10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended June 30, 2016

OR

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

For the transition period from to

Commission File Number 001-36663

NexPoint Residential Trust, Inc.

(Exact Name of Registrant as Specified in Its Charter)

Maryland	47-1881359
(State or other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

300 Crescent Court, Suite 700, Dallas, Texas	75201
(Address of Principal Executive Offices)	(Zip Code)

(972) 628-4100

(Telephone Number, Including Area Code)

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes  x   No  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer	o		Accelerated Filer	o
Non-Accelerated Filer	x	(Do not check if a smaller reporting company)	Smaller reporting company	o

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

As of August 8, 2016, the registrant had 21,266,770 shares of common stock, $0.01 par value, outstanding.

NEXPOINT RESIDENTIAL TRUST, INC.

Form 10-Q

Quarter Ended June 30, 2016

Page
PART I—FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Balance Sheets as of June 30, 2016 (Unaudited) and December 31, 2015	1
	Consolidated Unaudited Statements of Operations and Comprehensive Income (Loss) for the Three Months Ended June 30, 2016 and 2015 and Combined Consolidated Unaudited Statements of Operations and Comprehensive Income (Loss) for the Six Months Ended June 30, 2016 and 2015	2
	Consolidated Unaudited Statement of Equity for the Six Months Ended June 30, 2016	3
	Consolidated Unaudited Statements of Cash Flows for the Six Months Ended June 30, 2016 and Combined Consolidated Unaudited Statements of Cash Flows for the Six Months Ended June 30, 2015	4
	Notes to Combined Consolidated Unaudited Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	42
Item 4.	Controls and Procedures	43
PART II—OTHER INFORMATION
Item 1.	Legal Proceedings	44
Item 1A.	Risk Factors	44
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	44
Item 3.	Defaults Upon Senior Securities	44
Item 4.	Mine Safety Disclosures	44
Item 5.	Other Information	44
Item 6.	Exhibits	45
Signatures		46

i

Cautionary Statement Regarding Forward-Looking Statements

This quarterly report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are subject to risks and uncertainties. In particular, statements relating to our liquidity and capital resources, the performance of our properties, results of operations, strategy, plans or intentions contain forward-looking statements. Furthermore, all of the statements regarding future financial performance (including market conditions and demographics) are forward-looking statements. We caution investors that any forward-looking statements presented in this quarterly report are based on management’s beliefs and assumptions made by, and information currently available to, management. When used, the words “anticipate,” “believe,” “expect,” “intend,” “may,” “might,” “plan,” “estimate,” “project,” “should,” “will,” “would,” “result” and similar expressions that do not relate solely to historical matters are intended to identify forward-looking statements.

Forward-looking statements are subject to risks, uncertainties and assumptions and may be affected by known and unknown risks, trends, uncertainties and factors that are beyond our control. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or projected. We caution you therefore against relying on any of these forward-looking statements.

Some of the risks and uncertainties that may cause our actual results, performance, liquidity or achievements to differ materially from those expressed or implied by forward-looking statements include, among others, the following:

· unfavorable changes in market and economic conditions in the United States and globally and in the specific markets where our properties are located;

· risks associated with ownership of real estate;

· limited ability to dispose of assets because of the relative illiquidity of real estate investments;

· intense competition in the real estate market that, combined with low residential mortgage rates that could encourage potential renters to purchase residences rather than lease them, may limit our ability to acquire or lease and re-lease property or increase or maintain rent;

· risks associated with our ability to issue additional debt or equity securities in the future;

· failure of acquisitions and development projects to yield anticipated results;

· risks associated with our strategy of acquiring value-enhancement multifamily properties, which involves greater risks than more conservative investment strategies;

· the lack of experience of NexPoint Real Estate Advisors, L.P. (our “Adviser”) in operating under the constraints imposed by REIT requirements;

· loss of key personnel;

· the risk that we may not replicate the historical results achieved by other entities managed or sponsored by affiliates of our Adviser, members of our Adviser’s management team or by Highland Capital Management, L.P. (our “Sponsor” or “Highland”) or its affiliates;

· risks associated with our Adviser’s ability to terminate the Advisory Agreement;

· our ability to change our major policies, operations and targeted investments without stockholder consent;

· the substantial fees and expenses we will pay to our Adviser and its affiliates;

· risks associated with the potential internalization of our management functions;

· the risk that we may compete with other entities affiliated with our Sponsor or property manager for tenants;

· conflicts of interest and competing demands for time faced by our Adviser, our Sponsor and their officers and employees;

· our dependence on information systems;

· lack of or insufficient amounts of insurance;

· contingent or unknown liabilities related to properties or businesses that we have acquired or may acquire;

· high costs associated with the investigation or remediation of environmental contamination, including asbestos, lead-based paint, chemical vapor, subsurface contamination and mold growth;

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· the risk that our environmental assessments may not identify all potential environmental liabilities and our remediation actions may be insufficient; 

· high costs associated with the compliance with various accessibility, environmental, building and health and safety laws and regulations, such as the ADA and FHA;

· risks associated with our high concentrations of investments in the Southeastern and Southwestern United States;

· risks associated with limited warranties we may obtain when purchasing properties;

· exposure to decreases in market rents due to our short-term leases;

· risks associated with operating through joint ventures and funds;

· potential reforms to Fannie Mae and Freddie Mac;

· risks associated with our reduced public company reporting requirements as an “emerging growth company”;

· costs associated with being a public company, including compliance with securities laws;

· risks associated with breaches of our data security;

· the risk that our business could be adversely impacted if there are deficiencies in our disclosure controls and procedures or internal control over financial reporting;

· risks associated with our substantial current indebtedness and indebtedness we may incur in the future;

· risks associated with derivatives or hedging activity;

· the risk that we may be unable to achieve some or all of the benefits that we expect to achieve from the Spin-Off;

· failure to qualify as or to maintain our status as a REIT;

· compliance with REIT requirements, which may limit our ability to hedge our liabilities effectively and cause us to forgo otherwise attractive opportunities, liquidate certain of our investments or incur tax liabilities;

· failure of our operating partnership to qualify as a partnership for federal income tax purposes, causing us to fail to qualify for or to maintain REIT status;

· the ineligibility of dividends payable by REITs for the reduced tax rates available for some dividends;

· risks associated with the stock ownership restrictions of the Code for REITs and the stock ownership limit imposed by our charter;

· the ability of the Board of Directors to revoke our REIT qualification without stockholder approval;

· potential legislative or regulatory tax changes or other actions affecting REITs;

· risks associated with the market for our common stock and the general volatility of the capital and credit markets;

· failure to generate sufficient cash flows to service our outstanding indebtedness or pay distributions at expected levels;

· risks associated with limitations of liability for and our indemnification of our directors and officers; or

· any of the other risks included under Part I, Item 1A, “Risk Factors” of our annual report on Form 10-K, filed with the Securities and Exchange Commission on March 21, 2016.

While forward-looking statements reflect our good faith beliefs, they are not guarantees of future performance. They are based on estimates and assumptions only as of the date of this quarterly report. We undertake no obligation to update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, new information, data or methods, future events or other changes, except as required by law.

iii

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

NEXPOINT RESIDENTIAL TRUST, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts)

	June 30, 2016			December 31, 2015
	(Unaudited)
ASSETS
Operating Real Estate Investments
Land (including from VIEs of $94,962 and $163,462, respectively)	$	152,132		$	177,152
Buildings and improvements (including from VIEs of $363,453 and $642,936, respectively)		630,943			729,675
Intangible lease assets		—			2,573
Construction in progress (including from VIEs of $1,678 and $5,070, respectively)		2,562			5,346
Furniture, fixtures, and equipment (including from VIEs of $16,649 and $25,715, respectively)		29,867			28,009
Total Gross Operating Real Estate Investments		815,504			942,755
Accumulated depreciation and amortization (including from VIEs of $24,788 and $36,112, respectively)		(46,788	)		(39,873	)
Total Net Operating Real Estate Investments		768,716			902,882
Real estate held for sale (net of accumulated depreciation of $7,016 and $0, respectively) (including from VIEs of $81,090 and $0, respectively)		81,090			—
Total Net Real Estate Investments		849,806			902,882
Cash and cash equivalents (including from VIEs of $14,270 and $13,271, respectively)		28,550			16,226
Restricted cash (including from VIEs of $27,279 and $43,500, respectively)		34,200			46,869
Accounts receivable (including from VIEs of $878 and $1,517, respectively)		1,783			2,122
Prepaid and other assets (including from VIEs of $1,510 and $1,724, respectively)		3,093			1,961
TOTAL ASSETS	$	917,432		$	970,060
LIABILITIES AND EQUITY
Mortgages payable, net (including from VIEs of $161,239 and $609,703, respectively)	$	388,337		$	676,324
Mortgages payable held for sale, net (including from VIEs of $65,726 and $0, respectively)		65,726			—
Credit facility, net		196,290			—
Bridge facility, net		1,972			28,805
Accounts payable and other accrued liabilities (including from VIEs of $1,525 and $4,049, respectively)		3,789			5,106
Accrued real estate taxes payable (including from VIEs of $3,572 and $5,723, respectively)		5,988			6,057
Accrued interest payable (including from VIEs of $895 and $1,332, respectively)		1,031			1,462
Security deposit liability (including from VIEs of $780 and $1,277, respectively)		1,324			1,544
Prepaid rents (including from VIEs of $832 and $1,633, respectively)		1,231			1,824
Total Liabilities		665,688			721,122
NexPoint Residential Trust, Inc. stockholders' equity:
Preferred stock, $0.01 par value: 100,000,000 shares authorized; 0 shares issued		—			—
Common stock, $0.01 par value: 500,000,000 shares authorized; 21,293,825 shares issued		213			213
Additional paid-in capital		240,625			240,625
Accumulated deficit		(12,791	)		(18,593	)
Accumulated other comprehensive loss		(737	)		(697	)
Common stock held in treasury at cost; 5,000 and 0 shares, respectively		(88	)		—
Noncontrolling interests		24,522			27,390
Total Equity		251,744			248,938
TOTAL LIABILITIES AND EQUITY	$	917,432		$	970,060

See Notes to Combined Consolidated Financial Statements

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NEXPOINT RESIDENTIAL TRUST, INC. AND SUBSIDIARIES

COMBINED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE INCOME (LOSS)

(in thousands, except per share amounts)

(Unaudited)

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2016			2015			2016			2015
Revenues
Rental income	$	29,404		$	25,528		$	58,774		$	48,219
Other income		4,253			3,219			8,394			6,066
Total revenues		33,657			28,747			67,168			54,285
Expenses
Property operating expenses		9,691			8,293			19,073			15,612
Acquisition costs		—			238			—			2,169
Real estate taxes and insurance		4,090			3,577			8,353			6,955
Property management fees (related party)		1,013			858			2,018			1,617
Advisory and administrative fees (related party)		1,630			1,439			3,246			2,715
Corporate general and administrative expenses		844			831			1,626			831
Property general and administrative expenses		1,612			1,488			2,946			2,635
Depreciation and amortization		8,084			10,050			17,696			21,660
Total expenses		26,964			26,774			54,958			54,194
Operating income		6,693			1,973			12,210			91
Interest expense		(6,467	)		(4,239	)		(11,693	)		(8,248	)
Gain on sales of real estate		16,370			—			16,370			—
Net income (loss)		16,596			(2,266	)		16,887			(8,157	)
Net income (loss) attributable to noncontrolling interests		2,006			(12	)		2,312			(506	)
Net income (loss) attributable to common stockholders	$	14,590		$	(2,254	)	$	14,575		$	(7,651	)
Other comprehensive income (loss)
Net losses related to interest rate cap valuations		(12	)		(126	)		(44	)		(396	)
Total comprehensive income (loss)		16,584			(2,392	)		16,843			(8,553	)
Comprehensive income (loss) attributable to noncontrolling interests		2,005			(25	)		2,308			(543	)
Comprehensive income (loss) attributable to common stockholders	$	14,579		$	(2,367	)	$	14,535		$	(8,010	)
Weighted average common shares outstanding - basic and diluted		21,294			21,294			21,294			21,294
Dividends declared per common share	$	0.206		$	0.206		$	0.412		$	0.206
Earnings (loss) per share - basic and diluted (see Note 2)	$	0.69		$	(0.11	)	$	0.68		$	(0.36	)

See Notes to Combined Consolidated Financial Statements

2

NEXPOINT RESIDENTIAL TRUST, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF EQUITY

(in thousands)

(Unaudited)

	Preferred Stock				Common Stock
	Number of Shares		Par Value		Number of Shares		Par Value		Additional Paid-in Capital		Accumulated Deficit			Accumulated Other Comprehensive Loss			Common Stock Held in Treasury at Cost			Noncontrolling Interests			Total
Balances, December 31, 2015		—	$	—		21,294	$	213	$	240,625	$	(18,593	)	$	(697	)	$	—		$	27,390		$	248,938
Purchase of common stock										—		—			—			(88	)		—			(88	)
Distributions / Dividends										—		(8,773	)		—			—			(5,176	)		(13,949	)
Other comprehensive income    (loss)										—		—			(40	)		—			(4	)		(44	)
Net income										—		14,575			—			—			2,312			16,887
Balances, June 30, 2016		—	$	—		21,294	$	213	$	240,625	$	(12,791	)	$	(737	)	$	(88	)	$	24,522		$	251,744

See Notes to Combined Consolidated Financial Statements

3

NEXPOINT RESIDENTIAL TRUST, INC. AND SUBSIDIARIES

COMBINED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)

	For the Six Months Ended June 30,
	2016			2015
Cash flows from operating activities
Net income (loss)	$	16,887		$	(8,157	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Gain on sales of real estate		(16,370	)		—
Depreciation and amortization		17,696			21,660
Amortization of deferred financing costs		983			540
Change in fair value on derivative instruments included in interest expense		6			166
Amortization of fair market value adjustment of assumed debt		(55	)		(55	)
Noncash contributions		—			1,277
Changes in operating assets and liabilities, net of effects of acquisitions:
Accounts receivable		339			(668	)
Prepaid and other assets		(1,182	)		(418	)
Restricted cash		3,950			(4,253	)
Accounts payable and other accrued liabilities		(1,830	)		(1,478	)
Net cash provided by operating activities		20,424			8,614
Cash flows from investing activities
Net proceeds from sales of real estate		63,220			—
Change in restricted cash		8,719			(5,558	)
Prepaid acquisition deposits		—			(2,088	)
Additions to operating real estate investments		(12,265	)		(17,230	)
Acquisitions of operating real estate investments		—			(164,578	)
Net cash provided by (used in) investing activities		59,674			(189,454	)
Cash flows from financing activities
Mortgage proceeds received		—			124,990
Mortgage payments		(224,199	)		(6,391	)
Credit facility proceeds received		200,000			—
Bridge facility payments		(27,000	)		—
Deferred financing fees paid		(2,538	)		(1,519	)
Interest rate cap fees paid		—			(253	)
Due to affiliates		—			454
Purchase of common stock held in treasury		(88	)
Distributions to noncontrolling interests		(5,176	)		(1,136	)
Dividends		(8,773	)		—
Contributions from noncontrolling interests		—			7,628
Contributions		—			68,561
Net cash provided by (used in) financing activities		(67,774	)		192,334
Net increase in cash		12,324			11,494
Cash, beginning of period		16,226			12,662
Cash, end of period	$	28,550		$	24,156

See Notes to Combined Consolidated Financial Statements

4

NEXPOINT RESIDENTIAL TRUST, INC. AND SUBSIDIARIES

COMBINED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)

Supplemental Disclosure of Cash Flow Information
Interest paid	$	11,178	$	7,309
Supplemental Disclosure of Noncash Investing and Financing Activities
Capitalized construction costs included in accounts payable and other accrued liabilities		800		1,322
Change in fair value on hedging instruments designated as hedges		44		396
Dividend declared and payable		—		4,387
Liabilities assumed from acquisitions		—		1,104
Other assets acquired from acquisitions		—		298
Assumed debt on acquisitions of operating real estate investments		—		18,000

See Notes to Combined Consolidated Financial Statements

5

NEXPOINT RESIDENTIAL TRUST, INC. AND SUBSIDIARIES

NOTES TO COMBINED CONSOLIDATED FINANCIAL STATEMENTS

1. Organization and Description of Business

NexPoint Residential Trust, Inc. (the “Company”, “we”, “our”) was incorporated on September 19, 2014, and intends to be taxed as a real estate investment trust (“REIT”). The Company is focused on “value-add” multifamily investments primarily located in the Southeastern and Southwestern United States. Substantially all of the Company’s business is conducted through NexPoint Residential Trust Operating Partnership, L.P. (the “OP”), the Company’s operating partnership. The Company holds all or a majority interest in its properties (the “Portfolio”) through the OP. The Company’s wholly owned subsidiary, NexPoint Residential Trust Operating Partnership GP, LLC (the “OP GP”) is the sole general partner of the OP. The sole limited partner of the OP is the Company.

The Company began operations on March 31, 2015 as a result of the transfer and contribution by NexPoint Credit Strategies Fund (“NHF”) of all but one of the multifamily properties owned by NHF through its subsidiary Freedom REIT, LLC (“Freedom REIT”). We use the term “predecessor” to mean the carve-out business of Freedom REIT. On March 31, 2015, NHF distributed all of the outstanding shares of the Company's common stock held by NHF to holders of NHF common shares. We refer to the distribution of our common stock by NHF as the “Spin-Off.”

We are externally managed by NexPoint Real Estate Advisors, L.P., (the “Adviser”), through an agreement, as amended, dated March 16, 2015 (the “Advisory Agreement”), by and among the Company, the OP and our Adviser. The Advisory Agreement has a term of two years. Our Adviser conducts substantially all of our operations and provides asset management for our real estate investments. We will only have accounting employees while the Advisory Agreement is in effect. All of our investment decisions are made by our Adviser, subject to general oversight by our Adviser’s investment committee and our Board of Directors (the “Board”). Our Adviser is wholly owned by NexPoint Advisors, L.P. and is an affiliate of Highland Capital Management, L.P. (our “Sponsor” or “Highland”).

The Company’s investment objectives are to maximize the cash flow and value of properties owned, acquire properties with cash flow growth potential, provide quarterly cash distributions and achieve long-term capital appreciation for its stockholders through targeted management and a capex value-add program. Consistent with the Company’s policy to acquire assets for both income and capital gain, the Company intends to hold majority interests in the properties for long-term appreciation and to engage in the business of directly or indirectly acquiring, owning, and operating well-located multifamily properties with a value-add component in large cities and suburban submarkets of large cities primarily in the Southeastern and Southwestern United States consistent with its investment objectives. Economic and market conditions may influence the Company to hold properties for different periods of time. From time to time, the Company may sell a property if, among other deciding factors, the sale would be in the best interest of its stockholders.

The Company may also participate with third parties in property ownership, through limited liability companies (“LLCs”), funds or other types of co-ownership or acquire real estate or interests in real estate in exchange for the issuance of common stock, units, preferred stock or options to purchase stock. These types of investments may permit the Company to own interests in larger assets without unduly restricting diversification which provides flexibility in structuring the Company’s portfolio.

The Company may allocate up to thirty percent of the portfolio to investments in real estate-related debt and securities with the potential for high current income or total returns. These allocations may include first and second mortgages, subordinated, bridge, mezzanine, construction and other loans, as well as debt securities related to or secured by multifamily real estate and common and preferred equity securities, which may include securities of other REIT or real estate companies.

2. Summary of Significant Accounting Policies

Predecessor

With the exception of a nominal amount of initial cash funded at inception, the Company did not own any assets prior to March 31, 2015. The business and operations of the Company prior to March 31, 2015 occurred under the predecessor. Our predecessor included all of the properties in our Portfolio that were held directly or indirectly by Freedom REIT, a wholly owned subsidiary of NHF, prior to the Spin-Off that occurred on March 31, 2015. However, our combined consolidated statements of operations and comprehensive income (loss) and combined consolidated statements of cash flows reflect operations of our predecessor through March 31, 2015 as if they were incurred by us. Our predecessor was determined in accordance with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). References throughout these combined consolidated financial statements to the “Company”, “we”, or “our”, include the activity of the predecessor defined above.

6

Basis of Accounting

The accompanying unaudited combined consolidated financial statements of the Company are prepared in accordance with Generally Accepted Accounting Principles (“GAAP”). The consolidated balance sheets include the accounts of the Company and its subsidiaries. Our predecessor combined consolidated financial statements were derived from the historical accounting records of our predecessor and reflect the historical results of operations and cash flows for the period prior to the Spin-Off. All intercompany balances and transactions are eliminated in combination and consolidation. The financial statements of the Company’s subsidiaries are prepared using accounting polices consistent with those of the Company. In addition, the Company evaluates relationships with other entities to identify whether there are variable interest entities (“VIE’s”) as required by the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 810, Consolidation, and to assess whether it is the primary beneficiary of such entities. If the determination is made that the Company is the primary beneficiary, then that entity is included in the financial statements in accordance with FASB ASC 810. In the opinion of the Company’s management, the accompanying combined consolidated financial statements include all adjustments and eliminations, consisting only of normal recurring items necessary for their fair presentation in conformity with GAAP. The unaudited information included in this quarterly report on Form 10-Q should be read in conjunction with our audited financial statements for the year ended December 31, 2015 and notes thereto included in our annual report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 21, 2016. There have been no significant changes to the Company’s significant accounting policies during the six months ended June 30, 2016.

Use of Estimates

The preparation of the combined consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the date of the combined consolidated financial statements, and the reported amounts of revenues and expenses during the reporting periods. It is at least reasonably possible that these estimates could change in the near term.

Real Estate Investments

Upon acquisition, in accordance with FASB ASC 805, Business Combinations, the purchase price of a property is allocated to land, buildings, improvements, furniture, fixtures, and equipment, and intangible lease assets. The purchase price allocation is based on management’s estimate of the property’s “as-if” vacant fair value, which is calculated by using all available information such as the replacement cost of such asset, appraisals, property condition reports, market data and other related information. The allocation of the purchase price to intangible lease assets represents the value associated with the in-place leases, which may include lost rent, leasing commissions, legal and other related costs, which the Company, as buyer of the property, did not have to incur to obtain the residents.

If any debt is assumed in an acquisition, the difference between the fair value and the face value of debt is recorded as a premium or discount and amortized to interest expense over the life of the debt assumed. Costs associated with the acquisition of a property, including acquisition fees paid, are expensed upon closing the acquisition.

The results of operations for acquired properties are included in the combined consolidated statements of operations and comprehensive income (loss) from their respective acquisition dates.

Real estate assets, including land, buildings, improvements, furniture, fixtures and equipment, and intangible lease assets are stated at historical cost less accumulated depreciation and amortization. Costs incurred in making repairs and maintaining real estate assets are expensed as incurred. Expenditures for improvements, renovations, and replacements are capitalized at cost. Real estate-related depreciation and amortization are computed on a straight-line basis over the estimated useful lives as described in the following table:

Land	Not depreciated
Buildings	30 years
Improvements	15 years
Furniture, fixtures, and equipment	3 years
Intangible lease assets	6 months

Construction in progress includes the cost of renovation projects being performed at the various properties. Once a project is complete, the historical cost of the renovation is placed into service in one of the categories above depending on the type of renovation project and is depreciated over the estimated useful lives as described in the table above.

The Company periodically classifies real estate assets as held for sale. An asset is classified as held for sale after an active program to sell the asset has commenced or the asset is under contract for sale and after the evaluation of other factors. Upon the

7

classification of a real estate asset as held for sale, the carrying value of the asset is reduced to the lower of its net book value or its estimated fair value, less costs to sell the asset, and no further depreciation expense is recorded. Upon a decision to no longer market an asset for sale, the asset is classified as an operating asset and depreciation expense is reinstated. Real estate assets and the related debt held for sale are stated separately on the accompanying consolidated balance sheets.

Impairment

Real estate assets that are determined to be held and used will be reviewed periodically for impairment and whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In such cases, the Company will evaluate the recoverability of such real estate assets based on estimated future cash flows and the estimated liquidation value of such real estate assets, and provide for impairment if such undiscounted cash flows are insufficient to recover the carrying amount of the real estate asset. If impaired, the real estate asset will be written down to its estimated fair value. For the three and six month periods ended June 30, 2016 and 2015, the Company did not record any impairment charges related to real estate assets.

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Cash equivalents may include cash and short-term investments. Short-term investments are stated at cost, which approximates fair value.

Restricted Cash

Restricted cash is comprised of security deposits, operating escrows, and renovation value-add reserves. Security deposits are held until they are due to tenants and are credited against the balance. Operating escrows are required and held by our first mortgage lender(s) for items such as real estate taxes, insurance, and required repairs. Lender held escrows are released back to the joint venture upon the borrower’s proof of payment of such expenses. Renovation value-add reserves are funds identified to finance our value-add renovations at each of our properties and are not required to be held in escrow by a third party. The Company may reallocate these funds, at its discretion, to pursue other investment opportunities. The following is a summary of the restricted cash held as of June 30, 2016 and December 31, 2015 (in thousands):

	June 30, 2016		December 31, 2015
Security deposits	$	963	$	1,034
Operating escrows		17,433		21,312
Renovation value-add reserves		15,804		24,523
	$	34,200	$	46,869

Deferred Financing Costs

The Company defers costs incurred in obtaining financing and amortizes the costs over the terms of the related loans using the straight-line method, which approximates the effective interest method. Upon repayment of or in conjunction with a material change in the terms of the underlying debt agreement, any unamortized costs are charged to interest expense. Deferred financing costs, net of amortization, of $4.0 million and $6.0 million are recorded as a deduction from mortgages payable on the accompanying consolidated balance sheets as of June 30, 2016 and December 31, 2015, respectively. Deferred financing costs, net of amortization, of $3.7 million and $0.2 million are recorded as a deduction from the debt related to the Company’s credit facility and bridge facility on the accompanying consolidated balance sheets as of June 30, 2016 and December 31, 2015, respectively. Amortization of deferred financing costs of $0.7 million and $0.2 million is included in interest expense on the consolidated statements of operations and comprehensive income (loss) for the three months ended June 30, 2016 and 2015, respectively. For the three months ended June 30, 2016, the Company incurred amortization of deferred financing costs of approximately $0.3 million related to its sales of three properties (see Note 4). Amortization of deferred financing costs of $1.0 million and $0.6 million is included in interest expense on the combined consolidated statements of operations and comprehensive income (loss) for the six months ended June 30, 2016 and 2015, respectively.  

Noncontrolling Interests

Noncontrolling interests are comprised of the Company’s joint venture partners’ interests in the joint ventures in multifamily properties that the Company consolidates. The Company reports its joint venture partners’ interests in its consolidated real estate joint ventures and other subsidiary interests held by third parties as noncontrolling interests. The Company records these noncontrolling interests at their initial fair value, adjusting the basis prospectively for their share of the respective consolidated investment’s net

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income or loss and equity contributions and distributions. These noncontrolling interests are not redeemable by the equity holders and are presented as part of permanent equity. Income and losses are allocated to the noncontrolling interest holder based on its economic ownership percentage.

Accounting for Joint Ventures

The Company first analyzes its investments in joint ventures to determine if the joint venture is a VIE in accordance with FASB ASC 810, and if so, whether the Company is the primary beneficiary requiring consolidation. A VIE is an entity that has (i) insufficient equity to permit it to finance its activities without additional subordinated financial support or (ii) equity holders that lack the characteristics of a controlling financial interest. VIEs are consolidated by the primary beneficiary, which is the entity that has both the power to direct the activities that most significantly impact the VIE’s economic performance and the obligation to absorb losses or the right to receive benefits from the VIE that potentially could be significant to the primary beneficiary. Variable interests in a VIE are contractual, ownership, or other financial interests that change with changes in the fair value of the VIE’s net assets. The Company assesses at each level of the joint venture whether the entity is (i) a VIE, and (ii) if the Company is the primary beneficiary of the VIE. If an entity in which the Company holds a joint venture interest qualifies as a VIE and the Company is determined to be the primary beneficiary, the joint venture is consolidated.

The following table represents the Company’s investments in VIEs as of June 30, 2016 and December 31, 2015:

Property Name		Location	YearAcquired	Effective Ownership Percentage at June 30, 2016				Effective Ownership Percentage at December 31, 2015
Meridian		Austin, Texas	2014		—		(2)		90	%
The Grove at Alban	(1)	Frederick, Maryland	2014		76	%			76	%
Willowdale Crossing	(1)	Frederick, Maryland	2014		80	%			80	%
Abbington Heights		Antioch, Tennessee	2014		90	%			90	%
The Summit at Sabal Park		Tampa, Florida	2014		90	%			90	%
Courtney Cove		Tampa, Florida	2014		90	%			90	%
Colonial Forest	(1)	Jacksonville, Florida	2014		90	%			90	%
Park at Blanding	(1)	Orange Park, Florida	2014		90	%			90	%
Park at Regency		Jacksonville, Florida	2014		—		(2)		90	%
Jade Park	(1)	Daytona Beach, Florida	2014		90	%			90	%
Mandarin Reserve		Jacksonville, Florida	2014		—		(2)		90	%
Radbourne Lake		Charlotte, North Carolina	2014		90	%			90	%
Timber Creek		Charlotte, North Carolina	2014		90	%			90	%
Belmont at Duck Creek		Garland, Texas	2014		90	%			90	%
The Arbors		Tucker, Georgia	2014		90	%			90	%
The Crossings		Marietta, Georgia	2014		90	%			90	%
The Crossings at Holcomb Bridge		Roswell, Georgia	2014		90	%			90	%
The Knolls		Marietta, Georgia	2014		90	%			90	%
Regatta Bay		Seabrook, Texas	2014		90	%			90	%
Sabal Palm at Lake Buena Vista		Orlando, Florida	2014		90	%			90	%
Southpoint Reserve at Stoney Creek		Fredericksburg, Virginia	2014		85	%			85	%
Cornerstone		Orlando, Florida	2015		90	%			90	%
McMillan Place		Dallas, Texas	2015		90	%			90	%
Barrington Mill		Marietta, Georgia	2015		90	%			90	%
Dana Point		Dallas, Texas	2015		90	%			90	%
Heatherstone		Dallas, Texas	2015		90	%			90	%
Versailles		Dallas, Texas	2015		90	%			90	%
Seasons 704 Apartments		West Palm Beach, Florida	2015		90	%			90	%

(1) Properties are classified as held for sale as of June 30, 2016.

(2) Properties were sold during the six months ended June 30, 2016.

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The following table represents the Company’s investments in voting interest entities as of June 30, 2016 and December 31, 2015:

Property Name	Location	YearAcquired	Effective Ownership Percentage at June 30, 2016			Effective Ownership Percentage at December 31, 2015
The Miramar Apartments	Dallas, Texas	2013		100	%		100	%
Arbors on Forest Ridge	Bedford, Texas	2014		90	%		90	%	(1)
Cutter’s Point	Richardson, Texas	2014		90	%		90	%	(1)
Eagle Crest	Irving, Texas	2014		90	%		90	%	(1)
Silverbrook	Grand Prairie, Texas	2014		90	%		90	%	(1)
Timberglen	Dallas, Texas	2014		90	%		90	%	(1)
Toscana	Dallas, Texas	2014		90	%		90	%	(1)
Edgewater at Sandy Springs	Atlanta, Georgia	2014		90	%		90	%	(1)
Beechwood Terrace	Nashville, Tennessee	2014		90	%		90	%	(1)
Willow Grove	Nashville, Tennessee	2014		90	%		90	%	(1)
Woodbridge	Nashville, Tennessee	2014		90	%		90	%	(1)
Madera Point	Mesa, Arizona	2015		95	%		95	%
The Pointe at the Foothills	Mesa, Arizona	2015		95	%		95	%
The Place at Vanderbilt	Fort Worth, Texas	2015		95	%		95	%

(1) Properties were considered VIEs at December 31, 2015.

In connection with its indirect equity investments in the properties acquired, the Company, through the OP, directly or indirectly holds membership interests in single-asset LLCs that directly own the properties. In instances where the Company acquires multiple properties under a single purchase and sale agreement (a “Portfolio Acquisition”), the Company directly or indirectly holds membership interests in the single-asset LLCs that directly own the properties through a multiple-asset LLC. Under these arrangements, the multiple-asset LLC is the sole member of all single-asset LLCs which directly own the properties. The majority of these entities are deemed to be VIEs as we have disproportionate voting rights (in the form of substantive participating rights over all of the decisions that are made that most significantly affect economic performance) relative to our economic interests in the entities and substantially all of the activities of the entities are performed on our behalf. The Company is considered the primary beneficiary of these VIEs as no single party meets both criteria to be the primary beneficiary, and we are the member of the related party group that has both the power to direct the activities that most significantly impact economic performance of the VIE and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. Within the related party group, the Company is the most closely associated to the VIE based on the purpose and design of the entity, the size of our ownership interests relative to the other investors, and the rights we hold with respect to the other investors’ equity interests, including our ability to preclude any transfers of their interests and ability to drag them along on the sale of our equity interest. All VIEs are consolidated in the Company’s financial statements. The assets of each VIE can only be used to settle obligations of that particular VIE, and the creditors of each entity have no recourse to the assets of other entities or the Company.

The other investor in the VIEs is BH Equities, LLC (“BH Equity”) or affiliates of BH Equity. When these VIEs were formed, BH Equity invested cash in each VIE and received a proportional share of each VIE that it invested in. Each VIE has a non-recourse mortgage that has standard scope non-recourse carve outs required by agency lenders and generally call for protection by the borrower and the guarantor against losses by the lender for so-called “bad acts,” such as misrepresentations, and may include full recourse liability for more significant events such as bankruptcy. BH Equity, or its affiliates, provided non-recourse carve out guarantees for the mortgage indebtedness currently outstanding relating to each VIE. In consideration of the guarantees provided by BH Equity and its affiliates, they will earn an additional profit interest in each VIE such that distributions will be made to the members of the VIE pro rata in proportion to their relative percentage interests until the members have received an internal rate of return equal to 13%. Then, the proportion of distributions changes to a predetermined allocation according to the agreements between each VIE and BH Equity or its affiliates. In instances where membership interests in individual properties are held through a multiple-asset LLC, consideration of additional profit interest is calculated at the multiple-asset LLC level. Therefore, distributions will be made to the members pro rata in proportion to their relative percentage interests in the multiple-asset LLC until the members have received an internal rate of return equal to 13%. Then, the proportion of distributions changes to a predetermined allocation according to the multiple-asset LLC agreements between each VIE and BH Equity or its affiliates.

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Revenue Recognition

The Company’s primary operations consist of rental income earned from its residents under lease agreements with terms of one year or less. Rental income is recognized when earned. This policy effectively results in income recognition on the straight-line method over the related terms of the leases. Resident reimbursements and other income consist of charges billed to residents for utilities, carport and garage rental, pets, administrative, application and other fees and are recognized when earned.

Asset Management & Property Management Services

Asset management fee and property management fee expenses are recognized when incurred in accordance with each management agreement (see Note 9).

Income Taxes

The Company intends to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the “Code”), and expects to qualify as a REIT. To qualify as a REIT, the Company must meet a number of organizational and operational requirements, including a requirement to distribute annually at least 90% of its “REIT taxable income,” as defined by the Code, to its stockholders. As a REIT, the Company will be subject to federal income tax on its undistributed REIT taxable income and net capital gain and to a 4% nondeductible excise tax on any amount by which distributions it pays with respect to any calendar year are less than the sum of (a) 85% of its ordinary income, (b) 95% of its capital gain net income and (c) 100% of its undistributed income from prior years. The Company intends to operate in such a manner so as to qualify as a REIT, including creating taxable REIT subsidiaries to hold assets that generate income that would not be consistent with the rules applicable for qualification as a REIT if held directly by the REIT, but no assurance can be given that the Company will operate in a manner so as to qualify as a REIT. If the Company were to fail to meet these requirements, it could be subject to federal income tax on all of the Company’s taxable income at regular corporate rates for that year. The Company would not be able to deduct distributions paid to stockholders in any year in which it fails to qualify as a REIT. Additionally, the Company will also be disqualified from electing to be taxed as a REIT for the four taxable years following the year during which qualification was lost unless the Company is entitled to relief under specific statutory provisions. As of June 30, 2016, the Company believes it is in compliance with all applicable REIT requirements.

Reportable Segment

Substantially all of the Company’s net income (loss) is from investments in real estate properties within the multifamily sector that the Company owns through LLCs. The Company evaluates operating performance on an individual property level and views its real estate assets as one industry segment and, accordingly, its properties are aggregated into one reportable segment.

Concentration of Credit Risk

The Company maintains cash balances with high quality financial institutions, including NexBank, an affiliate of our Adviser, and periodically evaluates the creditworthiness of such institutions and believes that the Company is not exposed to significant credit risk. Cash balances may be in excess of the amounts insured by the Federal Deposit Insurance Corporation.

Fair Value Measurements

Fair value measurements are determined based on the assumptions that market participants would use in pricing an asset or liability. As a basis for considering market participant assumptions in fair value measurements, FASB ASC 820, Fair Value Measurement and Disclosures, establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy)

· Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access.

· Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs may include quoted prices for similar assets and liabilities in active markets, as well as inputs that are observable for the asset or liability (other than quoted prices), such as interest rates and yield curves that are observable at commonly quoted intervals.

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· Level 3 inputs are the unobservable inputs for the asset or liability, which are typically based on an entity’s own assumption, as there is little, if any, related market activity. In instances where the determination of the fair value measurement is based on input from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. 

The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. The Company utilizes an independent third party to perform the allocation of value analysis for each property acquisition and also to perform the market valuations on the interest rate caps and has established policies, as described above, processes and procedures intended to ensure that the valuation methodologies for investments and interest rate caps are fair and consistent as of the measurement date.

Per Share Data

The Company began operations on March 31, 2015, as described above, and therefore the Company had no operating activities or earnings (loss) per share before March 31, 2015. However, for purposes of the combined consolidated statements of operations and comprehensive income (loss), the Company has presented basic and diluted earnings (loss) per share as if the operating activities of the predecessor were those of the Company and assuming the shares outstanding at the date of the Spin-Off were outstanding for all periods prior to the Spin-Off. Basic earnings (loss) per share will be shown for all periods presented and computed by dividing net income (loss) by the weighted average number of shares of the Company’s common stock outstanding, which is adjusted for shares classified as treasury shares during the period (see Note 8). Diluted earnings (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. There were no potentially dilutive securities for any of the periods presented. For the three months ended June 30, 2016 and 2015, the Company incurred earnings (loss) per share of $0.69 and $(0.11), respectively. For the six months ended June 30, 2016 and 2015, the Company incurred earnings (loss) per share of $0.68 and $(0.36), respectively.

Recent Accounting Pronouncements

Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 13(a) of the Exchange Act, for complying with new or revised accounting standards applicable to public companies. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of this extended transition period. As a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates for such new or revised standards. We may elect to comply with public company effective dates at any time, and such election would be irrevocable pursuant to Section 107(b) of the JOBS Act. The following recent accounting pronouncements reflect effective dates that delay the adoption until those standards would otherwise apply to private companies.

In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements – Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, which requires management to evaluate whether there are conditions and events that raise substantial doubt about an entity’s ability to continue as a going concern, and to provide disclosures when it is probable that the entity will be unable to meet its obligations as they become due within one year after the date that the financial statements are issued. The ASU is effective for annual and interim periods beginning after December 15, 2015, with early adoption being permitted. The Company implemented the provisions of ASU 2014-15 as of January 1, 2016 and there was no material impact on its combined consolidated financial statements.

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In April 2015, the FASB issued ASU 2015-03, Interest-Imputation of Interest, which changes the way reporting enterprises record debt issuance costs. The ASU requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct reduction from the carrying amount of that debt liability, consistent with debt discounts. The ASU is effective for annual and interim reporting periods beginning after December 15, 2015. In August 2015, the FASB issued ASU 2015-15, Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements, which supplements the requirements of ASU 2015-03 by allowing an entity to defer and present debt issuance costs related to a line of credit arrangement as an asset and subsequently amortize the deferred costs ratably over the term of the line of credit arrangement. The Company implemented the provisions of ASU 2015-03 and ASU 2015-15 as of January 1, 2016. The retrospective application required upon adoption of ASU 2015-03 resulted in a reclassification of approximately $6.2 million of debt issuance costs from deferred financing costs, net, to a deduction from debt in its consolidated balance sheet as of December 31, 2015. At December 31, 2015, the following amounts of deferred financing costs were reclassified (in thousands):

	Assets			Liabilities
	Deferred financing costs, net			Bridge facility, net			Mortgages payable, net
December 31, 2015
As previously presented	$	6,213		$	29,000		$	682,342
Reclassification of deferred financing costs, net		(6,213	)		(195	)		(6,018	)
As presented herein	$	—		$	28,805		$	676,324

In February 2015, the FASB issued ASU 2015-02, Amendments to the Consolidation Analysis, which changes the way reporting enterprises evaluate whether (a) they should consolidate limited partnerships and similar entities, (b) fees paid to a decision maker or service provider are variable interests in a VIE, and (c) variable interests in a VIE held by related parties of the reporting enterprise require the reporting enterprise to consolidate the VIE. The ASU also significantly changes how to evaluate voting rights for entities that are not similar to limited partnerships when determining whether the entity is a VIE, which may affect entities for which the decision making rights are conveyed though a contractual arrangement. The ASU is effective for annual and interim periods in fiscal years beginning after December 15, 2016. The Company will implement the provisions of ASU 2015-02 as of January 1, 2017. The Company does not expect the new standard to have a material impact on its combined consolidated financial statements.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize 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 or services. An entity should also disclose sufficient quantitative and qualitative information to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers – Deferral of the Effective Date, which amends ASU 2014-09 to defer the effective date by one year. The new standard is effective for annual and interim reporting periods beginning after December 15, 2018. The Company expects to implement the provisions of ASU 2014-09 as of January 1, 2019. The Company has not yet determined the impact of the new standard on its current policies for revenue recognition.

In January 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, which changes certain recognition, measurement, presentation, and disclosure requirements for financial instruments. The ASU requires all equity investments, except those accounted for under the equity method of accounting or resulting in consolidation, to be measured at fair value with changes in fair value recognized in net income. The ASU also simplifies the impairment assessment for equity investments without readily determinable fair values, amends the presentation requirements for changes in the fair value of financial liabilities, requires presentation of financial instruments by measurement category and form of financial asset, and eliminates the requirement to disclose the methods and significant assumptions used in estimating the fair value of financial instruments. The ASU is effective for annual and interim periods beginning after December 15, 2018. The Company expects to implement the provisions of ASU 2016-01 as of January 1, 2019, and does not expect the new standard to have a material impact on its combined consolidated financial statements.

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3. Acquisitions

As of June 30, 2016, the Company is invested in a total of 39 multifamily properties as listed below:

Property Name		Rentable SquareFootage		Number of Units		Date Acquired	Average Effective Monthly Rent Per Unit (1)		% Occupied as of June 30, 2016 (2)			% Occupied as of December 31, 2015 (2)
The Miramar Apartments			183,100	314		10/31/2013	$	592		91.7	%		92.4	%
Arbors on Forest Ridge			154,556	210		1/31/2014		831		93.3	%		93.8	%
Cutter’s Point			197,972	196		1/31/2014		999		97.4	%		93.9	%
Eagle Crest			395,951	447		1/31/2014		821		92.2	%		95.5	%
Silverbrook			526,138	642		1/31/2014		733		94.5	%		93.6	%
Timberglen			221,376	304		1/31/2014		772		94.7	%		96.1	%
Toscana			115,400	192		1/31/2014		674		94.3	%		94.8	%
The Grove at Alban	(3)		267,300	290		3/10/2014		990		95.5	%		94.5	%
Willowdale Crossing	(3)		411,800	432		5/15/2014		955		93.8	%		88.9	%
Edgewater at Sandy Springs			726,774	760		7/18/2014		858		92.8	%		94.5	%
Beechwood Terrace			271,728	300		7/21/2014		827		95.3	%		97.3	%
Willow Grove			229,140	244		7/21/2014		815		95.9	%		95.9	%
Woodbridge			246,840	220		7/21/2014		921		92.3	%		96.4	%
Abbington Heights			238,974	274		8/1/2014		813		94.5	%		94.5	%
The Summit at Sabal Park			204,545	252		8/20/2014		880		92.9	%		92.5	%
Courtney Cove			224,958	324		8/20/2014		765		96.0	%		95.4	%
Colonial Forest	(3)		160,093	174		8/20/2014		654		96.6	%		94.8	%
Park at Blanding	(3)		116,410	117		8/20/2014		797		95.7	%		97.4	%
Jade Park	(3)		118,392	144		8/20/2014		773		95.8	%		90.3	%
Radbourne Lake			246,599	225		9/30/2014		997		94.7	%		96.9	%
Timber Creek			248,391	352		9/30/2014		772		94.9	%		94.3	%
Belmont at Duck Creek			198,279	240		9/30/2014		908		91.3	%		93.8	%
The Arbors			127,536	140		10/16/2014		806		97.1	%		94.3	%
The Crossings			377,840	380		10/16/2014		785		93.9	%		92.9	%
The Crossings at Holcomb Bridge			247,982	268		10/16/2014		820		97.0	%		95.9	%
The Knolls			311,160	312		10/16/2014		862		94.9	%		93.9	%
Regatta Bay			200,440	240		11/4/2014		1,037		93.3	%		93.3	%
Sabal Palm at Lake Buena Vista			370,768	400		11/5/2014		1,113		92.8	%		96.0	%
Southpoint Reserve at Stoney Creek			115,712	156		12/18/2014		1,005		93.6	%		94.9	%
Cornerstone			317,565	430		1/15/2015		846		93.7	%		93.3	%
McMillan Place			290,051	402		1/15/2015		679		91.8	%		91.3	%
Barrington Mill			692,180	752		2/6/2015		777		92.0	%		95.6	%
Dana Point			206,276	264		2/26/2015		752		92.0	%		92.8	%
Heatherstone			115,615	152		2/26/2015		813		96.1	%		94.1	%
Versailles			300,908	388		2/26/2015		789		94.6	%		90.2	%
Seasons 704 Apartments			216,891	222		4/15/2015		986		94.6	%		97.3	%
Madera Point			192,880	256		8/5/2015		768		89.8	%		93.8	%
The Pointe at the Foothills			472,952	528		8/5/2015		828		92.2	%		90.7	%
The Place at Vanderbilt			288,532	333		10/30/2015		746		91.0	%		92.8	%
			10,550,004		12,276

(1) Average effective monthly rent per unit is equal to the average of the contractual rent for commenced leases as of June 30, 2016 minus any tenant concessions over the term of the lease, divided by the number of units under commenced leases as of June 30, 2016.

(2) Percent occupied is calculated as the number of units occupied as of June 30, 2016 and December 31, 2015, divided by the total number of units, expressed as a percentage.

(3) Properties are classified as held for sale as of June 30, 2016. 

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4. Real Estate Investments

As of June 30, 2016, the major components of the Company’s investments in multifamily properties were as follows (in thousands):

Operating Properties	Land		Buildingsand Improvements			IntangibleLease Assets		Construction in Progress		Furniture, Fixtures and Equipment			Totals
The Miramar Apartments	$	1,580	$	8,721		$	—	$	48	$	639		$	10,988
Arbors on Forest Ridge		2,330		10,956			—		4		572			13,862
Cutter’s Point		3,330		12,789			—		—		737			16,856
Eagle Crest		5,450		21,900			—		12		955			28,317
Silverbrook		4,860		25,039			—		209		1,700			31,808
Timberglen		2,510		14,412			—		5		804			17,731
Toscana		1,730		7,276			—		5		606			9,617
Edgewater at Sandy Springs		14,290		43,666			—		24		2,822			60,802
Beechwood Terrace		1,390		20,466			—		10		713			22,579
Willow Grove		3,940		10,624			—		—		596			15,160
Woodbridge		3,650		12,652			—		43		669			17,014
Abbington Heights		1,770		16,285			—		54		804			18,913
The Summit at Sabal Park		5,770		13,317			—		9		806			19,902
Courtney Cove		5,880		12,864			—		49		766			19,559
Radbourne Lake		2,440		21,386			—		111		858			24,795
Timber Creek		11,260		13,140			—		42		681			25,123
Belmont at Duck Creek		1,910		16,997			—		—		712			19,619
The Arbors		1,730		6,508			—		13		298			8,549
The Crossings		3,982		17,487			—		145		1,129			22,743
The Crossings at Holcomb Bridge		5,560		10,758			—		—		954			17,272
The Knolls		3,410		17,615			—		8		1,319			22,352
Regatta Bay		1,660		16,130			—		73		688			18,551
Sabal Palm at Lake Buena Vista		7,580		41,103			—		1		761			49,445
Southpoint Reserve at Stoney Creek		6,120		10,950			—		195		497			17,762
Cornerstone		1,500		29,963			—		218		625			32,306
McMillan Place		3,610		17,855			—		101		761			22,327
Barrington Mill		10,170		47,559			—		338		1,764			59,831
Dana Point		4,090		12,126			—		123		814			17,153
Heatherstone		2,320		7,462			—		47		605			10,434
Versailles		6,720		20,160			—		76		1,263			28,219
Seasons 704 Apartments		7,480		13,788			—		202		544			22,014
Madera Point		4,920		16,799			—		41		613			22,373
The Pointe at the Foothills		4,840		45,821			—		5		990			51,656
The Place at Vanderbilt		2,350		16,369			—		351		802			19,872
		152,132		630,943			—		2,562		29,867			815,504
Accumulated depreciation and amortization		—		(37,671	)		—		—		(9,117	)		(46,788	)
Total Operating Properties	$	152,132	$	593,272		$	—	$	2,562	$	20,750		$	768,716
Held For Sale Properties
The Grove at Alban		3,640		19,033			—		—		1,215			23,888
Willowdale Crossing		4,650		35,657			—		27		974			41,308
Colonial Forest		2,090		3,490			—		—		372			5,952
Park at Blanding		2,610		4,033			—		6		322			6,971
Jade Park		1,490		6,414			—		30		432			8,366
		14,480		68,627			—		63		3,315			86,485
Accumulated depreciation and amortization		—		(4,605	)		—		—		(790	)		(5,395	)
Total Held For Sale Properties	$	14,480	$	64,022		$	—	$	63	$	2,525		$	81,090
Total	$	166,612	$	657,294		$	—	$	2,625	$	23,275		$	849,806

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As of December 31, 2015, the major components of the Company’s investments in multifamily properties were as follows (in thousands):

Property Name	Land		Buildings and Improvements			Intangible Lease Assets			Construction in Progress		Furniture, Fixtures and Equipment			Totals
The Miramar Apartments	$	1,580	$	8,601		$	—		$	48	$	603		$	10,832
Arbors on Forest Ridge		2,330		10,948			—			—		524			13,802
Cutter's Point		3,330		12,747			—			37		621			16,735
Eagle Crest		5,450		21,846			—			15		743			28,054
Meridian		2,310		10,325			—			12		419			13,066
Silverbrook		4,860		24,909			—			118		1,475			31,362
Timberglen		2,510		14,379			—			20		703			17,612
Toscana		1,730		7,256			—			4		522			9,512
The Grove at Alban		3,640		18,994			—			66		911			23,611
Willowdale Crossing		4,650		35,631			—			23		784			41,088
Edgewater at Sandy Springs		14,290		43,429			—			199		2,394			60,312
Beechwood Terrace		1,390		20,374			—			28		572			22,364
Willow Grove		3,940		10,621			—			2		483			15,046
Woodbridge		3,650		12,581			—			110		543			16,884
Abbington Heights		1,770		16,184			—			67		657			18,678
The Summit at Sabal Park		5,770		13,311			—			9		674			19,764
Courtney Cove		5,880		12,850			—			30		668			19,428
Colonial Forest		2,090		3,486			—			—		328			5,904
Park at Blanding		2,610		4,025			—			4		304			6,943
Park at Regency		2,620		5,706			—			5		446			8,777
Jade Park		1,490		6,404			—			19		351			8,264
Mandarin Reserve		5,610		20,850			—			—		1,021			27,481
Radbourne Lake		2,440		21,194			—			224		739			24,597
Timber Creek		11,260		13,101			—			37		541			24,939
Belmont at Duck Creek		1,910		16,948			—			47		533			19,438
The Arbors		1,730		6,512			—			4		279			8,525
The Crossings		3,982		16,696			—			759		890			22,327
The Crossings at Holcomb Bridge		5,560		10,644			—			101		749			17,054
The Knolls		3,410		17,574			—			—		1,016			22,000
Regatta Bay		1,660		16,120			—			34		543			18,357
Sabal Palm at Lake Buena Vista		7,580		40,833			—			214		639			49,266
Southpoint Reserve at Stoney Creek		6,120		10,896			—			166		286			17,468
Cornerstone		1,500		29,786			—			201		411			31,898
McMillan Place		3,610		17,127			—			398		517			21,652
Barrington Mill		10,170		47,055			—			430		1,117			58,772
Dana Point		4,090		11,760			—			330		649			16,829
Heatherstone		2,320		6,962			—			403		399			10,084
Versailles		6,720		19,339			—			699		903			27,661
Seasons 704 Apartments		7,480		13,532			—			254		361			21,627
Madera Point		4,920		16,632			629			39		444			22,664
The Pointe at the Foothills		4,840		45,395			1,433			186		768			52,622
The Place at Vanderbilt		2,350		16,112			511			4		479			19,456
		177,152		729,675			2,573			5,346		28,009			942,755
Accumulated depreciation and amortization		—		(32,350	)		(1,844	)		—		(5,679	)		(39,873	)
	$	177,152	$	697,325		$	729		$	5,346	$	22,330		$	902,882

Depreciation expense was $8.0 million and $6.7 million for the three months ended June 30, 2016 and 2015, respectively. Depreciation expense was $17.0 million and $12.5 million for the six months ended June 30, 2016 and 2015, respectively.   

Amortization expense related to the Company’s intangible lease assets was $0.1 million and $3.4 million for the three months ended June 30, 2016 and 2015, respectively. Amortization expense related to the Company’s intangible lease assets was $0.7 million and $9.2 million for the six months ended June 30, 2016 and 2015, respectively. Due to the six-month useful life attributable to intangible lease assets, the value of intangible lease assets on any acquisition prior to December 31, 2015 has been fully amortized and the assets and related accumulated amortization have been written-off as of June 30, 2016.

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Sales of Real Estate

The following table presents our sales of real estate for the six months ended June 30, 2016 (in thousands); there were no sales of real estate for the six months ended June 30, 2015:

Property		Location	Date of Sale	Sales Price		Net Cash Proceeds (1)		Gain on Sale of Real Estate
Meridian	(2)	Austin, Texas	May 10, 2016	$	17,250	$	16,981	$	4,786
Park at Regency and Mandarin Reserve	(3)	Jacksonville, Florida	June 6, 2016		47,000		46,239		11,584
				$	64,250	$	63,220	$	16,370

(1) Represents sales price, net of closing costs.

(2) Approximately $6.4 million of the proceeds from the sale of Meridian were placed with a qualified intermediary for use in a like-kind exchange. On July 27, 2016, the Company completed such like-kind exchange, using the approximately $6.4 million of proceeds from the Meridian sale to acquire CityView, a 217-unit property in West Palm Beach, Florida (see Note 11).

(3) Properties were sold as a portfolio.

5. Pro Forma Financial Information (unaudited)

The Company acquired 10 properties and sold 3 properties during the period January 1, 2015 through June 30, 2016 and acquired one property subsequent to June 30, 2016 on July 27, 2016 (see Note 11). The following unaudited pro forma information for the six months ended June 30, 2016 and 2015 has been provided to give effect to the acquisitions and dispositions of the properties as if they had occurred on January 1, 2015. This pro forma financial information is not intended to represent what the actual results of operations of the Company would have been had these acquisitions and dispositions occurred on this date, nor does it purport to predict the results of operations for future periods. The following table summarizes, on an unaudited basis, the combined consolidated pro forma results of operations of the Company for the six months ended June 30, 2016 and 2015 (in thousands, except per share amounts):

	Six Months Ended June 30,
	2016		2015
Actual:
Total revenues	$	67,168	$	54,285
Net income (loss)		16,887		(8,157	)
Earnings (loss) per share - basic and diluted (see Note 2)		0.68		(0.36	)
Pro forma:
Total revenues		64,788		59,682
Net income (loss)		997		(24,970	)
Earnings (loss) per share - basic and diluted (see Note 2)		0.05		(1.17	)

The pro forma information includes adjustments to actual revenues and expenses recorded to reflect operations of all properties owned as of and subsequent to June 30, 2016, assuming each was owned by the Company and operating as of January 1, 2015. Net income (loss) has been adjusted as follows: (1) interest expense has been adjusted to reflect the additional interest expense that would have been charged had the Company acquired the properties on January 1, 2015 under the same financing arrangements as existed as of the acquisition date; (2) depreciation and amortization has been adjusted based on the Company’s basis in the properties, and all of the intangible lease assets have been amortized during the six months ended June 30, 2015 due to the six-month life of intangible assets; (3) acquisition costs have been excluded for pro forma purposes for the acquisition costs of the properties; (4) advisory and administrative fees have been adjusted to include the acquisitions on a pro forma basis; (5) gain on sales of real estate has been excluded for pro forma purposes for the gain recognized on the properties sold; and (6) general and administrative fees expected to be incurred on a quarterly basis at a parent level have been adjusted to include the acquisitions and dispositions on a pro forma basis and are estimated to be approximately $800,000 per quarter.

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6. Debt

Mortgages Payable

The following table contains summary information concerning the mortgage debt of the Company as of June 30, 2016:

Operating Properties		Type	Term(months)		Amortization (months)		Outstanding Principal (1) (in thousands)				Interest Rate (2)		Max Note Rate (3)		Maturity Date
The Miramar Apartments	(4)	Floating		120		360	$	8,400				2.69%		5.75%	2/1/2025
Courtney Cove	(5)	Floating		84		360		14,210				2.55%		5.75%	9/1/2021
The Summit at Sabal Park	(5)	Floating		84		360		14,287				2.55%		5.75%	9/1/2021
Southpoint Reserve at Stoney Creek	(5)	Floating		84		360		13,600				2.58%		6.00%	1/1/2022
Barrington Mill	(5)	Floating		84		360		43,500				2.43%		5.50%	3/1/2022
Dana Point	(5)	Floating		84		360		12,176				2.52%		5.50%	3/1/2022
Heatherstone	(5)	Floating		84		360		7,087				2.55%		5.50%	3/1/2022
Versailles	(5)	Floating		84		360		19,623				2.50%		5.50%	3/1/2022
Seasons 704 Apartments	(5)	Floating		84		360		12,660				2.27%		5.95%	5/1/2022
Timber Creek	(6)	Floating		120		360		19,482				2.29%		5.96%	10/1/2024
Radbourne Lake	(6)	Floating		120		360		19,213				2.28%		6.25%	10/1/2024
The Arbors	(6)	Floating		120		360		5,812				2.28%		7.11%	11/1/2024
The Crossings	(6)	Floating		120		360		15,874				2.28%		7.21%	11/1/2024
The Crossings at Holcomb Bridge	(6)	Floating		120		360		12,450				2.28%		7.35%	11/1/2024
The Knolls	(6)	Floating		120		360		16,038				2.28%		7.11%	11/1/2024
McMillan Place	(6)	Floating		120		360		15,738				2.39%		5.92%	2/1/2025
Sabal Palm at Lake Buena Vista	(6)	Floating		120		360		37,680				2.28%		6.26%	12/1/2024
Abbington Heights	(7)	Fixed		120		360		10,305				3.79%		3.79%	9/1/2022
Belmont at Duck Creek	(8)	Fixed		84		360		11,246				4.68%		4.68%	9/1/2018
Regatta Bay	(9)	Floating		60		360		14,000				2.35%	N/A		11/1/2020
Cornerstone	(10)	Fixed		120		360		23,283				4.24%		4.24%	3/1/2023
Madera Point	(11)	Floating		60		360		13,515				2.37%	N/A		9/1/2020
The Pointe at the Foothills	(11)	Floating		60		360		31,365				2.36%	N/A		9/1/2020
							$	391,544
Fair market value adjustment								237		(12)
Deferred financing costs, net								(3,444	)
							$	388,337
Held for Sale Properties
The Grove at Alban	(5)	Floating		84		360		18,657				3.01%		6.50%	4/1/2021
Willowdale Crossing	(5)	Floating		84		360		32,800				2.74%		5.75%	6/1/2021
Colonial Forest	(5)	Floating		84		360		4,125				2.63%		6.25%	9/1/2021
Park at Blanding	(5)	Floating		84		360		4,875				2.63%		7.25%	9/1/2021
Jade Park	(5)	Floating		84		360		5,850				2.62%		6.49%	9/1/2021
							$	66,307
Deferred financing costs, net								(581	)
							$	65,726

(1) Mortgage debt that is non-recourse to the Company and encumbers the multifamily properties.

(2) Interest rate is based on one-month LIBOR plus an applicable margin, except for Abbington Heights (based on fixed rate of 3.79%), Belmont at Duck Creek (based on fixed rate of 4.68%), Regatta Bay (based on three-month LIBOR, subject to a floor of 0.25%, plus 1.70%) and Cornerstone (based on a blended fixed rate of 4.24%). One-month and three-month LIBOR as of June 30, 2016 were 0.4651% and 0.6541%, respectively.

(3) Represents the maximum rate payable on each note (see Note 7).

(4) Loan cannot be pre-paid in the first 12 months of the term. Starting in the 13^th month of the term through the 117^th month of the term, the loan can be pre-paid at par plus 1.00% of the unpaid principal balance and at par the last three months of the term.

(5) Loan can be pre-paid in the first 12 months of the term at par plus 5.00%. Starting in the 13th month of the term through the 81st month of the term, the loan can be pre-paid at par plus 1.00% of the unpaid principal balance and at par during the last three months of the term.   

(6) Loan can be pre-paid in the first 12 months of the term at par plus 5.00%. Starting in the 13^th month of the term through the 116^th month of the term, the loan can be pre-paid at par plus 1.00% of the unpaid principal balance and at par during the last four months of the term.

(7) Debt was assumed upon acquisition of this property at approximated fair value. The loan is open to pre-payment in the last three months of the term.

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(8) Debt was assumed upon acquisition of this property at approximated fair value. The loan is open to pre-payment in the last six months of the term. 

(9) Loan can be pre-paid in the first 12 months of the term at par plus 1.00% of the unpaid principal balance and at par thereafter. Loan’s unpaid principal balance can be declared due and payable in full, at the lender’s discretion, on November 1, 2018 and November 1, 2019.  

(10) Debt in the amount of $18.0 million was assumed upon acquisition of this property at approximated fair value. The assumed debt carries a 4.09% fixed rate, was originally issued in March 2013 and had a term of 120 months with an initial 24 months of interest only. At the time of acquisition, the principal balance of the first mortgage remained unchanged and had a remaining term of 98 months with 2 months of interest only. The first mortgage is pre-payable and subject to yield maintenance from month 13 through August 31, 2022 and is pre-payable at par September 1, 2022 until maturity. Concurrently with the acquisition of the property, we placed a supplemental second mortgage on the property with a principal amount of approximately $5.8 million, a fixed rate of 4.70%, and with a maturity date that is the same time as the first mortgage. The supplemental second mortgage is pre-payable and subject to yield maintenance from the date of issuance through August 31, 2022 and is pre-payable at par September 1, 2022 until maturity. As of June 30, 2016, the total indebtedness secured by the property is approximately $23.4 million and has a blended interest rate of 4.24%.

(11) Loan can be pre-paid starting in the 13^th month through the 57^th month of the term at par plus 1.00% of the unpaid principal balance and at par during the last three months of the term.    

(12) The Company reflected a valuation adjustment on its fixed rate debt for Belmont at Duck Creek to adjust it to fair market value on the date of acquisition for the difference between the fair value and the assumed principal amount of debt. The difference is amortized into interest expense over the remaining term of the mortgage.    

The weighted average interest rate of our mortgage indebtedness was 2.62% as of June 30, 2016 and 2.67% as of December 31, 2015.

Each of our mortgages is a non-recourse obligation subject to customary provisions. The loan agreements contain customary events of default, including defaults in the payment of principal or interest, defaults in compliance with the covenants contained in the documents evidencing the loan, defaults in payments under any other security instrument covering any part of the property, whether junior or senior to the loan, and bankruptcy or other insolvency events. As of June 30, 2016, the Company believes it is in compliance with all provisions.

During the period ended June 30, 2016, the Company sold three properties and repaid the related mortgage loans, as detailed in the table below:

Property Name		Date of Sale	Type	Outstanding Principal (1) (in thousands)
Meridian		May 10, 2016	Floating	$	9,791
Park at Regency and Mandarin Reserve	(2)	June 6, 2016	Floating		25,582
				$	35,373

(1) Represents the outstanding principal balance when the loan was repaid.

(2) Properties were sold as a portfolio.

The Company incurred prepayment penalties of approximately $350,000 in connection with the payoff of these mortgage loans, which is included in interest expense on the consolidated statements of operations and comprehensive income (loss).

Credit Facility

On June 6, 2016, the Company, through certain of its subsidiaries, entered into a $200.0 million credit facility (the “Credit Facility”) with KeyBank National Association (“KeyBank”), as lender, which was in turn assigned to the Federal Home Loan Mortgage Corporation (“Freddie Mac”). The Credit Facility is a full-term, interest-only facility and is expandable to $300.0 million upon the satisfaction of certain conditions. The Credit Facility is guaranteed by the OP. The initial term of the Credit Facility is 60 months, and the Company has one 12-month extension option. Interest accrues on the Credit Facility at an interest rate of one-month LIBOR plus 2.20%. The Credit Facility contains flexible prepayment options that are consistent with the Company’s other floating rate indebtedness held by Freddie Mac.

On June 6, 2016, the Company drew $191.0 million under the Credit Facility to replace the existing mortgage debt on 11 properties (see below). The refinancing of this existing mortgage debt did not incur prepayment penalties. In accordance with FASB ASC 470-50, Debt – Modifications and Extinguishments, the Company accounted for the refinancing as a modification of a debt

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instrument. As such, the existing $1.2 million of net deferred financing costs related to the 11 properties are included with the approximately $2.5 million of deferred financing costs incurred in connection with the modification. Such costs are recorded as a deduction from the debt related to the Credit Facility on the accompanying consolidated balance sheet as of June 30, 2016 and are amortized over the term of the Credit Facility. The Company subsequently drew an additional $9.0 million under the Credit Facility and used the proceeds to pay down a portion of its bridge facility (see “Bridge Facility” below). As of June 30, 2016, the Company has $200.0 million outstanding under its Credit Facility at an interest rate of 2.67%.

The following 11 properties in the Company’s portfolio have been cross-collateralized as security for the Credit Facility:

· Arbors on Forest Ridge

· Cutter’s Point

· Eagle Crest

· Silverbrook

· Timberglen

· Toscana

· Edgewater at Sandy Springs

· Beechwood Terrace

· Willow Grove

· Woodbridge

· The Place at Vanderbilt

The Credit Facility agreement contains customary provisions with respect to events of default, covenants and borrowing conditions. Certain prepayments may be required upon a breach of covenants or borrowing conditions. As of June 30, 2016, the Company believes it is in compliance with all provisions.

Bridge Facility

On August 5, 2015, the Company executed a bridge facility (the “Bridge Facility”) with KeyBank in the amount of $29.0 million. The proceeds from the Bridge Facility were used to fund a portion of the purchase price of the Madera Point and The Pointe at the Foothills acquisitions. During the three months ended June 30, 2016, the Company paid down $27.0 million of principal on the Bridge Facility, reducing the outstanding principal balance to $2.0 million, which was funded with $18.0 million of the Company’s share of proceeds, net of distributions to noncontrolling interests, from the sales of Park at Regency and Mandarin Reserve and $9.0 million of proceeds drawn under the Company’s Credit Facility. The Bridge Facility is payable in full on August 4, 2016, but is pre-payable at any time without penalty (see Note 11). The Bridge Facility is non-amortizing during the term it is outstanding and accrues interest at an annual rate of 4.00% plus one-month LIBOR. The Bridge Facility is recourse to the Company and is secured by the equity interests in Madera Point and The Pointe at the Foothills.

The Bridge Facility agreement contains customary provisions with respect to events of default, covenants and borrowing conditions. Certain prepayments may be required upon a breach of covenants or borrowing conditions. As of June 30, 2016, the Company believes it is in compliance with all provisions.

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Schedule of Debt Maturities

As of June 30, 2016, debt maturities scheduled for the remainder of 2016, each of the next four years and thereafter, are as follows (in thousands):

	Operating Properties & Other Secured Debt		Held For Sale Properties		Total
Remainder of 2016		2,399		619		3,018
2017		1,463		1,433		2,896
2018		16,908		1,475		18,383
2019		6,588		1,519		8,107
2020		65,564		1,558		67,122
Thereafter		500,622		59,703		560,325
Total	$	593,544	$	66,307	$	659,851

Interest Rate Swap Agreements

In order to fix a portion of, and mitigate the risk associated with, the Company’s floating rate indebtedness (without incurring substantial prepayment penalties or defeasance costs typically associated with fixed rate indebtedness when repaid early or refinanced), the Company, through the OP, has entered into three interest rate swap transactions with KeyBank with a combined notional amount of $300.0 million. The interest rate swaps effectively replace the floating interest rate with respect to that amount with a weighted average fixed rate of 1.0088%. The interest rate swaps have an effective date of July 1, 2016 and a termination date of June 1, 2021. Beginning on August 1, 2016, the Company will be required to make monthly fixed rate payments of a weighted average fixed rate of 1.0088% calculated on a combined notional amount of $300.0 million, while the counterparties will be obligated to make monthly floating rate payments based on one-month LIBOR to the Company referencing the same notional amount. The Company has designated these interest rate swaps as cash flow hedges of interest rate risk. For additional information regarding the interest rate swaps, see Note 11.

7. Fair Value Measures and Derivative Financial Instruments

From time to time, the Company records certain assets and liabilities at fair value. Real estate assets are recorded at fair value at acquisition and may be stated at fair value if they become impaired in a given period and may be stated at fair value if they are held for sale and the fair value of such assets is below historical cost. Additionally, the Company records derivative financial instruments at fair value.

Real estate acquisitions

As of June 30, 2016 and as further discussed in Notes 2 and 3, the Company had acquired and owned 39 properties. The Company did not acquire any properties during the six months ended June 30, 2016 (see Note 11). Upon acquisition of a property, the purchase price is allocated to land, buildings, improvements, furniture, fixtures and equipment, and intangible lease assets based on their estimated fair values using Level 3 inputs. If debt is assumed upon an acquisition, the debt is recorded based on its estimated fair value using Level 2 inputs.    

As discussed in Note 2, fair value measurements at the time of acquisition are determined by management using available market information and appropriate valuation methodologies available to management. Critical estimates in valuing certain assets and liabilities and the assumptions of what marketplace participants would use in making estimates of fair value include, but are not limited to: future expected cash flows, estimated carrying costs, estimated origination costs, lease up periods and tenant risk attributes, as well as assumptions about the period of time the acquired lease will continue to be used in the Company’s portfolio and discount rates used in these calculations. Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable. Assumptions may not always reflect unanticipated events and changes in circumstances may occur. In making such estimates, management uses a number of sources, including appraisals, third party cost segregation studies or other market data, as well as, information obtained in its pre-acquisition due diligence, marketing and leasing activities. Considerable judgment is necessary to interpret market data and estimate fair value. Accordingly, there can be no assurance that the estimates discussed herein, using Level 3 inputs, are indicative of the amounts the Company could realize on disposition of the real estate assets or other financial instruments. The use of different market assumptions and/or estimation methodologies could have a material effect on the estimated fair value amounts.  

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Derivative financial instruments and hedging activities

The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources, and duration of its debt funding and the use of derivative financial instruments. Specifically, the Company may enter into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Company’s derivative financial instruments are used to manage differences in the amount, timing, and duration of the Company’s known or expected cash payments principally related to the Company’s borrowings. The Company utilizes an independent third party to perform the market valuations on its derivative financial instruments. These market valuations are based on estimated fair values using Level 3 inputs.

The Company’s main objective in using interest rate derivatives is to add stability to interest expense related to floating rate debt. To accomplish this objective, the Company uses interest rate caps to cap the total amount of interest expense the Company may pay in a rising interest rate environment. Interest rate caps involve the receipt of variable-rate amounts from a counterparty if interest rates rise above the strike rate on the contract in exchange for an up-front premium. The rate caps have terms ranging from 3-4 years. During the six months ended June 30, 2016 and 2015, such derivatives were used to hedge the variable cash flows associated with a majority of the Company’s floating rate debt. The derivative financial instruments the Company employs cap the related floating interest rates at a weighted average interest rate of 6.09%.

The effective portion of changes in the fair value of derivative financial instruments that are designated as cash flow hedges is recorded in accumulated other comprehensive loss (“OCI”) and is subsequently reclassified into net income or loss in the period that the hedged forecasted transaction affects earnings. Amounts reported in accumulated OCI related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s floating rate debt. The ineffective portion of the change in fair value of the derivatives is recognized directly in net income as interest expense. During the three and six months ended June 30, 2016 and 2015, the Company recorded no ineffectiveness in earnings attributable to derivatives designated as cash flow hedges. As of June 30, 2015, the Company had 14 derivatives designated as cash flow hedges.

As of June 30, 2016, the Company had the following outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk (dollars in thousands):

Product	Number of Instruments		Notional
Interest rate caps		15	$	259,659

Derivatives not designated as hedges are not speculative and are used to manage the Company’s exposure to interest rate movements but do not meet the strict hedge accounting requirements of FASB ASC 815, Derivatives and Hedging. Changes in the fair value of derivatives not designated in hedging relationships are recorded directly in net income as interest expense. As of June 30, 2015, the Company had 20 derivatives that were not designated as hedges in qualifying hedging relationships.

As of June 30, 2016, the Company had the following outstanding derivatives that were not designated as hedges in qualifying hedging relationships (dollars in thousands):

Product	Number of Instruments		Notional
Interest rate caps		7	$	94,867

The tables below present the fair value of the Company’s derivative financial instruments as well as their classification on the consolidated balance sheets as of June 30, 2016 and December 31, 2015 (in thousands):

	Asset Derivative					Liability Derivative
	Balance Sheet Location	June 30, 2016		December 31, 2015		Balance Sheet Location	June 30, 2016		December 31, 2015
Derivatives designated as hedging instruments:
Interest rate caps	Other assets	$	5	$	61	Otherliabilities	$	—	$	—
Derivatives not designated as hedging instruments:
Interest rate caps	Other assets		—		6	Other liabilities		—		—
Total		$	5	$	67		$	—	$	—

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The tables below present the effect of the Company’s derivative financial instruments on the combined consolidated statements of operations and comprehensive income (loss) for the three and six months ended June 30, 2016 and 2015 (in thousands):

	Amount of gain (loss) recognized in OCI on derivative (effective portion)						Location of gain (loss) reclassified from accumulated OCI into income	Amount of gain (loss) reclassified from accumulated OCI into income (effective portion)					Location of gain (loss) recognized in income on derivative	Amount of gain (loss) recognized in income on derivative (ineffective portion)
	2016			2015			(effective portion)	2016			2015		(ineffective portion)	2016		2015
Derivatives designated as hedging instruments:
For the three months ended June 30,
Interest rate caps	$	(12	)	$	(126	)	Interest expense	$	(6	)	$	—	Interest expense	$	—	$	—
For the six months ended June 30,
Interest rate caps		(44	)		(396	)	Interest expense		(12	)		—	Interest expense		—		—

		Amount of gain (loss) recognized in income
	Location of gain (loss) recognized in income	2016			2015
Derivatives not designated as hedging instruments:
For the three months ended June 30,
Interest rate caps	Interest expense	$	(2	)	$	(50	)
For the six months ended June 30,
Interest rate caps	Interest expense		(6	)		(166	)

Other financial instruments

Cash equivalents, rents and accounts receivables, accounts payable, accrued expenses and other liabilities are carried at amounts that reasonably approximate their fair values because of the short-term nature of these instruments.

Long-term indebtedness is carried at amounts that reasonably approximate their fair value. The Company used market spreads from quoted prices on similar long-term debt, which are classified as Level 2 in the fair value hierarchy, to determine the estimated fair values for the Company’s long-term indebtedness.    

8. Stockholders’ Equity

Common stock

The Company began operations on March 31, 2015 as a result of the transfer and contribution by NexPoint Credit Strategies Fund (“NHF”) of all but one of the multifamily properties owned by NHF through its subsidiary Freedom REIT, LLC (“Freedom REIT”). On March 31, 2015, NHF distributed all of the outstanding shares of the Company's common stock held by NHF to holders of NHF common shares. As of June 30, 2016, the Company had 21,293,825 shares of common stock, $0.01 par value per share, issued and 21,288,825 shares of common stock outstanding (see “Treasury Stock” below) (see Note 11).

Treasury Stock

During the period ended June 30, 2016, in accordance with the Company’s share repurchase program (as described below), the Company purchased 5,000 shares of its common stock, $0.01 par value per share, at a total cost of approximately $88,000 (see Note 11). The cost of these shares is included in common stock held in treasury at cost on the consolidated balance sheet as of June 30, 2016. The number of shares of common stock classified as treasury shares reduce the number of shares of the Company’s common stock outstanding and, accordingly, are considered in the weighted average number of shares outstanding during the period.

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Share Repurchase Program

On June 15, 2016, the Company’s Board of Directors authorized the repurchase by the Company of up to $30.0 million of its common stock, $0.01 par value per share. This authorization expires on June 15, 2018. The Company may utilize various methods to effect the repurchases, and the timing and extent of the repurchases will depend upon several factors, including market and business conditions, regulatory requirements and other corporate considerations, including whether the Company’s common stock is trading at a significant discount to net asset value per share. Repurchases under this program may be discontinued at any time. During the period ended June 30, 2016, the Company purchased 5,000 shares of its common stock, $0.01 par value per share, at a total cost of approximately $88,000, or $17.62 per share (see Note 11).

Long Term Incentive Plan

On June 15, 2016, the Company’s stockholders approved a long term incentive plan (the “2016 LTIP”) and the Company filed a registration statement on Form S-8 registering up to 2,100,000 shares of common stock, $0.01 par value per share, that the Company may issue pursuant to the 2016 LTIP. The 2016 LTIP authorizes the compensation committee of the Company’s Board of Directors to provide equity-based compensation in the form of stock options, appreciation rights, restricted shares, restricted stock units, performance shares, performance units and certain other awards denominated or payable in, or otherwise based on, the Company’s common stock or factors that may influence the value of the Company’s common stock, plus cash incentive awards, for the purpose of providing the Company’s officers and other key employees (and those of the Adviser and the Company’s subsidiaries), the Company’s non-employee directors, and potentially certain non-employees who perform employee-type functions, incentives and rewards for performance. The Company did not award any equity-based compensation pursuant to the 2016 LTIP during the period ended June 30, 2016.

9. Related Party Transactions

Fees and reimbursements to BH and its affiliates

The Company has entered into management agreements with BH Management Services, LLC (“BH”), the Company’s property manager, who manages the Company’s properties and supervises the implementation of the Company’s value-add program. BH is an affiliate of the noncontrolling interest members of the Company by virtue of ownership in certain VIEs through BH’s affiliates. The property management fee is approximately 3% of the monthly gross income from each property managed. Currently, BH manages all of our properties. Additionally, the Company may pay BH certain other fees, including: (1) a fee of $15.00 per unit for the one-time setup and inspection of properties, (2) a construction supervision fee of 5-6% of total project costs, which is capitalized, (3) acquisition fees and due diligence costs reimbursements, and (4) other owner approved fees at $55 per hour. BH also acts as a paymaster for the properties and is reimbursed for various operating expenses it pays on their behalf. The following is a summary of fees that the properties incurred to BH and its affiliates, as well as reimbursements paid to BH from the properties for various operating expenses, for the three and six months ended June 30, 2016 and 2015 (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2016		2015		2016		2015
Fees incurred
Property management fees (1)	$	1,013	$	858	$	2,018	$	1,617
Construction supervision fees (2)		172		394		377		535
Acquisition fees (3)		—		162		—		1,353
Reimbursements
Payroll and benefits (4)		3,881		3,103		8,072		6,137
Other reimbursements (5)		705		1,307		1,005		1,556

(1) Included in property management fees on the combined consolidated statements of operations and comprehensive income (loss).

(2) Capitalized on the consolidated balance sheets and reflected in buildings and improvements.

(3) Includes due diligence costs and are included in acquisition costs on the combined consolidated statements of operations and comprehensive income (loss).

(4) Included in property operating expenses on the combined consolidated statements of operations and comprehensive income (loss).

(5) Includes various operating expenses such as repairs and maintenance costs and property general and administrative expenses, which are included on the combined consolidated statements of operations and comprehensive income (loss).

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Asset Management Fee

In accordance with the operating agreement of each entity that owns the real estate properties, the Company earns an asset management fee for services provided in connection with monitoring the operations of the properties. The asset management fee is equal to 0.5% per annum of the aggregate effective gross income of the properties, as defined in each of the operating agreements. For the three months ended June 30, 2016 and 2015, the properties incurred asset management fees to the Company of approximately $0.2 million and $0.1 million, respectively. For the six months ended June 30, 2016 and 2015, the properties incurred asset management fees to the Company of approximately $0.3 million and $0.3 million, respectively. Since the fees are paid to the Company (and not the Adviser) by consolidated properties, they have been eliminated in consolidation. However, because our joint venture partners own a portion of each entity, with the exception of The Miramar Apartments, they absorb their pro rata share of the asset management fee. This amount is reflected on the combined consolidated statements of operations and comprehensive income (loss) in the net income (loss) attributable to noncontrolling interests.

Advisory and Administrative Fee

Prior to the Spin-Off, the predecessor paid NexPoint Advisors, an affiliate of the Adviser, an annual advisory fee, paid monthly, in an amount equal to 1.00% of the average weekly value of the predecessor’s “Managed Assets.” The predecessor’s Managed Assets were an amount equal to the total assets of the predecessor, including any form of leverage, minus all accrued expenses incurred in the normal course of operations, but not excluding any liabilities or obligations attributable to investment leverage obtained through (i) indebtedness of any type (including, without limitation, borrowing through a credit facility or the issuance of debt securities), (ii) the issuance of preferred stock or other preference securities, (iii) the reinvestment of collateral received for securities loaned in accordance with the predecessor’s investment objectives and policies, and/or (iv) any other means.

Additionally, the predecessor paid NexPoint Advisors an administrative fee for services to the predecessor. The administrative fee was payable monthly, in an amount equal to 0.20% of the average weekly value of the predecessor’s Managed Assets. The advisory and administrative fees were paid by the predecessor on behalf of the Company.

Following the Spin-Off and in accordance with the Advisory Agreement, the Company pays the Adviser an advisory fee equal to 1.00% of the Average Real Estate Assets (as defined below). The duties performed by our Adviser under the terms of the Advisory Agreement include, but are not limited to: providing daily management for us, selecting and working with third party service providers, managing our properties or overseeing the third party property manager, formulating an investment strategy for us and selecting suitable properties and investments for us, managing our outstanding debt on properties, managing our interest rate exposure through derivative instruments, determining when to sell assets, and managing the value-add program or overseeing a third party vendor that implements the value-add program. “Average Real Estate Assets” means the average of the aggregate book value of Real Estate Assets before reserves for depreciation or other non-cash reserves, computed by taking the average of the book value of real estate assets at the end of each month (1) for which any fee under the Advisory Agreement is calculated or (2) during the year for which any expense reimbursement under the Advisory Agreement is calculated. “Real Estate Assets” is defined broadly in the Advisory Agreement to include, among other things, investments in real estate-related securities and mortgages and reserves for capital expenditures (the value-add program). The advisory fee is payable monthly in arrears in cash, unless the Adviser elects, in its sole discretion, to receive all or a portion of the advisory fee in shares of common stock, subject to certain limitations.

In accordance with the Advisory Agreement, the Company also pays the Adviser an administrative fee equal to 0.20% of the Average Real Estate Assets. The administrative fee is payable monthly in arrears in cash, unless the Adviser elects, in its sole discretion, to receive all or a portion of the administrative fee in shares of common stock, subject to certain limitations. The advisory and administrative fees paid to the Adviser on the Contributed Assets (as defined below) are subject to a stipulated cap.

Pursuant to the terms of the Advisory Agreement, the Company will reimburse the Adviser for all documented Operating Expenses and Offering Expenses it incurs on behalf of the Company. Operating Expenses include legal, accounting, financial and due diligence services performed by the Adviser that outside professionals or outside consultants would otherwise perform, the Company’s pro rata share of rent, telephone, utilities, office furniture, equipment, machinery and other office, internal and overhead expenses of the Adviser required for the Company’s operations, and compensation expenses under the 2016 LTIP, the Company’s long term incentive plan. Operating Expenses do not include expenses for the advisory and administrative services described in the Advisory Agreement. Certain Operating Expenses, such as our ratable share of rent, telephone, utilities, office furniture, equipment, machinery and other office, internal and overhead expenses incurred by the Adviser or its affiliates that relate to the operations of the Company, will be billed monthly to us under a shared services agreement. Offering Expenses include all expenses (other than underwriters’ discounts) in connection with an offering, including, without limitation, legal, accounting, printing, mailing and filing fees and other documented offering expenses. For the three and six months ended June 30, 2016 and the three months ended June 30, 2015, the Adviser did not bill any operating or offering expenses to the Company and any such expenses the Adviser incurred during the periods are considered to be permanently waived.

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Expense Cap

Pursuant to the terms of the Advisory Agreement, as amended, expenses paid or incurred by the Company for advisory and administrative fees payable to the Adviser and Operating Expenses will not exceed 1.5% of Average Real Estate Assets per calendar year (or part thereof that the Advisory Agreement is in effect (the “Expense Cap”)). The Expense Cap does not limit the reimbursement of expenses related to Offering Expenses. The Expense Cap also does not apply to legal, accounting, financial, due diligence and other service fees incurred in connection with mergers and acquisitions, extraordinary litigation or other events outside the Company’s ordinary course of business or any out-of-pocket acquisitions or due diligence expenses incurred in connection with the acquisition or disposition of real estate assets. Also, advisory and administrative fees are further limited on Contributed Assets to approximately $5.4 million in any calendar year. Contributed Assets refers to all Real Estate Assets contributed to the Company as part of the Spin-Off. Advisory and administrative fees on New Assets are not subject to the above limitation but are subject to the Expense Cap. New Assets are all Real Estate Assets that are not Contributed Assets.

For the three months ended June 30, 2016 and 2015, the Company incurred advisory and administrative fees of $1.6 million and $1.4 million, respectively. For the six months ended June 30, 2016 and 2015, the Company incurred advisory and administrative fees of $3.2 million and $2.7 million, respectively. These fees are reflected on the combined consolidated statements of operations and comprehensive income (loss) in advisory and administrative fees. The allocation of advisory and administrative fees prior to the Spin-Off is based on the terms of the Advisory Agreement between the Company’s predecessor and NexPoint Advisors. In management’s estimation, the allocation methodologies used are reasonable and result in a reasonable allocation of operating costs borne by the Company’s predecessor; however, these allocations may not be indicative of the cost of future operations or the amount of future allocations. The amount paid for the three and six months ended June 30, 2016 represents the maximum fee allowed on Contributed Assets under the Advisory Agreement plus approximately $0.3 million and $0.6 million, respectively, of advisory and administrative fees incurred on Madera Point, The Pointe at the Foothills, and The Place at Vanderbilt, defined as New Assets pursuant to the terms of the Advisory Agreement.

10. Commitments and Contingencies

Commitments

In the normal course of business, the Company enters into various rehabilitation construction related purchase commitments with parties that provide these goods and services. In the event the Company were to terminate rehabilitation construction services prior to the completion of projects, the Company could potentially be committed to satisfy outstanding or uncompleted purchase orders with such parties. As of June 30, 2016, management does not anticipate any material deviations from schedule or budget related to rehabilitation projects currently in process.  

Contingencies

In the normal course of business, the Company is subject to claims, lawsuits and legal proceedings. While it is not possible to ascertain the ultimate outcome of all such matters, management believes that the aggregate amount of such liabilities, if any, in excess of amounts provided or covered by insurance, will not have a material adverse effect on the consolidated balance sheets or combined consolidated statements of operations and comprehensive income (loss) of the Company. The Company is not involved in any material litigation nor, to management’s knowledge, is any material litigation currently threatened against the Company or its properties or subsidiaries.

The Company is not aware of any environmental liability with respect to the properties that could have a material adverse effect on the Company’s business, assets or results of operations. However, there can be no assurance that such a material environmental liability does not exist. The existence of any such material environmental liability could have an adverse effect on the Company’s results of operations and cash flows.

During the three months ended June 30, 2016, the Company sold three properties, for which BH Equity and its affiliates may be entitled to certain profits interests pursuant to a portfolio joint venture agreement covering the Company's Jacksonville portfolio. Upon achieving certain performance hurdles, not to exceed an additional 10% of the net proceeds from sales or refinancings and based upon estimated distributions upon a hypothetical liquidation of each of the Jacksonville properties (assuming they are liquidated and proceeds distributed and not reinvested through 1031 exchanges or similar deferment strategies), BH Equity and its affiliates may earn an additional profit interest in the Jacksonville portfolio in a range from $0 to $2.0 million. Inputs reflect the Company’s best estimate of what market participants would use in pricing the properties giving consideration to the terms of the joint venture agreements and the estimated discounted future cash flows to be generated from the underlying properties through disposition. The inputs and assumptions utilized to estimate the future cash flows of the underlying properties are based upon the Company’s evaluation of the economy, market trends, operating results, and other factors, including judgments regarding occupancy rates, rental rates, inflation

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rates, capitalization rates utilized to estimate the projected cash flows at the disposition, and discount rates. As the additional profit interest BH Equity and its affiliates may earn on these investments is reasonably possible, but not reasonably estimable, the Company has concluded that it is not appropriate to accrue a liability for these additional profit interests on its combined consolidated financial statements.

11. Subsequent Events

Acquisition of Multifamily Property

The Company acquired the following property subsequent to June 30, 2016 (dollars in thousands) (unaudited):

Property Name	Location	Date of Acquisition	Purchase Price		Debt			# Units		Noncontrolling Interest			Effective Ownership
CityView	West Palm Beach, Florida	July 27, 2016	$	22,421	$	15,812	(1)		217		5	%		95	%

(1) The Company assumed a 4.49% fixed-rate loan that was originally issued on July 24, 2015 and matures on August 1, 2025. 

Interest Rate Swap Agreements

On July 1, 2016, the Company had three interest rate swap transactions that became effective. The Company, through the OP, previously entered into these interest rate swap transactions with KeyBank. The following table contains summary information regarding the Company’s outstanding interest rate swaps (dollars in thousands):

Trade Date	Effective Date	Termination Date	Notional Amount		Fixed Rate				Floating Rate Option
May 13, 2016	July 1, 2016	June 1, 2021	$	100,000		1.1055	%		One-month LIBOR
June 13, 2016	July 1, 2016	June 1, 2021		100,000		1.0210	%		One-month LIBOR
June 30, 2016	July 1, 2016	June 1, 2021		100,000		0.9000	%		One-month LIBOR
			$	300,000		1.0088	%	(1)

(1) Represents the weighted average fixed rate of the interest rate swaps.

Bridge Facility Payoff

On August 2, 2016, the Company paid the remaining $2.0 million of principal outstanding on its Bridge Facility with cash on hand, and the Bridge Facility was retired.

Share Repurchase Program

Subsequent to June 30, 2016, the Company purchased 22,055 shares of its common stock, $0.01 par value per share, at a total cost of approximately $398,000, or $18.07 per share. As of August 8, 2016, the Company had purchased 27,055 shares of its common stock, $0.01 par value per share, at a total cost of approximately $486,000, or $17.99 per share, which will be included in common stock held in treasury at cost on the Company’s consolidated balance sheet.

Dividends Declared

On August 8, 2016, the Company’s board of directors declared a quarterly dividend of $0.206 per share,payable on September 30, 2016 to stockholders of record on September 15, 2016.

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

The following is a discussion and analysis of our financial condition and our historical results of operations. The following should be read in conjunction with our financial statements and accompanying notes. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those projected, forecasted or expected in these forward-looking statements as a result of various factors, including those which are discussed below and elsewhere in this quarterly report. See “Cautionary Statement Regarding Forward-Looking Statements” in this report, and “Risk Factors” in Part I, Item 1A, “Risk Factors” of our annual report on Form 10-K (our “Annual Report”), filed with the Securities and Exchange Commission (the “SEC”) on March 21, 2016. Our management believes the assumptions underlying the Company’s financial statements and accompanying notes are reasonable. However, the Company’s financial statements may not necessarily reflect our financial condition and results of operations in the future.

Overview

As of June 30, 2016, we owned all or a majority interest in a portfolio of multifamily properties, or the Portfolio, primarily located in the Southeastern and Southwestern United States consisting of 39 multifamily properties encompassing 12,276 units of apartment space that was approximately 93.7% leased. The weighted average monthly effective rent per occupied apartment unit in our Portfolio was $830 as of June 30, 2016. On July 27, 2016, we purchased an additional multifamily property, CityView, which encompasses 217 units of apartment space.

We are primarily focused on directly or indirectly acquiring, owning, and operating well-located multifamily properties with a value-add component in large cities and suburban submarkets of large cities, primarily in the Southeastern and Southwestern United States. We generate revenue primarily by leasing our multifamily properties. We intend to employ management and capex value-add programs at a majority of our properties in an attempt to improve rental rates and the net operating income (“NOI”) at our properties. We are externally managed by NexPoint Real Estate Advisors L.P., or our Adviser, an affiliate of Highland Capital Management, L.P. (our “Sponsor” or “Highland”), a leading global alternative asset manager and an SEC-registered investment adviser which, together with its affiliates, had approximately $17.0 billion in assets under management as of June 30, 2016.

The Company began operations on March 31, 2015 as a result of the transfer and contribution by NexPoint Credit Strategies Fund (“NHF”) of all but one of the multifamily properties owned by NHF through NHF’s subsidiary Freedom REIT, LLC (“Freedom REIT”) in exchange for 100% of its outstanding common stock. We use the term “predecessor” to mean the carve-out business of Freedom REIT, which owned all or a majority interest in the multifamily properties transferred or contributed to the Company by NHF through Freedom REIT. On March 31, 2015, NHF distributed all of the outstanding shares of the Company's common stock held by NHF to holders of NHF common shares. We refer to the distribution of our common stock by NHF as the “Spin-Off.” Substantially all of our operations were conducted by our predecessor prior to March 31, 2015. With the exception of a nominal amount of initial cash funded at inception, the Company did not own any assets prior to March 31, 2015. Our predecessor included all of the properties in our portfolio that were held indirectly by Freedom REIT prior to the Spin-Off. Our predecessor was determined in accordance with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). References throughout this report to the “Company,” “we,” or “our,” include the activity of the predecessor defined above.

We intend to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the “Code”), and expect to qualify as a REIT. To qualify as a REIT, we must meet a number of organizational and operational requirements, including a requirement that we distribute at least 90% of our “REIT taxable income,” as defined by the Code, to our stockholders. As a REIT, we will be subject to federal income tax on our undistributed REIT taxable income and net capital gain and to a 4% nondeductible excise tax on any amount by which distributions we pay with respect to any calendar year are less than the sum of (a) 85% of our ordinary income, (b) 95% of our capital gain net income and (c) 100% of our undistributed income from prior years. We believe we qualify for taxation as a REIT under the Code, and we intend to continue to operate in such a manner, but no assurance can be given that we will operate in a manner so as to qualify as a REIT.

Components of Our Revenues and Expenses

Revenues

Rental income. Our earnings are primarily attributable to the rental revenue from our multifamily properties. We anticipate that the leases we enter into for our multifamily properties will typically be for one year or less.

Other income. Other income includes ancillary income earned from tenants such as application fees, late fees, laundry fees, utility reimbursements, and other rental related fees charged to tenants.

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Expenses

Property operating expenses. Property operating expenses include property maintenance costs, salary and employee benefit costs, utilities and other property operating costs.

Acquisition costs. Acquisition costs include the costs to acquire additional properties.

Real estate taxes and insurance. Real estate taxes include the property taxes assessed by local and state authorities depending on the location of each property. Insurance includes the cost of commercial, general liability, and other needed insurance for each property.

Property management fees. Property management fees include fees paid to BH or other third party management companies for managing each property.

Advisory and administrative fees. Advisory and administrative fees include the fees paid to our Adviser pursuant to the Advisory Agreement.

Corporate general and administrative expenses. Corporate general and administrative expenses include but are not limited to payments of reimbursements to the Adviser, audit fees, legal fees, listing fees, board of director fees, and investor relation costs. Corporate general and administrative expenses, the reimbursement of Adviser operating expenses, administrative fees and the advisory fees paid to our Adviser (including advisory and administrative fees on New Assets) will not exceed 1.5% of Average Real Estate Assets per calendar year (or part thereof that the Advisory Agreement is in effect), or the “Expense Cap.” The Expense Cap does not limit the reimbursement by the Company of expenses related to securities offerings paid by the Adviser. The Expense Cap also does not apply to legal, accounting, financial, due diligence and other service fees incurred in connection with mergers and acquisitions, extraordinary litigation or other events outside the Company’s ordinary course of business or any out-of-pocket acquisition or due diligence expenses incurred in connection with the acquisition or disposition of real estate assets.

Property general and administrative expenses. Property general and administrative expenses include the costs of marketing, professional fees, general office supplies, and other administrative related costs of each property.

Depreciation and amortization. Depreciation and amortization costs primarily include depreciation of our multifamily properties and amortization of acquired in-place leases.

Interest expense. Interest expense primarily includes the cost of interest expense on debt, the amortization of deferred financing costs, any prepayment penalties we may incur on the early retirement of debt, and the fair value adjustments on interest rate caps that are not designated as hedges.

Results of Operations for the Three and Six Months Ended June 30, 2016 and 2015

As of June 30, 2016, we owned all or a majority interest in a portfolio of multifamily properties, or the Portfolio, primarily located in the Southeastern and Southwestern United States consisting of 39 multifamily properties encompassing 12,276 units of apartment space that was approximately 93.7% leased. The weighted average monthly effective rent per occupied apartment unit in our Portfolio was $830 as of June 30, 2016.

The following table sets forth a summary of our operating results for the three and six months ended June 30, 2016 and 2015 (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
Total revenues	$	33,657		$	28,747		$	67,168		$	54,285
Total expenses		(26,964	)		(26,774	)		(54,958	)		(54,194	)
Operating income		6,693			1,973			12,210			91
Interest expense		(6,467	)		(4,239	)		(11,693	)		(8,248	)
Gain on sales of real estate		16,370			—			16,370			—
Net income (loss)		16,596			(2,266	)		16,887			(8,157	)
Net income (loss) attributable to noncontrolling interests		2,006			(12	)		2,312			(506	)
Net income (loss) attributable to common stockholders	$	14,590		$	(2,254	)	$	14,575		$	(7,651	)

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The change in our operating results for the three months ended June 30, 2016 as compared to the operating results for the three months ended June 30, 2015 primarily relates to the gain on sales of real estate the Company recognized on the three properties it sold during the three months ended June 30, 2016, as well as increases in same store operating results. The change in our operating results for the six months ended June 30, 2016 as compared to the operating results for the six months ended June 30, 2015 primarily relates to the gain on sales of real estate the Company recognized on the three properties it sold during the six months ended June 30, 2016. Also, seven of the 39 properties owned as of June 30, 2015 were acquired during the six months ended June 30, 2015 and therefore contributed for less than a full period in 2015 versus the entire period in 2016.

Revenues

Rental income. Rental income was $29.4 million for the three months ended June 30, 2016 compared to $25.5 million for the three months ended June 30, 2015, which was an increase of approximately $3.9 million. The increase between the periods was primarily due to the acquisition of three additional properties subsequent to June 30, 2015, partially offset by the disposition of three properties during the period in 2016. Rental income was $58.8 million for the six months ended June 30, 2016 compared to $48.2 million for the six months ended June 30, 2015, which was an increase of approximately $10.6 million. The increase between the periods was primarily due to the acquisition of three additional properties subsequent to June 30, 2015, partially offset by the disposition of three properties during the period in 2016. Also, seven of the 39 properties owned as of June 30, 2015 were acquired during the six months ended June 30, 2015 and therefore contributed for less than a full period in 2015 versus the entire period in 2016. We have also experienced an increase in rental income from our properties based upon increased rents and increased occupancy rates due to the value-add programs that we have implemented as well as organic growth in rents in the markets where these properties are located. The weighted average monthly effective rent per occupied apartment unit in our Portfolio was $830 as of June 30, 2016 compared to $784 as of June 30, 2015, which was an increase of approximately 5.9%. The occupancy rate for the Portfolio was 93.7% as of June 30, 2016 compared to 93.2% as of June 30, 2015.

Other income. Other income was $4.3 million for the three months ended June 30, 2016 compared to $3.2 million for the three months ended June 30, 2015, which was an increase of approximately $1.1 million. The increase between the periods was primarily due to the acquisition of three additional properties subsequent to June 30, 2015, partially offset by the disposition of three properties during the period in 2016. Other income was $8.4 million for the six months ended June 30, 2016 compared to $6.1 million for the six months ended June 30, 2015, which was an increase of approximately $2.3 million. The increase between the periods was primarily due to the acquisition of three additional properties subsequent to June 30, 2015, partially offset by the disposition of three properties during the period in 2016. Also, seven of the 39 properties owned as of June 30, 2015 were acquired during the six months ended June 30, 2015 and therefore contributed for less than a full period in 2015 versus the entire period in 2016.

Expenses

Property operating expenses. Property operating expenses were $9.7 million for the three months ended June 30, 2016 compared to $8.3 million for the three months ended June 30, 2015, which was an increase of approximately $1.4 million. The increase between the periods was primarily due to the acquisition of three additional properties subsequent to June 30, 2015, partially offset by the disposition of three properties during the period in 2016. Property operating costs were $19.1 million for the six months ended June 30, 2016 compared to $15.6 million for the six months ended June 30, 2015, which was an increase of approximately $3.5 million. The increase between the periods was primarily due to the acquisition of three additional properties subsequent to June 30, 2015, partially offset by the disposition of three properties during the period in 2016. Also, seven of the 39 properties owned as of June 30, 2015 were acquired during the six months ended June 30, 2015 and therefore contributed for less than a full period in 2015 versus the entire period in 2016.

Acquisition costs. There were no acquisition costs for the three months ended June 30, 2016 compared to $0.2 million for the three months ended June 30, 2015. There were no acquisition costs for the six months ended June 30, 2016 compared to $2.2 million for the six months ended June 30, 2015. During the three and six months ended June 30, 2015, the Company acquired one and seven properties, respectively. Acquisition costs depend on the specific circumstances of each closing and are one-time costs associated with each acquisition.

Real estate taxes and insurance. Real estate taxes and insurance costs were $4.1 million for the three months ended June 30, 2016 compared to $3.6 million for the three months ended June 30, 2015, which was an increase of approximately $0.5 million. The increase between the periods was primarily due to the acquisition of three additional properties subsequent to June 30, 2015, partially offset by a $0.1 million, or 21.4%, reduction in property liability insurance and the disposition of three properties during the period in 2016. Real estate taxes and insurance costs were $8.4 million for the six months ended June 30, 2016 compared to $7.0 million for the six months ended June 30, 2015, which was an increase of approximately $1.4 million. The increase between the periods was primarily due to the acquisition of three additional properties subsequent to June 30, 2015, partially offset by the disposition of three

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properties during the period in 2016. Also, seven of the 39 properties owned as of June 30, 2015 were acquired during the six months ended June 30, 2015 and therefore contributed for less than a full period in 2015 versus the entire period in 2016. Further, the costs for property taxes incurred in the first year of ownership may be significantly less than subsequent years since the purchase price of the property may trigger a significant increase in assessed value by the taxing authority in subsequent years, increasing the costs of real estate taxes.

Property management fees. Property management fees were $1.0 million for the three months ended June 30, 2016 compared to $0.9 million for the three months ended June 30, 2015, which was an increase of approximately $0.1 million. The increase between the periods was primarily due to the acquisition of three additional properties subsequent to June 30, 2015, partially offset by the disposition of three properties during the period in 2016, and increases in rental income and other income, which the fee is, in part, based on. Property management fees were $2.0 million for the six months ended June 30, 2016 compared to $1.6 million for the six months ended June 30, 2015, which was an increase of approximately $0.4 million. The increase between the periods was primarily due to the acquisition of three additional properties subsequent to June 30, 2015, partially offset by the disposition of three properties during the period in 2016, and increases in rental income and other income, which the fee is, in part, based on. Also, seven of the 39 properties owned as of June 30, 2015 were acquired during the six months ended June 30, 2015 and therefore contributed for less than a full period in 2015 versus the entire period in 2016.

Advisory and administrative fees. Advisory and administrative fees were $1.6 million for the three months ended June 30, 2016 compared to $1.4 million for the three months ended June 30, 2015, which was an increase of approximately $0.2 million. Advisory and administrative fees were $3.2 million for the six months ended June 30, 2016 compared to $2.7 million for the six months ended June 30, 2015, which was an increase of approximately $0.5 million. The amount incurred during the three and six months ended June 30, 2016 represents the maximum fee allowed on Contributed Assets under the Advisory Agreement plus approximately $0.3 million and $0.6 million, respectively, of advisory and administrative fees incurred on Madera Point, The Pointe at the Foothills, and The Place at Vanderbilt, defined as New Assets pursuant to the terms of the Advisory Agreement. Advisory and administrative fees may increase in future periods as the Company acquires additional properties, which will be classified as New Assets.

Corporate general and administrative expenses. Prior to the completion of the Spin-Off on March 31, 2015, the Company did not incur any corporate general and administrative expenses. Corporate general and administrative expenses were $0.8 million for the three months ended June 30, 2016 compared to $0.8 million for the three months ended June 30, 2015. Corporate general and administrative expenses were $1.6 million for the six months ended June 30, 2016. Corporate general and administrative expenses may increase in future periods as the Company acquires additional properties.

Property general and administrative expenses. Property general and administrative expenses were $1.6 million for the three months ended June 30, 2016 compared to $1.5 million for the three months ended June 30, 2015, which was an increase of approximately $0.1 million. The increase between the periods was primarily due to the acquisition of three additional properties subsequent to June 30, 2015, partially offset by the disposition of three properties during the period in 2016. Property general and administrative costs were $2.9 million for the six months ended June 30, 2016 compared to $2.6 million for the six months ended June 30, 2015, which was an increase of approximately $0.3 million. The increase between the periods was primarily due to the acquisition of three additional properties subsequent to June 30, 2015, partially offset by the disposition of three properties during the period in 2016. Also, seven of the 39 properties owned as of June 30, 2015 were acquired during the six months ended June 30, 2015 and therefore contributed for less than a full period in 2015 versus the entire period in 2016.

Depreciation and amortization. Depreciation and amortization costs were $8.1 million for the three months ended June 30, 2016 compared to $10.5 million for the three months ended June 30, 2015, which was a decrease of approximately $2.4 million. The decrease between the periods was primarily due to the amortization of intangible lease assets of $0.1 million related to one property for the three months ended June 30, 2016 compared to $3.4 million related to 14 properties for the three months ended June 30, 2015, which was a decrease of approximately $3.3 million. Depreciation and amortization costs were $17.7 million for the six months ended June 30, 2016 compared to $21.7 million for the six months ended June 30, 2015, which was a decrease of approximately $4.0 million. The decrease between the periods was primarily due to the amortization of intangible lease assets of $0.7 million related to three properties for the six months ended June 30, 2016 compared to $9.2 million related to 29 properties for the six months ended June 30, 2015, which was a decrease of approximately $8.5 million. The amortization of intangible lease assets over a six-month period from the date of acquisition is expected to increase the amortization expense during the initial year of operations for each property. The decrease between both periods was partially offset by the additional depreciation expense related to the acquisition of three properties subsequent to June 30, 2015 and capitalized expenditures primarily related to our value-add program. Also, seven of the 39 properties owned as of June 30, 2015 were acquired during the six months ended June 30, 2015 and therefore contributed for less than a full period in 2015 versus the entire period in 2016.

Interest expense. Interest expense costs were $6.5 million for the three months ended June 30, 2016 compared to $4.2 million for the three months ended June 30, 2015, which was an increase of approximately $2.3 million. The increase between the periods was

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primarily due to the amortization of deferred financing costs and prepayment penalties incurred related to the disposition of three properties during the period in 2016 (see table below) and increases in LIBOR, which is the index for our floating rate indebtedness. Interest expense costs were $11.7 million for the six months ended June 30, 2016 compared to $8.2 million for the six months ended June 30, 2015, which was an increase of approximately $3.5 million. The increase between the periods was primarily due to the amortization of deferred financing costs and prepayment penalties incurred related to the disposition of three properties during the period in 2016 (see table below) and increases in LIBOR, which is the index for our floating rate indebtedness. Also, seven of the 39 properties owned as of June 30, 2015 were acquired during the six months ended June 30, 2015 and therefore contributed for less than a full period in 2015 versus the entire period in 2016. The following is a table that details the various costs included in interest expense for the three and six months ended June 30, 2016 and 2015 (in thousands):

	Three Months Ended June 30,					Six Months Ended June 30,
	2016			2015		2016			2015
Interest on debt	$	5,447		$	3,955	$	10,339		$	7,542
Amortization of deferred financing costs		659	(1)		234		983	(1)		540
Rate cap market adjustments		8			50		18			166
Prepayment penalties		353			—		353			—
Total	$	6,467		$	4,239	$	11,693		$	8,248

(1) We incurred amortization of deferred financing costs of approximately $0.3 million due to our disposition of three properties.

Same Store Results of Operations for the Three Months Ended June 30, 2016 and 2015

As of June 30, 2016, our Portfolio of 39 properties consisted of 35 Same Store properties encompassing 10,937 units of apartment space that was approximately 93.9% leased. The weighted average monthly effective rent per occupied apartment unit in our Same Store pool was $831 as of June 30, 2016. For our Same Store properties, we recorded the following operating results for the second quarter of 2016 as compared to the second quarter of 2015:

Revenues

Rental income. Rental income was $25.2 million for the three months ended June 30, 2016 compared to $23.3 million for the three months ended June 30, 2015, which was an increase of approximately $1.9 million, or 8.1%. The majority of the increase is primarily related to a 6.1% increase in the weighted average monthly effective rent per occupied apartment unit to $831 as of June 30, 2016 from $783 as of June 30, 2015, as well as a 0.9% increase in occupancy.

Other income. Other income was $3.7 million for the three months ended June 30, 2016 compared to $2.9 million for the three months ended June 30, 2015, which was an increase of approximately $0.8 million, or 26.3%. The majority of the increase is related to a $0.4 million, or 23.8%, increase in utility reimbursements.

Expenses

Property operating expenses. Property operating expenses were $8.1 million for the three months ended June 30, 2016 compared to $7.5 million for the three months ended June 30, 2015, which was an increase of approximately $0.6 million, or 8.0%. The majority of the increase is related to a $0.2 million, or 11.9%, increase in payroll expenses.

Real estate taxes and insurance. Real estate taxes and insurance costs were $3.5 million for the three months ended June 30, 2016 compared to $3.2 million for the three months ended June 30, 2015, which was an increase of approximately $0.3 million, or 10.0%. The majority of the increase is related to a $0.4 million, or 15.7%, increase in property taxes, partially offset by a $0.1 million, or 23.0%, decrease in property liability insurance.

Property management fees. Property management fees were $0.9 million for the three months ended June 30, 2016 compared to $0.8 million for the three months ended June 30, 2015, which was an increase of approximately $0.1 million, or 10.6%. The majority of the increase is related to a $1.9 million, or 8.1%, increase in rental income, and a $0.8 million, or 26.3%, increase in other income, which the fee is, primarily, based on.

Property general and administrative expenses. Property general and administrative expenses were $1.2 million for the three months ended June 30, 2016 compared to $1.1 million for the three months ended June 30, 2015, which was an increase of approximately $0.1 million, or 14.4%, that primarily related to increases in professional fees and licenses.

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Net Operating Income for the Three Months Ended June 30, 2016 and 2015

The following table reflects the revenues, property operating expenses and NOI for the three months ended June 30, 2016 and 2015 for our Same Store and Non-Same Store properties (dollars in thousands):

	Three Months Ended June 30,
	2016		2015		$ Change		% Change
Revenues
Same Store
Rental income	$	25,189	$	23,291	$	1,898		8.1	%
Other income		3,671		2,907		764		26.3	%
Same Store revenues		28,860		26,198		2,662		10.2	%
Non-Same Store
Rental income		4,215		2,237		1,978		88.4	%
Other income		582		312		270		86.5	%
Non-Same Store revenues		4,797		2,549		2,248		88.2	%
Total revenues		33,657		28,747		4,910		17.1	%
Operating expenses
Same Store
Property operating expenses		8,113		7,512		601		8.0	%
Real estate taxes and insurance		3,523		3,202		321		10.0	%
Property management fees (related party)		866		783		83		10.6	%
Property general and administrative expenses (1)		1,225		1,071		154		14.4	%
Same Store operating expenses		13,727		12,568		1,159		9.2	%
Non-Same Store
Property operating expenses		1,578		781		797		102.0	%
Real estate taxes and insurance		567		375		192		51.2	%
Property management fees (related party)		147		75		72		96.0	%
Property general and administrative expenses (1)		257		108		149		138.0	%
Non-Same Store operating expenses		2,549		1,339		1,210		90.4	%
Total operating expenses		16,276		13,907		2,369		17.0	%
NOI
Same Store		15,133		13,630		1,503		11.0	%
Non-Same Store		2,248		1,210		1,038		85.8	%
Total NOI	$	17,381	$	14,840	$	2,541		17.1	%

(1) Excludes expenses that are either non-recurring in nature or incurred on behalf of the Company at the property for expenses such as legal, professional and franchise tax fees.

See reconciliation of net income (loss) to NOI below under “Non-GAAP Measures – Net Operating Income and Same Store Net Operating Income” below.

Non-GAAP Measures

Net Operating Income and Same Store Net Operating Income

NOI is a non-GAAP financial measure of performance. NOI is used by investors and our management to evaluate and compare the performance of our properties to other comparable properties, to determine trends in earnings and to compute the fair value of our properties as NOI is not affected by (1) the cost of funds, (2) acquisition costs, (3) non-operating fees to affiliates, (4) the impact of depreciation and amortization expenses as well as gains or losses from the sale of operating real estate assets that are included in net income computed in accordance with GAAP, (5) corporate general and administrative expenses, (6) other gains and losses that are specific to us, and (7) entity level general and administrative expenses that are either non-recurring in nature or incurred on behalf of the Company at the property level for expenses such as legal, professional and franchise tax fees.

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The cost of funds is eliminated from net income (loss) because it is specific to our particular financing capabilities and constraints. The cost of funds is also eliminated because it is dependent on historical interest rates and other costs of capital as well as past decisions made by us regarding the appropriate mix of capital which may have changed or may change in the future. Acquisition costs and non-operating fees to affiliates are eliminated because they do not reflect continuing operating costs of the property owner. Depreciation and amortization expenses as well as gains or losses from the sale of operating real estate assets are eliminated because they may not accurately represent the actual change in value in our multifamily properties that result from use of the properties or changes in market conditions. While certain aspects of real property do decline in value over time in a manner that is reasonably captured by depreciation and amortization, the value of the properties as a whole have historically increased or decreased as a result of changes in overall economic conditions instead of from actual use of the property or the passage of time. Gains and losses from the sale of real property vary from property to property and are affected by market conditions at the time of sale which will usually change from period to period. Entity level general and administrative expenses incurred that relate to the properties are eliminated as they are specific to the way in which we have chosen to hold our properties and are the result of our joint venture ownership structuring. Also, non-recurring expenses that are incurred upon acquisition of a property do not reflect continuing operating costs of the property owner. These gains and losses can create distortions when comparing one period to another or when comparing our operating results to the operating results of other real estate companies that have not made similarly timed purchases or sales. We believe that eliminating these costs from net income is useful because the resulting measure captures the actual ongoing revenue generated and actual expenses incurred in operating our properties as well as trends in occupancy rates, rental rates and operating costs.

However, the usefulness of NOI is limited because it excludes corporate 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 properties, and other gains and losses as determined under GAAP, the level of capital expenditures and leasing costs necessary to maintain the operating performance of our properties, all of which are significant economic costs. NOI may fail to capture significant trends in these components of net income which further limits its usefulness.

We define Same Store NOI as NOI for our properties that are comparable between periods. We view Same Store NOI as an important measure of the operating performance of our properties because it allows us to compare operating results of properties owned for the entirety of the current and comparable periods and therefore eliminates variations caused by acquisitions or dispositions during the periods.

NOI is a measure of the operating performance of our properties but does not measure our performance as a whole. NOI is therefore not a substitute for net income (loss) as computed in accordance with GAAP. This measure should be analyzed in conjunction with net income (loss) computed in accordance with GAAP and discussions elsewhere in “—Results of Operations” regarding the components of net income (loss) that are eliminated in the calculation of NOI. Other companies may use different methods for calculating NOI or similarly entitled measures and, accordingly, our NOI may not be comparable to similarly entitled measures reported by other companies that do not define the measure exactly as we do.

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NOI for the Three and Six Months Ended June 30, 2016 and 2015 and Same Store NOI for the Three Months Ended June 30, 2016 and 2015

The following table, which has not been adjusted for the effects of any noncontrolling interests, details our NOI for the three and six months ended June 30, 2016 and 2015 and our Same Store NOI for the three months ended June 30, 2016 and 2015 (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
Net income (loss)	$	16,596		$	(2,266	)	$	16,887		$	(8,157	)
Adjustments to reconcile net income (loss) to NOI:
Advisory and administrative fees		1,630			1,439			3,246			2,715
Corporate general and administrative expenses		844			831			1,626			831
Non-recurring property general and administrative expenses		130			309			281			557
Depreciation and amortization		8,084			10,050			17,696			21,660
Interest expense		6,467			4,239			11,693			8,248
Gain on sales of real estate		(16,370	)		—			(16,370	)		—
Acquisition costs		—			238			—			2,169
NOI	$	17,381		$	14,840		$	35,059		$	28,023
Less Non-Same Store
Revenues		(4,797	)		(2,549	)
Operating expenses		2,549			1,339
Same Store NOI	$	15,133		$	13,630

FFO and AFFO

We believe that net income, as defined by GAAP, is the most appropriate earnings measure. We also believe that funds from operations, or FFO, as defined by the National Association of Real Estate Investment Trusts (“NAREIT”), and adjusted funds from operations, or AFFO, are important non-GAAP supplemental measures of operating performance for a REIT. Because the historical cost accounting convention used for real estate assets requires depreciation except on land, such accounting presentation implies that the value of real estate assets diminishes predictably over time. However, since real estate values have historically risen or fallen with market and other conditions, presentations of operating results for a REIT that use historical cost accounting for depreciation could be less informative. Thus, NAREIT created FFO as a supplemental measure of operating performance for REITs that excludes historical cost depreciation and amortization, among other items, from net income, as defined by GAAP. FFO is defined by NAREIT as net income computed in accordance with GAAP, excluding gains or losses from real estate dispositions, plus real estate depreciation and amortization and impairment charges. We compute FFO attributable to common stockholders in accordance with NAREIT’s definition. Our presentation differs slightly in that we begin with net income (loss) before adjusting for noncontrolling interests and show the noncontrolling interests as an adjustment to arrive at FFO attributable to common stockholders. AFFO is utilized by us to reflect our ongoing results of the existing portfolio by removing the impact of one-time or non-recurring expenditures and is calculated by adjusting our FFO by adding back items that do not reflect ongoing property operations, such as acquisition expenses, equity-based compensation expenses, the amortization of deferred loan costs, and the noncontrolling interests related to these items. AFFO will also be adjusted to include any gains (losses) from sales of property to the extent excluded from FFO. We will not have any equity-based compensation expenses until our Board of Directors grants such awards under our 2016 Long Term Incentive Plan (see Note 8 to our combined consolidated financial statements).

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We believe that the use of FFO and AFFO, combined with the required GAAP presentations, improves the understanding of operating results of REITs among investors and makes comparisons of operating results among such companies more meaningful. We consider FFO and AFFO to be useful measures for reviewing comparative operating and financial performance because, for FFO, by excluding gains or losses from real estate dispositions, impairment charges and real estate depreciation and amortization, and, for AFFO, by excluding non-cash expenses such as acquisition expenses, equity-based compensation expenses, and the amortization of deferred loan costs, FFO and AFFO can help investors compare our operating performance between periods and to other REITs. While FFO and AFFO are relevant and widely used measures of operating performance of REITs, they do not represent cash flows from operations or net income (loss) as defined by GAAP and should not be considered as an alternative to those measures in evaluating our liquidity or operating performance. FFO and AFFO do not purport to be indicative of cash available to fund our future cash requirements. Further, our computation of FFO and AFFO may not be comparable to FFO and AFFO reported by other REITs that do not define FFO in accordance with the current NAREIT definition or that interpret the current NAREIT definition or define AFFO differently than we do.

The following table reconciles our calculations of FFO and AFFO to net income (loss), the most directly comparable GAAP financial measure, for the three and six months ended June 30, 2016 and 2015 (in thousands, except per share amounts):

	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
Net income (loss)	$	16,596		$	(2,266	)	$	16,887		$	(8,157	)
Depreciation and amortization		8,084			10,050			17,696			21,660
Gain on sales of real estate		(16,370	)		—			(16,370	)		—
Adjustment for noncontrolling interests		(1,120	)		(1,063	)		(2,380	)		(1,801	)
FFO attributable to common stockholders		7,190			6,721			15,833			11,702
FFO per share	$	0.34		$	0.32		$	0.74		$	0.55
Acquisition costs		—			238			—			2,169
Amortization of deferred financing costs		659			234			983			540
Gain on sales of real estate		16,370			—			16,370			—
Equity-based compensation expenses		—			—			—			—
Adjustment for noncontrolling interests		(1,696	)		(49	)		(1,721	)		(266	)
AFFO attributable to common stockholders		22,523			7,144			31,465			14,145
AFFO per share	$	1.06		$	0.34		$	1.48		$	0.66

The change in our FFO for the three months ended June 30, 2016 as compared to FFO for the three months ended June 30, 2015 primarily relates to one-time interest charges of approximately $0.7 million during the period in 2016, which consisted of $0.3 million of amortization of deferred financing costs and $0.4 million of prepayment penalties incurred on the early retirement of debt related to our disposition of three properties. The change in our FFO for the six months ended June 30, 2016 as compared to FFO for the six months ended June 30, 2015 primarily relates to the acquisition of three additional properties subsequent to June 30, 2015, partially offset by the one-time interest charges we incurred and disposition of three properties during the period in 2016. Also, seven of the 39 properties owned as of June 30, 2015 were acquired during the six months ended June 30, 2015 and therefore contributed for less than a full period in 2015 versus the entire period in 2016.

The change in our AFFO for the three and six months ended June 30, 2016 as compared to AFFO for the three and six months ended June 30, 2015 primarily relates to the gain on sales of real estate and amortization of deferred financing costs we recognized related to the disposition of three properties during the second quarter of 2016.

Liquidity and Capital Resources

Our short-term liquidity requirements consist primarily of funds necessary to pay for operating expenses and other expenditures directly associated with our multifamily properties, including:

· recurring maintenance necessary to maintain our multifamily properties;

· interest expense and scheduled principal payments on outstanding indebtedness (see “—Obligations and Commitments”);

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· distributions necessary to qualify for taxation as a REIT; 

· capital expenditures to complete our value-add program and to improve the quality and performance of our multifamily properties;

· advisory fees payable to our Adviser;

· administrative fees payable to our Adviser;

· general and administrative expenses;

· reimbursements to our Adviser; and

· property management fees payable to BH.

We expect to meet our short-term liquidity requirements generally through net cash provided by operations and existing cash balances. As of June 30, 2016, we have reserved approximately $15.8 million for our planned capital expenditures to implement our value-add program.

Our long-term liquidity requirements consist primarily of funds necessary to pay for the costs of acquiring additional multifamily properties, renovations and other capital expenditures to improve our multifamily properties and scheduled debt payments and distributions. We expect to meet our long-term liquidity requirements through various sources of capital, which may include a revolving credit facility and future debt or equity issuances, existing working capital, net cash provided by operations, long-term mortgage indebtedness and other secured and unsecured borrowings, and property dispositions. However, there are a number of factors that may have a material adverse effect on our ability to access these capital sources, including the state of overall equity and credit markets, our degree of leverage, our unencumbered asset base and borrowing restrictions imposed by lenders (including as a result of any failure to comply with financial covenants in our existing and future indebtedness), general market conditions for REITs, our operating performance and liquidity and market perceptions about us. The success of our business strategy will depend, in part, on our ability to access these various capital sources.

In addition to our value-add program, our multifamily properties will require periodic capital expenditures and renovation to remain competitive. Also, acquisitions, redevelopments or expansions of our multifamily properties will require significant capital outlays. Long-term, we may not be able to fund such capital improvements solely from net cash provided by operations because we must distribute annually at least 90% of our REIT taxable income, determined without regard to the deductions for dividends paid and excluding net capital gains, to qualify and maintain our qualification as a REIT, and we are subject to tax on any retained income and gains. As a result, our ability to fund capital expenditures, acquisitions or redevelopment through retained earnings long-term is limited. Consequently, we expect to rely heavily upon the availability of debt or equity capital for these purposes. If we are unable to obtain the necessary capital on favorable terms, or at all, our financial condition, liquidity, results of operations and prospects could be materially and adversely affected.

We believe that our available cash, expected operating cash flows and potential debt or equity financings will provide sufficient funds for our operations, anticipated scheduled debt service payments and dividend requirements for the twelve-month period following June 30, 2016.

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Cash Flows

The following table presents selected data from the Company’s combined consolidated statements of cash flows for the six months ended June 30, 2016 and 2015 (in thousands):

	Six Months Ended June 30,
	2016				2015
Net cash provided by operating activities	$	20,424			$	8,614
Net cash provided by (used in) investing activities		59,674				(189,454	)
Net cash provided by (used in) financing activities		(67,774	)			192,334
Net increase in cash		12,324				11,494
Cash, beginning of period		16,226				12,662
Cash, end of period	$	28,550		(1)	$	24,156

(1) Does not include restricted cash of $34.2 million as of June 30, 2016.

Cash flows from operating activities. During the six months ended June 30, 2016, net cash provided by operating activities was $20.4 million compared to net cash provided by operating activities of $8.6 million for the six months ended June 30, 2015. The increase in net cash from operating activities was mainly due to changes in net income (loss), offset by changes in depreciation and amortization.

Cash flows from investing activities. During the six months ended June 30, 2016, net cash provided by investing activities was $59.7 million compared to net cash used in investing activities of $189.5 million for the six months ended June 30, 2015. The change in cash flows from investing activities was mainly due to the sales of three properties during the period in 2016 for net proceeds of approximately $63.2 million compared to the acquisition of seven properties during the period in 2015 for a combined purchase price of approximately $183.4 million.

Cash flows from financing activities. During the six months ended June 30, 2016, net cash used in financing activities was $67.8 million compared to net cash provided by financing activities of $192.3 million for the six months ended June 30, 2015. The change in cash flows from financing activities was mainly due to the retirement of $35.6 million of debt related to the sales of three properties and the use of proceeds from two of the sales to pay down $18.0 million of principal on our bridge facility during the period in 2016 compared to the acquisition of seven properties during the period in 2015 for a combined purchase price of approximately $183.4 million, which was funded through debt and capital contributions.

Mortgage Indebtedness

As of June 30, 2016, our subsidiaries have aggregate mortgage indebtedness to third parties of approximately $457.9 million. As of June 30, 2016, the weighted average interest rate on the outstanding mortgage indebtedness was 2.62%. For additional information regarding our mortgage indebtedness, see Note 6 to our combined consolidated financial statements.

We entered into and expect to continue to enter into interest rate cap agreements with various third parties to cap the floating interest rates on a majority of our outstanding floating rate mortgage indebtedness as well as interest rate swap agreements. These interest rate cap agreements generally have a term of three to four years and cover the outstanding principal amount of the underlying indebtedness. Under the interest rate cap agreements, we pay a fixed fee in exchange for the counterparty to pay any interest above a maximum rate. At June 30, 2016, interest rate cap agreements covered $354.1 million of the $413.0 million of total outstanding floating rate mortgage indebtedness relating to the Company. These interest rate cap agreements cap the related floating interest rates of our mortgage indebtedness at a weighted average interest rate of 6.09% as of June 30, 2016. Three floating rate mortgages totaling $58.9 million did not have caps associated with them as of June 30, 2016.

With the exception of the 11 properties we refinanced with a credit facility (see “Credit Facility” below), each property has a separate non-recourse mortgage which is secured only by that property. These non-recourse mortgages have standard scope non-recourse carve outs required by agency lenders and generally call for protection by the borrower and the guarantor against losses by the lender for so-called “bad acts,” such as misrepresentations, and may include full recourse liability for more significant events such as bankruptcy. We and our property manager, BH, and its affiliates, provided non-recourse carve out guarantees for the mortgage indebtedness currently outstanding relating to the Portfolio.

We intend to invest in additional multifamily properties as suitable opportunities arise and adequate sources of equity and debt financing are available. We expect that future investments in properties, including any improvements or renovations of current or newly-acquired properties, will depend on and will be financed by, in whole or in part, our existing cash, future borrowings and the

38

proceeds from additional issuances of common stock or other securities. In addition, we may seek financing from U.S. government agencies, including through the Federal Home Loan Mortgage Corporation, the Federal National Mortgage Association, and the U.S. Department of Housing and Urban Development, in appropriate circumstances in connection with the acquisition or refinancing of existing mortgage loans.

Although we expect to be subject to restrictions on our ability to incur indebtedness, we expect that we will be able to refinance existing indebtedness or incur additional indebtedness for acquisitions or other purposes, if needed. However, there can be no assurance that we will be able to refinance our indebtedness, incur additional indebtedness or access additional sources of capital, such as by issuing common stock or other debt or equity securities, on terms that are acceptable to us or at all.

Furthermore, following the completion of our value-add and capital expenditures programs and depending on the interest rate environment at the applicable time, we may seek to refinance our floating rate debt into longer-term fixed rate debt at lower leverage levels.

Credit Facility

On June 6, 2016, we, through certain of our subsidiaries, entered into a $200.0 million credit facility (the “Credit Facility”) with KeyBank National Association (“KeyBank”). The Credit Facility is a full-term, interest-only facility and is expandable to $300.0 million upon the satisfaction of certain conditions. The initial term of the Credit Facility is 60 months with one 12-month extension option. Interest accrues on the Credit Facility at an interest rate of one-month LIBOR plus 2.20%. The Credit Facility contains flexible prepayment options that are consistent with a majority of our other floating rate indebtedness.

On June 6, 2016, we drew $191.0 million under the Credit Facility to replace the existing mortgage debt on 11 properties (see below). The refinancing of this existing mortgage debt did not incur prepayment penalties. We subsequently drew an additional $9.0 million under the Credit Facility and used the proceeds to pay down a portion of our bridge facility (see “Bridge Facility” below). As of June 30, 2016, we have $200.0 million outstanding under our Credit Facility at an interest rate of 2.67%.

The following 11 properties in our portfolio have been cross-collateralized as security for the Credit Facility:

· Arbors on Forest Ridge

· Cutter’s Point

· Eagle Crest

· Silverbrook

· Timberglen

· Toscana

· Edgewater at Sandy Springs

· Beechwood Terrace

· Willow Grove

· Woodbridge

· The Place at Vanderbilt

Bridge Facility

As of June 30, 2016, we have $2.0 million outstanding on a bridge facility (the “Bridge Facility”) with KeyBank. Interest accrues on the Bridge Facility at an interest rate of one-month LIBOR plus 4.00%. During the three months ended June 30, 2016, we paid down $27.0 million of principal on the Bridge Facility, which was funded with $18.0 million of our share of proceeds, net of distributions to noncontrolling interests, from the sales of Park at Regency and Mandarin Reserve and $9.0 million of proceeds drawn under our Credit Facility. On August 2, 2016, we paid the remaining $2.0 million of principal outstanding on the Bridge Facility with cash on hand, and the Bridge Facility was retired (see Note 11 to our combined consolidated financial statements).

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Interest Rate Swap Agreements

In order to fix a portion of, and mitigate the risk associated with, our floating rate indebtedness (without incurring substantial prepayment penalties or defeasance costs typically associated with fixed rate indebtedness when repaid early or refinanced), we, through our OP, have entered into three interest rate swap transactions with KeyBank with a combined notional amount of $300.0 million. The interest rate swaps effectively replace the floating interest rate with respect to that amount with a weighted average fixed rate of 1.0088%. The interest rate swaps have an effective date of July 1, 2016 and a termination date of June 1, 2021. Beginning on August 1, 2016, we will be required to make monthly fixed rate payments of a weighted average fixed rate of 1.0088% calculated on a combined notional amount of $300.0 million, while the counterparties will be obligated to make monthly floating rate payments based on one-month LIBOR to us referencing the same notional amount. We have designated these interest rate swaps as cash flow hedges of interest rate risk. For additional information regarding the interest rate swaps, see Note 11 to our combined consolidated financial statements.

The refinancing of the 11 properties into the Credit Facility and the fixed rate achieved through the interest rate swaps is expected to result in an annual reduction of interest expense of approximately $300,000, assuming one-month LIBOR as of June 30, 2016.

Obligations and Commitments

The following table summarizes the Company’s contractual obligations and commitments for the next five years and thereafter as of June 30, 2016. Interest expense due by period on our floating rate debt is based on one-month and three-month LIBOR as of June 30, 2016.

	Payments Due by Period (in thousands)
	Total		2016		2017		2018		2019		2020		Thereafter
Operating Properties Mortgage Notes
Principal payments	$	391,544	$	399	$	1,463	$	16,908	$	6,588	$	65,564	$	300,622
Interest expense		63,914		5,396		10,676		10,397		9,881		9,319		18,245
Total	$	455,458	$	5,795	$	12,139	$	27,305	$	16,469	$	74,883	$	318,867
Held For Sale Properties Mortgage Notes
Principal payments	$	66,307	$	619	$	1,433	$	1,475	$	1,519	$	1,558	$	59,703
Interest expense		8,721		939		1,833		1,792		1,750		1,711		696
Total	$	75,028	$	1,558	$	3,266	$	3,267	$	3,269	$	3,269	$	60,399
Credit Facility
Principal payments	$	200,000	$	—	$	—	$	—	$	—	$	—	$	200,000
Interest expense		33,085		3,336		6,617		6,617		6,617		6,617		3,281
Total	$	233,085	$	3,336	$	—	$	—	$	—	$	—	$	—
Bridge Facility
Principal payments	$	2,000	$	2,000	$	—	$	—	$	—	$	—	$	—
Interest expense		9		9		—		—		—		—		—
Total	$	2,009	$	2,009	$	—	$	—	$	—	$	—	$	—
Total contractual obligations and commitments	$	765,580	$	12,698	$	15,405	$	30,572	$	19,738	$	78,152	$	379,266

Capital Expenditures and Value-Add Program

We anticipate incurring average annual repairs and maintenance expense of $575-$725 per unit in connection with the ongoing operations of our business. These expenditures are expensed as incurred. In addition, we reserve, on average, approximately $250 to $350 per unit for non-recurring capital expenditures and/or lender required replacement reserves. These expenditures are either capitalized or expensed, in accordance with GAAP, depending on the type of the expenditure. Although we will continuously monitor the adequacy of this average, we believe these figures to be sufficient to maintain the properties at a high level in the markets in which we operate. A majority of the properties in our Portfolio were underwritten and acquired with the premise that we would invest $4,000-$10,000 per unit in the first 24-36 months of ownership, in an effort to add value to the asset’s exterior and interiors. In most

40

cases, we reserved cash at closing to fund these planned capital expenditures and value-add improvements. As of June 30, 2016, we have reserved approximately $15.8 million for our planned capital expenditures and other expenses to implement our value-add program. The following table sets forth a summary of the Company’s capital expenditures related to its value-add program for the three and six months ended June 30, 2016 and 2015 (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
Rehab Expenditures	2016		2015		2016		2015
Interior (1)	$	2,560	$	1,946	$	4,697	$	3,349
Exterior and common area		2,011		7,226		6,332		9,846
Total rehab expenditures	$	4,571	$	9,172	$	11,029	$	13,195

(1) Includes total capital expenditures during the period on completed and in-progress interior rehabs. For the three months ended June 30, 2016 and 2015, we completed full and partial interior rehabs on 550 and 515 units, respectively. For the six months ended June 30, 2016 and 2015, we completed full and partial interior rehabs on 937 and 847 units, respectively.

Emerging Growth Company

Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 13(a) of the Exchange Act, for complying with new or revised accounting standards applicable to public companies. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of this extended transition period. As a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates for such new or revised standards. We may elect to comply with public company effective dates at any time, and such election would be irrevocable pursuant to Section 107(b) of the JOBS Act.

We could remain an “emerging growth company” until the earliest of (1) the last day of the fiscal year following the fifth anniversary of becoming a public company, (2) the last day of the first fiscal year in which we have total annual gross revenue of $1 billion or more, (3) the date on which we are deemed to be a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act (which would occur if the market value of our common stock held by non-affiliates exceeds $700 million, measured as of the last business day of our most recently completed second fiscal quarter, and we have been publicly reporting for at least 12 months) or (4) the date on which we have, during the preceding three year period, issued more than $1 billion in non-convertible debt.

Income Taxes

We anticipate that we will qualify to be taxed as a REIT for U.S. federal income tax purposes, and we intend to continue to be organized and to operate in a manner that will permit us to qualify as a REIT. To qualify as a REIT, we must meet certain organizational and operational requirements, including a requirement to distribute at least 90% of our annual REIT taxable income to stockholders. As a REIT, we will be subject to federal income tax on our undistributed REIT taxable income and net capital gain and to a 4% nondeductible excise tax on any amount by which distributions we pay with respect to any calendar year are less than the sum of (a) 85% of our ordinary income, (b) 95% of our capital gain net income and (c) 100% of our undistributed income from prior years. If we fail to qualify as a REIT in any taxable year, we will be subject to U.S. federal income tax, including any applicable alternative minimum tax, on our taxable income at regular corporate income tax rates, and dividends paid to our stockholders would not be deductible by us in computing taxable income. Any resulting corporate liability could be substantial and could materially and adversely affect our net income and net cash available for distribution to stockholders. Unless we were entitled to relief under certain Code provisions, we also would be disqualified from re-electing to be taxed as a REIT for the four taxable years following the year in which we failed to qualify to be taxed as a REIT.

Historically, our operations were included in Freedom REIT’s U.S. federal and state income tax returns and our operations for 2015 until the Spin-Off will be included in Freedom REIT’s U.S. federal and state income tax returns for the taxable year ended December 31, 2015. Freedom REIT elected to be taxed as a REIT beginning with its taxable year ending December 31, 2013 and Freedom REIT has covenanted to us to use its reasonable best efforts to maintain its REIT status for its taxable year ending on December 31, 2015. With respect to its taxable years ending December 31, 2013 and December 31, 2014, it distributed 100% of its REIT taxable income and therefore did not owe any U.S. federal income tax. If Freedom REIT fails to qualify as a REIT, it would be subject to U.S. federal income tax, including any applicable alternative minimum tax, on its taxable income at regular corporate income tax rates. In addition, unless we were entitled to relief under certain Code provisions, we also would be disqualified from electing to be taxed as a REIT if Freedom REIT fails to qualify as a REIT for its taxable years ending on or before December 31, 2015 and we are treated as a successor to Freedom REIT for U.S. federal income tax purposes. Although Freedom REIT represented to us that it has no knowledge of any fact or circumstance that would cause us to fail to qualify as a REIT, and covenanted in the agreement

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between us and our Adviser to use its reasonable best efforts to maintain its REIT status for each of Freedom REIT’s taxable years ending on or before December 31, 2015, no assurance can be given that such representation and covenant would prevent us from failing to qualify as a REIT.

Dividends

We intend to make regular quarterly dividend payments to holders of our common stock. U.S. federal income tax law generally requires that a REIT distribute annually at least 90% of its REIT taxable income, without regard to the deduction for dividends paid and excluding net capital gains. As a REIT, we will be subject to federal income tax on our undistributed REIT taxable income and net capital gain and to a 4% nondeductible excise tax on any amount by which distributions we pay with respect to any calendar year are less than the sum of (a) 85% of our ordinary income, (b) 95% of our capital gain net income and (c) 100% of our undistributed income from prior years. We intend to make regular quarterly dividend payments of all or substantially all of our taxable income to holders of our common stock out of assets legally available for this purpose, if and to the extent authorized by our Board. Before we make any dividend payments, whether for U.S. federal income tax purposes or otherwise, we must first meet both our operating requirements and debt service on our debt payable. If our cash available for distribution is less than our taxable income, we could be required to sell assets, borrow funds or raise additional capital to make cash dividends or we may make a portion of the required dividend in the form of a taxable distribution of stock or debt securities.

We will make dividend payments based on our estimate of taxable earnings per share of common stock, but not earnings calculated pursuant to GAAP. Our dividends and taxable income and GAAP earnings will typically differ due to items such as depreciation and amortization, fair value adjustments, differences in premium amortization and discount accretion, and non-deductible general and administrative expenses. Our quarterly dividends per share may be substantially different than our quarterly taxable earnings and GAAP earnings per share. The Board declared the Company’s second quarterly dividend of 2016 of $0.206 per share on May 9, 2016, which was paid on June 30, 2016 and funded out of cash flows from operations.

Significant Accounting Policies and Critical Accounting Estimates

Our significant accounting policies and critical accounting estimates are disclosed in Note 2 “Summary of Significant Accounting Policies” to the combined consolidated financial statements.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Market risk is the adverse effect on the value of a financial instrument that results from a change in interest rates. Our primary market risk exposure is interest rate risk with respect to our indebtedness. As of June 30, 2016, we have total indebtedness of $659.9 million, of which $615.0 million is debt with a floating interest rate.

An increase in interest rates could make the financing of any acquisition by us costlier. Rising interest rates could also limit our ability to refinance our debt when it matures or cause us to pay higher interest rates upon refinancing and increase interest expense on refinanced indebtedness. We may manage, or hedge, interest rate risks related to our borrowings by means of interest rate cap and interest rate swap agreements. At June 30, 2016, interest rate cap agreements covered $354.1 million of the $659.9 million of total outstanding indebtedness relating to the Company. As of June 30, 2016, these interest rate cap agreements cap the related floating interest rates at a weighted average interest rate of 6.09% for the term of the agreements, which is generally 3-4 years. We also expect to manage our exposure to interest rate risk by maintaining a mix of fixed and floating rates for our indebtedness.

In order to fix a portion of, and mitigate the risk associated with, our floating rate indebtedness (without incurring substantial prepayment penalties or defeasance costs typically associated with fixed rate indebtedness when repaid early or refinanced), we, through our OP, have entered into three interest rate swap transactions with KeyBank with a combined notional amount of $300.0 million. The interest rate swaps effectively replace the floating interest rate with respect to that amount with a weighted average fixed rate of 1.0088%. The interest rate swaps have an effective date of July 1, 2016 and a termination date of June 1, 2021. Beginning on August 1, 2016, we will be required to make monthly fixed rate payments of a weighted average fixed rate of 1.0088% calculated on a combined notional amount of $300.0 million, while the counterparties will be obligated to make monthly floating rate payments based on one-month LIBOR to us referencing the same notional amount.

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Until our interest rates reach the caps provided by our interest rate cap agreements, each quarter point change in interest rates on the portion of our floating rate indebtedness would result in an approximate increase to our annual interest expense costs, reduced by any payments due from counterparties under the terms of our interest rate swap agreements, of the amounts illustrated in the table below for our indebtedness as of June 30, 2016 (in thousands):

Change in Interest Rates	Annual Increase to Interest Expense
0.25%	$	800
0.50%		1,600
0.75%		2,400
1.00%		3,200

There is no assurance that we would realize such expense as such changes in interest rates could alter our liability positions or strategies in response to such changes.

We may also be exposed to credit risk in the derivative financial instruments we use. Credit risk is the failure of the counterparty to perform under the terms of the derivative financial instruments. If the fair value of a derivative financial instrument is positive, the counterparty will owe us, which creates credit risk for us. If the fair value of a derivative financial instrument is negative, we will owe the counterparty and, therefore, do not have credit risk. We seek to minimize the credit risk in derivative financial instruments by entering into transactions with high-quality counterparties.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As required by Rule 13a-15(b) and Rule 15d-15(b) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), our management, including our President and Chief Financial Officer, evaluated, as of June 30, 2016, the effectiveness of our disclosure controls and procedures as defined in Exchange Act Rule 13a-15(e) and Rule 15d-15(e). Based on that evaluation, our President and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of June 30, 2016, to provide reasonable assurance that information required to be disclosed by us in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the rules and forms of the Exchange Act and is accumulated and communicated to management, including the President and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures.

We believe, however, that a controls system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the controls systems are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud or error, if any, within a company have been detected.

Changes in Internal Control over Financial Reporting

There has been no change in internal control over financial reporting that occurred during the three months ended June 30, 2016 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II – OTHER INFORMATION

Item 1. Legal Proceedings

None.

Item 1A. Risk Factors

We have disclosed under Part I, Item 1A, “Risk Factors” in our Annual Report, filed with the U.S. Securities and Exchange Commission on March 21, 2016, risk factors which materially affect our business, financial condition or results of operations. There have been no material changes from the risk factors previously disclosed. You should carefully consider the risk factors set forth in the Annual Report and the other information set forth elsewhere in this quarterly report on Form 10-Q. You should be aware that these risk factors and other information may not describe every risk facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

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

Repurchase of Shares

The following table provides information on the Company’s purchases of equity securities during the quarter ended June 30, 2016.

Period (Quarter ended June 30, 2016)	Total Number of Shares Purchased		Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Approximate Dollar Value of Shares that may yet be Purchased under the Plans or Programs (in millions)(1)
April 1 – April 30		—	$	—		—	$	—
May 1 – May 31		—		—		—		—
June 1 – June 30		5,000		17.59		5,000		29.9
Total		5,000	$	17.59		5,000	$	29.9

(1) On June 15, 2016, we announced that our Board of Directors authorized us to repurchase an indeterminate number of shares of our common stock at an aggregate market value of up to $30 million during a two-year period that expires on June 15, 2018.

Item 3. Defaults upon Senior Securities

None.

Item 4. Mine Safety Disclosures

None.

Item 5. Other Information

None.

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Item 6. Exhibits 

EXHIBIT INDEX

Exhibit Number	Exhibit Description
3.1	Articles of Amendment and Restatement of NexPoint Residential Trust, Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the SEC on June 15, 2016)
10.1	Confirmation of swap transaction, dated May 18, 2016, from KeyBank National Association to NexPoint Residential Trust Operating Partnership, L.P. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on May 19, 2016)
10.2*	Credit Agreement by and between FRBH Edgewater Owner, LLC, FRBH Beechwood, LLC, FRBH Willow Grove, LLC, FRBH Woodbridge, LLC, NXRTBH Vanderbilt, LLC, FRBH Toscana, LLC, FRBH CP, LLC, FRBH Silverbrook, LLC, FRBH Eaglecrest, LLC, FRBH Timberglen, LLC and FRBH Arbors, LLC, as Borrowers, and KeyBank National Association, a national banking association, as Lender, dated June 6, 2016
10.3	Amendment to Advisory Agreement, dated June 15, 2016, by and among the Company, NexPoint Residential Trust Operating Partnership, L.P. and NexPoint Real Estate Advisors, L.P. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on June 15, 2016)
10.4	NexPoint Residential Trust, Inc. 2016 Long Term Incentive Plan (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the SEC on June 15, 2016)
10.5	Confirmation of swap transaction, dated June 13, 2016, from KeyBank National Association to NexPoint Residential Trust Operating Partnership, L.P. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on June 16, 2016)
10.6	Confirmation of swap transaction, dated June 30, 2016, from KeyBank National Association to NexPoint Residential Trust Operating Partnership, L.P. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on July 1, 2016)
31.1*	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1+	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes- Oxley Act of 2002
101.INS*	XBRL Instance Document
101.SCH*	XBRL Taxonomy Extension Schema Document
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*	XBRL Taxonomy Extension Label Linkbase Document
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document

* Filed herewith.

⁺ Furnished herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	NEXPOINT RESIDENTIAL TRUST, INC.
Dated: August 11, 2016		/s/ Jim Dondero
		Jim Dondero President (Principal Executive Officer)
Dated: August 11, 2016		/s/ Brian Mitts
		Brian Mitts Chief Financial Officer (Principal Financial Officer)

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EX-10.2

Exhibit 10.2

Freddie Mac Loan Number:	708650716, 708650767, 708650740, 708650732, 708650759, 708650783, 708650805, 708650848, 708650856, 708650813, 708650791
Freddie Mac Deal Number:	160502
Freddie Mac Rollup Number:	504199471

CREDIT AGREEMENT

BY AND BETWEEN

FRBH Edgewater Owner, LLC

FRBH Beechwood, LLC

FRBH Willow Grove, LLC

FRBH Woodbridge, LLC

NXRTBH Vanderbilt, LLC

FRBH Toscana, LLC

FRBH CP, LLC

FRBH Silverbrook, LLC

FRBH Eaglecrest, LLC

FRBH Timberglen, LLC

FRBH Arbors, LLC,

as Borrower

AND

KeyBank National Association, a national banking association
as Lender

June 6, 2016

Table of Contents

	Page
1. DEFINITIONS.	1
1.1 Definitions.	1
1.2 Construction.	10
1.2.1 Number; Inclusion.	10
1.2.2 Determination.	10
1.2.3 Lender’s Discretion and Consent; References to Lender’s Requirements.	10
1.2.4 Documents Taken as a Whole.	10
1.2.5 Headings.	10
1.2.6 Implied References to this Agreement.	11
1.2.7 Persons.	11
1.2.8 From, To and Through.	11
1.2.9 Conflicts with Other Loan Documents.	11
1.3 Accounting Principles.	11
2. REVOLVING LOAN FACILITY.	11
2.1 Revolving Loan.	11
2.1.1 Revolving Loan.	11
2.1.2 Loan Requests and Funding.	11
2.1.3 Recalculations.	12
2.1.4 Sublimits.	13
2.2 Term.	13
2.3 Option to Extend.	13
2.3.1 First Option to Extend.	13
2.3.2 Reserved.	14
2.4 Contraction and Expansion Options.	14
2.4.1 Borrower’s Election of Contraction Option.	14
2.4.2 Lender’s Election of Contraction Option.	15
2.4.3 Expansion Option.	15

-i-

Table of Contents

(continued)

	Page
2.5 Fees.	16
2.5.1 Fees and Costs Due on the Closing Date.	16
2.5.2 Unused Commitment Fee.	16
2.5.3 Seasoning Fee.	16
2.5.4 Base Rate Termination Fee, Fixed Rate Termination Fee and Release Termination Fee.	17
2.5.5 Addition Fee.	18
2.5.6 Expansion Fee.	18
2.5.7 Extension Fee.	18
2.6 Borrower’s Right to Terminate the Agreement.	18
3. COLLATERAL POOL, ADDITION AND RELEASE, VALUATIONS AND MATERIAL ADVERSE CHANGE.	19
3.1 Addition of a Collateral Pool Property.	19
3.1.1 Procedure for Proposing a Mortgaged Property Addition to the Collateral Pool.	19
3.1.2 Approval of the Addition of the Mortgaged Property to the Collateral Pool.	19
3.2 Release of a Collateral Pool Property.	21
3.3 Release of Collateral Pool Property Followed by a Securitized Loan.	21
3.3.1 Securitized Loan.	21
3.3.2 Procedure for Making a Securitized Loan.	22
3.4 Valuations.	23
3.4.1 Timing and Procedure of Valuation.	23
3.4.2 Valuations that Disclose a Decrease in Market Value and/or Net Operating Income.	23
3.4.3 Valuations that Disclose an Increase in Market Value and/or Net Operating Income.	24
3.5 Material Adverse Change to Borrower, Guarantor or a Collateral Pool Property.	24

-ii-

Table of Contents

(continued)

	Page
4. INTEREST, COSTS AND CHARGES	24
4.1 Interest Rate.	24
4.2 Interest Rate Determinations.	25
4.2.1 Prime Rate, Base Rate, and Fixed Rate Determination.	25
4.2.2 Prime Rate, Base Rate and Margin Quotations.	25
4.2.3 Net Spread.	25
4.3 Interest Periods.	26
4.3.1 Interest Period to End on a Business Day.	26
4.3.2 No Interest Periods Beyond the Expiration Date.	26
4.3.3 Renewals.	26
4.3.4 Interest After Default.	27
4.3.5 Late Charge.	27
4.3.6 Non-Compliance With Sublimits.	28
4.4 Illegality; Increased Costs.	28
4.4.1 Illegality; Increased Costs.	28
4.4.2 Lender’s Rights.	28
5. PAYMENTS	29
5.1 Repayment of Loan.	29
5.2 Payments.	29
5.3 Payment Dates.	29
5.4 Prepayments.	30
5.4.1 Voluntary Prepayments.	30
5.4.2 Sublimit Violations (Mandatory Prepayment or Collateral Addition).	30
5.5 Payment of Balance Without Termination.	31
5.6 Payment of Additional Compensation in Certain Circumstances.	31
5.6.1 Increased Costs Resulting from Taxes, Etc.	31
5.6.2 Termination.	32
5.7 Indemnity.	32

-iii-

Table of Contents

(continued)

	Page
6. CONDITIONS OF LENDING	32
6.1.1 Delivery of Loan Documents.	33
6.1.2 Validity of Representations.	33
6.1.3 Valid Security Instrument.	33
6.1.4 No Default.	33
6.1.5 Officer’s Certificate.	33
6.1.6 Opinion of Counsel.	34
6.1.7 Legal Details.	34
6.1.8 Payment of Fees.	34
6.1.9 Other Conditions.	34
7. REPRESENTATIONS AND WARRANTIES	34
7.1 Representations and Warranties.	34
7.1.1 Authority.	34
7.1.2 Binding Obligations.	35
7.1.3 Formation and Organizational Documents.	35
7.1.4 No Violation.	35
7.1.5 Reserved.	35
7.1.6 Financial Condition.	35
7.1.7 No Material Adverse Change.	35
7.1.8 Accuracy.	35
7.1.9 Reserved.	36
7.1.10 Enforceability.	36
7.1.11 Reserved.	36
7.1.12 Solvency.	36
7.1.13 No Pending Proceedings or Judgments.	36
7.1.14 Authorized Officer/Authorized Representative.	36
7.1.15 Other Loan Documents.	36
7.2 Reaffirmation and Survival of Representations and Warranties.	37

-iv-

Table of Contents

(continued)

	Page
8. COVENANTS	37
8.1 Organization and Dissolution.	37
8.2 Affiliate Transactions.	37
8.3 Assignment.	37
8.4 Further Assurances.	38
8.5 Proceedings and Judgments.	38
8.6 Compliance with Lender Requirements.	38
8.7 Correction of Defects.	38
8.8 Notice of Material Adverse Change.	39
8.9 Annual Evaluation.	39
8.10 Compliance with Guaranty.	39
9. DEFAULT	40
9.1 Events of Default.	40
9.1.1 Payments Under Loan Documents.	40
9.1.2 Breach of Representation or Warranty.	40
9.1.3 Breach of Covenant.	40
9.1.4 Event of Default under the Other Loan Documents.	41
9.1.5 Final Judgments or Orders.	41
9.1.6 Notice of Lien or Assessment.	41
9.1.7 Insolvency.	41
9.1.8 Cessation of Business.	41
9.1.9 Lien Priority.	41
9.1.10 Bankruptcy and Other Proceedings.	42
9.1.11 Material Adverse Change.	42
9.1.12 Aggregate DSCR/LTV Ratio.	42
9.1.13 Guarantor Default.	42
9.2 Consequences of Event of Default.	42
9.2.1 Acceleration of Loan.	42

-v-

Table of Contents

(continued)

	Page
9.2.2 Remedies Cumulative.	42
9.2.3 Notice of Sale.	42
10. MISCELLANEOUS	43
10.1 Reserved.	43
10.2 Successors and Assigns.	43
10.3 Modifications, Amendments or Waivers.	43
10.4 Forbearance.	43
10.5 Remedies Cumulative.	44
10.6 Reimbursement and Indemnification of Lender and Servicer by Borrower; Taxes.	44
10.7 Holidays.	44
10.8 Notices.	45
10.9 Severability.	45
10.10 Governing Law; Consent to Jurisdiction and Venue.	46
10.11 Prior Understanding.	46
10.12 Duration; Survival.	46
10.13 Exceptions.	47
10.14 Servicing.	47
10.15 Reserved.	47
10.16 Authority to File Notices.	47
10.17 WAIVER OF TRIAL BY JURY.	47
10.18 Advertising.	47
10.19 Time of Essence.	47
10.20 Counterparts.	47
10.21 NOTICE OF FINAL AGREEMENT.	48

-vi-

CREDIT AGREEMENT

THIS CREDIT AGREEMENT (“Agreement”) is dated as of June 6, 2016 and is made by and between FRBH Edgewater Owner, LLC, a Delaware limited liability company, FRBH Beechwood, LLC, a Delaware limited liability company, FRBH Willow Grove, LLC, a Delaware limited liability company, FRBH Woodbridge, LLC, a Delaware limited liability company, NXRTBH Vanderbilt, LLC, a Delaware limited liability company, FRBH Toscana, LLC, a Delaware limited liability company, FRBH CP, LLC, a Delaware limited liability company, FRBH Silverbrook, LLC, a Delaware limited liability company, FRBH Eaglecrest, LLC, a Delaware limited liability company, FRBH Timberglen, LLC, a Delaware limited liability company, and FRBH Arbors, LLC, a Delaware limited liability company having an address of c/o Highland Capital Management, 300 Crescent Court, Suite 700, Dallas, Texas 75201 (individually and collectively, “Borrower”) and KeyBank National Association, a national banking association having an address of KeyBank National Association, c/o KeyBank Real Estate Capital - Servicing Department, 11501 Outlook Street, Suite 300,Overland Park, Kansas 66211, Mailcode: KS-01-11-0501, Attn: Servicing Manager (together, with its successors and/or assigns, “Lender”).

RECITALS

WHEREAS, Borrower desires to obtain a revolving credit facility (the “Facility”) from Lender in an amount up to, but not exceeding $200,000,000, subject to increase to an amount up to, but not exceeding, $300,000,000 as provided herein;

WHEREAS, Borrower has offered to grant Lender a security interest in certain real property and other assets owned by Borrower as security for Borrower’s repayment of such Facility; and

WHEREAS, Lender is willing to make the above described Facility available to Borrower secured by an interest in such real property and other assets owned by Borrower.

NOW, THEREFORE, the parties hereto, in consideration of their mutual covenants and agreements hereinafter set forth and intending to be legally bound hereby, covenant and agree as follows:

1. DEFINITIONS.

1.1 Definitions.

The following capitalized terms shall have the meanings set forth below.  Certain other capitalized terms used only in specific sections of this Agreement are defined in such sections.  To the extent not otherwise defined herein, capitalized terms shall have the meanings as set forth in the applicable Loan Agreement, the Fixed Rate Note, or the Revolving Credit Note, as applicable.

“Accrued Interest” shall have the meaning as set forth in Section 5.4.1.1.

“Addition Fee” shall have the meaning as set forth in Section 2.5.6.

Credit Agreement

“Aggregate DSCR” shall mean, at the time of Lender’s determination, the then prevailing computation of the aggregate Net Operating Income of each Collateral Pool Property divided by the then prevailing computation of Aggregate Stressed Debt Service.

“Aggregate Stressed Debt Service” shall mean, for the purposes of this Agreement, the sum of (i) interest due on the Fixed Rate Note (including any default interest), (ii) the interest due on the Revolving Credit Note (including any default interest), (subject to a floor of 1.25%) for the LIBOR Index Rate or any other index then being used by Lender to determine the interest rate of the Revolving Credit Note pursuant to this Agreement, and (iii) an amount equal to 0.0100 of the then outstanding principal amount of such Revolving Credit Note, but exclusive of any voluntary or mandatory principal prepayments allowed or required hereunder.  Aggregate Stressed Debt Service shall be annualized at the time of Lender’s determination and calculated as set forth herein, notwithstanding the duration of any Interest Period.

“Agreement” shall mean this Credit Agreement, as the same may be amended, modified, increased or supplemented from time to time, including all exhibits and schedules attached hereto.

“Allocated Loan Amount” shall mean for a Collateral Pool Property the maximum debt amount determined by Freddie Mac taking into account the Sublimits. For purposes of determining the Addition Fee for an addition of a Mortgaged Property as a Collateral Pool Property, the Allocated Loan Amount shall be calculated based on such Mortgaged Property’s “as is” Net Operating Income and Valuation at the time of such Mortgaged Property’s addition to the Collateral Pool.  For purposes of determining the Seasoning Fee, the Allocated Loan Amount shall be calculated based on such Collateral Pool Property’s “as is” Net Operating Income and Valuation on or about the most recent anniversary of the Closing Date.

“Anniversary Date” shall have the meaning as set forth in Section 3.4.1.

“Authorized Officer” shall mean those individuals, designated by written Notice to Lender from Borrower, authorized to execute Notices, reports and other documents on behalf of Borrowerrequired hereunder; provided, further, that the individuals so designated as the Authorized Officers of Borrower shall be the sole representatives of Borrower for the purpose of giving or receiving any Notices permitted or requiredby this Agreement.  Borrower may amend such list of individuals from time to time by giving written Notice of such amendment to Lender.  

“Base Rate” shall mean the LIBOR Index Rate (truncated to the 5^th decimal place, if necessary) plus the applicable Margin.  Interest accruing at the Base Rate shall be calculated monthly in the manner provided in this Agreement based on the aggregate principal balance of the Base Rate Borrowing Tranches outstanding during the applicable Month, and such interest shall be paid in arrears, as provided herein.  The LIBOR Index Rate plus the applicable Margin with respect to each Base Rate Borrowing Tranche shall remain fixed throughout the applicable Interest Period and shall then be recalculated as of each renewal of such Base Rate Borrowing Tranche in accordance with Section 3.2.1.  The Margin with respect to each Base Rate Borrowing Tranche shall be determined and redetermined from time to time in accordance with Section 3.2.1.

“Base Rate Borrowing Tranche” shall mean a Borrowing Tranche which accrues interest at the Base Rate.

Credit Agreement Page 2

“Base Rate Termination Fee” shall have the meaning as set forth in Section 2.5.4.1.

“Borrower” shall mean each Single Purpose Entity defined as “Borrower” in the Recitals together with any Proposed Borrower that becomes a party to this Agreement pursuant to the terms and conditions of Section 3.1.2.2.

“Borrower’s Knowledge” shall mean the knowledge of:  (i) any officer or employee of Borrower, (ii) any officer of Guarantor, (iii) any officer of any holder of the membership or other equity interest in Borrower, and/or (iv) any officer of any Affiliate that manages or operates any Collateral Pool Property.

“Borrowing Date” shall mean, with respect to any Borrowing Tranche, the date of borrowing or renewal, as the case may be, which shall be a Business Day or, in the case of a renewal which would otherwise fall on a day other than a Business Day, the first Business Day thereafter.

“Borrowing Tranche” shall mean each advance outstanding at any one time at the (i) Base Rate hereunder having a particular Interest Period and the (ii) Fixed Rate, and all advances at the Prime Rate.  Two (2) or more Borrowing Tranches accruing interest at a Base Rate may be combined to form a single Borrowing Tranche (i) with the same Interest Period without a payment of any penalty or fee in the event such 2 or more Borrowing Tranches mature and are renewed at the same time with the same Interest Period, or (ii) in the event 2 or more Borrowing Tranches mature at different times, with payment of the applicable Accrued Interest if 1 or more Borrowing Tranches are advanced or prepaid and at the request of the Borrower then combined with 1 or more other Borrowing Tranches with the same Interest Period.  For all purposes hereunder, the 1 time advance at the Fixed Rate shall be deemed a single Borrowing Tranche, and all Prime Rate fundings permitted or required hereunder shall be aggregated and deemed a single Borrowing Tranche.  

“Closing Date” shall mean the first date on which both of the following requirements are met:  (i) this Agreement has been fully executed, and (ii) the first advance is made by Lender pursuant to this Agreement.  

“Collateral” shall mean the Collateral Pool Property, and the UCC Collateral of a Borrower on which first priority liens and security interests have been granted for the benefit of Lender to secure the Loan and all other obligations of Borrower under the Loan Documents.

“Collateral Pool” shall mean each and every Collateral Pool Property.

“Collateral Pool Property” shall mean each Mortgaged Property as set forth in Schedule 1.1(A).  Schedule 1.1(A) shall be deemed amended each time a Mortgaged Property is added as a Collateral Pool Property or released as a Collateral Pool Property in accordance with the terms of this Agreement.  

“Collateral Pool Property Documents” shall mean the Lender’s then current versions of the Loan Agreement, Security Instrument, guaranties, indemnities, O&M Programs, and any other documents now or in the future executed or authorized by Borrower, any Guarantor or any other person or entity in connection with the Loan or the Collateral, as each document may be amended,

Credit Agreement Page 3

modified or supplemented from time to time.  The Collateral Pool Property Documents shall include, but not be limited to, those documents set forth in Schedule 1.1(B).  To the extent a Borrower or Proposed Borrower shall execute a Loan Agreement or Security Instrument after the date hereof, in Lender’s sole discretion such documents may include any previously negotiated changes approved by Lender to the extent determined to be applicable by Lender in its sole discretion.

“Commitment Fee” shall have the meaning as set forth in Section 2.5.1.  

“Contraction Option Date” shall mean each date the Loan is decreased pursuant to Section 2.4.1 or Section 2.4.2.

“Event of Default” shall mean any of the events described in Section 9.1 or otherwise referred to herein as an “Event of Default”.

“Expansion Amount” shall have the meaning as set forth in Section 2.4.3.

“Expansion Fee” shall have the meaning as set forth in Section 2.5.6.

“Expansion Option Date” shall mean each date that the Loan is increased pursuant to Section 2.4.3

“Expiration Date” shall mean the earlier to occur of (i) the Maturity Date, or (ii) the date specified by Borrower as the expiration date under Section 2.6.

“Extension Fee” shall have the meaning as set forth in Section 2.5.7.

“Facility” shall have the meaning set forth in the Recitals of this Agreement.

“First Extended Maturity Date” shall mean July 1, 2021.

“First Option to Extend” shall have the meaning as set forth in Section 2.3.1.

“Fixed Rate” means the annual interest rate established by Lender and agreed upon by Borrower as set forth in the Fixed Rate Note.

“Fixed Rate Borrowing Tranche” shall mean, to the extent requested by Borrower, a single advance in an amount not greater than 50% of the Loan as of the Closing Date to be disbursed on the Closing Date and which accrues interest at the Fixed Rate.

“Fixed Rate Note” shall mean, solely to the extent Borrower requests a Fixed Rate Borrowing Tranche, the Multifamily Note (Fixed Rate) of Borrower in the face amount of the Fixed Rate Borrowing Tranche, together with all amendments, modifications, increases, extensions, renewals, replacements or supplements.

“Fixed Rate Termination Fee” shall have the meaning as set forth in Section 2.5.4.2.

“Freddie Mac” shall mean the Federal Home Loan Mortgage Corporation.

Credit Agreement Page 4

“GAAP” shall mean generally accepted accounting principles as are in effect from time to time, applied on a consistent basis both as to classification of items and amounts.

“Guarantor” shall mean individually and collectively (i) NexPoint Residential Trust Operating Partnership, L.P., a Delaware limited partnership and (ii) any entity or individual who becomes a Guarantor pursuant to the terms of this Agreement or the other Loan Documents.

“Guaranty” shall mean that certain Guarantytogether with all amendments, modifications, supplements or replacements thereto.

“Guide” shall have the meaning as set forth in Section 8.9.

“Increased Cost Amount” shall have the meaning set forth in Section 5.6.1.

“Indebtedness” shall mean at any time and from time to time the (i) principal amount of the Revolving Credit Note and Fixed Rate Note then outstanding, (ii) any interest owed pursuant to the Revolving Note and Fixed Rate Note, and (iii) any other fees, costs or amounts due under the Revolving Credit Note, the Fixed Rate Note, this Agreement, or any other Loan Document.

“Initial Market Value” shall mean the Market Value of any Mortgaged Property as determined by Lender based on Lender’s then current underwriting policies  as of the date the same is included in the Collateral Pool pursuant to the provisions hereof.  The Initial Market Value of each Collateral Pool Property is shown at Schedule 1.1(A).  The Lender shall update Schedule 1.1(A) or otherwise confirm Initial Market Value in writing as of the date a Mortgaged Property is included as a Collateral Pool Property pursuant to the provisions hereof.  Provided however, that with respect to a Mortgaged Property acquired or developed within 12 months prior to the date such Mortgaged Property is added as a Collateral Pool Property, the Initial Market Value shall not exceed the lesser of (i) appraised value or (ii) the sum of (a) the purchase price paid by Borrower for such Mortgaged Property, (b) the capital expenditures paid by Borrower for such Mortgaged Property during such 12 month period, (c) the acquisition costs (not to exceed 3% of the purchase price paid by Borrower in connection with the purchase of such Mortgaged Property) and (d) any escrows held by or on behalf of Lender on account of capital expenditures as determined by Lender (i.e. replacement reserves or repair escrows) for such Mortgaged Property; provided, further, that Lender may agree, in its sole discretion, to a Borrower’s written request to limit Lender’s recovery from a Collateral Pool Property to a certain dollar amount due to recording tax considerations in a particular Property Jurisdiction (which limitation shall be memorialized in the applicable Security Instrument), in which event the Market Value for such Collateral Pool Property shall never exceed such limited recovery amount.

“Interest Period” shall have the meaning as set forth in Section 4.3.

“Law” shall mean any law (including common law), constitution, statute, treaty, regulation, rule, ordinance, opinion, release, ruling, order, injunction, writ, decree or award of any Official Body.

“Lender” shall mean at any time and from time to time, the entity that is the holder of the Revolving Credit Note and Fixed Rate Note.  KeyBank National Association, a national banking association, the initial Lender, intends to sell the Revolving Credit Note and Fixed Rate Note to

Credit Agreement Page 5

Freddie Mac and assign all of its interests in this Agreement and the other Loan Documents to Freddie Mac subsequent to the Closing Date, provided each Collateral Pool Property serves as Collateral for the Loan as of the date of said assignment.

“LIBOR” shall have the meaning as set forth in the Revolving Credit Note.

“LIBOR Index” shall have the meaning as set forth in the Revolving Credit Note.

“LIBOR Index Page” shall have the meaning as set forth in the Revolving Credit Note.

“LIBOR Index Rate” shall have the meaning as set forth in the Revolving Credit Note.

“Liquidity” shall have the meaning as set forth in the Guaranty.

“Loan” shall mean $200,000,000 as of the Closing Date, subject to increase as provided in Section 2.4.3 hereof and contraction as provided in Sections 2.4.1 and 2.4.2 hereof.

“Loan Agreement” shall mean each Multifamily Loan and Security Agreement executed by a Borrower, as same may be amended, modified, increased or supplemented from time to time, including all riders, exhibits and schedules attached thereto.

“Loan Documents” shall mean individually and collectively this Agreement, the Revolving Credit Note, the Fixed Rate Note, the Guaranty, the Collateral Pool Property Documents and any other instruments, certificates or documents delivered or contemplated to be delivered hereunder or thereunder or in connection herewith or therewith, as the same may be supplemented or amended from time to time in accordance herewith or therewith.

“Loan Request” shall have the meaning as set forth in Section 2.1.2.

“LTV Ratio” shall mean the product, expressed as a percentage, determined by dividing the Outstanding Borrowing Tranches by the aggregate of the then current Market Values of the Collateral Pool Properties.

“Margin” shall mean with respect to a Base Rate Borrowing Tranche, the sum of the Net Spread and the Servicing Spread.

“Market Value” shall mean as to an individual Collateral Pool Property, the Initial Market Value of such property, in each case as such value may be subsequently increased or decreased in accordance with the terms and conditions of this Agreement.

“Material Adverse Change” shall mean any set of circumstances or events which: (i) has a material adverse effect upon, or could reasonably be expected to have a material adverse effect upon, the validity or enforceability of this Agreement or any of the other Loan Documents; (ii) has a material adverse effect upon, or could reasonably be expected to have a material adverse effect upon, the business, properties, assets, financial condition or results of operations of the Borrower, Taken as a Whole, or the Guarantor; (iii) materially impairs, or could reasonably be expected to materially impair, the ability of the Borrower, Taken as a Whole, or the Guarantor to pay and perform the Obligations; (iv) materially impairs, or could reasonably be expected to materially

Credit Agreement Page 6

impair,  the ability of the Borrower, Taken as a Whole, to duly and punctually pay the Indebtedness; or (v) materially impairs, or could reasonably be expected to materially impair,  the ability of the Lender to enforce its remedies against a Borrower or Guarantor as authorized by the terms of this Agreement and the other Loan Documents or pursuant to applicable Law.

“Maturity Date” shall mean the earlier of (i) the Scheduled Maturity Date, as the same may be extended to the First Extended Maturity Date or (ii) the date on which the unpaid principal balance of the Loan becomes due and payable by acceleration or otherwise pursuant to this Agreement or any Loan Document or the exercise by Lender of any right or remedy under this Agreement or any Loan Document.

“Maximum Facility Available” shall mean, at the time of determination, the maximum amount which Borrower may borrow under this Agreement without violating the Sublimits set forth in Section 2.1.4.

“Maximum LTV Ratio” shall mean 75%.

“Minimum Expansion Amount” shall have the meaning as set forth in Section 2.4.3.

“Minimum Net Worth” shall have the meaning as set forth in the Guaranty.

“Month” shall mean the appropriate calendar month.

“Monthly Payment Statement” shall have the meaning as set forth in Section 5.3.

“Mortgaged Property” shall have the meaning as set forth in the Loan Agreement consisting of conventional multifamily real property owned by Borrower or Proposed Borrower, as applicable.  Each Mortgaged Property shall be investment grade, fully constructed and shall have received all final certificates of occupancy.

“Net Operating Income” shall mean an annualized dollar amount, as determined by Lender in its sole discretion in accordance with Lender’s then applicable underwriting standards, which is equal to all income from the operations of each Collateral Pool Property that is available for repayment of debt and return of equity after deducting for economic vacancy and all expenses (including an allowance for a property management fee) (exclusive of debt service on account of the Loan).  Net Operating Income shall be calculated by Lender for each individual Collateral Pool Property as of the Closing Date and thereafter on or about the date of each Valuation performed in accordance with Section 3.4, in accordance with Lender’s then current methodology, consistently applied, excluding from such calculation expenses from depreciation, amortization, interest expenses, non-recurring items and capital expenses, but including in such calculation an assumed capital expense reserve in an amount consistent with Lender’s then current requirements for such capital reserves.  

“Net Spread” shall have the meaning as set forth in Section 4.2.3 with respect to a Base Rate Borrowing Tranche hereunder.

“Notice” shall have the meaning as set forth in Section 10.8.

Credit Agreement Page 7

“O&M Programs” shall mean a written program of operations and maintenance for a Mortgaged Property approved in writing by Lender.

“Obligation” shall mean the Indebtedness and any other obligation or liability of Borrower to Lender, howsoever created, arising or evidenced, whether direct or indirect, absolute or contingent, now or hereafter existing, or due or to become due, under or in connection with this Agreement, the Revolving Credit Note, the Fixed Rate Note or any other Loan Document.

“Official Body” shall mean any national, federal, state, local or other government or political subdivision or any agency, authority, bureau, commission, department or instrumentality of either, or any court, tribunal, grand jury or arbitrator, in each case whether foreign or domestic.

“Outstanding Borrowing Tranches” shall mean the sum of all Borrowing Tranches outstanding at any one time.

“Payment Date” shall have the meaning as set forth in Section 5.3.

“Permitted Exceptions” shall mean those title exceptions approved by Lender on Lender’s title insurance policy.

“Potential Default” shall mean any event or condition which, with the passage of time, the giving of notice, or a determination by Lender, or any combination of the foregoing, would constitute an Event of Default.

“Prepayment Premium” shall mean the prepayment premium calculated in accordance with the Fixed Rate Note.

“Prepayment Premium Period” shall have the meaning as set forth in the Fixed Rate Note.

“Prime Rate” shall mean the rate of interest per annum established on the first day of each Month during the term hereof and published in The Wall Street Journal as the prime rate, or any comparable publication reasonably selected by Lender in the event The Wall Street Journal no longer publishes the prime rate, plus the applicable Margin.

“Prime Rate Borrowing Tranche” shall mean all advances hereunder which accrue interest at the Prime Rate.  Notwithstanding anything to the contrary contained herein, no Prime Rate Borrowing Tranches will be permitted hereunder except as may be required pursuant to Sections 4.3.2 or 4.4.2.

“Proceeding” shall have the meaning as set forth in Section 8.5.

“Proposed Borrower” shall mean a Single Purpose Entity that is an Affiliate of Borrower and  is the owner of one or more Mortgaged Properties which have been proposed to be included in the Collateral Pool, pursuant to the terms hereof.

“Reaffirmation Date” shall have the meaning as set forth in Section 7.2.

Credit Agreement Page 8

“Release Termination Fee” shall have the meaning as set forth in Section 2.5.4.3.

“Renewal Date” shall have the meaning as set forth in Section 4.3.3.

“Renewal Request” shall have the meaning as set forth in Section 4.3.3.

“Required Financial Statements” shall have the meaning set forth in Section 8.9.

“Revolving Credit Note” shall mean the Multifamily Note (Floating Rate) of Borrower, in the face amount of the Loan, which evidences the Loan, together with all amendments, modifications, increases, extensions, renewals, replacements, or supplements.

“Scheduled Maturity Date” shall mean July 1, 2021.

“Seasoning Fee” shall have the meaning as set forth in Section 2.5.4.

“Securitized Loan” shall have the meaning as set forth in Section 3.3.1.

“Securitized Loan Collateral” shall have the meaning as set forth in Section 3.3.1.

“Securitized Product” shall mean Freddie Mac’s then current product for financing a performing loan that is intended to be securitized in a securitization where the most subordinate debt component of such securitization is sold to a party unrelated to Freddie Mac.  

“Seismic Report Fee” shall mean a non-refundable fee equal to Lender’s and Servicer’s reasonable out-of-pocket costs and expenses incurred in obtaining a seismic report with respect to any real property for which Lender, in its discretion, deems such report necessary.  

“Servicer” shall mean KeyBank National Association, a national banking association, Freddie Mac or any subsequent independent contractor appointed by Lender, at Lender’s sole cost and expense, to administer the Loan and the Loan Documents or otherwise perform certain functions in connection therewith under the terms of a Servicing Agreement and/or Guide.  

“Servicing Agreement” shall mean the Guide as modified by any agreement between Lender and an independent contractor pursuant to which Lender appoints said independent contractor as Servicer under this Agreement, the Revolving Credit Note, the Fixed Rate Note, and the other Loan Documents.

“Servicing Spread” shall mean (0.0005) times the outstanding Base Rate Borrowing Tranches.

“Sublimits” shall have the meaning as set forth in Section 2.1.4.

“Taken as a Whole” means the Borrower collectively as a group.

“Termination Fee” means singularly and collectively, the Base Rate Termination Fee, Fixed Rate Termination Fee and Release Termination Fee.

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“Underwriting Materials” shall mean all materials required by Lender pursuant to Lender’s then current loan underwriting requirements including, without limitation, a current appraisal acceptable to Lender for a Mortgaged Property to be added to the Collateral Pool.

“Unused Commitment Fee” shall have the meaning as set forth in Section 2.5.2.

“Valuation” shall have the meaning as set forth in Section 3.4.1.

“Valuation Letter” shall have the meaning as set forth in Section 3.4.1.

1.2 Construction.

Unless the context of this Agreement otherwise clearly requires, the following rules of construction shall apply to this Agreement and each of the other Loan Documents.

1.2.1 Number; Inclusion.

References to the plural include the singular, the plural, the part and the whole; “or” has the inclusive meaning represented by the phrase “and/or”, and “including” has the meaning represented by the phrase “including without limitation”.

1.2.2 Determination.

References to “determination” of or by Lender shall be deemed to include good-faith estimates by Lender (in the case of quantitative determinations) and good-faith beliefs by Lender (in the case of qualitative determinations) and such determinations shall be conclusive absent manifest error.

1.2.3 Lender’s Discretion and Consent; References to Lender’s Requirements.

Whenever Lender is granted the right herein to act in its sole discretion or to grant or withhold consent, such right shall be exercised in good faith, and whenever a reference is made to “Lender’s then current requirements”, “Lender’s then current programs” or the like, such reference shall be deemed to mean such requirements, programs and the like as are then standard in the secondary multifamily mortgage industry, as such standards are generally reflected in the then current version of the Guide.

1.2.4 Documents Taken as a Whole.

The words “hereof,” “herein,” “hereunder,” “hereto” and similar terms in this Agreement or any other Loan Document refer to this Agreement or such other Loan Document as a whole and not to any particular provision of this Agreement or such other Loan Document.

1.2.5 Headings.

The sectionand other headings contained in this Agreement or such other Loan Document and the Table of Contents preceding this Agreement or such other Loan Document are

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for reference purposes only and shall not control or affect the construction of this Agreement or such other Loan Documents or the interpretation thereof in any respect.

1.2.6 Implied References to this Agreement.

Article, section, subsection, clause, exhibit and schedulereferences are to this Agreement unless otherwise specified, and exhibits and schedules attached hereto are incorporated herein by this reference.

1.2.7 Persons.

Reference to any Person includes such Person’s successors and assigns (but only if such successors and assigns are permitted by this Agreement or such other Loan Document, as the case may be), and reference to a Person in a particular capacity excludes such Person in any other capacity.

1.2.8 From, To and Through.

Relative to the determination of any period of time, “from” means “from and including”, “to” means “to but excluding”, and “through” means “through and including”.

1.2.9 Conflicts with Other Loan Documents.

In the event of any conflict between the terms and provisions of this Agreement and any other Loan Document, the terms and provisions of this Agreement shall prevail.

1.3 Accounting Principles.

Except as otherwise provided in this Agreement, all computations and determinations as to accounting or financial matters and all financial statements to be delivered pursuant to this Agreement shall be made and prepared in accordance with GAAP (including principles of consolidation where appropriate) or, at the request of Borrower and consented to by Lender, cash accounting principles recognized and consistently applied at that time by the accounting industry.

2. REVOLVING LOAN FACILITY.

2.1 Revolving Loan.

2.1.1 Revolving Loan.

Subject to the terms of this Agreement from time to time prior to the Maturity Date, Lender shall make revolving advances in an amount not to exceed the amount of the Loan.  All advances pursuant to this Agreement, the Revolving Credit Note and the Fixed Rate Note constitute a single indebtedness, and all of the Collateral is security for the Obligations.

2.1.2 Loan Requests and Funding.

Subject to the terms and conditions set forth herein, on the Closing Date, Borrower may request a Fixed Rate Borrowing Tranche, and Borrower may from time to time request a Base Rate

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Borrowing Tranche in each case by delivering Notice to Servicer in the form attached hereto as Schedule 2.1.2 (“Loan Request”).  Borrower may at any one time submit 1 or more Loan Requests for a Base Rate Borrowing Tranche, which shall not be less than $10,000,000 provided, however, that the amount of the proposed Base Rate Borrowing Tranche may be in an amount not less than $1,000,000 if at the time of the Loan Request the difference between the Maximum Facility Available and the outstanding Base Rate Borrowing Tranches is less than $10,000,000. Notwithstanding anything to the contrary contained herein, (i) no Prime Rate Borrowing Tranches will be permitted hereunder except as may be required pursuant to Sections 4.3.2 or 4.4, and (ii) Borrower is permitted a maximum of 10 Borrowing Tranches outstanding at any one time.  

Subject to the terms and conditions set forth herein, Borrower may from time to time request an increase to an existing Base Rate Borrowing Tranche by delivering to Servicer a Loan Request.  Any request of an increase to an existing Base Rate Borrowing Tranche shall be in an amount not less than $1,000,000.

Provided all conditions set forth in this Agreement and the other Loan Documents are satisfied, the Lender shall fund the amount requested in the Loan Request to Borrower on the Borrowing Date relating to a Base Rate Borrowing Tranche and the Closing Date for the Fixed Rate Borrowing Tranche.  The Borrowing Date relating to a Base Rate Borrowing Tranche, shall be the Business Day set forth in the Loan Request, provided that Lender received Notice from Servicer not less than 30 days prior to the proposed Borrowing Date.  Lender shall fund the amounts requested in any Loan Request relating to a Base Rate Borrowing Tranche by 3:00 p.m. Eastern Time on the Borrowing Date.  While an Event of Default, Potential Default or Material Adverse Change exists, Lender may refuse to make any further Base Rate Borrowing Tranches available to Borrower.

2.1.3 Recalculations.

2.1.3.1 Aggregate Stressed Debt Service and LTV Ratio shall each be recalculated (i) as of each Loan Request, (ii) as of each Renewal Request, or deemed renewal under Section 4.3.3, (iii) on or about the date of each Valuation performed in accordance with Section 3.4.1, (iv) as of each addition or release of a Collateral Pool Property to or from the Collateral Pool, (v) as of each repayment of any principal portion of the Outstanding Borrowing Tranches, (vi) as of the exercise of the First Extension Option (if applicable), or the Second Extension Option (if applicable), (vii) as of the Expansion Option Date, and (viii)upon the occurrence of any Material Adverse Change.  Each recalculation of Aggregate Stressed Debt Service and the LTV Ratio shall be based on Lender’s then current underwriting policies, consistently applied.

2.1.3.2 In the event of:  (i) an addition of a Mortgaged Property to the Collateral Pool, Lender shall add the Net Operating Income of the Mortgaged Property to be added to the Collateral Pool to the most recent determination of Net Operating income for the existing Collateral Pool; (ii) a release of a Collateral Pool Property from the Collateral Pool, Lender shall subtract the Net Operating Income of the Collateral Pool Property released from the Collateral Pool from the most recent determination of the Net Operating Income for the Collateral Pool; or (iii) a substitution of a Collateral Pool Property in the Collateral Pool, Lender shall (x) add the Net Operating Income of the Mortgaged Property to be added to in the Collateral Pool to the most

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recent determination of Net Operating Income for the existing Collateral Pool and (y) subtract the Net Operating Income of the Collateral Pool Property released from the Collateral Pool from the most recent determination of Net Operating Income for the Collateral Pool.

2.1.4 Sublimits.

Notwithstanding anything to the contrary set forth herein, Borrower may borrow hereunder only to the extent that after giving effect to such borrowing (collectively, the “Sublimits”):

2.1.4.1 the LTV Ratio shall not exceed the Maximum LTV Ratio;

2.1.4.2 the Aggregate DSCR shall not be less than 1.45:1.00;

2.1.4.3 the number of Borrowing Tranches outstanding shall not exceed ten (10); and

2.1.4.4 the aggregate amount of the Outstanding Borrowing Tranches shall not exceed the Loan.

In the event either of the Sublimits set forth in Section 2.1.4.1 or  Section 2.1.4.2 above are not satisfied at any time prior to the Expiration Date, Lender shall provide Borrower with Notice in the form attached hereto as Schedule 2.1.4, and Borrower shall comply with the provisions of Section 5.4.2.

2.2 Term.  

The term of the Loan shall commence on the Closing Date and shall terminate on the Expiration Date.  The entire Indebtedness shall be due and payable on the Expiration Date.

2.3 Option to Extend.

2.3.1 First Option to Extend.

Borrower shall have the option to extend the Scheduled Maturity Date to the First Extended Maturity Date (“First Option to Extend”), upon satisfaction of each of the following conditions precedent in Lender’s discretion:

(i) Borrower shall provide written Notice to Lender at least 60 days, but no more than 90 days, prior to the Scheduled Maturity Date, which Notice shall be supplemented by such additional information as Lender may reasonably require to determine, in its sole discretion, whether the conditions set forth in this Section 2.3.1 have been satisfied;

(ii) Borrower shall pay prior to the Scheduled Maturity Date (a) all amounts due and owing pursuant to the Fixed Rate Note, if any; provided however, any unpaid principal may be converted to a Base Rate Borrowing Tranche if Borrower complies with all of the terms and provisions of this Agreement for obtaining a Base Rate Borrowing

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Tranche, (b) the Extension Fee to Lender together with the Notice delivered pursuant to clause (i) above (provided, that if Borrower elects to terminate the First Extension Option prior to the Scheduled Maturity Date for any reason, Lender shall reimburse Borrower for the Extension Fee) and (c) all of Lender’s and Servicer’s reasonable costs and expenses (including, without limitation, Attorneys’ Fees and Costs) incurred in connection with the requested extension;

(iii) Borrower shall provide to Lender all documents in connection with the requested extension as Lender shall require, in its sole discretion;

(iv) no Potential Default or Event of Default shall have occurred and then be continuing under this Agreement or any of the Loan Documents;

(v) Borrower shall be in compliance with the Sublimits; and

(vi) The representations and warranties set forth in Section 7 shall be true and correct as of the date of Borrower’s Notice to Lender requesting the extension and as of the effective date of the extension of the Scheduled Maturity Date.

If Borrower elects to exercise the First Option to Extend, then the Net Spread applicable for any Borrowing Tranche (including the converted Fixed Rate Borrowing Tranche) shall be redetermined by Lender in its sole discretion in accordance with Section 4.2.3 hereof.  Lender and Borrower shall evidence the First Extended Maturity Date and applicable Net Spread pursuant to this Section 2.3.1 by executing a confirmation substantially in the form attached hereto as Schedule 2.3.

If Borrower does not exercise the First Option to Extend, the entire Indebtedness shall be payable on the Scheduled Maturity Date.  

2.3.2 Reserved.

2.4 Contraction and Expansion Options.

2.4.1 Borrower’s Election of Contraction Option.

Borrower shall have the right to decrease the Loan (as to any future Base Rate Borrowing Tranches) as described below; provided such decrease is a result of either Borrower’s (i) sale of a Collateral Pool Property to a third party as determined by Lender; or (ii) refinancing of a Collateral Pool Property in connection with a Securitized Loan pursuant to the provisions of Section 3.3.  Borrower shall exercise such right by (a) delivering to Lender 60 days prior written Notice of its intent to decrease the Loan, which Notice shall be accompanied by payment of all reasonable costs and expenses that Lender and Servicer incur in connection with such decrease, including, but not limited to, Attorneys’ Fees and Costs, and (b) by executing and where appropriate acknowledging (A) amendments to the Loan Documents, in form and substance reasonably acceptable to Lender, as Lender deems necessary to evidence the decrease in the Loan, and (B) any other amendments or agreements deemed necessary by Lender.  All amendments referred to in clause (b)(A) of the preceding sentence shall be prepared by Lender’s counsel and delivered to Borrower within a reasonable time of Borrower’s Notice to Lender under clause (a) of

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the preceding sentence.  Upon Borrower’s compliance with all of the provisions of items (a) and (b) above, the Loan shall be decreased (as to any future Base Rate Borrowing Tranches) by an amount equal to the Allocated Loan Amount of the released Collateral Pool Property in the event of a third party sale, or decreased by the amount of the Securitized Loan in the event of a refinance pursuant to the provisions of Section 3.3.  Once Borrower has elected to decrease the Loan as provided herein, any unexercised expansion of the Loan as set forth in Section 2.4.3 shall be deemed null and void and of no further force and effect.

2.4.2 Lender’s Election of Contraction Option.

In the event a Collateral Pool Property is released pursuant to Section 3.2 and not refinanced or acquisition financed, as applicable, by a Securitized Product, Lender, in its sole discretion, may reduce the Loan as to any future Base Rate Borrowing Tranches by the Allocated Loan Amount, and Borrower shall pay the Termination Fee.  

2.4.3 Expansion Option.

Prior to the twelve (12) months immediately preceding the Scheduled Maturity Date, Borrower shall have the right to increase the Loan (as to any future Base Rate Borrowing Tranches) as described below, up to a maximum of $300,000,000 provided that (i) neither a Potential Default or Event of Default under this Agreement shall have occurred and then be continuing at the time of such increase, and (ii) the representations and warranties of Section 7 are true and correct at the time of such increase.  Borrower shall exercise such right by (a) delivering to Lender 60 days prior written Notice of its intent to increase the Loan, which Notice shall be accompanied by (1) the Expansion Fee, and (2) payment of all reasonable costs and expenses that Lender and Servicer incur in connection with such increase, including, but not limited to, Attorneys’ Fees and Costs, and (b) executing and where appropriate acknowledging (1) amendments to the Loan Documents, in form and substance reasonably acceptable to Lender, as Lender deems necessary to evidence the increase in the Loan, and (2) any other amendments or agreements deemed necessary by Lender, including, but not limited to, amendments to the title insurance policy(ies) increasing the amount of coverage provided thereunder.  All amendments referred to in clause (b)(1) of the preceding sentence shall be prepared by Lender’s counsel and delivered to Borrower within a reasonable period of time following Borrower’s Notice to Lender under clause (a) of the preceding sentence and such shall not: (y) change the material economic or other business terms of the Loan Documents (other than increasing the Loan and the Minimum Net Worth and Liquidity requirements of the Guarantor as set forth more fully in Section 8.10) or (z) impose on Borrower or Guarantor greater liability or obligation than that set forth in the Loan Documents (other than increasing the Loan (as to any future Base Rate Borrowing Tranches) and the resulting Minimum Net Worth and Liquidity requirements of the Guarantor as set forth more fully in Section 8.10).  Upon Borrower’s compliance with all of the provisions set forth herein, the Loan (as to any future Base Rate Borrowing Tranches) shall be increased to the amount selected by Borrower (the “Expansion Amount”).  The minimum amount of each increase in the Loan requested by Borrower pursuant to this Section shall be $25,000,000 (“Minimum Expansion Amount”).  Subject to the provisions of Sections 2.4.1 and 2.4.3, the Borrower shall have an unlimited number of expansion options, but in no event shall the number of requested increases by Borrower exceed 2 within any 12 month period.

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2.5 Fees.

2.5.1 Fees and Costs Due on the Closing Date.

Borrower shall pay on the Closing Date, as further consideration for Lender’s cost in underwriting the Loan, (i) a non-refundable transaction fee, payable to Freddie Mac, equal to the amount of 0.0005 times the amount of the Loan, (ii) a non-refundable transaction fee, payable to Servicer, equal to the amount of 0.0005 times the amount of the Loan (collectively, (i) and (ii), the “Commitment Fee”), (iii) the Addition Fee and Seismic Report Fee (to the extent applicable) for each Mortgaged Property to be included as part of the Collateral Pool, and (iv) all reasonable out-of-pocket costs, expenses and disbursements (including fees and expenses of counsel for Lender and Servicer), incurred by Lender and Servicer in connection with the negotiation and execution of this Agreement and other instruments and documents to be delivered hereunder.  

2.5.2 Unused Commitment Fee.  

Accruing from the Closing Date until the Maturity Date, Borrower shall pay to Lender, as consideration for Lender’s commitment hereunder, a nonrefundable unused commitment fee (the “Unused Commitment Fee”) equal to 0.0020 per annum (computed on the basis of a year of 360 days and actual days elapsed) on the average daily difference between the amount of (i) the outstanding principal balance of the Loan and (ii) the Loan.  All Unused Commitment Fees shall be payable monthly in arrears on each Payment Date and shall be set forth on the applicable Monthly Payment Statement.  Unused Commitment Fee payments which cover less than 1 month shall be prorated based on the actual number of days elapsed.  Any accrued but unpaid Unused Commitment Fees shall also be due and payable on the Expiration Date.

2.5.3 Seasoning Fee.  

For so long as a Collateral Pool Property remains in the Collateral Pool after such Collateral Pool Property has been part of the Collateral Pool for 4 years (and upon each subsequent 1 year anniversary date thereafter until the Expiration Date) Borrower shall pay to Lender an annual seasoning fee  for each such Collateral Pool Property in an amount equal to the product of 0.0050 times the applicable Collateral Pool Property’s Allocated Loan Amount (the “Seasoning Fee”). On each Payment Date during the applicable Seasoning Period, 1/12th of the applicable Seasoning Fee shall be paid in arrears on each Payment Date beginning with the Payment Date immediately after the applicable anniversary date and shall be set forth on the applicable Monthly Payment Statement.  Any Seasoning Fee payments which cover less than 1 month shall be prorated based on the actual number of days elapsed.  The applicable Seasoning Fee shall continue to be due and payable until the date on which Lender is required to deliver its release of the applicable Collateral Pool Property pursuant to Sections 3.2 or 3.3 as applicable.  After such date, any remaining portion of any such annual Seasoning Fee that would have been due after the date of such release will not be due.  Any accrued but unpaid Seasoning Fees shall also be due and payable on the Expiration Date.

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2.5.4 Base Rate Termination Fee, Fixed Rate Termination Fee and Release Termination Fee.

2.5.4.1 In the event any Collateral Pool Property is released pursuant to Section 2.6 or Section 3.2 and not refinanced or acquisition financed by the Borrower or a third party purchaser, as applicable, by a Securitized Product, then Borrower shall pay a termination fee (the “Base Rate Termination Fee”) relating to a Base Rate Borrowing Tranche as more fully set forth below.

2.5.4.1.1 In the event of a prepayment of all or any portion of any Base Rate Borrowing Tranche as a result of (i) a sale of a Collateral Pool Property, 1% of the Allocated Loan Amount attributable to such Collateral Pool Property or (ii) a release of a Collateral Pool Property (other than by a sale), the product of (a) the Allocated Loan Amount attributable to such Collateral Pool Property multiplied by (x) 2% if the Collateral Pool Property is released prior to the 3^rd anniversary of the closing Date or (y) 1% on or after the 3^rd anniversary of the Closing Date.

2.5.4.1.2 In the event of a prepayment of all of the Base Rate Borrowing Tranches pursuant to Section 2.6, the product of the (i) Loan (less (x) any decrease as a result of Borrower’s election of the Contraction Option or (y) the aggregate amount of the financing of the previously released Collateral Pool Properties which are refinanced or financed by the Borrower or a third party purchaser by a Securitized Product, as applicable; provided Borrower has not previously elected any Contraction Option as a result of such releases, the “Calculated Loan Amount”) times (a) 2% if the termination occurs prior to the 3rd anniversary of the Closing Date or (b) 1% on or after the 3rd anniversary of the Closing Date.

2.5.4.1.3 No Base Rate Termination Fee will be owed in the event Lender or its successors is not offering the Securitized Product.  Borrower, in the event a Collateral Pool Property is released pursuant to Section 3.2, will have the option, in its sole discretion (subject to compliance with the terms of Section 2.4.1) to reduce the Loan (relating only to Base Rate Borrowing Tranches) by the amount of financing for the Collateral Pool Property refinanced through the Securitized Product.

2.5.4.2 In the event any Collateral Pool Property is released pursuant to Section 2.6 or Section 3.2 then Borrower shall pay a termination fee (the “Fixed Rate Termination Fee”) relating to a Fixed Rate Borrowing Tranche as more fully set forth below.

2.5.4.2.1 In the event of a prepayment of all or any portion of any Fixed Rate Borrowing Tranche as a result of (i) a sale of a Collateral Pool Property, either (a) the applicable Prepayment Premium calculated in accordance with the Fixed Rate Note, if the third party purchaser does not finance the acquisition by a Securitized Product, or (b) the applicable Prepayment Premium calculated in accordance with the Fixed Rate Note minus 1% of the outstanding principal balance of the prepaid amount of the Fixed Rate Borrowing Tranche, if the third party purchaser finances the acquisition by a Securitized Product or (ii) a release of a Collateral Pool Property (other than by a sale) either (a) the applicable Prepayment Premium calculated in accordance with the Fixed Rate Note, if the Collateral Pool Property is released without the use of a Securitized Product, or (b) the applicable Prepayment Premium calculated in

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accordance with the Fixed Rate Note less 1% of the outstanding principal balance of the prepaid amount of the Fixed Rate Borrowing Tranche, if refinanced by a Securitized Product.

2.5.4.3 In the event (i) a Collateral Pool Property is released pursuant to Section 2.6 or Section 3.2 and not refinanced or acquisition financed by the Borrower or a third party purchaser, as applicable, by a Securitized Product and (ii) no prepayment occurs, then Borrower shall pay a termination fee (“Release Termination Fee”),calculated as follows: (i) as a result of (a) a sale of a Collateral Pool Property, 1% of the Allocated Loan Amount attributable to such Collateral Pool Property or (b) a release of a Collateral Pool Property (other than by a sale), the product of (x) the Allocated Loan Amount attributable to such Collateral Pool Property multiplied by (y) 2% if the Collateral Pool Property is released prior to the 3rd anniversary of the closing Date or (z) 1% on or after the 3rd anniversary of the Closing Date.

2.5.5 Addition Fee.  

For each Mortgaged Property added to the Collateral Pool pursuant to Section 3.1 of this Agreement, Borrower shall pay to: (a) Servicer a non-refundable addition fee equal to the amount of 0.0050 times the Allocated Loan Amount for such Mortgaged Property; (b) Lender a non-refundable addition fee equal to the amount of 0.0010 times the Allocated Loan Amount for such Mortgaged Property (collectively, the “Addition Fee”).

2.5.6 Expansion Fee.  

Upon each Expansion Option Date, Borrower shall pay to Servicer an expansion fee equal to 0.0010 times the Expansion Amount (“Expansion Fee”).

2.5.7 Extension Fee.  

If Borrower elects to exercise (i) its First Option to Extend and/or (ii) its Second Option to Extend, Borrower shall, in each instance, pay to Servicer an extension fee in the amount of $50,000 (the “Extension Fee”).

2.6 Borrower’s Right to Terminate the Agreement.  

At any time during the term of the Loan, Borrower shall have the right to terminate this Agreement in full and the parties’ obligations under the Loan Documents, provided that Borrower (i) delivers to Lender 30 days advance written Notice of its revocable election to terminate this Agreement specifying the Expiration Date, (ii) repays all Indebtedness with respect to, the Loan in full and (iii) performs all other Obligations under this Agreement, the Revolving Credit Note, the Fixed Rate Note and the other Loan Documents, including, but not limited to, Borrower’s obligations to pay the Termination Fee.  Upon Borrower’s compliance with the terms and provisions herein, Lender shall release the Liens granted hereunder and release and discharge Borrower from any and all Obligations under the other Loan Documents except as to environmental indemnifications under Sections 6.12 and 10.02 of the applicable Loan Agreement on the Expiration Date.  Without limiting any other provision contained herein, in the event Borrower shall revoke any such request to terminate its Obligations under this Agreement in full and the parties’ obligations under the Loan Documents, Borrower shall pay all costs and expenses incurred by Lender and Servicer in connection with such revocation,

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including, without limitation, Attorneys’ Fees and Costs, but any Termination Fee paid by Borrower, prior to such revocation, shall be refunded to Borrower..

3. COLLATERAL POOL, ADDITION AND RELEASE, VALUATIONS AND MATERIAL ADVERSE CHANGE.

3.1 Addition of a Collateral Pool Property.

3.1.1 Procedure for Proposing a Mortgaged Property Addition to the Collateral Pool.

Borrower or Proposed Borrower, as the case may be, may propose to add one (1) or more Mortgaged Properties to the Collateral Pool by delivering to Lender (i) a written proposal for addition of each such proposed Mortgaged Property, (ii) the Addition Fee, (iii) a Seismic Report Fee, and (iv) the Underwriting Materials with respect to the Mortgaged Property and the Proposed Borrower, if applicable, provided that, (a) no more than 1 such proposal shall be submitted to Lender in any 1 Month and (b) additions to the Collateral Pool may not be made more than once a Month unless otherwise approved by Lender.  Upon Lender’s receipt of all fees required hereunder and all Underwriting Materials, Lender shall notify Borrower (or Proposed Borrower, as applicable) of the same.  The determination of whether Borrower or Proposed Borrower has provided Lender with all Underwriting Materials shall be in Lender’s discretion.  For purposes of this Section 3.1.1, the Addition Fee and the Seismic Report Fee, if any, shall be deemed earned upon delivery thereof, whether or not Lender approves the Mortgaged Property for addition hereunder.  Borrower (or Proposed Borrower, as applicable) shall pay all reasonable costs and expenses that Lender and Servicer incur in connection with any such proposal to add a Mortgaged Property to the Collateral Pool, including, but not limited to, Attorneys’ Fees and Costs and any reasonable costs and expenses incurred with respect to third party reports, whether or not Lender approves the Mortgaged Property for addition hereunder.  Borrower (or Proposed Borrower, as applicable) or its Affiliates shall be permitted to engage and pay directly the third-party consultants to be retained for the required property condition reports and environmental reports provided that (i) Lender and Servicer approve in advance and in writing each such consultant and the scope of each such report, and (ii) each such report states that it is made for the benefit, use and reliance of Lender and Servicer, as well as Borrower (or Proposed Borrower, as applicable) and/or its Affiliate.  Notwithstanding the foregoing, only a Mortgaged Property presented by Borrower (or Proposed Borrower, as applicable) to Servicer for underwriting and approval pursuant to this Agreement will be eligible for addition to the Collateral Pool.

3.1.2 Approval of the Addition of the Mortgaged Property to the Collateral Pool.

3.1.2.1 With respect to any Mortgaged Property that Borrower (or Proposed Borrower, as applicable), proposes for addition to the Collateral Pool, Lender shall, within 20 days of the date on which Lender notifies Borrower (or Proposed Borrower, as applicable) that it has received all fees required hereunder and all Underwriting Materials, use its best efforts to accept or reject in writing the proposed Mortgaged Property on the basis of whether such Mortgaged Property meets Lender’s then current requirements for addition to the Collateral Pool, as determined by Lender in its sole discretion.  In the event that Lender accepts the Mortgaged

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Property for addition to the Collateral Pool, Lender shall provide or cause Servicer to provide Borrower (or Proposed Borrower, as applicable) with a written approval letter (which letter shall include Lender’s determination of the Initial Market Value of such Mortgaged Property, the Net Operating Income of such Mortgaged Property and the initial Allocated Loan Amount).  Borrower (or Proposed Borrower, as applicable) shall execute the approval letter and add such Mortgaged Property to the Collateral Pool within 20 days of the date of the issuance of the approval letter, subject to Borrower’s (or Proposed Borrower’s as applicable) compliance with the terms and provisions of Section 3.1.2.2.  Notwithstanding anything contained herein to the contrary, no Mortgaged Property shall be submitted for addition to the Collateral Pool unless the value of such Mortgaged Property, as determined by Lender, in its sole discretion, is equal to or greater than $10,000,000, prior to and after the addition of such Mortgaged Property.  The failure of Lender to respond to Borrower’s (or Proposed Borrower’s, as applicable) request within such 20 day period shall be deemed a rejection by Lender of the proposal to add the Mortgaged Property to the Collateral Pool.  If Lender provide(s) the reason(s) for such rejection, Borrower (or Proposed Borrower, as applicable) shall have 45 days to satisfy the objections of Lender to such proposed Mortgaged Property (Lender, in its sole discretion, may require that Borrower (or Proposed Borrower, as applicable) provide within such 45 day period necessary updates of any or all of the Underwriting Materials).  If Borrower (or Proposed Borrower, as applicable) does not satisfy Lender’s objections, then such proposal shall be deemed terminated (unless Lender, in its sole discretion shall agree to extend such 45 day period).  Any such termination shall not prevent Borrower (or Proposed Borrower, as applicable) from subsequently resubmitting a Mortgaged Property (together with all fees required hereunder and the Underwriting Materials) for addition to the Collateral Pool, provided however, that Borrower or Proposed Borrower may not resubmit the same Mortgaged Property for addition to the Collateral Pool more often than 1 time in any 12 month period.  

3.1.2.2 If the Mortgaged Property is accepted for addition to the Collateral Pool, such Mortgaged Property shall be added to the Collateral Pool, provided that, at the time of such addition to the Collateral Pool (i) no Event of Default or Potential Default shall exist and then be continuing, (ii) the representations and warranties of Section 7 shall be true and correct, (iii) Borrower (or Proposed Borrower, as applicable) has paid the fees and expenses required hereunder including, but not limited to, Attorneys’ Fees and Costs and the Addition Fee, (iv) Borrower (and Proposed Borrower, as applicable) has submitted the following to Lender: (a) executed Collateral Pool Property Documents requested by Lender, (b) any modifications or amendments to the existing Loan Documents as required by Lender, (c) copies of all filing receipts and acknowledgements issued by any governmental authority evidencing any recordation or filing necessary to perfect Lender’s Lien on the Mortgaged Property or other evidence satisfactory to Lender of such recordation and filing of the applicable Security Instrument, (d) evidence satisfactory to Lender that, subject to the Permitted Exceptions, (1) in the case of personal property, the Lien constitutes a first priority security interest in favor of Lender and, (2) in the case of real property, the Security Instrument constitutes a valid and perfected first priority Lien in favor of Lender (such evidence to be in the form of a title insurance policy acceptable to Lender in both form and substance), (e) such consents to the transaction by Guarantor as requested by Lender or Servicer in form and substance acceptable to the requesting party, (f) opinions of counsel acceptable to Lender including but not limited to an enforceability opinion with respect to Virginia law, and (g) such other certificates and documentation as required by Lender or Servicer and (v) in the case of a Proposed Borrower, such Proposed Borrower shall also execute (a) a joinder

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agreement relating to the Loan Documents, and (b) an allonge(s) to the Revolving Credit Note and Fixed Rate Note.  If Borrower (or Proposed Borrower, as applicable) fails to perform any of the acts, where applicable, or to submit any of the documents or information listed under (i), (ii), (iii), (iv), and (v) above together with any and all updates to the Underwriting Materials reasonably requested by Lender within 20 days of the date of Lender’s acceptance, Lender may at its option reject the Mortgaged Property and terminate such proposal.  In the event that Borrower (or Proposed Borrower, as applicable) performs all of the acts and submits all of the documents and evidence listed in (i), (ii), (iii), (iv), and (v) and accepts the terms of any approval letter issued or caused to be issued by Lender and not withdrawn, the Mortgaged Property shall be added to the Collateral Pool.

3.2 Release of a Collateral Pool Property.

Lender shall, upon 30 days advance written Notice, release the Liens with respect to a Collateral Pool Property, provided, however, such Collateral Pool Property is not the last remaining Collateral Pool Property (unless Borrower complies with the penultimate sentence in this Section 3.2), provided that (i) Borrower shall pay Lender (a) the Termination Fee, if applicable and (b) all costs and expenses that Lender or Servicer incur in connection with such release, including, but not limited to, Attorneys’ Fees and Costs and all other amounts due to Lender hereunder in connection with such release, including, without limitation, Accrued Interest and unpaid interest, if applicable, (ii) at the time of the request for such release, no Event of Default or Potential Default shall exist, (iii) after giving effect to such release, no Event of Default or Potential Default shall exist, (iv) the representations and warranties of Section 7 shall be true and correct as of the date of the release request and as of the date of such release, and (v) Borrower shall be in compliance with the Sublimits, provided, however, that if such release would otherwise cause Borrower to be in non-compliance with the Sublimits set forth in Section 2.1.4, Borrower shall have the opportunity to cure the same prior to or simultaneously with such release by complying with the terms and provisions of Section 5.4.2.  Upon the release of a Lien on a Collateral Pool Property, if the Borrower of such Collateral Pool Property owns no other Collateral Pool Property, such Borrower shall be released from its obligations under this Agreement and the other Loan Documents except as to environmental indemnifications pursuant to Sections 6.12 and 10.02 of the applicable Loan Agreement.  Notwithstanding the foregoing, under no circumstances may Borrower receive a release of the Security Instrument with respect to the last remaining Collateral Pool Property prior to the Maturity Date, unless Borrower has elected to terminate this Agreement pursuant to Section 2.6.  Borrower may revoke a pending request to release a Collateral Pool Property at any time; provided that Borrower pays all of Lender’s reasonable costs and expenses with respect to such release request, including, without limitation, Attorneys’ Fees and Costs; provided, further, that Borrower shall not be entitled to reimbursement of any Termination Fee paid to Lender in connection with such request to release a Collateral Pool Property.

3.3 Release of Collateral Pool Property Followed by a Securitized Loan.

3.3.1 Securitized Loan.

Borrower may request that Lender request Servicer to make a Securitized Loan (the “Securitized Loan”) to be secured by a Collateral Pool Property designated by Borrower (the

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“Securitized Loan Collateral”) to be simultaneously released from the Collateral Pool and encumbered in favor of Servicer as security for Borrower’s obligations under the Securitized Loan, which request shall be made in accordance with the provisions of Section 3.3.2.  The Securitized Loan shall be made in accordance with the terms and conditions of a Securitized Product.  Notwithstanding the foregoing, under no circumstances may Borrower receive a release of the Security Instrument with respect to the last remaining Collateral Pool Property prior to the Maturity Date, unless Borrower has elected to terminate this Agreement under Section 2.6.  Servicer shall be permitted to collect from Borrower (and Borrower shall pay to Servicer) a commitment fee for such Securitized Loan, as reasonably determined by Servicer based on then-current market commitment fees.

3.3.2 Procedure for Making a Securitized Loan.

Borrower's request to Servicer for a Securitized Loan (i) shall be in writing, which writing shall specify (a) each Collateral Pool Property that will constitute the Securitized Loan Collateral, (b) the requested original principal amount of the Securitized Loan, which amount shall be greater than or equal to $10,000,000, (c) the related reduction in the Maximum Facility Available, (d) whether Borrower has selected Lender’s then current early rate lock or standard delivery option, and (e) any payment or prepayment of a Borrowing Tranche, and (ii) shall be accompanied by (a) any fees then due and owing under the Securitized Product for each Collateral Pool Property proposed by Borrower to be subject to the Securitized Loan, and (b) the Underwriting Materials.  Following receipt of all of the items specified in (i) and (ii) of the previous sentence, Lender shall use its best efforts to consent to Borrower’s request within 60 days of such Notice, provided that (i) at the time of such request no Event of Default or Potential Default exists, (ii) the Securitized Loan shall be made in accordance with, and subject to, the terms and conditions of a Securitized Product, (iii) after giving effect to such release, no Event of Default or Potential Default shall exist, (iv) the representations and warranties of Section 7 shall be true and correct as of the date of Borrower’s request for such Securitized Loan and on the date that such Securitized Loan is funded by Lender, (v) Borrower will be in compliance with all provisions hereof, including the Sublimits set forth in Section 2.1.4, further provided that if any release occasioned by a Securitized Loan would otherwise cause Borrower to be in non-compliance with the Sublimits, Borrower shall have the opportunity to cure same, prior to or simultaneously with the release and the consummation of the Securitized Loan in accordance with the provisions of Section 5.4.2, (vi) Borrower shall provide evidence to Lender of title insurance in form and substance acceptable to Lender and in the face amount of the Securitized Loan, (vii) the proposed Borrower under the Securitized Loan shall execute and deliver such documents as Lender, in its discretion, may request in order to evidence the making of the Securitized Loan and in order to grant Lender a first priority Lien on the real and personal property constituting the Securitized Loan Collateral subject, in each case, to any Permitted Exceptions, and (viii) Borrower shall pay Lender any fees then due and owing under the Securitized Product.  Thereafter, Servicer shall use commercially reasonable efforts to consummate the Securitized Loan within 30 days after its consent to Borrower’s request thereof.  Notwithstanding the foregoing, in the event that Borrower elects Lender’s then current early rate lock delivery option, Lender shall use its best efforts, subject to Borrower’s timely compliance with Lender’s requests, to lock the interest rate for the requested Securitized Loan within 7 Business Days of Borrower’s Notice hereunder.  Any Securitized Loan granted pursuant to the foregoing provisions shall not reduce the Loan hereunder unless Borrower elects to reduce the Loan pursuant to Section 2.4.1.  Simultaneously with the closing of the

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Securitized Loan, Lender shall release the Lien granted hereunder on the Collateral.  Notwithstanding the foregoing, at any time prior to the release and consummation of the Securitized Loan, Borrower may by written Notice revoke its request for a release and a Securitized Loan pursuant to this Section 3.3.2; provided, however, that Borrower shall reimburse Lender and Servicer respectively, for Lender’s and Servicer’s  costs and expenses, including breakage costs and Attorneys’ Fees and Costs and any other fees due under this Agreement, that Lender or Servicer incur in connection with such proposed release and Securitized Loan financing prior to Borrower’s revocation.

3.4 Valuations.

3.4.1 Timing and Procedure of Valuation.  

In addition to any other provisions requiring a valuation hereunder, Lender will perform, in accordance with its then current underwriting policies, practices and procedures consistently applied, a valuation (the “Valuation”) to determine the then (i) Market Value and (ii) Net Operating Income of each Collateral Pool Property, which Valuation will be performed (a) on the first date such Collateral Pool Property is added to the Collateral Pool, and (b) on or about July 1^st annually thereafter (“Anniversary Date”).  On each Anniversary Date, in connection with the Valuation, Borrower shall deliver to Servicer by no later than May 1^st, a current rent roll (which will be no more than 30 days old) and trailing 12 month operating statement dated no later than the last day of January with respect to each Collateral Pool Property, each certified by an Authorized Officer.  In the event that a 12 month trailing operating statement is not available for a Collateral Pool Property because of when Borrower purchased such Collateral Pool Property, the Borrower must deliver to the Servicer no later than May 1^st a current rent roll (which will be no more than 30 days old) and no less than a 6 month trailing operating statement certified by an Authorized Officer.  Notwithstanding the foregoing, Lender may request that Borrower deliver additional current rent rolls (which shall be no more than 30 days old) more frequently than annually, and Borrower shall deliver to Servicer such additional current rent rolls, each certified by an Authorized Officer.  Lender may elect, in its sole and absolute discretion, to use any such additional current rent rolls for Valuation purposes but Lender has no obligation to do so.  Without limiting the foregoing, each such rent roll and operating statement will be in such form and contain such detail as Lender may reasonably require and Lender may require that any such rent rolls and operating statements be verified by an independent party acceptable to Lender.  Lender will then notify the Borrower in writing (the “Valuation Letter”) of the Net Operating Income and Market Value for each Collateral Pool Property.

3.4.2 Valuations that Disclose a Decrease in Market Value and/or Net Operating Income.

If any Valuation discloses that the Market Value and/or Net Operating Income of the Collateral Pool has decreased below the then current values or calculations thereof, the Maximum Facility Available may be adjusted in accordance with the provisions of Section 2.1.4 and in the event such decrease in Market Value or Net Operating Income shall cause Borrower to be in non-compliance with the Sublimits set forth in Sections 2.1.4.1 or 2.1.4.2, Borrower shall comply with the provisions of Section 5.4.2.

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3.4.3 Valuations that Disclose an Increase in Market Value and/or Net Operating Income.

If any Valuation discloses that the Market Value and/or Net Operating Income of the Collateral Pool has increased above the then current values thereof, the Maximum Facility Available may be adjusted, if necessary, in accordance with the provisions of Section 2.4.1, and Borrower shall be entitled to borrow and reborrow hereunder, subject to the Sublimits, up to the remaining amount of the Loan in accordance with the terms of this Agreement.

3.5 Material Adverse Change to Borrower, Guarantor or a Collateral Pool Property.

If a Material Adverse Change occurs, Borrower shall promptly notify Lender in writing as soon as Borrower has notice thereof.  If Lender shall receive Notice of a Material Adverse Change in accordance with the preceding sentence, or otherwise becomes aware of a Material Adverse Change, which Material Adverse Change affects a Collateral Pool Property or Borrower, Lender may promptly conduct a Valuation of the affected Collateral Pool Property pursuant to Section 3.4.  Until such time as such Valuation is completed, the Collateral Pool Property which experienced the Material Adverse Change, or which is owned by a Borrower that experienced a Material Adverse Change, shall be deemed, for the purposes of determining whether any new borrowing request satisfies the Sublimits, to have a Market Value and Net Operating Income reasonably determined and quantified by Lender upon the information then available to Lender.  Lender shall promptly provide Borrower with written Notice of the results of such Valuation.  If the results of such Valuation disclose that the Market Value of the affected Collateral Pool Property has decreased, then the Market Value shall thereafter be deemed to be the amount shown in such Valuation.  In the event that such Valuation hereunder shall cause Borrower to be in non-compliance with the Sublimits set forth in Sections 2.1.4.1 or 2.1.4.2, Borrower shall comply with the provisions of Section 5.4.2.  If Lender shall receive Notice of a Material Adverse Change from Borrower hereunder, or otherwise becomes aware of a Material Adverse Change, Borrower shall immediately provide any information or documents reasonably requested by Lender, including, but not limited to, (a) with respect to a Material Adverse Change which affects Borrower or Guarantor, financial statements and Borrower’s and/or Guarantor’s business plan to cure such Material Adverse Change or (b) with respect to a Material Adverse Change which affects the enforceability of this Agreement or the other Loan Documents taken as a whole, replacement documents in form and substance acceptable to Lender in its discretion, together with a legal opinion regarding the enforceability of such replacement documents, acceptable to Lender in its discretion.

4. INTEREST, COSTS AND CHARGES

4.1 Interest Rate.

The interest rate for each Borrowing Tranche shall be the Base Rate, Fixed Rate or, if required pursuant to Sections 4.3.2 or 4.4 hereof, the Prime Rate.  Interest rates under this Agreement, the Revolving Credit Note and the Fixed Rate Note shall be computed on the basis of a year of 360 days and actual days elapsed.

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4.2 Interest Rate Determinations.

4.2.1 Prime Rate, Base Rate, and Fixed Rate Determination.

4.2.1.1 Prime Rate.  The initial Prime Rate applicable to any Prime Rate Borrowing Tranche required under Sections 4.3.2 or 4.4 shall equal the Prime Rate as of the Borrowing Date or Renewal Date, as applicable.  The Prime Rate shall thereafter fluctuate in accordance with any changes to the Prime Rate as published from time to time during the term of the Prime Rate Borrowing Tranche.

4.2.1.2 Base Rate.  The Base Rate applicable to any Base Rate Borrowing Tranche hereunder shall, subject to the provisions set forth below, equal the Base Rate calculated as of the date of the Loan Request and set forth in the Loan Request.  In the event that the Base Rate, calculated as of the Borrowing Date, is more than 0.0025 higher or lower than the Base Rate set forth in the Loan Request, the Base Rate applicable to such Loan Request shall instead be the Base Rate calculated as of the Borrowing Date.  Thereafter, (i) the portion of the Base Rate attributable to the LIBOR Index Rate (or such alternative index as may be selected by Lender in accordance with the provisions of Section 4.4) for any Base Rate Borrowing Tranche shall be redetermined as of each renewal of such Borrowing Tranche pursuant to Section 4.3.3 and (ii) the Margin for all Borrowing Tranches then outstanding shall be redetermined as of each determination and redetermination of the Net Spread.  As determined and redetermined pursuant to this Agreement, the same Margin shall apply to all Borrowing Tranches then outstanding.  The portion of the Margin attributable to the Net Spread shall be determined based on the Aggregate DSCR in accordance with the table set forth in Schedule 4.2.3.  The Aggregate DSCR and Net Operating Income shall each be redetermined in accordance with the definitions thereof, as applicable.

4.2.1.3 Fixed Rate.  The Fixed Rate applicable to the Fixed Rate Borrowing Tranche shall be determined pursuant to Borrower’s selection of Lender’s then current rate lock or standard delivery option.

4.2.2 Prime Rate, Base Rate and Margin Quotations.

Borrower may call Servicer on or before the date on which a Loan Request is to be delivered or prior to the end of an Interest Period, to receive both a calculation of the resulting Aggregate DSCR for a proposed Prime Rate (if required pursuant to Sections 4.3.2 or 4.4) or Base Rate Borrowing Tranche and an indication of the rates then in effect, including the Margin, but both parties acknowledge that such projection shall not be binding on Lender or Borrower, nor shall such projection affect the rate of interest which thereafter is actually in effect when such interest rate election is made.

4.2.3 Net Spread.

The net spread (the “Net Spread”) applicable for any Base Rate Borrowing Tranche shall be as set forth in Schedule 4.2.3.  With respect to the exercising of the First Option to Extend, the Net Spread applicable for any Base Rate Borrowing Tranche during such extended term period shall be determined by Lender in its sole discretion and communicated to Borrower (provided, that Lender will communicate indicative (but not final) Net Spreads for such extension

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period to Borrower at least 2 Business Days prior to the Scheduled Maturity Date, First Extended Maturity Date or Second Extended Maturity Date, as applicable).  With respect to the exercising of an Expansion Option, the Net Spread applicable for any Base Rate Borrowing Tranche for such expanded amount of the Loan shall be determined by Lender in its sole discretion and communicated to Borrower (provided, that Lender will communicate indicative (but not final) Net Spreads for such expansion to Borrower at least 2 Business Days prior to the Expansion Option Date), and the final Net Spread for such expanded amount of the Loan shall be blended together with the Net Spread then in effect as determined by Lender.  Lender and Borrower shall evidence any new or blended applicable Net Spread pursuant to this Section 4.2.3, by executing a confirmation substantially in the form attached hereto as Schedule 2.3.

4.3 Interest Periods.

Upon each Loan Request for a new Base Rate Borrowing Tranche, and upon each Renewal Request applicable to a Base Rate Borrowing Tranche, Borrower shall notify Lender of the period (the “Interest Period”) which may only be a 1 month (having original durations to maturity of approximately 30 days) or 3 month (having original durations to maturity of approximately 90 days) for which the LIBOR Index Rate shall be determined.

4.3.1 Interest Period to End on a Business Day.

If the last day of any Interest Period is not a Business Day, the Interest Period shall be deemed to mature on the Business Day immediately following such date.

4.3.2 No Interest Periods Beyond the Expiration Date.

Borrower shall not select or renew an Interest Period for any Base Rate Borrowing Tranche that would end after the Expiration Date.  If at the time of any such selection or renewal the period of time remaining prior to the Expiration Date is less than 30 days then such Borrowing Tranche shall bear interest at the Prime Rate.  No Prime Rate Borrowing Tranche may remain outstanding in excess of 30 days at any one time.

4.3.3 Renewals.

For purposes of calculating interest due under the applicable Base Rate Borrowing Tranche, the first day of the new Interest Period shall be the first Business Day immediately following the last day of the preceding Interest Period (“Renewal Date”).  For each Base Rate Borrowing Tranche, if no new Interest Period is specified within 2 Business Days prior to the last day of such Interest Period, by delivery to Lender of a fully completed, authorized and executed request therefor (a “Renewal Request”) in the form attached hereto as Schedule 4.3.3, the Base Rate Borrowing Tranche shall be renewed for an Interest Period of 1 month at the Base Rate that would be applicable to a Base Rate Borrowing Tranche disbursed on the applicable Renewal Date having a 1 month Interest Period.  Notwithstanding anything contained herein to the contrary, (i) no Base Rate Borrowing Tranche may be renewed with a principal amount of less than $1,000,000 and (ii) in the event the Borrower fails to comply with the Sublimits set forth with Section 2.1.4.1 or Section 2.1.4.2, Borrower may renew or consolidate (but not increase the outstanding principal amount of) any Base Rate Borrowing Tranche(s) then outstanding, all in accordance with the provisions of this Section 4.3.3, provided that, as of the date of such renewal or consolidation (a)

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no Event of Default or Potential Default, other than Borrower’s failure to comply with Sections 2.1.4.1 or 2.1.4.2, shall then exist, (b) Borrower’s failure to comply with Sections2.1.4.1 or 2.1.4.2 shall have been for a period of less than 90 days, and (c) Borrower is otherwise in full compliance with all other terms and conditions of the Loan Documents, including the provisions of Section 4.3.6.  Borrower must comply with Sections2.1.4.1 or 2.1.4.2 pursuant to the provisions of Section 5.4.2.  

4.3.4 Interest After Default.

So long as (i) any payment under this Agreement remains past due for 30 days or more, or (ii) any other Event of Default has occurred and is continuing, interest on the Loan shall accrue on the unpaid principal balance from the earlier of the due date of the first unpaid installment or the occurrence of such other Event of Default at the Default Rate (as defined in the Revolving Credit Note and Fixed Rate Note).  If the unpaid principal balance and all accrued interest on the Loan are not paid in full on the Expiration Date, the unpaid principal balance and all accrued interest on the Loan shall thereafter bear interest at the Default Rate.  Borrower acknowledges that (a) its failure to make timely payments will cause Lender to incur additional expenses in servicing and processing the Loan, (b) during the time that any installment is delinquent for more than 30 days, Lender will incur additional costs and expenses arising from its loss of the use of the money due and from the adverse impact on Lender’s ability to meet its other obligations and to take advantage of other investment opportunities, and (c) it is extremely difficult and impractical to determine those additional costs and expenses. Borrower also acknowledges that, during the time that any installment is delinquent for more than 30 days or any other Event of Default has occurred and is continuing, Lender’s risk of nonpayment will be materially increased and Lender is entitled to be compensated for such increased risk.  Borrower agrees that the increase in the rate of interest set forth in the Revolving Credit Note and Fixed Rate Note represents a fair and reasonable estimate, taking into account all circumstances existing on the date of this Agreement, of the additional costs and expenses Lender will incur by reason of Borrower’s delinquent payment and the additional compensation Lender is entitled to receive for the increased risks of nonpayment associated with a delinquent loan.

4.3.5 Late Charge.

If any amount payable under this Agreement, the Revolving Credit Note, Fixed Rate Note or any other Loan Document, other than (i) the outstanding amount of the Revolving Credit Note or Fixed Rate Note payable on the Expiration Date or (ii) the then outstanding amount of the Loan payable upon acceleration of the Revolving Credit Note or Fixed Rate Note, is not received by Lender as provided in the Revolving Credit Note or Fixed Rate Note, as applicable, Borrower shall pay to Lender, immediately and without demand by Lender, a late charge as specified in the Revolving Credit Note or Fixed Rate Note.  Borrower acknowledges that its failure to make timely payments will cause Lender to incur additional expenses in servicing and processing the Loan, and that it is extremely difficult and impractical to determine those additional expenses.  Borrower agrees that the late charge payable specified in the Revolving Credit Note or Fixed Rate Note represents a fair and reasonable estimate, taking into account all circumstances existing on the date of this Agreement, of the additional expenses Lender will incur by reason of such late payment.  The late charge is payable in addition to, and not in lieu of, any interest payable at the Default Rate specified in the Revolving Credit Note or Fixed Rate Note.

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4.3.6 Non-Compliance With Sublimits.

If Borrower is unable to cause compliance with the Sublimits pursuant to Sections 2.1.4.1 or 2.1.4.2, within 15 days following Notice thereof from Servicer or Lender of Borrower’s non-compliance with such Sublimits, then, for so long as Borrower fails to comply with such Sublimits, (i) the Net Spread applicable to all Base Rate Borrowing Tranches then outstanding (and thereafter renewed) shall automatically increase to 0.01 over the highest Net Spread shown on Schedule 4.2.3 (as such Net Spreads are adjusted by Lender pursuant to Section 4.2.3), further increased, if at all, in accordance with Schedule 4.2.3, as a result of the duration of such Base Rate Borrowing Tranche(s) Interest Period and (ii) the interest rate applicable to all Fixed Rate Borrowing Tranches shall automatically increase by 0.0l; provided, however, such increase shall not constitute a cure of an Event of Default under Section 9.1.12.

4.4 Illegality; Increased Costs.

4.4.1 Illegality; Increased Costs.

At any time at which Lender shall have reasonably determined that (i) adequate and reasonable means do not exist for ascertaining the applicable LIBOR Index Rate, (ii) a contingency has occurred which materially and adversely affects the London interbank market, (iii) the making, maintenance or funding of any Borrowing Tranche bearing interest in part at the LIBOR Index Rate has been made unlawful by Lender’s compliance in good faith with any Law or any interpretation or application thereof by any Official Body or with any request or directive of any such Official Body (whether or not having the force of Law, but other than as a result of any misconduct by Lender), (iv) the Base Rate (as determined with reference to the LIBOR Index Rate) will not adequately and fairly reflect the cost to Lender of the establishment or maintaining of any such Borrowing Tranche, or (v) after making all reasonable efforts, deposits of the relevant amount in Dollars for the relevant Interest Period for a Borrowing Tranche are not available to Lender in the London interbank market, then Lender shall have the rights specified in Section 4.4.2.  

4.4.2 Lender’s Rights.

In the case of the events specified in Section 4.4.1 above, Lender shall promptly notify Borrower thereof.  Upon the date as shall be specified in such Notice, the obligation of Lender to make advances under any Borrowing Tranche(s) at the Base Rate shall be suspended until Lender shall have later notified Borrower of Lender’s reasonable determination that the circumstances set forth in Section 4.4.1 no longer exist.  If at any time Lender notifies Borrower that it has made a determination under Section 4.4.1, then with respect to any Loan Request previously submitted but not yet funded, and with respect to any Borrowing Tranche on which an Interest Period shall thereafter expire, each such new or renewal Borrowing Tranche(s) shall thereafter bear interest at the Prime Rate, in each case subject to Section 4.4.1.

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5. PAYMENTS

5.1 Repayment of Loan.

The obligation of Borrower to repay the aggregate unpaid principal amount of the Loan together with interest thereon, shall be evidenced by the Revolving Credit Note and Fixed Rate Note payable to the order of Lender.

5.2 Payments.

All payments and prepayments to be made in respect of principal, interest, fees or other amounts due from Borrower hereunder shall be due and payable on the date when due without presentment, demand, protest, or notice of any kind, including, but not limited to, notice of Lender’s intent to accelerate Borrower’s Obligations under the Loan Documents and notice of such acceleration, all of which (unless expressly provided in the Loan Documents) are hereby waived by Borrower, and without set-off, counterclaim or other deduction of any nature, and Lender’s right to action therefor shall immediately accrue.  Such payments shall be made to Lender in immediately available funds when due.  Lender’s Monthly Payment Statement shall, in the absence of manifest error, be conclusive as to the amount of principal of and interest on the Loan and other amounts owing under this Agreement, provided that Borrower may challenge the accuracy of any Monthly Payment Statement within 30 days from the date of receipt of such Monthly Payment Statement.

5.3 Payment Dates.

Subject to the provisions of Section 5.4, interest on the Loan shall be payable in arrears and shall be due, together with all other amounts set forth on the applicable Monthly Payment Statement, prior to 12:00 p.m. Eastern Time on the 1st day of any calendar month during the term hereof (“Payment Date”) and shall be paid by wire transfer of immediately available funds to an account specified by Servicer and, simultaneously with such wire transfer,  Lender shall (or shall cause Servicer to) deliver to Borrower an invoice (“Monthly Payment Statement”) detailing the interest and principal (if applicable), Unused Commitment Fees and other fees due and payable.  Except in the case of a prepayment under Section 5.4, Lender shall deliver the Monthly Payment Statement detailing charges due for the current calendar month via fax or by other electronic transmittal at least 5 Business Days prior to the first day of the succeeding calendar month.  In the instance of a renewal of an Interest Period pursuant to Section 4.3.3, interest on such renewed Base Rate Borrowing Tranche shall be due and payable on the next Payment Date, subject to any adjustments in interest rates, as if the Interest Period had not expired and then been renewed.  Interest on prepayments under Section 5.4 shall be due on the date such prepayment is due.  Interest on the principal amount of the Loan or other monetary Obligation shall be due and payable on demand after such principal amount or other monetary Obligation becomes due and payable (whether on the stated maturity date, upon acceleration or otherwise).

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5.4 Prepayments.

5.4.1 Voluntary Prepayments.

Borrower shall have the right, at its option, from time to time to prepay the Loan in whole or part at any time, but no prepayment may be less than the outstanding principal balance and accrued interest of the applicable Borrowing Tranche(s) being prepaid, except for partial prepayments made by Borrower in order to remedy non-compliance with the Sublimits as provided for herein.  Whenever Borrower desires to prepay any part of the Loan, Borrower shall provide a prepayment Notice to Lender by 12:00 p.m. Eastern Time at least 10 Business Days prior to the date of the proposed prepayment setting forth the following information:  (i) the amount to be prepaid; (ii) the estimated date on which the proposed prepayment is to be made; and (iii) a statement indicating the application of the prepayment to a particular Borrowing Tranche(s).

All prepayment Notices shall be irrevocable.  The principal amount of the Borrowing Tranche(s) for which a prepayment Notice is given, together with Accrued Interest, shall be due and payable by 12:00 p.m. Eastern Time on the date on which the proposed prepayment is to be made.  Lender shall, upon receipt of Borrower’s Notice, prepare and deliver to Borrower the same day via facsimile or other electronic transmittal a statement of interest due with respect to such prepayment, provided that in the event Borrower’s prepayment Notice is not received by Lender prior to 12:00 p.m. Eastern Time, Lender shall not be obligated to prepare and deliver such statement of interest until the Business Day following Lender’s receipt of such Notice.  

5.4.1.1 Prepayment of a Base Rate Borrowing Tranche.  Unless Borrower for any reason (i) repays a Prime Rate Borrowing Tranche permitted hereunder accruing interest at the Prime Rate or (ii) repays all or a part of a Base Rate Borrowing Tranche upon the expiration of such Base Rate Borrowing Tranche’s Interest Period, any prepayment under Section 5.4 shall be accompanied by a payment of the Accrued Interest.  The Accrued Interest for any Base Rate Borrowing Tranche shall be an amount equal to the interest, applicable to the particular Base Rate Borrowing Tranche being prepaid, which would have otherwise accrued over the remainder of the applicable Interest Period (“Accrued Interest”).  In addition, upon Lender’s exercise of any right of acceleration under this Agreement, the Revolving Credit Note, or any other Loan Document following an Event of Default, Borrower shall pay to Lender the Accrued Interest on all Base Rate Borrowing Tranches at the time of acceleration, and all other sums and fees payable to Lender hereunder.

5.4.1.2 Prepayment of a Fixed Rate Borrowing Tranche.  Except as otherwise provided in Section 2.5.4, any prepayment pursuant to Section 5.4.1, of a Fixed Rate Borrowing Tranche shall be accompanied by the Prepayment Premium.

5.4.2 Sublimit Violations (Mandatory Prepayment or Collateral Addition).

5.4.2.1 Upon Borrower’s receipt of Notice that it is not in compliance with the Sublimits, Borrower must either (i) within 90 days of the Notice of Borrower’s non-compliance with the Sublimits, add a Mortgaged Property in form, substance, value and in a manner all acceptable to Lender, in its sole discretion, in accordance with Section 3.1 or (ii) within

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30 days of the Notice of Borrower’s non-compliance with the Sublimits, prepay the Loan in such amount as is necessary to cause compliance with the Sublimits.  Borrower shall provide Notice to Lender and Servicer, within 15 days of Servicer’s or Lender’s Notice to Borrower of Borrower’s non-compliance with the Sublimits, of Borrower’s election to proceed under clause (i) or clause (ii) of the preceding sentence.  Any prepayment of the Loan in accordance with the provisions of this Section 5.4.2.1 shall be applied, as directed by Borrower, to a particular Borrowing Tranche or Borrowing Tranches under the Revolving Credit Note until the Revolving Credit Note has been repaid in full or, in the absence of any specific direction from Borrower, as selected by Lender in its sole discretion.

5.4.2.2 Casualty; Condemnation.  In the event of a casualty or condemnation affecting any Collateral Pool Property, any award and/or proceeds payable with respect to such casualty or condemnation and applied to Borrower’s Obligations in accordance with the provisions of the applicable Loan Agreement shall be applied without any prepayment fee or other penalty (but any Accrued Interest shall be paid), and this Agreement, and the parties’ obligations under the Loan Documents, shall be terminated, at Borrower’s election in accordance with Section 2.6.

5.5 Payment of Balance Without Termination.

Prior to the Maturity Date, Borrower shall have the right to pay the balance of the Loan, subject in each instance to the provisions of Section 5.4, all without any release of any Lien, and subsequently reborrow hereunder and the Revolving Credit Note, provided that Borrower is at such time, and thereafter remains, in compliance with the provisions of this Agreement, including, without limitation, the obligation to be in compliance with the Sublimits and the obligations to pay all fees due and payable hereunder.  Under no circumstances shall Borrower be entitled to any additional advances or re-advances under the Revolving Credit Note on or after the Maturity Date.  In no event will Borrower be permitted to request a Fixed Rate Borrowing Tranche after the Closing Date or re-borrow under the Fixed Rate Note.

5.6 Payment of Additional Compensation in Certain Circumstances.

5.6.1 Increased Costs Resulting from Taxes, Etc.

If any change in any Law, guideline or interpretation or application thereof by any Official Body charged with the interpretation or administration thereof or compliance with any written request or directive of any Official Body (other than as a result of any misconduct by Lender) which is applicable to Lender:

(i) subjects Lender to any tax or changes the basis of taxation with respect to this Agreement, the Revolving Credit Note, the Fixed Rate Note, the Loan or payments by Borrower of any principal, interest, fees, or other amounts due from Borrower hereunder, the Revolving Credit Note or the Fixed Rate Note (except for taxes on the overall net income of Lender); or

(ii) imposes upon Lender any condition or denies Lender any right, the result of which is to increase the cost to, reduce the income receivable by, or impose any expense (including breakage costs) upon Lender with respect to this Agreement, the Revolving Credit Note, the Fixed Rate

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Note or the making, maintenance or funding of any Borrowing Tranche by an amount which Lender in its discretion deems to be material;

then, Lender shall from time to time notify Borrower of the amount determined (using any averaging and attribution methods employed in good faith) by Lender to be necessary to compensate Lender for such increase in cost (“Increased Cost Amount”).  Such Notice shall set forth in reasonable detail the basis for such Increased Cost Amount.  The Increased Cost Amount shall be due and payable by Borrower to Lender 30 days after such Notice is given.

5.6.2 Termination.

Upon the occurrence of any event described in Section 5.6.1, Borrower, in lieu of paying the Increased Cost Amount within the time period set forth in Section 5.6.1, may terminate this Agreement in accordance with the provisions of Section 2.6, provided that the Borrower shall not be obligated to pay the Termination Fee.

5.7 Indemnity.

Borrower shall jointly and severally indemnify Lender and Servicer against all losses, claims, damages, liabilities and expenses, including Attorneys’ Fees and Costs ( individually and collectively, “Loss”) which may be imposed or incurred by Lender and/or Servicer directly or indirectly arising out of, or in any way relating to, or a result of any of the following:  (i) attempt by Borrower to revoke (expressly, by later inconsistent notices or otherwise) in whole or part any Loan Request under Section 2.1.2, any request to release a Mortgaged Property under Section 3.2, or notice relating to prepayments under Section 5.4, or (ii) default by Borrower in the performance or observance of any covenant or condition contained in this Agreement or any other Loan Document, including any failure of Borrower to pay when due (by acceleration or otherwise) any principal, interest, Accrued Interest, Unused Commitment Fee, or any other amount due hereunder.

If Lender sustains or incurs any such Loss, it shall from time to time notify Borrower of the amount determined in good faith by Lender (which determination may include such assumptions, allocations of costs and expenses and averaging or attribution methods as Lender shall deem reasonable) to be necessary to indemnify Lender for such Loss.  Such Notice shall set forth in reasonable detail the basis for such determination (which shall be conclusive absent manifest error).  Such amount shall be due and payable by Borrower to Lender 30 days after such Notice is given.

6. CONDITIONS OF LENDING

Lender’s obligation to make any advances or take any other action under the Loan Documents shall be subject at all times to satisfaction of each of the following conditions precedent in Lender’s discretion:

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6.1.1 Delivery of Loan Documents.

Lender shall have received all applicable Loan Documents together with all amendments thereto, and other documents, instruments, policies and forms of evidence or other material requested by Lender under the terms of this Agreement or any of the other Loan Documents.

6.1.2 Validity of Representations.

The representations and warranties contained in this Agreement and in each of the other Loan Documents shall be true and correct.

6.1.3 Valid Security Instrument.

The Security Instrument is a valid lien upon each Collateral Pool Property and is prior and superior to all other liens and encumbrances thereon except the Permitted Encumbrances.

6.1.4 No Default.  

There exists no Event of Default, or Potential Default under this Agreement or any of the other Loan Documents (or if the term “default” is not defined in such other Loan Document, a default thereunder that is uncured beyond any applicable notice and cure periods, if any, or event, omission or failure of condition which would constitute a Default after notice or lapse of time, or both).

6.1.5 Officer’s Certificate.

There shall be delivered to Lender and for the benefit of Lender a certificate, in form and substance acceptable to Lender, dated the Closing Date and signed by an Authorized Officer, certifying as appropriate as to:

6.1.5.1 all required actions taken by Borrower in connection with this Agreement and the other Loan Documents;

6.1.5.2 the names of the officer or officers authorized to sign this Agreement and the other Loan Documents and the true signatures of such officer or officers and specifying the Authorized Officers permitted to act on behalf of Borrower for purposes of this Agreement and the true signatures of such Authorized Officers, on which Lender may conclusively rely;

6.1.5.3 copies of the organizational documents of Borrower including its certificate of incorporation, by-laws, certificate of limited partnership, partnership agreement, certificate of formation, and limited liability company agreement, as applicable, as in effect on the Closing Date certified by the appropriate state official where such documents are filed in a state office together with certificates from the appropriate state officials as to the continued existence and good standing of Borrower in each state where organized or qualified to do business and dated within 30 days of the Closing Date, all of which shall be attached to such officer’s certificate; and

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6.1.5.4 all material consents required to effectuate the transactions contemplated hereby shall have been obtained.

6.1.6 Opinion of Counsel.

Prior to the Closing Date, there shall be delivered to Lender, written opinions of counsel for Borrower and Guarantor in form and substance satisfactory to Lender and its counsel as to matters customary to the transactions contemplated herein, or as Lender may reasonably request, including, but not limited to, an enforceability opinion with respect to Virginia law.

6.1.7 Legal Details.

All legal documents and due diligence materials in connection with the transactions contemplated by this Agreement and the other Loan Documents shall be in form and substance satisfactory to Lender and counsel for Lender, and Lender shall have received all such other counterpart originals or certified or other copies of such documents or due diligence in connection with such transactions, in form and substance satisfactory to Lender and said counsel, as Lender or said counsel may reasonably request.

6.1.8 Payment of Fees.

Borrower shall have paid or caused to be paid to Lender and Freddie Mac, to the extent not previously paid, all fees, costs and expenses accrued through the Closing Date, including, but not limited to, Attorneys’ Fees and Costs, title insurance premiums, surveys, appraisals, all costs incurred in obtaining environmental, engineering and credit reports, all third party due diligence costs and other costs and expenses incurred by either Lender or Freddie Mac in connection with the closing of this Loan.

6.1.9 Other Conditions.

Borrower shall have satisfied such other reasonable conditions as required by Lender.

7. REPRESENTATIONS AND WARRANTIES

7.1 Representations and Warranties.

As a material inducement to Lender’s entry into this Agreement, Borrower represents and warrants to Lender as of the Closing Date that:

7.1.1 Authority.

Borrower is in compliance with all laws and regulations applicable to its organization, existence and transaction of business and has all necessary rights and powers to borrow the Loan and to own the applicable Collateral Pool Property as contemplated by this Agreement and the other Loan Documents.

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7.1.2 Binding Obligations.

Borrower is authorized to execute, deliver and perform its obligations under this Agreement and the other Loan Documents, and such obligations shall be valid and binding obligations of Borrower.

7.1.3 Formation and Organizational Documents.  

Borrower has delivered to Lender true and complete copies of all formation and organizational documents of Borrower, of the partners, managers, joint venturers or members of Borrower, if any, and of any Guarantor of the Loan, and all such formation and organizational documents remain in full force and effect and have not been amended or modified since they were delivered to Lender.  

7.1.4 No Violation.  

Borrower’s execution, delivery, and performance under this Agreement and the other Loan Documents do not:  (i) require any consent or approval not heretofore obtained under any partnership agreement, operating agreement, articles of incorporation, bylaws or other document; (ii) to Borrower’s Knowledge violate any governmental requirement applicable to the Collateral Pool Property or any other statute, law, regulation or ordinance or any order or ruling of any court or governmental entity; or (iii) to Borrower’s Knowledge, conflict with, or constitute a breach or default or permit the acceleration of obligations under any agreement, contract, lease, or other document by which Borrower is or such Collateral Pool Property is bound or regulated.

7.1.5 Reserved.

7.1.6 Financial Condition.  

All financial statements, Underwriting Materials and such other information heretofore delivered to Lender by Borrower, including, without limitation, information relating to the financial condition of Borrower, the Collateral Pool Property, the partners, joint venturers or members of Borrower, and/or any Guarantor, fairly and accurately represent the financial condition of the subject thereof and have been prepared (except as noted therein) in accordance with Section 1.3.  

7.1.7 No Material Adverse Change.  

There has been no Material Adverse Change in the financial condition of Borrower or Guarantor since the dates of the latest financial statements furnished to Lender and, except as otherwise disclosed to Lender in writing, Borrower and Guarantor have not entered into any material transaction which is not disclosed in such financial statements.

7.1.8 Accuracy.  

All reports, documents, instruments, information and forms of evidence delivered to Lender concerning the Loan or a Collateral Pool Property or required by the Loan Documents

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are accurate, correct and sufficiently complete to give Lender true and accurate knowledge of their subject matter, and do not contain any misrepresentation or omission.

7.1.9 Reserved.

7.1.10 Enforceability.  

This Agreement and the other Loan Documents are not subject to any right of rescission, set-off, counterclaim or defense by Borrower, including the defense of usury, nor would the exercise of any of the terms of the Loan Documents, or the exercise of any right thereunder, render the Loan Documents unenforceable, and Borrower has not asserted any right of rescission, set-off, counterclaim or defense with respect thereto.

7.1.11 Reserved.  

7.1.12 Solvency.

Borrower, Taken as a Whole, and Guarantor are not insolvent (as such term is defined in Section 5.20(b) of the Loan Agreement.  After giving effect to the transactions contemplated by this Agreement and the other Loan Documents, Borrower, Taken as a Whole, and Guarantor will not be insolvent.  Borrower has not entered into this Agreement or any Loan Document with the actual intent to hinder, delay, or defraud any creditor, and Borrower has received reasonably equivalent value in exchange for its obligations under the Loan Documents.  Borrower does not intend to, and Borrower does not believe that it will, incur debts and liabilities beyond its ability to pay such debts as they mature (taking into account the timing and amounts to be payable on or in respect of obligations of Borrower).

7.1.13 No Pending Proceedings or Judgments.

Borrower is not (i) the subject of or a party to (other than as a creditor) any completed or pending bankruptcy, reorganization or insolvency proceeding, or (ii) the subject of any judgment unsatisfied of record or docketed in any court located in the United States.

7.1.14 Authorized Officer/Authorized Representative.  

The officers and employees of Borrower who are now (or in the future become) Authorized Officers of Borrower (i) have direct supervisory and managerial control over the Borrower and each Collateral Pool Property, subject to the management thereof in accordance with the terms of the Loan Documents, and (ii) are familiar with the organization and operations of Borrower and with the operations of each Collateral Pool Property.  

7.1.15 Other Loan Documents.

The representations and warranties set forth in the other Loan Documents are true and correct.

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7.2 Reaffirmation and Survival of Representations and Warranties.

Each (i) Loan Request by Borrower for an advance under this Agreement (ii) time an advance is made pursuant to this Agreement, (iii) exercise of the First Option to Extend, (iv) addition of a Mortgaged Property to the Collateral Pool, (v) release of a Collateral Pool Property, or (vi) exercise of any Expansion Option (each a “Reaffirmation Date”) shall constitute an affirmation on the part of Borrower that the representations and warranties contained in this Agreement and the other Loan Documents to which Borrower is a party are true and correct as of the time of such request and that the relevant conditions precedent set forth in this Agreement have been fully satisfied, notwithstanding the fact that such representations and warranties are only required to be made by Borrower upon execution of such Loan Documents.  All representations and warranties made herein shall survive the execution of this Agreement, each Reaffirmation Date and the execution and delivery of all other documents and instruments in connection with the Loan, so long as Lender has any commitment to lend to Borrower hereunder and until the Loan has been paid in full.

8. COVENANTS

Borrower covenants and agrees that until the later of (i) satisfaction of all of the Obligations of Borrower under this Agreement and the other Loan Documents, and (ii) the Expiration Date, Borrower shall comply at all times with each of the following covenants:

8.1 Organization and Dissolution.

Borrower shall not dissolve, terminate its existence, liquidate, merge with or consolidate into another Person.  Borrower shall promptly provide Lender with copies of any material amendments or modifications to the formation or organizational documents of Borrower, of the partners, managers, joint venturers or members of Borrower, if any, and of any Guarantor of the Loan.

8.2 Affiliate Transactions.

Borrower shall not enter into, or be a party to, any transaction with an Affiliate of Borrower or Guarantor, or any of the members of such Borrower or Guarantor, except for those agreements previously approved by Lender in writing and (i) in the ordinary course of business, and (ii) are no less favorable to Borrower than would be obtained in a comparable arm’s-length transaction with an unrelated third party.

8.3 Assignment.

Without the prior written consent of Lender (which consent shall be in Lender’s sole discretion), Borrower shall not assign Borrower’s interest under this Agreement, any of the Loan Documents, or in any monies due or to become due thereunder, and any assignment without such consent shall be void.  In this regard, Borrower acknowledges that Lender would not make this Loan except in reliance on Borrower’s or Guarantor’s expertise, reputation, and prior experience in owning and/or operating conventional multifamily real property, Lender’s knowledge of Borrower and Guarantor, and Lender’s understanding that this Agreement is more in the nature of

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an agreement involving personal services than a standard loan where Lender would rely on security which already exists.

8.4 Further Assurances.

Upon Lender’s request and at Borrower’s sole cost and expense, Borrower shall, and shall cause any person or entity affiliated with Borrower to, execute, acknowledge and deliver any other instruments, including, without limitation, replacement promissory notes, guaranties or other loan documents, and perform any other acts necessary, desirable or proper, as reasonably determined by Lender, to carry out the purposes of this Agreement and the other Loan Documents or to perfect and preserve any liens created by the Loan Documents.  This obligation shall survive any foreclosure or deed in lieu of foreclosure of a Collateral Pool Property.

8.5 Proceedings and Judgments.

If any suit or legal proceeding (“Proceeding”) is commenced seeking to enjoin or otherwise prevent or declare unlawful the use, occupancy, operation or maintenance of the Collateral Pool Property or any portion thereof, or if any other Proceeding is filed against Borrower in an amount in excess of $1,000,000, Borrower shall promptly notify Lender in writing and to the extent permitted by law and at its sole expense, (i) cause any Proceeding, to be vigorously contested in good faith, and (ii) in the event of an adverse ruling or decision, prosecute all reasonable allowable appeals therefrom.  Without limiting the generality of the foregoing, Borrower shall resist the entry or seek the stay of any temporary or permanent injunction that may be entered and use commercially reasonable efforts to bring about a favorable and speedy disposition of all such proceedings, as well as any others.  Upon request by Lender, Borrower will provide Lender with written updates on the status of any proceeding.  Borrower shall furnish to Lender prompt notice of any order, judgment or decree in excess of $100,000 having been entered against Borrower.

8.6 Compliance with Lender Requirements.

Borrower shall comply with the requirements of Lender in order to enable Lender to sell or securitize all or any part of the Loan, provided that neither Borrower nor any Guarantor shall be required to do anything that has the effect of (i) changing the material economic or other business terms of this Agreement, the Revolving Credit Note, the Fixed Rate Note or any other Loan Documents, or (ii) imposing on Borrower or any Guarantor greater liability or obligation than that set forth in this Agreement, the Revolving Credit Note, the Fixed Rate Note or any other Loan Documents.

8.7 Correction of Defects.

Within a commercially reasonable period of time after Borrower acquires knowledge of or is given notice of a material defect in a Collateral Pool Property or any departure from other requirements of this Agreement or the other Loan Documents, including, without limitation any Event of Default or Potential Default, under this Agreement or any of the Loan Documents, Borrower shall commence and continue with diligence to correct all such defects and departures (including, without limitation, any corrective action necessary to perfect and maintain perfected as valid liens upon each Collateral Pool Property and all other collateral the liens granted by

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Borrower to Lender under the Loan Documents).  Borrower shall endeavor to complete such corrections within 30 days after Borrower acquires such knowledge or is given such notice, or, if such corrections cannot reasonably be completed within 30 days then within 60 days in total.  Upon Borrower acquiring knowledge of such defect (other than as a result of written notice to Borrower from Lender), Borrower shall promptly advise Lender in writing of such matter and the measures being taken to make such corrections, along with an estimate of the time of completion.

8.8 Notice of Material Adverse Change.

Borrower shall promptly notify Lender of any Material Adverse Change affecting Borrower, Guarantor, any Collateral Pool Property, this Agreement or the other Loan Documents.

8.9 Annual Evaluation.

Borrower shall deliver and cause Guarantor to deliver to Servicer by no later than 60 days prior to the first anniversary of the Closing Date dated as of March 31, 2017 and thereafter no later than 90 days after the most recent calendar year end dated as of December 31st, the items set forth in clauses (i) through (iv) below for the purpose of Lender determining that Guarantor satisfies the Minimum Net Worth and Liquidity requirements set forth in the Guaranty as well as determining whether a Material Adverse Change has occurred.  Borrower shall and will cause Guarantor to comply with this Section annually thereafter.  

(i) The most recent fiscal year-end financial statements for (a) Borrower, and (b) Guarantor (together, the “Required Financial Statements”), which Required Financial Statements must (x) comply with the requirements of the then current version of the Freddie Mac Multifamily Seller/Servicer Guide (“Guide”), (y) include a balance sheet, income statement and statement of cash flows (provided that for the statement of cash flows, the operating entries need to be included however the investing and financing entries will not be required), each in form and substance reasonably acceptable to Lender and (z) be certified by an Authorized Officer of Borrower Guarantor , as applicable,

(ii) A complete Freddie Mac Form 1115 (which then current Freddie Mac Form 1115 will be provided by Servicer) for Borrower and Guarantor, dated as of December 31st, including, without limitation, fully completed net worth, liquidity and contingent liabilities sections,

(iii) A complete Freddie Mac Form No. 1116 (which then current Freddie Mac Form 1116 will be provided by Servicer) for the Guarantor, dated as of December 31^st, and

(iv) A statement showing any change in the (a) Liquidity, (b) Minimum Net Worth, (c) contingent liabilities and (d) value of encumbered assets as set forth in Form 1116 of Guarantor (in each case, as determined in accordance with Freddie Mac Form 1115), dated as of December 31st, as certified by an Authorized Officer of Guarantor.

8.10 Compliance with Guaranty.

Borrower shall cause Guarantor to comply with the terms and provisions of the Guaranty.

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9. DEFAULT

9.1 Events of Default.

The occurrence or existence of any one or more of the following events or conditions (whatever the reason therefor and whether voluntary, involuntary or effected by operation of Law) shall be an “Event of Default”:

9.1.1 Payments Under Loan Documents.

Borrower shall fail to pay any principal under any Borrowing Tranche (including scheduled installments, mandatory prepayments or the payment due at maturity), or shall fail to pay any interest on the Loan or any other amount owing hereunder or under any other Loan Documents after such principal, interest or other amount becomes due in accordance with the terms hereof or thereof, or shall fail to pay to Lender an amount which is payable under this Agreement or, any other Loan Document “upon demand”, and such “upon demand payment” is not made within 5 days of either written Notice to Borrower or request for such payment as set forth in any invoice or monthly statement provided to Borrower;

9.1.2 Breach of Representation or Warranty.

Any representation or warranty made at any time by Borrower herein or in any other Loan Document, or in any certificate, other instrument or statement furnished pursuant to the provisions hereof or thereof, shall prove to have been false or misleading in any material respect as of the time it was made or furnished which is not cured within 30 days after written Notice thereof from Lender to Borrower, or within such additional reasonable time as may be necessary, in Lender’s judgment to cure such breach, in the event Borrower commences such cure within such 30 day period and thereafter diligently pursues such cure, not to exceed 60 additional days;

9.1.3 Breach of Covenant.

Borrower shall default in the observance or performance of any covenant, condition or provision hereof or under any other Loan Document, which default is not otherwise specified as an “Event of Default” under (i) the provisions of this Article 9 or (ii) Section 9.01 of any Loan Agreement with respect to any Collateral Pool Property and is not cured within 30 days after Notice thereof from Lender to Borrower of such default.  However, if Borrower’s failure to perform its obligations as described in this Section 9.1.3 is of a nature that it cannot be cured within the 30 day cure period after such Notice from Lender but reasonably could be cured within 90 days, then Borrower will have additional time as determined by Lender in Lender’s judgment, not to exceed an additional 60 days, in which to cure such default, provided that Borrower has diligently commenced to cure such default during the initial 30 day cure period and diligently pursues the cure of such default.  Notwithstanding anything herein to the contrary, no such Notice or grace period shall apply in the case of any default which could, in Lender’s judgment, absent immediate exercise by Lender of a right or remedy under this Agreement or any of the other Loan Documents, result in additional harm to Lender, impairment of the Revolving Credit Note or Fixed Rate Note, or any rights of Lender under this Agreement or any security given under any other Loan Document;

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9.1.4 Event of Default under the Other Loan Documents.

Borrower shall be in default under any provision of the Revolving Credit Note, the Fixed Rate Note or any other Loan Document beyond any applicable notice and cure period, if any;

9.1.5 Final Judgments or Orders.

Any final judgments or orders for the payment of money in excess of $1,000,000 in the aggregate shall be entered against Borrower by a court of competent jurisdiction, which judgment is not discharged, vacated, bonded or stayed pending appeal within a period of 30 days from the date of entry;

9.1.6 Notice of Lien or Assessment.

A notice of Lien or assessment in excess of $1,000,000 which is not a Permitted Exception is filed of record with respect to all or any part of any of Borrower’s assets, or any taxes or debts owing at any time or times hereafter to the United States, or any department, agency or instrumentality thereof, or by any state, county, municipal or other governmental agency, becomes payable and the same is not paid or otherwise discharged within 30 days after the same becomes payable, unless the same is being contested in accordance with the Loan Documents;

9.1.7 Insolvency.

Borrower, Taken as a Whole, ceases to be Solvent or admits in writing its inability to pay its debts as they come due;

9.1.8 Cessation of Business.

Borrower ceases to conduct the business of Borrower, or Borrower is enjoined, restrained or in any way prevented by court order from conducting all or any material part of the business of Borrower or the right to use or lease the Collateral Pool Property as a conventional multifamily real property, and such injunction, restraint or other preventive order is not dismissed within 10 Business Days after the entry thereof;

9.1.9 Lien Priority.

The Liens granted to and for the benefit of Lender do not constitute valid first priority Liens (subject to Permitted Exceptions) under applicable Laws and such default shall continue unremedied for a period of 30 Business Days after Borrower’s Knowledge of the occurrence thereof or such additional reasonable time period necessary to cure such default, in the event Borrower commences such cure within such 30 day period and thereafter diligently pursues such cure, for a period not to exceed 60 additional days (such cure period to be applicable only in the event such default can be remedied by corrective action of Borrower to the satisfaction of Lender as determined by Lender in its reasonable discretion);

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9.1.10 Bankruptcy and Other Proceedings.

Borrower voluntarily files for bankruptcy protection under the United States Bankruptcy Code or voluntarily becomes subject to any reorganization, receivership, insolvency proceeding or other similar proceeding pursuant to any other federal or state law affecting debtor and creditor rights, or an involuntary case is commenced against Borrower by any creditor (other than Lender) of Borrower pursuant to the United States Bankruptcy Code or other federal or state law affecting debtor and creditor rights and is not dismissed or discharged within 60 days after filing;

9.1.11 Material Adverse Change.

There shall occur a Material Adverse Change;

9.1.12 Aggregate DSCR/LTV Ratio.

Either the Aggregate DSCR fails to comply with the requirements of Section 2.1.4.1 or the LTV Ratio exceeds the ratio permitted pursuant to Section 2.1.4.2 for a period of 90 consecutive days from the date of Borrower’s receipt of Notice of such non-compliance; or

9.1.13 Guarantor Default.  

Guarantor fails to comply with any of the terms and provisions of the Guaranty.

9.2 Consequences of Event of Default.

9.2.1 Acceleration of Loan.

Upon an Event of Default, Lender shall be entitled, without limitation, to (i) accelerate the Loan, and (ii) collect the Indebtedness.

9.2.2 Remedies Cumulative.

Upon an Event of Default under Section 9.1, Lender shall be entitled to all of the rights and remedies granted to Lender under the Loan Documents and applicable Law, all of which rights and remedies shall be cumulative and non-exclusive, to the extent permitted by Law.  Following an Event of Default, the Loan may be reinstated only upon the express written approval of Lender, to be granted, withheld or conditioned in its sole discretion.

9.2.3 Notice of Sale.

Any notice required to be given by Lender of a sale, lease, or other disposition of any Collateral that is personal property or any other intended action by Lender under the Uniform Commercial Code, if given at least 10 days prior to such proposed action, shall constitute commercially reasonable notice thereof to Borrower.

Credit Agreement Page 42

10. MISCELLANEOUS

10.1 Reserved.

10.2 Successors and Assigns.

This Agreement shall be binding upon and shall inure to the benefit of Lender, Borrower and their respective successors and assigns, except that Borrower may not assign or transfer any of its respective rights or Obligations hereunder or any interest herein.

10.3 Modifications, Amendments or Waivers.

Lender and Borrower may from time to time enter into written agreements amending or changing any provision of this Agreement or any other Loan Document or the rights of Lender or Borrower hereunder or thereunder, or may grant written waivers or consents to a departure from the due performance of the Obligations of Borrower hereunder or thereunder.  Any such written agreement, waiver or consent (i) shall be effective to bind Lender and Borrower, and (ii) shall be accompanied in each instance by a written affirmation executed by Guarantor consenting to such actions.

10.4 Forbearance.

Lender may (but shall not be obligated to) agree with Borrower, from time to time, and without giving notice to, or obtaining the consent of, or having any effect upon the obligations of, any Guarantor or other third party obligor, to take any of the following actions:  (i) extend the time for payment of all or any part of the Loan; (ii) reduce the payments due under this Agreement, the Revolving Credit Note, the Fixed Rate Note or any other Loan Document; (iii) release anyone liable for the payment of any amounts under this Agreement, the Revolving Credit Note, the Fixed Rate Note, or any other Loan Document; (iv) modify the terms and time of payment of the Loan; (v) join in any extension or subordination agreement; (vi) release any Collateral Pool Property; (vii) take or release other or additional security; (viii) modify the rate of interest or period of amortization of the Revolving Credit Note, the Fixed Rate Note or change the amount of the monthly installments payable under the Revolving Credit Note or the Fixed Rate Note; and (ix) otherwise modify this Agreement, the Revolving Credit Note, the Fixed Rate Note or any other Loan Document.

Any forbearance by Lender in exercising any right or remedy under the Revolving Credit Note, the Fixed Rate Note, this Agreement, or any other Loan Document or otherwise afforded by applicable Law, shall be in writing and shall not be deemed a waiver of or preclude the exercise of any right or remedy.  The acceptance by Lender of payment of all or any part of the Loan after the due date of such payment, or in an amount which is less than the required payment, shall not be a waiver of Lender’s right to require prompt payment when due of all other payments on account of the Loan or to exercise any remedies for any failure to make prompt payment. Enforcement by Lender of any security for the Loan shall not constitute an election by Lender of remedies so as to preclude the exercise of any other right available to Lender.  Lender’s receipt of any awards or proceeds shall not operate to cure or waive any Event of Default.

Credit Agreement Page 43

10.5 Remedies Cumulative.

Each right and remedy provided in this Agreement is distinct from all other rights or remedies under this Agreement or any other Loan Document or afforded by applicable Law, and each shall be cumulative and may be exercised concurrently, independently, or successively, in any order.

10.6 Reimbursement and Indemnification of Lender and Servicer by Borrower; Taxes.

Borrower agrees unconditionally upon demand to pay or reimburse to Lender and Servicer and to hold Lender and Servicer harmless against (i) liability for the payment of all reasonable out-of-pocket costs, expenses and disbursements (including fees and expenses of counsel for Lender and Servicer, incurred by Lender and Servicer (a) in connection with the administration and interpretation of this Agreement, and other instruments and documents to be delivered hereunder, (b) relating to any amendments, waivers or consents pursuant to the provisions hereof, (c) in connection with the enforcement of this Agreement or any other Loan Document, or collection of amounts due hereunder or thereunder or the proof and allowability of any claim arising under this Agreement or any other Loan Document, whether in bankruptcy or receivership proceedings or otherwise, and (d) in any workout or restructuring or in connection with the protection, preservation, exercise or enforcement of any of the terms hereof or of any rights hereunder or under any other Loan Document or in connection with any foreclosure, collection or bankruptcy proceedings, or (ii) all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on, incurred by or asserted against Lender or Servicer, in its capacity as such, in any way relating to or arising out of this Agreement or any other Loan Documents or any action taken or omitted by Lender or Servicer hereunder or thereunder, provided that no Borrower shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements (a) if the same results from Lender’s negligence or willful misconduct or breach of this Agreement, (b) any action taken with respect to a Collateral Pool Property after Lender has acquired title to such Collateral Pool Property in a foreclosure proceeding, (c) if Borrower was not given notice of the subject claim and the opportunity to participate in the defense thereof, at its expense (except that Borrower shall remain liable to the extent such failure to give notice does not result in a loss to Borrower), or (d) if the same results from a compromise or settlement agreement entered into without the consent of Borrower, which shall not be unreasonably withheld.  Borrower agrees unconditionally to pay all stamp, document, transfer, mortgage registration, recording or filing taxes or fees and similar impositions now or hereafter determined by Lender to be payable in connection with this Agreement or any other Loan Document, and Borrower agrees unconditionally to hold Lender and Servicer harmless from and against any and all present or future claims, liabilities or losses with respect to or resulting from any omission to pay or delay in paying any such taxes, fees or impositions.

10.7 Holidays.

Whenever the funding of a Borrowing Tranche hereunder shall be due on a day which is not a Business Day such payment shall be due on the next Business Day and such extension of time shall be included in computing interest and fees, except that the Loan shall be due on the Business

Credit Agreement Page 44

Day preceding the Expiration Date if the Expiration Date is not a Business Day.  Whenever any payment or action to be made or taken hereunder (other than payment of the Loan) shall be stated to be due on a day which is not a Business Day, such payment or action shall be made or taken on the next following Business Day, and such extension of time shall not be included in computing interest or fees, if any, in connection with such payment or action.

10.8 Notices.

(a) All Notices under or concerning this Agreement will be in writing. Each Notice will be deemed given on the earliest to occur of (i) the date when the Notice is received by the addressee, (ii) the 1st Business Day after the Notice is delivered to a recognized overnight courier service, with arrangements made for payment of charges for next Business Day delivery, or (iii) the 3rd Business Day after the Notice is deposited in the United States mail with postage prepaid, certified mail, return receipt requested. Addresses for Notice are as follows:

If to Lender:

KeyBank National Association
c/o KeyBank Real Estate Capital - Servicing Department

11501 Outlook Street, Suite 300
Overland Park, Kansas 66211
Mailcode: KS-01-11-0501
Attn:  Servicing Manager

If to Borrower:

c/o Highland Capital Management
300 Crescent Court, Suite 700
Dallas, Texas 75201

(b) Any party to this Agreement may change the address to which Notices intended for it are to be directed by means of Notice given to the other party in accordance with this Section 10.8. Each party agrees that it will not refuse or reject delivery of any Notice given in accordance with this Section 10.8, that it will acknowledge, in writing, the receipt of any Notice upon request by the other party and that any Notice rejected or refused by it will be deemed for purposes of this Section 10.8 to have been received by the rejecting party on the date so refused or rejected, as conclusively established by the records of the U.S. Postal Service or the courier service.

(c) Any Notice under the Revolving Credit Note, the Fixed Rate Note and any other Loan Document that does not specify how Notices are to be given will be given in accordance with this Section 10.8.

10.9 Severability.

The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision, and all other provisions shall remain in full force and effect.  This Agreement contains the entire agreement between the parties as to the rights

Credit Agreement Page 45

granted and the obligations assumed in this Agreement.  This Agreement may not be amended or modified except by a writing signed by the party against whom enforcement is sought.

10.10 Governing Law; Consent to Jurisdiction and Venue.

This Agreement, and any Loan Document which does not itself expressly identify the Law that is to apply to it, shall be governed by the Laws of the Commonwealth of Virginia.  Borrower agrees that any controversy arising under or in relation to this Agreement or any other Loan Document which does not expressly identify the Law that is to apply to it, shall be litigated in the courts located in the Commonwealth of Virginia.  The state and federal courts and authorities with jurisdiction in the Commonwealth of Virginia shall have non-exclusive jurisdiction over all controversies which shall arise under or in relation to this Agreement.  Borrower irrevocably consents to service, jurisdiction, and venue of such courts for any such litigation and waives any other venue to which it might be entitled by virtue of domicile, habitual residence or otherwise.  However, nothing in this Agreement is intended to limit any right that Lender may have to bring any suit, action or proceeding relating to matters arising under this Agreement in any court of any other jurisdiction.  

10.11 Prior Understanding.

This Agreement and the other Loan Documents supersede all prior understandings and agreements, whether written or oral, between the parties hereto and thereto relating to the transactions provided for herein and therein, including any prior confidentiality agreements and commitments.

10.12 Duration; Survival.

All representations and warranties of Borrower contained herein or made in connection herewith shall survive the funding of the initial advance hereunder and shall not be waived by the execution and delivery of this Agreement, any investigation by Lender, the funding of any Borrowing Tranche, or payment in full of the Loan.  All covenants and agreements of Borrower contained herein shall continue in full force and effect from and after the date hereof so long as Borrower may borrow hereunder and until the later of the (i) Expiration Date, or (ii) payment in full of the Obligations.  Except as provided in Sections 2.6 and 3.2, all covenants and agreements of any Borrower contained herein relating to the payment of principal, interest, premiums, additional compensation or expenses and indemnification, including those set forth in the Revolving Credit Note or the Fixed Rate Note hall survive payment in full of the Loan and the Expiration Date.  Notwithstanding any of the foregoing to the contrary, in no event shall (a) the release of Lender’s Lien on any Collateral Pool Property, (b) the maturity, expiration or early termination of the Revolving Credit Note or Fixed Rate Note or (c) the expiration or early termination of this Agreement, be deemed to terminate any covenants, agreements, representations or warranties contained in this Agreement, the Revolving Credit Note, the Fixed Rate Note or any of the other Loan Documents, to the extent that such covenant, agreement, representation or warranty, shall, by its terms survive the release, maturity, expiration or early termination of this Agreement, the Revolving Credit Note, Fixed Rate Note or any of the other Loan Documents.

Credit Agreement Page 46

10.13 Exceptions.

The representations, warranties and covenants contained herein shall be independent of each other, and no exception to any representation, warranty or covenant shall be deemed to be an exception to any other representation, warranty or covenant contained herein unless expressly provided, nor shall any such exceptions be deemed to permit any action or omission that would be in contravention of applicable Law.

10.14 Servicing.

Pursuant to the terms of the Guide and any Servicing Agreement, if any, Lender may designate Servicer to perform some or all of Lender’s obligations under this Agreement, the Revolving Credit Note, the Fixed Rate Note, and the other Loan Documents.

10.15 Reserved.

10.16 Authority to File Notices.

Borrower irrevocably appoints Lender as its attorney-in-fact, with full power of substitution, to file for record, at Borrower’s cost and expense and in Borrower’s name, any notices that Lender considers reasonably necessary or desirable to protect the Collateral.

10.17 WAIVER OF TRIAL BY JURY.

BORROWER AND LENDER EACH (A) COVENANTS AND AGREES NOT TO ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING OUT OF THIS AGREEMENT OR THE RELATIONSHIP BETWEEN THE PARTIES AS BORROWER AND LENDER THAT IS TRIABLE OF RIGHT BY A JURY AND (B) WAIVES ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO SUCH ISSUE TO THE EXTENT THAT ANY SUCH RIGHT EXISTS NOW OR IN THE FUTURE.  THIS WAIVER OF RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN BY EACH PARTY, KNOWINGLY AND VOLUNTARILY WITH THE BENEFIT OF COMPETENT LEGAL COUNSEL.

10.18 Advertising.

Lender may include the name of Borrower, the name and location of any Collateral Pool Property, the Loan and the number of apartment units contained in any Mortgaged Property on Lender’s client list and in any typical advertisement.

10.19 Time of Essence.

Time is of the essence with respect to each obligation of Borrower and Lender hereunder.

10.20 Counterparts.

This Agreement may be executed by different parties hereto on any number of separate counterparts, each of which, when so executed and delivered, shall be an original, and all such counterparts shall together constitute one and the same instrument.

Credit Agreement Page 47

10.21 NOTICE OF FINAL AGREEMENT.

THIS AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES HERETO AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES HERETO.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES HERETO.

[Signatures Continue on the Following Page]

Credit Agreement Page 48

IN WITNESS WHEREOF, the parties hereto, by their officers thereunto duly authorized, have executed this Agreement as of the day and year first above written.

WITNESS:	BORROWER:
	FRBH EDGEWATER OWNER, LLC, a
/s/ Sarah Bell	Delaware limited liability company
Print Name: Sarah Bell
	By:	FRBH Edgewater N, LLC, a Delaware
		limited liability company, its sole member
		By:	/s/ Matt McGraner (SEAL)
		Name:	Matt McGraner
		Authorized Signatory

[Signatures Continue on the Following Page]

Signature Page

WITNESS:	BORROWER:
	FRBH BEECHWOOD , LLC,
/s/ Sarah Bell	a Delaware limited liability company
Print Name: Sarah Bell
	By:	FRBH Nashville Residential, LLC, a
		Delaware limited liability company, its
		sole member
		By:	/s/ Matt McGraner (SEAL)
		Name:	Matt McGraner
		Authorized Signatory

[Signatures Continue on the Following Page]

Signature Page

WITNESS:	BORROWER:
	FRBH WILLOW GROVE, LLC,
/s/ Sarah Bell	a Delaware limited liability company
Print Name: Sarah Bell
	By:	FRBH Nashville Residential, LLC, a
		Delaware limited liability company, its
		sole member
		By:	/s/ Matt McGraner (SEAL)
		Name:	Matt McGraner
		Authorized Signatory

[Signatures Continue on the Following Page]

Signature Page

WITNESS:	BORROWER:
	FRBH WOODBRIDGE, LLC,
/s/ Sarah Bell	a Delaware limited liability company
Print Name: Sarah Bell
	By:	FRBH Nashville Residential, LLC, a
		Delaware limited liability company, its
		sole member
		By:	/s/ Matt McGraner (SEAL)
		Name:	Matt McGraner
		Authorized Signatory

[Signatures Continue on the Following Page]

Signature Page

WITNESS:	BORROWER:
	NXRTBH VANDERBILT, LLC, a Delaware
/s/ Sarah Bell	limited liability company
Print Name: Sarah Bell
		By:	/s/ Matt McGraner (SEAL)
		Name:	Matt McGraner
		Authorized Signatory

[Signatures Continue on the Following Page]

Signature Page

WITNESS:	BORROWER:
	FRBH TOSCANA, LLC,
/s/ Sarah Bell
Print Name: Sarah Bell
	By:	FRBH Cl Residential, LLC, a Delaware
		limited liability company, its sole member
		By:	/s/ Matt McGraner (SEAL)
		Name:	Matt McGraner
		Authorized Signatory

[Signatures Continue on the Following Page]

Signature Page

WITNESS:	BORROWER:
	FRBH CP, LLC,
/s/ Sarah Bell
Print Name: Sarah Bell
	By:	FRBH Cl Residential, LLC, a Delaware
		limited liability company, its sole member
		By:	/s/ Matt McGraner (SEAL)
		Name:	Matt McGraner
		Authorized Signatory

[Signatures Continue on the Following Page]

Signature Page

WITNESS:	BORROWER:
	FRBH SILVERBROOK, LLC,
/s/ Sarah Bell
Print Name: Sarah Bell
	By:	FRBH Cl Residential, LLC, a Delaware
		limited liability company, its sole member
		By:	/s/ Matt McGraner (SEAL)
		Name:	Matt McGraner
		Authorized Signatory

[Signatures Continue on the Following Page]

Signature Page

WITNESS:	BORROWER:
	FRBH EAGLECREST, LLC,
/s/ Sarah Bell
Print Name: Sarah Bell
	By:	FRBH Cl Residential, LLC, a Delaware
		limited liability company, its sole member
		By:	/s/ Matt McGraner (SEAL)
		Name:	Matt McGraner
		Authorized Signatory

[Signatures Continue on the Following Page]

Signature Page

WITNESS:	BORROWER:
	FRBH TIMBERGLEN, LLC,
/s/ Sarah Bell
Print Name: Sarah Bell
	By:	FRBH Cl Residential, LLC, a Delaware
		limited liability company, its sole member
		By:	/s/ Matt McGraner (SEAL)
		Name:	Matt McGraner
		Authorized Signatory

[Signatures Continue on the Following Page]

Signature Page

WITNESS:	BORROWER:
	FRBH ARBORS, LLC,
/s/ Sarah Bell
Print Name: Sarah Bell
	By:	FRBH Cl Residential, LLC, a Delaware
		limited liability company, its sole member
		By:	/s/ Matt McGraner (SEAL)
		Name:	Matt McGraner
		Authorized Signatory

[Signatures Continue on the Following Page]

Signature Page

WITNESS:	LENDER:
/s/ Artis Y. Dunford	KEYBANK NATIONAL ASSOCIATION,
Print Name: Artis Y. Dunford	a national banking association
	By:	/s/ Tonya E. Barnes
	Name:	Tonya E. Barnes
	Title:	Vice President

Signature Page

SCHEDULE 1.1(A)

LIST OF COLLATERAL POOL PROPERTIES

AND ASSOCIATED INITIAL NET OPERATING INCOMES AND MARKET VALUES

Collateral Pool Property	Initial Net Operating Income	Initial Market Value	Initial Allocated Loan Amount
Arbors on Forest Ridge	$895,350	$16,600,000	$12,450,000
Cutters Point	$1,046,405	$20,200,000	$15,150,000
Eagle Crest	$1,885,806	$34,400,000	$25,800,000
The Place at Vanderbilt	$960,546	$20,400,000	$14,050,000
Silverbrook	$2,324,741	$40,300,000	$30,225,000
Timberglen	$1,314,105	$24,100,000	$18,075,000
Toscana	$654,428	$12,100,000	$9,075,000
Beechwood Terrace	$1,586,887	$26,700,000	$20,025,000
Willow Grove	$1,195,645	$19,200,000	$14,400,000
Woodbridge	$1,198,589	$20,500,000	$15,375,000
Edgewater at Sandy Springs	$3,884,934	$75,300,000	$56,475,000

Schedule 1.1(A)

SCHEDULE 1.1(B)

LIST OF

COLLATERAL POOL PROPERTY DOCUMENTS

(a) Multifamily Mortgage/Deed of Trust/Deed to Secure Debt Assignment of Rents, Security Agreement and Fixture Filing

(b) Multifamily Loan and Security Agreement

(c) UCC-1 Financing Statements

(d) Documents evidencing O & M Programs (if any)

(e) Title insurance policy acceptable to Lender, in an amount equal to not less than the Initial Market Value of such Mortgaged Property, which title insurance shall include the following endorsements (where and if applicable): (i) a tie-in or aggregate endorsement, (ii) a multiple foreclosure endorsement, (iii) a first loss endorsement, (iv) a last dollar endorsement, (v) a variable rate mortgage endorsement, and (vi) a revolving credit endorsement

Schedule 1.1(B)

[BORROWER MAY, SUBJECT TO LENDER’S CONSENT, REVISE THIS FORM OF LOAN REQUEST TO PROVIDE FOR MULTIPLE BORROWING TRANCHES UNDER A SINGLE LOAN REQUEST FORM]

SCHEDULE 2.1.2

FORM OF

LOAN REQUEST

______________, 20__

[Lender’s Name and Address]

Attention:

Ladies and Gentlemen:

Reference is made to the Credit Agreement dated as of __________, 20____, as amended (the “Credit Agreement”) by and between _________________________, a ______________________, having an address at _________________________________________ (“Borrower”) and _______________________, a ______________________ (“Lender”).  Unless otherwise defined herein, terms defined in the Credit Agreement are used herein with the same meanings.

I, _______________, the _______________ ofBorrower, a _______________, do hereby certify on behalf ofBorrower as of the date hereof, as follows:

Borrower is entitled to and hereby requests Lender to make an advance under the Credit Agreement in the amount of $__________ (which must be greater than or equal to $______________.  Funds should be delivered to Borrower by wire to the following account:

Bank Name and Location:  

ABA Number:  

Account Name:  

Account Number:  

Further Credit Instructions:  

Attention:  

1. The requested date of the advance (the “Borrowing Date”) is ______________.

2. The Borrowing Tranche or [increase of an existing Borrowing Tranche as requested herein] shall bear interest at (check one):

Prime Rate*

Base Rate

Fixed Rate**

*  Prime Rate is available only as specified in the Credit Agreement

Schedule 2.1.2

**  Fixed Rate is available only as specified in the Credit Agreement.

3. The Interest Period (if the Base Rate is selected) applicable to the advance is (check one):

1-month

3-month*

*subject to a [___] ([__]) basis point ([____]) increase in the Margin otherwise applicable to such Borrowing Tranche

4. Borrower will (check one):

Pay all interest due and payable under the Borrowing Tranche [requested herein] or [as increased by this requested advance] in monthly installments pursuant to the terms of the Credit Agreement.

Prepay all interest for such Borrowing Tranche as of the Borrowing Date.

5. If applicable, the Base Rate for the Base Rate Borrowing Tranche requested hereunder shall be __% consisting of a LIBOR Index Rate of ___ % and a Margin of __%.  

6. Following the disbursement of the funds comprising the Borrowing Tranche [requested herein] or [as increased as requested herein], the total number of Borrowing Tranches outstanding will be __, which is not more than ___.

7. If applicable (i.e. in the event of a Loan Request for [a Borrowing Tranche] or [increase of an existing Borrowing Tranche], the maturity date of the Interest Period of the Borrowing Tranche [requested herein] or [increased herein] is (choose and complete one of the following):

____________, 20__ (which is the last day of the Interest Period, in the event that such date is a Business Day)

______________, 20__ (which is the Business Day following the last day of the Interest Period, in the event that such date is not a Business Day).

8. This request for an advance is made pursuant to and in accordance with the provisions of the Credit Agreement.  The proceeds of such advance are to be used for a permitted purpose under Section 17 of the Revolving Credit Note.

9. The principal amount outstanding under the Credit Agreement on the date hereof, prior to any advance in response to this request, is $_____________.

10. To the best of Borrower’s Knowledge following diligent inquiry, the advance of the funds requested herein will not cause Borrower to be in non-compliance with the Sublimits set forth in Section 2.1.4 of the Credit Agreement.

Schedule 2.1.2

11. Guarantor is in compliance with the requirements set forth in Section 8.10 of the Credit Agreement relating to the Minimum Net Worth and Liquidity requirements.

12. To the best of Borrower’s Knowledge following diligent inquiry, the computations set forth in Paragraphs [20] through [23] as certified by Servicer are accurate.

13. Except as set forth herein and approved by Lender, all of the representations and warranties contained in the Credit Agreement and the other Loan Documents are true and correct on the date hereof, and will continue to be true and correct on the Borrowing Date.

14. No Potential Default or Event of Default exists as of the date hereof and the Borrowing Date.

15. All of the other terms and conditions set forth in the Credit Agreement and the other Loan Documents pertaining to the Loan have been satisfied.

16. All items that Borrower and Guarantor are required to furnish to Lender pursuant to the Credit Agreement to accompany this request are true and complete in all material respects.

17. The undersigned is an Authorized Officer of Borrower.

18. Notice of this Loan Request shall be deemed received by Lender when (i) sent by facsimile to (_____) ____-________ and (ii) verbally confirmed by telephone call to either (when called in the following order of priority):  (1) __________ (__________), (2) __________ (__________), (3) __________ (__________) or such additional names and numbers as Lender may specify upon prior written Notice to Borrower.

[The Loan Request continues on the following page]

Schedule 2.1.2

IN WITNESS WHEREOF, the undersigned has executed this Certificate this ______ day of ___________, ____.

BORROWER:

	,
a

By:
	Name:
	Title:

As to item 11 set forth herein:

GUARANTOR:

	,
a

By:

Name:

Title:

[The Loan Request continues on the following page]

Schedule 2.1.2

19. The current LTV Ratio is ___%, which is less than or equal to the Maximum LTV Ratio specified in Section 2.1.4.1 of ___%, determined as follows:

A.	The current Loan balance	$_____________
B.	The current aggregate Market Value of the Collateral Pool	$____________
C.	Item A divided by Item B and then multiplied by 100% equals the LTV Ratio	____________%

20. Following the disbursement of the funds comprising the Borrowing Tranche [requested herein] or [increased herein], the LTV Ratio will equal ___%, which is less than or equal to the Maximum LTV Ratio set forth in Schedule 2.1.4.1 of the Credit Agreement of ___%, determined as follows:

A.	The Loan balance upon disbursement of the funds comprising the Borrowing Tranche(s) requested herein	$_____________
B.	The current aggregate Market Value of the Collateral Pool	$____________
C.	Item A divided by Item B and then multiplied by 100% equals the LTV Ratio	____________%

21. The current Aggregate DSCR is ______ : 1.00, which is not less than _____ : 1.00, as set forth in Section 2.1.4.2 of the Credit Agreement determined as follows:

A.	Net Operating Income of the Collateral Pool Properties determined by Lender	$_____________
B.	Aggregate Stressed Debt Service (as defined in the Credit Agreement)	$____________
C.	Item A divided by Item B equals the Aggregate DSCR	____________%

Schedule 2.1.2

22.Following the disbursement of the funds comprising the Borrowing Tranche [requested herein] or [increased herein] the Aggregate DSCR will be ______ : 1.00, which is not less than_____ : 1.00, as set forth in Section 2.1.4.2 of the Credit Agreement determined as follows:

A.	Net Operating Income of the Collateral Pool Properties as determined by Lender	$_____________
B.	Aggregate Stressed Debt Service (as defined in the Credit Agreement)	$____________
C.	Item A divided by Item B equals the Aggregate DSCR	____________%

Servicer hereby certifies (i) to the accuracy of each of the mathematical computations set forth in paragraphs s through v above (acknowledging that Servicer has relied, with Lender’s consent and without independent verification thereof, on the Net Operating Income and Market Value(s) prepared by Lender), and (ii) to the best of its knowledge and belief, that all statements made by Borrower herein are true and accurate in all material respects.

SERVICER:

	,
a

By:
	Name:
	Title:

Dated:

Schedule 2.1.2

SCHEDULE 2.1.4

FORM OF NOTICE FOR SUBLIMIT VIOLATIONS

[DATE]

Re:
Dear	:

In accordance with the Credit Agreement by and between ____________, a ___________ (individually and collectively, the “Borrower”) and [____________________], a [____________________] (“Servicer”) dated [____] [__], 20__, requires a Valuation of each of the Collateral Pool Properties.  Such Valuation has been performed in accordance with Freddie Mac’s current underwriting policies, practices and procedures  subject to the terms and provisions of Section 1.2.3 of the Credit Agreement) and is based in large part, but not entirely, on Borrower’s supplied property level financial statements as provided to the Servicer.  Based on this analysis, Freddie Mac has determined the following LTV Ratio, Aggregate DSCR and NOI:

LTV Ratio:

Aggregate DSCR:

NOI:

The [LTV Ratio] [and] [Aggregate DSCR] are not in compliance with the Sublimits set forth in [Sections 2.1.4.1 and 2.1.4.2][Section 2.1.4.1][Section 2.1.4.2] of the Credit Agreement, and Borrower shall comply with Section 5.4.2 of the Credit Agreement.

Please call the undersigned at ______________________________ if you have any questions.

Sincerely,

Schedule 2.1.4

SCHEDULE 2.3

FORM OF

[SCHEDULED MATURITY DATE EXTENSION CONFIRMATION] OR [NET SPREAD TABLE AFTER EXPANSION TO LOAN CONFIRMATION]

[______________], 20[__]

[__________]

[__________]

[__________]

[__________]

Attention:  [__________]

Ladies and Gentlemen:

Reference is made to that Credit Agreement dated as of [__________], as amended (the “Credit Agreement”) initially by and between [__________], a [__________], having an address at [__________] (“Borrower”) and [__________], a [__________], having an address at [__________] (together with its successors and assigns, “Lender”).  Unless otherwise defined herein, terms defined in the Credit Agreement are used herein with the same meanings.

Pursuant to Section 2.4.3 of the Credit Agreement, the Borrower has elected to increase the Loan as set forth in Section 2.4.3 of the Credit Agreement, and the Net Spread applicable to any Borrowing Tranche on or after such increase shall be as set forth on Exhibit A hereto. OR  

Pursuant to Section [2.3.1 or 2.3.2] of the Credit Agreement, the [First Option to Extend or Second Option to Extend] has been exercised, the [Maturity Date or First Extended Maturity Date] has been extended as set forth in [Section 2.3.1 or 2.3.2] of the Credit Agreement, and the Net Spread applicable to any Borrowing Tranche on or after the initial Scheduled Maturity Date shall be as set for the on Exhibit A hereto.

Sincerely,

LENDER:

, a

By:

Name:

Title:

[signatures continue on next page]

Schedule 2.3

ACKNOWLEDGED AND AGREED

BORROWER:

, a

By:

Name:

Title:

Schedule 2.3

EXHIBIT A TO SCHEDULE 2.3

[NET SPREAD TABLE APPLICABLE DURING AN EXTENSION PERIOD] OR [NET SPREAD TABLE APPLICABLE AFTER AN EXPANSION TO THE COMMITMENT]

Aggregate DSCR	Net Spread*	Margin*
Greater than or equal to [__] : 1.00 but less than [__]: 1.00	[_______]	[_______]
Greater than or equal to [__]: 1.00 but less than [___]: 1.00	[_______]	[_______]
Greater than or equal to [___] : 1.00	[_______]	[_______]

The Net Spread and Margin set forth above each assumes that the Base Rate Borrowing Tranche will have a one (1) month Interest Period.  [The Net Spread and Margin shall be increased by [__] basis points ([___]) for any Base Rate Borrowing Tranche having a three-month Interest Period]

Schedule 2.3

SCHEDULE 4.2.3

NET SPREAD TABLE

Aggregate DSCR	Net Spread*	Margin*
Greater than or equal to 1.45: 1.00 but less than 1.65: 1.00	235 basis points (0.0235)	240 basis points (0.0240)
Greater than or equal to 1.65: 1.00 but less than 1.85: 1.00	225 basis points (0.0225)	230 basis points (0.0230)
Greater than or equal to 1.85: 1.00	215 basis points (0.0215)	220 basis points (0.0220)

* The Net Spread and Margin set forth above assume that the Borrowing Tranches will have a one-month Interest Period.  The Net Spread and Margin shall be increased by 0.001 for any Base Rate Borrowing Tranche having a 3 month Interest Period.

Schedule 4.2.3

[BORROWER MAY, SUBJECT TO LENDER’S CONSENT, REVISE THIS FORM OF RENEWAL REQUEST TO PROVIDE FOR THE RENEWAL OF MULTIPLE BORROWING TRANCHES UNDER A SINGLE RENEWAL REQUEST FORM OR TO PROVIDE FOR THE SPLITTING OF A MATURING BORROWING TRANCHE INTO MULTIPLE BORROWING TRANCHES UNDER A SINGLE RENEWAL REQUEST FORM OR THE CONVERSION OF A FIXED RATE BORROWING TRANCHE TO A BASE RATE BORROWING TRANCHE PURSUANT TO THE CREDIT AGREEMENT]

SCHEDULE 4.3.3

RENEWAL [CONVERSION] REQUEST

______________, 20__

[Lender’s Name and Address]

Attention:

Ladies and Gentlemen:

Reference is made to the Credit Agreement dated as of _____________, 20___, as amended (the “Credit Agreement”) by between ______________________, a _____________________ (individually and collectively the “Borrower”) and [_____________________], a [____________________] (“Lender”).  Unless otherwise defined herein, terms defined in the Credit Agreement are used herein with the same meanings.

I, __________________, the _______________ ofBorrower, a __________________________, do hereby certify on behalf of each Borrower as of the date hereof, as follows:

_____Borrower hereby requests Lender to renew the Borrowing Tranche in the amount of $______________, whose then-current Interest Period will mature on ___________, ____.  

or

_____  Borrower, in accordance with the provisions of the Credit Agreement, will repay $___________ of the outstanding principal amount of the Borrowing Tranche originally funded in the amount of $____________, whose Interest Period will mature on ________, ____, prior to such maturity date, and hereby requests Lender to renew such Borrowing Tranche in the amount of the remaining principal balance of such Borrowing Tranche, the remaining principal balance being equal to $___________.

[or

_____  Borrower hereby requests Lender to combine 2 or more Borrowing Tranches pursuant to the provisions of the Credit Agreement into a single Borrowing Tranche, specifically Borrower hereby requests that Lender combine the Borrowing Tranche in the amount of $______________, whose Interest Period will mature on ___________, ____ with the Borrowing

Schedule 4.3.3

Tranche in the amount of $______________, whose Interest Period will mature on ___________, ____ [add descriptions of additional Borrowing Tranches as necessary.]

[or Borrower in accordance with the provisions of the Credit Agreement will convert the Fixed Rate Borrowing Tranche in the amount of $__________ to a Base Rate Borrowing Tranche in the amount of $__________]

1. The Borrowing Tranche shall bear interest at (check one):

Prime Rate*

Base Rate

* Prime Rate is available only as specified in the Credit Agreement

2. The Interest Period (if the Base Rate is selected) applicable to the renewed Borrowing Tranche [converted Fixed Rate Borrowing Tranche) is (check one):

one-month

three-month*

* subject to a [____]([__]) basis point ([_____]) increase in the Margin otherwise applicable to such Borrowing Tranche

3. Borrower will (check one):

Pay all interest due and payable under the requested Borrowing Tranche in monthly installments pursuant to the terms of the Credit Agreement.

Prepay all interest for such Borrowing Tranche as of the Borrowing Date.

4. The principal amount outstanding under the Credit Agreement on the date hereof, prior to any advance in response to this request, is $_____________.

5. If applicable, the Base Rate for the Borrowing Tranche renewed hereunder [Fixed Rate Tranche converted hereunder]shall be ____% consisting of a LIBOR Index Rate of ____% and a Margin of ____%.  

6. If applicable (i.e. in the event of the renewal of a Borrowing Tranche [or conversion of a Fixed Rate Borrowing Tranche]), the maturity date of the Interest Period of the Borrowing Tranche requested herein is (choose and complete one of the following):

____________, 20__ (which is the last day of the Interest Period, in the event that such date is a Business Day)

______________, 20__ (which is the Business Day following the last day of the Interest Period, in the event that such date is not a Business Day).

Schedule 4.3.3

7. To the best of Borrower’s Knowledge following diligent inquiry, the computations set forth in Paragraphs 12 through 14 as certified by Servicer are accurate.

8. Except as set forth herein and approved by Lender, all of the representations and warranties contained in the Credit Agreement and the other Loan Documents are true and correct on the date hereof, will continue to be true and correct as of the date of renewal [the conversion].

9. No Potential Default or Event of Default exists as of the date hereof and as of the date of renewal.

10. [Check one of the following:]

____ No Potential Default or Event of Default exists as of the date hereof and as of the date of renewal.

____ No  Potential Default or Event of Default exists as of the date hereof and as of the date of renewal, other than Borrower’s non-compliance with [Sections 2.1.4.1 and 2.1.4.2] [Section 2.1.4.1] [Section 2.1.4.2] of the Credit Agreement, and the renewal of any Borrowing Tranche hereunder will not increase the outstanding principal balance of the Loan.

11. All of the other terms and conditions set forth in the Credit Agreement and the other Loan Documents pertaining to the Loan have been satisfied.

12. The undersigned is an Authorized Officer of Borrower.

13. Notice of this Loan Request shall be deemed received by Lender when (i) sent by facsimile to (____) ____-_________and (ii) verbally confirmed by telephone call to either (when called in the following order of priority):  (1)  [__________] ([__________]), (2) [__________] ([__________]), (3) [__________] ([__________] or such other names and numbers as Lender may specify upon prior written notice to Borrower.

[The Renewal Request continues on the following page]

Schedule 4.3.3

IN WITNESS WHEREOF, the undersigned has executed this Certificate this ______ day of ___________, ____.

BORROWER:

	,
a

By:
	Name:
	Title:

[The Renewal Request continues on the following page]

Schedule 4.3.3

13. The current LTV Ratio  is ___________(__%), which is less than or equal to the Maximum LTV Ratio set forth in Section 2.1.4.1 of the Credit Agreement of ________________ percent (____%), determined as follows:

A.	The current Loan balance	$_____________
B.	The current aggregate Market Value of the Collateral Pool	$_____________
C.	Item A divided by Item B and then multiplied by 100% equals the LTV Ratio	____________%

14. The current Aggregate DSCR is [___] : 1.00, which [check one:]

___ is less than _____ : 1.00, or

___ is greater than or equal to _____: 1.00,

determined as follows:

A.	Net Operating Income of the Collateral Pool Properties determined by Lender	$_____________
B.	Aggregate Stressed Debt Service (as defined in the Credit Agreement)	$_____________
C.	Item A divided by Item B equals the Aggregate DSCR	____________%

15. Following the renewal of the Borrowing Tranche [conversion of the Fixed Rate Borrowing Tranche] for the Interest Period requested herein, the Aggregate DSCR will be ______ : 1.00, which [check one:]

___ is less than ____ : 1.00, or

___ is greater than or equal to _____ : 1.00,

Schedule 4.3.3

determined as follows:

A.	Net Operating Income of the Collateral Pool Properties as determined by Lender	$_____________
B.	Aggregate Stressed Debt Service (as defined in the Credit Agreement)	$_____________
C.	Item A divided by Item B equals the Aggregate DSCR	____________%

Servicer hereby certifies (i) to the accuracy of each of the mathematical computations set forth in paragraphs 12 through 14 above (acknowledging that Servicer has relied, with Lender’s consent and without independent verification thereof, on the Net Operating Income and Market Value(s) prepared by Lender), and (ii) to the best of its knowledge and belief, that all statements made by Borrower herein are true and accurate in all material respects.

SERVICER:

	,
a

By:
	Name:
	Title:

Dated:

Schedule 4.3.3

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO RULE 13a-14(a)/15d-14(a)

AS ADOPTED PURSUANT TO SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

I, Jim Dondero, certify that:

1. I have reviewed this quarterly report on Form 10-Q of NexPoint Residential Trust, Inc.;

2. Based on my knowledge, this quarterly 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)) 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) intentionally omitted;

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 the 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.

Date: August 11, 2016

/s/  Jim Dondero

Jim Dondero

President

(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO RULE 13a-14(a)/15d-14(a)

AS ADOPTED PURSUANT TO SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

I, Brian Mitts, certify that:

1. I have reviewed this quarterly report on Form 10-Q of NexPoint Residential Trust, Inc.;

2. Based on my knowledge, this quarterly 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)) 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) intentionally omitted;

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 the 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.

Date: August 11, 2016

/s/ Brian Mitts

Brian Mitts

Chief Financial Officer

(Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF

THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of NexPoint Residential Trust, Inc. (the “Company”) for the period ending June 30, 2016, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, Jim Dondero, President of the Company, and Brian Mitts, Chief Financial Officer of the Company, each certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 that:

1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and  

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods indicated.  

Dated: August 11, 2016	/s/ Jim Dondero
	Jim Dondero President (Principal Executive Officer)
Dated: August 11, 2016	/s/ Brian Mitts
	Brian Mitts Chief Financial Officer (Principal Financial Officer)

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2016	Aug. 08, 2016
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2016
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q2
Trading Symbol	NXRT
Entity Registrant Name	NexPoint Residential Trust, Inc.
Entity Central Index Key	0001620393
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		21,266,770

XML

CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Operating Real Estate Investments
Land (including from VIEs of $94,962 and $163,462, respectively)	$ 152,132	$ 177,152
Buildings and improvements (including from VIEs of $363,453 and $642,936, respectively)	630,943	729,675
Intangible lease assets		2,573
Construction in progress (including from VIEs of $1,678 and $5,070, respectively)	2,562	5,346
Furniture, fixtures, and equipment (including from VIEs of $16,649 and $25,715, respectively)	29,867	28,009
Total Gross Operating Real Estate Investments	815,504	942,755
Accumulated depreciation and amortization (including from VIEs of $24,788 and $36,112, respectively)	(46,788)	(39,873)
Total Net Operating Real Estate Investments	768,716	902,882
Real estate held for sale (net of accumulated depreciation of $7,016 and $0, respectively) (including from VIEs of $81,090 and $0, respectively)	81,090
Total Net Real Estate Investments	849,806	902,882
Cash and cash equivalents (including from VIEs of $14,270 and $13,271, respectively)	28,550	16,226
Restricted cash (including from VIEs of $27,279 and $43,500, respectively)	34,200	46,869
Accounts receivable (including from VIEs of $878 and $1,517, respectively)	1,783	2,122
Prepaid and other assets (including from VIEs of $1,510 and $1,724, respectively)	3,093	1,961
TOTAL ASSETS	917,432	970,060
LIABILITIES AND EQUITY
Mortgages payable, net (including from VIEs of $161,239 and $609,703, respectively)	388,337	676,324
Mortgages payable held for sale, net (including from VIEs of $65,726 and $0, respectively)	65,726
Credit facility, net	196,290
Bridge facility, net	1,972	28,805
Accounts payable and other accrued liabilities (including from VIEs of $1,525 and $4,049, respectively)	3,789	5,106
Accrued real estate taxes payable (including from VIEs of $3,572 and $5,723, respectively)	5,988	6,057
Accrued interest payable (including from VIEs of $895 and $1,332, respectively)	1,031	1,462
Security deposit liability (including from VIEs of $780 and $1,277, respectively)	1,324	1,544
Prepaid rents (including from VIEs of $832 and $1,633, respectively)	1,231	1,824
Total Liabilities	665,688	721,122
NexPoint Residential Trust, Inc. stockholders' equity:
Preferred stock, $0.01 par value: 100,000,000 shares authorized; 0 shares issued
Common stock, $0.01 par value: 500,000,000 shares authorized; 21,293,825 shares issued	213	213
Additional paid-in capital	240,625	240,625
Accumulated deficit	(12,791)	(18,593)
Accumulated other comprehensive loss	(737)	(697)
Common stock held in treasury at cost; 5,000 and 0 shares, respectively	(88)
Noncontrolling interests	24,522	27,390
Total Equity	251,744	248,938
TOTAL LIABILITIES AND EQUITY	$ 917,432	$ 970,060

XML

CONSOLIDATED BALANCE SHEETS (Parenthetical) (Unaudited) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Land	$ 152,132	$ 177,152
Buildings and improvements	630,943	729,675
Construction in progress	2,562	5,346
Furniture, fixtures, and equipment	29,867	28,009
Accumulated depreciation and amortization	46,788	39,873
Real estate held for sale	81,090
Net of accumulated depreciation	81,090	0
Cash and cash equivalents	28,550	16,226
Restricted cash	34,200	46,869
Accounts receivable	1,783	2,122
Prepaid and other assets	3,093	1,961
Mortgages payable, net	388,337	676,324
Mortgages payable held for sale, net	65,726
Accounts payable and other accrued liabilities	3,789	5,106
Accrued real estate taxes payable	5,988	6,057
Accrued interest payable	1,031	1,462
Security deposit liability	1,324	1,544
Prepaid rents	$ 1,231	$ 1,824
Preferred stock, shares authorized	100,000,000	100,000,000
Preferred stock, shares issued	0	0
Preferred stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	500,000,000	500,000,000
Common stock, shares, issued	21,293,825	21,293,825
Common stock, par value	$ 0.01	$ 0.01
Treasury stock, shares	5,000	0
VIE
Land	$ 94,962	$ 163,462
Buildings and improvements	363,453	642,936
Construction in progress	1,678	5,070
Furniture, fixtures, and equipment	16,649	25,715
Accumulated depreciation and amortization	24,788	36,112
Real estate held for sale	7,016	0
Cash and cash equivalents	14,270	13,271
Restricted cash	27,279	43,500
Accounts receivable	878	1,517
Prepaid and other assets	1,510	1,724
Mortgages payable, net	161,239	609,703
Mortgages payable held for sale, net	65,726	0
Accounts payable and other accrued liabilities	1,525	4,049
Accrued real estate taxes payable	3,572	5,723
Accrued interest payable	895	1,332
Security deposit liability	780	1,277
Prepaid rents	$ 832	$ 1,633

XML

COMBINED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Revenues
Rental income	$ 29,404	$ 25,528	$ 58,774	$ 48,219
Other income	4,253	3,219	8,394	6,066
Total revenues	33,657	28,747	67,168	54,285
Expenses
Property operating expenses	9,691	8,293	19,073	15,612
Acquisition costs		238		2,169
Real estate taxes and insurance	4,090	3,577	8,353	6,955
Property management fees (related party)	1,013	858	2,018	1,617
Advisory and administrative fees (related party)	1,630	1,439	3,246	2,715
Corporate general and administrative expenses	844	831	1,626	831
Property general and administrative expenses	1,612	1,488	2,946	2,635
Depreciation and amortization	8,084	10,050	17,696	21,660
Total expenses	26,964	26,774	54,958	54,194
Operating income	6,693	1,973	12,210	91
Interest expense	(6,467)	(4,239)	(11,693)	(8,248)
Gain on sales of real estate	16,370		16,370
Net income (loss)	16,596	(2,266)	16,887	(8,157)
Net income (loss) attributable to noncontrolling interests	2,006	(12)	2,312	(506)
Net income (loss) attributable to common stockholders	14,590	(2,254)	14,575	(7,651)
Other comprehensive income (loss)
Net losses related to interest rate cap valuations	(12)	(126)	(44)	(396)
Total comprehensive income (loss)	16,584	(2,392)	16,843	(8,553)
Comprehensive income (loss) attributable to noncontrolling interests	2,005	(25)	2,308	(543)
Comprehensive income (loss) attributable to common stockholders	$ 14,579	$ (2,367)	$ 14,535	$ (8,010)
Weighted average common shares outstanding - basic and diluted	21,294	21,294	21,294	21,294
Dividends declared per common share	$ 0.206	$ 0.206	$ 0.412	$ 0.206
Earnings (loss) per share - basic and diluted (see Note 2)	$ 0.69	$ (0.11)	$ 0.68	$ (0.36)

XML

CONSOLIDATED STATEMENTS OF EQUITY (Unaudited) - 6 months ended Jun. 30, 2016 - USD ($) $ in Thousands	Total	Common Stock	Additional Paid-in Capital	Accumulated Deficit	Accumulated Other Comprehensive Loss	Common Stock Held in Treasury at Cost	Noncontrolling Interests
Beginning Balance, Values at Dec. 31, 2015	$ 248,938	$ 213	$ 240,625	$ (18,593)	$ (697)		$ 27,390
Beginning Balance, Shares at Dec. 31, 2015	21,293,825	21,294,000
Purchase of common stock	$ (88)					$ (88)
Distributions	(13,949)						(5,176)
Dividends				(8,773)
Other comprehensive income (loss)	(44)				(40)		(4)
Net income	16,887			14,575			2,312
Ending Balances, Values at Jun. 30, 2016	$ 251,744	$ 213	$ 240,625	$ (12,791)	$ (737)	$ (88)	$ 24,522
Ending Balances, Shares at Jun. 30, 2016	21,293,825	21,294,000

XML

COMBINED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Cash flows from operating activities
Net income (loss)	$ 16,887	$ (8,157)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Gain on sales of real estate	(16,370)
Depreciation and amortization	17,696	21,660
Amortization of deferred financing costs	983	540
Change in fair value on derivative instruments included in interest expense	6	166
Amortization of fair market value adjustment of assumed debt	(55)	(55)
Noncash contributions		1,277
Changes in operating assets and liabilities, net of effects of acquisitions:
Accounts receivable	339	(668)
Prepaid and other assets	(1,182)	(418)
Restricted cash	3,950	(4,253)
Accounts payable and other accrued liabilities	(1,830)	(1,478)
Net cash provided by operating activities	20,424	8,614
Cash flows from investing activities
Net proceeds from sales of real estate	63,220
Change in restricted cash	8,719	(5,558)
Prepaid acquisition deposits		(2,088)
Additions to operating real estate investments	(12,265)	(17,230)
Acquisitions of operating real estate investments		(164,578)
Net cash provided by (used in) investing activities	59,674	(189,454)
Cash flows from financing activities
Mortgage proceeds received		124,990
Mortgage payments	(224,199)	(6,391)
Credit facility proceeds received	200,000
Bridge facility payments	(27,000)
Deferred financing fees paid	(2,538)	(1,519)
Interest rate cap fees paid		(253)
Due to affiliates		454
Purchase of common stock held in treasury	(88)
Distributions to noncontrolling interests	(5,176)	(1,136)
Dividends	(8,773)
Contributions from noncontrolling interests		7,628
Contributions		68,561
Net cash provided by (used in) financing activities	(67,774)	192,334
Net increase in cash	12,324	11,494
Cash, beginning of period	16,226	12,662
Cash, end of period	28,550	24,156
Supplemental Disclosure of Cash Flow Information
Interest paid	11,178	7,309
Supplemental Disclosure of Noncash Investing and Financing Activities
Capitalized construction costs included in accounts payable and other accrued liabilities	800	1,322
Change in fair value on hedging instruments designated as hedges	$ 44	396
Dividend declared and payable		4,387
Liabilities assumed from acquisitions		1,104
Other assets acquired from acquisitions		298
Assumed debt on acquisitions of operating real estate investments		$ 18,000

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Organization and Description of Business

6 Months Ended

Jun. 30, 2016

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Organization and Description of Business

1. Organization and Description of Business

NexPoint Residential Trust, Inc. (the “Company”, “we”, “our”) was incorporated on September 19, 2014, and intends to be taxed as a real estate investment trust (“REIT”). The Company is focused on “value-add” multifamily investments primarily located in the Southeastern and Southwestern United States. Substantially all of the Company’s business is conducted through NexPoint Residential Trust Operating Partnership, L.P. (the “OP”), the Company’s operating partnership. The Company holds all or a majority interest in its properties (the “Portfolio”) through the OP. The Company’s wholly owned subsidiary, NexPoint Residential Trust Operating Partnership GP, LLC (the “OP GP”) is the sole general partner of the OP. The sole limited partner of the OP is the Company.

The Company began operations on March 31, 2015 as a result of the transfer and contribution by NexPoint Credit Strategies Fund (“NHF”) of all but one of the multifamily properties owned by NHF through its subsidiary Freedom REIT, LLC (“Freedom REIT”). We use the term “predecessor” to mean the carve-out business of Freedom REIT. On March 31, 2015, NHF distributed all of the outstanding shares of the Company's common stock held by NHF to holders of NHF common shares. We refer to the distribution of our common stock by NHF as the “Spin-Off.”

We are externally managed by NexPoint Real Estate Advisors, L.P., (the “Adviser”), through an agreement, as amended, dated March 16, 2015 (the “Advisory Agreement”), by and among the Company, the OP and our Adviser. The Advisory Agreement has a term of two years. Our Adviser conducts substantially all of our operations and provides asset management for our real estate investments. We will only have accounting employees while the Advisory Agreement is in effect. All of our investment decisions are made by our Adviser, subject to general oversight by our Adviser’s investment committee and our Board of Directors (the “Board”). Our Adviser is wholly owned by NexPoint Advisors, L.P. and is an affiliate of Highland Capital Management, L.P. (our “Sponsor” or “Highland”).

The Company’s investment objectives are to maximize the cash flow and value of properties owned, acquire properties with cash flow growth potential, provide quarterly cash distributions and achieve long-term capital appreciation for its stockholders through targeted management and a capex value-add program. Consistent with the Company’s policy to acquire assets for both income and capital gain, the Company intends to hold majority interests in the properties for long-term appreciation and to engage in the business of directly or indirectly acquiring, owning, and operating well-located multifamily properties with a value-add component in large cities and suburban submarkets of large cities primarily in the Southeastern and Southwestern United States consistent with its investment objectives. Economic and market conditions may influence the Company to hold properties for different periods of time. From time to time, the Company may sell a property if, among other deciding factors, the sale would be in the best interest of its stockholders.

The Company may also participate with third parties in property ownership, through limited liability companies (“LLCs”), funds or other types of co-ownership or acquire real estate or interests in real estate in exchange for the issuance of common stock, units, preferred stock or options to purchase stock. These types of investments may permit the Company to own interests in larger assets without unduly restricting diversification which provides flexibility in structuring the Company’s portfolio.

The Company may allocate up to thirty percent of the portfolio to investments in real estate-related debt and securities with the potential for high current income or total returns. These allocations may include first and second mortgages, subordinated, bridge, mezzanine, construction and other loans, as well as debt securities related to or secured by multifamily real estate and common and preferred equity securities, which may include securities of other REIT or real estate companies.

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Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2016

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

Predecessor

With the exception of a nominal amount of initial cash funded at inception, the Company did not own any assets prior to March 31, 2015. The business and operations of the Company prior to March 31, 2015 occurred under the predecessor. Our predecessor included all of the properties in our Portfolio that were held directly or indirectly by Freedom REIT, a wholly owned subsidiary of NHF, prior to the Spin-Off that occurred on March 31, 2015. However, our combined consolidated statements of operations and comprehensive income (loss) and combined consolidated statements of cash flows reflect operations of our predecessor through March 31, 2015 as if they were incurred by us. Our predecessor was determined in accordance with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). References throughout these combined consolidated financial statements to the “Company”, “we”, or “our”, include the activity of the predecessor defined above.

Basis of Accounting

The accompanying unaudited combined consolidated financial statements of the Company are prepared in accordance with Generally Accepted Accounting Principles (“GAAP”). The consolidated balance sheets include the accounts of the Company and its subsidiaries. Our predecessor combined consolidated financial statements were derived from the historical accounting records of our predecessor and reflect the historical results of operations and cash flows for the period prior to the Spin-Off. All intercompany balances and transactions are eliminated in combination and consolidation. The financial statements of the Company’s subsidiaries are prepared using accounting polices consistent with those of the Company. In addition, the Company evaluates relationships with other entities to identify whether there are variable interest entities (“VIE’s”) as required by the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 810, Consolidation, and to assess whether it is the primary beneficiary of such entities. If the determination is made that the Company is the primary beneficiary, then that entity is included in the financial statements in accordance with FASB ASC 810. In the opinion of the Company’s management, the accompanying combined consolidated financial statements include all adjustments and eliminations, consisting only of normal recurring items necessary for their fair presentation in conformity with GAAP. The unaudited information included in this quarterly report on Form 10-Q should be read in conjunction with our audited financial statements for the year ended December 31, 2015 and notes thereto included in our annual report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 21, 2016. There have been no significant changes to the Company’s significant accounting policies during the six months ended June 30, 2016.

Use of Estimates

The preparation of the combined consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the date of the combined consolidated financial statements, and the reported amounts of revenues and expenses during the reporting periods. It is at least reasonably possible that these estimates could change in the near term.

Real Estate Investments

Upon acquisition, in accordance with FASB ASC 805, Business Combinations, the purchase price of a property is allocated to land, buildings, improvements, furniture, fixtures, and equipment, and intangible lease assets. The purchase price allocation is based on management’s estimate of the property’s “as-if” vacant fair value, which is calculated by using all available information such as the replacement cost of such asset, appraisals, property condition reports, market data and other related information. The allocation of the purchase price to intangible lease assets represents the value associated with the in-place leases, which may include lost rent, leasing commissions, legal and other related costs, which the Company, as buyer of the property, did not have to incur to obtain the residents.

If any debt is assumed in an acquisition, the difference between the fair value and the face value of debt is recorded as a premium or discount and amortized to interest expense over the life of the debt assumed. Costs associated with the acquisition of a property, including acquisition fees paid, are expensed upon closing the acquisition.

The results of operations for acquired properties are included in the combined consolidated statements of operations and comprehensive income (loss) from their respective acquisition dates.

Real estate assets, including land, buildings, improvements, furniture, fixtures and equipment, and intangible lease assets are stated at historical cost less accumulated depreciation and amortization. Costs incurred in making repairs and maintaining real estate assets are expensed as incurred. Expenditures for improvements, renovations, and replacements are capitalized at cost. Real estate-related depreciation and amortization are computed on a straight-line basis over the estimated useful lives as described in the following table:

Land	Not depreciated
Buildings	30 years
Improvements	15 years
Furniture, fixtures, and equipment	3 years
Intangible lease assets	6 months

Construction in progress includes the cost of renovation projects being performed at the various properties. Once a project is complete, the historical cost of the renovation is placed into service in one of the categories above depending on the type of renovation project and is depreciated over the estimated useful lives as described in the table above.

The Company periodically classifies real estate assets as held for sale. An asset is classified as held for sale after an active program to sell the asset has commenced or the asset is under contract for sale and after the evaluation of other factors. Upon the classification of a real estate asset as held for sale, the carrying value of the asset is reduced to the lower of its net book value or its estimated fair value, less costs to sell the asset, and no further depreciation expense is recorded. Upon a decision to no longer market an asset for sale, the asset is classified as an operating asset and depreciation expense is reinstated. Real estate assets and the related debt held for sale are stated separately on the accompanying consolidated balance sheets.

Impairment

Real estate assets that are determined to be held and used will be reviewed periodically for impairment and whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In such cases, the Company will evaluate the recoverability of such real estate assets based on estimated future cash flows and the estimated liquidation value of such real estate assets, and provide for impairment if such undiscounted cash flows are insufficient to recover the carrying amount of the real estate asset. If impaired, the real estate asset will be written down to its estimated fair value. For the three and six month periods ended June 30, 2016 and 2015, the Company did not record any impairment charges related to real estate assets.

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Cash equivalents may include cash and short-term investments. Short-term investments are stated at cost, which approximates fair value.

Restricted Cash

Restricted cash is comprised of security deposits, operating escrows, and renovation value-add reserves. Security deposits are held until they are due to tenants and are credited against the balance. Operating escrows are required and held by our first mortgage lender(s) for items such as real estate taxes, insurance, and required repairs. Lender held escrows are released back to the joint venture upon the borrower’s proof of payment of such expenses. Renovation value-add reserves are funds identified to finance our value-add renovations at each of our properties and are not required to be held in escrow by a third party. The Company may reallocate these funds, at its discretion, to pursue other investment opportunities. The following is a summary of the restricted cash held as of June 30, 2016 and December 31, 2015 (in thousands):

	June 30, 2016		December 31, 2015
Security deposits	$	963	$	1,034
Operating escrows		17,433		21,312
Renovation value-add reserves		15,804		24,523
	$	34,200	$	46,869

Deferred Financing Costs

The Company defers costs incurred in obtaining financing and amortizes the costs over the terms of the related loans using the straight-line method, which approximates the effective interest method. Upon repayment of or in conjunction with a material change in the terms of the underlying debt agreement, any unamortized costs are charged to interest expense. Deferred financing costs, net of amortization, of $4.0 million and $6.0 million are recorded as a deduction from mortgages payable on the accompanying consolidated balance sheets as of June 30, 2016 and December 31, 2015, respectively. Deferred financing costs, net of amortization, of $3.7 million and $0.2 million are recorded as a deduction from the debt related to the Company’s credit facility and bridge facility on the accompanying consolidated balance sheets as of June 30, 2016 and December 31, 2015, respectively. Amortization of deferred financing costs of $0.7 million and $0.2 million is included in interest expense on the consolidated statements of operations and comprehensive income (loss) for the three months ended June 30, 2016 and 2015, respectively. For the three months ended June 30, 2016, the Company incurred amortization of deferred financing costs of approximately $0.3 million related to its sales of three properties (see Note 4). Amortization of deferred financing costs of $1.0 million and $0.6 million is included in interest expense on the combined consolidated statements of operations and comprehensive income (loss) for the six months ended June 30, 2016 and 2015, respectively.  

Noncontrolling Interests

Noncontrolling interests are comprised of the Company’s joint venture partners’ interests in the joint ventures in multifamily properties that the Company consolidates. The Company reports its joint venture partners’ interests in its consolidated real estate joint ventures and other subsidiary interests held by third parties as noncontrolling interests. The Company records these noncontrolling interests at their initial fair value, adjusting the basis prospectively for their share of the respective consolidated investment’s net income or loss and equity contributions and distributions. These noncontrolling interests are not redeemable by the equity holders and are presented as part of permanent equity. Income and losses are allocated to the noncontrolling interest holder based on its economic ownership percentage.

Accounting for Joint Ventures

The Company first analyzes its investments in joint ventures to determine if the joint venture is a VIE in accordance with FASB ASC 810, and if so, whether the Company is the primary beneficiary requiring consolidation. A VIE is an entity that has (i) insufficient equity to permit it to finance its activities without additional subordinated financial support or (ii) equity holders that lack the characteristics of a controlling financial interest. VIEs are consolidated by the primary beneficiary, which is the entity that has both the power to direct the activities that most significantly impact the VIE’s economic performance and the obligation to absorb losses or the right to receive benefits from the VIE that potentially could be significant to the primary beneficiary. Variable interests in a VIE are contractual, ownership, or other financial interests that change with changes in the fair value of the VIE’s net assets. The Company assesses at each level of the joint venture whether the entity is (i) a VIE, and (ii) if the Company is the primary beneficiary of the VIE. If an entity in which the Company holds a joint venture interest qualifies as a VIE and the Company is determined to be the primary beneficiary, the joint venture is consolidated.

The following table represents the Company’s investments in VIEs as of June 30, 2016 and December 31, 2015:

Property Name		Location	YearAcquired	Effective Ownership Percentage at June 30, 2016				Effective Ownership Percentage at December 31, 2015
Meridian		Austin, Texas	2014		—		(2)		90	%
The Grove at Alban	(1)	Frederick, Maryland	2014		76	%			76	%
Willowdale Crossing	(1)	Frederick, Maryland	2014		80	%			80	%
Abbington Heights		Antioch, Tennessee	2014		90	%			90	%
The Summit at Sabal Park		Tampa, Florida	2014		90	%			90	%
Courtney Cove		Tampa, Florida	2014		90	%			90	%
Colonial Forest	(1)	Jacksonville, Florida	2014		90	%			90	%
Park at Blanding	(1)	Orange Park, Florida	2014		90	%			90	%
Park at Regency		Jacksonville, Florida	2014		—		(2)		90	%
Jade Park	(1)	Daytona Beach, Florida	2014		90	%			90	%
Mandarin Reserve		Jacksonville, Florida	2014		—		(2)		90	%
Radbourne Lake		Charlotte, North Carolina	2014		90	%			90	%
Timber Creek		Charlotte, North Carolina	2014		90	%			90	%
Belmont at Duck Creek		Garland, Texas	2014		90	%			90	%
The Arbors		Tucker, Georgia	2014		90	%			90	%
The Crossings		Marietta, Georgia	2014		90	%			90	%
The Crossings at Holcomb Bridge		Roswell, Georgia	2014		90	%			90	%
The Knolls		Marietta, Georgia	2014		90	%			90	%
Regatta Bay		Seabrook, Texas	2014		90	%			90	%
Sabal Palm at Lake Buena Vista		Orlando, Florida	2014		90	%			90	%
Southpoint Reserve at Stoney Creek		Fredericksburg, Virginia	2014		85	%			85	%
Cornerstone		Orlando, Florida	2015		90	%			90	%
McMillan Place		Dallas, Texas	2015		90	%			90	%
Barrington Mill		Marietta, Georgia	2015		90	%			90	%
Dana Point		Dallas, Texas	2015		90	%			90	%
Heatherstone		Dallas, Texas	2015		90	%			90	%
Versailles		Dallas, Texas	2015		90	%			90	%
Seasons 704 Apartments		West Palm Beach, Florida	2015		90	%			90	%

(1) Properties are classified as held for sale as of June 30, 2016.

(2) Properties were sold during the six months ended June 30, 2016.

The following table represents the Company’s investments in voting interest entities as of June 30, 2016 and December 31, 2015:

Property Name	Location	YearAcquired	Effective Ownership Percentage at June 30, 2016			Effective Ownership Percentage at December 31, 2015
The Miramar Apartments	Dallas, Texas	2013		100	%		100	%
Arbors on Forest Ridge	Bedford, Texas	2014		90	%		90	%	(1)
Cutter’s Point	Richardson, Texas	2014		90	%		90	%	(1)
Eagle Crest	Irving, Texas	2014		90	%		90	%	(1)
Silverbrook	Grand Prairie, Texas	2014		90	%		90	%	(1)
Timberglen	Dallas, Texas	2014		90	%		90	%	(1)
Toscana	Dallas, Texas	2014		90	%		90	%	(1)
Edgewater at Sandy Springs	Atlanta, Georgia	2014		90	%		90	%	(1)
Beechwood Terrace	Nashville, Tennessee	2014		90	%		90	%	(1)
Willow Grove	Nashville, Tennessee	2014		90	%		90	%	(1)
Woodbridge	Nashville, Tennessee	2014		90	%		90	%	(1)
Madera Point	Mesa, Arizona	2015		95	%		95	%
The Pointe at the Foothills	Mesa, Arizona	2015		95	%		95	%
The Place at Vanderbilt	Fort Worth, Texas	2015		95	%		95	%

(1) Properties were considered VIEs at December 31, 2015.

In connection with its indirect equity investments in the properties acquired, the Company, through the OP, directly or indirectly holds membership interests in single-asset LLCs that directly own the properties. In instances where the Company acquires multiple properties under a single purchase and sale agreement (a “Portfolio Acquisition”), the Company directly or indirectly holds membership interests in the single-asset LLCs that directly own the properties through a multiple-asset LLC. Under these arrangements, the multiple-asset LLC is the sole member of all single-asset LLCs which directly own the properties. The majority of these entities are deemed to be VIEs as we have disproportionate voting rights (in the form of substantive participating rights over all of the decisions that are made that most significantly affect economic performance) relative to our economic interests in the entities and substantially all of the activities of the entities are performed on our behalf. The Company is considered the primary beneficiary of these VIEs as no single party meets both criteria to be the primary beneficiary, and we are the member of the related party group that has both the power to direct the activities that most significantly impact economic performance of the VIE and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. Within the related party group, the Company is the most closely associated to the VIE based on the purpose and design of the entity, the size of our ownership interests relative to the other investors, and the rights we hold with respect to the other investors’ equity interests, including our ability to preclude any transfers of their interests and ability to drag them along on the sale of our equity interest. All VIEs are consolidated in the Company’s financial statements. The assets of each VIE can only be used to settle obligations of that particular VIE, and the creditors of each entity have no recourse to the assets of other entities or the Company.

The other investor in the VIEs is BH Equities, LLC (“BH Equity”) or affiliates of BH Equity. When these VIEs were formed, BH Equity invested cash in each VIE and received a proportional share of each VIE that it invested in. Each VIE has a non-recourse mortgage that has standard scope non-recourse carve outs required by agency lenders and generally call for protection by the borrower and the guarantor against losses by the lender for so-called “bad acts,” such as misrepresentations, and may include full recourse liability for more significant events such as bankruptcy. BH Equity, or its affiliates, provided non-recourse carve out guarantees for the mortgage indebtedness currently outstanding relating to each VIE. In consideration of the guarantees provided by BH Equity and its affiliates, they will earn an additional profit interest in each VIE such that distributions will be made to the members of the VIE pro rata in proportion to their relative percentage interests until the members have received an internal rate of return equal to 13%. Then, the proportion of distributions changes to a predetermined allocation according to the agreements between each VIE and BH Equity or its affiliates. In instances where membership interests in individual properties are held through a multiple-asset LLC, consideration of additional profit interest is calculated at the multiple-asset LLC level. Therefore, distributions will be made to the members pro rata in proportion to their relative percentage interests in the multiple-asset LLC until the members have received an internal rate of return equal to 13%. Then, the proportion of distributions changes to a predetermined allocation according to the multiple-asset LLC agreements between each VIE and BH Equity or its affiliates.

Revenue Recognition

The Company’s primary operations consist of rental income earned from its residents under lease agreements with terms of one year or less. Rental income is recognized when earned. This policy effectively results in income recognition on the straight-line method over the related terms of the leases. Resident reimbursements and other income consist of charges billed to residents for utilities, carport and garage rental, pets, administrative, application and other fees and are recognized when earned.

Asset Management & Property Management Services

Asset management fee and property management fee expenses are recognized when incurred in accordance with each management agreement (see Note 9).

Income Taxes

The Company intends to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the “Code”), and expects to qualify as a REIT. To qualify as a REIT, the Company must meet a number of organizational and operational requirements, including a requirement to distribute annually at least 90% of its “REIT taxable income,” as defined by the Code, to its stockholders. As a REIT, the Company will be subject to federal income tax on its undistributed REIT taxable income and net capital gain and to a 4% nondeductible excise tax on any amount by which distributions it pays with respect to any calendar year are less than the sum of (a) 85% of its ordinary income, (b) 95% of its capital gain net income and (c) 100% of its undistributed income from prior years. The Company intends to operate in such a manner so as to qualify as a REIT, including creating taxable REIT subsidiaries to hold assets that generate income that would not be consistent with the rules applicable for qualification as a REIT if held directly by the REIT, but no assurance can be given that the Company will operate in a manner so as to qualify as a REIT. If the Company were to fail to meet these requirements, it could be subject to federal income tax on all of the Company’s taxable income at regular corporate rates for that year. The Company would not be able to deduct distributions paid to stockholders in any year in which it fails to qualify as a REIT. Additionally, the Company will also be disqualified from electing to be taxed as a REIT for the four taxable years following the year during which qualification was lost unless the Company is entitled to relief under specific statutory provisions. As of June 30, 2016, the Company believes it is in compliance with all applicable REIT requirements.

Reportable Segment

Substantially all of the Company’s net income (loss) is from investments in real estate properties within the multifamily sector that the Company owns through LLCs. The Company evaluates operating performance on an individual property level and views its real estate assets as one industry segment and, accordingly, its properties are aggregated into one reportable segment.

Concentration of Credit Risk

The Company maintains cash balances with high quality financial institutions, including NexBank, an affiliate of our Adviser, and periodically evaluates the creditworthiness of such institutions and believes that the Company is not exposed to significant credit risk. Cash balances may be in excess of the amounts insured by the Federal Deposit Insurance Corporation.

Fair Value Measurements

Fair value measurements are determined based on the assumptions that market participants would use in pricing an asset or liability. As a basis for considering market participant assumptions in fair value measurements, FASB ASC 820, Fair Value Measurement and Disclosures, establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy)

· Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access.

· Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs may include quoted prices for similar assets and liabilities in active markets, as well as inputs that are observable for the asset or liability (other than quoted prices), such as interest rates and yield curves that are observable at commonly quoted intervals.

· Level 3 inputs are the unobservable inputs for the asset or liability, which are typically based on an entity’s own assumption, as there is little, if any, related market activity. In instances where the determination of the fair value measurement is based on input from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety.

The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. The Company utilizes an independent third party to perform the allocation of value analysis for each property acquisition and also to perform the market valuations on the interest rate caps and has established policies, as described above, processes and procedures intended to ensure that the valuation methodologies for investments and interest rate caps are fair and consistent as of the measurement date.

Per Share Data

The Company began operations on March 31, 2015, as described above, and therefore the Company had no operating activities or earnings (loss) per share before March 31, 2015. However, for purposes of the combined consolidated statements of operations and comprehensive income (loss), the Company has presented basic and diluted earnings (loss) per share as if the operating activities of the predecessor were those of the Company and assuming the shares outstanding at the date of the Spin-Off were outstanding for all periods prior to the Spin-Off. Basic earnings (loss) per share will be shown for all periods presented and computed by dividing net income (loss) by the weighted average number of shares of the Company’s common stock outstanding, which is adjusted for shares classified as treasury shares during the period (see Note 8). Diluted earnings (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. There were no potentially dilutive securities for any of the periods presented. For the three months ended June 30, 2016 and 2015, the Company incurred earnings (loss) per share of $0.69 and $(0.11), respectively. For the six months ended June 30, 2016 and 2015, the Company incurred earnings (loss) per share of $0.68 and $(0.36), respectively.

Recent Accounting Pronouncements

Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 13(a) of the Exchange Act, for complying with new or revised accounting standards applicable to public companies. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of this extended transition period. As a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates for such new or revised standards. We may elect to comply with public company effective dates at any time, and such election would be irrevocable pursuant to Section 107(b) of the JOBS Act. The following recent accounting pronouncements reflect effective dates that delay the adoption until those standards would otherwise apply to private companies.

In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements – Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, which requires management to evaluate whether there are conditions and events that raise substantial doubt about an entity’s ability to continue as a going concern, and to provide disclosures when it is probable that the entity will be unable to meet its obligations as they become due within one year after the date that the financial statements are issued. The ASU is effective for annual and interim periods beginning after December 15, 2015, with early adoption being permitted. The Company implemented the provisions of ASU 2014-15 as of January 1, 2016 and there was no material impact on its combined consolidated financial statements.

In April 2015, the FASB issued ASU 2015-03, Interest-Imputation of Interest, which changes the way reporting enterprises record debt issuance costs. The ASU requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct reduction from the carrying amount of that debt liability, consistent with debt discounts. The ASU is effective for annual and interim reporting periods beginning after December 15, 2015. In August 2015, the FASB issued ASU 2015-15, Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements, which supplements the requirements of ASU 2015-03 by allowing an entity to defer and present debt issuance costs related to a line of credit arrangement as an asset and subsequently amortize the deferred costs ratably over the term of the line of credit arrangement. The Company implemented the provisions of ASU 2015-03 and ASU 2015-15 as of January 1, 2016. The retrospective application required upon adoption of ASU 2015-03 resulted in a reclassification of approximately $6.2 million of debt issuance costs from deferred financing costs, net, to a deduction from debt in its consolidated balance sheet as of December 31, 2015. At December 31, 2015, the following amounts of deferred financing costs were reclassified (in thousands):

	Assets			Liabilities
	Deferred financing costs, net			Bridge facility, net			Mortgages payable, net
December 31, 2015
As previously presented	$	6,213		$	29,000		$	682,342
Reclassification of deferred financing costs, net		(6,213	)		(195	)		(6,018	)
As presented herein	$	—		$	28,805		$	676,324

In February 2015, the FASB issued ASU 2015-02, Amendments to the Consolidation Analysis, which changes the way reporting enterprises evaluate whether (a) they should consolidate limited partnerships and similar entities, (b) fees paid to a decision maker or service provider are variable interests in a VIE, and (c) variable interests in a VIE held by related parties of the reporting enterprise require the reporting enterprise to consolidate the VIE. The ASU also significantly changes how to evaluate voting rights for entities that are not similar to limited partnerships when determining whether the entity is a VIE, which may affect entities for which the decision making rights are conveyed though a contractual arrangement. The ASU is effective for annual and interim periods in fiscal years beginning after December 15, 2016. The Company will implement the provisions of ASU 2015-02 as of January 1, 2017. The Company does not expect the new standard to have a material impact on its combined consolidated financial statements.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize 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 or services. An entity should also disclose sufficient quantitative and qualitative information to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers – Deferral of the Effective Date, which amends ASU 2014-09 to defer the effective date by one year. The new standard is effective for annual and interim reporting periods beginning after December 15, 2018. The Company expects to implement the provisions of ASU 2014-09 as of January 1, 2019. The Company has not yet determined the impact of the new standard on its current policies for revenue recognition.

In January 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, which changes certain recognition, measurement, presentation, and disclosure requirements for financial instruments. The ASU requires all equity investments, except those accounted for under the equity method of accounting or resulting in consolidation, to be measured at fair value with changes in fair value recognized in net income. The ASU also simplifies the impairment assessment for equity investments without readily determinable fair values, amends the presentation requirements for changes in the fair value of financial liabilities, requires presentation of financial instruments by measurement category and form of financial asset, and eliminates the requirement to disclose the methods and significant assumptions used in estimating the fair value of financial instruments. The ASU is effective for annual and interim periods beginning after December 15, 2018. The Company expects to implement the provisions of ASU 2016-01 as of January 1, 2019, and does not expect the new standard to have a material impact on its combined consolidated financial statements.

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Acquisitions

6 Months Ended

Jun. 30, 2016

Business Combinations [Abstract]

Acquisitions

3. Acquisitions

As of June 30, 2016, the Company is invested in a total of 39 multifamily properties as listed below:

Property Name		Rentable SquareFootage		Number of Units		Date Acquired	Average Effective Monthly Rent Per Unit (1)		% Occupied as of June 30, 2016 (2)			% Occupied as of December 31, 2015 (2)
The Miramar Apartments			183,100	314		10/31/2013	$	592		91.7	%		92.4	%
Arbors on Forest Ridge			154,556	210		1/31/2014		831		93.3	%		93.8	%
Cutter’s Point			197,972	196		1/31/2014		999		97.4	%		93.9	%
Eagle Crest			395,951	447		1/31/2014		821		92.2	%		95.5	%
Silverbrook			526,138	642		1/31/2014		733		94.5	%		93.6	%
Timberglen			221,376	304		1/31/2014		772		94.7	%		96.1	%
Toscana			115,400	192		1/31/2014		674		94.3	%		94.8	%
The Grove at Alban	(3)		267,300	290		3/10/2014		990		95.5	%		94.5	%
Willowdale Crossing	(3)		411,800	432		5/15/2014		955		93.8	%		88.9	%
Edgewater at Sandy Springs			726,774	760		7/18/2014		858		92.8	%		94.5	%
Beechwood Terrace			271,728	300		7/21/2014		827		95.3	%		97.3	%
Willow Grove			229,140	244		7/21/2014		815		95.9	%		95.9	%
Woodbridge			246,840	220		7/21/2014		921		92.3	%		96.4	%
Abbington Heights			238,974	274		8/1/2014		813		94.5	%		94.5	%
The Summit at Sabal Park			204,545	252		8/20/2014		880		92.9	%		92.5	%
Courtney Cove			224,958	324		8/20/2014		765		96.0	%		95.4	%
Colonial Forest	(3)		160,093	174		8/20/2014		654		96.6	%		94.8	%
Park at Blanding	(3)		116,410	117		8/20/2014		797		95.7	%		97.4	%
Jade Park	(3)		118,392	144		8/20/2014		773		95.8	%		90.3	%
Radbourne Lake			246,599	225		9/30/2014		997		94.7	%		96.9	%
Timber Creek			248,391	352		9/30/2014		772		94.9	%		94.3	%
Belmont at Duck Creek			198,279	240		9/30/2014		908		91.3	%		93.8	%
The Arbors			127,536	140		10/16/2014		806		97.1	%		94.3	%
The Crossings			377,840	380		10/16/2014		785		93.9	%		92.9	%
The Crossings at Holcomb Bridge			247,982	268		10/16/2014		820		97.0	%		95.9	%
The Knolls			311,160	312		10/16/2014		862		94.9	%		93.9	%
Regatta Bay			200,440	240		11/4/2014		1,037		93.3	%		93.3	%
Sabal Palm at Lake Buena Vista			370,768	400		11/5/2014		1,113		92.8	%		96.0	%
Southpoint Reserve at Stoney Creek			115,712	156		12/18/2014		1,005		93.6	%		94.9	%
Cornerstone			317,565	430		1/15/2015		846		93.7	%		93.3	%
McMillan Place			290,051	402		1/15/2015		679		91.8	%		91.3	%
Barrington Mill			692,180	752		2/6/2015		777		92.0	%		95.6	%
Dana Point			206,276	264		2/26/2015		752		92.0	%		92.8	%
Heatherstone			115,615	152		2/26/2015		813		96.1	%		94.1	%
Versailles			300,908	388		2/26/2015		789		94.6	%		90.2	%
Seasons 704 Apartments			216,891	222		4/15/2015		986		94.6	%		97.3	%
Madera Point			192,880	256		8/5/2015		768		89.8	%		93.8	%
The Pointe at the Foothills			472,952	528		8/5/2015		828		92.2	%		90.7	%
The Place at Vanderbilt			288,532	333		10/30/2015		746		91.0	%		92.8	%
			10,550,004		12,276

(1) Average effective monthly rent per unit is equal to the average of the contractual rent for commenced leases as of June 30, 2016 minus any tenant concessions over the term of the lease, divided by the number of units under commenced leases as of June 30, 2016.

(2) Percent occupied is calculated as the number of units occupied as of June 30, 2016 and December 31, 2015, divided by the total number of units, expressed as a percentage.

(3) Properties are classified as held for sale as of June 30, 2016. 

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Real Estate Investments

6 Months Ended

Jun. 30, 2016

Real Estate [Abstract]

Real Estate Investments

4. Real Estate Investments

As of June 30, 2016, the major components of the Company’s investments in multifamily properties were as follows (in thousands):

Operating Properties	Land		Buildingsand Improvements			IntangibleLease Assets		Construction in Progress		Furniture, Fixtures and Equipment			Totals
The Miramar Apartments	$	1,580	$	8,721		$	—	$	48	$	639		$	10,988
Arbors on Forest Ridge		2,330		10,956			—		4		572			13,862
Cutter’s Point		3,330		12,789			—		—		737			16,856
Eagle Crest		5,450		21,900			—		12		955			28,317
Silverbrook		4,860		25,039			—		209		1,700			31,808
Timberglen		2,510		14,412			—		5		804			17,731
Toscana		1,730		7,276			—		5		606			9,617
Edgewater at Sandy Springs		14,290		43,666			—		24		2,822			60,802
Beechwood Terrace		1,390		20,466			—		10		713			22,579
Willow Grove		3,940		10,624			—		—		596			15,160
Woodbridge		3,650		12,652			—		43		669			17,014
Abbington Heights		1,770		16,285			—		54		804			18,913
The Summit at Sabal Park		5,770		13,317			—		9		806			19,902
Courtney Cove		5,880		12,864			—		49		766			19,559
Radbourne Lake		2,440		21,386			—		111		858			24,795
Timber Creek		11,260		13,140			—		42		681			25,123
Belmont at Duck Creek		1,910		16,997			—		—		712			19,619
The Arbors		1,730		6,508			—		13		298			8,549
The Crossings		3,982		17,487			—		145		1,129			22,743
The Crossings at Holcomb Bridge		5,560		10,758			—		—		954			17,272
The Knolls		3,410		17,615			—		8		1,319			22,352
Regatta Bay		1,660		16,130			—		73		688			18,551
Sabal Palm at Lake Buena Vista		7,580		41,103			—		1		761			49,445
Southpoint Reserve at Stoney Creek		6,120		10,950			—		195		497			17,762
Cornerstone		1,500		29,963			—		218		625			32,306
McMillan Place		3,610		17,855			—		101		761			22,327
Barrington Mill		10,170		47,559			—		338		1,764			59,831
Dana Point		4,090		12,126			—		123		814			17,153
Heatherstone		2,320		7,462			—		47		605			10,434
Versailles		6,720		20,160			—		76		1,263			28,219
Seasons 704 Apartments		7,480		13,788			—		202		544			22,014
Madera Point		4,920		16,799			—		41		613			22,373
The Pointe at the Foothills		4,840		45,821			—		5		990			51,656
The Place at Vanderbilt		2,350		16,369			—		351		802			19,872
		152,132		630,943			—		2,562		29,867			815,504
Accumulated depreciation and amortization		—		(37,671	)		—		—		(9,117	)		(46,788	)
Total Operating Properties	$	152,132	$	593,272		$	—	$	2,562	$	20,750		$	768,716
Held For Sale Properties
The Grove at Alban		3,640		19,033			—		—		1,215			23,888
Willowdale Crossing		4,650		35,657			—		27		974			41,308
Colonial Forest		2,090		3,490			—		—		372			5,952
Park at Blanding		2,610		4,033			—		6		322			6,971
Jade Park		1,490		6,414			—		30		432			8,366
		14,480		68,627			—		63		3,315			86,485
Accumulated depreciation and amortization		—		(4,605	)		—		—		(790	)		(5,395	)
Total Held For Sale Properties	$	14,480	$	64,022		$	—	$	63	$	2,525		$	81,090
Total	$	166,612	$	657,294		$	—	$	2,625	$	23,275		$	849,806

As of December 31, 2015, the major components of the Company’s investments in multifamily properties were as follows (in thousands):

Property Name	Land		Buildings and Improvements			Intangible Lease Assets			Construction in Progress		Furniture, Fixtures and Equipment			Totals
The Miramar Apartments	$	1,580	$	8,601		$	—		$	48	$	603		$	10,832
Arbors on Forest Ridge		2,330		10,948			—			—		524			13,802
Cutter's Point		3,330		12,747			—			37		621			16,735
Eagle Crest		5,450		21,846			—			15		743			28,054
Meridian		2,310		10,325			—			12		419			13,066
Silverbrook		4,860		24,909			—			118		1,475			31,362
Timberglen		2,510		14,379			—			20		703			17,612
Toscana		1,730		7,256			—			4		522			9,512
The Grove at Alban		3,640		18,994			—			66		911			23,611
Willowdale Crossing		4,650		35,631			—			23		784			41,088
Edgewater at Sandy Springs		14,290		43,429			—			199		2,394			60,312
Beechwood Terrace		1,390		20,374			—			28		572			22,364
Willow Grove		3,940		10,621			—			2		483			15,046
Woodbridge		3,650		12,581			—			110		543			16,884
Abbington Heights		1,770		16,184			—			67		657			18,678
The Summit at Sabal Park		5,770		13,311			—			9		674			19,764
Courtney Cove		5,880		12,850			—			30		668			19,428
Colonial Forest		2,090		3,486			—			—		328			5,904
Park at Blanding		2,610		4,025			—			4		304			6,943
Park at Regency		2,620		5,706			—			5		446			8,777
Jade Park		1,490		6,404			—			19		351			8,264
Mandarin Reserve		5,610		20,850			—			—		1,021			27,481
Radbourne Lake		2,440		21,194			—			224		739			24,597
Timber Creek		11,260		13,101			—			37		541			24,939
Belmont at Duck Creek		1,910		16,948			—			47		533			19,438
The Arbors		1,730		6,512			—			4		279			8,525
The Crossings		3,982		16,696			—			759		890			22,327
The Crossings at Holcomb Bridge		5,560		10,644			—			101		749			17,054
The Knolls		3,410		17,574			—			—		1,016			22,000
Regatta Bay		1,660		16,120			—			34		543			18,357
Sabal Palm at Lake Buena Vista		7,580		40,833			—			214		639			49,266
Southpoint Reserve at Stoney Creek		6,120		10,896			—			166		286			17,468
Cornerstone		1,500		29,786			—			201		411			31,898
McMillan Place		3,610		17,127			—			398		517			21,652
Barrington Mill		10,170		47,055			—			430		1,117			58,772
Dana Point		4,090		11,760			—			330		649			16,829
Heatherstone		2,320		6,962			—			403		399			10,084
Versailles		6,720		19,339			—			699		903			27,661
Seasons 704 Apartments		7,480		13,532			—			254		361			21,627
Madera Point		4,920		16,632			629			39		444			22,664
The Pointe at the Foothills		4,840		45,395			1,433			186		768			52,622
The Place at Vanderbilt		2,350		16,112			511			4		479			19,456
		177,152		729,675			2,573			5,346		28,009			942,755
Accumulated depreciation and amortization		—		(32,350	)		(1,844	)		—		(5,679	)		(39,873	)
	$	177,152	$	697,325		$	729		$	5,346	$	22,330		$	902,882

Depreciation expense was $8.0 million and $6.7 million for the three months ended June 30, 2016 and 2015, respectively. Depreciation expense was $17.0 million and $12.5 million for the six months ended June 30, 2016 and 2015, respectively.   

Amortization expense related to the Company’s intangible lease assets was $0.1 million and $3.4 million for the three months ended June 30, 2016 and 2015, respectively. Amortization expense related to the Company’s intangible lease assets was $0.7 million and $9.2 million for the six months ended June 30, 2016 and 2015, respectively. Due to the six-month useful life attributable to intangible lease assets, the value of intangible lease assets on any acquisition prior to December 31, 2015 has been fully amortized and the assets and related accumulated amortization have been written-off as of June 30, 2016.

Sales of Real Estate

The following table presents our sales of real estate for the six months ended June 30, 2016 (in thousands); there were no sales of real estate for the six months ended June 30, 2015:

Property		Location	Date of Sale	Sales Price		Net Cash Proceeds (1)		Gain on Sale of Real Estate
Meridian	(2)	Austin, Texas	May 10, 2016	$	17,250	$	16,981	$	4,786
Park at Regency and Mandarin Reserve	(3)	Jacksonville, Florida	June 6, 2016		47,000		46,239		11,584
				$	64,250	$	63,220	$	16,370

(1) Represents sales price, net of closing costs.

(2) Approximately $6.4 million of the proceeds from the sale of Meridian were placed with a qualified intermediary for use in a like-kind exchange. On July 27, 2016, the Company completed such like-kind exchange, using the approximately $6.4 million of proceeds from the Meridian sale to acquire CityView, a 217-unit property in West Palm Beach, Florida (see Note 11).

(3) Properties were sold as a portfolio.

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Pro Forma Financial Information (Unaudited)

6 Months Ended

Jun. 30, 2016

Pro Forma Financial Information [Abstract]

Pro Forma Financial Information (Unaudited)

5. Pro Forma Financial Information (unaudited)

The Company acquired 10 properties and sold 3 properties during the period January 1, 2015 through June 30, 2016 and acquired one property subsequent to June 30, 2016 on July 27, 2016 (see Note 11). The following unaudited pro forma information for the six months ended June 30, 2016 and 2015 has been provided to give effect to the acquisitions and dispositions of the properties as if they had occurred on January 1, 2015. This pro forma financial information is not intended to represent what the actual results of operations of the Company would have been had these acquisitions and dispositions occurred on this date, nor does it purport to predict the results of operations for future periods. The following table summarizes, on an unaudited basis, the combined consolidated pro forma results of operations of the Company for the six months ended June 30, 2016 and 2015 (in thousands, except per share amounts):

	Six Months Ended June 30,
	2016		2015
Actual:
Total revenues	$	67,168	$	54,285
Net income (loss)		16,887		(8,157	)
Earnings (loss) per share - basic and diluted (see Note 2)		0.68		(0.36	)
Pro forma:
Total revenues		64,788		59,682
Net income (loss)		997		(24,970	)
Earnings (loss) per share - basic and diluted (see Note 2)		0.05		(1.17	)

The pro forma information includes adjustments to actual revenues and expenses recorded to reflect operations of all properties owned as of and subsequent to June 30, 2016, assuming each was owned by the Company and operating as of January 1, 2015. Net income (loss) has been adjusted as follows: (1) interest expense has been adjusted to reflect the additional interest expense that would have been charged had the Company acquired the properties on January 1, 2015 under the same financing arrangements as existed as of the acquisition date; (2) depreciation and amortization has been adjusted based on the Company’s basis in the properties, and all of the intangible lease assets have been amortized during the six months ended June 30, 2015 due to the six-month life of intangible assets; (3) acquisition costs have been excluded for pro forma purposes for the acquisition costs of the properties; (4) advisory and administrative fees have been adjusted to include the acquisitions on a pro forma basis; (5) gain on sales of real estate has been excluded for pro forma purposes for the gain recognized on the properties sold; and (6) general and administrative fees expected to be incurred on a quarterly basis at a parent level have been adjusted to include the acquisitions and dispositions on a pro forma basis and are estimated to be approximately $800,000 per quarter.

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Debt

6 Months Ended

Jun. 30, 2016

Debt Disclosure [Abstract]

Debt

6. Debt

Mortgages Payable

The following table contains summary information concerning the mortgage debt of the Company as of June 30, 2016:

Operating Properties		Type	Term(months)		Amortization (months)		Outstanding Principal (1) (in thousands)				Interest Rate (2)		Max Note Rate (3)		Maturity Date
The Miramar Apartments	(4)	Floating		120		360	$	8,400				2.69%		5.75%	2/1/2025
Courtney Cove	(5)	Floating		84		360		14,210				2.55%		5.75%	9/1/2021
The Summit at Sabal Park	(5)	Floating		84		360		14,287				2.55%		5.75%	9/1/2021
Southpoint Reserve at Stoney Creek	(5)	Floating		84		360		13,600				2.58%		6.00%	1/1/2022
Barrington Mill	(5)	Floating		84		360		43,500				2.43%		5.50%	3/1/2022
Dana Point	(5)	Floating		84		360		12,176				2.52%		5.50%	3/1/2022
Heatherstone	(5)	Floating		84		360		7,087				2.55%		5.50%	3/1/2022
Versailles	(5)	Floating		84		360		19,623				2.50%		5.50%	3/1/2022
Seasons 704 Apartments	(5)	Floating		84		360		12,660				2.27%		5.95%	5/1/2022
Timber Creek	(6)	Floating		120		360		19,482				2.29%		5.96%	10/1/2024
Radbourne Lake	(6)	Floating		120		360		19,213				2.28%		6.25%	10/1/2024
The Arbors	(6)	Floating		120		360		5,812				2.28%		7.11%	11/1/2024
The Crossings	(6)	Floating		120		360		15,874				2.28%		7.21%	11/1/2024
The Crossings at Holcomb Bridge	(6)	Floating		120		360		12,450				2.28%		7.35%	11/1/2024
The Knolls	(6)	Floating		120		360		16,038				2.28%		7.11%	11/1/2024
McMillan Place	(6)	Floating		120		360		15,738				2.39%		5.92%	2/1/2025
Sabal Palm at Lake Buena Vista	(6)	Floating		120		360		37,680				2.28%		6.26%	12/1/2024
Abbington Heights	(7)	Fixed		120		360		10,305				3.79%		3.79%	9/1/2022
Belmont at Duck Creek	(8)	Fixed		84		360		11,246				4.68%		4.68%	9/1/2018
Regatta Bay	(9)	Floating		60		360		14,000				2.35%	N/A		11/1/2020
Cornerstone	(10)	Fixed		120		360		23,283				4.24%		4.24%	3/1/2023
Madera Point	(11)	Floating		60		360		13,515				2.37%	N/A		9/1/2020
The Pointe at the Foothills	(11)	Floating		60		360		31,365				2.36%	N/A		9/1/2020
							$	391,544
Fair market value adjustment								237		(12)
Deferred financing costs, net								(3,444	)
							$	388,337
Held for Sale Properties
The Grove at Alban	(5)	Floating		84		360		18,657				3.01%		6.50%	4/1/2021
Willowdale Crossing	(5)	Floating		84		360		32,800				2.74%		5.75%	6/1/2021
Colonial Forest	(5)	Floating		84		360		4,125				2.63%		6.25%	9/1/2021
Park at Blanding	(5)	Floating		84		360		4,875				2.63%		7.25%	9/1/2021
Jade Park	(5)	Floating		84		360		5,850				2.62%		6.49%	9/1/2021
							$	66,307
Deferred financing costs, net								(581	)
							$	65,726

(1) Mortgage debt that is non-recourse to the Company and encumbers the multifamily properties.

(2) Interest rate is based on one-month LIBOR plus an applicable margin, except for Abbington Heights (based on fixed rate of 3.79%), Belmont at Duck Creek (based on fixed rate of 4.68%), Regatta Bay (based on three-month LIBOR, subject to a floor of 0.25%, plus 1.70%) and Cornerstone (based on a blended fixed rate of 4.24%). One-month and three-month LIBOR as of June 30, 2016 were 0.4651% and 0.6541%, respectively.

(3) Represents the maximum rate payable on each note (see Note 7).

(4) Loan cannot be pre-paid in the first 12 months of the term. Starting in the 13^th month of the term through the 117^th month of the term, the loan can be pre-paid at par plus 1.00% of the unpaid principal balance and at par the last three months of the term.

(5) Loan can be pre-paid in the first 12 months of the term at par plus 5.00%. Starting in the 13th month of the term through the 81st month of the term, the loan can be pre-paid at par plus 1.00% of the unpaid principal balance and at par during the last three months of the term.   

(6) Loan can be pre-paid in the first 12 months of the term at par plus 5.00%. Starting in the 13^th month of the term through the 116^th month of the term, the loan can be pre-paid at par plus 1.00% of the unpaid principal balance and at par during the last four months of the term.

(7) Debt was assumed upon acquisition of this property at approximated fair value. The loan is open to pre-payment in the last three months of the term.

(8) Debt was assumed upon acquisition of this property at approximated fair value. The loan is open to pre-payment in the last six months of the term.

(9) Loan can be pre-paid in the first 12 months of the term at par plus 1.00% of the unpaid principal balance and at par thereafter. Loan’s unpaid principal balance can be declared due and payable in full, at the lender’s discretion, on November 1, 2018 and November 1, 2019.  

(10) Debt in the amount of $18.0 million was assumed upon acquisition of this property at approximated fair value. The assumed debt carries a 4.09% fixed rate, was originally issued in March 2013 and had a term of 120 months with an initial 24 months of interest only. At the time of acquisition, the principal balance of the first mortgage remained unchanged and had a remaining term of 98 months with 2 months of interest only. The first mortgage is pre-payable and subject to yield maintenance from month 13 through August 31, 2022 and is pre-payable at par September 1, 2022 until maturity. Concurrently with the acquisition of the property, we placed a supplemental second mortgage on the property with a principal amount of approximately $5.8 million, a fixed rate of 4.70%, and with a maturity date that is the same time as the first mortgage. The supplemental second mortgage is pre-payable and subject to yield maintenance from the date of issuance through August 31, 2022 and is pre-payable at par September 1, 2022 until maturity. As of June 30, 2016, the total indebtedness secured by the property is approximately $23.4 million and has a blended interest rate of 4.24%.

(11) Loan can be pre-paid starting in the 13^th month through the 57^th month of the term at par plus 1.00% of the unpaid principal balance and at par during the last three months of the term.    

(12) The Company reflected a valuation adjustment on its fixed rate debt for Belmont at Duck Creek to adjust it to fair market value on the date of acquisition for the difference between the fair value and the assumed principal amount of debt. The difference is amortized into interest expense over the remaining term of the mortgage.    

The weighted average interest rate of our mortgage indebtedness was 2.62% as of June 30, 2016 and 2.67% as of December 31, 2015.

Each of our mortgages is a non-recourse obligation subject to customary provisions. The loan agreements contain customary events of default, including defaults in the payment of principal or interest, defaults in compliance with the covenants contained in the documents evidencing the loan, defaults in payments under any other security instrument covering any part of the property, whether junior or senior to the loan, and bankruptcy or other insolvency events. As of June 30, 2016, the Company believes it is in compliance with all provisions.

During the period ended June 30, 2016, the Company sold three properties and repaid the related mortgage loans, as detailed in the table below:

Property Name		Date of Sale	Type	Outstanding Principal (1) (in thousands)
Meridian		May 10, 2016	Floating	$	9,791
Park at Regency and Mandarin Reserve	(2)	June 6, 2016	Floating		25,582
				$	35,373

(1) Represents the outstanding principal balance when the loan was repaid.

(2) Properties were sold as a portfolio.

The Company incurred prepayment penalties of approximately $350,000 in connection with the payoff of these mortgage loans, which is included in interest expense on the consolidated statements of operations and comprehensive income (loss).

Credit Facility

On June 6, 2016, the Company, through certain of its subsidiaries, entered into a $200.0 million credit facility (the “Credit Facility”) with KeyBank National Association (“KeyBank”), as lender, which was in turn assigned to the Federal Home Loan Mortgage Corporation (“Freddie Mac”). The Credit Facility is a full-term, interest-only facility and is expandable to $300.0 million upon the satisfaction of certain conditions. The Credit Facility is guaranteed by the OP. The initial term of the Credit Facility is 60 months, and the Company has one 12-month extension option. Interest accrues on the Credit Facility at an interest rate of one-month LIBOR plus 2.20%. The Credit Facility contains flexible prepayment options that are consistent with the Company’s other floating rate indebtedness held by Freddie Mac.

On June 6, 2016, the Company drew $191.0 million under the Credit Facility to replace the existing mortgage debt on 11 properties (see below). The refinancing of this existing mortgage debt did not incur prepayment penalties. In accordance with FASB ASC 470-50, Debt – Modifications and Extinguishments, the Company accounted for the refinancing as a modification of a debt instrument. As such, the existing $1.2 million of net deferred financing costs related to the 11 properties are included with the approximately $2.5 million of deferred financing costs incurred in connection with the modification. Such costs are recorded as a deduction from the debt related to the Credit Facility on the accompanying consolidated balance sheet as of June 30, 2016 and are amortized over the term of the Credit Facility. The Company subsequently drew an additional $9.0 million under the Credit Facility and used the proceeds to pay down a portion of its bridge facility (see “Bridge Facility” below). As of June 30, 2016, the Company has $200.0 million outstanding under its Credit Facility at an interest rate of 2.67%.

The following 11 properties in the Company’s portfolio have been cross-collateralized as security for the Credit Facility:

· Arbors on Forest Ridge

· Cutter’s Point

· Eagle Crest

· Silverbrook

· Timberglen

· Toscana

· Edgewater at Sandy Springs

· Beechwood Terrace

· Willow Grove

· Woodbridge

· The Place at Vanderbilt

The Credit Facility agreement contains customary provisions with respect to events of default, covenants and borrowing conditions. Certain prepayments may be required upon a breach of covenants or borrowing conditions. As of June 30, 2016, the Company believes it is in compliance with all provisions.

Bridge Facility

On August 5, 2015, the Company executed a bridge facility (the “Bridge Facility”) with KeyBank in the amount of $29.0 million. The proceeds from the Bridge Facility were used to fund a portion of the purchase price of the Madera Point and The Pointe at the Foothills acquisitions. During the three months ended June 30, 2016, the Company paid down $27.0 million of principal on the Bridge Facility, reducing the outstanding principal balance to $2.0 million, which was funded with $18.0 million of the Company’s share of proceeds, net of distributions to noncontrolling interests, from the sales of Park at Regency and Mandarin Reserve and $9.0 million of proceeds drawn under the Company’s Credit Facility. The Bridge Facility is payable in full on August 4, 2016, but is pre-payable at any time without penalty (see Note 11). The Bridge Facility is non-amortizing during the term it is outstanding and accrues interest at an annual rate of 4.00% plus one-month LIBOR. The Bridge Facility is recourse to the Company and is secured by the equity interests in Madera Point and The Pointe at the Foothills.

The Bridge Facility agreement contains customary provisions with respect to events of default, covenants and borrowing conditions. Certain prepayments may be required upon a breach of covenants or borrowing conditions. As of June 30, 2016, the Company believes it is in compliance with all provisions.

Schedule of Debt Maturities

As of June 30, 2016, debt maturities scheduled for the remainder of 2016, each of the next four years and thereafter, are as follows (in thousands):

	Operating Properties & Other Secured Debt		Held For Sale Properties		Total
Remainder of 2016		2,399		619		3,018
2017		1,463		1,433		2,896
2018		16,908		1,475		18,383
2019		6,588		1,519		8,107
2020		65,564		1,558		67,122
Thereafter		500,622		59,703		560,325
Total	$	593,544	$	66,307	$	659,851

Interest Rate Swap Agreements

In order to fix a portion of, and mitigate the risk associated with, the Company’s floating rate indebtedness (without incurring substantial prepayment penalties or defeasance costs typically associated with fixed rate indebtedness when repaid early or refinanced), the Company, through the OP, has entered into three interest rate swap transactions with KeyBank with a combined notional amount of $300.0 million. The interest rate swaps effectively replace the floating interest rate with respect to that amount with a weighted average fixed rate of 1.0088%. The interest rate swaps have an effective date of July 1, 2016 and a termination date of June 1, 2021. Beginning on August 1, 2016, the Company will be required to make monthly fixed rate payments of a weighted average fixed rate of 1.0088% calculated on a combined notional amount of $300.0 million, while the counterparties will be obligated to make monthly floating rate payments based on one-month LIBOR to the Company referencing the same notional amount. The Company has designated these interest rate swaps as cash flow hedges of interest rate risk. For additional information regarding the interest rate swaps, see Note 11.

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Fair Value Measures and Derivative Financial Instruments

6 Months Ended

Jun. 30, 2016

Fair Value Disclosures [Abstract]

Fair Value Measures and Derivative Financial Instruments

7. Fair Value Measures and Derivative Financial Instruments

From time to time, the Company records certain assets and liabilities at fair value. Real estate assets are recorded at fair value at acquisition and may be stated at fair value if they become impaired in a given period and may be stated at fair value if they are held for sale and the fair value of such assets is below historical cost. Additionally, the Company records derivative financial instruments at fair value.

Real estate acquisitions

As of June 30, 2016 and as further discussed in Notes 2 and 3, the Company had acquired and owned 39 properties. The Company did not acquire any properties during the six months ended June 30, 2016 (see Note 11). Upon acquisition of a property, the purchase price is allocated to land, buildings, improvements, furniture, fixtures and equipment, and intangible lease assets based on their estimated fair values using Level 3 inputs. If debt is assumed upon an acquisition, the debt is recorded based on its estimated fair value using Level 2 inputs.    

As discussed in Note 2, fair value measurements at the time of acquisition are determined by management using available market information and appropriate valuation methodologies available to management. Critical estimates in valuing certain assets and liabilities and the assumptions of what marketplace participants would use in making estimates of fair value include, but are not limited to: future expected cash flows, estimated carrying costs, estimated origination costs, lease up periods and tenant risk attributes, as well as assumptions about the period of time the acquired lease will continue to be used in the Company’s portfolio and discount rates used in these calculations. Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable. Assumptions may not always reflect unanticipated events and changes in circumstances may occur. In making such estimates, management uses a number of sources, including appraisals, third party cost segregation studies or other market data, as well as, information obtained in its pre-acquisition due diligence, marketing and leasing activities. Considerable judgment is necessary to interpret market data and estimate fair value. Accordingly, there can be no assurance that the estimates discussed herein, using Level 3 inputs, are indicative of the amounts the Company could realize on disposition of the real estate assets or other financial instruments. The use of different market assumptions and/or estimation methodologies could have a material effect on the estimated fair value amounts.  

Derivative financial instruments and hedging activities

The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources, and duration of its debt funding and the use of derivative financial instruments. Specifically, the Company may enter into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Company’s derivative financial instruments are used to manage differences in the amount, timing, and duration of the Company’s known or expected cash payments principally related to the Company’s borrowings. The Company utilizes an independent third party to perform the market valuations on its derivative financial instruments. These market valuations are based on estimated fair values using Level 3 inputs.

The Company’s main objective in using interest rate derivatives is to add stability to interest expense related to floating rate debt. To accomplish this objective, the Company uses interest rate caps to cap the total amount of interest expense the Company may pay in a rising interest rate environment. Interest rate caps involve the receipt of variable-rate amounts from a counterparty if interest rates rise above the strike rate on the contract in exchange for an up-front premium. The rate caps have terms ranging from 3-4 years. During the six months ended June 30, 2016 and 2015, such derivatives were used to hedge the variable cash flows associated with a majority of the Company’s floating rate debt. The derivative financial instruments the Company employs cap the related floating interest rates at a weighted average interest rate of 6.09%.

The effective portion of changes in the fair value of derivative financial instruments that are designated as cash flow hedges is recorded in accumulated other comprehensive loss (“OCI”) and is subsequently reclassified into net income or loss in the period that the hedged forecasted transaction affects earnings. Amounts reported in accumulated OCI related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s floating rate debt. The ineffective portion of the change in fair value of the derivatives is recognized directly in net income as interest expense. During the three and six months ended June 30, 2016 and 2015, the Company recorded no ineffectiveness in earnings attributable to derivatives designated as cash flow hedges. As of June 30, 2015, the Company had 14 derivatives designated as cash flow hedges.

As of June 30, 2016, the Company had the following outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk (dollars in thousands):

Product	Number of Instruments		Notional
Interest rate caps		15	$	259,659

Derivatives not designated as hedges are not speculative and are used to manage the Company’s exposure to interest rate movements but do not meet the strict hedge accounting requirements of FASB ASC 815, Derivatives and Hedging. Changes in the fair value of derivatives not designated in hedging relationships are recorded directly in net income as interest expense. As of June 30, 2015, the Company had 20 derivatives that were not designated as hedges in qualifying hedging relationships.

As of June 30, 2016, the Company had the following outstanding derivatives that were not designated as hedges in qualifying hedging relationships (dollars in thousands):

Product	Number of Instruments		Notional
Interest rate caps		7	$	94,867

The tables below present the fair value of the Company’s derivative financial instruments as well as their classification on the consolidated balance sheets as of June 30, 2016 and December 31, 2015 (in thousands):

	Asset Derivative					Liability Derivative
	Balance Sheet Location	June 30, 2016		December 31, 2015		Balance Sheet Location	June 30, 2016		December 31, 2015
Derivatives designated as hedging instruments:
Interest rate caps	Other assets	$	5	$	61	Otherliabilities	$	—	$	—
Derivatives not designated as hedging instruments:
Interest rate caps	Other assets		—		6	Other liabilities		—		—
Total		$	5	$	67		$	—	$	—

The tables below present the effect of the Company’s derivative financial instruments on the combined consolidated statements of operations and comprehensive income (loss) for the three and six months ended June 30, 2016 and 2015 (in thousands):

	Amount of gain (loss) recognized in OCI on derivative (effective portion)						Location of gain (loss) reclassified from accumulated OCI into income	Amount of gain (loss) reclassified from accumulated OCI into income (effective portion)					Location of gain (loss) recognized in income on derivative	Amount of gain (loss) recognized in income on derivative (ineffective portion)
	2016			2015			(effective portion)	2016			2015		(ineffective portion)	2016		2015
Derivatives designated as hedging instruments:
For the three months ended June 30,
Interest rate caps	$	(12	)	$	(126	)	Interest expense	$	(6	)	$	—	Interest expense	$	—	$	—
For the six months ended June 30,
Interest rate caps		(44	)		(396	)	Interest expense		(12	)		—	Interest expense		—		—

		Amount of gain (loss) recognized in income
	Location of gain (loss) recognized in income	2016			2015
Derivatives not designated as hedging instruments:
For the three months ended June 30,
Interest rate caps	Interest expense	$	(2	)	$	(50	)
For the six months ended June 30,
Interest rate caps	Interest expense		(6	)		(166	)

Other financial instruments

Cash equivalents, rents and accounts receivables, accounts payable, accrued expenses and other liabilities are carried at amounts that reasonably approximate their fair values because of the short-term nature of these instruments.

Long-term indebtedness is carried at amounts that reasonably approximate their fair value. The Company used market spreads from quoted prices on similar long-term debt, which are classified as Level 2 in the fair value hierarchy, to determine the estimated fair values for the Company’s long-term indebtedness.    

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Stockholders' Equity

6 Months Ended

Jun. 30, 2016

Equity [Abstract]

Stockholders' Equity

8. Stockholders’ Equity

Common stock

The Company began operations on March 31, 2015 as a result of the transfer and contribution by NexPoint Credit Strategies Fund (“NHF”) of all but one of the multifamily properties owned by NHF through its subsidiary Freedom REIT, LLC (“Freedom REIT”). On March 31, 2015, NHF distributed all of the outstanding shares of the Company's common stock held by NHF to holders of NHF common shares. As of June 30, 2016, the Company had 21,293,825 shares of common stock, $0.01 par value per share, issued and 21,288,825 shares of common stock outstanding (see “Treasury Stock” below) (see Note 11).

Treasury Stock

During the period ended June 30, 2016, in accordance with the Company’s share repurchase program (as described below), the Company purchased 5,000 shares of its common stock, $0.01 par value per share, at a total cost of approximately $88,000 (see Note 11). The cost of these shares is included in common stock held in treasury at cost on the consolidated balance sheet as of June 30, 2016. The number of shares of common stock classified as treasury shares reduce the number of shares of the Company’s common stock outstanding and, accordingly, are considered in the weighted average number of shares outstanding during the period.

Share Repurchase Program

On June 15, 2016, the Company’s Board of Directors authorized the repurchase by the Company of up to $30.0 million of its common stock, $0.01 par value per share. This authorization expires on June 15, 2018. The Company may utilize various methods to effect the repurchases, and the timing and extent of the repurchases will depend upon several factors, including market and business conditions, regulatory requirements and other corporate considerations, including whether the Company’s common stock is trading at a significant discount to net asset value per share. Repurchases under this program may be discontinued at any time. During the period ended June 30, 2016, the Company purchased 5,000 shares of its common stock, $0.01 par value per share, at a total cost of approximately $88,000, or $17.62 per share (see Note 11).

Long Term Incentive Plan

On June 15, 2016, the Company’s stockholders approved a long term incentive plan (the “2016 LTIP”) and the Company filed a registration statement on Form S-8 registering up to 2,100,000 shares of common stock, $0.01 par value per share, that the Company may issue pursuant to the 2016 LTIP. The 2016 LTIP authorizes the compensation committee of the Company’s Board of Directors to provide equity-based compensation in the form of stock options, appreciation rights, restricted shares, restricted stock units, performance shares, performance units and certain other awards denominated or payable in, or otherwise based on, the Company’s common stock or factors that may influence the value of the Company’s common stock, plus cash incentive awards, for the purpose of providing the Company’s officers and other key employees (and those of the Adviser and the Company’s subsidiaries), the Company’s non-employee directors, and potentially certain non-employees who perform employee-type functions, incentives and rewards for performance. The Company did not award any equity-based compensation pursuant to the 2016 LTIP during the period ended June 30, 2016.

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Related Party Transactions

6 Months Ended

Jun. 30, 2016

Related Party Transactions [Abstract]

Related Party Transactions

9. Related Party Transactions

Fees and reimbursements to BH and its affiliates

The Company has entered into management agreements with BH Management Services, LLC (“BH”), the Company’s property manager, who manages the Company’s properties and supervises the implementation of the Company’s value-add program. BH is an affiliate of the noncontrolling interest members of the Company by virtue of ownership in certain VIEs through BH’s affiliates. The property management fee is approximately 3% of the monthly gross income from each property managed. Currently, BH manages all of our properties. Additionally, the Company may pay BH certain other fees, including: (1) a fee of $15.00 per unit for the one-time setup and inspection of properties, (2) a construction supervision fee of 5-6% of total project costs, which is capitalized, (3) acquisition fees and due diligence costs reimbursements, and (4) other owner approved fees at $55 per hour. BH also acts as a paymaster for the properties and is reimbursed for various operating expenses it pays on their behalf. The following is a summary of fees that the properties incurred to BH and its affiliates, as well as reimbursements paid to BH from the properties for various operating expenses, for the three and six months ended June 30, 2016 and 2015 (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2016		2015		2016		2015
Fees incurred
Property management fees (1)	$	1,013	$	858	$	2,018	$	1,617
Construction supervision fees (2)		172		394		377		535
Acquisition fees (3)		—		162		—		1,353
Reimbursements
Payroll and benefits (4)		3,881		3,103		8,072		6,137
Other reimbursements (5)		705		1,307		1,005		1,556

(1) Included in property management fees on the combined consolidated statements of operations and comprehensive income (loss).

(2) Capitalized on the consolidated balance sheets and reflected in buildings and improvements.

(3) Includes due diligence costs and are included in acquisition costs on the combined consolidated statements of operations and comprehensive income (loss).

(4) Included in property operating expenses on the combined consolidated statements of operations and comprehensive income (loss).

(5) Includes various operating expenses such as repairs and maintenance costs and property general and administrative expenses, which are included on the combined consolidated statements of operations and comprehensive income (loss).

Asset Management Fee

In accordance with the operating agreement of each entity that owns the real estate properties, the Company earns an asset management fee for services provided in connection with monitoring the operations of the properties. The asset management fee is equal to 0.5% per annum of the aggregate effective gross income of the properties, as defined in each of the operating agreements. For the three months ended June 30, 2016 and 2015, the properties incurred asset management fees to the Company of approximately $0.2 million and $0.1 million, respectively. For the six months ended June 30, 2016 and 2015, the properties incurred asset management fees to the Company of approximately $0.3 million and $0.3 million, respectively. Since the fees are paid to the Company (and not the Adviser) by consolidated properties, they have been eliminated in consolidation. However, because our joint venture partners own a portion of each entity, with the exception of The Miramar Apartments, they absorb their pro rata share of the asset management fee. This amount is reflected on the combined consolidated statements of operations and comprehensive income (loss) in the net income (loss) attributable to noncontrolling interests.

Advisory and Administrative Fee

Prior to the Spin-Off, the predecessor paid NexPoint Advisors, an affiliate of the Adviser, an annual advisory fee, paid monthly, in an amount equal to 1.00% of the average weekly value of the predecessor’s “Managed Assets.” The predecessor’s Managed Assets were an amount equal to the total assets of the predecessor, including any form of leverage, minus all accrued expenses incurred in the normal course of operations, but not excluding any liabilities or obligations attributable to investment leverage obtained through (i) indebtedness of any type (including, without limitation, borrowing through a credit facility or the issuance of debt securities), (ii) the issuance of preferred stock or other preference securities, (iii) the reinvestment of collateral received for securities loaned in accordance with the predecessor’s investment objectives and policies, and/or (iv) any other means.

Additionally, the predecessor paid NexPoint Advisors an administrative fee for services to the predecessor. The administrative fee was payable monthly, in an amount equal to 0.20% of the average weekly value of the predecessor’s Managed Assets. The advisory and administrative fees were paid by the predecessor on behalf of the Company.

Following the Spin-Off and in accordance with the Advisory Agreement, the Company pays the Adviser an advisory fee equal to 1.00% of the Average Real Estate Assets (as defined below). The duties performed by our Adviser under the terms of the Advisory Agreement include, but are not limited to: providing daily management for us, selecting and working with third party service providers, managing our properties or overseeing the third party property manager, formulating an investment strategy for us and selecting suitable properties and investments for us, managing our outstanding debt on properties, managing our interest rate exposure through derivative instruments, determining when to sell assets, and managing the value-add program or overseeing a third party vendor that implements the value-add program. “Average Real Estate Assets” means the average of the aggregate book value of Real Estate Assets before reserves for depreciation or other non-cash reserves, computed by taking the average of the book value of real estate assets at the end of each month (1) for which any fee under the Advisory Agreement is calculated or (2) during the year for which any expense reimbursement under the Advisory Agreement is calculated. “Real Estate Assets” is defined broadly in the Advisory Agreement to include, among other things, investments in real estate-related securities and mortgages and reserves for capital expenditures (the value-add program). The advisory fee is payable monthly in arrears in cash, unless the Adviser elects, in its sole discretion, to receive all or a portion of the advisory fee in shares of common stock, subject to certain limitations.

In accordance with the Advisory Agreement, the Company also pays the Adviser an administrative fee equal to 0.20% of the Average Real Estate Assets. The administrative fee is payable monthly in arrears in cash, unless the Adviser elects, in its sole discretion, to receive all or a portion of the administrative fee in shares of common stock, subject to certain limitations. The advisory and administrative fees paid to the Adviser on the Contributed Assets (as defined below) are subject to a stipulated cap.

Pursuant to the terms of the Advisory Agreement, the Company will reimburse the Adviser for all documented Operating Expenses and Offering Expenses it incurs on behalf of the Company. Operating Expenses include legal, accounting, financial and due diligence services performed by the Adviser that outside professionals or outside consultants would otherwise perform, the Company’s pro rata share of rent, telephone, utilities, office furniture, equipment, machinery and other office, internal and overhead expenses of the Adviser required for the Company’s operations, and compensation expenses under the 2016 LTIP, the Company’s long term incentive plan. Operating Expenses do not include expenses for the advisory and administrative services described in the Advisory Agreement. Certain Operating Expenses, such as our ratable share of rent, telephone, utilities, office furniture, equipment, machinery and other office, internal and overhead expenses incurred by the Adviser or its affiliates that relate to the operations of the Company, will be billed monthly to us under a shared services agreement. Offering Expenses include all expenses (other than underwriters’ discounts) in connection with an offering, including, without limitation, legal, accounting, printing, mailing and filing fees and other documented offering expenses. For the three and six months ended June 30, 2016 and the three months ended June 30, 2015, the Adviser did not bill any operating or offering expenses to the Company and any such expenses the Adviser incurred during the periods are considered to be permanently waived.

Expense Cap

Pursuant to the terms of the Advisory Agreement, as amended, expenses paid or incurred by the Company for advisory and administrative fees payable to the Adviser and Operating Expenses will not exceed 1.5% of Average Real Estate Assets per calendar year (or part thereof that the Advisory Agreement is in effect (the “Expense Cap”)). The Expense Cap does not limit the reimbursement of expenses related to Offering Expenses. The Expense Cap also does not apply to legal, accounting, financial, due diligence and other service fees incurred in connection with mergers and acquisitions, extraordinary litigation or other events outside the Company’s ordinary course of business or any out-of-pocket acquisitions or due diligence expenses incurred in connection with the acquisition or disposition of real estate assets. Also, advisory and administrative fees are further limited on Contributed Assets to approximately $5.4 million in any calendar year. Contributed Assets refers to all Real Estate Assets contributed to the Company as part of the Spin-Off. Advisory and administrative fees on New Assets are not subject to the above limitation but are subject to the Expense Cap. New Assets are all Real Estate Assets that are not Contributed Assets.

For the three months ended June 30, 2016 and 2015, the Company incurred advisory and administrative fees of $1.6 million and $1.4 million, respectively. For the six months ended June 30, 2016 and 2015, the Company incurred advisory and administrative fees of $3.2 million and $2.7 million, respectively. These fees are reflected on the combined consolidated statements of operations and comprehensive income (loss) in advisory and administrative fees. The allocation of advisory and administrative fees prior to the Spin-Off is based on the terms of the Advisory Agreement between the Company’s predecessor and NexPoint Advisors. In management’s estimation, the allocation methodologies used are reasonable and result in a reasonable allocation of operating costs borne by the Company’s predecessor; however, these allocations may not be indicative of the cost of future operations or the amount of future allocations. The amount paid for the three and six months ended June 30, 2016 represents the maximum fee allowed on Contributed Assets under the Advisory Agreement plus approximately $0.3 million and $0.6 million, respectively, of advisory and administrative fees incurred on Madera Point, The Pointe at the Foothills, and The Place at Vanderbilt, defined as New Assets pursuant to the terms of the Advisory Agreement.

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Commitment and Contingencies

6 Months Ended

Jun. 30, 2016

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

10. Commitments and Contingencies

Commitments

In the normal course of business, the Company enters into various rehabilitation construction related purchase commitments with parties that provide these goods and services. In the event the Company were to terminate rehabilitation construction services prior to the completion of projects, the Company could potentially be committed to satisfy outstanding or uncompleted purchase orders with such parties. As of June 30, 2016, management does not anticipate any material deviations from schedule or budget related to rehabilitation projects currently in process.  

Contingencies

In the normal course of business, the Company is subject to claims, lawsuits and legal proceedings. While it is not possible to ascertain the ultimate outcome of all such matters, management believes that the aggregate amount of such liabilities, if any, in excess of amounts provided or covered by insurance, will not have a material adverse effect on the consolidated balance sheets or combined consolidated statements of operations and comprehensive income (loss) of the Company. The Company is not involved in any material litigation nor, to management’s knowledge, is any material litigation currently threatened against the Company or its properties or subsidiaries.

The Company is not aware of any environmental liability with respect to the properties that could have a material adverse effect on the Company’s business, assets or results of operations. However, there can be no assurance that such a material environmental liability does not exist. The existence of any such material environmental liability could have an adverse effect on the Company’s results of operations and cash flows.

During the three months ended June 30, 2016, the Company sold three properties, for which BH Equity and its affiliates may be entitled to certain profits interests pursuant to a portfolio joint venture agreement covering the Company's Jacksonville portfolio. Upon achieving certain performance hurdles, not to exceed an additional 10% of the net proceeds from sales or refinancings and based upon estimated distributions upon a hypothetical liquidation of each of the Jacksonville properties (assuming they are liquidated and proceeds distributed and not reinvested through 1031 exchanges or similar deferment strategies), BH Equity and its affiliates may earn an additional profit interest in the Jacksonville portfolio in a range from $0 to $2.0 million. Inputs reflect the Company’s best estimate of what market participants would use in pricing the properties giving consideration to the terms of the joint venture agreements and the estimated discounted future cash flows to be generated from the underlying properties through disposition. The inputs and assumptions utilized to estimate the future cash flows of the underlying properties are based upon the Company’s evaluation of the economy, market trends, operating results, and other factors, including judgments regarding occupancy rates, rental rates, inflation rates, capitalization rates utilized to estimate the projected cash flows at the disposition, and discount rates. As the additional profit interest BH Equity and its affiliates may earn on these investments is reasonably possible, but not reasonably estimable, the Company has concluded that it is not appropriate to accrue a liability for these additional profit interests on its combined consolidated financial statements.

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Subsequent Events

6 Months Ended

Jun. 30, 2016

Subsequent Events [Abstract]

Subsequent Events

11. Subsequent Events

Acquisition of Multifamily Property

The Company acquired the following property subsequent to June 30, 2016 (dollars in thousands) (unaudited):

Property Name	Location	Date of Acquisition	Purchase Price		Debt			# Units		Noncontrolling Interest			Effective Ownership
CityView	West Palm Beach, Florida	July 27, 2016	$	22,421	$	15,812	(1)		217		5	%		95	%

(1) The Company assumed a 4.49% fixed-rate loan that was originally issued on July 24, 2015 and matures on August 1, 2025. 

Interest Rate Swap Agreements

On July 1, 2016, the Company had three interest rate swap transactions that became effective. The Company, through the OP, previously entered into these interest rate swap transactions with KeyBank. The following table contains summary information regarding the Company’s outstanding interest rate swaps (dollars in thousands):

Trade Date	Effective Date	Termination Date	Notional Amount		Fixed Rate				Floating Rate Option
May 13, 2016	July 1, 2016	June 1, 2021	$	100,000		1.1055	%		One-month LIBOR
June 13, 2016	July 1, 2016	June 1, 2021		100,000		1.0210	%		One-month LIBOR
June 30, 2016	July 1, 2016	June 1, 2021		100,000		0.9000	%		One-month LIBOR
			$	300,000		1.0088	%	(1)

(1) Represents the weighted average fixed rate of the interest rate swaps.

Bridge Facility Payoff

On August 2, 2016, the Company paid the remaining $2.0 million of principal outstanding on its Bridge Facility with cash on hand, and the Bridge Facility was retired.

Share Repurchase Program

Subsequent to June 30, 2016, the Company purchased 22,055 shares of its common stock, $0.01 par value per share, at a total cost of approximately $398,000, or $18.07 per share. As of August 8, 2016, the Company had purchased 27,055 shares of its common stock, $0.01 par value per share, at a total cost of approximately $486,000, or $17.99 per share, which will be included in common stock held in treasury at cost on the Company’s consolidated balance sheet.

Dividends Declared

On August 8, 2016, the Company’s board of directors declared a quarterly dividend of $0.206 per share,payable on September 30, 2016 to stockholders of record on September 15, 2016.

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Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2016

Accounting Policies [Abstract]

Predecessor

Predecessor

With the exception of a nominal amount of initial cash funded at inception, the Company did not own any assets prior to March 31, 2015. The business and operations of the Company prior to March 31, 2015 occurred under the predecessor. Our predecessor included all of the properties in our Portfolio that were held directly or indirectly by Freedom REIT, a wholly owned subsidiary of NHF, prior to the Spin-Off that occurred on March 31, 2015. However, our combined consolidated statements of operations and comprehensive income (loss) and combined consolidated statements of cash flows reflect operations of our predecessor through March 31, 2015 as if they were incurred by us. Our predecessor was determined in accordance with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). References throughout these combined consolidated financial statements to the “Company”, “we”, or “our”, include the activity of the predecessor defined above.

Basis of Accounting

Basis of Accounting

The accompanying unaudited combined consolidated financial statements of the Company are prepared in accordance with Generally Accepted Accounting Principles (“GAAP”). The consolidated balance sheets include the accounts of the Company and its subsidiaries. Our predecessor combined consolidated financial statements were derived from the historical accounting records of our predecessor and reflect the historical results of operations and cash flows for the period prior to the Spin-Off. All intercompany balances and transactions are eliminated in combination and consolidation. The financial statements of the Company’s subsidiaries are prepared using accounting polices consistent with those of the Company. In addition, the Company evaluates relationships with other entities to identify whether there are variable interest entities (“VIE’s”) as required by the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 810, Consolidation, and to assess whether it is the primary beneficiary of such entities. If the determination is made that the Company is the primary beneficiary, then that entity is included in the financial statements in accordance with FASB ASC 810. In the opinion of the Company’s management, the accompanying combined consolidated financial statements include all adjustments and eliminations, consisting only of normal recurring items necessary for their fair presentation in conformity with GAAP. The unaudited information included in this quarterly report on Form 10-Q should be read in conjunction with our audited financial statements for the year ended December 31, 2015 and notes thereto included in our annual report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 21, 2016. There have been no significant changes to the Company’s significant accounting policies during the six months ended June 30, 2016.

Use of Estimates

Use of Estimates

The preparation of the combined consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the date of the combined consolidated financial statements, and the reported amounts of revenues and expenses during the reporting periods. It is at least reasonably possible that these estimates could change in the near term.

Real Estate Investments

Real Estate Investments

Upon acquisition, in accordance with FASB ASC 805, Business Combinations, the purchase price of a property is allocated to land, buildings, improvements, furniture, fixtures, and equipment, and intangible lease assets. The purchase price allocation is based on management’s estimate of the property’s “as-if” vacant fair value, which is calculated by using all available information such as the replacement cost of such asset, appraisals, property condition reports, market data and other related information. The allocation of the purchase price to intangible lease assets represents the value associated with the in-place leases, which may include lost rent, leasing commissions, legal and other related costs, which the Company, as buyer of the property, did not have to incur to obtain the residents.

If any debt is assumed in an acquisition, the difference between the fair value and the face value of debt is recorded as a premium or discount and amortized to interest expense over the life of the debt assumed. Costs associated with the acquisition of a property, including acquisition fees paid, are expensed upon closing the acquisition.

The results of operations for acquired properties are included in the combined consolidated statements of operations and comprehensive income (loss) from their respective acquisition dates.

Real estate assets, including land, buildings, improvements, furniture, fixtures and equipment, and intangible lease assets are stated at historical cost less accumulated depreciation and amortization. Costs incurred in making repairs and maintaining real estate assets are expensed as incurred. Expenditures for improvements, renovations, and replacements are capitalized at cost. Real estate-related depreciation and amortization are computed on a straight-line basis over the estimated useful lives as described in the following table:

Land	Not depreciated
Buildings	30 years
Improvements	15 years
Furniture, fixtures, and equipment	3 years
Intangible lease assets	6 months

Construction in progress includes the cost of renovation projects being performed at the various properties. Once a project is complete, the historical cost of the renovation is placed into service in one of the categories above depending on the type of renovation project and is depreciated over the estimated useful lives as described in the table above.

The Company periodically classifies real estate assets as held for sale. An asset is classified as held for sale after an active program to sell the asset has commenced or the asset is under contract for sale and after the evaluation of other factors. Upon the classification of a real estate asset as held for sale, the carrying value of the asset is reduced to the lower of its net book value or its estimated fair value, less costs to sell the asset, and no further depreciation expense is recorded. Upon a decision to no longer market an asset for sale, the asset is classified as an operating asset and depreciation expense is reinstated. Real estate assets and the related debt held for sale are stated separately on the accompanying consolidated balance sheets.

Impairment

Impairment

Real estate assets that are determined to be held and used will be reviewed periodically for impairment and whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In such cases, the Company will evaluate the recoverability of such real estate assets based on estimated future cash flows and the estimated liquidation value of such real estate assets, and provide for impairment if such undiscounted cash flows are insufficient to recover the carrying amount of the real estate asset. If impaired, the real estate asset will be written down to its estimated fair value. For the three and six month periods ended June 30, 2016 and 2015, the Company did not record any impairment charges related to real estate assets.

Cash and Cash Equivalents

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Cash equivalents may include cash and short-term investments. Short-term investments are stated at cost, which approximates fair value.

Restricted Cash

Restricted Cash

Restricted cash is comprised of security deposits, operating escrows, and renovation value-add reserves. Security deposits are held until they are due to tenants and are credited against the balance. Operating escrows are required and held by our first mortgage lender(s) for items such as real estate taxes, insurance, and required repairs. Lender held escrows are released back to the joint venture upon the borrower’s proof of payment of such expenses. Renovation value-add reserves are funds identified to finance our value-add renovations at each of our properties and are not required to be held in escrow by a third party. The Company may reallocate these funds, at its discretion, to pursue other investment opportunities. The following is a summary of the restricted cash held as of June 30, 2016 and December 31, 2015 (in thousands):

	June 30, 2016		December 31, 2015
Security deposits	$	963	$	1,034
Operating escrows		17,433		21,312
Renovation value-add reserves		15,804		24,523
	$	34,200	$	46,869

Deferred Financing Costs

Deferred Financing Costs

The Company defers costs incurred in obtaining financing and amortizes the costs over the terms of the related loans using the straight-line method, which approximates the effective interest method. Upon repayment of or in conjunction with a material change in the terms of the underlying debt agreement, any unamortized costs are charged to interest expense. Deferred financing costs, net of amortization, of $4.0 million and $6.0 million are recorded as a deduction from mortgages payable on the accompanying consolidated balance sheets as of June 30, 2016 and December 31, 2015, respectively. Deferred financing costs, net of amortization, of $3.7 million and $0.2 million are recorded as a deduction from the debt related to the Company’s credit facility and bridge facility on the accompanying consolidated balance sheets as of June 30, 2016 and December 31, 2015, respectively. Amortization of deferred financing costs of $0.7 million and $0.2 million is included in interest expense on the consolidated statements of operations and comprehensive income (loss) for the three months ended June 30, 2016 and 2015, respectively. For the three months ended June 30, 2016, the Company incurred amortization of deferred financing costs of approximately $0.3 million related to its sales of three properties (see Note 4). Amortization of deferred financing costs of $1.0 million and $0.6 million is included in interest expense on the combined consolidated statements of operations and comprehensive income (loss) for the six months ended June 30, 2016 and 2015, respectively.  

Noncontrolling Interests

Noncontrolling Interests

Noncontrolling interests are comprised of the Company’s joint venture partners’ interests in the joint ventures in multifamily properties that the Company consolidates. The Company reports its joint venture partners’ interests in its consolidated real estate joint ventures and other subsidiary interests held by third parties as noncontrolling interests. The Company records these noncontrolling interests at their initial fair value, adjusting the basis prospectively for their share of the respective consolidated investment’s net income or loss and equity contributions and distributions. These noncontrolling interests are not redeemable by the equity holders and are presented as part of permanent equity. Income and losses are allocated to the noncontrolling interest holder based on its economic ownership percentage.

Accounting for Joint Ventures

Accounting for Joint Ventures

The Company first analyzes its investments in joint ventures to determine if the joint venture is a VIE in accordance with FASB ASC 810, and if so, whether the Company is the primary beneficiary requiring consolidation. A VIE is an entity that has (i) insufficient equity to permit it to finance its activities without additional subordinated financial support or (ii) equity holders that lack the characteristics of a controlling financial interest. VIEs are consolidated by the primary beneficiary, which is the entity that has both the power to direct the activities that most significantly impact the VIE’s economic performance and the obligation to absorb losses or the right to receive benefits from the VIE that potentially could be significant to the primary beneficiary. Variable interests in a VIE are contractual, ownership, or other financial interests that change with changes in the fair value of the VIE’s net assets. The Company assesses at each level of the joint venture whether the entity is (i) a VIE, and (ii) if the Company is the primary beneficiary of the VIE. If an entity in which the Company holds a joint venture interest qualifies as a VIE and the Company is determined to be the primary beneficiary, the joint venture is consolidated.

The following table represents the Company’s investments in VIEs as of June 30, 2016 and December 31, 2015:

Property Name		Location	YearAcquired	Effective Ownership Percentage at June 30, 2016				Effective Ownership Percentage at December 31, 2015
Meridian		Austin, Texas	2014		—		(2)		90	%
The Grove at Alban	(1)	Frederick, Maryland	2014		76	%			76	%
Willowdale Crossing	(1)	Frederick, Maryland	2014		80	%			80	%
Abbington Heights		Antioch, Tennessee	2014		90	%			90	%
The Summit at Sabal Park		Tampa, Florida	2014		90	%			90	%
Courtney Cove		Tampa, Florida	2014		90	%			90	%
Colonial Forest	(1)	Jacksonville, Florida	2014		90	%			90	%
Park at Blanding	(1)	Orange Park, Florida	2014		90	%			90	%
Park at Regency		Jacksonville, Florida	2014		—		(2)		90	%
Jade Park	(1)	Daytona Beach, Florida	2014		90	%			90	%
Mandarin Reserve		Jacksonville, Florida	2014		—		(2)		90	%
Radbourne Lake		Charlotte, North Carolina	2014		90	%			90	%
Timber Creek		Charlotte, North Carolina	2014		90	%			90	%
Belmont at Duck Creek		Garland, Texas	2014		90	%			90	%
The Arbors		Tucker, Georgia	2014		90	%			90	%
The Crossings		Marietta, Georgia	2014		90	%			90	%
The Crossings at Holcomb Bridge		Roswell, Georgia	2014		90	%			90	%
The Knolls		Marietta, Georgia	2014		90	%			90	%
Regatta Bay		Seabrook, Texas	2014		90	%			90	%
Sabal Palm at Lake Buena Vista		Orlando, Florida	2014		90	%			90	%
Southpoint Reserve at Stoney Creek		Fredericksburg, Virginia	2014		85	%			85	%
Cornerstone		Orlando, Florida	2015		90	%			90	%
McMillan Place		Dallas, Texas	2015		90	%			90	%
Barrington Mill		Marietta, Georgia	2015		90	%			90	%
Dana Point		Dallas, Texas	2015		90	%			90	%
Heatherstone		Dallas, Texas	2015		90	%			90	%
Versailles		Dallas, Texas	2015		90	%			90	%
Seasons 704 Apartments		West Palm Beach, Florida	2015		90	%			90	%

(1) Properties are classified as held for sale as of June 30, 2016.

(2) Properties were sold during the six months ended June 30, 2016.

The following table represents the Company’s investments in voting interest entities as of June 30, 2016 and December 31, 2015:

Property Name	Location	YearAcquired	Effective Ownership Percentage at June 30, 2016			Effective Ownership Percentage at December 31, 2015
The Miramar Apartments	Dallas, Texas	2013		100	%		100	%
Arbors on Forest Ridge	Bedford, Texas	2014		90	%		90	%	(1)
Cutter’s Point	Richardson, Texas	2014		90	%		90	%	(1)
Eagle Crest	Irving, Texas	2014		90	%		90	%	(1)
Silverbrook	Grand Prairie, Texas	2014		90	%		90	%	(1)
Timberglen	Dallas, Texas	2014		90	%		90	%	(1)
Toscana	Dallas, Texas	2014		90	%		90	%	(1)
Edgewater at Sandy Springs	Atlanta, Georgia	2014		90	%		90	%	(1)
Beechwood Terrace	Nashville, Tennessee	2014		90	%		90	%	(1)
Willow Grove	Nashville, Tennessee	2014		90	%		90	%	(1)
Woodbridge	Nashville, Tennessee	2014		90	%		90	%	(1)
Madera Point	Mesa, Arizona	2015		95	%		95	%
The Pointe at the Foothills	Mesa, Arizona	2015		95	%		95	%
The Place at Vanderbilt	Fort Worth, Texas	2015		95	%		95	%

(1) Properties were considered VIEs at December 31, 2015.

In connection with its indirect equity investments in the properties acquired, the Company, through the OP, directly or indirectly holds membership interests in single-asset LLCs that directly own the properties. In instances where the Company acquires multiple properties under a single purchase and sale agreement (a “Portfolio Acquisition”), the Company directly or indirectly holds membership interests in the single-asset LLCs that directly own the properties through a multiple-asset LLC. Under these arrangements, the multiple-asset LLC is the sole member of all single-asset LLCs which directly own the properties. The majority of these entities are deemed to be VIEs as we have disproportionate voting rights (in the form of substantive participating rights over all of the decisions that are made that most significantly affect economic performance) relative to our economic interests in the entities and substantially all of the activities of the entities are performed on our behalf. The Company is considered the primary beneficiary of these VIEs as no single party meets both criteria to be the primary beneficiary, and we are the member of the related party group that has both the power to direct the activities that most significantly impact economic performance of the VIE and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. Within the related party group, the Company is the most closely associated to the VIE based on the purpose and design of the entity, the size of our ownership interests relative to the other investors, and the rights we hold with respect to the other investors’ equity interests, including our ability to preclude any transfers of their interests and ability to drag them along on the sale of our equity interest. All VIEs are consolidated in the Company’s financial statements. The assets of each VIE can only be used to settle obligations of that particular VIE, and the creditors of each entity have no recourse to the assets of other entities or the Company.

The other investor in the VIEs is BH Equities, LLC (“BH Equity”) or affiliates of BH Equity. When these VIEs were formed, BH Equity invested cash in each VIE and received a proportional share of each VIE that it invested in. Each VIE has a non-recourse mortgage that has standard scope non-recourse carve outs required by agency lenders and generally call for protection by the borrower and the guarantor against losses by the lender for so-called “bad acts,” such as misrepresentations, and may include full recourse liability for more significant events such as bankruptcy. BH Equity, or its affiliates, provided non-recourse carve out guarantees for the mortgage indebtedness currently outstanding relating to each VIE. In consideration of the guarantees provided by BH Equity and its affiliates, they will earn an additional profit interest in each VIE such that distributions will be made to the members of the VIE pro rata in proportion to their relative percentage interests until the members have received an internal rate of return equal to 13%. Then, the proportion of distributions changes to a predetermined allocation according to the agreements between each VIE and BH Equity or its affiliates. In instances where membership interests in individual properties are held through a multiple-asset LLC, consideration of additional profit interest is calculated at the multiple-asset LLC level. Therefore, distributions will be made to the members pro rata in proportion to their relative percentage interests in the multiple-asset LLC until the members have received an internal rate of return equal to 13%. Then, the proportion of distributions changes to a predetermined allocation according to the multiple-asset LLC agreements between each VIE and BH Equity or its affiliates.

Revenue Recognition

Revenue Recognition

The Company’s primary operations consist of rental income earned from its residents under lease agreements with terms of one year or less. Rental income is recognized when earned. This policy effectively results in income recognition on the straight-line method over the related terms of the leases. Resident reimbursements and other income consist of charges billed to residents for utilities, carport and garage rental, pets, administrative, application and other fees and are recognized when earned.

Asset Management & Property Management Services

Asset Management & Property Management Services

Asset management fee and property management fee expenses are recognized when incurred in accordance with each management agreement (see Note 9).

Income Taxes

Income Taxes

The Company intends to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the “Code”), and expects to qualify as a REIT. To qualify as a REIT, the Company must meet a number of organizational and operational requirements, including a requirement to distribute annually at least 90% of its “REIT taxable income,” as defined by the Code, to its stockholders. As a REIT, the Company will be subject to federal income tax on its undistributed REIT taxable income and net capital gain and to a 4% nondeductible excise tax on any amount by which distributions it pays with respect to any calendar year are less than the sum of (a) 85% of its ordinary income, (b) 95% of its capital gain net income and (c) 100% of its undistributed income from prior years. The Company intends to operate in such a manner so as to qualify as a REIT, including creating taxable REIT subsidiaries to hold assets that generate income that would not be consistent with the rules applicable for qualification as a REIT if held directly by the REIT, but no assurance can be given that the Company will operate in a manner so as to qualify as a REIT. If the Company were to fail to meet these requirements, it could be subject to federal income tax on all of the Company’s taxable income at regular corporate rates for that year. The Company would not be able to deduct distributions paid to stockholders in any year in which it fails to qualify as a REIT. Additionally, the Company will also be disqualified from electing to be taxed as a REIT for the four taxable years following the year during which qualification was lost unless the Company is entitled to relief under specific statutory provisions. As of June 30, 2016, the Company believes it is in compliance with all applicable REIT requirements.

Reportable Segment

Reportable Segment

Substantially all of the Company’s net income (loss) is from investments in real estate properties within the multifamily sector that the Company owns through LLCs. The Company evaluates operating performance on an individual property level and views its real estate assets as one industry segment and, accordingly, its properties are aggregated into one reportable segment.

Concentration of Credit Risk

Concentration of Credit Risk

The Company maintains cash balances with high quality financial institutions, including NexBank, an affiliate of our Adviser, and periodically evaluates the creditworthiness of such institutions and believes that the Company is not exposed to significant credit risk. Cash balances may be in excess of the amounts insured by the Federal Deposit Insurance Corporation.

Fair Value Measurements

Fair Value Measurements

Fair value measurements are determined based on the assumptions that market participants would use in pricing an asset or liability. As a basis for considering market participant assumptions in fair value measurements, FASB ASC 820, Fair Value Measurement and Disclosures, establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy)

· Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access.

· Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs may include quoted prices for similar assets and liabilities in active markets, as well as inputs that are observable for the asset or liability (other than quoted prices), such as interest rates and yield curves that are observable at commonly quoted intervals.

· Level 3 inputs are the unobservable inputs for the asset or liability, which are typically based on an entity’s own assumption, as there is little, if any, related market activity. In instances where the determination of the fair value measurement is based on input from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety.

The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. The Company utilizes an independent third party to perform the allocation of value analysis for each property acquisition and also to perform the market valuations on the interest rate caps and has established policies, as described above, processes and procedures intended to ensure that the valuation methodologies for investments and interest rate caps are fair and consistent as of the measurement date.

Per Share Data

Per Share Data

The Company began operations on March 31, 2015, as described above, and therefore the Company had no operating activities or earnings (loss) per share before March 31, 2015. However, for purposes of the combined consolidated statements of operations and comprehensive income (loss), the Company has presented basic and diluted earnings (loss) per share as if the operating activities of the predecessor were those of the Company and assuming the shares outstanding at the date of the Spin-Off were outstanding for all periods prior to the Spin-Off. Basic earnings (loss) per share will be shown for all periods presented and computed by dividing net income (loss) by the weighted average number of shares of the Company’s common stock outstanding, which is adjusted for shares classified as treasury shares during the period (see Note 8). Diluted earnings (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. There were no potentially dilutive securities for any of the periods presented. For the three months ended June 30, 2016 and 2015, the Company incurred earnings (loss) per share of $0.69 and $(0.11), respectively. For the six months ended June 30, 2016 and 2015, the Company incurred earnings (loss) per share of $0.68 and $(0.36), respectively.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 13(a) of the Exchange Act, for complying with new or revised accounting standards applicable to public companies. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of this extended transition period. As a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates for such new or revised standards. We may elect to comply with public company effective dates at any time, and such election would be irrevocable pursuant to Section 107(b) of the JOBS Act. The following recent accounting pronouncements reflect effective dates that delay the adoption until those standards would otherwise apply to private companies.

In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements – Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, which requires management to evaluate whether there are conditions and events that raise substantial doubt about an entity’s ability to continue as a going concern, and to provide disclosures when it is probable that the entity will be unable to meet its obligations as they become due within one year after the date that the financial statements are issued. The ASU is effective for annual and interim periods beginning after December 15, 2015, with early adoption being permitted. The Company implemented the provisions of ASU 2014-15 as of January 1, 2016 and there was no material impact on its combined consolidated financial statements.

In April 2015, the FASB issued ASU 2015-03, Interest-Imputation of Interest, which changes the way reporting enterprises record debt issuance costs. The ASU requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct reduction from the carrying amount of that debt liability, consistent with debt discounts. The ASU is effective for annual and interim reporting periods beginning after December 15, 2015. In August 2015, the FASB issued ASU 2015-15, Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements, which supplements the requirements of ASU 2015-03 by allowing an entity to defer and present debt issuance costs related to a line of credit arrangement as an asset and subsequently amortize the deferred costs ratably over the term of the line of credit arrangement. The Company implemented the provisions of ASU 2015-03 and ASU 2015-15 as of January 1, 2016. The retrospective application required upon adoption of ASU 2015-03 resulted in a reclassification of approximately $6.2 million of debt issuance costs from deferred financing costs, net, to a deduction from debt in its consolidated balance sheet as of December 31, 2015. At December 31, 2015, the following amounts of deferred financing costs were reclassified (in thousands):

	Assets			Liabilities
	Deferred financing costs, net			Bridge facility, net			Mortgages payable, net
December 31, 2015
As previously presented	$	6,213		$	29,000		$	682,342
Reclassification of deferred financing costs, net		(6,213	)		(195	)		(6,018	)
As presented herein	$	—		$	28,805		$	676,324

In February 2015, the FASB issued ASU 2015-02, Amendments to the Consolidation Analysis, which changes the way reporting enterprises evaluate whether (a) they should consolidate limited partnerships and similar entities, (b) fees paid to a decision maker or service provider are variable interests in a VIE, and (c) variable interests in a VIE held by related parties of the reporting enterprise require the reporting enterprise to consolidate the VIE. The ASU also significantly changes how to evaluate voting rights for entities that are not similar to limited partnerships when determining whether the entity is a VIE, which may affect entities for which the decision making rights are conveyed though a contractual arrangement. The ASU is effective for annual and interim periods in fiscal years beginning after December 15, 2016. The Company will implement the provisions of ASU 2015-02 as of January 1, 2017. The Company does not expect the new standard to have a material impact on its combined consolidated financial statements.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize 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 or services. An entity should also disclose sufficient quantitative and qualitative information to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers – Deferral of the Effective Date, which amends ASU 2014-09 to defer the effective date by one year. The new standard is effective for annual and interim reporting periods beginning after December 15, 2018. The Company expects to implement the provisions of ASU 2014-09 as of January 1, 2019. The Company has not yet determined the impact of the new standard on its current policies for revenue recognition.

In January 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, which changes certain recognition, measurement, presentation, and disclosure requirements for financial instruments. The ASU requires all equity investments, except those accounted for under the equity method of accounting or resulting in consolidation, to be measured at fair value with changes in fair value recognized in net income. The ASU also simplifies the impairment assessment for equity investments without readily determinable fair values, amends the presentation requirements for changes in the fair value of financial liabilities, requires presentation of financial instruments by measurement category and form of financial asset, and eliminates the requirement to disclose the methods and significant assumptions used in estimating the fair value of financial instruments. The ASU is effective for annual and interim periods beginning after December 15, 2018. The Company expects to implement the provisions of ASU 2016-01 as of January 1, 2019, and does not expect the new standard to have a material impact on its combined consolidated financial statements.

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Summary of Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2016

Accounting Policies [Abstract]

Estimated Useful Lives of Assets

Expenditures for improvements, renovations, and replacements are capitalized at cost. Real estate-related depreciation and amortization are computed on a straight-line basis over the estimated useful lives as described in the following table:

Land	Not depreciated
Buildings	30 years
Improvements	15 years
Furniture, fixtures, and equipment	3 years
Intangible lease assets	6 months

Summary of Restricted Cash Held

The following is a summary of the restricted cash held as of June 30, 2016 and December 31, 2015 (in thousands):

	June 30, 2016		December 31, 2015
Security deposits	$	963	$	1,034
Operating escrows		17,433		21,312
Renovation value-add reserves		15,804		24,523
	$	34,200	$	46,869

Schedule of Investments

The following table represents the Company’s investments in VIEs as of June 30, 2016 and December 31, 2015:

Property Name		Location	YearAcquired	Effective Ownership Percentage at June 30, 2016				Effective Ownership Percentage at December 31, 2015
Meridian		Austin, Texas	2014		—		(2)		90	%
The Grove at Alban	(1)	Frederick, Maryland	2014		76	%			76	%
Willowdale Crossing	(1)	Frederick, Maryland	2014		80	%			80	%
Abbington Heights		Antioch, Tennessee	2014		90	%			90	%
The Summit at Sabal Park		Tampa, Florida	2014		90	%			90	%
Courtney Cove		Tampa, Florida	2014		90	%			90	%
Colonial Forest	(1)	Jacksonville, Florida	2014		90	%			90	%
Park at Blanding	(1)	Orange Park, Florida	2014		90	%			90	%
Park at Regency		Jacksonville, Florida	2014		—		(2)		90	%
Jade Park	(1)	Daytona Beach, Florida	2014		90	%			90	%
Mandarin Reserve		Jacksonville, Florida	2014		—		(2)		90	%
Radbourne Lake		Charlotte, North Carolina	2014		90	%			90	%
Timber Creek		Charlotte, North Carolina	2014		90	%			90	%
Belmont at Duck Creek		Garland, Texas	2014		90	%			90	%
The Arbors		Tucker, Georgia	2014		90	%			90	%
The Crossings		Marietta, Georgia	2014		90	%			90	%
The Crossings at Holcomb Bridge		Roswell, Georgia	2014		90	%			90	%
The Knolls		Marietta, Georgia	2014		90	%			90	%
Regatta Bay		Seabrook, Texas	2014		90	%			90	%
Sabal Palm at Lake Buena Vista		Orlando, Florida	2014		90	%			90	%
Southpoint Reserve at Stoney Creek		Fredericksburg, Virginia	2014		85	%			85	%
Cornerstone		Orlando, Florida	2015		90	%			90	%
McMillan Place		Dallas, Texas	2015		90	%			90	%
Barrington Mill		Marietta, Georgia	2015		90	%			90	%
Dana Point		Dallas, Texas	2015		90	%			90	%
Heatherstone		Dallas, Texas	2015		90	%			90	%
Versailles		Dallas, Texas	2015		90	%			90	%
Seasons 704 Apartments		West Palm Beach, Florida	2015		90	%			90	%

(1) Properties are classified as held for sale as of June 30, 2016.

(2) Properties were sold during the six months ended June 30, 2016.

The following table represents the Company’s investments in voting interest entities as of June 30, 2016 and December 31, 2015:

Property Name	Location	YearAcquired	Effective Ownership Percentage at June 30, 2016			Effective Ownership Percentage at December 31, 2015
The Miramar Apartments	Dallas, Texas	2013		100	%		100	%
Arbors on Forest Ridge	Bedford, Texas	2014		90	%		90	%	(1)
Cutter’s Point	Richardson, Texas	2014		90	%		90	%	(1)
Eagle Crest	Irving, Texas	2014		90	%		90	%	(1)
Silverbrook	Grand Prairie, Texas	2014		90	%		90	%	(1)
Timberglen	Dallas, Texas	2014		90	%		90	%	(1)
Toscana	Dallas, Texas	2014		90	%		90	%	(1)
Edgewater at Sandy Springs	Atlanta, Georgia	2014		90	%		90	%	(1)
Beechwood Terrace	Nashville, Tennessee	2014		90	%		90	%	(1)
Willow Grove	Nashville, Tennessee	2014		90	%		90	%	(1)
Woodbridge	Nashville, Tennessee	2014		90	%		90	%	(1)
Madera Point	Mesa, Arizona	2015		95	%		95	%
The Pointe at the Foothills	Mesa, Arizona	2015		95	%		95	%
The Place at Vanderbilt	Fort Worth, Texas	2015		95	%		95	%

(1) Properties were considered VIEs at December 31, 2015.

Schedule of Reclassification of Deferred Financing Costs

At December 31, 2015, the following amounts of deferred financing costs were reclassified (in thousands):

	Assets			Liabilities
	Deferred financing costs, net			Bridge facility, net			Mortgages payable, net
December 31, 2015
As previously presented	$	6,213		$	29,000		$	682,342
Reclassification of deferred financing costs, net		(6,213	)		(195	)		(6,018	)
As presented herein	$	—		$	28,805		$	676,324

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Acquisitions (Tables)

6 Months Ended

Jun. 30, 2016

Multifamily Properties

Business Acquisition [Line Items]

Summary of Investment in Multifamily Properties

As of June 30, 2016, the Company is invested in a total of 39 multifamily properties as listed below:

Property Name		Rentable SquareFootage		Number of Units		Date Acquired	Average Effective Monthly Rent Per Unit (1)		% Occupied as of June 30, 2016 (2)			% Occupied as of December 31, 2015 (2)
The Miramar Apartments			183,100	314		10/31/2013	$	592		91.7	%		92.4	%
Arbors on Forest Ridge			154,556	210		1/31/2014		831		93.3	%		93.8	%
Cutter’s Point			197,972	196		1/31/2014		999		97.4	%		93.9	%
Eagle Crest			395,951	447		1/31/2014		821		92.2	%		95.5	%
Silverbrook			526,138	642		1/31/2014		733		94.5	%		93.6	%
Timberglen			221,376	304		1/31/2014		772		94.7	%		96.1	%
Toscana			115,400	192		1/31/2014		674		94.3	%		94.8	%
The Grove at Alban	(3)		267,300	290		3/10/2014		990		95.5	%		94.5	%
Willowdale Crossing	(3)		411,800	432		5/15/2014		955		93.8	%		88.9	%
Edgewater at Sandy Springs			726,774	760		7/18/2014		858		92.8	%		94.5	%
Beechwood Terrace			271,728	300		7/21/2014		827		95.3	%		97.3	%
Willow Grove			229,140	244		7/21/2014		815		95.9	%		95.9	%
Woodbridge			246,840	220		7/21/2014		921		92.3	%		96.4	%
Abbington Heights			238,974	274		8/1/2014		813		94.5	%		94.5	%
The Summit at Sabal Park			204,545	252		8/20/2014		880		92.9	%		92.5	%
Courtney Cove			224,958	324		8/20/2014		765		96.0	%		95.4	%
Colonial Forest	(3)		160,093	174		8/20/2014		654		96.6	%		94.8	%
Park at Blanding	(3)		116,410	117		8/20/2014		797		95.7	%		97.4	%
Jade Park	(3)		118,392	144		8/20/2014		773		95.8	%		90.3	%
Radbourne Lake			246,599	225		9/30/2014		997		94.7	%		96.9	%
Timber Creek			248,391	352		9/30/2014		772		94.9	%		94.3	%
Belmont at Duck Creek			198,279	240		9/30/2014		908		91.3	%		93.8	%
The Arbors			127,536	140		10/16/2014		806		97.1	%		94.3	%
The Crossings			377,840	380		10/16/2014		785		93.9	%		92.9	%
The Crossings at Holcomb Bridge			247,982	268		10/16/2014		820		97.0	%		95.9	%
The Knolls			311,160	312		10/16/2014		862		94.9	%		93.9	%
Regatta Bay			200,440	240		11/4/2014		1,037		93.3	%		93.3	%
Sabal Palm at Lake Buena Vista			370,768	400		11/5/2014		1,113		92.8	%		96.0	%
Southpoint Reserve at Stoney Creek			115,712	156		12/18/2014		1,005		93.6	%		94.9	%
Cornerstone			317,565	430		1/15/2015		846		93.7	%		93.3	%
McMillan Place			290,051	402		1/15/2015		679		91.8	%		91.3	%
Barrington Mill			692,180	752		2/6/2015		777		92.0	%		95.6	%
Dana Point			206,276	264		2/26/2015		752		92.0	%		92.8	%
Heatherstone			115,615	152		2/26/2015		813		96.1	%		94.1	%
Versailles			300,908	388		2/26/2015		789		94.6	%		90.2	%
Seasons 704 Apartments			216,891	222		4/15/2015		986		94.6	%		97.3	%
Madera Point			192,880	256		8/5/2015		768		89.8	%		93.8	%
The Pointe at the Foothills			472,952	528		8/5/2015		828		92.2	%		90.7	%
The Place at Vanderbilt			288,532	333		10/30/2015		746		91.0	%		92.8	%
			10,550,004		12,276

(1) Average effective monthly rent per unit is equal to the average of the contractual rent for commenced leases as of June 30, 2016 minus any tenant concessions over the term of the lease, divided by the number of units under commenced leases as of June 30, 2016.

(2) Percent occupied is calculated as the number of units occupied as of June 30, 2016 and December 31, 2015, divided by the total number of units, expressed as a percentage.

(3) Properties are classified as held for sale as of June 30, 2016. 

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Real Estate Investments (Tables)

6 Months Ended

Jun. 30, 2016

Real Estate [Abstract]

Summary of Major Components of Investments in Multifamily Properties

As of June 30, 2016, the major components of the Company’s investments in multifamily properties were as follows (in thousands):

Operating Properties	Land		Buildingsand Improvements			IntangibleLease Assets		Construction in Progress		Furniture, Fixtures and Equipment			Totals
The Miramar Apartments	$	1,580	$	8,721		$	—	$	48	$	639		$	10,988
Arbors on Forest Ridge		2,330		10,956			—		4		572			13,862
Cutter’s Point		3,330		12,789			—		—		737			16,856
Eagle Crest		5,450		21,900			—		12		955			28,317
Silverbrook		4,860		25,039			—		209		1,700			31,808
Timberglen		2,510		14,412			—		5		804			17,731
Toscana		1,730		7,276			—		5		606			9,617
Edgewater at Sandy Springs		14,290		43,666			—		24		2,822			60,802
Beechwood Terrace		1,390		20,466			—		10		713			22,579
Willow Grove		3,940		10,624			—		—		596			15,160
Woodbridge		3,650		12,652			—		43		669			17,014
Abbington Heights		1,770		16,285			—		54		804			18,913
The Summit at Sabal Park		5,770		13,317			—		9		806			19,902
Courtney Cove		5,880		12,864			—		49		766			19,559
Radbourne Lake		2,440		21,386			—		111		858			24,795
Timber Creek		11,260		13,140			—		42		681			25,123
Belmont at Duck Creek		1,910		16,997			—		—		712			19,619
The Arbors		1,730		6,508			—		13		298			8,549
The Crossings		3,982		17,487			—		145		1,129			22,743
The Crossings at Holcomb Bridge		5,560		10,758			—		—		954			17,272
The Knolls		3,410		17,615			—		8		1,319			22,352
Regatta Bay		1,660		16,130			—		73		688			18,551
Sabal Palm at Lake Buena Vista		7,580		41,103			—		1		761			49,445
Southpoint Reserve at Stoney Creek		6,120		10,950			—		195		497			17,762
Cornerstone		1,500		29,963			—		218		625			32,306
McMillan Place		3,610		17,855			—		101		761			22,327
Barrington Mill		10,170		47,559			—		338		1,764			59,831
Dana Point		4,090		12,126			—		123		814			17,153
Heatherstone		2,320		7,462			—		47		605			10,434
Versailles		6,720		20,160			—		76		1,263			28,219
Seasons 704 Apartments		7,480		13,788			—		202		544			22,014
Madera Point		4,920		16,799			—		41		613			22,373
The Pointe at the Foothills		4,840		45,821			—		5		990			51,656
The Place at Vanderbilt		2,350		16,369			—		351		802			19,872
		152,132		630,943			—		2,562		29,867			815,504
Accumulated depreciation and amortization		—		(37,671	)		—		—		(9,117	)		(46,788	)
Total Operating Properties	$	152,132	$	593,272		$	—	$	2,562	$	20,750		$	768,716
Held For Sale Properties
The Grove at Alban		3,640		19,033			—		—		1,215			23,888
Willowdale Crossing		4,650		35,657			—		27		974			41,308
Colonial Forest		2,090		3,490			—		—		372			5,952
Park at Blanding		2,610		4,033			—		6		322			6,971
Jade Park		1,490		6,414			—		30		432			8,366
		14,480		68,627			—		63		3,315			86,485
Accumulated depreciation and amortization		—		(4,605	)		—		—		(790	)		(5,395	)
Total Held For Sale Properties	$	14,480	$	64,022		$	—	$	63	$	2,525		$	81,090
Total	$	166,612	$	657,294		$	—	$	2,625	$	23,275		$	849,806

As of December 31, 2015, the major components of the Company’s investments in multifamily properties were as follows (in thousands):

Property Name	Land		Buildings and Improvements			Intangible Lease Assets			Construction in Progress		Furniture, Fixtures and Equipment			Totals
The Miramar Apartments	$	1,580	$	8,601		$	—		$	48	$	603		$	10,832
Arbors on Forest Ridge		2,330		10,948			—			—		524			13,802
Cutter's Point		3,330		12,747			—			37		621			16,735
Eagle Crest		5,450		21,846			—			15		743			28,054
Meridian		2,310		10,325			—			12		419			13,066
Silverbrook		4,860		24,909			—			118		1,475			31,362
Timberglen		2,510		14,379			—			20		703			17,612
Toscana		1,730		7,256			—			4		522			9,512
The Grove at Alban		3,640		18,994			—			66		911			23,611
Willowdale Crossing		4,650		35,631			—			23		784			41,088
Edgewater at Sandy Springs		14,290		43,429			—			199		2,394			60,312
Beechwood Terrace		1,390		20,374			—			28		572			22,364
Willow Grove		3,940		10,621			—			2		483			15,046
Woodbridge		3,650		12,581			—			110		543			16,884
Abbington Heights		1,770		16,184			—			67		657			18,678
The Summit at Sabal Park		5,770		13,311			—			9		674			19,764
Courtney Cove		5,880		12,850			—			30		668			19,428
Colonial Forest		2,090		3,486			—			—		328			5,904
Park at Blanding		2,610		4,025			—			4		304			6,943
Park at Regency		2,620		5,706			—			5		446			8,777
Jade Park		1,490		6,404			—			19		351			8,264
Mandarin Reserve		5,610		20,850			—			—		1,021			27,481
Radbourne Lake		2,440		21,194			—			224		739			24,597
Timber Creek		11,260		13,101			—			37		541			24,939
Belmont at Duck Creek		1,910		16,948			—			47		533			19,438
The Arbors		1,730		6,512			—			4		279			8,525
The Crossings		3,982		16,696			—			759		890			22,327
The Crossings at Holcomb Bridge		5,560		10,644			—			101		749			17,054
The Knolls		3,410		17,574			—			—		1,016			22,000
Regatta Bay		1,660		16,120			—			34		543			18,357
Sabal Palm at Lake Buena Vista		7,580		40,833			—			214		639			49,266
Southpoint Reserve at Stoney Creek		6,120		10,896			—			166		286			17,468
Cornerstone		1,500		29,786			—			201		411			31,898
McMillan Place		3,610		17,127			—			398		517			21,652
Barrington Mill		10,170		47,055			—			430		1,117			58,772
Dana Point		4,090		11,760			—			330		649			16,829
Heatherstone		2,320		6,962			—			403		399			10,084
Versailles		6,720		19,339			—			699		903			27,661
Seasons 704 Apartments		7,480		13,532			—			254		361			21,627
Madera Point		4,920		16,632			629			39		444			22,664
The Pointe at the Foothills		4,840		45,395			1,433			186		768			52,622
The Place at Vanderbilt		2,350		16,112			511			4		479			19,456
		177,152		729,675			2,573			5,346		28,009			942,755
Accumulated depreciation and amortization		—		(32,350	)		(1,844	)		—		(5,679	)		(39,873	)
	$	177,152	$	697,325		$	729		$	5,346	$	22,330		$	902,882

Summary of Sales of Real Estate Property

The following table presents our sales of real estate for the six months ended June 30, 2016 (in thousands); there were no sales of real estate for the six months ended June 30, 2015:

Property		Location	Date of Sale	Sales Price		Net Cash Proceeds (1)		Gain on Sale of Real Estate
Meridian	(2)	Austin, Texas	May 10, 2016	$	17,250	$	16,981	$	4,786
Park at Regency and Mandarin Reserve	(3)	Jacksonville, Florida	June 6, 2016		47,000		46,239		11,584
				$	64,250	$	63,220	$	16,370

(1) Represents sales price, net of closing costs.

(2) Approximately $6.4 million of the proceeds from the sale of Meridian were placed with a qualified intermediary for use in a like-kind exchange. On July 27, 2016, the Company completed such like-kind exchange, using the approximately $6.4 million of proceeds from the Meridian sale to acquire CityView, a 217-unit property in West Palm Beach, Florida (see Note 11).

(3) Properties were sold as a portfolio.

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Pro Forma Financial Information (Unaudited) (Tables)

6 Months Ended

Jun. 30, 2016

Pro Forma Financial Information [Abstract]

Summary of Unaudited Combined Consolidated Pro Forma Results of Operations

The following table summarizes, on an unaudited basis, the combined consolidated pro forma results of operations of the Company for the six months ended June 30, 2016 and 2015 (in thousands, except per share amounts):

	Six Months Ended June 30,
	2016		2015
Actual:
Total revenues	$	67,168	$	54,285
Net income (loss)		16,887		(8,157	)
Earnings (loss) per share - basic and diluted (see Note 2)		0.68		(0.36	)
Pro forma:
Total revenues		64,788		59,682
Net income (loss)		997		(24,970	)
Earnings (loss) per share - basic and diluted (see Note 2)		0.05		(1.17	)

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Debt (Tables)

6 Months Ended

Jun. 30, 2016

Debt Disclosure [Abstract]

Summary of Mortgage Debt of Company and Encumbers Multifamily Properties

The following table contains summary information concerning the mortgage debt of the Company as of June 30, 2016:

Operating Properties		Type	Term(months)		Amortization (months)		Outstanding Principal (1) (in thousands)				Interest Rate (2)		Max Note Rate (3)		Maturity Date
The Miramar Apartments	(4)	Floating		120		360	$	8,400				2.69%		5.75%	2/1/2025
Courtney Cove	(5)	Floating		84		360		14,210				2.55%		5.75%	9/1/2021
The Summit at Sabal Park	(5)	Floating		84		360		14,287				2.55%		5.75%	9/1/2021
Southpoint Reserve at Stoney Creek	(5)	Floating		84		360		13,600				2.58%		6.00%	1/1/2022
Barrington Mill	(5)	Floating		84		360		43,500				2.43%		5.50%	3/1/2022
Dana Point	(5)	Floating		84		360		12,176				2.52%		5.50%	3/1/2022
Heatherstone	(5)	Floating		84		360		7,087				2.55%		5.50%	3/1/2022
Versailles	(5)	Floating		84		360		19,623				2.50%		5.50%	3/1/2022
Seasons 704 Apartments	(5)	Floating		84		360		12,660				2.27%		5.95%	5/1/2022
Timber Creek	(6)	Floating		120		360		19,482				2.29%		5.96%	10/1/2024
Radbourne Lake	(6)	Floating		120		360		19,213				2.28%		6.25%	10/1/2024
The Arbors	(6)	Floating		120		360		5,812				2.28%		7.11%	11/1/2024
The Crossings	(6)	Floating		120		360		15,874				2.28%		7.21%	11/1/2024
The Crossings at Holcomb Bridge	(6)	Floating		120		360		12,450				2.28%		7.35%	11/1/2024
The Knolls	(6)	Floating		120		360		16,038				2.28%		7.11%	11/1/2024
McMillan Place	(6)	Floating		120		360		15,738				2.39%		5.92%	2/1/2025
Sabal Palm at Lake Buena Vista	(6)	Floating		120		360		37,680				2.28%		6.26%	12/1/2024
Abbington Heights	(7)	Fixed		120		360		10,305				3.79%		3.79%	9/1/2022
Belmont at Duck Creek	(8)	Fixed		84		360		11,246				4.68%		4.68%	9/1/2018
Regatta Bay	(9)	Floating		60		360		14,000				2.35%	N/A		11/1/2020
Cornerstone	(10)	Fixed		120		360		23,283				4.24%		4.24%	3/1/2023
Madera Point	(11)	Floating		60		360		13,515				2.37%	N/A		9/1/2020
The Pointe at the Foothills	(11)	Floating		60		360		31,365				2.36%	N/A		9/1/2020
							$	391,544
Fair market value adjustment								237		(12)
Deferred financing costs, net								(3,444	)
							$	388,337
Held for Sale Properties
The Grove at Alban	(5)	Floating		84		360		18,657				3.01%		6.50%	4/1/2021
Willowdale Crossing	(5)	Floating		84		360		32,800				2.74%		5.75%	6/1/2021
Colonial Forest	(5)	Floating		84		360		4,125				2.63%		6.25%	9/1/2021
Park at Blanding	(5)	Floating		84		360		4,875				2.63%		7.25%	9/1/2021
Jade Park	(5)	Floating		84		360		5,850				2.62%		6.49%	9/1/2021
							$	66,307
Deferred financing costs, net								(581	)
							$	65,726

(1) Mortgage debt that is non-recourse to the Company and encumbers the multifamily properties.

(2) Interest rate is based on one-month LIBOR plus an applicable margin, except for Abbington Heights (based on fixed rate of 3.79%), Belmont at Duck Creek (based on fixed rate of 4.68%), Regatta Bay (based on three-month LIBOR, subject to a floor of 0.25%, plus 1.70%) and Cornerstone (based on a blended fixed rate of 4.24%). One-month and three-month LIBOR as of June 30, 2016 were 0.4651% and 0.6541%, respectively.

(3) Represents the maximum rate payable on each note (see Note 7).

(4) Loan cannot be pre-paid in the first 12 months of the term. Starting in the 13^th month of the term through the 117^th month of the term, the loan can be pre-paid at par plus 1.00% of the unpaid principal balance and at par the last three months of the term.

(5) Loan can be pre-paid in the first 12 months of the term at par plus 5.00%. Starting in the 13th month of the term through the 81st month of the term, the loan can be pre-paid at par plus 1.00% of the unpaid principal balance and at par during the last three months of the term.   

(6) Loan can be pre-paid in the first 12 months of the term at par plus 5.00%. Starting in the 13^th month of the term through the 116^th month of the term, the loan can be pre-paid at par plus 1.00% of the unpaid principal balance and at par during the last four months of the term.

(7) Debt was assumed upon acquisition of this property at approximated fair value. The loan is open to pre-payment in the last three months of the term.

(8) Debt was assumed upon acquisition of this property at approximated fair value. The loan is open to pre-payment in the last six months of the term.

(9) Loan can be pre-paid in the first 12 months of the term at par plus 1.00% of the unpaid principal balance and at par thereafter. Loan’s unpaid principal balance can be declared due and payable in full, at the lender’s discretion, on November 1, 2018 and November 1, 2019.  

(10) Debt in the amount of $18.0 million was assumed upon acquisition of this property at approximated fair value. The assumed debt carries a 4.09% fixed rate, was originally issued in March 2013 and had a term of 120 months with an initial 24 months of interest only. At the time of acquisition, the principal balance of the first mortgage remained unchanged and had a remaining term of 98 months with 2 months of interest only. The first mortgage is pre-payable and subject to yield maintenance from month 13 through August 31, 2022 and is pre-payable at par September 1, 2022 until maturity. Concurrently with the acquisition of the property, we placed a supplemental second mortgage on the property with a principal amount of approximately $5.8 million, a fixed rate of 4.70%, and with a maturity date that is the same time as the first mortgage. The supplemental second mortgage is pre-payable and subject to yield maintenance from the date of issuance through August 31, 2022 and is pre-payable at par September 1, 2022 until maturity. As of June 30, 2016, the total indebtedness secured by the property is approximately $23.4 million and has a blended interest rate of 4.24%.

(11) Loan can be pre-paid starting in the 13^th month through the 57^th month of the term at par plus 1.00% of the unpaid principal balance and at par during the last three months of the term.    

(12) The Company reflected a valuation adjustment on its fixed rate debt for Belmont at Duck Creek to adjust it to fair market value on the date of acquisition for the difference between the fair value and the assumed principal amount of debt. The difference is amortized into interest expense over the remaining term of the mortgage.    

Sale of Properties and Repayment of Related Mortgage Loans

During the period ended June 30, 2016, the Company sold three properties and repaid the related mortgage loans, as detailed in the table below:

Property Name		Date of Sale	Type	Outstanding Principal (1) (in thousands)
Meridian		May 10, 2016	Floating	$	9,791
Park at Regency and Mandarin Reserve	(2)	June 6, 2016	Floating		25,582
				$	35,373

(1) Represents the outstanding principal balance when the loan was repaid.

(2) Properties were sold as a portfolio.

Schedule of Debt Maturities

As of June 30, 2016, debt maturities scheduled for the remainder of 2016, each of the next four years and thereafter, are as follows (in thousands):

	Operating Properties & Other Secured Debt		Held For Sale Properties		Total
Remainder of 2016		2,399		619		3,018
2017		1,463		1,433		2,896
2018		16,908		1,475		18,383
2019		6,588		1,519		8,107
2020		65,564		1,558		67,122
Thereafter		500,622		59,703		560,325
Total	$	593,544	$	66,307	$	659,851

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Fair Value Measures and Derivative Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2016

Fair Value Disclosures [Abstract]

Schedule of Outstanding Interest Rate Derivatives

As of June 30, 2016, the Company had the following outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk (dollars in thousands):

Product	Number of Instruments		Notional
Interest rate caps		15	$	259,659

As of June 30, 2016, the Company had the following outstanding derivatives that were not designated as hedges in qualifying hedging relationships (dollars in thousands):

Product	Number of Instruments		Notional
Interest rate caps		7	$	94,867

Summary of Derivative Financial Instruments and Classification on the Combined Consolidated Balance Sheet

The tables below present the fair value of the Company’s derivative financial instruments as well as their classification on the consolidated balance sheets as of June 30, 2016 and December 31, 2015 (in thousands):

	Asset Derivative					Liability Derivative
	Balance Sheet Location	June 30, 2016		December 31, 2015		Balance Sheet Location	June 30, 2016		December 31, 2015
Derivatives designated as hedging instruments:
Interest rate caps	Other assets	$	5	$	61	Otherliabilities	$	—	$	—
Derivatives not designated as hedging instruments:
Interest rate caps	Other assets		—		6	Other liabilities		—		—
Total		$	5	$	67		$	—	$	—

Summary of Derivative Financial Instruments and Combined Consolidated Statements of Operations and Comprehensive Loss

The tables below present the effect of the Company’s derivative financial instruments on the combined consolidated statements of operations and comprehensive income (loss) for the three and six months ended June 30, 2016 and 2015 (in thousands):

	Amount of gain (loss) recognized in OCI on derivative (effective portion)						Location of gain (loss) reclassified from accumulated OCI into income	Amount of gain (loss) reclassified from accumulated OCI into income (effective portion)					Location of gain (loss) recognized in income on derivative	Amount of gain (loss) recognized in income on derivative (ineffective portion)
	2016			2015			(effective portion)	2016			2015		(ineffective portion)	2016		2015
Derivatives designated as hedging instruments:
For the three months ended June 30,
Interest rate caps	$	(12	)	$	(126	)	Interest expense	$	(6	)	$	—	Interest expense	$	—	$	—
For the six months ended June 30,
Interest rate caps		(44	)		(396	)	Interest expense		(12	)		—	Interest expense		—		—

		Amount of gain (loss) recognized in income
	Location of gain (loss) recognized in income	2016			2015
Derivatives not designated as hedging instruments:
For the three months ended June 30,
Interest rate caps	Interest expense	$	(2	)	$	(50	)
For the six months ended June 30,
Interest rate caps	Interest expense		(6	)		(166	)

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Related Party Transactions (Tables)

6 Months Ended

Jun. 30, 2016

Related Party Transactions [Abstract]

Summary of Fees Incurred to BH And Its Affiliates As Well As Reimbursements Paid to BH

The following is a summary of fees that the properties incurred to BH and its affiliates, as well as reimbursements paid to BH from the properties for various operating expenses, for the three and six months ended June 30, 2016 and 2015 (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2016		2015		2016		2015
Fees incurred
Property management fees (1)	$	1,013	$	858	$	2,018	$	1,617
Construction supervision fees (2)		172		394		377		535
Acquisition fees (3)		—		162		—		1,353
Reimbursements
Payroll and benefits (4)		3,881		3,103		8,072		6,137
Other reimbursements (5)		705		1,307		1,005		1,556

(1) Included in property management fees on the combined consolidated statements of operations and comprehensive income (loss).

(2) Capitalized on the consolidated balance sheets and reflected in buildings and improvements.

(3) Includes due diligence costs and are included in acquisition costs on the combined consolidated statements of operations and comprehensive income (loss).

(4) Included in property operating expenses on the combined consolidated statements of operations and comprehensive income (loss).

(5) Includes various operating expenses such as repairs and maintenance costs and property general and administrative expenses, which are included on the combined consolidated statements of operations and comprehensive income (loss).

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Subsequent Events (Tables)

6 Months Ended

Jun. 30, 2016

Subsequent Event [Line Items]

Summary of Company's Outstanding Interest Rate Swaps

On July 1, 2016, the Company had three interest rate swap transactions that became effective. The Company, through the OP, previously entered into these interest rate swap transactions with KeyBank. The following table contains summary information regarding the Company’s outstanding interest rate swaps (dollars in thousands):

Trade Date	Effective Date	Termination Date	Notional Amount		Fixed Rate				Floating Rate Option
May 13, 2016	July 1, 2016	June 1, 2021	$	100,000		1.1055	%		One-month LIBOR
June 13, 2016	July 1, 2016	June 1, 2021		100,000		1.0210	%		One-month LIBOR
June 30, 2016	July 1, 2016	June 1, 2021		100,000		0.9000	%		One-month LIBOR
			$	300,000		1.0088	%	(1)

(1) Represents the weighted average fixed rate of the interest rate swaps.

Multifamily Properties

Subsequent Event [Line Items]

Summary of Acquired Property

The Company acquired the following property subsequent to June 30, 2016 (dollars in thousands) (unaudited):

Property Name	Location	Date of Acquisition	Purchase Price		Debt			# Units		Noncontrolling Interest			Effective Ownership
CityView	West Palm Beach, Florida	July 27, 2016	$	22,421	$	15,812	(1)		217		5	%		95	%

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Organization and Description of Business - Additional Information (Details)	6 Months Ended
	Jun. 30, 2016
Real Estate Properties [Line Items]
Date of incorporation	Sep. 19, 2014
Term of advisory agreement	2 years
Maximum
Real Estate Properties [Line Items]
Investments in real estate-related debt and securities	30.00%

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Summary of Significant Accounting Policies - Estimated Useful Lives of Assets (Details)	6 Months Ended
	Jun. 30, 2016
Land
Property Plant And Equipment [Line Items]
Estimated useful lives of assets	Not depreciated
Buildings
Property Plant And Equipment [Line Items]
Estimated useful lives of assets	30 years
Improvements
Property Plant And Equipment [Line Items]
Estimated useful lives of assets	15 years
Furniture, Fixtures, and Equipment
Property Plant And Equipment [Line Items]
Estimated useful lives of assets	3 years
Intangible Lease Assets
Property Plant And Equipment [Line Items]
Estimated useful lives of assets	6 months

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Summary of Significant Accounting Policies - Additional Information (Details)	3 Months Ended		6 Months Ended		18 Months Ended
	Jun. 30, 2016 USD ($) Property $ / shares shares	Jun. 30, 2015 USD ($) $ / shares shares	Jun. 30, 2016 USD ($) Property Segment $ / shares shares	Jun. 30, 2015 USD ($) $ / shares shares	Jun. 30, 2016 USD ($) Property	Dec. 31, 2015 USD ($)
Summary Of Significant Accounting Policies [Line Items]
Impairment charges related to real estate assets	$ 0	$ 0	$ 0	$ 0
Deferred financing costs, net	4,000,000		4,000,000		$ 4,000,000	$ 6,000,000
Amortization of deferred financing fees	$ 700,000	$ 200,000	$ 983,000	$ 540,000
Number of properties sold | Property	3		3		3
Minimum percentage of distributed taxable income to qualify as REIT			90.00%
Percentage of non-deductible excise tax on distribution			4.00%
Percentage of ordinary income considered for payment of distribution			85.00%
Percentage of capital gain net income considered for payment of distribution			95.00%
Percentage of undistributed income of prior considered for payment of distribution			100.00%
Number of reportable segments | Segment			1
Earnings (loss) per share: Basic and diluted | $ / shares	$ 0.69	$ (0.11)	$ 0.68	$ (0.36)
Potentially dilutive securities | shares	0	0	0	0
Reclassification of deferred financing costs, net
Summary Of Significant Accounting Policies [Line Items]
Deferred financing costs, net						(6,213,000)
Maximum
Summary Of Significant Accounting Policies [Line Items]
Internal rate of return in VIE			13.00%
Sale and Refinancing of Properties
Summary Of Significant Accounting Policies [Line Items]
Amortization of deferred financing fees	$ 300,000
Credit Facility and Bridge Facility
Summary Of Significant Accounting Policies [Line Items]
Deferred financing costs, net	$ 3,700,000		$ 3,700,000		$ 3,700,000	$ 200,000

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Summary of Significant Accounting Policies - Summary of Restricted Cash Held (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Accounting Policies [Abstract]
Security deposits	$ 963	$ 1,034
Operating escrows	17,433	21,312
Renovation value-add reserves	15,804	24,523
Restricted cash held	$ 34,200	$ 46,869

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Summary of Significant Accounting Policies - Schedule of Investments (Details) - VIE	6 Months Ended	12 Months Ended
	Jun. 30, 2016	Dec. 31, 2015
Meridian | Austin | Texas
Schedule Of Equity Method Investments [Line Items]
Year of acquisition	2014
Effective ownership percentage		90.00%
The Grove at Alban | Frederick | Maryland
Schedule Of Equity Method Investments [Line Items]
Year of acquisition	2014
Effective ownership percentage	76.00%	76.00%
Willowdale Crossing | Frederick | Maryland
Schedule Of Equity Method Investments [Line Items]
Year of acquisition	2014
Effective ownership percentage	80.00%	80.00%
Abbington Heights | Antioch | Tennessee
Schedule Of Equity Method Investments [Line Items]
Year of acquisition	2014
Effective ownership percentage	90.00%	90.00%
The Summit at Sabal Park | Tampa | Florida
Schedule Of Equity Method Investments [Line Items]
Year of acquisition	2014
Effective ownership percentage	90.00%	90.00%
Courtney Cove | Tampa | Florida
Schedule Of Equity Method Investments [Line Items]
Year of acquisition	2014
Effective ownership percentage	90.00%	90.00%
Colonial Forest | Jacksonville | Florida
Schedule Of Equity Method Investments [Line Items]
Year of acquisition	2014
Effective ownership percentage	90.00%	90.00%
Park at Blanding | Orange Park | Florida
Schedule Of Equity Method Investments [Line Items]
Year of acquisition	2014
Effective ownership percentage	90.00%	90.00%
Park at Regency | Jacksonville | Florida
Schedule Of Equity Method Investments [Line Items]
Year of acquisition	2014
Effective ownership percentage		90.00%
Jade Park | Daytona Beach | Florida
Schedule Of Equity Method Investments [Line Items]
Year of acquisition	2014
Effective ownership percentage	90.00%	90.00%
Mandarin Reserve | Jacksonville | Florida
Schedule Of Equity Method Investments [Line Items]
Year of acquisition	2014
Effective ownership percentage		90.00%
Radbourne Lake | Charlotte | North Carolina
Schedule Of Equity Method Investments [Line Items]
Year of acquisition	2014
Effective ownership percentage	90.00%	90.00%
Timber Creek | Charlotte | North Carolina
Schedule Of Equity Method Investments [Line Items]
Year of acquisition	2014
Effective ownership percentage	90.00%	90.00%
Belmont at Duck Creek | Garland | Texas
Schedule Of Equity Method Investments [Line Items]
Year of acquisition	2014
Effective ownership percentage	90.00%	90.00%
The Arbors | Tucker | Georgia
Schedule Of Equity Method Investments [Line Items]
Year of acquisition	2014
Effective ownership percentage	90.00%	90.00%
The Crossings | Marietta | Georgia
Schedule Of Equity Method Investments [Line Items]
Year of acquisition	2014
Effective ownership percentage	90.00%	90.00%
The Crossings at Holcomb Bridge | Roswell | Georgia
Schedule Of Equity Method Investments [Line Items]
Year of acquisition	2014
Effective ownership percentage	90.00%	90.00%
The Knolls | Marietta | Georgia
Schedule Of Equity Method Investments [Line Items]
Year of acquisition	2014
Effective ownership percentage	90.00%	90.00%
Regatta Bay | Seabrook | Texas
Schedule Of Equity Method Investments [Line Items]
Year of acquisition	2014
Effective ownership percentage	90.00%	90.00%
Sabal Palm at Lake Buena Vista | Orlando | Florida
Schedule Of Equity Method Investments [Line Items]
Year of acquisition	2014
Effective ownership percentage	90.00%	90.00%
Southpoint Reserve at Stoney Creek | Fredericksburg | Virginia
Schedule Of Equity Method Investments [Line Items]
Year of acquisition	2014
Effective ownership percentage	85.00%	85.00%
Cornerstone | Orlando | Florida
Schedule Of Equity Method Investments [Line Items]
Year of acquisition	2015
Effective ownership percentage	90.00%	90.00%
McMillan Place | Dallas | Texas
Schedule Of Equity Method Investments [Line Items]
Year of acquisition	2015
Effective ownership percentage	90.00%	90.00%
Barrington Mill | Marietta | Georgia
Schedule Of Equity Method Investments [Line Items]
Year of acquisition	2015
Effective ownership percentage	90.00%	90.00%
Dana Point | Dallas | Texas
Schedule Of Equity Method Investments [Line Items]
Year of acquisition	2015
Effective ownership percentage	90.00%	90.00%
Heatherstone | Dallas | Texas
Schedule Of Equity Method Investments [Line Items]
Year of acquisition	2015
Effective ownership percentage	90.00%	90.00%
Versailles | Dallas | Texas
Schedule Of Equity Method Investments [Line Items]
Year of acquisition	2015
Effective ownership percentage	90.00%	90.00%
Seasons 704 Apartments | West Palm Beach | Florida
Schedule Of Equity Method Investments [Line Items]
Year of acquisition	2015
Effective ownership percentage	90.00%	90.00%
The Miramar Apartments | Dallas | Texas
Schedule Of Equity Method Investments [Line Items]
Year of acquisition	2013
Effective ownership percentage	100.00%	100.00%
Arbors on Forest Ridge | Bedford | Texas
Schedule Of Equity Method Investments [Line Items]
Year of acquisition	2014
Effective ownership percentage	90.00%	90.00%
Cutter's Point | Richardson | Texas
Schedule Of Equity Method Investments [Line Items]
Year of acquisition	2014
Effective ownership percentage	90.00%	90.00%
Eagle Crest | Irving | Texas
Schedule Of Equity Method Investments [Line Items]
Year of acquisition	2014
Effective ownership percentage	90.00%	90.00%
Silverbrook | Grand Prairie | Texas
Schedule Of Equity Method Investments [Line Items]
Year of acquisition	2014
Effective ownership percentage	90.00%	90.00%
Timberglen | Dallas | Texas
Schedule Of Equity Method Investments [Line Items]
Year of acquisition	2014
Effective ownership percentage	90.00%	90.00%
Toscana | Dallas | Texas
Schedule Of Equity Method Investments [Line Items]
Year of acquisition	2014
Effective ownership percentage	90.00%	90.00%
Edgewater at Sandy Springs | Atlanta | Georgia
Schedule Of Equity Method Investments [Line Items]
Year of acquisition	2014
Effective ownership percentage	90.00%	90.00%
Beechwood Terrace | Nashville | Tennessee
Schedule Of Equity Method Investments [Line Items]
Year of acquisition	2014
Effective ownership percentage	90.00%	90.00%
Willow Grove | Nashville | Tennessee
Schedule Of Equity Method Investments [Line Items]
Year of acquisition	2014
Effective ownership percentage	90.00%	90.00%
Woodbridge | Nashville | Tennessee
Schedule Of Equity Method Investments [Line Items]
Year of acquisition	2014
Effective ownership percentage	90.00%	90.00%
Madera Point | Mesa | ARIZONA
Schedule Of Equity Method Investments [Line Items]
Year of acquisition	2015
Effective ownership percentage	95.00%	95.00%
The Pointe at the Foothills | Mesa | ARIZONA
Schedule Of Equity Method Investments [Line Items]
Year of acquisition	2015
Effective ownership percentage	95.00%	95.00%
The Place at Vanderbilt | Fort Worth | Texas
Schedule Of Equity Method Investments [Line Items]
Year of acquisition	2015
Effective ownership percentage	95.00%	95.00%

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Summary of Significant Accounting Policies - Schedule of Reclassification of Deferred Financing Costs (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
New Accounting Pronouncements Or Change In Accounting Principle [Line Items]
Deferred financing costs, net	$ 4,000	$ 6,000
Bridge facility, net	1,972	28,805
Mortgages payable, net	$ 388,337	676,324
As previously presented
New Accounting Pronouncements Or Change In Accounting Principle [Line Items]
Deferred financing costs, net		6,213
Bridge facility, net		29,000
Mortgages payable, net		682,342
Reclassification of deferred financing costs, net
New Accounting Pronouncements Or Change In Accounting Principle [Line Items]
Deferred financing costs, net		(6,213)
Bridge facility, net		(195)
Mortgages payable, net		$ (6,018)

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Acquisitions - Additional Information (Details)	Jun. 30, 2016 Property
Business Acquisition [Line Items]
Number of multifamily properties	39
Multifamily Properties
Business Acquisition [Line Items]
Number of multifamily properties	39

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Acquisitions - Summary of Investment in Multifamily Properties (Details)		6 Months Ended
		Jun. 30, 2016 ft² Property $ / Units	Dec. 31, 2015
Real Estate Properties [Line Items]
Rentable Square Footage | ft²		10,550,004
Number of Units | Property		12,276
The Miramar Apartments
Real Estate Properties [Line Items]
Rentable Square Footage | ft²		183,100
Number of Units | Property		314
Date Acquired		Oct. 31, 2013
Average Effective Monthly Rent Per Unit | $ / Units	[1]	592
% Occupied	[2]	91.70%	92.40%
Arbors on Forest Ridge
Real Estate Properties [Line Items]
Rentable Square Footage | ft²		154,556
Number of Units | Property		210
Date Acquired		Jan. 31, 2014
Average Effective Monthly Rent Per Unit | $ / Units	[1]	831
% Occupied	[2]	93.30%	93.80%
Cutter's Point
Real Estate Properties [Line Items]
Rentable Square Footage | ft²		197,972
Number of Units | Property		196
Date Acquired		Jan. 31, 2014
Average Effective Monthly Rent Per Unit | $ / Units	[1]	999
% Occupied	[2]	97.40%	93.90%
Eagle Crest
Real Estate Properties [Line Items]
Rentable Square Footage | ft²		395,951
Number of Units | Property		447
Date Acquired		Jan. 31, 2014
Average Effective Monthly Rent Per Unit | $ / Units	[1]	821
% Occupied	[2]	92.20%	95.50%
Silverbrook
Real Estate Properties [Line Items]
Rentable Square Footage | ft²		526,138
Number of Units | Property		642
Date Acquired		Jan. 31, 2014
Average Effective Monthly Rent Per Unit | $ / Units	[1]	733
% Occupied	[2]	94.50%	93.60%
Timberglen
Real Estate Properties [Line Items]
Rentable Square Footage | ft²		221,376
Number of Units | Property		304
Date Acquired		Jan. 31, 2014
Average Effective Monthly Rent Per Unit | $ / Units	[1]	772
% Occupied	[2]	94.70%	96.10%
Toscana
Real Estate Properties [Line Items]
Rentable Square Footage | ft²		115,400
Number of Units | Property		192
Date Acquired		Jan. 31, 2014
Average Effective Monthly Rent Per Unit | $ / Units	[1]	674
% Occupied	[2]	94.30%	94.80%
The Grove at Alban
Real Estate Properties [Line Items]
Rentable Square Footage | ft²	[3]	267,300
Number of Units | Property	[3]	290
Date Acquired	[3]	Mar. 10, 2014
Average Effective Monthly Rent Per Unit | $ / Units	[1],[3]	990
% Occupied	[2],[3]	95.50%	94.50%
Willowdale Crossing
Real Estate Properties [Line Items]
Rentable Square Footage | ft²	[3]	411,800
Number of Units | Property	[3]	432
Date Acquired	[3]	May 15, 2014
Average Effective Monthly Rent Per Unit | $ / Units	[1],[3]	955
% Occupied	[2],[3]	93.80%	88.90%
Edgewater at Sandy Springs
Real Estate Properties [Line Items]
Rentable Square Footage | ft²		726,774
Number of Units | Property		760
Date Acquired		Jul. 18, 2014
Average Effective Monthly Rent Per Unit | $ / Units	[1]	858
% Occupied	[2]	92.80%	94.50%
Beechwood Terrace
Real Estate Properties [Line Items]
Rentable Square Footage | ft²		271,728
Number of Units | Property		300
Date Acquired		Jul. 21, 2014
Average Effective Monthly Rent Per Unit | $ / Units	[1]	827
% Occupied	[2]	95.30%	97.30%
Willow Grove
Real Estate Properties [Line Items]
Rentable Square Footage | ft²		229,140
Number of Units | Property		244
Date Acquired		Jul. 21, 2014
Average Effective Monthly Rent Per Unit | $ / Units	[1]	815
% Occupied	[2]	95.90%	95.90%
Woodbridge
Real Estate Properties [Line Items]
Rentable Square Footage | ft²		246,840
Number of Units | Property		220
Date Acquired		Jul. 21, 2014
Average Effective Monthly Rent Per Unit | $ / Units	[1]	921
% Occupied	[2]	92.30%	96.40%
Abbington Heights
Real Estate Properties [Line Items]
Rentable Square Footage | ft²		238,974
Number of Units | Property		274
Date Acquired		Aug. 01, 2014
Average Effective Monthly Rent Per Unit | $ / Units	[1]	813
% Occupied	[2]	94.50%	94.50%
The Summit at Sabal Park
Real Estate Properties [Line Items]
Rentable Square Footage | ft²		204,545
Number of Units | Property		252
Date Acquired		Aug. 20, 2014
Average Effective Monthly Rent Per Unit | $ / Units	[1]	880
% Occupied	[2]	92.90%	92.50%
Courtney Cove
Real Estate Properties [Line Items]
Rentable Square Footage | ft²		224,958
Number of Units | Property		324
Date Acquired		Aug. 20, 2014
Average Effective Monthly Rent Per Unit | $ / Units	[1]	765
% Occupied	[2]	96.00%	95.40%
Colonial Forest
Real Estate Properties [Line Items]
Rentable Square Footage | ft²	[3]	160,093
Number of Units | Property	[3]	174
Date Acquired	[3]	Aug. 20, 2014
Average Effective Monthly Rent Per Unit | $ / Units	[1],[3]	654
% Occupied	[2],[3]	96.60%	94.80%
Park at Blanding
Real Estate Properties [Line Items]
Rentable Square Footage | ft²	[3]	116,410
Number of Units | Property	[3]	117
Date Acquired	[3]	Aug. 20, 2014
Average Effective Monthly Rent Per Unit | $ / Units	[1],[3]	797
% Occupied	[2],[3]	95.70%	97.40%
Jade Park
Real Estate Properties [Line Items]
Rentable Square Footage | ft²	[3]	118,392
Number of Units | Property	[3]	144
Date Acquired	[3]	Aug. 20, 2014
Average Effective Monthly Rent Per Unit | $ / Units	[1],[3]	773
% Occupied	[2],[3]	95.80%	90.30%
Radbourne Lake
Real Estate Properties [Line Items]
Rentable Square Footage | ft²		246,599
Number of Units | Property		225
Date Acquired		Sep. 30, 2014
Average Effective Monthly Rent Per Unit | $ / Units	[1]	997
% Occupied	[2]	94.70%	96.90%
Timber Creek
Real Estate Properties [Line Items]
Rentable Square Footage | ft²		248,391
Number of Units | Property		352
Date Acquired		Sep. 30, 2014
Average Effective Monthly Rent Per Unit | $ / Units	[1]	772
% Occupied	[2]	94.90%	94.30%
Belmont at Duck Creek
Real Estate Properties [Line Items]
Rentable Square Footage | ft²		198,279
Number of Units | Property		240
Date Acquired		Sep. 30, 2014
Average Effective Monthly Rent Per Unit | $ / Units	[1]	908
% Occupied	[2]	91.30%	93.80%
The Arbors
Real Estate Properties [Line Items]
Rentable Square Footage | ft²		127,536
Number of Units | Property		140
Date Acquired		Oct. 16, 2014
Average Effective Monthly Rent Per Unit | $ / Units	[1]	806
% Occupied	[2]	97.10%	94.30%
The Crossings
Real Estate Properties [Line Items]
Rentable Square Footage | ft²		377,840
Number of Units | Property		380
Date Acquired		Oct. 16, 2014
Average Effective Monthly Rent Per Unit | $ / Units	[1]	785
% Occupied	[2]	93.90%	92.90%
The Crossings at Holcomb Bridge
Real Estate Properties [Line Items]
Rentable Square Footage | ft²		247,982
Number of Units | Property		268
Date Acquired		Oct. 16, 2014
Average Effective Monthly Rent Per Unit | $ / Units	[1]	820
% Occupied	[2]	97.00%	95.90%
The Knolls
Real Estate Properties [Line Items]
Rentable Square Footage | ft²		311,160
Number of Units | Property		312
Date Acquired		Oct. 16, 2014
Average Effective Monthly Rent Per Unit | $ / Units	[1]	862
% Occupied	[2]	94.90%	93.90%
Regatta Bay
Real Estate Properties [Line Items]
Rentable Square Footage | ft²		200,440
Number of Units | Property		240
Date Acquired		Nov. 04, 2014
Average Effective Monthly Rent Per Unit | $ / Units	[1]	1,037
% Occupied	[2]	93.30%	93.30%
Sabal Palm at Lake Buena Vista
Real Estate Properties [Line Items]
Rentable Square Footage | ft²		370,768
Number of Units | Property		400
Date Acquired		Nov. 05, 2014
Average Effective Monthly Rent Per Unit | $ / Units	[1]	1,113
% Occupied	[2]	92.80%	96.00%
Southpoint Reserve at Stoney Creek
Real Estate Properties [Line Items]
Rentable Square Footage | ft²		115,712
Number of Units | Property		156
Date Acquired		Dec. 18, 2014
Average Effective Monthly Rent Per Unit | $ / Units	[1]	1,005
% Occupied	[2]	93.60%	94.90%
Cornerstone
Real Estate Properties [Line Items]
Rentable Square Footage | ft²		317,565
Number of Units | Property		430
Date Acquired		Jan. 15, 2015
Average Effective Monthly Rent Per Unit | $ / Units	[1]	846
% Occupied	[2]	93.70%	93.30%
McMillan Place
Real Estate Properties [Line Items]
Rentable Square Footage | ft²		290,051
Number of Units | Property		402
Date Acquired		Jan. 15, 2015
Average Effective Monthly Rent Per Unit | $ / Units	[1]	679
% Occupied	[2]	91.80%	91.30%
Barrington Mill
Real Estate Properties [Line Items]
Rentable Square Footage | ft²		692,180
Number of Units | Property		752
Date Acquired		Feb. 06, 2015
Average Effective Monthly Rent Per Unit | $ / Units	[1]	777
% Occupied	[2]	92.00%	95.60%
Dana Point
Real Estate Properties [Line Items]
Rentable Square Footage | ft²		206,276
Number of Units | Property		264
Date Acquired		Feb. 26, 2015
Average Effective Monthly Rent Per Unit | $ / Units	[1]	752
% Occupied	[2]	92.00%	92.80%
Heatherstone
Real Estate Properties [Line Items]
Rentable Square Footage | ft²		115,615
Number of Units | Property		152
Date Acquired		Feb. 26, 2015
Average Effective Monthly Rent Per Unit | $ / Units	[1]	813
% Occupied	[2]	96.10%	94.10%
Versailles
Real Estate Properties [Line Items]
Rentable Square Footage | ft²		300,908
Number of Units | Property		388
Date Acquired		Feb. 26, 2015
Average Effective Monthly Rent Per Unit | $ / Units	[1]	789
% Occupied	[2]	94.60%	90.20%
Seasons 704 Apartments
Real Estate Properties [Line Items]
Rentable Square Footage | ft²		216,891
Number of Units | Property		222
Date Acquired		Apr. 15, 2015
Average Effective Monthly Rent Per Unit | $ / Units	[1]	986
% Occupied	[2]	94.60%	97.30%
Madera Point
Real Estate Properties [Line Items]
Rentable Square Footage | ft²		192,880
Number of Units | Property		256
Date Acquired		Aug. 05, 2015
Average Effective Monthly Rent Per Unit | $ / Units	[1]	768
% Occupied	[2]	89.80%	93.80%
The Pointe at the Foothills
Real Estate Properties [Line Items]
Rentable Square Footage | ft²		472,952
Number of Units | Property		528
Date Acquired		Aug. 05, 2015
Average Effective Monthly Rent Per Unit | $ / Units	[1]	828
% Occupied	[2]	92.20%	90.70%
The Place at Vanderbilt
Real Estate Properties [Line Items]
Rentable Square Footage | ft²		288,532
Number of Units | Property		333
Date Acquired		Oct. 30, 2015
Average Effective Monthly Rent Per Unit | $ / Units	[1]	746
% Occupied	[2]	91.00%	92.80%

[1] Average effective monthly rent per unit is equal to the average of the contractual rent for commenced leases as of June 30, 2016 minus any tenant concessions over the term of the lease, divided by the number of units under commenced leases as of June 30, 2016

[2] Percent occupied is calculated as the number of units occupied as of June 30, 2016 and December 31, 2015, divided by the total number of units, expressed as a percentage.

[3] Properties are classified as held for sale as of June 30, 2016.

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Real Estate Investments - Summary of Major Components of Investments in Multifamily Properties (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Real Estate Properties [Line Items]
Real estate investment, gross	$ 815,504	$ 942,755
Accumulated depreciation and amortization	(46,788)	(39,873)
Total Net Operating Real Estate Investments	768,716	902,882
Total Net Real Estate Investments	849,806	902,882
Multifamily Properties
Real Estate Properties [Line Items]
Real estate investment, gross	815,504	942,755
Accumulated depreciation and amortization	(46,788)	(39,873)
Total Net Operating Real Estate Investments	768,716	902,882
Total Net Real Estate Investments	849,806
Multifamily Properties | Intangible Lease Assets
Real Estate Properties [Line Items]
Real estate investment, gross		2,573
Accumulated depreciation and amortization		(1,844)
Total Net Operating Real Estate Investments		729
Multifamily Properties | Held For Sale Properties
Real Estate Properties [Line Items]
Real estate investment, gross	86,485
Accumulated depreciation and amortization	(5,395)
Total Net Operating Real Estate Investments	81,090
Multifamily Properties | Land
Real Estate Properties [Line Items]
Real estate investment, gross	152,132	177,152
Total Net Operating Real Estate Investments	152,132	177,152
Total Net Real Estate Investments	166,612
Multifamily Properties | Land | Held For Sale Properties
Real Estate Properties [Line Items]
Real estate investment, gross	14,480
Total Net Operating Real Estate Investments	14,480
Multifamily Properties | Building and Improvements
Real Estate Properties [Line Items]
Real estate investment, gross	630,943	729,675
Accumulated depreciation and amortization	(37,671)	(32,350)
Total Net Operating Real Estate Investments	593,272	697,325
Total Net Real Estate Investments	657,294
Multifamily Properties | Building and Improvements | Held For Sale Properties
Real Estate Properties [Line Items]
Real estate investment, gross	68,627
Accumulated depreciation and amortization	(4,605)
Total Net Operating Real Estate Investments	64,022
Multifamily Properties | Construction in Progress
Real Estate Properties [Line Items]
Real estate investment, gross	2,562	5,346
Total Net Operating Real Estate Investments	2,562	5,346
Total Net Real Estate Investments	2,625
Multifamily Properties | Construction in Progress | Held For Sale Properties
Real Estate Properties [Line Items]
Real estate investment, gross	63
Total Net Operating Real Estate Investments	63
Multifamily Properties | Furniture, Fixtures, and Equipment
Real Estate Properties [Line Items]
Real estate investment, gross	29,867	28,009
Accumulated depreciation and amortization	(9,117)	(5,679)
Total Net Operating Real Estate Investments	20,750	22,330
Total Net Real Estate Investments	23,275
Multifamily Properties | Furniture, Fixtures, and Equipment | Held For Sale Properties
Real Estate Properties [Line Items]
Real estate investment, gross	3,315
Accumulated depreciation and amortization	(790)
Total Net Operating Real Estate Investments	2,525
Multifamily Properties | The Miramar Apartments
Real Estate Properties [Line Items]
Real estate investment, gross	10,988	10,832
Multifamily Properties | The Miramar Apartments | Land
Real Estate Properties [Line Items]
Real estate investment, gross	1,580	1,580
Multifamily Properties | The Miramar Apartments | Building and Improvements
Real Estate Properties [Line Items]
Real estate investment, gross	8,721	8,601
Multifamily Properties | The Miramar Apartments | Construction in Progress
Real Estate Properties [Line Items]
Real estate investment, gross	48	48
Multifamily Properties | The Miramar Apartments | Furniture, Fixtures, and Equipment
Real Estate Properties [Line Items]
Real estate investment, gross	639	603
Multifamily Properties | Arbors on Forest Ridge
Real Estate Properties [Line Items]
Real estate investment, gross	13,862	13,802
Multifamily Properties | Arbors on Forest Ridge | Land
Real Estate Properties [Line Items]
Real estate investment, gross	2,330	2,330
Multifamily Properties | Arbors on Forest Ridge | Building and Improvements
Real Estate Properties [Line Items]
Real estate investment, gross	10,956	10,948
Multifamily Properties | Arbors on Forest Ridge | Construction in Progress
Real Estate Properties [Line Items]
Real estate investment, gross	4
Multifamily Properties | Arbors on Forest Ridge | Furniture, Fixtures, and Equipment
Real Estate Properties [Line Items]
Real estate investment, gross	572	524
Multifamily Properties | Cutter's Point
Real Estate Properties [Line Items]
Real estate investment, gross	16,856	16,735
Multifamily Properties | Cutter's Point | Land
Real Estate Properties [Line Items]
Real estate investment, gross	3,330	3,330
Multifamily Properties | Cutter's Point | Building and Improvements
Real Estate Properties [Line Items]
Real estate investment, gross	12,789	12,747
Multifamily Properties | Cutter's Point | Construction in Progress
Real Estate Properties [Line Items]
Real estate investment, gross		37
Multifamily Properties | Cutter's Point | Furniture, Fixtures, and Equipment
Real Estate Properties [Line Items]
Real estate investment, gross	737	621
Multifamily Properties | Eagle Crest
Real Estate Properties [Line Items]
Real estate investment, gross	28,317	28,054
Multifamily Properties | Eagle Crest | Land
Real Estate Properties [Line Items]
Real estate investment, gross	5,450	5,450
Multifamily Properties | Eagle Crest | Building and Improvements
Real Estate Properties [Line Items]
Real estate investment, gross	21,900	21,846
Multifamily Properties | Eagle Crest | Construction in Progress
Real Estate Properties [Line Items]
Real estate investment, gross	12	15
Multifamily Properties | Eagle Crest | Furniture, Fixtures, and Equipment
Real Estate Properties [Line Items]
Real estate investment, gross	955	743
Multifamily Properties | Silverbrook
Real Estate Properties [Line Items]
Real estate investment, gross	31,808	31,362
Multifamily Properties | Silverbrook | Land
Real Estate Properties [Line Items]
Real estate investment, gross	4,860	4,860
Multifamily Properties | Silverbrook | Building and Improvements
Real Estate Properties [Line Items]
Real estate investment, gross	25,039	24,909
Multifamily Properties | Silverbrook | Construction in Progress
Real Estate Properties [Line Items]
Real estate investment, gross	209	118
Multifamily Properties | Silverbrook | Furniture, Fixtures, and Equipment
Real Estate Properties [Line Items]
Real estate investment, gross	1,700	1,475
Multifamily Properties | Timberglen
Real Estate Properties [Line Items]
Real estate investment, gross	17,731	17,612
Multifamily Properties | Timberglen | Land
Real Estate Properties [Line Items]
Real estate investment, gross	2,510	2,510
Multifamily Properties | Timberglen | Building and Improvements
Real Estate Properties [Line Items]
Real estate investment, gross	14,412	14,379
Multifamily Properties | Timberglen | Construction in Progress
Real Estate Properties [Line Items]
Real estate investment, gross	5	20
Multifamily Properties | Timberglen | Furniture, Fixtures, and Equipment
Real Estate Properties [Line Items]
Real estate investment, gross	804	703
Multifamily Properties | Toscana
Real Estate Properties [Line Items]
Real estate investment, gross	9,617	9,512
Multifamily Properties | Toscana | Land
Real Estate Properties [Line Items]
Real estate investment, gross	1,730	1,730
Multifamily Properties | Toscana | Building and Improvements
Real Estate Properties [Line Items]
Real estate investment, gross	7,276	7,256
Multifamily Properties | Toscana | Construction in Progress
Real Estate Properties [Line Items]
Real estate investment, gross	5	4
Multifamily Properties | Toscana | Furniture, Fixtures, and Equipment
Real Estate Properties [Line Items]
Real estate investment, gross	606	522
Multifamily Properties | Edgewater at Sandy Springs
Real Estate Properties [Line Items]
Real estate investment, gross	60,802	60,312
Multifamily Properties | Edgewater at Sandy Springs | Land
Real Estate Properties [Line Items]
Real estate investment, gross	14,290	14,290
Multifamily Properties | Edgewater at Sandy Springs | Building and Improvements
Real Estate Properties [Line Items]
Real estate investment, gross	43,666	43,429
Multifamily Properties | Edgewater at Sandy Springs | Construction in Progress
Real Estate Properties [Line Items]
Real estate investment, gross	24	199
Multifamily Properties | Edgewater at Sandy Springs | Furniture, Fixtures, and Equipment
Real Estate Properties [Line Items]
Real estate investment, gross	2,822	2,394
Multifamily Properties | Beechwood Terrace
Real Estate Properties [Line Items]
Real estate investment, gross	22,579	22,364
Multifamily Properties | Beechwood Terrace | Land
Real Estate Properties [Line Items]
Real estate investment, gross	1,390	1,390
Multifamily Properties | Beechwood Terrace | Building and Improvements
Real Estate Properties [Line Items]
Real estate investment, gross	20,466	20,374
Multifamily Properties | Beechwood Terrace | Construction in Progress
Real Estate Properties [Line Items]
Real estate investment, gross	10	28
Multifamily Properties | Beechwood Terrace | Furniture, Fixtures, and Equipment
Real Estate Properties [Line Items]
Real estate investment, gross	713	572
Multifamily Properties | Willow Grove
Real Estate Properties [Line Items]
Real estate investment, gross	15,160	15,046
Multifamily Properties | Willow Grove | Land
Real Estate Properties [Line Items]
Real estate investment, gross	3,940	3,940
Multifamily Properties | Willow Grove | Building and Improvements
Real Estate Properties [Line Items]
Real estate investment, gross	10,624	10,621
Multifamily Properties | Willow Grove | Construction in Progress
Real Estate Properties [Line Items]
Real estate investment, gross		2
Multifamily Properties | Willow Grove | Furniture, Fixtures, and Equipment
Real Estate Properties [Line Items]
Real estate investment, gross	596	483
Multifamily Properties | Woodbridge
Real Estate Properties [Line Items]
Real estate investment, gross	17,014	16,884
Multifamily Properties | Woodbridge | Land
Real Estate Properties [Line Items]
Real estate investment, gross	3,650	3,650
Multifamily Properties | Woodbridge | Building and Improvements
Real Estate Properties [Line Items]
Real estate investment, gross	12,652	12,581
Multifamily Properties | Woodbridge | Construction in Progress
Real Estate Properties [Line Items]
Real estate investment, gross	43	110
Multifamily Properties | Woodbridge | Furniture, Fixtures, and Equipment
Real Estate Properties [Line Items]
Real estate investment, gross	669	543
Multifamily Properties | Abbington Heights
Real Estate Properties [Line Items]
Real estate investment, gross	18,913	18,678
Multifamily Properties | Abbington Heights | Land
Real Estate Properties [Line Items]
Real estate investment, gross	1,770	1,770
Multifamily Properties | Abbington Heights | Building and Improvements
Real Estate Properties [Line Items]
Real estate investment, gross	16,285	16,184
Multifamily Properties | Abbington Heights | Construction in Progress
Real Estate Properties [Line Items]
Real estate investment, gross	54	67
Multifamily Properties | Abbington Heights | Furniture, Fixtures, and Equipment
Real Estate Properties [Line Items]
Real estate investment, gross	804	657
Multifamily Properties | The Summit at Sabal Park
Real Estate Properties [Line Items]
Real estate investment, gross	19,902	19,764
Multifamily Properties | The Summit at Sabal Park | Land
Real Estate Properties [Line Items]
Real estate investment, gross	5,770	5,770
Multifamily Properties | The Summit at Sabal Park | Building and Improvements
Real Estate Properties [Line Items]
Real estate investment, gross	13,317	13,311
Multifamily Properties | The Summit at Sabal Park | Construction in Progress
Real Estate Properties [Line Items]
Real estate investment, gross	9	9
Multifamily Properties | The Summit at Sabal Park | Furniture, Fixtures, and Equipment
Real Estate Properties [Line Items]
Real estate investment, gross	806	674
Multifamily Properties | Courtney Cove
Real Estate Properties [Line Items]
Real estate investment, gross	19,559	19,428
Multifamily Properties | Courtney Cove | Land
Real Estate Properties [Line Items]
Real estate investment, gross	5,880	5,880
Multifamily Properties | Courtney Cove | Building and Improvements
Real Estate Properties [Line Items]
Real estate investment, gross	12,864	12,850
Multifamily Properties | Courtney Cove | Construction in Progress
Real Estate Properties [Line Items]
Real estate investment, gross	49	30
Multifamily Properties | Courtney Cove | Furniture, Fixtures, and Equipment
Real Estate Properties [Line Items]
Real estate investment, gross	766	668
Multifamily Properties | Radbourne Lake
Real Estate Properties [Line Items]
Real estate investment, gross	24,795	24,597
Multifamily Properties | Radbourne Lake | Land
Real Estate Properties [Line Items]
Real estate investment, gross	2,440	2,440
Multifamily Properties | Radbourne Lake | Building and Improvements
Real Estate Properties [Line Items]
Real estate investment, gross	21,386	21,194
Multifamily Properties | Radbourne Lake | Construction in Progress
Real Estate Properties [Line Items]
Real estate investment, gross	111	224
Multifamily Properties | Radbourne Lake | Furniture, Fixtures, and Equipment
Real Estate Properties [Line Items]
Real estate investment, gross	858	739
Multifamily Properties | Timber Creek
Real Estate Properties [Line Items]
Real estate investment, gross	25,123	24,939
Multifamily Properties | Timber Creek | Land
Real Estate Properties [Line Items]
Real estate investment, gross	11,260	11,260
Multifamily Properties | Timber Creek | Building and Improvements
Real Estate Properties [Line Items]
Real estate investment, gross	13,140	13,101
Multifamily Properties | Timber Creek | Construction in Progress
Real Estate Properties [Line Items]
Real estate investment, gross	42	37
Multifamily Properties | Timber Creek | Furniture, Fixtures, and Equipment
Real Estate Properties [Line Items]
Real estate investment, gross	681	541
Multifamily Properties | Belmont at Duck Creek
Real Estate Properties [Line Items]
Real estate investment, gross	19,619	19,438
Multifamily Properties | Belmont at Duck Creek | Land
Real Estate Properties [Line Items]
Real estate investment, gross	1,910	1,910
Multifamily Properties | Belmont at Duck Creek | Building and Improvements
Real Estate Properties [Line Items]
Real estate investment, gross	16,997	16,948
Multifamily Properties | Belmont at Duck Creek | Construction in Progress
Real Estate Properties [Line Items]
Real estate investment, gross		47
Multifamily Properties | Belmont at Duck Creek | Furniture, Fixtures, and Equipment
Real Estate Properties [Line Items]
Real estate investment, gross	712	533
Multifamily Properties | The Arbors
Real Estate Properties [Line Items]
Real estate investment, gross	8,549	8,525
Multifamily Properties | The Arbors | Land
Real Estate Properties [Line Items]
Real estate investment, gross	1,730	1,730
Multifamily Properties | The Arbors | Building and Improvements
Real Estate Properties [Line Items]
Real estate investment, gross	6,508	6,512
Multifamily Properties | The Arbors | Construction in Progress
Real Estate Properties [Line Items]
Real estate investment, gross	13	4
Multifamily Properties | The Arbors | Furniture, Fixtures, and Equipment
Real Estate Properties [Line Items]
Real estate investment, gross	298	279
Multifamily Properties | The Crossings
Real Estate Properties [Line Items]
Real estate investment, gross	22,743	22,327
Multifamily Properties | The Crossings | Land
Real Estate Properties [Line Items]
Real estate investment, gross	3,982	3,982
Multifamily Properties | The Crossings | Building and Improvements
Real Estate Properties [Line Items]
Real estate investment, gross	17,487	16,696
Multifamily Properties | The Crossings | Construction in Progress
Real Estate Properties [Line Items]
Real estate investment, gross	145	759
Multifamily Properties | The Crossings | Furniture, Fixtures, and Equipment
Real Estate Properties [Line Items]
Real estate investment, gross	1,129	890
Multifamily Properties | The Crossings at Holcomb Bridge
Real Estate Properties [Line Items]
Real estate investment, gross	17,272	17,054
Multifamily Properties | The Crossings at Holcomb Bridge | Land
Real Estate Properties [Line Items]
Real estate investment, gross	5,560	5,560
Multifamily Properties | The Crossings at Holcomb Bridge | Building and Improvements
Real Estate Properties [Line Items]
Real estate investment, gross	10,758	10,644
Multifamily Properties | The Crossings at Holcomb Bridge | Construction in Progress
Real Estate Properties [Line Items]
Real estate investment, gross		101
Multifamily Properties | The Crossings at Holcomb Bridge | Furniture, Fixtures, and Equipment
Real Estate Properties [Line Items]
Real estate investment, gross	954	749
Multifamily Properties | The Knolls
Real Estate Properties [Line Items]
Real estate investment, gross	22,352	22,000
Multifamily Properties | The Knolls | Land
Real Estate Properties [Line Items]
Real estate investment, gross	3,410	3,410
Multifamily Properties | The Knolls | Building and Improvements
Real Estate Properties [Line Items]
Real estate investment, gross	17,615	17,574
Multifamily Properties | The Knolls | Construction in Progress
Real Estate Properties [Line Items]
Real estate investment, gross	8
Multifamily Properties | The Knolls | Furniture, Fixtures, and Equipment
Real Estate Properties [Line Items]
Real estate investment, gross	1,319	1,016
Multifamily Properties | Regatta Bay
Real Estate Properties [Line Items]
Real estate investment, gross	18,551	18,357
Multifamily Properties | Regatta Bay | Land
Real Estate Properties [Line Items]
Real estate investment, gross	1,660	1,660
Multifamily Properties | Regatta Bay | Building and Improvements
Real Estate Properties [Line Items]
Real estate investment, gross	16,130	16,120
Multifamily Properties | Regatta Bay | Construction in Progress
Real Estate Properties [Line Items]
Real estate investment, gross	73	34
Multifamily Properties | Regatta Bay | Furniture, Fixtures, and Equipment
Real Estate Properties [Line Items]
Real estate investment, gross	688	543
Multifamily Properties | Sabal Palm at Lake Buena Vista
Real Estate Properties [Line Items]
Real estate investment, gross	49,445	49,266
Multifamily Properties | Sabal Palm at Lake Buena Vista | Land
Real Estate Properties [Line Items]
Real estate investment, gross	7,580	7,580
Multifamily Properties | Sabal Palm at Lake Buena Vista | Building and Improvements
Real Estate Properties [Line Items]
Real estate investment, gross	41,103	40,833
Multifamily Properties | Sabal Palm at Lake Buena Vista | Construction in Progress
Real Estate Properties [Line Items]
Real estate investment, gross	1	214
Multifamily Properties | Sabal Palm at Lake Buena Vista | Furniture, Fixtures, and Equipment
Real Estate Properties [Line Items]
Real estate investment, gross	761	639
Multifamily Properties | Southpoint Reserve at Stoney Creek
Real Estate Properties [Line Items]
Real estate investment, gross	17,762	17,468
Multifamily Properties | Southpoint Reserve at Stoney Creek | Land
Real Estate Properties [Line Items]
Real estate investment, gross	6,120	6,120
Multifamily Properties | Southpoint Reserve at Stoney Creek | Building and Improvements
Real Estate Properties [Line Items]
Real estate investment, gross	10,950	10,896
Multifamily Properties | Southpoint Reserve at Stoney Creek | Construction in Progress
Real Estate Properties [Line Items]
Real estate investment, gross	195	166
Multifamily Properties | Southpoint Reserve at Stoney Creek | Furniture, Fixtures, and Equipment
Real Estate Properties [Line Items]
Real estate investment, gross	497	286
Multifamily Properties | Cornerstone
Real Estate Properties [Line Items]
Real estate investment, gross	32,306	31,898
Multifamily Properties | Cornerstone | Land
Real Estate Properties [Line Items]
Real estate investment, gross	1,500	1,500
Multifamily Properties | Cornerstone | Building and Improvements
Real Estate Properties [Line Items]
Real estate investment, gross	29,963	29,786
Multifamily Properties | Cornerstone | Construction in Progress
Real Estate Properties [Line Items]
Real estate investment, gross	218	201
Multifamily Properties | Cornerstone | Furniture, Fixtures, and Equipment
Real Estate Properties [Line Items]
Real estate investment, gross	625	411
Multifamily Properties | McMillan Place
Real Estate Properties [Line Items]
Real estate investment, gross	22,327	21,652
Multifamily Properties | McMillan Place | Land
Real Estate Properties [Line Items]
Real estate investment, gross	3,610	3,610
Multifamily Properties | McMillan Place | Building and Improvements
Real Estate Properties [Line Items]
Real estate investment, gross	17,855	17,127
Multifamily Properties | McMillan Place | Construction in Progress
Real Estate Properties [Line Items]
Real estate investment, gross	101	398
Multifamily Properties | McMillan Place | Furniture, Fixtures, and Equipment
Real Estate Properties [Line Items]
Real estate investment, gross	761	517
Multifamily Properties | Barrington Mill
Real Estate Properties [Line Items]
Real estate investment, gross	59,831	58,772
Multifamily Properties | Barrington Mill | Land
Real Estate Properties [Line Items]
Real estate investment, gross	10,170	10,170
Multifamily Properties | Barrington Mill | Building and Improvements
Real Estate Properties [Line Items]
Real estate investment, gross	47,559	47,055
Multifamily Properties | Barrington Mill | Construction in Progress
Real Estate Properties [Line Items]
Real estate investment, gross	338	430
Multifamily Properties | Barrington Mill | Furniture, Fixtures, and Equipment
Real Estate Properties [Line Items]
Real estate investment, gross	1,764	1,117
Multifamily Properties | Dana Point
Real Estate Properties [Line Items]
Real estate investment, gross	17,153	16,829
Multifamily Properties | Dana Point | Land
Real Estate Properties [Line Items]
Real estate investment, gross	4,090	4,090
Multifamily Properties | Dana Point | Building and Improvements
Real Estate Properties [Line Items]
Real estate investment, gross	12,126	11,760
Multifamily Properties | Dana Point | Construction in Progress
Real Estate Properties [Line Items]
Real estate investment, gross	123	330
Multifamily Properties | Dana Point | Furniture, Fixtures, and Equipment
Real Estate Properties [Line Items]
Real estate investment, gross	814	649
Multifamily Properties | Heatherstone
Real Estate Properties [Line Items]
Real estate investment, gross	10,434	10,084
Multifamily Properties | Heatherstone | Land
Real Estate Properties [Line Items]
Real estate investment, gross	2,320	2,320
Multifamily Properties | Heatherstone | Building and Improvements
Real Estate Properties [Line Items]
Real estate investment, gross	7,462	6,962
Multifamily Properties | Heatherstone | Construction in Progress
Real Estate Properties [Line Items]
Real estate investment, gross	47	403
Multifamily Properties | Heatherstone | Furniture, Fixtures, and Equipment
Real Estate Properties [Line Items]
Real estate investment, gross	605	399
Multifamily Properties | Versailles
Real Estate Properties [Line Items]
Real estate investment, gross	28,219	27,661
Multifamily Properties | Versailles | Land
Real Estate Properties [Line Items]
Real estate investment, gross	6,720	6,720
Multifamily Properties | Versailles | Building and Improvements
Real Estate Properties [Line Items]
Real estate investment, gross	20,160	19,339
Multifamily Properties | Versailles | Construction in Progress
Real Estate Properties [Line Items]
Real estate investment, gross	76	699
Multifamily Properties | Versailles | Furniture, Fixtures, and Equipment
Real Estate Properties [Line Items]
Real estate investment, gross	1,263	903
Multifamily Properties | Seasons 704 Apartments
Real Estate Properties [Line Items]
Real estate investment, gross	22,014	21,627
Multifamily Properties | Seasons 704 Apartments | Land
Real Estate Properties [Line Items]
Real estate investment, gross	7,480	7,480
Multifamily Properties | Seasons 704 Apartments | Building and Improvements
Real Estate Properties [Line Items]
Real estate investment, gross	13,788	13,532
Multifamily Properties | Seasons 704 Apartments | Construction in Progress
Real Estate Properties [Line Items]
Real estate investment, gross	202	254
Multifamily Properties | Seasons 704 Apartments | Furniture, Fixtures, and Equipment
Real Estate Properties [Line Items]
Real estate investment, gross	544	361
Multifamily Properties | Madera Point
Real Estate Properties [Line Items]
Real estate investment, gross	22,373	22,664
Multifamily Properties | Madera Point | Intangible Lease Assets
Real Estate Properties [Line Items]
Real estate investment, gross		629
Multifamily Properties | Madera Point | Land
Real Estate Properties [Line Items]
Real estate investment, gross	4,920	4,920
Multifamily Properties | Madera Point | Building and Improvements
Real Estate Properties [Line Items]
Real estate investment, gross	16,799	16,632
Multifamily Properties | Madera Point | Construction in Progress
Real Estate Properties [Line Items]
Real estate investment, gross	41	39
Multifamily Properties | Madera Point | Furniture, Fixtures, and Equipment
Real Estate Properties [Line Items]
Real estate investment, gross	613	444
Multifamily Properties | The Pointe at the Foothills
Real Estate Properties [Line Items]
Real estate investment, gross	51,656	52,622
Multifamily Properties | The Pointe at the Foothills | Intangible Lease Assets
Real Estate Properties [Line Items]
Real estate investment, gross		1,433
Multifamily Properties | The Pointe at the Foothills | Land
Real Estate Properties [Line Items]
Real estate investment, gross	4,840	4,840
Multifamily Properties | The Pointe at the Foothills | Building and Improvements
Real Estate Properties [Line Items]
Real estate investment, gross	45,821	45,395
Multifamily Properties | The Pointe at the Foothills | Construction in Progress
Real Estate Properties [Line Items]
Real estate investment, gross	5	186
Multifamily Properties | The Pointe at the Foothills | Furniture, Fixtures, and Equipment
Real Estate Properties [Line Items]
Real estate investment, gross	990	768
Multifamily Properties | The Place at Vanderbilt
Real Estate Properties [Line Items]
Real estate investment, gross	19,872	19,456
Multifamily Properties | The Place at Vanderbilt | Intangible Lease Assets
Real Estate Properties [Line Items]
Real estate investment, gross		511
Multifamily Properties | The Place at Vanderbilt | Land
Real Estate Properties [Line Items]
Real estate investment, gross	2,350	2,350
Multifamily Properties | The Place at Vanderbilt | Building and Improvements
Real Estate Properties [Line Items]
Real estate investment, gross	16,369	16,112
Multifamily Properties | The Place at Vanderbilt | Construction in Progress
Real Estate Properties [Line Items]
Real estate investment, gross	351	4
Multifamily Properties | The Place at Vanderbilt | Furniture, Fixtures, and Equipment
Real Estate Properties [Line Items]
Real estate investment, gross	802	479
Multifamily Properties | Colonial Forest
Real Estate Properties [Line Items]
Real estate investment, gross		5,904
Multifamily Properties | Colonial Forest | Held For Sale Properties
Real Estate Properties [Line Items]
Real estate investment, gross	5,952
Multifamily Properties | Colonial Forest | Land
Real Estate Properties [Line Items]
Real estate investment, gross		2,090
Multifamily Properties | Colonial Forest | Land | Held For Sale Properties
Real Estate Properties [Line Items]
Real estate investment, gross	2,090
Multifamily Properties | Colonial Forest | Building and Improvements
Real Estate Properties [Line Items]
Real estate investment, gross		3,486
Multifamily Properties | Colonial Forest | Building and Improvements | Held For Sale Properties
Real Estate Properties [Line Items]
Real estate investment, gross	3,490
Multifamily Properties | Colonial Forest | Furniture, Fixtures, and Equipment
Real Estate Properties [Line Items]
Real estate investment, gross		328
Multifamily Properties | Colonial Forest | Furniture, Fixtures, and Equipment | Held For Sale Properties
Real Estate Properties [Line Items]
Real estate investment, gross	372
Multifamily Properties | The Grove at Alban
Real Estate Properties [Line Items]
Real estate investment, gross		23,611
Multifamily Properties | The Grove at Alban | Held For Sale Properties
Real Estate Properties [Line Items]
Real estate investment, gross	23,888
Multifamily Properties | The Grove at Alban | Land
Real Estate Properties [Line Items]
Real estate investment, gross		3,640
Multifamily Properties | The Grove at Alban | Land | Held For Sale Properties
Real Estate Properties [Line Items]
Real estate investment, gross	3,640
Multifamily Properties | The Grove at Alban | Building and Improvements
Real Estate Properties [Line Items]
Real estate investment, gross		18,994
Multifamily Properties | The Grove at Alban | Building and Improvements | Held For Sale Properties
Real Estate Properties [Line Items]
Real estate investment, gross	19,033
Multifamily Properties | The Grove at Alban | Construction in Progress
Real Estate Properties [Line Items]
Real estate investment, gross		66
Multifamily Properties | The Grove at Alban | Furniture, Fixtures, and Equipment
Real Estate Properties [Line Items]
Real estate investment, gross		911
Multifamily Properties | The Grove at Alban | Furniture, Fixtures, and Equipment | Held For Sale Properties
Real Estate Properties [Line Items]
Real estate investment, gross	1,215
Multifamily Properties | Willowdale Crossing
Real Estate Properties [Line Items]
Real estate investment, gross		41,088
Multifamily Properties | Willowdale Crossing | Held For Sale Properties
Real Estate Properties [Line Items]
Real estate investment, gross	41,308
Multifamily Properties | Willowdale Crossing | Land
Real Estate Properties [Line Items]
Real estate investment, gross		4,650
Multifamily Properties | Willowdale Crossing | Land | Held For Sale Properties
Real Estate Properties [Line Items]
Real estate investment, gross	4,650
Multifamily Properties | Willowdale Crossing | Building and Improvements
Real Estate Properties [Line Items]
Real estate investment, gross		35,631
Multifamily Properties | Willowdale Crossing | Building and Improvements | Held For Sale Properties
Real Estate Properties [Line Items]
Real estate investment, gross	35,657
Multifamily Properties | Willowdale Crossing | Construction in Progress
Real Estate Properties [Line Items]
Real estate investment, gross		23
Multifamily Properties | Willowdale Crossing | Construction in Progress | Held For Sale Properties
Real Estate Properties [Line Items]
Real estate investment, gross	27
Multifamily Properties | Willowdale Crossing | Furniture, Fixtures, and Equipment
Real Estate Properties [Line Items]
Real estate investment, gross		784
Multifamily Properties | Willowdale Crossing | Furniture, Fixtures, and Equipment | Held For Sale Properties
Real Estate Properties [Line Items]
Real estate investment, gross	974
Multifamily Properties | Park at Blanding
Real Estate Properties [Line Items]
Real estate investment, gross		6,943
Multifamily Properties | Park at Blanding | Held For Sale Properties
Real Estate Properties [Line Items]
Real estate investment, gross	6,971
Multifamily Properties | Park at Blanding | Land
Real Estate Properties [Line Items]
Real estate investment, gross		2,610
Multifamily Properties | Park at Blanding | Land | Held For Sale Properties
Real Estate Properties [Line Items]
Real estate investment, gross	2,610
Multifamily Properties | Park at Blanding | Building and Improvements
Real Estate Properties [Line Items]
Real estate investment, gross		4,025
Multifamily Properties | Park at Blanding | Building and Improvements | Held For Sale Properties
Real Estate Properties [Line Items]
Real estate investment, gross	4,033
Multifamily Properties | Park at Blanding | Construction in Progress
Real Estate Properties [Line Items]
Real estate investment, gross		4
Multifamily Properties | Park at Blanding | Construction in Progress | Held For Sale Properties
Real Estate Properties [Line Items]
Real estate investment, gross	6
Multifamily Properties | Park at Blanding | Furniture, Fixtures, and Equipment
Real Estate Properties [Line Items]
Real estate investment, gross		304
Multifamily Properties | Park at Blanding | Furniture, Fixtures, and Equipment | Held For Sale Properties
Real Estate Properties [Line Items]
Real estate investment, gross	322
Multifamily Properties | Jade Park
Real Estate Properties [Line Items]
Real estate investment, gross		8,264
Multifamily Properties | Jade Park | Held For Sale Properties
Real Estate Properties [Line Items]
Real estate investment, gross	8,366
Multifamily Properties | Jade Park | Land
Real Estate Properties [Line Items]
Real estate investment, gross		1,490
Multifamily Properties | Jade Park | Land | Held For Sale Properties
Real Estate Properties [Line Items]
Real estate investment, gross	1,490
Multifamily Properties | Jade Park | Building and Improvements
Real Estate Properties [Line Items]
Real estate investment, gross		6,404
Multifamily Properties | Jade Park | Building and Improvements | Held For Sale Properties
Real Estate Properties [Line Items]
Real estate investment, gross	6,414
Multifamily Properties | Jade Park | Construction in Progress
Real Estate Properties [Line Items]
Real estate investment, gross		19
Multifamily Properties | Jade Park | Construction in Progress | Held For Sale Properties
Real Estate Properties [Line Items]
Real estate investment, gross	30
Multifamily Properties | Jade Park | Furniture, Fixtures, and Equipment
Real Estate Properties [Line Items]
Real estate investment, gross		351
Multifamily Properties | Jade Park | Furniture, Fixtures, and Equipment | Held For Sale Properties
Real Estate Properties [Line Items]
Real estate investment, gross	$ 432
Multifamily Properties | Meridian
Real Estate Properties [Line Items]
Real estate investment, gross		13,066
Multifamily Properties | Meridian | Land
Real Estate Properties [Line Items]
Real estate investment, gross		2,310
Multifamily Properties | Meridian | Building and Improvements
Real Estate Properties [Line Items]
Real estate investment, gross		10,325
Multifamily Properties | Meridian | Construction in Progress
Real Estate Properties [Line Items]
Real estate investment, gross		12
Multifamily Properties | Meridian | Furniture, Fixtures, and Equipment
Real Estate Properties [Line Items]
Real estate investment, gross		419
Multifamily Properties | Park at Regency
Real Estate Properties [Line Items]
Real estate investment, gross		8,777
Multifamily Properties | Park at Regency | Land
Real Estate Properties [Line Items]
Real estate investment, gross		2,620
Multifamily Properties | Park at Regency | Building and Improvements
Real Estate Properties [Line Items]
Real estate investment, gross		5,706
Multifamily Properties | Park at Regency | Construction in Progress
Real Estate Properties [Line Items]
Real estate investment, gross		5
Multifamily Properties | Park at Regency | Furniture, Fixtures, and Equipment
Real Estate Properties [Line Items]
Real estate investment, gross		446
Multifamily Properties | Mandarin Reserve
Real Estate Properties [Line Items]
Real estate investment, gross		27,481
Multifamily Properties | Mandarin Reserve | Land
Real Estate Properties [Line Items]
Real estate investment, gross		5,610
Multifamily Properties | Mandarin Reserve | Building and Improvements
Real Estate Properties [Line Items]
Real estate investment, gross		20,850
Multifamily Properties | Mandarin Reserve | Furniture, Fixtures, and Equipment
Real Estate Properties [Line Items]
Real estate investment, gross		$ 1,021

XML

Real Estate Investments - Additional Information (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Real Estate [Abstract]
Depreciation expense	$ 8,000,000	$ 6,700,000	$ 17,000,000	$ 12,500,000
Amortization expense of intangible lease assets	100,000	700,000	3,400,000	9,200,000
Sales of real estate	$ 64,250,000	$ 0	$ 64,250,000	$ 0

XML

Real Estate Investments - Summary of Sales of Real Estate Property (Details) - USD ($)	3 Months Ended	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2016	Jun. 30, 2015
Real Estate Properties [Line Items]
Sales Price	$ 64,250,000	$ 64,250,000	$ 0
Net proceeds from sales of real estate		63,220,000
Gain on sales of real estate	16,370,000	$ 16,370,000
Meridian | Austin | Texas
Real Estate Properties [Line Items]
Date of Sale		May 10, 2016
Sales Price	17,250,000	$ 17,250,000
Net proceeds from sales of real estate		16,981,000
Gain on sales of real estate		$ 4,786,000
Park At Regency And Mandarin Reserve | Jacksonville | Florida
Real Estate Properties [Line Items]
Date of Sale		Jun. 06, 2016
Sales Price	$ 47,000,000	$ 47,000,000
Net proceeds from sales of real estate		46,239,000
Gain on sales of real estate		$ 11,584,000

XML

Real Estate Investments - Summary of Sales of Real Estate Property (Parenthetical) (Details) Units in Millions, $ in Millions	6 Months Ended
	Jun. 30, 2016 USD ($) Property	Jul. 27, 2016 USD ($) Units
Real Estate Properties [Line Items]
Number of Units | Property	12,276
Meridian | Austin | Texas
Real Estate Properties [Line Items]
Proceeds from sales of real estate	$ 6.4
CityView | West Palm Beach | Florida
Real Estate Properties [Line Items]
Date of Acquisition	Jul. 27, 2016
CityView | West Palm Beach | Subsequent Event | Florida
Real Estate Properties [Line Items]
Purchase Price		$ 6.4
Number of Units | Units		217

XML

Pro Forma Financial Information (Unaudited) - Additional Information (Details)		3 Months Ended	6 Months Ended	18 Months Ended
	Jul. 27, 2016 Property	Jun. 30, 2016 USD ($) Property	Jun. 30, 2016 Property	Jun. 30, 2016 Property
Pro Forma Financial Information [Line Items]
Number of properties acquired				10
Number of properties sold		3	3	3
General and administrative fees expected | $		$ 800,000
Subsequent Event
Pro Forma Financial Information [Line Items]
Number of properties acquired	1

XML

Pro Forma Financial Information (Unaudited) - Summary of Unaudited Combined Consolidated Pro Forma Results of Operations (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Business Acquisition Pro Forma Information [Abstract]
Total revenues, actual	$ 33,657	$ 28,747	$ 67,168	$ 54,285
Net income (loss)	$ 16,596	$ (2,266)	$ 16,887	$ (8,157)
Earnings (loss) per share: Basic and diluted	$ 0.69	$ (0.11)	$ 0.68	$ (0.36)
Total revenues, pro forma			$ 64,788	$ 59,682
Net income (loss), pro forma			$ 997	$ (24,970)
Earnings (loss) per share - basic and diluted, pro forma			$ 0.05	$ (1.17)

XML

Debt - Summary of Mortgage Debt Nonrecourse to Company and Encumbers Multifamily Properties (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2016	Dec. 31, 2015
Debt Instrument [Line Items]
Maturity Date	Aug. 04, 2016
Deferred financing costs, net	$ (4,000)	$ (4,000)	$ (6,000)
Mortgages Payable	$ 388,337	$ 388,337	$ 676,324
Cornerstone | Debt With Fixed Interest Rate
Debt Instrument [Line Items]
Max Note Rate	4.09%	4.09%
Mortgages Payable
Debt Instrument [Line Items]
Outstanding Principal	$ 391,544	$ 391,544
Fair market value adjustment	237	237
Deferred financing costs, net	(3,444)	(3,444)
Mortgages Payable	388,337	388,337
Mortgages Payable | Debt With Floating Interest Rate
Debt Instrument [Line Items]
Outstanding Principal	35,373	$ 35,373
Mortgages Payable | The Miramar Apartments | Debt With Floating Interest Rate
Debt Instrument [Line Items]
Term (months)		120 months
Amortization (months)		360 months
Outstanding Principal	$ 8,400	$ 8,400
Interest Rate	2.69%	2.69%
Maturity Date		Feb. 01, 2025
Mortgages Payable | The Miramar Apartments | Maximum | Debt With Floating Interest Rate
Debt Instrument [Line Items]
Max Note Rate	5.75%	5.75%
Mortgages Payable | Courtney Cove | Debt With Floating Interest Rate
Debt Instrument [Line Items]
Term (months)		84 months
Amortization (months)		360 months
Outstanding Principal	$ 14,210	$ 14,210
Interest Rate	2.55%	2.55%
Maturity Date		Sep. 01, 2021
Mortgages Payable | Courtney Cove | Maximum | Debt With Floating Interest Rate
Debt Instrument [Line Items]
Max Note Rate	5.75%	5.75%
Mortgages Payable | The Summit at Sabal Park | Debt With Floating Interest Rate
Debt Instrument [Line Items]
Term (months)		84 months
Amortization (months)		360 months
Outstanding Principal	$ 14,287	$ 14,287
Interest Rate	2.55%	2.55%
Maturity Date		Sep. 01, 2021
Mortgages Payable | The Summit at Sabal Park | Maximum | Debt With Floating Interest Rate
Debt Instrument [Line Items]
Max Note Rate	5.75%	5.75%
Mortgages Payable | Southpoint Reserve at Stoney Creek | Debt With Floating Interest Rate
Debt Instrument [Line Items]
Term (months)		84 months
Amortization (months)		360 months
Outstanding Principal	$ 13,600	$ 13,600
Interest Rate	2.58%	2.58%
Maturity Date		Jan. 01, 2022
Mortgages Payable | Southpoint Reserve at Stoney Creek | Maximum | Debt With Floating Interest Rate
Debt Instrument [Line Items]
Max Note Rate	6.00%	6.00%
Mortgages Payable | Barrington Mill | Debt With Floating Interest Rate
Debt Instrument [Line Items]
Term (months)		84 months
Amortization (months)		360 months
Outstanding Principal	$ 43,500	$ 43,500
Interest Rate	2.43%	2.43%
Maturity Date		Mar. 01, 2022
Mortgages Payable | Barrington Mill | Maximum | Debt With Floating Interest Rate
Debt Instrument [Line Items]
Max Note Rate	5.50%	5.50%
Mortgages Payable | Dana Point | Debt With Floating Interest Rate
Debt Instrument [Line Items]
Term (months)		84 months
Amortization (months)		360 months
Outstanding Principal	$ 12,176	$ 12,176
Interest Rate	2.52%	2.52%
Maturity Date		Mar. 01, 2022
Mortgages Payable | Dana Point | Maximum | Debt With Floating Interest Rate
Debt Instrument [Line Items]
Max Note Rate	5.50%	5.50%
Mortgages Payable | Heatherstone | Debt With Floating Interest Rate
Debt Instrument [Line Items]
Term (months)		84 months
Amortization (months)		360 months
Outstanding Principal	$ 7,087	$ 7,087
Interest Rate	2.55%	2.55%
Maturity Date		Mar. 01, 2022
Mortgages Payable | Heatherstone | Maximum | Debt With Floating Interest Rate
Debt Instrument [Line Items]
Max Note Rate	5.50%	5.50%
Mortgages Payable | Versailles | Debt With Floating Interest Rate
Debt Instrument [Line Items]
Term (months)		84 months
Amortization (months)		360 months
Outstanding Principal	$ 19,623	$ 19,623
Interest Rate	2.50%	2.50%
Maturity Date		Mar. 01, 2022
Mortgages Payable | Versailles | Maximum | Debt With Floating Interest Rate
Debt Instrument [Line Items]
Max Note Rate	5.50%	5.50%
Mortgages Payable | Seasons 704 Apartments | Debt With Floating Interest Rate
Debt Instrument [Line Items]
Term (months)		84 months
Amortization (months)		360 months
Outstanding Principal	$ 12,660	$ 12,660
Interest Rate	2.27%	2.27%
Maturity Date		May 01, 2022
Mortgages Payable | Seasons 704 Apartments | Maximum | Debt With Floating Interest Rate
Debt Instrument [Line Items]
Max Note Rate	5.95%	5.95%
Mortgages Payable | Timber Creek | Debt With Floating Interest Rate
Debt Instrument [Line Items]
Term (months)		120 months
Amortization (months)		360 months
Outstanding Principal	$ 19,482	$ 19,482
Interest Rate	2.29%	2.29%
Maturity Date		Oct. 01, 2024
Mortgages Payable | Timber Creek | Maximum | Debt With Floating Interest Rate
Debt Instrument [Line Items]
Max Note Rate	5.96%	5.96%
Mortgages Payable | Radbourne Lake | Debt With Floating Interest Rate
Debt Instrument [Line Items]
Term (months)		120 months
Amortization (months)		360 months
Outstanding Principal	$ 19,213	$ 19,213
Interest Rate	2.28%	2.28%
Maturity Date		Oct. 01, 2024
Mortgages Payable | Radbourne Lake | Maximum | Debt With Floating Interest Rate
Debt Instrument [Line Items]
Max Note Rate	6.25%	6.25%
Mortgages Payable | The Arbors | Debt With Floating Interest Rate
Debt Instrument [Line Items]
Term (months)		120 months
Amortization (months)		360 months
Outstanding Principal	$ 5,812	$ 5,812
Interest Rate	2.28%	2.28%
Maturity Date		Nov. 01, 2024
Mortgages Payable | The Arbors | Maximum | Debt With Floating Interest Rate
Debt Instrument [Line Items]
Max Note Rate	7.11%	7.11%
Mortgages Payable | The Crossings | Debt With Floating Interest Rate
Debt Instrument [Line Items]
Term (months)		120 months
Amortization (months)		360 months
Outstanding Principal	$ 15,874	$ 15,874
Interest Rate	2.28%	2.28%
Maturity Date		Nov. 01, 2024
Mortgages Payable | The Crossings | Maximum | Debt With Floating Interest Rate
Debt Instrument [Line Items]
Max Note Rate	7.21%	7.21%
Mortgages Payable | The Crossings at Holcomb Bridge | Debt With Floating Interest Rate
Debt Instrument [Line Items]
Term (months)		120 months
Amortization (months)		360 months
Outstanding Principal	$ 12,450	$ 12,450
Interest Rate	2.28%	2.28%
Maturity Date		Nov. 01, 2024
Mortgages Payable | The Crossings at Holcomb Bridge | Maximum | Debt With Floating Interest Rate
Debt Instrument [Line Items]
Max Note Rate	7.35%	7.35%
Mortgages Payable | The Knolls | Debt With Floating Interest Rate
Debt Instrument [Line Items]
Term (months)		120 months
Amortization (months)		360 months
Outstanding Principal	$ 16,038	$ 16,038
Interest Rate	2.28%	2.28%
Maturity Date		Nov. 01, 2024
Mortgages Payable | The Knolls | Maximum | Debt With Floating Interest Rate
Debt Instrument [Line Items]
Max Note Rate	7.11%	7.11%
Mortgages Payable | McMillan Place | Debt With Floating Interest Rate
Debt Instrument [Line Items]
Term (months)		120 months
Amortization (months)		360 months
Outstanding Principal	$ 15,738	$ 15,738
Interest Rate	2.39%	2.39%
Maturity Date		Feb. 01, 2025
Mortgages Payable | McMillan Place | Maximum | Debt With Floating Interest Rate
Debt Instrument [Line Items]
Max Note Rate	5.92%	5.92%
Mortgages Payable | Sabal Palm at Lake Buena Vista | Debt With Floating Interest Rate
Debt Instrument [Line Items]
Term (months)		120 months
Amortization (months)		360 months
Outstanding Principal	$ 37,680	$ 37,680
Interest Rate	2.28%	2.28%
Maturity Date		Dec. 01, 2024
Mortgages Payable | Sabal Palm at Lake Buena Vista | Maximum | Debt With Floating Interest Rate
Debt Instrument [Line Items]
Max Note Rate	6.26%	6.26%
Mortgages Payable | Abbington Heights
Debt Instrument [Line Items]
Max Note Rate	3.79%	3.79%
Mortgages Payable | Abbington Heights | Debt With Fixed Interest Rate
Debt Instrument [Line Items]
Term (months)		120 months
Amortization (months)		360 months
Outstanding Principal	$ 10,305	$ 10,305
Interest Rate	3.79%	3.79%
Maturity Date		Sep. 01, 2022
Mortgages Payable | Abbington Heights | Maximum | Debt With Fixed Interest Rate
Debt Instrument [Line Items]
Max Note Rate	3.79%	3.79%
Mortgages Payable | Belmont at Duck Creek
Debt Instrument [Line Items]
Max Note Rate	4.68%	4.68%
Mortgages Payable | Belmont at Duck Creek | Debt With Fixed Interest Rate
Debt Instrument [Line Items]
Term (months)		84 months
Amortization (months)		360 months
Outstanding Principal	$ 11,246	$ 11,246
Interest Rate	4.68%	4.68%
Maturity Date		Sep. 01, 2018
Mortgages Payable | Belmont at Duck Creek | Maximum | Debt With Fixed Interest Rate
Debt Instrument [Line Items]
Max Note Rate	4.68%	4.68%
Mortgages Payable | Regatta Bay | Debt With Floating Interest Rate
Debt Instrument [Line Items]
Term (months)		60 months
Amortization (months)		360 months
Outstanding Principal	$ 14,000	$ 14,000
Interest Rate	2.35%	2.35%
Maturity Date		Nov. 01, 2020
Mortgages Payable | Cornerstone
Debt Instrument [Line Items]
Max Note Rate	4.24%	4.24%
Mortgages Payable | Cornerstone | Debt With Fixed Interest Rate
Debt Instrument [Line Items]
Term (months)		120 months
Amortization (months)		360 months
Outstanding Principal	$ 23,283	$ 23,283
Interest Rate	4.24%	4.24%
Maturity Date		Mar. 01, 2023
Mortgages Payable | Cornerstone | Maximum | Debt With Fixed Interest Rate
Debt Instrument [Line Items]
Max Note Rate	4.24%	4.24%
Mortgages Payable | Madera Point | Debt With Floating Interest Rate
Debt Instrument [Line Items]
Term (months)		60 months
Amortization (months)		360 months
Outstanding Principal	$ 13,515	$ 13,515
Interest Rate	2.37%	2.37%
Maturity Date		Sep. 01, 2020
Mortgages Payable | The Pointe at the Foothills | Debt With Floating Interest Rate
Debt Instrument [Line Items]
Term (months)		60 months
Amortization (months)		360 months
Outstanding Principal	$ 31,365	$ 31,365
Interest Rate	2.36%	2.36%
Maturity Date		Sep. 01, 2020
Mortgages Payable | Held For Sale Properties
Debt Instrument [Line Items]
Outstanding Principal	$ 66,307	$ 66,307
Deferred financing costs, net	(581)	(581)
Mortgages Payable	65,726	$ 65,726
Mortgages Payable | Held For Sale Properties | Colonial Forest | Debt With Floating Interest Rate
Debt Instrument [Line Items]
Term (months)		84 months
Amortization (months)		360 months
Outstanding Principal	$ 4,125	$ 4,125
Interest Rate	2.63%	2.63%
Maturity Date		Sep. 01, 2021
Mortgages Payable | Held For Sale Properties | Colonial Forest | Maximum | Debt With Floating Interest Rate
Debt Instrument [Line Items]
Max Note Rate	6.25%	6.25%
Mortgages Payable | Held For Sale Properties | Park at Blanding | Debt With Floating Interest Rate
Debt Instrument [Line Items]
Term (months)		84 months
Amortization (months)		360 months
Outstanding Principal	$ 4,875	$ 4,875
Interest Rate	2.63%	2.63%
Maturity Date		Sep. 01, 2021
Mortgages Payable | Held For Sale Properties | Park at Blanding | Maximum | Debt With Floating Interest Rate
Debt Instrument [Line Items]
Max Note Rate	7.25%	7.25%
Mortgages Payable | Held For Sale Properties | The Grove at Alban | Debt With Floating Interest Rate
Debt Instrument [Line Items]
Term (months)		84 months
Amortization (months)		360 months
Outstanding Principal	$ 18,657	$ 18,657
Interest Rate	3.01%	3.01%
Maturity Date		Apr. 01, 2021
Mortgages Payable | Held For Sale Properties | The Grove at Alban | Maximum | Debt With Floating Interest Rate
Debt Instrument [Line Items]
Max Note Rate	6.50%	6.50%
Mortgages Payable | Held For Sale Properties | Willowdale Crossing | Debt With Floating Interest Rate
Debt Instrument [Line Items]
Term (months)		84 months
Amortization (months)		360 months
Outstanding Principal	$ 32,800	$ 32,800
Interest Rate	2.74%	2.74%
Maturity Date		Jun. 01, 2021
Mortgages Payable | Held For Sale Properties | Willowdale Crossing | Maximum | Debt With Floating Interest Rate
Debt Instrument [Line Items]
Max Note Rate	5.75%	5.75%
Mortgages Payable | Held For Sale Properties | Jade Park | Debt With Floating Interest Rate
Debt Instrument [Line Items]
Term (months)		84 months
Amortization (months)		360 months
Outstanding Principal	$ 5,850	$ 5,850
Interest Rate	2.62%	2.62%
Maturity Date		Sep. 01, 2021
Mortgages Payable | Held For Sale Properties | Jade Park | Maximum | Debt With Floating Interest Rate
Debt Instrument [Line Items]
Max Note Rate	6.49%	6.49%

XML

Debt - Summary of Mortgage Debt Nonrecourse to Company and Encumbers Multifamily Properties (Parenthetical) (Details) $ in Millions	6 Months Ended
	Jun. 30, 2016 USD ($)
13th month through 81st month
Debt Instrument [Line Items]
Mortgage loans payable description	Loan can be pre-paid in the first 12 months of the term at par plus 5.00%. Starting in the 13th month of the term through the 81st month of the term, the loan can be pre-paid at par plus 1.00% of the unpaid principal balance and at par during the last three months of the term.
Loan prepayment fee as a percentage of unpaid principal balance	1.00%
First 12 months
Debt Instrument [Line Items]
Loan prepayment fee as a percentage of unpaid principal balance	5.00%
13th month through 116th month
Debt Instrument [Line Items]
Mortgage loans payable description	Loan can be pre-paid in the first 12 months of the term at par plus 5.00%. Starting in the 13th month of the term through the 116th month of the term, the loan can be pre-paid at par plus 1.00% of the unpaid principal balance and at par during the last four months of the term.
Loan prepayment fee as a percentage of unpaid principal balance	1.00%
13th month through 57th month
Debt Instrument [Line Items]
Mortgage loans payable description	Loan can be pre-paid starting in the 13th month through the 57th month of the term at par plus 1.00% of the unpaid principal balance and at par during the last three months of the term.
Loan prepayment fee as a percentage of unpaid principal balance	1.00%
Abbington Heights | Last Three Months
Debt Instrument [Line Items]
Mortgage loans payable description	Debt was assumed upon acquisition of this property at approximated fair value. The loan is open to pre-payment in the last three months of the term.
Belmont at Duck Creek | Last Six Months
Debt Instrument [Line Items]
Mortgage loans payable description	Debt was assumed upon acquisition of this property at approximated fair value. The loan is open to pre-payment in the last six months of the term.
Regatta Bay | First 12 months
Debt Instrument [Line Items]
Mortgage loans payable description	Loan can be pre-paid in the first 12 months of the term at par plus 1.00% of the unpaid principal balance and at par thereafter. Loan’s unpaid principal balance can be declared due and payable in full, at the lender’s discretion, on November 1, 2018 and November 1, 2019.
Loan prepayment fee as a percentage of unpaid principal balance	1.00%
Cornerstone | Debt With Fixed Interest Rate
Debt Instrument [Line Items]
Interest Rate	4.09%
Fair value of debt assumed upon acquisition	$ 18.0
Debt instrument, payment terms	The assumed debt carries a 4.09% fixed rate, was originally issued in March 2013 and had a term of 120 months with an initial 24 months of interest only.
Indebtedness secured by property	$ 23.4
Blended pay rate	4.24%
Cornerstone | First Mortgage | Debt With Fixed Interest Rate
Debt Instrument [Line Items]
Debt instrument, payment terms	At the time of acquisition, the principal balance of the first mortgage remained unchanged and had a remaining term of 98 months with 2 months of interest only. The first mortgage is pre-payable and subject to yield maintenance from month 13 through August 31, 2022 and is pre-payable at par September 1, 2022 until maturity.
Cornerstone | Second Mortgage | Debt With Fixed Interest Rate
Debt Instrument [Line Items]
Interest Rate	4.70%
Debt instrument, payment terms	The supplemental second mortgage is pre-payable and subject to yield maintenance from the date of issuance through August 31, 2022 and is pre-payable at par September 1, 2022 until maturity.
Acquired property mortgage loan principle amount	$ 5.8
The Miramar Apartments | 13th month through 117th month
Debt Instrument [Line Items]
Mortgage loans payable description	Loan cannot be pre-paid in the first 12 months of the term. Starting in the 13th month of the term through the 117th month of the term, the loan can be pre-paid at par plus 1.00% of the unpaid principal balance and at par the last three months of the term.
Loan prepayment fee as a percentage of unpaid principal balance	1.00%
Mortgages Payable | Three-month LIBOR
Debt Instrument [Line Items]
LIBOR, interest rate	0.6541%
Mortgages Payable | One-month LIBOR
Debt Instrument [Line Items]
LIBOR, interest rate	0.4651%
Mortgages Payable | Abbington Heights
Debt Instrument [Line Items]
Interest Rate	3.79%
Mortgages Payable | Abbington Heights | Debt With Fixed Interest Rate
Debt Instrument [Line Items]
LIBOR, interest rate	3.79%
Mortgages Payable | Belmont at Duck Creek
Debt Instrument [Line Items]
Interest Rate	4.68%
Mortgages Payable | Belmont at Duck Creek | Debt With Fixed Interest Rate
Debt Instrument [Line Items]
LIBOR, interest rate	4.68%
Mortgages Payable | Regatta Bay | Floor Rate
Debt Instrument [Line Items]
LIBOR, three month interest rate	0.25%
Mortgages Payable | Regatta Bay | Three-month LIBOR
Debt Instrument [Line Items]
LIBOR, three month interest rate	1.70%
Mortgages Payable | Cornerstone
Debt Instrument [Line Items]
Interest Rate	4.24%
Mortgages Payable | Cornerstone | Debt With Fixed Interest Rate
Debt Instrument [Line Items]
LIBOR, interest rate	4.24%

XML

Debt - Additional Information (Details)							3 Months Ended	6 Months Ended	18 Months Ended
	Aug. 02, 2016 USD ($)	Jul. 01, 2016 USD ($)	Jun. 30, 2016 USD ($) Property	Jun. 07, 2016 USD ($)	Jun. 06, 2016 USD ($)	Aug. 05, 2015 USD ($)	Jun. 30, 2016 USD ($) Property	Jun. 30, 2016 USD ($) Property	Jun. 30, 2016 USD ($) Property	Dec. 31, 2015 USD ($)
Debt Instrument [Line Items]
Weighted average interest rate of mortgage indebtedness			2.62%				2.62%	2.62%	2.62%	2.67%
Number of properties sold | Property							3	3	3
Credit facility proceeds received								$ 200,000,000
Amount outstanding under the credit facility			$ 196,290,000				$ 196,290,000	196,290,000	$ 196,290,000
Deferred financing costs, net			$ 4,000,000				$ 4,000,000	$ 4,000,000	$ 4,000,000	$ 6,000,000
Number Of Cross Collateralized Properties | Property			11				11	11	11
Bridge facility			$ 1,972,000				$ 1,972,000	$ 1,972,000	$ 1,972,000	$ 28,805,000
Bridge facility principal payment								$ 27,000,000
Bridge facility, full payment date							Aug. 04, 2016
Key Bank, N.A.
Debt Instrument [Line Items]
Bridge facility						$ 29,000,000
Key Bank, N.A. | Subsequent Event
Debt Instrument [Line Items]
Combined notional amount		$ 300,000,000
Weighted average fixed rate		1.0088%
Key Bank, N.A. | Subsequent Event | Interest Rate Swap
Debt Instrument [Line Items]
Combined notional amount		$ 300,000,000
Weighted average fixed rate		1.0088%
Interest rate swap effective date		Jul. 01, 2016
Interest rate swap termination date		Jul. 01, 2021
Bridge Loan
Debt Instrument [Line Items]
Credit facility interest accrual description								4.00% plus one-month LIBOR.
Accrual of interest on debt instrument						4.00%
Credit facility proceeds received							$ 9,000,000
Bridge facility principal payment							27,000,000
Remaining principal amount outstanding			2,000,000				2,000,000	$ 2,000,000	2,000,000
Bridge Loan | Subsequent Event
Debt Instrument [Line Items]
Bridge facility principal payment	$ 2,000,000
Bridge Loan | Park At Regency And Mandarin Reserve
Debt Instrument [Line Items]
Bridge facility principal payment funded with share proceeds							$ 18,000,000
Credit Facility
Debt Instrument [Line Items]
Credit facility, maximum borrowing capacity					$ 200,000,000
Credit facility, additional borrowing capacity					$ 300,000,000
Credit facility, initial term					60 months
Credit facility, one extension term					12 months
Credit facility interest accrual description								Interest accrues on the Credit Facility at an interest rate of one-month LIBOR plus 2.20%.
Accrual of interest on debt instrument					2.20%
Credit facility proceeds received				$ 9,000,000	$ 191,000,000
Number of properties refinanced | Property							11
Amount outstanding under the credit facility			$ 200,000,000				$ 200,000,000	$ 200,000,000	200,000,000
Credit facility, interest rate			2.67%
Deferred financing costs, net			$ 2,500,000		$ 1,200,000		$ 2,500,000	2,500,000	$ 2,500,000
Interest expense
Debt Instrument [Line Items]
Mortgage prepayment penalties								$ 350,000

XML

Debt - Sale of Properties and Repayment of Related Mortgage Loans (Details) - Mortgage Loans $ in Thousands	6 Months Ended
	Jun. 30, 2016 USD ($)
Debt Instrument [Line Items]
Outstanding Principal	$ 391,544
Debt With Floating Interest Rate
Debt Instrument [Line Items]
Outstanding Principal	$ 35,373
Debt With Floating Interest Rate | Meridian
Debt Instrument [Line Items]
Date of Sale	May 10, 2016
Outstanding Principal	$ 9,791
Debt With Floating Interest Rate | Park At Regency And Mandarin Reserve
Debt Instrument [Line Items]
Date of Sale	Jun. 06, 2016
Outstanding Principal	$ 25,582

XML

Debt - Schedule of Debt Maturities (Details) $ in Thousands	Jun. 30, 2016 USD ($)
Debt Instrument [Line Items]
Remainder of 2016	$ 3,018
2017	2,896
2018	18,383
2019	8,107
2020	67,122
Thereafter	560,325
Total	659,851
Operating Properties & Other Secured Debt
Debt Instrument [Line Items]
Remainder of 2016	2,399
2017	1,463
2018	16,908
2019	6,588
2020	65,564
Thereafter	500,622
Total	593,544
Held For Sale Properties
Debt Instrument [Line Items]
Remainder of 2016	619
2017	1,433
2018	1,475
2019	1,519
2020	1,558
Thereafter	59,703
Total	$ 66,307

XML

Fair Value Measures and Derivative Financial Instruments - Additional Information (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2016 USD ($) Property	Jun. 30, 2015 USD ($) DerivativeInstrument	Jun. 30, 2016 USD ($) Property	Jun. 30, 2015 USD ($) DerivativeInstrument
Fair Value Inputs Assets Quantitative Information [Line Items]
Properties acquired | Property	39		39
Derivative financial instruments cap weighted average interest rate	6.09%		6.09%
Designated as hedging instrument
Fair Value Inputs Assets Quantitative Information [Line Items]
Earnings ineffectiveness to derivatives designated as cash flow hedges | $	$ 0	$ 0	$ 0	$ 0
Number of derivatives designated as cash flow hedges		14		14
Not designated as hedging instrument
Fair Value Inputs Assets Quantitative Information [Line Items]
Number of derivatives not designated as hedges		20		20
Minimum
Fair Value Inputs Assets Quantitative Information [Line Items]
Interest rate caps term range			3 years
Maximum
Fair Value Inputs Assets Quantitative Information [Line Items]
Interest rate caps term range			4 years

XML

Fair Value Measures and Derivative Financial Instruments - Outstanding Interest Rate Derivatives Designated as Cash Flow Hedges of Interest Rate Risk (Details) - Designated as hedging instrument - Interest rate caps	Jun. 30, 2016 USD ($) DerivativeInstrument
Derivative Instruments And Hedging Activities Disclosures [Line Items]
Interest rate caps | DerivativeInstrument	15
Interest rate caps | $	$ 259,659,000

XML

Fair Value Measures and Derivative Financial Instruments - Outstanding Interest Rate Derivatives Not Designated as Cash Flow Hedges of Interest Rate Risk (Details) - Not designated as hedging instrument	Jun. 30, 2016 USD ($) DerivativeInstrument	Jun. 30, 2015 DerivativeInstrument
Derivative Instruments And Hedging Activities Disclosures [Line Items]
Interest rate caps		20
Interest rate caps
Derivative Instruments And Hedging Activities Disclosures [Line Items]
Interest rate caps	7
Interest rate caps | $	$ 94,867,000

XML

Fair Value Measures and Derivative Financial Instruments - Summary of Derivative Financial Instruments and Classification on the Combined Consolidated Balance Sheet (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Derivative Instruments And Hedging Activities Disclosures [Line Items]
Interest rate caps	$ 5	$ 67
Other assets | Interest rate caps | Designated as hedging instrument
Derivative Instruments And Hedging Activities Disclosures [Line Items]
Interest rate caps	$ 5	61
Other assets | Interest rate caps | Not designated as hedging instrument
Derivative Instruments And Hedging Activities Disclosures [Line Items]
Interest rate caps		$ 6

XML

Fair Value Measures and Derivative Financial Instruments - Summary of Derivative Financial Instruments and Combined Consolidated Statements of Operations and Comprehensive Loss (Details) - Interest rate caps - Interest expense - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Derivative Instruments Gain Loss [Line Items]
Amount of gain (loss) recognized in OCI on derivative (effective portion)	$ (12)	$ (126)	$ (44)	$ (396)
Amount of gain (loss) reclassified from accumulated OCI into income (effective portion)	(6)		(12)
Amount of gain (loss) recognized in income	$ (2)	$ (50)	$ (6)	$ (166)

XML

Stockholders' Equity - Additional Information (Details) - USD ($)	6 Months Ended
	Jun. 30, 2016	Jun. 15, 2016	Dec. 31, 2015
Class Of Stock [Line Items]
Common stock, shares, issued	21,293,825		21,293,825
Common stock, shares, outstanding	21,288,825
Common stock, par value	$ 0.01	$ 0.01	$ 0.01
Share repurchase program, treasury stock shares	5,000
Share repurchase program, treasury stock, value	$ 88,000
Share repurchase program, authorized amount		$ 30,000,000
Stock repurchase program, expiration date	Jun. 15, 2018
Share repurchase program, treasury stock, per share	$ 17.62
2016 LTIP
Class Of Stock [Line Items]
Common stock, par value		$ 0.01
Number of shares authorized to issue		2,100,000

XML

Related Party Transactions - Additional Information (Details) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2016 USD ($)	Jun. 30, 2015 USD ($)	Jun. 30, 2016 USD ($) $ / Property $ / h	Jun. 30, 2015 USD ($)
Operating Agreement
Related Party Transaction [Line Items]
Asset management fee percent			0.50%
Asset management fees	$ 0.2	$ 0.1	$ 0.3	$ 0.3
NexPoint Real Estate Advisors, L.P
Related Party Transaction [Line Items]
Percentage of annual administrative fee, paid monthly			0.20%
Advisory fee percentage, paid monthly			1.00%
Advisory and administrative fees	1.6	$ 1.4	$ 3.2	$ 2.7
Additional advisory and administrative fees	$ 0.3		$ 0.6
NexPoint Real Estate Advisors, L.P | Predecessor
Related Party Transaction [Line Items]
Percentage of annual advisory, paid monthly			1.00%
Percentage of annual administrative fee, paid monthly			0.20%
Maximum | NexPoint Real Estate Advisors, L.P
Related Party Transaction [Line Items]
Advisory and administrative fees percentage			1.50%
Advisory and administrative fees on contributed assets			$ 5.4
BH Management Services, LLC
Related Party Transaction [Line Items]
Property management fee percent			3.00%
Inspection of properties fee, per unit | $ / Property			15.00
Other owner approved fees, per hour | $ / h			55
BH Management Services, LLC | Maximum
Related Party Transaction [Line Items]
Construction supervision fee, percent fee			6.00%
BH Management Services, LLC | Minimum
Related Party Transaction [Line Items]
Construction supervision fee, percent fee			5.00%

XML

Related Party Transactions - Summary of Fees Incurred to BH And Its Affiliates As Well As Reimbursements Paid to BH (Details) - BH Management Services, LLC - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Fees incurred
Property management fees	$ 1,013	$ 858	$ 2,018	$ 1,617
Construction supervision fees	172	394	377	535
Acquisition fees		162		1,353
Reimbursements
Payroll and benefits	3,881	3,103	8,072	6,137
Other reimbursements	$ 705	$ 1,307	$ 1,005	$ 1,556

XML

Commitments and Contingencies - Additional Information (Details)	3 Months Ended	6 Months Ended	18 Months Ended
	Jun. 30, 2016 USD ($) Property	Jun. 30, 2016 Property	Jun. 30, 2016 Property
Commitments And Contingencies [Line Items]
Number of properties sold | Property	3	3	3
Maximum
Commitments And Contingencies [Line Items]
Percentage of net proceeds from sales or refinancing	10.00%
Maximum | Jacksonville Portfolio
Commitments And Contingencies [Line Items]
Additional profit interest earning	$ 2,000,000
Minimum | Jacksonville Portfolio
Commitments And Contingencies [Line Items]
Additional profit interest earning	$ 0

XML

Subsequent Events - Summary of Acquired Property (Details) $ in Thousands		6 Months Ended
	Jul. 27, 2016 USD ($) Units	Jun. 30, 2016 Property
Subsequent Event [Line Items]
Number of Units | Property		12,276
CityView | West Palm Beach | Florida
Subsequent Event [Line Items]
Date of Acquisition		Jul. 27, 2016
Subsequent Event | CityView | West Palm Beach | Florida
Subsequent Event [Line Items]
Purchase Price	$ 6,400
Number of Units | Units	217,000,000
Subsequent Event | CityView | Multifamily Properties | West Palm Beach | Florida
Subsequent Event [Line Items]
Date of Acquisition	Jul. 27, 2016
Purchase Price	$ 22,421
Debt	$ 15,812
Number of Units | Units	217
Noncontrolling Interest	5.00%
Effective ownership percentage	95.00%

XML

Subsequent Events - Summary of Acquired Property (Parenthetical) (Details)	3 Months Ended	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2016
Subsequent Event [Line Items]
Maturity Date	Aug. 04, 2016
CityView
Subsequent Event [Line Items]
Debt issued date		Jul. 24, 2015
Maturity Date		Aug. 01, 2025
Debt instrument description		The Company assumed a 4.49% fixed-rate loan that was originally issued on July 24, 2015 and matures on August 1, 2025. The loan is open to pre-payment in the last XX months of the term.
CityView | Debt With Fixed Interest Rate
Subsequent Event [Line Items]
Interest Rate	4.49%	4.49%

XML

Subsequent Events - Additional Information (Details) $ / shares in Units, $ in Thousands			3 Months Ended	6 Months Ended	7 Months Ended
	Aug. 08, 2016 USD ($) $ / shares shares	Aug. 02, 2016 USD ($)	Jun. 30, 2016 USD ($)	Jun. 30, 2016 USD ($) $ / shares shares	Aug. 08, 2016 USD ($) $ / shares shares	Sep. 30, 2016 $ / shares	Jul. 01, 2016 DerivativeInstrument
Subsequent Event [Line Items]
Remaining principal amount outstanding paid				$ 27,000
Share repurchase program, treasury stock shares | shares				5,000
Share repurchase program, treasury stock, per share | $ / shares				$ 17.62
Share repurchase program, treasury stock, value				$ 88
Dividends payable, date declared				Aug. 08, 2016
Dividends payable, date of record				Sep. 15, 2016
Dividends payable, date to be paid				Sep. 30, 2016
Scenario Forecast
Subsequent Event [Line Items]
Dividends payable, amount per share | $ / shares						$ 0.206
Bridge Loan
Subsequent Event [Line Items]
Remaining principal amount outstanding paid			$ 27,000
Subsequent Event
Subsequent Event [Line Items]
Number of derivatives not designated as hedges | DerivativeInstrument							3
Share repurchase program, treasury stock shares | shares	22,055				27,055
Share repurchase program, treasury stock, par value | $ / shares	$ 0.01				$ 0.01
Share repurchase program, treasury stock, per share | $ / shares	$ 18.07				$ 17.99
Share repurchase program, treasury stock, value	$ 398				$ 486
Subsequent Event | Bridge Loan
Subsequent Event [Line Items]
Remaining principal amount outstanding paid		$ 2,000

XML

Subsequent Events - Summary of Company's Outstanding Interest Rate Swaps (Details) - Subsequent Event - KeyBank	Jul. 01, 2016 USD ($)
Subsequent Event [Line Items]
Notional Amount	$ 300,000,000
Fixed Rate	1.0088%
Interest Rate Swap Transaction One
Subsequent Event [Line Items]
Trade Date	May 13, 2016
Effective Date	Jul. 01, 2016
Termination Date	Jun. 01, 2021
Notional Amount	$ 100,000,000
Fixed Rate	1.1055%
Floating Rate Option	One-month LIBOR
Interest Rate Swap Transaction Two
Subsequent Event [Line Items]
Trade Date	Jun. 13, 2016
Effective Date	Jul. 01, 2016
Termination Date	Jun. 01, 2021
Notional Amount	$ 100,000,000
Fixed Rate	1.021%
Floating Rate Option	One-month LIBOR
Interest Rate Swap Transaction Three
Subsequent Event [Line Items]
Trade Date	Jun. 30, 2016
Effective Date	Jul. 01, 2016
Termination Date	Jun. 01, 2021
Notional Amount	$ 100,000,000
Fixed Rate	0.90%
Floating Rate Option	One-month LIBOR