þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Maryland | 27-0331816 | |
(State or other jurisdiction of | (I.R.S. Employer | |
incorporation or organization) | Identification No.) | |
1845 Walnut Street, 18th Floor, Philadelphia, PA 19103 | ||
(Address of principal executive offices) (Zip code) | ||
(215) 231-7050 | ||
(Registrant's telephone number, including area code) | ||
Large accelerated filer | o | Accelerated filer | o | |
Non-accelerated filer | þ | (Do not check if a smaller reporting company) | Smaller reporting company | o |
PAGE | ||
PART 1 | FINANCIAL INFORMATION | |
Item 1. | Financial Statements | |
Item 2. | ||
Item 3. | ||
Item 4. | ||
PART II | ||
Item 2. | ||
Item 3. | ||
Item 6. | ||
September 30, 2016 | December 31, 2015 | ||||||
(unaudited) | |||||||
ASSETS | |||||||
Investments: | |||||||
Rental properties, net | $ | 846,980 | $ | 916,498 | |||
Other investments | 767 | 4,643 | |||||
Identified intangible assets, net | 150 | 374 | |||||
Assets held for sale - rental properties, net | — | 69,350 | |||||
Total investments | 847,897 | 990,865 | |||||
Cash | 118,490 | 78,442 | |||||
Restricted cash | 9,986 | 9,987 | |||||
Due from related parties | 1,756 | 1,421 | |||||
Tenant receivables, net | 199 | 211 | |||||
Deposits | 249 | 230 | |||||
Prepaid expenses and other assets | 3,516 | 2,227 | |||||
Goodwill | 711 | 1,231 | |||||
Other assets associated with rental properties held for sale | — | 81 | |||||
Total assets | $ | 982,804 | $ | 1,084,695 | |||
LIABILITIES AND EQUITY | |||||||
Liabilities: | |||||||
Mortgage notes payable, net | $ | 551,328 | $ | 591,545 | |||
Credit facility | — | 21,894 | |||||
Accounts payable | 3,628 | 1,583 | |||||
Accrued expenses and other liabilities | 6,357 | 7,932 | |||||
Accrued real estate taxes | 7,979 | 6,856 | |||||
Due to related parties | 1,254 | 1,185 | |||||
Tenant prepayments | 1,003 | 1,212 | |||||
Security deposits | 2,426 | 2,626 | |||||
Other liabilities associated with rental properties held for sale | — | 16,763 | |||||
Total liabilities | 573,975 | 651,596 | |||||
Equity: | |||||||
Preferred stock (par value $.01; 10,000,000 shares authorized, none issued) | — | — | |||||
Common stock (par value $.01; 1,000,000,000 shares authorized; 74,327,073 and 72,333,652 shares issued, respectively; and 71,628,719 and 71,617,117 shares outstanding, respectively) | 716 | 716 | |||||
Convertible stock (“promote shares”; par value $.01; 50,000 shares authorized, issued and outstanding) | 1 | 1 | |||||
Additional paid-in capital | 638,434 | 638,335 | |||||
Accumulated other comprehensive loss | (378 | ) | (440 | ) | |||
Accumulated deficit | (231,370 | ) | (213,366 | ) | |||
Total stockholders’ equity | 407,403 | 425,246 | |||||
Noncontrolling interests | 1,426 | 7,853 | |||||
Total equity | 408,829 | 433,099 | |||||
Total liabilities and equity | $ | 982,804 | $ | 1,084,695 |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Revenues: | |||||||||||||||
Rental income | $ | 28,524 | $ | 30,693 | $ | 89,272 | $ | 86,514 | |||||||
Interest and dividend income | 51 | 152 | 580 | 477 | |||||||||||
Total revenues | 28,575 | 30,845 | 89,852 | 86,991 | |||||||||||
Expenses: | |||||||||||||||
Rental operating - expenses | 6,308 | 9,328 | 21,168 | 25,120 | |||||||||||
Rental operating - payroll | 3,578 | 4,335 | 11,166 | 12,516 | |||||||||||
Rental operating - real estate taxes | 2,832 | 3,543 | 9,859 | 9,999 | |||||||||||
Subtotal - Rental operating expenses | 12,718 | 17,206 | 42,193 | 47,635 | |||||||||||
Acquisition costs | — | — | — | 5,809 | |||||||||||
Management fees | 3,811 | 4,126 | 11,898 | 11,306 | |||||||||||
General and administrative | 2,747 | 3,271 | 9,242 | 10,152 | |||||||||||
Loss on disposal of assets | 334 | 337 | 620 | 2,818 | |||||||||||
Provision for loan loss | — | — | — | 130 | |||||||||||
Depreciation and amortization expense | 10,828 | 13,108 | 33,167 | 35,464 | |||||||||||
Total expenses | 30,438 | 38,048 | 97,120 | 113,314 | |||||||||||
Loss before other income (expense) | (1,863 | ) | (7,203 | ) | (7,268 | ) | (26,323 | ) | |||||||
Other income (expense): | |||||||||||||||
Net gains on dispositions of properties and joint venture interests | 17,601 | 2,490 | 45,057 | 36,041 | |||||||||||
Interest expense | (6,154 | ) | (5,949 | ) | (17,509 | ) | (16,224 | ) | |||||||
Insurance proceeds in excess of cost basis | 53 | — | 264 | 407 | |||||||||||
Total other income (expense) | 11,500 | (3,459 | ) | 27,812 | 20,224 | ||||||||||
Net income (loss) | 9,637 | (10,662 | ) | 20,544 | (6,099 | ) | |||||||||
Net (income) loss attributable to noncontrolling interests | — | 43 | (6,306 | ) | 224 | ||||||||||
Net income (loss) attributable to stockholders | $ | 9,637 | $ | (10,619 | ) | $ | 14,238 | $ | (5,875 | ) | |||||
Net income (loss) | $ | 9,637 | $ | (10,662 | ) | $ | 20,544 | $ | (6,099 | ) | |||||
Other comprehensive (loss) income: | |||||||||||||||
Reclassification adjustment for realized loss on derivative due to sale | 33 | — | 105 | — | |||||||||||
Designated derivatives, fair value adjustments | (20 | ) | (48 | ) | (43 | ) | (173 | ) | |||||||
Total other comprehensive (loss) income | 13 | (48 | ) | 62 | (173 | ) | |||||||||
Comprehensive income (loss) | 9,650 | (10,710 | ) | 20,606 | (6,272 | ) | |||||||||
Comprehensive (income) loss attributable to noncontrolling interests | — | 43 | (6,306 | ) | 224 | ||||||||||
Total comprehensive income (loss) attributable to stockholders | $ | 9,650 | $ | (10,667 | ) | $ | 14,300 | $ | (6,048 | ) | |||||
Weighted average common shares outstanding | 71,621 | 70,724 | 71,781 | 70,110 | |||||||||||
Basic and diluted income per common share: | |||||||||||||||
Net income (loss) per common share | $ | 0.14 | $ | (0.15 | ) | $ | 0.20 | $ | (0.08 | ) |
Common Stock | Convertible Stock | Additional Paid-in Capital | Accumulated Other Comprehensive (Loss) Income | Accumulated Deficit | Total Stockholders’ Equity | Noncontrolling interests | Total Equity | ||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||
Balance at January 1, 2016 | 71,617 | $ | 716 | 50 | $ | 1 | $ | 638,335 | $ | (440 | ) | $ | (213,366 | ) | $ | 425,246 | $ | 7,853 | $ | 433,099 | |||||||||||||||||
Common stock issued through distribution reinvestment plan | 1,994 | 20 | — | — | 21,460 | — | — | 21,480 | — | 21,480 | |||||||||||||||||||||||||||
Distributions on common stock | — | — | — | — | — | — | (32,242 | ) | (32,242 | ) | — | (32,242 | ) | ||||||||||||||||||||||||
Common stock redemptions | (1,982 | ) | (20 | ) | — | — | (21,361 | ) | — | — | (21,381 | ) | — | (21,381 | ) | ||||||||||||||||||||||
Other comprehensive income | — | — | — | — | — | 62 | — | 62 | — | 62 | |||||||||||||||||||||||||||
Deconsolidation of subsidiaries | — | — | — | — | — | — | — | — | (3,613 | ) | (3,613 | ) | |||||||||||||||||||||||||
Distribution to noncontrolling interests | — | — | — | — | — | — | — | — | (9,120 | ) | (9,120 | ) | |||||||||||||||||||||||||
Net income | — | — | — | — | — | — | 14,238 | 14,238 | 6,306 | 20,544 | |||||||||||||||||||||||||||
Balance at September 30, 2016 | 71,629 | $ | 716 | 50 | $ | 1 | $ | 638,434 | $ | (378 | ) | $ | (231,370 | ) | $ | 407,403 | $ | 1,426 | $ | 408,829 |
RESOURCE REAL ESTATE OPPORTUNITY REIT, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) | |||||||
Nine Months Ended | |||||||
September 30, | |||||||
2016 | 2015 | ||||||
Cash flows from operating activities: | |||||||
Net income (loss) | $ | 20,544 | $ | (6,099 | ) | ||
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | |||||||
Loss on disposal of assets | 620 | 2,818 | |||||
Casualty losses | 324 | 1,081 | |||||
Provision for loan loss | — | 130 | |||||
Loss on extinguishment of debt | 854 | — | |||||
Net gains on dispositions of properties and joint venture interests | (45,057 | ) | (36,041 | ) | |||
Depreciation and amortization | 33,167 | 35,464 | |||||
Amortization of deferred financing costs | 1,758 | 1,378 | |||||
Amortization of debt premium (discount) | (364 | ) | (602 | ) | |||
Realized loss on change in fair value of interest rate cap | 105 | — | |||||
Accretion of discount and direct loan fees and costs | (33 | ) | (29 | ) | |||
Changes in operating assets and liabilities, net of acquisitions: | |||||||
Restricted cash | (1,860 | ) | (1,828 | ) | |||
Tenant receivables, net | (55 | ) | 214 | ||||
Deposits | (52 | ) | (10 | ) | |||
Prepaid expenses and other assets | (954 | ) | 377 | ||||
Due to/from related parties, net | (408 | ) | 215 | ||||
Accounts payable and accrued expenses | (369 | ) | 2,665 | ||||
Tenant prepayments | (153 | ) | (176 | ) | |||
Security deposits | 156 | 97 | |||||
Net cash provided by (used in) operating activities | 8,223 | (346 | ) | ||||
Cash flows from investing activities: | |||||||
Proceeds from disposal of properties and joint venture interests, net of closing costs | 80,173 | 60,258 | |||||
Property acquisitions | — | (96,953 | ) | ||||
Insurance proceeds received for casualty losses | 1,916 | — | |||||
Acquisition of preferred equity interest | (408 | ) | — | ||||
Resolution of preferred equity interest | 4,300 | — | |||||
Capital expenditures | (20,213 | ) | (29,230 | ) | |||
Restricted cash | 655 | (454 | ) | ||||
Principal payments received on loans held for investment | 17 | 596 | |||||
Net cash provided by (used in) investing activities | 66,440 | (65,783 | ) |
RESOURCE REAL ESTATE OPPORTUNITY REIT, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS - (Continued) (in thousands) (unaudited) | |||||||
Nine Months Ended | |||||||
September 30, | |||||||
2016 | 2015 | ||||||
Cash flows from financing activities: | |||||||
Redemptions of common stock | $ | (21,381 | ) | $ | (3,943 | ) | |
Payment of deferred financing costs | (1,670 | ) | (402 | ) | |||
Increase in borrowings on mortgages | 110,690 | 26,280 | |||||
Principal payments on borrowings on mortgages | (80,403 | ) | (4,419 | ) | |||
Proceeds from borrowings on credit facility | 12,500 | 32,918 | |||||
Payments on credit facility | (34,394 | ) | (20,288 | ) | |||
Distributions paid on common stock | (10,762 | ) | (9,842 | ) | |||
Contributions of noncontrolling interests | — | 151 | |||||
Purchase of interest rate caps | (75 | ) | (90 | ) | |||
Distributions to noncontrolling interests | (9,120 | ) | — | ||||
Net cash (used in) provided by financing activities | (34,615 | ) | 20,365 | ||||
Net increase (decrease) in cash | 40,048 | (45,764 | ) | ||||
Cash at beginning of period | 78,442 | 140,129 | |||||
Cash at end of period | $ | 118,490 | $ | 94,365 |
Subsidiary | Apartment Complex | Number of Units | Property Location | |||
RRE Opportunity Holdings, LLC | N/A | N/A | N/A | |||
Resource Real Estate Opportunity OP, LP | N/A | N/A | N/A | |||
RRE Charlemagne Holdings, LLC | N/A | N/A | N/A | |||
RRE Iroquois, LP (“Vista”) | Vista Apartment Homes | 133 | Philadelphia, PA | |||
RRE Iroquois Holdings, LLC | N/A | N/A | N/A | |||
RRE Cannery Holdings, LLC (“Cannery”) | Cannery Lofts | 156 | Dayton, OH | |||
RRE Williamsburg Holdings, LLC (“Williamsburg”) | Williamsburg | 976 | Cincinnati, OH | |||
WPL Holdings, LLC | N/A (a) | N/A | Cincinnati, OH | |||
RRE Park Forest Holdings, LLC ("Park Forest") | Mosaic | 216 | Oklahoma City, OK | |||
RRE Deerfield Holdings, LLC ("Deerfield") | Deerfield | 166 | Hermantown, MN | |||
RRE Autumn Wood Holdings, LLC ("Autumn Wood") | Retreat at Rocky Ridge | 206 | Hoover, AL | |||
RRE Village Square Holdings, LLC ("Village Square") | Trailpoint at the Woodlands | 271 | Houston, TX | |||
RRE Brentdale Holdings, LLC ("Brentdale") | The Westside Apartments | 412 | Plano, TX | |||
RRE Jefferson Point Holdings, LLC ("Jefferson Point") | Tech Center Square | 208 | Newport News, VA | |||
RRE Centennial Holdings, LLC ("Centennial") | Verona Apartment Homes | 276 | Littleton, CO | |||
RRE Pinnacle Holdings, LLC ("Pinnacle") | Skyview Apartment Homes | 224 | Westminster, CO | |||
RRE River Oaks Holdings, LLC ("River Oaks") | Maxwell Townhomes | 314 | San Antonio, TX | |||
RRE Nicollet Ridge Holdings, LLC ("Nicollet Ridge") | Meridian Pointe | 339 | Burnsville, MN | |||
RRE Addison Place Holdings, LLC ("Addison Place") | The Estates at Johns Creek | 403 | Alpharetta, GA | |||
PRIP Coursey, LLC ("Evergreen at Coursey Place") | Evergreen at Coursey Place (b) | 352 | Baton Rouge, LA | |||
PRIP 500, LLC ("Pinehurst") | Pinehurst (b) | 146 | Kansas City, MO | |||
PRIP 1102, LLC ("Pheasant Run") | Pheasant Run (b) | 160 | Lee's Summit, MO | |||
PRIP 11128, LLC ("Retreat at Shawnee") | Retreat at Shawnee (b) | 342 | Shawnee, KS | |||
PRIP Stone Ridge, LLC ("Stone Ridge") | N/A (b) | N/A | N/A | |||
PRIP Pines, LLC ("Pines of York") | Pines of York (b) | 248 | Yorktown, VA | |||
RRE Chisholm Place Holdings LLC ("Chisholm Place") | Chisholm Place | 142 | Plano, TX | |||
RRE Berkeley Run Holdings, LLC ("Berkley Run") | Perimeter Circle | 194 | Atlanta, GA | |||
RRE Berkeley Trace Holdings LLC ("Berkley Trace") | Perimeter 5550 | 165 | Atlanta, GA | |||
RRE Merrywood Holdings, LLC ("Merrywood") | Aston at Cinco Ranch | 228 | Katy, TX | |||
RRE Sunset Ridge Holdings, LLC ("Sunset Ridge") | Sunset Ridge | 324 | San Antonio, TX | |||
RRE Parkridge Place Holdings, LLC ("Parkridge Place") | Calloway at Las Colinas | 536 | Irving, TX | |||
RRE Woodmoor Holdings, LLC ("Woodmoor") | South Lamar Village | 208 | Austin, TX | |||
RRE Gilbert Holdings, LLC ("Springs at Gilbert") | Heritage Pointe | 458 | Gilbert, AZ | |||
RRE Bonita Glen Holdings, LLC ("Bonita") | Point Bonita Apartment Homes | 295 | Chula Vista, CA | |||
RRE Yorba Linda Holdings, LLC ("Yorba Linda") | Yorba Linda | 400 | Yorba Linda, CA | |||
8,498 | ||||||
Subsidiaries related to disposed investments: | ||||||
RRE Crestwood Holdings, LLC (“Crestwood”) | (c)(f) | N/A | N/A |
RRE 107th Avenue Holdings, LLC (“107th Avenue”) | (c)(f) | N/A | N/A | |||
RRE Westhollow Holdings, LLC (“Westhollow”) | (c) | N/A | N/A | |||
RRE Campus Club Holdings, LLC (“Campus Club”) | (c) | N/A | N/A | |||
RRE Bristol Holdings, LLC (“Bristol”) | (c)(f) | N/A | N/A | |||
RRE Skyview Holdings, LLC ("Skyview") | (c)(f) | N/A | N/A | |||
RRE Foxwood Holdings, LLC ("Foxwood") | (c)(f) | N/A | N/A | |||
RRE Flagstone Holdings, LLC ("Flagstone") | (c)(f) | N/A | N/A | |||
RRE Kenwick Canterbury Holdings, LLC ("Kenwick & Canterbury") | (c) | N/A | N/A | |||
RRE Armand Place Holdings, LLC ("Armand") | (d)(f) | N/A | N/A | |||
PRIP 5060/6310, LLC ("Governor Park") | (b)(c)(f) | N/A | N/A | |||
PRIP 3700, LLC ("Champion Farms") | (b)(d) | N/A | N/A | |||
PRIP 6700, LLC ("Hilltop Village") | (b)(c)(f) | N/A | N/A | |||
PRIP 3383, LLC ("Conifer Place") | (b)(d) | N/A | N/A | |||
RRE Nob Hill Holdings, LLC ("Nob Hill") | (d) | N/A | N/A | |||
RRE Spring Hill Holdings, LLC ("Spring Hill") | (e) | N/A | N/A | |||
PRIP 10637, LLC ("Fieldstone") | (b)(d) | N/A | N/A | |||
RRE Jasmine Holdings, LLC ("Jasmine") | (d) | N/A | N/A |
Subsidiary | Ownership % | Apartment Complex | Number of Units | Property Location | ||||
Springhurst Housing Partners, LLC (1) | 70.0% | Champion Farms | N/A | Louisville, KY | ||||
Glenwood Housing Partners I, LLC (2) | 83.0% | Fieldstone | N/A | Woodlawn, OH | ||||
FPA/PRIP Conifer, LLC (3) | 42.5% | Conifer Place | N/A | Norcross, GA | ||||
DT Stone Ridge, LLC | 83.4% | Stone Ridge | 188 | Columbia, SC |
Buildings | 27.5 years |
Building improvements | 3.0 to 27.5 years |
Tenant improvements | Shorter of lease term or expected useful life |
Nine Months Ended | |||||||
September 30, | |||||||
2016 | 2015 | ||||||
Non-cash financing and investing activities: | |||||||
Stock issued from the distribution reinvestment plan | $ | 21,480 | $ | 21,689 | |||
Deferred financing costs and escrow deposits funded directly by mortgage notes and credit facility | 933 | 10,709 | |||||
Non-cash activity related to sales: | |||||||
Deconsolidation of subsidiary and removal of related mortgage note payable and non-controlling interest | 35,152 | — | |||||
Mortgage notes payable settled with proceeds from sale of property | 55,720 | — | |||||
Assets and liabilities assumed in acquisitions: | |||||||
Mortgage notes payable and other liabilities assumed in acquisition of rental property | — | 40,284 | |||||
Cash paid during the period for: | |||||||
Interest | $ | 15,454 | $ | 15,172 |
September 30, 2016 | December 31, 2015 | ||||||
Land | $ | 169,019 | $ | 180,533 | |||
Building and improvements | 738,843 | 775,239 | |||||
Furniture, fixtures and equipment | 30,739 | 28,928 | |||||
Construction in progress | 5,337 | 2,949 | |||||
943,938 | 987,649 | ||||||
Less: accumulated depreciation | (96,958 | ) | (71,151 | ) | |||
$ | 846,980 | $ | 916,498 |
September 30, 2016 | December 31, 2015 | ||||||
Loan held for investment, net | $ | 767 | $ | 757 | |||
Preferred equity investment, net | — | 3,886 | |||||
$ | 767 | $ | 4,643 |
September 30, 2016 | December 31, 2015 | ||||||
Current | $ | 767 | $ | 757 | |||
Delinquent: | |||||||
30−89 days | — | — | |||||
90−180 days | — | — | |||||
Greater than 180 days | — | — | |||||
$ | 767 | $ | 757 |
September 30, 2016 | December 31, 2015 | ||||||
Performing | $ | 767 | $ | 757 | |||
Nonperforming | — | — | |||||
Total | $ | 767 | $ | 757 |
September 30, 2016 | December 31, 2015 | ||||||
Unpaid principal balance | $ | 964 | $ | 981 | |||
Unamortized discount | (204 | ) | (231 | ) | |||
Deferred expenses, net | 7 | 7 | |||||
Net book value | $ | 767 | $ | 757 | |||
Maturity date | 10/28/2021 | ||||||
Interest rate | 7.5% | ||||||
Average monthly payment | $ | 8 |
Net Gains on Dispositions of Properties and Joint Venture Interests | ||||||||||||||||
Multifamily Community | Location | Sale Date | Contract Sales Price | Three months ended September 30, 2016 | Nine months ended September 30, 2016 | |||||||||||
2016 Dispositions: | ||||||||||||||||
Conifer Place (1) | Norcross, Georgia | January 27, 2016 | $ | 42,500 | $ | — | $ | 9,897 | ||||||||
Champion Farms (2) | Louisville, Kentucky | January 29, 2016 | 7,590 | — | 1,066 | |||||||||||
The Ivy at Clear Creek | Houston, Texas | February 17, 2016 | 19,400 | — | 6,792 | |||||||||||
Affinity at Winter Park | Winter Park, Florida | June 9, 2016 | 17,500 | — | 5,605 | |||||||||||
Fieldstone (3) | Woodland, Ohio | June 30, 2016 | 7,514 | — | 4,096 | |||||||||||
The Nesbit Palisades | Alpharetta, Georgia | July 8, 2016 | 45,500 | 17,601 | 17,601 | |||||||||||
$ | 17,601 | $ | 45,057 | |||||||||||||
2015 Dispositions: | Three months ended September 30, 2015 | Nine months ended September 30, 2015 | ||||||||||||||
The Alcove Apartments | Houston, Texas | January 26, 2015 | $ | 11,050 | $ | — | $ | 3,784 | ||||||||
107th Avenue Apartments | Omaha, Nebraska | January 29, 2015 | 250 | — | 50 | |||||||||||
The Redford Apartments | Houston, Texas | February 27, 2015 | 32,959 | — | 15,303 | |||||||||||
Cityside Apartments | Houston, Texas | March 2, 2015 | 24,500 | — | 10,028 | |||||||||||
One Hundred Chevy Chase | Lexington, Kentucky | June 30, 2015 | 13,500 | — | 4,386 | |||||||||||
The Reserve at Mt. Moriah | Memphis, Tennessee | September 18, 2015 | 5,425 | 2,490 | 2,490 | |||||||||||
$ | 2,490 | $ | 36,041 |
Revenues Attributable to Properties Sold | Net Income (Loss) Attributable to Properties Sold | ||||||||||||||
Multifamily Community | Three months ended September 30, 2016 | Nine months ended September 30, 2016 | Three months ended September 30, 2016 | Nine months ended September 30, 2016 | |||||||||||
2016 Dispositions: | |||||||||||||||
Conifer Place (1) | $ | — | $ | 365 | $ | — | $ | 9,942 | |||||||
Champion Farms | — | 220 | — | 1,125 | |||||||||||
The Ivy at Clear Creek | — | 386 | 2 | 6,629 | |||||||||||
Affinity at Winter Park | 2 | 1,010 | (1 | ) | 5,747 | ||||||||||
Fieldstone | — | 1,548 | — | 4,325 | |||||||||||
The Nesbit Palisades | 167 | 2,615 | 17,273 | 17,742 | |||||||||||
$ | 169 | $ | 6,144 | $ | 17,274 | $ | 45,510 | ||||||||
2015 Dispositions: | Three months ended September 30, 2015 | Nine months ended September 30, 2015 | Three months ended September 30, 2015 | Nine months ended September 30, 2015 | |||||||||||
The Alcove Apartments | $ | — | $ | 199 | $ | 9 | $ | 3,819 | |||||||
107th Avenue Apartments | — | 3 | — | 50 | |||||||||||
The Redford Apartments | — | 1,274 | (18 | ) | 15,652 | ||||||||||
Cityside Apartments | — | 701 | (30 | ) | 10,280 | ||||||||||
One Hundred Chevy Chase | (6 | ) | 826 | (80 | ) | 4,028 | |||||||||
The Reserve at Mt. Moriah | 361 | 1,156 | 2,279 | 2,234 | |||||||||||
$ | 355 | $ | 4,159 | $ | 2,160 | $ | 36,063 |
Balance, January 1, 2016 | $ | 1,231 | ||
Sale of Conifer Place, Champion Farms, and Fieldstone | (520 | ) | ||
Balance, September 30, 2016 | $ | 711 |
2017 | $ | 16 | |
2018 | 16 | ||
2019 | 16 | ||
2020 | 16 | ||
2021 | 16 | ||
Thereafter | 70 | ||
$ | 150 |
September 30, 2016 | December 31, 2015 | |||||||||||||||||||||||||||||||
Collateral | Outstanding Borrowings | Premium (Discount) | Deferred finance costs, net | Carrying Value | Outstanding Borrowings | Premium (Discount) | Deferred finance costs, net | Carrying Value | ||||||||||||||||||||||||
Vista Apartment Homes | $ | 15,312 | $ | — | $ | (187 | ) | $ | 15,125 | $ | 15,573 | $ | — | $ | (216 | ) | $ | 15,357 | ||||||||||||||
Cannery Lofts | 8,024 | — | (109 | ) | 7,915 | 8,148 | — | (131 | ) | 8,017 | ||||||||||||||||||||||
Deerfield | 10,400 | — | (133 | ) | 10,267 | 10,517 | — | (159 | ) | 10,358 | ||||||||||||||||||||||
The Ivy at Clear Creek | — | — | — | — | 8,431 | — | (136 | ) | 8,295 | |||||||||||||||||||||||
Trailpoint at the Woodlands | 18,771 | — | (231 | ) | 18,540 | 19,013 | — | (257 | ) | 18,756 | ||||||||||||||||||||||
Verona Apartment Homes | 32,970 | — | (546 | ) | 32,424 | 22,402 | — | (179 | ) | 22,223 | ||||||||||||||||||||||
Skyview Apartment Homes | 28,400 | — | (474 | ) | 27,926 | 18,089 | — | (148 | ) | 17,941 | ||||||||||||||||||||||
The Nesbit Palisades | — | — | — | — | 20,298 | — | (309 | ) | 19,989 | |||||||||||||||||||||||
Maxwell Townhomes | 13,666 | — | (145 | ) | 13,521 | 13,850 | — | (167 | ) | 13,683 | ||||||||||||||||||||||
Fieldstone | — | — | — | — | 15,332 | — | (37 | ) | 15,295 | |||||||||||||||||||||||
Pinehurst | 4,002 | — | — | 4,002 | 4,111 | — | — | 4,111 | ||||||||||||||||||||||||
Pheasant Run | 6,250 | 57 | (12 | ) | 6,295 | 6,250 | 100 | (20 | ) | 6,330 | ||||||||||||||||||||||
Retreat of Shawnee | 12,944 | 104 | (28 | ) | 13,020 | 13,090 | 164 | (44 | ) | 13,210 | ||||||||||||||||||||||
Conifer Place | — | — | — | — | 27,074 | — | — | 27,074 | ||||||||||||||||||||||||
Evergreen at Coursey Place | 27,221 | 106 | (102 | ) | 27,225 | 27,548 | 123 | (120 | ) | 27,551 | ||||||||||||||||||||||
Pines of York | 15,068 | (315 | ) | (59 | ) | 14,694 | 15,267 | (363 | ) | (69 | ) | 14,835 | ||||||||||||||||||||
The Estates at Johns Creek | 49,839 | — | (435 | ) | 49,404 | 50,000 | — | (526 | ) | 49,474 | ||||||||||||||||||||||
Chisholm Place | 11,587 | — | (148 | ) | 11,439 | 11,587 | — | (163 | ) | 11,424 | ||||||||||||||||||||||
Perimeter Circle | 17,389 | — | (157 | ) | 17,232 | 17,657 | — | (202 | ) | 17,455 | ||||||||||||||||||||||
Perimeter 5550 | 13,724 | — | (130 | ) | 13,594 | 13,935 | — | (167 | ) | 13,768 | ||||||||||||||||||||||
Aston at Cinco Ranch | 23,472 | — | (284 | ) | 23,188 | 23,772 | — | (328 | ) | 23,444 | ||||||||||||||||||||||
Sunset Ridge 1 | 19,808 | 277 | (221 | ) | 19,864 | 20,121 | 329 | (261 | ) | 20,189 | ||||||||||||||||||||||
Sunset Ridge 2 | 2,962 | 38 | (28 | ) | 2,972 | 3,002 | 45 | (34 | ) | 3,013 | ||||||||||||||||||||||
Calloway at Las Colinas | 35,252 | — | (322 | ) | 34,930 | 35,740 | — | (372 | ) | 35,368 | ||||||||||||||||||||||
South Lamar Village | 12,498 | — | (144 | ) | 12,354 | 12,682 | — | (184 | ) | 12,498 | ||||||||||||||||||||||
Heritage Pointe | 26,280 | — | (338 | ) | 25,942 | 26,280 | — | (370 | ) | 25,910 | ||||||||||||||||||||||
Yorba Linda | 67,500 | — | (711 | ) | 66,789 | 67,500 | — | (860 | ) | 66,640 | ||||||||||||||||||||||
Point Bonita Apartment Homes | 27,000 | 2,043 | (351 | ) | 28,692 | 27,265 | 2,276 | (391 | ) | 29,150 | ||||||||||||||||||||||
Stone Ridge | 5,258 | — | (136 | ) | 5,122 | 5,350 | — | (153 | ) | 5,197 | ||||||||||||||||||||||
The Westside Apartments | 36,820 | — | (201 | ) | 36,619 | 23,000 | — | (351 | ) | 22,649 | ||||||||||||||||||||||
Tech Center Square | 12,438 | — | (205 | ) | 12,233 | 12,500 | — | (159 | ) | 12,341 | ||||||||||||||||||||||
$ | 554,855 | $ | 2,310 | $ | (5,837 | ) | $ | 551,328 | $ | 595,384 | $ | 2,674 | $ | (6,513 | ) | $ | 591,545 |
Collateral | Maturity Date | Annual Interest Rate | Average Monthly Debt Service | Average Monthly Escrow | |||
Vista Apartment Homes | 1/1/2022 | 2.82% | (1)(5) | $65 | $16 | ||
Cannery Lofts | 9/1/2020 | 3.83% | (1)(5) | 40 | 26 | ||
Deerfield | 11/1/2020 | 4.66% | (2)(5) | 54 | 29 | ||
Trailpoint at the Woodlands | 11/1/2023 | 2.94% | (1)(4) | 69 | 67 | ||
Verona Apartment Homes | 10/1/2026 | 2.89% | (1)(3) | 110 | 38 | ||
Skyview Apartment Homes | 10/1/2026 | 2.89% | (1)(3) | 95 | 22 | ||
Maxwell Townhomes | 1/1/2022 | 4.32% | (2)(5) | 71 | 63 | ||
Pinehurst | 1/1/2017 | 3.03% | (5)(6) | 23 | 12 | ||
Pheasant Run | 10/1/2017 | 5.95% | (2)(3) | 31 | 15 | ||
Retreat of Shawnee | 2/1/2018 | 5.58% | (2)(5) | 78 | 28 | ||
Evergreen at Coursey Place | 8/1/2021 | 5.07% | (2)(5) | 154 | 48 | ||
Pines of York | 12/1/2021 | 4.46% | (2)(5) | 80 | 37 | ||
The Estates at Johns Creek | 7/1/2020 | 3.38% | (2)(3) | 221 | 102 | ||
Chisholm Place | 6/1/2024 | 2.92% | (1)(3) | 40 | 38 | ||
Perimeter Circle | 7/1/2019 | 3.42% | (2)(5) | 81 | 53 | ||
Perimeter 5550 | 7/1/2019 | 3.42% | (2)(5) | 64 | 41 | ||
Aston at Cinco Ranch | 10/1/2021 | 4.34% | (2)(5) | 120 | 63 | ||
Sunset Ridge 1 | 11/1/2020 | 4.58% | (2)(5) | 113 | 91 | ||
Sunset Ridge 2 | 11/1/2020 | 4.54% | (2)(5) | 16 | — | ||
Calloway at Las Colinas | 12/1/2021 | 3.87% | (2)(5) | 171 | 113 | ||
South Lamar Village | 8/1/2019 | 3.64% | (2)(5) | 59 | 46 | ||
Heritage Pointe | 4/1/2025 | 2.41% | (1)(3) | 90 | 44 | ||
Yorba Linda | 6/1/2020 | 2.28% | (1)(3) | 160 | — | ||
Point Bonita Apartment Homes | 10/1/2023 | 5.33% | (2)(5) | 152 | 38 | ||
Stone Ridge | 12/1/2022 | 2.39% | (1)(5) | 21 | 17 | ||
The Westside Apartments | 9/1/2026 | 2.65% | (1)(3) | 129 | 68 | ||
Tech Center Square | 6/1/2023 | 3.11% | (1)(5) | 53 | 25 |
(1) | Variable rate based on one-month LIBOR of 0.5311% (as of September 30, 2016) plus a fixed margin. |
(2) | Fixed rate. |
(3) | Monthly interest-only payment currently required. |
(4) | Monthly fixed principal plus interest payment required. |
(5) | Fixed monthly principal and interest payment required. |
(6) | On January 1, 2016, this loan automatically extended for one year at a variable rate based on one-month LIBOR plus a fixed margin. |
2017 | $ | 10,731 | ||
2018 | 26,314 | |||
2019 | 49,913 | |||
2020 | 127,002 | |||
2021 | 61,776 | |||
Thereafter | 279,119 | |||
$ | 554,855 |
2017 | $ | 481 | ||
2018 | 366 | |||
2019 | 334 | |||
2020 | 329 | |||
2021 | 252 | |||
Thereafter | 548 | |||
$ | 2,310 |
2017 | $ | 1,194 | |
2018 | 1,151 | ||
2019 | 1,085 | ||
2020 | 855 | ||
2021 | 526 | ||
Thereafter | 1,026 | ||
$ | 5,837 |
Weighted Average Interest Rate | |||||||||||||||||||||||||
Balance Outstanding at | Current Availability at | Balance Outstanding at | Maturity Date | Interest Rate Basis (1) | Current Interest Rate | Three months ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||
Lender | September 30, 2016 | December 31, 2015 | 2016 | 2015 | 2016 | 2015 | |||||||||||||||||||
Bank of America | $ | — | $ | 20,894 | 21,894 | 5/23/2017 | LIBOR plus 3% | 3.53% | 3.47% | 3.20% | 3.44% | 3.20% |
(1) | Variable rate based on one-month LIBOR of 0.5311% (as of September 30, 2016). |
• | the Company must maintain a minimum tangible net worth equal to the lesser of (i) 200% of the outstanding principal amount of the Bank of America Credit Facility and (ii) $20.0 million; |
• | the Company must also maintain unencumbered liquid assets with a market value of not less than the greater of (i) $5.0 million or (ii) 20% of the outstanding principal amount of the Bank of America Credit Facility; and |
• | the Company may not incur any additional secured or unsecured debt without Bank of America's prior written consent and approval, which consent and approval is not to be unreasonably withheld. |
Balance, January 1, 2016 | $ | (440 | ) |
Reclassification adjustment for realized loss on designated derivative | 105 | ||
Unrealized loss on designated derivatives | (43 | ) | |
Balance, September 30, 2016 | $ | (378 | ) |
September 30, 2016 | December 31, 2015 | ||||||
Due from related parties: | |||||||
RAI and affiliates | $ | 1,756 | $ | 1,421 | |||
Due to related parties: | |||||||
Advisor: | |||||||
Operating expense reimbursements | $ | — | $ | 286 | |||
Resource Real Estate Opportunity Manager, LLC: | |||||||
Property management fees | 709 | 440 | |||||
Other operating expense reimbursements | 545 | 459 | |||||
$ | 1,254 | $ | 1,185 |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Fees earned / expenses paid to related parties: | |||||||||||||||
Advisor: | |||||||||||||||
Acquisition fees (1) | $ | — | $ | — | $ | 8 | $ | 5,169 | |||||||
Asset management fees (2) | $ | 2,543 | $ | 2,770 | $ | 7,924 | $ | 7,479 | |||||||
Disposition fees (3) | $ | 273 | $ | 109 | $ | 686 | $ | 1,140 | |||||||
Debt financing fees (4) | $ | 166 | $ | — | $ | 166 | $ | 670 | |||||||
Overhead allocation (5) | $ | 1,033 | $ | 817 | $ | 3,475 | $ | 2,639 | |||||||
Internal audit (5) | $ | 43 | $ | 9 | $ | 43 | $ | 23 | |||||||
Resource Real Estate Opportunity Manager LLC: | |||||||||||||||
Property management fees (2) | $ | 1,267 | $ | 1,246 | $ | 3,872 | $ | 3,484 | |||||||
Construction management fees (6) | $ | 246 | $ | 587 | $ | 738 | $ | 1,426 | |||||||
Information technology fees (5) | $ | 101 | $ | 61 | $ | 317 | $ | 233 | |||||||
Operating expense reimbursements (7) | $ | 56 | $ | 48 | $ | 186 | $ | 186 | |||||||
Debt servicing fees (2) | $ | — | $ | 4 | $ | 14 | $ | 29 | |||||||
Other: | |||||||||||||||
Ledgewood (5) | $ | 44 | $ | 8 | $ | 74 | $ | 152 | |||||||
Graphic Images (5) | $ | 23 | $ | 33 | $ | 83 | $ | 55 |
(1) | Included in Acquisition costs on the consolidated statements of operations and comprehensive (loss) income. |
(2) | Included in Management fees on the consolidated statements of operations and comprehensive (loss) income. |
(3) | Included in Net gains on dispositions of properties and joint venture interests on the consolidated statements of operations and comprehensive (loss) income. |
(4) | Included in Mortgage notes payable, net, on the consolidated balance sheets. |
(5) | Included in General and administrative costs on the consolidated statements of operations and comprehensive (loss) income. |
(6) | Included in Rental properties, net, on the consolidated balance sheets. |
(7) | Included in Rental operating expenses on the consolidated statements of operations and comprehensive comprehensive (loss) income. |
Shares Issued | Gross Proceeds | ||||||
Shares issued through private offering | 1,263,727 | $ | 12,582 | ||||
Shares issued through primary public offering (1) | 62,485,461 | 622,077 | |||||
Shares issued through stock distributions | 2,132,266 | — | |||||
Shares issued through distribution reinvestment plan | 8,430,119 | 84,369 | |||||
Shares issued in conjunction with the Advisor's initial investment, net of 4,500 share conversion | 15,500 | 155 | |||||
Total | 74,327,073 | $ | 719,183 | ||||
Shares redeemed | (2,698,354 | ) | |||||
Total shares outstanding as of September 30, 2016 | 71,628,719 |
(A) | the lesser of |
(1) | the value of the Company as of the date of the event triggering the conversion plus the total distributions paid to its stockholders through such date on the then-outstanding shares of its common stock exceeds |
(2) | the sum of the aggregate issue price of those outstanding shares plus a 10% cumulative, non-compounded, annual return on the issue price of those outstanding shares as of the date of the event triggering the conversion, or |
(1) | the value of the Company as of the date of the event triggering the conversion plus the total distributions paid to its stockholders through such date on the then-outstanding shares of its common stock exceeds |
(2) | the sum of the aggregate issue price of those outstanding shares plus a 6% cumulative, non-compounded, annual return on the issue price of those outstanding shares as of the date of the event triggering the conversion, divided by |
(B) | the value of the Company divided by the number of outstanding shares of common stock, in each case, as of the date of the event triggering the conversion. |
Record Date | Per Common Share | Distribution Date | Distributions Invested in Shares of Common Stock | Aggregate Cash Distribution | Total Aggregate Distribution | |||||||||||
January 28, 2016 | $0.05 | January 29, 2016 | $ | 2,423 | $ | 1,151 | $ | 3,574 | ||||||||
February 26, 2016 | 0.05 | February 29, 2016 | 2,418 | 1,167 | 3,585 | |||||||||||
March 30, 2016 | 0.05 | March 31, 2016 | 2,415 | 1,172 | 3,587 | |||||||||||
April 28, 2016 | 0.05 | April 29, 2016 | 2,414 | 1,181 | 3,595 | |||||||||||
May 27, 2016 | 0.05 | June 3, 2016 | 2,380 | 1,226 | 3,606 | |||||||||||
June 29, 2016 | 0.05 | June 30, 2016 | 2,357 | 1,208 | 3,565 | |||||||||||
July 28, 2016 | 0.05 | July 29, 2016 | 2,359 | 1,215 | 3,574 | |||||||||||
August 30, 2016 | 0.05 | August 31, 2016 | 2,363 | 1,222 | 3,585 | |||||||||||
September 29, 2016 | 0.05 | September 30, 2016 | 2,351 | 1,220 | 3,571 | |||||||||||
$0.45 | $ | 21,480 | $ | 10,762 | $ | 32,242 |
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
September 30, 2016 | |||||||||||||||
Assets: | |||||||||||||||
Interest rate caps | $ | — | $ | 39 | $ | — | $ | 39 | |||||||
$ | — | $ | 39 | $ | — | $ | 39 | ||||||||
December 31, 2015 | |||||||||||||||
Assets: | |||||||||||||||
Interest rate caps | $ | — | $ | 32 | $ | — | $ | 32 | |||||||
$ | — | $ | 32 | $ | — | $ | 32 |
September 30, 2016 | December 31, 2015 | ||||||||||||||
Carrying Amount | Estimated Fair Value | Carrying Amount | Estimated Fair Value | ||||||||||||
Loan held for investment, net | $ | 767 | $ | 1,122 | $ | 757 | $ | 1,151 | |||||||
Preferred equity investment | $ | — | $ | — | $ | 3,886 | $ | 3,908 | |||||||
Mortgage notes payable- outstanding borrowings | $ | (554,855 | ) | $ | (547,272 | ) | $ | (595,384 | ) | $ | (573,693 | ) | |||
Mortgage note payable- included in other liabilities associated with rental properties held for sale | $ | — | $ | — | $ | (16,443 | ) | $ | (16,597 | ) | |||||
Credit facility | $ | — | $ | — | $ | (21,894 | ) | $ | (21,894 | ) |
Interest Rate Derivative | Number of Instruments | Notional Amount | Maturity Dates | |||||
Interest Rate Caps | 11 | $ | 218,053 | January 1, 2018 to October 1, 2020 |
Asset Derivatives | Liability Derivatives | |||||||||||||||||||||||
September 30, 2016 | December 31, 2015 | September 30, 2016 | December 31, 2015 | |||||||||||||||||||||
Balance Sheet | Fair Value | Balance Sheet | Fair Value | Balance Sheet | Fair Value | Balance Sheet | Fair Value | |||||||||||||||||
Prepaid expenses and other assets | $ | 39 | Prepaid expenses and other assets | $ | 32 | — | $ | — | — | $ | — |
ITEM 2. | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
Three Months Ended | ||||||||
September 30, | ||||||||
2016 | 2015 | |||||||
Revenues: | ||||||||
Rental income | $ | 28,524 | $ | 30,693 | ||||
Interest and dividend income | 51 | 152 | ||||||
Total revenues | 28,575 | 30,845 | ||||||
Expenses: | ||||||||
Rental operating - expenses | 6,308 | 9,328 | ||||||
Rental operating- payroll | 3,578 | 4,335 | ||||||
Rental operating- real estate taxes | 2,832 | 3,543 | ||||||
Subtotal - Rental operating expenses | 12,718 | 17,206 | ||||||
Management fees | 3,811 | 4,126 | ||||||
General and administrative | 2,747 | 3,271 | ||||||
Loss on disposal of assets | 334 | 337 | ||||||
Depreciation and amortization expense | 10,828 | 13,108 | ||||||
Total expenses | 30,438 | 38,048 | ||||||
Loss before other income (expense) | (1,863 | ) | (7,203 | ) | ||||
Other income (expense): | ||||||||
Net gains on dispositions of properties and joint venture interests | 17,601 | 2,490 | ||||||
Interest expense | (6,154 | ) | (5,949 | ) | ||||
Insurance proceeds in excess of cost basis | 53 | — | ||||||
Total other income (expense) | 11,500 | (3,459 | ) | |||||
Net income (loss) | 9,637 | (10,662 | ) | |||||
Net loss attributable to noncontrolling interests | — | 43 | ||||||
Net income (loss) attributable to stockholders | $ | 9,637 | $ | (10,619 | ) |
For the three months ended | For the three months ended | ||||||||||||||||||||||
September 30, 2016 | September 30, 2015 | ||||||||||||||||||||||
Properties owned both periods | All other | Total | Properties owned both periods | All other | Total | ||||||||||||||||||
Revenues: | |||||||||||||||||||||||
Rental income | $ | 28,350 | $ | 174 | $ | 28,524 | $ | 25,283 | $ | 5,410 | $ | 30,693 | |||||||||||
Interest and dividend income | 11 | 40 | 51 | 13 | 139 | 152 | |||||||||||||||||
Total revenues | 28,361 | 214 | 28,575 | 25,296 | 5,549 | 30,845 | |||||||||||||||||
Expenses: | |||||||||||||||||||||||
Rental operating - expenses | 6,073 | 235 | 6,308 | 7,660 | 1,668 | 9,328 | |||||||||||||||||
Rental operating - payroll | 3,513 | 65 | 3,578 | 3,235 | 1,100 | 4,335 | |||||||||||||||||
Rental operating- real estate taxes | 2,849 | (17 | ) | 2,832 | 3,148 | 395 | 3,543 | ||||||||||||||||
Subtotal- Rental operating expenses | 12,435 | 283 | 12,718 | 14,043 | 3,163 | 17,206 | |||||||||||||||||
Management fees | 1,269 | 2,542 | 3,811 | 1,126 | 3,000 | 4,126 | |||||||||||||||||
General and administrative | 1,086 | 1,661 | 2,747 | 1,730 | 1,541 | 3,271 | |||||||||||||||||
Loss on disposal of assets | 334 | — | 334 | 250 | 87 | 337 | |||||||||||||||||
Depreciation and amortization expense | 10,828 | — | 10,828 | 11,486 | 1,622 | 13,108 | |||||||||||||||||
Total expenses | 25,952 | 4,486 | 30,438 | 28,635 | 9,413 | 38,048 | |||||||||||||||||
Income (loss) before other income (expense) | 2,409 | (4,272 | ) | (1,863 | ) | (3,339 | ) | (3,864 | ) | (7,203 | ) | ||||||||||||
Other income (expense): | |||||||||||||||||||||||
Net gains on dispositions of properties and joint venture interests | — | 17,601 | 17,601 | — | 2,490 | 2,490 | |||||||||||||||||
Interest expense | (5,736 | ) | (418 | ) | (6,154 | ) | (4,951 | ) | (998 | ) | (5,949 | ) | |||||||||||
Insurance proceeds in excess of cost basis | 53 | — | 53 | — | — | — | |||||||||||||||||
Total other income (expense) | (5,683 | ) | 17,183 | 11,500 | (4,951 | ) | 1,492 | (3,459 | ) | ||||||||||||||
Net (loss) income | (3,274 | ) | 12,911 | 9,637 | (8,290 | ) | (2,372 | ) | (10,662 | ) | |||||||||||||
Net loss attributable to noncontrolling interests | — | — | — | — | 43 | 43 | |||||||||||||||||
Net (loss) income attributable to stockholders | $ | (3,274 | ) | $ | 12,911 | $ | 9,637 | $ | (8,290 | ) | $ | (2,329 | ) | $ | (10,619 | ) |
Multifamily Community | Rental Increase (in thousands) | Increase in Occupancy | Increase in Effective Monthly Revenue Per Unit (in dollars) | ||||||||
Calloway at Las Colinas | $ | 290 | 13.0 | % | $ | 47 | |||||
The Estates at Johns Creek | 280 | 6.6 | % | 133 | |||||||
Meridian Pointe | 227 | 13.1 | % | 75 | |||||||
Yorba Linda | 175 | 2.1 | % | 115 | |||||||
Maxwell Townhomes | 164 | 7.6 | % | 101 | |||||||
The Westside Apartments | 161 | 4.5 | % | 86 | |||||||
Tech Center Square | 159 | 12.5 | % | 141 | |||||||
Sunset Ridge | 155 | 8.2 | % | 73 | |||||||
Verona Apartment Homes | 141 | 7.3 | % | 92 | |||||||
Aston at Cinco Ranch | 140 | 13.1 | % | 31 | |||||||
Skyview Apartment Homes | 122 | 9.6 | % | 73 | |||||||
Perimeter Circle | 121 | 2.7 | % | 186 | |||||||
Williamsburg | 120 | 2.6 | % | 19 | |||||||
Perimeter 5550 | 106 | 7.7 | % | 132 | |||||||
All other, net | 706 | ||||||||||
$ | 3,067 |
Properties owned both periods | All other | Total | |||||||||
Depreciation | $ | 1,194 | $ | (1,622 | ) | $ | (428 | ) | |||
Amortization of intangibles | (1,852 | ) | — | (1,852 | ) | ||||||
$ | (658 | ) | $ | (1,622 | ) | $ | (2,280 | ) |
Multifamily Community | Location | Sale Date | Contract Sales Price | Net Gains on Dispositions of Properties and Joint Venture Interests | ||||||||
2016 Dispositions: | ||||||||||||
The Nesbit Palisades | Alpharetta, Georgia | July 8, 2016 | 45,500 | 17,601 | ||||||||
$ | 45,500 | $ | 17,601 | |||||||||
2015 Dispositions: | ||||||||||||
The Reserve at Mt. Moriah | Memphis, Tennessee | September 18, 2015 | $ | 5,425 | $ | 2,490 | ||||||
$ | 5,425 | $ | 2,490 |
Nine Months Ended | ||||||||
September 30, | ||||||||
2016 | 2015 | |||||||
Revenues: | ||||||||
Rental income | $ | 89,272 | $ | 86,514 | ||||
Interest and dividend income | 580 | 477 | ||||||
Total revenues | 89,852 | 86,991 | ||||||
Expenses: | ||||||||
Rental operating - expenses | 21,168 | 25,120 | ||||||
Rental operating- payroll | 11,166 | 12,516 | ||||||
Rental operating- real estate taxes | 9,859 | 9,999 | ||||||
Subtotal - Rental operating expenses | 42,193 | 47,635 | ||||||
Acquisition costs | — | 5,809 | ||||||
Management fees | 11,898 | 11,306 | ||||||
General and administrative | 9,242 | 10,152 | ||||||
Loss on disposal of assets | 620 | 2,818 | ||||||
Provision for loan loss | — | 130 | ||||||
Depreciation and amortization expense | 33,167 | 35,464 | ||||||
Total expenses | 97,120 | 113,314 | ||||||
Loss before other income (expense) | (7,268 | ) | (26,323 | ) | ||||
Other income (expense): | ||||||||
Net gains on dispositions of properties and joint venture interests | 45,057 | 36,041 | ||||||
Interest expense | (17,509 | ) | (16,224 | ) | ||||
Insurance proceeds in excess of cost basis | 264 | 407 | ||||||
Total other income (expense) | 27,812 | 20,224 | ||||||
Net income (loss) | 20,544 | (6,099 | ) | |||||
Net (income) loss attributable to noncontrolling interests | (6,306 | ) | 224 | |||||
Net income (loss) attributable to stockholders | $ | 14,238 | $ | (5,875 | ) |
For the nine months ended | For the nine months ended | ||||||||||||||||||||||
September 30, 2016 | September 30, 2015 | ||||||||||||||||||||||
Properties owned both periods | All other | Total | Properties owned both periods | All other | Total | ||||||||||||||||||
Revenues: | |||||||||||||||||||||||
Rental income | $ | 68,386 | $ | 20,886 | $ | 89,272 | $ | 60,552 | $ | 25,962 | $ | 86,514 | |||||||||||
Interest and dividend income | 2 | 578 | 580 | 3 | 474 | 477 | |||||||||||||||||
Total revenues | 68,388 | 21,464 | 89,852 | 60,555 | 26,436 | 86,991 | |||||||||||||||||
Expenses: | |||||||||||||||||||||||
Rental operating - expenses | 16,627 | 4,541 | 21,168 | 17,380 | 7,740 | 25,120 | |||||||||||||||||
Rental operating - payroll | 8,711 | 2,455 | 11,166 | 8,873 | 3,643 | 12,516 | |||||||||||||||||
Rental operating- real estate taxes | 7,415 | 2,444 | 9,859 | 7,509 | 2,490 | 9,999 | |||||||||||||||||
Subtotal- Rental operating expenses | 32,753 | 9,440 | 42,193 | 33,762 | 13,873 | 47,635 | |||||||||||||||||
Acquisition costs | — | — | — | — | 5,809 | 5,809 | |||||||||||||||||
Management fees | 3,046 | 8,852 | 11,898 | 2,697 | 8,609 | 11,306 | |||||||||||||||||
General and administrative | 2,746 | 6,496 | 9,242 | 2,918 | 7,234 | 10,152 | |||||||||||||||||
Loss on disposal of assets | 495 | 125 | 620 | 647 | 2,171 | 2,818 | |||||||||||||||||
Provision for loan loss | — | — | — | — | 130 | 130 | |||||||||||||||||
Depreciation and amortization expense | 26,487 | 6,680 | 33,167 | 25,081 | 10,383 | 35,464 | |||||||||||||||||
Total expenses | 65,527 | 31,593 | 97,120 | 65,105 | 48,209 | 113,314 | |||||||||||||||||
Income (loss) before other income (expense) | 2,861 | (10,129 | ) | (7,268 | ) | (4,550 | ) | (21,773 | ) | (26,323 | ) | ||||||||||||
Other income (expense): | |||||||||||||||||||||||
Net gains on dispositions of properties and joint venture interests | — | 45,057 | 45,057 | — | 36,041 | 36,041 | |||||||||||||||||
Interest expense | (12,656 | ) | (4,853 | ) | (17,509 | ) | (11,859 | ) | (4,365 | ) | (16,224 | ) | |||||||||||
Insurance proceeds in excess of cost basis | 264 | — | 264 | 407 | — | 407 | |||||||||||||||||
Total other income (expense) | (12,392 | ) | 40,204 | 27,812 | (11,452 | ) | 31,676 | 20,224 | |||||||||||||||
Net (loss) income | (9,531 | ) | 30,075 | 20,544 | (16,002 | ) | 9,903 | (6,099 | ) | ||||||||||||||
Net (income) loss attributable to noncontrolling interests | — | (6,306 | ) | (6,306 | ) | — | 224 | 224 | |||||||||||||||
Net (loss) income attributable to stockholders | $ | (9,531 | ) | $ | 23,769 | $ | 14,238 | $ | (16,002 | ) | $ | 10,127 | $ | (5,875 | ) |
Multifamily Community | Rental Increase (in thousands) | Increase in Occupancy | Increase in Effective Monthly Revenue Per Unit (in dollars) | |||||||
Meridian Pointe | $ | 872 | 17.9 | % | 91 | |||||
Maxwell Townhomes | 844 | 19.5 | % | 101 | ||||||
The Estates at Johns Creek | 699 | 2.4 | % | 170 | ||||||
Calloway at Las Colinas | 632 | 7.6 | % | 59 | ||||||
The Westside Apartments | 606 | 7.9 | % | 85 | ||||||
Tech Center Square | 461 | 13.5 | % | 125 | ||||||
Verona Apartment Homes | 400 | 4.6 | % | 121 | ||||||
Trailpoint at the Woodlands | 332 | 9.5 | % | 26 | ||||||
Skyview Apartment Homes | 327 | 5.5 | % | 107 | ||||||
Perimeter Circle | 322 | 2.6 | % | 165 | ||||||
Perimeter 5550 | 295 | 8.4 | % | 108 | ||||||
Sunset Ridge | 290 | 2.1 | % | 84 | ||||||
Aston at Cinco Ranch | 231 | 7.1 | % | 17 | ||||||
Williamsburg | 227 | 1.2 | % | 16 | ||||||
Chisholm Place | 216 | 6.1 | % | 99 | ||||||
Retreat at Shawnee | 195 | 3.7 | % | 38 | ||||||
Retreat at Rocky Ridge | 191 | 7.4 | % | 44 | ||||||
All other, net | 694 | |||||||||
$ | 7,834 |
Properties owned both periods | All other | Total | |||||||||
Depreciation | $ | 3,308 | $ | (1,001 | ) | $ | 2,307 | ||||
Amortization of intangibles | (1,902 | ) | (2,702 | ) | (4,604 | ) | |||||
$ | 1,406 | $ | (3,703 | ) | $ | (2,297 | ) |
Multifamily Community | Location | Sale Date | Contract Sales Price | Net Gains on Dispositions of Properties and Joint Venture Interests | ||||||||
2016 Dispositions: | ||||||||||||
Conifer Place | Norcross, Georgia | January 27, 2016 | $ | 42,500 | $ | 9,897 | ||||||
Champion Farms | Louisville, Kentucky | January 29, 2016 | 7,590 | 1,066 | ||||||||
The Ivy at Clear Creek | Houston, Texas | February 17, 2016 | 19,400 | 6,792 | ||||||||
Affinity at Winter Park | Winter Park, Florida | June 9, 2016 | 17,500 | 5,605 | ||||||||
Fieldstone | Woodland, Ohio | June 30, 2016 | 7,514 | 4,096 | ||||||||
The Nesbit Palisades | Alpharetta, Georgia | July 8, 2016 | 45,500 | 17,601 | ||||||||
$ | 140,004 | $ | 45,057 | |||||||||
2015 Dispositions: | ||||||||||||
The Alcove Apartments | Houston, Texas | January 26, 2015 | $ | 11,050 | $ | 3,784 | ||||||
107th Avenue Apartments | Omaha, Nebraska | January 29, 2015 | 250 | 50 | ||||||||
The Redford Apartments | Houston, Texas | February 27, 2015 | 32,959 | 15,303 | ||||||||
Cityside Apartments | Houston, Texas | March 2, 2015 | 24,500 | 10,028 | ||||||||
One Hundred Chevy Chase | Lexington, Kentucky | June 30, 2015 | 13,500 | 4,386 | ||||||||
The Reserve at Mt. Moriah | Memphis, Tennessee | September 18, 2015 | 5,425 | 2,490 | ||||||||
$ | 87,684 | $ | 36,041 |
Capital deployed during the nine months ended | Remaining capital budgeted | |||||||
Multifamily Community | September 30, 2016 | |||||||
Yorba Linda | $ | 2,868 | $ | 6,901 | ||||
Heritage Pointe | 2,171 | 4,679 | ||||||
South Lamar Village | 2,026 | 927 | ||||||
Calloway at Las Colinas | 1,739 | 3,256 | ||||||
The Estates At Johns Creek | 1,407 | 544 | ||||||
All other properties | 10,002 | 12,880 | ||||||
$ | 20,213 |
Shares Issued | Gross Proceeds | ||||||
Shares issued through private offering | 1,263,727 | $ | 12,582 | ||||
Shares issued through primary public offering (1) | 62,485,461 | 622,077 | |||||
Shares issued through stock distributions | 2,132,266 | — | |||||
Shares issued through distribution reinvestment plan | 8,430,119 | 84,369 | |||||
Shares issued in conjunction with the Advisor's initial investment, net of 4,500 share conversion | 15,500 | 155 | |||||
Total | 74,327,073 | $ | 719,183 | ||||
Shares redeemed | (2,698,354 | ) | |||||
Total shares outstanding at September 30, 2016 | 71,628,719 |
Weighted Average Interest Rate | |||||||||||||||||||||||||||||||
Balance Outstanding at | Current Availability at | Balance Outstanding at | Maturity Date | Interest Rate Basis | Current Interest Rate | Three months ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||
Lender | September 30, 2016 | December 31, 2015 | 2016 | 2015 | 2016 | 2015 | |||||||||||||||||||||||||
Bank of America | $ | — | $ | 20,894 | $ | 21,894 | 5/23/2017 | LIBOR plus 3% | 3.53 | % | 3.47 | % | 3.20 | % | 3.44 | % | 3.20 | % |
September 30, 2016 | December 31, 2015 | |||||||||||||||||||||||||||||||
Collateral | Outstanding Borrowings | Premium (Discount) | Deferred finance costs, net | Carrying Value | Outstanding Borrowings | Premium (Discount) | Deferred finance costs, net | Carrying Value | ||||||||||||||||||||||||
Vista Apartment Homes | $ | 15,312 | $ | — | $ | (187 | ) | $ | 15,125 | $ | 15,573 | $ | — | $ | (216 | ) | $ | 15,357 | ||||||||||||||
Cannery Lofts | 8,024 | — | (109 | ) | 7,915 | 8,148 | — | (131 | ) | 8,017 | ||||||||||||||||||||||
Deerfield | 10,400 | — | (133 | ) | 10,267 | 10,517 | — | (159 | ) | 10,358 | ||||||||||||||||||||||
The Ivy at Clear Creek | — | — | — | — | 8,431 | — | (136 | ) | 8,295 | |||||||||||||||||||||||
Trailpoint at the Woodlands | 18,771 | — | (231 | ) | 18,540 | 19,013 | — | (257 | ) | 18,756 | ||||||||||||||||||||||
Verona Apartment Homes | 32,970 | — | (546 | ) | 32,424 | 22,402 | — | (179 | ) | 22,223 | ||||||||||||||||||||||
Skyview Apartment Homes | 28,400 | — | (474 | ) | 27,926 | 18,089 | — | (148 | ) | 17,941 | ||||||||||||||||||||||
The Nesbit Palisades | — | — | — | — | 20,298 | — | (309 | ) | 19,989 | |||||||||||||||||||||||
Maxwell Townhomes | 13,666 | — | (145 | ) | 13,521 | 13,850 | — | (167 | ) | 13,683 | ||||||||||||||||||||||
Fieldstone | — | — | — | — | 15,332 | — | (37 | ) | 15,295 | |||||||||||||||||||||||
Pinehurst | 4,002 | — | — | 4,002 | 4,111 | — | — | 4,111 | ||||||||||||||||||||||||
Pheasant Run | 6,250 | 57 | (12 | ) | 6,295 | 6,250 | 100 | (20 | ) | 6,330 | ||||||||||||||||||||||
Retreat of Shawnee | 12,944 | 104 | (28 | ) | 13,020 | 13,090 | 164 | (44 | ) | 13,210 | ||||||||||||||||||||||
Conifer Place | — | — | — | — | 27,074 | — | — | 27,074 | ||||||||||||||||||||||||
Evergreen at Coursey Place | 27,221 | 106 | (102 | ) | 27,225 | 27,548 | 123 | (120 | ) | 27,551 | ||||||||||||||||||||||
Pines of York | 15,068 | (315 | ) | (59 | ) | 14,694 | 15,267 | (363 | ) | (69 | ) | 14,835 | ||||||||||||||||||||
The Estates at Johns Creek | 49,839 | — | (435 | ) | 49,404 | 50,000 | — | (526 | ) | 49,474 | ||||||||||||||||||||||
Chisholm Place | 11,587 | — | (148 | ) | 11,439 | 11,587 | — | (163 | ) | 11,424 | ||||||||||||||||||||||
Perimeter Circle | 17,389 | — | (157 | ) | 17,232 | 17,657 | — | (202 | ) | 17,455 | ||||||||||||||||||||||
Perimeter 5550 | 13,724 | — | (130 | ) | 13,594 | 13,935 | — | (167 | ) | 13,768 | ||||||||||||||||||||||
Aston at Cinco Ranch | 23,472 | — | (284 | ) | 23,188 | 23,772 | — | (328 | ) | 23,444 | ||||||||||||||||||||||
Sunset Ridge 1 | 19,808 | 277 | (221 | ) | 19,864 | 20,121 | 329 | (261 | ) | 20,189 | ||||||||||||||||||||||
Sunset Ridge 2 | 2,962 | 38 | (28 | ) | 2,972 | 3,002 | 45 | (34 | ) | 3,013 | ||||||||||||||||||||||
Calloway at Las Colinas | 35,252 | — | (322 | ) | 34,930 | 35,740 | — | (372 | ) | 35,368 | ||||||||||||||||||||||
South Lamar Village | 12,498 | — | (144 | ) | 12,354 | 12,682 | — | (184 | ) | 12,498 | ||||||||||||||||||||||
Heritage Pointe | 26,280 | — | (338 | ) | 25,942 | 26,280 | — | (370 | ) | 25,910 | ||||||||||||||||||||||
Yorba Linda | 67,500 | — | (711 | ) | 66,789 | 67,500 | — | (860 | ) | 66,640 | ||||||||||||||||||||||
Point Bonita Apartment Homes | 27,000 | 2,043 | (351 | ) | 28,692 | 27,265 | 2,276 | (391 | ) | 29,150 | ||||||||||||||||||||||
Stone Ridge | 5,258 | — | (136 | ) | 5,122 | 5,350 | — | (153 | ) | 5,197 | ||||||||||||||||||||||
The Westside Apartments | 36,820 | — | (201 | ) | 36,619 | 23,000 | — | (351 | ) | 22,649 | ||||||||||||||||||||||
Tech Center Square | 12,438 | — | (205 | ) | 12,233 | 12,500 | — | (159 | ) | 12,341 | ||||||||||||||||||||||
$ | 554,855 | $ | 2,310 | $ | (5,837 | ) | $ | 551,328 | $ | 595,384 | $ | 2,674 | $ | (6,513 | ) | $ | 591,545 |
Record Date | Per Common Share | Distribution Date | Distributions Invested in Shares of Common Stock | Net Cash Distribution | Total Aggregate Distribution | |||||||||||
January 28, 2016 | $0.05 | January 29, 2016 | $ | 2,423 | $ | 1,151 | $ | 3,574 | ||||||||
February 26, 2016 | 0.05 | February 29, 2016 | 2,418 | 1,167 | 3,585 | |||||||||||
March 30, 2016 | 0.05 | March 31, 2016 | 2,415 | 1,172 | 3,587 | |||||||||||
April 28, 2016 | 0.05 | April 29, 2016 | 2,414 | 1,181 | 3,595 | |||||||||||
May 27, 2016 | 0.05 | June 3, 2016 | 2,380 | 1,226 | 3,606 | |||||||||||
June 29, 2016 | 0.05 | June 30, 2016 | 2,357 | 1,208 | 3,565 | |||||||||||
July 28, 2016 | 0.05 | July 29, 2016 | 2,359 | 1,215 | 3,574 | |||||||||||
August 30, 2016 | 0.05 | August 31, 2016 | 2,363 | 1,222 | 3,585 | |||||||||||
September 29, 2016 | 0.05 | September 30, 2016 | 2,351 | 1,220 | 3,571 | |||||||||||
$0.45 | $ | 21,480 | $ | 10,762 | $ | 32,242 |
Distributions Paid | Distributions Declared | Sources of Distributions Paid | |||||||||||||||||||||||||||
2016 | Cash | Distributions Reinvested (DRIP) | Total | Cash Provided By Operating Activities- QTD | Cash Provided By Operating Activities- YTD | Total | Per Share | Amount Paid from Operating Activities/Percent of Total Distributions Paid | Amount Paid from Debt Financing/Percent of Total Distributions Paid | Amount Paid from Dispositions/Percent of Total Distributions Paid | |||||||||||||||||||
First Quarter | $ | 3,490 | $ | 7,256 | $ | 10,746 | $ | 4,884 | $ | 4,884 | $ | 10,746 | $0.05 | $4,884 / 45% | — | $5,862/ 55% | |||||||||||||
Second Quarter | $ | 3,615 | $ | 7,151 | $ | 10,766 | $ | 2,597 | $ | 7,481 | $ | 10,766 | $0.05 | $2,597 / 24% | — | $8,169 / 76% | |||||||||||||
Third Quarter | $ | 3,657 | $ | 7,073 | $ | 10,730 | $ | 742 | $ | 8,223 | $ | 10,730 | $0.05 | $742 / 7% | — | $9,988 / 93% |
(1) | acquisition fees and expenses; |
(2) | straight-line rent amounts, both income and expense; |
(3) | amortization of above- or below-market intangible lease assets and liabilities; |
(4) | amortization of discounts and premiums on debt investments; |
(5) | impairment charges; |
(6) | gains or losses from the early extinguishment of debt; |
(7) | gains or losses on the extinguishment or sales of hedges, foreign exchange, securities and other derivatives holdings except where the trading of such instruments is a fundamental attribute of our operations; |
(8) | gains or losses related to fair-value adjustments for derivatives not qualifying for hedge accounting, including interest rate and foreign exchange derivatives; |
(9) | gains or losses related to consolidation from, or deconsolidation to, equity accounting; |
(10) | gains or losses related to contingent purchase price adjustments; and |
(11) | adjustments related to the above items for unconsolidated entities in the application of equity accounting. |
• | Acquisition expenses. In evaluating investments in real estate, including both business combinations and investments accounted for under the equity method of accounting, management’s investment models and analysis differentiate costs to acquire the investment from the operations derived from the investment. Prior to 2009, acquisition costs for both of these types of investments were capitalized under GAAP; however, beginning in 2009, acquisition costs related to business combinations are expensed. Both of these acquisition costs will continue to be funded from the proceeds of debt financing and proceeds from property dispositions and not from operations. We believe by excluding expensed acquisition costs, MFFO provides useful supplemental information that is comparable for each type of real estate investment and is consistent with management’s analysis of the investing and operating performance of our properties. Acquisition expenses include those paid to our Advisor or third parties. |
• | Adjustments for straight-line rents and amortization of discounts and premiums on debt investments. In the proper application of GAAP, rental receipts and discounts and premiums on debt investments are allocated to periods using various systematic methodologies. This application will result in income recognition that could be significantly different than underlying contract terms. By adjusting for these items, MFFO provides useful supplemental information on the realized economic impact of lease terms and debt investments and aligns results with management’s analysis of operating performance. |
• | Adjustments for amortization of above or below market intangible lease assets. Similar to depreciation and amortization of other real estate related assets that are excluded from FFO, GAAP implicitly assumes that the value of intangibles diminishes predictably over time and that these charges be recognized currently in revenue. Since real estate values and market lease rates in the aggregate have historically risen or fallen with market conditions, management believes that by excluding these charges, MFFO provides useful supplemental information on the performance of the real estate. |
• | Impairment charges, gains or losses related to fair-value adjustments for derivatives not qualifying for hedge accounting and gains or losses related to contingent purchase price adjustments. Each of these items relates to a fair value adjustment, which is based on the impact of current market fluctuations and underlying assessments of general market conditions and specific performance of the holding which may not be directly attributable to current operating performance. As these gains or losses relate to underlying long-term assets and liabilities, management |
• | Adjustment for gains or losses related to early extinguishment of hedges, debt, consolidation or deconsolidation and contingent purchase price. Similar to extraordinary items excluded from FFO, these adjustments are not related to continuing operations. By excluding these items, management believes that MFFO provides supplemental information related to sustainable operations that will be more comparable between other reporting periods and to other real estate operators. |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Net income (loss) attributable to stockholders – GAAP | $ | 9,637 | $ | (10,619 | ) | $ | 14,238 | $ | (5,875 | ) | |||||
Net gains on dispositions of properties and joint venture interests | (17,601 | ) | (2,490 | ) | (38,834 | ) | (36,041 | ) | |||||||
Depreciation expense | 10,824 | 10,936 | 32,883 | 29,689 | |||||||||||
FFO attributable to common stockholders | 2,860 | (2,173 | ) | 8,287 | (12,227 | ) | |||||||||
Adjustments for straight-line rents | 57 | (51 | ) | 57 | (35 | ) | |||||||||
Amortization of intangible lease assets | 4 | 1,855 | 224 | 4,827 | |||||||||||
Realized loss on change in fair value of interest rate cap | 33 | — | 105 | — | |||||||||||
Loss on extinguishment of debt | 714 | — | 854 | — | |||||||||||
Debt premium amortization | (122 | ) | (185 | ) | (364 | ) | (438 | ) | |||||||
Acquisition costs | — | — | — | 5,809 | |||||||||||
MFFO attributable to common stockholders | $ | 3,546 | $ | (554 | ) | $ | 9,163 | $ | (2,064 | ) | |||||
Net gains on dispositions of properties and joint venture interests | 17,601 | 2,490 | 38,834 | 36,041 | |||||||||||
AFFO attributable to common stockholders | $ | 21,147 | $ | 1,936 | $ | 47,997 | $ | 33,977 | |||||||
Basic and diluted income per common share - GAAP | $ | 0.14 | $ | (0.15 | ) | $ | 0.20 | $ | (0.08 | ) | |||||
FFO per common share | $ | 0.04 | $ | (0.03 | ) | $ | 0.12 | $ | (0.17 | ) | |||||
MFFO per common share | $ | 0.05 | $ | (0.01 | ) | $ | 0.13 | $ | (0.03 | ) | |||||
AFFO per common share | $ | 0.30 | $ | 0.03 | $ | 0.67 | $ | 0.48 | |||||||
Weighted average shares outstanding | 71,621 | 70,724 | 71,781 | 70,110 |
ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
ITEM 4. | CONTROLS AND PROCEDURES |
ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
Period | Total Number of Shares Redeemed (1) | Average Price Paid per Share | Total Number of Shares Purchased as Part of a Publicly Announced Plan or Program (2) | Approximate Dollar Value of Shares Available That May Yet Be Redeemed Under the Program | ||||
July 2016 | — | — | — | (3) | ||||
August 2016 | — | — | — | (3) | ||||
September 2016 | 519,736 | $10.83 | 519,736 | (3) | ||||
519,736 |
(1) | All redemptions of equity securities in the three months ended September 30, 2016 were made pursuant to our share redemption program. All redemption requests tendered were honored during the three months ended September 30, 2016. |
(2) | The share redemption program commenced on June 16, 2010 and was subsequently amended on September 29, 2011. |
(3) | We currently limit the dollar value and number of shares that may be redeemed under the program as described below. |
ITEM 3. | DEFAULTS UPON SENIOR SECURITIES |
(a) | There have been no defaults with respect to any of our indebtedness. |
(b) | Not applicable. |
ITEM 6. | EXHIBITS |
Exhibit No. | Description | |||
2.1 | Agreement and Plan of Merger, dated July 18, 2013, by and among Paladin Realty Income Properties, Inc., Paladin Realty Income Properties, L.P., Resource Real Estate Opportunity OP, LP, and RRE Charlemagne Holdings, LLC (incorporated by reference to the Company’s Post-Effective Amendment No. 13 to the Registration Statement on Form S-11 (No. 333-163411) filed September 16, 2013) | |||
2.2 | Second Amendment to Agreement and Plan of Merger, dated September 13, 2013, by and among Paladin Realty Income Properties, Inc., Paladin Realty Income Properties, L.P., Resource Real Estate Opportunity OP, LP, and RRE Charlemagne Holdings, LLC (incorporated by reference to the Company’s Post-Effective Amendment No. 13 to the Registration Statement on Form S-11 (No. 333-163411) filed September 16, 2013) | |||
2.3 | Third Amendment to Agreement and Plan of Merger, dated December 16, 2013, by and among Paladin Realty Income Properties, Inc., Paladin Realty Income Properties, L.P., Resource Real Estate Opportunity OP, LP, and RRE Charlemagne Holdings, LLC (incorporated by reference to Post-Effective Amendment No. 15 to the Company's Registration Statement on Form S-11 (No. 333-160463) filed December 30, 2013) | |||
3.1 | Amended and Restated Articles of Incorporation (incorporated by reference to Pre-Effective Amendment No. 3 to the Company’s Registration Statement on Form S-11 (No. 333-160463) filed February 9, 2010) | |||
3.2 | Bylaws (incorporated by reference to Pre-Effective Amendment No. 3 to the Company’s Registration Statement on Form S-11 (No. 333-160463) filed February 9, 2010) | |||
4.1 | Form of Distribution Reinvestment Plan Enrollment Form (incorporated by reference to the Company’s Registration Statement on Form S-3 (No. 333-211721) filed May 31, 2016) | |||
4.2 | Statement regarding restrictions on transferability of shares of common stock (to appear on stock certificate or to be sent upon request and without charge to stockholders issued shares without certificates) (incorporated by reference to Pre-Effective Amendment No. 2 to the Company’s Registration Statement on Form S-11 (No. 333-160463) filed November 12, 2009) | |||
4.3 | Second Amended and Restated Distribution Reinvestment Plan (incorporated by reference to the Company’s Registration Statement on Form S-3 (No. 333-211721) filed May 31, 2016) | |||
10.1 | Renewal Agreement, dated September 15, 2016, between Resource Real Estate Opportunity REIT, Inc. and Resource Real Estate Opportunity Advisor, LLC |
31.1 | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |||
31.2 | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |||
32.1 | Certification of Chief Executive Officer pursuant to Section 1350 18 U.S.C., as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |||
32.2 | Certification of Chief Financial Officer pursuant to Section 1350 18 U.S.C., as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |||
99.1 | Amended and Restated Share Redemption Program (incorporated by reference to the Company's Quarterly Report on Form 10-Q filed November 14, 2011) | |||
101.1 | Interactive Data Files |
RESOURCE REAL ESTATE OPPORTUNITY REIT, INC. | ||
November 14, 2016 | By: | /s/ Alan F. Feldman |
ALAN F. FELDMAN | ||
Chief Executive Officer | ||
(Principal Executive Officer) | ||
November 14, 2016 | By: | /s/ Steven R. Saltzman |
STEVEN R. SALTZMAN | ||
Chief Financial Officer | ||
(Principal Financial Officer and Principal Accounting Officer) |
1) | I have reviewed this quarterly report on Form 10-Q for the quarter ended September 30, 2016 of Resource Real Estate Opportunity REIT, Inc.; |
2) | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3) | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4) | The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5) | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
RESOURCE REAL ESTATE OPPORTUNITY REIT, INC. | ||
November 14, 2016 | By: | /s/ Alan F. Feldman |
Alan F. Feldman | ||
Chief Executive Officer | ||
(Principal Executive Officer) |
1) | I have reviewed this quarterly report on Form 10-Q for the quarter ended September 30, 2016 of Resource Real Estate Opportunity REIT, Inc.; |
2) | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3) | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4) | The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5) | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
RESOURCE REAL ESTATE OPPORTUNITY REIT, INC. | ||
November 14, 2016 | By: | /s/ Steven R. Saltzman |
Steven R. Saltzman | ||
Chief Financial Officer | ||
(Principal Financial Officer) |
(1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
RESOURCE REAL ESTATE OPPORTUNITY REIT, INC. | ||
November 14, 2016 | By: | /s/ Alan F. Feldman |
Alan F. Feldman | ||
Chief Executive Officer | ||
(Principal Executive Officer) |
(1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
RESOURCE REAL ESTATE OPPORTUNITY REIT, INC. | ||
November 14, 2016 | By: | /s/ Steven R. Saltzman |
Steven R. Saltzman | ||
Chief Financial Officer | ||
(Principal Financial Officer) |
Document and Entity Information - shares |
9 Months Ended | |
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Sep. 30, 2016 |
Nov. 08, 2016 |
|
Document and Entity Information [Abstract] | ||
Entity Registrant Name | Resource Real Estate Opportunity REIT, Inc. | |
Entity Central Index Key | 0001466225 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2016 | |
Document Fiscal Year Focus | 2016 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 71,845,514 |
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, authorized (in shares) | 10,000,000 | 10,000,000 |
Preferred stock, issued (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, authorized (in shares) | 1,000,000,000 | 1,000,000,000 |
Common stock, issued (in shares) | 74,327,073 | 72,333,652 |
Common stock, outstanding (in shares) | 71,628,719 | 71,617,117 |
Convertible stock ('promote shares'), par value (in dollars per share) | $ 0.01 | $ 0.01 |
Convertible stock ('promote shares'), authorized (in shares) | 50,000 | 50,000 |
Convertible stock ('promote shares'), issued (in shares) | 50,000 | 50,000 |
Convertible stock ('promote shares'), outstanding (in shares) | 50,000 | 50,000 |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY - 9 months ended Sep. 30, 2016 - USD ($) $ in Thousands |
Total |
Total Stockholders’ Equity |
Common Stock |
Convertible Stock |
Additional Paid-in Capital |
Accumulated Other Comprehensive (Loss) Income |
Accumulated Deficit |
Noncontrolling interests |
---|---|---|---|---|---|---|---|---|
Beginning balance at Dec. 31, 2015 | $ 433,099 | $ 425,246 | $ 716 | $ 1 | $ 638,335 | $ (440) | $ (213,366) | $ 7,853 |
Beginning balance (in shares) at Dec. 31, 2015 | 71,617,117 | 71,617,000 | 50,000 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Common stock issued through distribution reinvestment plan | $ 21,480 | 21,480 | $ 20 | 21,460 | ||||
Common stock issued through distribution reinvestment plan (in shares) | 2,000,000 | 1,994,000 | ||||||
Distributions on common stock | $ (32,242) | (32,242) | (32,242) | |||||
Common stock redemptions | $ (21,381) | (21,381) | $ (20) | (21,361) | ||||
Common stock redemptions (in shares) | (1,981,819) | (1,982,000) | ||||||
Other comprehensive income | $ 62 | 62 | 62 | |||||
Deconsolidation of subsidiaries | (3,613) | (3,613) | ||||||
Distribution to noncontrolling interests | (9,120) | (9,120) | ||||||
Net income | 20,544 | 14,238 | 14,238 | 6,306 | ||||
Ending balance at Sep. 30, 2016 | $ 408,829 | $ 407,403 | $ 716 | $ 1 | $ 638,434 | $ (378) | $ (231,370) | $ 1,426 |
Ending balance (in shares) at Sep. 30, 2016 | 71,628,719 | 71,629,000 | 50,000 |
NATURE OF BUSINESS AND OPERATIONS |
9 Months Ended |
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Sep. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
NATURE OF BUSINESS AND OPERATIONS | NOTE 1 - NATURE OF BUSINESS AND OPERATIONS Resource Real Estate Opportunity REIT, Inc. (the “Company”) was organized in Maryland on June 3, 2009 to purchase a diversified portfolio of discounted U.S. commercial real estate and real estate-related assets in order to generate gains to stockholders from the potential appreciation in the value of the assets and to generate current income for stockholders by distributing cash flow from the Company’s investments. Resource Real Estate Opportunity Advisor, LLC (the “Advisor”), an indirect wholly-owned subsidiary of Resource America, Inc. (“RAI”) has been engaged to manage the day-to-day operations of the Company. On September 8, 2016, RAI was acquired by C-III Capital Partners LLC ("C-III"), a leading commercial real estate services company engaged in a broad range of activities. C-III controls our Advisor, Resource Securities, Inc. ("Resource Securities"), the Company's dealer manager, and Resource Real Estate Opportunity Manager, LLC, the Company's property manager; C-III also controls all of the shares of common stock held by RAI. Through its private offering and primary public offering, which concluded on December 13, 2013, the Company raised aggregate gross offering proceeds of $645.8 million, which resulted in the issuance of 64.9 million shares of common stock, including 276,056 shares purchased by the Advisor and 1.2 million shares sold in the Company's distribution reinvestment plan. During the years ended December 31, 2015 and 2014, the Company issued 5.3 million additional shares for $51.9 million pursuant to its distribution reinvestment plan. During the nine months ended September 30, 2016, the Company additionally issued 2.0 million shares for $21.5 million pursuant to its distribution reinvestment plan. The Company's distribution reinvestment plan offering is ongoing. The Company has acquired, and may continue to acquire, real estate-related debt and equity. The Company has a particular focus on acquiring and operating multifamily assets, and it has targeted, and intends to continue to target, this asset class while also possibly acquiring interests in other types of commercial property assets consistent with its investment objectives. The Company’s targeted portfolio consists of commercial real estate assets, principally (i) multifamily rental properties purchased as non-performing or distressed loans or as real estate that was foreclosed upon and sold by financial institutions and (ii) multifamily rental properties to which the Company can add value with a capital infusion (referred to as “value add properties”). However, the Company is not limited in the types of real estate assets in which it may invest and, accordingly, it may invest in other real estate-related assets either directly or together with a co-investor or joint venture partner. The Company is organized and conducts its operations in a manner intended to allow it to qualify as a real estate investment trust (“REIT”) for U.S. federal income tax purposes under Subchapter M of the Internal Revenue Code of 1986, as amended. The Company also operates its business in a manner intended to maintain its exemption from registration under the Investment Company Act of 1940, as amended. The consolidated financial statements and the information and tables contained in the notes to the consolidated financial statements are unaudited. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). However, in the opinion of management, these interim financial statements include all the necessary adjustments to fairly present the results of the interim periods presented. The consolidated balance sheet as of December 31, 2015 was derived from the audited consolidated financial statements as of and for the year ended December 31, 2015. The unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015. The results of operations for the nine months ended September 30, 2016 may not necessarily be indicative of the results of operations for the full year ending December 31, 2016. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
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Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A summary of the significant accounting policies consistently applied in the preparation of the accompanying consolidated financial statements follows: Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries as follows:
N/A - Not Applicable (a) - Subsidiary holds a portion of the Williamsburg parking lot (b) - Wholly-owned subsidiary of RRE Charlemagne Holdings, LLC (c) - Underlying investment sold prior to 2016 (d) - Underlying investment sold in 2016 (e) - Underlying investment resolved in 2016 (f) - Subsidiary was dissolved prior to September 30, 2016 All intercompany accounts and transactions have been eliminated in consolidation. The consolidated financial statements reflect the Company's accounts and the accounts of the Company's majority-owned and/or controlled subsidiaries. The Company follows the provisions of Accounting Standards Codification (“ASC”) Topic 810, “Consolidation,” and accordingly consolidates entities that are variable interest entities (“VIEs”) where it has determined that it is the primary beneficiary of such entities. Once it has been determined that the Company holds a variable interest in a VIE, management performs a qualitative analysis to determine (i) if the Company has the power to direct the matters that most significantly impact the VIE's financial performance; and (ii) if the Company has the obligation to absorb the losses of the VIE that could potentially be significant to the VIE or the right to receive the benefits of the VIE that could potentially be significant to the VIE. If the Company's interest possesses both of these characteristics, the Company is deemed to be the primary beneficiary and would be required to consolidate the VIE. The Company will continually assess its involvement with VIEs and re-evaluate the requirement to consolidate them. For consolidated entities (including VIEs of which the Company is the primary beneficiary), noncontrolling interests are presented and disclosed as a separate component of stockholders' equity (not as a liability or other item outside of stockholders' equity). Consolidated net income (loss) includes the noncontrolling interests’ share of income (loss). All changes in the Company’s ownership interest in a subsidiary are accounted for as stockholders' equity transactions if the Company retains its controlling financial interest in the subsidiary. The portions of these entities that the Company does not own are presented as noncontrolling interests as of the dates and for the periods presented in the consolidated financial statements. The consolidated financial statements include the accounts of the Company's majority-owned and/or controlled subsidiaries, which are VIEs, as follows:
(1) On January 29, 2016, the Company sold its joint venture interest in Champion Farms to its joint venture partner. As such, the Company deconsolidated the entity as of January 29, 2016. The Company has no continuing involvement with this joint venture. (See Note 6) (2) On June 30, 2016, the Company sold its joint venture interest in Fieldstone to its joint venture partner. As such, the Company deconsolidated the entity as of June 30, 2016. The Company has no continuing involvement with this joint venture. (See Note 6) (3) On January 27, 2016, the Company and its joint venture partner sold Conifer Place, which resulted in the deconsolidation of the entity as of January 27, 2016. (See Note 6) The Company's preferred equity investment was a VIE for which the Company had determined it was not the primary beneficiary; therefore, the Company did not consolidate the entity. The Company was not considered the primary beneficiary of the preferred equity investee because it did not possess the unilateral power to direct the key activities of investee that were considered most significant. The preferred equity investment was sold during 2016 and the Company has no further continuing involvement with the investee. Additional information with respect to the preferred equity investment is disclosed in Note 5. Use of Estimates The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Assets Held for Sale The Company presents the assets and liabilities of any rental properties which qualify as held for sale, separately in the consolidated balance sheets. Real estate assets held for sale are measured at the lower of carrying amount or fair value less cost to sell. Both the real estate and the corresponding liabilities are presented separately in the consolidated balance sheets. Subsequent to classification of an asset as held for sale, no further depreciation is recorded. At December 31, 2015, the Company had three rental properties included in assets held for sale. At September 30, 2016, the Company had no rental properties included in assets held for sale. Rental Properties The Company records acquired rental properties at fair value on their respective acquisition date. The Company considers the period of future benefit of an asset to determine its appropriate useful life and depreciates the rental properties using the straight line method. The Company anticipates the estimated useful lives of its assets by class as follows:
Improvements and replacements in excess of $1,000 are capitalized when they have a useful life greater than or equal to one year. Resource Real Estate Opportunity Manager, LLC (the “Manager”), an affiliate of the Advisor, earns a construction management fee of 5% of actual aggregate costs to construct improvements, or to repair, rehab or reconstruct a property. These costs are capitalized along with the related asset. Costs of repairs and maintenance are expensed as incurred. Impairment of Long Lived Assets When circumstances indicate the carrying value of a property may not be recoverable, the Company reviews the asset for permanent impairment. This review is based on an estimate of the future undiscounted cash flows, excluding interest charges, expected to result from the property’s use and eventual disposition. The review also considers factors such as expected future operating income, market and other applicable trends and residual value, as well as the effects of leasing demand, competition and other factors. An impairment loss will be recorded to the extent that the carrying value exceeds the estimated fair value of a property to be held and used. For properties held for sale, the impairment loss would be the adjustment to fair value less the estimated cost to dispose of the asset. There were no impairment charges during the three and nine months ended September 30, 2016 and 2015. Loans Held for Investment, Net The Company records acquired performing loans held for investment at cost and reviews them for potential impairment at each balance sheet date. The Company considers a loan to be impaired if one of two conditions exists. The first condition is if, based on current information and events, management believes it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. The second condition is if the loan is deemed to be a troubled-debt restructuring (“TDR”) where a concession has been given to a borrower in financial difficulty. A TDR may not have an associated specific loan loss allowance if the principal and interest amount is considered recoverable based on current market conditions, expected collateral performance and/or guarantees made by the borrowers. The amount of impairment, if any, is measured by comparing the recorded amount of the loan to the present value of the expected cash flows or, as a practical expedient, the fair value of the collateral. If a loan is deemed to be impaired, the Company records a reserve for loan losses through a charge to income for any shortfall. Interest income from performing loans held for investment is recognized based on the contractual terms of the loan agreement. Fees related to any buy down of the interest rate are deferred as prepaid interest income and amortized over the term of the loan as an adjustment to interest income. The initial investment made in a purchased performing loan includes the amount paid to the seller plus fees. The initial investment frequently differs from the related loan’s principal amount at the date of the purchase. The difference is recognized as an adjustment of the yield over the life of the loan. Closing costs related to the purchase of a performing loan held for investment are amortized over the term of the loan and accreted as an adjustment to interest income. The Company may acquire real estate loans at a discount due to the credit quality of such loans and the respective borrowers under such loans. Revenues from these loans are recorded under the effective interest method. Under this method, an effective interest rate (“EIR”) is applied to the cost basis of the real estate loan held for investment. The EIR that is calculated when the loan held for investment is acquired remains constant and is the basis for subsequent impairment testing and income recognition. However, if the amount and timing of future cash collections are not reasonably estimable, the Company accounts for the real estate receivable on the cost recovery method. Under the cost recovery method of accounting, no income is recognized until the basis of the loan held for investment has been fully recovered. Preferred Equity Investment The Company recorded its preferred equity investments at amortized cost. Investments carried at amortized cost were evaluated for impairment at each reporting date. When an investment was impaired and that impairment was considered other than temporary, the amount of the loss accrual was calculated by comparing the carrying amount of the investment to its estimated fair value. This investment was repaid in full on June 6, 2016 (See Note 5). Dividend income was recognized when earned based on the contractual terms of the preferred equity agreement. Allocation of the Purchase Price of Acquired and Foreclosed Assets The cost of rental properties acquired directly as fee interests and through foreclosing on a loan are allocated to net tangible and intangible assets based on their relative fair values. The Company allocates the purchase price of properties to acquired tangible assets, consisting of land, buildings, fixtures and improvements, and to identified intangible lease assets and liabilities, consisting of the value of above-market and below-market leases, as applicable, the value of in-place leases and the value of tenant relationships. Fair value estimates are based on information obtained from a number of sources, including information obtained about each property as a result of pre-acquisition due diligence, marketing and leasing activities. In addition, the Company may obtain independent appraisal reports. The information in the appraisal reports along with the aforementioned information available to the Company's management is used in allocating the purchase price. The independent appraisers have no involvement in management's allocation decisions other than providing market information. In allocating the purchase price, management also includes real estate taxes, insurance and other operating expenses and estimates of lost rentals at market rates during the expected lease-up period. Management also estimates costs to execute similar leases, including leasing commissions and legal and other related expenses, to the extent that such costs have not already been incurred in connection with a new lease origination as part of the transaction. The Company records above-market and below-market in-place lease values for acquired properties based on the present value (using an interest rate that reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to the in-place leases and (ii) management’s estimate of fair market lease rates for the corresponding in-place leases, measured over a period equal to the remaining non-cancelable term of the lease. The Company amortizes any capitalized above-market or below-market lease values as an increase or reduction to rental income over the remaining non-cancelable terms of the respective leases. The Company measures the aggregate value of other intangible assets acquired based on the difference between (i) the property valued with existing in-place leases adjusted to market rental rates and (ii) the property valued as if it were vacant. Management’s estimates of value are made using methods similar to those used by independent appraisers (e.g., discounted cash flow analysis). Factors to be considered by management in its analysis include an estimate of carrying costs during hypothetical expected lease-up periods considering current market conditions and costs to execute similar leases. The total amount of other intangible assets acquired is further allocated to customer relationship intangible values based on management’s evaluation of the specific characteristics of each tenant’s lease and the Company’s overall relationship with that respective tenant. Characteristics to be considered by management in allocating these values include the nature and extent of the Company’s existing relationships with the tenant, the tenant’s credit quality and expectations of lease renewals (including those existing under the terms of the lease agreement), among other factors. The Company amortizes the value of in-place leases to expense over the average remaining term of the respective leases. The value of customer relationship intangibles are amortized to expense over the initial term and any renewal periods in the respective leases, but in no event will the amortization periods for the intangible assets exceed the remaining depreciable life of the building. Should a tenant terminate its lease, the unamortized portion of the in-place lease value and customer relationship intangibles associated with that tenant would be charged to expense in that period. The determination of the fair value of assets and liabilities acquired requires the use of significant assumptions with regard to current market rental rates, discount rates and other variables. The use of inappropriate estimates would result in an incorrect assessment of the purchase price allocations, which could impact the amount of the Company’s reported net income. Initial purchase price allocations are subject to change until all information is finalized, which is generally within one year of the acquisition date. Goodwill The Company records the excess of the cost of an acquired entity over the difference between the amounts assigned to assets acquired (including identified intangible assets) and liabilities assumed as goodwill. Goodwill is not amortized but is tested for impairment at a level of reporting referred to as a reporting unit during the fourth quarter of each calendar year, or more frequently if events or changes in circumstances indicate that the asset might be impaired. Debt Modification and Extinguishment During the nine months ended September 30, 2016, the Company refinanced four loans. A refinancing transaction in which the issuance of new debt with a new lender and the concurrent satisfaction of an existing loan with an unrelated lender is considered an extinguishment. An exchange of debt instruments with the same lender with substantially different terms is also considered an extinguishment. However, if the terms are not substantially different, then the exchange is considered a modification. The Company calculates the change in the present values of the old debt instruments and the new debt instruments to determine if the terms were substantially different. If the financing transactions is determined to be a extinguishment, the old debt is derecognized and the new debt is recorded at fair value. Unamortized deferred loan costs and new fees paid to the lender are expensed and fees paid to third parties on the new debt are capitalized. If the financing transaction is determined to be a modification, unamortized loan costs and new fees paid to the lender continue to be amortized over the new term and fees paid to third parties are expensed. Revenue Recognition The Company recognizes minimum rent, including rental abatements and contractual fixed increases attributable to operating leases, on a straight-line basis over the term of the related lease and includes amounts expected to be received in later years in deferred rents. The future minimum rental payments to be received from noncancelable operating leases for residential rental properties are $57.6 million and $152,000 for the 12 month periods ending September 30, 2017 and 2018, respectively, and none thereafter. The future minimum rental payments to be received from noncancelable operating leases for commercial rental properties and antenna rentals are $341,000, $226,000, $151,000, $95,000, $7,000, and $0 for the 12 month periods ending September 30, 2017, 2018, 2019, 2020, 2021, and thereafter, respectively. Revenue is primarily derived from the rental of residential housing units, however, included within rental income is other income such as pet fees, parking fees, and late fees, as well as property operating expense reimbursements due from tenants for common area maintenance, real estate taxes and other recoverable costs. The Company records the ancillary charges in the period in which they are earned or received and records the reimbursements in the period in which the related expenses are incurred. Total other income included within rental income was $2.7 million and $2.6 million for the three months ended September 30, 2016 and 2015, respectively. Total other income included within rental income was $8.3 million and $7.6 million for the nine months ended September 30, 2016 and 2015, respectively. Tenant Receivables Tenant receivables are stated in the financial statements as amounts due from tenants net of an allowance for uncollectible receivables. Payment terms vary and receivables outstanding longer than the payment terms are considered past due. The Company determines its allowance by considering a number of factors, including the length of time receivables are past due, security deposits held, the Company’s previous loss history, the tenants’ current ability to pay their obligations to the Company, the condition of the general economy and the industry as a whole. The Company writes off receivables when they become uncollectible. At September 30, 2016 and December 31, 2015, there were allowances for uncollectible receivables of $4,500 and $24,100, respectively. Income Taxes To maintain its REIT qualification for U.S. federal income tax purposes, the Company is generally required to distribute at least 90% of its taxable net income (excluding net capital gains) to its stockholders as well as comply with other requirements, including certain asset, income and stock ownership tests. As a REIT, the Company is not subject to federal corporate income tax to the extent that it distributes 100% of its REIT taxable income each year. If the Company fails to qualify as a REIT, and does not qualify for certain statutory relief provisions, it is subject to U.S. federal, state and local income taxes and may be precluded from qualifying as a REIT for the subsequent four taxable years following the year in which it fails its REIT qualification. Accordingly, the Company’s failure to qualify as a REIT could have a material adverse impact on its results of operations and amounts available for distribution to its stockholders. The dividends-paid deduction of a REIT for qualifying dividends to its stockholders is computed using the Company’s taxable income as opposed to net income reported on the financial statements. Generally, taxable income differs from net income reported on the financial statements because the determination of taxable income is based on tax provisions and not financial accounting principles. The Company may elect to treat certain of its subsidiaries as taxable REIT subsidiaries (“TRS”). In general, the Company’s TRSs may hold assets and engage in activities that the Company cannot hold or engage in directly and generally may engage in any real estate or non-real estate-related business. A TRS is subject to U.S. federal, state and local corporate income taxes. As of September 30, 2016 and December 31, 2015, the Company had no TRSs. The Company evaluates the benefits from tax positions taken or expected to be taken in its tax return. Only the largest amount of benefits from tax positions that will more likely than not be sustainable upon examination are recognized by the Company. The Company does not have any unrecognized tax benefits, nor interest and penalties, recorded in its consolidated financial statements and does not anticipate significant adjustments to the total amount of unrecognized tax benefits within the next 12 months. The Company is subject to examination by the U.S. Internal Revenue Service and by the taxing authorities in other states in which the Company has significant business operations. The Company is not currently undergoing any examinations by taxing authorities. The Company is not subject to IRS examination for tax return years 2012 and prior. Earnings Per Share Basic earnings per share is calculated on the basis of the weighted-average number of common shares outstanding during the year. Basic earnings per share is computed by dividing income available to common stockholders by the weighted-average common shares outstanding during the period. Diluted earnings per share takes into account the potential dilution that could occur if securities or other contracts to issue common stock were exercised and converted to common stock. None of the 50,000 shares of convertible stock (discussed in Note 12) are included in the diluted earnings per share calculations because the necessary conditions for conversion have not been satisfied as of September 30, 2016 (were such date to represent the end of the contingency period). Reclassifications Certain amounts in the prior year financial statements have been reclassified to conform to the current-year presentation. The Company has reclassified $406,000 and $1.4 million of payroll expenses from General and Administrative to Rental Operating for the three and nine months ended September 30, 2015, respectively. The impact of the reclassifications made to prior year amounts are not material and did not affect net income. In accordance with the adoption of Financial Accounting Standards Board ("FASB") Accounting Standards Update (“ASU”) 2015-03, "Simplifying the Presentation of Debt Issuance Costs", the Company has reclassified $6.5 million of unamortized debt issuance costs at December 31, 2015 from assets to liabilities as a direct reduction of the related mortgage notes payable. In addition, deferred finance costs related to the Company's credit facility were reclassified from deferred financing costs to prepaid and other assets (See Note 9). Adoption of New Accounting Standards In January 2015, FASB issued ASU No. 2015-01, "Income Statement - Extraordinary and Unusual Items (Subtopic 225-20), Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items". The amendments in ASU No. 2015-01 eliminate from GAAP the concept of extraordinary items. Although the amendment will eliminate the requirements for reporting entities to consider whether an underlying event or transaction is extraordinary, the presentation and disclosure guidance for items that are unusual in nature or occur infrequently will be retained and will be expanded to include items that are both unusual in nature and infrequently occurring. On January 1, 2016, the Company adopted ASU No. 2015-01 and the adoption had no impact on the Company's consolidated financial statements. In February 2015, FASB issued ASU No. 2015-02, "Consolidation (Topic 810): Amendments to the Consolidation Analysis", which makes certain changes to both the variable interest model and the voting model, including changes to (1) the identification of variable interests (fees paid to a decision maker or service provider), (2) the variable interest entity characteristics for a limited partnership or similar entity and (3) the primary beneficiary determination. On January 1, 2016, the Company adopted ASU No. 2015-02 and the adoption did not have a significant impact on the Company's consolidated financial statements. In April 2015, FASB issued ASU No. 2015-03, "Simplifying the Presentation of Debt Issuance Costs", which requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected. On January 1, 2016, the Company adopted ASU No. 2015-03. Upon adoption, the Company applied the new guidance on a retrospective basis and adjusted the balance sheet of each individual period presented to reflect the period-specific effects of applying the new guidance. The Company has reclassified $6.5 million of unamortized debt issuance costs at December 31, 2015 from assets to liabilities as a direct reduction of the related mortgage notes payable. In August 2015, FASB issued ASU No. 2015-15, "Interest - Imputation of Interest", which clarifies that debt issuance costs associated with line of credit arrangements may continue to be accounted for as assets and not as a direct deduction from the carrying amount of the debt liabilities. On January 1, 2016, the Company adopted ASU No. 2015-15. Upon adoption, deferred finance costs related to the Company's credit facility were reclassified to prepaid expenses and other assets (See Note 9). In September 2015, FASB issued ASU No. 2015-16, "Simplifying the Accounting for Measurement-Period Adjustments", which eliminates the requirement to retroactively revise comparative financial information for prior periods presented in financial statements due to changes in provisional amounts recorded for acquisitions in subsequent periods. Upon adoption, disclosure of the amounts recorded in current-period earnings that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized at the acquisition date are required. On January 1, 2016, the Company adopted ASU No. 2015-16 and the adoption had no impact on its consolidated financial statements. Accounting Standards Issued But Not Yet Effective In May 2014, FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers”, which will replace most existing revenue recognition guidance in GAAP. The core principle of ASU No. 2014-09 is that an entity should recognize revenue for the transfer of goods or services equal to the amount that it expects to be entitled to receive for those goods or services. ASU No. 2014-09 requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments. ASU No. 2014-09 will be effective for the Company beginning January 1, 2018, including interim periods in 2018, and allows for both retrospective and prospective methods of adoption. The Company is in the process of determining the method of adoption and assessing the impact of this guidance on the Company’s consolidated financial statements. In August 2014, FASB issued ASU No. 2014-15, "Presentation of Financial Statements-Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern." Under the new guidance, an entity should evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued. ASU No. 2014-15 will be effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. The adoption of the new requirements is not expected to have a material impact on the Company's consolidated financial statements. In February 2016, FASB issued ASU No. 2016-02, "Leases (Topic 842)", which requires lessees to recognize at the commencement date for all leases, with the exception of short-term leases, (a) a lease liability, which is a lessee‘s obligation to make lease payments arising from a lease, measured on a discounted basis, and (b) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. ASU No. 2016-02 will be effective for the Company beginning January 1, 2019. The Company is evaluating this guidance; however, it does not expect the adoption of ASU No. 2016-02 to have a significant impact on its consolidated financial statements. In June 2016, FASB issued ASU No. 2016-13, “Financial Instruments - Credit Losses”, which requires measurement and recognition of expected credit losses for financial assets held. ASU No. 2016-13 will be effective for the Company beginning January 1, 2019. The Company is evaluating this guidance; however, it does not expect the adoption of ASU No. 2016-13 to have a significant impact on its consolidated financial statements. In August 2016, FASB issued ASU No. 2016-15, "Classification of Certain Cash Receipts and Cash Payments", which addresses eight specific cash flow issues with the objective of reducing existing diversity in practice. ASU No. 2016-15 will be effective for the Company beginning January 1, 2018. Early application is permitted. The Company is evaluating this guidance; however, it does not expect the adoption of ASU No. 2016-15 to have a significant impact on its consolidated cash flows. |
SUPPLEMENTAL CASH FLOW INFORMATION |
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Supplemental Cash Flow Elements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SUPPLEMENTAL CASH FLOW INFORMATION | NOTE 3 - SUPPLEMENTAL CASH FLOW INFORMATION The following table presents the Company's supplemental cash flow information (in thousands):
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RENTAL PROPERTIES, NET |
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Real Estate Investments, Net [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
RENTAL PROPERTIES, NET | NOTE 4 - RENTAL PROPERTIES, NET The following table presents the Company’s investments in rental properties (in thousands):
Depreciation expense for the three and nine months ended September 30, 2016 was $10.8 million and $32.9 million, respectively, and for the three and nine months ended September 30, 2015 was $11.3 million and $30.6 million, respectively. During the three months ended December 31, 2015, the Company entered into agreements to sell two rental properties, Conifer Place and Ivy at Clear Creek, with a net book value of $43.9 million. The Company confirmed the intent and ability to sell both properties in their present condition and both properties qualified for held for sale accounting treatment upon meeting all applicable criteria prior to December 31, 2015, at which time depreciation ceased. As such, the assets associated with these properties were separately classified and included as assets held for sale on the Company's consolidated balance sheet at December 31, 2015. However, the sale of these properties did not qualify for discontinued operations, and, therefore, the operations for all periods presented continue to be classified within continuing operations on the Company's consolidated statements of operations. The Company completed the sales of both Conifer Place and Ivy at Clear Creek during the three months ended March 31, 2016 (see Note 6). In December 2015, the Company agreed to sell its 70% interest in the joint venture that owns Champion Farms Apartments to its joint venture partner. The sale was completed in January 2016. As such, all assets and liabilities of the consolidated entity were reclassified to held for sale as of December 31, 2015 in the consolidated balance sheet. In January 2016, the Company deconsolidated the entity (see Note 6). Loss on disposal of assets. During the three and nine months ended September 30, 2016, the Company recorded losses of $334,000 and $620,000, respectively. During the three and nine months ended September 30, 2015, the Company recorded losses of $337,000 and $2.8 million, respectively. All losses on disposals of assets were related to the replacement of appliances at its rental properties in conjunction with unit upgrades. |
OTHER INVESTMENTS |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
OTHER INVESTMENTS | NOTE 5 - OTHER INVESTMENTS The following table presents the Company's components of other investments (in thousands):
Preferred equity investment: On November 12, 2014, the Company, through its wholly owned subsidiary, RRE Spring Hill Holdings, LLC, made a $3.5 million preferred equity investment in Spring Hill Investors Limited Partner, LLC (the “Investment Vehicle”) and became the Preferred Member. An unaffiliated limited liability company, Presidium AMC Spring Hill Venture, LLC, ("Presidium"), a Texas limited liability company, owned the common equity and acted as the managing member of the Investment Vehicle. In October 2015 and March 2016, the Company increased its investment by $800,000. The Company was paid a dividend equal to 12% of the total amount invested, of which 7% was paid monthly and the remaining amount was accrued and was to be paid when the property cash flow allowed for the repayment. This investment was repaid in full on June 6, 2016. In conjunction with the payoff, the Company received an exit fee of $230,000, which is included in interest and dividend income in the Company's consolidated statement of operations. Loan held for investment: On March 15, 2011, the Company purchased, at a discount, two non-performing promissory notes (the "Oberlin Note” and the "Heatherwood Note”) and two performing promissory notes (the "Peterson Note” and the "Trail Ridge Note”), collectively referred to as the “Notes”, each of which was secured by a first priority mortgage on multifamily rental apartment communities. The contract purchase price for the Notes was a total of $3.1 million, excluding closing costs. The Oberlin, Peterson and Heatherwood Notes were resolved in prior years. The following table presents the aging of the Company’s remaining loan held for investment, net (in thousands):
The following table presents information about the credit quality of the Company’s remaining loan held for investment, net (in thousands):
The following table presents details of the balance and terms of the Company's remaining loan held for investment at September 30, 2016 and December 31, 2015 (in thousands):
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DISPOSITION OF PROPERTIES AND DECONSOLIDATION OF INTERESTS |
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Discontinued Operations and Disposal Groups [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DISPOSITION OF PROPERTIES AND DECONSOLIDATION OF INTERESTS | NOTE 6 - DISPOSITION OF PROPERTIES AND DECONSOLIDATION OF INTERESTS The following table presents details of the Company's disposition and deconsolidation activity during the three and nine months ended September 30, 2016 and 2015 (in thousands):
(1) On January 27, 2016, the Company and its joint venture partner sold Conifer Place, which resulted in the deconsolidation of the entity as of January 27, 2016. Net gains on disposition of properties and joint venture interests includes $6.2 million attributable to noncontrolling interests. (2) On January 29, 2016, the Company sold its joint venture interest in Champion Farms to its joint venture partner. As such, the Company deconsolidated the entity as of January 29, 2016. The Company has no continuing involvement with this joint venture. (3) On June 30, 2016, the Company sold its joint venture interest in Fieldstone to its joint venture partner. As such, the Company deconsolidated the entity as of June 30, 2016. The Company has no continuing involvement with this joint venture. The following table presents the Company's revenues and net income (loss) attributable to properties sold, which includes gain on sale, for the three and nine months ended September 30, 2016 and 2015 (in thousands):
(1) On January 27, 2016, the Company and its joint venture partner sold Conifer Place, which resulted in the deconsolidation of the entity as of January 27, 2016. Net income (loss) attributable to properties sold presented in table includes $6.3 million attributable to noncontrolling interests. The following table presents a rollforward of the Company's activity in goodwill for the nine months ended September 30, 2016 (in thousands):
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IDENTIFIED INTANGIBLE ASSETS, NET |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||
IDENTIFIED INTANGIBLE ASSETS, NET | NOTE 7 - IDENTIFIED INTANGIBLE ASSETS, NET Identified intangible assets, net, relate to in-place apartment unit rental and antennae leases. As of September 30, 2016, all identified intangible assets related to apartment unit rental leases have been fully amortized. The net carrying value of the acquired in-place leases totaled $150,000 and $374,000 as of September 30, 2016 and December 31, 2015, respectively, net of accumulated amortization of $24.3 million and $28.4 million, respectively. The weighted-average remaining life of the acquired apartment unit rental leases was zero months and one month as of September 30, 2016 and December 31, 2015, respectively. Expected amortization for the antennae leases at the Vista Apartment Homes is $16,000 annually through 2025. Amortization of the apartment unit rental and antennae leases for the three and nine months ended September 30, 2016 was $4,000 and $224,000, respectively. Amortization of the apartment unit rental and antennae leases for the three and nine months ended September 30, 2015 was $1.9 million and $4.8 million, respectively. The following table presents the Company's expected amortization for the antennae leases for the next five 12-month periods ending September 30, and thereafter (in thousands):
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MORTGAGE NOTES PAYABLE, NET |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
MORTGAGE NOTES PAYABLE, NET | NOTE 8 - MORTGAGE NOTES PAYABLE, NET The following table presents a summary of the Company's mortgage notes payable, net (in thousands):
The following table presents additional information about the Company's mortgage notes payable, net (in thousands, except percentages):
Loans assumed as part of the Point Bonita Apartment Homes, South Lamar Village, Paladin (Fieldstone, Pinehurst, Pheasant Run, Retreat of Shawnee, Conifer Place, Evergreen at Coursey Place, Pines of York), Sunset Ridge and Maxwell Townhomes acquisitions were recorded at their fair values. The premium or discount is amortized over the remaining term of the loans and included in interest expense. For the three months ended September 30, 2016 and 2015, interest expense was reduced by $122,000 and $228,000, respectively, for the amortization of the premium or discount. For the nine months ended September 30, 2016 and 2015, interest expense was reduced by $364,000 and $602,000, respectively, for the amortization of the premium or discount. All mortgage notes are collateralized by a first mortgage lien on the assets of the respective property as named in the table above. The amount outstanding on the mortgages may be prepaid in full during the entire term with a prepayment penalty on the majority of mortgages held. As of September 30, 2016 and December 31, 2015, the Company had $10.0 million of restricted cash related to escrow deposits held by mortgage lenders for real estate taxes, insurance and capital reserves. The following table presents the Company's annual principal payments on the mortgage notes payable, excluding the amortization of the premium or discount, for each of the next five 12-month periods ending September 30, and thereafter (in thousands):
The following table presents the Company's annual amortization of the premium or discount for each of the next five 12-month periods ending September 30, and thereafter (in thousands):
The mortgage notes payable are recourse only with respect to the properties that secure the notes, subject to certain limited standard exceptions, as defined in each mortgage note. The Company has guaranteed the mortgage notes by executing a guarantee with respect to the properties. These exceptions are referred to as “carveouts.” In general, carveouts relate to damages suffered by the lender for a borrower’s failure to pay rents, insurance or condemnation proceeds to lender, failure to pay water, sewer and other public assessments or charges, failure to pay environmental compliance costs or to deliver books and records, in each case as required in the loan documents. The exceptions also require the Company to guarantee payment of audit costs, lender’s enforcement of its rights under the loan documents and payment of the loan if the borrower voluntarily files for bankruptcy or seeks reorganization, or if a related party of the borrower does so with respect to the subsidiary. The Company has also guaranteed the completion and payment of costs of completion of no less than $7.0 million for renovations to The Estates at Johns Creek by July 1, 2018, of which $6.9 million were completed at September 30, 2016. The mortgage obtained in connection with the acquisition of Yorba Linda in June 2015 includes a $7.5 million earn-out holdback which may be borrowed when certain debt service coverage and loan to value criteria are met. The Yorba Linda mortgage loan includes a net worth and liquidity covenant. The Company was in compliance with all covenants related to this loan at September 30, 2016. The loan also includes an additional debt service coverage covenant that is only required to be met as of December 31, 2017 and periods thereafter. On December 20, 2013, the Company, through a wholly-owned subsidiary, entered into a loan ("Tech Center Loan") with PNC Bank, National Association. The Company provided a repayment guarantee of all interest and scheduled monthly principal payments (excluding the final payment at maturity for the outstanding balance). In March 2016, the Company amended the loan, removing any additional borrowing capacity and requiring monthly principal repayments beginning April 1, 2016. The interest rate on the loan was also increased from one-month LIBOR plus 2.0% to one-month LIBOR plus 2.25%. On May 3, 2016, the existing loan was repaid in full and was refinanced with a different lender. On December 27, 2013, the Company, through a wholly-owned subsidiary, entered into a loan ("Westside Loan") with U.S. Bank National Association for $29.7 million. The Company could draw the remaining $6.7 million when certain debt service coverage and loan to value criteria were met. Amounts repaid on the loan could not be reborrowed. The Company had provided a $6.5 million repayment guarantee. On September 1, 2016, the existing loan was repaid in full and was refinanced with a different lender. In addition to Tech Center Square and The Westside Apartments, the Company refinanced the loans on Verona Apartment Homes and Skyview Apartment Homes. As a result, $714,000 and $854,000 of loss on extinguishment of debt was included in interest expense on the consolidated statement of operations for the three and nine months ended September 30, 2016, respectively. Deferred financing costs incurred to obtain financing are amortized over the term of the related debt. During the three months ended September 30, 2016 and September 30, 2015, $622,000 and $402,000, respectively, of amortization of deferred financing costs was included in interest expense. During the nine months ended September 30, 2016 and September 30, 2015, $1.6 million and $1.1 million, respectively, of amortization of deferred financing costs was included in interest expense. Accumulated amortization as of both September 30, 2016 and December 31, 2015 was $2.4 million. Estimated amortization of the existing deferred financing costs for the next five 12-month periods ending September 30, and thereafter, is as follows (in thousands):
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CREDIT FACILITY |
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Line of Credit Facility [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CREDIT FACILITY | NOTE 9 - CREDIT FACILITY The following table presents a summary of the Company's credit facility (in thousands, except percentages):
Draws under the secured revolving credit facility (the “Bank of America Credit Facility”) with Bank of America, N.A. (“Bank of America”) are secured by certain of the Company's properties with an aggregate value of $42.0 million as of September 30, 2016 and are guaranteed by the Company. Weighted average borrowings for the three months ended September 30, 2016 and 2015 were $593,000 and $20.9 million, respectively. Weighted average borrowings for the nine months ended September 30, 2016 and 2015 were $9.0 million and $11.3 million, respectively. The Bank of America Credit Facility, as amended, matures on May 23, 2017, and may be extended to May 23, 2019 subject to satisfaction of certain conditions and payment of an extension fee equal to 0.25% of the amount committed under the Bank of America Credit Facility. The Company is required to make monthly interest-only payments. The Company also may prepay the Bank of America Credit Facility in whole or in part at any time without premium or penalty. The operating partnership's obligations with respect to the Bank of America Credit Facility are guaranteed by the Company, pursuant to the terms of a guaranty dated as of December 2, 2011, or the Guaranty. The Bank of America Credit Facility and the Guaranty contain restrictive covenants for maintaining a certain tangible net worth and a certain level of liquid assets, and for restricting the securing of additional debt as follows:
In addition to the covenants above, after 36 months from the date of an initial advance on any property, the property must satisfy debt service coverage requirements. This covenant will go into effect during the three months ended December 31, 2016. The Company was in compliance with all loan covenants at September 30, 2016. The Company has $122,000 and $389,000 of deferred finance costs included in prepaid expenses and other assets on the consolidated balance sheets related to the Bank of America Credit Facility as of September 30, 2016 and December 31, 2015, respectively, which is being amortized over the term of the debt. During the three months ended September 30, 2016 and 2015, $48,000 and $70,000, respectively, of amortization of deferred finance costs was included in interest expense related to this facility. During the nine months ended September 30, 2016 and 2015, $268,000 and $257,000, respectively, of amortization of deferred finance costs was included in interest expense related to this facility. Estimated amortization of the existing deferred financing costs is $122,000 for the 12-month period ending September 30, 2017 and none thereafter. As of September 30, 2016, there are no principal payments required by the credit facility for the 12-month period ending September 30, 2017. |
ACCUMULATED OTHER COMPREHENSIVE LOSS |
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ACCUMULATED OTHER COMPREHENSIVE LOSS | NOTE 10 - ACCUMULATED OTHER COMPREHENSIVE LOSS The following table presents the changes in each component of the Company's accumulated other comprehensive loss for the nine months ended September 30, 2016 (in thousands):
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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS |
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Related Party Transactions [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS | NOTE 11 - CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS In the ordinary course of its business operations, the Company has ongoing relationships with several related parties. Relationship with RAI On September 8, 2016, RAI was acquired by C-III. As a result, C-III now controls the Advisor and all of the shares currently held by RAI. Self-insurance funds held in escrow. Substantially all of the receivables from related parties represents escrow funds held by RAI for self insurance. The Company's properties participate in insurance pools with other properties directly and indirectly managed by RAI for both property insurance and general liability. RAI holds the escrow funds related to the insurance pools on its books. The pool for the property insurance covers losses up to $2.5 million and the pool for the general liability covers losses up to the first $50,000 per incident. Catastrophic insurance would cover property losses in excess of the insurance pool up to $140.0 million. Therefore, unforeseen or catastrophic losses in excess of the Company's insured limits could have a material adverse effect on the Company's financial condition and operating results. During the nine months ended September 30, 2016, the Company paid $1.7 million into the insurance pools. Internal audit. RAI performs internal audit services for the Company. Relationship with the Advisor In September 2009, the Company entered into an advisory agreement (the “Advisory Agreement”) pursuant to which the Advisor provides the Company with investment management, administrative and related services. The Advisory Agreement was amended in January 2010 and further amended in January 2011 and March 2015. The Advisory Agreement has a one-year term and renews for an unlimited number of successive one-year terms upon the approval of the conflicts committee of the Company's board of directors. The Company renewed the Advisory Agreement for another year on September 15, 2016. Under the Advisory Agreement, the Advisor receives fees and is reimbursed for its expenses as set forth below: Acquisition fees. The Company pays the Advisor an acquisition fee of 2.0% of the cost of investments acquired on behalf of the Company, plus any capital expenditure reserves allocated, or the amount funded by the Company to acquire loans, including acquisition expenses and any debt attributable to such investments. Asset management fees. The Company pays the Advisor a monthly asset management fee equal to one-twelfth of 1.0% of the higher of the cost or the independently appraised value of each asset, without deduction for depreciation, bad debts or other non-cash reserves. The asset management fee is based only on the portion of the costs or value attributable to the Company’s investment in an asset if the Company does not own all or a majority of an asset and does not manage or control the asset. Disposition fees. The Advisor earns a disposition fee in connection with the sale of a property equal to the lesser of one-half of the aggregate brokerage commission paid, or if none is paid, 2.75% of the contract sales price. Debt financing fees. The Advisor earns a debt financing fee equal to 0.5% of the amount available under any debt financing obtained for which it provided substantial services. Expense reimbursements and overhead allocation. The Company also pays directly or reimburses the Advisor for all of the expenses paid or incurred by the Advisor or its affiliates on behalf of the Company or in connection with the services provided to the Company in relation to its public offering, including its ongoing distribution reinvestment plan offering. Reimbursements also include expenses the Advisor incurs in connection with providing services to the Company, including the Company’s allocable share of costs for Advisor personnel and overhead, out of pocket expenses incurred in connection with the selection and acquisition of properties or other real estate related debt investments, whether or not the Company ultimately acquires the investment. However, the Company will not reimburse the Advisor or its affiliates for employee costs in connection with services for which the Advisor earns acquisition or disposition fees. Relationship with Resource Real Estate Opportunity Manager The Manager manages the Company's real estate properties and real estate-related debt investments and coordinates the leasing of, and manages construction activities related to, some of the Company’s real estate properties pursuant to the terms of the management agreement with the Manager. Property management fees. The Manager earns 4.5% of the gross receipts from the Company's properties, provided that for properties that are less than 75% occupied, the manager receives a minimum fee for the first 12 months of ownership for performing certain property management and leasing activities. Construction management fees. The Manager earns a construction management fee of 5.0% of actual aggregate costs to construct improvements, or to repair, rehab or reconstruct a property. Debt servicing fees. The Manager earns a debt servicing fee of 2.75% on payments received from loans held by the Company for investment. Information technology fees and operating expense reimbursement. During the ordinary course of business, the Manager or other affiliates of RAI may pay certain shared operating expenses on behalf of the Company. Relationship with Other Related Parties The Company has also made payment for legal services to the law firm of Ledgewood P.C. (“Ledgewood”). Until 1996, the Chairman of RAI was of counsel to Ledgewood. In connection with the termination of his affiliation with Ledgewood and its redemption of his interest, the Chairman continues to receive certain payments from Ledgewood, but as of September 8, 2016 is no longer the Chairman of RAI. Until March 2006, an executive of RAI was the managing member of Ledgewood. This executive remained of counsel to Ledgewood through June 2007, at which time he became an Executive Vice President of RAI, but as of September 8, 2016 is no longer an executive of RAI. The Company utilizes the services of a printing company, Graphic Images, LLC (“Graphic Images”), whose principal owner is the father of RAI’s Chief Financial Officer. The following table presents the Company's amounts payable to/receivable from related parties (in thousands):
The following table presents the Company's fees earned/expenses paid to related parties (in thousands):
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EQUITY |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EQUITY | NOTE 12 - EQUITY Preferred Stock The Company’s charter authorizes the Company to issue 10.0 million shares of its $0.01 par value preferred stock. As of September 30, 2016 and December 31, 2015, no shares of preferred stock were issued and outstanding. Common Stock As of September 30, 2016, the Company had issued shares of its $0.01 par value common stock as follows (dollars in thousands):
(1) Includes 276,056 shares issued to the Advisor. Convertible Stock As of September 30, 2016 and December 31, 2015, the Company had 50,000 shares of $0.01 par value convertible stock outstanding of which the Advisor and affiliated persons own 49,063 shares and outside investors own 937 shares. The convertible stock will convert into shares of the Company’s common stock upon the occurrence of (a) the Company having paid distributions to common stockholders that in the aggregate equal 100% of the price at which the Company originally sold the shares plus an amount sufficient to produce a 10% cumulative, non-compounded annual return on the shares at that price; or (b) if the Company lists its common stock on a national securities exchange and, on the 31st trading day after listing, the Company’s value based on the average trading price of its common stock since the listing, plus prior distributions, combine to meet the same 10% return threshold. Each of these two events is a “Triggering Event.” Upon a Triggering Event, the Company's convertible stock will, unless its advisory agreement has been terminated or not renewed on account of a material breach by its Advisor, generally be converted into a number of shares of common stock equal to 1/50,000 of the quotient of:
(i) 25% of the amount, if any, by which
(ii) 15% of the amount, if any, by which
Redemption of Securities During the three and nine months ended September 30, 2016, the Company redeemed 519,736 and 1,981,819 of its common shares, respectively. The Company will not redeem in excess of 5% of the weighted-average number of shares outstanding during the 12-month period immediately prior to the effective date of redemption. The Company's board of directors will determine at least quarterly whether it has sufficient excess cash to repurchase shares. Generally, the cash available for redemptions will be limited to proceeds from the Company's distribution reinvestment plan plus, if the Company has positive operating cash flow from the previous fiscal year, 1% of all operating cash flow from the previous year. All redemption requests tendered were honored during the three and nine months ended September 30, 2016. The Company's Board of Directors, in its sole discretion, may suspend, terminate or amend the Company's share redemption program without stockholder approval upon 30 days' notice if it determines that such suspension, termination or amendment is in the Company's best interest. The Company's board may also reduce the number of shares purchased under the share redemption program if it determines the funds otherwise available to fund the Company's share redemption program are needed for other purposes. These limitations apply to all redemptions, including redemptions sought upon a stockholder's death, qualifying disability or confinement to a long-term care facility. Distributions For the nine months ended September 30, 2016, the Company paid aggregate distributions of $32.2 million, including $10.8 million of distributions paid in cash and $21.5 million of distributions reinvested in shares of common stock through the Company's distribution reinvestment plan, as follows (in thousands):
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FAIR VALUE MEASURES AND DISCLOSURES |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE MEASURES AND DISCLOSURES | NOTE 13 - FAIR VALUE MEASURES AND DISCLOSURES In analyzing the fair value of its investments accounted for on a fair value basis, the Company follows the fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The Company determines fair value based on quoted prices when available or, if quoted prices are not available, through the use of alternative approaches, such as discounting the expected cash flows using market interest rates commensurate with the credit quality and duration of the investment. The fair value of cash, tenant receivables and accounts payable, approximate their carrying value due to their short nature. The hierarchy followed defines three levels of inputs that may be used to measure fair value: Level 1 - Quoted prices in active markets for identical assets and liabilities that the reporting entity has the ability to access at the measurement date. Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset and liability or can be corroborated with observable market data for substantially the entire contractual term of the asset or liability. Level 3 - Unobservable inputs that reflect the entity’s own assumptions about the assumptions that market participants would use in the pricing of the asset or liability and are consequently not based on market activity, but rather through particular valuation techniques. The determination of where an asset or liability falls in the hierarchy requires significant judgment. The Company evaluates its hierarchy disclosures each quarter; depending on various factors, it is possible that an asset or liability may be classified differently from quarter to quarter. However, the Company expects that changes in classifications between levels will be rare. Rental properties obtained through a foreclosed note are measured at fair value on a non-recurring basis. The fair value of rental properties is usually estimated based on information obtained from a number of sources, including information obtained about each property as a result of pre-acquisition due diligence, marketing and leasing activities. The Company allocates the purchase price of properties to acquired tangible assets, consisting of land, buildings, fixtures and improvements, and identified intangible lease assets and liabilities, consisting of the value of above-market and below-market leases, as applicable, the value of in-place leases and the value of tenant relationships, based in each case on their fair values. Derivatives (interest rate caps) which are reported at fair value in the consolidated balance sheets in prepaid expenses and other assets are valued by a third-party pricing agent using an income approach with models that use, as their primary inputs, readily observable market parameters. This valuation process considers factors including interest rate yield curves, time value, credit and volatility factors (Level 2). The following table presents information about the Company's assets measured at fair value on a recurring basis and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value (in thousands):
The carrying and fair values of the Company’s loan held for investment, net, preferred equity investment, mortgage notes payable-outstanding borrowings, mortgage note payable -included in other liabilities associated with rental properties held for sale and credit facilities were as follows (in thousands):
The fair values of the loan held for investment, net and preferred equity investment were estimated using rates available to the Company for debt with similar terms and remaining maturities (Level 3). The carrying amount of the mortgage notes payable presented is the outstanding borrowings excluding premium or discount and deferred finance costs, net. The fair value of the mortgage notes payable was estimated using rates available to the Company for debt with similar terms and remaining maturities (Level 3). The fair value of the credit facility equals the carrying amounts because the variable interest rate is considered a market rate (Level 3). |
DERIVATIVES AND HEDGING ACTIVITIES |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DERIVATIVES AND HEDGING ACTIVITIES | NOTE 14 - DERIVATIVES AND HEDGING ACTIVITIES Risk Management Objective of Using Derivatives The Company is exposed to certain risk arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources, and duration of its debt funding and the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Company’s derivative financial instruments are used to manage differences in the amount, timing, and duration of the Company’s known or expected cash receipts and its known or expected cash payments principally related to the Company’s investments and borrowings. As a condition to certain of the Company’s financing facilities, from time to time the Company may be required to enter into certain derivative transactions as may be required by the lender. These transactions would generally be in line with the Company’s own risk management objectives and also served to protect the lender. Cash Flow Hedges of Interest Rate Risk The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company entered into a total of 11 interest rate caps that were designated as cash flow hedges. Interest rate caps designated as cash flow hedges involve the receipt of variable amounts from a counterparty if interest rates rise above the strike rate on the contract in exchange for an up-front premium. The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive income and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. During the three and nine months ended September 30, 2016 and the year ended December 31, 2015, such derivatives were used to hedge the variable cash flows, indexed to USD-LIBOR, associated with existing variable-rate loan agreements. The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings. During the nine months ended September 30, 2016, the Company had a loss of $32,553 due to hedge ineffectiveness related to the sale of The Nesbit Palisades and $72,388 due to hedge ineffectiveness related to the sale of Ivy at Clear Creek. Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. As of September 30, 2016, the Company had the following outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk (dollars in thousands):
Tabular Disclosure of Fair Values of Derivative Instruments on the Balance Sheet The following table presents the fair value of the Company’s derivative financial instruments on the consolidated balance sheets as of September 30, 2016 and December 31, 2015 (in thousands):
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OPERATING EXPENSE LIMITATION |
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OPERATING EXPENSE LIMITATION WAIVER [Abstract] | |
OPERATING EXPENSE LIMITATION | NOTE 15 - OPERATING EXPENSE LIMITATION Under its charter, the Company must limit its total operating expenses to the lesser of 2% of its average invested assets or 25% of its net income for the four most recently completed fiscal quarters, unless the conflicts committee of the Company’s board of directors has determined that such excess expenses were justified based on unusual and non-recurring factors. Operating expenses for the four quarters ended September 30, 2016 were in compliance with the charter imposed limitation. |
SUBSEQUENT EVENTS |
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Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 16 - SUBSEQUENT EVENTS On October 31, 2016, the Company's Board of Directors declared a $0.05 per share cash distribution to its common stockholders of record at the close of business on that day. Such distribution was paid on November 1, 2016. On October 14, 2016, the Company refinanced the mortgage note payable secured by Pinehurst. The Company increased the mortgage note payable by $3.4 million as a result of the refinance. On October 31, 2016, the Company refinanced the mortgage note payable secured by Cannery Lofts. The Company increased the mortgage note payable by $4.9 million as a result of the refinance. The Company has evaluated subsequent events and determined that no events have occurred, other than those disclosed above, which would require an adjustment to or additional disclosure in the consolidated financial statements. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
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Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries as follows:
N/A - Not Applicable (a) - Subsidiary holds a portion of the Williamsburg parking lot (b) - Wholly-owned subsidiary of RRE Charlemagne Holdings, LLC (c) - Underlying investment sold prior to 2016 (d) - Underlying investment sold in 2016 (e) - Underlying investment resolved in 2016 (f) - Subsidiary was dissolved prior to September 30, 2016 All intercompany accounts and transactions have been eliminated in consolidation. The consolidated financial statements reflect the Company's accounts and the accounts of the Company's majority-owned and/or controlled subsidiaries. The Company follows the provisions of Accounting Standards Codification (“ASC”) Topic 810, “Consolidation,” and accordingly consolidates entities that are variable interest entities (“VIEs”) where it has determined that it is the primary beneficiary of such entities. Once it has been determined that the Company holds a variable interest in a VIE, management performs a qualitative analysis to determine (i) if the Company has the power to direct the matters that most significantly impact the VIE's financial performance; and (ii) if the Company has the obligation to absorb the losses of the VIE that could potentially be significant to the VIE or the right to receive the benefits of the VIE that could potentially be significant to the VIE. If the Company's interest possesses both of these characteristics, the Company is deemed to be the primary beneficiary and would be required to consolidate the VIE. The Company will continually assess its involvement with VIEs and re-evaluate the requirement to consolidate them. For consolidated entities (including VIEs of which the Company is the primary beneficiary), noncontrolling interests are presented and disclosed as a separate component of stockholders' equity (not as a liability or other item outside of stockholders' equity). Consolidated net income (loss) includes the noncontrolling interests’ share of income (loss). All changes in the Company’s ownership interest in a subsidiary are accounted for as stockholders' equity transactions if the Company retains its controlling financial interest in the subsidiary. The portions of these entities that the Company does not own are presented as noncontrolling interests as of the dates and for the periods presented in the consolidated financial statements. The consolidated financial statements include the accounts of the Company's majority-owned and/or controlled subsidiaries, which are VIEs, as follows:
(1) On January 29, 2016, the Company sold its joint venture interest in Champion Farms to its joint venture partner. As such, the Company deconsolidated the entity as of January 29, 2016. The Company has no continuing involvement with this joint venture. (See Note 6) (2) On June 30, 2016, the Company sold its joint venture interest in Fieldstone to its joint venture partner. As such, the Company deconsolidated the entity as of June 30, 2016. The Company has no continuing involvement with this joint venture. (See Note 6) (3) On January 27, 2016, the Company and its joint venture partner sold Conifer Place, which resulted in the deconsolidation of the entity as of January 27, 2016. (See Note 6) The Company's preferred equity investment was a VIE for which the Company had determined it was not the primary beneficiary; therefore, the Company did not consolidate the entity. The Company was not considered the primary beneficiary of the preferred equity investee because it did not possess the unilateral power to direct the key activities of investee that were considered most significant. |
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Use of Estimates | Use of Estimates The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
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Assets Held for Sale | Assets Held for Sale The Company presents the assets and liabilities of any rental properties which qualify as held for sale, separately in the consolidated balance sheets. Real estate assets held for sale are measured at the lower of carrying amount or fair value less cost to sell. Both the real estate and the corresponding liabilities are presented separately in the consolidated balance sheets. Subsequent to classification of an asset as held for sale, no further depreciation is recorded. |
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Rental Properties | Rental Properties The Company records acquired rental properties at fair value on their respective acquisition date. The Company considers the period of future benefit of an asset to determine its appropriate useful life and depreciates the rental properties using the straight line method. The Company anticipates the estimated useful lives of its assets by class as follows:
Improvements and replacements in excess of $1,000 are capitalized when they have a useful life greater than or equal to one year. Resource Real Estate Opportunity Manager, LLC (the “Manager”), an affiliate of the Advisor, earns a construction management fee of 5% of actual aggregate costs to construct improvements, or to repair, rehab or reconstruct a property. These costs are capitalized along with the related asset. Costs of repairs and maintenance are expensed as incurred. |
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Impairment of Long-Lived Assets | Impairment of Long Lived Assets When circumstances indicate the carrying value of a property may not be recoverable, the Company reviews the asset for permanent impairment. This review is based on an estimate of the future undiscounted cash flows, excluding interest charges, expected to result from the property’s use and eventual disposition. The review also considers factors such as expected future operating income, market and other applicable trends and residual value, as well as the effects of leasing demand, competition and other factors. An impairment loss will be recorded to the extent that the carrying value exceeds the estimated fair value of a property to be held and used. For properties held for sale, the impairment loss would be the adjustment to fair value less the estimated cost to dispose of the asset. |
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Loans Held for Investment, Net | Loans Held for Investment, Net The Company records acquired performing loans held for investment at cost and reviews them for potential impairment at each balance sheet date. The Company considers a loan to be impaired if one of two conditions exists. The first condition is if, based on current information and events, management believes it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. The second condition is if the loan is deemed to be a troubled-debt restructuring (“TDR”) where a concession has been given to a borrower in financial difficulty. A TDR may not have an associated specific loan loss allowance if the principal and interest amount is considered recoverable based on current market conditions, expected collateral performance and/or guarantees made by the borrowers. The amount of impairment, if any, is measured by comparing the recorded amount of the loan to the present value of the expected cash flows or, as a practical expedient, the fair value of the collateral. If a loan is deemed to be impaired, the Company records a reserve for loan losses through a charge to income for any shortfall. Interest income from performing loans held for investment is recognized based on the contractual terms of the loan agreement. Fees related to any buy down of the interest rate are deferred as prepaid interest income and amortized over the term of the loan as an adjustment to interest income. The initial investment made in a purchased performing loan includes the amount paid to the seller plus fees. The initial investment frequently differs from the related loan’s principal amount at the date of the purchase. The difference is recognized as an adjustment of the yield over the life of the loan. Closing costs related to the purchase of a performing loan held for investment are amortized over the term of the loan and accreted as an adjustment to interest income. The Company may acquire real estate loans at a discount due to the credit quality of such loans and the respective borrowers under such loans. Revenues from these loans are recorded under the effective interest method. Under this method, an effective interest rate (“EIR”) is applied to the cost basis of the real estate loan held for investment. The EIR that is calculated when the loan held for investment is acquired remains constant and is the basis for subsequent impairment testing and income recognition. However, if the amount and timing of future cash collections are not reasonably estimable, the Company accounts for the real estate receivable on the cost recovery method. Under the cost recovery method of accounting, no income is recognized until the basis of the loan held for investment has been fully recovered. |
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Preferred Equity Investment | Preferred Equity Investment The Company recorded its preferred equity investments at amortized cost. Investments carried at amortized cost were evaluated for impairment at each reporting date. When an investment was impaired and that impairment was considered other than temporary, the amount of the loss accrual was calculated by comparing the carrying amount of the investment to its estimated fair value. This investment was repaid in full on June 6, 2016 (See Note 5). Dividend income was recognized when earned based on the contractual terms of the preferred equity agreement. |
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Allocation of Purchase Price of Acquired and Foreclosed Assets | Allocation of the Purchase Price of Acquired and Foreclosed Assets The cost of rental properties acquired directly as fee interests and through foreclosing on a loan are allocated to net tangible and intangible assets based on their relative fair values. The Company allocates the purchase price of properties to acquired tangible assets, consisting of land, buildings, fixtures and improvements, and to identified intangible lease assets and liabilities, consisting of the value of above-market and below-market leases, as applicable, the value of in-place leases and the value of tenant relationships. Fair value estimates are based on information obtained from a number of sources, including information obtained about each property as a result of pre-acquisition due diligence, marketing and leasing activities. In addition, the Company may obtain independent appraisal reports. The information in the appraisal reports along with the aforementioned information available to the Company's management is used in allocating the purchase price. The independent appraisers have no involvement in management's allocation decisions other than providing market information. In allocating the purchase price, management also includes real estate taxes, insurance and other operating expenses and estimates of lost rentals at market rates during the expected lease-up period. Management also estimates costs to execute similar leases, including leasing commissions and legal and other related expenses, to the extent that such costs have not already been incurred in connection with a new lease origination as part of the transaction. The Company records above-market and below-market in-place lease values for acquired properties based on the present value (using an interest rate that reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to the in-place leases and (ii) management’s estimate of fair market lease rates for the corresponding in-place leases, measured over a period equal to the remaining non-cancelable term of the lease. The Company amortizes any capitalized above-market or below-market lease values as an increase or reduction to rental income over the remaining non-cancelable terms of the respective leases. The Company measures the aggregate value of other intangible assets acquired based on the difference between (i) the property valued with existing in-place leases adjusted to market rental rates and (ii) the property valued as if it were vacant. Management’s estimates of value are made using methods similar to those used by independent appraisers (e.g., discounted cash flow analysis). Factors to be considered by management in its analysis include an estimate of carrying costs during hypothetical expected lease-up periods considering current market conditions and costs to execute similar leases. The total amount of other intangible assets acquired is further allocated to customer relationship intangible values based on management’s evaluation of the specific characteristics of each tenant’s lease and the Company’s overall relationship with that respective tenant. Characteristics to be considered by management in allocating these values include the nature and extent of the Company’s existing relationships with the tenant, the tenant’s credit quality and expectations of lease renewals (including those existing under the terms of the lease agreement), among other factors. The Company amortizes the value of in-place leases to expense over the average remaining term of the respective leases. The value of customer relationship intangibles are amortized to expense over the initial term and any renewal periods in the respective leases, but in no event will the amortization periods for the intangible assets exceed the remaining depreciable life of the building. Should a tenant terminate its lease, the unamortized portion of the in-place lease value and customer relationship intangibles associated with that tenant would be charged to expense in that period. The determination of the fair value of assets and liabilities acquired requires the use of significant assumptions with regard to current market rental rates, discount rates and other variables. The use of inappropriate estimates would result in an incorrect assessment of the purchase price allocations, which could impact the amount of the Company’s reported net income. Initial purchase price allocations are subject to change until all information is finalized, which is generally within one year of the acquisition date. |
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Goodwill | Goodwill The Company records the excess of the cost of an acquired entity over the difference between the amounts assigned to assets acquired (including identified intangible assets) and liabilities assumed as goodwill. Goodwill is not amortized but is tested for impairment at a level of reporting referred to as a reporting unit during the fourth quarter of each calendar year, or more frequently if events or changes in circumstances indicate that the asset might be impaired. |
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Debt Modification and Extinguishment | The Company calculates the change in the present values of the old debt instruments and the new debt instruments to determine if the terms were substantially different. If the financing transactions is determined to be a extinguishment, the old debt is derecognized and the new debt is recorded at fair value. Unamortized deferred loan costs and new fees paid to the lender are expensed and fees paid to third parties on the new debt are capitalized. If the financing transaction is determined to be a modification, unamortized loan costs and new fees paid to the lender continue to be amortized over the new term and fees paid to third parties are expensed. |
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Revenue Recognition | Revenue Recognition The Company recognizes minimum rent, including rental abatements and contractual fixed increases attributable to operating leases, on a straight-line basis over the term of the related lease and includes amounts expected to be received in later years in deferred rents. The future minimum rental payments to be received from noncancelable operating leases for residential rental properties are $57.6 million and $152,000 for the 12 month periods ending September 30, 2017 and 2018, respectively, and none thereafter. The future minimum rental payments to be received from noncancelable operating leases for commercial rental properties and antenna rentals are $341,000, $226,000, $151,000, $95,000, $7,000, and $0 for the 12 month periods ending September 30, 2017, 2018, 2019, 2020, 2021, and thereafter, respectively. Revenue is primarily derived from the rental of residential housing units, however, included within rental income is other income such as pet fees, parking fees, and late fees, as well as property operating expense reimbursements due from tenants for common area maintenance, real estate taxes and other recoverable costs. The Company records the ancillary charges in the period in which they are earned or received and records the reimbursements in the period in which the related expenses are incurred. |
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Tenant Receivables | Tenant Receivables Tenant receivables are stated in the financial statements as amounts due from tenants net of an allowance for uncollectible receivables. Payment terms vary and receivables outstanding longer than the payment terms are considered past due. The Company determines its allowance by considering a number of factors, including the length of time receivables are past due, security deposits held, the Company’s previous loss history, the tenants’ current ability to pay their obligations to the Company, the condition of the general economy and the industry as a whole. The Company writes off receivables when they become uncollectible. |
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Income Taxes | Income Taxes To maintain its REIT qualification for U.S. federal income tax purposes, the Company is generally required to distribute at least 90% of its taxable net income (excluding net capital gains) to its stockholders as well as comply with other requirements, including certain asset, income and stock ownership tests. As a REIT, the Company is not subject to federal corporate income tax to the extent that it distributes 100% of its REIT taxable income each year. If the Company fails to qualify as a REIT, and does not qualify for certain statutory relief provisions, it is subject to U.S. federal, state and local income taxes and may be precluded from qualifying as a REIT for the subsequent four taxable years following the year in which it fails its REIT qualification. Accordingly, the Company’s failure to qualify as a REIT could have a material adverse impact on its results of operations and amounts available for distribution to its stockholders. The dividends-paid deduction of a REIT for qualifying dividends to its stockholders is computed using the Company’s taxable income as opposed to net income reported on the financial statements. Generally, taxable income differs from net income reported on the financial statements because the determination of taxable income is based on tax provisions and not financial accounting principles. The Company may elect to treat certain of its subsidiaries as taxable REIT subsidiaries (“TRS”). In general, the Company’s TRSs may hold assets and engage in activities that the Company cannot hold or engage in directly and generally may engage in any real estate or non-real estate-related business. A TRS is subject to U.S. federal, state and local corporate income taxes. As of September 30, 2016 and December 31, 2015, the Company had no TRSs. The Company evaluates the benefits from tax positions taken or expected to be taken in its tax return. Only the largest amount of benefits from tax positions that will more likely than not be sustainable upon examination are recognized by the Company. The Company does not have any unrecognized tax benefits, nor interest and penalties, recorded in its consolidated financial statements and does not anticipate significant adjustments to the total amount of unrecognized tax benefits within the next 12 months. The Company is subject to examination by the U.S. Internal Revenue Service and by the taxing authorities in other states in which the Company has significant business operations. |
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Earnings Per Share | Earnings Per Share Basic earnings per share is calculated on the basis of the weighted-average number of common shares outstanding during the year. Basic earnings per share is computed by dividing income available to common stockholders by the weighted-average common shares outstanding during the period. Diluted earnings per share takes into account the potential dilution that could occur if securities or other contracts to issue common stock were exercised and converted to common stock. |
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Reclassifications | Reclassifications Certain amounts in the prior year financial statements have been reclassified to conform to the current-year presentation. The Company has reclassified $406,000 and $1.4 million of payroll expenses from General and Administrative to Rental Operating for the three and nine months ended September 30, 2015, respectively. The impact of the reclassifications made to prior year amounts are not material and did not affect net income. |
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Adoption of New Accounting Standards | Adoption of New Accounting Standards In January 2015, FASB issued ASU No. 2015-01, "Income Statement - Extraordinary and Unusual Items (Subtopic 225-20), Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items". The amendments in ASU No. 2015-01 eliminate from GAAP the concept of extraordinary items. Although the amendment will eliminate the requirements for reporting entities to consider whether an underlying event or transaction is extraordinary, the presentation and disclosure guidance for items that are unusual in nature or occur infrequently will be retained and will be expanded to include items that are both unusual in nature and infrequently occurring. On January 1, 2016, the Company adopted ASU No. 2015-01 and the adoption had no impact on the Company's consolidated financial statements. In February 2015, FASB issued ASU No. 2015-02, "Consolidation (Topic 810): Amendments to the Consolidation Analysis", which makes certain changes to both the variable interest model and the voting model, including changes to (1) the identification of variable interests (fees paid to a decision maker or service provider), (2) the variable interest entity characteristics for a limited partnership or similar entity and (3) the primary beneficiary determination. On January 1, 2016, the Company adopted ASU No. 2015-02 and the adoption did not have a significant impact on the Company's consolidated financial statements. In April 2015, FASB issued ASU No. 2015-03, "Simplifying the Presentation of Debt Issuance Costs", which requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected. On January 1, 2016, the Company adopted ASU No. 2015-03. Upon adoption, the Company applied the new guidance on a retrospective basis and adjusted the balance sheet of each individual period presented to reflect the period-specific effects of applying the new guidance. The Company has reclassified $6.5 million of unamortized debt issuance costs at December 31, 2015 from assets to liabilities as a direct reduction of the related mortgage notes payable. In August 2015, FASB issued ASU No. 2015-15, "Interest - Imputation of Interest", which clarifies that debt issuance costs associated with line of credit arrangements may continue to be accounted for as assets and not as a direct deduction from the carrying amount of the debt liabilities. On January 1, 2016, the Company adopted ASU No. 2015-15. Upon adoption, deferred finance costs related to the Company's credit facility were reclassified to prepaid expenses and other assets (See Note 9). In September 2015, FASB issued ASU No. 2015-16, "Simplifying the Accounting for Measurement-Period Adjustments", which eliminates the requirement to retroactively revise comparative financial information for prior periods presented in financial statements due to changes in provisional amounts recorded for acquisitions in subsequent periods. Upon adoption, disclosure of the amounts recorded in current-period earnings that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized at the acquisition date are required. On January 1, 2016, the Company adopted ASU No. 2015-16 and the adoption had no impact on its consolidated financial statements. Accounting Standards Issued But Not Yet Effective In May 2014, FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers”, which will replace most existing revenue recognition guidance in GAAP. The core principle of ASU No. 2014-09 is that an entity should recognize revenue for the transfer of goods or services equal to the amount that it expects to be entitled to receive for those goods or services. ASU No. 2014-09 requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments. ASU No. 2014-09 will be effective for the Company beginning January 1, 2018, including interim periods in 2018, and allows for both retrospective and prospective methods of adoption. The Company is in the process of determining the method of adoption and assessing the impact of this guidance on the Company’s consolidated financial statements. In August 2014, FASB issued ASU No. 2014-15, "Presentation of Financial Statements-Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern." Under the new guidance, an entity should evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued. ASU No. 2014-15 will be effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. The adoption of the new requirements is not expected to have a material impact on the Company's consolidated financial statements. In February 2016, FASB issued ASU No. 2016-02, "Leases (Topic 842)", which requires lessees to recognize at the commencement date for all leases, with the exception of short-term leases, (a) a lease liability, which is a lessee‘s obligation to make lease payments arising from a lease, measured on a discounted basis, and (b) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. ASU No. 2016-02 will be effective for the Company beginning January 1, 2019. The Company is evaluating this guidance; however, it does not expect the adoption of ASU No. 2016-02 to have a significant impact on its consolidated financial statements. In June 2016, FASB issued ASU No. 2016-13, “Financial Instruments - Credit Losses”, which requires measurement and recognition of expected credit losses for financial assets held. ASU No. 2016-13 will be effective for the Company beginning January 1, 2019. The Company is evaluating this guidance; however, it does not expect the adoption of ASU No. 2016-13 to have a significant impact on its consolidated financial statements. In August 2016, FASB issued ASU No. 2016-15, "Classification of Certain Cash Receipts and Cash Payments", which addresses eight specific cash flow issues with the objective of reducing existing diversity in practice. ASU No. 2016-15 will be effective for the Company beginning January 1, 2018. Early application is permitted. The Company is evaluating this guidance; however, it does not expect the adoption of ASU No. 2016-15 to have a significant impact on its consolidated cash flows. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) |
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Sep. 30, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Wholly Owned Subsidiaries Information | The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries as follows:
N/A - Not Applicable (a) - Subsidiary holds a portion of the Williamsburg parking lot (b) - Wholly-owned subsidiary of RRE Charlemagne Holdings, LLC (c) - Underlying investment sold prior to 2016 (d) - Underlying investment sold in 2016 (e) - Underlying investment resolved in 2016 (f) - Subsidiary was dissolved prior to September 30, 2016 The consolidated financial statements include the accounts of the Company's majority-owned and/or controlled subsidiaries, which are VIEs, as follows:
(1) On January 29, 2016, the Company sold its joint venture interest in Champion Farms to its joint venture partner. As such, the Company deconsolidated the entity as of January 29, 2016. The Company has no continuing involvement with this joint venture. (See Note 6) (2) On June 30, 2016, the Company sold its joint venture interest in Fieldstone to its joint venture partner. As such, the Company deconsolidated the entity as of June 30, 2016. The Company has no continuing involvement with this joint venture. (See Note 6) (3) On January 27, 2016, the Company and its joint venture partner sold Conifer Place, which resulted in the deconsolidation of the entity as of January 27, 2016. (See Note 6) |
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Estimated Useful Lives of Assets | The Company anticipates the estimated useful lives of its assets by class as follows:
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SUPPLEMENTAL CASH FLOW INFORMATION (Tables) |
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Cash Flow Elements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Supplemental Cash Flow Information | The following table presents the Company's supplemental cash flow information (in thousands):
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RENTAL PROPERTIES, NET (Tables) |
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Real Estate Investments, Net [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Investments in Rental Properties | The following table presents the Company’s investments in rental properties (in thousands):
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OTHER INVESTMENTS (Tables) |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Investments | The following table presents the Company's components of other investments (in thousands):
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Aging of Loan Held for Investment | The following table presents the aging of the Company’s remaining loan held for investment, net (in thousands):
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Schedule of Credit Quality of Loan Held for Investment, Net | The following table presents information about the credit quality of the Company’s remaining loan held for investment, net (in thousands):
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Terms of Loan Held for Investment | The following table presents details of the balance and terms of the Company's remaining loan held for investment at September 30, 2016 and December 31, 2015 (in thousands):
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DISPOSITION OF PROPERTIES AND DECONSOLIDATION OF INTERESTS (Tables) |
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Discontinued Operations and Disposal Groups [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Disposition Activity | The following table presents details of the Company's disposition and deconsolidation activity during the three and nine months ended September 30, 2016 and 2015 (in thousands):
(1) On January 27, 2016, the Company and its joint venture partner sold Conifer Place, which resulted in the deconsolidation of the entity as of January 27, 2016. Net gains on disposition of properties and joint venture interests includes $6.2 million attributable to noncontrolling interests. (2) On January 29, 2016, the Company sold its joint venture interest in Champion Farms to its joint venture partner. As such, the Company deconsolidated the entity as of January 29, 2016. The Company has no continuing involvement with this joint venture. (3) On June 30, 2016, the Company sold its joint venture interest in Fieldstone to its joint venture partner. As such, the Company deconsolidated the entity as of June 30, 2016. The Company has no continuing involvement with this joint venture. The following table presents the Company's revenues and net income (loss) attributable to properties sold, which includes gain on sale, for the three and nine months ended September 30, 2016 and 2015 (in thousands):
(1) On January 27, 2016, the Company and its joint venture partner sold Conifer Place, which resulted in the deconsolidation of the entity as of January 27, 2016. Net income (loss) attributable to properties sold presented in table includes $6.3 million attributable to noncontrolling interests. |
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Roll Forward of Goodwill Activity | The following table presents a rollforward of the Company's activity in goodwill for the nine months ended September 30, 2016 (in thousands):
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IDENTIFIED INTANGIBLE ASSETS, NET (Tables) |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||
Summary of Expected Amortization of Rental and Antennae Leases | The following table presents the Company's expected amortization for the antennae leases for the next five 12-month periods ending September 30, and thereafter (in thousands):
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MORTGAGE NOTES PAYABLE, NET (Tables) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Mortgage Notes Payable | The following table presents a summary of the Company's mortgage notes payable, net (in thousands):
The following table presents additional information about the Company's mortgage notes payable, net (in thousands, except percentages):
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Annual Principal Payments on the Mortgage Notes Payable | The following table presents the Company's annual principal payments on the mortgage notes payable, excluding the amortization of the premium or discount, for each of the next five 12-month periods ending September 30, and thereafter (in thousands):
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Schedule of Annual Amortization | The following table presents the Company's annual amortization of the premium or discount for each of the next five 12-month periods ending September 30, and thereafter (in thousands):
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Estimated Amortization of Deferred Financing Costs | Estimated amortization of the existing deferred financing costs for the next five 12-month periods ending September 30, and thereafter, is as follows (in thousands):
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CREDIT FACILITY (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Line of Credit Facility [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of the Revolving Credit Facilities | The following table presents a summary of the Company's credit facility (in thousands, except percentages):
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ACCUMULATED OTHER COMPREHENSIVE LOSS (Tables) |
9 Months Ended | ||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||
Components of Accumulated Other Comprehensive Loss | The following table presents the changes in each component of the Company's accumulated other comprehensive loss for the nine months ended September 30, 2016 (in thousands):
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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fees Earned From/Expenses Paid to Related Parties | The following table presents the Company's amounts payable to/receivable from related parties (in thousands):
The following table presents the Company's fees earned/expenses paid to related parties (in thousands):
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EQUITY (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Shares Issued | As of September 30, 2016, the Company had issued shares of its $0.01 par value common stock as follows (dollars in thousands):
(1) Includes 276,056 shares issued to the Advisor. |
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Schedule of Distributions | For the nine months ended September 30, 2016, the Company paid aggregate distributions of $32.2 million, including $10.8 million of distributions paid in cash and $21.5 million of distributions reinvested in shares of common stock through the Company's distribution reinvestment plan, as follows (in thousands):
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FAIR VALUE MEASURES AND DISCLOSURES (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets Measured at Fair Value on a Recurring Basis | The following table presents information about the Company's assets measured at fair value on a recurring basis and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value (in thousands):
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Carrying and Fair Values of Loan Held for Investment, Net, Preferred Equity Investment, Mortgage Notes Payable, and Revolving Credit Facility | The carrying and fair values of the Company’s loan held for investment, net, preferred equity investment, mortgage notes payable-outstanding borrowings, mortgage note payable -included in other liabilities associated with rental properties held for sale and credit facilities were as follows (in thousands):
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DERIVATIVES AND HEDGING ACTIVITIES (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Outstanding Interest Rate Derivatives | As of September 30, 2016, the Company had the following outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk (dollars in thousands):
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Fair Value and Balance Sheet Location of Derivatives | The following table presents the fair value of the Company’s derivative financial instruments on the consolidated balance sheets as of September 30, 2016 and December 31, 2015 (in thousands):
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NATURE OF BUSINESS AND OPERATIONS - Narrative (Details) - USD ($) $ in Thousands |
9 Months Ended | 24 Months Ended | 54 Months Ended |
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Sep. 30, 2016 |
Dec. 31, 2015 |
Dec. 13, 2013 |
|
Securities Financing Transaction [Line Items] | |||
Common stock issued through distribution reinvestment plan (in shares) | 2,000,000 | 5,300,000 | 1,200,000 |
Common stock issued through distribution reinvestment plan | $ 21,480 | $ 51,900 | |
Public offering | Common Stock | |||
Securities Financing Transaction [Line Items] | |||
Proceeds from issuance of stock under private offering | $ 645,800 | ||
Issuance of common stock (in shares) | 64,900,000 | ||
Public offering | Common Stock | Advisor | |||
Securities Financing Transaction [Line Items] | |||
Issuance of common stock (in shares) | 276,056 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Rental Property Useful Lives (Details) |
9 Months Ended |
---|---|
Sep. 30, 2016 | |
Buildings | |
Real Estate Properties [Line Items] | |
Estimated useful lives | 27 years 6 months |
Building improvements | Minimum | |
Real Estate Properties [Line Items] | |
Estimated useful lives | 3 years |
Building improvements | Maximum | |
Real Estate Properties [Line Items] | |
Estimated useful lives | 27 years 6 months |
SUPPLEMENTAL CASH FLOW INFORMATION (Details) - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Non-cash financing and investing activities: | ||
Stock issued from the distribution reinvestment plan | $ 21,480 | $ 21,689 |
Deferred financing costs and escrow deposits funded directly by mortgage notes and credit facility | 933 | 10,709 |
Non-cash activity related to sales: | ||
Deconsolidation of subsidiary and removal of related mortgage note payable and non-controlling interest | 35,152 | 0 |
Mortgage notes payable settled with proceeds from sale of property | 55,720 | 0 |
Assets and liabilities assumed in acquisitions: | ||
Mortgage notes payable and other liabilities assumed in acquisition of rental property | 0 | 40,284 |
Cash paid during the period for: | ||
Interest | $ 15,454 | $ 15,172 |
OTHER INVESTMENTS - Narrative (Details) $ in Thousands |
6 Months Ended | 9 Months Ended | ||||
---|---|---|---|---|---|---|
Jun. 06, 2016
USD ($)
|
Nov. 12, 2014
USD ($)
|
Mar. 15, 2011
USD ($)
Loan
|
Mar. 31, 2016
USD ($)
|
Sep. 30, 2016
USD ($)
|
Sep. 30, 2015
USD ($)
|
|
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Payments to acquire preferred equity investment | $ 408 | $ 0 | ||||
Exit fee received | $ 230 | |||||
Number of nonperforming promissory notes (in loan) | Loan | 2 | |||||
Number of performing promissory notes (in loan) | Loan | 2 | |||||
Purchase price of promissory note | $ 3,100 | |||||
Spring Hills Investors Limited Partner, LLC | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Payments to acquire preferred equity investment | $ 3,500 | $ 800 | ||||
Dividend receivable rate | 12.00% | |||||
Monthly dividend receivable rate | 7.00% |
OTHER INVESTMENTS - Components of Investments (Details) - USD ($) $ in Thousands |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Investments, Debt and Equity Securities [Abstract] | ||
Loan held for investment, net | $ 767 | $ 757 |
Preferred equity investment, net | 0 | 3,886 |
Loans held for investment and preferred equity investments, net | $ 767 | $ 4,643 |
OTHER INVESTMENTS - Aging Schedule of Investments (Details) - USD ($) $ in Thousands |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Loans Held for Investment [Line Items] | ||
Financing receivable | $ 767 | $ 757 |
Current | ||
Loans Held for Investment [Line Items] | ||
Financing receivable | 767 | 757 |
30−89 days | ||
Loans Held for Investment [Line Items] | ||
Financing receivable | 0 | 0 |
90−180 days | ||
Loans Held for Investment [Line Items] | ||
Financing receivable | 0 | 0 |
Greater than 180 days | ||
Loans Held for Investment [Line Items] | ||
Financing receivable | $ 0 | $ 0 |
OTHER INVESTMENTS - Recorded Investment, Credit Quality Indicator (Details) - USD ($) $ in Thousands |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Financing Receivable, Recorded Investment [Line Items] | ||
Loan held for investment, net | $ 767 | $ 757 |
Performing | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loan held for investment, net | 767 | 757 |
Nonperforming | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Loan held for investment, net | $ 0 | $ 0 |
OTHER INVESTMENTS - Terms of Loans Held for Investment (Details) - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2016 |
Dec. 31, 2015 |
|
Investments, Debt and Equity Securities [Abstract] | ||
Unpaid principal balance | $ 964 | $ 981 |
Unamortized discount | (204) | (231) |
Deferred expenses, net | 7 | 7 |
Net book value | $ 767 | $ 757 |
Interest rate | 7.50% | |
Average monthly payment | $ 8 |
DISPOSITION OF PROPERTIES AND DECONSOLIDATION OF INTERESTS - Roll Forward of Activity in Goodwill (Details) $ in Thousands |
9 Months Ended |
---|---|
Sep. 30, 2016
USD ($)
| |
Goodwill [Roll Forward] | |
Beginning balance | $ 1,231 |
Sale of Conifer Place, Champion Farms, and Fieldstone | (520) |
Ending balance | $ 711 |
IDENTIFIED INTANGIBLE ASSETS, NET - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | 12 Months Ended | ||
---|---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
Dec. 31, 2015 |
|
Finite-Lived Intangible Assets [Line Items] | |||||
Identified intangible assets, net | $ 150 | $ 150 | $ 374 | ||
Weighted average remaining life | 0 months | 1 month | |||
Amortization expense | 4 | $ 1,900 | $ 224 | $ 4,800 | |
Acquired in-place leases | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Identified intangible assets, net | 150 | 150 | $ 374 | ||
Accumulated amortization | 24,300 | 24,300 | $ 28,400 | ||
Antennae leases | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Annual expected amortization expense through 2025 | $ 16 | $ 16 |
IDENTIFIED INTANGIBLE ASSETS, NET - Antennae Leases (Details) - USD ($) $ in Thousands |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2017 | $ 16 | |
2018 | 16 | |
2019 | 16 | |
2020 | 16 | |
2021 | 16 | |
Thereafter | 70 | |
Total | $ 150 | $ 374 |
MORTGAGE NOTES PAYABLE, NET - Annual Principal Payments (Details) $ in Thousands |
Sep. 30, 2016
USD ($)
|
---|---|
Debt Disclosure [Abstract] | |
2017 | $ 10,731 |
2018 | 26,314 |
2019 | 49,913 |
2020 | 127,002 |
2021 | 61,776 |
Thereafter | 279,119 |
Total | $ 554,855 |
MORTGAGE NOTES PAYABLE, NET - Amortization of Fair Value Adjustments (Details) - USD ($) $ in Thousands |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Debt Disclosure [Abstract] | ||
2017 | $ 481 | |
2018 | 366 | |
2019 | 334 | |
2020 | 329 | |
2021 | 252 | |
Thereafter | 548 | |
Amortization of fair value adjustments | $ 2,310 | $ 2,674 |
MORTGAGE NOTES PAYABLE, NET - Deferred Financing Costs (Details) - USD ($) $ in Thousands |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Debt Disclosure [Abstract] | ||
2017 | $ 1,194 | |
2018 | 1,151 | |
2019 | 1,085 | |
2020 | 855 | |
2021 | 526 | |
Thereafter | 1,026 | |
Deferred financing costs, net | $ 5,837 | $ 6,513 |
CREDIT FACILITY - Summary of Revolving Credit Facilities (Details) - USD ($) $ in Thousands |
1 Months Ended | 2 Months Ended | 3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|---|---|
Mar. 31, 2016 |
Feb. 29, 2016 |
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
Dec. 31, 2015 |
|
Line of Credit Facility [Line Items] | |||||||
Credit facility | $ 0 | $ 0 | $ 21,894 | ||||
LIBOR | |||||||
Line of Credit Facility [Line Items] | |||||||
Basis spread on variable rate | 2.25% | 2.00% | |||||
Revolving credit facility | LIBOR | |||||||
Line of Credit Facility [Line Items] | |||||||
Basis spread on variable rate | 0.5311% | ||||||
Revolving credit facility | Bank of America | |||||||
Line of Credit Facility [Line Items] | |||||||
Credit facility | 0 | $ 0 | $ 21,894 | ||||
Line of Credit Facility, Current Availability | $ 20,894 | $ 20,894 | |||||
Line of Credit Facility, Current Interest Rate | 3.53% | 3.53% | |||||
Line of Credit Facility, Weighted Average Interest Rate | 3.47% | 3.20% | 3.44% | 3.20% | |||
Basis spread on variable rate | 3.00% |
ACCUMULATED OTHER COMPREHENSIVE LOSS (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Accumulated Other Comprehensive Income [Rollforward] | ||||
Beginning balance | $ 425,246 | |||
Reclassification adjustment for realized loss on derivative due to sale | $ 33 | $ 0 | 105 | $ 0 |
Ending balance | 407,403 | 407,403 | ||
Designated derivatives | ||||
Accumulated Other Comprehensive Income [Rollforward] | ||||
Beginning balance | (440) | |||
Unrealized loss on designated derivatives | (43) | |||
Ending balance | $ (378) | $ (378) |
EQUITY - Preferred Stock (Details) - $ / shares |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Equity [Abstract] | ||
Preferred stock, authorized (in shares) | 10,000,000 | 10,000,000 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, issued (in shares) | 0 | 0 |
Preferred stock, outstanding (in shares) | 0 | 0 |
EQUITY - Convertible Stock (Details) |
9 Months Ended | |
---|---|---|
Sep. 30, 2016
Event
$ / shares
shares
|
Dec. 31, 2015
$ / shares
shares
|
|
Equity [Abstract] | ||
Convertible stock shares outstanding (in shares) | 50,000 | 50,000 |
Convertible stock, par value (in dollars per share) | $ / shares | $ 0.01 | $ 0.01 |
Convertible stock held by advisor and affiliated persons (in shares) | 49,063 | |
Convertible stock held by outside investors (in shares) | 937 | |
Percentage on original share price | 100.00% | |
Percentage non-compounded annual return, option one | 10.00% | |
Aggregate percentage return | 10.00% | |
Number of triggering events | Event | 2 | |
Conversion ratio | 0.00002 | |
Common stock, convertible, triggering event, if lesser of, option one | 25.00% | |
Common stock, convertible, triggering event, if lesser of, option two | 15.00% | |
Percentage non-compounded annual return, option two | 6.00% |
EQUITY - Redemption of Securities (Details) |
3 Months Ended | 9 Months Ended |
---|---|---|
Sep. 30, 2016
shares
|
Sep. 30, 2016
shares
|
|
Equity [Abstract] | ||
Common share redemptions (in shares) | 519,736 | 1,981,819 |
Percentage of weighted-average number of outstanding shares during the 12-month period immediately prior to the effective date of the redemption that company will not redeem in excess of (in excess of 5%) | 5.00% | 5.00% |
Period of time shares are outstanding prior to the effective date of redemption | 12 months | |
Cash available for redemption, percentage of previous fiscal year operating cash flow | 1.00% | |
Number of days' notice required to suspend, terminate or amend share redemption program | 30 days |
FAIR VALUE MEASURES AND DISCLOSURES - Assets Measured at Fair Value on a Recurring Basis (Details) - Fair Value, Measurements, Recurring - USD ($) $ in Thousands |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Interest rate caps | $ 39 | $ 32 |
Assets, fair value | 39 | 32 |
Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Interest rate caps | 0 | 0 |
Assets, fair value | 0 | 0 |
Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Interest rate caps | 39 | 32 |
Assets, fair value | 39 | 32 |
Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Interest rate caps | 0 | 0 |
Assets, fair value | $ 0 | $ 0 |
FAIR VALUE MEASURES AND DISCLOSURES - Schedule of Carrying and Fair Values (Details) - USD ($) $ in Thousands |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Carrying Amount | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Loan held for investment, net | $ 767 | $ 757 |
Preferred equity investment | 0 | 3,886 |
Mortgage notes payable- outstanding borrowings | (554,855) | (595,384) |
Mortgage note payable- included in other liabilities associated with rental properties held for sale | 0 | (16,443) |
Credit facility | 0 | (21,894) |
Estimated Fair Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Loan held for investment, net | 1,122 | 1,151 |
Preferred equity investment | 0 | 3,908 |
Mortgage notes payable- outstanding borrowings | (547,272) | (573,693) |
Mortgage note payable- included in other liabilities associated with rental properties held for sale | 0 | (16,597) |
Credit facility | $ 0 | $ (21,894) |
DERIVATIVES AND HEDGING ACTIVITIES (Details) |
9 Months Ended | |
---|---|---|
Sep. 30, 2016
USD ($)
derivative
|
Dec. 31, 2015
USD ($)
|
|
Prepaid expenses and other assets | ||
Derivatives, Fair Value [Line Items] | ||
Asset Derivatives, Fair Value | $ 39,000 | $ 32,000 |
Cash flow hedges | The Nesbit Palisades | ||
Derivatives, Fair Value [Line Items] | ||
Loss due to hedge ineffectiveness | 32,553 | |
Cash flow hedges | The Ivy at Clear Creek | ||
Derivatives, Fair Value [Line Items] | ||
Loss due to hedge ineffectiveness | $ 72,388 | |
Cash flow hedges | Interest Rate Caps | ||
Derivatives, Fair Value [Line Items] | ||
Number of Instruments (in derivatives) | derivative | 11 | |
Notional Amount | $ 218,053,000 |
OPERATING EXPENSE LIMITATION WAIVER (Details) |
9 Months Ended |
---|---|
Sep. 30, 2016 | |
OPERATING EXPENSE LIMITATION WAIVER [Abstract] | |
Percent of average invested assets | 2.00% |
Net income of operating expense, percent | 25.00% |
Operating expense limitation, term | 1 year |
SUBSEQUENT EVENTS (Details) - Subsequent event - USD ($) $ / shares in Units, $ in Millions |
Oct. 31, 2016 |
Oct. 14, 2016 |
---|---|---|
Subsequent Event [Line Items] | ||
Dividends declared (in dollars per share) | $ 0.05 | |
Mortgages | Refinance, secured by Pinehurst | ||
Subsequent Event [Line Items] | ||
Increase in mortgage note payable | $ 3.4 | |
Mortgages | Refinance, secured by Cannery Lofts | ||
Subsequent Event [Line Items] | ||
Increase in mortgage note payable | $ 4.9 |
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