Note 7 – Investments in Unconsolidated Real Estate Joint Ventures

Following is a summary of the Company’s ownership interests in the investments reported under the equity method of accounting. The carrying amount of the Company’s investments in unconsolidated real estate joint ventures as of December 31, 2015 and December 31, 2014 is summarized in the table below (amounts in thousands):

Property	December 31, 2015		December 31, 2014
Alexan CityCentre	$	6,505	$	6,505
Alexan Southside Place		17,322		—
Cheshire Bridge		16,360		—
Domain		3,806		—
EOS, formerly referred to as UCF Orlando		3,629		3,629
Flagler Village		5,451		—
Lake Boone Trail		9,919		—
Villas at Oak Crest		—		3,170
Whetstone		12,231		—
23Hundred@Berry Hill		—		4,906
Other		—		121
Total	$	75,223	$	18,331

As of December 31, 2015, the Company had outstanding preferred equity investments in eight multi-tiered joint ventures, each of which were created to develop a multifamily property. In each case, a wholly-owned subsidiary of the operating partnership made a preferred investment in a joint venture. The common interests in these joint ventures, as well as preferred interests in some cases, are owned by affiliates of the Manager. In each case, the Company’s investment in the joint venture generates a preferred return of 15% on its outstanding capital contributions and the Company is not allocated any of the income or loss in the joint ventures. The joint venture then becomes the controlling member in an entity whose purpose is to develop a multifamily property. Each joint venture is required to redeem the Company’s preferred membership interests plus any accrued but unpaid preferred return on the earlier of the date which is six months following the maturity of the related development’s construction loan. Additionally, the Company has the right, in its sole discretion, to convert its preferred membership interest in each joint venture into a common membership interest for a period of six months from the date upon which 70% of the units in the related development have been leased.

The following provides additional information regarding the Company’s preferred equity investments as of December 31, 2015.

The equity in income of the Company’s unconsolidated real estate joint ventures for the years ended December 31, 2015 and 2014 is summarized below (amounts in thousands):

Property	December 31, 2015		December 31, 2014
Alexan CityCentre	$	976	$	388
Alexan Southside Place		1,996		—
Cheshire Bridge		1,383		—
Domain		64		—
EOS		544		230
Flagler Village		(5)		—
Lake Boone Trail		44		—
Villas at Oak Crest		489		322
Whetstone		1,131		—
Other		(32)		126
Equity in income of unconsolidated joint venture	$	6,590	$	1,066

Summary combined financial information for the Company’s investments in unconsolidated real estate joint ventures as of December 31, 2015 and 2014 and for the years ended December 31, 2015 and 2014, is as follows:

	December 31, 2015		December 31, 2014
Balance Sheets:
Real estate, net of depreciation	$	132,265	$	55,091
Real estate, net of depreciation, held for sale		-		31,334
Other assets		24,737		1,193
Other assets, held for sale		-		2,458
Total assets	$	157,002	$	90,076

Mortgage payable	$	55,066	$	19,820
Mortgage payable, held for sale		-		23,569
Other liabilities		5,018		2,812
Other liabilities, held for sale		-		1,026
Total liabilities	$	60,084	$	47,227
Members’ equity		96,918		42,849
Total liabilities and members’ equity	$	157,002	$	90,076

	Year Ended December 31,
	2015		2014
Operating Statements:
Rental revenues	$	2,765	$	7,214
Operating expenses		(2,776)		(3,190)
(Loss) income before debt service, acquisition costs, and depreciation and amortization		(11)		4,024
Interest expense, net		(756)		(1,648)
Acquisition costs		(66)		(2)
Depreciation and amortization		(2,009)		(1,970)
Operating (loss) income		(2,842)		404
Gain on sale		29,200		2,498
Net income	$	26,358	$	2,902

Acquisition of Interest in Villas at Oak Crest

On April 2, 2014, the Company, through BRG Oak Crest, LLC, a Delaware limited liability company and a wholly-owned subsidiary of the Company’s Operating Partnership, acquired all of Fund II’s right, title and interest in and to a 93.432% limited liability company interest in BR Oak Crest Villas, LLC, a Delaware limited liability company, which is the owner and holder of a 71.9% limited liability company interest in Oak Crest Villas JV, LLC, a Delaware limited liability company, which is the owner and holder of 100% of the limited liability company interests in Villas Partners, LLC, a Delaware limited liability company, which is in turn the fee simple owner of a 209-unit multifamily property located in Chattanooga, Tennessee (the “Oak Crest Property”). The acquisition of Fund II’s interest was made pursuant to a contribution agreement. The purchased interest represents a preferred equity investment that earns a preferred return of 15%.

As consideration, the Company issued 200,143 unregistered shares of its Class A common stock, with an approximate value of $2.9 million, to Fund II. The consideration was subject to certain prorations and adjustments typical in a real estate transaction and was based on the value of the indirect equity interest of Fund II in the Oak Crest Property, which indirect equity valuation was based on an independent third party appraisal.

In conjunction with the consummation of the contribution agreement and the purchase and sale of Fund II’s interest, Fund II Manager received a disposition fee of approximately $0.2 million under the management agreement for Fund II, which disposition fee was paid in the form of 15,474 unregistered shares of the Company’s Class A common stock that would otherwise have been issued to Fund II. Additionally, the Former Advisor received an acquisition fee of approximately $300,000 under the Advisory Agreement, which acquisition fee was paid in the form of 19,343 LTIP Units.

All amounts paid in either Class A common stock or LTIP Units for the acquisition described above, were determined to have a value of $14.50 per share or unit, which was based on the IPO issuance price.

Sale of Villas at Oak Crest

The controlling member of the joint venture that owned the Oak Crest Property sold the property on September 1, 2015 and upon closing, the Company received a distribution of its original investment plus accrued return.

Investment in Alexan CityCentre Property

On July 1, 2014, a wholly-owned subsidiary of the Operating Partnership made a convertible preferred equity investment in a multi-tiered joint venture that includes Bluerock Growth Fund, LLC (“BGF”), Fund II and Fund III (collectively, the “BRG Co-Investors”), which are affiliates of the Manager, and an affiliate of Trammell Crow Residential to develop a 340-unit class A apartment community located in Houston, Texas, to be known as Alexan CityCentre.

For the development of Alexan CityCentre and funding of any required reserves, the Company has made a capital commitment of $6.5 million to acquire 100% of the preferred membership interests in BR T&C BLVD Member, LLC “(BR Alexan Member”), through a wholly-owned subsidiary of the Company’s Operating Partnership, BRG T&C BLVD Houston, LLC (“BRG Alexan’). The BRG Co-Investors’ budgeted development-related capital commitments are as follows: BGF - $8.8 million; Fund II - $5.4 million; and Fund III - $3.4 million, to acquire 49.95%, 30.61% and 19.44% of the common membership interests in BR Alexan Member, respectively.

Under the operating agreement of BR Alexan Member, the Company’s preferred membership interest earns and shall be paid on a current basis a preferred return at the annual rate of 15.0% times the outstanding amount of our capital contributions made pursuant to our capital commitment. As of December 31, 2015, the Company has fully funded our $6.5 million capital commitment and (ii) the BRG Co-Investors have funded $17.7 million.

Investment in EOS Property, formerly referred to as UCF Orlando

On July 29, 2014, a wholly-owned subsidiary of our Operating Partnership made a convertible preferred equity investment in a multi-tiered joint venture that includes Fund I, an affiliate of our Manager, and CDP UCFP Developer, LLC, a Georgia limited liability company and non-affiliated entity, to develop a 296-unit class A apartment community in Orlando, Florida, located in close proximity to the University of Central Florida and Central Florida Research Park, and will be a featured component of a master-planned, Publix-anchored retail development known as Town Park or the EOS property.

For the development of the EOS property and funding of any required reserves, the Company has made a capital commitment of $3.6 million to acquire 100% of the preferred membership interests in BR Orlando UCFP, LLC, “(BR Orlando JV Member”), through a wholly-owned subsidiary of our Operating Partnership, BRG UCFP Investor, LLC.

Under the operating agreement of BR Orlando JV Member, our preferred membership interest earns and shall be paid on a current basis a preferred return at the annual rate of 15.0% on the outstanding amount of our capital contributions made pursuant to our capital commitment. To date (i) the Company has fully funded our $3.6 million capital commitment and (ii) Fund I has funded $5.6 million.

The Company is not required to make any additional capital contributions beyond our initial capital commitment. However, if BR Orlando JV Member makes an additional capital call and Fund I does not fully fund it, then the Company may elect to fund such shortfall as an additional capital contribution, in which case those contributions will accrue a preferred return at the annual rate of 20.0% on the outstanding amount of such capital contributions.

Restructuring of 23Hundred@Berry Hill Interests and Transition from Consolidation to Equity Method of Accounting

On December 9, 2014 the Company, through BEMT Berry Hill, LLC, a Delaware limited liability company and a wholly-owned subsidiary of the Company’s Operating Partnership, entered into a series of transactions and agreements to restructure the ownership of Berry Hill.

Prior to the restructuring, the Company held a 25.1% indirect equity interest in Berry Hill, Fund III held a 28.4% indirect equity interest, BGF held a 29.0% indirect equity interest and Stonehenge 23Hundred JV Member, LLC, an affiliate of Stonehenge Real Estate Group, LLC, held the remaining 17.5% indirect equity interest plus a promote interest based on investment return hurdles for its service as developer of the property. These indirect equity interests were held in BR Stonehenge 23Hundred JV, LLC, a Delaware limited liability company, which owns 100% of 23Hundred, LLC, a Delaware limited liability company, which in turn owned 100% of Berry Hill.

Following the restructuring, Berry Hill was owned in tenancy-in-common interests, adjusted for the promote interest, as follows: (i) BEMT Berry Hill and Fund III, through 23Hundred, LLC, hold a 42.2287% undivided tenant-in-common interest in Berry Hill (the Company, through BEMT Berry Hill, LLC, owns a 19.8% indirect equity interest and Fund III owns a 22.4% indirect equity interest); (ii) BGF’s subsidiary, BGF 23Hundred, LLC, a Delaware limited liability company, holds a 22.9330% undivided tenant-in-common interest in Berry Hill; and (iii) Stonehenge 23Hundred JV Member LLC’s subsidiary, SH 23Hundred TIC, LLC, a Delaware limited liability company, holds a 34.8383% undivided tenant-in-common interest in Berry Hill.

As a result of the described restructuring, the Company no longer controlled Berry Hill through voting rights. Accordingly, the Company deconsolidated its investment in Berry Hill and subsequently accounted for its investment under the equity method beginning on December 9, 2014.

Acquisition of Alexan Southside Place (formerly referred to as Alexan Blaire House) Interests

On January 12, 2015, through BRG Southside, LLC, a wholly-owned subsidiary of its Operating Partnership, the Company made a convertible preferred equity investment in a multi-tiered joint venture, along with Fund II and Fund III, which are affiliates of the Manager, and an affiliate of Trammell Crow Residential, to develop an approximately 269-unit Class A apartment community located in Houston, Texas, to be known as Alexan Southside Place. Alexan Southside Place will be developed upon a tract of land ground leased from Prokop Industries BH, L.P., a Texas limited partnership, by BR Bellaire BLVD, LLC, as tenant under an 85-year ground lease. The Company has made a capital commitment of $17.3 million to acquire 100% of the preferred equity interests in BRG Southside, LLC all of which has been funded as of December 31, 2015.

Alexan Southside Place Construction Financing

On April 7, 2015, the Company, through BR Bellaire BLVD, LLC, an indirect subsidiary, entered into a $31.8 million construction loan with Bank of America, NA which is secured by the leasehold interest in the Alexan Southside Place property. The loan matures on April 7, 2019, and contains a one-year extension option, subject to certain conditions including a debt service coverage, loan to value ratio and payment of an extension fee. The loan bears interest on a floating basis on the amount drawn based on the base rate plus 1.25% or LIBOR plus 2.25%. Regular monthly payments are interest-only during the initial term, with payments during the extension period based on a thirty year amortization. The loan can be prepaid without penalty.

Acquisition of Whetstone Interests

On May 20, 2015, through BRG Whetstone Durham, LLC, a wholly-owned subsidiary of its Operating Partnership, the Company made a convertible preferred equity investment in a multi-tiered joint venture, along with Fund III and an affiliate of TriBridge Residential, LLC, to acquire a 204-unit Class A apartment community located in Durham, North Carolina, to be known as Whetstone Apartments. The Company has made a capital commitment of $12.2 million to acquire 100% of the preferred equity interests in BRG Whetstone Durham, LLC all of which has been funded as of December 31, 2015. The acquisition of Whetstone Apartments was partially funded by a bridge loan of approximately $25.2 million secured by the Whetstone Apartment property. The loan matures May 18, 2016, and bears interest on a floating basis based on LIBOR plus 2.0%. The loan can be prepaid without penalty. The Company provided certain standard scope non-recourse carveout guaranties in conjunction with the loan.

Acquisition of Cheshire Bridge Interests

On May 29, 2015, through BRG Cheshire, LLC, a wholly-owned subsidiary of its Operating Partnership, the Company made a convertible preferred equity investment in a multi-tiered joint venture, along with Fund III and an affiliate of Catalyst Development Partners II, to develop a 285-unit Class A apartment community located in Atlanta, Georgia, to be known as Cheshire Bridge Apartments. The Company has made a capital commitment of $16.4 million to acquire 100% of the preferred equity interests in BRG Cheshire, LLC, all of which has been funded as of December 31, 2015.

Cheshire Bridge Construction Financing

On December 16, 2015, the Company, through CB Owner, LLC, an indirect subsidiary, entered into a $38.1 million construction loan with The PrivateBank and Trust Company which is secured by the fee simple interest in the Cheshire property. The loan matures on December 16, 2018, and contains a two one-year extension options, subject to certain conditions including a debt service coverage, loan to value ratio and payment of an extension fee. The loan bears interest on a floating basis on the amount drawn based on one-month LIBOR plus 2.50%. Regular monthly payments are interest-only during the initial term, with payments during the extension period based on a thirty year amortization. The loan can be prepaid without penalty.

Acquisition of Domain Phase 1 Interest

On November 20, 2015, through a wholly-owned subsidiary of the Operating Partnership, BRG Domain Phase 1, LLC, the Company made a convertible preferred equity investment in a multi-tiered joint venture along with Fund II, an affiliate of the Manager, and an affiliate of ArchCo Residential, to develop an approximately 301-unit, class A, apartment community located in Garland, Texas. The property will be developed upon an approximately 10 acres tract of land. The Company has made a capital commitment of $18.6 million to acquire 100% of the preferred equity interests in BR Member Domain Phase I, LLC, of which $3.8 million has been funded at December 31, 2015.

Acquisition of Flagler Village Interest

On December 18, 2015, through a wholly-owned subsidiary of the Operating Partnership, BRG Flagler Village, LLC, the Company made an investment in a multi-tiered joint venture along with Fund II, an affiliate of the Manager, and an affiliate of ArchCo Residential, to develop an approximately 384-unit, class A, apartment community located in Ft. Lauderdale, Florida. The Company has made a capital commitment of $46.8 million to acquire interests in BR Flagler Village, LLC, of which $5.5 million has been funded at December 31, 2015.

Acquisition of Lake Boone Trail

On December 18, 2015, through a wholly-owned subsidiary of the Operating Partnership, BRG Lake Boone, LLC, the Company made a convertible preferred equity investment in a multi-tiered joint venture along with Fund II, an affiliate of the Manager, and an affiliate of Tribridge Residential, LLC, to develop an approximately 245-unit, class A, apartment community located in Raleigh, North Carolina. The Company has made a capital commitment of $16.8 million to acquire 100% of the preferred equity interests in BR Lake Boone, LLC, of which $9.9 million has been funded at December 31, 2015.