Maryland | 000-54674 | 27-0351641 | ||
(State or Other Jurisdiction | (Commission File Number) | (IRS Employer | ||
of Incorporation) | Identification No.) |
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | ||
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | ||
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | ||
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). | ||||
Emerging growth company o | ||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o |
Item 9.01 | Financial Statements and Exhibits. |
Jefferson at Perimeter Apartments | ||
Report of Independent Auditors | ||
Statements of Revenues Over Certain Operating Expenses for the Three Months Ended March 31, 2018 (unaudited) and the Year Ended December 31, 2017 | ||
Notes to Statements of Revenues Over Certain Operating Expenses for the Three Months Ended March 31, 2018 (unaudited) and the Year Ended December 31, 2017 | ||
Steadfast Income REIT, Inc. | ||
Summary of Unaudited Pro Forma Financial Statements | ||
Unaudited Pro Forma Balance Sheet as of March 31, 2018 | ||
Unaudited Pro Forma Statement of Operations for the Three Months Ended March 31, 2018 | ||
Unaudited Pro Forma Statement of Operations for the Year Ended December 31, 2017 |
For the Three Months Ended March 31, 2018 | For the Year Ended December 31, 2017 | ||||||
(unaudited) | |||||||
Revenues: | |||||||
Rental income | $ | 1,937,964 | $ | 7,618,106 | |||
Tenant reimbursements and other | 186,379 | 705,497 | |||||
Total revenues | 2,124,343 | 8,323,603 | |||||
Expenses: | |||||||
Operating, maintenance and management | 462,542 | 1,854,973 | |||||
Real estate taxes and insurance | 315,713 | 1,255,069 | |||||
General and administrative expenses | 55,538 | 187,256 | |||||
Total expenses | 833,793 | 3,297,298 | |||||
Revenues over certain operating expenses | $ | 1,290,550 | $ | 5,026,305 |
Steadfast Income REIT, Inc. Historical (a) | Pro Forma Adjustments | ||||||||||
Jefferson at Perimeter (b) | Pro Forma Total | ||||||||||
Assets: | |||||||||||
Real Estate: | |||||||||||
Land | $ | 106,932,041 | $ | 17,462,959 | (c) | $ | 124,395,000 | ||||
Building and improvements | 917,128,392 | 79,995,890 | (c) | 997,124,282 | |||||||
Tenant origination and absorption costs | — | 1,280,962 | (c) | 1,280,962 | |||||||
Other intangible assets | 2,644,263 | — | 2,644,263 | ||||||||
Total real estate, cost | 1,026,704,696 | 98,739,811 | 1,125,444,507 | ||||||||
Less accumulated depreciation and amortization | (192,693,352 | ) | — | (192,693,352 | ) | ||||||
Total real estate, net | 834,011,344 | 98,739,811 | 932,751,155 | ||||||||
Cash and cash equivalents | 217,672,108 | (9,873,899 | ) | 207,798,209 | |||||||
Restricted cash | 65,831,542 | (26,800,021 | ) | 39,031,521 | |||||||
Investment in unconsolidated joint venture | 15,102,763 | — | 15,102,763 | ||||||||
Rents and other receivables | 2,825,325 | (1,975 | ) | 2,823,350 | |||||||
Other assets | 3,748,162 | (707,346 | ) | 3,040,816 | |||||||
Total assets | $ | 1,139,191,244 | $ | 61,356,570 | $ | 1,200,547,814 | |||||
Liabilities: | |||||||||||
Accounts payable and accrued liabilities | $ | 21,717,387 | $ | 1,317,608 | $ | 23,034,995 | |||||
Notes payable: | |||||||||||
Mortgage notes payable, net | 632,526,481 | 59,448,127 | 691,974,608 | ||||||||
Credit facility, net | 90,282,883 | — | 90,282,883 | ||||||||
Total notes payable, net | 722,809,364 | 59,448,127 | 782,257,491 | ||||||||
Distributions payable | 4,584,450 | — | 4,584,450 | ||||||||
Due to affiliates | 1,455,517 | 590,835 | (d) | 2,046,352 | |||||||
Total liabilities | 750,566,718 | 61,356,570 | 811,923,288 | ||||||||
Commitments and Contingencies | |||||||||||
Stockholders’ equity: | |||||||||||
Preferred stock, $0.01 par value per share; 100,000,000 shares authorized, no shares issued and outstanding | — | — | — | ||||||||
Common stock, $0.01 par value per share; 999,999,000 shares authorized, 75,298,005 and 75,479,409 shares issued and outstanding at March 31, 2018 and December 31, 2017, respectively | 752,980 | — | 752,980 | ||||||||
Convertible stock, $0.01 par value per share; 1,000 shares issued and outstanding as of March 31, 2018 and December 31, 2017 | 10 | — | 10 | ||||||||
Additional paid-in capital | 662,130,024 | — | 662,130,024 | ||||||||
Cumulative distributions and net losses | (274,258,488 | ) | — | (274,258,488 | ) | ||||||
Total stockholders’ equity | 388,624,526 | — | 388,624,526 | ||||||||
Total liabilities and stockholders’ equity | $ | 1,139,191,244 | $ | 61,356,570 | $ | 1,200,547,814 |
(a) | Historical financial information as of March 31, 2018, derived from the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2018. |
(b) | Represents adjustments to the balance sheet of the Company to give effect to the acquisition of the Jefferson Property and related cash, other assets and liabilities as if the acquisition had occurred on March 31, 2018. The contract purchase price of the Jefferson Property, exclusive of closing and other acquisition costs, was $102,800,000. The Company financed the payment of the contract purchase price for the Jefferson Property with a combination of (1) cash proceeds from property dispositions in a tax-free exchange pursuant to Section 1031 of the Internal Revenue Code of 1986, as amended and (2) the assumption of a loan in the aggregate principal amount of approximately $65,000,000. The Company recorded the cost of tangible assets and identifiable intangible assets and liabilities acquired based on their estimated fair values. |
(c) | The Company adopted Accounting Standards Update (“ASU”) 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business (“ASU 2017-01”), issued in January 2017, beginning with real estate investments acquired on or after January 1, 2017. Acquisitions that do not meet the definition of a business under this guidance are accounted for as asset acquisitions. The acquisition of the Jefferson Property did not meet the definition of a business and consequently was accounted for as an asset acquisition. As a result, the Company capitalized approximately $833,982 in acquisition fees and acquisition costs related to the acquisition of the Jefferson Property on the unaudited pro forma balance sheet. Prior to the adoption of ASU 2017-01, acquisition fees and acquisition costs were included in fees to affiliates and acquisition costs, respectively, on the consolidated statements of operations. Upon adoption of this guidance, all such costs are included in the purchase price that are allocated between land, buildings and improvements, tenant origination and absorption costs and notes payable on the consolidated balance sheet. |
• | Acquisition Fees: Acquisition fees are payable to Steadfast Income Advisor, LLC (the “Advisor”) based on 0.5% of the cost of investment of the Jefferson Property including acquisition expenses (with the total acquisition fees and acquisition expenses payable to the Advisor being subject to a limitation of 6.0% of the contract purchase price), as set out in the Advisory Agreement by and among the Company, its operating partnership and the Advisor (the “Advisory Agreement”). |
• | Acquisition Costs: Those amounts incurred by the Company or its affiliates that were attributable to the acquisition of the Jefferson Property. |
As of March 31, 2018 | ||||||||||||||||
Contract Purchase Price | Acquisition Fee | Acquisition Costs | Total Real Estate, Cost | |||||||||||||
Land | $ | 17,322,428 | $ | 92,059 | $ | 48,472 | $ | 17,462,959 | ||||||||
Building and improvements | 79,352,132 | 421,714 | 222,044 | 79,995,890 | ||||||||||||
Tenant origination and absorption costs | 1,270,654 | 6,753 | 3,555 | 1,280,962 | ||||||||||||
Total real estate, cost | 97,945,214 | 520,526 | 274,071 | 98,739,811 | ||||||||||||
Loan discount | 4,854,786 | 25,801 | 13,585 | 4,894,172 | ||||||||||||
Total cost | $ | 102,800,000 | $ | 546,327 | $ | 287,656 | $ | 103,633,983 |
Steadfast Income REIT, Inc. Historical (a) | Jefferson at Perimeter (b) | Pro Forma Adjustments | Pro Forma Total | ||||||||||||
Revenues: | |||||||||||||||
Rental income | $ | 31,177,928 | $ | 1,937,964 | $ | — | $ | 33,115,892 | |||||||
Tenant reimbursements and other | 4,276,999 | 186,379 | — | 4,463,378 | |||||||||||
Total revenues | 35,454,927 | 2,124,343 | — | 37,579,270 | |||||||||||
Expenses: | |||||||||||||||
Operating, maintenance and management | 9,419,638 | 462,542 | (60,216 | ) | (c) | 9,821,964 | |||||||||
Real estate taxes and insurance | 5,863,322 | 315,713 | 106,040 | (d) | 6,285,075 | ||||||||||
Fees to affiliates | 3,932,066 | — | 272,732 | (e) | 4,204,798 | ||||||||||
Depreciation and amortization | 10,890,796 | — | 786,434 | (f) | 11,677,230 | ||||||||||
Interest expense | 7,712,772 | — | 561,207 | (g) | 8,273,979 | ||||||||||
General and administrative expenses | 1,951,497 | 55,538 | — | 2,007,035 | |||||||||||
Loss on debt extinguishment | 2,010,457 | — | — | 2,010,457 | |||||||||||
Total expenses | 41,780,548 | 833,793 | 1,666,197 | 44,280,538 | |||||||||||
(Loss) income before other income (expenses) | (6,325,621 | ) | 1,290,550 | (1,666,197 | ) | (6,701,268 | ) | ||||||||
Other income (expense): | |||||||||||||||
Equity in loss of unconsolidated joint venture | (1,641,405 | ) | — | — | (1,641,405 | ) | |||||||||
Gain on sales of real estate, net | 81,247,054 | — | — | 81,247,054 | |||||||||||
Total other income (expenses) | 79,605,649 | — | — | 79,605,649 | |||||||||||
Net income (loss) | $ | 73,280,028 | $ | 1,290,550 | $ | (1,666,197 | ) | $ | 72,904,381 | ||||||
Net income per common share — basic and diluted | $ | 0.97 | $ | 0.96 | |||||||||||
Weighted average number of common shares outstanding — basic | 75,343,863 | 75,343,863 | |||||||||||||
Weighted average number of common shares outstanding — diluted | 75,355,738 | 75,355,738 | |||||||||||||
Distributions per common share | $ | 0.177 | $ | 0.177 |
(a) | Historical financial information for the three months ended March 31, 2018, derived from the Company’s Quarterly Report on Form 10-Q for the three months ended March 31, 2018. |
(b) | Represents the historical operations of the Jefferson Property under the previous owners as reported in the statements of revenues over certain operating expenses. |
(c) | Represents the exclusion of property management fees recorded in the historical operations of the previous owners of the Jefferson Property that are not comparable to the expenses the Company expects to incur in the future operations of the Jefferson Property. |
(d) | Represents additional real estate taxes and insurance expense of the Jefferson Property (not reflected in the historical operations of the Company) for the three months ended March 31, 2018, based on management estimates as if the Jefferson Property was acquired on January 1, 2017. |
(e) | Represents adjustments made to fees to affiliates for the three months ended March 31, 2018, to include the fees to affiliates (not reflected in the historical statement of operations of the Company) for the three months ended March 31, 2018, that would be due to affiliates had the Jefferson Property been acquired on January 1, 2017. The pro forma total fees to affiliates are as follows: |
• | Investment Management Fees: Investment management fees are payable to the Advisor based on an annual fee, payable monthly, of 0.8% of the acquisition cost of the Jefferson Property, including acquisition fees, acquisition expenses and any debt attributable to the Jefferson Property, as set out in the Advisory Agreement. |
• | Property Management Fees: Property management fees are payable to the Company’s affiliated property manager based on 2.5% of the monthly gross revenues of the Jefferson Property, as set out in the Property Management Agreement for the property (the “Property Management Agreement”). |
For the Three Months Ended March 31, 2018 | ||||
Investment Management Fees | $ | 219,623 | ||
Property Management Fees | 53,109 | |||
$ | 272,732 |
(f) | Represents depreciation and amortization expense (not reflected in the historical statement of operations of the Company) for the three months ended March 31, 2018, as if the Jefferson Property were acquired on January 1, 2017. |
(g) | Represents interest expense (not reflected in the historical statement of operations of the Company) for the three months ended March 31, 2018, as if the $65,000,000 loan attributable to the Jefferson Property was assumed on January 1, 2017. |
Steadfast Income REIT, Inc. Historical (a) | Jefferson at Perimeter (b) | Pro Forma Adjustments | Pro Forma Total | ||||||||||||
Revenues: | |||||||||||||||
Rental income | $ | 188,019,112 | $ | 7,618,106 | $ | — | $ | 195,637,218 | |||||||
Tenant reimbursements and other | 24,950,128 | 705,497 | — | 25,655,625 | |||||||||||
Total revenues | 212,969,240 | 8,323,603 | — | 221,292,843 | |||||||||||
Expenses: | |||||||||||||||
Operating, maintenance and management | 58,347,903 | 1,854,973 | (238,089 | ) | (c) | 59,964,787 | |||||||||
Real estate taxes and insurance | 35,114,937 | 1,255,069 | 431,941 | (d) | 36,801,947 | ||||||||||
Fees to affiliates | 21,960,145 | — | 1,086,584 | (e) | 23,046,729 | ||||||||||
Depreciation and amortization | 67,755,152 | — | 4,426,697 | (f) | 72,181,849 | ||||||||||
Interest expense | 44,114,130 | — | 2,267,772 | (g) | 46,381,902 | ||||||||||
General and administrative expenses | 6,732,330 | 187,256 | — | 6,919,586 | |||||||||||
Loss on extinguishment of debt | 2,380,051 | — | — | 2,380,051 | |||||||||||
Total expenses | 236,404,648 | 3,297,298 | 7,974,905 | 247,676,851 | |||||||||||
Loss before other income (expenses) | (23,435,408 | ) | 5,026,305 | (7,974,905 | ) | (26,384,008 | ) | ||||||||
Other income (expense): | |||||||||||||||
Equity in loss of unconsolidated joint venture | (663,896 | ) | — | — | (663,896 | ) | |||||||||
Gain on sales of real estate, net | 96,573,171 | — | — | 96,573,171 | |||||||||||
Total other income (expenses) | 95,909,275 | — | — | 95,909,275 | |||||||||||
Net income (loss) | $ | 72,473,867 | $ | 5,026,305 | $ | (7,974,905 | ) | $ | 69,525,267 | ||||||
Net income per common share — basic and diluted | $ | 0.96 | $ | 0.92 | |||||||||||
Weighted average number of common shares outstanding — basic | 75,794,705 | 75,794,705 | |||||||||||||
Weighted average number of common shares outstanding — diluted | 75,807,710 | 75,807,710 | |||||||||||||
Distributions per common share | $ | 0.717 | $ | 0.717 |
(a) | Historical financial information for the year ended December 31, 2017, derived from the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017. |
(b) | Represents the historical operations of the Jefferson Property under the previous owners as reported in the statements of revenues over certain operating expenses. |
(c) | Represents the exclusion property management fees recorded in the historical operations of the previous owner of the Jefferson Property that are not comparable to the expense the Company expects to incur in the future operations of the Jefferson Property. |
(d) | Represents additional real estate taxes and insurance expense of the Jefferson Property (not reflected in the historical operations of the previous owner of the Jefferson Property or the Company) for the year ended December 31, 2017, based on management estimates as if the Jefferson Property was acquired on January 1, 2017. |
(e) | Represents fees to affiliates (not reflected in the historical statement of operations of the Company) for the year ended December 31, 2017 that would be due to affiliates had the Jefferson Property been acquired on January 1, 2017. The pro forma total fees to affiliates are as follows: |
• | Investment Management Fees: Investment management fees are payable to the Advisor based on an annual fee, payable monthly, of 0.8% of the acquisition cost of the Jefferson Property, including acquisition fees, acquisition expenses and any debt attributable to the Jefferson Property, as set out in the Advisory Agreement. |
• | Property Management Fees: Property management fees are payable to the Company’s affiliated property manager based on 2.5% of the monthly gross revenues of the Jefferson Property as set out in the Property Management Agreement. |
For the Year Ended December 31, 2017 | ||||
Investment Management Fees | $ | 878,494 | ||
Property Management Fees | 208,090 | |||
$ | 1,086,584 |
(f) | Represents depreciation and amortization expense (not reflected in the historical statement of operations of the Company) for the year ended December 31, 2017, as if the Jefferson Property was acquired on January 1, 2017. |
(g) | Represents interest expense (not reflected in the historical statement of operations of the Company) for the year ended December 31, 2017, as if the $65,000,000 loan attributable to the Jefferson Property was assumed on January 1, 2017. |
STEADFAST INCOME REIT, INC. | |||
Date: | June 29, 2018 | By: | /s/ Kevin J. Keating |
Kevin J. Keating | |||
Chief Financial Officer and Treasurer | |||
(Principal Financial Officer and Accounting Officer) |