Bluerock Residential Growth REIT 10K 2021 Annual report

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-K

(Mark One)


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

For the fiscal year ended December 31, 2021


☐	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.)

1345 Avenue of the Americas, 32^ndFloor, New York, NY		10105
(Address or principal executive offices)		(Zip Code)

(212) 843-1601

(Registrant’s telephone number, including area code)

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
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

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

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ◻ No ⌧

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ◻ No ⌧

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. Yes ⌧ No ◻

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ⌧ 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	☒	Non-Accelerated Filer	☐
Smaller reporting company	☒	Emerging growth company	☐

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 has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The aggregate market value of the registrant’s Class A common stock held by non-affiliates of the registrant as of June 30, 2021, the last business day of registrant’s most recently completed second fiscal quarter, was $293,427,966 based on the closing price of the Class A common stock on the NYSE American on such date.

Number of shares outstanding of the registrant’s

classes of common stock, as of March 7, 2022:

Class A Common Stock: 29,260,629 shares

Class C Common Stock: 76,603 shares

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BLUEROCK RESIDENTIAL GROWTH REIT, INC.

FORM 10-K

December 31, 2021


PART I
Item 1.	Business	8
Item 1A.	Risk Factors	18
Item 1B.	Unresolved Staff Comments	63
Item 2.	Properties	63
Item 3.	Legal Proceedings	66
Item 4.	Mining Safety Disclosures	66
PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	67
Item 6.	[Reserved]	71
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	71
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	106
Item 8.	Financial Statements and Supplementary Data	107
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	107
Item 9A.	Controls and Procedures	107
Item 9B.	Other Information	108
Item 9C.	Disclosure Regarding Foreign Jurisdictions That Prevent Inspections	109
PART III
Item 10.	Directors, Executive Officers and Corporate Governance	109
Item 11.	Executive Compensation	116
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	144
Item 13.	Certain Relationships and Related Transactions, and Director Independence	147
Item 14.	Principal Accounting Fees and Services	153
PART IV
Item 15.	Exhibits, Financial Statement Schedules	155
Item 16.	Form 10-K Summary	155
SIGNATURES		156

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Forward-Looking Statements

Statements included in this Annual Report on Form 10-K 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 Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”); and pursuant to the Private Securities Litigation Reform Act of 1995 (the “PSLRA”), including statements regarding the completion of the proposed Merger (as hereinafter defined). 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. We intend for these forward-looking statements to be covered by the applicable safe harbor provisions created by Section 27A of the Securities Act and Section 21E of the Exchange Act and the PSLRA.

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.

On December 20, 2021, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Badger Parent LLC (“Parent”) and Badger Merger Sub LLC (“Merger Sub”). The Merger Agreement provides that, upon the terms and subject to the conditions set forth therein, the Company will be merged with and into Merger Sub (the “Merger”), with Merger Sub surviving the Merger. The Merger and the other transactions contemplated by the Merger Agreement were unanimously approved by the Board. Parent and Merger Sub are affiliates of Blackstone Real Estate Partners IX L.P., an affiliate of Blackstone Inc.

Currently, one of the most significant factors, however, is the potential adverse effect of the ongoing pandemic of the novel coronavirus (“COVID-19”) on the financial condition, results of operations, cash flows and performance of the Company and its tenants of our properties, business partners within our network and service providers, as well as the real estate market and the global economy and financial markets. The extent to which COVID-19 impacts the Company and its tenants will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact (including governmental actions that may vary by jurisdiction, such as mandated business closing; “stay-at-home” orders; limits on group activity; and actions to protect residential tenants from eviction), and the direct and indirect economic effects of the pandemic and containment measures, among others. Moreover, you should interpret many of the risks identified in this Annual Report on Form 10-K, as well as the risks set forth below, as being heightened as a result of the ongoing and numerous adverse impacts of COVID-19.

Additional factors that could have a material adverse effect on our operations and future prospects include, but are not limited to:

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the competitive environment in which we operate;

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the use of proceeds of the Company’s securities offerings;

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the occurrence of any event, change or other circumstances that could delay the completion of the Merger or give rise to the termination of the Merger Agreement with Badger Parent and Badger Merger Sub, and the risk that the Merger Agreement may be terminated in circumstances that require us to pay a termination fee of $60 million;

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the inability to complete the Merger due to the failure to obtain stockholder approval for the Merger or the failure to satisfy other conditions to completion of the Merger;

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risks related to disruption of management’s attention from our ongoing business operations due to the proposed Merger transaction;

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the incurrence of substantial costs relating to the Merger;

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the effect of the pendency of the Merger on our business relationships, operating results and business generally

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any legal proceedings that may be initiated against us related to the Merger Agreement or any of the transactions contemplated by the Merger Agreement, and the outcome thereof;

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

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decreased rental rates or increasing vacancy rates;

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our ability to lease units in newly acquired or newly constructed apartment or single-family properties;

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potential defaults on or non-renewal of leases by tenants;

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creditworthiness of tenants;

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our ability to obtain financing for and complete acquisitions under contract under the contemplated terms, or at all;

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development and acquisition risks, including rising and unanticipated costs and failure of such acquisitions and developments to perform in accordance with projections;

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the timing of acquisitions and dispositions;

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the performance of our network of leading regional apartment or single-family owner/operators with which we invest, including through controlling positions in joint ventures;

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potential natural disasters such as hurricanes, tornadoes and floods;

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potential adverse effects of laws, regulations or other issues related to climate change;

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national, international, regional and local economic conditions;

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Board determination as to timing and payment of dividends, and our ability to pay future distributions at the dividend rates we have paid historically;

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the general level of interest rates;

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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;

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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;

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lack of or insufficient amounts of insurance;

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our ability to maintain our qualification as a REIT;

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litigation, including costs associated with prosecuting or defending claims and any adverse outcomes; and

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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.

Forward-looking statements are found throughout this Annual Report on Form 10-K, including under the headings “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and elsewhere in this Annual Report on Form 10-K. We caution investors not to place undue reliance on forward-looking statements, which reflect our management’s view only as of the date of this Annual Report on Form 10-K. We undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results.

Cautionary Note

The representations, warranties, and covenants made by us in any agreement filed as an exhibit to this Annual Report on Form 10-K are made solely for the benefit of the parties to the agreement, including, in some cases, for the purpose of allocating risk among the parties to the agreement, and should not be deemed to be representations, warranties, or covenants to or with any other parties. Moreover, these representations, warranties, or covenants should not be relied upon as accurately describing or reflecting the current state of our affairs.

Risk Factor Summary

An investment in our securities involves various risks. Some of the material risks include those set forth below. You should consider carefully these risks, and those discussed under “Risk Factors,” before purchasing our securities.

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The risk of the occurrence of any event, change or other circumstances that could delay the completion of the Merger or give rise to the termination of the Merger Agreement, and the risk that the Merger Agreement may be terminated in circumstances that require us to pay a termination fee of $60 million.

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The risk that we may be unable to complete the Merger due to the failure to obtain stockholder approval for the Merger or to satisfy other conditions to completion of the Merger.

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The risk that failure to complete the Merger could negatively impact the value of our Class A common stock and our business, our future financial results.

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Risks related to disruption of management’s attention from our ongoing business operations due to the proposed Merger transaction.

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Risks related to the incurrence of substantial costs relating to the Merger.

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The risk that the pendency of the Merger could adversely affect our business relationships, operating results and business generally.

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Risks related to the outcome of any legal proceedings that may be instituted against us related to the Merger Agreement or any of the transactions contemplated by the Merger Agreement.

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The risk that certain provisions of the Merger Agreement could discourage a potential competing acquirer of the Company, or result in any competing acquisition proposal being at a lower price than it might otherwise be.

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The ongoing pandemic of the novel coronavirus (“COVID-19”) and new variants thereof, or the future outbreak of other highly infectious or contagious diseases, could materially and adversely impact or disrupt our financial condition, results of operations, cash flows and performance.

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Our current portfolio consists primarily of multifamily apartment communities and single-family residential homes concentrated in certain markets, and we expect that our portfolio going forward will consist primarily of the same. Any adverse developments in local economic conditions or the demand for apartment or single-family units in these markets may negatively impact our operating results.

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If we are unable to identify suitable investments, then we may not be able to achieve our investment objectives or pay distributions.

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Adverse economic conditions may negatively affect our returns and profitability, and, as a result, our ability to make distributions to our stockholders.

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We have very limited sources of capital other than cash from property operations and the proceeds of offerings of our securities to meet our primary liquidity requirements. As a result, we may not be able to pay our short-term debt upon maturity or other liabilities and obligations when they come due other than with the net proceeds of an offering, which may limit our ability to fully consummate our business plan and diversify our portfolio.

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We may be limited in our ability to diversify our investments.

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We have used and will continue to use mortgage and other indebtedness to partially finance our company, which increases the risk to our business. Our leverage policy has been adopted by our board of directors (the “Board”) and is therefore subject to change without stockholder consent.

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During certain periods of our operations, we have funded distributions from offering proceeds, borrowings and the sale of assets to the extent distributions exceeded our earnings or cash flows from operations, and may do so in the future if we are unable to make distributions with our cash flows from our operations. There is no limit on the amount of offering proceeds we may use to fund distributions. Distributions paid from sources other than cash flow or funds from operations may constitute a return of capital to our stockholders. Rates of distribution may not be indicative of our operating results.

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We depend on our key employees. In particular, our success depends to a significant degree upon the contributions of Messrs. Kamfar, Babb, MacDonald, Ruddy, Vohs, and DiFranco, as well as Mr. Konig. There is no guarantee that our key employees will remain employed with us for any specified period of time, and will not engage in competitive activities if they cease to be employed with us. The departure or the loss of the services of any such key employee could have a material adverse effect on our business, financial condition, results of operations and ability to effectively operate our business.

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While we expect to maintain control over our properties, we will rely on members of our network for the day-to-day management and development of our real estate investments.

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Stockholders will have limited control over changes in our policies and day-to-day operations, which increases the uncertainty and risks you face as a stockholder. In addition, our Board may approve changes to our policies without your approval.

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The market price and trading volume of our Class A common stock has been volatile at times following our initial public offering (the “IPO”) and has frequently traded at a discount to the IPO price at times since the IPO, and these trends may continue following an offering.

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There is no public market for our Series B Preferred Stock or Warrants, or for the Series T Preferred Stock, and we currently have no plan to list the Series B Preferred Stock, the Warrants, or the Series T Preferred Stock on a securities exchange. If holders are able to sell the Series B Preferred Stock, Warrants, or Series T Preferred Stock, they may have to be sold at a substantial discount.

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Holders of Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock and/or Series T Preferred Stock should not expect us to redeem all or any such shares on the date they first become redeemable or on any particular date after they become redeemable. Any decision to propose a redemption will depend upon, among other things, our evaluation of our capital position and general market conditions at the time. We would likely choose to exercise our optional redemption right only when prevailing interest rates have declined, which would adversely affect the ability of holders of shares of the applicable series of preferred stock to reinvest proceeds from the redemption in a comparable investment with an equal or greater yield to the yield on such series of preferred stock had their shares not been redeemed.

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There are numerous conflicts of interest between the interests of stockholders and our interests or the interests of Bluerock and its affiliates, including conflicts arising out of (a) competing demands for the time and services of certain of our officers, and of Bluerock personnel that work for us and our affiliates under the Administrative Services Agreement, to our activities, (b) allocation of investment opportunities between us and investment vehicles affiliated with Bluerock, (c) purchase or sale of apartment properties, including from or to Bluerock or its affiliates and (d) determinations of rental expense sharing between Bluerock and us under the Leasehold Cost-Sharing Agreement.

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We have invested and anticipate that we will continue to invest in the redevelopment of existing properties and the development of new properties. These investments involve risks beyond those presented by stabilized, income-producing properties. These risks may diminish the return to our stockholders.

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We may fail to maintain our qualification as a REIT for federal income tax purposes. We would then be subject to corporate level taxation and we would not be required to pay any distributions to our stockholders.

If we are unable to effectively manage the impact of these and other risks, our ability to meet our investment objectives would be substantially impaired. In turn, the value of our securities and our ability to make distributions would be materially reduced.

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PART I

Item 1. Business

Organization

Bluerock Residential Growth REIT, Inc. (“we,” “us,” or the “Company”) was incorporated on July 25, 2008 under the laws of the state of Maryland.

We have elected to be treated, and currently qualify, as a real estate investment trust (or “REIT”) for federal income tax purposes. As a REIT, we generally are not subject to corporate-level income taxes. To maintain our REIT status, we are required, among other requirements, to distribute annually at least 90% of our “REIT taxable income,” as defined by the Internal Revenue Code of 1986, as amended (the “Code”), to our stockholders. If we fail to qualify as a REIT in any taxable year, we would be subject to federal income tax on our taxable income at regular corporate tax rates. We were incorporated to raise capital and acquire a diverse portfolio of residential real estate assets.

Unless otherwise indicated or the context requires otherwise, all references to “the Company,” “we,” “us” and “our” mean Bluerock Residential Growth REIT, Inc., a Maryland corporation, together with its consolidated subsidiaries, including, without limitation, Bluerock Residential Holdings, L.P., a Delaware limited partnership of which we are the sole general partner, which we refer to as our Operating Partnership. We refer to Bluerock Real Estate, L.L.C., a Delaware limited liability company, and its affiliate, Bluerock Real Estate Holdings, LLC, together as Bluerock or BRE, and we refer to our former external manager, BRG Manager, LLC, a Delaware limited liability company, as our former Manager. Both Bluerock and our former Manager are affiliated with the Company. References to our shares of Class A common stock on a “fully diluted basis” includes all outstanding shares of our Class A common stock, shares of our Class C common stock, units of limited partnership interest in our Operating Partnership, or OP Units, and long-term incentive plan units in our Operating Partnership, or LTIP Units, whether vested or unvested.

On October 31, 2017, we became an internally-managed REIT as a result of the completion of the management internalization transactions (the “Internalization”), and we are no longer externally managed by our former Manager. The owners of the former Manager are referred to as the Contributors.

Substantially all our business is conducted through our Operating Partnership.

The principal executive offices of our Company and the former Manager are located at 1345 Avenue of the Americas, 32^nd Floor, New York, New York 10105. Our telephone number is (212) 843-1601.

Investments in Real Estate

As of December 31, 2021, we held an aggregate of 20,263 units, comprised of 16,837 multifamily units and 3,426 single-family residential units. The aggregate number of units are held through seventy-eight real estate investments, consisting of forty-nine consolidated operating investments and twenty-nine investments held through preferred equity, loan or ground lease investments. As of December 31, 2021, our consolidated operating investments were approximately 95.9% occupied. For more information regarding our investments, see “Item 2. Properties”.

Proposed Merger

Pursuant to the terms and conditions in the Merger Agreement, at the effective time of the Merger (the “Effective Time”), each share of common stock, par value $0.01 per share, of the Company (the “Company Common Stock”), that is issued and outstanding immediately prior to the Effective Time will automatically be converted into the right to receive $24.25 in cash, without interest (the “Per Share Merger Consideration”).

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We will deliver a notice of redemption (the “Preferred Stock Redemption Notice”) to the holders of our Series B Redeemable Preferred Stock, par value $0.01 per share (“Series B Preferred Stock”), 7.625% Series C Cumulative Redeemable Preferred Stock, par value $0.01 per share (“Series C Preferred Stock”), 7.125% Series D Cumulative Preferred Stock, par value $0.01 per share (“Series D Preferred Stock”), and Series T Redeemable Preferred Stock, par value $0.01 per share (“Series T Preferred Stock”), in accordance with their respective Articles Supplementary, in order to provide that such preferred stock will be redeemed effective as of the Effective Time. Each share of Series C Preferred Stock, Series D Preferred Stock and Series T Preferred Stock will be redeemed for an amount equal to $25.00 plus an amount equal to all accrued and unpaid dividends to and including the redemption date set forth in the Preferred Stock Redemption Notice, without interest. Each share of Series B Preferred Stock will be redeemed for an amount equal to $1,000.00 plus an amount equal to all accrued and unpaid dividends to and including the redemption date set forth in the Preferred Stock Redemption Notice, without interest.

The outstanding warrants to purchase Class A common stock of the Company (the “Company Warrants”) will remain outstanding following the Effective Time in accordance with their terms, but the Exercise Price (as defined in the Warrant Agreements with respect to the Company Warrants) will be adjusted so that the holder of any Company Warrant exercised after the Effective Time will be entitled to receive in cash the amount of the Per Share Merger Consideration which, if the Company Warrant had been exercised immediately prior to the Closing, such holder would have been entitled to receive upon the consummation of the Merger.

In addition, each award of shares of restricted Class A common stock of the Company that is outstanding immediately prior to the Effective Time will be cancelled in exchange for a cash payment in an amount equal to (i) the number of shares of Company Common Stock subject to such award immediately prior to the Effective Time multiplied by (ii) the Per Share Merger Consideration, without interest and less any applicable withholding taxes.

Prior to the consummation of the Merger, we will complete the separation of our single-family residential real estate business (the “SFR Business”) from our multi-family residential real estate business (the “Separation”). Following the Separation, the SFR Business will be indirectly held by Bluerock Homes Trust, Inc. (“BHM”), a Maryland corporation, and the Operating Partnership, and, prior to the consummation of the Merger, we will distribute the common stock of BHM to our stockholders as of the record date for such distribution in a taxable distribution (the “Distribution”).

In connection with the Separation, the Operating Partnership will exchange its interests in an entity holding its multi-family residential real estate business with the Company as consideration for a redemption of all of our preferred interests in the Operating Partnership and a portion of our common units in the Operating Partnership (the “Redemption”). As a result, following the Redemption, the Operating Partnership will cease to hold interests in the Company’s multi-family residential real estate business, and will hold the assets related to the SFR Business. Most members of our senior management, along with certain entities related to them, have agreed to retain their interests in the Operating Partnership until the earlier of the Effective Time and the termination of the Merger Agreement, rather than redeeming their interests for cash or shares of Company Common Stock that will receive the Per Share Merger Consideration. As a result, following the Separation and the Distribution, our stockholders who receive shares of BHM in the Distribution are expected to indirectly own approximately 35% of the SFR Business, with holders of units in the Operating Partnership (other than BHM) expected to indirectly own an interest of approximately 65% of the SFR Business. In connection with the Separation and the Distribution, BHM and the Operating Partnership will enter into a management agreement with an affiliate of Bluerock providing for it to be externally managed thereby.

The Merger Agreement contains customary representations, warranties and covenants, including, among others, covenants by the Company to use commercially reasonable efforts to conduct its business in all material respects in the ordinary course, subject to certain exceptions, during the period between the execution of the Merger Agreement and the consummation of the Merger. The obligations of Parent and Merger Sub to consummate the Merger are not subject to any financing condition or the receipt of any financing by Parent or Merger Sub.

The consummation of the Merger is conditioned on the consummation of the Separation and the Distribution, as well as certain customary closing conditions, including, among others, approval of the Merger by the affirmative vote of the stockholders entitled to cast a majority of all the votes entitled to be cast on the Merger by the holders of issued and outstanding Company Common Stock (the “Company Requisite Vote”). The Merger Agreement requires the Company to convene a stockholders’ meeting for purposes of obtaining the Company Requisite Vote.

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The Company has agreed not to solicit or enter into an agreement regarding a Company Takeover Proposal (as defined in the Merger Agreement), and, subject to certain exceptions, is not permitted to enter into discussions or negotiations concerning, or provide information to a third party in connection with, any Company Takeover Proposal. However, the Company may, prior to obtaining the Company Requisite Vote, engage in discussions or negotiations and provide information to a third party which has made an unsolicited bona fide written Company Takeover Proposal that did not result from a breach of the non-solicit provisions of the Merger Agreement if the Board determines in good faith, after consultation with its independent financial advisors and outside legal counsel, that such Company Takeover Proposal constitutes or could reasonably be expected to lead to a Company Superior Proposal (as defined in the Merger Agreement).

Prior to the time the Company Requisite Vote is obtained, the Board may, in certain circumstances, effect a Company Adverse Recommendation Change (as defined in the Merger Agreement), subject to complying with specified notice and other conditions set forth in the Merger Agreement.

The Merger Agreement may be terminated under certain circumstances by the Company, including prior to obtaining the Company Requisite Vote, if, after following certain procedures and adhering to certain restrictions, the Board effects a Company Adverse Recommendation Change in connection with a Company Superior Proposal and the Company enters into a definitive agreement providing for the implementation of a Company Superior Proposal. In addition, Parent may terminate the Merger Agreement under certain circumstances and subject to certain restrictions, including if the Board effects a Company Adverse Recommendation Change. The Merger Agreement also may be terminated by either the Company or Parent if the Merger has not been completed on or prior to the date that is nine months after the date of the Merger Agreement, which date may be extended to complete the Separation and the Distribution, by the Company, up to the date that is ten months after the date of the Merger Agreement, or by Parent, up to the date that is twelve months after the date of the Merger Agreement.

Upon a termination of the Merger Agreement, under certain circumstances, the Company will be required to pay a termination fee to Parent of $60 million. Upon termination of the Merger Agreement in certain other circumstances, Parent will be required to pay the Company a termination fee of $200 million.

The foregoing description of the Merger Agreement is only a summary, does not purport to be complete and is qualified in its entirety by reference to the full text of the Merger Agreement, which is filed as Exhibit 2.1 to our current report on Form 8-K filed with the Securities and Exchange Commission (the “SEC”) on December 21, 2021, and is incorporated herein by reference.

Business and Growth Strategies

We are currently diversified through investments in both infill first-ring suburban single-family residential and high-quality multifamily properties.

The Separation of the Bluerock Homes Business from Bluerock Residential and the Distribution of shares of Bluerock Homes common stock is expected to enable Bluerock Homes to pursue our distinct business strategy focused on our single-family properties. Bluerock Homes and Bluerock Residential expect that the Separation and the Distribution will provide an opportunity for our experienced management team to implement and execute our growth strategy and for us to enhance investor transparency and better highlight our attributes by concentrating on investments in single-family residential.

Single-family residential

With respect to our investments in single-family residential properties, our principal business objective is to generate attractive risk-adjusted investment returns by assembling a portfolio of pre-existing single-family rental homes and developing build-to-rent communities located across a diverse group of growth markets. Our single-family rental properties will target a growing pool of middle-income renters seeking the single-family lifestyle without the upfront and ongoing investments associated with home ownership. By implementing our investment strategies and our institutional-quality management, we expect to be able to achieve sustainable long-term growth in both our FFO and NAV.

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Value Creation Execution. We acquire single-family rental properties with potential for long-term value creation for our stockholders. We utilize the following internal and external growth strategies to drive growth in FFO and NAV for our investors:

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Scattered-Site Aggregation. Currently, there is a high level of fragmentation in the single-family rental home market. We believe we can generate economies of scale and enable transaction efficiencies by targeting individual or small portfolios of quality, scattered, single-family rental homes with strong and stable cash flows and aggregate them into larger portfolios. We look for middle-market rents that deliver attractive unlevered yields relative to private market portfolio and public market dividend yields. To date, we have acquired scattered-site homes at year one nominal cap rates exceeding 5% and gross rental yields exceeding 9%. We see an opportunity to replicate this strategy across our markets utilizing our network as a force multiplier on the sourcing and execution fronts.

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Build-to-Rent. We develop build-to-rent communities at attractive stabilized unlevered yields, investing selectively in target markets that we believe will enable us to capture development premiums on completion. We may use a convertible loan or convertible preferred equity structure to provide income during the development stage and/or the ability to capture development premiums at completion by exercising our conversion rights to take ownership.

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Value-Add Renovation. We see significant potential for capital appreciation through renovation of existing assets. Our value-add strategy focuses on working with our local experts to reposition lower-quality, less current assets and drive rent growth and expand margins, increasing NOI and maximizing our return on investment.

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Institutional Property Management / NOI Margin Expansion. We expect to improve margins at our operating properties by deploying institutional management approaches across the portfolio —including professional management, investment in technology platforms, and leveraging economies of scale — to best position the portfolio for optimal rental growth. Through the aggregation of multiple scattered homes, we seek to address operational inefficiencies, revenue management and deferred capital maintenance at scale and to grow underlying cashflow through substantial NOI margin expansion at stabilized properties. We will also provide an aggressive asset management presence, working alongside our network partners to ensure optimal execution of the asset management plan, enabling us to drive rent growth and values.

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Technology-Aided Platform. We have implemented a data warehouse, which provides us with real-time visibility into leasing, inventory, maintenance and renovation metrics allowing us to quickly react to changes in current operational performance and monitor trends across our portfolio. Further, we believe we will be able to utilize our data warehouse technology as a building block in the design and implementation of a portfolio-wide revenue management system to further drive NOI and margin expansion. In addition, we utilize various PropTech solutions to both acquire and maximize operational efficiency. Operational PropTech solutions include focus on streamlining value-add initiatives, integrating smart-home technology, automating the lease process and providing robust and coordinated maintenance services.

Harvest and Redeploy Capital Selectively. On an opportunistic basis and subject to compliance with REIT restrictions, we intend to sell properties when we have executed our value creation plans and when we believe the investment has limited additional upside relative to other opportunities. This allows us to harvest profits and reinvest proceeds to maximize stockholder value.

Multifamily communities

With respect to our investments in multifamily residential communities, our principal business objective is to generate attractive risk-adjusted investment returns by assembling a high-quality portfolio of apartment properties located in demographically attractive growth markets and by implementing our investment strategies and our “Live/Work/Play Initiatives” to achieve sustainable long-term growth in both our core funds from operations and net asset value.

Invest in Institutional-Quality Apartment Properties. We acquire institutional-quality apartment properties where we believe we can create long-term value for our stockholders utilizing the following investment strategies.

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Value-Add. We invest in well-located institutional-quality apartment properties with strong and stable cash flows in demographically attractive knowledge economy growth markets where we believe there exists significant potential for medium-term capital appreciation through renovation or redevelopment, to reposition the asset and drive future rental growth.

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Opportunistic. We invest in properties available at opportunistic prices (i.e., at prices we believe are below those available in an otherwise efficient market) that exhibit some characteristics of distress, such as operational inefficiencies, significant deferred capital maintenance or broken capital structures providing an opportunity for a substantial portion of total return attributable to appreciation in value.

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Invest-to-Own. We selectively invest in development of Class A properties in target markets where we believe we can capture significant development premiums upon completion. We generally use a mezzanine loan or convertible preferred equity structure which provides income during the development stage and/or the ability to capture development premiums at completion by exercising our conversion rights to take ownership.

Invest in Class A Apartment Properties. We intend to continue to acquire primarily Class A apartment properties targeting the high disposable income renter by choice, where we believe we can create long-term value growth for our stockholders.

Focus on Growth Markets. We intend to continue to focus on demographically attractive growth markets, which we define as markets with strong employment drivers in industries creating high disposable income jobs over the long term. Employment growth is highly correlated with apartment demand; therefore, we believe that selecting markets with job growth significantly above the national average will provide high potential for increased rental demand leading to revenue growth and attractive risk-adjusted returns.

Implement our Value Creation Strategies. We intend to continue to focus on creating value at our properties utilizing our Value-Add, Opportunistic and Invest-to-Own investment strategies in order to maximize our return on investment. We work with each member of our network to evaluate property needs along with value-creation opportunities and create an asset-specific business plan to best position or reposition each property to drive rental growth and asset values. We then provide an aggressive asset management presence to manage our network partner and ensure execution of the plan, with the goal of driving rental growth and values.

Implement our Live/Work/Play Initiatives. We intend to continue to implement our amenities and attributes to transform the apartment community from a purely functional product (i.e., as solely a place to live), to a lifestyle product (i.e., as a place to live, interact, and socialize). Our Live/Work/Play initiatives are property specific, and generally consist of attributes that go beyond traditional features, including highly amenitized common areas, cosmetic and architectural improvements, technology, music and other community-oriented activities to appeal to our residents’ desire for a “sense of community” by creating places to gather, socialize and interact in an amenity-rich environment. We believe this creates an enhanced perception of value among residents, allowing for premium rental rates and improved resident retention.

Diversify Across Markets, Strategies and Investment Size. We will seek to grow our high-quality portfolio of apartment properties diversified by geography and by investment strategy and by size (typically ranging from $50 to $100 million), in order to manage concentration risk, while driving both current income and capital appreciation throughout the portfolio. Our network enables us to diversify across multiple markets and multiple strategies efficiently, without the logistical burden and time delay of building operating infrastructure in multiple markets and across multiple investment strategies.

Selectively Harvest and Redeploy Capital. On an opportunistic basis and subject to compliance with certain REIT restrictions, we intend to sell properties in cases where we have successfully executed our value creation plans and where we believe the investment has limited additional upside relative to other opportunities, in order to harvest profits and to reinvest proceeds to maximize stockholder value.

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Summary of Investments and Dispositions

The following table presents a summary of our investments during the years ended December 31, 2021, 2020 and 2019:


		Date	Ownership		Number
Properties Acquired	Location	Acquired	Interest		of Units
Multifamily
The Hartley at Blue Hill, formerly The Park at Chapel Hill⁽¹⁾	Chapel Hill, NC	1/23/2019	—		414
Element	Las Vegas, NV	6/27/2019	100	%	200
Providence Trail	Mount Juliet, TN	6/27/2019	100	%	334
Denim	Scottsdale, AZ	7/24/2019	100	%	645
The Sanctuary	Las Vegas, NV	7/31/2019	100	%	320
Mira Vista ⁽²⁾	Austin, TX	9/17/2019	—		200
Thornton Flats ⁽²⁾	Austin, TX	9/25/2019	—		104
Chattahoochee Ridge	Atlanta, GA	11/12/2019	90	%	358
The District at Scottsdale	Scottsdale, AZ	12/11/2019	100	%	332
Belmont Crossing ⁽²⁾	Smyrna, GA	12/20/2019	—		192
Sierra Terrace ⁽²⁾	Atlanta, GA	12/20/2019	—		135
Sierra Village ⁽²⁾	Atlanta, GA	12/20/2019	—		154
Avenue 25	Phoenix, AZ	1/23/2020	100	%	254
Zoey	Austin, TX	3/4/2020	—		307
Falls at Forsyth	Cumming, GA	3/6/2020	100	%	356
Georgetown Crossing ⁽²⁾	Savannah, GA	3/20/2020	—		168
Park on the Square ⁽²⁾	Pensacola, FL	3/20/2020	—		240
The Commons ⁽²⁾	Jacksonville, FL	5/8/2020	—		328
Reunion Apartments ⁽²⁾	Orlando, FL	7/1/2020	—		280
Chevy Chase	Austin, TX	8/11/2020	92	%	320
Avondale Hills ⁽²⁾	Decatur, GA	9/30/2020	—		240
Water’s Edge ⁽²⁾	Pensacola, FL	10/1/2020	—		184
Carrington at Perimeter Park	Morrisville, NC	12/1/2020	100	%	266
Elan	Austin, TX	12/1/2020	100	%	270
Hunters Pointe ⁽²⁾	Pensacola, FL	12/16/2020	—		204
Cielo on Gilbert	Mesa, AZ	12/23/2020	90	%	432
Chandler ⁽²⁾	Chandler, AZ	12/31/2020	—		208
The Riley ⁽²⁾	Richardson, TX	3/1/2021	—		262
The Reserve at Palmer Ranch ⁽³⁾	Sarasota, FL	6/10/2021	—		320
Deerwood Apartments ^{(1) (2)}	Houston, TX	6/16/2021	—		330
Windsor Falls	Raleigh, NC	6/17/2021	100	%	276
Deercross ⁽²⁾	Indianapolis, IN	6/25/2021	—		372
Spring Parc ⁽²⁾	Dallas, TX	7/13/2021	—		304
The Crossings of Dawsonville⁽²⁾	Dawsonville, GA	7/14/2021	—		216
Lower Broadway^{(1) (2)}	San Antonio, TX	7/15/2021	—		386
Orange City Apartments^{(1) (2)}	Orange City, FL	7/26/2021	—		298
Renew 3030 ⁽²⁾	Mesa, AZ	8/31/2021	—		126

Single-Family Residential⁽⁴⁾
Navigator Villas	Pasco, WA	12/18/2019	90	%	176
Peak Housing ⁽⁵⁾	IN / MO / TX	4/12/2021	—		474
Yauger Park Villas	Olympia, WA	4/14/2021	95	%	80
Wayford at Concord ⁽⁶⁾	Concord, NC	6/4/2021	83	%	150
Wayford at Innovation Park ^{(1) (2)}	Charlotte, NC	6/17/2021	—		210
Willow Park ^{(1) (2)}	Willow Park, TX	6/17/2021	—		46
Corpus ⁽⁷⁾	Corpus Christi, TX	7/9/2021	—		81
Jolin⁽⁷⁾	Weatherford, TX	8/6/2021	—		24
Indy	Indianapolis, IN	8/12/2021	60	%	44
Springfield	Springfield, MO	8/18/2021	60	%	290
The Cottages of Port St. Lucie^{(1) (2)}	Port St. Lucie, FL	8/26/2021	—		286
The Cottages at Myrtle Beach ^{(1) (2)}	Myrtle Beach, SC	9/9/2021	—		294
Springtown	Springtown, TX	9/15/2021	80	%	70
Texarkana	Texarkana, TX	9/21/2021	80	%	29
Lubbock	Lubbock, TX	9/24/2021	80	%	60
Granbury	Granbury, TX	9/30/2021	80	%	36
ILE	TX / SE US	10/4/2021	95	%	279
Axelrod	Garland, TX	10/5/2021	80	%	22
Springtown 2.0	Springtown, TX	10/26/2021	80	%	14
Lubbock 2.0	Lubbock, TX	10/28/2021	80	%	75
Lynnwood	Lubbock, TX	11/16/2021	80	%	20
Golden Pacific	KS / MO	11/23/2021	97	%	7
Lynnwood 2.0	Lubbock, TX	12/1/2021	80	%	20
Lubbock 3.0	Lubbock, TX	12/8/2021	80	%	45
The Cottages at Warner Robins ^{(1) (2)}	Warner Robins, GA	12/8/2021	—		251
The Woods at Forest Hill	Forest Hill, TX	12/20/2021	—		76
Texas Portfolio 183 ⁽⁷⁾	Various / TX	12/22/2021	80	%	183
DFW 189	Dallas-Fort Worth, TX	12/29/2021	56	%	189

(1)	The property is a development project.

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(2)	Our investment in the property is through a preferred equity investment with an unaffiliated third party. Refer to Note 7 of our consolidated financial statements for further information.

(3)	We sold The Reserve at Palmer Ranch to our unaffiliated joint venture partner, and as part of the sale, we simultaneously made a preferred equity investment in the property as part of the Strategic Portfolio.

(4)	Single-Family Residential includes single-family residential homes and attached townhomes/flats.

(5)	Peak Housing consists of our preferred equity investments in a private single-family home REIT (refer to Note 7 of our consolidated financial statements for further information). Unit count excludes consolidated operating investment units which are presented separately.

(6)	We purchased the Wayford at Concord property from our unaffiliated joint venture partner, and as part of the transaction, our preferred equity investment was redeemed.

(7)

We recapitalized Corpus and Jolin on December 22, 2021 and received full payoffs of the loans. As part of the recapitalization, both Corpus and Jolin, along with two portfolios of homes previously owned solely by our joint venture partner, were combined into one portfolio known as Texas Portfolio 183.

The following table presents a summary of our dispositions during the years ended December 31, 2021, 2020 and 2019:


			Ownership
			Interest in		Number
Property Dispositions	Location	Date Sold	Property		of Units
Multifamily
Wesley Village II ⁽¹⁾	Charlotte, NC	3/1/2019	100	%	—
Preston View	Morrisville, NC	7/15/2019	100	%	382
Leigh House ⁽²⁾	Raleigh, NC	7/15/2019	—		245
Sorrel	Frisco, TX	7/15/2019	100	%	352
Sovereign	Fort Worth, TX	7/15/2019	100	%	322
ARIUM Palms	Orlando, FL	8/29/2019	100	%	252
Marquis at Crown Ridge	San Antonio, TX	9/20/2019	90	%	352
Marquis at Stone Oak	San Antonio, TX	9/20/2019	90	%	335
Helios ⁽²⁾	Atlanta, GA	1/8/2020	—		282
Whetstone Apartments ⁽²⁾	Durham, NC	1/24/2020	—		204
Ashton Reserve	Charlotte, NC	4/14/2020	100	%	473
Marquis at TPC	San Antonio, TX	4/17/2020	90	%	139
Enders Place at Baldwin Park	Orlando, FL	4/21/2020	92	%	220
Cade Boca Raton	Boca Raton, FL	10/26/2020	81	%	90
Novel Perimeter ⁽²⁾	Atlanta, GA	12/9/2020	—		320
Arlo ⁽²⁾	Charlotte, NC	12/15/2020	—		286
Riverside Apartments	Austin, TX	12/22/2020	—		222
ARIUM Grandewood	Orlando, FL	1/28/2021	100	%	306
James at South First	Austin, TX	2/24/2021	90	%	250
Marquis at The Cascades	Tyler, TX	3/1/2021	90	%	582
The Conley ⁽²⁾	Leander, TX	3/18/2021	—		259
Alexan Southside Place ⁽²⁾	Houston, TX	3/25/2021	—		270
Plantation Park	Lake Jackson, TX	4/26/2021	80	%	238
Wayford at Concord ⁽²⁾	Concord, NC	6/4/2021	—		150
The Reserve at Palmer Ranch	Sarasota, FL	6/10/2021	100	%	320
Vickers Historic Roswell ⁽²⁾	Roswell, GA	6/29/2021	—		79
Park & Kingston	Charlotte, NC	7/7/2021	100	%	168
The District at Scottsdale	Scottsdale, AZ	7/7/2021	99	%	332
Mira Vista ⁽²⁾	Austin, TX	9/23/2021	—		200
Thornton Flats ⁽²⁾	Austin, TX	12/14/2021	—		104
Corpus⁽³⁾	Corpus Christi, TX	12/22/2021	—		81
Jolin ⁽³⁾	Weatherford, TX	12/22/2021	—		24
Belmont Crossing ⁽²⁾	Smyrna, GA	12/29/2021	—		192
Sierra Terrace ⁽²⁾	Atlanta, GA	12/29/2021	—		135
Sierra Village ⁽²⁾	Atlanta, GA	12/29/2021	—		154

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(1)	Sale of undeveloped parcel of land.

(2)	Preferred equity investment or equity investment. Refer to Note 6 and Note 7 of our consolidated financial statements for further information.

(3)

We recapitalized Corpus and Jolin on December 22, 2021 and received full payoffs of the loans. As part of the reorganization, both Corpus and Jolin, along with two portfolios of homes previously owned solely by our joint venture partner, were combined into one portfolio known as Texas Portfolio 183.

Distribution Policy

We intend to continue to qualify as a REIT for federal income tax purposes. The Code generally requires that a REIT annually distribute at least 90% of its REIT taxable income, determined without regard to the deduction for dividends paid and excluding any net capital gain, and imposes tax on any taxable income retained by a REIT, including capital gains.

To satisfy the requirements for qualification as a REIT and generally not be subject to federal income and excise tax, we intend to continue to make regular distributions of all or substantially all of our REIT taxable income, determined without regard to dividends paid, to our stockholders out of assets legally available for such purposes. All future distributions will be determined at the sole discretion of our Board of Directors (the “Board”) on a quarterly basis, subject to operating restrictions in the Merger Agreement. When determining the amount of future distributions, we expect that our Board will consider, among other factors, (i) the amount of cash generated from our operating activities, (ii) our expectations of future operating cash flows, (iii) our determination of near-term cash needs for acquisitions of new properties, development investments, general property capital improvements and debt repayments, (iv) our ability to continue to access additional sources of capital, (v) the requirements of Maryland law, (vi) the amount required to be distributed to maintain our status as a REIT and to reduce any income and excise taxes that we otherwise would be required to pay and (vii) any limitations on our distributions contained in our credit or other agreements.

Holders of shares of 8.250% Series A Cumulative Redeemable Preferred Stock, $0.01 par value per share (the “Series A Preferred Stock”), were entitled to receive cumulative cash dividends on the Series A Preferred Stock when authorized by our Board and declared by us from the end of the most recent dividend period for which dividends on the Series A Preferred Stock were paid, payable quarterly in arrears on each January 5^th, April 5^th, July 5^th and October 5^th of each year, commencing on January 5, 2016, to holders of record on each December 25^th, March 25^th, June 25^th and September 25^th, respectively. From the date of original issue to, and including, February 26, 2021, we paid dividends on the Series A Preferred Stock at the rate of 8.250% per annum of the $25.00 liquidation preference per share (equivalent to the fixed annual amount of $2.0625 per share). On February 26, 2021, the Company redeemed all remaining shares of its Series A Preferred Stock.

Holders of shares of Series B Redeemable Preferred Stock, $0.01 par value per share (the “Series B Preferred Stock”), are entitled to receive, when and as authorized by our Board and declared by us out of legally available funds, cumulative cash dividends on each share of Series B Preferred Stock at an annual rate of six percent (6%) of the initial stated value of $1,000 per share (the “Stated Value”). Dividends on each share of Series B Preferred Stock will begin accruing on, and will be cumulative from, the date of issuance or the end of the most recent dividend period for which dividends on the Series B Preferred Stock have been paid, payable monthly in arrears on the 5^th day of each month to holders of record on the 25^th day of the prior month; provided, however, that any such dividend may vary among holders of Series B Preferred Stock and may be prorated with respect to any shares of Series B Preferred Stock that were outstanding less than the total number of days in the dividend period immediately preceding the applicable dividend payment date, with the amount of any such prorated dividend being computed on the basis of the actual number of days in such dividend period during which such shares of Series B Preferred Stock were outstanding.

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Holders of shares of 7.625% Series C Cumulative Redeemable Preferred Stock, $0.01 par value per share (the “Series C Preferred Stock”), will be entitled to receive cumulative cash dividends on the Series C Preferred Stock when, as and if authorized by our Board and declared by us from and including the date of original issue or the end of the most recent dividend period for which dividends on the Series C Preferred Stock have been paid, payable quarterly in arrears on each January 5^th, April 5^th, July 5^th and October 5^th of each year, commencing on October 5, 2016, to holders of record on each December 25^th, March 25^th, June 25^th and September 25^th, respectively. From the date of original issuance to, but not including, July 19, 2023, we will pay dividends on the Series C Preferred Stock at the rate of 7.625% per annum of the $25.00 liquidation preference per share (equivalent to the fixed annual amount of $1.90625 per share). Commencing July 19, 2023, we will pay cumulative cash dividends on the Series C Preferred Stock at an annual dividend rate of the initial rate increased by 2.0% of the liquidation preference per annum, which will increase by an additional 2.0% of the liquidation preference per annum on each subsequent anniversary thereafter, subject to a maximum annual dividend rate of 14.0%.

Holders of shares of 7.125% Series D Cumulative Preferred Stock, $0.01 par value per share (the “Series D Preferred Stock”), will be entitled to receive cumulative cash dividends on the Series D Preferred Stock when, as and if authorized by our Board and declared by us from and including the date of original issue or the end of the most recent dividend period for which dividends on the Series D Preferred Stock have been paid, payable quarterly in arrears on each January 5^th, April 5^th, July 5^th and October 5^th of each year, commencing on January 5, 2017, to holders of record on each December 25^th, March 25^th, June 25^th and September 25^th, respectively. From the date of original issue, we will pay dividends on the Series D Preferred Stock at the rate of 7.1250% per annum of the $25.00 liquidation preference per share (equivalent to the fixed annual amount of $1.78125 per share).

Holders of shares of Series T Redeemable Preferred Stock, $0.01 par value per share (the “Series T Preferred Stock”), are entitled to receive, when and as authorized by our Board and declared by us out of legally available funds, the following:

(i)Cumulative cash dividends on each share of Series T Preferred Stock at an annual rate of six and 15/100 percent (6.15%) of the $25.00 liquidation preference per share (equivalent to the fixed annual amount of $1.5375 per share). Cash dividends on each share of Series T Preferred Stock will begin accruing on, and will be cumulative from, the date of issuance or the end of the most recent dividend period for which cash dividends on the Series T Preferred Stock have been paid, payable monthly in arrears on the 5^th day of each month to holders of record on the 25^th day of the prior month; provided, however, that any such cash dividend may vary among holders of Series T Preferred Stock and may be prorated with respect to any shares of Series T Preferred Stock that were outstanding less than the total number of days in the cash dividend period immediately preceding the applicable cash dividend payment date, with the amount of any such prorated dividend being computed on the basis of the actual number of days in such cash dividend period during which such shares of Series T Preferred Stock were outstanding; and

(ii)Annual stock dividends on each share of Series T Preferred Stock, payable in shares of Series T Preferred Stock, each at an annual rate of 0.2% of the $25.00 liquidation preference per share, for each of the first five (5) years from and including the later of (i) the year 2020 or (ii) the year of original issuance of each such share of Series T Preferred Stock, payable annually in arrears on the 29^th day of December to eligible holders of record on the 24^th day of December of each such year.

Holders of shares of Class A common stock, $0.01 par value per share (the “Class A common stock”), and Class C common stock $0.01 par value per share (the “Class C common stock”), will be entitled to receive cash dividends when, as and if authorized by our Board and declared by us. The common share dividend is paid on a quarterly basis, currently at an annual dividend rate of $0.65 per common share. The Board considered a number of factors in setting the current common stock dividend rate, including but not limited to achieving a sustainable dividend covered by core funds from operation (“CFFO”), multifamily and small cap peer dividend rates and 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.

We cannot assure you that we will generate sufficient cash flows to make distributions to our stockholders, or that we will be able to sustain those distributions. If our operations do not generate sufficient cash flow to allow us to satisfy the REIT distribution requirements, we may be required to fund distributions from working capital, offering proceeds, borrow funds, sell assets, make a taxable distribution of our equity or debt securities, or reduce such distributions. Our distribution policy enables us to review the alternative funding sources available to us from time to time. Our actual results of operations will be affected by a number of factors, including the revenues we receive from our properties, our operating expenses, interest expense, the ability of our tenants to meet their obligations and unanticipated expenditures. For more information regarding risk factors that could materially adversely affect our actual results of operations, please see “Item 1A — Risk Factors.”

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Regulations

Our investments are subject to various federal, state and local laws, ordinances and regulations, including, among other things, zoning regulations, land use controls, environmental controls relating to air and water quality, noise pollution and indirect environmental impacts such as increased motor vehicle activity. We believe that we have all permits and approvals necessary under current law to operate our investments.

Environmental

As an owner of real estate, we are subject to various environmental laws of federal, state and local governments. Compliance with existing laws has not had a material adverse effect on our financial condition or results of operations, and management does not believe it will have such an impact in the future. However, we cannot predict the impact of unforeseen environmental contingencies or new or changed laws or regulations on properties in which we hold an interest, or on properties that may be acquired directly or indirectly in the future.

Human Capital

We believe our employees are one of our greatest resources. In order to attract and retain high performing individuals, we are committed to partnering with our employees to provide opportunities for their professional development and promote their well-being. To that end, we have undertaken various initiatives, including the following:

●

launching an Environmental, Social, and Corporate Governance Initiative to codify and disclose the Company’s commitment to good corporate citizenship, including the appointment of an internal corporate responsibility committee in support the Company’s ongoing commitment to sustainability, health and safety, corporate social responsibility, corporate governance, and other public policy matters;

●

providing department-specific training, access to online training seminars and opportunities to participate in industry conferences;

●

providing annual reviews and regular feedback to assist in employee development and providing opportunities for employees to provide suggestions to management and safely register complaints;

●

providing family leave, for example, for the birth or adoption of a child, as well as sick leave;

●

focusing on creating a workplace that values employee health and safety;

●

committing to the full inclusion of all qualified employees and applicants and providing equal employment opportunities to all persons, in accordance with the principles and requirements of the Equal Employment Opportunities Commission and the principles and requirements of the Americans with Disabilities Act; and

●

recognizing the importance and contributions of a diverse workforce, with an appreciation for the unique perspectives and insights offered by diverse backgrounds.

Industry Segments

Our current business consists of owning and operating residential investments that generate rental and other property-related income through the leasing of units to a diverse base of tenants. In prior years, we had on reportable segment as our investments were primarily in multifamily apartment communities. During 2021, we began increasing our investments in single-family residential homes, and as such, we have transitioned from a one-segment to a two-segment structure based on investment type. We evaluate operating performance on an individual property investment level and based on the investments’ similar economic characteristics. Our primary financial measure for operating performance is net operating income (“NOI”) as it measures the core operations of property performance by excluding corporate-level expenses and those other items not related to property operating performance. We view our residential investments as two operating segments, and, accordingly, aggregate our properties into two reportable segments: multifamily apartment communities and single-family residential homes.

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Available Information

We electronically file annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports with the SEC. We also have filed with the SEC registration statements on Form S-3 (of which File Nos. 333-203415, 333-208988 and 333-255388 are currently effective) and Form S-8 (of which File Nos. 333-202569, 333-222255, 333-228825 and 333-249608 are currently effective). Copies of our filings with the SEC may be obtained from the SEC’s website at www.sec.gov, or downloaded from our website at www.bluerockresidential.com, as soon as reasonably practicable after such material has been filed with, or furnished to, the SEC. Access to these filings is free of charge.

Item 1A. Risk Factors

Risks Related to the Merger

There may be unexpected delays in the completion of the Merger, or the Merger may not be completed at all.

The Merger is currently expected to close during the first half of 2022, assuming that all of the conditions in the Merger Agreement are satisfied or waived. The Merger Agreement provides that either we or the Parent may terminate the Merger Agreement if the Merger has not been completed on or prior to the date that is nine months after the date of the Merger Agreement, which date may be extended to complete the Separation and the Distribution, by the Company, up to the date that is ten months after the date of the Merger Agreement, or by Parent, up to the date that is twelve months after the date of the Merger Agreement. In addition, Parent may terminate the Merger Agreement under certain circumstances and subject to certain restrictions, including if the Board effects a Company Adverse Recommendation Change. Certain events may delay the completion of the Merger or result in a termination of the Merger Agreement. Some of these events are outside the control of either party. In particular, completion of the Merger requires the affirmative vote of a majority of our outstanding common stock as of the record date for the special meeting of stockholders. If the required vote is not obtained at a special meeting (including any adjournment or postponement thereof) at which the Merger has been voted upon, either we or the Parent may terminate the Merger Agreement. There can be no assurance that our stockholders will vote affirmatively at any special meeting to approve the Merger.

Parent has represented in the Merger Agreement that it will have sufficient cash at the Effective Time, that when combined with debt financing Parent is obtaining concurrently, for which it has received a commitment that is subject to conditions, will be sufficient to pay the cash Merger Consideration, and any and all amounts required to be paid in connection with the consummation of the transactions contemplated by the Merger Agreement, including the Merger, any related fees and expenses and the repayment or refinancing of certain of our indebtedness.

We may incur significant additional costs in connection with any delay in completing the Merger or termination of the Merger Agreement, in addition to significant transaction costs, including legal, financial advisory, accounting, and other costs we have already incurred. We cannot assure you that the conditions to the completion of the Merger will be satisfied or waived or that any adverse change, effect, event, circumstance, occurrence or state of facts that could give rise to the termination of the Merger Agreement, including but not limited to Parent's failure to consummate the necessary financing arrangements to ensure that it will have sufficient cash at the Effective Time, will not occur, and we cannot provide any assurances as to whether or when the Merger will be completed.

The Merger and related transactions are subject to stockholder approval.

The Merger cannot be completed unless it is approved by the affirmative vote of the stockholders entitled to cast a majority of all the votes entitled to be cast on the Merger by the holders of issued and outstanding shares of Company Common Stock. If stockholder approval is not obtained, the Merger and related transactions cannot be completed.

Failure to complete the Merger could negatively impact the value of our Class A common stock and the future value of our business and financial results.

If the Merger is not completed, our ongoing business could be adversely affected and we will be subject to a variety of risks associated with the failure to complete the Merger, including but not limited to:

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being required, under certain circumstances, to pay to Parent a termination fee of $60 million;

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incurrence of substantial costs relating to the proposed Merger, such as legal, accounting, financial advisory, filing, printing and mailing fee; and

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diversion of resources and the focus of our management from operational matters and other strategic opportunities while working to implement the Merger.

If the Merger is not completed, these risks could negatively impact the value of our Class A common stock, the future value of our business, and our financial results.

Moreover, if the Merger is not completed, we may consider other strategic alternatives, which are subject to other risks and uncertainties.

The pendency of the Merger could adversely affect our business and operations.

In connection with the pending Merger, some of our tenants or vendors may delay or defer decisions, which could negatively impact our revenues, earnings, cash flows and expenses regardless of whether the Merger is completed. Similarly, employees may experience uncertainty about their future roles with the combined company following the Merger, which may materially adversely affect our ability to attract and retain key personnel during the pendency of the Merger. We also may experience negative impacts on our relationships with our joint venture partners and lenders, some of which have certain rights, including consent rights, in connection with a change of control transactions, such as the Merger. In addition, due to operating covenants in the Merger Agreement, we may be unable, during the pendency of the Merger, to pursue certain strategic transactions, undertake certain significant capital projects, undertake certain significant financing transactions and otherwise pursue other actions that are not in the ordinary course of business, even if such actions could prove beneficial.

An adverse judgment in any litigation challenging the Merger may prevent the Merger from becoming effective or from becoming effective within the expected time-frame.

It is possible that stockholders may file lawsuits challenging the Merger or the other transactions contemplated by the Merger Agreement, which may name us or our Board as defendants. We cannot assure you as to the outcome of any such lawsuits, including the amount of costs associated with defending such claims or any other liabilities that may be incurred in connection with the litigation of such claims. If any plaintiffs are successful in obtaining an injunction prohibiting the parties from completing the Merger on the agreed-upon terms, such an injunction may delay the completion of the Merger in the expected time-frame, or may prevent the Merger from being completed altogether. Whether or not any plaintiff’s claim is successful, this type of litigation may result in significant costs, and divert management’s attention and resources, which could adversely affect the operation of our business.

The Merger Agreement contains provisions that could discourage a potential competing acquirer of the Company or could result in any competing acquisition proposal being at a lower price than it might otherwise be.

The Merger Agreement contains provisions that, subject to limited exceptions, restrict our ability to solicit, initiate, knowingly encourage or facilitate any third-party proposals to acquire all or a significant part of our company. With respect to any bona fide third-party acquisition proposal, we generally have an opportunity to offer to modify the terms of the Merger Agreement in response to such proposal before our Board, or committee thereof, and may withdraw or modify its recommendation to our stockholders in response to such acquisition proposal. Upon termination of the Merger Agreement in certain circumstances, we may be required to pay a substantial termination fee to Parent.

These provisions could discourage a potential competing acquirer that might have an interest in acquiring all or a significant part of our company from considering or proposing a competing acquisition, even if the potential competing acquirer was prepared to pay consideration with a higher per share cash value than that value proposed to be received or realized in the Merger, or might result in a potential competing acquirer proposing to pay a lower price than it might otherwise have proposed to pay because of the added expense of the termination fee and expense reimbursement that may become payable in certain circumstances under the Merger Agreement.

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Risks Related to COVID-19

The ongoing pandemic of the novel coronavirus (“COVID-19”), or the future outbreak of other highly infectious or contagious diseases, could materially and adversely impact or disrupt our financial condition, results of operations, cash flows and performance.

Since its discovery in December 2019, the COVID-19 pandemic has spread from China to many other countries, including the United States. The outbreak was declared to be a pandemic by the World Health Organization, and the Health and Human Services Secretary declared a public health emergency in the United States in response to the outbreak. Considerable uncertainty still surrounds the COVID-19 virus and its potential effects, and the extent of and effectiveness of any responses taken on a national and local level. However, measures taken to limit the impact of COVID-19, including social distancing and other restrictions on travel, congregation and business operations have resulted in significant negative economic impacts. While many of these measures have been lifted, additional cases of COVID-19 and new variants thereof have resulted in, and may continue to result in, governments reinstating these or similar measures. Further, while vaccines have been developed and are being administered, it is unclear when or if vaccines may allow a return to full pre-pandemic activity levels. While some operations have been allowed to fully or partially re-open, the long-term impact of COVID-19 on the United States and world economies remains uncertain and may continue to adversely impact the global economy, the duration and scope of which cannot currently be predicted.

Our operating results depend, in large part, on revenues derived from leasing space in our properties to residential tenants and the ability of tenants to generate sufficient income to pay their rents in a timely manner. The market and economic challenges created by the COVID-19 pandemic, and measures implemented to prevent its spread, may adversely affect our returns and profitability and, as a result, our ability to make distributions to our stockholders or to realize appreciation in the value of our properties. The spread of the COVID-19 virus or new variants thereof could result in further increases in unemployment, and tenants that experience deteriorating financial conditions as a result of the pandemic may be unwilling or unable to pay rent in full on a timely basis. In some cases, we may have to restructure tenants’ rent obligations, and may not be able to do so on terms as favorable to us as those currently in place. Numerous state, local, federal and industry-initiated efforts, including eviction moratoriums or similar actions to protect residential tenants from eviction, have been implemented and may be extended or reinstated, which may also affect our ability to collect rent or enforce remedies for the failure to pay rent. In the event of tenant nonpayment, default or bankruptcy, we may incur costs in protecting our investment and re-leasing our property, and may have limited ability to renew existing leases or sign new leases at projected rents. Our properties may also incur significant costs or losses related to shelter-in-place orders, quarantines, infection or other related factors. The federal government has implemented various forms of aid, both to individual Americans and to the market sectors negatively affected by COVID-19. However, certain of such programs were slow to begin operating and in certain locations funds have taken longer than expected to be distributed. Further, in certain locations, adequate funds may not exist to assist with all unpaid rent. There can be no certainty that such aid will be available to our tenants or to us in any amount, or in amounts sufficient to mitigate the material reduction in revenue we may experience. Until such time as the virus is contained or eradicated and commerce and employment return to more customary levels, we may experience material reductions in our operating revenue.

Additionally, as a result of an extended economic downturn, the real estate market may be unable to attract the same level of capital investment that it attracts at the time of our purchases or there may be a reduction in the number of companies seeking to acquire properties, which may result in the value of our properties not appreciating or decreasing significantly below the amount for which we acquired them.

In light of the severe economic, market and other disruptions worldwide caused by the ongoing COVID-19 pandemic, there can be no assurance that conditions in the bank lending, capital and other financial markets will not deteriorate as a result of the pandemic, or that our access to capital and other sources of funding will not become constrained, which could adversely affect the availability and terms of future borrowings, renewals or refinancings. A constriction on lending by financial institutions could reduce the number of properties we can acquire, our cash flow from operations and our ability to make distributions to our stockholders. If we are unable to refinance maturing indebtedness with respect to a particular property and are unable to pay the same, then the lender may foreclose on such property and result in materially adverse impact on our financial results. Financial and real estate market disruptions could also adversely affect the availability of financing from Freddie Mac and Fannie Mae, which could decrease the amount of available liquidity and credit for use in acquiring and further diversifying our portfolio of multifamily assets, and also detrimentally impact the real estate market in general.

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The global impact of the ongoing COVID-19 pandemic continues to evolve rapidly including mutating variants of COVID-19, and the extent of these effects on our operational and financial performance will depend on future events and/or developments, which are highly uncertain and cannot be predicted with confidence, including the duration, scope and severity of the pandemic, the emergence and characteristics of new variants, the timing and effectiveness of COVID-19 vaccines (including against COVID-19 variant strains), the creation and duration of, or the reinstatement of, government measures to contain or mitigate its impact, including vaccine mandates, the timing and effectiveness of government rent relief programs and the timing and effectiveness of vaccine administration, and the direct and indirect economic effects of the pandemic and related containment measures, among others. Thus, the COVID-19 pandemic presents material uncertainty and risk with respect to our performance, financial condition, results of operations, cash flows and performance. Moreover, many of the risk factors set forth in this Annual Report on Form 10-K are heightened and further exacerbated as a result of the impact of the COVID-19 pandemic. In addition, if in the future there is an outbreak of another highly infectious or contagious disease, the Company and our properties may be subject to similar risks as posed by COVID-19.

Risks Related to our Business and Properties

We face numerous risks associated with the real estate industry that could adversely affect our results of operations through decreased revenues or increased costs.

As a real estate company, we are subject to various changes in real estate conditions, and any negative trends in such real estate conditions may adversely affect our results of operations through decreased revenues or increased costs. These conditions include:

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changes in national, regional and local economic conditions, which may be negatively impacted by concerns about inflation, deflation, government deficits, high unemployment rates, decreased consumer confidence and liquidity concerns, particularly in markets in which we have a high concentration of properties;

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fluctuations and relative increases in interest rates, which could adversely affect our ability to obtain financing on favorable terms or at all;

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the inability of residents and tenants to pay rent;

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the existence and quality of the competition, such as the attractiveness of our properties as compared to our competitors’ properties based on considerations such as convenience of location, rental rates, amenities and safety record;

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increased operating costs, including increased real property taxes, maintenance, insurance and utilities costs;

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weather conditions that may increase or decrease energy costs and other weather-related expenses;

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oversupply of apartments, commercial space or single-family housing or a reduction in demand for real estate in the markets in which our properties are located;

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a favorable interest rate environment that may result in a significant number of potential residents of our apartment communities deciding to purchase homes instead of renting;

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changes in, or increased costs of compliance with, laws and/or governmental regulations, including those governing usage, zoning, the environment and taxes; and

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rent control or stabilization laws, or other laws regulating rental housing, which could prevent us from raising rents to offset increases in operating costs.

Moreover, other factors may adversely affect our results of operations, including potential liability under environmental and other laws and other unforeseen events, many of which are discussed elsewhere in the following risk factors. Any or all of these factors could materially adversely affect our results of operations through decreased revenues or increased costs.

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As of December 31, 2021, we held seventy-eight real estate investments, consisting of forty-nine consolidated operating investments and twenty-nine investments held through preferred equity, loan or ground lease investments, located primarily in markets in the Southern United States. Any adverse developments in local economic conditions or the demand for apartment units in these markets may negatively impact our results of operations.

Our current portfolio of properties consists primarily of apartment communities and single-family residential homes geographically concentrated in the Southern United States, and our portfolio going forward may consist primarily of the same. For the year ended December 31, 2021, properties in Florida, Georgia, Texas, Arizona and Colorado comprised 26%, 17%, 15%, 13% and 8%, respectively, of our total rental revenue. As such, we are currently susceptible to local economic conditions and the supply of and demand for apartment and single-family residential units in these markets. If there is a downturn in the economy or an oversupply of or decrease in demand for apartment and single-family residential units in these markets, our business could be materially adversely affected to a greater extent than if we owned a real estate portfolio that was more diversified in terms of both geography and industry focus.

We may not be successful in identifying and consummating suitable investment opportunities.

Our investment strategy requires us to identify suitable investment opportunities compatible with our investment criteria. We may not be successful in identifying suitable opportunities that meet our criteria or in consummating investments, including those identified as part of our investment pipeline, on satisfactory terms or at all. Our ability to make investments on favorable terms may be constrained by several factors including, but not limited to, competition from other investors with significant capital, including other publicly-traded REITs and institutional investment funds, which may significantly increase investment costs; and/or the inability to finance an investment on favorable terms or at all. The failure to identify or consummate investments on satisfactory terms, or at all, may impede our growth and negatively affect our cash available for distribution to our stockholders.

Adverse economic conditions may negatively affect our results of operations and, as a result, our ability to make distributions to our stockholders or to realize appreciation in the value of our properties.

Our operating results may be adversely affected by market and economic challenges, which may negatively affect our returns and profitability and, as a result, our ability to make distributions to our stockholders or to realize appreciation in the value of our properties. These market and economic challenges include, but are not limited to, the following:

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any future downturn in the U.S. economy and high unemployment could result in tenant defaults under leases, vacancies at our apartment communities and concessions or reduced rental rates under new leases due to reduced demand. In addition, such downturns could result in reduced demand for homes, which may reduce home prices and make home purchases more affordable as an alternative to apartment renting, which also may materially adversely reduce the demand at our apartment communities;

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the rate of household formation or population growth in our target markets or a continued or exacerbated economic slow-down experienced by the local economies where our properties are located or by the real estate industry generally may result in changes in supply of or demand for our apartment units; and

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the failure of the real estate market to attract the same level of capital investment in the future that it attracted at the time of our purchases or a reduction in the number of companies seeking to acquire properties may result in the value of our investments not appreciating or decreasing, possibly significantly, below the amount we pay for these investments.

The length and severity of any economic slow-down or downturn cannot be predicted. Our operations and, as a result, our ability to make distributions to our stockholders and/or our ability to realize appreciation in the value of our properties could be materially and adversely affected to the extent that an economic slow-down or downturn is prolonged or becomes severe.

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Our revenues are significantly influenced by demand for apartment properties generally, and a decrease in such demand will likely have a greater adverse effect on our revenues than if we owned a more diversified real estate portfolio.

Our current portfolio is focused predominately on apartment properties, and we expect that our portfolio going forward will focus predominately on the same. As a result, we are subject to risks inherent in investments in a single industry, and a decrease in the demand for apartment properties would likely have a greater adverse effect on our rental revenues than if we owned a more diversified real estate portfolio. Resident demand at apartment properties was adversely affected by the most recent U.S. recession, including the reduction in spending, reduced home prices and high unemployment, together with the price volatility, dislocations and liquidity disruptions in the debt and equity markets, as well as the rate of household formation or population growth in our markets, changes in interest rates or changes in supply of, or demand for, similar or competing apartment properties in an area. If economic recovery slows or stalls, these conditions could persist and we could experience downward pressure on occupancy and market rents at our apartment properties, which could cause a decrease in our rental revenue. Any such decrease could impair our ability to satisfy our substantial debt service obligations or make distributions to our stockholders.

The properties in our investment pipeline are subject to contingencies that could delay or prevent acquisition or investment in those properties.

At any given time, we are generally in discussions regarding a number of properties for acquisition or investment, which we refer to as our investment pipeline. However, we may not have completed our diligence process on these properties or development projects or have definitive investment or purchase and sale agreements, as applicable, and several other conditions may be required to be met in order for us to complete these acquisitions or developments, including approval by our investment committee or Board. If we are planning to use proceeds of an offering of our securities to fund these acquisitions or investments and are unable to complete the acquisition of the interests or investment in any of these properties or experience significant delays in executing any such acquisition or investment, we will have issued securities in an offering without realizing a corresponding current or future increase in earnings and cash flow from acquiring those interests or developing those properties, and may incur expenses in connection with our attempts in consummating such acquisition or investment, which could have a material adverse impact on our financial condition and results of operations. In addition, to the extent the uses of proceeds from an offering are designated for the acquisition of or investment in these properties, we will have no specific designated use for the net proceeds from the offering allocated to the purchase or development and investors will be unable to evaluate in advance the manner in which we will invest, or the economic merits of the properties we may ultimately acquire or develop with such proceeds.

Our expenses may remain constant or increase, even if our revenues decrease, causing our results of operations to be adversely affected.

Costs associated with our business, such as mortgage payments, real estate taxes, insurance premiums and maintenance costs, are relatively inflexible and generally do not decrease, and may increase, when a property is not fully occupied, rental rates decrease, tenants fail to pay rent or other circumstances cause a reduction in property revenues. As a result, if revenues drop, we may not be able to commensurately reduce our expenses, which would adversely affect our financial condition and results of operations.

We compete with numerous other parties or entities for real estate assets and tenants and may not compete successfully.

We compete with numerous other persons or entities engaged in real estate investment activities, many of which have greater resources than we do. Some of these investors may enjoy significant competitive advantages that result from, among other things, a lower cost of capital and enhanced operating efficiencies. Our competitors may be willing to offer space at rates below our rates, causing us to lose existing or potential tenants.

Competition from other apartment properties for tenants could reduce our profitability and the return on your investment.

The apartment property industry is highly competitive. Our competitors may be willing to offer space at rental rates below ours, which may cause us to lose existing or potential tenants. This competition could reduce occupancy levels and revenues at our apartment properties, which could adversely affect our financial condition and results of operations. We expect to face competition for tenants from many sources. We will face competition from other apartment communities both in the immediate vicinity and in the larger geographic market where our apartment communities will be located. If overbuilding of apartment properties occurs near our properties the increased number of available apartment units may decrease occupancy and/or apartment rental rates at our properties.

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Increased competition and increased affordability of single-family homes could limit our ability to retain residents, lease apartment units or increase or maintain rents.

Any apartment properties we may acquire will most likely compete with numerous housing alternatives in attracting residents, including single-family homes, as well as owner-occupied single and multifamily homes available to rent. Competitive housing in a particular area and the increasing affordability of owner occupied single and multifamily homes available to rent or buy (including as may be caused by declining mortgage interest rates and government programs to promote home ownership) could adversely affect our ability to retain our residents, lease apartment units and increase or maintain rental rates.

Increased construction of similar properties that compete with our properties in any particular location could adversely affect the operating results of our properties and our cash available for distribution to our stockholders.

We may acquire properties in locations which experience increases in construction of properties that compete with our properties. This increased competition and construction could:

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make it more difficult for us to find tenants to lease units in our apartment properties;

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force us to lower our rental prices or grant leasing concessions in order to lease units in our apartment properties; and/or

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substantially reduce our revenues and cash available for distribution to our stockholders.

Our investments will be dependent on tenants for revenue, and lease terminations could reduce our revenues from rents, resulting in the decline in the value of your investment.

The underlying value of our properties and the ability to make distributions to you depend upon the ability of the tenants of our properties to generate enough income to pay their rents in a timely manner, and the success of our investments depends upon the occupancy levels, rental income and operating expenses of our properties and our Company. Tenants’ inability to timely or fully pay their rents may be impacted by their employment prospects and/or other constraints on their personal finances, including debts, purchases and other factors. These and other changes beyond our control may adversely affect our tenants’ ability to make their required lease payments. In the event of a tenant default or bankruptcy, we may experience delays in enforcing our rights as landlord and may incur costs in protecting our investment and re-leasing our property. We may be unable to re-lease the property for the rent previously received. We may be unable to sell a property with low occupancy without incurring a loss. These events and others could cause us to reduce the amount of distributions we make to stockholders and may also cause the value of your investment to decline.

Our operating results and distributable cash flow depend on our ability to generate revenue from leasing our properties to tenants on terms favorable to us.

Our operating results depend, in large part, on revenues derived from leasing space in our properties. We are subject to the credit risk of our tenants, and to the extent our tenants default on their leases or fail to make their required rental payments we may suffer a decrease in our revenue. In addition, if a tenant does not fully pay its rent, we may not be able to enforce our rights as landlord without delays and we may incur substantial legal costs. We are also subject to the risk that we will not be able to lease space in our value-added or opportunistic properties or that, upon the expiration of leases for space located in our properties, leases may not be renewed, the space may not be re-leased or the terms of renewal or re-leasing (including the cost of required renovations or concessions to customers) may be less favorable to us than current lease terms. If vacancies continue for a long period of time, we may suffer reduced revenues resulting in decreased distributions to our stockholders. In addition, the resale value of such affected properties could be diminished because the market value of a particular property will depend principally upon the cash flow generated by its leases. Further, costs associated with real estate investment, such as real estate taxes and maintenance costs, generally are not reduced when circumstances cause a reduction in revenue. These events would cause a significant decrease in net revenues and could cause us to reduce the amount of distributions to our stockholders.

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Short-term apartment leases expose us to the effects of declining market rent, which could adversely impact our ability to make cash distributions to our stockholders.

We expect that substantially all of our apartment leases will be for a term of one year or less. Because these leases generally permit the residents to leave at the end of the lease term without penalty, our rental revenues may be impacted by declines in market rents more quickly than if our leases were for longer terms.

Costs incurred in complying with governmental laws and regulations may reduce our net income and the cash available for distributions.

Our company and the properties we own and expect to own are subject to various federal, state and local laws and regulations relating to environmental protection and human health and safety. Federal laws, including the National Environmental Policy Act, the Comprehensive Environmental Response, Compensation, and Liability Act, the Solid Waste Disposal Act as amended by the Resource Conservation and Recovery Act, the Federal Water Pollution Control Act, the Federal Clean Air Act, the Toxic Substances Control Act, the Emergency Planning and Community Right to Know Act and the Hazard Communication Act and their resolutions and corresponding state and local counterparts govern matters such as wastewater discharges, air emissions, the operation and removal of underground and above-ground storage tanks, the use, storage, treatment, transportation and disposal of solid and hazardous materials and the remediation of contamination associated with disposals, that require compliance, sometimes at considerable expense. Some of these laws and regulations impose joint and several liability on tenants, owners or operators for the costs to investigate or remediate contaminated properties, regardless of fault or whether the acts causing the contamination were illegal. The properties we own and acquire must comply with the Americans with Disabilities Act of 1990 which generally requires that certain types of buildings and services be made accessible and available to people with disabilities, and the Fair Housing Amendments Act of 1988, which requires that apartment properties first occupied after March 13, 1991 be accessible to handicapped residents and visitors, may require us to make costly modifications to our properties. Compliance with these laws and any new or more stringent laws or regulations may require us to incur material expenditures. Future laws, ordinances or regulations may impose material environmental liability. In addition, there are various federal, state and local fire, health, life-safety and similar regulations with which we may be required to comply, and which may subject us to liability in the form of fines or damages for noncompliance.

Our properties may be affected by our tenants’ activities or actions, the existing condition of land when we buy it, operations in the vicinity of our properties, such as the presence of underground storage tanks, or activities of unrelated third parties. The presence of hazardous substances, or the failure to properly remediate these substances, may make it difficult or impossible to sell or rent such property. Any material expenditures, fines, or damages we must pay will reduce our ability to make distributions and may reduce the value of your investment.

As the owner of real property, we could become subject to liability for asbestos-containing building materials in the buildings on our properties.

Some of our properties may contain asbestos-containing materials. Environmental laws typically require that owners or operators of buildings with asbestos-containing building materials properly manage and maintain these materials, adequately inform or train those who may come in contact with asbestos and undertake special precautions, including removal or other abatement, in the event that asbestos is disturbed during building renovation or demolition. These laws may impose fines and penalties on building owners or operators for failure to comply with these requirements. In addition, third parties may be entitled to seek recovery from owners or operators for personal injury associated with exposure to asbestos-containing building materials.

In addition, many insurance carriers are excluding asbestos-related claims from standard policies, pricing asbestos endorsements at prohibitively high rates or adding significant restrictions to this coverage. Because of our difficulty in obtaining specialized coverage at rates that correspond to the perceived level of risk, we may not obtain insurance for asbestos-related claims. We will continue to evaluate the availability and cost of additional insurance coverage from the insurance market. If we purchase insurance for asbestos, the cost could have a negative impact on our results of operations.

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Costs associated with addressing indoor air quality issues, moisture infiltration and resulting mold remediation may be costly.

As a general matter, concern about indoor exposure to mold or other air contaminants has been increasing as such exposure has been alleged to have a variety of adverse effects on health. As a result, there have been a number of lawsuits in our industry against owners and managers of apartment communities relating to indoor air quality, moisture infiltration and resulting mold. Some of our properties may contain microbial matter such as mold and mildew. The terms of our property and general liability policies generally exclude certain mold-related claims. Should an uninsured loss arise against us, we would be required to use our funds to resolve the issue, including litigation costs. We can offer no assurance that liabilities resulting from indoor air quality, moisture infiltration and the presence of or exposure to mold will not have a future impact on our business, results of operations or financial condition.

A change in the United States government policy with regard to Fannie Mae and Freddie Mac could impact our financial condition.

Fannie Mae and Freddie Mac are a major source of financing for the apartment real estate sector. We and other apartment companies in the apartment real estate sector depend frequently on Fannie Mae and Freddie Mac to finance growth by purchasing or guarantying apartment loans. Prior initiatives in the recent past, including proposed legislation, have sought to wind down Fannie Mae and Freddie Mac. Any decision by the government to eliminate or downscale Fannie Mae or Freddie Mac, to reduce their acquisitions or guarantees of apartment real estate mortgage loans, or to reduce government support for multi-family housing more generally, may adversely affect interest rates, capital availability, development of multi-family communities and our ability to refinance our existing mortgage obligations as they come due and to obtain additional long-term financing for the acquisition of additional apartment communities on favorable terms or at all.

If we are not able to cost-effectively maximize the life of our properties, we may incur greater than anticipated capital expenditure costs, which may adversely affect our ability to make distributions to our stockholders.

While many of the existing properties we acquire have undergone substantial renovations since they were constructed, older properties may carry certain risks including unanticipated repair costs associated with older properties, increased maintenance costs as older properties continue to age, and cost overruns due to the need for special materials and/or fixtures specific to older properties. Although we take a proactive approach to property preservation, utilizing a preventative maintenance plan, and selective improvements that mitigate the cost impact of maintaining exterior building features and aging building components, if we are not able to cost-effectively maximize the life of our properties, we may incur greater than anticipated capital expenditure costs which may adversely affect our financial condition, results of operations and/or ability to make distributions to our stockholders.

Any uninsured losses or high insurance premiums will reduce our net income and the amount of our cash distributions to stockholders.

We will attempt to ensure adequate insurance is obtained to cover significant areas of risk to us as a company and to our properties. However, there are types of losses at the property level, generally catastrophic in nature, such as losses due to wars, acts of terrorism, earthquakes, floods, hurricanes, pollution or environmental matters, which are uninsurable or not economically insurable, or may be insured subject to limitations, such as large deductibles or co-payments. We may not have adequate insurance coverage for such losses. If any of our properties incurs a casualty loss that is not fully insured, the value of our assets will be reduced by any such uninsured loss. In addition, other than any working capital reserve or other reserves we may establish for a particular property, we could have no source of funding to repair or reconstruct any uninsured damaged property. Also, to the extent we must pay unexpectedly large amounts for insurance, we could suffer reduced cash flow that would result in lower distributions to stockholders.

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We may be adversely affected by laws, regulations or other issues related to climate change.

We may become subject to laws or regulations related to climate change, which could cause our business, results of operations and financial condition to be impacted adversely. The federal government has enacted, and some of the states and localities in which we operate may enact, certain climate change laws and regulations or have begun regulating carbon footprints and greenhouse gas emissions. Although these laws and regulations have not had any known material adverse effects on our business to date, they could result in substantial costs, including compliance costs, increased energy costs, retrofit costs and construction costs, including monitoring and reporting costs, and capital expenditures for environmental control facilities and other new equipment. Furthermore, our reputation could be negatively affected if we violate climate change laws or regulations. We cannot predict how future laws and regulations, or future interpretations of current laws and regulations, related to climate change will affect our properties, business, results of operations and financial condition. Lastly, the potential physical impacts of climate change on our operations are highly uncertain and would be particular to the geographic circumstances in areas in which we operate. These may include changes in global weather patterns, which could include local changes in rainfall and storm patterns and intensities, water shortages, changing sea levels and changing temperature averages or extremes. These impacts may adversely affect our properties, our business, financial condition and results of operations.

Climate change may adversely impact our properties directly and may lead to additional compliance obligations and costs as well as additional taxes and fees.

We cannot reliably predict the extent, rate, or impact of climate change. As such, the potential physical impacts of climate change on our operations are highly uncertain and would be particular to the geographic circumstances in areas in which we operate. These may include changes in global weather patterns, which could include local changes in rainfall and storm patterns and intensities, water shortages, changing sea levels and changing temperature averages or extremes. Further, population migration may occur in response to these or other factors and negatively impact our properties. Climate and other environmental changes may result in volatile or decreased demand for space at certain of our properties or, in extreme cases, our inability to operate certain properties at all. Climate change may also have indirect effects on our business by increasing the cost of insurance or making insurance unavailable. Although we strive to identify, analyze, and respond to the risk and opportunities that climate change presents, at this time, there can be no assurance that climate change will not have an adverse effect on the value of our properties and our financial performance.

We may have difficulty selling real estate investments, and our ability to distribute all or a portion of the net proceeds from such sale to our stockholders may be limited.

Real estate investments are relatively illiquid. We will have a limited ability to vary our portfolio in response to changes in economic or other conditions. We will also have a limited ability to sell assets in order to fund working capital and similar capital needs. When we sell any of our properties, we may not realize a gain on such sale. We may not elect to distribute any proceeds from the sale of properties to our stockholders; for example, we may use such proceeds to:

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purchase additional properties;

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fund capital commitments to our joint ventures;

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repay debt, if any;

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buy out interests of any co-venturers or other partners in any joint venture in which we are a party;

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create working capital reserves; and/or

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make repairs, maintenance, tenant improvements or other capital improvements or expenditures to our remaining properties.

Our ability to sell our properties may also be limited by our need to avoid a 100% penalty tax that is imposed on gain recognized by a REIT from the sale of property characterized as dealer property. In order to ensure that we avoid such characterization, we may be required to hold our properties for the production of rental income for a minimum period of time, generally two years, and comply with certain other requirements in the Internal Revenue Code of 1986, as amended (the “Code”). As such, we could be restricted from selling a property at an opportune time to maximize proceeds.

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Representations and warranties made by us in connection with sales of our properties may subject us to liability that could result in losses and could harm our operating results and, therefore, distributions we make to our stockholders.

When we sell a property, we may be required to make representations and warranties regarding the property and other customary items. In the event of a breach of such representations or warranties, the purchaser of the property may have claims for damages against us, rights to indemnification from us or otherwise have remedies against us. In any such case, we may incur liabilities that could result in losses and could harm our operating results and, therefore distributions we make to our stockholders.

We may be unable to redevelop existing properties successfully and our investments in the development of new properties will be subjected to development risk, either of which could adversely affect our results of operations due to unexpected costs, delays and other contingencies.

As part of our operating strategy, we intend to selectively expand and/or redevelop existing properties as market conditions warrant, as well as invest in development of new properties, including through our Invest-to-Own strategy. In addition to the risks associated with real estate investments in general as described above, there are material additional risks associated with development activities including the following:

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we or our development partners may be unable to obtain, or face delays in obtaining, necessary zoning, land-use, building, occupancy and other required governmental permits and authorizations, which could result in costly delays, increased development costs and/or lower than expected lease rates;

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developers may incur development costs for a property that exceed original estimates due to, among other things, increased materials, labor or other costs, changes in development plans or unforeseen environmental conditions, which could make completion of the property more costly or entirely uneconomical;

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land, insurance and construction costs may be higher than expected in our markets; therefore, we may be unable to attract rents that compensate for these increases in costs;

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we may abandon redevelopment or Invest-to-Own development opportunities that we have already begun to explore, and we may fail to recover expenses already incurred in connection with exploring any such opportunities;

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rental rates and occupancy levels may be lower and operating and/or capital costs may be higher than anticipated;

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changes in applicable zoning and land use laws may require us to abandon projects prior to their completion, resulting in the loss of development costs incurred up to the time of abandonment; and

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possible delays in completion because of construction delays, delays in the receipt of zoning, occupancy and other approvals, or other factors outside of our control.

Any one or more of these risks may cause us or the projects in which we invest to incur unexpected delays or development costs, and/or cause us not to be able to achieve targeted rental rates, which could negatively affect our financial condition, results of operations and/or reduce distributions.

We may acquire some properties with existing lock-out provisions, which may prohibit or inhibit us from selling a property for an indeterminate period of time, or may require us to maintain specified debt levels for a period of years on some properties.

Loan provisions could materially restrict us from selling or otherwise disposing of or refinancing properties. These provisions would affect our ability to turn our investments into cash and thus reduce cash available for distributions to you. Loan provisions may prohibit us from reducing the outstanding indebtedness with respect to properties, refinancing such indebtedness on a non-recourse basis at maturity, or increasing the amount of indebtedness with respect to such properties.

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Loan provisions could impair our ability to take actions that would otherwise be in the best interests of our stockholders and, therefore, may have an adverse impact on the value of our stock, relative to the value that would result if the loan provisions did not exist. Without limitation, such loan provisions could preclude us from participating in major transactions that could result in a disposition of our assets or a change in control even though that disposition or change in control might be in the best interests of our stockholders.

Our investments could be adversely affected if a member of our Bluerock operating partner network performs poorly at one or more of our projects, which could adversely affect returns to our stockholders.

In general, we expect to rely on members of our operating partner network for the day-to-day management and development of our real estate investments. Members of our network are not fiduciaries to us, and generally will have limited capital invested in a project, if any. One or more members of our network may perform poorly in managing our project investments for a variety of reasons, including failure to properly adhere to budgets or properly implement the property business plan. A member of our network may also underperform for strategic reasons related to projects or assets that the partner is involved in with a Bluerock affiliate but not our Company. If a member of our network does not perform well, we may not be able to ameliorate the adverse effects of poor performance by terminating the partner and finding a replacement partner to manage our projects in a timely manner. In such an instance, the returns to our stockholders could be adversely affected.

Actions of our joint venture partners could subject us to liabilities in excess of those contemplated or prevent us from taking actions which are in the best interests of our stockholders, which could result in lower investment returns to our stockholders.

We have entered into, and in the future intend to enter into, joint ventures with affiliates and other third parties, including with members of our operating partner network, to acquire or improve properties. We may also purchase properties in partnerships, co-tenancies or other co-ownership arrangements. Such investments may involve risks not otherwise present when acquiring real estate directly, including, for example:

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joint venturers may share certain approval rights over major decisions and reduce our flexibility to maximize project values or limit property costs;

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that such co-venturer, co-owner or partner may at any time have economic or business interests or goals which are or which become inconsistent with our business interests or goals, including inconsistent goals relating to the timing of the sale of properties held in the joint ventures and/or the timing of termination or liquidation of joint venture;

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the possibility that our co-venturer, co-owner or partner in an investment might become insolvent or bankrupt and thus be unable to fulfill its financial obligations to us in that investment;

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the possibility that we may incur liabilities as a result of an action or omission by taken by our co-venturer, co-owner or partner;

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that such co-venturer, co-owner or partner may be in a position to take action contrary to our instructions or requests or contrary to our policies or objectives, including our policy with respect to maintaining our qualification as a REIT;

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disputes between us and our joint venturers may result in litigation or arbitration that would increase our expenses and prevent our officers and directors from focusing their time and effort on our business and result in subjecting the properties owned by the applicable joint venture to additional risk; or

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under certain joint venture arrangements, neither venture partner may have the power to control the venture, and an impasse could be reached which might have a negative influence on the joint venture.

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These events might subject us to costs or liabilities in excess of those contemplated and thus reduce your investment returns. If we have a right of first refusal or buy/sell right to buy out a co-venturer, co-owner or partner, we may be unable to finance such a buy-out if it becomes exercisable or we may be required to purchase such interest at a time when it might not otherwise be in our best interest to do so. If our ownership interest is subject to a buy/sell right, we may not have sufficient cash, available borrowing capacity or other capital resources to allow us to elect to purchase an interest of a co-venturer subject to the buy/sell right, in which case we may be forced to sell our interest as the result of the exercise of such right when we would otherwise prefer to keep our interest. Finally, we may not be able to sell our interest in a joint venture if or when we desire to exit the venture.

Your investment return may be reduced if we are required to register as an investment company under the Investment Company Act; if we are subject to registration under the Investment Company Act, we will not be able to continue our business.

Neither we, nor our Operating Partnership, nor any of our subsidiaries intend to register as an investment company under the Investment Company Act. We expect that our Operating Partnership’s and subsidiaries’ investments in real estate will represent the substantial majority of our total asset mix, which would not subject us to the Investment Company Act. In order to maintain an exemption from regulation under the Investment Company Act, we intend to engage, through our Operating Partnership and our wholly and majority owned subsidiaries, primarily in the business of buying real estate, and qualifying real estate investments must be made within a year after cash is received by us. If we are unable to invest a significant portion of cash proceeds in properties within one year of receipt, we may avoid being required to register as an investment company by temporarily investing any unused proceeds in government securities with low returns, which would reduce the cash available for distribution to stockholders and possibly lower your returns.

We expect that most of our assets will continue to be held through wholly owned or majority owned subsidiaries of our Operating Partnership. We expect that most of these subsidiaries will be outside the definition of investment company under Section 3(a)(1) of the Investment Company Act as they are generally expected to hold at least 60% of their assets in real property or in entities that they manage or co-manage that own real property. Section 3(a)(1)(A) of the Investment Company Act defines an investment company as any issuer that is or holds itself out as being engaged primarily in the business of investing, reinvesting or trading in securities. Section 3(a)(1)(C) of the Investment Company Act defines an investment company as any issuer that is engaged or proposes to engage in the business of investing, reinvesting, owning, holding or trading in securities and owns or proposes to acquire investment securities having a value exceeding 40% of the value of the issuer’s total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis, which we refer to as the 40% test. Excluded from the term “investment securities,” among other things, are U.S. government securities and securities issued by majority owned subsidiaries that are not themselves investment companies and are not relying on the exception from the definition of investment company set forth in Section 3(c)(1) or Section 3(c)(7) of the Investment Company Act. We believe that we, our Operating Partnership and most of the subsidiaries of our Operating Partnership will not fall within either definition of investment company as we invest primarily in real property, through our wholly or majority owned subsidiaries, the majority of which we expect to have at least 60% of their assets in real property or in entities that they manage or co-manage that own real property. As these subsidiaries would be investing either solely or primarily in real property, they would be outside of the definition of “investment company” under Section 3(a)(1) of the Investment Company Act. We are organized as a holding company that conducts its businesses primarily through the Operating Partnership, which in turn is a holding company conducting its business through its subsidiaries. Both we and our Operating Partnership intend to conduct our operations so that they comply with the 40% test. We will monitor our holdings to ensure continuing and ongoing compliance with this test. In addition, we believe that neither we nor the Operating Partnership will be considered an investment company under Section 3(a)(1)(A) of the Investment Company Act because neither we nor the Operating Partnership will engage primarily or hold itself out as being engaged primarily in the business of investing, reinvesting or trading in securities. Rather, through the Operating Partnership’s wholly-owned or majority owned subsidiaries, we and the Operating Partnership will be primarily engaged in the non-investment company businesses of these subsidiaries.

In the event that the value of investment securities held by the subsidiaries of our Operating Partnership were to exceed 40%, we expect our subsidiaries to be able to rely on the exclusion from the definition of “investment company” provided by Section 3(c)(5)(C) of the Investment Company Act. Section 3(c)(5)(C), as interpreted by the staff of the SEC, requires each of our subsidiaries relying on this exception to invest at least 55% of its portfolio in “mortgage and other liens on and interests in real estate,” which we refer to as “qualifying real estate assets” and maintain at least 70% to 90% of its assets in qualifying real estate assets or other real estate-related assets. The remaining 20% of the portfolio can consist of miscellaneous assets.

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What we buy and sell is therefore limited to these criteria. How we determine to classify our assets for purposes of the Investment Company Act will be based in large measure upon no-action letters issued by the SEC staff in the past and other SEC interpretive guidance. These no-action positions were issued in accordance with factual situations that may be substantially different from the factual situations we may face, and a number of these no-action positions were issued more than ten years ago. Pursuant to this guidance, and depending on the characteristics of the specific investments, certain joint venture investments may not constitute qualifying real estate assets and therefore investments in these types of assets may be limited. No assurance can be given that the SEC will concur with our classification of our assets. Future revisions to the Investment Company Act or further guidance from the SEC may cause us to lose our exclusion from registration or force us to re-evaluate our portfolio and our investment strategy. Such changes may prevent us from operating our business successfully.

In the event that we, or our Operating Partnership, were to acquire assets that could make either entity fall within the definition of investment company under Section 3(a)(1) of the Investment Company Act, we believe that we would still qualify for an exclusion from registration pursuant to Section 3(c)(6). Section 3(c)(6) excludes from the definition of investment company any company primarily engaged, directly or through majority owned subsidiaries, in one or more of certain specified businesses. These specified businesses include the real estate business described in Section 3(c)(5)(C) of the Investment Company Act. It also excludes from the definition of investment company any company primarily engaged, directly or through majority owned subsidiaries, in one or more of such specified businesses from which at least 25% of such company’s gross income during its last fiscal year is derived, together with any additional business or businesses other than investing, reinvesting, owning, holding, or trading in securities. Although the SEC staff has issued little interpretive guidance with respect to Section 3(c)(6), we believe that we and our Operating Partnership may rely on Section 3(c)(6) if 55% of the assets of our Operating Partnership consist of, and at least 55% of the income of our Operating Partnership is derived from, qualifying real estate assets owned by wholly owned or majority owned subsidiaries of our Operating Partnership.

To ensure that neither we, nor our Operating Partnership nor subsidiaries are required to register as an investment company, each entity may be unable to sell assets they would otherwise want to sell and may need to sell assets they would otherwise wish to retain. In addition, we, our Operating Partnership or our subsidiaries may be required to acquire additional income or loss-generating assets that we might not otherwise acquire or forego opportunities to acquire interests in companies that we would otherwise want to acquire. Although we, our Operating Partnership and our subsidiaries intend to monitor our respective portfolios periodically and prior to each acquisition or disposition, any of these entities may not be able to maintain an exclusion from registration as an investment company. If we, our Operating Partnership or our subsidiaries are required to register as an investment company but fail to do so, the unregistered entity would be prohibited from engaging in our business, and criminal and civil actions could be brought against such entity. In addition, the contracts of such entity would be unenforceable unless a court required enforcement, and a court could appoint a receiver to take control of the entity and liquidate its business.

We have experienced losses in the past, and we may experience similar losses in the future.

From inception of our Company through June 30, 2019, we had a cumulative net loss of $28.1 million. Our losses can be attributed, in part, to acquisition costs and depreciation and amortization expenses, which substantially reduced our income. We cannot assure you that, in the future, we will be profitable or that we will realize growth in the value of our assets.

Our internal control over financial reporting may not be effective, which could adversely affect our reputation, results of operations and stock price.

The accuracy of our financial reporting depends on the effectiveness of our internal control over financial reporting. Internal control over financial reporting can provide only reasonable assurance with respect to the preparation and fair presentation of financial statements and may not prevent or detect misstatements because of its inherent limitations. These limitations include the possibility of human error, inadequacy or circumvention of internal controls and fraud. If we do not attain and maintain effective internal control over financial reporting or implement controls sufficient to provide reasonable assurance with respect to the preparation and fair presentation of our financial statements, we could be unable to file accurate financial reports on a timely basis, and our reputation, results of operations and stock price could be materially adversely affected.

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We have very limited sources of capital other than cash from property operations and the proceeds of offerings of our securities to meet our primary liquidity requirements.

We have very limited sources of capital other than cash from property operations and the net proceeds of offerings of our securities to meet our primary liquidity requirements. As a result, we may not be able to pay our liabilities and obligations when they come due other than with the net proceeds of an offering and depending on business conditions at the time we might not be able to effectuate an offering, which in either case may limit our ability to implement our business plan. In the past, we have relied on borrowing from affiliates to help finance our business activities. We have no current intention to borrow from affiliates, but we may do so in the future. However, there are no assurances that we will be able to borrow from affiliates in the future, or extend the maturity date of any loans that may be outstanding and due to affiliates.

You will have limited control over changes in our policies and day-to-day operations, which limited control increases the uncertainty and risks you face as a stockholder. In addition, our Board may change our major operational policies without your approval.

Our Board determines our major policies, including our policies regarding financing, growth, debt capitalization, REIT qualification and distributions. Our Board may amend or revise these and other policies without a vote of the stockholders. Under the Maryland General Corporation Law and our charter, our stockholders have a right to vote only on limited matters. See “Important Provisions of Maryland Corporate Law and Our Charter and Bylaws” in any applicable prospectus or prospectus supplement.

We are responsible for the day-to-day operations of our Company and the selection and management of investments and have broad discretion over the use of proceeds from offerings of our securities. Accordingly, you should not purchase our securities unless you are willing to entrust all aspects of the day-to-day management and the selection and management of investments to us, who will manage our Company. In addition, we may retain independent contractors to provide various services for our Company, and you should note that such contractors will have no fiduciary duty to you or the other stockholders and may not perform as expected or desired.

In addition, while any applicable prospectus or prospectus supplement outlines our investment policies and generally describes our target portfolio, our Board may make adjustments to these policies based on, among other things, prevailing real estate market conditions and the availability of attractive investment opportunities. While we have no current intention of changing our investment policies, we will not forego an attractive investment because it does not fit within our targeted asset class or portfolio composition. We may use the proceeds of an offering to purchase or invest in any type of real estate which we determine is in the best interest of our stockholders. As such, our actual portfolio composition may vary substantially from the target portfolio described in the applicable prospectus or prospectus supplement.

Your rights as stockholders and our rights to recover claims against our officers, and directors are limited.

Under Maryland law, our charter, our bylaws and the terms of certain indemnification agreements with our directors and employment or services agreements with our executive officers, we may generally indemnify our officers, our directors, and their respective affiliates to the maximum extent permitted by Maryland law. Maryland law permits us to indemnify our present and former directors and officers, among others, against judgments, penalties, fines, settlements and reasonable expenses actually incurred by them in connection with any proceeding to which they may be made or threatened to be made a party by reason of their service in those or other capacities unless it is established that: (1) the act or omission of the director or officer was material to the matter giving rise to the proceeding and (i) was committed in bad faith or (ii) was the result of active and deliberate dishonesty; (2) the director or officer actually received an improper personal benefit in money, property or services; or (3) in the case of any criminal proceeding, the director or officer had reasonable cause to believe that the act or omission was unlawful. As a result, we and our stockholders may have more limited rights against our directors, officers, employees and agents, and their affiliates, than might otherwise exist under common law. In addition, we may be obligated to fund the defense costs incurred by our directors, officers, employees and agents in some cases.

A limit on the percentage of our capital stock and common stock a person may own may discourage a takeover or business combination, which could prevent our common stockholders from realizing a premium price for their common stock.

Our charter restricts direct or indirect ownership by one person or entity to no more than 9.8% in value of the outstanding shares of our capital stock or 9.8% in number of shares or value, whichever is more restrictive, of the outstanding shares of our common stock unless exempted (prospectively or retroactively) by our Board. This restriction may have the effect of delaying, deferring or preventing a change in control of us, including an extraordinary transaction (such as a merger, tender offer or sale of all or substantially all of our assets) that might provide a premium price to our stockholders.

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Our charter permits our Board to issue stock with terms that may subordinate the rights of our common stockholders or discourage a third party from acquiring us in a manner that could result in a premium price to our stockholders.

Our Board may amend our charter from time to time to increase or decrease the aggregate number of shares of stock or the number of shares of stock of any class or series that we have authority to issue and may classify or reclassify any unissued common stock or preferred stock into other classes or series of stock and establish the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications and terms or conditions of redemption of any such stock. Our Board has authorized a total of 250,000,000 shares of preferred stock for issuance, of which, as of December 31, 2021, there are issued and outstanding 359,197 shares of Series B Preferred Stock, 2,295,845 shares of Series C Preferred Stock, 2,774,338 shares of Series D Preferred Stock, and 28,272,134 shares of Series T Preferred Stock, all of which are senior to our common stock with respect to priority of dividend payments and rights upon liquidation, dissolution or winding up. Our Board could also authorize the issuance of up to approximately 203,621,000 additional shares of preferred stock with terms and conditions that could have priority as to distributions and amounts payable upon liquidation over the rights of the holders of our common stock. Such preferred stock could also have the effect of delaying, deferring or preventing a change in control of us, including an extraordinary transaction (such as a merger, tender offer or sale of all or substantially all of our assets) that might provide a premium price to holders of our common stock.

We depend on our key employees. There is no guarantee that our key employees will remain employed with us for any specified period of time, and will not engage in competitive activities if they cease to be employed with us.

We depend on our key employees. In particular, our success depends to a significant degree upon the contributions of Messrs. Kamfar, Babb, MacDonald, Ruddy, Vohs, and DiFranco, who each entered into employment agreements with us, and Mr. Konig, who entered into a services agreement with us through his wholly-owned law firm, Konig & Associates, LLC, on substantially the same terms as the employment agreements. Each such agreement became effective upon the closing of the Internalization (except Mr. DiFranco’s, which became effective on November 5, 2018) and each (including Mr. DiFranco’s) had an initial term through and including December 31, 2020. Effective as of December 31, 2021, each of the employment agreements automatically renewed for a renewal term through and including December 31, 2022. The departure or the loss of the services of Messrs. Kamfar, Babb, MacDonald, Ruddy, Vohs, DiFranco or Konig 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 we entered into with each of Messrs. Kamfar, Babb, MacDonald, Ruddy, Vohs, DiFranco 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 with us and engage in competitive activities, such activities could have a material adverse effect on our business, financial condition and results of operations.

Our management manages our portfolio pursuant to very broad investment guidelines approved by our Board, which does not approve each investment and financing decision made by our management unless required by our investment guidelines.

Our management is authorized to follow very broad investment guidelines established by our Board. Our Board will periodically review our investment guidelines and our portfolio of assets but will not, and will not be required to, review all of our proposed investments, except in limited circumstances as set forth in our investment guidelines. In addition, in conducting periodic reviews, our Board may rely primarily on information provided to them by our management. Furthermore, transactions entered into by our management may be costly, difficult or impossible to unwind by the time they are reviewed by our Board. Our management has great latitude within the broad parameters of our investment guidelines in determining the types and amounts of assets in which to invest on our behalf, including making investments that may result in returns that are substantially below expectations or result in losses, which would materially and adversely affect our business and results of operations, or may otherwise not be in the best interests of our stockholders.

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We are highly dependent on information systems and therefore systems failures, cybersecurity incidents or other technology disruptions could negatively impact our business.

Our operations are highly dependent upon our information systems that support our business processes, including marketing, leasing, resident and vendor communication, property management and work order processing, finance and intracompany communications throughout our operations. Certain critical components of our information systems are dependent upon third-party providers and a significant portion of our business operations are conducted over the internet. These systems and websites require access to telecommunications or the internet, each of which is subject to system security risks, cybersecurity breaches, outages, and other risks. As a result, we could be severely impacted by a catastrophic occurrence, such as a natural disaster or a terrorist attack, or a circumstance that disrupted access to telecommunications, the internet or operations at our third-party providers, including viruses or experienced computer programmers that could penetrate network security defenses and cause system failures and disruptions of operations. We have implemented processes, procedures and internal controls to help mitigate cybersecurity risks and cyber intrusions, maintain the security and integrity of our information technology networks and related systems, and manage the risk of a security breach or disruption, but these measures, as well as our increased awareness of the nature and extent of a risk of a cyber incident, do not guarantee that our financial results, operations, business relationships or confidential information will not be negatively impacted by such an incident. In addition, while we believe we utilize appropriate duplication and back-up procedures, a significant outage in telecommunications, the internet or at our third-party providers could nonetheless negatively impact our operations.

Our third-party service providers are primarily responsible for the security of their own information technology environments and in certain instances, we rely significantly on third-party service providers to supply and store our sensitive data in a secure manner. All such third-party vendors face risks relating to cybersecurity similar to ours which could disrupt their businesses and therefore adversely impact us. While we provide guidance and specific requirements in some cases, we do not directly control any of such parties’ information technology security operations, or the amount of investment they place in guarding against cybersecurity threats. Accordingly, we are subject to any flaws in or breaches to their information technology systems or those which they operate for us.

Although no material incidents have occurred to date, we cannot be certain that our security efforts and measures will be effective or that our financial results will not be negatively impacted by such an incident should one occur.

Security breaches and other disruptions could compromise our information and expose us to liability, which would cause our business and reputation to suffer.

Information security risks have generally increased in recent years due to the rise in new technologies and the increased sophistication and activities of perpetrators of cyber-attacks. In the ordinary course of our business we acquire and store sensitive data, including intellectual property, our proprietary business information and personally identifiable information of our prospective and current residents, our employees and third-party service providers in our offices and on our networks and website and on third-party vendor networks. We may share some of this information with vendors who assist us with certain aspects of our business. The secure processing and maintenance of this information is critical to our operations and business and growth strategies. Despite our security measures and those of our third-party vendors, our information technology and such infrastructure may be vulnerable to attacks by hackers or breached due to employee error, malfeasance or other disruptions. Any such breach could compromise our networks and the information stored there could be accessed, publicly disclosed, lost or stolen. Any such access, disclosure or other loss of information could result in legal claims or proceedings, liability under laws that protect the privacy of personal information, regulatory penalties, disruption to our operations and the services we provide to customers or damage our reputation, and thus could have a material adverse impact on our business, financial condition or results of operations. In addition, a security breach could require that we expend significant additional resources to enhance our information security systems and could result in a disruption to our operations.

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Risks Related to Related Party Transactions

We may pursue less vigorous enforcement of the terms of certain agreements in connection with related party transactions because of conflicts of interest with certain of our officers and directors, and the terms of those agreements may be less favorable to us than they might otherwise be in an arm’s-length transaction.

The agreements we enter into in connection with related party transactions are expected to contain limited representations and warranties and have limited express indemnification rights in the event of a breach of those agreements. Furthermore, Mr. Kamfar, our Chairman and Chief Executive Officer, currently serves as an officer of Bluerock, an affiliate of our former Manager, and will have a conflict with respect to any matters that require consideration by our Board that occur between us and Bluerock. Even if we have actionable rights, we may choose not to enforce, or to enforce less vigorously, our rights under these agreements or under other agreements we may have with these parties, because of our desire to maintain positive relationships with these individuals.

Risks Related to Conflicts of Interest

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.

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.

Conflicts of interest exist between our interests and the interests of Bluerock and its affiliates.

Examples of these potential conflicts of interest include:

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The possibility that certain of our officers and their respective affiliates will face conflicts of interest relating to the purchase and leasing of properties, and that such conflicts may not be resolved in our favor;

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The possibility that the competing demands for the time of certain of our officers may result in them spending insufficient time on our business, which may result in our missing investment opportunities or having less efficient operations, which could reduce our profitability and result in lower distributions to you;

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Some of our current investments, generally in development projects, have been made through joint venture arrangements with various investment funds affiliated with Bluerock (in addition to unaffiliated third parties), which arrangements were not the result of arm’s-length negotiations of the type normally conducted between unrelated co-venturers, and which could result in a disproportionate benefit to affiliates of Bluerock;

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Competition for the time and services of Bluerock personnel that work for us and our affiliates under the Administrative Services Agreement; and

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Determinations of rental expense sharing between Bluerock and us under the Leasehold Cost-Sharing Agreement.

Any of these and other conflicts of interest could have a material adverse effect on the returns on our investments, our ability to make distributions to stockholders and the trading price of our stock.

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The ownership by our executive officers, of a significant portion of the outstanding shares of our common stock on a fully diluted basis could allow our executive officers to exert significant influence over our Company in a manner that may not be in the best interests of our other stockholders.

As of March 7, 2022, our executive officers beneficially own approximately 9.1% of our outstanding Class A common stock and Class C common stock on a fully diluted basis. As a result of our executive officers’ significant ownership in our Company, our executive officers will have significant influence over our affairs and could exercise such influence in a manner that is not in the best interests of our other stockholders, including with respect to matters submitted to our stockholders for approval such as the election of directors and any merger, consolidation or sale of all or substantially all of our assets. Our executive officers may have interests that differ from our other stockholders, and may accordingly vote in ways that may not be consistent with the interests of those other stockholders.

Certain of our executive officers have interests that may conflict with the interests of stockholders.

Messrs. Kamfar, MacDonald, Ruddy, Vohs, DiFranco and Konig are also affiliated with or are executive and/or senior officers of Bluerock and their affiliates. These individuals may have personal and professional interests that conflict with the interests of our stockholders with respect to business decisions affecting us and our Operating Partnership. As a result, the effect of these conflicts of interest on these individuals may influence their decisions affecting the negotiation and consummation of the transactions whereby we acquire apartment properties in the future from Bluerock or its affiliates, or in the allocation of investment opportunities to us by Bluerock or its affiliates.

Messrs. Kamfar, MacDonald, Ruddy, Vohs, DiFranco and Konig will have competing demands on their time and attention.

Messrs. Kamfar, MacDonald, Ruddy, Vohs, DiFranco and Konig have competing demands on their respective time and attention, principally with respect to the provision of services to certain outside entities affiliated with Bluerock. Such competing demands are not expected to be different from those that existed prior to the Internalization, 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 certain of 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.

If we acquire direct or indirect interests in properties from a Bluerock Fund with which we have joint ventured in a development deal, the price may be higher than we would pay if the transaction were the result of arm’s-length negotiations.

We are a party to certain development joint ventures with the Bluerock Funds, among other third parties, and under the terms of such joint ventures, we may, from time to time, seek to acquire the minority interest held by such Bluerock Fund. The prices we pay for such interests will not be the subject of arm’s-length negotiations, which means that the acquisitions may be on terms less favorable to us than those negotiated in an arm’s-length transaction. We may pay more for such interests than we would have in an arm’s-length transaction, which would reduce our cash available for investment in other properties or distribution to our stockholders.

Legal counsel for us, Bluerock and some of our affiliates is the same law firm.

KVCF, PLC acts as legal counsel to us, Bluerock, Fund I and the Bluerock Funds, and some of our affiliates. KVCF, PLC is not acting as counsel for any specific group of stockholders or any potential investor. There is a possibility in the future that the interests of the various parties may become adverse and, under the Code of Professional Responsibility of the legal profession, KVCF, PLC may be precluded from representing any one or all of such parties. If any situation arises in which our interests appear to be in conflict with those of our affiliates, additional counsel may be retained by one or more of the parties to assure that their interests are adequately protected. Moreover, should such a conflict not be readily apparent, KVCF, PLC may inadvertently act in derogation of the interest of parties which could adversely affect us, and our ability to meet our investment objectives and, therefore, our stockholders.

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We have entered into joint venture investments with affiliates of Bluerock and may continue to do so in the future.

As of December 31, 2021, twenty of our investments in equity interests in real property have been made through joint venture arrangements with affiliates of Bluerock, as well as unaffiliated third parties. While we have no current expectation of investing in additional development projects with affiliates of Bluerock in the future, in the event such opportunities arise that we determine to be in the best interest of our stockholders, it is likely that we will work together with such Bluerock affiliates to apportion the investments among us and such other programs in accordance with the investment objectives of the various programs, with our Company initially taking a senior or preferred capital position to such affiliates in the development project and having the right to elect into common ownership with such programs under certain conditions. The negotiation of such investments will not be at arm’s-length and conflicts of interest will arise in the process. We cannot assure you that we will be as successful as we otherwise would be if we enter into joint venture arrangements with programs sponsored by Bluerock or with affiliates of Bluerock. It is possible that we could pay more for an asset in this type of transaction than we would pay in an arm’s-length transaction with an unaffiliated third party.

In addition, an affiliated co-venturer may have economic or business interests or goals that are or may become inconsistent with our business interests or goals. Since Bluerock and its affiliates have an interest in us and control any affiliated co-venturer, agreements and transactions between the co-venturers with respect to any such joint venture do not have the benefit of arm’s-length negotiation of the type normally conducted between unrelated co-venturers.

Risks Related To Debt Financing

We have used and may continue to use mortgage and other debt financing to acquire properties or interests in properties and otherwise incur other indebtedness, which increases our expenses and could subject us to the risk of losing properties in foreclosure if our cash flow is insufficient to make loan payments.

We are permitted to acquire real properties and other real estate-related investments, including entity acquisitions, by assuming either existing financing secured by the asset or by borrowing new funds. In addition, we may incur or increase our mortgage debt by obtaining loans secured by some or all of our assets to obtain funds to acquire additional investments or to pay distributions to our stockholders. We also may borrow funds if necessary to satisfy the requirement that we distribute at least 90% of our annual “REIT taxable income,” or otherwise as is necessary or advisable to assure that we maintain our qualification as a REIT for federal income tax purposes.

There is no limit on the amount we may invest in any single property or other asset or on the amount we can borrow to purchase any individual property or other investment. If we mortgage a property and have insufficient cash flow to service the debt, we risk an event of default which may result in our lenders foreclosing on the properties securing the mortgage.

If we cannot repay or refinance loans incurred to purchase our properties, or interests therein, then we may lose our interests in the properties secured by the loans we are unable to repay or refinance.

We may be adversely affected by changes in LIBOR reporting practices, the method in which LIBOR is determined, the elimination of LIBOR or the use of alternative reference rates.

As of December 31, 2021, we had approximately $217.4 million of mortgages payable and revolving credit facilities outstanding that are indexed to the London Interbank Offered Rate (“LIBOR”). In July 2017, the Financial Conduct Authority of the U.K. (the “FCA”), the United Kingdom regulator that regulates LIBOR, announced its intention to phase out LIBOR rates by the end of 2021. The FCA has statutory powers to require panel banks to contribute to LIBOR where necessary. The administrator for LIBOR announced on March 5, 2021 that it would permanently cease to publish most LIBOR settings beginning on January 1, 2022 and will cease to publish the overnight, one-month, three-month, six-month and 12-month U.S. dollar LIBOR settings on July 1, 2023. Accordingly, the FCA has stated that is does not intend to persuade or compel banks to submit to LIBOR after such respective dates. Until such time, however, FCA panel banks have agreed to continue to support LIBOR. In October 2021, the federal bank regulatory agencies issued a Joint Statement on Managing the LIBOR Transition. In that guidance, the agencies offered their regulatory expectations and outlined potential supervisory and enforcement consequences for banks that fail to adequately plan for and implement the transition away from LIBOR. The failure to properly transition away from LIBOR may result in increased supervisory scrutiny.

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The U.S. Federal Reserve, in conjunction with the Alternative Reference Rates Committee (“ARRC”), a steering committee comprised of large U.S. financial institutions, has proposed replacing U.S. dollar LIBOR with a new index calculated by short-term repurchase agreements — the Secured Overnight Financing Rate (“SOFR”). Although there have been certain issuances utilizing SOFR, it is unknown at this time whether these or other alternative reference rates will attain market acceptance as replacements for LIBOR, and there is currently no definitive information regarding the future utilization of LIBOR or of any particular replacement rate. Such developments and any other legal or regulatory changes in the method by which LIBOR is determined or the transition from LIBOR to a successor benchmark may result in, among other things, a sudden or prolonged increase or decrease in LIBOR, a delay in the publication of LIBOR, and changes in the rules or methodologies in LIBOR, which may discourage market participants from continuing to administer or to participate in LIBOR’s determination and could result in LIBOR no longer being determined and published. If a published U.S. dollar LIBOR rate is no longer available, the interest rates on our mortgages payable and revolving credit facilities that are indexed to LIBOR will be determined using various alternative methods, any of which may result in interest obligations which are more than or do not otherwise correlate over time with the payments that would have been made on such debt if U.S. dollar LIBOR was available in its current form. Further, the same costs and risks that may lead to the unavailability of U.S. dollar LIBOR may make one or more of the alternative methods impossible or impracticable to determine. Any of these proposals or consequences could have a material adverse effect on our financing costs, and as a result, our financial condition, operating results and cash flows.

High levels of debt or increases in interest rates could increase the amount of our loan payments, which could reduce the cash available for distribution to stockholders.

Our policies do not limit us from incurring debt. For purposes of calculating our leverage, we assume full consolidation of all of 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.

Higher debt levels cause us to incur higher interest charges, resulting in higher debt service payments, and may be accompanied by restrictive covenants. Interest we pay reduces cash available for distribution to stockholders. Additionally, with respect to our variable rate debt, increases in interest rates increase our interest costs, which reduces our cash flow and our ability to make distributions to you. In addition, if we need to repay existing debt during periods of rising interest rates, we could be required to liquidate one or more of our investments in properties at times which may not permit realization of the maximum return on such investments and could result in a loss. In addition, if we are unable to service our debt payments, our lenders may foreclose on our interests in the real property that secures the loans we have entered into.

High mortgage rates may make it difficult for us to finance or refinance properties, which could reduce the number of properties we can acquire, our cash flow from operations and the amount of cash distributions we can make.

To qualify as a REIT, we will be required to distribute at least 90% of our annual taxable income (excluding net capital gains) to our stockholders in each taxable year, and thus our ability to retain internally generated cash is limited. Accordingly, our ability to acquire properties or to make capital improvements to or remodel properties will depend on our ability to obtain debt or equity financing from third parties or the sellers of properties. If mortgage debt is unavailable at reasonable rates, we may not be able to finance the purchase of properties. If we place mortgage debt on properties, we run the risk of being unable to refinance the properties when the debt becomes due or of being unable to refinance on favorable terms. If interest rates are higher when we refinance the properties, our income could be reduced. We may be unable to refinance properties. If any of these events occurs, our cash flow would be reduced. This, in turn, would reduce cash available for distribution to you and may hinder our ability to raise capital by issuing more stock or borrowing more money.

Lenders may require us to enter into restrictive covenants relating to our operations, which could limit our ability to make distributions to you.

When providing financing, a lender may impose restrictions on us that affect our distribution and operating policies and our ability to incur additional debt. Loan documents we enter into may contain covenants that limit our ability to further mortgage the property, discontinue insurance coverage, or impose other limitations. These or other limitations may limit our flexibility and prevent us from achieving our operating plans.

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If mortgage debt is unavailable at reasonable rates, it may make it difficult for us to finance or refinance properties, which could reduce the number of properties we can acquire, our cash flows from operations and the amount of cash distributions we can make.

If we are unable to borrow monies on terms and conditions that we find acceptable, we likely will have to reduce the number of properties we can purchase, and the return on the properties we do purchase may be lower. If we place mortgage debt on properties, we run the risk of being unable to refinance the properties when the debt becomes due or of being unable to refinance on favorable terms. If interest rates are higher when we refinance the properties, our income could be reduced. As such, we may find it difficult, costly or impossible to refinance indebtedness which is maturing. If any of these events occur, our interest cost would increase as a result, which would reduce our cash flow. This, in turn, could reduce cash available for distribution to our stockholders and may hinder our ability to raise capital by issuing more stock or borrowing more money. If we are unable to refinance maturing indebtedness with respect to a particular property and are unable to pay the same, then the lender may foreclose on such property.

Financial and real estate market disruptions could adversely affect the multifamily property sector’s ability to obtain financing from Freddie Mac and Fannie Mae, which could adversely impact us.

Fannie Mae and Freddie Mac are major sources of financing for the multifamily sector and both have historically experienced losses due to credit-related expenses, securities impairments and fair value losses. If new U.S. government regulations (i) heighten Fannie Mae’s and Freddie Mac’s underwriting standards, (ii) adversely affect interest rates, or (iii) reduce the amount of capital they can make available to the multifamily sector, it could reduce or remove entirely a vital resource for multifamily financing. Any potential reduction in loans, guarantees and credit-enhancement arrangements from Fannie Mae and Freddie Mac could jeopardize the effectiveness of the multifamily sector’s available financing and decrease the amount of available liquidity and credit that could be used to acquire and diversify our portfolio of multifamily assets, and thus could materially adversely affect our financial condition, results of operations and ability to make distributions to our investors.

Volatility in and regulation of the commercial mortgage-backed securities market has limited and may continue to impact the pricing of secured debt.

As a result of the past crisis in the residential mortgage-backed securities markets, the most recent global recession and some occasional market concerns over its ability to refinance or repay existing commercial mortgage-backed securities as they come due, liquidity previously provided by the commercial mortgage-backed securities and collateralized debt obligations markets has significantly decreased. In addition, the Dodd-Frank Wall Street Reform and Consumer Protection Act imposes significant new regulations related to the mortgage backed securities industry and market participants, which has contributed to uncertainty in the market. The volatility in the commercial mortgage-backed securities market could result in the following adverse effects on our incurrence of secured debt, which could have a materially negative impact on our financial condition, results of operations, cash flow and cash available for distribution:

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higher loan spreads;

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tighter loan covenants;

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reduced loan to value ratios and resulting borrower proceeds; and

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higher amortization and reserve requirements.

Some of our mortgage loans may have “due on sale” provisions, which may impact the manner in which we acquire, sell and/or finance our properties.

We may obtain financing with “due-on-sale” and/or “due-on-encumbrance” clauses when financing our properties. Due-on-sale clauses in mortgages allow a mortgage lender to demand full repayment of the mortgage loan if the borrower sells the mortgaged property. Similarly, due-on-encumbrance clauses allow a mortgage lender to demand full repayment if the borrower uses the real estate securing the mortgage loan as security for another loan. In such event, we may be required to sell our properties on an all-cash basis, which may make it more difficult to sell the property or reduce the selling price.

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Lenders may be able to recover against our other properties under our mortgage loans.

In financing our property acquisitions, we will seek to obtain secured nonrecourse loans. However, only recourse financing may be available, in which event, in addition to the property securing the loan, the lender would have the ability to look to our other assets for satisfaction of the debt if the proceeds from the sale or other disposition of the property securing the loan are insufficient to fully repay it. Also, in order to facilitate the sale of a property, we may allow the buyer to purchase the property subject to an existing loan whereby we remain responsible for the debt.

If we are required to make payments under any “bad boy” carve-out guaranties that we may provide in connection with certain mortgages and related loans, our business and financial results could be materially adversely affected.

In obtaining certain nonrecourse loans, we may provide standard carve-out guaranties. These guaranties are only applicable if and when the borrower directly, or indirectly through agreement with an affiliate, joint venture partner or other third party, voluntarily files a bankruptcy or similar liquidation or reorganization action or takes other actions that are fraudulent or restricted (commonly referred to as “bad boy” guaranties). Although we believe that “bad boy” carve-out guaranties are not guaranties of payment in the event of foreclosure or other actions of the foreclosing lender that are beyond the borrower’s control, some lenders in the real estate industry have recently sought to make claims for payment under such guaranties. In the event such a claim were made against us under a “bad boy” carve-out guaranty following a foreclosure, and such claim were successful, our business and financial results could be materially adversely affected.

Interest-only indebtedness may increase our risk of default and ultimately may reduce our funds available for distribution to our stockholders.

We may finance our property acquisitions using interest-only mortgage indebtedness. During the interest-only period, the amount of each scheduled payment will be less than that of a traditional amortizing mortgage loan. The principal balance of the mortgage loan will not be reduced (except in the case of prepayments) because there are no scheduled monthly payments of principal during this period. After the interest-only period, we will be required either to make scheduled payments of amortized principal and interest or to make a lump-sum or “balloon” payment at maturity. These required principal or balloon payments will increase the amount of our scheduled payments and may increase our risk of default under the related mortgage loan. If the mortgage loan has an adjustable interest rate, the amount of our scheduled payments also may increase at a time of rising interest rates. Increased payments and substantial principal or balloon maturity payments will reduce the funds available for distribution to our stockholders because cash otherwise available for distribution will be required to pay principal and interest associated with these mortgage loans.

To hedge against interest rate fluctuations, we may use derivative financial instruments that may be costly and ineffective, may reduce the overall returns on your investment, and may expose us to the credit risk of counterparties.

To the extent consistent with maintaining our qualification as a REIT, we may use derivative financial instruments to hedge exposures to interest rate fluctuations on loans secured by our assets and investments in collateralized mortgage-backed securities. Derivative instruments may include interest rate swap contracts, interest rate cap or floor contracts, futures or forward contracts, options or repurchase agreements. Our actual hedging decisions will be determined in light of the facts and circumstances existing at the time of the hedge and may differ from time to time.

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To the extent that we use derivative financial instruments to hedge against interest rate fluctuations, we will be exposed to financing, basis risk and legal enforceability risks. In this context, credit risk is the failure of the counterparty to perform under the terms of the derivative contract. If the fair value of a derivative contract is positive, the counterparty owes us, which creates credit risk for us. Basis risk occurs when the index upon which the contract is based is more or less variable than the index upon which the hedged asset or liability is based, thereby making the hedge less effective. Finally, legal enforceability risks encompass general contractual risks, including the risk that the counterparty will breach the terms of, or fail to perform its obligations under, the derivative contract. If we are unable to manage these risks effectively, our results of operations, financial condition and ability to make distributions to you will be adversely affected.

Complying with REIT requirements may limit our ability to hedge risk effectively.

We must satisfy two gross income tests annually to maintain our qualification as a REIT. First, at least 75% of our gross income for each taxable year must consist of defined types of income that we derive, directly or indirectly, from investments relating to real property or mortgages on real property or qualified temporary investment income (the “75% Gross Income Test”). Second, in general, at least 95% of our gross income for each taxable year must consist of income that is qualifying income for purposes of the 75% Gross Income Test, other types of interest and dividends, gain from the sale or disposition of shares or securities, or any combination of these (the “95% Gross Income Test”).

These and other REIT provisions of the Code may limit our ability to hedge the risks inherent to our operations. From time to time, we may enter into hedging transactions with respect to one or more of our assets or liabilities. Our hedging transactions may include entering into interest rate swaps, caps and floors, options to purchase these items, and futures and forward contracts. Any income or gain derived by us from transactions that hedge certain risks, such as the risk of changes in interest rates, will not be treated as gross income for purposes of either the 75% Gross Income Test or the 95% Gross Income Test, unless specific requirements are met. Such requirements include that the hedging transaction be properly identified within prescribed time periods and that the transaction either (1) hedges risks associated with indebtedness issued by us that is incurred to acquire or carry real estate assets or (2) manages the risks of currency fluctuations with respect to income or gain that qualifies under the 75% Gross Income Test or 95% Gross Income Test (or assets that generate such income). To the extent that we do not properly identify such transactions as hedges, hedge with other types of financial instruments, or hedge other types of indebtedness, the income from those transactions is not likely to be treated as qualifying income for purposes of the 75% Gross Income Test and the 95% Gross Income Test. As a result of these rules, we may have to limit the use of hedging techniques that might otherwise be advantageous, which could result in greater risks associated with interest rate or other changes than we would otherwise incur.

You may not receive any profits resulting from the sale of one of our properties, or receive such profits in a timely manner, because we may provide financing for the purchaser of such property.

If we liquidate our Company, you may experience a delay before receiving your share of the proceeds of such liquidation. In a forced or voluntary liquidation, we may sell our properties either subject to or upon the assumption of any then outstanding mortgage debt or, alternatively, may provide financing to purchasers. We may take a purchase money obligation secured by a mortgage as partial payment. We do not have any limitations or restrictions on our taking such purchase money obligations. To the extent we receive promissory notes or other property instead of cash from sales, such proceeds, other than any interest payable on those proceeds, will not be included in net sale proceeds until and to the extent the promissory notes or other property are actually paid, sold, refinanced or otherwise disposed of. In certain cases, we may receive initial down payments in the year of sale in an amount less than the selling price and subsequent payments may be spread over a number of years. In such cases, you may experience a delay in the distribution of the proceeds of a sale until such time.

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Risks Related to Offerings of our Class A Common Stock

The market price and trading volume of our Class A common stock has been volatile at times following the initial public offering (the “IPO”), and these trends may continue following an offering, which may adversely impact the market for shares of our Class A common stock and make it difficult for purchasers to sell their shares.

Prior to the IPO, there was no active market for our common stock. Although our Class A common stock is listed on the NYSE American, the stock markets, including the NYSE American on which our Class A common stock is listed, have from time to time experienced significant price and volume fluctuations. Our Class A common stock has frequently traded below the IPO price since the completion of the IPO. As a result, the market price of shares of our Class A common stock may be similarly volatile, and holders of shares of our Class A common stock may from time to time experience a decrease in the value of their shares, including decreases unrelated to our operating performance or prospects. The offering price for shares of our Class A common stock is expected to be determined by negotiation between us and the underwriters. Purchasers may not be able to sell their shares of Class A common stock at or above the offering price.

The price of shares of our Class A common stock could be subject to wide fluctuations in response to a number of factors, including those listed in this “Risk Factors” section and others such as:

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the impacts of the COVID-19 pandemic, or the future outbreak of other highly infectious or contagious diseases, on our financial condition, results of operations, cash flows and performances;

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our operating performance and the performance of other similar companies;

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actual or anticipated differences in our quarterly operating results;

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changes in our revenues or earnings estimates or recommendations by securities analysts;

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publication of research reports about us, the apartment or single-family residential real estate sector, apartment tenants or the real estate industry;

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increases in market interest rates, which may lead investors to demand a higher distribution yield for shares of our Class A common stock, and would result in increased interest expenses on our debt;

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the current state of the credit and capital markets, and our ability and the ability of our tenants to obtain financing;

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additions and departures of key personnel;

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increased competition in the multifamily or single-family residential real estate business in our target markets;

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the passage of legislation or other regulatory developments that adversely affect us or our industry;

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speculation in the press or investment community;

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equity issuances by us (including the issuances of OP and LTIP Units), or common stock resales by our stockholders, or the perception that such issuances or resales may occur;

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actual, potential or perceived accounting problems;

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changes in accounting principles;

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failure to qualify as a REIT;

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terrorist acts, natural or man-made disasters or threatened or actual armed conflicts; and

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general market and local, regional and national economic conditions, particularly in our target markets, including factors unrelated to our performance.

No assurance can be given that the market price of shares of our Class A common stock will not fluctuate or decline significantly in the future or that holders of shares of our Class A common stock will be able to sell their shares when desired on favorable terms, or at all. From time to time in the past, securities class action litigation has been instituted against companies following periods of extreme volatility in their stock price. This type of litigation could result in substantial costs and divert our management’s attention and resources.

In addition, our charter contains restrictions on the ownership and transfer of our stock, and these restrictions may inhibit your ability to sell your stock. Our charter contains a restriction on ownership of our shares that generally prevents any one person from owning more than 9.8% in value of our outstanding shares of stock or more than 9.8% in value or in number of shares, whichever is more restrictive, of our outstanding shares of common stock, unless otherwise excepted (prospectively or retroactively) by our Board.

Sales of shares of our Class A common stock, or the perception that such sales will occur, may have adverse effects on our share price.

We cannot predict the effect, if any, of future sales of Class A common stock, or the availability of shares for future sales, on the market price of our Class A common stock. Sales of substantial amounts of Class A common stock, including shares of Class A common stock issued in an offering, issuable upon the exchange of OP Units, the sale of shares of Class A common stock held by our current stockholders, and the sale of any shares we may issue under our incentive plans, or the perception that these sales could occur, may adversely affect prevailing market prices for our Class A common stock. We may be required to conduct additional offerings to raise more funds. These offerings or the perception of a need for offerings may affect the market prices for our Class A common stock.

An increase in market interest rates may have an adverse effect on the market price of our Class A common stock.

One of the factors that investors may consider in deciding whether to buy or sell our Class A common stock is our distribution yield, which is our distribution rate as a percentage of our share price, relative to market interest rates. If market interest rates increase, prospective investors may desire a higher distribution yield on our Class A common stock or may seek securities paying higher dividends or interest. The market price of our Class A common stock likely will be based primarily on the earnings that we derive from rental income with respect to our investments and our related distributions to stockholders, and not from the underlying appraised value of the properties themselves. As a result, interest rate fluctuations and capital market conditions are likely to affect the market price of our Class A common stock, and such effects could be significant. For example, if interest rates rise without an increase in our distribution rate, the market price of our Class A common stock could decrease because potential investors may require a higher distribution yield on our Class A common stock as market rates on interest-bearing securities, such as bonds, rise.

We have paid and may continue to pay distributions from offering proceeds, borrowings or the sale of assets to the extent our cash flow from operations or earnings are not sufficient to fund declared distributions. Rates of distribution to you will not necessarily be indicative of our operating results. If we make distributions from sources other than our cash flows from operations or earnings, we will have fewer funds available for the acquisition of properties and your overall return may be reduced.

Our organizational documents permit us to make distributions from any source, including the net proceeds from an offering. There is no limit on the amount of offering proceeds we may use to pay distributions. We have funded and may continue to fund distributions from the net proceeds of our offerings, borrowings and the sale of assets to the extent distributions exceed our earnings or cash flows from operations. While our policy is generally to pay distributions from cash flow from operations, our distributions through December 31, 2021 have been paid from proceeds from our underwritten and continuous offerings and at the market (“ATM”) offerings, and sales of assets, and may in the future be paid from additional sources, such as from borrowings. To the extent we fund distributions from sources other than cash flow from operations, such distributions may constitute a return of capital and we will have fewer funds available for the acquisition of properties and your overall return may be reduced. Further, to the extent distributions exceed our earnings and profits, a stockholder’s basis in our stock will be reduced and, to the extent distributions exceed a stockholder’s basis, the stockholder will be required to recognize capital gain.

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We have issued Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock and Series T Preferred Stock, which, along with future issuances of debt securities and preferred equity, ranks senior to our Class A common stock in priority of dividend payment and upon liquidation, dissolution and winding up, and may adversely affect the trading price of our Class A common stock.

As of December 31, 2021, we have issued and outstanding 359,197 shares of Series B Preferred Stock, 2,295,845 shares of Series C Preferred Stock, 2,774,338 shares of Series D Preferred Stock and 28,272,134 shares of Series T Preferred Stock, all of which are senior to our common stock with respect to priority of dividend payments and rights upon liquidation, dissolution or winding up. The Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock and Series T Preferred Stock may limit our ability to make distributions to holders of our Class A common stock. In the future, we may issue debt or additional preferred equity securities or incur other borrowings. Upon our liquidation, holders of our debt securities, other loans and Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock and Series T Preferred Stock and additional preferred stock, if any, will receive a distribution of our available assets before common stockholders. Any additional preferred stock, if issued, likely will also have a preference on periodic distribution payments, which could eliminate or otherwise limit our ability to make distributions to holders of our Class A common stock and Class C common stock. Holders of shares of our Class A common stock bear the risk that our future issuances of debt or equity securities, including Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock and Series T Preferred Stock or our incurrence of other borrowings may negatively affect the trading price of our Class A common stock.

We operate as a holding company dependent upon the assets and operations of our subsidiaries, and because of our structure, we may not be able to generate the funds necessary to make dividend payments on our common stock.

We generally operate as a holding company that conducts its businesses primarily through our Operating Partnership, which in turn is a holding company conducting its business through its subsidiaries. These subsidiaries conduct all of our operations and are our only source of income. Accordingly, we are dependent on cash flows and payments of funds to us by our subsidiaries as dividends, distributions, loans, advances, leases or other payments from our subsidiaries to generate the funds necessary to make dividend payments on our common stock. Our subsidiaries’ ability to pay such dividends and/or make such loans, advances, leases or other payments may be restricted by, among other things, applicable laws and regulations, current and future debt agreements and management agreements into which our subsidiaries may enter, which may impair our ability to make cash payments on our common stock. In addition, such agreements may prohibit or limit the ability of our subsidiaries to transfer any of their property or assets to us, any of our other subsidiaries or to third parties. Our future indebtedness or our subsidiaries’ future indebtedness may also include restrictions with similar effects.

In addition, because we are a holding company, stockholders’ claims will be structurally subordinated to all existing and future liabilities and obligations (whether or not for borrowed money) of our Operating Partnership and its subsidiaries. Therefore, in the event of our bankruptcy, liquidation or reorganization, claims of our stockholders will be satisfied only after all of our and our Operating Partnership’s and its subsidiaries’ liabilities and obligations have been paid in full.

Your percentage of ownership may be diluted if we issue new shares of stock.

Stockholders have no rights to buy additional shares of our stock in the event we issue new shares of stock. We may issue common stock, convertible debt or preferred stock pursuant to a subsequent public offering or a private placement, to sellers of properties we directly or indirectly acquire instead of, or in addition to, cash consideration, or to Bluerock in payment of some or all of the operating expense reimbursements that were earned by Bluerock. Because our decision to issue securities in any future offering will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of our future offerings. Investors purchasing shares of our Class A common stock in an offering who do not participate in any future stock issuances will experience dilution in the percentage of the issued and outstanding shares of Class A common stock they own.

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Redemption of our Series B Preferred Stock, Series C Preferred Stock or Series T Preferred Stock for shares of our Class A common stock will dilute the ownership interest of existing holders of our Class A common stock, including stockholders whose shares of Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock or Series T Preferred Stock were previously redeemed for shares of our Class A common stock, and stockholders whose shares of Series B Preferred Stock or Series T Preferred Stock were previously converted into shares of our Class A common stock or whose Warrants were previously exercised for shares of our Class A common stock.

Commencing on the date of original issuance of the shares of Series B Preferred Stock, the holders of shares of Series B Preferred Stock may require us to redeem such shares at a redemption price equal to their stated value (initially $1,000 per share), less a declining redemption fee (if applicable), plus an amount equal to any accrued but unpaid dividends. Further, commencing on July 19, 2023, the holders of shares of our Series C Preferred Stock have the option to cause us to redeem their shares at a redemption price of $25.00 per share, plus an amount equal to all accrued but unpaid dividends. In addition, commencing on the date of original issuance of the shares of Series T Preferred Stock, the holders of shares of Series T Preferred Stock may require us to redeem such shares at a redemption price equal to their stated value (initially $25.00 per share), less a declining redemption fee (if applicable), plus an amount equal to any accrued but unpaid dividends. The redemption price for any such redemptions of shares of Series B Preferred Stock, Series C Preferred Stock or Series T Preferred Stock is payable, in our sole discretion, in cash or in equal value of shares of our Class A common stock, at our option. The redemption of our Series B Preferred Stock, our Series C Preferred Stock or our Series T Preferred Stock for shares of our Class A common stock may result in the dilution of some or all of the ownership interests of existing stockholders, including stockholders whose shares of Series A Preferred Stock, Series B Preferred Stock Series C Preferred Stock or Series T Preferred Stock were previously redeemed for shares of our Class A common stock, and stockholders whose shares of Series B Preferred Stock or Series T Preferred Stock were previously converted into shares of our Class A common stock or whose Warrants were previously exercised for shares of our Class A common stock. Any sales in the public market of our Class A common stock issuable upon any such redemption could adversely affect prevailing market prices of our Class A common stock. In addition, any redemption of our Series B Preferred Stock, Series C Preferred Stock or Series T Preferred Stock for shares of our Class A common stock could depress the price of our Class A common stock.

Our authorized but unissued shares of common and preferred stock may prevent a change in our control.

Our charter authorizes us to issue additional authorized but unissued shares of common or preferred stock. In addition, our Board may, without stockholder approval, amend our charter from time to time to increase or decrease the aggregate number of shares of our stock or the number of shares of stock of any class or series that we have authority to issue and classify or reclassify any unissued shares of common or preferred stock into other classes or series of stock and set the preferences, rights and other terms of the classified or reclassified shares. As a result, our Board may establish a series of common or preferred stock that could delay or prevent a transaction or a change in control that might involve a premium price for our common stock or otherwise be in the best interest of our stockholders.

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Risks Related to Offerings of our Series B Preferred Stock, our Series C Preferred Stock, our Series D Preferred Stock and/or our Series T Preferred Stock

Because we conduct substantially all of our operations through our Operating Partnership, our ability to pay dividends on any of our Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock and Series T Preferred Stock depends almost entirely on the distributions we receive from our Operating Partnership. We may not be able to pay dividends regularly on our Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock or Series T Preferred Stock.

We may not be able to pay dividends on a regular quarterly basis in the future on any of our Series C Preferred Stock or Series D Preferred Stock, or on a monthly basis in the future on our Series B Preferred Stock or Series T Preferred Stock. We have contributed, and intend to contribute in the future, the entire net proceeds from the offerings of all such series of preferred stock to our Operating Partnership in exchange for Series B Preferred Units, Series C Preferred Units, Series D Preferred Units and Series T Preferred Units (as applicable) that have substantially the same economic terms as the Series B Preferred Stock, the Series C Preferred Stock, the Series D Preferred Stock and Series T Preferred Stock (respectively). Because we conduct substantially all of our operations through our Operating Partnership, our ability to pay dividends on the Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock and Series T Preferred Stock will depend almost entirely on payments and distributions we receive on our interests in our Operating Partnership. If our Operating Partnership fails to operate profitably and to generate sufficient cash from operations (and the operations of its subsidiaries), we may not be able to pay dividends on the Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock or Series T Preferred Stock. Furthermore, any new shares of preferred stock on parity with any such series of preferred stock will substantially increase the cash required to continue to pay cash dividends at stated levels. Any common stock or preferred stock that may be issued in the future to finance acquisitions, upon exercise of stock options or otherwise, would have a similar effect.

Your interests in our Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock and/or Series T Preferred Stock could be subordinated and/or diluted by the incurrence of additional debt, the issuance of additional shares of preferred stock, including additional shares of any or all of the foregoing series of preferred stock, and by other transactions.

As of December 31, 2021, our total long-term mortgage indebtedness was approximately $1,366.0 million and our credit facilities were undrawn, and we may incur significant additional debt in the future. Each of the Series B Preferred Stock, the Series C Preferred Stock, the Series D Preferred Stock and the Series T 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. In addition, 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 December 31, 2021, we have issued and outstanding 359,197 shares of Series B Preferred Stock, 2,295,845 shares of Series C Preferred Stock, 2,774,338 shares of Series D Preferred Stock and 28,272,134 shares of Series T Preferred Stock. The issuance of additional preferred stock on parity with or senior to any or all of the foregoing series of preferred stock would dilute the interests of the holders of shares of preferred stock of the applicable series, and any issuance of preferred stock senior to the Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock or Series T Preferred Stock or any issuance of additional indebtedness, could affect our ability to pay dividends on, redeem or pay the liquidation preference on any or all of the foregoing series of preferred stock. We may issue preferred stock on parity with any or all of the Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock and/or Series T Preferred Stock without the consent of the holders of shares of preferred stock of the applicable series. Other than the Asset Coverage Ratio (as defined below) with respect to the Series C Preferred Stock and the right of holders to cause us to redeem the Series B Preferred Stock, Series C Preferred Stock or Series T Preferred Stock or to convert the Series D Preferred Stock, upon a Change of Control/Delisting (as defined below), none of the provisions relating to any of the foregoing series of preferred stock relate to or limit our indebtedness or afford the holders of shares thereof 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 such shares.

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In the event a holder of our Series B Preferred Stock exercises their redemption option, a holder of our Series C Preferred Stock exercises a Redemption at Option of Holder on or after July 19, 2023, or a holder of Series T Preferred Stock exercises their redemption option we may redeem such shares of Series B Preferred Stock, Series C Preferred Stock or Series T Preferred Stock, as applicable, either for cash, or for shares of our Class A common stock, or any combination thereof, in our sole discretion.

If we choose to so redeem for Class A common stock, the holder will receive shares of our Class A common stock and therefore be subject to the risks of ownership thereof. See “--- Risks Related to an Offering of our Class A Common Stock.” Ownership of shares of our Series B Preferred Stock, shares of our Series C Preferred Stock or shares of Series T Preferred Stock will not give you the rights of holders of our common stock. Until and unless you receive shares of our Class A common stock upon redemption, you will have only those rights applicable to holders of our Series B Preferred Stock, Series C Preferred Stock or Series T Preferred Stock (as applicable).

The Series B Preferred Stock, the Series C Preferred Stock, the Series D Preferred Stock and the Series T Preferred Stock have not been rated.

We have not sought to obtain a rating for the Series B Preferred Stock, the Series C Preferred Stock, the Series D Preferred Stock or the Series T Preferred Stock. No assurance can be given, however, that one or more rating agencies might not independently determine to issue such ratings or that such a rating, if issued, would not adversely affect the market price of the applicable series of preferred stock. In addition, we may elect in the future to obtain a rating of the Series B Preferred Stock, the Series C Preferred Stock, the Series D Preferred Stock and/or Series T Preferred Stock, which could adversely impact the market price of the applicable series. Ratings only reflect the views of the rating agency or agencies issuing the ratings and such ratings could be revised downward, placed on negative outlook or withdrawn entirely at the discretion of the issuing rating agency if in its judgment circumstances so warrant. While ratings do not reflect market prices or the suitability of a security for a particular investor, such downward revision or withdrawal of a rating could have an adverse effect on the market price of the Series B Preferred Stock, the Series C Preferred Stock, the Series D Preferred Stock or the Series T Preferred Stock. It is also possible that the Series B Preferred Stock, the Series C Preferred Stock, the Series D Preferred Stock and/or Series T Preferred Stock will never be rated.

Dividend payments on the Series B Preferred Stock, on the Series C Preferred Stock, on the Series D Preferred Stock and on the Series T Preferred Stock are not guaranteed.

Although dividends on each of the Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock and Series T Preferred Stock are cumulative, our Board must approve the actual payment of such distributions. Our Board can elect at any time or from time to time, and for an indefinite duration, not to pay any or all accrued distributions. Our Board could do so for any reason, and may be prohibited from doing so in the following instances:

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poor historical or projected cash flows;

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the need to make payments on our indebtedness;

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concluding that payment of distributions on any or all such series of preferred stock would cause us to breach the terms of any indebtedness or other instrument or agreement; or

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determining that the payment of distributions would violate applicable law regarding unlawful distributions to stockholders.

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We intend to use the net proceeds from any offerings of the Series B Preferred Stock, the Series C Preferred Stock, the Series D Preferred Stock and/or the Series T Preferred Stock to fund future investments and for other general corporate and working capital purposes, but any such offerings will not be conditioned upon the closing of pending property investments and we will have broad discretion to determine alternative uses of proceeds.

We intend to use a portion of the net proceeds from any offerings of our Series B Preferred Stock, our Series C Preferred Stock, our Series D Preferred Stock and/or our Series T Preferred Stock to fund future investments and for other general corporate and working capital purposes. However, the offerings will not be conditioned upon the closing of definitive agreements to acquire or invest in any properties. We will have broad discretion in the application of the net proceeds from any such offerings, and holders of our Series B Preferred Stock, our Series C Preferred Stock, our Series D Preferred Stock and our Series T Preferred Stock will not have the opportunity as part of their investment decision to assess whether the net proceeds are being used appropriately. Because of the number and variability of factors that will determine our use of the net proceeds from any such offerings, their ultimate use may vary substantially from their currently intended use, and result in investments that are not accretive to our results from operations.

If we are required to make payments under any “bad boy” carve-out guaranties, recourse guaranties, and completion guaranties that we may provide in connection with certain mortgages and related loans in connection with an event that constitutes a Change of Control or Change of Control/Delisting, our business and financial results could be materially adversely affected.

In causing our subsidiaries to obtain certain nonrecourse loans, we may provide standard carve-out guaranties. These guaranties are generally only applicable if and when the borrower directly, or indirectly through agreement with an affiliate, joint venture partner or other third party, voluntarily files a bankruptcy or similar liquidation or reorganization action or takes other actions that are fraudulent or improper (commonly referred to as “bad boy” guaranties). We also may enter into recourse guaranties with respect to future mortgages, or provide credit support to development projects through completion guaranties, which also could increase risk of repayment. In some circumstances, pursuant to guarantees to which we are a party or that we may enter into in the future, our obligations pursuant to such “bad boy” carve-out guaranties and other guaranties may be triggered by a Change of Control or Change of Control/Delisting, because, among other things, such an event may result indirectly in a change of control of the applicable borrower. Because a Change of Control while any Series B Preferred Stock or Series T Preferred Stock is outstanding, or a Change of Control/Delisting while any Series C Preferred Stock is outstanding, also triggers a right of redemption for cash by the holders thereof, the effect of a Change of Control or Change of Control/Delisting could negatively impact our liquidity and overall financial condition, and could negatively impact the ability of holders of shares of our Series B Preferred Stock, Series C Preferred Stock or Series T Preferred Stock to receive dividends or other amounts on their shares of such Series B Preferred Stock, Series C Preferred Stock or Series T Preferred Stock.

There is a risk of delay in our redemption of the Series B Preferred Stock, Series C Preferred Stock or Series T Preferred Stock and we may fail to redeem such securities as required by their terms.

Substantially all of the investments we presently hold and the investments we expect to acquire in the future are, and will be, illiquid. The illiquidity of our investments may make it difficult for us to obtain cash quickly if a need arises. If we are unable to obtain sufficient liquidity prior to a redemption date, we may be forced to, among other things, engage in a partial redemption or to delay a required redemption. If this were to occur, the market price of shares of the Series B Preferred Stock, Series C Preferred Stock or Series T Preferred Stock might be adversely affected, and stockholders entitled to a redemption payment may not receive payment.

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The Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock and the Series T Preferred Stock will bear a risk of early redemption by us.

We may voluntarily redeem some or all of the Series B Preferred Stock, for cash or equal value of shares of our Class A common stock, two years after the issuance date. In addition, we may voluntarily redeem some or all of the Series C Preferred Stock, solely for cash, on or after July 19, 2021. Finally, we may voluntarily redeem some or all of the Series D Preferred Stock solely for cash, on or after October 13, 2021. We may also voluntarily redeem some or all of the Series T Preferred Stock, for cash or equal value of shares of our Class A common stock, two years after the issuance date. Any such redemptions may occur at a time that is unfavorable to holders of such preferred stock. As of December 31, 2021, the Company has initiated and consummated the redemption of a total of 173,865 shares of Series B Preferred Stock through the issuance of 16,540,204 shares of Class A common stock. We may have an incentive to voluntarily redeem additional shares of Series B Preferred Stock, and/or to voluntarily redeem shares of Series C Preferred Stock, Series D Preferred Stock or Series T Preferred Stock, if market conditions allow us to issue other preferred stock or debt securities at an interest or distribution rate that is lower than the distribution rate on the applicable series of preferred stock. Given the potential for early redemption of the Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock and Series T Preferred Stock, holders of such shares may face an increased reinvestment risk, which is the risk that the return on an investment purchased with proceeds from the sale or redemption of the Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock or Series T Preferred Stock may be lower than the return previously obtained from the investment in such shares.

Except in limited circumstances related to our ability to qualify as a REIT, our compliance with our Asset Coverage Ratio, or a special optional redemption in connection with a Change of Control/Delisting, the Series C Preferred Stock may be redeemed by us at our option, either in whole or in part, only on or after July 19, 2021. Except in limited circumstances related to our ability to qualify as a REIT or a special optional redemption in connection with a Change of Control/Delisting, the Series B Preferred Stock or Series T Preferred Stock may be redeemed by us at our option, either in whole or in part, only on or after two years from the issuance date, and the Series D Preferred Stock may be redeemed by us at our option, either in whole or in part, only on or after October 13, 2021. Any decision we make at any time to propose a redemption of any such series of preferred stock will depend upon, among other things, our evaluation of our capital position and general market conditions at the time. It is likely that we would choose to exercise our optional redemption right only when prevailing interest rates have declined, which would adversely affect the ability of holders of shares of the applicable series of preferred stock to reinvest proceeds from the redemption in a comparable investment with an equal or greater yield to the yield on such series of preferred stock had their shares not been redeemed. In addition, there is no penalty or premium payable on redemption, and the market price of the shares of such series of preferred stock may not exceed the liquidation preference at the time the shares become redeemable for any reason.

Compliance with the Asset Coverage Ratio may result in our early redemption of your Series C Preferred Stock.

The terms of our Series C Preferred Stock require us to maintain asset coverage of at least 200% calculated by determining the percentage value of (1) our total assets plus accumulated depreciation minus our total liabilities and indebtedness as reported in our financial statements prepared in accordance with GAAP (exclusive of the book value of any Redeemable and Term Preferred Stock (as defined below)), over (2) the aggregate liquidation preference, plus an amount equal to all accrued and unpaid dividends, of our outstanding Series C Preferred Stock and any outstanding shares of term preferred stock or preferred stock providing for a fixed mandatory redemption date or maturity date (collectively referred to as “Redeemable and Term Preferred Stock”) on the last business day of any calendar quarter (the “Asset Coverage Ratio”).

If we are not in compliance with the Asset Coverage Ratio, we may redeem shares of Redeemable and Term Preferred Stock, which may include Series C Preferred Stock, including shares that will result in compliance with the Asset Coverage Ratio up to and including 285%. This could result in our ability to redeem a significant amount of the Series C Preferred Stock prior to July 19, 2021.

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We may not have sufficient funds to redeem the Series B Preferred Stock, Series C Preferred Stock and/or Series T Preferred Stock upon a Change of Control/Delisting.

A “Change of Control/Delisting” is when, after the original issuance of the Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock or Series T Preferred Stock any of the following has occurred and is continuing:

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a “person” or “group” within the meaning of Section 13(d) of the Securities Exchange Act of 1934, as amended (the Exchange Act”), other than our Company, its subsidiaries, and its and their employee benefit plans, has become the direct or indirect “beneficial owner,” as defined in Rule 13d-3 under the Exchange Act, of our common equity representing more than 50% of the total voting power of all outstanding shares of our common equity that are entitled to vote generally in the election of directors, with the exception of the formation of a holding company;

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consummation of any share exchange, consolidation or merger of our Company or any other transaction or series of transactions pursuant to which our common stock will be converted into cash, securities or other property, other than any such transaction where the shares of our common stock outstanding immediately prior to such transaction constitute, or are converted into or exchanged for, a majority of the common stock of the surviving person or any direct or indirect parent company of the surviving person immediately after giving effect to such transaction;

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any sale, lease or other transfer in one transaction or a series of transactions of all or substantially all of the consolidated assets of our Company and its subsidiaries, taken as a whole, to any person other than one of the Company’s subsidiaries;

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our stockholders approve any plan or proposal for the liquidation or dissolution of our Company;

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our Class A common stock ceases to be listed or quoted on a national securities exchange in the United States; or

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at least a majority of our Board ceases to be constituted of directors who were either a member of our Board on October 21, 2015 (February 24, 2016 for Series B Preferred Stock, and November 13, 2019 for Series T Preferred Stock), or who became a member of our Board subsequent to that date and whose appointment, election or nomination for election by our stockholders was duly approved by a majority of the continuing directors on our Board at the time of such approval, either by a specific vote or by approval of the proxy statement issued by our Company on behalf of our Board in which such individual is named as nominee for director (each, a “Continuing Director”).

Upon the occurrence of a Change of Control/Delisting, unless we have exercised our right to redeem the Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock or Series T Preferred Stock, each holder of Series B Preferred Stock, Series C Preferred Stock or Series T Preferred Stock will have the right to require us to redeem all or any part of such stockholder’s Series B Preferred Stock, Series C Preferred Stock or Series T Preferred Stock at a price equal to the liquidation preference per share, plus an amount equal to any accumulated and unpaid dividends up to and including the date of payment (and each holder of Series D Preferred Stock will have the right to require us to convert all or some of their Series D Preferred Stock into shares of our Class A common stock (or equivalent value of alternative consideration)). If we experience a Change of Control/Delisting, there can be no assurance that we would have sufficient financial resources available to satisfy our obligations to redeem the Series B Preferred Stock, Series C Preferred Stock or Series T Preferred Stock, and any guarantees or indebtedness that may be required to be repaid or repurchased as a result of such event. Our failure to redeem the Series B Preferred Stock, Series C Preferred Stock or Series T Preferred Stock could have material adverse consequences for us and the holders of the applicable series of preferred stock. In addition, the special optional redemption in connection with a Change of Control/Delisting feature of the Series C Preferred Stock or Series D Preferred Stock may have the effect of inhibiting a third party from making an acquisition proposal for the Company, or of delaying, deferring or preventing a change of control of the Company under circumstances that otherwise could provide the holders of our Class A common stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock or Series T Preferred Stock with the opportunity for liquidity or the opportunity to realize a premium over the then-current market price or that stockholders may otherwise believe is in their best interests.

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Holders of our Series D Preferred Stock may not be permitted to exercise conversion rights upon a Change of Control/Delisting. If exercisable, the Change of Control/Delisting conversion feature of our Series D Preferred Stock may not adequately compensate such holders and may make it more difficult for a third party to take over our Company or discourage a third party from taking over our Company.

Upon the occurrence of a Change of Control/Delisting, holders of our Series D Preferred Stock will have the right to convert some or all of their Series D Preferred Stock into shares of our Class A common stock (or equivalent value of alternative consideration). Notwithstanding that we generally may not redeem the Series D Preferred Stock prior to October 13, 2021, we have a special optional redemption right in the event of a Change of Control/Delisting, and if we provide notice of our election to redeem the Series D Preferred Stock (whether pursuant to our optional redemption right or our special optional redemption right), the holders of the Series D Preferred Stock will not be permitted to exercise the Change of Control/Delisting Conversion Right with respect to the shares of Series D Preferred Stock subject to such notice. Upon such a conversion, such holders will be limited to a maximum number of shares of our Class A common stock per share of Series D Preferred Stock equal to the lesser of (i) the conversion value (equal to the liquidation preference and unpaid and accrued dividends) divided by the closing price on the date of the event triggering the Change of Control/Delisting and (ii) the share cap of 4.15973, subject to adjustments.

The Change of Control/Delisting conversion feature of our Series D Preferred Stock may have the effect of discouraging a third party from making an acquisition proposal for our Company or of delaying, deferring or preventing certain change of control transactions of our Company under circumstances that stockholders may otherwise believe is in their best interests.

The market price of shares of our Class A common stock received in a conversion of our Series D Preferred Stock may decrease between the date received and the date the shares of Class A common stock are sold.

The market price of shares of our Class A common stock received in a conversion may decrease between the date received and the date the shares of Class A common stock are sold. The stock markets, including the NYSE American, have experienced significant price and volume fluctuations. As a result, the market price of our Class A common stock is likely to be similarly volatile, and recipients of our Class A common stock may experience a decrease in the value of their shares, including decreases unrelated to our operating performance or prospects. The price of our Class A common stock could be subject to wide fluctuations in response to a number of factors, including sales of Class A common stock by other stockholders who received shares of our Class A common stock upon conversion of their Series D Preferred Stock, our financial performance, government regulatory action or inaction, tax laws, interest rates and general market conditions and other factors.

Market interest rates may have an effect on the value of the Series C Preferred Stock or the Series D Preferred Stock.

One of the factors that will influence the price of the Series C Preferred Stock or the Series D Preferred Stock will be the dividend yield on the Series C Preferred Stock or the Series D Preferred Stock (as a percentage of the price of the Preferred Stock, as applicable) relative to market interest rates. An increase in market interest rates, which are currently at low levels relative to historical rates, may lead prospective purchasers of the Series C Preferred Stock or the Series D Preferred Stock to expect a higher dividend yield and higher interest rates would likely increase our borrowing costs and potentially decrease funds available for distribution. Thus, higher market interest rates could cause the market price of the Series C Preferred Stock or the Series D Preferred Stock to decrease.

Holders of the Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock and Series T Preferred Stock will be subject to inflation risk.

Inflation is the reduction in the purchasing power of money resulting from the increase in the price of goods and services. Inflation risk is the risk that the inflation-adjusted, or “real,” value of an investment in preferred stock or the income from that investment will be worth less in the future. As inflation occurs, the real value of the Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock and Series T Preferred Stock and dividends payable on such shares decline.

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Holders of Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock and Series T Preferred Stock have extremely limited voting rights.

The voting rights of holders of shares of Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock and Series T Preferred Stock will be extremely limited. Our common stock is the only class or series of our stock carrying full voting rights. Voting rights for holders of shares of Series C Preferred Stock and Series D Preferred Stock exist primarily with respect to the ability to elect two additional directors in the event that dividends for each of six quarterly dividend periods payable on the applicable series of such preferred stock are in arrears, and with respect to voting on amendments to our charter that materially and adversely affect the rights of the applicable series of such preferred stock or, with holders of Series B Preferred Stock and Series T Preferred Stock, the creation of additional classes or series of preferred stock that are senior to the applicable series of such preferred stock with respect to a liquidation, dissolution or winding up of our affairs. Holders of Series C Preferred Stock, Series D Preferred Stock and Series T Preferred Stock have certain additional limited voting rights with respect to amendments to our charter that alter only the contract rights set forth therein of either (a) such series of preferred stock alone, or (b) of any preferred stock (i) ranking on parity with such series of preferred stock with respect to dividend rights and rights upon our liquidation, dissolution or winding up, and (ii) upon which like voting rights have been conferred (which preferred stock currently includes the Series C Preferred Stock, Series D Preferred Stock, and Series T Preferred Stock, but does not include the Series B Preferred Stock). Other than in these limited circumstances, holders of Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, and Series T Preferred Stock will generally not have voting rights.

The amount of the liquidation preference is fixed and holders of Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock and Series T Preferred Stock will have no right to receive any greater payment.

The payment due upon liquidation is fixed at the liquidation preference of $25.00 per share of Series C Preferred Stock, Series D Preferred Stock and Series T Preferred Stock, and $1,000.00 per share of Series B Preferred Stock, plus an amount equal to all accrued and unpaid dividends thereon, to, but not including, the date of liquidation, whether or not authorized or declared. If, in the case of our liquidation, there are remaining assets to be distributed after payment of this amount, you will have no right to receive or to participate in these amounts. Further, if the market price of a holder’s shares of Series C Preferred Stock or Series D Preferred Stock is greater than the liquidation preference, the holder will have no right to receive the market price from us upon our liquidation.

Our charter and the articles supplementary establishing each of the Series B Preferred Stock, the Series C Preferred Stock, the Series D Preferred Stock and the Series T Preferred Stock each contain restrictions upon ownership and transfer of such preferred stock which may impair the ability of holders to acquire such preferred stock and the shares of our common stock into which shares thereof may be converted, at the Company’s option, pursuant to the redemption at the option of the holder under certain circumstances. In addition, the Warrant Agreement governing the Warrants issued in connection with the Series B Preferred Stock contains similar restrictions upon ownership and transfer of Warrants, which may impair the ability of holders to acquire Warrants and the shares of our common stock for which such Warrants may be exercisable.

Our charter and the articles supplementary establishing the Series B Preferred Stock, the Series C Preferred Stock, the Series D Preferred Stock, and the Series T Preferred Stock, and the Warrant Agreement with respect to the Warrants issued in connection with the Series B Preferred Stock, each contain restrictions on ownership and transfer of each such series of preferred stock and the Warrants, which restrictions are intended to assist us in maintaining our qualification as a REIT for federal income tax purposes. For example, to assist us in qualifying as a REIT, the articles supplementary establishing each of the Series B Preferred Stock, the Series C Preferred Stock, the Series D Preferred Stock and the Series T Preferred Stock (respectively) prohibit anyone from owning, or being deemed to own by virtue of the applicable constructive ownership provisions of the Code, more than 9.8% in value or number of shares, whichever is more restrictive, of the outstanding Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock or Series T Preferred Stock (as applicable). Additionally, the Warrant Agreement prohibits any person from beneficially or constructively owning more than 9.8% of our Warrants, and provides that Warrants may not be exercised to the extent such exercise would result in the holder’s beneficial or constructive ownership of more than 9.8%, in number or value, whichever is more restrictive, of our outstanding shares of common stock, or more than 9.8% in value of our outstanding capital stock. You should consider these ownership limitations prior to a purchase of shares of any such series of preferred stock. The restrictions could also have anti-takeover effects and could reduce the possibility that a third party will attempt to acquire control of us, which could adversely affect the market price of the Series C Preferred Stock and the Series D Preferred Stock.

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Our ability to pay dividends or redeem shares is limited by the requirements of Maryland law.

Our ability to pay dividends on or redeem shares of the Series B Preferred Stock, the Series C Preferred Stock, the Series D Preferred Stock and the Series T Preferred Stock is limited by the laws of Maryland. Under applicable Maryland law, a Maryland corporation generally may not make a distribution (including a dividend or redemption) if, after giving effect to the distribution, the corporation would not be able to pay its debts as the debts become due in the usual course of business, or the corporation’s total assets would be less than the sum of its total liabilities plus, unless the corporation’s charter provides otherwise, the amount that would be needed, if the corporation were dissolved at the time of the distribution, to satisfy the preferential rights upon dissolution of stockholders whose preferential rights are superior to those receiving the distribution. Accordingly, we generally may not make a distribution on the Series B Preferred Stock, the Series C Preferred Stock, the Series D Preferred Stock or the Series T Preferred Stock if, after giving effect to the distribution, we would not be able to pay our debts as they become due in the usual course of business or our total assets would be less than the sum of our total liabilities plus, unless the terms of such class or series provide otherwise, the amount that would be needed to satisfy the preferential rights upon dissolution of the holders of shares of any class or series of preferred stock then outstanding, if any, with preferences senior to those of the Series B Preferred Stock, the Series C Preferred Stock, the Series D Preferred Stock and the Series T Preferred Stock. Any dividends or redemption payments may be delayed or prohibited.

If our common stock is no longer listed on the NYSE American or another national securities exchange, the ability to transfer or sell shares of the Series C Preferred Stock and the Series D Preferred Stock may be limited and the market value of the Series C Preferred Stock and the Series D Preferred Stock will be materially adversely affected.

If our Class A common stock is no longer listed on the NYSE American or another national securities exchange, it is likely that the Series C Preferred Stock and the Series D Preferred Stock will be delisted as well. Accordingly, if our Class A common stock is delisted, the ability of holders to transfer or sell their shares of the Series C Preferred Stock and the Series D Preferred Stock may be limited and the market value of the Series C Preferred Stock and the Series D Preferred Stock may be materially adversely affected.

To the extent that our distributions represent a return of capital for tax purposes, stockholders may recognize an increased gain or a reduced loss upon subsequent sales (including cash redemptions) of their shares of Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock or Series T Preferred Stock.

The dividends payable by us on the Series B Preferred Stock, the Series C Preferred Stock, the Series D Preferred Stock and the Series T Preferred Stock may exceed our current and accumulated earnings and profits as determined for U.S. federal income tax purposes. If that were to occur, it would result in the amount of distributions that exceed our earnings and profits being treated first as a return of capital to the extent of the stockholder’s adjusted tax basis in the stockholder’s Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock and Series T Preferred Stock and then, to the extent of any excess over the stockholder’s adjusted tax basis in the stockholder’s Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock and Series T Preferred Stock, as capital gain. Any distribution that is treated as a return of capital will reduce the stockholder’s adjusted tax basis in the stockholder’s Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock and Series T Preferred Stock, and subsequent sales (including cash redemptions) of such stockholder’s Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock and Series T Preferred Stock will result in recognition of an increased taxable gain or reduced taxable loss due to the reduction in such adjusted tax basis.

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There is no public market for our Series B Preferred Stock, Warrants, or Series T Preferred Stock, and we do not expect one to develop.

There is no public market for the Series B Preferred Stock or Warrants offered in the Series B Preferred Stock offering, or for the Series T Preferred Stock offered in the Series T Preferred Stock offering, and we currently have no plan to list the Series B Preferred Stock, the Warrants, or the Series T Preferred Stock on a securities exchange or to include such shares for quotation on any national securities market. Additionally, our charter contains restrictions on the ownership and transfer of our securities, including our Series B Preferred Stock and Series T Preferred Stock, and these restrictions may inhibit the ability to sell shares of our Series B Preferred Stock or our Warrants, and/or shares of our Series T Preferred Stock, promptly or at all. Furthermore, the Warrants will expire four years from the date of issuance. If holders are able to sell the Series B Preferred Stock, Warrants, or Series T Preferred Stock, they may only be able to be sold at a substantial discount from the price originally paid. Therefore, Units comprised of shares of Series B Preferred Stock and Warrants, and/or shares of Series T Preferred Stock, should in each case be purchased only as a long-term investment. After one year from the date of issuance, the Warrants will be exercisable at the option of the holder for shares of our Class A common stock, which currently are publicly traded on the NYSE American. Beginning immediately upon original issuance of any share of Series B Preferred Stock or Series T Preferred Stock, the holder thereof may require us to redeem, and beginning two years from the date of original issuance, we may redeem, any such share, in each case with the redemption price payable, in our sole discretion, in cash or in equal value of shares of our Class A common stock, based on the closing price per share of our Class A common stock for the single trading day prior to the date of redemption. If we opt to pay the redemption price in shares of our Class A common stock, holders of shares of Series B Preferred Stock or Series T Preferred Stock may receive publicly traded shares, as we currently expect to continue listing our Class A common stock on the NYSE American.

There may not be a broad market for our Class A common stock, which may cause our Class A common stock to trade at a discount and make it difficult for holders of Warrants to sell the Class A common stock for which the Warrants are exercisable and for which shares of our Series B Preferred Stock or Series T Preferred Stock may be redeemable at our option.

Our Class A common stock for which the Warrants are exercisable trades on the NYSE American under the symbol “BRG.” Listing on the NYSE American or another national securities exchange does not ensure an actual or active market for our Class A common stock. Historically, our Class A common stock has had a low trading volume. Accordingly, an actual or active market for our Class A common stock may not be maintained, the market for our Class A common stock may not be liquid, the holders of our Class A common stock may be unable to sell their shares of our Class A common stock, and the prices that may be obtained following the sale of our Class A common stock upon the exercise of Warrants or the redemption of shares of Series B Preferred Stock or Series T Preferred Stock may not reflect the underlying value of our assets and business.

Shares of Series B Preferred Stock or Series T Preferred Stock may be redeemed for shares of our Class A common stock, which rank junior to the Series B Preferred Stock and Series T Preferred Stock with respect to dividends and upon liquidation.

The holders of shares of Series B Preferred Stock or Series T Preferred Stock may require us to redeem such shares, with the redemption price payable, in our sole discretion, in cash or in equal value of shares of our Class A common stock, based on the closing price per share of our Class A common stock for the single trading day prior to the date of redemption. We may opt to pay the redemption price in shares of our Class A common stock. The rights of the holders of shares of Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock and Series T Preferred Stock rank senior to the rights of the holders of shares of our common stock as to dividends and payments upon liquidation. Unless full cumulative dividends on our shares of Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock and Series T Preferred Stock for all past dividend periods have been declared and paid (or set apart for payment), we will not declare or pay dividends with respect to any shares of our Class A common stock for any period. Upon liquidation, dissolution or winding up of our Company, the holders of shares of our Series B Preferred Stock are entitled to receive a liquidation preference of stated value, $1,000 per share, plus an amount equal to all accrued but unpaid dividends, and holders of shares of each of our Series C Preferred Stock, our Series D Preferred Stock and our Series T Preferred Stock are entitled to receive a liquidation preference of $25.00 per share, plus an amount equal to all accrued and unpaid dividends, in each case prior and in preference to any distribution to the holders of shares of our Class A common stock or any other class of our equity securities.

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We will be able to call shares of Series B Preferred Stock or Series T Preferred Stock for redemption under certain circumstances without the consent of the holder.

We will have the ability to call the outstanding shares of Series B Preferred Stock or Series T Preferred Stock after two years from the date of original issuance of such shares of Series B Preferred Stock or Series T Preferred Stock. At that time, we will have the right to redeem, at our option, the outstanding shares of Series B Preferred Stock or Series T Preferred Stock, in whole or in part, at 100% of the Stated Value per share, plus an amount equal to any accrued and unpaid dividends. As of December 31, 2021, the Company has initiated and consummated the redemption of a total of 173,865 shares of Series B Preferred Stock through the issuance of 16,540,204 shares of Class A common stock.

Our requirement to redeem the Series B Preferred Stock and/or the Series T Preferred Stock in the event of a Change of Control may, in either case, deter a change of control transaction otherwise in the best interests of our stockholders.

Upon the occurrence of a Change of Control (as defined below) with respect to either the Series B Preferred Stock or the Series T Preferred Stock, we will be required to redeem all outstanding shares of the Series B Preferred Stock or the Series T Preferred Stock (as applicable), in whole, within 60 days after the first date on which such Change of Control occurred, in cash at a redemption price of (i) $1,000 per share of Series B Preferred Stock, and (ii) $25.00 per share of Series T Preferred Stock; in each case, plus an amount equal to all accrued and unpaid dividends, if any, to and including the redemption date. The mandatory redemption feature of each of the Series B Preferred Stock and the Series T Preferred Stock in connection with a Change of Control may each have the effect of inhibiting a third party from making an acquisition proposal for the Company, or of delaying, deferring or preventing a change of control of the Company, under circumstances that otherwise could provide the holders of our Class A common stock, Series B Preferred Stock, and/or Series T Preferred Stock with the opportunity for liquidity or the opportunity to realize a premium over the then-current market price or that stockholders may otherwise believe is in their best interests.

A “Change of Control” is when, (i) after the initial issuance of the Series B Preferred Stock (for purposes of the Series B Preferred Stock), or (ii) after the initial issuance of the Series T Preferred Stock (for purposes of the Series T Preferred Stock), any of the following has occurred and is continuing:

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a “person” or “group” within the meaning of Section 13(d) of the Exchange Act, other than our Company, its subsidiaries, and its and their employee benefit plans, has become the direct or indirect “beneficial owner,” as defined in Rule 13d-3 under the Exchange Act, of our common equity representing more than 50% of the total voting power of all outstanding shares of our common equity that are entitled to vote generally in the election of directors, with the exception of the formation of a holding company;

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consummation of any share exchange, consolidation or merger of our Company or any other transaction or series of transactions pursuant to which our Class A common stock will be converted into cash, securities or other property, (1) other than any such transaction where the shares of our Class A common stock outstanding immediately prior to such transaction constitute, or are converted into or exchanged for, a majority of the common stock of the surviving person or any direct or indirect parent company of the surviving person immediately after giving effect to such transaction, and (2) expressly excluding any such transaction preceded by our Company’s acquisition of the capital stock of another company for cash, securities or other property, whether directly or indirectly through one of our subsidiaries, as a precursor to such transactions; or

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at least a majority of our Board ceases to be constituted of directors who were either (A) a member of our Board on (i) February 24, 2016, for purposes of the Series B Preferred Stock, or (ii) November 13, 2019, for purposes of the Series T Preferred Stock, or (B) who became a member of our Board subsequent to such applicable date and whose appointment, election or nomination for election by our stockholders was duly approved by a majority of the continuing directors on our Board at the time of such approval, either by a specific vote or by approval of the proxy statement issued by our Company on behalf of our Board in which such individual is named as nominee for director.

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Subject to the Cetera Side Letter and the articles supplementary establishing the Series T Preferred Stock (respectively), upon the sale of any individual property, holders of Series B Preferred Stock and Series T Preferred Stock do not have a priority over holders of our common stock regarding return of capital.

Subject to the Cetera Side Letter and the articles supplementary establishing the Series T Preferred Stock (respectively), holders of our Series B Preferred Stock and our Series T Preferred Stock (respectively) do not have a right to receive a return of capital prior to holders of our common stock upon the individual sale of a property. To provide protection to the holders of the Series B Preferred Stock, our Cetera Side Letter restricts us from selling an asset if the sale would cause us to fail to meet a dividend coverage ratio of at least 1.1:1 based on the ratio of our adjusted funds from operations to dividends required to be paid to holders of our Series B, Series C and Series D Preferred Stock for the two most recent quarters, subject to our ability to maintain status as a REIT for federal income tax purposes. Similarly, to provide protection to the holders of the Series T Preferred Stock, the articles supplementary establishing the Series T Preferred Stock restrict us from selling an asset if the sale would cause us to fail to meet a dividend coverage ratio of at least 1.1:1 based on the ratio of our core funds from operations to dividends required to be paid to holders of our Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock and Series T Preferred Stock for the two most recent quarters, subject to our ability to maintain status as a REIT for federal income tax purposes. Depending on the price at which such property is sold, it is possible that holders of our common stock will receive a return of capital prior to the holders of our Series B Preferred Stock and/or our Series T Preferred Stock, provided that any accrued but unpaid dividends have been paid in full to holders of Series B Preferred Stock and/or Series T Preferred Stock (as applicable). It is also possible that holders of common stock will receive additional distributions from the sale of a property (in excess of their capital attributable to the asset sold) before the holders of Series B Preferred Stock and/or Series T Preferred Stock (as applicable) receive a return of their capital.

We established the offering prices for each of the Series B Units and the Series T Preferred Stock pursuant to negotiations among us and our affiliated dealer manager; as a result, the actual value of an investment in Series B Units or the Series T Preferred Stock may be substantially less than the amount paid.

The selling prices of the Series B Units and the Series T Preferred Stock were determined, in each case, pursuant to negotiations among us and the dealer manager, which is an affiliate of Bluerock, based upon the following primary factors at the time of each such offering: the economic conditions in and future prospects for the industry in which we compete; our prospects for future earnings; an assessment of our management; the state of our development; the prevailing condition of the equity securities market; the state of the market for non-traded REIT securities; and market valuations of public companies considered comparable to our Company. Because the offering prices are not based upon any independent valuation, the offering prices are not indicative of the proceeds that an investor in the Series B Units or the Series T Preferred Stock would receive upon liquidation.

Your percentage of ownership may become diluted if we issue new shares of stock or other securities, and issuances of additional preferred stock or other securities by us may further subordinate the rights of the holders of our Class A common stock (which you may become upon receipt of redemption payments in shares of our Class A common stock for any of your shares of Series B Preferred Stock, Series C Preferred Stock, or Series T Preferred Stock, or upon exercise of any of your Warrants).

Under the terms of our Series B Preferred Stock, Series C Preferred Stock or Series T Preferred Stock, we may make redemption payments in shares of our Class A common stock. Although the dollar amounts of such payments are unknown, the number of shares to be issued in connection with such payments may fluctuate based on the price of our Class A common stock. Any sales or perceived sales in the public market of shares of our Class A common stock issuable upon such redemption payments could adversely affect prevailing market prices of shares of our Class A common stock. The issuance of shares of our Class A common stock upon such redemption payments also may have the effect of reducing our net income per share (or increasing our net loss per share). In addition, the existence of Series B Preferred Stock, Series C Preferred Stock and Series T Preferred Stock may encourage short selling by market participants because the existence of redemption payments could depress the market price of shares of our Class A common stock.

Our Board is authorized, without stockholder approval, to cause us to issue additional shares of our Class A common stock or to raise capital through the issuance of additional preferred stock (including equity or debt securities convertible into preferred stock), options, warrants and other rights, on such terms and for such consideration as our Board in its sole discretion may determine. Any such issuance could result in dilution of the equity of our stockholders. Our Board may, in its sole discretion, authorize us to issue common stock or other equity or debt securities to persons from whom we purchase apartment communities, as part or all of the purchase price of the community. Our Board, in its sole discretion, may determine the value of any common stock or other equity or debt securities issued in consideration of apartment communities or services provided, or to be provided, to us.

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Our charter also authorizes our Board, without stockholder approval, to designate and issue one or more classes or series of preferred stock in addition to the Series B Preferred Stock (including equity or debt securities convertible into preferred stock) and to set or change the voting, conversion or other rights, preferences, restrictions, limitations as to dividends or other distributions and qualifications or terms or conditions of redemption of each class or series of shares so issued. If any additional preferred stock is publicly offered, the terms and conditions of such preferred stock (including any equity or debt securities convertible into preferred stock) will be set forth in a registration statement registering the issuance of such preferred stock or equity or debt securities convertible into preferred stock. Because our Board has the power to establish the preferences and rights of each class or series of preferred stock, it may afford the holders of any series or class of preferred stock preferences, powers, and rights senior to the rights of holders of common stock or the Series B Preferred Stock. If we ever create and issue additional preferred stock or equity or debt securities convertible into preferred stock with a distribution preference over common stock or the Series B Preferred Stock, payment of any distribution preferences of such new outstanding preferred stock would reduce the amount of funds available for the payment of distributions on our common stock and our Series B Preferred Stock. Further, holders of preferred stock are normally entitled to receive a preference payment if we liquidate, dissolve, or wind up before any payment is made to the common stockholders, likely reducing the amount common stockholders would otherwise receive upon such an occurrence. In addition, under certain circumstances, the issuance of additional preferred stock may delay, prevent, render more difficult or tend to discourage a merger, tender offer, or proxy contest, the assumption of control by a holder of a large block of our securities, or the removal of incumbent management.

Stockholders have no rights to buy additional shares of stock or other securities if we issue new shares of stock or other securities. We may issue common stock, convertible debt or preferred stock pursuant to a subsequent public offering or a private placement, or to sellers of properties we directly or indirectly acquire instead of, or in addition to, cash consideration. Investors purchasing Series B Units in the offering of our Series B Preferred Stock who do not participate in any future stock issuances will experience dilution in the percentage of the issued and outstanding stock they own. In addition, depending on the terms and pricing of any additional offerings and the value of our investments, you also may experience dilution in the book value and fair market value of, and the amount of distributions paid on, your shares of Series B Preferred Stock and common stock, if any.

Holders of the Series B Preferred Stock and the Series T Preferred Stock have no control over changes in our policies and operations.

Our Board determines our major policies, including with regard to investment objectives, financing, growth, debt capitalization, REIT qualification and distributions. Our Board may amend or revise these and other policies without a vote of the stockholders.

In addition, holders of shares of our Series B Preferred Stock have no voting rights under our charter, and otherwise have no voting rights except as set forth in the Cetera Side Letter. Pursuant to the Cetera Side Letter, holders of shares of Series B Preferred Stock have voting rights only in certain limited circumstances, voting together as a single class with the holders of preferred stock (i) ranking on parity with the Series B Preferred Stock with respect to dividend rights and rights upon our liquidation, dissolution or winding up, and (ii) upon which like voting rights have been conferred (such holders, together with holders of shares of Series B Preferred Stock, the “Parity Holders”). The Parity Holders currently include the holders of Series C Preferred Stock, Series D Preferred Stock, and Series T Preferred Stock. The affirmative vote of a majority of the votes cast by the Parity Holders, voting together as a single class, is required to approve (a) the authorization, creation or issuance, or an increase in the number of authorized or issued shares of, any class or series of our capital stock ranking senior to the Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock or Series T Preferred Stock with respect to dividend rights and rights upon our liquidation, dissolution or winding up (any such senior stock, the “Senior Stock”), (b) the reclassification of any of our authorized capital stock into Senior Stock, or (c) the creation, authorization or issuance of any obligation or security convertible into, or evidencing the right to purchase, Senior Stock. Other than in these limited circumstances, holders of Series B Preferred Stock have no voting rights.

Holders of shares of Series T Preferred Stock generally have no voting rights under our charter, except as indicated in the immediately preceding paragraph, and with respect to any amendment of our charter that would alter only the contract rights, as expressly set forth therein, of either (a) the Series T Preferred Stock alone, or (b) of any preferred stock (i) ranking on parity with the Series T Preferred Stock with respect to dividend rights and rights upon our liquidation, dissolution or winding up, and (ii) upon which like voting rights have been conferred (which currently includes the Series C Preferred Stock, Series D Preferred Stock, and Series T Preferred Stock, but does not include the Series B Preferred Stock). Other than in these limited circumstances, holders of Series T Preferred Stock have no voting rights.

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General Risks Related to Ownership of our Securities

The cash distributions you receive may be less frequent or lower in amount than you expect.

Our directors determine the amount and timing of distributions in their sole discretion, subject to operating restrictions included in the Merger Agreement. Our directors consider all relevant factors, including the amount of cash available for distribution, capital expenditure and reserve requirements, general operational requirements and the requirements necessary to maintain our REIT qualification. We cannot assure you that we will consistently be able to generate sufficient available cash flow to make distributions, nor can we assure you that sufficient cash will be available to make distributions to you. We may borrow funds, return capital, make taxable distributions of our stock or debt securities, or sell assets to make distributions. We cannot predict the amount of distributions you may receive and we may be unable to pay or maintain cash distributions or increase distributions over time. Our inability to acquire additional properties or make real estate-related investments or operate profitably may have a negative effect on our ability to generate sufficient cash flow from operations to pay distributions.

Also, because we may receive income from rents at various times during our fiscal year, distributions paid may not reflect our income earned in that particular distribution period. The amount of cash available for distributions will be affected by many factors, such as our ability to acquire properties as offering proceeds become available, the income from those investments and yields on securities of other real estate companies that we invest in, as well as our operating expense levels and many other variables. In addition, to the extent we make distributions to stockholders with sources other than cash flow from operations, the amount of cash that is available for investment in real estate assets will be reduced, which will in turn negatively impact our ability to achieve our investment objectives and limit our ability to make future distributions.

If the properties we acquire or invest in do not produce the cash flow that we expect in order to meet our REIT minimum distribution requirement, we may decide to borrow funds to meet the REIT minimum distribution requirements, which could adversely affect our overall financial performance.

We may decide to borrow funds in order to meet the REIT minimum distribution requirements even if our management believes that the then prevailing market conditions generally are not favorable for such borrowings or that such borrowings would not be advisable in the absence of such tax considerations. If we borrow money to meet the REIT minimum distribution requirement or for other working capital needs, our expenses will increase, our net income will be reduced by the amount of interest we pay on the money we borrow and we will be obligated to repay the money we borrow from future earnings or by selling assets, which may decrease future distributions to stockholders.

We intend to use the net proceeds from any offering of our securities to fund future acquisitions and for other general corporate and working capital purposes, but no offering will be conditioned upon the closing of properties in our then-current pipeline and we will have broad discretion to determine alternative uses of proceeds.

As described under “Use of Proceeds” in any applicable prospectus or prospectus supplement, we intend to use a portion of the net proceeds from any offering of our securities to fund future acquisitions and for other general corporate and working capital purposes. However, no offering will be conditioned upon the closing of any properties. We will have broad discretion in the application of the net proceeds from an offering, and holders of our securities will not have the opportunity as part of their investment decision to assess whether the net proceeds are being used appropriately. Because of the number and variability of factors that will determine our use of the net proceeds from an offering, their ultimate use may vary substantially from their currently intended use.

Material Federal Income Tax Risks

Failure to remain qualified as a REIT would cause us to be taxed as a regular corporation, which would substantially reduce funds available for distributions to our stockholders.

We elected to be taxed as a REIT under the federal income tax laws commencing with our taxable year ended December 31, 2010. We believe that we have been organized and have operated in a manner qualifying us as a REIT commencing with our taxable year ended December 31, 2010 and intend to continue to so operate. However, we cannot assure you that we will remain qualified as a REIT.

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If we fail to qualify as a REIT in any taxable year, we will face serious tax consequences that will substantially reduce the funds available for distributions to our stockholders because:

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we would not be able to deduct dividends paid to stockholders in computing our taxable income and would be subject to U.S. federal income tax at regular corporate rates;

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we could be subject to possibly increased state and local taxes; and

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unless we are entitled to relief under certain U.S. federal income tax laws, we could not re-elect REIT status until the fifth calendar year after the year in which we failed to qualify as a REIT.

In addition, if we fail to qualify as a REIT, we will no longer be required to make distributions. As a result of all these factors, our failure to qualify as a REIT could impair our ability to expand our business and raise capital, and it would adversely affect the value of our securities.

Complying with REIT requirements may cause us to forego otherwise attractive opportunities or liquidate otherwise attractive investments.

To maintain our qualification as a REIT for federal income tax purposes, we must continually satisfy tests concerning, among other things, the sources of our income, the nature and diversification of our assets, the amounts we distribute to our stockholders and the ownership of our capital stock. In order to meet these tests, we may be required to forego investments we might otherwise make. Thus, compliance with the REIT requirements may hinder our performance.

In particular, we must ensure that at the end of each calendar quarter, at least 75% of the value of our assets consists of cash, cash items, government securities and qualified real estate assets. The remainder of our investment in securities (other than government securities, securities of taxable REIT subsidiaries (“TRSs”) and qualified real estate assets) generally cannot include more than 10% of the outstanding voting securities of any one issuer or more than 10% of the total value of the outstanding securities of any one issuer. In addition, in general, no more than 5% of the value of our assets (other than government securities, securities of TRSs and qualified real estate assets) can consist of the securities of any one issuer, and no more than 20% (25% for 2017 and prior years) of the value of our total assets can be represented by the securities of one or more TRSs. If we fail to comply with these requirements at the end of any calendar quarter, we must correct the failure within 30 days after the end of the calendar quarter or qualify for certain statutory relief provisions to avoid losing our REIT qualification and suffering adverse tax consequences. As a result, we may be required to liquidate otherwise attractive investments. These actions could have the effect of reducing our income and amounts available for distribution to our stockholders.

Even if we remain qualified as a REIT, we may face other tax liabilities that reduce our cash flows.

Even if we remain qualified as a REIT, we may be subject to certain federal, state and local taxes on our income and assets, including taxes on any undistributed income, tax on income from some activities conducted as a result of a foreclosure, and state or local income, property and transfer taxes. In addition, any TRS in which we own an interest will be subject to regular corporate federal, state and local taxes. Any of these taxes would decrease cash available for distributions to stockholders.

Failure to make required distributions would subject us to U.S. federal corporate income tax.

We intend to continue to operate in a manner so as to qualify as a REIT for U.S. federal income tax purposes. In order to remain qualified as a REIT, we generally are required to distribute at least 90% of our REIT taxable income, determined without regard to the dividends paid deduction and excluding any net capital gain, each year to our stockholders. To the extent that we satisfy this distribution requirement, but distribute less than 100% of our REIT taxable income, we will be subject to U.S. federal corporate income tax on our undistributed taxable income. In addition, we will be subject to a 4% nondeductible excise tax if the actual amount that we pay out to our stockholders in a calendar year is less than a minimum amount specified under the Code.

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We may satisfy the 90% distribution test with taxable distributions of our stock or debt securities. On August 11, 2017, the Internal Revenue Service (“IRS”) issued Revenue Procedure 2017-45 authorizing elective cash/stock dividends to be made by publicly offered REITs (e.g., REITs that are required to file annual and periodic reports with the SEC under the Exchange Act). Pursuant to Revenue Procedure 2017-45, effective for distributions declared on or after August 11, 2017, the IRS will treat the distribution of stock pursuant to an elective cash/stock dividend as a distribution of property under Section 301 of the Code (e.g., a dividend), as long as at least 20% of the total dividend is available in cash and certain other parameters detailed in the Revenue Procedure are satisfied. Although we have no current intention of paying dividends in our own stock, if in the future we choose to pay dividends in our own stock, our stockholders may be required to pay taxes in excess of the cash that they receive.

The prohibited transactions tax may subject us to tax on our gain from sales of property and limit our ability to dispose of our properties.

A REIT’s net income from prohibited transactions is subject to a 100% tax. In general, prohibited transactions are sales or other dispositions of property other than foreclosure property, held primarily for sale to customers in the ordinary course of business. Although we intend to acquire and hold all of our assets as investments and not for sale to customers in the ordinary course of business, the IRS may assert that we are subject to the prohibited transaction tax equal to 100% of net gain upon a disposition of real property. Although a safe harbor to the characterization of the sale of real property by a REIT as a prohibited transaction is available, not all of our prior property dispositions qualified for the safe harbor and we cannot assure you that we can comply with the safe harbor in the future or that we have avoided, or will avoid, owning property that may be characterized as held primarily for sale to customers in the ordinary course of business. Consequently, we may choose not to engage in certain sales of our properties or may conduct such sales through a TRS, which would be subject to federal and state income taxation. Additionally, in the event that we engage in sales of our properties, any gains from the sales of properties classified as prohibited transactions would be taxed at the 100% prohibited transaction tax rate.

The ability of our Board to revoke our REIT qualification without stockholder approval may cause adverse consequences to our stockholders.

Our charter provides that our Board may revoke or otherwise terminate our REIT election, without the approval of our stockholders, if it determines that it is no longer in our best interest to continue to qualify as a REIT. If we cease to qualify as a REIT, we would become subject to U.S. federal income tax on our taxable income and would no longer be required to distribute most of our taxable income to our stockholders, which may have adverse consequences on our total return to our stockholders.

Our ownership of any TRSs will be subject to limitations and our transactions with any TRSs will cause us to be subject to a 100% penalty tax on certain income or deductions if those transactions are not conducted on arm’s-length terms.

Overall, no more than 20% (25% for 2017 and prior years) of the value of a REIT’s assets may consist of stock or securities of one or more TRSs. In addition, the Code limits the deductibility of interest paid or accrued by a TRS to its parent REIT to assure that the TRS is subject to an appropriate level of corporate taxation. The Code also imposes a 100% excise tax on certain transactions between a TRS and its parent REIT that are not conducted on an arm’s-length basis. Furthermore, we will monitor the value of our respective investments in any TRSs for the purpose of ensuring compliance with TRS ownership limitations and will structure our transactions with any TRSs on terms that we believe are arm’s-length to avoid incurring the 100% excise tax described above. There can be no assurance, however, that we will be able to comply with the 20% REIT subsidiaries limitation or to avoid application of the 100% excise tax.

You may be restricted from acquiring or transferring certain amounts of our common stock.

The stock ownership restrictions of the Code for REITs and the 9.8% stock ownership limits in our charter may inhibit market activity in our capital stock and restrict our business combination opportunities.

In order to qualify as a REIT, five or fewer individuals, as defined in the Code to include specified private foundations, employee benefit plans and trusts, and charitable trusts, may not own, beneficially or constructively, more than 50% in value of our issued and outstanding stock at any time during the last half of a taxable year. Attribution rules in the Code determine if any individual or entity beneficially or constructively owns our capital stock under this requirement. Additionally, at least 100 persons must beneficially own our capital stock during at least 335 days of a taxable year. To help insure that we meet these tests, among other purposes, our charter restricts the acquisition and ownership of shares of our capital stock.

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Our charter, with certain exceptions, authorizes our directors to take such actions as are necessary and desirable to preserve our qualification as a REIT. Unless exempted, prospectively or retroactively, by our Board, our charter prohibits any person from beneficially or constructively owning more than 9.8% in value of the aggregate of our outstanding shares of capital stock or 9.8% in value or number of shares, whichever is more restrictive, of the outstanding shares of our common stock. Our Board may not grant an exemption from these restrictions to any proposed transferee whose ownership in excess of such thresholds does not satisfy certain conditions designed to ensure that we will not fail to qualify as a REIT. These restrictions on transferability and ownership will not apply, however, if our Board determines that it is no longer in our best interest to continue to qualify as a REIT or that compliance is no longer required for REIT qualification.

We may be subject to adverse legislative or regulatory tax changes that could reduce the market price of our stock.

At any time, the U.S. federal income tax laws governing REITs or the administrative interpretations of those laws may be amended. We cannot predict when or if any new U.S. federal income tax law, regulation or administrative interpretation, or any amendment to any existing U.S. federal income tax law, regulation or administrative interpretation, will be adopted, promulgated or become effective and any such law, regulation, or interpretation may take effect retroactively. We and our stockholders could be adversely affected by any such change in the U.S. federal income tax laws, regulations or administrative interpretations.

The “Tax Cuts and Jobs Act” (the “TCJA”) makes significant changes to the U.S. federal income tax rules for taxation of individuals and corporations. In the case of individuals, the tax brackets have been adjusted, the top federal income rate has been reduced to 37%, special rules reduce taxation of certain income earned through pass-through entities and reduce the top effective rate applicable to ordinary dividends from REITs to 29.6% (through a 20% deduction for ordinary REIT dividends received) and various deductions have been eliminated or limited, including limiting the deduction for state and local taxes to $10,000 per year. Most of the changes applicable to individuals are temporary and apply only to taxable years beginning after December 31, 2017 and before January 1, 2026. The top corporate income tax rate has been reduced to 21%. There are only minor changes to the REIT rules (other than the 20% deduction applicable to individuals for ordinary REIT dividends received). The TCJA makes numerous other large and small changes to the tax rules that do not affect REITs directly but may affect our stockholders and may indirectly affect us.

Stockholders are urged to consult with their tax advisors with respect to the status of the TCJA and any other regulatory or administrative developments and proposals and their potential effect on investment in our stock.

Dividends payable by REITs generally do not qualify for the reduced tax rates available for certain dividends.

The maximum tax rate applicable to “qualified dividend income” payable to U.S. stockholders taxed at individual rates is 20% plus the 3.8% surtax on net investment income, if applicable. Dividends payable by REITs, however, generally are not eligible for the reduced rates on qualified dividend income. Rather, under the TCJA, REIT dividends constitute “qualified business income” and thus a 20% deduction is available to individual taxpayers with respect to such dividends, resulting in a 29.6% maximum federal tax rate (plus the 3.8% surtax on net investment income, if applicable) for individual U.S. stockholders. Additionally, without further legislative action, the 20% deduction applicable to REIT dividends will expire on January 1, 2026. The more favorable rates applicable to regular corporate qualified dividends could cause investors who are taxed at individual rates to perceive investments in REITs to be relatively less attractive than investments in the stocks of non-REIT corporations that pay dividends, which could adversely affect the value of the shares of REITs, including our stock.

Distributions to tax-exempt investors may be classified as unrelated business taxable income and tax-exempt investors would be required to pay tax on the unrelated business taxable income and to file income tax returns.

Neither ordinary nor capital gain distributions with respect to our stock nor gain from the sale of stock should generally constitute unrelated business taxable income to a tax-exempt investor. However, there are certain exceptions to this rule. In particular:

●

under certain circumstances, part of the income and gain recognized by certain qualified employee pension trusts with respect to our stock may be treated as unrelated business taxable income if our stock is predominately held by qualified employee pension trusts, such that we are a “pension-held” REIT (which we do not expect to be the case);

●

part of the income and gain recognized by a tax exempt investor with respect to our stock would constitute unrelated business taxable income if such investor incurs debt in order to acquire the stock; and

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●

part or all of the income or gain recognized with respect to our stock held by social clubs, voluntary employee benefit associations, supplemental unemployment benefit trusts and qualified group legal services plans which are exempt from federal income taxation under Sections 501(c)(7), (9), (17) or (20) of the Code may be treated as unrelated business taxable income.

We encourage you to consult your tax advisor to determine the tax consequences applicable to you if you are a tax-exempt investor.

Benefit Plan Risks Under ERISA or the Code

If you fail to meet the fiduciary and other standards under the Employee Retirement Income Security Act of 1974, as amended or the Code as a result of an investment in our stock, you could be subject to criminal and civil liabilities and penalties.

Special considerations apply to the purchase of stock or holding of Warrants by employee benefit plans subject to the fiduciary rules of Title I of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), including pension or profit sharing plans and entities that hold assets of such plans, which we refer to as ERISA Plans, and plans and accounts that are not subject to ERISA, but are subject to the prohibited transaction rules of Section 4975 of the Code, including IRAs, Keogh Plans, and medical savings accounts. (Collectively, we refer to ERISA Plans and plans subject to Section 4975 of the Code as “Benefit Plans” or “Benefit Plan Investors”). If you are investing the assets of any Benefit Plan, you should consider whether:

●

your investment will be consistent with your fiduciary obligations under ERISA and the Code;

●

your investment will be made in accordance with the documents and instruments governing the Benefit Plan, including the Benefit Plan’s investment policy;

●

your investment will satisfy the prudence and diversification requirements of Sections 404(a)(1)(B) and 404(a)(1)(C) of ERISA, if applicable, and other applicable provisions of ERISA and the Code;

●

your investment will impair the liquidity of the Benefit Plan;

●

your investment will produce “unrelated business taxable income” for the Benefit Plan;

●

you will be able to value the assets of the plan annually in accordance with ERISA requirements and applicable provisions of the Benefit Plan;

●

you will be able to satisfy plan liquidity requirements as there may be only a limited market to sell or otherwise dispose of our stock; and

●

your investment will constitute a non-exempt prohibited transaction under Section 406 of ERISA or Section 4975 of the Code.

Failure to satisfy the fiduciary standards of conduct and other applicable requirements of ERISA and the Code may result in the imposition of civil and criminal penalties, and can subject the fiduciary to personal liability for claims for damages or for equitable remedies. In addition, if an investment in our stock or holding of Warrants constitutes a prohibited transaction under ERISA or the Code, the fiduciary or IRA owner who authorized or directed the investment may be subject to the imposition of excise taxes with respect to the amount invested. In the case of a prohibited transaction involving an IRA owner, the IRA may be disqualified and all of the assets of the IRA may be deemed distributed and subjected to tax. Benefit Plan Investors should consult with counsel before making an investment in our securities.

Plans that are not subject to ERISA or the prohibited transactions of the Code, such as government plans or church plans, may be subject to similar requirements under state law. The fiduciaries of such plans should review all details to ensure themselves that the investment satisfies applicable law.

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For additional discussion of significant factors that make an investment in our shares risky, see the Liquidity and Capital Resources Section under Item 7. — Management’s Discussion and Analysis of Financial Conditions and Results of Operations of this report.

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

As of December 31, 2021, we held seventy-eight real estate investments, consisting of forty-nine consolidated operating investments and twenty-nine investments held through preferred equity, loan or ground lease investments. The following tables provide summary information regarding our consolidated operating investments and preferred equity, loan and ground lease investments.

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Consolidated Operating Investments


	Number of	Year	Ownership		Average
Name - Location	Units	Built/Renovated ⁽¹⁾	Interest		Rent ⁽²⁾		Occupancy % ⁽³⁾
Multifamily
ARIUM Glenridge - Atlanta, GA	480	1990	90	%	$	1,463	93.1	%
ARIUM Westside - Atlanta, GA	336	2008	90	%		1,606	94.0	%
Ashford Belmar - Lakewood, CO	512	1988/1993	85	%		1,786	95.9	%
Avenue 25 - Phoenix, AZ	254	2013	100	%		1,409	95.7	%
Burano Hunter’s Creek, formerly ARIUM Hunter’s Creek - Orlando, FL	532	1999	100	%		1,512	98.5	%
Carrington at Perimeter Park - Morrisville, NC	266	2007	100	%		1,366	97.7	%
Chattahoochee Ridge - Atlanta, GA	358	1996	90	%		1,496	96.4	%
Chevy Chase - Austin, TX	320	1971	92	%		1,067	96.3	%
Cielo on Gilbert - Mesa, AZ	432	1985	90	%		1,253	96.3	%
Citrus Tower - Orlando, FL	336	2006	97	%		1,498	95.8	%
Denim - Scottsdale, AZ	645	1979	100	%		1,410	97.2	%
Elan - Austin, TX	270	2007	100	%		1,231	97.8	%
Element - Las Vegas, NV	200	1995	100	%		1,410	95.5	%
Falls at Forsyth - Cumming, GA	356	2019	100	%		1,547	96.1	%
Gulfshore Apartment Homes - Naples, FL	368	2016	100	%		1,419	97.0	%
Outlook at Greystone - Birmingham, AL	300	2007	100	%		1,233	97.7	%
Pine Lakes Preserve - Port St. Lucie, FL	320	2003	100	%		1,591	96.3	%
Providence Trail - Mount Juliet, TN	334	2007	100	%		1,401	97.3	%
Roswell City Walk - Roswell, GA	320	2015	98	%		1,755	94.7	%
Sands Parc - Daytona Beach, FL	264	2017	100	%		1,522	96.2	%
The Brodie - Austin, TX	324	2001	100	%		1,428	96.0	%
The Debra Metrowest, formerly ARIUM Metrowest - Orlando, FL	510	2001	100	%		1,528	97.3	%
The Links at Plum Creek - Castle Rock, CO	264	2000	88	%		1,581	96.6	%
The Mills - Greenville, SC	304	2013	100	%		1,125	97.0	%
The Preserve at Henderson Beach - Destin, FL	340	2009	100	%		1,708	95.6	%
The Sanctuary - Las Vegas, NV	320	1988	100	%		1,274	95.9	%
Veranda at Centerfield - Houston, TX	400	1999	93	%		1,084	97.0	%
Villages of Cypress Creek - Houston, TX	384	2001	80	%		1,263	95.8	%
Wesley Village - Charlotte, NC	301	2010	100	%		1,466	97.3	%
Windsor Falls - Raleigh, NC	276	1994	100	%		1,181	96.7	%
Total Multifamily Units	10,626

Name - Market		Average Year Built
Single-Family Residential ⁽⁴⁾
Golden Pacific - KS / MO	7	1977	97	%		1,432	42.9	%
ILE - TX / SE US	279	1990	95	%		1,544	84.3	%⁽⁵⁾
Navigator Villas - Pasco, WA	176	2013	90	%		1,278	96.0	%
Peak
Axelrod - Garland, TX	22	1959	80	%		1,355	100.0	%
DFW 189 - Dallas-Fort Worth, TX	189	1962	56	%		942	98.4	%
Granbury - Granbury, TX	36	2020-2021	80	%		1,556	97.2	%
Indy - Indianapolis, IN	44	1958	60	%		836	86.4	%
Lubbock - Lubbock, TX	60	1955	80	%		975	86.7	%
Lubbock 2.0 - Lubbock, TX	75	1972	80	%		1,220	92.0	%
Lubbock 3.0 - Lubbock, TX	45	1945	80	%		988	95.6	%
Lynnwood - Lubbock, TX	20	2005	80	%		1,005	95.0	%
Lynnwood 2.0 - Lubbock, TX	20	2003	80	%		987	100.0	%
Springfield - Springfield, MO	290	2004	60	%		1,134	99.3	%
Springtown - Springtown, TX	70	1991	80	%		1,235	87.1	%
Springtown 2.0 - Springtown, TX	14	2018	80	%		1,416	92.9	%
Texarkana - Texarkana, TX	29	1967	80	%		1,019	75.9	%
Texas Portfolio 183 - Various / TX	183	1975	80	%		1,275	92.3	%
Wayford at Concord - Concord, NC	150	2019	83	%		1,936	94.7	%
Yauger Park Villas - Olympia, WA	80	2010	95	%		2,085	98.8	%
Total Single-Family Units/Average	1,789
Total Units/Average	12,415				$	1,424	95.9	%

(1)	Represents date of last significant renovation or year built if no renovations.

(2)	Represents the average effective monthly rent per occupied unit for all occupied units for the three months ended December 31, 2021. Total concessions for the three months ended December 31, 2021 amounted to approximately $0.1 million.

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(3)	Percent occupied is calculated as (i) the number of units occupied as of December 31, 2021 divided by (ii) total number of units, expressed as a percentage.

(4)	Single-Family Residential includes single-family residential homes and attached townhomes/flats.

(5)	Excludes 50 down units under renovation.

Preferred Equity, Loan and Ground Lease Investments


			Total
			Actual/				Actual/
		Actual/	Estimated				Estimated		Actual/	Actual/	Pro
		Planned	Construction		Cost to		Construction		Estimated	Estimated	Forma
		Number	Cost		Date		Cost Per		Initial	Construction	Average
Lease-up Investment Name ⁽¹⁾	Location / Market	of Units	(in millions)		(in millions)		Unit		Occupancy	Completion	Rent ⁽²⁾
Multifamily
Zoey	Austin, TX	307	$	59.5	$	53.3	$	193,811	4Q 2021	2Q 2022	$	1,762
Reunion Apartments	Orlando, FL	280		48.6		46.3		173,571	3Q 2021	3Q 2022		1,366
Total Lease-up Units		587

Development Investment Name ⁽¹⁾
Multifamily
Avondale Hills	Decatur, GA	240		50.9		37.3		212,083	1Q 2023	1Q 2023		1,538
The Hartley at Blue Hill, formerly The Park at Chapel Hill	Chapel Hill, NC	414		99.2		69.5		239,614	1Q 2022	1Q 2023		1,599
Deerwood Apartments	Houston, TX	330		65.8		22.1		199,394	4Q 2022	2Q 2023		1,590
Chandler	Chandler, AZ	208		48.2		10.8		231,731	3Q 2023	4Q 2023		1,457
Orange City Apartments	Orange City, FL	298		60.5		9.6		203,020	1Q 2023	4Q 2023		1,457
Lower Broadway	San Antonio, TX	386		91.5		27.0		237,047	4Q 2023	2Q 2024		1,769
Total Multifamily Units		1,876

Single-Family Residential
Willow Park	Willow Park, TX	46		12.7		7.8		276,087	2Q 2022	4Q 2022		2,362
The Woods at Forest Hill	Forest Hill, TX	76		14.7		3.6		193,421	1Q 2023	3Q 2023		1,625
The Cottages at Myrtle Beach	Myrtle Beach, SC	294		63.1		14.9		214,626	1Q 2023	4Q 2023		1,743
The Cottages at Warner Robins	Warner Robins, GA	251		53.1		5.4		211,554	3Q 2023	4Q 2023		1,346
The Cottages of Port St. Lucie	Port St. Lucie, FL	286		69.6		13.8		243,357	1Q 2023	4Q 2023		2,133
Wayford at Innovation Park	Charlotte, NC	210		62.0		6.6		295,238	3Q 2023	3Q 2024		1,994
Total Single-Family Units		1,163
Total Development Units		3,039


		Number	Average
Operating Investment Name ⁽¹⁾	Location / Market	of Units	Rent ⁽²⁾
Multifamily
Alexan CityCentre	Houston, TX	340	$	1,690
Deercross	Indianapolis, IN	372		788
Domain at The One Forty	Garland, TX	299		1,452
Georgetown Crossing	Savannah, GA	168		1,118
Hunter’s Pointe	Pensacola, FL	204		1,056
Motif	Fort Lauderdale, FL	385		2,455
Park on the Square	Pensacola, FL	240		1,269
Renew 3030	Mesa, AZ	126		1,127
Spring Parc	Dallas, TX	304		1,022
The Commons	Jacksonville, FL	328		965
The Crossings of Dawsonville	Dawsonville, GA	216		1,460
The Reserve at Palmer Ranch	Sarasota, FL	320		1,512
The Riley	Richardson, TX	262		1,506
Water’s Edge	Pensacola, FL	184		1,283
Total Multifamily Units		3,748

Single-Family Residential
Peak Housing ⁽³⁾	IN / MO / TX	474		918
Total Single-Family Units		474
Total Operating Units		4,222
Total Units/Average		7,848	$	1,478

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(1)	Investments in which we have a loan, preferred equity or ground lease investment. Refer to Note 6 and Note 7 of our consolidated financial statements for further information.

(2)	For lease-up and development investments, represents the average pro forma effective monthly rent per occupied unit for all expected occupied units upon stabilization. For operating investments, represents the average effective monthly rent per occupied unit.

(3)	Peak Housing consists of our preferred equity investments in a private single-family home REIT (refer to Note 7 of our consolidated financial statements for further information). Unit count excludes units presented in the consolidated operating investments table above.

Item 3. Legal Proceedings

We are not party to, and none of our properties are subject to, any material pending legal proceeding.

Item 4. Mining Safety Disclosures

Not applicable.

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PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Market Information

Our shares of Class A common stock are traded on the NYSE American under the symbol “BRG.”

On March 7, 2022, the closing price of our Class A common stock, as reported on the NYSE American, was $26.54.


	Period Ending
Index	12/31/16	12/31/17	12/31/18	12/31/19	12/31/20	12/31/21
Bluerock Residential Growth REIT, Inc.	100.00	81.28	77.83	110.04	126.20	276.47
Russell 3000 Index	100.00	121.13	114.78	150.39	181.80	228.45
Russell 2000 Index	100.00	114.65	102.02	128.06	153.62	176.39
Dow Jones Equity All REIT Index	100.00	108.69	104.23	134.18	127.76	180.39
MSCI U.S. REIT Index	100.00	105.07	100.27	126.18	116.62	166.84

Stockholder Information

As of March 7, 2022, we had approximately 29,260,629 shares of Class A common stock outstanding held by a total of 606 stockholders, one of which is the holder for all beneficial owners who hold in street name.

Distributions

Future distributions paid by the Company will be at the discretion of our Board, subject to operating restrictions in the Merger Agreement, and will depend upon the actual cash flow of the Company, its financial condition, capital requirements, the annual distribution requirements under the REIT provisions of the Code and such other factors as our Board deems relevant.

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Distributions paid on our Class A common shares, Class C common shares, OP Units and LTIP Units that are entitled to receive distribution equivalents when dividends are paid on the common stock, by quarter for the years ended December 31, 2021 and 2020, respectively, were as follows (amounts in thousands, except per share amounts):


	Distributions
	Declared
	Per Share		Total Paid
2020
First Quarter	$	0.1625	$	5,212
Second Quarter		0.1625		5,359
Third Quarter		0.1625		5,520
Fourth Quarter		0.1625		5,550
Total	$	0.6500	$	21,641

2021
First Quarter	$	0.1625	$	5,179
Second Quarter		0.1625		5,818
Third Quarter		0.1625		6,418
Fourth Quarter		0.1625		5,921
Total	$	0.6500	$	23,336

2022
First Quarter	$	0.1625	$	6,048

On January 14, 2022, our Board authorized, and we declared monthly dividends for the first quarter of 2022 equal to a monthly rate of $5.00 per share on our Series B Preferred Stock, payable monthly to the stockholders of record as of January 25, 2022, February 25, 2022 and March 25, 2022, which was paid in cash on February 4, 2022 and March 4, 2022, and which will be paid in cash on April 5, 2022, respectively.

On January 14, 2022, our Board authorized, and we declared monthly dividends for the first quarter of 2022 equal to a monthly rate of $0.128125 per share on our Series T Preferred Stock, payable monthly to the stockholders of record as of January 25, 2022, February 25, 2022 and March 25, 2022, which was paid in cash on February 4, 2022 and March 4, 2022, and which will be paid in cash on April 5, 2022, respectively. Newly-issued shares of Series T Preferred Stock held for only a portion of the applicable monthly dividend period received a prorated Series T Preferred Stock dividend based on the actual number of days in the applicable dividend period during which each shares of Series T Preferred Stock was outstanding.

Distributions paid for the years ended December 31, 2021, 2020 and 2019, respectively, were funded from cash provided by operating activities except with respect to $7.7 million, $8.7 million and $3.4 million for the years ended December 31, 2021, 2020 and 2019, respectively, which was funded from sales of real estate, borrowings, and/or proceeds from our equity offerings.

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Although we may use alternative sources of cash to fund distributions in a given period, we expect that distribution requirements for an entire year will be met with cash flows from operating activities.


	Year Ended December 31,
	2021		2019		2019

	(In thousands)
Cash provided by operating activities	$	82,052	$	74,475	$	63,331

Cash distributions to preferred stockholders		(63,019)		(59,183)		(45,075)
Cash distributions to common stockholders		(16,618)		(15,771)		(14,850)
Cash distributions to noncontrolling interests, excluding $15.2 million, $5.5 million and $2.3 million from sale of real estate investments in 2021, 2020 and 2019, respectively		(10,132)		(8,227)		(6,806)
Total distributions	$	(89,769)	$	(83,181)	$	(66,731)

(Shortfall) excess	$	(7,717)	$	(8,706)	$	(3,400)
Proceeds from sale of and redemption of our preferred equity investments in unconsolidated real estate joint ventures	$	51,504	$	50,734	$	—
Net proceeds from sale of real estate assets, net of noncontrolling distributions of $15.2 million, $5.5 million and $2.3 million in 2021, 2020 and 2019, respectively	$	189,336	$	70,706	$	95,881

Equity Compensation Plans

Incentive Plans

The Company’s incentive plans were originally adopted by our Board on December 16, 2013, and approved by our stockholders on January 23, 2014, as the 2014 Equity Incentive Plan for Individuals (the “2014 Individuals Plan”) and the 2014 Equity Incentive Plan for Entities (the “2014 Entities Plan,” and together with the 2014 Individuals Plan, as each was subsequently amended and restated, the “2014 Incentive Plans”).

On August 9, 2018, our Board adopted, and on September 28, 2018 our stockholders approved, the third amendment and restatement of the 2014 Individuals Plan (the “Third Amended 2014 Individuals Plan”) and the 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 2014 Incentive Plans, the “Incentive Plans”), which superseded and replaced in their entirety the 2014 Incentive Plans.

On July 23, 2020, our Board adopted, and on September 8, 2020 our stockholders approved, the fourth amendment and restatement of the 2014 Individuals Plan (the “Fourth Amended 2014 Individuals Plan”) and the 2014 Entities Plan (the “Fourth Amended 2014 Entities Plan,” and together with the Fourth Amended 2014 Individuals Plan, the “Fourth Amended 2014 Incentive Plans,” and together with the 2014 Incentive Plans, the “Incentive Plans”), which superseded and replaced in their entirety the 2014 Incentive Plans. Under the Fourth Amended 2014 Incentive Plans, we have authorized an additional 3,000,000 shares of Class A common stock, for an aggregate 6,800,000 shares of our common stock for issuance. As of March 7, 2022, there were 1,654,860 shares available for future issuance.

The purpose of the Fourth Amended 2014 Incentive Plans is to attract and retain independent directors, executive officers and other key employees, including officers and employees of our Operating Partnership and their affiliates, and other service providers. The Fourth Amended 2014 Incentive Plans provide for the grant of options to purchase shares of our common stock, stock awards, stock appreciation rights, performance units, incentive awards and other equity-based awards.

Administration of the Fourth Amended 2014 Incentive Plans

The Fourth Amended 2014 Incentive Plans are administered by the compensation committee of our Board, except that the Fourth Amended 2014 Incentive Plans will be administered by our Board with respect to awards made to directors who are not employees. This summary uses the term “administrator” to refer to the compensation committee or our Board, as applicable. The administrator will approve who will receive grants under the Fourth Amended 2014 Incentive Plans, determine the type of award that will be granted and will specify the number of shares of our Class A Common Stock subject to each grant.

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Eligibility

Employees and officers of our Company and our affiliates (including employees of our Operating Partnership) and members of our Board are eligible to receive grants under the Fourth Amended 2014 Individuals Plan. In addition, individuals who provide significant services to us or an affiliate, including individuals who provide services to us or an affiliate by virtue of employment with, or providing services to, our Operating Partnership may receive grants under the Fourth Amended 2014 Individuals Plan.

Entities that provide significant services to us or our affiliates, including our Operating Partnership, may receive grants under the Fourth Amended 2014 Entities Plan in the discretion of the administrator.

The following table provides information about our common stock that may be issued upon the exercise of options, warrants and rights under our Fourth Amended 2014 Incentive Plans, as of December 31, 2021.


	Number of
	Securities to Be	Weighted-
	Issued Upon	Average	Number of
	Exercise of	Exercise Price	Securities
	Outstanding	of Outstanding	Remaining
	Options,	Options,	Available for
	Warrants, and	Warrants, and	Future
Plan Category	Rights	Rights	Issuance
Equity compensation plans approved by security holders	—	—	2,081,508
Equity compensation plans not approved by security holders	—	—	—
Total	—	—	2,081,508

We have adopted an Amended and Restated Code of Ethics for our directors, officers and employees intended to satisfy NYSE American listing standards and the definition of a “code of ethics” set forth in Item 406 of Regulation S-K. Any information relating to amendments to our Amended and Restated Code of Ethics or waivers of a provision of our Amended and Restated Code of Ethics required to be disclosed pursuant to Item 5.05 of Form 8-K will be disclosed through our website.

Clawback Policy

Any award granted under the Incentive Plans, and any payment made with respect to any such award, is subject to the condition that we may require such award to be returned, and any payment made with respect to such award to be repaid, if such action is required under the terms of any Company recoupment or “clawback” (forfeiture or repayment) policy as in effect on the date the award was granted or if recoupment is required by any law, rule, requirement or regulation.

Unregistered Sales of Equity Securities

We previously disclosed our issuances during the years ended December 31, 2021, 2020 and 2019 of equity securities that were not registered under the Securities Act of 1933, as amended, in our Current Reports on Form 8-K and amendments thereto on Form 8-K/A, as applicable, filed with the Securities and Exchange Commission (the “SEC”) on January 4, 2019, February 21, 2019, May 10, 2019, August 13, 2019, November 8, 2019, January 6, 2020, February 20, 2020, April 16, 2020, May 15, 2020, May 27, 2020, August 12, 2020, November 6, 2020, January 6, 2021, February 22, 2021, March 1, 2021, March 31, 2021, May 13, 2021, August 6, 2021, and November 12, 2021.

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Issuer Purchases of Equity Securities


				Total	Maximum
				Number of	Dollar
				Shares	Value of
	Total	Weighted		Purchased as	Shares that
	Number of	Average		Part of the	May Yet Be
	Shares	Price Paid		Publicly	Purchased
Period	Purchased	Per Share		Announced Plan	Under the Plan ⁽¹⁾
Class A Common Stock
January 1, 2021 through January 31, 2021	1,354,186	$	11.79	1,354,186	$	40,099,159
February 1, 2021 through February 28, 2021	1,232,735		11.33	1,232,735		101,133,048
March 1, 2021 through March 31, 2021	970,641		11.12	970,641		90,343,128
April 1, 2021 through April 30, 2021	1,063,914		9.83	1,063,914		79,888,091
May 1, 2021 through May 31, 2021	1,344,803		9.53	1,344,803		67,074,585
June 1, 2021 through June 30, 2021	2,196,881		9.94	2,196,881		45,237,284
July 1, 2021 through July 31, 2021	2,415,333		11.01	2,415,333		18,654,414
August 1, 2021 through August 31, 2021	562,144		12.77	562,144		11,475,518
September 1, 2021 through November 8, 2021	—		—	—		—
Total Class A Common Stock	11,140,637	$	10.73	11,140,637

(1)

Includes shares repurchased by the Company pursuant to the stock repurchase plans publicly announced in our Annual Report on Form 10-K for the year ended December 31, 2020 as filed with the SEC on February 23, 2021, for up to an aggregate of $150.0 million in shares of our Class A common stock, Series C Preferred Stock and/or Series D Preferred Stock. The repurchase plans terminated upon the close of the NYSE American trading day on November 8, 2021, the filing date of the Company’s Form 10-Q for the quarter ended September 30, 2021.

Item 6. [Reserved]

Not applicable.

Item 7. 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, and Bluerock Real Estate Holdings, LLC, a Delaware limited liability company, together as “Bluerock”, and we refer to our former external manager, BRG Manager, LLC, as our “former Manager.” Both Bluerock and our former Manager are affiliated with the Company. See also “Forward-Looking Statements” preceding Part I.

Overview

We were incorporated as a Maryland corporation on July 25, 2008. Our principal business objective is to generate attractive risk-adjusted investment returns by assembling a high-quality portfolio of multifamily apartment communities and single-family residential homes located in demographically attractive growth markets and by implementing our investment strategies and our “Live/Work/Play Initiatives” to achieve sustainable long-term growth in both our funds from operations and net asset value.

We conduct our operations through our Operating Partnership, of which we are the sole general partner. The consolidated financial statements include our accounts and those of the Operating Partnership.

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We have elected to be taxed as a Real Estate Investment Trust (“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.

Proposed Merger

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Significant Developments

Acquisitions of and Investments in Real Estate

During the year ended December 31, 2021, we acquired one multifamily operating property representing 276 units and eighteen operating portfolios of single-family residential homes representing an aggregate of 1,613 homes, for total purchase prices of $336.9 million.

Additionally, we entered into sixteen preferred equity investments in both multifamily apartment communities and single-family residential homes, committing $186.2 million, of which $97.6 million was funded (which includes the full funding of seven investments for $68.3 million), during the period.

We made mortgage loan investments in two portfolios of single-family residential homes amounting to $9.9 million.

In addition to the investments summarized in the tables below, we increased our mezzanine loan investments in Avondale Hills, Domain at The One Forty, Motif, Reunion Apartments and Vickers Historic Roswell by approximately $24.1 million in aggregate, increased our preferred equity investments in Alexan CityCentre, Chandler, The Conley and Thornton Flats by approximately $7.5 million in aggregate, and provided increased funding for the Zoey Ground Lease of approximately $8.3 million.

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The following is a summary of our real estate investments made during the year ended December 31, 2021 (dollars in millions):


			Number of	Ownership			Purchase
Name - Operating	Location / Market	Date of Investment	Units / Homes	Interest			Price
Multifamily
Windsor Falls	Raleigh, NC	June 17, 2021	276		100	%	$	48.8

Single-Family Residential ⁽¹⁾
Yauger Park Villas	Olympia, WA	April 14, 2021	80		95	%		24.5
Wayford at Concord ⁽²⁾	Concord, NC	June 4, 2021	150		83	%		44.4
Indy	Indianapolis, IN	August 12, 2021	44		60	%		3.8
Springfield	Springfield, MO	August 18, 2021	290		60	%		49.0
Springtown	Springtown, TX	September 15, 2021	70		80	%		9.4
Texarkana	Texarkana, TX	September 21, 2021	29		80	%		3.1
Lubbock	Lubbock, TX	September 24, 2021	60		80	%		5.6
Granbury	Granbury, TX	September 30, 2021	36		80	%		8.1
ILE	TX / SE US	October 4, 2021	279		95	%		57.1
Axelrod	Garland, TX	October 5, 2021	22		80	%		4.1
Springtown 2.0	Springtown, TX	October 26, 2021	14		80	%		3.0
Lubbock 2.0	Lubbock, TX	October 28, 2021	75		80	%		9.3
Lynnwood	Lubbock, TX	November 16, 2021	20		80	%		2.4
Golden Pacific	KS / MO	November 23, 2021	7		97	%		1.2
Lynnwood 2.0	Lubbock, TX	December 1, 2021	20		80	%		2.5
Lubbock 3.0	Lubbock, TX	December 8, 2021	45		80	%		4.6
Texas Portfolio 183	Various / TX	December 22, 2021	183		80	%		28.3
DFW 189	Dallas-Fort Worth, TX	December 29, 2021	189		56	%		27.7
Total Operating			1,889				$	336.9

			Actual/Planned
			Number of	Commitment			Investment
Name - Preferred Equity	Location / Market	Date of Investment	Units / Homes	Amount			Amount
Multifamily
The Riley	Richardson, TX	March 1, 2021	262	$	7.0		$	7.0
The Reserve at Palmer Ranch ⁽³⁾	Sarasota, FL	June 10, 2021	320		11.4			11.4
Deerwood Apartments	Houston, TX	June 16, 2021	330		16.5			9.2
Deercross	Indianapolis, IN	June 25, 2021	372		4.0			4.0
Spring Parc	Dallas, TX	July 13, 2021	304		8.0			8.0
The Crossings of Dawsonville	Dawsonville, GA	July 14, 2021	216		10.5			10.5
Lower Broadway	San Antonio, TX	July 15, 2021	386		15.8			0.9
Orange City Apartments	Orange City, FL	July 26, 2021	298		15.1			—
Renew 3030	Mesa, AZ	August 31, 2021	126		7.1			7.1

Single-Family Residential ⁽¹⁾
Peak Housing ⁽⁴⁾	IN / MO / TX	April 12, 2021 ⁽⁵⁾	474		20.3			20.3
Wayford at Innovation Park	Charlotte, NC	June 17, 2021	210		13.4			—
Willow Park	Willow Park, TX	June 17, 2021	46		3.8			2.5
The Cottages of Port St. Lucie	Port St. Lucie, FL	August 26, 2021	286		18.8			7.3
The Cottages at Myrtle Beach	Myrtle Beach, SC	September 9, 2021	294		17.9			9.0
The Cottages at Warner Robins	Warner Robins, GA	December 8, 2021	251		13.3			—
The Woods at Forest Hill	Forest Hill, TX	December 20, 2021	76		3.3			0.4
Total Preferred Equity			4,251				$	97.6

			Number of		Commitment			Investment
Name - Mortgage Loan	Market	Date of Investment	Homes		Amount			Amount
Single-Family Residential
Corpus ⁽⁶⁾	Corpus Christi, TX	July 9, 2021	81		6.8			6.8
Jolin ⁽⁶⁾	Weatherford, TX	August 6, 2021	24		3.1			3.1
Total Mortgage Loan			105				$	9.9
Total			6,245				$	444.4

(1)	Single-Family Residential includes single-family residential homes and attached townhomes/flats.

(2)	We purchased the Wayford at Concord property from our unaffiliated joint venture partner, and as part of the transaction, our preferred equity investment was redeemed.

(3)	We sold The Reserve at Palmer Ranch to our unaffiliated joint venture partner, and as part of the sale, we simultaneously made a preferred equity investment in the property as part of the Strategic Portfolio.

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(4)	Peak Housing consists of our preferred equity investments in a private single-family home REIT. Unit count excludes consolidated operating investment units which are presented separately.

(5)	The date of investment represents the initial investment of $10.7 million. There were additional investments of $9.6 million through December 31, 2021.

(6)

Sale of Real Estate Assets and Investments

We sold seven operating properties for net proceeds of $189.3 million. Additionally, seven of the properties underlying our preferred equity investments were redeemed for net proceeds of $48.1 million, of which $0.3 million is to be received subsequent to December 31, 2021. We also received mezzanine loan payoffs of approximately $22.8 million from the sale of one property and the recapitalization of two portfolios.

The following is a summary of our real estate sales, mezzanine loan payoffs and redemption of preferred equity investments during the year ended December 31, 2021 (dollars in millions):


			Number of	Ownership		Sale		BRG Net
Property	Location	Date Sold	Units	Interest		Price		Proceeds
Operating
ARIUM Grandewood	Orlando, FL	January 28, 2021	306	100	%	$	65.3	$	25.1
James at South First	Austin, TX	February 24, 2021	250	90	%		50.0		18.1
Marquis at The Cascades	Tyler, TX	March 1, 2021	582	90	%		90.9		32.6
Plantation Park	Lake Jackson, TX	April 26, 2021	238	80	%		32.0		2.7
The Reserve at Palmer Ranch ⁽¹⁾	Sarasota, FL	June 10, 2021	320	100	%		57.6		16.6
Park & Kingston	Charlotte, NC	July 7, 2021	168	100	%		44.9		24.7
The District at Scottsdale	Scottsdale, AZ	July 7, 2021	332	99	%		150.5		69.5
Total Operating			2,196				491.2		189.3

Mezzanine Loan
Vickers Historic Roswell	Roswell, GA	June 29, 2021	79	—			40.3		12.9
Corpus ⁽²⁾	Corpus Christi, TX	December 22, 2021	81	—			—		6.8
Jolin⁽²⁾	Weatherford, TX	December 22, 2021	24	—			—		3.1
Total Mezzanine Loan			184				40.3		22.8

Preferred Equity
The Conley	Leander, TX	March 18, 2021	259	—			52.1		16.5
Alexan Southside Place	Houston, TX	March 25, 2021	270	—			45.1		10.1
Wayford at Concord ⁽³⁾	Concord, NC	June 4, 2021	150	—			44.4		7.0
Mira Vista	Austin, TX	September 23, 2021	200	—			32.6		5.6
Thornton Flats	Austin, TX	December 14, 2021	104	—			—		5.5
Belmont Crossing	Smyrna, GA	December 29, 2021	192	—			28.1		2.8
Sierra Terrace	Atlanta, GA	December 29, 2021	135	—			27.6		3.8
Sierra Village	Atlanta, GA	December 29, 2021	154	—			27.9		3.8
Total Preferred Equity			1,464				257.8		55.1
Total			3,844			$	789.3	$	267.2

(1)	We sold The Reserve at Palmer Ranch to our unaffiliated joint venture partner, and as part of the sale, we simultaneously made a preferred equity investment in the property as part of the Strategic Portfolio.

(2)

We recapitalized Corpus and Jolin on December 22, 2021 and received full payoffs for the loans. As part of the recapitalization, both Corpus and Jolin, along with two portfolios of homes previously owned solely by our joint venture partner, were combined into one portfolio known as Texas Portfolio 183.

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(3)	We purchased the Wayford at Concord property from our unaffiliated joint venture partner, and as part of the transaction, our preferred equity investment was redeemed.

Series T Preferred Stock Continuous Offering

During the year ended December 31, 2021, we issued 18,535,916 shares of Series T Preferred Stock under a continuous registered offering with net proceeds of approximately $417.1 million after commissions, dealer manager fees and discounts of approximately $46.3 million.

Redemption of 8.250% Series A Cumulative Redeemable Preferred Stock

On February 26, 2021, we redeemed all 2,201,547 outstanding shares of our Series A Preferred Stock at a redemption price of $25.00 per share, plus accrued and unpaid dividends up to, and including, the date of redemption in an amount equal to $0.320833 per share, for a total payment of $25.320833 per share, in cash.

Redemptions of Series B Redeemable Preferred Stock

During the year ended December 31, 2021, we redeemed 154,060 shares of Series B Preferred Stock through the issuance of 14,876,516 shares of Class A common stock.

In December 2019, our Board authorized the repurchase of up to an aggregate of $50 million of our outstanding shares of Class A common stock over a period of one year pursuant to stock repurchase plans. On May 9, 2020, our Board authorized the modification of the stock repurchase plans to provide for the repurchase, from time to time, of up to an aggregate of $50 million in shares of its Class A common stock, 8.250% Series A Cumulative Redeemable Preferred Stock, $0.01 par value per share (“Series A Preferred Stock”), 7.625% Series C Cumulative Redeemable Preferred Stock, $0.01 par value per share (“Series C Preferred Stock”), and/or 7.125% Series D Cumulative Preferred Stock, $0.01 par value per share (“Series D Preferred Stock”). On October 29, 2020, our Board authorized new stock repurchase plans for the repurchase, from time to time, of up to an aggregate of $75 million in shares of the Company’s Class A common stock, Series A Preferred Stock, Series C Preferred Stock and/or Series D Preferred Stock to be conducted in accordance with Rules 10b5-1 and 10b-18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). On February 9, 2021, our Board authorized the modification of the stock repurchase plans to provide for the repurchase, from time to time, of up to an aggregate of $150 million in shares of our Class A common stock, Series C Preferred Stock and/or Series D Preferred Stock. The repurchase plans terminated at the close of the NYSE American trading day on November 8, 2021 (the date on which we filed our Form 10-Q with the SEC for the quarter ended September 30, 2021). The extent to which we repurchased shares of our Class A common stock, Series A Preferred Stock, Series C Preferred Stock, and/or Series D Preferred Stock under the repurchase plans, and the timing of any such repurchases, depended on a variety of factors including general business and market conditions and other corporate considerations. Stock repurchases under the repurchase plans were made in the open market or through privately negotiated transactions, subject to certain price limitations and other conditions established under the plans. Open market repurchases were structured to occur in conformity with the method, timing, price and volume requirements of Rule 10b-18 of the Exchange Act.

During the year ended December 31, 2021, we repurchased 11,140,637 shares of Class A common stock under the repurchase plans for a total purchase price of approximately $119.6 million. During the year ended December 31, 2020, we repurchased shares under the repurchase plans as follows: 3,983,842 shares of Class A common stock, 163,068 shares of Series A Preferred Stock, 27,905 shares of Series C Preferred Stock and 76,264 shares of Series D Preferred Stock for a total purchase price of approximately $46.4 million. During the life of all repurchase plans, the total purchase price of shares we repurchased is approximately $189.1 million.

Our total stockholders’ equity increased $25.5 million from $58.4 million as of December 31, 2020 to $83.9 million as of December 31, 2021. The increase in our total stockholders’ equity is primarily attributable to the issuance of shares of Class A common stock for the redemptions of shares of Series B Preferred Stock of $154.0 million (of which, $150.7 million relates to Company-initiated redemptions) and net income of $91.7 million, offset by dividends declared of $81.0 million, the repurchase of shares of Class A common stock of $119.6 million and preferred stock accretion of $24.6 million during the year ended December 31, 2021.

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COVID-19

We continue to monitor the impact of the ongoing COVID-19 pandemic on all aspects of our business, apartment communities, and single-family residential homes including how it will impact our tenants and business partners. While, consistent with prior quarters, we did not incur any significant impact on our performance during the three months ended December 31, 2021 from the COVID-19 pandemic, going forward we cannot predict the impact that the COVID-19 pandemic will have on our financial condition, results of operations and cash flows due to the numerous uncertainties. These uncertainties include the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact and the direct and indirect economic effects of the pandemic and containment measures, among others. The outbreak of COVID-19 across the globe, including the United States, has significantly and adversely impacted global economic activity and has contributed to significant volatility and negative pressure in financial markets. The global impact of the outbreak evolved rapidly and, as cases of COVID-19 and new variants thereof have continued to be identified, many countries, including the United States, have reacted by instituting quarantines, mandating business and school closures and restricting travel. Certain states and cities, including where we own communities, have developments and where our Company has places of business located, have also reacted by instituting quarantines, restrictions on travel, “stay-at-home” orders, restrictions on types of business that may continue to operate, and/or restrictions on the types of construction projects that may continue. While many of these measures have been lifted, additional cases of COVID-19 and new variants thereof have resulted in, and may continue to result in, governments reinstating these or similar measures. We cannot predict if additional states and cities will implement similar restrictions or when restrictions currently in place will expire. Further, while vaccines have been developed and are being administered, it is unclear when or if vaccines may allow a return to full pre-pandemic activity levels. While some operations have been allowed to fully or partially re-open, the long-term impact of COVID-19 on the United States and world economies remains uncertain and may continue to adversely impact the global economy, the duration and scope of which cannot currently be predicted. As a result, the COVID-19 pandemic is negatively impacting almost every industry directly or indirectly, including industries in which our tenants are employed. Further, the impacts of a potential worsening of global economic conditions and the continued disruptions to, and volatility in, the credit and financial markets, consumer spending as well as other unanticipated consequences remain unknown. We also are unable to predict the impact that COVID-19 will have on our tenants, business partners within our network, and our service providers; and therefore, any material effect on these parties could adversely impact us.

As of December 31, 2021, we collected 97% of rents from our properties for the three months ended December 31, 2021. As of January 31, 2022, we collected 97% of January rents from our properties. In 2020, we had provided rent deferral payment plans as a result of hardships certain tenants experienced due to the impact of COVID-19; for the year ended December 31, 2021, the Company did not provide rent deferral payment plans, compared to the onset of the COVID-19 pandemic (quarter ended June 30, 2020) in which 1% of our tenant base was on payment plans. Although we may receive tenant requests for rent deferrals in the coming months, we do not expect to waive our contractual rights under our lease agreements. Further, while occupancy remains strong at 95.9% and 95.8% as of December 31, 2021 and January 31, 2022, respectively, in future periods, we may experience reduced levels of tenant retention, and reduced foot traffic and lease applications from prospective tenants, as a result of the impact of COVID-19.

The impact of the ongoing COVID-19 pandemic on our rental revenue for 2022 and thereafter cannot be determined at present. The situation surrounding the COVID-19 pandemic remains uncertain, and we continue to actively manage our response in collaboration with business partners in our network and service providers, and to assess potential impacts to our financial position and operating results, as well as potential adverse developments in our business. While we expect COVID-19 may continue to adversely impact our tenants, we believe the knowledge economy renter by choice targeted by our Class A affordable rent strategy should be less impacted by COVID-19 related job loss, which should provide a downside buffer in the interim and allow us to reaccelerate rent growth more quickly once more economic certainty exists around the COVID-19 pandemic.

Since the beginning of the COVID-19 pandemic, we have taken actions to prioritize the health and well-being of our tenants and our employees, while maintaining our high standard of service. As of December 31, 2021, all our properties are open and are complying with federal, state and local government orders. In keeping with such orders, we have implemented, and will continue to implement, operational changes, including the adoption of social distancing practices, additional use of PPE equipment and a virtual leasing/virtual office structure. Our property offices are now open to the public and to residents by appointment and with strict social distancing protocols in place. Work orders are now being completed, also with strict safety protocols in place including PPE equipment and a safety questionnaire of each resident at time of request. Generally, the outdoor amenity areas at our communities, including pools, pet parks, and outdoor social areas, have re-opened with strict social distancing protocols, limited capacity and cleaning protocols implemented. Our properties continue the cleaning protocols for the sanitization of all community common areas (including handrails, doors and elevators).

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In response to shelter-in-place orders, our corporate offices have also transitioned to a remote work environment. There can be no assurances that the continuation of such remote work arrangements for an extended period of time will not strain our business continuity plans, introduce operational risk, including cybersecurity risks, or impair our ability to manage our business.

Industry Outlook

Single-family residential

The single-family rental industry has historically been more resilient to economic cycles than the multi-family sector and is currently benefiting from significant industry tailwinds that have accelerated during the pandemic. We believe industry dynamics present a compelling investment opportunity for us, including:

●

Supply at accessible price points remains extremely tight, with little new affordable rental product coming on-line over the last decade. These supply and affordability gaps have been in place and intensifying since the wind-down of the Great Recession, with rental prices continuing to increase in step with home price appreciation.

●

Limited institutional ownership of single-family rental stock, currently estimated to be approximately 2%, creates potential for outsized growth. Our institutionally operated properties benefit from experienced regional owner-operators and a technology-aided platform, delivering not only a competitive market advantage but also operating growth potential that can benefit investors.

●

Demand fundamentals are strong and strengthening further, particularly from rental-biased and debt-burdened millennials now reaching peak single-family house consumption age. We believe that a continued upswing in propensity to rent, coupled with the limited and depleting supply at the middle-income range, signals significant opportunity.

Multifamily communities

We believe that the apartment sector will continue to deliver attractive performance for the foreseeable future due to favorable underlying demographics and supply and demand fundamentals.

Large demographic trends, including the Millennial generation of 90 million entering prime rental age through 2030, followed by the Gen-Z generation of 82 million, are projected to form more households than the Baby Boomer and the Gen-X generations, which should drive significant renter demand over the coming decades. As one data point, new research from the National Multifamily Housing Council (the “NMHC”) indicates that approximately 4.6 million new rental units will be needed to meet projected demand by 2030, and that current construction trends indicate that only 3 million new units will be delivered.

We believe that a significant amount of institutional capital and public REITs are primarily focused on investing in the big six Gateway Markets of Boston, New York, Washington, D.C., Seattle, San Francisco, and Los Angeles, and that many other primary markets are underinvested by institutional/public capital. As a result, we believe that our target “next generation, knowledge economy” markets, which are primary markets below the “big six,” provide the opportunity to source investments at cap rates that have the potential to provide not only significant current income, but also attractive capital appreciation.

Further, given that a significant portion of the nation’s apartment stock was built prior to 1980, we believe that a number of our target markets are underserved by institutional quality highly amenitized live/work/play apartment properties desired by Millennials as they continue to move into their prime rental years. We also believe that rising construction costs will continue to limit supply in the near to intermediate term, and as such, there is opportunity in our target markets for development and/or redevelopment to deliver institutional quality highly amenitized live/work/play product and capture premium rental rates and generate value.

Results of Operations

Note 3, “Sale of Real Estate Assets”; Note 4, “Investments in Real Estate”; Note 5, “Acquisition of Real Estate”; Note 6, “Notes and Interest Receivable”; and Note 7, “Preferred Equity Investments and Investments in Unconsolidated Real Estate Joint Ventures,” to our Consolidated Financial Statements provide discussion of the various purchases and sales of properties and joint venture equity interests. These transactions have resulted in material changes to the presentation of our financial statements.

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The following is a summary of our stabilized consolidated operating real estate investments as of December 31, 2021:


		Year	Number	Ownership		Occupancy
Name		Built/Renovated⁽¹⁾	of Units	Interest		% ⁽²⁾
Multifamily
ARIUM Glenridge		1990	480	90	%	93.1	%
ARIUM Westside		2008	336	90	%	94.0	%
Ashford Belmar		1988/1993	512	85	%	95.9	%
Avenue 25		2013	254	100	%	95.7	%
Burano Hunter’s Creek, formerly ARIUM Hunter’s Creek		1999	532	100	%	98.5	%
Carrington at Perimeter Park		2007	266	100	%	97.7	%
Chattahoochee Ridge		1996	358	90	%	96.4	%
Chevy Chase		1971	320	92	%	96.3	%
Cielo on Gilbert		1985	432	90	%	96.3	%
Citrus Tower		2006	336	97	%	95.8	%
Denim		1979	645	100	%	97.2	%
Elan		2007	270	100	%	97.8	%
Element		1995	200	100	%	95.5	%
Falls at Forsyth		2019	356	100	%	96.1	%
Gulfshore Apartment Homes		2016	368	100	%	97.0	%
Outlook at Greystone		2007	300	100	%	97.7	%
Pine Lakes Preserve		2003	320	100	%	96.3	%
Providence Trail		2007	334	100	%	97.3	%
Roswell City Walk		2015	320	98	%	94.7	%
Sands Parc		2017	264	100	%	96.2	%
The Brodie		2001	324	100	%	96.0	%
The Debra Metrowest, formerly ARIUM Metrowest		2001	510	100	%	97.3	%
The Links at Plum Creek	��	2000	264	88	%	96.6	%
The Mills		2013	304	100	%	97.0	%
The Preserve at Henderson Beach		2009	340	100	%	95.6	%
The Sanctuary		1988	320	100	%	95.9	%
Veranda at Centerfield		1999	400	93	%	97.0	%
Villages of Cypress Creek		2001	384	80	%	95.8	%
Wesley Village		2010	301	100	%	97.3	%
Windsor Falls		1994	276	100	%	96.7	%
Total Multifamily Units			10,626

		Average Year
Single-Family Residential ⁽³⁾		Built
Golden Pacific		1977	7	97	%	42.9	%
ILE		1990	279	95	%	84.3	%⁽⁴⁾
Navigator Villas		2013	176	90	%	96.0	%
Peak
Axelrod		1959	22	80	%	100.0	%
DFW 189		1962	189	56	%	98.4	%
Granbury		2020-2021	36	80	%	97.2	%
Indy		1958	44	60	%	86.4	%
Lubbock		1955	60	80	%	86.7	%
Lubbock 2.0		1972	75	80	%	92.0	%
Lubbock 3.0		1945	45	80	%	95.6	%
Lynnwood		2005	20	80	%	95.0	%
Lynnwood 2.0		2003	20	80	%	100.0	%
Springfield		2004	290	60	%	99.3	%
Springtown		1991	70	80	%	87.1	%
Springtown 2.0		2018	14	80	%	92.9	%
Texarkana		1967	29	80	%	75.9	%
Texas Portfolio 183		1975	183	80	%	92.3	%
Wayford at Concord		2019	150	83	%	94.7	%
Yauger Park Villas		2010	80	95	%	98.8	%
Total Single-Family Units			1,789
Total Units/Average			12,415			95.9	%

(1)	Represents date of most recent significant renovation or date built if no renovations.

(2)	Percent occupied is calculated as (i) the number of units occupied as of December 31, 2021 divided by (ii) total number of units, expressed as a percentage.

(3)	Single-Family Residential includes single-family residential homes and attached townhomes/flats.

(4)	Excludes 50 down units under renovation.

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Year ended December 31, 2021 as compared to the year ended December 31, 2020

Revenue

Rental and other property revenues increased $7.2 million, or 4%, to $203.7 million for the year ended December 31, 2021 as compared to $196.5 million for the same prior year period. This was due to a $28.0 million increase from the acquisition of nineteen investments in 2021 and the full year impact of six investments acquired in 2020, and a $10.1 million increase from same store properties, partially offset by a $30.9 million decrease driven by the sales of seven investments in 2021 and the full period impact of four investments sold in 2020. See Item 1. Business “Summary of Investments and Dispositions”.

Interest income from mezzanine loan and ground lease investments decreased $6.3 million, or 27%, to $17.0 million for the year ended December 31, 2021 as compared to $23.3 million for the same prior year period primarily due to sales of three underlying investments in 2021 and 2020 and decreases in interest rates in 2021, partially offset by increases in the average outstanding balance of mezzanine loans in 2021.

Expenses

Property operating expenses decreased $0.3 million, or 0.4%, to $76.0 million for the year ended December 31, 2021 as compared to $76.3 million for the same prior year period. This was primarily due to a $13.0 million decrease from sold investments, partially offset by a $10.5 million increase from the acquisition of investments in 2021 and 2020 and a $2.2 million increase from same store properties. Property NOI margins increased to 62.7% of total revenues for the year ended December 31, 2021, from 61.2% in the prior year period. Property NOI margins are computed as total property revenues less property operating expenses, divided by total property revenues.

Property management fees expense increased $0.4 million, or 8%, to $5.4 million for the year ended December 31, 2021 as compared to $5.0 million in the same prior year period. Property management fees incurred are based on property level revenues; an increase in property management fees was due to the increase in rental and other property revenues.

General and administrative expenses increased $3.7 million, or 15%, to $27.8 million for the year ended December 31, 2021 as compared to $24.1 million for the same prior year period.

Acquisition and pursuit costs amounted to $0.4 million for the year ended December 31, 2021 as compared to $4.2 million for the same prior year period. The 2020 expense primarily related to the write-off of pre-acquisition costs from abandoned deals due to the uncertainty from COVID-19, of which $3.3 million of the total costs related to two abandoned deals. Abandoned pursuit costs can vary greatly, and the costs incurred in any given period may be significantly different in future periods.

Weather-related losses, net amounted to $1.0 million for the year ended December 31, 2021. The 2021 expense related to freeze damages at eight properties in Texas and storm damages to two properties in Arizona and one property in Florida. No weather-related losses were recorded in 2020.

Depreciation and amortization expenses increased $0.6 million, or 1%, to $80.1 million for the year ended December 31, 2021 as compared to $79.5 million for the same prior year period. This was due to a $12.2 million increase from the acquisition of investments in 2021 and 2020 and a $0.4 million increase from same store properties, partially offset by a $12.0 million decrease driven by the sales of investments in 2021 and 2020.

Other Income and Expense

Other income and expense amounted to net income of $75.2 million for the year ended December 31, 2021 compared to net expense of $16.1 million for the same prior year period. This was primarily due to an increase in gains on sale of real estate investments of $77.9 million, a decrease in allowance for credit losses of $16.0 million, a decrease in loss on early extinguishment of debt of $7.9 million, and a $3.3 million net decrease in interest expense. This was partially offset by an increase in Merger transaction costs of $15.0 million. In addition, the Company recorded a $16.4 million provision for credit losses in the fourth quarter 2020; the provision for credit losses primarily related to a decline in the collectability of the Alexan Southside preferred equity investment since the onset of COVID-19 and its impact on the value of the property.

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Year ended December 31, 2020 as compared to the year ended December 31, 2019

Revenue

Rental and other property revenues increased $11.1 million, or 6%, to $196.5 million for the year ended December 31, 2020 as compared to $185.4 million for the same prior year period. This was due to a $36.2 million increase from the acquisition of six properties in 2020 and the full year impact of eight properties acquired in 2019, and a $1.3 million increase from same store properties, partially offset by a $26.4 million decrease driven by the sales of four properties in 2020 and the full period impact of six properties sold in 2019. See Item 1. Business “Summary of Investments and Dispositions”.

Interest income from mezzanine loan and ground lease investments decreased $1.3 million, or 5%, to $23.3 million for the year ended December 31, 2020 as compared to $24.6 million for the same prior year period primarily due to the consolidation of Cade Boca Raton and a decreased interest rate at Domain at The One Forty, partially offset by increases in the average balance of mezzanine loans outstanding.

Expenses

Property operating expenses increased $1.9 million, or 2%, to $76.3 million for the year ended December 31, 2020 as compared to $74.4 million for the same prior year period. This was due to a $13.2 million increase from the acquisition of properties in 2020 and 2019, and a $1.1 million increase from same store properties, partially offset by a $12.4 million decrease driven by the sales of properties in 2020 and 2019. Property NOI margins increased to 61.2% of total revenues for the year ended December 31, 2020, from 59.8% in the prior year period. Property NOI margins are computed as total property revenues less property operating expenses, divided by total property revenues.

Property management fees expense increased $0.1 million, or 2%, to $5.0 million for the year ended December 31, 2020 as compared to $4.9 million in the same prior year period. Property management fees incurred are based on property level revenues; an increase in property management fees was due to the increase in rental and other property revenues.

General and administrative expenses increased $1.5 million, or 7%, to $24.1 million for the year ended December 31, 2020 as compared to $22.6 million for the same prior year period.

Acquisition and pursuit costs amounted to $4.2 million for the year ended December 31, 2020 as compared to $0.6 million for the same prior year period. Acquisition and pursuit costs incurred for the year ended December 31, 2020 were primarily related to the write-off of pre-acquisition costs from abandoned deals due to the uncertainty from COVID-19, of which $3.3 million of the total costs related to two abandoned deals. Abandoned pursuit costs can vary greatly, and the costs incurred in any given period may be significantly different in future periods.

Weather-related losses, net amounted to $0.4 million for the year ended December 31, 2019. The 2019 expense primarily related to hail damage at one property in Texas and lightning damage at one property in Florida, partially offset by insurance reimbursements related to prior year storms. No weather-related losses were recorded in 2020.

Depreciation and amortization expenses increased to $79.5 million for the year ended December 31, 2020 as compared to $70.5 million for the same prior year period. This was due to a $16.6 million increase from the acquisition of properties in 2020 and 2019 and a $0.7 million increase from same store properties, partially offset by a $8.3 million decrease driven by the sales of properties in 2020 and 2019.

Other Income and Expense

Other income and expense amounted to net expense of $16.1 million for the year ended December 31, 2020 as compared to net expense of $7.6 million for the same prior year period. This was primarily due to an allowance for credit losses of $16.4 million in 2020 combined with an increase in loss from extinguishment of debt of $7.4 million. This was partially offset by an increase in gains on sale of real estate investments of $10.1 million, increase in preferred returns on unconsolidated real estate joint ventures of $1.5 million and a decrease of $3.6 million in interest expense. The Company recorded a $16.4 million provision for credit losses in the fourth quarter of 2020. The provision for credit losses primarily related to a decline in the collectability of the Alexan Southside preferred equity investment since the onset of COVID-19 and its impact on the value of the property.

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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, or properties held for sale. 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 90.0% physical occupancy.

For comparison of our three months ended December 31, 2021 and 2020, the same store properties included properties owned at October 1, 2020. Our same store properties for the three months ended December 31, 2021 and 2020 consisted of 27 properties, representing 9,558 units.

For comparison of our twelve months ended December 31, 2021 and 2020, the same store properties included properties owned at January 1, 2020. Our same store properties for the twelve months ended December 31, 2021 and 2020 consisted of 24 properties, representing 8,628 units.

Because of the limited number of same store properties as compared to the number of properties in our portfolio in 2021 and 2020, respectively, our same store performance measures may be of limited usefulness.

The following table presents the same store and non-same store results from operations for the three months ended December 31, 2021 and 2020 (dollars in thousands):


	Three Months Ended
	December 31,				Change
	2021		2020		$		%
Property Revenues
Same Store	$	44,311	$	39,566	$	4,745	12.0	%
Non-Same Store		8,792		10,244		(1,452)	(14.2)	%
Total property revenues		53,103		49,810		3,293	6.6	%

Property Expenses
Same Store		14,949		15,027		(78)	(0.5)	%
Non-Same Store		3,073		3,834		(761)	(19.8)	%
Total property expenses		18,022		18,861		(839)	(4.4)	%

Same Store NOI		29,362		24,539		4,823	19.7	%
Non-Same Store NOI		5,719		6,410		(691)	(10.8)	%
Total NOI ⁽¹⁾	$	35,081	$	30,949	$	4,132	13.4	%

(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.

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The following table presents the same store and non-same store results from operations for the years ended December 31, 2021 and 2020 (dollars in thousands):


	Year Ended
	December 31,				Change
	2021		2020		$		%
Property Revenues
Same Store	$	153,578	$	143,441	$	10,137	7.1	%
Non-Same Store		50,111		53,081		(2,970)	(5.6)	%
Total property revenues		203,689		196,522		7,167	3.6	%

Property Expenses
Same Store		56,983		54,751		2,232	4.1	%
Non-Same Store		19,019		21,550		(2,531)	(11.7)	%
Total property expenses		76,002		76,301		(299)	(0.4)	%

Same Store NOI		96,595		88,690		7,905	8.9	%
Non-Same Store NOI		31,092		31,531		(439)	(1.4)	%
Total NOI ⁽¹⁾	$	127,687	$	120,221	$	7,466	6.2	%

⁽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.

Three Months Ended December 31, 2021 Compared to Three Months Ended December 31, 2020

Same store NOI for the three months ended December 31, 2021 increased 19.7%, or $4.8 million, compared to the 2020 period. Same store property revenues increased 12.0%, or $4.7 million, as compared to the 2020 period, primarily attributable to a 10.5% increase in average rental rates and a 70-basis point increase in occupancy. Of our twenty-seven same store properties, all twenty-seven recognized rental rate increases and fifteen recognized increases in occupancy during the period. In addition, ancillary income, such as termination fees, late fees, and pet fees, increased $0.4 million and bad debt decreased $0.2 million.

Same store expenses for the three months ended December 31, 2021 decreased 0.5%, or $0.08 million, compared to the 2020 period. The decrease was partially due to non-controllable expenses; real estate taxes decreased due to a $0.5 million credit in the current year offset by a $0.2 million increase in insurance due to industrywide multifamily price increases. The remaining increase was due to controllable expenses; $0.2 million increase in utilities, $0.2 million increase in payroll related expenses, $0.06 million increase in seasonal maintenance, offset by a $0.24 million decrease in turnover costs.

Non-same store property revenues and property expenses for the three months ended December 31, 2021 decreased $1.5 million and $0.8 million, respectively, compared to the 2020 period due to the timing and volume of operating property transactions. We acquired twenty-two operating investments representing 2,857 units, of which ten operating investments were acquired during the three months ended December 31, 2021 and have a partial period of operations, and we sold eight operating investments representing 2,286 units since October 1, 2020.

Twelve Months Ended December 31, 2021 Compared to Twelve Months Ended December 31, 2020

Same store NOI for the twelve months ended December 31, 2021 increased 8.9%, or $7.9 million, compared to the 2020 period. Same store property revenues increased 7.1%, or $10.1 million, as compared to the 2020 period, primarily attributable to a 5.3% increase in average rental rates and an 80-basis point increase in occupancy. Of our twenty-four same store properties, all twenty-four recognized increases in rental rates and eighteen recognized increases in occupancy during the period. In addition, ancillary income, such as termination fees, late fees, and pet fees, increased $1.3 million and bad debt decreased $0.7 million.

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Same store expenses for the twelve months ended December 31, 2021 increased 4.1%, or $2.2 million, compared to the 2020 period. The increase was primarily due to non-controllable expenses; insurance increased $0.6 million due to industrywide multifamily price increases and real estate taxes increased $0.3 million due to municipality tax increases. The remaining increase was due to the following increases: $0.45 million in repairs and maintenance, $0.44 million in administrative costs, $0.2 million in marketing, and $0.2 million in payroll related expenses.

Non-same store property revenues and property expenses for the twelve months ended December 31, 2021 decreased $3.0 million and $2.5 million, respectively, compared to the 2020 period due to the timing and volume of operating property transactions. We acquired twenty-five operating investments representing 3,787 units, of which nineteen operating investments were acquired during the year ended December 31, 2021 and have a partial period of operations, and we sold eleven operating investments representing 3,118 units since January 1, 2020.

Prior year’s comparisons

For comparison of our three months ended December 31, 2020 and 2019, the same store properties included properties owned at October 1, 2019. Our same store properties for the three months ended December 31, 2020 and 2019 consisted of 28 properties, representing 9,958 units.

For comparison of our twelve months ended December 31, 2020 and 2019, the same store properties included properties owned at January 1, 2019. Our same store properties for the twelve months ended December 31, 2020 and 2019 consisted of 24 properties, representing 8,459 units.

Because of the limited number of same store properties as compared to the number of properties in our portfolio in 2020 and 2019, respectively, our same store performance measures may be of limited usefulness.

The following table presents the same store and non-same store results from operations for the three months ended December 31, 2020 and 2019 (dollars in thousands):


	Three Months Ended
	December 31,				Change
	2020		2019		$		%
Property Revenues
Same Store	$	41,325	$	41,092	$	233	0.6	%
Non-Same Store		8,485		4,708		3,777	80.2	%
Total property revenues		49,810		45,800		4,010	8.8	%

Property Expenses
Same Store		15,779		15,609		170	1.1	%
Non-Same Store		3,082		1,991		1,091	54.8	%
Total property expenses		18,861		17,600		1,261	7.2	%

Same Store NOI		25,546		25,483		63	0.2	%
Non-Same Store NOI		5,403		2,717		2,686	98.9	%
Total NOI ⁽¹⁾	$	30,949	$	28,200	$	2,749	9.7	%

(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.

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The following table presents the same store and non-same store results from operations for the years ended December 31, 2020 and 2019 (dollars in thousands):


	Year Ended
	December 31,				Change
	2020		2019		$		%
Property Revenues
Same Store	$	142,199	$	140,900	$	1,299	0.9	%
Non-Same Store		54,323		44,476		9,847	22.1	%
Total property revenues		196,522		185,376		11,146	6.0	%

Property Expenses
Same Store		56,660		55,598		1,062	1.9	%
Non-Same Store		19,641		18,851		790	4.2	%
Total property expenses		76,301		74,449		1,852	2.5	%

Same Store NOI		85,539		85,302		237	0.3	%
Non-Same Store NOI		34,682		25,625		9,057	35.3	%
Total NOI ⁽¹⁾	$	120,221	$	110,927	$	9,294	8.4	%

(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.

Three Months Ended December 31, 2020 Compared to Three Months Ended December 31, 2019

Same store NOI for the three months ended December 31, 2020 increased 0.2%, or $0.06 million, compared to the 2019 period. Same store property revenues increased 0.6%, or $0.2 million, as compared to the 2019 period, primarily attributable to a 140 basis point increase in occupancy and a 0.2% increase in average rental rates; of our twenty-eight same store properties, twenty-two recognized occupancy increases and fifteen recognized rental rate increases during the period. This increase in revenue was partially offset by a $0.3 million increase in bad debt expense due to the impact of COVID-19.

Same store expenses for the three months ended December 31, 2020 increased 1.1%, or $0.2 million, compared to the 2019 period. The increase was primarily due to the timing of repairs and maintenance expense in 2020. Non-controllable expenses were essentially flat compared to the 2019 period; insurance expenses increased $0.16 million due to industrywide multifamily price increases offset by a $0.19 million decrease in real estate taxes. Real estate tax decrease was due to a $0.35 million credit in the current year offset by $0.16 million of municipality tax increases.

Property revenues and property expenses for our non-same store properties increased due to our investment activity since October 1, 2019: the acquisition of six properties in 2020 and the full period impact of four properties acquired in 2019, partially offset by the sale of four properties in 2020. The results of operations for acquired properties have been included in our consolidated statements of operations from the date of acquisition and the results of operations for disposed properties have been excluded from the consolidated statements of operations since the date of disposition.

Twelve Months Ended December 31, 2020 Compared to Twelve Months Ended December 31, 2019

Same store NOI for the twelve months ended December 31, 2020 increased 0.3%, or $0.2 million, compared to the 2019 period. Same store property revenues increased 0.9% as compared to the 2019 period, primarily attributable to a 90-basis point increase in average occupancy and a 1.2% increase in average rental rates; of our twenty-four same store properties, seventeen recognized occupancy increases and sixteen recognized rental rate increases during the period. The increases were partially offset by a $0.95 million increase in bad debt expense and $0.37 million less ancillary income, such as termination fees and late fees, due to the impact of COVID-19.

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Same store expenses for the twelve months ended December 31, 2020 increased 1.9%, or $1.06 million, compared to the 2019 period. The expense increase was primarily due to non-controllable expenses; insurance expenses increased $0.7 million due to industrywide multifamily price increases and real estate taxes increased $0.6 million from prior year due to municipality tax increases. The increases were partially offset by a $0.3 million decrease in discretionary expenses, such as seasonal maintenance, resident functions, and travel due to COVID-19.

Property revenues and property expenses for our non-same store properties increased due to our investment activity since January 1, 2019: the acquisition of six properties in 2020 and the full period impact of eight properties acquired in 2019, partially offset by the sale of four properties in 2020 and the full period impact of six properties sold in 2019. The results of operations for acquired properties have been included in our consolidated statements of operations from the date of acquisition and the results of operations for disposed properties have been excluded from the consolidated statements of operations since the date of 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.

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; 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.

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However, NOI should only be used as a supplemental measure of our financial performance. The following table reflects net income (loss) attributable to common stockholders 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):



	Year Ended December 31,
	2021		2020		2019
Net income (loss) attributable to common stockholders	$	3,473	$	(44,674)	$	(19,751)
Add back: Net income (loss) attributable to Operating Partnership Units		2,250		(17,313)		(6,779)
Net income (loss) attributable to common stockholders and unit holders		5,723		(61,987)		(26,530)
Add common stockholders and Operating Partnership Units pro-rata share of:
Real estate depreciation and amortization		75,877		75,727		66,670
Non-real estate depreciation and amortization		487		486		448
Non-cash interest expense		1,869		3,025		3,174
Unrealized (gain) loss on derivatives		(73)		115		2,450
Impairment on preferred investment		—		15,930		—
Loss on extinguishment of debt and debt modification costs		6,148		14,238		7,199
Provision for credit losses		384		439		—
Property management fees		5,086		4,751		4,645
Acquisition and pursuit costs		448		4,152		556
Corporate operating expenses		27,486		23,770		22,261
Transaction costs		15,036		—		—
Weather-related losses, net		967		—		313
Preferred dividends		63,606		58,463		46,159
Preferred stock accretion		24,633		16,851		10,335
Less common stockholders and Operating Partnership units pro-rata share of:
Other income, net		432		74		68
Preferred returns on unconsolidated real estate joint ventures		12,067		11,381		9,797
Interest income from loan and ground lease investments		17,488		23,326		24,595
Gain on sale of real estate investments		124,547		56,777		48,172
Gain on sale of non-depreciable real estate investments		—		—		679
Pro-rata share of properties’ income		73,143		64,402		54,369
Add:
Noncontrolling interest pro-rata share of partially owned property income		3,692		3,074		2,810
Total property income		76,835		67,476		57,179
Add:
Interest expense		50,852		52,745		53,748
Net operating income		127,687		120,221		110,927
Less:
Non-same store net operating income		31,092		31,531		25,625
Same store net operating income	$	96,595	$	88,690	$	85,302

Liquidity and Capital Resources

Liquidity is a measure of our ability to meet potential cash requirements, both short- and long-term. Our primary short-term liquidity requirements historically have related 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, (d) ongoing commitments to repay borrowings, including our credit facilities and our maturing short-term debt, (e) the redemption of our Series A Preferred Stock, and (f) Class A common stock, Series A Preferred Stock, Series C Preferred Stock and Series D Preferred Stock repurchases under our stock repurchase plans.

Our ability to access capital on favorable terms as well as to use cash from operations to continue to meet our short-term liquidity needs could be affected by various risks and uncertainties, including, but not limited to, the effects of the COVID-19 pandemic and other risks detailed in Part II, Item 1A titled “Risk Factors” and in the other reports we have filed with the SEC.

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We believe we currently have a stable financial condition; as of December 31, 2021, we collected 97% of rents from our properties for the three months ended December 31, 2021. As of January 31, 2022, we collected 97% of January rents from our properties. In addition, we have provided rent deferral payment plans as a result of hardships certain tenants experienced due to the COVID-19 impact, decreasing from 1% in the quarter ended June 30, 2020, to none in the quarter ended December 31, 2021. Although we expect to continue to receive tenant requests for rent deferrals in the coming months, we do not expect to waive our contractual rights under our lease agreements. Further, while occupancy remains strong at 95.9% and 95.8% as of December 31, 2021 and January 31, 2022, respectively, in future periods we may experience reduced levels of tenant retention as well as reduced foot traffic and lease applications from prospective tenants as a result of COVID-19 impact.

We believe the stabilized properties underlying our consolidated real estate investments are performing well with an occupancy of 95.9%, exclusive of our development properties, at December 31, 2021.

On May 17, 2018, we filed, and on May 23, 2018, the SEC declared effective on Form S-3 (File No. 333-224990), a shelf registration statement that expired in May 2021 (the “May 2018 Shelf Registration Statement”). The securities covered by the May 2018 Shelf Registration Statement cannot exceed $2,500,000,000 in the aggregate and include common stock, preferred stock, depositary shares representing preferred stock, debt securities, warrants to purchase stock or debt securities and units. We may periodically offer one or more of these securities in amounts, prices and on terms to be announced when and if these securities are offered. The specifics of any future offerings, along with the use of proceeds of any securities offered, will be described in detail in a prospectus supplement, or other offering materials, at the time of the offering.

On October 31, 2019, based on general market conditions and related considerations, our Board determined it to be in the best interest of us and our stockholders to replace the Series B Preferred Offering with an offering of up to 32,000,000 shares of a new Series T Redeemable Preferred Stock (the “Series T Preferred Stock”), with a maximum of 20,000,000 shares of Series T Redeemable Preferred Stock offered in the primary offering and an additional 12,000,000 shares of Series T Preferred Stock offered pursuant to a dividend reinvestment plan (collectively, the “Series T Preferred Offering”). On November 13, 2019, we filed a prospectus supplement to our May 2018 Shelf Registration Statement for the Series T Preferred Offering, and on December 20, 2019, we made the initial issuance of Series T Preferred Stock pursuant to the Series T Preferred Offering. As of December 31, 2021, we have issued and outstanding 28,272,134 shares of Series T Preferred Stock.

On September 13, 2019, we and our Operating Partnership entered into an At Market Issuance Sales Agreement 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 American, or on any other existing trading market for Class A common stock or through a market maker (the “Class A ATM Offering”). The Company did not issue any shares through the Class A Common Stock ATM Offering during the year before its expiration in November 2021. During the life of the Class A Common Stock Offering, the Company had issued a total of 621,110 shares of Class A common stock.

On November 18, 2021, we filed Pre-Effective Amendment No. 1 to the Form S-3 filed on April 20, 2021, and on November 22, 2021, the SEC declared effective on Form S-3 (File No. 333-255388), a shelf registration statement that expires in November 2024 (the “November 2021 Shelf Registration Statement”). The securities covered by the November 2021 Shelf Registration Statement cannot exceed approximately $4.1 billion in the aggregate and include common stock, preferred stock, depositary shares representing preferred stock, debt securities, warrants to purchase stock or debt securities and units. We may periodically offer one or more of these securities in amounts, prices and on terms to be announced when and if these securities are offered. The specifics of any future offerings, along with the use of proceeds of any securities offered, will be described in detail in a prospectus supplement, or other offering materials, at the time of the offering.

We have approximately $128.0 million of cash and $143.3 million of capacity on our credit facilities as of January 31, 2022. At December 31, 2021, we were in compliance with all covenants under our credit facilities. We continue to communicate with our key lenders and believe access to capacity under our credit facilities will remain available for the uses set forth in their terms.

As we did in 2021 and to date in 2022, we expect to maintain a proactive capital allocation process and selectively sell assets at appropriate cap rates, which would be expected to generate cash sources for both our short-term and long-term liquidity needs. Due to the uncertainty surrounding the COVID-19 impact, we had temporarily suspended interior renovations at several properties as part of assuming a more conservative posture; however, we have selectively restarted the program at various properties as we gained more visibility on the economic recovery nationally and within our specific markets.

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Our total stockholders’ equity increased $25.5 million from $58.4 million as of December 31, 2020 to $83.9 million as of December 31, 2021. The increase in our total stockholders’ equity is primarily attributable to the issuance of shares of Class A common stock for the redemptions of shares of Series B Preferred Stock of $154.0 million (of which, $150.7 million relates to Company-initiated redemptions ) and net income of $91.7 million, offset by dividends declared of $81.0 million, the repurchase of shares of Class A common stock of $119.6 million and preferred stock accretion of $24.6 million during the year ended December 31, 2021.

In general, we believe our available cash balances, the Senior and Junior Credit Facilities, the Fannie Facility (each as defined below), 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 from the proceeds of the Series T Preferred Offering and from the credit facilities will have a 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. However, there can be no assurance that the worldwide economic disruptions arising from the COVID-19 pandemic will not cause conditions in the lending, capital and other financial markets to deteriorate, nor that our future revenues or access to capital and other sources of funding will not become constrained, which could reduce the amount of liquidity and credit available for use in acquiring and further diversifying our portfolio of multifamily assets. We cannot provide any assurances that we will be able to add properties to our portfolio at the anticipated pace, or at all.

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

●

$166.5 million in cash available at December 31, 2021;

●

$143.3 million of capacity on our credit facilities as of December 31, 2021;

●

cash generated from operating activities; and

●

proceeds from future borrowings and potential offerings, including potential offerings of common and preferred stock through underwritten offerings, as well as issuances of units of limited partnership interest in our Operating Partnership, or OP Units.

At the current time, we do not anticipate the need to establish any material contingency reserves related to the COVID-19 pandemic, other than the provision for credit loss referred to earlier, but continue to assess along with our network of business partners the possible need for such contingencies, whether at the corporate or property level.

Our primary long-term liquidity requirements relate to (a) costs for additional apartment community and single-family residential homes investments, (b) repayment of long-term debt and our credit facilities, (c) capital expenditures, and (d) cash redemption requirements related to our Series B Preferred Stock, Series C Preferred Stock and Series T Preferred Stock.

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In December 2019, our Board authorized the repurchase of up to an aggregate of $50 million of our outstanding shares of Class A common stock over a period of one year pursuant to stock repurchase plans. On May 9, 2020, our Board authorized the modification of the stock repurchase plans to provide for the repurchase, from time to time, of up to an aggregate of $50 million in shares of our Class A common stock, 8.250% Series A Cumulative Redeemable Preferred Stock, $0.01 par value per share (“Series A Preferred Stock”), 7.625% Series C Cumulative Redeemable Preferred Stock, $0.01 par value per share (“Series C Preferred Stock”), and/or 7.125% Series D Cumulative Preferred Stock, $0.01 par value per share (“Series D Preferred Stock”). On October 29, 2020, our Board authorized new stock repurchase plans for the repurchase, from time to time, of up to an aggregate of $75 million in shares of our Class A common stock, Series A Preferred Stock, Series C Preferred Stock and/or Series D Preferred Stock to be conducted in accordance with Rules 10b5-1 and 10b-18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). On February 9, 2021, our Board authorized the modification of the stock repurchase plans to provide for the repurchase, from time to time, of up to an aggregate of $150 million in shares of our Class A common stock, Series C Preferred Stock and/or Series D Preferred Stock. The repurchase plans terminated at the close of the NYSE American trading day on November 8, 2021 (the date on which we filed our Form 10-Q with the SEC for the quarter ended September 30, 2021). The extent to which we repurchased shares of our Class A common stock, Series C Preferred Stock, and/or Series D Preferred Stock under the repurchase plans, and the timing of such repurchases, depended on a variety of factors including general business and market conditions and other corporate considerations. Stock repurchases under the repurchase plans were made in the open market or through privately negotiated transactions, subject to certain price limitations and other conditions established under the plans. Open market repurchases were structured to occur in conformity with the method, timing, price and volume requirements of Rule 10b-18 of the Exchange Act.

We intend to finance our long-term liquidity requirements with net proceeds of additional issuances of common and preferred stock, our credit facilities, as well as future borrowings. 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 , all of which may continue to be adversely impacted by COVID-19 pandemic.

As we did in 2021 and 2020, 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 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 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 December 31, 2021, 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. For purposes of calculating our leverage, we assume full consolidation of all of 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.

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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 distributions paid to our Series B Preferred Stock, our Series C Preferred Stock, our Series D Preferred Stock and our Series T Preferred Stock in accordance with the terms of those securities which require monthly or quarterly dividends depending on the series. While our policy is generally to pay distributions from cash flow from operations, our distributions through December 31, 2021 have been paid from cash flow from operations, proceeds from our continuous preferred stock offerings, including our Series T Preferred Stock, proceeds from 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 in conjunction with properties that are in various stages of development, in lease-up and operating. To date, these investments have been structured as mezzanine loans, and in the future, we may also provide mortgage financing to these types of projects. The notes receivable provide a current stated return, and in certain cases, an accrued return, and required repayment based on a fixed maturity date, generally in relation to the property’s construction loan or mortgage loan maturity. If the property 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 property 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 property. 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.

We also have preferred membership interests in properties that are in various stages of development, in lease-up and operating. Our preferred equity investments are structured to provide a current preferred return, and in some cases an accrued return, during all phases. Each joint venture in which we own a preferred membership interest is required to redeem our preferred membership interests, plus any accrued but unpaid preferred return, based on a fixed maturity date, generally in relation to the property’s construction loan or mortgage loan maturity. Upon redemption of the preferred membership interests, our income, FFO, CFFO and cash flows could be 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 cash flows could be reduced if the property does not produce sufficient cash flow to pay its operating expenses, debt service and preferred return obligations. As we evaluate our capital position and capital allocation strategy, we may consider alternative means of financing the loan and preferred equity investment activities at the subsidiary level.

Cash Flows

Year ended December 31, 2021 as compared to the year ended December 31, 2020

As of December 31, 2021, we held seventy-eight real estate investments, consisting of forty-nine consolidated operating investments and twenty-nine investments held through preferred equity, loan or ground lease investments. During the year ended December 31, 2021, net cash provided by operating activities was $82.1 million after net income of $105.2 million was adjusted for the following:

●

an increase in accounts payable and other accrued liabilities of $21.3 million;

●

distributions and preferred returns from unconsolidated joint ventures of $11.7 million;

●

loss on extinguishment of debt of $6.7 million; and

●

amortization of deferred interest income on mezzanine loan of $3.0 million; offset by

●

non-cash items of $56.0 million;

●

an increase in accounts receivable, prepaids and other assets of $5.5 million; and

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an increase in notes and accrued interest receivable of $4.3 million.

Cash Flows from Investing Activities

During the year ended December 31, 2021, net cash provided by investing activities was $39.4 million, primarily due to the following:

●

$417.9 million of proceeds from the sale of real estate investments;

●

$51.5 million of proceeds from the sale and redemption of unconsolidated real estate joint ventures; and

●

$22.3 million of repayments on notes receivable; offset by

●

$277.8 million used in acquiring consolidated real estate investments;

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$146.7 million used in acquiring investments in unconsolidated joint ventures and notes receivable; and

●

$27.9 million used on capital expenditures.

Cash Flows from Financing Activities

During the year ended December 31, 2021, net cash used in financing activities was $43.9 million, primarily due to the following:

●

$189.1 million of repayments of our mortgages payable;

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$119.6 million paid for the repurchase of Class A common stock;

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$63.0 million of repayments on revolving credit facilities;

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$63.0 million in cash distributions paid to preferred stockholders;

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$55.1 million paid for the redemption of Series A Preferred Stock;

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$25.3 million in cash distributions paid to noncontrolling interests;

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$16.6 million in cash distributions paid to common stockholders;

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$2.1 million in deferred financing costs;

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$1.1 million of Class A common stock ATM issuance costs; and

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$0.3 million paid for the redemption of Series B Redeemable Preferred Stock;

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$0.2 million paid for the redemption of Series T Redeemable Preferred Stock;

●

partially offset by net proceeds of $416.6 million from the issuance of Series T Redeemable Preferred Stock;

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proceeds of $30.0 million from borrowings on revolving credit facilities;

●

capital contributions of $22.4 million from noncontrolling interests;

●

borrowings of $15.5 million on mortgages payable; and

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net proceeds of $7.2 million from the exercise of Warrants.

Operating Activities

Net cash flow provided by operating activities increased $7.6 million in 2021 compared to 2020 primarily due to:

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Increase in accounts payable and other accrued liabilities of $15.0 million;

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Decrease in accounts receivable, prepaid expenses and other assets of $10.3 million; and

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An increase in amortization of deferred interest income on mezzanine loan of $3.0 million; offset by

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Decrease of $7.9 million attributable to loss on extinguishment of debt;

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Increase in notes and accrued interest receivable of $4.3 million;

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Net decrease in net due to affiliates of $2.5 million;

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Decrease in net distributions of income and preferred returns from preferred equity investments of $2.1 million; and

●

Operating income, adjusted for non-cash activity, decreased $3.9 million as a result of our acquisitions (net of dispositions).

Investing Activities

Net cash provided by investing activities increased $66.4 million in 2021 compared to 2020 primarily due to:

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Higher proceeds from the sales of real estate investments of $223.2 million;

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Decrease in investment in notes receivable of $5.1 million;

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Lower purchases from noncontrolling interests of $3.7 million; and

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Higher proceeds from sale and redemption of unconsolidated real estate joint ventures of $0.8 million; offset by

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Higher investments in unconsolidated real estate joint venture interests of $79.5 million;

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Decreased repayments on notes receivable of $61.1 million; and

●

Acquisition of real estate investments and capital expenditures increased $25.9 million.

Financing Activities

Net cash used in financing activities was $43.9 million in 2021 as compared to net cash provided by financing activities of $20.7 million in 2020. This decrease of $64.6 million is primarily explained by:

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An increase in net mortgage repayments of $181.0 million;

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An increase in Class A common stock repurchases of $79.3 million;

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An increase in revolving credit facility repayments of $48.0 million;

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An increase in distributions paid of $16.2 million;

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A decrease in Class A common stock offering of $2.0 million;

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An increase of miscellaneous offering costs of $1.1 million; offset by

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An increase in proceeds from the Series T Preferred Stock continuous offering of $199.2 million;

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A decrease in the redemption of Series A Preferred Stock of $28.9 million;

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An increase in capital contributions of $19.3 million from noncontrolling interests;

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An increase in net proceeds of $7.1 million from the exercise of Warrants;

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A decrease in the repurchase of Series A, Series C and Series D Preferred Stock of $6.1 million;

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A decrease in deferred financing costs of $2.6 million.

Capital Expenditures

The following table summarizes our total capital expenditures incurred for the years ended December 31, 2021, 2020 and 2019 (amounts in thousands):


	2021		2020		2019
Redevelopment/renovations	$	20,467	$	10,164	$	13,124
Normally recurring capital expenditures		3,246		3,093		3,209
Routine capital expenditures		6,321		3,869		4,229
Total capital expenditures	$	30,034	$	17,126	$	20,562

Redevelopment and renovation costs are non-recurring capital expenditures for significant projects that are revenue enhancing through unit or common area upgrades, such as clubhouse renovations and kitchen remodels. Routine capital expenditures are necessary non-revenue generating improvements that extend the useful life of the property and that are less frequent in nature, such as roof repairs and asphalt resurfacing. Normally recurring capital expenditures are necessary non-revenue generating improvements that occur on a regular ongoing basis, such as carpet and appliances.

Funds from Operations and Core Funds from Operations Attributable to Common Stockholders and Unit Holders

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.

FFO attributable to common stockholders and unit holders 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 NAREIT definition, as net income (loss), computed in accordance with GAAP, excluding gains or losses on sales of depreciable real estate property, plus depreciation and amortization of real estate assets, plus impairment write-downs of certain real estate assets and investments in entities where the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for notes receivable, unconsolidated partnerships and joint ventures will be calculated to reflect FFO on the same basis.

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CFFO makes certain adjustments to FFO, removing the effect of items that do not reflect ongoing property operations such as acquisition expenses, non-cash interest, unrealized gains or losses on derivatives, provision for credit losses, 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), one-time weather-related costs, gains or losses on sales of non-depreciable real estate property, shareholder activism, stock compensation expense and preferred stock accretion. Commencing in 2020, we do not deduct the accrued portion of income on our loan and preferred equity investments from FFO to determine CFFO as the income is deemed fully collectible. The accrued portion of the income totaled $2.7 million and $1.1 million, and $7.4 million and $2.3 million for the three and twelve months ended December 31, 2021 and 2020, respectively. 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.

Our calculation of CFFO differs from the methodology used for calculating CFFO by certain other REITs and, accordingly, our CFFO may not be comparable to CFFO reported by other REITs. Our management utilizes FFO and 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 and CFFO and other supplemental performance measures are defined in various ways throughout the REIT industry, we also believe that FFO and CFFO may provide us and our stockholders with an additional useful measure to compare our financial performance to certain other REITs.

Neither FFO nor CFFO is equivalent to net income (loss), including net income (loss) attributable to common stockholders, or cash generated from operating activities determined in accordance with GAAP. Furthermore, FFO and 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 CFFO should be considered as an alternative to net income, including net income (loss) 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 nineteen operating investments, made fifteen investments through preferred equity or loans, sold seven operating investments and received payoffs of our loan or preferred equity in eleven investments subsequent to December 31, 2020. As of December 31, 2020, we had acquired six operating investments, made eight investments through preferred equity, loans or ground lease, sold six operating investments and received payoffs of our loan or preferred equity in three investments subsequent to December 31, 2019. The results presented in the table below are not directly comparable and should not be considered an indication of our future operating performance.

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The table below presents our calculation of FFO and CFFO for the years ended December 31, 2021, 2020 and 2019 (amounts in thousands, except per share amounts):




	2021		2020		2019
Net income (loss) attributable to common stockholders	$	3,473	$	(44,674)	$	(19,751)
Add back: Net income (loss) attributable to Operating Partnership Units		2,250		(17,313)		(6,779)
Net income (loss) attributable to common stockholders and unit holders		5,723		(61,987)		(26,530)
Common stockholders and Operating Partnership Units pro-rata share of:
Real estate depreciation and amortization		75,877		75,727		66,670
Impairment on preferred investment		—		15,930		—
Gain on sale of real estate investments		(124,547)		(56,777)		(48,172)
FFO attributable to Common Stockholders and Unit Holders		(42,947)		(27,107)		(8,032)
Common stockholders and Operating Partnership Units pro-rata share of:
Acquisition and pursuit costs		448		4,152		556
Non-cash interest expense		1,869		3,025		3,174
Unrealized (gain) loss on derivatives		(73)		115		2,450
Provision for credit losses		384		439		—
Loss on extinguishment of debt and debt modification costs		6,148		14,238		7,199
Amortization of deferred interest income on mezzanine loan		2,996		—		—
Weather-related losses, net		967		—		313
Non-real estate depreciation and amortization		487		486		448
Transaction costs		15,036		—		—
Gain on sale of non-depreciable real estate investments		—		—		(679)
Shareholder activism		—		—		393
Other expense (income), net		284		(400)		(68)
Non-cash preferred returns on unconsolidated real estate joint ventures		—		—		(1,291)
Non-cash equity compensation		13,512		11,917		10,615
Preferred stock accretion		24,633		16,851		10,335
CFFO Attributable to Common Stockholders and Unit Holders	$	23,744	$	23,716	$	25,413
Per Share and Unit Information:
FFO attributable to Common Stockholders and Unit Holders - diluted	$	(1.17)	$	(0.82)	$	(0.26)
CFFO attributable to Common Stockholders and Unit Holders - diluted	$	0.65	$	0.72	$	0.82

Weighted average common shares and units outstanding - diluted		36,805,455		33,116,871		30,899,927

Operating cash flow, FFO and CFFO may also be used to fund all or a portion of certain capitalizable items that are excluded from FFO and CFFO.

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 CFFO the same way, so comparisons with other REITs may not be meaningful. FFO or CFFO should not be considered as an alternative to net income (loss) attributable to common stockholders 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 CFFO should be reviewed in connection with other GAAP measurements.

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Contractual Obligations

The following table summarizes our contractual obligations as of December 31, 2021 which consisted of mortgage notes secured by our properties and revolving credit facilities. At December 31, 2021, our estimated future required payments on these obligations were as follows (amounts in thousands):


			Less than
	Total		one year		2022-2023		2024-2025		Thereafter
Mortgages Payable (Principal)	$	1,365,975	$	17,896	$	331,547	$	488,732	$	527,800
Revolving Credit Facilities (Principal)		—		—		33,000		—		—
Estimated Interest Payments on Mortgages Payable and Revolving Credit Facilities		229,446		48,928		90,122		54,328		36,068
Total	$	1,595,421	$	66,824	$	421,669	$	543,064	$	563,868

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

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Distributions


	Payable to stockholders			Date
Declaration Date	of record as of	Amount		Paid or Payable
Class A Common Stock
December 11, 2020	December 24, 2020	$	0.162500	January 5, 2021
March 12, 2021	March 25, 2021	$	0.162500	April 5, 2021
June 11, 2021	June 25, 2021	$	0.162500	July 2, 2021
September 10, 2021	September 24, 2021	$	0.162500	October 5, 2021
December 10, 2021	December 23, 2021	$	0.162500	January 5, 2022
Class C Common Stock
December 11, 2020	December 24, 2020	$	0.162500	January 5, 2021
March 12, 2021	March 25, 2021	$	0.162500	April 5, 2021
June 11, 2021	June 25, 2021	$	0.162500	July 2, 2021
September 10, 2021	September 24, 2021	$	0.162500	October 5, 2021
December 10, 2021	December 23, 2021	$	0.162500	January 5, 2022
Series A Preferred Stock
December 11, 2020	December 24, 2020	$	0.515625	January 5, 2021
January 27, 2021⁽¹⁾	February 26, 2021	$	0.320833	February 26, 2021
Series B Preferred Stock
October 9, 2020	December 24, 2020	$	5.00	January 5, 2021
January 13, 2021	January 25, 2021	$	5.00	February 5, 2021
January 13, 2021	February 25, 2021	$	5.00	March 5, 2021
January 13, 2021	March 25, 2021	$	5.00	April 5, 2021
April 12, 2021	April 23, 2021	$	5.00	May 5, 2021
April 12, 2021	May 25, 2021	$	5.00	June 4, 2021
April 12, 2021	June 25, 2021	$	5.00	July 2, 2021
July 12, 2021	July 23, 2021	$	5.00	August 5, 2021
July 12, 2021	August 25, 2021	$	5.00	September 3, 2021
July 12, 2021	September 24, 2021	$	5.00	October 5, 2021
October 11, 2021	October 25, 2021	$	5.00	November 5, 2021
October 11, 2021	November 24, 2021	$	5.00	December 3, 2021
October 11, 2021	December 23, 2021	$	5.00	January 5, 2022
Series C Preferred Stock
December 11, 2020	December 24, 2020	$	0.4765625	January 5, 2021
March 12, 2021	March 25, 2021	$	0.4765625	April 5, 2021
June 11, 2021	June 25, 2021	$	0.4765625	July 2, 2021
September 10, 2021	September 24, 2021	$	0.4765625	October 5, 2021
December 10, 2021	December 23, 2021	$	0.4765625	January 5, 2022
Series D Preferred Stock
December 11, 2020	December 24, 2020	$	0.4453125	January 5, 2021
March 12, 2021	March 25, 2021	$	0.4453125	April 5, 2021
June 11, 2021	June 25, 2021	$	0.4453125	July 2, 2021
September 10, 2021	September 24, 2021	$	0.4453125	October 5, 2021
December 10, 2021	December 23, 2021	$	0.4453125	January 5, 2022
Series T Preferred Stock ⁽²⁾
October 9, 2020	December 24, 2020	$	0.128125	January 5, 2021
January 13, 2021	January 25, 2021	$	0.128125	February 5, 2021
January 13, 2021	February 25, 2021	$	0.128125	March 5, 2021
January 13, 2021	March 25, 2021	$	0.128125	April 5, 2021
April 12, 2021	April 23, 2021	$	0.128125	May 5, 2021
April 12, 2021	May 25, 2021	$	0.128125	June 4, 2021
April 12, 2021	June 25, 2021	$	0.128125	July 2, 2021
July 12, 2021	July 23, 2021	$	0.128125	August 5, 2021
July 12, 2021	August 25, 2021	$	0.128125	September 3, 2021
July 12, 2021	September 24, 2021	$	0.128125	October 5, 2021
October 11, 2021	October 25, 2021	$	0.128125	November 5, 2021
October 11, 2021	November 24, 2021	$	0.128125	December 3, 2021
October 11, 2021	December 23, 2021	$	0.128125	January 5, 2022
December 10, 2021 ⁽³⁾	December 23, 2021	$	0.050000	December 29, 2021

(1)	This dividend was paid on the date indicated to shareholders in conjunction with the redemption of Series A preferred shares.

(2)	Shares of newly issued Series T Preferred Stock that are held only a portion of the applicable monthly dividend period receive a prorated monthly dividend based on the actual number of days in the applicable dividend period during which each such share of Series T Preferred Stock was outstanding.

(3)

The Board authorized, and the Company declared, an annual Series T Preferred Stock dividend of 0.20% per share of Series T Preferred Stock. Shares of Series T Preferred Stock that were held only for a portion of the applicable annual stock dividend period receive a prorated Series T Preferred Stock dividend based on the actual number of months in the applicable annual stock dividend period during which each such share of Series T Preferred Stock was outstanding. The annual stock dividend equates to $0.05 per share of Series T Preferred Stock.

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

We had a dividend reinvestment plan that allowed for participating stockholders to have their Class A common stock dividend distributions automatically reinvested in additional Class A common shares based on the average price of the Class A common shares on the investment date.

We also had a dividend reinvestment plan that allowed for participating stockholders to have their Series T Preferred Stock dividend distributions automatically reinvested in additional shares of Series T Preferred Stock at a price of $25.00 per share. In December 2021, the Board approved the suspension of the dividend reinvestment plans until further notice.

Our Board will determine the amount of dividends to be paid to our stockholders, subject to operating restrictions included in the Merger Agreement. The determination of our Board will be based on several 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. While our policy is generally to pay distributions from cash flow from operations, we may declare distributions in excess of funds from operations.

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Distributions for the year ended December 31, 2021 were as follows (amounts in thousands):


	Distributions
2021	Declared		Paid
First Quarter
Class A Common Stock	$	3,943	$	3,630
Class C Common Stock		12		12
Series A Preferred Stock		706		1,842
Series B Preferred Stock		7,089		7,400
Series C Preferred Stock		1,094		1,094
Series D Preferred Stock		1,235		1,235
Series T Preferred Stock		4,493		4,049
OP Units		1,027		1,027
LTIP Units		814		510
Total first quarter 2021	$	20,413	$	20,799
Second Quarter
Class A Common Stock	$	4,753	$	3,945
Class C Common Stock		12		12
Series B Preferred Stock		5,818		6,273
Series C Preferred Stock		1,094		1,094
Series D Preferred Stock		1,235		1,235
Series T Preferred Stock		6,220		5,616
OP Units		1,027		1,025
LTIP Units		721		836
Total second quarter 2021	$	20,880	$	20,036
Third Quarter
Class A Common Stock	$	4,244	$	4,750
Class C Common Stock		12		12
Series B Preferred Stock		5,404		5,407
Series C Preferred Stock		1,094		1,094
Series D Preferred Stock		1,235		1,235
Series T Preferred Stock		8,039		7,439
OP Units		1,027		1,025
LTIP Units		836		631
Total third quarter 2021	$	21,891	$	21,593


Fourth Quarter
Class A Common Stock	$	4,363	$	4,245
Class C Common Stock		12		12
Series B Preferred Stock		5,393		5,396
Series C Preferred Stock		1,094		1,094
Series D Preferred Stock		1,235		1,235
Series T Preferred Stock		11,128		10,281
OP Units		1,027		1,025
LTIP Units		843		639
Total fourth quarter 2021	$	25,095	$	23,927
Total	$	88,279	$	86,355

Critical Accounting Policies and Estimates

Below is a discussion of the accounting policies that we consider critical to an understanding of our financial condition and operating results that may require complex or significant judgment in their application or require estimates about matters which are inherently uncertain.

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Principles of Consolidation and Basis of Presentation

Our consolidated financial statements include our accounts and the accounts of other subsidiaries over which we have control. All inter-company transactions, balances, and profits have been eliminated in consolidation. Interests in entities acquired will be evaluated based on applicable GAAP, which includes the requirement to consolidate entities deemed to be variable interest entities (“VIE”) in which we are the primary beneficiary. If the entity in which we hold an interest is determined not to be a VIE, then the entity will be evaluated for consolidation based on legal form, economic substance, and the extent to which we have control and/or substantive participating rights under the respective ownership agreement.

There are judgments and estimates involved in determining if an entity in which we have made an investment is a VIE and, if so, whether we are the primary beneficiary. The entity is evaluated to determine if it is a VIE by, among other things, calculating the percentage of equity being risked compared to the total equity of the entity. A change in the judgments, assumptions, and estimates used could result in consolidating an entity that should not be consolidated or accounting for an investment using the equity method that should in fact be consolidated, the effects of which could be material to our financial statements.

Real Estate Purchase Price Allocations

Upon the acquisition of real estate properties which do not constitute the definition of a business, we recognize the assets acquired, the liabilities assumed, and any noncontrolling interest as of the acquisition date, measured at their relative fair values. Acquisition-related costs are capitalized in the period incurred and are recorded to the components of the real estate assets acquired. In determining fair values for multifamily apartment community acquisitions, we assess the acquisition-date fair values of all tangible assets, identifiable intangible assets and assumed liabilities using methods like those used by independent appraisers (e.g., discounted cash flow analysis) and which utilize appropriate discount and/or capitalization rates and available market information. In determining fair values for single-family residential home acquisitions, we utilize information obtained from county tax assessment records to assist in the determination of the fair value of land and building. Estimates of future cash flows are based on several factors including historical operating results, known and anticipated trends, and market and economic conditions. The fair value of tangible assets of an acquired property considers the value of the property as if it was vacant.

Intangible assets include the value of in-place leases, which represents the estimated fair value of the net cash flows of leases in place at the time of acquisition, as compared to the net cash flows that would have occurred had the property been vacant at the time of acquisition and subject to lease-up. We amortize the value of in-place leases to expense over the remaining non-cancelable term of the respective leases, which on average is six months.

Estimates of the fair values of the tangible assets, identifiable intangible assets and assumed liabilities require us to make significant assumptions to estimate market lease rates, property operating expenses, carrying costs during lease-up periods, discount rates, market absorption periods, prevailing interest rates and the number of years the property will be held for investment. The use of inappropriate assumptions could result in an incorrect valuation of acquired tangible assets, identifiable intangible assets and assumed liabilities, which could impact the amount of our net income (loss). Differences in the amount attributed to the fair value estimate of the various assets acquired can be significant based on the assumptions made in calculating these estimates.

Revenue Recognition

We recognize rental revenue on a straight-line basis over the terms of the rental agreements and in accordance with ASC Topic 842 Leases. Rental revenue is recognized on an accrual basis and when the collectability of the amounts due from tenants is deemed probable. Rental revenue is included within rental and other property revenues on our consolidated statements of operations. Amounts received in advance are recorded as a liability within other accrued liabilities on our consolidated balance sheets.

Other property revenues are recognized in the period earned.

We recognize a gain or loss on the sale of real estate assets when the criteria for an asset to be derecognized are met, which include when (i) a contract exists and (ii) the buyer obtains control.

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Preferred Equity Investments and Investments in Unconsolidated Real Estate Joint Ventures

We analyze an investment to determine if it is a variable interest entity (a “VIE”) in accordance with Topic ASC 810 and, if so, whether we are 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 of the entity 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. We continuously re-assess at each level of the investment whether the entity is (i) a VIE, and (ii) if we are the primary beneficiary of the VIE. If it was determined that the entity in which we hold an interest qualified as a VIE and we were the primary beneficiary, the entity would be consolidated.

If after consideration of the VIE accounting literature, we have determined that an entity is not a VIE, we assess the need for consolidation under all other provisions of ASC 810. These provisions provide for consolidation of majority-owned entities where majority voting interest held by us provides control.

In assessing whether we are in control of and requiring consolidation of the limited liability company and partnership venture structures we evaluate the respective rights and privileges afforded each member or partner (collectively referred to as “member”). Our 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 business.

If it has been determined that we do not have control but do have the ability to exercise significant influence over the entity, we account for these investments as preferred equity investments and investments in unconsolidated real estate joint ventures in our consolidated balance sheets. In accordance with ASC 320 Investments – Debt Securities, we classify each preferred equity investment as a held to maturity debt security as we have the intention and ability to hold the investment until redemption. We earn a fixed return on these investments which is included within preferred returns on unconsolidated real estate joint ventures in our consolidated statements of operations. We evaluate the collectability of each preferred equity investment and estimates a provision for credit loss, as applicable. Refer to the Current Expected Credit Losses (“CECL”) section below for further information regarding CECL and our provision for credit losses.

Mezzanine Loan Investments

We analyze each loan arrangement that involves real estate development to consider whether the loan qualifies for accounting as a loan or as an investment in a real estate development project. We have evaluated our real estate loans, where appropriate, for accounting treatment as loans versus real estate development projects, as required by ASC 310-10 Receivables. For each loan, we have concluded that the characteristics and the facts and circumstances indicate that loan accounting treatment is appropriate. We recognize interest income on our notes receivable on the accrual method unless a significant uncertainty of collection exists. If a significant uncertainty exists, interest income is recognized as collected. Costs incurred to originate our notes receivable are deferred and amortized using the effective interest method over the term of the related notes receivable. We evaluate the collectability of each mezzanine loan investment and estimate a provision for credit loss, as applicable. Refer to CECL section below for further information regarding CECL and our provision for credit losses.

Current Expected Credit Losses (“CECL”)

We estimate provision for credit losses on our mezzanine loan and preferred equity investments under CECL. This method is based on expected credit losses for the life of the investment as of each balance sheet date. The method for calculating the estimate of expected credit loss takes into account historical experience and current conditions for similar loans and reasonable and supportable forecasts about the future.

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We estimate our provision for credit losses using a collective (pool) approach for investments with similar risk characteristics, such as collateral and duration of investment. In measuring the CECL provision for investments that share similar characteristics, we apply a default rate to the investments for the remaining mezzanine loan or preferred equity investment hold period. As we do not have a significant historical population of loss data on our mezzanine loans and preferred equity investments, our default rate utilized for CECL is based on an external historical loss rate for commercial real estate loans.

In addition to analyzing investments as a pool, we perform an individual investment assessment of expected credit losses. If it is determined that the borrower is experiencing financial difficulty, or a foreclosure is probable, or we expect repayment through the sale of the collateral, we calculate expected credit losses based on the value of the underlying collateral as of the reporting date. During this review process, if we determine that it is probable that we will not be able to collect all amounts due for both principal and interest according to the contractual terms of an investment, that mezzanine loan or preferred equity investment is not considered fully recoverable and a provision for credit loss is recorded.

In estimating the value of the underlying collateral when determining if a mezzanine loan or preferred equity investment is fully recoverable, we evaluate estimated future cash flows to be generated from the collateral underlying the investment. The inputs and assumptions utilized to estimate the future cash flows of the underlying collateral are based upon our evaluation of the operating results, economy, market trends, and other factors, including judgments regarding costs to complete any construction activities, lease up and occupancy rates, rental rates, and capitalization rates utilized to estimate the projected cash flows at the disposition. We may also obtain a third-party valuation which may value the collateral through an "as-is" or "stabilized value" methodology. If upon completion of the valuation the fair value of the underlying collateral securing the investment is less than the net carrying value, we record a provision for credit loss on that mezzanine loan or preferred equity investment. As the investment no longer displays the characteristics that are similar to those of the pool of mezzanine loans or preferred equity investments, the investment is removed from the CECL collective (pool) analysis described above.

Our significant accounting policies are more fully described in Note 2, “Basis of Presentation and Summary of Significant Accounting Policies,” to our Notes to the Consolidated Financial Statements. Certain of our accounting policies require management to make estimates and judgments regarding uncertainties that may affect the reported amounts presented and disclosed in our consolidated financial statements. These estimates and judgments are affected by management’s application of accounting policies. These judgments affect the reported amounts of assets and liabilities and our disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods.

We base these estimates on historical experience and various other factors that are believed to be reasonable, the results of which form the basis for making judgments under the circumstances. Due to the inherent uncertainty involved in making these estimates, actual results reported may differ from these estimates under different situations or conditions. Additionally, other companies may utilize different estimates that may impact the comparability of our results of operations to those of companies in similar businesses. We consider an accounting estimate to be significant if it requires us to make assumptions about matters that were uncertain at the time the estimate was made and changes in the estimate would have had a significant impact on our consolidated financial position or results of operations.

Off-Balance Sheet Arrangements

As of December 31, 2021, we have off-balance sheet arrangements that may have a material effect on our financial condition, revenues or expenses, results of operations, liquidity, capital resources or capital expenditures. As of December 31, 2021, we own interests in twenty joint ventures that are accounted for as held to maturity debt securities or loans as we exercise significant influence over, but do not control, the investee.

New Accounting Pronouncements

See Note 2, “Basis of Presentation and Summary of Significant Accounting Policies,” to our Notes to the Consolidated Financial Statements for a description of accounting pronouncements. We do not believe these new pronouncements will have a significant impact on our Consolidated Financial Statements, cash flows or results of operations.

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Subsequent Events

Issuance of LTIP Units under the Fourth Amended 2014 Incentive Plans

On January 1, 2022, we granted an aggregate of 134,131 time-based LTIP Units and an aggregate of 268,265 performance-based LTIP Units to various executive officers under the Fourth Amended 2014 Incentive Plans pursuant to the executive officers’ employment or service agreements. The time-based LTIP Units vest over approximately three years, while the performance-based LTIP Units subject to a three-year performance period and will thereafter vest upon successful achievement of performance-based conditions. All such LTIP Unit grants require continuous employment for vesting.

In addition, on January 1, 2022, we granted 3,546 LTIP Units pursuant to the Fourth Amended 2014 Incentive Plans to each independent member of the Board in payment of the equity portion of their respective annual retainers. The LTIP Units vested immediately upon issuance.

Distributions Declared


	Payable to stockholders
Declaration Date	of record as of	Amount		Paid / Payable Date
Series B Preferred Stock
January 14, 2022	January 25, 2022	$	5.00	February 4, 2022
January 14, 2022	February 25, 2022	$	5.00	March 4, 2022
January 14, 2022	March 25, 2022	$	5.00	April 5, 2022
Series T Preferred Stock
January 14, 2022	January 25, 2022	$	0.128125	February 4, 2022
January 14, 2022	February 25, 2022	$	0.128125	March 4, 2022
January 14, 2022	March 25, 2022	$	0.128125	April 5, 2022

Distributions Paid

The following distributions have been paid subsequent to December 31, 2021 (amounts in thousands):


	Distributions Paid
January 5, 2022 (to stockholders of record as of December 23, 2021)
Class A Common Stock	$	4,363
Class C Common Stock		12
Series B Preferred Stock		1,796
Series C Preferred Stock		1,094
Series D Preferred Stock		1,235
Series T Preferred Stock		3,619
OP Units		1,027
LTIP Units		646
Total	$	13,792
February 4, 2022 (to stockholders of record as of January 25, 2022)
Series B Preferred Stock	$	1,795
Series T Preferred Stock		3,621
Total	$	5,416
March 4, 2022 (to stockholders of record as of February 25, 2022)
Series B Preferred Stock	$	1,794
Series T Preferred Stock		3,620
Total	$	5,414

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Stock Activity

Subsequent to December 31, 2021 and as of February 28, 2022, we have issued 1,266,444 shares of Class A common stock upon the exercise of 106,502 Warrants and there are 29,242,107 shares of Class A common stock outstanding and 138,583 Warrants outstanding (refer to Note 13 – Stockholders’ Equity of our consolidated financial statements for further information).

Sale of Alexan CityCentre Interests

On January 20, 2022, Alexan CityCentre, the underlying asset of an unconsolidated joint venture located in Houston, Texas, was sold. Upon the sale, our preferred equity investment was redeemed by the joint venture for $18.7 million, which included its original preferred investment of $18.2 million and accrued preferred return of $0.5 million.

Weatherford Loan Financing

On February 15, 2022, we provided a $9.6 million mezzanine loan (the “Weatherford Mezz Loan”) to an unaffiliated third party for land to be used in the development of 185-build for rent, single-family residential homes in Weatherford, Texas. The Weatherford Mezz Loan matures on May 16, 2022 and contains three (3) thirty-day extension options, subject to certain conditions, and can be prepaid without penalty. The Weatherford Mezz Loan bears interest at 12.0% per annum with interest-only payments during the term of the loan.

Sale of Reunion Apartments

On February 25, 2022, Reunion Apartments, a property located in Orlando, Florida, was sold. Upon the sale, the mezzanine loan that we provided was paid off for $12.5 million, which included principal repayment of $10.0 million, accrued interest of $1.5 million and an incremental payment of $1.0 million to achieve the minimum interest per the terms of the loan agreement.

Sale of The Hartley at Blue Hill

On February 28, 2022, The Hartley at Blue Hill, a property located in Chapel Hill, North Carolina, was sold. The mezzanine loan that we provided was paid off for $34.4 million, which included principal repayment of $31.0 million and accrued interest of $3.4 million. The $5.0 million senior loan that we provided, which is secured by a parcel of land adjacent to The Hartley at Blue Hill property, remains outstanding.

Item 7A. 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. Fair value adjustments and unamortized deferred financing costs, net, of approximately $(1.0) million are excluded:

($ in thousands)


	2022			2023			2024			2025			2026			Thereafter			Total
Mortgage Notes Payable	$	17,896		$	127,237		$	204,310		$	332,171		$	156,561		$	527,800		$	1,365,975
Weighted Average Interest Rate		3.69	%		3.21	%		3.75	%		3.82	%		3.70	%		3.36	%		3.56	%

Revolving Credit Facilities	$	—		$	—		$	—		$	—		$	—		$	—		$	—
Weighted Average Interest Rate		—			—			—			—			—			—			—

The fair value (in thousands) is estimated at $1,388.3 million for mortgages payable as of December 31, 2021.

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The table above incorporates those exposures that exist as of December 31, 2021; 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.

Based on our debt and interest rates in effect at December 31, 2021, a 100 basis point increase or decrease in interest rates on the portion of our debt bearing interest at variable rates would increase future interest expense by approximately $3.0 million or decrease by $0.4 million, respectively, on an annual basis.

Item 8. Financial Statements and Supplementary Data

The information required by this Item 8 is hereby included in our Consolidated Financial Statements beginning on page F-1 of the Annual Report on Form 10-K.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

None.

Item 9A. Controls and Procedures

Disclosure Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

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 Financial Officer, evaluated, as of December 31, 2021, 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 Financial Officer concluded that our disclosure controls and procedures were effective as of December 31, 2021, 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 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.

Management’s Annual Report on Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)). Our management, including our Chief Executive Officer and Chief Financial Officer, evaluated, as of December 31, 2021, the effectiveness of our internal control over financial reporting based on the framework in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013). Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our internal control over financial reporting, as of December 31, 2021, were effective.

Report from Our Independent Registered Public Accounting Firm

Grant Thornton LLP, our independent registered public accounting firm that audited the financial statements included in this Annual Report on Form 10-K, has audited the effectiveness of the Company’s internal control over financial reporting as of December 31, 2021, and issued a report which appears on page F-2 of this Annual Report on Form 10-K.

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Changes in Internal Control over Financial Reporting

There has been no change in internal control over financial reporting that occurred during the quarter ended December 31, 2021 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information

None.

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Item 9C. Disclosure Regarding Foreign Jurisdictions That Prevent Inspections

Not applicable.

PART III

Item 10. Directors, Executive Officers and Corporate Governance.

Our Executive Officers and Directors

The individuals listed as our executive officers below serve to manage the day-to-day affairs and carry out the directives of our Board in the review, selection and recommendation of investment opportunities and operating acquired investments and monitoring the performance of those investments to ensure that they are consistent with our investment objectives. The duties that these executive officers perform also include the performance of corporate governance activities on our behalf that require the attention of our corporate officers, including signing certifications required under Sarbanes-Oxley Act of 2002, as amended, for filing with the periodic reports.

The following table and biographical descriptions set forth certain information with respect to the individuals who currently serve as our executive officers and directors:


Name^*	Age^**	Position	Year First Became Director
R. Ramin Kamfar	58	Chairman of the Board and Chief Executive Officer	2008
Jordan B. Ruddy	59	Chief Operating Officer and President	N/A
James G. Babb, III	57	Chief Strategy Officer	N/A
Ryan S. MacDonald	38	Chief Investment Officer	N/A
Christopher J. Vohs	45	Chief Financial Officer and Treasurer	N/A
Michael L. Konig	61	Chief Legal Officer and Secretary	N/A
Michael DiFranco	57	Executive Vice President, Operations	N/A
I. Bobby Majumder	53	Independent Director	2009
Romano Tio	62	Independent Director	2009
Elizabeth Harrison	57	Independent Director	2018
Kamal Jafarnia	55	Independent Director	2019

* The address of each executive officer and director listed is 1345 Avenue of the Americas, 32^nd Floor, New York, New York 10105.

** As of March 7, 2022.

R. Ramin Kamfar, Chief Executive Officer. Mr. Kamfar has served as Chairman of the board of directors and Chief Executive Officer of Bluerock Residential since August 2008, and also served as its President from April 2014 until October 2017. Mr. Kamfar also served as Chief Executive Officer of BRG Manager, LLC, the former manager of Bluerock Residential, from August 2008 to February 2013. In addition, Mr. Kamfar has served as Chairman of the board of trustees of Bluerock Total Income + Real Estate Fund, a closed-end interval fund organized by Bluerock, since 2012 and Chairman of the board of directors of Bluerock Industrial Growth REIT, Inc. and Chief Executive Officer of its external manager, Bluerock Industrial Manager, LLC, since their respective formations in 2021. Mr. Kamfar is the Founder and has also served as the Chairman and Chief Executive Officer of Bluerock since 2002. Mr. Kamfar has approximately 30 years of experience in various aspects of real estate, private equity, and investment banking. From 1988 to 1993, Mr. Kamfar worked as an investment banker at Lehman Brothers Inc., New York, New York, where he specialized in mergers and acquisitions and corporate finance. From 1993 to 2002, Mr. Kamfar built a startup into a leading public company in the “fast casual” market now known as Einstein Noah Restaurant Group, Inc. Mr. Kamfar received an M.B.A. degree with distinction in Finance from The Wharton School of the University of Pennsylvania, and a B.S. degree with distinction in Finance from the University of Maryland, College Park.

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Jordan B. Ruddy, President. Mr. Ruddy has served as Chief Operating Officer and President of Bluerock Residential since August 2008, and also served as the President of BRG Manager, LLC, the former manager of Bluerock Residential, from February 2013 to October 2017. In addition, Mr. Ruddy has served as President of Bluerock Total Income+ Real Estate Fund, as well co-portfolio manager of its adviser Bluerock Fund Advisor since October 2013 and as President of Bluerock Industrial Growth REIT, Inc. and its external manager, Bluerock Industrial Manager, LLC, since their respective formations in 2021. Mr. Ruddy joined Bluerock in 2002 and has continuously served in various senior management capacities for it and its affiliates. Mr. Ruddy has approximately 30 years of experience in real estate acquisitions, financings, management and dispositions. Prior to joining Bluerock, Mr. Ruddy served as a real estate investment banker at Banc of America Securities LLC and Smith Barney Inc., as well as Vice President of Amerimar Enterprises, a real estate company specializing in value-added investments nationwide, where he managed acquisitions, financings, leasing, asset management and dispositions involving over 1.5 million square feet of commercial and multifamily real estate. Mr. Ruddy received an M.B.A. degree in Finance and Real Estate from The Wharton School of the University of Pennsylvania, and a B.S. degree with high honors in Economics from the London School of Economics.

Ryan S. MacDonald, Chief Investment Officer. Mr. MacDonald has served as Bluerock Residential’s Chief Investment Officer since January 2021 and as its Chief Acquisitions Officer from October 2017 until January 2021. In addition, Mr. MacDonald has served as Chief Investment Officer of Bluerock Industrial Growth REIT, Inc. and its external manager, Bluerock Industrial Manager, LLC, since their respective formations in 2021. Mr. MacDonald joined Bluerock in 2008 and has continuously served in various senior acquisition and disposition capacities. To date, with Bluerock, Mr. MacDonald has been involved with real estate transactions with an aggregate value of approximately $8.5 billion. Prior to joining Bluerock, Mr. MacDonald was an Analyst for PNC Realty Investors (formerly Mercantile Real Estate Advisors), where he served as part of an investment team that made more than $1.2 billion in investments within all tranches of the capital structure. Mr. MacDonald received a B.A. in Economics from the University of Maryland, College Park.

James G. Babb, III, Chief Strategy Officer. Mr. Babb has served as Chief Strategy Officer of Bluerock Residential since January 2021, and previously served as its Chief Investment Officer from July 2008 until November 2013 and from October 2017 until January 2021. Mr. Babb also previously served as Chief Investment Officer of BRG Manager, LLC from November 2013 until October 2017, as a director of Bluerock Residential until April 2014, as the President of Bluerock Residential from July 2008 until August 2012, and as the President of BRG Manager, LLC, the former manager to Bluerock Residential, from July 2008 until February 2013. In addition, Mr. Babb has served as Chief Strategy Officer of Bluerock Industrial Growth REIT, Inc. and its external manager, Bluerock Industrial Manager, LLC, since their respective formations in 2021. Mr. Babb joined Bluerock in 2007 and served as its Chief Investment Officer through October 2017, and as a Trustee of Bluerock Total Income + Real Estate Fund from 2012 until November 2019. He has been involved exclusively in real estate acquisition, management, financing and dispositions for approximately 30 years. From 1992 to August 2003, Mr. Babb helped lead the residential and office acquisitions initiatives for Starwood Capital Group, or Starwood Capital. Starwood Capital was formed in 1992 and during his tenure raised and invested funds on behalf of institutional investors through seven private real estate funds, which in the aggregate ultimately invested approximately $8 billion in approximately 250 separate transactions and was also active in Starwood Capital’s efforts to expand its platform to invest in Europe. From August 2003 to July 2007, Mr. Babb founded Bluepoint Capital, LLC, a private real estate investment company focused on the acquisition, development and/or redevelopment of residential and commercial properties. Mr. Babb received a B.A. degree in Economics from the University of North Carolina at Chapel Hill.

Christopher J. Vohs, Chief Financial Officer . Mr. Vohs has served as Chief Financial Officer of Bluerock Residential since October 2017. In addition, Mr. Vohs has served as Chief Financial Officer and Treasurer of Bluerock Industrial Growth REIT, Inc. and its external manager, Bluerock Industrial Manager, LLC, since their respective formations in 2021. Mr. Vohs joined Bluerock in July 2010 and has continuously served in various senior accounting and financial capacities for it and its affiliates, including as Bluerock’s Chief Accounting Officer from July 2010 until October 2017. Prior to joining Bluerock, Mr. Vohs served as Corporate Controller for Roberts Realty Investors, Inc., a public multifamily REIT based in Atlanta, Georgia, from March 2009 to July 2010. From October 2004 to March 2009, Mr. Vohs worked at Pulte Homes, a nationwide builder of single-family homes, in various financial roles, including as Internal Audit Manager & Asset Manager and later as Vice President of Finance for Pulte’s Orlando and Southeast Florida operations. From January 1999 to October 2004, Mr. Vohs worked as an Audit Manager for Deloitte & Touche, an international professional services firm, where he earned his CPA certification. Mr. Vohs received his B.A. degree in Accounting from Michigan State University.

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Michael L. Konig, Chief Legal Officer and Secretary. Mr. Konig, through his wholly-owned limited liability company, Konig & Associates, LLC, serves as our Chief Legal Officer and Secretary. Previously, Mr. Konig served as Chief Operating Officer, General Counsel and Secretary of both our Company and our former Manager from November 2013 through October 2017, and as Senior Vice President and General Counsel of our Company and our former advisor from August 2008 through November 2013. Mr. Konig joined Bluerock in 2004 and has continuously served in various senior legal and management capacities for it and its affiliates, including as General Counsel of Bluerock, and served as Chief Legal Officer of the advisor of Bluerock Total Income + Real Estate Fund from October 2012 through May 2018. Mr. Konig has over 25 years of experience in law and business. Mr. Konig was an attorney at the firms of Ravin Sarasohn Cook Baumgarten Fisch & Baime from September 1987 to September 1989, and Greenbaum Rowe Smith & Davis from September 1989 to March 1997, representing borrowers and lenders in numerous financing transactions, primarily involving real estate, distressed real estate and Chapter 11 reorganizations, as well as a broad variety of litigation and corporate law matters. From 1998 to 2002, Mr. Konig served as legal counsel, including as General Counsel, at New World Restaurant Group, Inc. (now known as Einstein Noah Restaurant Group, Inc.). From 2002 to December 2004, Mr. Konig served as Senior Vice President of Roma Food Enterprises, Inc. where he led operations and the restructuring and sale of the privately held company with approximately $300 million in annual revenues. Mr. Konig received a J.D. degree cum laude in 1987 from California Western School of Law, located in San Diego, California, an M.B.A. degree in Finance in 1988 from San Diego State University and a Bachelor of Commerce degree in 1982 from the University of Calgary.

Michael DiFranco, Executive Vice President, Operations. Mr. DiFranco has served as Executive Vice President, Operations of Bluerock Residential since November 2018, with responsibility for the operational and financial performance of its multi-family housing portfolio. Previously, from 2005 to 2016, Mr. DiFranco held several roles of increasing responsibilities with Apartment & Investment Management Company (NYSE: AIV), including serving four years as Senior Vice President of Financial Operations. From 2016 to 2018, Mr. DiFranco served as Senior Vice President of Financial Operations with The Irvine Company Apartment Communities, overseeing Revenue Management, Business Intelligence and Portfolio Management. Mr. DiFranco received a B.A. in Business from Texas A&M University, College Station, an M.B.A. from The University of Texas at Austin, and an M.S. in Information Systems from The University of Colorado, Denver.

Elizabeth Harrison. Ms. Harrison has served as an independent member of the board of directors of Bluerock Residential since July 2018. Ms. Harrison has over 23 years of branding and marketing experience. Ms. Harrison serves as the CEO and Principal of H &S Communications (“H&S”), a full-service marketing, branding and public relations agency with offices in New York, Miami and Los Angeles, which she co-founded in 1995. Having organized the sale of H&S to Omnicom Group (NYSE: OMC), a leading global marketing and corporate communications company, in 2003, and where she continued to serve as CEO, Ms. Harrison reacquired H&S from Omnicom Group in 2020. As CEO of H&S, Ms. Harrison is responsible for the company’s operations and strategic development, while overseeing communications, partnerships and marketing for clients that include real estate developers, luxury hotel properties and travel technology companies on a global level. In 2011, H&S became the complementary sister-agency of Ketchum, a leading global communications consultancy. Ms. Harrison is the co-author of several books and is frequently invited to share her luxury branding expertise at high-profile conferences and summits, most recently including Harvard’s 5th Annual CEO Roundtable: Building Leading Brands and Driving Growth. Ms. Harrison has also served as a panelist for Step Up Women’s Network’s “View from the Top” seminar. Ms. Harrison has served on the boards of Love Heals and the Alison Gertz Foundation for AIDS Education, and also works closely with the Ars Nova Theater Group. Ms. Harrison received a B.A. degree in 1986 from Sarah Lawrence College, located in Bronxville, New York.

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I. Bobby Majumder. Mr. Majumder has served as an independent member of the board of directors of Bluerock Residential since January 2009. Mr. Majumder is a partner at the law firm of Frost Brown Todd. Mr. Majumder specializes in corporate and securities transactions with an emphasis on the representation of underwriters, placement agents and issuers in both public and private offerings, private investment in public equity (PIPE) transactions and venture capital and private equity funds. Prior to Frost Brown Todd, Mr. Majumder was a partner at the law firm of Reed Smith from May 2019 to September 2021, where he served as the Managing Partner of the firm’s Dallas office and firmwide Co-Chair of the firm’s India practice. Prior to Reed Smith, Mr. Majumder was a partner at the law firm of Perkins Coie from March 2013 to May 2019. Prior to Perkins Coie, Mr. Majumder was a partner in the law firm of K&L Gates LLP from May 2005 to March 2013. From January 2000 to April 2005, Mr. Majumder was a partner at the firm of Gardere Wynne Sewell LLP. Through his law practice, Mr. Majumder has gained significant experience relating to the acquisition of a number of types of real property assets including raw land, improved real estate and oil and gas interests. Mr. Majumder also has served as an independent trustee on the Board of Trustees of Bluerock Total Income + Real Estate Fund, a closed-end interval fund organized by Bluerock Residential, since July 2012. He is an active member of the Park Cities Rotary Club, a charter member of the Dallas Chapter of The Indus Entrepreneurs and an Associate Board member of the Cox School of Business at Southern Methodist University. Mr. Majumder received a J.D. degree in 1993 from Washington and Lee University School of Law, located in Lexington, Virginia, and a B.A. degree in 1990 from Trinity University, located in San Antonio, Texas.

Romano Tio. Mr. Tio has served as an independent member of the board of directors of Bluerock Residential since January 2009. Mr. Tio serves as Senior Managing Director of Greystone, a commercial real estate finance and investment firm. From June 2017 to March 2021, Mr. Tio served as Senior Managing Director at Ackman-Ziff, an institutional real estate capital advisory firm. From May 2009 to June 2017, Mr. Tio served as Managing Director of RM Capital Management LLC, a boutique real estate investment and advisory firm. From January 2008 to May 2009, Mr. Tio served as a Managing Director and co-head of the commercial real estate efforts of HCP Real Estate Investors, LLC, an affiliate of Harbinger Capital Partners Funds, a $10+ billion private investment firm specializing in event/distressed strategies. From August 2003 until December 2007, Mr. Tio was a Managing Director at Carlton Group Ltd., a boutique real estate investment banking firm where he was involved in over $2.5 billion worth of commercial real estate transactions. Earlier in his career, Mr. Tio was involved in real estate sales and brokerage for 25 years. Mr. Tio also has served as an independent trustee of the Board of Trustees of Bluerock Total Income + Real Estate Fund, a closed-end interval fund organized by Bluerock Residential, since July 2012. Mr. Tio served as an independent member of the Board of Directors of Yangtze River Development Ltd. from January 2016 until February 2017. Mr. Tio received a B.S. degree in biochemistry in 1982 from Hofstra University, located in Hempstead, New York.

Kamal Jafarnia. Mr. Jafarnia has served as an independent member of the board of directors of Bluerock Residential since June 2019. Mr. Jafarnia currently serves as General Counsel, Executive Vice President and Secretary of Lonsdale Digital Management, Inc. Previously, Mr. Jafarnia served as General Counsel and Chief Compliance Officer at Artivest Holdings, Inc., which position he held from October 2018 until February 2021, and as Chief Compliance Officer of Altegris Advisors LLC, which was the advisor to the Altegris KKR Commitments Fund. Prior to Artivest, Mr. Jafarnia served as Managing Director for Legal and Business Development at Provasi Capital Partners LP. Prior to that, from October 2014 to December 2017, he served as Senior Vice President of W.P. Carey Inc. (NYSE: WPC), as well as Senior Vice President and Chief Compliance Officer of Carey Credit Advisors, Inc. and as Chief Compliance Officer and General Counsel of Carey Financial, LLC. Prior to joining W. P. Carey Inc., Mr. Jafarnia served as Counsel to two American Lawyer Global 100 law firms in New York. From March 2014 to October 2014, Mr. Jafarnia served as Counsel in the REIT practice group at the law firm of Greenberg Traurig, LLP. From August 2012 to March 2014, Mr. Jafarnia served as Counsel in the Financial Services & Products Group and was a member of the REIT practice group of Alston & Bird, LLP. Between 2006 and 2012, Mr. Jafarnia served as a senior executive, in-house counsel, and Chief Compliance Officer for several alternative investment program sponsors, including, among others, American Realty Capital, a real estate investment program sponsor, and its affiliated broker-dealer, Realty Capital Securities, LLC. In addition, Mr. Jafarnia has served as a non-executive independent member of the board of directors of Ashford Hospitality Trust, Inc. (NYSE: AHT) since January 2013. Mr. Jafarnia received an LL.M. in Securities and Financial Regulation in 2011 from Georgetown University Law Center, located in Washington, D.C., a J.D. degree in 1992 from Temple University, located in Philadelphia, Pennsylvania, and a B.A. degree in economics and government in 1988 from the University of Texas at Austin.

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Selection of Our Board

In determining the composition of our Board, our goal was to assemble a group of individuals of sound character, judgment and business acumen, whose varied backgrounds, leadership experience and real estate experience would complement each other to bring a diverse set of skills and perspectives to the board. We have determined that each of our directors, including our independent directors, has at least three years of relevant experience demonstrating the knowledge and experience required to successfully acquire and manage the type of assets being acquired by our Company.

Mr. Kamfar was chosen to serve as the Chairman of the Board because, as our Chief Executive Officer, Mr. Kamfar is well positioned to provide essential insight and guidance to our Board from the inside perspective of the day-to-day operations of the Company. Furthermore, Mr. Kamfar brings to the board approximately 30 years of experience in building operating companies, and in various aspects of real estate, mergers and acquisitions, private equity investing and public and private financings. His experience with complex financial and operational issues in the real estate industry, as well as his strong leadership ability and business acumen, make him critical to proper functioning of our board.

Ms. Harrison was selected as one of our independent directors based on her extensive leadership and entrepreneurial experience, background in luxury branding and marketing, and oversight of global communications, partnerships and marketing for clients including real estate developers, luxury hotel properties and travel technology companies.

Mr. Majumder was selected as one of our independent directors due to his depth of legal experience in advising clients with respect to corporate and securities transactions, including representations of underwriters, placement agents and issuers in both public and private offerings. Mr. Majumder also brings with him significant legal experience relating to the acquisition of a number of types of real estate assets.

Mr. Tio was selected as one of our independent directors as a result of his demonstrated leadership skill and industry-specific experience developed through a number of high-level management positions with investment and advisory firms specializing in the commercial real estate sector.

Mr. Jafarnia was selected as one of our independent directors to leverage his legal background, including his prior service as a regulatory compliance officer, his extensive public company experience, and his background with alternative investment programs, all of which provide him with a skill set and knowledge base unique to our board.

Delinquent Section 16(a) Reports

Section 16(a) of the Securities Exchange Act of 1934, or the Exchange Act, requires our directors and executive officers, and any persons beneficially owning more than 10% of our outstanding shares of common stock, to file with the SEC reports with respect to their initial ownership of our common stock and reports of changes in their ownership of our common stock. As a matter of practice, our administrative staff and outside counsel assists our directors and executive officers in preparing these reports, and typically file those reports on behalf of our directors and executive officers. Based solely on a review of the copies of such forms filed with the SEC during fiscal year 2021 and on written representations from our directors and executive officers, we believe that during fiscal year 2021, all of our directors, executive officers and greater than 10% beneficial owners filed the required reports on a timely basis under Section 16(a), except for one Form 4 for each James Babb III, of Ryan MacDonald and Jordan Ruddy, three Form 4s for Ramin Kamfar, and two Form 4s for The Cypress Trust, which (at the time of the relevant transactions) was a greater than 10% beneficial owner.

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Code of Ethics and Whistleblower Policy

On March 26, 2014, our Board adopted a Code of Business Conduct and Ethics (as amended and restated by that certain Amended and Restated Code of Business Conduct and Ethics adopted by the Board on August 2, 2019), Code of Ethics for Senior Executive and Financial Officers, Whistleblower Policy, and Corporate Governance Guidelines that apply to our principal executive officer, principal financial officer, principal accounting officer, controller and persons performing similar functions and all members of our Board. We believe these policies are reasonably designed to deter wrongdoing and promote honest and ethical conduct; full, fair, accurate, timely, and understandable disclosure in our reporting to our stockholders and the SEC; compliance with applicable laws; reporting of violations of the code; and accountability for adherence to the code. We will provide to any person without charge a copy of our Amended and Restated Code of Business Conduct and Ethics, Code of Ethics for Senior Executive and Financial Officers, Whistleblower Policy, and Corporate Governance Guidelines, including any amendments or waivers thereto, upon written request delivered to our principal executive office at the address listed on the cover page to our Annual Report on Form 10-K.

Committees of the Board

We currently have a standing audit committee, a standing investment committee, a standing compensation committee and a standing nominating and corporate governance committee. All of our standing committees consist solely of independent directors, except that R. Ramin Kamfar, who serves as our Chief Executive Officer and Chairman of the Board, serves as a member of the investment committee. The principal functions of these committees are briefly described below. Our Board may from time to time establish other committees to facilitate our management.

Audit Committee

Our Board has established an audit committee, which is comprised of three individuals, all of whom are independent directors. The members of our audit committee are I. Bobby Majumder, Kamal Jafarnia and Romano Tio. Mr. Majumder is the chairman of our audit committee, and is designated as the audit committee financial expert as defined by the rules promulgated by the SEC and the NYSE American corporate governance listing standards.

The audit committee meets on a regular basis, at least quarterly and more frequently as necessary. The audit committee’s primary functions are:

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to evaluate and approve the audit and non-audit services and fees of our independent registered public accounting firm;

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to periodically review the auditors’ independence; and

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to assist our Board in fulfilling its oversight responsibilities by reviewing the financial information to be provided to the stockholders and others, management’s system of internal controls and the audit and financial reporting process.

The audit committee also considers and approves certain related party transactions.

Investment Committee

Our Board has established an investment committee, which is comprised of three individuals, Romano Tio, Elizabeth Harrison and R. Ramin Kamfar. Mr. Tio is the chairman of the investment committee.

Our Board has delegated to the investment committee the authority (1) to approve all real property acquisitions, developments and dispositions, including real property portfolio acquisitions, developments and dispositions, as well as all other investments in real estate consistent with our investment guidelines (each, an “Investment Transaction”) involving an equity investment equal to or in excess of ten percent (10%) of our Company Equity at the time of consideration, and (2) to review our investment policies and procedures on an ongoing basis and recommend any changes to our Board.

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Our Board has further delegated to a management committee comprised of members of our executive management team the authority to (1) approve all Investment Transactions involving an equity investment amount of less than ten percent (10%) of our Company Equity at the time of consideration, and (2) to review and recommend potential investments equal to or in excess of the 10% threshold for consideration by the investment committee. If the members of the investment committee or the management committee (as applicable) approve a given investment, then management will be directed to make such investment on our behalf, if such investment can be completed on terms approved by the committee.

Compensation Committee

Our Board has established a compensation committee, which is comprised of three of our independent directors. The members of our compensation committee are Romano Tio, Elizabeth Harrison, and I. Bobby Majumder. Mr. Tio is the chairman of our compensation committee. Our compensation committee charter details the principal functions of the compensation committee. These functions include:

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reviewing and approving on an annual basis the corporate goals and objectives relevant to our chief executive officer’s compensation, if any, evaluating our chief executive officer’s performance in light of such goals and objectives, and determining and approving the remuneration, if any, of our chief executive officer based on such evaluation;

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reviewing and approving the compensation, if any, of all of our other executive officers;

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reviewing our executive compensation policies and plans;

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implementing and administering our incentive compensation equity-based remuneration plans, if any;

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assisting management in complying with our proxy statement and annual report disclosure requirements;

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producing a report on executive compensation to be included in our annual proxy statement; and

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reviewing, evaluating and recommending changes, if appropriate, to the remuneration for directors.

Nominating and Corporate Governance Committee

Our Board has established a nominating and corporate governance committee, which is comprised of three of our independent directors, I. Bobby Majumder, Kamal Jafarnia, and Romano Tio. Mr. Majumder is the chairman of our nominating and corporate governance committee. Our nominating and corporate governance committee charter details the principal functions of the nominating and corporate governance committee. These functions include:

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identifying and recommending qualified candidates to our full Board for election as directors, and recommending nominees for election as directors at the annual meeting of stockholders;

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developing and recommending corporate governance guidelines to our Board, and implementing and monitoring such guidelines;

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reviewing and making recommendations on matters involving the general operation of our Board, including board size and composition, and committee composition and structure;

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recommending nominees for each committee of our Board to our Board;

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annually facilitating the assessment of our Board’s performance as a whole and of the individual directors, as required by applicable law, regulations and the NYSE American corporate governance listing standards; and

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overseeing our Board’s evaluation of management.

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The nominating and corporate governance committee may form and delegate authority to subcommittees in its discretion, provided that such subcommittees must be comprised entirely of independent directors, and each such committee must have its own charter setting forth its purpose and responsibilities.

Item 11. Executive Compensation

Compensation Discussion and Analysis

Our Compensation Discussion and Analysis describes our compensation program, objectives and policies for our Named Executive Officers, or NEOs, for fiscal year 2021. Our NEOs for fiscal year 2021 were R. Ramin Kamfar, Chief Executive Officer, Jordan B. Ruddy, President and Chief Operating Officer, James G. Babb, III, Chief Strategy Officer, Michael L. Konig, Chief Legal Officer and Secretary, Ryan S. MacDonald, Chief Investment Officer, and Christopher J. Vohs, Chief Financial Officer and Treasurer (the “NEOs”). Where indicated, information is also provided for Michael DiFranco, our Executive Vice President, Operations.

Overview of Compensation Program and Philosophy

Executive Compensation Objectives

The primary objective of our executive compensation program is to align the interests of our NEOs with those of our stockholders through our pay-for-performance approach to NEO compensation. Our executive compensation program is performance-based, closely correlated with business and financial results, and designed to attract and retain the best executive talent. The compensation committee has designed a compensation program intended to reward, among other things, capital raising, total investment activity, favorable stockholder returns, share appreciation, same store net operating income growth, on-time and on-budget completion of development projects, return on investment on redevelopment projects, asset growth, and our competitive position within our segment of the real estate industry, as well as each executive officer’s long-term career contributions to our Company. Compensation incentives designed to further these goals and to incentivize long-term careers with the Company will take the form of base salaries/payments, annual performance-based cash compensation, as well as long-term vesting of both time- and performance-based equity incentive compensation, subject to performance criteria and targets established and administered by our compensation committee. In addition, our compensation committee may decide to make awards to new executive officers in order to attract talented professionals. This compensation philosophy, as reflected in our employment agreements with our NEOs and other executive officers (collectively, the “Executive Agreements”) and our overall compensation program, is designed to motivate our executives to focus on operating results and create long-term stockholder value.

Compensation Philosophy, Design and Process

How We Determine Executive Compensation

Pursuant to its charter, our compensation committee is responsible for designing our executive compensation plans, establishing compensation levels, and evaluating the performance of our NEOs and other executive officers pursuant to the terms of their Executive Agreements. To assist the compensation committee in designing, establishing and evaluating an appropriate and competitive compensation program for our NEOs, the compensation committee has engaged FPL Associates L.P. (“FPL”), an independent executive compensation consulting firm, to advise the compensation committee on alternatives for executive compensation design. FPL has provided the compensation committee with market-based compensation benchmarking analyses summarizing the compensation practices among our peers, including with respect to base salary, annual target bonus opportunities, long-term target equity compensation opportunities, as well as severance and change in control arrangements. FPL has also provided recommendations relating to the proposed compensation arrangements and terms of employment or service for our NEOs and other executive officers, and supplemental market benchmarking data that summarizes the typical compensation and perquisites provided to executives in the Company’s peer group. FPL has further provided recommendations with respect to certain terms and conditions of the Company’s Fourth Amended 2014 Incentive Plans, and the amounts of the equity awards for which our NEOs and other executive officers will be eligible pursuant to the terms of their Executive Agreements.

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The compensation committee assesses total annual compensation (comprised of base salaries/payments, annual cash incentive compensation, and long-term time- and performance-based equity incentive compensation) for our NEOs in comparison to the market ranges of our peer group, The committee does not target a specific position within the peer group for our NEOs, rather, the market ranges provide appropriate guidance, which along with factors such as (but not limited to) individual performance, corporate performance and areas of expertise, help to form the committee’s decisions regarding NEO compensation. To determine the market range, the compensation committee uses a competitive market-based compensation analysis of total compensation for comparable officer positions at peer companies prepared by FPL. The compensation committee also seeks the insight of our executive management team and assistance of FPL to review and determine the performance criteria and targets to which the annual cash incentive compensation and long-term performance-based equity incentive compensation will be subject. The compensation committee establishes performance criteria based on financial and operational performance metrics that are consistent with our long-term strategic objectives and in line with market practices, with targets for the three-year performance periods that will challenge our NEOs to drive operating results that generate stockholder returns. At the end of the performance period, the awards earned by our NEOs are based on the level of achievement of those performance criteria against such targets.

Peer Group

To assist the compensation committee in developing an appropriate and competitive compensation program for our NEOs, FPL was engaged to examine current market compensation practices. On an annual basis, FPL provides the compensation committee with a market-based compensation benchmarking analysis with respect to the executive compensation practices among peer REITs, which is reviewed by the compensation committee to ensure the overall composite reflects an appropriate peer set. While a peer group of companies used for performance comparison purposes may be focused on business operations and industry focus, and may include companies much larger or smaller in size, the peer group of companies used for compensation benchmarking purposes tend to be driven by size, business model and geographic considerations. Accordingly, in establishing a compensation structure for the Company’s NEOs for fiscal year 2021, the compensation committee reviewed the Company’s competitive peer group based on the following criteria:

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Size: REITs within an appropriate size range relative to the Company (i.e., 0.5x to 2.0x) in terms of total market capitalization.

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Business Activities: REITs with an emphasis on multifamily properties (or diversified REITs with portfolios containing multifamily properties.

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Geography: REITs with a similar geographic focus.

In evaluating our size relative to potential members of the peer group, our total market capitalization was calculated with reference to our permanent equity capital structure, to include the outstanding shares of both our Series B Preferred Stock and our Series T Preferred Stock. Unlike a conventional series of convertible preferred stock with a fixed conversion price, both the Series B Preferred Stock and the Series T Preferred Stock have a unique conversion feature, and are convertible by the Company into shares of our Class A Common Stock on a $1.00-for-$1.00 basis, based on the future closing price of the Class A Common Stock. This conversion feature enables us to issue equity to grow accretively during periods when our Class A Common Stock is trading below inherent value, and minimize dilution to the holders of our Class A Common Stock by subsequently converting such Series B Preferred Stock and/or Series T Preferred Stock to Class A Common Stock on a $1.00-for-$1.00 basis at a future time of our choosing (subject to a two-year lockout) when the Class A Common Stock is more fairly valued. As such, we consider both the Series B Preferred Stock and the Series T Preferred Stock as a permanent part of our equity capital structure with a $1.00-for-$1.00 conversion rate, and calculate our market capitalization accordingly. The inclusion of our convertible preferred equity in the calculation of our total market capitalization more accurately reflects the nature of our fully diluted permanent equity capital structure, and ensures the peer group selected for use in establishing our executive compensation program is comprised of companies appropriately comparable to our size.

Given the Company’s growth, as well as changes in peer company size, classification, and industry consolidation, the compensation committee reevaluated the constituents of the 2020 peer group based on the criteria above and determined that for purposes of executive compensation for fiscal year 2021, certain adjustments to the peer group were necessary in order to maintain a competitor set appropriately reflective of the Company’s current size and operations. The compensation committee carefully selected the peer group to include the most similar competitors based on such factors, so that comparisons of our compensation structure to such peers would be meaningful. The peer group selected by the compensation committee for use in establishing the compensation program for the Company’s NEOs and other executive officers for fiscal year 2021 was comprised of the following:

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●	Acadia Realty Trust	●	Lexington Realty Trust
●	American Assets Trust, Inc.	●	Mack-Cali Realty Corporation
●	Brandywine Realty Trust	●	Paramount Group, Inc.
●	Brixmor Property Group Inc.	●	Preferred Apartment Communities, Inc.
●	Columbia Property Trust	●	Retail Opportunity Investments Corp.
●	Essential Properties Realty Trust, Inc.	●	RPT Realty
●	Independence Realty Trust, Inc.	●	Urban Edge Properties
●	Investors Real Estate Trust	●	Washington Real Estate Investment Trust

For purposes of developing the compensation program for the Company’s NEOs and other executive officers for fiscal year 2021, the compensation committee utilized peer group compensation data to understand the Company’s pay levels and structure as compared to the market. The compensation committee does not rely solely upon benchmarking to determine the compensation of the Company’s NEOs and other executive officers, but uses the compensation levels, structures and practices of the peer group as one of many factors to formulate the Company’s executive compensation structure. While the compensation committee does not adhere to a specific formula, nor is the compensation of the Company’s NEOs and other executive officers tied to a specified percentile of compensation relative to the peer group, the compensation committee does take into account peer group compensation levels to assess the competitiveness of each NEO’s overall compensation, while also considering factors such as size, scope of operations and our relative performance, as appropriate.

Elements of Executive Compensation

(A) Base Salary/Base Payment. Our compensation committee believes that payment of a competitive base salary or base payment (as applicable) is a necessary element of any compensation program that is designed to attract and retain talented and qualified executives. The Executive Agreements of our NEOs provide that Mr. Kamfar, Mr. Babb, Mr. MacDonald, Mr. Ruddy, Mr. Vohs, and Mr. Konig will receive an annual base salary or, in the case of Mr. Konig, an annual base payment, of at least $400,000, $325,000, $250,000, $300,000, $250,000, and $300,000, respectively. Each such Executive Agreement provides that the base salary or base payment (as applicable) of each of our NEOs will be reviewed annually for appropriate increases by the compensation committee, but will not be decreased. Subject to our existing contractual obligations, we expect our compensation committee to consider base salary and base payment levels for our NEOs annually as part of our performance review process, as well as upon any promotion or other change in job responsibility. The goal of our base salary and base payment program is to provide such salaries and payments at a level that allows us to attract and retain qualified executives while preserving significant flexibility to recognize and reward individual performance with other elements of the overall compensation program. Base salary and base payment levels also affect the annual cash incentive compensation because the annual bonus target opportunity of each NEO is expressed as a percentage of base salary or base payment (as applicable). The following items are generally considered when determining base salary and base payment levels:

●

market data provided by our outside consultants;

●

our financial resources;

●

the executive officer’s experience, scope of responsibilities, performance and prospects; and

●

internal equity in relation to other executive officers with similar levels of experience, scope of responsibilities, performance, and prospects.

See “2021 Compensation Decisions — 2021 Base Salary/Base Payment” below for information regarding the base salaries and base payments payable to our NEOs for fiscal year 2021.

(B) Annual Cash Incentive Compensation. It is the intention of our compensation committee to make a meaningful portion of each of our executives’ compensation in future years contingent on achieving certain performance targets and an executive’s individual objectives in that year. As part of such contingent compensation, during the term of their Executive Agreement, each of our current NEOs will be eligible to receive an annual cash incentive bonus (each, an “Annual Cash Bonus”).

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Pursuant to their Executive Agreement, each of our current NEOs is eligible to receive an Annual Cash Bonus in an amount ranging from 0% to a maximum of 150% (75% for Mr. Vohs) of their annual base salary or base payment (as applicable), with a target equal to 100% (50% for Mr. Vohs) of such annual base salary or base payment. The amount of each such Annual Cash Bonus will further be determined based on the Company’s performance relative to pre-determined objective performance criteria and targets established and administered by the compensation committee, as well as the compensation committee’s subjective evaluation of the performance of each such NEO during such time period. See “2021 Compensation Decisions — 2021 Annual Cash Bonuses” below for information regarding the Annual Cash Bonuses for which our NEOs are eligible for fiscal year 2021, and the applicable performance criteria and targets established by the compensation committee for use in determining the amounts of such Annual Cash Bonuses.

(C) Long-Term Equity Incentive Awards. Our long-term equity incentive awards are comprised of two primary components, each of which are administered by the compensation committee through our Fourth Amended 2014 Incentive Plans: (1) a time-vested equity award component, and (2) a performance-vested equity award component.

Time-Vested Equity Awards. The objective of our time-vested equity award component is to attract and retain qualified personnel by offering an equity-based program that is competitive with our peer companies. Our compensation committee believes that these time-vested awards are necessary to successfully attract qualified executives, including our NEOs and other executive officers, and other employees of REIT Operator, and will continue to be an important incentive for promoting executive and employee retention going forward. Time-vested equity awards under this plan were determined by the compensation committee in consultation with FPL, and subsequently reviewed with the Chief Executive Officer (with respect to all awards except his own).

Pursuant to their Executive Agreement, each of our NEOs is entitled to an annual grant of time-vested equity awards in the form of LTIP Units (each, an “Annual LTIP Award”). The number of LTIP Units that will actually vest and become nonforfeitable in three equal installments on each anniversary of the date of grant in respect to each such Annual LTIP Award will be dependent upon continued employment and other conditions as set forth in the Executive Agreements. See “2021 Compensation Decisions — 2021 Annual LTIP Awards” below for information regarding the Annual LTIP Awards to which our NEOs are entitled for fiscal year 2021.

Performance-Vested Equity Awards. The objective of our performance-vested equity award component is to implement our objective of promoting a performance-focused culture by rewarding our NEOs and other executive officers, and other employees of REIT Operator, based upon achievement of long term Company and individual performance targets. When determining the quantity and amounts of such long term performance-vested equity awards (each, a “Long Term Performance Award”) to be granted, the compensation committee assesses the same factors considered in setting base salaries and base payments, as applicable, described above, but with a greater emphasis on performance measures we believe drive our long-term success. The actual number of LTIP Units that will actually vest and become nonforfeitable as of the last day of the three-year performance period in respect of each such Long Term Performance Award will be dependent upon the achievement of the long term Company and individual performance criteria and targets established and administered by the compensation committee as described below.

Pursuant to their Executive Agreement, each of our NEOs is entitled to an annual grant of a Long Term Performance Awards in the form of LTIP Units for a three-year performance period. The actual amount of the annual Long Term Performance Award for 2021 for which each of our current NEOs will be eligible will range from 0% to a maximum of 200% of their Annual LTIP Award, with a threshold equal to 50% of that year’s Annual LTIP Award, and a target equal to that year’s Annual LTIP Award. The number of LTIP Units that will actually vest and become nonforfeitable in respect of each such Long Term Performance Award will be dependent upon the achievement, over the three-year performance period, of the objective Company performance criteria and targets established and administered by the compensation committee as described below, as well as a subjective evaluation of the performance of each such executive officer during such time period. See “2021 Compensation Decisions — 2021 Long Term Performance Awards” below for information regarding the Long Term Performance Awards to which our NEOs are entitled for fiscal year 2021, and the applicable performance criteria and targets established by the compensation committee for use in determining the amounts of such Long Term Performance Awards.

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(D) Executive Compensation Metrics: Objective Performance Criteria. Listed below are the objective performance criteria established by the compensation committee for use in determining Annual Cash Bonuses and/or Long Term Performance Awards (as indicated) for our NEOs for fiscal year 2021. For information regarding the relative weightings and threshold, target, and maximum achievement levels assigned to each such criterion for each type of equity incentive award for fiscal year 2021, see “2021 Compensation Decisions — 2021 Annual Cash Bonuses” and “— 2021 Long Term Performance Awards,” below.

(a)

Total Shareholder Return (TSR) Rank vs. SNL U.S. Multifamily REIT Index Peer Group

Why is this metric important? The Company’s total stockholder return (“TSR”) metric was designed to increase accountability for creating value for our stockholders as recognized by the market. This metric compares our TSR (calculated based on appreciation/depreciation in the price per share of our common stock and distributions paid thereon, including reinvestment of dividends), relative to that of the peer companies in the SNL U.S. Multifamily REIT Index. We believe that the Company’s relative TSR rank is an important component of our executive compensation program because it helps to align the interests of our NEOs and other executives with, and ensure our NEOs and other executives remain focused on the value they are delivering to, our stockholders.

For Use in Determining: Long Term Performance Awards.

Target: For fiscal year 2021, the Company’s target is to rank within the 50^th percentile in TSR relative to the SNL U.S. Multifamily REIT Index.

(b)

Same Store NOI Growth Rank vs. SNL U.S. Multifamily REIT Index Peer Group

Why is this metric important? The Company’s primary financial measure for evaluating the operating performance of its portfolio is net operating income (“NOI”), which represents rental income less direct property operating expenses (including real estate taxes and insurance). The Company believes that NOI is helpful to stockholders as a supplemental measure of its operating performance because it is a direct measure of the actual operating results of the Company’s portfolio. Comparing the growth of the Company’s “same store” NOI (i.e., looking at NOI growth of the exact same set of stabilized apartment properties over the periods being compared) relative to that of the peer companies in the SNL U.S. Multifamily REIT Index helps stockholders compare the Company’s operating results to the market. The Company’s same store NOI growth rank further provides an indication of the Company’s focus on quality acquisitions, and its execution of its business plan.

For Use in Determining: Long Term Performance Awards.

Target: For fiscal year 2021, the Company’s target is to rank within the 50^th percentile in same store NOI growth relative to the SNL U.S. Multifamily REIT Index.

(c)

Development Projects: Budget Performance vs. Target

Why is this metric important? The on-budget development metric compares the Company’s actual performance relative to its target budget with respect to each of its development projects. On-budget completion of the Company’s development projects ensures that the Company’s strategic business objectives with respect to each such project is achieved in a cost-effective manner. The on-budget development metric was designed to ensure our NEOs and other executive officers remain focused on maintaining the Company’s target budget with respect to its development projects.

For Use in Determining: Annual Cash Bonuses.

Target: For fiscal year 2021, the Company’s target is to be on budget for its development projects.

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(d)

Redevelopment Projects: Return on Investment (IRR)

Why is this metric important? This metric focuses on the Company’s return on investment with respect to its redevelopment projects, and was designed to ensure our NEOs and other executive officers remain focused on maximizing return on the Company’s value-added investments.

For Use in Determining: Annual Cash Bonuses and Long Term Performance Awards.

Target: For fiscal year 2021, the Company’s target is to achieve an internal rate of return of 20% on its redevelopment projects.

(e)

Capital Raising

Why is this metric important? The Company’s raising of capital is important to its achievement of growth and ability to execute on its business plan. This metric was designed to ensure our NEOs and other executive officers remain focused on the Company’s raise of capital in support of such growth and execution.

For Use in Determining: Annual Cash Bonuses.

Target: For fiscal year 2021, the Company’s target is to raise $175 million in capital during 2021.

(f)

Total Investment Activity (Acquisitions/Dispositions)

Why is this metric important? This metric was designed to ensure our NEOs and other executive officers remain focused on the growth of the Company’s asset base, as well as the enhancement of the quality of its portfolio as a whole.

For Use in Determining: Annual Cash Bonuses.

Target: For fiscal year 2021, the Company’s target was to have investment activity of $500 million in 2021.

(E) Executive Compensation Metrics: Subjective Performance Criteria. When assessing the subjective component in determining Annual Cash Bonuses and/or Long Term Performance Awards for our NEOs for each fiscal year, the compensation committee takes into consideration the Company’s overall performance, each NEO’s individual performance outside of the objective performance criteria established by the compensation committee, and each NEO’s individual contributions to the Company’s overall success in significant areas based upon the executive’s position and responsibilities as they related to the Company’s overall business plan. When assessing the individual performance component with respect to the Company’s other NEOs, the compensation committee also considers the input of Mr. Kamfar, which the compensation committee believes to be valuable given Mr. Kamfar’s knowledge of the Company’s operations, the day-to-day responsibilities and performance of its other NEOs, the real estate industry generally and the markets in which the Company operates. Finally, the compensation committee may also consider certain key performance accomplishments during the relevant performance period in assessing the subjective component of each NEO’s performance. In determining (i) Annual Cash Bonuses, and (ii) the number of LTIP Units that will actually vest and become nonforfeitable as of the last day of the three-year performance period in respect of the Long Term Performance Awards for fiscal year 2021, the key performance accomplishments to be considered by the compensation committee will vary by performance period.

(F) Distributions on LTIP Units. Distributions on LTIP Units granted to our NEOs pursuant to the equity incentive awards described above will be paid from the date of grant; provided, that (i) solely with respect to LTIP Units granted as part of Long Term Performance Awards, distributions will be paid at the rate of ten percent (10%) of the distributions otherwise payable with respect to such LTIP Units until the last day of the three-year performance period (or the date of forfeiture, if earlier); and (ii) with respect to each LTIP Unit granted as part of a Long Term Performance Award that becomes fully vested in accordance with the terms of an NEO‘s Executive Agreement, such NEO shall be entitled to receive, as of the date of such vesting, a single cash payment equal to the distributions payable with respect to each such LTIP Unit back to the date of grant, minus the distributions already paid on each such LTIP Unit in accordance with clause (i), in each case subject to certain potential limitations on distributions set forth in the limited partnership agreement of our Operating Partnership and intended to preserve the U.S. federal income tax treatment of such LTIP Units as “profits interests.”

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(G) Post-Termination Compensation. The Executive Agreements with our NEOs and other executive officer provide for payments and other benefits if the executive officer’s employment terminates under specified circumstances. See “Executive Officer Compensation Tables—Narrative Discussion of Summary Compensation Table—Executive Agreements with our NEOs” and “Executive Officer Compensation Tables—Potential Payments upon Termination or Change in Control” for a description of these termination and severance benefits with our NEOs.

2021 Compensation Decisions

2021 Base Salary/Base Payment. For fiscal year 2021, the compensation committee set the base salaries or base payment, as applicable, of our current NEOs as set forth in the table below:


	2021 Base
	Salary/Base
Name and Principal Position	Payment
R. Ramin Kamfar, Chief Executive Officer	$	600,000
James G. Babb, III, Chief Strategy Officer	$	325,000
Jordan B. Ruddy, Chief Operating Officer and President	$	350,000
Michael L. Konig, Chief Legal Officer and Secretary	$	325,000
Ryan S. MacDonald, Chief Investment Officer	$	450,000
Christopher J. Vohs, Chief Financial Officer and Treasurer	$	280,000

In January 2021, the compensation committee approved, and each of Mr. Kamfar and Mr. Ruddy executed a Sixth Side Letter to their Executive Agreement to reflect their prospective election to receive, (a) for each quarter of fiscal year 2021, (i) 98.0% of the portion of the 2021 base salary payable to Mr. Kamfar for such period, and (ii) 83.0% of the portion of the 2021 base salary payable to Mr. Ruddy for such period, in the form of LTIP Units rather than in cash; in each case, with the remainder payable in cash. The number of LTIP Units granted to each of Mr. Kamfar and Mr. Ruddy on the applicable date of grant for each such period was determined by dividing the dollar value of each such grant by the weighted average closing price of a share of Class A common stock for the twenty (20) trading days preceding the applicable date of grant. The payment of the 2021 base salaries to each of Mr. Kamfar and Mr. Ruddy primarily in the form of Company equity rather than in cash reflected a change in the form of payment only. The amounts of Mr. Kamfar and Mr. Ruddy’s respective 2021 base salaries as set forth in the table above remained unchanged.

2021 Annual Cash Bonuses. For fiscal year 2021, the compensation committee has determined that 75% of the Annual Cash Bonus for which each of our NEOs would be eligible would be determinable based upon the objective performance criteria set forth below, and the remaining 25% would be determinable based upon subjective performance criteria.

In recognition of the Company’s greater emphasis during 2021 on growth in its asset base, execution on its business plan and enhancement of its portfolio as a whole, the compensation committee elected to revise the objective performance criteria applicable to the Annual Cash Bonuses, to replace the “TSR vs. SNL U.S. REIT Multifamily Index Peer Group” and “Total Asset Growth vs. SNL U.S. REIT Multifamily Index Peer Group” criteria (which, for fiscal year 2020, had each been weighted at 25%) with the new “Capital Raising” and “Total Investment Activity” criteria (which, were not utilized for fiscal year 2020), both of which were weighted at 25%. For fiscal year 2021, the objective performance criteria, their relative weightings, and threshold, target, and maximum achievement levels were thus as follow:


2021 Objective Performance Criteria	Weighting		Threshold	Target	Maximum
Capital Raising*	25.00	%	$124 million	$175 million	$225 million
Development Projects: Budget Performance vs. Target	25.00	%	3% Over	On Budget	3% Under
Redevelopment Projects: Return on Investment (IRR)*	25.00	%	15% ROI	20% ROI	25% ROI
Total Investment Activity (Acquisitions/Dispositions)*	25.00	%	$400 million	$500 million	$600 million

* For performance between achievement levels, the award will be determined by linear interpolation.

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Each component of the 2021 objective performance criteria was weighted as indicated above. For fiscal year 2021, the target amount of each executive officer’s Annual Cash Bonus was equal to the 2021 Base Salary or 2021 Base Payment (as applicable) of each such executive officer (50% of the 2021 Base Salary for Mr. Vohs). For achievement of the threshold level, 50% of the target amount of each such executive’s Annual Cash Bonus can be earned (35% for Mr. Vohs); for achievement of the target level, 100% can be earned (50% for Mr. Vohs); and for achievement of the maximum level, 150% can be earned (75% for Mr. Vohs). If performance for a component of the objective performance criteria is below the threshold level, no bonus will be earned for that component. In December 2020, each NEO other than Mr. Vohs executed a Fourth Side Letter to their Executive Agreement to reflect their prospective election to receive any Annual Cash Bonus earned for 2021 in the form of LTIP Units, rather than in cash. The actual amounts of such Annual Cash Bonuses for the year ended December 31, 2021 will be determined by the compensation committee in April 2022, in its reasonable business judgment and based on (i) its review of the Company’s performance with respect to the objective performance criteria set forth immediately above and further described above under “Executive Compensation Metrics: Objective Performance Criteria,” and (ii) its subjective evaluation of the performance of each such executive officer based on the factors described above under “Executive Compensation Metrics: Subjective Performance Criteria.” The Annual Cash Bonuses for fiscal year 2021 will be payable by April 15, 2022.

2021 Annual LTIP Awards. Pursuant to the Executive Agreements of our NEOs, on January 1, 2021, the Company granted the following Annual LTIP Awards for fiscal year 2021: 121,568 LTIP Units to Mr. Kamfar; 23,011 LTIP Units to Mr. Babb; 43,417 LTIP Units to Mr. MacDonald; 36,905 LTIP Units to Mr. Ruddy; 8,683 LTIP Units to Mr. Vohs; and 32,563 LTIP Units to Mr. Konig. The amount of each such Annual LTIP Award was determined by dividing (x) $1,400,000 for Mr. Kamfar, $265,000 for Mr. Babb, $500,000 for Mr. MacDonald, $425,000 for Mr. Ruddy, $100,000 for Mr. Vohs, and $375,000 for Mr. Konig, by (y) the volume weighted average price of a share of the Company’s Class A Common Stock as reported on the NYSE American for the twenty (20) trading days immediately preceding the date of grant. The number of LTIP Units that will actually vest and become nonforfeitable in three equal installments on each anniversary of the date of grant in respect of each such Annual LTIP Award will be dependent upon continued employment and other conditions as set forth in the Executive Agreements.

2021 Long Term Performance Awards. For fiscal year 2021, the compensation committee has determined that 75% of the Long Term Performance Award for which each of our NEOs would be eligible would be determinable based upon the objective performance criteria set forth below, and the remaining 25% would be determinable based upon the subjective performance criteria described above under “Executive Compensation Metrics: Subjective Performance Criteria.”

The compensation committee determined that the objective performance criteria applicable to the Long Term Performance Awards for 2020, and the weighting thereof, remained appropriate for use as the objective performance criteria applicable to the Long Term Performance Awards for 2021, and the weighting thereof. The objective performance criteria, their relative weightings, and threshold, target, and maximum achievement levels will thus be as follow:


2021 Objective Performance Criteria	Weighting		Threshold	Target	Maximum
Total Shareholder Return (TSR) Rank vs. SNL U.S. Multifamily REIT Index*	40.00	%	25^th Percentile	50^th Percentile	75^th Percentile
Same Store NOI Growth Rank vs. SNL U.S. Multifamily REIT Index*	30.00	%	25^th Percentile	50^th Percentile	75^th Percentile
Redevelopment Projects – Return on Investment (IRR)*	30.00	%	15% ROI	20% ROI	25% ROI

* For performance between achievement levels, the award will be determined by linear interpolation.

Each component of the 2021 objective performance criteria was weighted as indicated above. For achievement of the threshold level, 50% of the weighted portion of each executive’s target Long Term Performance Award (i.e., 50% of the weighted portion of their Annual LTIP Award) could be earned; for achievement of the target level, 100% could be earned; and for achievement of the maximum level, 200% could be earned. If performance for a component of the objective performance criteria was below the threshold level, no bonus would be earned for that component.

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Pursuant to the Executive Agreements of our NEOs, on January 1, 2021, the Company granted the following Long Term Performance Awards for fiscal year 2021: 243,136 LTIP Units to Mr. Kamfar; 46,022 LTIP Units to Mr. Babb; 86,834 LTIP Units to Mr. MacDonald; 73,809 LTIP Units to Mr. Ruddy; 17,367 LTIP Units to Mr. Vohs; and 65,126 LTIP Units to Mr. Konig. The number of LTIP Units that will actually vest and become nonforfeitable as of the last day of the three-year performance period in respect of each such Long Term Performance Award will be dependent upon (i) the achievement, over the three-year performance period, of the objective Company performance criteria and targets set forth immediately above and further described above under “Executive Compensation Metrics: Objective Performance Criteria,” and (ii) the compensation committee’s subjective evaluation of the performance of each such NEO during such time period based on the factors described above under “Executive Compensation Metrics: Subjective Performance Criteria.”

Say-on-Pay Vote

At our 2021 annual meeting of stockholders, we provided our stockholders with the opportunity to vote to approve, on a non-binding, advisory basis, the compensation of our NEOs. A substantial majority of our stockholders (95.40%) that voted at the 2021 annual meeting of stockholders approved the compensation of our NEOs as described in our proxy statement, which included both the annual salaries for each NEO for 2020, as well as the formulas for the calculation of each element of incentive compensation for which our NEOs were eligible for 2020. In evaluating and establishing the compensation program for our NEOs for 2021, our compensation committee reviewed these results and took into consideration the strong support of our stockholders for our executive compensation policies evidenced by this advisory “say-on-pay” vote. The compensation committee will also carefully consider the results of future advisory votes on executive compensation, along with other expressions of stockholder views it receives on specific policies and desirable actions. Our next say-on-pay vote is scheduled for our 2022 annual meeting of stockholders.

Say-on-Frequency Vote

At our 2020 annual meeting of stockholders, we provided our stockholders with the opportunity to vote, on a non-binding, advisory basis, for their preference as to how frequently we should seek future advisory “say-on-pay” votes on the compensation of our NEOs. Of our stockholders who voted on this 2020 “say-on-frequency” measure, a majority (66.48%) recommended that we hold an advisory say-on-pay vote on the compensation of our NEOs every year. As a result of this vote, our next advisory say-on-pay vote was scheduled for our 2021 annual meeting of stockholders. Our next say-on-frequency vote is scheduled for our 2026 annual meeting of stockholders.

Incentive Plans

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Stock Ownership Guidelines

On December 20, 2017, to further align the interests of our executive officers and directors with the interest of our stockholders, and to promote our commitment to sound corporate governance, our Board implemented stock ownership guidelines (“Stock Ownership Guidelines”) for our executive officers, including our NEOs, and non-employee directors.

The stock ownership guidelines provide that, within five years of the later date of adoption of the guidelines or the date an individual first becomes subject to the guidelines upon becoming a director or executive officer:

●

our Chief Executive Officer is encouraged to own shares of our common stock, including restricted stock, valued at a minimum of six times annual base compensation;

●

all other executive officers are encouraged to own shares of our common stock, including restricted stock, valued at a minimum of three times annual base compensation; and

●

non-employee directors are encouraged to own shares of our common stock valued at a minimum of three times their annual director compensation.

Any shares owned directly or indirectly (including shares owned in trust and including restricted stock) by the executive officer or director, or his or her spouse or minor children, constitute qualifying shares that count toward satisfaction of the stock ownership guidelines. Deferred or restricted stock units, OP Units and LTIP Units (with each such OP Unit and LTIP Unit counting as, and having a value equivalent to, one share of our Class A Common Stock) owned by the executive officer or director also constitute qualifying shares that count toward satisfaction of the stock ownership guidelines. Shares underlying stock options do not count toward satisfaction of the stock ownership guidelines.

As of December 31, 2021, all of our directors and executive officers were in compliance with our stock ownership guidelines or on track to be compliant within the five-year period specified by the guidelines.

Pledging Policy

On July 23, 2020, our Board adopted an Amended & Restated Pledging Policy Regarding Company Securities (the “Pledging Policy”).

The Pledging Policy is designed to achieve the following goals:

●

Prohibit any pledging by executive officers or directors for the purpose of hedging the pledgor’s exposure to fluctuations in the Company’s stock price.

●

Strictly limit the amount of leverage allowed on executive officer or director loans from third parties, for which a portion of their equity securities have been pledged as collateral, to protect the Company and its stockholders from potential risks associated with a forced sale by the lender.

●

Require audit committee pre-certification and pre-approval prior to the entry by any executive officer or director into any proposed loan or other arrangement requiring the pledging of Company securities.

●

Foster and encourage our executive officers and directors to maintain and increase their equity ownership levels well above the levels mandated by the Company’s Stock Ownership Guidelines, thereby strengthening the alignment of their economic interests in the Company with those of stockholders, in part permitting them, subject to strict leverage restrictions, pre-approval and ongoing audit committee monitoring and oversight addressed above, to pledge a limited amount of their Company equity to secure loans. Such limited pledging offers them access to liquidity, for purposes other than to serve as a hedge, and provides them with an alternative to the sale of such Company equity and the resulting, undesirable reduction in equity ownership and dilution of alignment of interests with stockholders.

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Historically, our executive officers and directors have held significant and ever-increasing amounts and percentages of the Company’s equity securities, which holdings have consistently increased over time. Our Board has fostered and encouraged such high levels of equity ownership in the interest of providing the strongest-possible incentive to align the interests of our executive officers and directors with those of stockholders. Our board of directors has facilitated these objectives by heavily weighting the compensation to our executive officers and directors in the form of Company equity, including through the payment of substantially all consideration in connection with the Company’s Internalization in Company equity rather than in cash, our compensation committee structuring the Company’s executive compensation program using Company equity as significant components of their base and incentive compensation, and through its support for the prospective election made by certain of our executive officers to receive not only their incentive compensation for 2019, 2020 and 2021, but also, in the cases of our Chief Executive Officer and our President, their respective base salaries for 2020 and 2021, primarily (if not entirely) in the form of restricted shares of our Class A Common Stock or LTIP Units rather than in cash. Our Board believes that an absolute prohibition on pledging would run counter to these longstanding objectives, with the unintended and undesirable consequence of leaving our executive officers and directors with no means of accessing legitimate liquidity needs, other than by the sale of their Company securities holdings.

The Pledging Policy entirely prohibits the Company’s executive officers and directors from pledging, or otherwise using as collateral to secure any loan or other obligation, any Company securities that such executive officer or director is required to hold pursuant to the Company’s Stock Ownership Guidelines.

The Pledging Policy prohibits any pledging by executive officers or directors for the purpose of hedging the pledgor’s exposure to fluctuations in the Company’s stock price.

The Pledging Policy strictly limits pledges by our executive officers and directors, subject to audit committee oversight, to only those Company securities they hold in excess of the Stock Ownership Guidelines applicable to them (such excess, to the extent pledged, the “Pledged Shares”). The Pledging Policy requires executive officers and directors to pre-certify and obtain pre-approval from the audit committee for any such new pledging arrangement, and requires re-certification to the audit committee of compliance with the Pledging Policy with respect to existing pledging arrangements. In addition, the Pledging Policy requires all pledgors to annually certify to the audit committee his or her ongoing compliance therewith.

The Pledging Policy further limits the number of permitted Pledged Shares by setting a maximum leverage rate of thirty percent (30%), such that the number of Pledged Shares cannot exceed, on an annual basis, thirty percent (30%) of the time-weighted value of the lender’s entire collateral package, inclusive of the Pledged Shares.

The audit committee monitors compliance with the Pledging Policy by requiring certain certifications from each executive officer or director with a new or existing loan secured in part by Pledged Shares. Prior to entering into any such new pledge, an executive officer or director must certify to the audit committee that the pledge is limited to only such Company securities held in excess of the applicable Stock Ownership Guidelines, and that its sole purpose is not to serve as a hedging arrangement. With respect to previously existing pledge arrangements, promptly following adoption of the Pledging Policy, each executive officer or director must certify to the audit committee that its existing pledge arrangement is not for the sole purpose of serving as a hedging arrangement. In addition, within ten (10) days following each annual meeting of the Company’s stockholders, each pledgor must certify to the audit committee that its Pledged Shares comprised thirty percent (30%) or less of the time-weighted value of the creditor’s collateral package, inclusive of the Pledged Shares.

The Pledging Policy’s restrictions, structuring and certification obligations are intended to mitigate the risks from a forced sale due to a default under the subject loan or as a result of a decline in the market price of our Class A Common Stock, should such market price be the valuation parameter applicable to the lender’s collateral package. First, even if an event occurred that would enable a lender to exercise forced sale rights, the fact that the Pledged Shares are limited to 30% of the time-weighted collateral package means that the lender should have other sources of collateral with which to cover its loan, and thus may not pursue a forced sale, even if authorized to do so. Further, to the extent that the subject loan has covenants tied to the value of its overall collateral package, valuing the Pledged Shares according to the market price of our Class A Common Stock mitigates the risk related to even a precipitous drop in such market price, as such a drop might not result in a significant reduction in the value of the lender’s overall collateral package to the point of causing a default, in which case, all else being equal, the lender would not have a forced sale right at all.

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Neither the general market decline in connection with the COVID-19 pandemic, nor the related decline in the closing price per share of our Class A Common Stock by approximately 66% between March 6, 2020 and April 3, 2020, resulted in the forced sale or any other negative event with respect to any Pledged Shares. We believe the absence of such an effect, particularly given the historically severe impact on the market that COVID-19 has had, demonstrates that the safeguards structured into the Pledging Policy to mitigate risk were effective and operated as intended to protect the interests of the Company and our stockholders against a forced sale.

The Pledging Policy simultaneously fulfills the objectives and strategy of the Board to further the alignment of stockholder interests by heavily weighting the compensation of our executive officers and directors in Company equity, while recognizing their legitimate need to access liquidity from their earned equity if desired, providing them with a method to do so without having to sell their equity to access that liquidity, thereby reducing their ownership and diluting their alignment with stockholder interests.

Anti-Hedging Policy

Our insider trading policy expressly prohibits the Company’s directors, officers and employees from engaging in any of the following hedging transactions with respect to any Company securities at any time: short sales (including short sales “against the box”); buying or selling puts or calls; buying financial instruments designed to hedge or offset any decrease in the market value of Company securities owned by the individual directly or indirectly, including prepaid variable forward contracts, equity swaps, collars and exchange funds; and frequent trading to take advantage of fluctuations in share price.

Clawback Policy

Our compensation committee has adopted a policy on the clawback of incentive compensation. The policy is applicable to incentive-based compensation (including equity and equity-based compensation) that is paid, issued or vests based on the achievement of performance objectives (“Incentive Awards”) granted on or after its effective date to current or former executive officers while an executive officer (“Covered Executives”). The policy will be invoked in the event that (a) the Company is required to restate its financial statements due to material noncompliance with any financial reporting requirement under U.S. federal securities laws (whether or not based on fraud or misconduct) and the Board or the compensation committee has not determined that such restatement (i) is required or permitted under GAAP in connection with the adoption or implementation of a new accounting standard or (ii) was caused by the Company’s decision to change its accounting practice as permitted by applicable law, and (b) the performance measurement period with respect to the grant or vesting of such Incentive Awards includes one or more fiscal periods affected by such restatement.

In such event, under the terms of the policy, our Board or the compensation committee will determine whether, within three (3) completed fiscal years preceding the restatement date and any interim period, any Covered Executives received Incentive Awards in excess of the amount to which he or she would otherwise have been entitled based on the restated financial statements (such excess amount, “Excess Compensation”). If the Board or the compensation committee determines that any Covered Executive received Excess Compensation, the Company will be entitled to recover such Excess Compensation from such Covered Executive, and our Board or the compensation committee, in its sole discretion and subject to applicable law, will take such action as it deems necessary to recover such Excess Compensation. Such actions may include (i) requiring repayment or return of prior Incentive Awards made to such Covered Executive, including Incentive Awards not affected by the accounting restatement, (ii) cancelling unvested Incentive Awards, or (iii) adjusting the future compensation of such Covered Executive.

In the event that the Board or the compensation committee determines that a Covered Executive’s acts or omissions constituted fraud or misconduct, then in addition to the recovery of Incentive Awards, the Board or the compensation committee may (i) take (in the case of the Board), or recommend to the Board (in the case of the compensation committee), disciplinary action, including termination, and (ii) pursue other available remedies, including legal action.

In addition, each award that may be granted under the Fourth Amended 2014 Incentive Plans will be subject to the condition that we may require that such award be returned, and that any payment made with respect to such award must be repaid, if such action is required under the terms of any recoupment or “clawback” policy of ours as in effect on the date that the payment was made, or on the date the award was granted or exercised or vested or earned, as applicable.

Our Board and compensation committee recognize that the Dodd-Frank legislation enacted in 2010 may, following rulemaking, require some modification of these policies. Our Board and compensation committee intend to review any rules adopted as a result of that legislation and to adopt any modifications to these policies that become required by applicable law.

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Compensation Policies and Practices Relating to Risk Management

The compensation committee, with the assistance of FPL, conducts regular analytical reviews focusing on several key areas of the Company’s compensation program for its NEOs and other executive officer, including external market compensation data, pay mix, selection of performance metrics, the goal-setting process, and internal equity (i.e., compensation differences between individuals) on the payment of compensation. These reviews provide a framework for consideration by the compensation committee with respect to whether any of the Company’s current programs, practices or procedures regarding compensation of its NEOs and other executive officer should be altered to help ensure the Company maintains an appropriate balance between prudent business risk and resulting compensation.

As a result of this process, the compensation committee has concluded that while a significant portion of the Company’s compensation program for its NEOs and other executive officer is performance-based, the program does not encourage excessive or unnecessary risk-taking. The compensation committee further concluded that the Company’s policies and procedures largely achieve the appropriate balance between the Company’s annual goals and its long-term financial success and growth. While risk-taking is a necessary part of the growth of any business, the compensation committee focuses on aligning the Company’s compensation policies with its long-term interests, and on avoiding short-term rewards for management decisions that could pose long-term risks to the Company, including as follows:

●

Use of Long-Term Compensation. In order to more closely align the interests of the Company’s NEOs and other executive officer with those of its stockholders, more than half of the total compensation payable or potentially payable to our NEOs and other executive officer is non-cash compensation in the form of long-term equity-based awards. This structure is also intended to maximize retention, as such equity-based awards are subject to either time- or performance-based vesting, generally over a period of at least three years (subject to accelerated vesting upon certain terminations of the holder’s employment as described under “Potential Payments Upon Termination or Change-in-Control” below). Such vesting periods encourages our NEOs and other executive officer to focus on sustaining the Company’s long-term performance. Grants of such long-term equity-based awards are typically made annually, so our NEOs and other executive officer generally have unvested awards that could decrease significantly in value if the Company’s business is not managed for the long-term.

●

Stock Ownership Guidelines. The Board has implemented stock ownership guidelines for our NEOs and other executive officer, which are described above under “Stock Ownership Guidelines.” The compensation committee believes that significant ownership of the Company’s common stock by its NEOs and other executive officer helps to align the interests of the Company’s management with those of its stockholders, and is consistent with the Company’s commitment to sound corporate governance. As of December 31, 2021, all of our NEOs and our other executive officer were in compliance with our stock ownership guidelines or on track to be compliant within the five-year period specified by the guidelines.

●

Pledging Policy. The Board has adopted a pledging policy, which is described above under “Pledging Policy.” The pledging policy prohibits the Company’s executive officers and directors from pledging, or otherwise using as collateral to secure any loan or other obligation, any Company securities that such executive officer or director is required to hold pursuant to the Company’s Stock Ownership Guideline. To encourage our executive officers and directors to continue to hold Company securities currently owned by them that are in excess of the amounts required under the Stock Ownership Guidelines, and to encourage them to increase such ownership over time, our executive officers and directors are permitted to pledge only such Company securities held in excess of the Stock Ownership Guidelines applicable to such executive officer or director and subject to certain restrictions and limitations.

●

Anti-Hedging Policy. The Board has adopted an insider trading policy that expressly prohibits our directors, officers and employees from engaging in any of the following hedging transactions with respect to any of our securities at any time: short sales (including short sales “against the box”); buying or selling puts or calls; buying financial instruments designed to hedge or offset any decrease in the market value of our securities owned by the individual directly or indirectly, including prepaid variable forward contracts, equity swaps, collars and exchange funds; and frequent trading to take advantage of fluctuations in share price.

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●

Clawback Policy. The compensation committee has also adopted a policy on the clawback of incentive compensation, which is described above under “Clawback Policy.” Under the clawback policy, if the Company is required to restate its financial results due to material noncompliance with any financial reporting requirement under the U.S. federal securities laws (whether or not based on fraud or misconduct) and the Board or the compensation committee has not determined that such restatement is subject to certain exceptions, the Company may recover certain excess incentive-based compensation (including equity and equity-based compensation) that is paid, issued or vests based on the achievement of performance objectives and that is granted on or after the policy’s effective date to current or former NEOs or other executive officer while an NEO or other executive officer.

●

Performance Metrics. The compensation committee further believes in linking pay with performance. In 2021 (as in 2020 and 2019), the Company used a variety of quantifiable performance metrics for its annual incentive programs, which are described in more detail under “Compensation Discussion and Analysis—Elements of Compensation and 2021 Compensation Decisions.”

In summary, the compensation committee believes that structuring the Company’s executive compensation program such that a considerable amount of the compensation of its NEOs and other executive officer is tied to the Company’s long-term success and share value provides incentives for our NEOs and other executive officer to manage the Company for long-term growth in a prudent manner, and avoids creating disproportionately large short-term incentives that could otherwise serve to promote the taking of risks that would not be in the long-term interests of the Company.

Lending Policies

We may not make loans to our directors, officers or other employees except in accordance with our code of business conduct and ethics and applicable law.

Compensation Committee Report⁽¹⁾

The compensation committee has reviewed and discussed with management the Compensation Discussion and Analysis contained in this Annual Report on Form 10-K. Based on such review and discussion, the compensation committee has recommended to our Board that the Compensation Discussion and Analysis be included in this Annual Report on Form 10-K for the fiscal year ended December 31, 2021.

Submitted by the Compensation Committee:

Romano Tio, Chairman

Elizabeth Harrison

I. Bobby Majumder

⁽¹⁾

The Compensation Committee Report does not constitute “soliciting material” and will not be deemed “filed” or incorporated by reference into any of our filings under the Securities Act of 1933 or the Securities Exchange Act of 1934 that might incorporate our SEC filings by reference, in whole or in part, notwithstanding anything to the contrary set forth in those filings.

Compensation Committee Interlocks and Insider Participation

The members of the compensation committee during the fiscal year ended 2021 were Romano Tio, Elizabeth Harrison and I. Bobby Majumder, each of whom is an independent director. None of these directors has at any time served as an officer or employee of the Company. None of our executive officers has served as a director or member of the compensation committee of any entity that has one or more of its executive officers serving as a member of our Board or compensation committee. Accordingly, during 2021 there were no interlocks with other companies within the meaning of the SEC’s rules.

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EXECUTIVE OFFICER COMPENSATION TABLES

Summary Compensation Table

The table below summarizes the total compensation paid or earned by our NEOs in 2021, 2020 and 2019.


						Non-Equity
					Stock	Incentive Plan	All Other
		Salary		Bonus	Awards	Compensation	Compensation	Total
Name and Principal Position	Year	($)		($)⁽¹⁾	($)⁽²⁾	($)⁽³⁾	($)	($)
R. Ramin Kamfar	2021	600,000	⁽⁴⁾	—	2,733,864	—	—	3,333,864
Chairman and CEO	2020	400,000		549,750	2,410,455	—	—	3,360,205
	2019	400,000		500,400	1,375,592	—	—	2,275,992
Jordan B. Ruddy	2021	350,000	⁽⁴⁾	—	829,927	—	—	1,179,927
President and	2020	300,000		412,313	723,135	—	—	1,435,448
COO	2019	300,000		375,300	502,805	—	—	1,178,105
James G. Babb, III	2021	325,000		—	517,479	—	—	842,479
Chief Strategy Officer	2020	325,000		385,735	511,018	—	—	1,221,753
	2019	325,000		406,575	502,805	—	—	1,234,380
Ryan S. MacDonald	2021	450,000		—	976,377	—	—	1,426,377
Chief Investment Officer	2020	325,000		446,672	964,178	—	—	1,735,850
	2019	300,000		375,300	502,805	—	—	1,178,105
Christopher J. Vohs	2021	280,000		—	195,272	—	—	475,272
Chief Financial Officer and Treasurer	2020	262,500		163,980	160,051	—	—	586,531
	2019	250,000		156,375	149,422	—	—	555,797
Michael L. Konig*	2021	325,000		—	732,288	—	—	1,057,288
Chief Legal Officer and Secretary	2020	300,000		374,813	723,135	—	—	1,397,948
	2019	300,000		375,300	502,805	—	—	1,178,105

* Pursuant to a Services Agreement with his wholly-owned law firm, K&A.

(1)

Each executive officer is eligible for an annual cash incentive bonus for the year ended December 31, 2021. The amounts of such bonuses are not calculable through the latest practicable date, but will be determined by the compensation committee, in its reasonable business judgment and based on its review of the Company’s performance and the performance of each such executive officer during that time period, in April 2022. The annual cash incentive bonuses will be payable by April 15, 2022.

In December 2019, each of our current NEOs other than Mr. Vohs executed a side letter to their Employment or Services Agreement (as applicable) to reflect their prospective election to receive any Annual Cash Bonus for 2020 in the form of LTIP Units, rather than in cash. On March 25, 2021, the Company granted the following LTIP Units in lieu of the executive’s 2020 cash bonus: 48,939 LTIP Units to Mr. Kamfar; 36,705 LTIP Units to Mr. Ruddy; 34,339 LTIP Units to Mr. Babb; 39,763 LTIP Units to Mr. MacDonald; and 33,366 LTIP Units to Mr. Konig, which LTIP Units are shown on the “Grants of Plan-Based Awards for 2021” table.

(2)

Amounts shown do not reflect compensation actually received by the named executive officer. Instead, the amounts shown are the full grant date fair value of LTIP Unit awards issued to the executives in 2019, 2020 and 2021. In accordance with SEC disclosure requirements, the amounts for 2019, 2020 and 2021 include the full grant date fair value of awards issued under the Incentive Plans. The grant date fair value is computed in accordance with FASB ASC 718, “Compensation-Stock Compensation,” or “ASC 718.”

The actual value of awards with respect to these awards are contingent on continued employment and assumes target performance had been achieved under any long term performance awards. The amounts for 2019 were previously reported assuming maximum performance and have been restated to reflect target performance.

(3)	The executive officers did not receive any non-equity incentive plan compensation in 2021.

(4)

On January 15, 2021, the Compensation Committee approved, and each of Mr. Kamfar and Mr. Ruddy formally elected and agreed to receive, and the Company agreed to pay, (a) 98.0% of the base salary of Mr. Kamfar for the fiscal year ending December 31, 2021, and (b) 83.0% of the base salary of Mr. Ruddy for such fiscal year, in Company equity rather than in cash, as more specifically set forth therein. The number of LTIP Units granted to each of Mr. Kamfar and Mr. Ruddy on the grant dates were determined by dividing the dollar value of each such grant by the volume weighted average closing price of a share of the Company’s Class A common stock as reported on the NYSE American for the twenty (20) trading days immediately preceding the grant dates, which shares of Class A common stock or LTIP Units are shown on the “Grants of Plan-Based Awards for 2021” table.

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Grants of Plan-Based Awards for 2021

Estimated Future Payouts Under Equity Incentive Plan Awards


						All Other Stock	Grant Date Fair
						Awards: Number of	Value of Stock
						Shares of Stock or	and Option
Name	Grant Date		Threshold (#)	Target (#)	Maximum (#)	Units (#)	Awards ($)⁽¹⁾
R. Ramin Kamfar	1/1/2021	⁽²⁾	—	—	—	121,568	$	1,400,001
	1/1/2021	⁽³⁾	60,784	121,568	243,136	—		1,333,862
	2/16/2021	⁽⁴⁾				13,174		147,009
	3/25/2021	⁽⁵⁾				48,939		549,751
	5/11/2021	⁽⁴⁾				15,532		147,009
	8/3/2021	⁽⁴⁾				12,857		147,002
	11/9/2021	⁽⁴⁾				10,612		147,013
Jordan B. Ruddy	1/1/2021	⁽²⁾	—	—	—	36,905	$	425,005
	1/1/2021	⁽³⁾	18,452	36,905	73,809	—		404,922
	2/16/2021	⁽⁴⁾				6,509		72,634
	3/25/2021	⁽⁶⁾				36,705		412,322
	5/11/2021	⁽⁴⁾				7,674		72,634
	8/3/2021	⁽⁴⁾				6,352		72,626
	11/9/2021	⁽⁴⁾				5,243		72,634
James G. Babb III	1/1/2021	⁽²⁾	—	—	—	23,011	$	264,999
	1/1/2021	⁽³⁾	11,506	23,011	46,022	—		252,480
	3/25/2021	⁽⁶⁾				34,339		385,744
Ryan S. MacDonald	1/1/2021	⁽²⁾	—	—	—	43,417	$	499,999
	1/1/2021	⁽³⁾	21,709	43,417	86,834	—		476,378
	3/25/2021	⁽⁶⁾				39,763		446,674
Christopher J. Vohs	1/1/2021	⁽²⁾	—	—	—	8,683	$	99,995
	1/1/2021	⁽³⁾	4,342	8,684	17,367	—		95,277
Michael L. Konig	1/1/2021	⁽²⁾	—	—	—	32,563	$	375,002
	1/1/2021	⁽³⁾	16,282	32,563	65,126	—		357,286
	25-03-2021	⁽⁶⁾				33,366		374,814

(1)

The amounts presented in this column represent the full grant date fair value of equity awards (calculated pursuant to FASB ASC Topic 718) granted to the Named Executive Officers in 2021. Pursuant to the rules and regulations of the SEC, the amounts exclude the impact of estimated forfeitures related to service-based vesting conditions. The grant date fair value, including the impact of estimated forfeitures related to service-based vesting conditions, is the amount we would expense in our consolidated financial statements over the award’s vesting schedule. For additional information on our value assumptions, refer to Note 13 of our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the SEC.

(2)

Represents long-term incentive plan units (“LTIP Units”) in the Operating Partnership, of which the Issuer is the general partner. Such LTIP Units will vest ratably over a three year period and may convert to OP Units upon reaching capital account equivalency with the OP Units held by the Issuer, and may then be redeemed for cash or, at the option of the Issuer and after a one year holding period (including any period during which the LTIP Units were held), settled in shares of the Issuer’s Class A common stock on a one-for-one basis.

(3)

Represents Long Term Performance Awards issued in the form of LTIP Units which are subject to a three-year performance period beginning January 1, 2021 and may vest at the end of that period subject to performance criteria and established targets. The LTIP Units may convert to OP Units upon reaching capital account equivalency with the OP Units held by the Issuer, and may then be redeemed for cash, or at the option of the Issuer and after a one-year holding period (including any period during which the LTIP Units were held), settled in shares of the Issuer’s Class A common stock on a one-for-one basis.

(4)

Represents LTIP Units issued in lieu of a portion of the NEO’s base salary which are subject to a one-year vesting period. The LTIP Units may convert to OP Units upon reaching capital account equivalency with the OP Units held by the Issuer, and may then be redeemed for cash, or at the option of the Issuer and after a one-year holding period (including any period during which the LTIP Units were held), settled in shares of the Issuer’s Class A common stock on a one-for-one basis.

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(5)

Represents LTIP Units issued in lieu of cash payment for the NEO’s 2020 cash bonus which are subject to a one-year vesting period. The LTIP Units may convert to OP Units upon reaching capital account equivalency with the OP Units held by the Issuer, and may then be redeemed for cash, or at the option of the Issuer and after a one-year holding period (including any period during which the LTIP Units were held), settled in shares of the Issuer’s Class A common stock on a one-for-one basis.

(6)

Represents LTIP Units issued in lieu of cash payment for the NEO’s 2020 cash bonus which vested upon issuance. The LTIP Units may convert to OP Units upon reaching capital account equivalency with the OP Units held by the Issuer, and may then be redeemed for cash, or at the option of the Issuer and after a one-year holding period (including any period during which the LTIP Units were held), settled in shares of the Issuer’s Class A common stock on a one-for-one basis.

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Outstanding Equity Awards at December 31, 2021

The following table sets forth certain information with respect to outstanding equity awards held by NEOs as of December 31, 2021:


					Equity Incentive Plan
					Awards: Number of	Equity Incentive Plan
				Market Value of	Unearned Shares,	Awards: Market or Payout
			Number of Shares or	Shares or Units of	Units or Other Rights	Value of Unearned Shares,
			Units of Stock That	Stock That Have	That Have Not Vested	Units or Other Rights That
Name	Grant Date		Have Not Vested (#)	Not Vested ($)⁽¹⁾	(#)	Have Not Vested ($)⁽¹⁾
R. Ramin Kamfar	1/1/2018	⁽²⁾	48,180	1,271,470	—	—
	1/1/2019	⁽³⁾	25,418	670,781	—	—
	1/1/2019	⁽⁴⁾	—	—	76,253	2,012,308
	1/1/2020	⁽³⁾	69,861	1,843,632	—	—
	1/1/2020	⁽⁵⁾	—	—	104,791	2,765,434
	1/1/2021	⁽³⁾	121,568	3,208,180	—	—
	1/1/2021	⁽⁵⁾	—	—	121,568	3,208,180
	2/16/2021	⁽⁶⁾	13,174	347,662	—	—
	3/25/2021	⁽⁷⁾	48,939	1,291,500	—	—
	5/11/2021	⁽⁶⁾	15,532	409,889	—	—
	8/3/2021	⁽⁶⁾	12,857	339,296	—	—
	11/9/2021	⁽⁶⁾	10,612	280,051	—	—

Jordan B. Ruddy	1/1/2018	⁽²⁾	24,090	635,735	—	—
	1/1/2019	⁽³⁾	9,290	245,163	—	—
	1/1/2019	⁽⁴⁾	—	—	27,871	735,524
	1/1/2020	⁽³⁾	20,958	553,082	—	—
	1/1/2020	⁽⁵⁾	—	—	31,438	829,636
	1/1/2021	⁽³⁾	36,905	973,923	—	—
	1/1/2021	⁽⁵⁾	—	—	36,905	973,923
	2/16/2021	⁽⁶⁾	6,509	171,773	—	—
	5/11/2021	⁽⁶⁾	7,674	202,517	—	—
	8/3/2021	⁽⁶⁾	6,352	167,629	—	—
	11/9/2021	⁽⁶⁾	5,243	138,363	—	—

James G. Babb III	1/1/2018	⁽²⁾	24,090	635,735	—	—
	1/1/2019	⁽³⁾	9,290	245,163	—	—
	1/1/2019	⁽⁴⁾	—	—	27,871	735,524
	1/1/2020	⁽³⁾	14,811	390,862	—	—
	1/1/2020	⁽⁵⁾	—	—	22,216	586,267
	1/1/2021	⁽³⁾	23,011	607,260	—	—
	1/1/2021	⁽⁵⁾	—	—	23,011	607,260

Ryan S. MacDonald	1/1/2018	⁽²⁾	24,090	635,735	—	—
	1/1/2019	⁽³⁾	9,290	245,163	—	—
	1/1/2019	⁽⁴⁾	—	—	27,871	735,524
	1/1/2020	⁽³⁾	27,944	737,442	—	—
	1/1/2020	⁽⁵⁾	—	—	41,917	1,106,176
	1/1/2021	⁽³⁾	43,417	1,145,775	—	—
	1/1/2021	⁽⁵⁾	—	—	43,417	1,145,775

Christopher J. Vohs	1/1/2018	⁽²⁾	9,634	254,241	—	—
	1/1/2019	⁽³⁾	2,761	72,863	—	—
	1/1/2019	⁽⁴⁾	—	—	8,283	218,580
	1/1/2020	⁽³⁾	4,639	122,423	—	—
	1/1/2020	⁽⁵⁾	—	—	6,958	183,622
	1/1/2021	⁽³⁾	8,683	229,144	—	—
	1/1/2021	⁽⁵⁾	—	—	8,683	229,144

Michael L. Konig	1/1/2018	⁽²⁾	24,090	635,735	—	—
	1/1/2019	⁽³⁾	9,290	245,163	—	—
	1/1/2019	⁽⁴⁾	—	—	27,871	735,524
	1/1/2020	⁽³⁾	20,958	553,082	—	—
	1/1/2020	⁽⁵⁾	—	—	31,438	829,636
	1/1/2021	⁽³⁾	32,563	859,338	—	—
	1/1/2021	⁽⁵⁾	—	—	32,563	859,338

(1)	Based upon the closing price of our Class A common stock on December 31, 2021 of $26.39.

(2)

Each LTIP award vests and becomes nonforfeitable as follows: (i) the first, second, third and fourth installments vested on December 31, 2018, and October 31, 2019, 2020, and 2021 respectively, each in the amount of one-fifth (1/5) of the LTIP award and (ii) the fifth installment will vest on the fifth anniversary of October 31, 2017, in an amount equal to one-fifth (1/5) of the LTIP award, subject to continued employment and other conditions.

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(3)	The amount of each such LTIP award was determined as set forth above. Each LTIP award vests and becomes nonforfeitable in three equal installments on each anniversary of the date of grant, subject to continued employment and other conditions.

(4)

Each Long Term Performance Award was granted in the form of LTIP Units for a three-year performance period, with a threshold equal to 50% of that year’s Annual LTIP Award, a target equal to that year’s Annual LTIP Award and a maximum equal to 150% of that year’s Annual LTIP Award, subject to the performance criteria and targets established and administered by the compensation committee. The amounts in the table assume target performance. The actual number of LTIP Units that become fully vested in respect of each such Long Term Performance Award will be based on the attainment, over the three-year performance period, of targets related to relative total stockholder return, relative same store net operating income growth, and return on investment on certain redevelopment projects, as well as a subjective evaluation of the achievement of strategic objectives. Each such Long Term Performance Award will vest and become nonforfeitable effective as of the last day of the performance period.

(5)

Each Long Term Performance Award was granted in the form of LTIP Units for a three-year performance period, with a threshold equal to 50% of that year’s Annual LTIP Award, a target equal to that year’s Annual LTIP Award and a maximum equal to 200% of that year’s Annual LTIP Award, subject to the performance criteria and targets established and administered by the compensation committee. The amounts in the table assume target performance. The actual number of LTIP Units that become fully vested in respect of each such Long Term Performance Award will be based on the attainment, over the three-year performance period, of targets related to relative total stockholder return, relative same store net operating income growth, and return on investment on certain redevelopment projects, as well as a subjective evaluation of the achievement of strategic objectives. Each such Long Term Performance Award will vest and become nonforfeitable effective as of the last day of the performance period.

(6)	Each LTIP Unit was issued in lieu of a portion of the NEO’s base salary and are subject to a one-year vesting period.

(7)	This Long Term Performance Award was issued in the form of LTIP Units in lieu of cash payment for the NEO’s 2020 cash bonus and is subject to a one-year vesting period.

Stock Vested in 2021

The following table sets forth certain information with respect to the vesting of LTIP Units for each named executive officer during the fiscal year ended December 31, 2021.


	Stock Awards
	Number of Shares	Value Received on
Name	Acquired on Vesting (#)	Vesting ($)(1)
R. Ramin Kamfar	324,439	$	3,766,623
Jordan B. Ruddy	205,185	$	2,253,202
James G. Babb III	167,843	$	1,831,722
Ryan S. MacDonald	172,646	$	1,896,039
Christopher J. Vohs	20,591	$	269,175
Michael L. Konig	164,991	$	1,815,555

(1)	Based on the closing prices on the NYSE American of one share of Class A common stock on each of the vesting dates. Assumes that the value of LTIP Units on a per unit basis is equal to the per share value of our Class A common stock.

Narrative Discussion of Summary Compensation Table

We provide additional disclosure below of factors relating to the Summary Compensation Table, including descriptions of the Executive Agreements of our NEOs. For further narrative disclosures concerning the information set forth in the Summary Compensation Table, please see “Compensation Discussion and Analysis” in this Form 10-K.

Executive Agreements with our NEOs

We have entered into Employment Agreements with Messrs. Kamfar, Babb, MacDonald, Ruddy, and Vohs, as well as a Services Agreement with Mr. Konig on substantially the same terms as the Employment Agreements. Hereinafter, references to “Executive Agreement(s)” will refer solely to the Employment and/or Service Agreement(s) of our NEOs. The post-termination and severance provisions of these agreements are discussed in “Potential Payments Upon Termination or Change-in-Control” below.

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Term. The Executive Agreements became effective as of the closing of the Internalization on October 31, 2017. The Executive Agreements were to continue in effect for an initial term through and including December 31, 2020, subject to automatic renewals of additional successive one-year periods (each a “Renewal Term”) unless either party thereto provides at least sixty (60) days’ advance notice of non-renewal. In connection with the establishment of the compensation structure for our NEOs for fiscal years 2021 and 2022, the compensation committee and the Board evaluated the Executive Agreements and determined their terms and conditions to be consistent with and reflective of the compensation terms established for each of our NEOs for each of 2021 and 2022, and thus approved the automatic renewal of the Executive Agreements, each of which automatically renewed effective as of December 31, 2020 and 2021, respectively, and will continue in effect for a Renewal Term through and including December 31, 2022. The Executive Agreements provide that each of Mr. Kamfar, Mr. Babb, Mr. MacDonald, Mr. Ruddy, Mr. Vohs, and Mr. Konig, each in their respective capacity as executive officers (collectively, for purposes of this section, the “Executive Officers,” and each, an “Executive Officer”) can voluntarily terminate his employment or service for any reason upon 60 days’ notice or by sending a notice of non-renewal to the Company, or may resign for good reason. The Company may also terminate the Executive Agreements upon the disability of the Executive Officer, and the Executive Officer’s employment or service shall terminate upon such Executive Officer’s death. The terms “cause,” “disability,” and “good reason,” are discussed in “Potential Payments on Termination or Change-In-Control” below.

Duties. The Executive Agreements provide that each Executive Officer will perform duties and provide services to us that are commensurate with the duties, authorities and responsibilities of persons in similar capacities in similarly sized companies, and such other duties, authorities and responsibilities as may reasonably be assigned to him from time to time by the Board or, in the case of Executive Officers other than Mr. Kamfar, the Chief Executive Officer. The Executive Agreements further provide that the Executive Officers will, without additional compensation, also serve on the Board of, serve as an officer of, and/or perform such executive and consulting services for, or on behalf of, such subsidiaries of the Company as the Board may, from time to time, request. The Executive Agreements also provide that the Executive Officers will devote substantially all of their business time and attention to the performance of their duties to the Company, but will be permitted to devote time as they determine in good faith to be necessary or appropriate to fulfill their duties to Bluerock and its affiliates, and engage in certain other outside activities, so long as those duties and activities do not unreasonably interfere with the performance of their duties to us.

Compensation. The Executive Agreements provide that Mr. Kamfar, Mr. Babb, Mr. MacDonald, Mr. Ruddy, and Mr. Vohs will receive an annual base salary or, in the case of Mr. Konig, an annual base payment, of at least $400,000, $325,000, $300,000, $300,000, $250,000, and $300,000, respectively. Each Executive Agreement provides that each Executive Officer’s base salary or base payment, as applicable, will be reviewed annually for appropriate increases by the compensation committee, but will not be decreased. Each Executive Agreement further states that each Executive Officer is eligible to receive an annual incentive bonus payable in cash, and annual grants of time- and performance-based equity awards, in each case as described above in “Elements of Executive Compensation” and “2021 Compensation Decisions.” Each Executive Agreement provides that each Executive Officer is entitled to participate in all executive incentive and, and except for Mr. Konig, all employee benefit programs of the Company made available to the Company’s senior executives generally, and to be reimbursed for reasonable and customary expenses related to his employment and to paid vacation in accordance with the Company’s policies.

Clawback. Each Executive Agreement provides that any compensation paid to the Executive Officer pursuant to the Executive Agreement or any other agreement or arrangement with the Company is subject to mandatory repayment by the Executive Officer to the Company if and to the extent any such compensation or gain is or becomes subject to (i) the Company’s clawback policy, or (ii) any law, rule, requirement or regulation which imposes mandatory recoupment, under circumstances set forth in such law, rule, requirement or regulation.

Non-Competition, Non-Solicitation, Intellectual Property, Confidentiality and Non-Disparagement. The Executive Agreements provide that for the one-year period following the termination of his employment or its service relationship with the Company for any reason, the respective Executive Officer will not solicit our employees or exclusive consultants or independent contractors, and for the eighteen-month period following the termination of his employment or its service relationship with us for any reason, each Executive Officer will not solicit our investors or customers or compete with us. Each Executive Agreement also contains covenants relating to the treatment of confidential information and intellectual property matters and restrictions on the ability of each of the Executive Officers on the one hand and us on the other hand to disparage the other.

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Parachute Payments. Each Executive Agreement provides that the Executive Officer shall bear all expense of, and be solely responsible for, all federal, state, local or foreign taxes due with respect to any amount payable to or other benefit receivable by the Executive Officer under their Executive Agreement, including, without limitation, any excise tax imposed by Section 4999 of the Code; provided, however, that any such amount or benefit deemed to be a “parachute payment” (as defined in Section 280G of the Code) alone or when added to any other amount payable or paid to or other benefit receivable or received by the Executive Officer which is deemed to constitute a parachute payment (whether or not under an existing plan, arrangement or other agreement), and would result in the imposition on the Executive Officer of an excise tax under Section 4999 of the Code (all such amounts and benefits being referred to as total payments), shall be reduced to the extent necessary so that no portion thereof shall be subject to the excise tax imposed by Section 4999 of the Code but only if, by reason of such reduction, the net after-tax benefit received by the Executive Officer shall exceed the net after-tax benefit received by the Executive Officer if no such reduction was made. Net after-tax benefit is defined as (i) the total of all payments and the value of all benefits which the Executive Officer receives or is then entitled to receive from the Company that would constitute parachute payments, less (ii) the amount of all federal, state and local income taxes payable with respect to the foregoing calculated at the maximum marginal income tax rate for each year in which the foregoing shall be paid to the Executive Officer (based on the rate in effect for such year as set forth in the Code as in effect at the time of the first payment of the foregoing) and the amount of applicable employment taxes, less (iii) the amount of excise taxes imposed with respect to the payments and benefits described in (i) above by Section 4999 of the Code.

Section 409A. Each Executive Agreement provides that it is intended to comply with the requirements of Section 409A of the Code, to the extent applicable, and the Executive Agreement will be interpreted to avoid any penalty sanctions under Section 409A of the Code. Accordingly, each Executive Agreement provides that all of its provisions will be construed and interpreted to comply with Section 409A and, if necessary, any such provision shall be deemed amended to comply with Section 409A of the Code and regulations thereunder. If any payment or benefit cannot be provided or made at the time specified herein without incurring sanctions under Section 409A of the Code, then such benefit or payment shall be provided in full at the earliest time thereafter when such sanctions will not be imposed. For purposes of Section 409A of the Code, each payment made under the Executive Agreement shall be treated as a separate payment. In no event may the Executive Officer, directly or indirectly, designate the calendar year of payment. The Executive Officer will be deemed to have a termination of employment for purposes of determining the timing of any payments or benefits hereunder that are classified as deferred compensation only upon a “separation from service” within the meaning of Section 409A of the Code.

Each Executive Agreement provides that if on the date of the Executive Officer’s termination of employment, the Executive Officer is a “specified employee” (as such term is defined in Section 409A(a)(2)(B)(i) of the Code and its corresponding regulations) as determined by the board (or its delegate) in its sole discretion in accordance with its “specified employee” determination policy, then all cash severance payments payable to the Executive Officer under the Executive Agreement that are deemed as deferred compensation subject to the requirements of Section 409A of the Code shall be postponed for a period of six months following the Executive Officer’s “separation from service” with the Company (or any successor thereto). The postponed amounts shall be paid to the Executive Officer in a lump sum on the date that is six (6) months and one (1) day following the Executive Officer’s “separation from service” with the Company (or any successor thereto). If the Executive Officer dies during such six-month period and prior to payment of the postponed cash amounts hereunder, the amounts delayed on account of Section 409A of the Code shall be paid to the personal representative of the Executive Officer’s estate on the sixtieth (60^th) day after the Executive Officer’s death. If any of the cash payments payable pursuant to the Executive Agreement are delayed due to the requirements of Section 409A of the Code, there shall be added to such payments interest during the deferral period at an annualized rate of interest equal to the prime rate as reported in the Wall Street Journal (or, if unavailable, a comparable source) at the relevant time.

All reimbursements provided under the Executive Agreements that constitute deferred compensation under Section 409A of the Code shall be made or provided in accordance with the requirements of Section 409A, including, where applicable, the requirement that (i) any reimbursement is for expenses incurred during the Executive Officer’s lifetime (or during a shorter period of time specified in the Executive Agreement), (ii) the amount of expenses eligible for reimbursement during a calendar year may not affect the expenses eligible for reimbursement in any other calendar year, (iii) the reimbursement of an eligible expense will be made on or before the last day of the taxable year following the year in which the expense is incurred, and (iv) the right to reimbursement is not subject to liquidation or exchange for another benefit.

Potential Payments Upon Termination or Change-in-Control

The following section describes potential payments and benefits to the NEOs under the Company’s compensation and benefit plans and arrangements upon termination of employment or a change of control of the Company.

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We have entered into Employment Agreements with Messrs. Kamfar, Babb, MacDonald, Ruddy, and Vohs, as well as a Services Agreement with Mr. Konig on substantially the same terms as the Employment Agreements (hereinafter, collectively, the “Executive Agreements”). The Executive Agreements provide for payments and other benefits if the NEO’s employment with us is terminated under circumstances specified in his respective Executive Agreement. An NEO’s rights upon the termination of his employment or service will depend upon the circumstances of the termination. The table below summarizes these rights and the amount of any payments and benefits due under the circumstances specified for the NEO indicated.

Further, certain of the Company’s benefit plans and arrangements contain provisions regarding acceleration of vesting and payment upon specified termination events; see “—Company Share-Based Plans” below. In addition, the Company may authorize discretionary severance payments to its NEOs upon termination.

Company Share-Based Plans

Fourth Amended 2014 Incentive Plan (the “Incentive Plans”). A “Change in Control” under the Fourth Amended 2014 Incentive Plans occurs if:

●

a person, entity or affiliated group (with certain exceptions) acquires, in a transaction or series of transactions, more than 50% of the total combined voting power of our outstanding securities;

●

there occurs a merger, consolidation, reorganization, or business combination, unless the holders of our voting securities immediately prior to such transaction have more than 50% of the combined voting power of the securities in the successor entity or its parent;

●

we (i) sell or dispose of all or substantially all of our assets or (ii) acquire assets or stock of another entity, unless the holders of our voting securities immediately prior to such transaction have more than 50% of the combined voting power of the securities in the successor entity or its parent; or

●

during any period of twelve consecutive months, individuals who, at the beginning of such period, constitute our Board together with any new directors (other than individuals who become directors in connection with certain transactions or election contests) cease for any reason to constitute a majority of our Board.

If we experience a Change in Control, the administrator may, at its discretion, provide that awards (including LTIP Units) that vest, are earned or become exercisable based solely on continued employment or service (“Time-Based Awards”) that are outstanding on the date of such Change in Control will be assumed by the surviving entity, will be replaced by a comparable substitute award of substantially equal value granted by the surviving entity, or will otherwise automatically become fully exercisable, restrictions and conditions on outstanding stock awards will lapse, and performance units, incentive awards or other equity-based awards will become earned and nonforfeitable in their entirety, on such date. Any Time-Based Awards so assumed or replaced with substitute awards in connection with the Change in Control will vest in accordance with their original terms, except that any such assumed or substitute awards for Time-Based Awards originally granted under the Incentive Plans will automatically become vested in full on the last day of the holder’s employment if (A) the holder’s employment or service with the Company, the Successor Entity, or an affiliate thereof is terminated (i) involuntarily without Cause or following non-renewal of the holder’s employment agreement, (ii) voluntarily by the holder with Good Reason, or (iii) on account of the holder’s death or disability, and (B) the holder remained in the continuous employ or service of the Company, the Successor Entity, or the applicable affiliate thereof from the date of such Change in Control until the date of such termination of employment or service.

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Awards that are not Time-Based Awards (“Performance Awards”) that are outstanding on the date of such Change in Control must be assumed or replaced with substitute awards in connection with the Change in Control. Such assumed or substituted Performance Awards will be of the same type of award as the original Performance Awards being assumed or replaced, and will have a value, as of the date of such Change in Control, that is substantially equal to the value of the original Performance Awards. In addition, such assumed or substituted Performance Awards will continue to vest in accordance with the terms and conditions of the original Performance Awards being assumed or replaced; provided, that the performance objectives and measures of the original Performance Awards being assumed or replaced shall be adjusted as the administrator determines is equitably required. Notwithstanding the preceding sentence (and solely with respect to assumed or substitute awards for Performance Awards originally granted under the Plans), if (A) the holder’s employment with the Company, the Successor Entity, or an affiliate thereof is terminated (i) involuntarily without Cause, (ii) following non-renewal of the employment agreement, if any, between the holder and the Company, the Successor Entity or the applicable affiliate thereof (if the holder has an employment agreement requiring accelerated vesting in such case), (iii) voluntarily by the holder with Good Reason, or (iv) on account of the holder’s death or disability, and (B) the holder remained in the continuous employ of the Company, the Successor Entity or the applicable affiliate thereof from the date of such Change in Control until the date of such termination of employment, then the assumed or substituted Performance Awards will automatically become vested with respect to a pro rata number of the shares or other securities subject to such assumed or substituted Performance Awards based on the extent to which the performance or other objectives are achieved as of the date of such termination of employment or service. Any portion of any such Performance Awards that does not become so vested will be forfeited.

The administrator may also provide that any Time-Based Awards (or any portion thereof) that become vested in connection with the Change in Control as set forth above may be cancelled, in the sole discretion of the administrator, in exchange for a payment, in cash or shares of our common stock or other securities or consideration received by stockholders in the Change in Control transaction, in an amount substantially equal to (i) the price per share of Class A Common Stock received by stockholders (in the case of vested shares of Class A Common Stock), (ii) the amount by which the price per share of Class A Common Stock received by stockholders exceeds the option price or Initial Value (in the case of Options and SARs), and (iii) if applicable, the value of the other securities or property in which a Performance Unit or Other Equity-Based Award is denominated. However, in the case of Options and SARs, if the option price or Initial Value exceeds the price per share of Class A Common Stock received by stockholders in the Change in Control transaction, the Option or SAR may be cancelled without any payment to the holder.

The Code has special rules that apply to “parachute payments,” i.e., compensation or benefits the payment of which is contingent upon a Change in Control. If certain individuals receive parachute payments in excess of a safe harbor amount prescribed by the Code, the payor is denied a federal income tax deduction for a portion of the payments and the recipient must pay a 20% excise tax, in addition to income tax, on a portion of the payments.

If we experience a Change in Control, benefits provided under the Incentive Plans could be treated as parachute payments. In that event, the Incentive Plans provide that the benefits under the Incentive Plans, and all other parachute payments provided under other plans and agreements, will be reduced to the safe harbor amount, i.e., the maximum amount that may be paid without excise tax liability or loss of deduction, if the reduction allows the participant to receive greater after-tax benefits. The benefits under the Incentive Plans and other plans and agreements will not be reduced, however, if the participant will receive greater after-tax benefits (taking into account the 20% excise tax payable by the participant) by receiving the total benefits. The Incentive Plans also provide that these provisions do not apply to a participant who has an agreement with us providing that the participant cannot receive payments in excess of the safe harbor amount.

Change in Control/Severance Payment Table as of December 31, 2021

The following table estimates the potential payments and benefits to our Executive Officers upon termination of employment or a change in control of the Company, assuming such event occurs on December 31, 2021. These estimates do not reflect the actual amounts that would be paid to such persons, which would only be known at the time that they become eligible for payment and would only be payable if the specified event occurs.

Items Not Reflected in Table. The following items are not reflected in the table set forth below:

●

Accrued salary, bonus and vacation.

●

Welfare benefits provided to all salaried employees having substantially the same value.

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●

Amounts outstanding under the Company’s 401(k) plan.

Change in Control and Severance Payments as of December 31, 2021


		Reason for Termination / Acceleration
						Termination by
						Company without
				Company		cause or by Executive		Change in
Name	Benefit	Disability ⁽¹⁾		non-renewal ⁽²⁾		for good reason ⁽³⁾		Control ⁽⁴⁾
R. Ramin Kamfar	Cash Severance	$	—	$	3,375,225	$	3,375,225	$	3,375,225	⁽⁵⁾
	Acceleration of Share-Based Awards		17,712,023		17,712,023		17,712,023		17,712,023	⁽⁶⁾
	Annual Disability Benefits ⁽⁷⁾		120,000		—		—		—
	Other ⁽⁸⁾		—		35,394		35,394		35,394
	Total	$	17,832,023	$	21,122,642	$	21,122,642	$	21,122,642
Jordan B. Ruddy	Cash Severance	$	—	$	1,487,613	$	1,487,613	$	2,231,420	⁽⁵⁾
	Acceleration of Share-Based Awards		5,698,901		5,698,901		5,698,901		5,698,901	⁽⁶⁾
	Annual Disability Benefits⁽⁷⁾		120,000		—		—		—
	Other⁽⁸⁾		—		27,663		27,663		27,663
	Total	$	5,818,901	$	7,214,177	$	7,214,177	$	7,957,984
James G. Babb, III	Cash Severance	$	—	$	1,442,310	$	1,442,310	$	2,163,465	⁽⁵⁾
	Acceleration of Share-Based Awards		3,981,839		3,981,839		3,981,839		3,981,839	⁽⁶⁾
	Annual Disability Benefits ⁽⁷⁾		120,000		—		—		—
	Other⁽⁸⁾		—		35,436		35,436		35,436
	Total	$	4,101,839	$	5,459,585	$	5,459,585	$	6,180,740
Ryan S. MacDonald	Cash Severance	$	—	$	1,721,972	$	1,721,972	$	2,582,958	⁽⁵⁾
	Acceleration of Share-Based Awards		5,798,331		5,798,331		5,798,331		5,798,331	⁽⁶⁾
	Annual Disability Benefits ⁽⁷⁾		120,000		—		—		—
	Other ⁽⁸⁾		—		39,630		39,630		39,630
	Total	$	5,918,331	$	7,559,933	$	7,559,933	$	8,420,919
Christopher J. Vohs	Cash Severance	$	—	$	880,355	$	880,355	$	1,320,533	⁽⁵⁾
	Acceleration of Share-Based Awards		1,344,867		1,344,867		1,344,867		1,344,867	⁽⁶⁾
	Annual Disability Benefits ⁽⁷⁾		120,000		—		—		—
	Other ⁽⁸⁾		—		35,436		35,436		35,436
	Total	$	1,464,867	$	2,260,658	$	2,260,658	$	2,700,836
Michael L. Konig	Cash Severance	$	—	$	1,400,113	$	1,400,113	$	2,100,170	⁽⁵⁾
	Acceleration of Share-Based Awards		4,832,121		4,832,121		4,832,121		4,832,121	⁽⁶⁾
	Annual Disability Benefits ⁽⁷⁾		120,000		—		—		—
	Other ⁽⁸⁾		—		30,219		30,219		30,219
	Total	$	4,952,121	$	6,262,453	$	6,262,453	$	6,962,510

(1)

Each Executive Agreement provides that the Company may terminate the Executive Officer’s employment, to the extent permitted by applicable law, if the Executive Officer (i) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or (ii) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Company, or a disability. If the Company terminates the Executive Officer’s employment for disability, the Executive Officer will be entitled to receive the following:

(A)Any unpaid base salary and accrued but unused vacation and/or paid time off (determined in accordance with Company policy) through the date of termination (paid in cash within 30 days, or such shorter period required by applicable law, following the effective date of termination);

(B)Reimbursement for all necessary, customary and usual business expenses and fees incurred and paid by the Executive Officer prior to the effective date of termination in connection with his employment or service upon presentation to the Company of reasonable substantiation and documentation (payable in accordance with the Company’s expense reimbursement policy);

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(C)Vested benefits, if any, to which the Executive Officer may be entitled under the Company’s employee benefit plans as provided under his Executive Agreement (payable in accordance with the applicable employee benefit plan), and directors and officers liability coverage pursuant to the applicable provisions of the Executive Agreement for actions and inactions occurring during the term of such agreement, and continued coverage for any actions or inactions by the Executive Officer while providing cooperation under the Executive Agreement (all such benefits set forth under subsection (A) through (C) to this footnote (1), collectively, the “Accrued Benefits”); and

(D)The Executive Officer's outstanding equity awards (x) that are subject solely to time-based vesting conditions shall become fully vested as of Executive Officer's date of termination for disability and (y) that are subject to performance-based vesting conditions, will vest if and to the extent the applicable performance-based conditions are satisfied as of the date of termination (without regard to the original length of the performance period); provided, however, that any performance-based award that vests pursuant to clause (y) will be pro-rated for the actual number of days in the applicable vesting period preceding the date of termination of Executive Officer's employment.

(2)

Each Executive Agreement provides that the Company may elect not to extend the term of such Executive Agreement by giving written notice to the Executive Officer at least sixty (60) days prior to any anniversary of December 31, 2021 (a “Non-Renewal”). In the event that the Executive Officer’s employment is terminated by reason of a Non-Renewal by the Company and the Executive Officer is willing and able, at the time of such Non-Renewal, to continue performing services on the terms and conditions set forth herein for the renewal term that would have occurred but for the Non-Renewal, then the Executive Officer shall be entitled to receive:

(A)The Accrued Benefits; and,

(B)

If the Executive Officer signs a general release of claims in favor of the Company (subject to the expiration of any applicable or legally required revocation period) within sixty (60) days after the effective date of termination (the “Release Requirement”):

(1)A lump sum cash payment equal to a multiple (the “Severance Multiple”) of (a) three times the sum (in the case of Mr. Kamfar), or (b) two times the sum (in the case of Messrs. Babb, MacDonald, Ruddy, Vohs and Konig), of (i) his base salary, and (ii) his average annual bonus with respect to two prior calendar years (in the case of Messrs. Kamfar, Babb, MacDonald, Ruddy, Vohs and Konig);

(2)A lump sum cash payment in an amount equal to his target bonus for the then-current calendar year, pro-rated for the number of days in such calendar year ending on the effective date of termination;

(3)All outstanding equity-based awards (x) that are subject solely to time-based vesting conditions will become fully vested as of the effective date of termination, and (y) that are subject to performance-based vesting conditions will vest if and to the extent the applicable performance-based vesting conditions are satisfied as of the date of termination (without regard to the original length of the performance period); provided, that any performance-based award that vests pursuant to clause (y) will be pro-rated for the actual number of days in the applicable vesting period preceding the effective date of termination;

(4)If entitled to elect continuation of coverage under any Company group health plan under applicable law, reimbursement for 100% of COBRA premiums incurred for he and his dependents under such plan during the duration of his COBRA continuation;

(5)A lump-sum cash payment of any unpaid base salary or unpaid base payment and accrued but unused vacation and/or paid time off through the date of termination; and

(6)Reimbursement for all necessary, customary and usual business expenses and fees incurred and paid prior to the effective date of termination (all such benefits set forth under this subsection (B) to footnote (2), collectively, the “Release Benefits”).

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(3)

Under each Executive Agreement, the Company may terminate an Executive Officer’s employment or service at any time without “cause” (defined below) upon not less than sixty (60) days’ prior written notice to the Executive Officer. In addition, the Executive Officer may initiate a termination of employment or service by resigning for “good reason” (defined below). The Executive Officer must give the Company not less than sixty (60) days’ prior written notice of such resignation. In addition, the Company may initiate a termination of employment or service by sending a notice of non-renewal of the Executive Agreement to the Executive Officer, as described above. If the Executive Officer satisfies the Release Requirement in these circumstances, the Executive Officer will be entitled to receive the Accrued Benefits and the Release Benefits. If the Executive Officer does not satisfy the Release Requirement in these circumstances, we refer to the termination as a no-release termination. Upon any no-release termination, the Executive Officer is entitled to receive only the amount due to the Executive Officer under the Company’s then current severance pay plan for employees, if any, and no other payments or benefits will be due under the Executive Agreement to the Executive Officer, but the Executive Officer will be entitled to receive the Accrued Benefits.

Each Executive Agreement defines “cause” as any of the following grounds for termination of the Executive Officer’s employment or service:

the Executive Officer’s conviction of, or plea of guilty or nolo contendere to, a felony (excluding traffic-related felonies), or any financial crime involving the Company (including, but not limited to, fraud, misappropriation or embezzlement of Company assets);

ii.

the Executive Officer’s willful and gross misconduct in the performance of his duties (other than by reason of his incapacity or disability); provided, that the Company’s dissatisfaction with the Executive Officer’s performance shall not constitute “cause”;

iii.

the Executive Officer’s continuous, willful and material breach of the Executive Agreement after written notice of such breach has been given by the Board in its reasonable discretion exercised in good faith; provided that, in no event shall any action or omission in subsection (ii) or (iii) constitute “cause” unless (1) the Company gives notice to the Executive Officer stating that the Executive Officer will be terminated for cause, specifying the particulars thereof in reasonable detail and the effective date of termination (which shall be no less than ten (10) business days following the date on which such written notice is received by the Executive Officer) (the “Cause Termination Notice”), (2) the Company provides the Executive Officer and his counsel with an opportunity to appear before the Board to rebut or dispute the alleged reason for termination on a specified date that is at least three (3) business days following the date on which the Cause Termination Notice is given, but prior to the stated termination date described in clause (1), and (3) a majority of the Board (calculated without regard to the Executive Officer, if applicable) determines that the Executive Officer has failed to materially cure or cease such misconduct or breach within ten (10) business days after the Cause Termination Notice is given to him. For purposes of the foregoing sentence, no act, or failure to act, on the Executive Officer’s part shall be considered willful unless done or omitted to be done by him not in good faith and without reasonable belief that his action or omission was in the best interest of the Company, and any act or omission by the Executive Officer pursuant to the authority given pursuant to a resolution duly adopted by the Board or on the advice of counsel to the Company will be deemed made in good faith and in the best interest of the Company.

Each Executive Agreement defines “good reason” to mean the occurrence of any of the following events without the Executive Officer’s consent:

iv.

the assignment to the Executive Officer of duties or responsibilities substantially inconsistent with his title at the Company or a material diminution in the Executive Officer’s title, authority or responsibilities; provided (in the case of Mr. Kamfar only) that failing to maintain Mr. Kamfar as a member of the Board will constitute “good reason”; and provide (in the case of the other Executive Officers) that a change in title or modification of authority or responsibilities in connection with hiring new or elevating other executives as reasonably required or commensurate with the growth of the Company shall not constitute “good reason”;

a material reduction in base salary, or the annual or long-term target incentive opportunities, of the Executive Officer;

vi.

the Company’s continuous, material and willful breach of the Executive Agreement; or

vii.

the relocation (without the written consent of the Executive Officer) of the Executive Officer’s principal place of employment or service by more than thirty-five (35) miles from its location on the effective date of the Executive Agreement.

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Each Executive Agreement provides that (i) “good reason” will not be deemed to exist unless notice of termination on account thereof (specifying a termination date of at least sixty (60) days but no more than ninety (90) days from the date of such notice) is given no later than ninety (90) days after the time at which the event or condition purportedly giving rise to “good reason” first occurs or arises, and (ii) if there exists an event or condition that constitutes “good reason,” the Company will have thirty (30) days from the date notice of such a termination is given to cure such event or condition and, if the Company does so, such event or condition will not constitute “good reason;” provided, however, that the Company’s right to cure such event or condition will not apply if there have been repeated breaches by the Company.

(4)

Pursuant to the Fourth Amended 2014 Incentive Plans, the outstanding Time-Based Awards and Performance Awards held by any Executive Officer may be entitled to accelerated vesting in the event of a “Change in Control” of the Company. Immediate acceleration of vesting upon a Change in Control occurs only with respect to outstanding Time-Based Awards that are not assumed or replaced with a substitute award of substantially equal value by the surviving entity, whereas upon such event, outstanding Time-Based Awards that are so assumed or replaced, and all outstanding Performance Awards, will generally vest in accordance with their original terms and conditions. However, if upon a Change in Control or thereafter, an Executive Officer’s employment or service is terminated (i) involuntarily without “cause,” (ii) following non-renewal of the Executive Officer’s Executive Agreement (if the Executive Agreement requires accelerated vesting in such case), (iii) voluntarily by the Executive Officer with “good reason,” or (iv) on account of the Executive Officer’s death or disability, and the Executive Officer remained in the continuous employ or service of the Company or the successor entity from the date of such Change in Control until the date of such termination, then under the Fourth Amended 2014 Incentive Plans, all such assumed or replaced Time-Based Awards, and all or a pro rata portion (based on the extent to which the applicable performance or other objectives are achieved) of such Performance Awards, will automatically become fully vested as of the last day of the Executive Officer’s employment or service.

In addition, the Executive Agreement of each Executive Officer other than Mr. Kamfar provides that if a Change in Control of the Company occurs and, upon or within 18 months thereafter, the Company terminates the Executive Officer’s employment or service without “cause” or the Executive Officer terminates his employment or service for “good reason,” then the Executive Officer shall be entitled to receive (A) the Accrued Benefits; and (B) if the Executive Officer satisfies the Release Requirement, the Release Benefits, except that the Severance Multiple shall be three rather than two. The “Change in Control” provision in the Executive Agreement of each Executive Officer other than Mr. Kamfar serves to change the Severance Multiple to be used in calculating the amount of cash severance to which each such Executive Officer may be entitled, under the preceding circumstances, in the event of a Change in Control, but does not affect or accelerate the vesting, in such event, of the outstanding Time-Based Awards or Performance Awards held by the Executive Officer.

The Executive Agreement of each Executive Officer other than Mr. Kamfar defines “Change in Control” to have the same meaning as the same term under the Fourth Amended 2014 Incentive Plans, which definition is set forth above under “Potential Payments Upon Termination or Change-in-Control—Company Share-Based Plans.”

(5)

Amount reflects the occurrence of a Change in Control and, (A) upon or within 18 months thereafter, (i) the Company’s termination of the Executive Officer’s employment or service without “cause” or (ii) the Executive Officer’s termination of his employment or service for “good reason,” and (B) the Executive Officer’s satisfaction of the Release Requirement, thereby triggering, under the Executive Agreement of each of Messrs. Babb, MacDonald, Ruddy, Vohs and Konig, a cash severance payment calculated using a Severance Multiple of three rather than two.

(6)

Amount reflects accelerated vesting of (i) all Time-Based Awards outstanding as of 12/31/21, and (ii) approximately (a) 60% of Performance Awards outstanding for Mr. Kamfar, (b) 55% of Performance Awards outstanding for Mr. Ruddy; (c) 60% of Performance Awards outstanding for Mr. Babb; (d) 54% of Performance Awards outstanding for Mr. MacDonald; (e) 58% of Performance Awards outstanding for Mr. Vohs; and (f) 57% of Performance Awards outstanding for Mr. Konig, as of 12/31/2021.

(7)

$120,000 represents the maximum amount paid under the Company’s Long-Term Disability Plan to an employee if disabled for 90 consecutive days and the employee was eligible to receive the long-term disability payments. $120,000 represents the aggregate of maximum monthly payments of $2,000 payable as a long-term disability benefit for a maximum of 5 years or to age 70 (such payments would continue for the length of the disability).

(8)	Represents COBRA payments for a maximum of 18 months.

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In the event of the death of an Executive Officer during the term of their Executive Agreement, the Executive Officer will be entitled to receive (i) the Accrued Benefits, and (ii) all outstanding equity awards (a) that are subject solely to time-based vesting conditions, which will become fully vested as of the date of such Executive Officer’s death, and (b) that are subject to performance-based vesting conditions, which will vest if and to the extent the applicable performance-based vesting conditions are satisfied as of the date of such Executive Officer’s death (without regard to the original length of the performance period); provided, however, that any performance-based award that vests and becomes payable pursuant to clause (b) will be pro-rated for the actual number of days in the applicable performance period preceding the Executive Officer’s death.

In the event of (i) the Company’s termination of an Executive Officer’s employment or service at any time for “cause” or (ii) voluntary termination by the Executive Officer without “good reason” upon sixty (60) days’ prior written notice to the Company, the Executive Officer will be entitled to receive the Accrued Benefits. In such event, all payments and benefits under the Executive Agreement will otherwise cease, and all then-unvested awards or benefits will be forfeited.

CEO Pay Ratio

The amount earned in 2021 by our Chief Executive Officer with respect to the annual cash incentive bonus (the “Annual Cash Bonus”) for the year ended December 31, 2021 is not calculable as of the date of this Annual Report on Form 10-K, because the final performance data for the 2021 performance period used in determining the amount of such Annual Cash Bonus was not yet available as of the date hereof. For this reason, pursuant to Instruction 6 to Item 402(u) of Regulation S-K, we have omitted the CEO pay ratio disclosure required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(u) of Regulation S-K from this Annual Report on Form 10-K. We expect to determine the amount payable to our Chief Executive Officer with respect to such Annual Cash Bonus in April 2022, and will include such amount, and the required CEO pay ratio disclosure, in a Current Report on Form 8-K to be filed no later than four business days after our compensation committee approves the Chief Executive Officer’s Annual Cash Bonus, if any, for the year ended December 31, 2021.

Compensation of Directors

During 2021, the independent directors’ compensation consisted of cash and equity retainers amounting to $55,000 and $85,000, respectively. In addition, the lead independent director, the audit committee chairman, the compensation committee chairman, investment committee chairman and the nominating & corporate governance chairman received annual retainers of $25,000, $20,000, $15,000, $15,000 and $12,500, respectively. Each member of the audit committee, the compensation committee, the nominating & corporate governance committee and the investment committee received annual retainers of $10,000, $10,000, $7,500 and $5,000, respectively. All directors receive reimbursement of reasonable out-of-pocket expenses incurred in connection with attendance at meetings of the Board.

We have provided below certain information regarding compensation earned by and paid to our directors and during fiscal year 2021 (amounts in thousands).


	Fees Paid
	in Cash in		LTIP Unit
Name	2021		Awards⁽¹⁾		Total
Elizabeth Harrison⁽²⁾	$	70	$	94	$	164
Kamal Jafarnia⁽³⁾		73		94		167
I. Bobby Majumder⁽⁴⁾		123		94		217
Romano Tio⁽⁵⁾		103		94		197
R. Ramin Kamfar		—		—		—

(1)

Reflects 7,381 LTIP Units granted under the Fourth Amended 2014 Individuals Plan to Ms. Harrison, Mr. Jafarnia, Mr. Majumder and Mr. Tio, each a non-employee director. The amounts reported for each non-employee director reflect the grant date fair value of the award based on the closing price of the shares on January 1, 2021 (i.e. $12.67).

(2)	Includes standard Board retainer of $55,000, compensation committee member retainer of $10,000, and investment committee member retainer of $5,000.

(3)	Includes standard Board retainer of $55,000, audit committee member retainer of $10,000, and nominating and corporate governance committee member retainer of $7,500.

(4)	Includes standard Board retainer of $55,000, lead independent director retainer of $25,000, audit committee chairman retainer of $20,000, compensation committee member retainer of $10,000 and nominating committee chairperson retainer of $12,500.

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(5)	Includes standard Board retainer of $55,000, compensation committee chairman retainer of $15,000, audit committee member retainer of $10,000, investment committee chairman retainer of $15,000, and nominating committee member retainer of $7,500.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Stock Ownership

The table below sets forth, as of March 7, 2022, certain information regarding the total beneficial ownership of shares of our Class A Common Stock, shares of our Class C Common Stock, and shares of our Class A Common Stock issuable upon redemption of OP Units and LTIP Units, for (1) each person known to us to be the beneficial owner of more than 5% of our outstanding shares of Common Stock, (2) each of our directors and named executive officers, and (3) all of our directors and named executive officers as a group. Each person named in the table has sole voting and investment power with respect to all of the shares of Common Stock shown as beneficially owned by such person, except as otherwise set forth in the notes to the table.

The SEC has defined “beneficial ownership” of a security to mean the possession, directly or indirectly, of voting power and/or investment power over such security. A stockholder is also deemed to be, as of any date, the beneficial owner of all securities that such stockholder has the right to acquire within 60 days after that date through (1) the exercise of any option, warrant or right, (2) the conversion of a security, (3) the power to revoke a trust, discretionary account or similar arrangement or (4) the automatic termination of a trust, discretionary account or similar arrangement. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, shares of Common Stock subject to options, vesting or other rights (as set forth above) held by that person that are exercisable or will become exercisable or vest within 60 days thereafter, are deemed outstanding, while such shares are not deemed outstanding for purposes of computing percentage ownership of any other person.

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		Amount and
		Nature of
	Title of Class of	Beneficial	Percent of		Amount of	Percent of
Name of Beneficial Owner	Securities Owned	Ownership	Class⁽⁷⁾		Beneficial Ownership	Common Stock⁽⁸⁾
Executive Officers and Directors:⁽¹⁾⁽⁷⁾
R. Ramin Kamfar	Class A Common Stock	26,241	*		70,242	*
	Class C Common Stock	41,979	54.80	%
	OP Units⁽³⁾	1,956	*
	LTIP Units⁽²⁾⁽³⁾	66	*
Jordan B. Ruddy	Class A Common Stock	14,563	*		76,896	*
	Class C Common Stock	8,670	11.32	%
	OP Units⁽⁵⁾	20,284	*
	LTIP Units⁽⁴⁾⁽⁵⁾	33,379	1.13	%
James G. Babb	Class A Common Stock	11,980	*		945,972	2.48	%
	Class C Common Stock	10,916	14.25	%
	OP Units	633,250	10.76	%
	LTIP Units⁽⁴⁾	289,826	9.83	%
Ryan S. MacDonald	Class C Common Stock	2,729	3.56	%	414,715	1.09	%
	OP Units	167,289	2.84	%
	LTIP Units⁽⁴⁾	244,697	8.30	%
Christopher J. Vohs	Class A Common Stock	2,575	*		66,824	*
	LTIP Units⁽⁴⁾	64,249	2.18	%
Michael L. Konig	Class A Common Stock	720,647	2.46	%	729,317	1.91	%
	Class C Common Stock	8,670	11.32	%
Elizabeth Harrison, Independent Director	LTIP Units	28,054	*		28,054	*
Kamal Jafarnia, Independent Director	LTIP Units	20,982	*		20,982	*
I. Bobby Majumder, Independent Director	Class A Common Stock	14,225	*		47,877	*
	LTIP Units	33,652	1.14	%
Romano Tio, Independent Director	Class A Common Stock	27,244	*		60,896	*
	LTIP Units	33,652	1.14	%
All named executive officers and Directors as a Group⁽⁴⁾⁽⁷⁾		2,461,775	6.45	%	2,461,775	6.45	%
5% Stockholders:
None.

* Less than 1%.

(1)	The address of each beneficial owner listed is 1345 Avenue of the Americas, 32^nd Floor, New York, New York 10105.

(2)

Totals do not include 236,594 remaining unvested LTIP Units issued to Mr. Kamfar pursuant to his Executive Agreement, which will vest and become nonforfeitable in accordance with the vesting periods (and any applicable performance criteria and targets) of each award, subject to continued employment and other conditions. 185,839 of the remaining unvested LTIP Units reflected are pledged as security in connection with third-party loans.

(3)

On September 23, 2020, for estate planning purposes, Mr. Kamfar transferred 4,317,840 OP Units and 1,658,404 LTIP Units to an irrevocable trust of which members of his immediate family are the beneficiaries and of which Mr. Kamfar is neither a trustee nor a beneficiary. On November 8, 2021, for estate planning purposes, Mr. Kamfar transferred an aggregate of 1,035,163 LTIP Units to irrevocable trusts of which members of his immediate family members are the beneficiaries and of which Mr. Kamfar is neither a trustee nor a beneficiary.

(4)

Totals do not include the following remaining unvested LTIP Units issued to each such executive officer pursuant to their Executive Agreement: (a) 133,819 unvested LTIP Units issued to Mr. Ruddy; (b) 212,265 unvested LTIP Units issued to Mr. Babb; (c) 342,062 unvested LTIP Units issued to Mr. MacDonald; (d) 73,966 unvested LTIP Units issued to Mr. Vohs; and (e) 273,022 unvested LTIP Units issued to Mr. Konig. The remaining unvested LTIP Units attributable to each such Executive Officer will vest and become nonforfeitable in accordance with the vesting periods (and any applicable performance criteria and targets) of each award, subject to continued employment and other conditions.

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(5)

On December 22, 2020, for estate planning purposes, Mr. Ruddy transferred 494,588 OP Units to an irrevocable trust of which members of his immediate family are the beneficiaries and of which Mr. Ruddy is neither a trustee nor a beneficiary. On July 14, 2021, for estate planning purposes, Mr. Ruddy transferred 478,881 LTIP Units to an irrevocable trust of which members of his immediate family members are the beneficiaries and of which Mr. Ruddy is neither a trustee nor a beneficiary.

(6)	424,845 OP Units reflected in total are pledged as a security in connection with a third-party loan.

(7)

Numbers and percentages in the table are based on 29,260,629 shares of Class A Common Stock outstanding, 76,603 shares of Class C Common Stock outstanding, 5,884,827 OP Units outstanding and 2,947,233 vested LTIP Units outstanding, in each case as of March 7, 2022, for a total of 38,169,292 shares of Class A Common Stock, Class C Common Stock, OP Units and vested LTIP Units outstanding. Numbers and percentages in the table exclude 2,399,465 unvested LTIP Units outstanding as of March 7, 2022 as set forth in footnote (4) above.

Percentage for all NEOs and directors as a group is based on the combined total of all 38,169,292 shares of Class A Common Stock, Class C Common Stock, OP Units and vested LTIP Units, as each is an equivalent unit of ownership.

(8)

Percent of Common Stock for each executive officer and director is calculated using the combined total of all shares of Class A Common Stock, Class C Common Stock, OP Units and vested LTIP Units owned by each such individual, as each is an equivalent unit of ownership, relative to the combined total of 38,169,292 shares of Class A Common Stock and Class C Common Stock, OP Units, and vested LTIP Units outstanding as of March 7, 2022 (comprised of 29,260,629 shares of Class A Common Stock outstanding, 76,603 shares of Class C Common Stock outstanding, 5,884,827 OP Units outstanding, and 2,947,233 vested LTIP Units outstanding). Further, the number of vested LTIP Units owned by each of the following executive officers and directors include the indicated number of LTIP Units that, though vested, may not yet have achieved capital account equivalency with the OP Units held by the Company (at which time such LTIP Units may convert to OP Units and may then be settled in shares of Class A Common Stock): (a) 3,546 vested LTIP Units owned by Ms. Harrison; (b) 3,546 vested LTIP Units owned by Mr. Majumder; (c) 3,546 vested LTIP Units owned by Mr. Tio; and (d) 3,546 vested LTIP Units owned by Mr. Jafarnia.

Equity Compensation Plans

Incentive Plans

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Administration of the Fourth Amended 2014 Incentive Plans

Eligibility


	Number of
	Securities to Be	Weighted-
	Issued Upon	Average	Number of
	Exercise of	Exercise Price	Securities
	Outstanding	of Outstanding	Remaining
	Options,	Options,	Available for
	Warrants, and	Warrants, and	Future
Plan Category	Rights	Rights	Issuance
Equity compensation plans approved by security holders	—	—	2,081,508
Equity compensation plans not approved by security holders	—	—	—
Total	—	—	2,081,508

Item 13. Certain Relationships and Related Transactions and Director Independence

Director Independence

A majority of the members of our Board, and all of the members of the audit committee, are “independent.” One of our current directors, Ramin Kamfar, is affiliated with us and we do not consider Mr. Kamfar to be an independent director. Our other current directors, Elizabeth Harrison, Kamal Jafarnia, I. Bobby Majumder and Romano Tio, qualify as “independent directors” as defined under the rules of the New York Stock Exchange American. Messrs. Majumder and Tio each serve as an independent director of the Board of Directors of Bluerock Total Income + Real Estate Fund (“TIPRX”), an affiliate of our former Manager. Serving as a director of, or having an ownership interest in, another program sponsored by Bluerock will not, by itself, preclude independent director status. The Board has determined that Messrs. Jafarnia, Majumder and Tio and Mrs. Harrison each satisfy the independence criteria. None of these directors has ever served as (or is related to) an employee of ours or any of our predecessors or acquired companies or received or earned any compensation from us or any such other entities except for compensation directly related to service as a director of us or TIPRX. Therefore, we believe that all of these directors are independent directors.

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Certain Transactions with Related Persons

Related Person Transaction Policy

Our Board has adopted a written related person transaction policy. The purpose of this policy is to describe the procedures used to identify, review and approve any existing or proposed transaction, arrangement, relationship (or series of similar transactions, arrangements or relationships) in which (a) we, our Operating Partnership or any of our subsidiaries were, are or will be a participant, (b) the aggregate amount involved exceeds $120,000, and (c) a related person has or will have a direct or indirect interest. For purposes of this policy, a related person is (i) any person who is, or at any time since the beginning of the current fiscal year was, a director, director nominee, or executive officer of the Company, (ii) any beneficial owner of more than 5% of our stock, or (iii) any immediate family member of any of the foregoing persons.

Under this policy, our audit committee is responsible for reviewing and approving or ratifying each related person transaction or proposed related person transaction. In determining whether to approve or ratify a related person transaction, the audit committee is required to consider all relevant facts and circumstances of the related person transaction available to the audit committee and to approve only those related person transactions that are in, or not inconsistent with, our best interests and those of our stockholders, as the audit committee determines in good faith. No member of the audit committee is permitted to participate in any consideration of a related person transaction with respect to which that member or any of his or her immediate family is a related person.

Affiliate Transactions

As described further below, we have entered into agreements with certain affiliates pursuant to which they will provide services to us. Our independent directors have reviewed the material transactions between our affiliates and us since the beginning of 2021. Set forth below is a description of such transactions and the independent directors’ determination of their fairness.

Administrative Services Agreement

In October 2017, we 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 us with certain human resources, investor relations, marketing, legal and other administrative services (the “Services”). The Services are provided on an at-cost basis, generally allocated based on the use of such Services for the benefit of our business, and are invoiced on a quarterly basis. In addition, the Administrative Services Agreement permits certain employees of ours 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 us under the Administrative Services Agreement. Payment by us of invoices and other amounts payable under the Administrative Services Agreement will be made in cash or, at the sole discretion of the Board, in the form of LTIP Units.

We have the right to renew the Administrative Services Agreement for successive one-year terms upon sixty (60) days written notice prior to expiration. We renewed the Administrative Services Agreement for a one-year term in 2020, and on August 4, 2021, we delivered written notice to BRE of our intention to renew the Administrative Services Agreement for an additional one-year term, to expire on October 31, 2022. The Administrative Services Agreement will automatically terminate (i) upon termination by us of all Services, or (ii) in the event of our non-renewal. Pursuant to the Administrative Services Agreement, BRE is responsible for the payment of all employee benefits and any other direct and indirect compensation for the employees of BRE (or their affiliates or permitted subcontractors) assigned to perform the Services, as well as such employees’ worker’s compensation insurance, employment taxes, and other applicable employer liabilities relating to such employees.

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In the event of (i) the failure by any Party of ours to pay for Services as required under the Administrative Services Agreement, (ii) any material default by either Bluerock entity in the due performance or observance of any term or agreement in the Administrative Services Agreement, or (iii) the adjudication of any party as insolvent and/or bankrupt, or the appointment of a receiver or trustee for any party or its property, or the approval of a petition for reorganization or arrangement under any bankruptcy or insolvency Law, or the filing by any party of a voluntary petition in bankruptcy, or the consent by any party to the appointment of a receiver or trustee (in each such case, the “Defaulting Party”), then the non-Defaulting Party shall have the right, at its sole discretion, (A) in the case of a default under clause (iii), to immediately terminate the applicable Service(s) and/or the Administrative Services Agreement and its participation with the Defaulting Party thereunder; and (B) in the case of a default under clause (i) or (ii), to terminate the applicable Service(s) and/or the Administrative Services Agreement and its participation with the Defaulting Party thereunder if the Defaulting Party has failed to (x) cure the default within thirty (30) days after receiving written notice of such default, or (y) take substantial steps towards and diligently pursue the curing of the default. Parties of ours have each agreed that in the event of the termination of the Administrative Services Agreement or of a Service thereunder, the obligation of Bluerock to provide the terminated Services, or to cause the terminated Services to be provided, shall immediately cease.

We and BRE also entered into a Leasehold Cost-Sharing Agreement (the “Leasehold Cost-Sharing Agreement”) with respect to the lease for our New York headquarters (the “NY Lease”) to provide for the allocation and sharing between BRE and us of the costs thereunder, including costs associated with tenant improvements. The NY Lease permits us and certain of our respective subsidiaries and/or affiliates to share occupancy of the New York headquarters with BRE. Under the NY Lease, we, through our Operating Partnership, issued a $750,000 letter of credit as a security deposit, and BRE is obligated under the Leasehold Cost-Sharing Agreement to indemnify and hold us harmless from loss if there is a claim under such letter of credit. Payment by us of any amounts payable under the Leasehold Cost-Sharing Agreement to BRE will be made in cash or, in the sole discretion of the Board, in the form of LTIP Units.

The amounts paid or payable to Bluerock for the year ended December 31, 2021 are as reflected in the following table (amounts in thousands):


	Approximate
	Dollar Value of
	Mr. Kamfar’s
	Interest In Company		Year Ended
	Incurred Amounts		December 31, 2021
Administrative Services Agreement
Expense reimbursements	$	2,243	$	2,243
Offering expense reimbursements		1,173		1,173
Leasehold Cost-Sharing Agreement
Expense reimbursements	$	750	$	750

Dealer Manager Agreement for Series T Preferred Offering

In conjunction with the offering of the Series T Preferred Stock, we entered into a dealer manager agreement (the “Series T Dealer Manager Agreement”) with Bluerock Capital Markets, LLC, our affiliate, pursuant to which it assumed dealer manager responsibilities for our Series T Preferred Offering. Pursuant to the Series T Dealer Manager Agreement, Bluerock Capital Markets received up to 7.0% and 3.0% of the gross offering proceeds from the offering as selling commissions and dealer manager fees, respectively. The dealer manager re-allowed the substantial majority of the selling commissions and dealer manager fees to participating broker-dealers and incurred costs in excess of the 10.0%, which costs were borne by the dealer manager without our reimbursement. On November 19, 2021, we made the final issuance of Series T Preferred Stock pursuant to the Series T Preferred Offering, and upon the final issuance, the Series T Preferred Offering terminated pursuant to its terms.

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Summary of Fees and Reimbursements to Dealer Manager

Summarized below are the fees earned and expenses reimbursable to Bluerock Capital Markets, our affiliated dealer manager, and any related amounts payable for the year ended December 31, 2021 (amounts in thousands):


		Approximate		Incurred
		Dollar Value of		for the
		Mr. Kamfar’s		Year Ended
		Interest In REIT		December 31,
		Incurred Amounts		2021
Type of Compensation
Selling Commissions	$	32,438	$	32,438
Dealer Manager Fees		13,902		13,902
Total:	$	46,340	$	46,340

The dealer manager re-allowed the substantial majority of the selling commissions and dealer manager fees to participating broker-dealers, and incurred costs in excess of the 10.0%, which costs were borne by the dealer manager bearing the loss from the excess above the 10.0% without our reimbursement.

Stockholders Agreement

In connection with our Internalization transaction in 2017, we entered into a stockholders agreement pursuant to which we may grant certain registration rights for the benefit of the contributors and impose certain limitations on the voting rights of the Class C Common Stock. The agreement may require us from time to time to register the resale of the internalization shares and grants each contributor certain rights to demand a registration of some or all their shares or to request the inclusion of some or all their shares in a piggyback registration, in each case subject to certain customary restrictions, limitations, registration procedures and indemnity provisions.

Pursuant to the stockholders agreement, the contributors agreed to limit certain of their voting rights with respect to the Class C Common Stock in excess of 9.9% of the voting rights of the company. Any shares in excess of 9.9% of the voting rights of the outstanding shares shall be voted or a written consent furnished in respect to the excess shares in such manner as directed by a majority of the members of our Board.

Transactions with Affiliates of Our Former Manager

We have entered into several transactions with five private real estate funds that are affiliates of Bluerock, an affiliate of our former Manager, in connection with our investments. Bluerock Special Opportunity + Income Fund, LLC (“Fund I”), Bluerock Growth Fund (“BGF”) and Bluerock Growth Fund II (“BGF II”) are managed and controlled by Bluerock. Bluerock Special Opportunity + Income Fund II, LLC (“Fund II”) and Bluerock Special Opportunity + Income Fund III, LLC (“Fund III”, together with Fund I, BGF, BGF II and Fund II, the “Bluerock Funds”) are managed and controlled by a wholly owned subsidiary of Bluerock. Mr. Kamfar and a family owned limited liability company are the indirect owners of 100% of the membership interests of Bluerock, and certain of our and our former Manager’s officers are also officers of Bluerock.

Domain at The One Forty Mezzanine Loan Financing

We provided a $24.5 million mezzanine loan to BR Member Domain Phase 1, LLC (the “Domain JV Member”), an affiliate of our former Manager. On June 29, 2021, we entered into an amended and restated mezzanine loan agreement (the “Domain Mezz Loan”) with Domain JV Member to: (i) increase our loan commitment to $27.4 million, of which $25.2 million had been funded as of December 31, 2021, and (ii) extend the maturity date of the loan to June 29, 2024 or earlier upon the occurrence of certain events, including the date of sale or transfer of the property. The Domain Mezz Loan is secured by Domain JV Member’s approximate 95% interest in a joint venture along with Fund II and an unaffiliated third party, which developed a 299-unit Class A apartment community located in Garland, Texas known as Domain at The One Forty. The mezzanine loan bore interest at 15% in 2019, 5.5% in 2020, and 4.0% in 2021, and bears interest at 3.0% in 2022 and thereafter, with regular monthly payments being interest-only. The Domain Mezz Loan can be prepaid without penalty. We have a 50.0% participation in any profits achieved in a sale after repayment of the Domain Mezz Loan and we and Fund II each receive full return of our respective capital contributions.

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On December 12, 2019, the Domain at The One Forty property owner entered into a $39.2 million senior mortgage loan (the “Domain Senior Loan”) secured by the Domain at The One Forty property and used the proceeds in part to pay off the outstanding balances of the prior construction and mezzanine loans. The Domain Senior Loan matures on January 5, 2023 and bears interest at the greater of 3.95% or one-month LIBOR plus 2.20% with interest-only payments through the initial term of the loan. The Domain Senior Loan contains two one-year extension options and can be prepaid without penalty.

Motif Mezzanine Financing

We provided a $74.6 million mezzanine loan (the “Motif Mezz Loan”) to BR Flagler JV Member, LLC (the “Motif JV Member”), an affiliate of our former Manager. The Motif Mezz Loan is secured by Motif JV Member’s 97% interest in a joint venture along with Fund II, Fund III, and an unaffiliated third party, which developed a 385-unit Class A apartment community located in Fort Lauderdale, Florida known as Motif.

On January 27, 2021, the Motif property owner entered into a $88.8 million bridge loan (the “Motif Bridge Loan”) secured by the Motif property and used the proceeds in part to pay off the outstanding balance, in full, of the prior construction loan. The Motif Bridge Loan matures on August 1, 2023, contains a six-month extension option, subject to certain conditions, and bears interest at the greater of 3.85% or one-month LIBOR plus 3.70% with interest-only payments through the term of the loan. The Motif Bridge Loan may be prepaid, subject to an exit fee, without prepayment penalties (i) if prepayment is being made in connection with the lender providing a permanent mortgage loan, or (ii) February 1, 2022 otherwise.

On March 29, 2021, we entered into an amended and restated mezzanine loan agreement (the “Amended Motif Mezz Loan”) with Motif JV Member to increase our loan commitment to $88.6 million, of which $84.4 million had been funded as of December 31, 2021. As part of the agreement, we agreed to reduce, after December 31, 2021, the Amended Motif Mezz Loan’s fixed rate of 12.9% per annum as follows: 9.0% per annum for the calendar year 2022 and 6.0% per annum for the calendar year 2023 and thereafter, with regular monthly payments being interest-only. In conjunction with entering the Amended Motif Mezz Loan, we entered into an amended operating agreement for Motif JV Member with Fund II and Fund III. In consideration for us reducing the Amended Motif Mezz Loan interest rate, Fund II and Fund III agreed to (a) admit BRG Flagler Village Profit Share, LLC (the “Motif PS”), a wholly-owned subsidiary of ours, as an additional member of Motif JV Member, (b) grant Motif PS a 50% participation in any profits achieved in a sale after repayment of the Amended Motif Mezz Loan and we, Fund II and Fund III each receive full return of our respective capital contributions, and (c) grant us a right to compel Motif JV Member to refinance and/or sell the Motif property beginning January 1, 2023. The Amended Motif Mezz Loan matures on March 29, 2026 and can be prepaid without penalty.

The Hartley at Blue Hill Loan Financing, formerly The Park at Chapel Hill

We provided a mezzanine loan (the “Hartley Mezz Loan”, formerly the Chapel Hill Mezz Loan) in an amount up to $40.0 million to BR Chapel Hill JV, LLC (“BR Chapel Hill JV”), of which $29.5 million was funded upon execution of the agreement. BR Chapel Hill JV owns a 100% interest in BR Chapel Hill, LLC (“BR Chapel Hill”) and is a joint venture with common interests held by Fund I, Fund II, and BR Chapel Hill Investment, LLC, all managed by affiliates of our former Manager.

In conjunction with the Hartley Mezz Loan, we provided a $5.0 million senior loan to BR Chapel Hill. The senior loan is secured by BR Chapel Hill’s fee simple interest in The Hartley at Blue Hill property. The senior loan matures on March 31, 2024 and bears interest at a fixed rate of 10.0% per annum. Regular monthly payments are interest-only during the initial term. The senior loan can be prepaid without penalty. As of December 31, 2021, the senior loan remains outstanding in full.

On August 18, 2020, we entered into an amended and restated mezzanine loan agreement (the “Amended Hartley Mezz Loan”, formerly the Amended Chapel Hill Mezz Loan) with BR Chapel Hill JV. As part of the Amended Hartley Mezz Loan, (i) our maximum loan commitment was adjusted to $31.0 million, including all previously advanced amounts outstanding, from the previous commitment amount of $40.0 million, and (ii) the interest rate on the loan was increased to 11.75% per annum from the previous rate of 11% per annum, with 5.25% paid current and 6.5% accrued. As of December 31, 2021, all amounts had been funded under the Amended Hartley Mezz Loan. The Amended Hartley Mezz Loan matures on March 31, 2024 or earlier upon the occurrence of certain events, including the date of sale or transfer of property, and can be prepaid without penalty. The loan maturity events and the ability of the loan to be prepaid without penalty did not change from the previous loan.

The Hartley at Blue Hill property was sold in February 2022. Refer to the Subsequent Events section of Item 7 for further information.

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Vickers Historic Roswell Mezzanine Loan Financing

We provided an $12.4 million mezzanine loan (the “Vickers Mezz Loan”) to BR Vickers Roswell JV Member, LLC (the “Vickers JV Member”), an affiliate of our former Manager. The Vickers Mezz Loan was secured by Vickers JV Member’s approximate 80% interest in a joint venture along with Fund III and an unaffiliated third party, which developed a 79-unit Class A apartment community located in Roswell, Georgia known as Vickers Historic Roswell. The Vickers Mezz Loan was to mature on February 26, 2022 or earlier upon the occurrence of certain events, including the date of sale or transfer of the property. The Vickers Mezz Loan bore interest at a fixed rate of 15.0% with regular monthly payments that were interest-only and could be prepaid without penalty.

The Vickers Historic Roswell property was sold on June 29, 2021. Refer to Note 3 of our consolidated financial statements for further information.

Alexan CityCentre Interests

We made a $18.3 million preferred equity investment in a joint venture along with BGF, BGF II, Fund II and Fund III, and an unaffiliated third party (the “Alexan CityCentre JV”), which developed a 340-unit Class A apartment community located in Houston, Texas, known as Alexan CityCentre. We earn a preferred return of 15.0% and 20.0% on our $6.5 million and $11.8 million preferred equity investments, respectively. The Alexan CityCentre JV is required to redeem our preferred membership interest plus any accrued but unpaid return on the earlier date which is six months following the maturity of the loans, detailed below, including extension and refinancing, or any earlier acceleration or due date.

In April 2019, the Alexan CityCentre owner: (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 outstanding balance, in full, of the prior construction loan. The loans bear interest at 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, with regular monthly payments that are interest-only. The senior loan and mezzanine loan both: (i) have initial maturity dates of May 9, 2022, (ii) contain two one-year extension options, and (iii) can be prepaid in whole prior provided the lender receives a stated spread maintenance premium.

Alexan CityCentre, the property underlying our preferred equity investment, was sold in January 2022. Refer to the Subsequent Events section of Item 7 for further information.

Alexan Southside Place Interests

We made a $24.9 million preferred equity investment in a joint venture along with Fund II and Fund III (together, the “Funds”), and an unaffiliated third party (the “Alexan Southside JV”), which developed a 270-unit Class A apartment community located in Houston, Texas, known as Alexan Southside Place. Alexan Southside Place was developed upon a tract of land under an 85-year ground lease. The joint venture adopted ASU No. 2016-02 as of January 1, 2019, and as such, had recorded a right-of-use asset and lease liability of $17.1 million as of December 31, 2020. We earned per annum returns on our investment as follows: 6.5% in 2019, 5.0% in 2020 and 3.5% in 2021. The Alexan Southside JV was required to redeem our preferred membership interest plus any accrued but unpaid return on November 9, 2022 or earlier upon the occurrence of certain events.

On March 25, 2021, Alexan Southside Place, the property underlying our preferred equity investment, was sold. Refer to Note 3 of our consolidated financial statements for further information.

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Alexan Southside Place Provision for Credit Loss

Consistent with the overall Houston – Medical Center submarket, Alexan Southside Place lost significant value since the onset of the COVID-19 pandemic given the pandemic’s impact on demand within the submarket. At the time in the fourth quarter 2020, it was expected that the overall submarket would rebound over the next twenty-four to thirty-six months, though it was more likely than not that the joint venture would sell before recovery. As a result of this change in the submarket and the impact on the underlying operations of the Alexan Southside Place preferred equity investment, and the likelihood that the joint venture would sell before recovery (which it did sell in March 2021 as disclosed above), the risk characteristics of the investment, such as investment duration, had changed; the investment was removed from the pool analysis for credit losses under CECL and the investment was evaluated separately through an individual investment recoverability analysis. This separate analysis deemed the investment was not fully recoverable, and as a result, a $15.9 million provision for credit loss was recorded in the fourth quarter 2020. The credit loss on this asset was a result of writing down our investment to equal its estimated value. The estimated value was based on a letter of intent to purchase the property from an unrelated third party which was received by the joint venture. Refer to Note 2 of our consolidated financial statements for further information regarding CECL.

Refer to Note 12 – Related Party Transactions of our consolidated financial statements for additional information regarding related party disclosures.

Item 14. Principal Accounting Fees and Services

Independent Auditors

Grant Thornton LLP (“Grant Thornton”) has served as our independent auditors since March 11, 2019. The appointment of Grant Thornton as our independent registered public accountants was unanimously approved by our Board.

In order to ensure that the provision of such services does not impair the auditors’ independence, the audit committee approved, on March 26, 2014, the Amended and Restated Audit Committee Charter, which includes an Audit Committee Pre-Approval Policy for Audit and Non-audit Services. In establishing this policy, the audit committee considered whether the service is a permissible service under the rules and regulations promulgated by the SEC. In addition, the audit committee, may, in its discretion, delegate to one or more of its members the authority to pre-approve any audit or non-audit services to be performed by the independent auditors, provided any such approval is presented to and approved by the full audit committee at its next scheduled meeting.

Since October 15, 2009, when we became a reporting company under Section 15(d) of the Exchange Act, all services rendered by our independent auditors have been pre-approved in accordance with the policies and procedures described above.

The aggregate fees billed to us for professional accounting services, including the audit of our annual financial statements by Grant Thornton for the years ended December 31, 2021 and 2020, are set forth in the table below (amounts in thousands):


		2021		2020
Audit fees	$	809	$	650
Audit-related fees		201		—
Tax fees		—		—
All other fees		—		—
Total	$	1,010	$	650

For purposes of the preceding table professional fees are classified as follows:

●

Audit fees – These are fees for professional services performed for the audit of our annual financial statements and the required review of quarterly financial statements and other procedures performed by the independent auditors in order for them to be able to form an opinion on our consolidated financial statements. These fees also cover services that are normally provided by independent auditors in connection with statutory and regulatory filings or engagements.

●

Audit-related fees – These are fees for assurance and related services that traditionally are performed by independent auditors that are reasonably related to the performance of the audit or review of the financial statements, such as due diligence related to acquisitions and dispositions, attestation services that are not required by statute or regulation, internal control reviews and consultation concerning financial accounting and reporting standards.

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●

Tax fees – These are fees for all professional services performed by professional staff in our independent auditor’s tax division, except those services related to the audit of our financial statements. These include fees for tax compliance, tax planning and tax advice, including federal, state and local issues. Services may also include assistance with tax audits and appeals before the IRS and similar state and local agencies, as well as federal, state and local tax issues related to due diligence.

●

All other fees – These are fees for any services not included in the above-described categories.

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PART IV

Item 15. Exhibits, Financial Statement Schedules

(a)	List of Documents Filed.

1.Financial Statements

The list of the financial statements filed as part of this Annual Report on Form 10-K is set forth on page F-1 herein.

(b)

Exhibits.

The exhibits filed in response to Item 601 of Regulation S-K are listed on the Exhibit Index attached hereto.

(c)	Financial Statement Schedules.

Our consolidated financial statements and supplementary data are included as a separate section in this Annual Report on Form 10-K commencing on page F-1 and are incorporated herein by reference.

Item 16. Form 10-K Summary

None.

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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: March 11, 2022
		/s/ R. Ramin Kamfar
		R. Ramin Kamfar Chief Executive Officer (Principal Executive Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.


		BLUEROCK RESIDENTIAL GROWTH REIT, INC.
Date: March 11, 2022
		/s/ R. Ramin Kamfar
		R. Ramin Kamfar Chief Executive Officer (Principal Executive Officer)
Date: March 11, 2022
		/s/ Christopher J. Vohs
		Christopher J. Vohs Chief Financial Officer and Treasurer (Principal Financial Officer and Principal Accounting Officer)
Date: March 11, 2022
		/s/ Elizabeth Harrison
		Elizabeth Harrison Director
Date: March 11, 2022
		/s/ Kamal Jafarnia
		Kamal Jafarnia Director
Date: March 11, 2022
		/s/ I. Bobby Majumder
		I. Bobby Majumder Director
Date: March 11, 2022
		/s/ Romano Tio
		Romano Tio Director

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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


		Page
Financial Statements
Reports of Independent Registered Public Accounting Firm (PCAOB ID Number 248)		F-2
Consolidated Balance Sheets as of December 31, 2021 and 2020		F-6
Consolidated Statements of Operations for the Years Ended December 31, 2021, 2020, and 2019		F-7
Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2021, 2020, and 2019		F-8
Consolidated Statements of Cash Flows for the Years Ended December 31, 2021, 2020, and 2019		F-11
Notes to Consolidated Financial Statements		F-12

F-1

Table of Contents

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders

Bluerock Residential Growth REIT, Inc.

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Bluerock Residential Growth REIT, Inc. (a Maryland corporation) and subsidiaries (the “Company”) as of December 31, 2021 and 2020, the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2021, and the related notes and financial statement schedule included under Item 15(a) (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2021, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated March 11, 2022 expressed an unqualified opinion.

Basis for opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical audit matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Impairment of Real Estate Assets

At December 31, 2021, the Company’s net real estate investments total $2.0 billion. As described further in Note 2 to the financial statements, the Company continually monitors events and changes in circumstances that could indicate that the carrying amounts of the Company’s real estate and related intangible assets may not be recoverable. Events or circumstances that may prompt a review of the carrying value of investment properties may include a significant decrease in the anticipated market price of the investment property, an adverse change to the extent or manner in which an asset may be used, or a significant change in its physical condition or damage due to catastrophic event.

F-2

Table of Contents

The Company reviews for potential impairment indictors utilizing expected undiscounted future cash flows and expected disposition proceeds for a given investment under a variety of scenarios. Forecasting of future cash flows requires management to make estimates and assumptions about variables such as capitalization rates, forecasted net operating income and assumed hold periods. In the event this analysis indicates that a potential impairment exists, the Company will perform additional investigation into the recoverability of the carrying value of the real estate property and in some cases may obtain third party valuations. We identified the evaluation for impairment of real estate investments as a critical audit matter.

The principal consideration for our determination that the evaluation for impairment of real estate investments is a critical audit matter is that auditing management’s evaluation of impairment is challenging due to the high degree of subjective auditor judgment necessary in evaluating management’s identification of indicators of potential impairment and the related evaluation of the severity of such indicators in determining whether a triggering event has occurred that requires the Company to perform additional analyses to evaluate the recoverability of the investment. The significant inputs used in the evaluation include capitalization rates, forecasted net operating income, and assumed hold periods, which can be affected by expectations about future market or economic conditions, demand and competition.

Our audit procedures related to the evaluation for impairment of real estate investments included the following, among others. We obtained an understanding of management’s process to identify indicators of impairment. We evaluated the design and tested the operating effectiveness of the controls that address the identification of indicators of impairment, including management’s review of the operations and financial performance of each property, and the reasonableness of key inputs including forecasted net operating income, capitalization rates and assumed hold periods. We tested the Company’s evaluation of impairment of real estate investments by performing procedures on the key inputs used in the Company’s undiscounted cash flow analysis, specifically, forecasted net operating income, capitalization rates, and assumed hold periods. We compared forecasted to historical net operating income and the assumed hold period to historical experience, considering relevant future market or economic conditions, demand and competition. We utilized an internal valuation specialist to compare the consistency of capitalization rates used by the Company to those used for comparable properties in the market.

Evaluation of Preferred Equity Investments and Mezzanine Loan Investments for Collectability

As described further in Note 2 to the financial statements, the Company estimates the provision for credit losses on its mezzanine loans and preferred equity investments under Financial Accounting Standards Board Accounting Standard Codification 326, Financial Instruments, which is also known as the expected credit loss model or CECL.

The Company estimates its provision for credit losses using a collective (pool) approach for investments with similar risk characteristics. In measuring the CECL provision for investments that share similar characteristics, the Company applies a default rate to the investments for the remaining loan or investment hold period. In addition to analyzing investments as a pool, the Company performs an individual investment assessment of expected credit losses, which includes a quantitative assessment that utilizes projected or stabilized net operating income and capitalization rates as significant inputs as well as the results of management’s review of the operations and financial performance of the underlying property. If it is determined that the borrower is experiencing financial difficulty, or a foreclosure is probable, or the Company expects repayment through the sale of the collateral, the Company utilizes the value of the underlying collateral to evaluate the need to record an expected credit loss. We identified the individual investment assessment of expected credit losses as a critical audit matter.

The principal consideration for our determination of the individual investment assessment of expected credit losses as a critical audit matter is that auditing management’s assessment is challenging due to the high degree of subjective auditor judgment necessary in evaluating the significant inputs used in management’s individual investment assessment. The significant inputs used in the assessment can be affected by expectations about future market or economic conditions, demand and competition.

F-3

Table of Contents

Our audit procedures related to the individual investment assessment of expected credit losses included the following, among others. We obtained an understanding of management’s process to identify indicators that the borrower is experiencing financial difficulty, or a foreclosure is probable, or the Company expects repayment through the sale of the collateral. We evaluated the design and tested the operating effectiveness of the controls that address the identification of indicators that the borrower is experiencing financial difficulty, or a foreclosure is probable, or the Company expects repayment through the sale of the collateral, specifically management’s review of the operations and financial performance of the underlying property, and the reasonableness of key inputs in the individual investment assessment, including projected or stabilized net operating income and capitalization rates. We tested the Company’s individual investment assessment by performing procedures on the key inputs used in the Company’s analysis, specifically, we utilized an internal valuation specialist to compare the consistency of projected or stabilized net operating income and capitalization rates used by the Company to those used for comparable properties in the market.

/s/ GRANT THORNTON LLP

We have served as the Company’s auditor since 2019.

Southfield, Michigan

March 11, 2022

F-4

Table of Contents

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders

Bluerock Residential Growth REIT, Inc.

Opinion on Internal Control over Financial Reporting

We have audited the internal control over financial reporting of Bluerock Residential Growth REIT, Inc. (a Maryland corporation) and subsidiaries (the “Company”) as of December 31, 2021, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in the 2013 Internal Control—Integrated Framework issued by COSO.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated financial statements of the Company as of and for the year ended December 31, 2021, and our report dated March 11, 2022 expressed an unqualified opinion on those financial statements.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ GRANT THORNTON LLP

Southfield, Michigan

March 11, 2022

F-5

Table of Contents

BLUEROCK RESIDENTIAL GROWTH REIT, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)


	December 31,		December 31,
	2021		2020
ASSETS
Net Real Estate Investments
Land	$	287,406	$	279,481
Buildings and improvements		1,894,745		1,889,471
Furniture, fixtures and equipment		89,270		78,438
Total Gross Real Estate Investments		2,271,421		2,247,390
Accumulated depreciation		(224,123)		(186,426)
Total Net Operating Real Estate Investments		2,047,298		2,060,964
Operating real estate held for sale, net		0		36,213
Total Net Real Estate Investments		2,047,298		2,097,177
Cash and cash equivalents		166,492		83,868
Restricted cash		30,015		35,093
Notes and accrued interest receivable, net		173,489		157,734
Due from affiliates		711		339
Accounts receivable, prepaids and other assets, net		43,108		29,502
Preferred equity investments and investments in unconsolidated real estate joint ventures, net		135,690		83,485
In-place lease intangible assets, net		2,530		2,594
Non-real estate assets associated with operating real estate held for sale		0		145
TOTAL ASSETS	$	2,599,333	$	2,489,937

LIABILITIES, REDEEMABLE PREFERRED STOCK AND EQUITY
Mortgages payable	$	1,364,991	$	1,490,932
Mortgages payable associated with operating real estate held for sale		0		38,773
Revolving credit facilities		0		33,000
Accounts payable		3,824		1,317
Other accrued liabilities		52,947		31,025
Due to affiliates		599		618
Distributions payable		15,345		13,421
Liabilities associated with operating real estate held for sale		0		383
Total Liabilities		1,437,706		1,609,469
8.250% Series A Cumulative Redeemable Preferred Stock, liquidation preference $25.00 per share, 5,153,540 and 10,875,000 shares authorized at December 31, 2021 and 2020, respectively; 0 shares and 2,201,547 shares issued and outstanding at December 31, 2021 and 2020, respectively		0		54,332
6.000% Series B Redeemable Preferred Stock, liquidation preference $1,000 per share, 1,225,000 shares authorized; 359,197 and 513,489 shares issued and outstanding at December 31, 2021 and 2020, respectively		331,983		469,907
7.625% Series C Cumulative Redeemable Preferred Stock, liquidation preference $25.00 per share, 4,000,000 shares authorized; 2,295,845 shares issued and outstanding at December 31, 2021 and 2020, respectively		56,823		56,462
6.150% Series T Redeemable Preferred Stock, liquidation preference $25.00 per share, 32,000,000 shares authorized; 28,272,134 and 9,717,917 shares issued and outstanding at December 31, 2021 and 2020, respectively		643,428		219,967
Equity
Stockholders’ Equity
Preferred stock, $0.01 par value, 203,621,460 and 197,900,000 shares authorized at December 31, 2021 and 2020, respectively; 0 shares issued and outstanding at December 31, 2021 and 2020		0		0
7.125% Series D Cumulative Preferred Stock, liquidation preference $25.00 per share, 4,000,000 shares authorized; 2,774,338 shares issued and outstanding at December 31, 2021 and 2020, respectively		66,867		66,867
Common stock - Class A, $0.01 par value, 747,509,582 shares authorized; 27,257,586 and 22,020,950 shares issued and outstanding at December 31, 2021 and 2020, respectively		273		220
Common stock - Class C, $0.01 par value, 76,603 shares authorized; 76,603 shares issued and outstanding at December 31, 2021 and 2020		1		1
Additional paid-in-capital		344,003		304,710
Distributions in excess of cumulative earnings		(327,270)		(313,392)
Total Stockholders’ Equity		83,874		58,406
Noncontrolling Interests
Operating partnership units		5,889		(3,272)
Partially owned properties		39,630		24,666
Total Noncontrolling Interests		45,519		21,394
Total Equity		129,393		79,800
TOTAL LIABILITIES, REDEEMABLE PREFERRED STOCK AND EQUITY	$	2,599,333	$	2,489,937

See Notes to Consolidated Financial Statements

F-6

Table of Contents

BLUEROCK RESIDENTIAL GROWTH REIT, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share amounts)


	Year Ended December 31,
	2021		2020		2019
Revenues
Rental and other property revenues	$	203,689	$	196,522	$	185,376
Interest income from loan and ground lease investments		16,962		23,326		24,595
Total revenues		220,651		219,848		209,971

Expenses
Property operating		76,002		76,301		74,449
Property management fees		5,390		4,988		4,899
General and administrative		27,787		24,141		22,553
Acquisition and pursuit costs		448		4,152		556
Weather-related losses, net		1,001		—		355
Depreciation and amortization		80,051		79,452		70,452
Total expenses		190,679		189,034		173,264
Operating income		29,972		30,814		36,707

Other income (expense)
Other income		549		144		68
Preferred returns on unconsolidated real estate joint ventures		12,067		11,250		9,797
Provision for credit losses		(384)		(16,369)		—
Gain on sale of real estate investments		137,427		59,508		48,680
Gain on sale of non-depreciable real estate investments		—		—		679
Transaction costs		(15,036)		—		—
Loss on extinguishment of debt and debt modification costs		(6,740)		(14,630)		(7,258)
Interest expense, net		(52,701)		(55,994)		(59,554)
Total other income (expense)		75,182		(16,091)		(7,588)
Net income		105,154		14,723		29,119
Preferred stock dividends		(63,606)		(58,463)		(46,159)
Preferred stock accretion		(24,633)		(16,851)		(10,335)
Net income (loss) attributable to noncontrolling interests
Operating partnership units		2,250		(17,313)		(6,779)
Partially-owned properties		11,192		1,396		(845)
Net income (loss) attributable to noncontrolling interests		13,442		(15,917)		(7,624)
Net income (loss) attributable to common stockholders	$	3,473	$	(44,674)	$	(19,751)

Net income (loss) per common share - Basic	$	0.08	$	(1.91)	$	(0.91)
Net income (loss) per common share – Diluted	$	0.07	$	(1.91)	$	(0.91)

Weighted average basic common shares outstanding		26,024,935		24,084,347		22,649,222
Weighted average diluted common shares outstanding		26,249,999		24,084,347		22,649,222

See Notes to Consolidated Financial Statements

F-7

Table of Contents

BLUEROCK RESIDENTIAL GROWTH REIT, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands, except share and per share amounts)


	Class A Common Stock			Class C Common Stock			Series D Preferred Stock
														Net (Loss) Income to
	Number of			Number of			Number of			Additional Paid-		Cumulative		Common		Noncontrolling
	Shares	Par Value		Shares	Par Value		Shares	Par Value		in Capital		Distributions		Stockholders		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	456,708		5	0		0	0		0		5,320		0		0		0		5,325
Issuance of Class A common stock due to Series B warrants exercises	37,391		0	0		0	0		0		299		0		0		0		299
Repurchase of Class A common stock	(1,313,328)		(13)	0		0	0		0		(14,073)		0		0		0		(14,086)
Issuance of restricted Class A common stock	87,094		1	0		0	0		0		424		0		0		0		425
Issuance of Long-Term Incentive Plan ("LTIP") Units for director compensation	0		0	0		0	0		0		0		0		0		282		282
Vesting of LTIP Units for compensation	0		0	0		0	0		0		0		0		0		5,293		5,293
Issuance of LTIP Units for expense reimbursements	0		0	0		0	0		0		0		0		0		2,238		2,238
Issuance of LTIP Units for capitalized reimbursements	0		0	0		0	0		0		0		0		0		737		737
Issuance of Series B warrants	0		0	0		0	0		0		4,413		0		0		0		4,413
Contributions from noncontrolling interests, net	0		0	0		0	0		0		0		0		0		3,511		3,511
Common stock distributions declared	0		0	0		0	0		0		0		(14,850)		0		0		(14,850)
Series A Preferred Stock distributions declared	0		0	0		0	0		0		0		(11,800)		0		0		(11,800)
Series A Preferred Stock accretion	0		0	0		0	0		0		0		(810)		0		0		(810)
Series B Preferred Stock distributions declared	0		0	0		0	0		0		0		(24,854)		0		0		(24,854)
Series B Preferred Stock accretion	0		0	0		0	0		0		0		(9,213)		0		0		(9,213)
Series C Preferred Stock distributions declared	0		0	0		0	0		0		0		(4,428)		0		0		(4,428)
Series C Preferred Stock accretion	0		0	0		0	0		0		0		(312)		0		0		(312)
Series D Preferred Stock distributions declared	0		0	0		0	0		0		0		(5,076)		0		0		(5,076)
Series T Preferred Stock distributions declared	0		0	0		0	0		0		0		(1)		0		0		(1)
Miscellaneous offering costs	0		0	0		0	0		0		(222)		0		0		0		(222)
Distributions to Operating Partnership ("OP") noncontrolling interests	0		0	0		0	0		0		0		0		0		(5,749)		(5,749)
Distributions to partially owned noncontrolling interests	0		0	0		0	0		0		0		0		0		(3,765)		(3,765)
Redemption of OP Units	0		0	0		0	0		0		(15)		0		0		(10)		(25)
Holder redemption of Series B Preferred Stock and conversion into Class A common stock	219,328		2	0		0	0		0		2,631		0		0		0		2,633
Company redemption of Series B Preferred Stock and conversion into Class A common stock	613,153		6	0		0	0		0		7,188		0		0		0		7,194
Cash redemption of Series B Preferred Stock	0		0	0		0	0		0		15		0		0		0		15
Acquisition of noncontrolling interest	0		0	0		0	0		0		(6,529)		0		0		(2,390)		(8,919)
Adjustment for noncontrolling interest in Cade Boca Raton	0		0	0		0	0		0		0		0		0		3,344		3,344
Adjustment for noncontrolling interest ownership in the OP	0		0	0		0	0		0		4,294		0		0		(4,294)		0
Net income (loss)	0		0	0		0	0		0		0		0		36,743		(7,624)		29,119
Balance, December 31, 2019	23,422,557	$	234	76,603	$	1	2,850,602	$	68,705	$	311,683	$	(259,254)	$	6,122	$	48,170	$	175,661

F-8

Table of Contents



	Class A Common Stock			Class C Common Stock			Series D Preferred Stock
														Net (Loss) Income to
	Number of			Number of			Number of			Additional Paid-		Cumulative		Common		Noncontrolling
	Shares	Par Value		Shares	Par Value		Shares	Par Value		in Capital		Distributions		Stockholders		Interests		Total Equity
Issuance of Class A common stock, net	171,713		2	0		0	0		0		1,992		0		0		0		1,994
Issuance of Class A common stock due to Series B warrant exercises	12,513		0	0		0	0		0		137		0		0		0		137
Issuance of Class A common stock for executive salaries	25,174		—	—		—	—		—		147		—		—		—		147
Repurchase of Class A common stock	(3,983,842)		(40)	0		0	0		0		(40,294)		0		0		0		(40,334)
Repurchase of Series A, Series C and Series D Preferred Stock, net	—		0	—		0	(76,264)		(1,838)		511		0		0		0		(1,327)
Issuance of restricted Class A common stock, net of shares withheld for employee taxes	72,284		1	0		0	0		0		454		0		0		0		455
Issuance of LTIP Units for director compensation	0		0	0		0	0		0		0		0		0		343		343
Issuance of LTIP Units for executive bonuses	—		0	—		0	—		0		0		0		0		2,034		2,034
Issuance of LTIP Units for executive salaries	—		0	—		0	—		0		0		0		0		488		488
Vesting of LTIP Units for compensation	0		0	0		0	0		0		0		0		0		6,824		6,824
Issuance of LTIP Units for expense and capitalized cost reimbursements	0		0	0		0	0		0		0		0		0		1,747		1,747
Common stock distributions declared	0		0	0		0	0		0		0		(15,586)		0		0		(15,586)
Series A Preferred Stock distributions declared	0		0	0		0	0		0		0		(10,910)		0		0		(10,910)
Series A Preferred Stock accretion	0		0	0		0	0		0		0		(892)		0		0		(892)
Company redemption of Series A Preferred Stock accretion	—		0	—		0	—		0		0		(1,084)		0		0		(1,084)
Series B Preferred Stock distributions declared	0		0	0		0	0		0		0		(31,076)		0		0		(31,076)
Series B Preferred Stock accretion	0		0	0		0	0		0		0		(12,141)		0		0		(12,141)
Series C Preferred Stock distributions declared	0		0	0		0	0		0		0		(4,398)		0		0		(4,398)
Series C Preferred Stock accretion	0		0	0		0	0		0		0		(362)		0		0		(362)
Series D Preferred Stock distributions declared	0		0	0		0	0		0		0		(4,986)		0		0		(4,986)
Series T Preferred Stock distributions declared	0		0	0		0	0		0		0		(7,093)		0		0		(7,093)
Series T Preferred Stock accretion	—		0	—		0	—		0		0		(2,372)		0		0		(2,372)
Distributions to OP noncontrolling interests	0		0	0		0	0		0		0		0		0		(6,611)		(6,611)
Distributions to partially owned noncontrolling interests	0		0	0		0	0		0		0		0		0		(7,844)		(7,844)
Conversion of OP Units into Class A common stock	75,801		1	—		0	—		0		141		0		0		(142)		0
Holder redemption of Series B Preferred Stock and conversion into Class A common stock	868,437		9	0		0	0		0		6,962		0		0		0		6,971
Company redemption of Series B Preferred Stock and conversion into Class A common stock	1,334,501		13	0		0	0		0		15,779		0		0		0		15,792
Holder redemption of Series T Preferred Stock and conversion into Class A common stock	21,812		0	—		0	—		0		160		0		0		0		160
Cash redemption of Series B Preferred Stock	0		0	0		0	0		0		9		0		0		0		9
Series B warrant activity and exercise, net	—		0	—		0	—		0		(38)		0		0		0		(38)
Company redemption of Series A Preferred Stock costs	—		0	—		0	—		0		(30)		0		0		0		(30)
Contributions from noncontrolling interests, net	—		0	—		0	—		0		0		0		0		3,050		3,050
Transfer of noncontrolling interest to controlling interest	—		0	—		0	—		0		0		0		0		(775)		(775)
Acquisition of noncontrolling interest	0		0	0		0	0		0		(2,876)		0		0		0		(2,876)
Adjustment for noncontrolling interest ownership in the OP	0		0	0		0	0		0		9,973		0		0		(9,973)		0
Net income (loss)	0		0	0		0	0		0		0		0		30,640		(15,917)		14,723
Balance, December 31, 2020	22,020,950	$	220	76,603	$	1	2,774,338	$	66,867	$	304,710	$	(350,154)	$	36,762	$	21,394	$	79,800

F-9

Table of Contents



	Class A Common Stock			Class C Common Stock			Series D Preferred Stock
														Net (Loss) Income to
	Number of			Number of			Number of			Additional Paid-		Cumulative		Common		Noncontrolling
	Shares	Par Value		Shares	Par Value		Shares	Par Value		in Capital		Distributions		Stockholders		Interests		Total Equity
Issuance of Class A common stock, net	4,141		0	0		0	0		0		47		0		0		0		47
Issuance costs for Class A common stock ATM	—		0	—		0	—		0		(626)		0		0		0		(626)
Issuance of Class A common stock due to Series B warrant exercises	1,231,822		12	0		0	0		0		23,033		0		0		0		23,045
Repurchase of Class A common stock	(11,140,637)		(111)	—		0	—		0		(119,478)		0		0		0		(119,589)
Issuance of restricted Class A common stock, net of shares withheld for employee taxes	21,174		0	0		0	0		0		313		0		0		0		313
Issuance of LTIP Units for director compensation	0		0	0		0	0		0		0		0		0		374		374
Issuance of LTIP Units for executive bonuses	0		0	0		0	0		0		0		0		0		2,170		2,170
Issuance of LTIP Units for executive salaries	—		0	—		0	—		0		0		0		0		879		879
Vesting of LTIP Units for compensation	0		0	0		0	0		0		0		0		0		7,721		7,721
Issuance of LTIP Units for expense reimbursements	0		0	0		0	0		0		0		0		0		1,556		1,556
Common stock distributions declared	0		0	0		0	0		0		0		(17,351)		0		0		(17,351)
Series A Preferred Stock distributions declared	0		0	0		0	0		0		0		(706)		0		0		(706)
Series A Preferred Stock accretion	0		0	0		0	0		0		0		(35)		0		0		(35)
Company redemption of Series A Preferred Stock accretion	0		0	0		0	0		0		0		(710)		0		0		(710)
Series B Preferred Stock distributions declared	0		0	0		0	0		0		0		(23,704)		0		0		(23,704)
Series B Preferred Stock accretion	0		0	0		0	0		0		0		(14,335)		0		0		(14,335)
Series C Preferred Stock distributions declared	0		0	0		0	0		0		0		(4,376)		0		0		(4,376)
Series C Preferred Stock accretion	0		0	0		0	0		0		0		(361)		0		0		(361)
Series D Preferred Stock distributions declared	0		0	0		0	0		0		0		(4,940)		0		0		(4,940)
Series T Preferred Stock distributions declared	0		0	0		0	0		0		0		(29,880)		0		0		(29,880)
Series T Preferred Stock accretion	0		0	0		0	0		0		0		(9,192)		0		0		(9,192)
Miscellaneous offering cost	—		0	—		0	—		0		(456)		0		0		0		(456)
Distributions to OP noncontrolling interests	0		0	0		0	0		0		0		0		0		(7,322)		(7,322)
Distributions to partially owned noncontrolling interests	0		0	0		0	0		0		0		0		0		(18,581)		(18,581)
Conversion of OP Units into Class A common stock	62,023		1	0		0	0		0		(23)		0		0		24		2
Redemption of OP Units	—		0	—		0	—		0		(4)		0		0		(1)		(5)
Holder redemption of Series B Preferred Stock and conversion into Class A common stock	283,966		3	0		0	0		0		3,299		0		0		0		3,302
Company redemption of Series B Preferred Stock and conversion into Class A common stock	14,592,550		146	0		0	0		0		150,536		0		0		0		150,682
Cash redemption of Series B Preferred Stock	—		0	—		0	—		0		9		0		0		0		9
Holder redemption of Series T Preferred Stock and conversion into Class A common stock	181,597		2	0		0	0		0		2,029		0		0		0		2,031
Cash redemption of Series T Preferred Stock	—		0	—		0	—		0		19		0		0		0		19
Series B warrant exercises and activity, net	0		0	0		0	0		0		(17,917)		0		0		0		(17,917)
Company redemption of Series A Preferred Stock activity	0		0	0		0	0		0		22		0		0		0		22
Contributions from noncontrolling interests, net	0		0	0		0	0		0		0		0		0		22,353		22,353
Adjustment for noncontrolling interest ownership in the OP	0		0	0		0	0		0		(1,510)		0		0		1,510		0
Net income	0		0	0		0	0		0		0		0		91,712		13,442		105,154
Balance, December 31, 2021	27,257,586	$	273	76,603	$	1	2,774,338	$	66,867	$	344,003	$	(455,744)	$	128,474	$	45,519	$	129,393

See Notes to Consolidated Financial Statements

F-10

Table of Contents

BLUEROCK RESIDENTIAL GROWTH REIT, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS


	Year Ended December 31,
	2021		2020		2019
Cash flows from operating activities
Net income	$	105,154	$	14,723	$	29,119
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		83,306		82,993		74,055
Amortization of fair value adjustments		(1,326)		(420)		(335)
Preferred returns on unconsolidated real estate joint ventures		(12,067)		(11,250)		(9,797)
Gain on sale of real estate investments		(137,427)		(59,508)		(48,680)
Gain on sale of non-depreciable real estate investments		—		—		(679)
Fair value adjustment of interest rate caps		82		128		2,536
Loss on extinguishment of debt		6,740		14,630		7,258
Provision for credit losses		384		16,369		0
Amortization of deferred interest income on mezzanine loan		2,996		—		0
Distributions of income and preferred returns from preferred equity investments and unconsolidated real estate joint ventures		11,721		13,770		9,015
Share-based compensation attributable to equity incentive plan		8,095		7,167		5,575
Share-based compensation attributable to executive salaries		879		635		0
Share-based compensation attributable to restricted stock grants		442		502		425
Share-based expense and capitalized cost reimbursements to BRE – LTIP Units		1,556		1,747		2,975
Changes in operating assets and liabilities:
Due to (from) affiliates, net		37		2,458		(252)
Accounts receivable, prepaids and other assets		(5,470)		(15,718)		(4,268)
Notes and accrued interest receivable		(4,277)		(5)		(247)
Accounts payable and other accrued liabilities		21,227		6,254		(3,369)
Net cash provided by operating activities		82,052		74,475		63,331

Cash flows from investing activities
Acquisitions of real estate investments		(277,750)		(262,734)		(516,217)
Capital expenditures		(27,904)		(17,119)		(21,446)
Investment in notes receivable		(42,351)		(47,473)		(51,714)
Repayments on notes receivable		22,319		83,350		12,148
Proceeds from sale of real estate investments		417,921		194,700		313,785
Proceeds from sale and redemption of unconsolidated real estate joint ventures		51,504		50,734		36,620
Adjustment for noncontrolling interests in Cade Boca Raton		—		—		461
Purchase of interests from noncontrolling interests		—		(3,651)		(9,891)
Investments in unconsolidated real estate joint venture interests		(104,325)		(24,809)		(74,307)
Net cash provided by (used in) investing activities		39,414		(27,002)		(310,561)

Cash flows from financing activities
Distributions to common stockholders		(16,618)		(15,771)		(14,850)
Distributions to noncontrolling interests		(25,299)		(13,713)		(9,129)
Distributions to preferred stockholders		(63,019)		(59,183)		(45,075)
Contributions from noncontrolling interests		22,353		3,050		3,511
Borrowings on mortgages payable		15,453		197,211		450,241
Repayments on mortgages payable including prepayment penalties		(189,058)		(189,782)		(274,715)
Proceeds from credit facilities		30,000		384,189		133,500
Repayments on credit facilities		(63,000)		(369,189)		(197,707)
Payments of deferred financing fees		(2,100)		(4,738)		(4,815)
Miscellaneous offering costs		(1,082)		—		(222)
Net proceeds from issuance of Class A common stock		47		1,994		5,325
Repurchase of Class A common stock		(119,589)		(40,334)		(14,086)
Shares withheld for employee taxes upon vesting of award		(129)		(47)		0
Redemption of 8.250% Series A Redeemable Preferred Stock		(55,055)		(83,950)		0
Repurchase of Series A, Series C and Series D Redeemable Preferred Stock		—		(6,103)		0
Net proceeds from issuance of 6.0% Series B Redeemable Preferred Stock		—		—		208,913
Retirement of 6.0% Series B Redeemable Preferred Stock		(79)		(290)		0
Payments to redeem 6.0% Series B Redeemable Preferred Stock		(220)		(112)		(255)
Net proceeds from issuance of Warrants associated with the Series B Redeemable Preferred Stock		—		—		4,413
Net proceeds from exercise of Warrants associated with the Series B Redeemable Preferred Stock		7,161		121		343
Net proceeds from issuance of 6.150% Series T Redeemable Preferred Stock		416,683		217,367		387
Retirement of 6.150% Series T Redeemable Preferred Stock		(130)		—		0
Payments to redeem 6.150% Series T Redeemable Preferred Stock		(234)		—		0
Payments to redeem Operating Partnership Units		(5)		—		(25)
Net cash (used in) provided by financing activities		(43,920)		20,720		245,754

Net increase (decrease) in cash, cash equivalents and restricted cash		77,546		68,193		(1,476)
Cash, cash equivalents and restricted cash, beginning of year		118,961		50,768		52,244
Cash, cash equivalents and restricted cash, end of year	$	196,507	$	118,961	$	50,768

Reconciliation of cash, cash equivalents and restricted cash
Cash and cash equivalents	$	166,492	$	83,868	$	31,683
Restricted cash		30,015		35,093		19,085
Total cash, cash equivalents and restricted cash, end of year	$	196,507	$	118,961	$	50,768

Supplemental disclosure of cash flow information
Cash paid for interest (net of interest capitalized)	$	51,199	$	52,768	$	53,890

Supplemental disclosure of non-cash investing and financing activities
Distributions payable - declared and unpaid	$	15,345	$	13,421	$	13,541
Mortgages assumed upon property acquisitions	$	69,781	$	84,043	$	15,546
Mortgages assumed by buyer upon sale of real estate	$	(67,268)	$	—	$	0
Capital expenditures held in accounts payable and other accrued liabilities	$	2,130	$	7	$	(884)
Reduction of assets from change of control or deconsolidation	$	—	$	—	$	(26,383)
Reduction of mortgages payable from change of control or deconsolidation	$	—	$	—	$	(23,500)
Reduction of noncontrolling interests from change of control or deconsolidation	$	—	$	—	$	(3,344)

See Notes to Consolidated Financial Statements

F-11

Table of Contents

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 multifamily apartment communities and single-family residential homes in 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 its Value-Add and Invest-to-Own investment strategies.

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.

As of December 31, 2021, the Company held an aggregate of 20,263 units, comprised of 16,837 multifamily units and 3,426 single-family residential units. The aggregate number of units are held through NaN real estate investments, consisting of NaN consolidated operating investments and twenty- nine investments held through preferred equity, loan or ground lease investments. As of December 31, 2021, the Company’s consolidated operating investments were approximately 95.9% occupied.

Proposed Merger

On December 20, 2021, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Badger Parent LLC (“Parent”) and Badger Merger Sub LLC (“Merger Sub”). The Merger Agreement provides that, upon the terms and subject to the conditions set forth therein, the Company will be merged with and into Merger Sub (the “Merger”), with Merger Sub surviving the Merger. The Merger and the other transactions contemplated by the Merger Agreement were unanimously approved by the Board. Parent and Merger Sub are affiliates of Blackstone Real Estate Partners IX L.P., an affiliate of Blackstone Inc.

The Company will deliver a notice of redemption (the “Preferred Stock Redemption Notice”) to the holders of our Series B Redeemable Preferred Stock, par value $0.01 per share (“Series B Preferred Stock”), 7.625% Series C Cumulative Redeemable Preferred Stock, par value $0.01 per share (“Series C Preferred Stock”), 7.125% Series D Cumulative Preferred Stock, par value $0.01 per share (“Series D Preferred Stock”), and Series T Redeemable Preferred Stock, par value $0.01 per share (“Series T Preferred Stock”), in accordance with their respective Articles Supplementary, in order to provide that such preferred stock will be redeemed effective as of the Effective Time. Each share of Series C Preferred Stock, Series D Preferred Stock and Series T Preferred Stock will be redeemed for an amount equal to $25.00 plus an amount equal to all accrued and unpaid dividends to and including the redemption date set forth in the Preferred Stock Redemption Notice, without interest. Each share of Series B Preferred Stock will be redeemed for an amount equal to $1,000.00 plus an amount equal to all accrued and unpaid dividends to and including the redemption date set forth in the Preferred Stock Redemption Notice, without interest.

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Prior to the consummation of the Merger, the Company will complete the separation of our single-family residential real estate business (the “SFR Business”) from our multi-family residential real estate business (the “Separation”). Following the Separation, the SFR Business will be indirectly held by Bluerock Homes Trust, Inc. (“BHM”), a Maryland corporation, and the Operating Partnership, and, prior to the consummation of the Merger, the Company will distribute the common stock of BHM to its stockholders as of the record date for such distribution in a taxable distribution (the “Distribution”).

In connection with the Separation, the Operating Partnership will exchange its interests in an entity holding its multi-family residential real estate business with the Company as consideration for a redemption of all of the Company’s preferred interests in the Operating Partnership and a portion of our common units in the Operating Partnership (the “Redemption”). As a result, following the Redemption, the Operating Partnership will cease to hold interests in the Company’s multi-family residential real estate business, and will hold the assets related to the SFR Business. Most members of the Company’s senior management, along with certain entities related to them, have agreed to retain their interests in the Operating Partnership until the earlier of the Effective Time and the termination of the Merger Agreement, rather than redeeming their interests for cash or shares of Company Common Stock that will receive the Per Share Merger Consideration. As a result, following the Separation and the Distribution, the Company’s stockholders who receive shares of BHM in the Distribution are expected to indirectly own approximately 35% of the SFR Business, with holders of units in the Operating Partnership (other than BHM) expected to indirectly own an interest of approximately 65% of the SFR Business. In connection with the Separation and the Distribution, BHM and the Operating Partnership will enter into a management agreement with an affiliate of Bluerock providing for it to be externally managed thereby.

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The foregoing description of the Merger Agreement is only a summary, does not purport to be complete and is qualified in its entirety by reference to the full text of the Merger Agreement, which is filed as Exhibit 2.1 to the Company’s current report on Form 8-K filed with the Securities and Exchange Commission (the “SEC”) on December 21, 2021.

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 December 31, 2021, limited partners other than the Company owned approximately 29.61% of the common units of the Operating Partnership (16.24% is held by holders of limited partnership interest in the Operating Partnership (“OP Units”) and 13.37% is held by holders of the Operating Partnership’s long-term incentive plan units (“LTIP Units”), including 5.35% which are not vested at December 31, 2021).

Because the Company is the sole general partner of 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.

In cases where the Company holds a preferred equity investment in real estate joint ventures where the preferred equity interest must be redeemed by the issuing entity or is redeemable at the Company's option, the preferred equity investment is accounted for as a held to maturity debt security. These preferred equity investments have a mandatory redemption provision, and the Company has the intent and ability to hold the investment until redemption. The preferred equity investments are included in 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 preferred equity investments and loan investments for consolidation in accordance with the provisions required by the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 810: Consolidation.

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Significant Risks and Uncertainties

At the present time, one of the most significant risks and uncertainties is the potential adverse effect of the ongoing pandemic of the novel coronavirus and variants thereof (“COVID-19”). The Company’s tenants may experience financial difficulty due to the loss of their jobs and some have requested rent deferral or rent abatement during this pandemic. Experts have predicted that the outbreak will trigger, or has already triggered, a period of global economic slowdown or a global recession.

The COVID-19 pandemic could have material and adverse effects on the Company’s financial condition, results of operations and cash flows in the near term due to, but not limited to, the following:

●

reduced economic activity may impact the employment of the Company’s tenants and their ability to pay their obligations to the Company, thus requesting modifications of such obligations, resulting in increases in uncollectible receivables and reductions in rental income;

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the negative financial impact of the pandemic could impact the Company’s future compliance with financial covenants of its credit facilities and other debt agreements;

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weaker economic conditions could require that the Company recognize impairment in value of its real estate assets due to a reduction in property income;

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the Company’s inability to maintain occupancy or leasing rates, or increase these rates at stabilizing development properties, including due to possible reduced foot traffic and lease applications from prospective tenants at the Company’s properties as a result of shelter-in-place orders and similar government guidelines; and

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concentration of the Company’s properties in markets that may be more severely affected by the COVID-19 pandemic due to its significant negative impact on certain key economic drivers in those markets, such as travel and entertainment.

The extent to which the COVID-19 pandemic impacts the Company’s operations and those of its tenants will depend on future developments, which are uncertain and cannot be predicted with confidence, including the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact, and the direct and indirect economic effects of the pandemic and containment measures, among others.

The Company believes it currently has a stable financial condition: as of December 31, 2021, the Company collected 97% of rents from its properties for the three months ended December 31, 2021. In 2020, the Company had provided rent deferral payment plans as a result of hardships certain tenants experienced due to the impact of COVID-19; for the year ended December 31, 2021, the Company did not provide rent deferral payment plans, compared to the onset of the COVID-19 pandemic (quarter ended June 30, 2020) in which 1% of the tenant base was on payment plans. Although the Company may receive tenant requests for rent deferrals in the coming months, the Company does not expect to waive its contractual rights under its lease agreements. Further, while occupancy remains strong at 95.9% as of December 31, 2021, in future periods, the Company may experience reduced levels of tenant retention, and reduced foot traffic and lease applications from prospective tenants, as a result of the impact of COVID-19.

Summary of Significant Accounting Policies

Preferred Equity Investments and Investments in Unconsolidated Real Estate Joint Ventures

The Company first analyzes an investment to determine if 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 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 an interest qualified as a VIE and the Company was the primary beneficiary, the entity would be consolidated.

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.

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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 investments as preferred equity investments and investments in unconsolidated real estate joint ventures in its consolidated balance sheets. In accordance with ASC 320 Investments – Debt Securities, the Company classifies each preferred equity investment as a held to maturity debt security as the Company has the intention and ability to hold the investment until redemption.The Company earns a fixed return on these investments which is included within preferred returns on unconsolidated real estate joint ventures in its consolidated statements of operations. The Company evaluates the collectability of each preferred equity investment and estimates a provision for credit loss, as applicable. Refer to the Current Expected Credit Losses (“CECL”) section of this Note for further information regarding CECL and the Company’s provision for credit losses.

Mezzanine Loan Investments

The Company analyzes each loan arrangement that involves real estate development to consider whether the loan qualifies for accounting as a loan or as an investment in a real estate development project. The Company has evaluated its real estate loans, where appropriate, for accounting treatment as loans versus real estate development projects, as required by ASC 310-10 Receivables. For each loan, the Company has concluded that the characteristics and the facts and circumstances indicate that loan accounting treatment is appropriate. The Company recognizes interest income on its notes receivable on the accrual method unless a significant uncertainty of collection exists. If a significant uncertainty exists, interest income is recognized as collected. Costs incurred to originate its notes receivable are deferred and amortized using the effective interest method over the term of the related notes receivable. The Company evaluates the collectability of each mezzanine loan investment and estimates a provision for credit loss, as applicable. Refer to CECL section of this Note for further information regarding CECL and the Company’s provision for credit losses.

Fair Value of Financial Instruments

As of December 31, 2021 and 2020, the carrying values of cash and cash equivalents, restricted cash, 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 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. Refer to Note 10 for further information regarding fair value measurements.

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Real Estate Assets

Capital Additions, Depreciation and Amortization

The Company capitalizes costs, including certain indirect costs, incurred in connection with its capital additions activities, including redevelopment, development and construction projects, other tangible apartment community improvements, and replacements of existing apartment community components. Included in these capitalized costs are payroll costs associated with time spent by employees in connection with capital additions activities at the apartment community level. The Company characterizes as “indirect costs” an allocation of certain department costs, including payroll, at the corporate levels that clearly relate to capital additions activities. The Company also capitalizes interest, property taxes and insurance during periods in which redevelopment, development and construction projects are in progress. Cost capitalization begins once the development or construction activity commences and ceases when the asset is ready for its intended use. Repair and maintenance and tenant turnover costs are expensed as incurred. Repair and maintenance and tenant turnover costs include all costs that do not extend the useful life of the real estate asset. Depreciation and amortization expense are computed on the straight-line method over the asset’s estimated useful life. The Company considers the period of future benefit of an asset to determine its appropriate useful life and anticipates the estimated useful lives of assets by class to be generally as follows:


Buildings		30 – 40 years
Building improvements		5 – 15 years
Land improvements		5 – 15 years
Furniture, fixtures and equipment		3 – 7 years
In-place leases		6 months

Real Estate Purchase Price Allocations

Upon the acquisition of real estate properties which do not constitute the definition of a business, the Company recognizes the assets acquired, the liabilities assumed, and any noncontrolling interest as of the acquisition date, measured at their relative fair values. Acquisition-related costs are capitalized in the period incurred and are recorded to the components of the real estate assets acquired. In determining fair values for multifamily apartment community acquisitions, the Company assesses the acquisition-date fair values of all tangible assets, identifiable intangible assets and assumed liabilities using methods like those used by independent appraisers (e.g., discounted cash flow analysis) and which utilize appropriate discount and/or capitalization rates and available market information. In determining fair values for single-family residential home acquisitions, the Company utilizes information obtained from county tax assessment records to assist in the determination of the fair value of land and building. Estimates of future cash flows are based on several factors including historical operating results, known and anticipated trends, and market and economic conditions. The fair value of tangible assets of an acquired property considers the value of the property as if it was vacant.

Intangible assets include the value of in-place leases, which represents the estimated fair value of the net cash flows of leases in place at the time of acquisition, as compared to the net cash flows that would have occurred had the property been vacant at the time of acquisition and subject to lease-up. The Company amortizes the value of in-place leases to expense over the remaining non-cancelable term of the respective leases, which is on average six months.

Estimates of the fair values of the tangible assets, identifiable intangibles and assumed liabilities require the Company to make significant assumptions to estimate market lease rates, property operating expenses, carrying costs during lease-up periods, discount rates, market absorption periods, prevailing interest rates and the number of years the property will be held for investment. The use of inappropriate assumptions could result in an incorrect valuation of acquired tangible assets, identifiable intangible assets and assumed liabilities, which could impact the amount of the Company’s net income (loss). Differences in the amount attributed to the fair value estimate of the various assets acquired can be significant based upon the assumptions made in calculating these estimates.

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Impairment of Real Estate Assets

The Company continually monitors events and changes in circumstances that could indicate that the carrying amounts of the Company’s real estate and related intangible assets may not be recoverable. When indicators of potential impairment suggest that the carrying value of real estate and related intangible assets may not be recoverable, the Company assesses the recoverability of the assets by estimating whether the Company will recover the carrying value of the asset through its undiscounted future cash flows and its eventual disposition. Based on this analysis, if the Company does not believe that it will be able to recover the carrying value of the real estate and related intangible assets and liabilities, the Company will record an impairment loss to the extent that the carrying value exceeds the estimated fair value of the real estate and related intangible assets. NaN impairment charges were recorded in 2021, 2020 or 2019.

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Cash equivalents may include cash and short-term investments. Short-term investments are stated at cost, which approximates fair value.

Restricted Cash

Restricted cash is comprised of the following: (i) lender-imposed escrow accounts for replacement reserves, real estate taxes and insurance, and (ii) amounts set aside for reinvestment in accordance with Internal Revenue Service Code Section 1031 related to like-kind exchanges.

Concentration of Credit Risk

The Company maintains cash balances with high quality financial institutions and periodically evaluates the creditworthiness of such institutions and believes that the Company is not exposed to significant credit risk. Cash balances may be in excess of the amounts insured by the Federal Deposit Insurance Corporation.

Rents and Other Receivables

The Company will periodically evaluate the collectability of amounts due from tenants and maintain an allowance for doubtful accounts for estimated losses resulting from the inability of tenants to make required payments under lease agreements. The Company exercises judgment in establishing these allowances and considers payment history and current credit status of tenants in developing these estimates.

Deferred Financing Fees

Deferred financing fees represent commitment fees, legal fees and other third-party costs associated with obtaining financing. Deferred financing fees paid by the Company on behalf of its consolidated joint ventures are capitalized and reflected as a reduction of mortgages payable, and fees associated with the Company’s lines of credit are recorded within accounts receivable, prepaids and other assets on the consolidated balances sheets. Deferred financing fees paid by the Company on behalf of its consolidated joint ventures and fees associated with its lines of credit are amortized to interest expense over the terms of the financing agreements using the straight-line method, which approximates the effective interest method.

Noncontrolling Interests

Noncontrolling interests are comprised of the Company’s joint venture partners’ interests in consolidated joint ventures, as well as interests held by LTIP Unit holders and OP Unit holders. The Company reports its joint venture partners’ interest in its consolidated real estate joint ventures and other subsidiary interests held by third parties as noncontrolling interests. The Company records these noncontrolling interests at their initial fair value, adjusting the basis prospectively for their share of the respective consolidated investments’ net income or loss and equity contributions and distributions. These noncontrolling interests are not redeemable by the equity holders and are presented as part of permanent equity. Income and losses are allocated to the noncontrolling interest holder pursuant to each joint venture’s operating agreement.

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Revenue Recognition

The Company recognizes rental revenue on a straight-line basis over the terms of the rental agreements and in accordance with ASC Topic 842 Leases. Lease revenue is recognized on an accrual basis and when the collectability of the amounts due from tenants is deemed probable. Rental revenue is included within rental and other property revenues on the Company’s consolidated statements of operations. Amounts received in advance are recorded as a liability within other accrued liabilities on the Company’s consolidated balance sheets.

Other property revenues are recognized in the period earned.

The Company recognizes a gain or loss on the sale of real estate assets when the criteria for an asset to be derecognized are met, which include when (i) a contract exists and (ii) the buyer obtains control.

Stock-Based Compensation

The Company expenses the fair value of share awards in accordance with the fair value recognition requirements of ASC Topic 718 “Compensation-Stock Compensation.” ASC Topic 718 requires companies to measure the cost of the recipient services received in exchange for an award of an equity instrument based on the grant-date fair value of the award. The cost of the share award is expensed over the requisite service period (usually the vesting period).

Distribution Policy

The Company expects to authorize and declare regular cash distributions to its stockholders in order to maintain its REIT status. Distributions to stockholders will be determined by the Company’s board of directors (the “Board”), subject to operating restrictions included in the Merger Agreement, and will be dependent upon a number of factors, including funds available for the payment of distributions, financial condition, the timing of property acquisitions, capital expenditure requirements, and annual distribution requirements in order to maintain the Company’s status as a REIT, and other considerations as the Board may deem relevant. Distributions are recorded as a reduction of stockholders’ equity in the period in which they are declared.

Selling Commissions and Dealer Manager Fees

In conjunction with the offering of the Series T Preferred Stock and the previous offering of the Series B Preferred Stock, the Company engaged a related party as dealer manager and pays selling commissions and dealer manager fees of 7% and 3%, respectively, of the gross offering proceeds from the offering. The dealer manager re-allows the substantial majority of the selling commissions and dealer manager fees to participating broker-dealers, and incurs costs in excess of the 10%, which costs are borne by the dealer manager without reimbursement by the Company. Offering costs related to each closing are recorded as a reduction of proceeds raised on the date of issue.

Income Taxes

The Company has elected to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended, and has qualified since the taxable year ended December 31, 2010. To qualify as a REIT, the Company must meet certain organizational and operational requirements, including a requirement to distribute at least 90% of its annual REIT taxable income to stockholders (which is computed without regard to the dividends paid deduction or net capital gain and which does not necessarily equal net income as calculated in accordance with GAAP). As a REIT, the Company generally will not be subject to federal income tax to the extent it distributes qualifying dividends to its stockholders. Even if the Company qualifies for taxation as a REIT, the Company may be subject to certain state and local taxes on its income and property, and federal income and excise taxes on its undistributed income. If the Company fails to qualify as a REIT in any taxable year, the Company will be subject to federal income tax on its taxable income at regular corporate income tax rates and generally will not be permitted to qualify for treatment as a REIT for federal income tax purposes for the four taxable years following the year during which qualification is lost, unless the Internal Revenue Service grants it relief under certain statutory provisions. Such an event could materially adversely affect the Company’s net income (loss) and net cash available for distribution to stockholders. However, the Company intends to continue to organize and operate in such a manner as to remain qualified for treatment as a REIT.

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For the year ended December 31, 2021, 21.64% of the distributions received by both the common and preferred stockholders were classified as ordinary income for income tax purposes, NaN were return of capital, and 78.36% were capital gains, with 28.53% of the capital gains qualifying as Section 1250 gains. For the year ended December 31, 2020, 100% of the distributions received by the common stockholders were classified as return of capital for income tax purposes and NaN were ordinary income. In addition, for the year ended December 31, 2020, NaN of the distributions received by the preferred stockholders were classified as ordinary income for income tax purposes, 51.53% were return of capital, and 48.47% were capital gains, with 18.45% of the capital gains qualifying as Section 1250 gains. For the year ended December 31, 2019, 100% of the distributions received by the common stockholders were classified as return of capital for income tax purposes and NaN were ordinary income. In addition, for the year ended December 31, 2019, approximately 1.33% of the distributions received by the preferred stockholders were classified as ordinary income for income tax purposes, 93.15% were return of capital, and 5.52% were capital gains, with 87.49% of the capital gains qualifying as Section 1250 gains.

ASC Topic 740 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements. It requires a recognition threshold and measurement attribute for financial statement disclosure of tax positions taken, or expected to be taken, in an income tax return. This interpretation also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. Management has considered all positions taken on the 2014 through 2020 tax returns (where applicable), and those positions expected to be taken on the 2021 tax returns, and concluded that tax positions taken will more likely than not be sustained at the full amount upon examination. Accordingly, the Company has concluded that there are no significant uncertain tax positions requiring recognition in its consolidated financial statements. The Company expects no significant increases or decreases in unrecognized tax benefits due to changes in tax positions within one year of December 31, 2021. If any income tax exposure was identified, the Company would recognize an estimated liability for income tax items that meet the criteria for accrual. Neither the Company nor its subsidiaries have been assessed interest or penalties by any major tax jurisdictions. If any interest and penalties related to income tax assessments arose, the Company would record them as income tax expense. As of December 31, 2021, tax returns for the calendar years 2018 and subsequent remain subject to examination by the Internal Revenue Service and various state tax jurisdictions.

Reportable Segment

The Company owns and operates residential investments that generate rental and other property-related income through the leasing of units to a diverse base of tenants. In prior years, the Company had one reportable segment as its investments were primarily in multifamily apartment communities. During 2021, the Company began increasing its investments in single-family residential homes, and as such, the Company has transitioned from a one-segment to a two-segment structure based on investment type. The Company evaluates operating performance on an individual property investment level and based on the investments’ similar economic characteristics. The Company’s primary financial measure for operating performance is net operating income (“NOI”) as it measures the core operations of property performance by excluding corporate level expenses and those other items not related to property operating performance. The Company views its residential investments as 2 operating segments, and, accordingly, aggregates its properties into 2 reportable segments: multifamily apartment communities and single-family residential homes. Refer to Note 15 for further information.

Lessor Accounting

The Company’s current portfolio is focused predominately on multifamily apartment communities and single-family residential homes whereby the Company generates rental revenue by leasing units to residents. As lease revenues for apartments and homes fall under the scope of ASC Topic 842, such lease revenues are classified as operating leases with straight-line recognition over the terms of the 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 and the resident. Non-lease components of the Company’s apartment and home leases are combined with the related lease component and accounted for as a single lease component under ASC Topic 842. The balances of net real estate investments and related depreciation on the Company’s consolidated financial statements relate to assets for which the Company is the lessor.

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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 ASC 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.

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, 2020.

New Accounting Pronouncements

In August 2020, the FASB issued ASU No. 2020-06 “Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity” (“ASU 2020-06”). The guidance in ASU 2020-06 simplifies the accounting for convertible debt and convertible preferred stock by removing the requirements to separately present certain conversion features in equity. In addition, the amendments in the ASU 2020-06 also simplify the guidance in ASC Subtopic 815-40, Derivatives and Hedging: Contracts in Entity’s Own Equity, by removing certain criteria that must be satisfied in order to classify a contract as equity, which is expected to decrease the number of freestanding instruments and embedded derivatives accounted for as assets or liabilities. Finally, the amendments revise the guidance on calculating earnings per share, requiring use of the if-converted method for all convertible instruments and rescinding an entity’s ability to rebut the presumption of share settlement for instruments that may be settled in cash or other assets. The amendments in ASU 2020-06 are effective for the Company beginning January 1, 2022 as the Company did not early adopt ASU 2020-06 as allowed on January 1, 2021. The Company is currently evaluating the impact of adopting ASU 2020-06 on its consolidated results of operations and financial position.

In January 2021, the FASB issued ASU No. 2021-01 "Reference Rate Reform (Topic 848)" ("ASU 2021-01"). The amendments in ASU 2021-01 permit entities to elect certain optional expedients in connection with reference rate reform activities and their impact on debt, contract modifications and derivative instruments as it is expected the global market will transition from LIBOR and other interbank offered rates to alternative reference rates. The amendments in ASU 2021-01 are effective immediately and may be elected over time as reference rate reform activities occur through December 31, 2022. The Company will continue to evaluate the impact of the guidance and may apply elections as applicable as changes in the market occur.

Current Expected Credit Losses (“CECL”)

The Company estimates provision for credit losses on its mezzanine loan and preferred equity investments under CECL. This method is based on expected credit losses for the life of the investment as of each balance sheet date. The method for calculating the estimate of expected credit loss takes into account historical experience and current conditions for similar loans and reasonable and supportable forecasts about the future.

The Company estimates its provision for credit losses using a collective (pool) approach for investments with similar risk characteristics, such as collateral and duration of investment. In measuring the CECL provision for investments that share similar characteristics, the Company applies a default rate to the investments for the remaining mezzanine loan or preferred equity investment hold period. As the Company does not have a significant historical population of loss data on its mezzanine loan and preferred equity investments, the Company’s default rate utilized for CECL is based on an external historical loss rate for commercial real estate loans.

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In addition to analyzing investments as a pool, the Company performs an individual investment assessment of expected credit losses. If it is determined that the borrower is experiencing financial difficulty, or a foreclosure is probable, or the Company expects repayment through the sale of the collateral, the Company calculates expected credit losses based on the value of the underlying collateral as of the reporting date. During this review process, if the Company determines that it is probable that it will not be able to collect all amounts due for both principal and interest according to the contractual terms of an investment, that mezzanine loan or preferred equity investment is not considered fully recoverable and a provision for credit loss is recorded.

In estimating the value of the underlying collateral when determining if a mezzanine loan or preferred equity investment is fully recoverable, the Company evaluates estimated future cash flows to be generated from the collateral underlying the investment. The inputs and assumptions utilized to estimate the future cash flows of the underlying collateral are based upon the Company’s evaluation of the operating results, economy, market trends, and other factors, including judgments regarding costs to complete any construction activities, lease up and occupancy rates, rental rates, and capitalization rates utilized to estimate the projected cash flows at the disposition. The Company may also obtain a third-party valuation which may value the collateral through an "as-is" or "stabilized value" methodology. If upon completion of the valuation the fair value of the underlying collateral securing the investment is less than the net carrying value, the Company records a provision for credit loss on that mezzanine loan or preferred equity investment. As the investment no longer displays the characteristics that are similar to those of the pool of mezzanine loans or preferred equity investments, the investment is removed from the CECL collective (pool) analysis described above.

Refer to Note 6 and Note 7 for further information regarding CECL and the Company’s provision for credit losses on its pool of investments.

Note 3 — Sale of Real Estate Assets

Sale of Helios

On January 8, 2020, Helios, the underlying asset of an unconsolidated joint venture and located in Atlanta, Georgia, was sold for approximately $65.6 million, subject to certain prorations and adjustments typical in such real estate transactions. After deduction for the payoff of existing mortgage indebtedness encumbering the property in the amount of $39.5 million and the payment of early extinguishment of debt costs, closing costs and fees, the Company’s pro rata share of the net proceeds was $22.7 million, which included payment for its original investment of $19.2 million and its additional investment of approximately $3.5 million. The Company also received a $0.3 million profit share distribution recorded as a gain on sale on the consolidated statements of operations. Refer to Note 7 for further information.

Sale of Whetstone Apartments

On January 24, 2020, the Company closed on the sale of Whetstone Apartments located in Durham, North Carolina for approximately $46.5 million, subject to certain prorations and adjustments typical in such real estate transactions. After deduction for the payoff of existing mortgage indebtedness encumbering the property in the amount of $25.4 million and the payment of early extinguishment of debt costs, closing costs and fees, the Company’s net proceeds were $19.6 million, which included payment for its original investment of $12.9 million, its accrued preferred return of $2.7 million and its additional investment of approximately $4.0 million. Refer to Note 7 for further information.

Sale of Ashton Reserve

On April 14, 2020, the Company closed on the sale of the Ashton Reserve properties, located in Charlotte, North Carolina, pursuant to the terms and conditions of two separate purchase and sales agreements. The properties were sold for approximately $84.6 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 properties in the amount of $45.4 million, the payment of early extinguishment of debt costs of $7.1 million and payment of closing costs and fees of $0.8 million, the sale of the properties generated net proceeds of approximately $31.2 million and a gain on sale of approximately $26.5 million. The Company recorded a loss on extinguishment of debt of $6.9 million related to the sale.

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Sale of Marquis at TPC

On April 17, 2020, the Company closed on the sale of Marquis at TPC, located in San Antonio, Texas. The property was sold for $22.5 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 property in the amount of $16.3 million, the sale of the property generated net proceeds of approximately $5.9 million and a gain on sale of approximately $3.2 million, of which the Company’s pro rata share of the proceeds was approximately $5.3 million. The Company recorded a loss on extinguishment of debt of $0.1 million related to the sale.

Sale of Enders Place at Baldwin Park

On April 21, 2020, the Company closed on the sale of Enders Place at Baldwin Park, located in Orlando, Florida. The property was sold for approximately $53.2 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 property in the amount of $23.2 million, the payment of early extinguishment of debt costs of $2.2 million and payment of closing costs and fees of $0.9 million, the sale of the property generated net proceeds of approximately $26.1 million and a gain on sale of approximately $28.2 million, of which the Company’s pro rata share of the proceeds was approximately $24.0 million. The Company recorded a loss on extinguishment of debt of $2.4 million related to the sale.

Sale of Cade Boca Raton

On October 26, 2020, the Company closed on the sale of Cade Boca Raton, located in Boca Raton, Florida. The property was sold for approximately $37.8 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 property in the amount of $23.5 million, the payment of early extinguishment of debt costs of $0.2 million and payment of closing costs and fees of $0.6 million, the sale of the property generated net proceeds of approximately $13.0 million and a gain on sale of approximately $1.7 million, of which the Company’s pro rata share of the proceeds was approximately $10.2 million. The Company recorded a loss on extinguishment of debt of $0.6 million related to the sale.

Sale of Novel Perimeter

On December 9, 2020, Novel Perimeter, a property located in Atlanta, Georgia, was sold. Upon the sale, the mezzanine loan provided by the Company was paid off for $23.6 million, which included principal repayment of $23.5 million and accrued interest of $0.1 million. Refer to Note 6 for further information.

Sale of Arlo

On December 15, 2020, Arlo, a property located in Charlotte, North Carolina, was sold. Upon the sale, the mezzanine loan provided by the Company was paid off for $31.1 million, which included principal repayment of $30.9 million and accrued interest of $0.2 million. Refer to Note 6 for further information.

Sale of Riverside Apartment Interests

On December 22, 2020, Riverside Apartments, the underlying asset of an unconsolidated joint venture and located in Austin, Texas, was sold. Upon the sale, the Company’s preferred equity investment was redeemed by the joint venture for $14.8 million, which included its original preferred investment of $13.9 million and accrued preferred return of $0.9 million. Refer to Note 7 for further information.

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Sale of ARIUM Grandewood

On January 28, 2021, the Company closed on the sale of ARIUM Grandewood located in Orlando, Florida. The property was sold for approximately $65.3 million, subject to certain prorations and adjustments typical in such real estate transactions. ARIUM Grandewood was encumbered by a $39.1 million senior mortgage through the Master Credit Facility Agreement (refer to Note 9 for further information). Under the agreement, the Company had the option to forgo the repayment of the principal balance and any related prepayment penalties and costs by substituting the collateral securing the senior mortgage with collateral of the same or higher value. The Company elected to substitute the ARIUM Grandewood collateral with its Falls at Forsyth property and the transaction was completed on February 18, 2021. After consideration of the $39.1 million senior mortgage and payment of closing costs and fees of $1.1 million, the sale of ARIUM Grandewood generated net proceeds of approximately $25.1 million and a gain on sale of approximately $27.7 million. The Company recorded debt modification costs of $0.1 million related to the collateral substitution transaction.

Sale of James at South First

On February 24, 2021, the Company closed on the sale of James at South First located in Austin, Texas. The property was sold for $50.0 million, subject to certain prorations and adjustments typical in such real estate transactions. After deduction for the payoff of existing mortgage indebtedness encumbering the property in the amount of $25.6 million, the payment of early extinguishment of debt costs of $2.5 million and payment of closing costs and fees of $0.5 million, the sale of the property generated net proceeds of approximately $21.1 million and a gain on sale of approximately $17.4 million. The Company’s pro rata share of the proceeds was approximately $18.1 million. The Company recorded a loss on extinguishment of debt of $2.6 million related to the sale.

Sale of Marquis at The Cascades

On March 1, 2021, the Company closed on the sale of the Marquis at The Cascades properties, located in Tyler, Texas, pursuant to the terms and conditions of two separate purchase and sales agreements. The properties were sold for approximately $90.9 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 properties in the amount of $53.6 million and payment of closing costs and fees of $0.3 million, the sale of the properties generated net proceeds of approximately $37.3 million and a gain on sale of approximately $23.7 million. The Company’s pro rata share of the proceeds was approximately $32.6 million. The Company recorded a loss on extinguishment of debt of $0.3 million related to the sale.

Sale of The Conley Interests

On March 18, 2021, The Conley, the underlying asset of an unconsolidated joint venture located in Leander, Texas, was sold. Upon the sale, the Company’s preferred equity investment was redeemed by the joint venture for $16.5 million, which included its original preferred investment of $15.2 million and accrued preferred return of $1.3 million. Refer to Note 7 for further information.

Sale of Alexan Southside Place Interests

On March 25, 2021, Alexan Southside Place, the underlying asset of an unconsolidated joint venture located in Houston, Texas, was sold. In April 2021, the Company received $9.8 million of its $10.1 million preferred equity investment, which is net of the $15.9 million provision for credit loss recorded in the fourth quarter 2020. The remaining $0.3 million represents a holdback for a representations and warranty period related to the sale and is expected to be received during the first quarter 2022. This amount was recorded as a related party receivable and is included in due from affiliates in the Company’s consolidated balance sheet. Refer to Note 7 for further information.

Sale of Plantation Park

On April 26, 2021, the Company closed on the sale of Plantation Park located in Lake Jackson, Texas. The property was sold for $32.0 million, subject to certain prorations and adjustments typical in such real estate transactions. After deduction for assumption of the existing mortgage indebtedness encumbering the property in the amount of $26.6 million and payment of closing costs and fees of $0.4 million, a loss on the sale of $1.1 million was incurred. The sale of the property generated net proceeds of approximately $4.9 million, of which the Company’s pro rata share of the proceeds was approximately $2.7 million. The Company recorded a loss on extinguishment of debt of $0.2 million related to the sale.

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Sale of The Reserve at Palmer Ranch

On June 10, 2021, the Company closed on the sale of The Reserve at Palmer Ranch located in Sarasota, Florida. The property was sold for $57.6 million, subject to certain prorations and adjustments typical in such real estate transactions. After deduction for assumption of the existing mortgage indebtedness encumbering the property in the amount of $40.6 million and payment of closing costs and fees of $0.9 million, the sale of the property generated net proceeds of approximately $16.6 million and a gain on sale of approximately $20.5 million. The Company recorded a loss on extinguishment of debt of $0.5 million related to the sale. The Company sold The Reserve at Palmer Ranch to its unaffiliated third-party joint venture partner in the Strategic Portfolio (the “Strategic JV”), and in conjunction with the sale, the Company used a portion of its net proceeds to make an additional preferred equity investment in the Strategic JV for The Reserve at Palmer Ranch. Refer to Note 7 for further information.

Sale of Vickers Historic Roswell

On June 29, 2021, Vickers Historic Roswell, a property located in Roswell, Georgia, was sold. Upon the sale, the mezzanine loan provided by the Company was paid off in the amount of $12.9 million, which included principal repayment of $12.4 million and accrued interest of $0.5 million. Refer to Note 6 for further information.

Sale of Park & Kingston

On July 7, 2021, the Company closed on the sale of Park & Kingston located in Charlotte, North Carolina. The property was sold for $44.9 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 property in the amount of $19.6 million, the payment of early extinguishment of debt costs of $2.4 million and payment of closing costs and fees of $0.5 million, the sale of the property generated net proceeds of approximately $24.7 million and a gain on sale of approximately $19.4 million. The Company recorded a loss on extinguishment of debt of $2.6 million related to the sale.

Sale of The District at Scottsdale

On July 7, 2021, the Company closed on the sale of The District at Scottsdale located in Scottsdale, Arizona. The property was sold for $150.5 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 property in the amount of $73.8 million, the payment of early extinguishment of debt costs of $0.4 million and payment of closing costs and fees of $0.4 million, the sale of the property generated net proceeds of approximately $74.8 million and a gain on sale of approximately $29.6 million. The Company’s pro rata share of the proceeds was approximately $69.5 million. The Company recorded a loss on extinguishment of debt of $0.4 million related to the sale.

Sale of Mira Vista Interests

On September 23, 2021, Mira Vista, the underlying asset of an unconsolidated joint venture located in Austin, Texas, was sold. Upon the sale, the Company’s preferred equity investment was redeemed by the joint venture for $5.6 million, which included its original preferred investment of $5.2 million and accrued preferred return of $0.4 million. Refer to Note 7 for further information.

Sale of Thornton Flats Interests

On December 14, 2021, Thornton Flats, the underlying asset of an unconsolidated joint venture located in Austin, Texas, was sold. Upon the sale, the Company’s preferred equity investment was redeemed by the joint venture for $5.5 million, which included its original preferred investment of $5.3 million and accrued preferred return of $0.2 million. Refer to Note 7 for further information.

Sale of Strategic Portfolio Interests (partial)

On December 29, 2021, the following underlying assets of an unconsolidated joint venture were sold: Belmont Crossing, located in Smyrna, Georgia, and Sierra Terrace and Sierra Village, both located in Atlanta, Georgia. Upon the sale, the Company’s preferred equity investment was redeemed by the joint venture for $10.4 million, which included its original preferred investment of $10.2 million, accrued preferred return of $0.1 million and an exit fee of $0.1 million. Refer to Note 7 for further information.

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Note 4 — Investments in Real Estate

As of December 31, 2021, the Company held NaN real estate investments, consisting of NaN consolidated operating investments and NaN investments held through preferred equity, loan or ground lease investments. The following tables provide summary information regarding the Company’s consolidated operating investments and preferred equity, loan and ground lease investments.

Consolidated Operating Investments


		Number of	Date Built /	Ownership
Name	Location	Units	Renovated ⁽¹⁾	Interest
Multifamily
ARIUM Glenridge	Atlanta, GA	480	1990	90	%
ARIUM Westside	Atlanta, GA	336	2008	90	%
Ashford Belmar	Lakewood, CO	512	1988/1993	85	%
Avenue 25	Phoenix, AZ	254	2013	100	%
Burano Hunter’s Creek, formerly ARIUM Hunter’s Creek	Orlando, FL	532	1999	100	%
Carrington at Perimeter Park	Morrisville, NC	266	2007	100	%
Chattahoochee Ridge	Atlanta, GA	358	1996	90	%
Chevy Chase	Austin, TX	320	1971	92	%
Cielo on Gilbert	Mesa, AZ	432	1985	90	%
Citrus Tower	Orlando, FL	336	2006	97	%
Denim	Scottsdale, AZ	645	1979	100	%
Elan	Austin, TX	270	2007	100	%
Element	Las Vegas, NV	200	1995	100	%
Falls at Forsyth	Cumming, GA	356	2019	100	%
Gulfshore Apartment Homes	Naples, FL	368	2016	100	%
Outlook at Greystone	Birmingham, AL	300	2007	100	%
Pine Lakes Preserve	Port St. Lucie, FL	320	2003	100	%
Providence Trail	Mount Juliet, TN	334	2007	100	%
Roswell City Walk	Roswell, GA	320	2015	98	%
Sands Parc	Daytona Beach, FL	264	2017	100	%
The Brodie	Austin, TX	324	2001	100	%
The Debra Metrowest, formerly ARIUM Metrowest	Orlando, FL	510	2001	100	%
The Links at Plum Creek	Castle Rock, CO	264	2000	88	%
The Mills	Greenville, SC	304	2013	100	%
The Preserve at Henderson Beach	Destin, FL	340	2009	100	%
The Sanctuary	Las Vegas, NV	320	1988	100	%
Veranda at Centerfield	Houston, TX	400	1999	93	%
Villages of Cypress Creek	Houston, TX	384	2001	80	%
Wesley Village	Charlotte, NC	301	2010	100	%
Windsor Falls	Raleigh, NC	276	1994	100	%
Total Multifamily Units		10,626

		Number of	Average
Single-Family Residential ⁽²⁾	Market	Units	Year Built

Golden Pacific	KS / MO	7	1977	97	%
ILE	TX / SE US	279	1990	95	%
Navigator Villas	Pasco, WA	176	2013	90	%
Peak
Axelrod	Garland, TX	22	1959	80	%
DFW 189	Dallas-Fort Worth, TX	189	1962	56	%
Granbury	Granbury, TX	36	2020-2021	80	%
Indy	Indianapolis, IN	44	1958	60	%
Lubbock	Lubbock, TX	60	1955	80	%
Lubbock 2.0	Lubbock, TX	75	1972	80	%
Lubbock 3.0	Lubbock, TX	45	1945	80	%
Lynnwood	Lubbock, TX	20	2005	80	%
Lynnwood 2.0	Lubbock, TX	20	2003	80	%
Springfield	Springfield, MO	290	2004	60	%
Springtown	Springtown, TX	70	1991	80	%
Springtown 2.0	Springtown, TX	14	2018	80	%
Texarkana	Texarkana, TX	29	1967	80	%
Texas Portfolio 183	Various / TX	183	1975	80	%
Wayford at Concord	Concord, NC	150	2019	83	%
Yauger Park Villas	Olympia, WA	80	2010	95	%
Total Single-Family Residential Units		1,789
Total Units		12,415

(1)	Represents date of last significant renovation or year built if there were no renovations.

(2)	Single-Family Residential includes single-family residential homes and attached townhomes/flats.

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Depreciation expense was $74.2 million, $72.9 million and $63.7 million for the years ended December 31, 2021, 2020 and 2019, 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 $5.5 million, $6.6 million and $6.8 million for the years ended December 31, 2021, 2020 and 2019, respectively.

The Company’s real estate assets are leased to tenants under operating leases for which the terms and expirations vary. The leases may have provisions to extend the lease agreements, options for early termination after paying a specified penalty and other terms and conditions as negotiated. The Company retains substantially all the risks and benefits of ownership of the consolidated real estate assets leased to tenants. Generally, upon the execution of a lease, the Company requires security deposits from tenants in the form of a cash deposit. Amounts required as a security deposit vary depending upon the terms of the respective leases and the creditworthiness of the tenant, but generally are not individually significant amounts. Therefore, exposure to credit risk exists to the extent that a receivable from a tenant exceeds the amount of their security deposit. Security deposits received in cash related to tenant leases are included within other accrued liabilities in the accompanying consolidated balance sheets and totaled $4.3 million and $3.1 million as of December 31, 2021 and 2020, respectively, for the Company’s consolidated real estate investments. No individual tenant represents over 10% of the Company’s annualized base rent for the consolidated real estate investments.

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Preferred Equity, Loan and Ground Lease Investments



			Actual /
		Actual /	Estimated	Actual / Estimated
		Planned	Initial	Construction
Lease-up Investment Name ⁽¹⁾	Location / Market	Number of Units	Occupancy	Completion
Multifamily
Zoey	Austin, TX	307	4Q 2021	2Q 2022
Reunion Apartments	Orlando, FL	280	3Q 2021	3Q 2022
Total Lease-up Units		587

Development Investment Name ⁽¹⁾
Multifamily
Avondale Hills	Decatur, GA	240	1Q 2023	1Q 2023
The Hartley at Blue Hill, formerly The Park at Chapel Hill	Chapel Hill, NC	414	1Q 2022	1Q 2023
Deerwood Apartments	Houston, TX	330	4Q 2022	2Q 2023
Chandler	Chandler, AZ	208	3Q 2023	4Q 2023
Orange City Apartments	Orange City, FL	298	1Q 2023	4Q 2023
Lower Broadway	San Antonio, TX	386	4Q 2023	2Q 2024
Total Multifamily Units		1,876

Single-Family Residential
Willow Park	Willow Park, TX	46	2Q 2022	4Q 2022
The Woods at Forest Hill	Forest Hill, TX	76	1Q 2023	3Q 2023
The Cottages at Myrtle Beach	Myrtle Beach, SC	294	1Q 2023	4Q 2023
The Cottages at Warner Robins	Warner Robins, GA	251	3Q 2023	4Q 2023
The Cottages of Port St. Lucie	Port St. Lucie, FL	286	1Q 2023	4Q 2023
Wayford at Innovation Park	Charlotte, NC	210	3Q 2023	3Q 2024
Total Single-Family Units		1,163
Total Development Units		3,039

Operating Investment Name ⁽¹⁾	Location / Market	Number of Units
Multifamily
Alexan CityCentre	Houston, TX	340
Deercross	Indianapolis, IN	372
Domain at The One Forty	Garland, TX	299
Georgetown Crossing ⁽²⁾	Savannah, GA	168
Hunter’s Pointe ⁽²⁾	Pensacola, FL	204
Motif	Fort Lauderdale, FL	385
Park on the Square ⁽²⁾	Pensacola, FL	240
Renew 3030	Mesa, AZ	126
Spring Parc	Dallas, TX	304
The Commons ⁽²⁾	Jacksonville, FL	328
The Crossings of Dawsonville	Dawsonville, GA	216
The Reserve at Palmer Ranch ⁽²⁾	Sarasota, FL	320
The Riley	Richardson, TX	262
Water’s Edge ⁽²⁾	Pensacola, FL	184
Total Multifamily Units		3,748

Single-Family Residential
Peak Housing ⁽³⁾	IN / MO / TX	474
Total Single-Family Units		474
Total Operating Units		4,222
Total Units		7,848

(1)	Investments in which the Company has a loan, preferred equity or ground lease investment. Operating investments represent stabilized operating investments. Refer to Note 6 and Note 7 for further information.

(2)	These six operating investments are collectively known as the Strategic Portfolio. Refer to Note 7 for further information.

(3)	Peak Housing consists of the Company’s preferred equity investments in a private single-family home REIT (refer to Note 7 for further information). Unit count excludes units presented in the consolidated operating investments table above.

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Note 5 — Acquisition of Real Estate

The following describes the Company’s significant acquisition activity and related new financing during the years ended December 31, 2021 and 2020 (dollars in thousands):


			Ownership		Purchase		Mortgage/
Name	Location / Market	Date	Interest		Price		Debt
Multifamily
Avenue 25	Phoenix, AZ	January 23, 2020	100	%	$	55,600	$	36,566	⁽¹⁾
Falls at Forsyth	Cumming, GA	March 6, 2020	100	%		82,500		—	⁽²⁾
Chevy Chase	Austin, TX	August 11, 2020	92	%		34,500		24,400
Carrington at Perimeter Park	Morrisville, NC	December 1, 2020	100	%		52,000		31,301	⁽³⁾
Elan	Austin, TX	December 1, 2020	100	%		39,500		25,574	⁽⁴⁾
Cielo on Gilbert	Mesa, Arizona	December 23, 2020	90	%		74,250		58,000
Windsor Falls	Raleigh, NC	June 17, 2021	100	%		48,775		27,442	⁽⁵⁾

Single-Family Residential ⁽⁶⁾
Yauger Park Villas	Olympia, WA	April 14, 2021	95	%		24,500		15,077	⁽⁷⁾
Wayford at Concord	Concord, NC	June 4, 2021	83	%		44,438		—	⁽⁸⁾
Indy	Indianapolis, IN	August 12, 2021	60	%		3,785		2,650	⁽⁹⁾
Springfield	Springfield, MO	August 18, 2021	60	%		49,000		35,525	⁽⁹⁾
Springtown	Springtown, TX	September 15, 2021	80	%		9,350		6,545	⁽⁹⁾
Texarkana	Texarkana, TX	September 21, 2021	80	%		3,100		2,170	⁽⁹⁾
Lubbock	Lubbock, TX	September 24, 2021	80	%		5,600		3,920	⁽⁹⁾
Granbury	Granbury, TX	September 30, 2021	80	%		8,100		5,670	⁽⁹⁾
ILE	TX / SE US	October 4, 2021	95	%		57,139		26,839	⁽¹⁰⁾
Axelrod	Garland, TX	October 5, 2021	80	%		4,133		2,893	⁽⁹⁾
Springtown 2.0	Springtown, TX	October 26, 2021	80	%		2,985		2,090	⁽⁹⁾
Lubbock 2.0	Lubbock, TX	October 28, 2021	80	%		9,275		6,510	⁽⁹⁾
Lynnwood	Lubbock, TX	November 16, 2021	80	%		2,448		1,714	⁽⁹⁾
Golden Pacific	KS / MO	November 23, 2021	97	%		1,213		—	⁽⁸⁾
Lynnwood 2.0	Lubbock, TX	December 1, 2021	80	%		2,490		1,743	⁽⁹⁾
Lubbock 3.0	Lubbock, TX	December 8, 2021	80	%		4,574		3,202	⁽⁹⁾
Texas Portfolio 183	Various / TX	December 22, 2021	80	%		28,290		19,803	⁽⁹⁾
DFW 189	Dallas-Fort Worth	December 29, 2021	56	%		27,670		19,950	⁽⁹⁾

(1)	Mortgage balance includes a $29.7 million loan assumption and a $6.9 million supplemental loan secured by the Avenue 25 property.

(2)	The Company funded $79.9 million of the purchase price with proceeds from its Amended Senior Credit Facility secured by the Falls at Forsyth property. Refer to Note 8 for further information about the Company’s Amended Senior Credit Facility.

(3)	Mortgage balance includes a $27.5 million loan assumption and a $3.8 million supplemental loan secured by the Carrington at Perimeter Park property.

(4)	Mortgage balance includes a $21.2 million loan assumption and a $4.4 million supplemental loan secured by the Elan property.

(5)	Mortgage balance represents a loan assumption secured by the Windsor Falls property.

(6)	Single-Family Residential includes single-family residential homes and attached townhomes/flats.

(7)	Mortgage balance includes a $10.5 million senior loan assumption and a $4.6 million supplemental loan assumption secured by the Yauger Park Villas property.

(8)	Purchase price was funded in full by the Company and its unaffiliated joint venture partner upon acquisition.

(9)	As part of the acquisition, the Company provided a mortgage or mezzanine loan to the consolidated portfolio owner in the full amount shown. The loan is eliminated in the Company’s consolidated financial statements. Refer to the Peak Housing Financing disclosure in Note 6 for further information.

(10)	The mortgage amount represents the aggregate debt held through five separate credit agreements. Refer to Note 9 for further information.

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Purchase Price Allocation

The real estate acquisitions above 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 for acquisitions made during the year ended December 31, 2021 (amounts in thousands):


	Purchase
	Price
	Allocation
Land	$	50,203
Building		273,233
Building improvements		2,907
Land improvements		13,665
Furniture and fixtures		2,132
In-place leases		5,392
Total assets acquired	$	347,532
Mortgages assumed	$	66,785
Fair value adjustments		2,996
Total liabilities assumed	$	69,781

Acquisition of Additional Interests in The Brodie

On April 24, 2020, the Company purchased the non-controlling partner’s interest in The Brodie for $3.5 million, increasing the Company’s interest in the property from 93% to 100%.

Note 6 — Notes and Interest Receivable

Following is a summary of the notes and accrued interest receivable due from loan investments as of December 31, 2021 and 2020 (amounts in thousands):


Property	2021		2020
Avondale Hills	$	12,874	$	1,021
Domain at The One Forty		25,309		24,315
Motif		85,375		75,436
Reunion Apartments		11,382		8,161
The Hartley at Blue Hill, formerly The Park at Chapel Hill		38,942		36,927
Vickers Historic Roswell		—		12,048
Total	$	173,882	$	157,908
Provision for credit losses		(393)		(174)
Total, net	$	173,489	$	157,734

Provision for Credit Losses

As of December 31, 2021, the Company’s provision for credit losses on its loan investments was $0.4 million on a carrying amount of $173.9 million of these investments. The provision for credit losses of the Company’s loan investments for the years ended December 31, 2021 and 2020 are summarized in the table below (amounts in thousands):


	2021		2020
Beginning balance as of January 1	$	174	$	0
Provision for credit loss on pool of assets, net ⁽¹⁾		219		174
Ending balance	$	393	$	174

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(1)

Under Current Expected Credit Losses (CECL), a provision for credit losses for similar assets is calculated based on a historical default rate applied to the remaining life of the assets. The increase in the provision during the year ended December 31, 2021 was the result of an extension of loan maturity dates and an increase in the trailing twelve-month historical default rate, partially offset by the removal of one investment from the pool of assets.

Following is a summary of the interest income from loan and ground lease investments for the years ended December 31, 2021 and 2020 (amounts in thousands):


Property	2021		2020
Arlo ⁽¹⁾	$	—	$	4,161
Avondale Hills		1,124		3
Corpus		219		—
Domain at The One Forty		985		1,311
Jolin		84		—
Motif ⁽²⁾		7,162		9,549
Novel Perimeter ⁽¹⁾		—		3,084
Reunion Apartments		1,207		176
The Hartley at Blue Hill		4,149		3,077
Vickers Historic Roswell ⁽¹⁾		903		1,733
Zoey ⁽³⁾		1,129		232
Total	$	16,962	$	23,326

(1)	In the fourth quarter 2020, the Arlo and Novel Perimeter properties were sold. In the second quarter 2021, the Vickers Historic Roswell property was sold. Each mezzanine loan provided by the Company was paid off in full upon the sale of each property.

(2)	The Motif interest income amount for the year ended December 31, 2021 is net of a ($3.0) million adjustment for straight line income recognition. The adjustment results from a reduced loan rate in the upcoming years as part of the amended and restated mezzanine loan agreement as noted below.

(3)	The ground lease project is under development and the full leasehold improvement allowance of $20.4 million has been fully funded and is included within accounts receivable, prepaids and other assets in the Company’s consolidated balance sheets.

The occupancy percentages of the Company’s mezzanine loan investment properties at December 31, 2021 and 2020 are as follows:


Property	2021		2020
Avondale Hills	⁽¹⁾		⁽²⁾
Domain at The One Forty	94.6	%	92.6	%
Motif	91.2	%	62.1	%
Reunion Apartments	66.4	%	⁽²⁾
The Hartley at Blue Hill	⁽¹⁾		⁽²⁾

(1)	The development had not commenced lease-up as of December 31, 2021.

(2)	The development had not commenced lease-up as of December 31, 2020.

Arlo Mezzanine Loan Financing

The Company provided a $32.0 million mezzanine loan (the “Arlo Mezz Loan”) to BR Morehead JV Member, LLC (the “Arlo JV Member”), an affiliate of BRG Manager, LLC (the “former Manager”). The Arlo Mezz Loan was secured by Arlo JV Member’s approximate 95.0% interest in a joint venture along with Bluerock Special Opportunity + Income Fund II, LLC (“Fund II”), an affiliate of the former Manager, and an unaffiliated third party, which developed a 286-unit Class A apartment community located in Charlotte, North Carolina. The Arlo Mezz Loan was to mature on July 1, 2025 or earlier upon the occurrence of certain events, including the date of sale or transfer of the property. The Arlo Mezz Loan bore interest at a fixed rate of 15% and could be prepaid without penalty.

The Arlo property was sold on December 15, 2020. Refer to Note 3 for further information.

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Avondale Hills Mezzanine Loan Financing

On September 30, 2020, the Company entered into an agreement to provide a mezzanine loan in an amount up to $11.7 million, of which all had been funded as of December 31, 2021, to an unaffiliated third party which is developing a 240-unit Class A apartment community located in Decatur, Georgia known as Avondale Hills. The loan matures on October 5, 2023 and contains 2 one-year extension options, subject to certain conditions and fees. The loan bears interest at a fixed rate of 12% per annum with monthly payments commencing upon completion of construction and in an amount equal to excess cash flow above the senior loan debt service from the preceding month.

Corpus and Jolin Bridge Loan Financing

On July 9, 2021, the Company provided a $6.8 million bridge loan to the operating partnership of Peak Housing REIT (the “Peak REIT OP”), an unaffiliated private single-family home REIT, for Corpus, an 81-unit, stabilized portfolio of single-family residential homes located in the Corpus Christi, Texas market. On August 6, 2021, the Company provided a $3.1 million bridge loan to the Peak REIT OP for Jolin, a 24-unit, stabilized portfolio of single-family residential homes located in the Weatherford, Texas market. Both the Corpus and Jolin bridge loans bore interest at a fixed rate of 7.0% with regular monthly payments that were interest-only. At the time each bridge loan was provided, the Company also made a preferred equity investment in the Peak REIT OP for Corpus and Jolin on which the Company earned a 10.0% per annum return on its investments.

On December 22, 2021, the Company and Peak REIT OP entered into an agreement to recapitalize the Corpus and Jolin portfolios. As part of the recapitalization, both Corpus and Jolin, along with two portfolios of homes previously owned solely by Peak REIT OP, were combined into one portfolio known as Texas Portfolio 183 which was contributed into the existing joint venture between the Company and the Peak REIT OP. The Company, through a contribution to the joint venture, made a common equity investment in Texas Portfolio 183 and provided a mezzanine loan of $19.8 million to the portfolio owner. The Company received full payoffs, including any accrued but unpaid interest, of both the Corpus and Jolin bridge loans from the Peak REIT OP. Additionally, the Company’s original preferred equity investments in the Peak REIT OP for Corpus and Jolin were amended to reduce the preferred return rate from 10.0% to 8.0% per annum. Refer to the Peak Housing Financing disclosure below for further information on the elimination of the mezzanine loan through consolidation. Refer to the Peak Housing Interests disclosure in Note 7 for further information about the Company’s preferred equity investments in the Peak REIT OP.

Domain at The One Forty Mezzanine Loan Financing

The Company provided a $24.5 million mezzanine loan to BR Member Domain Phase 1, LLC (the “Domain JV Member”), an affiliate of the former Manager. On June 29, 2021, the Company entered into an amended and restated mezzanine loan agreement (the "Domain Mezz Loan") with Domain JV Member to: (i) increase the Company's loan commitment to $27.4 million, of which $25.2 million had been funded as of December 31, 2021, and (ii) extend the maturity date of the loan to June 29, 2024 or earlier upon the occurrence of certain events, including the date of sale or transfer of the property. The Domain Mezz Loan is secured by Domain JV Member’s approximate 95% interest in a joint venture along with Fund II, an affiliate of the former Manager, and an unaffiliated third party, which developed a 299-unit Class A apartment community located in Garland, Texas known as Domain at The One Forty. The mezzanine loan bore interest at 15% in 2019, 5.5% in 2020, and 4.0% in 2021, and bears interest at 3.0% in 2022 and thereafter, with regular monthly payments being interest-only. The Domain Mezz Loan can be prepaid without penalty. The Company has a 50.0% participation in any profits achieved in a sale after repayment of the Domain Mezz Loan and the Company and Fund II each receive full return of their respective capital contributions.

In conjunction with the Domain at The One Forty development, the Domain at The One Forty property owner, which is owned by an entity in which the Company has an equity interest, (i) entered into a $30.3 million construction loan (the “Domain Construction Loan”) with an unaffiliated party, which was secured by the Domain at The One Forty property, and (ii) entered into a $6.4 million mezzanine loan with an unaffiliated party, which was secured by the membership interest in the joint-venture which developed the Domain at The One Forty property. On December 12, 2019, the Domain at The One Forty property owner refinanced the Domain Construction Loan and entered into a $39.2 million senior mortgage loan (the “Domain Senior Loan”) secured by the Domain at The One Forty property and used the proceeds in part to pay off the outstanding balances, in full, of the Domain Construction Loan and mezzanine loan. The Domain Senior Loan matures on January 5, 2023 and bears interest at the greater of 3.95% or one-month LIBOR plus 2.20% with interest-only payments through the initial term of the loan. The Domain Senior Loan contains two one-year extension options and can be prepaid without penalty.

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Motif Loan Financing

The Company provided a $74.6 million mezzanine loan (the “Motif Mezz Loan”) to BR Flagler JV Member, LLC (the “Motif JV Member”), an affiliate of the former Manager. The Motif Mezz Loan is secured by Motif JV Member’s 97% interest in a joint venture along with Fund II and Bluerock Special Opportunity + Income Fund III, LLC (“Fund III”), affiliates of the former Manager, and an unaffiliated third party, which developed a 385-unit Class A apartment community located in Fort Lauderdale, Florida known as Motif. In March 2020, the Company received a paydown of $8.0 million on the Motif Mezz Loan, and in May 2020, at the request of Motif JV Member, the Company amended the Motif Mezz Loan agreement to re-lend the $8.0 million to the Motif JV Member. The Company funded the full $8.0 million during the second quarter 2020 to Motif JV Member, increasing the outstanding Motif Mezz Loan balance to $74.6 million.

In conjunction with the Motif development, the Motif property owner, which is owned by an entity in which the Company has an equity interest, entered into an approximately $70.4 million construction loan (the “Motif Construction Loan”) with an unaffiliated party, which was secured by the Motif development. On January 27, 2021, the Motif property owner entered into a $88.8 million bridge loan (the “Motif Bridge Loan”) secured by the Motif property and used the proceeds in part to pay off the outstanding balance, in full, of the Motif Construction Loan. The Motif Bridge Loan matures on August 1, 2023, contains a six-month extension option, subject to certain conditions, and bears interest at the greater of 3.85% or one-month LIBOR plus 3.70% with interest-only payments through the term of the loan. The Motif Bridge Loan may be prepaid, subject to an exit fee, without prepayment penalties if prepayment is being made in connection with the lender providing a permanent mortgage loan, or February 1, 2022 otherwise.

On March 29, 2021, the Company entered into an amended and restated mezzanine loan agreement (the “Amended Motif Mezz Loan”) with Motif JV Member to increase its loan commitment to $88.6 million, of which $84.4 million had been funded as of December 31, 2021. As part of the agreement, the Company agreed to reduce, after December 31, 2021, the Amended Motif Mezz Loan’s fixed rate of 12.9% per annum as follows: 9.0% per annum for the calendar year 2022 and 6.0% per annum for the calendar year 2023 and thereafter, with regular monthly payments being interest-only. In conjunction with entering the Amended Motif Mezz Loan, the Company entered into an amended operating agreement for Motif JV Member with Fund II and Fund III. In consideration for the Company reducing the Amended Motif Mezz Loan interest rate, Fund II and Fund III agreed to (a) admit BRG Flagler Village Profit Share, LLC (the “Motif PS”), a wholly-owned subsidiary of the Company, as an additional member of Motif JV Member, (b) grant Motif PS a 50% participation in any profits achieved in a sale after repayment of the Amended Motif Mezz Loan and the Company, Fund II and Fund III each receive full return of their respective capital contributions, and (c) grant the Company a right to compel Motif JV Member to refinance and/or sell the Motif property beginning January 1, 2023. The Amended Motif Mezz Loan matures on March 29, 2026 and can be prepaid without penalty.

Novel Perimeter Mezzanine Loan Financing

The Company provided a $23.8 million mezzanine loan (the “Perimeter Mezz Loan”) to BR Perimeter JV Member, LLC (the “Perimeter JV Member”), an affiliate of the former Manager. The Perimeter Mezz Loan was secured by Perimeter JV Member’s approximate 60% interest in a joint venture along with Fund III and an unaffiliated third party, which developed a 320-unit Class A apartment community located in Atlanta, Georgia known as Novel Perimeter. The Perimeter Mezz Loan was to mature on December 29, 2021, bore interest at a fixed rate of 15.0% and could be prepaid without penalty.

The Novel Perimeter property was sold on December 9, 2020. Refer to Note 3 for further information.

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Peak Housing Financing

During 2021, the Company made common and preferred equity investments, along with the Peak REIT OP, in the following portfolios of single-family residential homes: Axelrod, DFW 189, Granbury, Indy, Lubbock, Lubbock 2.0, Lubbock 3.0, Lynnwood, Lynnwood 2.0, Springfield, Springtown, Springtown 2.0, Texarkana and Texas Portfolio 183. These fourteen portfolios are part of Peak Housing (refer to Note 7 for further information about the Company’s preferred equity investment therein). In addition to its common and preferred equity investments, the Company, through wholly-owned lender-entities, provided the full mortgage or mezzanine loan to each of the fourteen respective portfolio owners. These portfolio owners are owned by joint ventures in which the Company has its common equity investments along with Peak REIT OP. To determine if consolidation of the joint ventures was appropriate, the Company evaluated the basis of consolidation under ASC 810: Consolidation using the voting interest equity method as it had determined that the joint ventures were not variable interest entities. As the Company has controlling voting interests and substantive participating rights of the joint ventures under the operating agreements, the Company determined that consolidation of the joint ventures was appropriate. As the entities through which the Company provided the loans (the lender-entities) and the entities to which the loans were provided (the property owners) consolidate into the Company’s financial statements, the loan receivable balances and the loan payable balances are eliminated through consolidation and therefore are not reflected in the Company’s consolidated balance sheets. In addition, the Company’s pro rata share of each loan’s interest expense incurred through the portfolio owner partially offsets, through consolidation, the Company’s interest income for each loan recognized at the wholly-owned lender-entity. The remaining interest income, which is attributable to interest incurred by Peak REIT OP as the noncontrolling interest in each portfolio, is reflected in net income (loss) attributable to common stockholders in the Company’s consolidated statements of operations. Through its impact on the net operations of the portfolio, Peak REIT OP’s pro rata share of each loan’s interest expense is reflected in net income (loss) attributable to noncontrolling interests partially owned properties in the Company’s consolidated statements of operations.

The Hartley at Blue Hill Loan Financing, formerly The Park at Chapel Hill

The Company provided a mezzanine loan (the “Hartley Mezz Loan”, formerly the Chapel Hill Mezz Loan) in an amount up to $40.0 million to BR Chapel Hill JV, LLC (“BR Chapel Hill JV”), of which $29.5 million was funded upon execution of the agreement. BR Chapel Hill JV owns a 100% interest in BR Chapel Hill, LLC (“BR Chapel Hill”) and is a joint venture with common interests held by Bluerock Special Opportunity + Income Fund, Fund II, and BR Chapel Hill Investment, LLC, all managed by affiliates of the former Manager. In March 2020, the Company received a paydown of $21.0 million on the Hartley Mezz Loan, and in May 2020, at the borrower’s request, the Company amended the Hartley Mezz Loan agreement to permit the Hartley Mezz Loan borrower to re-borrow $2.0 million. The Company funded the full $2.0 million during the second quarter 2020 to the Hartley Mezz Loan borrower, increasing the outstanding Hartley Mezz Loan balance to $10.5 million.

In conjunction with the Hartley Mezz Loan, the Company provided a $5.0 million senior loan to BR Chapel Hill. The senior loan is secured by BR Chapel Hill’s fee simple interest in The Hartley at Blue Hill property. The senior loan matures on March 31, 2024 and bears interest at a fixed rate of 10.0% per annum. Regular monthly payments are interest-only during the initial term. The senior loan can be prepaid without penalty. As of December 31, 2021, the senior loan remains outstanding in full.

On August 18, 2020, the Company entered into an amended and restated mezzanine loan agreement (the “Amended Hartley Mezz Loan”, formerly the Amended Chapel Hill Mezz Loan) with BR Chapel Hill JV. As part of the Amended Hartley Mezz Loan, (i) the Company’s maximum loan commitment was adjusted to $31.0 million, including all previously advanced amounts outstanding, from the previous commitment amount of $40.0 million, and (ii) the interest rate on the loan was increased to 11.75% per annum from the previous rate of 11% per annum, with 5.25% paid current and 6.5% accrued. As of December 31, 2021, all amounts had been funded under the Amended Hartley Mezz Loan. The Amended Hartley Mezz Loan matures on March 31, 2024 or earlier upon the occurrence of certain events, including the date of sale or transfer of property, and can be prepaid without penalty. The loan maturity events and the ability of the loan to be prepaid without penalty did not change from the previous loan.

The Hartley at Blue Hill property was sold in February 2022. Refer to Note 16 for further information.

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Reunion Apartments Mezzanine Loan Financing

On July 1, 2020, the Company entered into an agreement to provide a mezzanine loan in an amount up to $10.0 million, of which all had been funded as of December 31, 2021, to an unaffiliated third party which is developing a 280-unit Class A apartment community located in Orlando, Florida known as Reunion Apartments. The loan matures on December 30, 2023 and contains 2 one-year extension options, subject to certain conditions and fees. The loan bears interest at a fixed rate of 12% per annum with monthly payments commencing upon completion of construction and in an amount equal to excess cash flow above the senior loan debt service from the preceding month.

The Reunion Apartments property was sold in February 2022. Refer to Note 16 for further information.

Vickers Historic Roswell Mezzanine Loan Financing

The Company provided an $12.4 million mezzanine loan (the “Vickers Mezz Loan”) to BR Vickers Roswell JV Member, LLC (the “Vickers JV Member”), an affiliate of the former Manager. The Vickers Mezz Loan was secured by Vickers JV Member’s approximate 80% interest in a joint venture along with Fund III, an affiliate of the former Manager, and an unaffiliated third party, which developed a 79-unit Class A apartment community located in Roswell, Georgia known as Vickers Historic Roswell. The Vickers Mezz Loan was to mature on February 26, 2022 or earlier upon the occurrence of certain events, including the date of sale or transfer of the property. The Vickers Mezz Loan bore interest at a fixed rate of 15.0% with regular monthly payments that were interest-only and could be prepaid without penalty.

The Vickers Historic Roswell property was sold on June 29, 2021. Refer to Note 3 for further information.

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

The carrying amount of the Company’s preferred equity investments and investments in unconsolidated real estate joint ventures as of December 31, 2021 and 2020 is summarized in the table below (amounts in thousands):


Property	2021		2020
Alexan CityCentre	$	18,261	$	15,063
Alexan Southside Place ⁽¹⁾		—		26,038
Chandler		3,305		—
Deercross		4,000		—
Deerwood Apartments		9,245		—
Lower Broadway		908		—
Mira Vista ⁽²⁾		—		5,250
Peak Housing		20,319		—
Renew 3030		7,060		—
Spring Parc		8,000		—
Strategic Portfolio ⁽³⁾		28,212		27,054
The Conley ⁽²⁾		—		15,036
The Cottages at Myrtle Beach		9,034		—
The Cottages of Port St. Lucie		7,260		—
The Crossings of Dawsonville		10,450		—
The Riley		6,961		—
The Woods at Forest Hill		442		—
Thornton Flats ⁽²⁾		—		4,600
Wayford at Concord ⁽⁴⁾		—		6,500
Willow Park		2,540		—
Other		64		97
Total	$	136,061	$	99,638
Provision for credit losses		(371)		(16,153)
Total, net	$	135,690	$	83,485

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(1)	On March 25, 2021, Alexan Southside Place, the property underlying the Company’s preferred equity investment, was sold. Refer to Note 3 for further information.

(2)	The Company’s preferred equity investment was redeemed in 2021. Refer to Note 3 for further information.

(3)	Georgetown Crossing, Hunter’s Pointe, Park on the Square, The Commons, The Reserve at Palmer Ranch and Water’s Edge are collectively known as the Strategic Portfolio.

(4)	On June 4, 2021, the Company’s preferred equity investment in Wayford at Concord was redeemed. Refer to the Wayford at Concord Interests disclosure below for further information.

Provision for Credit Losses

As of December 31, 2021, the Company’s provision for credit losses on its preferred equity investments was $0.4 million on a carrying amount of $136.1 million of these investments. The provision for credit losses of the Company’s preferred equity investments for the years ended December 31, 2021 and 2020 are summarized in the table below (amounts in thousands):


	2021		2020
Beginning balance as of January 1	$	16,153	$	—
Provision for credit loss on pool of assets ⁽¹⁾		148		223
Provision for credit loss – Alexan Southside Place ⁽²⁾		(15,930)		15,930
Ending balance	$	371	$	16,153

(1)

Under Current Expected Credit Losses (CECL), a provision for credit losses for similar assets is calculated based on a historical default rate applied to the remaining life of the assets. The decrease in the provision during the year ended December 31, 2021 was primarily the result of the removal of 8 investments from the pool of assets, partially offset by an increase in the trailing twelve-month historical default rate.

(2)	On March 25, 2021, Alexan Southside Place, the property underlying the Company’s preferred equity investment, was sold. Refer to Note 3 for further information.

As of December 31, 2021, the Company, through wholly-owned subsidiaries of the Operating Partnership, had outstanding equity investments in 20 joint ventures.

NaN of the 20 equity investments, Alexan CityCentre, Chandler, Deercross, Deerwood Apartments, Lower Broadway, Orange City Apartments, Peak Housing, Renew 3030, Spring Parc, Strategic Portfolio, The Cottages at Myrtle Beach, The Cottages at Warner Robins, The Cottages of Port St. Lucie, The Crossings of Dawsonville, The Riley, The Woods at Forest Hill, Wayford at Innovation Park and Willow Park are preferred equity investments that are classified as held to maturity debt securities as the Company has the intention and ability to hold the investments to maturity. The Company earns a fixed return on these investments which is included within preferred returns on unconsolidated real estate joint ventures in its consolidated statements of operations. The joint venture is the controlling member in an entity whose purpose is to develop or operate a multifamily property.

NaN of the 20 equity investments, Domain at The One Forty and Motif, represent a remaining 0.5% common interest in joint ventures where, in some cases, the Company had previously redeemed its preferred equity investment in the joint ventures and provided a mezzanine loan. Refer to Note 6 for further information.

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The preferred returns on the Company’s unconsolidated real estate joint ventures for the years ended December 31, 2021, 2020 and 2019 is summarized below (amounts in thousands):




Property	2021		2020		2019
Alexan CityCentre	$	2,952	$	2,502	$	2,108
Alexan Southside Place		—		1,281		1,583
Chandler		91		—		—
Deercross		221		—		—
Deerwood Apartments		174		—		—
Helios ⁽¹⁾		—		(133)		1,343
Leigh House		—		2		1,155
Lower Broadway		3		—		—
Mira Vista		391		539		155
Peak Housing		1,030		—		—
Renew 3030		251		—		—
Riverside Apartments		—		1,662		879
Spring Parc		401		—		—
Strategic Portfolio		3,617		2,121		33
The Conley		405		1,966		1,375
The Cottages at Myrtle Beach		300		—		—
The Cottages of Port St. Lucie		227		—		—
The Crossings of Dawsonville		518		—		—
The Riley		649		—		—
The Woods at Forest Hill		2		—		—
Thornton Flats		420		415		110
Wayford at Concord		364		839		121
Whetstone Apartments		—		56		935
Willow Park		51		—		—
Total preferred returns on unconsolidated joint ventures	$	12,067	$	11,250	$	9,797

(1)	Of the net loss incurred at Helios for the year ended December 31, 2020, ($143) pertains to costs related to the sale of Helios.

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The occupancy percentages of the Company’s unconsolidated real estate joint ventures at December 31, 2021 and 2020 are as follows:


Property	2021		2020
Alexan CityCentre	94.1	%	94.1	%
Chandler	⁽¹⁾		⁽²⁾
Deercross	86.8	%	—
Deerwood Apartments	⁽¹⁾		—
Lower Broadway	⁽¹⁾		—
Orange City Apartments	⁽¹⁾		—
Peak Housing	92.8	%	—
Renew 3030	96.8	%	—
Spring Parc	98.4	%	—
Strategic Portfolio
Georgetown Crossing	97.0	%	88.7	%
Hunter’s Pointe	98.5	%	99.0	%
Park on the Square	95.4	%	97.5	%
The Commons	97.6	%	93.9	%
The Reserve at Palmer Ranch	97.5	%	—
Water’s Edge	97.3	%	99.5	%
The Cottages at Myrtle Beach	⁽¹⁾		—
The Cottages at Warner Robins	⁽¹⁾		—
The Cottages of Port St. Lucie	⁽¹⁾		—
The Crossings of Dawsonville	98.1	%	—
The Riley	97.3	%	—
The Woods at Forest Hill	⁽¹⁾		—
Wayford at Innovation Park	⁽¹⁾		—
Willow Park	⁽¹⁾		—

(1)	The development had not commenced lease-up as of December 31, 2021.

(2)	The development had not commenced lease-up as of December 31, 2020.

Alexan CityCentre Interests

The Company made an $18.3 million preferred equity investment in a joint venture along with Bluerock Growth Fund, LLC (“BGF”), Bluerock Growth Fund II, LLC (“BGF II”), Fund II and Fund III, all affiliates of the former Manager, and an unaffiliated third party (the “Alexan CityCentre JV”), which developed a 340-unit Class A apartment community located in Houston, Texas, known as Alexan CityCentre. The Company earns a preferred return of 15.0% and 20.0% on its $6.5 million and $11.8 million preferred equity investments, respectively. The Alexan CityCentre JV is required to redeem the Company’s preferred membership interest plus any accrued but unpaid return on the earlier date which is six months following the maturity of the loans, detailed below, including extension and refinancing, or any earlier acceleration or due date.

The Alexan CityCentre property owner, which is owned by an entity in which the Company has a preferred equity interest, entered into a $55.1 million construction loan modification agreement, which was secured by its interest in the Alexan CityCentre property. In April 2019, the Alexan CityCentre owner: (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 outstanding balance, in full, of the construction loan. The loans bear interest at 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, with regular monthly payments that are interest-only. The senior loan and mezzanine loan both: (i) have initial maturity dates of May 9, 2022, (ii) contain 2 one-year extension options, and (iii) can be prepaid in whole prior provided the lender receives a stated spread maintenance premium.

Alexan CityCentre, the property underlying the Company’s preferred equity investment, was sold in January 2022. Refer to Note 16 for further information.

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Alexan Southside Place Interests

The Company made a $24.9 million preferred equity investment in a joint venture along with Fund II and Fund III (together, the "Funds"), affiliates of the former Manager, and an unaffiliated third party (the “Alexan Southside JV”), which developed a 270-unit Class A apartment community located in Houston, Texas, known as Alexan Southside Place. Alexan Southside Place was developed upon a tract of land under an 85-year ground lease. The joint venture adopted ASU No. 2016-02 as of January 1, 2019, and as such, had recorded a right-of-use asset and lease liability of $17.1 million as of December 31, 2020. The Company earned per annum returns on its investment as follows: 6.5% in 2019, 5.0% in 2020 and 3.5% in 2021. The Alexan Southside JV was required to redeem the Company’s preferred membership interest plus any accrued but unpaid return on November 9, 2022 or earlier upon the occurrence of certain events.

On March 25, 2021, Alexan Southside Place, the property underlying the Company’s preferred equity investment, was sold. Refer to Note 3 for further information.

Alexan Southside Place Provision for Credit Loss

Consistent with the overall Houston – Medical Center submarket, Alexan Southside Place lost significant value since the onset of the COVID-19 pandemic given the pandemic’s impact on demand within the submarket. At the time in the fourth quarter 2020, it was expected that the overall submarket would rebound over the next twenty-four to thirty-six months, though it was more likely than not that the joint venture would sell before recovery. As a result of this change in the submarket and the impact on the underlying operations of the Alexan Southside Place preferred equity investment, and the likelihood that the joint venture would sell before recovery (which it did sell in March 2021 as disclosed above), the risk characteristics of the investment, such as investment duration, had changed; the investment was removed from the pool analysis for credit losses under CECL and the investment was evaluated separately through an individual investment recoverability analysis. This separate analysis deemed the investment was not fully recoverable, and as a result, a $15.9 million provision for credit loss was recorded in the fourth quarter 2020. The credit loss on this asset was a result of writing down the Company’s investment to equal its estimated value. The estimated value was based on a letter of intent to purchase the property from an unrelated third party which was received by the joint venture. Refer to Note 2 for further information regarding CECL.

Chandler Interests, formerly Encore Chandler

In December 2020, the Company entered into a joint venture agreement with an unaffiliated third party (the “Chandler JV”, formerly Encore JV) to develop an approximately 208-unit, Class A apartment community located in Chandler, Arizona to be known as Chandler. The Company made a commitment to invest in $10.2 million of preferred equity interests in the Chandler JV, of which $3.3 million had been funded as of December 31, 2021. The Company will earn a 13% per annum accrued return on outstanding capital contributions with payments to be remitted when the property generates cash flow in excess of operating costs and the senior loan debt service from the preceding month. The Chandler JV is required to redeem the Company’s preferred membership interest plus any accrued but unpaid preferred return on December 31, 2026 (the “redemption date”) or earlier upon the occurrence of certain events. The redemption date can be extended through 2 (2) one year extension options, subject to certain conditions.

In conjunction with the Chandler development, the Chandler property owner, which is owned by an entity in which the Company has a preferred equity interest, entered into a $31.0 million construction loan, of which NaN was outstanding as of December 31,2021. The loan matures on December 30, 2024 and is secured by the fee simple interest in the Chandler property. The loan contains a one-year extension option, subject to certain conditions, and can be prepaid without penalty. The loan bears interest on the amount drawn at the greater of 3.00% or one-month LIBOR plus 2.50%. Regular monthly payments are interest-only through the earlier of December 2023 or upon the development achieving certain debt service conditions, with future monthly payments based on thirty-year amortization.

Deercross Interests

On June 25, 2021, the Company made a $4.0 million preferred equity investment in a joint venture (the “Deercross JV”) with an unaffiliated third party for Deercross, a 372-unit, stabilized property located in Indianapolis, Indiana. The Company earns a 7.0% current return and a 3.5% accrued return on its investment, for a total preferred return of 10.5% per annum. The current return shall be paid monthly to the extent the property generates cash flow in excess of operating costs, and any amount of the current return not paid monthly shall be accrued. The Deercross JV is required to redeem the Company’s preferred equity interest plus any accrued preferred

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return on the earlier date of: (i) the sale of the property, (ii) the refinancing of the senior mortgage loan (refer to below), or (iii) the maturity date of the senior mortgage loan.

In conjunction with the Deercross investment, the Deercross property owner, which is owned by an entity in which the Company has a preferred equity interest, entered into an $18.9 million senior mortgage loan. The loan matures on June 1, 2033 and is secured by the fee simple interest in the Deercross property. The loan bears interest at a fixed rate of 4.66% with interest-only monthly payments through June 2025 and future monthly payments based on thirty-year amortization. The loan can only be prepaid in full and is subject to yield maintenance or a 1% prepayment penalty until December 1, 2032.

Deerwood Apartments Interests

On June 16, 2021, the Company entered into a joint venture agreement with an unaffiliated third party (the “Deerwood JV”) to develop an approximately 330-unit, Class A apartment community located in Houston, Texas to be known as Deerwood Apartments. The Company made a commitment to invest $16.5 million of preferred equity interests in the Deerwood JV, of which $9.2 million had been funded as of December 31, 2021. The Company will earn an 11.5% per annum accrued return on outstanding capital contributions with payments to be remitted when the property generates cash flow in excess of operating costs and/or there are available net proceeds from financing, refinancing or sale of the property. The Deerwood JV is required to redeem the Company’s preferred equity interest plus any accrued preferred return on the date the construction loan is due and payable (as noted below) or earlier upon the occurrence of certain events.

In conjunction with the Deerwood Apartments development, the Deerwood Apartments property owner, which is owned by an entity in which the Company has a preferred equity interest, entered into a $39.5 million construction loan, of which NaN was outstanding as of December 31, 2021. The loan matures on June 16, 2026 and is secured by the fee simple interest in the Deerwood Apartments property. The loan contains a one-year extension option, subject to certain conditions, and can be prepaid without penalty. The loan bears interest on the amount drawn at the greater of 3.35% or one-month LIBOR plus 2.75%, with the potential for a reduced spread upon achieving a certain debt service coverage ratio. Regular monthly payments are interest-only through June 2025, with future monthly payments based on thirty-year amortization.

Helios Interests

The Company made a $19.2 million preferred equity investment in a joint venture along with Fund III, an affiliate of the former Manager, and an unaffiliated third party (the “Helios JV”), which developed a 282-unit Class A apartment community located in Atlanta, Georgia known as Helios.

In December 2019, the Company entered into a membership interest purchase agreement to purchase 100% of the common membership interest in the joint venture from Fund III and the Helios JV for $2.5 million and $1.8 million, respectively, based on fair market value after consideration of the $19.2 million preferred equity investment previously funded by the Company. As ownership in the Helios real property was in the form of undivided interests, the Company continued to account for the Helios property under the equity method as of December 31, 2019.

The Company closed on the sale of the Helios investment on January 8, 2020. Refer to Note 3 for further information.

Lower Broadway Interests

On July 15, 2021, the Company entered into a joint venture agreement with an unaffiliated third party (the “Lower Broadway JV”) to develop an approximately 386-unit, Class A apartment community located in San Antonio, Texas to be known as Lower Broadway. The Company made a commitment to invest in $15.8 million of preferred equity interests in the Lower Broadway JV, of which $0.9 million had been funded as of December 31, 2021. The Company will earn a 12.5% per annum accrued return on outstanding capital contributions with payments to be remitted when the property generates cash flow in excess of operating costs and/or there are available net proceeds from financing, refinancing or sale of the property. The Lower Broadway JV is required to redeem the Company’s preferred membership interest plus any accrued but unpaid preferred return on July 15, 2027 (the “redemption date”) or earlier upon the occurrence of certain events. The redemption date can be extended through 2 (2) one year extension options, subject to certain conditions.

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In conjunction with the Lower Broadway development, the Lower Broadway property owner, which is owned by an entity in which the Company has a preferred equity interest, entered into a $51.0 million construction loan, of which NaN was outstanding as of December 31, 2021. The loan matures on July 15, 2025 and is secured by the fee simple interest in the Lower Broadway property. The loan contains 2 (2) one-year extension options, subject to certain conditions, and can be prepaid without penalty. The loan bears interest on the amount drawn at one-month LIBOR plus 2.55% with interest-only monthly payments during the term of the loan.

Mira Vista Interests

In September 2019, the Company made a $5.3 million preferred equity investment in a joint venture (the “Mira Vista JV”) with an unaffiliated third party for a stabilized property in Austin, Texas known as Mira Vista. The Company earned a 7.0% current return and a 3.1% accrued return, for a total preferred return of 10.1% per annum. The Mira Vista JV was required to redeem the Company’s preferred membership interest plus any accrued but unpaid preferred return on January 1, 2030 or earlier upon the occurrence of certain events.

On September 23, 2021, the Company's preferred equity investment in Mira Vista was redeemed. Refer to Note 3 for further information.

Orange City Apartments Interests

On July 26, 2021, the Company entered into a joint venture agreement with an unaffiliated third party (the "Orange City JV") to develop an approximately 298-unit, Class A apartment community located in Orange City, Florida to be known as Orange City Apartments. The Company made a commitment to invest in $15.1 million of preferred equity interests in the Orange City JV, of which NaN had been funded as of December 31, 2021. The Company will begin funding capital once the unaffiliated third party has contributed its full common equity commitment. The Company will earn a 13.0% per annum accrued return on outstanding capital contributions with payments to be remitted when the property generates cash flow in excess of operating costs and/or there are available net proceeds from financing, refinancing or sale of the property. The Orange City JV is required to redeem the Company's preferred membership interest plus any accrued but unpaid preferred return on July 26, 2024 (the "redemption date") or earlier upon the occurrence of certain events. The redemption date can be extended through 2 (2) one year extension options, subject to certain conditions.

In conjunction with the Orange City Apartments development, the Orange City Apartments property owner, which is owned by an entity in which the Company has a preferred equity interest, entered into a $36.3 million construction loan, of which NaN was outstanding as of December 31, 2021. The loan matures on July 15, 2024 and is secured by the fee simple interest in the Orange City Apartments property. The loan contains 2 (2) one-year extension options, subject to certain conditions, and can be prepaid without penalty. The loan bears interest on the amount drawn at the greater of 3.50% or one-month LIBOR plus 2.75% with interest-only monthly payments during the term of the loan.

Peak Housing Interests

On April 12, 2021, the Company made a $10.7 million preferred equity investment in the Peak REIT OP for a portfolio of 474 single-family residential homes located throughout Texas. During the third and fourth quarters 2021, the Company made additional preferred equity investments totaling $9.6 million in the Peak REIT OP which is cross-collateralized by an additional fourteen portfolios representing an aggregate of 1,097 single-family residential homes.

Of the Company's total $20.3 million preferred equity investment in the Peak REIT OP, the Company earns a 7.0% current return and a 3.0% accrued return on $16.0 million of its investment, for a total preferred return of 10.0% per annum. On its remaining $4.3 million investment, the Company earns a 4.0% current return and a 4.0% accrued return, for a total preferred return of 8.0% per annum. The current returns shall be paid monthly to the extent the property generates cash flow in excess of operating costs, and any amount of the current returns not paid monthly shall be accrued at a rate of 15% per annum. The homes in Peak Housing are subject to individual mortgage debt in the aggregate amount of $146.6 million. The Peak REIT OP is required to redeem the Company's preferred equity interest plus any accrued preferred return in each property, on a pro rata basis, on the earlier date of: (i) the third anniversary on which the Company made its preferred equity investment, with the option for 2 (2) one-year extensions, subject to certain conditions, (ii) the sale of a property, (iii) the refinancing of the loan related to a property, or (iv) the maturity date of a property loan.

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Renew 3030 Interests

On August 31, 2021, the Company made a $7.1 million preferred equity investment in a joint venture (the "Renew 3030 JV") with an unaffiliated third party for Renew 3030, a 126-unit, stabilized property located in Mesa, Arizona. The Company earns a 6.0% current return and a 4.5% accrued return on its investment, for a total preferred return of 10.5% per annum. The current return shall be paid monthly to the extent the property generates cash flow in excess of operating costs, and any amount of the current return not paid monthly shall be accrued. The Renew 3030 JV is required to redeem the Company's preferred equity interest plus any accrued preferred return on the earlier date of the maturity of the senior mortgage loan (refer to below) or its repayment in full.

In conjunction with the Renew 3030 investment, the Renew 3030 property owner, which is owned by an entity in which the Company has a preferred equity interest, entered into a $13.6 million senior mortgage loan. The loan matures on May 1, 2030 and is secured by the fee simple interest in the Renew 3030 property. The loan bears interest at a fixed rate of 3.52% with interest-only monthly payments through May 2025 and future monthly payments based on thirty-year amortization. The loan can only be prepaid in full and is subject to yield maintenance or a 1% prepayment penalty until February 1, 2030.

Riverside Apartments Interests

The Company made a $13.9 million preferred equity investment in a joint venture (the "Riverside JV") with an unaffiliated third party which developed a 222-unit Class A apartment community located in Austin, Texas known as Riverside Apartments. The Company earned an 8.5% current return and a 4.0% accrued return for a total preferred return of 12.5% per annum. The Riverside JV was required to redeem the Company’s preferred membership interest plus any accrued but unpaid preferred return on November 21, 2023 or earlier upon the occurrence of certain events.

On December 22, 2020, the Company’s preferred equity investment in Riverside Apartments was redeemed. Refer to Note 3 for further information.

Spring Parc Interests

On July 13, 2021, the Company made an $8.0 million preferred equity investment in a joint venture (the “Spring Parc JV”) with an unaffiliated third party for Spring Parc, a 304-unit, stabilized property located in Dallas, Texas. The Company earns a 7.0% current return and a 3.5% accrued return on its investment, for a total preferred return of 10.5% per annum. The current return shall be paid monthly to the extent the property generates cash flow in excess of operating costs, and any amount of the current return not paid monthly shall be accrued. The Company’s preferred membership interest plus any accrued but unpaid preferred return shall be redeemed by the Spring Parc JV at a date no earlier than July 13, 2023 and no later than the repayment in full of the senior mortgage loan (refer to below).

In conjunction with the Spring Parc investment, the Spring Parc property owner, which is owned by an entity in which the Company has a preferred equity interest, entered into a $30.1 million senior mortgage loan. The loan matures on March 1, 2028 and is secured by the fee simple interest in the Spring Parc property. The loan bears interest at the 30-day average SOFR plus 2.49% with interest-only monthly payments through March 2023 and future monthly payments based on thirty-year amortization. The loan can only be prepaid in full and is subject to a 1% prepayment penalty until December 1, 2027.

Strategic Portfolio Interests

In 2019 and 2020, the Company made preferred equity investments totaling $27.0 million in a joint venture (the “Strategic JV”) with an unaffiliated third party for the following eight stabilized properties: Belmont Crossing, located in Smyrna, Georgia; Georgetown Crossing, located in Savannah, Georgia; Sierra Terrace and Sierra Village, both located in Atlanta, Georgia; The Commons, located in Jacksonville, Florida; and Hunter's Pointe, Park on the Square and Water's Edge, all located in Pensacola, Florida. These eight properties were collectively known as the Strategic Portfolio. The Company earned a 7.5% current return and a 3.0% accrued return on its investment, for a total preferred return of 10.5% per annum.

On June 10, 2021, the Company made an additional preferred equity investment of $11.4 million in the Strategic JV for The Reserve at Palmer Ranch, a 320-unit, stabilized property located in Sarasota, Florida. The Reserve at Palmer Ranch was previously owned by the Company and sold on June 10, 2021 to its partner in the Strategic JV (refer to Note 3 for further information). For its

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investment related to The Reserve at Palmer Ranch, the Company earns a 6.35% current return and a 5.15% accrued return on its investment, for a total preferred return of 11.5% per annum.

On December 29, 2021, the Company’s original preferred equity investments in Belmont Crossing, Sierra Terrace and Sierra Village in the aggregate amount of $10.2 million were redeemed. Refer to the Sale of Strategic Portfolio Interests (partial) disclosure in Note 3 for further information.

The Company continues to earn a 7.5% current return and a 3.0% accrued return, for a total preferred return of 10.5% per annum, on its preferred equity investments in Georgetown Crossing, Hunter's Pointe, Park on the Square, The Commons and Water's Edge. These five properties, along with The Reserve at Palmer Ranch, are collectively known as the Strategic Portfolio. All current returns shall be paid monthly to the extent the property generates cash flow in excess of operating costs, and any amount of the current returns not paid monthly shall be accrued. The Strategic JV is required to redeem the Company’s preferred equity interest plus any accrued preferred return in each property on the earlier date of: (i) the sale of the property, (ii) the refinancing of the loan related to the property, or (iii) the maturity date of the property loan. The remaining six properties in the Strategic Portfolio are subject to individual property mortgage debt in the aggregate amount of $129.3 million.

The Conley Interests

The Company made a $15.2 million preferred equity investment in a joint venture (the “The Conley JV”) with an unaffiliated third party which developed a 259-unit Class A apartment community located in Leander, Texas known as The Conley. The Company earned an 8.5% current return and a 4.0% accrued return for a total preferred return of 12.5% per annum. The Conley JV was required to redeem the Company’s preferred membership interest plus any accrued but unpaid preferred return on October 29, 2023 or earlier upon the occurrence of certain events.

On March 18, 2021, the Company’s preferred equity investment in The Conley was redeemed. Refer to Note 3 for further information.

The Cottages at Myrtle Beach Interests

On September 9, 2021, the Company entered into a joint venture agreement with an unaffiliated third party (the “Cottages MB JV”) to develop approximately 294-build for rent, single-family residential homes in Myrtle Beach, South Carolina. The Company made a commitment to invest $17.9 million of preferred equity interests in the Cottages MB JV, of which $9.0 million had been funded as of December 31, 2021. The Company will earn a 14.5% per annum accrued return on outstanding capital contributions with payments to be remitted when the properties generate cash flow in excess of operating costs and/or there are available net proceeds from financing, refinancing or sale of properties. The Cottages MB JV is required to redeem the Company’s preferred equity interests plus any accrued preferred return on the date the construction loan (refer to below) is due and payable or earlier upon the occurrence of certain events.

In conjunction with The Cottages at Myrtle Beach investment, The Cottages at Myrtle Beach property owner, which is owned by an entity in which the Company has a preferred equity interest, entered into a $40.2 million construction loan, of which none was outstanding as of December 31, 2021. The loan matures on March 9, 2025 and is secured by the fee simple interest in The Cottages at Myrtle Beach property. The loan contains two (2) one-year extension options, subject to certain conditions, and can be prepaid without penalty. The loan bears interest on the amount drawn at the greater of 3.10% or one-month LIBOR plus 2.60% with interest-only monthly payments through the initial term of the loan.

The Cottages at Warner Robins Interests

On December 8, 2021, the Company entered into a joint venture agreement with an unaffiliated third party (the "Cottages WR JV") to develop approximately 251-build for rent, single-family residential homes in Warner Robins, Georgia. The Company made a commitment to invest $13.3 million of preferred equity interests in the Cottages WR JV, of which none had been funded as of December 31, 2021. The Company will earn a 14.5% per annum accrued return on outstanding capital contributions with payments to be remitted when the properties generate cash flow in excess of operating costs and/or there are available net proceeds from financing, refinancing or sale of properties. The Cottages WR JV is required to redeem the Company's preferred equity interests plus any accrued preferred return on the date the construction loan (refer to below) is due and payable or earlier upon the occurrence of certain events.

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In conjunction with The Cottages at Warner Robins investment, The Cottages at Warner Robins property owner, which is owned by an entity in which the Company has a preferred equity interest, entered into a $34.5 million construction loan, of which none was outstanding as of December 31, 2021. The loan matures on April 5, 2025 and is secured by the fee simple interest in The Cottages at Warner Robins property. The loan contains an extension option to December 5, 2026, subject to certain conditions, and can be prepaid without penalty. The loan bears interest on the amount drawn at one-month Term SOFR plus 3.10% with interest-only monthly payments through the initial term of the loan.

The Cottages of Port St. Lucie Interests

On August 26, 2021, the Company entered into a joint venture agreement with an unaffiliated third party (the “Cottages St. Lucie JV”) to develop approximately 286-build for rent, single-family residential homes in Port St. Lucie, Florida. The Company made a commitment to invest $18.8 million of preferred equity interests in the Cottages St. Lucie JV, of which $7.3 million had been funded as of December 31, 2021. The Company will earn a 14.5% per annum accrued return on outstanding capital contributions with payments to be remitted when the properties generate cash flow in excess of operating costs and/or there are available net proceeds from financing, refinancing or sale of properties. The Cottages St. Lucie JV is required to redeem the Company’s preferred equity interests plus any accrued preferred return on the date the construction loan (refer to below) is due and payable or earlier upon the occurrence of certain events.

In conjunction with The Cottages of Port St. Lucie investment, The Cottages of Port St. Lucie property owner, which is owned by an entity in which the Company has a preferred equity interest, entered into a $45.2 million construction loan, of which none was outstanding as of December 31, 2021. The loan matures on August 26, 2024 and is secured by the fee simple interest in The Cottages of Port St. Lucie property. The loan contains two (2) one-year extension options, subject to certain conditions, and can be prepaid without penalty. The loan bears interest on the amount drawn at the greater of 3.50% or one-month LIBOR plus 2.75% with interest-only monthly payments through the initial term of the loan.

The Crossings of Dawsonville Interests

On July 14, 2021, the Company made a $10.5 million preferred equity investment in a joint venture (the “Dawsonville JV”) with an unaffiliated third party for The Crossings of Dawsonville, a 216-unit, stabilized property located in Dawsonville, Georgia. The Company earns a 7.0% current return and a 3.5% accrued return on its investment, for a total preferred return of 10.5% per annum. The current return shall be paid monthly to the extent the property generates cash flow in excess of operating costs, and any amount of the current return not paid monthly shall be accrued. The Company’s preferred membership interest plus any accrued but unpaid preferred return shall be redeemed by the Dawsonville JV at a date no earlier than July 14, 2023 and no later than the repayment in full of the senior mortgage loan (refer to below).

In conjunction with The Crossings of Dawsonville investment, The Crossings of Dawsonville property owner, which is owned by an entity in which the Company has a preferred equity interest, entered into a $37.6 million senior mortgage loan. The loan matures on August 1, 2033 and is secured by the fee simple interest in The Crossings of Dawsonville property. The loan bears interest at a fixed rate of 3.28% with interest-only monthly payments through August 2026 and future monthly payments based on thirty-year amortization. The loan can only be prepaid in full and is subject to yield maintenance or a 1% prepayment penalty until April 29, 2033.

The Riley Interests

On March 1, 2021, the Company made a $7.0 million preferred equity investment in a joint venture (the “Riley JV”) with an unaffiliated third party for a stabilized property in Richardson, Texas known as The Riley. The Company earns a 6.0% current return and a 5.0% accrued return on its investment, for a total preferred return of 11.0% per annum. The Riley JV is required to redeem the Company’s preferred equity interest plus any accrued preferred return on the earlier date of: (i)(a) the refinancing or (b) maturity of the property loan, detailed below, (ii) the sale of the property, or (iii) any other acceleration event.

In conjunction with The Riley investment, The Riley property owner, which is owned by an entity in which the Company has a preferred equity interest, entered into a $44.1 million senior mortgage loan. The loan matures on March 9, 2024, contains two (2) one-year extension options, subject to certain conditions, and is secured by the fee simple interest in The Riley property. The loan bears interest at the greater of 3.50% or one-month LIBOR plus 3.35% with interest-only payments during the initial term of the loan. The loan can only be prepaid in full and is subject to yield maintenance through June 9, 2022.

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The Woods at Forest Hill Interests

On December 20, 2021, the Company entered into a joint venture agreement with Peak Housing REIT (the “Woods JV”) to develop approximately 76-build for rent, single-family residential homes in Forest Hill, Texas. The Company made a commitment to invest $3.3 million of preferred equity interests in the Woods JV, of which $0.4 million had been funded as of December 31, 2021. The Company will earn a 13% per annum accrued return on outstanding capital contributions with payments to be remitted when the properties generate cash flow in excess of operating costs and/or there are available net proceeds from financing, refinancing or sale of properties. The Woods JV is required to redeem the Company’s preferred equity interests plus any accrued preferred return on the date the construction loan (refer to below) is due and payable or earlier upon the occurrence of certain events.

In conjunction with The Woods at Forest Hill development, The Woods at Forest Hill property owner, which is owned by an entity in which the Company has a preferred equity interest, entered into an $8.3 million construction loan, of which none was outstanding as of December 31, 2021. The loan matures on December 20, 2024 and is secured by the fee simple interest in The Woods at Forest Hill property. The loan contains two (2) one-year extension options, subject to certain conditions, and can be prepaid subject to a make whole premium. The loan bears interest on the amount drawn at the greater of 4.75% or the prime rate plus 1.50% with interest-only monthly payments through July 2024 and future monthly payments based on twenty-five-year amortization.

Thornton Flats Interests

In September 2019, the Company made a $4.6 million preferred equity investment in a joint venture (the “Thornton JV”) with an unaffiliated third party for a stabilized property in Austin, Texas known as Thornton Flats. The Company earned an 8.0% current return and a 1.0% accrued return for a total preferred return of 9.0% per annum. On August 26, 2021, the Company, in accordance with terms as set forth in the Thornton Flats operating agreement, funded an additional $0.8 million of preferred equity interests in the Thornton JV, increasing the Company's total preferred equity investment in the Thornton JV to $5.3 million. The Thornton JV was required to redeem the Company’s preferred membership interest plus any accrued but unpaid preferred return on September 25, 2024 or earlier upon the occurrence of certain events.

On December 14, 2021, the Company's preferred equity investment in Thornton Flats was redeemed. Refer to Note 3 for further information.

Wayford at Concord Interests

The Company made a $6.5 million preferred equity investment in a joint venture (the “Wayford JV”) with an unaffiliated third party which developed 150-build for rent, single-family residential homes in Concord, North Carolina known as Wayford at Concord. The Company earned a 9.0% current return and a 4.0% accrued return for a total preferred return of 13.0% per annum. The Wayford JV was required to redeem the Company’s preferred membership interest plus any accrued but unpaid preferred return on November 9, 2023 or earlier upon the occurrence of certain events.

In conjunction with the Wayford at Concord development, the Wayford at Concord property owner, which was owned by an entity in which the Company had a preferred equity interest, entered into a $22.3 million construction loan. The loan was to mature on November 9, 2021 and was secured by the fee simple interest in the Wayford at Concord property. The loan bore interest on the amount drawn at one-month LIBOR plus 2.50% with regular monthly payments that were interest-only. The loan could be prepaid without penalty.

On June 4, 2021, the Company, along with an unaffiliated third party, purchased the interests in the Wayford at Concord property, the underlying asset of the Wayford JV, from the Company’s Wayford JV partner for $44.4 million. The Company acquired an 83% interest in Wayford at Concord. In conjunction with the sale, the Company’s preferred equity investment was redeemed by the Wayford JV for $7.0 million, which included its original preferred investment of $6.5 million and accrued preferred return of $0.5 million. Upon the redemption of its preferred investment and the purchase of Wayford at Concord, the Company began consolidating the property’s statement of operations and balance sheet.

Wayford at Innovation Park Interests

On June 17, 2021, the Company entered into a joint venture agreement with an unaffiliated third party (the “Wayford IP JV”) to develop approximately 210-build for rent, single-family residential homes in Charlotte, North Carolina to be known as Wayford at

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Innovation Park. The Company made a commitment to invest in $13.4 million of preferred equity interests in the Wayford IP JV, of which none had been funded as of December 31, 2021. The Company will begin funding capital once the unaffiliated third party has contributed its full common equity commitment. The Company will earn a 12.5% per annum accrued return on outstanding capital contributions with payments to be remitted when the property generates cash flow in excess of operating costs and/or there are available net proceeds from financing, refinancing or sale of the property. The Wayford IP JV is required to redeem the Company’s preferred equity interest plus any accrued preferred return on June 17, 2026 or earlier upon the occurrence of certain events.

In conjunction with the Wayford at Innovation Park development, the Wayford at Innovation Park property owner, which is owned by an entity in which the Company has a preferred equity interest, entered into a $39.6 million construction loan, of which none was outstanding as of December 31, 2021. The loan matures on October 15, 2026, can be prepaid without penalty, and is secured by the fee simple interest in the Wayford at Innovation Park property. The loan bears interest on the amount drawn at the greater of 3.50% or one-month LIBOR plus 2.25% with interest-only monthly payments through October 2024 and future monthly payments based on thirty-year amortization.

Whetstone Apartments Interests

The Company made a $12.9 million preferred equity investment in a joint venture along with Fund III, an affiliate of the former Manager, and an unaffiliated third party, to acquire a 204-unit Class A apartment community located in Durham, North Carolina known as Whetstone Apartments. The Company earned a 6.5% preferred return on its investment, though effective April 2017, Whetstone Apartments ceased paying its preferred return on a current basis. The Company accrued any preferred return amounts not received on a current basis.

On January 22, 2020, the Company entered into a membership interest purchase agreement to purchase 100% of the common membership interest in BR Whetstone Member, LLC from Fund III for approximately $2.5 million. In conjunction with this transaction, BR Whetstone Member, LLC, along with BRG Avenue 25 TRS, LLC, a wholly-owned subsidiary of the Company's Operating Partnership, entered into a membership purchase agreement to purchase the right to all the economic interest promote and the common membership interest of 7.5% held in the Whetstone Apartments joint venture from an unaffiliated member of the joint venture for approximately $1.9 million.

The Company closed on the sale of Whetstone Apartments on January 24, 2020 and recovered its preferred equity investment and accrued preferred return. Refer to Note 3 for further information.

Willow Park Interests

On June 17, 2021, the Company entered into a joint venture agreement with Peak Housing REIT (the "Willow Park JV") to develop approximately 46-build for rent, single-family residential homes in Willow Park, Texas. The Company made a commitment to invest $3.8 million of preferred equity interests in the Willow Park JV, of which $2.5 million had been funded as of December 31, 2021. The Company will earn a 13.0% per annum accrued return on outstanding capital contributions with payments to be remitted when the properties generate cash flow in excess of operating costs and/or there are available net proceeds from financing, refinancing or sale of properties. The Willow Park JV is required to redeem the Company's preferred equity interests plus any accrued preferred return on the date the construction loan (refer to below) is due and payable or earlier upon the occurrence of certain events.

In conjunction with the Willow Park development, the Willow Park property owner, which is owned by an entity in which the Company has a preferred equity interest, entered into an $8.8 million construction loan, of which $1.7 million was outstanding as of December 31, 2021. The loan matures on August 5, 2024 and is secured by the fee simple interest in the Willow Park property. The loan contains two (2) one-year extension options, subject to certain conditions, and can be prepaid subject to a make whole premium. The loan bears interest on the amount drawn at the greater of 4.50% or the prime rate plus 1.25% with interest-only monthly payments through February 2024 and future monthly payments based on twenty-five-year amortization.

Note 8 — Revolving Credit Facility

The outstanding balances on the revolving credit facilities as of December 31, 2021 and 2020 are as follows (amounts in thousands):

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Revolving Credit Facilities	2021		2020
Amended Senior Credit Facility	$	—	$	33,000
Amended Junior Credit Facility		—		0
Total	$	—	$	33,000

Amended Senior Credit Facility

On March 6, 2020, the Company entered into the Amended Senior Credit Facility. The Amended Senior Credit Facility provides for a revolving loan with an initial commitment amount of $100 million, which commitment contains an accordion feature to a maximum total commitment of up to $350 million. Borrowings under the Amended Senior Credit Facility bear interest, at the Company’s option, at LIBOR plus 1.30% to 1.65% or the base rate plus 0.30% to 0.65%, depending on the Company’s leverage ratio. The Company pays an unused fee at an annual rate of 0.15% to 0.20% of the unused portion of the Amended Senior Credit Facility, depending on the borrowings outstanding. The Amended Senior Credit Facility matures on March 6, 2023 and contains 2 one-year extension options, subject to certain conditions. The Amended 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 December 31, 2021, the Company was in compliance with all covenants under the Amended Senior Credit Facility. The Company has guaranteed the obligations under the Amended Senior Credit Facility and has pledged certain assets as collateral.

The Amended Senior Credit Facility provides the Company with the ability to issue up to $50 million in letters of credit. While the issuance of letters of credit does not increase the Company's borrowings outstanding under the Amended Senior Credit Facility, it does reduce the availability of borrowings. At December 31, 2021, the Company had 1 outstanding letter of credit of $0.8 million.

Amended Junior Credit Facility

On September 21, 2021, the Company entered into an amended and restated Junior Credit Facility (the “Amended Junior Credit Facility”). The Amended Junior Credit Facility extended the maturity date of the credit facility to December 21, 2023 and included changes in certain financial and operating covenants. There were no other material changes in terms from the previous credit facility. The Amended Junior Credit Facility provides for a revolving loan with a maximum commitment amount of $72.5 million. Borrowings under the Amended Junior Credit Facility bear interest, at the Company’s option, at LIBOR plus 2.75% to 3.25% or the base rate plus 1.75% to 2.25%, depending on the Company’s leverage ratio. The Company pays an unused fee at an annual rate of 0.35% to 0.40% of the unused portion of the Amended Junior Credit Facility, depending on the borrowings outstanding. The Amended Junior Credit Facility contains certain financial and operating covenants, including a maximum leverage ratio, minimum liquidity, minimum debt service coverage ratio, minimum debt yield, minimum tangible net worth and minimum equity raise and collateral values. At December 31, 2021, 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 facilities at December 31, 2021 is based on the collateral and compliance with various ratios related to those assets and was approximately $143.3 million.

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Note 9 — Mortgages Payable

The following table summarizes certain information as of December 31, 2021 and 2020, with respect to the Company’s senior mortgage indebtedness (amounts in thousands):


	Outstanding Principal				As of December 31, 2021
	December 31,		December 31,				Interest-only
Property	2021		2020		Interest Rate		through date	Maturity Date

Fixed Rate:
ARIUM Westside	$	51,841	$	52,150	3.68	%	⁽¹⁾	August 1, 2023
Ashford Belmar		100,675		100,675	4.53	%	December 2022	December 1, 2025
Avenue 25 ⁽²⁾		36,566		36,566	4.18	%	July 2022	July 1, 2027
Burano Hunter’s Creek ⁽³⁾		69,502		70,871	3.65	%	⁽¹⁾	November 1, 2024
Carrington at Perimeter Park⁽⁴⁾		31,244		31,301	4.16	%	⁽⁴⁾	July 1, 2027
Chattahoochee Ridge		45,338		45,338	3.25	%	December 2022	December 5, 2024
Citrus Tower		39,896		40,627	4.07	%	⁽¹⁾	October 1, 2024
Denim⁽⁵⁾		101,205		101,205	3.41	%	August 2024	August 1, 2029
Elan⁽⁶⁾		25,508		25,574	4.19	%	⁽⁶⁾	July 1, 2027
Element		29,260		29,260	3.63	%	July 2022	July 1, 2026
Falls at Forsyth ⁽⁷⁾		19,265		0	4.35	%	⁽¹⁾	July 1, 2025
Gulfshore Apartment Homes		46,345		46,345	3.26	%	September 2022	September 1, 2029
James on South First		0		25,674
Navigator Villas ⁽⁸⁾		20,361		20,515	4.57	%	⁽¹⁾	June 1, 2028
Outlook at Greystone		21,930		22,105	4.30	%	⁽¹⁾	June 1, 2025
Park & Kingston		0		19,600
Plantation Park		0		26,625
Providence Trail		47,587		47,950	3.54	%	⁽¹⁾	July 1, 2026
Roswell City Walk		49,050		50,043	3.63	%	⁽¹⁾	December 1, 2026
The Brodie		32,876		33,551	3.71	%	⁽¹⁾	December 1, 2023
The Debra Metrowest ⁽³⁾		63,982		64,559	4.43	%	⁽¹⁾	May 1, 2025
The Links at Plum Creek		38,916		39,578	4.31	%	⁽¹⁾	October 1, 2025
The Mills		24,731		25,275	4.21	%	⁽¹⁾	January 1, 2025
The Preserve at Henderson Beach		48,490		48,490	3.26	%	September 2028	September 1, 2029
The Reserve at Palmer Ranch		0		40,977
The Sanctuary		33,707		33,707	3.31	%	Interest-only	August 1, 2029
Wesley Village		38,730		39,438	4.25	%	⁽¹⁾	April 1, 2024
Windsor Falls		27,442		0	4.19	%	November 2022	November 1, 2027
Yauger Park Villas ⁽⁹⁾		14,921		0	4.86	%	⁽¹⁾	April 1, 2026
Total Fixed Rate	$	1,059,368	$	1,117,999

Floating Rate ⁽¹⁰⁾:
ARIUM Glenridge	$	49,170	$	49,500	1.42	%	⁽¹⁾	September 1, 2025
Chevy Chase		24,400		24,400	2.41	%	September 2022	September 1, 2027
Cielo on Gilbert ⁽¹¹⁾		58,000		58,000	2.66	%	January 2026	January 1, 2031
Falls at Forsyth ⁽⁷⁾		19,186		0	1.49	%	⁽¹⁾	July 1, 2025
Fannie Facility Advance		13,936		13,936	2.69	%	June 2022	June 1, 2027
Fannie Facility Second Advance ⁽¹¹⁾		12,880		0	2.75	%	March 2023	March 1, 2028
ILE ⁽¹²⁾		26,825		0	3.78	%	⁽¹²⁾	⁽¹²⁾
Marquis at The Cascades I		0		31,668
Marquis at The Cascades II		0		22,101
Pine Lakes Preserve		42,728		42,728	3.07	%	July 2025	July 1, 2030
The District at Scottsdale		0		75,577
Veranda at Centerfield		25,962		26,100	1.35	%	⁽¹⁾	July 26, 2023 ⁽¹³⁾
Villages of Cypress Creek		33,520		33,520	2.64	%	July 2022	July 1, 2027
Total Floating Rate	$	306,607	$	377,530
Total	$	1,365,975	$	1,495,529
Fair value adjustments		8,159		6,489
Deferred financing costs, net		(9,143)		(11,086)
Total continuing operations	$	1,364,991	$	1,490,932

Held for Sale
ARIUM Grandewood ^(7)(14)	$	0	$	19,585
ARIUM Grandewood ^(7)(14)		0		19,529
Deferred financing costs, net		0		(341)
Total held for sale		0		38,773
Total mortgages payable	$	1,364,991	$	1,529,705

(1)	The loan requires monthly payments of principal and interest.

(2)	The principal balance includes a $29.7 million senior loan at a fixed rate of 4.02% and a $6.9 million supplemental loan at a fixed rate of 4.86%.

(3)	Burano Hunter’s Creek and The Debra Metrowest, formerly ARIUM Hunter’s Creek and ARIUM Metrowest, respectively.

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(4)

The principal balance includes a $27.5 million senior loan at a fixed rate of 4.09% and a $3.7 million supplemental loan at a fixed rate of 4.66%. The senior loan has monthly payments that are interest-only through July 2024, whereas the supplemental loan has monthly payments of principal and interest. Both loans have a maturity date of July 1, 2027.

(5)	The principal balance includes a $91.6 million senior loan at a fixed rate of 3.32% and a $9.6 million supplemental loan at a fixed rate of 4.22%.

(6)

The principal balance includes a $21.2 million senior loan at a fixed rate of 4.09% and a $4.3 million supplemental loan at a fixed rate of 4.66%. The senior loan has monthly payments that are interest-only through July 2024, whereas the supplemental loan has monthly payments of principal and interest. Both loans have a maturity date of July 1, 2027.

(7)	Refer to the Master Credit Facility with Fannie Mae disclosure below for further information regarding the senior mortgage substitution of collateral.

(8)	The principal balance includes a $14.7 million senior loan at a fixed rate of 4.31% and a $5.7 million supplemental loan at a fixed rate of 5.23%.

(9)	The principal balance includes a $10.4 million senior loan at a fixed rate of 4.81% and a $4.6 million supplemental loan at a fixed rate of 4.96%.

(10)	Other than Cielo on Gilbert, the Fannie Facility Second Advance and ILE, all the Company’s floating rate loans bear interest at one-month LIBOR + margin. In December 2021, one-month LIBOR in effect was 0.09%. LIBOR rate is subject to a rate cap. Please refer to Note 11 for further information.

(11)	The Cielo on Gilbert loan and the Fannie Facility Second Advance bear interest at the 30-day average SOFR + 2.61% and + 2.70%, respectively. In December 2021, the 30-day average SOFR in effect was 0.05%. SOFR rate is subject to a rate cap. Please refer to Note 11 for further information.

(12)

The principal balance represents the aggregate debt outstanding across five separate credit agreements. Of the $26.8 million principal balance, $7.5 million held through two credit agreements requires monthly payments of principal and interest, while the remaining principal balance of $19.3 million held through three credit agreements has monthly payments that are currently interest-only. The five credit agreements have maturity dates ranging from 2022 to 2026 and bear interest at one-month LIBOR or prime rate + margins ranging from 0.50% to 3.00%, subject to rate floors, and have current interest rates ranging from 3.50% to 4.25% with a weighted average interest rate of 3.78% as of December 31, 2021.

(13)	The loan has 2 (2) one-year extension options subject to certain conditions.

(14)	At December 31, 2020, ARIUM Grandewood had a fixed rate loan with a principal balance of $19.6 million and a floating rate loan with a principal balance of $19.5 million.

Deferred financing costs

Costs incurred in obtaining long-term financing are amortized on a straight-line basis to interest expense over the terms of the related financing agreements, as applicable, which approximates the effective interest method. Amortization of deferred financing costs, including the amounts related to the revolving credit facilities, was $3.3 million, $3.5 million and $3.6 million for the years ended December 31, 2021, 2020 and 2019, respectively.

Fair value adjustments of debt

The Company records a fair value adjustment based upon the fair value of the loans on the date they were assumed in conjunction with acquisitions. The fair value adjustments are being amortized to interest expense over the remaining life of the loans. Amortization of fair value adjustments was $1.3 million, $0.4 million and $0.3 million for the years ended December 31, 2021, 2020 and 2019, respectively.

Loss on Extinguishment of Debt and Debt 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 within loss on extinguishment of debt and debt modification costs on the consolidated statements of operations. Loss on extinguishment of debt and debt modification costs were $6.7 million, $14.6 million and $7.3 million for the years ended December 31, 2021, 2020 and 2019, respectively.

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Master Credit Facility with Fannie Mae

On April 30, 2018, the Company, through certain subsidiaries of the Operating Partnership, entered into 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 December 31, 2021, the mortgage loans secured by The Debra Metrowest (formerly ARIUM Metrowest), Falls at Forsyth and Outlook at Greystone were issued under the Fannie Facility.

On May 27, 2020, the Company, through certain subsidiaries of the Operating Partnership, entered into a $13.9 million floating rate advance (the “Fannie Facility Advance”) originated under the Fannie Facility and collateralized by the properties issued under the Fannie Facility. The Fannie Facility Advance matures on June 1, 2027 and bears interest at LIBOR plus 2.60%, subject to an interest rate cap, with interest-only payments through June 2022 and then monthly payments based on thirty-year amortization. The Fannie Facility Advance may be prepaid without prepayment or yield maintenance beginning March 1, 2027.

On February 18, 2021, the Company, through certain subsidiaries of the Operating Partnership, entered into a $12.9 million floating rate advance originated under the Fannie Facility (the “Fannie Facility Second Advance”). Upon the sale of ARIUM Grandewood (refer to Note 3 for further information), the Company had the option to forgo the repayment of the principal balance and any related prepayment penalties and costs by substituting the collateral securing the senior mortgage with collateral of the same or higher value. As such, the Company elected to substitute the ARIUM Grandewood collateral on the Fannie Facility with its Falls at Forsyth property. As the collateral value of Falls at Forsyth exceeded the collateral value of ARIUM Grandewood, the Company elected to receive this incremental difference in collateral value as an advance under the Fannie Facility. The Fannie Facility Second Advance matures on March 1, 2028 and bears interest at the 30-day average SOFR plus 2.70%, subject to an interest rate cap, with interest-only payments through March 2023 and then monthly payments based on thirty-year amortization. The Fannie Facility Second Advance may be prepaid without prepayment or yield maintenance beginning December 1, 2027.

The Company may request future fixed rate advances or floating rate advances under the Fannie Facility either by borrowing against the value of 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 maximum loan-to-value tests. The proceeds of any future advances made under the Fannie Facility may be used, among other things, for general operating purposes and the acquisition and refinancing of additional properties to be identified in the future.

Debt maturities

As of December 31, 2021, contractual principal payments for the five subsequent years and thereafter are as follows (amounts in thousands):


Year	Total
2022	$	17,896
2023		127,237
2024		204,310
2025		332,171
2026		156,561
Thereafter		527,800
	$	1,365,975
Add: Unamortized fair value debt adjustment		8,159
Subtract: Deferred financing costs, net		(9,143)
Total	$	1,364,991

The net book value of real estate assets providing collateral for these above borrowings, including the Amended Senior Credit Facility, Amended Junior Credit Facility and Fannie Facility, was $2,070.3 million as of December 31, 2021.

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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.

Note 10 — Fair Value of Financial Instruments

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.

Fair Value of Financial Instruments

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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Fair Value of Debt

As of December 31, 2021 and December 31, 2020, 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 $1,388.3 million and $1,586.0 million, respectively, compared to the carrying amounts, before adjustments for deferred financing costs, net, of $1,374.1 million and $1,541.1 million, respectively. The fair value of mortgages payable is estimated based on the Company’s current interest rates (Level 3 inputs of the fair value hierarchy) for similar types of borrowing arrangements.

Note 11 — Derivative Financial Instruments

Risk Management Objective of Using Derivatives

The Company is exposed to certain risks 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 December 31, 2021, 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 $279.8 million of the Company’s floating rate mortgage 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 December 31, 2021 and 2020 (amounts in thousands):



Derivatives not designated as hedging		Fair values of derivative
instruments under ASC 815‑20	Balance Sheet Location	instruments
		2021		2020
Interest rate caps	Accounts receivable, prepaids and other assets	$	185	$	14

The table below presents the effect of Company's derivative financial instruments as well as their classification on the consolidated statements of operations for the years ended December 31, 2021, 2020 and 2019 (amounts in thousands):


Derivatives not designated as hedging	Location of Gain (Loss)	The Effect of Derivative Instruments
instruments under ASC 815‑20	Recognized in Income	on the Statements of Operations
		2021		2020		2019
Interest rate caps	Interest Expense	$	82	$	(128)	$	(2,536)

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Credit-risk-related Contingent Features

The Company has agreements with each of its derivative counterparties that contain a provision where the Company could be declared in default on its derivative obligations if repayment of the underlying indebtedness is accelerated by the lender due to the Company’s default on the indebtedness.

Note 12 — Related Party Transactions

Administrative Services Agreement

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”). The Services are provided on an at-cost basis, generally allocated based on the use of such Services for the benefit of the Company’s business, and are invoiced on a quarterly basis. In addition, the Administrative Services Agreement permits certain employees of 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, at the sole discretion of the Board, in the form of LTIP Units.

The Company has the right to renew the Administrative Services Agreement for successive one-year terms upon sixty (60) days written notice prior to expiration. The Company renewed the Administrative Services Agreement for a one-year term in 2020, and on August 4, 2021, 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, 2022. The Administrative Services Agreement will automatically terminate (i) upon termination by the Company of all Services, or (ii) in the event of non-renewal by the Company. Pursuant to the Administrative Services Agreement, BRE is responsible for the payment of all employee benefits and any other direct and indirect compensation for the employees of BRE (or their affiliates or permitted subcontractors) assigned to perform the Services, as well as such employees’ worker’s compensation insurance, employment taxes, and other applicable employer liabilities relating to such employees.

All the Company’s executive officers and one of its directors are also executive officers, managers and/or holders of a direct or indirect controlling interest in 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.

The Company and BRE also entered into a Leasehold Cost-Sharing Agreement (the “Leasehold Cost-Sharing Agreement”) with respect to the lease for their New York headquarters (the “NY Lease”) to provide for the allocation and sharing between BRE and the Company of the costs thereunder, including costs associated with tenant improvements. The NY Lease permits the Company and certain of its respective subsidiaries and/or affiliates to share occupancy of the New York headquarters with BRE. Under the NY Lease, the Company, through its Operating Partnership, issued a $750,000 letter of credit as a security deposit, and BRE is obligated under the Leasehold Cost-Sharing Agreement to indemnify and hold the Company harmless from loss if there is a claim under such letter of credit. Payment by the Company of any amounts payable under the Leasehold Cost-Sharing Agreement to BRE will be made in cash or, in the sole discretion of the Board, in the form of LTIP Units.

Recorded as part of general and administrative expenses, operating expenses paid by BRE on behalf of the Company of $3.0 million, $2.8 million and $3.6 million were expensed during the years ended December 31, 2021, 2020 and 2019, respectively. Operating expense reimbursements of $0.4 million for the third quarter 2021 were paid to BRE through the issuance of 27,432 LTIP Units on November 9, 2021. During the year ended December 31, 2021, the Company issued 138,179 LTIP Units to BRE as reimbursement for operating expenses paid on behalf of the Company.

Pursuant to the terms of the Administrative Services Agreement, the Company paid operating expenses on behalf of BRE of $2.3 million, $1.9 million and $1.7 million for the years ended December 31, 2021, 2020 and 2019, respectively. During the year ended December 31, 2021, the Company was reimbursed in cash for operating expenses it paid on behalf of BRE.

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Pursuant to the terms of the Administrative Services Agreement and the Leasehold Cost-Sharing Agreement, summarized below are the net related party amounts payable to BRE as of December 31, 2021 and 2020 (amounts in thousands):


	2021		2020
Amounts Payable to BRE under the Administrative Services Agreement, net
Operating and direct expense reimbursements	$	318	$	338
Offering expense reimbursements		94		89
Total expense reimbursement amounts payable to BRE, net	$	412	$	427

Amounts Payable to BRE under the Leasehold Cost-Sharing Agreement
Operating and direct expense reimbursements	$	187	$	191
Total expense and cost reimbursement amounts payable to BRE	$	187	$	191
Total	$	599	$	618

As of December 31, 2021 and 2020, the Company had $0.7 million and $0.3 million, respectively, in receivables due from related parties other than from BRE. Of the $0.7 million balance at December 31, 2021, $0.3 million represents accrued preferred returns on unconsolidated real estate investments. The remaining amount represents the Company’s preferred equity investment in Alexan Southside Place. On March 25, 2021, the property underlying the Company’s investment in Alexan Southside Place was sold, and in April 2021, the Company received $9.8 million of its $10.1 million preferred equity investment, with the remaining amount classified as a related party receivable. Refer to Note 3 for further information.

Selling Commissions and Dealer Manager Fees

In conjunction with the offering of the Series T Preferred Stock (the “Series T Preferred Offering”), the Company engaged a related party as dealer manager, and paid up to 10% of the gross offering proceeds from the offering as selling commissions and dealer manager fees. The dealer manager re-allowed the substantial majority of the selling commissions and dealer manager fees to participating broker-dealers and incurred costs in excess of the 10%, which costs were borne by the dealer manager without reimbursement by the Company. For the years ended December 31, 2021 and 2020, the Company incurred $32.4 million and $17.0 million, respectively, in selling commissions and discounts and $13.9 million and $7.3 million, respectively, in dealer manager fees and discounts related to its Series T Preferred Offering. In addition, BRE was reimbursed for offering costs in conjunction with the Series T Preferred Offering of $1.2 million and $1.0 million during the years ended December 31, 2021 and 2020, respectively. The selling commissions, dealer manager fees, discounts and reimbursements for offering costs were recorded as a reduction to the proceeds of the offering. On November 19, 2021, we made the final issuance of Series T Preferred Stock pursuant to the Series T Preferred Offering, and upon the final issuance, the Series T Preferred Offering terminated pursuant to its terms.

Stockholders Agreement

In connection with the Company’s Internalization transaction in 2017, the Company entered into a stockholders agreement pursuant to which the Company may grant certain registration rights for the benefit of the contributors and impose certain limitations on the voting rights of the Class C Common Stock. The agreement may require the Company from time to time to register the resale of the internalization shares and grants each contributor certain rights to demand a registration of some or all their shares or to request the inclusion of some or all their shares in a piggyback registration, in each case subject to certain customary restrictions, limitations, registration procedures and indemnity provisions.

Notes and Interest Receivable

The Company provides loans, in some cases, to related parties in conjunction with the developments of multifamily communities. At December 31, 2021, the following loan investments were provided to related parties: Domain at The One Forty, Motif, and The Hartley at Blue Hill (formerly The Park at Chapel Hill). Refer to Note 6 for further information.

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Preferred Equity Investments and Investments in Unconsolidated Real Estate Joint Ventures

The Company invests, in some cases, with related parties in various joint ventures in which the Company owns either preferred or common interests. At December 31, 2021, the Alexan CityCentre preferred equity investment involved related parties. Refer to Note 7 for further information.

Note 13 — Stockholders’ Equity

Net Income (Loss) Per Common Share

Basic net income (loss) per common share is computed by dividing net income (loss) attributable to common stockholders, less dividends on restricted stock and LTIP Units expected to vest, by the weighted average number of common shares outstanding for the period. Diluted net income (loss) per common share is computed by dividing net income (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) attributable to common stockholders is computed by adjusting net income (loss) for the non-forfeitable dividends paid on restricted stock and non-vested 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 C common stock participate in dividends on a one-for-one basis.

The following table reconciles the components of basic and diluted net income (loss) per common share for the years ended December 31, 2021, 2020 and 2019 (amounts in thousands, except share and per share amounts):


	2021		2020		2019
Net income (loss) attributable to common stockholders	$	3,473	$	(44,674)	$	(19,751)
Dividends on restricted stock and LTIP Units expected to vest		(1,508)		(1,323)		(953)
Basic net income (loss) attributable to common stockholders	$	1,965	$	(45,997)	$	(20,704)

Weighted average common shares outstanding ⁽¹⁾		26,024,935		24,084,347		22,649,222
Potential dilutive shares ⁽²⁾		225,064		—		—
Weighted average common shares outstanding and potential dilutive shares ⁽¹⁾		26,249,999		24,084,347		22,649,222

Net income (loss) per common share, basic	$	0.08	$	(1.91)	$	(0.91)
Net income (loss) per common share, diluted	$	0.07	$	(1.91)	$	(0.91)

(1)	Amounts relate to shares of the Company’s Class A and Class C common stock outstanding.

(2)

For the year ended December 31, 2021, the following are included in the diluted shares calculation: a) warrants outstanding from issuances in conjunction with the Company’s Series B Preferred Stock offerings that are potentially exercisable for 154,810 shares of Class A common stock, and b) potential vesting of restricted stock to employees for 70,254 shares of Class A common stock.

For the year ended December 31, 2020, potential vesting of restricted stock to employees for 63,045 shares of Class A common stock are excluded from the diluted shares calculation as the effect is antidilutive.

For the year ended December 31, 2019, the following are excluded from the diluted shares calculation as the effect is antidilutive: a) warrants outstanding from issuances in conjunction with the Company’s Series B Preferred Stock offerings that are potentially exercisable for 140,334 shares of Class A common stock, and b) potential vesting of restricted stock to employees for 22,807 shares of Class A common stock.

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 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 OP Units would have no net impact on the determination of diluted earnings per share.

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Series T Redeemable Preferred Stock Offering

During the year ended December 31, 2021, the Company issued 18,535,916 shares of Series T Preferred Stock under a continuous registered offering with net proceeds of approximately $417.1 million after commissions, dealer manager fees and discounts of approximately $46.3 million, along with 109,661 shares issued under the dividend reinvestment plan with total proceeds of $2.7 million. During the life of the Series T Preferred Stock Offering, the Company has issued a total of 28,369,906 shares of Series T Preferred Stock for net proceeds of approximately $638.3 million after commissions, dealer manager fees and discounts. During the year ended December 31, 2021, the Company, at the request of holders, redeemed 81,246 shares of Series T Preferred Stock through the issuance of 181,597 shares of Class A common stock and redeemed 10,113 shares of Series T Preferred Stock for $0.2 million in cash.

The Company had a dividend reinvestment plan that allowed for participating stockholders to have their Series T Preferred Stock dividend distributions automatically reinvested in additional shares of Series T Preferred Stock at a price of $25.00 per share. In December 2021, the Board approved the suspension of the dividend reinvestment plan until further notice.

At-the-Market Offerings

In September 2019, the Company and its Operating Partnership entered into an At Market Issuance Sales Agreement 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 American, or on any other existing trading market for Class A common stock or through a market maker (the “Class A Common Stock ATM Offering”). The Company did not issue any shares through the Class A Common Stock ATM Offering during the year before its expiration in November 2021. During the life of the Class A Common Stock ATM Offering, the Company had issued a total of 621,110 shares at a weighted average price of $12.01 per share with net proceeds of $7.3 million.

Stock Repurchase Plans

In May 2020, the Board authorized the modification of the Company’s stock repurchase plans, which were previously authorized in December 2019, to provide for the repurchase, from time to time, of up to an aggregate of $50 million in shares of its Class A common stock, 8.250% Series A Cumulative Redeemable Preferred Stock, $0.01 par value per share (“Series A Preferred Stock”), 7.625% Series C Cumulative Redeemable Preferred Stock, $0.01 par value per share (“Series C Preferred Stock”), and/or 7.125% Series D Cumulative Preferred Stock, $0.01 par value per share (“Series D Preferred Stock”). In October 2020, the Board authorized new stock repurchase plans for the repurchase, from time to time, of up to an aggregate of $75 million in shares of the Company’s Class A common stock, Series A Preferred Stock, Series C Preferred Stock and/or Series D Preferred Stock to be conducted in accordance with Rules 10b5-1 and 10b-18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). On February 9, 2021, the Board authorized the modification of the stock repurchase plans to increase the maximum repurchase amount from an aggregate of $75 million in shares to an aggregate of $150 million in shares of Class A common stock, Series C Preferred Stock, and/or Series D Preferred Stock. The repurchase plans terminated upon the close of the NYSE American trading day on November 8, 2021, the filing date of the Company’s Form 10-Q with the SEC for the quarter ended September 30, 2021.

During the year ended December 31, 2021, the Company repurchased 11,140,637 shares of Class A common stock for a total purchase price of approximately $119.6 million. During the year ended December 31, 2020, the Company repurchased shares under the repurchase plans as follows: 3,983,842 shares of Class A common stock, 163,068 shares of Series A Preferred Stock, 27,905 shares of Series C Preferred Stock and 76,264 shares of Series D Preferred Stock for a total purchase price of approximately $46.4 million. During the life of all repurchase plans, the total purchase price of shares repurchased by the Company was approximately $189.1 million.

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Class C Common Stock

The Class C Common Stock is equivalent in all material respects to, and ranks on parity with, the Class A Common Stock, except that each share of Class C Common Stock entitles the holder thereof to fifty (50) votes, which mirrors the aggregate number of OP Units (which are redeemable for cash or, at our sole option, for shares of our Class A Common Stock, on a one-to-one basis) and shares of Class C Common Stock issued as consideration in the internalization. The Class C Common Stock provides its holders a right to vote that is proportionate to the outstanding non-voting economic interest in the Company attributable to such holders or their affiliates by virtue of the OP Units issued in the internalization, as if all such OP Units were redeemed by us for shares of Class A Common Stock, but without providing any disproportionate voting rights. Shares of Class C Common Stock will only be issued (a) to the owners of the former Manager, (b) in conjunction with the issuance of OP Units as consideration in the internalization, and (c) in a ratio of no more than one (1) share of Class C Common Stock for every forty-nine (49) OP Units so issued.

See Note 12 Related Party Transactions – Stockholders Agreement for limitations on voting rights of the Class C Common Stock.

Redemption of 8.250% Series A Cumulative Redeemable Preferred Stock

The Series A Preferred Stock ranked senior to common stock and on parity with the Series B Preferred Stock, the Series C Preferred Stock, the Series D Preferred Stock and the Series T Preferred Stock as to rights upon the Company’s liquidation, dissolution or winding up. The Company could not redeem the Series A Preferred Stock before October 21, 2020, except in limited circumstances related to its qualification as a REIT, complying with an asset coverage ratio or upon a change in control. As of October 21, 2020, the Company could redeem the Series A Preferred Stock for a redemption price of $25.00 per share plus any accrued and unpaid dividends.

On October 21, 2020, the Company redeemed 1,393,294 shares of its Series A Preferred Stock at a redemption price of $25.00 per share, plus accrued and unpaid dividends up to, and including, the date of redemption in an amount equal to $0.120313 per share, for a total payment of $25.120313 per share, in cash. On December 21, 2020, the Company redeemed an additional 1,963,551 shares of its Series A Preferred Stock at a redemption price of $25.00 per share, plus accrued and unpaid dividends up to, and including, the date of redemption in an amount equal to $0.464063 per share, for a total payment of $25.464063 per share, in cash.

On February 26, 2021, the Company redeemed all 2,201,547 outstanding shares of its Series A Preferred Stock that were outstanding as of December 31, 2020 at a redemption price of $25.00 per share, plus accrued and unpaid dividends up to, and including, the date of redemption in an amount equal to $0.320833 per share, for a total payment of $25.320833 per share, in cash.

Series B Redeemable Preferred Stock

The Series B Preferred Stock ranks senior to common stock and on parity with the Series C Preferred Stock, the Series D Preferred Stock and the Series T Preferred Stock as to rights upon the Company’s liquidation, dissolution or winding up. The Series B Preferred Stock is entitled to priority cumulative dividends to be paid monthly, in arrears, when, as and if authorized by the Board. Holders may, at their option, elect to have the Company redeem their shares through the first year from issuance subject to a 13% redemption fee. After year one, the redemption fee decreases to 10%, after year three it decreases to 5%, after year four it decreases to 3%, and after year five there is no redemption fee. Any redeemed shares are entitled to any accrued but unpaid dividends at the time of the redemption, payable by the Company at its option in cash or shares of Class A common stock. The Company may redeem the Series B Preferred Stock beginning two years from the original issuance for the liquidation preference per share plus any accrued and unpaid dividends in either cash or shares of Class A common stock. The calculation to determine the number of Class A common shares issued for redemptions of Series B Preferred Stock is based on the closing price of the Class A common stock on the single trading day prior to the redemption date. On December 20, 2019, the Company made the final issuance of Series B Preferred Stock pursuant to the Series B Preferred Offering, and on February 11, 2020, the Board formally approved the termination of the Series B Preferred Offering.

During the year ended December 31, 2021, the Company, at the request of holders, redeemed 3,302 shares of Series B Preferred Stock through the issuance of 283,966 shares of Class A common stock and redeemed 232 shares of Series B Preferred Stock for $0.2 million in cash. In November 2019, the Company began initiating redemptions of its Series B Preferred Stock, and during the year ended December 31, 2021, redemptions initiated by the Company resulted in 150,758 shares of Series B Preferred Stock redeemed through the issuance of 14,592,550 shares of Class A common stock. As of December 31, 2021, total redemptions to date initiated by the Company have resulted in 173,865 shares of Series B Preferred Stock redeemed through the issuance of 16,540,204 shares of Class A common stock.

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As of December 31, 2021, the Company had 247,397 outstanding Warrants from the Series B Preferred Offering. The Warrants are exercisable by the holder at an exercise price of 120% of the market price per share of Class A common Stock on the date of issuance of such Warrant, with a minimum exercise price of $10.00 per share. The market price per share of our Class A common stock was determined using the volume weighted average price per share of our Class A common stock for the 20 trading days prior to the date of issuance of such Warrant, subject to the minimum exercise price of $10.00 per share (subject to adjustment). One Warrant is exercisable by the holder to purchase 20 shares of Class A common stock. The Warrants are exercisable one year following the date of issuance and expire four years following the date of issuance. As of December 31, 2021, a total of 125,501 Warrants had been exercised into 1,280,858 shares of Class A common stock. The outstanding Warrants have exercise prices ranging from $10.00 to $14.71 per share.

At the date of issuance, the carrying amount of the Series B Preferred Stock was less than the redemption value. As a result of the Company’s determination that holder redemption is probable, the carrying value will be increased by periodic accretions so that the carrying value will equal the redemption amount at the earliest redemption date without discount. Such accretion is recorded as a preferred stock dividend on the Statements of Stockholders’ Equity.

7.625% Series C Cumulative Redeemable Preferred Stock

The Series C Preferred Stock ranks senior to common stock and on parity with the Series B Preferred Stock, the Series D Preferred Stock and the Series T Preferred Stock as to rights upon the Company’s liquidation, dissolution or winding up. The Series C Preferred Stock is entitled to priority cumulative dividends to be paid quarterly, in arrears, when, as and if authorized by the Board. Commencing July 19, 2023, the annual dividend rate will increase by 2.0% annually, up to a maximum of 14.0%, if not redeemed by the holder or not previously redeemed by the Company. Commencing on July 19, 2023, holders may, at their option, elect to have the Company redeem their shares at a redemption price of $25.00 per share, plus an amount equal to accrued but unpaid dividends, payable by the Company at its option in cash or shares of Class A common stock. As of July 19, 2021, the Company can redeem the Series C Preferred Stock for a redemption price of $25.00 per share plus any accrued and unpaid dividends.

At the date of issuance, the carrying amount of the Series C Preferred Stock was less than the redemption value. As a result of the Company’s determination that redemption is probable, the carrying value will be increased by periodic accretions so that the carrying value will equal the redemption amount at the earliest redemption date without discount. Such accretion is recorded as a preferred stock dividend on the Statements of Stockholders’ Equity.

7.125% Series D Cumulative Preferred Stock

The Series D Preferred Stock ranks senior to common stock and on parity with the Series B Preferred Stock, the Series C Preferred Stock and the Series T Preferred Stock as to rights upon the Company’s liquidation, dissolution or winding up. The Series D Preferred Stock is entitled to priority cumulative dividends to be paid quarterly, in arrears, when, as and if authorized by the Board. As of October 13, 2021, the Company can redeem the Series D Preferred Stock for a redemption price of $25.00 per share plus any accrued and unpaid dividends.

Series T Redeemable Preferred Stock

The Series T Preferred Stock ranks senior to common stock and on parity with the Series B Preferred Stock, the Series C Preferred Stock and the Series D Preferred Stock as to rights upon the Company’s liquidation, dissolution or winding up. The Series T Preferred Stock is entitled, when, as and if authorized by the Board, to: (i) priority cumulative cash dividends to be paid monthly in arrears, and (ii) a stock dividend to be paid annually. Holders may, at their option, elect to have the Company redeem their shares through the first year from issuance subject to a 12% redemption fee. After year one, the redemption fee decreases to 9%, after year two it decreases to 6%, after year three it decreases to 3%, and after year four there is no redemption fee. Any redeemed shares are entitled to any accrued but unpaid dividends at the time of the redemption, payable by the Company at its option in cash or shares of Class A common stock. The Company may redeem the Series T Preferred Stock beginning two years from the original issuance for the liquidation preference per share plus any accrued and unpaid dividends in either cash or shares of Class A common stock. The calculation to determine the number of Class A common shares issued for redemptions of Series T Preferred Stock is based on the closing price of the Class A common stock on the single trading day prior to the redemption date. On November 19, 2021, the Company made the final issuance of Series T Preferred Stock pursuant to the Series T Preferred Offering, and upon the final issuance, the Series T Preferred Offering terminated pursuant to its terms.

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At the date of issuance, the carrying amount of the Series T Preferred Stock was less than the redemption value. As a result of the Company's determination that holder redemption is probable, the carrying value will be increased by periodic accretions so that the carrying value will equal the redemption amount at the earliest redemption date without discount. Such accretion is recorded as a preferred stock dividend on the Statements of Stockholders' Equity.

Operating Partnership and Long-Term Incentive Plan Units

On April 2, 2014, concurrently with the completion of the IPO, the Company entered into the Second Amended and Restated Agreement of Limited Partnership of its Operating Partnership, Bluerock Residential Holdings, L.P. (the “Partnership Agreement”). Pursuant to the amendment, the Company is the sole general partner of the Operating Partnership and may not be removed as general partner by the limited partners with or without cause.

The Partnership Agreement, as amended, provides, among other things, that the Operating Partnership initially has two classes of limited partnership interests: OP Units and LTIP Units. In calculating the percentage interests of the partners in the Operating Partnership, LTIP Units are treated as OP Units. In general, LTIP Units will receive the same per-unit distributions as the OP Units. Initially, each LTIP Unit will have a capital account balance of zero and, therefore, will not have full parity with OP Units with respect to any liquidating distributions. However, the Partnership Agreement, as amended provides that “book gain,” or economic appreciation, in the Company’s assets realized by the Operating Partnership as a result of the actual sale of all or substantially all of the Operating Partnership’s assets, or the revaluation of the Operating Partnership’s assets as provided by applicable U.S. Department of Treasury regulations, will be allocated first to the holders of LTIP Units until their capital account per unit is equal to the average capital account per-unit of the Company’s OP Unit holders in the Operating Partnership. The Company expects that the Operating Partnership will issue OP Units to limited partners, and the Company, in exchange for capital contributions of cash or property, will issue LTIP Units pursuant to the Company’s Incentive Plans, as defined below, to persons who provide services to the Company, including the Company’s officers, directors and employees.

As of December 31, 2021, limited partners other than the Company owned approximately 29.61% of the common units of the Operating Partnership (6,309,672 OP Units, or 16.24%, is held by OP Unit holders, and 5,196,894 LTIP Units, or 13.37%, is held by LTIP Unit holders, including 5.35% which are not vested at December 31, 2021). 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, or, at the Company’s election, 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, or, at the Company’s election, cash.

The Operating Partnership, in conjunction with the issuance of preferred stock by the Company, has issued preferred OP Units which provide for similar rights as for each class of preferred stock.

Equity Incentive Plans

LTIP Unit Grants

On January 1, 2020, the Company granted 247,138 time-based LTIP Units and 494,279 performance-based LTIP Units to various executive officers under the Third Amended 2014 Incentive Plans pursuant to the executive officers’ employment or service agreements. The time-based LTIP Units vest over approximately three years, while the performance-based LTIP Units are subject to a three-year performance period and will thereafter vest upon successful achievement of performance-based conditions. All such LTIP Unit grants require continuous employment for vesting.

Compensation expense for service vesting LTIP Unit and restricted stock awards is measured based on the closing share price of our common stock on the date of grant. The Company measures the fair value of LTIP Units with performance conditions based on an estimate of shares expected to vest using the closing price of the common stock on the date of grant. If it is not probable that the performance conditions will be satisfied, the Company does not recognize compensation expense. The Company estimates the fair value of performance-based LTIP Units with market conditions using a Monte Carlo simulation. The Company recognizes compensation expense based on the fair value estimated by the model.

In addition, on January 1, 2020, the Company granted 7,126 LTIP Units under 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 $0.3 million immediately based on the fair value at the date of grant.

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On April 15, 2020, the Company granted an aggregate of 348,117 LTIP Units to various executive officers under the Third Amended 2014 Incentive Plans pursuant to the executive officers’ employment or service agreements in lieu of cash payment of annual incentive bonuses for the fiscal year ended December 31, 2019. Such LTIP Units vested on April 15, 2021.

In addition, on April 15, 2020, the Company granted 46,075 LTIP Units to an employee under the Third Amended 2014 Incentive Plans. Such LTIP Units will vest in three equal installments on each anniversary of the date of grant.

The Company granted LTIP Units to 2 executive officers under its incentive plans in lieu of cash payment of an agreed upon portion of the executive officers’ base salary, with the remaining portion payable in cash, as follows: under the Third Amended 2014 Incentive Plans, an aggregate of 27,111 LTIP Units granted on May 22, 2020 for the second quarter 2020 and an aggregate of 21,889 LTIP Units granted on August 11, 2020 for the third quarter 2020, and under the Fourth Amended 2014 Incentive Plans, an aggregate of 19,197 LTIP Units granted on November 5, 2020 for the fourth quarter 2020. Such LTIP Units vested on the first anniversary of the date of grant.

On September 8, 2020, the Company’s stockholders approved the amendment and restatement of each of the Third Amended 2014 Individuals Plan (the “Fourth Amended 2014 Individuals Plan”) and the Third Amended 2014 Entities Plan (the “Fourth Amended 2014 Entities Plan”, and together with the Fourth Amended 2014 Individuals Plan, the “Fourth Amended 2014 Incentive Plans”). The Fourth Amended 2014 Incentive Plans allow for the issuance of up to 3,000,000 additional shares of Class A common stock, and thus provide for the issuance of an aggregate of up to 6,800,000 shares of Class A common stock. The Fourth Amended 2014 Incentive Plans provide for the grant of options to purchase shares of the Company’s common stock, stock awards, stock appreciation rights, performance units, incentive awards and other equity-based awards.

On January 1, 2021, the Company granted 277,001 time-based LTIP Units and 554,003 performance-based LTIP Units to various executive officers under the Fourth Amended 2014 Incentive Plans pursuant to the executive officers’ employment or service agreements. The time-based LTIP Units vest over three years, while the performance-based LTIP Units are subject to a three-year performance period and will thereafter vest upon successful achievement of performance-based conditions. All such LTIP Unit grants require continuous employment for vesting.

In addition, on January 1, 2021, the Company granted 7,381 LTIP Units pursuant to the Fourth 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 $0.4 million immediately based on the fair value at the date of grant.

The Company granted LTIP Units to 2 executive officers under the Fourth Amended 2014 Incentive Plans in lieu of cash payment of an agreed upon portion of the executive officers’ base salary, with the remaining portion payable in cash, as follows: an aggregate of 19,683 LTIP Units granted on February 16, 2021, an aggregate of 23,206 LTIP Units granted on May 11, 2021, an aggregate of 19,209 LTIP Units granted on August 3, 2021, and an aggregate of 15,855 LTIP Units granted on November 9, 2021 for the first, second, third and fourth quarter 2021, respectively.

On March 25, 2021, the Company granted an aggregate of 193,112 LTIP Units to various executive officers under the Fourth Amended 2014 Incentive Plans pursuant to the executive officers’ employment or service agreements in lieu of cash payment of annual incentive bonuses for the fiscal year ended December 31, 2020. Of the LTIP Units granted, 144,173 LTIP Units were fully vested upon issuance, with the remaining 48,939 LTIP Units to vest on the first anniversary of the date of grant.

On April 1, 2021, the Company granted 22,598 LTIP Units to an employee under the Fourth Amended 2014 Incentive Plans. Such LTIP Units will vest in three equal installments on each anniversary of the date of grant.

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A summary of the status of the Company’s non-vested shares/LTIP Units under the Incentive Plans for individuals as of December 31, 2021, 2020 and 2019 is as follows (dollars in thousands):


		Weighted average grant-
Non-Vested shares/LTIP Units	Shares / LTIP Units	date fair value
Balance at January 1, 2019	975,209	$	10.05
Granted	637,315		9.36
Vested	(237,841)		10.01
Forfeited	(3,600)		10.65
Balance at December 31, 2019	1,371,083	$	9.72
Granted	1,346,538		9.39
Vested	(333,951)		10.12
Forfeited	(7,081)		6.53
Balance at December 31, 2020	2,376,589	$	9.50
Granted	1,211,845		11.75
Vested	(1,158,385)		8.65
Forfeited	(100,488)		9.44
Balance at December 31, 2021	2,329,561	$	11.07

The Company recognizes compensation expense ratably over the requisite service periods for time-based LTIP Units based on the fair value at the date of grant; thus, the Company recognized compensation expense of approximately $4.1 million, $3.9 million and $3.6 million during the years ended December 31, 2021, 2020 and 2019, 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 performance-based LTIP Units; thus, the Company recognized approximately $3.7 million, $3.0 million and $1.6 million during the years ended December 31, 2021, 2020 and 2019, respectively.

As of December 31, 2021, there was $6.1 million of total unrecognized compensation expense related to unvested LTIP Units granted under the Incentive Plans. The remaining expense is expected to be recognized over a period of 1.6 years.

The Company currently uses authorized and unissued shares to satisfy share award grants.

Restricted Stock Grants

On April 15, 2020, the Company granted an aggregate of 25,174 shares of Class A common stock to 2 executive officers in lieu of cash payment of an agreed upon portion of each such executive officer’s base salary, with the remaining portion having been paid in cash, for the period from January 1, 2020 through March 31, 2020. Such shares of Class A common stock vested on April 15, 2021.

In April 2020 and 2021, the Company provided restricted stock grants (“RSGs”) to employees under the Incentive Plans. Such RSGs will vest in three equal installments on each anniversary of the date of grant. In 2020, the RSGs were comprised of 89,054 shares of Class A common stock with a fair value of $4.80 per RSG and a total fair value of $0.4 million. In 2021, the RSGs were comprised of 57,654 shares of Class A common stock with a fair value of $10.42 per RSG and a total fair value of $0.6 million.

The Company recognized compensation expense for all such RSGs of approximately $0.4 million and $0.5 million during the years ended December 31, 2021 and 2020, respectively. As of December 31, 2021, there was $0.4 million of total unrecognized compensation expense related to the unvested RSGs granted under the Incentive Plans. The remaining expense is expected to be recognized over the remaining 2.0 years.

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Distributions


	Payable to stockholders
Declaration Date	of record as of	Amount		Date Paid or Payable
Class A Common Stock
December 11, 2020	December 24, 2020	$	0.162500	January 5, 2021
March 12, 2021	March 25, 2021	$	0.162500	April 5, 2021
June 11, 2021	June 25, 2021	$	0.162500	July 2, 2021
September 10, 2021	September 24, 2021	$	0.162500	October 5, 2021
December 10, 2021	December 23, 2021	$	0.162500	January 5, 2022
Class C Common Stock
December 11, 2020	December 24, 2020	$	0.162500	January 5, 2021
March 12, 2021	March 25, 2021	$	0.162500	April 5, 2021
June 11, 2021	June 25, 2021	$	0.162500	July 2, 2021
September 10, 2021	September 24, 2021	$	0.162500	October 5, 2021
December 10, 2021	December 23, 2021	$	0.162500	January 5, 2022
Series A Preferred Stock
December 11, 2020	December 24, 2020	$	0.515625	January 5, 2021
January 27, 2021⁽¹⁾	February 26, 2021	$	0.320833	February 26, 2021
Series B Preferred Stock
October 9, 2020	December 24, 2020	$	5.00	January 5, 2021
January 13, 2021	January 25, 2021	$	5.00	February 5, 2021
January 13, 2021	February 25, 2021	$	5.00	March 5, 2021
January 13, 2021	March 25, 2021	$	5.00	April 5, 2021
April 12, 2021	April 23, 2021	$	5.00	May 5, 2021
April 12, 2021	May 25, 2021	$	5.00	June 4, 2021
April 12, 2021	June 25, 2021	$	5.00	July 2, 2021
July 12, 2021	July 23, 2021	$	5.00	August 5, 2021
July 12, 2021	August 25, 2021	$	5.00	September 3, 2021
July 12, 2021	September 24, 2021	$	5.00	October 5, 2021
October 11, 2021	October 25, 2021	$	5.00	November 5, 2021
October 11, 2021	November 24, 2021	$	5.00	December 3, 2021
October 11, 2021	December 23, 2021	$	5.00	January 5, 2022
Series C Preferred Stock
December 11, 2020	December 24, 2020	$	0.4765625	January 5, 2021
March 12, 2021	March 25, 2021	$	0.4765625	April 5, 2021
June 11, 2021	June 25, 2021	$	0.4765625	July 2, 2021
September 10, 2021	September 24, 2021	$	0.4765625	October 5, 2021
December 10, 2021	December 23, 2021	$	0.4765625	January 5, 2022
Series D Preferred Stock
December 11, 2020	December 24, 2020	$	0.4453125	January 5, 2021
March 12, 2021	March 25, 2021	$	0.4453125	April 5, 2021
June 11, 2021	June 25, 2021	$	0.4453125	July 2, 2021
September 10, 2021	September 24, 2021	$	0.4453125	October 5, 2021
December 10, 2021	December 23, 2021	$	0.4453125	January 5, 2022
Series T Preferred Stock ⁽²⁾
October 9, 2020	December 24, 2020	$	0.128125	January 5, 2021
January 13, 2021	January 25, 2021	$	0.128125	February 5, 2021
January 13, 2021	February 25, 2021	$	0.128125	March 5, 2021
January 13, 2021	March 25, 2021	$	0.128125	April 5, 2021
April 12, 2021	April 23, 2021	$	0.128125	May 5, 2021
April 12, 2021	May 25, 2021	$	0.128125	June 4, 2021
April 12, 2021	June 25, 2021	$	0.128125	July 2, 2021
July 12, 2021	July 23, 2021	$	0.128125	August 5, 2021
July 12, 2021	August 25, 2021	$	0.128125	September 3, 2021
July 12, 2021	September 24, 2021	$	0.128125	October 5, 2021
October 11, 2021	October 25, 2021	$	0.128125	November 5, 2021
October 11, 2021	November 24, 2021	$	0.128125	December 3, 2021
October 11, 2021	December 23, 2021	$	0.128125	January 5, 2022
December 10, 2021⁽³⁾	December 23, 2021	$	0.050000	December 29, 2021

(1)	The dividend was paid on the date indicated to stockholders in conjunction with the redemption of shares of Series A Preferred Stock.

(2)	Shares of newly issued Series T Preferred Stock that are held only a portion of the applicable monthly dividend period receive a prorated dividend based on the actual number of days in the applicable dividend period during which each such share of Series T Preferred Stock was outstanding.

(3)

The Board authorized, and the Company declared, an annual Series T Preferred Stock dividend of 0.20% per share of Series T Preferred Stock. Shares of Series T Preferred Stock that are held only for a portion of the applicable annual stock dividend period will receive a prorated Series T Preferred Stock dividend based on the actual number of months in the applicable annual stock dividend period during which each such share of Series T Preferred Stock was outstanding. The annual stock dividend equates to $0.05 per share of Series T Preferred 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. Holders of OP Units 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.

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The Company had a dividend reinvestment plan that allowed 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. In December 2021, the Board approved the suspension of the dividend reinvestment plan until further notice.

Distributions declared and paid for the year ended December 31, 2021 were as follows (amounts in thousands):


	Distributions
2021	Declared		Paid
First Quarter
Class A Common Stock	$	3,943	$	3,630
Class C Common Stock		12		12
Series A Preferred Stock		706		1,842
Series B Preferred Stock		7,089		7,400
Series C Preferred Stock		1,094		1,094
Series D Preferred Stock		1,235		1,235
Series T Preferred Stock		4,493		4,049
OP Units		1,027		1,027
LTIP Units		814		510
Total first quarter 2021	$	20,413	$	20,799
Second Quarter
Class A Common Stock	$	4,753	$	3,945
Class C Common Stock		12		12
Series B Preferred Stock		5,818		6,273
Series C Preferred Stock		1,094		1,094
Series D Preferred Stock		1,235		1,235
Series T Preferred Stock		6,220		5,616
OP Units		1,027		1,025
LTIP Units		721		836
Total second quarter 2021	$	20,880	$	20,036
Third Quarter
Class A Common Stock	$	4,244	$	4,750
Class C Common Stock		12		12
Series B Preferred Stock		5,404		5,407
Series C Preferred Stock		1,094		1,094
Series D Preferred Stock		1,235		1,235
Series T Preferred Stock		8,039		7,439
OP Units		1,027		1,025
LTIP Units		836		631
Total third quarter 2021	$	21,891	$	21,593
Fourth Quarter
Class A Common Stock	$	4,363	$	4,245
Class C Common Stock		12		12
Series B Preferred Stock		5,393		5,396
Series C Preferred Stock		1,094		1,094
Series D Preferred Stock		1,235		1,235
Series T Preferred Stock		11,128		10,281
OP Units		1,027		1,025
LTIP Units		843		639
Total fourth quarter 2021	$	25,095	$	23,927
Total	$	88,279	$	86,355

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Note 14 — Commitments and Contingencies

The aggregate amount of the Company’s contractual commitments to fund future cash obligations in certain of its preferred equity, loan and joint venture investments was $158.5 million and $35.0 million as of December 31, 2021 and 2020, respectively.

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 15 — Segment Information

The Company owns and operates residential investments that generate rental and other property-related income through the leasing of units to a diverse base of tenants. In prior years, the Company had 1 reportable segment as its investments were primarily in multifamily apartment communities. During 2021, the Company began increasing its investments in single-family residential homes, and as such, the Company has transitioned from a 1-segment to a 2-segment structure based on investment type. The Chief Operating Decision Maker, which is comprised of several members of the Company’s executive management team, evaluates the performance of the Company’s operations and allocates financial and other resources by assessing the financial results of and future performance outlook for the Company’s 2 reportable segments: multifamily apartment communities (“Multifamily”) and single-family residential homes (“Single-family”).

The Chief Operating Decision Maker’s primary financial measure for the Company’s operating performance is net operating income (“NOI”). NOI is a non-GAAP measure that the Company defines as total property revenues less total property operating expenses, excluding depreciation and amortization and interest. The Chief Operating Decision Maker evaluates the Company’s operating performance using NOI as it measures the core operations of property performance by excluding corporate level expenses and those other items not related to property operating performance.

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The following table summarizes NOI by the Company’s reportable segments for the years ended December 31, 2021, 2020 and 2019, and reconciles NOI to net income (loss) attributable to common stockholders on the Company’s consolidated statements of operations. Prior year amounts have been reclassified to conform to the current period segment presentation (amounts in thousands):


	Year Ended December 31,
	2021		2020		2019
Rental and other property revenues
Multifamily	$	194,414	$	193,963	$	185,294
Single-family		9,275		2,559		82
Total rental and other property revenues		203,689		196,522		185,376

Property operating expenses
Multifamily		72,775		75,411		74,414
Single-family		3,227		890		35
Total property operating expenses		76,002		76,301		74,449

Net operating income
Multifamily		121,639		118,552		110,880
Single-family		6,048		1,669		47
Total net operating income		127,687		120,221		110,927
Reconciling items:
Interest income from loan and ground lease investments		16,962		23,326		24,595
Property management fees		(5,390)		(4,988)		(4,899)
General and administrative		(27,787)		(24,141)		(22,553)
Acquisition and pursuit costs		(448)		(4,152)		(556)
Weather-related losses, net		(1,001)		—		(355)
Depreciation and amortization		(80,051)		(79,452)		(70,452)
Other income		549		144		68
Preferred returns on unconsolidated real estate joint ventures		12,067		11,250		9,797
Provision for credit losses		(384)		(16,369)		—
Gain on sale of real estate investments		137,427		59,508		48,680
Gain on sale of non-depreciable real estate investments		—		—		679
Transaction costs		(15,036)		—		—
Loss on extinguishment of debt and debt modification costs		(6,740)		(14,630)		(7,258)
Interest expense, net		(52,701)		(55,994)		(59,554)
Net income (loss)		105,154		14,723		29,119
Preferred stock dividends		(63,606)		(58,463)		(46,159)
Preferred stock accretion		(24,633)		(16,851)		(10,335)
Net income (loss) attributable to noncontrolling interests
Operating partnership units		2,250		(17,313)		(6,779)
Partially-owned properties		11,192		1,396		(845)
Net income (loss) attributable to noncontrolling interests		13,442		(15,917)		(7,624)
Net income (loss) attributable to common stockholders	$	3,473	$	(44,674)	$	(19,751)

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The following table summarizes the assets of the Company’s reportable segments for the years ended December 31, 2021 and 2020. Prior year amounts have been reclassified to conform to the current period segment presentation (amounts in thousands):


	December 31, 2021		December 31, 2020
Assets
Net Operating Real Estate Investments
Multifamily	$	1,729,214	$	2,031,899
Single-family		318,084		29,065
Total Net Operating Real Estate Investments		2,047,298		2,060,964
Multifamily operating real estate held for sale, net		—		36,213
Total Net Real Estate Investments		2,047,298		2,097,177
Reconciling items:
Cash and cash equivalents		166,492		83,868
Restricted cash		30,015		35,093
Notes and accrued interest receivable, net		173,489		157,734
Due from affiliates		711		339
Accounts receivable, prepaids and other assets, net		43,108		29,502
Preferred equity investments and investments in unconsolidated real estate joint ventures, net		135,690		83,485
In-place lease intangible assets, net		2,530		2,594
Non-real estate assets associated with multifamily operating real estate held for sale		—		145
Total Consolidated Assets	$	2,599,333	$	2,489,937

Note 16 — Subsequent Events

Issuance of LTIP Units under the Fourth Amended 2014 Incentive Plans

On January 1, 2022, the Company granted an aggregate of 134,131 time-based LTIP Units and an aggregate of 268,265 performance-based LTIP Units to various executive officers under the Fourth Amended 2014 Incentive Plans pursuant to the executive officers’ employment or service agreements. The time-based LTIP Units vest over approximately three years, while the performance-based LTIP Units are subject to a three-year performance period and will thereafter vest upon successful achievement of performance-based conditions. All such LTIP Unit grants require continuous employment for vesting.

In addition, on January 1, 2022, the Company granted 3,546 LTIP Units pursuant to the Fourth 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.

Declaration of Dividends


	Payable to stockholders
Declaration Date	of record as of	Amount		Paid / Payable Date
Series B Preferred Stock
January 14, 2022	January 25, 2022	$	5.00	February 4, 2022
January 14, 2022	February 25, 2022	$	5.00	March 4, 2022
January 14, 2022	March 25, 2022	$	5.00	April 5, 2022
Series T Preferred Stock
January 14, 2022	January 25, 2022	$	0.128125	February 4, 2022
January 14, 2022	February 25, 2022	$	0.128125	March 4, 2022
January 14, 2022	March 25, 2022	$	0.128125	April 5, 2022

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Distributions Paid

The following distributions were declared and/or paid to the Company’s stockholders, as well as holders of OP Units and LTIP Units, subsequent to December 31, 2021 (amounts in thousands):

Declaration

Distributions

Total

Shares

Date

Record Date

Date Paid

per Share

Distribution

Class A Common Stock

December 10, 2021

December 23, 2021

January 5, 2022

0.1625000

4,363

Class C Common Stock

December 10, 2021

December 23, 2021

January 5, 2022

0.1625000

Series B Preferred Stock

October 11, 2021

December 23, 2021

January 5, 2022

5.0000000

1,796

Series C Preferred Stock

December 10, 2021

December 23, 2021

January 5, 2022

0.4765625

1,094

Series D Preferred Stock

December 10, 2021

December 23, 2021

January 5, 2022

0.4453125

1,235

Series T Preferred Stock

October 11, 2021

December 23, 2021

January 5, 2022

0.1281250

3,619

OP Units

December 10, 2021

December 23, 2021

January 5, 2022

0.1625000

1,027

LTIP Units

December 10, 2021

December 23, 2021

January 5, 2022

0.1625000

646

Series B Preferred Stock

January 14, 2022

January 25, 2022

February 4, 2022

5.0000000

1,795

Series B Preferred Stock

January 14, 2022

February 25, 2022

March 4, 2022

5.0000000

1,794

Series T Preferred Stock

January 14, 2022

January 25, 2022

February 4, 2022

0.1281250

3,621

Series T Preferred Stock

January 14, 2022

February 25, 2022

March 4, 2022

0.1281250

3,620

Total

24,622

Stock Activity

Subsequent to December 31, 2021 and as of February 28, 2022, the Company has issued 1,266,444 shares of Class A common stock upon the exercise of 106,502 Warrants and there are 29,242,107 shares of Class A common stock outstanding and 138,583 Warrants outstanding. Refer to Note 13 for further information.

Sale of Alexan CityCentre Interests

On January 20, 2022, Alexan CityCentre, the underlying asset of an unconsolidated joint venture located in Houston, Texas, was sold. Upon the sale, the Company’s preferred equity investment was redeemed by the joint venture for $18.7 million, which included its original preferred investment of $18.2 million and accrued preferred return of $0.5 million.

Weatherford Loan Financing

On February 15, 2022, the Company provided a $9.6 million mezzanine loan (the “Weatherford Mezz Loan”) to an unaffiliated third party for land to be used in the development of 185-build for rent, single-family residential homes in Weatherford, Texas. The Weatherford Mezz Loan matures on May 16, 2022 and contains three (3) thirty-day extension options, subject to certain conditions, and can be prepaid without penalty. The Weatherford Mezz Loan bears interest at 12.0% per annum with interest-only payments during the term of the loan.

Sale of Reunion Apartments

On February 25, 2022, Reunion Apartments, a property located in Orlando, Florida, was sold. Upon the sale, the mezzanine loan provided by the Company was paid off for $12.5 million, which included principal repayment of $10.0 million, accrued interest of $1.5 million and an incremental payment of $1.0 million to achieve the minimum interest per the terms of the loan agreement.

Sale of The Hartley at Blue Hill

On February 28, 2022, The Hartley at Blue Hill, a property located in Chapel Hill, North Carolina, was sold. The mezzanine loan provided by the Company was paid off for $34.4 million, which included principal repayment of $31.0 million and accrued interest of $3.4 million. The $5.0 million senior loan provided by the Company, which is secured by a parcel of land adjacent to The Hartley at Blue Hill property, remains outstanding.

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Bluerock Residential Growth REIT, Inc.
Schedule III - Real Estate and Accumulated Depreciation	December 31, 2021


COLUMN A		COLUMN B			COLUMN C				COLUMN D		COLUMN E						COLUMN F		COLUMN G	COLUMN H
																				Life on Which
									Costs											Depreciation in
					Initial Cost				Capitalized		Gross Amount at Which Carried at Close of Period									Latest Income
							Building and		Subsequent				Building and				Accumulated		Date of	Statement is
Property	Location	Encumbrance			Land		Improvements		to Acquisition		Land		Improvements		Total		Depreciation		Acquisition	Computed
Real Estate Held
for Investment
Gulfshore Apartment Homes	FL		46,345			10,000		36,047		6,178		10,000		42,225		52,225		9,995	2016	3 - 40 Years
The Preserve at Henderson Beach	FL		48,490			4,100		50,117		3,275		4,100		53,392		57,492		10,475	2016	3 - 40 Years
ARIUM Westside	GA		51,841			8,657		63,402		4,653		8,657		68,055		76,712		11,847	2016	3 - 40 Years
ARIUM Glenridge	GA		49,170			14,513		52,324		10,855		14,513		63,179		77,692		12,858	2016	3 - 40 Years
Pine Lakes Preserve	FL		42,728			5,760		31,854		3,552		5,760		35,406		41,166		8,887	2016	3 - 40 Years
The Brodie	TX		32,876			5,400		42,497		3,240		5,400		45,737		51,137		9,871	2016	3 - 40 Years
Roswell City Walk	GA		49,050			8,423		66,249		903		8,423		67,152		75,575		11,704	2016	3 - 40 Years
Wesley Village	NC		38,730			5,600		50,062		2,588		5,600		52,650		58,250		7,927	2017	3 - 40 Years
Villages at Cypress Creek	TX		33,520			4,650		35,990		3,306		4,650		39,296		43,946		6,528	2017	3 - 40 Years
Citrus Tower	FL		39,896			5,208		49,388		2,667		5,208		52,055		57,263		8,739	2017	3 - 40 Years
Outlook at Greystone	AL		21,930			3,950		31,664		4,930		3,950		36,594		40,544		6,521	2017	3 - 40 Years
Burano Hunter's Creek	FL		69,502			9,600		86,202		6,253		9,600		92,455		102,055		14,397	2017	3 - 40 Years
The Debra Metrowest	FL		63,982			10,200		74,768		6,335		10,200		81,103		91,303		12,879	2017	3 - 40 Years
The Mills	SC		24,731			3,300		36,969		1,268		3,300		38,237		41,537		5,465	2017	3 - 40 Years
The Links at Plum Creek	CO		38,916			2,960		57,803		4,457		2,960		62,260		65,220		9,386	2018	3 - 40 Years
Sands Parc	FL		0	⁽¹⁾		3,170		42,443		639		3,170		43,082		46,252		5,398	2018	3 - 40 Years
Veranda at Centerfield	TX		25,962			5,120		35,506		2,843		5,120		38,349		43,469		5,453	2018	3 - 40 Years
Ashford Belmar	CO		100,675			18,400		124,149		6,198		18,400		130,347		148,747		16,336	2018	3 - 40 Years
Element	NV		29,260			8,056		33,346		1,255		8,056		34,601		42,657		3,605	2019	3 - 40 Years
Providence Trail	TN		47,587			5,362		62,620		1,883		5,362		64,503		69,865		5,651	2019	3 - 40 Years
Denim	AZ		101,205			43,182		96,361		5,020		43,182		101,381		144,563		9,922	2019	3 - 40 Years
The Sanctuary	NV		33,707			5,406		45,805		2,247		5,406		48,052		53,458		5,062	2019	3 - 40 Years
Chattahoochee Ridge	GA		45,338			9,660		59,457		2,629		9,660		62,086		71,746		4,383	2019	3 - 40 Years
Navigator Villas	WA		20,361			2,026		27,206		869		2,027		28,074		30,101		2,079	2019	3 - 40 Years
Avenue 25	AZ		36,566			5,527		50,679		1,441		5,527		52,120		57,647		3,443	2020	3 - 40 Years
Falls at Forsyth	GA		51,331			7,067		74,445		641		7,070		75,083		82,153		4,315	2020	3 - 40 Years
Chevy Chase	TX		24,400			5,453		28,843		857		5,453		29,700		35,153		1,646	2020	3 - 40 Years
Elan	TX		25,508			4,185		36,612		469		4,187		37,079		41,266		1,398	2020	3 - 40 Years
Carrington at Perimeter Park	NC		31,244			5,041		48,798		537		5,041		49,335		54,376		1,727	2020	3 - 40 Years
Cielo on Gilbert	AZ		58,000			7,292		66,219		1,305		7,292		67,524		74,816		2,717	2020	3 - 40 Years
Yauger Park Villas	WA		14,921			1,322		24,575		211		1,322		24,786		26,108		683	2021	3 - 40 Years
Wayford at Concord	NC		0			2,933		40,920		54		2,933		40,974		43,907		784	2021	3 - 40 Years
Windsor Falls	NC		27,442			10,161		39,806		121		10,161		39,927		50,088		625	2021	3 - 40 Years
Indy	IN		0			593		3,210		11		594		3,220		3,814		36	2021	3 - 40 Years
Springfield	MO		0			7,711		41,435		33		7,715		41,464		49,179		461	2021	3 - 40 Years
Springtown	TX		0			1,459		7,919		14		1,461		7,931		9,392		66	2021	3 - 40 Years
Texarkana	TX		0			438		2,681		8		439		2,688		3,127		22	2021	3 - 40 Years
Lubbock	TX		0			719		4,892		26		721		4,916		5,637		41	2021	3 - 40 Years
Granbury	TX		0			751		7,497		7		751		7,504		8,255		62	2021	3 - 40 Years
Axelrod	TX		0			1,115		3,078		10		1,115		3,088		4,203		26	2021	3 - 40 Years
ILE	TX / SE US		26,825			11,276		46,997		855		11,277		47,851		59,128		113	2021	3 - 40 Years
Springtown 2.0	TX		0			106		2,891		0		106		2,891		2,997		16	2021	3 - 40 Years
Lubbock 2.0	TX		0			718		8,550		0		718		8,550		9,268		47	2021	3 - 40 Years
Lynnwood	TX		0			281		2,192		0		281		2,192		2,473		6	2021	3 - 40 Years
Golden Pacific	KS / MO		0			251		1,122		19		251		1,141		1,392		1	2021	3 - 40 Years
Lynnwood 2.0	TX		0			266		2,244		0		266		2,244		2,510		6	2021	3 - 40 Years
Lubbock 3.0	TX		0			245		4,382		0		245		4,382		4,627		12	2021	3 - 40 Years
Texas Portfolio 183	TX		0			4,138		23,764		0		4,138		23,764		27,902		0	2021	3 - 40 Years
DFW 189	TX		0			5,638		22,415		0		5,638		22,415		28,053		0	2021	3 - 40 Years
Subtotal			1,352,039			287,389		1,888,395		94,662		287,406		1,983,040		2,270,446		223,621

Non-Real Estate assets
REIT Operator	MI		0			0		185		790		0		975		975		502	2017	5 Years
Fannie Facility	MI		13,936			0		0		0		0		0		0		0	2020	7 Years
Subtotal			13,936			0		185		790		0		975		975		502

Total		$	1,365,975		$	287,389	$	1,888,580	$	95,452	$	287,406	$	1,984,015	$	2,271,421	$	224,123

(1)	Sands Parc was funded, in part, by a secured credit facility. As of December 31, 2021, there was 0 outstanding balance on the credit facility.

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Bluerock Residential Growth REIT, Inc.

Notes to Schedule III

1. Reconciliation of Real Estate Properties

The following table reconciles the Real Estate Properties from January 1, 2019 to December 31, 2021.


	2021		2020 ⁽¹⁾		2019

Balance at January 1	$	2,291,934	$	2,088,886	$	1,802,668
Construction and acquisition cost		372,179		358,288		580,208
Disposition of real estate		(392,692)		(155,240)		(293,990)
Balance at December 31	$	2,271,421	$	2,291,934	$	2,088,886

2. Reconciliation of Accumulated Depreciation

The following table reconciles the Real Estate Properties from January 1, 2019 to December 31, 2021.


	2021		2020 ⁽¹⁾		2019

Balance at January 1	$	194,757	$	141,566	$	108,911
Current year depreciation expense		74,151		72,826		63,709
Disposition of real estate		(44,785)		(19,635)		(31,054)
Balance at December 31	$	224,123	$	194,757	$	141,566

(1)	Includes properties classified as held for sale as of December 31, 2020.

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EXHIBIT INDEX

Effective February 22, 2013, Bluerock Enhanced Multifamily Trust, Inc. changed its name to Bluerock Multifamily Growth REIT, Inc. Effective November 19, 2013, Bluerock Multifamily Growth REIT, Inc. changed its name to Bluerock Residential Growth REIT, Inc. Effective February 27, 2013, Bluerock Enhanced Multifamily Advisor, LLC and Bluerock Enhanced Multifamily Holdings, L.P. changed their names to Bluerock Multifamily Advisor, LLC and Bluerock Multifamily Holdings, L.P., respectively. Effective November 19, 2013, Bluerock Multifamily Holdings, L.P. changed its name to Bluerock Residential Holdings, L.P. With respect to documents executed prior to the name change, the following Exhibit Index refers to the entity names used prior to the name changes in order to accurately reflect the names of the entities that appear on such documents.


Exhibit Number		Description
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 by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on 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 by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on August 15, 2017.

2.3		Agreement and Plan of Merger, dated as of December 20, 2021, by and among Bluerock Residential Growth REIT, Inc., Badger Parent LLC, and Badger Merger Sub LLC, incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on December 21, 2021.

3.1		Articles of Amendment and Restatement of the Company, incorporated by reference to Exhibit 3.1 to Pre-Effective Amendment No. 5 to the Company’s Registration Statement on Form S-11 (No. 333-153135)

3.2		Articles of Amendment of the Company, incorporated by reference to Exhibit 3.3 to Pre-Effective Amendment No. 2 to the Company’s Registration Statement on Form S-11 (No. 333-184006)

3.3		Second Articles of Amendment and Restatement of the Company, incorporated by reference to Exhibit 3.3 to Pre-Effective Amendment No. 5 to the Company’s Registration Statement on Form S-11 (No. 333-192610)

3.4		Articles of Amendment to the Second Articles of Amendment and Restatement of the Company, dated March 26, 2014, incorporated by reference to Exhibit 3.6 to Pre-Effective Amendment No. 5 to the Company’s Registration Statement on Form S-11 (No. 333-192610)

3.5		Articles of Amendment to the Second Articles of Amendment and Restatement of the Company, dated March 26, 2014, incorporated by reference to Exhibit 3.7 to Pre-Effective Amendment No. 5 to the Company’s Registration Statement on Form S-11 (No. 333-192610)

3.6		Articles of Amendment to the Second Articles of Amendment and Restatement of the Company, dated March 31, 2014, incorporated by reference to Exhibit 3.3 to the Company’s Current Report on Form 8-K filed April 1, 2014

3.7		Articles of Amendment to the Second Articles of Amendment and Restatement of the Company, dated March 31, 2014, incorporated by reference to Exhibit 3.4 to the Company’s Current Report on Form 8-K filed April 1, 2014

3.8		Articles Supplementary of the Company, dated October 20, 2015, incorporated by reference to Exhibit 3.6 to the Company’s Current Report on Form 8-A filed October 20, 2015

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3.9		Articles Supplementary of the Company, dated December 16. 2015, incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed December 22, 2015

3.10		Articles Supplementary of the Company, dated February 26, 2016, incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed March 1, 2016

3.11		Articles Supplementary of the Company, dated March 29, 2016, incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed March 29, 2016

3.12		Articles Supplementary of the Company, dated July 15, 2016, incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed July 18, 2016

3.13		Articles Supplementary of the Company, dated October 10, 2016, incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed October 12, 2016

3.14		Second Amended and Restated Bylaws of the Company, incorporated by reference to Exhibit 3.5 to Pre-Effective Amendment No. 5 to the Company’s Registration Statement on Form S-11 (No. 333-192610)

3.15		Third Amended and Restated Bylaws of the Company, incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on May 9, 2017

3.16		Articles Supplementary of the Company, dated July 20, 2017, incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on July 21, 2017

3.17		Articles Supplementary of the Company, dated October 26, 2017, incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on November 6, 2017

3.18		Articles Supplementary of the Company, dated November 14, 2017, incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on November 20, 2017

3.19		Certificate of Correction to Articles Supplementary of the Company, dated May 11, 2018, incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on May 14, 2018

3.20		Articles Supplementary of the Company, dated November 16, 2018, incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on November 19, 2018

3.21		Articles of Amendment to the Second Articles of Amendment and Restatement of the Company, dated October 28, 2019, incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed October 31, 2019

3.22		Articles Supplementary of the Company, dated November 13, 2019, incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed November 19, 2019

4.1		Registration Rights Agreement by and among Bluerock Special Opportunity + Income Fund II, LLC, Bluerock Special Opportunity + Income Fund III, LLC, BR SOIF II Manager, LLC, BR SOIF III Manager, LLC and the Company, dated April 2, 2014, incorporated by reference to Exhibit 10.11 to the Company’s Current Report on Form 8-K filed on April 8, 2014

4.2		Indemnification Agreement by and among the Company, Bluerock Residential Holdings, L.P. and R. Ramin Kamfar, dated April 2, 2014, incorporated by reference to Exhibit 10.14 to the Company’s Current Report on Form 8-K filed April 8, 2014

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4.3		Indemnification Agreement by and among the Company, Bluerock Residential Holdings, L.P. and Gary T. Kachadurian, dated April 2, 2014, incorporated by reference to Exhibit 10.15 to the Company’s Current Report on Form 8-K filed April 8, 2014

4.4		Indemnification Agreement by and among the Company, Bluerock Residential Holdings, L.P. and Michael L. Konig, dated April 2, 2014, incorporated by reference to Exhibit 10.16 to the Company’s Current Report on Form 8-K filed April 8, 2014

4.5		Indemnification Agreement by and among the Company, Bluerock Residential Holdings, L.P. and Christopher J. Vohs, dated April 2, 2014, incorporated by reference to Exhibit 10.17 to the Company’s Current Report on Form 8-K filed April 8, 2014

4.6		Indemnification Agreement by and among the Company, Bluerock Residential Holdings, L.P. and I. Bobby Majumder, dated April 2, 2014, incorporated by reference to Exhibit 10.18 to the Company’s Current Report on Form 8-K filed April 8, 2014

4.7		Indemnification Agreement by and among the Company, Bluerock Residential Holdings, L.P. and Brian D. Bailey, dated April 2, 2014, incorporated by reference to Exhibit 10.19 to the Company’s Current Report on Form 8-K filed April 8, 2014

4.8		Indemnification Agreement by and among the Company, Bluerock Residential Holdings, L.P. and Romano Tio, dated April 2, 2014, incorporated by reference to Exhibit 10.20 to the Company’s Current Report on Form 8-K filed April 8, 2014

4.9		Letter Agreement, by and between Bluerock Residential Growth REIT, Inc. and Cetera Financial Group, Inc., dated as of February 6, 2017, incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on February 8, 2017

4(vi)		Description of Registrant's Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934

10.1		Second Amended and Restated Agreement of Limited Partnership of Bluerock Residential Holdings, L.P., dated April 2, 2014, incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 10-K filed on April 8, 2014

10.2		First Amendment to the Second Amended and Restated Agreement of Limited Partnership of Bluerock Residential Holdings, L.P., dated October 21, 2015, incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed October 21, 2015

10.3		Second Amendment to the Second Amended and Restated Agreement of Limited Partnership of Bluerock Residential Holdings, L.P., dated December 21, 2015, incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed December 22, 2015

10.4		Third Amendment to the Second Amended and Restated Agreement of Limited Partnership of Bluerock Residential Holdings, L.P., dated March 1, 2016, incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed March 1, 2016

10.5		Fourth Amendment to the Second Amended and Restated Agreement of Limited Partnership of Bluerock Residential Holdings, L.P., dated March 29, 2016, incorporated by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K filed on April 19, 2016

10.6		Fifth Amendment to the Second Amended and Restated Agreement of Limited Partnership of Bluerock Residential Holdings, L.P., dated July 15, 2016, incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed July 18, 2016

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10.7		Sixth Amendment to the Second Amended and Restated Agreement of Limited Partnership of Bluerock Residential Holdings, L.P., dated October 11, 2016, incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed October 12, 2016

10.8		Seventh Amendment to the Second Amended and Restated Agreement of Limited Partnership of Bluerock Residential Holdings, L.P., dated July 21, 2017, incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on July 21, 2017

10.9		Eighth Amendment to the Second Amended and Restated Agreement of Limited Partnership of Bluerock Residential Holdings, L.P., dated October 31, 2017, incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on November 6, 2017

10.10		Ninth Amendment to the Second Amended and Restated Agreement of Limited Partnership of Bluerock Residential Holdings, L.P., dated November 15, 2017, incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on November 20, 2017

10.11		Tenth Amendment to the Second Amended and Restated Agreement of Limited Partnership of Bluerock Residential Holdings, L.P., dated August 6, 2018, incorporated by reference to Exhibit 10.6 to the Company’s quarterly report on Form 10-Q filed on August 8, 2018

10.12		Eleventh Amendment to the Second Amended and Restated Agreement of Limited Partnership of Bluerock Residential Holdings, L.P., dated November 16, 2018, incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on November 19, 2018

10.13		Twelfth Amendment to the Second Amended and Restated Agreement of Limited Partnership of Bluerock Residential Holdings, L.P., dated November 19, 2019, incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on November 19, 2019

10.14		Bluerock Residential Growth REIT, Inc. Amended and Restated 2014 Equity Incentive Plan for Individuals, incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed May 29, 2015

10.15		Bluerock Residential Growth REIT, Inc. Amended and Restated 2014 Equity Incentive Plan for Entities, incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed May 29, 2015

10.16		Bluerock Residential Growth REIT, Inc. Second Amended and Restated 2014 Equity Incentive Plan for Individuals, incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on October 31, 2017

10.17		Bluerock Residential Growth REIT, Inc. Second Amended and Restated 2014 Equity Incentive Plan for Entities, incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on October 31, 2017

10.18		Bluerock Residential Growth REIT, Inc. Third Amended and Restated 2014 Equity Incentive Plan for Individuals, incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on October 2, 2018

10.19		Bluerock Residential Growth REIT, Inc. Third Amended and Restated 2014 Equity Incentive Plan for Entities, incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on October 2, 2018

10.20		Bluerock Residential Growth REIT, Inc. Fourth Amended and Restated 2014 Equity Incentive Plan for Individuals, incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on September 11, 2020

10.21		Bluerock Residential Growth REIT, Inc. Fourth Amended and Restated 2014 Equity Incentive Plan for Entities, incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on September 11, 2020

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10.22		Management Agreement by and among the Company, Bluerock Residential Holdings, L.P. and BRG Manager, LLC, dated April 2, 2014, incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on April 8, 2014

10.23		Second Amendment to Management Agreement, by and among Bluerock Residential Growth REIT, Inc., Bluerock Residential Holdings, L.P. and BRG Manager, LLC, dated August 6, 2015, incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed August 12, 2015

10.24		Third Amendment to Management Agreement, by and among Bluerock Residential Growth REIT, Inc., Bluerock Residential Holdings, L.P. and BRG Manager, LLC, dated November 10, 2015, incorporated by reference to Exhibit 10.1 to the Company’s Current Report on form 8-K filed on November 17, 2015

10.25		Warrant Agreement by and between Bluerock Residential Growth REIT, Inc. and American Stock Transfer & Trust Company, LLC, dated February 24, 2016, incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on March 1, 2016

10.26		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 by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on July 21, 2017

10.27		Warrant Agreement by and between Bluerock Residential Growth REIT, Inc., Computershare Inc. and Computershare Trust Company N.A., dated November 15, 2017, incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on November 20, 2017

10.28		Warrant Agreement by and between Bluerock Residential Growth REIT, Inc., Computershare Inc. and Computershare Trust Company N.A., dated November 16, 2018, incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on November 19, 2018

10.29		Dealer Manager Agreement by and among Bluerock Residential Growth REIT, Inc., Bluerock Residential Holdings, L.P. and Bluerock Capital Markets, LLC, dated November 13, 2019, incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on November 19, 2019

10.30		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 by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on October 11, 2017
10.31		Guaranty by Bluerock Residential Growth REIT, Inc. to and for the benefit of KeyBank National Association, dated as of October 4, 2017, incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on October 11, 2017

10.32		$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 by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on October 11, 2017

10.33		$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 by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed on October 11, 2017

10.34		$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 by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K filed on October 11, 2017

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10.35		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 by reference to Exhibit 10.6 to the Company’s Current Report on Form 8-K filed on October 11, 2017

10.36		Amended and Restated 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 by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on October 31, 2017

10.37		Amended and Restated 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 by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed on October 31, 2017

10.38		Amended and Restated 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 by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K filed on October 31, 2017

10.39		Amended and Restated 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 by reference to Exhibit 10.6 to the Company’s Current Report on Form 8-K filed on October 31, 2017

10.40		Amended and Restated 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 by reference to Exhibit 10.7 to the Company’s Current Report on Form 8-K filed on October 31, 2017

10.41		Amended and Restated 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 by reference to Exhibit 10.8 to the Company’s Current Report on Form 8-K filed on October 31, 2017

10.42		Employment Agreement, dated as of November 5, 2018, by and between Bluerock Residential Growth REIT, Inc., Bluerock Residential Holdings, L.P., Bluerock REIT Operator, LLC, and Michael DiFranco, incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on April 5, 2019

10.43		Stockholders Agreement, dated October 31, 2017, by and among Bluerock Residential Growth REIT, Inc. and Bluerock Real Estate, L.L.C., The Kachadurian Group, LLC, Konig & Associates, LLC, Jenco Business Advisors, Inc., James G. Babb, III, Jordan B. Ruddy, and Ryan S. MacDonald, incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on November 6, 2017

10.44		Administrative Services Agreement, dated October 31, 2017, by and among Bluerock Real Estate, L.L.C., Bluerock Real Estate Holdings, LLC, Bluerock Residential Growth REIT, Inc., Bluerock Residential Holdings, L.P., Bluerock TRS Holdings, LLC and Bluerock REIT Operator, LLC, incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on November 6, 2017

10.45		Notice of Renewal, dated August 6, 2018, of Administrative Services Agreement dated October 31, 2017, incorporated by reference to Exhibit 10.7 to the Company’s quarterly report on Form 10-Q filed on August 8, 2018

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10.46		Notice of Renewal, dated August 2, 2019, of Administrative Services Agreement dated October 31, 2017, by and among Bluerock Real Estate, L.L.C., Bluerock Real Estate Holdings, LLC, Bluerock Residential Growth REIT, Inc., Bluerock Residential Holdings, L.P., Bluerock TRS Holdings, LLC and Bluerock REIT Operator, LLC, incorporated by reference to Exhibit 10.9 to the Company’s Quarterly Report on Form 10-Q filed on August 7, 2019

10.47		Notice of Renewal, dated August 4, 2020, of Administrative Services Agreement dated October 31, 2017, by and among Bluerock Real Estate, L.L.C., Bluerock Real Estate Holdings, LLC, Bluerock Residential Growth REIT, Inc., Bluerock Residential Holdings, L.P., Bluerock TRS Holdings, LLC and Bluerock REIT Operator, LLC, incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed on August 10, 2020

10.48		Notice of Renewal, dated August 4, 2021, of Administrative Services Agreement dated October 31, 2017, by and among Bluerock Real Estate, L.L.C., Bluerock Real Estate Holdings, LLC, Bluerock Residential Growth REIT, Inc., Bluerock Residential Holdings, L.P., Bluerock TRS Holdings, LLC and Bluerock REIT Operator, LLC, incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed on August 5, 2021

10.49		Amended and Restated Credit Agreement by and among Bluerock Residential Holdings, L.P. as Parent Borrower, certain subsidiaries thereof 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 March 6, 2020, incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on March 12, 2020

10.50		Guaranty by Bluerock Residential Growth REIT, Inc. to and for the benefit of KeyBank National Association, dated as of October 4, 2017, incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed by the Company on October 11, 2017

10.51		$50,000,000 Second Amended and Restated Note by Bluerock Residential Holdings, L.P. to and for the benefit of KeyBank National Association, dated as of March 6, 2020, incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on March 12, 2020

10.52		$50,000,000 Note by Bluerock Residential Holdings, L.P. to and for the benefit of Truist Bank, dated as of March 6, 2020, incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed on March 12, 2020

14.1		Amended and Restated Code of Business Conduct and Ethics, effective August 2, 2019, incorporated by reference to Exhibit 14.1 to the Company’s Quarterly Report on Form 10-Q filed on August 7, 2019

21.1		List of Subsidiaries

23.1		Consent of Grant Thornton LLP

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

99.1		Press Release dated November 4, 2021, incorporated by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K filed November 4, 2021

99.2		Supplemental Financial Information, incorporated by reference to Exhibit 99.2 to the Company’s Current Report on Form 8-K filed November 4, 2021

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99.3		Consent of Duff & Phelps, LLC, incorporated by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K filed on November 8, 2021

99.4		Press Release, dated December 20, 2021, incorporated by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K filed December 20, 2021

99.5		Letter to Stockholders dated December 28, 2021, incorporated by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K filed December 28, 2021

101.1		The following information from the Company’s annual report on Form 10-K for the year ended December 31, 2021, formatted in Inline XBRL (eXtensible Business Reporting Language): (i) Balance Sheets; (ii) Statements of Operations; (iii) Statement of Stockholders’ Equity; (iv) Statements of Cash Flows; (v) notes to consolidated financial statements.

104.1		Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101.1)

Positive
Negative
Uncertain
Constraining
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Bluerock Residential Growth REIT (BRG) 10-K2021 FY Annual report

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