þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the quarterly period ended March 31, 2018 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the transition period from _________ to _________ |
Maryland | 36-4769184 | |
(State or Other Jurisdiction of | (I.R.S. Employer | |
Incorporation or Organization) | Identification No.) |
18100 Von Karman Avenue, Suite 500 | ||
Irvine, California | 92612 | |
(Address of Principal Executive Offices) | (Zip Code) |
Large Accelerated filer o | Accelerated filer o |
Non-Accelerated filer þ (Do not check if a smaller reporting company) | Smaller reporting company o |
Emerging growth company þ |
Page | |||
March 31, 2018 | December 31, 2017 | ||||||
(Unaudited) | |||||||
ASSETS | |||||||
Assets: | |||||||
Real Estate: | |||||||
Land | $ | 164,113,072 | $ | 164,113,072 | |||
Building and improvements | 1,397,981,828 | 1,394,779,659 | |||||
Total real estate, cost | 1,562,094,900 | 1,558,892,731 | |||||
Less accumulated depreciation and amortization | (165,150,626 | ) | (147,726,630 | ) | |||
Total real estate, net | 1,396,944,274 | 1,411,166,101 | |||||
Cash and cash equivalents | 24,202,447 | 27,298,855 | |||||
Restricted cash | 9,587,654 | 11,368,850 | |||||
Rents and other receivables | 2,485,440 | 1,722,065 | |||||
Other assets | 2,725,119 | 2,812,186 | |||||
Total assets | $ | 1,435,944,934 | $ | 1,454,368,057 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Liabilities: | |||||||
Accounts payable and accrued liabilities | $ | 25,395,038 | $ | 27,612,665 | |||
Notes Payable, net: | |||||||
Mortgage notes payable, net | 948,763,775 | 948,557,074 | |||||
Revolving credit facilities, net | 44,875,164 | 44,848,788 | |||||
Total notes payable, net | 993,638,939 | 993,405,862 | |||||
Distributions payable | 3,900,642 | 3,886,730 | |||||
Due to affiliates | 2,178,934 | 2,760,555 | |||||
Total liabilities | 1,025,113,553 | 1,027,665,812 | |||||
Commitments and contingencies (Note 9) | |||||||
Redeemable common stock | — | 36,397,062 | |||||
Stockholders’ Equity: | |||||||
Preferred stock, $0.01 par value per share; 100,000,000 shares authorized, no shares issued and outstanding | — | — | |||||
Common stock, $0.01 par value per share; 999,999,000 shares authorized, 51,024,374 and 50,842,640 shares issued and outstanding at March 31, 2018 and December 31, 2017, respectively | 510,244 | 508,426 | |||||
Convertible stock, $0.01 par value per share; 1,000 shares authorized, issued and outstanding as of March 31, 2018 and December 31, 2017, respectively | 10 | 10 | |||||
Additional paid-in capital | 673,041,680 | 633,186,743 | |||||
Cumulative distributions and net losses | (262,720,553 | ) | (243,389,996 | ) | |||
Total stockholders’ equity | 410,831,381 | 390,305,183 | |||||
Total liabilities and stockholders’ equity | $ | 1,435,944,934 | $ | 1,454,368,057 |
Three Months Ended March 31, | |||||||
2018 | 2017 | ||||||
Revenues: | |||||||
Rental income | $ | 36,800,334 | $ | 35,503,148 | |||
Tenant reimbursements and other | 4,566,692 | 4,201,627 | |||||
Total revenues | 41,367,026 | 39,704,775 | |||||
Expenses: | |||||||
Operating, maintenance and management | 9,974,835 | 9,450,859 | |||||
Real estate taxes and insurance | 5,685,380 | 6,232,047 | |||||
Fees to affiliates | 5,796,678 | 5,638,971 | |||||
Depreciation and amortization | 17,435,350 | 17,398,525 | |||||
Interest expense | 9,092,883 | 7,882,714 | |||||
General and administrative expenses | 1,399,994 | 1,513,512 | |||||
Acquisition costs | — | 1,185 | |||||
Total expenses | 49,385,120 | 48,117,813 | |||||
Net loss | $ | (8,018,094 | ) | $ | (8,413,038 | ) | |
Loss per common share — basic and diluted | $ | (0.16 | ) | $ | (0.17 | ) | |
Weighted average number of common shares outstanding — basic and diluted | 50,976,133 | 49,921,129 | |||||
Distributions declared per share | $ | 0.222 | $ | 0.222 |
Common Stock | Convertible Stock | Additional Paid-In Capital | Cumulative Distributions & Net Losses | Total Stockholders’ Equity | ||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||
BALANCE, December 31, 2016 | 49,698,486 | $ | 496,985 | 1,000 | $ | 10 | $ | 625,996,383 | $ | (164,445,092 | ) | $ | 462,048,286 | |||||||||||||
Issuance of common stock | 1,583,829 | 15,838 | — | — | 23,322,254 | — | 23,338,092 | |||||||||||||||||||
Transfers to redeemable common stock | — | — | — | — | (10,025,412 | ) | — | (10,025,412 | ) | |||||||||||||||||
Repurchase of common stock | (439,675 | ) | (4,397 | ) | — | — | (6,186,340 | ) | — | (6,190,737 | ) | |||||||||||||||
Distributions declared | — | — | — | — | — | (45,321,063 | ) | (45,321,063 | ) | |||||||||||||||||
Amortization of stock-based compensation | — | — | — | — | 79,858 | — | 79,858 | |||||||||||||||||||
Net loss | — | — | — | — | — | (33,623,841 | ) | (33,623,841 | ) | |||||||||||||||||
BALANCE, December 31, 2017 | 50,842,640 | 508,426 | 1,000 | 10 | 633,186,743 | (243,389,996 | ) | 390,305,183 | ||||||||||||||||||
Issuance of common stock | 383,906 | 3,840 | — | — | 5,697,190 | — | 5,701,030 | |||||||||||||||||||
Transfers from redeemable common stock | — | — | — | — | 37,028,102 | — | 37,028,102 | |||||||||||||||||||
Repurchase of common stock | (202,172 | ) | (2,022 | ) | — | — | (2,884,194 | ) | — | (2,886,216 | ) | |||||||||||||||
Distributions declared | — | — | — | — | — | (11,312,463 | ) | (11,312,463 | ) | |||||||||||||||||
Amortization of stock-based compensation | — | — | — | — | 13,839 | — | 13,839 | |||||||||||||||||||
Net loss | — | — | — | — | — | (8,018,094 | ) | (8,018,094 | ) | |||||||||||||||||
BALANCE, March 31, 2018 | 51,024,374 | $ | 510,244 | 1,000 | $ | 10 | $ | 673,041,680 | $ | (262,720,553 | ) | $ | 410,831,381 |
Three Months Ended March 31, | |||||||
2018 | 2017 | ||||||
Cash Flows from Operating Activities: | |||||||
Net loss | $ | (8,018,094 | ) | $ | (8,413,038 | ) | |
Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||
Depreciation and amortization | 17,435,350 | 17,398,525 | |||||
Loss on disposal of buildings and improvements | 180,041 | 8,529 | |||||
Amortization of deferred financing costs | 246,274 | 253,732 | |||||
Amortization of stock-based compensation | 13,839 | 19,869 | |||||
Change in fair value of interest rate cap agreements | (447,614 | ) | 255,002 | ||||
Amortization of loan discount | 88,746 | 88,746 | |||||
Insurance claim recoveries | (143,972 | ) | (11,834 | ) | |||
Changes in operating assets and liabilities: | |||||||
Rents and other receivables | (763,375 | ) | (170,380 | ) | |||
Other assets | 534,681 | 585,659 | |||||
Accounts payable and accrued liabilities | (1,525,012 | ) | (4,683,314 | ) | |||
Due to affiliates | (513,838 | ) | (1,237,692 | ) | |||
Net cash provided by operating activities | 7,087,026 | 4,093,804 | |||||
Cash Flows from Investing Activities: | |||||||
Additions to real estate investments | (3,466,412 | ) | (9,915,481 | ) | |||
Proceeds from insurance claims | 143,972 | 11,834 | |||||
Net cash used in investing activities | (3,322,440 | ) | (9,903,647 | ) | |||
Cash Flows from Financing Activities: | |||||||
Principal payments on mortgage notes payable | (101,943 | ) | (65,721 | ) | |||
Borrowings from revolving credit facilities | — | 10,000,000 | |||||
Payments of commissions on sale of common stock | (56,510 | ) | (57,569 | ) | |||
Distributions to common stockholders | (5,597,521 | ) | (5,255,684 | ) | |||
Repurchase of common stock | (2,886,216 | ) | (1,053,198 | ) | |||
Net cash (used in) provided by financing activities | (8,642,190 | ) | 3,567,828 | ||||
Net decrease in cash, cash equivalents and restricted cash | (4,877,604 | ) | (2,242,015 | ) | |||
Cash, cash equivalents and restricted cash, beginning of the period | 38,667,705 | 38,815,266 | |||||
Cash, cash equivalents and restricted cash, end of the period | $ | 33,790,101 | $ | 36,573,251 |
Three Months Ended March 31, | |||||||
2018 | 2017 | ||||||
Supplemental Disclosures of Cash Flow Information: | |||||||
Interest paid | $ | 8,705,963 | $ | 7,154,208 | |||
Supplemental Disclosures of Noncash Flow Transactions: | |||||||
Increase in distributions payable | $ | 13,912 | $ | 35,200 | |||
Distributions paid to common stockholders through common stock issuances pursuant to the distribution reinvestment plan | $ | 5,701,030 | $ | 5,787,328 | |||
Decrease in redeemable common stock | $ | (36,397,062 | ) | $ | (2,387,814 | ) | |
(Decrease) increase in redemptions payable | $ | (631,040 | ) | $ | 370,218 | ||
Decrease in accounts payable and accrued liabilities from additions to real estate investments | $ | (61,575 | ) | $ | (1,342,749 | ) | |
(Decrease) increase in due to affiliates from additions to real estate investments | $ | (11,273 | ) | $ | 12,037 | ||
Decrease in due to affiliates for commissions on sale of common stock | $ | (56,510 | ) | $ | (57,569 | ) |
• | Level 1: unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities; |
• | Level 2: quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations in which significant inputs and significant value drivers are observable in active markets; and |
• | Level 3: prices or valuation techniques where little or no market data is available that requires inputs that are both significant to the fair value measurement and unobservable. |
March 31, 2018 | ||||||||||||
Fair Value Measurements Using | ||||||||||||
Level 1 | Level 2 | Level 3 | ||||||||||
Assets: | ||||||||||||
Interest rate cap agreements | $ | — | $ | 795,023 | $ | — |
December 31, 2017 | ||||||||||||
Fair Value Measurements Using | ||||||||||||
Level 1 | Level 2 | Level 3 | ||||||||||
Assets: | ||||||||||||
Interest rate cap agreements | $ | — | $ | 347,409 | $ | — |
March 31, 2018 | ||||||||||||
Assets | ||||||||||||
Land | Building and Improvements | Total Real Estate | ||||||||||
Investments in real estate | $ | 164,113,072 | $ | 1,397,981,828 | $ | 1,562,094,900 | ||||||
Less: Accumulated depreciation and amortization | — | (165,150,626 | ) | (165,150,626 | ) | |||||||
Net investments in real estate and related lease intangibles | $ | 164,113,072 | $ | 1,232,831,202 | $ | 1,396,944,274 |
December 31, 2017 | ||||||||||||
Assets | ||||||||||||
Land | Building and Improvements | Total Real Estate | ||||||||||
Investments in real estate | $ | 164,113,072 | $ | 1,394,779,659 | $ | 1,558,892,731 | ||||||
Less: Accumulated depreciation and amortization | — | (147,726,630 | ) | (147,726,630 | ) | |||||||
Net investments in real estate and related lease intangibles | $ | 164,113,072 | $ | 1,247,053,029 | $ | 1,411,166,101 |
March 31, 2018 | December 31, 2017 | ||||||
Prepaid expenses | $ | 902,018 | $ | 1,411,353 | |||
Interest rate cap agreements | 795,023 | 347,409 | |||||
Other deposits | 1,028,078 | 1,053,424 | |||||
Other assets | $ | 2,725,119 | $ | 2,812,186 |
March 31, 2018 | ||||||||||||||||
Interest Rate Range | Weighted Average Interest Rate | |||||||||||||||
Type | Number of Instruments | Maturity Date Range | Minimum | Maximum | Principal Outstanding | |||||||||||
Variable rate(1) | 29 | 12/1/2021 - 9/1/2026 | 1-Mo LIBOR + 1.61% | 1-Mo LIBOR + 2.48% | 3.90% | $ | 888,312,403 | |||||||||
Fixed rate | 2 | 7/1/2025 - 5/1/2054 | 4.34 | % | 4.60 | % | 4.51% | 67,754,949 | ||||||||
Mortgage notes payable, gross | 31 | 3.92% | 956,067,352 | |||||||||||||
Discount, net(2) | (2,187,092 | ) | ||||||||||||||
Deferred financing costs, net(3) | (5,116,485 | ) | ||||||||||||||
Mortgage notes payable, net | $ | 948,763,775 |
December 31, 2017 | ||||||||||||||||
Interest Rate Range | Weighted Average Interest Rate | |||||||||||||||
Type | Number of Instruments | Maturity Date Range | Minimum | Maximum | Principal Outstanding | |||||||||||
Variable rate(1) | 29 | 12/1/2021 - 9/1/2026 | 1-Mo LIBOR + 1.61% | 1-Mo LIBOR + 2.48% | 3.58% | $ | 888,345,717 | |||||||||
Fixed rate | 2 | 7/1/2025 - 5/1/2054 | 4.34 | % | 4.60 | % | 4.51% | 67,823,579 | ||||||||
Mortgage notes payable, gross | 31 | 3.63% | 956,169,296 | |||||||||||||
Discount, net(2) | (2,275,838 | ) | ||||||||||||||
Deferred financing costs, net(3) | (5,336,384 | ) | ||||||||||||||
Mortgage notes payable, net | $ | 948,557,074 |
(1) | See Note 10 (Derivative Financial Instruments) for a discussion of the interest rate cap agreements used to manage the exposure to interest rate movement on the Company’s variable rate loans. |
(2) | Accumulated amortization related to the debt discount as of March 31, 2018 and December 31, 2017, was $534,447 and $445,701, respectively. |
(3) | Accumulated amortization related to deferred financing costs as of March 31, 2018 and December 31, 2017, was $2,454,554 and $2,234,655, respectively. |
Amount of Advance as of | ||||||||
March 31, 2018 | December 31, 2017 | |||||||
Principal balance on revolving line of credit, gross(1) | $ | 45,000,000 | $ | 45,000,000 | ||||
Deferred financing costs, net on revolving line of credit(2) | (124,836 | ) | (151,212 | ) | ||||
Revolving credit facilities, net | $ | 44,875,164 | $ | 44,848,788 |
(1) | Landings of Brentwood is pledged as collateral for repayment of amounts advanced under the Line of Credit. |
(2) | Accumulated amortization related to deferred financing costs in respect of the Line of Credit as of March 31, 2018 and December 31, 2017, was $200,164 and $173,788, respectively. |
Maturities During the Years Ending December 31, | ||||||||||||||||||||||||||||
Contractual Obligations | Total | Remainder of 2018 | 2019 | 2020 | 2021 | 2022 | Thereafter | |||||||||||||||||||||
Principal payments on outstanding debt(1) | $ | 1,001,067,352 | $ | 2,184,120 | $ | 49,904,419 | $ | 8,327,845 | $ | 49,841,647 | $ | 61,568,950 | $ | 829,240,371 |
(1) | Projected principal payments on outstanding debt obligations are based on the terms of the notes payable agreements. Amounts exclude the amortization of deferred financing costs and debt discount associated with the notes payable. |
Three Months Ended March 31, 2018 | Year Ended December 31, 2017 | |||||
Nonvested shares at the beginning of the period | 7,497 | 9,997 | ||||
Granted shares | — | 4,998 | ||||
Vested shares | — | (7,498 | ) | |||
Nonvested shares at the end of the period | 7,497 | 7,497 |
Grant Year | Weighted Average Fair Value | |||
2017 | $ | 14.85 | ||
2018 | n/a |
Share Purchase Anniversary | Repurchase Price on Repurchase Date(1)(4) | |
Less than 1 year | No Repurchase Allowed | |
1 year | 92.5% of Estimated Value per Share | |
2 years | 95.0% of Estimated Value per Share | |
3 years | 97.5% of Estimated Value per Share | |
4 years | 100.0% of Estimated Value per Share | |
In the event of a stockholder’s death or disability(2) | Average Issue Price for Shares(3) |
Share Purchase Anniversary | Repurchase Price on Repurchase Date(1)(4) | |
Less than 1 year | No Repurchase Allowed | |
1 year | 92.5% of the Share Repurchase Price | |
2 years | 95.0% of the Share Repurchase Price | |
3 years | 97.5% of the Share Repurchase Price | |
4 years | 100.0% of the Share Repurchase Price | |
In the event of a stockholder’s death or disability(2) | Average Issue Price for Shares(3) |
(1) | As adjusted for any stock dividends, combinations, splits, recapitalizations or any similar transaction with respect to the shares of common stock. Repurchase price includes the full amount paid for each share, including all sales commissions and dealer manager fees. |
(2) | The required one-year holding period does not apply to repurchases requested within two years after the death or disability of a stockholder. |
(3) | The purchase price per share for shares repurchased upon the death or disability of a stockholder will be equal to the average issue price per share for all of the stockholder’s shares. |
(4) | The “Share Repurchase Price” shall be 93% of the Estimated Value Per Share. The “Estimated Value per Share” means the most recently publicly disclosed estimated value per share determined by the Company’s board of directors. |
Incurred For The Three Months Ended March 31, | Payable (prepaid) as of | |||||||||||||||
2018 | 2017 | March 31, 2018 | December 31, 2017 | |||||||||||||
Consolidated Statements of Operations: | ||||||||||||||||
Expensed | ||||||||||||||||
Investment management fees(1) | $ | 4,262,253 | $ | 4,200,140 | $ | 3,024 | $ | — | ||||||||
Acquisition expenses(2) | — | 1,185 | — | — | ||||||||||||
Loan coordination fees(1) | — | — | — | 728,100 | ||||||||||||
Property management: | ||||||||||||||||
Fees(1) | 1,191,167 | 1,142,347 | 402,395 | 396,722 | ||||||||||||
Reimbursement of onsite personnel(3) | 3,562,735 | 3,439,433 | 873,894 | 766,894 | ||||||||||||
Other fees(1) | 343,258 | 296,484 | 36,945 | 41,950 | ||||||||||||
Other fees - property operations(3) | 23,649 | 26,707 | — | — | ||||||||||||
Other fees - G&A(4) | 9,299 | 21,145 | — | — | ||||||||||||
Other operating expenses(4) | 261,411 | 441,766 | 180,094 | 76,515 | ||||||||||||
Insurance proceeds(5) | — | (100,000 | ) | — | — | |||||||||||
Property insurance(6) | 379,094 | 40,270 | (153,412 | ) | (172,717 | ) | ||||||||||
Consolidated Balance Sheets: | ||||||||||||||||
Capitalized | ||||||||||||||||
Capital expenditures(7) | 5,622 | — | — | — | ||||||||||||
Construction management: | ||||||||||||||||
Fees(7) | 136,443 | 551,927 | 126,925 | 125,159 | ||||||||||||
Reimbursement of labor costs(7) | 232,591 | 1,021,294 | 49,828 | 62,876 | ||||||||||||
Additional paid-in capital | ||||||||||||||||
Selling commissions | — | — | 505,829 | 562,339 | ||||||||||||
$ | 10,407,522 | $ | 11,082,698 | $ | 2,025,522 | $ | 2,587,838 |
(1) | Included in fees to affiliates in the accompanying consolidated statements of operations. |
(2) | Included in acquisition costs in the accompanying consolidated statements of operations. |
(3) | Included in operating, maintenance and management in the accompanying consolidated statements of operations. |
(4) | Included in general and administrative expenses in the accompanying consolidated statements of operations. |
(5) | Included in tenant reimbursements and other in the accompanying consolidated statements of operations. |
(6) | Property related insurance expense and the amortization of the prepaid insurance deductible account are included in general and administrative expenses in the accompanying consolidated statements of operations. The amortization of the prepaid property insurance is included in operating, maintenance and management expenses in the accompanying consolidated statements of operations. The prepaid insurance is included in other assets in the accompanying consolidated balance sheets upon payment. |
(7) | Included in building and improvements in the accompanying consolidated balance sheets. |
March 31, 2018 | ||||||||||||||||||
Type | Maturity Date Range | Based on | Number of Instruments | Notional Amount | Variable Rate | Weighted Average Rate Cap | Fair Value | |||||||||||
Interest Rate Cap | 6/1/2018 - 1/1/2021 | One-Month LIBOR | 29 | $ | 888,368,100 | 1.88% | 3.21% | $ | 795,023 |
December 31, 2017 | ||||||||||||||||||
Type | Maturity Date Range | Based on | Number of Instruments | Notional Amount | Variable Rate | Weighted Average Rate Cap | Fair Value | |||||||||||
Interest Rate Cap | 6/1/2018 - 1/1/2021 | One-Month LIBOR | 29 | $ | 888,368,100 | 1.56% | 3.17% | $ | 347,409 |
• | the fact that we have a limited operating history and commenced operations on May 22, 2014; |
• | the fact that we have had a net loss for each quarterly and annual period since inception; |
• | changes in economic conditions generally and the real estate and debt markets specifically; |
• | our ability to secure resident leases for our multifamily properties at favorable rental rates; |
• | risks inherent in the real estate business, including resident defaults, potential liability relating to environmental matters and the lack of liquidity of real estate investments; |
• | the fact that we pay fees and expenses to our advisor and its affiliates that were not negotiated on an arm’s length basis and the fact that the payment of these fees and expenses increases the risk that our stockholders will not earn a profit on their investment in us; |
• | our ability to retain our executive officers and other key personnel of our advisor, our property manager and other affiliates of our advisor; |
• | our ability to generate sufficient cash flows to pay distributions for our stockholders; |
• | legislative or regulatory changes (including changes to the laws governing the taxation of real estate investment trusts, or REITs); |
• | the availability of capital; |
• | changes in interest rates; and |
• | changes to generally accepted accounting principles, or GAAP. |
Average Monthly Occupancy(1) | Average Monthly Rent(2) | ||||||||||||||||||||||||||||||
Property Name | Location | Purchase Date | Number of Units | Contract Purchase Price | Mortgage Debt Outstanding(3) | March 31, 2018 | December 31, 2017 | March 31, 2018 | December 31, 2017 | ||||||||||||||||||||||
1 | Villages at Spring Hill Apartments | Spring Hill, TN | 5/22/2014 | 176 | $ | 14,200,000 | $ | 9,888,255 | 95.5 | % | 93.8 | % | $ | 1,058 | $ | 1,076 | |||||||||||||||
2 | Harrison Place Apartments | Indianapolis, IN | 6/30/2014 | 307 | 27,864,250 | 19,438,144 | 94.5 | % | 93.5 | % | 955 | 942 | |||||||||||||||||||
3 | Club at Summer Valley | Austin, TX | 8/28/2014 | 260 | 21,500,000 | 14,977,248 | 93.5 | % | 94.6 | % | 871 | 926 | |||||||||||||||||||
4 | Terrace Cove Apartment Homes | Austin, TX | 8/28/2014 | 304 | 23,500,000 | 16,370,480 | 94.4 | % | 91.4 | % | 889 | 880 | |||||||||||||||||||
5 | The Residences on McGinnis Ferry | Suwanee, GA | 10/16/2014 | 696 | 98,500,000 | 73,416,111 | 91.2 | % | 88.6 | % | 1,234 | 1,272 | |||||||||||||||||||
6 | The 1800 at Barrett Lakes | Kennesaw, GA | 11/20/2014 | 500 | 49,000,000 | 34,196,251 | 91.4 | % | 91.4 | % | 1,013 | 973 | |||||||||||||||||||
7 | The Oasis | Colorado Springs, CO | 12/19/2014 | 252 | 40,000,000 | 27,884,830 | 94.8 | % | 92.9 | % | 1,367 | 1,344 | |||||||||||||||||||
8 | Columns on Wetherington | Florence, KY | 2/26/2015 | 192 | 25,000,000 | 17,409,170 | 93.8 | % | 91.7 | % | 1,057 | 1,061 | |||||||||||||||||||
9 | Preston Hills at Mill Creek | Buford, GA | 3/10/2015 | 464 | 51,000,000 | 35,573,646 | 92.2 | % | 92.5 | % | 1,141 | 1,136 | |||||||||||||||||||
10 | Eagle Lake Landing Apartments | Speedway, IN | 3/27/2015 | 277 | 19,200,000 | 13,328,054 | 94.9 | % | 93.5 | % | 834 | 837 | |||||||||||||||||||
11 | Reveal on Cumberland | Fishers, IN | 3/30/2015 | 220 | 29,500,000 | 21,575,355 | 94.1 | % | 93.2 | % | 1,067 | 1,072 | |||||||||||||||||||
12 | Randall Highlands Apartments | North Aurora, IL | 3/31/2015 | 146 | 32,115,000 | 22,374,331 | 91.8 | % | 90.4 | % | 1,675 | 1,747 |
Average Monthly Occupancy(1) | Average Monthly Rent(2) | ||||||||||||||||||||||||||||||
Property Name | Location | Purchase Date | Number of Units | Contract Purchase Price | Mortgage Debt Outstanding(3) | March 31, 2018 | December 31, 2017 | March 31, 2018 | December 31, 2017 | ||||||||||||||||||||||
13 | Heritage Place Apartments | Franklin, TN | 4/27/2015 | 105 | $ | 9,650,000 | $ | 7,048,417 | 89.5 | % | 96.2 | % | $ | 922 | $ | 1,052 | |||||||||||||||
14 | Rosemont at East Cobb | Marietta, GA | 5/21/2015 | 180 | 16,450,000 | 11,406,124 | 92.2 | % | 90.6 | % | 972 | 966 | |||||||||||||||||||
15 | Ridge Crossings Apartments | Hoover, AL | 5/28/2015 | 720 | 72,000,000 | 50,231,332 | 92.9 | % | 93.5 | % | 937 | 946 | |||||||||||||||||||
16 | Bella Terra at City Center | Aurora, CO | 6/11/2015 | 304 | 37,600,000 | 26,183,450 | 92.4 | % | 94.4 | % | 1,092 | 1,120 | |||||||||||||||||||
17 | Hearthstone at City Center | Aurora, CO | 6/25/2015 | 360 | 53,400,000 | 37,212,894 | 94.7 | % | 94.2 | % | 1,183 | 1,178 | |||||||||||||||||||
18 | Arbors at Brookfield | Mauldin, SC | 6/30/2015 | 702 | 66,800,000 | 45,144,457 | 90.6 | % | 92.7 | % | 871 | 881 | |||||||||||||||||||
19 | Carrington Park | Kansas City, MO | 8/19/2015 | 298 | 39,480,000 | 29,496,411 | 95.0 | % | 94.6 | % | 1,004 | 1,049 | |||||||||||||||||||
20 | Delano at North Richland Hills | North Richland Hills, TX | 8/26/2015 | 263 | 38,500,000 | 29,759,342 | 96.2 | % | 94.7 | % | 1,383 | 1,391 | |||||||||||||||||||
21 | Meadows at North Richland Hills | North Richland Hills, TX | 8/26/2015 | 252 | 32,600,000 | 25,409,973 | 95.2 | % | 95.6 | % | 1,304 | 1,290 | |||||||||||||||||||
22 | Kensington by the Vineyard | Euless, TX | 8/26/2015 | 259 | 46,200,000 | 34,069,192 | 93.4 | % | 93.1 | % | 1,509 | 1,515 | |||||||||||||||||||
23 | Monticello by the Vineyard | Euless, TX | 9/23/2015 | 354 | 52,200,000 | 41,104,880 | 94.4 | % | 96.6 | % | 1,309 | 1,331 | |||||||||||||||||||
24 | The Shores | Oklahoma City, OK | 9/29/2015 | 300 | 36,250,000 | 24,154,949 | 90.7 | % | 90.7 | % | 1,003 | 972 | |||||||||||||||||||
25 | Lakeside at Coppell | Coppell, TX | 10/7/2015 | 315 | 60,500,000 | 45,196,446 | 91.4 | % | 92.1 | % | 1,591 | 1,652 | |||||||||||||||||||
26 | Meadows at River Run | Bolingbrook, IL | 10/30/2015 | 374 | 58,500,000 | 43,294,592 | 90.6 | % | 92.2 | % | 1,293 | 1,340 | |||||||||||||||||||
27 | PeakView at T-Bone Ranch | Greeley, CO | 12/11/2015 | 224 | 40,300,000 | 28,091,457 | 92.4 | % | 94.6 | % | 1,236 | 1,242 | |||||||||||||||||||
28 | Park Valley Apartments | Smyrna, GA | 12/11/2015 | 496 | 51,400,000 | 44,646,959 | 91.5 | % | 92.3 | % | 962 | 958 | |||||||||||||||||||
29 | PeakView by Horseshoe Lake | Loveland, CO | 12/18/2015 | 222 | 44,200,000 | 33,656,258 | 95.5 | % | 95.5 | % | 1,341 | 1,381 | |||||||||||||||||||
30 | Stoneridge Farms | Smyrna, TN | 12/30/2015 | 336 | 47,750,000 | — | 93.5 | % | 94.9 | % | 1,145 | 1,139 | |||||||||||||||||||
31 | Fielder’s Creek | Englewood, CO | 3/23/2016 | 217 | 32,400,000 | — | 95.4 | % | 94.5 | % | 1,163 | 1,171 | |||||||||||||||||||
32 | Landings of Brentwood | Brentwood, TN | 5/18/2016 | 724 | 110,000,000 | — | 94.2 | % | 96.0 | % | 1,175 | 1,175 | |||||||||||||||||||
33 | 1250 West Apartments | Marietta, GA | 8/12/2016 | 468 | 55,772,500 | 41,680,049 | 91.0 | % | 91.2 | % | 991 | 958 | |||||||||||||||||||
34 | Sixteen50 @ Lake Ray Hubbard | Rockwall, TX | 9/29/2016 | 334 | 66,050,000 | 44,544,718 | 93.4 | % | 94.3 | % | 1,498 | 1,527 | |||||||||||||||||||
11,601 | $ | 1,499,381,750 | $ | 948,763,775 | 92.9 | % | 93.1 | % | $ | 1,128 | $ | 1,137 |
(1) | As of March 31, 2018, our portfolio was approximately 95.0% leased, calculated using the number of occupied and contractually leased units divided by total units. |
(2) | Average monthly rent is based upon the effective rental income after considering the effect of vacancies, concessions and write-offs. |
(3) | Mortgage debt outstanding is net of deferred financing costs and loan discount associated with the loans for each individual property listed above but excludes the principal balance of $45,000,000 and associated deferred financing costs of $124,836 related to the line of credit at the company level. |
Distributions Paid(3) | Sources of Distributions Paid | |||||||||||||||||||||||||||||||
Period | Distributions Declared(1) | Distributions Declared Per Share(1)(2) | Cash | Reinvested | Total | Cash Flow From Operations | Notes Payable | Net Cash Provided by Operating Activities | ||||||||||||||||||||||||
First Quarter 2018 | $ | 11,312,463 | $ | 0.222 | $ | 5,597,521 | $ | 5,701,030 | $ | 11,298,551 | $ | 7,087,026 | $ | 4,211,525 | $ | 7,087,026 |
(1) | Distributions during the first quarter of 2018 were based on daily record dates and calculated at a rate of $0.002466 per share per day. |
(2) | Assumes each share was issued and outstanding each day during the period presented. |
(3) | Distributions are paid on a monthly basis. Distributions for all record dates of a given month are paid approximately three days following month end. |
• | current unrestricted cash balance, which was $24,202,447 as of March 31, 2018; |
• | various forms of secured and unsecured financing; |
• | borrowings under master repurchase agreements; |
• | equity capital from joint venture partners; and |
• | proceeds from our distribution reinvestment plan. |
• | $3,466,412 of cash used for improvements to real estate investments; and |
• | $143,972 of cash provided by proceeds from insurance claims. |
• | $56,510 of payments of commissions on sales of common stock; |
• | $101,943 of principal payments on mortgage notes payable; |
• | $2,886,216 of cash paid for the repurchase of common stock; and |
• | $5,597,521 of net cash distributions to our stockholders, after giving effect to distributions reinvested by stockholders of $5,701,030. |
Payments due by period | ||||||||||||||||||||
Contractual Obligations | Total | Less than 1 year | 1-3 years | 3-5 years | More than 5 years | |||||||||||||||
Interest payments on outstanding debt obligations(1) | $ | 271,961,141 | $ | 29,800,608 | $ | 76,679,147 | $ | 71,663,220 | $ | 93,818,166 | ||||||||||
Principal payments on outstanding debt obligations(2) | 1,001,067,352 | 2,184,120 | 58,232,264 | 111,410,597 | 829,240,371 | |||||||||||||||
Total | $ | 1,273,028,493 | $ | 31,984,728 | $ | 134,911,411 | $ | 183,073,817 | $ | 923,058,537 |
(1) | Projected interest payments on outstanding debt obligations are based on the outstanding principal amounts and interest rates in effect at March 31, 2018. We incurred interest expense of $9,092,883 during the three months ended March 31, 2018, including amortization of deferred financing costs totaling $246,274, net unrealized gains from the change in fair value of interest rate cap agreements of $447,614, amortization of loan discount of $88,746 and credit facility commitment fees of $7,397. |
(2) | Projected principal payments on outstanding debt obligations are based on the terms of the notes payable agreements. Amounts exclude the amortization of the debt discount and net deferred financing costs associated with certain notes payable. |
For the Three Months Ended March 31, | |||||||||||||||
2018 | 2017 | Change $ | Change % | ||||||||||||
Total revenues | $ | 41,367,026 | $ | 39,704,775 | $ | 1,662,251 | 4 | % | |||||||
Operating, maintenance and management | (9,974,835 | ) | (9,450,859 | ) | (523,976 | ) | 6 | % | |||||||
Real estate taxes and insurance | (5,685,380 | ) | (6,232,047 | ) | 546,667 | (9 | )% | ||||||||
Fees to affiliates | (5,796,678 | ) | (5,638,971 | ) | (157,707 | ) | 3 | % | |||||||
Depreciation and amortization | (17,435,350 | ) | (17,398,525 | ) | (36,825 | ) | — | % | |||||||
Interest expense | (9,092,883 | ) | (7,882,714 | ) | (1,210,169 | ) | 15 | % | |||||||
General and administrative expenses | (1,399,994 | ) | (1,513,512 | ) | 113,518 | (8 | )% | ||||||||
Acquisition costs | — | (1,185 | ) | 1,185 | (100 | )% | |||||||||
Net loss | $ | (8,018,094 | ) | $ | (8,413,038 | ) | $ | 394,944 | (5 | )% | |||||
NOI(1) | $ | 23,985,291 | $ | 22,442,003 | $ | 1,543,288 | 7 | % | |||||||
FFO(2) | $ | 9,417,256 | $ | 8,985,487 | $ | 431,769 | 5 | % | |||||||
MFFO(2) | $ | 8,969,642 | $ | 9,241,674 | $ | (272,032 | ) | (3 | )% |
(1) | NOI is a non-GAAP financial measure used by investors and our management to evaluate and compare the performance of our properties and to determine trends in earnings. However, the usefulness of NOI is limited because it excludes general and administrative costs, interest expense, interest income and other expense, acquisition costs, certain fees to affiliates, depreciation and amortization expense and gains or losses from the sale of our properties and other gains and losses as stipulated by GAAP, the level of capital expenditures and leasing costs, all of which are significant economic costs. For additional information on how we calculate NOI and a reconciliation of NOI to net loss, see “—Net Operating Income.” |
(2) | GAAP basis accounting for real estate assets utilizes historical cost accounting and assumes real estate values diminish over time. In an effort to overcome the difference between real estate values and historical cost accounting for real estate assets the Board of Governors of the National Association of Real Estate Investment Trusts, or NAREIT, established the measurement tool of FFO. Since its introduction, FFO has become a widely used non-GAAP financial measure among REITs. Additionally, we use modified funds from operations, or MFFO, as defined by the Institute for Portfolio Alternatives (formerly known as the Investment Program Association), or the IPA, as a supplemental measure to evaluate our operating performance. MFFO is based on FFO but includes certain adjustments we believe are necessary due to changes in accounting and reporting under GAAP since the establishment of FFO. Neither FFO nor MFFO should be considered as alternatives to net loss or other measurements under GAAP as indicators of our operating performance, nor should they be considered as alternatives to cash flow from operating activities or other measurements under GAAP as indicators of liquidity. For additional information on how we calculate FFO and MFFO and a reconciliation of FFO and MFFO to net loss, see “—Funds From Operations and Modified Funds From Operations.” |
For the Three Months Ended March 31, | |||||||||||||||
2018 | 2017 | Change $ | Change % | ||||||||||||
Same-store properties: | |||||||||||||||
Revenues | $ | 41,179,931 | $ | 39,563,742 | $ | 1,616,189 | 4.1 | % | |||||||
Operating expenses | 17,194,640 | 17,121,739 | 72,901 | 0.4 | % | ||||||||||
Net operating income | 23,985,291 | 22,442,003 | 1,543,288 | 6.9 | % | ||||||||||
Non-same-store properties: | |||||||||||||||
Net operating income | — | — | — | ||||||||||||
Total net operating income(1) | $ | 23,985,291 | $ | 22,442,003 | $ | 1,543,288 |
(1) | See “—Net Operating Income” below for a reconciliation of NOI to net loss. |
For the Three Months Ended March 31, | ||||||||
2018 | 2017 | |||||||
Net loss | $ | (8,018,094 | ) | $ | (8,413,038 | ) | ||
Fees to affiliates(1) | 4,262,253 | 4,200,140 | ||||||
Depreciation and amortization | 17,435,350 | 17,398,525 | ||||||
Interest expense | 9,092,883 | 7,882,714 | ||||||
General and administrative expenses | 1,399,994 | 1,513,512 | ||||||
Acquisition costs | — | 1,185 | ||||||
Other gains(2) | (187,095 | ) | (141,035 | ) | ||||
Net operating income | $ | 23,985,291 | $ | 22,442,003 |
(1) | Fees to affiliates for the three months ended March 31, 2018, exclude property management fees of $1,191,167 and other fees of $343,258 that are included in NOI. Fees to affiliates for the three months ended March 31, 2017, exclude property management fees of $1,142,347 and other fees of $296,484 that are included in NOI. |
(2) | Other gains for the three months ended March 31, 2018 and 2017, includes non-recurring insurance claim recoveries that are not included in NOI. |
For the Three Months Ended March 31, | ||||||||
2018 | 2017 | |||||||
Reconciliation of net loss to MFFO: | ||||||||
Net loss | $ | (8,018,094 | ) | $ | (8,413,038 | ) | ||
Depreciation of real estate assets | 17,435,350 | 16,388,413 | ||||||
Amortization of lease-related costs | — | 1,010,112 | ||||||
FFO | 9,417,256 | 8,985,487 | ||||||
Acquisition fees and expenses (1)(2) | — | 1,185 | ||||||
Unrealized (gain) loss on derivative instruments | (447,614 | ) | 255,002 | |||||
MFFO | $ | 8,969,642 | $ | 9,241,674 |
(1) | By excluding expensed acquisition costs that are not capitalized, management believes MFFO provides useful supplemental information that is comparable for each type of real estate investment and is consistent with management’s |
(2) | Acquisition fees and expenses for the three months ended March 31, 2018 and 2017 include acquisition expenses of $0 and $1,185, respectively, that did not meet the criteria for capitalization under ASU 2017-01 and are recorded in acquisition costs in the accompanying consolidated statements of operations. FFO and MFFO may be used to fund all or a portion of certain capitalizable items that are excluded from FFO and MFFO, such as tenant improvements, building improvements and deferred leasing costs. |
Total Number of Shares Requested to be Repurchased(1) | Total Number of Shares Repurchased | Average Price Paid per Share(2)(3) | Approximate Dollar Value of Shares Available That May Yet Be Repurchased Under the Program | |||||||||
January 2018 | 79,896 | 185,218 | $ | 14.24 | (4) | |||||||
February 2018 | 76,777 | 15,861 | 14.64 | (4) | ||||||||
March 2018 | 153,279 | 1,092 | 14.48 | (4) | ||||||||
309,952 | 202,171 |
(1) | We generally repurchase shares approximately 30 days following the end of the applicable quarter in which requests were received. At March 31, 2018, we had $2,000,000, representing 144,442 shares of outstanding and unfulfilled repurchase requests, all of which were fulfilled on May 1, 2018. |
(2) | During the three months ended March 31, 2018, we repurchased shares at prices determined as follows: |
• | 92.5% of the estimated value per share for stockholders who have held their shares for at least one year; |
• | 95.0% of the estimated value per share for stockholders who have held their shares for at least two years; |
• | 97.5% of the estimated value per share for stockholders who have held their shares for at least three years; and |
• | 100% of the estimated value per share for stockholders who have held their shares for at least four years. |
(3) | From inception through March 31, 2018, our share repurchases have been funded exclusively from the net proceeds we received from the sale of shares under our distribution reinvestment plan. |
(4) | The number of shares that may be repurchased pursuant to the share repurchase plan is limited to: (1) 5% of the weighted-average number of shares outstanding during the prior calendar year and (2) those that can be funded from net proceeds we received from the sale of shares under the distribution reinvestment plan during the prior calendar year, plus such additional funds as may be reserved for that purpose by our board of directors. Our board of directors has further limited the amount of shares that may be repurchased pursuant to our share repurchase plan to $2,000,000 per quarter. |
Exhibit | Description | ||
3.1 | |||
3.2 | |||
4.1 | |||
4.2 | |||
4.3 | |||
4.5 | |||
4.6 | |||
31.1* | |||
31.2* | |||
32.1** | |||
32.2** |
* | Filed herewith | |||
** | In accordance with Item 601(b)(32) of Regulation S-K, this Exhibit is not deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section. Such certifications will not be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference. |
Steadfast Apartment REIT, Inc. | |||
Date: | May 10, 2018 | By: | /s/ Rodney F. Emery |
Rodney F. Emery | |||
Chief Executive Officer and Chairman of the Board | |||
(Principal Executive Officer) | |||
Date: | May 10, 2018 | By: | /s/ Kevin J. Keating |
Kevin J. Keating | |||
Chief Financial Officer and Treasurer | |||
(Principal Financial and Accounting Officer) |
1. | I have reviewed this quarterly report on Form 10-Q of Steadfast Apartment REIT, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer 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 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. |
By: | /s/ Rodney F. Emery | |
Rodney F. Emery | ||
Chief Executive Officer and Chairman of the Board (Principal Executive Officer) |
1. | I have reviewed this quarterly report on Form 10-Q of Steadfast Apartment REIT, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer 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 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. |
By: | /s/ Kevin J. Keating | |
Kevin J. Keating | ||
Chief Financial Officer (Principal Financial and Accounting Officer) |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
By: | /s/ Rodney F. Emery | |
Rodney F. Emery | ||
Chief Executive Officer and Chairman of the Board (Principal Executive Officer) |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
By: | /s/ Kevin J. Keating | |
Kevin J. Keating | ||
Chief Financial Officer (Principal Financial and Accounting Officer) |
Document and Entity Information - shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
May 04, 2018 |
|
Document and Entity Information | ||
Entity Registrant Name | Steadfast Apartment REIT, Inc. | |
Entity Central Index Key | 0001585219 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Common Stock, Shares Outstanding | 51,135,201 | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q1 |
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares |
Mar. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common Stock [Member] | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 999,999,000 | 999,999,000 |
Common stock, shares issued (in shares) | 51,024,374 | 50,842,640 |
Common stock, shares outstanding (in shares) | 51,024,374 | 50,842,640 |
Convertible Stock [Member] | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 1,000 | 1,000 |
Common stock, shares issued (in shares) | 1,000 | 1,000 |
Common stock, shares outstanding (in shares) | 1,000 | 1,000 |
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Revenues: | ||
Rental income | $ 36,800,334 | $ 35,503,148 |
Tenant reimbursements and other | 4,566,692 | 4,201,627 |
Total revenues | 41,367,026 | 39,704,775 |
Expenses: | ||
Operating, maintenance and management | 9,974,835 | 9,450,859 |
Real estate taxes and insurance | 5,685,380 | 6,232,047 |
Fees to affiliates | 5,796,678 | 5,638,971 |
Depreciation and amortization | 17,435,350 | 17,398,525 |
Interest expense | 9,092,883 | 7,882,714 |
General and administrative expenses | 1,399,994 | 1,513,512 |
Acquisition costs | 0 | 1,185 |
Total expenses | 49,385,120 | 48,117,813 |
Net loss | $ (8,018,094) | $ (8,413,038) |
Loss per common share - basic and diluted (in dollars per share) | $ (0.16) | $ (0.17) |
Weighted average number of common shares outstanding - basic and diluted (in shares) | 50,976,133 | 49,921,129 |
Distributions declared per share (in dollars per share) | $ 0.222 | $ 0.222 |
Organization and Business |
3 Months Ended |
---|---|
Mar. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Business | Organization and Business Steadfast Apartment REIT, Inc. (the “Company”) was formed on August 22, 2013, as a Maryland corporation that elected to qualify as a real estate investment trust (“REIT”) commencing with the taxable year ended December 31, 2014. On September 3, 2013, the Company was initially capitalized with the sale of 13,500 shares of common stock to Steadfast REIT Investments, LLC (the “Sponsor”) at a purchase price of $15.00 per share for an aggregate purchase price of $202,500. Steadfast Apartment Advisor, LLC (the “Advisor”), a Delaware limited liability company formed on August 22, 2013, invested $1,000 in the Company in exchange for 1,000 shares of non-participating, non-voting convertible stock (the “Convertible Stock”) as described in Note 6 (Stockholders’ Equity). The Company owns and operates a diverse portfolio of multifamily properties located in targeted markets throughout the United States. In addition to the Company’s focus on multifamily properties, the Company may also make selective strategic acquisitions of other types of commercial properties. The Company may also acquire or originate mortgage, mezzanine, bridge and other real estate loans and equity securities of other real estate companies. As of March 31, 2018, the Company owned 34 multifamily properties comprising a total of 11,601 apartment homes. For more information on the Company’s real estate portfolio, see Note 3 (Real Estate). Public Offering On December 30, 2013, the Company commenced its initial public offering to offer a maximum of 66,666,667 shares of common stock for sale to the public at an initial price of $15.00 per share (with discounts available for certain categories of purchasers) (the “Primary Offering”). The Company also registered up to 7,017,544 shares of common stock for sale pursuant to the Company’s distribution reinvestment plan (the “DRP,” and together with the Primary Offering, the “Public Offering”) at an initial price of $14.25 per share. The Company terminated its Public Offering on March 24, 2016, but continues to offer shares of common stock pursuant to the DRP. As of the termination of the Public Offering, the Company had sold 48,625,651 shares of common stock in the Public Offering for gross proceeds of $724,849,631, including 1,011,561 shares of common stock issued pursuant to the DRP for gross offering proceeds of $14,414,752. As of March 31, 2018, the Company had issued 51,798,081 shares of common stock for gross offering proceeds of $771,327,030, including 4,184,054 shares of common stock issued pursuant to the DRP for gross offering proceeds of $60,892,151. On March 24, 2016, the Company’s board of directors determined an estimated value per share of the Company’s common stock of $14.46 as of December 31, 2015. On February 14, 2017, the Company’s board of directors determined an estimated value per share of the Company’s common stock of $14.85 as of December 31, 2016. On March 14, 2018, the Company’s board of directors determined an estimated value per share of the Company’s common stock of $15.18 as of December 31, 2017. In connection with the determination of an estimated value per share, the Company’s board of directors determined a price per share for the DRP of $14.46, $14.85 and $15.18, effective May 1, 2016, March 1, 2017 and April 1, 2018. The Company’s board of directors may again, from time to time, in its sole discretion, change the price at which the Company offers shares pursuant to the DRP to reflect changes in the Company’s estimated value per share and other factors that the Company’s board of directors deems relevant. The business of the Company is externally managed by the Advisor, pursuant to the Advisory Agreement dated December 13, 2013, by and among the Company, Steadfast Apartment REIT Operating Partnership, L.P. (the “Operating Partnership”) and the Advisor (as amended, the “Advisory Agreement”). The Advisory Agreement is subject to annual renewal by the Company’s board of directors. The current term of the Advisory Agreement expires on December 13, 2018. Subject to certain restrictions and limitations, the Advisor manages the Company’s day-to-day operations, manages the Company’s portfolio of properties and real estate-related assets, sources and presents investment opportunities to the Company’s board of directors and provides investment management services on the Company’s behalf. The Advisor has also entered into an Advisory Services Agreement with Crossroads Capital Advisors, LLC (“Crossroads Capital Advisors”), whereby Crossroads Capital Advisors provides certain advisory services to the Company on behalf of the Advisor. The Company retained Stira Capital Markets Group, LLC (formerly known as Steadfast Capital Markets Group, LLC) (the “Dealer Manager”), an affiliate of the Sponsor, to serve as the dealer manager for the Public Offering. The Dealer Manager was responsible for marketing the Company’s shares of common stock offered pursuant to the Public Offering. The Advisor, along with the Dealer Manager, provides offering services, marketing, investor relations and other administrative services on the Company’s behalf. Substantially all of the Company’s business is conducted through the Operating Partnership. The Company is the sole general partner of the Operating Partnership. The Company and Steadfast Apartment REIT Limited Partner, LLC, a Delaware limited liability company and a wholly-owned subsidiary of the Company, entered into a Limited Partnership Agreement (the “Partnership Agreement”) on September 3, 2013. As the Company accepted subscriptions for shares of its common stock, the Company transferred substantially all of the net offering proceeds from its Public Offering to the Operating Partnership as a contribution in exchange for partnership interests and the Company’s percentage ownership in the Operating Partnership increased proportionately. The Partnership Agreement provides that the Operating Partnership is operated in a manner that will enable the Company to (1) satisfy the requirements for being classified as a REIT for tax purposes, (2) avoid any federal income or excise tax liability and (3) ensure that the Operating Partnership will not be classified as a “publicly traded partnership” for purposes of Section 7704 of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), which classification could result in the Operating Partnership being taxed as a corporation. In addition to the administrative and operating costs and expenses incurred by the Operating Partnership in acquiring and operating real properties, the Operating Partnership pays all of the Company’s administrative costs and expenses, and such expenses are treated as expenses of the Operating Partnership. The Company commenced its real estate operations on May 22, 2014, upon acquiring a fee simple interest in a multifamily property located in Spring Hill, Tennessee. |
Summary of Significant Accounting Policies |
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Summary of Significant Accounting Policies | Summary of Significant Accounting Policies There have been no significant changes to the Company’s accounting policies since it filed its audited financial statements in its Annual Report on Form 10-K for the year ended December 31, 2017, other than Accounting Standards Update (“ASU”) 2016-18, as further described below. For further information about the Company’s accounting policies, refer to the Company’s consolidated financial statements and notes thereto for the year ended December 31, 2017 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on March 16, 2018. Principles of Consolidation and Basis of Presentation The consolidated financial statements include the accounts of the Company, the Operating Partnership and its subsidiaries. All significant intercompany balances and transactions are eliminated in consolidation. The financial statements of the Company’s subsidiaries are prepared using accounting policies consistent with those of the Company. The accompanying unaudited consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information as contained within the Financial Accounting Standards Board (“FASB”), Accounting Standards Codification (“ASC”) and the rules and regulations of the SEC, including the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, the unaudited consolidated financial statements do not include all of the information and footnotes required by GAAP for audited financial statements. In the opinion of management, the financial statements for the unaudited interim periods presented include all adjustments that are of a normal and recurring nature and necessary for a fair and consistent presentation of the results of such periods. Operating results for the three months ended March 31, 2018, are not necessarily indicative of the results that may be expected for the year ending December 31, 2018. The unaudited consolidated financial statements herein should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017. Use of Estimates The preparation of the consolidated financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could materially differ from those estimates. Fair Value Measurements Under GAAP, the Company is required to measure certain financial instruments at fair value on a recurring basis. In addition, the Company is required to measure other assets and liabilities at fair value on a non-recurring basis (e.g., carrying value of impaired real estate loans receivable and long-lived assets). Fair value is defined as the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The GAAP fair value framework uses a three-tiered approach. Fair value measurements are classified and disclosed in one of the following three categories:
When available, the Company utilizes quoted market prices from an independent third-party source to determine fair value and will classify such items in Level 1 or Level 2. In instances where the market is not active, regardless of the availability of a nonbinding quoted market price, observable inputs might not be relevant and could require the Company to make a significant adjustment to derive a fair value measurement. Additionally, in an inactive market, a market price quoted from an independent third party may rely more on models with inputs based on information available only to that independent third party. When the Company determines the market for a financial instrument owned by the Company to be illiquid or when market transactions for similar instruments do not appear orderly, the Company uses several valuation sources (including internal valuations, discounted cash flow analysis and quoted market prices) and will establish a fair value by assigning weights to the various valuation sources. The following describes the valuation methodologies used by the Company to measure fair value, including an indication of the level in the fair value hierarchy in which each asset or liability is generally classified. Interest rate cap agreements - The Company has entered into certain interest rate cap agreements. These derivatives are recorded at fair value. Fair value was based on a model-driven valuation using the associated variable rate curve and an implied market volatility, both of which were observable at commonly quoted intervals for the full term of the interest rate cap agreements. Therefore, the Company’s interest rate cap agreements were classified within Level 2 of the fair value hierarchy and are included in other assets in the accompanying consolidated balance sheets. Changes in the fair value of the interest rate cap agreements are recorded as interest expense in the accompanying consolidated statements of operations. The following tables reflect the Company’s assets required to be measured at fair value on a recurring basis on the consolidated balance sheets:
Changes in assumptions or estimation methodologies can have a material effect on these estimated fair values. In this regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, may not be realized in an immediate settlement of the instrument. Fair Value of Financial Instruments The accompanying consolidated balance sheets include the following financial instruments: cash and cash equivalents, restricted cash, rents and other receivables, accounts payable and accrued liabilities, distributions payable, due to affiliates and notes payable. The Company considers the carrying value of cash and cash equivalents, restricted cash, rents and other receivables, accounts payable and accrued liabilities and distributions payable to approximate the fair value of these financial instruments based on the short duration between origination of the instruments and their expected realization. The fair value of amounts due to affiliates is not determinable due to the related party nature of such amounts. The Company has determined that its notes payable, net are classified as Level 3 within the fair value hierarchy. The fair value of the notes payable, net is estimated using a discounted cash flow analysis using borrowing rates available to the Company for debt instruments with similar terms and maturities. As of March 31, 2018 and December 31, 2017, the fair value of the notes payable was $1,009,923,592 and $1,011,004,179, respectively, compared to the carrying value of $993,638,939 and $993,405,862, respectively. Distribution Policy The Company elected to be taxed, and currently qualifies, as a REIT commencing with the taxable year ended December 31, 2014. To maintain its qualification as a REIT, the Company intends to make distributions each taxable year equal to at least 90% of its REIT taxable income (which is determined without regard to the dividends paid deduction or net capital gain and which does not necessarily equal net income as calculated in accordance with GAAP). Distributions declared during the three months ended March 31, 2018, were based on daily record dates and calculated at a rate of $0.002466 per share per day during the period from January 1, 2018, through March 31, 2018. Distributions to stockholders are determined by the board of directors of the Company and are dependent upon a number of factors relating to the Company, including funds available for the payment of distributions, financial condition, the timing of property acquisitions, capital expenditure requirements and annual distribution requirements in order for the Company to qualify as a REIT under the Internal Revenue Code. During the three months ended March 31, 2018 and 2017, the Company declared distributions totaling $0.222 and $0.222 per share of common stock, respectively. Per Share Data Basic loss per share attributable to common stockholders for all periods presented are computed by dividing net loss by the weighted average number of shares of the Company’s common stock outstanding during the period. Diluted loss per share is computed based on the weighted average number of shares of the Company’s common stock and all potentially dilutive securities, if any. Distributions declared per common share assume each share was issued and outstanding each day during the period. Nonvested shares of the Company’s restricted common stock and convertible stock give rise to potentially dilutive shares of the Company’s common stock but such shares were excluded from the computation of diluted earnings per share because such shares were anti-dilutive during the period. Segment Disclosure The Company has determined that it has one reportable segment with activities related to investing in multifamily properties. The Company’s investments in real estate are in different geographic regions, and management evaluates operating performance on an individual asset level. However, as each of the Company’s assets has similar economic characteristics, tenants and products and services, its assets have been aggregated into one reportable segment. Reclassifications Certain amounts in the Company’s prior period consolidated unaudited financial statements have been reclassified to conform to the current period presentation. These reclassifications have not changed the results of operations of prior periods. During the three months ended March 31, 2018, the Company adopted ASU 2016-18, as further described below. As a result, the Company no longer presents transfers between cash and restricted cash in the consolidated statements of cash flows. Instead, restricted cash is included with cash and cash equivalents when reconciling the beginning of the period and end of the period total amounts shown on the consolidated statements of cash flows. Recent Accounting Pronouncements In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). The new guidance requires an entity to recognize the revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. The new guidance supersedes the revenue requirements in Revenue Recognition (Topic 605) and most industry-specific guidance throughout the Industry Topics of the Codification. The new guidance does not apply to lease contracts within the scope of Leases (Topic 840). In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606), which delayed the effective date of the new guidance by one year, which will result in the new guidance being effective for fiscal years, and interim periods within those years, beginning after December 15, 2017, and is to be applied retrospectively. Early adoption is permitted, but can be no earlier than the original public entity effective date of fiscal years, and interim periods within those years, beginning after December 15, 2016. The Company selected the modified retrospective transition method with a cumulative effect recognized as of the date of adoption and adopted the new standard effective January 1, 2018. The Company identified limited sources of revenues from non-lease components, and the Company did not experience a material impact on its revenue recognition in the consolidated financial statements upon adoption. Additionally, there was no impact to the Company’s recognition of rental revenue, as rental revenue from leasing arrangements was specifically excluded from the standard. In February 2016, the FASB issued ASU 2016-02, Leases, amending the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. The new standard requires a modified retrospective transition approach. The guidance will be effective in the first quarter of 2019 and allows for early adoption. The Company is in the preliminary stages of evaluating the impact of this ASU on its leases both as it relates to the Company acting as a lessor and as a lessee. Based on the preliminary results of its evaluation, as it relates to the former, the Company does not expect any material impact on the recognition of leases in the consolidated financial statements because under this guidance, lessors will continue to account for leases using an approach that is substantially equivalent to existing guidance for sales-type leases, direct financing leases, and operating leases. As it relates to the latter, the Company does not expect a material impact on the recognition of leases in the consolidated financial statements because the quantity of leased equipment by the Company is limited. The Company is finalizing its evaluation of this new guidance and plans to adopt this ASU on January 1, 2019. In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230), Restricted Cash, that requires that a statement of cash flows explains the change during the period in the total of cash, cash equivalents, restricted cash and restricted cash equivalents. Therefore, amounts generally described as restricted cash should be included with cash and cash equivalents when reconciling the beginning of period and end of period total amounts shown on the statement of cash flows. The guidance is effective for annual periods beginning after December 15, 2017, and interim periods within those years. Early adoption is permitted. The Company adopted this guidance January 1, 2018 and applied it retrospectively. As a result of adopting ASU 2016-18, the Company began presenting restricted cash along with cash and cash equivalents in its consolidated statements of cash flows. In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the definition of business, that clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of businesses. This ASU provides a screen to determine when a set is not a business. If the screen is not met, it (1) requires that to be considered a business, a set must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output and (2) removes the evaluation of whether a market participant could replace the missing elements. The guidance is effective for annual reporting periods beginning after December 15, 2017, and interim periods within those years. Early adoption is permitted. The Company adopted this new guidance as of January 1, 2017. The Company did not experience a material impact from adopting this new guidance. In February 2017, the FASB issued ASU 2017-05, Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (“Subtopic 610-20”): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets (“ASU 2017-05”), that clarifies that a financial asset is within the scope of Subtopic 610-20 if it meets the definition of an in substance nonfinancial asset and defines the term in substance nonfinancial asset. ASU 2017-05 also clarifies that nonfinancial assets within the scope of Subtopic 610-20 may include nonfinancial assets transferred within a legal entity to a counterparty. Subtopic 610-20, which was issued in May 2014 as part of ASU 2014-09 (discussed above), provides guidance for recognizing gains and losses from the transfer of nonfinancial assets in contracts with noncustomers. An entity is required to apply amendments in ASU 2017-05 at the same time it applies the amendments in ASU 2014-09. ASU 2017-05 requires retrospective application and is effective for fiscal years beginning after December 15, 2017, including interim reporting periods within those fiscal years. The Company adopted this guidance January 1, 2018. The Company did not experience a material impact from adopting this new guidance. In May 2017, the FASB issued ASU 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting (“ASU 2017-09”). The FASB issued ASU 2017-09 to provide clarity and reduce both (1) diversity in practice and (2) cost and complexity when applying the guidance in Topic 718, Compensation - Stock Compensation, to a change to the terms or conditions of a share-based payment award. The amendments in ASU 2017-09 provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. ASU 2017-09 requires prospective application and is effective for annual periods beginning after December 15, 2017, including interim periods within those fiscal years. The Company adopted this guidance January 1, 2018. The Company did not experience a material impact from adopting this new guidance. |
Real Estate |
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Real Estate | Real Estate As of March 31, 2018, the Company owned 34 multifamily properties comprising a total of 11,601 apartment homes. The total contract acquisition price of the Company’s real estate portfolio was $1,499,381,750. As of March 31, 2018 and December 31, 2017, the Company’s portfolio was approximately 92.9% and 93.1% occupied and the average monthly rent was $1,128 and $1,137, respectively. As of March 31, 2018 and December 31, 2017, accumulated depreciation and amortization related to the Company’s consolidated real estate properties and related intangibles were as follows:
Depreciation and amortization expense was $17,435,350 and $17,398,525 for the three months ended March 31, 2018 and 2017, respectively. Depreciation of the Company’s buildings and improvements was $17,435,350 and $16,388,413 for the three months ended March 31, 2018 and 2017, respectively. Amortization of the Company’s tenant origination and absorption costs was $0 and $1,010,112 for the three months ended March 31, 2018 and 2017, respectively. Tenant origination and absorption costs had a weighted-average amortization period as of the date of acquisition of less than one year. As of March 31, 2017, all tenant origination and absorption costs were fully amortized and written off. Operating Leases As of March 31, 2018, the Company’s real estate portfolio comprised 11,601 residential apartment homes and was 95.0% leased by a diverse group of residents. The residential lease terms consist of lease durations equal to twelve months or less. Some residential leases contain provisions to extend the lease agreements, options for early termination after paying a specified penalty and other terms and conditions as negotiated. The Company retains substantially all of the risks and benefits of ownership of the real estate assets leased to tenants. Generally, upon the execution of a lease, the Company requires security deposits from tenants in the form of a cash deposit. Amounts required as security deposits vary depending upon the terms of the respective leases and the creditworthiness of the tenant, but generally are not significant amounts. Therefore, exposure to credit risk exists to the extent that a receivable from a tenant exceeds the amount of its security deposit. Security deposits received in cash related to tenant leases are included in accounts payables and accrued liabilities in the accompanying consolidated balance sheets and totaled $3,686,985 and $3,613,649 as of March 31, 2018 and December 31, 2017, respectively. As of March 31, 2018 and 2017, no tenant represented over 10% of the Company’s annualized base rent. |
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Other Assets | Other Assets As of March 31, 2018 and December 31, 2017, other assets consisted of:
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt | Debt Mortgage Notes Payable The following is a summary of mortgage notes payable, net secured by real property as of March 31, 2018 and December 31, 2017.
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Refinancing Transactions On November 29, 2017, three of the Company’s wholly-owned subsidiaries refinanced their existing loans under the Company’s revolving credit facility for an aggregate principal amount of $93,825,000 and entered into new loan agreements (each a “Loan Agreement”), with PNC Bank, National Association, or PNC Bank, for an aggregate principal amount of $100,752,000, (the “November Refinancing Transactions”). Additionally, on December 29, 2017, another three of the Company’s wholly-owned subsidiaries refinanced their existing loans under the revolving credit facility for an aggregate principal amount of $92,475,000 and entered into new loan agreements (each a “Loan Agreement”), with PNC Bank for an aggregate principal amount of $97,080,000 (the “December Refinancing Transactions,” together with the November Refinancing Transactions, the “Refinancing Transactions”). In the Refinancing Transactions, each Loan Agreement was made pursuant to the Freddie Mac Capital Markets Execution Program (“CME”), as evidenced by a multifamily note. Pursuant to the CME, PNC Bank originates the mortgage loan and then transfers the loan to the Federal Home Loan Mortgage Association. Each Loan Agreement refinanced in November and December provides for a term loan with a maturity of December 1, 2024 or January 1, 2025, respectively, unless the maturity date is accelerated in accordance with its terms. Each loan refinanced in November and December accrues interest at the one-month London Interbank Offered Rate (“LIBOR”) plus 1.94% or 1.88%, respectively. The entire outstanding principal balance and any accrued and unpaid interest on each of the loans are due on the maturity date. Interest and principal payments on the loans are payable monthly in arrears on specified dates as set forth in each loan agreement. Monthly payments are due and payable on the first day of each month commencing on January 1, or February 1, 2018, as applicable. Revolving Credit Facility On August 26, 2015, the Company entered into a revolving credit facility (the “Credit Facility”) with PNC Bank in an amount not to exceed $200,000,000, which provided for advances to purchase properties or refinance existing properties from time to time (subject to certain debt service and loan to value requirements). The Credit Facility had a maturity date of September 1, 2020, subject to extension (the “Maturity Date”). The maximum amount available to be drawn under the Credit Facility could have been increased up to $350,000,000 at any time during the period from January 1, 2016 to 12 months prior to the Maturity Date, as further described in the Credit Agreement (the “Credit Agreement”) entered into by certain of the Company’s wholly-owned subsidiaries with PNC Bank in connection with property acquisitions. For each advance drawn under the Credit Facility, an Addition Fee, as defined in the Credit Agreement, was incurred. Advances made under the Credit Facility were secured by the property for which such advances were used (each a “Loan” and collectively the “Loans”), as evidenced by the Credit Agreement, Multifamily Loan and Security Agreement (the “Loan and Security Agreement”), the Multifamily Revolving Credit Note (the “Note”) and a Multifamily Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing (the “Mortgage”) and a Guaranty from the Company (the “Guaranty,” together with the Credit Agreement, the Loan and Security Agreement, the Note and the Mortgage, the “Loan Documents”). Each Loan was purchased from PNC Bank by the Federal Home Loan Mortgage Corporation (“Freddie Mac”). As of December 31, 2017, the Company had no outstanding balance under the Credit Facility. The Company is in the process of terminating the Credit Facility. Interest on the outstanding principal balances of the Loans accrued at the one-month LIBOR plus (1) the servicing spread of 0.05% and (2) the net spread, based on the debt service coverage ratio, of between 1.80% and 2.10%, as further described in the applicable Notes. Monthly interest payments were due and payable on the first day of each month until the Maturity Date. The entire outstanding principal balance and any accrued and unpaid interest on the Loans were due and payable in full on the Maturity Date. In addition to monthly interest payments, an unused commitment fee equal to 0.1% of the average daily difference between (1) the amount outstanding and (2) the maximum facility available was due and payable monthly. Additionally, an unused capacity fee equal to 1.0% of the average daily difference between the amount of the (1) maximum facility available and (2) the outstanding borrowing tranches, each as defined in the Credit Agreement, was due and payable monthly. Upon the second anniversary of each advance pursuant to the Credit Facility, a seasoning fee equal to 0.25% of such advance was due and payable monthly. The seasoning fee would increase by 0.25% on each subsequent anniversary until the Maturity Date. Revolving Line of Credit On May 18, 2016, the Company entered into a line of credit facility (the “Line of Credit”) with PNC Bank in an amount not to exceed $65,000,000. The Line of Credit provides for advances (each, an “LOC Loan” and collectively, the “LOC Loans”) solely for the purpose of financing the costs in connection with acquisitions and development of real estate projects and for general corporate purposes (subject to certain debt service and loan to value requirements). The Line of Credit has a maturity date of May 17, 2019, subject to extension (the “LOC Maturity Date”), as further described in the loan agreement (the “LOC Loan Agreement”) entered into by certain of the Company’s wholly-owned subsidiaries with PNC Bank in connection with the acquisition of the Landings of Brentwood Property (the “Mortgaged Property”). Advances made under the Line of Credit are secured by the Mortgaged Property, as evidenced by the LOC Loan Agreement, the Revolving Credit Loan Note (the “LOC Note”), the Deed of Trust and a Guaranty from the Company (the “LOC Guaranty,” together with the LOC Loan Agreement and the LOC Note, the “LOC Loan Documents”). The Company has the option to select the interest rate in respect of the outstanding unpaid principal amount of the LOC Loans from the following options (the “Interest Rate Options”): (1) the sum of the Base Rate (as defined in the LOC Loan Agreement) plus 0.60%, or (2) a rate per annum fixed for the applicable LIBOR Interest Period (as defined in the LOC Loan Agreement) equal to the sum of LIBOR plus 1.60%. The Company may select different Interest Rate Options and different LIBOR Interest Periods to apply simultaneously to the LOC Loans comprising of different Borrowing Tranches (as defined in the LOC Loan Agreement) and may convert to or renew one or more Interest Rate Options with respect to all or any portion of the LOC Loans comprising any borrowing tranche provided that there may not be at any time outstanding more than eight Borrowing Tranches. Monthly interest payments are due and payable in arrears on the first day of each month and on the LOC Maturity Date. The entire outstanding principal balance and any accrued and unpaid interest on the LOC Loans are due and payable in full on the LOC Maturity Date. As of March 31, 2018, the interest rate on the LOC Loans was 3.48%. In addition to monthly interest payments, the Company will pay PNC Bank a non-refundable commitment fee equal to (a) the average daily difference between (i) the maximum principal amount of the LOC Loans minus (ii) the aggregate outstanding principal amount of all advances multiplied by (b) 0.15%. The commitment fee shall be payable in arrears on the first day of each calendar quarter until the LOC Maturity Date. As of March 31, 2018 and December 31, 2017, the advances obtained and certain financing costs incurred under the Line of Credit, which is included in revolving credit facilities, net, in the accompanying consolidated balance sheets, are summarized in the following table.
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Maturity and Interest The following is a summary of the Company’s aggregate maturities as of March 31, 2018:
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The Company’s notes payable contain customary financial and non-financial debt covenants. As of March 31, 2018, the Company was in compliance with all debt covenants. For the three months ended March 31, 2018 and 2017, the Company incurred interest expense of $9,092,883 and $7,882,714, respectively. Interest expense for the three months ended March 31, 2018 and 2017, includes amortization of deferred financing costs of $246,274 and $253,732, net unrealized gains (losses) from the change in fair value of interest rate cap agreements of $447,614 and ($255,002), amortization of loan discount of $88,746 and $88,746 and Credit Facility commitment fees of $7,397 and $13,370, respectively. Interest expense of $3,081,455 and $2,581,941 was payable as of March 31, 2018 and December 31, 2017, respectively, and is included in accounts payable and accrued liabilities in the accompanying consolidated balance sheets. |
Stockholders' Equity |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity | Stockholders’ Equity General Under the Company’s Articles of Amendment and Restatement (the “Charter”), the total number of shares of capital stock authorized for issuance is 1,100,000,000 shares, consisting of 999,999,000 shares of common stock with a par value of $0.01 per share, 1,000 shares of convertible stock with a par value of $0.01 per share and 100,000,000 shares designated as preferred stock with a par value of $0.01 per share. Common Stock The shares of the Company’s common stock entitle the holders to one vote per share on all matters upon which stockholders are entitled to vote, to receive dividends and other distributions as authorized by the Company’s board of directors in accordance with the Maryland General Corporation Law and to all rights of a stockholder pursuant to the Maryland General Corporation Law. The common stock has no preferences or preemptive, conversion or exchange rights. On September 3, 2013, the Company issued 13,500 shares of common stock to the Sponsor for $202,500. From inception through March 24, 2016, the date of the termination of the Public Offering, the Company had issued 48,625,651 shares of common stock in its Public Offering for offering proceeds of $640,012,497, including 1,011,561 shares of common stock issued pursuant to the DRP for total proceeds of $14,414,752, net of offering costs of $84,837,134. Following the termination of the Public Offering, the Company continues to offer shares pursuant to the DRP. As of March 31, 2018, the Company had issued 51,798,081 shares of common stock for offering proceeds of $686,489,896, including 4,184,054 shares of common stock issued pursuant to the DRP for total proceeds of $60,892,151, net of offering costs of $84,837,134. The offering costs primarily consisted of selling commissions and dealer manager fees. As further discussed in Note 8 (Incentive Award Plan and Independent Director Compensation), the shares of restricted common stock vest and become non-forfeitable in four equal annual installments beginning on the date of grant and ending on the third anniversary of the date of grant or will become fully vested and become non-forfeitable on the earlier to occur of (1) the termination of the independent director’s service as a director due to his or her death or disability, or (2) a change in control of the Company. The issuance and vesting activity for the three months ended March 31, 2018, and year ended December 31, 2017, for the restricted stock issued to the Company’s independent directors as compensation for services in connection with the independent directors’ re-election to the board of directors at the Company’s annual meeting is as follows:
Additionally, the weighted average fair value of restricted common stock issued to the Company’s independent directors for the three months ended March 31, 2018, and year ended December 31, 2017, is as follows:
Included in general and administrative expenses is $13,839 and $19,869 for the three months ended March 31, 2018 and 2017, for compensation expense related to the issuance of restricted common stock. As of March 31, 2018, the compensation expense related to the issuance of the restricted common stock not yet recognized was $75,167. The weighted average remaining term of the restricted common stock was approximately one year as of March 31, 2018. As of March 31, 2018, no shares of restricted common stock issued to the independent directors have been forfeited. Convertible Stock The Company issued 1,000 shares of Convertible Stock to the Advisor for $1,000. The Convertible Stock will convert into shares of common stock if and when: (A) the Company has made total distributions on the then-outstanding shares of its common stock equal to the original issue price of those shares plus an aggregate 6.0% cumulative, non-compounded, annual return on the original issue price of those shares, (B) the Company lists its common stock for trading on a national securities exchange, or (C) the Advisory Agreement is terminated or not renewed (other than for “cause” as defined in the Advisory Agreement). In the event of a termination or non-renewal of the Advisory Agreement for cause, all of the shares of the Convertible Stock will be repurchased for $1.00. In general, each share of Convertible Stock will convert into a number of shares of common stock equal to 1/1000 of the quotient of (A) 15% of the excess of (1) the Company’s “enterprise value” plus the aggregate value of distributions paid to date on the then outstanding shares of the Company’s common stock over (2) the aggregate purchase price paid by stockholders for those outstanding shares of common stock plus an aggregated 6.0% cumulative, non-compounded, annual return on the original issue price of those outstanding shares, divided by (B) the Company’s enterprise value divided by the number of outstanding shares of common stock on an as-converted basis, in each case calculated as of the date of the conversion. Preferred Stock The Charter also provides the Company’s board of directors with the authority to issue one or more classes or series of preferred stock, and prior to the issuance of such shares of preferred stock, the board of directors shall have the power from time to time to classify or reclassify, in one or more series, any unissued shares and designate the preferences, rights and privileges of such shares of preferred stock. The Company’s board of directors is authorized to amend the Charter without the approval of the stockholders to increase the aggregate number of authorized shares of capital stock or the number of shares of any class or series that the Company has authority to issue. As of March 31, 2018 and December 31, 2017, no shares of the Company’s preferred stock were issued and outstanding. Distribution Reinvestment Plan The Company’s board of directors has approved the DRP through which common stockholders may elect to reinvest an amount equal to the distributions declared on their shares of common stock in additional shares of the Company’s common stock in lieu of receiving cash distributions. The purchase price per share under the DRP was initially $14.25. On March 14, 2018, February 14, 2017 and March 24, 2016, the Company’s board of directors determined a price per share for the DRP of $15.18, $14.85 and $14.46, effective April 1, 2018, March 1, 2017 and May 1, 2016, respectively, in connection with the determination of an estimated value per share of the Company’s common stock. The Company’s board of directors may again, in its sole discretion, from time to time, change this price based upon changes in the Company’s estimated value per share and other factors that the Company’s board of directors deems relevant. No sales commissions or dealer manager fees are payable on shares sold through the DRP. The Company’s board of directors may amend, suspend or terminate the DRP at its discretion at any time upon ten days’ notice to the Company’s stockholders. Following any termination of the DRP, all subsequent distributions to stockholders will be made in cash. Share Repurchase Plan and Redeemable Common Stock The Company’s share repurchase plan may provide an opportunity for stockholders to have their shares of common stock repurchased by the Company, subject to certain restrictions and limitations. No shares can be repurchased under the Company’s share repurchase plan until after the first anniversary of the date of purchase of such shares; provided, however, that this holding period shall not apply to repurchases requested within two years after the death or disability of a stockholder. Beginning March 29, 2016, the date the Company first published an estimated value per share, the purchase price for shares repurchased under the Company’s share repurchase plan was as follows:
On March 14, 2018, the board of directors of the Company determined to amend the terms of the Company’s share repurchase plan to (1) limit the amount of shares repurchased pursuant to the Company’s share repurchase plan each quarter to $2,000,000 and (2) revise the repurchase price to an amount equal to 93% of the most recently publicly disclosed estimated value per share. The new share repurchase price is $14.12 per share, which represents 93% of the estimated value per share of $15.18. The share repurchase price is further reduced based on how long the stockholder has held the shares as follows:
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The purchase price per share for shares repurchased pursuant to the Company’s share repurchase plan will be further reduced by the aggregate amount of net proceeds per share, if any, distributed to the Company’s stockholders prior to the Repurchase Date (defined below) as a result of the sale of one or more of the Company’s assets that constitutes a return of capital as a result of such sales. Repurchases of shares of the Company’s common stock are made quarterly upon written request to the Company at least 15 days prior to the end of the applicable quarter. Repurchase requests are honored approximately 30 days following the end of the applicable quarter (“Repurchase Date”). Stockholders may withdraw their repurchase request at any time up to three business days prior to the Repurchase Date. During the three months ended March 31, 2018, the Company repurchased a total of 202,170 shares with a total repurchase value of $2,886,216 and received requests for repurchases of 309,952 shares with a total repurchase value of $4,262,726. During the three months ended March 31, 2017, the Company repurchased a total of 75,764 shares with a total repurchase value of $1,053,198 and received requests for the repurchase of 102,187 shares with a total repurchase value of $1,423,416. As of March 31, 2018 and 2017, the Company had 144,442 and 102,187 shares of outstanding and unfulfilled repurchase requests, respectively, and recorded $2,000,000 and $1,423,416 in accounts payable and accrued liabilities on the accompanying consolidated balance sheets related to these unfulfilled repurchase requests, respectively. The Company repurchased the shares of common stock represented by the outstanding repurchase requests as of March 31, 2018 and 2017, on the May 1, 2018, and April 28, 2017, Repurchase Dates, respectively. The Company cannot guarantee that the funds set aside for the share repurchase plan will be sufficient to accommodate all repurchase requests made in any quarter. In the event that the Company does not have sufficient funds available to repurchase all of the shares of the Company’s common stock for which repurchase requests have been submitted in any quarter, priority will be given to repurchase requests in the case of the death or disability of a stockholder. If the Company repurchases less than all of the shares subject to a repurchase request in any quarter, with respect to any shares which have not been repurchased, the Company will treat the shares that have not been repurchased as a request for repurchase in the following quarter pursuant to the limitations of the share repurchase plan and when sufficient funds are available, unless the stockholder withdraws the request for repurchase. Such pending requests will be honored among all requests for repurchases in any given repurchase period as follows: first, pro rata as to repurchases sought upon a stockholder’s death or disability; and, next, pro rata as to other repurchase requests. The Company is not obligated to repurchase shares of its common stock under the share repurchase plan. The share repurchase plan limits the number of shares to be repurchased in any calendar year to (1) 5% of the weighted average number of shares of common stock outstanding during the prior calendar year and (2) those that could be funded from the net proceeds from the sale of shares under the DRP in the prior calendar year, plus such additional funds as may be reserved for that purpose by the Company’s board of directors. Such sources of funds could include cash on hand, cash available from borrowings and cash from liquidations of securities investments as of the end of the applicable month, to the extent that such funds are not otherwise dedicated to a particular use, such as working capital, cash distributions to stockholders or purchases of real estate assets. The Company’s board of directors has further limited the amount of shares that may be repurchased pursuant to the share repurchase plan to $2,000,000 per quarter. There is no fee in connection with a repurchase of shares of the Company’s common stock pursuant to the Company’s share repurchase plan. The Company’s board of directors may again, in its sole discretion, amend, suspend or terminate the share repurchase plan at any time upon 30 days’ notice to its stockholders if it determines that the funds available to fund the share repurchase plan are needed for other business or operational purposes or that amendment, suspension or termination of the share repurchase plan is in the best interest of the Company’s stockholders. Therefore, a stockholder may not have the opportunity to make a repurchase request prior to any potential termination of the Company’s share repurchase plan. The share repurchase plan will terminate in the event that a secondary market develops for the Company’s shares of common stock. Pursuant to the share repurchase plan, for the three months ended March 31, 2018, the Company reclassified $37,028,102, net of $2,886,216 of fulfilled redemption requests, from temporary equity to permanent equity, which is included as additional paid-in capital on the accompanying consolidated balance sheets. For the three months ended March 31, 2017, the Company reclassified $2,387,814, net of $1,053,198 of fulfilled redemption requests, from permanent equity to temporary equity, which is included as redeemable common stock on the accompanying consolidated balance sheets. Distributions The Company’s long-term goal is to pay distributions solely from cash flow from operations. However, because the Company may receive income from interest or rents at various times during the Company’s fiscal year and because the Company may need cash flow from operations during a particular period to fund capital expenditures and other expenses, the Company expects that at times during the Company’s operational stage, the Company will declare distributions in anticipation of cash flow that the Company expects to receive during a later period, and the Company expects to pay these distributions in advance of its actual receipt of these funds. The Company’s board of directors has the authority under its organizational documents, to the extent permitted by Maryland law, to fund distributions from sources such as borrowings, offering proceeds or advances and the deferral of fees and expense reimbursements by the Advisor, in its sole discretion. The Company has not established a limit on the amount of proceeds it may use to fund distributions from sources other than cash flow from operations. If the Company pays distributions from sources other than cash flow from operations, the Company will have fewer funds available and stockholders’ overall return on their investment in the Company may be reduced. To maintain the Company’s qualification as a REIT, the Company must make aggregate annual distributions to its stockholders of at least 90% of its REIT taxable income (which is computed without regard to the dividends-paid deduction or net capital gain and which does not necessarily equal net income as calculated in accordance with GAAP). If the Company meets the REIT qualification requirements, the Company generally will not be subject to federal income tax on the income that the Company distributes to its stockholders each year. Distributions Declared The Company’s board of directors approved a cash distribution that accrues at a rate of $0.002466 per day for each share of the Company’s common stock during the three months ended March 31, 2018 and 2017, which, if paid over a 365-day period, is equivalent to a 6.0% annualized distribution rate based on a purchase price of $15.00 per share of the Company’s common stock. The distributions declared accrue daily to stockholders of record as of the close of business on each day and are payable in cumulative amounts on or before the third day of each calendar month with respect to the prior month. There is no guarantee that the Company will continue to pay distributions at this rate or at all. Distributions declared for the three months ended March 31, 2018 and 2017 were $11,312,463 and $11,078,212, including $5,671,096 and $5,773,757, or 381,892 shares and 392,430 shares, respectively, of common stock attributable to the DRP. As of March 31, 2018 and December 31, 2017, $3,900,642 and $3,886,730 of distributions declared were payable, which included $1,940,976 and $1,970,910, or 130,705 shares and 132,721 shares of common stock attributable to the DRP, respectively. Distributions Paid For the three months ended March 31, 2018 and 2017, the Company paid cash distributions of $5,597,521 and $5,255,684, which related to distributions declared for each day in the period from December 1, 2017, through February 28, 2018, and December 1, 2016, through February 28, 2017, respectively. Additionally, for the three months ended March 31, 2018 and 2017, 383,908 and 396,962 shares of common stock were issued pursuant to the DRP for gross offering proceeds of $5,701,030 and $5,787,328, respectively. For the three months ended March 31, 2018 and 2017, the Company paid total distributions of $11,298,551 and $11,043,012, respectively. |
Related Party Arrangements |
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Related Party Transactions [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Arrangements | Related Party Arrangements The Company has entered into the Advisory Agreement with the Advisor and a Dealer Manager Agreement with the Dealer Manager. Pursuant to the Advisory Agreement and Dealer Manager Agreement, the Company is or was obligated to pay the Advisor and the Dealer Manager specified fees upon the provision of certain services related to the Public Offering, the investment of funds in real estate and real estate-related investments and the management of the Company’s investments and for other services (including, but not limited to, the disposition of investments). Subject to the limitations described below, the Company is also obligated to reimburse the Advisor and its affiliates for organization and offering costs incurred by the Advisor and its affiliates on behalf of the Company, as well as acquisition and origination expenses and certain operating expenses incurred on behalf of the Company or incurred in connection with providing services to the Company. Amounts attributable to the Advisor and its affiliates incurred for the three months ended March 31, 2018 and 2017 and amounts attributable to the Advisor and its affiliates that are payable (prepaid) as of March 31, 2018 and December 31, 2017 are as follows:
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Investment Management Fee The Company pays the Advisor a monthly investment management fee equal to one-twelfth of 1.0% of the cost of the Company’s investments in real properties and real estate-related assets or the Company’s proportionate share thereof in the case of investments made through joint ventures. Such fee is calculated including acquisition fees, acquisition expenses and any debt attributable to such investments. Acquisition Fees and Expenses The Company pays the Advisor an acquisition fee equal to 1.0% of the cost of investment, which includes the amount actually paid or budgeted to fund the acquisition, origination, development, construction or improvement (i.e. value-enhancement) of any real property or real estate-related asset acquired. In addition to acquisition fees, the Company reimburses the Advisor for amounts directly incurred by the Advisor and amounts the Advisor pays to third parties in connection with the selection, evaluation, acquisition and development of a property or acquisition of real estate-related assets, whether or not the Company ultimately acquires the property or the real estate-related assets. The Charter limits the Company’s ability to pay acquisition fees if the total of all acquisition fees and expenses relating to the purchase would exceed 4.5% of the contract purchase price. Under the Charter, a majority of the Company’s board of directors, including a majority of the independent directors, is required to approve any acquisition fees (or portion thereof) that would cause the total of all acquisition fees and expenses relating to an acquisition to exceed 4.5% of the contract purchase price. In connection with the purchase of securities, the acquisition fee may be paid to an affiliate of the Advisor that is registered as a Financial Industry Regulatory Authority, Inc. (“FINRA”) member broker-dealer if applicable FINRA rules would prohibit the payment of the acquisition fee to a firm that is not a registered broker-dealer. Loan Coordination Fee The Company pays the Advisor or its affiliate a loan coordination fee equal to 1.0% of the initial amount of the new debt financed or outstanding debt assumed in connection with the acquisition, development, construction, improvement or origination of a property or a real estate-related asset. In addition, in connection with any financing or the refinancing of any debt (in each case, other than identified at the time of the acquisition of a property or a real estate-related asset), the Company pays the Advisor or its affiliate a loan coordination fee equal to 0.75% of the amount of debt financed or refinanced. Property Management Fees and Expenses The Company has entered into property management agreements (each, a “Property Management Agreement”) with Steadfast Management Company, Inc., an affiliate of the Sponsor (the “Property Manager”), in connection with the management of each of the Company’s properties. The property management fee payable with respect to each property under the Property Management Agreements at March 31, 2018, ranges from 2.50% to 3.0% of the annual gross revenue collected at the property, as determined by the Advisor and approved by a majority of the Company’s board of directors, including a majority of the independent directors. Each Property Management Agreement has an initial one-year term and will continue thereafter on a month-to-month basis unless either party gives 60-days’ prior notice of its desire to terminate the Property Management Agreement, provided that the Company may terminate the Property Management Agreement at any time upon a determination of gross negligence, willful misconduct or bad acts of the Property Manager or its employees or upon an uncured breach of the Property Management Agreement upon 30 days’ prior written notice to the Property Manager. In addition to the property management fee, the Property Management Agreements also specify certain other fees payable to the Property Manager for benefit administration, information technology infrastructure, licenses, support and training services and capital expenditures. The Company also reimburses the Property Manager for the salaries and related benefits of on-site property management employees. Construction Management Fees and Expenses The Company has entered into construction management agreements (each, a “Construction Management Agreement”) with Pacific Coast Land & Construction, Inc. (the “Construction Manager”), in connection with capital improvements and renovation or value-enhancement projects for certain properties the Company acquires. The construction management fee payable with respect to each property under the Construction Management Agreements ranges from 8.0% to 12.0% of the costs of the improvements for which the Construction Manager has planning and oversight authority. Generally, each Construction Management Agreement can be terminated by either party with 30 days prior written notice to the other party. Construction management fees are capitalized to the respective real estate properties in the period in which they are incurred as such costs relate to capital improvements and renovations for apartment homes taken out of service while they undergo the planned renovation. The Company may also reimburse the Construction Manager for the salaries and related benefits of certain of its employees for time spent working on capital improvements and renovations. Property Insurance The Company deposits amounts with an affiliate of the Sponsor to fund a prepaid insurance deductible account to cover the cost of required insurance deductibles across all properties of the Company and other affiliated entities. Upon filing a major claim, proceeds from the insurance deductible account may be used by the Company or another affiliate of the Sponsor. In addition, the Company deposits amounts with an affiliate of the Sponsor to cover the cost of property and property related insurance across certain properties of the Company. Other Operating Expense Reimbursement In addition to the various fees paid to the Advisor, the Company is obligated to pay directly or reimburse all expenses incurred by the Advisor in providing services to the Company, including the Company’s allocable share of the Advisor’s overhead, such as rent, employee costs, utilities and information technology costs. The Company will not reimburse the Advisor for employee costs in connection with services for which the Advisor or its affiliates receive acquisition fees or disposition fees or for the salaries the Advisor pays to the Company’s executive officers. The Charter limits the Company’s total operating expenses during any four fiscal quarters to the greater of 2% of the Company’s average invested assets or 25% of the Company’s net income for the same period (the “2%/25% Limitation”). The Company may reimburse the Advisor, at the end of each fiscal quarter, for operating expenses incurred by the Advisor; provided, however, that the Company shall not reimburse the Advisor at the end of any fiscal quarter for operating expenses that exceed the 2%/25% Limitation unless the independent directors have determined that such excess expenses were justified based on unusual and non-recurring factors. The Advisor must reimburse the Company for the amount by which the Company’s operating expenses for the preceding four fiscal quarters then ended exceed the 2%/25% Limitation, unless approved by the independent directors. For purposes of determining the 2%/25% Limitation amount, “average invested assets” means the average monthly book value of the Company’s assets invested directly or indirectly in equity interests and loans secured by real estate during the 12-month period before deducting depreciation, bad debts reserves or other non-cash reserves. “Total operating expenses” means all expenses paid or incurred by the Company that are in any way related to the Company’s operation, including the Company’s allocable share of Advisor overhead and investment management fees, but excluding (a) the expenses of raising capital such as organization and offering expenses, legal, audit, accounting, underwriting, brokerage, listing, registration and other fees, printing and other such expenses and taxes incurred in connection with the issuance, distribution, transfer, listing and registration of shares of the Company’s common stock; (b) interest payments; (c) taxes; (d) non-cash expenditures such as depreciation, amortization and bad debt reserves; (e) reasonable incentive fees based on the gain in the sale of the Company’s assets; (f) acquisition fees and acquisition expenses (including expenses relating to potential acquisitions that the Company does not close); (g) real estate commissions on the resale of investments; and (h) other expenses connected with the acquisition, disposition, management and ownership of investments (including the costs of foreclosure, insurance premiums, legal services, maintenance, repair and improvement of real property). As of March 31, 2018, the Company’s total operating expenses, as defined above, did not exceed the 2%/25% Limitation. Disposition Fee If the Advisor or its affiliates provide a substantial amount of services in connection with the sale of a property or real estate-related asset as determined by a majority of the Company’s independent directors, the Company will pay the Advisor or its affiliates one-half of the brokerage commissions paid, but in no event to exceed 1% of the sales price of each property or real estate-related asset sold. To the extent the disposition fee is paid upon the sale of any assets other than real property, it will be included as an operating expense for purposes of the 2%/25% Limitation. In connection with the sale of securities, the disposition fee may be paid to an affiliate of the Advisor that is registered as a FINRA member broker-dealer if applicable FINRA rules would prohibit the payment of the disposition fee to a firm that is not a registered broker-dealer. As of March 31, 2018, the Company had not sold or otherwise disposed of any properties or any real estate-related assets. Accordingly, the Company had not incurred any disposition fees as of March 31, 2018. Selling Commissions and Dealer Manager Fees The Company paid the Dealer Manager up to 7% and 3% of the gross offering proceeds from the Primary Offering as selling commissions and dealer manager fees, respectively. The Dealer Manager reallowed 100% of sales commissions earned to participating broker-dealers. The Dealer Manager could also reallow to any participating broker-dealer a portion of the dealer manager fee that was attributable to that participating broker-dealer for certain marketing costs of that participating broker-dealer. The Dealer Manager negotiated the reallowance of the dealer manager fee on a case-by-case basis with each participating broker-dealer subject to various factors associated with the cost of the marketing program. The Company allowed a participating broker-dealer to elect to receive the 7% selling commission at the time of sale or elect to have the selling commission paid on a trailing basis. A participating broker-dealer that elected to receive a trailing selling commission is paid as follows: 3% at the time of sale and the remaining 4% paid ratably (1% per year) on each of the first four anniversaries of the sale. A reduced sales commission and dealer manager fee was paid in connection with volume discounts and certain other categories of sales. No sales commission or dealer manager fee was paid with respect to shares of common stock issued pursuant to the DRP. The Company terminated the Public Offering on March 24, 2016, and as of March 31, 2018 and December 31, 2017, expects to pay trailing selling commissions of $505,829 and $562,339, respectively, which were charged to additional paid-in capital and included within amounts due to affiliates in the accompanying consolidated balance sheets. |
Incentive Award Plan and Independent Director Compensation |
3 Months Ended |
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Mar. 31, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Incentive Award Plan and Independent Director Compensation | Incentive Award Plan and Independent Director Compensation The Company has adopted an incentive award plan (the “Incentive Award Plan”) that provides for the grant of equity awards to its employees, directors and consultants and those of the Company’s affiliates. The Incentive Award Plan authorizes the grant of non-qualified and incentive stock options, restricted stock awards, restricted stock units, stock appreciation rights, dividend equivalents and other stock-based awards or cash-based awards. Under the Company’s independent directors’ compensation plan, which is a sub-plan of the Incentive Award Plan, each of the Company’s independent directors received 3,333 shares of restricted common stock once the Company raised $2,000,000 in gross offering proceeds in the Public Offering. Each subsequent independent director that joins the Company’s board of directors receives 3,333 shares of restricted common stock upon election to the Company’s board of directors. In addition, on the date following an independent director’s re-election to the Company’s board of directors, he or she receives 1,666 shares of restricted common stock. One-fourth of the shares of restricted common stock generally vest and become non-forfeitable upon issuance and the remaining portion will vest in three equal annual installments beginning on the date of grant and ending on the third anniversary of the date of grant; provided, however, that the restricted stock will become fully vested and become non-forfeitable on the earlier to occur of (1) the termination of the independent director’s service as a director due to his or her death or disability, or (2) a change in control of the Company. These awards entitle the holders to participate in distributions. The Company recorded stock-based compensation expense of $13,839 and $19,869 for the three months ended March 31, 2018 and 2017, respectively, related to the independent directors restricted common stock. In addition to the stock awards, the Company pays each of its independent directors an annual retainer of $55,000, prorated for any partial term (the audit committee chairperson receives an additional $10,000 annual retainer, prorated for any partial term). In addition, the independent directors are paid for attending meetings as follows: (i) $2,500 for each board meeting attended in person, (ii) $1,500 for each committee meeting attended in person in such director’s capacity as a committee member, (iii) $1,000 for each board meeting attended via teleconference (not to exceed $4,000 for any one set of meetings attended on any given day). All directors also receive reimbursement of reasonable out of pocket expenses incurred in connection with attendance at meetings of the board of directors. Director compensation is an operating expense of the Company that is subject to the operating expense reimbursement obligation of the Advisor discussed in Note 7 (Related Party Arrangements). The Company recorded an operating expense of $55,750 and $61,750 for the three months ended March 31, 2018 and 2017, related to the independent directors annual retainer and attending board meetings, which is included in general and administrative expenses in the accompanying consolidated statements of operations. As of March 31, 2018 and December 31, 2017, $55,750 and $55,750, respectively, related to the independent directors’ annual retainer and board meetings attendance is included in accounts payable and accrued liabilities in the consolidated balance sheets. |
Commitments and Contingencies |
3 Months Ended |
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Mar. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Economic Dependency The Company is dependent on the Advisor for certain services that are essential to the Company, including the identification, evaluation, negotiation, purchase and disposition of real estate and real estate-related investments; management of the daily operations of the Company’s real estate and real estate-related investment portfolio; and other general and administrative responsibilities. In the event that the Advisor is unable to provide such services, the Company will be required to obtain such services from other sources. The Company may not be able to retain services from such other sources on favorable terms or at all. Concentration of Credit Risk The geographic concentration of the Company’s portfolio makes it particularly susceptible to adverse economic developments in the Atlanta, Georgia, Dallas/Fort Worth, Texas and Nashville, Tennessee apartment markets. Any adverse economic or real estate developments in these markets, such as business layoffs or downsizing, relocations of businesses, increased competition from other apartment communities, decrease in demand for apartments or any other changes, could adversely affect the Company’s operating results and its ability to make distributions to stockholders. Environmental As an owner of real estate, the Company is subject to various environmental laws of federal, state and local governments. The Company is not aware of any environmental liability that could have a material adverse effect on its financial condition or results of operations. However, changes in applicable environmental laws and regulations, the uses and conditions of properties in the vicinity of the Company’s properties, the activities of its tenants and other environmental conditions of which the Company is unaware with respect to the properties could result in future environmental liabilities. Legal Matters From time to time, the Company is subject, or party, to legal proceedings that arise in the ordinary course of its business. Management is not aware of any legal proceedings of which the outcome is reasonably likely to have a material adverse effect on the Company’s results of operations or financial condition nor is the Company aware of any such legal proceedings contemplated by government agencies. |
Derivative Financial Instruments |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Financial Instruments | Derivative Financial Instruments The Company uses interest rate derivatives with the objective of managing exposure to interest rate movements thereby minimizing the effect of interest rate changes and the effect they could have on future cash flows. Interest rate cap agreements are used to accomplish this objective. The following table provides the terms of the Company’s interest rate derivative instruments that were in effect at March 31, 2018 and December 31, 2017:
The interest rate cap agreements are not designated as effective cash flow hedges. Accordingly, the Company records any changes in the fair value of the interest rate cap agreements as interest expense. The change in the fair value of the interest rate cap agreements for the three months ended March 31, 2018 and 2017, resulted in an unrealized gain (loss) of $447,614 and ($255,002), respectively, which is included in interest expense in the accompanying consolidated statements of operations. During the three months ended March 31, 2018 and 2017, the Company did not acquire any interest rate cap agreements. The fair value of the interest rate cap agreements of $795,023 and $347,409 as of March 31, 2018 and December 31, 2017, respectively, is included in other assets on the accompanying consolidated balance sheets. |
Subsequent Events |
3 Months Ended |
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Mar. 31, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events Distributions Paid On April 2, 2018, the Company paid distributions of $3,900,642, which related to distributions declared for each day in the period from March 1, 2018, through March 31, 2018, and consisted of cash distributions paid in the amount of $1,959,666 and $1,940,976 in shares issued pursuant to the DRP. On May 1, 2018, the Company paid distributions of $3,784,139, which related to distributions declared for each day in the period from April 1, 2018 through April 30, 2018 and consisted of cash distributions paid in the amount of $1,893,602 and $1,890,537 in shares issued pursuant to the DRP. Distributions Declared On May 8, 2018, the Company’s board of directors approved and authorized a daily distribution to stockholders of record as of the close of business on each day of the period commencing on July 1, 2018 and ending on September 30, 2018. The distributions will be equal to $0.002466 per share of the Company’s common stock. The distributions for each record date in July 2018, August 2018 and September 2018 will be paid in August 2018, September 2018 and October 2018, respectively. The distributions will be payable to stockholders from legally available funds therefor. |
Summary of Significant Accounting Policies (Policies) |
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Mar. 31, 2018 | |||||||||||||
Accounting Policies [Abstract] | |||||||||||||
Principles of Consolidation | Principles of Consolidation and Basis of Presentation The consolidated financial statements include the accounts of the Company, the Operating Partnership and its subsidiaries. All significant intercompany balances and transactions are eliminated in consolidation. The financial statements of the Company’s subsidiaries are prepared using accounting policies consistent with those of the Company. |
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Basis of Presentation | The accompanying unaudited consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information as contained within the Financial Accounting Standards Board (“FASB”), Accounting Standards Codification (“ASC”) and the rules and regulations of the SEC, including the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, the unaudited consolidated financial statements do not include all of the information and footnotes required by GAAP for audited financial statements. In the opinion of management, the financial statements for the unaudited interim periods presented include all adjustments that are of a normal and recurring nature and necessary for a fair and consistent presentation of the results of such periods. Operating results for the three months ended March 31, 2018, are not necessarily indicative of the results that may be expected for the year ending December 31, 2018. The unaudited consolidated financial statements herein should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017. |
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Use of Estimates | Use of Estimates The preparation of the consolidated financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could materially differ from those estimates. |
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Fair Value Measurements | Fair Value Measurements Under GAAP, the Company is required to measure certain financial instruments at fair value on a recurring basis. In addition, the Company is required to measure other assets and liabilities at fair value on a non-recurring basis (e.g., carrying value of impaired real estate loans receivable and long-lived assets). Fair value is defined as the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The GAAP fair value framework uses a three-tiered approach. Fair value measurements are classified and disclosed in one of the following three categories:
When available, the Company utilizes quoted market prices from an independent third-party source to determine fair value and will classify such items in Level 1 or Level 2. In instances where the market is not active, regardless of the availability of a nonbinding quoted market price, observable inputs might not be relevant and could require the Company to make a significant adjustment to derive a fair value measurement. Additionally, in an inactive market, a market price quoted from an independent third party may rely more on models with inputs based on information available only to that independent third party. When the Company determines the market for a financial instrument owned by the Company to be illiquid or when market transactions for similar instruments do not appear orderly, the Company uses several valuation sources (including internal valuations, discounted cash flow analysis and quoted market prices) and will establish a fair value by assigning weights to the various valuation sources. The following describes the valuation methodologies used by the Company to measure fair value, including an indication of the level in the fair value hierarchy in which each asset or liability is generally classified. Interest rate cap agreements - The Company has entered into certain interest rate cap agreements. These derivatives are recorded at fair value. Fair value was based on a model-driven valuation using the associated variable rate curve and an implied market volatility, both of which were observable at commonly quoted intervals for the full term of the interest rate cap agreements. Therefore, the Company’s interest rate cap agreements were classified within Level 2 of the fair value hierarchy and are included in other assets in the accompanying consolidated balance sheets. Changes in the fair value of the interest rate cap agreements are recorded as interest expense in the accompanying consolidated statements of operations. |
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Fair Value of Financial Instruments | Fair Value of Financial Instruments The accompanying consolidated balance sheets include the following financial instruments: cash and cash equivalents, restricted cash, rents and other receivables, accounts payable and accrued liabilities, distributions payable, due to affiliates and notes payable. The Company considers the carrying value of cash and cash equivalents, restricted cash, rents and other receivables, accounts payable and accrued liabilities and distributions payable to approximate the fair value of these financial instruments based on the short duration between origination of the instruments and their expected realization. The fair value of amounts due to affiliates is not determinable due to the related party nature of such amounts. The Company has determined that its notes payable, net are classified as Level 3 within the fair value hierarchy. The fair value of the notes payable, net is estimated using a discounted cash flow analysis using borrowing rates available to the Company for debt instruments with similar terms and maturities. |
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Distribution Policy | Distributions to stockholders are determined by the board of directors of the Company and are dependent upon a number of factors relating to the Company, including funds available for the payment of distributions, financial condition, the timing of property acquisitions, capital expenditure requirements and annual distribution requirements in order for the Company to qualify as a REIT under the Internal Revenue Code. Distribution Policy The Company elected to be taxed, and currently qualifies, as a REIT commencing with the taxable year ended December 31, 2014. To maintain its qualification as a REIT, the Company intends to make distributions each taxable year equal to at least 90% of its REIT taxable income (which is determined without regard to the dividends paid deduction or net capital gain and which does not necessarily equal net income as calculated in accordance with GAAP). |
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Per Share Data | Per Share Data Basic loss per share attributable to common stockholders for all periods presented are computed by dividing net loss by the weighted average number of shares of the Company’s common stock outstanding during the period. Diluted loss per share is computed based on the weighted average number of shares of the Company’s common stock and all potentially dilutive securities, if any. Distributions declared per common share assume each share was issued and outstanding each day during the period. Nonvested shares of the Company’s restricted common stock and convertible stock give rise to potentially dilutive shares of the Company’s common stock but such shares were excluded from the computation of diluted earnings per share because such shares were anti-dilutive during the period. |
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Segment Disclosure | Segment Disclosure The Company has determined that it has one reportable segment with activities related to investing in multifamily properties. The Company’s investments in real estate are in different geographic regions, and management evaluates operating performance on an individual asset level. However, as each of the Company’s assets has similar economic characteristics, tenants and products and services, its assets have been aggregated into one reportable segment. |
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Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). The new guidance requires an entity to recognize the revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. The new guidance supersedes the revenue requirements in Revenue Recognition (Topic 605) and most industry-specific guidance throughout the Industry Topics of the Codification. The new guidance does not apply to lease contracts within the scope of Leases (Topic 840). In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606), which delayed the effective date of the new guidance by one year, which will result in the new guidance being effective for fiscal years, and interim periods within those years, beginning after December 15, 2017, and is to be applied retrospectively. Early adoption is permitted, but can be no earlier than the original public entity effective date of fiscal years, and interim periods within those years, beginning after December 15, 2016. The Company selected the modified retrospective transition method with a cumulative effect recognized as of the date of adoption and adopted the new standard effective January 1, 2018. The Company identified limited sources of revenues from non-lease components, and the Company did not experience a material impact on its revenue recognition in the consolidated financial statements upon adoption. Additionally, there was no impact to the Company’s recognition of rental revenue, as rental revenue from leasing arrangements was specifically excluded from the standard. In February 2016, the FASB issued ASU 2016-02, Leases, amending the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. The new standard requires a modified retrospective transition approach. The guidance will be effective in the first quarter of 2019 and allows for early adoption. The Company is in the preliminary stages of evaluating the impact of this ASU on its leases both as it relates to the Company acting as a lessor and as a lessee. Based on the preliminary results of its evaluation, as it relates to the former, the Company does not expect any material impact on the recognition of leases in the consolidated financial statements because under this guidance, lessors will continue to account for leases using an approach that is substantially equivalent to existing guidance for sales-type leases, direct financing leases, and operating leases. As it relates to the latter, the Company does not expect a material impact on the recognition of leases in the consolidated financial statements because the quantity of leased equipment by the Company is limited. The Company is finalizing its evaluation of this new guidance and plans to adopt this ASU on January 1, 2019. In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230), Restricted Cash, that requires that a statement of cash flows explains the change during the period in the total of cash, cash equivalents, restricted cash and restricted cash equivalents. Therefore, amounts generally described as restricted cash should be included with cash and cash equivalents when reconciling the beginning of period and end of period total amounts shown on the statement of cash flows. The guidance is effective for annual periods beginning after December 15, 2017, and interim periods within those years. Early adoption is permitted. The Company adopted this guidance January 1, 2018 and applied it retrospectively. As a result of adopting ASU 2016-18, the Company began presenting restricted cash along with cash and cash equivalents in its consolidated statements of cash flows. In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the definition of business, that clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of businesses. This ASU provides a screen to determine when a set is not a business. If the screen is not met, it (1) requires that to be considered a business, a set must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output and (2) removes the evaluation of whether a market participant could replace the missing elements. The guidance is effective for annual reporting periods beginning after December 15, 2017, and interim periods within those years. Early adoption is permitted. The Company adopted this new guidance as of January 1, 2017. The Company did not experience a material impact from adopting this new guidance. In February 2017, the FASB issued ASU 2017-05, Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (“Subtopic 610-20”): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets (“ASU 2017-05”), that clarifies that a financial asset is within the scope of Subtopic 610-20 if it meets the definition of an in substance nonfinancial asset and defines the term in substance nonfinancial asset. ASU 2017-05 also clarifies that nonfinancial assets within the scope of Subtopic 610-20 may include nonfinancial assets transferred within a legal entity to a counterparty. Subtopic 610-20, which was issued in May 2014 as part of ASU 2014-09 (discussed above), provides guidance for recognizing gains and losses from the transfer of nonfinancial assets in contracts with noncustomers. An entity is required to apply amendments in ASU 2017-05 at the same time it applies the amendments in ASU 2014-09. ASU 2017-05 requires retrospective application and is effective for fiscal years beginning after December 15, 2017, including interim reporting periods within those fiscal years. The Company adopted this guidance January 1, 2018. The Company did not experience a material impact from adopting this new guidance. In May 2017, the FASB issued ASU 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting (“ASU 2017-09”). The FASB issued ASU 2017-09 to provide clarity and reduce both (1) diversity in practice and (2) cost and complexity when applying the guidance in Topic 718, Compensation - Stock Compensation, to a change to the terms or conditions of a share-based payment award. The amendments in ASU 2017-09 provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. ASU 2017-09 requires prospective application and is effective for annual periods beginning after December 15, 2017, including interim periods within those fiscal years. The Company adopted this guidance January 1, 2018. The Company did not experience a material impact from adopting this new guidance. |
Summary of Significant Accounting Policies (Tables) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Assets Required to be Measured at Fair Value on a Recurring Basis | The following tables reflect the Company’s assets required to be measured at fair value on a recurring basis on the consolidated balance sheets:
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Real Estate (Tables) |
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Real Estate [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accumulated Depreciation and Amortization Related to Consolidated Real Estate Properties and Related Intangibles | As of March 31, 2018 and December 31, 2017, accumulated depreciation and amortization related to the Company’s consolidated real estate properties and related intangibles were as follows:
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Other Assets (Tables) |
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Other Assets | As of March 31, 2018 and December 31, 2017, other assets consisted of:
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Debt (Tables) |
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Mortgage Notes Payable Secured by Real Property | As of March 31, 2018 and December 31, 2017, the advances obtained and certain financing costs incurred under the Line of Credit, which is included in revolving credit facilities, net, in the accompanying consolidated balance sheets, are summarized in the following table.
___________
The following is a summary of mortgage notes payable, net secured by real property as of March 31, 2018 and December 31, 2017.
___________
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Summary of Aggregate Maturities | The following is a summary of the Company’s aggregate maturities as of March 31, 2018:
___________
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Stockholders' Equity (Tables) |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Restricted Stock Issued to Independent Directors as Compensation for Services | The issuance and vesting activity for the three months ended March 31, 2018, and year ended December 31, 2017, for the restricted stock issued to the Company’s independent directors as compensation for services in connection with the independent directors’ re-election to the board of directors at the Company’s annual meeting is as follows:
Additionally, the weighted average fair value of restricted common stock issued to the Company’s independent directors for the three months ended March 31, 2018, and year ended December 31, 2017, is as follows:
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Schedule of Share Repurchase Plan Following Estimated Value Per Share of Common Stock is Published | Beginning March 29, 2016, the date the Company first published an estimated value per share, the purchase price for shares repurchased under the Company’s share repurchase plan was as follows:
On March 14, 2018, the board of directors of the Company determined to amend the terms of the Company’s share repurchase plan to (1) limit the amount of shares repurchased pursuant to the Company’s share repurchase plan each quarter to $2,000,000 and (2) revise the repurchase price to an amount equal to 93% of the most recently publicly disclosed estimated value per share. The new share repurchase price is $14.12 per share, which represents 93% of the estimated value per share of $15.18. The share repurchase price is further reduced based on how long the stockholder has held the shares as follows:
________________
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Related Party Arrangements (Tables) |
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Schedule of Amounts Attributable to the Advisor and its Affiliates | Amounts attributable to the Advisor and its affiliates incurred for the three months ended March 31, 2018 and 2017 and amounts attributable to the Advisor and its affiliates that are payable (prepaid) as of March 31, 2018 and December 31, 2017 are as follows:
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Derivative Financial Instruments (Tables) |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Interest Rate Derivatives | The following table provides the terms of the Company’s interest rate derivative instruments that were in effect at March 31, 2018 and December 31, 2017:
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Organization and Business - Narrative (Details) - USD ($) |
Sep. 03, 2013 |
Aug. 22, 2013 |
Mar. 31, 2018 |
---|---|---|---|
Common Stock [Member] | |||
Initial capitalization | |||
Share price (in dollars per share) | $ 15.00 | ||
Common Stock [Member] | Sponsor [Member] | |||
Initial capitalization | |||
Issuance of common stock (in shares) | 13,500 | ||
Share price (in dollars per share) | $ 15 | ||
Issuance of common stock | $ 202,500 | ||
Convertible Stock [Member] | Advisor [Member] | |||
Initial capitalization | |||
Issuance of common stock (in shares) | 1,000 | ||
Issuance of common stock | $ 1,000 |
Summary of Significant Accounting Policies - Schedule of Assets Required to be Measured at Fair Value on a Recurring Basis (Details) - Interest Rate Cap [Member] - Fair Value, Measurements, Recurring [Member] - USD ($) |
Mar. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Level 1 [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Interest rate cap agreements | $ 0 | $ 0 |
Level 2 [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Interest rate cap agreements | 795,023 | 347,409 |
Level 3 [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Interest rate cap agreements | $ 0 | $ 0 |
Summary of Significant Accounting Policies - Narrative - Fair Value of Financial Instruments (Details) - USD ($) |
Mar. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Principal Outstanding | $ 948,763,775 | $ 948,557,074 |
Estimate of Fair Value Measurement [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Mortgage notes payable, fair value | 1,009,923,592 | 1,011,004,179 |
Reported Value Measurement [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Principal Outstanding | $ 993,638,939 | $ 993,405,862 |
Summary of Significant Accounting Policies - Narrative - Distribution Policy (Details) - $ / shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Accounting Policies [Abstract] | ||
Distributions declared per common share (in dollars per share) | $ 0.222 | $ 0.222 |
Summary of Significant Accounting Policies - Narrative - Segment Disclosure (Details) |
3 Months Ended |
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Mar. 31, 2018
segment
| |
Accounting Policies [Abstract] | |
Number of reportable segments | 1 |
Real Estate - Narrative - Operating Leases (Details) |
3 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|
Mar. 31, 2018
apartment
tenant
|
Mar. 31, 2017
tenant
|
Dec. 31, 2017
USD ($)
|
Mar. 31, 2018
residential_unit
|
Mar. 31, 2018
USD ($)
|
|
Real Estate Properties [Line Items] | |||||
Average percentage of real estate portfolio occupied | 92.90% | 93.10% | |||
Maximum [Member] | |||||
Real Estate Properties [Line Items] | |||||
Operating lease term | 12 months | ||||
Accounts Payable and Accrued Liabilities [Member] | |||||
Real Estate Properties [Line Items] | |||||
Security deposit liability | $ | $ 3,613,649 | $ 3,686,985 | |||
Residential Real Estate [Member] | |||||
Real Estate Properties [Line Items] | |||||
Units | 11,601 | 11,601 | |||
Average percentage of real estate portfolio occupied | 95.00% | ||||
Tenant [Member] | Customer Concentration Risk [Member] | |||||
Real Estate Properties [Line Items] | |||||
Number of tenants | tenant | 0 | 0 |
Other Assets - Schedule of Other Assets (Details) - USD ($) |
Mar. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Prepaid expenses | $ 902,018 | $ 1,411,353 |
Interest rate cap agreements | 795,023 | 347,409 |
Other deposits | 1,028,078 | 1,053,424 |
Deferred financing costs and other assets, net | $ 2,725,119 | $ 2,812,186 |
Debt - Schedule of Advances Under Credit Facilities (Details) - USD ($) |
Mar. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Debt Instrument [Line Items] | ||
Revolving credit facilities, net | $ 44,875,164 | $ 44,848,788 |
Revolving credit facility, net | 993,638,939 | 993,405,862 |
Residential Real Estate [Member] | ||
Debt Instrument [Line Items] | ||
Revolving credit facilities, net | 45,000,000 | 45,000,000 |
Line of Credit [Member] | ||
Debt Instrument [Line Items] | ||
Deferred financing costs, net | (124,836) | (151,212) |
Accumulated amortization | $ 200,164 | $ 173,788 |
Debt - Summary of Aggregate Maturities (Details) |
Mar. 31, 2018
USD ($)
|
---|---|
Debt Disclosure [Abstract] | |
Total | $ 1,001,067,352 |
Remainder of 2018 | 2,184,120 |
2019 | 49,904,419 |
2020 | 8,327,845 |
2021 | 49,841,647 |
2022 | 61,568,950 |
Thereafter | $ 829,240,371 |
Stockholders' Equity - Narrative - General (Details) - $ / shares |
Mar. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Class of Stock [Line Items] | ||
Common and preferred shares authorized (in shares) | 1,100,000,000 | |
Preferred stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common Stock [Member] | ||
Class of Stock [Line Items] | ||
Common stock, shares authorized (in shares) | 999,999,000 | 999,999,000 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Convertible Stock [Member] | ||
Class of Stock [Line Items] | ||
Common stock, shares authorized (in shares) | 1,000 | 1,000 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Stockholders' Equity - Schedule of Restricted Stock Issued to Independent Directors as Compensation for Services (Details) - Restricted Stock [Member] - shares |
3 Months Ended | 12 Months Ended |
---|---|---|
Mar. 31, 2018 |
Dec. 31, 2017 |
|
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | ||
Nonvested shares at the beginning of the year (in shares) | 7,497 | 9,997 |
Granted shares (in shares) | 0 | 4,998 |
Vested shares (in shares) | 0 | (7,498) |
Nonvested shares at the end of the year (in shares) | 7,497 | 7,497 |
Stockholders' Equity - Schedule of Weighted Average Fair Value of Restricted Stock Issued to Independent Directors (Details) |
12 Months Ended |
---|---|
Dec. 31, 2017
$ / shares
| |
Restricted Stock [Member] | Independent Directors Compensation Plan [Member] | Common Stock [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Shares granted, grant date fair value (in dollars per share) | $ 14.85 |
Stockholders' Equity - Narrative - Convertible Stock (Details) - Advisor [Member] - Convertible Stock [Member] - USD ($) |
3 Months Ended | |
---|---|---|
Aug. 22, 2013 |
Mar. 31, 2018 |
|
Class of Stock [Line Items] | ||
Conversion basis multiplier | 0.001 | |
Issuance of common stock (in shares) | 1,000 | |
Issuance of common stock | $ 1,000 | |
Aggregate percentage of cumulative, non-compounded, annual return on the original issue price added to total distributions qualifying for conversion of stock | 6.00% | |
Convertible stock redemption price (in dollars per share) | $ 1.00 | |
Convertible stock, percentage applied to the excess of enterprise value, including distributions to date | 15.00% | |
Private Placement [Member] | ||
Class of Stock [Line Items] | ||
Issuance of common stock (in shares) | 1,000 | |
Issuance of common stock | $ 1,000 |
Stockholders' Equity - Narrative - Preferred Stock (Details) |
3 Months Ended | |
---|---|---|
Mar. 31, 2018
class
shares
|
Dec. 31, 2017
shares
|
|
Equity [Abstract] | ||
Preferred stock, number of classes or series the Board of Directors is authorized to classify or reclassify | class | 1 | |
Preferred stock, number of classes or series the Board of Directors is authorized to issue | class | 1 | |
Preferred stock, shares outstanding (in shares) | shares | 0 | 0 |
Preferred stock, shares issued (in shares) | shares | 0 | 0 |
Stockholders' Equity - Distribution Reinvestment Plan (Details) - USD ($) |
3 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2018 |
Mar. 14, 2018 |
Dec. 31, 2017 |
Mar. 01, 2017 |
Feb. 14, 2017 |
Dec. 31, 2016 |
May 01, 2016 |
Mar. 24, 2016 |
Dec. 31, 2015 |
Dec. 30, 2013 |
|
Common Stock [Member] | ||||||||||
Class of Stock [Line Items] | ||||||||||
Share price (in dollars per share) | $ 15.00 | |||||||||
Distribution Reinvestment Plan [Member] | ||||||||||
Class of Stock [Line Items] | ||||||||||
Share price (in dollars per share) | $ 15.18 | $ 14.85 | $ 14.46 | |||||||
Sales commissions or dealer manager fees payable on shares sold under the plan | $ 0 | |||||||||
Notice period for termination of plan | 10 days | |||||||||
Distribution Reinvestment Plan [Member] | Common Stock [Member] | ||||||||||
Class of Stock [Line Items] | ||||||||||
Share price (in dollars per share) | $ 15.18 | $ 15.18 | $ 14.85 | $ 14.85 | $ 14.46 | $ 14.46 | $ 14.25 |
Stockholders' Equity - Schedule of Share Repurchase Plan Prior to Estimated Value Per Share of Common Stock is Published (Details) - Share Repurchase Plan Pre-published Valuation [Member] - Common Stock [Member] |
Mar. 29, 2016 |
---|---|
Class of Stock [Line Items] | |
Less than 1 year | 0.00% |
1 year | 92.50% |
2 years | 95.00% |
3 years | 97.50% |
4 years | 100.00% |
Stockholders' Equity - Schedule of Share Repurchase Plan Following Estimated Value Per Share of Common Stock is Published (Details) - Share Repurchase Plan Post Published Valuation [Member] - Common Stock [Member] |
Mar. 30, 2016 |
---|---|
Class of Stock [Line Items] | |
Less than 1 year | 0.00% |
1 year | 92.50% |
2 years | 95.00% |
3 years | 97.50% |
4 years | 100.00% |
Stockholders' Equity - Narrative - Distributions Paid (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Equity [Abstract] | ||
Payments of ordinary dividends, common stock | $ 5,597,521 | $ 5,255,684 |
Stock issued during period, dividend reinvestment plan (in shares) | 383,908 | 396,962 |
Proceeds from issuance of common stock, dividend reinvestment plan | $ 5,701,030 | $ 5,787,328 |
Distributions paid, common stock, including distribution reinvestment plan | $ 11,298,551 | $ 11,043,012 |
Related Party Arrangements - Narrative - Organization and Offering Costs (Details) - Advisor [Member] - Advisor and its Affiliates [Member] - USD ($) |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
Dec. 31, 2017 |
|
Related Party Transaction [Line Items] | |||
Amount payable | $ 2,025,522 | $ 2,587,838 | |
Incurred in the period | $ 10,407,522 | $ 11,082,698 |
Related Party Arrangements - Narrative - Investment Management Fee (Details) |
1 Months Ended | 3 Months Ended |
---|---|---|
Dec. 31, 2014 |
Mar. 31, 2018 |
|
Advisor [Member] | Investment Management Fee [Member] | ||
Related Party Transaction [Line Items] | ||
Investment management fees | 0.0417% | 0.0833% |
Related Party Arrangements - Narrative - Acquisition Fees and Expenses (Details) - Advisor [Member] - Advisor [Member] - Acquisition Fees and Expenses [Member] |
3 Months Ended |
---|---|
Mar. 31, 2018 | |
Related Party Transaction [Line Items] | |
Acquisition fee, percent | 1.00% |
Acquisition fee payable without board approval as a percent of total contract price | 4.50% |
Related Party Arrangements - Narrative - Loan Coordination Fee (Details) - Advisor [Member] - Advisor [Member] - Loan Coordination Fee [Member] |
3 Months Ended |
---|---|
Mar. 31, 2018 | |
Related Party Transaction [Line Items] | |
Loan coordination fee, acquisitions | 1.00% |
Loan coordination fee, other than acquisitions | 0.75% |
Related Party Arrangements - Narrative - Property Management Fees and Expenses (Details) - Property Management Fees and Expenses [Member] - Steadfast Management Company [Member] - Property Manager [Member] |
3 Months Ended |
---|---|
Mar. 31, 2018 | |
Related Party Transaction [Line Items] | |
Related Party Agreement, Term of Agreement | 1 year |
Property Management Agreement, Number of Days Prior Notice is Needed to Terminate Agreement | 60 days |
Property Management Agreement, Number of Days of Uncured Breach Prior to Termination of Agreement | 30 days |
Minimum [Member] | |
Related Party Transaction [Line Items] | |
Property management fee, percent fee | 2.50% |
Maximum [Member] | |
Related Party Transaction [Line Items] | |
Property management fee, percent fee | 3.00% |
Related Party Arrangements - Narrative - Construction Management Fee (Details) - Pacific Coast Land & Construction, Inc. [Member] - Affiliated Entity [Member] - Construction Management Fee [Member] |
3 Months Ended |
---|---|
Mar. 31, 2018 | |
Related Party Transaction [Line Items] | |
Construction management agreement, notice of termination of contract, period | 30 days |
Minimum [Member] | |
Related Party Transaction [Line Items] | |
Construction management fee, percent | 8.00% |
Maximum [Member] | |
Related Party Transaction [Line Items] | |
Construction management fee, percent | 12.00% |
Related Party Arrangements - Narrative - Other Operating Expense Reimbursements (Details) - Advisor [Member] - Advisor [Member] - Other Operating Expense Reimbursement [Member] |
3 Months Ended |
---|---|
Mar. 31, 2018
quarter
| |
Operating Expenses | |
Operating expense limitation, number of rolling quarters | 4 |
Operating expenses limitation as a percentage of average invested assets | 2.00% |
Operating expenses limitation as a percentage of net income | 25.00% |
Average invested assets, calculation period | 12 months |
Related Party Arrangements - Narrative - Disposition Fee (Details) - Advisor [Member] - Advisor [Member] - Disposition Fee [Member] |
3 Months Ended |
---|---|
Mar. 31, 2018
USD ($)
| |
Related Party Transaction [Line Items] | |
Disposition fee, maximum percent of brokerage commission paid threshold | 50.00% |
Property sale disposition fee, maximum percentage of total sale price | 1.00% |
Operating expenses limitation as a percentage of average invested assets | 2.00% |
Operating expenses limitation as a percentage of net income | 25.00% |
Disposition fees incurred | $ 0 |
Derivative Financial Instruments - Schedule of Interest Rate Derivatives (Details) - Interest Rate Cap [Member] |
Mar. 31, 2018
USD ($)
instrument
|
Dec. 31, 2017
USD ($)
instrument
|
---|---|---|
Derivative [Line Items] | ||
Interest rate derivative assets, at fair value | $ 347,409 | |
Cash Flow Hedging [Member] | Not Designated as Hedging Instrument [Member] | ||
Derivative [Line Items] | ||
Derivative, number of instruments held | instrument | 29 | 29 |
Notional Amount | $ 888,368,100 | $ 888,368,100 |
Derivative, Average Cap Interest Rate | 3.21% | 3.17% |
Interest rate derivative assets, at fair value | $ 795,023 | $ 347,409 |
Cash Flow Hedging [Member] | Not Designated as Hedging Instrument [Member] | LIBOR [Member] | ||
Derivative [Line Items] | ||
Variable Rate | 1.88% | 1.56% |
Derivative Financial Instruments - Narrative (Details) - USD ($) |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
Dec. 31, 2017 |
|
Derivative [Line Items] | |||
Unrealized loss | $ (447,614) | $ 255,002 | |
Interest Rate Cap [Member] | |||
Derivative [Line Items] | |||
Unrealized loss | (447,614) | 255,002 | |
Interest rate derivative assets, at fair value | $ 347,409 | ||
Interest Rate Cap [Member] | Deferred Financing Costs and Other Assets, Net [Member] | |||
Derivative [Line Items] | |||
Interest rate derivative assets, at fair value | 795,023 | ||
Interest Expense [Member] | Interest Rate Cap [Member] | |||
Derivative [Line Items] | |||
Unrealized loss | $ (447,614) | $ 255,002 |
Subsequent Events - Narrative - Distributions Paid (Details) - USD ($) |
3 Months Ended | ||||
---|---|---|---|---|---|
May 08, 2018 |
May 01, 2018 |
Apr. 02, 2018 |
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Subsequent Event [Line Items] | |||||
Distributions paid, common stock, including distribution reinvestment plan | $ 11,298,551 | $ 11,043,012 | |||
Payments of ordinary dividends, common stock | $ 5,597,521 | $ 5,255,684 | |||
Subsequent Event [Member] | |||||
Subsequent Event [Line Items] | |||||
Distributions paid, common stock, including distribution reinvestment plan | $ 3,784,139 | $ 3,900,642 | |||
Common share, distribution rate per share per day, declared (in dollars per share) | $ 0.002466 | ||||
Subsequent Event [Member] | Dividend Paid [Member] | |||||
Subsequent Event [Line Items] | |||||
Payments of ordinary dividends, common stock | 1,893,602 | 1,959,666 | |||
Distributions paid to common stockholders through common stock issuances pursuant to distribution reinvestment plan | $ 1,890,537 | $ 1,940,976 |
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