Document_and_Entity_Informatio
Document and Entity Information Document (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Mar. 03, 2015 | Jun. 30, 2014 | |
Document and Entity Information [Abstract] | |||
Document Type | 10-K | ||
Amendment Flag | FALSE | ||
Document Period End Date | 31-Dec-14 | ||
Document Fiscal Year Focus | 2014 | ||
Document Fiscal Period Focus | FY | ||
Entity Registrant Name | KBS Legacy Partners Apartment REIT, Inc. | ||
Entity Central Index Key | 1469822 | ||
Current Fiscal Year End Date | -19 | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Common Stock, Shares Outstanding | 20,125,721 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Public Float | $19,877,474,000 |
CONSOLIDATED_BALANCE_SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Real estate: | ||
Land | $46,828 | $42,363 |
Buildings and improvements | 363,379 | 301,022 |
Tenant origination and absorption costs | 0 | 249 |
Total real estate, cost | 410,207 | 343,634 |
Less accumulated depreciation and amortization | -24,344 | -13,317 |
Total real estate, net | 385,863 | 330,317 |
Cash and cash equivalents | 23,878 | 36,698 |
Restricted cash | 4,570 | 4,454 |
Deferred financing costs, prepaid expenses and other assets | 6,923 | 6,697 |
Total assets | 421,234 | 378,166 |
Liabilities and stockholders’ equity | ||
Notes payable | 291,214 | 242,856 |
Accounts payable and accrued liabilities | 5,281 | 5,040 |
Due to affiliates | 4,797 | 2,670 |
Distributions payable | 1,109 | 1,054 |
Other liabilities | 1,570 | 725 |
Total liabilities | 303,971 | 252,345 |
Commitments and contingencies (Note 10) | ||
Redeemable common stock | 1,539 | 4,761 |
Stockholders’ equity: | ||
Preferred stock, $.01 par value; 10,000,000 shares authorized, no shares issued and outstanding | 0 | 0 |
Common stock, $.01 par value; 1,000,000,000 shares authorized, 20,084,830 and 19,196,501 shares issued and outstanding as of December 31, 2014 and December 31, 2013, respectively | 201 | 192 |
Additional paid-in capital | 172,448 | 161,328 |
Cumulative distributions and net losses | -56,925 | -40,460 |
Total stockholders’ equity | 115,724 | 121,060 |
Total liabilities and stockholders’ equity | $421,234 | $378,166 |
CONSOLIDATED_BALANCE_SHEETS_Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value | $0.01 | $0.01 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $0.01 | $0.01 |
Common stock, shares authorized | 1,000,000,000 | 1,000,000,000 |
Common stock, shares issued | 20,084,830 | 19,196,501 |
Common stock, shares outstanding | 20,084,830 | 19,196,501 |
CONSOLIDATED_STATEMENTS_OF_OPE
CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | 12 Months Ended | ||
In Thousands, except Share data, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Revenues: | |||
Rental income | $42,200 | $32,825 | $16,105 |
Total revenues | 42,200 | 32,825 | 16,105 |
Expenses: | |||
Operating, maintenance, and management | 10,977 | 8,500 | 4,273 |
Real estate taxes and insurance | 5,804 | 4,496 | 2,311 |
Asset management fees to affiliate | 2,598 | 2,670 | 1,521 |
Property management fees to affiliate | 281 | 207 | 106 |
Real estate acquisition fees to affiliate | 701 | 1,186 | 1,969 |
Real estate acquisition fees and expenses | 264 | 981 | 1,584 |
General and administrative expenses | 2,374 | 2,199 | 1,898 |
Depreciation and amortization | 12,577 | 12,366 | 8,012 |
Interest expense | 10,261 | 8,000 | 4,688 |
Total expenses | 45,837 | 40,605 | 26,362 |
Other income: | |||
Interest and other income | 77 | 35 | 24 |
Net loss | ($3,560) | ($7,745) | ($10,233) |
Net loss per common share, basic and diluted | ($0.18) | ($0.44) | ($1.16) |
Weighted-average number of common shares outstanding, basic and diluted | 19,853,904 | 17,649,883 | 8,801,166 |
CONSOLIDATED_STATEMENTS_OF_STO
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (USD $) | Total | Common Stock | Additional Paid-in Capital | Cumulative Distributions and Net Loss |
In Thousands, except Share data, unless otherwise specified | ||||
Balance, value at Mar. 11, 2010 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Issuance of common stock, shares | 20,502,279 | |||
Issuance of common stock, value | $204,400 | |||
Redemptions of common stock, shares | -437,449 | |||
Redemptions of common stock, value | -4,200 | |||
Balance, value at Dec. 31, 2014 | 201 | |||
Balance, shares at Dec. 31, 2014 | 20,084,830 | |||
Balance, value at Dec. 31, 2011 | 34,181 | 47 | 39,419 | -5,285 |
Balance, shares at Dec. 31, 2011 | 4,707,212 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Issuance of common stock, shares | 8,195,092 | |||
Issuance of common stock, value | 81,306 | 82 | 81,224 | |
Redemptions of common stock, shares | -35,848 | |||
Redemptions of common stock, value | -350 | -350 | ||
Transfers to redeemable common stock | -1,879 | -1,879 | ||
Distributions declared | -5,724 | -5,724 | ||
Commissions on stock sales and related dealer manager fees to affiliate | -7,026 | -7,026 | ||
Other offering costs | -3,703 | -3,703 | ||
Net loss | -10,233 | -10,233 | ||
Balance, value at Dec. 31, 2012 | 86,572 | 129 | 107,685 | -21,242 |
Balance, shares at Dec. 31, 2012 | 12,866,456 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Issuance of common stock, shares | 6,538,502 | |||
Issuance of common stock, value | 65,139 | 65 | 65,074 | |
Redemptions of common stock, shares | -208,457 | |||
Redemptions of common stock, value | -1,978 | -2 | -1,976 | |
Transfers to redeemable common stock | -2,532 | -2,532 | ||
Distributions declared | -11,473 | -11,473 | ||
Commissions on stock sales and related dealer manager fees to affiliate | -4,898 | -4,898 | ||
Other offering costs | -2,025 | -2,025 | ||
Net loss | -7,745 | -7,745 | ||
Balance, value at Dec. 31, 2013 | 121,060 | 192 | 161,328 | -40,460 |
Balance, shares at Dec. 31, 2013 | 19,196,501 | 19,196,501 | ||
Balance, value at Mar. 12, 2013 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Issuance of common stock, shares | 1,496,198 | |||
Issuance of common stock, value | 15,900 | |||
Balance, value at Dec. 31, 2014 | 115,724 | 201 | ||
Balance, shares at Dec. 31, 2014 | 20,084,830 | 20,084,830 | ||
Balance, value at Dec. 31, 2013 | 121,060 | 192 | 161,328 | -40,460 |
Balance, shares at Dec. 31, 2013 | 19,196,501 | 19,196,501 | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Issuance of common stock, shares | 1,081,474 | |||
Issuance of common stock, value | 11,250 | 11 | 11,239 | |
Redemptions of common stock, shares | -193,145 | |||
Redemptions of common stock, value | -1,853 | -2 | -1,851 | |
Transfers from redeemable common stock | 2,888 | 2,888 | ||
Distributions declared | -12,905 | -12,905 | ||
Commissions on stock sales and related dealer manager fees to affiliate | -536 | -536 | ||
Other offering costs | -620 | -620 | ||
Net loss | -3,560 | -3,560 | ||
Balance, value at Dec. 31, 2014 | $115,724 | $201 | $172,448 | ($56,925) |
Balance, shares at Dec. 31, 2014 | 20,084,830 | 20,084,830 |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Cash Flows from Operating Activities: | |||
Net loss | ($3,560) | ($7,745) | ($10,233) |
Adjustments to reconcile net loss to net cash provided by (used) in operating activities: | |||
Depreciation and amortization | 12,577 | 12,366 | 8,012 |
Bad debt expense | 403 | 329 | 191 |
Loss due to property damages | 685 | 1,203 | 0 |
Amortization of discount (premium) on notes payable | 78 | 0 | -395 |
Amortization of deferred financing costs | 415 | 620 | 386 |
Changes in operating assets and liabilities: | |||
Restricted cash for operational expenditures | -916 | -1,350 | -1,161 |
Prepaid expenses and other assets | -828 | -1,092 | -834 |
Accounts payable and accrued liabilities | 568 | 1,373 | 1,864 |
Due to affiliates | 2,280 | 2,612 | 39 |
Other liabilities | 384 | -120 | 598 |
Net cash provided by (used in) operating activities | 12,086 | 8,196 | -1,533 |
Cash Flows from Investing Activities: | |||
Acquisitions of real estate | -13,141 | -114,875 | -193,900 |
Improvements to real estate | -5,031 | -4,939 | -1,936 |
Escrow deposits for pending real estate acquisition | 0 | -1,500 | -500 |
Restricted cash for capital expenditures | 800 | -800 | 0 |
Net cash used in investing activities | -17,372 | -122,114 | -196,336 |
Cash Flows from Financing Activities: | |||
Proceeds from notes payable | 0 | 76,220 | 167,940 |
Principal payments on mortgage note payable | -3,988 | -1,304 | -22,682 |
Principal payments on unsecured note payable due to affiliate | 0 | 0 | -1,000 |
Payments of deferred financing costs | -91 | -1,025 | -1,737 |
Proceeds from issuance of common stock | 5,786 | 60,378 | 79,077 |
Payments to redeem common stock | -1,853 | -1,978 | -350 |
Payments of commissions on stock sales and related dealer manager fees | -536 | -4,898 | -7,026 |
Payments of other offering costs | -338 | -2,277 | -4,538 |
Reimbursements of other offering costs from affiliates | 745 | 0 | 0 |
Distributions paid | -7,259 | -6,349 | -3,038 |
Net cash (used in) provided by financing activities | -7,534 | 118,767 | 206,646 |
Net (decrease) increase in cash and cash equivalents | -12,820 | 4,849 | 8,777 |
Cash and cash equivalents, beginning of period | 36,698 | 31,849 | 23,072 |
Cash and cash equivalents, end of period | 23,878 | 36,698 | 31,849 |
Supplemental Disclosure of Cash Flow Information: | |||
Interest paid, net of capitalized interest of $57 for the year ended December 31, 2013 | 9,610 | 7,228 | 3,793 |
Supplemental Disclosure of Noncash Investing and Financing Activities: | |||
Distributions paid to common stockholders through common stock issuances pursuant to the dividend reinvestment plan | 5,591 | 4,761 | 2,229 |
Mortgage debt assumed in connection with real estate acquisitions at fair value | 52,268 | 0 | 0 |
Application of escrow deposits to purchase real estate | 1,500 | 2,000 | 0 |
Increase in redeemable common stock payable | 461 | 0 | 223 |
Increase in distributions payable | 55 | 363 | 457 |
Increase in accrued improvements to real estate | $0 | $220 | $159 |
CONSOLIDATED_STATEMENTS_OF_CAS1
CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Statement of Cash Flows [Abstract] | ||
Capitalized interest | $57 | $57 |
ORGANIZATION
ORGANIZATION | 12 Months Ended |
Dec. 31, 2014 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION | ORGANIZATION |
KBS Legacy Partners Apartment REIT, Inc. (the “Company”) was formed on July 31, 2009 as a Maryland corporation that elected to be taxed as a real estate investment trust (“REIT”) beginning with the taxable year ended December 31, 2010. Substantially all of the Company’s business is conducted through KBS Legacy Partners Limited Partnership (the “Operating Partnership”), a Delaware limited partnership formed on August 4, 2009. The Company is the sole general partner of and owns a 0.1% partnership interest in the Operating Partnership. KBS Legacy Partners Holdings LLC (“REIT Holdings”), a Delaware limited liability company formed on August 4, 2009, owns the remaining 99.9% interest in the Operating Partnership and is its sole limited partner. The Company is the sole member and manager of REIT Holdings. | |
Subject to certain restrictions and limitations, the business of the Company is externally managed by KBS Capital Advisors LLC (the “Advisor”), an affiliate of the Company, pursuant to an advisory agreement the Company renewed with the Advisor on January 25, 2015 (the “Advisory Agreement”). | |
On August 7, 2009, the Company issued 20,000 shares of its common stock to KBS-Legacy Apartment Community REIT Venture, LLC (the “Sub-Advisor”), an affiliate of the Company, at a purchase price of $10.00 per share. As of December 31, 2014, the Sub-Advisor owned 20,000 shares of common stock of the Company. | |
The Company has invested in and manages a portfolio of high quality apartment communities located throughout the United States. The Company’s portfolio includes “core” apartment buildings that are already well positioned and producing rental income. As of December 31, 2014, the Company owned 11 apartment complexes. | |
On August 19, 2009, the Company filed a registration statement on Form S-11 with the Securities and Exchange Commission (the “SEC”) to offer a minimum of 250,000 shares and a maximum of 280,000,000 shares of common stock for sale to the public (the “Initial Offering”), of which 80,000,000 shares would be offered pursuant to the Company’s dividend reinvestment plan. | |
The SEC declared the Company’s registration statement for the Initial Offering effective on March 12, 2010, and the Company retained KBS Capital Markets Group LLC (the “Dealer Manager”), an affiliate of the Company, to serve as the dealer manager for the Initial Offering pursuant to a dealer manager agreement dated March 12, 2010 (the “Initial Dealer Manager Agreement”). Under the Initial Dealer Manager Agreement, the Dealer Manager was responsible for marketing the Company’s shares being offered pursuant to the Initial Offering. | |
On May 31, 2012, the Company filed a registration statement on Form S-11 with the SEC to register a follow-on public offering (the “Follow-on Offering” and together with the Initial Offering, the “Offerings”). Pursuant to the registration statement, as amended, the Company registered up to an additional $2,000,000,000 of shares of common stock for sale to the public and up to an additional $760,000,000 of shares of common stock pursuant to the dividend reinvestment plan. The SEC declared the Company’s registration statement for the Follow-on Offering effective on March 8, 2013. | |
The Company retained the Dealer Manager to serve as the dealer manager for the Follow-on Offering pursuant to a dealer manager agreement dated March 8, 2013 (the “Follow-on Dealer Manager Agreement” and together with the Initial Dealer Manager Agreement, the “Dealer Manager Agreements”). On March 12, 2013, the Company ceased offering shares pursuant to the Initial Offering and on March 13, 2013, the Company commenced offering shares to the public pursuant to the Follow-on Offering. | |
In the Initial Offering, the Company sold 18,088,084 shares of common stock for gross offering proceeds of $179.2 million, including 368,872 shares of common stock under the dividend reinvestment plan for gross offering proceeds of $3.5 million. The Company ceased offering shares in the primary Follow-on Offering on March 31, 2014 and completed subscription processing procedures on April 30, 2014. The Company sold 1,496,198 shares of common stock in the primary Follow-on Offering for gross offering proceeds of $15.9 million. | |
As of December 31, 2014, the Company had sold an aggregate of 20,502,279 shares of common stock in the Offerings for gross offering proceeds of $204.4 million, including an aggregate of 1,286,869 shares of common stock under the dividend reinvestment plan for gross offering proceeds of $12.9 million. Also, as of December 31, 2014, the Company had redeemed 437,449 shares sold in the Offerings for $4.2 million. | |
The Company continues to offer shares of common stock under the dividend reinvestment plan. |
SUMMARY_OF_SIGNIFICANT_ACCOUNT
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended | |
Dec. 31, 2014 | ||
Accounting Policies [Abstract] | ||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Principles of Consolidation and Basis of Presentation | ||
The consolidated financial statements include the accounts of the Company, REIT Holdings, the Operating Partnership and their direct and indirect wholly owned subsidiaries. All significant intercompany balances and transactions are eliminated in consolidation. | ||
The consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) as contained within the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) and the rules and regulations of the SEC. | ||
Use of Estimates | ||
The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could materially differ from those estimates. | ||
Reclassifications | ||
Certain amounts in the Company’s prior period consolidated financial statements have been reclassified to conform to the current period presentation. These reclassifications have not changed the results of operations of prior periods. | ||
Revenue Recognition | ||
The Company leases apartment units under operating leases with terms generally of one year or less. Generally, credit investigations will be performed for prospective residents and security deposits will be obtained. The Company recognizes rental revenue, net of concessions, on a straight-line basis over the term of the lease, when collectibility is reasonably assured. | ||
The Company will recognize gains on sales of real estate either in total or deferred for a period of time, depending on whether a sale has been consummated, the extent of the buyer’s investment in the property being sold, whether the receivable of the Company is subject to future subordination, and the degree of the Company’s continuing involvement with the property after the sale. If the criteria for profit recognition under the full-accrual method are not met, the Company will defer gain recognition and account for the continued operations of the property by applying the percentage-of-completion, reduced profit, deposit, installment or cost recovery method, as appropriate, until the appropriate criteria are met. | ||
Other income, including interest earned on the Company’s cash, is recognized as it is earned. | ||
Real Estate | ||
Depreciation and Amortization | ||
Real estate properties are carried at cost and depreciated using the straight-line method over the estimated useful lives of 40 years for buildings, 10–20 years for building improvements, 10–20 years for land improvements and five to 12 years for computer, furniture, fixtures and equipment. Costs directly associated with the development of land and those incurred during construction are capitalized as part of the investment basis. Acquisition costs are expensed as incurred. Operating expenses incurred that are not related to the development and construction of the real estate investments are expensed as incurred. Repairs, maintenance and tenant turnover costs are expensed as incurred and significant replacements and improvements are capitalized. Repairs, maintenance and tenant turnover costs include all costs that do not extend the useful life of the real estate property. The Company considers the period of future benefit of an asset to determine its appropriate useful life. | ||
Intangible assets related to in-place leases are amortized to expense over the average remaining non-cancelable terms of the respective in-place leases. | ||
Development Costs | ||
The Company will capitalize development and construction costs (including interest and other financing fees, property taxes, and other direct and indirect development costs) beginning when active development commences and ending when apartment units are available for occupancy and all infrastructure is substantially complete. | ||
Real Estate Acquisition Valuation | ||
The Company records the acquisition of income-producing real estate or real estate that will be used for the production of income as a business combination. All assets acquired and liabilities assumed in a business combination are measured at their acquisition-date fair values. Acquisition costs are expensed as incurred and restructuring costs that do not meet the definition of a liability at the acquisition date are expensed in periods subsequent to the acquisition date. | ||
Intangible assets include the value of in-place leases, which represents the estimated value of the net cash flows of the in-place leases to be realized, 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. Acquired in-place lease values are amortized to expense over the average remaining non-cancelable terms of the respective in-place leases. | ||
The Company assesses the acquisition-date fair values of all tangible assets, identifiable intangibles and assumed liabilities using methods similar to those used by independent appraisers (e.g., discounted cash flow analysis) and that utilize appropriate discount and/or capitalization rates and available market information. Estimates of future cash flows are based on a number of 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. | ||
The Company records above-market and below-market in-place lease values for acquired properties based on the present value (using a discount rate that reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to the in-place leases and (ii) management’s estimate of fair market lease rates for the corresponding in-place leases, measured over a period equal to the remaining non-cancelable term of above-market in-place leases and for the initial term plus any extended term for any leases with below-market renewal options. The Company amortizes any recorded above-market or below-market lease values as a reduction or increase, respectively, to rental income over the remaining non-cancelable terms of the respective leases, including any below-market renewal periods. | ||
The Company estimates the value of tenant origination and absorption costs by considering the estimated carrying costs during hypothetical expected lease-up periods, considering current market conditions. In estimating carrying costs, management includes real estate taxes, insurance and other operating expenses and estimates of lost rentals at market rates during the expected lease-up periods. The Company amortizes the value of tenant origination and absorption costs to depreciation and amortization expense over the remaining non-cancelable term of the leases. | ||
Estimates of the fair values of the tangible assets, identifiable intangibles and assumed liabilities require the Company to make significant assumptions, such as market lease rates, property-operating expenses, carrying costs during lease-up periods, discount rates, market absorption periods, and the number of years the property will be held for investment. The use of inappropriate assumptions would result in an incorrect valuation of the Company’s acquired tangible assets, identifiable intangibles and assumed liabilities, which would impact the amount of the Company’s net income. | ||
Impairment of Real Estate and Related Intangible Assets and Liabilities | ||
The Company monitors events and changes in circumstances that could indicate that the carrying amounts of its real estate and related intangible assets and liabilities may not be recoverable or realized. When indicators of potential impairment suggest that the carrying value of real estate and related intangible assets and liabilities may not be recoverable, the Company will assess the recoverability by estimating whether the Company will recover the carrying value of the real estate and related intangible assets and liabilities through its undiscounted future cash flows and its eventual disposition. If, based on this analysis, 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 would record an impairment loss to the extent that the carrying value exceeds the estimated fair value of the real estate and related intangible assets and liabilities. The Company did not record any impairment loss on its real estate and related intangible assets and liabilities during the years ended December 31, 2014, 2013 and 2012. | ||
Insurance Proceeds for Property Damages | ||
The Company maintains an insurance policy that provides coverage for property damages and business interruption. Losses due to physical damages are recognized during the accounting period in which they occur while the amount of monetary assets to be received from the insurance policy is recognized when receipt of insurance recoveries is probable. Losses, which are reduced by the related insurance recoveries, are recorded as operating, maintenance and management expenses on the accompanying consolidated statements of income. Anticipated proceeds in excess of recognized losses would be considered a gain contingency and recognized when the contingency related to the insurance claim has been resolved. Anticipated recoveries for lost rental revenue due to property damages are also considered to be a gain contingency and recognized when the contingency related to the insurance claim has been resolved. | ||
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. Cash and cash equivalents are stated at cost, which approximates fair value. There are no restrictions on the use of the Company’s cash and cash equivalents as of December 31, 2014. | ||
The Company’s cash and cash equivalent balance exceeds federally insurable limits as of December 31, 2014. The Company monitors the cash balances in its operating accounts and adjusts the cash balances as appropriate; however, these cash balances could be impacted if the underlying financial institutions fail or are subject to other adverse conditions in the financial markets. To date, the Company has experienced no loss or lack of access to cash in its operating accounts. | ||
Restricted Cash | ||
Restricted cash is comprised of lender impound reserve accounts for property taxes and insurance proceeds for property damages. | ||
Fair Value Measurements | ||
Under GAAP, the Company is required to measure certain financial instruments at fair value on a recurring basis. In addition, the Company is required to measure other financial instruments and balances at fair value on a non-recurring basis (e.g., carrying value of impaired real estate loans receivable and long-lived assets). Fair value, as defined under GAAP, is the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The GAAP fair value framework uses a three-tiered approach. Fair value measurements are classified and disclosed in one of the following three categories: | ||
• | Level 1: unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities; | |
• | 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 in which significant inputs and significant value drivers are observable in active markets; and | |
• | Level 3: prices or valuation techniques where little or no market data is available that requires inputs that are both significant to the fair value measurement and unobservable. | |
When available, the Company will utilize quoted market prices from independent third-party sources to determine fair value and will classify such items in Level 1 or Level 2. In instances where the market for a financial instrument is not active, regardless of the availability of a nonbinding quoted market price, observable inputs might not be relevant and could require the Company to make a significant adjustment to derive a fair value measurement. Additionally, in an inactive market, a market price quoted from an independent third party may rely more on models with inputs based on information available only to that independent third party. When the Company determines the market for a financial instrument owned by the Company to be illiquid or when market transactions for similar instruments do not appear orderly, the Company will use several valuation sources (including internal valuations, discounted cash flow analysis and quoted market prices) and will establish a fair value by assigning weights to the various valuation sources. | ||
Changes in assumptions or estimation methodologies can have a material effect on these estimated fair values. In this regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, may not be realized in an immediate settlement of the instrument. | ||
The Company considers the following factors to be indicators of an inactive market: (i) there are few recent transactions, (ii) price quotations are not based on current information, (iii) price quotations vary substantially either over time or among market makers (for example, some brokered markets), (iv) indexes that previously were highly correlated with the fair values of the asset or liability are demonstrably uncorrelated with recent indications of fair value for that asset or liability, (v) there is a significant increase in implied liquidity risk premiums, yields, or performance indicators (such as delinquency rates or loss severities) for observed transactions or quoted prices when compared with the Company’s estimate of expected cash flows, considering all available market data about credit and other nonperformance risk for the asset or liability, (vi) there is a wide bid-ask spread or significant increase in the bid-ask spread, (vii) there is a significant decline or absence of a market for new issuances (that is, a primary market) for the asset or liability or similar assets or liabilities, and (viii) little information is released publicly (for example, a principal-to-principal market). | ||
The Company considers the following factors to be indicators of non-orderly transactions: (i) there was not adequate exposure to the market for a period before the measurement date to allow for marketing activities that are usual and customary for transactions involving such assets or liabilities under current market conditions, (ii) there was a usual and customary marketing period, but the seller marketed the asset or liability to a single market participant, (iii) the seller is in or near bankruptcy or receivership (that is, distressed), or the seller was required to sell to meet regulatory or legal requirements (that is, forced), and (iv) the transaction price is an outlier when compared with other recent transactions for the same or similar assets or liabilities. | ||
Dividend Reinvestment Plan | ||
The Company has adopted a dividend reinvestment plan through which common stockholders may elect to reinvest an amount equal to the distributions declared on their shares in additional shares of the Company’s common stock in lieu of receiving cash distributions. Pursuant to the dividend reinvestment plan, the purchase price of shares of the Company’s common stock issued under the dividend reinvestment plan was equal to 95% of the price to acquire a share of common stock in one of the Company’s primary Offerings. At such time as the Company announces an estimated value per share of its common stock for a purpose other than to set the price to acquire a share in one of the primary Offerings, participants in the dividend reinvestment plan will acquire shares of common stock under the dividend reinvestment plan at a price equal to 95% of the estimated value per share of the Company’s common stock. | ||
On March 4, 2013, the Company’s board of directors approved an updated primary offering price for the Company’s common stock in the Initial Offering of $10.68 (unaudited) based on the estimated value of the Company’s assets less the estimated value of the Company’s liabilities, divided by the number of shares outstanding, all as of December 31, 2012 and increased for certain offering and other costs. Pursuant to the terms of the dividend reinvestment plan, commencing on the next purchase date under the plan, which occurred on April 1, 2013, the purchase price per share under the dividend reinvestment plan was $10.15, which is equal to 95% of $10.68. | ||
On March 6, 2014, the Company’s board of directors approved an updated primary offering price for the Company’s common stock in the Follow-on Offering of $10.96 (unaudited) based on the estimated value of the Company’s assets less the estimated value of the Company’s liabilities, divided by the number of shares outstanding, all as of December 31, 2013 and increased for certain offering and other costs. Pursuant to the terms of the dividend reinvestment plan, commencing on the next purchase date under the plan, which occurred on April 1, 2014, the purchase price per share under the dividend reinvestment plan was $10.42, which is equal to 95% of $10.96. | ||
On December 9, 2014, the Company’s board of directors approved an estimated value per share of the Company’s common stock of $10.14 (unaudited) based on the estimated value of the Company’s assets less the estimated value of the Company’s liabilities, divided by the number of shares outstanding, all as of September 30, 2014. Pursuant to the terms of the dividend reinvestment plan, effective on the next purchase date under the plan, which occurred on January 2, 2015, the purchase price per share under the dividend reinvestment plan is $9.64, which is equal to 95% of $10.14. The Company currently expects to utilize an independent valuation firm to update the estimated value per share in December of each year, in accordance with Practice Guideline 2013-01, Valuations of Publicly Registered Non-Listed REITs, issued by the Investment Program Association (“IPA”) in April 2013. The board of directors of the Company may amend or terminate the dividend reinvestment plan for any reason upon 10 days’ notice to participants. | ||
As provided under the dividend reinvestment plan, for a participant to terminate participation effective for a particular distribution, the Company must have received notice of termination from the participant at least four business days prior to the last business day of the month to which the distribution relates. Also as provided under the dividend reinvestment plan, and in addition to the standard termination procedures, a dividend reinvestment plan participant shall have no less than two business days after the date the Company publicly announces an updated estimated value per share in a filing with the SEC to terminate participation. | ||
Redeemable Common Stock | ||
The Company has adopted a share redemption program that may enable stockholders to sell their shares to the Company in limited circumstances. | ||
Share Redemption Program Terms and Amendments | ||
Pursuant to the Company’s share redemption program, as amended to date, there are several limitations on Company’s ability to redeem shares: | ||
• | Unless the shares are being redeemed in connection with a stockholder’s death, “qualifying disability,” or “determination of incompetence” (both as defined in the share redemption program and together with redemptions in connection with a stockholder’s death, “special redemptions”), the Company may not redeem shares until the stockholder has held his or her shares for one year. | |
• | Subject to the limitations of the Fourth Amended Share Redemption Program (defined below), during each calendar year, the share redemption program limits the number of shares the Company may redeem to those that the Company could purchase with the amount of the net proceeds from the issuance of shares under the dividend reinvestment plan during the prior calendar year. | |
• | During any calendar year, the Company may redeem no more than 5% of the weighted-average number of shares outstanding during the prior calendar year. | |
• | The Company has no obligation to redeem shares if the redemption would violate the restrictions on distributions under Maryland law, which prohibits distributions that would cause a corporation to fail to meet statutory tests of solvency. | |
Pursuant to the Company’s share redemption program, as amended to date, unless the Company was redeeming a stockholder’s shares in connection with a special redemption, and until such time as the Company established an estimated value per share for a purpose other than to set the price to acquire a share in one of its now-terminated primary Offerings, the price at which the Company would redeem the shares of a qualifying stockholder was as follows: | ||
i. | For those shares held by the redeeming stockholder for at least one year, 92.5% of the price paid to acquire the shares from the Company; | |
ii. | For those shares held by the redeeming stockholder for at least two years, 95.0% of the price paid to acquire the shares from the Company; | |
iii. | For those shares held by the redeeming stockholder for at least three years, 97.5% of the price paid to acquire the shares from the Company; and | |
iv. | For those shares held by the redeeming stockholder for at least four years, 100% of the price paid to acquire the shares from the Company. | |
Notwithstanding the above, for shares redeemed in connection with a special redemption, the redemption price was the amount paid to acquire the shares from the Company. | ||
On January 24, 2014, the Company’s board of directors approved a fourth amended and restated share redemption program (the “Fourth Amended Share Redemption Program”). The Fourth Amended Share Redemption Program became effective for redemptions under the program on or after February 27, 2014. Under the Fourth Amended Share Redemption Program, the Company may redeem only the number of shares that it could purchase with the amount of the net proceeds from the sale of shares under its dividend reinvestment plan during the prior calendar year; provided that the Company may not redeem more than $2.0 million of shares in the aggregate during any calendar year. Furthermore, during any calendar year, once the Company has redeemed $1.5 million of shares under the Company’s share redemption program, including redemptions in connection with a special redemption, the remaining $0.5 million of the $2.0 million annual limit shall be reserved exclusively for shares being redeemed in connection with special redemptions. In establishing the $2.0 million limitation, the Company’s board of directors considered the $2.0 million of redemptions processed during the 2013 calendar year and the cash requirements necessary to effectively manage the Company’s assets. | ||
There were no other changes to the Fourth Amended Share Redemption Program. | ||
In August 2014, the Company exhausted the $1.5 million of funds available for all redemptions and thus, because of the limitations on the dollar value of shares that could be redeemed under the Fourth Amended Share Redemption Program, as described above, the Company was not be able to process ordinary redemptions for the remainder of 2014 and could only process special redemptions. Thus, as of December 31, 2014, the Company had $0.5 million of outstanding and unfulfilled ordinary redemption requests, representing 47,073 shares. The $2.0 million annual limitation was reset beginning January 1, 2015 and the $0.5 million of outstanding unfulfilled redemption requests as of December 31, 2014 were fulfilled in January 2015. | ||
On October 14, 2014, the Company’s board of directors approved a fifth amended and restated share redemption program (the “Fifth Amended Share Redemption Program”). Pursuant to the Fifth Amended Share Redemption Program, unless the Company is redeeming a stockholder’s shares in connection with a special redemption, once the Company establishes an estimated value per share for a purpose other than to set the price to acquire a share in one of its now-terminated primary Offerings, the price at which the Company will redeem the shares of a qualifying stockholder is as follows: | ||
▪ | for those shares held by the redeeming stockholder for at least one year, 92.5% of the Company’s most recent estimated value per share as of the applicable redemption date; | |
▪ | for those shares held by the redeeming stockholder for at least two years, 95.0% of the Company’s most recent estimated value per share as of the applicable redemption date; | |
▪ | for those shares held by the redeeming stockholder for at least three years, 97.5% of the Company’s most recent estimated value per share as of the applicable redemption date; and | |
▪ | for those shares held by the redeeming stockholder for at least four years, 100% of the Company’s most recent estimated value per share as of the applicable redemption date. | |
Once the Company establishes an estimated value per share for a purpose other than to set the price to acquire a share in one of its now-terminated primary Offerings, the redemption price for shares being redeemed in connection with a special redemption will be the estimated value per share. | ||
The Fifth Amended Share Redemption Program also permits the Company’s board of directors to increase or decrease the funding available for the redemption of shares upon ten business days’ notice to our stockholders. The Company may provide notice of a funding increase or decrease by including such information in a Current Report on Form 8-K, a Quarterly Report on Form 10-Q or an Annual Report on Form 10-K, all publicly filed with the Securities and Exchange Commission, or by a separate mailing to the Company’s stockholders. | ||
There were no other material changes in the Fifth Amended Share Redemption Program. The Fifth Amended Share Redemption Program became effective on November 16, 2014, and as a result was effective on the November 2014 redemption date, which was November 28, 2014. | ||
Because of the limitations on the dollar value of shares that may be redeemed under the Fourth Amended Share Redemption Program, as described above, which limitations continue to be in effect under the Fifth Amended Share Redemption Program, only shares redeemed in connection with a special redemption in December 2014 were affected by the amendments in the Fifth Amended Share Redemption Program, with such shares being redeemed at the estimated value per share of $10.14. As the $2.0 million annual limitation was reset in January 2015, all redemptions will be affected by the amendments in the Fifth Amended Share Redemption Program and will be processed at the prices referenced above. | ||
If the Company cannot redeem all shares presented for redemption in any month because of the limitations on redemptions set forth in our share redemption program, then the Company will honor redemption requests on a pro rata basis, except that if a pro rata redemption would result in a stockholder owning less than the minimum purchase requirement described in the Company’s currently effective, or the most recently effective, registration statement as such registration statement has been amended or supplemented, then the Company would redeem all of such stockholder’s shares. | ||
On December 9, 2014, the Company’s board of directors approved an estimated value per share of its common stock of $10.14 (unaudited) based on the estimated value of the Company’s assets less the estimated value of its liabilities, divided by the number of shares outstanding, all as of September 30, 2014. This estimated value per share became effective for the December 2014 redemption date, which was December 31, 2014. Because of the limitations on the dollar value of shares that may be redeemed under the share redemption program, the Company was only able to redeem shares in connection with special redemptions in December 2014. For a full description of the methodologies used to value the Company’s assets and liabilities in connection with the calculation of the December 2014 estimated value per share, see Part II, Item 5, “Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities - Market Information.” | ||
The Company’s board of directors may amend, suspend or terminate the share redemption program with 30 days’ notice to its stockholders. The Company may provide this notice by including such information in a Current Report on Form 8-K or in the Company’s annual or quarterly reports, all publicly filed with the SEC, or by a separate mailing to its stockholders. | ||
The Company will record amounts that are redeemable under the share redemption program as redeemable common stock in its consolidated balance sheets because the shares will be mandatorily redeemable at the option of the holder and therefore their redemption will be outside the control of the Company. The maximum amount redeemable under the Company’s share redemption program is limited to the number of shares the Company could redeem with the amount of the net proceeds from the sale of shares under the dividend reinvestment plan during the prior calendar year; provided, that the Company may not redeem more than $2.0 million of shares in the aggregate during any calendar year. Furthermore, during any calendar year, once the Company has redeemed $1.5 million of shares under the share redemption program, including redemptions in connection with a special redemption, the remaining $0.5 million of the $2.0 million annual limit shall be reserved exclusively for shares being redeemed in connection with a special redemption. However, because the amounts that can be redeemed will be determinable and only contingent on an event that is likely to occur (e.g., the passage of time), the Company will present the net proceeds from the current year dividend reinvestment plan as redeemable common stock in its accompanying consolidated balance sheets. | ||
The Company will classify as liabilities financial instruments that represent a mandatory obligation of the Company to redeem shares. The Company’s redeemable common shares will be contingently redeemable at the option of the holder. When the Company determines it has a mandatory obligation to repurchase shares under the share redemption program, it will reclassify such obligations from temporary equity to a liability based upon their respective settlement values. During the year ended December 31, 2014, the Company redeemed $1.9 million of common stock, which represented all redemption requests received in good order and eligible for redemption through the December 31, 2014 redemption date, except for 47,073 shares due to the limitations described above, which were redeemed in January 2015. The Company recorded $0.5 million of other liabilities on the Company’s consolidated balance sheets as of December 31, 2014 related to these unfulfilled redemption requests. | ||
Related Party Transactions | ||
Pursuant to the Advisory Agreement and Dealer Manager Agreement, the Company is obligated to pay the Advisor and the Dealer Manager specified fees upon the provision of certain services related to the Offering, the investment of funds in real estate and real estate-related investments, management of the Company’s investments and for other services (including, but not limited to, the disposition of investments). The Company is also obligated to reimburse the Advisor and Dealer Manager for organization and offering costs incurred by the Advisor and the Dealer Manager on behalf of the Company, and the Company is obligated to reimburse the Advisor for acquisition expenses and certain operating expenses incurred on behalf of the Company or incurred in connection with providing services to the Company. In addition, the Advisor is entitled to certain other fees, including an incentive fee upon achieving certain performance goals, as detailed in the Advisory Agreement. | ||
The Company records all related party fees as incurred, subject to any limitations described in the Advisory Agreement. The Company had not incurred any disposition fees, subordinated participations in net cash flows, or subordinated incentive listing fees during the year ended December 31, 2014. | ||
Organization and Offering Costs | ||
A portion of the organization and offering costs (other than selling commissions and dealer manager fees) of the Company are paid by the Advisor, the Dealer Manager or their affiliates on behalf of the Company. These organization and other offering costs include expenses to be paid by the Company in connection with the Offering. Organization costs include all expenses to be incurred by the Company in connection with the formation of the Company, including but not limited to legal fees and other costs to incorporate the Company. | ||
Pursuant to the Advisory Agreement and the Dealer Manager Agreement, the Company is obligated to reimburse the Advisor, the Dealer Manager or their affiliates, as applicable, for organization and offering costs paid by them on behalf of the Company, provided that the Advisor would be obligated to reimburse the Company to the extent selling commissions, dealer manager fees and other organization and offering costs incurred by the Company in the Offering exceed 15% of gross offering proceeds. As a result, the Company is only liable for these costs up to an amount that, when combined with selling commissions and dealer manager fees, does not exceed 15% of the gross proceeds of the Offering. | ||
Organization costs are expensed as incurred, and offering costs, which include selling commissions and dealer manager fees, will be deferred and charged to stockholders’ equity as such amounts are reimbursed to the Advisor, the Dealer Manager or their affiliates from the gross proceeds of the Offering. The Company expects the Advisor to continue to incur organization and other offering costs on its behalf. | ||
Selling Commissions and Dealer Manager Fees | ||
The Company paid the Dealer Manager up to 6.5% and 3.0% of the gross offering proceeds from the primary Offerings as selling commissions and dealer manager fees, respectively. A reduced sales commission and dealer manager fee was paid with respect to certain volume discount sales. No sales commission or dealer manager fee is paid with respect to shares issued through the dividend reinvestment plan. The Dealer Manager reallowed 100% of sales commissions earned to participating broker-dealers. The Dealer Manager may reallow to any participating broker-dealer up to 1% of the gross offering proceeds attributable to that participating broker-dealer as a marketing fee and, in special cases, the Dealer Manager may increase the reallowance. | ||
Acquisition Advisory Fee | ||
The Company pays the Advisor an acquisition advisory fee equal to 1% of the cost of investments acquired, including any acquisition expenses and any debt attributable to such investments. | ||
Asset Management Fee | ||
Until August 13, 2013, the asset management fee payable to the Advisor with respect to investments in real estate was equal to one twelfth of 1.0% of the amount paid to fund the acquisition, development, construction or improvement of the investment, inclusive of acquisition expenses related thereto (but excluding any acquisition fees related thereto). The amount paid included any portion of the investment that was debt financed. In the case of investments made through joint ventures, the asset management fee was determined based on the Company’s proportionate share of the underlying investment. | ||
Effective August 14, 2013, the asset management fee payable by the Company to the Advisor with respect to investments in real estate is a monthly fee equal to the lesser of one-twelfth of (i) 1.0% of the amount paid or allocated to fund the acquisition, development, construction or improvement of the property (whether at or subsequent to acquisition), including acquisition expenses and budgeted capital improvement costs (regardless of the level of debt used to finance the investment), and (ii) 2.0% of the amount paid or allocated to fund the acquisition, development, construction or improvement of the property (whether at or subsequent to acquisition), including acquisition expenses and budgeted capital improvement costs, less any debt used to finance the investment. | ||
In addition, effective January 8, 2013, the Company and the Advisor agreed to defer the Company’s obligation to pay asset management fees under certain circumstances. For more information, see Note 7, “Related Party Transactions - Asset Management Fee.” | ||
Construction Management Fees | ||
In the event that the Sub-Advisor or an affiliate of the Sub-Advisor, assists with planning and coordinating the construction of any building or tenant improvements, the Company will pay the Sub-Advisor or an affiliate of the Sub-Advisor a construction management fee in an amount that is usual and customary for comparable services rendered by third-party management companies to similar projects in the geographic market of the project. Furthermore, the payment of any construction management fees to the Sub-Advisor and its affiliates is subject to approval by the Company’s conflicts committee. Construction management fees are capitalized as part of the associated real estate in our accompanying consolidated balance sheets. | ||
Income Taxes | ||
The Company has elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended. To qualify as a REIT, the Company must meet certain organizational and operational requirements, including a requirement to distribute at least 90% of the Company’s annual REIT taxable income to its 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. If the Company fails to qualify as a REIT in any taxable year, it 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 the Company relief under certain statutory provisions. Such an event could materially adversely affect the Company’s net income and net cash available for distribution to stockholders. However, the Company intends to continue to be organized and operated in such a manner as to qualify for treatment as a REIT. | ||
The Company has concluded that there are no significant uncertain tax positions requiring recognition in its financial statements. Neither the Company nor its subsidiaries have been assessed interest or penalties by any major tax jurisdictions. The Company’s evaluations were performed for the tax years ended December 31, 2014, 2013 and 2012. As of December 31, 2014, returns for calendar years 2010 through 2013 remain subject to examination by major tax jurisdictions. | ||
Segments | ||
The Company had invested in 11 apartment complexes as of December 31, 2014. Substantially all of the Company’s revenue and net loss is from real estate, and therefore, the Company currently operates in one reportable segment. | ||
Per Share Data | ||
Basic net income (loss) per share of common stock is calculated by dividing net income (loss) by the weighted-average number of shares of common stock issued and outstanding during such period. Diluted net income (loss) per share of common stock equals basic net income (loss) per share of common stock as there were no potentially dilutive securities outstanding during the years ended December 31, 2014, 2013 and 2012. | ||
Distributions declared per common share were $0.650 for the years ended December 31, 2014, 2013 and 2012, respectively. Distributions declared per common share assumes each share was issued and outstanding each day from January 1, 2012 through December 31, 2014. For each day that was a record date for distributions during the period from January 1, 2012 through December 31, 2014, distributions were calculated at a rate of $0.00178082 per share per day. Each day during the periods from January 1, 2012 through February 28, 2012 and March 1, 2012 through December 31, 2014 was a record date for distributions. | ||
Square Footage, Occupancy and Other Measures | ||
Square footage, occupancy and other measures used to describe real estate investments included in the Notes to Consolidated Financial Statements are presented on an unaudited basis. | ||
Recently Issued Accounting Standards Updates | ||
In April 2014, the FASB issued ASU No. 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity (“ASU No. 2014-08”). ASU No. 2014-08 limits discontinued operations reporting to disposals of components of an entity that represent a strategic shift that has (or will have) a major effect on an entity’s operations and financial results when any of the following occurs: a) the component of an entity or group of components of an entity meets the criteria to be classified as held for sale; b) the component of an entity or group of components of an entity is disposed of by sale; or c) the component of an entity or group of components of an entity is disposed of other than by sale. ASU No. 2014-08 also requires additional disclosures about discontinued operations. ASU No. 2014-08 is effective for reporting periods beginning after December 15, 2014. Early adoption is permitted, but only for disposals (or classifications as held for sale) that have not been reported in financial statements previously issued or available for issuance. The Company early adopted ASU No. 2014-08 for the reporting period beginning January 1, 2014. As a result of the adoption of ASU No. 2014-08, results of operations for properties that are classified as held for sale in the ordinary course of business on or subsequent to January 1, 2014 would generally be included in continuing operations on the Company’s consolidated statements of operations, to the extent such disposals did not meet the criteria for classification as a discontinued operation described above. Additionally, any gain or loss on sale of real estate that does not meet the criteria for classification as a discontinued operation would be included in income from continuing operations on the consolidated statements of operations. As there are no properties currently classified as held for sale, ASU No. 2014-08 did not have an impact on the presentation of the Company’s financial statements. | ||
In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU No. 2014-09”). ASU No. 2014-09 requires an entity to recognize the revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. ASU No. 2014-09 supersedes the revenue requirements in Revenue Recognition (Topic 605) and most industry-specific guidance throughout the Industry Topics of the Codification. ASU No. 2014-09 does not apply to lease contracts within the scope of Leases (Topic 840). ASU No. 2014-09 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016, and is to be applied retrospectively, with early application not permitted. The Company is still evaluating the impact of adopting ASU No. 2014-09 on its financial statements, but does not expect the adoption of ASU No. 2014-09 to have a material impact on its financial statements. | ||
In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements (Subtopic 205-40), Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ASU No. 2014-15”). The amendments in ASU No. 2014-15 require management to evaluate, for each annual and interim reporting period, whether there are conditions or events, considered in the aggregate, that raise substantial doubt about an entity’s ability to continue as a going concern within one year after the date that the financial statements are issued (or are available to be issued when applicable) and, if so, provide related disclosures. ASU No. 2014-15 is effective for annual periods ending after December 15, 2016, and interim periods within annual periods beginning after December 15, 2016. Early adoption is permitted for annual or interim reporting periods for which the financial statements have not previously been issued. The Company does not expect the adoption of ASU 2014-15 to have a significant impact on its financial statements. | ||
In January 2015, the FASB issued ASU No. 2015-01, Income Statement — Extraordinary and Unusual Items (Subtopic 225-20), Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items (“ASU No. 2015-01”). The amendments in ASU No. 2015-01 eliminate from GAAP the concept of extraordinary items. Although the amendments will eliminate the requirements in Subtopic 225-20 for reporting entities to consider whether an underlying event or transaction is extraordinary, the presentation and disclosure guidance for items that are unusual in nature or occur infrequently will be retained and will be expanded to include items that are both unusual in nature and infrequently occurring. ASU No. 2015-01 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2015. Early adoption is permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. The Company does not expect the adoption of ASU 2015-01 to have a significant impact on its financial statements. |
RECENT_ACQUISITIONS_OF_REAL_ES
RECENT ACQUISITIONS OF REAL ESTATE | 12 Months Ended | ||||||||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||||||||
Business Combinations [Abstract] | |||||||||||||||||||||||||||
BUSINESS ACQUISITIONS | RECENT ACQUISITIONS OF REAL ESTATE | ||||||||||||||||||||||||||
During the year ended December 31, 2014, the Company acquired the following properties (dollars in thousands): | |||||||||||||||||||||||||||
Property Name | City | State | Acquisition Date | Land | Building | Tenant Origination and Absorption Costs | Other Intangible Assets | Total | |||||||||||||||||||
and Improvements | Purchase Price | ||||||||||||||||||||||||||
Legacy Grand at Concord | Concord | NC | 2/18/14 | $ | 1,465 | $ | 25,960 | $ | 542 | $ | — | $ | 27,967 | ||||||||||||||
Lofts at the Highlands (1) | St. Louis | MO | 2/25/14 | 3,000 | 32,486 | 510 | 2,946 | (2) | 38,942 | ||||||||||||||||||
$ | 4,465 | $ | 58,446 | $ | 1,052 | $ | 2,946 | $ | 66,909 | ||||||||||||||||||
_____________________ | |||||||||||||||||||||||||||
(1) In connection with the acquisition of Lofts at the Highlands, the Company assumed the Lofts at the Highlands Mortgage Loan. The Company recorded the mortgage debt assumed with an outstanding principal balance of $32.0 million at an estimated fair value of $29.1 million, which is net of a discount on note payable of $2.9 million due to the below-market interest rate. The discount on note payable is amortized over the remaining life of the loan of 38.5 years. | |||||||||||||||||||||||||||
(2) The property is subject to certain property tax abatements through 2031. The estimated fair value of the property tax abatements of $2.9 million is recorded as deferred financing costs, prepaid expenses and other assets on the Company’s consolidated balance sheet as of the acquisition date and amortized over the tax abatement period of 17.9 years. | |||||||||||||||||||||||||||
The in-place leases acquired in connection with these acquisitions had a total weighted-average amortization period of 6 months as of the date of acquisition. | |||||||||||||||||||||||||||
The Company recorded each acquisition as a business combination and expensed $1.0 million of acquisition costs related to these properties during the year ended December 31, 2014. During the year ended December 31, 2014, the Company recognized $5.3 million of total revenues and $4.0 million of operating expenses from these properties. | |||||||||||||||||||||||||||
PRO FORMA FINANCIAL INFORMATION | |||||||||||||||||||||||||||
The following table summarizes, on an unaudited pro forma basis, the combined results of operations of the Company for the years ended December 31, 2014 and 2013. The Company acquired two apartment complexes during the year ended December 31, 2014, both of which were accounted for as business combinations. The following unaudited pro forma information for the years ended December 31, 2014 and 2013 has been prepared to give effect to the acquisition of Lofts at the Highlands as if the acquisition occurred on January 1, 2013. This pro forma information does not purport to represent what the actual results of operations of the Company would have been had this acquisition occurred on January 1, 2013, nor does it purport to predict the results of operations for future periods (in thousands, except share and per share amounts). | |||||||||||||||||||||||||||
For the Years Ended December 31, | |||||||||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||||||||
Revenues | $ | 42,785 | $ | 36,333 | |||||||||||||||||||||||
Depreciation and amortization | $ | 12,146 | $ | 13,944 | |||||||||||||||||||||||
Net loss | $ | (2,558 | ) | $ | (8,444 | ) | |||||||||||||||||||||
Net loss per common share, basic and diluted | $ | (0.13 | ) | $ | (0.45 | ) | |||||||||||||||||||||
Weighted-average number of common shares outstanding, basic and diluted | 20,024,428 | 18,781,544 | |||||||||||||||||||||||||
The unaudited pro forma information for the year ended December 31, 2014 was adjusted to exclude $0.6 million of acquisition costs incurred in 2014 related to Lofts at the Highlands. |
REAL_ESTATE
REAL ESTATE | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Real Estate [Abstract] | |||||||||||||||||
REAL ESTATE | REAL ESTATE | ||||||||||||||||
As of December 31, 2014, the Company owned 11 apartment complexes, containing 3,039 units and encompassing 3.1 million rentable square feet, which were 93% occupied. The following table provides summary information regarding the properties owned by the Company as of December 31, 2014 (dollars in thousands): | |||||||||||||||||
Property Name | Date Acquired | Location | Total | Accumulated Depreciation and Amortization | Total | ||||||||||||
Real Estate at Cost | Real Estate, Net | ||||||||||||||||
Legacy at Valley Ranch | 10/26/10 | Irving, TX | $ | 36,471 | $ | (3,868 | ) | $ | 32,603 | ||||||||
Poplar Creek | 2/9/12 | Schaumburg, IL | 26,998 | (1,723 | ) | 25,275 | |||||||||||
The Residence at Waterstone | 4/6/12 | Pikesville, MD | 64,637 | (4,382 | ) | 60,255 | |||||||||||
Legacy Crescent Park | 5/3/12 | Greer, SC | 20,205 | (1,622 | ) | 18,583 | |||||||||||
Legacy at Martin’s Point | 5/31/12 | Lombard, IL | 37,069 | (2,864 | ) | 34,205 | |||||||||||
Wesley Village | 11/6/12 | Charlotte, NC | 44,223 | (2,528 | ) | 41,695 | |||||||||||
Watertower Apartments | 1/15/13 | Eden Prairie, MN | 38,434 | (2,036 | ) | 36,398 | |||||||||||
Crystal Park at Waterford | 5/8/13 | Frederick, MD | 45,747 | (2,194 | ) | 43,553 | |||||||||||
Millennium Apartment Homes | 6/7/13 | Greenville, SC | 33,090 | (1,572 | ) | 31,518 | |||||||||||
Legacy Grand at Concord | 2/18/14 | Concord, NC | 27,671 | (718 | ) | 26,953 | |||||||||||
Lofts at the Highlands | 2/25/14 | St. Louis, MO | 35,662 | (837 | ) | 34,825 | |||||||||||
$ | 410,207 | $ | (24,344 | ) | $ | 385,863 | |||||||||||
Additionally, as of December 31, 2014 and 2013, the Company had recorded unamortized tax abatement intangible assets, which are included in deferred financing costs, prepaid expenses and other assets in the accompanying balance sheets, of $3.4 million and $0.7 million, respectively. During the years ended December 31, 2014, 2013 and 2012, the Company recorded amortization expense of $0.2 million, $96,000 and $16,000, respectively, related to tax abatement intangible assets. | |||||||||||||||||
Property Damage | |||||||||||||||||
During the year ended December 31, 2014, two of the Company’s apartment complexes suffered physical damage due to storms. The Company’s insurance policies provide coverage for property damage and business interruption subject to a deductible of up to $25,000 per incident. Based on management’s estimates, the Company recognized an estimated aggregate loss due to damages of $0.7 million during the year ended December 31, 2014, which was reduced by $0.6 million of estimated insurance recoveries related to such damages, which the Company determined were probable of collection. The net loss due to damages of $75,000 during the year ended December 31, 2014 was classified as operating, maintenance and management expenses on the accompanying consolidated statements of operations and relates to the Company’s insurance deductible. As of December 31, 2014, the total estimated insurance recovery to be collected related to these losses of $0.4 million, was classified as deferred financing costs, prepaid expenses and other assets on the accompanying consolidated balance sheets. |
NOTES_PAYABLE
NOTES PAYABLE | 12 Months Ended | |||||||||||||||
Dec. 31, 2014 | ||||||||||||||||
Debt Disclosure [Abstract] | ||||||||||||||||
NOTES PAYABLE | NOTES PAYABLE | |||||||||||||||
As of December 31, 2014 and 2013, the Company’s notes payable consisted of the following (dollars in thousands): | ||||||||||||||||
Principal as of December 31, 2014 | Principal as of | Contractual | Payment Type | Maturity Date | ||||||||||||
31-Dec-13 | Interest Rate as of | |||||||||||||||
December 31, 2014 (1) | ||||||||||||||||
Legacy at Valley Ranch Mortgage Loan | $ | 32,131 | $ | 32,500 | 3.90% | Principal & Interest | (1) | 4/1/19 | ||||||||
Poplar Creek Mortgage Loan | 20,143 | 20,400 | 4.00% | Principal & Interest | (1) | 3/1/19 | ||||||||||
The Residence at Waterstone Mortgage Loan | 47,419 | 47,905 | 3.80% | Principal & Interest | (1) | 5/1/19 | ||||||||||
Legacy Crescent Park Mortgage Loan | 14,146 | 14,425 | 3.50% | Principal & Interest | (1) | 6/1/19 | ||||||||||
Legacy at Martin’s Point Mortgage Loan | 22,781 | 23,000 | 3.30% | Principal & Interest | (1) | 6/1/19 | ||||||||||
Wesley Village Mortgage Loan | 28,253 | 28,923 | 2.60% | Principal & Interest | (1) | 12/1/17 | ||||||||||
Watertower Mortgage Loan | 25,000 | 25,000 | 2.50% | Principal & Interest | (2) | 2/10/18 | ||||||||||
Crystal Park Mortgage Loan | 28,391 | 29,055 | 2.50% | Principal & Interest | (1) | 6/1/18 | ||||||||||
Millennium Mortgage Loan | 21,175 | 21,648 | 2.70% | Principal & Interest | (1) | 7/1/18 | ||||||||||
Legacy Grand at Concord Mortgage Loan | 22,981 | — | 4.10% | Principal & Interest | (3) | 12/1/50 | ||||||||||
Lofts at the Highlands Mortgage Loan | 31,611 | — | 3.40% | Principal & Interest | (4) | 8/1/52 | ||||||||||
Total notes payable principal outstanding | $ | 294,031 | $ | 242,856 | ||||||||||||
Discount on note payable (5) | (2,817 | ) | — | |||||||||||||
Total notes payable, net | $ | 291,214 | $ | 242,856 | ||||||||||||
_____________________ | ||||||||||||||||
(1) Monthly payments include principal and interest with principal payments calculated using an amortization schedule of 30 years. | ||||||||||||||||
(2) Monthly payments are interest-only during the first two years of the loan. Beginning with the third year of the loan, monthly payments include principal and interest with principal payments calculated using an amortization schedule of 30 years. | ||||||||||||||||
(3) Monthly payments for the Legacy Grand at Concord Mortgage Loan include principal and interest in the sum of $101,159. | ||||||||||||||||
(4) Monthly payments for the Lofts at the Highlands Mortgage Loan include principal and interest in the sum of $124,111. | ||||||||||||||||
(5) Represents the unamortized discount on the Lofts at the Highlands Mortgage Loan due to the below-market interest rate when the loan was assumed. The discount is amortized over the remaining life of the loan. | ||||||||||||||||
As of December 31, 2014 and 2013, the Company’s deferred financing costs were $1.6 million and $2.0 million, respectively, net of amortization, and are included in deferred financing costs, prepaid expenses and other assets on the accompanying consolidated balance sheets. | ||||||||||||||||
During the years ended December 31, 2014, 2013 and 2012, the Company incurred $10.3 million, $8.0 million and $4.7 million of interest expense, respectively. Included in interest expense for the years ended December 31, 2014, 2013 and 2012 were $0.4 million, $0.6 million and $0.4 million of amortization of deferred financing costs, respectively. Included in interest expense for the year ended December 31, 2014 was $0.1 million of amortization of discount on a note payable. Additionally, during the year ended December 31, 2013, the Company capitalized $0.1 million of interest to land under development. Included in interest expense for the year ended December 31, 2012 was $0.5 million and $(0.4) million due to early termination fees on mortgage debt and the write-off of a premium on notes payable, respectively. As of December 31, 2014 and 2013, the Company recorded interest payable of $0.9 million and $0.7 million, respectively. | ||||||||||||||||
The following is a schedule of maturities, including principal payments, for the Company’s notes payable outstanding as of December 31, 2014 (in thousands): | ||||||||||||||||
2015 | $ | 5,582 | ||||||||||||||
2016 | 5,844 | |||||||||||||||
2017 | 32,196 | |||||||||||||||
2018 | 72,958 | |||||||||||||||
2019 | 126,682 | |||||||||||||||
Thereafter | 50,769 | |||||||||||||||
$ | 294,031 | |||||||||||||||
FAIR_VALUE_DISCLOSURES
FAIR VALUE DISCLOSURES | 12 Months Ended | ||||||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||
FAIR VALUE DISCLOSURES | FAIR VALUE DISCLOSURES | ||||||||||||||||||||||||
Under GAAP, the Company is required to measure certain financial instruments at fair value on a recurring basis. In addition, the Company is required to measure other financial instruments and balances at fair value on a non-recurring basis (e.g., carrying value of impaired real estate loans receivable and long-lived assets). Fair value, as defined under GAAP, is the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The GAAP fair value framework uses a three-tiered approach. Fair value measurements are classified and disclosed in one of the following three categories: | |||||||||||||||||||||||||
• | Level 1: unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities; | ||||||||||||||||||||||||
• | 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 in which significant inputs and significant value drivers are observable in active markets; and | ||||||||||||||||||||||||
• | Level 3: prices or valuation techniques where little or no market data is available that requires inputs that are both significant to the fair value measurement and unobservable. | ||||||||||||||||||||||||
The fair value for certain financial instruments is derived using valuation techniques that involve significant management judgment. The price transparency of financial instruments is a key determinant of the degree of judgment involved in determining the fair value of the Company’s financial instruments. Financial instruments for which actively quoted prices or pricing parameters are available and for which markets contain orderly transactions will generally have a higher degree of price transparency than financial instruments for which markets are inactive or consist of non-orderly trades. The Company evaluates several factors when determining if a market is inactive or when market transactions are not orderly. The following is a summary of the methods and assumptions used by management in estimating the fair value of each class of financial instrument for which it is practicable to estimate the fair value: | |||||||||||||||||||||||||
Cash and cash equivalents, restricted cash, and accounts payable and accrued liabilities: These balances approximate their fair values due to the short maturities of these items. | |||||||||||||||||||||||||
Notes payable: The fair value of the Company’s notes payable is estimated using a discounted cash flow analysis based on management’s estimates of current market interest rates for instruments with similar characteristics, including remaining loan term, loan-to-value ratio, type of collateral and other credit enhancements. Additionally, when determining the fair value of liabilities in circumstances in which a quoted price in an active market for an identical liability is not available, the Company measures fair value using (i) a valuation technique that uses the quoted price of the identical liability when traded as an asset or quoted prices for similar liabilities or similar liabilities when traded as assets or (ii) another valuation technique that is consistent with the principles of fair value measurement, such as the income approach or the market approach. The Company classifies these inputs as Level 3 inputs. | |||||||||||||||||||||||||
The following were the face value, carrying amount and fair value of the Company’s notes payable as of December 31, 2014 and 2013 (dollars in thousands): | |||||||||||||||||||||||||
December 31, 2014 | December 31, 2013 | ||||||||||||||||||||||||
Face Value | Carrying Amount | Fair Value | Face Value | Carrying Amount | Fair Value | ||||||||||||||||||||
Financial liabilities: | |||||||||||||||||||||||||
Notes payable | $ | 294,031 | $ | 291,214 | $ | 296,581 | $ | 242,856 | $ | 242,856 | $ | 237,728 | |||||||||||||
Disclosure of the fair values of financial instruments is based on pertinent information available to the Company as of the period end and requires a significant amount of judgment. Despite increased capital market and credit market activity, transaction volume for certain financial instruments remains relatively low. This has made the estimation of fair values difficult and, therefore, both the actual results and the Company’s estimate of value at a future date could be materially different. |
RELATED_PARTY_TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended | ||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||
Related Party Transactions [Abstract] | |||||||||||||||||||||
RELATED PARTY TRANSACTIONS | RELATED PARTY TRANSACTIONS | ||||||||||||||||||||
The Company has entered into the Advisory Agreement with the Advisor and the Dealer Manager Agreements with the Dealer Manager. These agreements entitled the Advisor and/or the Dealer Manager to specified fees upon the provision of certain services with regard to the Offerings and entitle the Advisor to specified fees upon the provision of certain services with regard to the management of the Company’s real estate properties, among other services, as well as reimbursement of organization and offering costs incurred by the Advisor and the Dealer Manager on behalf of the Company, such as expenses related to the dividend reinvestment plan, and certain costs incurred by the Advisor in providing services to the Company. The Company has also entered into a fee reimbursement agreement with the Dealer Manager pursuant to which the Company agreed to reimburse the Dealer Manager for certain fees and expenses it incurs for administering the Company’s participation in the DTCC Alternative Investment Product Platform with respect to certain accounts of the Company’s investors serviced through the platform. The Advisor and Dealer Manager also serve as the advisor and dealer manager, respectively, for KBS Real Estate Investment Trust, Inc., KBS Real Estate Investment Trust II, Inc., KBS Real Estate Investment Trust III, Inc., KBS Strategic Opportunity REIT, Inc. and KBS Strategic Opportunity REIT II, Inc. and anticipate serving as the Advisor and Dealer Manager, respectively, for KBS Growth & Income REIT, Inc. | |||||||||||||||||||||
On January 6, 2014, the Company, together with KBS Real Estate Investment Trust, Inc., KBS Real Estate Investment Trust II, Inc., KBS Real Estate Investment Trust III, Inc., KBS Strategic Opportunity REIT, Inc., KBS Strategic Opportunity REIT II, Inc., the Dealer Manager, the Advisor and other KBS-affiliated entities, entered into an errors and omissions and directors and officers liability insurance program where the lower tiers of such insurance coverage are shared. The cost of these lower tiers is allocated by the Advisor and its insurance broker among each of the various entities covered by the program, and is billed directly to each entity. The allocation of these shared coverage costs is proportionate to the pricing by the insurance marketplace for the first tiers of directors and officers liability coverage purchased individually by each REIT. The Advisor’s and the Dealer Manager’s portion of the shared lower tiers’ cost is proportionate to the respective entities’ prior cost for the errors and omissions insurance. | |||||||||||||||||||||
During the years ended December 31, 2014, 2013 and 2012, no other transactions occurred between the Company and KBS Real Estate Investment Trust, Inc., KBS Real Estate Investment Trust II, Inc., KBS Real Estate Investment Trust III, Inc., KBS Strategic Opportunity REIT, Inc. and KBS Strategic Opportunity REIT II, Inc. | |||||||||||||||||||||
Pursuant to the terms of these agreements and the property management agreements discussed below, summarized below are the related-party costs incurred by the Company for the years ended December 31, 2014, 2013 and 2012, respectively, and any related amounts payable as of December 31, 2014 and 2013 (in thousands): | |||||||||||||||||||||
Incurred | Payable as of | ||||||||||||||||||||
Years Ended December 31, | December 31, | ||||||||||||||||||||
2014 | 2013 | 2012 | 2014 | 2013 | |||||||||||||||||
Expensed | |||||||||||||||||||||
Asset management fees (1) | $ | 2,598 | $ | 2,670 | $ | 1,521 | $ | 4,752 | $ | 2,454 | |||||||||||
Reimbursable operating expenses (2) | 392 | 454 | 602 | 45 | 63 | ||||||||||||||||
Acquisition fees on real properties | 701 | 1,186 | 1,969 | — | — | ||||||||||||||||
Related party interest expense | — | — | 10 | — | — | ||||||||||||||||
Property management fees (3) | 281 | 207 | 106 | — | — | ||||||||||||||||
Capitalized | |||||||||||||||||||||
Construction management fees | — | 134 | — | — | 134 | ||||||||||||||||
Additional Paid-in Capital | |||||||||||||||||||||
Selling commissions | 363 | 3,101 | 4,668 | — | — | ||||||||||||||||
Dealer manager fees | 173 | 1,797 | 2,358 | — | — | ||||||||||||||||
Reimbursable other offering costs(4) | 59 | 619 | 3,408 | — | 19 | ||||||||||||||||
$ | 4,567 | $ | 10,168 | $ | 14,642 | $ | 4,797 | $ | 2,670 | ||||||||||||
____________________ | |||||||||||||||||||||
(1) See “Advisory Agreement — Asset Management Fees” below. | |||||||||||||||||||||
(2) Reimbursable operating expenses primarily consists of marketing research costs and property pursuit costs incurred by the Sub-Advisor. In addition, the Advisor may seek reimbursement for certain employee costs under the Advisory Agreement. Beginning July 1, 2010, the Company has reimbursed the Advisor for the Company’s allocable portion of the salaries, benefits and overhead of internal audit department personnel providing services to the Company. These amounts totaled $108,000, $87,000 and $74,000 for the years ended December 31, 2014, 2013 and 2012, respectively, and were the only type of employee costs reimbursable under the Advisory Agreement for the years ended December 31, 2014, 2013 and 2012, respectively. The Company will not reimburse for employee costs in connection with services for which the Advisor earns acquisition or disposition fees (other than reimbursement of travel and communication expenses) or for the salaries or benefits the Advisor or its affiliates may pay to the Company’s executive officers. | |||||||||||||||||||||
(3) See “–Property Management – Account Services Agreements.” | |||||||||||||||||||||
(4) See “–Other Offering Costs Related to Follow-on Offering.” | |||||||||||||||||||||
In connection with the Offering, the Company’s sponsors agreed to provide additional indemnification to one of the participating broker dealers. The Company agreed to add supplemental coverage to its directors’ and officers’ insurance coverage to insure the sponsors’ obligations under this indemnification agreement in exchange for reimbursement by the sponsors to the Company for all costs, expenses and premiums related to this supplemental coverage. During the years ended December 31, 2014 and 2013, the Advisor paid $87,000 and $87,000, respectively, to the insurer for the costs of the supplemental coverage obtained by the Company. | |||||||||||||||||||||
Other Offering Costs Related to Follow-on Offering | |||||||||||||||||||||
The offering costs related to the Follow-on Offering (other than selling commissions and dealer manager fees) were either paid directly by the Company or in some instances were paid by the Advisor, the Dealer Manager or their affiliates on the Company’s behalf. Offering costs include all expenses in connection with an offering and are charged as incurred as a reduction to stockholders’ equity. | |||||||||||||||||||||
Pursuant to the Advisory Agreement and the Follow-on Dealer Manager Agreement, the Company is obligated to reimburse the Advisor, the Dealer Manager or their affiliates, as applicable, for offering costs paid by them on the Company’s behalf. However, at the termination of the primary Follow-on Offering and at the termination of the offering under the Company’s dividend reinvestment plan, the Advisor agreed to reimburse the Company to the extent that selling commissions, dealer manager fees and other offering costs incurred by the Company exceed 15% of the gross offering proceeds. Further, the Company is only liable to reimburse offering costs incurred by the Advisor up to an amount that, when combined with selling commissions, dealer manager fees and all other amounts spent by the Company on offering expenses, does not exceed 15% of the gross proceeds of the primary Follow-on Offering and the offering under the Company’s dividend reinvestment plan as of the date of reimbursement. Within 30 days after the end of the month in which the Company’s primary Follow-on Offering terminates, the Dealer Manager must reimburse the Company to the extent that the Company’s reimbursements to the Dealer Manager and payment of selling commissions and dealer manager fees cause total underwriting compensation for the Company’s primary Follow-on Offering to exceed 10% of the gross offering proceeds from the primary Follow-on Offering. | |||||||||||||||||||||
The Company ceased offering shares in the primary Follow-on Offering on March 31, 2014 and completed subscription processing procedures on April 30, 2014. Through April 30, 2014, the Company sold an aggregate of 2,051,925 shares of common stock in the Follow-on Offering for gross offering proceeds of $21.5 million, including 555,727 shares under the dividend reinvestment plan for proceeds of $5.7 million. Total offering expenses in the Follow-on Offering were $4.2 million, including $1.8 million in underwriting compensation (which includes selling commissions, dealer manager fees and any other items viewed as underwriting compensation by the Financial Industry Regulatory Authority). After reimbursements from the Advisor and the Dealer Manager, the Company incurred offering expenses of $3.2 million in the Follow-on Offering (representing 15.0% of gross offering proceeds), which includes underwriting compensation of $1.6 million (representing 9.9% of primary Follow-on Offering proceeds). Including the reimbursements to the Company, the Dealer Manager incurred underwriting expenses of $0.2 million in the Follow-on Offering. In addition, because of the aggregate underwriting compensation incurred in the Follow-on Offering, on August 20, 2014, the Dealer Manager made a payment to the Company of $55,000. | |||||||||||||||||||||
Advisory Agreement - Asset Management Fee | |||||||||||||||||||||
Pursuant to the advisory agreement, the asset management fee payable by the Company to the Advisor with respect to investments in real estate is a monthly fee equal to the lesser of one-twelfth of (i) 1.0% of the amount paid or allocated to fund the acquisition, development, construction or improvement of the property (whether at or subsequent to acquisition), including acquisition expenses and budgeted capital improvement costs (regardless of the level of debt used to finance the investment), and (ii) 2.0% of the amount paid or allocated to fund the acquisition, development, construction or improvement of the property (whether at or subsequent to acquisition), including acquisition expenses and budgeted capital improvement costs, less any debt used to finance the investment. | |||||||||||||||||||||
The advisory agreement defers the Company’s obligation to pay asset management fees, without interest, accruing from February 1, 2013 through July 31, 2013. The Company will only be obligated to pay the Advisor such deferred amounts if and to the extent that the Company’s funds from operations, as such term is defined by the National Association of Real Estate Investment Trusts and interpreted by the Company, as adjusted for the effects of straight-line rents and acquisition costs and expenses (“AFFO”) for the immediately preceding month exceeds the amount of distributions declared for record dates of such prior month (an “AFFO Surplus”). The amount of any AFFO Surplus in a given month shall be applied first to pay to the Advisor asset management fees currently due with respect to such month (including any that would otherwise have been deferred for that month in accordance with the advisory agreement) and then to pay asset management fees previously deferred by the Advisor in accordance with the advisory agreement that remain unpaid. As of December 31, 2014, the Company had accrued and deferred payment of $1.5 million of asset management fees for February through July 2013 under the advisory agreement, as the Company believes the payment of this amount to the Advisor is probable. These fees will be reimbursed in accordance with the terms noted above. | |||||||||||||||||||||
In addition, the advisory agreement defers without interest under certain circumstances, the Company’s obligation to pay asset management fees accruing from August 1, 2013. Specifically, the advisory agreement defers the Company’s obligation to pay an asset management fee for any month in which the Company’s modified funds from operations (“MFFO”) for such month, as such term is defined in the practice guideline issued by the Investment Program Association (“IPA”) in November 2010 and interpreted by the Company, excluding asset management fees, does not exceed the amount of distributions declared by the Company for record dates of that month. The Company remains obligated to pay the Advisor an asset management fee in any month in which the Company’s MFFO, excluding asset management fees, for such month exceeds the amount of distributions declared for the record dates of that month (such excess amount, an “MFFO Surplus”); however, any amount of such asset management fee in excess of the MFFO Surplus is also deferred under the advisory agreement. If the MFFO Surplus for any month exceeds the amount of the asset management fee payable for such month, any remaining MFFO Surplus will not be applied to pay asset management fee amounts previously deferred by the Advisor in accordance with the advisory agreement. As of December 31, 2014, the Company had accrued and deferred payment of $3.3 million of asset management fees for August 2013 through December 31, 2014 under the advisory agreement, as the Company believes the payment of this amount to the Advisor is probable. The fees will be reimbursed in accordance with the terms noted above. | |||||||||||||||||||||
However, notwithstanding any of the foregoing, any and all deferred asset management fees shall be immediately due and payable at such time as the Company’s stockholders have received, together as a collective group, aggregate distributions (including distributions that may constitute a return of capital for federal income tax purposes) sufficient to provide (i) a return of their net invested capital, or the amount calculated by multiplying the total number of shares purchased by stockholders by the issue price, reduced by any amounts to repurchase shares pursuant to the Company’s share redemption plan, and (ii) an 8.0% per year cumulative, non-compounded return on such net invested capital (the “Stockholders’ 8% Return”). The Stockholders’ 8% Return is not based on the return provided to any individual stockholder. Accordingly, it is not necessary for each of the Company’s stockholders to have received any minimum return in order for the Advisor to receive deferred asset management fees. | |||||||||||||||||||||
Property Management — Account Services Agreements | |||||||||||||||||||||
In connection with its acquisitions of Poplar Creek, The Residence at Waterstone, Legacy Crescent Park, Legacy at Martin’s Point, Wesley Village, Millennium Apartment Homes, Legacy Grand at Concord and Lofts at the Highlands, the Company, through an indirect wholly owned subsidiary, entered into separate Property Management — Account Services Agreements (each, a “Services Agreement”) with Legacy Partners Residential L.P. (“LPR”), an affiliate of the Sub-Advisor, pursuant to which LPR will provide certain account maintenance and bookkeeping services related to these properties. Under each Services Agreement, the Company pays LPR a monthly fee in an amount equal to 1% of each property’s gross monthly collections. Unless otherwise provided for in an approved operating budget for a property, LPR will be responsible for all expenses that it incurs in rendering services pursuant to each Services Agreement. Each Services Agreement has an initial term of one year and will continue thereafter on a month-to-month basis unless either party gives 30 days’ prior written notice of its desire to terminate the Services Agreement. Notwithstanding the foregoing, the Company may terminate each Services Agreement at any time without cause upon 30 days’ prior written notice to LPR. The Company may also terminate each Services Agreement with cause immediately upon notice to LPR and the expiration of any applicable cure period. LPR may terminate each Services Agreement at any time without cause upon 90 days’ prior written notice to the Company. |
UNAUDITED_PRO_FORMA_FINANCIAL_
UNAUDITED PRO FORMA FINANCIAL INFORMATION | 12 Months Ended | ||||||||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||||||||
Business Acquisition, Pro Forma Information [Abstract] | |||||||||||||||||||||||||||
BUSINESS ACQUISITIONS | RECENT ACQUISITIONS OF REAL ESTATE | ||||||||||||||||||||||||||
During the year ended December 31, 2014, the Company acquired the following properties (dollars in thousands): | |||||||||||||||||||||||||||
Property Name | City | State | Acquisition Date | Land | Building | Tenant Origination and Absorption Costs | Other Intangible Assets | Total | |||||||||||||||||||
and Improvements | Purchase Price | ||||||||||||||||||||||||||
Legacy Grand at Concord | Concord | NC | 2/18/14 | $ | 1,465 | $ | 25,960 | $ | 542 | $ | — | $ | 27,967 | ||||||||||||||
Lofts at the Highlands (1) | St. Louis | MO | 2/25/14 | 3,000 | 32,486 | 510 | 2,946 | (2) | 38,942 | ||||||||||||||||||
$ | 4,465 | $ | 58,446 | $ | 1,052 | $ | 2,946 | $ | 66,909 | ||||||||||||||||||
_____________________ | |||||||||||||||||||||||||||
(1) In connection with the acquisition of Lofts at the Highlands, the Company assumed the Lofts at the Highlands Mortgage Loan. The Company recorded the mortgage debt assumed with an outstanding principal balance of $32.0 million at an estimated fair value of $29.1 million, which is net of a discount on note payable of $2.9 million due to the below-market interest rate. The discount on note payable is amortized over the remaining life of the loan of 38.5 years. | |||||||||||||||||||||||||||
(2) The property is subject to certain property tax abatements through 2031. The estimated fair value of the property tax abatements of $2.9 million is recorded as deferred financing costs, prepaid expenses and other assets on the Company’s consolidated balance sheet as of the acquisition date and amortized over the tax abatement period of 17.9 years. | |||||||||||||||||||||||||||
The in-place leases acquired in connection with these acquisitions had a total weighted-average amortization period of 6 months as of the date of acquisition. | |||||||||||||||||||||||||||
The Company recorded each acquisition as a business combination and expensed $1.0 million of acquisition costs related to these properties during the year ended December 31, 2014. During the year ended December 31, 2014, the Company recognized $5.3 million of total revenues and $4.0 million of operating expenses from these properties. | |||||||||||||||||||||||||||
PRO FORMA FINANCIAL INFORMATION | |||||||||||||||||||||||||||
The following table summarizes, on an unaudited pro forma basis, the combined results of operations of the Company for the years ended December 31, 2014 and 2013. The Company acquired two apartment complexes during the year ended December 31, 2014, both of which were accounted for as business combinations. The following unaudited pro forma information for the years ended December 31, 2014 and 2013 has been prepared to give effect to the acquisition of Lofts at the Highlands as if the acquisition occurred on January 1, 2013. This pro forma information does not purport to represent what the actual results of operations of the Company would have been had this acquisition occurred on January 1, 2013, nor does it purport to predict the results of operations for future periods (in thousands, except share and per share amounts). | |||||||||||||||||||||||||||
For the Years Ended December 31, | |||||||||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||||||||
Revenues | $ | 42,785 | $ | 36,333 | |||||||||||||||||||||||
Depreciation and amortization | $ | 12,146 | $ | 13,944 | |||||||||||||||||||||||
Net loss | $ | (2,558 | ) | $ | (8,444 | ) | |||||||||||||||||||||
Net loss per common share, basic and diluted | $ | (0.13 | ) | $ | (0.45 | ) | |||||||||||||||||||||
Weighted-average number of common shares outstanding, basic and diluted | 20,024,428 | 18,781,544 | |||||||||||||||||||||||||
The unaudited pro forma information for the year ended December 31, 2014 was adjusted to exclude $0.6 million of acquisition costs incurred in 2014 related to Lofts at the Highlands. |
SELECTED_QUARTERLY_FINANCIAL_D
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) | SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) | ||||||||||||||||
Presented below is a summary of the unaudited quarterly financial information for the years ended December 31, 2014 and 2013 (in thousands, except per share amounts): | |||||||||||||||||
2014 | |||||||||||||||||
First Quarter | Second Quarter | Third Quarter | Fourth Quarter | ||||||||||||||
Revenues | $ | 9,617 | $ | 10,823 | $ | 10,909 | $ | 10,851 | |||||||||
Net loss | $ | (1,831 | ) | $ | (930 | ) | $ | (500 | ) | $ | (299 | ) | |||||
Net loss per common share, basic and diluted | $ | (0.09 | ) | $ | (0.05 | ) | $ | (0.03 | ) | $ | (0.01 | ) | |||||
Distributions declared per common share (1) | $ | 0.16 | $ | 0.162 | $ | 0.164 | $ | 0.164 | |||||||||
2013 | |||||||||||||||||
First Quarter | Second Quarter | Third Quarter | Fourth Quarter | ||||||||||||||
Revenues | $ | 6,730 | $ | 7,912 | $ | 9,136 | $ | 9,047 | |||||||||
Net loss | $ | (2,167 | ) | $ | (3,336 | ) | $ | (1,526 | ) | $ | (716 | ) | |||||
Net loss per common share, basic and diluted | $ | (0.14 | ) | $ | (0.18 | ) | $ | (0.08 | ) | $ | (0.04 | ) | |||||
Distributions declared per common share (1) | $ | 0.16 | $ | 0.162 | $ | 0.164 | $ | 0.164 | |||||||||
_____________________ | |||||||||||||||||
(1) Distributions declared per common shares assumes each share was issued and outstanding each day during the respective periods from January 1, 2013 through December 31, 2014. Each day during the periods from January 1, 2013 through December 31, 2014 was a record date for distributions. Distributions were calculated at a rate of $0.00178082 per share per day. |
COMMITMENTS_AND_CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2014 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES |
Economic Dependency | |
The Company is dependent on the Advisor and the Sub-Advisor for certain services that are essential to the Company, including the identification, evaluation, negotiation, acquisition and disposition of investments; management of the daily operations of the Company’s investment portfolio; and other general and administrative responsibilities. In the event that these companies are unable to provide the respective services, the Company will be required to obtain such services from other sources. | |
Environmental | |
As an owner of real estate, the Company is subject to various environmental laws of federal, state and local governments. Although there can be no assurance, the Company is not aware of any environmental liability that could have a material adverse effect on its financial condition or results of operations. However, changes in applicable environmental laws and regulations, the uses and conditions of properties in the vicinity of the Company’s property, the activities of its tenants and other environmental conditions of which the Company is unaware with respect to the property could result in future environmental liabilities. | |
Legal Matters | |
From time to time, the Company may become party to legal proceedings that arise in the ordinary course of its business. Management is not aware of any legal proceedings of which the outcome is probable or reasonably possible to have a material adverse effect on the Company’s results of operations or financial condition, which would require accrual or disclosure of the contingency and possible range of loss. Additionally, the Company has not recorded any loss contingencies related to legal proceedings in which the potential loss is deemed to be remote. |
SUBSEQUENT_EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2014 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | SUBSEQUENT EVENTS |
The Company evaluates subsequent events up until the date the consolidated financial statements are issued. | |
Distributions Paid | |
On January 2, 2015, the Company paid distributions of $1.1 million, which related to distributions declared for daily record dates for each day in the period from December 1, 2014 through December 31, 2014. On February 2, 2015, the Company paid distributions of $1.1 million, which related to distributions declared for daily record dates for each day in the period from January 1, 2015 through January 31, 2015. On March 2, 2015, the Company paid distributions of $1.0 million, which related to distributions declared for daily record dates for each day in the period from February 1, 2015 through February 28, 2015. | |
Distributions Declared | |
On January 15, 2015, the Company’s board of directors declared distributions based on daily record dates for the period from March 1, 2015 through March 31, 2015, which the Company expects to pay in April 2015. On March 5, 2015, the Company’s board of directors declared distributions based on daily record dates for the period from April 1, 2015 through April 30, 2015, which the Company expects to pay in May 2015, and distributions based on daily record dates for the period from May 1, 2015 through May 31, 2015, which the Company expects to pay in June 2015. Investors may choose to receive cash distributions or purchase additional shares through the Company’s dividend reinvestment plan. | |
Distributions for these periods will be calculated based on stockholders of record each day during these periods at a rate of $0.00178082 per share per day and equal a daily amount that, if paid each day for a 365-day period, would equal a 6.5% annualized rate based on the initial primary offering price for the Initial Offering of $10.00 per share or a 6.4% annualized rate based on the Company’s December 9, 2014 estimated value per share of $10.14. |
SCHEDULE_III_REAL_ESTATE_ASSET
SCHEDULE III REAL ESTATE ASSETS AND ACCUMULATED DEPRECIATION AND AMORTIZATION | 12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||||||||||||||||||||||||||
SEC Schedule III, Real Estate and Accumulated Depreciation Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||
SCHEDULE III REAL ESTATE ASSETS AND ACCUMULATED DEPRECIATION AND AMORTIZATION | |||||||||||||||||||||||||||||||||||||||||||||
Initial Cost to Company | Gross Amount at which Carried at Close of Period | ||||||||||||||||||||||||||||||||||||||||||||
Description | Location | Ownership Percent | Encumbrances | Land | Building and Improvements (1) | Total | Cost Capitalized Subsequent to Acquisition (2) | Land | Building and Improvements (1) | Total (3) | Accumulated Depreciation and Amortization | Original Date of Construction | Date Acquired | ||||||||||||||||||||||||||||||||
Legacy at Valley Ranch | Irving, TX | 100% | $ | 32,131 | $ | 4,838 | $ | 31,750 | $ | 36,588 | $ | (117 | ) | $ | 4,838 | $ | 31,633 | $ | 36,471 | $ | (3,868 | ) | 1999 | 10/26/10 | |||||||||||||||||||||
Poplar Creek | Schaumburg, IL | 100% | 20,143 | 7,020 | 20,180 | 27,200 | (202 | ) | 7,020 | 19,978 | 26,998 | (1,723 | ) | 1986/2007 | 2/9/12 | ||||||||||||||||||||||||||||||
The Residence at Waterstone | Pikesville, MD | 100% | 47,419 | 7,700 | 57,000 | 64,700 | (63 | ) | 7,700 | 56,937 | 64,637 | (4,382 | ) | 2002 | 4/6/12 | ||||||||||||||||||||||||||||||
Legacy Crescent Park | Greer, SC | 100% | 14,146 | 1,710 | 19,090 | 20,800 | (595 | ) | 1,710 | 18,495 | 20,205 | (1,622 | ) | 2008 | 5/3/12 | ||||||||||||||||||||||||||||||
Legacy at Martin’s Point | Lombard, IL | 100% | 22,781 | 3,500 | 31,950 | 35,450 | 1,619 | 3,500 | 33,569 | 37,069 | (2,864 | ) | 1989/2009 | 5/31/12 | |||||||||||||||||||||||||||||||
Wesley Village | Charlotte, NC | 100% | 28,253 | 5,000 | 39,915 | 44,915 | (692 | ) | 5,057 | 39,166 | 44,223 | (2,528 | ) | 2009 | 11/6/12 | ||||||||||||||||||||||||||||||
Watertower Apartments | Eden Prairie, MN | 100% | 25,000 | 4,100 | 34,275 | 38,375 | 59 | 4,100 | 34,334 | 38,434 | (2,036 | ) | 2004 | 1/15/13 | |||||||||||||||||||||||||||||||
Crystal Park at Waterford | Frederick, MD | 100% | 28,391 | 5,666 | 39,234 | 44,900 | 847 | 5,666 | 40,081 | 45,747 | (2,194 | ) | 1990 | 5/8/13 | |||||||||||||||||||||||||||||||
Millennium Apartment Homes | Greenville, SC | 100% | 21,175 | 2,772 | 30,828 | 33,600 | (510 | ) | 2,772 | 30,318 | 33,090 | (1,572 | ) | 2009 | 6/7/13 | ||||||||||||||||||||||||||||||
Legacy Grand at Concord | Concord, NC | 100% | 22,981 | 1,465 | 26,502 | 27,967 | (296 | ) | 1,465 | 26,206 | 27,671 | (718 | ) | 2010 | 2/18/14 | ||||||||||||||||||||||||||||||
Lofts at the Highlands | St. Louis, MO | 100% | 31,611 | 3,000 | 32,996 | 35,996 | (334 | ) | 3,000 | 32,662 | 35,662 | (837 | ) | 2006 | 2/25/14 | ||||||||||||||||||||||||||||||
TOTAL | $ | 294,031 | $ | 46,771 | $ | 363,720 | $ | 410,491 | $ | (284 | ) | $ | 46,828 | $ | 363,379 | $ | 410,207 | $ | (24,344 | ) | |||||||||||||||||||||||||
_____________________ | |||||||||||||||||||||||||||||||||||||||||||||
(1) Building and improvements include tenant origination and absorption costs. | |||||||||||||||||||||||||||||||||||||||||||||
(2) Costs capitalized subsequent to acquisition is net of write-offs of fully depreciated/amortized assets. | |||||||||||||||||||||||||||||||||||||||||||||
(3) The aggregate cost of real estate for federal income tax purposes was $434.9 million as of December 31, 2014. | |||||||||||||||||||||||||||||||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||||||||||||||||||||||||||||||
Real Estate: | |||||||||||||||||||||||||||||||||||||||||||||
Balance at the beginning of the year | $ | 343,634 | $ | 227,038 | $ | 37,241 | |||||||||||||||||||||||||||||||||||||||
Acquisitions | 63,963 | 116,875 | 193,900 | ||||||||||||||||||||||||||||||||||||||||||
Improvements | 4,596 | 5,159 | 1,260 | ||||||||||||||||||||||||||||||||||||||||||
Write-off of fully depreciated and fully amortized assets | (1,301 | ) | (4,235 | ) | (5,363 | ) | |||||||||||||||||||||||||||||||||||||||
Loss due to property damages | (685 | ) | (1,203 | ) | — | ||||||||||||||||||||||||||||||||||||||||
Balance at the end of the year | $ | 410,207 | $ | 343,634 | $ | 227,038 | |||||||||||||||||||||||||||||||||||||||
Accumulated depreciation and amortization: | |||||||||||||||||||||||||||||||||||||||||||||
Balance at the beginning of the year | $ | 13,317 | $ | 5,282 | $ | 2,649 | |||||||||||||||||||||||||||||||||||||||
Depreciation and amortization expense | 12,328 | 12,270 | 7,996 | ||||||||||||||||||||||||||||||||||||||||||
Write-off of fully depreciated and fully amortized assets | (1,301 | ) | (4,235 | ) | (5,363 | ) | |||||||||||||||||||||||||||||||||||||||
Balance at the end of the year | $ | 24,344 | $ | 13,317 | $ | 5,282 | |||||||||||||||||||||||||||||||||||||||
SUMMARY_OF_SIGNIFICANT_ACCOUNT1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended | |
Dec. 31, 2014 | ||
Accounting Policies [Abstract] | ||
Principles of Consolidation and Basis of Presentation | The consolidated financial statements include the accounts of the Company, REIT Holdings, the Operating Partnership and their direct and indirect wholly owned subsidiaries. All significant intercompany balances and transactions are eliminated in consolidation. | |
The consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) as contained within the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) and the rules and regulations of the SEC. | ||
Use of Estimates | The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could materially differ from those estimates. | |
Reclassifications | Certain amounts in the Company’s prior period consolidated financial statements have been reclassified to conform to the current period presentation. These reclassifications have not changed the results of operations of prior periods. | |
Revenue Recognition | The Company leases apartment units under operating leases with terms generally of one year or less. Generally, credit investigations will be performed for prospective residents and security deposits will be obtained. The Company recognizes rental revenue, net of concessions, on a straight-line basis over the term of the lease, when collectibility is reasonably assured. | |
The Company will recognize gains on sales of real estate either in total or deferred for a period of time, depending on whether a sale has been consummated, the extent of the buyer’s investment in the property being sold, whether the receivable of the Company is subject to future subordination, and the degree of the Company’s continuing involvement with the property after the sale. If the criteria for profit recognition under the full-accrual method are not met, the Company will defer gain recognition and account for the continued operations of the property by applying the percentage-of-completion, reduced profit, deposit, installment or cost recovery method, as appropriate, until the appropriate criteria are met. | ||
Other income, including interest earned on the Company’s cash, is recognized as it is earned. | ||
Real Estate, Depreciation and Amortization | Real estate properties are carried at cost and depreciated using the straight-line method over the estimated useful lives of 40 years for buildings, 10–20 years for building improvements, 10–20 years for land improvements and five to 12 years for computer, furniture, fixtures and equipment. Costs directly associated with the development of land and those incurred during construction are capitalized as part of the investment basis. Acquisition costs are expensed as incurred. Operating expenses incurred that are not related to the development and construction of the real estate investments are expensed as incurred. Repairs, maintenance and tenant turnover costs are expensed as incurred and significant replacements and improvements are capitalized. Repairs, maintenance and tenant turnover costs include all costs that do not extend the useful life of the real estate property. The Company considers the period of future benefit of an asset to determine its appropriate useful life. | |
Intangible assets related to in-place leases are amortized to expense over the average remaining non-cancelable terms of the respective in-place leases. | ||
Real Estate, Development Costs | The Company will capitalize development and construction costs (including interest and other financing fees, property taxes, and other direct and indirect development costs) beginning when active development commences and ending when apartment units are available for occupancy and all infrastructure is substantially complete. | |
Real Estate, Real Estate Acquisition Valuation | The Company records the acquisition of income-producing real estate or real estate that will be used for the production of income as a business combination. All assets acquired and liabilities assumed in a business combination are measured at their acquisition-date fair values. Acquisition costs are expensed as incurred and restructuring costs that do not meet the definition of a liability at the acquisition date are expensed in periods subsequent to the acquisition date. | |
Intangible assets include the value of in-place leases, which represents the estimated value of the net cash flows of the in-place leases to be realized, 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. Acquired in-place lease values are amortized to expense over the average remaining non-cancelable terms of the respective in-place leases. | ||
The Company assesses the acquisition-date fair values of all tangible assets, identifiable intangibles and assumed liabilities using methods similar to those used by independent appraisers (e.g., discounted cash flow analysis) and that utilize appropriate discount and/or capitalization rates and available market information. Estimates of future cash flows are based on a number of 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. | ||
The Company records above-market and below-market in-place lease values for acquired properties based on the present value (using a discount rate that reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to the in-place leases and (ii) management’s estimate of fair market lease rates for the corresponding in-place leases, measured over a period equal to the remaining non-cancelable term of above-market in-place leases and for the initial term plus any extended term for any leases with below-market renewal options. The Company amortizes any recorded above-market or below-market lease values as a reduction or increase, respectively, to rental income over the remaining non-cancelable terms of the respective leases, including any below-market renewal periods. | ||
The Company estimates the value of tenant origination and absorption costs by considering the estimated carrying costs during hypothetical expected lease-up periods, considering current market conditions. In estimating carrying costs, management includes real estate taxes, insurance and other operating expenses and estimates of lost rentals at market rates during the expected lease-up periods. The Company amortizes the value of tenant origination and absorption costs to depreciation and amortization expense over the remaining non-cancelable term of the leases. | ||
Estimates of the fair values of the tangible assets, identifiable intangibles and assumed liabilities require the Company to make significant assumptions, such as market lease rates, property-operating expenses, carrying costs during lease-up periods, discount rates, market absorption periods, and the number of years the property will be held for investment. The use of inappropriate assumptions would result in an incorrect valuation of the Company’s acquired tangible assets, identifiable intangibles and assumed liabilities, which would impact the amount of the Company’s net income. | ||
Real Estate, Impairments of Real Estate and Related Intangible Assets and Liabilities | The Company monitors events and changes in circumstances that could indicate that the carrying amounts of its real estate and related intangible assets and liabilities may not be recoverable or realized. When indicators of potential impairment suggest that the carrying value of real estate and related intangible assets and liabilities may not be recoverable, the Company will assess the recoverability by estimating whether the Company will recover the carrying value of the real estate and related intangible assets and liabilities through its undiscounted future cash flows and its eventual disposition. If, based on this analysis, 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 would record an impairment loss to the extent that the carrying value exceeds the estimated fair value of the real estate and related intangible assets and liabilities. The Company did not record any impairment loss on its real estate and related intangible assets and liabilities during the years ended December 31, 2014, 2013 and 2012. | |
Real Estate, Insurance Proceeds for Property Damages | The Company maintains an insurance policy that provides coverage for property damages and business interruption. Losses due to physical damages are recognized during the accounting period in which they occur while the amount of monetary assets to be received from the insurance policy is recognized when receipt of insurance recoveries is probable. Losses, which are reduced by the related insurance recoveries, are recorded as operating, maintenance and management expenses on the accompanying consolidated statements of income. Anticipated proceeds in excess of recognized losses would be considered a gain contingency and recognized when the contingency related to the insurance claim has been resolved. Anticipated recoveries for lost rental revenue due to property damages are also considered to be a gain contingency and recognized when the contingency related to the insurance claim has been resolved. | |
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. Cash and cash equivalents are stated at cost, which approximates fair value. There are no restrictions on the use of the Company’s cash and cash equivalents as of December 31, 2014. | |
The Company’s cash and cash equivalent balance exceeds federally insurable limits as of December 31, 2014. The Company monitors the cash balances in its operating accounts and adjusts the cash balances as appropriate; however, these cash balances could be impacted if the underlying financial institutions fail or are subject to other adverse conditions in the financial markets. To date, the Company has experienced no loss or lack of access to cash in its operating accounts. | ||
Restricted Cash | Restricted cash is comprised of lender impound reserve accounts for property taxes and insurance proceeds for property damages. | |
Fair Value Measurements | Under GAAP, the Company is required to measure certain financial instruments at fair value on a recurring basis. In addition, the Company is required to measure other financial instruments and balances at fair value on a non-recurring basis (e.g., carrying value of impaired real estate loans receivable and long-lived assets). Fair value, as defined under GAAP, is the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The GAAP fair value framework uses a three-tiered approach. Fair value measurements are classified and disclosed in one of the following three categories: | |
• | Level 1: unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities; | |
• | 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 in which significant inputs and significant value drivers are observable in active markets; and | |
• | Level 3: prices or valuation techniques where little or no market data is available that requires inputs that are both significant to the fair value measurement and unobservable. | |
When available, the Company will utilize quoted market prices from independent third-party sources to determine fair value and will classify such items in Level 1 or Level 2. In instances where the market for a financial instrument is not active, regardless of the availability of a nonbinding quoted market price, observable inputs might not be relevant and could require the Company to make a significant adjustment to derive a fair value measurement. Additionally, in an inactive market, a market price quoted from an independent third party may rely more on models with inputs based on information available only to that independent third party. When the Company determines the market for a financial instrument owned by the Company to be illiquid or when market transactions for similar instruments do not appear orderly, the Company will use several valuation sources (including internal valuations, discounted cash flow analysis and quoted market prices) and will establish a fair value by assigning weights to the various valuation sources. | ||
Changes in assumptions or estimation methodologies can have a material effect on these estimated fair values. In this regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, may not be realized in an immediate settlement of the instrument. | ||
The Company considers the following factors to be indicators of an inactive market: (i) there are few recent transactions, (ii) price quotations are not based on current information, (iii) price quotations vary substantially either over time or among market makers (for example, some brokered markets), (iv) indexes that previously were highly correlated with the fair values of the asset or liability are demonstrably uncorrelated with recent indications of fair value for that asset or liability, (v) there is a significant increase in implied liquidity risk premiums, yields, or performance indicators (such as delinquency rates or loss severities) for observed transactions or quoted prices when compared with the Company’s estimate of expected cash flows, considering all available market data about credit and other nonperformance risk for the asset or liability, (vi) there is a wide bid-ask spread or significant increase in the bid-ask spread, (vii) there is a significant decline or absence of a market for new issuances (that is, a primary market) for the asset or liability or similar assets or liabilities, and (viii) little information is released publicly (for example, a principal-to-principal market). | ||
The Company considers the following factors to be indicators of non-orderly transactions: (i) there was not adequate exposure to the market for a period before the measurement date to allow for marketing activities that are usual and customary for transactions involving such assets or liabilities under current market conditions, (ii) there was a usual and customary marketing period, but the seller marketed the asset or liability to a single market participant, (iii) the seller is in or near bankruptcy or receivership (that is, distressed), or the seller was required to sell to meet regulatory or legal requirements (that is, forced), and (iv) the transaction price is an outlier when compared with other recent transactions for the same or similar assets or liabilities. | ||
Dividend Reinvestment Plan | The Company has adopted a dividend reinvestment plan through which common stockholders may elect to reinvest an amount equal to the distributions declared on their shares in additional shares of the Company’s common stock in lieu of receiving cash distributions. Pursuant to the dividend reinvestment plan, the purchase price of shares of the Company’s common stock issued under the dividend reinvestment plan was equal to 95% of the price to acquire a share of common stock in one of the Company’s primary Offerings. At such time as the Company announces an estimated value per share of its common stock for a purpose other than to set the price to acquire a share in one of the primary Offerings, participants in the dividend reinvestment plan will acquire shares of common stock under the dividend reinvestment plan at a price equal to 95% of the estimated value per share of the Company’s common stock. | |
On March 4, 2013, the Company’s board of directors approved an updated primary offering price for the Company’s common stock in the Initial Offering of $10.68 (unaudited) based on the estimated value of the Company’s assets less the estimated value of the Company’s liabilities, divided by the number of shares outstanding, all as of December 31, 2012 and increased for certain offering and other costs. Pursuant to the terms of the dividend reinvestment plan, commencing on the next purchase date under the plan, which occurred on April 1, 2013, the purchase price per share under the dividend reinvestment plan was $10.15, which is equal to 95% of $10.68. | ||
On March 6, 2014, the Company’s board of directors approved an updated primary offering price for the Company’s common stock in the Follow-on Offering of $10.96 (unaudited) based on the estimated value of the Company’s assets less the estimated value of the Company’s liabilities, divided by the number of shares outstanding, all as of December 31, 2013 and increased for certain offering and other costs. Pursuant to the terms of the dividend reinvestment plan, commencing on the next purchase date under the plan, which occurred on April 1, 2014, the purchase price per share under the dividend reinvestment plan was $10.42, which is equal to 95% of $10.96. | ||
On December 9, 2014, the Company’s board of directors approved an estimated value per share of the Company’s common stock of $10.14 (unaudited) based on the estimated value of the Company’s assets less the estimated value of the Company’s liabilities, divided by the number of shares outstanding, all as of September 30, 2014. Pursuant to the terms of the dividend reinvestment plan, effective on the next purchase date under the plan, which occurred on January 2, 2015, the purchase price per share under the dividend reinvestment plan is $9.64, which is equal to 95% of $10.14. The Company currently expects to utilize an independent valuation firm to update the estimated value per share in December of each year, in accordance with Practice Guideline 2013-01, Valuations of Publicly Registered Non-Listed REITs, issued by the Investment Program Association (“IPA”) in April 2013. The board of directors of the Company may amend or terminate the dividend reinvestment plan for any reason upon 10 days’ notice to participants. | ||
As provided under the dividend reinvestment plan, for a participant to terminate participation effective for a particular distribution, the Company must have received notice of termination from the participant at least four business days prior to the last business day of the month to which the distribution relates. Also as provided under the dividend reinvestment plan, and in addition to the standard termination procedures, a dividend reinvestment plan participant shall have no less than two business days after the date the Company publicly announces an updated estimated value per share in a filing with the SEC to terminate participation. | ||
Redeemable Common Stock | The Company has adopted a share redemption program that may enable stockholders to sell their shares to the Company in limited circumstances. | |
Share Redemption Program Terms and Amendments | ||
Pursuant to the Company’s share redemption program, as amended to date, there are several limitations on Company’s ability to redeem shares: | ||
• | Unless the shares are being redeemed in connection with a stockholder’s death, “qualifying disability,” or “determination of incompetence” (both as defined in the share redemption program and together with redemptions in connection with a stockholder’s death, “special redemptions”), the Company may not redeem shares until the stockholder has held his or her shares for one year. | |
• | Subject to the limitations of the Fourth Amended Share Redemption Program (defined below), during each calendar year, the share redemption program limits the number of shares the Company may redeem to those that the Company could purchase with the amount of the net proceeds from the issuance of shares under the dividend reinvestment plan during the prior calendar year. | |
• | During any calendar year, the Company may redeem no more than 5% of the weighted-average number of shares outstanding during the prior calendar year. | |
• | The Company has no obligation to redeem shares if the redemption would violate the restrictions on distributions under Maryland law, which prohibits distributions that would cause a corporation to fail to meet statutory tests of solvency. | |
Pursuant to the Company’s share redemption program, as amended to date, unless the Company was redeeming a stockholder’s shares in connection with a special redemption, and until such time as the Company established an estimated value per share for a purpose other than to set the price to acquire a share in one of its now-terminated primary Offerings, the price at which the Company would redeem the shares of a qualifying stockholder was as follows: | ||
i. | For those shares held by the redeeming stockholder for at least one year, 92.5% of the price paid to acquire the shares from the Company; | |
ii. | For those shares held by the redeeming stockholder for at least two years, 95.0% of the price paid to acquire the shares from the Company; | |
iii. | For those shares held by the redeeming stockholder for at least three years, 97.5% of the price paid to acquire the shares from the Company; and | |
iv. | For those shares held by the redeeming stockholder for at least four years, 100% of the price paid to acquire the shares from the Company. | |
Notwithstanding the above, for shares redeemed in connection with a special redemption, the redemption price was the amount paid to acquire the shares from the Company. | ||
On January 24, 2014, the Company’s board of directors approved a fourth amended and restated share redemption program (the “Fourth Amended Share Redemption Program”). The Fourth Amended Share Redemption Program became effective for redemptions under the program on or after February 27, 2014. Under the Fourth Amended Share Redemption Program, the Company may redeem only the number of shares that it could purchase with the amount of the net proceeds from the sale of shares under its dividend reinvestment plan during the prior calendar year; provided that the Company may not redeem more than $2.0 million of shares in the aggregate during any calendar year. Furthermore, during any calendar year, once the Company has redeemed $1.5 million of shares under the Company’s share redemption program, including redemptions in connection with a special redemption, the remaining $0.5 million of the $2.0 million annual limit shall be reserved exclusively for shares being redeemed in connection with special redemptions. In establishing the $2.0 million limitation, the Company’s board of directors considered the $2.0 million of redemptions processed during the 2013 calendar year and the cash requirements necessary to effectively manage the Company’s assets. | ||
There were no other changes to the Fourth Amended Share Redemption Program. | ||
In August 2014, the Company exhausted the $1.5 million of funds available for all redemptions and thus, because of the limitations on the dollar value of shares that could be redeemed under the Fourth Amended Share Redemption Program, as described above, the Company was not be able to process ordinary redemptions for the remainder of 2014 and could only process special redemptions. Thus, as of December 31, 2014, the Company had $0.5 million of outstanding and unfulfilled ordinary redemption requests, representing 47,073 shares. The $2.0 million annual limitation was reset beginning January 1, 2015 and the $0.5 million of outstanding unfulfilled redemption requests as of December 31, 2014 were fulfilled in January 2015. | ||
On October 14, 2014, the Company’s board of directors approved a fifth amended and restated share redemption program (the “Fifth Amended Share Redemption Program”). Pursuant to the Fifth Amended Share Redemption Program, unless the Company is redeeming a stockholder’s shares in connection with a special redemption, once the Company establishes an estimated value per share for a purpose other than to set the price to acquire a share in one of its now-terminated primary Offerings, the price at which the Company will redeem the shares of a qualifying stockholder is as follows: | ||
▪ | for those shares held by the redeeming stockholder for at least one year, 92.5% of the Company’s most recent estimated value per share as of the applicable redemption date; | |
▪ | for those shares held by the redeeming stockholder for at least two years, 95.0% of the Company’s most recent estimated value per share as of the applicable redemption date; | |
▪ | for those shares held by the redeeming stockholder for at least three years, 97.5% of the Company’s most recent estimated value per share as of the applicable redemption date; and | |
▪ | for those shares held by the redeeming stockholder for at least four years, 100% of the Company’s most recent estimated value per share as of the applicable redemption date. | |
Once the Company establishes an estimated value per share for a purpose other than to set the price to acquire a share in one of its now-terminated primary Offerings, the redemption price for shares being redeemed in connection with a special redemption will be the estimated value per share. | ||
The Fifth Amended Share Redemption Program also permits the Company’s board of directors to increase or decrease the funding available for the redemption of shares upon ten business days’ notice to our stockholders. The Company may provide notice of a funding increase or decrease by including such information in a Current Report on Form 8-K, a Quarterly Report on Form 10-Q or an Annual Report on Form 10-K, all publicly filed with the Securities and Exchange Commission, or by a separate mailing to the Company’s stockholders. | ||
There were no other material changes in the Fifth Amended Share Redemption Program. The Fifth Amended Share Redemption Program became effective on November 16, 2014, and as a result was effective on the November 2014 redemption date, which was November 28, 2014. | ||
Because of the limitations on the dollar value of shares that may be redeemed under the Fourth Amended Share Redemption Program, as described above, which limitations continue to be in effect under the Fifth Amended Share Redemption Program, only shares redeemed in connection with a special redemption in December 2014 were affected by the amendments in the Fifth Amended Share Redemption Program, with such shares being redeemed at the estimated value per share of $10.14. As the $2.0 million annual limitation was reset in January 2015, all redemptions will be affected by the amendments in the Fifth Amended Share Redemption Program and will be processed at the prices referenced above. | ||
If the Company cannot redeem all shares presented for redemption in any month because of the limitations on redemptions set forth in our share redemption program, then the Company will honor redemption requests on a pro rata basis, except that if a pro rata redemption would result in a stockholder owning less than the minimum purchase requirement described in the Company’s currently effective, or the most recently effective, registration statement as such registration statement has been amended or supplemented, then the Company would redeem all of such stockholder’s shares. | ||
On December 9, 2014, the Company’s board of directors approved an estimated value per share of its common stock of $10.14 (unaudited) based on the estimated value of the Company’s assets less the estimated value of its liabilities, divided by the number of shares outstanding, all as of September 30, 2014. This estimated value per share became effective for the December 2014 redemption date, which was December 31, 2014. Because of the limitations on the dollar value of shares that may be redeemed under the share redemption program, the Company was only able to redeem shares in connection with special redemptions in December 2014. For a full description of the methodologies used to value the Company’s assets and liabilities in connection with the calculation of the December 2014 estimated value per share, see Part II, Item 5, “Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities - Market Information.” | ||
The Company’s board of directors may amend, suspend or terminate the share redemption program with 30 days’ notice to its stockholders. The Company may provide this notice by including such information in a Current Report on Form 8-K or in the Company’s annual or quarterly reports, all publicly filed with the SEC, or by a separate mailing to its stockholders. | ||
The Company will record amounts that are redeemable under the share redemption program as redeemable common stock in its consolidated balance sheets because the shares will be mandatorily redeemable at the option of the holder and therefore their redemption will be outside the control of the Company. The maximum amount redeemable under the Company’s share redemption program is limited to the number of shares the Company could redeem with the amount of the net proceeds from the sale of shares under the dividend reinvestment plan during the prior calendar year; provided, that the Company may not redeem more than $2.0 million of shares in the aggregate during any calendar year. Furthermore, during any calendar year, once the Company has redeemed $1.5 million of shares under the share redemption program, including redemptions in connection with a special redemption, the remaining $0.5 million of the $2.0 million annual limit shall be reserved exclusively for shares being redeemed in connection with a special redemption. However, because the amounts that can be redeemed will be determinable and only contingent on an event that is likely to occur (e.g., the passage of time), the Company will present the net proceeds from the current year dividend reinvestment plan as redeemable common stock in its accompanying consolidated balance sheets. | ||
The Company will classify as liabilities financial instruments that represent a mandatory obligation of the Company to redeem shares. The Company’s redeemable common shares will be contingently redeemable at the option of the holder. When the Company determines it has a mandatory obligation to repurchase shares under the share redemption program, it will reclassify such obligations from temporary equity to a liability based upon their respective settlement values. During the year ended December 31, 2014, the Company redeemed $1.9 million of common stock, which represented all redemption requests received in good order and eligible for redemption through the December 31, 2014 redemption date | ||
Related Party Transactions | Pursuant to the Advisory Agreement and Dealer Manager Agreement, the Company is obligated to pay the Advisor and the Dealer Manager specified fees upon the provision of certain services related to the Offering, the investment of funds in real estate and real estate-related investments, management of the Company’s investments and for other services (including, but not limited to, the disposition of investments). The Company is also obligated to reimburse the Advisor and Dealer Manager for organization and offering costs incurred by the Advisor and the Dealer Manager on behalf of the Company, and the Company is obligated to reimburse the Advisor for acquisition expenses and certain operating expenses incurred on behalf of the Company or incurred in connection with providing services to the Company. In addition, the Advisor is entitled to certain other fees, including an incentive fee upon achieving certain performance goals, as detailed in the Advisory Agreement. | |
The Company records all related party fees as incurred, subject to any limitations described in the Advisory Agreement. The Company had not incurred any disposition fees, subordinated participations in net cash flows, or subordinated incentive listing fees during the year ended December 31, 2014. | ||
Related Party Transactions, Organization and Offering Costs | A portion of the organization and offering costs (other than selling commissions and dealer manager fees) of the Company are paid by the Advisor, the Dealer Manager or their affiliates on behalf of the Company. These organization and other offering costs include expenses to be paid by the Company in connection with the Offering. Organization costs include all expenses to be incurred by the Company in connection with the formation of the Company, including but not limited to legal fees and other costs to incorporate the Company. | |
Pursuant to the Advisory Agreement and the Dealer Manager Agreement, the Company is obligated to reimburse the Advisor, the Dealer Manager or their affiliates, as applicable, for organization and offering costs paid by them on behalf of the Company, provided that the Advisor would be obligated to reimburse the Company to the extent selling commissions, dealer manager fees and other organization and offering costs incurred by the Company in the Offering exceed 15% of gross offering proceeds. As a result, the Company is only liable for these costs up to an amount that, when combined with selling commissions and dealer manager fees, does not exceed 15% of the gross proceeds of the Offering. | ||
Organization costs are expensed as incurred, and offering costs, which include selling commissions and dealer manager fees, will be deferred and charged to stockholders’ equity as such amounts are reimbursed to the Advisor, the Dealer Manager or their affiliates from the gross proceeds of the Offering. The Company expects the Advisor to continue to incur organization and other offering costs on its behalf. | ||
Related Party Transactions, Selling Commissions and Dealer Manager Fees | The Company paid the Dealer Manager up to 6.5% and 3.0% of the gross offering proceeds from the primary Offerings as selling commissions and dealer manager fees, respectively. A reduced sales commission and dealer manager fee was paid with respect to certain volume discount sales. No sales commission or dealer manager fee is paid with respect to shares issued through the dividend reinvestment plan. The Dealer Manager reallowed 100% of sales commissions earned to participating broker-dealers. The Dealer Manager may reallow to any participating broker-dealer up to 1% of the gross offering proceeds attributable to that participating broker-dealer as a marketing fee and, in special cases, the Dealer Manager may increase the reallowance. | |
Related Party Transactions, Acquisition Advisory Fee | The Company pays the Advisor an acquisition advisory fee equal to 1% of the cost of investments acquired, including any acquisition expenses and any debt attributable to such investments. | |
Related Party Transactions, Assets Management Fee | Until August 13, 2013, the asset management fee payable to the Advisor with respect to investments in real estate was equal to one twelfth of 1.0% of the amount paid to fund the acquisition, development, construction or improvement of the investment, inclusive of acquisition expenses related thereto (but excluding any acquisition fees related thereto). The amount paid included any portion of the investment that was debt financed. In the case of investments made through joint ventures, the asset management fee was determined based on the Company’s proportionate share of the underlying investment. | |
Effective August 14, 2013, the asset management fee payable by the Company to the Advisor with respect to investments in real estate is a monthly fee equal to the lesser of one-twelfth of (i) 1.0% of the amount paid or allocated to fund the acquisition, development, construction or improvement of the property (whether at or subsequent to acquisition), including acquisition expenses and budgeted capital improvement costs (regardless of the level of debt used to finance the investment), and (ii) 2.0% of the amount paid or allocated to fund the acquisition, development, construction or improvement of the property (whether at or subsequent to acquisition), including acquisition expenses and budgeted capital improvement costs, less any debt used to finance the investment. | ||
In addition, effective January 8, 2013, the Company and the Advisor agreed to defer the Company’s obligation to pay asset management fees under certain circumstances. For more information, see Note 7, “Related Party Transactions - Asset Management Fee.” | ||
Related Party Transactions, Construction Management Fees | In the event that the Sub-Advisor or an affiliate of the Sub-Advisor, assists with planning and coordinating the construction of any building or tenant improvements, the Company will pay the Sub-Advisor or an affiliate of the Sub-Advisor a construction management fee in an amount that is usual and customary for comparable services rendered by third-party management companies to similar projects in the geographic market of the project. Furthermore, the payment of any construction management fees to the Sub-Advisor and its affiliates is subject to approval by the Company’s conflicts committee. Construction management fees are capitalized as part of the associated real estate in our accompanying consolidated balance sheets. | |
Income Taxes | The Company has elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended. To qualify as a REIT, the Company must meet certain organizational and operational requirements, including a requirement to distribute at least 90% of the Company’s annual REIT taxable income to its 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. If the Company fails to qualify as a REIT in any taxable year, it 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 the Company relief under certain statutory provisions. Such an event could materially adversely affect the Company’s net income and net cash available for distribution to stockholders. However, the Company intends to continue to be organized and operated in such a manner as to qualify for treatment as a REIT. | |
The Company has concluded that there are no significant uncertain tax positions requiring recognition in its financial statements. Neither the Company nor its subsidiaries have been assessed interest or penalties by any major tax jurisdictions. The Company’s evaluations were performed for the tax years ended December 31, 2014, 2013 and 2012. As of December 31, 2014, returns for calendar years 2010 through 2013 remain subject to examination by major tax jurisdictions. | ||
Segments | The Company had invested in 11 apartment complexes as of December 31, 2014. Substantially all of the Company’s revenue and net loss is from real estate, and therefore, the Company currently operates in one reportable segment. | |
Per Share Data | Basic net income (loss) per share of common stock is calculated by dividing net income (loss) by the weighted-average number of shares of common stock issued and outstanding during such period. Diluted net income (loss) per share of common stock equals basic net income (loss) per share of common stock as there were no potentially dilutive securities outstanding during the years ended December 31, 2014, 2013 and 2012. | |
Distributions declared per common share were $0.650 for the years ended December 31, 2014, 2013 and 2012, respectively. Distributions declared per common share assumes each share was issued and outstanding each day from January 1, 2012 through December 31, 2014. For each day that was a record date for distributions during the period from January 1, 2012 through December 31, 2014, distributions were calculated at a rate of $0.00178082 per share per day. Each day during the periods from January 1, 2012 through February 28, 2012 and March 1, 2012 through December 31, 2014 was a record date for distributions. | ||
Square Footage, Occupancy and Other Measures | Square footage, occupancy and other measures used to describe real estate investments included in the Notes to Consolidated Financial Statements are presented on an unaudited basis. | |
Recently Issued Accounting Standards Update | In April 2014, the FASB issued ASU No. 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity (“ASU No. 2014-08”). ASU No. 2014-08 limits discontinued operations reporting to disposals of components of an entity that represent a strategic shift that has (or will have) a major effect on an entity’s operations and financial results when any of the following occurs: a) the component of an entity or group of components of an entity meets the criteria to be classified as held for sale; b) the component of an entity or group of components of an entity is disposed of by sale; or c) the component of an entity or group of components of an entity is disposed of other than by sale. ASU No. 2014-08 also requires additional disclosures about discontinued operations. ASU No. 2014-08 is effective for reporting periods beginning after December 15, 2014. Early adoption is permitted, but only for disposals (or classifications as held for sale) that have not been reported in financial statements previously issued or available for issuance. The Company early adopted ASU No. 2014-08 for the reporting period beginning January 1, 2014. As a result of the adoption of ASU No. 2014-08, results of operations for properties that are classified as held for sale in the ordinary course of business on or subsequent to January 1, 2014 would generally be included in continuing operations on the Company’s consolidated statements of operations, to the extent such disposals did not meet the criteria for classification as a discontinued operation described above. Additionally, any gain or loss on sale of real estate that does not meet the criteria for classification as a discontinued operation would be included in income from continuing operations on the consolidated statements of operations. As there are no properties currently classified as held for sale, ASU No. 2014-08 did not have an impact on the presentation of the Company’s financial statements. | |
In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU No. 2014-09”). ASU No. 2014-09 requires an entity to recognize the revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. ASU No. 2014-09 supersedes the revenue requirements in Revenue Recognition (Topic 605) and most industry-specific guidance throughout the Industry Topics of the Codification. ASU No. 2014-09 does not apply to lease contracts within the scope of Leases (Topic 840). ASU No. 2014-09 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016, and is to be applied retrospectively, with early application not permitted. The Company is still evaluating the impact of adopting ASU No. 2014-09 on its financial statements, but does not expect the adoption of ASU No. 2014-09 to have a material impact on its financial statements. | ||
In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements (Subtopic 205-40), Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ASU No. 2014-15”). The amendments in ASU No. 2014-15 require management to evaluate, for each annual and interim reporting period, whether there are conditions or events, considered in the aggregate, that raise substantial doubt about an entity’s ability to continue as a going concern within one year after the date that the financial statements are issued (or are available to be issued when applicable) and, if so, provide related disclosures. ASU No. 2014-15 is effective for annual periods ending after December 15, 2016, and interim periods within annual periods beginning after December 15, 2016. Early adoption is permitted for annual or interim reporting periods for which the financial statements have not previously been issued. The Company does not expect the adoption of ASU 2014-15 to have a significant impact on its financial statements. | ||
In January 2015, the FASB issued ASU No. 2015-01, Income Statement — Extraordinary and Unusual Items (Subtopic 225-20), Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items (“ASU No. 2015-01”). The amendments in ASU No. 2015-01 eliminate from GAAP the concept of extraordinary items. Although the amendments will eliminate the requirements in Subtopic 225-20 for reporting entities to consider whether an underlying event or transaction is extraordinary, the presentation and disclosure guidance for items that are unusual in nature or occur infrequently will be retained and will be expanded to include items that are both unusual in nature and infrequently occurring. ASU No. 2015-01 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2015. Early adoption is permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. The Company does not expect the adoption of ASU 2015-01 to have a significant impact on its financial statements. |
RECENT_ACQUISITIONS_OF_REAL_ES1
RECENT ACQUISITIONS OF REAL ESTATE (Tables) | 12 Months Ended | ||||||||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||||||||
Business Combinations [Abstract] | |||||||||||||||||||||||||||
Schedule of Business Acquisitions, Properties Acquired | During the year ended December 31, 2014, the Company acquired the following properties (dollars in thousands): | ||||||||||||||||||||||||||
Property Name | City | State | Acquisition Date | Land | Building | Tenant Origination and Absorption Costs | Other Intangible Assets | Total | |||||||||||||||||||
and Improvements | Purchase Price | ||||||||||||||||||||||||||
Legacy Grand at Concord | Concord | NC | 2/18/14 | $ | 1,465 | $ | 25,960 | $ | 542 | $ | — | $ | 27,967 | ||||||||||||||
Lofts at the Highlands (1) | St. Louis | MO | 2/25/14 | 3,000 | 32,486 | 510 | 2,946 | (2) | 38,942 | ||||||||||||||||||
$ | 4,465 | $ | 58,446 | $ | 1,052 | $ | 2,946 | $ | 66,909 | ||||||||||||||||||
_____________________ | |||||||||||||||||||||||||||
(1) In connection with the acquisition of Lofts at the Highlands, the Company assumed the Lofts at the Highlands Mortgage Loan. The Company recorded the mortgage debt assumed with an outstanding principal balance of $32.0 million at an estimated fair value of $29.1 million, which is net of a discount on note payable of $2.9 million due to the below-market interest rate. The discount on note payable is amortized over the remaining life of the loan of 38.5 years. | |||||||||||||||||||||||||||
(2) The property is subject to certain property tax abatements through 2031. The estimated fair value of the property tax abatements of $2.9 million is recorded as deferred financing costs, prepaid expenses and other assets on the Company’s consolidated balance sheet as of the acquisition date and amortized over the tax abatement period of 17.9 years. |
REAL_ESTATE_Tables
REAL ESTATE (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Real Estate [Abstract] | |||||||||||||||||
Schedule of Real Estate Investments | The following table provides summary information regarding the properties owned by the Company as of December 31, 2014 (dollars in thousands): | ||||||||||||||||
Property Name | Date Acquired | Location | Total | Accumulated Depreciation and Amortization | Total | ||||||||||||
Real Estate at Cost | Real Estate, Net | ||||||||||||||||
Legacy at Valley Ranch | 10/26/10 | Irving, TX | $ | 36,471 | $ | (3,868 | ) | $ | 32,603 | ||||||||
Poplar Creek | 2/9/12 | Schaumburg, IL | 26,998 | (1,723 | ) | 25,275 | |||||||||||
The Residence at Waterstone | 4/6/12 | Pikesville, MD | 64,637 | (4,382 | ) | 60,255 | |||||||||||
Legacy Crescent Park | 5/3/12 | Greer, SC | 20,205 | (1,622 | ) | 18,583 | |||||||||||
Legacy at Martin’s Point | 5/31/12 | Lombard, IL | 37,069 | (2,864 | ) | 34,205 | |||||||||||
Wesley Village | 11/6/12 | Charlotte, NC | 44,223 | (2,528 | ) | 41,695 | |||||||||||
Watertower Apartments | 1/15/13 | Eden Prairie, MN | 38,434 | (2,036 | ) | 36,398 | |||||||||||
Crystal Park at Waterford | 5/8/13 | Frederick, MD | 45,747 | (2,194 | ) | 43,553 | |||||||||||
Millennium Apartment Homes | 6/7/13 | Greenville, SC | 33,090 | (1,572 | ) | 31,518 | |||||||||||
Legacy Grand at Concord | 2/18/14 | Concord, NC | 27,671 | (718 | ) | 26,953 | |||||||||||
Lofts at the Highlands | 2/25/14 | St. Louis, MO | 35,662 | (837 | ) | 34,825 | |||||||||||
$ | 410,207 | $ | (24,344 | ) | $ | 385,863 | |||||||||||
NOTES_PAYABLE_Tables
NOTES PAYABLE (Tables) | 12 Months Ended | |||||||||||||||
Dec. 31, 2014 | ||||||||||||||||
Debt Disclosure [Abstract] | ||||||||||||||||
Schedule of Long-term Debt Instruments | As of December 31, 2014 and 2013, the Company’s notes payable consisted of the following (dollars in thousands): | |||||||||||||||
Principal as of December 31, 2014 | Principal as of | Contractual | Payment Type | Maturity Date | ||||||||||||
31-Dec-13 | Interest Rate as of | |||||||||||||||
December 31, 2014 (1) | ||||||||||||||||
Legacy at Valley Ranch Mortgage Loan | $ | 32,131 | $ | 32,500 | 3.90% | Principal & Interest | (1) | 4/1/19 | ||||||||
Poplar Creek Mortgage Loan | 20,143 | 20,400 | 4.00% | Principal & Interest | (1) | 3/1/19 | ||||||||||
The Residence at Waterstone Mortgage Loan | 47,419 | 47,905 | 3.80% | Principal & Interest | (1) | 5/1/19 | ||||||||||
Legacy Crescent Park Mortgage Loan | 14,146 | 14,425 | 3.50% | Principal & Interest | (1) | 6/1/19 | ||||||||||
Legacy at Martin’s Point Mortgage Loan | 22,781 | 23,000 | 3.30% | Principal & Interest | (1) | 6/1/19 | ||||||||||
Wesley Village Mortgage Loan | 28,253 | 28,923 | 2.60% | Principal & Interest | (1) | 12/1/17 | ||||||||||
Watertower Mortgage Loan | 25,000 | 25,000 | 2.50% | Principal & Interest | (2) | 2/10/18 | ||||||||||
Crystal Park Mortgage Loan | 28,391 | 29,055 | 2.50% | Principal & Interest | (1) | 6/1/18 | ||||||||||
Millennium Mortgage Loan | 21,175 | 21,648 | 2.70% | Principal & Interest | (1) | 7/1/18 | ||||||||||
Legacy Grand at Concord Mortgage Loan | 22,981 | — | 4.10% | Principal & Interest | (3) | 12/1/50 | ||||||||||
Lofts at the Highlands Mortgage Loan | 31,611 | — | 3.40% | Principal & Interest | (4) | 8/1/52 | ||||||||||
Total notes payable principal outstanding | $ | 294,031 | $ | 242,856 | ||||||||||||
Discount on note payable (5) | (2,817 | ) | — | |||||||||||||
Total notes payable, net | $ | 291,214 | $ | 242,856 | ||||||||||||
_____________________ | ||||||||||||||||
(1) Monthly payments include principal and interest with principal payments calculated using an amortization schedule of 30 years. | ||||||||||||||||
(2) Monthly payments are interest-only during the first two years of the loan. Beginning with the third year of the loan, monthly payments include principal and interest with principal payments calculated using an amortization schedule of 30 years. | ||||||||||||||||
(3) Monthly payments for the Legacy Grand at Concord Mortgage Loan include principal and interest in the sum of $101,159. | ||||||||||||||||
(4) Monthly payments for the Lofts at the Highlands Mortgage Loan include principal and interest in the sum of $124,111. | ||||||||||||||||
(5) Represents the unamortized discount on the Lofts at the Highlands Mortgage Loan due to the below-market interest rate when the loan was assumed. The discount is amortized over the remaining life of the loan. | ||||||||||||||||
Schedule of Maturities of Long-term Debt | The following is a schedule of maturities, including principal payments, for the Company’s notes payable outstanding as of December 31, 2014 (in thousands): | |||||||||||||||
2015 | $ | 5,582 | ||||||||||||||
2016 | 5,844 | |||||||||||||||
2017 | 32,196 | |||||||||||||||
2018 | 72,958 | |||||||||||||||
2019 | 126,682 | |||||||||||||||
Thereafter | 50,769 | |||||||||||||||
$ | 294,031 | |||||||||||||||
FAIR_VALUE_DISCLOSURES_Tables
FAIR VALUE DISCLOSURES (Tables) | 12 Months Ended | ||||||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||
Schedule of Face Value, Carrying Amounts and Fair Value | The following were the face value, carrying amount and fair value of the Company’s notes payable as of December 31, 2014 and 2013 (dollars in thousands): | ||||||||||||||||||||||||
December 31, 2014 | December 31, 2013 | ||||||||||||||||||||||||
Face Value | Carrying Amount | Fair Value | Face Value | Carrying Amount | Fair Value | ||||||||||||||||||||
Financial liabilities: | |||||||||||||||||||||||||
Notes payable | $ | 294,031 | $ | 291,214 | $ | 296,581 | $ | 242,856 | $ | 242,856 | $ | 237,728 | |||||||||||||
RELATED_PARTY_TRANSACTIONS_Tab
RELATED PARTY TRANSACTIONS (Tables) | 12 Months Ended | ||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||
Related Party Transactions [Abstract] | |||||||||||||||||||||
Schedule of Related Party Costs | Pursuant to the terms of these agreements and the property management agreements discussed below, summarized below are the related-party costs incurred by the Company for the years ended December 31, 2014, 2013 and 2012, respectively, and any related amounts payable as of December 31, 2014 and 2013 (in thousands): | ||||||||||||||||||||
Incurred | Payable as of | ||||||||||||||||||||
Years Ended December 31, | December 31, | ||||||||||||||||||||
2014 | 2013 | 2012 | 2014 | 2013 | |||||||||||||||||
Expensed | |||||||||||||||||||||
Asset management fees (1) | $ | 2,598 | $ | 2,670 | $ | 1,521 | $ | 4,752 | $ | 2,454 | |||||||||||
Reimbursable operating expenses (2) | 392 | 454 | 602 | 45 | 63 | ||||||||||||||||
Acquisition fees on real properties | 701 | 1,186 | 1,969 | — | — | ||||||||||||||||
Related party interest expense | — | — | 10 | — | — | ||||||||||||||||
Property management fees (3) | 281 | 207 | 106 | — | — | ||||||||||||||||
Capitalized | |||||||||||||||||||||
Construction management fees | — | 134 | — | — | 134 | ||||||||||||||||
Additional Paid-in Capital | |||||||||||||||||||||
Selling commissions | 363 | 3,101 | 4,668 | — | — | ||||||||||||||||
Dealer manager fees | 173 | 1,797 | 2,358 | — | — | ||||||||||||||||
Reimbursable other offering costs(4) | 59 | 619 | 3,408 | — | 19 | ||||||||||||||||
$ | 4,567 | $ | 10,168 | $ | 14,642 | $ | 4,797 | $ | 2,670 | ||||||||||||
____________________ | |||||||||||||||||||||
(1) See “Advisory Agreement — Asset Management Fees” below. | |||||||||||||||||||||
(2) Reimbursable operating expenses primarily consists of marketing research costs and property pursuit costs incurred by the Sub-Advisor. In addition, the Advisor may seek reimbursement for certain employee costs under the Advisory Agreement. Beginning July 1, 2010, the Company has reimbursed the Advisor for the Company’s allocable portion of the salaries, benefits and overhead of internal audit department personnel providing services to the Company. These amounts totaled $108,000, $87,000 and $74,000 for the years ended December 31, 2014, 2013 and 2012, respectively, and were the only type of employee costs reimbursable under the Advisory Agreement for the years ended December 31, 2014, 2013 and 2012, respectively. The Company will not reimburse for employee costs in connection with services for which the Advisor earns acquisition or disposition fees (other than reimbursement of travel and communication expenses) or for the salaries or benefits the Advisor or its affiliates may pay to the Company’s executive officers. | |||||||||||||||||||||
(3) See “–Property Management – Account Services Agreements.” | |||||||||||||||||||||
(4) See “–Other Offering Costs Related to Follow-on Offering.” |
UNAUDITED_PRO_FORMA_FINANCIAL_1
UNAUDITED PRO FORMA FINANCIAL INFORMATION (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Business Acquisition, Pro Forma Information [Abstract] | |||||||||
Business Acquisition, Pro Forma Information | This pro forma information does not purport to represent what the actual results of operations of the Company would have been had this acquisition occurred on January 1, 2013, nor does it purport to predict the results of operations for future periods (in thousands, except share and per share amounts). | ||||||||
For the Years Ended December 31, | |||||||||
2014 | 2013 | ||||||||
Revenues | $ | 42,785 | $ | 36,333 | |||||
Depreciation and amortization | $ | 12,146 | $ | 13,944 | |||||
Net loss | $ | (2,558 | ) | $ | (8,444 | ) | |||
Net loss per common share, basic and diluted | $ | (0.13 | ) | $ | (0.45 | ) | |||
Weighted-average number of common shares outstanding, basic and diluted | 20,024,428 | 18,781,544 | |||||||
SELECTED_QUARTERLY_FINANCIAL_D1
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||
Schedule of Unaudited Quarterly Financial Information | Presented below is a summary of the unaudited quarterly financial information for the years ended December 31, 2014 and 2013 (in thousands, except per share amounts): | ||||||||||||||||
2014 | |||||||||||||||||
First Quarter | Second Quarter | Third Quarter | Fourth Quarter | ||||||||||||||
Revenues | $ | 9,617 | $ | 10,823 | $ | 10,909 | $ | 10,851 | |||||||||
Net loss | $ | (1,831 | ) | $ | (930 | ) | $ | (500 | ) | $ | (299 | ) | |||||
Net loss per common share, basic and diluted | $ | (0.09 | ) | $ | (0.05 | ) | $ | (0.03 | ) | $ | (0.01 | ) | |||||
Distributions declared per common share (1) | $ | 0.16 | $ | 0.162 | $ | 0.164 | $ | 0.164 | |||||||||
2013 | |||||||||||||||||
First Quarter | Second Quarter | Third Quarter | Fourth Quarter | ||||||||||||||
Revenues | $ | 6,730 | $ | 7,912 | $ | 9,136 | $ | 9,047 | |||||||||
Net loss | $ | (2,167 | ) | $ | (3,336 | ) | $ | (1,526 | ) | $ | (716 | ) | |||||
Net loss per common share, basic and diluted | $ | (0.14 | ) | $ | (0.18 | ) | $ | (0.08 | ) | $ | (0.04 | ) | |||||
Distributions declared per common share (1) | $ | 0.16 | $ | 0.162 | $ | 0.164 | $ | 0.164 | |||||||||
_____________________ | |||||||||||||||||
(1) Distributions declared per common shares assumes each share was issued and outstanding each day during the respective periods from January 1, 2013 through December 31, 2014. Each day during the periods from January 1, 2013 through December 31, 2014 was a record date for distributions. Distributions were calculated at a rate of $0.00178082 per share per day. |
ORGANIZATION_Details
ORGANIZATION (Details) (USD $) | 12 Months Ended | 14 Months Ended | 22 Months Ended | 36 Months Ended | 58 Months Ended | |||||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Apr. 30, 2014 | Dec. 31, 2014 | Mar. 12, 2013 | Dec. 31, 2014 | Aug. 19, 2009 | 31-May-12 | Aug. 07, 2009 | |
Organizational Structure [Line Items] | ||||||||||
Partnership interest in Operating Partnership | 0.10% | |||||||||
Partnership interest in the Operating Partnership and is its sole limited partner | 99.90% | |||||||||
Common stock, shares issued | 20,084,830 | 19,196,501 | 20,084,830 | 20,084,830 | ||||||
Issuance of common stock, value | $11,250,000 | $65,139,000 | $81,306,000 | $21,500,000 | $15,900,000 | $179,200,000 | ||||
Shares of common stock sold under dividend reinvestment plan, value | 5,700,000 | 3,500,000 | 12,900,000 | |||||||
Redemptions of common stock, value | 1,853,000 | 1,978,000 | 350,000 | |||||||
Apartment Complex [Member] | ||||||||||
Organizational Structure [Line Items] | ||||||||||
Number of real estate properties | 11 | 11 | 11 | |||||||
Common Stock | ||||||||||
Organizational Structure [Line Items] | ||||||||||
Shares of common stock authorized under dividend reinvestment plan, shares | 80,000,000 | |||||||||
Issuance of common stock, shares | 1,081,474 | 6,538,502 | 8,195,092 | 2,051,925 | 1,496,198 | 18,088,084 | 20,502,279 | |||
Issuance of common stock, value | 11,000 | 65,000 | 82,000 | 204,400,000 | ||||||
Shares of common stock sold under dividend reinvestment plan, shares | 555,727 | 368,872 | 1,286,869 | |||||||
Redemptions of common stock, shares | 193,145 | 208,457 | 35,848 | 437,449 | ||||||
Redemptions of common stock, value | 2,000 | 2,000 | 4,200,000 | |||||||
Common Stock | Minimum [Member] | ||||||||||
Organizational Structure [Line Items] | ||||||||||
Number of shares authorized to be repurchased | 250,000 | |||||||||
Common Stock | Maximum [Member] | ||||||||||
Organizational Structure [Line Items] | ||||||||||
Number of shares authorized to be repurchased | 280,000,000 | |||||||||
Stock offering, shares authorized for issuance, value | 2,000,000,000 | |||||||||
Stock offering, shares authorized for dividend reinvestment plan, value | $760,000,000 | |||||||||
KBS-Legacy Apartment Community REIT Venture, LLC [Member] | ||||||||||
Organizational Structure [Line Items] | ||||||||||
Common stock, shares issued | 20,000 | |||||||||
Common stock, purchase price per share | $10 | |||||||||
KBS-Legacy Apartment Community REIT Venture, LLC [Member] | Common Stock | ||||||||||
Organizational Structure [Line Items] | ||||||||||
Shares held by affiliate | 20,000 | 20,000 | 20,000 |
SUMMARY_OF_SIGNIFICANT_ACCOUNT2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Useful Life) (Details) | 12 Months Ended |
Dec. 31, 2014 | |
Buildings [Member] | |
Property, Plant and Equipment [Line Items] | |
Useful life | 40 years |
Building Improvements [Member] | Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Useful life | 10 years |
Building Improvements [Member] | Maximum [Member] | |
Property, Plant and Equipment [Line Items] | |
Useful life | 20 years |
Land Improvements [Member] | Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Useful life | 10 years |
Land Improvements [Member] | Maximum [Member] | |
Property, Plant and Equipment [Line Items] | |
Useful life | 20 years |
Computer, Furniture, Fixtures and Equipment [Member] | Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Useful life | 5 years |
Computer, Furniture, Fixtures and Equipment [Member] | Maximum [Member] | |
Property, Plant and Equipment [Line Items] | |
Useful life | 12 years |
SUMMARY_OF_SIGNIFICANT_ACCOUNT3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Share Redemption Program Terms and Amendments) (Details) (USD $) | 12 Months Ended | 58 Months Ended | 0 Months Ended | ||||||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2014 | Aug. 31, 2014 | Oct. 14, 2014 | Jan. 24, 2014 | Dec. 09, 2014 | Mar. 06, 2014 | |
Equity, Class of Treasury Stock [Line Items] | |||||||||
Percent of weighted-average shares outstanding that may be redeemed | 5.00% | ||||||||
Updated primary offering price | $10.14 | $10.96 | |||||||
Redemptions of common stock, value | ($1,853,000) | ($1,978,000) | ($350,000) | ||||||
Number of shares non-redeemable due to limitation, shares | 47,073 | ||||||||
Other Liabilities [Member] | |||||||||
Equity, Class of Treasury Stock [Line Items] | |||||||||
Unfulfilled redemption requests | 500,000 | 500,000 | |||||||
Common Stock [Member] | |||||||||
Equity, Class of Treasury Stock [Line Items] | |||||||||
Redemptions of common stock, value | -2,000 | -2,000 | -4,200,000 | ||||||
Held for One Year [Member] | |||||||||
Equity, Class of Treasury Stock [Line Items] | |||||||||
Redemption price percentage of most recent estimated value per share | 92.50% | ||||||||
Held for Two Years [Member] | |||||||||
Equity, Class of Treasury Stock [Line Items] | |||||||||
Redemption price percentage of most recent estimated value per share | 95.00% | ||||||||
Held for Three Years [Member] | |||||||||
Equity, Class of Treasury Stock [Line Items] | |||||||||
Redemption price percentage of most recent estimated value per share | 97.50% | ||||||||
Held for Four Years [Member] | |||||||||
Equity, Class of Treasury Stock [Line Items] | |||||||||
Redemption price percentage of most recent estimated value per share | 100.00% | ||||||||
Fourth Amended and Restated Share Redemption Program [Member] | Held for One Year [Member] | |||||||||
Equity, Class of Treasury Stock [Line Items] | |||||||||
Share holding term | 1 year | ||||||||
Fourth Amended and Restated Share Redemption Program [Member] | Held for Two Years [Member] | |||||||||
Equity, Class of Treasury Stock [Line Items] | |||||||||
Share holding term | 2 years | ||||||||
Fourth Amended and Restated Share Redemption Program [Member] | Held for Three Years [Member] | |||||||||
Equity, Class of Treasury Stock [Line Items] | |||||||||
Share holding term | 3 years | ||||||||
Fourth Amended and Restated Share Redemption Program [Member] | Held for Four Years [Member] | |||||||||
Equity, Class of Treasury Stock [Line Items] | |||||||||
Share holding term | 4 years | ||||||||
Fourth Amended Share Redemption Program [Member] | |||||||||
Equity, Class of Treasury Stock [Line Items] | |||||||||
Number of shares non-redeemable due to limitation, shares | 47,073 | ||||||||
Fourth Amended Share Redemption Program [Member] | Other Liabilities [Member] | |||||||||
Equity, Class of Treasury Stock [Line Items] | |||||||||
Unfulfilled redemption requests | 500,000 | 500,000 | |||||||
Fourth Amended Share Redemption Program [Member] | Including Shares Redeemed Pursuant to Special Redemptions [Member] | |||||||||
Equity, Class of Treasury Stock [Line Items] | |||||||||
Stock repurchased during period, value | 1,500,000 | ||||||||
Fourth Amended Share Redemption Program [Member] | Maximum [Member] | |||||||||
Equity, Class of Treasury Stock [Line Items] | |||||||||
Stock repurchased during period, value | 2,000,000 | 2,000,000 | |||||||
Fifth Amended Share Redemption Program [Member] | |||||||||
Equity, Class of Treasury Stock [Line Items] | |||||||||
Estimated value per share of Company's common stock | $10.14 | ||||||||
Period of termination notice | 30 days | ||||||||
Fifth Amended Share Redemption Program [Member] | Including Shares Redeemed Pursuant to Special Redemptions [Member] | |||||||||
Equity, Class of Treasury Stock [Line Items] | |||||||||
Stock repurchased during period, value | 1,500,000 | 1,500,000 | |||||||
Fifth Amended Share Redemption Program [Member] | Shall be Reserved Exclusively for Special Redemptions [Member] | |||||||||
Equity, Class of Treasury Stock [Line Items] | |||||||||
Stock repurchased during period, value | 500,000 | 500,000 | |||||||
Fifth Amended Share Redemption Program [Member] | Maximum [Member] | |||||||||
Equity, Class of Treasury Stock [Line Items] | |||||||||
Stock repurchased during period, value | $2,000,000 | ||||||||
Fifth Amended Share Redemption Program [Member] | Held for One Year [Member] | |||||||||
Equity, Class of Treasury Stock [Line Items] | |||||||||
Redemption price percentage of most recent estimated value per share | 92.50% | ||||||||
Fifth Amended Share Redemption Program [Member] | Held for Two Years [Member] | |||||||||
Equity, Class of Treasury Stock [Line Items] | |||||||||
Redemption price percentage of most recent estimated value per share | 95.00% | ||||||||
Fifth Amended Share Redemption Program [Member] | Held for Three Years [Member] | |||||||||
Equity, Class of Treasury Stock [Line Items] | |||||||||
Redemption price percentage of most recent estimated value per share | 97.50% | ||||||||
Fifth Amended Share Redemption Program [Member] | Held for Four Years [Member] | |||||||||
Equity, Class of Treasury Stock [Line Items] | |||||||||
Redemption price percentage of most recent estimated value per share | 100.00% |
SUMMARY_OF_SIGNIFICANT_ACCOUNT4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Related Party Transactions) (Details) | 12 Months Ended | 14 Months Ended | 59 Months Ended | ||
Dec. 31, 2014 | Apr. 30, 2014 | Dec. 31, 2014 | Aug. 14, 2013 | Aug. 13, 2013 | |
Related Party Transaction [Line Items] | |||||
Percent of dealer manager reallows of sales commissions earned to participating broker-dealer | 100.00% | 100.00% | |||
Monthly fees paid of property's gross monthly collections, percentage | 1.00% | 1.00% | |||
Maximum [Member] | |||||
Related Party Transaction [Line Items] | |||||
Costs paid by the company if selling commissions, dealer manager fees and other organization and offering costs exceed gross proceeds of the offering as percent | 15.00% | 15.00% | 15.00% | ||
Selling commissions fees paid, percent of gross offering proceeds | 6.50% | 6.50% | |||
Dealer managers fees paid, percent of gross offering proceeds | 3.00% | 3.00% | |||
Sales commissions, broker dealer, percentage | 1.00% | 1.00% | |||
KBS Capital Advisors LLC [Member] | |||||
Related Party Transaction [Line Items] | |||||
Acquisition advisory fee, as percent | 1.00% | 1.00% | |||
Asset management fee, as percent | 0.00% | 0.00% | |||
KBS Capital Advisors LLC [Member] | Minimum [Member] | |||||
Related Party Transaction [Line Items] | |||||
Reimbursable offering costs determination, percentage | 15.00% | 15.00% | |||
Option One [Member] | |||||
Related Party Transaction [Line Items] | |||||
Acquisition advisory fee, as percent | 1.00% | 1.00% | 1.00% | 1.00% | |
Option Two [Member] | |||||
Related Party Transaction [Line Items] | |||||
Acquisition advisory fee, as percent | 2.00% | 2.00% | 2.00% |
SUMMARY_OF_SIGNIFICANT_ACCOUNT5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Narrative) (Details) (USD $) | 3 Months Ended | 12 Months Ended | 14 Months Ended | 24 Months Ended | ||||||||||||||||||||||||
Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Feb. 28, 2012 | Dec. 31, 2014 | Dec. 09, 2014 | Apr. 16, 2014 | Mar. 06, 2014 | Apr. 15, 2013 | Mar. 04, 2013 | Jan. 17, 2013 | Jan. 02, 2015 | |||||||||
Real Estate Properties [Line Items] | ||||||||||||||||||||||||||||
Amended Dividend Reinvestment Plan common stock price per share as percent of common stock price per share from the public offering | 95.00% | 95.00% | 95.00% | 95.00% | ||||||||||||||||||||||||
Dividend reinvestment plan, initial purchase price per share | $10.68 | |||||||||||||||||||||||||||
Updated primary offering price | $10.14 | $10.96 | ||||||||||||||||||||||||||
Dividend reinvestment plan, purchase price per share | $10.42 | $10.15 | ||||||||||||||||||||||||||
Distributions declared per common share (in dollars per share) | $0.16 | [1] | $0.16 | [1] | $0.16 | [1] | $0.16 | [1] | $0.16 | [1] | $0.16 | [1] | $0.16 | [1] | $0.16 | [1] | $0.65 | $0.65 | $0.65 | |||||||||
Distribution rate per share per day, declared (in dollars per share) | $0.00 | $0.00 | $0.00 | $0.00 | ||||||||||||||||||||||||
Subsequent Event [Member] | ||||||||||||||||||||||||||||
Real Estate Properties [Line Items] | ||||||||||||||||||||||||||||
Dividend reinvestment plan, purchase price per share | $9.64 | |||||||||||||||||||||||||||
Apartment Complex [Member] | ||||||||||||||||||||||||||||
Real Estate Properties [Line Items] | ||||||||||||||||||||||||||||
Number of real estate properties | 11 | 11 | 11 | |||||||||||||||||||||||||
[1] | Distributions declared per common shares assumes each share was issued and outstanding each day during the respective periods from January 1, 2013 through December 31, 2014. Each day during the periods from January 1, 2013 through December 31, 2014 was a record date for distributions. Distributions were calculated at a rate of $0.00178082 per share per day. |
RECENT_ACQUISITIONS_OF_REAL_ES2
RECENT ACQUISITIONS OF REAL ESTATE (Narrative) (Details) (USD $) | 12 Months Ended |
In Millions, unless otherwise specified | Dec. 31, 2014 |
Business Combinations [Abstract] | |
Weighted-average amortization period | 6 months |
Business combination and acquisition cost expensed | $1 |
Total revenues recognized from business combination | 5.3 |
Operating Expense recognized from business combination | $4 |
RECENT_ACQUISITIONS_OF_REAL_ES3
RECENT ACQUISITIONS OF REAL ESTATE (Schedule of Business Acquisitions, Properties Acquired) (Details) (USD $) | 12 Months Ended | |||
Dec. 31, 2014 | Dec. 31, 2013 | |||
Business Acquisition [Line Items] | ||||
Land | $4,465,000 | |||
Building and Improvements | 58,446,000 | |||
Tenant Origination and Absorption Costs | 1,052,000 | |||
Other Intangible Assets | 2,946,000 | |||
Total Purchase Price | 66,909,000 | |||
Notes payable | 291,214,000 | 242,856,000 | ||
Discount on notes payable | 2,817,000 | [1] | 0 | [1] |
Legacy Grand at Concord [Member] | ||||
Business Acquisition [Line Items] | ||||
Acquisition Date | 18-Feb-14 | |||
Land | 1,465,000 | |||
Building and Improvements | 25,960,000 | |||
Tenant Origination and Absorption Costs | 542,000 | |||
Other Intangible Assets | 0 | |||
Total Purchase Price | 27,967,000 | |||
Notes payable | 32,000,000 | |||
Debt, fair value | 29,100,000 | |||
Discount on notes payable | 2,900,000 | |||
Loan, remaining life | 38 years 6 months | |||
Lofts at the Highlands [Member] | ||||
Business Acquisition [Line Items] | ||||
Acquisition Date | 25-Feb-14 | [2] | ||
Land | 3,000,000 | [2] | ||
Building and Improvements | 32,486,000 | [2] | ||
Tenant Origination and Absorption Costs | 510,000 | [2] | ||
Other Intangible Assets | 2,946,000 | [2] | ||
Total Purchase Price | 38,942,000 | [2] | ||
Property tax abatement, fair value | $2,900,000 | |||
Property tax abatement, period | 17 years 10 months 24 days | |||
[1] | Represents the unamortized discount on the Lofts at the Highlands Mortgage Loan due to the below-market interest rate when the loan was assumed. The discount is amortized over the remaining life of the loan. | |||
[2] | In connection with the acquisition of Lofts at the Highlands, the Company assumed the Lofts at the Highlands Mortgage Loan. The Company recorded the mortgage debt assumed with an outstanding principal balance of $32.0 million at an estimated fair value of $29.1 million, which is net of a discount on note payable of $2.9 million due to the below-market interest rate. The discount on note payable is amortized over the remaining life of the loan of 38.5 years. |
REAL_ESTATE_Narrative_Details
REAL ESTATE (Narrative) (Details) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
sqft | |||
Real Estate Properties [Line Items] | |||
Number of real estate units | 3,039 | ||
Rentable square feet | 3,100,000 | ||
Percentage of portfolio occupied | 93.00% | ||
Tax abatement asset | $3,400,000 | $700,000 | |
Maximum deductible per incident | 25,000 | ||
Loss due to property damages | 685,000 | 1,203,000 | 0 |
Estimated insurance recoveries | 600,000 | ||
Operating, maintenance, and management | 10,977,000 | 8,500,000 | 4,273,000 |
Estimated insurance recoveries to be collected | 400,000 | ||
Property Tax Abatement Intangible Asset [Member] | |||
Real Estate Properties [Line Items] | |||
Amortization of intangible assets | 200,000 | 96,000 | 16,000 |
Apartment Complex [Member] | |||
Real Estate Properties [Line Items] | |||
Number of real estate properties | 11 | ||
Damaged Properties [Member] | |||
Real Estate Properties [Line Items] | |||
Operating, maintenance, and management | $75,000 |
REAL_ESTATE_Schedule_of_Real_E
REAL ESTATE (Schedule of Real Estate Investments) (Details) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Real Estate Properties [Line Items] | ||
Total Real Estate at Cost | $410,207 | $343,634 |
Accumulated Depreciation and Amortization | -24,344 | -13,317 |
Total real estate, net | 385,863 | 330,317 |
Legacy at Valley Ranch [Member] | ||
Real Estate Properties [Line Items] | ||
Date Acquired | 26-Oct-10 | |
Total Real Estate at Cost | 36,471 | |
Accumulated Depreciation and Amortization | -3,868 | |
Total real estate, net | 32,603 | |
Poplar Creek [Member] | ||
Real Estate Properties [Line Items] | ||
Date Acquired | 9-Feb-12 | |
Total Real Estate at Cost | 26,998 | |
Accumulated Depreciation and Amortization | -1,723 | |
Total real estate, net | 25,275 | |
The Residence at Waterstone [Member] | ||
Real Estate Properties [Line Items] | ||
Date Acquired | 6-Apr-12 | |
Total Real Estate at Cost | 64,637 | |
Accumulated Depreciation and Amortization | -4,382 | |
Total real estate, net | 60,255 | |
Legacy Crescent Park [Member] | ||
Real Estate Properties [Line Items] | ||
Date Acquired | 3-May-12 | |
Total Real Estate at Cost | 20,205 | |
Accumulated Depreciation and Amortization | -1,622 | |
Total real estate, net | 18,583 | |
Legacy at Martin’s Point [Member] | ||
Real Estate Properties [Line Items] | ||
Date Acquired | 31-May-12 | |
Total Real Estate at Cost | 37,069 | |
Accumulated Depreciation and Amortization | -2,864 | |
Total real estate, net | 34,205 | |
Wesley Village [Member] | ||
Real Estate Properties [Line Items] | ||
Date Acquired | 6-Nov-12 | |
Total Real Estate at Cost | 44,223 | |
Accumulated Depreciation and Amortization | -2,528 | |
Total real estate, net | 41,695 | |
Watertower Apartments [Member] | ||
Real Estate Properties [Line Items] | ||
Date Acquired | 15-Jan-13 | |
Total Real Estate at Cost | 38,434 | |
Accumulated Depreciation and Amortization | -2,036 | |
Total real estate, net | 36,398 | |
Crystal Park at Waterford [Member] | ||
Real Estate Properties [Line Items] | ||
Date Acquired | 8-May-13 | |
Total Real Estate at Cost | 45,747 | |
Accumulated Depreciation and Amortization | -2,194 | |
Total real estate, net | 43,553 | |
Millennium Apartment Homes [Member] | ||
Real Estate Properties [Line Items] | ||
Date Acquired | 7-Jun-13 | |
Total Real Estate at Cost | 33,090 | |
Accumulated Depreciation and Amortization | -1,572 | |
Total real estate, net | 31,518 | |
Legacy Grand at Concord [Member] | ||
Real Estate Properties [Line Items] | ||
Date Acquired | 18-Feb-14 | |
Total Real Estate at Cost | 27,671 | |
Accumulated Depreciation and Amortization | -718 | |
Total real estate, net | 26,953 | |
Lofts at the Highlands [Member] | ||
Real Estate Properties [Line Items] | ||
Date Acquired | 25-Feb-14 | |
Total Real Estate at Cost | 35,662 | |
Accumulated Depreciation and Amortization | -837 | |
Total real estate, net | $34,825 |
REAL_ESTATE_Property_Damage_De
REAL ESTATE (Property Damage) (Details) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Real Estate Properties [Line Items] | |||
Maximum deductible per incident | $25,000 | ||
Loss due to property damages | 685,000 | 1,203,000 | 0 |
Estimated insurance recoveries | 600,000 | ||
Operating, maintenance, and management | 10,977,000 | 8,500,000 | 4,273,000 |
Estimated insurance recoveries to be collected | 400,000 | ||
Apartment Complex [Member] | |||
Real Estate Properties [Line Items] | |||
Number of properties suffered from physical damaged | 2 | ||
Damaged Properties [Member] | |||
Real Estate Properties [Line Items] | |||
Operating, maintenance, and management | $75,000 |
NOTES_PAYABLE_Narrative_Detail
NOTES PAYABLE (Narrative) (Details) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Debt Instrument [Line Items] | |||
Interest expense | $10,261,000 | $8,000,000 | $4,688,000 |
Amortization of deferred financing costs | 415,000 | 620,000 | 386,000 |
Amortization of debt discount | 78,000 | 0 | -395,000 |
Capitalized interest | 57,000 | 57,000 | |
Interest payable, current | 900,000 | 700,000 | |
Mortgages [Member] | |||
Debt Instrument [Line Items] | |||
Early termination fees | 500,000 | ||
Notes Payable [Member] | |||
Debt Instrument [Line Items] | |||
Premium write-off | -400,000 | ||
Notes Payable [Member] | Interest Expense [Member] | |||
Debt Instrument [Line Items] | |||
Amortization of debt discount | 100,000 | ||
Deferred Financing Costs, Prepaid Expenses and Other Assets [Member] | |||
Debt Instrument [Line Items] | |||
Deferred financing costs | $1,600,000 | $2,000,000 |
NOTES_PAYABLE_Schedule_of_Long
NOTES PAYABLE (Schedule of Long-term Debt Instruments) (Details) (USD $) | 12 Months Ended | |||
Dec. 31, 2014 | Dec. 31, 2013 | |||
Debt Instrument [Line Items] | ||||
Total notes payable principal outstanding | $294,031,000 | $242,856,000 | ||
Discount on note payable | -2,817,000 | [1] | 0 | [1] |
Long term debt | 291,214,000 | 242,856,000 | ||
Mortgages [Member] | Legacy at Valley Ranch [Member] | ||||
Debt Instrument [Line Items] | ||||
Total notes payable principal outstanding | 32,131,000 | 32,500,000 | ||
Contractual Interest Rate | 3.93% | [2] | ||
Payment Type | Principal & Interest | [2] | ||
Maturity Date | 1-Apr-19 | |||
Amortization schedule | 30 years | |||
Mortgages [Member] | Legacy at Valley Ranch [Member] | First Two Years [Member] | ||||
Debt Instrument [Line Items] | ||||
Payment Type | interest-only | |||
Periodic payment | monthly | |||
Period of interest only payments | 2 years | |||
Mortgages [Member] | Legacy at Valley Ranch [Member] | Third Year and Thereafter [Member] | ||||
Debt Instrument [Line Items] | ||||
Periodic payment | monthly | |||
Mortgages [Member] | Poplar Creek [Member] | ||||
Debt Instrument [Line Items] | ||||
Total notes payable principal outstanding | 20,143,000 | 20,400,000 | ||
Contractual Interest Rate | 4.00% | [2] | ||
Payment Type | Principal & Interest | [2] | ||
Maturity Date | 1-Mar-19 | |||
Amortization schedule | 30 years | |||
Mortgages [Member] | Poplar Creek [Member] | First Two Years [Member] | ||||
Debt Instrument [Line Items] | ||||
Payment Type | interest-only | |||
Periodic payment | monthly | |||
Period of interest only payments | 2 years | |||
Mortgages [Member] | Poplar Creek [Member] | Third Year and Thereafter [Member] | ||||
Debt Instrument [Line Items] | ||||
Periodic payment | monthly | |||
Mortgages [Member] | The Residence at Waterstone [Member] | ||||
Debt Instrument [Line Items] | ||||
Total notes payable principal outstanding | 47,419,000 | 47,905,000 | ||
Contractual Interest Rate | 3.79% | [2] | ||
Payment Type | Principal & Interest | [2] | ||
Maturity Date | 1-May-19 | |||
Amortization schedule | 30 years | |||
Mortgages [Member] | The Residence at Waterstone [Member] | First Two Years [Member] | ||||
Debt Instrument [Line Items] | ||||
Payment Type | interest-only | |||
Periodic payment | monthly | |||
Period of interest only payments | 2 years | |||
Mortgages [Member] | The Residence at Waterstone [Member] | Third Year and Thereafter [Member] | ||||
Debt Instrument [Line Items] | ||||
Periodic payment | monthly | |||
Mortgages [Member] | Legacy Crescent Park [Member] | ||||
Debt Instrument [Line Items] | ||||
Total notes payable principal outstanding | 14,146,000 | 14,425,000 | ||
Contractual Interest Rate | 3.47% | [2] | ||
Payment Type | Principal & Interest | [2] | ||
Maturity Date | 1-Jun-19 | |||
Amortization schedule | 30 years | |||
Mortgages [Member] | Legacy Crescent Park [Member] | First Year [Member] | ||||
Debt Instrument [Line Items] | ||||
Payment Type | interest-only | |||
Periodic payment | monthly | |||
Period of interest only payments | 1 year | |||
Mortgages [Member] | Legacy Crescent Park [Member] | Second Year and Thereafter [Member] | ||||
Debt Instrument [Line Items] | ||||
Periodic payment | monthly | |||
Mortgages [Member] | Legacy at Martin’s Point [Member] | ||||
Debt Instrument [Line Items] | ||||
Total notes payable principal outstanding | 22,781,000 | 23,000,000 | ||
Contractual Interest Rate | 3.33% | [2] | ||
Payment Type | Principal & Interest | [2] | ||
Maturity Date | 1-Jun-19 | |||
Amortization schedule | 30 years | |||
Mortgages [Member] | Legacy at Martin’s Point [Member] | First Two Years [Member] | ||||
Debt Instrument [Line Items] | ||||
Payment Type | interest-only | |||
Periodic payment | monthly | |||
Period of interest only payments | 2 years | |||
Mortgages [Member] | Legacy at Martin’s Point [Member] | Third Year and Thereafter [Member] | ||||
Debt Instrument [Line Items] | ||||
Periodic payment | monthly | |||
Mortgages [Member] | Wesley Village [Member] | ||||
Debt Instrument [Line Items] | ||||
Total notes payable principal outstanding | 28,253,000 | 28,923,000 | ||
Contractual Interest Rate | 2.57% | [2] | ||
Payment Type | Principal & Interest | [2] | ||
Maturity Date | 1-Dec-17 | |||
Amortization schedule | 30 years | |||
Periodic payment | monthly | |||
Mortgages [Member] | Watertower Apartments [Member] | ||||
Debt Instrument [Line Items] | ||||
Total notes payable principal outstanding | 25,000,000 | 25,000,000 | ||
Contractual Interest Rate | 2.46% | [2] | ||
Payment Type | Principal & Interest | [3] | ||
Maturity Date | 10-Feb-18 | |||
Amortization schedule | 30 years | |||
Mortgages [Member] | Watertower Apartments [Member] | First Two Years [Member] | ||||
Debt Instrument [Line Items] | ||||
Payment Type | interest-only | |||
Periodic payment | monthly | |||
Period of interest only payments | 2 years | |||
Mortgages [Member] | Watertower Apartments [Member] | Third Year and Thereafter [Member] | ||||
Debt Instrument [Line Items] | ||||
Periodic payment | monthly | |||
Mortgages [Member] | Crystal Park Mortgage Loan [Member] | ||||
Debt Instrument [Line Items] | ||||
Total notes payable principal outstanding | 28,391,000 | 29,055,000 | ||
Contractual Interest Rate | 2.50% | [2] | ||
Payment Type | Principal & Interest | [2] | ||
Maturity Date | 1-Jun-18 | |||
Amortization schedule | 30 years | |||
Periodic payment | monthly | |||
Mortgages [Member] | Millennium Mortgage Loan [Member] | ||||
Debt Instrument [Line Items] | ||||
Total notes payable principal outstanding | 21,175,000 | 21,648,000 | ||
Contractual Interest Rate | 2.74% | [2] | ||
Payment Type | Principal & Interest | [2] | ||
Maturity Date | 1-Jul-18 | |||
Amortization schedule | 30 years | |||
Periodic payment | monthly | |||
Mortgages [Member] | Legacy Grand at Concord Mortgage Loan [Member] | ||||
Debt Instrument [Line Items] | ||||
Total notes payable principal outstanding | 22,981,000 | 0 | ||
Contractual Interest Rate | 4.10% | [2] | ||
Payment Type | Principal & Interest | [4] | ||
Maturity Date | 1-Dec-50 | |||
Periodic payment, amount | 101,159 | |||
Mortgages [Member] | Lofts at the Highlands Mortgage Loan [Member] | ||||
Debt Instrument [Line Items] | ||||
Total notes payable principal outstanding | 31,611,000 | 0 | ||
Contractual Interest Rate | 3.40% | [2] | ||
Payment Type | Principal & Interest | [5] | ||
Maturity Date | 1-Aug-52 | |||
Periodic payment, amount | $124,111 | |||
[1] | Represents the unamortized discount on the Lofts at the Highlands Mortgage Loan due to the below-market interest rate when the loan was assumed. The discount is amortized over the remaining life of the loan. | |||
[2] | Monthly payments include principal and interest with principal payments calculated using an amortization schedule of 30 years. | |||
[3] | Monthly payments are interest-only during the first two years of the loan. Beginning with the third year of the loan, monthly payments include principal and interest with principal payments calculated using an amortization schedule of 30 years. | |||
[4] | Monthly payments for the Legacy Grand at Concord Mortgage Loan include principal and interest in the sum of $101,159. | |||
[5] | Monthly payments for the Lofts at the Highlands Mortgage Loan include principal and interest in the sum of $124,111. |
NOTES_PAYABLE_Schedule_of_Matu
NOTES PAYABLE (Schedule of Maturities of Long-Term Debt) (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Debt Disclosure [Abstract] | ||
2015 | $5,582 | |
2016 | 5,844 | |
2017 | 32,196 | |
2018 | 72,958 | |
2019 | 126,682 | |
Thereafter | 50,769 | |
Long term debt | $294,031 | $242,856 |
FAIR_VALUE_DISCLOSURES_Details
FAIR VALUE DISCLOSURES (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Face amount | $294,031 | $242,856 |
Notes payable, Value | 296,581 | 237,728 |
Carrying Amount [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Notes payable, Value | $291,214 | $242,856 |
RELATED_PARTY_TRANSACTIONS_Nar
RELATED PARTY TRANSACTIONS (Narrative) (Details) (USD $) | 6 Months Ended | 12 Months Ended | 14 Months Ended | 22 Months Ended | 36 Months Ended | 58 Months Ended | 59 Months Ended | ||||||
Jul. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Apr. 30, 2014 | Dec. 31, 2014 | Mar. 12, 2013 | Dec. 31, 2014 | Dec. 31, 2014 | Mar. 05, 2014 | Aug. 14, 2013 | Aug. 13, 2013 | Aug. 20, 2014 | |
Related Party Transaction [Line Items] | |||||||||||||
Percentage of selling commissions, dealer manager fees, and organization and other offering costs of gross offering proceeds | 10.00% | ||||||||||||
Issuance of common stock, value | $11,250,000 | $65,139,000 | $81,306,000 | $21,500,000 | $15,900,000 | $179,200,000 | |||||||
Shares of common stock sold under dividend reinvestment plan, value | 5,700,000 | 3,500,000 | 12,900,000 | ||||||||||
Noninterest expense, offering cost | 4,200,000 | ||||||||||||
Non-compounded return on net invested capital | 9.90% | 8.00% | |||||||||||
Asset management fees to affiliate | 1,500,000 | 2,598,000 | 2,670,000 | 1,521,000 | |||||||||
Due to affiliates | 4,797,000 | 2,670,000 | 4,797,000 | 4,797,000 | 4,797,000 | ||||||||
Monthly fees paid of property's gross monthly collections, percentage | 1.00% | 1.00% | 1.00% | 1.00% | |||||||||
Deferred financing costs, prepaid expenses and other assets | 6,923,000 | 6,697,000 | 6,923,000 | 6,923,000 | 6,923,000 | ||||||||
Option One [Member] | |||||||||||||
Related Party Transaction [Line Items] | |||||||||||||
Acquisition advisory fee, as percent | 1.00% | 1.00% | 1.00% | 1.00% | 1.00% | 1.00% | |||||||
Option Two [Member] | |||||||||||||
Related Party Transaction [Line Items] | |||||||||||||
Acquisition advisory fee, as percent | 2.00% | 2.00% | 2.00% | 2.00% | 2.00% | ||||||||
Maximum [Member] | |||||||||||||
Related Party Transaction [Line Items] | |||||||||||||
Costs paid by the company if selling commissions, dealer manager fees and other organization and offering costs exceed gross proceeds of the offering as percent | 15.00% | 15.00% | 15.00% | ||||||||||
Asset Management Fees [Member] | August 2013 through December 2014 [Member] | |||||||||||||
Related Party Transaction [Line Items] | |||||||||||||
Due to affiliates | 3,300,000 | 3,300,000 | 3,300,000 | 3,300,000 | |||||||||
Dealer Manager [Member] | |||||||||||||
Related Party Transaction [Line Items] | |||||||||||||
Noninterest expense, offering cost | 200,000 | ||||||||||||
Related party transactions, additional payment received | 55,000 | ||||||||||||
After Reimbursements from the Advisor and the Dealer Manager [Member] | |||||||||||||
Related Party Transaction [Line Items] | |||||||||||||
Noninterest expense, offering cost | 3,200,000 | ||||||||||||
Underwriting Compensation [Member] | |||||||||||||
Related Party Transaction [Line Items] | |||||||||||||
Noninterest expense, offering cost | 1,800,000 | ||||||||||||
Underwriting Compensation [Member] | After Reimbursements from the Advisor and the Dealer Manager [Member] | |||||||||||||
Related Party Transaction [Line Items] | |||||||||||||
Noninterest expense, offering cost | 1,600,000 | ||||||||||||
Common Stock [Member] | |||||||||||||
Related Party Transaction [Line Items] | |||||||||||||
Issuance of common stock, shares | 1,081,474 | 6,538,502 | 8,195,092 | 2,051,925 | 1,496,198 | 18,088,084 | 20,502,279 | ||||||
Issuance of common stock, value | 11,000 | 65,000 | 82,000 | 204,400,000 | |||||||||
Shares of common stock sold under dividend reinvestment plan, shares | 555,727 | 368,872 | 1,286,869 | ||||||||||
KBS Capital Advisors LLC [Member] | |||||||||||||
Related Party Transaction [Line Items] | |||||||||||||
Payments for supplemental coverage | $87,000 | $87,000 | |||||||||||
Acquisition advisory fee, as percent | 1.00% | 1.00% | 1.00% | 1.00% |
RELATED_PARTY_TRANSACTIONS_Sch
RELATED PARTY TRANSACTIONS (Schedule of Related Party Costs) (Details) (USD $) | 12 Months Ended | |||||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |||
Related Party Transaction [Line Items] | ||||||
Payable | $4,797 | $2,670 | ||||
Administrative fees, amount paid | 108 | 87 | 74 | |||
Advisor and Dealer Manager [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Incurred | 4,567 | 10,168 | 14,642 | |||
Payable | 4,797 | 2,670 | ||||
Advisor and Dealer Manager [Member] | Construction Management Fees [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Incurred | 0 | 134 | 0 | |||
Payable | 0 | 134 | ||||
Advisor and Dealer Manager [Member] | Expensed [Member] | Asset Management Fees [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Expenses | 2,598 | [1] | 2,670 | [1] | 1,521 | [1] |
Payable | 4,752 | [1] | 2,454 | [1] | ||
Advisor and Dealer Manager [Member] | Expensed [Member] | Reimbursement of Operating Expenses [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Expenses | 392 | [2] | 454 | [2] | 602 | [2] |
Payable | 45 | [2] | 63 | [2] | ||
Advisor and Dealer Manager [Member] | Expensed [Member] | Acquisition Fees [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Expenses | 701 | 1,186 | 1,969 | |||
Payable | 0 | 0 | ||||
Advisor and Dealer Manager [Member] | Expensed [Member] | Related Party Interest Expense [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Expenses | 0 | 0 | 10 | |||
Payable | 0 | 0 | ||||
Advisor and Dealer Manager [Member] | Expensed [Member] | Property Management Fees [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Expenses | 281 | [3] | 207 | [3] | 106 | [3] |
Payable | 0 | [3] | 0 | [3] | ||
Advisor and Dealer Manager [Member] | Additional Paid-in Capital [Member] | Sales Commissions [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Incurred | 363 | 3,101 | 4,668 | |||
Payable | 0 | 0 | ||||
Advisor and Dealer Manager [Member] | Additional Paid-in Capital [Member] | Dealer Manager Fees [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Incurred | 173 | 1,797 | 2,358 | |||
Payable | 0 | 0 | ||||
Advisor and Dealer Manager [Member] | Additional Paid-in Capital [Member] | Reimbursable Other Offering Costs [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Incurred | 59 | [4] | 619 | [4] | 3,408 | [4] |
Payable | $0 | [4] | $19 | [4] | ||
[1] | See “Advisory Agreement — Asset Management Fees†below | |||||
[2] | Reimbursable operating expenses primarily consists of marketing research costs and property pursuit costs incurred by the Sub-Advisor. In addition, the Advisor may seek reimbursement for certain employee costs under the Advisory Agreement. Beginning July 1, 2010, the Company has reimbursed the Advisor for the Company’s allocable portion of the salaries, benefits and overhead of internal audit department personnel providing services to the Company. These amounts totaled $108,000, $87,000 and $74,000 for the years ended December 31, 2014, 2013 and 2012, respectively, and were the only type of employee costs reimbursable under the Advisory Agreement for the years ended December 31, 2014, 2013 and 2012, respectively. The Company will not reimburse for employee costs in connection with services for which the Advisor earns acquisition or disposition fees (other than reimbursement of travel and communication expenses) or for the salaries or benefits the Advisor or its affiliates may pay to the Company’s executive officers. | |||||
[3] | See “–Property Management – Account Services Agreements.†| |||||
[4] | See “–Other Offering Costs Related to Follow-on Offering.†|
UNAUDITED_PRO_FORMA_FINANCIAL_2
UNAUDITED PRO FORMA FINANCIAL INFORMATION (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Business Acquisition [Line Items] | ||
Business combination and acquisition cost expensed | $1,000,000 | |
Apartment Complex [Member] | ||
Business Acquisition [Line Items] | ||
Number of real estate properties acquired | 2 | |
Lofts at the Highlands [Member] | ||
Business Acquisition [Line Items] | ||
Revenues | 42,785,000 | 36,333,000 |
Depreciation and amortization | 12,146,000 | 13,944,000 |
Net loss | -2,558,000 | -8,444,000 |
Net loss per common share, basic and diluted (in dollars per share) | ($0.13) | ($0.45) |
Weighted-average number of common shares outstanding, basic and diluted | 20,024,428 | 18,781,544 |
Business combination and acquisition cost expensed | $600,000 |
SELECTED_QUARTERLY_FINANCIAL_D2
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) (Details) (USD $) | 3 Months Ended | 12 Months Ended | 14 Months Ended | 24 Months Ended | |||||||||||||||||
In Thousands, except Per Share data, unless otherwise specified | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Feb. 28, 2012 | Dec. 31, 2014 | ||||||||
Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||||||
Revenues | $10,851 | $10,909 | $10,823 | $9,617 | $9,047 | $9,136 | $7,912 | $6,730 | $42,200 | $32,825 | $16,105 | ||||||||||
Net loss | ($299) | ($500) | ($930) | ($1,831) | ($716) | ($1,526) | ($3,336) | ($2,167) | ($3,560) | ($7,745) | ($10,233) | ||||||||||
Net loss per common share, basic and diluted (in dollars per share) | ($0.01) | ($0.03) | ($0.05) | ($0.09) | ($0.04) | ($0.08) | ($0.18) | ($0.14) | ($0.18) | ($0.44) | ($1.16) | ||||||||||
Distributions declared per common share (in dollars per share) | $0.16 | [1] | $0.16 | [1] | $0.16 | [1] | $0.16 | [1] | $0.16 | [1] | $0.16 | [1] | $0.16 | [1] | $0.16 | [1] | $0.65 | $0.65 | $0.65 | ||
Distribution rate per share per day, declared (in dollars per share) | $0.00 | $0.00 | $0.00 | $0.00 | |||||||||||||||||
[1] | Distributions declared per common shares assumes each share was issued and outstanding each day during the respective periods from January 1, 2013 through December 31, 2014. Each day during the periods from January 1, 2013 through December 31, 2014 was a record date for distributions. Distributions were calculated at a rate of $0.00178082 per share per day. |
SUBSEQUENT_EVENTS_Status_Offer
SUBSEQUENT EVENTS (Status Offering and Distributions Paid and Declared) (Details) (USD $) | 12 Months Ended | 14 Months Ended | 22 Months Ended | 24 Months Ended | 36 Months Ended | 58 Months Ended | 0 Months Ended | |||||||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Apr. 30, 2014 | Feb. 28, 2012 | Dec. 31, 2014 | Dec. 31, 2014 | Mar. 12, 2013 | Dec. 31, 2014 | Mar. 07, 2014 | Jan. 16, 2014 | Mar. 02, 2015 | Feb. 02, 2015 | Jan. 02, 2015 | |
Subsequent Event [Line Items] | ||||||||||||||
Issuance of common stock, value | $11,250,000 | $65,139,000 | $81,306,000 | $21,500,000 | $15,900,000 | $179,200,000 | ||||||||
Shares of common stock sold under dividend reinvestment plan, value | 5,700,000 | 3,500,000 | 12,900,000 | |||||||||||
Redemptions of common stock, value | 1,853,000 | 1,978,000 | 350,000 | |||||||||||
Distribution rate per share per day, declared (in dollars per share) | $0.00 | $0.00 | $0.00 | $0.00 | ||||||||||
Dividend Declared [Member] | ||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||
Distribution rate per share per day, declared (in dollars per share) | $0.00 | |||||||||||||
Distribution rate per share annualized, declared, based on purchase price | 6.50% | |||||||||||||
Common stock, purchase price per share | $10 | |||||||||||||
Distribution rate per share annualized, declared, based on current offering price | 6.40% | |||||||||||||
Common stock, price per share | $10.14 | |||||||||||||
Common Stock | ||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||
Issuance of common stock, shares | 1,081,474 | 6,538,502 | 8,195,092 | 2,051,925 | 1,496,198 | 18,088,084 | 20,502,279 | |||||||
Issuance of common stock, value | 11,000 | 65,000 | 82,000 | 204,400,000 | ||||||||||
Shares of common stock sold under dividend reinvestment plan, shares | 555,727 | 368,872 | 1,286,869 | |||||||||||
Redemptions of common stock, shares | 193,145 | 208,457 | 35,848 | 437,449 | ||||||||||
Redemptions of common stock, value | 2,000 | 2,000 | 4,200,000 | |||||||||||
Subsequent Event [Member] | Dividend Paid [Member] | ||||||||||||||
Subsequent Event [Line Items] | ||||||||||||||
Distributions paid | $1,000,000 | $1,100,000 | $1,100,000 |
SCHEDULE_III_REAL_ESTATE_ASSET1
SCHEDULE III REAL ESTATE ASSETS AND ACCUMULATED DEPRECIATION AND AMORTIZATION (Details) (USD $) | 12 Months Ended | ||||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | ||
Real Estate and Accumulated Depreciation [Line Items] | |||||
Encumbrances | $294,031,000 | ||||
Initial Cost to Property, Land | 46,771,000 | ||||
Initial Cost to Property, Buildings and Improvements | 363,720,000 | [1] | |||
Initial Cost to Property, Total | 410,491,000 | ||||
Cost Capitalized Subsequent to Acquisition | -284,000 | [2] | |||
Gross Amount at which Carried at Close of Period, Land | 46,828,000 | ||||
Gross Amount at which Carried at Close of Period, Building and Improvements | 363,379,000 | [1] | |||
Gross Amount at which Carried at Close of Period, Total | 410,207,000 | [3] | 343,634,000 | 227,038,000 | 37,241,000 |
Accumulated Depreciation and Amortization | -24,344,000 | -13,317,000 | -5,282,000 | -2,649,000 | |
Aggregate cost of real estate for federal income tax purposes | 434,900,000 | ||||
Legacy at Valley Ranch [Member] | |||||
Real Estate and Accumulated Depreciation [Line Items] | |||||
Ownership Percent | 100.00% | ||||
Encumbrances | 32,131,000 | ||||
Initial Cost to Property, Land | 4,838,000 | ||||
Initial Cost to Property, Buildings and Improvements | 31,750,000 | [1] | |||
Initial Cost to Property, Total | 36,588,000 | ||||
Cost Capitalized Subsequent to Acquisition | -117,000 | [2] | |||
Gross Amount at which Carried at Close of Period, Land | 4,838,000 | ||||
Gross Amount at which Carried at Close of Period, Building and Improvements | 31,633,000 | [1] | |||
Gross Amount at which Carried at Close of Period, Total | 36,471,000 | [3] | |||
Accumulated Depreciation and Amortization | -3,868,000 | ||||
Original Date of Construction | 1999 | ||||
Date Acquired | 26-Oct-10 | ||||
Poplar Creek [Member] | |||||
Real Estate and Accumulated Depreciation [Line Items] | |||||
Ownership Percent | 100.00% | ||||
Encumbrances | 20,143,000 | ||||
Initial Cost to Property, Land | 7,020,000 | ||||
Initial Cost to Property, Buildings and Improvements | 20,180,000 | [1] | |||
Initial Cost to Property, Total | 27,200,000 | ||||
Cost Capitalized Subsequent to Acquisition | -202,000 | [2] | |||
Gross Amount at which Carried at Close of Period, Land | 7,020,000 | ||||
Gross Amount at which Carried at Close of Period, Building and Improvements | 19,978,000 | [1] | |||
Gross Amount at which Carried at Close of Period, Total | 26,998,000 | [3] | |||
Accumulated Depreciation and Amortization | -1,723,000 | ||||
Original Date of Construction | 1986/2007 | ||||
Date Acquired | 9-Feb-12 | ||||
The Residence at Waterstone [Member] | |||||
Real Estate and Accumulated Depreciation [Line Items] | |||||
Ownership Percent | 100.00% | ||||
Encumbrances | 47,419,000 | ||||
Initial Cost to Property, Land | 7,700,000 | ||||
Initial Cost to Property, Buildings and Improvements | 57,000,000 | [1] | |||
Initial Cost to Property, Total | 64,700,000 | ||||
Cost Capitalized Subsequent to Acquisition | -63,000 | [2] | |||
Gross Amount at which Carried at Close of Period, Land | 7,700,000 | ||||
Gross Amount at which Carried at Close of Period, Building and Improvements | 56,937,000 | [1] | |||
Gross Amount at which Carried at Close of Period, Total | 64,637,000 | [3] | |||
Accumulated Depreciation and Amortization | -4,382,000 | ||||
Original Date of Construction | 2002 | ||||
Date Acquired | 6-Apr-12 | ||||
Legacy Crescent Park [Member] | |||||
Real Estate and Accumulated Depreciation [Line Items] | |||||
Ownership Percent | 100.00% | ||||
Encumbrances | 14,146,000 | ||||
Initial Cost to Property, Land | 1,710,000 | ||||
Initial Cost to Property, Buildings and Improvements | 19,090,000 | [1] | |||
Initial Cost to Property, Total | 20,800,000 | ||||
Cost Capitalized Subsequent to Acquisition | -595,000 | [2] | |||
Gross Amount at which Carried at Close of Period, Land | 1,710,000 | ||||
Gross Amount at which Carried at Close of Period, Building and Improvements | 18,495,000 | [1] | |||
Gross Amount at which Carried at Close of Period, Total | 20,205,000 | [3] | |||
Accumulated Depreciation and Amortization | -1,622,000 | ||||
Original Date of Construction | 2008 | ||||
Date Acquired | 3-May-12 | ||||
Legacy at Martin’s Point [Member] | |||||
Real Estate and Accumulated Depreciation [Line Items] | |||||
Ownership Percent | 100.00% | ||||
Encumbrances | 22,781,000 | ||||
Initial Cost to Property, Land | 3,500,000 | ||||
Initial Cost to Property, Buildings and Improvements | 31,950,000 | [1] | |||
Initial Cost to Property, Total | 35,450,000 | ||||
Cost Capitalized Subsequent to Acquisition | 1,619,000 | [2] | |||
Gross Amount at which Carried at Close of Period, Land | 3,500,000 | ||||
Gross Amount at which Carried at Close of Period, Building and Improvements | 33,569,000 | [1] | |||
Gross Amount at which Carried at Close of Period, Total | 37,069,000 | [3] | |||
Accumulated Depreciation and Amortization | -2,864,000 | ||||
Original Date of Construction | 1989/2009 | ||||
Date Acquired | 31-May-12 | ||||
Wesley Village [Member] | |||||
Real Estate and Accumulated Depreciation [Line Items] | |||||
Ownership Percent | 100.00% | ||||
Encumbrances | 28,253,000 | ||||
Initial Cost to Property, Land | 5,000,000 | ||||
Initial Cost to Property, Buildings and Improvements | 39,915,000 | [1] | |||
Initial Cost to Property, Total | 44,915,000 | ||||
Cost Capitalized Subsequent to Acquisition | -692,000 | [2] | |||
Gross Amount at which Carried at Close of Period, Land | 5,057,000 | ||||
Gross Amount at which Carried at Close of Period, Building and Improvements | 39,166,000 | [1] | |||
Gross Amount at which Carried at Close of Period, Total | 44,223,000 | [3] | |||
Accumulated Depreciation and Amortization | -2,528,000 | ||||
Original Date of Construction | 2009 | ||||
Date Acquired | 6-Nov-12 | ||||
Watertower Apartments [Member] | |||||
Real Estate and Accumulated Depreciation [Line Items] | |||||
Ownership Percent | 100.00% | ||||
Encumbrances | 25,000,000 | ||||
Initial Cost to Property, Land | 4,100,000 | ||||
Initial Cost to Property, Buildings and Improvements | 34,275,000 | [1] | |||
Initial Cost to Property, Total | 38,375,000 | ||||
Cost Capitalized Subsequent to Acquisition | 59,000 | [2] | |||
Gross Amount at which Carried at Close of Period, Land | 4,100,000 | ||||
Gross Amount at which Carried at Close of Period, Building and Improvements | 34,334,000 | [1] | |||
Gross Amount at which Carried at Close of Period, Total | 38,434,000 | [3] | |||
Accumulated Depreciation and Amortization | -2,036,000 | ||||
Original Date of Construction | 2004 | ||||
Date Acquired | 15-Jan-13 | ||||
Crystal Park at Waterford [Member] | |||||
Real Estate and Accumulated Depreciation [Line Items] | |||||
Ownership Percent | 100.00% | ||||
Encumbrances | 28,391,000 | ||||
Initial Cost to Property, Land | 5,666,000 | ||||
Initial Cost to Property, Buildings and Improvements | 39,234,000 | [1] | |||
Initial Cost to Property, Total | 44,900,000 | ||||
Cost Capitalized Subsequent to Acquisition | 847,000 | [2] | |||
Gross Amount at which Carried at Close of Period, Land | 5,666,000 | ||||
Gross Amount at which Carried at Close of Period, Building and Improvements | 40,081,000 | [1] | |||
Gross Amount at which Carried at Close of Period, Total | 45,747,000 | [3] | |||
Accumulated Depreciation and Amortization | -2,194,000 | ||||
Original Date of Construction | 1990 | ||||
Date Acquired | 8-May-13 | ||||
Millennium Apartment Homes [Member] | |||||
Real Estate and Accumulated Depreciation [Line Items] | |||||
Ownership Percent | 100.00% | ||||
Encumbrances | 21,175,000 | ||||
Initial Cost to Property, Land | 2,772,000 | ||||
Initial Cost to Property, Buildings and Improvements | 30,828,000 | [1] | |||
Initial Cost to Property, Total | 33,600,000 | ||||
Cost Capitalized Subsequent to Acquisition | -510,000 | [2] | |||
Gross Amount at which Carried at Close of Period, Land | 2,772,000 | ||||
Gross Amount at which Carried at Close of Period, Building and Improvements | 30,318,000 | [1] | |||
Gross Amount at which Carried at Close of Period, Total | 33,090,000 | [3] | |||
Accumulated Depreciation and Amortization | -1,572,000 | ||||
Original Date of Construction | 2009 | ||||
Date Acquired | 7-Jun-13 | ||||
Legacy Grand at Concord [Member] | |||||
Real Estate and Accumulated Depreciation [Line Items] | |||||
Ownership Percent | 100.00% | ||||
Encumbrances | 22,981,000 | ||||
Initial Cost to Property, Land | 1,465,000 | ||||
Initial Cost to Property, Buildings and Improvements | 26,502,000 | [1] | |||
Initial Cost to Property, Total | 27,967,000 | ||||
Cost Capitalized Subsequent to Acquisition | -296,000 | [2] | |||
Gross Amount at which Carried at Close of Period, Land | 1,465,000 | ||||
Gross Amount at which Carried at Close of Period, Building and Improvements | 26,206,000 | [1] | |||
Gross Amount at which Carried at Close of Period, Total | 27,671,000 | [3] | |||
Accumulated Depreciation and Amortization | -718,000 | ||||
Original Date of Construction | 2010 | ||||
Date Acquired | 18-Feb-14 | ||||
Lofts at the Highlands [Member] | |||||
Real Estate and Accumulated Depreciation [Line Items] | |||||
Ownership Percent | 100.00% | ||||
Encumbrances | 31,611,000 | ||||
Initial Cost to Property, Land | 3,000,000 | ||||
Initial Cost to Property, Buildings and Improvements | 32,996,000 | [1] | |||
Initial Cost to Property, Total | 35,996,000 | ||||
Cost Capitalized Subsequent to Acquisition | -334,000 | [2] | |||
Gross Amount at which Carried at Close of Period, Land | 3,000,000 | ||||
Gross Amount at which Carried at Close of Period, Building and Improvements | 32,662,000 | [1] | |||
Gross Amount at which Carried at Close of Period, Total | 35,662,000 | [3] | |||
Accumulated Depreciation and Amortization | ($837,000) | ||||
Original Date of Construction | 2006 | ||||
Date Acquired | 25-Feb-14 | ||||
[1] | Building and improvements include tenant origination and absorption costs. | ||||
[2] | Costs capitalized subsequent to acquisition is net of write-offs of fully depreciated/amortized assets. | ||||
[3] | The aggregate cost of real estate for federal income tax purposes was $434.9 million as of December 31, 2014. |
SCHEDULE_III_REAL_ESTATE_ASSET2
SCHEDULE III REAL ESTATE ASSETS AND ACCUMULATED DEPRECIATION AND AMORTIZATION (Reconciliation) (Details) (USD $) | 12 Months Ended | |||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Real Estate: | ||||
Balance at the beginning of the year | $343,634 | $227,038 | $37,241 | |
Acquisitions | 63,963 | 116,875 | 193,900 | |
Improvements | 4,596 | 5,159 | 1,260 | |
Write-off of fully depreciated and fully amortized assets | -1,301 | -4,235 | -5,363 | |
Loss due to property damages | -685 | -1,203 | 0 | |
Balance at the end of the year | 410,207 | [1] | 343,634 | 227,038 |
Accumulated depreciation and amortization: | ||||
Balance at the beginning of the year | 13,317 | 5,282 | 2,649 | |
Depreciation and amortization expense | 12,328 | 12,270 | 7,996 | |
Write-off of fully depreciated and fully amortized assets | -1,301 | -4,235 | -5,363 | |
Balance at the end of the year | $24,344 | $13,317 | $5,282 | |
[1] | The aggregate cost of real estate for federal income tax purposes was $434.9 million as of December 31, 2014. |