United States securities and exchange commission logo
May 27, 2021
Brian Mitts
Chief Financial Officer
VineBrook Homes Trust, Inc.
2515 McKinney Avenue, Suite 1100
Dallas, TX
Re: VineBrook Homes
Trust, Inc.
Registration
Statement on Form 10-12G
Filed April 30,
2021
File No. 000-56274
Dear Mr. Mitts:
We have reviewed your filing and have the following comments. In
some of our
comments, we may ask you to provide us with information so we may better
understand your
disclosure.
Please respond to these comments within ten business days by
providing the requested
information or advise us as soon as possible when you will respond. If
you do not believe our
comments apply to your facts and circumstances, please tell us why in
your response.
After reviewing your response and any amendment you may file in
response to these
comments, we may have additional comments.
Registration Statement on Form 10-12G Filed April 30, 2021
Business
Our Ownership and Operation Structure, page 5
1. Please revise the
organization chart to disclose the percentage ownership the company and
other parties hold in
VineBrook Homes OP.
Our Portfolio, page 7
2. We note your disclosure
of "stabilized" homes excludes houses in rehabilitation or houses
purchased with a tenant
in place. Please revise to clarify why you exclude houses
purchased with a tenant
in place from your definition of "stabilized homes." Please also
revise to indicate the
proportion of homes excluded from this definition, either because the
houses are in
rehabilitation or were purchased with tenants in place. Disclose the average
time that a home is in
rehabilitation, as well as the average length of time from
Brian Mitts
FirstName
VineBrookLastNameBrian Mitts
Homes Trust, Inc.
Comapany
May NameVineBrook Homes Trust, Inc.
27, 2021
May 27,
Page 2 2021 Page 2
FirstName LastName
acquisition to stabilization, if materially different. To the extent
you reasonably anticipate
a materially different timeline for stabilization of your units going
forward, or in certain
MSAs, please discuss these factors.
3. Please revise to address the material geographic concentration of
certain MSAs in your
current portfolio. We refer to Schedule III in your financial
statements. It may be helpful
to include an additional column in your portfolio summary to include
the number of
homes located in each market identified.
4. Please disclose the proportion of homes in your portfolio that are
unoccupied. Please also
revise to provide quantitative or qualitative support for the "low
turnover rates" referenced
and, expand to provide more detail regarding lease expirations. In
this regard, disclose the
average length of your leases and the average remaining length of
leases in your portfolio,
if material.
5. Please disclose the average age of the properties in your portfolio.
6. Please revise to balance the stabilized property data by presenting
similar disclosure for
your full portfolio, including the number of properties, occupancy,
and average monthly
rent.
Risk Factors
Risks Associated with Debt Financing, page 40
7. We note that a substantial amount of your debt is interest-only, with
principal due either
as a balloon payment at the end of the loan or, in the case of your
Initial
Mortgage, amortized over the final 36 months of the loan term. Please
revise to quantify
the amount of your interest-only debt outstanding and address the
material risks that you
face with this type of financing.
Interest rate risk on our debt..., page 40
8. We note you entered into a $500 million credit agreement with JPMorgan
on March 1,
2021. Please revise to quantify the amount of your floating rate debt
outstanding, that is
not otherwise hedged, as well as any additional capacity under such
credit facility.
Summary Pro Forma Financial Data, page 48
9. We note that you prepared the summary pro forma financial data based
on other
information and data received in connection with the Conrex
acquisitions. Please
elaborate on the nature of this data as well as the level of reliance
you placed on it.
10. Please explain through footnote disclosure 1) how you estimated the
revenues attributable
to Conrex I and II and 2) a preliminary purchase price allocation or a
narrative description
for all of the balance sheet adjustments.
11. Please tell us why you have only included depreciation and
amortization expense and
interest expense in the total expenses related to the Conrex
acquisitions. In that regard, we
Brian Mitts
FirstName
VineBrookLastNameBrian Mitts
Homes Trust, Inc.
Comapany
May NameVineBrook Homes Trust, Inc.
27, 2021
May 27,
Page 3 2021 Page 3
FirstName LastName
note that you present pro forma net loss that does not appear to
include any property
operating expenses of the newly acquired properties.
Management's Discussion and Analysis of Financial Condition and Results of
Operations, page
51
12. On page 24 you state that the markets in which you operate have
"experienced substantial
economic downturns in recent years and could experience similar or
worse economic
downturns in the future." On page 32 you state that the COVID-19
pandemic has led to
an economic slowdown "which could result in a general decline in rents
or an increased
incidence of defaults under existing leases." Please revise to clarify
whether these
represent material trends or uncertainties, and if so, address any
material challenges and
risks associated with any such known trend or uncertainty. See Item
303 of Regulation S-
K and SEC Release No. 33-8350.
Non-GAAP Measurements, page 55
13. We note that Same Home NOI is defined as NOI for homes that are
comparable
between periods. Please expand upon this definition to provide more
clarity to readers.
For example, consider disclosing if homes in this category are held
for the entirety of
all periods presented, whether it includes homes being renovated,
homes held for sale,
unoccupied homes, and any other relevant characteristics used to
determine which
properties are included in the "same home" category.
14. You present on page 57 what appears to be a non-GAAP income statement
that reconciles
to NOI, with greater prominence than your separate reconciliation of
NOI on page 58. In
this regard, please tell us how you considered Question 102.10 of the
Non-GAAP
Financial Measures Compliance and Disclosure Interpretations.
FFO, Core FFO and AFFO, page 59
15. Please revise to clarify whether you define FFO in accordance with the
NAREIT
definition.
Debt, Derivatives and Hedging Activity
Reference Rate Reform, page 66
16. We note your disclosure that you have contracts indexed to LIBOR.
Please revise to
qualitatively and quantitatively disclose whether or not you have
identified a material
exposure to risks associated with the termination of LIBOR, and
clarify whether your
material contracts have a clearly defined alternative reference rate
after the
discontinuation of LIBOR. In this regard we note approximately $327.7
million of your
outstanding debt at December 31, 2020, your $320 million notional
amount of interest
swaps expiring in 2024 and 2025, and your JPM Facility with an
additional $320 million
outstanding at March 31, 2021, all reference LIBOR.
Brian Mitts
FirstName
VineBrookLastNameBrian Mitts
Homes Trust, Inc.
Comapany
May NameVineBrook Homes Trust, Inc.
27, 2021
May 27,
Page 4 2021 Page 4
FirstName LastName
Executive Compensation
Compensation of Our Executive Officers in 2020, page 85
17. We note that you intend to reimburse your advisor for all of its
operating expenses and
offering expenses. Please specifically disclose whether you will
reimburse your advisor
for the salaries and benefits to be paid to your named executive
officers.
18. We note your grants of restricted stock units under your 2018 LTIP.
Please revise to
disclose the material terms of these awards, such as the applicable
performance criteria or
any conditions to exercisability, per by Item 402(o) of Regulation
S-K.
Description of Registrant's Securities to Be Registered
Share Repurchase Program, page 116
19. Please be advised that you are responsible for analyzing the
applicability of the tender
offer rules, including Rule 13e-4 and Regulation 14E, to your share
repurchase program.
We urge you to consider all the elements of your share repurchase
program in determining
whether the program is consistent with relief granted by the Division
of Corporation
Finance in prior no action letters. To the extent you are relying on
Blackstone Real Estate
Income Trust, Inc. (Letter dated September 12, 2016), Rich Uncles NNN
REIT, Inc.
(Letter dated December 21, 2016), Hines Global REIT II, Inc. (Letter
dated April 26,
2017), or Black Creek Diversified Property Fund Inc. (Letter dated
September 1, 2017)
please provide us with an analysis as to how your program is
consistent with such relief.
To the extent you have questions as to whether the program is entirely
consistent with the
relief previously granted by the Division of Corporation Finance, you
may contact the
Division s Office of Mergers and Acquisitions at 202-551-3440.
20. Please revise to describe the parameters of your share repurchase plan
in more detail. For
example, describe the process for submitting repurchase requests.
State how frequently
the company will process repurchase requests and when it will do so.
Disclose when a
repurchase request must be received in order to be processed by the
company and
clarify whether, and how, shareholders may withdraw a request.
Certain Provisions of Maryland Law and Our Charter and Bylaws
Forum Selection Clause, page 119
21. We note that your forum selection provision identifies a state court
located in Baltimore
City, Maryland (or, if such court does not have jurisdiction, the
federal district court for
the District of Maryland, Baltimore Division) as the exclusive forum
for certain litigation,
including any derivative action. Please disclose whether this
provision applies to
actions arising under the Securities Act or Exchange Act. If so,
please also state that there
is uncertainty as to whether a court would enforce such provision. If
the provision applies
to Securities Act claims, please also state that investors cannot
waive compliance with the
federal securities laws and the rules and regulations thereunder. In
that regard, we note
that Section 22 of the Securities Act creates concurrent jurisdiction
for federal and state
Brian Mitts
VineBrook Homes Trust, Inc.
May 27, 2021
Page 5
courts over all suits brought to enforce any duty or liability created by
the Securities Act
or the rules and regulations thereunder. If this provision does not apply
to actions arising
under the Securities Act or Exchange Act, please also ensure that the
exclusive forum
provision in the governing documents states this clearly, or tell us how
you will inform
investors in future filings that the provision does not apply to any
actions arising under the
Securities Act or Exchange Act.
General
22. Please revise to describe the company's methodology and key assumptions
used in
calculating NAV, material limitations associated with NAV, and who is
responsible for
establishing NAV. In this regard, disclosure on page F-23 states that the
pricing
committee of the Board determines NAV using the Valuation Methodology
whereas
disclosure on page 1 states that your Adviser calculates NAV. We also
note disclosure on
pages 18-19 indicating that you will not take into account the full
growth or decline
of properties if growth exceeds 15% or decline exceeds 5% for purposes of
determining
NAV. Please explain the rationale behind this limitation. Please also
clarify how your
independent third-party valuation firm considers any such adjustment in
connection with
its assessment and evaluation of the appropriateness of your NAV.
23. Please note that your registration statement will become effective
automatically
60 days from the date you filed it and that you will then be responsible
for filing reports
required by Section 13 of the Securities Exchange Act of 1934. We also
may continue to
comment on your registration statement after the effective date.
We remind you that the company and its management are responsible for
the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action
or absence of
action by the staff.
You may contact Frank Knapp at (202) 551-3805 or Kristina Marrone at
(202) 551-3429
if you have questions regarding comments on the financial statements and
related
matters. Please contact Christopher Dunham at (202) 551-3783 or Kim McManus at
(202) 551-
3215 with any other questions.
Sincerely,
FirstName LastNameBrian Mitts
Division of
Corporation Finance
Comapany NameVineBrook Homes Trust, Inc.
Office of Real
Estate & Construction
May 27, 2021 Page 5
cc: Justin S. Reinus, Esq.
FirstName LastName