Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2019 | Nov. 12, 2019 | |
Document Information [Line Items] | ||
Entity Registrant Name | Cottonwood Communities, Inc. | |
Entity Central Index Key | 0001692951 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | true | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2019 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Shell Company | false | |
Entity Current Reporting Status | Yes | |
Class A | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 7,923,000 | |
Class T | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 0 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Assets | ||
Real estate assets, net | $ 64,810,011 | $ 0 |
Real estate note investment | 1,119,994 | 0 |
Cash and cash equivalents | 36,549,491 | 3,406,175 |
Restricted cash | 187,433 | 0 |
Related party receivables | 312,846 | 0 |
Other assets | 729,058 | 317,279 |
Total assets | 103,708,833 | 3,723,454 |
Liabilities | ||
Credit facility, net | 34,963,468 | 0 |
Related party payables | 431,478 | 128,617 |
Accounts payable, accrued expenses and other liabilities | 1,485,233 | 29,146 |
Total liabilities | 36,880,179 | 157,763 |
Commitments and contingencies (Note 10) | ||
Stockholders' equity | ||
Preferred stock, $0.01 par value, 100,000,000 shares authorized | 0 | 0 |
Common stock, $0.01 par value, 1,000,000,000 shares authorized; 7,090,194 shares issued and outstanding at September 30, 2019; 366,654 shares issued and outstanding at December 31, 2018 | 70,902 | 3,667 |
Additional paid-in capital | 70,484,942 | 3,662,233 |
Accumulated distributions | (1,362,780) | 0 |
Accumulated deficit | (2,364,410) | (100,209) |
Total stockholders' equity | 66,828,654 | 3,565,691 |
Total liabilities and stockholders' equity | $ 103,708,833 | $ 3,723,454 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 1,000,000,000 | 1,000,000,000 |
Common stock, shares issued (in shares) | 7,090,194 | 366,654 |
Common stock, shares outstanding (in shares) | 7,090,194 | 366,654 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Revenues | ||||
Rental and other property revenues | $ 1,180,972 | $ 0 | $ 1,548,514 | $ 0 |
Real estate note investment interest | 16,699 | 0 | 16,699 | 0 |
Total revenues | 1,197,671 | 0 | 1,565,213 | 0 |
Expenses | ||||
Property operations expense | 661,181 | 0 | 883,822 | 0 |
Reimbursable operating expenses to related parties | 148,906 | 0 | 399,391 | 0 |
Asset management fee to related party | 296,126 | 0 | 453,851 | 0 |
Depreciation and amortization | 1,270,577 | 0 | 1,716,528 | 0 |
General and administrative expenses | 210,700 | 0 | 463,058 | 2,072 |
Total operating expenses | 2,587,490 | 0 | 3,916,650 | 2,072 |
Other income (expense) | ||||
Interest income | 137,543 | 0 | 299,574 | 0 |
Interest expense | (388,186) | 0 | (522,822) | 0 |
Total other expense | (250,643) | 0 | (223,248) | 0 |
Total expenses before asset management fee waiver | (2,838,133) | 0 | (4,139,898) | (2,072) |
Asset management fee waived by Advisor | 310,484 | 0 | 310,484 | 0 |
Net expenses after asset management fee waiver | (2,527,649) | 0 | (3,829,414) | (2,072) |
Net loss | $ (1,329,978) | $ 0 | $ (2,264,201) | $ (2,072) |
Weighted-average shares outstanding (in shares) | 6,091,617 | 20,000 | 3,613,382 | 20,000 |
Net loss per common share - basic and diluted (in dollars per share) | $ (0.22) | $ 0 | $ (0.63) | $ (0.10) |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) | Total | Common Stock | Additional Paid-In Capital | Accumulated Distributions | Accumulated Deficit |
Shares outstanding, beginning balance (in shares) at Dec. 31, 2017 | 20,000 | ||||
Stockholders' equity, beginning balance at Dec. 31, 2017 | $ 200,000 | $ 200 | $ 199,800 | $ 0 | $ 0 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net loss | (963) | (963) | |||
Shares outstanding, ending balance (in shares) at Mar. 31, 2018 | 20,000 | ||||
Stockholders' equity, ending balance at Mar. 31, 2018 | 199,037 | $ 200 | 199,800 | 0 | (963) |
Shares outstanding, beginning balance (in shares) at Dec. 31, 2017 | 20,000 | ||||
Stockholders' equity, beginning balance at Dec. 31, 2017 | 200,000 | $ 200 | 199,800 | 0 | 0 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net loss | (2,072) | ||||
Shares outstanding, ending balance (in shares) at Sep. 30, 2018 | 20,000 | ||||
Stockholders' equity, ending balance at Sep. 30, 2018 | 197,928 | $ 200 | 199,800 | 0 | (2,072) |
Shares outstanding, beginning balance (in shares) at Mar. 31, 2018 | 20,000 | ||||
Stockholders' equity, beginning balance at Mar. 31, 2018 | 199,037 | $ 200 | 199,800 | 0 | (963) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net loss | (1,109) | (1,109) | |||
Shares outstanding, ending balance (in shares) at Jun. 30, 2018 | 20,000 | ||||
Stockholders' equity, ending balance at Jun. 30, 2018 | 197,928 | $ 200 | 199,800 | 0 | (2,072) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net loss | 0 | 0 | |||
Shares outstanding, ending balance (in shares) at Sep. 30, 2018 | 20,000 | ||||
Stockholders' equity, ending balance at Sep. 30, 2018 | $ 197,928 | $ 200 | 199,800 | 0 | (2,072) |
Shares outstanding, beginning balance (in shares) at Dec. 31, 2018 | 366,654 | 366,654 | |||
Stockholders' equity, beginning balance at Dec. 31, 2018 | $ 3,565,691 | $ 3,667 | 3,662,233 | 0 | (100,209) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Issuance of common stock (in shares) | 1,523,319 | ||||
Issuance of common stock | 15,201,915 | $ 15,233 | 15,186,682 | ||
Distributions to investors | (58,045) | (58,045) | |||
Net loss | (231,511) | (231,511) | |||
Shares outstanding, ending balance (in shares) at Mar. 31, 2019 | 1,889,973 | ||||
Stockholders' equity, ending balance at Mar. 31, 2019 | $ 18,478,050 | $ 18,900 | 18,848,915 | (58,045) | (331,720) |
Shares outstanding, beginning balance (in shares) at Dec. 31, 2018 | 366,654 | 366,654 | |||
Stockholders' equity, beginning balance at Dec. 31, 2018 | $ 3,565,691 | $ 3,667 | 3,662,233 | 0 | (100,209) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net loss | $ (2,264,201) | ||||
Shares outstanding, ending balance (in shares) at Sep. 30, 2019 | 7,090,194 | 7,090,194 | |||
Stockholders' equity, ending balance at Sep. 30, 2019 | $ 66,828,654 | $ 70,902 | 70,484,942 | (1,362,780) | (2,364,410) |
Shares outstanding, beginning balance (in shares) at Mar. 31, 2019 | 1,889,973 | ||||
Stockholders' equity, beginning balance at Mar. 31, 2019 | 18,478,050 | $ 18,900 | 18,848,915 | (58,045) | (331,720) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Issuance of common stock (in shares) | 3,169,474 | ||||
Issuance of common stock | 31,556,816 | $ 31,695 | 31,525,121 | ||
Distributions to investors | (537,172) | (537,172) | |||
Net loss | (702,712) | (702,712) | |||
Shares outstanding, ending balance (in shares) at Jun. 30, 2019 | 5,059,447 | ||||
Stockholders' equity, ending balance at Jun. 30, 2019 | 48,794,982 | $ 50,595 | 50,374,036 | (595,217) | (1,034,432) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Issuance of common stock (in shares) | 2,030,747 | ||||
Issuance of common stock | 20,131,213 | $ 20,307 | 20,110,906 | ||
Distributions to investors | (767,563) | (767,563) | |||
Net loss | $ (1,329,978) | (1,329,978) | |||
Shares outstanding, ending balance (in shares) at Sep. 30, 2019 | 7,090,194 | 7,090,194 | |||
Stockholders' equity, ending balance at Sep. 30, 2019 | $ 66,828,654 | $ 70,902 | $ 70,484,942 | $ (1,362,780) | $ (2,364,410) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2019 | Sep. 30, 2018 | |
Cash flows from operating activities: | |||
Net loss | $ (1,329,978) | $ (2,264,201) | $ (2,072) |
Adjustments to reconcile net loss to net cash provided by operating activities: | |||
Depreciation and amortization | 1,270,577 | 1,716,528 | 0 |
Amortization of debt issuance costs | 35,570 | 0 | |
Changes in operating assets and liabilities: | |||
Related party receivables | (312,846) | 0 | |
Other assets | 1,413 | 0 | |
Related party payables | 302,861 | 0 | |
Accounts payable, accrued expenses and other liabilities | 713,126 | 2,072 | |
Net cash provided by operating activities | 192,451 | 0 | |
Cash flows from investing activities: | |||
Acquisition of real estate | (31,171,298) | 0 | |
Capital improvements to real estate | (73,186) | 0 | |
Issuance of real estate note investment | (1,119,994) | 0 | |
Net cash used in investing activities | (32,364,478) | 0 | |
Cash flows from financing activities: | |||
Proceeds from issuance of common stock | 66,377,134 | 0 | |
Distributions to common stockholders | (562,887) | (874,358) | 0 |
Net cash provided by financing activities | 65,502,776 | 0 | |
Net increase in cash and cash equivalents and restricted cash | 33,330,749 | 0 | |
Cash and cash equivalents and restricted cash, beginning of period | 3,406,175 | 200,000 | |
Cash and cash equivalents and restricted cash, end of period | 36,736,924 | 36,736,924 | 200,000 |
Reconciliation of cash and cash equivalents and restricted cash to the consolidated balance sheets: | |||
Total cash and cash equivalents and restricted cash | 36,736,924 | 3,406,175 | 200,000 |
Supplemental disclosure of cash flow information: | |||
Cash paid for interest | 369,368 | 0 | |
Cash paid for income and other taxes | 8,627 | 200 | |
Supplemental disclosure of non-cash investing and financing activities: | |||
Credit facility entered into in conjunction with acquisition of real estate | 35,995,000 | 0 | |
Assumption of liabilities in connection with acquisition of real estate | 452,639 | 0 | |
Proceeds receivable for issuance of common stock | 557,000 | 0 | |
Issuance of common stock through dividend reinvestment program | $ 124,224 | $ 211,810 | $ 0 |
Organization and Business
Organization and Business | 9 Months Ended |
Sep. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Business | Organization and Business Cottonwood Communities, Inc. is a Maryland corporation formed on July 27, 2016 that intends to qualify as a real estate investment trust or REIT beginning with the taxable year ending December 31, 2019. The Company is the sole general partner of Cottonwood Communities O.P., LP, a Delaware limited partnership (the “Operating Partnership”). Cottonwood Communities Investor, LLC, a wholly owned subsidiary of Cottonwood Residential O.P., LP (“CROP”), is the sole limited partner of the Operating Partnership. Unless the context indicates otherwise, the “Company,” “we,” “our” or “us” refers to Cottonwood Communities, Inc. and its consolidated subsidiaries, including the Operating Partnership. We were formed to invest in multifamily apartment communities and real estate related assets located throughout the United States. Substantially all of our business is conducted through the Operating Partnership. On August 13, 2018, we commenced a best-efforts initial public offering of up to $750,000,000 in shares of our common stock (the "Offering"), consisting of up to $675,000,000 in shares of common stock in our primary offering and up to $75,000,000 in shares of common stock pursuant to our distribution reinvestment plan (the "DRP Offering”) at a purchase price of $10.00 per share (with discounts available to certain categories of purchasers) in both the primary and the DRP Offering. Effective October 15, 2019, we amended our registration statement for the Offering to offer two classes of our common stock: Class A and Class T. We are offering both classes of our shares for sale in the primary offering at $10.00 per share (with discounts available to certain categories of purchasers of our Class A shares) and shares of both classes in the DRP Offering at $10.00 per share. Shares in the Offering are being sold without any upfront costs or expenses charged to the investor. We are offering to sell any combination of our Class A and Class T common stock in the Offering, with a dollar value up to the maximum offering amount. On November 8, 2019, we launched a best-efforts private placement offering exempt from registration pursuant to Rule 506(b) of Regulation D of the Securities Act of 1933, as amended (the “Securities Act”) pursuant to which we are offering a maximum of $50,000,000 in shares of our Series 2019 preferred stock to accredited investors at a purchase price of $10.00 per share (the "Private Offering"). We are externally managed and have no employees. From August 13, 2018 to March 1, 2019, Cottonwood Communities Management, LLC, an affiliate of CROP, acted as our advisor and our property manager. Effective March 1, 2019, CC Advisors III, LLC (our “advisor”) became our advisor. Cottonwood Communities Management, LLC (our "property manager") continues to act as property manager for our multifamily apartment communities. As of September 30, 2019, we own a multifamily community in West Palm Beach, Florida, a B Note secured by a deed of trust on a multifamily development project in Allen, Texas, and have entered into an agreement to make a preferred equity investment in a multifamily development project in Ybor City, Florida (see Note 10 ). |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Presentation The accompanying interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the accounting and disclosure rules and regulations of the SEC, and reflect all adjustments, consisting only of normal recurring adjustments, which are, in our opinion, necessary for a fair presentation of our financial position as of September 30, 2019 and the results of operations and cash flows for the periods presented. Principles of Consolidation The consolidated financial statements include the accounts of the Company and its consolidated subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Use of Estimates The preparation of the consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Investments in Real Estate In accordance with the guidance for business combinations, we determine whether the acquisition of a property qualifies as a business combination, which requires that the assets acquired and liabilities assumed constitute a business. If the property acquired does not constitute a business, we account for the transaction as an asset acquisition. The guidance for business combinations states that when substantially all of the fair value of the gross assets to be acquired is concentrated in a single identifiable asset or group of similar identifiable assets, the asset or set of assets is not a business. All property acquisitions to date have been accounted for as asset acquisitions. We account for asset acquisitions by allocating the total cost to the individual assets acquired and liabilities assumed on a relative fair value basis. Transaction costs associated with the acquisition of a property are capitalized as incurred and are allocated to land, building, furniture, fixtures and equipment and intangible assets on a relative fair value basis. Real estate assets and liabilities include land, building, furniture, fixtures and equipment, other personal property, in-place lease intangibles and debt. The fair values are determined using methods similar to those used by independent appraisers, and include using replacement cost estimates less depreciation, discounted cash flows, market comparisons, and direct capitalization of net operating income. Real Estate Assets, Net We state real estate assets at cost, less accumulated depreciation and amortization. We capitalize costs related to the development, construction, improvement, and significant renovation of properties, which include capital replacements such as scheduled carpet replacement, new roofs, HVAC units, plumbing, concrete, masonry and other paving, pools and various exterior building improvements. We compute depreciation on a straight-line basis over the estimated useful lives of the related assets. Intangible assets are amortized to depreciation and amortization over the remaining lease term. The useful lives of our real estate assets are as follows (in years): Land improvements 5-15 Buildings 30 Building improvements 5-15 Furniture, fixtures and equipment 5-15 Intangible assets Over lease term We expense ordinary maintenance and repairs to operations as incurred. We capitalize significant renovations and improvements that improve and/or extend the useful life of an asset and amortize over their estimated useful life, generally five to 15 years . The weighted-average amortization period for the intangible lease assets acquired in connection with our multifamily community, Cottonwood West Palm, was 0.5 years. Real Estate Note Investment We carry our real estate note investment at amortized cost with an assessment made for impairment in the event recoverability of the principal amount becomes doubtful. If, upon testing for impairment, the fair value result of the real estate note investment or its collateral is lower than the carrying amount of the note, an allowance is recorded to lower the carrying amount to fair value, with a loss recorded in earnings. The real estate note investment on the consolidated balance sheets consists of drawn amounts on the note. Costs we incurred associated with originating the real estate note investment were not significant and have been expensed. Interest income on our real estate note investment is recognized on an accrual basis over the life of the note and is being collected monthly. Cash and Cash Equivalents We consider all cash on deposit, money market funds and short-term investments with original maturities of three months or less to be cash and cash equivalents. Cash and cash equivalents consist of amounts the Company has on deposit with major commercial financial institutions. Income Taxes We intend to qualify as a REIT and to be taxed as a REIT under the Internal Revenue Code of 1986, as amended, beginning with the year ending December 31, 2019. To qualify as a REIT, we must meet certain organizational and operational requirements, including a requirement to distribute at least 90% of our taxable income to our stockholders. As a REIT, we generally are not subject to federal corporate income tax on that portion of our taxable income that is currently distributed to stockholders. If we fail to qualify as a REIT in any taxable year, we will be subject to federal income tax on our taxable income at regular corporate 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 relief under certain statutory provisions. Such an event could materially and adversely affect our net income and net cash available for distribution to stockholders. However, we intend to organize and operate in such a manner as to qualify for treatment as a REIT. Organization and Offering Costs Organization costs include all expenses incurred in connection with our formation, including but not limited to legal fees and other costs to incorporate the Company. Offering costs include all expenses incurred in connection with any offering of our shares, including legal, accounting, printing, mailing and filing fees, escrow charges and transfer agent fees, dealer manager fees and selling commissions. All organization and offering costs in connection with the Offering are paid by our advisor. We will not incur any liability for or reimburse our advisor for any of these organizational and offering costs related to the Offering. As of September 30, 2019, organizational and offering costs incurred by our advisor in connection with the Offering were approximately $7,715,000 . We will be responsible for any offering related costs incurred in connection with the Private Offering. See Note 11 for additional information about these expenses. |
Real Estate Assets, Net
Real Estate Assets, Net | 9 Months Ended |
Sep. 30, 2019 | |
Business Combinations [Abstract] | |
Real Estate Assets, Net | Real Estate Assets, Net The following table summarizes the carrying amounts of our consolidated real estate assets: September 30, 2019 Building and building improvements $ 52,349,281 Land and land improvements 10,658,155 Furniture, fixtures and equipment 2,015,778 Intangible assets 1,503,325 66,526,539 Less: Accumulated depreciation and amortization (1,716,528 ) Real estate assets, net $ 64,810,011 We had no real estate assets as of December 31, 2018. Asset acquisitions On May 30, 2019, we acquired 100% of Cottonwood West Palm (formerly "Luma at West Palm Beach"), a multifamily community in West Palm Beach, Florida for $66,923,500 . Acquired assets and liabilities were recorded at relative fair value as an asset acquisition ( Note 2 ). The following table summarizes the purchase price allocation of the real estate assets acquired during the nine months ended September 30, 2019: Allocated Amounts Property Building Land Land Improvements Personal Property Intangible Total Cottonwood West Palm $ 52,276,096 $ 9,379,895 $ 1,278,260 $ 2,015,778 $ 1,503,325 $ 66,453,354 The weighted-average amortization period for the intangible lease assets acquired in connection with the Cottonwood West Palm acquisition was 0.5 years. |
Real Estate Note Investment
Real Estate Note Investment | 9 Months Ended |
Sep. 30, 2019 | |
Real Estate [Abstract] | |
Real Estate Note Investment | Real Estate Note Investment On July 31, 2019, we invested in a B note secured by a deed of trust on a development project for an amount of up to $10 million (which commitment could rise to $10.5 million in certain circumstances) (the “Dolce B Note”). The borrower is an unaffiliated third party. The borrower intends to use the proceeds from the Dolce B Note, additional financing in the amount of $45.5 million (the “Dolce A Note”) and $17.9 million in common equity for the development of Dolce Twin Creeks, Phase II, a proposed 366 -unit multifamily project and approximately 15,000 square feet of medical office space on a 10.89 acre site located in Allen, Texas, a northern suburb of Dallas (the “Project”). The Dolce B Note bears interest at a rate of 9.50% plus 1-month LIBOR and is expected to be drawn upon in stages as needed throughout the construction of the Project. As of September 30, 2019, $1.1 million had been drawn. The Dolce B Note includes a 1-month LIBOR floor equal to 2.50% , resulting in an interest rate floor equal to 12.00% and matures on December 31, 2021 with two six -month extension options. Prior to maturity, the borrower is required to make monthly interest only payments with principal due at maturity. Prepayment is permitted in whole but not in part subject to certain prepayment fees. The borrower may obtain a release of the parcel that will contain the medical office space for a minimum release price of $3,960,000 ( 82.5% of the as-stabilized appraised value of that parcel), which would be applied pro rata, without prepayment fees, to repayment of the Dolce A Note and the Dolce B Note. We had interest income of $16,699 for the three and nine months ended September 30, 2019. The costs we incurred directly for originating the Dolce B Note were de minimis and have been expensed in the current period. No allowance was recorded on the Dolce B Note for the three and nine months ended September 30, 2019. |
Credit Facility
Credit Facility | 9 Months Ended |
Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |
Credit Facility | Credit Facility On May 30, 2019, in conjunction with the acquisition of Cottonwood West Palm, we, through a wholly owned subsidiary of the Operating Partnership, entered a Master Credit Facility Agreement with Berkadia Commercial Mortgage, LLC, an unaffiliated lender, under the Fannie Mae credit facility program (the “Credit Facility”). Pursuant to the terms of the Facility, we obtained an advance secured against Cottonwood West Palm in the amount of $35,995,000 . The advance carries an interest-only term of 10 years and bears a fixed interest rate of 3.93% . We have the right to prepay all or a portion of the Facility at any time subject to certain fees and conditions contained in the loan documents. The Credit Facility is presented net of the origination fees that were incurred to obtain the financing. We may finance other future acquisitions through the Credit Facility. The aggregate loan-to-value ratio for all advances made with respect to the Credit Facility cannot exceed 65% at the time any advance is made. There is no limit on the amount that we can borrow under the Credit Facility so long as we maintain the loan-to-value ratio and other requirements set forth in the Facility loan documents. Each advance will be cross-collateralized with the other advances. The Credit Facility permits us to sell the multifamily apartment communities that are secured by the Credit Facility individually, provided that certain debt coverage ratios and other requirements are met. We are in compliance with all debt covenants as of September 30, 2019. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 9 Months Ended |
Sep. 30, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | Fair Value of Financial Instruments We estimate the fair value of our financial instruments using available market information and valuation methodologies we believe to be appropriate. As of September 30, 2019 and December 31, 2018, the fair values of cash and cash equivalents, restricted cash, other assets, related party payables, and accounts payable, accrued expenses and other liabilities approximate their carrying values due to the short-term nature of these instruments. Fair value measurements are determined based on the assumptions that market participants would use in pricing the asset or liability. Fair value measurements are categorized into one of three levels of the fair value hierarchy based on the lowest level of significant input used. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. Considerable judgment and a high degree of subjectivity are involved in developing these estimates. These estimates may differ from the actual amounts that we could realize upon settlement. The fair value hierarchy is as follows: Level 1 - Quoted (unadjusted) prices in active markets for identical assets or liabilities. Level 2 - Other observable inputs, either directly or indirectly, other than quoted prices included in Level 1, including: • Quoted prices for similar assets/liabilities in active markets; • Quoted prices for identical or similar assets/liabilities in non-active markets (e.g., few transactions, limited information, non-current prices, high variability over time); • Inputs other than quoted prices that are observable for the asset/liability (e.g., interest rates, yield curves, volatilities, default rates); and • Inputs that are derived principally from or corroborated by other observable market data. Level 3 - Unobservable inputs that cannot be corroborated by observable market data. The table below includes the carrying value and fair value for our financial instruments for which it is practicable to estimate fair value: As of September 30, 2019 As of December 31, 2018 Carrying Value Fair Value Carrying Value Fair Value Financial Asset: Real estate note investment $ 1,119,994 $ 1,119,994 $ — $ — Financial Liability: Credit Facility $ 35,995,000 $ 37,140,000 $ — $ — Our real estate note investment is categorized as Level 3 in the fair value hierarchy. The Credit Facility is categorized as Level 2 in the fair value hierarchy. |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2019 | |
Equity [Abstract] | |
Stockholders' Equity | Stockholders' Equity Our charter authorizes the issuance of up to 1,100,000,000 shares of capital stock, of which 1,000,000,000 shares are designated as common stock at $0.01 par value per share and 100,000,000 are designated as preferred stock at $0.01 par value per share. Effective August 13, 2019, we established two classes of common stock by designating 500,000,000 shares of common stock as Class A and 500,000,000 shares of common stock as Class T. In addition, on August 13, 2019, the currently issued and outstanding shares of common stock were renamed as Class A common stock. Both classes have identical rights and privileges. Common Stock Holders of our Class A and Class T common stock are entitled to receive such distributions as may be declared from time to time by our board of directors out of legally available funds, subject to any preferential rights of outstanding preferred stock. With respect to each authorized and declared distribution, each outstanding share of common stock shall be entitled to receive the same amount. The holders of our common stock are also entitled to one vote per share on all matters submitted to a shareholder vote, including the election of directors. As of September 30, 2019, we had outstanding Class A shares of 7,090,194 , which includes 20,000 shares owned by CROP and 21,181 issued through our distribution reinvestment program. No Class T shares were issued and outstanding as of September 30, 2019. Preferred Stock The board of directors is authorized, without approval of common shareholders, to provide for the issuance of preferred stock, in one or more classes or series, with such rights, preferences and privileges as the board of directors approves. No preferred stock was issued and outstanding as of September 30, 2019. Effective November 8, 2019, we classified and designated 5,000,000 shares of our authorized but unissued preferred stock as shares of Series 2019 Preferred Stock. See Note 11 for additional information regarding these shares. Distributions Distributions are determined by the board of directors based on the Company’s financial condition and other relevant factors. Investors may choose to receive cash distributions or purchase additional shares through our distribution reinvestment plan. We have paid distributions from offering proceeds and from cash flows from operations, and we may continue to fund distributions with offering proceeds. For the three months ended September 30, 2019, we paid aggregate distributions of $687,111 , including $562,887 distributions paid in cash and $124,224 of distributions reinvested through our distribution reinvestment plan. For the nine months ended September 30, 2019, we paid aggregate distributions of $1,086,168 , including $874,358 distributions paid in cash and $211,810 of distributions reinvested through our distribution reinvestment plan. Accrued distributions declared but not yet paid as September 30, 2019 were $276,612 . On May 13, 2019, our board of directors declared distributions on the outstanding shares of our common stock based on daily record dates for the period from July 1, 2019 through July 31, 2019; and the period from August 1, 2019 through August 31, 2019. Distributions for these periods are based on stockholders of record each day at a rate of $0.00136986 per share per day. On August 6, 2019, our board of directors declared distributions on the outstanding shares of our common stock based on daily record dates for the period from September 1, 2019 through September 30, 2019; the period from October 1, 2019 through October 31, 2019; and the period from November 1, 2019 through November 30, 2019. Distributions for these periods are based on stockholders of record each day at a rate of $0.00136986 per share per day. |
Related-Party Transactions
Related-Party Transactions | 9 Months Ended |
Sep. 30, 2019 | |
Related Party Transactions [Abstract] | |
Related-Party Transactions | Related-Party Transactions Advisory Agreement Our advisor is responsible for making decisions related to the structuring, acquisition, management, financing and disposition of our assets in accordance with our investment objectives, guidelines, policies and limitations. Our advisor also manages day-to-day operations, retains property managers, and performs other duties. These activities are all subject to oversight by our board of directors. Per the terms of our advisory agreement, our advisor is entitled to receive the fees for these services which are mentioned below. Asset Management Fee Our advisor receives an annual asset management fee, paid monthly, in an amount equal to 1.25% of gross assets, as defined in the advisory agreement, as of the last day of the prior month. We incurred asset management fees of $296,126 and $453,851 for the three and nine months ended September 30, 2019, respectively. No asset management fees were incurred for the three and nine months ended September 30, 2018. Our advisor has agreed to waive its asset management fee each month in an amount equivalent to the 6.0% discount provided to purchasers of our Class A shares who purchase their shares through certain distribution channels as specified in the prospectus for the Offering. As a result, the asset management fee waived by our advisor for the three and nine months ended September 30, 2019 was $310,484 . A receivable for this amount was included within the related party receivables balance on the consolidated balance sheet as of September 30, 2019. Contingent Acquisition Fee After common stockholders have received, or are deemed to have received (with respect to a merger or a listing), together as a collective group, aggregate distributions sufficient to provide a return of their invested capital, plus a cumulative, noncompounded annual return on their investment (a “Required Return”), our advisor will receive a contingent acquisition fee from us that is a percentage of the cost of investments acquired or originated by us, or the amount to be funded by us to acquire or originate loans, including acquisition and origination expenses and any debt attributable to such investments plus significant capital expenditures related to the development, construction or improvement of the investment as follows: 1% contingent acquisition fee if stockholders receive a 6% Required Return; and 2% additional contingent acquisition fee if stockholders receive a 13% Required Return. The contingent acquisition fee is immediately payable when each Required Return has been met. The fee is based on all assets we have acquired even if no longer in our portfolio. To the extent we acquire any assets after satisfying the return threshold, the contingent acquisition fee will be immediately payable at the closing of the acquisition. If our advisory agreement is terminated before August 13, 2028 for any reason other than our advisor’s fraud, willful misconduct or gross negligence, our advisor will receive a 3% contingent acquisition fee less the amount of any prior payments of contingent acquisition fees to our advisor. No contingent acquisition fees were incurred for the three and nine months ended September 30, 2019 and 2018. Contingent Financing Fee After our common stockholders have received, or are deemed to have received (with respect to a merger or a listing), together as a collective group, aggregate distributions sufficient to provide a return of their invested capital, plus a Required Return of 13% , our advisor will receive from us a contingent financing fee of 1% of the original principal amount of any financing obtained or assumed by us. The contingent financing fee is payable upon satisfying the return threshold with respect to any financing obtained or assumed by us prior to satisfaction of the return threshold and at the closing of new financing following satisfaction of the return threshold. If our advisor agreement is terminated before August 13, 2028 for any reason other than the advisor’s fraud, willful misconduct or gross negligence, the payment of the contingent financing fee will be immediately due and payable. No contingent financing fees were incurred for the three and nine months ended September 30, 2019 and 2018. Acquisition Expense Reimbursement Subject to the limitations contained in our charter, our advisor receives reimbursement from us for all out-of-pocket expenses incurred in connection with the selection and acquisition or origination of investments, whether or not we ultimately acquire the property or other real estate-related investment. Acquisition expenses reimbursed to our advisor during the three and nine months ended September 30, 2019 were not significant, as we have generally incurred and paid such expenses directly. Reimbursable Operating Expenses We reimburse our advisor or its affiliates for all actual expenses paid or incurred by our advisor or its affiliates in connection with the services provided to us, including our allocable share of our advisor’s or its affiliates’ overhead, such as rent, personnel costs, utilities, cybersecurity and IT costs; provided, however, that we will not reimburse our advisor or its affiliates for salaries, wages and related benefits of personnel who perform investment advisory services for us or serve as our executive officers. In addition, subject to the approval of our board of directors we may reimburse our advisor or its affiliates for costs and fees associated with providing services to us that we would otherwise engage a third party to provide. Reimbursable company operating expenses were $148,906 and $399,391 for the three and nine months ended September 30, 2019, respectively. There were no reimbursable company operating expenses for the three and nine months ended September 30, 2018. Commencing with the quarter ending June 30, 2020, our advisor must reimburse us the amount by which our aggregate total operating expenses for the four fiscal quarters then ended exceed the greater of 2% of our average invested assets or 25% of our net income, unless the conflicts committee has determined that such excess expenses were justified based on unusual and non-recurring factors. Property Management Fee Our property manager operates under the terms of separate property management agreements for each community. Our property manager receives from us a property management fee in an amount up to 3.5% of the annual gross revenues of the multifamily apartment communities that it manages. We incurred property management fees of $38,753 and $53,297 for the three and nine months ended September 30, 2019. No property management fees were incurred in 2018. Property management fees are presented within property operations expense on the consolidated statements of operations. Promotional Interest Cottonwood Communities Advisors Promote, LLC, an affiliated entity, will receive from the Operating Partnership a promotional interest equal to 15% of net income and cash distributions, but only after our common stockholders, together as a collective group, receive in the aggregate, cumulative distributions from us sufficient to provide a return of their invested capital plus a 6% cumulative, non-compounded annual return on their invested capital. Cottonwood Communities Advisors Promote, LLC, will not be required to make any capital contributions to our Operating Partnership in order to obtain the promotional interest. In addition, Cottonwood Communities Advisors Promote, LLC will be entitled to a separate one-time payment upon (1) the listing of our common stock on a national securities exchange or (2) the occurrence of certain events that result in the termination or non-renewal of our advisory agreement, in each case for an amount that Cottonwood Communities Advisors Promote, LLC would have been entitled to receive as if our Operating Partnership had disposed of all of its assets at the market value of our shares of common stock as of the date of the event triggering the payment. A separate one-time payment following the termination or non-renewal of our advisory agreement for reasons unrelated to a liquidity event for our common stockholders will be in the form of an interest-bearing promissory note that is payable only after our common stockholders have actually received distributions in the amount required before Cottonwood Communities Advisors Promote, LLC can receive the promotional interest. Provided, however, if the promissory note has not been repaid prior to a liquidity event for our common stockholders, the promissory note shall be paid in full on the date of or immediately prior to the liquidity event. Independent Director Compensation We pay each of our independent directors an annual retainer of $10,000 . We also pay our independent directors for attending meetings as follows: (i) $500 for each board meeting attended and (ii) $500 for each committee meeting attended (if held at a different time or place than a board meeting). All directors receive reimbursement of reasonable out of pocket expenses incurred in connection with attendance at meetings of the board of directors. Economic Dependency Under various agreements, we have engaged or will engage our advisor or its affiliates to provide certain services that are essential to us, including asset management services and other administrative responsibilities for the Company including accounting services and investor relations. Because of these relationships, we are dependent upon our advisor. If these companies were unable to provide us with the respective services, we would be required to find alternative providers of these services. |
Economic Dependency
Economic Dependency | 9 Months Ended |
Sep. 30, 2019 | |
Related Party Transactions [Abstract] | |
Economic Dependency | Related-Party Transactions Advisory Agreement Our advisor is responsible for making decisions related to the structuring, acquisition, management, financing and disposition of our assets in accordance with our investment objectives, guidelines, policies and limitations. Our advisor also manages day-to-day operations, retains property managers, and performs other duties. These activities are all subject to oversight by our board of directors. Per the terms of our advisory agreement, our advisor is entitled to receive the fees for these services which are mentioned below. Asset Management Fee Our advisor receives an annual asset management fee, paid monthly, in an amount equal to 1.25% of gross assets, as defined in the advisory agreement, as of the last day of the prior month. We incurred asset management fees of $296,126 and $453,851 for the three and nine months ended September 30, 2019, respectively. No asset management fees were incurred for the three and nine months ended September 30, 2018. Our advisor has agreed to waive its asset management fee each month in an amount equivalent to the 6.0% discount provided to purchasers of our Class A shares who purchase their shares through certain distribution channels as specified in the prospectus for the Offering. As a result, the asset management fee waived by our advisor for the three and nine months ended September 30, 2019 was $310,484 . A receivable for this amount was included within the related party receivables balance on the consolidated balance sheet as of September 30, 2019. Contingent Acquisition Fee After common stockholders have received, or are deemed to have received (with respect to a merger or a listing), together as a collective group, aggregate distributions sufficient to provide a return of their invested capital, plus a cumulative, noncompounded annual return on their investment (a “Required Return”), our advisor will receive a contingent acquisition fee from us that is a percentage of the cost of investments acquired or originated by us, or the amount to be funded by us to acquire or originate loans, including acquisition and origination expenses and any debt attributable to such investments plus significant capital expenditures related to the development, construction or improvement of the investment as follows: 1% contingent acquisition fee if stockholders receive a 6% Required Return; and 2% additional contingent acquisition fee if stockholders receive a 13% Required Return. The contingent acquisition fee is immediately payable when each Required Return has been met. The fee is based on all assets we have acquired even if no longer in our portfolio. To the extent we acquire any assets after satisfying the return threshold, the contingent acquisition fee will be immediately payable at the closing of the acquisition. If our advisory agreement is terminated before August 13, 2028 for any reason other than our advisor’s fraud, willful misconduct or gross negligence, our advisor will receive a 3% contingent acquisition fee less the amount of any prior payments of contingent acquisition fees to our advisor. No contingent acquisition fees were incurred for the three and nine months ended September 30, 2019 and 2018. Contingent Financing Fee After our common stockholders have received, or are deemed to have received (with respect to a merger or a listing), together as a collective group, aggregate distributions sufficient to provide a return of their invested capital, plus a Required Return of 13% , our advisor will receive from us a contingent financing fee of 1% of the original principal amount of any financing obtained or assumed by us. The contingent financing fee is payable upon satisfying the return threshold with respect to any financing obtained or assumed by us prior to satisfaction of the return threshold and at the closing of new financing following satisfaction of the return threshold. If our advisor agreement is terminated before August 13, 2028 for any reason other than the advisor’s fraud, willful misconduct or gross negligence, the payment of the contingent financing fee will be immediately due and payable. No contingent financing fees were incurred for the three and nine months ended September 30, 2019 and 2018. Acquisition Expense Reimbursement Subject to the limitations contained in our charter, our advisor receives reimbursement from us for all out-of-pocket expenses incurred in connection with the selection and acquisition or origination of investments, whether or not we ultimately acquire the property or other real estate-related investment. Acquisition expenses reimbursed to our advisor during the three and nine months ended September 30, 2019 were not significant, as we have generally incurred and paid such expenses directly. Reimbursable Operating Expenses We reimburse our advisor or its affiliates for all actual expenses paid or incurred by our advisor or its affiliates in connection with the services provided to us, including our allocable share of our advisor’s or its affiliates’ overhead, such as rent, personnel costs, utilities, cybersecurity and IT costs; provided, however, that we will not reimburse our advisor or its affiliates for salaries, wages and related benefits of personnel who perform investment advisory services for us or serve as our executive officers. In addition, subject to the approval of our board of directors we may reimburse our advisor or its affiliates for costs and fees associated with providing services to us that we would otherwise engage a third party to provide. Reimbursable company operating expenses were $148,906 and $399,391 for the three and nine months ended September 30, 2019, respectively. There were no reimbursable company operating expenses for the three and nine months ended September 30, 2018. Commencing with the quarter ending June 30, 2020, our advisor must reimburse us the amount by which our aggregate total operating expenses for the four fiscal quarters then ended exceed the greater of 2% of our average invested assets or 25% of our net income, unless the conflicts committee has determined that such excess expenses were justified based on unusual and non-recurring factors. Property Management Fee Our property manager operates under the terms of separate property management agreements for each community. Our property manager receives from us a property management fee in an amount up to 3.5% of the annual gross revenues of the multifamily apartment communities that it manages. We incurred property management fees of $38,753 and $53,297 for the three and nine months ended September 30, 2019. No property management fees were incurred in 2018. Property management fees are presented within property operations expense on the consolidated statements of operations. Promotional Interest Cottonwood Communities Advisors Promote, LLC, an affiliated entity, will receive from the Operating Partnership a promotional interest equal to 15% of net income and cash distributions, but only after our common stockholders, together as a collective group, receive in the aggregate, cumulative distributions from us sufficient to provide a return of their invested capital plus a 6% cumulative, non-compounded annual return on their invested capital. Cottonwood Communities Advisors Promote, LLC, will not be required to make any capital contributions to our Operating Partnership in order to obtain the promotional interest. In addition, Cottonwood Communities Advisors Promote, LLC will be entitled to a separate one-time payment upon (1) the listing of our common stock on a national securities exchange or (2) the occurrence of certain events that result in the termination or non-renewal of our advisory agreement, in each case for an amount that Cottonwood Communities Advisors Promote, LLC would have been entitled to receive as if our Operating Partnership had disposed of all of its assets at the market value of our shares of common stock as of the date of the event triggering the payment. A separate one-time payment following the termination or non-renewal of our advisory agreement for reasons unrelated to a liquidity event for our common stockholders will be in the form of an interest-bearing promissory note that is payable only after our common stockholders have actually received distributions in the amount required before Cottonwood Communities Advisors Promote, LLC can receive the promotional interest. Provided, however, if the promissory note has not been repaid prior to a liquidity event for our common stockholders, the promissory note shall be paid in full on the date of or immediately prior to the liquidity event. Independent Director Compensation We pay each of our independent directors an annual retainer of $10,000 . We also pay our independent directors for attending meetings as follows: (i) $500 for each board meeting attended and (ii) $500 for each committee meeting attended (if held at a different time or place than a board meeting). All directors receive reimbursement of reasonable out of pocket expenses incurred in connection with attendance at meetings of the board of directors. Economic Dependency Under various agreements, we have engaged or will engage our advisor or its affiliates to provide certain services that are essential to us, including asset management services and other administrative responsibilities for the Company including accounting services and investor relations. Because of these relationships, we are dependent upon our advisor. If these companies were unable to provide us with the respective services, we would be required to find alternative providers of these services. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Lector85 Investment On August 15, 2019, we entered into an agreement to make a preferred equity investment of up to $9.9 million in Lector85, a multifamily community in Ybor City, Florida (the “Lector85 Investment”). In connection with our investment we entered a joint venture agreement with Milhaus, LLC (“Milhaus”), the sponsor of the development. Milhaus intends to use the Lector85 Investment, along with a $34.0 million construction loan and equity of $9.3 million to fund the total development costs of $53.3 million for a 4-story, 254 -unit urban-style apartment community that will include over 11,000 square feet of retail. The Lector85 Investment is expected to be drawn upon in stages as needed throughout the construction of the Project. As of September 30, 2019, Milhaus had not drawn on the Lector85 Investment. Pursuant to the terms of the joint venture agreement, the Lector85 Investment has an annual preferred return of 13% that will be reduced to 10% annually upon the later to occur of (i) the stabilization of the development project, or (ii) the one-year anniversary of the receipt of all temporary certificate of occupancies for the development project, subject to certain financial covenants being satisfied. The investment has a special preferred return of $200,000 to be paid upon redemption and provides a minimum cumulative return upon redemption, sale or similar transaction of 35% . Subject to one twelve -month extension option, the redemption date is no earlier than two years after the receipt of all temporary certificate of occupancies for the development project (the “Redemption Lockout Date”) but no later than the earlier of (i) the payment in full of the construction loan, if the loan is repaid after the Redemption Lockout Date, or (ii) the construction loan maturity date, if the loan is not refinanced prior to the Redemption Lockout Date. Litigation As of September 30, 2019, we were not subject to any material litigation nor were we aware of any material litigation threatened against us. Distribution Reinvestment Plan We have adopted a distribution reinvestment plan whereby stockholders may elect to have us apply their dividends and other distributions to the purchase of additional shares of common stock. Participants in the plan will acquire common stock at the per share price effective on the date of purchase (initially $10.00 ). Share Repurchase Program We have a share repurchase program whereby, on a quarterly basis, stockholders may request that we repurchase all or any portion of their shares. We may choose to repurchase all, some or none of the shares that have been requested to be repurchased at our discretion, subject to limitations in the share repurchase plan. The total amount of aggregate repurchases shares will be limited to 5% of the weighted average number of shares of common stock outstanding during the prior calendar year. In addition, during any calendar year, we may redeem only the number of shares that we could purchase with the amount of net proceeds from the sale of shares under our distribution reinvestment plan during the prior calendar year. Except for Exceptional Repurchases (as defined in the share repurchase program), the repurchase price is subject to the following discounts, depending on how long a redeeming stockholder has held each share: Share Purchase Anniversary Repurchase Price as a Percentage of Estimated Value (1) Less than 1 year No repurchase allowed 1 year - 2 years 85 % 3 years - 4 years 90 % 5 years and thereafter 95 % A stockholder’s death or complete disability, less than 2 years 95 % A stockholder’s death or complete disability, 2 years or more 100 % (1) For the purposes of the share repurchase program, the “estimated value per share” will initially be equal to the purchase price per share at which the original purchaser or purchasers of the shares bought its shares from us, and the purchase price per share will be adjusted to reflect any stock dividends, combinations, splits, recapitalizations or any similar transaction with respect to the shares outstanding. We plan to establish an estimated net asset value (“NAV”) per share of its common stock based on valuations of its assets and liabilities no later than May 17, 2021 and annually thereafter. Upon our establishment of an estimated NAV per share, the estimated NAV per share will be the estimated value per share pursuant to the share repurchase program. No shares were redeemed during the three and nine months ended September 30, 2019 and 2018. Our board of directors may, in its sole discretion, amend, suspend or terminate our share repurchase program for any reason upon 15 days’ notice to our stockholders. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events We evaluate subsequent events up until the date the consolidated financial statements are issued and have determined there are none to be reported or disclosed in the consolidated financial statements other than those mentioned below. Status of the Offering We commenced the Offering on August 13, 2018. As of November 12, 2019, we had sold approximately 7,923,000 shares of our Class A common stock for aggregate gross offering proceeds of approximately $78,836,000 . Included in these amounts were 33,236 shares of common stock sold pursuant to the DRP Offering for aggregate gross offering proceeds of $332,360 . No shares of our Class T common stock had been sold as of November 12, 2019. Distributions Paid Distributions paid to holders of our common stock subsequent to September 30, 2019 are as follows: Period Date Paid Daily Distribution Rate Annualized Rate (1) Amount September 1, 2019 - September 30, 2019 October 3, 2019 $ 0.00136986 5.0% $ 276,612 October 1, 2019 - October 31, 2019 November 8, 2019 $ 0.00136986 5.0% $ 312,628 (1) Annualized rate is based on the $10.00 purchase price and assumes distributions are paid every day for a year at the daily distribution rate. Distributions Declared Our board of directors have declared cash distributions to holders of our common stock as follows: Period Declaration Date Daily Distribution Rate Annualized Rate (1) Expected Payment November 1, 2019 - November 30, 2019 August 6, 2019 $ 0.00136986 5.0% December 2019 December 1, 2019 - December 31, 2019 November 12, 2019 $ 0.00136986 5.0% January 2020 January 1, 2020 - January 31, 2020 November 12, 2019 $ 0.00136612 5.0% February 2020 February 1, 2020 - February 29, 2020 November 12, 2019 $ 0.00136612 5.0% March 2020 (1) Annualized rate is based on the $10.00 purchase price and assumes distributions are paid every day for a year at the daily distribution rate. Holders of our common stock may choose to receive cash distributions or purchase additional shares through our distribution reinvestment plan. Pursuant to the terms of the preferred stock, our board of directors have declared cash distributions to holders of our preferred stock as follows: Period Declaration Date Daily Distribution Rate Annualized Rate (1) Expected Payment November 12, 2019 - November 30, 2019 November 12, 2019 $ 0.00150685 5.5% December 2019 December 1, 2019 - December 31, 2019 November 12, 2019 $ 0.00150685 5.5% January 2020 January 1, 2020 - January 31, 2020 November 12, 2019 $ 0.00150273 5.5% February 2020 February 1, 2020 - February 29, 2020 November 12, 2019 $ 0.00150273 5.5% March 2020 (1) Annualized rate is based on the $10.00 purchase price and assumes distributions are paid every day for a year at the daily distribution rate. 2980 Huron Investment On October 25, 2019, we entered a limited liability company agreement (the “Huron Joint Venture Agreement”) with respect to a preferred equity investment (the "2980 Huron Investment") in an entity (the “2980 Huron Owner”) that has purchased and intends to develop a parcel of land commonly known as 2980 Huron Street in Denver, Colorado (the "2980 Huron Project"). The 2980 Huron Project is a proposed 13-story, 299 -unit high-rise multifamily apartment community located on 0.84 acres in the Union Station North neighborhood in downtown Denver, Colorado. Upon completion, the 2980 Huron Project is expected to feature several amenities, including a pool deck, fitness center, aqua lounge and a co-working space and lounge. We expect construction on the 2980 Huron Project to commence in the first quarter of 2020 and to be completed in 2022. We, through our wholly owned subsidiary, and an affiliate of CA Residential, a real estate investment and development firm, (the “Huron Developer”) are the sole members of the joint venture that is the sole member and owner of the 2980 Huron Owner. The Huron Developer is the managing member of the 2980 Huron Owner; however, we have approval rights with respect to major decisions involving the 2980 Huron Project. We expect the Huron Developer or its affiliates to provide services to the 2980 Huron Project for which they will earn fees separate and in addition to any payments associated with their equity interest. Pursuant to the Huron Joint Venture Agreement we will contribute up to $20.0 million for our preferred membership interest in the 2980 Huron Owner with additional funding for the 2980 Huron Project to come from a $17.5 million common equity contribution from the Huron Developer and a $65.4 million secured construction loan (the “Huron Secured Loan”), with total development costs estimated at $102.9 million . Our contributions to the 2980 Huron Owner will only be made following the contribution of the full $17.5 million of equity from the Huron Developer and then will be made as project costs are incurred. Pursuant to the terms of the Huron Joint Venture Agreement, the 2980 Huron Investment has a preferred return of 12% annually, compounded monthly, and matures on the earlier of: (i) the sale of the 2980 Huron Project (ii) the maturity of the Huron Secured Loan; and (iii) such earlier date as may be provided in the transaction documents, all subject to a one -year extension provided certain conditions are satisfied. In addition, we will receive an underwriting fee in the amount of 1% of our preferred equity investment at origination and will receive an exit fee in the amount of 0.5% of the investment amount on repayment. Series 2019 Preferred Stock On November 8, 2019, we filed Articles Supplementary with the State Department of Assessments and Taxation of the State of Maryland to classify and designate 5,000,000 shares of our authorized but unissued preferred stock as shares of non-voting Series 2019 preferred stock, par value $0.01 . As set forth in the Articles Supplementary, the Series 2019 preferred stock will be entitled to receive a preferred dividend equal to a 5.5% (subject to an increase to 6.0% in certain circumstances) per annum cumulative but not compounded return on invested capital on the purchase price, which will have a priority over our common stock but which may become subordinate to certain other series of preferred stock and indebtedness of the Company. The Series 2019 preferred stock must be redeemed by December 31, 2023, which date may be extended by two 1 -year extension options. The Series 2019 preferred stock is redeemable by us for cash beginning on January 1, 2022 or upon the occurrence of certain special events. Operating Partnership Amendment Effective November 8, 2019, we, as general partner of the Operating Partnership, amended the Limited Partnership Agreement of Operating Partnership, to create a series of preferred units that mirrors the rights and preferences of the Series 2019 preferred stock. We will contribute the proceeds from the sale of Series 2019 preferred stock to the Operating Partnership in exchange for preferred units. Private Placement Offering On November 8, 2019, we launched a private placement offering exempt from registration pursuant to Rule 506(b) of Regulation D of the Securities Act pursuant to which we are offering a maximum of $50,000,000 in shares of our Series 2019 preferred stock to accredited investors at a purchase price of $10.00 per share (the "Private Offering"). In connection with the launch of the Private Offering, on November 8, 2019, we entered a managing broker dealer agreement (the "Managing Broker Dealer Agreement") with an unaffiliated third party to act as the managing broker dealer for the Private Offering. Pursuant to the terms of the Managing Broker Dealer Agreement, the managing broker dealer will receive selling commissions in an amount up to 6% of the gross offering proceeds from the Private Offering, which it will reallow to selling group members, and a placement fee in an amount up to 3% of the gross offering proceeds from the Private Offering, which it will reallow, in whole or in part, to certain wholesalers which are internal to affiliates of our advisor. We will be responsible for paying all of the expenses associated with the Private Offering. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the accounting and disclosure rules and regulations of the SEC, and reflect all adjustments, consisting only of normal recurring adjustments, which are, in our opinion, necessary for a fair presentation of our financial position as of September 30, 2019 and the results of operations and cash flows for the periods presented. |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of the Company and its consolidated subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. |
Use of Estimates | Use of Estimates The preparation of the consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. |
Investments in Real Estate / Real Estate Assets, Net | Investments in Real Estate In accordance with the guidance for business combinations, we determine whether the acquisition of a property qualifies as a business combination, which requires that the assets acquired and liabilities assumed constitute a business. If the property acquired does not constitute a business, we account for the transaction as an asset acquisition. The guidance for business combinations states that when substantially all of the fair value of the gross assets to be acquired is concentrated in a single identifiable asset or group of similar identifiable assets, the asset or set of assets is not a business. All property acquisitions to date have been accounted for as asset acquisitions. We account for asset acquisitions by allocating the total cost to the individual assets acquired and liabilities assumed on a relative fair value basis. Transaction costs associated with the acquisition of a property are capitalized as incurred and are allocated to land, building, furniture, fixtures and equipment and intangible assets on a relative fair value basis. Real estate assets and liabilities include land, building, furniture, fixtures and equipment, other personal property, in-place lease intangibles and debt. The fair values are determined using methods similar to those used by independent appraisers, and include using replacement cost estimates less depreciation, discounted cash flows, market comparisons, and direct capitalization of net operating income. Real Estate Assets, Net We state real estate assets at cost, less accumulated depreciation and amortization. We capitalize costs related to the development, construction, improvement, and significant renovation of properties, which include capital replacements such as scheduled carpet replacement, new roofs, HVAC units, plumbing, concrete, masonry and other paving, pools and various exterior building improvements. We compute depreciation on a straight-line basis over the estimated useful lives of the related assets. Intangible assets are amortized to depreciation and amortization over the remaining lease term. The useful lives of our real estate assets are as follows (in years): Land improvements 5-15 Buildings 30 Building improvements 5-15 Furniture, fixtures and equipment 5-15 Intangible assets Over lease term We expense ordinary maintenance and repairs to operations as incurred. We capitalize significant renovations and improvements that improve and/or extend the useful life of an asset and amortize over their estimated useful life, generally five to 15 years . |
Cash and Cash Equivalents | Cash and Cash Equivalents We consider all cash on deposit, money market funds and short-term investments with original maturities of three months or less to be cash and cash equivalents. Cash and cash equivalents consist of amounts the Company has on deposit with major commercial financial institutions. |
Income Taxes | Income Taxes We intend to qualify as a REIT and to be taxed as a REIT under the Internal Revenue Code of 1986, as amended, beginning with the year ending December 31, 2019. To qualify as a REIT, we must meet certain organizational and operational requirements, including a requirement to distribute at least 90% of our taxable income to our stockholders. As a REIT, we generally are not subject to federal corporate income tax on that portion of our taxable income that is currently distributed to stockholders. If we fail to qualify as a REIT in any taxable year, we will be subject to federal income tax on our taxable income at regular corporate 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 relief under certain statutory provisions. Such an event could materially and adversely affect our net income and net cash available for distribution to stockholders. However, we intend to organize and operate in such a manner as to qualify for treatment as a REIT. |
Organization and Offering Costs | Organization and Offering Costs Organization costs include all expenses incurred in connection with our formation, including but not limited to legal fees and other costs to incorporate the Company. Offering costs include all expenses incurred in connection with any offering of our shares, including legal, accounting, printing, mailing and filing fees, escrow charges and transfer agent fees, dealer manager fees and selling commissions. All organization and offering costs in connection with the Offering are paid by our advisor. We will not incur any liability for or reimburse our advisor for any of these organizational and offering costs related to the Offering. |
Fair Value of Financial Instruments | We estimate the fair value of our financial instruments using available market information and valuation methodologies we believe to be appropriate. As of September 30, 2019 and December 31, 2018, the fair values of cash and cash equivalents, restricted cash, other assets, related party payables, and accounts payable, accrued expenses and other liabilities approximate their carrying values due to the short-term nature of these instruments. Fair value measurements are determined based on the assumptions that market participants would use in pricing the asset or liability. Fair value measurements are categorized into one of three levels of the fair value hierarchy based on the lowest level of significant input used. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. Considerable judgment and a high degree of subjectivity are involved in developing these estimates. These estimates may differ from the actual amounts that we could realize upon settlement. The fair value hierarchy is as follows: Level 1 - Quoted (unadjusted) prices in active markets for identical assets or liabilities. Level 2 - Other observable inputs, either directly or indirectly, other than quoted prices included in Level 1, including: • Quoted prices for similar assets/liabilities in active markets; • Quoted prices for identical or similar assets/liabilities in non-active markets (e.g., few transactions, limited information, non-current prices, high variability over time); • Inputs other than quoted prices that are observable for the asset/liability (e.g., interest rates, yield curves, volatilities, default rates); and • Inputs that are derived principally from or corroborated by other observable market data. Level 3 - Unobservable inputs that cannot be corroborated by observable market data. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Summary of Useful Lives of Real Estate Assets | The useful lives of our real estate assets are as follows (in years): Land improvements 5-15 Buildings 30 Building improvements 5-15 Furniture, fixtures and equipment 5-15 Intangible assets Over lease term The following table summarizes the carrying amounts of our consolidated real estate assets: September 30, 2019 Building and building improvements $ 52,349,281 Land and land improvements 10,658,155 Furniture, fixtures and equipment 2,015,778 Intangible assets 1,503,325 66,526,539 Less: Accumulated depreciation and amortization (1,716,528 ) Real estate assets, net $ 64,810,011 |
Real Estate Assets, Net (Tables
Real Estate Assets, Net (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Business Combinations [Abstract] | |
Summary of Carrying Amounts of Consolidated Real Estate Assets | The useful lives of our real estate assets are as follows (in years): Land improvements 5-15 Buildings 30 Building improvements 5-15 Furniture, fixtures and equipment 5-15 Intangible assets Over lease term The following table summarizes the carrying amounts of our consolidated real estate assets: September 30, 2019 Building and building improvements $ 52,349,281 Land and land improvements 10,658,155 Furniture, fixtures and equipment 2,015,778 Intangible assets 1,503,325 66,526,539 Less: Accumulated depreciation and amortization (1,716,528 ) Real estate assets, net $ 64,810,011 |
Summary of Purchase Price Allocation of Real Estate Assets Acquired | The following table summarizes the purchase price allocation of the real estate assets acquired during the nine months ended September 30, 2019: Allocated Amounts Property Building Land Land Improvements Personal Property Intangible Total Cottonwood West Palm $ 52,276,096 $ 9,379,895 $ 1,278,260 $ 2,015,778 $ 1,503,325 $ 66,453,354 |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Fair Value Disclosures [Abstract] | |
Summary of Carrying Value and Fair Value of Financial Instrument Assets | The table below includes the carrying value and fair value for our financial instruments for which it is practicable to estimate fair value: As of September 30, 2019 As of December 31, 2018 Carrying Value Fair Value Carrying Value Fair Value Financial Asset: Real estate note investment $ 1,119,994 $ 1,119,994 $ — $ — Financial Liability: Credit Facility $ 35,995,000 $ 37,140,000 $ — $ — |
Summary of Carrying Value and Fair Value of Financial Instrument Liabilities | The table below includes the carrying value and fair value for our financial instruments for which it is practicable to estimate fair value: As of September 30, 2019 As of December 31, 2018 Carrying Value Fair Value Carrying Value Fair Value Financial Asset: Real estate note investment $ 1,119,994 $ 1,119,994 $ — $ — Financial Liability: Credit Facility $ 35,995,000 $ 37,140,000 $ — $ — |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Repurchase Program Discounts | Except for Exceptional Repurchases (as defined in the share repurchase program), the repurchase price is subject to the following discounts, depending on how long a redeeming stockholder has held each share: Share Purchase Anniversary Repurchase Price as a Percentage of Estimated Value (1) Less than 1 year No repurchase allowed 1 year - 2 years 85 % 3 years - 4 years 90 % 5 years and thereafter 95 % A stockholder’s death or complete disability, less than 2 years 95 % A stockholder’s death or complete disability, 2 years or more 100 % (1) For the purposes of the share repurchase program, the “estimated value per share” will initially be equal to the purchase price per share at which the original purchaser or purchasers of the shares bought its shares from us, and the purchase price per share will be adjusted to reflect any stock dividends, combinations, splits, recapitalizations or any similar transaction with respect to the shares outstanding. We plan to establish an estimated net asset value (“NAV”) per share of its common stock based on valuations of its assets and liabilities no later than May 17, 2021 and annually thereafter. Upon our establishment of an estimated NAV per share, the estimated NAV per share will be the estimated value per share pursuant to the share repurchase program. |
Subsequent Events (Tables)
Subsequent Events (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Subsequent Events [Abstract] | |
Dividends Paid and Declared | Distributions Paid Distributions paid to holders of our common stock subsequent to September 30, 2019 are as follows: Period Date Paid Daily Distribution Rate Annualized Rate (1) Amount September 1, 2019 - September 30, 2019 October 3, 2019 $ 0.00136986 5.0% $ 276,612 October 1, 2019 - October 31, 2019 November 8, 2019 $ 0.00136986 5.0% $ 312,628 (1) Annualized rate is based on the $10.00 purchase price and assumes distributions are paid every day for a year at the daily distribution rate. Distributions Declared Our board of directors have declared cash distributions to holders of our common stock as follows: Period Declaration Date Daily Distribution Rate Annualized Rate (1) Expected Payment November 1, 2019 - November 30, 2019 August 6, 2019 $ 0.00136986 5.0% December 2019 December 1, 2019 - December 31, 2019 November 12, 2019 $ 0.00136986 5.0% January 2020 January 1, 2020 - January 31, 2020 November 12, 2019 $ 0.00136612 5.0% February 2020 February 1, 2020 - February 29, 2020 November 12, 2019 $ 0.00136612 5.0% March 2020 (1) Annualized rate is based on the $10.00 purchase price and assumes distributions are paid every day for a year at the daily distribution rate. Pursuant to the terms of the preferred stock, our board of directors have declared cash distributions to holders of our preferred stock as follows: Period Declaration Date Daily Distribution Rate Annualized Rate (1) Expected Payment November 12, 2019 - November 30, 2019 November 12, 2019 $ 0.00150685 5.5% December 2019 December 1, 2019 - December 31, 2019 November 12, 2019 $ 0.00150685 5.5% January 2020 January 1, 2020 - January 31, 2020 November 12, 2019 $ 0.00150273 5.5% February 2020 February 1, 2020 - February 29, 2020 November 12, 2019 $ 0.00150273 5.5% March 2020 (1) Annualized rate is based on the $10.00 purchase price and assumes distributions are paid every day for a year at the daily distribution rate. |
Organization and Business (Deta
Organization and Business (Details) | Nov. 08, 2019USD ($)$ / shares | Aug. 13, 2018USD ($)$ / shares | Oct. 15, 2019class | Sep. 30, 2019employee$ / shares | Aug. 13, 2019class |
Subsidiary, Sale of Stock [Line Items] | |||||
Number of classes of stock | class | 2 | ||||
Number of employees | employee | 0 | ||||
IPO | |||||
Subsidiary, Sale of Stock [Line Items] | |||||
Aggregate value of shares offered (up to) | $ | $ 750,000,000 | ||||
Share price (in dollars per share) | $ 10 | ||||
Primary Offering | |||||
Subsidiary, Sale of Stock [Line Items] | |||||
Aggregate value of shares offered (up to) | $ | $ 675,000,000 | ||||
Distribution Reinvestment Plan | |||||
Subsidiary, Sale of Stock [Line Items] | |||||
Aggregate value of shares offered (up to) | $ | $ 75,000,000 | ||||
Share price (in dollars per share) | $ 10 | ||||
Subsequent event | IPO | |||||
Subsidiary, Sale of Stock [Line Items] | |||||
Number of classes of stock | class | 2 | ||||
Class A | Primary Offering | |||||
Subsidiary, Sale of Stock [Line Items] | |||||
Share price (in dollars per share) | 10 | ||||
Class A | Distribution Reinvestment Plan | |||||
Subsidiary, Sale of Stock [Line Items] | |||||
Share price (in dollars per share) | 10 | ||||
Class T | Primary Offering | |||||
Subsidiary, Sale of Stock [Line Items] | |||||
Share price (in dollars per share) | 10 | ||||
Class T | Distribution Reinvestment Plan | |||||
Subsidiary, Sale of Stock [Line Items] | |||||
Share price (in dollars per share) | $ 10 | ||||
Series 2019 Preferred Stock | Subsequent event | Private Placement | |||||
Subsidiary, Sale of Stock [Line Items] | |||||
Aggregate value of shares offered (up to) | $ | $ 50,000,000 | ||||
Share price (in dollars per share) | $ 10 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2019USD ($) | |
Minimum | |
Subsidiary, Sale of Stock [Line Items] | |
Useful lives of real estate assets | 5 years |
Maximum | |
Subsidiary, Sale of Stock [Line Items] | |
Useful lives of real estate assets | 15 years |
Cottonwood Communities Management, LLC | |
Subsidiary, Sale of Stock [Line Items] | |
Offering costs incurred | $ 7,715 |
Land improvements | Minimum | |
Subsidiary, Sale of Stock [Line Items] | |
Useful lives of real estate assets | 5 years |
Land improvements | Maximum | |
Subsidiary, Sale of Stock [Line Items] | |
Useful lives of real estate assets | 15 years |
Buildings | |
Subsidiary, Sale of Stock [Line Items] | |
Useful lives of real estate assets | 30 years |
Building improvements | Minimum | |
Subsidiary, Sale of Stock [Line Items] | |
Useful lives of real estate assets | 5 years |
Building improvements | Maximum | |
Subsidiary, Sale of Stock [Line Items] | |
Useful lives of real estate assets | 15 years |
Furniture, fixtures and equipment | Minimum | |
Subsidiary, Sale of Stock [Line Items] | |
Useful lives of real estate assets | 5 years |
Furniture, fixtures and equipment | Maximum | |
Subsidiary, Sale of Stock [Line Items] | |
Useful lives of real estate assets | 15 years |
Cottonwood West Palm | |
Subsidiary, Sale of Stock [Line Items] | |
Weighted-average amortization period | 6 months |
Real Estate Assets, Net (Detail
Real Estate Assets, Net (Details) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Business Combinations [Abstract] | ||
Building and building improvements | $ 52,349,281 | |
Land and land improvements | 10,658,155 | |
Furniture, fixtures and equipment | 2,015,778 | |
Intangible assets | 1,503,325 | |
Real estate investment property, at cost | 66,526,539 | |
Less: Accumulated depreciation and amortization | (1,716,528) | |
Real estate assets, net | $ 64,810,011 | $ 0 |
Real Estate Assets, Net - Asset
Real Estate Assets, Net - Asset Acquisitions (Details) - Luma | May 30, 2019USD ($) |
Business Acquisition [Line Items] | |
Ownership percentage | 100.00% |
Payment for asset acquisition | $ 66,923,500 |
Building | 52,276,096 |
Land | 9,379,895 |
Land Improvements | 1,278,260 |
Personal Property | 2,015,778 |
Intangible | 1,503,325 |
Total | $ 66,453,354 |
Weighted-average amortization period | 6 months |
Real Estate Note Investment (De
Real Estate Note Investment (Details) | Jul. 31, 2019USD ($)aft²extensionunit | Sep. 30, 2019USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2019USD ($) | Sep. 30, 2018USD ($) | Dec. 31, 2018USD ($) |
Real Estate [Line Items] | ||||||
Amount drawn | $ 34,963,468 | $ 34,963,468 | $ 0 | |||
Real estate note investment interest | 16,699 | $ 0 | 16,699 | $ 0 | ||
Commercial Mortgage Backed Securities | B Note | ||||||
Real Estate [Line Items] | ||||||
Amount of investment | $ 10,000,000 | |||||
Maximum investment amount if certain circumstances arise | $ 10,500,000 | |||||
Amount drawn | $ 1,100,000 | $ 1,100,000 | ||||
Interest rate floor | 12.00% | |||||
Number of extensions | extension | 2 | |||||
Term of extensions | 6 months | |||||
Dolce Twin Creeks Phase 2, LLC | Commercial Mortgage Backed Securities | ||||||
Real Estate [Line Items] | ||||||
Common equity | $ 17,900,000 | |||||
Area of land | a | 10.89 | |||||
Dolce Twin Creeks Phase 2, LLC | Commercial Mortgage Backed Securities | A Note | ||||||
Real Estate [Line Items] | ||||||
Additional financing | $ 45,500,000 | |||||
Multifamily unit | Dolce Twin Creeks Phase 2, LLC | Commercial Mortgage Backed Securities | ||||||
Real Estate [Line Items] | ||||||
Number of units in multifamily project | unit | 366 | |||||
Medical office space | Dolce Twin Creeks Phase 2, LLC | Commercial Mortgage Backed Securities | ||||||
Real Estate [Line Items] | ||||||
Area of property | ft² | 15,000 | |||||
Parcel release price | $ 3,960,000 | |||||
Parcel release price as a percentage of appraised value | 82.50% | |||||
1-month LIBOR | Commercial Mortgage Backed Securities | B Note | ||||||
Real Estate [Line Items] | ||||||
Basis spread on variable rate | 9.50% | |||||
Interest rate floor | 2.50% |
Credit Facility (Details)
Credit Facility (Details) $ in Thousands | May 30, 2019USD ($) |
Debt Disclosure [Abstract] | |
Credit facility entered into in conjunction with acquisition of real estate | $ 35,995 |
Interest-only term | 10 years |
Fixed interest rate | 3.93% |
Loan-to-value ratio, maximum | 65.00% |
Fair Value of Financial Instr_3
Fair Value of Financial Instruments (Details) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Carrying Value | ||
Financial Asset: | ||
Real estate note investment | $ 1,119,994 | $ 0 |
Financial Liability: | ||
Credit Facility | 35,995,000 | 0 |
Fair Value | ||
Financial Asset: | ||
Real estate note investment | 1,119,994 | 0 |
Financial Liability: | ||
Credit Facility | $ 37,140,000 | $ 0 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) | Nov. 08, 2019USD ($)$ / sharesshares | Oct. 03, 2019USD ($)$ / shares | Sep. 30, 2019USD ($)$ / sharesshares | Sep. 30, 2019USD ($)vote$ / sharesshares | Sep. 30, 2018USD ($) | Aug. 13, 2019classshares | Dec. 31, 2018$ / sharesshares |
Subsidiary, Sale of Stock [Line Items] | |||||||
Shares of capital stock authorized (in shares) | 1,100,000,000 | 1,100,000,000 | |||||
Shares of common stock authorized (in shares) | 1,000,000,000 | 1,000,000,000 | 1,000,000,000 | ||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.01 | $ 0.01 | $ 0.01 | ||||
Shares of preferred stock authorized (in shares) | 100,000,000 | 100,000,000 | 100,000,000 | ||||
Preferred stock, par value (in dollars per share) | $ / shares | $ 0.01 | $ 0.01 | $ 0.01 | ||||
Number of classes of stock | class | 2 | ||||||
Number of votes per share | vote | 1 | ||||||
Common stock, shares outstanding (in shares) | 7,090,194 | 7,090,194 | 366,654 | ||||
Common stock, shares issued (in shares) | 7,090,194 | 7,090,194 | 366,654 | ||||
Preferred stock, shares issued (in shares) | 0 | 0 | |||||
Preferred stock, shares outstanding (in shares) | 0 | 0 | |||||
Aggregate distributions | $ | $ 687,111 | $ 1,086,168 | |||||
Distributions paid in cash | $ | 562,887 | 874,358 | $ 0 | ||||
Issuance of common stock through dividend reinvestment program | $ | 124,224 | 211,810 | 0 | ||||
Distributions declared but not yet paid | $ | $ 276,612 | $ 276,612 | $ 0 | ||||
Common stock, dividend rate (in dollars per share) | $ / shares | $ 0.00136986 | ||||||
Class A | |||||||
Subsidiary, Sale of Stock [Line Items] | |||||||
Shares of common stock authorized (in shares) | 500,000,000 | ||||||
Common stock, shares outstanding (in shares) | 7,090,194 | 7,090,194 | |||||
Stock issued through distribution reinvestment plan (in shares) | 21,181 | ||||||
Class A | CROP | |||||||
Subsidiary, Sale of Stock [Line Items] | |||||||
Common stock, shares outstanding (in shares) | 20,000 | 20,000 | |||||
Class T | |||||||
Subsidiary, Sale of Stock [Line Items] | |||||||
Shares of common stock authorized (in shares) | 500,000,000 | ||||||
Common stock, shares outstanding (in shares) | 0 | 0 | |||||
Common stock, shares issued (in shares) | 0 | 0 | |||||
Subsequent event | |||||||
Subsidiary, Sale of Stock [Line Items] | |||||||
Distributions paid in cash | $ | $ 312,628 | $ 276,612 | |||||
Common stock, dividend rate (in dollars per share) | $ / shares | $ 0.00136986 | $ 0.00136986 | |||||
Subsequent event | Series 2019 Preferred Stock | |||||||
Subsidiary, Sale of Stock [Line Items] | |||||||
Shares of preferred stock authorized (in shares) | 5,000,000 | ||||||
Preferred stock, par value (in dollars per share) | $ / shares | $ 0.01 |
Related-Party Transactions (Det
Related-Party Transactions (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Related Party Transaction [Line Items] | ||||
Asset management fees | $ 296,126 | $ 0 | $ 453,851 | $ 0 |
Asset management fee waived by Advisor | 310,484 | 0 | 310,484 | 0 |
Reimbursable operating expenses to related parties | $ 148,906 | 0 | $ 399,391 | 0 |
Percentage threshold operating expenses must exceed average invested assets to be reimbursable | 2.00% | 2.00% | ||
Percentage threshold operating expenses must exceed net income to be reimbursable | 25.00% | 25.00% | ||
Cumulative, non-compounded annual return on invested capital to be received (as a percent) | 6.00% | 6.00% | ||
Cottonwood Communities Management, LLC | Affiliated Entity | ||||
Related Party Transaction [Line Items] | ||||
Annual asset management fee (as a percent) | 1.25% | |||
Asset management fees | $ 296,126 | $ 453,851 | 0 | |
Asset management fees paid | 0 | 0 | ||
Asset management fee waived (percent) | 6.00% | |||
Asset management fee waived by Advisor | $ 310,484 | $ 310,484 | ||
Contingent acquisition fee | 1.00% | 1.00% | ||
Shareholders' required return to receive contingent acquisition fee | 6.00% | 6.00% | ||
Additional contingent acquisition fee | 2.00% | 2.00% | ||
Shareholders' required return to receive additional contingent acquisition fee | 13.00% | 13.00% | ||
Contingent acquisition fee to be paid to advisor upon termination (as a percent) | 3.00% | 3.00% | ||
Contingent acquisition fees | $ 0 | 0 | $ 0 | 0 |
Contingent financing fee (as a percent) | 1.00% | 1.00% | ||
Contingent financing fees | $ 0 | 0 | $ 0 | 0 |
Property management fee (as a percent) | 3.50% | |||
Property management fees | $ 38,753 | $ 0 | $ 53,297 | $ 0 |
Cottonwood Communities Investor, LLC | Limited Partner | ||||
Related Party Transaction [Line Items] | ||||
Promotional interest (as a percent) | 15.00% | 15.00% | ||
Annual retainer | Director | ||||
Related Party Transaction [Line Items] | ||||
Compensation expense related to independent directors | $ 10,000 | |||
Compensation per board meeting | Director | ||||
Related Party Transaction [Line Items] | ||||
Compensation expense related to independent directors | 500 | |||
Compensation per committee meeting | Director | ||||
Related Party Transaction [Line Items] | ||||
Compensation expense related to independent directors | $ 500 |
Commitments and Contingencies -
Commitments and Contingencies - Lector85 Investment (Details) - Corporate Joint Venture - Lector85 | Aug. 15, 2019USD ($)ft²extensionreal_estate_unit |
Investments [Line Items] | |
Annual preferred return (percent) | 13.00% |
Reduced preferred return (percent) | 10.00% |
Amount of special preferred return received upon redemption | $ 200,000 |
Minimum cumulative return upon redemption (percent) | 35.00% |
Number of extensions available | extension | 1 |
Term of extension | 12 months |
Preferred Equity Investment | |
Investments [Line Items] | |
Amount of investment | $ 9,900,000 |
Milhaus | |
Investments [Line Items] | |
Amount of investment | 53,300,000 |
Construction loan | 34,000,000 |
Equity | $ 9,300,000 |
Apartment community | Milhaus | |
Investments [Line Items] | |
Number of units in apartment community | real_estate_unit | 254 |
Retail | Milhaus | |
Investments [Line Items] | |
Area of property | ft² | 11,000 |
Commitments and Contingencies_2
Commitments and Contingencies - Distribution Reinvestment Plan (Details) | Sep. 30, 2019$ / shares |
Distribution Reinvestment Plan | |
Subsidiary, Sale of Stock [Line Items] | |
Share price (in dollars per share) | $ 10 |
Commitments and Contingencies_3
Commitments and Contingencies - Share Repurchase Program (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | ||||
Percentage of weighted average number of shares of common stock outstanding authorized for repurchase | 5.00% | 5.00% | ||
Share Repurchase Program [Line Items] | ||||
Number of shares redeemed | 0 | 0 | 0 | 0 |
Period of notice required for repurchase program termination | 15 days | |||
1 year - 2 years | ||||
Share Repurchase Program [Line Items] | ||||
Repurchase price as a percentage of estimated value | 85.00% | 85.00% | ||
3 years - 4 years | ||||
Share Repurchase Program [Line Items] | ||||
Repurchase price as a percentage of estimated value | 90.00% | 90.00% | ||
5 years and thereafter | ||||
Share Repurchase Program [Line Items] | ||||
Repurchase price as a percentage of estimated value | 95.00% | 95.00% | ||
A stockholder’s death or complete disability, less than 2 years | ||||
Share Repurchase Program [Line Items] | ||||
Repurchase price as a percentage of estimated value | 95.00% | 95.00% | ||
A stockholder’s death or complete disability, 2 years or more | ||||
Share Repurchase Program [Line Items] | ||||
Repurchase price as a percentage of estimated value | 100.00% | 100.00% |
Subsequent Events - Additional
Subsequent Events - Additional Information (Details) | Nov. 12, 2019USD ($)shares | Nov. 08, 2019USD ($)extension$ / sharesshares | Oct. 25, 2019USD ($)areal_estate_unit | Aug. 13, 2018USD ($)$ / shares | Sep. 30, 2019$ / sharesshares | Dec. 31, 2018$ / sharesshares |
Subsequent Event [Line Items] | ||||||
Preferred stock, shares authorized (in shares) | shares | 100,000,000 | 100,000,000 | ||||
Preferred stock, par value (in dollars per share) | $ / shares | $ 0.01 | $ 0.01 | ||||
IPO | ||||||
Subsequent Event [Line Items] | ||||||
Aggregate value of shares offered (up to) | $ 750,000,000 | |||||
Share price (in dollars per share) | $ / shares | $ 10 | |||||
Distribution Reinvestment Plan | ||||||
Subsequent Event [Line Items] | ||||||
Aggregate value of shares offered (up to) | $ 75,000,000 | |||||
Share price (in dollars per share) | $ / shares | 10 | |||||
Class A | IPO | Subsequent event | ||||||
Subsequent Event [Line Items] | ||||||
Number of shares sold in public offering (in shares) | shares | 7,923,000 | |||||
Gross offering proceeds | $ 78,836,000 | |||||
Class A | Distribution Reinvestment Plan | ||||||
Subsequent Event [Line Items] | ||||||
Share price (in dollars per share) | $ / shares | 10 | |||||
Class A | Distribution Reinvestment Plan | Subsequent event | ||||||
Subsequent Event [Line Items] | ||||||
Number of shares sold in public offering (in shares) | shares | 33,236 | |||||
Gross offering proceeds | $ 332,360 | |||||
Class T | IPO | Subsequent event | ||||||
Subsequent Event [Line Items] | ||||||
Number of shares sold in public offering (in shares) | shares | 0 | |||||
Class T | Distribution Reinvestment Plan | ||||||
Subsequent Event [Line Items] | ||||||
Share price (in dollars per share) | $ / shares | $ 10 | |||||
Series 2019 Preferred Stock | Subsequent event | ||||||
Subsequent Event [Line Items] | ||||||
Preferred stock, shares authorized (in shares) | shares | 5,000,000 | |||||
Preferred stock, par value (in dollars per share) | $ / shares | $ 0.01 | |||||
Preferred stock, cumulative dividends (percent) | 5.50% | |||||
Number of extensions | extension | 2 | |||||
Extension term | 1 year | |||||
Series 2019 Preferred Stock | Private Placement | Subsequent event | ||||||
Subsequent Event [Line Items] | ||||||
Aggregate value of shares offered (up to) | $ 50,000,000 | |||||
Share price (in dollars per share) | $ / shares | $ 10 | |||||
Selling commissions (percent) | 6.00% | |||||
Placement fee (percent) | 3.00% | |||||
Series 2019 Preferred Stock | Maximum | Subsequent event | ||||||
Subsequent Event [Line Items] | ||||||
Preferred stock, cumulative dividends (percent) | 6.00% | |||||
Corporate Joint Venture | 2980 Huron Investment | Subsequent event | ||||||
Subsequent Event [Line Items] | ||||||
Annual preferred return (percent) | 12.00% | |||||
Term of extension | 1 year | |||||
Underwriting fee (percent) | 1.00% | |||||
Exit fee (percent) | 0.50% | |||||
Corporate Joint Venture | Preferred Equity Investment | 2980 Huron Investment | Subsequent event | ||||||
Subsequent Event [Line Items] | ||||||
Amount of investment | $ 102,900,000 | |||||
Corporate Joint Venture | 2980 Huron Owner | Preferred Equity Investment | 2980 Huron Investment | Subsequent event | ||||||
Subsequent Event [Line Items] | ||||||
Construction loan | 65,400,000 | |||||
Corporate Joint Venture | Huron Developer | Preferred Equity Investment | Subsequent event | ||||||
Subsequent Event [Line Items] | ||||||
Common equity | $ 17,500,000 | |||||
Corporate Joint Venture | Multifamily unit | 2980 Huron Owner | 2980 Huron Investment | Subsequent event | ||||||
Subsequent Event [Line Items] | ||||||
Number of units in apartment community | real_estate_unit | 299 | |||||
Area of land | a | 0.84 | |||||
Corporate Joint Venture | Maximum | Huron Developer | Preferred Equity Investment | Subsequent event | ||||||
Subsequent Event [Line Items] | ||||||
Amount of investment | $ 20,000,000 |
Subsequent Events - Distributio
Subsequent Events - Distributions Declared and Paid (Details) - USD ($) | Nov. 12, 2019 | Nov. 08, 2019 | Oct. 03, 2019 | Aug. 06, 2019 | Sep. 30, 2019 | Sep. 30, 2019 | Sep. 30, 2018 |
Subsequent Event [Line Items] | |||||||
Common stock, daily distribution rate (in dollars per share) | $ 0.00136986 | ||||||
Distributions paid | $ 562,887 | $ 874,358 | $ 0 | ||||
Subsequent event | |||||||
Subsequent Event [Line Items] | |||||||
Common stock, daily distribution rate (in dollars per share) | $ 0.00136986 | $ 0.00136986 | |||||
Common stock, annualized rate | 5.00% | 5.00% | |||||
Distributions paid | $ 312,628 | $ 276,612 | |||||
November 1, 2019 - November 30, 2019 | |||||||
Subsequent Event [Line Items] | |||||||
Common stock, daily distribution rate (in dollars per share) | $ 0.00136986 | ||||||
Common stock, annualized rate | 5.00% | ||||||
November 1, 2019 - November 30, 2019 | Subsequent event | |||||||
Subsequent Event [Line Items] | |||||||
Preferred stock, daily distribution rate (in dollars per share) | $ 0.0015068493 | ||||||
Preferred stock, annualized rate | 5.50% | ||||||
December 1, 2019 - December 31, 2019 | Subsequent event | |||||||
Subsequent Event [Line Items] | |||||||
Common stock, daily distribution rate (in dollars per share) | $ 0.00136986 | ||||||
Common stock, annualized rate | 5.00% | ||||||
Preferred stock, daily distribution rate (in dollars per share) | $ 0.0015068493 | ||||||
Preferred stock, annualized rate | 5.50% | ||||||
January 1, 2020 - January 31, 2020 | Subsequent event | |||||||
Subsequent Event [Line Items] | |||||||
Common stock, daily distribution rate (in dollars per share) | $ 0.0013661202 | ||||||
Common stock, annualized rate | 5.00% | ||||||
Preferred stock, daily distribution rate (in dollars per share) | $ 0.0015027322 | ||||||
Preferred stock, annualized rate | 5.50% | ||||||
February 1, 2020 - February 29, 2020 | Subsequent event | |||||||
Subsequent Event [Line Items] | |||||||
Common stock, daily distribution rate (in dollars per share) | $ 0.0013661202 | ||||||
Common stock, annualized rate | 5.00% | ||||||
Preferred stock, daily distribution rate (in dollars per share) | $ 0.0015027322 | ||||||
Preferred stock, annualized rate | 5.50% | ||||||
Primary Offering | Class A | |||||||
Subsequent Event [Line Items] | |||||||
Share price (in dollars per share) | $ 10 | $ 10 | |||||
Private Placement | Series 2019 Preferred Stock | Subsequent event | |||||||
Subsequent Event [Line Items] | |||||||
Share price (in dollars per share) | $ 10 |