BLUEROCK RESIDENTIAL GROWTH REIT : Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-K)

The following discussion and analysis should be read in conjunction with the
accompanying consolidated financial statements of Bluerock Residential Growth
REIT, Inc., and the notes thereto. As used herein, the terms "we," "our" and
"us" refer to Bluerock Residential Growth REIT, Inc., a Maryland corporation,
and, as required by context, Bluerock Residential Holdings, L.P., a Delaware
limited partnership, which we refer to as our "Operating Partnership," and to
their subsidiaries. We refer to Bluerock Real Estate, L.L.C., a Delaware limited
liability company, and Bluerock Real Estate Holdings, LLC, a Delaware limited
liability company, together as "Bluerock", and we refer to our former external
manager, BRG Manager, LLC, as our "former Manager." Both Bluerock and our former
Manager are affiliated with the Company. See also "Forward-Looking Statements"
preceding Part I.
Overview
We were incorporated as a Maryland corporation on July 25, 2008. Our principal
business objective is to generate attractive risk-adjusted investment returns by
assembling a high-quality portfolio of apartment properties located in
demographically attractive growth markets and by implementing our investment
strategies and our "Live/Work/Play Initiatives" to achieve sustainable long-term
growth in both our funds from operations and net asset value.
On October 31, 2017, we became an internally-managed REIT as a result of the
completion of the management internalization transactions (the
"Internalization"), and we are no longer externally managed by our former
Manager.
We conduct our operations through our Operating Partnership, of which we are the
sole general partner. The consolidated financial statements include our accounts
and those of the Operating Partnership.
As of December 31, 2019, we owned interests in fifty-three real estate
properties, consisting of thirty-five consolidated operating properties and
eighteen properties held through preferred equity and mezzanine loan
investments. Of the property interests held through preferred equity and
mezzanine loan investments, five are under development, four are in lease-up and
nine properties are stabilized. The fifty-three properties contain an aggregate
of 15,627 units, comprised of 11,746 consolidated operating units and
3,881 units through preferred equity and mezzanine loan investments. As of
December 31, 2019, our consolidated operating properties were approximately
94.0% occupied.
We have elected to be taxed as a Real Estate Investment Trust ("REIT") under
Sections 856 through 860 of the Code and have qualified as a REIT commencing
with our taxable year ended December 31, 2010. In order to continue to qualify
as a REIT, we must distribute to our stockholders each calendar year at least
90% of our taxable income (excluding net capital gains). If we qualify as a REIT
for federal income tax purposes, we generally will not be subject to federal
income tax on income that we distribute to our stockholders. If we fail to
qualify as a REIT in any taxable year, we will be subject to federal income tax
on our taxable income at regular corporate rates and will not be permitted to
qualify as a REIT for four years following the year in which our qualification
is denied. Such an event could materially and adversely affect our net income
and results of operations. We intend to continue to organize and operate in such
a manner as to remain qualified as a REIT.
Significant Developments
During 2019, we acquired seven operating multifamily communities generally
through various multi-tiered joint ventures in which we have indirect ownership
ranging from 90% to 100%, representing an aggregate of 2,365 units, for an
aggregate purchase price of approximately $525.7 million. These properties are
located in Las Vegas, Nevada; Mount Juliet, Tennessee; Scottsdale, Arizona;
Atlanta, Georgia; and Pasco, Washington.
We also invested in or continued to invest in multi-tiered development joint
ventures through increased common or preferred equity investments of
$20.1 million, representing an aggregate of 785 units. These properties are
located in Atlanta, Georgia; Smyrna, Georgia, and Austin, Texas.

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We provided mezzanine or senior loan funds in five developments projects with
754 units in 2019. During 2019 we provided increased mezzanine financing to
Chapel Hill of approximately $34.5 million (net). We also provided increased
mezzanine financing to Cade, Domain, Arlo and Vickers Historic Roswell of
approximately $8.7 million (net).
As part of our effort to simplify our structure, during 2019 we invested
approximately $9.7 million to increase our ownership stake to 100% in each of
our Pine Lakes Preserve, Sorrel, and Sovereign properties, the latter two of
which were subsequently sold in 2019.
During the year ended December 31, 2019, we issued 240,876 shares of Series B
Preferred Stock under the Series B Preferred Offering (as hereinafter defined)
with net proceeds of approximately $216.8 million after commissions, discounts
and dealer manager fees. On October 31, 2019, the Board determined to replace
the Series B Preferred Offering with the Series T Preferred Offering (as
hereinafter defined). On December 20, 2019, we made the final issuance of
Series B Preferred Stock pursuant to the Series B Preferred Offering, and on
February 11, 2020, the Board formally approved the termination of the Series B
Preferred Offering. In addition, in December 2019 we issued 17,400 shares of
Series T Preferred Stock under the Series T Preferred Offering with net proceeds
of approximately $0.4 million after commissions, discounts and dealer manager
fees.
In February 2018, the Company authorized the repurchase of up to $25 million of
its outstanding shares of Class A common stock over a period of one year
pursuant to a stock repurchase plan. In December 2018, we renewed our stock
repurchase plan for a period of one year and announced a new plan for the
repurchase of up to $5.0 million of our outstanding shares of Class A common
stock in accordance with the guidelines specified under Rule 10b5-1 of the
Exchange Act, which shares were applied against the $25 million under our
original stock repurchase plan. On December 20, 2019, the Company authorized new
stock repurchase plans for the repurchase of up to an aggregate of  $50 million
of the Company's outstanding shares of Class A common stock, to be conducted in
accordance with the Rules 10b5-1 and 10b-18 of the Exchange Act. The stock
repurchase plans will terminate upon the earliest to occur of certain specified
events as set forth therein. The extent to which the Company repurchases shares
of its Class A common stock under the stock repurchase plans, and the timing of
any such purchases, depends on a variety of factors including general business
and market conditions and other corporate considerations. Repurchases under the
stock repurchase plans may be made in the open market or through privately
negotiated transactions, subject to certain price limitations and other
conditions established thereunder. Open market repurchases will be structured to
occur within the method, timing, price and volume requirements of Rule 10b-18 of
the Exchange Act. During the year ended December 31, 2019, the Company purchased
1,313,328 shares of Class A common stock under its stock repurchase plans for a
total purchase price of approximately $14.1 million.
Industry Outlook
We believe that the apartment sector will continue to deliver attractive
performance for the foreseeable future due to favorable underlying demographics
and supply and demand fundamentals.
Large demographic trends, including the Millennial generation of 90 million
entering prime rental age through 2030, followed by the Gen-Z generation of
82 million, are projected to form more households than the Baby Boomer and the
Gen-X generations, which should drive significant renter demand over the coming
decades. As one data point, new research from the National Multifamily Housing
Council (the "NMHC") indicates that approximately 4.6 million new rental units
will be needed to meet projected demand by 2030, and that current construction
trends indicate that only 3 million new units will be delivered.
We believe that a significant amount of institutional capital and public REITs
are primarily focused on investing in the big six Gateway Markets of Boston, New
York, Washington, D.C., Seattle, San Francisco, and Los Angeles, and that many
other primary markets are underinvested by institutional/public capital. As a
result, we believe that our target "next generation, knowledge economy" markets,
which are primary markets below the "big six," provide the opportunity to source
investments at cap rates that have the potential to provide not only significant
current income, but also attractive capital appreciation.
Further, given that a significant portion of the nation's apartment stock was
built prior to 1980, we believe that a number of our target markets are
underserved by institutional quality highly amenitized live/

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work/play apartment properties desired by Millennials as they continue to move
into their prime rental years. We also believe that rising construction costs
will continue to limit supply in the near to intermediate term, and as such,
there is opportunity in our target markets for development and/or redevelopment
to deliver institutional quality highly amenitized live/work/play product and
capture premium rental rates and generate value.
Results of Operations
Note 3, "Sale of Real Estate Assets and Joint Venture Equity Interests and
Abandonment of Development Project"; Note 4, "Investments in Real Estate"; Note
5, "Acquisition of Real Estate'; Note 6, "Notes and Interest Receivable due from
Related Party"; and Note 7, "Preferred Equity Investments and Investments in
Unconsolidated Real Estate Joint Ventures," to our Consolidated Financial
Statements provide discussion of the various purchases and sales of properties
and joint venture equity interests. These transactions have resulted in material
changes to the presentation of our financial statements.
The following is a summary of our stabilized consolidated operating real estate
investments as of December 31, 2019:
                                                                     Year
                                                                    Built/             Number                          Occupancy
Multifamily Community                                            Renovated(1)         of Units        Ownership            %
ARIUM Glenridge                                                          1990              480              90%            92.9%
ARIUM Grandewood                                                         2005              306             100%            94.1%
ARIUM Hunter's Creek                                                     1999              532             100%            94.7%
ARIUM Metrowest                                                          2001              510             100%            93.5%
ARIUM Westside                                                           2008              336              90%            97.0%
Ashford Belmar                                                      1988/1993              512              85%            91.8%
Ashton Reserve                                                           2015              473             100%            95.8%
Cade Boca Raton                                                          2019               90              81%            92.2%
Chattahoochee Ridge                                                      1996              358              90%            91.3%
Citrus Tower                                                             2006              336              97%            92.6%
Denim                                                                    1979              645             100%            97.2%
Element                                                                  1995              200             100%            94.5%
Enders Place at Baldwin Park                                             2003              220              92%            96.4%
Gulfshore Apartment Homes, formerly ARIUM Gulfshore                      2016              368             100%            92.9%
James on South First                                                     2016              250              90%            94.0%
Marquis at the Cascades                                                  2009              582              90%            93.8%
Marquis at TPC                                                           2008              139              90%            97.1%
Navigator Villas                                                         2013              176              90%            95.5%
Outlook at Greystone                                                     2007              300             100%            95.3%
Park & Kingston                                                          2015              168             100%            94.6%
Pine Lakes Preserve, formerly ARIUM Pine Lakes                           2003              320             100%            94.7%
Plantation Park                                                          2016              238              80%            91.6%
Providence Trail                                                         2007              334             100%            91.0%
Roswell City Walk                                                        2015              320              98%            94.4%
Sands Parc                                                               2017              264             100%            94.7%
The Brodie                                                               2001              324              93%            96.0%
The District at Scottsdale                                               2018              332             100%            61.1%
The Links at Plum Creek                                                  2000              264              88%            90.9%
The Mills                                                                2013              304             100%            93.4%
The Preserve at Henderson Beach                                          2009              340             100%            93.5%
The Reserve at Palmer Ranch, formerly ARIUM at Palmer Ranch              2016              320             100%            96.9%
The Sanctuary                                                            1988              320             100%            89.4%
Veranda at Centerfield                                                   1999              400              93%            96.3%
Villages of Cypress Creek                                                2001              384              80%            93.8%
Wesley Village                                                           2010              301             100%            92.4%
Total/Average(2)                                                                        11,746                             94.0%




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(1)

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

(2)

Total occupancy percentage excludes The District at Scottsdale which is in lease-up and Cade Boca Raton which was consolidated on December 31, 2019 and had no operations for the quarter.

Year ended December 31, 2019 as compared to the year ended December 31, 2018
Revenue
Rental and other property revenues increased $22.9 million, or 14%, to
$185.4 million for the year ended December 31, 2019 as compared to
$162.5 million for the same prior year period. This was due to a $28.1 million
increase from the acquisition of seven properties in 2019 and the full year
impact of five properties acquired in 2018, and a $5.8 million increase from
same store properties, partially offset by a $11.0 million decrease driven by
the sales of six properties in 2019. See Item 1. Business "Summary of
Investments and Dispositions".
Interest income from related parties increased $2.3 million, or 11%, to
$24.6 million for the year ended December 31, 2019 as compared to $22.3 million
for the same prior year period due to increases in the average balance of
mezzanine loans outstanding.
Expenses
Property operating expenses increased $6.4 million, or 9%, to $74.4 million for
the year ended December 31, 2019 as compared to $68.0 million for the same prior
year period. This was due to a $10.0 million increase from the acquisition of
seven properties in 2019 and the full year impact of five properties acquired in
2018, and a $1.7 million increase from same store properties, partially offset
by a $5.3 million decrease driven by the sales of six properties in 2019.
Property NOI margins increased to 59.8% of total revenues for the year ended
December 31, 2019, from 58.1% in the prior year period. Property NOI margins are
computed as total property revenues less property operating expenses, divided by
total property revenues.
Property management fees expense increased $0.5 million, or 12%, to $4.9 million
for the year ended December 31, 2019 as compared to $4.4 million in the same
prior year period. This was due to a $0.6 million increase from the acquisition
of seven properties in 2019 and the full year impact of five properties acquired
in 2018, a $0.1 million increase from same store properties, partially offset by
a $0.3 million decrease driven by the sales of six properties in 2019.
General and administrative expenses amounted to $22.6 million for the year ended
December 31, 2019 as compared to $19.6 million for the same prior year period.
Excluding non-cash equity compensation expense of  $10.9 million and
$6.9 million for the years ended December 31, 2019 and 2018, respectively,
general and administrative expenses were $11.6 million, or 5.5% of revenues for
the year ended December 31, 2019 as compared to $12.6 million, or 6.8% of
revenues, for the same prior year end period.
Acquisition and pursuit costs amounted to $0.6 million for the year ended
December 31, 2019 as compared to $0.1 million for the same prior year period.
Acquisition and pursuit costs incurred in the year ended December 31, 2019 were
related to the write-off of pre-acquisition costs from abandoned deals.
Abandoned pursuit costs can vary greatly, and the costs incurred in any given
period may be significantly different in future periods.
Weather-related losses, net amounted to $0.4 million for the year ended
December 31, 2019 as compared to $0.3 million for the same prior year period. In
2019, the expense primarily relates to hail damage at one property in Texas and
lightning damage at one property in Florida, partially offset by insurance
reimbursements related to prior year storms. In 2018, the expense related to
freeze damages at three properties in North Carolina and one property in Texas,
along with hail damages at one property in Texas.
Depreciation and amortization expenses increased to $70.5 million for the year
ended December 31, 2019 as compared to $62.7 million for the same prior year
period. This was due to a $13.7 million increase

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from the acquisition of seven properties in 2019 and the full year impact of
five properties acquired in 2018, partially offset by a $1.5 million decrease
from same store properties and a $4.4 million decrease from the sale of six
properties in 2019.
Other Income and Expenses
Other income and expenses amounted to net expense of  $7.6 million for the year
ended December 31, 2019 as compared to net expense of  $45.0 million for the
same prior year period. This was primarily due to the $48.7 million of gains of
on sale of six properties in 2019. This was partially offset by an increase in
interest expense of  $6.6 million and a loss on extinguishment of debt of
$5.0 million due to property sales and the refinance of various loans.
Year ended December 31, 2018 as compared to the year ended December 31, 2017
Revenue
Rental and other property revenues increased $46.8 million, or 40%, to
$162.5 million for the year ended December 31, 2018 as compared to
$115.6 million for the same prior year period. This was due to a $51.9 million
increase from the acquisition of five properties in 2018 and the full year
impact of twelve properties acquired in 2017, and a $3.7 million increase from
same store properties, offset by a $8.7 million decrease driven by the sales of
four properties in 2017. See Item 1. Business "Summary of Investments and
Dispositions".
Interest income from related parties increased $14.4 million, or 182%, to
$22.3 million for the year ended December 31, 2018 as compared to $7.9 million
for the same prior year period due to increases in the average balance of
mezzanine loans outstanding.
Expenses
Property operating expenses increased $19.7 million, or 41%, to $68.0 million
for the year ended December 31, 2018 as compared to $48.3 million for the same
prior year period. Property operating expenses increased $21.8 million primarily
from the acquisition of five properties in 2018 and the full year impact of
twelve properties acquired in 2017, and a $1.4 million increase from same store
properties, offset by a $3.4 million decrease in property operating expenses
driven by the sales of four properties in 2017. Property NOI margins decreased
to 58.1% of total revenues for the year ended December 31, 2018, from 58.2% in
the prior year period. Property margins have been impacted by the sales of
stabilized properties owned for longer time periods and the recent purchase of
assets that have not yet achieved the same level of operational efficiency.
Property NOI margins are computed as total property revenues less property
operating expenses, divided by total property revenues.
Property management fees expense increased $1.2 million, or 38%, to $4.4 million
for the year ended December 31, 2018 as compared to $3.2 million in the same
prior year period. Property management fees increased $1.4 million from the
acquisition of five properties in 2018 and the full year impact of twelve
properties acquired in 2017, offset by a $0.2 million decrease in property
management fees driven by the sales of four properties in 2017.
General and administrative expenses amounted to $19.6 million for the year ended
December 31, 2018 as compared to $7.5 million for the same prior year period.
Excluding non-cash equity compensation expense of  $6.9 million and $2.3 million
for the years ended December 31, 2018 and 2017, respectively, general and
administrative expenses were $12.6 million, or 6.8% of revenues for the year
ended December 31, 2018 as compared to $5.2 million, or 4.2% of revenues, for
the same prior year end period. This increase can be primarily attributed to the
impact of the Internalization as we are now incurring expenses that were
previously covered by the management fees payable to our former Manager,
described below. Combined general and administrative expenses and management
fees decreased $0.7 million to $19.6 million for the year ended December 31,
2018 as compared to $20.3 million for the year ended December 31, 2017.
Management fees were eliminated in conjunction with the Internalization. Base
management fees of $8.7 million were expensed in the year ended December 31,
2017. Incentive management fees of  $4.0 million

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were expensed in the year ended December 31, 2017. All base management and
incentive management fees in 2017 were paid in LTIP Units in lieu of cash.
Acquisition and pursuit costs amounted to $0.1 million for the year ended
December 31, 2018 as compared to $3.2 million for the same prior year period.
Substantially all the expenses for the year ended December 31, 2017 were due to
the Company's decision to abandon the proposed East San Marco Property
development and write off the pre-acquisition costs that had been incurred.
Abandoned pursuit costs can vary greatly, and the costs incurred in any given
period may be significantly different in future periods.
Management internalization expenses of  $43.6 million for the year ended
December 31, 2017 related to the transaction expenses for the Internalization,
including the issuance of Class C common stock and OP units. There were no such
costs in 2018.
Weather-related losses, net were $0.3 million for the year ended December 31,
2018 as compared to $1.0 million for the same prior year period. Weather-related
losses incurred in the year ended December 31, 2018 primarily related to freeze
damages at three properties in North Carolina and one property in Texas for
$0.2 million, along with hail damages at one property in Texas for $0.1 million.
Weather-related losses incurred in the year ended December 31, 2017 were related
to damages sustained from Hurricane Irma at six properties in Florida and three
properties in Georgia.
Depreciation and amortization expenses increased to $62.7 million for the year
ended December 31, 2018 as compared to $48.6 million for the same prior year
period. Depreciation and amortization expense increased $18.4 million from the
acquisition of five properties in 2018 and the full year impact of twelve
properties acquired in 2017, offset by a $2.0 million decrease in depreciation
and amortization driven by the sales of four properties in 2017 and a
$2.4 million decrease from same store properties.
Other Income and Expenses
Other income and expenses amounted to net expense of  $45.0 million for the year
ended December 31, 2018 as compared to net other income of  $37.6 million for
the same prior year period. Interest expense increased $21.5 million, or 68%, to
$53.0 million for the year ended December 31, 2018 as compared to $31.5 million
for the same prior year period due to the increased amount of properties and an
increase in debt to fund the property acquisitions. The balance of the
difference was primarily due to $60.4 million of gains on the sales of
properties during the year ended December 31, 2017.
Property Operations
We define "same store" properties as those that we owned and operated for the
entirety of both periods being compared, except for properties that are in the
construction or lease-up phases, or properties that are undergoing development
or significant redevelopment. We move properties previously excluded from our
same store portfolio for these reasons into the same store designation once they
have stabilized or the development or redevelopment is complete and such status
has been reflected fully in all quarters during the applicable periods of
comparison. For newly constructed or lease-up properties or properties
undergoing significant redevelopment, we consider a property stabilized upon
attainment of 90.0% physical occupancy.
For comparison of our three months ended December 31, 2019 and 2018, the same
store properties included properties owned at October 1, 2018. Our same store
properties for the three months ended December 31, 2019 and 2018 consisted of 26
properties, representing 8,779 units.
For comparison of our twelve months ended December 31, 2019 and 2018, the same
store properties included properties owned at January 1, 2018. Our same store
properties for the twelve months ended December 31, 2019 and 2018 consisted of
22 properties, representing 7,613 units.
Because of the limited number of same store properties as compared to the number
of properties in our portfolio in 2019 and 2018, respectively, our same store
performance measures may be of limited usefulness.

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The following table presents the same store and non-same store results from
operations for the three months ended December 31, 2019 and 2018 (dollars in
thousands):
                                 Three Months Ended
                                    December 31,                         Change
                                2019             2018              $               %
Property Revenues
Same Store                    $ 36,319         $ 35,472         $   847             2.4%
Non-Same Store                   9,481            8,816             665             7.5%
Total property revenues         45,800           44,288           1,512             3.4%
Property Expenses
Same Store                      14,569           13,681             888             6.5%
Non-Same Store                   3,031            3,812           (781)           -20.5%
Total property expenses         17,600           17,493             107             0.6%
Same Store NOI                  21,750           21,791            (41)            -0.2%
Non-Same Store NOI               6,450            5,004           1,446            28.9%
Total NOI(1)                  $ 28,200         $ 26,795         $ 1,405             5.2%



(1)

See "Net Operating Income" below for a reconciliation of Same Store NOI, Non-Same Store NOI and Total NOI to net income (loss) and a discussion of how management uses this non-GAAP financial measure.

The following table presents the same store and non-same store results from
operations for the years ended December 31, 2019 and 2018 (dollars in
thousands):
                                      Year Ended
                                     December 31,                          Change
                                2019              2018               $                %
Property Revenues
Same Store                    $ 126,568         $ 120,770         $  5,798            4.8%
Non-Same Store                   58,808            41,691           17,117           41.1%
Total property revenues         185,376           162,461           22,915           14.1%
Property Expenses
Same Store                       51,012            49,340            1,672            3.4%
Non-Same Store                   23,437            18,657            4,780           25.6%
Total property expenses          74,449            67,997            6,452            9.5%
Same Store NOI                   75,556            71,430            4,126            5.8%
Non-Same Store NOI               35,371            23,034           12,337           53.6%
Total NOI(1)                  $ 110,927         $  94,464         $ 16,463           17.4%



(1)

See "Net Operating Income" below for a reconciliation of Same Store NOI, Non-Same Store NOI and Total NOI to net income (loss) and a discussion of how management uses this non-GAAP financial measure.

Three Months Ended December 31, 2019 Compared to Three Months Ended December 31,
2018
Same store NOI for the three months ended December 31, 2019 decreased 0.2%, or
$0.04 million, compared to the 2018 period. Same store property revenues
increased 2.4% as compared to the 2018 period, primarily attributable to a 3.6%
increase in average rental rates as twenty-four of our twenty-six same

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store properties recognized rental rate increases during the period. Revenues
were moderated by a 120 basis points decrease in average occupancy to 93.6%
primarily due to a loss of 27 corporate leases in one asset, and the transition
of property management at three assets necessitated by performance issues.
Occupancy at the above assets has recovered to 96.2% as of end of January 2020.
Same store expenses for the three months ended December 31, 2019 increased 6.5%,
or $0.9 million, compared to the 2018 period, primarily due to non-controllable
expense increases. Real estate taxes increased $0.6 million from prior year due
to $0.3 million in municipality tax increases and to a $0.3 million real estate
tax credit recognized in the prior year. In addition, insurance expenses
increased $0.2 million due to industrywide multifamily price increases stemming
from carrier losses over the past two years from hurricanes, wildfires, and
hail.
Property revenues and property expenses for our non-same store properties
increased due to the acquisition and disposition transactions in our portfolio
since October 1, 2018; the 2019 non-same store property count was eight compared
to seven properties for the 2018 period. The results of operations for acquired
properties have been included in our consolidated statements of operations from
the date of acquisition and the results of operations for disposed properties
have been excluded from the consolidated statements of operations since the date
of disposition.
Twelve Months Ended December 31, 2019 Compared to Twelve Months Ended
December 31, 2018
Same store NOI for the twelve months ended December 31, 2019 increased 5.8%, or
$4.1 million, compared to the 2018 period. Same store property revenues
increased 4.8% as compared to the 2018 period, primarily attributable to a 5.2%
increase in average rental rates; all twenty-two same store properties
recognized rental rate increases during the period. Average occupancy decreased
20 basis points to 94.1%. In addition, other revenue increased $0.4 million
related to valet trash service and amenity fees.
Same store expenses for the twelve months ended December 31, 2019 increased
3.4%, or $1.7 million, compared to the 2018 period, primarily due to a
$0.9 million increase in non-controllable costs. There was a $0.5 million
increase in real estate taxes from annual municipality tax increases and a
$0.4 million increase in insurance premiums due to pressure on the overall
insurance market stemming from carrier losses over the past two years from
hurricanes, wildfires, and hail. The remaining $0.7 million expense increase
relates to increases of  $0.23 million in turnover, $0.22 million in repairs and
maintenance, $0.16 million in trash valet costs, and $0.12 million in marketing.
Property revenues and property expenses for our non-same store properties
increased significantly due to the acquisition and disposition transactions in
our portfolio since January 1, 2018; the 2019 non-same store property count was
eighteen compared to eleven properties for the 2018 period. The results of
operations for acquired properties have been included in our consolidated
statements of operations from the date of acquisition and the results of
operations for disposed properties have been excluded from the consolidated
statements of operations since the date of disposition.
Prior year's comparisons
For comparison of our three months ended December 31, 2018 and 2017, the same
store properties included properties owned at October 1, 2017. Our same store
properties for the three months ended December 31, 2018 and 2017 consisted of 24
properties, representing 7,962 units.
For comparison of our twelve months ended December 31, 2018 and 2017, the same
store properties included properties owned at January 1, 2017. Our same store
properties for the twelve months ended December 31, 2018 and 2017 consisted of
16 properties, representing 5,151 units.
Because of the limited number of same store properties as compared to the number
of properties in our portfolio in 2018 and 2017, respectively, our same store
performance measures may be of limited usefulness.

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The following table presents the same store and non-same store results from
operations for the three months ended December 31, 2018 and 2017 (dollars in
thousands):
                                 Three Months Ended
                                    December 31,                         Change
                                2018             2017              $               %
Property Revenues
Same Store                    $ 31,984         $ 30,313         $ 1,671             5.5%
Non-Same Store                  12,304            4,072           8,232           202.2%
Total property revenues         44,288           34,385           9,903            28.8%
Property Expenses
Same Store                      12,871           12,558             313             2.5%
Non-Same Store                   4,622            1,584           3,038           191.8%
Total property expenses         17,493           14,142           3,351            23.7%
Same Store NOI                  19,113           17,755           1,358             7.6%
Non-Same Store NOI               7,682            2,488           5,194           208.8%
Total NOI(1)                  $ 26,795         $ 20,243         $ 6,552            32.4%



(1)

See "Net Operating Income" below for a reconciliation of Same Store NOI, Non-Same Store NOI and Total NOI to net income (loss) and a discussion of how management uses this non-GAAP financial measure.

The following table presents the same store and non-same store results from
operations for the years ended December 31, 2018 and 2017 (dollars in
thousands):
                                      Year Ended
                                     December 31,                          Change
                                2018              2017               $                %
Property Revenues
Same Store                    $  84,504         $  80,828         $  3,676             4.5%
Non-Same Store                   77,957            34,818           43,139           123.9%
Total property revenues         162,461           115,646           46,815            40.5%
Property Expenses
Same Store                       34,967            33,585            1,382             4.1%
Non-Same Store                   33,030            14,761           18,269           123.8%
Total property expenses          67,997            48,346           19,651            40.6%
Same Store NOI                   49,537            47,243            2,294             4.9%
Non-Same Store NOI               44,927            20,057           24,870           124.0%
Total NOI(1)                  $  94,464         $  67,300         $ 27,164            40.4%



(1)

See "Net Operating Income" below for a reconciliation of Same Store NOI, Non-Same Store NOI and Total NOI to net income (loss) and a discussion of how management uses this non-GAAP financial measure.

Three Months Ended December 31, 2018 Compared to Three Months Ended December 31,
2017
Same store NOI for the three months ended December 31, 2018 increased 7.6%, or
$1.36 million, compared to the 2017 period. There was a 5.5% increase in same
store property revenues as compared to

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the 2017 period. The increase was primarily attributable to a 4.8% increase in
average rental rates; twenty-three of our twenty-four same store properties
recognized rental rate increases during the period. In addition, average
occupancy increased 80 basis points to 94.6%. Same store expenses for the
three months ended December 31, 2018 increased 2.5%, or $0.32 million, compared
to the 2017 period. The increase is primarily due to a $0.15 million increase in
payroll, a $0.11 million increase in maintenance, and $0.09 million of
additional real estate taxes due to higher valuations by municipalities.
Property revenues and property expenses for our non-same store properties
increased significantly due to the properties acquired during 2017 and 2018; the
2018 non-same store property count was 9 compared to 4 properties for the 2017
period. The results of operations for acquired properties have been included in
our consolidated statements of operations from the date of acquisition and the
results of operations for disposed properties have been excluded from the
consolidated statements of operations since the date of disposition.
Twelve Months Ended December 31, 2018 Compared to Twelve Months Ended
December 31, 2017
Same store NOI for the twelve months ended December 31, 2018 increased 4.9%, or
$2.29 million, compared to the 2017 period. There was a 4.5% increase in same
store property revenues as compared to the 2017 period. The increase was
primarily attributable to a 4.5% increase in average rental rates; all sixteen
same store properties recognized rental rate increases during the period.
Average occupancy decreased 30 basis points to 94.1%. The remaining increase was
due to a $0.45 million increase in resident fees derived from implementing valet
trash fees at twelve same store properties, telecommunication royalty programs
and a general increase in resident fees, such as pet, pest and late fees. Same
store expenses for the twelve months ended December 31, 2018 increased 4.1%, or
$1.38 million, compared to the 2017 period, primarily due to a $0.62 million
increase in real estate taxes due to higher valuations by municipalities and
$0.38 million attributable to the recurring annual maintenance incurred in
current year on certain properties which was not required in prior year as the
properties were undergoing renovations. The remaining increase is due to a
$0.13 million increase in payroll and a $0.12 million increase in utilities.
Property revenues and property expenses for our non-same store properties
increased significantly due to having a full year impact in 2018 from twelve
properties acquired during 2017 along with the partial year impact of the five
properties acquired in 2018. The results of operations for acquired properties
have been included in our consolidated statements of operations from the date of
acquisition and the results of operations for disposed properties have been
excluded from the consolidated statements of operations since the date of
disposition.
Net Operating Income
We believe that net operating income ("NOI") is a useful measure of our
operating performance. We define NOI as total property revenues less total
property operating expenses, excluding depreciation and amortization and
interest. Other REITs may use different methodologies for calculating NOI, and
accordingly, our NOI may not be comparable to other REITs. NOI also is a
computation made by analysts and investors to measure a real estate company's
operating performance.
We believe that this measure provides an operating perspective not immediately
apparent from GAAP operating income or net income. We use NOI to evaluate our
performance on a same store and non-same store basis; NOI allows us to evaluate
the operating performance of our properties because it measures the core
operations of property performance by excluding corporate level expenses and
other items not related to property operating performance and captures trends in
rental housing and property operating expenses.
However, NOI should only be used as a supplemental measure of our financial
performance. The following table reflects net loss attributable to common
stockholders together with a reconciliation to NOI

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and to same store and non-same store contributions to consolidated NOI, as
computed in accordance with GAAP for the periods presented (amounts in
thousands):
                                                                                              Year Ended December 31,
                                                                                     2019               2018               2017
Net loss attributable to common stockholders                                

$ (19,751) $ (42,759) $ (45,679) Add back: Net loss attributable to Operating Partnership Units

                       (6,779)           (12,839)            (9,372)
Net loss attributable to common stockholders and unit holders                       (26,530)           (55,598)           (55,051)

Add common stockholders and Operating Partnership Units pro-rata share of: Depreciation and amortization

                                                         66,670             59,103             44,741
Non-real estate depreciation and amortization                                            448                301                  6
Non-cash interest expense                                                              3,174              3,757              1,939
Unrealized loss on derivatives                                                         2,450              2,776                  -
Loss on extinguishment of debt and debt modification costs                             7,199              2,226              1,551
Property management fees                                                               4,645              4,151              2,915
Management fees to related parties                                                         -                  -             12,726
Acquisition and pursuit costs                                                            556                116              3,091
Corporate operating expenses                                                          22,261             19,416              7,541
Management internalization                                                                 -                  -             43,554
Weather-related losses, net                                                              313                280                956
Preferred dividends                                                                   46,159             35,637             27,023
Preferred stock accretion                                                             10,335              5,970              3,011

Less common stockholders and Operating Partnership units pro-rata share of: Other income

                                                                              68                  -                 16
Preferred returns on unconsolidated real estate joint ventures                         9,797             10,312             10,336
Interest income from related parties                                                  24,595             22,255              7,930
Gain on sale of real estate investments                                               48,172                  -             34,436
Gain on sale of joint venture interests, net                                               -                  -              6,414
Gain on sale of non-depreciable real estate investments                                  679                  -                  -
Pro-rata share of properties' income                                                  54,369             45,568             34,871

Add:

Noncontrolling interest pro-rata share of partially owned property income

           2,810              2,629              3,112
Total property income                                                                 57,179             48,197             37,983
Add:
Interest expense                                                                      53,748             46,267             29,317
Net operating income                                                                 110,927             94,464             67,300
Less:
Non-same store net operating income                                                   35,371             23,034             20,057
Same store net operating income                                                   $   75,556         $   71,430         $   47,243



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Liquidity and Capital Resources
Liquidity is a measure of our ability to meet potential cash requirements. Our
primary liquidity requirements relate to (a) our operating expenses and other
general business needs, (b) distributions to our stockholders, (c) investments
and capital requirements to fund development and renovations at existing
properties and (d) ongoing commitments to repay borrowings, including our credit
facilities and maturing short-term debt, and (e) Class A common stock
repurchases under our stock repurchase program.
We believe the properties underlying our real estate investments are performing
well with an occupancy of 94.0%, exclusive of our development properties, at
December 31, 2019.
On May 17, 2018, the Company filed, and on May 23, 2018, the SEC declared
effective on Form S-3 (File No. 333-224990), a shelf registration statement that
expires in May 2021 (the "May 2018 Shelf Registration Statement"). The
securities covered by the May 2018 Shelf Registration Statement cannot exceed
$2,500,000,000 in the aggregate and include common stock, preferred stock,
depositary shares representing preferred stock, debt securities, warrants to
purchase stock or debt securities and units. The Company may periodically offer
one or more of these securities in amounts, prices and on terms to be announced
when and if these securities are offered. The specifics of any future offerings,
along with the use of proceeds of any securities offered, will be described in
detail in a prospectus supplement, or other offering materials, at the time of
the offering.
On February 24, 2016, we filed a prospectus supplement to our registration
statement on Form S-3 (File No. 333-200359) filed with the SEC on November 19,
2014 and declared effective on December 19, 2014 (the "December 2014 Shelf
Registration Statement"), offering a maximum of 150,000 Units (the "Series B
Units") consisting of 150,000 shares of Series B Redeemable Preferred Stock (the
"Series B Preferred Stock") and warrants (the "Warrants") to purchase 3,000,000
shares of Class A common stock (liquidation preference $1,000 per share of
Series B Preferred Stock) (the "Series B Preferred Offering"). On July 21, 2017,
we filed an additional prospectus supplement to the December 2014 Shelf
Registration Statement to increase the size of the Series B Preferred Offering
to a maximum of 225,000 shares of our Series B Preferred Stock, and Warrants to
purchase a maximum of 4,500,000 shares of our Class A common stock (which
maximum amounts were inclusive of those reflected in the original Series B
Prospectus Supplement). On November 15, 2017, we filed an additional prospectus
supplement to our registration statement on Form S-3 (File No. 333-208956) filed
with the SEC on January 13, 2016 and declared effective on January 29, 2016 (the
"January 2016 Shelf Registration Statement"), to further increase the size of
the Series B Preferred Offering to a maximum of 435,000 shares of our Series B
Preferred Stock, and Warrants to purchase a maximum of 8,700,000 shares of our
Class A common stock (which maximum amounts were inclusive of those reflected in
the additional Series B Prospectus Supplement filed on July 21, 2017). On
November 15, 2018, we filed a prospectus supplement to our May 2018 Shelf
Registration Statement, to further increase the size of the Series B Preferred
Offering by offering an additional 500,000 Units (the "Series B Units")
consisting of 500,000 shares of Series B Redeemable Preferred Stock (the
"Series B Preferred Stock") and warrants (the "Warrants") to purchase 10,000,000
shares of Class A common stock (liquidation preference $1,000 per share of
Series B Preferred Stock).
On October 31, 2019, based on general market conditions and related
considerations, the Board determined it to be in the best interest of the
Company and its stockholders to replace the Series B Preferred Offering with an
offering of up to 32,000,000 shares of a new Series T Redeemable Preferred Stock
(the "Series T Preferred Stock"), with a maximum of 20,000,000 shares of
Series T Redeemable Preferred Stock offered in the primary offering and an
additional 12,000,000 shares of Series T Preferred Stock offered pursuant to a
dividend reinvestment plan (collectively, the "Series T Preferred Offering"). On
November 13, 2019, we filed a prospectus supplement to our May 2018 Shelf
Registration Statement for the Series T Preferred Offering, and on December 20,
2019, we made the initial issuance of Series T Preferred Stock pursuant to the
Series T Preferred Offering. As of December 31, 2019, the Company has issued and
outstanding 17,400 shares of Series T Preferred Stock.
Also, on December 20, 2019, we made the final issuance of Series B Preferred
Stock pursuant to the Series B Preferred Offering. No offers, sales or issuances
of Series B Preferred Stock have thereafter been made pursuant to the Series B
Preferred Offering, and on February 11, 2020, the Board formally approved the
termination of the Series B Preferred Offering. As of December 31, 2019, the
Company has issued and

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outstanding 536,695 shares of Series B Preferred Stock and 546,146 Warrants to
purchase 10,922,920 shares of Class A common stock.
On September 13, 2019, we and our Operating Partnership entered into an At
Market Issuance Sales Agreement (the "Class A Sales Agreement") with B. Riley
FBR, Inc. ("FBR") as sales agent. On November 20, 2019, and again on
December 18, 2019, the Class A Sales Agreement was amended to add Robert W.
Baird & Co. Incorporated, Compass Point Research and Trading, LLC, JMP
Securities LLC and Morgan Stanley & Co. LLC with FBR (collectively, the "Sales
Agents") as sales agents. Pursuant to the Class A Sales Agreement, the Sales
Agents will act as distribution agents with respect to the offering and sale of
up to $100,000,000 in shares of Class A common stock in "at the market
offerings" as defined in Rule 415 under the Securities Act, including without
limitation sales made directly on or through the NYSE American, or on any other
existing trading market for Class A common stock or through a market maker (the
"Class A ATM Offering"). The Company has sold 454,237 shares of Class A common
stock through the Class A ATM Offering as of December 31, 2019.
Our total stockholders' equity decreased $30.8 million from $158.3 million as of
December 31, 2018 to $127.5 million as of December 31, 2019. The decrease in our
total stockholders' equity is primarily attributable to distributions declared
of  $61.0 million for the year ended December 31, 2019, and repurchase of
Class A common stock of  $14.1 million, offset by net income attributable to
common stockholders of $36.7 million, proceeds of  $4.4 million from the sale of
Warrants in conjunction with the Series B Preferred Stock and the issuance of
Class A common stock of  $2.6 million for holder redemptions of Series B
Preferred Stock and $7.3 million for Company redemptions of Series B Preferred
Stock.
In general, we believe our available cash balances, the proceeds from the
Class A ATM Offering and the Series T Preferred Offering, the Senior and Junior
Credit Facilities, the Fannie Facility (each as defined below), other financing
arrangements and cash flows from operations will be sufficient to fund our
liquidity requirements with respect to our existing portfolio for the next
12 months. We expect that properties added to our portfolio with the proceeds
from the Class A ATM Offering and the Series T Preferred Offering and from the
credit facilities will have a positive impact on our future results of
operations. In general, we expect that our results related to our portfolio will
improve in future periods as a result of anticipated future investments in and
acquisitions of real estate.
We believe we will be able to meet our primary liquidity requirements going
forward through:
•
$31.7 million in cash available at December 31, 2019;

•

cash generated from operating activities; and

•

our Class A ATM Offering and our continuous Series T Preferred Offering,
proceeds from future borrowings and potential offerings, including potential
offerings of common and preferred stock through underwritten offerings, as well
as issuances of units of limited partnership interest in our Operating
Partnership, or OP Units.

Our primary long-term liquidity requirements relate to (a) costs for additional
apartment community investments; (b) repayment of long-term debt and our credit
facilities; (c) capital expenditures; and (d) cash redemption requirements
related to our Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock and Series T Preferred Stock, and (e) Class A common stock
repurchases under our stock repurchase program.
In February 2018, we authorized the repurchase of up to $25 million of our
outstanding shares of Class A common stock over a period of one year pursuant to
a stock repurchase plan. In December 2018, we renewed our stock repurchase plan
for a period of one year and announced a new plan for the repurchase of up to
$5.0 million of our outstanding shares of Class A common stock in accordance
with the guidelines specified under Rule 10b5-1 of the Exchange Act, which
shares were applied against the $25 million under our original stock repurchase
plan. On December 20, 2019, the Company authorized new stock repurchase plans
for the repurchase of up to an aggregate of  $50 million of the Company's
outstanding shares of Class A common stock, to be conducted in accordance with
the Rules 10b5-1 and 10b-18 of the Exchange Act. The stock repurchase plans will
terminate upon the earliest to occur of certain specified events as set forth
therein. The extent to which the Company repurchases shares of its Class A
common stock

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under the stock repurchase plans, and the timing of any such purchases, depends
on a variety of factors including general business and market conditions and
other corporate considerations. Repurchases under the stock repurchase plans may
be made in the open market or through privately negotiated transactions, subject
to certain price limitations and other conditions established thereunder. Open
market repurchases will be structured to occur within the method, timing, price
and volume requirements of Rule 10b-18 of the Exchange Act. During the year
ended December 31, 2019, the Company purchased 1,313,328 shares of Class A
common stock under its stock repurchase plans for a total purchase price of
approximately $14.1 million.
We intend to finance our long-term liquidity requirements with net proceeds of
additional issuances of common and preferred stock, including our Class A ATM
Offering, our Series T Preferred Offering, our credit facilities, as well as
future borrowings. Our success in meeting these requirements will therefore
depend upon our ability to access capital. Further, our ability to access equity
capital is dependent upon, among other things, general market conditions for
REITs and the capital markets generally, market perceptions about us and our
asset class, and current trading prices of our securities.
As we did in 2019 and 2017, we may also selectively sell assets at appropriate
times, which would be expected to generate cash sources for both our short-term
and long-term liquidity needs.
We may also meet our long-term liquidity needs through borrowings from a number
of sources, either at the corporate or project level. In October 2017, we
entered into a credit agreement with KeyBank National Association ("KeyBank")
and a syndicate of other lenders, which currently provide for a loan commitment
amount of  $75 million, with an accordion feature to a maximum commitment of up
to $175 million (the "Senior Credit Facility"). In addition, in November 2019,
we entered into an amended and restated credit agreement with KeyBank and other
lenders providing for a revolving loan facility with a maximum commitment amount
of  $72.5 million (the "Junior Credit Facility"). We believe these facilities
will enable us to deploy our capital more efficiently and provide capital
structure flexibility as we grow our asset base. Additionally, we instituted a
Master Credit Facility Agreement issued through Fannie Mae's Multifamily
Delegated Underwriting and Servicing Program (the "Fannie Facility"), under
which we closed our first property on April 30, 2018. We expect the combination
of these facilities to provide us flexibility by allowing us, among other
things, to use borrowings under our Senior Credit Facility and Junior Credit
Facility to acquire properties pending placement of permanent mortgage
indebtedness, including under the Fannie Facility. In addition to restrictive
covenants, these credit facilities contain material financial covenants. At
December 31, 2019, we were in compliance with all covenants under our credit
facilities. We will continue to monitor the debt markets, including Fannie Mae
and Freddie Mac, and as market conditions permit, access borrowings that are
advantageous to us.
We intend to continue to use prudent amounts of leverage in making our
investments, which we define as having total indebtedness of approximately 65%
of the fair market value of the properties in which we have invested. For
purposes of calculating our leverage, we assume full consolidation of all of our
real estate investments, whether or not they would be consolidated under GAAP,
include assets we have classified as held for sale, and include any joint
venture level indebtedness in our total indebtedness. However, we are not
subject to any limitations on the amount of leverage we may use, and
accordingly, the amount of leverage we use may be significantly less or greater
than we currently anticipate. We expect our leverage to decline commensurately
as we execute our business plan to grow our net asset value.
If we are unable to obtain financing on favorable terms or at all, we would
likely need to curtail our investment activities, including acquisitions and
improvements to and developments of, real properties, which could limit our
growth prospects. This, in turn, could reduce cash available for distribution to
our stockholders and may hinder our ability to raise capital by issuing more
securities or borrowing more money. We also may be forced to dispose of assets
at inopportune times in order to maintain our REIT qualification and Investment
Company Act exemption.
We expect to maintain a distribution paid to our Series A Preferred Stock, our
Series B Preferred Stock, our Series C Preferred Stock, our Series D Preferred
Stock and our Series T Preferred Stock in accordance with the terms of those
securities which require monthly or quarterly dividends depending on the series.
On December 20, 2017, we announced that our Board revised the dividend policy
for the Class A Common Stock and set an annual dividend rate of  $0.65 per
share. The Board's evaluation considered a

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number of factors including, but not limited to, achieving a sustainable
dividend covered by current recurring AFFO (vs. pro forma AFFO), multifamily and
small cap peer dividend rates and payout ratios, providing financial flexibility
for the Company, and achieving an appropriate balance between the retention of
capital to invest and grow net asset value and the importance of current
distributions. While our policy is generally to pay distributions from cash flow
from operations, our distributions through December 31, 2019 have been paid from
cash flow from operations, proceeds from our continuous registered public
offering, proceeds from the IPO and follow-on offerings, and sales of assets and
may in the future be paid from additional sources, such as from borrowings.
We have preferred membership interests in development projects in various stages
of completion and lease-up. Our preferred investments are generally structured
to provide a current preferred return during the development and lease-up phase.
We have the right, in certain development joint ventures, to convert our
preferred membership interest, in our sole discretion, into a common membership
interest for a period of six months from the date upon which 70% of the units in
the related development project have been leased and occupied. If we elect to
convert one or more of these investments into common ownership, our income, FFO,
CFFO and cash flows would be reflective of our pro rata share of the property's
results, which may be a reduction from what our preferred membership interest
currently generates. Alternatively, if we do not convert, and/or the joint
ventures do not redeem our preferred membership interest when required, our
income, FFO, CFFO and cash flows could be reduced if the development project
does not produce sufficient cash flow to pays its operating expenses, debt
service and preferred return obligations.
Each joint venture in which we own a preferred membership interest is required
to redeem our preferred membership interests plus any accrued but unpaid
preferred return on either a certain date or earlier upon the occurrence of
certain events. Upon redemption of the preferred membership interests, our
income, FFO, CFFO and cash flows could be reduced below the preferred returns
currently being recognized.
We have senior or mezzanine loan investments in operating or development
projects in various stages of completion and lease-up. Our loan investments are
generally structured to provide a current and/or accrued interest return during
the operating or development and lease-up phase. If the borrower experiences
operating difficulties or delays in development or lease-up and are unable to
pay the required debt service on one or more of these investments, our income,
FFO, CFFO and cash flows may be reduced from what our loan investment currently
generates.
Each entity in which we have a loan investment is required to repay the loan
plus any accrued but unpaid return on either a certain date or earlier upon the
occurrence of certain events. Upon payoff of the loan investment, our income,
FFO, CFFO and cash flows could be reduced below the returns currently being
recognized.
Cash Flows
Year ended December 31, 2019 as compared to the year ended December 31, 2018
As of December 31, 2019, we owned interests in fifty-three real estate
properties, thirty-five consolidated operating properties and eighteen through
preferred equity and mezzanine loan investments. During the year ended
December 31, 2019, net cash provided by operating activities was $63.3 million
after net income of $29.1 million was adjusted for the following:
•
Non-cash items of  $33.4 million;

•

Distributions and preferred returns from unconsolidated joint ventures of $9.0 million; offset by

•

a decrease in accounts payable, accrued liabilities and distributions of $3.4 million;

•

an increase in accounts receivable, prepaid expenses and other assets of $4.5 million; and

•

a decrease in due to affiliates of $0.3 million.

Cash Flows from Investing Activities
During the year ended December 31, 2019, net cash used in investing activities
was $310.6 million, primarily due to the following:
•
$516.2 million used in acquiring consolidated real estate investments;


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•

$9.9 million used in purchases of interests from noncontrolling members;

•

$126.0 million used in acquiring investments in unconsolidated joint ventures and notes receivable;

•

$21.4 million used on capital expenditures; offset by

•

$12.1 million of repayments on notes receivable from related parties;

•

$313.8 million of proceeds from the sale of depreciable and non-depreciable real estate investments; and

•

$36.6 million proceeds from sale of unconsolidated real estate real estate joint ventures.

Cash Flows from Financing Activities
During the year ended December 31, 2019, net cash provided by financing
activities was $245.8 million, primarily due to the following:
•
net borrowings of  $450.2 million on mortgages payable;

•
net proceeds of  $133.5 million from borrowings on revolving credit facilities;

•

net proceeds of $213.4 million from issuance of Units of Series B Preferred Stock and Warrants;

•

net proceeds of $5.3 million from issuance of Class A common stock;

•

net proceeds of $0.4 million from issuance of Units of Series T Preferred Stock;

•

$3.5 million in capital contributions from noncontrolling interests;

•

partially offset by $14.9 million in distributions paid to common stockholders;

•

$45.1 million paid in cash distribution paid to preferred stockholders;

•

$9.1 million paid in cash distribution paid to noncontrolling interests;

•

$274.7 million of repayments of our mortgages payable;

•

$197.7 million of repayments of revolving credit facilities;

•

$4.8 million increase in deferred financing costs; and

•

$14.1 million paid for repurchase of Class A common stock.

Operating Activities
Net cash flow provided by operating activities decreased $1.2 million in 2019
compared to 2018 primarily due to:
•
Operating income, adjusted for non-cash activity, increased $11.3 million as a
result of our acquisitions (net of dispositions);

•

Net due to affiliates increased $1.7 million; offset by

•

Decrease in net distributions of income and preferred returns from preferred equity investments of $0.5 million;

•

Decrease in accounts payable and other accrued liabilities of $11.2 million; and

•

An increase in accounts receivable, prepaid expenses and other assets of $2.5 million.

Investing Activities
Net cash used in investing activities decreased $96.3 million in 2019 compared
to 2018 primarily due to:
•
Acquisition of real estate investments and capital expenditures increased
$182.9 million;

•

Increase in investment in notes receivable of $29.7 million;

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•

Higher investments in unconsolidated real estate joint ventures interests of $56.4 million; offset by

•

Higher proceeds from sales of joint venture interests and real estate investments of $350.4 million;

•

Lower purchases from noncontrolling interests of $2.3 million; and

•

Repayments on notes receivable from related parties of $12.1 million.

Financing Activities
Cash flows from financing activities were $245.8 million in 2019 as compared to
$330.1 million in 2018. This decrease of  $84.3 million is primarily explained
by:
•
A decrease in net mortgage borrowings of  $93.8 million;

•

An increase in distributions paid of $13.9 million;

•

A decrease in contributions from noncontrolling interests of $10.1 million;

•

A decrease in revolving credit facility borrowings of $89.0 million and an increase in repayments of $10.3 million;

•

An increase in Class A common stock repurchases of $5.1 million; offset by

•

An increase in the Series B preferred stock continuous offering of $104.0 million;

•

An increase in other stock offerings of $5.7 million;

•

A decrease in purchase of interest rate caps of $5.2 million; and

•

A decrease in deferred financing costs of $2.5 million.

Capital Expenditures The following table summarizes our total capital expenditures incurred for the years ended December 31, 2019, 2018 and 2017 (amounts in thousands):

                                                2019             2018       

2017

Redevelopment/renovations                     $ 13,124         $ 16,095         $ 13,186
Normally recurring capital expenditures          3,209            2,716            1,687
Routine capital expenditures                     4,229            3,215            2,394
New development                                      -                -           29,704
Total capital expenditures                    $ 20,562         $ 22,026         $ 46,971


Redevelopment and renovation costs are non-recurring capital expenditures for
significant projects that are revenue enhancing through unit or common area
upgrades, such as clubhouse renovations and kitchen remodels. Routine capital
expenditures are necessary non-revenue generating improvements that extend the
useful life of the property and that are less frequent in nature, such as roof
repairs and asphalt resurfacing. Normally recurring capital expenditures are
necessary non-revenue generating improvements that occur on a regular ongoing
basis, such as carpet and appliances.
Funds from Operations and Core Funds from Operations Attributable to Common
Stockholders and Unit Holders
We believe that funds from operations ("FFO"), as defined by the National
Association of Real Estate Investment Trusts ("NAREIT"), and core funds from
operations ("CFFO") are important non-GAAP supplemental measures of operating
performance for a REIT.
FFO attributable to common stockholders and unit holders is a non-GAAP financial
measure that is widely recognized as a measure of REIT operating performance. We
consider FFO to be an appropriate supplemental measure of our operating
performance as it is based on a net income analysis of property portfolio
performance that excludes non-cash items such as depreciation. The historical
accounting convention

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used for real estate assets requires straight-line depreciation of buildings and
improvements, which implies that the value of real estate assets diminishes
predictably over time. Since real estate values historically rise and fall with
market conditions, presentations of operating results for a REIT, using
historical accounting for depreciation, could be less informative. We define
FFO, consistent with the NAREIT definition, as net income, computed in
accordance with GAAP, excluding gains or losses on sales of depreciable real
estate property, plus depreciation and amortization of real estate assets, plus
impairment write-downs of depreciable real estate, and after adjustments for
unconsolidated partnerships and joint ventures. Adjustments for unconsolidated
partnerships and joint ventures will be calculated to reflect FFO on the same
basis.
CFFO makes certain adjustments to FFO, removing the effect of items that do not
reflect ongoing property operations such as acquisition expenses, non-cash
interest, unrealized gains or losses on derivatives, losses on extinguishment of
debt and debt modification costs (includes prepayment penalties incurred and the
write-off of unamortized deferred financing costs and fair market value
adjustments of assumed debt), one-time weather-related costs, gains or losses on
sales of non-depreciable real estate property, shareholder activism, stock
compensation expense and preferred stock accretion. We believe that CFFO is
helpful to investors as a supplemental performance measure because it excludes
the effects of certain items which can create significant earnings volatility,
but which do not directly relate to our core recurring property operations. As a
result, we believe that CFFO can help facilitate comparisons of operating
performance between periods and provides a more meaningful predictor of future
earnings potential.
Our calculation of CFFO differs from the methodology used for calculating CFFO
by certain other REITs and, accordingly, our CFFO may not be comparable to CFFO
reported by other REITs. Our management utilizes FFO and CFFO as measures of our
operating performance after adjustment for certain non-cash items, such as
depreciation and amortization expenses, and acquisition and pursuit costs that
are required by GAAP to be expensed but may not necessarily be indicative of
current operating performance and that may not accurately compare our operating
performance between periods. Furthermore, although FFO and CFFO and other
supplemental performance measures are defined in various ways throughout the
REIT industry, we also believe that FFO and CFFO may provide us and our
stockholders with an additional useful measure to compare our financial
performance to certain other REITs.
Neither FFO nor CFFO is equivalent to net income, including net income
attributable to common stockholders, or cash generated from operating activities
determined in accordance with GAAP. Furthermore, FFO and CFFO do not represent
amounts available for management's discretionary use because of needed capital
replacement or expansion, debt service obligations or other commitments or
uncertainties. Neither FFO nor CFFO should be considered as an alternative to
net income, including net income attributable to common stockholders, as an
indicator of our operating performance or as an alternative to cash flow from
operating activities as a measure of our liquidity.
We have acquired seven operating properties, made six property investments
through preferred equity interests or mezzanine loans and sold seven operating
properties subsequent to December 31, 2018. As of December 31, 2018, we had
acquired five operating properties and made three property investments through
preferred equity interests or mezzanine loans subsequent to December 31, 2017.
The results presented in the table below are not directly comparable and should
not be considered an indication of our future operating performance.

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The table below presents our calculation of FFO and CFFO for the years ended December 31, 2019, 2018 and 2017 (amounts in thousands, except per share amounts):

                                                                                  2019                 2018                 2017
Net loss attributable to common stockholders                                

$ (19,751) $ (42,759) $ (45,679) Add back: Net loss attributable to Operating Partnership Units

                     (6,779)             (12,839)              (9,372)
Net loss attributable to common stockholders and unit holders                     (26,530)             (55,598)             (55,051)

Common stockholders and Operating Partnership Units pro-rata share of: Real estate depreciation and amortization(1)

                                        66,670               59,103               44,741
Gain on sale of real estate investments                                           (48,172)                    -             (34,436)
Gain on sale of joint venture interests, net                                             -                    -              (6,414)
FFO attributable to Common Stockholders and Unit Holders                           (8,032)                3,505             (51,160)

Common stockholders and Operating Partnership Units pro-rata share of: Acquisition and pursuit costs

                                                          556                  116                3,091
Non-cash interest expense                                                            3,174                3,757                1,939
Unrealized loss on derivatives                                                       2,450                2,776                    -
Loss on extinguishment of debt and debt modification costs                           7,199                2,226                1,551
Weather-related losses, net                                                            313                  280                  956
Non-real estate depreciation and amortization                                          448                  301                    6
Gain on sale of non-depreciable real estate investments                              (679)                    -                    -
Shareholder activism                                                                   393                    -                    -
Non-recurring income                                                                  (68)                    -                 (16)

Non-cash preferred returns on unconsolidated real estate joint ventures

        (1,291)                (980)              (1,243)
Management internalization                                                               -                    -               43,554
Non-cash equity compensation                                                        10,615                6,807               15,022
Preferred stock accretion                                                           10,335                5,970                3,011
CFFO Attributable to Common Stockholders and Unit
Holders                                                                     

$ 25,413 $ 24,758 $ 16,711 Per Share and Unit Information: FFO attributable to Common Stockholders and Unit Holders - diluted

$ (0.26) $ 0.11 $ (1.89) CFFO attributable to Common Stockholders and Unit Holders - diluted

$       0.82         $       0.80         $       0.62
Weighted average common shares and units outstanding -
diluted                                                                         30,899,927           30,995,249           27,032,354



(1)
The real estate depreciation and amortization amount includes our share of
consolidated real estate-related depreciation and amortization of intangibles,
less amounts attributable to noncontrolling interests for partially owned
properties, and our similar estimated share of unconsolidated depreciation and
amortization, which is included in earnings of our unconsolidated real estate
joint venture investments.

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

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Presentation of this information is intended to assist the reader in comparing
the sustainability of the operating performance of different REITs, although it
should be noted that not all REITs calculate FFO or CFFO the same way, so
comparisons with other REITs may not be meaningful. FFO or CFFO should not be
considered as an alternative to net income (loss) attributable to common
stockholders or as an indication of our liquidity, nor is either indicative of
funds available to fund our cash needs, including our ability to make
distributions. Both FFO and CFFO should be reviewed in connection with other
GAAP measurements.
Contractual Obligations
The following table summarizes our contractual obligations as of December 31,
2019 which consisted of mortgage notes secured by our properties and revolving
credit facilities. At December 31, 2019, our estimated future required payments
on these obligations were as follows (amounts in thousands):
                                                                                                           Less than
                                                                                          Total            one year         2021 - 2022        2023 - 2024        Thereafter
Mortgages Payable (Principal)                                                          $ 1,435,023         $  91,075          $  75,737          $ 443,030         $ 825,181
Revolving Credit Facilities (Principal)                                                     18,000            18,000                  -                  -                 -
Estimated Interest Payments on Mortgages Payable and Revolving Credit Facilities           303,413            54,738            101,689             86,299            60,687
Total                                                                                  $ 1,756,436         $ 163,813          $ 177,426          $ 529,329         $ 885,868


Estimated interest payments are based on the stated rates for mortgage notes
payable and revolving credit facility assuming the interest rate in effect for
the most recent quarter remains in effect through the respective maturity dates.
Distributions
                                 Payable to
                                stockholders
Declaration Date              of record as of           Amount          Date Paid or Payable
Class A Common Stock
December 7, 2018             December 24, 2018        $  0.162500         January 4, 2019
March 8, 2019                  March 25, 2019         $  0.162500          April 5, 2019
June 7, 2019                   June 25, 2019          $  0.162500           July 5, 2019
September 13, 2019           September 25, 2019       $  0.162500         October 4, 2019
December 6, 2019             December 24, 2019        $  0.162500         January 3, 2020
Class C Common Stock
December 7, 2018             December 24, 2018        $  0.162500         January 4, 2019
March 8, 2019                  March 25, 2019         $  0.162500          April 5, 2019
June 7, 2019                   June 25, 2019          $  0.162500           July 5, 2019
September 13, 2019           September 25, 2019       $  0.162500         October 4, 2019
December 6, 2019             December 24, 2019        $  0.162500         January 3, 2020
Series A Preferred Stock
December 7, 2018             December 24, 2018        $  0.515625         January 4, 2019
March 8, 2019                  March 25, 2019         $  0.515625          April 5, 2019
June 7, 2019                   June 25, 2019          $  0.515625           July 5, 2019
September 13, 2019           September 25, 2019       $  0.515625         October 4, 2019
December 6, 2019             December 24, 2019        $  0.515625         January 3, 2020



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                                    Payable to
                                   stockholders
Declaration Date                 of record as of           Amount          Date Paid or Payable
Series B Preferred Stock(1)
October 12, 2018                December 24, 2018        $      5.00         January 4, 2019
January 11, 2019                 January 25, 2019        $      5.00         February 5, 2019
January 11, 2019                February 25, 2019        $      5.00          March 5, 2019
January 11, 2019                  March 25, 2019         $      5.00          April 5, 2019
April 12, 2019                    April 25, 2019         $      5.00           May 3, 2019
April 12, 2019                     May 24, 2019          $      5.00           June 5, 2019
April 12, 2019                    June 25, 2019          $      5.00           July 5, 2019
July 12, 2019                     July 25, 2019          $      5.00          August 5, 2019
July 12, 2019                    August 23, 2019         $      5.00        September 5, 2019
July 12, 2019                   September 25, 2019       $      5.00         October 4, 2019
October 14, 2019                 October 25, 2019        $      5.00         November 5, 2019
October 31, 2019                November 25, 2019        $      5.00         December 5, 2019
October 31, 2019                December 24, 2019        $      5.00         January 3, 2020
Series C Preferred Stock
December 7, 2018                December 24, 2018        $ 0.4765625         January 4, 2019
March 8, 2019                     March 25, 2019         $ 0.4765625          April 5, 2019
June 7, 2019                      June 25, 2019          $ 0.4765625           July 5, 2019
September 13, 2019              September 25, 2019       $ 0.4765625         October 4, 2019
December 6, 2019                December 24, 2019        $ 0.4765625         January 3, 2020
Series D Preferred Stock
December 7, 2018                December 24, 2018        $ 0.4453125         January 4, 2019
March 8, 2019                     March 25, 2019         $ 0.4453125          April 5, 2019
June 7, 2019                      June 25, 2019          $ 0.4453125           July 5, 2019
September 13, 2019              September 25, 2019       $ 0.4453125         October 4, 2019
December 6, 2019                December 24, 2019        $ 0.4453125         January 3, 2020
Series T Preferred Stock(1)
December 20, 2019               December 24, 2019        $  0.128125         January 3, 2020



(1)
Shares of Series B Preferred Stock issued on or after October 28, 2019 and all
newly-issued shares of Series T Preferred Stock that are held only a portion of
the applicable monthly dividend period will receive a prorated monthly dividend
based on the actual number of days in the applicable dividend period during
which each such share of Series B Preferred Stock or Series T Preferred Stock
was outstanding.

A portion of each dividend may constitute a return of capital for tax purposes.
There is no assurance that we will continue to declare dividends or at this
rate. Holders of OP Units and LTIP Units are entitled to receive "distribution
equivalents" at the same time as dividends are paid to holders of our Class A
common stock.
We have a dividend reinvestment plan that allows for participating stockholders
to have their Class A common stock dividend distributions automatically
reinvested in additional Class A common shares based on the average price of the
Class A common shares on the investment date. We plan to issue Class A common
shares to cover shares required for investment.

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We also have a dividend reinvestment plan that allows for participating
stockholders to have their Series T Preferred Stock dividend distributions
automatically reinvested in additional shares of Series T Preferred Stock at a
price of  $25.00 per share. We plan to issue shares of Series T Preferred Stock
to cover shares required for investment.
Our Board will determine the amount of dividends to be paid to our stockholders.
The determination of our Board will be based on several factors, including funds
available from operations, our capital expenditure requirements and the annual
distribution requirements necessary to maintain our REIT status under the
Internal Revenue Code. As a result, our distribution rate and payment frequency
may vary from time to time. However, to qualify as a REIT for tax purposes, we
must make distributions equal to at least 90% of our "REIT taxable income" each
year. While our policy is generally to pay distributions from cash flow from
operations, we may declare distributions in excess of funds from operations.
Distributions for the year ended December 31, 2019 were as follows (amounts in
thousands):
                                      Distributions
2019                            Declared           Paid
First Quarter
Class A Common Stock            $  3,727         $  3,820
Class C Common Stock                  12               12
Series A Preferred Stock           2,950            2,950
Series B Preferred Stock           5,058            4,842
Series C Preferred Stock           1,107            1,107
Series D Preferred Stock           1,269            1,269
OP Units                           1,038            1,038
LTIP Units                           383              262
Total first quarter 2019        $ 15,544         $ 15,300
Second Quarter
Class A Common Stock            $  3,623         $  3,726
Class C Common Stock                  12               12
Series A Preferred Stock           2,950            2,950
Series B Preferred Stock           5,693            5,443
Series C Preferred Stock           1,107            1,107
Series D Preferred Stock           1,269            1,269
OP Units                           1,038            1,058
LTIP Units                           392              309
Total second quarter 2019       $ 16,084         $ 15,874
Third Quarter
Class A Common Stock            $  3,636         $  3,621
Class C Common Stock                  12               12
Series A Preferred Stock           2,950            2,950
Series B Preferred Stock           6,562            6,259
Series C Preferred Stock           1,107            1,107
Series D Preferred Stock           1,269            1,269
OP Units                           1,038            1,018
LTIP Units                           399              316
Total third quarter 2019        $ 16,973         $ 16,552



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                                      Distributions
2019                            Declared           Paid
Fourth Quarter
Class A Common Stock               3,816            3,635
Class C Common Stock                  12               12
Series A Preferred Stock           2,950            2,950
Series B Preferred Stock           7,541            7,227
Series C Preferred Stock           1,107            1,107
Series D Preferred Stock           1,269            1,269
Series T Preferred Stock               1                -
OP Units                           1,038            1,038
LTIP Units                           423              325
Total fourth quarter 2019       $ 18,157         $ 17,563
Total                           $ 66,758         $ 65,289



Declaration of Dividends
                                Payable to
                               stockholders                                Paid /
Declaration Date              of record as of        Amount(1)          Payable Date
Series B Preferred Stock
January 13, 2020             January 24, 2020        $     5.00       February 5, 2020
January 13, 2020             February 25, 2020       $     5.00        March 5, 2020
January 13, 2020              March 25, 2020         $     5.00        April 3, 2020
Series T Preferred Stock
January 13, 2020             January 24, 2020        $ 0.128125       February 5, 2020
January 13, 2020             February 25, 2020       $ 0.128125        March 5, 2020
January 13, 2020              March 25, 2020         $ 0.128125        April 3, 2020



(1)
Shares of newly-issued Series T Preferred Stock and held only a portion of the
applicable monthly dividend period will receive a prorated monthly Series T
Preferred Stock dividend based on the actual number of days in the applicable
dividend period during which each such share of Series T Preferred Stock was
outstanding.

Critical Accounting Policies
Below is a discussion of the accounting policies that we consider critical to an
understanding of our financial condition and operating results that may require
complex or significant judgment in their application or require estimates about
matters which are inherently uncertain.
Our consolidated financial statements include our accounts and the accounts of
other subsidiaries over which we have control. All inter-company transactions,
balances, and profits have been eliminated in consolidation. Interests in
entities acquired will be evaluated based on applicable GAAP, which includes the
requirement to consolidate entities deemed to be variable interest entities
("VIE").
Principles of Consolidation and Basis of Presentation
Our consolidated financial statements include our accounts and the accounts of
other subsidiaries over which we have control. All inter-company transactions,
balances, and profits have been eliminated in consolidation. Interests in
entities acquired will be evaluated based on applicable GAAP, which includes the
requirement to consolidate entities deemed to be VIEs in which we are the
primary beneficiary. If the

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entity in which we hold an interest is determined not to be a VIE, then the
entity will be evaluated for consolidation based on legal form, economic
substance, and the extent to which we have control and/or substantive
participating rights under the respective ownership agreement.
There are judgments and estimates involved in determining if an entity in which
we have made an investment is a VIE and, if so, whether we are the primary
beneficiary. The entity is evaluated to determine if it is a VIE by, among other
things, calculating the percentage of equity being risked compared to the total
equity of the entity. A change in the judgments, assumptions, and estimates used
could result in consolidating an entity that should not be consolidated or
accounting for an investment using the equity method that should in fact be
consolidated, the effects of which could be material to our financial
statements.
Real Estate Asset Acquisition and Valuation
Upon the acquisition of real estate properties, we recognize the assets
acquired, the liabilities assumed, and any noncontrolling interest as of the
acquisition date, measured at their fair values. Acquisition-related costs are
capitalized in the period incurred. We assess the acquisition-date fair values
of all tangible assets, identifiable intangible assets and assumed liabilities
using methods similar to those used by independent appraisers (e.g., discounted
cash flow analysis) and that utilize appropriate discount and/or capitalization
rates and available market information. Estimates of future cash flows are based
on a number of factors including historical operating results, known and
anticipated trends, and market and economic conditions. The fair value of
tangible assets of an acquired property considers the value of the property as
if it was vacant.
Intangible assets include the value of in-place leases, which represents the
estimated value of the net cash flows of the in-place leases to be realized, as
compared to the net cash flows that would have occurred had the property been
vacant at the time of acquisition and subject to lease-up. We amortize the value
of in-place leases to expense over the remaining non-cancelable term of the
respective leases, which on average is six months. Should a tenant terminate its
lease, the unamortized portion of the in-place lease value and customer
relationship intangibles would be charged to expense in that period.
Estimates of the fair values of the tangible assets, identifiable intangible
assets and assumed liabilities require us to make significant assumptions to
estimate market lease rates, property-operating expenses, carrying costs during
lease-up periods, discount rates, market absorption periods, and the number
of years the property will be held for investment. The use of inappropriate
assumptions could result in an incorrect valuation of acquired tangible assets,
identifiable intangible assets and assumed liabilities, which could impact the
amount of our net income (loss).
Our significant accounting policies are more fully described in Note 2, "Basis
of Presentation and Summary of Significant Accounting Policies," to our Notes to
the Consolidated Financial Statements. Certain of our accounting policies
require management to make estimates and judgments regarding uncertainties that
may affect the reported amounts presented and disclosed in our consolidated
financial statements. These estimates and judgments are affected by management's
application of accounting policies. These judgments affect the reported amounts
of assets and liabilities and our disclosure of contingent assets and
liabilities at the dates of the financial statements and the reported amounts of
revenue and expenses during the reporting periods.
We base these estimates on historical experience and various other factors that
are believed to be reasonable, the results of which form the basis for making
judgments under the circumstances. Due to the inherent uncertainty involved in
making these estimates, actual results reported may differ from these estimates
under different situations or conditions. Additionally, other companies may
utilize different estimates that may impact the comparability of our results of
operations to those of companies in similar businesses. We consider an
accounting estimate to be significant if it requires us to make assumptions
about matters that were uncertain at the time the estimate was made and changes
in the estimate would have had a significant impact on our consolidated
financial position or results of operations.
Revenue Recognition
Rental income related to tenant leases is recognized on an accrual basis over
the terms of the related leases on a straight-line basis. Amounts received in
advance are recorded as a liability within other related liabilities.

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Other property revenues are recognized in the period earned.
The Company recognizes a gain or loss on the sale of real estate assets when the
criteria for an asset to be derecognized are met, which include when (i) a
contract exists and (ii) the buyer obtains control.
Investments in Joint Ventures
We accounted for the acquisitions of our interests in properties through
managing member limited liability companies ("LLCs") in accordance with the
provisions of the Consolidation Topic of the Financial Accounting Standards
Board ("FASB") Accounting Standards Codification ("ASC").
We analyze an investment to determine if it is a variable interest entity (a
"VIE") and, if so, whether we are the primary beneficiary requiring
consolidation. A VIE is an entity that has (i) insufficient equity to permit it
to finance its activities without additional subordinated financial support or
(ii) equity holders that lack the characteristics of a controlling financial
interest. VIEs are consolidated by the primary beneficiary, which is the entity
that has both the power to direct the activities that most significantly impact
the entity's economic performance and the obligation to absorb losses of the
entity or the right to receive benefits from the entity that potentially could
be significant to the entity. Variable interests in a VIE are contractual,
ownership, or other financial interests in a VIE that change in value with
changes in the fair value of the VIE's net assets. We continuously re-assess at
each level of the investment whether the entity is (i) a VIE, and (ii) if we are
the primary beneficiary of the VIE. If it was determined that the entity in
which we hold an interest qualified as a VIE and we were the primary
beneficiary, the entity would be consolidated.
If after consideration of the VIE accounting literature, we have determined that
an entity is not a VIE, the Company assesses the need for consolidation under
all other provisions of ASC 810. These provisions provide for consolidation of
majority-owned entities where majority voting interest held by the Company
provides control, or through determination of control by virtue of the Company
being the general partner in a limited partnership or the controlling member of
a limited liability company.
In assessing whether we are in control of and requiring consolidation of the
limited liability company and partnership venture structures we evaluate the
respective rights and privileges afforded each member or partner (collectively
referred to as "member"). Our member would not be deemed to control the entity
if any of the other members have either (i) substantive kickout rights providing
the ability to dissolve (liquidate) the entity or otherwise remove the managing
member or general partner without cause or (ii) has substantive participating
rights in the entity. Substantive participating rights (whether granted by
contract or law) provide for the ability to effectively participate in
significant decisions of the entity that would be expected to be made in the
ordinary course business.
If it has been determined that we do not have control, but do have the ability
to exercise significant influence over the entity, we generally account for
these unconsolidated investments under the equity method. The equity method of
accounting requires these investments to be initially recorded at cost and
subsequently increased (decreased) for our share of net income (loss), including
eliminations for our share of inter-company transactions, and increased
(decreased) for contributions (distributions). The proportionate share of the
results of operations of these investments is reflected in our earnings or
losses.
Off-Balance Sheet Arrangements
As of December 31, 2019, we have off-balance sheet arrangements that may have a
material effect on our financial condition, revenues or expenses, results of
operations, liquidity, capital resources or capital expenditures. As of
December 31, 2019, we own interests in fifteen joint ventures that are accounted
for under the equity method as we exercise significant influence over, but do
not control, the investee.
New Accounting Pronouncements
See Note 2, "Basis of Presentation and Summary of Significant Accounting
Policies," to our Notes to the Consolidated Financial Statements for a
description of accounting pronouncements. We do not believe these new
pronouncements will have a significant impact on our Consolidated Financial
Statements, cash flows or results of operations.

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Subsequent Events
Issuance of LTIP Units under the Third Amended 2014 Incentive Plans
On January 1, 2020, the Company granted certain equity grants of LTIPs of the
Company's Operating Partnership to various executive officers under the Third
Amended 2014 Incentive Plans. These awards, amounting to 741,417 LTIPs, were
issued pursuant to the executive officers' employment and service agreements as
time-based LTIPs and performance-based LTIPs. All of these LTIP grants require
continuous employment for vesting. Time-based LTIPs were issued amounting to
247,138 LTIPs that vest over approximately three years. Performance-based LTIPs
were issued amounting to 494,279 LTIPs, are subject to a three-year performance
period, and will thereafter vest upon successful achievement of
performance-based conditions.
In addition, on January 1, 2020, the Company granted 7,126 LTIP Units pursuant
to the Third Amended 2014 Incentive Plans to each independent member of the
Board in payment of the equity portion of their respective annual retainers. The
LTIP Units vested immediately upon issuance.
Distributions Declared
On January 13, 2020 our Board authorized, and we declared monthly dividends for
the first quarter of 2020 equal to monthly rate of  $5.00 per share on our
Series B Preferred Stock, payable monthly to the stockholders of record as of
January 24, 2020, February 25, 2020 and March 25, 2020, which was paid in cash
on February 5, 2020, and which will be paid in cash on March 5, 2020 and
April 3, 2020, respectively.
On January 13, 2020 our Board authorized, and we declared monthly dividends for
the first quarter of 2020 equal to monthly rate of  $0.128125 per share on our
Series T Preferred Stock, payable monthly to the stockholders of record as of
January 24, 2020, February 25, 2020 and March 25, 2020, which was paid in cash
on February 5, 2020, and which will be paid in cash on March 5, 2020 and
April 3, 2020, respectively. Newly-issued shares of Series T Preferred Stock
held for only a portion of the applicable monthly dividend period will receive a
prorated Series T preferred Stock dividend based on the actual number of days in
the applicable dividend period during which each shares of Series T Preferred
Stock was outstanding.
Distributions Paid
The following distributions have been paid subsequent to December 31, 2019
(amounts in thousands):
                                                                         Distributions Paid
January 3, 2020 (to stockholders of record as of December 24, 2019)
Class A Common Stock                                                        $        3,816
Class C Common Stock                                                                    12
Series A Preferred Stock                                                             2,950
Series B Preferred Stock                                                             2,616
Series C Preferred Stock                                                             1,107
Series D Preferred Stock                                                             1,269
Series T Preferred Stock                                                                 1
OP Units                                                                             1,038
LTIP Units                                                                             347
Total                                                                       $       13,156
February 5, 2020 (to stockholders of record as of January 24, 2020)
Series B Preferred Stock                                                    $        2,651
Series T Preferred Stock                                                                23
Total                                                                       $        2,674




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Stock Activity
Subsequent to December 31, 2019 and as of February 20, 2020, we have completed
the following activity as it relates to our Class A common stock and Series B
Preferred Stock (refer to Note 13 - Stockholders' Equity of our consolidated
financial statements for further information):
•
sold 166,873 shares of Class A common stock through the Class A ATM Offering
with net proceeds of  $2.0 million;

•

initiated the redemption of 15,822 shares of Series B Preferred Stock through the issuance of 1,334,501 Class A common shares; and

•

purchased 351,255 shares of Class A common stock under the stock repurchase plan for a total purchase price of approximately $4.1 million.

Sale of Helios
On January 8, 2020, an underlying asset of an unconsolidated joint venture
located in Atlanta, Georgia known as Helios was sold for approximately
$65.6 million, subject to certain prorations and adjustments typical in such
real estate transactions. After deduction for the payoff of existing mortgage
indebtedness encumbering the property in the amount of  $39.5 million and the
payment of early extinguishment of debt costs, closing costs and fees, our
pro rata share of the net proceeds was $22.7 million, which included payment for
our original investment of  $19.2 million and our additional investment of
approximately $3.5 million.
Acquisition of Avenue 25
On January 23, 2020, we, through subsidiaries of our Operating Partnership,
acquired a 100% interest in a 254-unit apartment community located in Phoenix,
Arizona known as Avenue 25 for approximately $55.6 million. The purchase price
of  $55.6 million was funded, in part, with a $29.7 million loan assumption and
a $6.9 million supplemental loan secured by the Avenue 25 property.
Sale of Whetstone Apartments
On January 22, 2020, BRG Whetstone Durham, LLC entered into a membership
interest purchase agreement to purchase 100% of the common membership interest
in BR Whetstone Member, LLC from Fund III. In conjunction with this transaction,
BR Whetstone Member, LLC, along with BRG Avenue 25 TRS, LLC, a wholly-owned
subsidiary of our Operating Partnership, entered into a membership purchase
agreement to purchase the right to all the economic interest promote and the
common membership interest of 7.5% held in the joint venture from an
unaffiliated member of the joint venture.
On January 24, 2020, we, through a subsidiary of our Operating Partnership,
closed on the sale of Whetstone Apartments located in Durham, North Carolina for
approximately $46.5 million, subject to certain prorations and adjustments
typical in such real estate transactions. After deduction for the payoff of
existing mortgage indebtedness encumbering the property in the amount of
$25.4 million and the payment of early extinguishment of debt costs, closing
costs and fees, our net proceeds were $19.6 million, which included payment for
our original investment of  $12.9 million, payment of our accrued preferred
return of  $2.7 million, and our additional investment of approximately
$4.0 million.
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk

We are exposed to interest rate risk primarily through borrowing activities.
There is inherent roll-over risk for borrowings as they mature and are renewed
at current market rates. The extent of this risk is not quantifiable or
predictable because of the variability of future interest rates and our future
financing requirements. We are not subject to foreign exchange rates or
commodity price risk, and all of our financial instruments were entered into for
other than trading purposes.
Our interest rate risk is monitored using a variety of techniques. The table
below presents the principal payments and the weighted average interest rates on
outstanding debt, by year of expected maturity, to

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evaluate the expected cash flows and sensitivity to interest rate changes. Fair value adjustments and unamortized deferred financing costs, net, of approximately $(9.8) million are excluded:

                                       2020             2021             2022             2023              2024           Thereafter            Total
                                                                                       ($ in thousands)
Mortgage Notes Payable               $ 91,075         $ 12,444         $ 

63,293 $ 153,439 $ 289,591 $ 825,181 $ 1,435,023 Weighted Average Interest Rate 3.06%

            3.89%            3.75%             3.63%             3.71%             3.84%               3.74%
Revolving Credit Facilities          $ 18,000         $      -         $   

- $ - $ - $ - $ 18,000 Weighted Average Interest Rate 3.99%

                -                -                 -                 -                 -               

3.99%

The fair value (in thousands) is estimated at $1,436.2 million for mortgages
payable as of December 31, 2019.
The table above incorporates those exposures that exist as of December 31, 2019;
it does not consider those exposures or positions which could arise after that
date. As a result, our ultimate realized gain or loss with respect to interest
rate fluctuations will depend on the exposures that arise during the period and
interest rates.
Based on our debt and interest rates in effect at December 31, 2019, a 100 basis
point increase or decrease in interest rates on the portion of our debt bearing
interest at variable rates would increase future interest expense by
approximately $2.5 million or decrease by $3.1 million, respectively, on an
annual basis.
Item 8.
Financial Statements and Supplementary Data

The information required by this Item 8 is hereby included in our Consolidated
Financial Statements beginning on page F-1 of the Annual Report on Form 10-K.
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure.

None.

Item 9A.

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