ITEM 1.01
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ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
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Flagler
Village Property
As
previously disclosed in the Form 8-K
filed
with the Securities and Exchange Commission (the “SEC”) on December 24, 2015 by Bluerock Residential Growth REIT,
Inc., a Maryland corporation (the “Company”), on December 18, 2015, the Company, through a wholly-owned subsidiary
of our operating partnership, Bluerock Residential Holdings, L.P., a Delaware limited partnership (the “Operating Partnership”),
made an initial investment to acquire an 89.5% common equity interest in BR Flagler JV Member, LLC, a Delaware limited liability
company (“BR Flagler JV Member”). BR Flagler JV Member is a joint venture entity that owns a majority interest in
BR ArchCo Flagler Village JV, LLC, a Delaware limited liability company (the “Flagler Village JV”), which owns, through
wholly-owned subsidiaries, a 100% interest in an assemblage of land totaling 3.7 acres for development of a 6-story, 385-unit
urban, wrap-style apartment project in the Flagler Village neighborhood of Fort Lauderdale, Florida (the “Flagler Property”).
The remaining 10.5% common equity interest in BR Flagler JV Member was owned by Bluerock Special Opportunity + Income Fund II,
LLC, a Delaware limited liability company and an affiliate of the Company’s former external manager (“Fund II”).
On
December 29, 2017, 89.0% of the Company’s common equity interest in BR Flagler JV Member was redeemed in exchange for a mezzanine
loan by the Company to BR Flagler JV Member in the original principal amount of approximately $53.6 million (the “Flagler
Loan”), inclusive of approximately $27.3 million of incremental funding. Also on December 29, 2017, Fund II made an additional
common equity investment in BR Flagler JV Member in the amount of approximately $2.8 million, and Bluerock Special Opportunity
+ Income Fund III, LLC, a Delaware limited liability company and an affiliate of the Company’s former external manager (“Fund
III”), made a common equity investment in BR Flagler JV Member in the amount of approximately $409,000. As a result of these
transactions, the Company now owns an indirect 0.5% common equity interest in BR Flagler JV Member, Fund II owns a 93.03% common
equity interest in BR Flagler JV Member, and Fund III owns a 6.47% common equity interest in BR Flagler JV Member. The Company
(through a wholly-owned subsidiary of our Operating Partnership), Fund II, and Fund III have entered into an amended and restated
joint venture operating agreement for BR Flagler JV Member reflecting the structure described above and otherwise containing terms,
conditions, and indemnities that are customary and standard for joint ventures in the real estate industry.
The
Flagler Loan was made pursuant to a Loan and Security Agreement and a Secured Promissory Note, and is secured by a pledge of BR
Flagler JV Member’s membership interest in the Flagler Village JV pursuant to a Control Agreement (the Secured Promissory
Note, Loan and Security Agreement, and Control Agreement, collectively, the “Flagler Loan Documents”). The Flagler
Loan has a five-year term and requires payment of interest on a current basis at the rate of fifteen percent (15%) per annum.
Included in the amount of the Flagler Loan is an approximately three-year interest reserve. In addition, BR Flagler JV Member granted
to the Company a right of first offer to purchase the Flagler Property or BR Flagler JV Member’s membership interests in
the Flagler Village JV. Pursuant to the Loan and Security Agreement, at any time until the earlier of (a) the closing of construction
financing for the development of the Flagler Property, or (b) March 31, 2018, BR Flagler JV Member has the right to cause the Company
to convert its rights under the Flagler Loan Documents into an approximately 89.5% common membership interest in BR Flagler JV
Member.
Crescent
Perimeter Property
O
n
December 12
, 2016
, the Company, through a wholly-owned subsidiary of our Operating
Partnership, made an initial investment to acquire a 99.9% common equity interest in BR Perimeter JV Member, LLC, a Delaware limited
liability company (“BR Perimeter JV Member”). BR Perimeter JV Member is a joint venture entity that owns a majority
interest in BR Crescent Perimeter Venture JV, LLC, a Delaware limited liability company (the “Crescent JV”), which
is the sole member of BR Crescent Perimeter, LLC (“BR Crescent”), which owns, through a wholly-owned subsidiary, a
100% interest in a tract of real property located in Atlanta, Georgia for the development of a 320-unit, Class A apartment community
to be known as Crescent Perimeter (the “Crescent Perimeter Property”). The remaining 0.1% common equity interest in
BR Perimeter JV Member was owned by Fund III.
On
December 29, 2017, 99.4% of the Company’s common equity interest in BR Perimeter JV Member was redeemed in exchange for a
mezzanine loan by the Company to BR Perimeter JV Member in the original principal amount of approximately $20.6 million (the “Crescent
Perimeter Loan”), inclusive of approximately $5.3 million of incremental funding. Also on December 29, 2017, Fund III made
an additional common equity investment in BR Perimeter JV Member in the amount of approximately $2.4 million. As a result of these
transactions, the Company now owns an indirect 0.5% common equity interest in BR Perimeter JV Member, and Fund III owns a 99.5%
common equity interest in BR Perimeter JV Member. The Company (through a wholly-owned subsidiary of our Operating Partnership)
and Fund III have entered into an amended and restated joint venture operating agreement for BR Perimeter JV Member reflecting
the structure described above and otherwise containing terms, conditions, and indemnities that are customary and standard for joint
ventures in the real estate industry.
The
Crescent
Perimeter Loan was made pursuant to a Loan
and Security Agreement and a Secured Promissory Note, and is secured by a pledge of BR Perimeter JV Member’s membership
interest in the Crescent JV pursuant to a Control Agreement. The Crescent Perimeter Loan has a four-year term and requires payment
of interest on a current basis at the rate of fifteen percent (15%) per annum. Included in the amount of the Crescent Perimeter
Loan is an approximately 2.5-year interest reserve.
Vickers
Village Property
O
n
December 20, 2016, the Company, through a wholly-owned subsidiary of our Operating Partnership, made an initial investment to
acquire a 99.9% common equity interest in BR Vickers Roswell JV Member, LLC, a Delaware limited liability company (“BR Vickers
Roswell JV Member”). BR Vickers Roswell JV Member is a joint venture entity that owns a majority interest in BR Vickers
Roswell JV, LLC, a Delaware limited liability company (the “Vickers JV”), which is the sole member of BR Vickers Roswell,
LLC (“BR Vickers”), which owns, through a wholly-owned subsidiary, a 100% interest in a tract of real property located
in the Roswell submarket of Atlanta, Georgia for the development of a 79-unit, Class A apartment community to be known as Vickers
Village (the “Vickers Village Property”). The remaining 0.1% common equity interest in BR Vickers Roswell JV Member
was owned by Fund III.
On
December 29, 2017, 99.4% of the Company’s common equity interest
in
BR Vickers Roswell JV Member was redeemed in exchange for a mezzanine loan by the Company to BR Vickers Roswell JV Member in the
original principal amount of approximately $9.8 million (the “Vickers Loan”), inclusive of approximately $1.1 million
of incremental funding. Also on December 29, 2017, Fund III made an additional common equity investment in BR Vickers Roswell
JV Member in the amount of approximately $1.1 million. As a result of these transactions, the Company now owns an indirect 0.5%
common equity interest in BR Vickers Roswell JV Member, and Fund III owns a 99.5% common equity interest in BR Vickers Roswell
JV Member. The Company (through a wholly-owned subsidiary of our Operating Partnership) and Fund III have entered into an amended
and restated joint venture operating agreement for BR Vickers Roswell JV Member reflecting the structure described above and otherwise
containing terms, conditions, and indemnities that are customary and standard for joint ventures in the real estate industry.
The
Vickers Loan was made pursuant to a Loan and Security
Agreement and a Secured Promissory Note, and is secured by a pledge of BR Vickers Roswell JV Member’s membership interest
in the Vickers JV pursuant to a Control Agreement. The Vickers Loan has a three-year term and requires payment of interest on
a current basis at the rate of fifteen percent (15%) per annum. Included in the amount of the Vickers Loan is an approximately
1.5-year interest reserve.