10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2020

OR

☐    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission File No. 001-34995 

Preferred Apartment Communities, Inc.

(Exact name of registrant as specified in its charter)

Maryland	27-1712193
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

3284 Northside Parkway NW, Suite 150, Atlanta, GA 30327

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (770) 818-4100

 

Securities registered pursuant to Section 12(b) of the Act:  

Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, par value $.01 per share	APTS	NYSE

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No   ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Sec. 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No   ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. Large accelerated filer ☐   Accelerated filer ☒   Non-accelerated filer ☐   Smaller reporting company ☐ Emerging growth company ☐

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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No  ☒

The number of shares outstanding of the registrant’s Common Stock, as of November 4, 2020 was 49,900,555.

PART I - FINANCIAL INFORMATION
INDEX
Item 1.	Financial Statements	Page No.
	Condensed Consolidated Balance Sheets (unaudited) – as of September 30, 2020 and December 31, 2019	2
	Condensed Consolidated Statements of Operations (unaudited) – Three Months and Nine Months Ended September 30, 2020 and 2019	3
	Condensed Consolidated Statements of Stockholders' Equity (unaudited) – Three Months and Nine Months Ended September 30, 2020 and 2019	4
	Condensed Consolidated Statements of Cash Flows (unaudited) – Nine Months Ended September 30, 2020 and 2019	8
	Notes to Condensed Consolidated Financial Statements (unaudited)	10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	50
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	78
Item 4.	Controls and Procedures	79
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	79
Item 1A.	Risk Factors	79
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	81
Item 3.	Defaults Upon Senior Securities	81
Item 4.	Mine Safety Disclosures	81
Item 5.	Other Information	81
Item 6.	Exhibits	81

Preferred Apartment Communities, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands, except per-share par values)	September 30, 2020		December 31, 2019
Assets
Real estate
Land	$	657,286	$	635,757
Building and improvements	3,361,174		3,256,223
Tenant improvements	175,400		167,275
Furniture, fixtures, and equipment	357,010		323,381
Construction in progress	23,677		11,893
Gross real estate	4,574,547		4,394,529
Less: accumulated depreciation	(542,161)		(421,551)
Net real estate	4,032,386		3,972,978
Real estate loan investments, net of deferred fee income and allowance for expected
loan loss of $10,480 and $1,460	307,033		325,790
Real estate loan investments to related parties, net of deferred fee income and allowances for expected
loan losses and doubtful accounts of $3,548 and $1,416	2,568		23,692
Total real estate and real estate loan investments, net	4,341,987		4,322,460
Cash and cash equivalents	30,337		94,381
Restricted cash	65,690		42,872
Notes receivable	2,894		17,079
Note receivable and revolving lines of credit due from related parties	9,011		24,838
Accrued interest receivable on real estate loans	24,784		25,755
Acquired intangible assets, net of amortization of $177,348 and $149,896	133,297		154,803
Deferred loan costs on Revolving Line of Credit, net of amortization of $1,362 and $849	879		1,286
Deferred offering costs	4,721		2,147
Tenant lease inducements, net of amortization of $4,902 and $3,567	18,655		19,607
Investment in unconsolidated joint venture	6,851		—
Tenant receivables and other assets	91,956		65,332
Total assets	$	4,731,062	$	4,770,560
Liabilities and equity
Liabilities
Mortgage notes payable, net of deferred loan costs and mark-to-market adjustment of $48,376 and $42,807	$	2,765,793	$	2,567,022
Revolving line of credit	33,000		—
Term note payable, net of deferred loan costs of $0 and $511	—		69,489
Unearned purchase option termination fees	1,164		2,859
Deferred revenue	36,909		39,722
Accounts payable and accrued expenses	66,283		42,191
Deferred liability to Former Manager	23,373		—
Contingent liability due to Former Manager	14,867		—
Accrued interest payable	8,538		8,152
Dividends and partnership distributions payable	20,971		23,519
Acquired below market lease intangibles, net of amortization of $31,511 and $23,655	54,483		62,611
Prepaid rent, security deposits, and other liabilities	34,823		20,879
Total liabilities	3,060,204		2,836,444
Commitments and contingencies (Note 11)
Equity
Stockholders' equity
Series A Redeemable Preferred Stock, $0.01 par value per share; 3,050 shares authorized; 2,226 and 2,161 shares
issued; 1,991 and 2,028 shares outstanding at September 30, 2020 and December 31, 2019, respectively	20		20
Series A1 Redeemable Preferred Stock, $0.01 par value per share; up to 1,000 shares authorized; 103 and 5 shares
issued and outstanding at September 30, 2020 and December 31, 2019, respectively	—		—
Series M Redeemable Preferred Stock, $0.01 par value per share; 500 shares authorized; 106 shares issued;
91 and 103 shares outstanding at September 30, 2020 and December 31, 2019, respectively	1		1
Series M1 Redeemable Preferred Stock, $0.01 par value per share; up to 1,000 shares authorized; 13 and zero shares
issued and outstanding at September 30, 2020 and December 31, 2019, respectively	—		—
Common Stock, $0.01 par value per share; 400,067 shares authorized; 49,901 and 46,443 shares issued and
outstanding at September 30, 2020 and December 31, 2019, respectively	499		464
Additional paid-in capital	1,882,149		1,938,057
Accumulated (deficit) earnings	(210,218)		(7,244)
Total stockholders' equity	1,672,451		1,931,298
Non-controlling interest	(1,593)		2,818
Total equity	1,670,858		1,934,116
Total liabilities and equity	$	4,731,062	$	4,770,560

The accompanying notes are an integral part of these condensed consolidated financial statements.

2

Preferred Apartment Communities, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands, except per-share figures)	Three months ended September 30,				Nine months ended September 30,
	2020		2019		2020		2019
Revenues:
Rental and other property revenues	$	114,831	$	105,049	$	338,271	$	298,569
Interest income on loans and notes receivable	10,649		12,608		34,495		35,989
Interest income from related parties	609		2,546		3,750		9,980
Miscellaneous revenues	608		—		4,560		1,023
Total revenues	126,697		120,203		381,076		345,561
Operating expenses:
Property operating and maintenance	19,278		16,493		52,919		43,236
Property salary and benefits (including reimbursements of $0, $4,681, $1,430
and $12,973 to related party)	6,054		5,360		16,965		14,845
Property management costs (including $0, $2,565, $894 and $7,534 to related parties)	983		3,534		4,028		10,174
Real estate taxes and insurance	16,078		14,474		48,109		42,646
General and administrative	7,898		1,364		23,109		4,171
Equity compensation to directors and executives	582		305		1,058		922
Depreciation and amortization	51,794		46,239		153,096		137,191
Asset management and general and administrative expense fees to related party	—		8,611		3,099		24,649
Provision for expected credit losses	(152)		—		5,463		—
Management internalization expense	577		818		179,828		1,143
Total operating expenses	103,092		97,198		487,674		278,977
Waived asset management and general and administrative expense fees	—		(3,081)		(1,136)		(8,505)
Net operating expenses	103,092		94,117		486,538		270,472
Operating (loss) income before gain on sale of real estate and loss from
unconsolidated joint venture	23,605		26,086		(105,462)		75,089
Loss from unconsolidated joint venture	(120)		—		(120)		—
Gain on sale of real estate, net	3,261		—		3,261		4
Operating (loss) income	26,746		26,086		(102,321)		75,093
Interest expense	29,879		28,799		90,608		83,166
Change in fair value of net assets of consolidated VIEs from mortgage-backed pools	—		591		—		1,316
Loss on extinguishment of debt	(518)		(15)		(6,674)		(84)
Gain on land condemnation	49		—		528		747
Net loss	(3,602)		(2,137)		(199,075)		(6,094)
Consolidated net loss (income) attributable to non-controlling interests	108		59		3,515		138
Net loss attributable to the Company	(3,494)		(2,078)		(195,560)		(5,956)
Dividends declared to preferred stockholders	(35,909)		(29,446)		(104,601)		(82,527)
Earnings attributable to unvested restricted stock	(96)		(5)		(109)		(14)
Net loss attributable to common stockholders	$	(39,499)	$	(31,529)	$	(300,270)	$	(88,497)
Net loss per share of Common Stock available
to common stockholders, basic and diluted	$	(0.79)	$	(0.71)	$	(6.21)	$	(2.02)
Weighted average number of shares of Common Stock outstanding,
basic and diluted	49,689		44,703		48,351		43,703

The accompanying notes are an integral part of these condensed consolidated financial statements.

3

Preferred Apartment Communities, Inc.
Condensed Consolidated Statements of Stockholders' Equity
For the three-month period ended September 30, 2020
(Unaudited)
(In thousands, except dividend per-share figures)	Redeemable Preferred Stock		Common Stock		Additional Paid in Capital		Accumulated Earnings		Total Stockholders' Equity		Non-Controlling Interest		Total Equity
Balance at July 1, 2020	$	21	$	493	$	1,917,212	$	(206,724)	$	1,711,002	$	(1,006)	$	1,709,996
Issuance of Series A1/M1 preferred shares	—		—		42,352		—		42,352		—		42,352
At-the-market issuance of common stock	—		6		4,608		—		4,614		—		4,614
Redemptions of preferred stock	—		—		(33,823)		—		(33,823)		—		(33,823)
Syndication and offering costs	—		—		(4,127)		—		(4,127)		—		(4,127)
Equity compensation to executives and directors	—		—		512		—		512		—		512
Conversion of Class A Units to common stock	—		—		(2)		—		(2)		2		—
Current period amortization of Class B Units	—		—		—		—		—		70		70
Net loss	—		—		—		(3,494)		(3,494)		(108)		(3,602)
Contributions from non-controlling interests	—		—		—		—		—		(98)		(98)
Reallocation of non-controlling interest to Class A Unitholders	—		—		202		—		202		(202)		—
Distributions to non-controlling interests	—		—		—		—		—		(119)		(119)
Distributions to Class A Unitholders	—		—		—		—		—		(132)		(132)
Dividends to Series A preferred stockholders
($5.00 per share per month)	—		—		(32,964)		—		(32,964)		—		(32,964)
Dividends to mShares preferred stockholders
($4.79 - $6.25 per share per month)	—		—		(1,547)		—		(1,547)		—		(1,547)
Dividends to Series A1/M1 preferred stockholders
($5.00 and $5.08 - $5.92 per share per month, respectively)	—		—		(1,398)		—		(1,398)		—		(1,398)
Dividends to common stockholders ($0.175 per share)	—		—		(8,876)		—		(8,876)		—		(8,876)
Balance at September 30, 2020	$	21	$	499	$	1,882,149	$	(210,218)	$	1,672,451	$	(1,593)	$	1,670,858

The accompanying notes are an integral part of these condensed consolidated financial statements.

4

Preferred Apartment Communities, Inc.
Condensed Consolidated Statements of Stockholders' Equity, continued
For the three-month period ended September 30, 2019
(Unaudited)
(In thousands, except dividend per-share figures)	Redeemable Preferred Stock		Common Stock		Additional Paid in Capital		Accumulated Earnings		Total Stockholders' Equity		Non-Controlling Interest		Total Equity
Balance at July 1, 2019	$	19	$	442	$	1,784,197	$	—	$	1,784,658	$	(488)	$	1,784,170
Issuance of Series A preferred shares	1		—		116,827		—		116,828		—		116,828
Issuance of mShares	—		—		17,156		—		17,156		—		17,156
Redemptions of preferred stock	—		9		(2,886)		—		(2,877)		—		(2,877)
Exercises of warrants	—		2		2,480		—		2,482		—		2,482
Syndication and offering costs	—		—		(13,553)		—		(13,553)		—		(13,553)
Equity compensation to executives and directors	—		—		155		—		155		—		155
Conversion of Class A Units to common stock	—		—		112		—		112		(112)		—
Current period amortization of Class B Units	—		—		—		—		—		150		150
Net loss	—		—		—		(2,078)		(2,078)		(59)		(2,137)
Contributions from non-controlling interests	—		—		—		—		—		2,050		2,050
Reallocation of non-controlling interest to Class A Unitholders	—		—		305		—		305		(305)		—
Distributions to non-controlling interests	—		—		—		—		—		(225)		(225)
Dividends to Series A preferred stockholders
($5.00 per share per month)	—		—		(30,094)		1,983		(28,111)		—		(28,111)
Dividends to mShares preferred stockholders
($4.79 - $6.25 per share per month)	—		—		(1,430)		95		(1,335)		—		(1,335)
Dividends to common stockholders ($0.2625 per share)	—		—		(11,823)		—		(11,823)		—		(11,823)
Balance at September 30, 2019	$	20	$	453	$	1,861,446	$	—	$	1,861,919	$	1,011	$	1,862,930

The accompanying notes are an integral part of these condensed consolidated financial statements.

5

Preferred Apartment Communities, Inc.
Condensed Consolidated Statements of Stockholders' Equity, continued
For the nine-month period ended September 30, 2020
(Unaudited)
(In thousands, except dividend per-share figures)	Redeemable Preferred Stock		Common Stock		Additional Paid in Capital		Accumulated Earnings		Total Stockholders' Equity		Non-Controlling Interest		Total Equity
Balance at January 1, 2020	$	21	$	464	$	1,938,057	$	(7,244)	$	1,931,298	$	2,818	$	1,934,116
Cumulative adjustment to reflect the adoption of ASU 2016-13	—		—		—		(7,414)		(7,414)		—		(7,414)
Issuance of Series A preferred shares	1		—		64,483		—		64,484		—		64,484
Issuance of Series A1/M1 preferred shares	1		—		110,946		—		110,947		—		110,947
At-the-market issuance of common stock	—		6		4,608		—		4,614		—		4,614
Exercise of warrants	—		—		8		—		8		—		8
Redemptions of preferred stock	(2)		28		(82,058)		—		(82,032)		—		(82,032)
Syndication and offering costs	—		—		(20,775)		—		(20,775)		—		(20,775)
Equity compensation to executives and directors	—		—		864		—		864		—		864
Conversion of Class A Units to common stock	—		1		1,381		—		1,382		(1,382)		—
Current period amortization of Class B Units	—		—		—		—		—		194		194
Net loss	—		—		—		(195,560)		(195,560)		(3,515)		(199,075)
Contributions from non-controlling interests	—		—		—		—		—		103		103
Reallocation of non-controlling interest to Class A Unitholders	—		—		(773)		—		(773)		773		—
Distributions to non-controlling interests	—		—		—		—		—		(119)		(119)
Distributions to Class A Unitholders	—		—		—		—		—		(465)		(465)
Dividends to Series A preferred stockholders
($5.00 per share per month)	—		—		(97,272)		—		(97,272)		—		(97,272)
Dividends to mShares preferred stockholders
($4.79 - $6.25 per share per month)	—		—		(4,903)		—		(4,903)		—		(4,903)
Dividends to Series A1/M1 preferred stockholders
($5.00 and $5.08 - $5.92 per share per month, respectively)	—		—		(2,426)		—		(2,426)		—		(2,426)
Dividends to common stockholders ($0.6125 per share)	—		—		(29,991)		—		(29,991)		—		(29,991)
Balance at September 30, 2020	$	21	$	499	$	1,882,149	$	(210,218)	$	1,672,451	$	(1,593)	$	1,670,858

The accompanying notes are an integral part of these condensed consolidated financial statements.

6

Preferred Apartment Communities, Inc.
Condensed Consolidated Statements of Stockholders' Equity, continued
For the nine-month period ended September 30, 2019
(Unaudited)
(In thousands, except dividend per-share figures)	Redeemable Preferred Stock		Common Stock		Additional Paid in Capital		Accumulated Earnings		Total Stockholders' Equity		Non-Controlling Interest		Total Equity
Balance at January 1, 2019	$	16	$	418	$	1,607,712	$	—	$	1,608,146	$	1,239	$	1,609,385
Issuance of Series A preferred shares	4		—		369,416		—		369,420		—		369,420
Issuance of mShares	—		—		46,765		—		46,765		—		46,765
Redemptions of preferred stock	—		26		(8,014)		—		(7,988)		—		(7,988)
Exercises of warrants	—		8		10,066		—		10,074		—		10,074
Syndication and offering costs	—		—		(43,795)		—		(43,795)		—		(43,795)
Equity compensation to executives and directors	—		—		471		—		471		—		471
Conversion of Class A Units to common stock	—		1		676		—		677		(677)		—
Current period amortization of Class B Units	—		—		—		—		—		451		451
Net loss	—		—		—		(5,956)		(5,956)		(138)		(6,094)
Contributions from non-controlling interests	—		—		—		—		—		2,050		2,050
Reallocation of non-controlling interest to Class A Unitholders	—		—		1,231		—		1,231		(1,231)		—
Distributions to non-controlling interests	—		—		—		—		—		(683)		(683)
Dividends to Series A preferred stockholders
($5.00 per share per month)	—		—		(85,078)		5,727		(79,351)		—		(79,351)
Dividends to mShares preferred stockholders
($4.79 - $6.25 per share per month)	—		—		(3,405)		229		(3,176)		—		(3,176)
Dividends to common stockholders ($0.785 per share)	—		—		(34,599)		—		(34,599)		—		(34,599)
Balance at September 30, 2019	$	20	$	453	$	1,861,446	$	—	$	1,861,919	$	1,011	$	1,862,930

The accompanying notes are an integral part of these consolidated financial statements.

7

Preferred Apartment Communities, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)	Nine-month periods ended September 30,
	2020		2019
Operating activities:
Net loss	$	(199,075)	$	(6,094)
Reconciliation of net loss to net cash provided by operating activities:
Depreciation and amortization expense	153,096		137,191
Amortization of above and below market leases	(6,145)		(4,525)
Deferred revenues and other noncash revenues amortization	(3,710)		(4,720)
Purchase option termination fee amortization	(4,896)		(6,900)
Amortization of equity compensation, lease incentives and other non-cash expenses	3,027		2,414
Deferred loan cost amortization	5,177		4,752
Non-cash accrued interest income on real estate loan investments	(9,208)		(10,206)
Receipt of accrued interest income on real estate loans	10,179		2,318
Gains on sales of real estate loan investments, net	—		(751)
Gain on sale of real estate and land condemnation	(3,789)		—
Loss from unconsolidated joint venture	120		—
Cash received for purchase option terminations	4,800		1,330
Loss on extinguishment of debt	6,674		84
Non-cash payment of interest on related party line of credit	—		(637)
Mortgage interest received from consolidated VIEs	—		13,398
Mortgage interest paid to other participants of consolidated VIEs	—		(13,398)
Increase in provision for expected credit losses	5,463		—
Changes in operating assets and liabilities:
(Increase) in tenant receivables and other assets	(15,769)		(12,379)
(Increase) in tenant lease incentives	(382)		(570)
Increase in accounts payable and accrued expenses	46,821		22,399
Increase in deferred liability to Former Manager	22,851		—
Increase in contingent liability	15,013		—
Decrease in accrued interest, prepaid rents and other liabilities	(249)		730
Net cash provided by operating activities	29,998		124,436
Investing activities:
Investments in real estate loans	(42,193)		(74,668)
Repayments of real estate loans	71,146		—
Notes receivable issued	(793)		(5,399)
Notes receivable repaid	15,012		2,169
Note receivable issued to and draws on line of credit by related parties	(9,624)		(30,434)
Repayments of notes receivable and lines of credit by related parties	4,546		26,222
Proceeds from sale of real estate loan investment, net	—		747
Origination fees received on real estate loan investments	882		1,347
Origination fees paid to Former Manager on real estate loan investments	—		(674)
Purchases of mortgage backed securities (K program), net of acquisition costs	—		(18,656)
Mortgage principal received from consolidated VIEs	—		5,024
Purchases of mortgage backed securities	—		(12,278)
Proceeds from sales of mortgage-backed securities	—		53,445
Acquisition of properties	(185,970)		(442,415)
Proceeds from sale of interest in unconsolidated joint venture	19,221		—
Return of capital from investment in unconsolidated joint venture	12,250		—
Receipt of insurance proceeds for capital improvements	—		746
Proceeds from land condemnation	787		—
Capital improvements to real estate assets	(39,158)		(34,251)
Investment in property development	(50)		—
Deposits paid on acquisitions	(1,227)		(952)
Net cash used in investing activities	(155,171)		(530,027)
The accompanying notes are an integral part of these consolidated financial statements.

8

Preferred Apartment Communities, Inc.
Consolidated Statements of Cash Flows - continued
(Unaudited)
(In thousands)	Nine-month periods ended September 30,
	2020		2019
Financing activities:
Proceeds from mortgage notes payable	377,749		329,905
Repayments of mortgage notes payable	(173,409)		(106,728)
Payments for deposits and other mortgage loan costs	(10,911)		(6,738)
Debt prepayment and other debt extinguishment costs	(5,733)		—
Payments to real estate loan participants	—		(5,223)
Proceeds from lines of credit	321,000		240,200
Payments on lines of credit	(288,000)		(247,200)
Repayment of the Term Loan	(70,000)		—
Mortgage principal paid to other participants of consolidated VIEs	—		(5,024)
Proceeds from repurchase agreements	—		4,857
Repayments of repurchase agreements	—		(4,857)
Proceeds from the sales of Preferred Stock and Units, net of offering costs and redemptions	159,096		380,016
Proceeds from exercises of Warrants	24		9,875
Payments for redemptions of preferred stock	(82,003)		(7,995)
Proceeds from sale of Common Stock	4,522		—
Common Stock dividends paid	(33,271)		(33,617)
Preferred stock dividends and Class A Unit distributions paid	(104,428)		(81,025)
Payments for deferred offering costs	(10,669)		(3,386)
Contributions from non-controlling interests	99		2,050
Distributions to non-controlling interests	(119)		—
Net cash provided by financing activities	83,947		465,110
Net increase (decrease) in cash, cash equivalents and restricted cash	(41,226)		59,519
Cash, cash equivalents and restricted cash, beginning of year	137,253		87,690
Cash, cash equivalents and restricted cash, end of period	$	96,027	$	147,209
Supplemental cash flow information:
Cash paid for interest	$	84,172	$	76,563
Supplemental disclosure of non-cash investing and financing activities:
Accrued capital expenditures	$	6,067	$	3,952
Writeoff of fully depreciated or amortized assets and liabilities	$	2,473	$	210
Writeoff of fully amortized deferred loan costs	$	2,828	$	1,850
Consolidation of assets of VIEs	$	—	$	270,669
Consolidation of liabilities of VIEs	$	—	$	270,669
Noncash extinguishment of notes receivable	$	20,865	$	—
Dividends payable - Common Stock	$	8,876	$	11,823
Dividends payable - Series A Preferred Stock	$	9,954	$	9,534
Dividends payable - mShares Preferred Stock	$	1,097	$	714
Dividends payable - A1/M1 Preferred Stock	$	545	$	—
Dividends declared but not yet due and payable	$	499	$	358
Partnership distributions payable to non-controlling interests	$	130	$	225
Accrued and payable deferred offering costs	$	38	$	252
Offering cost reimbursement to related party	$	40	$	384
Reclass of offering costs from deferred asset to equity	$	4,338	$	7,508
Loan receivables converted to equity for property acquisition	$	—	$	47,797
Noncash contribution of property into an unconsolidated joint venture	$	38,443	$	—
Fair value issuances of equity compensation	$	6,461	$	719
Mortgage loans assumed on acquisitions	$	—	$	41,550
Noncash repayment of mortgages through refinances	$	86,669	$	65,607
Operating lease liabilities assumed from Former Manager	$	15,912	$	—

    The accompanying notes are an integral part of these consolidated financial statements.

9

Preferred Apartment Communities, Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

September 30, 2020

1. Organization and Basis of Presentation

Preferred Apartment Communities, Inc. (NYSE: APTS) is a real estate investment trust engaged primarily in the ownership and operation of Class A multifamily properties, with select investments in grocery anchored shopping centers, Class A office buildings, and student housing properties. Preferred Apartment Communities’ investment objective is to generate attractive, stable returns for stockholders by investing in income-producing properties and acquiring or originating real estate loans. As of September 30, 2020, the Company owned or was invested in 125 properties in 15 states, predominantly in the Southeast region of the United States. Preferred Apartment Communities, Inc. has elected to be taxed as a real estate investment trust under the Internal Revenue Code of 1986, as amended, commencing with its tax year ended December 31, 2011. The Company was externally managed and advised by Preferred Apartment Advisors, LLC, or its Former Manager, a Delaware limited liability company and related party until the Company acquired the Former Manager and NMP Advisors, LLC, or the Sub-Manager, or the Internalization, on January 31, 2020. Prior to the Internalization transaction, according to the Sixth Amended and Restated Management Agreement, effective as of June 3, 2016, among the Company, the Operating Partnership (as defined below), and the Former Manager, or the Former Management Agreement, the Company paid acquisition fees and other fees and expense reimbursements to the Former Manager. Following the Internalization transaction that closed on January 31, 2020, the Company no longer pays any fees or expense reimbursements to its Former Manager or Sub-Manager (see Note 6).

As of September 30, 2020, the Company had 49,900,555 shares of common stock, par value $0.01 per share, or Common Stock, issued and outstanding and was the approximate 98.5% owner of the Preferred Apartment Communities Operating Partnership, L.P., the Company's operating partnership, at that date. The number of partnership units not owned by the Company totaled 742,413 at September 30, 2020 and represented Class A OP Units of the Operating Partnership, or Class A OP Units. The Class A OP Units are convertible at any time at the option of the holder into the Operating Partnership's choice of either cash or Common Stock. In the case of cash, the value is determined based upon the trailing 20-day volume weighted average price of the Company's Common Stock.

The Company controlled the Operating Partnership through its sole general partner interest and conducted substantially all of its business through the Operating Partnership until January 31, 2020. Beginning February 1, 2020, the Company conducts substantially all of its business through PAC Carveout, LLC, or Carveout, a wholly-owned subsidiary of the Operating Partnership. Carveout intends to elect to be taxed as a real estate investment trust under the Internal Revenue Code of 1986, as amended, commencing with its tax year ended December 31, 2020. The Company has determined the Operating Partnership is a variable interest entity, or VIE, of which the Company is the primary beneficiary. The Company is involved with other VIEs as discussed in Note 4. New Market Properties, LLC owns and conducts the business of our portfolio of grocery-anchored shopping centers. Preferred Office Properties, LLC owns and conducts the business of our portfolio of office buildings. Preferred Campus Communities, LLC owns and conducts the business of our portfolio of off-campus student housing communities. Each of these entities are indirect wholly-owned subsidiaries of the Operating Partnership.

Basis of Presentation

These consolidated financial statements include all of the accounts of the Company and the Operating Partnership presented in accordance with accounting principles generally accepted in the United States of America, or GAAP. These condensed financial statements were derived from audited financial statements, but do not contain all the disclosures required by GAAP. These condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements and notes thereto included in the company’s Annual Report on Form 10-K for the year ended December 31, 2019. All significant intercompany transactions have been eliminated in consolidation. Certain adjustments have been made consisting of normal recurring accruals, which, in the opinion of management, are necessary for a fair presentation of the Company's financial condition and results of operations. The results of operations for the three and nine months ended September 30, 2020 and 2019, are not necessarily indicative of the results that may be expected for the full year. The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes.

During the first quarter of 2020, there was a global outbreak of a novel coronavirus, or COVID-19, that has had and will continue to have an adverse impact on economic and market conditions and trigger a period of economic slowdown in the United States and globally. The potential reach, severity and duration of impacts of the COVID-19 pandemic will cause our estimates and forecasts of future events to be inherently less certain. Actual results could differ from those estimates. Amounts are presented in thousands where indicated.

10

Preferred Apartment Communities, Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

September 30, 2020

Reclassification Adjustments

The Company recorded certain reclassification adjustments on its Condensed Consolidated Statement of Operations for the three-month and nine-month periods ended September 30, 2019, to conform prior period presentation to the current presentation reflective of the internalized structure as shown in the table below. None of these reclassification adjustments were due to error or misstatement.

	For the three-month period ended September 30, 2019
(in thousands)	As reported in Quarterly Report on Form 10-Q at September 30, 2019		Reclassification adjustments		As reported in Quarterly Report on Form 10-Q at September 30, 2020
Rental revenues	$	101,817	$	(101,817)	$	—
Other property revenues	$	3,232	$	(3,232)	$	—
Rental and other property revenues	$	—	$	105,049	$	105,049
Operating expenses:
Property operating and maintenance	$	14,928	$	1,565	$	16,493
Real estate taxes	$	12,870	$	(12,870)	$	—
Real estate taxes and insurance	$	—	$	14,474	$	14,474
General and administrative	$	1,898	$	(534)	$	1,364
Insurance, professional fees and other expenses	$	3,453	$	(3,453)	$	—
Management internalization expense	$	—	$	818	$	818

	For the nine-month period ended September 30, 2019
(in thousands)	As reported in Quarterly Report on Form 10-Q at September 30, 2019		Reclassification adjustments		As reported in Quarterly Report on Form 10-Q at September 30, 2020
Rental revenues	$	289,647	$	(289,647)	$	—
Other property revenues	$	8,922	$	(8,922)	$	—
Rental and other property revenues	$	—	$	298,569	$	298,569
Operating expenses:
Property operating and maintenance	$	38,186	$	5,050	$	43,236
Real estate taxes	$	37,914	$	(37,914)	$	—
Real estate taxes and insurance	$	—	$	42,646	$	42,646
General and administrative	$	6,425	$	(2,254)	$	4,171
Insurance, professional fees and other expenses	$	8,671	$	(8,671)	$	—
Management internalization expense	$	—	$	1,143	$	1,143

11

Preferred Apartment Communities, Inc.

Notes to Consolidated Financial Statements (Unaudited)

September 30, 2020

2.Summary of Significant Accounting Policies

Impairment Assessment

The Company evaluates its tangible and identifiable intangible real estate assets for impairment when events such as declines in a property’s operating performance, deteriorating market conditions, or environmental or legal concerns bring recoverability of the carrying value of one or more assets into question. When qualitative factors indicate the possibility of impairment, the total undiscounted cash flows of the property, including proceeds from disposition, are compared to the net book value of the property. If this test indicates that impairment exists, an impairment loss is recorded in earnings equal to the shortage of the book value to fair value, calculated as the discounted net cash flows of the property.

Current expected credit losses on real estate loan investments

The Company carries its investments in real estate loans at amortized cost that consists of drawn amounts on the loans, net of unamortized deferred loan origination fees and current expected credit losses.

On January 1, 2020, the Company adopted ASU 2016-13, that replaced the incurred loss model with an expected loss model for instruments measured at amortized cost, and requires entities to record credit allowances for total expected future losses on financial assets at the outset of each loan. For each loan in which the Company is the lender, the amount of protection afforded to the Company is estimated to be the excess of the future estimated fair market value of the developed property over the developer’s related obligations (including the Company’s mezzanine or member loan(s)), other loans senior to the Company's, the expected future balance of accrued interest and any other obligations related to the project’s funding. The excess represents the amount of equity dollars in each real estate project plus profit expected to be realized by the developer on the project, both of which are in a subordinate position to the Company's real estate loan investments. This numeric result is expressed as a percentage of the property's expected future fair value (a "loss reserve ratio"), which is then pooled into ranges of loss percentages that was derived from company-specific loss experience. The product of this indicated loss reserve ratio and the expected fully-funded balance (inclusive of an expected future balance of accrued interest) is the initial total expected credit loss reserve. Over the life of the loan, the initial reserve is reevaluated for potential reduction at the achievement of certain milestones in construction and lease-up progress as the project approaches completion and the loan approaches maturity, given no unforeseen degradation in project performance or failure to adhere to the terms of the loan by the borrower/developer. Finally, the loss reserve may be further refined by the Company due to any subjective qualitative factors deemed pertinent and worthy of reflection.

The Company implemented this new guidance by applying this model to its existing portfolio of real estate loan investments using the modified retrospective method and in doing so, recorded a cumulative effect adjustment to retained earnings on January 1, 2020. See note 4.

The Company's notes and lines of credit receivable are unsecured and so are assessed for expected future credit loss by individually assessing the expected profit from current development projects in progress, as well as the viability of the personal guarantees of the borrowers.

The Company's real estate loan investments are collateralized by real estate development projects and secured further by guaranties of repayment from one or more of the borrowers. The Company's lines of credit receivable are typically only collateralized by personal guaranties, but occasionally may be cross-collateralized by interests in other real estate projects. As a result, the Company regularly evaluates the extent and impact of any credit deterioration associated with the performance and/or value of the underlying collateral property, as well as the financial and operating capability of the borrower. Specifically, a property’s operating results and any cash reserves are analyzed and used to assess (i) whether cash from operations is sufficient to cover the debt service requirements currently and into the future, (ii) the ability of the borrower to refinance the loan, and/or (iii) the property’s liquidation value. The Company also evaluates the financial wherewithal of any loan guarantors as well as the borrower’s competency in managing and operating the properties. In addition, the overall economic environment, real estate sector, and geographic sub-market in which the borrower operates are considered. Such analyses are completed and reviewed by management, utilizing various data sources, including periodic financial data such as property operating statements, occupancy, tenant profile, rental rates, operating expenses, the borrower’s exit plan, capitalization and discount rates and site inspections.

12

Preferred Apartment Communities, Inc.

Notes to Consolidated Financial Statements (Unaudited)

September 30, 2020

See the Revenue Recognition section of this Note for other loan-related policy disclosures required by ASC 310-10-50-6.

Purchase Option Terminations

The Company will occasionally receive a purchase option and/or a right of first refusal on the underlying property in conjunction with extending a real estate loan investment to the developer of the property. The purchase option is in some instances at a discount to the to-be-agreed-upon market value of the property, once stabilized. If the Company elects not to exercise the purchase option and acquire the property, it may negotiate to sell the purchase option back to the developer and receive a termination fee in consideration. The amount of the termination fee is accounted for as additional interest on the real estate loan investment and is recognized as interest revenue utilizing the effective interest method over the period beginning from the date of election until the earlier of (i) the maturity of the real estate loan investment and (ii) the sale of the property.

Revenue Recognition

Residential properties

Rental revenue is recognized when earned from residents of the Company's residential properties, which is over the terms of the rental agreements, typically of nine to fifteen months’ duration. The Company evaluates the collectability of amounts due from residents and recognizes revenue from residents when collectability is deemed probable, in accordance with ASC 842-30-25-12.

The Company evaluated the various ancillary revenues within its multifamily leases, including resident utility reimbursements. Having met the criteria that (i) the timing and pattern of transfer for the lease component and associated non-lease components are the same and (ii) that the lease component, if accounted for separately would be classified as an operating lease, the Company has elected the practical expedient under ASC 842, Leases, paragraph 10-15-42A, to elect reporting the lease component and non-lease components as one single component within the rental and other property revenues line on the Consolidated Statements of Operations. Revenue from utility reimbursements are considered variable lease payments and are recognized in the period in which the related expenses are incurred.

Grocery-anchored shopping centers and office properties

Our retail leases have original lease terms which generally range from three to seven years for spaces under 5,000 square feet and from ten to twenty years for spaces over 10,000 square feet. Anchor leases generally contain renewal options for one or more additional periods whereas in-line tenant leases may or may not have renewal options. With the exception of anchor leases, the leases generally contain contractual increases in base rent rates over the lease term and the base rent rates for renewal periods are generally based upon the rental rate for the primary term, which may be adjusted for inflation or market conditions. Anchor leases generally do not contain contractual increases in base rent rates over the lease term and the renewal periods. Our leases generally provide for the payment of fixed monthly rentals and may also provide for the payment of additional rent based upon a percentage of the tenant’s gross sales above a certain threshold level (“percentage rent”). Our leases also generally include tenant reimbursements for common area expenses, insurance, and real estate taxes. Utilities are generally paid by tenants either directly through separate meters or through payment of tenant reimbursements. The foregoing general description of the characteristics of the leases in our centers is not intended to describe all leases and material variations in lease terms may exist.

Our office building leases have original lease terms which generally range from five to fifteen years and generally contain contractual, annual base rental rate escalations ranging from 2% to 3%. These leases may be structured as gross where the tenant’s base rental rate is all inclusive and there is no additional obligation to reimburse building operating expenses, net or NNN where in addition to base rent the tenant is also responsible for its pro rata share of reimbursable building operating expenses, or modified gross where in addition to base rent the tenant is also responsible for its pro rata share of reimbursable building operating expense increases over a base year amount (typically calculated as the actual reimbursable operating expenses in year one of the original lease term).

Base rental revenue from tenants' operating leases is a lease component revenue in the Company's grocery-anchored shopping centers and office properties and is recognized on a straight-line basis over the term of the lease. Revenue based on "percentage rent" provisions that provide for additional rents that become due upon achievement of specified sales revenue targets (as specified in each lease agreement) is recognized only after the tenant exceeds its specified sales revenue target.

13

Preferred Apartment Communities, Inc.

Notes to Consolidated Financial Statements (Unaudited)

September 30, 2020

Revenue from reimbursements of the tenants' share of real estate taxes, insurance and common area maintenance, or CAM, costs represent non-lease component revenue. Having met the criteria that (i) the timing and pattern of transfer for the lease component and associated non-lease components are the same and (ii) that the lease component, if accounted for separately would be classified as an operating lease, the Company has elected the practical expedient under ASC 842, Leases, paragraph 10-15-42A, to elect reporting the lease component and non-lease components as one single component under rental and other property revenues recognized in accordance with ASC 842. Revenue from reimbursements are considered variable lease payments and are recognized in the period in which the related expenses are incurred. The Company does not record income and offsetting expense for certain variable costs paid directly to third parties by lessees on behalf of lessors.

Non-lease components which do not qualify under the practical expedient primarily include lease termination income and other ancillary revenue (e.g. application fees, license fees, late fees and tenant billbacks). Lease termination revenues are recognized ratably over the revised remaining lease term after giving effect to the termination notice or when tenant vacates and the Company has no further obligations under the lease. Rents and tenant reimbursements collected in advance are recorded as prepaid rent within other liabilities in the accompanying consolidated balance sheets. The Company evaluated the collectability of the tenant receivable related to rental and reimbursement billings due from tenants and straight-line rent receivables, which represent the cumulative amount of future adjustments necessary to present rental revenue on a straight-line basis, by taking into consideration the Company's historical write-off experience, tenant credit-worthiness, current economic trends, and remaining lease terms. In performing a detailed review of each tenant, we determined if the balances were paid in the subsequent month, if if the tenant had requested rent relief in the subsequent month due to COVID-19 circumstances, if the tenant was a credit tenant that was not typically late, and if the tenant had a security deposit on hand. If collection of substantially all of the outstanding balance is not probable, the tenant's rental revenue is recognized on a cash basis and all accrued balances are written off to rental revenue.

The Company evaluates the collectability of these amounts and recognizes revenue related to tenants where collectability is deemed probable, in accordance with ASC 842-30-25-12. Upon adoption of ASC 842, the Company began recording amounts not deemed probable of collection as a reduction of rental and other property revenues, as applicable.

In April 2020, the FASB issued a question-and-answer document (the “Lease Modification Q&A”) focused on the application of lease accounting guidance to lease concessions provided as a result of COVID-19. Under existing lease guidance, the Company would have to determine, on a lease by lease basis, if a lease concession was the result of a new arrangement reached with the tenant (treated with the lease modification accounting framework) or if a lease concession was under the enforceable rights and obligations within the existing lease agreement (precluded from applying the lease modification accounting framework). The Lease Modification Q&A clarifies that entities may elect to not evaluate whether lease-related relief that lessors provide to mitigate the economic effects of COVID-19 on lessees is a lease modification under Topic 842, Leases. Instead, an entity that elects not to evaluate whether a concession directly related to COVID-19 is a modification can then elect whether to apply the modification guidance (i.e. assume the relief was always contemplated by the contract or assume the relief was not contemplated by the contract). Both lessees and lessors may make this election. The Company is evaluating its election on a disaggregated basis, with such election applied consistently to leases with similar characteristics and similar circumstances. The future impact of the Lease Modification Q&A is dependent upon the extent of lease concessions granted to tenants as a result of COVID-19 in future periods and the elections made by the Company at the time of entering into such concessions. The Company elected to account for rent deferments provided to our residents and tenants, which were primarily related to a change of timing of rent payments with no significant changes to total payments or term, as a deferred payment in which we continue to recognize rental revenue on the existing straight-line basis over the remaining lease term and recognize any changes in payment through lease receivables, which is recorded in tenant receivables and other assets in our condensed consolidated balance sheet. Any deferment agreements which resulted in a significant change in lease term were accounted for as a modification under ASC 842.

The Company may provide grocery-anchored shopping center and office building tenants an allowance for the construction of leasehold improvements. These leasehold improvements are capitalized and depreciated over the shorter of the useful life of the improvements or the remaining lease term. If the allowance represents a payment for a purpose other than funding leasehold improvements, or in the event the Company is not considered the owner of the improvements, the allowance is considered to be a lease incentive and is recognized over the lease term as a reduction of rental revenue. Determination of the appropriate accounting for the payment of a tenant allowance is made on a lease-by-lease basis, considering the facts and circumstances of the individual tenant lease. When the Company is the owner of the leasehold improvements, recognition of rental revenue commences when the lessee is given possession of the leased space upon completion of tenant improvements. However, when the leasehold improvements are owned by the tenant, the lease inception date is the date the tenant obtains possession of the leased space for purposes of constructing its leasehold improvements. For our office properties, if the

14

Preferred Apartment Communities, Inc.

Notes to Consolidated Financial Statements (Unaudited)

September 30, 2020

improvement is deemed to be a “landlord asset,” and the tenant funded the tenant improvements, the cost is amortized over the term of the underlying lease with a corresponding recognition of rental revenues. In order to qualify as a landlord asset, the specifics of the tenant’s assets are reviewed, including the Company's approval of the tenant’s detailed expenditures, whether such assets may be usable by other future tenants, whether the Company has consent to alter or remove the assets from the premises and generally remain the Company's property at the end of the lease.

Gains on sales of real estate assets

The Company recognizes gains on sales of real estate based on the difference between the consideration received and the carrying amount of the distinct asset, including the carrying amount of any liabilities relieved or assumed by the purchasing counterparty and net of disposition expenses.

Lessee accounting

The Company has evaluated its leases for which it is the lessee to determine the value of any right of use assets and related lease liabilities. All of these leases qualify as operating leases. The Company has three ground leases related to our office and grocery-anchored shopping center assets, one of which had been recorded at fair value on the Company's balance sheet at acquisition due to a purchase option the Company deemed probable of exercising. These ground leases generally have extended terms (e.g. over twenty years with multiple renewal options) and generally have base rent with CPI-based increases. The Company evaluated its renewal option periods in quantifying its asset and liability related to these ground leases. In determining the value of its right of use asset and lease liability, the Company used discount rates comparable to recent loan rates obtained on comparative properties within its portfolio. The Company is also the lessee of office space for its corporate headquarters and of furniture and office equipment, which generally are three to five years in duration with minimal rent increases. The Company’s right of use asset and related lease liability in accordance with ASC 842-20-30 related to these leases are recorded within the Tenant Receivables and Other Assets and the Security Deposits and Other Liabilities line items of the balance sheet, respectively. Lease expense for ground leases and furniture and office equipment located at the Company's properties is included in the consolidated statements of operations within property operations and maintenance and expense for office rent and furniture and office equipment in the Company's corporate headquarters are included in general and administrative expense. See note 12 for more disclosures related to the Company's right of use assets and lease liabilities.

Investments in joint ventures

The Company’s joint ventures primarily consist of co-investments with institutional and other real estate operators, consistent with its core business. These joint ventures typically obtain non-recourse third-party financing on their property investments, thus contractually limiting the Company’s exposure to losses primarily to the amount of its equity investment; and due to the lender’s exposure to losses, a lender typically will require a minimum level of equity in order to mitigate its risk. As of September 30, 2020, the Company has a partial ownership interest in one multifamily community, two student housing properties, three grocery-anchored shopping centers and two office buildings. Of these investments in joint venture, only one grocery-anchored shopping center is accounted for as an investment in an unconsolidated joint venture. The Company evaluates its investments in joint venture and consolidates those in which it has controlling financial interest and records limited partners’ ownership interest and share of net income as non-controlling interest, under the voting interest model. The Company accounts for its investments for which it does not have a controlling financial interest as an investment in an unconsolidated joint venture under the equity method of accounting. All investments in joint venture have been evaluated for factors which may indicate a variable interest entity and determined none met such criteria.

Investments in unconsolidated joint venture are recorded initially at cost and subsequently adjusted for cash contributions, distributions and our share of earnings and losses. To recognize the character of distributions from equity investees within its Condensed Consolidated Statements of Cash Flows, all distributions received are presumed to be returns on investment and classified as cash inflows from operating activities unless the Company’s cumulative distributions received less distributions received in prior periods that were determined to be returns of investment exceed its cumulative equity in earnings recognized by the investor (as adjusted for amortization of basis differences). When such an excess occurs, the current-period distribution up to this excess is considered a return of investment and classified as cash inflows from investing. Cash from loan proceeds received from the placement of debt on a property included in investments in unconsolidated joint venture are presented in cash flows provided by investing activities in the accompanying Condensed Consolidated Statements of Cash Flows.

On a continuous basis, management assesses whether there are any indicators, including the underlying investment property operating performance and general market conditions, that the value of the Company’s investments in unconsolidated joint

15

Preferred Apartment Communities, Inc.

Notes to Consolidated Financial Statements (Unaudited)

September 30, 2020

ventures may be impaired. An investment’s value is impaired only if management’s estimate of the fair value of the investment is less than the carrying value of the investment and such difference is deemed to be other-than-temporary. To the extent impairment has occurred, the loss shall be measured as the excess of the carrying amount of the investment over the estimated fair value of the investment. Estimated fair values which are based on discounted cash flow models include all estimated cash inflows and outflows over a specified holding period, capitalization rates and discount rates utilized in these models are based upon unobservable rates that the Company believes to be within a reasonable range of current market rates.

New Accounting Pronouncements

Standard	Description	Date of Adoption	Effect on the Consolidated Financial Statements
Recently Adopted Accounting Guidance
ASU 2016-13, Financial Instruments - Credit Losses (ASC 326)	ASU 2016-03 ("CECL") changes how entities will measure credit losses for most financial assets, including loans, which are not measured at fair value through net income. The guidance replaces the existing incurred loss model with an expected loss model for instruments measured at amortized cost, and requires entities to record credit allowances for financial assets rather than reduce the carrying amount, as they do today under the other-than temporary impairment model.	January 1, 2020	Implementation of the new guidance on accounting for financial assets was limited to our real estate loan investments. We have developed a model that derives a reserve ratio based upon the amount of financial protection afforded each instrument. For each loan in which we are the lender, the amount of protection afforded to us is estimated to be the excess of the future estimated fair market value of the developed property over the commitment amount of each loan (including other loans senior to the Company’s), inclusive of accrued interest and other related receivables. The excess represents the amount of equity dollars in each real estate project, which are in a subordinate position to our real estate loan investments. We implemented this new guidance using the modified retrospective basis by recording a cumulative effect adjustment to retained earnings on January 1, 2020 of approximately $7.4 million.

Standard	Description	Date of Adoption	Effect on the Consolidated Financial Statements
Recently Issued Accounting Guidance Not Yet Adopted
ASU 2020-04, Reference Rate Reform (Topic 848) - Facilitation of the Effects of Reference Rate Reform on Financial Reporting	The new standard enables affected entities to elect from a series of practical expedients designed to ease the transition from referenced base rates within contracts designated to be replaced by Reference Rate Reform.	The amendments are effective March 12, 2020 through December 31, 2022.	ASU 2020-04 will potentially be applicable to the Company's variable-rate debt instruments for which the Company is the borrower, which bear interest at a spread over the 1-month London Interbank Offer Rate (1-month LIBOR). Among the practical expedients are the option to elect prospective adjustment of the effective interest rate, foregoing reassessment of any instruments under loan modification rules. The Company is monitoring developments pertaining to Reference Rate Reform and does not currently anticipate ASU 2020-04 to have a material effect on its results of operations.

16

Preferred Apartment Communities, Inc.

Notes to Consolidated Financial Statements (Unaudited)

September 30, 2020

3. Real Estate Assets

The Company's real estate assets consisted of:

	As of:
	September 30, 2020	December 31, 2019
Residential properties:
Properties (1,2)	44	42
Units	12,936	12,256
Beds	6,095	6,095
New Market Properties:
Properties (2)	54	52
Gross leasable area (square feet) (3)	6,208,278	6,041,629
Preferred Office Properties:
Properties (2,4)	9	10
Rentable square feet	3,169,000	3,204,000
(1) The acquired second phases of CityPark View and Crosstown Walk communities are managed in combination with the initial phases and so together are considered a single property, as is the Regent at Lenox Village within the Lenox Portfolio.
(2) One multifamily community, two student housing properties, two grocery-anchored shopping centers and two office buildings are owned through consolidated joint ventures. One grocery-anchored shopping center is an investment in an unconsolidated joint venture.
(3) The Company also owns approximately 47,600 square feet of gross leasable area of ground floor retail space which is embedded within the Lenox Portfolio and is not included in the totals above for New Market Properties.
(4) Excludes our 251 Armour property, comprising 35,000 rentable square feet that is under development and our 4th & Brevard land parcel, that is slated for future development.

Impacts of COVID-19 Pandemic

The COVID-19 pandemic emerged in December 2019 and has since spread globally, including to every state in the United States. On March 13, 2020, the United States declared a national emergency. Since that time, efforts to contain the spread of COVID-19 have intensified. Several countries, including the United States, have taken steps to restrict travel, temporarily close businesses and issue quarantine orders. The restrictions have resulted in impacts to earnings for commercial real estate, which in turn is expected to affect asset valuations to some degree. The Company does not consider this event to be a triggering event for purposes of impairment, since no evidence of declining valuations of any consequence have emerged to cause a triggering event, as evidenced by step one analyses performed on a sample of its properties from each segment. The Company found a significant amount of cushion between the asset’s book value and the undiscounted cash flows for the properties evaluated.

17

Preferred Apartment Communities, Inc.

Notes to Consolidated Financial Statements (Unaudited)

September 30, 2020

The Company's monthly rent collections for the three-month period ended September 30, 2020 continue to improve across the Company's segments compared to the three-month period ended June 30, 2020, with a more pronounced improvement in collections for in-line retail tenants, whose businesses were closed during periods with state or local operating restrictions. Many tenants have reopened as restrictions were lifted and monthly rent collections are beginning to increase. Within our multifamily communities, the Company offered rent deferral plans for the months of April, May, June and July 2020. Any deferred rents would be due over the remaining lease term of the individual tenants. For retail and office tenants, the company evaluated all delinquent receivable balances by performing a detailed review of each tenant. In this review, we determined if the balances were paid in the subsequent month, if tenant had requested rent relief in the subsequent month due to COVID-19 circumstances, if the tenant was a credit tenant that was not typically late, and if the tenant had a security deposit on hand. If the likelihood of the tenant submitting payment was deemed to be less than probable based on the aforementioned criteria, we determined the tenant as being an “at risk” tenant and revenue would be recognized on a cash basis.

The Company's average recurring rental revenue collections before and after any effect of rent deferrals for the third quarter 2020 were approximately 99.0% and 99.0% respectively for multifamily communities, 99.5% and 99.8% for office properties and 95.2% and 96.6% for grocery-anchored retail properties, respectively. Rent deferments provided to residents and tenants primarily related to a change of timing of rent payments with no significant changes to total payments or term. The Company has deferred approximately $0.8 million, or 0.7% of total rental and other revenues for the three-month period ended September 30, 2020. In addition, the Company’s revenues were reduced by approximately $1.7 million, or 1.4% of rental and other revenues for the three-month period ended September 30, 2020 due to additional bad debt reserves related to the COVID-19 pandemic.

Residential properties acquired

During the nine-month period ended September 30, 2020, the Company completed the acquisition of the following multifamily communities:

Acquisition date	Property	Location	Units
3/31/2020	Horizon at Wiregrass	Tampa, Florida	392
4/30/2020	Parkside at the Beach	Panama City Beach, Florida	288
			680

The aggregate purchase prices of the multifamily acquisitions for the nine-month period ended September 30, 2020 were approximately $141.2 million, exclusive of acquired escrows, security deposits, prepaids, capitalized acquisition costs and other miscellaneous assets and assumed liabilities. The Company acquired no multifamily communities during the nine-month period ended September 30, 2019.

18

Preferred Apartment Communities, Inc.

Notes to Consolidated Financial Statements (Unaudited)

September 30, 2020

The Company allocated the purchase prices and capitalized acquisition costs to the acquired assets and liabilities based upon their fair values, as shown in the following table. The purchase price allocations were based upon the Company's best estimates of the fair values of the acquired assets and liabilities.

	Multifamily Community acquired during the nine-month period ended
(In thousands, except amortization period data)	September 30, 2020
Land	$	12,945
Buildings and improvements	100,113
Furniture, fixtures and equipment	26,284
Lease intangibles	5,968
Prepaids & other assets	24
Accrued taxes	(437)
Security deposits, prepaid rents, and other liabilities	(384)
Net assets acquired	$	144,513
Cash paid	$	99,476
Mortgage debt, net	45,037
Total consideration	$	144,513
Three-months ended September 30, 2020
Revenue	$	2,883
Net income (loss)	$	(1,832)
Nine-months ended September 30, 2020
Revenue	$	5,258
Net income (loss)	$	(4,018)
Capitalized acquisition costs incurred by the Company	$	4,085
Acquisition costs paid to related party (included above)	$	—
Remaining amortization period of intangible
assets and liabilities (months)	11.5

The Company had no acquisitions of student housing property assets during the nine-month period ended September 30, 2020.

During the nine-month period ended September 30, 2019, the Company completed the acquisition of Haven49, a 322-unit, 887-bed student housing property adjacent to the University of North Carolina at Charlotte. The Company effectuated the acquisition via a negotiated agreement whereby the Company accepted the membership interest in the Haven49 project entity in satisfaction of the project indebtedness owed to the Company. See Note 4.

19

Preferred Apartment Communities, Inc.

Notes to Consolidated Financial Statements (Unaudited)

September 30, 2020

The Company allocated the asset's fair value and capitalized acquisition costs to the acquired assets and liabilities based upon their fair values, as shown in the following table. The purchase price allocations were based upon the Company's best estimates of the fair values of the acquired assets and liabilities.

	Student housing property acquired during the nine-month period ended
(In thousands, except amortization period data)	September 30, 2019
Land	$	7,289
Buildings and improvements	68,163
Furniture, fixtures and equipment	16,966
Lease intangibles	983
Accrued taxes	(158)
Security deposits, prepaid rents, and other liabilities	(2,579)
Net assets acquired	$	90,664
Satisfaction of loan receivables	$	46,397
Cash paid	2,717
Mortgage debt, net	41,550
Total consideration	$	90,664
Three-months ended September 30, 2020
Revenue	$	2,042
Net income (loss)	$	36
Nine-months ended September 30, 2020
Revenue	$	5,980
Net income (loss)	$	307
Capitalized acquisition costs incurred by the Company	$	1,016
Acquisition costs paid to related party	$	936
Remaining amortization period of intangible
assets and liabilities (months)	0

On March 20, 2020, we delivered a written termination notice to the prospective purchaser of six of our student housing properties for their failure to consummate the purchase. Accordingly, we received an additional $2.75 million of forfeited earnest money as liquidated damages.

20

Preferred Apartment Communities, Inc.

Notes to Consolidated Financial Statements (Unaudited)

September 30, 2020

New Market Properties assets acquired

During the nine-month periods ended September 30, 2020 and 2019, the Company completed the acquisition of the following grocery-anchored shopping centers:

Acquisition date	Property	Location	Gross leasable area (square feet)
1/29/2020	Wakefield Crossing	Raleigh, North Carolina	75,927
3/19/2020	Midway Market	Dallas, Texas	85,599
			161,526
1/17/2019	Gayton Crossing	Richmond, Virginia	158,316
5/28/2019	Free State Shopping Center	Washington, D.C.	264,152
6/12/2019	Disston Plaza	Tampa - St. Petersburg, Florida	129,150
6/12/2019	Polo Grounds Mall	West Palm Beach, Florida	130,285
8/16/2019	Fairfield Shopping Center (1)	Virginia Beach, VA	231,829
			913,732
(1) Property is owned through a consolidated joint venture.

The aggregate purchase price of the New Market Properties acquisitions for the nine-month periods ended September 30, 2020 and 2019 was approximately $27.7 million and $178.5 million respectively, exclusive of acquired escrows, security deposits, prepaid assets, capitalized acquisition costs and other miscellaneous assets and assumed liabilities.

21

Preferred Apartment Communities, Inc.

Notes to Consolidated Financial Statements (Unaudited)

September 30, 2020

The Company allocated the purchase prices to the acquired assets and liabilities based upon their fair values, as shown in the following table. The purchase price allocation was based upon the Company's best estimates of the fair values of the acquired assets and liabilities.

	New Market Properties' acquisitions during the nine-month periods ended September 30,
(In thousands, except amortization period data)	2020		2019
Land	$	9,328	$	57,916
Buildings and improvements	12,264		101,873
Tenant improvements	2,099		8,230
In-place leases	3,043		16,080
Above market leases	107		2,759
Leasing costs	1,237		5,768
Below market leases	(359)		(10,537)
Prepaid taxes and other assets	61		98
Security deposits, prepaid rents, and other	(249)		(748)
Net assets acquired	$	27,531	$	181,439
Cash paid	$	19,640	$	65,526
Mortgage debt	7,891		115,913
Total consideration	$	27,531	$	181,439
Three-month period ended September 30, 2020
Revenue	$	678	$	3,976
Net income (loss)	$	5	$	(997)
Nine-month period ended September 30, 2020
Revenue	$	1,723	$	13,094
Net income (loss)	$	59	$	(2,126)
Capitalized acquisition costs incurred by the Company	$	470	$	4,022
Capitalized acquisition costs paid to related party (included above)	$	249	$	1,799
Remaining amortization period of intangible
assets and liabilities (years)	10.2		8.0

The Company recorded aggregate amortization and depreciation expense of:

(In thousands)	Three-month periods ended September 30,				Nine-month periods ended September 30,
	2020		2019		2020		2019
Depreciation:
Buildings and improvements	$	29,050	$	25,509	$	85,811	$	72,686
Furniture, fixtures, and equipment	12,817		12,296		38,132		37,961
	41,867		37,805		123,943		110,647
Amortization:
Acquired intangible assets	9,510		8,169		27,873		25,732
Deferred leasing costs	368		217		1,132		670
Website development costs	49		48		148		142
Total depreciation and amortization	$	51,794	$	46,239	$	153,096	$	137,191

At September 30, 2020, the Company had recorded acquired gross intangible assets of $310.6 million, accumulated amortization of $177.3 million, gross intangible liabilities of $86.0 million and accumulated amortization of $31.5 million. Net intangible assets and liabilities as of September 30, 2020 will be amortized over the weighted average remaining amortization periods of approximately 7.2 and 8.7 years, respectively.

22

Preferred Apartment Communities, Inc.

Notes to Consolidated Financial Statements (Unaudited)

September 30, 2020

At September 30, 2020, included in the Company's total restricted cash was approximately $18.8 million that was contractually restricted to fund capital expenditures and other property-level commitments such as tenant improvements and leasing commissions. Our lenders also require us to escrow balances for future real estate tax and insurance payments. Through our property-level mortgage refinances executed in the second and third quarters of 2020, our lenders also required us to escrow funds for potential effects from the COVID-19 pandemic. At September 30, 2020, our restricted cash for real estate taxes, insurance premiums and COVID-19 reserves was $33.6 million and $6.8 million, respectively. The remainder of the Company's restricted cash consisted primarily of resident and tenant security deposits.

Purchase Options

In the course of extending real estate loan investments for property development, the Company will often receive an exclusive option to purchase the property once development and stabilization are complete. If the Company determines that it does not wish to acquire the property, it has the right to sell its purchase option back to the borrower for a termination fee in the amount of the purchase option discount.

Effective May 7, 2018, the Company terminated its purchase options on the Bishop Street multifamily community and the Haven Charlotte student housing property, both of which were partially supported by real estate loan investments held by the Company, in exchange for termination fees aggregating approximately $5.6 million from the developers. Effective January 1, 2019, the Company terminated its purchase options on the Sanibel Straits, Newbergh, Wiregrass and Cameron Square multifamily communities and the Solis Kennesaw student housing property, all of which are partially supported by real estate loan investments held by the Company, in exchange for termination fees aggregating approximately $9.1 million from the developers. Effective March 6, 2020, the Company terminated its purchase option on the Falls at Forsyth multifamily community for $2.5 million. These fees are treated as additional interest revenue and are amortized over the period ending with the earlier of (i) the sale of the underlying property and (ii) the maturity of the real estate loans. The Company recorded approximately $4.9 million and $6.9 million of interest revenue related to these purchase option terminations for the nine-month periods ended September 30, 2020 and 2019, respectively.

Joint Venture Investment

On July 15, 2020, we contributed our Neapolitan Way grocery-anchored shopping center that was previously wholly-owned and consolidated into a joint venture in exchange for approximately $19.2 million and 50% interest in the joint venture. We realized a gain on the transaction of approximately $3.3 million. We now hold our remaining interest in the property via an unconsolidated joint venture and retain a 50% voting and financial interest. The following tables summarize the balance sheet and statements of income data for Neapolitan Way shopping center subsequent to its contribution into the joint venture as of and for the periods presented:

(in thousands)	September 30, 2020
Total assets	$	39,843
Total liabilities	$	26,142

	Three months ended		Nine months ended
	September 30,		September 30,
	2020		2020
Rental and other property revenues	$	651	$	651
Total operating expenses	$	797	$	797
Interest expense	$	94	$	94
Net income (loss)	$	(240)	$	(240)
Net income (loss) attributable to the Company	$	(120)	$	(120)

23

Preferred Apartment Communities, Inc.

Notes to Consolidated Financial Statements (Unaudited)

September 30, 2020

4. Real Estate Loans, Notes Receivable, and Line of Credit

Our portfolio of fixed rate, interest-only real estate loans consisted of:

	September 30, 2020			December 31, 2019
Number of loans	25			27
Number of underlying properties in development	18			19
(In thousands)
Drawn amount	$	323,629		$	352,582
Deferred loan origination fees	(1,567)			(1,476)
Allowance for loan losses	(12,461)			(1,400)
Carrying value	$	309,601		$	349,706
Unfunded loan commitments	$	62,964		$	61,718
Weighted average current interest, per annum (paid monthly)	8.50		%	8.48		%
Weighted average accrued interest, per annum	3.84		%	3.85		%

(In thousands)	Principal balance		Deferred loan origination fees		Allowances and CECL Reserves		Carrying value
Balances as of December 31, 2019	$	352,582	$	(1,476)	$	(1,400)	$	349,706
Opening CECL reserve	—		—		(7,414)		(7,414)
Loan fundings	42,193		—		—		42,193
Loan repayments	(71,146)		—		—		(71,146)
Loan origination fees collected	—		(882)		—		(882)
Amortization of loan origination fees	—		791		—		791
Reserve increases due to loan originations	—		—		(767)		(767)
Net increases in reserves on existing loans or loans repaid	—		—		(2,880)		(2,880)
Balances as of September 30, 2020	$	323,629	$	(1,567)	$	(12,461)	$	309,601

Property type	Number of loans	Carrying value		Commitment amount		Percentage of portfolio
(In thousands)
Residential properties	24	$	299,219	$	367,400	97	%
New Market Properties	—	—		—		—	%
Preferred Office Properties	1	10,382		19,193		3	%
Balances as of September 30, 2020	25	$	309,601	$	386,593

On September 3, 2020, we closed on a real estate loan investment of up to approximately $20.7 million to partially finance the development and construction of a 320-unit multifamily community to be located in suburban Atlanta, Georgia. The loan pays a current monthly interest rate of 8.5% per annum and accrues additional deferred interest of 5.5% per annum and matures on September 3, 2024.

On May 14, 2020, the Company closed on a real estate loan investment of up to $10.0 million in partial support of a 277-unit multifamily community to be located in Raleigh, North Carolina. The loan pays a current monthly interest rate of 8.5% per annum and accrues additional deferred interest of 5.5% per annum and matures on November 14, 2023.

24

Preferred Apartment Communities, Inc.

Notes to Consolidated Financial Statements (Unaudited)

September 30, 2020

On February 28, 2020, the Company closed on a real estate loan investment of up to approximately $13.4 million in partial support of a 256-unit multifamily community to be located in Charlotte, North Carolina. The loan pays a current monthly interest rate of 8.5% per annum and accrues additional deferred interest of 5.5% per annum and matures on February 28, 2025.

The Company's real estate loan investments are primarily collateralized by 100% of the membership interests of the underlying project entity, and, where considered necessary, by unconditional joint and several repayment guaranties and performance guaranties by the principal(s) of the borrowers. These guaranties generally remain in effect until the receipt of a final certificate of occupancy. All of the guaranties are subject to the rights held by the senior lender pursuant to a standard intercreditor agreement. Prepayment of the real estate loans are permitted in whole, but not in part, without the Company's consent.

As discussed in note 2, the Company established total expected credit losses against its existing portfolio of real estate loan investments on January 1, 2020. In doing so, it recorded a cumulative effect reduction adjustment to retained earnings of approximately $7.4 million. For the quarter ended September 30, 2020, the Company recorded an aggregate net decrease in its provision for expected credit losses of approximately $0.8 million, primarily related to development projects achieving construction and leasing milestones.

As described in note 2, the Company assesses the credit quality of its real estate loan investments by a calculated loss reserve ratio, which is an internally-developed credit quality indicator. Loss reserve ratios reflect the amount of protection afforded by the amount of equity and debt financing subordinate to the Company's position in the project; higher reserve ratios reflect a lower amount of invested dollars junior to the Company's position. The following table presents the Company's aggregation of loan amounts by final reserve ratio as of September 30, 2020:

Final reserve ratio		Number of loans	Total receivables by project, net of reserves (in thousands)
—	%	3	$	28,921
0.50	%	10	108,630
1.00	%	3	17,876
1.50	%	4	26,729
3.00	%	3	27,902
4.00	%	1	126,768
5.00% +		1	3,776
		25	$	340,602

The COVID-19 pandemic has, and will continue to have, impacts upon the development activity underlying our real estate loan investments, including the availability of labor, the supply and availability of construction materials and the ability to achieve leased stabilization. The Company's Berryessa real estate loan investment carried a 4.0% final reserve ratio at September 30, 2020. The project experienced a temporary construction delay due to effects of the COVID-19 pandemic but resumed in the second quarter of 2020 when the force majeure order was lifted. The Company assesses its real estate loan investment portfolio for impacts from COVID-19 at the outset of the project, as well as both quantitatively and qualitatively at the achievement of construction and leasing milestones during the projects' lives.

The Company can make no assurances that economic or industry conditions or other circumstances will not lead to increases in allowances for credit losses.

Management monitors the credit quality of the obligors under each of the Company's real estate loans by tracking the timeliness of scheduled interest and principal payments relative to the due dates as specified in the loan documents, as well as draw requests on the loans relative to the project budgets. In addition, management monitors the actual progress of development and construction relative to the construction plan, as well as local, regional and national economic conditions that may bear on our current and target markets.

25

Preferred Apartment Communities, Inc.

Notes to Consolidated Financial Statements (Unaudited)

September 30, 2020

The Company's Starkville loan has been in default since August 20, 2019 under the terms of the underlying mezzanine loan agreement. During the fourth quarter of 2019, the Company recorded a specific loan loss reserve related to this loan totaling $1.4 million, reducing its net investment in the Starkville loan from $7.3 million, including accrued interest of $1.2 million, to a carrying amount of $5.9 million. In the first quarter of 2020, the Company recorded an additional $2.1 million in reserves pertaining to this loan under ASU 2016-03, reducing its carrying amount to $3.8 million as of September 30, 2020. No additional reserves were recorded in the second or third quarters of 2020. See note 16.

At September 30, 2020, the Company's portfolio of notes and lines of credit receivable consisted of:

Borrower	Date of loan	Maturity date	Total loan commitments		Outstanding balance as of:				Interest rate
					September 30, 2020		December 31, 2019
(In thousands)
Preferred Capital Marketing Services, LLC (1)	N/A	N/A	$	—	$	—	$	650	N/A
Preferred Apartment Advisors, LLC (1)	N/A	N/A	—		—		15,178		N/A
Haven Campus Communities, LLC (1,2)	6/11/2014	12/31/2018	11,660		9,011		9,011		8	%
Newport Development Partners, LLC	6/17/2014	6/30/2021	1,000		—		—		12	%
Oxford Capital Partners, LLC (3)	10/5/2015	6/30/2021	8,000		1,006		5,438		10	%
Mulberry Development Group, LLC (4)	3/31/2016	6/30/2021	750		670		525		12	%
360 Capital Company, LLC (4)	5/24/2016	12/31/2020	3,400		1,218		3,394		12	%
360 Capital Company, LLC (1)	7/24/2018	N/A	—		—		7,754		N/A
Unamortized loan fees			—		—		(33)
			$	24,810	$	11,905	$	41,917
(1) See related party disclosure in Note 6.
(2) The amount payable under the note is collateralized by one of the principals of the borrower's 49.49% interest in an unrelated shopping center located in Atlanta, Georgia and a personal guaranty of repayment by the principals of the borrower.
(3) The amounts payable under the terms of this revolving credit line, up to the lesser of 25% of the loan balance or $2.0 million, are collateralized by a personal guaranty of repayment by the principals of the borrower. The overall decrease in the Oxford LOC balance is a function of an approximate $5.0 million paydown on July 31, 2020, that was required as part of the LOC agreement whenever a Capital Transaction involving the Manassas Palisades property occurred. This property was sold on July 31, 2020 and the related mezz loan was repaid to PAC. Therefore, a corresponding paydown on the Oxford LOC was made to reduce the sum of the principal balance.
(4) The amounts payable under the terms of these revolving credit lines are collateralized by a personal guaranty of repayment by the principals of the borrower.

On November 20, 2018, the borrower on the Haven Campus Communities, LLC line of credit defaulted on the loan, triggering the accrual of an additional 10% default interest rate, which is incremental to the original 8% current interest rate. The amount of default interest recorded from the default date through September 30, 2020 was approximately $1.8 million. Under the terms of the loan, amounts collected are applied first to any legal costs incurred by the Company to collect amounts due on the loan; second, to pay any accrued default and current interest on the loan; and third, to repay the principal amount owed.

Based on the negotiated agreement between the Company and the borrowers, on March 27, 2019, the Company received the membership interests of the Haven49 student housing project in exchange for the complete settlement of the related Haven49 loans, which include the Haven Campus Communities Charlotte Member, LLC line of credit, the Haven49 real estate loan investment and the Haven49 member loan. Additionally, under the same agreement, the Company received payouts and credits totaling approximately $3.75 million towards the Haven Campus Communities, LLC line of credit. These amounts were applied in accordance with the terms of the line of credit. The Company retains a pledge of a 49.49% interest in an unrelated shopping center located in Atlanta, Georgia as collateral on the Haven Campus Communities, LLC line of credit, as well as personal guaranties of repayment from the principals of the borrower.

In January 2019 the Company filed a lawsuit to collect the amounts owed under the line of credit it provided to Haven Campus Communities, LLC. In September 2019, Haven Campus Communities, LLC answered the lawsuit and filed counterclaims against the Company and its affiliates. At this time, the case is in discovery, so the Company is unable to make any estimates on timing or amounts that may be collected by the Company on its Haven Campus Communities, LLC line of credit.

26

Preferred Apartment Communities, Inc.

Notes to Consolidated Financial Statements (Unaudited)

September 30, 2020

The Company recorded interest income and other revenue from these instruments as follows:

Interest income	Three month periods ended September 30,				Nine-month periods ended September 30,
(In thousands)	2020		2019		2020		2019
Real estate loans:
Current interest	$	6,921	$	8,083	$	21,070	$	23,031
Additional accrued interest	3,052		3,471		9,208		10,040
Loan origination fee amortization	264		283		791		1,063
Purchase option termination fee amortization	421		1,283		4,896		6,900
Default interest	63		—		186		—
Total real estate loan revenue	10,721		13,120		36,151		41,034
Notes and lines of credit	536		1,865		2,056		4,278
Bank and money market accounts	1		169		38		562
Agency mortgage-backed securities	—		—		—		95
Interest income on loans and notes receivable	$	11,258	$	15,154	$	38,245	$	45,969

The Company extends loans for purposes such as to partially finance the development of multifamily residential communities, to acquire land in anticipation of developing and constructing multifamily residential communities, and for other real estate or real estate related projects. Certain of these loans include characteristics such as exclusive options to purchase the project within a specific time window following project completion and stabilization, the sufficiency of the borrowers' investment at risk and the existence of payment and performance guaranties provided by the borrowers, any of which can cause the loans to create variable interests to the Company and require further evaluation as to whether the variable interest creates a VIE, which would necessitate consolidation of the project.

The Company considers the facts and circumstances pertinent to each entity borrowing under the loan, including the relative amount of financing the Company is contributing to the overall project cost, decision making rights or control held by the Company, guarantees provided by third parties, and rights to expected residual gains or obligations to absorb expected residual losses that could be significant from the project. If the Company is deemed to be the primary beneficiary of a VIE, consolidation treatment would be required.

The Company has no decision making authority or power to direct activity, except normal lender rights, which are subordinate to the rights of the senior lenders on the projects. The Company has concluded that it is not the primary beneficiary of the borrowing entities and therefore it has not consolidated these entities in its consolidated financial statements. The Company's maximum exposure to loss from these loans is their drawn amount as of September 30, 2020 of approximately $323.6 million. The maximum aggregate amount of loans to be funded as of September 30, 2020 was approximately $386.6 million, which includes approximately $63.0 million of loan committed amounts not yet funded.

The Company has evaluated its real estate loans, where appropriate, for accounting treatment as loans versus real estate development projects, as required by ASC 310. The Company evaluates the expected residual profit it expects to collect under the terms of the loan versus the expected residual profit expected to be collected by the developer (in conjunction with any equity investors, if applicable), along with the "loan versus investment" characteristics as set forth by ASC 310-25. For each loan, the characteristics and the facts and circumstances indicate that loan accounting treatment is appropriate in cases where (i) the majority of the expected residual profit is expected to be due the developer and (ii) the majority of "loan versus investment" tests indicate that the instrument is a loan.

The Company is subject to a geographic concentration of risk that could be considered significant with regard to the Newbergh, Newbergh Capital, Solis Kennesaw II, 8West, Kennesaw Crossing and Solis Cumming Town Center real estate loan investments, all of which are partially supporting various real estate projects in or near Atlanta, Georgia. The drawn amount, in addition to outstanding accrued interest, for these loans as of September 30, 2020 totaled approximately $56.5 million (with a total commitment amount of approximately $86.2 million). The Company is also subject to a geographic concentration of risk that could be considered significant with regard to the Sanibel Straits, Sanibel Straits Capital, E-Town, Vintage Destin, Hidden River II, Hidden River II Capital and Vintage Horizon West real estate loan investments, all of which are partially supporting various real estate projects in Florida. The drawn amount, in addition to outstanding accrued interest, for these loans as of September 30, 2020 totaled approximately $56.4 million (with a total commitment amount of approximately $61.2 million).

27

Preferred Apartment Communities, Inc.

Notes to Consolidated Financial Statements (Unaudited)

September 30, 2020

The event of a total failure to perform by the borrowers and guarantors would subject the Company to a total possible loss of the drawn amount and all outstanding accrued interest.

Freddie Mac K Program investments

On May 23, 2018, the Company purchased a subordinate tranche of Series 2018-ML04, a pool of 20 multifamily mortgages with a total pool size of approximately $276.3 million, from Freddie Mac. The purchase price of the subordinate tranche was approximately $4.7 million. On December 10, 2019, the Company sold its investment in Series 2018-ML04 for $6.2 million.

On March 28, 2019, the Company purchased a subordinate tranche of Series 2019-ML05, a pool of 21 multifamily mortgages with a total pool size of approximately $295.7 million, from Freddie Mac. The Company's tranche of the 2019-ML05 pool paid monthly interest of approximately $103,000. The purchase price of the subordinate tranche was approximately $18.4 million. On December 17, 2019, the Company sold its investment in Series 2019-ML05 for $20.4 million.

5. Redeemable Preferred Stock and Equity Offerings

On February 14, 2020, the Company's offering of a maximum of 1,500,000 Units, with each Unit consisting of one share of Series A Redeemable Preferred Stock, par value $0.01 per share, and one Warrant to purchase up to 20 shares of Common Stock (the "$1.5 Billion Unit Offering") expired. See note 6 for discussion regarding a termination fee agreement with and payment to Preferred Capital Securities, LLC, or PCS, an affiliate of the Company, in conjunction with the Company's winding down of the $1.5 Billion Unit Offering.

At September 30, 2020, the Company's active equity offerings consisted of:

•an offering of up to 1,000,000 Shares of Series A1 Redeemable Preferred Stock ("Series A1 Preferred Stock"), Series M1 Redeemable Preferred Stock ("Series M1 Preferred Stock"), or a combination of both (collectively the "Series A1/M1 Offering");

•an offering of up to $400 million of equity or debt securities (the "2019 Shelf Offering"), including an offering of up to $125 million of Common Stock from time to time in an "at the market" offering (the "2019 ATM Offering"); and

•an offering of up to $100 million of equity securities for the Preferred Office Growth Fund, a consolidated entity (the

“Preferred Office Growth Fund Offering”).

Certain offering costs are not related to specific closing transactions and are recognized as a reduction of stockholders' equity in the proportion of the number of instruments issued to the maximum number of shares of Preferred Stock anticipated to be issued. Any offering costs not yet reclassified as reductions of stockholders' equity are are reflected in the asset section of the consolidated balance sheets as deferred offering costs.

Cumulative gross proceeds and offering costs for our active equity offerings consisted of:

(In thousands)					Deferred Offering Costs
Offering	Total offering		Gross proceeds as of September 30, 2020		Reclassified as reductions of stockholders' equity		Recorded as deferred assets		Total		Specifically identifiable offering costs (3)		Total offering costs
$1.5 Billion Unit Offering (1)	1,500,000		$	1,236,414	$	15,874	$	—	$	15,874	$	115,650	$	131,524
Series A1/M1 Offering	1,000,000		115,893		426		3,251		3,677		11,023		14,700
2019 Shelf Offering (2)	400,000		4,614		22		975		997		92		1,089
Preferred Office Growth Fund	100,000		—		—		495		495		3		498
Total	$	3,000,000	$	1,356,921	$	16,322	$	4,721	$	21,043	$	126,768	$	147,811

28

Preferred Apartment Communities, Inc.

Notes to Consolidated Financial Statements (Unaudited)

September 30, 2020

(1) The Series A $1.5 billion unit offering expired in Q1 2020 and therefore all remaining deferred offering costs were reclassified as reductions of stockholder's equity in Q1 2020.

(2) The $125 million ATM Offering is a part of the $400 million Shelf Offering and therefore it is not included in the total.

(3) These offering costs specifically identifiable to Unit offering closing transactions, such as commissions, dealer manager fees, and other registration fees, are reflected as a reduction of stockholders' equity at the time of closing.

Series A1/M1 Preferred Stock Offering

On September 27, 2019, the Company’s registration statement on Form S-3 (Registration No. 333-233576) (the “Series A1/M1 Registration Statement”)  was declared effective by the SEC. Shares of Series A1 Preferred Stock and Series M1 Preferred Stock issued under the Series A1/M1 Registration Statement are each offered at a price of $1,000 per share, subject to adjustment under certain conditions.

Aggregate offering expenses of the Series A1/M1 Preferred Stock Offering, including selling commissions and dealer manager fees for the Series A1 Preferred Stock and only dealer manager fees for the Series M1 Preferred Stock, are capped at 12.0% of aggregate gross proceeds of the offering. Dealer manager fees and sales commissions for the Series A1/M1 Preferred Stock Offering are not reimbursable.

6. Related Party Transactions

On January 31, 2020, the Company internalized the functions performed by the Former Manager and Sub-Manager by acquiring the entities that owned the Former Manager and the Sub-Manager for an aggregate purchase price of $154 million, plus up to $25 million of additional consideration to be paid within 36 months, due upon the earlier of (i) if, for the immediately preceding fiscal year beginning on January 1, funds from operations ("FFO") of the Company per weighted average basic share of the Company’s common stock and Class A Unit (as defined in the limited partnership agreement of PAC OP) outstanding for such fiscal year is determined to be greater than or equal to $1.55 or (ii) on the thirty-six (36) month anniversary of the closing of the Internalization. Pursuant to the Stock Purchase Agreement, the sellers sold all of the outstanding shares of capital stock of NELL Partners, Inc. ("NELL") and NMA Holdings, Inc. ("NMA") to PAC Carveout, LLC ("PAC Sub") in exchange for an aggregate of approximately $111.1 million in cash paid at the closing which reflects the satisfaction of certain indebtedness of NELL, the estimated net working capital adjustment, and a hold back of $15 million for certain specified matters (the "Specified Matters Holdback Amount"). The Specified Matters Holdback Amount is payable to the NELL sellers less certain losses following final resolution of any such specified matters.

Daniel M. DuPree and Leonard A. Silverstein were executive directors of NELL Partners, Inc., which controlled the Former Manager through the date of the Internalization. Daniel M. DuPree was the Chief Executive Officer and Leonard A. Silverstein was the President and Chief Operating Officer of the Former Manager. Trusts established, or entities owned, by the family of John A. Williams, Daniel M. DuPree, the family of Leonard A. Silverstein, the Company’s former Vice Chairman of the Board, and former President and Chief Operating Officer, were the owners of NELL. Trusts established, or entities owned, by Joel T. Murphy, the Company’s Chief Executive Officer and a member of the Board, the family of Mr. Williams, Mr. DuPree and the family of Mr. Silverstein were the owners of the Sub-Manager.

The Company's Haven 12 real estate loan investment and Haven Campus Communities LLC line of credit are both supported in part by a guaranty of repayment and performance by John A. Williams, Jr., the son of the late John A. Williams, the Company's former Chief Executive Officer and Chairman of the Board. Because the terms of these loans were negotiated and agreed upon while John A. Williams was the Chief Executive Officer of the Company, these instruments will continue to be reported as related party transactions until the loans are repaid.

The Company's Wiregrass and Wiregrass Capital real estate loan investments partially financed the development of a multifamily community in Tampa, Florida by the Altman Companies. Timothy A. Peterson is a member of management of the Altman Companies as well as Chairman of the Audit Committee of the Company's Board of Directors. The Wiregrass loans and the acquisition of the underlying property on March 31, 2020 as described in note 3, therefore qualify as related party transactions.

29

Preferred Apartment Communities, Inc.

Notes to Consolidated Financial Statements (Unaudited)

September 30, 2020

The Management Agreement entitled the Former Manager to receive compensation for various services it performed related to acquiring assets and managing properties on the Company's behalf:

(In thousands)		Three-month periods ended September 30,				Nine-month periods ended September 30,
Type of Compensation	Basis of Compensation	2020		2019		2020		2019
Acquisition fees	1.0% of the gross purchase price of real estate assets	$	—	$	2,864	$	235	$	5,467
Loan origination fees	1.0% of the maximum commitment of any real estate loan, note or line of credit receivable	—		148		—		674
Loan coordination fees	0.6% of any assumed, new or supplemental debt incurred in connection with an acquired property	—		1,100		47		2,065
Asset management fees	Monthly fee equal to one-twelfth of 0.50% of the total book value of assets, as adjusted	—		3,981		1,349		11,546
Property management fees	Monthly fee up to 4% of the monthly gross revenues of the properties managed	—		2,557		890		7,509
General and administrative expense fees	Monthly fee equal to 2% of the monthly gross revenues of the Company	—		1,557		616		4,624
Construction management fees	Quarterly fee for property renovation and takeover projects	—		73		14		208
Disposition fees	1% of the sale price of a real estate asset	—		—		—		16
		$	—	$	12,280	$	3,151	$	32,109

The Former Manager waived some of the asset management, property management, or general and administrative fees for properties owned by the Company. A cumulative total of approximately $25.6 million of combined asset management and general and administrative fees related to acquired properties had been waived by the Former Manager; at the date of Internalization, all of the remaining contingent fees of $24.1 million were eliminated in conjunction with the Company's Internalization transaction.

In addition to property management fees, the Company incurred the following reimbursable on-site personnel salary and related benefits expenses at the properties, which are listed on the Consolidated Statements of Operations:

	Three-month periods ended September 30,				Nine-month periods ended September 30,
(In thousands)	2020		2019		2020		2019
	$	—	$	4,681	$	1,430	$	12,973

The Former Manager utilized its own and its affiliates' personnel to accomplish certain tasks related to raising capital that would typically be performed by third parties, including, but not limited to, legal and marketing functions. As permitted under the Management Agreement, the Former Manager was reimbursed $40,451 and $384,243 for the nine-month periods ended September 30, 2020 and 2019, respectively and Preferred Capital Securities, LLC, or PCS, was reimbursed $0 and $1,022,855 for the nine-month periods ended September 30, 2020 and 2019, respectively. These costs are recorded as deferred offering costs until such time as additional closings occur on the Series A1/M1 Preferred Stock Offering or the 2019 Shelf Offering, at

30

Preferred Apartment Communities, Inc.

Notes to Consolidated Financial Statements (Unaudited)

September 30, 2020

which time they are reclassified on a pro-rata basis as a reduction of offering proceeds within stockholders’ equity. In conjunction with the winding down of the $1.5 Billion Unit Offering, the Company has engaged PCS to perform certain termination-related services. These services began in October 2019 and continued through April 2020. For the nine-month period ended September 30, 2020, the Company paid an additional $3.1 million for these services, which were recorded as deferred offering costs.

Prior to the Internalization, the Company held a promissory note in the amount of approximately $650,000 due from Preferred Capital Marketing Services, LLC, or PCMS, which is a wholly-owned subsidiary of NELL Partners and a revolving line of credit with a maximum borrowing amount of $24.0 million to its Manager. Both of these instruments were extinguished in connection with the Internalization transaction.

Of the Company’s $24.8 million accrued interest receivable on real estate loans balance on the Consolidated Balance Sheet, interest receivable of approximately $1.2 million relates to the Haven 12 real estate loan investment, which is to a related party. Interest receivable of approximately $2.0 million on its Haven Campus Communities, LLC line of credit is included in the tenant receivables and other assets line.

7. Dividends and Distributions

The Company declares and pays monthly cash dividend distributions in the amount of $5.00 per share per month on its Series A Preferred Stock and its Series A1 Preferred Stock. For the Company's Series M Preferred Stock, or mShares, dividends are paid on an escalating scale of $4.79 per month in the first year following share issuance, increasing each year to $6.25 per month in year eight and beyond. Similarly, for the Company's Series M1 Preferred Stock, dividends are paid on an escalating scale of $5.08 per month in the first year following share issuance, increasing each year to $5.92 per month in year ten and beyond. All preferred stock dividends are prorated for partial months at issuance as necessary.

Given the nature of the escalating dividends associated with the Company’s mShares and Series M1 Preferred Stock, the Company accrues dividends at the effective dividend rate in accordance with GAAP. This results in the Company recording larger dividends declared to preferred stockholders in the Company’s Consolidated Statements of Operations than dividends required to be paid for the first four years after issuance with respect to the mShares and the first five years after issuance with respect to the Series M1 Preferred Stock. Similarly, this will result in the Company recording smaller dividends declared to preferred stockholders in the Company’s Consolidated Statements of Operations than dividends required to be paid for the fifth through the eighth year after issuance with respect to the mShares and the sixth through the tenth year after issuance with respect to the Series M1 Preferred Stock. Following the escalation period (year eight for the mShares and year ten for the Series M1 Preferred Stock), the dividends declared to preferred stockholders in the Company’s Consolidated Statements of Operations will equal the dividend paid.  

The Company declared aggregate quarterly cash dividends on its Common Stock of $0.175 and $0.2625 per share for the three-month periods ended September 30, 2020 and 2019 respectively and $0.6125 and $0.7850 per share for the nine-month periods ended September 30, 2020 and 2019, respectively. The holders of Class A OP Units of the Operating Partnership are entitled to equivalent distributions as the dividends declared on the Common Stock. At September 30, 2020, the Company had 742,413 Class A OP Units outstanding, which are exchangeable on a one-for-one basis for shares of Common Stock or the equivalent amount of cash.

31

Preferred Apartment Communities, Inc.

Notes to Consolidated Financial Statements (Unaudited)

September 30, 2020

The Company's dividend and distribution activity consisted of:

	Dividends and distributions declared
	For the nine-month periods ended September 30,
(In thousands)	2020		2019
Series A Preferred Stock	$	97,272	$	79,351
mShares	4,903		3,176
Series A1 Preferred Stock	2,209		—
Series M1 Preferred Stock	217		—
Common Stock	29,895		34,599
Restricted Stock and Class A OP Units	559		683
Total	$	135,055	$	117,809

8. Equity Compensation

    Stock Incentive Plan

On May 2, 2019, the Company’s board of directors adopted, and the Company’s Common stockholders approved, the Preferred Apartment Communities, Inc. 2019 Stock Incentive Plan, or the 2019 Plan, to incentivize, compensate and retain eligible officers, consultants, and non-employee directors. The 2019 Plan increased the aggregate number of shares of Common Stock authorized for issuance under the 2011 Plan from 2,617,500 to 3,617,500. The 2019 Plan does not have a stated expiration date.

Equity compensation expense by award type for the Company was:

(In thousands)	Three-month periods ended September 30,				Nine-month periods ended September 30,				Unamortized expense as of September 30,
	2020		2019		2020		2019		2020
Class B Unit awards to employees:
2016	$	—	$	—	$	—	$	2	$	—
2017	—		78		3		234		—
2018	70		72		191		215		71
Restricted stock grants to Board members:
2018	—		—		—		120		—
2019	—		106		140		176		—
2020	133		—		222		—		310
Restricted stock grants for employees:
2020	242		—		279		—		3,601
Performance-based restricted stock units:
2020	92		—		92		—		1,753
Restricted stock units to employees:
2017	—		15		—		53		—
2018	14		15		38		55		19
2019	16		19		47		67		94
2020	15		—		46		—		137
Total	$	582	$	305	$	1,058	$	922	$	5,985

32

Preferred Apartment Communities, Inc.

Notes to Consolidated Financial Statements (Unaudited)

September 30, 2020

Performance-based Restricted Stock Unit Grants

On July 31, 2020, the Company awarded performance-based restricted stock units (“PSUs”) to certain of its senior executives. Each PSU represents the right to receive one share of APTS common stock upon satisfaction of both (i) the market condition, at which time the PSUs become earned PSUs, and (ii) the service requirement, beyond which point the PSUs become vested PSUs.

The market condition requirement of the PSUs consists of a relative measure of total shareholder return (“TSR”) of the Company's Common Stock versus the average TSR of a select group of publicly-traded peer companies. TSR is calculated by dividing the sum of price appreciation and cumulative dividends over the performance period divided by the beginning value of the common stock at the performance period commencement date (July 1, 2020), where the determining values are derived by calculating the 20-day volume weighted average stock price preceding both the performance period commencement date and the performance period end date (June 30, 2023). PSUs will become earned PSUs according to the percentile rank of the TSR of Company's Common Stock versus the peer group’s average TSR, as shown in the following table:

Level	Relative TSR performance (percentile rank versus peers)	Earned PSUs (% of target)
< Threshold	<35th Percentile	0%
Threshold	35th Percentile	50%
Target	55th Percentile	100%
Maximum	>=75th Percentile	200%

The number of PSUs that become earned PSUs can range between 0% and 200% of the original (target) number of PSUs awarded and actual percentile ranking results between the 35th and 75th percentile are to be interpolated between the percentage earned values shown.

In order for earned PSUs to become vested PSUs, the participant must remain continuously employed by the Company or an affiliate company (i) from the grant date through the payout determination date (expected to be no more than 5 days following the performance period end date) for 50% of the PSU award and (ii) from the grant date through the first anniversary of the performance period end date for the remaining 50% of the PSU award.

Since the PSUs vest in part based upon achievement of a market condition, they were valued utilizing a Monte-Carlo simulation, that excludes the value of Common Stock dividends since dividend equivalents accrue separately to the award holders. The underlying valuation assumptions and result for the Performance RSU award was:

Stock price on grant date	$	7.23
Dividend yield	6.87		%
Expected volatility	44.40		%
Risk-free interest rate	0.11		%
Target number of PSUs granted:
First vesting tranche	136,462
Second vesting tranche	136,467
	272,929
Calculated fair value per PSU	$	6.76
Total fair value of PSUs	$	1,845,000

The expected dividend yield assumptions were derived from the Company’s closing prices of the Common Stock and historical dividend amounts over the trailing five-year period from the grant date.

The Company's own stock price history over the 2.91 year period trailing the grant date was utilized as the expected volatility assumption.

33

Preferred Apartment Communities, Inc.

Notes to Consolidated Financial Statements (Unaudited)

September 30, 2020

The risk-free rate assumptions were obtained from the grant date yields on zero coupon U.S. Treasury STRIPS that have a term equal to the length of the remaining Performance Period and were calculated as the interpolated rate between the two-year and three-year yield percentages.

Restricted Stock Grants

The following annual grants of restricted stock were made to members of the Company's independent directors, as payment of the annual retainer fees. The restricted stock grants for service years 2017-2019 vested (or are scheduled to vest) on a pro-rata basis over the four consecutive 90-day periods following the date of grant. The restricted stock grant for service year 2020 is scheduled to vest on the one-year anniversary of the date of grant.

Service year	Shares	Fair value per share		Total compensation cost (in thousands)
2017	24,408	$	14.75	$	360
2018	24,810	$	14.51	$	360
2019	26,446	$	15.88	$	420
2020	66,114	$	8.05	$	532

On June 17, 2020, the Company granted Restricted Stock to certain of its executives and employees. The fair value per share of $8.05 was based upon the closing price of the Company's Common Stock on the business day preceding the grant date. A total of 137,741 shares representing a fair value of approximately $1.1 million will vest on the four year anniversary of the grant date and 344,356 shares representing a fair value of approximately $2.8 million will vest on a pro-rata basis on each of the four succeeding anniversaries of the grant date.

34

Preferred Apartment Communities, Inc.

Notes to Consolidated Financial Statements (Unaudited)

September 30, 2020

Class B OP Units

As of September 30, 2020, cumulative activity of grants of Class B Units of the Operating Partnership, or Class B OP units, was:

	Grant date
	1/2/2018	1/3/2017
Units granted	256,087	286,392
Units forfeited:
John A. Williams (1)	(38,284)	—
Voluntary forfeiture by senior executives (2)	(128,258)	—
Other	(24,237)	(5,334)
Total forfeitures	(190,779)	(5,334)
Units earned and converted into Class A Units	—	(281,058)
Class B Units outstanding at September 30, 2020	65,308	—
Units unearned but vested	48,678	—
Units unearned and not yet vested	16,630	—
Class B Units outstanding at September 30, 2020	65,308	—
(1) Pro rata modification of award on April 16, 2018, the date of Mr. Williams' passing.
(2) Additional Class B OP units granted to senior executives other than Mr. Williams were voluntarily forfeited at the end of 2018.

There were no grants of Class B OP Units for 2019 or 2020.

The underlying valuation assumptions and results for the 2018 Class B OP Unit awards were:

Grant date	1/2/2018
Stock price	$	20.19
Dividend yield	4.95		%
Expected volatility	25.70		%
Risk-free interest rate	2.71		%
Number of Units granted:
One year vesting period	171,988
Three year vesting period	84,099
	256,087
Calculated fair value per Unit	$	16.66
Total fair value of Units	$	4,266,409
Target market threshold increase	$	5,660,580

The expected dividend yield assumptions were derived from the Company’s closing prices of the Common Stock on the grant dates and the projected future quarterly dividend payments per share of $0.25 for the 2018 awards.

For the 2018 awards, the Company's own stock price history was utilized as the basis for deriving the expected volatility assumption.

35

Preferred Apartment Communities, Inc.

Notes to Consolidated Financial Statements (Unaudited)

September 30, 2020

The risk-free rate assumptions were obtained from the Federal Reserve yield table and were calculated as the interpolated rate between the 20 and 30 year yield percentages on U. S. Treasury securities on the grant date.

Since the Class B OP Units have no expiration date, a derived service period of one year was utilized, which equals the period of time from the grant date to the initial valuation date.    

    Restricted Stock Units

The Company, made grants of restricted stock units, or RSUs, to its employees under the 2019 Plan, and prior to Internalization, made grants of RSUs to certain employees of affiliates of the Company under the 2011 Plan, as shown in the following table:

Grant date	1/2/2020		1/2/2019		1/2/2018
Service period	2020-2022		2019-2021		2018-2020
RSU activity:
Granted	21,400		27,760		20,720
Forfeited	(2,100)		(6,581)		(6,874)
RSUs outstanding at September 30, 2020	19,300		21,179		13,846
RSUs unearned but vested	—		7,141		9,306
RSUs unearned and not yet vested	19,300		14,038		4,540
RSUs outstanding at September 30, 2020	19,300		21,179		13,846
Fair value per RSU	$	9.47	$	10.77	$	16.66
Total fair value of RSU grant	$	202,658	$	298,975	$	345,195

The RSUs vest in three equal consecutive one-year tranches from the date of grant. For each grant, on the Initial Valuation Date, the market capitalization of the number of shares of Common Stock at the date of grant is compared to the market capitalization of the same number of shares of Common Stock at the Initial Valuation Date. If the market capitalization measure results in an increase which exceeds the target market threshold, the Vested RSUs become earned RSUs and are settled in shares of Common Stock on a one-to-one basis. Vested RSUs may become Earned RSUs on a pro-rata basis should the result of the market capitalization test be an increase of less than the target market threshold. Any Vested RSUs that do not become Earned RSUs on the Initial Valuation Date are subsequently remeasured on a quarterly basis until such time as all Vested RSUs become Earned RSUs or are forfeited due to termination of continuous service due to an event other than as a result of a qualified event, which is generally the death or disability of the holder. Continuous service through the final valuation date is required for the Vested RSUs to qualify to become fully Earned RSUs.

Because RSUs are valued using the identical market condition vesting requirement that determines the transition of the Vested Class B Units to Earned Class B Units, the same valuation assumptions per RSU were utilized to calculate the total fair values of the RSUs. The total fair value amounts pertaining to grants of RSUs, net of forfeitures, are amortized as compensation expense over the three one-year periods ending on the three successive anniversaries of the grant dates.

36

Preferred Apartment Communities, Inc.

Notes to Consolidated Financial Statements (Unaudited)

September 30, 2020

9. Indebtedness

    Mortgage Notes Payable

Mortgage financing of property acquisitions

During the nine-month period ended September 30, 2020, the Company obtained original mortgage financing on the following properties as shown in the following table:

Property	Date	Initial principal amount (in thousands)		Fixed/Variable rate	Interest rate		Maturity date
251 Armour Yards	1/22/2020	$	3,522	Fixed	4.50	%	1/22/2025
Wakefield Crossing	1/29/2020	7,891		Fixed	3.66	%	2/1/2032
Morrocroft Centre	3/19/2020	70,000		Fixed	3.40	%	4/10/2033
Horizon at Wiregrass Ranch	4/23/2020	52,000		Fixed	2.90	%	5/1/2030
Parkside at the Beach	4/30/2020	45,037		Fixed	2.95	%	5/1/2030
		$	178,450

Repayments and refinancings

The following table summarizes our mortgage debt refinancing and repayment activity for the nine-month periods ended September 30, 2020 and 2019:

37

Preferred Apartment Communities, Inc.

Notes to Consolidated Financial Statements (Unaudited)

September 30, 2020

Date	Property	Previous balance (millions)		Previous interest rate / spread over 1 month LIBOR		Loan refinancing costs expensed (thousands)		New balance (millions)		New interest rate		Additional deferred loan costs from refinancing (thousands)
1/3/2020	Ursa	$	31.4	L + 300		$	—	$	—	n/a		$	—
6/25/2020	CityPark View	19.8		3.27	%	1,314		29.0		2.75	%	314
6/29/2020	Aster at Lely Resort	30.7		3.84	%	293		50.4		2.95	%	2,777
6/29/2020	Avenues at Northpointe	26.0		3.16	%	166		33.5		2.79	%	1,247
6/30/2020	Avenues at Cypress	20.5		3.43	%	1,607		28.4		2.96	%	336
6/30/2020	Venue at Lakewood Ranch	27.8		3.55	%	2,457		36.6		2.99	%	384
6/30/2020	Crosstown Walk	29.9		3.90	%	248		46.5		2.92	%	2,841
6/30/2020	Summit Crossing II	13.1		4.49	%	779		20.7		L + 278		136
7/10/2020	Citrus Village	28.5		3.65	%	704		40.9		2.95	%	522
7/31/2020	Village at Baldwin Park	70.1		4.16	%	16		70.1		3.59	%	864
		$	297.8			$	7,584	$	356.1			$	9,421
9/17/2019	Spring Hill Plaza	$	9.1	3.36	%	$	—	$	8.2	3.72	%	$	195
9/17/2019	Parkway Town Centre	6.6		3.36	%	—		8.1		3.72	%	195
8/16/2019	Deltona Landings	6.5		3.48	%	5		6.3		4.18	%	204
8/16/2019	Barclay Crossing	6.1		3.48	%	4		6.3		4.18	%	209
8/16/2019	Parkway Center	4.3		3.48	%	3		4.6		4.18	%	148
8/13/2019	Powder Springs	6.9		3.48	%	4		8.0		3.65	%	236
7/29/2019	Citi Lakes	41.1		L + 217		155		41.3		3.66	%	668
4/12/2019	Royal Lakes Marketplace	9.5		L + 250		52		9.7		4.29	%	287
4/12/2019	Cherokee Plaza	24.5		L + 225		317		25.2		4.28	%	723
2/28/2019	Lenox Village Town Center	29.2		3.82	%	17		39.3		4.34	%	1,153
		$	143.8			$	557	$	157.0			$	4,018

38

Preferred Apartment Communities, Inc.

Notes to Consolidated Financial Statements (Unaudited)

September 30, 2020

The following table summarizes our mortgage notes payable at September 30, 2020:

(In thousands)
Fixed rate mortgage debt:	Principal balances due		Weighted-average interest rate		Weighted average remaining life (years)
Residential Properties	$	1,442,905	3.68	%	8.8
New Market Properties	571,320		4.00	%	7.6
Preferred Office Properties	634,876		4.13	%	12.7
Total fixed rate mortgage debt	2,649,101		3.86	%	9.5
Variable rate mortgage debt:
Residential Properties	117,917		3.76	%	3.3
New Market Properties	47,150		2.81	%	3.1
Preferred Office Properties	—		—	%	—
Total variable rate mortgage debt	165,067		3.49	%	3.3
Total mortgage debt:
Residential Properties	1,560,823		3.68	%	8.4
New Market Properties	618,470		3.91	%	7.2
Preferred Office Properties	634,876		4.13	%	12.7
Total principal amount	2,814,169		3.83	%	9.1
Deferred loan costs	(44,338)
Mark to market loan adjustment	(4,038)
Mortgage notes payable, net	$	2,765,793

The Company has placed interest rate caps on the variable rate mortgages on its Avenues at Creekside, Summit Crossing II, Tradition and Bloc residential properties. Under guidance provided by ASC 815-10, these interest rate caps are derivatives that are embedded in the debt hosts. Because the interest rate caps are deemed to be clearly and closely related to the debt hosts, bifurcation and fair value accounting treatment is not required.

The mortgage note secured by our Independence Square property is a seven year term with an anticipated repayment date of September 1, 2022. If the Company elects not to pay its principal balance at the anticipated repayment date, the term will be extended for an additional five years, maturing on September 1, 2027. The interest rate from September 1, 2022 to September 1, 2027 will be the greater of (i) the Initial Interest Rate of 3.93% plus 200 basis points or (ii) the yield on the seven year U.S. treasury security rate plus approximately 400 basis points.

As of September 30, 2020, the weighted-average remaining life of deferred loan costs related to the Company's mortgage indebtedness was approximately 9.3 years. Our mortgage notes have maturity dates between June 6, 2021 and June 1, 2054.

    Credit Facility

The Company has a credit facility, or Credit Facility, with KeyBank National Association, or KeyBank, which includes a revolving line of credit, or Revolving Line of Credit, which is used to fund investments, capital expenditures, dividends (with consent of KeyBank), working capital and other general corporate purposes on an as needed basis. On March 23, 2018, the maximum borrowing capacity on the Revolving Line of Credit was increased to $200 million pursuant to an accordion feature. The accordion feature permits the maximum borrowing capacity to be expanded or contracted without amending any further terms of the instrument. On December 12, 2018, the Fourth Amended and Restated Credit Agreement, or the Amended and Restated Credit Agreement, was amended to extend the maturity to December 12, 2021, with an option to extend the maturity

39

Preferred Apartment Communities, Inc.

Notes to Consolidated Financial Statements (Unaudited)

September 30, 2020

date to December 12, 2022, subject to certain conditions described therein. The Revolving Line of Credit accrues interest at a variable rate of one month LIBOR plus an applicable margin of 2.75% to 3.50% per annum, depending upon the Company’s leverage ratio. The weighted average interest rate for the Revolving Line of Credit was 3.91% for the nine-month period ended September 30, 2020. The Amended and Restated Credit Agreement also reduced the commitment fee on the average daily unused portion of the Revolving Line of Credit to 0.25% or 0.30% per annum, depending upon the Company’s outstanding Credit Facility balance.

On December 20, 2019, the Company entered into a $70.0 million interim term loan with KeyBank, or the 2019 Term Loan, to partially finance the acquisition of Morrocroft Centre, an office building located in Charlotte, North Carolina. The 2019 Term Loan accrues interest at a rate of LIBOR plus 1.7% per annum. The 2019 Term Loan was repaid in conjunction with the closing of permanent mortgage financing for Morrocroft Centre on March 19, 2020.

The Fourth Amended and Restated Credit Agreement contains certain affirmative and negative covenants, including negative covenants that limit or restrict secured and unsecured indebtedness, mergers and fundamental changes, investments and acquisitions, liens and encumbrances, dividends, transactions with affiliates, burdensome agreements, changes in fiscal year and other matters customarily restricted in such agreements. The amount of dividends that may be paid out by the Company is restricted to a maximum of 95% of AFFO for the trailing four quarters without the lender's consent; solely for purposes of this covenant, AFFO is calculated as earnings before interest, taxes, depreciation and amortization expense, plus reserves for capital expenditures, less normally recurring capital expenditures, less consolidated interest expense.

As of September 30, 2020, the Company was in compliance with all covenants related to the Revolving Line of Credit, as shown in the following table:

Covenant (1)	Requirement		Result
Net worth	Minimum $1.7 billion		$1.9 billion	(3)
Debt yield	Minimum 8.25%		9.89%
Payout ratio	Maximum 95%	(2)	88.1%
Total leverage ratio	Maximum 65%		63.7%
Debt service coverage ratio	Minimum 1.50x		1.74x

(1) All covenants are as defined in the credit agreement for the Revolving Line of Credit.

(2) Calculated on a trailing four-quarter basis, except for Common Stock dividends, which are annualized off of the trailing two quarters' dividend. For the year ended September 30, 2020, the maximum dividends and distributions allowed under this covenant was approximately $179.8 million.

(3) Adjusted to exclude the effect of costs incurred with internalization.

Loan fees and closing costs for the establishment and subsequent amendments of the Credit Facility are amortized utilizing the straight line method over the life of the Credit Facility. At September 30, 2020, unamortized loan fees and closing costs for the Credit Facility were approximately $0.8 million, which will be amortized over a remaining loan life of approximately 1.3 years. Loan fees and closing costs for the mortgage debt on the Company's properties are amortized utilizing the effective interest rate method over the lives of the loans.

    Acquisition Facility

On February 28, 2017, the Company entered into a credit agreement, or Acquisition Credit Agreement, with Freddie Mac through KeyBank to obtain an acquisition revolving credit facility, or Acquisition Facility, with a maximum borrowing capacity of $200 million. The purpose of the Acquisition Facility is to finance acquisitions. The maximum borrowing capacity on the Acquisition Facility may be increased at the Company's request up to $300 million at any time prior to March 1, 2021. On March 25, 2019, the maximum borrowing capacity was decreased to $90 million by agreement between the Company and KeyBank.The Acquisition Facility accrues interest at a variable rate of one month LIBOR plus a margin of between 1.75% per annum and 2.20% per annum, depending on the type of assets acquired and the resulting property debt service coverage ratio. The Acquisition Facility has a maturity date of March 1, 2022 and has two one-year extension options, subject to certain conditions described therein. At September 30, 2020, unamortized loan fees and closing costs for the establishment of the Acquisition Facility were approximately $0.1 million, which will be amortized over a remaining loan life of approximately 1.4 years. 

40

Preferred Apartment Communities, Inc.

Notes to Consolidated Financial Statements (Unaudited)

September 30, 2020

    Interest Expense

Interest expense, including amortization of deferred loan costs was:

(In thousands)	Three-month periods ended September 30,				Nine-month periods ended September 30,
	2020		2019		2020		2019
Residential Properties	$	15,739	$	16,108	$	46,537	$	46,729
New Market Properties	6,539		6,422		19,876		18,123
Preferred Office Properties	6,699		5,909		20,256		16,617
Interest paid to real estate loan participants	—		—		—		110
Total	28,977		28,439		86,669		81,579
Credit Facility and Acquisition Facility	902		360		3,939		1,587
Interest Expense	$	29,879	$	28,799	$	90,608	$	83,166

    Future Principal Payments

The Company’s estimated future principal payments due on its debt instruments as of September 30, 2020 were:

Period	Future principal payments (in thousands)
2020 (1)	$	44,152
2021	166,730
2022	105,432
2023	117,605
2024	367,421
Thereafter	2,045,829
Total	$	2,847,169
(1) Includes the principal amount due on our revolving line of credit of $33.0 million as of September 30, 2020.

10. Income Taxes

The Company elected to be taxed as a REIT effective with its tax year ended December 31, 2011, and therefore, the Company will not be subject to federal and state income taxes, so long as it distributes 100% of the Company's annual REIT taxable income (which does not equal net income as calculated in accordance with GAAP and determined without regard for the deduction for dividends paid and excluding net capital gains) to its stockholders. For the Company's tax years prior to its REIT election year, its operations resulted in a tax loss. As of December 31, 2010, the Company had deferred federal and state tax assets totaling approximately $298,100, none of which were based upon tax positions deemed to be uncertain. These deferred tax assets will most likely not be used since the Company elected REIT status; therefore, management has determined that a 100% valuation allowance is appropriate as of September 30, 2020 and December 31, 2019.

11. Commitments and Contingencies

On January 31, 2020, the Company assumed its Former Manager's eleven-year office lease as amended, which began on October 9, 2014. As of September 30, 2020, the amount of rent due from the Company was $15.3 million over the remaining term of the lease.

41

Preferred Apartment Communities, Inc.

Notes to Consolidated Financial Statements (Unaudited)

September 30, 2020

A total of approximately $24.1 million of asset management and general and administrative fees related to acquired properties as of September 30, 2020 that have been waived by the Former Manager were eliminated in conjunction with the Company's Internalization transaction.

At September 30, 2020, the Company had unfunded commitments on its real estate loan portfolio of approximately $63.0 million.

At September 30, 2020, the Company had unfunded contractual commitments for tenant, leasing, and capital improvements of approximately $6.2 million.

The Company is otherwise currently subject to neither any known material commitments or contingencies from its business operations, nor any material known or threatened litigation.

12. Operating Leases

Company as Lessor

For the nine months ended September 30, 2020 and 2019, the Company recognized rental property revenues of $330.4 million and $290.0 million, respectively, of which $31.2 million and $29.2 million, respectively, represented variable rental revenue.

Company as Lessee

The Company has three ground leases related to our office and grocery-anchored shopping center assets that generally have extended terms (e.g. over twenty years with multiple renewal options) and generally have base rent with CPI-based increases. The Company evaluated its renewal option periods in quantifying its asset and liability related to these ground leases. In determining the value of its right of use asset and lease liability, the Company used discount rates comparable to recent loan rates obtained on comparative properties within its portfolio. The Company is also, as of January 31, 2020 following the Internalization, the lessee of office space for its property support center which expires in May 2026, and of furniture and office equipment, which leases generally are three to five years in duration with minimal rent increases.

The Company recorded lease expense as follows:

(dollars in thousands)	For the nine-month periods ended September 30, 2020				Weighted average remaining lease term (years)	Weighted average discount rate
	Lease expense		Cash paid
Office space	$	1,942	$	1,903	5.2	3.0	%
Ground leases	44		38		35.7	4.4	%
Office equipment	282		282		2.3	3.0	%
Total	$	2,268	$	2,223

42

Preferred Apartment Communities, Inc.

Notes to Consolidated Financial Statements (Unaudited)

September 30, 2020

Future minimum rent expense for office space, ground leases and office equipment were:

For the year ending December 31:	Future Minimum Rents as of September 30, 2020
(in thousands)	Office space		Ground leases		Office equipment		Total
2020 (1)	$	723	$	13	$	91	$	827
2021	2,930		51		321		3,302
2022	2,855		51		149		3,055
2023	2,497		51		58		2,606
2024	3,139		51		39		3,229
Thereafter	3,163		1,136		—		4,299
Total	$	15,307	$	1,353	$	658	$	17,318
(1) Remaining three months

43

Preferred Apartment Communities, Inc.

Notes to Consolidated Financial Statements (Unaudited)

September 30, 2020

13. Segment Information

The Company's Chief Operating Decision Maker, or CODM, evaluates the performance of the Company's business operations and allocates financial and other resources by assessing the financial results and outlook for future performance across four distinct segments: residential properties, real estate related financing, New Market Properties and Preferred Office Properties.

Residential Properties - consists of the Company's portfolio of residential multifamily communities and student housing properties. Multifamily Communities and Student Housing Properties were previously presented as separate reporting segments. The Company has combined these two segments into the Residential Properties reportable segment.

Financing - consists of the Company's portfolio of real estate loans, bridge loans, and other instruments deployed by the Company to partially finance the development, construction, and prestabilization carrying costs of new multifamily communities and other real estate and real estate related assets. Excluded from the financing segment are consolidated assets of VIEs and financial results of the Company's Dawson Marketplace grocery-anchored shopping center real estate loan, which are included in the New Market Properties segment.

New Market Properties - consists of the Company's portfolio of grocery-anchored shopping centers, which are owned by New Market Properties, LLC, a subsidiary of the Company, as well as the financial results from the Company's Dawson Marketplace real estate loan, that was repaid and extinguished on February 3, 2020.

Preferred Office Properties - consists of the Company's portfolio of office buildings, which are owned by Preferred Office Properties, LLC, a wholly-owned subsidiary of the Company.

The CODM monitors net operating income (“NOI”) on a segment and a consolidated basis as a key performance measure for its operating segments. NOI is a non-GAAP measure that is defined as rental and other property revenue from real estate assets plus interest income from its loan portfolio less total property operating and maintenance expenses, property management fees, real estate taxes, property insurance, and general and administrative expenses. The CODM uses NOI as a measure of operating performance because it provides a measure of the core operations, rather than factoring in depreciation and amortization, financing costs, acquisition expenses, and other expenses generally incurred at the corporate level.

The following tables present the Company's assets, revenues, and NOI results by reportable segment, as well as a reconciliation from NOI to net income (loss). The assets attributable to 'Other' primarily consist of  deferred offering costs recorded but not yet reclassified as reductions of stockholders' equity and cash balances at the Company and Operating Partnership levels.

(In thousands)	September 30, 2020		December 31, 2019
Assets:
Residential properties	$	2,146,061	$	2,047,905
Financing	354,130		409,226
New Market Properties	1,074,584		1,125,230
Preferred Office Properties	1,130,962		1,123,212
Other	25,325		64,987
Consolidated assets	$	4,731,062	$	4,770,560

44

Preferred Apartment Communities, Inc.

Notes to Consolidated Financial Statements (Unaudited)

September 30, 2020

Total capitalized expenditures (inclusive of additions to construction in progress, but exclusive of the purchase price of acquisitions) for the three-month and nine-month periods ended September 30, 2020 and 2019 were as follows:

(In thousands)	Three-month periods ended September 30,				Nine-month periods ended September 30,
	2020		2019		2020		2019
Capitalized expenditures:
Residential properties	$	4,348	$	4,709	$	10,938	$	11,377
New Market Properties	2,017		2,699		4,557		5,703
Preferred Office Properties	5,779		3,265		22,458		12,040
Total	$	12,144	$	10,673	$	37,953	$	29,120

Second-generation capital expenditures exclude those expenditures made in our office building portfolio (i) to lease space to "first generation" tenants (i.e. leasing capital for existing vacancies and known move-outs at the time of acquisition), (ii) to bring recently acquired properties up to our Class A ownership standards (and which amounts were underwritten into the total investment at the time of acquisition), (iii) for property redevelopments and repositionings (iv) to newly leased space which had been vacant for more than one year and (v) for building improvements that are recoverable from future operating cost savings.

Total revenues by reportable segment of the Company were:

(In thousands)	Three-month periods ended September 30,				Nine-month periods ended September 30,
	2020		2019		2020		2019
Revenues
Rental and other property revenues:
Residential properties	$	60,643	$	56,008	$	180,325	$	162,669
New Market Properties	26,707		25,270		80,815		70,211
Preferred Office Properties (1)	27,810		24,215		81,009		68,006
Total rental and other property revenues	115,160		105,493		342,149		300,886
Financing revenues	11,271		14,710		38,115		44,675
Miscellaneous revenues	266		—		812		—
Consolidated revenues	$	126,697	$	120,203	$	381,076	$	345,561
(1) Included in rental revenues for our Preferred Office Properties segment is the amortization of deferred revenue for tenant-funded leasehold improvements from a major tenant in our Three Ravinia and Westridge office buildings. As of September 30, 2020, the Company has recorded deferred revenue in an aggregate amount of $47.0 million in connection with such improvements. The remaining balance to be recognized is approximately $36.9 million which is included in the deferred revenues line on the consolidated balance sheets at September 30, 2020. These total costs will be amortized over the lesser of the useful lives of the improvements or the individual lease terms. The Company recorded non-cash revenue of approximately $2.8 million and $2.8 million for the nine-month periods ended September 30, 2020 and 2019, respectively.

The Company expects that negative impacts from the COVID-19 pandemic affecting its in-line retail tenants within its New Market Properties segment may continue throughout 2020. Of our over 900 retail tenants, the Company has 11 leases with six companies that have entered bankruptcy proceedings and in the aggregate this constitutes approximately 1% of the total recurring rental revenue for the New Market Properties segment.

The chief operating decision maker utilizes segment net operating income, or Segment NOI, in evaluating the performance of its operating segments. Segment NOI represents total property revenues less total property operating expenses, excluding depreciation and amortization, for all properties held during the period. Segment NOI for the Company's financing segment consists of interest revenues from the Company's real estate loan investments and notes and lines of credit receivable, as well as revenues from terminated property purchase options. Management believes that Segment NOI is a helpful tool in evaluating the operating performance of the segments because it measures the core operations of property performance by excluding corporate level expenses and other items not directly related to property operating performance.

45

Preferred Apartment Communities, Inc.

Notes to Consolidated Financial Statements (Unaudited)

September 30, 2020

Segment NOI for each reportable segment for the three-month and nine-month periods ended September 30, 2020 and 2019 were as follows:

	Three-month periods ended September 30,				Nine-month periods ended September 30,
(In thousands)	2020		2019		2020		2019
Segment net operating income (Segment NOI)
Residential Properties	$	33,267	$	30,191	$	103,414	$	90,825
Financing	11,245		14,710		38,089		44,675
New Market Properties	19,235		18,211		57,381		50,441
Preferred Office Properties	20,291		17,236		59,363		48,745
Miscellaneous revenues	266		—		812		—
Consolidated segment net operating income	84,304		80,348		259,059		234,686
Interest expense:
Residential Properties	15,739		16,108		46,537		46,729
New Market Properties	6,539		6,422		19,876		18,123
Preferred Office Properties	6,699		5,909		20,256		16,617
Financing	902		360		3,939		1,697
Depreciation and amortization:
Residential Properties	26,516		23,869		77,745		74,304
New Market Properties	12,688		11,677		39,410		32,644
Preferred Office Properties	12,590		10,693		35,941		30,243
Equity compensation to directors and executives	582		305		1,058		922
Management fees, net of waived fees	—		5,530		1,963		16,144
Management Internalization	577		818		179,828		1,143
Provision for expected credit losses	(152)		—		5,463		—
Change in net assets of consolidated VIE	—		(591)		—		(1,316)
(Gain) / loss on sale of real estate	(3,261)		—		(3,261)		—
(Gain) / loss on trading investment, net	—		—		—		(4)
(Gain) / loss on sale of real estate loan investment	—		—		—		(747)
(Gain) / loss from land condemnation, net	(49)		—		(528)		—
(Gain) / loss on extinguishment of debt	518		15		6,674		84
Loss from unconsolidated joint venture	120		—		120		—
Corporate G&A and Other	7,898		1,370		23,113		4,197
Net income (loss)	$	(3,602)	$	(2,137)	$	(199,075)	$	(6,094)

46

Preferred Apartment Communities, Inc.

Notes to Consolidated Financial Statements (Unaudited)

September 30, 2020

14. Income (Loss) Per Share

The following is a reconciliation of weighted average basic and diluted shares outstanding used in the calculation of income (loss) per share of Common Stock:

	(In thousands, except per-share figures)	Three-month periods ended September 30,				Nine-month periods ended September 30,
		2020		2019		2020		2019
Numerator:
	Operating (loss) income before gain on sale of real estate and loss from unconsolidated joint venture	$	23,605	$	26,086	$	(105,462)	$	75,089
	Loss from unconsolidated joint venture	(120)		—		(120)		—
	Gain on sale of real estate, net	3,261		—		3,261		4
	Operating (loss) income	26,746		26,086		(102,321)		75,093
	Interest expense	29,879		28,799		90,608		83,166
	Change in fair value of net assets of consolidated VIEs from mortgage-backed pools	—		591		—		1,316
	Less: loss on extinguishment of debt	(518)		(15)		(6,674)		(84)
	Gains on land condemnation	49		—		528		747
	Net loss	(3,602)		(2,137)		(199,075)		(6,094)
	Consolidated net loss attributable to non-controlling interests	108		59		3,515		138
	Net loss attributable to the Company	(3,494)		(2,078)		(195,560)		(5,956)
	Dividends declared to preferred stockholders	(35,909)		(29,446)		(104,601)		(82,527)
	Net loss attributable to unvested restricted stock	(96)		(5)		(109)		(14)
	Net loss attributable to common stockholders	$	(39,499)	$	(31,529)	$	(300,270)	$	(88,497)
Denominator:
	Weighted average number of shares of Common Stock - basic	49,689		44,703		48,351		43,703
	Effect of dilutive securities: (D)	—		—		—		—
	Weighted average number of shares of Common Stock - basic and diluted	49,689		44,703		48,351		43,703
	Net loss per share of Common Stock attributable to
	common stockholders, basic and diluted	$	(0.79)	$	(0.71)	$	(6.21)	$	(2.02)

(A) The Company's outstanding Class A Units of the Operating Partnership (742 and 856 Units at September 30, 2020, and 2019, respectively) contain rights to distributions in the same amount per unit as for dividends declared on the Company's Common Stock. The impact of the Class A Unit distributions on earnings per share has been calculated using the two-class method whereby earnings are allocated to the Class A Units based on dividends declared and the Class A Units' participation rights in undistributed earnings.

(B) The Company’s shares of Series A Preferred Stock outstanding accrue dividends at an annual rate of 6% of the stated value of $1,000 per share, payable monthly. The Company had 1,991 and 1,932 outstanding shares of Series A Preferred Stock at September 30, 2020 and 2019, respectively and 103 outstanding shares of Series A1 Preferred Stock at September 30, 2020. The Company's shares of Series M preferred stock, or mShares, accrue dividends at an escalating rate of 5.75% in year one to 7.50% in year eight and thereafter. The Company had 91 and 90 mShares outstanding at September 30, 2020 and 2019, respectively. The Company's shares of Series M1 preferred stock accrue dividends at an escalating rate of 6.1% in year one to 7.1% in year ten and thereafter. The Company had 13 shares of Series M1 preferred stock outstanding at September 30, 2020.

(C) The Company's outstanding unvested restricted share awards (548 and 20 shares of Common Stock at September 30, 2020 and 2019, respectively) contain non-forfeitable rights to distributions or distribution equivalents. The impact of the unvested restricted

47

Preferred Apartment Communities, Inc.

Notes to Consolidated Financial Statements (Unaudited)

September 30, 2020

share awards on earnings per share has been calculated using the two-class method whereby earnings are allocated to the unvested restricted share awards based on dividends declared and the unvested restricted shares' participation rights in undistributed earnings. Given the Company's unvested restricted share awards are defined as participating securities, the dividends declared for that period are adjusted in determining the calculation of loss per share of Common Stock.

(D) Potential dilution from (i) warrants outstanding from issuances of Units from our Series A Preferred Stock offerings that are potentially exercisable into 27,767 shares of Common Stock; (ii) 65 Class B Units; (iii) 548 shares of unvested restricted common stock; (iv) 54 outstanding Restricted Stock Units; and (v) 273 Performance-based Restricted Stock Units are excluded from the diluted shares calculations because the effect was antidilutive. Class A Units were excluded from the denominator because earnings were allocated to non-controlling interests in the calculation of the numerator.

15. Fair Values of Financial Instruments

Fair value is defined as the price at which an asset or liability is exchanged between market participants in an orderly transaction at the reporting date. The Company’s cash equivalents, notes receivable, accounts receivable and payables and accrued expenses all approximate fair value due to their short term nature.

The following tables provide estimated fair values of the Company’s financial instruments. The carrying values of the Company's real estate loans include accrued interest receivable from additional interest or exit fee provisions and are presented net of deferred loan fee revenue and credit losses reserves, where applicable.

	As of September 30, 2020
(In thousands)	Carrying value				Fair value measurements using fair value hierarchy
			Fair Value		Level 1		Level 2		Level 3
Financial Assets:
Real estate loans	$	334,385	$	348,608	$	—	$	—	$	348,608
Notes receivable and line of credit receivable	11,905		11,905		—		—		11,905
	$	346,290	$	360,513	$	—	$	—	$	360,513
Financial Liabilities:
Mortgage notes payable	$	2,814,169	$	2,866,502	$	—	$	—	$	2,866,502
Revolving credit facility	33,000		33,000		—		—		33,000
	$	2,847,169	$	2,899,502	$	—	$	—	$	2,899,502

	As of December 31, 2019
(In thousands)	Carrying value				Fair value measurements using fair value hierarchy
			Fair Value		Level 1		Level 2		Level 3
Financial Assets:
Real estate loans	$	375,460	$	382,373	$	—	$	—	$	382,373
Notes receivable and line of credit receivable	41,917		41,917		—		—		41,917
	$	417,377	$	424,290	$	—	$	—	$	424,290
Financial Liabilities:
Mortgage notes payable	$	2,609,829	$	2,659,242	$	—	$	—	$	2,659,242
Revolving line of credit	—		—		—		—		—
Term note payable	70,000		70,000		—		—		70,000
	$	2,679,829	$	2,729,242	$	—	$	—	$	2,729,242

48

Preferred Apartment Communities, Inc.

Notes to Consolidated Financial Statements (Unaudited)

September 30, 2020

The fair value of the real estate loans within the level 3 hierarchy are comprised of estimates of the fair value of the notes, which were developed utilizing a discounted cash flow model over the remaining terms of the notes until their maturity dates and utilizing discount rates believed to approximate the market risk factor for notes of similar type and duration. The fair values also contain a separately-calculated estimate of any applicable additional interest payment due the Company at the maturity date of the loan, based on the outstanding loan balances at September 30, 2020, discounted to the reporting date utilizing a discount rate believed to be appropriate for multifamily development projects.

The fair values of the fixed rate mortgages on the Company’s properties were developed using market quotes of the fixed rate yield index and spread for 4, 5, 6, 7, 10, 15, 25 and 35 year notes as of the reporting date. The present values of the cash flows were calculated using the original interest rate in place on the fixed rate mortgages and again at the current market rate. The difference between the two results was applied as a fair market adjustment to the carrying value of the mortgages.

16. Subsequent Events

Between October 1, 2020 and October 31, 2020, the Company issued 13,986 shares of Series A1 Redeemable Preferred Stock and collected net proceeds of approximately $12.6 million after commissions and fees and issued 2,914 shares of Series M1 Redeemable Preferred Stock and collected net proceeds of approximately $2.8 million after commissions and fees. During the same period, the Company redeemed 23,468 shares of Series A Preferred Stock and 862 shares of Series M1 Preferred Stock, or mShares.

On November 2, 2020, the Company closed on the acquisition of The Blake, a 281-unit multifamily community located in Orlando, Florida.

On November 3, 2020, the Company announced via a press release the closing on that day of the sale of student housing assets to an unrelated third party for a sales price of approximately $478.7 million.

On November 5, 2020, the Company's board of directors declared a quarterly dividend on our Common Stock of $0.175 per share, payable on January 15, 2021 to stockholders of record on December 15, 2020. Even though this dividend will be paid in 2021, if and to the extent this dividend is taxable, the Company intends for this dividend to be taxable in 2020.

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Item 2.    Management's Discussion and Analysis of Financial Condition and Results of Operations

Significant Developments

    On January 1, 2020, Joel T. Murphy became Chief Executive Officer of the Company. Mr. Murphy will continue as a member of the board, where he has served since May 2019. Mr. Murphy was the CEO of our New Market Properties subsidiary for the last five years until his appointment as our CEO, and since June 2018 has been the chairman of the Company's investment committee. Mr. Murphy succeeded our previous CEO and Chairman of the Board, Daniel M. DuPree, who will remain with us as Executive Chairman of the Board.

    On January 31, 2020, we internalized the functions performed by Preferred Apartment Advisors, LLC (the "Former Manager") and NMP Advisors, LLC (the "Sub-Manager") by acquiring the entities that own the Manager and the Sub-Manager (such transactions, collectively, the "Internalization") for an aggregate purchase price of $154.0 million, plus up to $25.0 million of additional consideration to be paid within 36 months. Additionally, up to $15.0 million of the $154.0 million purchase price was to be held back and is payable to the sellers less certain losses following final resolution of certain specified matters. Pursuant to the Stock Purchase Agreement entered into on January 31, 2020 the sellers sold all of the outstanding shares of NELL Partners, Inc. (“NELL”) and NMA Holdings, Inc., parent companies of the Manager and Sub-Manager, respectively, to us, in exchange for an aggregate of approximately $111.1 million in cash paid at the closing which reflects the satisfaction of certain indebtedness of NELL, the estimated net working capital adjustment, and a hold back of $15.0 million for certain specified matters. Trusts established, or entities owned, by the family of John A. Williams, the Company’s former Chairman of the Board and Chief Executive Officer, Daniel M. DuPree, the Company’s Executive Chairman of the Board and former Chief Executive Officer of the Company, and the family of Leonard A. Silverstein, the Company’s former Vice Chairman of the Board, and former President and Chief Operating Officer, were the owners of NELL. Trusts established, or entities owned, by Joel T. Murphy, the Company’s Chief Executive Officer and a member of the Board, the family of Mr. Williams, Mr. DuPree and the family of Mr. Silverstein were the owners of NMA.

    During the nine-month period ended September 30, 2020, we acquired two multifamily communities and two grocery-anchored shopping centers. We also closed on three real estate loan investments of up to $44.1 million, in partial support of the development of multifamily communities in Charlotte, North Carolina, Raleigh, North Carolina and Atlanta, Georgia.

    During the nine-month period ended September 30, 2020, we issued 98,076 shares of Series A1 Preferred Stock and collected net proceeds of approximately $88.3 million. During the same period, we issued 13,081 shares of Series M1 Preferred Stock and collected net proceeds of approximately $12.7 million. During the nine-month period ended September 30, 2020, we issued 65,298 Units (one share of Series A Preferred Stock and one warrant to purchase 20 shares of our Common Stock) and collected net proceeds of approximately $58.8 million from our $1.5 Billion Unit Offering, which terminated in February 2020. Our Preferred Stock offerings and our other equity offerings are discussed in detail in the Liquidity and Capital Resources section of this Management's Discussion and Analysis of Financial Condition and Results of Operations.

    Our average recurring rental revenue collections before and after any effect of rent deferrals for the third quarter 2020 were approximately 99.0% and 99.0% for multifamily communities, 99.5% and 99.8% for office properties and 95.2% and 96.6% for grocery-anchored retail properties, respectively. Rent deferments provided to our residents/tenants primarily related to a change of timing of rent payments with no significant changes to total payments or term. As of September 30, 2020, we have deferred $1.5 million of retail recurring rental revenue, or approximately 3.1% cumulatively over the last two quarters. Including this deferred rent, we have accounted for 96.6% and 95.9% of third quarter and second quarter retail recurring rental revenue, respectively. In addition to the deferrals, we granted approximately $324,000 of COVID-19 related rental abatements, or approximately 0.7% of retail recurring rental revenues cumulatively over the last two quarters. These rental abatements were generally accompanied by an increase in the tenant’s lease term or the lease terms were amended to be more favorable to us. We have also reserved $928,000 or 3.4% of total retail revenues (inclusive of straight line rent) in the third quarter, increasing our total reserves to $2.5 million or 3.0% of total retail revenues year to date. Total reserves for the consolidated Company was $6.0 million or 1.7% of rental and other property revenues year to date.

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    Forward-looking Statements

Certain statements contained in this Quarterly Report on Form 10-Q, including, without limitation, statements containing the words "believes," "anticipates," "intends," "expects," "assumes," "goals," "guidance," "trends" and similar expressions, constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based upon our current plans, expectations and projections about future events. However, such statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the following:

•     our business and investment strategy;

•     our projected operating results;

•     actions and initiatives of the U.S. Government and changes to U.S. Government policies and the execution and

    the state of the U.S. economy generally or in specific geographic areas;

•     economic trends and economic recoveries;

•     our ability to obtain and maintain financing arrangements, including through Fannie Mae and Freddie Mac;

•     financing and advance rates for our target assets;

•     our expected leverage;

•     changes in the values of our assets;

•     our expected portfolio of assets;

•     our expected investments;

•     interest rate mismatches between our target assets and our borrowings used to fund such investments;

•     changes in interest rates and the market value of our target assets;

•     changes in prepayment rates on our target assets;

•     effects of hedging instruments on our target assets;

•     rates of default or decreased recovery rates on our target assets;

•     changes in our operating costs, including real estate taxes, utilities and insurance costs;

•     the degree to which our hedging strategies may or may not protect us from interest rate volatility;

•     impact of and changes in governmental regulations, tax law and rates, accounting guidance and similar matters;

•     our ability to maintain our qualification as a real estate investment trust, or REIT, for U.S. federal income tax

    purposes;

•     the possibility that the anticipated benefits from the Internalization, may not be realized or may take longer to

realize than expected, or that unexpected costs or unexpected liabilities may arise from the Internalization;

•     the impact of the coronavirus (COVID-19) pandemic on PAC’s business operations and the economic conditions

in the markets in which PAC operates;

•     PAC’s ability to mitigate the impacts arising from COVID-19;

•     our ability to maintain our exemption from registration under the Investment Company Act of 1940, as

amended;

•     the availability of investment opportunities in mortgage-related and real estate-related investments and

securities;

•     the availability of qualified personnel;

•     estimates relating to our ability to make distributions to our stockholders in the future;

•     our understanding of our competition;

•     market trends in our industry, interest rates, real estate values, the debt securities markets or the general

economy;

•     weakness in the national, regional and local economies, which could adversely impact consumer spending and

retail sales and in turn tenant demand for space and could lead to increased store closings;

•     changes in market rental rates;

•     changes in demographics (including the number of households and average household income) surrounding our

shopping centers;

•     adverse financial conditions for grocery anchors and other retail, service, medical or restaurant tenants;

•     continued consolidation in the grocery-anchored shopping center sector;

•     excess amount of retail space in our markets;

•     reduction in the demand by tenants to occupy our shopping centers as a result of reduced consumer demand for

certain retail formats;

•     the growth of super-centers and warehouse club retailers, such as those operated by Wal-Mart and Costco, and

their adverse effect on traditional grocery chains;

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•     the entry of new market participants into the food sales business, such as Amazon's acquisition of Whole Foods,

the growth of online food delivery services and online supermarket retailers and their collective adverse effect

on traditional grocery chains;

•     our ability to aggregate a critical mass of grocery-anchored shopping centers;

•     the impact of an increase in energy costs on consumers and its consequential effect on the number of shopping

visits to our centers; and

•     our ability to aggregate a critical mass of grocery-anchored shopping centers;

•     the impact of an increase in energy costs on consumers and its consequential effect on the number of shopping

visits to our centers; and

•     the consequences of any armed conflict involving, or terrorist attack against, the United States.

Forward-looking statements are found throughout this "Management’s Discussion and Analysis of Financial Condition and Results of Operations" and elsewhere in this Quarterly Report on Form 10-Q. The reader should not place undue reliance on forward-looking statements, which speak only as of the date of this report. Except as required under the federal securities laws and the rules and regulations of the Securities and Exchange Commission, or SEC, we do not have any intention or obligation to publicly release any revisions to forward-looking statements to reflect unforeseen or other events after the date of this report. The forward-looking statements should be read in light of the risk factors indicated in the section entitled "Risk Factors" in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2019 and as may be supplemented by any amendments to our risk factors in our subsequent quarterly reports on Form 10-Q and other reports filed with the SEC, which are accessible on the SEC’s website at www.sec.gov.

General

    The following discussion and analysis provides information that we believe is relevant to an assessment and understanding of our results of operations and financial position. This discussion and analysis should be read in conjunction with our consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q.

Industry Outlook

Residential Properties

              Multifamily owners and operators, like every other business, have been impacted by COVID-19, but we believe the long term health of the industry is intact. Demand for multifamily rental housing will continue due to the ongoing entry of the “millennial” generation into the workforce, and the desire of the Baby Boom generation to “downsize” as they focus on their retirement years. 

    Entering this pandemic-induced recession, most economists agreed there was a housing shortfall, not an oversupply. Regarding multifamily specifically, in 2019, the industry was reaching occupancy levels not seen since 2000 and net absorption of units was also at peak levels during this last economic cycle. While this pandemic and resulting recession will create significant job losses in the near term, economic models forecast a quick recovery and the multifamily industry is in a prime position to recover relatively quickly given the aforementioned baseline pre-COVID-19. Until such recovery, the Company’s multifamily assets are well positioned to sustain through a recession with a majority of the assets being newly constructed, suburban and located in dynamic sunbelt growth markets. The Company also has strict leasing guidelines regarding the credit worthiness of its tenants, providing for a relatively resilient rental stream. Additionally, the Company focused on financing the assets with project level, long-term, fixed rate debt, which provides surety and continuity in times of uncertainty.

Student housing owners and operators, like their multifamily counterparts, have been impacted by the COVID-19 pandemic. Traffic and leasing velocity immediately decreased by the decision of many universities across the country to discontinue on-campus classes and move to an on-line learning program. With these immediate closures, including the mandates to vacate on-campus housing dorms and students being advised by university personnel to return to their permanent homes to resume their classes on-line, the student’s college experience changed overnight. In addition, without a commitment from the universities as to when the Fall 2020 classes would begin, the student-renter base took a “wait and see” approach toward signing leases for the 2020-2021 school year.

Furthermore, the dynamics of enrollment growth information has also been impacted by the pandemic in that universities have pushed back their enrollment deadlines. PAC’s student housing portfolio was tracking 9% ahead of the

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number of leases executed for Fall 2019 until the university closings occurred. At this point in the leasing schedule, the portfolio is currently within 1% of Fall 2019 leasing velocity.

All of the primary universities served by the Company’s student housing properties have returned to in-person classes or a hybrid in-person model for Fall 2020. Should a significant number of the colleges and universities that our properties serve revert to online classes for the remainder of the 2020/2021 academic year or decide to cancel classes due to a resurgence of COVID-19 cases or additional governmental actions restricting physical movement, we could experience further adverse effects. We believe the present level of near-normal leasing activity will continue for the foreseeable future.

New Market Properties

We specialize in owning and managing a portfolio of 54 neighborhood shopping centers anchored by market-leading grocers in Sunbelt and Mid-Atlantic suburban markets with strong demographic fundamentals. These centers are primarily anchored by Publix, Kroger, Harris Teeter and other leading grocers that have high sales per square foot. The importance of our market share leading grocers has become even more evident during the pandemic, as shoppers have flocked to these stores to purchase their essential items. Publix and Kroger reported same store sales increases in excess of 15% for their most recent 9 months, evidencing their leveling off at these increased levels.

Despite the continued impacts of COVID-19, our outlook on grocery-anchored shopping centers remains positive. We are confident in our portfolio’s tenant make up, focused on strongly performing grocers complemented by necessity and convenience-based tenants. 34% of our base rent is attributed to grocery and pharmacy tenants and 53% comes from tenants deemed essential by their respective governments. We have collected over 95% of recurring base rent and reimbursement revenue due in the third quarter 2020 during a time that many tenants have been forced to greatly modify their normal businesses. The recovery has been gradual with local governments and municipalities allowing businesses to reopen in phases.

As of September 30, 2020, we have deferred $1.5 million of retail recurring rental revenue, or approximately 3.1% cumulatively over the last two quarters. Including this deferred rent, we have accounted for 96.5% and 95.8% of third quarter and second quarter retail recurring rental revenue, respectively. We are diligently working to get payment plans in place with the remaining tenants to recover unpaid balances. Rent deferrals have included lease amendments that add additional term and/or eliminate cumbersome restrictions on the greater center, ultimately unlocking additional long-term value across the portfolio.

Preferred Office Properties

We continue to hold a positive outlook for the office industry in our markets, notwithstanding COVID-19, while acknowledging that in the immediate near term this positive performance may be more relative than absolute. Multi-year contractual leases and rent schedules paired with corporate balance sheets offer protection against adverse impacts of the pandemic, and office-using employment has fared better thus far than have hourly wage earners. In addition, certain industries have been more affected - namely travel and leisure, and the energy sector. Markets with concentrations to these industries are likely to be more strained than others. We also believe New York City will be slower to recover due to the severity of its encounter with the virus. Fortunately, the Company’s office investments are not located in New York City or any markets where tourism or energy is the primary economic driver. While leasing activity has been impacted by uncertainty from COVID-19, and we are likely to see some level of continued softness on that front in the near-term, fortunately the Company’s office investments are 96% leased with only approximately 12% of the portfolio expiring through 2022. Beyond that we believe the more lasting consequence of this event will be an acceleration of migration trends to the SunBelt that were already underway.

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Critical Accounting Policies

    There have been no material changes to our critical accounting policies as disclosed in our Annual Report on Form 10-

K for the year ended December 31, 2019, besides the following.

Expected Credit Loss Reserves

    On January 1, 2020, we adopted ASU 2016-13, that replaced the incurred loss model with an expected loss model for instruments measured at amortized cost, and requires entities to record credit allowances for total expected future losses on financial assets at the outset of each loan. For each loan for which we are the lender, the amount of protection afforded to us is estimated to be the excess of the future estimated fair market value of the developed property over the commitment amount of each loan (including other loans senior to ours), inclusive of accrued interest and other related receivables. The excess represents the amount of equity dollars in each real estate project plus profit expected to be realized on the project, which are in a subordinate position to our real estate loan investments. This numeric result is expressed as a percentage of the property's expected future fair value, which is then held up against a banded range of loss percentages that was derived from our company-specific loss experience. The product of this indicated loss reserve ratio and the total loan commitment amount is the initial total expected credit loss reserve. This loss reserve may be further refined by us due to any subjective factors deemed pertinent and worthy of reflection in the initial reserve. Over the life of the loan, the initial reserve is reevaluated for potential reduction at the achievement of certain milestones in construction and lease-up progress as the project approaches completion and the loan approaches maturity, given no unforeseen degradation in project performance or failure to adhere to the terms of the loan by the borrower/developer.

Off-Balance Sheet Arrangements

    As of September 30, 2020, we had 1,388,362 outstanding Warrants from our sales of Units. The Warrants are exercisable by the holder at an exercise price of 120% of the current market price per share of the Common Stock on the date of issuance of such Warrant, with a minimum exercise price of $19.50 per share for Warrants issued after February 15, 2017. The current market price per share is determined using the closing market price of the Common Stock immediately preceding the issuance of the Warrant. The Warrants are not exercisable until one year following the date of issuance and expire four years following the date of issuance. As of September 30, 2020, a total of 531,522 Warrants had been exercised into 10,630,440 shares of Common stock. The 1,388,362 Warrants outstanding at September 30, 2020 have exercise prices that range between $15.31 and $26.34 per share. If all the Warrants outstanding at September 30, 2020 became exercisable and were exercised, gross proceeds to us would be approximately $136.3 million and we would as a result issue an additional 27,767,240 shares of Common Stock.

New Accounting Pronouncements

For a discussion of our adoption of new accounting pronouncements, please see Note 2 of our Consolidated Financial Statements.

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Results of Operations

    Certain financial highlights of our results of operations for the nine-month period ended September 30, 2020 were:

Financial

•Our net loss per share was $(0.79) and $(0.71) for the three-month periods ended September 30, 2020 and 2019, respectively. Funds From Operations, or FFO, for the three months ended September 30, 2020 was $0.17 per weighted average share of Common Stock and Class A Unit outstanding and reflects lower purchase option termination revenues, lower interest income, higher preferred dividends and a higher share count. Core FFO was $0.26 for the three months ended September 30, 2020 as compared to $0.35 for the three months ended September 30, 2019 and was similarly impacted by the items listed above.

•Our FFO per share result increased to $0.17 for the third quarter 2020 from $(0.01) for the second quarter 2020; our Core FFO per share result increased to $0.26 for the third quarter 2020 from $0.22 for the second quarter 2020 and our AFFO per share result increased to $0.07 for the third quarter 2020 from $0.05 for the second quarter 2020. Core FFO increased 22.1% for the third quarter 2020 from the second quarter 2020.

•Our Core FFO payout ratio to Common Stockholders and Unitholders was approximately 67.8% and our Core FFO payout ratio (before the deduction of preferred dividends) to our preferred stockholders was approximately 73.0%. (A)

•Our AFFO payout ratio to Common Stockholders and Unitholders was approximately 95.1% for the trailing twelve months ended September 30, 2020. Our AFFO payout ratio (before the deduction of preferred dividends) to our preferred stockholders was approximately 90.9% for the third quarter 2020, 78.5% for the nine months ended September 30, 2020 and 75.1% for the trailing twelve months ended September 30, 2020.(A) Our AFFO payout ratios were negatively impacted by the reduced level of accrued interest received on our real estate loan investment portfolio and increased property insurance rates. We have approximately $24.8 million of accrued interest revenue on our real estate loan investment portfolio, which will positively impact AFFO when collected.

•As of September 30, 2020, our total assets were approximately $4.7 billion. Our total assets at September 30, 2019 of approximately $5.3 billion included approximately $585.8 million of VIE mortgage pool assets attributable to other mortgage pool participants that were consolidated due to our investments in the Freddie Mac K Program. During the fourth quarter 2019 we sold our K Program investments, realizing an internal rate of return of approximately 18%. Excluding the consolidated VIE mortgage pool assets from the September 30, 2019 total, our total assets grew approximately $49.3 million.

(A) We calculate the Core FFO and AFFO payout ratios to Common Stockholders as the ratio of Common Stock dividends and distributions to Core FFO and AFFO. We calculate the Core FFO and AFFO payout ratios to preferred stockholders as the ratio of Preferred Stock dividends to the sum of Preferred Stock dividends and Core FFO and AFFO. Since our operations resulted in a net loss from continuing operations for the periods presented, a payout ratio based on net loss is not calculable. See Definitions of Non-GAAP Measures.

The following chart details monthly cash collections of rental revenues before and after the effect of rent deferrals across all our operating business lines as of November 6, 2020:

	2020 Cash Collections of Recurring Rental Revenues (1)
Unadjusted for rent deferrals:	First quarter		April		May		June		July		August		September		October
Multifamily	99.9	%	98.8	%	98.8	%	98.8	%	98.8	%	99.0	%	99.0	%	98.5	%
Student housing	99.9	%	97.9	%	97.0	%	97.4	%	97.0	%	98.6	%	98.8	%	98.9	%
Office	99.8	%	98.8	%	97.3	%	97.8	%	98.9	%	99.7	%	99.9	%	99.8	%
Grocery-anchored retail (2)	99.4	%	91.5	%	89.7	%	91.5	%	94.1	%	95.0	%	96.4	%	95.6	%

	2020 Cash Collections of Recurring Rental Revenues (1)
Adjusted for rent deferrals:	First quarter		April		May		June		July		August		September		October
Multifamily	99.9	%	99.7	%	99.5	%	98.9	%	98.9	%	99.0	%	99.0	%	98.5	%
Student housing	99.9	%	98.4	%	97.4	%	97.4	%	97.0	%	98.6	%	98.8	%	98.9	%
Office	99.8	%	99.7	%	99.8	%	99.9	%	99.8	%	99.7	%	99.9	%	99.8	%
Grocery-anchored retail (2)	99.5	%	96.8	%	95.2	%	95.7	%	96.7	%	96.0	%	97.0	%	96.5	%

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(1) Percent of revenue billed includes recurring charges for base rent, operating expense escalations, pet, garage, parking and storage rent, as well as receivables from U.S. Government tenants, from which collection is reasonably assured.

(2) Includes an investment in an unconsolidated joint venture that is not prorated for our ownership percentage.

The following chart details monthly occupancy and percent leased rates across all our operating business lines:

	2020 Monthly Occupancy and Percentages Leased
	First quarter		April		May		June		July		August		September		October
Occupancy:
Multifamily (stabilized)	95.5	%	94.4	%	94.4	%	95.2	%	95.1	%	96.0	%	95.6	%	95.4	%
Student housing	96.1	%	96.0	%	95.8	%	95.8	%	95.9	%	95.1	%	95.3	%	95.5	%
Percent leased:
Office	96.7	%	95.9	%	96.2	%	96.2	%	96.1	%	95.9	%	95.5	%	95.4	%
Grocery-anchored retail (1)	92.6	%	92.5	%	92.5	%	92.7	%	92.8	%	92.8	%	92.5	%	92.4	%

(1) Includes an investment in an unconsolidated joint venture that is not prorated for our ownership percentage.

Operational

•Our average recurring rental revenue collections before and after any effect of rent deferrals for the third quarter 2020 were approximately 99.0% and 99.0% for multifamily communities, 99.5% and 99.8% for office properties and 95.2% and 96.6% for grocery-anchored retail properties, respectively. Rent deferments provided to our residents/tenants primarily related to a change of timing of rent payments with no significant changes to total payments or term.

•As of September 30, 2020, we have deferred $1.5 million of retail recurring rental revenue, or approximately 3.1% cumulatively over the last two quarters. Including this deferred rent, we have accounted for 96.6% and 95.9% of third quarter and second quarter retail recurring rental revenue, respectively. In addition to the deferrals, we granted approximately $324,000 of COVID-19 related rental abatements, or approximately 0.7% of retail recurring rental revenues cumulatively over the last two quarters. These rental abatements were generally accompanied by an increase in the tenant’s lease term or the lease terms were amended to be more favorable to us. We have also reserved $928,000 or 3.4% of total retail revenues (inclusive of straight line rent) in the third quarter, increasing our total reserves to $2.5 million or 3.0% of total retail revenues year to date, which is 0.7% of total company rental and other property revenues.

•On July 31, 2020, we received approximately $18.7 million in full satisfaction of the principal and all interest due on our Palisades real estate loan investment. Included in this total was the receipt of approximately $375,000 of deferred interest revenue on the loan, which was additive to AFFO for the quarter.

•As of September 30, 2020, the average age of our multifamily communities was approximately 6.3 years, which is the youngest in the public multifamily REIT industry.

•As of September 30, 2020, all of our owned multifamily communities had achieved stabilization, which we define as reaching 93% physical occupancy for three full months in a quarter.

Financing and Capital Markets

•On July 10, 2020, we closed on a refinancing of the mortgage on our Citrus Village multifamily community. The new instrument has a principal amount of $40.9 million, bears interest at a fixed rate of 2.95% per annum and matures on August 1, 2027. Monthly interest-only payments are due through August 31, 2022.

•As of September 30, 2020, approximately 94.1% of our permanent property-level mortgage debt has fixed interest rates and approximately 4.2% has variable interest rates which are capped. We believe we are well protected against potential increases in market interest rates. Our overall weighted average interest rate for our mortgage debt portfolio was 3.68% for residential properties, 4.13% for office properties and 3.91% for grocery-anchored retail properties.

•At September 30, 2020, our leverage, as measured by the ratio of our debt to the undepreciated book value of our total assets, was approximately 54.0%.

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•During the third quarter 2020, we issued and sold an aggregate of 34,603 shares of Series A1 Redeemable Preferred Stock, resulting in net proceeds of approximately $31.1 million after commissions and other fees. During the third quarter 2020, we issued and sold an aggregate of 7,862 shares of Series M1 Redeemable Preferred Stock, resulting in net proceeds of approximately $7.6 million after dealer manager fees. During the third quarter 2020, we issued approximately 617,000 shares of Common Stock through our ATM program, and collected net proceeds of approximately $4.5 million.

• During the third quarter 2020, we issued a total of 42,465 shares of preferred stock and redeemed 37,391 shares of preferred stock for a net total of 5,074 shares issued.

Significant Transactions

•On July 15, 2020, we contributed our Neapolitan Way grocery-anchored shopping center into an unconsolidated joint venture from which we collected approximately $19.2 million of proceeds and realized a gain on the transaction of approximately $3.3 million. Subsequently, the joint venture obtained a mortgage on the property, reducing our investment to approximately $6.9 million. We retain a 50% financial and voting interest in the property.

•On September 3, 2020, we closed on a real estate loan investment of up to approximately $20.7 million to partially finance the development and construction of a 320-unit multifamily community to be located in suburban Atlanta, Georgia. The aggregate carrying amount of our real estate loan investment portfolio was approximately $309.6 million at September 30, 2020.

Real Estate Loan Investments

    Certain real estate loan investments include limited purchase options and additional amounts of accrued interest, which becomes due in cash to us on the earliest to occur of: (i) the maturity of the loan, (ii) any uncured event of default as defined in the associated loan agreement, (iii) the sale of the project or the refinancing of the loan (other than a refinancing loan by us or one of our affiliates) and (iv) any other repayment of the loan. There are no contingent events that are necessary to occur for us to realize the additional interest amounts. We hold options and rights of first offer, but not obligations, to purchase certain of the properties which are partially financed by our real estate loans, as shown in the table below. The option purchase prices are negotiated at the time of the loan closing and are to be calculated based upon market cap rates at the time of exercise of the purchase option, with discounts up to 15 basis points (if any), depending on the loan.

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As of September 30, 2020, potential property acquisitions and units from projects in our real estate loan investment portfolio consisted of:

		Total units upon	Purchase option window
Project/Property	Location	completion (1)	Begin	End
Residential properties:
V & Three	Charlotte, NC	338	S + 90 days (2)	S + 150 days (2)
The Anson	Nashville, TN	301	S + 90 days (2)	S + 150 days (2)
Southpoint	Fredericksburg, VA	240	S + 90 days (2)	S + 150 days (2)
E-Town	Jacksonville, FL	332	S + 90 days (3)	S + 150 days (3)
Vintage	Destin, FL	282	(4)	(4)
Hidden River II	Tampa, FL	204	S + 90 days (2)	S + 150 days (2)
Kennesaw Crossing	Atlanta, GA	250	(5)	(5)
Vintage Horizon West	Orlando, FL	340	(4)	(4)
Solis Chestnut Farm	Charlotte, NC	256	(5)	(5)
Vintage Jones Franklin	Raleigh, NC	277	(4)	(4)
Solis Kennesaw II	Atlanta, GA	175	(6)	(6)
Solis Cumming	Atlanta, GA	320	(5)	(5)
Office property:
8West	Atlanta, GA	(7)	(7)	(7)
		3,315
(1) We evaluate each project individually and we make no assurance that we will acquire any of the underlying properties from our real estate loan investment portfolio. The purchase options held by us on the 464 Bishop, Haven Charlotte, Sanibel Straights, Wiregrass, Newbergh, Cameron Square, Solis Kennesaw and Falls at Forsyth projects were terminated, in exchange for an aggregate $17.2 million in termination fees from the developers.
(2) The option period window begins and ends at the number of days indicated beyond the achievement of a 93% physical occupancy rate by the underlying property.
(3) The option period window begins on the earlier of June 21, 2024 and the number of days indicated beyond the achievement of a 93% physical occupancy rate by the underlying property.
(4) The option period window begins on the later of one year following receipt of final certificate of occupancy or 90 days beyond the achievement of a 93% physical occupancy rate by the underlying property and ends 60 days beyond the option period beginning date.
(5) We hold a right of first offer on the property.
(6) The option period begins on October 1 of the second academic year following project completion and ends on the following December 31. The developer may elect to expedite the option period to begin December 1, 2020 and end on December 31, 2020.
(7) The project plans are for the construction of a class A office building consisting of approximately 195,000 rentable square feet; our purchase option window opens 90 days following the achievement of 90% lease commencement and ends on November 30, 2024 (subject to adjustment). Our purchase option is at the to-be-agreed-upon market value. In the event the property is sold to a third party, we would be due a fee based on a minimum multiple of 1.15 times the total commitment amount of the real estate loan investment, less the amounts actually paid by the borrower, up to and including payment of accrued interest and repayment of principal at the time of the sale.

58

Three-month and nine-month periods ended September 30, 2020 compared to 2019

    The following discussion and tabular presentations highlight the major drivers behind the line item changes in our results of operations for the three-month and nine-month periods ended September 30, 2020 versus 2019:

Preferred Apartment Communities, Inc.	Three-month periods ended September 30,				Change inc (dec)
	2020		2019		Amount		Percentage
Revenues:
Rental and other property revenues	$	114,831	$	105,049	$	9,782	9.3	%
Interest income on loans and notes receivable	10,649		12,608		(1,959)		(15.5)	%
Interest income from related parties	609		2,546		(1,937)		(76.1)	%
Miscellaneous revenues	608		—		608		—
Total revenues	126,697		120,203		6,494		5.4	%
Operating expenses:
Property operating and maintenance	19,278		16,493		2,785		16.9	%
Property salary and benefits	6,054		5,360		694		12.9	%
Property management fees	983		3,534		(2,551)		(72.2)	%
Real estate taxes and insurance	16,078		14,474		1,604		11.1	%
General and administrative	7,898		1,364		6,534		479.0	%
Equity compensation to directors and executives	582		305		277		90.8	%
Depreciation and amortization	51,794		46,239		5,555		12.0	%
Asset management and general and administrative expense fees to related party	—		8,611		(8,611)		(100.0)	%
Provision for expected credit losses	(152)		—		(152)		—
Management internalization expense	577		818		(241)		—
Total operating expenses	103,092		97,198		5,894		6.1	%
Waived asset management and general and administrative expense fees	—		(3,081)		3,081		(100.0)	%
Net operating expenses	103,092		94,117		8,975		9.5	%
Operating (loss) income before gain on sale of real estate and loss from unconsolidated joint venture	23,605		26,086		(2,481)		(9.5)	%
Loss from unconsolidated joint venture	(120)		—		(120)		—	%
Gain on sale of real estate, net	3,261		—		3,261		—
Operating income	26,746		26,086		660		2.5	%
Interest expense	29,879		28,799		1,080		3.8	%
Change in fair value of net assets of consolidated VIEs from mortgage-backed pools	—		591		(591)		—
Loss on extinguishment of debt	(518)		(15)		(503)		—
Gain on land condemnation	49		—		49		—
Net loss	(3,602)		(2,137)		(1,465)		—
Consolidated net loss (income) attributable to non-controlling interests	108		59		49		83.1	%
Net loss attributable to the Company	$	(3,494)	$	(2,078)	$	(1,416)	—

59

Preferred Apartment Communities, Inc.	Nine-month periods ended September 30,				Change inc (dec)
	2020		2019		Amount		Percentage
Revenues:
Rental and other property revenues	$	338,271	$	298,569	$	39,702	13.3	%
Interest income on loans and notes receivable	34,495		35,989		(1,494)		(4.2)	%
Interest income from related parties	3,750		9,980		(6,230)		(62.4)	%
Miscellaneous revenues	4,560		1,023		3,537		345.7	%
Total revenues	381,076		345,561		35,515		10.3	%
Operating expenses:
Property operating and maintenance	52,919		43,236		9,683		22.4	%
Property salary and benefits	16,965		14,845		2,120		14.3	%
Property management fees	4,028		10,174		(6,146)		(60.4)	%
Real estate taxes and insurance	48,109		42,646		5,463		12.8	%
General and administrative	23,109		4,171		18,938		454.0	%
Equity compensation to directors and executives	1,058		922		136		14.8	%
Depreciation and amortization	153,096		137,191		15,905		11.6	%
Asset management and general and administrative expense fees to related party	3,099		24,649		(21,550)		(87.4)	%
Provision for expected credit losses	5,463		—		5,463		—
Management internalization expense	179,828		1,143		178,685		—	%
Total operating expenses	487,674		278,977		208,697		74.8	%
Waived asset management and general and administrative expense fees	(1,136)		(8,505)		7,369		(86.6)	%
Net operating expenses	486,538		270,472		216,066		79.9	%
Operating (loss) income before gain on sale of real estate and loss from unconsolidated joint venture	(105,462)		75,089		(180,551)		(240.4)	%
Loss from unconsolidated joint venture	(120)		—		(120)		—	%
Gain on sale of real estate, net	3,261		4		3,257		81,425.0	%
Operating (loss) income	(102,321)		75,093		(177,414)		(236.3)	%
Interest expense	90,608		83,166		7,442		8.9	%
Change in fair value of net assets of consolidated VIEs from mortgage-backed pools	—		1,316		(1,316)		—
Loss on extinguishment of debt	(6,674)		(84)		(6,590)		—
Gain on land condemnation	528		747		(219)		(29.3)	%
Net loss	(199,075)		(6,094)		(192,981)		—
Consolidated net loss (income) attributable to non-controlling interests	3,515		138		3,377		2,447.1	%
Net loss attributable to the Company	$	(195,560)	$	(5,956)	$	(189,604)	—

60

New Market Properties, LLC

    Our New Market Properties, LLC business consists of our portfolio of grocery-anchored shopping centers and our Dawson Marketplace real estate loan supporting a shopping center in the Atlanta, Georgia market. Comparative statements of operations of New Market Properties, LLC for the three-month and nine-month periods ended September 30, 2020 versus 2019 are presented below. These statements of operations include no allocations of corporate overhead or other expenses.

New Market Properties, LLC	Three-month periods ended September 30,				Change inc (dec)
	2020		2019		Amount		Percentage
Revenues:
Rental revenues & other property revenues	$	26,707	$	24,826	$	1,881	7.6	%
Interest income on notes receivable	—		444		(444)		(100.0)	%
Total revenues	26,707		25,270		1,437		5.7	%
Operating expenses:
Property operating and maintenance	3,291		$	2,730	561		20.5	%
Property management fees	528		824		(296)		(35.9)	%
Real estate taxes and insurance	3,653		3,511		142		4.0	%
General and administrative	794		261		533		204.2	%
Equity compensation to directors and executives	19		17		2		11.8	%
Depreciation and amortization	12,688		11,677		1,011		8.7	%
Asset management and general and administrative
expense fees to related parties	—		1,892		(1,892)		(100.0)	%
Total operating expenses	20,973		20,912		61		0.3	%
Waived asset management and general and administrative
expense fees	—		(94)		94		(100.0)	%
Net operating expenses	20,973		20,818		155		0.7	%
Operating income before gain on sale of real estate and loss from unconsolidated joint venture	5,734		4,452		1,282		28.8	%
Loss from unconsolidated joint venture	(120)		—		(120)		—	%
Gain on sale of real estate, net	3,261		—		3,261		—	%
Operating income	8,875		4,452		4,423		99.3	%
Interest expense	6,539		6,422		117		1.8	%
Loss on extinguishment of debt	—		(16)		16		(100.0)	%
Gain on land condemnation	49		—		49		100.0	%
Net income (loss)	$	2,385	$	(1,986)	$	4,371	(220.1)	%
Consolidated net loss (income) attributable to non-controlling interests	$	(43)	$	(12)	(31)		258.3	%
Net income (loss) attributable to the Company	$	2,428	$	(1,974)	4,402		(223.0)	%

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New Market Properties, LLC	Nine-month periods ended September 30,				Change inc (dec)
	2020		2019		Amount		Percentage
Revenues:
Rental revenues & other property revenues	$	80,651	$	68,894	$	11,757	17.1	%
Interest income on notes receivable	164		1,317		(1,153)		(87.5)	%
Total revenues	80,815		70,211		10,604		15.1	%
Operating expenses:
Property operating and maintenance	9,831		7,409		2,422		32.7	%
Property management fees	1,921		2,345		(424)		(18.1)	%
Real estate taxes and insurance	11,685		10,041		1,644		16.4	%
General and administrative	2,680		577		2,103		364.5	%
Equity compensation to directors and executives	47		53		(6)		(11.3)	%
Depreciation and amortization	39,410		32,644		6,766		20.7	%
Asset management and general and administrative
expense fees to related parties	720		5,274		(4,554)		(86.3)	%
Total operating expenses	66,294		58,343		7,951		13.6	%
Waived asset management and general and administrative
expense fees	(17)		(296)		279		(94.3)	%
Net operating expenses	66,277		58,047		8,230		14.2	%
Operating income before gain on sale of real estate and loss from unconsolidated joint venture	14,538		12,164		2,374		19.5	%
Loss from unconsolidated joint venture	(120)		—		(120)		—	%
Gain on sale of real estate, net	3,261		—		3,261		—	%
Operating income	17,679		12,164		5,515		45.3	%
Interest expense	19,876		18,123		1,753		9.7	%
Loss on extinguishment of debt	—		(68)		68		(100.0)	%
Gain on land condemnation	528		—		528		100.0	%
Net income (loss)	$	(1,669)	$	(6,027)	$	4,358	(72.3)	%
Consolidated net loss (income) attributable to non-controlling interests	$	(82)	$	(12)	(70)		583.3	%
Net income (loss) attributable to the Company	$	(1,587)	$	(6,015)	4,428		(73.6)	%

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Recent acquisitions

Our acquisitions (net of dispositions) of real estate assets since January 1, 2019 were generally the primary drivers behind our increases in rental and property revenues and property operating expenses for the year ended September 30, 2020 versus 2019.

    Real estate assets acquired

Acquisition date	Property	Location	Units	Beds	Leasable square feet
	Residential Properties:
3/27/2019	Haven49	Charlotte, NC	322	887	-
8/8/2019	Artisan at Viera	Melbourne, FL	259	-	-
9/18/2019	Five Oaks at Westchase	Tampa, FL	218	-	-
3/31/2020	Horizon at Wiregrass	Tampa, FL	392	-	-
4/30/2020	Parkside at the Beach	Panama City Beach, FL	288	-	-
	New Market Properties:
1/17/2019	Gayton Crossing	Richmond, VA	-	-	158,316
5/28/2019	Free State Shopping Center	Washington, D.C.	-	-	264,152
6/12/2019	Disston Plaza	Tampa - St. Petersburg, FL	-	-	129,150
6/12/2019	Polo Grounds Mall	West Palm Beach, FL	-	-	130,285
8/16/2019	Fairfield Shopping Center (1)	Virginia Beach, VA	-	-	231,829
11/14/2019	Berry Town Center	Orlando, FL	-	-	99,441
12/19/2019	Hanover Shopping Center (1)	Wilmington, NC	-	-	305,346
1/29/2020	Wakefield Crossing	Raleigh, NC	-	-	75,927
3/19/2020	Midway Market	Dallas, TX	-	-	85,599
	Preferred Office Properties:
7/25/2019	CAPTRUST Tower (1)	Raleigh, NC	-	-	300,000
7/31/2019	251 Armour	Atlanta, GA	-	-	35,000
12/20/2019	Morrocroft Centre (1)	Charlotte, NC	-	-	291,000
			1,479	887	2,106,045

(1) Property is owned through a consolidated joint venture.

Rental and other property revenues

    Rental and other property revenues increased 9.3% and 13.3% for the three-month and nine-month periods ended September 30, 2020 versus 2019 respectively, primarily due to properties acquired since January 1, 2019. These increases occurred in multifamily communities, grocery-anchored shopping centers and office buildings, which accounted for most of our acquisition activity since January 1, 2019. Similar increases in property operations and maintenance and property salary and benefits expense were also driven by these acquisitions.

    The primary components of operating and maintenance expense are utilities, property repairs, and landscaping costs. The expenses incurred for property repairs and, to a lesser extent, utilities could generally be expected to increase gradually over time as the buildings and properties age. Utility costs may generally be expected to increase in future periods as rate increases from providing carriers are passed on to our residents and tenants.

    We recorded property salary and benefits expense for individuals who handle the on-site management, operations and maintenance of our properties. These costs increased primarily due to the incremental costs brought on by additional personnel necessary to manage and operate properties acquired.

    Changes in occupancy rates and in percentages of leased space and rent growth are the primary drivers of changes in rental revenue from our owned properties. Factors which we believe affect market rents include vacant unit inventory in local markets, local and national economic growth and resultant employment stability, income levels and growth, the ease of obtaining credit for home purchases, and changes in demand due to consumer confidence in the above factors.

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Interest income

    Interest income from our real estate loan investments decreased for the three-month and nine-month periods ended September 30, 2020 versus 2019. The principal amount outstanding on our portfolio of real estate loan investments decreased to approximately $323.6 million at September 30, 2020 from $383.2 million at September 30, 2019. Revenues from the amortization of terminated purchase options decreased from approximately $1.3 million for the third quarter 2019 to approximately $0.4 million for the third quarter 2020 and decreased from approximately $6.9 million for the nine months ended September 30, 2019 to approximately $4.9 million for the nine months ended September 30, 2020. At September 30, 2020, we had unrecognized purchase option termination revenue of approximately $1.2 million that will be recognized by December 31, 2021. We recorded interest income and other revenue from these instruments as presented in Note 4 to our Consolidated Financial Statements.

    Miscellaneous revenues included forfeited earnest money deposits from prospective purchasers of certain of our student housing properties of $2.75 million and $1.0 million for the nine months ended September 30, 2020 and 2019, respectively.

Property management fees

    We paid fees for property management services to our Former Manager in an amount of 4% of gross property revenues as compensation for services such as rental, leasing, operation and management of our multifamily communities and the supervision of any subcontractors; for grocery-anchored shopping center assets, property management fees were generally 4% of gross property revenues, of which generally 2.0% to 2.5% were paid to a third party management company. Property management fees for office building assets are 1.25% to 2.00% and are paid to a third party property management company. All property management fees paid to our Former Manager ceased effective with our Internalization on January 31, 2020, which resulted in a decrease of approximately $2.6 million and $6.6 million in these property management fees for the three months and nine months ended September 30, 2020 as compared to the comparative periods in 2019.

Real estate taxes and insurance

    We are liable for property taxes due to the various counties and municipalities that levy such taxes on real property for each of our properties. Real estate taxes rose primarily due to the incremental costs brought on by properties acquired since January 1, 2019. We generally expect the assessed values of our properties to rise over time, owing to our expectation of improving market conditions, as well as pressure on municipalities to raise revenues. Insurance premiums are paid to insure against damages to our real estate assets and for liability claims. 

General and Administrative

    The increases in general and administrative expenses were due to charges for corporate salaries and administrative expenses that are borne by us following the Internalization.

Equity compensation to directors and executives

    Equity compensation expenses increased for the three-month and nine-month periods ended September 30, 2020 as compared to the corresponding 2019 periods, primarily due to the recognition of expense related to two new equity compensation grants. First, on June 17, 2020, a restricted stock grant was issued to employees and directors and second, on July 31, 2020, a grant of performance-based restricted stock units was issued to certain named executive officers. This increase in equity compensation expense was partially offset by a decrease in recognition of expense relating to Class B Unit grants. The last Class B Unit grant to be issued was in 2018, and the final one-third of the expense related to this grant will be recorded in 2020.

Depreciation and amortization

    The increases in depreciation and amortization for the three-month and nine-month periods ended September 30, 2020 versus 2019 increased due to the addition of properties acquired since January 1, 2019.

64

Asset management fees and general and administrative fees to related party

Monthly asset management fees and general and administrative expense fees ceased effective with the closing of our Internalization transaction on January 31, 2020.

Provision for expected credit losses

    Effective January 1, 2020, we adopted ASU 2016-03, which requires us to estimate the amount of future credit losses we expect to incur over the lives of our real estate loan investments at the inception of each loan, rather than perform assessments for impairment as circumstances dictate. The Company’s opening reserve of approximately $7.4 million was recorded as a cumulative adjustment to accumulated earnings on January 1, 2020. During the first quarter of 2020, the Company recorded an aggregate net increase in its provisions for expected credit losses of approximately $4.5 million, primarily related to the onset of the coronavirus pandemic. For the three months and nine months ended September 30, 2020, the Company recorded an aggregate net decrease of $0.8 million and increase of $3.6 million in its provision for expected credit losses, respectively, primarily related to development projects achieving construction and leasing milestones.

Management Internalization expense

    On January 31, 2020, we internalized the functions performed by the Former Manager and the Sub-Manager by acquiring the entities that own the Manager and the Sub-Manager for an aggregate purchase price of $154 million, plus up to $25 million of additional consideration to be paid within 36 months.

Interest expense

The increase consisted of interest expense on mortgages that increased from $28.4 million for the third quarter 2019 to $29.0 million for the third quarter 2020, due to the additional acquired properties in 2019 and 2020. Additionally, our Revolving Line of Credit carried a higher balance for the third quarter 2020 over the third quarter 2019, resulting in an additional $0.5 million in interest expense.

See the sections entitled Contractual Obligations and Quantitative and Qualitative Disclosures About Market Risk.

Definitions of Non-GAAP Measures

    We disclose FFO, Core FFO, and AFFO, each of which meet the definition of a “non-GAAP financial measure”, as set forth in Item 10(e) of Regulation S-K promulgated by the SEC. As a result we are required to include in this filing a statement of why the Company believes that presentation of these measures provides useful information to investors. The non-GAAP measures of FFO, Core FFO, AFFO and NOI should be considered as an alternative to net income (determined in accordance with GAAP) as an indication of our performance, and we believe that to understand our performance further FFO, Core FFO and AFFO should be compared with our reported net income or net loss and considered in addition to cash flows in accordance with GAAP, as presented in our consolidated financial statements. FFO, Core FFO and AFFO are not considered measures of liquidity and are not alternatives to measures calculated under GAAP.

Funds From Operations Attributable to Common Stockholders and Unitholders (“FFO”)

    FFO is one of the most commonly utilized Non-GAAP measures currently in practice. In its 2002 “White Paper on Funds From Operations,” which was restated in 2018, the National Association of Real Estate Investment Trusts, or NAREIT, standardized the definition of how Net income/loss should be adjusted to arrive at FFO, in the interests of uniformity and comparability. We have adopted the NAREIT definition for computing FFO as a meaningful supplemental gauge of our operating results, and as is most often presented by other REIT industry participants.

    The NAREIT definition of FFO (and the one reported by the Company) is:

Net income/loss, excluding:

◦depreciation and amortization related to real estate;

◦gains and losses from the sale of certain real estate assets;

65

◦gains and losses from change in control and

◦impairment writedowns of certain real estate assets and investments in entities where the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity.

    Not all companies necessarily utilize the standardized NAREIT definition of FFO, so caution should be taken in comparing the Company’s reported FFO results to those of other companies. The Company’s FFO results are comparable to the FFO results of other companies that follow the NAREIT definition of FFO and report these figures on that basis. FFO is a non-GAAP measure that is reconciled to its most comparable GAAP measure, net income/loss available to common stockholders.

Core Funds From Operations Attributable to Common Stockholders and Unitholders (“Core FFO”)

    The Company makes adjustments to FFO to remove costs incurred and revenues recorded that are singular in nature and outside the normal operations of the Company and portray its primary operational results. The Company calculates Core FFO as:

FFO, plus:

• acquisition and pursuit (dead deal) costs;

• loan cost amortization on acquisition term notes and loan coordination fees;

• losses on debt extinguishments or refinancing costs;

• internalization costs;

• expenses incurred on the potential call of preferred stock;

• deemed dividends for redemptions of and non-cash dividends on preferred stock;

• expenses related to the COVID-19 global pandemic; and

Less:

• earnest money forfeitures by prospective asset purchasers.

Core FFO figures reported by us may not be comparable to Core FFO figures reported by other companies. We utilize Core FFO as a supplemental measure of the operating performance of our portfolio of real estate assets. We believe Core FFO is useful to investors as a supplemental gauge of our operating performance and may be useful in comparing our operating performance with other real estate companies. Since our calculation of Core FFO removes costs incurred and revenues recorded that are often singular in nature and outside the normal operations of the Company, we believe it improves comparability to investors in assessing our core operating results across periods. Core FFO is a non-GAAP measure that is reconciled to its most comparable GAAP measure, net income/loss available to common stockholders.

Adjusted Funds From Operations Attributable to Common Stockholders and Unitholders (“AFFO”)

    AFFO makes further adjustments to Core FFO results in order to arrive at a more refined measure of operating and financial performance. There is no industry standard definition of AFFO and practice is divergent across the industry. The Company calculates AFFO as:

Core FFO, plus:

• non-cash equity compensation to directors and executives;

• amortization of loan closing costs;

• weather-related property operating losses;

• amortization of loan coordination fees paid to the Manager;

• depreciation and amortization of non-real estate assets;

• non-cash (income) expense for current expected credit losses;

• net loan origination fees received;

• accrued interest income received;

• cash received for purchase option terminations;

• non-operating miscellaneous revenues;

• non-cash dividends on Series M Preferred Stock and mShares; and

• amortization of lease inducements;

Less:

• non-cash loan interest income;

• cash paid for loan closing costs;

• amortization of acquired real estate intangible liabilities;

66

• amortization of straight line rent adjustments and deferred revenues; and

• normally-recurring capital expenditures and capitalized second generation leasing costs.

    AFFO figures reported by us may not be comparable to those AFFO figures reported by other companies. We utilize AFFO as another measure of the operating performance of our portfolio of real estate assets. We believe AFFO is useful to investors as a supplemental gauge of our operating performance and may be useful in comparing our operating performance with other real estate companies. Since our calculation of AFFO removes other significant non-cash charges and revenues and other costs which are not representative of our ongoing business operations, we believe it improves comparability to investors in assessing our core operating results across periods. AFFO is a non-GAAP measure that is reconciled to its most comparable GAAP measure, net income/loss available to common stockholders. FFO, Core FFO and AFFO are not considered measures of liquidity and are not alternatives to measures calculated under GAAP.

67

Reconciliation of FFO Attributable to Common Stockholders and Unitholders, Core FFO and AFFO
to Net (Loss) Income Attributable to Common Stockholders (A)
		Three months ended September 30,
(In thousands, except per-share figures)		2020		2019
Net loss attributable to common stockholders (See note 1)		$	(39,499)	$	(31,529)
Add:	Depreciation of real estate assets	41,282		37,381
	Amortization of acquired intangible assets and deferred leasing costs	9,978		8,386
	Net loss attributable to Class A Unitholders (See note 2)	(50)		(59)
	Gain on sale of real estate	(3,261)		—
FFO attributable to common stockholders and unitholders		8,450		14,179
	Aquisition and pursuit costs	3		—
	Loan cost amortization on acquisition term notes and loan coordination fees (See note 3)	505		511
	Payment of costs related to property refinancing	509		170
	Internalization costs (See note 4)	577		818
	Deemed dividends for redemptions of and non-cash dividends on preferred stock	3,061		152
	Expenses incurred on the potential call of preferred stock (See note 5)	46		—
	Expenses related to the COVID-19 global pandemic (See note 6)	138		—
Core FFO attributable to common stockholders and unitholders		13,289		15,830
Add:	Non-cash equity compensation to directors and executives	582		305
	Noncash (income) expense for current expected credit losses (See note 7)	(761)		—
	Amortization of loan closing costs (See note 8)	1,288		1,168
	Depreciation/amortization of non-real estate assets	621		472
	Net loan origination fees received (See note 9)	415		148
	Deferred interest income received (See note 10)	375		—
	Amortization of lease inducements (See note 11)	448		435
Less:	Amortization of purchase option termination revenues in excess of cash received (See note 12)	(421)		(1,283)
	Non-cash loan interest income (See note 10)	(3,317)		(3,763)
	Cash received for sale of K Program securities in excess of noncash revenues	—		(281)
	Cash paid for loan closing costs	(106)		(29)
	Amortization of acquired real estate intangible liabilities and SLR (See note 13)	(4,887)		(4,293)
	Amortization of deferred revenues (See note 14)	(940)		(940)
	Normally recurring capital expenditures (See note 15)	(2,983)		(2,379)
AFFO attributable to common stockholders and Unitholders		$	3,603	$	5,390
Common Stock dividends and distributions to Unitholders declared:
	Common Stock dividends	$	8,780	$	11,823
	Distributions to Unitholders (See note 2)	226		225
	Total	$	9,006	$	12,048
Common Stock dividends and Unitholder distributions per share		$	0.1750	$	0.2625
FFO per weighted average basic share of Common Stock and Unit outstanding		$	0.17	$	0.31
Core FFO per weighted average basic share of Common Stock and Unit outstanding		$	0.26	$	0.35
AFFO per weighted average basic share of Common Stock and Unit outstanding		$	0.07	$	0.12
Weighted average shares of Common Stock and Units outstanding: (A)
	Basic:
	Common Stock	49,689		44,703
	Class A Units	742		868
	Common Stock and Class A Units	50,431		45,571
	Diluted Common Stock and Class A Units (B)	50,433		45,768
Actual shares of Common Stock outstanding, including 548 and 20 unvested shares
of restricted Common Stock at September 30, 2020 and 2019, respectively.		50,449		45,355
Actual Class A Units outstanding at September 30, 2020 and 2019, respectively.		742		856
	Total	51,191		46,211
(A) Units and Unitholders refer to Class A Units in our Operating Partnership (as defined in note 2), or Class A Units, and holders of Class A Units, respectively. Unitholders include recipients of awards of Class B Units in our Operating Partnership, or Class B Units, for annual service which became vested and earned and automatically converted to Class A Units. Unitholders also include the entity that contributed the Wade Green grocery-anchored shopping center. The Class A Units collectively represent an approximate 1.47% weighted average non-controlling interest in the Operating Partnership for the three-month period ended September 30, 2020.
(B) Since our AFFO results are positive for the periods reflected above, we are presenting recalculated diluted weighted average shares of Common Stock and Class A Units for these periods for purposes of this table, which includes the dilutive effect of common stock equivalents from grants of the Class B Units, warrants included in units of Series A Preferred Stock issued, as well as annual grants of restricted Common Stock and restricted stock units. The weighted average shares of Common Stock outstanding presented on the Consolidated Statements of Operations are the same for basic and diluted for any period for which we recorded a net loss available to common stockholders.

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Reconciliation of FFO Attributable to Common Stockholders and Unitholders, Core FFO and AFFO
to Net (Loss) Income Attributable to Common Stockholders (A)
		Nine months ended September 30,
(In thousands, except per-share figures)		2020		2019
Net loss attributable to common stockholders (See note 1)		$	(300,270)	$	(88,497)
Add:	Depreciation of real estate assets	122,053		109,408
	Amortization of acquired intangible assets and deferred leasing costs	28,933		26,402
	Net loss attributable to Class A Unitholders (See note 2)	(3,393)		(138)
	Gain on sale of real estate	(3,261)		—
FFO attributable to common stockholders and unitholders		(155,938)		47,175
	Acquisition and pursuit costs	381		—
	Loan cost amortization on acquisition term notes and loan coordination fees (See note 3)	1,711		1,491
	Payment of costs related to property refinancing	7,372		594
	Internalization costs (See note 4)	179,828		1,143
	Deemed dividends for redemptions of and non-cash dividends on preferred stock	6,377		371
	Expenses incurred on the potential call of preferred stock (See note 5)	46		—
	Expenses related to the COVID-19 global pandemic (See note 6)	586		—
	Earnest money forfeited by prospective asset purchaser	(2,750)		—
Core FFO attributable to common stockholders and unitholders		37,613		50,774
Add:	Non-cash equity compensation to directors and executives	1,058		922
	Noncash (income) expense for current expected credit losses (See note 7)	3,647		—
	Amortization of loan closing costs (See note 8)	3,631		3,458
	Depreciation/amortization of non-real estate assets	1,793		1,381
	Net loan origination fees received (See note 9)	882		674
	Deferred interest income received (See note 10)	8,652		5,078
	Amortization of lease inducements (See note 11)	1,334		1,295
	Amortization of purchase option termination revenues in excess of cash received (See note 12)	(96)		(2,370)
	Non-operating miscellaneous revenues	2,750		—
Less:	Non-cash loan interest income (See note 10)	(9,445)		(10,745)
	Non-cash revenues from mortgage-backed securities	—		(696)
	Cash paid for loan closing costs	(106)		(37)
	Amortization of acquired real estate intangible liabilities and SLR (See note 13)	(13,684)		(12,375)
	Amortization of deferred revenues (See note 14)	(2,821)		(2,821)
	Normally recurring capital expenditures (See note 15)	(6,525)		(5,122)
AFFO attributable to common stockholders and Unitholders		$	28,683	$	29,416
Common Stock dividends and distributions to Unitholders declared:
	Common Stock dividends	29,895		34,599
	Distributions to Unitholders (See note 2)	559		683
	Total	30,454		35,282
Common Stock dividends and Unitholder distributions per share		$	0.6125	$	0.785
FFO per weighted average basic share of Common Stock and Unit outstanding		$	(3.17)	$	1.06
Core FFO per weighted average basic share of Common Stock and Unit outstanding		$	0.77	$	1.14
AFFO per weighted average basic share of Common Stock and Unit outstanding		$	0.58	$	0.66
Weighted average shares of Common Stock and Units outstanding: (A)
	Basic:
	Common Stock	48,351		43,703
	Class A Units	776		875
	Common Stock and Class A Units	49,127		44,578
	Diluted Common Stock and Class A Units (B)	49,144		45,235
Actual shares of Common Stock outstanding, including 548 and 20 unvested shares
of restricted Common Stock at September 30, 2020 and 2019, respectively.		50,449		45,355
Actual Class A Units outstanding at September 30, 2020 and 2019, respectively.		742		856
	Total	51,191		46,211
(A) Units and Unitholders refer to Class A Units in our Operating Partnership (as defined in note 2), or Class A Units, and holders of Class A Units, respectively. Unitholders include recipients of awards of Class B Units in our Operating Partnership, or Class B Units, for annual service which became vested and earned and automatically converted to Class A Units. Unitholders also include the entity that contributed the Wade Green grocery-anchored shopping center. The Class A Units collectively represent an approximate 1.58% weighted average non-controlling interest in the Operating Partnership for the nine-month period ended September 30, 2020.
(B) Since our AFFO results are positive for the periods reflected above, we are presenting recalculated diluted weighted average shares of Common Stock and Class A Units for these periods for purposes of this table, which includes the dilutive effect of common stock equivalents from grants of the Class B Units, warrants included in units of Series A Preferred Stock issued, as well as annual grants of restricted Common Stock and restricted stock units. The weighted average shares of Common Stock outstanding presented on the Consolidated Statements of Operations are the same for basic and diluted for any period for which we recorded a net loss available to common stockholders.

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Notes to Reconciliations of FFO Attributable to Common Stockholders and Unitholders, Core FFO and AFFO to

Net Loss Attributable to Common Stockholders

1)Rental and other property revenues and property operating expenses for the three-month and nine-month periods ended September 30, 2020 include activity for the properties acquired during the period only from their respective dates of acquisition. In addition, these periods include activity for the properties acquired since September 30, 2019. Rental and other property revenues and expenses for the three-month and nine-month periods ended September 30, 2019 include activity for the acquisitions made during that period only from their respective dates of acquisition.

2)Non-controlling interests in Preferred Apartment Communities Operating Partnership, L.P., or our Operating Partnership, consisted of a total of 742,413 Class A Units as of September 30, 2020. Included in this total are 419,228 Class A Units which were granted as partial consideration to the seller in conjunction with the seller's contribution to us on February 29, 2016 of the Wade Green grocery-anchored shopping center. The remaining Class A units were awarded primarily to our key executive officers. The Class A Units are apportioned a percentage of our financial results as non-controlling interests. The weighted average ownership percentage of these holders of Class A Units was calculated to be 1.47% and 1.90% for the three-month periods ended September 30, 2020 and 2019, respectively.

3)     We paid loan coordination fees to Preferred Apartment Advisors, LLC, or our Former Manager, to reflect the administrative effort involved in arranging debt financing for acquired properties prior to the Internalization. The fees were calculated as 0.6% of the amount of any mortgage indebtedness on newly-acquired properties or refinancing and are amortized over the lives of the respective mortgage loans. This non-cash amortization expense is an addition to FFO in the calculation of Core FFO and AFFO. At September 30, 2020, aggregate unamortized loan coordination fees were approximately $12.8 million, which will be amortized over a weighted average remaining loan life of approximately 10.2 years.

4)    This adjustment reflects the add-back of (i) consideration paid to the owners of the Former Manager and Former Sub-Manager, (ii) accretion of the discount on the deferred liability payable to the owners of the Former Manager and (iii) due diligence and pursuit costs incurred by the Company related to the internalization of the functions performed by the Former Manager.

5)    This adjustment adds back expenses incurred by us to effect an amendment of the Company's charter necessary to allow us to redeem outstanding shares of our Series A Preferred Stock beginning on the fifth anniversary of the date of issuance of the shares of Series A Preferred Stock, rather than the tenth anniversary.

6)    This additive adjustment to FFO consists of one-time costs for signage, cleaning and supplies necessary to create and maintain work environments necessary to adhere to CDC guidelines during the current COVID-19 pandemic. Since we do not expect to incur similar costs once the COVID-19 pandemic has subsided, we add these costs back to FFO in our calculation of Core FFO.

7)    Effective January 1, 2020, we adopted ASU 2016-03, which requires us to estimate the amount of future credit losses we expect to incur over the lives of our real estate loan investments at the inception of each loan. This loss reserve may be adjusted upward or downward over the lives of our loans and therefore the aggregate net adjustment for each period could be positive (removing the non-cash effect of a net increase in aggregate loss reserves) or negative (removing the non-cash effect of a net decrease in aggregate loss reserves) in these adjustments to FFO in calculating Core FFO.

8)    We incur loan closing costs on our existing mortgage loans, which are secured on a property-by-property basis by each of our acquired real estate assets, and also for occasional amendments to our syndicated revolving line of credit with Key Bank National Association, or our Revolving Line of Credit. Effective April 13, 2018, the maximum borrowing capacity on the Revolving Line of Credit was increased from $150 million to $200 million. These loan closing costs are also amortized over the lives of the respective loans and the Revolving Line of Credit, and this non-cash amortization expense is an addition to FFO in the calculation of AFFO. Neither we nor the Operating Partnership have any recourse liability in connection with any of the mortgage loans, nor do we have any cross-collateralization arrangements with respect to the assets securing the mortgage loans, other than security interests in 49% of the equity interests of the subsidiaries owning such assets, granted in connection with our Revolving Line of Credit, which provides for full recourse liability. At September 30, 2020, unamortized loan costs on all the Company's indebtedness were approximately $32.3 million, which will be amortized over a weighted average remaining loan life of approximately 8.9 years.

9)    We receive loan origination fees in conjunction with the origination of certain real estate loan investments. These fees are then recognized as revenue over the lives of the applicable loans as adjustments of yield using the effective interest method. The total fees received are additive adjustments in the calculation of AFFO. Correspondingly, the amortized non-cash income is a deduction in the calculation of AFFO. Over the lives of certain loans, we accrue additional interest amounts that become due to us at the time of repayment of the loan or refinancing of the property, or when the property is sold. This non-cash interest income is subtracted from Core FFO in our calculation of AFFO. The amount of additional accrued interest becomes an additive adjustment to FFO once received from the borrower (see note 10).

10)    This adjustment reflects the receipt during the periods presented of additional interest income (described in note 9 above) which was earned and accrued on various real estate loans prior to those periods and previously deducted in our calculation of AFFO.

11)    This adjustment removes the non-cash amortization of costs incurred to induce tenants to lease space in our office buildings and grocery-anchored shopping centers.

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12)    Effective March 6, 2020, our purchase option on the Falls at Forsyth multifamily community was extinguished in conjunction with the loan repayment; effective January 1, 2019, we terminated our purchase options on the Sanibel Straits, Newbergh, Wiregrass and Cameron Square multifamily communities and the Solis Kennesaw student housing property; on May 7, 2018, we terminated our purchase options on the Bishop Street multifamily community and the Haven Charlotte student housing property, both of which are (or were) partially supported by real estate loan investments held by us. In exchange, we arranged to receive termination fees aggregating approximately $17.2 million from the developers, which are recorded as revenue over the period beginning on the date of election until the earlier of (i) the maturity of the real estate loan investment and (ii) the sale of the property. The receipt of the cash termination fees are an additive adjustment in our calculation of AFFO and the removal of non-cash revenue from the recognition of the termination fees are a reduction to Core FFO in our calculation of AFFO; both of these adjustments are presented in a single net number within this line. For all periods presented, we had recognized termination fee revenues in excess of cash received, resulting in the negative adjustments shown to Core FFO in our calculation of AFFO.

13)    This adjustment reflects straight-line rent adjustments and the reversal of the non-cash amortization of below-market and above-market lease intangibles, which were recognized in conjunction with our acquisitions and which are amortized over the estimated average remaining lease terms from the acquisition date for multifamily communities and over the remaining lease terms for grocery-anchored shopping center assets and office buildings. At September 30, 2020, the balance of unamortized below-market lease intangibles was approximately $54.5 million, which will be recognized over a weighted average remaining lease period of approximately 8.7 years.

14)    This adjustment removes the non-cash amortization of deferred revenue recorded by us in conjunction with Company-owned lessee-funded tenant improvements in our office buildings.

15)    We deduct from Core FFO normally recurring capital expenditures that are necessary to maintain our assets’ revenue streams in the calculation of AFFO. This adjustment also deducts from Core FFO capitalized amounts for third party costs during the period to originate or renew leases in our grocery-anchored shopping centers and office buildings. This adjustment includes approximately $28,000 and $100,000 of recurring capitalized expenditures incurred at our corporate offices during the three-month and nine-month periods ended September 30, 2020, respectively. No adjustment is made in the calculation of AFFO for nonrecurring capital expenditures. See Capital Expenditures, Grocery-Anchored Shopping Center Portfolio, and Office Buildings Portfolio sections for definitions of these terms.

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Liquidity and Capital Resources

Short-Term Liquidity

    We believe our principal short-term liquidity needs are to fund:

•operating expenses directly related to our portfolio of multifamily communities, student housing properties, grocery-anchored shopping centers and office properties (including regular maintenance items);

•operating expenses related to salaries, benefits, and general and administrative expenses (that were formally funded by payment of fees to our Former Manager prior to Internalization on January 31, 2020);

•capital expenditures incurred to lease our multifamily communities, student housing properties, grocery-anchored shopping centers and office properties;

•interest expense on our outstanding property level debt;

•amounts due on our Credit Facility;

•distributions that we pay to our preferred stockholders, common stockholders, and unitholders;

•cash redemptions that we may pay to our preferred stockholders, and

•committed investments.

    We have a credit facility, or Credit Facility, with KeyBank National Association, or KeyBank, which defines a revolving line of credit, or Revolving Line of Credit, which is used to fund investments, capital expenditures, dividends (with consent of KeyBank), working capital and other general corporate purposes on an as needed basis. On March 23, 2018, the maximum borrowing capacity on the Revolving Line of Credit was increased to $200 million pursuant to an accordion feature. The accordion feature permits the maximum borrowing capacity to be expanded or contracted without amending any further terms of the instrument. On December 12, 2018, the Fourth Amended and Restated Credit Agreement, or the Amended and Restated Credit Agreement, was amended to extend the maturity to December 12, 2021, with an option to extend the maturity date to December 12, 2022, subject to certain conditions described therein. The Revolving Line of Credit accrues interest at a variable rate of one month LIBOR plus an applicable margin of 2.75% to 3.50% per annum, depending upon our leverage ratio. The weighted average interest rate for the Revolving Line of Credit was 3.91% for the nine months ended September 30, 2020. The Amended and Restated Credit Agreement also reduced the commitment fee on the average daily unused portion of the Revolving Line of Credit to 0.25% or 0.30% per annum, depending upon our outstanding Credit Facility balance. At September 30, 2020, we had $167.0 million available to be drawn by us on the Revolving Line of Credit.

    The COVID-19 pandemic has the potential to affect our short-term cash flows, if multifamily tenants lose their jobs due to business closings, retailers fall behind on their rent obligations, and our office tenants' businesses begin to similarly suffer. Should these events continue to accelerate and worsen, our operational cash flows could suffer and cause us to draw upon our Revolving Credit Line more extensively and in a manner other than we previously intended.

The Amended and Restated Credit Agreement contains certain affirmative and negative covenants including negative covenants that limit or restrict secured and unsecured indebtedness, mergers and fundamental changes, investments and acquisitions, liens and encumbrances, dividends, transactions with affiliates, burdensome agreements, changes in fiscal year and other matters customarily restricted in such agreements. The material financial covenants include minimum net worth and debt service coverage ratios and maximum leverage and dividend payout ratios. As of September 30, 2020, we were in compliance with all covenants related to the Fourth Amended and Restated Credit Agreement. Our results with respect to such compliance are presented in Note 9 to the Company's Consolidated Financial Statements.

On December 20, 2019, we utilized proceeds from an interim term loan to partially finance the acquisition of Morrocroft Centre, an office building located in Charlotte, North Carolina, or the 2019 Interim Term Loan. The 2019 Interim Term Loan accrued interest at a rate of LIBOR plus 170 basis points per annum. We repaid the 2019 Interim Term Loan during the first quarter 2020 with permanent mortgage financing.

    On February 28, 2017, we entered into a revolving acquisition credit agreement, or Acquisition Credit Agreement, with KeyBank to obtain the Acquisition Facility, with a maximum borrowing capacity of $200 million. The sole purpose of the Acquisition Credit Agreement is to finance our acquisitions of multifamily communities and student housing communities prior to obtaining permanent conventional mortgage financing on the acquired assets. The maximum borrowing capacity on the Acquisition Facility was reduced by agreement with KeyBank to $90 million on March 25, 2019. The Acquisition Facility accrues interest at a variable rate of one month LIBOR plus a margin of between 1.75% per annum and 2.20% per annum, depending on the type of assets acquired and the resulting property debt service coverage ratio. The Acquisition Facility has a

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maturity date of March 1, 2022 and has two one-year extension options, subject to certain conditions described therein. At September 30, 2020, we had $90.0 million available to be drawn by us on the Acquisition Facility.

    Our net cash provided by operating activities for the nine-month period ended September 30, 2020 was approximately $30.0 million and net cash provided by operating activities for the nine-month period ended September 30, 2019 was approximately $124.4 million. The Internalization transaction reduced the Company’s operating cash flows by approximately $114.0 million for the nine-month period ended September 30, 2020.

The majority of our revenue is derived from residents and tenants under existing leases at our residential properties, grocery-anchored shopping centers and office properties. Therefore, our operating cash flow is principally dependent on: (1) the number of residential properties, grocery-anchored shopping centers and office properties in our portfolio; (2) rental rates; (3) occupancy rates; (4) operating expenses associated with these properties; and (5) the ability of our residents and tenants to make their rental payments.

We also earn interest revenue from the issuance of real estate-related loans and may receive fees at the inception of these loans for committing and originating them. Interest revenue we receive on these loans is influenced by (1) market interest rates on similar loans; (2) the availability of credit from alternative financing sources; (3) the desire of borrowers to finance new real estate projects; and (4) unique characteristics attached to these loans, such as exclusive purchase options. In the course of extending real estate loan investments for property development, we will often receive an exclusive option to purchase the property once development and stabilization are complete. If we do not wish to acquire the property, we have the right to sell the purchase option back to the borrower for a termination fee in the amount of the purchase option discount, which is recognized as interest income over the earlier of the maturity date of the loan or the sale of the property.

Interest income on our loans and notes receivable decreased primarily due to the repayment of various loans and notes receivable. On March 27, 2019, the Haven Campus Communities Charlotte Member, LLC line of credit, and the Haven Campus Communities Charlotte real estate loans were settled when we received the membership interests of the Haven49 student housing project from the developer. In the first quarter of 2020, the Falls at Forsyth and Dawsonville real estate loans were repaid in full, and the Wiregrass real estate loans were repaid in full when the Company purchased the property from the developer. Lastly, the Former Manager’s line of credit was repaid in full in conjunction with the Internalization transaction which closed on January 31, 2020.

    Our net cash used in investing activities for the nine-month periods ended September 30, 2020 and 2019 was approximately $155.2 million and $530.0 million, respectively. Cash disbursed for property acquisitions decreased from approximately $442.4 million in the 2019 period to $186.0 million in the 2020 period.

Cash used in investing activities is primarily driven by acquisitions and dispositions of multifamily properties, student housing properties, office properties and grocery-anchored shopping centers and acquisitions and maturities or other dispositions of real estate loans and other real estate and real estate-related assets, and secondarily by capital expenditures related to our owned properties. We will seek to acquire more multifamily communities, student housing properties, office properties and grocery-anchored shopping centers at costs that we expect will be accretive to our financial results. Capital expenditures may be nonrecurring and discretionary, as part of a strategic plan intended to increase a property’s value and corresponding revenue-generating power, or may be normally recurring and necessary to maintain the income streams and present value of a property. Certain capital expenditures may be budgeted and reserved for upon acquiring a property as initial expenditures necessary to bring a property up to our standards or to add features or amenities that we believe make the property a compelling value to prospective residents or tenants in its individual market. These budgeted nonrecurring capital expenditures in connection with an acquisition are funded from the capital source(s) for the acquisition and are not dependent upon subsequent property operational cash flows for funding.

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For the nine-month period ended September 30, 2020, our capital expenditures for our multifamily communities, not including changes in related payables, were as follows:

(In thousands, except per-unit amounts)	Capital Expenditures
	Recurring				Non-recurring				Total
	Amount		Per Unit		Amount		Per Unit		Amount		Per Unit
Appliances	$	552	$	51.77	$	—	$	—	$	552	$	51.77
Carpets	1,246		116.78		—		—		1,246		116.78
Wood flooring / vinyl	89		8.36		368		34.56		457		42.92
Blinds and ceiling fans	158		14.79		—		—		158		14.79
Fire safety	—		—		411		38.57		411		38.57
Furnace, air (HVAC)	482		45.16		—		—		482		45.16
Computers, equipment, misc.	94		8.78		181		16.93		275		25.71
Elevators	—		—		75		7.00		75		7.00
Exterior painting	—		—		681		63.80		681		63.80
Leasing office / common amenities	78		7.36		670		62.80		748		70.16
Major structural	—		—		1,753		164.31		1,753		164.31
Cabinets & countertops and unit upgrades	—		—		770		72.21		770		72.21
Landscaping & fencing	—		—		310		29.07		310		29.07
Parking lot	—		—		84		7.90		84		7.90
Signage and sanitation	—		—		100		9.35		100		9.35
	$	2,699	$	253.00	$	5,403	$	506.50	$	8,102	$	759.50

For the nine-month period ended September 30, 2020, our capital expenditures for our student housing properties, not including changes in related payables, were as follows:

(In thousands, except per-unit amounts)	Capital Expenditures
	Recurring				Non-recurring				Total
	Amount		Per Bed		Amount		Per Bed		Amount		Per Bed
Appliances	$	93	$	15.31	$	—	$	—	$	93	$	15.31
Carpets	207		34.00		—		—		207		34.00
Wood flooring / vinyl	9		1.50		—		—		9		1.50
Blinds and ceiling fans	20		3.25		—		—		20		3.25
Fire safety	—		—		68		11.13		68		11.13
Furnace, air (HVAC)	148		24.29		—		—		148		24.29
Computers, equipment, misc.	46		7.59		79		12.94		125		20.53
Elevators	—		—		15		2.51		15		2.51
Exterior painting	—		—		—		—		—		—
Leasing office / common amenities	77		12.56		118		19.41		195		31.97
Major structural	—		—		760		124.64		760		124.64
Cabinets & countertops and unit upgrades	—		—		11		1.78		11		1.78
Landscaping & fencing	—		—		53		8.77		53		8.77
Parking lot	—		—		5		0.88		5		0.88
Signage and sanitation	—		—		59		9.62		59		9.62
Unit furniture	394		64.63		—		—		394		64.63
	$	994	$	163.13	$	1,168	$	191.68	$	2,162	$	354.81

    In addition, second-generation capital expenditures within our grocery-anchored shopping center portfolio for the nine-month periods ended September 30, 2020 and 2019 totaled $2.0 million and $1.3 million, respectively and within our office properties portfolio for the nine-month periods ended September 30, 2020 and 2019 totaled $0.7 million and $0.5 million, respectively. We define second-generation capital expenditures as those that exclude expenditures made in our grocery-anchored shopping center and office properties portfolios (i) to lease space to "first generation" tenants (i.e. leasing capital for

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existing vacancies and known move-outs at the time of acquisition), (ii) to bring recently acquired properties up to our ownership standards, and (iii) for property re-developments and repositioning.

    At September 30, 2020, we had restricted cash of approximately $65.7 million. These funds are restricted for a variety of purposes, such as commitments to fund capital expenditures and lender required escrows for future real estate tax and insurance payments. At September 30, 2020, our restricted cash for future real estate tax and insurance payments was $33.6 million, an increase of approximately $8.1 million as compared to June 30, 2020. Typically these escrows increase in the second and third quarters of each calendar year as the Company pays monthly mortgage installments, of which a portion goes to these escrows, until payments are made to the taxing authorities (generally in the first and fourth quarters of each calendar year). Additionally, through the mortgage refinances that the Company executed in the second and third quarters of 2020, our lenders required us to put an additional $6.8 million into escrows related to the COVID-19 pandemic. These escrows will be released back to us upon the cessation of all governmental emergency declarations and certain other performance conditions.

Net cash provided by financing activities for the nine-month periods ended September 30, 2020 and 2019 was approximately $83.9 million and $465.1 million, respectively. Our significant financing cash sources were approximately $159.1 million and $380.0 million of net proceeds from the issuance of Preferred Stock for the 2020 and 2019 periods respectively, and approximately $204.3 million and $223.2 million of net proceeds from the mortgage financing transactions, net of repayments for the 2020 and 2019 periods respectively. The decrease in proceeds from the issuance of Preferred Stock in the 2020 period was related to the closure of our $1.5 Billion Unit Offering during the quarter, as our Series A1/M1 offering was gaining traction as our primary equity raising vehicle.

Distributions

In order to maintain our status as a REIT for U.S. federal income tax purposes, we must comply with a number of organizational and operating requirements, including a requirement to distribute 90% of our annual REIT taxable income (which does not equal net income as calculated in accordance with GAAP and determined without regard for the deduction for dividends paid and excluding net capital gains) to our stockholders. As a REIT, we generally will not be subject to federal income taxes on the taxable income we distribute to our stockholders. Generally, our objective is to meet our short-term liquidity requirement of funding the payment of our quarterly Common Stock dividends, as well as monthly dividends to holders of our Series A Redeemable Preferred Stock, mShares, Series A1 Redeemable Preferred Stock and Series M1 Redeemable Preferred Stock (collectively, our Preferred Stock), through net cash generated from operating results.

Our board of directors reviews the Preferred Stock dividends monthly to determine whether we have funds legally available for payment of such dividends in cash, and there can be no assurance that the Preferred Stock dividends will consistently be paid in cash. Dividends may be paid as a combination of cash and stock in order to satisfy the annual distribution requirements applicable to REITs. We expect the aggregate dollar amount of monthly Preferred Stock dividend payments to increase at a rate that approximates the rate at which we issue new shares of Preferred Stock, less those shares redeemed.

Our third quarter 2020 Common Stock dividend declaration of $0.175 per share represented a decrease of $0.0875, or 33.3% from our first quarter 2020 dividend of $0.2625 per share, but an increase over our initial Common Stock dividend per share of $0.125 following our IPO, or an average annual dividend growth rate of approximately 4.3% over the same period. Our board of directors reviews the proposed Common Stock dividend declarations quarterly, and there can be no assurance that the current dividend level will be maintained.

We believe that our short-term liquidity needs are and will continue to be adequately funded.

For the nine months ended September 30, 2020, our aggregate dividends and distributions totaled approximately $135.1 million and our net cash provided by operating activities were approximately $30.0 million. We expect our cash flow from operations over time to be sufficient to fund our quarterly Common Stock dividends, Class A Unit distributions and our monthly Preferred Stock dividends.

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Long-Term Liquidity Needs

We believe our principal long-term liquidity needs are to fund:

•the principal amount of our long-term debt as it becomes due or matures;

•capital expenditures needed for our multifamily communities, student housing properties, grocery-anchored shopping centers and office properties;

•costs associated with current and future capital raising activities;

•costs to acquire additional multifamily communities, student housing properties, grocery-anchored shopping centers, office properties or other real estate and enter into new and fund existing lending opportunities; and

•our minimum distributions necessary to maintain our REIT status.

We intend to finance our future investments with the net proceeds from additional issuances of our securities, including our Series A1/M1 Offering (as defined and described in note 5 to our Consolidated Financial Statements), Common Stock, and units of limited partnership interest in our Operating Partnership, and/or borrowings. The success of our acquisition strategy may depend, in part, on our ability to access further capital through issuances of additional securities. If we are unsuccessful in raising additional funds, we may not be able to obtain any assets in addition to those we have acquired.

    On September 27, 2019, our registration statement on Form S-3 (Registration No. 333-233576) (the “Series A1/M1 Registration Statement”) was declared effective by the Securities and Exchange Commission (the “SEC”). The Series A1/M1 Registration Statement allows us to offer up to a maximum of 1,000,000 shares of Series A1 Redeemable Preferred Stock, Series M1 Redeemable Preferred Stock or a combination of both. The stated price per share is $1,000, subject to adjustment under certain conditions. The shares are being offered by our affiliate, Preferred Capital Securities, LLC (“PCS”), on a "reasonable best efforts" basis and we intend to invest substantially all the net proceeds of the Series A1/M1 Offering in connection with the acquisition of multifamily communities, grocery-anchored shopping centers, office buildings, real estate loans and mortgages, other real estate-related investments and general working capital purposes.

    At September 30, 2020, the Company's active equity offerings consisted of:

•an offering of up to 1,000,000 Shares of Series A1 Redeemable Preferred Stock ("Series A1 Preferred Stock"), Series M1 Redeemable Preferred Stock ("Series M1 Preferred Stock"), or a combination of both (collectively the "Series A1/M1 Offering");

•an offering of up to $400 million of equity or debt securities (the "2019 Shelf Offering"), including an offering of up to $125 million of Common Stock from time to time in an "at the market" offering (the "2019 ATM Offering"); and

•an offering of up to $100 million of equity securities for the Preferred Office Growth Fund, a consolidated entity (the “Preferred Office Growth Fund Offering”).

For the three-month and nine-month periods ended September 30, 2020, we issued 617,306 shares of our common stock under our 2019 ATM Offering; the proceeds of $4.5 million were used primarily to fund redemptions of our preferred stock. Our $1.5 Billion Unit Offering expired on February 14, 2020.

Our ability to raise funds through the issuance of our securities is dependent on, among other things, general market conditions for REITs, market perceptions about us, and the current trading price of our Common Stock. We will continue to analyze which source of capital is most advantageous to us at any particular point in time, but the equity and credit markets may not consistently be available on terms that are attractive to us or at all. In addition, the impacts of the COVID-19 pandemic on capital markets, including the availability and costs of debt and equity capital, remain uncertain and may have material adverse effects on our access to capital on attractive terms.

The sources to fulfill our long-term liquidity in the future may include borrowings from a number of sources, including repurchase agreements, securitizations, resecuritizations, warehouse facilities and credit facilities (including term loans and revolving facilities), in addition to our Revolving Line of Credit. We have utilized, and we intend to continue to utilize, leverage in making our investments in multifamily communities and retail shopping centers. The number of different multifamily communities, retail shopping centers and other investments we will acquire will be affected by numerous factors, including the amount of funds available to us. By operating on a leveraged basis, we will have more funds available for our

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investments. This will allow us to make more investments than would otherwise be possible, resulting in a larger and more diversified portfolio.

    We intend to target leverage levels (secured and unsecured) between 50% and 65% of the fair market value of our tangible assets (including our real estate assets, real estate loans, notes receivable, accounts receivable and cash and cash equivalents) on a portfolio basis. As of September 30, 2020, our outstanding debt (both secured and unsecured) was approximately 53.5% of the value of our tangible assets on a portfolio basis based on our estimates of fair market value at September 30, 2020. Neither our charter nor our by-laws contain any limitation on the amount of leverage we may use. These targets, however, will not apply to individual real estate assets or investments. The amount of leverage we will place on particular investments will depend on our assessment of a variety of factors which may include the anticipated liquidity and price volatility of the assets in our investment portfolio, the potential for losses and extension risk in the portfolio, the availability and cost of financing the asset, our opinion of the creditworthiness of our financing counterparties, the health of the U.S. economy and the health of the commercial real estate market in general. In addition, factors such as our outlook on interest rates, changes in the yield curve slope, the level and volatility of interest rates and their associated credit spreads, the underlying collateral of our assets and our outlook on credit spreads relative to our outlook on interest rate and economic performance could all impact our decision and strategy for financing the target assets. At the date of acquisition of each asset, we anticipate that the investment cost for such asset will be substantially similar to its fair market value. However, subsequent events, including changes in the fair market value of our assets, could result in our exceeding these limits. Finally, we intend to acquire all our real estate assets through separate single purpose entities and we intend to finance each of these assets using debt financing techniques for that asset alone without any cross-collateralization to our other real estate assets or any guarantees by us or our Operating Partnership. We intend to have no long-term unsecured debt at the Company or Operating Partnership levels, except for our Revolving Line of Credit.

Our secured and unsecured aggregate borrowings are intended by us to be reasonable in relation to our tangible assets and will be reviewed by our board of directors at least quarterly. In determining whether our borrowings are reasonable in relation to our tangible assets, we expect that our board of directors will consider many factors, including without limitation the lending standards of government-sponsored enterprises, such as Fannie Mae and Freddie Mac, for loans in connection with the financing of multifamily properties, the leverage ratios of publicly traded and non-traded REITs with similar investment strategies, and general market conditions. There is no limitation on the amount that we may borrow for any single investment.

Our ability to incur additional debt is dependent on a number of factors, including our credit ratings (if any), the value of our assets, our degree of leverage and borrowing restrictions imposed by lenders. We will continue to monitor the debt markets, including Fannie Mae and/or Freddie Mac (from both of whom we have obtained single asset secured financing on all of our multifamily communities), and as market conditions permit, access borrowings that are advantageous to us.

If we are unable to obtain financing on favorable terms or at all, we may have to curtail our investment activities, including acquisitions and improvements to real properties, which could limit our growth prospects. This, in turn, could reduce cash available for distribution to our stockholders and may hinder our ability to raise capital by issuing more securities or borrowing more money. We may be forced to dispose of assets at inopportune times in order to maintain our REIT qualification and Investment Company Act exemption. Our ability to generate cash from asset sales is limited by market conditions and certain rules applicable to REITs. We may not be able to sell a property or properties as quickly as we would like or on terms as favorable as we would like.

Furthermore, if interest rates or other factors at the time of financing result in higher costs of financing, then the interest expense relating to that financed indebtedness would be higher. Higher interest rates on newly incurred debt may negatively impact us as well. If interest rates increase, our interest costs and overall costs of capital will increase, which could adversely affect our transaction and development activity, financial condition, results of operations, cash flow, our ability to pay principal and interest on our debt and our ability to pay distributions to our stockholders. Finally, sellers may be less inclined to offer to sell to us if they believe we may be unable to obtain financing.

As of September 30, 2020, we had long term mortgage indebtedness of approximately $2.8 billion, all of which was incurred by us in connection with the acquisition or refinancing of our real estate properties.

As of September 30, 2020, we had approximately $30.3 million in unrestricted cash and cash equivalents available to meet our short-term and long-term liquidity needs. We believe that our long-term liquidity needs are and will continue to be adequately funded through the sources discussed above.

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On November 5, 2020, the Company adjourned its Special Meeting of Stockholders to November 19, 2020 to provide stockholders with additional time to vote on Proposal 1 (Approval of the Articles of Amendment to the Company’s charter to give bylaw access to stockholders) and Proposal 2 (Approval of the Articles of Amendment to the Company’s charter to reduce the Company’s call period on its Series A Redeemable Preferred Stock from 10 years to 5 years). The required vote to approve each Proposal is two-thirds of the Company's outstanding shares entitled to vote. As of November 9, 2020, approximately 65.4% of the Company’s outstanding shares had been voted on Proposal 1 and Proposal 2 and, of these shares, approximately 97.9% and 95.7% had been voted in favor of Proposal 1 and Proposal 2, respectively.

Contractual Obligations

    As of September 30, 2020, our contractual obligations consisted of the mortgage notes secured by our acquired properties and the Revolving Credit Facility. Based on a LIBOR rate of 0.15% at September 30, 2020, our estimated future required payments on these instruments were:

(In thousands)	Total		Less than one year		1-3 years		3-5 years		More than five years
Principal payments:
Mortgage debt	$	2,814,169	$	106,922	$	280,773	$	531,271	$	1,895,203
Line of credit	33,000		33,000		—		—		—
Total principal	$	2,847,169	$	139,922	$	280,773	$	531,271	$	1,895,203
Interest payments:
Mortgage debt	837,570		107,107		196,677		182,397		351,389
Line of credit	32		32		—		—		—
Total interest	$	837,602	$	107,139	$	196,677	$	182,397	$	351,389

    In addition, we had unfunded real estate loan balances totaling approximately $63.0 million at September 30, 2020.

Item 3.    Quantitative and Qualitative Disclosures About Market Risk

Our primary market risk exposure is interest rate risk. All our floating-rate debt is tied to the 30-day LIBOR. As of September 30, 2020, we have variable rate mortgages on the properties listed in following table.

	Balance (in thousands)		Percentage of total mortgage indebtedness		LIBOR Cap		All-in Cap
Avenues at Creekside	$	38,251			5.00	%	6.6	%
The Tradition	30,000				3.25	%	7.0	%
The Bloc	28,966				3.25	%	6.8	%
Summit Crossing II	20,700				2.47	%	5.3	%
Total capped floating-rate debt	117,917		4.2	%
Champions Village	27,400
Fairfield Shopping Center	19,750
Total uncapped floating-rate debt	47,150		1.7	%
Total floating-rate debt	$	165,067	5.9	%

    Our Revolving Line of Credit accrued interest at a spread of 3.0% over LIBOR as of September 30, 2020; this combined rate is uncapped. Because of the short term nature of the Revolving Line of Credit and Acquisition Credit Facility instruments, we believe our interest rate risk is minimal.

We have and will continue to manage interest rate risk as follows:

•maintain a reasonable ratio of fixed-rate, long-term debt to total debt so that floating-rate exposure is kept at an acceptable level;

•place interest rate caps on floating-rate debt where appropriate; and

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•take advantage of favorable market conditions for long-term debt and/or equity financings.

We use various financial models and advisors to achieve our objectives.

    If interest rates under our floating-rate LIBOR-based indebtedness fluctuated by 100 basis points, our interest costs, based on outstanding borrowings at September 30, 2020, would increase by approximately $1.04 million or decrease by approximately $0.1 million on an annualized basis.

Item  4.    Controls and Procedures

Evaluation of disclosure controls and procedures.

    Management of the Company evaluated, under the supervision and with the participation of the Company's Chief Executive Officer and Chief Financial Officer, the effectiveness of the design and operation of the Company's disclosure controls and procedures (as defined in the Exchange Act Rule 13a-15(e)) as of September 30, 2020, the end of the period covered by this report. Based on that evaluation, the Company's Chief Executive Officer and Chief Financial Officer have concluded that the Company's disclosure controls and procedures were effective as of the end of such period to provide reasonable assurance that that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms and such information is accumulated and communicated to the Company’s management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures.

Changes in internal control over financial reporting.

    As required by the Exchange Act Rule 13a-15(d), the Company's Chief Executive Officer and Chief Financial Officer evaluated the Company's internal control over financial reporting to determine whether any change occurred during the quarter ended September 30, 2020 that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting. Based on that evaluation, there has been no such change during such period.

PART II

Item 1.    Legal Proceedings

    Neither we nor our subsidiaries nor, to our knowledge, our Former Manager is currently subject to any legal proceedings that we or our Former Manager consider to be material. To our knowledge, none of our communities are currently subject to any legal proceeding that we consider material.

Item 1A.    Risk Factors

    The Company is supplementing the risk factors set forth under Item 1A. Risk Factors in its Annual Report on Form 10-K for the year ended December 31, 2019 ("2019 Annual Report") with the additional risk factor set forth below. This supplemental risk factor should be read in conjunction with the risk factors set forth in the 2019 Annual Report.

The current outbreak of the novel coronavirus, (“COVID-19”), or the future outbreak or pandemic of any other highly infectious or contagious diseases, could have a material and adverse effect on or cause disruption to the Company’s business or financial condition, results of operations, cash flows and the market value and trading price of the Company’ securities.

A novel strain of coronavirus was reported to have surfaced in Wuhan, China in December 2019, and has since spread globally, including to every state in the United States. On March 11, 2020, the World Health Organization declared COVID-19 a pandemic, and on March 13, 2020, the United States declared a national emergency. Since that time, efforts to contain the spread of COVID-19 have intensified. Several countries, including the United States, have taken steps to restrict travel, temporarily close or otherwise limit businesses and issue quarantine orders, and it remains unclear how long such measures will remain in place. As a result, the COVID-19 pandemic has negatively affected almost every industry directly or indirectly and the duration and severity of these affects is unknown at this time. The risk of diminished revenues and future closures at our properties exists as the virus remains active and continues to spread which could result in a resurgence in COVID-19 cases and reinstituted government mandated closures of non-essential businesses.

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Impact of COVID-19 on Our Operations

Our operating results depend, in large part, on revenues derived from leasing apartment homes in our communities to residential tenants, the ability of our residents to earn sufficient income to pay their rents in a timely manner, the extent to which we waive late and other customary fees associated with the apartment rental process, and our ability to limit bad debt and maintain operating results by evicting and re-leasing apartment homes when residents remain delinquent in their payment of rent. Additionally, a prolonged imposition of mandated closures or other social-distancing guidelines may adversely impact our retail and office tenants’ ability to generate sufficient revenues, and could force tenants to default on their leases, or result in the tenant’s bankruptcy or insolvency, which would diminish the Company’s ability to receive rental revenue it is owed under their leases. The rapid development and fluidity of the pandemic precludes any prediction as to the ultimate adverse impact on the Company. A number of the our office and retail tenants have announced mandated or temporary closures of their operations and/or have requested adjustments to their lease terms during this pandemic. The COVID-19 pandemic has caused, and is likely to continue to cause, a global economic slowdown and we cannot assure you conditions will not continue to deteriorate despite some locations attempting to reopen and recover from the pandemic. COVID-19 (or a future pandemic) could have a material and adverse effect on or cause disruption to our business or financial condition, results from operations, cash flows and the market value and trading price of our common stock due to, among other factors:

•A complete or partial closure of, or other operational issues at the Company’s properties as a result of government or tenant action;

•In the event of resident nonpayment, default or bankruptcy, the uncollectibility of rent could increase and we may not be able to re-lease apartment homes at current or projected rents. Our occupancy levels and pricing across our portfolio may decline due to changes in demand or logistical challenges in showing or leasing apartment homes to prospective residents, including restrictions inhibiting our employees’ ability to meet with existing or potential residents;

•Our properties may also incur significant costs or losses related to shelter-in-place orders, quarantines, infection, clean-up costs or other related factors;

•The declines in or instability of the economy or financial markets may result in a recession or negatively impact consumer discretionary spending, which could adversely affect retailers and consumers;

•The reduction of economic activity has impacted our office and retail tenants' business operations, financial condition, liquidity and access to capital resources that resulted in us agreeing to rent deferrals and/or lease modifications and caused tenant bankruptcies and may cause these and others tenants to be unable to meet their obligations to us in full, or at all, to default on their lease, or to otherwise seek modifications of such obligations;

•A general decline in business activity and demand for real estate transactions would adversely affect the Company’s ability to successfully execute investment strategies or expand its portfolio; and

•The potential negative impact on the health of the Company’s associates or Board of Directors, particularly if a significant number are impacted, or the impact of government actions or restrictions, including stay-at-home orders, restricting access to our headquarters located in Atlanta, Georgia, could result in a deterioration in our ability to ensure business continuity during a disruption.

The extent to which COVID-19 impacts our operations and those of our tenants will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the outbreak, the actions taken to contain the outbreak or mitigate its impact, and the direct and indirect economic effects of the outbreak and containment measures, among others. COVID-19 presents material uncertainty and risk with respect to our performance, business or financial condition, results from operations and cash flows.

Impact of COVID-19 on Liquidity and Financing

As a result of the current economic downturn, the real estate market may be unable to attract the same level of capital investment that it attracted before the COVID-19 pandemic, and there may be a reduction in the number of companies seeking to acquire properties, which may result in the value of our properties not appreciating, or decreasing significantly below the amount for which we acquired or developed them. This may also limit our ability to sell our properties, realize a cash return on

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our investment and reinvest the sales proceeds in new properties.  In light of the severe economic, market and other disruptions worldwide being caused by the COVID-19 pandemic, there can be no assurance that conditions in the bank lending, capital and other financial markets will not continue to deteriorate as a result of the pandemic, or that our access to capital and other sources of funding will not become constrained, which could adversely affect the availability and terms of future borrowings, renewals or refinancings.

Additional financial impacts include the following:

•A significant reduction in our cash flows could impact the Company’s ability to continue paying cash dividends to its common and preferred stockholders at expected levels or at all;

•Increased redemption activity by holders of our preferred stock has impacted our cash availability and liquidity strength and, to the extent we made redemptions of our Preferred Stock in shares of our Common Stock, further diluted stockholder’s ownership interests and there is no way to be sure if this redemption activity will increase, stabilize or decline as the pandemic continues; and

•The financial impact of COVID-19 could negatively affect the Company’s future compliance with financial and other covenants of the Company’s credit facility and other debt instruments, and the failure to comply with such covenants could result in a default that accelerates the payment of such indebtedness

Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds

    None.

Item 3.    Defaults Upon Senior Securities

    None.

Item 4.    Mine Safety Disclosures

    Not applicable.

Item 5.    Other Information

    None.

Item  6.    Exhibits

    See Exhibit Index.

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EXHIBIT INDEX
Exhibit Number		Description
10.1	+	Form of Restricted Stock Unit Agreement (Officer) (incorporated by reference to Exhibit 10.1 to the Form 8-K filed by the Company with the Securities and Exchange Commission on August 6, 2020)
10.2	+	Preferred Apartment Communities Executive Severance & CIC Plan (incorporated by reference to Exhibit 10.2 to the Form 8-K filed by the Company with the Securities and Exchange Commission on August 6, 2020)
10.3	+	Form of Executive Participation Agreement (incorporated by reference to Exhibit 10.3 to the Form 8-K filed by the Company with the Securities and Exchange Commission on August 6, 2020)
10.4	+	Form of CEO/CFO Participation Agreement (incorporated by reference to Exhibit 10.4 to the Form 8-K filed by the Company with the Securities and Exchange Commission on August 6, 2020)
10.5	*	Purchase and Sale Agreement dated July 31, 2020, by and among PCC TALLAHASSEE, LLC, PCC ORLANDO, LLC, PCC COLLEGE STATION, LLC, PCC LUBBOCK, LLC, PCC WACO, LLC, PCC TEMPE, LLC, HAVEN CAMPUS COMMUNITIES-KENNESAW, LLC, HAVEN CAMPUS COMMUNITIES-CHARLOTTE, LLC, and TPG REAL ESTATE PARTNERS INVESTMENTS, LLC
10.6	*	First Amendment to Purchase and Sale Agreement dated August 7, 2020, by and among PCC TALLAHASSEE, LLC, PCC ORLANDO, LLC, PCC COLLEGE STATION, LLC, PCC LUBBOCK, LLC, PCC WACO, LLC, PCC TEMPE, LLC, HAVEN CAMPUS COMMUNITIES-KENNESAW, LLC, HAVEN CAMPUS COMMUNITIES-CHARLOTTE, LLC, and TPG REAL ESTATE PARTNERS INVESTMENTS, LLC
10.7	*	Second Amendment to Purchase and Sale Agreement dated September 18, 2020, by and among PCC TALLAHASSEE, LLC, PCC ORLANDO, LLC, PCC COLLEGE STATION, LLC, PCC LUBBOCK, LLC, PCC WACO, LLC, PCC TEMPE, LLC, HAVEN CAMPUS COMMUNITIES-KENNESAW, LLC, HAVEN CAMPUS COMMUNITIES-CHARLOTTE, LLC, and TPG REAL ESTATE PARTNERS INVESTMENTS, LLC
31.1	*	Certification of Joel T. Murphy, Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	*	Certification of John A. Isakson, Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	*	Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	*	Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS	*	Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH	*	Inline XBRL Taxonomy Extension Schema Document
101.CAL	*	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	*	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	*	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE	*	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104	*	Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document.
	*	Filed or Furnished herewith
	+	Management contract or compensatory plan, contract or arrangement

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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
		PREFERRED APARTMENT COMMUNITIES, INC.
Date: November 9, 2020	By:	/s/ Joel T. Murphy
		Joel T. Murphy
		Chief Executive Officer
		(Principal Executive Officer)
Date: November 9, 2020	By:	/s/ John A. Isakson
		John A. Isakson
		Chief Financial Officer
		(Principal Financial Officer)

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EX-10.5

EXHIBIT 10.5

PURCHASE AND SALE AGREEMENT

THIS PURCHASE AND SALE AGREEMENT (this “Agreement”) is hereby made and entered into as of July 31, 2020 (the “Effective Date”) by and among PCC TALLAHASSEE, LLC, a Delaware limited liability company (“Tallahassee Seller”), PCC ORLANDO, LLC, a Delaware limited liability company (“Orlando Seller”), PCC COLLEGE STATION, LLC, a Delaware limited liability company (“College Station Seller”), PCC LUBBOCK, LLC, a Delaware limited liability company (“Lubbock Seller”), PCC WACO, LLC, a Delaware limited liability company (“Waco Seller”), PCC TEMPE, LLC, a Delaware limited liability company (“Tempe Seller”), HAVEN CAMPUS COMMUNITIES-KENNESAW, LLC, a Delaware limited liability company (“Kennesaw Seller”), and HAVEN CAMPUS COMMUNITIES-CHARLOTTE, LLC, a Georgia limited liability company (“Charlotte Seller”, and together with Tallahassee Seller, Orlando Seller, College Station Seller, Lubbock Seller, Waco Seller, Tempe Seller and Kennesaw Seller, jointly and severally, “Seller”), and TPG REAL ESTATE PARTNERS INVESTMENTS, LLC, a Delaware limited liability company (“Purchaser”).

In consideration of the mutual covenants and agreements herein contained, and other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, Seller and Purchaser agree as follows:

1.

PURCHASE AND SALE

1.1    Purchase and Sale. Subject to the terms and conditions of this Agreement, Seller hereby agrees to sell and convey to Purchaser, and Purchaser hereby agrees to purchase from Seller, all of the following described property:

(a)    That certain tract of land (the “Tallahassee Land”) located at 800 Basin Street, Tallahassee,     Florida 32304, being more particularly described on Exhibit “A-1” attached hereto and made a     part hereof.

(b)    That certain tract of land (the “Orlando Land”) located at 11037 Retreat Avenue, Orlando, Florida     32817, being more particularly described on Exhibit “A-2” attached hereto and made a part hereof.

(c)    That certain tract of land (the “College Station Land”) located at 301 Church Avenue, College     Station, Texas 77840, being more particularly described on Exhibit “A-4” attached hereto and     made a part hereof.

(d)    That certain tract of land (the “Lubbock Land”) located at 707 Avenue T, Lubbock, Texas 79401,     being more particularly described on Exhibit “A-5” attached hereto and made a part hereof.

(e)    That certain tract of land (the “Waco Land”) located at 2255 South University Parks Drive, Waco,     Texas 76706, being more particularly described on Exhibit “A-3” attached hereto and made a part     hereof.

(f)    That certain tract of land (the “Tempe Land”) located at 1949 E. University Drive, Tempe, Arizona     85281, being more particularly described on Exhibit “A-6” attached hereto and made a part hereof.

(g)    That certain tract of land (the “Kennesaw Land”) located at 3044 Hidden Forest Court, Marietta,     Georgia 30066, being more particularly described on Exhibit “A-7” attached hereto and made a     part hereof.

(h)    That certain tract of land (the “Charlotte Land”) located at 9200 University City Boulevard,     Charlotte, North Carolina 28213, being more particularly described on Exhibit “A-8” attached     hereto and made a part hereof (the Tallahassee Land, the Orlando Land, the College Station Land,     Lubbock Land, the Waco Land, the Tempe Land, the Kennesaw Land and the Charlotte Land are     herein collectively called the “Land”).

(i)    Easements. All easements and privileges, if any, benefiting the Land or the Improvements (as     defined in Section 1.1(k) of this Agreement) (the “Easements”).

(j)    Rights and Appurtenances. All rights and appurtenances pertaining to the Land, including any     right, title and interest of Seller in and to (i) any land lying in the bed of any street, road or access     way, opened or proposed, in front of, at a side of or adjoining the Real Property, and (ii) mineral     rights (the “Rights and Appurtenances”).

(k)    Improvements. All structures, improvements, fixtures, and other items that constitute real property     located on the Land (the “Improvements”).

(l)    Warranties. All assignable guaranties, warranties and indemnifications received from suppliers,     contractors, materialmen or subcontractors arising out of, or in connection with, the operation,     ownership, management, installation, construction or maintenance of the Improvements or     Property, if any (collectively, “Warranties”), including, without limitation, the warranties     described on Exhibit “M” attached hereto.

(m)    Permits. All certificates, permits, licenses, authorizations, entitlements, development rights and     approvals relating or pertaining to the Real Property and Tangible Personal Property (as hereinafter     defined) (collectively, the “Permits”).

(n)    Plans and Studies. All site plans, surveys, soil and substrata studies, architectural drawings, plans     and specifications, engineering plans and studies, floor plans, landscape plans, and other plans, if     any, that relate to the Real Property or the Tangible Personal Property (the “Plans and Studies”).

(o)    Leases. Seller’s interest as landlord under all leases, licenses or occupancy agreements     (collectively, the “Leases”) now or hereafter affecting the Property, including any guaranties     thereof), together with any and all refundable tenant security deposits, pet deposits or other deposits     (collectively, the “Deposits”) held by Seller, and any prepaid rent attributable to periods after the     Closing Date (as hereinafter defined).

(p)    Tangible Personal Property. All appliances, fixtures, equipment, machinery, furniture, carpet,     drapes, appliances, building supplies, inventory, tools and supplies and other personal property, if     any, owned by Seller and located on or about the Land and the Improvements (the “Tangible Personal Property”), including, without limitation, those items of personal property set forth on     Exhibit “I” attached hereto.

(q)    Contracts. Seller’s interest (to the extent the same is assignable) under the Contracts (as defined in     Section 4.1.2 of this Agreement) to which Seller is a party, if any.

(r)    Intangible Property. All intangible property (the “Intangible Property”), if any, owned by Seller     and pertaining to the Land, the Improvements, or the Tangible Personal Property, including,     without limitation, any telephone numbers, marketing materials, the right to use the name of the     Property (including, without limitation, “NxNW, Knightshade, SoL, The Bloc, The Tradition, Ursa,     

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Stadium Village and Rush”), any trademarks, logos, any trade or business name(s) for the Land, Improvements and/or Tangible Personal Property, all resident and tenant files for current residents and tenants as of the Closing Date, all telephone numbers for the Improvements, domain names and uniform resource locators (URLs) used in connection with the Property (including, without limitation, https://livesolasu.com;https://nxnwlife.com;https://knightshadeorlando.com;https://livethebloc.com;https://traditiontx.com;https://ursawaco.com; https://rushcharlotte.com; https://stadiumvillageksu.com) and any information contained therein, all social media accounts associated with the Property, and any electronic or digital copies and files of the foregoing, in each case, whether created by Seller or on Seller’s behalf, and all licenses, permits and certificates of occupancy for the Land, Improvements and Tangible Personal Property.

The Land, the Easements, the Rights and Appurtenances, the Improvements, the Warranties, the Leases the Tangible Personal Property, the Permits, the Plans and Studies, the Contracts and the Intangible Property are sometimes collectively referred to herein as the “Property.” All Property being sold by Tempe Seller is referred to as the “Tempe Property”, all Property being sold by Kennesaw Seller is referred to as the “Kennesaw Property,” all Property being sold by Tallahassee Seller is referred to as the “Tallahassee Property”, all Property being sold by Orlando Seller is referred to as the “Orlando Property”, all Property being sold by Lubbock Seller is referred to as the “Lubbock Property”, all Property being sold by College Station Seller is referred to as the “College Station Property”, all Property being sold by Charlotte Seller is referred to as the “Charlotte Property”, and all Property being sold by Waco Seller is referred to as the “Waco Property”

1.2    Excluded Property. The following items shall be and hereby are excluded from the Property to be conveyed and/or transferred hereunder:

        (a)    Insurance Policies and Proceeds. Seller’s interest under any and all insurance policies held by or on behalf of Seller, and proceeds payable thereunder, except as may be expressly set forth in Section 7.2 below.

        (b)    Management Software. Seller’s management software program; provided, however, that Seller shall provide to Purchaser on or before the Closing Date a download of the information set forth in Exhibit “BB”, to the extent contained within such software program, and an executed and completed copy of the form attached hereto as Exhibit “BB”for each Property or such other forms required by Entrata to complete inter-customer data migration.

, provided that financial information regarding the ownership, operation, management and maintenance of the Property, including the Rent Roll (as hereinafter defined), shall be included in the Property.

        (c)    Utility Deposits. All utility and other similar deposits of Seller relating to the Property, but not including the Deposits.

        (d)    Rebates. All rebates, credits, refunds and/or reimbursements that at any time on or prior to the Closing Date are paid or payable in respect of the ownership and/or operation of the Property, provided that any rebates, credits, refunds and/or reimbursements received as a result of any Contracts, agreements or arrangements entered into after the Effective Date shall be included in the Property.

2.

PURCHASE PRICE

2.1    Purchase Price. (a) The purchase price (the “Purchase Price”) for the Property shall be [FOUR HUNDRED SEVENTY EIGHT MILLION SEVEN HUNDRED TWENTY ONE THOUSAND EIGHT HUNDRED FIFTY AND 00/100 DOLLARS ($478,721,850.00)]. The allocated Purchase Price for each

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Property (the “Allocated Purchase Price”) as determined by Purchaser is set forth on Exhibit “N” attached hereto. For clarification, the Allocated Purchase Price shall be an allocation of the Purchase Price for each Property and not an allocation of the Purchase Price for each Property to the various components of such Property (for instance, the allocation between Land, Improvements and the Tangible Personal Property associated with such Property). The parties shall use good faith efforts to agree upon an allocation of the Allocated Purchase Price for each Property between the Land, the Improvements and the Tangible Personal Property for such Property prior to the Closing Date; provided, however, that that allocations amongst the Land, the Improvements and the Tangible Personal Property for each Property shall not be a condition to Closing, and if the parties fail to agree upon such allocations then each party may separately determine such allocations.

    (b)    A portion of the Allocated Purchase Price for the Tempe Property, the Orlando Property and the Kennesaw Property (each a “Loan Assumption Property”) shall be paid, respectively, by Purchaser’s assumption of the Tempe Loan (as hereinafter defined) (the “Tempe Loan Assumption”), Purchaser’s assumption of the Orlando Loan (as hereinafter defined) (the “Orlando Loan Assumption”), and Purchaser’s assumption of the Kennesaw Loan (as hereinafter defined) (the “Kennesaw Loan Assumption”; and, together with the Tempe Loan Assumption and the Orlando Loan Assumption, collectively, the “Loan Assumptions”), in each case in an amount equal to the outstanding principal balance of the applicable assumed Loan (as hereinafter defined) (the “Loan Balance”), which Loan Balance shall be determined by Federal Home Loan Mortgage Corporation (together with its successors and assigns, “Freddie”) with respect to the Tempe Loan and the Kennesaw Loan, and by Fannie Mae (“Fannie Mae”; and, together with Freddie, collectively, “Lender”), with respect to the Orlando Loan, on or before the Loan Assumption Approval Deadline (as hereinafter defined). Purchaser shall, in accordance with this Section 2.1, use commercially reasonable efforts to (and, as between Purchaser and Seller, shall be primarily responsible to) cause Lender to provide Lender’s written consent to the assumption of each Loan by Purchaser under the terms and conditions expressed in the documents evidencing and securing such Loan as of the Effective Date (the “Loan Documents”), which terms and conditions must be satisfactory to Purchaser in all respects (such written consent of Lender and agreement by Purchaser and each Lender as to the forms of the loan assumption documents, with respect to each of the Loan Assumptions, a “Loan Assumption Approval”); provided, however, that Seller shall take any and all actions as reasonably requested by Purchaser and as required under the applicable Loan Documents or otherwise as requested by the respective Lender or servicer of each Loan to initiate, commence or process the Loan Assumptions, and shall submit formal requests for the Tempe Loan Assumption, the Orlando Loan Assumption and the Kennesaw Loan Assumption (each such request, a “Loan Assumption Request”) to the applicable Lender (such formal request being in the form of an electronic mail message) no later than the business day immediately following the expiration of the Inspection Period, unless Purchaser has previously terminated this Agreement under the terms of Section 4.1.1 hereof, and Seller shall provide to Purchaser a copy of each Loan Assumption Request on the date of such submission. Provided that Seller has timely submitted each Loan Assumption Request and has provided Purchaser with all information, to the extent in Seller’s possession and control, required by Purchaser to submit a complete application package to Lender, Purchaser shall submit a complete application package to Lender for each Loan Assumption not later than ten (10) business days after the date Seller timely submits each Loan Assumption Request (the date Purchaser submits such application package to Lender for each Loan Assumption is hereby referred to, with respect to such Loan Assumption, as the “Submission Date”). Seller shall cooperate with Purchaser in connection with providing the necessary information, materials and reports as required by Lender or the servicer of each Loan in connection with submission of the application package and in connection with Purchaser’s efforts to obtain each Loan Assumption Approval. Subject to Seller’s satisfaction of its material obligations as set forth in this Section 2.1, Purchaser shall diligently, continuously and in good faith pursue each Loan Assumption Approval and shall use commercially reasonable efforts in taking such actions as reasonably required by each Lender in connection with the Loan Assumptions. Purchaser shall provide Seller with copies of its material written correspondence in respect of the Loan Assumptions with the representatives of each Lender and the application packages therefor (redacting or omitting any confidential or proprietary information pertaining to Purchaser and/or its principals or affiliates) and shall keep Seller

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reasonably informed as to Purchaser’s progress in satisfying any conditions to the Loan Assumptions. Seller shall provide to Purchaser copies of any correspondence received from Lender or the servicer of each Loan related to the Loan Assumptions and the Loan Assumption Approval.

    (c)    Each party to this Agreement shall cooperate with the other, as reasonably requested by such party, to obtain each Loan Assumption Approval. Purchaser shall pay any and all of the fees, charges or costs in connection with the Loan Assumptions, including, without limitation, the assumption or transfer fees to be paid to Lender at Closing and any of Purchaser’s attorneys’ or administrative fees; provided however, in no event will Purchaser be responsible for any attorneys’ fees or overhead costs incurred by Seller in connection with the Loan Assumptions or any Loan Assumption Approval. Purchaser recognizes that such fees and expenses paid by Purchaser will not be subject to reimbursement by Seller except pursuant to the expense reimbursement provisions of this Agreement, including, without limitation, Section 8.1. Purchaser, at Purchaser’s sole expense, shall use commercially reasonable efforts to obtain and cause the Title Company to deliver to the Lender any endorsement to the Lender’s title insurance policy or a new title insurance policy, all in such form as the Lender may reasonably require. If Lender does not provide all Loan Assumption Approvals on or before 5:00 p.m. in Atlanta, Georgia on the date that is forty five (45) days after the expiration of the Inspection Period (the “Loan Assumption Approval Deadline”, with the period of time commencing on the Submission Date and ending on the Loan Assumption Approval Deadline being referred to as the “Loan Assumption Approval Period”), then (i) if Purchaser is actively and in good faith pursuing the Loan Assumption Approvals, Purchaser shall have the right to extend the Loan Assumption Approval Deadline until 5:00 p.m. in Atlanta, Georgia up to the date that is ninety (90) days after the expiration of the Inspection Period by delivering written notice of such extension to Seller prior to the initial Loan Assumption Approval Deadline (and the Loan Assumption Approval Period shall be extended accordingly upon such extension of the Loan Assumption Approval Deadline), or (ii) Purchaser may terminate this Agreement with respect to the agreement of Seller to sell and the agreement of Purchaser to purchase any Loan Assumption Property for which Loan Assumption Approval has not been obtained, in which event a percentage of the Earnest Money equal to the quotient (expressed as a percentage) of the Allocated Purchase Price of such terminated Loan Assumption Property divided by the total Purchase Price, shall be promptly refunded to Purchaser and the parties hereto shall be relieved of all further obligations hereunder with respect to such Loan Assumption Property, except for those obligations which expressly survive termination of this Agreement, and the Purchase Price shall be reduced by the Allocated Purchase Price for such Loan Assumption Property set forth on Exhibit “N” attached hereto on the Effective Date. In the event that Purchaser extends the Loan Assumption Approval Deadline in accordance with this Section 2.1(c) and does not receive the Loan Assumption Approval by the end of the extended Loan Assumption Approval Period, this Agreement shall terminate with respect to the agreement of Seller to sell and the agreement of Purchaser to purchase any Loan Assumption Property for which Loan Assumption Approval has not been obtained, in which event a percentage of the Earnest Money equal to the quotient (expressed as a percentage) of the Allocated Purchase Price of such terminated Loan Assumption Property divided by the total Purchase Price shall be promptly disbursed to Purchaser and the parties hereto shall be relieved of all further obligations hereunder with respect to such Loan Assumption Property, except for those obligations which expressly survive termination of this Agreement, and the Purchase Price shall be reduced by the Allocated Purchase Price for such Loan Assumption Property set forth on Exhibit “N” attached hereto on the Effective Date. If two or more Loan Assumption Approvals have not been obtained, Seller may terminate the Agreement in its entirety, the Earnest Money shall be returned to Purchaser, Seller shall reimburse Purchaser for all actually incurred Pursuit Costs (as hereinafter defined) in an amount not to exceed $2,000,000 and Purchaser and Seller shall have no further rights or obligations under this Agreement except for the Surviving Obligations. Notwithstanding any provision to the contrary in this Agreement, the Loan Assumptions and the agreements, instruments and documents evidencing the same (i) shall in all events be satisfactory to Seller (to the extent Seller is a party to such agreement, instrument or document) and Purchaser in their reasonable opinion (subject to the conditions set forth in this sentence), (ii) may contain modifications to the Loan Documents reasonably required by the Purchaser, including but not limited to revisions required to reflect the structure of Purchaser and its constituent entities, including standard transfer provisions related thereto, but Purchaser may not propose modifications to material economic terms of the Loan, (iii) shall provide for the consent, approval and agreement of Lender to the conveyance of the applicable Loan Assumption Property by Seller to Purchaser and the release of Seller

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from all obligations under the Loan and the Loan Documents first arising and accruing on and after the Closing Date, except for those obligations set forth in the Loan Documents which expressly survive the payoff or assignment of the Loan by Seller; provided, for the avoidance of doubt, that Lender shall not be required to release Seller or any guarantor from any liability arising or accruing prior to the Closing Date, (iv) shall include a representation by the applicable Seller that, to Seller’s knowledge, no default or event of default exists on the part of any borrower or guarantor under the Loan Documents and (v) shall provide the outstanding principal balance under the Loan and the amount of all reserves under the Loan. For all purposes hereunder, the “Loan” shall mean, individually or collectively, as the context requires: (i) that certain Freddie Mac Loan Number 502997400 to Tempe Seller in the original principal amount of $36,243,000.00 (the “Tempe Loan”), as evidenced by that certain Multifamily Note dated as of October 31, 2018, in the original principal amount of $36,243,000.00, made by Tempe Seller to the order of KeyBank National Association (“Original Tempe Lender”), as assigned by Original Tempe Lender to Lender, and secured by that certain Multifamily Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing dated October 31, 2018, executed by Tempe Seller in favor of Original Tempe Lender; (ii) that certain loan to Orlando Student Housing DST, a Delaware statutory trust (“Original Borrower”) in the original principal amount of $47,125,000.00 (the “Orlando Loan”), as evidenced by that certain Multifamily Note dated as of August 13, 2015, in the original principal amount of $47,125,000.00, made by Original Borrower to the order of PNC Bank, National Association (“Original Orlando Lender”), as assigned by Original Orlando Lender to Fannie Mae, and secured by that certain Consolidated, Amended and Restated Multifamily Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing dated as of August 13, 2015, executed by Original Borrower in favor of Original Orlando Lender, all as assigned to and assumed by Orlando Seller pursuant to that certainAssumption and Release Agreement dated as of May 31, 2018 by and among Original Borrower, Orlando Seller and Fannie Mae, and (iii) that certain Freddie Mac Loan Number 933006888 to Kennesaw Seller in the original principal amount of $47,000,000.00 (the “Kennesaw Loan”), as evidenced by that certain Multifamily Note dated as of October 27, 2017, in the original principal amount of $47,000,000.00, made by Kennesaw Seller to the order of Prudential Affordable Mortgage Company, LLC (“Original Kennesaw Lender”), as assigned by Original Kennesaw Lender to Lender, and secured by that certain Multifamily Deed to Secure Debt, Assignment of Rents and Security Agreement dated October 26, 2017, executed by Tempe Seller in favor of Original Kennesaw Lender. The parties acknowledge that a Loan Assumption Approval may or may not be granted by Lender with respect to any combination of the Tempe Loan, the Orlando Loan and the Kennesaw Loan, and therefore agree that the above provisions regarding the Loan Assumption Approval shall be applied independently to the obligations of the parties hereunder with respect to the Tempe Property, the Orlando Property and the Kennesaw Property.    

(d)    The balance of the Purchase Price, after giving credit to Purchaser for the Loan Balance and giving credit to Seller for the amounts of all reserves held pursuant to the terms of the Loan, that are not returned by Lender to Seller at Closing with respect to the Allocated Purchase Price for the Tempe Property and the Kennesaw Property, and after calculating the adjustments and prorations as set forth in this Agreement and crediting the Earnest Money paid hereunder, shall be paid by Purchaser to Seller at the Closing (as defined in Section 6.1 below) by wire transfer of immediately available funds to the Escrow Agent (as hereinafter defined) on the Closing Date (as hereinafter defined) in accordance with wire transfer instructions to be provided by the Escrow Agent. Seller hereby confirms that no reserves are held pursuant to the terms of the Orlando Loan.

3.

EARNEST MONEY

3.1    Earnest Money. Purchaser shall deliver to First American Title Insurance Company (“Escrow Agent” andTitle Company”), as such Escrow Agent or Title Company may be replaced pursuant to the definition of Blocking Event contained herein, no later than two (2) business days after the Effective Date, an earnest money deposit (the “Earnest Money”) in the amount of TEN MILLION AND 00/100 DOLLARS ($10,000,000.00). After the expiration of the Inspection Period, the Earnest Money shall be non-refundable in all events except as set forth herein, including, without limitation, the failure to satisfy the Financing Contingency pursuant to Section 9.22 hereof. In the event the sale of the Property is

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consummated under this Agreement, the Earnest Money shall be paid to Seller and applied as a credit against the Purchase Price at Closing.

3.2    Escrow Agent Provisions. The Escrow Agent joins in the execution of this Agreement solely for acknowledging and agreeing to the provisions of this Section 3.2. The duties of the Escrow Agent shall be as follows:

    (a)    During the term of this Agreement and upon any termination hereof in accordance with this Agreement, the Escrow Agent the Escrow Agent shall hold and disburse the Earnest Money in accordance with the terms and provisions of this Agreement.

        (b)    The Earnest Money shall at all times be refundable to Purchaser unless and until Purchaser delivers an Approval Notice to Seller pursuant to Section 4.1.1 hereof. Following Purchaser’s delivery of an Approval Notice, the Earnest Money shall not be refundable to Purchaser, except as provided in this Agreement. The Escrow Agent shall otherwise pay the Earnest Money in accordance with the joint written instructions of Seller and Purchaser in any of the following events: (i) if this Agreement is not terminated by one of the parties as permitted hereunder but is terminated by the mutual written agreement of Seller and Purchaser, or (ii) if the Escrow Agent shall be unable to determine at any time to whom the Earnest Money should be paid, or (iii) if a dispute shall develop between Seller and Purchaser concerning to whom the Earnest Money should be paid. If such written instructions shall not be received by the Escrow Agent within ten (l0) days after the Escrow Agent has served a written request for instructions upon Seller and Purchaser, then the Escrow Agent shall have the right to pay the Earnest Money into any court of competent jurisdiction and interplead Seller and Purchaser in respect thereof, and thereupon the Escrow Agent shall be discharged of any further obligations relating to this Agreement.

        (c)    If costs or expenses are incurred by the Escrow Agent in its capacity as Escrow Agent because of litigation or a dispute between the Seller and Purchaser arising out of the holding of the Earnest Money in escrow, Seller and Purchaser shall each pay the Escrow Agent one-half of such reasonable out-of-pocket costs and expenses. Except for such out-of-pocket costs or expenses, no fee or charge shall be due or payable to the Escrow Agent for its services as escrow holder only.

        (d)    By joining herein, the Escrow Agent undertakes only to perform the duties and obligations imposed upon the Escrow Agent under the terms of this Agreement and expressly does not undertake to perform any of the other covenants, terms and provisions incumbent upon the Seller and the Purchaser hereunder.

        (e)    Purchaser and Seller hereby agree and acknowledge that the Escrow Agent assumes no liability in connection herewith except for gross negligence or willful misconduct; that the Escrow Agent shall never be responsible in its capacity as Escrow Agent for the validity, correctness or genuineness of any document or notice referred to under this Agreement; and that in the event of any dispute under this Agreement, the Escrow Agent may seek advice from its own counsel and shall be fully protected in any action taken by it in good faith in accordance with the opinion of its counsel.

        (f)    All investments by the Escrow Agent will be made in the regular course of business. To be entitled to same day investment (assuming good funds are provided), the Earnest Money must be received by noon; otherwise, such funds will be deemed deposited on the next business day. All investments shall be subject to the rules, regulations, policies and procedures of the bank depository in which such monies are deposited.

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        (g)    The Earnest Money may be processed for collection in the normal course of business by the Escrow Agent, which may commingle funds received by it with escrow funds of others in its regular escrow account held at the bank depository in which the Escrow Agent maintains its regular escrow account (the “Depository”). The Escrow Agent shall not be accountable for any incidental benefit which may be attributable to the funds so deposited. The Escrow Agent shall not be liable for any loss caused by the failure, suspension, bankruptcy or dissolution of the Depository. Seller and Purchaser acknowledge that they are aware that the Federal Deposit Insurance Corporation’s coverages apply to a maximum amount of $250,000.00 per depositor.

        (h)    Escrow Agent shall not be liable for loss or damage resulting from:

            (i)    any good faith act or forbearance of the Escrow Agent;

            (ii)    any default, error, action or omission of any party, other than

the Escrow Agent’s gross negligence or willful misconduct;

            (iii)    the expiration of any time limit or other delay which is not

solely caused by Escrow Agent’s gross negligence or willful misconduct, and

in no event where such time limit is not disclosed in writing to the Escrow

Agen;

            (iv)    the lack of authenticity of any writing delivered to the Escrow

Agent or of any signature thereto, or the lack of authority of

the signatory to sign such writing;

            (v)    Escrow Agent’s compliance with all attachments, writs,

orders, judgments, or other legal process issued out of any

court;

            (vi)    Escrow Agent’s assertion or failure to assert any cause of

action or defense in any judicial or administrative proceedings;

or;                         

            (vii)    any loss or damage which arises after the Earnest Money has

been disbursed in accordance with the terms of this Agreem                        .

        (i)    Escrow Agent shall be fully indemnified by the parties hereto for all the Escrow Agent’s expenses, costs, and reasonable out-of-pocket attorney’s fees actually incurred relating to any interpleader action which the Escrow Agent may file to resolve any dispute as to the Earnest Money, or which may be filed against the Escrow Agent.

        (j)    If the Escrow Agent is made a party to any judicial, non-judicial or administrative action, hearing or process based on acts of any of the other parties hereto and not on the malfeasance and/or gross negligence of the Escrow Agent in performing its duties hereunder, the party/parties whose alleged acts are held or found to be the cause of such proceedings shall indemnify, save and hold the Escrow Agent harmless from said expenses, costs and reasonable attorneys’ fees so incurred.

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3.3    Independent Consideration. Notwithstanding anything to the contrary in this Agreement, in the event any provision hereof allows for the return of the Earnest Money to Purchaser, such amount shall be returned to Purchaser less One Hundred and No/100 Dollars ($100.00), which shall be paid to Seller as independent consideration for entering into this Agreement and shall not be refundable in all events. In addition, Seller acknowledges that Purchaser, in evaluating the Property and performing its due diligence investigation of the Property, will devote internal resources and incur expenses, and that such efforts and expenses of Purchaser also constitute good, valuable and sufficient consideration for this Agreement.

4.

CONDITIONS TO CLOSING

4.1    Inspection Period; Contracts; Title; Survey.

4.1.1 Inspection Period. During the period commencing on the Effective Date and expiring at 5:00 p.m. (in Atlanta, Georgia) on July 31, 2020 (the “Inspection Period”), Purchaser shall have the right to terminate this Agreement, for any or no reason, by written notice to Seller (a “Termination Notice”) delivered before expiration of the Inspection Period or in the event Purchaser fails to deliver written notice to Seller electing to proceed with the transaction contemplated in this Agreement (an “Approval Notice”) on or prior to the expiration of the Inspection Period, which Approval Notice may be sent via e-mail. Upon delivery of a Termination Notice to Seller or the failure by Purchaser to deliver an Approval Notice to Seller prior to the expiration of the Inspection Period, this Agreement shall terminate, whereupon the Earnest Money shall be returned to Purchaser without any further action from Seller and this Agreement shall be of no further force or effect with Purchaser and Seller having no further rights, obligation or liability hereunder except for such obligations hereunder which by their terms expressly survive the termination of this Agreement (the “Surviving Obligations”). In the event Purchaser delivers an Approval Notice on or before the expiration of the Inspection Period, then the transaction contemplated by this Agreement shall proceed and the Earnest Money shall be non-refundable in all events except as expressly set forth herein, including, without limitation in the event of Seller’s default, the failure of any closing conditions set forth herein or the failure of the Financing Contingency to be satisfied pursuant to Section 9.20 hereof.

4.1.2 Contracts. Attached hereto as Exhibit “J” and incorporated herein is a list of all service contracts, equipment leases and maintenance contracts currently affecting the Property (collectively, the “Contracts”). Purchaser agrees to assume all of the Contracts at Closing which are not Rejected Contracts (as hereinafter defined), and Purchaser shall notify Seller in writing prior to the expiration of the Inspection Period in the event Purchaser desires to have any of the Contracts canceled by Seller at Closing (the “RejectedContracts”). Seller hereby agrees to send cancellation notices with respect to the Rejected Contracts not later than Closing so long as the Rejected Contracts, by their terms, are terminable upon thirty (30) days or less notice without payment of a fee or penalty; failing which, Purchaser shall be obligated to assume such Rejected Contracts at Closing.

4.1.3 Title Commitment.

(a) Seller shall convey good and marketable indefeasible fee simple title to the Property to Purchaser at Closing, subject only to the Permitted Encumbrances (as defined below). During the Inspection Period, Purchaser shall request and obtain from Title Company a commitment for an ALTA extended Owner's Policy of Title Insurance issued by Title Company for each Property (each, a “Title Commitment” and collectively the “Title Commitments”), insuring good and marketable indefeasible fee simple title to the Land, together with copies of all exceptions listed therein. Purchaser shall have until 5:00 pm ET on August 3, 2020 to deliver to Seller written notice of Purchaser’s objections to title and

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zoning (the “Title Objection Letter”). Prior to, or concurrently with, notifying Seller of any objections to title, Purchaser shall endeavor in good faith to cause the Title Company to modify and update the Title Commitment to reflect its requested corrections and revisions. Seller shall have the right, but not the obligation, to Remove Purchaser’s objections to title; subject, however, to Seller’s obligation to Remove all Required Clearance Exceptions (as hereinafter defined) by Closing, whether or not Purchaser objects thereto. Seller shall notify Purchaser in writing on or before 5:00 pm ET on August 5, 2020 concerning which title or zoning objections, if any, Seller has agreed to cure (the “Seller Title Election Deadline”). Seller’s failure on or before the Seller Election Deadline to notify Purchaser of which objections it elects to Remove shall be deemed to be an election by Seller to cure none of Purchaser’s objections, subject to Seller’s mandatory obligation to remove all Required Clearance Exceptions. In the event that Seller does not undertake to cure all of the objections in the Title Objection Letter to Purchaser’s satisfaction (or does not respond to the Title Objection Letter by the Seller Title Election Deadline), then Purchaser shall have until 5:00 pm ET on August 7, 2020 to either (i) waive any such title or zoning objection in writing and proceed to Closing (in which event such waived title or zoning objection shall be deemed to be Permitted Encumbrance), or (ii) terminate this Agreement, in which event the Earnest Money shall be promptly returned to Purchaser upon written notice to Seller and Escrow Agent, and neither party shall have any further obligation hereunder except for the Surviving Obligations. The term “Permitted Encumbrances” as used herein includes: (i) all exceptions and other title matters shown on the Title Commitment (as the same may be revised by the Title Company pursuant to the process set forth in this Section 4.1.3(a) above and pursuant to any subsequent updates thereof pursuant to Section 4.1.3(b) below, but expressly excluding any title matters that Seller is obligated to remove pursuant to the provisions of this Agreement or that Seller agrees to remove as part of the process described in this Section 4.1.3(a); (ii) the rights and interests of parties claiming under the Leases, as tenants only; and (iii) liens to secure taxes and assessments not yet due and payable; provided that Permitted Encumbrances shall not include any Required Clearance Exceptions or other matters that Seller has either agreed to Remove or is obligated to Remove as provided in this Section 4.1.3(a).

(b)    In the event that any update to the Title Commitment indicates the existence of any liens, encumbrances or other defects or exceptions (the “Unacceptable Encumbrances”) which are not shown in the initial Title Commitment and that are unacceptable to Purchaser, in its sole discretion, Purchaser shall within three (3) business days after receipt of any such update to the Title Commitment notify Seller in writing of its objection to any such Unacceptable Encumbrance (the “Unacceptable Encumbrance Notice”). Notwithstanding anything to the contrary contained herein, Seller shall have no obligation to take any steps or bring any action or proceeding or otherwise to incur any expense whatsoever to eliminate or modify any of the Unacceptable Encumbrances; provided, however, that Seller shall, prior to Closing, eliminate by Removing any Required Clearance Exceptions. For purposes of this Agreement, “Required Clearance Exceptions” means (i) any Unacceptable Encumbrances that arise as a result of Seller’s intentional acts or omissions, (ii) any mortgages, deeds of trust or deeds to secure debt that appear on the Title Commitment, other than any such documents related to the Loan Assumptions (the “Mortgages”), (iii) all mechanics, judgment, tax and other monetary liens and encumbrances of liquidated amounts (excluding, however, current, non-delinquent taxes and assessments) affecting the Property which were voluntarily or involuntarily caused or created by, through or under Seller or its affiliates, agents, employees contractors or representatives (collectively, the “Monetary Liens”), (iv) liens or encumbrances other than Mortgages and Monetary Liens created by Seller or its agents or affiliates after the date of this Agreement in violation of the terms of this Agreement, (v) any existing purchase rights granted or caused by acts of Seller or its affiliates, agents, employees contractors or representatives and (vi) any exception to title that Seller has agreed in writing to Remove pursuant to the terms of this Agreement. For purposes of this Agreement, “Remove” shall mean that Seller causes such exception or matter to be discharged, terminated and extinguished in full and removed from title in a manner satisfactory to the Purchaser and the Title Company, and deliver to Purchaser at Closing instruments in recordable form and sufficient to cause such Title Objections to be released of record, together with the cost of recording or filing such instruments. In the event Seller is unable, unwilling or for any reason fails to Remove all of the Unacceptable Encumbrances to the satisfaction of Purchaser (other than the Required Clearance Exceptions required to be Removed by Seller), Purchaser may

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terminate this Agreement by delivering notice thereof in writing to Seller by the latest to occur of (x) the Closing Date, (y) three (3) days after Seller’s written notice to Purchaser of Seller’s intent to not cure one or more of such Unacceptable Encumbrances, or (z) ten (10) days after the Unacceptable Encumbrance Notice, in the event Seller does not timely respond thereto; provided, however, the Closing Date shall be extended to allow for the running of the time periods described in the aforesaid clauses (y) and (z). Upon a termination of this Agreement pursuant to the immediately preceding sentence, upon prior written notice to Seller and Escrow Agent, the Earnest Money shall be promptly returned to Purchaser, and neither party shall have any further obligation hereunder except for the Surviving Obligations.

(c)    Notwithstanding the foregoing, the Charlotte Seller and the Waco Seller shall have the right after the Effective Date to encumber the Charlotte Property and the Waco Property, respectively, with deeds of trust securing interim financing on the Charlotte Property and the Waco Property, respectively (collectively, the “Additional Mortgages”), provided that the total amount of the (i) maximum amount of indebtedness under each Additional Mortgage to Seller and (ii) outstanding balance of the indebtedness, if any, encumbering the Charlotte Property or the Waco Property, as applicable, on the Effective Date shall not exceed the Allocated Purchase Price for the Property securing such Additional Mortgage. The Additional Mortgages shall be deemed to be Required Clearance Exceptions and shall be Removed by the Charlotte Seller and the Waco Seller prior to or on the Closing Date, and in the event any such Additional Mortgages are not Removed on or prior to the Closing Date, Purchaser shall have the right to apply and receive a credit for such portion of the Purchase Price as necessary to repay in full such outstanding Additional Mortgages on the Closing Date.

4.1.4    Survey. During the Inspection Period, Purchaser, at its sole expense, may elect to obtain a current ALTA/NSPS Land Title Survey of the Property or an update of any existing survey delivered by Seller to Purchaser (the “Survey”). Purchaser shall have until 5:00 pm ET on August 3, 2020 to deliver to Seller written notice of Purchaser’s objections to the Survey (the “Survey Comment Letter”). Seller shall have the right, but not the obligation, to address Purchaser’s objections to the Survey. Seller shall notify Purchaser in writing on or before 5:00 pm ET on August 5, 2020 concerning which objections to the Survey, if any, Seller has agreed to cure (the “Seller Survey Election Deadline”). Seller’s failure on or before the Seller Survey Election Deadline to notify Purchaser of which objections it elects to cure shall be deemed to be an election by Seller to cure none of Purchaser’s objections. In the event that Seller does not undertake to address all of the comments in the Survey Comment Letter to Purchaser’s reasonable satisfaction (or does not timely respond to the Survey Comment Letter by the Seller Survey Election Deadline), then Purchaser shall have until 5:00 pm ET on August 7, 2020 to either (i) waive any such Survey objection in writing and proceed to Closing (in which event such waived Survey objection shall be deemed to be a Permitted Encumbrance), or (ii) terminate this Agreement, in which event the Earnest Money shall be promptly returned to Purchaser upon written notice to Seller and Escrow Agent, and neither party shall have any further obligation hereunder except for the Surviving Obligations.

4.2    Inspection.

(a)    On or before Closing or the earlier termination of this Agreement, Purchaser, at its sole risk and expense, and its engineers, architects, employees, contractors, consultants, and agents (collectively, the “Purchaser Parties”) may conduct such tests and inspections of the Property as Purchaser deems appropriate at reasonable times during regular business hours (“Purchaser’s Inspections”); provided, however, Purchaser must obtain Seller’s prior written approval, which may be granted or withheld in Seller’s sole discretion, of the scope and method of any environmental testing or inspections (other than a Phase I environmental site assessment, which shall require no consent or approval of any kind), prior to Purchaser’s commencement of such tests or inspections. All such tests and inspections shall be conducted in accordance with applicable laws, including without limitation, laws relating to worker safety and the proper disposal of discarded materials. Purchaser, at Purchaser’s sole expense, shall repair any physical damage to the extent resulting from any of the tests, studies, inspections and investigations performed by

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or on behalf of Purchaser pursuant to this Section 4.2, and Purchaser shall and hereby agrees to indemnify, defend and hold the Seller Parties (as defined below) harmless from and against all Claims (as defined below) for all Indemnified Claims (as defined below) which may be asserted or recovered against any of the Seller Parties arising by reason of the tests, studies, inspections and investigations performed hereunder by Purchaser, which obligation of indemnification shall survive the Closing or any expiration or termination of this Agreement until the earlier of (i) the applicable jurisdiction’s statute of limitations and (ii) ten (10) years, however caused. As used herein, “Seller Parties” shall mean collectively, Seller, each and all of its officers, directors, employees, shareholders, partners, affiliates, subsidiaries, principals, parents, trustees, joint venturers, related parties and entities, contractors and agents (including its property manager), each and all of the predecessors, legal representatives, heirs, successors and assigns of any of the foregoing and their respective subsidiaries, parents, affiliates, joint venturers, directors, officers, members, principals, investors, shareholders, trustees, designees, lenders, beneficiaries, employees, agents, brokers, property managers, asset managers, representatives, predecessors, successors, assigns, contractors, subcontractors, fiduciaries, insurers, heirs, estates, servants, other related parties and persons, past and present. As used herein, “Claims” shall mean any and all actual losses or damages (including, without limitation, reasonable and actual out-of-pocket attorneys’ fees and other reasonable and actual professional fees of attorneys and professionals selected by the Seller Parties, but excluding any punitive, special, speculative or consequential damages except to the extent awarded in connection with third party claims against such Seller Parties) actually incurred by Seller, whether in connection with any investigation, non-judicial, quasi-judicial, judicial, mediative, arbitrative, or administrative actions or proceedings or otherwise (including pretrial, trial, appellate, administrative, bankruptcy or insolvency proceedings) or in settlement or in any other proceeding and whether or not suit was filed thereon. As used herein, “Indemnified Claims” shall mean collectively, (i) liens, personal injury, death or property damage caused in any way by Purchaser’s Inspections, whether by Purchaser or any of the Purchaser Parties; and (ii) any Hazardous Materials (as hereinafter defined) introduced on the Property by Purchaser or any of the Purchaser Parties in connection with Purchaser’s Inspections; provided, however, in no event shall Indemnified Claims include any Claims incurred by Seller or Seller Parties and caused by (xx) Seller or Seller Parties’ gross negligence or willful misconduct, or (yy) the condition of the Property prior to Purchaser’s inspection thereof except to the extent any pre-existing condition is exacerbated by Purchaser or its employees, agents, contractors or representatives. Purchaser shall not permit any liens to attach to the Property by reason of Purchaser’s Inspections. In the event that Purchaser fails, within ten (10) business days following the imposition of any such lien and Purchaser’s notice of same, to cause the same to be released of record or provide a bond to satisfactorily address such lien, Seller shall have the right to cause the same to be released by such means as it shall deem proper, including payment of the claim giving rise to such lien, and all such sums paid and expenses actually incurred by Seller, including, without limitation, reasonable and actual out-of-pocket attorneys’ fees and expenses, shall be payable to Seller by Purchaser within five (5) business days after Seller’s demand and delivery of evidence of Seller’s payment of such sums.

(b)    Purchaser and any Purchaser Parties entering the Property shall maintain (i) commercial general liability insurance (occurrence form) with limits of not less than $1,000,000 for each occurrence and $2,000,000 general aggregate; (ii) worker’s compensation and employer’s liability insurance with limits of not less than $1,000,000; and (iii) commercial automobile liability coverage having a combined single limit of $1,000,000 for each accident. Prior to commencing any inspections, Purchaser shall deliver to Seller a certificate of insurance evidencing the existence of the aforesaid policies and naming Seller as additional insureds. All referenced policies shall be endorsed to provide a waiver of subrogation with respect to Seller and all other entities to be named as additional insureds as set forth hereinabove. All insurance carriers must be authorized to do business in the State in which the Property is located and have a minimum A.M. Best rating of A- VII or, if not rated by A.M. Best, have an equivalent rating by Moody’s, Fitch, or Standard & Poor’s.

(c)    Purchaser shall provide Seller with not less than one (1) business days’ advance notice regarding any such entry (except for entries regarding the inspection of individual tenant’s units within an

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individual Property, which shall require two (2) business days’ advance notice), which notice may be given via email to Seller at the email address included in Seller’s notice address in Section 9.1 herein. At Seller’s option, Seller or its designated representative shall have the reasonable opportunity, but are not required, to be present during Purchaser’s access to an individual Property. The Purchaser Parties shall not contact any tenant without Seller’s prior written consent (which shall not be unreasonably withheld, conditioned or delayed and which consent may be given by e-mail), and Seller or its designated representative shall have the right to be present (whether telephonically or in person) during any conversations between the Purchaser Parties and any tenant.

(d)    Except in connection with (i) the preparation of a Phase I environmental site assessment with respect to the Property, or (ii) obtaining a customary zoning compliance letter from applicable governmental authorities with respect to the Property (provided that the same may be obtained without an inspection of the Property by any governmental authority), or (iii) ascertaining the existing development rights or entitlements with respect to the Property, the Purchaser Parties shall not contact any governmental official or representative regarding the Property without Seller’s prior written consent thereto, which consent shall not be unreasonably withheld, conditioned or delayed. In addition, if Seller consents to any such governmental contact, Seller shall be entitled to receive at least three (3) business days’ prior written notice of the intended contact and to have the reasonable opportunity to have a representative present (whether telephonically or in person) when any of the Purchaser Parties has any such contact with any governmental official or representative.

4.3    Purchaser’s Representations and Warranties. Purchaser represents and warrants to Seller that:

(a)    Purchaser has all of the requisite right, power and authority, without the joinder of any other person or entity, to enter into, execute and deliver this Agreement and to perform all duties and obligations imposed on Purchaser under this Agreement;

(b)    Neither the execution nor the delivery of this Agreement, nor the consummation of the purchase and sale contemplated hereby, nor the fulfillment of or compliance with the terms and conditions of this Agreement conflict with or will result in the breach of any of the terms, conditions, or provisions of any agreement or instrument to which Purchaser is a party or by which Purchaser or any of Purchaser’s assets is bound;

(c)    None of the following have occurred with respect to Purchaser, and if Purchaser is a partnership, to any general partners of Purchaser:  (i) the commencement of a case under Title 11 of the United States Code, as now constituted or hereafter amended, or under any other applicable federal or state bankruptcy law or other similar law; (ii) the appointment of a trustee or receiver of any property interest; (iii) an assignment for the benefit of creditors; (iv) an attachment, execution or other judicial seizure of a substantial property interest; (v) the taking of, failure to take, or submission to any action indicating an inability to meet its financial obligations as they accrue; or (vi) a dissolution or liquidation, death or incapacity;

(d)    To Purchaser’s Knowledge (as hereinafter defined), neither Purchaser nor any of its constituents or affiliates have engaged in any dealings or transactions, directly or indirectly: (i) in contravention of any U.S., international or other money laundering regulations or conventions, including, without limitation, the United States Bank Secrecy Act, the United States Money Laundering Control Act of 1986, The United States International Money Laundering Abatement and Anti-Terrorist Financing Act of 2001, Trading with the Enemy Act (50 U.S.C. 1 et seq., as amended), or any foreign asset control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling legislation or executive order relating thereto; or (ii) in contravention of Executive Order No. 13224 dated September 24, 2001 issued by the President of the United States (Executive Order Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism), as may be amended or supplemented from time to time ("Anti-Terrorism Order") or on behalf of terrorist or terrorist organizations, including those persons or entities that are included on any relevant lists

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maintained by the United Nations, North Atlantic Treaty Organization, Organization of Economic Cooperation and Development, Financial Action Task Force, U.S. Office of Foreign Assets Control, U.S. Securities & Exchange Commission, U.S. Federal Bureau of Investigation, U.S. Central Intelligence Agency, U.S. Internal Revenue Service, or any country or organization, all as may be amended from time to time. Neither Purchaser nor any of its constituents or affiliates (i) are or will be conducting any business or engaging in any transaction with any person appearing on the U.S. Treasury Department's Office of Foreign Assets Control list of restrictions and prohibited persons, or (ii) are a person described in section 1 of the Anti-Terrorism Order, and neither Purchaser nor any of its constituents or affiliates have engaged in any dealings or transactions, or otherwise been associated with any such person; and

(e)    Purchaser represents, warrants and covenants that it is not using the assets of any (i) “employee benefit plan” (within the meaning of Section 3(3) of  the Employee Retirement Income Security Act of 1974, as amended (“ERISA”)), (ii) “plan” (within the meaning of Section 4975(e)(1) of the Internal Revenue Code of 1986, as amended (the “Code”)) or (iii) entity whose underlying assets include “plan assets” by reason of a plan’s investment in such entity, to fund its purchase of the Property under this Agreement.

For purposes of this Agreement, “Purchaser’s Representative” means Ty Newell, which Purchaser’s Representative shall have no personal liability for any breach of a representation or warranty set forth in this Agreement. As used in this Agreement, the phrase “to Purchaser’s Knowledge” or phrases of similar import shall mean the actual, not constructive or imputed knowledge of Purchaser’s Representative, without any obligation of their part to make any independent investigation of the matters being represented and warranted.

4.4    Seller’s Representations and Warranties. (a) Seller represents and warrants to Purchaser as follows (made as of the date hereof and as of the Closing Date):

(i)    Seller is duly organized (or formed), validly existing and in good standing under the laws of its state of organization and, as applicable, the state in which the Property is located, and is and will be current on all required tax and franchise filings and payments in its state of formation and each state in which it operates. Seller has the full right, power and authority, without the joinder of any other person or entity, to enter into, execute and deliver this Agreement and to perform all duties and obligations imposed on Seller under this Agreement, and neither the execution nor the delivery of this Agreement, nor the consummation of the purchase and sale contemplated hereby, nor the fulfillment of or compliance with the terms and conditions of this Agreement conflict with or will result in the breach of any of the terms, conditions, or provisions of any agreement or instrument to which Seller is a party or by which Seller or any of Seller’s assets is bound;

(ii)    This Agreement and all documents contemplated hereunder to be executed by Seller as of the date hereof, have been (or, in the case of documents to be executed at Closing, as of the Closing will be) duly authorized by all requisite limited liability company action on the part of Seller and are the valid and legally binding obligations of Seller. Neither the execution and delivery of this Agreement and all documents contemplated hereunder as of the date hereof to be executed by Seller, nor the performance of the obligations of Seller hereunder or thereunder, will result in the violation of any Law or any provision of the organizational documents of Seller or will conflict with any order or decree of any court or governmental instrumentality of any nature by which Seller bound;

(iii)    There is no existing or to Seller’s actual knowledge, pending litigation affecting the Property other than routine dispossessory proceedings with respect to tenants in default under Leases, except for those matters set forth on Exhibit “O” attached hereto and made a part hereof, and there is no existing or pending litigation affecting Seller which would reasonably be expected to affect Seller’s obligations or Seller’s ability to perform its obligations under this Agreement;

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(iv)     Seller has not received any written notice, and has no actual knowledge, of any violation of any applicable federal, state or local laws, ordinances, orders, regulations or guidelines or any other governmental requirements concerning any of the Property or claim from any counterparty to any covenant or restrictions encumbering any Property of any alleged or actual violation or breach thereof, in each case which has not been fully remedied or dismissed prior to the Effective Date;

(v)     Seller is solvent and no bankruptcy, insolvency, rearrangement or similar action involving the Seller, whether voluntary or involuntary, is pending or, to Seller’s actual knowledge, threatened, and Seller has never filed a voluntary petition in bankruptcy; been adjudicated a bankrupt or insolvent or filed a petition or action seeking any reorganization, arrangement, recapitalization, readjustment, liquidation, dissolution or similar relief under any Federal bankruptcy act or any other laws; sought or acquiesced in the appointment of any trustee, receiver or liquidator of all or any substantial part of its properties, the Property, personal property or any portion thereof, or made an assignment for the benefit of creditors or admitted in writing its inability to pay its debts generally as the same become due;

(vi)    Seller has not received, with respect to the Property, written notice from any governmental authority regarding any change to the zoning classification of the Land, any condemnation or other governmental taking proceedings or proceedings to widen or realign any street or highway adjacent to the Land or that otherwise affects the Land or the Improvements. There is no pending or, to Seller’s actual knowledge, threatened condemnation, expropriation, eminent domain, zoning or similar proceedings or litigation affecting all or any portion of the Property;

(vii)    Seller owns good and marketable title to the Tangible Personal Property, free and clear of all liens, security interests or other encumbrances;

(viii)    Seller has not received any written notice from any governmental authority that the Property is in violation of any federal, state, or local laws, ordinances or regulations applicable to the Property with respect to Hazardous Materials (as hereinafter defined) or toxic substances or that there exists any releases of Hazardous Substances in violation of Environmental Law or any corrective or remedial action for, or cleanup of the Property. Except for the foregoing, Seller makes no representations or warranties as to whether the Property contains asbestos, radon or any hazardous materials or harmful or toxic substances, or pertaining to the extent, location or nature of same, if any. Further, to the extent that Seller has provided Purchaser information from any inspection, engineering or environmental reports concerning asbestos, radon or any hazardous materials or harmful or toxic substances, Seller makes no representations or warranties with respect to the accuracy or completeness, methodology of preparation or otherwise concerning the contents of such reports;

(ix)    Seller has not received any written notice from any applicable governmental authorities revoking the certificate(s) of occupancy issued for the Improvements;

(x)    There are no existing, or to Seller’s actual knowledge, pending or threatened special assessments, liens or similar charges against Seller and/or the Property arising out of the construction of the Property and/or any subsequent work or materials relating to the Property (however, if any such assessments, liens or charges exist, such items shall not constitute a default hereunder to the extent they are paid in full and/or satisfied on or before Closing);

(xi)     Rent rolls of the Leases presently in effect with respect to the Property including the amount of any rents collected, scheduled rents, and the Deposits held thereunder, a report of delinquencies under the Leases existing as of the Effective Date, pre-leasing reports and a summary of any free rent, rebates, recurring and non-recurring rent concessions that have not been fully satisfied, deductions, or offsets under the Leases for the 2020-2021 academic year (the “Academic Year”), if applicable, have been delivered to Purchaser as of the Effective Date (collectively, the “Rent Roll”), and a summary of the Rent Roll is attached hereto and made a part hereof as Exhibit “K”. The Rent Roll is true and correct in all material respects and is the Rent Roll maintained by Seller and relied on by Seller for internal

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administration and accounting purposes. Seller is the lessor or landlord or the successor lessor or landlord under the Leases. Except as set forth on the Rent Roll, there are no leases or occupancy agreements to which Seller is a party affecting the Property;

(xii)    To Seller’s actual knowledge, all of the documents delivered to Purchaser in connection with this Agreement, including without limitation any and all financial statements and operating statements, are true, correct and complete copies (in all material respects) of the applicable documents in Seller’s possession or control;

(xiii)     No commissions or other fees are or will be due to brokers or other procurers in connection with the Leases (including any modifications or extensions of the Leases) under any agreement which will survive the Closing and be binding upon Purchaser following Closing;

(xiv)    To Seller’s actual knowledge, the list of the Contracts attached hereto as Exhibit “K” is complete in all material respects as of the date hereof, and there are no other Contracts affecting the Property. Seller has not received any written notice of, and has no actual knowledge of, any default by it under any Contract, which default has not been cured and which would have an adverse effect on Purchaser or the ownership or operation of any of the Properties, individually or taken as a whole, after Closing;

(xv)    Subject to normal additions and replacements in the ordinary course of business of Seller, Seller is and will, on the Closing Date, be the owner of all the Tangible Personal Property scheduled on Exhibit “J” used in connection with the Property and will have full authority to convey the same;

(xvi)    The Leases scheduled on Exhibit “K” constitute all of the material terms, conditions, agreements or understandings between Seller and the tenants thereunder which are binding upon Seller. Seller has made copies, which are complete and accurate, of the Leases and any pre-leasing leases (i.e., Leases which are executed but tenants who have not yet taken possession) readily available to Purchaser for inspection. Except as set forth on the Rent Roll, to Seller’s actual knowledge, no tenants have asserted in writing any defenses or offsets to rent accruing after the Closing Date and no default or breach exists on the part of any tenant. Except as set forth on the Rent Roll, Seller has not received any written notice of any termination of any Lease, any material default or material breach on the part of the landlord under any Lease nor, to such Seller’s actual knowledge, does any such material default or material breach exist;

(xvii)    Seller has not granted any option or right of first refusal to any party to acquire, or entered into any other outstanding contract or agreement with any third party for the sale or transfer of, any interest in any portion of the Property;

(xviii)    Neither Seller nor any of its constituents or affiliates have engaged in any dealings or transactions, directly or indirectly: (i) in contravention of any U.S., international or other money laundering regulations or conventions, including, without limitation, the United States Bank Secrecy Act, the United States Money Laundering Control Act of 1986, The United States International Money Laundering Abatement and Anti-Terrorist Financing Act of 2001, Trading with the Enemy Act (50 U.S.C. 1 et seq., as amended), or any foreign asset control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling legislation or executive order relating thereto; or (ii) in contravention of the Anti-Terrorism Order or on behalf of terrorist or terrorist organizations, including those persons or entities that are included on any relevant lists maintained by the United Nations, North Atlantic Treaty Organization, Organization of Economic Cooperation and Development, Financial Action Task Force, U.S. Office of Foreign Assets Control, U.S. Securities & Exchange Commission, U.S. Federal Bureau of Investigation, U.S. Central Intelligence Agency, U.S. Internal Revenue Service, or any country or organization, all as may be amended from time to time. Neither Seller nor any of its constituents or affiliates (i) are or will be conducting any business or engaging in any transaction with any person appearing on the U.S. Treasury Department's Office of Foreign Assets Control list of restrictions and prohibited persons, or (ii) are a person described in section

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1 of the Anti-Terrorism Order, and neither Seller nor any of its constituents or affiliates have engaged in any dealings or transactions, or otherwise been associated with any such person;

(xix)    Seller is not a foreign person, nonresident alien individual, foreign corporation, foreign partnership, foreign trust or foreign estate (as such terms are defined in Section 1445 of the U.S. Internal Revenue Code of 1986, as amended) and the Treasury Regulations issued thereunder, and is not a disregarded entity whose sole owner is a nonresident alien individual, foreign corporation, foreign partnership, foreign trust or foreign estate;

(xx)    Seller is not and is not acting on behalf of (i) an “employee benefit plan” within the meaning of Section 3(3) of ERISA, that is subject to Title I of ERISA (ii) a “plan” as defined by and subject to Section 4975 of the Code or (iii) an entity deemed to hold “plan assets” (within the meaning of 29 C.F.R. §2510.3-101, as modified by Section 3(42) of ERISA) of any such employee benefit plan or plans;

(xxi)    Seller has no employees. There are no union contracts or collective bargaining agreements in effect with respect to the Property;

(xxii)    Seller and Starkville Mezzanine Lending, LLC, a Georgia limited liability company and an affiliate of Seller (“Starkville”) have full right and authority to sell, assign and transfer the Notes (as defined in the Mezzanine Loan Agreement (as defined below) and any other collateral held by Starkville to Purchaser. Neither Starkville nor Seller needs to obtain any consents (other than those already obtained or obtained by Seller on or before the Closing Date) to the assignment of Starkville’s rights and obligations under the Mezzanine Loan Documents (as defined below). Starkville is the Agent under the Mezzanine Loan Agreement;

(xxiii)    Immediately prior to the sale, transfer and assignment to Purchaser, Starkville was the legal and beneficial owner of 100% of the Notes and any and all collateral with respect to the Mezzanine Loan (as defined below);

(xxiv)    Starkville has not pledged, assigned or encumbered the Assignment of Interests (as defined in the Mezzanine Loan Agreement) or Notes and the membership interests in Owner (as defined in the Mezzanine Loan Agreement) are free and clear of any claim, participation interest, lien, option, security interest, or other charge;

(xxv)    Exhibit “R” attached hereto reflects all of the Mezzanine Loan Documents that evidence and/or secure the Mezzanine Loan (Purchaser acknowledges that certain Assignment of Interests effective as of December 31, 2017 by SHW Partners, L.L.L.P. to Haven Lubbock II Lending, LLC, Starkville Mezzanine Lending, LLC, Haven Charlotte Lending, LLC and Preferred Apartment Communities Operating Partnership, L.P. is not a Mezzanine Loan Document);

(xxvi)    Except as set forth on Exhibit “R” attached hereto, the Mezzanine Loan Documents have not been amended, modified, supplemented or restated, and Starkville has not waived any material default, breach, violation or event of acceleration thereunder;

(xxvii)    Except as set forth in Schedule 4.4(a)(xxv) attached hereto, (i) no Event of Default exists under the Mezzanine Loan or the Mezzanine Loan Documents; (ii) to the knowledge of Seller, no event exists which, with the passage of time or with notice and the expiration of any grace or cure period, would or does constitute an Event of Default under the Mezzanine Loan or the Mezzanine Loan Documents and (iii) to the knowledge of Seller, there is no claim, counterclaim (as defined in the Mezzanine Loan) or right of set-off under the Mezzanine Loan or the Mezzanine Loan Documents;

(xxviii)    As of the date hereof, the principal amount outstanding under the Mezzanine Loan is $6,116,384.00;

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(xxix)    Interest on the Mezzanine Loan has been paid by the Borrower through and including June 30, 2019; and

(xxx)    As of the date hereof, the Mezzanine Loan is fully funded and there are no remaining monetary commitments or obligations outstanding to be performed by the lender under the Mezzanine Loan or amounts in any reserve accounts established under the Mezzanine Loan Agreement.

(xxxi)    The schedule of the documents as set forth on Exhibit CC attached hereto (the “Loan Documents”) constitutes all of the material loan documents with respect to each of the Loan and none of them has been amended except as set forth on Exhibit CC. Seller has delivered or made available to Purchaser true, correct and complete copies of all of the Loan Documents. As of the date of this Agreement, Seller has no actual knowledge of any acceleration or default that remains uncured under any of the Loan Documents.

        (b)    For purposes of this Agreement, all references to “Seller’s actual knowledge”, “the knowledge of Seller” or any similar reference shall be deemed to refer to the current actual knowledge of Brian Harrison, Asset Manager of Preferred Apartment Communities, Inc., who is the person in Seller’s organization most knowledgeable about each Property without liability, following inquiry of the respective property manager for each Property. All of Seller’s foregoing representations and warranties (“Seller’s Representations and Warranties”) shall survive the Closing for a period of six (6) months (the “Limitation Period”) and shall not merge with any deed delivered at Closing. In the event that Purchaser’s Representative obtains actual current knowledge, without any duty of inquiry or investigation, prior to Closing that any of Seller’s representations or warranties relating to or affecting one or more of the Properties was untrue when made in any material respect (each such Property, an “RW Property” and collectively the “RW Properties”), then, subject in all events to Section 4.4(d), (i) Purchaser shall be deemed to have knowledge thereof (herein, “Deemed Knowledge”), (ii) such representation or warranty automatically and without further action shall be deemed to be qualified by such Deemed Knowledge, and (iii) Purchaser shall have the right, at Purchaser’s sole and exclusive remedy in respect thereof, to (A) terminate this Agreement with respect to any or all such RW Properties (as Purchaser shall elect, in its sole and absolute discretion), and promptly receive a refund of a percentage of the Earnest Money equal to the quotient (expressed as a percentage) of the Allocated Purchase Price of such terminated RW Property divided by the total Purchase Price, and Seller shall reimburse Purchaser for all actual, verifiable and commercially reasonable third party costs and expenses (including but not limited to reasonable attorneys’ fees, any lender’s legal fees and any financing commitment, rate lock, extension or break-up fees) and any other costs incurred by Purchaser in connection with the transaction contemplated under this Agreement (collectively the “Pursuit Costs”) either specifically allocated to Purchaser’s pursuit of any RW Property or ratably allocated to the RW Property based on the Allocated Purchase Price of the RW Property if any Pursuit Costs were incurred on a portfolio basis across multiple Properties, in an aggregate amount not to exceed $250,000 for each such terminated RW Property (thereby waiving any and all rights and remedies otherwise available to Purchaser with respect to such breach of which Purchaser has Deemed Knowledge) or (B) if such representations or warranties are untrue in any material respect for more than one RW Property, or if Purchaser has previously terminated this Agreement as it relates to an RW Property and Purchaser’s Representative thereafter obtains actual knowledge prior to Closing that any of Seller’s representations or warranties were untrue when made in any material respect with respect to another RW Property, Purchaser shall have the right to terminate this Agreement in its entirety and promptly receive a refund of the Earnest Money, and Seller shall reimburse Purchaser for all Pursuit Costs in an amount not to exceed $2,000,000 (without duplication). In the event that Purchaser elects to terminate this Agreement with respect to any RW Property as provided above, the Purchase Price shall be reduced by the amount allocated to each terminated RW Property in Section 2.1 and set forth on Exhibit “N” attached hereto on

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the Effective Date, and the parties’ rights and obligations under this Agreement shall remain and continue only with respect to the sale and purchase of the remainder of the Property. If the Purchaser elects to terminate the Agreement in its entirety, Purchaser and Seller shall have no further rights or obligations under this Agreement except for the Surviving Obligations. In the event that Purchaser, prior to the Closing, has Deemed Knowledge of an untrue or inaccurate representation or warranty giving rise to a right of Purchaser to terminate this Agreement in respect of any RW Property pursuant to this Section 4.4(b) and, notwithstanding such Deemed Knowledge, Purchaser consummates the Closing of the transactions contemplated by this Agreement in respect of such RW Property, then Purchaser shall be deemed to have waived any and all rights and remedies otherwise available to Purchaser in respect of all inaccurate or untrue representations or warranties with respect to such RW Property of which Purchaser had Deemed Knowledge, which waiver expressly shall survive Closing.

        (c)    Seller’s liability for any breach of any of Seller’s Representations and Warranties first discovered by Purchaser after the Closing: (i) shall be limited to claims in excess of an aggregate $50,000 (the “Floor”), provided, however, that if the aggregate of all such claims exceeds the Floor, Seller shall be liable for the full amount of such claims up to the maximum amount permitted pursuant to the immediately following sentence; and (ii) shall be subject to a maximum aggregate liability not to exceed one percent (1%) of the Purchase Price (the “Ceiling”). Purchaser shall provide written notice to Seller prior to the expiration of the Limitation Period of any alleged breach of Seller’s Representations and Warranties first discovered by Purchaser after the Closing and in the event Purchaser delivers such notice prior to the expiration of the Limitation Period, Purchaser’s sole remedy shall be an action at law for actual damages as a consequence thereof, with any such damages being subject to the Floor and the Ceiling. The Limitation Period referred to herein shall apply to known as well as unknown breaches of Seller’s Representations and Warranties. Purchaser specifically acknowledges that such termination of liability represents a material element of the consideration to Seller. Notwithstanding anything to the contrary in this Agreement, Seller’s liabilities resulting from Seller’s Fraud, related to prorations under Section 6.3 or arising under Section 9.2 or Section 5.12 shall not be subject to the Ceiling. As used herein, "Seller’s Fraud" means the actual and intentional fraud of Seller in the making of any of the representations and warranties in this Agreement. At Closing, Seller shall cause PAC Carveout, LLC, a Delaware limited liability company (“PAC Guarantor”), to execute and deliver to Purchaser a joinder to this Agreement to guaranty Seller’s post-Closing obligations and liabilities under this Section 4.4(c).

        (d)    If any of Seller’s Representations and Warranties become untrue or inaccurate in any material respect at any time after the Effective Date because of events that have occurred thereafter which are beyond Seller’s control, including, without limitation, as a result of Covid-19 and pandemic related matters, or because of new information of which Seller becomes aware and, as to any representation or warranty based on Seller’s knowledge, which was not known to Seller as of the Effective Date (the “Changed Condition”), Seller shall promptly give Purchaser written notice thereof and if Purchaser does not approve of the Changed Condition, Purchaser’s sole right shall be to elect, by written notice given to Seller on or prior to the earlier of (a) five (5) business days after receipt of written notice of the Changed Condition or (b) the Closing Date, to terminate this Agreement with respect to one or more of the Properties to which such Changed Condition relates to or affects (each a “Changed Condition Property”, and collectively the “Changed Condition Properties”), in which event a percentage of the Earnest Money equal to the quotient (expressed as a percentage) of the Allocated Purchase Price of such terminated Changed Condition Property divided by the total Purchase Price, shall be refunded to Purchaser. If, prior to the Closing, Purchaser obtains actual knowledge that two (2) or more Properties are or have been Changed Condition Properties, without limitation of Purchaser’s right to terminate this Agreement as it relates to such Changed Condition Properties, (i) either Purchaser or Seller shall have the right to terminate this Agreement in its entirety, and (ii) upon such termination of this Agreement,

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Purchaser shall receive a refund of the Earnest Money in full (without duplication of any portion of the Earnest Money previously refunded). In the event Purchaser elects to terminate this Agreement with respect to one or more of the Changed Condition Properties as provided above, the Purchase Price shall be reduced by the amount allocated to the terminated Change Condition Property in Section 2.1 and set forth on Exhibit “N” attached hereto on the Effective Date, and the parties’ rights and obligations hereunder shall remain and continue with respect to the sale and purchase of the remainder of the Property. If the Purchaser elects to terminate the Agreement in its entirety, following the refund of the Earnest Money in full to purchaser, Purchaser and Seller shall have no further rights or obligations under this Agreement except for the Surviving Obligations.

        4.5    Purchaser’s Conditions Precedent. Purchaser’s obligations under this Agreement are expressly conditioned on, and subject to satisfaction of, the following conditions precedent:

            (i)    Performance by Seller. Seller shall have performed all obligations required by this Agreement to be performed by it in all material respects, including, without limitation, delivery of all of the documents enumerated in Sections 6.5 and 6.7 hereof and, solely with respect to the Tallahassee Property causing the Defeasance (as hereinafter defined) to occur in accordance with Section 5.10.

            (ii)    Representations and Warranties True. Seller’s Representations and Warranties shall be true and correct in all material respects as of the Closing Date, except as they may have been modified pursuant to and in accordance with Section 4.4(b) or 4.4(d).

            (iii)    Title Policy. As of the Closing Date, the Title Company is irrevocably committed to issue the Title Policy (as hereinafter defined) to Purchaser, subject only to the Permitted Exceptions and subject to payment of the premium as Purchaser is required under this Agreement.

            (iv)    Estoppels. Seller shall have obtained and delivered to Purchaser:

                (a)    an estoppel certificate from A & V Property Group, Inc., a Florida corporation, or its successor in interest, substantially in the form attached hereto as Exhibit “A” with such other information and modifications reasonably requested by Purchaser, and dated no more than thirty (30) days prior to the Closing Date.

                (b)    an estoppel certificate from Town Village II Owners Association, Inc., a Georgia non-profit corporation, substantially in the form attached hereto as Exhibit “Y” and dated no more than thirty (30) days prior to the Closing Date.

                (c)    an estoppel certificate from Kennesaw Seller and PAC Aldridge at Town Village, LLC, a Delaware limited liability company, substantially in the form attached hereto as Exhibit “Z” and dated no more than thirty (30) days prior to the Closing Date.

            (iv)    Financing Contingency. The Financing Contingency shall have been satisfied pursuant to Section 9.22 hereof.

            (v)    Termination of Property Management Agreements. Seller shall have terminated any existing property management agreements affecting the Property, to the extent applicable.

            (vi)    Occupancy Minimum. As of September 15, 2020 (the “Minimum Occupancy Date”), at least seventy percent (70%) of the aggregate number of units located at the Properties (without

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taking into account any individual Property for which this Agreement has terminated) shall be subject to executed Leases which have not been purported to have been terminated by the tenant thereunder and pursuant to which tenants have moved in their respective units.

The conditions set forth in this Section 4.5 are intended solely for the benefit of Purchaser. If any of the foregoing conditions are not satisfied as of the Closing Date, Purchaser shall have the right at its sole election either to waive the condition in question and proceed with the purchase of the Property or, in the alternative, to terminate this Agreement, whereupon the Earnest Money shall be promptly returned to Purchaser and each of the parties hereto shall be relieved of all further obligations hereunder, except for the Surviving Obligations; provided, however, if any of the foregoing conditions have not been satisfied due to a default by Seller in the performance of any of its obligations to be performed on or prior to the Closing Date hereunder, except as a result of Purchaser’s default or a termination of this Agreement by Purchaser or Seller pursuant to a right to do so under the provisions hereof, then Purchaser’s rights and remedies shall be governed by Section 8.1.

        4.6    Seller’s Conditions Precedent. Seller’s obligations under this Agreement are expressly conditioned on, and subject to satisfaction of, the following conditions precedent:

            (i)    Performance by Purchaser. Purchaser shall have performed all obligations required by this Agreement to be performed by it in all material respects, including, without limitation, delivery of all of the documents enumerated in Sections 6.6 and 6.7 hereof.

            (ii)    Representations and Warranties True. The representations and warranties of Purchaser contained herein shall be true and correct in all material respects as of the Closing Date.

    The conditions set forth in this Section 4.6 are intended solely for the benefit of Seller. If any of the foregoing conditions are not satisfied as of the Closing Date, Seller shall have the right at its sole election either to waive the condition in question and proceed with the sale or, in the alternative, to terminate this Agreement, and upon such termination the Earnest Money shall be promptly returned to Purchaser and each of the parties hereto shall be relieved of all further obligations hereunder, except for the Surviving Obligations; provided, however, if any of the foregoing conditions have not been satisfied due to a default by Purchaser in the performance of any of its material obligations to be performed on or before the Closing Date, except as a result of Seller’s default or a termination of this Agreement by Seller or Purchaser pursuant to a right to do so under the provisions hereof, then Seller’s rights and remedies shall be governed by Section 8.2.

5.

COVENANTS OF SELLER

    5.1    Operation of Property. From the Effective Date through and including the Closing Date, Seller agrees (i) to operate, maintain and repair the Improvements in the normal course of business substantially in accordance with Seller's past practices with respect to the Property, normal wear and tear excepted, and (ii) upon request of Purchaser, provide to Purchaser an electronic copy of (a) operating statements, (b) the then-current Rent Roll and a report of delinquencies under the Leases existing as of the date of Purchaser’s request, (c) pre-leasing rent rolls, including a summary of any free rent, rebates, recurring rent concessions, deductions, or offsets under the Leases for the Academic Year and any subsequent academic year, if applicable, and/or (d) other items related to the Property reasonably requested by Purchaser.

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    5.2    Third-Party Contracts. From the Effective Date through and including the Closing Date, without the prior consent of Purchaser, Seller shall not enter into any contracts for the Property which are not cancellable on thirty (30) days written notice without payment of any fee or penalty.

    5.3    Leasing of Property. From the Effective Date through and including the Closing Date, Seller agrees not to enter into any new leases, or amend, terminate or accept the surrender of any existing tenancies, without the prior consent of Purchaser (which consent be withheld in Purchaser’s reasonable discretion prior to the expiration of the Inspection Period and which consent may be withheld in Purchaser’s sole and absolute discretion after the expiration of the Inspection Period), provided prior consent is not required if such new lease (i) is in conformance with Seller’s current leasing practices and tenant underwriting standards as set forth on Exhibit “AA” attached hereto (collectively, the “Leasing Standards”) (ii) is on Seller’s standard lease form delivered to Purchaser, (iii) does not include any concessions or discounts except as is consistent with the Leasing Standards, (iv) has a term of at least twelve (12) months except as set forth in the Leasing Standards and (v) is consistent with prevailing market rates and terms for student housing properties in the area where such Property is located. After the Effective Date and until the Closing or earlier termination of this Agreement, upon request by Purchaser, Seller shall provide Purchaser with weekly leasing activity and occupancy reports showing all leasing activity for the Property during the previous week.

    5.4    Insurance. From the Effective Date through and including the Closing Date, Seller agrees to keep the Property insured under its current policies against fire and other hazards covered by extended coverage endorsement and commercial general liability insurance against claims for bodily injury, death and property damage occurring in, on or about the Property, and to pay all premiums for such insurance prior to the applicable due dates.

    5.5    Tangible Personal Property. Seller shall not remove any of the Tangible Personal Property which cost, in the aggregate, in excess of $500.00 per Property except as may be required for necessary repair or replacement (provided that any replacement shall be of equal quality as existed at the time of removal) and, in the case of supplies, except for those items consumed in the ordinary course of business.

    5.6    Leasing Commissions. As of the Closing Date, there shall be no leasing commissions or locator fees payable or due by the “landlord” or “lessor” under any Lease (including any modification or extension of any Lease). The terms of this Section 5.6 shall survive Closing.

    5.7    Encumbering the Property. From and after the Effective Date hereof, except for the Additional Mortgages entered into as set forth in Section 4.1.3(c), and until the Closing, or the earlier termination of this Agreement, Seller shall not sell, assign, transfer or create or permit to be created any right, title or interest whatsoever in and to the Property other than the Leases as addressed above, create or permit to exist any lien, easement, encumbrance or charge thereon without Purchaser’s prior written consent.

    5.8    Employee Matters. After the end of the Inspection Period, Purchaser may conduct private interviews with the individuals who are employed on site by Seller, any affiliates of Seller or any property manager in connection with the operation of the Property (the “Property Employees”); provided, however, that any such interviews shall not unreasonably disrupt or disturb (A) the on-going operation of the Property, (B) any services to the Property, or (C) the quiet possession of any tenants under the Leases. Purchaser may consider directly and/or indirectly making, but shall not be obligated to

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make, offers of employment to any of the Property Employees, such offers to be effective as of and contingent upon the Closing and on such terms and conditions as may be determined by Purchaser in its sole discretion. As between Purchaser and Seller, (A) all amounts and benefits payable to the Property Employees providing services to the Property (including any accrued or vested benefits) prior to the Closing Date will not be prorated between the parties and shall remain the sole responsibility of Seller, and (B) if and to the extent that Purchaser directly and/or indirectly hires any such Property Employees, Purchaser will be responsible for any amounts and benefits earned by such employees on and after the Closing Date. If and to the extent that Purchaser or its affiliate directly and/or indirectly makes an offer to hire any such Property Employees (each, a “Purchaser Employee”) and the Purchaser Employee accepts such employment, then for a period beginning upon each such Purchaser Employee’s acceptance of employment with Purchaser’s affiliate and continuing until ninety (90) days following the Closing, neither Seller, nor its affiliated property manager nor any of their respective affiliates shall solicit or persuade, or attempt to solicit or persuade, any such Purchaser Employee to terminate or modify his or her employment relationship, whether or not pursuant to a written agreement, with Purchaser, Purchaser’s management company or their respective affiliates unless such employee first independently declines in writing the offer from Purchaser or its affiliate or is first terminated from employment with Purchaser or its affiliate. The terms of this Section 5.8 shall survive Closing.

    5.9    Notices. Seller shall deliver to Purchaser, promptly after receipt by the Seller, copies of all written notices of violation with respect to the Property issued by any governmental entity having jurisdiction over the Property. Seller shall deliver to Purchaser promptly after receipt by the Seller, copies of all written notices of any monetary or material non-monetary default issued by Seller or received by Seller in respect of any Contract. Promptly after Seller obtains knowledge thereof, Seller shall advise Purchaser of any pending or threatened in writing litigation (excluding any routine residential landlord-tenant disputes), arbitration or similar proceeding (and any updates regarding the foregoing) which affects the Property in any material respect or Seller’s ability to consummate the transactions contemplated hereby, which litigation is not adequately covered by existing insurance, and any condemnation, environmental, zoning or other land-use regulation proceedings related to the Property.

    5.10    Defeasance. Title to the Tallahassee Property is encumbered by, and subject to, that certain mortgage loan in the original principal amount of $36,300,000.00 (the “Tallahassee Loan”), which Tallahassee Loan is evidenced, governed and secured by the documents listed on Exhibit “Q” attached hereto (collectively, the “Tallahassee Loan Documents”), and is held by U.S. Bank National Association, as trustee for the registered Holders of Banc of America Merrill Lynch Commercial Mortgage Inc., Multifamily Mortgage Pass-Through Certificates, Series 2013-K25. Seller, at Seller’s sole cost and expense (except for any attorneys’ fees incurred by Purchaser related to the Defeasance), shall cause the Tallahassee Loan to be defeased at Closing in accordance with the Tallahassee Loan Documents such that at Closing the Tallahassee Property will be released from any and all liens related thereto (the “Defeasance”).

Purchaser and Seller hereby each agree to deposit all closing documents required by this Agreement, which documents shall be fully executed and where required acknowledged, with the Escrow Agent, no later than 3:00 pm New York time on the date which is one (1) business day prior to the Closing Date (the “Pre-Closing Date”). Purchaser hereby agrees to deposit the Purchase Price by wire transfer of immediately available federal funds, plus or minus prorations, with the Escrow Agent no later than the Pre-Closing Date provided that Purchaser shall not be required to fund the Purchase Price until Seller has deposited with the Escrow Agent all closing documents required under this Agreement. Seller shall credit Purchaser at Closing one day of interest at the actual interest rate of any loan received by Purchaser related to the acquisition of the Property on the funds advanced by Purchaser’s lender on the Pre-Closing

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Date in consideration for funding the Purchase Price on the Pre-Closing Date. The provisions of this Section 5.10 shall survive the Closing or termination of this Agreement.

    5.11    Rent Ready. Seller shall cause all units at the Property which have been vacant for more than five (5) days prior to Closing to be in Rent Ready Condition on or before Closing, provided however that any failure to cause any such units to be in Rent Ready Condition shall in no event be deemed or construed to constitute a breach or default of this Agreement by Seller, and Purchaser’s sole and exclusive remedy in the event of any such failure shall be to receive credit against the Purchase Price at Closing in the amount of $225.00 per bed for each bed in each such unit which has been vacant for more than five (5) days prior to Closing which is not in Rent Ready Condition on or before Closing. For purposes of this Agreement, “Rent Ready Condition” means the applicable unit has been cleaned and prepared for occupancy for each new tenant in a manner consistent with Seller’s current standards for units available for rent.

    5.12    Litigation. PAC Guarantor shall indemnify Purchaser and its affiliates, and its and their respective officers, directors, managers, employees, members, partners, stockholders, representatives, agents, successors and permitted assigns (collectively, “Purchaser Indemnified Parties”) from and against all losses, claims, costs and expenses (including, without limitation, reasonable attorney’s fees and court fees) that Purchaser Indemnified Parties incur to the extent arising from or out of the Retreat Class Action Complaint or the Tallahassee Litigation, each as described in Exhibit “O” attached hereto. This Section 5.12 shall survive the Closing.

6.

CLOSING

    6.1    Closing. The closing of the transaction contemplated hereby (the “Closing”) shall be held through an escrow at the offices of the Escrow Agent, located at the address set forth in Section 9.1 hereof, no later than 2:00 p.m. (in Atlanta, Georgia) on the date that is ten (10) days after the date (i) the Financing Contingency has been satisfied and (ii) Loan Assumption Approvals have been obtained for each Loan Assumption Property that has not been previously terminated in accordance with this Agreement (the “Closing Date”). The parties expressly acknowledge and agree that in the event Loan Assumption Approval is not obtained with respect to one or more of the Loan Assumption Properties and to the extent Seller has the right to do so, Seller does not elect to terminate the Agreement in its entirety in accordance with Section 2.1(c) hereof, this Agreement shall terminate with respect to the agreement of Seller to sell and the agreement of Purchaser to purchase any Loan Assumption Property for which Loan Assumption Approval has not been obtained and the parties’ rights and obligations hereunder shall remain and continue with respect to the sale and purchase of the remainder of the Property.

6.2    Possession. Possession of the Property shall be delivered to Purchaser at the Closing, subject only to (i) tenants in possession under the Leases, as set forth on the Rent Roll delivered no later than three (3) business days prior to Closing, and (ii) the Permitted Encumbrances.

6.3    Proration. The following items shall be prorated as of 12:01 am on the Closing Date: (i) collected rents, other collected amounts payable by the tenants under the Leases, and all other collected income with respect to the Property for the month in which the Closing occurs, (ii) real estate and personal property taxes and other assessments with respect to the Property for the year in which the Closing occurs, and (iii) all operating expenses relating to the ownership and operation of the Property, including any fees and charges under any Contracts being assigned to and assumed by Purchaser at Closing; provided however, in no event shall Purchaser be responsible for costs associated with property management contracts or employee expenses. If permitted by the applicable utility providers, utilities

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shall be canceled by Seller and reestablished in Purchaser’s name on the Closing Date; otherwise, utilities shall be prorated between Seller and Purchaser at Closing, with such proration to be readjusted at such time as final utility bills become available. Any amounts unpaid under the Contracts which Purchaser elects or is obligated to assume at Closing shall be prorated between Seller and Purchaser at Closing. If accurate allocations cannot be made at Closing because current bills are not obtainable, Seller and Purchaser shall allocate such income or expenses at Closing on the best available information, subject to adjustment upon receipt of the final bill or other evidence of the applicable income or expense. Delinquent rent shall not be prorated.

    (a)    Subsequent to the Closing, if any such rents and other income are received by Purchaser, all such amounts shall be applied in the following order: (i) first to rent due for the month or months following the month in which Closing occurs to keep rent current, (ii) next, to delinquent rent due for the month in which Closing occurs, and (iii) the balance to delinquent rent due for the period prior to the month in which Closing occurs. Any such rentals due to Seller shall be paid by Purchaser to Seller within sixty (60) days following Purchaser’s receipt thereof. If, subsequent to the Closing, any such rents and other income payable to Purchaser, as provided above, are received by Seller, Seller shall remit to Purchaser within sixty (60) days following Seller’s receipt thereof and such rent shall be calculated and applied as aforesaid. Purchaser shall receive a credit at Closing for all Deposits that are being held by or on behalf of Seller, as reflected on the final Rent Roll delivered to Purchaser (and interest thereon if required by law or contract to be earned thereon). Purchaser shall receive a credit at Closing for all rent rebates, deductions, concessions or offsets with respect to the Leases for the Academic Year, if applicable, including, without limitation, the value of any gift cards payable to tenants following Closing (but only to the extent the cost of any such gift cards have not been paid for by Seller), as reflected on the final Rent Roll delivered to Purchaser. The foregoing does not include any credit for “concessions” in the form of free rent provided to a tenant which results in a net effective rent as shown on the Rent Roll.

    (b)    If the Closing shall occur before the tax rate or the assessed valuation of the Property is fixed for the then current year, the apportionment of taxes shall be based on 103% of the taxes assessed against the Property for the calendar year immediately preceding the calendar year in which the Closing occurs, subject to any notice of reassessment which may have been received prior to Closing. Should such proration not be based on the actual amount of the taxes for the period in question and should such proration prove to be inaccurate upon receipt of the actual bills for the Property, then, either Seller or Purchaser may demand a payment from the other party correcting such malapportionment, except in the case of real estate taxes which at the expiration of such period are subject to appeal. Claims with respect to the adjustment which are subject to the appeal of real estate taxes will be valid if made on or before the date that is sixty (60) days after a final order or resolution shall have been issued in such appeal. Both parties shall use good faith efforts to resolve any disputed claims promptly. The obligations of the parties under this Section 6.3(b) shall survive for a period of sixty (60) days after final bills are received to ascertain final apportionment of taxes.

(c)    Seller shall be entitled to receive refunds for any and all deposits which Seller has made with utility companies, and Purchaser shall replace such deposits at Closing.

In the event that a post-closing true-up is necessary, Purchaser shall work diligently with Seller to finalize the prorations within one hundred twenty (120) days after the Closing Date (except as to real estate taxes for the current period, the final adjustment with respect to which shall take place pursuant to Section 6.3(b). Seller and Purchaser shall have reasonable access to, and the right to inspect and audit, the other’s books to confirm the final prorations. Notwithstanding anything to the contrary in this Agreement, Seller’s liabilities related to prorations under this Section 6.3 shall not be subject to the Ceiling. The agreements of Seller and Purchaser set forth in this Section 6.3 shall survive the Closing as specified in this Section 6.3.

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6.4    Closing Costs. Purchaser shall pay, on the Closing Date, (a) one-half of any escrow fees of the Escrow Agent, (b) the costs relating to the extended portion of the premiums for the ALTA Extended Owner's Policies of Title Insurance issued pursuant to the Title Commitments (collectively, the “Title Policy”) as set forth on Exhibit “P”, (c) all title insurance costs and premiums relating to endorsements or other modifications to the Title Policy issued pursuant to the Title Commitments and any mortgagee’s policies of title insurance, (d) the fees of Purchaser’s counsel, (e) all costs relating to the Survey, if any, (f) any recording or filing fees necessary to record the Deed (as hereinafter defined) (except with respect to the Tempe Land), (g) documentary stamp, recordation or transfer tax related to the conveyance of title to the Property as set forth on Exhibit “P”, and (h) any other expenses incurred by Purchaser, or its consultants or representatives in inspecting and evaluating the Property or closing this transaction. Seller shall pay, on the Closing Date, (i) any recording or filing fees necessary to remove any (A) Unacceptable Encumbrances which Seller is obligated or agreed to remove under the terms of this Agreement and (B) any Required Clearance Exceptions, (ii) any documentary stamp, recordation or transfer tax related to the conveyance of title to the Property as set forth on Exhibit “P”, (iii) any recording or filing fees necessary to record each of the Deed and Affidavit of Property Value with respect to the Tempe Land, (iv) one-half of any escrow fees of the Escrow Agent, (v) all costs relating to the premiums for the Title Policy as set forth on Exhibit “S”, and (vi) the fees of Seller’s counsel.

6.5    Seller’s Obligations at the Closing. At the Closing, Seller shall deliver to Purchaser the following:

(a)    Deed. Duly executed and acknowledged Special or Limited Warranty Deed (the “Deed”), as applicable, for each individual Land conveying the Land and Improvements to Purchaser, in the form attached to this Agreement as Exhibit “B”.

(b)    Bill of Sale. A duly executed and acknowledged Bill of Sale (the “Bill of Sale”) conveying the Tangible Personal Property to Purchaser, in the form attached to this Agreement as Exhibit “C”.

(c)     Evidence of Authority. Such organizational and authorizing documents of Seller as shall be reasonably required by the Title Company to evidence Seller’s authority to consummate the transactions contemplated by this Agreement.

(d)    Foreign Person. Duly executed and acknowledged Affidavits certifying that each Seller is not a “foreign person,” as defined in the federal Foreign Investment in Real Property Tax Act of 1980, and the 1984 Tax Reform Act, as amended, in the form attached to this Agreement as Exhibit “D”.

(e)    Leases. The originals, or copies should originals not be available, of all of the Leases to which Seller is a party, if any, and together with all keys in Seller’s possession.

(f)    Contracts. Originals, or copies should originals not be available, of all of the Contracts.

(g)    Affidavits. Duly executed and acknowledged Owner’s affidavits, in the forms attached to this Agreement as Exhibit “E”, and a duly executed and acknowledged (where required) Affidavit of Property Value as required by Arizona law sufficient for the Title Company to delete any standard title and survey exceptions from the title insurance policies issued to Purchaser, including, without limitation, those exceptions for (w) mechanics’ or materialmen’s liens, (x) parties in possession, other than tenants as tenants only under unrecorded leases as set forth on the Rent Roll, and (y) matters not shown in the public records, and with respect to the Kennesaw Property, an Affidavit of Seller’s Residence affirming that the Kennesaw Seller is, or is deemed, a “resident” of Georgia.

(h)    Transfer Tax and Withholding Tax Declarations. All such tax, transfer and other declarations and returns, and withholding affidavits and information returns, duly executed and sworn to by Seller, as may be required of Seller by law in connection with the conveyance of the Property to Purchaser.

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(i)    Security Deposits. All Deposits under Leases together with any and all interest accrued thereon.

(j)    Sellers’ Certificate. A duly executed and acknowledged certificate executed by an authorized representative of Seller indicating that all of Seller’s representations and warranties made in this Agreement are true and correct as of the Closing Date as if then made, in the form attached to this Agreement as Exhibit “F”.

(k)    Revised Rent Roll. An updated Rent Roll (including the amount of any rents collected, scheduled rents, and the Deposits held thereunder, a report of delinquencies under the Leases existing as of the Closing Date, pre-leasing reports and a summary of any free rent, rebates, recurring and non-recurring rent concessions that have not been fully satisfied, deductions, or offsets under the Leases for the Academic Year and any subsequent academic year, if applicable) and operating statements for the Property printed as of three (3) business days prior to the Closing Date certified to be true, correct and complete in all material respects and stating the amount of all of the Security Deposits held by Seller under each Lease.

(l)    Keys. All keys to the Property, labeled for identification.

(m)    Termination of Property Management Agreement. Duly executed terminations of any existing property management agreements affecting the Property.

(n)    Broker’s Lien Waiver. With respect to the Kennesaw Property, a duly executed and acknowledged Broker’s Lien Waiver from Agent.

(o)    Florida Sales Tax Clearance Letter. A sales tax clearance letter from the Department of Revenue of the State of Florida indicating that all sales taxes arising from the Seller’s operations of the Orlando Property and the Tallahassee Property have been paid in full; provided that in the event Seller is unable to deliver such sales tax clearance letter at closing, PAC Guarantor hereby agrees by joinder to this Agreement to indemnify Purchaser for any sales taxes due and payable arising from Seller’s operations of the Orlando Property or the Tallahassee Property accruing prior to the Closing Date. Any such indemnification shall survive the Closing.

(p)    Other Tax Forms. Any other federal or state tax reporting forms required in connection with the transactions contemplated by this Agreement including, but not limited to, Internal Revenue Service Form 1099.

(q)    Other Documents. Such other documents as may be reasonably requested by Title Company to effect the Closing of the transaction contemplated by this Agreement.

6.6    Purchaser’s Obligations at the Closing. At the Closing, Purchaser shall deliver to Seller the following:

(a)    Purchase Price. The Purchase Price, as adjusted pursuant to the terms hereof, payment of which shall be made by wire transfer of immediately available funds to the account of the Escrow Agent for the benefit of Seller in accordance with the terms of Section 6.1.

(b)    Evidence of Authority. Such organizational and authorizing documents of Purchaser as shall be reasonably required by the Title Company to evidence Purchaser’s authority to consummate the transactions contemplated by this Agreement.

(c)    Purchaser’s Certificate. A duly executed and acknowledged certificate executed by an authorized representative of Purchaser indicating that all of Purchaser’s representations and warranties made in this Agreement are true and correct in all material respects as of the Closing Date as if then made, in the form attached to this Agreement as Exhibit “L”.

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(d)    Affidavit of Property Value. A duly executed and acknowledged (where required) Affidavit of Property Value as required by Arizona law.

(e)    Other Documents. Such other documents as may be reasonably requested by Title Company to effect the Closing of the transaction contemplated by this Agreement.

6.7    Documents to be Executed by Seller and Purchaser. At the Closing, Seller and Purchaser shall also execute and deliver the following:

(a)    Tenant Notices. Signed statements or notices to all tenants of the Property notifying such tenants that the Property has been transferred to Purchaser and that Purchaser is responsible for security deposits (specifying the amounts of such deposits) returnable under the Leases and notifying such tenants of the new address where tenants are to make rental payments after the Closing, in the form attached to this Agreement as Exhibit “G”. Seller shall sign one (1) counterpart of the tenant notice letter for each Property and Purchaser shall thereafter be responsible for the delivery of the tenant notice letter to all tenants of the Property, as determined by Purchaser in its sole discretion.

(b)    Assignment and Assumption of Leases, Contracts and Intangible Property. An “Assignment and Assumption of Leases, Contracts and Intangible Property” (the “Assignment”) in the form attached to this Agreement as Exhibit “H”, for the Property assigning to Purchaser the Leases, those Contracts which Purchaser has elected to assume and the Intangible Property.

(c)    Settlement Statements. Settlement statements, in conformity with the terms of this Agreement and otherwise in form acceptable to Seller and Purchaser.

(d)    Transfer Tax and Withholding Tax Declarations. All such tax, transfer and other declarations and returns, and withholding affidavits and information returns, duly executed and sworn to, as may be required by law in connection with the conveyance of the Property to Purchaser.

(e)    Assignment and Assumption of Mezzanine Loan. An assignment and assumption of the Mezzanine Loan Documents (as hereinafter defined) in the form attached to this Agreement as Exhibit “S”.

(f)    Underwritten Bad Debt Escrow Agreement. An Underwritten Bad Debt Escrow Agreement (as hereinafter defined) in the form attached to this Agreement as Exhibit “U”.

(g)    Escrow Agreement. An Escrow Agreement (as hereinafter defined) in the form attached to this Agreement as Exhibit “EE”.

(h)    Roof Escrow Agreement. A Roof Escrow Agreement (as hereinafter defined) in the form attached to this Agreement as Exhibit “FF”.

7.

RISK OF LOSS

7.1    Condemnation. If, prior to the Closing, action is initiated to take the Land and Improvements, or part thereof, by eminent domain proceedings or by deed in lieu thereof (each a “Taking”), which Taking will (i) cause the Property to no longer comply with zoning requirements affecting the Property, (ii) affect the Property’s access to a publicly-dedicated and maintained right-of-way for vehicular and pedestrian access or affect parking at the Property, (iii) have a material adverse effect on the continued operation or leasing activity of the Property, or (iv) cost in excess of $1,000,000.00 per individual Property to restore in Purchaser’s reasonable opinion (an “Impacted Property”), then Purchaser may either at or prior to Closing, by written notice to Seller, elect to either (a) terminate this Agreement with

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respect to the Impacted Property and promptly receive a refund of a percentage of the Earnest Money equal to the quotient (expressed as a percentage) of the Allocated Purchase Price of such terminated Impact Property divided by the total Purchase Price, and neither party shall have any further rights or obligations hereunder with respect to the sale and purchase of the Impacted Property except for the Surviving Obligations, or (b) consummate the Closing, in which latter event all of Seller’s assignable right, title and interest in and to the award of the condemning authority with respect to the Impacted Property shall be assigned to Purchaser at the Closing and there shall be no reduction in the Purchase Price. If there is a Taking with respect to two or more Properties, either party may terminate the Agreement in its entirety, the Earnest Money shall be returned to Purchaser and Purchaser and Seller shall have no further rights or obligations under this Agreement except for the Surviving Obligations. In the event Purchaser terminates this Agreement with respect to an Impacted Property, the Purchase Price shall be reduced by the amount allocated to the Impacted Property pursuant to Section 2.1 and set forth on Exhibit “N” attached hereto on the Effective Date, and the parties’ rights and obligations hereunder shall remain and continue with respect to the sale and purchase of the remainder of the Property. The Seller shall provide written notice to Purchaser of a Taking affecting the Property within ten (10) business days of obtaining knowledge of such Taking.

7.2    Casualty. If the Improvements, or any part thereof, suffers any damage or causes a loss in rent payable equal to or in excess of $1,000,000.00 per individual Property, as determined by Purchaser in its reasonable discretion or there is an uninsured loss at a Property in excess of $1,000,000.00 (a “Damaged Property”), prior to the Closing from fire or other casualty, Purchaser may either at or prior to Closing, by written notice to Seller, elect to either (a) terminate this Agreement with respect to the Damaged Property and promptly receive a refund of a percentage of the Earnest Money equal to the quotient (expressed as a percentage) of the Allocated Purchase Price of such terminated Damaged Property divided by the total Purchase Price, and neither party shall have any further rights or obligations hereunder with respect to the sale and purchase of the Damaged Property except for the Surviving Obligations, or (b) consummate the Closing, in which latter event all of Seller’s right, title and interest in and to the proceeds of any insurance covering such damage with respect to the Damaged Property shall be assigned to Purchaser at the Closing and there shall be no reduction in the Purchase Price (except, however, Purchaser shall receive at Closing a credit equal to Seller’s deductible with respect to the Damaged Property). If there are two or more Damaged Properties and provided Purchaser has not elected to terminate the Agreement with respect to more than one Property, either Purchaser or Seller may terminate the Agreement in its entirety, the Earnest Money shall be returned to Purchaser and Purchaser and Seller shall have no further rights or obligations under this Agreement except for the Surviving Obligations. If the Improvements, or any part thereof, suffers any damage and loss in rent payable less than the $1,000,000.00 threshold and there is no uninsured loss less than $1,000,000.00 for which Seller does not agree to be responsible, Purchaser agrees that it will consummate the Closing and accept the assignment of the proceeds of any insurance covering such damage, and there shall be no reduction in the Purchase Price (except, however, Purchaser shall receive at Closing a credit equal to Seller’s deductible with respect to the damaged Property and the amount of any uninsured loss less than $1,000,000.00, if any). In the event Purchaser terminates this Agreement with respect to a Damaged Property, the Purchase Price shall be reduced by the amount allocated to the Damaged Property in Section 2.1 and set forth on Exhibit “N” attached hereto on the Effective Date, and the parties’ rights and obligations hereunder shall remain and continue with respect to the sale and purchase of the remainder of the Property. Seller shall provide written notice to Purchaser of any fire or casualty at the Property within ten (10) business days of such fire of casualty.

8.

DEFAULT

8.1    Breach by Seller. If Seller (i) breaches any of its obligations hereunder to be performed by it in any material respects prior to the Closing Date, or (ii) defaults in the performance of any of its obligations to be performed by it in any material respects on the Closing Date, Purchaser shall be entitled, as its sole

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and exclusive remedy, at law or in equity, to either (i) terminate this Agreement and receive a refund of the Earnest Money, and Seller shall reimburse Purchaser for all Pursuit Costs incurred by Purchaser in connection with this transaction in an amount not to exceed Two Million Dollars ($2,000,000), whereupon neither party shall have any further right or obligation hereunder other than the Surviving Obligations; or (ii) pursue the remedy of specific performance of Seller’s obligations under this Agreement; provided that any suit for specific performance must be brought within ninety (90) days of Seller’s default, to the extent permitted by law, Purchaser waiving the right to bring suit at any later date. Notwithstanding the foregoing, in the event Seller intentionally conveys any portion of the Property to a third party prior to the earlier of (x) the termination of this Agreement pursuant to the terms hereof or (y) ninety (90) days following the date that Closing is otherwise required to occur under this Agreement (provided no action for specific performance has then been initiated by Purchaser), thereby making the remedy of specific performance unavailable to Purchaser, Purchaser shall be permitted to pursue all other rights and remedies which may be available to it at law or in equity on account of a breach of Seller’s obligations herein. This Agreement confers no present right, title or interest in the Property to Purchaser, and Purchaser agrees not to file a lis pendens or other similar notice against the Property except in connection with the enforcement of its rights under this Section 8.1.

8.2     Breach by Purchaser. If Purchaser fails to consummate this Agreement on the Closing Date for any reason, except Seller’s default or a termination of this Agreement by Purchaser or Seller pursuant to a right to do so under the provisions hereof, Seller, as its sole and exclusive remedy, may terminate this Agreement and thereupon shall be entitled to the Earnest Money as liquidated damages (and not as a penalty). Seller and Purchaser have made this provision for liquidated damages because it would be difficult to calculate, on the date hereof, the amount of actual damages for such breach, and Seller and Purchaser agree that these sums represent a reasonable forecast of such damages.

8.3    Notice and Opportunity to Cure. Seller and Purchaser each agree to provide the other party with written notice of any default by the other party under this Agreement, and a period of ten (10) days following the other party’s receipt of such notice within which to cure such default; provided, however, that no such notice and opportunity to cure shall be applicable with respect to a party’s failure to timely close, nor shall any such notice and cure period extend beyond the Closing Date.

9.

MISCELLANEOUS

9.1    Notices. All notices, demands and requests which may be given or which are required to be given by either party to the other, and any exercise of a right of termination provided by this Agreement, shall be in writing and shall be deemed effective either: (a) on the date personally delivered to the address below, as evidenced by written receipt therefor, whether or not actually received by the person to whom addressed; (b) on the third (3rd) business day after being sent, by certified or registered mail, return receipt requested, postage prepaid, addressed to the intended recipient at the address specified below; (c) on the first business day after being deposited into the custody of a nationally recognized overnight delivery service such as Federal Express Corporation, addressed to such party at the address specified below, or (d) on the date an electronic mail message with a pdf copy of the signed notice is delivered to the email addresses listed below, provided confirmation of electronic mail receipt is demonstrated by the sender’s failure to receive a delivery failure or error message from the recipient. Any notice given pursuant to subclauses (b) and (c) shall be accompanied by a copy delivered pursuant to subclause (d) hereof. For purposes of this Section 9.1, the addresses of the parties for all notices are as follows (unless changed by similar notice in writing given by the particular person whose address is to be changed):

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If to Purchaser:    c/o TPG Real Estate

    345 California St., Suite 3300

    San Francisco, CA 94104

    Attention: Ty Newell, Jamie Sholem and Yaman Shukairy

    Email:     tnewell@tpg.com, JSholem@tpg.com and yshukairy@tpg.com

    Phone: (415) 743-1617, (212) 601-4707 and (415) 743-5426

with a copy to:    Kirkland & Ellis LLP

    300 North LaSalle

    Chicago, IL 60654

    Attention: Andrew Small

    Email:    andrew.small@kirkland.com

    Phone: (312) 862-5489

If to Seller:        c/o Preferred Apartment Communities, Inc.

            3284 Northside Parkway, Suite 150

            Atlanta, Georgia 30327

            Attention: Jeffrey R. Sprain

            Phone: (404) 818-4108

            Email:     jsprain@pacapts.com

with a copy to:        Preferred Apartment Communities, Inc.

            3284 Northside Parkway, Suite 150

            Atlanta, Georgia 30327

            Attention: Jeff Sherman

            Email: jsherman@pacapts.com

with a copy to:        Preferred Apartment Communities, Inc.

            3284 Northside Parkway, Suite 150

            Atlanta, Georgia 30327

            Attention: Brian Harrison

            Email: bharrison@pacapts.com

with a copy to:        Stephen F. White, Esq.

            Capital Law & Advisory Partners, LLC

            375 Northridge Road, Suite 485

            Atlanta, Georgia 30350

            Email: swhite@caplawpartners.com

If to Escrow Agent/

Title Company:    Jennifer Panciera

    Senior Vice President & Counsel

First American Title Insurance Company

666 Third Avenue, New York, NY 10017

New York, NY 10017

    Email: JPanciera@firstam.com

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9.2    Real Estate Commissions. Neither Seller nor Purchaser has authorized any broker or finder to act on any party’s behalf in connection with the sale and purchase hereunder and neither Seller nor Purchaser has dealt with any broker or finder purporting to act on behalf of any other party, except for CBRE (“Agent”), who represents Seller. Seller shall pay Agent any commissions due Agent on the Closing Date. Purchaser agrees to indemnify and hold harmless Seller from and against any and all claims, losses, damages, costs or expenses of any kind or character arising out of or resulting from any agreement, arrangement or understanding alleged to have been made by Purchaser or on Purchaser’s behalf with any broker or finder in connection with this Agreement or the transaction contemplated hereby. Seller agrees to indemnify and hold harmless Purchaser from and against any and all claims, losses, damages, costs or expenses (including but not limited to reasonable attorneys’ fees) of any kind or character arising out of or resulting from any agreement, arrangement or understanding alleged to have been made by Seller or on Seller’s behalf with Agent and/or any broker or finder in connection with this Agreement or the transaction contemplated hereby. Notwithstanding anything to the contrary contained herein, this Section 9.2 shall survive the Closing or any earlier termination of this Agreement.

9.3    Entire Agreement. This Agreement embodies the entire agreement between the parties relative to the subject matter hereof, and there are no oral or written agreements between the parties, nor any representations made by either party relative to the subject matter hereof, which are not expressly set forth herein.

9.4    Amendment. This Agreement may be amended only by a written instrument executed by Seller and Purchaser.

9.5    Headings. The captions and headings used in this Agreement are for convenience only and do not in any way limit, amplify, or otherwise modify the provisions of this Agreement.

9.6    Time of Essence. Time is of the essence of this Agreement; however, if the final date of any period which is set out in any provision of this Agreement falls on a Saturday, Sunday or legal holiday under the laws of the United States or the State of Georgia, then, in such event, the time of such period shall be extended to the next day which is not a Saturday, Sunday or legal holiday.

9.7    Governing Law. This Agreement shall be governed by the laws of the State of Georgia and the laws of the United States pertaining to transactions in such State.

9.8    Successors and Assigns; Assignment. This Agreement shall bind and inure to the benefit of Seller and Purchaser and their respective successors and permitted assigns. Purchaser shall not have the right to assign all or any portion of Purchaser's rights and obligations under this Agreement without Seller’s prior written consent, which may be granted or withheld in Seller’s sole discretion, except that Purchaser may assign or transfer this Agreement to one or more affiliates of Purchaser without Seller’s consent or approval provided that, prior to or at Closing, Seller receives an executed assignment and assumption agreement which expressly assigns the Earnest Money and in which such assignee expressly assumes performance of this Agreement for the benefit of Seller. No such assignment or designation shall relieve or release Purchaser from any obligations under this Agreement prior to Closing, and Purchaser shall remain jointly and severally liable for all of same together with such assignee until Closing. Notwithstanding the foregoing, Seller agrees to cause each Property to be conveyed at Closing to such designee or designees as Purchaser may provide in writing not less than five (5) business days prior to Closing.

9.9    Invalid Provision. If any provision of this Agreement is held to be illegal, invalid or unenforceable under present or future laws, such provision shall be fully severable; this Agreement shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part of this Agreement; and, the remaining provisions of this Agreement shall remain in full force and effect and shall not be affected by such illegal, invalid, or unenforceable provision or by its severance from this Agreement.

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9.10    Attorneys’ Fees. In the event it becomes necessary for either party hereto to file suit to enforce this Agreement or any provision contained herein, the party prevailing in such suit shall be entitled to recover, in addition to all other remedies or damages, as provided herein, reasonable attorneys’ fees incurred in such suit, both at trial and at all appellate levels.

9.11    Multiple Counterparts. This Agreement may be executed in a number of identical counterparts which, taken together, shall constitute collectively one agreement; in making proof of this Agreement, it shall not be necessary to produce or account for more than one such counterpart with each party’s signature. Facsimile or electronic mail signature pages shall be effective for purposes of this Section 9.11.

9.12    No Recordation. Seller and Purchaser hereby acknowledge that neither this Agreement nor any memorandum or affidavit thereof shall be recorded in the public records of any county.

9.13.    Tax-Deferred Exchange. Each party will, upon request by the other party, cooperate as reasonably required to facilitate a tax-deferred exchange. Notwithstanding the foregoing, neither party will be required to undertake any liabilities or obligations or expend any sums of money in connection with a proposed tax-free exchange for the benefit of the other party.

[Remainder of Page Left Blank]

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9.14    Disclaimers by Seller.

EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT AND IN ANY DOCUMENTS DELIVERED AT CLOSING, IT IS UNDERSTOOD AND AGREED THAT NEITHER SELLER NOR SELLER'S AGENTS, EMPLOYEES OR REPRESENTATIVES HAVE AT ANY TIME MADE AND ARE NOT NOW MAKING, AND THEY SPECIFICALLY DISCLAIM, ANY WARRANTIES, REPRESENTATIONS OR GUARANTIES OF ANY KIND OR CHARACTER, EXPRESS OR IMPLIED, WITH RESPECT TO THE PROPERTY, INCLUDING, BUT NOT LIMITED TO, WARRANTIES, REPRESENTATIONS OR GUARANTIES AS TO (A) MATTERS OF TITLE (OTHER THAN SELLER'S LIMITED WARRANTY OF TITLE TO BE CONTAINED IN THE DEED), (B) ENVIRONMENTAL MATTERS RELATING TO THE PROPERTY, THE LAND AND IMPROVEMENTS OR ANY PORTION THEREOF, INCLUDING, WITHOUT LIMITATION, THE PRESENCE OF “HAZARDOUS MATERIALS” (AS DEFINED BELOW) IN, ON, UNDER OR IN THE VICINITY OF THE LAND AND IMPROVEMENTS, (C) GEOLOGICAL CONDITIONS, INCLUDING, WITHOUT LIMITATION, SUBSIDENCE, SUBSURFACE CONDITIONS, WATER TABLE, UNDERGROUND WATER RESERVOIRS, LIMITATIONS REGARDING THE WITHDRAWAL OF WATER, AND GEOLOGIC FAULTS AND THE RESULTING DAMAGE OF PAST AND/OR FUTURE FAULTING, (D) WHETHER, AND TO THE EXTENT TO WHICH, THE LAND OR IMPROVEMENTS OR ANY PORTION THEREOF IS AFFECTED BY ANY STREAM (SURFACE OR UNDERGROUND), BODY OF WATER, WETLANDS, FLOOD PRONE AREA, FLOOD PLAIN, FLOODWAY OR SPECIAL FLOOD HAZARD, (E) DRAINAGE, (F) SOIL CONDITIONS, INCLUDING THE EXISTENCE OF INSTABILITY, PAST SOIL REPAIRS, SOIL ADDITIONS OR CONDITIONS OF SOIL FILL, OR SUSCEPTIBILITY TO LANDSLIDES, OR THE SUFFICIENCY OF ANY UNDERSHORING, (G) THE PRESENCE OF ENDANGERED SPECIES OR ANY ENVIRONMENTALLY SENSITIVE OR PROTECTED AREAS, (H) ZONING OR BUILDING ENTITLEMENTS TO WHICH THE LAND OR IMPROVEMENTS OR ANY PORTION THEREOF MAY BE SUBJECT, (I) THE AVAILABILITY OF ANY UTILITIES TO THE LAND OR IMPROVEMENTS OR ANY PORTION THEREOF INCLUDING, WITHOUT LIMITATION, WATER, SEWAGE, GAS AND ELECTRIC, (J) USAGES OF ADJOINING PROPERTY, (K) ACCESS TO THE LAND OR IMPROVEMENTS OR ANY PORTION THEREOF, (L) THE VALUE, COMPLIANCE WITH THE PLANS AND SPECIFICATIONS, SIZE, LOCATION, AGE, USE, DESIGN, QUALITY, DESCRIPTION, SUITABILITY, STRUCTURAL INTEGRITY, OPERATION, TITLE TO, OR PHYSICAL OR FINANCIAL CONDITION OF THE LAND OR IMPROVEMENTS OR ANY PORTION THEREOF, OR ANY INCOME, EXPENSES, CHARGES, LIENS, ENCUMBRANCES, RIGHTS OR CLAIMS ON OR AFFECTING OR PERTAINING TO THE PROPERTY, THE LAND OR IMPROVEMENTS OR ANY PART THEREOF, (M) THE CONDITION OR USE OF THE LAND OR IMPROVEMENTS OR COMPLIANCE OF THE LAND OR THE IMPROVEMENTS WITH ANY OR ALL PAST, PRESENT OR FUTURE FEDERAL, STATE OR LOCAL ORDINANCES, RULES, REGULATIONS OR LAWS, BUILDING, FIRE OR ZONING ORDINANCES, CODES OR OTHER SIMILAR LAWS, (N) THE EXISTENCE OR NON-EXISTENCE OF UNDERGROUND STORAGE TANKS, SURFACE IMPOUNDMENTS, OR LANDFILLS, (O) ANY OTHER MATTER AFFECTING THE STABILITY AND INTEGRITY OF THE LAND OR IMPROVEMENTS, (P) THE POTENTIAL FOR FURTHER DEVELOPMENT OF THE LAND OR IMPROVEMENTS, (Q) THE MERCHANTABILITY OF THE PROPERTY, THE LAND OR THE IMPROVEMENTS OR FITNESS OF THE PROPERTY, THE LAND OR THE IMPROVEMENTS FOR ANY PARTICULAR PURPOSE, (R) THE TRUTH, ACCURACY OR COMPLETENESS OF ANY DUE DILIGENCE ITEMS DELIVERED TO PURCHASER, (S) TAX CONSEQUENCES, OR (T) ANY OTHER MATTER OR THING WITH RESPECT TO THE PROPERTY, THE LAND OR THE IMPROVEMENTS.

Purchaser’s Initials: ______

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EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT AND IN ANY DOCUMENTS DELIVERED AT CLOSING, PURCHASER ACKNOWLEDGES AND AGREES THAT UPON CLOSING, SELLER SHALL SELL AND CONVEY TO PURCHASER AND PURCHASER SHALL ACCEPT THE PROPERTY "AS IS, WHERE IS, WITH ALL FAULTS". EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES OF SELLER UNDER SECTION 4.4 ABOVE AND CONTAINED IN ANY DOCUMENTS DELIVERED AT CLOSING, PURCHASER HAS NOT RELIED AND WILL NOT RELY ON, AND SELLER HAS NOT MADE AND IS NOT LIABLE FOR OR BOUND BY, ANY EXPRESS OR IMPLIED WARRANTIES, GUARANTEES, STATEMENTS, REPRESENTATIONS OR INFORMATION PERTAINING TO THE PROPERTY, THE LAND OR THE IMPROVEMENTS OR RELATING THERETO (INCLUDING SPECIFICALLY, WITHOUT LIMITATION, PROPERTY INFORMATION PACKAGES DISTRIBUTED WITH RESPECT TO THE PROPERTY) MADE OR FURNISHED BY SELLER, OR ANY PROPERTY MANAGER, REAL ESTATE BROKER, AGENT OR THIRD PARTY REPRESENTING OR PURPORTING TO REPRESENT SELLER, TO WHOMEVER MADE OR GIVEN, DIRECTLY OR INDIRECTLY, ORALLY OR IN WRITING. PURCHASER REPRESENTS THAT IT IS A KNOWLEDGEABLE, EXPERIENCED AND SOPHISTICATED PURCHASER OF REAL ESTATE AND THAT EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT AND IN ANY DOCUMENTS DELIVERED AT CLOSING, IT IS RELYING SOLELY ON ITS OWN EXPERTISE AND THAT OF PURCHASER'S CONSULTANTS IN PURCHASING THE PROPERTY AND SHALL MAKE AN INDEPENDENT VERIFICATION OF THE ACCURACY OF ANY DOCUMENTS AND INFORMATION PROVIDED BY SELLER. PURCHASER WILL CONDUCT SUCH INSPECTIONS AND INVESTIGATIONS OF THE PROPERTY, THE LAND AND THE IMPROVEMENTS AS PURCHASER DEEMS NECESSARY, INCLUDING, BUT NOT LIMITED TO, THE PHYSICAL AND ENVIRONMENTAL CONDITIONS THEREOF. PURCHASER ACKNOWLEDGES THAT SELLER HAS AFFORDED PURCHASER A FULL OPPORTUNITY TO CONDUCT SUCH INVESTIGATIONS OF THE PROPERTY, THE LAND AND THE IMPROVEMENTS AS PURCHASER DEEMED NECESSARY TO SATISFY ITSELF AS TO THE CONDITION OF THE PROPERTY, THE LAND AND THE IMPROVEMENTS AND THE EXISTENCE OR NON-EXISTENCE OR CURATIVE ACTION TO BE TAKEN WITH RESPECT TO ANY HAZARDOUS MATERIALS ON OR DISCHARGED FROM THE LAND AND THE IMPROVEMENTS, AND WILL RELY SOLELY UPON SAME AND NOT UPON ANY INFORMATION PROVIDED BY OR ON BEHALF OF SELLER OR ITS AGENTS OR EMPLOYEES WITH RESPECT THERETO. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT AND IN ANY DOCUMENTS DELIVERED AT CLOSING, UPON CLOSING, PURCHASER SHALL ASSUME THE RISK THAT ADVERSE MATTERS, INCLUDING, BUT NOT LIMITED TO, ADVERSE PHYSICAL OR CONSTRUCTION DEFECTS OR ADVERSE ENVIRONMENTAL, HEALTH OR SAFETY CONDITIONS, MAY NOT HAVE BEEN REVEALED BY PURCHASER'S INSPECTIONS AND INVESTIGATIONS. PURCHASER HEREBY REPRESENTS AND WARRANTS TO SELLER THAT: (A) PURCHASER IS REPRESENTED BY LEGAL COUNSEL IN CONNECTION WITH THE TRANSACTION CONTEMPLATED BY THIS AGREEMENT; AND (B) PURCHASER IS PURCHASING THE PROPERTY FOR BUSINESS, COMMERCIAL, INVESTMENT OR OTHER SIMILAR PURPOSE AND NOT FOR USE AS PURCHASER'S RESIDENCE. EACH OF SELLER AND PURCHASER HEREBY WAIVES ANY AND ALL RIGHTS OR REMEDIES IT MAY HAVE OR BE ENTITLED TO, DERIVING FROM DISPARITY IN SIZE OR FROM ANY SIGNIFICANT DISPARATE BARGAINING POSITION IN RELATION TO THE OTHER.

                Purchaser’s Initials: ______

PURCHASER ACKNOWLEDGES THAT IT WILL HAVE THE OPPORTUNITY TO INSPECT THE PROPERTY, OBSERVE ITS PHYSICAL CHARACTERISTICS AND EXISTING CONDITIONS AND THE OPPORTUNITY TO CONDUCT SUCH INVESTIGATION AND STUDY ON AND OF THE PROPERTY, THE LAND AND THE IMPROVEMENTS AND

35

ADJACENT AREAS AS PURCHASER DEEMS NECESSARY, AND EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT AND IN ANY DOCUMENTS DELIVERED AT CLOSING, SELLER’S FRAUD OR CLAIMS ASSERTED BY THIRD PARTIES RELATING TO THE PROPERTY FOR MATTERS ACCRUING OR ARISING PRIOR TO THE CLOSING DATE, PURCHASER HEREBY FOREVER RELEASES AND DISCHARGES SELLER FROM ALL RESPONSIBILITY AND LIABILITY, INCLUDING WITHOUT LIMITATION, LIABILITIES UNDER THE COMPREHENSIVE ENVIRONMENTAL RESPONSE, COMPENSATION AND LIABILITY ACT OF 1980 (42 U.S.C. SECTIONS 9601 ET SEQ.), AS AMENDED ("CERCLA"), REGARDING THE CONDITION, VALUATION, SALABILITY OR UTILITY OF THE PROPERTY, THE LAND OR THE IMPROVEMENTS OR THEIR SUITABILITY FOR ANY PURPOSE WHATSOEVER (INCLUDING, BUT NOT LIMITED TO, WITH RESPECT TO THE PRESENCE IN THE SOIL, AIR, STRUCTURES AND SURFACE AND SUBSURFACE WATERS, OF HAZARDOUS MATERIALS OR OTHER MATERIALS OR SUBSTANCES THAT HAVE BEEN OR MAY IN THE FUTURE BE DETERMINED TO BE TOXIC, HAZARDOUS, UNDESIRABLE OR SUBJECT TO REGULATION AND THAT MAY NEED TO BE SPECIALLY TREATED, HANDLED AND/OR REMOVED FROM THE LAND OR THE IMPROVEMENTS UNDER CURRENT OR FUTURE FEDERAL, STATE AND LOCAL LAWS, REGULATIONS OR GUIDELINES, AND ANY STRUCTURAL AND GEOLOGIC CONDITIONS, SUBSURFACE SOIL AND WATER CONDITIONS AND SOLID AND HAZARDOUS WASTE AND HAZARDOUS MATERIALS ON, UNDER, ADJACENT TO OR OTHERWISE AFFECTING THE LAND OR THE IMPROVEMENTS. PURCHASER FURTHER HEREBY ASSUMES THE RISK OF CHANGES IN APPLICABLE LAWS AND REGULATIONS RELATING TO PAST, PRESENT AND FUTURE ENVIRONMENTAL CONDITIONS ON THE LAND OR THE IMPROVEMENTS AND THE RISK THAT ADVERSE PHYSICAL CHARACTERISTICS AND CONDITIONS, INCLUDING, WITHOUT LIMITATION, THE PRESENCE OF HAZARDOUS MATERIALS OR OTHER CONTAMINANTS, MAY NOT HAVE BEEN REVEALED BY ITS INVESTIGATION.

Purchaser’s Initials: ______

[Remainder of Page Left Blank]

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For purposes hereof, "Hazardous Materials" means "Hazardous Material," "Hazardous Substance," "Pollutant or Contaminant," and "Petroleum" and "Natural Gas Liquids," as those terms are defined or used in Section 101 of CERCLA, and any other substances regulated, listed, limited or prohibited under any Environmental Law because of their effect or potential effect on public health and the environment, including, without limitation, PCBs, lead paint, asbestos, urea formaldehyde, radioactive materials, putrescible materials, and infectious materials. As used herein, “Environmental Law” means all past, present or future federal, state and local statutes, regulations, directives, ordinances, rules, policies, guidelines, court orders, decrees, arbitration awards and the common law, which pertain to environmental matters, contamination of any type whatsoever or health and safety matters, as such have been amended, modified or supplemented from time to time (including all present and future amendments thereto and re-authorizations thereof).

The terms and conditions of this Section 9.14 shall expressly survive the Closing without time limitation, and not merge with the provisions of any closing documents.

Purchaser and Seller acknowledge and agree that the representations, warranties, disclaimers and other agreements set forth in this Agreement are an integral part of this Agreement and that neither Purchaser nor Seller would have agreed to sell or purchase the Property, as applicable, for the Purchase Price without the representations, warranties, disclaimers and other agreements set forth in this Agreement.

No shareholder, officer, employee or agent of or consultant of or to Seller or Purchaser shall be held to any personal liability hereunder, and no resort shall be had to their property or assets for the satisfaction of any claims hereunder or in connection with the transaction contemplated by this Agreement. Furthermore, Seller’s liability under this Agreement is explicitly limited to Seller’s interest in the Property, including any proceeds thereof. Purchaser shall have no recourse against any other property or assets of Seller or any other Seller Parties or of any of the assets or property of any of the foregoing for the payment or collection of any amount, judgment, judicial process, arbitral award, fee or cost or for any other obligation or claim arising out of or based upon this Agreement and requiring the payment of money by Seller. Except as otherwise expressly set forth in this Section 9.14, neither Seller nor any Seller Party shall be subject to levy, lien, execution, attachment or other enforcement procedure for the satisfaction of any of Purchaser’s rights or remedies under or with respect to this Agreement, at law, in equity or otherwise. Purchaser shall not seek enforcement of any judgment, award, right or remedy against any property or asset of Seller or any Seller Parties other than Seller’s interest in the Property or any proceeds thereof. The provisions of this Section 9.14 shall survive the termination of this Agreement.

9.15    Exhibits and Schedules. The following exhibits are attached to this Agreement and are incorporated into this Agreement by this reference and made a part hereof for all purposes:

(a)    Exhibit A, Legal Description of the Land

(b)    Exhibit B, Form of Deed

(c)    Exhibit C, Form of Bill of Sale

(d)    Exhibit D, Form of Certification of Non-Foreign Status

(e)    Exhibit E, Form of Owner’s Affidavit

(f)    Exhibit F, Form of Certificate of Seller

(g)    Exhibit G, Form of Tenant Notice Letter

(h)    Exhibit H, Form of Assignment

(i)    Exhibit I, List of Personal Property

(j)    Exhibit J, List of Contracts

(k)    Exhibit K, Rent Roll

(l)    Exhibit L, Form of Certificate of Purchaser

(m)    Exhibit M, List of Warranties

(n)    Exhibit N, Purchase Price Allocations

(o)    Exhibit O, Litigation

37

(p)    Exhibit P, Allocation of Closing Costs

(q)    Exhibit Q, Tallahassee Loan Documents

(r)    Exhibit R, Mezzanine Loan Documents

(s)    Exhibit S, Assignment and Assumption of Mezzanine Loan Documents

(t)    Exhibit T, Underwritten Bad Debt

(u)    Exhibit U, Underwritten Bad Debt Escrow Agreement

(v)    Exhibit V, Excel Model

(w)    Exhibit W, Underwritten Revenue Assumptions

(x)    Exhibit X, Knightshade Estoppel

(y)    Exhibit Y, Stadium Village Association Estoppel

(z)    Exhibit Z, Stadium Village Storm Water Estoppel

(aa)    Exhibit AA, Seller’s Leasing Standards

(bb)    Exhibit BB, Property Information

(cc)    Exhibit CC, Loan Documents

(dd)    Exhibit DD, SPE Modifications

(ee)    Exhibit EE, Escrow Agreement

(ff)    Exhibit FF, Roof Escrow Agreement

(gg)    Schedule 4.4(a)(xxv), Events of Default

9.16    Confidentiality. Seller and Purchaser hereby covenant and agree that, at all times after the Effective Date, unless consented to in writing by the other party (which consent may be granted or withheld in the sole discretion of the party whose consent is being requested), no press release or other public disclosure concerning this transaction shall be made by or on behalf of Seller or Purchaser, and each party agrees to use best efforts to prevent disclosure of this transaction by any third party; provided, that the parties agree that the initial press release regarding this Agreement shall be a mutually acceptable joint press release.  Notwithstanding the foregoing, (i) each party shall be entitled to make disclosures concerning this Agreement and materials provided hereunder to its lenders, prospective investors, attorneys, accountants, employees, agents, other service professionals and the U.S. Securities and Exchange Commission as may be reasonably necessary in furtherance of the transactions contemplated hereby, including, without limitation, the filing with the Securities and Exchange Commission by Preferred Apartment Communities, Inc. of a Form 8-K reporting the entry into this Agreement (the “Form 8-K”) containing only such information as Seller or Preferred Apartment Communities, Inc. is required to include in its filing of the Form 8-K; provided, however, that Seller shall give Purchaser a reasonable opportunity to review and comment on the Form 8-K and any other subsequent disclosure or filing made with the Securities and Exchange Commission reporting the entry into this Agreement or any amendment thereto or the consummation of the transactions contemplated herein that is not consistent with the Form 8-K (and Seller shall reasonably consider Purchaser’s comments thereon), (ii) each party shall be entitled to make such disclosures concerning this Agreement and materials provided hereunder as may be necessary to comply with any court order or directive of any applicable governmental authority, and (iii) Purchaser’s confidentiality obligations under this Section 9.16 shall not apply to any information which (a) was already in Purchaser’s possession prior to its receipt from Seller, (b) is or becomes publicly available other than as a result of a disclosure by Purchaser, or (c) is independently developed by Purchaser. The provisions of this Section 9.16 shall survive Closing or any termination of this Agreement.

9.17    Joint and Separate Liability. All entities constituting “Seller” hereunder shall be jointly and severally liable for the faithful performance of the terms and conditions hereof, and of any other document executed in connection herewith, to be performed by Seller. Each Seller is jointly and separately liable for the representations, warranties, covenants and obligations of each Seller under this Agreement with respect to the Property owned by each Seller and the documents executed in connection herewith. The provisions of this Section 9.17 shall survive Closing or any termination of this Agreement.

9.18    Solicitation. Neither Seller nor any of its affiliates, officers, employees, directors, stockholders and representatives shall during the term of this Agreement directly or indirectly solicit or respond to offers and proposals from other parties in connection with the possible acquisition of the Property (or any

38

portion thereof), sale of or disposition of the Property (or any portion thereof) or any other transaction involving a change in ownership of, or debt or equity financing of, the Property (or any portion thereof) subsequent to August 7, 2020, except as set forth in Section 4.1.3(c).

9.19    Covid-19 Matters. Notwithstanding the foregoing, to the extent a Blocking Event (as defined below) has occurred on a Key Performance Date (as defined below) or the business day immediately prior to a Key Performance Date, such Key Performance Date shall be extended until the date that is two (2) business days following a Blocking Event Cure. Further, and notwithstanding anything to the contrary contained herein, in the event the Blocking Event would result in the then scheduled Closing Date being extended for more than thirty (30) days, either Seller or Purchaser shall have the right to terminate this Agreement. Upon a termination of this Agreement as set forth in this Section 9.19, Escrow Agent shall disburse the Earnest Money to Purchaser and, upon such disbursement, this Agreement shall be null and void and of no further force or effect and neither party shall have any rights or obligations against or to the other except for those provisions hereof which by their terms expressly survive the termination of this Agreement.

For purposes hereof, the terms below shall have the following definitions:

“Blocking Event” shall mean an event, development, condition or state of facts that: (a) prevents Federal Express and the United Parcel Service from being able to pick up packages from, or deliver packages to, Purchaser, Seller, Escrow Agent or its applicable legal counsel, (b) results in the closure of the Escrow Agent’s or Title Company’s offices; provided that it shall not be a Blocking Event if a replacement escrow agent within the same national title insurance company agrees to act as escrow agent pursuant to the terms of this Agreement at no additional cost or liability to either party, (c) results in the inability or unwillingness of the Title Company to issue the Title Policy (or Purchaser’s lender’s insurance policy) on the Closing Date free and clear of any additional title exceptions due to general market conditions, including the closing of the local recording office (and not specifically related to the Property, with respect to which this Section 9.19 shall govern), or (d) prevents Purchaser’s bank from sending or processing wire transfers for a material portion of the day.

“Blocking Event Cure” shall mean with respect to any Blocking Event (i) described in clause (a) of the definition thereof, the resumption of pick-up and overnight deliveries by any nationally recognized overnight courier, (ii) described in clause (b) of the definition thereof, the reopening of the Escrow Agent’s and Title Company’s offices, (iii) described in clause (c) of the definition thereof, the ability and willingness of the Title Company to issue the Title Policy pursuant to the other terms and conditions of this Agreement, and (iv) described in clause (d) of the definition thereof, wire transfers by Purchaser’s bank and the banking institution providing acquisition financing to Purchaser, if applicable, have resumed.

“Key Performance Date” shall mean, (x) with respect to clause (a) of the definition of “Blocking Event”, the Closing Date or the business day prior to the Closing Date, and (y) with respect to clause (d) of the definition of “Blocking Event”, the Closing Date and any other date on which the performance of an obligation requires the wiring of funds and (z) with respect to all other clauses of the definition of “Blocking Events”, the Closing Date.

9.20    Assignment of Mezzanine Loan. In consideration of the mutual covenants and agreements set forth herein, and other consideration (the receipt and sufficiency of which are hereby acknowledged), Starkville Mezzanine Lending, LLC, a Georgia limited liability company and an affiliate of Seller (“Starkville”), hereby agrees to assign to Purchaser, effective as of the Closing Date, all rights, title and interests of Starkville in, to and under or arising out that certain loan in the principal face amount of $6,116,384.00 (the “Mezzanine Loan”), which Loan is evidenced, secured by and more particularly

39

described in those documents set forth in Exhibit “R” attached hereto and made a part hereof (collectively, the “Mezzanine Loan Documents”). Purchaser hereby agrees to accept the foregoing assignment and assume all rights and obligations of Starkville arising after the Closing Date under the Mezzanine Loan Documents and otherwise relating to the Mezzanine Loan, including all rights of Starkville as “Agent” and “Lender” under the terms of that certain Mezzanine Loan Agreement dated as of June 16, 2014 by and among Haven Campus Communities Starkville Member, LLC, a Georgia limited liability company (“Borrower”), and Starkville (as amended, the “Mezzanine Loan Agreement”).Seller agrees to reasonably cooperate and deliver any notices or documents as required to comply with the terms of the Intercreditor Agreement identified on Exhibit “R”.

9.21    Covid-19 Related Bad Debt Reserve Escrow. Seller hereby acknowledges that the Purchase Price agreed to by Purchaser under the terms of this Agreement assumes a Bad Debt Expense of $215,427 for all of the Properties, as such amount may be ratably adjusted in the event this Agreement is terminated with respect to any individual Property (the “Underwritten Bad Debt”) as shown in Exhibit “T” attached hereto and made a part hereof and has agreed to deposit with Title Company at the Closing, pursuant to an escrow agreement (the “Underwritten Bad Debt Escrow Agreement”) in the form attached to this Agreement as Exhibit “U”, the sum of Five Million and No/100 Dollars ($5,000,000.00) (the “Escrow Funds”), to be held by Title Company in an interest bearing account in a bank or savings and loan association whose deposits are insured by the Federal Deposit Insurance Corporation or the Federal Savings and Loan Insurance Corporation (the “Underwritten Bad Debt Escrow Account”) until March 31, 2021 (the “True-up Date”). In the event the actual Bad Debt Expense of the Property (“Actual Bad Debt”) measured from the Closing Date to the True-up Date is greater than the Underwritten Bad Debt for the same period, an amount equal to the difference between the Actual Bad Debt and the Underwritten Bad Debt for such period shall be promptly disbursed to Purchaser out of the Underwritten Bad Debt Escrow Account, with any remaining balance of the Escrow Funds disbursed to Seller. In the event the Actual Bad Debt on the True-up Date is equal to or less than the Underwritten Bad Debt on the True-up Date, the full amount of the Escrow Funds shall be disbursed to Seller. Purchaser covenants and agrees (i) until the date that is ninety (90) days after the True-up Date to use commercially reasonable efforts, in accordance with its ordinary course billing practices, to pursue the collection of the Bad Debt Expense after the Closing Date through the True-up Date for all rent payments payable by tenants at any Property that remain unpaid for more than sixty (60) days after the original payment due date, provided that Purchaser shall have no obligation to commence litigation (including, without limitation, any action for unlawful detainer or eviction proceeding) or engage a collection agency to pursue the collection of such Bad Debt Expense and (ii) not to waive or forgive the payment of any Bad Debt Expense as an inducement or concession to any tenant to enter into a lease for any academic year subsequent to the Academic Year. As used herein, “Bad Debt Expense” means, determined on a portfolio wide basis, the amount of any rent payment payable by any tenant at any Property is unpaid for more than thirty (30) days after the original payment due date, provided that Bad Debt Expense shall include any rent that is payable for the month of March 2021 and is unpaid as of the True-up Date.

9.22    Debt Financing Contingency. Seller and Purchaser hereby acknowledge that a portion of the Allocated Purchase Price for the Tallahassee Property, the College Station Property, the Lubbock Property, the Waco Property and the Charlotte Property (collectively, the “Unencumbered Assets”) shall be paid by one or more loans from Fannie Mae (collectively, the “Financing”) in an amount(s) and on terms that are defined as follows: (i) a floating rate of interest of LIBOR (or such replacement floating rate index generally used by Fannie Mae in its floating rate commercial real estate loans) plus a maximum acceptable spread of 275 basis points; (ii) intentionally omitted; (iii) total minimum loan proceeds equal to $173,500,000.00; (iv) a minimum 4-year interest-only period; (v) a seven or ten year term; (vi) no more than an eighteen (18) month debt service reserve requirement; and (vii) reasonable and standard loan covenants and event of default provisions customarily utilized by Fannie Mae in their form of loan documents on the Effective Date across their student housing loan portfolio with the following additional items: (a) the loan documents shall impose no ongoing debt service or debt yield coverage requirements (“Financial Covenants”) measured periodically during the loan term that would require a prepayment of a portion of the loan or impose a cash management regime in the event of noncompliance with such

40

Financial Covenants, (b) the loan documents shall not include prohibitions on partial releases of assets so long as Fannie Mae receives its customary release price and the borrower thereunder otherwise complies with customary and reasonable release requirements; and (c) the non-recourse carve outs (the loans must be non-recourse) must be reasonably acceptable to Purchaser, Purchaser agreeing that Section 3.02 of the Fannie Loan Agreement set forth on Exhibit “DD” attached hereto and made a part hereof is acceptable to Purchaser with the modifications thereto also set forth on Exhibit “DD” (collectively, the “Loan Terms”). Purchaser shall submit a complete application package to Fannie Mae for the Financing having a seven and ten year term with a 65% loan-to-value ratio not later than ten (10) business days after the expiration of the Inspection Period. In the event Fannie Mae does not issue to Purchaser a binding commitment for the Financing containing all of the Loan Terms on or before September 18, 2020 (herein, the “Financing Contingency”, with the date of issuance of the commitment being the “Financing Contingency Approval Date”), Purchaser shall have the right at its sole election either to waive the Financing Contingency and proceed with the purchase of the Property or, in the alternative, to terminate this Agreement, whereupon the Earnest Money shall be promptly returned to Purchaser and each of the parties hereto shall be relieved of all further obligations hereunder, except for the Surviving Obligations. In the event the foregoing loan commitment is issued as described above but prior to Closing is terminated by the lender based on the existence of a fact or event that could, in Lender’s sole judgment, reasonably be expected to adversely affect the value or marketability of the Financing or the Unencumbered Assets or the eligibility of the Financing for sale to Fannie Mae, then, notwithstanding anything contained herein, for all purposes of this Agreement, the Financing Contingency will be deemed to have not been satisfied by the Financing Contingency Approval Date and Purchaser shall have the right to either waive the Financing Contingency or terminate this Agreement as provided for above. Notwithstanding the foregoing, to the extent the Financing offered to Purchaser in a commitment contains the Loan Terms except that the interest rate spread is greater than 275 basis points (but in all events less than 375 basis points) and/or total loan proceeds less than $173,500,000.00, then Seller shall have the right, at its option, to require Purchaser to proceed to purchase the Unencumbered Assets at an adjusted Purchase Price calculated by inserting the total loan proceeds and spread offered in the commitment in the Excel model delivered to Seller electronically on July 31, 2020, a snapshot of which is attached as Exhibit “V” hereto and made a part hereof; provided, however, for purposes of calculating the adjusted Purchase Price the commitment option (seven or ten year term) that would result in the least amount of adjustment to the Purchase Price shall be used.

9.23    Pre-Leasing Adjustments. Seller hereby acknowledges that the Purchase Price agreed to by Purchaser under the terms of this Agreement is based upon on the revenue assumptions for the Academic Year as shown in Exhibit “W” attached hereto and made a part hereof, which assumes ten (10) months of remaining lease term for the Leases measured from the Closing Date to August 1, 2021 and underwritten rental income of $40,740,251.00, as such amount may be ratably adjusted in the event this Agreement is terminated with respect to any individual Property, for the Property for the Academic Year (the “Underwritten Rental Income”), which Underwritten Rental Income shall be ratably adjusted in the event (i) the Closing Date occurs after October 1, 2020 and (ii) this Agreement is terminated with respect to any individual Property. Seller and Purchaser agree to measure the actual rental income for the Property for the Academic Year based on tenants under executed Leases (a) which have not been purported to have been terminated by the tenant thereunder and pursuant to which tenants have moved in their respective units, (b) where the applicable tenant has paid the first month’s rent due under the applicable Lease and (c) that are accompanied by either a fully executed guaranty or adequate proof of the applicable tenant’s self-qualification and creditworthiness or other required documentation to obtain lease approval in accordance with the Leasing Standards (the “Actual Rental Income”) on the date that is five (5) business days prior to the Closing Date (the “Rental True-Up Date”), and in the event the Actual Rental Income is less than the Underwritten Rental Income, the Purchase Price shall be lowered by an amount equal to the difference in the Actual Rental Income and the Underwritten Rental Income.

9.24    Florida Disclosures.

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(a)    Section 404.056(5), Florida Statutes, requires the following notice to be provided with respect to the contract for sale and purchase of any building:

RADON GAS: Radon is a naturally occurring radioactive gas that, when it has accumulated in a building in sufficient quantities, may present health risks to persons who are exposed to it over time. Levels of radon that exceed federal and state guidelines have been found in buildings in Florida. Additional information regarding radon and radon testing may be obtained from your county health department.

(b)    ENERGY–EFFICIENCY RATING INFORMATION: Purchaser acknowledges that it has received a copy of The Florida Building Energy–Efficiency Rating System Brochure as provided by the State of Florida, Department of Community Affairs, as required by Section 553.996, Florida Statutes.

9.25    Escrow. Seller and Purchaser agree to enter into an escrow agreement (the “Escrow Agreement”) in the form attached to this Agreement as Exhibit “EE”at Closing.

9.26    Roof Escrow. Seller acknowledges that roof repairs will be required at the Tempe Property. Seller has agreed to be responsible for funding fifty percent 50%) of the Roof Work Cost (as defined below) (“Seller’s Roof Share”) up to $217,800 and shall deposit with Title Company at the Closing, pursuant to an escrow agreement (the “Roof Escrow Agreement”) in the form attached to this Agreement as Exhibit “FF”, the sum of Two Hundred Seventeen Thousand Eight Hundred and No/100 Dollars ($217,800.00) (the “Roof Escrow Funds”) for Seller’s Roof Share, to be held by Title Company in an interest bearing account in a bank or savings and loan association whose deposits are insured by the Federal Deposit Insurance Corporation or the Federal Savings and Loan Insurance Corporation (the “Roof Escrow Account”) until the True-up Date. As used herein, the “Roof Work Cost” shall mean the total cost incurred by and/or to be incurred by Purchaser, under an executed contract to complete the recoating of the existing roof at the Tempe Property to the Purchaser’s reasonable satisfaction. On or before the True-up Date, once the Roof Work Cost is determined, in the event that an amount equal to fifty percent (50%) of the cost for Roof Work Cost is less than the amount of the Roof Escrow Funds, an amount equal to fifty percent (50%) of the Roof Work Cost shall be promptly disbursed to Purchaser out of the Roof Escrow Account and the remaining balance of the Roof Escrow Funds will be disbursed to Seller. In the event that an amount equal to fifty percent (50%) of the Roof Work Cost is equal to or greater than the amount of the Roof Escrow Funds, then the full amount of the Roof Escrow Funds shall be disbursed to Purchaser.

[SIGNATURES COMMENCE ON FOLLOWING PAGE]

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    IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and year first written above.

SELLER:

PCC TALLAHASSEE, LLC, a Delaware

limited liability company

By:    Preferred Campus Communities, LLC, a Maryland limited liability company, its

Manager

By:    PAC Carveout, LLC, a Delaware limited liability company, its

Sole Member

By: Preferred Apartment Communities Operating Partnership, L.P., a Delaware limited partnership, as sole member of the Board of Managers of PAC Carveout, LLC

    Maryland corporation, its General Partner

By: Preferred Apartment Communities, Inc., a

    Maryland corporation, its General Partner

                        By: /s/ Jeffrey R. Sprain____________________

Jeffrey R. Sprain, Executive Vice President, General Counsel and Secretary

PCC ORLANDO, LLC, a Delaware

limited liability company

By:    Preferred Campus Communities, LLC, a Maryland limited liability company, its

Manager

By:    PAC Carveout, LLC, a Delaware limited liability company, its

Sole Member

By: Preferred Apartment Communities Operating Partnership, L.P., a Delaware limited partnership, as sole member of the Board of Managers of PAC Carveout, LLC

    Maryland corporation, its General Partner

By: Preferred Apartment Communities, Inc., a

    Maryland corporation, its General Partner

Signature Page to Purchase and Sale Agreement - PAC Student Housing

                        By: /s/ Jeffrey R. Sprain____________________

Jeffrey R. Sprain, Executive Vice President, General Counsel and Secretary

PCC COLLEGE STATION, LLC, a Delaware

limited liability company

By:    Preferred Campus Communities, LLC, a Maryland limited liability company, its

Manager

By:    PAC Carveout, LLC, a Delaware limited liability company, its

Sole Member

By: Preferred Apartment Communities Operating Partnership, L.P., a Delaware limited partnership, as sole member of the Board of Managers of PAC Carveout, LLC

    Maryland corporation, its General Partner

By: Preferred Apartment Communities, Inc., a

    Maryland corporation, its General Partner

                        By: /s/ Jeffrey R. Sprain____________________

Jeffrey R. Sprain, Executive Vice President, General Counsel and Secretary

PCC LUBBOCK, LLC, a Delaware

limited liability company

By:    Preferred Campus Communities, LLC, a Maryland limited liability company, its

Manager

By:    PAC Carveout, LLC, a Delaware limited liability company, its

Sole Member

By: Preferred Apartment Communities Operating Partnership, L.P., a Delaware limited partnership, as sole member of the Board of Managers of PAC Carveout, LLC

    Maryland corporation, its General Partner

By: Preferred Apartment Communities, Inc., a

    Maryland corporation, its General Partner

Signature Page to Purchase and Sale Agreement - PAC Student Housing

                        By: /s/ Jeffrey R. Sprain____________________

Jeffrey R. Sprain, Executive Vice President, General Counsel and Secretary

PCC WACO, LLC, a Delaware

limited liability company

By: Haven Campus Communities Kennesaw Member, LLC, a Georgia limited liability company, its sole Member and Manager

By: PCC Stadium Village, LLC, a Delaware limited liabiltiy company, its Manager

By:    Preferred Campus Communities, LLC, a Maryland limited liability company, its

Manager

By:    PAC Carveout, LLC, a Delaware limited liability company, its

Sole Member

By: Preferred Apartment Communities Operating Partnership, L.P., a Delaware limited partnership, as sole member of the Board of Managers of PAC Carveout, LLC

    Maryland corporation, its General Partner

By: Preferred Apartment Communities, Inc., a

    Maryland corporation, its General Partner

                        By: /s/ Jeffrey R. Sprain____________________

Jeffrey R. Sprain, Executive Vice President, General Counsel and Secretary

PCC TEMPE, LLC, a Delaware

limited liability company

By:    Preferred Campus Communities, LLC, a Maryland limited liability company, its

Manager

By:    PAC Carveout, LLC, a Delaware limited liability company, its

Sole Member

By: Preferred Apartment Communities Operating Partnership, L.P., a Delaware limited

Signature Page to Purchase and Sale Agreement - PAC Student Housing

partnership, as sole member of the Board of Managers of PAC Carveout, LLC

    Maryland corporation, its General Partner

By: Preferred Apartment Communities, Inc., a

    Maryland corporation, its General Partner

                        By: /s/ Jeffrey R. Sprain____________________

Jeffrey R. Sprain, Executive Vice President, General Counsel and Secretary

HAVEN CAMPUS COMMUNITIES-KENNESAW, LLC, a Delaware

limited liability company

By: Haven Campus Communities Kennesaw Member, LLC, a Georgia limited liability company, its sole Member and Manager

By: PCC Stadium Village, LLC, a Delaware limited liability company, its Manager

By:    Preferred Campus Communities, LLC, a Maryland limited liability company, its

Manager

By:    PAC Carveout, LLC, a Delaware limited liability company, its

Sole Member

By: Preferred Apartment Communities Operating Partnership, L.P., a Delaware limited partnership, as sole member of the Board of Managers of PAC Carveout, LLC

    Maryland corporation, its General Partner

By: Preferred Apartment Communities, Inc., a

    Maryland corporation, its General Partner

                        By: /s/ Jeffrey R. Sprain____________________

Jeffrey R. Sprain, Executive Vice President, General Counsel and Secretary

HAVEN CAMPUS COMMUNITIES-CHARLOTTE, LLC, a Georgia

limited liability company

By:    PAC Lending, LLC, a Delaware limited liability company, its

Signature Page to Purchase and Sale Agreement - PAC Student Housing

Sole Member

By:    PAC Carveout, LLC, a Delaware limited liability company, its

Sole Member

By: Preferred Apartment Communities Operating Partnership, L.P., a Delaware limited partnership, as sole member of the Board of Managers of PAC Carveout, LLC

    Maryland corporation, its General Partner

By: Preferred Apartment Communities, Inc., a

    Maryland corporation, its General Partner

                        By: /s/ Jeffrey R. Sprain____________________

Jeffrey R. Sprain, Executive Vice President, General Counsel and Secretary

PURCHASER:

TPG REAL ESTATE PARTNERS INVESTMENTS, LLC, a Delaware limited liability company

By: /s/ Matthew Coleman

Name: Matthew Coleman

Title: Vice President

Signature Page to Purchase and Sale Agreement - PAC Student Housing

JOINDER

PAC CARVEOUT, LLC, a Delaware limited liability company (“Joinder Party”) hereby joins in the Purchase and Sale Agreement (the “Agreement”) to which this Joinder is attached (and of which it forms a part) for the sole purpose of guaranteeing the performance of the obligations and duties of Seller as set forth in Section 4.4(C), Section 5.12 and to the extent applicable, Section 6.5(o) of the Agreement.

JOINDER PARTY:

                                PAC CARVEOUT, LLC,

                                a Delaware limited liability company

By: Preferred Apartment Communities Operating Partnership, L.P., a Delaware limited partnership, as sole Member of the Board of Managers of PAC Carveout, LLC

By: Preferred Apartment Communities, Inc., a

        Maryland corporation, its General Partner

By: /s/ Jeffrey R. Sprain _______________________________

Jeffrey R. Sprain, Executive Vice

President, General Counsel and         Secretary    

The undersigned Escrow Agent hereby acknowledges receipt of the Earnest Money in the amount of $10,000,000.00, and a fully executed copy of this Agreement, and agrees to hold and dispose of the Earnest Money in accordance with the provisions of this Agreement. Seller and Purchaser acknowledge and agree that Section 6045(e) of the Internal Revenue Code of 1986 requires that notice of the sale and purchase of the Property described in this Agreement be provided to the Internal Revenue Service (“IRS”) by preparation of and filing with the IRS of IRS Form 1099-S. Purchaser and Seller hereby authorize and direct the Escrow Agent to prepare and file form 1099-S with respect to the transaction hereunder. Seller and Purchaser agree to furnish and provide to the Escrow Agent all information that the Escrow Agent may require for the Escrow Agent to (a) comply with all instructions to IRS Form 1099-S in the preparation thereof, and (b) prepare and timely file such form with the IRS.

FIRST AMERICAN TITLE INSURANCE COMPANY

By: /s/ Frank Longobardi

Name: Frank Longobardi

Title: Underwriting Counsel

Date of Execution by Escrow Agent:

                            July 31, 2020

EX-10.6

EXHIBIT 10.6

FIRST AMENDMENT TO PURCHASE AND SALE AGREEMENT

    THIS FIRST AMENDMENT TO PURCHASE AND SALE AGREEMENT (hereinafter the "Amendment") is made effective as of August 7, 2020 (hereinafter the “Effective Date”), by and among PCC TALLAHASSEE, LLC, a Delaware limited liability company (“Tallahassee Seller”), PCC ORLANDO, LLC, a Delaware limited liability company (“Orlando Seller”), PCC COLLEGE STATION, LLC, a Delaware limited liability company (“College Station Seller”), PCC LUBBOCK, LLC, a Delaware limited liability company (“Lubbock Seller”), PCC WACO, LLC, a Delaware limited liability company (“Waco Seller”), PCC TEMPE, LLC, a Delaware limited liability company (“Tempe Seller”), HAVEN CAMPUS COMMUNITIES-KENNESAW, LLC, a Delaware limited liability company (“Kennesaw Seller”), and HAVEN CAMPUS COMMUNITIES-CHARLOTTE, LLC, a Georgia limited liability company (“Charlotte Seller”, and together with Tallahassee Seller, Orlando Seller, College Station Seller, Lubbock Seller, Waco Seller, Tempe Seller and Kennesaw Seller, jointly and severally, “Seller”), and TPG REAL ESTATE PARTNERS INVESTMENTS, LLC, a Delaware limited liability company (“Purchaser”).

    W I T N E S S E T H:

    WHEREAS, Purchaser and Seller are parties to that certain Purchase and Sale Agreement dated July 31, 2020 (as amended from time to time, the “Agreement”), for the sale from Seller to Purchaser of the Property (as defined in the Agreement); and

    WHEREAS, Purchaser and Seller desire to further modify the Agreement, as set forth below.

    NOW, THEREFORE, in consideration of the premises, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Seller and Purchaser hereby agree that the Agreement is and shall be amended as follows:

    1.     Incorporation of Recitals; Definitions. The recitals set forth above are hereby incorporated in this Amendment as if set forth herein in full. All capitalized terms not defined in this Amendment shall be deemed to have the meanings given such terms in the Agreement.

    2.    Orlando Inspections. The following provision shall be added as Section 5.13 of the Agreement:

        5.13     Seller shall use commercially reasonable efforts to cause fire and building inspections to take place with respect to the Orlando Property prior to Closing. Promptly following receipt by Seller of such inspections, Seller shall disclose to Purchaser the results of such inspections. In the event such inspection discloses that repairs, maintenance or other remediation work (“Repair Work”) needs to be performed at the Orlando Property in order to bring such Property in compliance with any applicable local laws or ordinances, then Seller shall, at its sole cost and expense, promptly use diligent efforts to complete such Repair Work prior to Closing. In the event that as of Closing, such Repair Work is not complete, then Purchaser shall receive a credit at Closing for the cost to complete such Repair Work, as mutually determined by Seller and Purchaser in good faith and Purchaser shall assume any contracts in place with respect to such Repair Work. In the event that as of the Closing, such inspection is not complete or the results of such inspection are not available, then Seller shall continue to use diligent efforts to complete such inspection and/or obtain such results following Closing (Purchaser agreeing to reasonably cooperate with Seller as necessary in order to schedule such inspection), and the cost of any

1

Repair Work disclosed in such inspection results, as mutually determined by Seller and Purchaser in good faith, shall be paid to Purchaser as part of the post-closing prorations adjustment process under Section 6.3 of the Agreement. This Section 5.13 shall survive the Closing.

3.    College Station and Charlotte Property Repair Work. The following provision shall be added as Section 5.14 of the Agreement:

        5.14     Seller acknowledges that certain Repair Work will be completed at the College Station Property and the Charlotte Property, as more particularly described on Exhibit A attached hereto. Seller agrees to use commercially reasonable efforts to cause such Repair Work to be completed prior to Closing. In the event such Repair Work is not complete on or prior to Closing, then Purchaser shall receive a credit at Closing for the cost to complete such Repair Work, as mutually determined by Seller and Purchaser in good faith and Purchaser shall assume any contracts in place with respect to such work .

    4.    Title and Survey Waiver. Subject to this Amendment, Purchaser hereby elects to waive its title, zoning and Survey objections set forth in the Title Objection Letter and the Survey Comment Letter delivered by Purchaser prior to the date hereof.

    5.    Counterparts. This Amendment may be executed in any number of counterparts and it shall be sufficient that the signature of each party appear on one or more such counterparts. All counterparts shall collectively constitute a single agreement. Originals transmitted by facsimile or electronic mail shall be considered original in all respects.

    6.    Continued and Binding Effect. Except to the extent the Agreement is amended or modified by this Amendment, the remaining terms and conditions of the Agreement shall remain in full force and effect. This Amendment shall be binding upon and inure to the benefit of Purchaser and Seller and their respective successors and assigns.

[Remainder of page intentionally left blank]

2

    IN WITNESS WHEREOF, the parties have executed this Amendment as of the date set forth above.

PCC TALLAHASSEE, LLC, a Delaware

limited liability company

By:    Preferred Campus Communities, LLC, a Maryland limited liability company, its

Manager

By:    PAC Carveout, LLC, a Delaware limited liability company, its

Sole Member

By: Preferred Apartment Communities Operating Partnership, L.P., a Delaware limited partnership, as sole member of the Board of Managers of PAC Carveout, LLC

    Maryland corporation, its General Partner

By: Preferred Apartment Communities, Inc., a

    Maryland corporation, its General Partner

                        By: /s/ Jeffrey R. Sprain____________________

Jeffrey R. Sprain, Executive Vice President, General Counsel and Secretary

PCC ORLANDO, LLC, a Delaware

limited liability company

By:    Preferred Campus Communities, LLC, a Maryland limited liability company, its

Manager

By:    PAC Carveout, LLC, a Delaware limited liability company, its

Sole Member

By: Preferred Apartment Communities Operating Partnership, L.P., a Delaware limited partnership, as sole member of the Board of Managers of PAC Carveout, LLC

    Maryland corporation, its General Partner

By: Preferred Apartment Communities, Inc., a

    Maryland corporation, its General Partner

[Signature Page to First Amendment to PSA - Student Housing]

                        By: /s/ Jeffrey R. Sprain____________________

Jeffrey R. Sprain, Executive Vice President, General Counsel and Secretary

PCC COLLEGE STATION, LLC, a Delaware

limited liability company

By:    Preferred Campus Communities, LLC, a Maryland limited liability company, its

Manager

By:    PAC Carveout, LLC, a Delaware limited liability company, its

Sole Member

By: Preferred Apartment Communities Operating Partnership, L.P., a Delaware limited partnership, as sole member of the Board of Managers of PAC Carveout, LLC

    Maryland corporation, its General Partner

By: Preferred Apartment Communities, Inc., a

    Maryland corporation, its General Partner

                        By: /s/ Jeffrey R. Sprain____________________

Jeffrey R. Sprain, Executive Vice President, General Counsel and Secretary

PCC LUBBOCK, LLC, a Delaware

limited liability company

By:    Preferred Campus Communities, LLC, a Maryland limited liability company, its

Manager

By:    PAC Carveout, LLC, a Delaware limited liability company, its

Sole Member

By: Preferred Apartment Communities Operating Partnership, L.P., a Delaware limited partnership, as sole member of the Board of Managers of PAC Carveout, LLC

    Maryland corporation, its General Partner

[Signature Page to First Amendment to PSA - Student Housing]

By: Preferred Apartment Communities, Inc., a

    Maryland corporation, its General Partner

                        By: /s/ Jeffrey R. Sprain____________________

Jeffrey R. Sprain, Executive Vice President, General Counsel and Secretary

PCC WACO, LLC, a Delaware

limited liability company

By: Haven Campus Communities Kennesaw Member, LLC, a Georgia limited liability company, its sole Member and Manager

By: PCC Stadium Village, LLC, a Delaware limited liabiltiy company, its Manager

By:    Preferred Campus Communities, LLC, a Maryland limited liability company, its

Manager

By:    PAC Carveout, LLC, a Delaware limited liability company, its

Sole Member

By: Preferred Apartment Communities Operating Partnership, L.P., a Delaware limited partnership, as sole member of the Board of Managers of PAC Carveout, LLC

    Maryland corporation, its General Partner

By: Preferred Apartment Communities, Inc., a

    Maryland corporation, its General Partner

                        By: /s/ Jeffrey R. Sprain____________________

Jeffrey R. Sprain, Executive Vice President, General Counsel and Secretary

[Signature Page to First Amendment to PSA - Student Housing]

PCC TEMPE, LLC, a Delaware

limited liability company

By:    Preferred Campus Communities, LLC, a Maryland limited liability company, its

Manager

By:    PAC Carveout, LLC, a Delaware limited liability company, its

Sole Member

By: Preferred Apartment Communities Operating Partnership, L.P., a Delaware limited partnership, as sole member of the Board of Managers of PAC Carveout, LLC

    Maryland corporation, its General Partner

By: Preferred Apartment Communities, Inc., a

    Maryland corporation, its General Partner

                        By: /s/ Jeffrey R. Sprain____________________

Jeffrey R. Sprain, Executive Vice President, General Counsel and Secretary

HAVEN CAMPUS COMMUNITIES-KENNESAW, LLC, a Delaware

limited liability company

By: Haven Campus Communities Kennesaw Member, LLC, a Georgia limited liability company, its sole Member and Manager

By: PCC Stadium Village, LLC, a Delaware limited liability company, its Manager

By:    Preferred Campus Communities, LLC, a Maryland limited liability company, its

Manager

By:    PAC Carveout, LLC, a Delaware limited liability company, its

Sole Member

By: Preferred Apartment Communities Operating Partnership, L.P., a Delaware limited partnership, as sole member of the Board of Managers of PAC Carveout, LLC

[Signature Page to First Amendment to PSA - Student Housing]

    Maryland corporation, its General Partner

By: Preferred Apartment Communities, Inc., a

    Maryland corporation, its General Partner

                        By: /s/ Jeffrey R. Sprain____________________

Jeffrey R. Sprain, Executive Vice President, General Counsel and Secretary

HAVEN CAMPUS COMMUNITIES-CHARLOTTE, LLC, a Georgia

limited liability company

By:    PAC Lending, LLC, a Delaware limited liability company, its

Sole Member

By:    PAC Carveout, LLC, a Delaware limited liability company, its

Sole Member

By: Preferred Apartment Communities Operating Partnership, L.P., a Delaware limited partnership, as sole member of the Board of Managers of PAC Carveout, LLC

    Maryland corporation, its General Partner

By: Preferred Apartment Communities, Inc., a

    Maryland corporation, its General Partner

                        By: /s/ Jeffrey R. Sprain____________________

Jeffrey R. Sprain, Executive Vice President, General Counsel and Secretary

[Signature Page to First Amendment to PSA - Student Housing]

PURCHASER:

TPG REAL ESTATE PARTNERS INVESTMENTS, LLC, a Delaware limited liability company

By: /s/ Matthew Coleman

Name: Matthew Coleman

Title: Vice President

[Signature Page to First Amendment to PSA - Student Housing]

EX-10.7

EXHIBIT 10.7

SECOND AMENDMENT TO PURCHASE AND SALE AGREEMENT

    THIS SECOND AMENDMENT TO PURCHASE AND SALE AGREEMENT (hereinafter the "Amendment") is made effective as of September 18, 2020 (hereinafter the “Effective Date”), by and among PCC TALLAHASSEE, LLC, a Delaware limited liability company (“Tallahassee Seller”), PCC ORLANDO, LLC, a Delaware limited liability company (“Orlando Seller”), PCC COLLEGE STATION, LLC, a Delaware limited liability company (“College Station Seller”), PCC LUBBOCK, LLC, a Delaware limited liability company (“Lubbock Seller”), PCC WACO, LLC, a Delaware limited liability company (“Waco Seller”), PCC TEMPE, LLC, a Delaware limited liability company (“Tempe Seller”), HAVEN CAMPUS COMMUNITIES-KENNESAW, LLC, a Delaware limited liability company (“Kennesaw Seller”), and HAVEN CAMPUS COMMUNITIES-CHARLOTTE, LLC, a Georgia limited liability company (“Charlotte Seller”, and together with Tallahassee Seller, Orlando Seller, College Station Seller, Lubbock Seller, Waco Seller, Tempe Seller and Kennesaw Seller, jointly and severally, “Seller”), and TPG REAL ESTATE PARTNERS INVESTMENTS, LLC, a Delaware limited liability company (“Purchaser”).

    W I T N E S S E T H:

    WHEREAS, Purchaser and Seller are parties to that certain Purchase and Sale Agreement dated July 31, 2020, as amended by that certain First Amendment to Purchase and Sale Agreement dated August 7, 2020, as affected by that certain Extension of Loan Assumption Approval Deadline letter dated September 11, 2020 (as amended from time to time, the “Agreement”), for the sale from Seller to Purchaser of the Property (as defined in the Agreement); and

    WHEREAS, Purchaser and Seller desire to further modify the Agreement, as set forth below.

    NOW, THEREFORE, in consideration of the premises, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Seller and Purchaser hereby agree that the Agreement is and shall be amended as follows:

    1.     Incorporation of Recitals; Definitions. The recitals set forth above are hereby incorporated in this Amendment as if set forth herein in full. All capitalized terms not defined in this Amendment shall be deemed to have the meanings given such terms in the Agreement.

    2.    Financing Contingency. Purchaser hereby waives the Financing Contingency pursuant to Section 9.22 of the Agreement.

3.    Loan Assumption Approval Deadline. The parties hereby agree that the Loan Assumption Approval Deadline is extended to 5:00 p.m. Atlanta, Georgia time on October 30, 2020. In the event Lender does not provide all Loan Assumption Approvals on or before the Loan Assumption Approval Deadline, as extended pursuant to this Section 3, then without limiting any other rights Purchaser may have under the Agreement, Purchaser shall have the right to further extend the Loan Assumption Approval Deadline until 5:00 p.m. Atlanta, Georgia time on November 12, 2020, by providing written notice thereof (the “Extension Notice”) to Seller on or before the Loan Assumption Approval Deadline. In the event Purchaser delivers the Extension Notice pursuant to this Section 3, Purchaser shall deliver to Escrow Agent, no later than two (2) business days after delivery of the Extension Notice, an additional earnest money deposit in the amount of TWO MILLION FIVE HUNDRED THOUSAND AND 00/100 DOLLARS ($2,500,000.00), which amount shall be included as

1

part of the Earnest Money, provided that $1,000,000 of the Earnest Money shall not be applied to the Purchase Price at Closing.

    4.    Closing Date. The parties hereto agree that if the Extension Notice is not given in accordance with Section 3 herein, the Closing Date shall be November 9, 2020. If the Extension Notice is given in accordance with Section 3 herein, the Closing Date shall be November 20, 2020.

    5.    Counterparts. This Amendment may be executed in any number of counterparts and it shall be sufficient that the signature of each party appear on one or more such counterparts. All counterparts shall collectively constitute a single agreement. Originals transmitted by facsimile or electronic mail shall be considered original in all respects.

    6.    Continued and Binding Effect. Except to the extent the Agreement is amended or modified by this Amendment, the remaining terms and conditions of the Agreement shall remain in full force and effect. This Amendment shall be binding upon and inure to the benefit of Purchaser and Seller and their respective successors and assigns.

[Remainder of page intentionally left blank]

2

    IN WITNESS WHEREOF, the parties have executed this Amendment as of the date set forth above.

PCC TALLAHASSEE, LLC, a Delaware

limited liability company

By:    Preferred Campus Communities, LLC, a Maryland limited liability company, its

Manager

By:    PAC Carveout, LLC, a Delaware limited liability company, its

Sole Member

By: Preferred Apartment Communities Operating Partnership, L.P., a Delaware limited partnership, as sole member of the Board of Managers of PAC Carveout, LLC

    Maryland corporation, its General Partner

By: Preferred Apartment Communities, Inc., a

    Maryland corporation, its General Partner

                        By: /s/ Jeffrey R. Sprain____________________

Jeffrey R. Sprain, Executive Vice President, General Counsel and Secretary

PCC ORLANDO, LLC, a Delaware

limited liability company

By:    Preferred Campus Communities, LLC, a Maryland limited liability company, its

Manager

By:    PAC Carveout, LLC, a Delaware limited liability company, its

Sole Member

By: Preferred Apartment Communities Operating Partnership, L.P., a Delaware limited partnership, as sole member of the Board of Managers of PAC Carveout, LLC

    Maryland corporation, its General Partner

[Signature Page to Second Amendment to PSA - Student Housing]

By: Preferred Apartment Communities, Inc., a

    Maryland corporation, its General Partner

                        By: /s/ Jeffrey R. Sprain____________________

Jeffrey R. Sprain, Executive Vice President, General Counsel and Secretary

HAVEN CAMPUS COMMUNITIES-KENNESAW, LLC, a Delaware

limited liability company

By: Haven Campus Communities Kennesaw Member, LLC, a Georgia limited liability company, its sole Member and Manager

By: PCC Stadium Village, LLC, a Delaware limited liability company, its Manager

By:    Preferred Campus Communities, LLC, a Maryland limited liability company, its

Manager

By:    PAC Carveout, LLC, a Delaware limited liability company, its

Sole Member

By: Preferred Apartment Communities Operating Partnership, L.P., a Delaware limited partnership, as sole member of the Board of Managers of PAC Carveout, LLC

    Maryland corporation, its General Partner

By: Preferred Apartment Communities, Inc., a

    Maryland corporation, its General Partner

                        By: /s/ Jeffrey R. Sprain____________________

Jeffrey R. Sprain, Executive Vice President, General Counsel and Secretary

[Signature Page to Second Amendment to PSA - Student Housing]

HAVEN CAMPUS COMMUNITIES-CHARLOTTE, LLC, a Georgia

limited liability company

By:    PAC Lending, LLC, a Delaware limited liability company, its

Sole Member

By:    PAC Carveout, LLC, a Delaware limited liability company, its

Sole Member

By: Preferred Apartment Communities Operating Partnership, L.P., a Delaware limited partnership, as sole member of the Board of Managers of PAC Carveout, LLC

    Maryland corporation, its General Partner

By: Preferred Apartment Communities, Inc., a

    Maryland corporation, its General Partner

                        By: /s/ Jeffrey R. Sprain____________________

Jeffrey R. Sprain, Executive Vice President, General Counsel and Secretary

[Signature Page to Second Amendment to PSA - Student Housing]

PURCHASER:

TPG REAL ESTATE PARTNERS INVESTMENTS, LLC, a Delaware limited liability company

By: /s/ Matthew Coleman

Name: Matthew Coleman

Title: Vice President

[Signature Page to Second Amendment to PSA - Student Housing]

EX-31.1

EXHIBIT 31.1

CERTIFICATIONS

I, Joel T. Murphy, certify that:

1.    I have reviewed this quarterly report on Form 10-Q of Preferred Apartment Communities, 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.

Date: November 9, 2020	/s/ Joel T. Murphy
	Joel T. Murphy
	Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATIONS

I, John A. Isakson, certify that:

1.    I have reviewed this quarterly report on Form 10-Q of Preferred Apartment Communities, 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.

Date: November 9, 2020	/s/ John A. Isakson
	John A. Isakson
	Chief Financial Officer

EX-32.1

Exhibit 32.1

Furnished (but not filed) as an exhibit to the periodic report identified in the Certification.

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Preferred Apartment Communities, Inc. (the "Company") on Form 10-Q for the period ended September 30, 2020 as filed with the Securities and Exchange Commission (the "Report"), I, Joel T. Murphy, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(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.

Date: November 9, 2020	/s/ Joel T. Murphy
	Joel T. Murphy
	Chief Executive Officer

EX-32.2

Exhibit 32.2

Furnished (but not filed) as an exhibit to the periodic report identified in the Certification.

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Preferred Apartment Communities, Inc. (the "Company") on Form 10-Q for the period ended September 30, 2020 as filed with the Securities and Exchange Commission (the "Report"), I, John A. Isakson, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(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.

Date: November 9, 2020	/s/ John A. Isakson
	John A. Isakson
	Chief Financial Officer

XML

Cover - shares	9 Months Ended
	Sep. 30, 2020	Nov. 04, 2020
Document and Entity Information
entity registrant name	Preferred Apartment Communities, Inc.
entity CIK	0001481832
Current fiscal year end date	--12-31
document type	10-Q
document period end date	Sep. 30, 2020
document fiscal year focus	2020
entity filer category	Accelerated Filer
document fiscal period focus	Q3
Entity Current Reporting Status	Yes
amendment flag	false
entity common stock, shares outstanding		49,900,555
Document Quarterly Report	true
Document Transition Report	false
Entity File Number	001-34995
Entity Incorporation, State or Country Code	MD
Entity Tax Identification Number	27-1712193
Entity Address, Address Line One	3284 Northside Parkway NW, Suite 150
Entity Address, City or Town	Atlanta
Entity Address, State or Province	GA
Entity Address, Postal Zip Code	30327
City Area Code	770
Local Phone Number	818-4100
Title of 12(b) Security	Common Stock, par value $.01 per share
Trading Symbol	APTS
Security Exchange Name	NYSE
Entity Interactive Data Current	Yes
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false

XML

Balance Sheets - USD ($)	Sep. 30, 2020	Dec. 31, 2019
Real estate
Land	$ 657,286,000	$ 635,757,000
Building and improvements	3,361,174,000	3,256,223,000
Tenant Improvements	175,400,000	167,275,000
Furniture, fixtures, and equipment	357,010,000	323,381,000
Construction in progress	23,677,000	11,893,000
Gross real estate	4,574,547,000	4,394,529,000
Less: accumulated depreciation	(542,161,000)	(421,551,000)
Net real estate	4,032,386,000	3,972,978,000
Real estate loans	307,033,000	325,790,000
Loans and Leases Receivable, Related Parties	2,568,000	23,692,000
Total real estate and real estate loan, net	4,341,987,000	4,322,460,000
Cash and cash equivalents	30,337,000	94,381,000
Restricted cash	65,690,000	42,872,000
Financing Receivable, Net	2,894,000	17,079,000
Note receivable	24,810,000
Due from Related Parties, Current	9,011,000	24,838,000
Interest Receivable	24,784,000	25,755,000
Intangible Assets, Net (Excluding Goodwill)	133,297,000	154,803,000
Deferred loan costs, net of amortization of $155,953 and $64,480	(879,000)	(1,286,000)
Deferred offering costs	4,721,000	2,147,000
tenants capitalized lease inducements	18,655,000	19,607,000
Investment in unconsolidated joint venture	6,851,000	0
Other assets	91,956,000	65,332,000
Total assets	4,731,062,000	4,770,560,000
Liabilities
Mortgage notes payable	2,765,793,000	2,567,022,000
Accounts payable and accrued expenses	66,283,000	42,191,000
deferred liability to former manager	23,373,000	0
contingent liability due to former manager	14,867,000	0
Line of Credit Facility, Amount Outstanding	33,000,000	0
Notes Payable	0	69,489,000
unearned revenue from purchase option termination fees	1,164,000	2,859,000
Interest Payable, Current	8,538,000	8,152,000
Dividends payable	20,971,000	23,519,000
Below Market Lease, Net	54,483,000	62,611,000
Security deposits and prepaid rents	34,823,000	20,879,000
Deferred income	36,909,000	39,722,000
Total liabilities	3,060,204,000	2,836,444,000
Stockholder's equity
Common Stock, $0.01 par value per share; 400,066,666 shares authorized; 5,179,093 and 5,149,325 shares issued and outstanding at September 30, 2012 and December 31, 2011, respectively	499,000	464,000
Additional paid in capital	1,882,149,000	1,938,057,000
Accumulated deficit	(210,218,000)	(7,244,000)
Total stockholders' equity	1,672,451,000	1,931,298,000
Non-controlling interest	(1,593,000)	2,818,000
Total equity	1,670,858,000	1,934,116,000
Total liabilities and equity	4,731,062,000	4,770,560,000
Series A Preferred Stock [Member]
Stockholder's equity
Series A Redeemable Preferred Stock, $0.01 par value per share; 150,000 shares authorized; 12,178 and 0 shares issued and outstanding at September 30, 2012 and December 31, 2011, respectively	20,000	20,000
Series M Preferred Stock [Member]
Stockholder's equity
Series A Redeemable Preferred Stock, $0.01 par value per share; 150,000 shares authorized; 12,178 and 0 shares issued and outstanding at September 30, 2012 and December 31, 2011, respectively	1,000	1,000
series A1M1 offering [Domain]
Stockholder's equity
Series A Redeemable Preferred Stock, $0.01 par value per share; 150,000 shares authorized; 12,178 and 0 shares issued and outstanding at September 30, 2012 and December 31, 2011, respectively	0	0
series m1 [Domain]
Stockholder's equity
Series A Redeemable Preferred Stock, $0.01 par value per share; 150,000 shares authorized; 12,178 and 0 shares issued and outstanding at September 30, 2012 and December 31, 2011, respectively	$ 0	$ 0

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Balance Sheets (Parentheticals) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Accumulated Depreciation, Depletion and Amortization, Sale or Disposal of Property, Plant and Equipment	$ 542,161	$ 421,551
Finite-Lived Intangible Assets, Accumulated Amortization	177,348	149,896
sales inducements accumulated amortization	4,902	3,567
Below Market Lease, Accumulated Amortization	$ 31,511	23,655
Common Stock, par value per share	$ 0.01
Common stock, shares outstanding	49,900,555
Financing Receivable, Related Party, Allowance For Doubtful Accounts	$ 3,548	1,416
Real Estate Related Loans, Deferred Fee Income and loan loss allowance	$ 10,480	$ 1,460
Series A Preferred Stock [Member]
Series A Redeemable Preferred Stock, par value per share	$ 0.01	$ 0.01
Preferred stock, shares authorized	3,050,000	3,050,000
Preferred stock, shares issued	2,226,000	2,161,000
Shares outstanding, preferred stock	1,991,000	2,028,000
Series M Preferred Stock [Member]
Series A Redeemable Preferred Stock, par value per share	$ 0.01	$ 0.01
Preferred stock, shares authorized	500,000	500,000
Preferred stock, shares issued	106,000	106,000
Shares outstanding, preferred stock	91,000	103,000
Common Stock [Member]
Common Stock, par value per share	$ 0.01	$ 0.01
Common stock, shares authorized	400,067,000	400,067,000
Common Stock, Shares, Issued	49,901,000	46,443,000
Common stock, shares outstanding	49,901,000	46,443,000
Series A1 Preferred Stock
Series A Redeemable Preferred Stock, par value per share	$ 0.01	$ 0.01
Preferred stock, shares authorized	1,000,000	1,000,000
Preferred stock, shares issued	103,000	5,000
Shares outstanding, preferred stock	103,000	5,000
Series M1 Preferred Stock
Series A Redeemable Preferred Stock, par value per share	$ 0.01	$ 0.01
Preferred stock, shares authorized	1,000,000	1,000,000
Preferred stock, shares issued	13,000	0
Shares outstanding, preferred stock	13,000	0
Line of Credit [Member]
Deferred loan costs, accumulated amortization	$ 1,362	$ 849
Mortgages [Member]
Deferred loan costs, accumulated amortization	48,376	42,807
Notes Payable, Other Payables
Deferred loan costs, accumulated amortization	$ 0	$ 511

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Statements of Operations - USD ($) shares in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Revenues:
Rental and other property revenues	$ 114,831,000	$ 105,049,000	$ 338,271,000	$ 298,569,000
Interest income on loan and note receivable	10,649,000	12,608,000	34,495,000	35,989,000
Revenue from Related Parties	609,000	2,546,000	3,750,000	9,980,000
miscellaneous revenues	608,000	0	4,560,000	1,023,000
Revenues	126,697,000	120,203,000	381,076,000	345,561,000
Operating expenses:
Property operating and maintenance	19,278,000	16,493,000	52,919,000	43,236,000
Payments to Employees	6,054,000	5,360,000	16,965,000	14,845,000
Management Fee Expense	983,000	3,534,000	4,028,000	10,174,000
Provision for Other Credit Losses	(152,000)	0	5,463,000	0
Real Estate Taxes and Insurance	16,078,000	14,474,000	48,109,000	42,646,000
Real estate taxes		0		0
General and administrative	7,898,000	1,364,000	23,109,000	4,171,000
Employee Benefits and Share-based Compensation	582,000	305,000	1,058,000	922,000
Depreciation, Depletion and Amortization	51,794,000	46,239,000	153,096,000	137,191,000
Asset management and G&A	0	8,611,000	3,099,000	24,649,000
Share-based Compensation	(152,000)	0	5,463,000	0
Depreciation and amortization	51,794,000	46,239,000	153,096,000	137,191,000
Allowance for Loan and Lease Losses, Loans Acquired	0	(5,530,000)	(1,963,000)	(16,144,000)
Other Expenses	577,000	818,000	179,828,000	1,143,000
Total operating expenses	103,092,000	97,198,000	487,674,000	278,977,000
manager's fees deferred	0	3,081,000	1,136,000	8,505,000
Operating Expenses	103,092,000	94,117,000	486,538,000	270,472,000
Operating Income (Loss)	23,605,000	26,086,000	(105,462,000)	75,089,000
Income (Loss) from Equity Method Investments, Net of Dividends or Distributions	(120,000)	0	(120,000)	0
Gain on Sale of Investments	3,261,000	0	3,261,000	4,000
Interest Expense	29,879,000	28,799,000	90,608,000	83,166,000
change in fair value of variable interest entities	0	591,000	0	1,316,000
Gain (Loss) on Extinguishment of Debt	518,000	15,000	6,674,000	84,000
gain on sale of financial instruments	49,000	0	528,000	747,000
Income (Loss) from Continuing Operations before Equity Method Investments, Income Taxes, Noncontrolling Interest	(3,602,000)	(2,137,000)	(199,075,000)	(6,094,000)
Net Income (Loss) Attributable to Noncontrolling Interest	108,000	59,000	3,515,000	138,000
Gains (Losses) on Sales of Investment Real Estate	0	0	0	4,000
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest	26,746,000	26,086,000	(102,321,000)	75,093,000
Income (Loss) from Continuing Operations, Including Portion Attributable to Noncontrolling Interest	(3,602,000)	(2,137,000)	(199,075,000)	(6,094,000)
Net loss attributable to the Company	(3,494,000)	(2,078,000)	(195,560,000)	(5,956,000)
Preferred Stock Dividends, Income Statement Impact	35,909,000	29,446,000	104,601,000	82,527,000
net income attributable to unvested restricted stockholders	(96,000)	(5,000)	(109,000)	(14,000)
Deemed noncash dividend			499,000	358,000
Net Income (Loss) Available to Common Stockholders, Basic	$ (39,499,000)	$ (31,529,000)	$ (300,270,000)	$ (88,497,000)
Income (Loss) from Continuing Operations, Per Basic and Diluted Share	$ (0.79)	$ (0.71)	$ (6.21)	$ (2.02)
Weighted Average Number of Shares Outstanding, Basic	49,689	44,703	48,351	43,703
Dividends, Common Stock, Cash	$ 8,876,000	$ 11,823,000	$ 29,991,000	$ 34,599,000
Common Stock, Dividends, Per Share, Declared	$ 0.175	$ 0.2625	$ 0.6125	$ 0.785
Fair Value, Assets Measured on Recurring Basis, Change in Unrealized Gain (Loss)	$ 0	$ 0	$ 0	$ 747,000

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Statements of Operations (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Income Statement Parentheticals [Abstract]
property management fees paid to related party	$ 0	$ 2,565	$ 894	$ 7,534
Related Party Transaction, Property Salary And Benefits Reimbursement Fees	$ 0	$ 4,681	$ 1,430	$ 12,973

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Statements of Cash Flows Statement - USD ($)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019
Operating activities:
Net loss attributable to the Company	$ (3,494,000)	$ (2,078,000)	$ (195,560,000)	$ (5,956,000)
Income (Loss) from Continuing Operations before Equity Method Investments, Income Taxes, Noncontrolling Interest	(3,602,000)	(2,137,000)	(199,075,000)	(6,094,000)
Reconciliation of net loss to net cash provided by (used in) operating activities:
Depreciation expense	51,794,000	46,239,000	153,096,000	137,191,000
Amortization of above and below Market Leases			(6,145,000)	(4,525,000)
Deferred fee income amortization			(3,710,000)	(4,720,000)
amortization of purchase option termination fee income	(421,000)	(1,283,000)	(4,896,000)	(6,900,000)
Interest Income, Securities, Mortgage Backed	0	0	0	(95,000)
Deferred Sales Inducement Cost, Amortization Expense			3,027,000	2,414,000
Deferred loan cost amortization			5,177,000	4,752,000
deferred interest income			(9,208,000)	(10,206,000)
Receipt of accrued interest income on real estate loans			10,179,000	2,318,000
Gain (Loss) on Sale of Mortgage Loans			0	(751,000)
Share-based Compensation	(152,000)	0	5,463,000	0
Gain (Loss) on Disposition of Assets			(3,789,000)	0
Gain (Loss) From Unconsolidated Joint Ventures			120,000	0
cash inflows purchase option terminations			4,800,000	1,330,000
Gain (Loss) on Extinguishment of Debt	518,000	15,000	6,674,000	84,000
noncash loan interest income			0	(637,000)
Provision for Loan and Lease Losses			5,463,000	0
cash inflows mortgage interest from consolidated VIE			0	13,398,000
mortgage interes cash outflows consolidated VIE			0	(13,398,000)
Changes in operating assets and liabilities:
(Increase) in tenant accounts receivable			(15,769,000)	(12,379,000)
Payments for (Proceeds from) Tenant Allowance			(382,000)	(570,000)
Loans and Leases Receivable, Allowance	0	5,530,000	1,963,000	16,144,000
(Increase) decrease in other assets			46,821,000	22,399,000
Increase (Decrease) in Deferred Liabilities			22,851,000	0
Business Combination, Contingent Consideration Arrangements, Change in Amount of Contingent Consideration, Liability			15,013,000	0
Increase in accounts payable and accrued expenses			(249,000)	730,000
Net cash provided by (used in) operating activities			29,998,000	124,436,000
Investing activities:
Investments in real estate loans			(42,193,000)	(74,668,000)
Proceeds from Principal Repayments on Loans and Leases Held-for-investment			71,146,000	0
Notes receivable issued			15,012,000	2,169,000
Deferred acquisition fee on real estate loans			(9,624,000)	(30,434,000)
Deferred real estate loan income			(793,000)	(5,399,000)
Acquisition of properties, net			(185,970,000)	(442,415,000)
proceeds from sale of interest in joint venture			19,221,000	0
return of capital from joint venture			12,250,000	0
Receipt of insurance proceeds for capital improvements			0	746,000
Proceeds from Sale of Productive Assets			787,000	0
Additions to real estate assets - improvements			(39,158,000)	(34,251,000)
Payments to Acquire Investments			(50,000)	0
Increase (Decrease) in Earnest Money Deposits Outstanding			(1,227,000)	(952,000)
AcquisitionFeesRelatedPartyCosts			0	(674,000)
Payments to Acquire Mortgage Backed Securities (MBS) categorized as Held-to-maturity			0	(18,656,000)
cash paid investment in CMBS			0	(12,278,000)
Proceeds from Sale of Mortgage Backed Securities (MBS) categorized as Available-for-sale			0	53,445,000
mortgage principal received from consolidated VIE			0	5,024,000
Increase (Decrease) in Accounts and Notes Receivable			4,546,000	26,222,000
Proceeds from Sale of Loans Receivable				747,000
Net cash (used in) investing activities			(155,171,000)	(530,027,000)
Financing activities:
Proceeds from mortgage notes payable			377,749,000	329,905,000
Extinguishment of Debt, Amount			(173,409,000)	(106,728,000)
Payments for mortgage loan costs			(10,911,000)	(6,738,000)
Payments of Debt Issuance Costs			(5,733,000)	0
payments received from real estate loan participants			0	(5,223,000)
Proceeds from non-revolving lines of credit			321,000,000	240,200,000
Payments on revolving lines of credit			(288,000,000)	(247,200,000)
Repayments of Short-term Debt			(70,000,000)	0
mortgage principal paid to consolidated VIE			0	(5,024,000)
cash flows financing proceeds repurchase agreements			0	4,857,000
cash flows financing repayments repurchase agreements			0	(4,857,000)
Proceeds from sales of Units, net of offering costs			159,096,000	380,016,000
Proceeds from Warrant Exercises			24,000	9,875,000
Preferred Stock, Redemption Amount			(82,003,000)	(7,995,000)
Dividends declared and paid			(33,271,000)	(33,617,000)
Proceeds from Issuance of Common Stock			4,522,000	0
Payments of Ordinary Dividends, Preferred Stock and Preference Stock			(104,428,000)	(81,025,000)
Payments for deferred offering costs, net of non cash items			(10,669,000)	(3,386,000)
Proceeds from Noncontrolling Interests			99,000	2,050,000
Net Cash Provided by (Used in) Financing Activities			83,947,000	465,110,000
Cash and Cash Equivalents, Period Increase (Decrease)			(41,226,000)	59,519,000
Cash beginning of period			137,253,000	87,690,000	$ 87,690,000
Cash end of period	96,027,000	147,209,000	96,027,000	147,209,000	137,253,000
Supplemental cash flow information:
Cash paid for interest			84,172,000	76,563,000
Noncash Investing and Financing Items [Abstract]
Accrued capital expenditures			6,067,000	3,952,000
Deemed noncash dividend			499,000	358,000
Dividends payable to non controlling interests			130,000	225,000
Payments of Ordinary Dividends, Noncontrolling Interest			119,000	0
Accrued and payable deferred offering costs			38,000	252,000
receivable for deferred offering costs			2,473,000	210,000
Writeoff of fully amortized deferred loan costs			2,828,000	1,850,000
Assets	4,731,062,000		4,731,062,000		4,770,560,000
Liabilities	3,060,204,000		3,060,204,000		$ 2,836,444,000
Notes Reduction			20,865,000	0
Reclass of offering costs from deferred asset to equity			4,338,000	7,508,000
Loan Receivable Transferred To Equity			0	47,797,000
Non-Cash Contribution of Property into an Unconsolidated Joint Venture			38,443,000	0
Loans Assumed			0	41,550,000
Share-based Compensation			6,461,000	719,000
Noncash settlement of loans			40,000	384,000
loan fees received			882,000	1,347,000
mortgage debt refinanced			86,669,000	65,607,000
Operating Lease Assumed			15,912,000	0
Variable Interest Entity, Primary Beneficiary
Noncash Investing and Financing Items [Abstract]
Assets	0	270,669,000	0	270,669,000
Liabilities	0	270,669,000	0	270,669,000
Common Stock [Member]
Noncash Investing and Financing Items [Abstract]
Dividends payable			8,876,000	11,823,000
Series A Preferred Stock [Member]
Noncash Investing and Financing Items [Abstract]
Dividends payable			9,954,000	9,534,000
Series M Preferred Stock [Member]
Noncash Investing and Financing Items [Abstract]
Dividends payable			1,097,000	714,000
Series A1/M1 Preferred Stock
Financing activities:
Proceeds from Issuance of Common Stock	4,614,000
Noncash Investing and Financing Items [Abstract]
Dividends payable			545,000	0
Parent [Member]
Operating activities:
Income (Loss) from Continuing Operations before Equity Method Investments, Income Taxes, Noncontrolling Interest	(3,494,000)	$ (2,078,000)	$ (195,560,000)	$ (5,956,000)
Parent [Member] | Series A1/M1 Preferred Stock
Financing activities:
Proceeds from Issuance of Common Stock	$ 4,614,000

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Statements of Equity and Accumulated Deficit - USD ($)	Total	Series A Preferred Stock [Member]	Series A1/M1 Preferred Stock	Common Stock [Member]	Common Stock [Member] Series A Preferred Stock [Member]	Common Stock [Member] Series M Preferred Stock [Member]	Common Stock [Member] Series A1/M1 Preferred Stock	Additional Paid-in Capital [Member]	Additional Paid-in Capital [Member] Series A Preferred Stock [Member]	Additional Paid-in Capital [Member] Series A1/M1 Preferred Stock	Accumulated Deficit [Member]	Accumulated Deficit [Member] Series A Preferred Stock [Member]	Accumulated Deficit [Member] Series A1/M1 Preferred Stock	Total Stockholders' Equity [Member]	Total Stockholders' Equity [Member] Series A Preferred Stock [Member]	Total Stockholders' Equity [Member] Series A1/M1 Preferred Stock	Noncontrolling Interest [Member]	Noncontrolling Interest [Member] Series A Preferred Stock [Member]	Noncontrolling Interest [Member] Series A1/M1 Preferred Stock	Preferred Stock [Member]	Preferred Stock [Member] Series A Preferred Stock [Member]	Preferred Stock [Member] Series M Preferred Stock [Member]	Preferred Stock [Member] Series A1/M1 Preferred Stock	ClassBUnits [Member]	ClassBUnits [Member] Common Stock [Member]	ClassBUnits [Member] Additional Paid-in Capital [Member]	ClassBUnits [Member] Accumulated Deficit [Member]	ClassBUnits [Member] Total Stockholders' Equity [Member]	ClassBUnits [Member] Noncontrolling Interest [Member]	ClassBUnits [Member] Preferred Stock [Member] Series A Preferred Stock [Member]
Proceeds from Issuance of Preferred Stock and Preference Stock	$ 46,765,000	$ 369,420,000			$ 0	$ 0		$ 46,765,000	$ 369,416,000		$ 0	$ 0		$ 46,765,000	$ 369,420,000						$ 4,000	$ 0
Proceeds from Issuance of Common Stock	0
Balance at Dec. 31, 2018	1,609,385,000			$ 418,000				1,607,712,000			0			1,608,146,000			$ 1,239,000				16,000
Stock Redeemed or Called During Period, Value	(7,988,000)			26,000				(8,014,000)			0			(7,988,000)			0				0
exercise of warrants	10,074,000			8,000				10,066,000			0			10,074,000			0				0
Stock Issued During Period, Value, Conversion of Units	0			1,000				676,000			0			677,000			(677,000)				0
amortization of Class A Unit awards																								$ 451,000	$ 0	$ 0	$ 0	$ 0	$ 451,000	$ 0
Syndication and offering costs	(43,795,000)			0				(43,795,000)			0			(43,795,000)			0				0
Stock Issued During Period, Value, Share-based Compensation, Gross	471,000			0				471,000			0			471,000			0				0
Dividends, Common Stock, Cash	(34,599,000)			0				(34,599,000)			0			(34,599,000)			0			$ 0
Balance at Sep. 30, 2019	1,862,930,000			453,000				1,861,446,000			0			1,861,919,000			1,011,000				20,000
Income (Loss) from Continuing Operations before Equity Method Investments, Income Taxes, Noncontrolling Interest	(6,094,000)			0				0			(5,956,000)			(5,956,000)			(138,000)				0
Other Ownership Interests, Contributed Capital			$ 2,050,000				$ 0									$ 0			$ 2,050,000				$ 0
non-controlling interest equity adjustment	0			0				1,231,000			0			1,231,000			(1,231,000)				0
Payments to Noncontrolling Interests	(683,000)			0				0			0			0			(683,000)				0
Dividends, Preferred Stock	(3,176,000)	(79,351,000)			0			(3,405,000)	(85,078,000)		229,000	5,727,000		(3,176,000)	(79,351,000)		0	$ 0			0	0
Proceeds from Issuance of Preferred Stock and Preference Stock	17,156,000	116,828,000			0	$ 0		17,156,000	116,827,000		0	0		17,156,000	116,828,000						1,000	0
Balance at Jun. 30, 2019	1,784,170,000			442,000				1,784,197,000			0			1,784,658,000			(488,000)				19,000
Stock Redeemed or Called During Period, Value	(2,877,000)			9,000				(2,886,000)			0			(2,877,000)			0				0
exercise of warrants	2,482,000			2,000				2,480,000			0			2,482,000			0				0
Stock Issued During Period, Value, Conversion of Units	0			0				112,000			0			112,000			(112,000)				0
amortization of Class A Unit awards																								150,000	0	0	0	0	150,000	0
Syndication and offering costs	(13,553,000)			0				(13,553,000)			0			(13,553,000)			0				0
Stock Issued During Period, Value, Share-based Compensation, Gross	155,000			0				155,000			0			155,000			0				0
Dividends, Common Stock, Cash	(11,823,000)			0				(11,823,000)			0			(11,823,000)			0			0
Balance at Sep. 30, 2019	1,862,930,000			453,000				1,861,446,000			0			1,861,919,000			1,011,000				20,000
Income (Loss) from Continuing Operations before Equity Method Investments, Income Taxes, Noncontrolling Interest	(2,137,000)			0				0			(2,078,000)			(2,078,000)			(59,000)				0
Other Ownership Interests, Contributed Capital			2,050,000				0									0			2,050,000				0
non-controlling interest equity adjustment	0			0				305,000			0			305,000			(305,000)				0
Payments to Noncontrolling Interests	(225,000)			0				0			0			0			(225,000)				0
Dividends, Preferred Stock	(1,335,000)	(28,111,000)			0			(1,430,000)	(30,094,000)		95,000	1,983,000		(1,335,000)	(28,111,000)		0	0			0	0
Proceeds from Issuance of Preferred Stock and Preference Stock		64,484,000	110,947,000		0		0		64,483,000	$ 110,946,000					64,484,000	110,947,000					1,000		1,000
Proceeds from Issuance of Common Stock	4,522,000
Balance at Dec. 31, 2019	1,934,116,000			464,000				1,938,057,000			(7,244,000)			1,931,298,000			2,818,000				21,000
Balance (Accounting Standards Update 2016-13) at Dec. 31, 2019	(7,414,000)										(7,414,000)			(7,414,000)
Stock Redeemed or Called During Period, Value	(82,032,000)			28,000				(82,058,000)			0			(82,032,000)			0				(2,000)
exercise of warrants	8,000			0				8,000			0			8,000			0				0
Stock Issued During Period, Value, Conversion of Units	0			1,000				1,381,000			0			1,382,000			(1,382,000)				0
amortization of Class A Unit awards																								194,000	0	0	0	0	194,000	0
Syndication and offering costs	(20,775,000)			0				(20,775,000)			0			(20,775,000)			0				0
Stock Issued During Period, Value, Share-based Compensation, Gross	864,000			0				864,000			0			864,000			0				0
Dividends, Common Stock, Cash	(29,991,000)			0				(29,991,000)			0			(29,991,000)			0			0
Balance at Sep. 30, 2020	1,670,858,000			499,000				1,882,149,000			(210,218,000)			1,672,451,000			(1,593,000)				21,000
Income (Loss) from Continuing Operations before Equity Method Investments, Income Taxes, Noncontrolling Interest	(199,075,000)			0				0			(195,560,000)			(195,560,000)			(3,515,000)				0
Other Ownership Interests, Contributed Capital			103,000				0									0			103,000				0
non-controlling interest equity adjustment	0			0				(773,000)			0			(773,000)			773,000				0
Payments to Noncontrolling Interests	(119,000)			0				0			0			0			(119,000)				0
us-gaap_MinorityInterestDecreaseFromDistributionsToNoncontrollingInterestHolders	465,000			0				0			0			0			465,000				0
Dividends, Preferred Stock	(4,903,000)	(97,272,000)	(2,426,000)		0		0	(4,903,000)	(97,272,000)	(2,426,000)	0	0	$ 0	(4,903,000)	(97,272,000)	(2,426,000)	0	0	0		0	0	0
Proceeds from Issuance of Preferred Stock and Preference Stock			42,352,000				0			42,352,000						42,352,000							0
Proceeds from Issuance of Common Stock			4,614,000				6,000			4,608,000						4,614,000							0
Balance at Jun. 30, 2020	1,709,996,000			493,000				1,917,212,000			(206,724,000)			1,711,002,000			(1,006,000)				21,000
Stock Redeemed or Called During Period, Value	(33,823,000)			0				(33,823,000)			0			(33,823,000)			0
Stock Issued During Period, Value, Conversion of Units	0			0				(2,000)			0			(2,000)			2,000				0
amortization of Class A Unit awards																								$ 70,000	$ 0	$ 0	$ 0	$ 0	$ 70,000	$ 0
Syndication and offering costs	4,127,000							4,127,000						4,127,000
Stock Issued During Period, Value, Share-based Compensation, Gross	512,000			0				512,000			0			512,000			0				0
Dividends, Common Stock, Cash	(8,876,000)			0				(8,876,000)			0			(8,876,000)			0			$ 0
Balance at Sep. 30, 2020	1,670,858,000			499,000				1,882,149,000			(210,218,000)			1,672,451,000			(1,593,000)				21,000
Income (Loss) from Continuing Operations before Equity Method Investments, Income Taxes, Noncontrolling Interest	(3,602,000)			0				0			(3,494,000)			(3,494,000)			(108,000)				0
Other Ownership Interests, Contributed Capital			(98,000)				0									0			(98,000)				0
non-controlling interest equity adjustment	0			0				202,000			0			202,000			(202,000)				0
Payments to Noncontrolling Interests	(119,000)			0				0			0			0			(119,000)				0
us-gaap_MinorityInterestDecreaseFromDistributionsToNoncontrollingInterestHolders	132,000			$ 0				0			0			0			132,000				0
Dividends, Preferred Stock	$ (1,547,000)	$ (32,964,000)	$ (1,398,000)		$ 0		$ 0	$ (1,547,000)	$ (32,964,000)	$ (1,398,000)	$ 0	$ 0	$ 0	$ (1,547,000)	$ (32,964,000)	$ (1,398,000)	$ 0	$ 0	$ 0		$ 0	$ 0	$ 0

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Statements of Equity and Accumulated Deficit Parenthetical - $ / shares	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Common Stock, Dividends, Per Share, Declared	$ 0.175	$ 0.2625	$ 0.6125	$ 0.785
Series A Preferred Stock [Member]
Preferred Stock, Dividends Per Share, Declared	5.00	5.00	5.00	5.00
Series A1 Preferred Stock
Preferred Stock, Dividends Per Share, Declared	5.00		5.00
Minimum [Member] | Series M Preferred Stock [Member]
Preferred Stock, Dividends Per Share, Declared	4.79	4.79	4.79	4.79
Minimum [Member] | Series M1 Preferred Stock
Preferred Stock, Dividends Per Share, Declared	5.08		5.08
Maximum [Member] | Series M Preferred Stock [Member]
Preferred Stock, Dividends Per Share, Declared	6.25	$ 6.25	6.25	$ 6.25
Maximum [Member] | Series M1 Preferred Stock
Preferred Stock, Dividends Per Share, Declared	$ 5.92		$ 5.92

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Pro Forma Financial Information (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Business Acquisition, Pro Forma Information, Nonrecurring Adjustment [Line Items]
Revenues	$ 126,697	$ 120,203	$ 381,076	$ 345,561

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Quarterly Financial Data (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Income Statement [Abstract]
Revenues	$ 126,697	$ 120,203	$ 381,076	$ 345,561
Operating Income (Loss)	23,605	26,086	(105,462)	75,089
Net Income (Loss) Attributable to Parent	(3,494)	(2,078)	(195,560)	(5,956)
Net Income (Loss) Available to Common Stockholders, Basic	$ (39,499)	$ (31,529)	$ (300,270)	$ (88,497)

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Organization

9 Months Ended

Sep. 30, 2020

Organization [Abstract]

Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

Organization and Basis of Presentation

Preferred Apartment Communities, Inc. (NYSE: APTS) is a real estate investment trust engaged primarily in the ownership and operation of Class A multifamily properties, with select investments in grocery anchored shopping centers, Class A office buildings, and student housing properties. Preferred Apartment Communities’ investment objective is to generate attractive, stable returns for stockholders by investing in income-producing properties and acquiring or originating real estate loans. As of September 30, 2020, the Company owned or was invested in 125 properties in 15 states, predominantly in the Southeast region of the United States. Preferred Apartment Communities, Inc. has elected to be taxed as a real estate investment trust under the Internal Revenue Code of 1986, as amended, commencing with its tax year ended December 31, 2011. The Company was externally managed and advised by Preferred Apartment Advisors, LLC, or its Former Manager, a Delaware limited liability company and related party until the Company acquired the Former Manager and NMP Advisors, LLC, or the Sub-Manager, or the Internalization, on January 31, 2020. Prior to the Internalization transaction, according to the Sixth Amended and Restated Management Agreement, effective as of June 3, 2016, among the Company, the Operating Partnership (as defined below), and the Former Manager, or the Former Management Agreement, the Company paid acquisition fees and other fees and expense reimbursements to the Former Manager. Following the Internalization transaction that closed on January 31, 2020, the Company no longer pays any fees or expense reimbursements to its Former Manager or Sub-Manager (see Note 6).

As of September 30, 2020, the Company had 49,900,555 shares of common stock, par value $0.01 per share, or Common Stock, issued and outstanding and was the approximate 98.5% owner of the Preferred Apartment Communities Operating Partnership, L.P., the Company's operating partnership, at that date. The number of partnership units not owned by the Company totaled 742,413 at September 30, 2020 and represented Class A OP Units of the Operating Partnership, or Class A OP Units. The Class A OP Units are convertible at any time at the option of the holder into the Operating Partnership's choice of either cash or Common Stock. In the case of cash, the value is determined based upon the trailing 20-day volume weighted average price of the Company's Common Stock.

The Company controlled the Operating Partnership through its sole general partner interest and conducted substantially all of its business through the Operating Partnership until January 31, 2020. Beginning February 1, 2020, the Company conducts substantially all of its business through PAC Carveout, LLC, or Carveout, a wholly-owned subsidiary of the Operating Partnership. Carveout intends to elect to be taxed as a real estate investment trust under the Internal Revenue Code of 1986, as amended, commencing with its tax year ended December 31, 2020. The Company has determined the Operating Partnership is a variable interest entity, or VIE, of which the Company is the primary beneficiary. The Company is involved with other VIEs as discussed in Note 4. New Market Properties, LLC owns and conducts the business of our portfolio of grocery-anchored shopping centers. Preferred Office Properties, LLC owns and conducts the business of our portfolio of office buildings. Preferred Campus Communities, LLC owns and conducts the business of our portfolio of off-campus student housing communities. Each of these entities are indirect wholly-owned subsidiaries of the Operating Partnership.

Basis of Presentation

These consolidated financial statements include all of the accounts of the Company and the Operating Partnership presented in accordance with accounting principles generally accepted in the United States of America, or GAAP. These condensed financial statements were derived from audited financial statements, but do not contain all the disclosures required by GAAP. These condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements and notes thereto included in the company’s Annual Report on Form 10-K for the year ended December 31, 2019. All significant intercompany transactions have been eliminated in consolidation. Certain adjustments have been made consisting of normal recurring accruals, which, in the opinion of management, are necessary for a fair presentation of the Company's financial condition and results of operations. The results of operations for the three and nine months ended September 30, 2020 and 2019, are not necessarily indicative of the results that may be expected for the full year. The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes.

During the first quarter of 2020, there was a global outbreak of a novel coronavirus, or COVID-19, that has had and will continue to have an adverse impact on economic and market conditions and trigger a period of economic slowdown in the United States and globally. The potential reach, severity and duration of impacts of the COVID-19 pandemic will cause our estimates and forecasts of future events to be inherently less certain. Actual results could differ from those estimates. Amounts are presented in thousands where indicated.

Reclassification Adjustments

The Company recorded certain reclassification adjustments on its Condensed Consolidated Statement of Operations for the three-month and nine-month periods ended September 30, 2019, to conform prior period presentation to the current presentation reflective of the internalized structure as shown in the table below. None of these reclassification adjustments were due to error or misstatement.

	For the three-month period ended September 30, 2019
(in thousands)	As reported in Quarterly Report on Form 10-Q at September 30, 2019		Reclassification adjustments		As reported in Quarterly Report on Form 10-Q at September 30, 2020
Rental revenues	$	101,817	$	(101,817)	$	—
Other property revenues	$	3,232	$	(3,232)	$	—
Rental and other property revenues	$	—	$	105,049	$	105,049
Operating expenses:
Property operating and maintenance	$	14,928	$	1,565	$	16,493
Real estate taxes	$	12,870	$	(12,870)	$	—
Real estate taxes and insurance	$	—	$	14,474	$	14,474
General and administrative	$	1,898	$	(534)	$	1,364
Insurance, professional fees and other expenses	$	3,453	$	(3,453)	$	—
Management internalization expense	$	—	$	818	$	818

	For the nine-month period ended September 30, 2019
(in thousands)	As reported in Quarterly Report on Form 10-Q at September 30, 2019		Reclassification adjustments		As reported in Quarterly Report on Form 10-Q at September 30, 2020
Rental revenues	$	289,647	$	(289,647)	$	—
Other property revenues	$	8,922	$	(8,922)	$	—
Rental and other property revenues	$	—	$	298,569	$	298,569
Operating expenses:
Property operating and maintenance	$	38,186	$	5,050	$	43,236
Real estate taxes	$	37,914	$	(37,914)	$	—
Real estate taxes and insurance	$	—	$	42,646	$	42,646
General and administrative	$	6,425	$	(2,254)	$	4,171
Insurance, professional fees and other expenses	$	8,671	$	(8,671)	$	—
Management internalization expense	$	—	$	1,143	$	1,143

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Significant Accounting Policies

9 Months Ended

Sep. 30, 2020

Summary of Significant Accounting Policies [Abstract]

Significant Accounting Policies [Text Block]

Summary of Significant Accounting Policies

Impairment Assessment

The Company evaluates its tangible and identifiable intangible real estate assets for impairment when events such as declines in a property’s operating performance, deteriorating market conditions, or environmental or legal concerns bring recoverability of the carrying value of one or more assets into question. When qualitative factors indicate the possibility of impairment, the total undiscounted cash flows of the property, including proceeds from disposition, are compared to the net book value of the property. If this test indicates that impairment exists, an impairment loss is recorded in earnings equal to the shortage of the book value to fair value, calculated as the discounted net cash flows of the property.

Current expected credit losses on real estate loan investments

The Company carries its investments in real estate loans at amortized cost that consists of drawn amounts on the loans, net of unamortized deferred loan origination fees and current expected credit losses.

On January 1, 2020, the Company adopted ASU 2016-13, that replaced the incurred loss model with an expected loss model for instruments measured at amortized cost, and requires entities to record credit allowances for total expected future losses on financial assets at the outset of each loan. For each loan in which the Company is the lender, the amount of protection afforded to the Company is estimated to be the excess of the future estimated fair market value of the developed property over the developer’s related obligations (including the Company’s mezzanine or member loan(s)), other loans senior to the Company's, the expected future balance of accrued interest and any other obligations related to the project’s funding. The excess represents the amount of equity dollars in each real estate project plus profit expected to be realized by the developer on the project, both of which are in a subordinate position to the Company's real estate loan investments. This numeric result is expressed as a percentage of the property's expected future fair value (a "loss reserve ratio"), which is then pooled into ranges of loss percentages that was derived from company-specific loss experience. The product of this indicated loss reserve ratio and the expected fully-funded balance (inclusive of an expected future balance of accrued interest) is the initial total expected credit loss reserve. Over the life of the loan, the initial reserve is reevaluated for potential reduction at the achievement of certain milestones in construction and lease-up progress as the project approaches completion and the loan approaches maturity, given no unforeseen degradation in project performance or failure to adhere to the terms of the loan by the borrower/developer. Finally, the loss reserve may be further refined by the Company due to any subjective qualitative factors deemed pertinent and worthy of reflection.

The Company implemented this new guidance by applying this model to its existing portfolio of real estate loan investments using the modified retrospective method and in doing so, recorded a cumulative effect adjustment to retained earnings on January 1, 2020. See note 4.

The Company's notes and lines of credit receivable are unsecured and so are assessed for expected future credit loss by individually assessing the expected profit from current development projects in progress, as well as the viability of the personal guarantees of the borrowers.

The Company's real estate loan investments are collateralized by real estate development projects and secured further by guaranties of repayment from one or more of the borrowers. The Company's lines of credit receivable are typically only collateralized by personal guaranties, but occasionally may be cross-collateralized by interests in other real estate projects. As a result, the Company regularly evaluates the extent and impact of any credit deterioration associated with the performance and/or value of the underlying collateral property, as well as the financial and operating capability of the borrower. Specifically, a property’s operating results and any cash reserves are analyzed and used to assess (i) whether cash from operations is sufficient to cover the debt service requirements currently and into the future, (ii) the ability of the borrower to refinance the loan, and/or (iii) the property’s liquidation value. The Company also evaluates the financial wherewithal of any loan guarantors as well as the borrower’s competency in managing and operating the properties. In addition, the overall economic environment, real estate sector, and geographic sub-market in which the borrower operates are considered. Such analyses are completed and reviewed by management, utilizing various data sources, including periodic financial data such as property operating statements, occupancy, tenant profile, rental rates, operating expenses, the borrower’s exit plan, capitalization and discount rates and site inspections.

See the Revenue Recognition section of this Note for other loan-related policy disclosures required by ASC 310-10-50-6.

Purchase Option Terminations

The Company will occasionally receive a purchase option and/or a right of first refusal on the underlying property in conjunction with extending a real estate loan investment to the developer of the property. The purchase option is in some instances at a discount to the to-be-agreed-upon market value of the property, once stabilized. If the Company elects not to exercise the purchase option and acquire the property, it may negotiate to sell the purchase option back to the developer and receive a termination fee in consideration. The amount of the termination fee is accounted for as additional interest on the real estate loan investment and is recognized as interest revenue utilizing the effective interest method over the period beginning from the date of election until the earlier of (i) the maturity of the real estate loan investment and (ii) the sale of the property.

Revenue Recognition

Residential properties

Rental revenue is recognized when earned from residents of the Company's residential properties, which is over the terms of the rental agreements, typically of nine to fifteen months’ duration. The Company evaluates the collectability of amounts due from residents and recognizes revenue from residents when collectability is deemed probable, in accordance with ASC 842-30-25-12.

The Company evaluated the various ancillary revenues within its multifamily leases, including resident utility reimbursements. Having met the criteria that (i) the timing and pattern of transfer for the lease component and associated non-lease components are the same and (ii) that the lease component, if accounted for separately would be classified as an operating lease, the Company has elected the practical expedient under ASC 842, Leases, paragraph 10-15-42A, to elect reporting the lease component and non-lease components as one single component within the rental and other property revenues line on the Consolidated Statements of Operations. Revenue from utility reimbursements are considered variable lease payments and are recognized in the period in which the related expenses are incurred.

Grocery-anchored shopping centers and office properties

Our retail leases have original lease terms which generally range from three to seven years for spaces under 5,000 square feet and from ten to twenty years for spaces over 10,000 square feet. Anchor leases generally contain renewal options for one or more additional periods whereas in-line tenant leases may or may not have renewal options. With the exception of anchor leases, the leases generally contain contractual increases in base rent rates over the lease term and the base rent rates for renewal periods are generally based upon the rental rate for the primary term, which may be adjusted for inflation or market conditions. Anchor leases generally do not contain contractual increases in base rent rates over the lease term and the renewal periods. Our leases generally provide for the payment of fixed monthly rentals and may also provide for the payment of additional rent based upon a percentage of the tenant’s gross sales above a certain threshold level (“percentage rent”). Our leases also generally include tenant reimbursements for common area expenses, insurance, and real estate taxes. Utilities are generally paid by tenants either directly through separate meters or through payment of tenant reimbursements. The foregoing general description of the characteristics of the leases in our centers is not intended to describe all leases and material variations in lease terms may exist.

Our office building leases have original lease terms which generally range from five to fifteen years and generally contain contractual, annual base rental rate escalations ranging from 2% to 3%. These leases may be structured as gross where the tenant’s base rental rate is all inclusive and there is no additional obligation to reimburse building operating expenses, net or NNN where in addition to base rent the tenant is also responsible for its pro rata share of reimbursable building operating expenses, or modified gross where in addition to base rent the tenant is also responsible for its pro rata share of reimbursable building operating expense increases over a base year amount (typically calculated as the actual reimbursable operating expenses in year one of the original lease term).

Base rental revenue from tenants' operating leases is a lease component revenue in the Company's grocery-anchored shopping centers and office properties and is recognized on a straight-line basis over the term of the lease. Revenue based on "percentage rent" provisions that provide for additional rents that become due upon achievement of specified sales revenue targets (as specified in each lease agreement) is recognized only after the tenant exceeds its specified sales revenue target.

Revenue from reimbursements of the tenants' share of real estate taxes, insurance and common area maintenance, or CAM, costs represent non-lease component revenue. Having met the criteria that (i) the timing and pattern of transfer for the lease component and associated non-lease components are the same and (ii) that the lease component, if accounted for separately would be classified as an operating lease, the Company has elected the practical expedient under ASC 842, Leases, paragraph 10-15-42A, to elect reporting the lease component and non-lease components as one single component under rental and other property revenues recognized in accordance with ASC 842. Revenue from reimbursements are considered variable lease payments and are recognized in the period in which the related expenses are incurred. The Company does not record income and offsetting expense for certain variable costs paid directly to third parties by lessees on behalf of lessors.

Non-lease components which do not qualify under the practical expedient primarily include lease termination income and other ancillary revenue (e.g. application fees, license fees, late fees and tenant billbacks). Lease termination revenues are recognized ratably over the revised remaining lease term after giving effect to the termination notice or when tenant vacates and the Company has no further obligations under the lease. Rents and tenant reimbursements collected in advance are recorded as prepaid rent within other liabilities in the accompanying consolidated balance sheets. The Company evaluated the collectability of the tenant receivable related to rental and reimbursement billings due from tenants and straight-line rent receivables, which represent the cumulative amount of future adjustments necessary to present rental revenue on a straight-line basis, by taking into consideration the Company's historical write-off experience, tenant credit-worthiness, current economic trends, and remaining lease terms. In performing a detailed review of each tenant, we determined if the balances were paid in the subsequent month, if if the tenant had requested rent relief in the subsequent month due to COVID-19 circumstances, if the tenant was a credit tenant that was not typically late, and if the tenant had a security deposit on hand. If collection of substantially all of the outstanding balance is not probable, the tenant's rental revenue is recognized on a cash basis and all accrued balances are written off to rental revenue.

The Company evaluates the collectability of these amounts and recognizes revenue related to tenants where collectability is deemed probable, in accordance with ASC 842-30-25-12. Upon adoption of ASC 842, the Company began recording amounts not deemed probable of collection as a reduction of rental and other property revenues, as applicable.

In April 2020, the FASB issued a question-and-answer document (the “Lease Modification Q&A”) focused on the application of lease accounting guidance to lease concessions provided as a result of COVID-19. Under existing lease guidance, the Company would have to determine, on a lease by lease basis, if a lease concession was the result of a new arrangement reached with the tenant (treated with the lease modification accounting framework) or if a lease concession was under the enforceable rights and obligations within the existing lease agreement (precluded from applying the lease modification accounting framework). The Lease Modification Q&A clarifies that entities may elect to not evaluate whether lease-related relief that lessors provide to mitigate the economic effects of COVID-19 on lessees is a lease modification under Topic 842, Leases. Instead, an entity that elects not to evaluate whether a concession directly related to COVID-19 is a modification can then elect whether to apply the modification guidance (i.e. assume the relief was always contemplated by the contract or assume the relief was not contemplated by the contract). Both lessees and lessors may make this election. The Company is evaluating its election on a disaggregated basis, with such election applied consistently to leases with similar characteristics and similar circumstances. The future impact of the Lease Modification Q&A is dependent upon the extent of lease concessions granted to tenants as a result of COVID-19 in future periods and the elections made by the Company at the time of entering into such concessions. The Company elected to account for rent deferments provided to our residents and tenants, which were primarily related to a change of timing of rent payments with no significant changes to total payments or term, as a deferred payment in which we continue to recognize rental revenue on the existing straight-line basis over the remaining lease term and recognize any changes in payment through lease receivables, which is recorded in tenant receivables and other assets in our condensed consolidated balance sheet. Any deferment agreements which resulted in a significant change in lease term were accounted for as a modification under ASC 842.

The Company may provide grocery-anchored shopping center and office building tenants an allowance for the construction of leasehold improvements. These leasehold improvements are capitalized and depreciated over the shorter of the useful life of the improvements or the remaining lease term. If the allowance represents a payment for a purpose other than funding leasehold improvements, or in the event the Company is not considered the owner of the improvements, the allowance is considered to be a lease incentive and is recognized over the lease term as a reduction of rental revenue. Determination of the appropriate accounting for the payment of a tenant allowance is made on a lease-by-lease basis, considering the facts and circumstances of the individual tenant lease. When the Company is the owner of the leasehold improvements, recognition of rental revenue commences when the lessee is given possession of the leased space upon completion of tenant improvements. However, when the leasehold improvements are owned by the tenant, the lease inception date is the date the tenant obtains possession of the leased space for purposes of constructing its leasehold improvements. For our office properties, if the

improvement is deemed to be a “landlord asset,” and the tenant funded the tenant improvements, the cost is amortized over the term of the underlying lease with a corresponding recognition of rental revenues. In order to qualify as a landlord asset, the specifics of the tenant’s assets are reviewed, including the Company's approval of the tenant’s detailed expenditures, whether such assets may be usable by other future tenants, whether the Company has consent to alter or remove the assets from the premises and generally remain the Company's property at the end of the lease.

Gains on sales of real estate assets

The Company recognizes gains on sales of real estate based on the difference between the consideration received and the carrying amount of the distinct asset, including the carrying amount of any liabilities relieved or assumed by the purchasing counterparty and net of disposition expenses.

Lessee accounting

The Company has evaluated its leases for which it is the lessee to determine the value of any right of use assets and related lease liabilities. All of these leases qualify as operating leases. The Company has three ground leases related to our office and grocery-anchored shopping center assets, one of which had been recorded at fair value on the Company's balance sheet at acquisition due to a purchase option the Company deemed probable of exercising. These ground leases generally have extended terms (e.g. over twenty years with multiple renewal options) and generally have base rent with CPI-based increases. The Company evaluated its renewal option periods in quantifying its asset and liability related to these ground leases. In determining the value of its right of use asset and lease liability, the Company used discount rates comparable to recent loan rates obtained on comparative properties within its portfolio. The Company is also the lessee of office space for its corporate headquarters and of furniture and office equipment, which generally are three to five years in duration with minimal rent increases. The Company’s right of use asset and related lease liability in accordance with ASC 842-20-30 related to these leases are recorded within the Tenant Receivables and Other Assets and the Security Deposits and Other Liabilities line items of the balance sheet, respectively. Lease expense for ground leases and furniture and office equipment located at the Company's properties is included in the consolidated statements of operations within property operations and maintenance and expense for office rent and furniture and office equipment in the Company's corporate headquarters are included in general and administrative expense. See note 12 for more disclosures related to the Company's right of use assets and lease liabilities.

Investments in joint ventures

The Company’s joint ventures primarily consist of co-investments with institutional and other real estate operators, consistent with its core business. These joint ventures typically obtain non-recourse third-party financing on their property investments, thus contractually limiting the Company’s exposure to losses primarily to the amount of its equity investment; and due to the lender’s exposure to losses, a lender typically will require a minimum level of equity in order to mitigate its risk. As of September 30, 2020, the Company has a partial ownership interest in one multifamily community, two student housing properties, three grocery-anchored shopping centers and two office buildings. Of these investments in joint venture, only one grocery-anchored shopping center is accounted for as an investment in an unconsolidated joint venture. The Company evaluates its investments in joint venture and consolidates those in which it has controlling financial interest and records limited partners’ ownership interest and share of net income as non-controlling interest, under the voting interest model. The Company accounts for its investments for which it does not have a controlling financial interest as an investment in an unconsolidated joint venture under the equity method of accounting. All investments in joint venture have been evaluated for factors which may indicate a variable interest entity and determined none met such criteria.

Investments in unconsolidated joint venture are recorded initially at cost and subsequently adjusted for cash contributions, distributions and our share of earnings and losses. To recognize the character of distributions from equity investees within its Condensed Consolidated Statements of Cash Flows, all distributions received are presumed to be returns on investment and classified as cash inflows from operating activities unless the Company’s cumulative distributions received less distributions received in prior periods that were determined to be returns of investment exceed its cumulative equity in earnings recognized by the investor (as adjusted for amortization of basis differences). When such an excess occurs, the current-period distribution up to this excess is considered a return of investment and classified as cash inflows from investing. Cash from loan proceeds received from the placement of debt on a property included in investments in unconsolidated joint venture are presented in cash flows provided by investing activities in the accompanying Condensed Consolidated Statements of Cash Flows.

On a continuous basis, management assesses whether there are any indicators, including the underlying investment property operating performance and general market conditions, that the value of the Company’s investments in unconsolidated joint

ventures may be impaired. An investment’s value is impaired only if management’s estimate of the fair value of the investment is less than the carrying value of the investment and such difference is deemed to be other-than-temporary. To the extent impairment has occurred, the loss shall be measured as the excess of the carrying amount of the investment over the estimated fair value of the investment. Estimated fair values which are based on discounted cash flow models include all estimated cash inflows and outflows over a specified holding period, capitalization rates and discount rates utilized in these models are based upon unobservable rates that the Company believes to be within a reasonable range of current market rates.

New Accounting Pronouncements

Standard	Description	Date of Adoption	Effect on the Consolidated Financial Statements
Recently Adopted Accounting Guidance
ASU 2016-13, Financial Instruments - Credit Losses (ASC 326)	ASU 2016-03 ("CECL") changes how entities will measure credit losses for most financial assets, including loans, which are not measured at fair value through net income. The guidance replaces the existing incurred loss model with an expected loss model for instruments measured at amortized cost, and requires entities to record credit allowances for financial assets rather than reduce the carrying amount, as they do today under the other-than temporary impairment model.	January 1, 2020	Implementation of the new guidance on accounting for financial assets was limited to our real estate loan investments. We have developed a model that derives a reserve ratio based upon the amount of financial protection afforded each instrument. For each loan in which we are the lender, the amount of protection afforded to us is estimated to be the excess of the future estimated fair market value of the developed property over the commitment amount of each loan (including other loans senior to the Company’s), inclusive of accrued interest and other related receivables. The excess represents the amount of equity dollars in each real estate project, which are in a subordinate position to our real estate loan investments. We implemented this new guidance using the modified retrospective basis by recording a cumulative effect adjustment to retained earnings on January 1, 2020 of approximately $7.4 million.

Standard	Description	Date of Adoption	Effect on the Consolidated Financial Statements
Recently Issued Accounting Guidance Not Yet Adopted
ASU 2020-04, Reference Rate Reform (Topic 848) - Facilitation of the Effects of Reference Rate Reform on Financial Reporting	The new standard enables affected entities to elect from a series of practical expedients designed to ease the transition from referenced base rates within contracts designated to be replaced by Reference Rate Reform.	The amendments are effective March 12, 2020 through December 31, 2022.	ASU 2020-04 will potentially be applicable to the Company's variable-rate debt instruments for which the Company is the borrower, which bear interest at a spread over the 1-month London Interbank Offer Rate (1-month LIBOR). Among the practical expedients are the option to elect prospective adjustment of the effective interest rate, foregoing reassessment of any instruments under loan modification rules. The Company is monitoring developments pertaining to Reference Rate Reform and does not currently anticipate ASU 2020-04 to have a material effect on its results of operations.

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Real Estate Assets (Notes)

9 Months Ended

Sep. 30, 2020

Real Estate Assets [Abstract]

Business Combination Disclosure

The Company allocated the purchase prices and capitalized acquisition costs to the acquired assets and liabilities based upon their fair values, as shown in the following table. The purchase price allocations were based upon the Company's best estimates of the fair values of the acquired assets and liabilities.

	Multifamily Community acquired during the nine-month period ended
(In thousands, except amortization period data)	September 30, 2020
Land	$	12,945
Buildings and improvements	100,113
Furniture, fixtures and equipment	26,284
Lease intangibles	5,968
Prepaids & other assets	24
Accrued taxes	(437)
Security deposits, prepaid rents, and other liabilities	(384)
Net assets acquired	$	144,513
Cash paid	$	99,476
Mortgage debt, net	45,037
Total consideration	$	144,513
Three-months ended September 30, 2020
Revenue	$	2,883
Net income (loss)	$	(1,832)
Nine-months ended September 30, 2020
Revenue	$	5,258
Net income (loss)	$	(4,018)
Capitalized acquisition costs incurred by the Company	$	4,085
Acquisition costs paid to related party (included above)	$	—
Remaining amortization period of intangible
assets and liabilities (months)	11.5

The Company had no acquisitions of student housing property assets during the nine-month period ended September 30, 2020.

During the nine-month period ended September 30, 2019, the Company completed the acquisition of Haven49, a 322-unit, 887-bed student housing property adjacent to the University of North Carolina at Charlotte. The Company effectuated the acquisition via a negotiated agreement whereby the Company accepted the membership interest in the Haven49 project entity in satisfaction of the project indebtedness owed to the Company. See Note 4.

The Company allocated the asset's fair value and capitalized acquisition costs to the acquired assets and liabilities based upon their fair values, as shown in the following table. The purchase price allocations were based upon the Company's best estimates of the fair values of the acquired assets and liabilities.

	Student housing property acquired during the nine-month period ended
(In thousands, except amortization period data)	September 30, 2019
Land	$	7,289
Buildings and improvements	68,163
Furniture, fixtures and equipment	16,966
Lease intangibles	983
Accrued taxes	(158)
Security deposits, prepaid rents, and other liabilities	(2,579)
Net assets acquired	$	90,664
Satisfaction of loan receivables	$	46,397
Cash paid	2,717
Mortgage debt, net	41,550
Total consideration	$	90,664
Three-months ended September 30, 2020
Revenue	$	2,042
Net income (loss)	$	36
Nine-months ended September 30, 2020
Revenue	$	5,980
Net income (loss)	$	307
Capitalized acquisition costs incurred by the Company	$	1,016
Acquisition costs paid to related party	$	936
Remaining amortization period of intangible
assets and liabilities (months)	0

On March 20, 2020, we delivered a written termination notice to the prospective purchaser of six of our student housing properties for their failure to consummate the purchase. Accordingly, we received an additional $2.75 million of forfeited earnest money as liquidated damages.

New Market Properties assets acquired

During the nine-month periods ended September 30, 2020 and 2019, the Company completed the acquisition of the following grocery-anchored shopping centers:

Acquisition date	Property	Location	Gross leasable area (square feet)
1/29/2020	Wakefield Crossing	Raleigh, North Carolina	75,927
3/19/2020	Midway Market	Dallas, Texas	85,599
			161,526
1/17/2019	Gayton Crossing	Richmond, Virginia	158,316
5/28/2019	Free State Shopping Center	Washington, D.C.	264,152
6/12/2019	Disston Plaza	Tampa - St. Petersburg, Florida	129,150
6/12/2019	Polo Grounds Mall	West Palm Beach, Florida	130,285
8/16/2019	Fairfield Shopping Center (1)	Virginia Beach, VA	231,829
			913,732
(1) Property is owned through a consolidated joint venture.

The aggregate purchase price of the New Market Properties acquisitions for the nine-month periods ended September 30, 2020 and 2019 was approximately $27.7 million and $178.5 million respectively, exclusive of acquired escrows, security deposits, prepaid assets, capitalized acquisition costs and other miscellaneous assets and assumed liabilities.

The Company allocated the purchase prices to the acquired assets and liabilities based upon their fair values, as shown in the following table. The purchase price allocation was based upon the Company's best estimates of the fair values of the acquired assets and liabilities.

	New Market Properties' acquisitions during the nine-month periods ended September 30,
(In thousands, except amortization period data)	2020		2019
Land	$	9,328	$	57,916
Buildings and improvements	12,264		101,873
Tenant improvements	2,099		8,230
In-place leases	3,043		16,080
Above market leases	107		2,759
Leasing costs	1,237		5,768
Below market leases	(359)		(10,537)
Prepaid taxes and other assets	61		98
Security deposits, prepaid rents, and other	(249)		(748)
Net assets acquired	$	27,531	$	181,439
Cash paid	$	19,640	$	65,526
Mortgage debt	7,891		115,913
Total consideration	$	27,531	$	181,439
Three-month period ended September 30, 2020
Revenue	$	678	$	3,976
Net income (loss)	$	5	$	(997)
Nine-month period ended September 30, 2020
Revenue	$	1,723	$	13,094
Net income (loss)	$	59	$	(2,126)
Capitalized acquisition costs incurred by the Company	$	470	$	4,022
Capitalized acquisition costs paid to related party (included above)	$	249	$	1,799
Remaining amortization period of intangible
assets and liabilities (years)	10.2		8.0

The Company recorded aggregate amortization and depreciation expense of:

(In thousands)	Three-month periods ended September 30,				Nine-month periods ended September 30,
	2020		2019		2020		2019
Depreciation:
Buildings and improvements	$	29,050	$	25,509	$	85,811	$	72,686
Furniture, fixtures, and equipment	12,817		12,296		38,132		37,961
	41,867		37,805		123,943		110,647
Amortization:
Acquired intangible assets	9,510		8,169		27,873		25,732
Deferred leasing costs	368		217		1,132		670
Website development costs	49		48		148		142
Total depreciation and amortization	$	51,794	$	46,239	$	153,096	$	137,191

At September 30, 2020, the Company had recorded acquired gross intangible assets of $310.6 million, accumulated amortization of $177.3 million, gross intangible liabilities of $86.0 million and accumulated amortization of $31.5 million. Net intangible assets and liabilities as of September 30, 2020 will be amortized over the weighted average remaining amortization periods of approximately 7.2 and 8.7 years, respectively.

At September 30, 2020, included in the Company's total restricted cash was approximately $18.8 million that was contractually restricted to fund capital expenditures and other property-level commitments such as tenant improvements and leasing commissions. Our lenders also require us to escrow balances for future real estate tax and insurance payments. Through our property-level mortgage refinances executed in the second and third quarters of 2020, our lenders also required us to escrow funds for potential effects from the COVID-19 pandemic. At September 30, 2020, our restricted cash for real estate taxes, insurance premiums and COVID-19 reserves was $33.6 million and $6.8 million, respectively. The remainder of the Company's restricted cash consisted primarily of resident and tenant security deposits.

Purchase Options

In the course of extending real estate loan investments for property development, the Company will often receive an exclusive option to purchase the property once development and stabilization are complete. If the Company determines that it does not wish to acquire the property, it has the right to sell its purchase option back to the borrower for a termination fee in the amount of the purchase option discount.

Effective May 7, 2018, the Company terminated its purchase options on the Bishop Street multifamily community and the Haven Charlotte student housing property, both of which were partially supported by real estate loan investments held by the Company, in exchange for termination fees aggregating approximately $5.6 million from the developers. Effective January 1, 2019, the Company terminated its purchase options on the Sanibel Straits, Newbergh, Wiregrass and Cameron Square multifamily communities and the Solis Kennesaw student housing property, all of which are partially supported by real estate loan investments held by the Company, in exchange for termination fees aggregating approximately $9.1 million from the developers. Effective March 6, 2020, the Company terminated its purchase option on the Falls at Forsyth multifamily community for $2.5 million. These fees are treated as additional interest revenue and are amortized over the period ending with the earlier of (i) the sale of the underlying property and (ii) the maturity of the real estate loans. The Company recorded approximately $4.9 million and $6.9 million of interest revenue related to these purchase option terminations for the nine-month periods ended September 30, 2020 and 2019, respectively.

Joint Venture Investment

On July 15, 2020, we contributed our Neapolitan Way grocery-anchored shopping center that was previously wholly-owned and consolidated into a joint venture in exchange for approximately $19.2 million and 50% interest in the joint venture. We realized a gain on the transaction of approximately $3.3 million. We now hold our remaining interest in the property via an unconsolidated joint venture and retain a 50% voting and financial interest. The following tables summarize the balance sheet and statements of income data for Neapolitan Way shopping center subsequent to its contribution into the joint venture as of and for the periods presented:

(in thousands)	September 30, 2020
Total assets	$	39,843
Total liabilities	$	26,142

	Three months ended		Nine months ended
	September 30,		September 30,
	2020		2020
Rental and other property revenues	$	651	$	651
Total operating expenses	$	797	$	797
Interest expense	$	94	$	94
Net income (loss)	$	(240)	$	(240)
Net income (loss) attributable to the Company	$	(120)	$	(120)

Real Estate Disclosure

Real Estate Assets

The Company's real estate assets consisted of:

	As of:
	September 30, 2020	December 31, 2019
Residential properties:
Properties (1,2)	44	42
Units	12,936	12,256
Beds	6,095	6,095
New Market Properties:
Properties (2)	54	52
Gross leasable area (square feet) (3)	6,208,278	6,041,629
Preferred Office Properties:
Properties (2,4)	9	10
Rentable square feet	3,169,000	3,204,000
(1) The acquired second phases of CityPark View and Crosstown Walk communities are managed in combination with the initial phases and so together are considered a single property, as is the Regent at Lenox Village within the Lenox Portfolio.
(2) One multifamily community, two student housing properties, two grocery-anchored shopping centers and two office buildings are owned through consolidated joint ventures. One grocery-anchored shopping center is an investment in an unconsolidated joint venture.
(3) The Company also owns approximately 47,600 square feet of gross leasable area of ground floor retail space which is embedded within the Lenox Portfolio and is not included in the totals above for New Market Properties.
(4) Excludes our 251 Armour property, comprising 35,000 rentable square feet that is under development and our 4th & Brevard land parcel, that is slated for future development.

Impacts of COVID-19 Pandemic

The COVID-19 pandemic emerged in December 2019 and has since spread globally, including to every state in the United States. On March 13, 2020, the United States declared a national emergency. Since that time, efforts to contain the spread of COVID-19 have intensified. Several countries, including the United States, have taken steps to restrict travel, temporarily close businesses and issue quarantine orders. The restrictions have resulted in impacts to earnings for commercial real estate, which in turn is expected to affect asset valuations to some degree. The Company does not consider this event to be a triggering event for purposes of impairment, since no evidence of declining valuations of any consequence have emerged to cause a triggering event, as evidenced by step one analyses performed on a sample of its properties from each segment. The Company found a significant amount of cushion between the asset’s book value and the undiscounted cash flows for the properties evaluated.

The Company's monthly rent collections for the three-month period ended September 30, 2020 continue to improve across the Company's segments compared to the three-month period ended June 30, 2020, with a more pronounced improvement in collections for in-line retail tenants, whose businesses were closed during periods with state or local operating restrictions. Many tenants have reopened as restrictions were lifted and monthly rent collections are beginning to increase. Within our multifamily communities, the Company offered rent deferral plans for the months of April, May, June and July 2020. Any deferred rents would be due over the remaining lease term of the individual tenants. For retail and office tenants, the company evaluated all delinquent receivable balances by performing a detailed review of each tenant. In this review, we determined if the balances were paid in the subsequent month, if tenant had requested rent relief in the subsequent month due to COVID-19 circumstances, if the tenant was a credit tenant that was not typically late, and if the tenant had a security deposit on hand. If the likelihood of the tenant submitting payment was deemed to be less than probable based on the aforementioned criteria, we determined the tenant as being an “at risk” tenant and revenue would be recognized on a cash basis.

The Company's average recurring rental revenue collections before and after any effect of rent deferrals for the third quarter 2020 were approximately 99.0% and 99.0% respectively for multifamily communities, 99.5% and 99.8% for office properties and 95.2% and 96.6% for grocery-anchored retail properties, respectively. Rent deferments provided to residents and tenants primarily related to a change of timing of rent payments with no significant changes to total payments or term. The Company has deferred approximately $0.8 million, or 0.7% of total rental and other revenues for the three-month period ended September 30, 2020. In addition, the Company’s revenues were reduced by approximately $1.7 million, or 1.4% of rental and other revenues for the three-month period ended September 30, 2020 due to additional bad debt reserves related to the COVID-19 pandemic.

Residential properties acquired

During the nine-month period ended September 30, 2020, the Company completed the acquisition of the following multifamily communities:

Acquisition date	Property	Location	Units
3/31/2020	Horizon at Wiregrass	Tampa, Florida	392
4/30/2020	Parkside at the Beach	Panama City Beach, Florida	288
			680

The aggregate purchase prices of the multifamily acquisitions for the nine-month period ended September 30, 2020 were approximately $141.2 million, exclusive of acquired escrows, security deposits, prepaids, capitalized acquisition costs and other miscellaneous assets and assumed liabilities. The Company acquired no multifamily communities during the nine-month period ended September 30, 2019.

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Real Estate Loans, Notes Receivable, and Lines of Credit

9 Months Ended

Sep. 30, 2020

Receivables [Abstract]

Real Estate Loans, Notes Receivable, and Line of Credit

Real Estate Loans, Notes Receivable, and Line of Credit

Our portfolio of fixed rate, interest-only real estate loans consisted of:

	September 30, 2020			December 31, 2019
Number of loans	25			27
Number of underlying properties in development	18			19
(In thousands)
Drawn amount	$	323,629		$	352,582
Deferred loan origination fees	(1,567)			(1,476)
Allowance for loan losses	(12,461)			(1,400)
Carrying value	$	309,601		$	349,706
Unfunded loan commitments	$	62,964		$	61,718
Weighted average current interest, per annum (paid monthly)	8.50		%	8.48		%
Weighted average accrued interest, per annum	3.84		%	3.85		%

(In thousands)	Principal balance		Deferred loan origination fees		Allowances and CECL Reserves		Carrying value
Balances as of December 31, 2019	$	352,582	$	(1,476)	$	(1,400)	$	349,706
Opening CECL reserve	—		—		(7,414)		(7,414)
Loan fundings	42,193		—		—		42,193
Loan repayments	(71,146)		—		—		(71,146)
Loan origination fees collected	—		(882)		—		(882)
Amortization of loan origination fees	—		791		—		791
Reserve increases due to loan originations	—		—		(767)		(767)
Net increases in reserves on existing loans or loans repaid	—		—		(2,880)		(2,880)
Balances as of September 30, 2020	$	323,629	$	(1,567)	$	(12,461)	$	309,601

Property type	Number of loans	Carrying value		Commitment amount		Percentage of portfolio
(In thousands)
Residential properties	24	$	299,219	$	367,400	97	%
New Market Properties	—	—		—		—	%
Preferred Office Properties	1	10,382		19,193		3	%
Balances as of September 30, 2020	25	$	309,601	$	386,593

On September 3, 2020, we closed on a real estate loan investment of up to approximately $20.7 million to partially finance the development and construction of a 320-unit multifamily community to be located in suburban Atlanta, Georgia. The loan pays a current monthly interest rate of 8.5% per annum and accrues additional deferred interest of 5.5% per annum and matures on September 3, 2024.

On May 14, 2020, the Company closed on a real estate loan investment of up to $10.0 million in partial support of a 277-unit multifamily community to be located in Raleigh, North Carolina. The loan pays a current monthly interest rate of 8.5% per annum and accrues additional deferred interest of 5.5% per annum and matures on November 14, 2023.

On February 28, 2020, the Company closed on a real estate loan investment of up to approximately $13.4 million in partial support of a 256-unit multifamily community to be located in Charlotte, North Carolina. The loan pays a current monthly interest rate of 8.5% per annum and accrues additional deferred interest of 5.5% per annum and matures on February 28, 2025.

The Company's real estate loan investments are primarily collateralized by 100% of the membership interests of the underlying project entity, and, where considered necessary, by unconditional joint and several repayment guaranties and performance guaranties by the principal(s) of the borrowers. These guaranties generally remain in effect until the receipt of a final certificate of occupancy. All of the guaranties are subject to the rights held by the senior lender pursuant to a standard intercreditor agreement. Prepayment of the real estate loans are permitted in whole, but not in part, without the Company's consent.

As discussed in note 2, the Company established total expected credit losses against its existing portfolio of real estate loan investments on January 1, 2020. In doing so, it recorded a cumulative effect reduction adjustment to retained earnings of approximately $7.4 million. For the quarter ended September 30, 2020, the Company recorded an aggregate net decrease in its provision for expected credit losses of approximately $0.8 million, primarily related to development projects achieving construction and leasing milestones.

As described in note 2, the Company assesses the credit quality of its real estate loan investments by a calculated loss reserve ratio, which is an internally-developed credit quality indicator. Loss reserve ratios reflect the amount of protection afforded by the amount of equity and debt financing subordinate to the Company's position in the project; higher reserve ratios reflect a lower amount of invested dollars junior to the Company's position. The following table presents the Company's aggregation of loan amounts by final reserve ratio as of September 30, 2020:

Final reserve ratio		Number of loans	Total receivables by project, net of reserves (in thousands)
—	%	3	$	28,921
0.50	%	10	108,630
1.00	%	3	17,876
1.50	%	4	26,729
3.00	%	3	27,902
4.00	%	1	126,768
5.00% +		1	3,776
		25	$	340,602

The COVID-19 pandemic has, and will continue to have, impacts upon the development activity underlying our real estate loan investments, including the availability of labor, the supply and availability of construction materials and the ability to achieve leased stabilization. The Company's Berryessa real estate loan investment carried a 4.0% final reserve ratio at September 30, 2020. The project experienced a temporary construction delay due to effects of the COVID-19 pandemic but resumed in the second quarter of 2020 when the force majeure order was lifted. The Company assesses its real estate loan investment portfolio for impacts from COVID-19 at the outset of the project, as well as both quantitatively and qualitatively at the achievement of construction and leasing milestones during the projects' lives.

The Company can make no assurances that economic or industry conditions or other circumstances will not lead to increases in allowances for credit losses.

Management monitors the credit quality of the obligors under each of the Company's real estate loans by tracking the timeliness of scheduled interest and principal payments relative to the due dates as specified in the loan documents, as well as draw requests on the loans relative to the project budgets. In addition, management monitors the actual progress of development and construction relative to the construction plan, as well as local, regional and national economic conditions that may bear on our current and target markets.

The Company's Starkville loan has been in default since August 20, 2019 under the terms of the underlying mezzanine loan agreement. During the fourth quarter of 2019, the Company recorded a specific loan loss reserve related to this loan totaling $1.4 million, reducing its net investment in the Starkville loan from $7.3 million, including accrued interest of $1.2 million, to a carrying amount of $5.9 million. In the first quarter of 2020, the Company recorded an additional $2.1 million in reserves pertaining to this loan under ASU 2016-03, reducing its carrying amount to $3.8 million as of September 30, 2020. No additional reserves were recorded in the second or third quarters of 2020. See note 16.

At September 30, 2020, the Company's portfolio of notes and lines of credit receivable consisted of:

Borrower	Date of loan	Maturity date	Total loan commitments		Outstanding balance as of:				Interest rate
					September 30, 2020		December 31, 2019
(In thousands)
Preferred Capital Marketing Services, LLC (1)	N/A	N/A	$	—	$	—	$	650	N/A
Preferred Apartment Advisors, LLC (1)	N/A	N/A	—		—		15,178		N/A
Haven Campus Communities, LLC (1,2)	6/11/2014	12/31/2018	11,660		9,011		9,011		8	%
Newport Development Partners, LLC	6/17/2014	6/30/2021	1,000		—		—		12	%
Oxford Capital Partners, LLC (3)	10/5/2015	6/30/2021	8,000		1,006		5,438		10	%
Mulberry Development Group, LLC (4)	3/31/2016	6/30/2021	750		670		525		12	%
360 Capital Company, LLC (4)	5/24/2016	12/31/2020	3,400		1,218		3,394		12	%
360 Capital Company, LLC (1)	7/24/2018	N/A	—		—		7,754		N/A
Unamortized loan fees			—		—		(33)
			$	24,810	$	11,905	$	41,917
(1) See related party disclosure in Note 6.
(2) The amount payable under the note is collateralized by one of the principals of the borrower's 49.49% interest in an unrelated shopping center located in Atlanta, Georgia and a personal guaranty of repayment by the principals of the borrower.
(3) The amounts payable under the terms of this revolving credit line, up to the lesser of 25% of the loan balance or $2.0 million, are collateralized by a personal guaranty of repayment by the principals of the borrower. The overall decrease in the Oxford LOC balance is a function of an approximate $5.0 million paydown on July 31, 2020, that was required as part of the LOC agreement whenever a Capital Transaction involving the Manassas Palisades property occurred. This property was sold on July 31, 2020 and the related mezz loan was repaid to PAC. Therefore, a corresponding paydown on the Oxford LOC was made to reduce the sum of the principal balance.
(4) The amounts payable under the terms of these revolving credit lines are collateralized by a personal guaranty of repayment by the principals of the borrower.

On November 20, 2018, the borrower on the Haven Campus Communities, LLC line of credit defaulted on the loan, triggering the accrual of an additional 10% default interest rate, which is incremental to the original 8% current interest rate. The amount of default interest recorded from the default date through September 30, 2020 was approximately $1.8 million. Under the terms of the loan, amounts collected are applied first to any legal costs incurred by the Company to collect amounts due on the loan; second, to pay any accrued default and current interest on the loan; and third, to repay the principal amount owed.

Based on the negotiated agreement between the Company and the borrowers, on March 27, 2019, the Company received the membership interests of the Haven49 student housing project in exchange for the complete settlement of the related Haven49 loans, which include the Haven Campus Communities Charlotte Member, LLC line of credit, the Haven49 real estate loan investment and the Haven49 member loan. Additionally, under the same agreement, the Company received payouts and credits totaling approximately $3.75 million towards the Haven Campus Communities, LLC line of credit. These amounts were applied in accordance with the terms of the line of credit. The Company retains a pledge of a 49.49% interest in an unrelated shopping center located in Atlanta, Georgia as collateral on the Haven Campus Communities, LLC line of credit, as well as personal guaranties of repayment from the principals of the borrower.

In January 2019 the Company filed a lawsuit to collect the amounts owed under the line of credit it provided to Haven Campus Communities, LLC. In September 2019, Haven Campus Communities, LLC answered the lawsuit and filed counterclaims against the Company and its affiliates. At this time, the case is in discovery, so the Company is unable to make any estimates on timing or amounts that may be collected by the Company on its Haven Campus Communities, LLC line of credit.

The Company recorded interest income and other revenue from these instruments as follows:

Interest income	Three month periods ended September 30,				Nine-month periods ended September 30,
(In thousands)	2020		2019		2020		2019
Real estate loans:
Current interest	$	6,921	$	8,083	$	21,070	$	23,031
Additional accrued interest	3,052		3,471		9,208		10,040
Loan origination fee amortization	264		283		791		1,063
Purchase option termination fee amortization	421		1,283		4,896		6,900
Default interest	63		—		186		—
Total real estate loan revenue	10,721		13,120		36,151		41,034
Notes and lines of credit	536		1,865		2,056		4,278
Bank and money market accounts	1		169		38		562
Agency mortgage-backed securities	—		—		—		95
Interest income on loans and notes receivable	$	11,258	$	15,154	$	38,245	$	45,969

The Company extends loans for purposes such as to partially finance the development of multifamily residential communities, to acquire land in anticipation of developing and constructing multifamily residential communities, and for other real estate or real estate related projects. Certain of these loans include characteristics such as exclusive options to purchase the project within a specific time window following project completion and stabilization, the sufficiency of the borrowers' investment at risk and the existence of payment and performance guaranties provided by the borrowers, any of which can cause the loans to create variable interests to the Company and require further evaluation as to whether the variable interest creates a VIE, which would necessitate consolidation of the project.

The Company considers the facts and circumstances pertinent to each entity borrowing under the loan, including the relative amount of financing the Company is contributing to the overall project cost, decision making rights or control held by the Company, guarantees provided by third parties, and rights to expected residual gains or obligations to absorb expected residual losses that could be significant from the project. If the Company is deemed to be the primary beneficiary of a VIE, consolidation treatment would be required.

The Company has no decision making authority or power to direct activity, except normal lender rights, which are subordinate to the rights of the senior lenders on the projects. The Company has concluded that it is not the primary beneficiary of the borrowing entities and therefore it has not consolidated these entities in its consolidated financial statements. The Company's maximum exposure to loss from these loans is their drawn amount as of September 30, 2020 of approximately $323.6 million. The maximum aggregate amount of loans to be funded as of September 30, 2020 was approximately $386.6 million, which includes approximately $63.0 million of loan committed amounts not yet funded.

The Company has evaluated its real estate loans, where appropriate, for accounting treatment as loans versus real estate development projects, as required by ASC 310. The Company evaluates the expected residual profit it expects to collect under the terms of the loan versus the expected residual profit expected to be collected by the developer (in conjunction with any equity investors, if applicable), along with the "loan versus investment" characteristics as set forth by ASC 310-25. For each loan, the characteristics and the facts and circumstances indicate that loan accounting treatment is appropriate in cases where (i) the majority of the expected residual profit is expected to be due the developer and (ii) the majority of "loan versus investment" tests indicate that the instrument is a loan.

The Company is subject to a geographic concentration of risk that could be considered significant with regard to the Newbergh, Newbergh Capital, Solis Kennesaw II, 8West, Kennesaw Crossing and Solis Cumming Town Center real estate loan investments, all of which are partially supporting various real estate projects in or near Atlanta, Georgia. The drawn amount, in addition to outstanding accrued interest, for these loans as of September 30, 2020 totaled approximately $56.5 million (with a total commitment amount of approximately $86.2 million). The Company is also subject to a geographic concentration of risk that could be considered significant with regard to the Sanibel Straits, Sanibel Straits Capital, E-Town, Vintage Destin, Hidden River II, Hidden River II Capital and Vintage Horizon West real estate loan investments, all of which are partially supporting various real estate projects in Florida. The drawn amount, in addition to outstanding accrued interest, for these loans as of September 30, 2020 totaled approximately $56.4 million (with a total commitment amount of approximately $61.2 million).

The event of a total failure to perform by the borrowers and guarantors would subject the Company to a total possible loss of the drawn amount and all outstanding accrued interest.

Freddie Mac K Program investments

On May 23, 2018, the Company purchased a subordinate tranche of Series 2018-ML04, a pool of 20 multifamily mortgages with a total pool size of approximately $276.3 million, from Freddie Mac. The purchase price of the subordinate tranche was approximately $4.7 million. On December 10, 2019, the Company sold its investment in Series 2018-ML04 for $6.2 million.

On March 28, 2019, the Company purchased a subordinate tranche of Series 2019-ML05, a pool of 21 multifamily mortgages with a total pool size of approximately $295.7 million, from Freddie Mac. The Company's tranche of the 2019-ML05 pool paid monthly interest of approximately $103,000. The purchase price of the subordinate tranche was approximately $18.4 million. On December 17, 2019, the Company sold its investment in Series 2019-ML05 for $20.4 million.

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Redeemable Preferred Stock

9 Months Ended

Sep. 30, 2020

Redeemable Stock, Preferred [Abstract]

Preferred Stock [Text Block]

Redeemable Preferred Stock and Equity Offerings

On February 14, 2020, the Company's offering of a maximum of 1,500,000 Units, with each Unit consisting of one share of Series A Redeemable Preferred Stock, par value $0.01 per share, and one Warrant to purchase up to 20 shares of Common Stock (the "$1.5 Billion Unit Offering") expired. See note 6 for discussion regarding a termination fee agreement with and payment to Preferred Capital Securities, LLC, or PCS, an affiliate of the Company, in conjunction with the Company's winding down of the $1.5 Billion Unit Offering.

At September 30, 2020, the Company's active equity offerings consisted of:

•an offering of up to 1,000,000 Shares of Series A1 Redeemable Preferred Stock ("Series A1 Preferred Stock"), Series M1 Redeemable Preferred Stock ("Series M1 Preferred Stock"), or a combination of both (collectively the "Series A1/M1 Offering");

•an offering of up to $400 million of equity or debt securities (the "2019 Shelf Offering"), including an offering of up to $125 million of Common Stock from time to time in an "at the market" offering (the "2019 ATM Offering"); and

•an offering of up to $100 million of equity securities for the Preferred Office Growth Fund, a consolidated entity (the

“Preferred Office Growth Fund Offering”).

Certain offering costs are not related to specific closing transactions and are recognized as a reduction of stockholders' equity in the proportion of the number of instruments issued to the maximum number of shares of Preferred Stock anticipated to be issued. Any offering costs not yet reclassified as reductions of stockholders' equity are are reflected in the asset section of the consolidated balance sheets as deferred offering costs.

Cumulative gross proceeds and offering costs for our active equity offerings consisted of:

(In thousands)					Deferred Offering Costs
Offering	Total offering		Gross proceeds as of September 30, 2020		Reclassified as reductions of stockholders' equity		Recorded as deferred assets		Total		Specifically identifiable offering costs (3)		Total offering costs
$1.5 Billion Unit Offering (1)	1,500,000		$	1,236,414	$	15,874	$	—	$	15,874	$	115,650	$	131,524
Series A1/M1 Offering	1,000,000		115,893		426		3,251		3,677		11,023		14,700
2019 Shelf Offering (2)	400,000		4,614		22		975		997		92		1,089
Preferred Office Growth Fund	100,000		—		—		495		495		3		498
Total	$	3,000,000	$	1,356,921	$	16,322	$	4,721	$	21,043	$	126,768	$	147,811

(1) The Series A $1.5 billion unit offering expired in Q1 2020 and therefore all remaining deferred offering costs were reclassified as reductions of stockholder's equity in Q1 2020.

(2) The $125 million ATM Offering is a part of the $400 million Shelf Offering and therefore it is not included in the total.

(3) These offering costs specifically identifiable to Unit offering closing transactions, such as commissions, dealer manager fees, and other registration fees, are reflected as a reduction of stockholders' equity at the time of closing.

Series A1/M1 Preferred Stock Offering

On September 27, 2019, the Company’s registration statement on Form S-3 (Registration No. 333-233576) (the “Series A1/M1 Registration Statement”)  was declared effective by the SEC. Shares of Series A1 Preferred Stock and Series M1 Preferred Stock issued under the Series A1/M1 Registration Statement are each offered at a price of $1,000 per share, subject to adjustment under certain conditions.

Aggregate offering expenses of the Series A1/M1 Preferred Stock Offering, including selling commissions and dealer manager fees for the Series A1 Preferred Stock and only dealer manager fees for the Series M1 Preferred Stock, are capped at 12.0% of aggregate gross proceeds of the offering. Dealer manager fees and sales commissions for the Series A1/M1 Preferred Stock Offering are not reimbursable.

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Related Party Transactions

9 Months Ended

Sep. 30, 2020

Related Party Transactions [Abstract]

Related Party Transactions Disclosure [Text Block]

Related Party Transactions

On January 31, 2020, the Company internalized the functions performed by the Former Manager and Sub-Manager by acquiring the entities that owned the Former Manager and the Sub-Manager for an aggregate purchase price of $154 million, plus up to $25 million of additional consideration to be paid within 36 months, due upon the earlier of (i) if, for the immediately preceding fiscal year beginning on January 1, funds from operations ("FFO") of the Company per weighted average basic share of the Company’s common stock and Class A Unit (as defined in the limited partnership agreement of PAC OP) outstanding for such fiscal year is determined to be greater than or equal to $1.55 or (ii) on the thirty-six (36) month anniversary of the closing of the Internalization. Pursuant to the Stock Purchase Agreement, the sellers sold all of the outstanding shares of capital stock of NELL Partners, Inc. ("NELL") and NMA Holdings, Inc. ("NMA") to PAC Carveout, LLC ("PAC Sub") in exchange for an aggregate of approximately $111.1 million in cash paid at the closing which reflects the satisfaction of certain indebtedness of NELL, the estimated net working capital adjustment, and a hold back of $15 million for certain specified matters (the "Specified Matters Holdback Amount"). The Specified Matters Holdback Amount is payable to the NELL sellers less certain losses following final resolution of any such specified matters.

Daniel M. DuPree and Leonard A. Silverstein were executive directors of NELL Partners, Inc., which controlled the Former Manager through the date of the Internalization. Daniel M. DuPree was the Chief Executive Officer and Leonard A. Silverstein was the President and Chief Operating Officer of the Former Manager. Trusts established, or entities owned, by the family of John A. Williams, Daniel M. DuPree, the family of Leonard A. Silverstein, the Company’s former Vice Chairman of the Board, and former President and Chief Operating Officer, were the owners of NELL. Trusts established, or entities owned, by Joel T. Murphy, the Company’s Chief Executive Officer and a member of the Board, the family of Mr. Williams, Mr. DuPree and the family of Mr. Silverstein were the owners of the Sub-Manager.

The Company's Haven 12 real estate loan investment and Haven Campus Communities LLC line of credit are both supported in part by a guaranty of repayment and performance by John A. Williams, Jr., the son of the late John A. Williams, the Company's former Chief Executive Officer and Chairman of the Board. Because the terms of these loans were negotiated and agreed upon while John A. Williams was the Chief Executive Officer of the Company, these instruments will continue to be reported as related party transactions until the loans are repaid.

The Company's Wiregrass and Wiregrass Capital real estate loan investments partially financed the development of a multifamily community in Tampa, Florida by the Altman Companies. Timothy A. Peterson is a member of management of the Altman Companies as well as Chairman of the Audit Committee of the Company's Board of Directors. The Wiregrass loans and the acquisition of the underlying property on March 31, 2020 as described in note 3, therefore qualify as related party transactions.

The Management Agreement entitled the Former Manager to receive compensation for various services it performed related to acquiring assets and managing properties on the Company's behalf:

(In thousands)		Three-month periods ended September 30,				Nine-month periods ended September 30,
Type of Compensation	Basis of Compensation	2020		2019		2020		2019
Acquisition fees	1.0% of the gross purchase price of real estate assets	$	—	$	2,864	$	235	$	5,467
Loan origination fees	1.0% of the maximum commitment of any real estate loan, note or line of credit receivable	—		148		—		674
Loan coordination fees	0.6% of any assumed, new or supplemental debt incurred in connection with an acquired property	—		1,100		47		2,065
Asset management fees	Monthly fee equal to one-twelfth of 0.50% of the total book value of assets, as adjusted	—		3,981		1,349		11,546
Property management fees	Monthly fee up to 4% of the monthly gross revenues of the properties managed	—		2,557		890		7,509
General and administrative expense fees	Monthly fee equal to 2% of the monthly gross revenues of the Company	—		1,557		616		4,624
Construction management fees	Quarterly fee for property renovation and takeover projects	—		73		14		208
Disposition fees	1% of the sale price of a real estate asset	—		—		—		16
		$	—	$	12,280	$	3,151	$	32,109

The Former Manager waived some of the asset management, property management, or general and administrative fees for properties owned by the Company. A cumulative total of approximately $25.6 million of combined asset management and general and administrative fees related to acquired properties had been waived by the Former Manager; at the date of Internalization, all of the remaining contingent fees of $24.1 million were eliminated in conjunction with the Company's Internalization transaction.

In addition to property management fees, the Company incurred the following reimbursable on-site personnel salary and related benefits expenses at the properties, which are listed on the Consolidated Statements of Operations:

	Three-month periods ended September 30,				Nine-month periods ended September 30,
(In thousands)	2020		2019		2020		2019
	$	—	$	4,681	$	1,430	$	12,973

The Former Manager utilized its own and its affiliates' personnel to accomplish certain tasks related to raising capital that would typically be performed by third parties, including, but not limited to, legal and marketing functions. As permitted under the Management Agreement, the Former Manager was reimbursed $40,451 and $384,243 for the nine-month periods ended September 30, 2020 and 2019, respectively and Preferred Capital Securities, LLC, or PCS, was reimbursed $0 and $1,022,855 for the nine-month periods ended September 30, 2020 and 2019, respectively. These costs are recorded as deferred offering costs until such time as additional closings occur on the Series A1/M1 Preferred Stock Offering or the 2019 Shelf Offering, at

which time they are reclassified on a pro-rata basis as a reduction of offering proceeds within stockholders’ equity. In conjunction with the winding down of the $1.5 Billion Unit Offering, the Company has engaged PCS to perform certain termination-related services. These services began in October 2019 and continued through April 2020. For the nine-month period ended September 30, 2020, the Company paid an additional $3.1 million for these services, which were recorded as deferred offering costs.

Prior to the Internalization, the Company held a promissory note in the amount of approximately $650,000 due from Preferred Capital Marketing Services, LLC, or PCMS, which is a wholly-owned subsidiary of NELL Partners and a revolving line of credit with a maximum borrowing amount of $24.0 million to its Manager. Both of these instruments were extinguished in connection with the Internalization transaction.

Of the Company’s $24.8 million accrued interest receivable on real estate loans balance on the Consolidated Balance Sheet, interest receivable of approximately $1.2 million relates to the Haven 12 real estate loan investment, which is to a related party. Interest receivable of approximately $2.0 million on its Haven Campus Communities, LLC line of credit is included in the tenant receivables and other assets line.

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Dividends

9 Months Ended

Sep. 30, 2020

Dividends [Abstract]

Dividends and Distributions

Dividends and Distributions

The Company declares and pays monthly cash dividend distributions in the amount of $5.00 per share per month on its Series A Preferred Stock and its Series A1 Preferred Stock. For the Company's Series M Preferred Stock, or mShares, dividends are paid on an escalating scale of $4.79 per month in the first year following share issuance, increasing each year to $6.25 per month in year eight and beyond. Similarly, for the Company's Series M1 Preferred Stock, dividends are paid on an escalating scale of $5.08 per month in the first year following share issuance, increasing each year to $5.92 per month in year ten and beyond. All preferred stock dividends are prorated for partial months at issuance as necessary.

Given the nature of the escalating dividends associated with the Company’s mShares and Series M1 Preferred Stock, the Company accrues dividends at the effective dividend rate in accordance with GAAP. This results in the Company recording larger dividends declared to preferred stockholders in the Company’s Consolidated Statements of Operations than dividends required to be paid for the first four years after issuance with respect to the mShares and the first five years after issuance with respect to the Series M1 Preferred Stock. Similarly, this will result in the Company recording smaller dividends declared to preferred stockholders in the Company’s Consolidated Statements of Operations than dividends required to be paid for the fifth through the eighth year after issuance with respect to the mShares and the sixth through the tenth year after issuance with respect to the Series M1 Preferred Stock. Following the escalation period (year eight for the mShares and year ten for the Series M1 Preferred Stock), the dividends declared to preferred stockholders in the Company’s Consolidated Statements of Operations will equal the dividend paid.  

The Company declared aggregate quarterly cash dividends on its Common Stock of $0.175 and $0.2625 per share for the three-month periods ended September 30, 2020 and 2019 respectively and $0.6125 and $0.7850 per share for the nine-month periods ended September 30, 2020 and 2019, respectively. The holders of Class A OP Units of the Operating Partnership are entitled to equivalent distributions as the dividends declared on the Common Stock. At September 30, 2020, the Company had 742,413 Class A OP Units outstanding, which are exchangeable on a one-for-one basis for shares of Common Stock or the equivalent amount of cash.

The Company's dividend and distribution activity consisted of:

	Dividends and distributions declared
	For the nine-month periods ended September 30,
(In thousands)	2020		2019
Series A Preferred Stock	$	97,272	$	79,351
mShares	4,903		3,176
Series A1 Preferred Stock	2,209		—
Series M1 Preferred Stock	217		—
Common Stock	29,895		34,599
Restricted Stock and Class A OP Units	559		683
Total	$	135,055	$	117,809

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Equity Compensation

9 Months Ended

Sep. 30, 2020

Equity Compensation [Abstract]

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

Equity Compensation

    Stock Incentive Plan

On May 2, 2019, the Company’s board of directors adopted, and the Company’s Common stockholders approved, the Preferred Apartment Communities, Inc. 2019 Stock Incentive Plan, or the 2019 Plan, to incentivize, compensate and retain eligible officers, consultants, and non-employee directors. The 2019 Plan increased the aggregate number of shares of Common Stock authorized for issuance under the 2011 Plan from 2,617,500 to 3,617,500. The 2019 Plan does not have a stated expiration date.

Equity compensation expense by award type for the Company was:

(In thousands)	Three-month periods ended September 30,				Nine-month periods ended September 30,				Unamortized expense as of September 30,
	2020		2019		2020		2019		2020
Class B Unit awards to employees:
2016	$	—	$	—	$	—	$	2	$	—
2017	—		78		3		234		—
2018	70		72		191		215		71
Restricted stock grants to Board members:
2018	—		—		—		120		—
2019	—		106		140		176		—
2020	133		—		222		—		310
Restricted stock grants for employees:
2020	242		—		279		—		3,601
Performance-based restricted stock units:
2020	92		—		92		—		1,753
Restricted stock units to employees:
2017	—		15		—		53		—
2018	14		15		38		55		19
2019	16		19		47		67		94
2020	15		—		46		—		137
Total	$	582	$	305	$	1,058	$	922	$	5,985

Performance-based Restricted Stock Unit Grants

On July 31, 2020, the Company awarded performance-based restricted stock units (“PSUs”) to certain of its senior executives. Each PSU represents the right to receive one share of APTS common stock upon satisfaction of both (i) the market condition, at which time the PSUs become earned PSUs, and (ii) the service requirement, beyond which point the PSUs become vested PSUs.

The market condition requirement of the PSUs consists of a relative measure of total shareholder return (“TSR”) of the Company's Common Stock versus the average TSR of a select group of publicly-traded peer companies. TSR is calculated by dividing the sum of price appreciation and cumulative dividends over the performance period divided by the beginning value of the common stock at the performance period commencement date (July 1, 2020), where the determining values are derived by calculating the 20-day volume weighted average stock price preceding both the performance period commencement date and the performance period end date (June 30, 2023). PSUs will become earned PSUs according to the percentile rank of the TSR of Company's Common Stock versus the peer group’s average TSR, as shown in the following table:

Level	Relative TSR performance (percentile rank versus peers)	Earned PSUs (% of target)
< Threshold	<35th Percentile	0%
Threshold	35th Percentile	50%
Target	55th Percentile	100%
Maximum	>=75th Percentile	200%

The number of PSUs that become earned PSUs can range between 0% and 200% of the original (target) number of PSUs awarded and actual percentile ranking results between the 35th and 75th percentile are to be interpolated between the percentage earned values shown.

In order for earned PSUs to become vested PSUs, the participant must remain continuously employed by the Company or an affiliate company (i) from the grant date through the payout determination date (expected to be no more than 5 days following the performance period end date) for 50% of the PSU award and (ii) from the grant date through the first anniversary of the performance period end date for the remaining 50% of the PSU award.

Since the PSUs vest in part based upon achievement of a market condition, they were valued utilizing a Monte-Carlo simulation, that excludes the value of Common Stock dividends since dividend equivalents accrue separately to the award holders. The underlying valuation assumptions and result for the Performance RSU award was:

Stock price on grant date	$	7.23
Dividend yield	6.87		%
Expected volatility	44.40		%
Risk-free interest rate	0.11		%
Target number of PSUs granted:
First vesting tranche	136,462
Second vesting tranche	136,467
	272,929
Calculated fair value per PSU	$	6.76
Total fair value of PSUs	$	1,845,000

The expected dividend yield assumptions were derived from the Company’s closing prices of the Common Stock and historical dividend amounts over the trailing five-year period from the grant date.

The Company's own stock price history over the 2.91 year period trailing the grant date was utilized as the expected volatility assumption.

The risk-free rate assumptions were obtained from the grant date yields on zero coupon U.S. Treasury STRIPS that have a term equal to the length of the remaining Performance Period and were calculated as the interpolated rate between the two-year and three-year yield percentages.

Restricted Stock Grants

The following annual grants of restricted stock were made to members of the Company's independent directors, as payment of the annual retainer fees. The restricted stock grants for service years 2017-2019 vested (or are scheduled to vest) on a pro-rata basis over the four consecutive 90-day periods following the date of grant. The restricted stock grant for service year 2020 is scheduled to vest on the one-year anniversary of the date of grant.

Service year	Shares	Fair value per share		Total compensation cost (in thousands)
2017	24,408	$	14.75	$	360
2018	24,810	$	14.51	$	360
2019	26,446	$	15.88	$	420
2020	66,114	$	8.05	$	532

On June 17, 2020, the Company granted Restricted Stock to certain of its executives and employees. The fair value per share of $8.05 was based upon the closing price of the Company's Common Stock on the business day preceding the grant date. A total of 137,741 shares representing a fair value of approximately $1.1 million will vest on the four year anniversary of the grant date and 344,356 shares representing a fair value of approximately $2.8 million will vest on a pro-rata basis on each of the four succeeding anniversaries of the grant date.

Class B OP Units

As of September 30, 2020, cumulative activity of grants of Class B Units of the Operating Partnership, or Class B OP units, was:

	Grant date
	1/2/2018	1/3/2017
Units granted	256,087	286,392
Units forfeited:
John A. Williams (1)	(38,284)	—
Voluntary forfeiture by senior executives (2)	(128,258)	—
Other	(24,237)	(5,334)
Total forfeitures	(190,779)	(5,334)
Units earned and converted into Class A Units	—	(281,058)
Class B Units outstanding at September 30, 2020	65,308	—
Units unearned but vested	48,678	—
Units unearned and not yet vested	16,630	—
Class B Units outstanding at September 30, 2020	65,308	—
(1) Pro rata modification of award on April 16, 2018, the date of Mr. Williams' passing.
(2) Additional Class B OP units granted to senior executives other than Mr. Williams were voluntarily forfeited at the end of 2018.

There were no grants of Class B OP Units for 2019 or 2020.

The underlying valuation assumptions and results for the 2018 Class B OP Unit awards were:

Grant date	1/2/2018
Stock price	$	20.19
Dividend yield	4.95		%
Expected volatility	25.70		%
Risk-free interest rate	2.71		%
Number of Units granted:
One year vesting period	171,988
Three year vesting period	84,099
	256,087
Calculated fair value per Unit	$	16.66
Total fair value of Units	$	4,266,409
Target market threshold increase	$	5,660,580

The expected dividend yield assumptions were derived from the Company’s closing prices of the Common Stock on the grant dates and the projected future quarterly dividend payments per share of $0.25 for the 2018 awards.

For the 2018 awards, the Company's own stock price history was utilized as the basis for deriving the expected volatility assumption.

The risk-free rate assumptions were obtained from the Federal Reserve yield table and were calculated as the interpolated rate between the 20 and 30 year yield percentages on U. S. Treasury securities on the grant date.

Since the Class B OP Units have no expiration date, a derived service period of one year was utilized, which equals the period of time from the grant date to the initial valuation date.    

    Restricted Stock Units

The Company, made grants of restricted stock units, or RSUs, to its employees under the 2019 Plan, and prior to Internalization, made grants of RSUs to certain employees of affiliates of the Company under the 2011 Plan, as shown in the following table:

Grant date	1/2/2020		1/2/2019		1/2/2018
Service period	2020-2022		2019-2021		2018-2020
RSU activity:
Granted	21,400		27,760		20,720
Forfeited	(2,100)		(6,581)		(6,874)
RSUs outstanding at September 30, 2020	19,300		21,179		13,846
RSUs unearned but vested	—		7,141		9,306
RSUs unearned and not yet vested	19,300		14,038		4,540
RSUs outstanding at September 30, 2020	19,300		21,179		13,846
Fair value per RSU	$	9.47	$	10.77	$	16.66
Total fair value of RSU grant	$	202,658	$	298,975	$	345,195

The RSUs vest in three equal consecutive one-year tranches from the date of grant. For each grant, on the Initial Valuation Date, the market capitalization of the number of shares of Common Stock at the date of grant is compared to the market capitalization of the same number of shares of Common Stock at the Initial Valuation Date. If the market capitalization measure results in an increase which exceeds the target market threshold, the Vested RSUs become earned RSUs and are settled in shares of Common Stock on a one-to-one basis. Vested RSUs may become Earned RSUs on a pro-rata basis should the result of the market capitalization test be an increase of less than the target market threshold. Any Vested RSUs that do not become Earned RSUs on the Initial Valuation Date are subsequently remeasured on a quarterly basis until such time as all Vested RSUs become Earned RSUs or are forfeited due to termination of continuous service due to an event other than as a result of a qualified event, which is generally the death or disability of the holder. Continuous service through the final valuation date is required for the Vested RSUs to qualify to become fully Earned RSUs.

Because RSUs are valued using the identical market condition vesting requirement that determines the transition of the Vested Class B Units to Earned Class B Units, the same valuation assumptions per RSU were utilized to calculate the total fair values of the RSUs. The total fair value amounts pertaining to grants of RSUs, net of forfeitures, are amortized as compensation expense over the three one-year periods ending on the three successive anniversaries of the grant dates.

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Indebtedness

9 Months Ended

Sep. 30, 2020

Debt Disclosure [Abstract]

Debt Disclosure [Text Block]

Indebtedness

    Mortgage Notes Payable

Mortgage financing of property acquisitions

During the nine-month period ended September 30, 2020, the Company obtained original mortgage financing on the following properties as shown in the following table:

Property	Date	Initial principal amount (in thousands)		Fixed/Variable rate	Interest rate		Maturity date
251 Armour Yards	1/22/2020	$	3,522	Fixed	4.50	%	1/22/2025
Wakefield Crossing	1/29/2020	7,891		Fixed	3.66	%	2/1/2032
Morrocroft Centre	3/19/2020	70,000		Fixed	3.40	%	4/10/2033
Horizon at Wiregrass Ranch	4/23/2020	52,000		Fixed	2.90	%	5/1/2030
Parkside at the Beach	4/30/2020	45,037		Fixed	2.95	%	5/1/2030
		$	178,450

Repayments and refinancings

The following table summarizes our mortgage debt refinancing and repayment activity for the nine-month periods ended September 30, 2020 and 2019:

Date	Property	Previous balance (millions)		Previous interest rate / spread over 1 month LIBOR		Loan refinancing costs expensed (thousands)		New balance (millions)		New interest rate		Additional deferred loan costs from refinancing (thousands)
1/3/2020	Ursa	$	31.4	L + 300		$	—	$	—	n/a		$	—
6/25/2020	CityPark View	19.8		3.27	%	1,314		29.0		2.75	%	314
6/29/2020	Aster at Lely Resort	30.7		3.84	%	293		50.4		2.95	%	2,777
6/29/2020	Avenues at Northpointe	26.0		3.16	%	166		33.5		2.79	%	1,247
6/30/2020	Avenues at Cypress	20.5		3.43	%	1,607		28.4		2.96	%	336
6/30/2020	Venue at Lakewood Ranch	27.8		3.55	%	2,457		36.6		2.99	%	384
6/30/2020	Crosstown Walk	29.9		3.90	%	248		46.5		2.92	%	2,841
6/30/2020	Summit Crossing II	13.1		4.49	%	779		20.7		L + 278		136
7/10/2020	Citrus Village	28.5		3.65	%	704		40.9		2.95	%	522
7/31/2020	Village at Baldwin Park	70.1		4.16	%	16		70.1		3.59	%	864
		$	297.8			$	7,584	$	356.1			$	9,421
9/17/2019	Spring Hill Plaza	$	9.1	3.36	%	$	—	$	8.2	3.72	%	$	195
9/17/2019	Parkway Town Centre	6.6		3.36	%	—		8.1		3.72	%	195
8/16/2019	Deltona Landings	6.5		3.48	%	5		6.3		4.18	%	204
8/16/2019	Barclay Crossing	6.1		3.48	%	4		6.3		4.18	%	209
8/16/2019	Parkway Center	4.3		3.48	%	3		4.6		4.18	%	148
8/13/2019	Powder Springs	6.9		3.48	%	4		8.0		3.65	%	236
7/29/2019	Citi Lakes	41.1		L + 217		155		41.3		3.66	%	668
4/12/2019	Royal Lakes Marketplace	9.5		L + 250		52		9.7		4.29	%	287
4/12/2019	Cherokee Plaza	24.5		L + 225		317		25.2		4.28	%	723
2/28/2019	Lenox Village Town Center	29.2		3.82	%	17		39.3		4.34	%	1,153
		$	143.8			$	557	$	157.0			$	4,018

The following table summarizes our mortgage notes payable at September 30, 2020:

(In thousands)
Fixed rate mortgage debt:	Principal balances due		Weighted-average interest rate		Weighted average remaining life (years)
Residential Properties	$	1,442,905	3.68	%	8.8
New Market Properties	571,320		4.00	%	7.6
Preferred Office Properties	634,876		4.13	%	12.7
Total fixed rate mortgage debt	2,649,101		3.86	%	9.5
Variable rate mortgage debt:
Residential Properties	117,917		3.76	%	3.3
New Market Properties	47,150		2.81	%	3.1
Preferred Office Properties	—		—	%	—
Total variable rate mortgage debt	165,067		3.49	%	3.3
Total mortgage debt:
Residential Properties	1,560,823		3.68	%	8.4
New Market Properties	618,470		3.91	%	7.2
Preferred Office Properties	634,876		4.13	%	12.7
Total principal amount	2,814,169		3.83	%	9.1
Deferred loan costs	(44,338)
Mark to market loan adjustment	(4,038)
Mortgage notes payable, net	$	2,765,793

The Company has placed interest rate caps on the variable rate mortgages on its Avenues at Creekside, Summit Crossing II, Tradition and Bloc residential properties. Under guidance provided by ASC 815-10, these interest rate caps are derivatives that are embedded in the debt hosts. Because the interest rate caps are deemed to be clearly and closely related to the debt hosts, bifurcation and fair value accounting treatment is not required.

The mortgage note secured by our Independence Square property is a seven year term with an anticipated repayment date of September 1, 2022. If the Company elects not to pay its principal balance at the anticipated repayment date, the term will be extended for an additional five years, maturing on September 1, 2027. The interest rate from September 1, 2022 to September 1, 2027 will be the greater of (i) the Initial Interest Rate of 3.93% plus 200 basis points or (ii) the yield on the seven year U.S. treasury security rate plus approximately 400 basis points.

As of September 30, 2020, the weighted-average remaining life of deferred loan costs related to the Company's mortgage indebtedness was approximately 9.3 years. Our mortgage notes have maturity dates between June 6, 2021 and June 1, 2054.

    Credit Facility

The Company has a credit facility, or Credit Facility, with KeyBank National Association, or KeyBank, which includes a revolving line of credit, or Revolving Line of Credit, which is used to fund investments, capital expenditures, dividends (with consent of KeyBank), working capital and other general corporate purposes on an as needed basis. On March 23, 2018, the maximum borrowing capacity on the Revolving Line of Credit was increased to $200 million pursuant to an accordion feature. The accordion feature permits the maximum borrowing capacity to be expanded or contracted without amending any further terms of the instrument. On December 12, 2018, the Fourth Amended and Restated Credit Agreement, or the Amended and Restated Credit Agreement, was amended to extend the maturity to December 12, 2021, with an option to extend the maturity

date to December 12, 2022, subject to certain conditions described therein. The Revolving Line of Credit accrues interest at a variable rate of one month LIBOR plus an applicable margin of 2.75% to 3.50% per annum, depending upon the Company’s leverage ratio. The weighted average interest rate for the Revolving Line of Credit was 3.91% for the nine-month period ended September 30, 2020. The Amended and Restated Credit Agreement also reduced the commitment fee on the average daily unused portion of the Revolving Line of Credit to 0.25% or 0.30% per annum, depending upon the Company’s outstanding Credit Facility balance.

On December 20, 2019, the Company entered into a $70.0 million interim term loan with KeyBank, or the 2019 Term Loan, to partially finance the acquisition of Morrocroft Centre, an office building located in Charlotte, North Carolina. The 2019 Term Loan accrues interest at a rate of LIBOR plus 1.7% per annum. The 2019 Term Loan was repaid in conjunction with the closing of permanent mortgage financing for Morrocroft Centre on March 19, 2020.

The Fourth Amended and Restated Credit Agreement contains certain affirmative and negative covenants, including negative covenants that limit or restrict secured and unsecured indebtedness, mergers and fundamental changes, investments and acquisitions, liens and encumbrances, dividends, transactions with affiliates, burdensome agreements, changes in fiscal year and other matters customarily restricted in such agreements. The amount of dividends that may be paid out by the Company is restricted to a maximum of 95% of AFFO for the trailing four quarters without the lender's consent; solely for purposes of this covenant, AFFO is calculated as earnings before interest, taxes, depreciation and amortization expense, plus reserves for capital expenditures, less normally recurring capital expenditures, less consolidated interest expense.

As of September 30, 2020, the Company was in compliance with all covenants related to the Revolving Line of Credit, as shown in the following table:

Covenant (1)	Requirement		Result
Net worth	Minimum $1.7 billion		$1.9 billion	(3)
Debt yield	Minimum 8.25%		9.89%
Payout ratio	Maximum 95%	(2)	88.1%
Total leverage ratio	Maximum 65%		63.7%
Debt service coverage ratio	Minimum 1.50x		1.74x

(1) All covenants are as defined in the credit agreement for the Revolving Line of Credit.

(2) Calculated on a trailing four-quarter basis, except for Common Stock dividends, which are annualized off of the trailing two quarters' dividend. For the year ended September 30, 2020, the maximum dividends and distributions allowed under this covenant was approximately $179.8 million.

(3) Adjusted to exclude the effect of costs incurred with internalization.

Loan fees and closing costs for the establishment and subsequent amendments of the Credit Facility are amortized utilizing the straight line method over the life of the Credit Facility. At September 30, 2020, unamortized loan fees and closing costs for the Credit Facility were approximately $0.8 million, which will be amortized over a remaining loan life of approximately 1.3 years. Loan fees and closing costs for the mortgage debt on the Company's properties are amortized utilizing the effective interest rate method over the lives of the loans.

    Acquisition Facility

On February 28, 2017, the Company entered into a credit agreement, or Acquisition Credit Agreement, with Freddie Mac through KeyBank to obtain an acquisition revolving credit facility, or Acquisition Facility, with a maximum borrowing capacity of $200 million. The purpose of the Acquisition Facility is to finance acquisitions. The maximum borrowing capacity on the Acquisition Facility may be increased at the Company's request up to $300 million at any time prior to March 1, 2021. On March 25, 2019, the maximum borrowing capacity was decreased to $90 million by agreement between the Company and KeyBank.The Acquisition Facility accrues interest at a variable rate of one month LIBOR plus a margin of between 1.75% per annum and 2.20% per annum, depending on the type of assets acquired and the resulting property debt service coverage ratio. The Acquisition Facility has a maturity date of March 1, 2022 and has two one-year extension options, subject to certain conditions described therein. At September 30, 2020, unamortized loan fees and closing costs for the establishment of the Acquisition Facility were approximately $0.1 million, which will be amortized over a remaining loan life of approximately 1.4 years. 

    Interest Expense

Interest expense, including amortization of deferred loan costs was:

(In thousands)	Three-month periods ended September 30,				Nine-month periods ended September 30,
	2020		2019		2020		2019
Residential Properties	$	15,739	$	16,108	$	46,537	$	46,729
New Market Properties	6,539		6,422		19,876		18,123
Preferred Office Properties	6,699		5,909		20,256		16,617
Interest paid to real estate loan participants	—		—		—		110
Total	28,977		28,439		86,669		81,579
Credit Facility and Acquisition Facility	902		360		3,939		1,587
Interest Expense	$	29,879	$	28,799	$	90,608	$	83,166

    Future Principal Payments

The Company’s estimated future principal payments due on its debt instruments as of September 30, 2020 were:

Period	Future principal payments (in thousands)
2020 (1)	$	44,152
2021	166,730
2022	105,432
2023	117,605
2024	367,421
Thereafter	2,045,829
Total	$	2,847,169
(1) Includes the principal amount due on our revolving line of credit of $33.0 million as of September 30, 2020.

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Income Taxes	9 Months Ended
	Sep. 30, 2020
Income Taxes [Abstract]
Income Taxes	Income TaxesThe Company elected to be taxed as a REIT effective with its tax year ended December 31, 2011, and therefore, the Company will not be subject to federal and state income taxes, so long as it distributes 100% of the Company's annual REIT taxable income (which does not equal net income as calculated in accordance with GAAP and determined without regard for the deduction for dividends paid and excluding net capital gains) to its stockholders. For the Company's tax years prior to its REIT election year, its operations resulted in a tax loss. As of December 31, 2010, the Company had deferred federal and state tax assets totaling approximately $298,100, none of which were based upon tax positions deemed to be uncertain. These deferred tax assets will most likely not be used since the Company elected REIT status; therefore, management has determined that a 100% valuation allowance is appropriate as of September 30, 2020 and December 31, 2019.

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2020

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and ContingenciesOn January 31, 2020, the Company assumed its Former Manager's eleven-year office lease as amended, which began on October 9, 2014. As of September 30, 2020, the amount of rent due from the Company was $15.3 million over the remaining term of the lease.

A total of approximately $24.1 million of asset management and general and administrative fees related to acquired properties as of September 30, 2020 that have been waived by the Former Manager were eliminated in conjunction with the Company's Internalization transaction.

At September 30, 2020, the Company had unfunded commitments on its real estate loan portfolio of approximately $63.0 million.

At September 30, 2020, the Company had unfunded contractual commitments for tenant, leasing, and capital improvements of approximately $6.2 million.

The Company is otherwise currently subject to neither any known material commitments or contingencies from its business operations, nor any material known or threatened litigation.

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Segment information

9 Months Ended

Sep. 30, 2020

Segment Information [Abstract]

Segment Information

Segment Information

The Company's Chief Operating Decision Maker, or CODM, evaluates the performance of the Company's business operations and allocates financial and other resources by assessing the financial results and outlook for future performance across four distinct segments: residential properties, real estate related financing, New Market Properties and Preferred Office Properties.

Residential Properties - consists of the Company's portfolio of residential multifamily communities and student housing properties. Multifamily Communities and Student Housing Properties were previously presented as separate reporting segments. The Company has combined these two segments into the Residential Properties reportable segment.

Financing - consists of the Company's portfolio of real estate loans, bridge loans, and other instruments deployed by the Company to partially finance the development, construction, and prestabilization carrying costs of new multifamily communities and other real estate and real estate related assets. Excluded from the financing segment are consolidated assets of VIEs and financial results of the Company's Dawson Marketplace grocery-anchored shopping center real estate loan, which are included in the New Market Properties segment.

New Market Properties - consists of the Company's portfolio of grocery-anchored shopping centers, which are owned by New Market Properties, LLC, a subsidiary of the Company, as well as the financial results from the Company's Dawson Marketplace real estate loan, that was repaid and extinguished on February 3, 2020.

Preferred Office Properties - consists of the Company's portfolio of office buildings, which are owned by Preferred Office Properties, LLC, a wholly-owned subsidiary of the Company.

The CODM monitors net operating income (“NOI”) on a segment and a consolidated basis as a key performance measure for its operating segments. NOI is a non-GAAP measure that is defined as rental and other property revenue from real estate assets plus interest income from its loan portfolio less total property operating and maintenance expenses, property management fees, real estate taxes, property insurance, and general and administrative expenses. The CODM uses NOI as a measure of operating performance because it provides a measure of the core operations, rather than factoring in depreciation and amortization, financing costs, acquisition expenses, and other expenses generally incurred at the corporate level.

The following tables present the Company's assets, revenues, and NOI results by reportable segment, as well as a reconciliation from NOI to net income (loss). The assets attributable to 'Other' primarily consist of  deferred offering costs recorded but not yet reclassified as reductions of stockholders' equity and cash balances at the Company and Operating Partnership levels.

(In thousands)	September 30, 2020		December 31, 2019
Assets:
Residential properties	$	2,146,061	$	2,047,905
Financing	354,130		409,226
New Market Properties	1,074,584		1,125,230
Preferred Office Properties	1,130,962		1,123,212
Other	25,325		64,987
Consolidated assets	$	4,731,062	$	4,770,560

Total capitalized expenditures (inclusive of additions to construction in progress, but exclusive of the purchase price of acquisitions) for the three-month and nine-month periods ended September 30, 2020 and 2019 were as follows:

(In thousands)	Three-month periods ended September 30,				Nine-month periods ended September 30,
	2020		2019		2020		2019
Capitalized expenditures:
Residential properties	$	4,348	$	4,709	$	10,938	$	11,377
New Market Properties	2,017		2,699		4,557		5,703
Preferred Office Properties	5,779		3,265		22,458		12,040
Total	$	12,144	$	10,673	$	37,953	$	29,120

Second-generation capital expenditures exclude those expenditures made in our office building portfolio (i) to lease space to "first generation" tenants (i.e. leasing capital for existing vacancies and known move-outs at the time of acquisition), (ii) to bring recently acquired properties up to our Class A ownership standards (and which amounts were underwritten into the total investment at the time of acquisition), (iii) for property redevelopments and repositionings (iv) to newly leased space which had been vacant for more than one year and (v) for building improvements that are recoverable from future operating cost savings.

Total revenues by reportable segment of the Company were:

(In thousands)	Three-month periods ended September 30,				Nine-month periods ended September 30,
	2020		2019		2020		2019
Revenues
Rental and other property revenues:
Residential properties	$	60,643	$	56,008	$	180,325	$	162,669
New Market Properties	26,707		25,270		80,815		70,211
Preferred Office Properties (1)	27,810		24,215		81,009		68,006
Total rental and other property revenues	115,160		105,493		342,149		300,886
Financing revenues	11,271		14,710		38,115		44,675
Miscellaneous revenues	266		—		812		—
Consolidated revenues	$	126,697	$	120,203	$	381,076	$	345,561
(1) Included in rental revenues for our Preferred Office Properties segment is the amortization of deferred revenue for tenant-funded leasehold improvements from a major tenant in our Three Ravinia and Westridge office buildings. As of September 30, 2020, the Company has recorded deferred revenue in an aggregate amount of $47.0 million in connection with such improvements. The remaining balance to be recognized is approximately $36.9 million which is included in the deferred revenues line on the consolidated balance sheets at September 30, 2020. These total costs will be amortized over the lesser of the useful lives of the improvements or the individual lease terms. The Company recorded non-cash revenue of approximately $2.8 million and $2.8 million for the nine-month periods ended September 30, 2020 and 2019, respectively.

The Company expects that negative impacts from the COVID-19 pandemic affecting its in-line retail tenants within its New Market Properties segment may continue throughout 2020. Of our over 900 retail tenants, the Company has 11 leases with six companies that have entered bankruptcy proceedings and in the aggregate this constitutes approximately 1% of the total recurring rental revenue for the New Market Properties segment.

The chief operating decision maker utilizes segment net operating income, or Segment NOI, in evaluating the performance of its operating segments. Segment NOI represents total property revenues less total property operating expenses, excluding depreciation and amortization, for all properties held during the period. Segment NOI for the Company's financing segment consists of interest revenues from the Company's real estate loan investments and notes and lines of credit receivable, as well as revenues from terminated property purchase options. Management believes that Segment NOI is a helpful tool in evaluating the operating performance of the segments because it measures the core operations of property performance by excluding corporate level expenses and other items not directly related to property operating performance.

Segment NOI for each reportable segment for the three-month and nine-month periods ended September 30, 2020 and 2019 were as follows:

	Three-month periods ended September 30,				Nine-month periods ended September 30,
(In thousands)	2020		2019		2020		2019
Segment net operating income (Segment NOI)
Residential Properties	$	33,267	$	30,191	$	103,414	$	90,825
Financing	11,245		14,710		38,089		44,675
New Market Properties	19,235		18,211		57,381		50,441
Preferred Office Properties	20,291		17,236		59,363		48,745
Miscellaneous revenues	266		—		812		—
Consolidated segment net operating income	84,304		80,348		259,059		234,686
Interest expense:
Residential Properties	15,739		16,108		46,537		46,729
New Market Properties	6,539		6,422		19,876		18,123
Preferred Office Properties	6,699		5,909		20,256		16,617
Financing	902		360		3,939		1,697
Depreciation and amortization:
Residential Properties	26,516		23,869		77,745		74,304
New Market Properties	12,688		11,677		39,410		32,644
Preferred Office Properties	12,590		10,693		35,941		30,243
Equity compensation to directors and executives	582		305		1,058		922
Management fees, net of waived fees	—		5,530		1,963		16,144
Management Internalization	577		818		179,828		1,143
Provision for expected credit losses	(152)		—		5,463		—
Change in net assets of consolidated VIE	—		(591)		—		(1,316)
(Gain) / loss on sale of real estate	(3,261)		—		(3,261)		—
(Gain) / loss on trading investment, net	—		—		—		(4)
(Gain) / loss on sale of real estate loan investment	—		—		—		(747)
(Gain) / loss from land condemnation, net	(49)		—		(528)		—
(Gain) / loss on extinguishment of debt	518		15		6,674		84
Loss from unconsolidated joint venture	120		—		120		—
Corporate G&A and Other	7,898		1,370		23,113		4,197
Net income (loss)	$	(3,602)	$	(2,137)	$	(199,075)	$	(6,094)

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Loss per Share

9 Months Ended

Sep. 30, 2020

Loss per share [Abstract]

Income (Loss) per Share

Income (Loss) Per Share

The following is a reconciliation of weighted average basic and diluted shares outstanding used in the calculation of income (loss) per share of Common Stock:

	(In thousands, except per-share figures)	Three-month periods ended September 30,				Nine-month periods ended September 30,
		2020		2019		2020		2019
Numerator:
	Operating (loss) income before gain on sale of real estate and loss from unconsolidated joint venture	$	23,605	$	26,086	$	(105,462)	$	75,089
	Loss from unconsolidated joint venture	(120)		—		(120)		—
	Gain on sale of real estate, net	3,261		—		3,261		4
	Operating (loss) income	26,746		26,086		(102,321)		75,093
	Interest expense	29,879		28,799		90,608		83,166
	Change in fair value of net assets of consolidated VIEs from mortgage-backed pools	—		591		—		1,316
	Less: loss on extinguishment of debt	(518)		(15)		(6,674)		(84)
	Gains on land condemnation	49		—		528		747
	Net loss	(3,602)		(2,137)		(199,075)		(6,094)
	Consolidated net loss attributable to non-controlling interests	108		59		3,515		138
	Net loss attributable to the Company	(3,494)		(2,078)		(195,560)		(5,956)
	Dividends declared to preferred stockholders	(35,909)		(29,446)		(104,601)		(82,527)
	Net loss attributable to unvested restricted stock	(96)		(5)		(109)		(14)
	Net loss attributable to common stockholders	$	(39,499)	$	(31,529)	$	(300,270)	$	(88,497)
Denominator:
	Weighted average number of shares of Common Stock - basic	49,689		44,703		48,351		43,703
	Effect of dilutive securities: (D)	—		—		—		—
	Weighted average number of shares of Common Stock - basic and diluted	49,689		44,703		48,351		43,703
	Net loss per share of Common Stock attributable to
	common stockholders, basic and diluted	$	(0.79)	$	(0.71)	$	(6.21)	$	(2.02)

(A) The Company's outstanding Class A Units of the Operating Partnership (742 and 856 Units at September 30, 2020, and 2019, respectively) contain rights to distributions in the same amount per unit as for dividends declared on the Company's Common Stock. The impact of the Class A Unit distributions on earnings per share has been calculated using the two-class method whereby earnings are allocated to the Class A Units based on dividends declared and the Class A Units' participation rights in undistributed earnings.

(B) The Company’s shares of Series A Preferred Stock outstanding accrue dividends at an annual rate of 6% of the stated value of $1,000 per share, payable monthly. The Company had 1,991 and 1,932 outstanding shares of Series A Preferred Stock at September 30, 2020 and 2019, respectively and 103 outstanding shares of Series A1 Preferred Stock at September 30, 2020. The Company's shares of Series M preferred stock, or mShares, accrue dividends at an escalating rate of 5.75% in year one to 7.50% in year eight and thereafter. The Company had 91 and 90 mShares outstanding at September 30, 2020 and 2019, respectively. The Company's shares of Series M1 preferred stock accrue dividends at an escalating rate of 6.1% in year one to 7.1% in year ten and thereafter. The Company had 13 shares of Series M1 preferred stock outstanding at September 30, 2020.

(C) The Company's outstanding unvested restricted share awards (548 and 20 shares of Common Stock at September 30, 2020 and 2019, respectively) contain non-forfeitable rights to distributions or distribution equivalents. The impact of the unvested restricted

share awards on earnings per share has been calculated using the two-class method whereby earnings are allocated to the unvested restricted share awards based on dividends declared and the unvested restricted shares' participation rights in undistributed earnings. Given the Company's unvested restricted share awards are defined as participating securities, the dividends declared for that period are adjusted in determining the calculation of loss per share of Common Stock.

(D) Potential dilution from (i) warrants outstanding from issuances of Units from our Series A Preferred Stock offerings that are potentially exercisable into 27,767 shares of Common Stock; (ii) 65 Class B Units; (iii) 548 shares of unvested restricted common stock; (iv) 54 outstanding Restricted Stock Units; and (v) 273 Performance-based Restricted Stock Units are excluded from the diluted shares calculations because the effect was antidilutive. Class A Units were excluded from the denominator because earnings were allocated to non-controlling interests in the calculation of the numerator.

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Fair Values of Financial Instruments

9 Months Ended

Sep. 30, 2020

Fair Values of Financial Instruments [Abstract]

Fair Values of Financial Instruments

Fair Values of Financial Instruments

Fair value is defined as the price at which an asset or liability is exchanged between market participants in an orderly transaction at the reporting date. The Company’s cash equivalents, notes receivable, accounts receivable and payables and accrued expenses all approximate fair value due to their short term nature.

The following tables provide estimated fair values of the Company’s financial instruments. The carrying values of the Company's real estate loans include accrued interest receivable from additional interest or exit fee provisions and are presented net of deferred loan fee revenue and credit losses reserves, where applicable.

	As of September 30, 2020
(In thousands)	Carrying value				Fair value measurements using fair value hierarchy
			Fair Value		Level 1		Level 2		Level 3
Financial Assets:
Real estate loans	$	334,385	$	348,608	$	—	$	—	$	348,608
Notes receivable and line of credit receivable	11,905		11,905		—		—		11,905
	$	346,290	$	360,513	$	—	$	—	$	360,513
Financial Liabilities:
Mortgage notes payable	$	2,814,169	$	2,866,502	$	—	$	—	$	2,866,502
Revolving credit facility	33,000		33,000		—		—		33,000
	$	2,847,169	$	2,899,502	$	—	$	—	$	2,899,502

	As of December 31, 2019
(In thousands)	Carrying value				Fair value measurements using fair value hierarchy
			Fair Value		Level 1		Level 2		Level 3
Financial Assets:
Real estate loans	$	375,460	$	382,373	$	—	$	—	$	382,373
Notes receivable and line of credit receivable	41,917		41,917		—		—		41,917
	$	417,377	$	424,290	$	—	$	—	$	424,290
Financial Liabilities:
Mortgage notes payable	$	2,609,829	$	2,659,242	$	—	$	—	$	2,659,242
Revolving line of credit	—		—		—		—		—
Term note payable	70,000		70,000		—		—		70,000
	$	2,679,829	$	2,729,242	$	—	$	—	$	2,729,242

The fair value of the real estate loans within the level 3 hierarchy are comprised of estimates of the fair value of the notes, which were developed utilizing a discounted cash flow model over the remaining terms of the notes until their maturity dates and utilizing discount rates believed to approximate the market risk factor for notes of similar type and duration. The fair values also contain a separately-calculated estimate of any applicable additional interest payment due the Company at the maturity date of the loan, based on the outstanding loan balances at September 30, 2020, discounted to the reporting date utilizing a discount rate believed to be appropriate for multifamily development projects. The fair values of the fixed rate mortgages on the Company’s properties were developed using market quotes of the fixed rate yield index and spread for 4, 5, 6, 7, 10, 15, 25 and 35 year notes as of the reporting date. The present values of the cash flows were calculated using the original interest rate in place on the fixed rate mortgages and again at the current market rate. The difference between the two results was applied as a fair market adjustment to the carrying value of the mortgages.

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Subsequent Events

9 Months Ended

Sep. 30, 2020

Subsequent Events [Abstract]

Subsequent Events

Subsequent Events

Between October 1, 2020 and October 31, 2020, the Company issued 13,986 shares of Series A1 Redeemable Preferred Stock and collected net proceeds of approximately $12.6 million after commissions and fees and issued 2,914 shares of Series M1 Redeemable Preferred Stock and collected net proceeds of approximately $2.8 million after commissions and fees. During the same period, the Company redeemed 23,468 shares of Series A Preferred Stock and 862 shares of Series M1 Preferred Stock, or mShares.

On November 2, 2020, the Company closed on the acquisition of The Blake, a 281-unit multifamily community located in Orlando, Florida.

On November 3, 2020, the Company announced via a press release the closing on that day of the sale of student housing assets to an unrelated third party for a sales price of approximately $478.7 million.

On November 5, 2020, the Company's board of directors declared a quarterly dividend on our Common Stock of $0.175 per share, payable on January 15, 2021 to stockholders of record on December 15, 2020. Even though this dividend will be paid in 2021, if and to the extent this dividend is taxable, the Company intends for this dividend to be taxable in 2020.

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Operating Leases (Notes)

9 Months Ended

Sep. 30, 2020

Leases [Abstract]

Operating Leases

Operating Leases

Company as Lessor

For the nine months ended September 30, 2020 and 2019, the Company recognized rental property revenues of $330.4 million and $290.0 million, respectively, of which $31.2 million and $29.2 million, respectively, represented variable rental revenue.

Company as Lessee

The Company has three ground leases related to our office and grocery-anchored shopping center assets that generally have extended terms (e.g. over twenty years with multiple renewal options) and generally have base rent with CPI-based increases. The Company evaluated its renewal option periods in quantifying its asset and liability related to these ground leases. In determining the value of its right of use asset and lease liability, the Company used discount rates comparable to recent loan rates obtained on comparative properties within its portfolio. The Company is also, as of January 31, 2020 following the Internalization, the lessee of office space for its property support center which expires in May 2026, and of furniture and office equipment, which leases generally are three to five years in duration with minimal rent increases.

The Company recorded lease expense as follows:

(dollars in thousands)	For the nine-month periods ended September 30, 2020				Weighted average remaining lease term (years)	Weighted average discount rate
	Lease expense		Cash paid
Office space	$	1,942	$	1,903	5.2	3.0	%
Ground leases	44		38		35.7	4.4	%
Office equipment	282		282		2.3	3.0	%
Total	$	2,268	$	2,223

Future minimum rent expense for office space, ground leases and office equipment were:

For the year ending December 31:	Future Minimum Rents as of September 30, 2020
(in thousands)	Office space		Ground leases		Office equipment		Total
2020 (1)	$	723	$	13	$	91	$	827
2021	2,930		51		321		3,302
2022	2,855		51		149		3,055
2023	2,497		51		58		2,606
2024	3,139		51		39		3,229
Thereafter	3,163		1,136		—		4,299
Total	$	15,307	$	1,353	$	658	$	17,318
(1) Remaining three months

Operating Leases

Operating Leases

Company as Lessor

For the nine months ended September 30, 2020 and 2019, the Company recognized rental property revenues of $330.4 million and $290.0 million, respectively, of which $31.2 million and $29.2 million, respectively, represented variable rental revenue.

Company as Lessee

The Company has three ground leases related to our office and grocery-anchored shopping center assets that generally have extended terms (e.g. over twenty years with multiple renewal options) and generally have base rent with CPI-based increases. The Company evaluated its renewal option periods in quantifying its asset and liability related to these ground leases. In determining the value of its right of use asset and lease liability, the Company used discount rates comparable to recent loan rates obtained on comparative properties within its portfolio. The Company is also, as of January 31, 2020 following the Internalization, the lessee of office space for its property support center which expires in May 2026, and of furniture and office equipment, which leases generally are three to five years in duration with minimal rent increases.

The Company recorded lease expense as follows:

(dollars in thousands)	For the nine-month periods ended September 30, 2020				Weighted average remaining lease term (years)	Weighted average discount rate
	Lease expense		Cash paid
Office space	$	1,942	$	1,903	5.2	3.0	%
Ground leases	44		38		35.7	4.4	%
Office equipment	282		282		2.3	3.0	%
Total	$	2,268	$	2,223

Future minimum rent expense for office space, ground leases and office equipment were:

For the year ending December 31:	Future Minimum Rents as of September 30, 2020
(in thousands)	Office space		Ground leases		Office equipment		Total
2020 (1)	$	723	$	13	$	91	$	827
2021	2,930		51		321		3,302
2022	2,855		51		149		3,055
2023	2,497		51		58		2,606
2024	3,139		51		39		3,229
Thereafter	3,163		1,136		—		4,299
Total	$	15,307	$	1,353	$	658	$	17,318
(1) Remaining three months

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Significant Accounting Policies Basis of Presentation (Policies)

9 Months Ended

Sep. 30, 2020

Summary of Significant Accounting Policies [Abstract]

Impairment or Disposal of Long-Lived Assets, Policy [Policy Text Block]

Impairment Assessment The Company evaluates its tangible and identifiable intangible real estate assets for impairment when events such as declines in a property’s operating performance, deteriorating market conditions, or environmental or legal concerns bring recoverability of the carrying value of one or more assets into question. When qualitative factors indicate the possibility of impairment, the total undiscounted cash flows of the property, including proceeds from disposition, are compared to the net book value of the property. If this test indicates that impairment exists, an impairment loss is recorded in earnings equal to the shortage of the book value to fair value, calculated as the discounted net cash flows of the property.

Goodwill and Intangible Assets, Policy [Policy Text Block]

s

New Accounting Pronouncements, Policy [Policy Text Block]

New Accounting Pronouncements

Standard	Description	Date of Adoption	Effect on the Consolidated Financial Statements
Recently Adopted Accounting Guidance
ASU 2016-13, Financial Instruments - Credit Losses (ASC 326)	ASU 2016-03 ("CECL") changes how entities will measure credit losses for most financial assets, including loans, which are not measured at fair value through net income. The guidance replaces the existing incurred loss model with an expected loss model for instruments measured at amortized cost, and requires entities to record credit allowances for financial assets rather than reduce the carrying amount, as they do today under the other-than temporary impairment model.	January 1, 2020	Implementation of the new guidance on accounting for financial assets was limited to our real estate loan investments. We have developed a model that derives a reserve ratio based upon the amount of financial protection afforded each instrument. For each loan in which we are the lender, the amount of protection afforded to us is estimated to be the excess of the future estimated fair market value of the developed property over the commitment amount of each loan (including other loans senior to the Company’s), inclusive of accrued interest and other related receivables. The excess represents the amount of equity dollars in each real estate project, which are in a subordinate position to our real estate loan investments. We implemented this new guidance using the modified retrospective basis by recording a cumulative effect adjustment to retained earnings on January 1, 2020 of approximately $7.4 million.

Standard	Description	Date of Adoption	Effect on the Consolidated Financial Statements
Recently Issued Accounting Guidance Not Yet Adopted
ASU 2020-04, Reference Rate Reform (Topic 848) - Facilitation of the Effects of Reference Rate Reform on Financial Reporting	The new standard enables affected entities to elect from a series of practical expedients designed to ease the transition from referenced base rates within contracts designated to be replaced by Reference Rate Reform.	The amendments are effective March 12, 2020 through December 31, 2022.	ASU 2020-04 will potentially be applicable to the Company's variable-rate debt instruments for which the Company is the borrower, which bear interest at a spread over the 1-month London Interbank Offer Rate (1-month LIBOR). Among the practical expedients are the option to elect prospective adjustment of the effective interest rate, foregoing reassessment of any instruments under loan modification rules. The Company is monitoring developments pertaining to Reference Rate Reform and does not currently anticipate ASU 2020-04 to have a material effect on its results of operations.

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Organization (Tables)

9 Months Ended

Sep. 30, 2020

Organization [Abstract]

Schedule of Error Corrections and Prior Period Adjustments

The Company recorded certain reclassification adjustments on its Condensed Consolidated Statement of Operations for the three-month and nine-month periods ended September 30, 2019, to conform prior period presentation to the current presentation reflective of the internalized structure as shown in the table below. None of these reclassification adjustments were due to error or misstatement.

	For the three-month period ended September 30, 2019
(in thousands)	As reported in Quarterly Report on Form 10-Q at September 30, 2019		Reclassification adjustments		As reported in Quarterly Report on Form 10-Q at September 30, 2020
Rental revenues	$	101,817	$	(101,817)	$	—
Other property revenues	$	3,232	$	(3,232)	$	—
Rental and other property revenues	$	—	$	105,049	$	105,049
Operating expenses:
Property operating and maintenance	$	14,928	$	1,565	$	16,493
Real estate taxes	$	12,870	$	(12,870)	$	—
Real estate taxes and insurance	$	—	$	14,474	$	14,474
General and administrative	$	1,898	$	(534)	$	1,364
Insurance, professional fees and other expenses	$	3,453	$	(3,453)	$	—
Management internalization expense	$	—	$	818	$	818

	For the nine-month period ended September 30, 2019
(in thousands)	As reported in Quarterly Report on Form 10-Q at September 30, 2019		Reclassification adjustments		As reported in Quarterly Report on Form 10-Q at September 30, 2020
Rental revenues	$	289,647	$	(289,647)	$	—
Other property revenues	$	8,922	$	(8,922)	$	—
Rental and other property revenues	$	—	$	298,569	$	298,569
Operating expenses:
Property operating and maintenance	$	38,186	$	5,050	$	43,236
Real estate taxes	$	37,914	$	(37,914)	$	—
Real estate taxes and insurance	$	—	$	42,646	$	42,646
General and administrative	$	6,425	$	(2,254)	$	4,171
Insurance, professional fees and other expenses	$	8,671	$	(8,671)	$	—
Management internalization expense	$	—	$	1,143	$	1,143

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Real Estate Assets (Tables)

9 Months Ended

Sep. 30, 2020

Business Acquisition

real estate owned [Table Text Block]

The Company's real estate assets consisted of:

	As of:
	September 30, 2020	December 31, 2019
Residential properties:
Properties (1,2)	44	42
Units	12,936	12,256
Beds	6,095	6,095
New Market Properties:
Properties (2)	54	52
Gross leasable area (square feet) (3)	6,208,278	6,041,629
Preferred Office Properties:
Properties (2,4)	9	10
Rentable square feet	3,169,000	3,204,000
(1) The acquired second phases of CityPark View and Crosstown Walk communities are managed in combination with the initial phases and so together are considered a single property, as is the Regent at Lenox Village within the Lenox Portfolio.
(2) One multifamily community, two student housing properties, two grocery-anchored shopping centers and two office buildings are owned through consolidated joint ventures. One grocery-anchored shopping center is an investment in an unconsolidated joint venture.
(3) The Company also owns approximately 47,600 square feet of gross leasable area of ground floor retail space which is embedded within the Lenox Portfolio and is not included in the totals above for New Market Properties.
(4) Excludes our 251 Armour property, comprising 35,000 rentable square feet that is under development and our 4th & Brevard land parcel, that is slated for future development.

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed

The Company allocated the purchase prices to the acquired assets and liabilities based upon their fair values, as shown in the following table. The purchase price allocation was based upon the Company's best estimates of the fair values of the acquired assets and liabilities.

	New Market Properties' acquisitions during the nine-month periods ended September 30,
(In thousands, except amortization period data)	2020		2019
Land	$	9,328	$	57,916
Buildings and improvements	12,264		101,873
Tenant improvements	2,099		8,230
In-place leases	3,043		16,080
Above market leases	107		2,759
Leasing costs	1,237		5,768
Below market leases	(359)		(10,537)
Prepaid taxes and other assets	61		98
Security deposits, prepaid rents, and other	(249)		(748)
Net assets acquired	$	27,531	$	181,439
Cash paid	$	19,640	$	65,526
Mortgage debt	7,891		115,913
Total consideration	$	27,531	$	181,439
Three-month period ended September 30, 2020
Revenue	$	678	$	3,976
Net income (loss)	$	5	$	(997)
Nine-month period ended September 30, 2020
Revenue	$	1,723	$	13,094
Net income (loss)	$	59	$	(2,126)
Capitalized acquisition costs incurred by the Company	$	470	$	4,022
Capitalized acquisition costs paid to related party (included above)	$	249	$	1,799
Remaining amortization period of intangible
assets and liabilities (years)	10.2		8.0

schedule of depreciation and amortization expense [Table Text Block]

The Company recorded aggregate amortization and depreciation expense of:

(In thousands)	Three-month periods ended September 30,				Nine-month periods ended September 30,
	2020		2019		2020		2019
Depreciation:
Buildings and improvements	$	29,050	$	25,509	$	85,811	$	72,686
Furniture, fixtures, and equipment	12,817		12,296		38,132		37,961
	41,867		37,805		123,943		110,647
Amortization:
Acquired intangible assets	9,510		8,169		27,873		25,732
Deferred leasing costs	368		217		1,132		670
Website development costs	49		48		148		142
Total depreciation and amortization	$	51,794	$	46,239	$	153,096	$	137,191

Schedule of Joint Venture Activity

The following tables summarize the balance sheet and statements of income data for Neapolitan Way shopping center subsequent to its contribution into the joint venture as of and for the periods presented:

(in thousands)	September 30, 2020
Total assets	$	39,843
Total liabilities	$	26,142

	Three months ended		Nine months ended
	September 30,		September 30,
	2020		2020
Rental and other property revenues	$	651	$	651
Total operating expenses	$	797	$	797
Interest expense	$	94	$	94
Net income (loss)	$	(240)	$	(240)
Net income (loss) attributable to the Company	$	(120)	$	(120)

multifamily community [Domain]

Business Acquisition

Table of Properties Acquired

During the nine-month period ended September 30, 2020, the Company completed the acquisition of the following multifamily communities:

Acquisition date	Property	Location	Units
3/31/2020	Horizon at Wiregrass	Tampa, Florida	392
4/30/2020	Parkside at the Beach	Panama City Beach, Florida	288
			680

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed

The Company allocated the purchase prices and capitalized acquisition costs to the acquired assets and liabilities based upon their fair values, as shown in the following table. The purchase price allocations were based upon the Company's best estimates of the fair values of the acquired assets and liabilities.

	Multifamily Community acquired during the nine-month period ended
(In thousands, except amortization period data)	September 30, 2020
Land	$	12,945
Buildings and improvements	100,113
Furniture, fixtures and equipment	26,284
Lease intangibles	5,968
Prepaids & other assets	24
Accrued taxes	(437)
Security deposits, prepaid rents, and other liabilities	(384)
Net assets acquired	$	144,513
Cash paid	$	99,476
Mortgage debt, net	45,037
Total consideration	$	144,513
Three-months ended September 30, 2020
Revenue	$	2,883
Net income (loss)	$	(1,832)
Nine-months ended September 30, 2020
Revenue	$	5,258
Net income (loss)	$	(4,018)
Capitalized acquisition costs incurred by the Company	$	4,085
Acquisition costs paid to related party (included above)	$	—
Remaining amortization period of intangible
assets and liabilities (months)	11.5

student housing community [Domain]

Business Acquisition

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed

The Company allocated the asset's fair value and capitalized acquisition costs to the acquired assets and liabilities based upon their fair values, as shown in the following table. The purchase price allocations were based upon the Company's best estimates of the fair values of the acquired assets and liabilities.

	Student housing property acquired during the nine-month period ended
(In thousands, except amortization period data)	September 30, 2019
Land	$	7,289
Buildings and improvements	68,163
Furniture, fixtures and equipment	16,966
Lease intangibles	983
Accrued taxes	(158)
Security deposits, prepaid rents, and other liabilities	(2,579)
Net assets acquired	$	90,664
Satisfaction of loan receivables	$	46,397
Cash paid	2,717
Mortgage debt, net	41,550
Total consideration	$	90,664
Three-months ended September 30, 2020
Revenue	$	2,042
Net income (loss)	$	36
Nine-months ended September 30, 2020
Revenue	$	5,980
Net income (loss)	$	307
Capitalized acquisition costs incurred by the Company	$	1,016
Acquisition costs paid to related party	$	936
Remaining amortization period of intangible
assets and liabilities (months)	0

Retail Segment [Member]

Business Acquisition

Table of Properties Acquired

During the nine-month periods ended September 30, 2020 and 2019, the Company completed the acquisition of the following grocery-anchored shopping centers:

Acquisition date	Property	Location	Gross leasable area (square feet)
1/29/2020	Wakefield Crossing	Raleigh, North Carolina	75,927
3/19/2020	Midway Market	Dallas, Texas	85,599
			161,526
1/17/2019	Gayton Crossing	Richmond, Virginia	158,316
5/28/2019	Free State Shopping Center	Washington, D.C.	264,152
6/12/2019	Disston Plaza	Tampa - St. Petersburg, Florida	129,150
6/12/2019	Polo Grounds Mall	West Palm Beach, Florida	130,285
8/16/2019	Fairfield Shopping Center (1)	Virginia Beach, VA	231,829
			913,732
(1) Property is owned through a consolidated joint venture.

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Real Estate Loans, Notes Receivable, and Lines of Credit (Tables)

9 Months Ended

Sep. 30, 2020

Receivables [Abstract]

Schedule of Accounts, Notes, Loans and Financing Receivable [Table Text Block]

	September 30, 2020			December 31, 2019
Number of loans	25			27
Number of underlying properties in development	18			19
(In thousands)
Drawn amount	$	323,629		$	352,582
Deferred loan origination fees	(1,567)			(1,476)
Allowance for loan losses	(12,461)			(1,400)
Carrying value	$	309,601		$	349,706
Unfunded loan commitments	$	62,964		$	61,718
Weighted average current interest, per annum (paid monthly)	8.50		%	8.48		%
Weighted average accrued interest, per annum	3.84		%	3.85		%

(In thousands)	Principal balance		Deferred loan origination fees		Allowances and CECL Reserves		Carrying value
Balances as of December 31, 2019	$	352,582	$	(1,476)	$	(1,400)	$	349,706
Opening CECL reserve	—		—		(7,414)		(7,414)
Loan fundings	42,193		—		—		42,193
Loan repayments	(71,146)		—		—		(71,146)
Loan origination fees collected	—		(882)		—		(882)
Amortization of loan origination fees	—		791		—		791
Reserve increases due to loan originations	—		—		(767)		(767)
Net increases in reserves on existing loans or loans repaid	—		—		(2,880)		(2,880)
Balances as of September 30, 2020	$	323,629	$	(1,567)	$	(12,461)	$	309,601

Property type	Number of loans	Carrying value		Commitment amount		Percentage of portfolio
(In thousands)
Residential properties	24	$	299,219	$	367,400	97	%
New Market Properties	—	—		—		—	%
Preferred Office Properties	1	10,382		19,193		3	%
Balances as of September 30, 2020	25	$	309,601	$	386,593

Notes receivable [Table Text Block]

portfolio of notes and lines of credit receivable consisted of:

Borrower	Date of loan	Maturity date	Total loan commitments		Outstanding balance as of:				Interest rate
					September 30, 2020		December 31, 2019
(In thousands)
Preferred Capital Marketing Services, LLC (1)	N/A	N/A	$	—	$	—	$	650	N/A
Preferred Apartment Advisors, LLC (1)	N/A	N/A	—		—		15,178		N/A
Haven Campus Communities, LLC (1,2)	6/11/2014	12/31/2018	11,660		9,011		9,011		8	%
Newport Development Partners, LLC	6/17/2014	6/30/2021	1,000		—		—		12	%
Oxford Capital Partners, LLC (3)	10/5/2015	6/30/2021	8,000		1,006		5,438		10	%
Mulberry Development Group, LLC (4)	3/31/2016	6/30/2021	750		670		525		12	%
360 Capital Company, LLC (4)	5/24/2016	12/31/2020	3,400		1,218		3,394		12	%
360 Capital Company, LLC (1)	7/24/2018	N/A	—		—		7,754		N/A
Unamortized loan fees			—		—		(33)
			$	24,810	$	11,905	$	41,917
(1) See related party disclosure in Note 6.
(2) The amount payable under the note is collateralized by one of the principals of the borrower's 49.49% interest in an unrelated shopping center located in Atlanta, Georgia and a personal guaranty of repayment by the principals of the borrower.
(3) The amounts payable under the terms of this revolving credit line, up to the lesser of 25% of the loan balance or $2.0 million, are collateralized by a personal guaranty of repayment by the principals of the borrower. The overall decrease in the Oxford LOC balance is a function of an approximate $5.0 million paydown on July 31, 2020, that was required as part of the LOC agreement whenever a Capital Transaction involving the Manassas Palisades property occurred. This property was sold on July 31, 2020 and the related mezz loan was repaid to PAC. Therefore, a corresponding paydown on the Oxford LOC was made to reduce the sum of the principal balance.
(4) The amounts payable under the terms of these revolving credit lines are collateralized by a personal guaranty of repayment by the principals of the borrower.

interest income [Table Text Block]

The Company recorded interest income and other revenue from these instruments as follows:

Interest income	Three month periods ended September 30,				Nine-month periods ended September 30,
(In thousands)	2020		2019		2020		2019
Real estate loans:
Current interest	$	6,921	$	8,083	$	21,070	$	23,031
Additional accrued interest	3,052		3,471		9,208		10,040
Loan origination fee amortization	264		283		791		1,063
Purchase option termination fee amortization	421		1,283		4,896		6,900
Default interest	63		—		186		—
Total real estate loan revenue	10,721		13,120		36,151		41,034
Notes and lines of credit	536		1,865		2,056		4,278
Bank and money market accounts	1		169		38		562
Agency mortgage-backed securities	—		—		—		95
Interest income on loans and notes receivable	$	11,258	$	15,154	$	38,245	$	45,969

Real Estate Loan Investments Receivable, By Final Reserve Ratio

The following table presents the Company's aggregation of loan amounts by final reserve ratio as of September 30, 2020:

Final reserve ratio		Number of loans	Total receivables by project, net of reserves (in thousands)
—	%	3	$	28,921
0.50	%	10	108,630
1.00	%	3	17,876
1.50	%	4	26,729
3.00	%	3	27,902
4.00	%	1	126,768
5.00% +		1	3,776
		25	$	340,602

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Redeemable Preferred Stock Proceeds and offering costs (Tables)

9 Months Ended

Sep. 30, 2020

Equity [Abstract]

Schedule of Stockholders Equity [Table Text Block]

Cumulative gross proceeds and offering costs for our active equity offerings consisted of:

(In thousands)					Deferred Offering Costs
Offering	Total offering		Gross proceeds as of September 30, 2020		Reclassified as reductions of stockholders' equity		Recorded as deferred assets		Total		Specifically identifiable offering costs (3)		Total offering costs
$1.5 Billion Unit Offering (1)	1,500,000		$	1,236,414	$	15,874	$	—	$	15,874	$	115,650	$	131,524
Series A1/M1 Offering	1,000,000		115,893		426		3,251		3,677		11,023		14,700
2019 Shelf Offering (2)	400,000		4,614		22		975		997		92		1,089
Preferred Office Growth Fund	100,000		—		—		495		495		3		498
Total	$	3,000,000	$	1,356,921	$	16,322	$	4,721	$	21,043	$	126,768	$	147,811

(1) The Series A $1.5 billion unit offering expired in Q1 2020 and therefore all remaining deferred offering costs were reclassified as reductions of stockholder's equity in Q1 2020.

(2) The $125 million ATM Offering is a part of the $400 million Shelf Offering and therefore it is not included in the total.

(3) These offering costs specifically identifiable to Unit offering closing transactions, such as commissions, dealer manager fees, and other registration fees, are reflected as a reduction of stockholders' equity at the time of closing.

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Related Party Transactions (Tables)

9 Months Ended

Sep. 30, 2020

Related Party Transactions [Abstract]

Schedule of Related Party Transactions [Table Text Block]

(In thousands)		Three-month periods ended September 30,				Nine-month periods ended September 30,
Type of Compensation	Basis of Compensation	2020		2019		2020		2019
Acquisition fees	1.0% of the gross purchase price of real estate assets	$	—	$	2,864	$	235	$	5,467
Loan origination fees	1.0% of the maximum commitment of any real estate loan, note or line of credit receivable	—		148		—		674
Loan coordination fees	0.6% of any assumed, new or supplemental debt incurred in connection with an acquired property	—		1,100		47		2,065
Asset management fees	Monthly fee equal to one-twelfth of 0.50% of the total book value of assets, as adjusted	—		3,981		1,349		11,546
Property management fees	Monthly fee up to 4% of the monthly gross revenues of the properties managed	—		2,557		890		7,509
General and administrative expense fees	Monthly fee equal to 2% of the monthly gross revenues of the Company	—		1,557		616		4,624
Construction management fees	Quarterly fee for property renovation and takeover projects	—		73		14		208
Disposition fees	1% of the sale price of a real estate asset	—		—		—		16
		$	—	$	12,280	$	3,151	$	32,109

In addition to property management fees, the Company incurred the following reimbursable on-site personnel salary and related benefits expenses at the properties, which are listed on the Consolidated Statements of Operations:

	Three-month periods ended September 30,				Nine-month periods ended September 30,
(In thousands)	2020		2019		2020		2019
	$	—	$	4,681	$	1,430	$	12,973

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Dividends (Tables)

9 Months Ended

Sep. 30, 2020

Dividends [Abstract]

Schedule of Dividends Payable

The Company's dividend and distribution activity consisted of:

	Dividends and distributions declared
	For the nine-month periods ended September 30,
(In thousands)	2020		2019
Series A Preferred Stock	$	97,272	$	79,351
mShares	4,903		3,176
Series A1 Preferred Stock	2,209		—
Series M1 Preferred Stock	217		—
Common Stock	29,895		34,599
Restricted Stock and Class A OP Units	559		683
Total	$	135,055	$	117,809

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Equity Compensation (Tables)

9 Months Ended

Sep. 30, 2020

Equity Compensation [Abstract]

equity compensation expense [Table Text Block]

Equity compensation expense by award type for the Company was:

(In thousands)	Three-month periods ended September 30,				Nine-month periods ended September 30,				Unamortized expense as of September 30,
	2020		2019		2020		2019		2020
Class B Unit awards to employees:
2016	$	—	$	—	$	—	$	2	$	—
2017	—		78		3		234		—
2018	70		72		191		215		71
Restricted stock grants to Board members:
2018	—		—		—		120		—
2019	—		106		140		176		—
2020	133		—		222		—		310
Restricted stock grants for employees:
2020	242		—		279		—		3,601
Performance-based restricted stock units:
2020	92		—		92		—		1,753
Restricted stock units to employees:
2017	—		15		—		53		—
2018	14		15		38		55		19
2019	16		19		47		67		94
2020	15		—		46		—		137
Total	$	582	$	305	$	1,058	$	922	$	5,985

Performance Shares, Schedule of Percentile Rank [Table Text Block]

PSUs will become earned PSUs according to the percentile rank of the TSR of Company's Common Stock versus the peer group’s average TSR, as shown in the following table:

Level	Relative TSR performance (percentile rank versus peers)	Earned PSUs (% of target)
< Threshold	<35th Percentile	0%
Threshold	35th Percentile	50%
Target	55th Percentile	100%
Maximum	>=75th Percentile	200%

Schedule of Share-based Compensation, Restricted Stock and Restricted Stock Units Activity [Table Text Block]

Restricted Stock Grants

The following annual grants of restricted stock were made to members of the Company's independent directors, as payment of the annual retainer fees. The restricted stock grants for service years 2017-2019 vested (or are scheduled to vest) on a pro-rata basis over the four consecutive 90-day periods following the date of grant. The restricted stock grant for service year 2020 is scheduled to vest on the one-year anniversary of the date of grant.

Service year	Shares	Fair value per share		Total compensation cost (in thousands)
2017	24,408	$	14.75	$	360
2018	24,810	$	14.51	$	360
2019	26,446	$	15.88	$	420
2020	66,114	$	8.05	$	532

Grant date	1/2/2020		1/2/2019		1/2/2018
Service period	2020-2022		2019-2021		2018-2020
RSU activity:
Granted	21,400		27,760		20,720
Forfeited	(2,100)		(6,581)		(6,874)
RSUs outstanding at September 30, 2020	19,300		21,179		13,846
RSUs unearned but vested	—		7,141		9,306
RSUs unearned and not yet vested	19,300		14,038		4,540
RSUs outstanding at September 30, 2020	19,300		21,179		13,846
Fair value per RSU	$	9.47	$	10.77	$	16.66
Total fair value of RSU grant	$	202,658	$	298,975	$	345,195

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block]

The underlying valuation assumptions and result for the Performance RSU award was:

Stock price on grant date	$	7.23
Dividend yield	6.87		%
Expected volatility	44.40		%
Risk-free interest rate	0.11		%
Target number of PSUs granted:
First vesting tranche	136,462
Second vesting tranche	136,467
	272,929
Calculated fair value per PSU	$	6.76
Total fair value of PSUs	$	1,845,000

The underlying valuation assumptions and results for the 2018 Class B OP Unit awards were:

Grant date	1/2/2018
Stock price	$	20.19
Dividend yield	4.95		%
Expected volatility	25.70		%
Risk-free interest rate	2.71		%
Number of Units granted:
One year vesting period	171,988
Three year vesting period	84,099
	256,087
Calculated fair value per Unit	$	16.66
Total fair value of Units	$	4,266,409
Target market threshold increase	$	5,660,580

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Indebtedness (Tables)

9 Months Ended

Sep. 30, 2020

Debt Disclosure [Abstract]

Schedule of Long-term Debt Instruments [Table Text Block]

Mortgage financing of property acquisitions

During the nine-month period ended September 30, 2020, the Company obtained original mortgage financing on the following properties as shown in the following table:

Property	Date	Initial principal amount (in thousands)		Fixed/Variable rate	Interest rate		Maturity date
251 Armour Yards	1/22/2020	$	3,522	Fixed	4.50	%	1/22/2025
Wakefield Crossing	1/29/2020	7,891		Fixed	3.66	%	2/1/2032
Morrocroft Centre	3/19/2020	70,000		Fixed	3.40	%	4/10/2033
Horizon at Wiregrass Ranch	4/23/2020	52,000		Fixed	2.90	%	5/1/2030
Parkside at the Beach	4/30/2020	45,037		Fixed	2.95	%	5/1/2030
		$	178,450

The following table summarizes our mortgage notes payable at September 30, 2020:

(In thousands)
Fixed rate mortgage debt:	Principal balances due		Weighted-average interest rate		Weighted average remaining life (years)
Residential Properties	$	1,442,905	3.68	%	8.8
New Market Properties	571,320		4.00	%	7.6
Preferred Office Properties	634,876		4.13	%	12.7
Total fixed rate mortgage debt	2,649,101		3.86	%	9.5
Variable rate mortgage debt:
Residential Properties	117,917		3.76	%	3.3
New Market Properties	47,150		2.81	%	3.1
Preferred Office Properties	—		—	%	—
Total variable rate mortgage debt	165,067		3.49	%	3.3
Total mortgage debt:
Residential Properties	1,560,823		3.68	%	8.4
New Market Properties	618,470		3.91	%	7.2
Preferred Office Properties	634,876		4.13	%	12.7
Total principal amount	2,814,169		3.83	%	9.1
Deferred loan costs	(44,338)
Mark to market loan adjustment	(4,038)
Mortgage notes payable, net	$	2,765,793

debt covenant [Table Text Block]

As of September 30, 2020, the Company was in compliance with all covenants related to the Revolving Line of Credit, as shown in the following table:

Covenant (1)	Requirement		Result
Net worth	Minimum $1.7 billion		$1.9 billion	(3)
Debt yield	Minimum 8.25%		9.89%
Payout ratio	Maximum 95%	(2)	88.1%
Total leverage ratio	Maximum 65%		63.7%
Debt service coverage ratio	Minimum 1.50x		1.74x

(1) All covenants are as defined in the credit agreement for the Revolving Line of Credit.

(2) Calculated on a trailing four-quarter basis, except for Common Stock dividends, which are annualized off of the trailing two quarters' dividend. For the year ended September 30, 2020, the maximum dividends and distributions allowed under this covenant was approximately $179.8 million.

(3) Adjusted to exclude the effect of costs incurred with internalization.

mortgage interest [Table Text Block]

c

Schedule of Maturities of Long-term Debt [Table Text Block]

The Company’s estimated future principal payments due on its debt instruments as of September 30, 2020 were:

Period	Future principal payments (in thousands)
2020 (1)	$	44,152
2021	166,730
2022	105,432
2023	117,605
2024	367,421
Thereafter	2,045,829
Total	$	2,847,169
(1) Includes the principal amount due on our revolving line of credit of $33.0 million as of September 30, 2020.

Schedule of Debt [Table Text Block]

Interest expense, including amortization of deferred loan costs was:

(In thousands)	Three-month periods ended September 30,				Nine-month periods ended September 30,
	2020		2019		2020		2019
Residential Properties	$	15,739	$	16,108	$	46,537	$	46,729
New Market Properties	6,539		6,422		19,876		18,123
Preferred Office Properties	6,699		5,909		20,256		16,617
Interest paid to real estate loan participants	—		—		—		110
Total	28,977		28,439		86,669		81,579
Credit Facility and Acquisition Facility	902		360		3,939		1,587
Interest Expense	$	29,879	$	28,799	$	90,608	$	83,166

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Segment information (Tables)

9 Months Ended

Sep. 30, 2020

Segment Reporting Information [Line Items]

segment assets [Table Text Block]

The following tables present the Company's assets, revenues, and NOI results by reportable segment, as well as a reconciliation from NOI to net income (loss). The assets attributable to 'Other' primarily consist of  deferred offering costs recorded but not yet reclassified as reductions of stockholders' equity and cash balances at the Company and Operating Partnership levels.

(In thousands)	September 30, 2020		December 31, 2019
Assets:
Residential properties	$	2,146,061	$	2,047,905
Financing	354,130		409,226
New Market Properties	1,074,584		1,125,230
Preferred Office Properties	1,130,962		1,123,212
Other	25,325		64,987
Consolidated assets	$	4,731,062	$	4,770,560

Capital Expenditures By Segment

Total capitalized expenditures (inclusive of additions to construction in progress, but exclusive of the purchase price of acquisitions) for the three-month and nine-month periods ended September 30, 2020 and 2019 were as follows:

(In thousands)	Three-month periods ended September 30,				Nine-month periods ended September 30,
	2020		2019		2020		2019
Capitalized expenditures:
Residential properties	$	4,348	$	4,709	$	10,938	$	11,377
New Market Properties	2,017		2,699		4,557		5,703
Preferred Office Properties	5,779		3,265		22,458		12,040
Total	$	12,144	$	10,673	$	37,953	$	29,120

Reconciliation of Revenue from Segments to Consolidated [Table Text Block]

Total revenues by reportable segment of the Company were:

(In thousands)	Three-month periods ended September 30,				Nine-month periods ended September 30,
	2020		2019		2020		2019
Revenues
Rental and other property revenues:
Residential properties	$	60,643	$	56,008	$	180,325	$	162,669
New Market Properties	26,707		25,270		80,815		70,211
Preferred Office Properties (1)	27,810		24,215		81,009		68,006
Total rental and other property revenues	115,160		105,493		342,149		300,886
Financing revenues	11,271		14,710		38,115		44,675
Miscellaneous revenues	266		—		812		—
Consolidated revenues	$	126,697	$	120,203	$	381,076	$	345,561
(1) Included in rental revenues for our Preferred Office Properties segment is the amortization of deferred revenue for tenant-funded leasehold improvements from a major tenant in our Three Ravinia and Westridge office buildings. As of September 30, 2020, the Company has recorded deferred revenue in an aggregate amount of $47.0 million in connection with such improvements. The remaining balance to be recognized is approximately $36.9 million which is included in the deferred revenues line on the consolidated balance sheets at September 30, 2020. These total costs will be amortized over the lesser of the useful lives of the improvements or the individual lease terms. The Company recorded non-cash revenue of approximately $2.8 million and $2.8 million for the nine-month periods ended September 30, 2020 and 2019, respectively.

Schedule of Segment Reporting Information, by Segment [Table Text Block]

Segment NOI for each reportable segment for the three-month and nine-month periods ended September 30, 2020 and 2019 were as follows:

	Three-month periods ended September 30,				Nine-month periods ended September 30,
(In thousands)	2020		2019		2020		2019
Segment net operating income (Segment NOI)
Residential Properties	$	33,267	$	30,191	$	103,414	$	90,825
Financing	11,245		14,710		38,089		44,675
New Market Properties	19,235		18,211		57,381		50,441
Preferred Office Properties	20,291		17,236		59,363		48,745
Miscellaneous revenues	266		—		812		—
Consolidated segment net operating income	84,304		80,348		259,059		234,686
Interest expense:
Residential Properties	15,739		16,108		46,537		46,729
New Market Properties	6,539		6,422		19,876		18,123
Preferred Office Properties	6,699		5,909		20,256		16,617
Financing	902		360		3,939		1,697
Depreciation and amortization:
Residential Properties	26,516		23,869		77,745		74,304
New Market Properties	12,688		11,677		39,410		32,644
Preferred Office Properties	12,590		10,693		35,941		30,243
Equity compensation to directors and executives	582		305		1,058		922
Management fees, net of waived fees	—		5,530		1,963		16,144
Management Internalization	577		818		179,828		1,143
Provision for expected credit losses	(152)		—		5,463		—
Change in net assets of consolidated VIE	—		(591)		—		(1,316)
(Gain) / loss on sale of real estate	(3,261)		—		(3,261)		—
(Gain) / loss on trading investment, net	—		—		—		(4)
(Gain) / loss on sale of real estate loan investment	—		—		—		(747)
(Gain) / loss from land condemnation, net	(49)		—		(528)		—
(Gain) / loss on extinguishment of debt	518		15		6,674		84
Loss from unconsolidated joint venture	120		—		120		—
Corporate G&A and Other	7,898		1,370		23,113		4,197
Net income (loss)	$	(3,602)	$	(2,137)	$	(199,075)	$	(6,094)

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Income (Loss) per Share (Tables)

9 Months Ended

Sep. 30, 2020

Loss per share [Abstract]

Schedule of Earnings Per Share, Basic, by Common Class, Including Two Class Method

The following is a reconciliation of weighted average basic and diluted shares outstanding used in the calculation of income (loss) per share of Common Stock:

	(In thousands, except per-share figures)	Three-month periods ended September 30,				Nine-month periods ended September 30,
		2020		2019		2020		2019
Numerator:
	Operating (loss) income before gain on sale of real estate and loss from unconsolidated joint venture	$	23,605	$	26,086	$	(105,462)	$	75,089
	Loss from unconsolidated joint venture	(120)		—		(120)		—
	Gain on sale of real estate, net	3,261		—		3,261		4
	Operating (loss) income	26,746		26,086		(102,321)		75,093
	Interest expense	29,879		28,799		90,608		83,166
	Change in fair value of net assets of consolidated VIEs from mortgage-backed pools	—		591		—		1,316
	Less: loss on extinguishment of debt	(518)		(15)		(6,674)		(84)
	Gains on land condemnation	49		—		528		747
	Net loss	(3,602)		(2,137)		(199,075)		(6,094)
	Consolidated net loss attributable to non-controlling interests	108		59		3,515		138
	Net loss attributable to the Company	(3,494)		(2,078)		(195,560)		(5,956)
	Dividends declared to preferred stockholders	(35,909)		(29,446)		(104,601)		(82,527)
	Net loss attributable to unvested restricted stock	(96)		(5)		(109)		(14)
	Net loss attributable to common stockholders	$	(39,499)	$	(31,529)	$	(300,270)	$	(88,497)
Denominator:
	Weighted average number of shares of Common Stock - basic	49,689		44,703		48,351		43,703
	Effect of dilutive securities: (D)	—		—		—		—
	Weighted average number of shares of Common Stock - basic and diluted	49,689		44,703		48,351		43,703
	Net loss per share of Common Stock attributable to
	common stockholders, basic and diluted	$	(0.79)	$	(0.71)	$	(6.21)	$	(2.02)

(A) The Company's outstanding Class A Units of the Operating Partnership (742 and 856 Units at September 30, 2020, and 2019, respectively) contain rights to distributions in the same amount per unit as for dividends declared on the Company's Common Stock. The impact of the Class A Unit distributions on earnings per share has been calculated using the two-class method whereby earnings are allocated to the Class A Units based on dividends declared and the Class A Units' participation rights in undistributed earnings.

(B) The Company’s shares of Series A Preferred Stock outstanding accrue dividends at an annual rate of 6% of the stated value of $1,000 per share, payable monthly. The Company had 1,991 and 1,932 outstanding shares of Series A Preferred Stock at September 30, 2020 and 2019, respectively and 103 outstanding shares of Series A1 Preferred Stock at September 30, 2020. The Company's shares of Series M preferred stock, or mShares, accrue dividends at an escalating rate of 5.75% in year one to 7.50% in year eight and thereafter. The Company had 91 and 90 mShares outstanding at September 30, 2020 and 2019, respectively. The Company's shares of Series M1 preferred stock accrue dividends at an escalating rate of 6.1% in year one to 7.1% in year ten and thereafter. The Company had 13 shares of Series M1 preferred stock outstanding at September 30, 2020.

(C) The Company's outstanding unvested restricted share awards (548 and 20 shares of Common Stock at September 30, 2020 and 2019, respectively) contain non-forfeitable rights to distributions or distribution equivalents. The impact of the unvested restricted

share awards on earnings per share has been calculated using the two-class method whereby earnings are allocated to the unvested restricted share awards based on dividends declared and the unvested restricted shares' participation rights in undistributed earnings. Given the Company's unvested restricted share awards are defined as participating securities, the dividends declared for that period are adjusted in determining the calculation of loss per share of Common Stock.

(D) Potential dilution from (i) warrants outstanding from issuances of Units from our Series A Preferred Stock offerings that are potentially exercisable into 27,767 shares of Common Stock; (ii) 65 Class B Units; (iii) 548 shares of unvested restricted common stock; (iv) 54 outstanding Restricted Stock Units; and (v) 273 Performance-based Restricted Stock Units are excluded from the diluted shares calculations because the effect was antidilutive. Class A Units were excluded from the denominator because earnings were allocated to non-controlling interests in the calculation of the numerator.

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Fair Values of Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2020

Fair Values of Financial Instruments [Abstract]

Fair Value Measurements, Nonrecurring [Table Text Block]

The following tables provide estimated fair values of the Company’s financial instruments. The carrying values of the Company's real estate loans include accrued interest receivable from additional interest or exit fee provisions and are presented net of deferred loan fee revenue and credit losses reserves, where applicable.

	As of September 30, 2020
(In thousands)	Carrying value				Fair value measurements using fair value hierarchy
			Fair Value		Level 1		Level 2		Level 3
Financial Assets:
Real estate loans	$	334,385	$	348,608	$	—	$	—	$	348,608
Notes receivable and line of credit receivable	11,905		11,905		—		—		11,905
	$	346,290	$	360,513	$	—	$	—	$	360,513
Financial Liabilities:
Mortgage notes payable	$	2,814,169	$	2,866,502	$	—	$	—	$	2,866,502
Revolving credit facility	33,000		33,000		—		—		33,000
	$	2,847,169	$	2,899,502	$	—	$	—	$	2,899,502

	As of December 31, 2019
(In thousands)	Carrying value				Fair value measurements using fair value hierarchy
			Fair Value		Level 1		Level 2		Level 3
Financial Assets:
Real estate loans	$	375,460	$	382,373	$	—	$	—	$	382,373
Notes receivable and line of credit receivable	41,917		41,917		—		—		41,917
	$	417,377	$	424,290	$	—	$	—	$	424,290
Financial Liabilities:
Mortgage notes payable	$	2,609,829	$	2,659,242	$	—	$	—	$	2,659,242
Revolving line of credit	—		—		—		—		—
Term note payable	70,000		70,000		—		—		70,000
	$	2,679,829	$	2,729,242	$	—	$	—	$	2,729,242

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Operating Leases (Tables)

9 Months Ended

Sep. 30, 2020

Leases [Abstract]

Schedule of Future Minimum Rental Payments for Operating Leases [Table Text Block]

Future minimum rent expense for office space, ground leases and office equipment were:

For the year ending December 31:	Future Minimum Rents as of September 30, 2020
(in thousands)	Office space		Ground leases		Office equipment		Total
2020 (1)	$	723	$	13	$	91	$	827
2021	2,930		51		321		3,302
2022	2,855		51		149		3,055
2023	2,497		51		58		2,606
2024	3,139		51		39		3,229
Thereafter	3,163		1,136		—		4,299
Total	$	15,307	$	1,353	$	658	$	17,318
(1) Remaining three months

Lease, Cost

The Company recorded lease expense as follows:

(dollars in thousands)	For the nine-month periods ended September 30, 2020				Weighted average remaining lease term (years)	Weighted average discount rate
	Lease expense		Cash paid
Office space	$	1,942	$	1,903	5.2	3.0	%
Ground leases	44		38		35.7	4.4	%
Office equipment	282		282		2.3	3.0	%
Total	$	2,268	$	2,223

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Organization (Details)	Sep. 30, 2020 state number_of_properties $ / shares shares	Dec. 31, 2019 $ / shares shares
Class of Stock [Line Items]
Number of Real Estate Properties | number_of_properties	125
Number Of States With Real Estate Properties | state	15
Common Stock, Par or Stated Value Per Share | $ / shares	$ 0.01
Common Stock, Shares, Outstanding	49,900,555
Noncontrolling Interest, Ownership Percentage by Parent	98.50%
minority interest partnership units outstanding	742,413
daycountvolweightedavgcalcformarketvalue	20
Common Stock [Member]
Class of Stock [Line Items]
Common Stock, Par or Stated Value Per Share | $ / shares	$ 0.01	$ 0.01
Common Stock, Shares, Outstanding	49,901,000	46,443,000

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Organization - Adjustments (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Rental revenues		$ 0		$ 0
Other property revenues		0		0
Rental and other property revenues	$ 114,831	105,049	$ 338,271	298,569
miscellaneous revenues	608	0	4,560	1,023
Operating Costs and Expenses	19,278	16,493	52,919	43,236
Real estate taxes		0		0
Real Estate Taxes and Insurance	16,078	14,474	48,109	42,646
General and administrative	7,898	1,364	23,109	4,171
Other General and Administrative Expense		0		0
Other Expenses	$ 577	818	$ 179,828	1,143
Previously Reported
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Rental revenues		101,817		289,647
Other property revenues		3,232		8,922
Rental and other property revenues		0		0
Operating Costs and Expenses		14,928		38,186
Real estate taxes		12,870		37,914
Real Estate Taxes and Insurance		0		0
General and administrative		1,898		6,425
Other General and Administrative Expense		3,453		8,671
Other Expenses		0		0
Restatement Adjustment
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Rental revenues		(101,817)		(289,647)
Other property revenues		(3,232)		(8,922)
Rental and other property revenues		105,049		298,569
Operating Costs and Expenses		1,565		5,050
Real estate taxes		(12,870)		(37,914)
Real Estate Taxes and Insurance		14,474		42,646
General and administrative		(534)		(2,254)
Other General and Administrative Expense		(3,453)		(8,671)
Other Expenses		$ 818		$ 1,143

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Significant Accounting Policies (Details) shares in Thousands, $ in Thousands	9 Months Ended
	Sep. 30, 2020 USD ($) number_of_properties shares	Jan. 31, 2020	Dec. 31, 2019 USD ($) shares
Real Estate Properties [Line Items]
Lease term		11 years
Lessee, Operating Lease, Number Of Leases | number_of_properties	3
Lessee, Operating Lease, Renewal Term	20 years
Accumulated deficit | $	$ (210,218)		$ (7,244)
Accounting Standards Update 2016-13
Real Estate Properties [Line Items]
Accumulated deficit | $			$ 7,400
Minimum [Member]
Real Estate Properties [Line Items]
Rental Agreement Term	9 months
Maximum [Member]
Real Estate Properties [Line Items]
Rental Agreement Term	15 months
Series M Preferred Stock [Member]
Real Estate Properties [Line Items]
preferred stock | shares	106		106
Series A Preferred Stock [Member]
Real Estate Properties [Line Items]
preferred stock | shares	2,226		2,161
Leases Under Five Thousand Square Feet [Member] | Minimum [Member]
Real Estate Properties [Line Items]
Lease term	3 years
Leases Under Five Thousand Square Feet [Member] | Maximum [Member]
Real Estate Properties [Line Items]
Lease term	7 years
Leases Over Ten Thousand Square Feet [Member] | Minimum [Member]
Real Estate Properties [Line Items]
Lease term	10 years
Leases Over Ten Thousand Square Feet [Member] | Maximum [Member]
Real Estate Properties [Line Items]
Lease term	20 years
Building [Member] | Minimum [Member]
Real Estate Properties [Line Items]
Lessee, Operating Lease, Term of Contract	3 years
Lessee, Operating Lease, Annual Rent Increase Percentage	2.00%
Lease term	5 years
Building [Member] | Maximum [Member]
Real Estate Properties [Line Items]
Lessee, Operating Lease, Term of Contract	5 years
Lessee, Operating Lease, Annual Rent Increase Percentage	3.00%
Lease term	15 years

XML

Real Estate Assets - Real estate assets owned (Details)	Sep. 30, 2020 ft²	Sep. 30, 2020 number_of_properties	Sep. 30, 2020	Dec. 31, 2019 ft²	Sep. 30, 2019 ft²
Business Combination Segment Allocation [Line Items]
Number of Real Estate Properties | number_of_properties		125
Number of units in real estate property	680		12,936	12,256
Area of Real Estate Property	6,208,278			6,041,629
Area of Real Estate Property, Excluded from Floor Retail Space	3,169,000			3,204,000
Net Rentable Area	161,526				913,732
Lennox Portfolio
Business Combination Segment Allocation [Line Items]
Net Rentable Area	47,600
Armour And Brevard
Business Combination Segment Allocation [Line Items]
Net Rentable Area	35,000
Multifamily
Business Combination Segment Allocation [Line Items]
Number of units in real estate property | number_of_properties		1
Student housing
Business Combination Segment Allocation [Line Items]
Number of units in real estate property | number_of_properties		2
Shopping Center
Business Combination Segment Allocation [Line Items]
Number of units in real estate property | number_of_properties		2
Office Building
Business Combination Segment Allocation [Line Items]
Number of units in real estate property | number_of_properties		2
Lenox Portfolio [Member]
Business Combination Segment Allocation [Line Items]
Net Rentable Area	47,600
Lenox Portfolio [Member] | Construction in Progress
Business Combination Segment Allocation [Line Items]
Net Rentable Area	35,000
Office Building
Business Combination Segment Allocation [Line Items]
Number of Real Estate Properties			9	10
Multifamily
Business Combination Segment Allocation [Line Items]
Number of Real Estate Properties			44	42
Retail Site [Member]
Business Combination Segment Allocation [Line Items]
Number of Real Estate Properties			54	52
Student housing
Business Combination Segment Allocation [Line Items]
Number of beds, student housing			6,095	6,095

XML

Real Estate Assets - Table of Properties Acquired (Details)	Sep. 30, 2020 ft²	Sep. 30, 2020	Dec. 31, 2019	Sep. 30, 2019 ft²
Business Acquisition
Number of units in real estate property	680	12,936	12,256
Net Rentable Area	161,526			913,732
Parkside at the Beach [Member]
Business Acquisition
Number of units in real estate property	288
Horizon At Wiregrass [Member]
Business Acquisition
Number of units in real estate property	392
wakefield crossing [Domain]
Business Acquisition
Net Rentable Area	75,927
Midway Market
Business Acquisition
Net Rentable Area	85,599
Gayton Crossing
Business Acquisition
Net Rentable Area				158,316
Free State Shopping Center
Business Acquisition
Net Rentable Area				264,152
Disston Plaza
Business Acquisition
Net Rentable Area				129,150
Polo Grounds Mall
Business Acquisition
Net Rentable Area				130,285
Fairfield Shopping Center [Member]
Business Acquisition
Net Rentable Area				231,829

XML

Real Estate Assets - Narrative (Details)				3 Months Ended			9 Months Ended
	Jul. 15, 2020 USD ($)	Mar. 20, 2020 USD ($) number_of_properties	Mar. 06, 2020 USD ($)	Sep. 30, 2020 USD ($)	Mar. 31, 2020 USD ($)	Sep. 30, 2019 USD ($) bed number_of_properties	Sep. 30, 2020 USD ($)	Sep. 30, 2019 USD ($) bed number_of_properties	Sep. 30, 2020	Sep. 30, 2020 ft²	Dec. 31, 2019 USD ($)
Business Acquisition
Total consideration								$ 90,664,000
Number of units in real estate property									12,936	680	12,256
purchase option termination fees received		$ 2,750,000	$ 2,500,000		$ 9,100,000
Intangible Assets, Gross (Excluding Goodwill)				$ 310,600,000			$ 310,600,000
Finite-Lived Intangible Assets, Accumulated Amortization				177,348,000			177,348,000				$ 149,896,000
Finite-Lived Intangible Liabilities							86,000,000.0
finite lived intangible liabilities accumulated amortization							31,500,000
Restricted Cash				18,800,000			18,800,000
amortization of purchase option termination fee income				421,000		$ 1,283,000	4,896,000	6,900,000
Contract with Customer, Liability				$ 800,000			800,000
Contract With Customer, Liability, Percent Of Total Rental And Other Revenue				0.70%
Bad Debt Expense Related To COVID-19				$ 1,700,000
Bad Debt Expense Related To COVID-19, Percentage Of Rental And Other Revenues				1.40%
Business Acquisition, Number Of Properties Failure to Consummate Purchase | number_of_properties		6
Joint Venture
Business Acquisition
Payments to Acquire Real Estate and Real Estate Joint Ventures	$ 19,200,000
Gain (Loss) from Transactions With Joint Ventures	$ 3,300,000
Ownership Interest in Joint Ventures	50.00%
Future Capital Expenditures [Member]
Business Acquisition
Restricted Cash				$ 33,600,000			33,600,000
Other Property Level Commitments [Member]
Business Acquisition
Restricted Cash				$ 6,800,000			6,800,000
sanibel straights [Member]
Business Acquisition
amortization of purchase option termination fee income							$ 4,900,000	$ 6,900,000
Minimum [Member]
Business Acquisition
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life							7 years 2 months 12 days
Maximum [Member]
Business Acquisition
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life							8 years 8 months 12 days
Multifamily Communities
Business Acquisition
Total consideration							$ 141,200,000
Haven49 [Member]
Business Acquisition
Number of units in real estate property | number_of_properties						322		322
Number Of Beds In Real Estate Property | bed						887		887
New Market Properties [Member]
Business Acquisition
Total consideration							$ 27,700,000	$ 178,500,000

XML

Real Estate Assets - Purchase Price Allocation (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019
Business Acquisition
Tenant Improvements	$ 175,400,000		$ 175,400,000		$ 167,275,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Assets, Prepaid Expense and Other Assets	24,000		24,000
Net assets acquired		$ 90,664,000		$ 90,664,000
Satisfaction of loan receivables				46,397,000
Total consideration				90,664,000
Revenues	126,697,000	120,203,000	381,076,000	345,561,000
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest	26,746,000	26,086,000	(102,321,000)	75,093,000
Business Acquisition, Transaction Costs		1,016,000		1,016,000
Business Combination, Acquisition Related Costs Paid To Related Party				936,000
Multifamily Acquisitions [Member]
Business Acquisition
Land	12,945,000		12,945,000
Buildings and improvements	100,113,000		100,113,000
Furniture, fixtures and equipment	26,284,000		26,284,000
Lease intangibles			5,968,000
Accrued taxes	(437,000)		(437,000)
Security deposits, prepaid rents, and other liabilities	(384,000)		(384,000)
Cash paid			45,037,000
Total consideration			144,513,000
Revenues	2,883,000		5,258,000
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest	(1,832,000)		(4,018,000)
capitalized acquisition costs asset acquisition			$ 4,085,000
Finite-Lived Intangible Assets, Remaining Amortization Period			11 years 6 months
business combination debt financing			$ 99,476,000
Business Acquisition, Transaction Costs	0		0
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Assets	144,513,000		144,513,000
Q2 2018 NMP acquisitions [Domain]
Business Acquisition
Land	9,328,000	57,916,000	9,328,000	57,916,000
Buildings and improvements	12,264,000	101,873,000	12,264,000	101,873,000
Tenant Improvements	2,099,000	8,230,000	2,099,000	8,230,000
Finite-Lived Intangible Asset, Acquired-in-Place Leases	3,043,000	16,080,000	3,043,000	16,080,000
Finite-Lived Intangible Asset, Off-market Lease, Favorable, Gross	107,000	2,759,000	107,000	2,759,000
Other Finite-Lived Intangible Assets, Gross	1,237,000	5,768,000	1,237,000	5,768,000
Off-market Lease, Unfavorable	(359,000)	(10,537,000)	(359,000)	(10,537,000)
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Assets, Prepaid Expense and Other Assets	61,000	98,000	61,000	98,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Liabilities	(249,000)	(748,000)	(249,000)	(748,000)
Cash paid			7,891,000	115,913,000
Total consideration			27,531,000	181,439,000
Revenues	678,000	3,976,000	1,723,000	13,094,000
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest	5,000	(997,000)	59,000	(2,126,000)
capitalized acquisition costs asset acquisition			$ 470,000	$ 4,022,000
Finite-Lived Intangible Assets, Remaining Amortization Period			10 years 2 months 12 days	8 years
business combination debt financing			$ 19,640,000	$ 65,526,000
Business Acquisition, Transaction Costs	249,000	1,799,000	249,000	1,799,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Assets	27,531,000	181,439,000	27,531,000	181,439,000
westridge [Member]
Business Acquisition
Land		7,289,000		7,289,000
Buildings and improvements		68,163,000		68,163,000
Furniture, fixtures and equipment		16,966,000		16,966,000
Lease intangibles				983,000
Accrued taxes		(158,000)		(158,000)
Security deposits, prepaid rents, and other liabilities		$ (2,579,000)		(2,579,000)
Cash paid				2,717,000
Mortgage debt, net				$ 41,550,000
Revenues	2,042,000		5,980,000
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest	$ 36,000		$ 307,000
Finite-Lived Intangible Assets, Remaining Amortization Period				0 years

XML

Real Estate Assets - Depreciation and Amortization (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Depreciation:
Depreciation	$ 41,867,000	$ 37,805,000	$ 123,943,000	$ 110,647,000
Depreciation and amortization	51,794,000	46,239,000	153,096,000	137,191,000
Building and Building Improvements [Member]
Depreciation:
Depreciation	29,050,000	25,509,000	85,811,000	72,686,000
Furniture and Fixtures [Member]
Depreciation:
Depreciation	12,817,000	12,296,000	38,132,000	37,961,000
Finite-Lived Intangible Assets [Member]
Depreciation:
Amortization of Intangible Assets	9,510,000	8,169,000	27,873,000	25,732,000
Lease Agreements [Member]
Depreciation:
Amortization of Deferred Leasing Fees	368,000	217,000	1,132,000	670,000
Website Development [Member]
Depreciation:
amortization website development costs	$ 49,000	$ 48,000	$ 148,000	$ 142,000

XML

Real Estate Assets - Schedule of Joint Ventures (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019
Business Acquisition
Assets	$ 4,731,062		$ 4,731,062		$ 4,770,560
Liabilities	3,060,204		3,060,204		$ 2,836,444
Rental and other property revenues	114,831	$ 105,049	338,271	$ 298,569
Costs and Expenses	103,092	97,198	487,674	278,977
Interest Expense	29,879	28,799	90,608	83,166
Income (Loss) from Continuing Operations before Equity Method Investments, Income Taxes, Noncontrolling Interest	(3,602)	(2,137)	(199,075)	(6,094)
Net Income (Loss) Attributable to Parent	(3,494)	$ (2,078)	(195,560)	$ (5,956)
Joint Venture
Business Acquisition
Assets	39,843		39,843
Liabilities	26,142		26,142
Rental and other property revenues	651		651
Costs and Expenses	797		797
Interest Expense	94		94
Income (Loss) from Continuing Operations before Equity Method Investments, Income Taxes, Noncontrolling Interest	(240)		(240)
Net Income (Loss) Attributable to Parent	$ (120)		$ (120)

XML

Real Estate Loans, Notes Receivable, and Lines of Credit Real Estate Loans (Details) $ in Thousands	3 Months Ended			9 Months Ended
	Sep. 30, 2020 USD ($) number_of_properties	Mar. 31, 2020	Sep. 30, 2019 USD ($)	Sep. 30, 2020 USD ($) number_of_properties	Sep. 30, 2019 USD ($)	Dec. 31, 2019 USD ($) number_of_properties
Mortgage Loans on Real Estate [Line Items]
number of loans receivable	25			25		27
Number Of Underlying Properties In Development | number_of_properties	18			18		19
Mortgage Loans on Real Estate, Carrying Amount of Mortgages	$ 309,601			$ 309,601
real estate loans commitment amount				386,593
Variable Interest Entity, Reporting Entity Involvement, Maximum Loss Exposure, Amount	323,600			323,600
variable interest entity loans amount to be funded	386,600			386,600
interest revenue current pay	6,921		$ 8,083	21,070	$ 23,031
Loans and Leases Receivable, Deferred Income	0			0		$ 33
Loans Receivable, Gross, Commercial, Real Estate	323,629			323,629		352,582
Unamortized Loan Commitment and Origination Fees and Unamortized Discounts or Premiums	(1,567)			(1,567)		(1,476)
Loans and Leases Receivable, Allowance	(12,461)			(12,461)		(1,400)
Mortgage Loans on Real Estate, Commercial and Consumer, Net	309,601			309,601		349,706
Loans and Leases Receivable, Impaired, Commitment to Lend	62,964			62,964		61,718
real estate loans amount funded				42,193
Loan Receivable, Repayments				(71,146)
real estate loan fees amortized				(882)
Amortization of Deferred Loan Origination Fees, Net				791
Financing Receivable, Credit Loss, Expense (Reversal)				(767)
Loans And Leases Receivable, Credit Loss Expense On Existing Or Repaid Loans				$ (2,880)
current interest rate		8.48%		8.50%
Deferred interest rate		3.85%		3.84%
Interest Receivable	$ 24,784			$ 24,784		25,755
Accounting Standards Update 2016-13
Mortgage Loans on Real Estate [Line Items]
Loans and Leases Receivable, Allowance						(7,414)
Mortgage Loans on Real Estate, Commercial and Consumer, Net						$ (7,414)
multifamily community [Domain]
Mortgage Loans on Real Estate [Line Items]
number of loans receivable	24			24
Mortgage Loans on Real Estate, Carrying Amount of Mortgages	$ 299,219			$ 299,219
real estate loans commitment amount				$ 367,400
real estate loans percent of portfolio	97.00%			97.00%
Retail Segment [Member]
Mortgage Loans on Real Estate [Line Items]
number of loans receivable	0			0
Mortgage Loans on Real Estate, Carrying Amount of Mortgages	$ 0			$ 0
real estate loans commitment amount				$ 0
real estate loans percent of portfolio	0.00%			0.00%
Preferred Office Properties
Mortgage Loans on Real Estate [Line Items]
number of loans receivable	1			1
Mortgage Loans on Real Estate, Carrying Amount of Mortgages	$ 10,382			$ 10,382
real estate loans commitment amount				$ 19,193
real estate loans percent of portfolio	3.00%			3.00%

XML

Real Estate Loans, Notes Receivable, and Lines of Credit Notes and lines of credit (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Accounts, Notes, Loans and Financing Receivable [Line Items]
line of credit receivable		$ 41,917
Financing Receivable, Gross	$ 24,810
Loans and Leases Receivable, Net Amount	11,905	41,917
Loans and Leases Receivable, Deferred Income	0	(33)
PCMS [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Gross	0
Loans and Leases Receivable, Net Amount	0	650
PAA [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
line of credit receivable	0
Loans and Leases Receivable, Net Amount	0	15,178
HCC [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
line of credit receivable	11,660
Loans and Leases Receivable, Net Amount	$ 9,011	9,011
interest rate note receivable	8.00%
Oxford Capital Partners LLC [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
line of credit receivable	$ 8,000
Loans and Leases Receivable, Net Amount	$ 1,006	5,438
interest rate note receivable	10.00%
newport development partners [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
line of credit receivable	$ 1,000
Loans and Leases Receivable, Net Amount	$ 0	0
interest rate note receivable	12.00%
Mulberry Development Group LLC [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
line of credit receivable	$ 750
Loans and Leases Receivable, Net Amount	$ 670	525
interest rate note receivable	12.00%
360 Capital Company - Due December 31, 2019 [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
line of credit receivable	$ 3,400
Loans and Leases Receivable, Net Amount	$ 1,218	3,394
interest rate note receivable	12.00%
360 Capital Company - Due December 31, 2020 [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
line of credit receivable	$ 0
Loans and Leases Receivable, Net Amount	$ 0	$ 7,754

XML

Real Estate Loans, Notes Receivable, and Lines of Credit Interest income (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Receivables [Abstract]
interest revenue current pay	$ 6,921	$ 8,083	$ 21,070	$ 23,031
Accrued exit fee revenue	3,052	3,471	9,208	10,040
Deferred Revenue, Revenue Recognized	264	283	791	1,063
amortization of purchase option termination fee income	421	1,283	4,896	6,900
default interest accrued	63	0	186	0
Net loan fee revenue	10,721	13,120	36,151	41,034
interest revenue notes receivable	536	1,865	2,056	4,278
Interest Income, Deposit Accounts	1	169	38	562
Interest Income, Securities, Mortgage Backed	0	0	0	95
Interest income on loans and notes receivable	$ 11,258	$ 15,154	$ 38,245	$ 45,969

XML

Real Estate Loans, Notes Receivable, and Lines of Credit Real Estate Loans Narrative (Details)					3 Months Ended		9 Months Ended		15 Months Ended
	Dec. 17, 2019 USD ($)	Dec. 10, 2019 USD ($)	Mar. 28, 2019 USD ($) loan	May 23, 2018 USD ($) loan	Sep. 30, 2020 USD ($) number_of_properties	Jun. 30, 2020 USD ($)	Sep. 30, 2020 USD ($) number_of_properties	Sep. 30, 2019 USD ($)	Jun. 30, 2020 USD ($)	Sep. 30, 2020 USD ($)	Sep. 30, 2020	Sep. 30, 2020 ft²	Sep. 03, 2020 USD ($) number_of_properties	May 14, 2020 USD ($) number_of_properties	Feb. 28, 2020 USD ($) number_of_properties	Dec. 31, 2019 USD ($)	Jun. 30, 2019 USD ($)	Dec. 31, 2018 USD ($)
Mortgage Loans on Real Estate [Line Items]
Payments to Acquire Investments							$ 50,000	$ 0
payments received from real estate loan participants							$ 0	5,223,000
Variable Interest Entity, Reporting Entity Involvement, Maximum Loss Exposure, Amount										$ 323,600,000
variable interest entity loans amount to be funded										386,600,000
real estate loan balances unfunded										63,000,000.0
Number of units in real estate property											12,936	680				12,256
Real Estate Loan Investments Collateralized, Percent											100.00%
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest						$ 1,709,996,000		1,862,930,000	$ 1,709,996,000	1,670,858,000						$ 1,934,116,000	$ 1,784,170,000	$ 1,609,385,000
Real Estate Loan Investments, Credit Loss Expense					$ 800,000
Real Estate Loan Investment, Number Of Loans | number_of_properties					25		25
Real Estate Loan Investment										340,602,000
Proceeds from Sale of Notes Receivable	$ 20,400,000	$ 6,200,000
Real Estate Loan Investment, Reserve Ratio 0.00
Mortgage Loans on Real Estate [Line Items]
Real Estate Loan Investment, Number Of Loans | number_of_properties					3		3
Real Estate Loan Investment										28,921,000
Real Estate Loan Investment, Reserve Ratio 0.50
Mortgage Loans on Real Estate [Line Items]
Real Estate Loan Investment, Number Of Loans | number_of_properties					10		10
Real Estate Loan Investment										108,630,000
Real Estate Loan Investment, Reserve Ratio 1.00
Mortgage Loans on Real Estate [Line Items]
Real Estate Loan Investment, Number Of Loans | number_of_properties					3		3
Real Estate Loan Investment										17,876,000
Real Estate Loan Investment, Reserve Ratio 1.50
Mortgage Loans on Real Estate [Line Items]
Real Estate Loan Investment, Number Of Loans | number_of_properties					4		4
Real Estate Loan Investment										26,729,000
Real Estate Loan Investment, Reserve Ratio 3.00
Mortgage Loans on Real Estate [Line Items]
Real Estate Loan Investment, Number Of Loans | number_of_properties					3		3
Real Estate Loan Investment										27,902,000
Real Estate Loan Investment, Reserve Ratio 4.00
Mortgage Loans on Real Estate [Line Items]
Real Estate Loan Investment, Number Of Loans | number_of_properties					1		1
Real Estate Loan Investment										126,768,000
Real Estate Loan Investment, Reserve Ratio 5.00 And Above
Mortgage Loans on Real Estate [Line Items]
Real Estate Loan Investment, Number Of Loans | number_of_properties					1		1
Real Estate Loan Investment										3,776,000
Accumulated Deficit [Member]
Mortgage Loans on Real Estate [Line Items]
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest						(206,724,000)		$ 0	(206,724,000)	(210,218,000)						(7,244,000)	$ 0	$ 0
Accounting Standards Update 2016-13
Mortgage Loans on Real Estate [Line Items]
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest																(7,414,000)
Accounting Standards Update 2016-13 | Accumulated Deficit [Member]
Mortgage Loans on Real Estate [Line Items]
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest																(7,414,000)
Berryessa [Member]
Mortgage Loans on Real Estate [Line Items]
Real Estate Loan Investment, Reserve Ratio											4.00%
Starkville [Member]
Mortgage Loans on Real Estate [Line Items]
Real Estate Loan Investments, Credit Loss Expense					$ 0	$ 2,100,000
Real Estate Loan Investment										3,800,000						5,900,000
Allowance for Loan and Lease Losses, Real Estate																1,400,000
Real Estate Loan Investment, Initial Amount																7,300,000
Real Estate Loan Investment, Accrued Interest																$ 1,200,000
Multifamily
Mortgage Loans on Real Estate [Line Items]
Number of units in real estate property | number_of_properties					1		1
Multifamily | Multifamily Community In Raleigh, Atlanta Georgia [Member]
Mortgage Loans on Real Estate [Line Items]
Real Estate Loan Investment, Maximum													$ 20,700,000
Number of units in real estate property | number_of_properties													320
Loan Receivable, Fixed Interest Rate													8.50%
Loan Receivable, Deferred Fixed Interest														5.50%
Multifamily | Multifamily Community In Raleigh, North Carolina [Member]
Mortgage Loans on Real Estate [Line Items]
Real Estate Loan Investment, Maximum														$ 10,000,000.0
Number of units in real estate property | number_of_properties														277
Loan Receivable, Fixed Interest Rate														8.50%
Loan Receivable, Deferred Fixed Interest														5.50%
Multifamily | Multifamily Community In Charlotte, North Carolina [Member]
Mortgage Loans on Real Estate [Line Items]
Real Estate Loan Investment, Maximum															$ 13,400,000
Number of units in real estate property | number_of_properties															256
Loan Receivable, Fixed Interest Rate															8.50%
Loan Receivable, Deferred Fixed Interest															5.50%
Mortgage Backed Securities, Other [Member]
Mortgage Loans on Real Estate [Line Items]
Monthly Interest Expense			$ 103,000
Payments to Acquire Investments			$ 18,400,000	$ 4,700,000
number of loans in CMBS trust | loan			21	20
total maturity amount of CMBS pool			$ 295,700,000	$ 276,300,000
HCC [Member]
Mortgage Loans on Real Estate [Line Items]
interest rate note receivable											8.00%
Loan Receivable Default Interest Rate											10.00%
Loan Receivable, Default Interest Income										1,800,000
Proceeds from Collection of Notes Receivable									$ 3,750,000
Geographic Concentration Risk [Member] | GEORGIA
Mortgage Loans on Real Estate [Line Items]
amount drawn under loan agreement										56,500,000
loan commitment amount										86,200,000
Geographic Concentration Risk [Member] | FLORIDA
Mortgage Loans on Real Estate [Line Items]
amount drawn under loan agreement										56,400,000
loan commitment amount										$ 61,200,000

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Real Estate Loans, Notes Receivable, and Lines of Credit phantom facts (Details) - USD ($)		3 Months Ended	9 Months Ended
	Jul. 31, 2020	Mar. 31, 2020	Sep. 30, 2020	Dec. 31, 2019	Mar. 23, 2018
Mortgage Loans on Real Estate [Line Items]
line of credit receivable				$ 41,917,000
Deferred interest rate		3.85%	3.84%
current interest rate		8.48%	8.50%
Line of Credit Facility, Maximum Borrowing Capacity					$ 200,000,000
Oxford Capital Partners LLC [Member]
Mortgage Loans on Real Estate [Line Items]
line of credit receivable			$ 8,000,000
interest rate note receivable			10.00%
Line Of Credit Amount Collateralized By Principals, Percentage			25.00%
Payments for Line of Credit, Required Payments	$ 5,000,000.0
Amount Collateralized By Principals			$ 2,000,000.0
HCC [Member]
Mortgage Loans on Real Estate [Line Items]
line of credit receivable			$ 11,660,000
interest rate note receivable			8.00%
HCC [Member] | Shopping Center In Atlanta Georgia [Member]
Mortgage Loans on Real Estate [Line Items]
Equity Method Investment, Ownership Percentage			49.49%
newport development partners [Member]
Mortgage Loans on Real Estate [Line Items]
line of credit receivable			$ 1,000,000
interest rate note receivable			12.00%

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Acquired Intangible Assets amortization (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Liabilities			$ 86,000,000.0
Total consideration				$ 90,664,000
Revenues	$ 126,697,000	$ 120,203,000	381,076,000	345,561,000
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest	$ 26,746,000	26,086,000	(102,321,000)	75,093,000
Business Acquisition, Transaction Costs		$ 1,016,000		$ 1,016,000
Multifamily communities [Member]
Finite-Lived Intangible Assets [Line Items]
Total consideration			$ 141,200,000

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Redeemable Preferred Stock (Details)			3 Months Ended		9 Months Ended
	Feb. 14, 2020 USD ($) $ / shares shares	Sep. 27, 2019 $ / shares	Sep. 30, 2020 USD ($) $ / shares shares	Sep. 30, 2019 USD ($) $ / shares	Sep. 30, 2020 USD ($) $ / shares shares	Sep. 30, 2019 USD ($) $ / shares	Dec. 31, 2019 USD ($) $ / shares shares
Class of Stock [Line Items]
gross potential offering proceeds			$ 3,000,000,000		$ 3,000,000,000
Common Stock, Dividends, Per Share, Declared | $ / shares			$ 0.175	$ 0.2625	$ 0.6125	$ 0.785
Proceeds from Other Equity					$ 1,356,921,000
daycountvolweightedavgcalcformarketvalue			20		20
aggregate offering costs			$ 147,811,000		$ 147,811,000
prorataamountofferingcostsreclassed					16,322,000
deferred offering costs not yet reclassified			4,721,000		4,721,000
shares common stock from warrant exercises | shares	20
Deferred offering costs			21,043,000		21,043,000
specifically identifiable offering costs					126,768,000
Aggregate Offering Expenses, Maximum As a Percentage Of Gross Proceeds		12.00%
Sale of Stock, Price Per Share | $ / shares		$ 1,000
Preferred Stock, Par or Stated Value Per Share | $ / shares	$ 0.01
Dividends, Common Stock, Cash			$ 8,876,000	$ 11,823,000	$ 29,991,000	$ 34,599,000
Sale Of Stock, Maximum Consideration Received On Transaction	$ 1,500,000,000
Series A Preferred Stock [Member]
Class of Stock [Line Items]
Preferred Stock, Dividend Rate, Percentage					6.00%
preferred stock | shares			2,226,000		2,226,000		2,161,000
Preferred Stock, Par or Stated Value Per Share | $ / shares			$ 0.01		$ 0.01		$ 0.01
Preferred Stock, Value, Issued			$ 20,000		$ 20,000		$ 20,000
Redeemable Preferred Stock [Member]
Class of Stock [Line Items]
Sale Of Stock, Maximum Shares Sold | shares	1,000,000
Equity Or Debt Securities [Member]
Class of Stock [Line Items]
Sale Of Stock, Maximum Consideration Received On Transaction	$ 100,000,000
Equity Securities [Member]
Class of Stock [Line Items]
Sale Of Stock, Maximum Consideration Received On Transaction	400,000,000
Common Stock [Member]
Class of Stock [Line Items]
Common Stock, Shares, Issued | shares			49,901,000		49,901,000		46,443,000
Sale Of Stock, Maximum Consideration Received On Transaction	$ 125,000,000
$1.5 billion unit [Domain]
Class of Stock [Line Items]
maximum shares available to be issued | shares			1,500,000		1,500,000
Unit Offering [Member]
Class of Stock [Line Items]
gross potential offering proceeds			$ 1,500,000,000		$ 1,500,000,000
Proceeds from Other Equity					1,236,414,000
aggregate offering costs			131,524,000		131,524,000
prorataamountofferingcostsreclassed					15,874,000
deferred offering costs not yet reclassified			0		0
Deferred offering costs			15,874,000		15,874,000
specifically identifiable offering costs					115,650,000
2016 Shelf Offering [Member] [Domain]
Class of Stock [Line Items]
gross potential offering proceeds			400,000,000		400,000,000
Proceeds from Other Equity					4,614,000
aggregate offering costs			1,089,000		1,089,000
prorataamountofferingcostsreclassed					22,000
deferred offering costs not yet reclassified			975,000		975,000
Deferred offering costs			997,000		997,000
specifically identifiable offering costs					92,000
series A1M1 offering [Domain]
Class of Stock [Line Items]
gross potential offering proceeds			1,000,000,000		1,000,000,000
Proceeds from Other Equity					115,893,000
aggregate offering costs			14,700,000		14,700,000
prorataamountofferingcostsreclassed					426,000
deferred offering costs not yet reclassified			3,251,000		3,251,000
Deferred offering costs			3,677,000		3,677,000
specifically identifiable offering costs					11,023,000
preferred office growth fund [Domain]
Class of Stock [Line Items]
gross potential offering proceeds			100,000,000		100,000,000
Proceeds from Other Equity					0
aggregate offering costs			498,000		498,000
prorataamountofferingcostsreclassed					0
deferred offering costs not yet reclassified			495,000		495,000
Deferred offering costs			$ 495,000		495,000
specifically identifiable offering costs					$ 3,000

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Related Party Transactions (Details)			3 Months Ended		9 Months Ended
	Feb. 14, 2020 USD ($)	Jan. 31, 2020 USD ($) $ / shares	Sep. 30, 2020 USD ($) number_of_properties shares	Sep. 30, 2019 USD ($)	Sep. 30, 2020 USD ($) number_of_properties shares	Sep. 30, 2019 USD ($)	Dec. 31, 2019 USD ($)
Related Party Transaction [Line Items]
Business Acquisition, Transaction Costs				$ 1,016,000		$ 1,016,000
loan coordination fees			$ 0	1,100,000	$ 47,000	2,065,000
Cost of Reimbursable Expense			$ 0	4,681,000	1,430,000	12,973,000
capital marketing and professional					$ 40,451	384,243
Common Stock, Shares, Outstanding | shares			49,900,555		49,900,555
Construction Management Fee			$ 0	73,000	$ 14,000	208,000
Related Party Transaction, Expenses from Transactions with Related Party			0	12,280,000	3,151,000	32,109,000
AcquisitionFeesRelatedPartyCosts			0	2,864,000	235,000	5,467,000
loan origination fees			$ 0	148,000	$ 0	674,000
Number of Real Estate Properties | number_of_properties			125		125
manager's fees deferred					$ 25,600,000	24,100,000
Financing Receivable, Gross			$ 24,810,000		24,810,000
Loans and Leases Receivable, Net Amount			11,905,000		11,905,000		$ 41,917,000
disposition fee to manager			0	$ 0	0	$ 16,000
line of credit receivable							41,917,000
Sale Of Stock, Maximum Consideration Received On Transaction	$ 1,500,000,000
Interest Receivable			$ 24,784,000		24,784,000		$ 25,755,000
Remaining Contingent Fees					$ 24,100,000
Gross Purchase Price, Real Estate Assets, Percentage			1.00%	1.00%	1.00%	1.00%
Loan Origination Fee, Percentage			1.00%	1.00%	1.00%	1.00%
loan coordination fee percentage			0.60%	0.60%	0.60%	0.60%
Asset Management Fee, Percentage			0.04%	0.04%	0.04%	0.04%
Property Management Fee, Percentage			4.00%	4.00%	4.00%	4.00%
General and Administrative Expense Fee, Percentage			2.00%	2.00%	2.00%	2.00%
Disposition Fee, Percentage			1.00%	1.00%	1.00%	1.00%
Transition Services [Member]
Related Party Transaction [Line Items]
Related Party Transaction, Expenses from Transactions with Related Party					$ 3,100,000
Have 12 Real Estate Loan Investment [Member]
Related Party Transaction [Line Items]
Interest Receivable			$ 1,200,000		1,200,000
HCC Line Of Credit [Member]
Related Party Transaction [Line Items]
Interest Receivable			2,000,000.0		2,000,000.0
AssetmanagementFees [Member]
Related Party Transaction [Line Items]
Asset Management Costs			0	$ 3,981,000	1,349,000	$ 11,546,000
Propertymanagementfees [Member]
Related Party Transaction [Line Items]
Asset Management Costs			0	2,557,000	890,000	7,509,000
General and Administrative Expense [Member]
Related Party Transaction [Line Items]
Related Party Transaction, Selling, General and Administrative Expenses from Transactions with Related Party			$ 0	$ 1,557,000	616,000	4,624,000
preferred capital securities [Member]
Related Party Transaction [Line Items]
marketing and legal cost reimbursements					$ 0	$ 1,022,855
Former Manager and Sub-Manager [Member]
Related Party Transaction [Line Items]
Business Acquisition, Transaction Costs		$ 154,000,000
Business Combination, Contingent Consideration Arrangements, Range of Outcomes, Value, High		25,000,000
Business Combination, Specified Matters Holdback Amount		$ 15,000,000
Former Manager and Sub-Manager [Member] | Minimum [Member]
Related Party Transaction [Line Items]
Share Price | $ / shares		$ 1.55
Retail Site [Member]
Related Party Transaction [Line Items]
Number of Real Estate Properties			54		54		52
PCMS [Member]
Related Party Transaction [Line Items]
Financing Receivable, Gross			$ 0		$ 0
Loans and Leases Receivable, Net Amount			0		0		$ 650,000
PCMS [Member] | PCMS [Member]
Related Party Transaction [Line Items]
Loans and Leases Receivable, Net Amount			650,000		650,000
PAA [Member]
Related Party Transaction [Line Items]
Loans and Leases Receivable, Net Amount			0		0		$ 15,178,000
line of credit receivable			0		0
PAA [Member] | Revolving Credit Facility [Member]
Related Party Transaction [Line Items]
Debt Instrument, Face Amount			$ 24,000,000.0		$ 24,000,000.0
PAC Carveout, LLC [Member]
Related Party Transaction [Line Items]
Sale of Stock, Consideration Received Per Transaction		$ 111,100,000

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Dividends (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Dividends Payable [Line Items]
minority interest partnership units outstanding	742,413		742,413
Common Stock, Dividends, Per Share, Declared	$ 0.175	$ 0.2625	$ 0.6125	$ 0.785
dividends common stock declared			$ 29,895	$ 34,599
Dividends, Preferred Stock, Cash			$ 135,055	117,809
Common Stock, Shares, Outstanding	49,900,555		49,900,555
Series A Preferred Stock [Member]
Dividends Payable [Line Items]
Preferred Stock, Dividend Rate, Per-Dollar-Amount			$ 5.00
Dividends, Preferred Stock, Cash			$ 97,272	79,351
Series M1 Preferred Stock
Dividends Payable [Line Items]
Dividends, Preferred Stock, Cash			$ 217	$ 0
Minimum [Member] | mShares [Domain]
Dividends Payable [Line Items]
Preferred Stock, Dividend Rate, Per-Dollar-Amount			$ 4.79
Minimum [Member] | Series M1 Preferred Stock
Dividends Payable [Line Items]
Preferred Stock, Dividend Rate, Per-Dollar-Amount			5.08
Maximum [Member] | mShares [Domain]
Dividends Payable [Line Items]
Preferred Stock, Dividend Rate, Per-Dollar-Amount			6.25
Maximum [Member] | Series M1 Preferred Stock
Dividends Payable [Line Items]
Preferred Stock, Dividend Rate, Per-Dollar-Amount			$ 5.92

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Dividends Series A Preferred Dividends (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Dividends Payable [Line Items]
Common Stock, Dividends, Per Share, Declared	$ 0.175	$ 0.2625	$ 0.6125	$ 0.785
Dividends, Preferred Stock, Cash			$ 135,055	$ 117,809
Distribution Made to Limited Partner, Cash Distributions Declared			559	683
dividends common stock declared			29,895	34,599
Series A Preferred Stock [Member]
Dividends Payable [Line Items]
Dividends, Preferred Stock, Cash			97,272	79,351
Series M Preferred Stock [Member]
Dividends Payable [Line Items]
Dividends, Preferred Stock, Cash			4,903	3,176
Series A1 Preferred Stock
Dividends Payable [Line Items]
Dividends, Preferred Stock, Cash			2,209	0
Series M1 Preferred Stock
Dividends Payable [Line Items]
Dividends, Preferred Stock, Cash			$ 217	$ 0

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Dividends NCI (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019
Equity [Abstract]
Distribution Made to Limited Partner, Cash Distributions Declared	$ 559	$ 683

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Equity Compensation (Details) - USD ($)			3 Months Ended		9 Months Ended		12 Months Ended
	Jul. 31, 2020	Jun. 17, 2020	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019	Jan. 02, 2018
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Share-based Compensation			$ (152,000)	$ 0	$ 5,463,000	$ 0
market vesting condition capital increase threshhold					$ 5,660,580
Share-based Compensation Award, Tranche One [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Share-Based Compensation, Earned Performance Shares As Percentage of Target	0.00%
Share-based Compensation Award, Tranche Two [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Share-Based Compensation, Earned Performance Shares As Percentage of Target	50.00%
Share-based Compensation Award, Tranche Three [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Share-Based Compensation, Earned Performance Shares As Percentage of Target	100.00%
Share-based Compensation Award, Tranche Four [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Share-Based Compensation, Earned Performance Shares As Percentage of Target	200.00%
2011 Plan [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized			2,617,500		2,617,500
2019 Plan [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized			3,617,500		3,617,500
Restricted Stock [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Share-based Compensation					$ 548,000
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value		$ 8.05
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number			548,000		548,000		20,000
Restricted Stock [Member] | Share-based Compensation Award, Tranche One [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number			137,741		137,741
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Aggregate Intrinsic Value, Nonvested			$ 1,100,000		$ 1,100,000
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period			4 years
Restricted Stock [Member] | Share-based Compensation Award, Tranche Two [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number			344,356		344,356
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Aggregate Intrinsic Value, Nonvested			$ 2,800,000		$ 2,800,000
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period			4 years
ClassBUnits [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
common stock fair value per share								$ 20.19
Class B Units valuation assumption dividend yield								4.95%
ClassBUnit valuation assumption expected volatility								25.70%
Class B Unit valuation assumptions risk free rate								2.71%
Share-based Compensation							$ 65,000
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value								$ 4,266,409
Performance based restricted stock units
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
common stock fair value per share								$ 7.23
Class B Units valuation assumption dividend yield								6.87%
ClassBUnit valuation assumption expected volatility								44.40%
Class B Unit valuation assumptions risk free rate								0.11%
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value								$ 1,845,000
Share-based Compensation, Period Trailing Grant Date, Expected Volatility Assumption					2 years 10 months 28 days

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Equity Compensation Restricted Stock (Details) - USD ($)		3 Months Ended		9 Months Ended		12 Months Ended
	Jan. 02, 2018	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation		$ (152,000)	$ 0	$ 5,463,000	$ 0
ClassBUnits [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
common stock fair value per share	$ 20.19
Share-based Compensation						$ 65,000
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period	256,087
Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation				$ 548,000
Restricted Stock [Member] | Share-based Compensation Award, Tranche One [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period		4 years
Restricted Stock [Member] | Share-based Compensation Award, Tranche Two [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period		4 years
Performance based restricted stock units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
common stock fair value per share	$ 7.23
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period	272,929
2017 through 2019 | Restricted Stock [Member] | Share-based Compensation Award, Tranche One [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period				90 days
2017 through 2019 | Restricted Stock [Member] | Share-based Compensation Award, Tranche Two [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period				90 days
2017 through 2019 | Restricted Stock [Member] | Share-based Compensation Award, Tranche Three [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period				90 days
2017 through 2019 | Restricted Stock [Member] | Share-Based Payment Arrangement, Tranche Four [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period				90 days
2017 | Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period				24,408
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Intrinsic Value, Amount Per Share				$ 14.75
Stock Granted, Value, Share-based Compensation, Gross				$ 360,000
2018 | Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period				24,810
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Intrinsic Value, Amount Per Share				$ 14.51
Stock Granted, Value, Share-based Compensation, Gross				$ 360,000
2019 | Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period				26,446
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Intrinsic Value, Amount Per Share				$ 15.88
Stock Granted, Value, Share-based Compensation, Gross				$ 420,000
2020 | Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period				1 year
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period				66,114
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Intrinsic Value, Amount Per Share				$ 8.05
Stock Granted, Value, Share-based Compensation, Gross				$ 532,000

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Equity Compensation Committee Fee Grants (Details) - USD ($)		3 Months Ended		9 Months Ended		12 Months Ended
	Jan. 02, 2018	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation		$ (152,000)	$ 0	$ 5,463,000	$ 0
ClassBUnits [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period	256,087
Share-based Compensation						$ 65,000
Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation				$ 548,000
Performance based restricted stock units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period	272,929

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Equity Compensation Class B Units (Details) - USD ($)		3 Months Ended		9 Months Ended		12 Months Ended
	Jan. 02, 2018	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common Stock, Dividends, Per Share, Declared		$ 0.175	$ 0.2625	$ 0.6125	$ 0.785
Share-based Compensation		$ (152,000)	$ 0	$ 5,463,000	$ 0
market vesting condition capital increase threshhold				$ 5,660,580
ClassBUnits [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
common stock fair value per share	$ 20.19
Common Stock, Dividends, Per Share, Declared					$ 0.25
Share-based Compensation						$ 65,000
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Risk Free Interest Rate, Minimum				20 years
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period	256,087
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Risk Free Interest Rate, Maximum				30 years
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value	$ 4,266,409
Class B Units valuation assumption dividend yield	4.95%
ClassBUnit valuation assumption expected volatility	25.70%
Class B Unit valuation assumptions risk free rate	2.71%
Performance based restricted stock units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
common stock fair value per share	$ 7.23
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Risk Free Interest Rate, Minimum				2 years
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period	272,929
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Risk Free Interest Rate, Maximum				3 years
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value	$ 1,845,000
Class B Units valuation assumption dividend yield	6.87%
ClassBUnit valuation assumption expected volatility	44.40%
Class B Unit valuation assumptions risk free rate	0.11%
100percentvestinglevel [Member] | ClassBUnits [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value	$ 16.66
100percentvestinglevel [Member] | Performance based restricted stock units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value	$ 6.76
one year [Member] | ClassBUnits [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period	171,988
one year [Member] | Performance based restricted stock units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period	136,462
three year [Member] | ClassBUnits [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period	84,099
three year [Member] | Performance based restricted stock units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period	136,467

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Equity Compensation Warrant (Details) - $ / shares	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common Stock, Dividends, Per Share, Declared	$ 0.175	$ 0.2625	$ 0.6125	$ 0.785

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Equity Compensation Equity compensation expense by grant (Details) - USD ($)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common Stock, Dividends, Per Share, Declared	$ 0.175	$ 0.2625	$ 0.6125	$ 0.785
Share-based Compensation	$ (152,000)	$ 0	$ 5,463,000	$ 0
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized	5,985,000		5,985,000
Employee Benefits and Share-based Compensation	582,000	305,000	1,058,000	$ 922,000
ClassBUnits [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common Stock, Dividends, Per Share, Declared				$ 0.25
Share-based Compensation					$ 65,000
Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation			548,000
2016 [Member] | ClassBUnits [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized	0		0
Employee Benefits and Share-based Compensation	0	0	0	$ 2,000
2017 | ClassBUnits [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized	0		0
Employee Benefits and Share-based Compensation	0	78,000	3,000	234,000
2017 | Restricted Stock Units outstanding
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized	0		0
Employee Benefits and Share-based Compensation	0	15,000	0	53,000
2014 [Member] | ClassBUnits [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized	71,000		71,000
2014 [Member] | 2011restrictedstockgrant
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized	0		0
Employee Benefits and Share-based Compensation	0	0	0	120,000
2014 [Member] | Restricted Stock Units outstanding
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized	19,000		19,000
Employee Benefits and Share-based Compensation	14,000	15,000	38,000	55,000
2019 | 2011restrictedstockgrant
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized	0		0
Employee Benefits and Share-based Compensation	0	106,000	140,000	176,000
2019 | Restricted Stock Units outstanding
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized	94,000		94,000
Employee Benefits and Share-based Compensation	16,000	19,000	47,000	67,000
2018 | ClassBUnits [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Employee Benefits and Share-based Compensation	70,000	72,000	191,000	215,000
2020 | Performance based restricted stock units | Share-based Payment Arrangement, Employee
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized	1,753,000		1,753,000
Employee Benefits and Share-based Compensation	92,000	0	92,000	0
2020 | 2011restrictedstockgrant
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized	310,000		310,000
Employee Benefits and Share-based Compensation	133,000	0	222,000	0
2020 | 2011restrictedstockgrant | Share-based Payment Arrangement, Employee
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized	3,601,000		3,601,000
Employee Benefits and Share-based Compensation	242,000	0	279,000	0
2020 | Restricted Stock Units outstanding
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized	137,000		137,000
Employee Benefits and Share-based Compensation	$ 15,000	$ 0	$ 46,000	$ 0

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Equity Compensation Restricted Stock Units (Details) - $ / shares		9 Months Ended
	Jan. 02, 2018	Sep. 30, 2020
Restricted Stock Units (RSUs) [Member] | Share-based Compensation Award, Tranche One [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period		1 year
Restricted Stock Units (RSUs) [Member] | Share-based Compensation Award, Tranche Two [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period		1 year
Restricted Stock Units (RSUs) [Member] | Share-based Compensation Award, Tranche Three [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period		1 year
Performance based restricted stock units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period	272,929
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value	$ 1,845,000
2018 [Domain] | Restricted Stock Units (RSUs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted Stock Units outstanding		13,846
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Intrinsic Value, Amount Per Share		$ 16.66
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period		20,720
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value		$ 345,195
share based compensation awards forfeited		(6,874)
RSUs Unearned And Unvested		4,540
RSUs Vested And Unearned		9,306
2019 | Restricted Stock Units (RSUs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted Stock Units outstanding		21,179
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Intrinsic Value, Amount Per Share		$ 10.77
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period		27,760
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value		$ 298,975
share based compensation awards forfeited		(6,581)
RSUs Unearned And Unvested		14,038
RSUs Vested And Unearned		7,141
2020 | Restricted Stock Units (RSUs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted Stock Units outstanding		19,300
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Intrinsic Value, Amount Per Share		$ 9.47
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period		21,400
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value		$ 202,658
share based compensation awards forfeited		(2,100)
RSUs Unearned And Unvested		19,300
RSUs Vested And Unearned		0

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Equity Compensation Class B OP Units (Details) - shares	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Class B Units Issued During Period (shares)	0	0
2018 Award
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Class B Units Issued During Period (shares)	256,087
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeited in Period (shares)	(190,779)
Partners' Capital Account, Units, Converted (shares)	0
Class B Units Outstanding (shares)	65,308
Class B Units Unearned And Vested (shares)	48,678
Class B Units Unearned And Unvested (shares)	16,630
2018 Award | Former CEO - John A. Williams [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeited in Period (shares)	(38,284)
2018 Award | Executive Officer
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeited in Period (shares)	(128,258)
2018 Award | Other OP Unit Participants
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeited in Period (shares)	(24,237)
2017 Award
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Class B Units Issued During Period (shares)	286,392
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeited in Period (shares)	(5,334)
Partners' Capital Account, Units, Converted (shares)	(281,058)
Class B Units Outstanding (shares)	0
Class B Units Unearned And Vested (shares)	0
Class B Units Unearned And Unvested (shares)	0
2017 Award | Former CEO - John A. Williams [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeited in Period (shares)	0
2017 Award | Executive Officer
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeited in Period (shares)	0
2017 Award | Other OP Unit Participants
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeited in Period (shares)	(5,334)

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Indebtedness (Details) $ in Thousands		3 Months Ended		9 Months Ended
	Dec. 20, 2019 USD ($)	Sep. 30, 2020 USD ($)	Sep. 30, 2019 USD ($)	Sep. 30, 2020 USD ($)	Sep. 30, 2019 USD ($)	Jun. 29, 2020 USD ($)	Dec. 31, 2019 USD ($)	Jun. 29, 2019 USD ($)
Debt Instrument [Line Items]
Unamortized Debt Issuance Expense		$ 800		$ 800
Interest Expense, Long-term Debt		28,977	$ 28,439	86,669	$ 81,579
interest expense to loan participant		0	0	0	110
Long-term Debt, Current Maturities		44,152		44,152
Long-term Debt		2,765,793		2,765,793		$ 297,800	$ 2,567,022	$ 143,800
Long-term Debt, Maturities, Repayments of Principal in Year Two		166,730		166,730
Long-term Debt, Maturities, Repayments of Principal in Year Three		105,432		105,432
Long-term Debt, Maturities, Repayments of Principal in Year Four		117,605		117,605
Long-term Debt, Maturities, Repayments of Principal after Year Five		367,421		367,421
Long-term Debt, Maturities, Repayments of Principal after Year Five		2,045,829		2,045,829
Long-term Debt		2,847,169		2,847,169
Interest Expense		29,879	28,799	90,608	83,166
Line of Credit Facility, Amount Outstanding		33,000		33,000			$ 0
Amortization of Financing Costs				5,177	4,752
interest expense credit facility		$ 902	360	$ 3,939	1,587
Short-term Debt	$ 70,000
Debt Instrument, Debt Covenant, Debt Service Coverage Ratio		1.74		1.74
Long-term Debt, Current Maturities, Line of Credit		$ 33,000		$ 33,000
London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument [Line Items]
Debt Instrument, Basis Spread on Variable Rate	1.70%
Secured Mortgage Note [Member]
Debt Instrument [Line Items]
Initial Interest Rate		3.93%		3.93%
Spread over Initial Interest Rate option 1		200		200
Spread over Initial Interest Rate option 2		400		400
Indebtedness Weighted Average Remaining Maturity				9 years 3 months 18 days
Long-term Debt, Term		7 years		7 years
Debt, Term Of Extension				5 years
Retail Segment [Member]
Debt Instrument [Line Items]
Interest Expense, Long-term Debt		$ 6,539	6,422	$ 19,876	18,123
Office Building
Debt Instrument [Line Items]
Interest Expense, Long-term Debt		6,699	5,909	20,256	16,617
Interest Expense		6,699	5,909	20,256	16,617
Multifamily Communities
Debt Instrument [Line Items]
Interest Expense, Long-term Debt		15,739	16,108	46,537	46,729
Interest Expense		$ 15,739	$ 16,108	$ 46,537	$ 46,729

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Indebtedness debt covenants (Details) - USD ($)	9 Months Ended
	Sep. 30, 2020	Mar. 23, 2018
debt covenants [Line Items]
dividend restriction AFFO	95.00%
Line of Credit Facility, Maximum Borrowing Capacity		$ 200,000,000
maximum dividends debt covenant	$ 179,800,000
Minimum Net Worth Required for Compliance	$ 1,900,000,000
debt yield	9.89%
payout ratio	88.10%
Total leverage ratio	63.70%

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Indebtedness Credit Facility (Details) - USD ($)	9 Months Ended
	Sep. 30, 2020	Dec. 20, 2019	Mar. 23, 2018
Line of Credit Facility [Line Items]
Short-term Debt		$ 70,000,000.0
Short-term Debt, Weighted Average Interest Rate, at Point in Time	3.91%
Line of Credit Facility, Maximum Borrowing Capacity			$ 200,000,000
Revolving Credit Facility [Member]
Line of Credit Facility [Line Items]
Indebtedness Weighted Average Remaining Maturity	1 year 3 months 18 days
Minimum [Member]
Line of Credit Facility [Line Items]
Line of Credit Facility, Unused Capacity, Commitment Fee Percentage	0.25%
Minimum [Member] | Revolving Credit Facility [Member]
Line of Credit Facility [Line Items]
Loans Receivable, Basis Spread on Variable Rate	2.75%
Maximum [Member]
Line of Credit Facility [Line Items]
Line of Credit Facility, Unused Capacity, Commitment Fee Percentage	0.30%
Maximum [Member] | Revolving Credit Facility [Member]
Line of Credit Facility [Line Items]
Loans Receivable, Basis Spread on Variable Rate	3.50%

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Indebtedness Acquisition Credit Facility (Details)	9 Months Ended
	Sep. 30, 2020 USD ($) number_of_properties	Mar. 01, 2021 USD ($)	Mar. 25, 2019 USD ($)	Mar. 23, 2018 USD ($)	Feb. 28, 2017 USD ($)
Line of Credit Facility [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity				$ 200,000,000
Unamortized Debt Issuance Expense	$ 800,000
Line Of Credit, Number Of Extension Options | number_of_properties	2
Line Of Credit, Extension Term	1 year
February 2017 facility [Member]
Line of Credit Facility [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity			$ 90,000,000		$ 200,000,000
Subsequent Event [Member] | February 2017 facility [Member]
Line of Credit Facility [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity		$ 300,000,000
Revolving Credit Facility [Member]
Line of Credit Facility [Line Items]
Indebtedness Weighted Average Remaining Maturity	1 year 3 months 18 days
acquisition facility [Member]
Line of Credit Facility [Line Items]
Unamortized Debt Issuance Expense	$ 100,000
Indebtedness Weighted Average Remaining Maturity	1 year 4 months 24 days
Minimum [Member] | Revolving Credit Facility [Member]
Line of Credit Facility [Line Items]
Loans Receivable, Basis Spread on Variable Rate	2.75%
Minimum [Member] | Revolving Credit Facility [Member] | February 2017 facility [Member]
Line of Credit Facility [Line Items]
Loans Receivable, Basis Spread on Variable Rate	1.75%
Maximum [Member] | Revolving Credit Facility [Member]
Line of Credit Facility [Line Items]
Loans Receivable, Basis Spread on Variable Rate	3.50%
Maximum [Member] | Revolving Credit Facility [Member] | February 2017 facility [Member]
Line of Credit Facility [Line Items]
Loans Receivable, Basis Spread on Variable Rate	2.20%

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Indebtedness Mortgage debt summary by segment (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2020	Jun. 29, 2020	Dec. 31, 2019	Jun. 29, 2019
Debt Instrument [Line Items]
Secured Debt	$ 2,814,169
Long-term Debt, Weighted Average Interest Rate, at Point in Time	3.83%
average maturity mortgage debt	9 years 1 month 6 days
Deferred Finance Costs, Own-share Lending Arrangement, Issuance Costs, Accumulated Amortization Adjustment	$ (44,338)
Mark-to-Market debt	(4,038)
Long-term Debt	2,765,793	$ 297,800	$ 2,567,022	$ 143,800
Fixed Income Interest Rate [Member]
Debt Instrument [Line Items]
Secured Debt	$ 2,649,101
Long-term Debt, Weighted Average Interest Rate, at Point in Time	3.86%
average maturity mortgage debt	9 years 6 months
Variable Income Interest Rate [Member]
Debt Instrument [Line Items]
Secured Debt	$ 165,067
Long-term Debt, Weighted Average Interest Rate, at Point in Time	3.49%
average maturity mortgage debt	3 years 3 months 18 days
multifamily community [Domain]
Debt Instrument [Line Items]
Secured Debt	$ 1,560,823
Long-term Debt, Weighted Average Interest Rate, at Point in Time	3.68%
average maturity mortgage debt	8 years 4 months 24 days
multifamily community [Domain] | Fixed Income Interest Rate [Member]
Debt Instrument [Line Items]
Secured Debt	$ 1,442,905
Long-term Debt, Weighted Average Interest Rate, at Point in Time	3.68%
average maturity mortgage debt	8 years 9 months 18 days
multifamily community [Domain] | Variable Income Interest Rate [Member]
Debt Instrument [Line Items]
Secured Debt	$ 117,917
Long-term Debt, Weighted Average Interest Rate, at Point in Time	3.76%
average maturity mortgage debt	3 years 3 months 18 days
Retail Segment [Member]
Debt Instrument [Line Items]
Secured Debt	$ 618,470
Long-term Debt, Weighted Average Interest Rate, at Point in Time	3.91%
average maturity mortgage debt	7 years 2 months 12 days
Retail Segment [Member] | Fixed Income Interest Rate [Member]
Debt Instrument [Line Items]
Secured Debt	$ 571,320
Long-term Debt, Weighted Average Interest Rate, at Point in Time	4.00%
average maturity mortgage debt	7 years 7 months 6 days
Retail Segment [Member] | Variable Income Interest Rate [Member]
Debt Instrument [Line Items]
Secured Debt	$ 47,150
Long-term Debt, Weighted Average Interest Rate, at Point in Time	2.81%
average maturity mortgage debt	3 years 1 month 6 days
Office Building
Debt Instrument [Line Items]
Secured Debt	$ 634,876
Long-term Debt, Weighted Average Interest Rate, at Point in Time	4.13%
average maturity mortgage debt	12 years 8 months 12 days
Office Building | Fixed Income Interest Rate [Member]
Debt Instrument [Line Items]
Secured Debt	$ 634,876
Long-term Debt, Weighted Average Interest Rate, at Point in Time	4.13%
average maturity mortgage debt	12 years 8 months 12 days
Office Building | Variable Income Interest Rate [Member]
Debt Instrument [Line Items]
Secured Debt	$ 0
Long-term Debt, Weighted Average Interest Rate, at Point in Time	0.00%
average maturity mortgage debt	0 years

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Indebtedness New mortgages (Details) - USD ($)				9 Months Ended
	Jun. 29, 2020	Dec. 20, 2019	Jun. 29, 2019	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019
Debt Instrument [Line Items]
Long-term Debt	$ 297,800,000		$ 143,800,000	$ 2,765,793,000		$ 2,567,022,000
Mortgage Loans on Real Estate, Interest Rate				4.50%
Debt Issuance Costs, Net				$ 879,000		1,286,000
Loans Receivable, Gross, Commercial, Real Estate				323,629,000		$ 352,582,000
Payments of Loan Costs				7,584,000	$ 557,000
deferred finance costs				9,421,000	4,018,000
Long-term Debt, Refinanced				356,100,000	$ 157,000,000.0
London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument [Line Items]
Debt Instrument, Basis Spread on Variable Rate		1.70%
Mortgages [Member]
Debt Instrument [Line Items]
Loans Receivable, Gross, Commercial, Real Estate				178,450,000
251 armour [Domain] | Mortgages [Member]
Debt Instrument [Line Items]
Loans Receivable, Gross, Commercial, Real Estate				$ 3,522,000
wakefield crossing [Domain]
Debt Instrument [Line Items]
Mortgage Loans on Real Estate, Interest Rate				3.66%
wakefield crossing [Domain] | Mortgages [Member]
Debt Instrument [Line Items]
Loans Receivable, Gross, Commercial, Real Estate				$ 7,891,000
morrocroft [Domain]
Debt Instrument [Line Items]
Mortgage Loans on Real Estate, Interest Rate				3.40%
morrocroft [Domain] | Mortgages [Member]
Debt Instrument [Line Items]
Loans Receivable, Gross, Commercial, Real Estate				$ 70,000,000
wiregrass [Domain]
Debt Instrument [Line Items]
Mortgage Loans on Real Estate, Interest Rate				2.90%
wiregrass [Domain] | Mortgages [Member]
Debt Instrument [Line Items]
Loans Receivable, Gross, Commercial, Real Estate				$ 52,000,000
parkside [Domain]
Debt Instrument [Line Items]
Mortgage Loans on Real Estate, Interest Rate				2.95%
parkside [Domain] | Mortgages [Member]
Debt Instrument [Line Items]
Loans Receivable, Gross, Commercial, Real Estate				$ 45,037,000
city park view [Domain]
Debt Instrument [Line Items]
Long-term Debt	$ 19,800,000
Mortgage Loans on Real Estate, Interest Rate	3.27%			2.75%
Payments of Loan Costs				$ 1,314,000
deferred finance costs				314,000
Long-term Debt, Refinanced				29,000,000.0
Ursa [Member]
Debt Instrument [Line Items]
Long-term Debt	$ 31,400,000
Payments of Loan Costs				0
deferred finance costs				0
Long-term Debt, Refinanced				$ 0
Ursa [Member] | London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument [Line Items]
Mortgage Loans on Real Estate, Interest Rate	3.00%
aster at lely [Domain]
Debt Instrument [Line Items]
Long-term Debt	$ 30,700,000
Mortgage Loans on Real Estate, Interest Rate	3.84%			2.95%
Payments of Loan Costs				$ 293,000
deferred finance costs				2,777,000
Long-term Debt, Refinanced				$ 50,400,000
avenues at northpointe [Domain]
Debt Instrument [Line Items]
Long-term Debt	$ 26,000,000.0
Mortgage Loans on Real Estate, Interest Rate	3.16%			2.79%
Payments of Loan Costs				$ 166,000
deferred finance costs				1,247,000
Long-term Debt, Refinanced				$ 33,500,000
avenues at cypress [Domain]
Debt Instrument [Line Items]
Long-term Debt	$ 20,500,000
Mortgage Loans on Real Estate, Interest Rate	3.43%			2.96%
Payments of Loan Costs				$ 1,607,000
deferred finance costs				336,000
Long-term Debt, Refinanced				$ 28,400,000
avenues at lakewood ranch [Domain]
Debt Instrument [Line Items]
Long-term Debt	$ 27,800,000
Mortgage Loans on Real Estate, Interest Rate	3.55%			2.99%
Payments of Loan Costs				$ 2,457,000
deferred finance costs				384,000
Long-term Debt, Refinanced				$ 36,600,000
crosstown walk [Domain]
Debt Instrument [Line Items]
Long-term Debt	$ 29,900,000
Mortgage Loans on Real Estate, Interest Rate	3.90%			2.92%
Payments of Loan Costs				$ 248,000
deferred finance costs				2,841,000
Long-term Debt, Refinanced				46,500,000
summit 2 [Domain]
Debt Instrument [Line Items]
Long-term Debt	$ 13,100,000
Mortgage Loans on Real Estate, Interest Rate	4.49%
Payments of Loan Costs				779,000
deferred finance costs				136,000
Long-term Debt, Refinanced				$ 20,700,000
summit 2 [Domain] | London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument [Line Items]
Mortgage Loans on Real Estate, Interest Rate				2.78%
lenox village town center [Domain]
Debt Instrument [Line Items]
Long-term Debt			$ 29,200,000
Mortgage Loans on Real Estate, Interest Rate			3.82%		4.34%
Payments of Loan Costs					$ 17,000
deferred finance costs					1,153,000
Long-term Debt, Refinanced					$ 39,300,000
royal lakes marketplace [Domain]
Debt Instrument [Line Items]
Long-term Debt			$ 9,500,000
Mortgage Loans on Real Estate, Interest Rate					4.29%
Payments of Loan Costs					$ 52,000
deferred finance costs					287,000
Long-term Debt, Refinanced					$ 9,700,000
royal lakes marketplace [Domain] | London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument [Line Items]
Mortgage Loans on Real Estate, Interest Rate	2.50%
Cherokee Plaza [Member]
Debt Instrument [Line Items]
Long-term Debt			24,500,000
Mortgage Loans on Real Estate, Interest Rate					4.28%
Payments of Loan Costs					$ 317,000
deferred finance costs					723,000
Long-term Debt, Refinanced					$ 25,200,000
Cherokee Plaza [Member] | London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument [Line Items]
Mortgage Loans on Real Estate, Interest Rate	2.25%
Spring Hill Plaza [Member]
Debt Instrument [Line Items]
Long-term Debt			$ 9,100,000
Mortgage Loans on Real Estate, Interest Rate			3.36%		3.72%
Payments of Loan Costs					$ 0
deferred finance costs					195,000
Long-term Debt, Refinanced					$ 8,200,000
Parkway Town Centre [Member]
Debt Instrument [Line Items]
Long-term Debt			$ 6,600,000
Mortgage Loans on Real Estate, Interest Rate			3.36%		3.72%
Payments of Loan Costs					$ 0
deferred finance costs					195,000
Long-term Debt, Refinanced					$ 8,100,000
Deltona Landings [Member]
Debt Instrument [Line Items]
Long-term Debt			$ 6,500,000
Mortgage Loans on Real Estate, Interest Rate			3.48%		4.18%
Payments of Loan Costs					$ 5,000
deferred finance costs					204,000
Long-term Debt, Refinanced					$ 6,300,000
Barclay Crossing [Member]
Debt Instrument [Line Items]
Long-term Debt			$ 6,100,000
Mortgage Loans on Real Estate, Interest Rate			3.48%		4.18%
Payments of Loan Costs					$ 4,000
deferred finance costs					209,000
Long-term Debt, Refinanced					$ 6,300,000
Parkway Center [Member]
Debt Instrument [Line Items]
Long-term Debt			$ 4,300,000
Mortgage Loans on Real Estate, Interest Rate			3.48%		4.18%
Payments of Loan Costs					$ 3,000
deferred finance costs					148,000
Long-term Debt, Refinanced					$ 4,600,000
Powder Springs [Member]
Debt Instrument [Line Items]
Long-term Debt			$ 6,900,000
Mortgage Loans on Real Estate, Interest Rate			3.48%		3.65%
Payments of Loan Costs					$ 4,000
deferred finance costs					236,000
Long-term Debt, Refinanced					$ 8,000,000.0
Citi Lakes [Member]
Debt Instrument [Line Items]
Long-term Debt			$ 41,100,000
Mortgage Loans on Real Estate, Interest Rate					3.66%
Payments of Loan Costs					$ 155,000
deferred finance costs					668,000
Long-term Debt, Refinanced					$ 41,300,000
Citi Lakes [Member] | London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument [Line Items]
Mortgage Loans on Real Estate, Interest Rate	2.17%
citrus village
Debt Instrument [Line Items]
Long-term Debt	$ 28,500,000
Mortgage Loans on Real Estate, Interest Rate	3.65%			2.95%
Payments of Loan Costs				$ 704,000
deferred finance costs				522,000
Long-term Debt, Refinanced				$ 40,900,000
Village at Baldwin Park
Debt Instrument [Line Items]
Long-term Debt	$ 70,100,000
Mortgage Loans on Real Estate, Interest Rate	4.16%			3.59%
Payments of Loan Costs				$ 16,000
deferred finance costs				864,000
Long-term Debt, Refinanced				$ 70,100,000

XML

Income Taxes (Details) - USD ($)	Sep. 30, 2020	Dec. 31, 2010
Operating Loss Carryforwards [Line Items]
Deferred Tax Assets, Net of Valuation Allowance		$ 298,100
DeferredTaxAssetsValuationAllowancePercentage	100.00%

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Commitments and Contingencies (Details) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Jan. 31, 2020
Commitments and Contingencies Disclosure [Abstract]
Lease term			11 years
Rent	$ 15.3
cumulative manager's fees deferred	25.6	$ 24.1
Unfunded Tenant Leasing Commissions and Tenant Allowances	6.2
real estate loan balances unfunded	$ 63.0

XML

Segment information (Details)	3 Months Ended				9 Months Ended
	Sep. 30, 2020 USD ($) business leases tenants	Jun. 30, 2020 USD ($)	Sep. 30, 2019 USD ($)	Jun. 30, 2019 USD ($)	Sep. 30, 2020 USD ($) business leases number_of_properties tenants	Sep. 30, 2019 USD ($)	Dec. 31, 2019 USD ($)	Jan. 01, 2019 USD ($)
Segment Reporting Information [Line Items]
Number of Operating Segments | number_of_properties					4
Assets	$ 4,731,062,000				$ 4,731,062,000		$ 4,770,560,000
Operating Leases, Income Statement, Lease Revenue	114,831,000		$ 105,049,000		338,271,000	$ 298,569,000
Financing Revenues	11,271,000		14,710,000		38,115,000	44,675,000
miscellaneous revenues	266,000		0		812,000	0
adjusted funds from operations	84,304,000		80,348,000		259,059,000	234,686,000
Income (Loss) from Continuing Operations, Including Portion Attributable to Noncontrolling Interest	(3,602,000)		(2,137,000)		(199,075,000)	(6,094,000)
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest	26,746,000		26,086,000		(102,321,000)	75,093,000
Interest Expense	29,879,000		28,799,000		90,608,000	83,166,000
Depreciation	41,867,000		37,805,000		123,943,000	110,647,000
Share-based Compensation	152,000		0		(5,463,000)	0
Gain (Loss) on Condemnation	0		(591,000)		0	(1,316,000)
Gains (Losses) on Sales of Investment Real Estate	(3,261,000)		0		(3,261,000)	0
Gains (Losses) on Sales of Investment Real Estate	0		0		0	(4,000)
Fair Value, Assets Measured on Recurring Basis, Change in Unrealized Gain (Loss)	0		0		0	(747,000)
Gain (Loss) on Extinguishment of Debt	518,000		15,000		6,674,000	84,000
Trading Securities, Unrealized Holding Gain	(49,000)		0		(528,000)	0
loan fees received					882,000	1,347,000
noncash loan interest income	577,000		818,000		179,828,000	1,143,000
Management fees net of deferrals	582,000		305,000		1,058,000	922,000
Loans and Leases Receivable, Allowance	0		5,530,000		1,963,000	16,144,000
Income (Loss) from Equity Method Investments, Net of Dividends or Distributions	120,000		0		120,000	0
rental and other property revenues	115,160,000		105,493,000		342,149,000	300,886,000
Revenues	$ 126,697,000		120,203,000		$ 381,076,000	345,561,000
Number Of Retail Tenants | tenants	900				900
Number Of Leases In Bankruptcy Proceedings | leases	11				11
Number Of Companies With Leases From Company In Bankruptcy Proceedings | business	6				6
Payments to Acquire Productive Assets	$ 12,144,000		10,673,000		$ 37,953,000	29,120,000
Contract with Customer, Liability	800,000				800,000
Contract with Customer, Liability, Revenue Recognized		$ 2,800,000		$ 2,800,000
Multifamily Communities
Segment Reporting Information [Line Items]
Assets	2,146,061,000				2,146,061,000		2,047,905,000
adjusted funds from operations	33,267,000		30,191,000		103,414,000	90,825,000
Interest Expense	15,739,000		16,108,000		46,537,000	46,729,000
Depreciation	26,516,000		23,869,000		77,745,000	74,304,000
financingsegment [Member]
Segment Reporting Information [Line Items]
Assets	354,130,000				354,130,000		409,226,000
adjusted funds from operations	11,245,000		14,710,000		38,089,000	44,675,000
Interest Expense	902,000		360,000		3,939,000	1,697,000
New Market Properties [Member]
Segment Reporting Information [Line Items]
adjusted funds from operations	19,235,000		18,211,000		57,381,000	50,441,000
Interest Expense	6,539,000		6,422,000		19,876,000	18,123,000
Depreciation	12,688,000		11,677,000		39,410,000	32,644,000
rental and other property revenues	26,707,000		25,270,000		80,815,000	70,211,000
Payments to Acquire Productive Assets	2,017,000		2,699,000		$ 4,557,000	5,703,000
Average Recurring Rental Revenue Collections, After Rent Deferrrals					1.00%
Retail Segment [Member]
Segment Reporting Information [Line Items]
Assets	1,074,584,000				$ 1,074,584,000		1,125,230,000
Office Building
Segment Reporting Information [Line Items]
Assets	1,130,962,000				1,130,962,000		1,123,212,000
adjusted funds from operations	20,291,000		17,236,000		59,363,000	48,745,000
Interest Expense	6,699,000		5,909,000		20,256,000	16,617,000
Depreciation	12,590,000		10,693,000		35,941,000	30,243,000
Contract with Customer, Liability		$ 36,900,000						$ 47,000,000.0
Other Assets [Member]
Segment Reporting Information [Line Items]
Assets	25,325,000				25,325,000		$ 64,987,000
All Other Segments [Member]
Segment Reporting Information [Line Items]
adjusted funds from operations	7,898,000		1,370,000		23,113,000	4,197,000
Miscellaneous
Segment Reporting Information [Line Items]
adjusted funds from operations	266,000		0		812,000	0
Residential Properties
Segment Reporting Information [Line Items]
rental and other property revenues	60,643,000		56,008,000		180,325,000	162,669,000
Payments to Acquire Productive Assets	4,348,000		4,709,000		10,938,000	11,377,000
Preferred Office Properties
Segment Reporting Information [Line Items]
rental and other property revenues	27,810,000		24,215,000		81,009,000	68,006,000
Payments to Acquire Productive Assets	$ 5,779,000		$ 3,265,000		$ 22,458,000	$ 12,040,000

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Income (Loss) per Share (Details) - USD ($)		3 Months Ended		9 Months Ended		12 Months Ended
	Jan. 02, 2018	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019	Feb. 14, 2020
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
minority interest partnership units outstanding		742,413		742,413
Restricted Stock Units outstanding				54,000
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest		$ 26,746,000	$ 26,086,000	$ (102,321,000)	$ 75,093,000
Gains (Losses) on Sales of Investment Real Estate		0	0	0	4,000
Net Income (Loss) Attributable to Parent		(3,494,000)	(2,078,000)	(195,560,000)	(5,956,000)
Deemed noncash dividend				(499,000)	(358,000)
Net Income (Loss) Available to Common Stockholders, Basic		$ (39,499,000)	(31,529,000)	$ (300,270,000)	(88,497,000)
Incremental Common Shares from conversion of outstanding units		27,767,000		27,767,000
Share-based Compensation		$ (152,000)	$ 0	$ 5,463,000	$ 0
Incremental Common Shares Attributable to Dilutive Effect of Conversion of Debt Securities		0	0	0	0
Series A Redeemable Preferred Stock, par value per share							$ 0.01
ClassBUnits [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period	256,087
Share-based Compensation						$ 65,000
Restricted Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number		548,000		548,000		20,000
Share-based Compensation				$ 548,000
Performance based restricted stock units
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Restricted Stock Units outstanding				273,000
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period	272,929
mShares [Domain]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Preferred Stock, Shares Outstanding		91,000	90,000	91,000	90,000
mShares [Domain] | Minimum [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Preferred Stock, Dividend Rate, Percentage				5.75%
mShares [Domain] | Maximum [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Preferred Stock, Dividend Rate, Percentage				7.50%
Series A Preferred Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Preferred Stock, Shares Outstanding		1,991,000	1,932,000	1,991,000	1,932,000	2,028,000
Preferred Stock, Dividend Rate, Percentage				6.00%
Series A Redeemable Preferred Stock, par value per share		$ 0.01		$ 0.01		$ 0.01
preferred stock stated value per share		$ 1,000		$ 1,000
Series M Preferred Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Preferred Stock, Shares Outstanding		91,000		91,000		103,000
Series A Redeemable Preferred Stock, par value per share		$ 0.01		$ 0.01		$ 0.01
Common Class A [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Common Unit, Outstanding		742,000	856,000	742,000	856,000
Series A1 Preferred Stock
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Preferred Stock, Shares Outstanding		103,000		103,000		5,000
Series A Redeemable Preferred Stock, par value per share		$ 0.01		$ 0.01		$ 0.01
Series M1 Preferred Stock
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Preferred Stock, Shares Outstanding		13,000		13,000		0
Series A Redeemable Preferred Stock, par value per share		$ 0.01		$ 0.01		$ 0.01
Series M1 Preferred Stock | Minimum [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Preferred Stock, Dividend Rate, Percentage				6.10%
Series M1 Preferred Stock | Maximum [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Preferred Stock, Dividend Rate, Percentage				7.10%

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Fair Values of Financial Instruments (Details) - USD ($)	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Jun. 29, 2020	Dec. 31, 2019	Dec. 20, 2019	Jun. 29, 2019
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
line of credit receivable				$ 41,917,000
financial assets carrying value				417,377,000
Mortgage notes payable	$ 2,765,793,000		$ 297,800,000	2,567,022,000		$ 143,800,000
Line of Credit Facility, Amount Outstanding	33,000,000			0
Short-term Debt					$ 70,000,000.0
Debt, Long-term and Short-term, Combined Amount	2,847,169,000			2,679,829,000
Real estate loans carrying value including accrued interest				375,460,000
mortgage principal received from consolidated VIE	0	$ (5,024,000)
Fair Value, Inputs, Level 2 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Assets, Fair Value Disclosure				0
real estate related loans fair value				0
Financial and Nonfinancial Liabilities, Fair Value Disclosure	0			0
Fair Value, Inputs, Level 3 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Assets, Fair Value Disclosure				424,290,000
real estate related loans fair value				382,373,000
Financial and Nonfinancial Liabilities, Fair Value Disclosure	2,899,502,000			2,729,242,000
Fair Value, Inputs, Level 1 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
real estate related loans fair value				0
Mortgages [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
real estate related loans fair value				382,373,000
Reported Value Measurement [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
line of credit receivable	11,905,000
financial assets carrying value	346,290,000
Real estate loans carrying value including accrued interest	334,385,000
Reported Value Measurement [Member] | Mortgages [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Mortgage notes payable	2,814,169,000			2,609,829,000
Reported Value Measurement [Member] | Term Note
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Short-term Debt				70,000,000
Reported Value Measurement [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Line of Credit Facility, Amount Outstanding	33,000,000			0
Estimate of Fair Value Measurement [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
line of credit receivable	11,905,000
Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Assets, Fair Value Disclosure	0
Long-term Debt, Fair Value	0			0
Line of Credit Facility, Amount Outstanding	0			0
Short-term Debt, Fair Value				0
Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Assets, Fair Value Disclosure	360,513,000
real estate related loans fair value	348,608,000
Long-term Debt, Fair Value	2,866,502,000			2,659,242,000
Line of Credit Facility, Amount Outstanding	33,000,000			0
Short-term Debt, Fair Value				70,000,000
Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Assets, Fair Value Disclosure	0
Long-term Debt, Fair Value	0			0
Line of Credit Facility, Amount Outstanding	0			0
Short-term Debt, Fair Value				0
Financial and Nonfinancial Liabilities, Fair Value Disclosure	0			$ 0
Estimate of Fair Value Measurement [Member] | Mortgages [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Assets, Fair Value Disclosure	$ 348,608,000

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Subsequent Events (Details) $ / shares in Units, $ in Thousands		1 Months Ended		3 Months Ended		9 Months Ended
	Nov. 03, 2020 USD ($)	Oct. 31, 2020 shares	Jul. 31, 2020 USD ($) shares	Sep. 30, 2020 USD ($) $ / shares	Sep. 30, 2019 USD ($) $ / shares	Sep. 30, 2020 USD ($) $ / shares	Sep. 30, 2019 USD ($) $ / shares	Nov. 02, 2020 number_of_properties	Sep. 30, 2020	Sep. 30, 2020 ft²	Jun. 29, 2020 USD ($)	Dec. 31, 2019 USD ($)	Jun. 29, 2019 USD ($)
Subsequent Event [Line Items]
Proceeds from Issuance of Preferred Stock and Preference Stock					$ 17,156		$ 46,765
Long-term Debt				$ 2,765,793		$ 2,765,793					$ 297,800	$ 2,567,022	$ 143,800
Common Stock, Dividends, Per Share, Declared | $ / shares				$ 0.175	$ 0.2625	$ 0.6125	$ 0.785
Number of units in real estate property									12,936	680		12,256
Subsequent Event [Member]
Subsequent Event [Line Items]
Proceeds from Issuance of Redeemable Preferred Stock			$ 2,800
Proceeds from Sale of Real Estate	$ 478,700
Subsequent Event [Member] | The Blake [Member]
Subsequent Event [Line Items]
Number of units in real estate property | number_of_properties								281
Series M Preferred Stock [Member] | Subsequent Event [Member]
Subsequent Event [Line Items]
Stock Redeemed or Called During Period, Shares | shares		862
Series M Preferred Stock [Member] | Subsequent Event [Member] | Unitsissued [Member]
Subsequent Event [Line Items]
Unitsissuedcumulative | shares			2,914
Proceeds from Issuance of Preferred Stock and Preference Stock			$ 12,600
Series A Preferred Stock [Member]
Subsequent Event [Line Items]
Proceeds from Issuance of Preferred Stock and Preference Stock					$ 116,828	$ 64,484	$ 369,420
Series A Preferred Stock [Member] | Subsequent Event [Member]
Subsequent Event [Line Items]
Stock Redeemed or Called During Period, Shares | shares		23,468
Series A Preferred Stock [Member] | Subsequent Event [Member] | Unitsissued [Member]
Subsequent Event [Line Items]
Unitsissuedcumulative | shares			13,986

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Operating Leases (Details) - USD ($)	3 Months Ended		9 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Lessor, Lease, Description [Line Items]
Operating Leases, Variable Rental Revenue			$ 31,200,000	$ 29,200,000
Contract with Customer, Liability, Revenue Recognized	$ 2,800,000	$ 2,800,000
2020			827,000
2021			3,302,000
2022			3,055,000
2023			2,606,000
2024			3,229,000
Thereafter			4,299,000
Lessee, Operating Lease, Liability, Payments, Due, Total			17,318,000
Rental Revenue
Lessor, Lease, Description [Line Items]
Contract with Customer, Liability, Revenue Recognized			330,400,000	$ 290,000,000.0
Office Space
Lessor, Lease, Description [Line Items]
2020			723,000
2021			2,930,000
2022			2,855,000
2023			2,497,000
2024			3,139,000
Thereafter			3,163,000
Lessee, Operating Lease, Liability, Payments, Due, Total			15,307,000
Ground Leases
Lessor, Lease, Description [Line Items]
2020			13,000
2021			51,000
2022			51,000
2023			51,000
2024			51,000
Thereafter			1,136,000
Lessee, Operating Lease, Liability, Payments, Due, Total			1,353,000
Office Equipment
Lessor, Lease, Description [Line Items]
2020			91,000
2021			321,000
2022			149,000
2023			58,000
2024			39,000
Thereafter			0
Lessee, Operating Lease, Liability, Payments, Due, Total			$ 658,000

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Operating Leases - Lease Expense (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2020 USD ($)
Lessee, Lease, Description [Line Items]
Operating Lease, Lease Income, Lease Payments	$ 2,223
Lease, Cost	$ 2,268
Office Space
Lessee, Lease, Description [Line Items]
Operating Lease, Weighted Average Discount Rate, Percent	3.00%
Operating Lease, Weighted Average Remaining Lease Term	5 years 2 months 12 days
Operating Lease, Lease Income, Lease Payments	$ 1,903
Lease, Cost	$ 1,942
Ground Leases
Lessee, Lease, Description [Line Items]
Operating Lease, Weighted Average Discount Rate, Percent	4.40%
Operating Lease, Weighted Average Remaining Lease Term	35 years 8 months 12 days
Operating Lease, Lease Income, Lease Payments	$ 38
Lease, Cost	$ 44
Office Equipment
Lessee, Lease, Description [Line Items]
Operating Lease, Weighted Average Discount Rate, Percent	3.00%
Operating Lease, Weighted Average Remaining Lease Term	2 years 3 months 18 days
Operating Lease, Lease Income, Lease Payments	$ 282
Lease, Cost	$ 282

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Schedule IV (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Mar. 31, 2020	Sep. 30, 2020
Mortgage Loans on Real Estate [Line Items]
current interest rate	8.48%	8.50%
Deferred interest rate	3.85%	3.84%
Mortgage Loans on Real Estate, Carrying Amount of Mortgages		$ 309,601