10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended June 30, 2019

OR

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

For the transition period from to

Commission File 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 (Address of Principal Executive Offices)	75201
	(Zip Code)

(972) 628-4100

(Telephone Number, Including Area Code)

N/A

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

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

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	NXRT	New York Stock Exchange

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

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

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

Large Accelerated Filer	☐	Accelerated Filer	☒
Non-Accelerated Filer	☐	Smaller reporting company	☐
Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

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

As of July 30, 2019, the registrant had 23,895,442 shares of its common stock, par value $0.01 per share, outstanding.

NEXPOINT RESIDENTIAL TRUST, INC.

Form 10-Q

Quarter Ended June 30, 2019

INDEX

			Page
Cautionary Statement Regarding Forward-Looking Statements			ii
	PART I—FINANCIAL INFORMATION
Item 1.		Financial Statements
		Consolidated Balance Sheets as of June 30, 2019 (Unaudited) and December 31, 2018	1
		Consolidated Unaudited Statements of Operations and Comprehensive Income (Loss) for the Three and Six Months Ended June 30, 2019 and 2018	2
		Consolidated Unaudited Statements of Stockholders’ Equity for the Three and Six Months Ended June 30, 2019 and 2018	3
		Consolidated Unaudited Statements of Cash Flows for the Six Months Ended June 30, 2019 and 2018	5
		Notes to Consolidated Unaudited Financial Statements	7
Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
Item 3.		Quantitative and Qualitative Disclosures About Market Risk	51
Item 4.		Controls and Procedures	52
	PART II—OTHER INFORMATION
Item 1.		Legal Proceedings	53
Item 1A.		Risk Factors	53
Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds	53
Item 3.		Defaults Upon Senior Securities	53
Item 4.		Mine Safety Disclosures	53
Item 5.		Other Information	53
Item 6.		Exhibits	54
Signatures			55

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 and results of operations 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 current 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. You can also identify forward-looking statements by discussions of strategy, plans or intentions.

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;

• our multifamily properties are concentrated in certain geographic markets in the Southeastern and Southwestern United States, which makes us more susceptible to adverse developments in those markets;

• increased risks associated with our strategy of acquiring value-enhancement multifamily properties rather than more conservative investment strategies;

• potential reforms to the Federal Home Loan Mortgage Corporation (“Freddie Mac”) and the Federal National Mortgage Association (“Fannie Mae”);

• competition could limit our ability to acquire attractive investment opportunities, which could adversely affect our profitability and impede our growth;

• competition and any increased affordability of residential homes could limit our ability to lease our apartments or increase or maintain rents;

• the relatively low residential mortgage rates may result in potential renters purchasing residences rather than leasing them, and as a result, cause a decline in our occupancy rates;

• the risk that we may fail to consummate future property acquisitions;

• failure of acquisitions to yield anticipated results;

• risks associated with increases in interest rates and our ability to issue additional debt or equity securities in the future;

• risks associated with selling apartment communities, which could limit our operational and financial flexibility;

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

• lack of or insufficient amounts of insurance;

• 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 investigation or remediation of environmental contamination, including asbestos, lead-based paint, chemical vapor, subsurface contamination and mold growth;

• high costs associated with the compliance with various accessibility, environmental, building and health and safety laws and regulations, such as the Americans with Disabilities Act of 1990 (the “ADA”) and the Fair Housing Act (the “FHA”);

• 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;

• our dependence on information systems;

ii

• risks associated with breaches of our data security;

• 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;

• 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 relative lack of experience of NexPoint Real Estate Advisors, L.P. (our “Adviser”) and property manager in operating under the constraints imposed on us as a real estate investment trust (“REIT”) may hinder the achievement of our investment objectives;

• loss of key personnel of Highland Capital Management, L.P. (our “Sponsor” or “Highland”), our Adviser and our property manager;

• 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 our Sponsor or its affiliates;

• risks associated with our Adviser’s ability to terminate the Advisory Agreement (as defined below);

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

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

• risks associated with any potential internalization of our management functions;

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

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

• failure to maintain our status as a REIT;

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

• 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;

• risks associated with our ownership of interests in taxable REIT subsidiaries;

• the recognition of taxable gains from the sale of properties as a result of the inability to complete certain like-kind exchanges (“1031 Exchanges”) in accordance with Section 1031 of the Internal Revenue Code of 1986, as amended (the “Code”);

• the risk that the Internal Revenue Service (the “IRS”) may consider certain sales of properties to be prohibited transactions, resulting in a 100% penalty tax on any taxable gain;

• 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 our board of directors (the “Board”) to revoke our REIT qualification without stockholder approval;

• recent and 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; and

• any other risks included under Part I, Item 1A, “Risk Factors” of our annual report on Form 10-K, filed with the U.S. Securities and Exchange Commission (“SEC”) on February 19, 2019 (our “Annual Report”).

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

NEXPOINT RESIDENTIAL TRUST, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts)

	June 30, 2019			December 31, 2018
	(Unaudited)
ASSETS
Operating Real Estate Investments
Land	$	203,748		$	202,347
Buildings and improvements		914,771			935,604
Intangible lease assets		2,971			3,049
Construction in progress		612			1,881
Furniture, fixtures, and equipment		57,545			61,456
Total Gross Operating Real Estate Investments		1,179,647			1,204,337
Accumulated depreciation and amortization		(127,118	)		(134,124	)
Total Net Operating Real Estate Investments		1,052,529			1,070,213
Real estate held for sale, net of accumulated depreciation of $33,305 and $897, respectively		175,968			17,329
Total Net Real Estate Investments		1,228,497			1,087,542
Cash and cash equivalents		16,892			19,864
Restricted cash		22,676			23,265
Accounts receivable		2,667			3,340
Prepaid and other assets		3,826			9,058
Fair market value of interest rate swaps		2,363			18,141
TOTAL ASSETS	$	1,276,921		$	1,161,210
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Mortgages payable, net	$	769,973		$	824,702
Mortgages payable held for sale, net		156,636			13,318
Credit facility, net		51,536			—
Accounts payable and other accrued liabilities		6,679			5,765
Accrued real estate taxes payable		10,192			12,607
Accrued interest payable		3,086			2,852
Security deposit liability		2,032			1,889
Prepaid rents		1,554			1,482
Fair market value of interest rate swaps		853			-
Total Liabilities		1,002,541			862,615
Redeemable noncontrolling interests in the Operating Partnership		3,032			2,567
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; 23,895,442 and 23,499,635 shares issued and outstanding, respectively		238			234
Additional paid-in capital		297,448			285,511
Accumulated earnings less dividends		(26,824	)		(6,764	)
Accumulated other comprehensive income		486			17,047
Total Stockholders' Equity		271,348			296,028
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	1,276,921		$	1,161,210

See Notes to Consolidated Financial Statements

1

NEXPOINT RESIDENTIAL TRUST, INC. AND SUBSIDIARIES

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,
	2019			2018			2019			2018
Revenues
Rental income	$	37,711		$	31,069		$	74,033		$	61,642
Other income		5,355			4,586			10,524			9,070
Total revenues		43,066			35,655			84,557			70,712
Expenses
Property operating expenses		10,161			8,231			19,800			17,108
Real estate taxes and insurance		5,564			4,588			11,322			9,444
Property management fees (1)		1,291			1,066			2,531			2,120
Advisory and administrative fees (2)		1,872			1,863			3,722			3,701
Corporate general and administrative expenses		2,741			1,986			4,974			3,799
Property general and administrative expenses		1,768			1,648			3,426			3,195
Depreciation and amortization		13,066			11,038			28,464			22,410
Total expenses		36,463			30,420			74,239			61,777
Operating income before gain on sales of real estate		6,603			5,235			10,318			8,935
Gain on sales of real estate		—			—			—			13,742
Operating income		6,603			5,235			10,318			22,677
Interest expense		(8,590	)		(6,823	)		(16,678	)		(13,620	)
Loss on extinguishment of debt and modification costs		—			(78	)		—			(629	)
Net income (loss)		(1,987	)		(1,666	)		(6,360	)		8,428
Net income (loss) attributable to redeemable noncontrolling interests in the Operating Partnership		(6	)		(5	)		(19	)		25
Net income (loss) attributable to common stockholders	$	(1,981	)	$	(1,661	)	$	(6,341	)	$	8,403
Other comprehensive income (loss)
Unrealized gains (losses) on interest rate derivatives		(10,946	)		2,749			(16,611	)		10,510
Total comprehensive income (loss)		(12,933	)		1,083			(22,971	)		18,938
Comprehensive income (loss) attributable to redeemable noncontrolling interests in the Operating Partnership		(39	)		4			(69	)		57
Comprehensive income (loss) attributable to common stockholders	$	(12,894	)	$	1,079		$	(22,902	)	$	18,881
Weighted average common shares outstanding - basic		23,736			20,780			23,643			20,883
Weighted average common shares outstanding - diluted		24,233			21,295			24,139			21,362
Earnings (loss) per share - basic	$	(0.08	)	$	(0.08	)	$	(0.27	)	$	0.40
Earnings (loss) per share - diluted	$	(0.08	)	$	(0.08	)	$	(0.27	)	$	0.39

(1) Fees incurred to an unaffiliated third party that is an affiliate of the noncontrolling limited partner of the Company’s operating partnership, NexPoint Residential Trust Operating Partnership, L.P. (see Note 10).

(2) Fees incurred to the Adviser (see Note 11).

See Notes to Consolidated Financial Statements

2

NEXPOINT RESIDENTIAL TRUST, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(dollars in thousands)

(Unaudited)

	Preferred Stock				Common Stock				Additional		Accumulated Earnings			Accumulated Other			Common Stock Held in
Three Months ended June 30, 2019	Number of Shares		Par Value		Number of Shares		Par Value		Paid-in Capital		Less Dividends			Comprehensive Income (Loss)			Treasury at Cost		Total
Balances, March 31, 2019		—	$	—		23,643,277	$	235	$	286,580	$	(17,891	)	$	11,399		$	—	$	280,323
Net loss attributable to common stockholders		—		—		—		—		—		(1,981	)		—			—		(1,981	)
Vesting of stock-based compensation		—		—		—		—		1,419		—			—			—		1,419
Issuance of common shares through at-the-market offering		—		—		252,165		3		9,449		—			—			—		9,452
Common stock dividends declared ($0.275 per share)		—		—		—		—		—		(6,702	)		—			—		(6,702	)
Other comprehensive loss		—		—		—		—		—		—			(10,913	)		—		(10,913	)
Adjustment to reflect redemption value of redeemable noncontrolling interests in the Operating Partnership		—		—		—		—		—		(250	)		—			—		(250	)
Balances, June 30, 2019		—	$	—		23,895,442	$	238	$	297,448	$	(26,824	)	$	486		$	—	$	271,348

	Preferred Stock				Common Stock				Additional		Accumulated Earnings			Accumulated Other			Common Stock Held in
Six Months ended June 30, 2019	Number of Shares		Par Value		Number of Shares		Par Value		Paid-in Capital		Less Dividends			Comprehensive Income (Loss)			Treasury at Cost		Total
Balances, December 31, 2018		—	$	—		23,499,635	$	234	$	285,511	$	(6,764	)	$	17,047		$	—	$	296,028
Net loss attributable to common stockholders		—		—		—		—		—		(6,341	)		—			—		(6,341	)
Vesting of stock-based compensation		—		—		143,642		1		2,488		—			—			—		2,489
Issuance of common shares through at-the-market offering		—		—		252,165		3		9,449		—			—			—		9,452
Common stock dividends declared ($0.550 per share)		—		—		—		—		—		(13,343	)		—			—		(13,343	)
Other comprehensive loss		—		—		—		—		—		—			(16,561	)		—		(16,561	)
Adjustment to reflect redemption value of redeemable noncontrolling interests in the Operating Partnership		—		—		—		—		—		(376	)		—			—		(376	)
Balances, June 30, 2019		—		—		23,895,442		238		297,448		(26,824	)		486			—		271,348

See Notes to Consolidated Financial Statements

3

NEXPOINT RESIDENTIAL TRUST, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Continued)

(dollars in thousands)

(Unaudited)

	Preferred Stock				Common Stock						Additional			Accumulated Earnings			Accumulated Other		Common Stock Held in
Three Months ended June 30, 2018	Number of Shares		Par Value		Number of Shares			Par Value			Paid-in Capital			Less Dividends			Comprehensive Income		Treasury at Cost			Total
Balances, March 31, 2018		—	$	—		20,926,355		$	209		$	202,085		$	22,569		$	22,860	$	—		$	247,723
Net income attributable to common stockholders		—		—		—			—			—			(1,661	)		—	$	—			(1,661	)
Repurchase of common stock		—		—		—			—			—			—			—		(4,614	)		(4,614	)
Retirement of common stock held in treasury		—		—		(178,988	)		(2	)		(4,612	)		—			—		4,614			—
Vesting of stock-based compensation		—		—		—			—			1,094			—			—		—			1,094
Common stock dividends declared ($0.25 per share)		—		—		—			—			—			(5,316	)		—		—			(5,316	)
Other comprehensive income		—		—		—			—			—			—			2,740		—			2,740
Adjustment to reflect redemption value of redeemable noncontrolling interests in the Operating Partnership		—		—		—			—			—			(22	)		—		—			(22	)
Balances, June 30, 2018		—		—		20,747,367			207			198,567			15,570			25,600		—			239,944

	Preferred Stock				Common Stock						Additional			Accumulated Earnings			Accumulated Other		Common Stock Held in
Six Months ended June 30, 2018	Number of Shares		Par Value		Number of Shares			Par Value			Paid-in Capital			Less Dividends			Comprehensive Income		Treasury at Cost			Total
Balances, December 31, 2017		—	$	—		21,049,565		$	210		$	206,227		$	19,288		$	13,719	$	—		$	239,444
Cumulative effect upon adoption of ASU 2017-12															(1,403	)		1,403
Net income attributable to common stockholders		—		—		—			—			—			8,403			—		—			8,403
Repurchase of common stock		—		—		—			—			—			—			—		(9,672	)		(9,672	)
Retirement of common stock held in treasury		—		—		(382,941	)		(4	)		(9,668	)		—			—		9,672			—
Vesting of stock-based compensation		—		—		80,743			1			2,008			—			—		—			2,009
Common stock dividends declared ($0.50 per share)		—		—		—			—			—			(10,696	)		—		—			(10,696	)
Other comprehensive income		—		—		—			—			—			—			10,478		—			10,478
Adjustment to reflect redemption value of redeemable noncontrolling interests in the Operating Partnership		—		—		—			—			—			(22	)		—		—			(22	)
Balances, June 30, 2018		—		—		20,747,367			207			198,567			15,570			25,600		—			239,944

See Notes to Consolidated Financial Statements

4

NEXPOINT RESIDENTIAL TRUST, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)

	For the Six Months Ended June 30,
	2019			2018
Cash flows from operating activities
Net income (loss)	$	(6,360	)	$	8,428
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Gain on sales of real estate		—			(13,742	)
Depreciation and amortization		28,464			22,410
Amortization/write-off of deferred financing costs		902			1,225
Change in fair value on derivative instruments included in interest expense		(3,734	)		(1,241	)
Net cash received on derivative settlements		3,720			1,177
Amortization/write-off of fair market value adjustment of assumed debt		(47	)		(121	)
Vesting of stock-based compensation		2,654			2,009
Changes in operating assets and liabilities, net of effects of acquisitions:
Operating assets		(585	)		(1,399	)
Operating liabilities		(1,394	)		(1,413	)
Net cash provided by operating activities		23,620			17,333
Cash flows from investing activities
Net proceeds from sales of real estate		—			29,553
Prepaid acquisition costs		(1,000	)		—
Additions to real estate investments		(17,529	)		(15,104	)
Acquisitions of real estate investments		(133,792	)		—
Net cash provided by (used in) investing activities		(152,321	)		14,449
Cash flows from financing activities
Mortgage proceeds received		78,987			17,760
Mortgage payments		(465	)		(29,471	)
Credit facilities proceeds received		52,500			5,000
Bridge facility payments		—			(8,597	)
Deferred financing costs paid		(1,861	)		(310	)
Interest rate cap fees paid		(20	)		(9	)
Proceeds from the issuance of common shares through at-the-market offering, net of offering costs		9,452			—
Payments for taxes related to net share settlement of stock-based compensation		(165	)		—
Repurchase of common stock		—			(9,672	)
Dividends paid to common stockholders		(13,288	)		(10,512	)
Net cash provided by (used in) financing activities		125,140			(35,811	)
Net decrease in cash, cash equivalents and restricted cash		(3,561	)		(4,029	)
Cash, cash equivalents and restricted cash, beginning of period		43,129			43,248
Cash, cash equivalents and restricted cash, end of period	$	39,568		$	39,219

See Notes to Consolidated Financial Statements

5

NEXPOINT RESIDENTIAL TRUST, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)

Supplemental Disclosure of Cash Flow Information
Interest paid	$	19,323		$	14,042
Prepayment penalties		—			172
Supplemental Disclosure of Noncash Activities
Capitalized construction costs included in accounts payable and other accrued liabilities		1,513			1,607
Change in fair value on derivative instruments designated as hedges		(16,611	)		10,510
Other assets acquired from acquisitions		109			—
Liabilities assumed from acquisitions		647			—
Assumed debt on acquisitions		10,109
Increase in dividends payable upon vesting of restricted stock units		55			184

See Notes to Consolidated Financial Statements

6

NEXPOINT RESIDENTIAL TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Organization and Description of Business

NexPoint Residential Trust, Inc. (the “Company”, “we”, “our”) was incorporated in Maryland on September 19, 2014, and has elected 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 owns its properties (the “Portfolio”) through the OP and its wholly owned taxable REIT subsidiary (“TRS”). The OP owns approximately 99.9% of the Portfolio; the TRS owns approximately 0.1% of the Portfolio. The Company’s wholly owned subsidiary, NexPoint Residential Trust Operating Partnership GP, LLC (the “OP GP”), is the sole general partner of the OP. As of June 30, 2019, there were 23,819,402 common units in the OP (“OP Units”) outstanding, of which 23,746,169, or 99.7%, were owned by the Company and 73,233, or 0.3%, were owned by a noncontrolling limited partner (see Note 10).

The Company is externally managed by NexPoint Real Estate Advisors, L.P. (the “Adviser”), through an agreement dated March 16, 2015, as amended, and renewed on February 13, 2019 for a one-year term set to expire on March 16, 2020 (the “Advisory Agreement”), by and among the Company, the OP and the Adviser. The Adviser conducts substantially all of the Company’s operations and provides asset management services for its real estate investments. The Company expects it will only have accounting employees while the Advisory Agreement is in effect. All of the Company’s investment decisions are made by the Adviser, subject to general oversight by the Adviser’s investment committee and the Company’s board of directors (the “Board”). The Adviser is wholly owned by NexPoint Advisors, L.P., which is an affiliate of Highland Capital Management, L.P. (the “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 value-add program. Consistent with the Company’s policy to acquire assets for both income and capital gain, the Company intends to hold at least majority interests in its 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.

2. Summary of Significant Accounting Policies

Basis of Accounting

The accompanying unaudited consolidated financial statements are presented in accordance with accounting principles generally accepted in the United States (“GAAP”). GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the dates of the unaudited consolidated financial statements and the amounts of revenues and expenses during the reporting periods. Actual amounts realized or paid could differ from those estimates. All significant intercompany accounts and transactions have been eliminated in consolidation. There have been no significant changes to the Company’s significant accounting policies during the six months ended June 30, 2019.

The accompanying unaudited consolidated financial statements have been prepared according to the rules and regulations of the SEC.  Certain information and note disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted according to such rules and regulations, although management believes that the disclosures are adequate to make the information presented not misleading.

In the opinion of management, all adjustments and eliminations necessary for the fair presentation of the Company’s financial position as of June 30, 2019 and results of operations for the six months ended June 30, 2019 and 2018 have been included.  Such adjustments are normal and recurring in nature.  The unaudited information included in this quarterly report on Form 10-Q should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2018 and notes thereto included in its annual report on Form 10-K filed with the SEC on February 19, 2019.

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Principles of Consolidation

The Company accounts for subsidiary partnerships, joint ventures and other similar entities in which it holds an ownership interest in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 810, Consolidation. The Company first evaluates whether each entity is a variable interest entity (“VIE”). Under the VIE model, the Company consolidates an entity when it has control to direct the activities of the VIE and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. Under the voting model, the Company consolidates an entity when it controls the entity through ownership of a majority voting interest. The unaudited consolidated financial statements include the accounts of the Company and its subsidiaries, including the OP and its subsidiaries.

Revenue Recognition

The Company’s primary operations consist of rental income earned from its residents under lease agreements typically 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, and pets, administrative, application and other fees and are recognized when earned.  The Company implemented the provisions of Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”) as of January 1, 2019 using the modified retrospective approach.  The adoption of ASU 2014-09 did not have a material impact on the Company’s consolidated financial statements as a substantial portion of its revenue consists of rental income from leasing arrangements, which is specifically excluded from ASU 2014-09. 

Purchase Price Allocation

Upon acquisition of a property, the purchase price and related acquisition costs (“total consideration”) are allocated to land, buildings, improvements, furniture, fixtures, and equipment, and intangible lease assets in accordance with FASB ASC 805, Business Combinations. Acquisition costs are capitalized in accordance with FASB ASC 805.

The allocation of total consideration, which is determined using inputs that are classified within Level 3 of the fair value hierarchy established by FASB ASC 820, Fair Value Measurement and Disclosures (“ASC 820”) (see Note 7), is based on management’s estimate of the property’s “as-if” vacant fair value and 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 total consideration 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, which is estimated using inputs that are classified within Level 2 of the fair value hierarchy, and the face value of debt is recorded as a premium or discount and amortized as interest expense over the life of the debt assumed.

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.

Impairment

Real estate assets are reviewed for impairment 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.

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The Company periodically classifies real estate assets as held for sale when certain criteria are met, in accordance with GAAP. At that time, the Company presents the net real estate assets and the net debt associated with the real estate held for sale separately in its consolidated balance sheet, and the Company ceases recording depreciation and amortization expense related to that property. Real estate held for sale is reported at the lower of its carrying amount or its estimated fair value less estimated costs to sell.  As of June 30, 2019, there are seven properties that are held for sale.  Approximately $0.6 million of other assets and approximately $2.6 million of other liabilities related to the held for sale assets are included on the consolidated balance sheet.  

Income Taxes

The Company has elected 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 continue 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 (1) 85% of its ordinary income, (2) 95% of its capital gain net income and (3) 100% of its undistributed income from prior years. The Company intends to operate in such a manner so as to qualify as a REIT, but no assurance can be given that the Company will operate in a manner so as to qualify as a REIT. Taxable income from certain non-REIT activities is managed through a TRS and is subject to applicable federal, state, and local income and margin taxes. The Company had no significant taxes associated with its TRS for the six months ended June 30, 2019 and 2018.

If the Company fails 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, 2019, the Company believes it is in compliance with all applicable REIT requirements.

The Company evaluates the accounting and disclosure of tax positions taken or expected to be taken in the course of preparing the Company’s tax returns to determine whether the tax positions are “more-likely-than-not” (greater than 50 percent probability) of being sustained by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax benefit or expense in the current year. The Company’s management is required to analyze all open tax years, as defined by the statute of limitations, for all major jurisdictions, which include federal and certain states. The Company has no examinations in progress and none are expected at this time.

The Company recognizes its tax positions and evaluates them using a two-step process. First, the Company determines whether a tax position is more likely than not to be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. Second, the Company will determine the amount of benefit to recognize and record the amount that is more likely than not to be realized upon ultimate settlement.

The Company had no material unrecognized tax benefit or expense, accrued interest or penalties as of June 30, 2019. The Company and its subsidiaries are subject to federal income tax as well as income tax of various state and local jurisdictions. The 2018, 2017 and 2016 tax years remain open to examination by tax jurisdictions to which the Company and its subsidiaries are subject. When applicable, the Company recognizes interest and/or penalties related to uncertain tax positions on its consolidated statements of operations and comprehensive income (loss).

Accounting Pronouncements Adopted in the Current Year

In May 2014, the FASB issued ASU 2014-09, 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 periods in fiscal years beginning after December 15, 2018. Entities are allowed to use either the full or modified retrospective approach when transitioning to the ASU. The Company implemented the provisions of ASU 2014-09 as of January 1, 2019 using the modified retrospective approach. The adoption of ASU 2014-09 did not have a material impact on the Company’s consolidated financial statements as a substantial portion of its revenue consists of rental income from leasing arrangements, which is specifically excluded from ASU 2014-09.   

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In January 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities(“ASU 2016-01”), 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 in fiscal years beginning after December 15, 2018. The Company implemented the provisions of ASU 2016-01 as of January 1, 2019, and it did not have a material impact on the Company’s consolidated financial statementsas the Company does not, nor does it expect to, have a material amount of financial assets or financial liabilities that would be subject to the provisions of ASU 2016-01.

Recent Accounting Pronouncements

Section 107 of the Jumpstart Our Business Startups Act (“JOBS Act”) provides that an emerging growth company can take advantage of the extended transition period provided in Section 13(a) of the Securities Exchange Act of 1934, as amended (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. The Company has elected to take advantage of this extended transition period. As a result of this election, the Company’s financial statements may not be comparable to companies that comply with public company effective dates for such new or revised standards. At June 30, 2019, the Company’s public float exceeded $700 million, and as such, the transition period will end at December 31, 2019. At the point the transition period ends, the Company will follow the adoption criteria for public companies and reflect such adoption criteria in the Company’s Annual Report on Form 10-K for the 2019 fiscal year. The following recent accounting pronouncements reflect effective dates that delay the adoption until those standards would otherwise apply to private companies.

In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815) (“ASU 2017-12”), which clarifies hedge accounting requirements, improves disclosure of hedging arrangements, and better aligns risk management activities and financial reporting for hedging relationships. The Company early adopted ASU 2017-12 on January 1, 2018, on a modified retrospective basis. For cash flow hedges existing as of the date of adoption, the Company eliminated the separate measurement of ineffectiveness by means of a cumulative-effect adjustment to accumulated other comprehensive income (“OCI”) with a corresponding adjustment to the opening balance of accumulated earnings less dividends on January 1, 2018. The cumulative-effect adjustment, which eliminated the cumulative ineffectiveness that was previously reported in interest expense, resulted in an increase to OCI of approximately $1.4 million, with a corresponding decrease to accumulated earnings less dividends.

In February 2016, the FASB issued ASU 2016-02, Leases (“ASU 2016-02”), which supersedes the current accounting for leases and while retaining two distinct types of leases, finance and operating, (1) requires lessees to record a right of use asset and a related liability for the rights and obligations associated with a lease, regardless of lease classification, and recognize lease expense in a manner similar to current accounting, (2) eliminates most real estate specific lease provisions and (3) aligns many of the underlying lessor model principles with those in the new revenue standard. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases today. As noted above, at the point the transition period ends, the Company will follow the adoption criteria for public companies. As such, the ASU is now effective for the Company to adopt as of January 1, 2019, and will be presented accordingly in the Company’s Annual Report on Form 10-K for the 2019 Fiscal Year. Entities are required to use a modified retrospective approach when transitioning to the ASU for leases that exist as of or are entered into after the beginning of the earliest comparative period presented in the financial statements. As lessors, substantially all of the Company’s agreements have a term of 12 months or less. For lessors, accounting for leases under the new standard will be substantially the same as existing guidance for sales-type leases, direct financing leases, and operating leases, but eliminates current real estate specific provisions and changes the treatment of initial direct costs. The Company is continuing its evaluation, which may identify additional impacts this standard will have on its consolidated financial statements and related disclosures.

In July 2018, the FASB issued ASU 2018-11, Leases – Targeted Improvements (“ASU 2018-11”), which provides entities with relief from the costs of implementing certain aspects of ASU 2016-02. The ASU provides a practical expedient which allows lessors to not separate lease and non-lease components in a contract and allocate the consideration in the contract to the separate components if both (i) the timing and pattern of revenue recognition for the non-lease component and the related lease component are the same and (ii) the combined single lease component would be classified as an operating lease. The Company intends to elect the practical expedient to account for lease and non-lease components as a single component in lease contracts where the Company is the lessor. The ASU also provides a transition option that permits entities to not recast the comparative periods presented when transitioning to the standard. The Company also intends to elect the transition option.

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In August 2018, the SEC adopted SEC Release No. 33-10532, Disclosure Update and Simplification (the “SEC Release”), which amends certain disclosure requirements that were redundant, duplicative, overlapping or superseded by other SEC disclosure requirements or GAAP. The amendments generally eliminated or otherwise reduced certain disclosure requirements of various SEC rules and regulations. However, in some cases, the amendments require additional information to be disclosed, including changes in stockholders’ equity in interim periods. Under the SEC Release, registrants will be required to disclose in interim periods on Form 10-Q the changes in each caption of stockholders’ equity and noncontrolling interests for the current and comparative year-to-date periods, with subtotals for each interim period and the amount of dividends per share for each class of shares. The amendments require registrants, including smaller reporting companies, to provide information as prescribed by Rule 3-04 of Regulation S-X. Therefore, the interim disclosures of changes in stockholders’ equity, including dividends per share amounts, may be given in a note to the financial statements or in a separate financial statement. Under Rule 3-04, the interim disclosures of the changes in stockholders’ equity should be in the form of a reconciliation of the beginning balance to the ending balance for each period for which an income statement is required to be filed, with all significant reconciling items described by appropriate captions. The reconciliation should also reflect any adjustments to the balance at the beginning of the earliest period presented for items retroactively applied to periods prior to that period. The Company adopted the provisions of the SEC Release on September 30, 2018, on a retrospective basis.

3. Investments in Subsidiaries

The Company conducts its operations through the OP, which owns the properties through single asset limited liability companies that are special purpose entities (“SPEs”). The Company consolidates the SPEs that it controls as well as any VIEs where it is the primary beneficiary. In connection with its indirect equity investments in the properties acquired, the Company, through the OP and the TRS, directly or indirectly holds 100% of the membership interests in SPEs that directly own the properties. All of the properties the SPEs own are consolidated in the Company’s consolidated financial statements. The assets of each entity can only be used to settle obligations of that particular entity, and the creditors of each entity have no recourse to the assets of other entities or the Company.

Additionally, the Company has in the past and may in the future enter into purchase and sale transactions structured as reverse like-kind exchanges (“1031 Exchanges”) under Section 1031 of the Code. For a reverse 1031 Exchange in which the Company purchases a new property prior to selling the property to be matched in the like-kind exchange (the Company refers to the new property being acquired in the 1031 Exchange prior to the sale of the related property as a “Parked Asset”), legal title to the Parked Asset is held by an Exchange Accommodation Titleholder (“EAT”) engaged to execute the 1031 Exchange until the sale transaction and the 1031 Exchange are completed. The Company, through a wholly owned subsidiary, enters into a master lease agreement with the EAT whereby the EAT leases the acquired property and all other rights acquired in connection with the acquisition to the Company. The term of the master lease agreement is the earlier of the completion of the reverse 1031 Exchange or 180 days from the date that the property was acquired. The EAT is classified as a VIE as it does not have sufficient equity investment at risk to finance its activities without additional subordinated financial support. The Company consolidates the EAT as its primary beneficiary because it has the ability to control the activities that most significantly impact the EAT’s economic performance and the Company retains all of the legal and economic benefits and obligations related to the Parked Assets prior to completion of the 1031 Exchange. As such, the Parked Assets are included in the Company’s consolidated financial statements as VIEs until legal title is transferred to the Company upon either completion of the 1031 Exchange or termination of the master lease agreement, at which time they will be consolidated as wholly owned subsidiaries.

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As of June 30, 2019, the Company, through the OP and the wholly owned TRS, owned 39 properties through single-asset LLCs. The following table represents the Company’s ownership in each property by virtue of its 100% ownership of the single-asset LLCs that directly own the title to each property as of June 30, 2019 and December 31, 2018:

				Effective Ownership Percentage at
Property Name		Location	YearAcquired	June 30, 2019			December 31, 2018
Arbors on Forest Ridge		Bedford, Texas	2014		100	%		100	%
Cutter's Point		Richardson, Texas	2014		100	%		100	%
Eagle Crest		Irving, Texas	2014		100	%		100	%
Silverbrook		Grand Prairie, Texas	2014		100	%		100	%
Edgewater at Sandy Springs	(1)	Atlanta, Georgia	2014		100	%		100	%
Beechwood Terrace		Antioch, Tennessee	2014		100	%		100	%
Willow Grove		Nashville, Tennessee	2014		100	%		100	%
Woodbridge		Nashville, Tennessee	2014		100	%		100	%
Abbington Heights	(1)	Antioch, Tennessee	2014		100	%		100	%
The Summit at Sabal Park		Tampa, Florida	2014		100	%		100	%
Courtney Cove		Tampa, Florida	2014		100	%		100	%
Radbourne Lake		Charlotte, North Carolina	2014		100	%		100	%
Timber Creek		Charlotte, North Carolina	2014		100	%		100	%
Belmont at Duck Creek	(1)	Garland, Texas	2014		100	%		100	%
Sabal Palm at Lake Buena Vista		Orlando, Florida	2014		100	%		100	%
Southpoint Reserve at Stoney Creek	(1)	Fredericksburg, Virginia	2014		100	%		100	%
Cornerstone		Orlando, Florida	2015		100	%		100	%
The Preserve at Terrell Mill		Marietta, Georgia	2015		100	%		100	%
The Ashlar	(1)	Dallas, Texas	2015		100	%		100	%
Heatherstone	(1)	Dallas, Texas	2015		100	%		100	%
Versailles		Dallas, Texas	2015		100	%		100	%
Seasons 704 Apartments		West Palm Beach, Florida	2015		100	%		100	%
Madera Point		Mesa, Arizona	2015		100	%		100	%
The Pointe at the Foothills	(1)	Mesa, Arizona	2015		100	%		100	%
Venue at 8651		Fort Worth, Texas	2015		100	%		100	%
Parc500		West Palm Beach, Florida	2016		100	%		100	%
The Venue on Camelback	(6)	Phoenix, Arizona	2016		100	%		100	%
Old Farm		Houston, Texas	2016		100	%		100	%
Stone Creek at Old Farm		Houston, Texas	2016		100	%		100	%
Hollister Place		Houston, Texas	2017		100	%		100	%
Rockledge Apartments		Marietta, Georgia	2017		100	%		100	%
Atera Apartments	(2)	Dallas, Texas	2017		100	%		100	%
Cedar Pointe	(3)	Antioch, Tennessee	2018		100	%		100	%
Crestmont Reserve		Dallas, Texas	2018		100	%		100	%
Brandywine I & II		Nashville, Tennessee	2018		100	%		100	%
Bella Vista	(4)	Phoenix, Arizona	2019		100	%		—		(5)
The Enclave	(4)	Tempe, Arizona	2019		100	%		—		(5)
The Heritage	(4)	Phoenix, Arizona	2019		100	%		—		(5)
Summers Landing		Fort Worth, Texas	2019		100	%		—		(5)

(1) Property was classified as held for sale as of June 30, 2019.

(2) The EAT that directly owned Atera Apartments was consolidated as a VIE at December 31, 2017.  The Company completed the reverse portion of the 1031 Exchange of Atera Apartments with the sale of Timberglen on January 31, 2018, at which time legal title to Atera Apartments transferred to the Company.  Upon the transfer of title, the entity that directly owns Atera Apartments was no longer considered a VIE.

(3) The EAT that directly owned Cedar Pointe was consolidated as a VIE at December 31, 2018.  The master lease agreement with the EAT that directly owned Cedar Pointe terminated on February 20, 2019, at which time legal title to Cedar Pointe transferred to the Company.  Upon the transfer of title, the entity that directly owns Cedar Pointe was no longer considered a VIE.

(4) The EAT that directly owned Bella Vista, The Enclave and The Heritage was consolidated as a VIE at March 31, 2019.  The master lease agreement with the EAT that directly owned these properties terminated on July 27, 2019, as which time legal title transferred to the Company. Upon the transfer of title, the EAT that directly owned these properties was no longer considered a VIE.

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(5) Properties were acquired in 2019; therefore, no ownership as of December 31, 2018.

(6) Formerly knowns as The Colonnade.

4. Real Estate Investments Statistics

As of June 30, 2019, the Company was invested in a total of 39 multifamily properties, as listed below:

							Average Effective Monthly Rent Per Unit (1) as of					% Occupied (2) as of
Property Name		Rentable Square Footage (in thousands)		Number of Units		Date Acquired	June 30, 2019		December 31, 2018			June 30, 2019			December 31, 2018
Arbors on Forest Ridge			155	210		1/31/2014	$	874	$	870			95.2	%		95.2	%
Cutter's Point			198	196		1/31/2014		1,138		1,109			94.9	%		95.4	%
Eagle Crest			396	447		1/31/2014		946		922			95.7	%		94.9	%
Silverbrook			526	642		1/31/2014		868		835			96.0	%		94.9	%
Edgewater at Sandy Springs	(3)		727	760		7/18/2014		976		950			94.6	%		94.1	%
Beechwood Terrace			272	300		7/21/2014		938		933			94.0	%		93.7	%
Willow Grove			229	244		7/21/2014		991		960			94.3	%		95.1	%
Woodbridge			247	220		7/21/2014		1,052		1,028			94.1	%		94.1	%
Abbington Heights	(3)		239	274		8/1/2014		891		889			94.9	%		92.0	%
The Summit at Sabal Park			205	252		8/20/2014		986		955			93.7	%		94.4	%
Courtney Cove			225	324		8/20/2014		912		895			94.4	%		95.7	%
Radbourne Lake			247	225		9/30/2014		1,100		1,082			95.6	%		96.0	%
Timber Creek			248	352		9/30/2014		879		847			96.0	%		92.6	%
Belmont at Duck Creek	(3)		198	240		9/30/2014		1,050		1,030			94.2	%		92.1	%
Sabal Palm at Lake Buena Vista			371	400		11/5/2014		1,256		1,255			95.5	%		96.5	%
Southpoint Reserve at Stoney Creek	(3)		116	156		12/18/2014		1,133		1,093			97.4	%		98.1	%
Cornerstone			318	430		1/15/2015		1,042		1,007			93.3	%		94.2	%
The Preserve at Terrell Mill			692	752		2/6/2015		954		921			93.4	%		94.8	%
The Ashlar	(3)		206	264		2/26/2015		884		859			93.2	%		94.3	%
Heatherstone	(3)		116	152		2/26/2015		888		874			96.1	%		94.7	%
Versailles			301	388		2/26/2015		908		884			91.5	%		96.4	%
Seasons 704 Apartments			217	222		4/15/2015		1,127		1,130			94.6	%		96.8	%
Madera Point			193	256		8/5/2015		919		866			96.1	%		94.5	%
The Pointe at the Foothills	(3)		473	528		8/5/2015		909		859			95.5	%		95.1	%
Venue at 8651			289	333		10/30/2015		896		875			96.1	%		92.8	%
Parc500			266	217		7/27/2016		1,275		1,254			94.9	%		94.9	%
The Venue on Camelback			256	415		10/11/2016		751		719			93.0	%		93.3	%
Old Farm			697	734		12/29/2016		1,168		1,176			93.5	%		92.9	%
Stone Creek at Old Farm			186	190		12/29/2016		1,184		1,173			93.2	%		96.8	%
Hollister Place			246	260		2/1/2017		990		984			95.4	%		93.5	%
Rockledge Apartments			802	708		6/30/2017		1,224		1,186			94.5	%		94.6	%
Atera Apartments			334	380		10/25/2017		1,245		1,232			96.8	%		97.4	%
Cedar Pointe			224	210		8/24/2018		1,053		1,051			91.4	%		95.7	%
Crestmont Reserve			199	242		9/26/2018		906		914			94.6	%		94.6	%
Brandywine I & II			414	632		9/26/2018		970		957			92.9	%		93.8	%
Bella Vista			243	248		1/28/2019		1,221		—	(4)		93.5	%		—		(4)
The Enclave			194	204		1/28/2019		1,266		—	(4)		93.6	%		—		(4)
The Heritage			199	204		1/28/2019		1,248		—	(4)		92.6	%		—		(4)
Summers Landing			139	196		6/7/2019		922		—	(4)		94.9	%		—		(4)
			11,803		13,407

(1) Average effective monthly rent per unit is equal to the average of the contractual rent for commenced leases as of June 30, 2019 and December 31, 2018, respectively, minus any tenant concessions over the term of the lease, divided by the number of units under commenced leases as of June 30, 2019 and December 31, 2018, respectively.

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(2) Percent occupied is calculated as the number of units occupied as of June 30, 2019 and December 31, 2018, divided by the total number of units, expressed as a percentage.

(3) Property was classified as held for sale as of June 30, 2019. 

(4) Properties were acquired in 2019.

5. Real Estate Investments

As of June 30, 2019, the major components of the Company’s investments in multifamily properties were as follows (in thousands):

Operating Properties		Land		Buildings and Improvements			Intangible Lease Assets			Construction in Progress		Furniture, Fixtures and Equipment			Totals
Arbors on Forest Ridge		$	2,330	$	11,498		$	—		$	—	$	1,160		$	14,988
Cutter's Point			3,330		13,406			—			13		1,470			18,219
Eagle Crest			5,450		23,557			—			—		1,652			30,659
Silverbrook			4,860		27,375			—			—		3,514			35,749
Beechwood Terrace			1,390		21,545			—			—		1,877			24,812
Willow Grove			3,940		11,065			—			—		1,356			16,361
Woodbridge			3,650		13,224			—			—		1,721			18,595
The Summit at Sabal Park			5,770		13,562			—			—		1,481			20,813
Courtney Cove			5,880		13,371			—			—		1,397			20,648
Radbourne Lake			2,440		22,336			—			51		1,717			26,544
Timber Creek			11,260		13,894			—			28		2,016			27,198
Sabal Palm at Lake Buena Vista			7,580		41,561			—			—		1,423			50,564
Cornerstone			1,500		30,538			—			—		2,164			34,202
The Preserve at Terrell Mill			10,170		49,160			—			—		5,535			64,865
Versailles			6,720		21,832			—			—		3,200			31,752
Seasons 704 Apartments			7,480		14,274			—			—		1,372			23,126
Madera Point			4,920		17,588			—			—		1,573			24,081
Venue at 8651			2,350		18,130			—			—		2,717			23,197
Parc500			3,860		20,762			—			73		2,867			27,562
The Venue on Camelback			8,340		37,818			—			154		1,829			48,141
Old Farm			11,078		70,557			—			—		2,028			83,663
Stone Creek at Old Farm			3,493		19,407			—			—		519			23,419
Hollister Place			2,782		21,658			—			25		1,750			26,215
Rockledge Apartments			17,451		95,928			—			—		4,035			117,414
Atera Apartments			22,370		37,251			—			—		1,352			60,973
Cedar Pointe	(1)		2,372		24,053			—			—		711			27,136
Crestmont Reserve			4,124		20,138			—			64		735			25,061
Brandywine I & II			6,237		72,169			—			61		1,888			80,355
Bella Vista	(2)		10,942		36,417			919			47		806			49,131
The Enclave	(2)		11,046		29,813			769			49		639			42,316
The Heritage	(2)		6,835		34,147			750			47		672			42,451
Summers Landing			1,798		16,737			533			—		369			19,437
			203,748		914,771			2,971			612		57,545			1,179,647
Accumulated depreciation and amortization			—		(90,401	)		(2,120	)		—		(34,597	)		(127,118	)
Total Operating Properties		$	203,748	$	824,370		$	851		$	612	$	22,948		$	1,052,529
Held For Sale Property
Southpoint Reserve at Stoney Creek			6,120		11,399			—			—		847			18,366
Edgewater at Sandy Springs			14,290		44,608			—			146		5,438			64,482
Abbington Heights			1,770		17,202			—			—		1,614			20,586
Belmont at Duck Creek			1,910		17,455			—			4		1,527			20,896
The Ashlar			4,090		12,863			—			—		2,145			19,098
Heatherstone			2,320		8,154			—			—		1,263			11,737
The Pointe at the Foothills			4,840		47,012			—			—		2,256			54,108
Accumulated depreciation and amortization			—		(22,932	)		—			—		(10,373	)		(33,305	)
Total Held For Sale Property		$	35,340	$	135,761		$	—		$	150	$	4,717		$	175,968
Total		$	239,088	$	960,131		$	851		$	762	$	27,665		$	1,228,497

(1) The EAT that directly owned Cedar Pointe was consolidated as a VIE at December 31, 2018.  The master lease agreement with the EAT that directly owned Cedar Pointe terminated on February 20, 2019, at which time legal title to Cedar Pointe transferred to the Company.  Upon the transfer of title, the entity that directly owns Cedar Pointe was no longer considered a VIE.

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(2) The EAT that directly owned Bella Vista, The Enclave and The Heritage was consolidated as a VIE at March 31, 2019.  The master lease agreement with the EAT that directly owned these properties terminated on July 27, 2019, as which time legal title transferred to the Company. Upon the transfer of title, the EAT that directly owned these properties was no longer considered a VIE.

As of December 31, 2018, the major components of the Company’s investments in multifamily properties were as follows (in thousands):

Operating Properties		Land		Buildings and Improvements			Intangible Lease Assets			Construction in Progress		Furniture, Fixtures and Equipment			Totals
Arbors on Forest Ridge		$	2,330	$	11,319		$	—		$	—	$	1,047		$	14,696
Cutter's Point			3,330		13,347			—			—		1,320			17,997
Eagle Crest			5,450		22,969			—			—		1,563			29,982
Silverbrook			4,860		26,485			—			60		3,230			34,635
Edgewater at Sandy Springs			14,290		44,186			—			349		5,083			63,908
Beechwood Terrace			1,390		21,123			—			31		1,670			24,214
Willow Grove			3,940		10,829			—			—		1,231			16,000
Woodbridge			3,650		13,125			—			—		1,536			18,311
Abbington Heights			1,770		17,140			—			—		1,539			20,449
The Summit at Sabal Park			5,770		13,447			—			43		1,347			20,607
Courtney Cove			5,880		13,170			—			—		1,268			20,318
Radbourne Lake			2,440		22,138			—			72		1,536			26,186
Timber Creek			11,260		13,582			—			—		1,556			26,398
Belmont at Duck Creek			1,910		17,397			—			—		1,471			20,778
Sabal Palm at Lake Buena Vista			7,580		41,336			—			—		1,280			50,196
Cornerstone			1,500		30,513			—			—		1,885			33,898
The Preserve at Terrell Mill			10,170		49,091			—			57		4,843			64,161
The Ashlar			4,090		12,845			—			—		2,017			18,952
Heatherstone			2,320		8,132			—			—		1,199			11,651
Versailles			6,720		21,513			—			—		3,033			31,266
Seasons 704 Apartments			7,480		14,223			—			—		1,288			22,991
Madera Point			4,920		17,570			—			—		1,431			23,921
The Pointe at the Foothills			4,840		46,998			—			—		2,078			53,916
Venue at 8651			2,350		18,084			—			—		2,499			22,933
Parc500			3,860		20,692			—			37		2,600			27,189
The Colonnade			8,340		37,086			—			567		1,604			47,597
Old Farm			11,078		70,471			—			—		1,800			83,349
Stone Creek at Old Farm			3,493		19,394			—			—		467			23,354
Hollister Place			2,782		21,389			—			135		1,410			25,716
Rockledge Apartments			17,451		95,484			—			428		3,314			116,677
Atera Apartments			22,371		36,563			—			86		1,151			60,171
Cedar Pointe	(1)		2,371		23,458			600			16		441			26,886
Crestmont Reserve			4,124		19,544			687			—		504			24,859
Brandywine I & II			6,237		70,961			1,762			—		1,215			80,175
			202,347		935,604			3,049			1,881		61,456			1,204,337
Accumulated depreciation and amortization			—		(95,364	)		(1,625	)		—		(37,135	)		(134,124	)
Total Operating Properties		$	202,347	$	840,240		$	1,424		$	1,881	$	24,321		$	1,070,213
Held For Sale Properties
Southpoint Reserve at Stoney Creek			6,120		11,319			—			—		787			18,226
Accumulated depreciation and amortization			—		(736	)		—			—		(161	)		(897	)
Total Held For Sale Properties		$	6,120	$	10,583		$	—		$	—	$	626		$	17,329
Total		$	208,467	$	850,823		$	1,424		$	1,881	$	24,947		$	1,087,542

(1) The EAT that directly owned Cedar Pointe was consolidated as a VIE at December 31, 2018.  The master lease agreement with the EAT that directly owned Cedar Pointe terminated on February 20, 2019, at which time legal title to Cedar Pointe transferred to the Company.  Upon the transfer of title, the entity that directly owns Cedar Pointe was no longer considered a VIE.

Depreciation expense was $11.8 million and $10.8 million for the three months ended June 30, 2019 and 2018, respectively.  Depreciation expense was $24.9 million and $21.6 million for the six months ended June 30, 2019 and 2018, respectively.

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Amortization expense related to the Company’s intangible lease assets was $1.3 million and $0.2 million for the three months ended June 30, 2019 and 2018.  Amortization expense related to the Company’s intangible lease assets was $3.5 million and $0.8 million for thesix months ended June 30, 2019 and 2018, respectively. Amortization expense related to the Company’s intangible lease assets for all acquisitions completed through June 30, 2019 is expected to be $0.9 million for the remainder of the year ended December 31, 2019. 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, 2018 has been fully amortized and the assets and related accumulated amortization have been written off as of June 30, 2019.

Acquisitions

The Company acquired four properties during the six months ended June 30, 2019, as detailed in the table below (dollars in thousands); there were no acquisitions of real estate during the six months ended June 30, 2018.

Property Name	Location	Date of Acquisition	Purchase Price		Mortgage Debt (1)		# Units		Effective Ownership
Bella Vista	Phoenix, Arizona	January 28, 2019	$	48,400	$	29,040		248		100	%
The Enclave	Tempe, Arizona	January 28, 2019		41,800		25,322		204		100	%
The Heritage	Phoenix, Arizona	January 28, 2019		41,900		24,625		204		100	%
Summers Landing	Fort Worth, Texas	June 7, 2019		19,396		10,109		196		100	%
			$	151,496	$	89,096		852

(1) For additional information regarding the Company’s debt, see Note 6.

Dispositions

There were no sales of real estate during the six months ended June 30, 2019. The Company sold one property for approximately $30.0 million during the six months ended June 30, 2018.

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6. Debt

Mortgage Debt

The following table contains summary information concerning the mortgage debt of the Company as of June 30, 2019 (dollars in thousands):

Operating Properties		Type	Term(months)		Outstanding Principal (1)				Interest Rate (2)	Maturity Date
Arbors on Forest Ridge	(3)	Floating		84	$	13,130			4.08%	7/1/2024
Cutter's Point	(3)	Floating		84		16,640			4.08%	7/1/2024
Eagle Crest	(3)	Floating		84		29,510			4.08%	7/1/2024
Silverbrook	(3)	Floating		84		30,590			4.08%	7/1/2024
Beechwood Terrace	(3)	Floating		84		23,365			3.84%	9/1/2025
Willow Grove	(3)	Floating		84		14,818			4.18%	7/1/2024
Woodbridge	(3)	Floating		84		13,677			4.18%	7/1/2024
The Summit at Sabal Park	(3)	Floating		84		13,560			4.02%	7/1/2024
Courtney Cove	(3)	Floating		84		13,680			4.02%	7/1/2024
The Preserve at Terrell Mill	(3)	Floating		84		42,480			4.02%	7/1/2024
Versailles	(3)	Floating		84		23,880			4.02%	7/1/2024
Seasons 704 Apartments	(3)	Floating		84		17,460			4.02%	7/1/2024
Madera Point	(3)	Floating		84		15,150			4.02%	7/1/2024
Venue at 8651	(3)	Floating		84		13,734			4.18%	7/1/2024
The Venue on Camelback	(3)	Floating		84		28,093			4.08%	7/1/2024
Old Farm	(3)	Floating		84		52,886			4.08%	7/1/2024
Stone Creek at Old Farm	(3)	Floating		84		15,274			4.08%	7/1/2024
Timber Creek	(3)	Floating		84		24,100			3.66%	10/1/2025
Radbourne Lake	(3)	Floating		84		20,000			3.69%	10/1/2025
Sabal Palm at Lake Buena Vista	(3)	Floating		84		42,100			3.70%	9/1/2025
Cornerstone	(4)	Fixed		120		22,001			4.24%	3/1/2023
Parc500	(5)	Fixed		120		15,353			4.49%	8/1/2025
Hollister Place	(3)	Floating		84		14,811			3.74%	10/1/2025
Rockledge Apartments	(3)	Floating		84		68,100			3.97%	7/1/2024
Atera Apartments	(3)	Floating		84		29,500			3.88%	11/1/2024
Cedar Pointe	(6)	Floating		84		17,300			3.75%	9/1/2025
Crestmont Reserve	(3)	Floating		84		12,061			3.58%	10/1/2025
Brandywine I & II	(3)	Floating		84		43,835			3.58%	10/1/2025
Bella Vista	(7)	Floating		84		29,040			3.72%	2/1/2026
The Enclave	(7)	Floating		84		25,322			3.72%	2/1/2026
The Heritage	(7)	Floating		84		24,625			3.72%	2/1/2026
Summers Landing	(9)	Floating		84		10,109			3.58%	10/1/2025
					$	776,184
Fair market value adjustment						584		(8)
Deferred financing costs, net of accumulated amortization of $2,026						(6,795	)
					$	769,973
Held For Sale Property
Southpoint Reserve at Stoney Creek	(3)	Floating		84		13,281			4.51%	1/1/2022
Edgewater at Sandy Springs	(3)	Floating		84		52,000			4.08%	7/1/2024
Abbington Heights	(3)	Floating		84		16,920			3.65%	9/1/2025
Belmont at Duck Creek	(3)	Floating		84		17,760			3.79%	6/1/2025
The Ashlar	(3)	Floating		84		14,520			4.02%	7/1/2024
Heatherstone	(3)	Floating		84		8,880			4.02%	7/1/2024
The Pointe at the Foothills	(3)	Floating		84		34,800			4.02%	7/1/2024
					$	158,161
Deferred financing costs, net of accumulated amortization of $616						(1,525	)
					$	156,636

(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 fixed rate mortgage debt. One-month LIBOR as of June 30, 2019 was 2.3980%.

(3) Loan can be pre-paid in the first 12 months of the term in certain circumstances at par plus 5.00%. Starting in the 13^th month of the term through the 81^st 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.

17

(4) Debt in the amount of $18.0 million was assumed upon acquisition of this property and recorded 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 the 13^th month through August 31, 2022 and is pre-payable at par September 1, 2022 until maturity. Concurrently with the acquisition of the property, the Company 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, 2019, the total indebtedness secured by the property had a blended interest rate of 4.24%.

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

(6) Loan can be pre-paid in the first 12 months of the term in certain circumstances at par plus 5.00%.  Starting in the 13^th month of the term through the 81^st 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.  The EAT that directly owned Cedar Pointe was consolidated as a VIE at December 31, 2018.  The master lease agreement with the EAT that directly owned Cedar Pointe terminated on February 20, 2019, at which time legal title to Cedar Pointe transferred to the Company.  Upon the transfer of title, the entity that directly owns Cedar Pointe was no longer considered a VIE.

(7) Loan can be pre-paid in the first 12 months of the term in certain circumstances at par plus 5.00%. Starting in the 13^th month of the term through the 81^st 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. The EAT that directly owned Bella Vista, The Enclave and The Heritage was consolidated as a VIE at March 31, 2019.  The master lease agreement with the EAT that directly owned these properties terminated on July 27, 2019, as which time legal title transferred to the Company. Upon the transfer of title, the EAT that directly owned these properties was no longer considered a VIE.

(8) The Company reflected a valuation adjustment on its fixed rate debt for Parc500 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.

(9) Debt was assumed upon acquisition of this property and recorded at approximated fair value.  It can be pre-paid in the first 12 months of the term in certain circumstances at par plus 5.00%. Starting in the 13^th month of the term through the 81^st 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.

The weighted average interest rate of the Company’s mortgage indebtedness was 3.94% as of June 30, 2019 and 4.07% as of December 31, 2018. The decrease between the periods is primarily related to a decrease in one-month LIBOR of approximately 10 basis points to 2.3980% as of June 30, 2019 from 2.5027% as of December 31, 2018. As of June 30, 2019, the adjusted weighted average interest rate of the Company’s mortgage indebtedness was 3.16%. For purposes of calculating the adjusted weighted average interest rate of the outstanding mortgage indebtedness, the Company has included the weighted average fixed rate of 1.4272% for one-month LIBOR on its combined $750.0 million notional amount of interest rate swap agreements, which effectively fix the interest rate on $750.0 million of the Company’s floating rate mortgage indebtedness (see Note 7).

Each of the Company’s 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, 2019, the Company believes it is in compliance with all provisions.

Freddie Mac Multifamily Green Advantage. In order to obtain more favorable pricing on the Company’s mortgage debt financing with Freddie Mac, the Company has decided to participate in Freddie Mac’s new Multifamily Green Advantage program (the “Green Program”). In the second quarter of 2017, the Company escrowed approximately $4.2 million to finance smarter, greener property improvements at 18 of its properties. In connection with the three acquisitions and seven refinancings the Company completed in 2018, the Company escrowed approximately $1.2 million related to the Green Program.  In connection with the four purchases in 2019, the Company escrowed approximately $0.6 million related to the Green Program.

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Credit Facility

The following table contains summary information concerning the Company’s credit facility as of June 30, 2019 (dollars in thousands):

	Type	Term(months)		Outstanding Principal			Interest Rate (1)	Maturity Date
Corporate Credit Facility	Floating		24	$	52,500		4.65%	1/28/2021
Deferred financing costs, net of accumulated amortization of $134					(964	)
				$	51,536

(1) Interest rate is based on one-month LIBOR plus an applicable margin.  One-month LIBOR as of June 30, 2019 was 2.3980%.

Corporate Credit Facility. On January 28, 2019, the Company, through the OP, entered into a $75.0 million credit facility (the “Corporate Credit Facility”) with SunTrust Bank, as administrative agent and the lenders party thereto, and immediately drew $52.5 million to fund a portion of the purchase price of Bella Vista, The Enclave, and The Heritage. The Corporate Credit Facility is a full-term, interest-only facility with an initial 24-month term, has one 12-month extension option, and the Company has the right to request an increase in the facility amount up to $140 million (the “Accordion Feature”).  The facility bears interest at a rate of one-month LIBOR plus a range from 2.00% to 2.50%, depending on the Company’s leverage level as determined under the credit facility agreement, and is guaranteed by the Company. On June 29, 2019, the Company, through the OP, exercised its option under the Accordion Feature of the Corporate Credit Facility and increased the amount of the facility from $75 million to $125 million. In conjunction with the increase in the facility, the Company incurred costs of $0.5 million in obtaining the additional financing through the Accordion Feature (see “Deferred Financing Costs” below). The Company did not immediately draw additional funds on the facility and the outstanding balance as of June 30, 2019 was $52.5 million.

The Corporate Credit Facility is a non-recourse obligation and contains customary events of default, including defaults in the payment of principal or interest, defaults in compliance with the covenants contained in the document evidencing the loan, defaults in payments under any other security instrument, and bankruptcy or other insolvency events. As of June 30, 2019, the Company believes it is in compliance with all provisions.

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. Deferred financing costs, net of amortization, are recorded as a reduction from the related debt on the Company’s consolidated balance sheets. Upon repayment of or in conjunction with a material change in the terms of the underlying debt agreement (i.e. a 10% or greater difference in the cash flows between instruments), any unamortized costs and fair market value adjustments related to the original debt are charged to loss on extinguishment of debt and modification costs. For the three months ended June 30, 2019 and 2018, the Company wrote-off deferred financing costs of approximately $0.0 million and $0.1 million, respectively, which is included in loss on extinguishment of debt and modification costs on the consolidated statements of operations and comprehensive income (loss). For the six months ended June 30, 2019 and 2018, the Company wrote-off deferred financing costs of approximately $0.0 million and $0.5 million, respectively, which is included in loss on extinguishment of debt and modification costs on the consolidated statements of operations and comprehensive income (loss). For the three months ended June 30, 2019 and 2018, amortization of deferred financing costs of approximately $0.5 million and $0.4 million, respectively, is included in interest expense on the consolidated statements of operations and comprehensive income (loss). For the six months ended June 30, 2019 and 2018, amortization of deferred financing costs of approximately $0.9 million and $0.7 million, respectively, is included in interest expense on the consolidated statements of operations and comprehensive income (loss).

Loss on Extinguishment of Debt and Modification Costs

Loss on extinguishment of debt and modification costs includes prepayment penalties and defeasance costs incurred on the early repayment of debt, costs incurred in a debt modification that are not capitalized as deferred financing costs and other costs incurred in a debt extinguishment.

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Schedule of Debt Maturities

The aggregate scheduled maturities, including amortizing principal payments, of total debt for the next five calendar years subsequent to June 30, 2019 are as follows (in thousands):

	Operating Properties		Held For Sale Property		Credit Facility		Total
2019	$	360	$	116		—	$	476
2020		744		263		—		1,007
2021		782		282		52,500		53,564
2022		817		12,620		—		13,437
2023		20,598		—		—		20,598
Thereafter		752,883		144,880		—		897,763
Total	$	776,184	$	158,161	$	52,500	$	986,845

7. Fair Value of Derivatives and Financial Instruments

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, ASC 820 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 independent third parties to perform the allocation of value analysis for each property acquisition and to perform the market valuations on its derivative financial instruments and has established policies, as described above, processes and procedures intended to ensure that the valuation methodologies for investments and derivative financial instruments are fair and consistent as of the measurement date.

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. In order to minimize counterparty credit risk, the Company enters into and expects to enter into hedging arrangements only with major financial institutions that have high credit ratings.

The Company utilizes an independent third party to perform the market valuations on its derivative financial instruments. The valuation of these instruments is determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. The fair values of interest rate swaps are determined using the market standard methodology of netting the discounted future fixed cash receipts (or payments) and the discounted expected variable cash payments (or receipts). The variable cash payments (or receipts) are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves. The fair values of interest rate caps are determined using the market standard methodology of discounting the future expected cash receipts that would occur if

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variable interest rates rise above the strike rate of the caps. The variable interest rates used in the calculation of projected receipts on the cap are based on an expectation of future interest rates derived from observable market interest rate curves and volatilities. To comply with the provisions of ASC 820, the Company incorporates credit valuation adjustments to appropriately reflect both the Company’s own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of the Company’s derivative contracts for the effect of nonperformance risk, the Company has considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts and guarantees. Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with the Company’s derivatives utilize Level 3 inputs, such as estimates of current credit spreads, to evaluate the likelihood of default by the Company and its counterparties. The Company has determined that the significance of the impact of the credit valuation adjustments made to its derivative contracts, which determination was based on the fair value of each individual contract, was not significant to the overall valuation. As a result, all of the Company’s derivatives held as of June 30, 2019 and December 31, 2018 were classified as Level 2 of the fair value hierarchy.

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 primarily uses interest rate swaps and caps as part of its interest rate risk management strategy. Interest rate swaps involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. The interest rate swaps have terms ranging from four to five years. 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 interest rate caps have terms ranging from three to four years. During the six months ended June 30, 2019 and 2018, interest rate cap derivatives were used to hedge the variable cash flows associated with a portion of the Company’s floating rate debt. The interest rate cap agreements the Company has entered into effectively cap one-month LIBOR on $320.1 million of the Company’s floating rate mortgage indebtedness at a weighted average rate of 5.82%.

The changes in the fair value of derivative financial instruments that are designated as cash flow hedges are recorded in OCI and are subsequently reclassified into net income (loss) in the period that the hedged forecasted transaction affects earnings. Amounts reported in OCI related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s floating rate debt. Prior to the Company’s adoption of ASU 2017-12 on January 1, 2018, the ineffective portion of changes in the fair value of the Company’s derivatives designated as cash flow hedges was recognized directly in net income (loss) as interest expense. The adoption of ASU 2017-12 eliminates the separate measurement of effectiveness and ineffectiveness, and all changes in the fair value of derivatives that are designated as cash flow hedges are recorded directly in OCI. Therefore, during the six months ended June 30, 2019, the Company recorded no gain or loss related to the ineffective portion of changes in the fair value of its derivatives designated as cash flow hedges. During the six months ended June 30, 2019 and 2018, the Company recorded no gain/(loss) related to the ineffective portion of changes in the fair value of its derivatives designated as cash flow hedges, which is recorded as a decrease/(increase) to interest expense on the accompanying consolidated statements of operations and comprehensive income (loss).

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 nine interest rate swap transactions with KeyBank National Association (“KeyBank”) and SunTrust Bank with a combined notional amount of $750.0 million. The interest rate swaps the Company has entered into effectively replace the floating interest rate (one-month LIBOR) with respect to that amount with a weighted average fixed rate of 1.4272%. The Company has designated these interest rate swaps as cash flow hedges of interest rate risk.

As of June 30, 2019, the Company had the following outstanding interest rate swaps that were designated as cash flow hedges of interest rate risk (dollars in thousands):

Effective Date	Termination Date	Counterparty	Notional		Fixed Rate (1)
July 1, 2016	June 1, 2021	KeyBank	$	100,000		1.1055	%
July 1, 2016	June 1, 2021	KeyBank		100,000		1.0210	%
July 1, 2016	June 1, 2021	KeyBank		100,000		0.9000	%
September 1, 2016	June 1, 2021	KeyBank		100,000		0.9560	%
April 1, 2017	April 1, 2022	KeyBank		100,000		1.9570	%
May 1, 2017	April 1, 2022	KeyBank		50,000		1.9610	%
July 1, 2017	July 1, 2022	KeyBank		100,000		1.7820	%
June 1, 2019	June 1, 2024	KeyBank		50,000		2.0020	%
June 1, 2019	June 1, 2024	SunTrust		50,000		2.0020	%
			$	750,000		1.4272	%	(2)

(1) The floating rate option for the interest rate swaps is one-month LIBOR. As of June 30, 2019, one-month LIBOR was 2.3980%.

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

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Derivatives not designated as hedges are not speculative and are used to manage the Company’s exposure to interest rate movements but either do not meet the strict requirements to apply hedge accounting in accordance with FASB ASC 815, Derivatives and Hedging, or the Company has elected not to designate such derivatives as hedges. Changes in the fair value of derivatives not designated in hedging relationships are recorded directly in net income (loss) as interest expense.

As of June 30, 2019, 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		14	$	320,137

As of June 30, 2018, the Company had 11 interest rate cap derivatives, with a notional amount of $182.4 million, which were not designated as hedges in qualifying hedging relationships.

The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the consolidated balance sheets as of June 30, 2019 and December 31, 2018 (in thousands):

		Asset Derivatives				Liability Derivatives
	Balance Sheet Location	June 30, 2019		December 31, 2018		June 30, 2019		December 31, 2018
Derivatives designated as hedging instruments:
Interest rate swaps	Fair market value of interest rate swaps	$	5,125	$	18,141	$	3,615	$	—
Derivatives not designated as hedging instruments:
Interest rate caps	Prepaid and other assets		3		10		—		—
Total		$	5,128	$	18,151	$	3,615	$	—

The tables below present the effect of the Company’s derivative financial instruments on the consolidated statements of operations and comprehensive income (loss) for the three and six months ended June 30, 2019 and 2018 (in thousands):

	Amount of gain (loss) recognized in OCI						Location of gain (loss) reclassified from accumulated	Amount of gain (loss) reclassified from OCI into income					Location of gain (loss) recognized	Amount of gain (loss) recognized in income
	2019			2018			OCI into income	2019		2018			in income	2019		2018
Derivatives designated as hedging instruments:
For the three months ended June 30,
Interest rate products	$	(9,064	)	$	3,653	(1)	Interest expense	$	1,882	$	904	(1)	Interest expense	$	—	$	—
For the six months ended June 30,
Interest rate products	$	(12,849	)	$	11,753	(1)	Interest expense	$	3,762	$	1,243	(1)	Interest expense	$	—	$	—	(2)

(1) Represents the effective portion of changes in fair value.

(2) Represents the ineffective portion of changes in fair value.

	Location of gain (loss)	Amount of gain (loss) recognized in income
	recognized in income	2019			2018
Derivatives not designated as hedging instruments:
For the three months ended June 30,
Interest rate products	Interest expense		(1	)		(12	)
For the six months ended June 30,
Interest rate products	Interest expense	$	(27	)	$	(2	)

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Other Financial Instruments Carried at Fair Value

Redeemable noncontrolling interests in the OP have a redemption feature and are marked to their redemption value if such value exceeds the carrying value of the redeemable noncontrolling interests in the OP (see Note 10). The redemption value is based on the fair value of the Company’s common stock at the redemption date, and therefore, is calculated based on the fair value of the Company’s common stock at the balance sheet date. Since the valuation is based on observable inputs such as quoted prices for similar instruments in active markets, redeemable noncontrolling interests in the OP are classified as Level 2 if they are adjusted to their redemption value.

Financial Instruments Not Carried at Fair Value

At June 30, 2019 and December 31, 2018, the fair values of cash and cash equivalents, restricted cash, accounts receivable, prepaid and other assets, accounts payable and other accrued liabilities, accrued real estate taxes payable, accrued interest payable, security deposits and prepaid rent approximated their carrying values because of the short term nature of these instruments. The estimated fair values of other financial instruments were determined by the Company using available market information and appropriate valuation methodologies. Considerable judgment is necessary to interpret market data and develop estimated fair values. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company would realize on the disposition of the financial instruments. The use of different market assumptions or estimation methodologies may have a material effect on the estimated fair value amounts.

Long-term indebtedness is carried at amounts that reasonably approximate their fair value. In calculating the fair value of its long-term indebtedness, the Company used interest rate and spread assumptions that reflect current credit worthiness and market conditions available for the issuance of long-term debt with similar terms and remaining maturities. These financial instruments utilize Level 2 inputs.

Real estate assets are reviewed for impairment 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. 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 asset. For the six months ended June 30, 2019 and 2018, the Company did not record any impairment charges related to real estate assets.

8. Stockholders’ Equity

Common Stock

During the six months ended June 30, 2019, the Company issued 143,642 shares of common stock pursuant to its long-term incentive plan (see “Long Term Incentive Plan” below) and 252,165 pursuant to its at-the-market offering (see “-At-the-Market Offering” below).

As of June 30, 2019, the Company had 23,895,442 shares of common stock, par value $0.01 per share, issued and outstanding.

Share Repurchase Program

On June 15, 2016, the Board authorized the Company to repurchase up to $30.0 million of its common stock, par value $0.01 per share, during a two-year period that was set to expire on June 15, 2018 (the “Share Repurchase Program”). On April 30, 2018, the Board increased the Share Repurchase Program to up to $40.0 million and extended it by an additional two years to June 15, 2020. 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 six months ended June 30, 2019, the Company did not repurchase any shares of its common stock. As of June 30, 2019, the Company had repurchased 737,458 shares of its common stock, par value $0.01 per share, at a total cost of approximately $16,694,000, or $22.64 per share.

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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 2,100,000 shares of common stock, par value $0.01 per share, which the Company may issue pursuant to the 2016 LTIP. The 2016 LTIP authorizes the compensation committee of the Board 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 directors, 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.

Restricted Stock Units. Under the 2016 LTIP, restricted stock units may be granted to the Company’s directors, officers and other key employees (and those of the Adviser and the Company’s subsidiaries) and typically vest over a three to five-year period for officers, employees and certain key employees of the Adviser and annually for directors. Beginning on the date of grant, restricted stock units earn dividends that are payable in cash on the vesting date. On August 11, 2016, pursuant to the 2016 LTIP, the Company granted 209,797 restricted stock unitsto its directors and officers. On March 16, 2017, pursuant to the 2016 LTIP, the Company granted 219,802 restricted stock units to its directors and officers. On February 15, 2018, pursuant to the 2016 LTIP, the Company granted 275,795 restricted stock units to its directors, officers, employees and certain key employees of the Adviser.  On February 21, 2019, pursuant to the 2016 LTIP, the Company granted 186,662 restricted stock units to its directors, officers, employees and certain key employees of the Adviser. The following table includes the number of restricted stock units granted, vested, forfeited and outstanding as of June 30, 2019:

	2019
	Number of Units				Weighted Average Grant Date Fair Value
Outstanding January 1,		464,626
Granted		186,662				37.50
Vested		(148,091	)	(1)		23.10
Forfeited		(6,386	)			—
Outstanding June 30,		496,811		(2)	$	28.14

(1) Certain key employees of the Adviser elected to net the taxes owed upon vesting against the shares issued resulting in 143,642 shares being issued as shown on the Consolidated Statement of Stockholders’ Equity.  

(2) 49,772 restricted stock units vest in August 2019, 108,613 vest in February 2020, 69,530 vest in March 2020, 99,564 vest in February 2021, 99,563 vest in February 2022, 34,883 vest in February 2023 and 34,886 vest in February 2024.

As of June 30, 2019, the Company had issued 384,410 shares of common stock under the 2016 LTIP. For the three months ended June 30, 2019 and 2018, the Company recognized approximately $1.4 million and $1.1 million, respectively, of equity-based compensation expense related to grants of restricted stock units, which is included in corporate general and administrative expenses on the consolidated statements of operations and comprehensive income (loss).  For the six months ended June 30, 2019 and 2018, the Company recognized approximately $2.7 million and $2.0 million, respectively, of equity-based compensation expense related to grants of restricted stock units. As of June 30, 2019, the Company had recognized a liability of approximately $0.7 million related to dividends earned on restricted stock units that are payable in cash upon vesting.

At-the-Market Offering

On February 20, 2019, the Company, the OP and the Adviser entered into separate equity distribution agreements with each of Jefferies LLC (“Jefferies”), Raymond James & Associates, Inc. (“Raymond James”) and SunTrust Robinson Humphrey, Inc. (together with Raymond James and Jefferies, the “Sales Agents”), pursuant to which the Company may issue and sell from time to time shares of the Company’s common stock, par value $0.01 per share, having an aggregate sales price of up to $100,000,000.  Sales of shares of common stock, if any, may be made in transactions that are deemed to be “at the market” offerings, as defined in Rule 415 under the Securities Act of 1933, as amended (the “Securities Act”), including, without limitation, sales made by means of ordinary brokers’ transactions on the New York Stock Exchange, to or through a market maker at market prices prevailing at the time of sale, at prices related to prevailing market prices or at negotiated prices based on prevailing market prices (the “ATM Program”).  In addition to the issuance and sale of shares of common stock, the Company may enter into forward sale agreements with each of Jefferies and Raymond James, or their respective affiliates, through the ATM Program.  During the three months ended June 30, 2019, the Company issued 252,165 shares of common stock at an average price of $40.26 per share for net proceeds of approximately $9.4 million. The Company paid approximately $0.2 million in fees to the Sales Agents with respect to such sales and incurred other issuance costs of approximately $0.5 million, both of which were netted against the gross proceeds and recorded in additional paid in capital. The ATM Program may be terminated by the Company at any time and expires automatically once aggregate sales under the ATM Program reach $100,000,000.

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9. Earnings (Loss) Per Share

Basic earnings (loss) per share is computed by dividing net income (loss) attributable to common stockholders 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 and excludes any unvested restricted stock units issued pursuant to the 2016 LTIP. Diluted earnings (loss) per share is computed by adjusting basic earnings (loss) per share for the dilutive effect of the assumed vesting of restricted stock units. During periods of net loss, the assumed vesting of restricted stock units is anti-dilutive and is not included in the calculation of earnings (loss) per share.

The effect of the conversion of OP Units held by noncontrolling limited partners is not reflected in the computation of basic and diluted earnings (loss) per share, as they are exchangeable for common stock on a one-for-one basis. The income (loss) allocable to such units is allocated on this same basis and reflected as net income (loss) attributable to redeemable noncontrolling interests in the OP in the accompanying consolidated statements of operations and comprehensive income. As such, the assumed conversion of these units would have no net impact on the determination of diluted earnings (loss) per share. See Note 10 for additional information.

The following table sets forth the computation of basic and diluted earnings (loss) per share for the periods presented (in thousands, except per share amounts):

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2019			2018			2019			2018
Numerator for earnings (loss) per share:
Net income (loss)	$	(1,987	)	$	(1,666	)	$	(6,360	)	$	8,428
Net income (loss) attributable to redeemable noncontrolling interests in the Operating Partnership		(6	)		(5	)		(19	)		25
Net income (loss) attributable to common stockholders	$	(1,981	)	$	(1,661	)	$	(6,341	)	$	8,403
Denominator for earnings (loss) per share:
Weighted average common shares outstanding		23,736			20,780			23,643			20,883
Denominator for basic earnings (loss) per share		23,736			20,780			23,643			20,883
Weighted average unvested restricted stock units		497			515			496			479
Denominator for diluted earnings per share		24,233			21,295			24,139			21,362
Earnings (loss) per weighted average common share:
Basic	$	(0.08	)	$	(0.08	)	$	(0.27	)	$	0.40
Diluted	$	(0.08	)	$	(0.08	)	$	(0.27	)	$	0.39

10. Noncontrolling Interests

Redeemable Noncontrolling Interests in the OP

Interests in the OP held by limited partners are represented by OP Units. Net income (loss) is allocated to holders of OP Units based upon net income (loss) attributable to common stockholders and the weighted average number of OP Units outstanding to total common shares plus OP Units outstanding during the period. Capital contributions, distributions, and profits and losses are allocated to OP Units in accordance with the terms of the partnership agreement of the OP. Each time the OP distributes cash to the Company, outside limited partners of the OP receive their pro-rata share of the distribution.Redeemable noncontrolling interests in the OP have a redemption feature and are marked to their redemption value if such value exceeds the carrying value of the redeemable noncontrolling interests in the OP.

On June 30, 2017, the Company and the OP entered into a contribution agreement (the “Contribution Agreement”) with BH Equities, LLC and its affiliates (collectively, “BH Equity”), whereby the Company purchased 100% of the joint venture interests in the Portfolio owned by BH Equity, representing approximately 8.4% ownership in the Portfolio (the “BH Buyout”), for total consideration of approximately $51.7 million (the “Purchase Amount”). The Purchase Amount consisted of approximately $49.7 million in cash that was paid on June 30, 2017 and 73,233 OP Units (initially valued at $2.0 million) that were issued on August 1, 2017. The number of OP Units issued was calculated by dividing $2.0 million by the midpoint of the range of the Company’s net asset value as publicly disclosed in connection with the Company’s release of its second quarter of 2017 earnings results, which was $27.31 per share.

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In connection with the issuance of OP Units to BH Equity on August 1, 2017, the Company and the OP amended the partnership agreement of the OP (the “Amendment”). Pursuant to the Amendment, limited partners holding OP Units have the right to cause the OP to redeem their units at a redemption price equal to and in the form of the Cash Amount (as defined in the partnership agreement of the OP), provided that such OP Units have been outstanding for at least one year. The Company, through the OP GP, as the general partner of the OP may, in its sole discretion, purchase the OP Units by paying to the limited partner either the Cash Amount or the REIT Share Amount (one share of common stock of the Company for each OP Unit), as defined in the partnership agreement of the OP. Notwithstanding the foregoing, a limited partner will not be entitled to exercise its redemption right to the extent the issuance of the Company’s common stock to the redeeming limited partner would (1) be prohibited, as determined in the Company’s sole discretion, under the Company’s charter or (2) cause the acquisition of common stock by such redeeming limited partner to be “integrated” with any other distribution of the Company’s common stock for purposes of complying with the Securities Act. Accordingly, the Company records the OP Units held by noncontrolling limited partners outside of permanent equity and reports the OP Units at the greater of their carrying value or their redemption value using the Company’s stock price at each balance sheet date.

The following table sets forth the redeemable noncontrolling interests in the OP for the six months ended June 30, 2019 (in thousands):

Redeemable noncontrolling interests in the OP, December 31, 2018	$	2,567
Net loss attributable to redeemable noncontrolling interests in the OP		(19	)
Other comprehensive loss attributable to redeemable noncontrolling interests in the OP		(50	)
Contributions from redeemable noncontrolling interests in the OP		197
Distributions to redeemable noncontrolling interests in the OP		(39	)
Adjustment to reflect redemption value of redeemable noncontrolling interests in the OP		376
Redeemable noncontrolling interests in the OP, June 30, 2019	$	3,032

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 and an independently owned third party, who manages the Company’s properties and supervises the implementation of the Company’s value-add program. BH is an affiliate of BH Equity, who was a noncontrolling interest member of the Company’s joint ventures prior to the BH Buyout on June 30, 2017. Through BH Equity’s noncontrolling interests in such joint ventures, BH Equity was deemed to be a related party. With the completion of the BH Buyout, BH Equity is no longer deemed to be a related party. BH Equity became a noncontrolling limited partner of the OP upon execution of the Amendment. BH and its affiliates do not have common ownership in any joint venture with the Adviser; there is also no common ownership between BH and its affiliates and the Adviser.

The property management fee paid to BH is approximately 3% of the monthly gross income from each property managed. Currently, BH manages all of the Company’s properties. Additionally, the Company may pay BH certain other fees, including: (1) a fee of $15-25 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 at cost for various operating expenses it pays on behalf of the properties. 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, 2019 and 2018 (in thousands):

		For the Three Months Ended June 30,				For the Six Months Ended June 30,
		2019		2018		2019		2018
Fees incurred
Property management fees	(1)	$	1,285	$	1,066	$	2,525	$	2,120
Construction supervision fees	(2)		340		283		564		570
Design Fees			60		—		60		—
Acquisition fees	(3)		—		—		308		—
Reimbursements
Payroll and benefits	(4)		4,000		3,347		8,311		7,135
Other reimbursements	(5)		928		563		1,561		1,024

(1) Included in property management fees on the 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. Acquisition fees are capitalized to real estate assets on the consolidated balance sheets.

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

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

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11. Related Party Transactions

Advisory and Administrative Fee

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 the Company’s Adviser under the terms of the Advisory Agreement include, but are not limited to: providing daily management for the Company, selecting and working with third party service providers, managing the Company’s properties or overseeing the third party property manager, formulating an investment strategy for the Company and selecting suitable properties and investments, managing the Company’s outstanding debt and its 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 in the Advisory Agreement) are subject to an annual cap of approximately $5.4 million (the “Contributed Assets Cap”) (see “Expense Cap” below).

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. Operating Expenses do not include expenses for the advisory and administrative services described in the Advisory Agreement. Certain Operating Expenses, such as the Company’s 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, may be billed monthly to the Company 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 six months ended June 30, 2019 and 2018, the Adviser did not bill any Operating Expenses 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, 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. The Contributed Assets Cap is not reduced for dispositions of such assets subsequent to the Spin-Off. Advisory and administrative fees on New Assets are not subject to the above limitation and are based on an annual rate of 1.2% on Average Real Estate Assets, 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, 2019 and 2018, the Company incurred advisory and administrative fees of $1.9 million and $1.9 million, respectively. The amount paid for the three months ended June 30, 2019 and 2018 represents the maximum fee allowed on Contributed Assets under the Advisory Agreement plus approximately $0.5 million and $0.5 million, respectively, of advisory and administrative fees incurred on New Assets. For the six months ended June 30, 2019 and 2018, the Company incurred advisory and administrative fees of $3.7 million and $3.7 million, respectively. The amount paid for the six months ended June 30, 2019 and 2018 represents the maximum fee allowed on Contributed Assets under the Advisory Agreement plus approximately $1.0 million and $1.0 million, respectively, of advisory and administrative fees incurred on New Assets.

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For the three months andsix months ended June 30, 2019, the Adviser elected to voluntarily waive the advisory and administrative fees incurred on the twelve properties acquired subsequent to October 2016, which totaled approximately $1.8 million and $3.3 million, respectively, and are considered to be permanently waived. For the three andsix months ended June 30, 2018, the Adviser elected to voluntarily waive the advisory and administrative fees incurred on properties acquired subsequent to October 2016, which totaled approximately $0.9 million and $1.8 million, respectively, and are considered to be permanently waived.  The Adviser is not contractually obligated to waive fees on New Assets in the future and may cease waiving fees on New Assets at its discretion.

Other Related Party Transactions

The Company has in the past, and may in the future, utilize the services of affiliated parties. For the six months ended June 30, 2019 and 2018, the Company paid approximately $0.0 million and $0.2 million, respectively, to NexBank Title, Inc. (“NexBank Title”). NexBank Title is an affiliate of the Adviser through common beneficial ownership. NexBank Title provides title insurance and work related to providing title insurance on properties related to acquisitions, dispositions and refinancing transactions. These amounts are either capitalized as real estate assets or deferred financing costs, expensed as loss on extinguishment of debt and modification costs, or expensed as selling costs when determining gain (loss) on sales of real estate, depending on the appropriate accounting as determined for each specific transaction.

12. 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, 2019, 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 consolidated statements of operations and comprehensive income 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.

Self-Insurance Program

Effective March 1, 2019, the Company maintains a partial self-insurance program for property casualty claims whereby it incurs the “first-loss” portion of a claim up to an aggregate loss amount.  Claims resulting in losses in excess of a $100,000 per occurrence property deductible will be paid by the Company up to an aggregate amount of $1.2 million (the “Aggregate Amount”).  For the period from March 1, 2019 to June 30, 2019, the Company has not incurred a claim it has funded as part of the Aggregate Amount. Under ASC 450-20 “Loss Contingencies”, the Company does not reserve for the Aggregate Amount or any portion thereof until a claim is made and the amount of the claim and the timing of payment on the claim can be reasonably estimated. For the period from March 1, 2019 to June 30, 2019, there were no potential claims that met the criteria as set forth under ASC 450-20. The Company believes it has sufficient resources through cash reserves and unused capacity on the Corporate Credit Facility to fund any potential future claims toward the Aggregate Amount.   

13. Subsequent Events

Dividends Declared

On July 29, 2019, the Company’s board of directors declared a quarterly dividend of $0.275 per share, payable on September 30, 2019 to stockholders of record on September 13, 2019.

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Acquisitions

On July 17, 2019, the Company, through the OP, acquired the following properties (dollars in thousands):

Property Name	Location	Date of Acquisition	Purchase Price		Mortgage Debt		# Units		Effective Ownership
Residences at Glenview Reserve	Nashville, Tennessee	July 17, 2019	$	45,000	$	26,560		360		100	%
Residences at West Place	Orlando, Florida	July 17, 2019		55,000		33,817		342		100	%
			$	100,000	$	60,377		702

Dispositions

On June 25, 2019, the Company, through the OP, entered into a purchase and sale agreement with a large real estate investment firm (the “Buyer”) for the sale of the following proprieties.  Closing of the disposition is subject to Buyer due diligence and customary closing conditions.  The sales of the properties are expected to close on or before August 30, 2019.

Property Name (1)	Location	Sales Price		Debt Outstanding (2)		Real Estate Carrying Value, net (2)
Edgewater at Sandy Springs	Atlanta, Georgia		101,250	$	52,000	$	52,685
Abbington Heights	Antioch, Tennessee		28,050		16,920		16,662
Belmont at Duck Creek	Garland, Texas		29,500		17,760		17,082
The Ashlar	Dallas, Texas		29,400		14,520		15,806
Heatherstone	Dallas, Texas		16,275		8,880		9,656
The Pointe at the Foothills	Mesa, Arizona		85,400		34,800		46,608
		$	289,875	$	144,880	$	158,499

(1) Property was classified as held for sale as of June 30, 2019.

(2) As of June 30, 2019.

Corporate Credit Facility

In conjunction with the acquisition of the Residences at Glenview Reserve and the Residences at West Place, the OP drew $41.7 million on the Corporate Credit Facility on July 1, 2019.  The OP drew an additional $10 million on July 24, 2019 to fund an earnest money deposit on additional acquisitions.  As of July 30, 2019, the drawn balance on the Corporate Credit Facility was $104.2 million.

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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, but not limited to, those 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 February 19, 2019.

Overview

As of June 30, 2019, our Portfolio consisted of 39 multifamily properties primarily located in the Southeastern and Southwestern United States encompassing 13,407 units of apartment space that was approximately 94.4% leased with a weighted average monthly effective rent per occupied apartment unit of $1,016. Substantially all of our business is conducted through the OP. We own the Portfolio through the OP and our TRS. The OP owns approximately 99.9% of the Portfolio; our TRS owns approximately 0.1% of the Portfolio. The OP GP is the sole general partner of the OP. As of June 30, 2019, there were 23,819,402 OP Units outstanding, of which 23,746,169, or 99.7%, were owned by us and 73,233, or 0.3%, were owned by an unaffiliated limited partner (see Note 10 to our consolidated financial statements).

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 targeted management and a value-add program at a majority of our properties in an attempt to improve rental rates and the net operating income (“NOI”) at our properties and achieve long-term capital appreciation for our stockholders. We are externally managed by the Adviser through the Advisory Agreement, by and among the OP, the Adviser and us. The Advisory Agreement was renewed on February 13, 2019 for a one-year term set to expire on March 16, 2020. The Adviser is wholly owned by NexPoint Advisors, L.P., which is an affiliate of our Sponsor.

On February 20, 2019, the Company, the OP and the Adviser entered into separate equity distribution agreements (“Equity Distribution Agreements”) with each of Jefferies LLC (“Jefferies”), Raymond James & Associates, Inc. (“Raymond James”) and SunTrust Robinson Humphrey, Inc. (“SunTrust” and together with Jefferies and Raymond James, the “Sales Agents”), pursuant to which the Company may issue and sell from time to time shares of the Company’s common stock, par value $0.01 per share, having an aggregate sales price of up to $100,000,000.  Sales of shares of common stock, if any, may be made in transactions that are deemed to be “at the market” offerings, as defined in Rule 415 under the Securities Act of 1933, as amended, including, without limitation, sales made by means of ordinary brokers’ transactions on the New York Stock Exchange, to or through a market maker at market prices prevailing at the time of sale, at prices related to prevailing market prices or at negotiated prices based on prevailing market prices (the “ATM Program”).  In addition to the issuance and sale of shares of common stock, the Company may enter into forward sale agreements with each of Jefferies and Raymond James, or their respective affiliates, through the ATM Program. During the three months ended June 30, 2019, the Company issued 252,165 shares of common stock at an average price of $40.26 per share, for net proceeds of approximately $9.4 million. The Company paid approximately $0.2 million in fees to the Sales Agents with respect to such sales and incurred other issuance costs of approximately $0.5 million, both of which were netted against the gross proceeds and recorded in additional paid in capital. The ATM Program may be terminated by the Company at any time and expires automatically once aggregate sales under the ATM Program reach $100,000,000 (see Note 8 to our consolidated financial statements).

We have elected to be taxed as a REIT under Sections 856 through 860 of the Code, and expect to continue 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 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 (1) 85% of our ordinary income, (2) 95% of our capital gain net income and (3) 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. Taxable income from certain non-REIT activities is managed through a TRS and is subject to applicable federal, state, and local income and margin taxes. We had no significant taxes associated with our TRS for the six months ended June 30, 2019 and 2018.

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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 on average.

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.

Expenses

Property operating expenses. Property operating expenses include property maintenance costs, salary and employee benefit costs, utilities, casualty-related expenses and recoveries and other property operating costs.

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, our property manager, or other third party management companies for managing each property (see Note 10 to our consolidated financial statements).

Advisory and administrative fees. Advisory and administrative fees include the fees paid to our Adviser pursuant to the Advisory Agreement (see Note 11 to our consolidated financial statements).

Corporate general and administrative expenses. Corporate general and administrative expenses include, but are not limited to, audit fees, legal fees, listing fees, board of director fees, equity-based compensation expense, investor relations costs and payments of reimbursements to our Adviser for operating expenses. Corporate general and administrative expenses and the advisory and administrative fees paid to our Adviser (including advisory and administrative fees on properties defined in the Advisory Agreement as 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), calculated in accordance with the Advisory Agreement, or the Expense Cap. The Expense Cap does not limit the reimbursement by us of expenses related to securities offerings paid by our 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 our 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.  Additionally, in the sole discretion of the Adviser, the Adviser may elect to waive certain advisory and administrative fees otherwise due.  If advisory and administrative fees are waived in a period, the waived fees for that period are considered to be waived permanently and the Adviser may not be reimbursed in the future.

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.

Other Income and Expense

Interest expense. Interest expense primarily includes the cost of interest expense on debt, the amortization of deferred financing costs, the related impact of interest rate derivatives used to manage our interest rate risk and fair market value adjustments on debt.

Loss on extinguishment of debt and modification costs. Loss on extinguishment of debt and modification costs includes prepayment penalties and defeasance costs, the write-off of unamortized deferred financing costs and fair market value adjustments of assumed debt related to the early repayment of debt, costs incurred in a debt modification that are not capitalized as deferred financing costs and other costs incurred in a debt extinguishment.

Gain on sales of real estate. Gain on sales of real estate includes the gain recognized upon sales of properties. Gain on sales of real estate is calculated by deducting the carrying value of the real estate and costs incurred to sell the properties from the sales prices of the properties.

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Results of Operations for the Three and Six Months Ended June 30, 2019 and 2018

The three months ended June 30, 2019 as compared to the three months ended June 30, 2018

The following table sets forth a summary of our operating results for the three months ended June 30, 2019 and 2018 (in thousands):

	For the Three Months Ended June 30,
	2019			2018			$ Change
Total revenues	$	43,066		$	35,655		$	7,411
Total expenses		(36,463	)		(30,420	)		(6,043	)
Operating income		6,603			5,235			1,368
Interest expense		(8,590	)		(6,823	)		(1,767	)
Loss on extinguishment of debt and modification costs		—			(78	)		78
Net loss		(1,987	)		(1,666	)		(321	)
Net loss attributable to redeemable noncontrolling interests in the Operating Partnership		(6	)		(5	)		(1	)
Net loss attributable to common stockholders	$	(1,981	)	$	(1,661	)	$	(320	)

The change in our net loss for the three months ended June 30, 2019 as compared to our net loss for the three months ended June 30, 2018 primarily relates to an increase in interest expense and total expenses partially offset by an increase in total revenues.  

Revenues

Rental income. Rental income was $37.7 million for the three months ended June 30, 2019 compared to $31.1 million for the three months ended June 30, 2018, which was an increase of approximately $6.6 million. The increase between the periods was primarily due to our acquisition and disposition activity in 2018 and 2019 and the timing of the transactions (we purchased three properties in the first quarter of 2019 and one property in the second quarter of 2019; there were no acquisitions in the first or second quarter of 2018, and one disposition in the first quarter of 2018), and a 5.1% increase in the weighted average monthly effective rent per occupied apartment unit in our Portfolio to $1,016 as of June 30, 2019 from $967 as of June 30, 2018.  The increase in effective rent was primarily driven by the value-add program that we have implemented and organic growth in rents in the markets where our properties are located as well as an increase in the occupancy rate of 0.2% to 94.4% in June 30, 2019 from 94.2% in June 30, 2018.  

Other income. Other income was $5.4 million for the three months ended June 30, 2019 compared to $4.6 million for the three months ended June 30, 2018, which was an increase of approximately $0.8 million. The increase between the periods was primarily due to our acquisition and disposition activity in 2018 and 2019 and the timing of the transactions, as described above.

Expenses

Property operating expenses. Property operating expenses were $10.2 million for the three months ended June 30, 2019 compared to $8.2 million for the three months ended June 30, 2018, which was an increase of approximately $2.0 million. The increase between the periods was primarily due to our acquisition and disposition activity in 2018 and 2019 and the timing of the transactions, as described above. The increase between the periods was also due to a $0.7 million, or 18.4%, increase in labor costs and a $0.5 million, or 16.1%, increase in repairs & maintenance costs.

Real estate taxes and insurance. Real estate taxes and insurance costs were $5.6 million for the three months ended June 30, 2019 compared to $4.6 million for the three months ended June 30, 2018, which was an increase of approximately $1.0 million. The increase between the periods was primarily due to our acquisition and disposition activity in 2018 and 2019 and the timing of the transactions, as described above. The increase between the periods was also due to a $1.0 million, or 26.1%, increase in property taxes. 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 $1.3 million for the three months ended June 30, 2019 compared to $1.1 million for the three months ended June 30, 2018, which was an increase of approximately $0.2 million. The increase between periods was primarily due to an increase in total revenues, which the fee is primarily based on.

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Advisory and administrative fees. Advisory and administrative fees remained flat at $1.9 million for the three months ended June 30, 2019 compared to $1.9 million for the three months ended June 30, 2018. The amount incurred during the three months ended June 30, 2019 and 2018 represents the maximum fee allowed on properties defined as Contributed Assets under the Advisory Agreement plus approximately $0.5 million and $0.5 million, respectively, of advisory and administrative fees incurred on certain properties defined as New Assets. For the three months ended June 30, 2019, our Adviser elected to voluntarily waive the advisory and administrative fees incurred on the twelve properties we acquired subsequent to October 2016, which totaled approximately $1.7 million and are considered to be permanently waived for the period. For the three months ended June 30, 2018, our Adviser elected to voluntarily waive the advisory and administrative fees incurred on the five properties we acquired subsequent to October 2016, which totaled approximately $0.9 million and are considered to be permanently waived. Our Adviser is not contractually obligated to waive fees on New Assets in the future and may cease waiving fees on New Assets at its discretion. Advisory and administrative fees may increase in future periods as we acquire additional properties, which will be classified as New Assets.

Corporate general and administrative expenses. Corporate general and administrative expenses were $2.7 million for the three months ended June 30, 2019 compared to $2.0 million for the three months ended June 30, 2018, which was an increase of approximately $0.7 million. The increase between the periods was primarily due to approximately $1.4 million of equity-based compensation expense recognized during the three months ended June 30, 2019 related to the grants of restricted stock units to our directors, officers, employees and certain key employees of our Adviser pursuant to our long-term incentive plan (the “2016 LTIP”), compared to $1.1 million of equity-based compensation expense recognized during the three months ended June 30, 2018 (see Note 8 to our consolidated financial statements). Subject to the Expense Cap, corporate general and administrative expenses may increase in future periods as we acquire additional properties, incur additional public company costs once we lose our status as an “emerging growth company” as defined in the JOBS Act or the Board issues additional equity grants under the 2016 LTIP.

Property general and administrative expenses. Property general and administrative expenses were $1.8 million for the three months ended June 30, 2019 compared to $1.6 million for the three months ended June 30, 2018, which was an increase of approximately $0.2 million. The increase between the periods was primarily due to our acquisition and disposition activity in 2018 and 2019 and the timing of the transactions, as described above.

Depreciation and amortization. Depreciation and amortization costs were $13.1 million for the three months ended June 30, 2019 compared to $11.0 million for the three months ended June 30, 2018, which was an increase of approximately $2.1 million.  The increase between the periods was primarily due to the amortization of intangible lease assets of $1.3 million related to four properties for the three months ended June 30, 2019 compared to $0.2 million related to one property for the three months ended June 30, 2018 which was an increase of approximately $1.1 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 increase between periods was also due to an increase in depreciation expense of approximately $0.9 million, primarily related to the acquisition of seven properties subsequent to June 30, 2018.

Other Income and Expense

Interest expense. Interest expense was $8.6 million for the three months ended June 30, 2019 compared to $6.8 million for the three months ended June 30, 2018, which was an increase of approximately $1.8 million. The increase between the periods was primarily due to increase in interest on debt of approximately $2.6 million partially offset by an increase in the gain recognized related to the effective portion of changes in fair value of our interest rate swap derivatives designated as cash flow hedges of approximately $0.9 million (see “Debt, Derivatives and Hedging Activity – Interest Rate Swap Agreements” below). The following table details the various costs included in interest expense for the three months ended June 30, 2019 and 2018 (in thousands):

	For the Three Months Ended June 30,
	2019			2018			$ Change
Interest on debt	$	10,000		$	7,363		$	2,637
Amortization of deferred financing costs		470			352			118
Interest rate swaps		(1,882	)		(962	)		(920	)
Interest rate caps expense		2			70			(68	)
Total	$	8,590		$	6,823		$	1,767

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Loss on extinguishment of debt and modification costs. Loss on extinguishment of debt and modification costs was $- million for the three months ended June 30, 2019 compared to $0.1 million for the three months ended June 30, 2018, which was a decrease of approximately $0.1 million. The decrease between the periods was primarily due to decreases in write-offs of deferred financing costs of $0.1 million. The following table details the various costs included in loss on extinguishment of debt and modification costs for the three months ended June 30, 2019 and 2018 (in thousands):

	For the Three Months Ended June 30,
	2019		2018			$ Change
Write-off of deferred financing costs		—		105			(105	)
Write-off of fair market value adjustment of assumed debt		—		(27	)		27
Total	$	—	$	78		$	(78	)

Gain on sales of real estate. We did not recognize a gain on sales of real estate for the three months ended June 30, 2019 as we did not sell any properties during the period. During the three months ended June 30, 2018, we did not sell any properties.

The six months ended June 30, 2019 as compared to the six months ended June 30, 2018

The following table sets forth a summary of our operating results for the six months ended June 30, 2019 and 2018 (in thousands):

	For the Six Months Ended June 30,
	2019			2018			$ Change
Total revenues	$	84,557		$	70,712		$	13,845
Total expenses		(74,239	)		(61,777	)		(12,462	)
Operating income before gain on sales of real estate		10,318			8,935			1,383
Gain on sales of real estate		—			13,742			(13,742	)
Operating income		10,318			22,677			(12,359	)
Interest expense		(16,678	)		(13,620	)		(3,058	)
Loss on extinguishment of debt and modification costs		—			(629	)		629
Net income (loss)		(6,360	)		8,428			(14,788	)
Net income (loss) attributable to redeemable noncontrolling interests in the Operating Partnership		(19	)		25			(44	)
Net income (loss) attributable to common stockholders	$	(6,341	)	$	8,403		$	(14,744	)

The change in our net loss for the six months ended June 30, 2019 as compared to the net income for the six months ended June 30, 2018 primarily relates to a decrease in gain on sales of real estate, an increase in total expenses, and an increase in interest expenses, and was partially offset by an increase in total revenues and decreases in loss on extinguishment of debt and modification costs. The change in our net loss between the periods was also due to our acquisition and disposition activity in 2019 and 2018 and the timing of the transactions (we purchased three properties in the first quarter of 2019 and one property in the second quarter of 2019; there were no acquisitions in the first or second quarter of 2018, and one disposition in the first quarter of 2018).

Revenues

Rental income. Rental income was $74.0 million for the six months ended June 30, 2019 compared to $61.6 million for the six months ended June 30, 2018, which was an increase of approximately $12.4 million. The increase between the periods was primarily due to our acquisition and disposition activity in 2018 and 2019 and the timing of the transactions, as described above, and a 5.1% increase in the weighted average monthly effective rent per occupied apartment unit in our Portfolio to $1,016 as of June 30, 2019 from $967 as of June 30, 2018. The increase in effective rent was primarily driven by the value-add program that we have implemented and organic growth in rents in the markets where our properties are located. The increase between the periods was also due to an increase in the occupancy rate of our Portfolio of 0.2% to 94.4% as of June 30, 2019 from 94.2% as of June 30, 2018.

Other income. Other income was $10.5 million for the six months ended June 30, 2019 compared to $9.1 million for the six months ended June 30, 2018, which was an increase of approximately $1.4 million. The increase between the periods was primarily due to our acquisition and disposition activity in 2018 and 2019 and the timing of the transactions, as described above, as well as a 4.0% increase in other income collected at existing properties.

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Expenses

Property operating expenses. Property operating expenses were $19.8 million for the six months ended June 30, 2019 compared to $17.1 million for the six months ended June 30, 2018, which was an increase of approximately $2.7 million. The increase between the periods was primarily due to our acquisition and disposition activity in 2018 and 2019 and the timing of the transactions, as described above. The increase between the periods was also due to a $1.0 million, or 17.6%, increase in repairs and maintenance costs and a $1.1 million, or 15.4%, increase in labor costs.

Real estate taxes and insurance. Real estate taxes and insurance costs were $11.3 million for the six months ended June 30, 2019 compared to $9.4 million for the six months ended June 30, 2018, which was an increase of approximately $1.9 million. The increase between the periods was primarily due to a $1.8 million, or 22.7%, increase in property taxes. 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 cost of real estate taxes.

Property management fees. Property management fees were $2.5 million for the six months ended June 30, 2019 compared to $2.1 million for the six months ended June 30, 2018, which was an increase of approximately $0.4 million. The increase between the periods was primarily due to an increase in total revenues, which the fee is primarily based on.

Advisory and administrative fees. Advisory and administrative fees remained flat at $3.7 million for the six months ended June 30, 2019 compared to $3.7 million for the six months ended June 30, 2018. The amount incurred during the six months ended June 30, 2019 and 2018 represents the maximum fee allowed on properties defined as Contributed Assets under the Advisory Agreement plus approximately $1.0 million and $1.0 million, respectively, of advisory and administrative fees incurred on certain properties defined as New Assets. For the six months ended June 30, 2019, our Adviser elected to voluntarily waive the advisory and administrative fees incurred on the twelve properties we acquired subsequent to October 2016, which totaled approximately $3.3 million and are considered to be permanently waived. For the six months ended June 30, 2018, our Adviser elected to voluntarily waive the advisory and administrative fees incurred on the properties we acquired subsequent to October 2016, which totaled approximately $1.8 million and are considered to be permanently waived for the period. Our Adviser is not contractually obligated to waive fees on New Assets in the future and may cease waiving fees on New Assets at its discretion. Advisory and administrative fees may increase in future periods as we acquire additional properties, which will be classified as New Assets.

Corporate general and administrative expenses. Corporate general and administrative expenses were $5.0 million for the six months ended June 30, 2019 compared to $3.8 million for the six months ended June 30, 2018, which was an increase of approximately $1.2 million. The increase between the periods was primarily due to approximately $2.7 million of equity-based compensation expense recognized during the six months ended June 30, 2019 related to the grants of restricted stock units to our directors, officers, employees and certain key employees of our Adviser pursuant to our long-term incentive plan (the “2016 LTIP”), compared to $2.0 million of equity-based compensation expense recognized during the six months ended June 30, 2018 (see Note 8 to our consolidated financial statements). Subject to the Expense Cap, corporate general and administrative expenses may increase in future periods as we acquire additional properties, incur additional public company costs once we lose our status as an “emerging growth company” as defined in the JOBS Act or the Board issues additional equity grants under the 2016 LTIP.

Property general and administrative expenses. Property general and administrative expenses were $3.4 million for the six months ended June 30, 2019 compared to $3.2 million for the six months ended June 30, 2018, which was an increase of approximately $0.2 million. The increase between the periods was primarily due to our acquisition and disposition activity in 2018 and 2019 and the timing of the transactions, as described above.

Depreciation and amortization. Depreciation and amortization costs were $28.5 million for the six months ended June 30, 2019 compared to $22.4 million for the six months ended June 30, 2018, which was an increase of approximately $6.1 million. The increase between the periods was primarily due to the amortization of intangible lease assets of $3.5 million related to seven properties for the six months ended June 30, 2019 compared to $0.8 million related to one property for the six months ended June 30, 2018, which was an increase of approximately $2.7 million. The increase between the periods was also due to an increase of $3.4 million in depreciation expense, primarily due to our acquisition activity in 2018 and 2019 and the timing of the transactions, as described above. 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 year of acquisition for each property.

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Other Income and Expense

Interest expense. Interest expense was $16.7 million for the six months ended June 30, 2019 compared to $13.6 million for the six months ended June 30, 2018, which was an increase of approximately $3.1 million. The increase between the periods was primarily due an increase in interest on debt of $5.4 million related to our acquisition activity in 2018 and 2019.  This increase was partially offset by an increase in gain recognized related to the effective portion of changes in fair value of our interest rate swap derivatives designated as cash flow hedges of approximately $2.4 million (see “Debt, Derivatives and Hedging Activity – Interest Rate Swap Agreements” below). The following table details the various costs included in interest expense for the six months ended June 30, 2019 and 2018 (in thousands):

	For the Six Months Ended June 30,
	2019			2018			$ Change
Interest on debt	$	19,510		$	14,120		$	5,390
Amortization of deferred financing costs		902			741			161
Interest rate swaps		(3,762	)		(1,386	)		(2,376	)
Interest rate caps expense		28			145			(117	)
Total	$	16,678		$	13,620		$	3,058

Loss on extinguishment of debt and modification costs. There was were no losses on extinguishment of debt and modification costs for the six months ended June 30, 2019 compared to $0.1 million for the six months ended June 30, 2018, which was a decrease of approximately $0.6 million. The decrease between the periods was primarily due to decreases in prepayment penalties and defeasance costs of approximately $0.2 million and a decrease in deferred financing costs of approximately $0.5 million. The following table details the various costs included in loss on extinguishment of debt and modification costs for the six months ended June 30, 2019 and 2018 (in thousands):

	For the Six Months Ended June 30,
	2019		2018			$ Change
Prepayment penalties and defeasance costs	$	—	$	172		$	(172	)
Write-off of deferred financing costs		—		484			(484	)
Write-off of fair market value adjustment of assumed debt		—		(27	)		27
Total	$	—	$	629		$	(629	)

Gain on sales of real estate. There were no sales of real estate during the six months ended June 30, 2019. Gain on sale of real estate was $13.7 million for the six months ended June 30, 2018, which was a decrease of approximately $13.7 million.

Non-GAAP Measurements

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) advisory and administrative fees, (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, (7) casualty-related expenses/(recoveries) and (8) property general and administrative expenses that are not reflective of the continuing operations of the properties or are incurred on our behalf at the property for expenses such as legal, professional and franchise tax fees.

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. Casualty-related expenses and recoveries are excluded because they do not reflect continuing operating costs of the property owner. Entity level general and administrative expenses incurred at 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 ownership structuring. Also, expenses that

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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 items 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 expenses, interest expense, loss on extinguishment of debt and modification costs, acquisition costs, certain fees to affiliates such as advisory and administrative fees, 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.

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.

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.

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Net Operating Income for Our Q2 Same Store and Non-Same Store Properties for the Three Months Ended June 30, 2019 and 2018

There are 32 properties encompassing 11,471 units of apartment space in our same store pool for the three months ended June 30, 2019 and 2018 (our “Q2 Same Store” properties). Our Q2 Same Store properties exclude the following seven properties in our Portfolio as of June 30, 2019: Cedar Pointe, Crestmont Reserve, Brandywine I & II, Bella Vista, The Enclave, The Heritage and Summers Landing.

The following table reflects the revenues, property operating expenses and NOI for the three months ended June 30, 2019 and 2018 for our Q2 Same Store and Non-Same Store properties (dollars in thousands):

	For the Three Months Ended June 30,
	2019		2018			$ Change			% Change
Revenues
Same Store
Rental income	$	32,341	$	31,072		$	1,269			4.1	%
Other income		4,721		4,570			151			3.3	%
Same Store revenues		37,062		35,642			1,420			4.0	%
Non-Same Store
Rental income		5,370		(3	)		5,373		N/M
Other income		634		16			618		N/M
Non-Same Store revenues		6,004		13			5,991		N/M
Total revenues		43,066		35,655			7,411			20.8	%
Operating expenses
Same Store
Property operating expenses (1)		8,927		8,930			(3	)		0.0	%
Real estate taxes and insurance		4,959		4,630			329			7.1	%
Property management fees (2)		1,112		1,066			46			4.3	%
Property general and administrative expenses (3)		1,227		1,242			(15	)		-1.2	%
Same Store operating expenses		16,225		15,868			357			2.2	%
Non-Same Store
Property operating expenses (4)		1,277		(9	)		1,286		N/M
Real estate taxes and insurance		605		(42	)		647		N/M
Property management fees (2)		179		—			179		N/M
Property general and administrative expenses (5)		202		—			202		N/M
Non-Same Store operating expenses		2,263		(51	)		2,314		N/M
Total operating expenses		18,488		15,817			2,671			16.9	%
NOI
Same Store		20,837		19,774			1,063			5.4	%
Non-Same Store		3,741		64			3,677		N/M
Total NOI	$	24,578	$	19,838		$	4,740			23.9	%

(1) For the three months ended June 30, 2019 and 2018, excludes approximately $59,000 and $686,000, respectively, of casualty-related recoveries.

(2) Fees incurred to an unaffiliated third party that is an affiliate of the noncontrolling limited partner of the OP.

(3) For the three months ended June 30, 2019 and 2018, excludes approximately $266,000 and $399,000, respectively, of expenses that are not reflective of the continuing operations of the properties or are incurred on our behalf at the property for expenses such as legal, professional and franchise tax fees.

(4) For the three months ended June 30, 2019 and 2018, excludes approximately $16,000 and $(4,000), respectively, of casualty-related expenses/(recoveries).

(5) For the three months ended June 30, 2019 and 2018, excludes approximately $73,000 and $7,000, respectively, of expenses that are not reflective of the continuing operations of the properties or are incurred on our behalf at the property for expenses such as legal, professional and franchise tax fees.

See reconciliation of net income (loss) to NOI below under “NOI and Same Store NOI for the Three and Six Months Ended June 30, 2019 and 2018.”

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Q2 Same Store Results of Operations for the Three Months Ended June 30, 2019 and 2018

As of June 30, 2019, our Q2 Same Store properties were approximately 94.6% leased with a weighted average monthly effective rent per occupied apartment unit of $1,009. As of June 30, 2018, our Q2 Same Store properties were approximately 94.2% leased with a weighted average monthly effective rent per occupied apartment unit of $967. For our Q2 Same Store properties, we recorded the following operating results for the three months ended June 30, 2019 as compared to the three months ended June 30, 2018:

Revenues

Rental income. Rental income was $32.3 million for the three months ended June 30, 2019 compared to $31.1 million for the three months ended June 30, 2018, which was an increase of approximately $1.2 million, or 4.1%. The majority of the increase is related to a 4.3% increase in the weighted average monthly effective rent per occupied apartment unit to $1,009 as of June 30, 2019 from $967 as of June 30, 2018, partially offset by a 0.4% increase in occupancy.

Other income. Other income was $4.7 million for the three months ended June 30, 2019 compared to $4.6 million for the three months ended June 30, 2018, which was an increase of approximately $0.1 million, or 3.3%. The majority of the increase is related to a $0.1 million, or 27.2%, increase in non-refundable fees.

Expenses

Property operating expenses. Property operating expenses remained flat at $8.9 million for the three months ended June 30, 2019 compared to $8.9 million for the three months ended June 30, 2018.

Real estate taxes and insurance. Real estate taxes and insurance costs were $5.0 million for the three months ended June 30, 2019 compared to $4.6 million for the three months ended June 30, 2018, which was an increase of approximately $0.4 million, or 7.1%. The majority of the increase is related to a $0.5 million, or 11.5%, increase in property taxes partially offset by a $0.1 million, or 17.1%, decrease in insurance expenses.

Property management fees. Property management fees remained flat at $1.1 million for the three months ended June 30, 2019 compared to $1.1 million for the three months ended June 30, 2018.

Property general and administrative expenses. Property general and administrative expenses remained flat at $1.2 million for the three months ended June 30, 2019 compared to the three months ended June 30, 2018.

Net Operating Income for Our YTD Same Store and Non-Same Store Properties for the Six Months Ended June 30, 2019 and 2018

There are 32 properties encompassing 11,471 units of apartment space in our same store pool for the six months ended June 30, 2019 and 2018 (our “YTD Same Store” properties). Our YTD Same Store properties exclude the following seven properties in our Portfolio as of June 30, 2019: Cedar Pointe, Crestmont Reserve, Brandywine I & II, Bella Vista, The Enclave, The Heritage and Summers Landing.

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The following table reflects the revenues, property operating expenses and NOI for the six months ended June 30, 2019 and 2018 for our YTD Same Store and Non-Same Store properties (dollars in thousands):

	For the Six Months Ended June 30,
	2019		2018			$ Change			% Change
Revenues
Same Store
Rental income	$	64,125	$	61,427		$	2,698			4.4	%
Other income		9,415		9,053			362			4.0	%
Same Store revenues		73,540		70,480			3,060			4.3	%
Non-Same Store
Rental income		9,908		215			9,693		N/M
Other income		1,109		17			1,092		N/M
Non-Same Store revenues		11,017		232			10,785		N/M
Total revenues		84,557		70,712			13,845			19.6	%
Operating expenses
Same Store
Property operating expenses (1)		17,507		17,666			(159	)		-0.9	%
Real estate taxes and insurance		10,184		9,448			736			7.8	%
Property management fees (2)		2,204		2,111			93			4.4	%
Property general and administrative expenses (3)		2,392		2,397			(5	)		-0.2	%
Same Store operating expenses		32,287		31,622			665			2.1	%
Non-Same Store
Property operating expenses (4)		2,300		108			2,192		N/M
Real estate taxes and insurance		1,138		(4	)		1,142		N/M
Property management fees (2)		327		9			318		N/M
Property general and administrative expenses (5)		338		12			326		N/M
Non-Same Store operating expenses		4,103		125			3,978		N/M
Total operating expenses		36,390		31,747			4,643			14.6	%
NOI
Same Store		41,253		38,858			2,395			6.2	%
Non-Same Store		6,914		107			6,807		N/M
Total NOI	$	48,167	$	38,965		$	9,202			23.6	%

(1) For the six months ended June 30, 2019 and 2018, excludes approximately $24,000 and $663,000, respectively, of casualty-related recoveries.

(2) Fees incurred to an unaffiliated third party that is an affiliate of the noncontrolling limited partner of the OP.

(3) For the six months ended June 30, 2019 and 2018, excludes approximately $502,000 and $759,000, respectively, of expenses that are not reflective of the continuing operations of the properties or are incurred on our behalf at the property for expenses such as legal, professional and franchise tax fees.

(4) For the six months ended June 30, 2019 and 2018, excludes approximately $17,000 and $(3,000), respectively, of casualty-related expenses/(recoveries).  

(5) For the six months ended June 30, 2019 and 2018, excludes approximately $194,000 and $27,000, respectively, of expenses that are not reflective of the continuing operations of the properties or are incurred on our behalf at the property for expenses such as legal, professional and franchise tax fees.

See reconciliation of net income (loss) to NOI below under “NOI and Same Store NOI for the Three and Six Months Ended June 30, 2019 and 2018.”

YTD Same Store Results of Operations for the Six Months Ended June 30, 2019 and 2018

As of June 30, 2019, our YTD Same Store properties were approximately 94.6% leased with a weighted average monthly effective rent per occupied apartment unit of $1,009. As of June 30, 2018, our YTD Same Store properties were approximately 94.2% leased with a weighted average monthly effective rent per occupied apartment unit of $967. For our YTD Same Store properties, we recorded the following operating results for the six months ended June 30, 2019 as compared to the six months ended June 30, 2018:

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Revenues

Rental income. Rental income was $64.1 million for the six months ended June 30, 2019 compared to $61.4 million for the six months ended June 30, 2018, which was an increase of approximately $2.7 million, or 4.4%. The majority of the increase is related to a 4.3% increase in the weighted average monthly effective rent per occupied apartment unit to $1,009 as of June 30, 2019 from $967 as of June 30, 2018, partially offset by a 0.4% increase in occupancy.

Other income. Other income was $9.4 million for the six months ended June 30, 2019 compared to $9.1 million for the six months ended June 30, 2018, which was an increase of approximately $0.3 million, or 4.0%. The majority of the increase is related to a $0.2 million, or 28%, increase in non-refundable charges.

Expenses

Property operating expenses. Property operating expenses were $17.5 million for the six months ended June 30, 2019 compared to $17.7 million for the six months ended June 30, 2018, which was a decrease of approximately $0.2 million, or 0.9%. The majority of the decrease is related to a $0.7 million, or 15.5%, decrease in utility costs, partially offset by a $0.3 million, or 6.0%, increase in repair and maintenance costs and a $0.2 million, or 2.8%, increase in labor costs.

Real estate taxes and insurance. Real estate taxes and insurance costs were $10.2 million for the six months ended June 30, 2019 compared to $9.4 million for the six months ended June 30, 2018, which was an increase of approximately $0.8 million, or 7.8%. The majority of the increase is related to a $0.9 million, or 10.6%, increase in property taxes due to higher assessments of value by taxing authorities.

Property management fees. Property management fees were $2.2 million for the six months ended June 30, 2019 compared to $2.1 million for the six months ended June 30, 2018, which was an increase of approximately $0.1 million, or 4.4%. The majority of the increase is related to a $2.7 million, or 4.4%, increase in rental income, and a $0.4 million, or 4.0%, increase in other income, which the fee is primarily based on.

Property general and administrative expenses. Property general and administrative expenses remained flat at $2.4 million for the six months ended June 30, 2019 compared to $2.4 million for the six months ended June 30, 2018.

NOI and Same Store NOI for the Three and Six Months Ended June 30, 2019 and 2018

The following table, which has not been adjusted for the effects of noncontrolling interests, reconciles our NOI and our Same Store NOI for the three and six months ended June 30, 2019 and 2018 to net income (loss), the most directly comparable GAAP financial measure (in thousands):

		For the Six Months Ended June 30,						For the Three Months Ended June 30,
		2019			2018			2019			2018
Net income (loss)		$	(6,360	)	$	8,428		$	(1,987	)	$	(1,666	)
Adjustments to reconcile net income (loss) to NOI:
Advisory and administrative fees			3,722			3,701			1,872			1,863
Corporate general and administrative expenses			4,974			3,799			2,741			1,986
Casualty-related recoveries	(1)		(7	)		(666	)		(43	)		(690	)
Property general and administrative expenses	(2)		696			786			339			406
Depreciation and amortization			28,464			22,410			13,066			11,038
Interest expense			16,678			13,620			8,590			6,823
Loss on extinguishment of debt and modification costs			—			629			—			78
Gain on sales of real estate			—			(13,742	)		—			—
NOI		$	48,167		$	38,965		$	24,578		$	19,838
Less Non-Same Store
Revenues			(11,017	)		(232	)		(6,004	)		(13	)
Operating expenses			4,103			125			2,263			(51	)
Same Store NOI		$	41,253		$	38,858		$	20,837		$	19,774

(1) Adjustment to net income (loss) to exclude certain property operating expenses that are casualty-related recoveries.

(2) Adjustment to net income (loss) to exclude certain property general and administrative expenses that are not reflective of the continuing operations of the properties or are incurred on our behalf at the property for expenses such as legal, professional and franchise tax fees.

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FFO, Core 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 (“FFO”), as defined by the National Association of Real Estate Investment Trusts (“NAREIT”), core funds from operations (“Core FFO”) and adjusted funds from operations (“AFFO”) are important non-GAAP supplemental measures of operating performance for a REIT.

Since 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 amounts attributable to (1) noncontrolling interests in consolidated joint ventures and (2) redeemable noncontrolling interests in the OP and we show the combined amounts attributable to such noncontrolling interests as an adjustment to arrive at FFO attributable to common stockholders.

Core FFO makes certain adjustments to FFO, which are either not likely to occur on a regular basis or are otherwise not representative of the ongoing operating performance of our portfolio. Core FFO adjusts FFO to remove items such as acquisition expenses, losses on extinguishment of debt and modification costs (including prepayment penalties and defeasance costs incurred on the early repayment of debt, the write-off of unamortized deferred financing costs and fair market value adjustments of assumed debt related to the early repayment of debt, costs incurred in a debt modification that are not capitalized as deferred financing costs and other costs incurred in a debt extinguishment), casualty-related expenses and recoveries, the amortization of deferred financing costs incurred in connection with obtaining short-term debt financing, the ineffective portion of fair value adjustments on interest rate derivatives designated as cash flow hedges (see Notes 2 and 7 to our consolidated financial statements), and the noncontrolling interests (as described above) related to these items. We believe Core FFO is useful to investors as a supplemental gauge of our operating performance and is useful in comparing our operating performance with other REITs that are not as involved in the aforementioned activities.

AFFO makes certain adjustments to Core FFO in order to arrive at a more refined measure of the operating performance of our Portfolio. There is no industry standard definition of AFFO and practice is divergent across the industry. AFFO adjusts Core FFO to remove items such as equity-based compensation expense and the amortization of deferred financing costs incurred in connection with obtaining long-term debt financing, and the noncontrolling interests (as described above) related to these items. We believe AFFO is useful to investors as a supplemental gauge of our operating performance and is useful in comparing our operating performance with other REITs that are not as involved in the aforementioned activities.

The effect of the conversion of OP Units held by noncontrolling limited partners is not reflected in the computation of basic and diluted FFO, Core FFO and AFFO per share, as they are exchangeable for common stock on a one-for-one basis. The FFO, Core FFO and AFFO allocable to such units is allocated on this same basis and reflected in the adjustments for noncontrolling interests in the table below. As such, the assumed conversion of these units would have no net impact on the determination of diluted FFO, Core FFO and AFFO per share. See Note 9 to our consolidated financial statements for additional information.

We believe that the use of FFO, Core 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. While FFO, Core 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 or substitute to those measures in evaluating our liquidity or operating performance. FFO, Core FFO and AFFO do not purport to be indicative of cash available to fund our future cash requirements. Further, our computation of FFO, Core FFO and AFFO may not be comparable to FFO, Core 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 Core FFO or AFFO differently than we do.

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The following table reconciles our calculations of FFO, Core FFO and AFFO to net income (loss), the most directly comparable GAAP financial measure, for the three and six months ended June 30, 2019 and 2018(in thousands, except per share amounts):

		For the Three Months Ended June 30,							For the Six Months Ended June 30,
		2019			2018				2019			2018			% Change (1)
Net income (loss)		$	(1,987	)	$	(1,666	)		$	(6,360	)	$	8,428			-175.5	%
Depreciation and amortization			13,066			11,038				28,464			22,410			27.0	%
Gain on sales of real estate			—			—				—			(13,742	)		-100.0	%
Adjustment for noncontrolling interests			(33	)		(28	)			(66	)		(51	)		29.4	%
FFO attributable to common stockholders			11,046			9,344				22,038			17,045			29.3	%
FFO per share - basic		$	0.47		$	0.45			$	0.93		$	0.82			14.2	%
FFO per share - diluted		$	0.46		$	0.44			$	0.91		$	0.80			14.4	%
Loss on extinguishment of debt and modification costs			—			78				—			629			-100.0	%
Casualty-related recoveries			(43	)		(690	)			(7	)		(666	)		-98.9	%
Amortization of deferred financing costs - acquisition term notes			—			—				—			21			-100.0	%
Adjustment for noncontrolling interests			—			2				—			—		N/A
Core FFO attributable to common stockholders			11,003			8,734				22,031			17,029			29.4	%
Core FFO per share - basic		$	0.46		$	0.42			$	0.93		$	0.82			14.3	%
Core FFO per share - diluted		$	0.45		$	0.41			$	0.91		$	0.80			14.5	%
Amortization of deferred financing costs - long term debt			470			352				902			720			25.3	%
Equity-based compensation expense			1,419			1,094				2,654			2,009			32.1	%
Adjustment for noncontrolling interests			(5	)		(4	)			(11	)		(8	)		37.5	%
AFFO attributable to common stockholders			12,887			10,176				25,576			19,750			29.5	%
AFFO per share - basic		$	0.54		$	0.49			$	1.08		$	0.95			14.4	%
AFFO per share - diluted		$	0.53		$	0.48			$	1.06		$	0.92			14.6	%
Weighted average common shares outstanding - basic			23,736			20,780				23,643			20,883			13.2	%
Weighted average common shares outstanding - diluted			24,233			21,295				24,139			21,362			13.0	%
Dividends declared per common share		$	0.275		$	0.250			$	0.550		$	0.500			10.0	%
FFO Coverage - diluted	(2)	1.66x			1.76x			(2)	1.66x			1.60x				4.02	%
Core FFO Coverage - diluted	(2)	1.65x			1.64x			(2)	1.66x			1.59x				4.08	%
AFFO Coverage - diluted	(2)	1.93x			1.91x			(2)	1.93x			1.85x				4.18	%

(1) Represents the percentage change for the six months ended June 30, 2019 compared to the six months ended June 30, 2018.

(2) Indicates coverage ratio of FFO/Core FFO/AFFO per common share (diluted) over dividends declared per common share during the period.

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The three months ended June 30, 2019 as compared to the three months ended June 30, 2018

FFO was $11.0 million for the three months ended June 30, 2019 compared to $9.3 million for the three months ended June 30, 2018, which was an increase of approximately $1.7 million. The change in our FFO between the periods primarily relates to an increase in total revenues of $7.4 million.  This was partially offset by an increase in property operating expenses of $3.3 million, an increase in advisory and administrative fees of $0.2 million, an increase in interest expense of $1.8 million, an increase in corporate general and administrative expenses of $0.8 million and adjustments for amounts attributable to noncontrolling interests.

Core FFO was $11.0 million for the three months ended June 30, 2019 compared to $8.7 million for the three months ended June 30, 2018, which was an increase of approximately $2.3 million. The change in our Core FFO between the periods primarily relates to an increase in FFO and a decrease in casualty-related losses of $0.6 million, partially offset by a decrease in loss on extinguishment of debt and modification costs of $0.1 million and adjustments for amounts attributable to noncontrolling interests.

AFFO was $12.9 million for the three months ended June 30, 2019 compared to $10.2 million for the three months ended June 30, 2018, which was an increase of approximately $2.7 million. The change in our AFFO between the periods primarily relates to increases in Core FFO and an increase in equity-based compensation expense of $0.3 million.

The six months ended June 30, 2019 as compared to the six months ended June 30, 2018

FFO was $22.0 million for the six months ended June 30, 2019 compared to $17.0 million for the six months ended June 30, 2018, which was an increase of approximately $5.0 million. The change in our FFO between the periods primarily relates to an increase in total revenues of $13.8 million, partially offset by increases in total property operating expenses of $5.2 million, interest expense of $3.1 million, corporate general and administrative expenses of $1.2 million, and adjustments for amounts attributable to noncontrolling interests.

Core FFO was $22.0 million for the six months ended June 30, 2019 compared to $17.0 million for the six months ended June 30, 2018, which was an increase of approximately $5.0 million. The change in our Core FFO between the periods primarily relates to an increase in FFO and a decrease in casualty-related losses of $0.6 million.  These were partially offset by a decrease in loss on extinguishment of debt and modification costs of $0.6 million and adjustments for amounts attributable to noncontrolling interests.

AFFO was $25.6 million for the six months ended June 30, 2019 compared to $19.8 million for the six months ended June 30, 2018, which was an increase of approximately $5.8 million. The change in our AFFO between the periods primarily relates to increases in Core FFO and equity-based compensation expense of $0.6 million.

Liquidity and Capital Resources

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

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

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

• recurring maintenance necessary to maintain our multifamily properties;

• distributions necessary to qualify for taxation as a REIT;

• acquisition of additional properties;

• advisory and 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 and unused capacity on the Corporate Credit Facility. As of June 30, 2019, we had approximately $6.2 million of renovation value-add reserves for our planned capital expenditures to implement our value-add program. Renovation value-add reserves are not required to be held in escrow by a third party. We may reallocate these funds, at our discretion, to pursue other investment opportunities or meet our short-term liquidity requirements. Additionally, we had $72.5 million of unused capacity on the Corporate Credit Facility as of June 30, 2019.

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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, market perceptions about us and restrictions on sales of properties under the Code. 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.

On February 20, 2019, the Company, the OP and the Adviser entered into separate Equity Distribution Agreements with each of Jefferies, Raymond James and SunTrust, pursuant to which the Company may issue and sell from time to time shares of the Company’s common stock, par value $0.01 per share, having an aggregate sales price of up to $100,000,000.  In addition to the issuance and sale of shares of common stock, the Company may enter into forward sale agreements with each of Jefferies and Raymond James, or their respective affiliates, through the ATM Program.  During the three months ended June 30, 2019, the Company issued 252,165 shares of common stock at an average price of $40.26 per share, for net proceeds of approximately $9.4 million. The Company paid approximately $0.2 million in fees to the Sales Agents with respect to such sales and incurred other issuance costs of approximately $0.5 million, both of which were netted against the gross proceeds and recorded in additional paid in capital.  The ATM Program may be terminated by the Company at any time and expires automatically once aggregate sales under the ATM Program reach $100,000,000.

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, 2019.

Cash Flows

The following table presents selected data from our consolidated statements of cash flows for the six months ended June 30, 2019 and 2018 (in thousands):

	For the Six Months Ended June 30,
	2019			2018
Net cash provided by operating activities	$	23,620		$	17,333
Net cash provided by (used in) investing activities		(152,321	)		14,449
Net cash provided by (used in) financing activities		125,140			(35,811	)
Net decrease in cash, cash equivalents and restricted cash		(3,561	)		(4,029	)
Cash, cash equivalents and restricted cash, beginning of period		43,129			43,248
Cash, cash equivalents and restricted cash, end of period	$	39,568		$	39,219

Cash flows from operating activities. During the six months ended June 30, 2019, net cash provided by operating activities was $23.6 million compared to net cash provided by operating activities of $17.3 million for the six months ended June 30, 2018. The change in cash flows from operating activities was mainly due to an increase in total revenues and net cash received on derivative settlements and changes in operating assets and liabilities.  These were partially offset by an increase in property operating expenses.

Cash flows from investing activities. During the six months ended June 30, 2019, net cash used in investing activities was $152.3 million compared to net cash provided by investing activities of $14.4 million for the six months ended June 30, 2018. The change in cash flows from investing activities was mainly due to the acquisition of four properties for a combined purchase price of approximately $151.5 million during the period in 2019 compared to no acquisitions during the period in 2018. The change in cash flows from investing activities was partially offset by a decrease in net proceeds from sales of real estate. We had no sales during the six months ended June 30, 2019, and we sold one property for net proceeds of approximately $29.6 million during the period in 2018.

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Cash flows from financing activities. During thesix months ended June 30, 2019, net cash provided by financing activities was $125.1 million compared to net cash used in financing activities of $35.8 million for thesix months ended June 30, 2018. The change in cash flows from financing activities was mainly due to a net increase in debt of approximately $146.3 million,adecrease in common stock repurchases of approximately $9.5 million, and an increase in proceeds from the issuance of common stock through the ATMProgram of approximately $9.4 million(net of Sales Agents fees and other legal fees) between the periods.  These were partially offset by an increase in common stock dividends paid of approximately $2.8 million and anincrease in deferred financing costs paid of approximately $1.5 million between the periods.

Debt, Derivatives and Hedging Activity

Mortgage Debt

As of June 30, 2019, our subsidiaries had aggregate mortgage debt outstanding to third parties of approximately $934.3 million at a weighted average interest rate of 3.94% and an adjusted weighted average interest rate of 3.16%. For purposes of calculating the adjusted weighted average interest rate of our mortgage debt outstanding, we have included the weighted average fixed rate of 1.4272% for one-month LIBOR on our combined $750.0 million notional amount of interest rate swap agreements, which effectively fixes the interest rate on $750.0 million of our floating rate mortgage debt. See Notes 6 and 7 to our consolidated financial statements for additional information.

We have entered into and expect to continue to enter into interest rate swap and cap agreements with various third parties to fix or cap the floating interest rates on a majority of our floating rate mortgage debt outstanding. The interest rate swap agreements generally have a term of four to five years and effectively establish a fixed interest rate on debt on the underlying notional amounts. The interest rate swap agreements involve the receipt of variable-rate amounts from a counterparty in exchange for us making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. As of June 30, 2019, interest rate swap agreements effectively covered $750.0 million, or 84%, of our $897.0 million of floating rate mortgage debt outstanding.

The interest rate cap agreements generally have a term of three to four years, cover the outstanding principal amount of the underlying debt and are generally required by our lenders. Under the interest rate cap agreements, we pay a fixed fee in exchange for the counterparty to pay any interest above a maximum rate. As of June 30, 2019, interest rate cap agreements covered $320.1 million of our $897.0 million of floating rate mortgage debt outstanding. These interest rate cap agreements effectively cap one-month LIBOR on $320.1 million of our floating rate mortgage debt at a weighted average rate of 5.82%.

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 proceeds from additional issuances of common stock or other securities or property dispositions.

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.

Corporate Credit Facility

On January 28, 2019, we, through the OP, entered into a $75.0 million credit facility (the “Corporate Credit Facility”) with SunTrust Bank, as administrative agent and the lenders party thereto, and immediately drew $52.5 million to fund a portion of the purchase price of three properties we acquired on January 28, 2019. The Corporate Credit Facility is a full-term, interest-only facility with an initial 24-month term, has one 12-month extension option, and we have the right to request an increase in the facility amount up to $140 million (the “Accordion Feature”).  The facility bears interest at a rate of one-month LIBOR plus a range from 2.00% to 2.50%, depending on our leverage level as determined under the credit facility agreement, and is guaranteed by us. On June 29, 2019, we, through the OP, exercised our option under the Accordion Feature of the Corporate Credit Facility and increased the amount of the facility from $75 million to $125 million. In conjunction with the increase in the facility, we incurred costs of $0.5 million in obtaining the additional financing through the Accordion Feature. As of June 30, 2019, at our current leverage level, the spread over the reference rate is 2.25%.  See Note 6 to our consolidated financial statements for additional information.

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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 the OP, have entered into nine interest rate swap transactions with KeyBank and SunTrust Bank (collectively the “Counterparties”) with a combined notional amount of $750.0 million. As of June 30, 2019, the interest rate swaps we have entered into effectively replace the floating interest rate (one-month LIBOR) with respect to $750.0 million of our floating rate mortgage debt outstanding with a weighted average fixed rate of 1.4272%. During the term of these interest rate swap agreements, we are required to make monthly fixed rate payments of 1.4272%, on a weighted average basis, on the notional amounts, while the Counterparties are obligated to make monthly floating rate payments based on one-month LIBOR to us referencing the same notional amounts. For purposes of hedge accounting under FASB ASC 815, Derivatives and Hedging, we have designated these interest rate swaps as cash flow hedges of interest rate risk. See Notes 6 and 7 to our consolidated financial statements for additional information.

The following table contains summary information regarding our outstanding interest rate swaps (dollars in thousands):

Effective Date	Termination Date	Counterparty	Notional		Fixed Rate (1)
July 1, 2016	June 1, 2021	KeyBank	$	100,000		1.1055	%
July 1, 2016	June 1, 2021	KeyBank		100,000		1.0210	%
July 1, 2016	June 1, 2021	KeyBank		100,000		0.9000	%
September 1, 2016	June 1, 2021	KeyBank		100,000		0.9560	%
April 1, 2017	April 1, 2022	KeyBank		100,000		1.9570	%
May 1, 2017	April 1, 2022	KeyBank		50,000		1.9610	%
July 1, 2017	July 1, 2022	KeyBank		100,000		1.7820	%
June 1, 2019	June 1, 2024	KeyBank		50,000		2.0020	%
June 1, 2019	June 1, 2024	SunTrust		50,000		2.0020	%
			$	750,000		1.4272	%	(2)

(1) The floating rate option for the interest rate swaps is one-month LIBOR. As of June 30, 2019, one-month LIBOR was 2.3980%.

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

Obligations and Commitments

The following table summarizes our contractual obligations and commitments as of June 30, 2019 for the next five calendar years subsequent to June 30, 2019. We used one-month LIBOR as of June 30, 2019 to calculate interest expense due by period on our floating rate debt and net interest expense due by period on our interest rate swaps.

		Payments Due by Period (in thousands)
		Total		2019		2020		2021		2022		2023		Thereafter
Operating Properties Mortgage Debt
Principal payments		$	776,184	$	360	$	744	$	782	$	817	$	20,598	$	752,883
Interest expense	(1)		151,695		11,846		23,559		26,776		29,912		29,631		29,971
Total		$	927,879	$	12,206	$	24,303	$	27,558	$	30,729	$	50,229	$	782,854
Held For Sale Property Mortgage Debt
Principal payments		$	158,161	$	116	$	263	$	282	$	12,620	$	—	$	144,880
Interest expense			32,020		3,243		6,442		6,412		5,829		5,829		4,265
Total		$	190,181	$	3,359	$	6,705	$	6,694	$	18,449	$	5,829	$	149,145
Credit Facility
Principal payments		$	52,500	$	—	$	—	$	52,500	$	—	$	—	$	—
Interest expense			3,702		1,181		2,348		173		—		—		—
Total		$	56,202	$	1,181	$	2,348	$	52,673	$	—	$	—	$	—
Total contractual obligations and commitments		$	1,174,262	$	16,746	$	33,356	$	86,925	$	49,178	$	56,058	$	931,999

(1) Interest expense obligations includes the impact of expected settlements on interest rate swaps which have been entered into in order to fix the interest rate on the hedged portion of our floating rate debt obligations. As of June 30, 2019, we had entered into nine interest rate swap transactions with a combined notional amount of $750.0 million. We have allocated the total impact of expected settlements on the $750.0 million notional amount of interest rate swaps to ‘Operating Properties Mortgage Debt.’ We used one-month LIBOR as of June 30, 2019 to determine our expected settlements through the terms of the interest rate swaps.

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Capital Expenditures and Value-Add Program

We anticipate incurring average annual repairs and maintenance expense of $575 to $725 per apartment 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 apartment unit for non-recurring capital expenditures and/or lender required replacement reserves. When incurred, 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 to $10,000 per unit in the first 36 months of ownership, in an effort to add value to the asset’s exterior and interiors. In many cases, we reserve cash at the closing of each acquisition to fund these planned capital expenditures and value-add improvements. As of June 30, 2019, we had approximately $6.2 million of renovation value-add reserves for our planned capital expenditures and other expenses to implement our value-add program, which will complete approximately 1,200 planned interior rehabs. The following table sets forth a summary of our capital expenditures related to our value-add program for the three and six months ended June 30, 2019 and 2018 (in thousands):

		For the Three Months Ended June 30,				For the Six Months Ended June 30,
Rehab Expenditures		2019		2018		2019		2018
Interior	(1)	$	2,973	$	2,040	$	5,461	$	3,556
Exterior and common area			3,352		2,543		5,137		4,992
Total rehab expenditures		$	6,325	$	4,583	$	10,598	$	8,548

(1) Includes total capital expenditures during the period on completed and in-progress interior rehabs. For the six months ended June 30, 2019 and 2018, we completed full and partial interior rehabs on 720 and 677 units, respectively.  For the three months ended June 30, 2019 and 2018 we completed full and partial interior rehabs on 475 and 379 units, respectively.

Freddie Mac Multifamily Green Advantage Program

In order to obtain more favorable pricing on our mortgage debt financing with Freddie Mac, we have decided to participate in Freddie Mac’s new Multifamily Green Advantage program (the “Green Program”). In the second quarter of 2017, we escrowed approximately $4.2 million to finance smarter, greener property improvements at 18 of our properties. In connection with the three acquisitions and seven refinancings we completed in 2018, we escrowed approximately $1.2 million related to the Green Program.  In connection with the four purchases in 2019, the Company escrowed approximately $0.6 million related to the Green Program. Since the inception of the Green Program through June 30, 2019, we had spent approximately $4.2 million on green improvements and completed 23 Green Programs. We expect to spend approximately $2.7 million on green improvements during the fiscal year 2019. We expect to reduce water/sewer costs at each property where the Green Program is implemented by at least 15% through the replacement of showerheads, plumbing fixtures and toilets with modern energy efficient upgrades. For the six months ended June 30, 2019, utility costs for our YTD Same Store properties decreased by approximately $0.7 million or 15.5% compared to the six months ended June 30, 2018.  For the three months ended June 30, 2019, utility costs for our Q2 Same Store properties decreased by approximately $0.2 million or 10.2% compared to the three months ended June 30, 2018.  In 2018, for the 17 properties where the Green Program was completed, this resulted in an estimated reduction of utility costs of approximately $1.4 million.

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 $1.07 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 $1.0 billion in non-convertible debt.  As of June 30, 2019, the market value of our common stock held by non-affiliates exceeded $700 million, and as such, we will no longer be an emerging growth company after December 31, 2019 and will have to adopt all accounting standards as required for

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public companies without the use of the extended transition period. Further, an audit of internal controls over financial reporting will be required for the year ended December 31, 2019.

Income Taxes

We anticipate that we will continue to 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 (1) 85% of our ordinary income, (2) 95% of our capital gain net income and (3) 100% of our undistributed income from prior years. Taxable income from certain non-REIT activities is managed through a TRS and is subject to applicable federal, state, and local income and margin taxes. We had no significant taxes associated with our TRS for the six months ended June 30, 2019 and 2018.

If we fail to qualify as a REIT in any taxable year, we will be subject to U.S. federal income 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.

We evaluate the accounting and disclosure of tax positions taken or expected to be taken in the course of preparing our tax returns to determine whether the tax positions are “more-likely-than-not” (greater than 50 percent probability) of being sustained by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax benefit or expense in the current year. Our management is required to analyze all open tax years, as defined by the statute of limitations, for all major jurisdictions, which include federal and certain states. We have no examinations in progress and none are expected at this time.

We recognize our tax positions and evaluate them using a two-step process. First, we determine whether a tax position is more likely than not to be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. Second, we will determine the amount of benefit to recognize and record the amount that is more likely than not to be realized upon ultimate settlement.

We had no material unrecognized tax benefit or expense, accrued interest or penalties as of June 30, 2019. We and our subsidiaries are subject to federal income tax as well as income tax of various state and local jurisdictions. The 2018, 2017 and 2016 tax years remain open to examination by tax jurisdictions to which our subsidiaries and we are subject. When applicable, we recognize interest and/or penalties related to uncertain tax positions on our consolidated statements of operations and comprehensive income.

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 (1) 85% of our ordinary income, (2) 95% of our capital gain net income and (3) 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. Our Board declared our second quarterly dividend of 2019 of $0.275 per share on April 30, 2019, which was paid on June 28, 2019 and funded out of cash flows from operations.

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Off-Balance Sheet Arrangements

As of June 30, 2019 and December 31, 2018, we had no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Critical Accounting Policies and Estimates

Management’s discussion and analysis of financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires our management to make judgments, assumptions and estimates that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We evaluate these judgments, assumptions and estimates for changes that would affect the reported amounts. These estimates are based on management’s historical industry experience and on various other judgments and assumptions that are believed to be reasonable under the circumstances. Actual results may differ from these judgments, assumptions and estimates. Below is a discussion of the accounting policies that we consider critical to understanding our financial condition or results of operations where there is uncertainty or where significant judgment is required. A discussion of recent accounting pronouncements and our significant accounting policies, including further discussion of the accounting policies described below, can be found in Note 2 “Summary of Significant Accounting Policies” to our consolidated financial statements included in this quarterly report.

Purchase Price Allocation

Upon acquisition of a property, the purchase price and related acquisition costs (“total consideration”) are allocated to land, buildings, improvements, furniture, fixtures, and equipment, and intangible lease assets in accordance with FASB ASC 805, Business Combinations. Acquisition costs are capitalized in accordance with FASB ASC 805.

The allocation of total consideration, which is determined using inputs that are classified within Level 3 of the fair value hierarchy established by FASB ASC 820, Fair Value Measurement and Disclosures (see Note 7 to our consolidated financial statements), is based on management’s estimate of the property’s “as-if” vacant fair value and 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. If any debt is assumed in an acquisition, the difference between the fair value, which is estimated using inputs that are classified within Level 2 of the fair value hierarchy, and the face value of debt is recorded as a premium or discount and amortized as interest expense over the life of the debt assumed.

Impairment

Real estate assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In such cases, we 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.

Inflation

The real estate market has not been affected significantly by inflation in the past several years due to a relatively low inflation rate. The majority of our lease terms are for a period of one year or less and reset to market if renewed. The majority of our leases also contain protection provisions applicable to reimbursement billings for utilities. Should inflation return, due to the short-term nature of our leases, we do not believe our results will be materially affected.

Inflation may also affect the overall cost of debt, as the implied cost of capital increases. Currently, interest rates are less than historical averages. However, the Federal Reserve, in response to or in anticipation of continued inflation concerns, could continue to raise interest rates. We intend to mitigate these risks through long-term fixed interest rate loans and interest rate hedges, which to date have included interest rate cap and interest rate swap agreements.

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REIT Tax Election

We have elected to be taxed as a REIT under Sections 856 through 860 of the Code and expect to continue 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. Taxable income from certain non-REIT activities is managed through a TRS and is subject to applicable federal, state, and local income and margin taxes. We had no significant taxes associated with our TRS for the six months ended June 30, 2019 and 2018. 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.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Market risk is the adverse effect on the value of assets and liabilities that results from a change in market conditions. Our primary market risk exposure is interest rate risk with respect to our indebtedness and counterparty credit risk with respect to our interest rate derivatives. In order to minimize counterparty credit risk, we enter into and expect to enter into hedging arrangements only with major financial institutions that have high credit ratings. As of June 30, 2019, we had total indebtedness of $986.8 million at a weighted average interest rate of 3.98%, of which $949.5 million was debt with a floating interest rate. The interest rate swap agreements we have entered into effectively fix the interest rate on $750.0 million, or 84%, of our $897.0 million of floating rate mortgage debt outstanding (see below). As of June 30, 2019, the adjusted weighted average interest rate of our total indebtedness was 3.21%. For purposes of calculating the adjusted weighted average interest rate of the total indebtedness, we have included the weighted average fixed rate of 1.4272% for one-month LIBOR on the $750.0 million notional amount of interest rate swap agreements that we have entered into as of June 30, 2019, which effectively fix the interest rate on $750.0 million of our floating rate mortgage debt outstanding.

An increase in interest rates could make the financing of any acquisition by us more costly. 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. As of June 30, 2019, the interest rate cap agreements we have entered into effectively cap one-month LIBOR on $320.1 million of our floating rate mortgage debt at a weighted average rate of 5.82% for the term of the agreements, which is generally three to four 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 the OP, have entered into nine interest rate swap transactions with the Counterparty with a combined notional amount of $750.0 million. The interest rate swaps we have entered into effectively replace the floating interest rate (one-month LIBOR) with respect to that amount with a weighted average fixed rate of 1.4272%. During the term of these interest rate swap agreements, we are required to make monthly fixed rate payments of 1.4272%, on a weighted average basis, on the notional amounts, while the Counterparty is obligated to make monthly floating rate payments based on one-month LIBOR to us referencing the same notional amounts. We have designated these interest rate swaps as cash flow hedges of interest rate risk.

Until our interest rates reach the caps provided by our interest rate cap agreements, each quarter point change in LIBOR would result in an approximate increase to annual interest expense costs on our floating rate indebtedness, reduced by any payments due from the Counterparty under the terms of the interest rate swap agreements we had entered into as of June 30, 2019, of the amounts illustrated in the table below for our indebtedness as of June 30, 2019 (dollars in thousands):

Change in Interest Rates	Annual Increase to Interest Expense
0.25%	$	500
0.50%		1,000
0.75%		1,500
1.00%		2,000

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 major financial institutions that have high credit ratings.

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In July 2017, the Financial Conduct Authority (the authority that regulates LIBOR) announced it intends to stop compelling banks to submit rates for the calculation of LIBOR after 2021. The Alternative Reference Rates Committee (“ARRC”) has proposed that the Secured Overnight Financing Rate (“SOFR”) is the rate that represents best practice as the alternative to USD-LIBOR for use in derivatives and other financial contracts that are currently indexed to USD-LIBOR. ARRC has proposed a paced market transition plan to SOFR from USD-LIBOR and organizations are currently working on industry wide and company specific transition plans as it relates to derivatives and cash markets exposed to USD-LIBOR. We have material contracts that are indexed to USD-LIBOR and are monitoring this activity and evaluating the related risks.

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 Exchange Act, our management, including our President and Chief Financial Officer, evaluated, as of June 30, 2019, 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, 2019, 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, 2019 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

From time to time, we are party to legal proceedings that arise in the ordinary course of our business. Management is not aware of any legal proceedings of which the outcome is reasonably likely to have a material adverse effect on our results of operations or financial condition, nor are we aware of any such legal proceedings contemplated by government agencies.

Item 1A. Risk Factors

We have disclosed under Part I, Item 1A, “Risk Factors” in our Annual Report, filed with the SEC on February 19, 2019, 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

On June 15, 2016, our Board 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 was set to expire on June 15, 2018 (the “Share Repurchase Program”).  On April 30, 2018, our Board increased the Share Repurchase Program to up to $40 million and extended it by an additional two years to June 15, 2020.  There were no purchases of equity securities during the six months ended June 30, 2019.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

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Item 6. Exhibits

EXHIBIT INDEX

Exhibit Number	Description
10.1*	Purchase and Sale Agreement, dated June 25, 2019, by and among the Company and Bridge Acquisitions, Asset Management and Dispositions, LLC
31.1*	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1+	Certification of Chief Executive Officer 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.

Signature	Title	Date
/s/ Jim Dondero	President and Director	July 30, 2019
Jim Dondero	(Principal Executive Officer)
/s/ Brian Mitts	Chief Financial Officer and Director	July 30, 2019
Brian Mitts	(Principal Financial Officer and Principal Accounting Officer)

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EX-10.1

Exhibit 10.1

PURCHASE AND SALE AGREEMENT

BETWEEN

NXRTBH Foothill, LLC, FRBH Dana Point, LLC, FRBH Duck Creek, LLC, FRBH Abbington, LLC, NXRTBH Heatherstone, LLC, and FRBH Edgewater Owner, LLC,

COLLECTIVELY,
AS SELLER

AND

bridge acquisitions, asset management and dispositions, llc,

AS PURCHASER

DATED June 25, 2019

PROPERTY ADDRESSES:
(i) 4424 E. Baseline Rd., Phoenix, Arizona, (ii) 18800 Lina Street, Dallas, Texas, (iii) 18950 Marsh Lane, Dallas, Texas, (iv) 6202 Duck Creek Drive, Garland, Texas, (v) 7600 Roswell Road, Sandy Springs, Georgia, (vi) 149 Hickory Hollow Terrace, Nashville, Tennessee

PURCHASE AND SALE AGREEMENT

THIS PURCHASE AND SALE AGREEMENT (this “Agreement”) is entered into as of the 25^th day of June, 2019 (the “Effective Date”), by and between bridge acquisitions, asset management and dispositions, llc, a Utah limited liability company (“Purchaser”), and NXRTBH Foothill, LLC, a Delaware limited liability company, FRBH Dana Point, LLC, a Delaware limited liability company, FRBH Duck Creek, LLC, a Delaware limited liability company, FRBH Abbington, LLC, a Delaware limited liability company, NXRTBH Heatherstone, LLC, a Delaware limited liability company, and FRBH Edgewater Owner, LLC, a Delaware limited liability company (collectively, “Seller”).

WITNESSETH:

1.PURCHASE AND SALE.  Purchaser agrees to purchase and Seller agrees to sell for the Purchase Price (as set forth in Schedule 1), all of the following property (collectively, the “Properties”):

(a)That certain parcels of real property located in Phoenix, Arizona, and commonly known as “The Pointe at Foothills” having an address of 4424 E. Baseline Rd., Phoenix, Arizona, more particularly described on Exhibit A-1 attached hereto (collectively, the “Foothills Land”);

(b)That certain parcels of real property located in located in Dallas, Texas, and commonly known as “The Ashlar” having an address of 18800 Lina Street, Dallas, Texas, more particularly described on Exhibit A-2 attached hereto (collectively, the “Ashlar Land”);

(c)That certain parcels of real property located in Dallas, Texas, and commonly known as “Heatherstone” having an address of 18950 Marsh Lane, Dallas, Texas, more particularly described on Exhibit A-3 attached hereto (collectively, the “Heatherstone Land”);

(d)That certain parcels of real property located in Garland, Texas, and commonly known as “Belmont at Duck Creek” having an address of 6202 Duck Creek Drive, Garland, Texas, more particularly described on Exhibit A-4 attached hereto (collectively, the “Belmont Land”);

(e)That certain parcels of real property located in Sandy Springs, Georgia, and commonly known as “Edgewater at Sandy Springs” having an address of 7600 Roswell Road, Sandy Springs, Georgia, more particularly described on Exhibit A-5 attached hereto (collectively, the “Edgewater Land”);

(f)That certain parcels of real property located in Nashville, Tennessee, and commonly known as “Abbington” having an address of 149 Hickory Hollow Terrace, Nashville, Tennessee, more particularly described on Exhibit A-6 attached hereto (collectively, the “Abbington Land”, and together with the Foothills Land, the Ashlar Land, the Heatherstone Land, the Belmont Land, and the Edgewater Land, the “Land”);

(g)The personal property (the “Personal Property”) located on the Improvements (hereinafter defined) which is used for operation and maintenance of the apartment project and is owned by Seller, including those items set forth on Exhibit B, which shall be transferred to Purchaser at Closing (as hereinafter defined) by a Bill of Sale;

(h)All rights and appurtenances pertaining to the Land, including, without limitation, any and all rights of Seller in and to all roads, alleys, easements, streets and ways adjacent to the Land, rights of ingress and egress thereto, any strips and gores within or bounding the Land and in the profits or rights or other appurtenances connected with the beneficial use or enjoyment of the Land;

(i)Those certain apartment buildings containing approximately 528 apartment units, and all of Seller’s right, title and interest in the other improvements, structures, facilities, installations, fixtures and other improvements of every kind placed, constructed or installed on, under or within the Foothills Land (collectively, the “Foothills Improvements”);

(j)Those certain apartment buildings containing approximately 264 apartment units, and all of Seller’s right, title and interest in the other improvements, structures, facilities, installations, fixtures and other improvements of every kind placed, constructed or installed on, under or within the Ashlar Land (collectively, the “Ashlar Improvements”);

(k)Those certain apartment buildings containing approximately 152 apartment units, and all of Seller’s right, title and interest in the other improvements, structures, facilities, installations, fixtures and other improvements of every kind placed, constructed or installed on, under or within the Heatherstone Land (collectively, the “Heatherstone Improvements”);

(l)Those certain apartment buildings containing approximately 240 apartment units, and all of Seller’s right, title and interest in the other improvements, structures, facilities, installations, fixtures and other improvements of every kind placed, constructed or installed on, under or within the Belmont Land (collectively, the “Belmont Improvements”);

(m)Those certain apartment buildings containing approximately 760 apartment units, and all of Seller’s right, title and interest in the other improvements, structures, facilities, installations, fixtures and other improvements of every kind placed, constructed or installed on, under or within the Edgewater Land (collectively, the “Edgewater Improvements”);

(n)Those certain apartment buildings containing approximately 274 apartment units, and all of Seller’s right, title and interest in the other improvements, structures, facilities, installations, fixtures and other improvements of every kind placed, constructed or installed on, under or within the Abbington Land (collectively, the “Abbington Improvements”, and together with the Foothills Improvements, the Ashlar Improvements, the Heatherstone Improvements, the Belmont Improvements, and the Edgewater Improvements, the “Improvements”);

(o)All of Seller’s right, title and interest in all leases, licenses and concession agreements and other similar written agreements (and any amendments, renewals, extensions, modifications and guaranties thereof) (collectively, the “Leases”) covering space situated at or within the Land and Improvements under any existing Lease occupied by tenants (collectively, the “Tenants”),  all refundable security deposits deposited by Tenants with respect to the Leases

which have not been previously applied pursuant to the applicable Leases, and all resident and tenant files, tenant lists and tenant marketing information associated with the Property;

(p)All of Seller’s rights in and to contractual rights and intangibles with respect to the operation, maintenance, and repair of the Land and the Improvements, including assignable service and maintenance agreements but excluding the property management agreement and any Master Agreements as hereafter defined (collectively, “Service Contracts”),  utility agreements, manufacturers’ warranties and guaranties relating to the Personal Property, assignable governmental permits, licenses, certificates and approvals in connection with the ownership of the Property (collectively, the “Licenses”), architectural and civil plans, specifications, surveys, and drawings relating to the Property (to the extent assignable), used in connection with the operation of the Land or any part thereof in Seller possession or control, but specifically excluding any warranties and/or guaranties from and/or claims against Seller, BH Management Services, LLC (the “Property Manager”, their respective affiliates and each of their respective successors and assigns). As used herein, the term “Master Agreements” means agreements pertaining to operations, services, maintenance, or repair of multiple properties of Seller or affiliates of Seller.  Any Master Agreements affecting the Properties will be terminated as to such Property at the Closing;

(q)Seller’s right, if any, to the use of the trade name “The Pointe at Foothills”, “The Ashlar”, “Heatherstone”, “Belmont at Duck Creek”, “Edgewater at Sandy Springs”, and “Abbington” (collectively, the “Trade Name”) in connection with the Properties;

(r)All other intangible personal property, if any, owned by Seller to the extent related exclusively to the Land, Improvements or the Personal Property, including, without limitation, goodwill, logos, designs, trade names, building names, trademarks, website domain names associated with Properties, and if assignable, the right to the use of all telephone numbers pertaining to fixed land lines at the Properties used by Seller; and

(s)All insurance proceeds and condemnation awards or claims thereto to be assigned to Purchaser pursuant to Section 6 of this Agreement.

Each parcel of Land described in this Section, and all of the Personal Property, Improvements, Leases, Licenses, Service Contracts, intangible property and other property pertaining to such parcels, are sometimes referred to as a “Housing Community,” and all such Housing Communities are sometimes collectively referred to as the “Housing Communities.”  

References in the body of this Agreement to a defined term set forth on Schedule 1, Schedule 1(a), or Schedule 2 of this Agreement (the “Schedules”) (e.g., the defined terms in the left-hand column of the Schedules) shall be deemed and construed to incorporate all the terms provided under each such referenced portion of the Schedules.  References in the Schedules to a portion of the body of this Agreement (e.g., Section references in the right-hand column of the Schedules) shall be deemed and construed to incorporate all the terms provided under each such referenced portion of the body of the Agreement.  Notwithstanding anything set forth above, if there is any inconsistency between the Schedules and another portion of this Agreement, the terms of the Schedules shall control.    

2.PAYMENT OF PURCHASE PRICE.  The Purchase Price shall be paid by Purchaser as follows:

(a)Within three (3) business days of the full execution of this Agreement, the Earnest Money (as set forth in Schedule 2) shall be delivered to NexVantage Title Services, Attn: Jeff Justema, 2515 McKinney Ave, Suite 1100, Dallas, Texas 75201; Jeff.Justema@NexVantageTitle.com; (469) 362-8845 (Office) (the “Escrow Agent”) to be held in escrow by the Escrow Agent.  If Purchaser does not timely deliver the Earnest Money, or if the Escrow Agent is not immediately able to obtain good funds in respect of the Earnest Money, Seller may, at its option, terminate this Agreement.  The Earnest Money shall be allocated among each Housing Community based on a prorata share that the Allocated Purchase Price for such Housing Community bears to the Purchase Price for all Housing Communities.  

(b)All Earnest Money shall be delivered to the Escrow Agent by federally wired “immediately available” funds.

(c)The Earnest Money shall be non-refundable unless this Agreement has been terminated by Purchaser pursuant to a provision in this Agreement which expressly entitles Purchaser to a return of the Earnest Money.

(d)On the Closing Date (as hereinafter defined), the balance of the Purchase Price (plus or minus any prorations, to the extent applicable) by federally wired “immediately available” funds delivered to the Escrow Agent’s account no later than 12:00 Noon Central Time on the Closing Date.  If the funds are not received by the Escrow Agent by 12:00 Noon Central Time but are received on the Closing Date, then on the Closing Date, Purchaser shall pay Seller an amount equal to any increased financing costs actually incurred by Seller, which may include additional per diem interest, increases in the amount of any prepayment penalties or payment of interest for the full month in which Closing occurs.

(e)Escrow Agent shall pay a portion of the Deposit in the amount of One Hundred and No/100 Dollars ($100.00) (the “Independent Consideration”) to Seller upon the earlier to occur of the Closing or the termination of this Agreement for any reason.  The Independent Consideration constitutes bargained-for consideration for this Agreement and Purchaser’s rights under Section 17 and is expressly acknowledged to be adequate.  The obligation of Purchaser to pay the Independent Consideration to Escrow Agent, and the obligation of Escrow Agent to pay the same to Seller, are unconditional and shall survive any termination of this Agreement.

(f)Seller and Purchaser agree to allocate the Purchase Price between the Property as set forth in Schedule 1(a).  

3.TITLE COMMITMENT AND SURVEY.  Seller shall obtain and deliver to Purchaser a current commitment for a TLTA or ALTA Owners’ Title Insurance Policy, as applicable, for each Property (collectively, the “Title Commitments”) in the amount of the allocated Purchase Price of such Property issued by Escrow Agent, together with copies of all exception documents.  Purchaser shall within ten (10) days of Seller’s receipt of the Title Commitments (but in any event no later than five (5) days prior to the expiration of the Approval Period [hereinafter defined]) (the “Title Review Period”) to examine Seller’s title to the Properties

and to notify Seller of any defects in or encumbrances upon Seller’s title to the Properties (the “Objections”); provided, however, in no event shall Purchaser have the right to object to the Permitted Exceptions (hereinafter defined). Seller shall have the right, but not the obligation, to remove, correct, and/or satisfy any Objections. If Purchaser fails to notify Seller of any Objections prior to 5:00 p.m. Central Time on the last day of the Title Review Period, then Purchaser shall be deemed to have waived any Objections and to have accepted Seller’s title to the Properties.  If Purchaser notifies Seller of any Objections prior to the expiration of the Title Review Period (“Purchaser’s Objections Notice”), Seller shall notify Purchaser within five (5) days after receipt of Purchaser’s Objections Notice (“Seller’s Response Period”) whether or not Seller will seek to remove, correct, and/or satisfy the Objections (“Seller’s Objections Response”).  If Seller fails to notify Purchaser of Seller’s Objections Response within Seller’s Response Period, then Seller shall be deemed to have elected not to seek to remove, correct, and/or satisfy any Objections.  If Seller’s Objections Response indicates that Seller will not seek to remove, correct, and/or satisfy all Objections set forth in Purchaser’s Objections Notice, or if Seller fails to notify Purchaser of Seller’s Objections within Seller’s Response Period, then Purchaser may either (i) waive the Objections set forth in Purchaser’s Objections Notice and proceed with Closing or (ii) terminate this Agreement by sending a Notice of Disapproval (as hereinafter defined) in accordance with Section 17(f) to Seller not later than five (5) days after the later of (A) Purchaser’s receipt of Seller’s Objections Response if Seller sent a Seller’s Objections Response or (B) Seller’s Response Period if Seller failed to notify Purchaser of Seller’s Objections Response within Seller’s Response Period, in which case the Earnest Money shall be disbursed and this Agreement shall terminate in accordance with Section 17(f).  If Purchaser fails to so terminate this Agreement, Purchaser shall be deemed to have waived all Objections and to have accepted Seller’s title to the Properties subject to the Permitted Exceptions (hereinafter defined), and any Objections for which Seller elects (or is deemed to have elected not to cure) shall be deemed to be Permitted Exceptions.  If there remains at Closing any Objections that Purchaser included in Purchaser’s Objections Notice and for which Seller affirmatively agreed to seek to remove, correct, and/or satisfy in Seller’s Objections Response, then Purchaser may elect to: (1) consummate the transaction contemplated hereby without regard to such Objections (in which event, the Purchase Price shall not be adjusted because of such Objections); or (2) terminate this Agreement at Closing by delivering a Notice of Disapproval, in which case the Earnest Money shall be disbursed and this Agreement shall terminate in accordance with Section 17(f).  As used herein, the term “Permitted Exceptions” means (i) real estate taxes and assessments not yet due and payable; (ii) the rights of tenants, as tenants only, without any right or option to acquire any portion of the Property, under the Leases described in the Rent Roll and any new Leases entered into between the Effective Date and the Closing in accordance with the terms of this Agreement and (if required) approved by Purchaser in accordance with the terms of this Agreement; (iii) documents or agreements contemplated by the terms of this Agreement; (iv) matters arising from acts of or at the direction of Purchaser, its consultants or any of their respective agents, representatives or employees; and (v) additional items, if any, approved by Purchaser pursuant to this Agreement.The Title Commitments shall be conclusive evidence of good title as therein shown as to all matters insured by the policy, subject only to the exceptions therein stated, and Seller makes no representation or warranty that the Title Commitments are true and correct.  

Notwithstanding the foregoing or any provision of this Agreement to the contrary, Seller shall be obligated to cause the discharge or release of (i) all deeds of trust or mortgages previously granted by Seller (or their affiliates) and encumbering such Housing Community; and (ii) all other

voluntary liens or encumbrances resulting from any action of Seller or its affiliates after the Effective Date that are not otherwise permitted pursuant to the terms of this Agreement; provided, however, that Seller may elect to effectuate such discharge by directing Escrow Agent to apply a portion of the Purchase Price funds at the applicable Closing to repayment of the debt secured by such deeds of trust or mortgages or otherwise to discharge or release any such lien or encumbrance.

4.CONDITION OF TITLE/CONVEYANCE.  Subject to Seller’s receipt of the Purchase Price (plus or minus prorations) and Purchaser’s compliance with the terms of this Agreement, Seller agrees to convey fee simple title to each Property by Special WarrantyDeed (“Deed”) in recordable form subject only to the Permitted Exceptions (including, without limitation, Additional Disapproved Exceptions (as herein defined) accepted or deemed accepted by Purchaser).  If Seller is unable to convey title to any Property subject only to the Permitted Exceptions because of the existence of an additional title exception that (a) would have a material adverse effect on such Property or would render title to such Property unmarketable, (b) was not previously included in the Title Commitment, (c) was not known by Purchaser, and (d) did not arise from acts of or at the direction of Purchaser, its consultants or any of their respective agents, representatives or employees (“Additional Disapproved Exception”), then Purchaser shall notify Seller within three (3) business days after Purchaser has knowledge of, or receives notice of, such Additional Disapproved Exception and Seller shall have three (3) business days (or until the Pre-Closing Date (as hereinafter defined,  if earlier) to have the Additional Disapproved Exception removed from the Title Commitment or “insured” or bonded” over.  If Seller is unable (or unwilling) to effect such a cure, then Purchaser may elect either to take title to such Property subject to the Additional Disapproved Exception or to terminate this Agreement by delivering a Notice of Disapproval within three (3) business days after Seller notifies Purchaser that the Additional Disapproved Exception has not been so cured, in which case the Earnest Money shall be disbursed and this Agreement shall terminate in accordance with Section 17(f).  If Purchaser elects to take title to such Property subject to the Additional Disapproved Exception or fails to timely terminate this Agreement, such Additional Disapproved Exception shall thereafter be deemed a Permitted Exception.

5.PAYMENT OF CLOSING COSTS. At Closing, Seller shall pay Seller’s Closing Costs (as set forth in Schedule 2) and Purchaser shall pay Purchaser’s Closing Costs (as set forth in Schedule 2).  All other closing costs not addressed in this Section or elsewhere in this Agreement shall be allocated in accordance with the customary practice in the county in which such Property is located or shall be borne by the party who incurred such costs.

6.DAMAGE, CASUALTY AND CONDEMNATION.

(a)In the event of “damage” to the Properties or any portion thereof, then Seller shall promptly notify Purchaser thereof.  If any Housing Community suffers damage as a result of any insured casualty prior to the Closing Date and can be repaired or restored for an amount equal to the Materiality Threshold (as set forth in Schedule 2) or less, then Seller shall assign to Purchaser all insurance proceeds payable (and all claims relating thereto) as a result of such damage and give Purchaser a credit at Closing equal to (x) any insurance proceeds received to date by Seller or their affiliates (less any repair costs incurred by Sellers which were approved by Purchaser) and (y) any insurance deductible due under Sellers’ insurance policy(ies).  If any insurance proceeds to be

assigned hereunder are not assignable, Sellers shall cooperate with Purchaser to continue such proceedings and make such claims so Purchaser may obtain the benefit of and receive such

(b)If the cost of repair or restoration exceeds the Materiality Threshold, then Purchaser may elect to proceed with the Closing (subject to the other provisions of this Agreement) or may terminate this Agreement solely with respect to the Housing Community(ies) so damaged (each, a “Damaged Housing Community,” and collectively, the “Damaged Housing Communities”) by delivering written notice thereof to Seller within five (5) Business Days after Purchaser’s receipt of Sellers’ notice respecting the damage and an estimate of the time and cost to repair such damage.  If, within five (5) Business Days of receipt of Seller’s notice respecting such damage, Purchaser delivers written notice of such termination of this Agreement with respect to such Damaged Housing Community(ies), to Seller, this Agreement with respect to such Damaged Housing Community(ies) shall terminate, the Allocated Earnest Money allocable to such Damaged Housing Community(ies) shall be returned to Purchaser and, except for obligations of the parties which survive termination of this Agreement, the parties shall have no further obligations hereunder with respect to such Damaged Housing Community(ies). If Purchaser does not timely elect to so terminate this Agreement with respect to such Damaged Housing Community(ies), Purchaser shall have no further right to terminate this Agreement as a result of the damage and in such event, Seller shall assign to Purchaser at the Closing all insurance proceeds payable (and all claims relating thereto) as a result of such damage and give Purchaser a credit at Closing equal to (x) any insurance proceeds received to date by Seller or their affiliates (less any repair costs incurred by Sellers which were approved by Purchaser) and (y) any insurance deductible due under Sellers’ insurance policy(ies).  

(c)If condemnation proceedings (“Proceedings”) are instituted against any Housing Community and the parties reasonably believe that such Proceedings will result in a taking which materially and adversely affects vehicular access with respect to the Housing Community, or such Proceedings will result in an award equal to the Materiality Threshold or less, then Purchaser shall remain obligated to purchase the Properties at the Closing for the Purchase Price without any offset, credit or deduction, provided that Seller shall assign Seller’s interest in the Proceedings to Purchaser. If Proceedings are instituted against any Housing Community and the parties reasonably believe that such Proceedings will result in an award in excess of the Materiality Threshold, then Purchaser can elect to either take the Properties subject to the Proceedings along with an assignment of Seller’s interest in the Proceedings or terminate this Agreement with respect to such Housing Community by delivering written notice to the Seller within five (5) days after Seller notifies Purchaser of the Proceedings.  If the Agreement is terminated with respect to a Housing Community(ies) pursuant to the express termination provisions contained in Section 6(a) or 6(c), then the Earnest Money (less the Independent Consideration) allocable to such Housing Community(ies) shall be returned to Purchaser and, except for obligations of the parties which survive termination of this Agreement, the parties shall have no further obligations hereunder with respect to such Housing Community(ies).

7.AS-IS CONDITION.

(a)Except as specifically set forth in Section 18 of this Agreement and in the Closing Documents (the “Seller’s Express Obligations”), Purchaser is not relying on Seller having made any inquiry as to the condition of the Properties or the Leases.  Purchaser

acknowledges and agrees that it will be purchasing the Properties based solely upon its inspection and investigations of the Properties and that Purchaser will be purchasing the Properties “AS IS” and “WITH ALL FAULTS” based upon the condition of the Properties as of the date of this Agreement, subject to reasonable wear and tear and, subject to the provisions of Section 6, loss by fire or other casualty or condemnation from the date of this Agreement until the Closing Date.  Without limiting the foregoing, Purchaser acknowledges that, except for Seller’s Express Obligations, neither Seller nor its consultants, brokers or agents have made any other representations or warranties of any kind upon which Purchaser is relying as to any matters concerning the Properties, including, but not limited to, any implied warranty as to the quality of the construction of the Properties or its fitness for use as an apartment project, the condition of the Land or any of the Improvements, whether or not the Properties are subject to airport corridor noise, the existence or nonexistence of asbestos, lead in water, lead in paint, radon, underground or above ground storage tanks, petroleum, toxic waste or any Hazardous Materials or Hazardous Substances (as such terms are defined below), the Tenants of the Properties or the Leases affecting the Properties, economic projections or market studies concerning the Properties, any development rights, taxes, bonds, covenants, conditions and restrictions affecting the Properties, water or water rights, topography, drainage, soil, subsoil of the Properties, the utilities serving the Properties or any zoning, environmental or building laws, rules or regulations affecting the Properties.  Seller makes no representation that the Properties comply with Title III of the Americans With Disabilities Act, the Fair Housing Act of 1968 as amended, or any fire codes, building codes or health codes.  Except for claims in connection with a breach of Seller’s Express Obligations, Purchaser hereby releases Seller and Property Manager, together with all of their respective members, managers, partners, officers, directors, employees, representatives, agents, shareholders, trustees and/or beneficiaries and all their respective current and former affiliates, heirs, successors, assigns, predecessors, attorneys, agents and related entities (collectively referred to herein as the “Seller Related Parties”) from any and all liability in connection with any claims (including but not limited to all health and medical claims) which Purchaser may have against any of the Seller Related Parties, and Purchaser hereby agrees not to assert any claims, for damage, loss, compensation, contribution, cost recovery or otherwise, against any of the Seller Related Parties, whether in tort, contract, or otherwise, relating directly or indirectly to the condition of the Properties, including without limitation (i) claims relating to the existence of asbestos; (ii) claims attributable to indoor air quality issues, releases from building material and furnishings, releases from cleaning, repairing, or decorating activities, and the operation of heating and cooling systems and humidifiers; or (iii) claims relating to Hazardous Materials or Hazardous Substances on, or environmental conditions of, the Properties, or arising under the Environmental Laws (as such term is hereinafter defined), or relating in any way to the quality of the indoor or outdoor environment at the Properties including methane gas or any of its derivatives; or (iv) claims relating to mold, fungus, bacteria and/or other biological growth or biological growth factors, or any other type of indoor contaminants that may exist on the Properties; or (v) claims relating to latent or patent construction defects or any implied warranty as to fitness for use as an apartment project; or (vi) claims relating to the failure of any of the Seller Related Parties to disclose any information relating to the Properties, except as may otherwise be expressly set forth in Section 17(f).  As used in this Section the term “affiliates” means, with respect to the Seller Related Parties, or any manager, member or partner of the Seller Related Parties, any other entity or person which directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with the Seller Related Parties or any manager, member or partner of the Seller

Related Parties.  As used in the previous sentence, “control” means the possession, directly or indirectly, of the power to cause the direction of the management of any Seller Related Party or any manager, member or partner of any Seller Related Party, whether through voting securities, by contract, family relationship or otherwise.  This release shall forever survive the Closing and the delivery and recording of the Deeds.  As used herein, the term “Hazardous Materials” or “Hazardous Substances” means (i) hazardous wastes, hazardous materials, hazardous substances, hazardous constituents, toxic substances or related materials, whether solids, liquids or gases, including but not limited to substances defined as “hazardous wastes,” “hazardous materials,” “hazardous substances,” “toxic substances,” “pollutants,” “contaminants,” “radioactive materials”, “toxic pollutants”, or other similar designations in, or otherwise subject to regulation under, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended (“CERCLA”), 42 U.S.C. § 9601 et seq.; the Toxic Substance Control Act (“TSCA”), 15 U.S.C. § 2601 et seq.; the Hazardous Materials Transportation Act, 49 U.S.C. § 1802; the Resource Conservation and Recovery Act (“RCRA”), 42 U.S.C. § 9601, et seq.; the Clean Water Act (“CWA”), 33 U.S.C. § 1251 et seq.; the Safe Drinking Water Act, 42 U.S.C. § 300f et seq.; the Clean Air Act (“CAA”), 42 U.S.C. § 7401 et seq.; and in any permits, licenses, approvals, plans, rules, regulations or ordinances adopted, or other criteria and guidelines promulgated pursuant to the preceding laws or other similar federal, state or local laws, regulations, rules or ordinance now or hereafter in effect relating to environmental matters (collectively the “Environmental Laws”); and (ii) any other substances, constituents or wastes subject to any applicable federal, state or local law, regulation or ordinance, including any Environmental Law, now or hereafter in effect, including but not limited to (A) petroleum, (B) refined petroleum products, (C) waste oil, (D) waste aviation or motor vehicle fuel and their byproducts, (E) asbestos, (F) lead in water, paint or elsewhere, (G) radon, (H) Polychlorinated Biphenyls (PCB’s), (I) ureaformaldehyde, (J) volatile organic compounds (VOC), (K) total petroleum hydrocarbons (TPH), (L) benzene derivative (BTEX), (M) petroleum byproducts and (N) methane gas or any of its derivatives.    

Purchaser hereby specifically acknowledges that Purchaser has carefully reviewed this subsection, and discussed its import with legal counsel, is fully aware of its consequences, and that the provisions of this subsection are a material part of this Agreement.

Purchaser’s Initials _CA_________

(b)None of the Seller Related Parties makes any representation or warranty that any financial material that Seller may provide to Purchaser is complete or accurate or that Purchaser will achieve similar financial or other results with respect to the operations of the Properties, it being acknowledged by Purchaser that Seller’s operation of the Properties and allocations of revenues or expenses may be vastly different than Purchaser may be able to attain.  Purchaser acknowledges that it is a sophisticated and experienced purchaser of real estate and further that Purchaser has relied upon its own investigation and inquiry with respect to the operation of the Properties and releases the Seller Related Parties from any liability with respect to such historical information.

Purchaser’s Initials __CA________

8.CLOSING.

(a)The closing (“Closing”) of this transaction shall be on the Closing Date (as set forth in Schedule 2), at which time Purchaser shall cause the Purchase Price (plus or minus prorations) to be delivered to Seller and Seller shall deliver possession of the Properties to Purchaser.  There will be a “pre-closing” on the first business day immediately preceding the Closing Date (“Pre-Closing Date”) through the office of the Escrow Agent.  

(b)Subject to Purchaser’s right to terminate this Agreement with respect to a specific Housing Community in Sections 6 and 8 of this Agreement, Purchaser and Seller acknowledge and agree that (a) it is the intent of the parties hereunder that Seller’s and Purchaser’s obligation to proceed with the Closing (as hereinafter defined) is contingent upon the Closing of all the Properties occurring concurrently; (b) each party assures the other that it shall cause the Closing of all the Properties to occur concurrently; and (c) neither party would have entered into this Agreement but for such assurance by the other party.

(c)The obligation of Purchaser to proceed with each Closing shall be subject to the fulfillment on or before the date of such Closing (or such earlier time as otherwise required hereby) of all of the following conditions, any or all of which may be waived by Purchaser in its sole discretion:

(i)Seller shall have delivered all of the items required to be delivered by Seller pursuant to Section 9(c) of this Agreement;

(ii)All of the representations and warranties of Seller contained in this Agreement shall have been true and correct in all material respects when made, and shall be true and correct in all material respects on the date of Closing with the same effect as if made on and as of such date, except for (i) any changes in such representations and warranties set forth in Section 18(b)(i), Section 18(b)(iv), Section 18(b)(v), or Section 18(b)(viii), (ii) any changes in such representations and warranties set forth in Section 18(b)(ix) unless the cure for such change exceeds the Materiality Threshold for any specific Housing Community or such change results in a Material Title Defect, and (iii) any changes in such representations and warranties set forth in Section 18(b)(x) unless the cure for such change exceeds the Materiality Threshold for any specific Housing Community or such change results in a Material Environmental Issue, resulting from matters which are not prohibited by the terms of this Agreement, and unless any breach of such representations and warranties has been waived or is deemed to have been waived pursuant to Section 10 of this Agreement;

(iii)Seller shall have performed and observed in all material respects all covenants and obligations of this Agreement to be performed and observed by Seller on or prior to the date of such Closing unless any breach of such covenants and obligations has been waived or is deemed to have been waived pursuant to Section 10 of this Agreement;

(iv)Escrow Agent has committed in writing, subject only to (i) the receipt of the title premiums and costs with respect to the title policies, and (ii) Purchaser’s satisfaction of any customary requirements of the Title Company that are imposed upon and complied with by similar purchasers in like transactions in the respective jurisdictions

where the applicable Housing Communities are located, to issue to Purchaser an TLTA or ALTA Owner’s Title Insurance Policy, as applicable, with respect to each Housing Community involved in the applicable Closing, in an amount equal to the portion of the Purchase Price allocable to such Housing Community (as specified herein), in each case subject only to Permitted Exceptions (each, a “Title Policy,” and collectively, the “Title Policies”); and  

(v)No action, suit or other proceeding shall be pending which shall have been brought by a person or entity seeking to restrain or prohibit the transactions contemplated under this Agreement.

In the event any of the foregoing conditions has not been satisfied by the Closing Date, then Purchaser shall provide Seller with a written notice describing such unsatisfied conditions.  If such conditions are not satisfied within ten (10) days following Seller’s receipt of such notice and Purchaser is not in breach or default hereunder, then Purchaser shall have the right either to (i) terminate this Agreement with respect solely to the Housing Community(ies) involved in such Closing for which conditions of this Section 8 have not been satisfied by written notice to Seller within one (1) business day after the expiration of such ten (10) day cure period, or (ii) elect to proceed with the Closing (including, without limitation, with regard to such Housing Communities) despite the non-satisfaction of such conditions.  In the event Purchaser so terminates this Agreement, the parties shall have no further rights, duties or obligations hereunder with respect to such Housing Community(ies) as were the subject of such termination, other than those which are expressly provided herein to survive the termination of this Agreement. In the event Purchaser so terminates this Agreement, Escrow Agent shall promptly refund the Earnest Money allocable to the Housing Community(ies) for which such termination has occurred then held by Escrow Agent to Purchaser.  For the avoidance of doubt, in the event Purchaser elects to terminate this Agreement with respect to any Housing Community(ies) pursuant to subclause (i) above, this Agreement shall remain in full force and effect with respect to each other Housing Community (including those Housing Communities with respect to the applicable Closing for which the foregoing conditions have been satisfied).

(d)The obligation of Seller to proceed with each Closing shall be subject to the fulfillment on or before the date of such Closing (or such earlier time as otherwise required hereby) of all of the following conditions:

(i)Purchaser shall have deposited with Escrow Agent the Purchase Price, together with any other amounts to be paid by Purchaser in connection with such Closing pursuant to this Agreement.

(ii)Purchaser shall have delivered all of the items required to be delivered by Purchaser pursuant to the terms of this Agreement.

(iii)All of the representations and warranties of Purchaser contained in this Agreement shall be true and correct in all material respects as of (i) the Effective Date and (ii) the date of such Closing.

(iv)Purchaser shall have performed and observed, in all material respects, all covenants and agreements of this Agreement to be performed and observed by Purchaser as of the date of such Closing.

(v)No action, suit or other proceeding shall be pending which shall have been brought by a person or entity to restrain, prohibit or change in any material respect the transactions contemplated under this Agreement.

In the event any of the foregoing conditions has not been satisfied by the applicable Closing Date, then Seller shall provide Purchaser with a written notice describing such unsatisfied conditions.  In the event Purchaser breaches or fails, without legal excuse, to satisfy the foregoing condition and complete the purchase of the Property or to perform its obligations under this Agreement in any respect, and such failure continues for ten (10) days after written notice from Seller to Purchaser regarding the same (provided that such ten (10) day period shall not be applicable in connection with a failure by Purchaser to perform its obligations on the Closing Date set forth in Sections 9(a) and 9(c)), and Seller is not in breach of default hereunder, then Seller shall have the right either to (i) terminate this Agreement in its entirety by delivering written notice to Seller within one (1) business day after the expiration of such ten (10) day cure period or the Closing Date, if such cure period is not applicable, (ii) terminate this Agreement with respect solely to the Housing Community(ies) involved in such Closing for which conditions of this Section 8 have not been satisfied by delivering written notice to Seller within one (1) business day after the expiration of such ten (10) day cure period or the Closing Date, if such cure period is not applicable, or (iii) elect to proceed with the Closing (including, without limitation, with regard to such Housing Communities) despite the non-satisfaction of such conditions.  In the event Seller terminates this Agreement in its entirety, (a) the parties shall have no further rights, duties or obligations hereunder with respect to such Housing Community(ies) as were the subject of such termination, other than those which are expressly provided herein to survive the termination of this Agreement, and (b) Escrow Agent shall deliver the Earnest Money to Seller.  In the event Seller terminates this Agreement with respect to a specific Housing Community(ies) (y) the parties shall have no further rights, duties or obligations hereunder with respect to such Housing Community(ies) as were the subject of such termination, other than those which are expressly provided herein to survive the termination of this Agreement, and (z) Escrow Agent shall deliver the portion of the Earnest Money allocable to the Housing Community(ies) for which such termination has occurred then held by Escrow Agent to Seller.  For the avoidance of doubt, in the event Seller elects to terminate this Agreement with respect to any Housing Community(ies) pursuant to subclause (ii) above, this Agreement shall remain in full force and effect with respect to each other Housing Community (including those Housing Communities with respect to the applicable Closing for which the foregoing conditions have been satisfied).

(e)Purchaser and certain seller entities have entered into a contract of even date herewith substantially similar to this Agreement (the “Other Agreement”) for the purchase and sale of additional property as set forth therein (the “Other Property”).  Purchaser acknowledges and agrees that a significant part of the consideration of this Agreement is Purchaser’s agreement with Seller to close the purchase of both the Property under this Agreement and the Other Property under the Other Contract simultaneously (i.e., on the same date and at the same time), Purchaser hereby covenants to Seller that it shall be obligated to close the purchase under both this Agreement

and the Other Agreement simultaneously. Accordingly, it shall be an additional condition precedent of Seller’s obligations at the Closing under this Agreement that Purchaser close on the purchase of the Other Property in accordance with the Other Agreement, and failing which, Purchaser shall be considered in default under this Agreement,  in which case Seller shall have the rights set forth in Section 11.  If Purchaser is in default under any provision of the Other Agreement, then Purchaser shall be deemed in default of the corresponding provision of this Agreement.  Any termination of this Agreement for any reason by any party shall constitute a termination of the Other Agreement by such party’s corresponding party to the Other Agreement, and any termination by any party of the Other Agreement shall constitute a termination of this Agreement by such Party’s corresponding party to this Agreement.  This Section 8(e) shall survive the termination of this Agreement.

9.CLOSING DOCUMENTS.

(a)On or before the Closing Date, Purchaser shall deliver to Escrow Agent the balance of the Purchase Price plus or minus prorations, in accordance with the closing statement.

(b)Once the Closing has occurred and Seller has received the Purchase Price (plus or minus any prorations), Seller shall deliver to Purchaser possession of the Properties, all keys used in connection with the Properties, and copies of the Lease files (all of which will be made available at the Properties).

(c)On or before the Pre-Closing Date, Seller and Purchaser shall deliver to Escrow Agent or the other party, as applicable, executed originals of the following:

(i)the Deed (in the form of Exhibit C attached hereto) executed and acknowledged by Seller, subject to the Permitted Exceptions (including any Additional Disapproved Exceptions (as herein defined) accepted or deemed accepted by Purchaser);

(ii)the Bill of Sale (in the form of Exhibit D attached hereto) which shall be executed by Seller and Purchaser;

(iii)closing statement prepared by Escrow Agent which shall be executed by Seller and Purchaser upon receipt thereof;

(iv) assignment and assumption of all Service Contracts to be assumed by Purchaser hereunder (in the form of Exhibit E attached hereto) which shall be executed by Seller and Purchaser;

(v)assignment and assumption of all Leases and security deposits (in the form of Exhibit F attached hereto) which shall be executed by Seller and Purchaser;

(vi)rent roll in the form set forth on Exhibit K attached hereto;

(vii)notices to the tenants of the transfer of title and the assumption by Purchaser of the landlord’s obligations under the Leases and the obligation to refund the security deposits (in the form of Exhibit G attached hereto), which shall be executed by Seller and Purchaser;

(viii)non-foreign affidavit (in the form of Exhibit H attached hereto), executed by Seller;

(ix)assignment of intangible property (in the form of Exhibit I attached hereto), which shall be executed by Seller and Purchaser;

(x)assignment of all transferable guaranties and transferable warranties relating to the Personal Property and an assignment of all assignable governmental permits, licenses and approvals covering the buildings and the Personal Property situated on the Properties (in the form of Exhibit J attached hereto), which shall be executed by Seller and Purchaser; and

(xi)such other documents executed by Seller and/or Purchaser as may be reasonably required by the Escrow Agent in order to consummate the transaction as set forth in this Agreement, including any state law specific closing documents.

10.SELLER’S RIGHT TO CURE. If on or prior to Closing, Purchaser discovers, believes or obtains actual or constructive knowledge that any representation or warranty of Seller is untrue or misleading in any material respect or that Seller is in default under this Agreement or that Seller has failed to perform a required covenant (collectively, a “Breach”), then Purchaser shall give Seller notice of such Breach (“Purchaser’s Breach Notice”).  Upon receipt of Purchaser’s Breach Notice, Seller shall have the right to cure such Breach within ten (10) days after receipt of such notice.  If Purchaser fails to deliver Purchaser’s Breach Notice to Seller within five (5) business days after learning of such Breach, then Purchaser shall have waived its rights to assert any claims for a Breach, and Seller’s representations and warranties shall be deemed to be modified to include any such discovery, belief or knowledge by Purchaser.  If Seller is unable to cure the Breach, then Seller shall so notify Purchaser (“Seller’s Breach Notice”).  In such event, Purchaser can either waive the Breach or, upon notice to Seller within five (5) days after receipt of Seller’s Breach Notice, terminate this Agreement.  In such event, the Earnest Money (less the Independent Consideration) plus all interest accrued thereon shall be returned to Purchaser, and except for those provisions that expressly survive the termination of this Agreement, neither party shall have any further obligation or liability hereunder.  Purchaser hereby waives any right Purchaser may have to commence any action(s) to enforce any alleged breach and/or violation of any representations of Seller as set forth in this Agreement or to seek damages in connection therewith in the event that Purchaser obtains actual knowledge of any such alleged breach and/or violation prior to Closing and consummates the Closing.

11.DEFAULT BY PURCHASER.  ALL EARNEST MONEY DEPOSITED INTO THE ESCROW IS TO SECURE THE TIMELY PERFORMANCE BY PURCHASER OF ITS OBLIGATIONS AND UNDERTAKINGS UNDER THIS AGREEMENT.   IN THE EVENT OF ANY DEFAULT OF PURCHASER UNDER THE PROVISIONS OF THIS AGREEMENT, SELLER SHALL RETAIN ALL OF THE EARNEST MONEY AND THE INTEREST THEREON AS SELLER’S SOLE RIGHT TO DAMAGES OR ANY OTHER REMEDY AND PURCHASER SHALL HAVE NO FURTHER RIGHTS TO PURCHASE THE PROPERTIES, PROVIDED THAT THE FOREGOING SHALL NOT LIMIT SELLER’S RIGHT TO RECOVER FROM PURCHASER ANY AMOUNTS AS TO WHICH PURCHASER HAS INDEMNIFIED SELLER AS PROVIDED ELSEWHERE IN THIS AGREEMENT OR SELLER’S RIGHT TO

RECOVER ATTORNEYS’ FEES (AS PROVIDED IN SECTION 33).  THE PARTIES HAVE AGREED THAT SELLER’S ACTUAL DAMAGES, IN THE EVENT OF A DEFAULT BY PURCHASER, WOULD BE EXTREMELY DIFFICULT OR IMPRACTICAL TO DETERMINE.  THEREFORE, BY PLACING THEIR INITIALS BELOW, THE PARTIES ACKNOWLEDGE THAT THE EARNEST MONEY HAS BEEN AGREED UPON, AFTER NEGOTIATION, AS THE PARTIES’ REASONABLE ESTIMATE OF SELLER’S DAMAGES.

Seller’s Initials _MRM_________ Purchaser’s Initials _CA_________

12. SELLER’S DEFAULT.  IF THIS SALE IS NOT COMPLETED BECAUSE OF SELLER’S UNCURED FAILURE TO PERFORM ANY COVENANT REQUIRED HEREIN OR BECAUSE OF ANY INTENTIONAL BREACH OF A WARRANTY OR MISREPRESENTATION, PURCHASER’S SOLE REMEDY SHALL BE THE RIGHT TO A RETURN OF ALL EARNEST MONEY (LESS THE INDEPENDENT CONSIDERATION) TOGETHER WITH ANY INTEREST ACCRUED THEREON, THIS AGREEMENT SHALL TERMINATE, AND TO THE EXTENT SUCH BREACH IS DUE TO OF ANY INTENTIONAL BREACH OF A WARRANTY OR INTENTIONAL MISREPRESENTATION OF SELLER, SELLER SHALL REIMBURSE Purchaser for the actual and documented out of pocket expenses incurred by Purchaser in connection with this Agreement with respect to any applicable terminated Housing Community and the transactions contemplated hereby with respect thereto in an aggregate amount not to exceed THE COST CAP (AS SET FORTH IN SCHEDULE 2), AND EXCEPT FOR THOSE PROVISIONS THAT EXPRESSLY SURVIVE THE TERMINATION OF THIS AGREEMENT, NEITHER PARTY SHALL HAVE ANY FURTHER OBLIGATION OR LIABILITY TO EACH OTHER AT LAW OR IN EQUITY.  NOTWITHSTANDING ANYTHING CONTAINED HEREIN TO THE CONTRARY, IF SELLER’S DEFAULT IS ITS REFUSAL TO DELIVER THE DEED AND THE OTHER DOCUMENTS REQUIRED TO BE DELIVERED AT CLOSING, THEN PURCHASER WILL BE ENTITLED, AS ITS SOLE REMEDY, TO SUE FOR SPECIFIC PERFORMANCE, PROVIDED THAT PURCHASER ASSERTS SUCH CLAIM FOR SPECIFIC PERFORMANCE WITHIN THIRTY (30) DAYS FROM THE SCHEDULED CLOSING DATE SET FORTH IN SECTION 8; PROVIDED, HOWEVER, NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT, UNDER NO CIRCUMSTANCES SHALL PURCHASER BE PERMITTED OR ENTITLED TO FILE A CLAIM OF LIS PENDENS AGAINST ANY PROPERTY.  IF PURCHASER IS UNABLE TO ENFORCE THIS AGREEMENT BY SUIT FOR SPECIFIC PERFORMANCE DUE TO SELLER SELLING THE PROPERTY TO A THIRD PARTY and IF Purchaser entered into and paid for a rate lock agreement for its acquisition loan, then Purchaser may recover Purchaser’s actual out-of-pocket fee paid to its lender not to exceed two percent of the loan amount.

Seller’s Initials _MRM_________ Purchaser’s Initials __CA________

13.PRORATIONS AND DELINQUENT RENTS.  

(a)Rents (exclusive of Delinquent Rent, as hereinafter defined, but including prepaid rents); refundable security deposits and interest thereon if required by law (which will be assigned to and assumed by Purchaser and credited to Purchaser at Closing); water and other utility charges; fuels; prepaid operating expenses; real and personal property taxes; and other similar items shall be adjusted ratably as of 11:59 P.M. on the Pre-Closing Date (the “Proration Date”), and credited or debited to the balance of the cash due at Closing.  All supplemental taxes and assessments attributable to the period prior to the Closing Date for the calendar year in which the Closing occurs shall be prorated to the Closing Date; provided, however, in no event shall Seller be charged with or (and Purchaser shall) be responsible for any increase in the taxes on the Properties resulting from the sale of the Properties or from any improvements made at any time from and after the Closing Date or any improvements constructed in respect of Seller’s rights under Section 6(a).  Except as provided in Section 13(a), if the amount of any of the items to be prorated is not then ascertainable, the adjustment thereof shall be on the basis of the most recent ascertainable data and will be reconciled by Seller and Purchaser when such data is available, but in no event later than one hundred twenty (120) days after the Closing Date, except for taxes and assessments which shall be reconciled as soon as reasonably practical after applicable information is obtained.  Notwithstanding any provision herein to the contrary, if any amounts are not prorated as of the Closing and such amounts relate to periods prior to the Closing Date, Seller and Purchaser shall prorate such amounts within one hundred twenty (120) days after the Closing Date.  If special assessments have been levied against the Properties for completed improvements, then the amount of any installments which are due prior to the Closing Date shall be paid by the Seller; and the amount of installments which are due after the Closing Date shall be paid by Purchaser.  All assessments for incomplete improvements shall be paid by Purchaser.  Purchaser acknowledges that Seller is currently contesting the assessed valuation of the Property for the 2019 tax year (the “Tax Protest”).  Seller shall retain the right to control the Tax Protest and the right to receive any refunds resulting therefrom following the Closing, but shall keep Purchaser reasonably informed regarding the status of the Tax Protest.

(b)If, as of the Closing Date, any rentals, receipts, water, sewer or utility charges, or other revenues from the Properties are in arrears (“Delinquent Rent”) for the calendar month in which the Closing occurs, then Seller’s portion of the first rent collected by Purchaser during that calendar month will be delivered to Seller for the Delinquent Rent.  If Delinquent Rent is in arrears for a period prior to the calendar month in which the Closing occurs, then rents collected by Purchaser shall first be applied to current rent and then to Delinquent Rent.  Purchaser shall use reasonable efforts after Closing to collect all Delinquent Rent, and Seller shall have the right to take any action to collect any such Delinquent Rent from any tenant that has vacated the leased premises and is no longer a tenant of the Property, provided that Seller shall have no right to exercise any other landlord remedy against such tenant other than to sue for collection.  Purchaser shall deliver Seller’s pro rata share within ten (10) days of Purchaser’s receipt of that Delinquent Rent.  In addition to any other prorations described in this Agreement, any ratio utility billing systems (“RUBS”) applicable to the Properties, for the following categories of utilities and other reimbursements: (i) electricity, (ii) gas, (iii) water / sewer, (iv) trash, (v) pest control and (vi) other, attributable to the uncollected or trailing collections two calendar months prior to Closing will be reflected as a credit to Seller at Closing and will be calculated for closing purposes on the uncollected or trailing collections monthly periods based on the monthly average actual trailing

RUBS for three months prior to Closing according to the income statements prepared by Seller and provided to Purchaser., and such amount shall be final between Seller and Purchaser and not subject to adjustment after the Closing Date.  Seller and Purchaser each agree to provide such information as the other may reasonably request regarding RUBS and the billing, collection, and payment thereof.  This Section 13(a) of this Agreement shall survive the Closing and the delivery and recording of the Deed.

14.RECORDING.  This Agreement shall not be recorded in the real property records and the act of recording by either party hereto shall be an act of default hereunder and shall be subject to the provisions of Section 11 or Section 12, as applicable.

15.ASSIGNMENT.  Purchaser shall not have the right to assign its interest in this Agreement without the prior written consent of the Seller.  Any assignment or transfer of, or attempt to assign or transfer Purchaser’s interest in this Agreement shall be an act of default hereunder by Purchaser and subject to the provisions of Section 11.  Seller hereby consents to an assignment to an entity (or entities), the ownership and control of which is held by the same persons owning and controlling Purchaser.  However, Purchaser shall remain liable for all of Purchaser’s obligations and undertakings set forth in this Agreement and the exhibits attached hereto.  Purchaser shall notify Seller of any assignment no later than ten (10) days prior to the Closing Date.

16.BROKER. The parties hereto acknowledge that CBRE, Inc. (“Broker”) is the only real estate broker involved in this transaction.  The foregoing does not apply to any fee which may be paid by Seller to any affiliate of Seller or an exclusive broker engaged by an affiliate of Seller as a result of this transaction.  Seller agrees to pay Broker a commission or fee (“Fee”) pursuant to an agreement between Seller and Broker.  Purchaser agrees to indemnify, defend and hold harmless the Seller Related Parties from all claims, including attorneys’ fees and costs incurred by a Seller Related Party as a result of anyone’s claiming by or through Purchaser any fee, commission or compensation on account of this Agreement, its negotiation or the sale hereby contemplated.  Purchaser does now and shall at all times consent to a Seller Related Party’s selection of defense counsel.  Seller agrees to indemnify, defend and hold harmless Purchaser and all shareholders, employees, officers and directors of Purchaser or Purchaser’s parent or affiliate (each of the above is individually referred to as a “Purchaser Related Party”) from all claims, including attorneys’ fees and costs incurred by a Purchaser Related Party as a result of anyone’s claiming by or through Seller any fee, commission or compensation on account of this Agreement, its negotiation or the sale hereby contemplated.  Seller does now and shall at all times consent to a Purchaser Related Party’s selection of defense counsel.  Notwithstanding anything contained in this Agreement to the contrary, the provisions of this Section shall forever survive the Closing and delivery and recording of the Deed or earlier termination of this Agreement.

17.DOCUMENTS, INSPECTION OF PROPERTY AND APPROVAL PERIOD.

(a)Seller has heretofore delivered or shall deliver or make available to Purchaser within five (5) business days after the full execution of this Agreement, originals or copies of the following documents to the extent that they are in Seller’s possession, provided, however, that nothing in this Section shall constitute a representation or warranty as to the delivery,

accuracy or completeness of any documents described herein or otherwise in Seller’s possession  (collectively the “Documents”):

(i)Copies of all certificates of occupancy.

(ii)Copies of any existing surveys of the Properties.

(iii)Copies of the most recent real estate and personal property tax bills.

(iv)Copies of all Service Contracts pertaining to the Properties and a schedule listing all such Service Contracts.

(v)Copies of any Leases and licenses which are located at the Properties for Purchaser’s review.

(vi)Unaudited income and expense statements of operations (hereinafter referred to as the “Financial Statements”) for the Properties for the prior calendar year and the latest available current calendar year.

(vii)A current inventory of all material personal property included in the sale.

(viii)Copies of any Phase I Environmental reports.

(ix)Where available, accounting information showing details of all revenues and expenses for the operation during 2016, 2017, 2018 and year to date 2019. The most recent 12 months are to be provided on a month to month basis supported by monthly bank statements.

(x)Live pleadings in any pending litigation affecting the Property.

(xi)A copy of the standard lease document (including all addendums and exhibits).

(xii)A copy of the 2016, 2017, 2018 and 2019 (when available) real estate tax valuations and tax bills from the appropriate county and/or other jurisdiction. If applicable, provide a personal property tax itemized report, valuations and bills.

(xiii)To the extent available, a copy of all utility billings which are/were the obligation of Seller for the past twelve months to include but not limited to electric, gas, water, sewer (cable & internet if provided by Seller). Most recent three months of detailed RUBS billing and collection history with coinciding utility bills.

(xiv)Copies of all Service Agreements.

(xv)Copies of all assignable construction warranties and guaranties.

(xvi)All licenses, permits, and certificates of occupancy affecting the Properties.

(xvii)A current aged delinquency and prepaid report (if available).

(xviii)A month-by-month occupancy report for the property covering the past 12 months.

All of the Documents and the condition of the Properties shall be subject to approval by Purchaser by the close of business (5:00 P.M. Mountain Time) on the Approval Period (as set forth in Schedule 2).  Purchaser shall deliver written notice (the “Diligence Notice”) to Seller stating either (i) that Purchaser elects to terminate this Agreement, or (ii) that Purchaser elects not to terminate this Agreement.  From the Effective Date through the Closing Date, upon reasonable notice to the Seller, Purchaser shall have the right to inspect and approve the condition of the Properties during normal business hours.  Purchaser, its engineers, architects, employees, contractors and agents shall maintain public liability insurance policies (in an amount of combined single limit coverage of not less than Two Million Dollars ($2,000,000)) insuring against claims arising as a result of the inspections of the Properties being conducted by Purchaser naming Seller and Property Manager, as additional insureds.  Prior to commencing any tests, studies and investigations, Purchaser shall deliver to Seller a certificate of insurance evidencing the existence of the aforesaid policies, however, Purchaser’s failure to deliver said certificate of insurance to Seller shall not in any way waive Purchaser’s obligation to maintain or caused to be maintained said public liability policies in accordance with the terms of the previous sentence.  Purchaser shall indemnify, defend, protect and hold the Seller Related Parties harmless from any and all loss, costs, including attorneys’ fees, liability or damages which any of the Seller Related Parties may incur or suffer as a result of Purchaser conducting its inspection and investigation of the Properties including the entry of Purchaser, its employees or agents and its lender onto the Properties, including without limitation, liability for mechanics’ lien claims; provided, however, the foregoing indemnity shall not apply to (i) Purchaser’s mere discovery of pre-existing conditions at the Property; or any (ii) loss, costs, including attorneys’ fees, liability or damages attributable to Seller’s gross negligence or willful misconduct.  Purchaser’s rights under this Section shall not include the right to conduct any Phase II-type environmental audit or invasive or destructive testing of the Properties (including, without limitation, any soil sampling, excavation or other physical testing) without Seller’s prior written approval (which approval shall not be unreasonably withheld or delayed) of the specific types and extent of such audit or testing and the entity which is to perform such audit or test; provided, however, in no event shall Purchaser have the right to perform (and Purchaser shall not perform) any test, investigation, drilling or other action involving or which may disturb or contaminate any ground water under or adjacent to the Properties.  If Seller’s on-site management personnel refuse to allow Purchaser to perform testing of the Improvements (invasive or otherwise), then Purchaser shall immediately deliver written notice to Seller of such refusal.  Purchaser shall have the right, prior to the expiration of the Approval Period, to inspect the apartment units (collectively, the “Units”); provided, however, in no event shall Purchaser, without being accompanied by a representative of Seller, (i) contact any Tenant of the Properties or (ii) enter any Unit whether or not occupied by a Tenant.  Seller shall have the right, at its option, to cause a representative of Seller to be present at all on-site inspections, reviews and examinations conducted hereunder.  Purchaser shall keep all information or data received or discovered in connection with any of the inspections, reviews or examinations strictly confidential.  Notwithstanding anything contained in this Agreement to the contrary, Purchaser’s indemnity obligations under this Section shall forever survive the Closing and delivery and recording of the Deed or the earlier termination of this Agreement.  

(b)Purchaser acknowledges that it is a sophisticated and experienced purchaser of real estate; that numerous apartment complexes contain mold; water damage, fungi, bacteria and/or other biological growth or biological growth factors; and that the Properties may contain mold, water damage, fungi, bacteria, and/or other biological growth or biological growth factors which Purchaser may not discover during the Approval Period.  Purchaser agrees that in purchasing the Properties from the Seller, it is assuming the risk that the Properties may contain mold, water damage, fungi, bacteria, and/or other biological growth or biological growth factors even as a result of a patent or latent construction defect.

(c)Purchaser agrees to restore any damage to the Properties which may arise as a result of Purchaser’s inspection of the Properties.

(d)Purchaser shall not, directly or indirectly, cause any governmental agency, authority, department or employee to inspect any portion of the Properties.

(e)If at any time prior to the expiration of the Approval Period, Purchaser discovers or is advised of any fact or circumstance which would cause a representation or warranty of Seller to be untrue or misleading, or with the passage of time would become untrue or misleading, then Seller’s representation shall be deemed modified to the extent of Purchaser’s knowledge prior to the expiration of the Approval Period.

(f)In the event that Purchaser delivers a Diligence Notice stating that Purchaser elects to terminate this Agreement, then upon receipt of such Diligence Notice, the Earnest Money (less the Independent Consideration) on deposit with the Escrow Agent shall be released and delivered to Seller, unless the reason for such termination is as a result of a Material Title Defect or a Material Environmental Issue (both hereinafter defined), in which event the Earnest Money shall be returned to Purchaser, and this Agreement shall be deemed terminated, and except for those provisions that expressly survive the termination of this Agreement, neither party shall have any further obligation or liability hereunder. In the event that Purchaser delivers a Diligence Notice stating that Purchaser elects to proceed with this Agreement, then Purchaser shall no longer have the right to terminate this Agreement pursuant to this Section 17, the Earnest Money shall become fully nonrefundable (unless otherwise expressly stated herein) and it shall be conclusively presumed that Purchaser (i) has approved the Documents, any surveys obtained, and the condition of title and condition to the Properties, (ii) has acknowledged and agreed that Purchaser has been given adequate access to inspect the Properties, including the opportunity to conduct invasive testing to discover any patent or latent defects in or on the Properties, examine the books and records relating to the Properties; conduct interviews or take any other necessary steps to fully and adequately discover any and all latent or patent defects with the Properties, (iii) has acknowledged that it has the full and complete knowledge necessary to purchase the Properties, or has chosen not to obtain the full and complete knowledge, although provided with the opportunity by Seller, and (iv) has conducted, or had the opportunity to conduct, sufficient examination of the building, building envelope, building systems, building grounds, building components and surrounding conditions including but not limited to soils and the environmental condition of the Properties.  The failure of Purchaser to deliver the Diligence Notice to Seller by the expiration of the Approval Period shall be deemed to be the delivery of a Diligence Notice by Purchaser electing to terminate this Agreement. A “Material Environmental Issue” means (A) the presence on the Property of Hazardous Substances or Hazardous Materials and (B)(i) the presence of which substances or

materials are such that the same will materially and adversely affect Purchaser’s ability to own and operate the Property as it is currently being operated as of the Effective Date or (ii) causes Freddie Mac, Fannie Mae, or a national lender to refuse to provide financing for the acquisition of the Property.  A “Material Title Defect” means an encumbrance or defect in legal title to the Property that (i) materially and adversely affects Purchaser’s ability to own and operate the Property as it is currently being operated as of the Effective Date or (ii) causes Freddie Mac, Fannie Mae, or a national lender to refuse to provide financing for the acquisition of the Property.

Purchaser’s Initials _CA_________

(g)On or before the expiration of the Approval Period, Purchaser may deliver written notice to Seller (the “Service Contracts Notice”) specifying any Service Contracts which Purchaser desires to terminate at the Closing (the “Terminated Contracts”); provided that (a) the effective date of such termination on or after Closing shall be subject to the express terms of such Terminated Contracts, (b) if any such Service Contract cannot by its terms be terminated at Closing, it shall be assumed by Purchaser and not be a Terminated Contract, and (c) to the extent that any such Terminated Contract requires payment of a penalty, fee or premium for cancellation, Purchaser shall be solely responsible for the payment of any such cancellation fees, penalties or premiums.  If Purchaser fails to deliver the Service Contracts Notice on or before the expiration of the Approvals Period, there shall be no Terminated Contracts and Purchaser shall assume all Service Contracts at the Closing.  If Purchaser delivers the Service Contracts Notice to Seller on or before the expiration of the Approval Period, then Seller shall deliver a vendor termination notices for each Terminated Contract informing the vendor(s) of the termination of such Terminated Contract as of the Closing Date (subject to any delay in the effectiveness of such termination pursuant to the express terms of each applicable Terminated Contract) (the “Vendor Terminations”).  Seller shall request its property manager to sign the Vendor Terminations prepared by Purchaser, and deliver them to all applicable vendors.  To the extent that any Service Contract to be assigned to Purchaser requires vendor consent, then, prior to the Closing, Seller shall obtain from each applicable vendor a consent (each a “Required Assignment Consent”) to such assignment.  The provisions of this Section shall survive the Closing.

18.SELLER’S REPRESENTATIONS, WARRANTIES AND COVENANTS.

(a)Any reference in this Agreement to Seller’s knowledge or to the best of Seller’s knowledge shall mean solely such actual (and not constructive or imputed) knowledge or notice that as has actually been received by Matt McGraner, who shall not have made, and who shall not have any duty to make, any inquiry of any kind with respect to such matters.  Any knowledge or notice given, had or received by any of Seller’s agents, servants or employees (other than notice actually given to Matt McGraner) shall not be construed or imputed to Seller or its constituent entities or their owners.  Matt McGraner shall have no personal liability to Purchaser or any other person or entity for any breach of any representation, warranty or covenant by Seller in this Agreement.  Matt McGraner is acting for and on behalf of Seller and in a capacity as a representative of Seller or one or more of Seller’s affiliates and is in no manner expressly or impliedly making any representations in an individual capacity.  Purchaser waives any right to sue or seek any personal judgment or claim against Matt McGraner.

(b)Except in all cases for (i) any fact, information or condition disclosed in the Documents, the Title Commitments, the Permitted Exceptions, any survey provided to or obtained by Purchaser, the Service Contracts, the Rent Roll, any environmental report provided to or obtained by Purchaser, or any other documents or materials provided by Seller to Purchaser prior to Closing, (ii) any matter disclosed in any exhibits or schedules to this Agreement (as updated from time to time pursuant to this Agreement), (iii) any matter disclosed by Purchaser’s diligence or inspection of the Property (including, without limitation, zoning reports, property condition reports, or similar third-party reports), or (iv) any fact, information or condition of which Purchaser otherwise has knowledge, and subject to the limitations set forth in subparagraph (a) above, Seller hereby makes the following representations, warranties and covenants, all of which are made to the best of Seller’s knowledge, as of the date of this Agreement (and shall be remade by Seller as of Closing):

(i)Seller has not received written notice of any pending litigation action, suit, condemnation, arbitration, administrative or judicial proceeding, or unsatisfied order or judgment, affecting title to the Properties or the transaction contemplated by this Agreement, except as may be set forth on Exhibit L attached hereto.

(ii)This Agreement has been, and each Closing Document shall have been as of Closing, been duly authorized and executed on behalf of each Seller and constitutes a valid and binding agreement, enforceable in accordance with its terms.  Each Seller has been duly organized and is validly existing and in good standing under the laws of the State of Delaware and is duly qualified to transact business in the State where the Housing Community that it owns is located.  Neither the execution and delivery by Seller of this Agreement or the Closing Documents, nor the consummation of the transaction contemplated hereby, will (x) conflict with, or result in any violation of, (i) the organizational documents of any Seller, (ii) any agreement, instrument or document to which any Seller is a party or to which any portion of the Property is subject or (iii) any law, regulation, governmental authorization, order, writ, judgement or decree or any provisions of any agreement or judicial order, in each case, to which any Seller is a party or to which any portion of the Property is subject or (y) result in the creation or imposition of any lien or encumbrance on any portion of the Property.  The person signing this Agreement on behalf of Seller is authorized to do so.  

(iii)Seller does not have any employees on site at the Properties.

(iv)Attached hereto as Exhibit M is a list of all current Service Contracts (excepting the property management agreement which shall be terminated at Closing) entered into by Seller and/or its property manager or leasing agent relating to the management, maintenance, leasing or operation of the Properties.  

(v)The Rent Roll attached hereto as Exhibit K is, and each rent roll hereafter delivered by Seller to Purchaser shall be, the rent roll maintained by Seller and relied on by Seller for internal administration and accounting purposes.  To Seller’s knowledge, there are no tenant delinquencies under any Leases, except as set forth in the Rent Roll.  Notwithstanding any provision of this Agreement to the contrary, Seller does

not represent or warrant that any particular Lease will be in force or effect at any Closing or that the tenants under the Leases will have performed their obligations thereunder.  

(vi)No Seller is a “foreign person” as defined in Section 1445 of the Code, and the regulations adopted thereunder. Each Seller shall deliver such documentation as required under Section 1445 of the Code to establish that such Seller is not subject to the withholding requirements of Section 1445 of the Code.

(vii)No Seller has (i) made a general assignment for the benefit of creditors, (ii) filed any voluntary petition in bankruptcy or suffered the filing of any involuntary petition by Seller’s creditors, (iii) suffered the appointment of a receiver to take possession of all, or substantially all, of such Seller’s assets or any portion of the Property, (iv) suffered the attachment or other judicial seizure of all, or substantially all, of such Seller’s assets or any portion of the Property, (v) admitted in writing its inability to pay its debts as they come due, or (vi) made an offer of settlement, extension or composition to its creditors generally.

(viii)Seller is not delinquent in the payment of any ad valorem property taxes that are currently due and payable with respect to the Property.

(ix)To Seller’s knowledge, Seller has not received any written notice from any governmental authority that Seller or the Property is in material violation of any applicable laws (other than Environmental Laws), rules or regulations.  

(x)To Seller’s knowledge, except as set forth in any environmental report or assessment previously made available to or obtained by Purchaser, Seller has received no written notice from any governmental authority asserting any violation of Environmental Laws related to the Property which has not been cured or corrected as of the Effective Date.

(c)Seller hereby covenants that prior to the Closing:

(i)Seller shall operate, lease, insure, and manage the Properties (or to cause its property manager to do so) in at least the same manner that Seller (or its property manager, as the case may be) has heretofore operated, leased and managed the Properties (wear and tear, and casualty excepted).  

(ii)Seller will not, without the prior written consent of Purchaser, which consent shall not be unreasonably withheld, delayed or conditioned, permit any material structural modifications or additions to the Properties.

(iii)Seller will not remove any Personal Property, unless it is replaced by similar personal property of at least equal value.

(iv)Seller shall place apartment units that are now vacant or that become vacant into rent-ready condition on or before such Closing Date substantially in accordance with Seller’s current management standards for its apartment properties as though no sale

of the Property were contemplated or, at Seller’s option, provide Purchaser a credit at such Closing equal to the Rent Ready Credit (as set forth in Schedule 2) per unit for the apartment units that are not in rent-ready condition on such Closing Date; provided, however, that with respect to apartment units vacated during the ten (10) day period ending on such Closing Date on which the applicable Housing Communities are sold, Seller shall have no obligation either to put such units into rent-ready condition or to give Purchaser a credit for the cost of doing so.  

(v)Seller shall advise Purchaser promptly after Seller’s receipt of any written notice of litigation, arbitration proceeding or administrative hearing (including condemnation) before any governmental agency which materially and adversely affects the Property.  Seller shall deliver to Purchaser promptly after receipt thereof copies of any written notices received by any Seller of (i) violations or other written notices regarding material violations of applicable laws affecting the Property, or (ii) any material defaults under any Service Contract.

(vi)In the event that Purchaser’s proposed lender with respect to any Housing Community (“Purchaser’s Lender”) requires Purchaser to deliver (i) estoppels to any parties to any declaration, reciprocal easement agreement, Lease (other than a residential lease) or Service Contract (“Estoppels”) and/or (ii) subordination, nondisturbance and attornment agreements (“SNDAs”) in connection with Purchaser’s financing of the Property (or any portion thereof) or otherwise requests Purchaser to attempt to obtain same, Seller shall, at Purchaser’s cost and expense, deliver to the applicable third party each such requested Estoppel and/or SNDA (as applicable) prepared by Purchaser or Purchaser’s Lender and shall endeavor to obtain the return of an executed Estoppel and/or an SNDA (as applicable) in substantially the same form. In no event shall Purchaser’s receipt of any such requested Estoppels or SNDAs be a condition to Closing. In no event shall Seller be required to deliver requests for such Estoppels and/or SNDAs (as applicable) for any residential Leases.

d. Purchaser’s right to make a claim against Seller for a breach of an indemnity (except for Seller’s indemnity for a brokerage commission), representation, warranty or covenant under this Agreement or the Exhibits attached hereto (“Claim”) shall expire on the Survival Date (as set forth in Schedule 2) and may not be asserted as to any matter as to which Purchaser had knowledge prior to Closing.   As to any Claim, Purchaser must: (i) notify Seller of the existence of the Claim in question prior to the Survival Date, which notification (“Claim Notice”) shall contain a reasonable description of the nature of the Claim or the facts, circumstances, conditions or events then known to Purchaser which give rise to the claim in question; and (ii) institute legal proceedings in a court of competent jurisdiction within thirty (30) days after delivery of the Claim Notice to Seller (“Judicial Proceedings Date”).  Any Claim for which a Claim Notice is not delivered by Purchaser to Seller on or prior to the Survival Date or for which legal proceedings are not instituted on or prior to the Judicial Proceedings Date, then such Claim shall be deemed to have been waived by Purchaser and rendered null and void and of no further force or effect.  Seller’s total liability in the aggregate for all Claims shall not exceed the Liability Cap (as set forth in Schedule 2).  Seller shall not be liable for any Claim(s) which in the aggregate do(es) not exceed the Liability Threshold (as set forth in Schedule 2).

19.PURCHASER’S REPRESENTATIONS AND WARRANTIES.

(a)If Purchaser is an entity, it is duly organized, validly existing and in good standing under the laws of the state of its formation. Purchaser is authorized to transact business in the state in which the Properties a located. Purchaser has full power and authority to enter into and perform this Agreement in accordance with its terms, and the persons executing this Agreement on behalf of Purchaser have been duly authorized to do so.

(b)This Agreement is, and all agreements, instruments and documents to be executed and delivered by Purchaser pursuant to this Agreement shall be, valid and legally binding upon Purchaser and enforceable in accordance with their respective terms.

(c)Performance of this Agreement will not result in any breach of, or constitute any default under, any agreement or other instrument to which Purchaser is a party or by which Purchaser might be bound.

(d)Neither the execution or delivery of, nor the performance under, this Agreement by Purchaser will (a) violate any provision of any law, rule, regulation, order, writ, judgment, injunction, decree, determination or award presently in effect having applicability to Purchaser or the articles of incorporation, by-laws or other similar corporate and/or organizational and governing documents of Purchaser, or (b) result in a breach of or constitute or cause a default under any indenture, agreement, lease or instrument to which Purchaser is a party or by which the Properties may be bound or affected.

(e)No petition in bankruptcy (voluntary or otherwise), assignment for the benefit of creditors, or petition seeking reorganization or arrangement or other action under Federal or state bankruptcy law is pending against or, to the best of Purchaser's knowledge, contemplated by Purchaser.

(f)There are no actions, suits, claims or other proceedings pending or, to the best of Purchaser's knowledge, contemplated or threatened against Purchaser that could affect Purchaser's ability to perform its obligations when and as required under the terms of this Agreement.

(g)Purchaser is not, and will not become, a person or entity with whom United States persons or entities are restricted from doing business under regulations of the Office of Foreign Asset Control, Department of the Treasury ("OFAC") of the Department of the Treasury (including those named on OFAC's Specially Designated and Blocked Persons list), or under any statute, executive order (including the September 24, 2002, Executive Order blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit or Support Terrorism) or other governmental action and is not and will not engage in any dealing or transaction or be otherwise associated with such persons or entities.

20.COMPLIANCE WITH OFAC.

(a)To the best knowledge of Purchaser, without any duty to make diligent inquiry, Purchaser is in compliance with all laws, statutes, rules and regulations or any federal, state or local governmental authority in the United States of America applicable to Purchaser and

all beneficial owners of Purchaser, including, without limitation, the requirements of Executive Order No. 13224, 66 Fed Reg. 49079 (September 25, 2001) (the “Order”) and in any enabling legislation or other Executive Orders in respect thereof (the Order and such other rules, regulations, legislation, or orders are collectively called the “Orders”).  Purchaser agrees to make its policies, procedures and practices regarding compliance with the Orders available to Seller for its review and inspection during normal business hours and upon reasonable prior notice.

(b)Neither Purchaser nor any beneficial owner of Purchaser:

(i)is listed on the Specially Designated Nationals and Blocked Persons List maintained by OFAC pursuant to the Order and/or on any other list of terrorists or terrorist organizations maintained pursuant to any of the rules and regulations of OFAC or pursuant to any other applicable Orders (such lists are collectively referred to as the “Lists”);

(ii)has been determined by competent authority to be subject to the prohibitions contained in the Orders;

(iii)is owned or controlled by, nor acts for or on behalf of, any person or entity on the Lists or any other person or entity who has been determined by competent authority to be subject to the prohibitions contained in the Orders; or

(iv)shall transfer or permit the transfer of any interest in Purchaser or any beneficial owner in Purchaser to any person who is or whose beneficial owners are listed on the Lists.

If Purchaser obtains knowledge that Purchaser or any beneficial owner in Purchaser has become listed on the Lists or has been indicted, arraigned, or detained (in a custodial manner) on charges involving money laundering or predicate crimes to money laundering, Purchaser shall immediately notify Seller and in such event, Seller shall have the right to terminate this Contract without penalty or liability to Seller immediately upon delivery of written notice thereof to Purchaser.  In such event the Earnest Money shall be returned to Purchaser.

21.FURTHER NEGOTIATIONS.  For one (1) year following Closing, Purchaser shall comply with the Right to Offer described Schedule 2.  This Section 21 shall survive the Closing.

22.INTENTIONALLY DELETED.  

23.ORGANIZATIONAL DOCUMENTS.  At least ten (10) days prior to the Closing Date, Purchaser and Seller will provide Escrow Agent with copies of their respective organizational documents as required by Escrow Agent.

24.TIME OF ESSENCE.  Time is of the essence of this Agreement.

25.NOTICES.  Any notice or demand which either party hereto is required or may desire to give or deliver to or make upon the other party shall be in writing and may be personally delivered or given or made by overnight courier such as Federal Express or by facsimile (in the

case of facsimile followed by delivering such notice using one of the other methods of delivery):

TO SELLER:	c/o Highland Capital Management, L.P. 300 Crescent Court, Suite 700 Dallas, Texas  75201 Attn:  Matt R. McGraner Tel:  (972) 419-6229 Fax: (972) 628-4147 Email: MMcGraner@hcmlp.com
with a copy to:	Wick Phillips Gould & Martin, LLP 3131 McKinney Avenue, Suite 100 Dallas, TX  75204 Attn:  Chris Fuller Tel: 214-740-4023 Email: cfuller@wickphillips.com and Attn:  D.C. Sauter Tel: 214-740-4043 Email: dcsauter@wickphillips.com
TO PURCHASER:	c/o Bridge Acquisitions and Dispositions, LLC 111 E. Sego Lily Drive, Suite 400 Sandy, UT 84070 Attention: Colin Apple Telephone: 801-716-4552 Email:        Collin.Apple@bridgeig.com
with a copy to:	Ward | Molloy, P.C. 68 South Main Street, 8th Floor Salt Lake City, Utah 84101 Attention: Curtis Ward Phone: 801-258-9801 Email: cward@wardmolloy.com Attention: Brynn Hill Phone: 801-258-9803 Email: bhill@wardmolloy.com

subject to the right of either party to designate a different address for itself by notice similarly given.  Any notice or demand so given shall be deemed to be delivered or made on the next business day if sent by overnight courier, or on the same day if sent by facsimile or personal delivery before the close of business, or the next day if sent by facsimile or personal delivery after

the close of business.  Any such notice, demand or document not given, delivered or made by overnight courier, personal delivery or facsimile as aforesaid shall be deemed to be given, delivered or made upon receipt of the same by the party to whom the same is to be given, delivered or made.  Copies of all notices shall be served upon the Escrow Agent.

26.EXECUTION OF AGREEMENT.  The parties hereto will each execute one (1) original of this Agreement and forward such original to the Escrow Agent.  This Agreement may be executed in multiple counterparts, and by the parties hereto on separate counterparts, and each counterpart, when so executed and delivered, shall constitute an original agreement, and all such separate counterparts shall constitute one and the same agreement.   Each party (i) has agreed to permit the use, from time to time, of telecopied signatures in order to expedite the transaction contemplated by this Agreement, (ii) intends to be bound by its telecopied signature, (iii) is aware that the other will rely on the telecopied signature, and (iv) acknowledges such reliance and waives any defenses (other than fraud) to the enforcement of any document based on the fact that a signature was sent by telecopy.  As used herein, the term "telecopied signature" shall include any signature sent via facsimile or via email in portable document format (".pdf").    

27.GOVERNING LAW.  The provisions of this Agreement shall be governed by the laws of the State of Texas without regard to conflicts of laws principles.

28.ENTIRE AGREEMENT.  This Agreement constitutes the entire agreement between the parties and supersedes all other negotiations, understandings and representations made by and between the parties and the agents, servants and employees.

29.COUNTERPARTS.  This Agreement may be executed in multiple counterparts, each of which shall be deemed an original but all of which shall constitute one and the same instrument.

30.CAPTIONS.  Section titles or captions contained herein are inserted as a matter of convenience and for reference, and in no way define, limit, extend or describe the scope of this Agreement or any provision hereof.

31.NON-BUSINESS DAYS.  Whenever action must be taken (including the giving of notice of the delivery of documents) under this Agreement during a certain period of time (or by a particular date) that ends (or occurs) on a non-business day, then such period (or date) shall be extended until the immediately following business day.  As used herein, “business day” means any day other than a Saturday, Sunday or federal holiday.

32.SEVERABILITY.  If any term or provision of this Agreement or the application thereof to any person or circumstance shall, to any extent, be invalid or unenforceable, the remainder of this Agreement, or the application of such term or provision to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby, and each such term and provision of this Agreement shall be valid and be enforced to the fullest extent permitted by law.

33.NO WAIVER.  No waiver by a party of any breach of this Agreement or of any warranty or representation hereunder by the other party shall be deemed to be a waiver of any other breach by such other party (whether preceding or succeeding and whether or not of the same or

similar nature), and no acceptance of payment or performance by a party after any breach by the other party shall be deemed to be a waiver of any breach of this Agreement or of any representation or warranty hereunder by such other party, whether or not the first party knows of such breach at the time it accepts such payment or performance.  No failure or delay by a party to exercise any right it may have by reason of the default of the other party shall operate as a waiver of default or modification of this Agreement or shall prevent the exercise of any right by the first party while the other party continues to be so in default.

34.ATTORNEYS’ FEES.  In the event either party commences legal proceedings against the other party pursuant to any right to do so under this Agreement, then the prevailing party shall be entitled to recover reasonable attorneys’ fees and costs.

35.TAX DEFERRED EXCHANGE.  Purchaser and Seller may use the Properties in connection with a 1031 or 1033 tax deferred exchange (“Exchange”).  The parties agree to cooperate with each other and will execute such documents as may reasonably be required by each other in order to effectuate an Exchange, provided that no later than five (5) business days prior to the Closing Date, the party (“Exchange Party”) seeking to effectuate an Exchange, delivers to the other party (“Cooperating Party”) copies of all of the documents which the Cooperating Party is required to execute in order to effectuate an Exchange.  The Cooperating Party will not assume any liability or cost in connection with an Exchange and the Closing will not be delayed in order to effectuate an Exchange.  Either party’s inability to obtain any benefits for an Exchange under Sections 1031 or 1033 of I.R.C. will not relieve such party of any of its obligations under this Agreement.  The Exchange Party hereby agrees to indemnify, defend and hold the Cooperating Party harmless from any damages, costs or claims incurred by reason of the Exchange.  The provisions of this Section shall survive the Closing and delivery and recording of the Deed.

36.CONFIDENTIALITY.  Purchaser and Seller each hereby agree to keep the terms and conditions of this Agreement and any information obtained with reference to the Properties confidential, provided that the parties may reveal such information regarding the terms and provisions of this Agreement as may be necessary in their reasonable discretion to comply with the provisions of this Agreement or in the ordinary course of business.  Nothing in this Section 36, however, shall prohibit (a) the parties from making disclosures to their respective legal counsel, certified public accountants, professional advisors, current and prospective lenders and financial partners and investors, (b) the parties from making disclosures that are otherwise required as a matter of law (including, without limitation, any determination by Seller or any of its direct or indirect owners that such disclosure is made to comply with the freedom of information act or any public records act), or (c) the parties from making disclosures in connection with asserting or defending any action relating to the Properties or this Agreement.  This Section 36 shall survive the Closing and the delivery and recording of the Deed or earlier termination of this Agreement.

37.SURVIVAL OF INDEMNIFICATION.  Notwithstanding anything contained in this Agreement to the contrary, all of Purchaser’s indemnity obligations contained in this Agreement and the Exhibits attached hereto shall forever survive the Closing and the delivery and recording of the Deed or the earlier termination of this Agreement.

38.DRAFTING.  This Agreement shall not be construed more strictly against any party merely by virtue of the fact that the same has been prepared by such party or its counsel, it being

recognized that each party hereto has contributed substantially and materially to the preparation of this Agreement, and that each party hereto acknowledges and waives any claim contesting the existence and the adequacy of the consideration given by the other parties hereto in entering into this Agreement.

39.NO SURVIVAL.  Except as to those obligations which specifically survive the Closing, all of Seller’s other obligations hereunder shall merge with the Deed.

40.WAIVER OF JURY.  In the event of a dispute, the parties hereto waive a trial by jury.

41.FURTHER ASSURANCES.  Each party agrees that it will without further consideration execute and deliver such other documents and take such other action, whether prior or subsequent to the Closing, as may be reasonably requested by the other party to consummate more effectively the purposes or subject matter of this Agreement.  The provisions of this Section 41 shall survive the Closing.

42.JOINT AND SEVERAL LIABILITY.  Each Seller who is a party as a Seller to this Agreement (“Seller Party”) shall be jointly and severally liable for all of the obligations and liabilities of Seller (and each other Seller) under this Agreement.  Without limiting the generality of the foregoing, (i) each reference herein to Seller shall also be deemed to refer to each Seller Party, (ii) references in this Agreement to the phrase “received by Seller” (or words of similar import) shall mean received by any Seller Party, (iii) references in this Agreement to the phrase “given by Seller” (or words of similar import) shall mean given by any Seller Party, and (iv) references in this Agreement to the phrase “in the possession of Seller” (or words of similar import) shall mean the possession of any Seller Party. Each Seller Party hereby irrevocably appoints NexPoint Residential Operating Partnership, L.P., a Delaware limited partnership (the “Seller Agent”), to act as an agent for Seller (and for each Seller Party individually) in connection with all actions to be taken by Seller and/or a Seller Party in connection with this Agreement (including, without limitation, giving and receiving notices, granting or denying of consents, and accepting payments to be made to Seller under this Agreement).  Accordingly (and without limiting the generality of the foregoing), (i) if Purchaser pays any amounts in connection with this Agreement to the Seller Agent (including the Purchase Price, as adjusted in accordance with this Agreement), then the same shall be deemed duly paid to all Seller(s) (and thus to all of the Seller Parties) for all purposes of this Agreement; (ii) any consent, approval or other notice given by the Seller Agent to Purchaser shall be deemed to have been given by, and shall be binding on, all Sellers (and thus all of the Seller Parties) for all purposes of this Agreement, and Purchaser shall have the right to rely on any such consent, approval or other notice so given; (iii) any notice given by Purchaser to the Seller Agent shall be deemed to have been given to all Sellers (and thus all of the Seller Parties) for all purposes of this Agreement; and (iv) each Seller Party hereby irrevocably appoints the Seller Agent as the agent for the service of process on each of the Sellers (and thus all of the Seller Parties).  Notwithstanding the foregoing, Purchaser may insist that any action (such as the execution of a deed or other closing documents) that is required to be taken by Seller or any individual Seller Party pursuant to this Agreement actually be taken by Seller Agent (and thus all of the Seller Parties) or such individual Seller Party, as the case may be (rather than by the Seller Agent acting as agent therefor).  In the event more than one person and/or entity executes or becomes a party to this Agreement as Purchaser, including by assignment, each such person and/or

entity which comprises Purchaser under this Agreement shall be jointly and severally liable for all of the obligations, covenants and liabilities and shall jointly exercise any rights or remedies available under this Agreement and any exhibit hereto.  The provisions of this Section 42 shall survive the Closing.

43.ABBINGTON WORK.  Seller shall use commercially reasonable efforts (i) to complete the Abbington Work (as set forth in Schedule 2), at its sole cost and expense, which cost shall not be capped by the Rent Ready Credit; provided, that if the Abbington Work is not completed by the Closing Date, Seller shall credit Purchaser for the reasonable cost of the incomplete Abbington Work at Closing, not to exceed the Abbington Work Cap (as set forth in Schedule 2).

44.EDGEWATER WORK.  On or before the Closing Date, Seller shall procure a business license for Edgewater at Sandy Springs and provide compliance documentation for code violation BL201900355.

SIGNATURE PAGES FOLLOW

IN WITNESS WHEREOF, the parties hereto have put their hand and seal as of the date set forth above.

Executed by Purchaser on	PURCHASER:
June 25, 2019.
	Bridge Acquisitions, Asset Management and Dispositions, LLC, A Utah limited liability company By: /s/ Colin Apple Name:Colin Apple Title: Managing Director

Executed by Seller on	SELLER:
June 25, 2019.	FRBH DUCK CREEK, LLC, a Delaware limited liability company
	By: /s/ Matt McGraner Name:Matt McGraner Title:Authorized Signatory
	NXRTBH HEATHERSTONE, LLC, a Delaware limited liability company
	By: /s/ Matt McGraner Name:Matt McGraner Title:Authorized Signatory
		FRBH ABBINGTON, LLC, a Delaware limited liability company
		By: /s/ Matt McGraner Name:Matt McGraner Title:Authorized Signatory
		FRBH EDGEWATER OWNER, LLC, a Delaware limited liability company
		By: /s/ Matt McGraner Name:Matt McGraner Title:Authorized Signatory

FRBH DANA POINT, LLC,
a Delaware limited liability company

By: /s/ Matt McGraner

Name:Matt McGraner

Title:Authorized Signatory

JOINDER BY ESCROW AGENT

Escrow Agent has executed this Agreement in order to confirm that Escrow Agent shall hold the Earnest Money required to be deposited under this Agreement and the interest earned thereto, in escrow, and shall disburse the Earnest Money, and the interest earned thereon, pursuant to the provisions of this Agreement.

NEXVANTAGE TITLE SERVICES

    Date executed by Escrow Agent _6-26-19_______________________   By: /s/ Jeff Justema Name: Jeff Justema Title: VP  

Schedule 1

Purchase Price

Two Hundred Eighty Nine Million Eight Hundred Seventy Five and No/100 Dollars ($289,875,000.00)

Schedule 1(a)

Purchase Price Allocations

Pointe at Foothills	$85,400,000
Duck Creek	$29,500,000
Abbington Heights	$28,050,000
The Ashlar	$29,400,000
Heatherstone	$16,275,000
Edgewater	$101,250,000

Schedule 2

Defined Terms

Earnest Money:	Nine Million and No/100 Dollars ($9,000,000.00) (Section 2)
Seller’s Closing Costs:	(i) Seller’s attorneys’ fees, (ii) the fee owed to Broker, (iii) the cost of each title policy in an amount up to the Allocated Purchase Price for each Property, (iv) one-half (½) of any escrow fees (unrelated to any Purchaser financing) pertaining to the sale of the Properties, and (v) transfer taxes or documentary stamps to be paid with reference to the recording of the Deeds (Section 5) At Closing, Seller will provide Purchaser with a credit in the amount of One Hundred Fifteen Thousand and No/100 Dollars ($115,000.00) in consideration of Purchaser’s agreement to extend the Closing Date to August 30, 2019.
Purchaser’s Closing Costs:	(i) Purchaser’s attorneys’ fees, (ii) one-half (½) of any escrow fees pertaining to the sale of the Properties, (iii) the cost of any endorsements and extended coverage to the title policy for the Properties, (iv) any and all recording fees (except as set forth above), (v) any and all costs related to any financing that may be obtained by Purchaser in connection with its acquisition of the Properties, (vi) any costs and fees related to ordering any update of the existing survey(s) for the Properties, and (vii) all costs of Purchaser’s due diligence in connection with the transaction contemplated hereby (Section 5)
Materiality Threshold:	Five percent (5.0%) of the Allocated Purchase Price of any Housing Community (Section 6)
Approval Period:	July 3, 2019 (Section 17)
Closing Date:	September 3, 2019 with respect to the Abbington Housing Community, and with respect to all other Housing Communities, August 30, 2019 (Section 8)
Cost Cap:	One Hundred Eighty Seven Thousand Five Hundred and No/100 Dollars ($187,500.00)
Survival Date:	One hundred twenty (120) days after the Closing
Liability Cap:	One and 4/10 percent (1.4%) of the Purchase Price
Liability Threshold:	Twenty-Five Thousand and No/100 Dollars ($25,000.00)

Rent Ready Credit:	Seven Hundred Fifty and no/100 Dollars ($750.00) (Section 18)
Abbington Work:	Unit 102: Repair fire damage as set forth in the Contract attached hereto as Schedule 3. Unit 123: Complete plumbing work as set forth in the Contract attached hereto as Schedule 3. Unit 168: Complete plumbing work as set forth in the Contract attached hereto as Schedule 3.
Abbington Work Cap:	$54,434.00

Right to Offer: If, during the one (1) year period following the Closing Date of this Agreement, Purchaser, in its sole and absolute discretion, determines that it will endeavor to sell any portion of the Property to an unrelated third party, then Purchaser shall so notify Seller in writing.  Seller shall have ten (10) days after the date of receipt of Purchaser’s notice (the “Offer Period”) within which to present a Letter of Intent (“LOI”) to Purchaser describing the terms and conditions upon which Seller desires to purchase the Property (the “Offer”).  If Seller fails to deliver the Offer to Purchaser within the Offer Period, then Seller's rights hereunder shall terminate, and Purchaser shall be free to sell the Property upon terms and conditions, and to such purchaser, as determined by Purchaser in its sole and absolute discretion.   If Seller delivers the Offer within the Offer Period, Purchaser may accept or reject Seller’s offer for any reason or no reason at all, and is under no obligation to make a counterproposal.  If Purchaser accepts the Offer, then for a period of fifteen (15) days thereafter, Seller and Purchaser shall exclusively negotiate a proposed purchase and sale agreement.  If the parties do not finalize a purchase and sale agreement within the 15-day negotiation period, then Purchaser is under no further obligation to continue such negotiations with Seller and shall be free to sell the Property to any third party at its sole discretion.  The terms and conditions of this paragraph, and the rights and obligations of Purchaser and Seller hereunder shall expire and terminate one (1) year after the Closing Date and shall be of no further force or effect.  Notwithstanding the foregoing or anything to the contrary herein, in no event Seller shall have any offer rights with respect to (a) any transfer of the Property by Purchaser to any parent, subsidiary or affiliate of Purchaser, (b) any transfer of membership interest in Purchaser or transfers to any entity into which or with which Purchaser is merged or consolidated; (c) any transfers by Purchaser which are deemed or considered transfers by operation of law, liquidation or consolidation, (d) any transfer by Purchaser to a lender or designee of a lender as security for a loan, or in a foreclosure (or to any other third party in a foreclosure sale or auction), by a deed in lieu of foreclosure, or similar transaction, (e) any grants of easements, leases, licenses, or transfers not in fee, and (f) any other financing transactions of any nature no matter the structure, including financing arrangements which include lender acquisition rights.   The terms and conditions of this paragraph are personal to Seller and shall become null and void upon any attempted transfer or assignment.    In no event shall any broker be entitled to a commission in the event of a subsequent sale of the Property to Seller.  The terms and conditions of this paragraph are confidential and shall become null and void if Seller shall record this paragraph, or any of the terms herein, or any memorandum or other evidence hereof.

Schedule 3

Abbington Work

EXHIBITS

A	-	Legal
B	-	Personal Property
C	-	Deed
D	-	Bill of Sale
E	-	Assignment and Assumption of Service Contracts
F	-	Assignment and Assumption of Leases and Security Deposits
G	-	Notice to Tenants
H	-	Non-Foreign Affidavit
I	-	Assignment of Intangible Property
J	-	Assignment of Guaranties, Warranties, Permits, Licenses and Approvals
K	-	Rent Roll
L	-	Litigation
M	-	Service Contracts

Table of Contents

Page

1. PURCHASE AND SALE2

2. PURCHASE PRICE5

3. TITLE COMMITMENT AND SURVEY5

4. CONDITION OF TITLE/CONVEYANCE7

5. PAYMENT OF CLOSING COSTS7

6. DAMAGE, CASUALTY AND CONDEMNATION7

7. AS-IS CONDITION8

8. CLOSING11

9. CLOSING DOCUMENTS14

10. SELLER’S RIGHT TO CURE15

11. DEFAULT BY PURCHASER15

12. SELLER’S DEFAULT16

13. PRORATIONS AND DELINQUENT RENTS16

14. RECORDING18

15. ASSIGNMENT18

16. BROKER.18

17. DOCUMENTS, INSPECTION OF PROPERTY AND APPROVAL PERIOD18

18. SELLER’S REPRESENTATIONS, WARRANTIES AND COVENANTS22

19. PURCHASER’S REPRESENTATIONS, WARRANTIES AND COVENANTS26

20. COMPLIANCE WITH OFAC26

21. ORGANIZATIONAL DOCUMENTS27

22. TIME OF ESSENCE27

23. NOTICES27

24. EXECUTION OF AGREEMENT AND ESCROW AGREEMENT29

25. GOVERNING LAW29

26. ENTIRE AGREEMENT29

27. COUNTERPARTS29

28. CAPTIONS29

29. NON-BUSINESS DAYS29

30. SEVERABILITY29

-i-

Table of Contents

(continued)

Page

31. NO WAIVER29

32. ATTORNEYS’ FEES30

33. TAX DEFERRED EXCHANGE30

34. CONFIDENTIALITY30

35. SURVIVAL OF INDEMNIFICATION30

36. MISCELLANEOUS PROVISIONS30

37. RIGHT TO CONTINUE TO MARKET31

38. JOINT AND SEVERAL LIABILITY OF PURCHASER31

-ii-

FIRST AMENDMENT TO

PURCHASE AND SALE AGREEMENT

This FIRST AMENDMENT TO PURCHASE AND SALE AGREEMENT (this “Amendment”) is made as of the 28th day of June, 2019, by and between NXRTBH FOOTHILL, LLC, a Delaware limited liability company, FRBH DANA POINT, LLC, a Delaware limited liability company, FRBH DUCK CREEK, LLC, a Delaware limited liability company, FRBH ABBINGTON, LLC, a Delaware limited liability company, NXRTBH HEATHERSTONE, LLC, a Delaware limited liability company, and FRBH EDGEWATER OWNER, LLC, a Delaware limited liability company (collectively, “Seller”), and BRIDGE ACQUISITIONS, ASSET MANAGEMENT AND DISPOSITIONS, LLC, a Utah limited liability company (“Purchaser”).

R E C I T A L S:

A.Seller and Purchaser are parties to that Purchase and Sale Agreement dated as of June 25, 2019 (the “Agreement”) for the purchase and sale of the properties described therein.

B.Purchaser and Seller desire to modify the terms of the Agreement pursuant to the terms and conditions of this Amendment.

NOW, THEREFORE, in consideration of the mutual promises set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:

1.Incorporation of Recitals; Definitions.  The foregoing recitals are incorporated herein.  Capitalized terms not otherwise defined herein shall have the meaning given such terms in the Agreement.

2.Title Period.  Notwithstanding anything to the contrary contained in the Agreement, Seller and Purchaser agree that the Title Review Period shall expire at 5 p.m. Mountain Time on July 3, 2019 and the Approval Period with respect to a Material Title Defect shall expire at 5 p.m. Mountain Time on July 8, 2019.

3.No Further Amendment.  Except as expressly set forth herein, the Agreement remains unmodified and in full force and effect.  To the extent of any inconsistency between the terms and provisions of this Amendment and the Agreement, the terms and provisions of this Amendment shall control.

4.Miscellaneous.  This Amendment may be executed in multiple counterparts each of which shall be deemed an original but together shall constitute one and the same instrument.  Each party has the right to rely upon a facsimile or e-mail counterpart of this Amendment signed by the other party to the same extent as if such party received an original counterpart.  This Amendment shall extend to, be binding upon and inure to the benefit of the respective heirs, devisees, legal representatives, successors, permitted assigns and beneficiaries of the parties hereto.

-i-

[Signatures on Next Page]

-ii-

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

SELLER:

FRBH DUCK CREEK, LLC,

a Delaware limited liability company

By: /s/ Matt McGraner

Name:Matt McGraner
Title:Authorized

NXRTBH HEATHERSTONE, LLC,

a Delaware limited liability company

By: /s/ Matt McGraner

Name:Matt McGraner

Title:Authorized Signatory

FRBH ABBINGTON, LLC,

a Delaware limited liability company

By: /s/ Matt McGraner

Name:Matt McGraner

Title:Authorized

FRBH EDGEWATER OWNER, LLC,
a Delaware limited liability company

By: /s/ Matt McGraner

Name:Matt McGraner

Title:Authorized

FRBH DANA POINT, LLC,
a Delaware limited liability company

By: /s/ Matt McGraner

Name:Matt McGraner

Title:Authorized

-iii-

PURCHASER:

BRIDGE ACQUISITIONS, ASSET MANAGEMENT AND

DISPOSITIONS, LLC,

a Utah limited liability company

By: /s/ Colin Apple

Name: Colin Apple____________________
Its: _Managing Director________________

-iv-

SECOND AMENDMENT TO

PURCHASE AND SALE AGREEMENT

This SECONDAMENDMENT TO PURCHASE AND SALE AGREEMENT (this “Amendment”) is made as of the 3^rd day of July, 2019, by and between NXRTBH FOOTHILL, LLC, a Delaware limited liability company, FRBH DANA POINT, LLC, a Delaware limited liability company, FRBH DUCK CREEK, LLC, a Delaware limited liability company, FRBH ABBINGTON, LLC, a Delaware limited liability company, NXRTBH HEATHERSTONE, LLC, a Delaware limited liability company, and FRBH EDGEWATER OWNER, LLC, a Delaware limited liability company (collectively, “Seller”), and BRIDGE ACQUISITIONS, ASSET MANAGEMENT AND DISPOSITIONS, LLC, a Utah limited liability company (“Purchaser”).

R E C I T A L S:

A.Seller and Purchaser are parties to that Purchase and Sale Agreement dated as of June 25, 2019, as amended by that certain First Amendment to Purchase and Sale Agreement dated June 28, 2019 (collectively, the “Agreement”) for the purchase and sale of the properties described therein.

B.Purchaser and Seller desire to modify the terms of the Agreement pursuant to the terms and conditions of this Amendment.

NOW, THEREFORE, in consideration of the mutual promises set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:

1.Incorporation of Recitals; Definitions.  The foregoing recitals are incorporated herein.  Capitalized terms not otherwise defined herein shall have the meaning given such terms in the Agreement.

2.Title Period.  Notwithstanding anything to the contrary contained in the Agreement, Seller and Purchaser agree that the Title Review Period shall expire at 5 p.m. Mountain Time on July 9, 2019 and the Approval Period with respect to a Material Title Defect shall expire at 5 p.m. Mountain Time on July 11, 2019.

3.No Further Amendment.  Except as expressly set forth herein, the Agreement remains unmodified and in full force and effect.  To the extent of any inconsistency between the terms and provisions of this Amendment and the Agreement, the terms and provisions of this Amendment shall control.

4.Miscellaneous.  This Amendment may be executed in multiple counterparts each of which shall be deemed an original but together shall constitute one and the same instrument.  Each party has the right to rely upon a facsimile or e-mail counterpart of this Amendment signed by the other party to the same extent as if such party received an original counterpart.  This Amendment shall extend to, be binding upon and inure to the benefit of the respective heirs,

-i-

devisees, legal representatives, successors, permitted assigns and beneficiaries of the parties hereto.

[Signatures on Next Page]

-ii-

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

SELLER:

FRBH DUCK CREEK, LLC,

a Delaware limited liability company

By: /s/ Matt McGraner

Name:Matt McGraner
Title:Authorized

NXRTBH HEATHERSTONE, LLC,

a Delaware limited liability company

By: /s/ Matt McGraner

Name:Matt McGraner

Title:Authorized Signatory

FRBH ABBINGTON, LLC,

a Delaware limited liability company

By: /s/ Matt McGraner

Name:Matt McGraner

Title:Authorized

FRBH EDGEWATER OWNER, LLC,
a Delaware limited liability company

By: /s/ Matt McGraner

Name:Matt McGraner

Title:Authorized

FRBH DANA POINT, LLC,
a Delaware limited liability company

By: /s/ Matt McGraner

Name:Matt McGraner

Title:Authorized

-iii-

PURCHASER:

BRIDGE ACQUISITIONS, ASSET MANAGEMENT AND

DISPOSITIONS, LLC,

a Utah limited liability company

By: /s/ Colin Apple

Name: Colin Apple____________________
Its: Managing Director__________________

-iv-

THIRD AMENDMENT TO

PURCHASE AND SALE AGREEMENT

This THIRD AMENDMENT TO PURCHASE AND SALE AGREEMENT (this “Amendment”) is made as of the 24th day of July, 2019, by and between NXRTBH FOOTHILL, LLC, a Delaware limited liability company, NXRTBH DANA POINT, LLC, a Delaware limited liability company, FRBH DUCK CREEK, LLC, a Delaware limited liability company, NXRT ABBINGTON, LLC, a Delaware limited liability company, NXRTBH HEATHERSTONE, LLC, a Delaware limited liability company, and FRBH EDGEWATER OWNER, LLC, a Delaware limited liability company (collectively, “Seller”), and BRIDGE ACQUISITIONS, ASSET MANAGEMENT AND DISPOSITIONS, LLC, a Utah limited liability company (“Purchaser”).

R E C I T A L S:

A.Seller and Purchaser are parties to that Purchase and Sale Agreement dated as of June 25, 2019, as amended by that certain First Amendment to Purchase and Sale Agreement dated June 28, 2019, and as further amended by that certain Second Amendment to Purchase and Sale Agreement dated July 3, 2019 (collectively, the “Agreement”) for the purchase and sale of the properties described therein.

B.Purchaser and Seller desire to modify the terms of the Agreement pursuant to the terms and conditions of this Amendment.

NOW, THEREFORE, in consideration of the mutual promises set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:

1.Incorporation of Recitals; Definitions.  The foregoing recitals are incorporated herein.  Capitalized terms not otherwise defined herein shall have the meaning given such terms in the Agreement.

2.Closing Date.  Notwithstanding anything to the contrary contained in the Agreement, the Closing Date with respect to all Housing Communities, except for the Abbington Housing Community, shall be revised to August 27, 2019.  The Closing Date with respect to the Abbington Housing Community shall remain on September 3, 2019.

3.No Further Amendment.  Except as expressly set forth herein, the Agreement remains unmodified and in full force and effect.  To the extent of any inconsistency between the terms and provisions of this Amendment and the Agreement, the terms and provisions of this Amendment shall control.

4.Miscellaneous.  This Amendment may be executed in multiple counterparts each of which shall be deemed an original but together shall constitute one and the same instrument.  Each party has the right to rely upon a facsimile or e-mail counterpart of this Amendment signed by the other party to the same extent as if such party received an original counterpart.  This Amendment shall extend to, be binding upon and inure to the benefit of the respective heirs, devisees, legal representatives, successors, permitted assigns and beneficiaries of the parties hereto.

[Signatures on Next Page]

-i-

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

SELLER:

FRBH DUCK CREEK, LLC,

a Delaware limited liability company

By: /s/ Matt McGraner

Name: Matt McGraner

Title: Authorized Signatory

NXRTBH HEATHERSTONE, LLC,

a Delaware limited liability company

By: /s/ Matt McGraner

Name: Matt McGraner

Title: Authorized Signatory

NXRT ABBINGTON, LLC,

a Delaware limited liability company

By: /s/ Matt McGraner

Name: Matt McGraner

Title: Authorized Signatory

FRBH EDGEWATER OWNER, LLC,

a Delaware limited liability company

By: /s/ Matt McGraner

Name: Matt McGraner

Title: Authorized Signatory

NXRTBH DANA POINT, LLC,

a Delaware limited liability company

By: /s/ Matt McGraner

Name: Matt McGraner

Title: Authorized Signatory

-ii-

PURCHASER:

BRIDGE ACQUISITIONS, ASSET MANAGEMENT AND

DISPOSITIONS, LLC,

a Utah limited liability company

By: /s/ Colin Apple

Name: Colin Apple____________________
Its: Managing Director_________________________________

-iii-

fourth AMENDMENT TO

PURCHASE AND SALE AGREEMENT

This FOURTH AMENDMENT TO PURCHASE AND SALE AGREEMENT (this “Amendment”) is made as of the 30th day of July, 2019, by and between NXRTBH FOOTHILL, LLC, a Delaware limited liability company, NXRTBH DANA POINT, LLC, a Delaware limited liability company, FRBH DUCK CREEK, LLC, a Delaware limited liability company, NXRT ABBINGTON, LLC, a Delaware limited liability company, NXRTBH HEATHERSTONE, LLC, a Delaware limited liability company, and FRBH EDGEWATER OWNER, LLC, a Delaware limited liability company (collectively, “Seller”), and BRIDGE ACQUISITIONS, ASSET MANAGEMENT AND DISPOSITIONS, LLC, a Utah limited liability company (“Purchaser”).

R E C I T A L S:

A.Seller and Purchaser are parties to that Purchase and Sale Agreement dated as of June 25, 2019, as amended by that certain First Amendment to Purchase and Sale Agreement dated June 28, 2019, as further amended by that certain Second Amendment to Purchase and Sale Agreement dated July 3, 2019, and as further amended by that certain Third Amendment to Purchase and Sale Agreement dated July 24, 2019 (collectively, the “Agreement”) for the purchase and sale of the properties described therein.

B.Purchaser and Seller desire to modify the terms of the Agreement pursuant to the terms and conditions of this Amendment.

NOW, THEREFORE, in consideration of the mutual promises set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:

1.Incorporation of Recitals; Definitions.  The foregoing recitals are incorporated herein.  Capitalized terms not otherwise defined herein shall have the meaning given such terms in the Agreement.

2.Closing Date.  Notwithstanding anything to the contrary contained in the Agreement, the Closing Date with respect to the Abbington Housing Community shall be revised to August 30, 2019.  

3.No Further Amendment.  Except as expressly set forth herein, the Agreement remains unmodified and in full force and effect.  To the extent of any inconsistency between the terms and provisions of this Amendment and the Agreement, the terms and provisions of this Amendment shall control.

4.Miscellaneous.  This Amendment may be executed in multiple counterparts each of which shall be deemed an original but together shall constitute one and the same instrument.  Each party has the right to rely upon a facsimile or e-mail counterpart of this Amendment signed by the other party to the same extent as if such party received an original counterpart.  This Amendment shall extend to, be binding upon and inure to the benefit of the respective heirs, devisees, legal representatives, successors, permitted assigns and beneficiaries of the parties hereto.

[Signatures on Next Page]

-1-

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

SELLER:

FRBH DUCK CREEK, LLC,

a Delaware limited liability company

By: ____/s/ Matt McGraner______

Name: Matt McGraner

Title: Authorized Signatory

NXRTBH HEATHERSTONE, LLC,

a Delaware limited liability company

By: ____/s/ Matt McGraner______

Name: Matt McGraner

Title: Authorized Signatory

NXRT ABBINGTON, LLC,

a Delaware limited liability company

By: ____/s/ Matt McGraner______

Name: Matt McGraner

Title: Authorized Signatory

FRBH EDGEWATER OWNER, LLC,

a Delaware limited liability company

By: ____/s/ Matt McGraner______

Name: Matt McGraner

Title: Authorized Signatory

NXRTBH DANA POINT, LLC,

a Delaware limited liability company

By: ____/s/ Matt McGraner______

Name: Matt McGraner

Title: Authorized Signatory

-2-

PURCHASER:

BRIDGE ACQUISITIONS, ASSET MANAGEMENT AND

DISPOSITIONS, LLC,

a Utah limited liability company

By:/s/ Colin Apple

Name: Colin Apple    

Its: Managing Director    

-3-

EX-31.1

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER 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 report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 30, 2019

/s/  Jim Dondero

Jim Dondero

President

(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER 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 report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 30, 2019

/s/ Brian Mitts

Brian Mitts

Chief Financial Officer

(Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATIONS 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, 2019, 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.  

Dated: July 30, 2019	/s/ Jim Dondero
	Jim Dondero President (Principal Executive Officer)
Dated: July 30, 2019	/s/ Brian Mitts
	Brian Mitts Chief Financial Officer (Principal Financial Officer)

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2019	Jul. 30, 2019
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2019
Document Fiscal Year Focus	2019
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	Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Common Stock, Shares Outstanding		23,895,442
Entity Current Reporting Status	Yes
Entity Shell Company	false
Entity File Number	001-36663
Entity Tax Identification Number	471881359
Entity Address, Address Line One	300 Crescent Court
Entity Address, Address Line Two	Suite 700
Entity Address, City or Town	Dallas
Entity Address, State or Province	Texas
Entity Address, Postal Zip Code	75201
City Area Code	(972)
Local Phone Number	628-4100

XML

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Operating Real Estate Investments
Land	$ 203,748	$ 202,347
Buildings and improvements	914,771	935,604
Intangible lease assets	2,971	3,049
Construction in progress	612	1,881
Furniture, fixtures, and equipment	57,545	61,456
Total Gross Operating Real Estate Investments	1,179,647	1,204,337
Accumulated depreciation and amortization	(127,118)	(134,124)
Total Net Operating Real Estate Investments	1,052,529	1,070,213
Real estate held for sale, net of accumulated depreciation of $33,305 and $897, respectively	175,968	17,329
Total Net Real Estate Investments	1,228,497	1,087,542
Cash and cash equivalents	16,892	19,864
Restricted cash	22,676	23,265
Accounts receivable	2,667	3,340
Prepaid and other assets	3,826	9,058
Fair market value of interest rate swaps	2,363	18,141
TOTAL ASSETS	1,276,921	1,161,210
Liabilities:
Mortgages payable, net	769,973	824,702
Mortgages payable held for sale, net	156,636	13,318
Credit facility, net	51,536
Accounts payable and other accrued liabilities	6,679	5,765
Accrued real estate taxes payable	10,192	12,607
Accrued interest payable	3,086	2,852
Security deposit liability	2,032	1,889
Prepaid rents	1,554	1,482
Fair market value of interest rate swaps	853
Total Liabilities	1,002,541	862,615
Redeemable noncontrolling interests in the Operating Partnership	3,032	2,567
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; 23,895,442 and 23,499,635 shares issued and outstanding, respectively	238	234
Additional paid-in capital	297,448	285,511
Accumulated earnings less dividends	(26,824)	(6,764)
Accumulated other comprehensive income	486	17,047
Total Stockholders' Equity	271,348	296,028
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 1,276,921	$ 1,161,210

XML

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Statement Of Financial Position [Abstract]
Net of accumulated depreciation	$ 33,305	$ 897
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	23,895,442	23,499,635
Common stock, shares, outstanding	23,895,442	23,499,635
Common stock, par value	$ 0.01	$ 0.01

XML

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (Unaudited) - USD ($) shares in Thousands, $ in Thousands		3 Months Ended		6 Months Ended
		Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Revenues
Rental income		$ 37,711	$ 31,069	$ 74,033	$ 61,642
Other income		5,355	4,586	10,524	9,070
Total revenues		43,066	35,655	84,557	70,712
Expenses
Property operating expenses		10,161	8,231	19,800	17,108
Real estate taxes and insurance		5,564	4,588	11,322	9,444
Property management fees	[1]	1,291	1,066	2,531	2,120
Advisory and administrative fees	[2]	1,872	1,863	3,722	3,701
Corporate general and administrative expenses		2,741	1,986	4,974	3,799
Property general and administrative expenses		1,768	1,648	3,426	3,195
Depreciation and amortization		13,066	11,038	28,464	22,410
Total expenses		36,463	30,420	74,239	61,777
Operating income before gain on sales of real estate		6,603	5,235	10,318	8,935
Gain on sales of real estate					13,742
Operating income		6,603	5,235	10,318	22,677
Interest expense		(8,590)	(6,823)	(16,678)	(13,620)
Loss on extinguishment of debt and modification costs			(78)		(629)
Net income (loss)		(1,987)	(1,666)	(6,360)	8,428
Net income (loss) attributable to redeemable noncontrolling interests in the Operating Partnership		(6)	(5)	(19)	25
Net income (loss) attributable to common stockholders		(1,981)	(1,661)	(6,341)	8,403
Other comprehensive income (loss)
Unrealized gains (losses) on interest rate derivatives		(10,946)	2,749	(16,611)	10,510
Total comprehensive income (loss)		(12,933)	1,083	(22,971)	18,938
Comprehensive income (loss) attributable to redeemable noncontrolling interests in the Operating Partnership		(39)	4	(69)	57
Comprehensive income (loss) attributable to common stockholders		$ (12,894)	$ 1,079	$ (22,902)	$ 18,881
Weighted average common shares outstanding - basic		23,736	20,780	23,643	20,883
Weighted average common shares outstanding - diluted		24,233	21,295	24,139	21,362
Earnings (loss) per share - basic		$ (0.08)	$ (0.08)	$ (0.27)	$ 0.40
Earnings (loss) per share - diluted		$ (0.08)	$ (0.08)	$ (0.27)	$ 0.39

[1] Fees incurred to an unaffiliated third party that is an affiliate of the noncontrolling limited partner of the Company’s operating partnership, NexPoint Residential Trust Operating Partnership, L.P. (see Note 10).

[2] Fees incurred to the Adviser (see Note 11).

XML

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited) - USD ($) $ in Thousands	Total	Common Stock	Additional Paid-in Capital	Accumulated Earnings Less Dividends	Accumulated Other Comprehensive Income (Loss)	Common Stock Held in Treasury at Cost
Beginning Balance, Values at Dec. 31, 2017	$ 239,444	$ 210	$ 206,227	$ 19,288	$ 13,719
Beginning Balance, Shares at Dec. 31, 2017		21,049,565
Cumulative effect upon adoption of ASU 2017-12				(1,403)	1,403
Net income (loss) attributable to common stockholders	8,403			8,403
Repurchase of common stock	(9,672)					$ (9,672)
Retirement of common stock held in treasury		$ (4)	(9,668)			9,672
Retirement of common stock held in treasury, Shares		(382,941)
Vesting of stock-based compensation	2,009	$ 1	2,008
Vesting of stock-based compensation, Shares		80,743
Common stock dividends declared	(10,696)			(10,696)
Other comprehensive income (loss)	10,478				10,478
Adjustment to reflect redemption value of redeemable noncontrolling interests in the Operating Partnership	(22)			(22)
Ending Balance, Values at Jun. 30, 2018	239,944	$ 207	198,567	15,570	25,600
Ending Balance, Shares at Jun. 30, 2018		20,747,367
Beginning Balance, Values at Mar. 31, 2018	247,723	$ 209	202,085	22,569	22,860
Beginning Balance, Shares at Mar. 31, 2018		20,926,355
Net income (loss) attributable to common stockholders	(1,661)			(1,661)
Repurchase of common stock	(4,614)					(4,614)
Retirement of common stock held in treasury		$ (2)	(4,612)			$ 4,614
Retirement of common stock held in treasury, Shares		(178,988)
Vesting of stock-based compensation	1,094		1,094
Common stock dividends declared	(5,316)			(5,316)
Other comprehensive income (loss)	2,740				2,740
Adjustment to reflect redemption value of redeemable noncontrolling interests in the Operating Partnership	(22)			(22)
Ending Balance, Values at Jun. 30, 2018	239,944	$ 207	198,567	15,570	25,600
Ending Balance, Shares at Jun. 30, 2018		20,747,367
Beginning Balance, Values at Dec. 31, 2018	$ 296,028	$ 234	285,511	(6,764)	17,047
Beginning Balance, Shares at Dec. 31, 2018	23,499,635	23,499,635
Net income (loss) attributable to common stockholders	$ (6,341)			(6,341)
Vesting of stock-based compensation	2,489	$ 1	2,488
Vesting of stock-based compensation, Shares		143,642
Issuance of common shares through at-the-market offering	9,452	$ 3	9,449
Issuance of common shares through at-the-market offering, Shares		252,165
Common stock dividends declared	(13,343)			(13,343)
Other comprehensive income (loss)	(16,561)				(16,561)
Adjustment to reflect redemption value of redeemable noncontrolling interests in the Operating Partnership	(376)			(376)
Ending Balance, Values at Jun. 30, 2019	$ 271,348	$ 238	297,448	(26,824)	486
Ending Balance, Shares at Jun. 30, 2019	23,895,442	23,895,442
Beginning Balance, Values at Mar. 31, 2019	$ 280,323	$ 235	286,580	(17,891)	11,399
Beginning Balance, Shares at Mar. 31, 2019		23,643,277
Net income (loss) attributable to common stockholders	(1,981)			(1,981)
Vesting of stock-based compensation	1,419		1,419
Issuance of common shares through at-the-market offering	9,452	$ 3	9,449
Issuance of common shares through at-the-market offering, Shares		252,165
Common stock dividends declared	(6,702)			(6,702)
Other comprehensive income (loss)	(10,913)				(10,913)
Adjustment to reflect redemption value of redeemable noncontrolling interests in the Operating Partnership	(250)			(250)
Ending Balance, Values at Jun. 30, 2019	$ 271,348	$ 238	$ 297,448	$ (26,824)	$ 486
Ending Balance, Shares at Jun. 30, 2019	23,895,442	23,895,442

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CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited) (Parenthetical) - $ / shares	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Statement Of Stockholders Equity [Abstract]
Common stock, dividend per share declared	$ 0.275	$ 0.25	$ 0.550	$ 0.50

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CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
Cash flows from operating activities
Net income (loss)	$ (6,360)	$ 8,428
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Gain on sales of real estate		(13,742)
Depreciation and amortization	28,464	22,410
Amortization/write-off of deferred financing costs	902	1,225
Change in fair value on derivative instruments included in interest expense	(3,734)	(1,241)
Net cash received on derivative settlements	3,720	1,177
Amortization/write-off of fair market value adjustment of assumed debt	(47)	(121)
Vesting of stock-based compensation	2,654	2,009
Changes in operating assets and liabilities, net of effects of acquisitions:
Operating assets	(585)	(1,399)
Operating liabilities	(1,394)	(1,413)
Net cash provided by operating activities	23,620	17,333
Cash flows from investing activities
Net proceeds from sales of real estate		29,553
Prepaid acquisition costs	(1,000)
Additions to real estate investments	(17,529)	(15,104)
Acquisitions of real estate investments	(133,792)
Net cash provided by (used in) investing activities	(152,321)	14,449
Cash flows from financing activities
Mortgage proceeds received	78,987	17,760
Mortgage payments	(465)	(29,471)
Credit facilities proceeds received	52,500	5,000
Bridge facility payments		(8,597)
Deferred financing costs paid	(1,861)	(310)
Interest rate cap fees paid	(20)	(9)
Proceeds from the issuance of common shares through at-the-market offering, net of offering costs	9,452
Payments for taxes related to net share settlement of stock-based compensation	(165)
Repurchase of common stock		(9,672)
Dividends paid to common stockholders	(13,288)	(10,512)
Net cash provided by (used in) financing activities	125,140	(35,811)
Net decrease in cash, cash equivalents and restricted cash	(3,561)	(4,029)
Cash, cash equivalents and restricted cash, beginning of period	43,129	43,248
Cash, cash equivalents and restricted cash, end of period	39,568	39,219
Supplemental Disclosure of Cash Flow Information
Interest paid	19,323	14,042
Prepayment penalties		172
Supplemental Disclosure of Noncash Activities
Capitalized construction costs included in accounts payable and other accrued liabilities	1,513	1,607
Change in fair value on derivative instruments designated as hedges	(16,611)	10,510
Other assets acquired from acquisitions	109
Liabilities assumed from acquisitions	647
Assumed debt on acquisitions	10,109
Increase in dividends payable upon vesting of restricted stock units	$ 55	$ 184

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Organization and Description of Business

6 Months Ended

Jun. 30, 2019

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 in Maryland on September 19, 2014, and has elected 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 owns its properties (the “Portfolio”) through the OP and its wholly owned taxable REIT subsidiary (“TRS”). The OP owns approximately 99.9% of the Portfolio; the TRS owns approximately 0.1% of the Portfolio. The Company’s wholly owned subsidiary, NexPoint Residential Trust Operating Partnership GP, LLC (the “OP GP”), is the sole general partner of the OP. As of June 30, 2019, there were 23,819,402 common units in the OP (“OP Units”) outstanding, of which 23,746,169, or 99.7%, were owned by the Company and 73,233, or 0.3%, were owned by a noncontrolling limited partner (see Note 10).

The Company is externally managed by NexPoint Real Estate Advisors, L.P. (the “Adviser”), through an agreement dated March 16, 2015, as amended, and renewed on February 13, 2019 for a one-year term set to expire on March 16, 2020 (the “Advisory Agreement”), by and among the Company, the OP and the Adviser. The Adviser conducts substantially all of the Company’s operations and provides asset management services for its real estate investments. The Company expects it will only have accounting employees while the Advisory Agreement is in effect. All of the Company’s investment decisions are made by the Adviser, subject to general oversight by the Adviser’s investment committee and the Company’s board of directors (the “Board”). The Adviser is wholly owned by NexPoint Advisors, L.P., which is an affiliate of Highland Capital Management, L.P. (the “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 value-add program. Consistent with the Company’s policy to acquire assets for both income and capital gain, the Company intends to hold at least majority interests in its 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.

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Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2019

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

Basis of Accounting

The accompanying unaudited consolidated financial statements are presented in accordance with accounting principles generally accepted in the United States (“GAAP”). GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the dates of the unaudited consolidated financial statements and the amounts of revenues and expenses during the reporting periods. Actual amounts realized or paid could differ from those estimates. All significant intercompany accounts and transactions have been eliminated in consolidation. There have been no significant changes to the Company’s significant accounting policies during the six months ended June 30, 2019.

The accompanying unaudited consolidated financial statements have been prepared according to the rules and regulations of the SEC.  Certain information and note disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted according to such rules and regulations, although management believes that the disclosures are adequate to make the information presented not misleading.

In the opinion of management, all adjustments and eliminations necessary for the fair presentation of the Company’s financial position as of June 30, 2019 and results of operations for the six months ended June 30, 2019 and 2018 have been included.  Such adjustments are normal and recurring in nature.  The unaudited information included in this quarterly report on Form 10-Q should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2018 and notes thereto included in its annual report on Form 10-K filed with the SEC on February 19, 2019.

Principles of Consolidation

The Company accounts for subsidiary partnerships, joint ventures and other similar entities in which it holds an ownership interest in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 810, Consolidation. The Company first evaluates whether each entity is a variable interest entity (“VIE”). Under the VIE model, the Company consolidates an entity when it has control to direct the activities of the VIE and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. Under the voting model, the Company consolidates an entity when it controls the entity through ownership of a majority voting interest. The unaudited consolidated financial statements include the accounts of the Company and its subsidiaries, including the OP and its subsidiaries.

Revenue Recognition

The Company’s primary operations consist of rental income earned from its residents under lease agreements typically 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, and pets, administrative, application and other fees and are recognized when earned.  The Company implemented the provisions of Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”) as of January 1, 2019 using the modified retrospective approach.  The adoption of ASU 2014-09 did not have a material impact on the Company’s consolidated financial statements as a substantial portion of its revenue consists of rental income from leasing arrangements, which is specifically excluded from ASU 2014-09. 

Purchase Price Allocation

Upon acquisition of a property, the purchase price and related acquisition costs (“total consideration”) are allocated to land, buildings, improvements, furniture, fixtures, and equipment, and intangible lease assets in accordance with FASB ASC 805, Business Combinations. Acquisition costs are capitalized in accordance with FASB ASC 805.

The allocation of total consideration, which is determined using inputs that are classified within Level 3 of the fair value hierarchy established by FASB ASC 820, Fair Value Measurement and Disclosures (“ASC 820”) (see Note 7), is based on management’s estimate of the property’s “as-if” vacant fair value and 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 total consideration 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, which is estimated using inputs that are classified within Level 2 of the fair value hierarchy, and the face value of debt is recorded as a premium or discount and amortized as interest expense over the life of the debt assumed.

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.

Impairment

Real estate assets are reviewed for impairment 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.

The Company periodically classifies real estate assets as held for sale when certain criteria are met, in accordance with GAAP. At that time, the Company presents the net real estate assets and the net debt associated with the real estate held for sale separately in its consolidated balance sheet, and the Company ceases recording depreciation and amortization expense related to that property. Real estate held for sale is reported at the lower of its carrying amount or its estimated fair value less estimated costs to sell.  As of June 30, 2019, there are seven properties that are held for sale.  Approximately $0.6 million of other assets and approximately $2.6 million of other liabilities related to the held for sale assets are included on the consolidated balance sheet.     

Income Taxes

The Company has elected 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 continue 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 (1) 85% of its ordinary income, (2) 95% of its capital gain net income and (3) 100% of its undistributed income from prior years. The Company intends to operate in such a manner so as to qualify as a REIT, but no assurance can be given that the Company will operate in a manner so as to qualify as a REIT. Taxable income from certain non-REIT activities is managed through a TRS and is subject to applicable federal, state, and local income and margin taxes. The Company had no significant taxes associated with its TRS for the six months ended June 30, 2019 and 2018.

If the Company fails 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, 2019, the Company believes it is in compliance with all applicable REIT requirements.

The Company evaluates the accounting and disclosure of tax positions taken or expected to be taken in the course of preparing the Company’s tax returns to determine whether the tax positions are “more-likely-than-not” (greater than 50 percent probability) of being sustained by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax benefit or expense in the current year. The Company’s management is required to analyze all open tax years, as defined by the statute of limitations, for all major jurisdictions, which include federal and certain states. The Company has no examinations in progress and none are expected at this time.

The Company recognizes its tax positions and evaluates them using a two-step process. First, the Company determines whether a tax position is more likely than not to be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. Second, the Company will determine the amount of benefit to recognize and record the amount that is more likely than not to be realized upon ultimate settlement.

The Company had no material unrecognized tax benefit or expense, accrued interest or penalties as of June 30, 2019. The Company and its subsidiaries are subject to federal income tax as well as income tax of various state and local jurisdictions. The 2018, 2017 and 2016 tax years remain open to examination by tax jurisdictions to which the Company and its subsidiaries are subject. When applicable, the Company recognizes interest and/or penalties related to uncertain tax positions on its consolidated statements of operations and comprehensive income (loss).

Accounting Pronouncements Adopted in the Current Year

In May 2014, the FASB issued ASU 2014-09, 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 periods in fiscal years beginning after December 15, 2018. Entities are allowed to use either the full or modified retrospective approach when transitioning to the ASU. The Company implemented the provisions of ASU 2014-09 as of January 1, 2019 using the modified retrospective approach. The adoption of ASU 2014-09 did not have a material impact on the Company’s consolidated financial statements as a substantial portion of its revenue consists of rental income from leasing arrangements, which is specifically excluded from ASU 2014-09.   

In January 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”), 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 in fiscal years beginning after December 15, 2018. The Company implemented the provisions of ASU 2016-01 as of January 1, 2019, and it did not have a material impact on the Company’s consolidated financial statements as the Company does not, nor does it expect to, have a material amount of financial assets or financial liabilities that would be subject to the provisions of ASU 2016-01.

Recent Accounting Pronouncements

Section 107 of the Jumpstart Our Business Startups Act (“JOBS Act”) provides that an emerging growth company can take advantage of the extended transition period provided in Section 13(a) of the Securities Exchange Act of 1934, as amended (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. The Company has elected to take advantage of this extended transition period. As a result of this election, the Company’s financial statements may not be comparable to companies that comply with public company effective dates for such new or revised standards. At June 30, 2019, the Company’s public float exceeded $700 million, and as such, the transition period will end at December 31, 2019. At the point the transition period ends, the Company will follow the adoption criteria for public companies and reflect such adoption criteria in the Company’s Annual Report on Form 10-K for the 2019 fiscal year. The following recent accounting pronouncements reflect effective dates that delay the adoption until those standards would otherwise apply to private companies.

In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815) (“ASU 2017-12”), which clarifies hedge accounting requirements, improves disclosure of hedging arrangements, and better aligns risk management activities and financial reporting for hedging relationships. The Company early adopted ASU 2017-12 on January 1, 2018, on a modified retrospective basis. For cash flow hedges existing as of the date of adoption, the Company eliminated the separate measurement of ineffectiveness by means of a cumulative-effect adjustment to accumulated other comprehensive income (“OCI”) with a corresponding adjustment to the opening balance of accumulated earnings less dividends on January 1, 2018. The cumulative-effect adjustment, which eliminated the cumulative ineffectiveness that was previously reported in interest expense, resulted in an increase to OCI of approximately $1.4 million, with a corresponding decrease to accumulated earnings less dividends.

In February 2016, the FASB issued ASU 2016-02, Leases (“ASU 2016-02”), which supersedes the current accounting for leases and while retaining two distinct types of leases, finance and operating, (1) requires lessees to record a right of use asset and a related liability for the rights and obligations associated with a lease, regardless of lease classification, and recognize lease expense in a manner similar to current accounting, (2) eliminates most real estate specific lease provisions and (3) aligns many of the underlying lessor model principles with those in the new revenue standard. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases today. As noted above, at the point the transition period ends, the Company will follow the adoption criteria for public companies. As such, the ASU is now effective for the Company to adopt as of January 1, 2019, and will be presented accordingly in the Company’s Annual Report on Form 10-K for the 2019 Fiscal Year. Entities are required to use a modified retrospective approach when transitioning to the ASU for leases that exist as of or are entered into after the beginning of the earliest comparative period presented in the financial statements. As lessors, substantially all of the Company’s agreements have a term of 12 months or less. For lessors, accounting for leases under the new standard will be substantially the same as existing guidance for sales-type leases, direct financing leases, and operating leases, but eliminates current real estate specific provisions and changes the treatment of initial direct costs. The Company is continuing its evaluation, which may identify additional impacts this standard will have on its consolidated financial statements and related disclosures.

In July 2018, the FASB issued ASU 2018-11, Leases – Targeted Improvements (“ASU 2018-11”), which provides entities with relief from the costs of implementing certain aspects of ASU 2016-02. The ASU provides a practical expedient which allows lessors to not separate lease and non-lease components in a contract and allocate the consideration in the contract to the separate components if both (i) the timing and pattern of revenue recognition for the non-lease component and the related lease component are the same and (ii) the combined single lease component would be classified as an operating lease. The Company intends to elect the practical expedient to account for lease and non-lease components as a single component in lease contracts where the Company is the lessor. The ASU also provides a transition option that permits entities to not recast the comparative periods presented when transitioning to the standard. The Company also intends to elect the transition option.

In August 2018, the SEC adopted SEC Release No. 33-10532, Disclosure Update and Simplification (the “SEC Release”), which amends certain disclosure requirements that were redundant, duplicative, overlapping or superseded by other SEC disclosure requirements or GAAP. The amendments generally eliminated or otherwise reduced certain disclosure requirements of various SEC rules and regulations. However, in some cases, the amendments require additional information to be disclosed, including changes in stockholders’ equity in interim periods. Under the SEC Release, registrants will be required to disclose in interim periods on Form 10-Q the changes in each caption of stockholders’ equity and noncontrolling interests for the current and comparative year-to-date periods, with subtotals for each interim period and the amount of dividends per share for each class of shares. The amendments require registrants, including smaller reporting companies, to provide information as prescribed by Rule 3-04 of Regulation S-X. Therefore, the interim disclosures of changes in stockholders’ equity, including dividends per share amounts, may be given in a note to the financial statements or in a separate financial statement. Under Rule 3-04, the interim disclosures of the changes in stockholders’ equity should be in the form of a reconciliation of the beginning balance to the ending balance for each period for which an income statement is required to be filed, with all significant reconciling items described by appropriate captions. The reconciliation should also reflect any adjustments to the balance at the beginning of the earliest period presented for items retroactively applied to periods prior to that period. The Company adopted the provisions of the SEC Release on September 30, 2018, on a retrospective basis.

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Investments in Subsidiaries

6 Months Ended

Jun. 30, 2019

Schedule Of Investments [Abstract]

Investments in Subsidiaries

3. Investments in Subsidiaries

The Company conducts its operations through the OP, which owns the properties through single asset limited liability companies that are special purpose entities (“SPEs”). The Company consolidates the SPEs that it controls as well as any VIEs where it is the primary beneficiary. In connection with its indirect equity investments in the properties acquired, the Company, through the OP and the TRS, directly or indirectly holds 100% of the membership interests in SPEs that directly own the properties. All of the properties the SPEs own are consolidated in the Company’s consolidated financial statements. The assets of each entity can only be used to settle obligations of that particular entity, and the creditors of each entity have no recourse to the assets of other entities or the Company.

Additionally, the Company has in the past and may in the future enter into purchase and sale transactions structured as reverse like-kind exchanges (“1031 Exchanges”) under Section 1031 of the Code. For a reverse 1031 Exchange in which the Company purchases a new property prior to selling the property to be matched in the like-kind exchange (the Company refers to the new property being acquired in the 1031 Exchange prior to the sale of the related property as a “Parked Asset”), legal title to the Parked Asset is held by an Exchange Accommodation Titleholder (“EAT”) engaged to execute the 1031 Exchange until the sale transaction and the 1031 Exchange are completed. The Company, through a wholly owned subsidiary, enters into a master lease agreement with the EAT whereby the EAT leases the acquired property and all other rights acquired in connection with the acquisition to the Company. The term of the master lease agreement is the earlier of the completion of the reverse 1031 Exchange or 180 days from the date that the property was acquired. The EAT is classified as a VIE as it does not have sufficient equity investment at risk to finance its activities without additional subordinated financial support. The Company consolidates the EAT as its primary beneficiary because it has the ability to control the activities that most significantly impact the EAT’s economic performance and the Company retains all of the legal and economic benefits and obligations related to the Parked Assets prior to completion of the 1031 Exchange. As such, the Parked Assets are included in the Company’s consolidated financial statements as VIEs until legal title is transferred to the Company upon either completion of the 1031 Exchange or termination of the master lease agreement, at which time they will be consolidated as wholly owned subsidiaries.

As of June 30, 2019, the Company, through the OP and the wholly owned TRS, owned 39 properties through single-asset LLCs. The following table represents the Company’s ownership in each property by virtue of its 100% ownership of the single-asset LLCs that directly own the title to each property as of June 30, 2019 and December 31, 2018:

				Effective Ownership Percentage at
Property Name		Location	YearAcquired	June 30, 2019			December 31, 2018
Arbors on Forest Ridge		Bedford, Texas	2014		100	%		100	%
Cutter's Point		Richardson, Texas	2014		100	%		100	%
Eagle Crest		Irving, Texas	2014		100	%		100	%
Silverbrook		Grand Prairie, Texas	2014		100	%		100	%
Edgewater at Sandy Springs	(1)	Atlanta, Georgia	2014		100	%		100	%
Beechwood Terrace		Antioch, Tennessee	2014		100	%		100	%
Willow Grove		Nashville, Tennessee	2014		100	%		100	%
Woodbridge		Nashville, Tennessee	2014		100	%		100	%
Abbington Heights	(1)	Antioch, Tennessee	2014		100	%		100	%
The Summit at Sabal Park		Tampa, Florida	2014		100	%		100	%
Courtney Cove		Tampa, Florida	2014		100	%		100	%
Radbourne Lake		Charlotte, North Carolina	2014		100	%		100	%
Timber Creek		Charlotte, North Carolina	2014		100	%		100	%
Belmont at Duck Creek	(1)	Garland, Texas	2014		100	%		100	%
Sabal Palm at Lake Buena Vista		Orlando, Florida	2014		100	%		100	%
Southpoint Reserve at Stoney Creek	(1)	Fredericksburg, Virginia	2014		100	%		100	%
Cornerstone		Orlando, Florida	2015		100	%		100	%
The Preserve at Terrell Mill		Marietta, Georgia	2015		100	%		100	%
The Ashlar	(1)	Dallas, Texas	2015		100	%		100	%
Heatherstone	(1)	Dallas, Texas	2015		100	%		100	%
Versailles		Dallas, Texas	2015		100	%		100	%
Seasons 704 Apartments		West Palm Beach, Florida	2015		100	%		100	%
Madera Point		Mesa, Arizona	2015		100	%		100	%
The Pointe at the Foothills	(1)	Mesa, Arizona	2015		100	%		100	%
Venue at 8651		Fort Worth, Texas	2015		100	%		100	%
Parc500		West Palm Beach, Florida	2016		100	%		100	%
The Venue on Camelback	(6)	Phoenix, Arizona	2016		100	%		100	%
Old Farm		Houston, Texas	2016		100	%		100	%
Stone Creek at Old Farm		Houston, Texas	2016		100	%		100	%
Hollister Place		Houston, Texas	2017		100	%		100	%
Rockledge Apartments		Marietta, Georgia	2017		100	%		100	%
Atera Apartments	(2)	Dallas, Texas	2017		100	%		100	%
Cedar Pointe	(3)	Antioch, Tennessee	2018		100	%		100	%
Crestmont Reserve		Dallas, Texas	2018		100	%		100	%
Brandywine I & II		Nashville, Tennessee	2018		100	%		100	%
Bella Vista	(4)	Phoenix, Arizona	2019		100	%		—		(5)
The Enclave	(4)	Tempe, Arizona	2019		100	%		—		(5)
The Heritage	(4)	Phoenix, Arizona	2019		100	%		—		(5)
Summers Landing		Fort Worth, Texas	2019		100	%		—		(5)

(1) Property was classified as held for sale as of June 30, 2019.

(2) The EAT that directly owned Atera Apartments was consolidated as a VIE at December 31, 2017.  The Company completed the reverse portion of the 1031 Exchange of Atera Apartments with the sale of Timberglen on January 31, 2018, at which time legal title to Atera Apartments transferred to the Company.  Upon the transfer of title, the entity that directly owns Atera Apartments was no longer considered a VIE.

(3) The EAT that directly owned Cedar Pointe was consolidated as a VIE at December 31, 2018.  The master lease agreement with the EAT that directly owned Cedar Pointe terminated on February 20, 2019, at which time legal title to Cedar Pointe transferred to the Company.  Upon the transfer of title, the entity that directly owns Cedar Pointe was no longer considered a VIE.

(4) The EAT that directly owned Bella Vista, The Enclave and The Heritage was consolidated as a VIE at March 31, 2019.  The master lease agreement with the EAT that directly owned these properties terminated on July 27, 2019, as which time legal title transferred to the Company. Upon the transfer of title, the EAT that directly owned these properties was no longer considered a VIE.

(5) Properties were acquired in 2019; therefore, no ownership as of December 31, 2018.

(6) Formerly knowns as The Colonnade.

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Real Estate Investments Statistics

6 Months Ended

Jun. 30, 2019

Business Combinations [Abstract]

Real Estate Investments Statistics

4. Real Estate Investments Statistics

As of June 30, 2019, the Company was invested in a total of 39 multifamily properties, as listed below:

							Average Effective Monthly Rent Per Unit (1) as of					% Occupied (2) as of
Property Name		Rentable Square Footage (in thousands)		Number of Units		Date Acquired	June 30, 2019		December 31, 2018			June 30, 2019			December 31, 2018
Arbors on Forest Ridge			155	210		1/31/2014	$	874	$	870			95.2	%		95.2	%
Cutter's Point			198	196		1/31/2014		1,138		1,109			94.9	%		95.4	%
Eagle Crest			396	447		1/31/2014		946		922			95.7	%		94.9	%
Silverbrook			526	642		1/31/2014		868		835			96.0	%		94.9	%
Edgewater at Sandy Springs	(3)		727	760		7/18/2014		976		950			94.6	%		94.1	%
Beechwood Terrace			272	300		7/21/2014		938		933			94.0	%		93.7	%
Willow Grove			229	244		7/21/2014		991		960			94.3	%		95.1	%
Woodbridge			247	220		7/21/2014		1,052		1,028			94.1	%		94.1	%
Abbington Heights	(3)		239	274		8/1/2014		891		889			94.9	%		92.0	%
The Summit at Sabal Park			205	252		8/20/2014		986		955			93.7	%		94.4	%
Courtney Cove			225	324		8/20/2014		912		895			94.4	%		95.7	%
Radbourne Lake			247	225		9/30/2014		1,100		1,082			95.6	%		96.0	%
Timber Creek			248	352		9/30/2014		879		847			96.0	%		92.6	%
Belmont at Duck Creek	(3)		198	240		9/30/2014		1,050		1,030			94.2	%		92.1	%
Sabal Palm at Lake Buena Vista			371	400		11/5/2014		1,256		1,255			95.5	%		96.5	%
Southpoint Reserve at Stoney Creek	(3)		116	156		12/18/2014		1,133		1,093			97.4	%		98.1	%
Cornerstone			318	430		1/15/2015		1,042		1,007			93.3	%		94.2	%
The Preserve at Terrell Mill			692	752		2/6/2015		954		921			93.4	%		94.8	%
The Ashlar	(3)		206	264		2/26/2015		884		859			93.2	%		94.3	%
Heatherstone	(3)		116	152		2/26/2015		888		874			96.1	%		94.7	%
Versailles			301	388		2/26/2015		908		884			91.5	%		96.4	%
Seasons 704 Apartments			217	222		4/15/2015		1,127		1,130			94.6	%		96.8	%
Madera Point			193	256		8/5/2015		919		866			96.1	%		94.5	%
The Pointe at the Foothills	(3)		473	528		8/5/2015		909		859			95.5	%		95.1	%
Venue at 8651			289	333		10/30/2015		896		875			96.1	%		92.8	%
Parc500			266	217		7/27/2016		1,275		1,254			94.9	%		94.9	%
The Venue on Camelback			256	415		10/11/2016		751		719			93.0	%		93.3	%
Old Farm			697	734		12/29/2016		1,168		1,176			93.5	%		92.9	%
Stone Creek at Old Farm			186	190		12/29/2016		1,184		1,173			93.2	%		96.8	%
Hollister Place			246	260		2/1/2017		990		984			95.4	%		93.5	%
Rockledge Apartments			802	708		6/30/2017		1,224		1,186			94.5	%		94.6	%
Atera Apartments			334	380		10/25/2017		1,245		1,232			96.8	%		97.4	%
Cedar Pointe			224	210		8/24/2018		1,053		1,051			91.4	%		95.7	%
Crestmont Reserve			199	242		9/26/2018		906		914			94.6	%		94.6	%
Brandywine I & II			414	632		9/26/2018		970		957			92.9	%		93.8	%
Bella Vista			243	248		1/28/2019		1,221		—	(4)		93.5	%		—		(4)
The Enclave			194	204		1/28/2019		1,266		—	(4)		93.6	%		—		(4)
The Heritage			199	204		1/28/2019		1,248		—	(4)		92.6	%		—		(4)
Summers Landing			139	196		6/7/2019		922		—	(4)		94.9	%		—		(4)
			11,803		13,407

(1) Average effective monthly rent per unit is equal to the average of the contractual rent for commenced leases as of June 30, 2019 and December 31, 2018, respectively, minus any tenant concessions over the term of the lease, divided by the number of units under commenced leases as of June 30, 2019 and December 31, 2018, respectively.

(2) Percent occupied is calculated as the number of units occupied as of June 30, 2019 and December 31, 2018, divided by the total number of units, expressed as a percentage.

(3) Property was classified as held for sale as of June 30, 2019. 

(4) Properties were acquired in 2019.

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Real Estate Investments

6 Months Ended

Jun. 30, 2019

Real Estate [Abstract]

Real Estate Investments

5. Real Estate Investments

As of June 30, 2019, the major components of the Company’s investments in multifamily properties were as follows (in thousands):

Operating Properties		Land		Buildings and Improvements			Intangible Lease Assets			Construction in Progress		Furniture, Fixtures and Equipment			Totals
Arbors on Forest Ridge		$	2,330	$	11,498		$	—		$	—	$	1,160		$	14,988
Cutter's Point			3,330		13,406			—			13		1,470			18,219
Eagle Crest			5,450		23,557			—			—		1,652			30,659
Silverbrook			4,860		27,375			—			—		3,514			35,749
Beechwood Terrace			1,390		21,545			—			—		1,877			24,812
Willow Grove			3,940		11,065			—			—		1,356			16,361
Woodbridge			3,650		13,224			—			—		1,721			18,595
The Summit at Sabal Park			5,770		13,562			—			—		1,481			20,813
Courtney Cove			5,880		13,371			—			—		1,397			20,648
Radbourne Lake			2,440		22,336			—			51		1,717			26,544
Timber Creek			11,260		13,894			—			28		2,016			27,198
Sabal Palm at Lake Buena Vista			7,580		41,561			—			—		1,423			50,564
Cornerstone			1,500		30,538			—			—		2,164			34,202
The Preserve at Terrell Mill			10,170		49,160			—			—		5,535			64,865
Versailles			6,720		21,832			—			—		3,200			31,752
Seasons 704 Apartments			7,480		14,274			—			—		1,372			23,126
Madera Point			4,920		17,588			—			—		1,573			24,081
Venue at 8651			2,350		18,130			—			—		2,717			23,197
Parc500			3,860		20,762			—			73		2,867			27,562
The Venue on Camelback			8,340		37,818			—			154		1,829			48,141
Old Farm			11,078		70,557			—			—		2,028			83,663
Stone Creek at Old Farm			3,493		19,407			—			—		519			23,419
Hollister Place			2,782		21,658			—			25		1,750			26,215
Rockledge Apartments			17,451		95,928			—			—		4,035			117,414
Atera Apartments			22,370		37,251			—			—		1,352			60,973
Cedar Pointe	(1)		2,372		24,053			—			—		711			27,136
Crestmont Reserve			4,124		20,138			—			64		735			25,061
Brandywine I & II			6,237		72,169			—			61		1,888			80,355
Bella Vista	(2)		10,942		36,417			919			47		806			49,131
The Enclave	(2)		11,046		29,813			769			49		639			42,316
The Heritage	(2)		6,835		34,147			750			47		672			42,451
Summers Landing			1,798		16,737			533			—		369			19,437
			203,748		914,771			2,971			612		57,545			1,179,647
Accumulated depreciation and amortization			—		(90,401	)		(2,120	)		—		(34,597	)		(127,118	)
Total Operating Properties		$	203,748	$	824,370		$	851		$	612	$	22,948		$	1,052,529
Held For Sale Property
Southpoint Reserve at Stoney Creek			6,120		11,399			—			—		847			18,366
Edgewater at Sandy Springs			14,290		44,608			—			146		5,438			64,482
Abbington Heights			1,770		17,202			—			—		1,614			20,586
Belmont at Duck Creek			1,910		17,455			—			4		1,527			20,896
The Ashlar			4,090		12,863			—			—		2,145			19,098
Heatherstone			2,320		8,154			—			—		1,263			11,737
The Pointe at the Foothills			4,840		47,012			—			—		2,256			54,108
Accumulated depreciation and amortization			—		(22,932	)		—			—		(10,373	)		(33,305	)
Total Held For Sale Property		$	35,340	$	135,761		$	—		$	150	$	4,717		$	175,968
Total		$	239,088	$	960,131		$	851		$	762	$	27,665		$	1,228,497

(1) The EAT that directly owned Cedar Pointe was consolidated as a VIE at December 31, 2018.  The master lease agreement with the EAT that directly owned Cedar Pointe terminated on February 20, 2019, at which time legal title to Cedar Pointe transferred to the Company.  Upon the transfer of title, the entity that directly owns Cedar Pointe was no longer considered a VIE.

(2) The EAT that directly owned Bella Vista, The Enclave and The Heritage was consolidated as a VIE at March 31, 2019.  The master lease agreement with the EAT that directly owned these properties terminated on July 27, 2019, as which time legal title transferred to the Company. Upon the transfer of title, the EAT that directly owned these properties was no longer considered a VIE.

As of December 31, 2018, the major components of the Company’s investments in multifamily properties were as follows (in thousands):

Operating Properties		Land		Buildings and Improvements			Intangible Lease Assets			Construction in Progress		Furniture, Fixtures and Equipment			Totals
Arbors on Forest Ridge		$	2,330	$	11,319		$	—		$	—	$	1,047		$	14,696
Cutter's Point			3,330		13,347			—			—		1,320			17,997
Eagle Crest			5,450		22,969			—			—		1,563			29,982
Silverbrook			4,860		26,485			—			60		3,230			34,635
Edgewater at Sandy Springs			14,290		44,186			—			349		5,083			63,908
Beechwood Terrace			1,390		21,123			—			31		1,670			24,214
Willow Grove			3,940		10,829			—			—		1,231			16,000
Woodbridge			3,650		13,125			—			—		1,536			18,311
Abbington Heights			1,770		17,140			—			—		1,539			20,449
The Summit at Sabal Park			5,770		13,447			—			43		1,347			20,607
Courtney Cove			5,880		13,170			—			—		1,268			20,318
Radbourne Lake			2,440		22,138			—			72		1,536			26,186
Timber Creek			11,260		13,582			—			—		1,556			26,398
Belmont at Duck Creek			1,910		17,397			—			—		1,471			20,778
Sabal Palm at Lake Buena Vista			7,580		41,336			—			—		1,280			50,196
Cornerstone			1,500		30,513			—			—		1,885			33,898
The Preserve at Terrell Mill			10,170		49,091			—			57		4,843			64,161
The Ashlar			4,090		12,845			—			—		2,017			18,952
Heatherstone			2,320		8,132			—			—		1,199			11,651
Versailles			6,720		21,513			—			—		3,033			31,266
Seasons 704 Apartments			7,480		14,223			—			—		1,288			22,991
Madera Point			4,920		17,570			—			—		1,431			23,921
The Pointe at the Foothills			4,840		46,998			—			—		2,078			53,916
Venue at 8651			2,350		18,084			—			—		2,499			22,933
Parc500			3,860		20,692			—			37		2,600			27,189
The Colonnade			8,340		37,086			—			567		1,604			47,597
Old Farm			11,078		70,471			—			—		1,800			83,349
Stone Creek at Old Farm			3,493		19,394			—			—		467			23,354
Hollister Place			2,782		21,389			—			135		1,410			25,716
Rockledge Apartments			17,451		95,484			—			428		3,314			116,677
Atera Apartments			22,371		36,563			—			86		1,151			60,171
Cedar Pointe	(1)		2,371		23,458			600			16		441			26,886
Crestmont Reserve			4,124		19,544			687			—		504			24,859
Brandywine I & II			6,237		70,961			1,762			—		1,215			80,175
			202,347		935,604			3,049			1,881		61,456			1,204,337
Accumulated depreciation and amortization			—		(95,364	)		(1,625	)		—		(37,135	)		(134,124	)
Total Operating Properties		$	202,347	$	840,240		$	1,424		$	1,881	$	24,321		$	1,070,213
Held For Sale Properties
Southpoint Reserve at Stoney Creek			6,120		11,319			—			—		787			18,226
Accumulated depreciation and amortization			—		(736	)		—			—		(161	)		(897	)
Total Held For Sale Properties		$	6,120	$	10,583		$	—		$	—	$	626		$	17,329
Total		$	208,467	$	850,823		$	1,424		$	1,881	$	24,947		$	1,087,542

(1) The EAT that directly owned Cedar Pointe was consolidated as a VIE at December 31, 2018.  The master lease agreement with the EAT that directly owned Cedar Pointe terminated on February 20, 2019, at which time legal title to Cedar Pointe transferred to the Company.  Upon the transfer of title, the entity that directly owns Cedar Pointe was no longer considered a VIE.

Depreciation expense was $11.8 million and $10.8 million for the three months ended June 30, 2019 and 2018, respectively.  Depreciation expense was $24.9 million and $21.6 million for the six months ended June 30, 2019 and 2018, respectively.

Amortization expense related to the Company’s intangible lease assets was $1.3 million and $0.2 million for the three months ended June 30, 2019 and 2018.  Amortization expense related to the Company’s intangible lease assets was $3.5 million and $0.8 million for the six months ended June 30, 2019 and 2018, respectively. Amortization expense related to the Company’s intangible lease assets for all acquisitions completed through June 30, 2019 is expected to be $0.9 million for the remainder of the year ended December 31, 2019. 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, 2018 has been fully amortized and the assets and related accumulated amortization have been written off as of June 30, 2019.

Acquisitions

The Company acquired four properties during the six months ended June 30, 2019, as detailed in the table below (dollars in thousands); there were no acquisitions of real estate during the six months ended June 30, 2018.

Property Name	Location	Date of Acquisition	Purchase Price		Mortgage Debt (1)		# Units		Effective Ownership
Bella Vista	Phoenix, Arizona	January 28, 2019	$	48,400	$	29,040		248		100	%
The Enclave	Tempe, Arizona	January 28, 2019		41,800		25,322		204		100	%
The Heritage	Phoenix, Arizona	January 28, 2019		41,900		24,625		204		100	%
Summers Landing	Fort Worth, Texas	June 7, 2019		19,396		10,109		196		100	%
			$	151,496	$	89,096		852

(1) For additional information regarding the Company’s debt, see Note 6.

Dispositions

There were no sales of real estate during the six months ended June 30, 2019. The Company sold one property for approximately $30.0 million during the six months ended June 30, 2018.

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Debt

6 Months Ended

Jun. 30, 2019

Debt Disclosure [Abstract]

Debt

6. Debt

Mortgage Debt

The following table contains summary information concerning the mortgage debt of the Company as of June 30, 2019 (dollars in thousands):

Operating Properties		Type	Term(months)		Outstanding Principal (1)				Interest Rate (2)	Maturity Date
Arbors on Forest Ridge	(3)	Floating		84	$	13,130			4.08%	7/1/2024
Cutter's Point	(3)	Floating		84		16,640			4.08%	7/1/2024
Eagle Crest	(3)	Floating		84		29,510			4.08%	7/1/2024
Silverbrook	(3)	Floating		84		30,590			4.08%	7/1/2024
Beechwood Terrace	(3)	Floating		84		23,365			3.84%	9/1/2025
Willow Grove	(3)	Floating		84		14,818			4.18%	7/1/2024
Woodbridge	(3)	Floating		84		13,677			4.18%	7/1/2024
The Summit at Sabal Park	(3)	Floating		84		13,560			4.02%	7/1/2024
Courtney Cove	(3)	Floating		84		13,680			4.02%	7/1/2024
The Preserve at Terrell Mill	(3)	Floating		84		42,480			4.02%	7/1/2024
Versailles	(3)	Floating		84		23,880			4.02%	7/1/2024
Seasons 704 Apartments	(3)	Floating		84		17,460			4.02%	7/1/2024
Madera Point	(3)	Floating		84		15,150			4.02%	7/1/2024
Venue at 8651	(3)	Floating		84		13,734			4.18%	7/1/2024
The Venue on Camelback	(3)	Floating		84		28,093			4.08%	7/1/2024
Old Farm	(3)	Floating		84		52,886			4.08%	7/1/2024
Stone Creek at Old Farm	(3)	Floating		84		15,274			4.08%	7/1/2024
Timber Creek	(3)	Floating		84		24,100			3.66%	10/1/2025
Radbourne Lake	(3)	Floating		84		20,000			3.69%	10/1/2025
Sabal Palm at Lake Buena Vista	(3)	Floating		84		42,100			3.70%	9/1/2025
Cornerstone	(4)	Fixed		120		22,001			4.24%	3/1/2023
Parc500	(5)	Fixed		120		15,353			4.49%	8/1/2025
Hollister Place	(3)	Floating		84		14,811			3.74%	10/1/2025
Rockledge Apartments	(3)	Floating		84		68,100			3.97%	7/1/2024
Atera Apartments	(3)	Floating		84		29,500			3.88%	11/1/2024
Cedar Pointe	(6)	Floating		84		17,300			3.75%	9/1/2025
Crestmont Reserve	(3)	Floating		84		12,061			3.58%	10/1/2025
Brandywine I & II	(3)	Floating		84		43,835			3.58%	10/1/2025
Bella Vista	(7)	Floating		84		29,040			3.72%	2/1/2026
The Enclave	(7)	Floating		84		25,322			3.72%	2/1/2026
The Heritage	(7)	Floating		84		24,625			3.72%	2/1/2026
Summers Landing	(9)	Floating		84		10,109			3.58%	10/1/2025
					$	776,184
Fair market value adjustment						584		(8)
Deferred financing costs, net of accumulated amortization of $2,026						(6,795	)
					$	769,973
Held For Sale Property
Southpoint Reserve at Stoney Creek	(3)	Floating		84		13,281			4.51%	1/1/2022
Edgewater at Sandy Springs	(3)	Floating		84		52,000			4.08%	7/1/2024
Abbington Heights	(3)	Floating		84		16,920			3.65%	9/1/2025
Belmont at Duck Creek	(3)	Floating		84		17,760			3.79%	6/1/2025
The Ashlar	(3)	Floating		84		14,520			4.02%	7/1/2024
Heatherstone	(3)	Floating		84		8,880			4.02%	7/1/2024
The Pointe at the Foothills	(3)	Floating		84		34,800			4.02%	7/1/2024
					$	158,161
Deferred financing costs, net of accumulated amortization of $616						(1,525	)
					$	156,636

(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 fixed rate mortgage debt. One-month LIBOR as of June 30, 2019 was 2.3980%.

(3) Loan can be pre-paid in the first 12 months of the term in certain circumstances at par plus 5.00%. Starting in the 13^th month of the term through the 81^st 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.

(4) Debt in the amount of $18.0 million was assumed upon acquisition of this property and recorded 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 the 13^th month through August 31, 2022 and is pre-payable at par September 1, 2022 until maturity. Concurrently with the acquisition of the property, the Company 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, 2019, the total indebtedness secured by the property had a blended interest rate of 4.24%.

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

(6) Loan can be pre-paid in the first 12 months of the term in certain circumstances at par plus 5.00%.  Starting in the 13^th month of the term through the 81^st 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.  The EAT that directly owned Cedar Pointe was consolidated as a VIE at December 31, 2018.  The master lease agreement with the EAT that directly owned Cedar Pointe terminated on February 20, 2019, at which time legal title to Cedar Pointe transferred to the Company.  Upon the transfer of title, the entity that directly owns Cedar Pointe was no longer considered a VIE.

(7) Loan can be pre-paid in the first 12 months of the term in certain circumstances at par plus 5.00%. Starting in the 13^th month of the term through the 81^st 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. The EAT that directly owned Bella Vista, The Enclave and The Heritage was consolidated as a VIE at March 31, 2019.  The master lease agreement with the EAT that directly owned these properties terminated on July 27, 2019, as which time legal title transferred to the Company. Upon the transfer of title, the EAT that directly owned these properties was no longer considered a VIE.

(8) The Company reflected a valuation adjustment on its fixed rate debt for Parc500 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.

(9) Debt was assumed upon acquisition of this property and recorded at approximated fair value.  It can be pre-paid in the first 12 months of the term in certain circumstances at par plus 5.00%. Starting in the 13^th month of the term through the 81^st 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.

The weighted average interest rate of the Company’s mortgage indebtedness was 3.94% as of June 30, 2019 and 4.07% as of December 31, 2018. The decrease between the periods is primarily related to a decrease in one-month LIBOR of approximately 10 basis points to 2.3980% as of June 30, 2019 from 2.5027% as of December 31, 2018. As of June 30, 2019, the adjusted weighted average interest rate of the Company’s mortgage indebtedness was 3.16%. For purposes of calculating the adjusted weighted average interest rate of the outstanding mortgage indebtedness, the Company has included the weighted average fixed rate of 1.4272% for one-month LIBOR on its combined $750.0 million notional amount of interest rate swap agreements, which effectively fix the interest rate on $750.0 million of the Company’s floating rate mortgage indebtedness (see Note 7).

Each of the Company’s 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, 2019, the Company believes it is in compliance with all provisions.

Freddie Mac Multifamily Green Advantage. In order to obtain more favorable pricing on the Company’s mortgage debt financing with Freddie Mac, the Company has decided to participate in Freddie Mac’s new Multifamily Green Advantage program (the “Green Program”). In the second quarter of 2017, the Company escrowed approximately $4.2 million to finance smarter, greener property improvements at 18 of its properties. In connection with the three acquisitions and seven refinancings the Company completed in 2018, the Company escrowed approximately $1.2 million related to the Green Program.  In connection with the four purchases in 2019, the Company escrowed approximately $0.6 million related to the Green Program.

Credit Facility

The following table contains summary information concerning the Company’s credit facility as of June 30, 2019 (dollars in thousands):

	Type	Term(months)		Outstanding Principal			Interest Rate (1)	Maturity Date
Corporate Credit Facility	Floating		24	$	52,500		4.65%	1/28/2021
Deferred financing costs, net of accumulated amortization of $134					(964	)
				$	51,536

(1) Interest rate is based on one-month LIBOR plus an applicable margin.  One-month LIBOR as of June 30, 2019 was 2.3980%.

Corporate Credit Facility. On January 28, 2019, the Company, through the OP, entered into a $75.0 million credit facility (the “Corporate Credit Facility”) with SunTrust Bank, as administrative agent and the lenders party thereto, and immediately drew $52.5 million to fund a portion of the purchase price of Bella Vista, The Enclave, and The Heritage. The Corporate Credit Facility is a full-term, interest-only facility with an initial 24-month term, has one 12-month extension option, and the Company has the right to request an increase in the facility amount up to $140 million (the “Accordion Feature”).  The facility bears interest at a rate of one-month LIBOR plus a range from 2.00% to 2.50%, depending on the Company’s leverage level as determined under the credit facility agreement, and is guaranteed by the Company. On June 29, 2019, the Company, through the OP, exercised its option under the Accordion Feature of the Corporate Credit Facility and increased the amount of the facility from $75 million to $125 million. In conjunction with the increase in the facility, the Company incurred costs of $0.5 million in obtaining the additional financing through the Accordion Feature (see “Deferred Financing Costs” below). The Company did not immediately draw additional funds on the facility and the outstanding balance as of June 30, 2019 was $52.5 million.

The Corporate Credit Facility is a non-recourse obligation and contains customary events of default, including defaults in the payment of principal or interest, defaults in compliance with the covenants contained in the document evidencing the loan, defaults in payments under any other security instrument, and bankruptcy or other insolvency events. As of June 30, 2019, the Company believes it is in compliance with all provisions.

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. Deferred financing costs, net of amortization, are recorded as a reduction from the related debt on the Company’s consolidated balance sheets. Upon repayment of or in conjunction with a material change in the terms of the underlying debt agreement (i.e. a 10% or greater difference in the cash flows between instruments), any unamortized costs and fair market value adjustments related to the original debt are charged to loss on extinguishment of debt and modification costs. For the three months ended June 30, 2019 and 2018, the Company wrote-off deferred financing costs of approximately $0.0 million and $0.1 million, respectively, which is included in loss on extinguishment of debt and modification costs on the consolidated statements of operations and comprehensive income (loss). For the six months ended June 30, 2019 and 2018, the Company wrote-off deferred financing costs of approximately $0.0 million and $0.5 million, respectively, which is included in loss on extinguishment of debt and modification costs on the consolidated statements of operations and comprehensive income (loss). For the three months ended June 30, 2019 and 2018, amortization of deferred financing costs of approximately $0.5 million and $0.4 million, respectively, is included in interest expense on the consolidated statements of operations and comprehensive income (loss). For the six months ended June 30, 2019 and 2018, amortization of deferred financing costs of approximately $0.9 million and $0.7 million, respectively, is included in interest expense on the consolidated statements of operations and comprehensive income (loss).

Loss on Extinguishment of Debt and Modification Costs

Loss on extinguishment of debt and modification costs includes prepayment penalties and defeasance costs incurred on the early repayment of debt, costs incurred in a debt modification that are not capitalized as deferred financing costs and other costs incurred in a debt extinguishment.

Schedule of Debt Maturities

The aggregate scheduled maturities, including amortizing principal payments, of total debt for the next five calendar years subsequent to June 30, 2019 are as follows (in thousands):

	Operating Properties		Held For Sale Property		Credit Facility		Total
2019	$	360	$	116		—	$	476
2020		744		263		—		1,007
2021		782		282		52,500		53,564
2022		817		12,620		—		13,437
2023		20,598		—		—		20,598
Thereafter		752,883		144,880		—		897,763
Total	$	776,184	$	158,161	$	52,500	$	986,845

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Fair Value of Derivative and Financial Instruments

6 Months Ended

Jun. 30, 2019

Fair Value Disclosures [Abstract]

Fair Value Measures and Derivative Financial Instruments

7. Fair Value of Derivatives and Financial Instruments

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, ASC 820 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 independent third parties to perform the allocation of value analysis for each property acquisition and to perform the market valuations on its derivative financial instruments and has established policies, as described above, processes and procedures intended to ensure that the valuation methodologies for investments and derivative financial instruments are fair and consistent as of the measurement date.

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. In order to minimize counterparty credit risk, the Company enters into and expects to enter into hedging arrangements only with major financial institutions that have high credit ratings.

The Company utilizes an independent third party to perform the market valuations on its derivative financial instruments. The valuation of these instruments is determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. The fair values of interest rate swaps are determined using the market standard methodology of netting the discounted future fixed cash receipts (or payments) and the discounted expected variable cash payments (or receipts). The variable cash payments (or receipts) are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves. The fair values of interest rate caps are determined using the market standard methodology of discounting the future expected cash receipts that would occur if variable interest rates rise above the strike rate of the caps. The variable interest rates used in the calculation of projected receipts on the cap are based on an expectation of future interest rates derived from observable market interest rate curves and volatilities. To comply with the provisions of ASC 820, the Company incorporates credit valuation adjustments to appropriately reflect both the Company’s own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of the Company’s derivative contracts for the effect of nonperformance risk, the Company has considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts and guarantees. Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with the Company’s derivatives utilize Level 3 inputs, such as estimates of current credit spreads, to evaluate the likelihood of default by the Company and its counterparties. The Company has determined that the significance of the impact of the credit valuation adjustments made to its derivative contracts, which determination was based on the fair value of each individual contract, was not significant to the overall valuation. As a result, all of the Company’s derivatives held as of June 30, 2019 and December 31, 2018 were classified as Level 2 of the fair value hierarchy.

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 primarily uses interest rate swaps and caps as part of its interest rate risk management strategy. Interest rate swaps involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. The interest rate swaps have terms ranging from four to five years. 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 interest rate caps have terms ranging from three to four years. During the six months ended June 30, 2019 and 2018, interest rate cap derivatives were used to hedge the variable cash flows associated with a portion of the Company’s floating rate debt. The interest rate cap agreements the Company has entered into effectively cap one-month LIBOR on $320.1 million of the Company’s floating rate mortgage indebtedness at a weighted average rate of 5.82%.

The changes in the fair value of derivative financial instruments that are designated as cash flow hedges are recorded in OCI and are subsequently reclassified into net income (loss) in the period that the hedged forecasted transaction affects earnings. Amounts reported in OCI related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s floating rate debt. Prior to the Company’s adoption of ASU 2017-12 on January 1, 2018, the ineffective portion of changes in the fair value of the Company’s derivatives designated as cash flow hedges was recognized directly in net income (loss) as interest expense. The adoption of ASU 2017-12 eliminates the separate measurement of effectiveness and ineffectiveness, and all changes in the fair value of derivatives that are designated as cash flow hedges are recorded directly in OCI. Therefore, during the six months ended June 30, 2019, the Company recorded no gain or loss related to the ineffective portion of changes in the fair value of its derivatives designated as cash flow hedges. During the six months ended June 30, 2019 and 2018, the Company recorded no gain/(loss) related to the ineffective portion of changes in the fair value of its derivatives designated as cash flow hedges, which is recorded as a decrease/(increase) to interest expense on the accompanying consolidated statements of operations and comprehensive income (loss).

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 nine interest rate swap transactions with KeyBank National Association (“KeyBank”) and SunTrust Bank with a combined notional amount of $750.0 million. The interest rate swaps the Company has entered into effectively replace the floating interest rate (one-month LIBOR) with respect to that amount with a weighted average fixed rate of 1.4272%. The Company has designated these interest rate swaps as cash flow hedges of interest rate risk.

As of June 30, 2019, the Company had the following outstanding interest rate swaps that were designated as cash flow hedges of interest rate risk (dollars in thousands):

Effective Date	Termination Date	Counterparty	Notional		Fixed Rate (1)
July 1, 2016	June 1, 2021	KeyBank	$	100,000		1.1055	%
July 1, 2016	June 1, 2021	KeyBank		100,000		1.0210	%
July 1, 2016	June 1, 2021	KeyBank		100,000		0.9000	%
September 1, 2016	June 1, 2021	KeyBank		100,000		0.9560	%
April 1, 2017	April 1, 2022	KeyBank		100,000		1.9570	%
May 1, 2017	April 1, 2022	KeyBank		50,000		1.9610	%
July 1, 2017	July 1, 2022	KeyBank		100,000		1.7820	%
June 1, 2019	June 1, 2024	KeyBank		50,000		2.0020	%
June 1, 2019	June 1, 2024	SunTrust		50,000		2.0020	%
			$	750,000		1.4272	%	(2)

(1) The floating rate option for the interest rate swaps is one-month LIBOR. As of June 30, 2019, one-month LIBOR was 2.3980%.

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

Derivatives not designated as hedges are not speculative and are used to manage the Company’s exposure to interest rate movements but either do not meet the strict requirements to apply hedge accounting in accordance with FASB ASC 815, Derivatives and Hedging, or the Company has elected not to designate such derivatives as hedges. Changes in the fair value of derivatives not designated in hedging relationships are recorded directly in net income (loss) as interest expense.

As of June 30, 2019, 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		14	$	320,137

As of June 30, 2018, the Company had 11 interest rate cap derivatives, with a notional amount of $182.4 million, which were not designated as hedges in qualifying hedging relationships.

The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the consolidated balance sheets as of June 30, 2019 and December 31, 2018 (in thousands):

		Asset Derivatives				Liability Derivatives
	Balance Sheet Location	June 30, 2019		December 31, 2018		June 30, 2019		December 31, 2018
Derivatives designated as hedging instruments:
Interest rate swaps	Fair market value of interest rate swaps	$	5,125	$	18,141	$	3,615	$	—
Derivatives not designated as hedging instruments:
Interest rate caps	Prepaid and other assets		3		10		—		—
Total		$	5,128	$	18,151	$	3,615	$	—

The tables below present the effect of the Company’s derivative financial instruments on the consolidated statements of operations and comprehensive income (loss) for the three and six months ended June 30, 2019 and 2018 (in thousands):

	Amount of gain (loss) recognized in OCI						Location of gain (loss) reclassified from accumulated	Amount of gain (loss) reclassified from OCI into income					Location of gain (loss) recognized	Amount of gain (loss) recognized in income
	2019			2018			OCI into income	2019		2018			in income	2019		2018
Derivatives designated as hedging instruments:
For the three months ended June 30,
Interest rate products	$	(9,064	)	$	3,653	(1)	Interest expense	$	1,882	$	904	(1)	Interest expense	$	—	$	—
For the six months ended June 30,
Interest rate products	$	(12,849	)	$	11,753	(1)	Interest expense	$	3,762	$	1,243	(1)	Interest expense	$	—	$	—	(2)

(1) Represents the effective portion of changes in fair value.

(2) Represents the ineffective portion of changes in fair value.

	Location of gain (loss)	Amount of gain (loss) recognized in income
	recognized in income	2019			2018
Derivatives not designated as hedging instruments:
For the three months ended June 30,
Interest rate products	Interest expense		(1	)		(12	)
For the six months ended June 30,
Interest rate products	Interest expense	$	(27	)	$	(2	)

Other Financial Instruments Carried at Fair Value

Redeemable noncontrolling interests in the OP have a redemption feature and are marked to their redemption value if such value exceeds the carrying value of the redeemable noncontrolling interests in the OP (see Note 10). The redemption value is based on the fair value of the Company’s common stock at the redemption date, and therefore, is calculated based on the fair value of the Company’s common stock at the balance sheet date. Since the valuation is based on observable inputs such as quoted prices for similar instruments in active markets, redeemable noncontrolling interests in the OP are classified as Level 2 if they are adjusted to their redemption value.

Financial Instruments Not Carried at Fair Value

At June 30, 2019 and December 31, 2018, the fair values of cash and cash equivalents, restricted cash, accounts receivable, prepaid and other assets, accounts payable and other accrued liabilities, accrued real estate taxes payable, accrued interest payable, security deposits and prepaid rent approximated their carrying values because of the short term nature of these instruments. The estimated fair values of other financial instruments were determined by the Company using available market information and appropriate valuation methodologies. Considerable judgment is necessary to interpret market data and develop estimated fair values. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company would realize on the disposition of the financial instruments. The use of different market assumptions or estimation methodologies may have a material effect on the estimated fair value amounts.

Long-term indebtedness is carried at amounts that reasonably approximate their fair value. In calculating the fair value of its long-term indebtedness, the Company used interest rate and spread assumptions that reflect current credit worthiness and market conditions available for the issuance of long-term debt with similar terms and remaining maturities. These financial instruments utilize Level 2 inputs.

Real estate assets are reviewed for impairment 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. 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 asset. For the six months ended June 30, 2019 and 2018, the Company did not record any impairment charges related to real estate assets.

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Stockholders' Equity

6 Months Ended

Jun. 30, 2019

Equity [Abstract]

Stockholders' Equity

8. Stockholders’ Equity

Common Stock

During the six months ended June 30, 2019, the Company issued 143,642 shares of common stock pursuant to its long-term incentive plan (see “Long Term Incentive Plan” below) and 252,165 pursuant to its at-the-market offering (see “-At-the-Market Offering” below).

As of June 30, 2019, the Company had 23,895,442 shares of common stock, par value $0.01 per share, issued and outstanding.

Share Repurchase Program

On June 15, 2016, the Board authorized the Company to repurchase up to $30.0 million of its common stock, par value $0.01 per share, during a two-year period that was set to expire on June 15, 2018 (the “Share Repurchase Program”). On April 30, 2018, the Board increased the Share Repurchase Program to up to $40.0 million and extended it by an additional two years to June 15, 2020. 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 six months ended June 30, 2019, the Company did not repurchase any shares of its common stock. As of June 30, 2019, the Company had repurchased 737,458 shares of its common stock, par value $0.01 per share, at a total cost of approximately $16,694,000, or $22.64 per share.

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 2,100,000 shares of common stock, par value $0.01 per share, which the Company may issue pursuant to the 2016 LTIP. The 2016 LTIP authorizes the compensation committee of the Board 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 directors, 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.

Restricted Stock Units. Under the 2016 LTIP, restricted stock units may be granted to the Company’s directors, officers and other key employees (and those of the Adviser and the Company’s subsidiaries) and typically vest over a three to five-year period for officers, employees and certain key employees of the Adviser and annually for directors. Beginning on the date of grant, restricted stock units earn dividends that are payable in cash on the vesting date. On August 11, 2016, pursuant to the 2016 LTIP, the Company granted 209,797 restricted stock unitsto its directors and officers. On March 16, 2017, pursuant to the 2016 LTIP, the Company granted 219,802 restricted stock units to its directors and officers. On February 15, 2018, pursuant to the 2016 LTIP, the Company granted 275,795 restricted stock units to its directors, officers, employees and certain key employees of the Adviser.  On February 21, 2019, pursuant to the 2016 LTIP, the Company granted 186,662 restricted stock units to its directors, officers, employees and certain key employees of the Adviser. The following table includes the number of restricted stock units granted, vested, forfeited and outstanding as of June 30, 2019:

	2019
	Number of Units				Weighted Average Grant Date Fair Value
Outstanding January 1,		464,626
Granted		186,662				37.50
Vested		(148,091	)	(1)		23.10
Forfeited		(6,386	)			—
Outstanding June 30,		496,811		(2)	$	28.14

(1) Certain key employees of the Adviser elected to net the taxes owed upon vesting against the shares issued resulting in 143,642 shares being issued as shown on the Consolidated Statement of Stockholders’ Equity.  

(2) 49,772 restricted stock units vest in August 2019, 108,613 vest in February 2020, 69,530 vest in March 2020, 99,564 vest in February 2021, 99,563 vest in February 2022, 34,883 vest in February 2023 and 34,886 vest in February 2024.

As of June 30, 2019, the Company had issued 384,410 shares of common stock under the 2016 LTIP. For the three months ended June 30, 2019 and 2018, the Company recognized approximately $1.4 million and $1.1 million, respectively, of equity-based compensation expense related to grants of restricted stock units, which is included in corporate general and administrative expenses on the consolidated statements of operations and comprehensive income (loss).  For the six months ended June 30, 2019 and 2018, the Company recognized approximately $2.7 million and $2.0 million, respectively, of equity-based compensation expense related to grants of restricted stock units. As of June 30, 2019, the Company had recognized a liability of approximately $0.7 million related to dividends earned on restricted stock units that are payable in cash upon vesting.

At-the-Market Offering

On February 20, 2019, the Company, the OP and the Adviser entered into separate equity distribution agreements with each of Jefferies LLC (“Jefferies”), Raymond James & Associates, Inc. (“Raymond James”) and SunTrust Robinson Humphrey, Inc. (together with Raymond James and Jefferies, the “Sales Agents”), pursuant to which the Company may issue and sell from time to time shares of the Company’s common stock, par value $0.01 per share, having an aggregate sales price of up to $100,000,000.  Sales of shares of common stock, if any, may be made in transactions that are deemed to be “at the market” offerings, as defined in Rule 415 under the Securities Act of 1933, as amended (the “Securities Act”), including, without limitation, sales made by means of ordinary brokers’ transactions on the New York Stock Exchange, to or through a market maker at market prices prevailing at the time of sale, at prices related to prevailing market prices or at negotiated prices based on prevailing market prices (the “ATM Program”).  In addition to the issuance and sale of shares of common stock, the Company may enter into forward sale agreements with each of Jefferies and Raymond James, or their respective affiliates, through the ATM Program.  During the three months ended June 30, 2019, the Company issued 252,165 shares of common stock at an average price of $40.26 per share for net proceeds of approximately $9.4 million. The Company paid approximately $0.2 million in fees to the Sales Agents with respect to such sales and incurred other issuance costs of approximately $0.5 million, both of which were netted against the gross proceeds and recorded in additional paid in capital. The ATM Program may be terminated by the Company at any time and expires automatically once aggregate sales under the ATM Program reach $100,000,000.

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Earnings (Loss) Per Share

6 Months Ended

Jun. 30, 2019

Earnings Per Share [Abstract]

Earnings (Loss) Per Share

9. Earnings (Loss) Per Share

Basic earnings (loss) per share is computed by dividing net income (loss) attributable to common stockholders 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 and excludes any unvested restricted stock units issued pursuant to the 2016 LTIP. Diluted earnings (loss) per share is computed by adjusting basic earnings (loss) per share for the dilutive effect of the assumed vesting of restricted stock units. During periods of net loss, the assumed vesting of restricted stock units is anti-dilutive and is not included in the calculation of earnings (loss) per share.

The effect of the conversion of OP Units held by noncontrolling limited partners is not reflected in the computation of basic and diluted earnings (loss) per share, as they are exchangeable for common stock on a one-for-one basis. The income (loss) allocable to such units is allocated on this same basis and reflected as net income (loss) attributable to redeemable noncontrolling interests in the OP in the accompanying consolidated statements of operations and comprehensive income. As such, the assumed conversion of these units would have no net impact on the determination of diluted earnings (loss) per share. See Note 10 for additional information.

The following table sets forth the computation of basic and diluted earnings (loss) per share for the periods presented (in thousands, except per share amounts):

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2019			2018			2019			2018
Numerator for earnings (loss) per share:
Net income (loss)	$	(1,987	)	$	(1,666	)	$	(6,360	)	$	8,428
Net income (loss) attributable to redeemable noncontrolling interests in the Operating Partnership		(6	)		(5	)		(19	)		25
Net income (loss) attributable to common stockholders	$	(1,981	)	$	(1,661	)	$	(6,341	)	$	8,403
Denominator for earnings (loss) per share:
Weighted average common shares outstanding		23,736			20,780			23,643			20,883
Denominator for basic earnings (loss) per share		23,736			20,780			23,643			20,883
Weighted average unvested restricted stock units		497			515			496			479
Denominator for diluted earnings per share		24,233			21,295			24,139			21,362
Earnings (loss) per weighted average common share:
Basic	$	(0.08	)	$	(0.08	)	$	(0.27	)	$	0.40
Diluted	$	(0.08	)	$	(0.08	)	$	(0.27	)	$	0.39

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Noncontrolling Interests

6 Months Ended

Jun. 30, 2019

Noncontrolling Interest [Abstract]

Noncontrolling Interests

10. Noncontrolling Interests

Redeemable Noncontrolling Interests in the OP

Interests in the OP held by limited partners are represented by OP Units. Net income (loss) is allocated to holders of OP Units based upon net income (loss) attributable to common stockholders and the weighted average number of OP Units outstanding to total common shares plus OP Units outstanding during the period. Capital contributions, distributions, and profits and losses are allocated to OP Units in accordance with the terms of the partnership agreement of the OP. Each time the OP distributes cash to the Company, outside limited partners of the OP receive their pro-rata share of the distribution.Redeemable noncontrolling interests in the OP have a redemption feature and are marked to their redemption value if such value exceeds the carrying value of the redeemable noncontrolling interests in the OP.

On June 30, 2017, the Company and the OP entered into a contribution agreement (the “Contribution Agreement”) with BH Equities, LLC and its affiliates (collectively, “BH Equity”), whereby the Company purchased 100% of the joint venture interests in the Portfolio owned by BH Equity, representing approximately 8.4% ownership in the Portfolio (the “BH Buyout”), for total consideration of approximately $51.7 million (the “Purchase Amount”). The Purchase Amount consisted of approximately $49.7 million in cash that was paid on June 30, 2017 and 73,233 OP Units (initially valued at $2.0 million) that were issued on August 1, 2017. The number of OP Units issued was calculated by dividing $2.0 million by the midpoint of the range of the Company’s net asset value as publicly disclosed in connection with the Company’s release of its second quarter of 2017 earnings results, which was $27.31 per share.

In connection with the issuance of OP Units to BH Equity on August 1, 2017, the Company and the OP amended the partnership agreement of the OP (the “Amendment”). Pursuant to the Amendment, limited partners holding OP Units have the right to cause the OP to redeem their units at a redemption price equal to and in the form of the Cash Amount (as defined in the partnership agreement of the OP), provided that such OP Units have been outstanding for at least one year. The Company, through the OP GP, as the general partner of the OP may, in its sole discretion, purchase the OP Units by paying to the limited partner either the Cash Amount or the REIT Share Amount (one share of common stock of the Company for each OP Unit), as defined in the partnership agreement of the OP. Notwithstanding the foregoing, a limited partner will not be entitled to exercise its redemption right to the extent the issuance of the Company’s common stock to the redeeming limited partner would (1) be prohibited, as determined in the Company’s sole discretion, under the Company’s charter or (2) cause the acquisition of common stock by such redeeming limited partner to be “integrated” with any other distribution of the Company’s common stock for purposes of complying with the Securities Act. Accordingly, the Company records the OP Units held by noncontrolling limited partners outside of permanent equity and reports the OP Units at the greater of their carrying value or their redemption value using the Company’s stock price at each balance sheet date.

The following table sets forth the redeemable noncontrolling interests in the OP for the six months ended June 30, 2019 (in thousands):

Redeemable noncontrolling interests in the OP, December 31, 2018	$	2,567
Net loss attributable to redeemable noncontrolling interests in the OP		(19	)
Other comprehensive loss attributable to redeemable noncontrolling interests in the OP		(50	)
Contributions from redeemable noncontrolling interests in the OP		197
Distributions to redeemable noncontrolling interests in the OP		(39	)
Adjustment to reflect redemption value of redeemable noncontrolling interests in the OP		376
Redeemable noncontrolling interests in the OP, June 30, 2019	$	3,032

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 and an independently owned third party, who manages the Company’s properties and supervises the implementation of the Company’s value-add program. BH is an affiliate of BH Equity, who was a noncontrolling interest member of the Company’s joint ventures prior to the BH Buyout on June 30, 2017. Through BH Equity’s noncontrolling interests in such joint ventures, BH Equity was deemed to be a related party. With the completion of the BH Buyout, BH Equity is no longer deemed to be a related party. BH Equity became a noncontrolling limited partner of the OP upon execution of the Amendment. BH and its affiliates do not have common ownership in any joint venture with the Adviser; there is also no common ownership between BH and its affiliates and the Adviser.

The property management fee paid to BH is approximately 3% of the monthly gross income from each property managed. Currently, BH manages all of the Company’s properties. Additionally, the Company may pay BH certain other fees, including: (1) a fee of $15-25 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 at cost for various operating expenses it pays on behalf of the properties. 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, 2019 and 2018 (in thousands):

		For the Three Months Ended June 30,				For the Six Months Ended June 30,
		2019		2018		2019		2018
Fees incurred
Property management fees	(1)	$	1,285	$	1,066	$	2,525	$	2,120
Construction supervision fees	(2)		340		283		564		570
Design Fees			60		—		60		—
Acquisition fees	(3)		—		—		308		—
Reimbursements
Payroll and benefits	(4)		4,000		3,347		8,311		7,135
Other reimbursements	(5)		928		563		1,561		1,024

(1) Included in property management fees on the 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. Acquisition fees are capitalized to real estate assets on the consolidated balance sheets.

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

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

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Related Party Transactions

6 Months Ended

Jun. 30, 2019

Related Party Transactions [Abstract]

Related Party Transactions

11. Related Party Transactions

Advisory and Administrative Fee

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 the Company’s Adviser under the terms of the Advisory Agreement include, but are not limited to: providing daily management for the Company, selecting and working with third party service providers, managing the Company’s properties or overseeing the third party property manager, formulating an investment strategy for the Company and selecting suitable properties and investments, managing the Company’s outstanding debt and its 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 in the Advisory Agreement) are subject to an annual cap of approximately $5.4 million (the “Contributed Assets Cap”) (see “Expense Cap” below).

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. Operating Expenses do not include expenses for the advisory and administrative services described in the Advisory Agreement. Certain Operating Expenses, such as the Company’s 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, may be billed monthly to the Company 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 six months ended June 30, 2019 and 2018, the Adviser did not bill any Operating Expenses 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, 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. The Contributed Assets Cap is not reduced for dispositions of such assets subsequent to the Spin-Off. Advisory and administrative fees on New Assets are not subject to the above limitation and are based on an annual rate of 1.2% on Average Real Estate Assets, 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, 2019 and 2018, the Company incurred advisory and administrative fees of $1.9 million and $1.9 million, respectively. The amount paid for the three months ended June 30, 2019 and 2018 represents the maximum fee allowed on Contributed Assets under the Advisory Agreement plus approximately $0.5 million and $0.5 million, respectively, of advisory and administrative fees incurred on New Assets. For the six months ended June 30, 2019 and 2018, the Company incurred advisory and administrative fees of $3.7 million and $3.7 million, respectively. The amount paid for the six months ended June 30, 2019 and 2018 represents the maximum fee allowed on Contributed Assets under the Advisory Agreement plus approximately $1.0 million and $1.0 million, respectively, of advisory and administrative fees incurred on New Assets.

For the three months and six months ended June 30, 2019, the Adviser elected to voluntarily waive the advisory and administrative fees incurred on the twelve properties acquired subsequent to October 2016, which totaled approximately $1.8 million and $3.3 million, respectively, and are considered to be permanently waived. For the three and six months ended June 30, 2018, the Adviser elected to voluntarily waive the advisory and administrative fees incurred on properties acquired subsequent to October 2016, which totaled approximately $0.9 million and $1.8 million, respectively, and are considered to be permanently waived.  The Adviser is not contractually obligated to waive fees on New Assets in the future and may cease waiving fees on New Assets at its discretion.

Other Related Party Transactions

The Company has in the past, and may in the future, utilize the services of affiliated parties. For the six months ended June 30, 2019 and 2018, the Company paid approximately $0.0 million and $0.2 million, respectively, to NexBank Title, Inc. (“NexBank Title”). NexBank Title is an affiliate of the Adviser through common beneficial ownership. NexBank Title provides title insurance and work related to providing title insurance on properties related to acquisitions, dispositions and refinancing transactions. These amounts are either capitalized as real estate assets or deferred financing costs, expensed as loss on extinguishment of debt and modification costs, or expensed as selling costs when determining gain (loss) on sales of real estate, depending on the appropriate accounting as determined for each specific transaction.

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2019

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

12. 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, 2019, 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 consolidated statements of operations and comprehensive income 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.

Self-Insurance Program

Effective March 1, 2019, the Company maintains a partial self-insurance program for property casualty claims whereby it incurs the “first-loss” portion of a claim up to an aggregate loss amount.  Claims resulting in losses in excess of a $100,000 per occurrence property deductible will be paid by the Company up to an aggregate amount of $1.2 million (the “Aggregate Amount”).  For the period from March 1, 2019 to June 30, 2019, the Company has not incurred a claim it has funded as part of the Aggregate Amount. Under ASC 450-20 “Loss Contingencies”, the Company does not reserve for the Aggregate Amount or any portion thereof until a claim is made and the amount of the claim and the timing of payment on the claim can be reasonably estimated. For the period from March 1, 2019 to June 30, 2019, there were no potential claims that met the criteria as set forth under ASC 450-20. The Company believes it has sufficient resources through cash reserves and unused capacity on the Corporate Credit Facility to fund any potential future claims toward the Aggregate Amount.   

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Subsequent Events

6 Months Ended

Jun. 30, 2019

Subsequent Events [Abstract]

Subsequent Events

13. Subsequent Events

Dividends Declared

On July 29, 2019, the Company’s board of directors declared a quarterly dividend of $0.275 per share, payable on September 30, 2019 to stockholders of record on September 13, 2019.

Acquisitions

On July 17, 2019, the Company, through the OP, acquired the following properties (dollars in thousands):

Property Name	Location	Date of Acquisition	Purchase Price		Mortgage Debt		# Units		Effective Ownership
Residences at Glenview Reserve	Nashville, Tennessee	July 17, 2019	$	45,000	$	26,560		360		100	%
Residences at West Place	Orlando, Florida	July 17, 2019		55,000		33,817		342		100	%
			$	100,000	$	60,377		702

Dispositions

On June 25, 2019, the Company, through the OP, entered into a purchase and sale agreement with a large real estate investment firm (the “Buyer”) for the sale of the following proprieties.  Closing of the disposition is subject to Buyer due diligence and customary closing conditions.  The sales of the properties are expected to close on or before August 30, 2019.

Property Name (1)	Location	Sales Price		Debt Outstanding (2)		Real Estate Carrying Value, net (2)
Edgewater at Sandy Springs	Atlanta, Georgia		101,250	$	52,000	$	52,685
Abbington Heights	Antioch, Tennessee		28,050		16,920		16,662
Belmont at Duck Creek	Garland, Texas		29,500		17,760		17,082
The Ashlar	Dallas, Texas		29,400		14,520		15,806
Heatherstone	Dallas, Texas		16,275		8,880		9,656
The Pointe at the Foothills	Mesa, Arizona		85,400		34,800		46,608
		$	289,875	$	144,880	$	158,499

(1) Property was classified as held for sale as of June 30, 2019.

(2) As of June 30, 2019.

Corporate Credit Facility

In conjunction with the acquisition of the Residences at Glenview Reserve and the Residences at West Place, the OP drew $41.7 million on the Corporate Credit Facility on July 1, 2019.  The OP drew an additional $10 million on July 24, 2019 to fund an earnest money deposit on additional acquisitions.  As of July 30, 2019, the drawn balance on the Corporate Credit Facility was $104.2 million.

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Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2019

Accounting Policies [Abstract]

Basis of Accounting

Basis of Accounting

The accompanying unaudited consolidated financial statements are presented in accordance with accounting principles generally accepted in the United States (“GAAP”). GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the dates of the unaudited consolidated financial statements and the amounts of revenues and expenses during the reporting periods. Actual amounts realized or paid could differ from those estimates. All significant intercompany accounts and transactions have been eliminated in consolidation. There have been no significant changes to the Company’s significant accounting policies during the six months ended June 30, 2019.

The accompanying unaudited consolidated financial statements have been prepared according to the rules and regulations of the SEC.  Certain information and note disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted according to such rules and regulations, although management believes that the disclosures are adequate to make the information presented not misleading.

In the opinion of management, all adjustments and eliminations necessary for the fair presentation of the Company’s financial position as of June 30, 2019 and results of operations for the six months ended June 30, 2019 and 2018 have been included.  Such adjustments are normal and recurring in nature.  The unaudited information included in this quarterly report on Form 10-Q should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2018 and notes thereto included in its annual report on Form 10-K filed with the SEC on February 19, 2019.

Principles of Consolidation

Principles of Consolidation

The Company accounts for subsidiary partnerships, joint ventures and other similar entities in which it holds an ownership interest in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 810, Consolidation. The Company first evaluates whether each entity is a variable interest entity (“VIE”). Under the VIE model, the Company consolidates an entity when it has control to direct the activities of the VIE and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. Under the voting model, the Company consolidates an entity when it controls the entity through ownership of a majority voting interest. The unaudited consolidated financial statements include the accounts of the Company and its subsidiaries, including the OP and its subsidiaries.

Revenue Recognition

Revenue Recognition

The Company’s primary operations consist of rental income earned from its residents under lease agreements typically 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, and pets, administrative, application and other fees and are recognized when earned.  The Company implemented the provisions of Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”) as of January 1, 2019 using the modified retrospective approach.  The adoption of ASU 2014-09 did not have a material impact on the Company’s consolidated financial statements as a substantial portion of its revenue consists of rental income from leasing arrangements, which is specifically excluded from ASU 2014-09. 

Purchase Price Allocation

Purchase Price Allocation

Upon acquisition of a property, the purchase price and related acquisition costs (“total consideration”) are allocated to land, buildings, improvements, furniture, fixtures, and equipment, and intangible lease assets in accordance with FASB ASC 805, Business Combinations. Acquisition costs are capitalized in accordance with FASB ASC 805.

The allocation of total consideration, which is determined using inputs that are classified within Level 3 of the fair value hierarchy established by FASB ASC 820, Fair Value Measurement and Disclosures (“ASC 820”) (see Note 7), is based on management’s estimate of the property’s “as-if” vacant fair value and 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 total consideration 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, which is estimated using inputs that are classified within Level 2 of the fair value hierarchy, and the face value of debt is recorded as a premium or discount and amortized as interest expense over the life of the debt assumed.

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.

Impairment

Impairment

Real estate assets are reviewed for impairment 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.

The Company periodically classifies real estate assets as held for sale when certain criteria are met, in accordance with GAAP. At that time, the Company presents the net real estate assets and the net debt associated with the real estate held for sale separately in its consolidated balance sheet, and the Company ceases recording depreciation and amortization expense related to that property. Real estate held for sale is reported at the lower of its carrying amount or its estimated fair value less estimated costs to sell.  As of June 30, 2019, there are seven properties that are held for sale.  Approximately $0.6 million of other assets and approximately $2.6 million of other liabilities related to the held for sale assets are included on the consolidated balance sheet.     

Income Taxes

Income Taxes

The Company has elected 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 continue 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 (1) 85% of its ordinary income, (2) 95% of its capital gain net income and (3) 100% of its undistributed income from prior years. The Company intends to operate in such a manner so as to qualify as a REIT, but no assurance can be given that the Company will operate in a manner so as to qualify as a REIT. Taxable income from certain non-REIT activities is managed through a TRS and is subject to applicable federal, state, and local income and margin taxes. The Company had no significant taxes associated with its TRS for the six months ended June 30, 2019 and 2018.

If the Company fails 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, 2019, the Company believes it is in compliance with all applicable REIT requirements.

The Company evaluates the accounting and disclosure of tax positions taken or expected to be taken in the course of preparing the Company’s tax returns to determine whether the tax positions are “more-likely-than-not” (greater than 50 percent probability) of being sustained by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax benefit or expense in the current year. The Company’s management is required to analyze all open tax years, as defined by the statute of limitations, for all major jurisdictions, which include federal and certain states. The Company has no examinations in progress and none are expected at this time.

The Company recognizes its tax positions and evaluates them using a two-step process. First, the Company determines whether a tax position is more likely than not to be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. Second, the Company will determine the amount of benefit to recognize and record the amount that is more likely than not to be realized upon ultimate settlement.

The Company had no material unrecognized tax benefit or expense, accrued interest or penalties as of June 30, 2019. The Company and its subsidiaries are subject to federal income tax as well as income tax of various state and local jurisdictions. The 2018, 2017 and 2016 tax years remain open to examination by tax jurisdictions to which the Company and its subsidiaries are subject. When applicable, the Company recognizes interest and/or penalties related to uncertain tax positions on its consolidated statements of operations and comprehensive income (loss).

Recent Accounting Pronouncements

Accounting Pronouncements Adopted in the Current Year

In May 2014, the FASB issued ASU 2014-09, 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 periods in fiscal years beginning after December 15, 2018. Entities are allowed to use either the full or modified retrospective approach when transitioning to the ASU. The Company implemented the provisions of ASU 2014-09 as of January 1, 2019 using the modified retrospective approach. The adoption of ASU 2014-09 did not have a material impact on the Company’s consolidated financial statements as a substantial portion of its revenue consists of rental income from leasing arrangements, which is specifically excluded from ASU 2014-09.   

In January 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”), 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 in fiscal years beginning after December 15, 2018. The Company implemented the provisions of ASU 2016-01 as of January 1, 2019, and it did not have a material impact on the Company’s consolidated financial statements as the Company does not, nor does it expect to, have a material amount of financial assets or financial liabilities that would be subject to the provisions of ASU 2016-01.

Recent Accounting Pronouncements

Section 107 of the Jumpstart Our Business Startups Act (“JOBS Act”) provides that an emerging growth company can take advantage of the extended transition period provided in Section 13(a) of the Securities Exchange Act of 1934, as amended (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. The Company has elected to take advantage of this extended transition period. As a result of this election, the Company’s financial statements may not be comparable to companies that comply with public company effective dates for such new or revised standards. At June 30, 2019, the Company’s public float exceeded $700 million, and as such, the transition period will end at December 31, 2019. At the point the transition period ends, the Company will follow the adoption criteria for public companies and reflect such adoption criteria in the Company’s Annual Report on Form 10-K for the 2019 fiscal year. The following recent accounting pronouncements reflect effective dates that delay the adoption until those standards would otherwise apply to private companies.

In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815) (“ASU 2017-12”), which clarifies hedge accounting requirements, improves disclosure of hedging arrangements, and better aligns risk management activities and financial reporting for hedging relationships. The Company early adopted ASU 2017-12 on January 1, 2018, on a modified retrospective basis. For cash flow hedges existing as of the date of adoption, the Company eliminated the separate measurement of ineffectiveness by means of a cumulative-effect adjustment to accumulated other comprehensive income (“OCI”) with a corresponding adjustment to the opening balance of accumulated earnings less dividends on January 1, 2018. The cumulative-effect adjustment, which eliminated the cumulative ineffectiveness that was previously reported in interest expense, resulted in an increase to OCI of approximately $1.4 million, with a corresponding decrease to accumulated earnings less dividends.

In February 2016, the FASB issued ASU 2016-02, Leases (“ASU 2016-02”), which supersedes the current accounting for leases and while retaining two distinct types of leases, finance and operating, (1) requires lessees to record a right of use asset and a related liability for the rights and obligations associated with a lease, regardless of lease classification, and recognize lease expense in a manner similar to current accounting, (2) eliminates most real estate specific lease provisions and (3) aligns many of the underlying lessor model principles with those in the new revenue standard. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases today. As noted above, at the point the transition period ends, the Company will follow the adoption criteria for public companies. As such, the ASU is now effective for the Company to adopt as of January 1, 2019, and will be presented accordingly in the Company’s Annual Report on Form 10-K for the 2019 Fiscal Year. Entities are required to use a modified retrospective approach when transitioning to the ASU for leases that exist as of or are entered into after the beginning of the earliest comparative period presented in the financial statements. As lessors, substantially all of the Company’s agreements have a term of 12 months or less. For lessors, accounting for leases under the new standard will be substantially the same as existing guidance for sales-type leases, direct financing leases, and operating leases, but eliminates current real estate specific provisions and changes the treatment of initial direct costs. The Company is continuing its evaluation, which may identify additional impacts this standard will have on its consolidated financial statements and related disclosures.

In July 2018, the FASB issued ASU 2018-11, Leases – Targeted Improvements (“ASU 2018-11”), which provides entities with relief from the costs of implementing certain aspects of ASU 2016-02. The ASU provides a practical expedient which allows lessors to not separate lease and non-lease components in a contract and allocate the consideration in the contract to the separate components if both (i) the timing and pattern of revenue recognition for the non-lease component and the related lease component are the same and (ii) the combined single lease component would be classified as an operating lease. The Company intends to elect the practical expedient to account for lease and non-lease components as a single component in lease contracts where the Company is the lessor. The ASU also provides a transition option that permits entities to not recast the comparative periods presented when transitioning to the standard. The Company also intends to elect the transition option.

In August 2018, the SEC adopted SEC Release No. 33-10532, Disclosure Update and Simplification (the “SEC Release”), which amends certain disclosure requirements that were redundant, duplicative, overlapping or superseded by other SEC disclosure requirements or GAAP. The amendments generally eliminated or otherwise reduced certain disclosure requirements of various SEC rules and regulations. However, in some cases, the amendments require additional information to be disclosed, including changes in stockholders’ equity in interim periods. Under the SEC Release, registrants will be required to disclose in interim periods on Form 10-Q the changes in each caption of stockholders’ equity and noncontrolling interests for the current and comparative year-to-date periods, with subtotals for each interim period and the amount of dividends per share for each class of shares. The amendments require registrants, including smaller reporting companies, to provide information as prescribed by Rule 3-04 of Regulation S-X. Therefore, the interim disclosures of changes in stockholders’ equity, including dividends per share amounts, may be given in a note to the financial statements or in a separate financial statement. Under Rule 3-04, the interim disclosures of the changes in stockholders’ equity should be in the form of a reconciliation of the beginning balance to the ending balance for each period for which an income statement is required to be filed, with all significant reconciling items described by appropriate captions. The reconciliation should also reflect any adjustments to the balance at the beginning of the earliest period presented for items retroactively applied to periods prior to that period. The Company adopted the provisions of the SEC Release on September 30, 2018, on a retrospective basis.

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Summary of Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2019

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

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Investments in Subsidiaries (Tables)

6 Months Ended

Jun. 30, 2019

Schedule Of Investments [Abstract]

Schedule of Ownership in Each Property

As of June 30, 2019, the Company, through the OP and the wholly owned TRS, owned 39 properties through single-asset LLCs. The following table represents the Company’s ownership in each property by virtue of its 100% ownership of the single-asset LLCs that directly own the title to each property as of June 30, 2019 and December 31, 2018:

				Effective Ownership Percentage at
Property Name		Location	YearAcquired	June 30, 2019			December 31, 2018
Arbors on Forest Ridge		Bedford, Texas	2014		100	%		100	%
Cutter's Point		Richardson, Texas	2014		100	%		100	%
Eagle Crest		Irving, Texas	2014		100	%		100	%
Silverbrook		Grand Prairie, Texas	2014		100	%		100	%
Edgewater at Sandy Springs	(1)	Atlanta, Georgia	2014		100	%		100	%
Beechwood Terrace		Antioch, Tennessee	2014		100	%		100	%
Willow Grove		Nashville, Tennessee	2014		100	%		100	%
Woodbridge		Nashville, Tennessee	2014		100	%		100	%
Abbington Heights	(1)	Antioch, Tennessee	2014		100	%		100	%
The Summit at Sabal Park		Tampa, Florida	2014		100	%		100	%
Courtney Cove		Tampa, Florida	2014		100	%		100	%
Radbourne Lake		Charlotte, North Carolina	2014		100	%		100	%
Timber Creek		Charlotte, North Carolina	2014		100	%		100	%
Belmont at Duck Creek	(1)	Garland, Texas	2014		100	%		100	%
Sabal Palm at Lake Buena Vista		Orlando, Florida	2014		100	%		100	%
Southpoint Reserve at Stoney Creek	(1)	Fredericksburg, Virginia	2014		100	%		100	%
Cornerstone		Orlando, Florida	2015		100	%		100	%
The Preserve at Terrell Mill		Marietta, Georgia	2015		100	%		100	%
The Ashlar	(1)	Dallas, Texas	2015		100	%		100	%
Heatherstone	(1)	Dallas, Texas	2015		100	%		100	%
Versailles		Dallas, Texas	2015		100	%		100	%
Seasons 704 Apartments		West Palm Beach, Florida	2015		100	%		100	%
Madera Point		Mesa, Arizona	2015		100	%		100	%
The Pointe at the Foothills	(1)	Mesa, Arizona	2015		100	%		100	%
Venue at 8651		Fort Worth, Texas	2015		100	%		100	%
Parc500		West Palm Beach, Florida	2016		100	%		100	%
The Venue on Camelback	(6)	Phoenix, Arizona	2016		100	%		100	%
Old Farm		Houston, Texas	2016		100	%		100	%
Stone Creek at Old Farm		Houston, Texas	2016		100	%		100	%
Hollister Place		Houston, Texas	2017		100	%		100	%
Rockledge Apartments		Marietta, Georgia	2017		100	%		100	%
Atera Apartments	(2)	Dallas, Texas	2017		100	%		100	%
Cedar Pointe	(3)	Antioch, Tennessee	2018		100	%		100	%
Crestmont Reserve		Dallas, Texas	2018		100	%		100	%
Brandywine I & II		Nashville, Tennessee	2018		100	%		100	%
Bella Vista	(4)	Phoenix, Arizona	2019		100	%		—		(5)
The Enclave	(4)	Tempe, Arizona	2019		100	%		—		(5)
The Heritage	(4)	Phoenix, Arizona	2019		100	%		—		(5)
Summers Landing		Fort Worth, Texas	2019		100	%		—		(5)

(1) Property was classified as held for sale as of June 30, 2019.

(2) The EAT that directly owned Atera Apartments was consolidated as a VIE at December 31, 2017.  The Company completed the reverse portion of the 1031 Exchange of Atera Apartments with the sale of Timberglen on January 31, 2018, at which time legal title to Atera Apartments transferred to the Company.  Upon the transfer of title, the entity that directly owns Atera Apartments was no longer considered a VIE.

(3) The EAT that directly owned Cedar Pointe was consolidated as a VIE at December 31, 2018.  The master lease agreement with the EAT that directly owned Cedar Pointe terminated on February 20, 2019, at which time legal title to Cedar Pointe transferred to the Company.  Upon the transfer of title, the entity that directly owns Cedar Pointe was no longer considered a VIE.

(4) The EAT that directly owned Bella Vista, The Enclave and The Heritage was consolidated as a VIE at March 31, 2019.  The master lease agreement with the EAT that directly owned these properties terminated on July 27, 2019, as which time legal title transferred to the Company. Upon the transfer of title, the EAT that directly owned these properties was no longer considered a VIE.

(5) Properties were acquired in 2019; therefore, no ownership as of December 31, 2018.

(6) Formerly knowns as The Colonnade.

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Real Estate Investments Statistics (Tables)

6 Months Ended

Jun. 30, 2019

Multifamily Properties

Business Acquisition [Line Items]

Summary of Investment in Multifamily Properties

As of June 30, 2019, the Company was invested in a total of 39 multifamily properties, as listed below:

							Average Effective Monthly Rent Per Unit (1) as of					% Occupied (2) as of
Property Name		Rentable Square Footage (in thousands)		Number of Units		Date Acquired	June 30, 2019		December 31, 2018			June 30, 2019			December 31, 2018
Arbors on Forest Ridge			155	210		1/31/2014	$	874	$	870			95.2	%		95.2	%
Cutter's Point			198	196		1/31/2014		1,138		1,109			94.9	%		95.4	%
Eagle Crest			396	447		1/31/2014		946		922			95.7	%		94.9	%
Silverbrook			526	642		1/31/2014		868		835			96.0	%		94.9	%
Edgewater at Sandy Springs	(3)		727	760		7/18/2014		976		950			94.6	%		94.1	%
Beechwood Terrace			272	300		7/21/2014		938		933			94.0	%		93.7	%
Willow Grove			229	244		7/21/2014		991		960			94.3	%		95.1	%
Woodbridge			247	220		7/21/2014		1,052		1,028			94.1	%		94.1	%
Abbington Heights	(3)		239	274		8/1/2014		891		889			94.9	%		92.0	%
The Summit at Sabal Park			205	252		8/20/2014		986		955			93.7	%		94.4	%
Courtney Cove			225	324		8/20/2014		912		895			94.4	%		95.7	%
Radbourne Lake			247	225		9/30/2014		1,100		1,082			95.6	%		96.0	%
Timber Creek			248	352		9/30/2014		879		847			96.0	%		92.6	%
Belmont at Duck Creek	(3)		198	240		9/30/2014		1,050		1,030			94.2	%		92.1	%
Sabal Palm at Lake Buena Vista			371	400		11/5/2014		1,256		1,255			95.5	%		96.5	%
Southpoint Reserve at Stoney Creek	(3)		116	156		12/18/2014		1,133		1,093			97.4	%		98.1	%
Cornerstone			318	430		1/15/2015		1,042		1,007			93.3	%		94.2	%
The Preserve at Terrell Mill			692	752		2/6/2015		954		921			93.4	%		94.8	%
The Ashlar	(3)		206	264		2/26/2015		884		859			93.2	%		94.3	%
Heatherstone	(3)		116	152		2/26/2015		888		874			96.1	%		94.7	%
Versailles			301	388		2/26/2015		908		884			91.5	%		96.4	%
Seasons 704 Apartments			217	222		4/15/2015		1,127		1,130			94.6	%		96.8	%
Madera Point			193	256		8/5/2015		919		866			96.1	%		94.5	%
The Pointe at the Foothills	(3)		473	528		8/5/2015		909		859			95.5	%		95.1	%
Venue at 8651			289	333		10/30/2015		896		875			96.1	%		92.8	%
Parc500			266	217		7/27/2016		1,275		1,254			94.9	%		94.9	%
The Venue on Camelback			256	415		10/11/2016		751		719			93.0	%		93.3	%
Old Farm			697	734		12/29/2016		1,168		1,176			93.5	%		92.9	%
Stone Creek at Old Farm			186	190		12/29/2016		1,184		1,173			93.2	%		96.8	%
Hollister Place			246	260		2/1/2017		990		984			95.4	%		93.5	%
Rockledge Apartments			802	708		6/30/2017		1,224		1,186			94.5	%		94.6	%
Atera Apartments			334	380		10/25/2017		1,245		1,232			96.8	%		97.4	%
Cedar Pointe			224	210		8/24/2018		1,053		1,051			91.4	%		95.7	%
Crestmont Reserve			199	242		9/26/2018		906		914			94.6	%		94.6	%
Brandywine I & II			414	632		9/26/2018		970		957			92.9	%		93.8	%
Bella Vista			243	248		1/28/2019		1,221		—	(4)		93.5	%		—		(4)
The Enclave			194	204		1/28/2019		1,266		—	(4)		93.6	%		—		(4)
The Heritage			199	204		1/28/2019		1,248		—	(4)		92.6	%		—		(4)
Summers Landing			139	196		6/7/2019		922		—	(4)		94.9	%		—		(4)
			11,803		13,407

(1) Average effective monthly rent per unit is equal to the average of the contractual rent for commenced leases as of June 30, 2019 and December 31, 2018, respectively, minus any tenant concessions over the term of the lease, divided by the number of units under commenced leases as of June 30, 2019 and December 31, 2018, respectively.

(2) Percent occupied is calculated as the number of units occupied as of June 30, 2019 and December 31, 2018, divided by the total number of units, expressed as a percentage.

(3) Property was classified as held for sale as of June 30, 2019. 

(4) Properties were acquired in 2019.

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Real Estate Investments (Tables)

6 Months Ended

Jun. 30, 2019

Real Estate [Abstract]

Summary of Major Components of Investments in Multifamily Properties

As of June 30, 2019, the major components of the Company’s investments in multifamily properties were as follows (in thousands):

Operating Properties		Land		Buildings and Improvements			Intangible Lease Assets			Construction in Progress		Furniture, Fixtures and Equipment			Totals
Arbors on Forest Ridge		$	2,330	$	11,498		$	—		$	—	$	1,160		$	14,988
Cutter's Point			3,330		13,406			—			13		1,470			18,219
Eagle Crest			5,450		23,557			—			—		1,652			30,659
Silverbrook			4,860		27,375			—			—		3,514			35,749
Beechwood Terrace			1,390		21,545			—			—		1,877			24,812
Willow Grove			3,940		11,065			—			—		1,356			16,361
Woodbridge			3,650		13,224			—			—		1,721			18,595
The Summit at Sabal Park			5,770		13,562			—			—		1,481			20,813
Courtney Cove			5,880		13,371			—			—		1,397			20,648
Radbourne Lake			2,440		22,336			—			51		1,717			26,544
Timber Creek			11,260		13,894			—			28		2,016			27,198
Sabal Palm at Lake Buena Vista			7,580		41,561			—			—		1,423			50,564
Cornerstone			1,500		30,538			—			—		2,164			34,202
The Preserve at Terrell Mill			10,170		49,160			—			—		5,535			64,865
Versailles			6,720		21,832			—			—		3,200			31,752
Seasons 704 Apartments			7,480		14,274			—			—		1,372			23,126
Madera Point			4,920		17,588			—			—		1,573			24,081
Venue at 8651			2,350		18,130			—			—		2,717			23,197
Parc500			3,860		20,762			—			73		2,867			27,562
The Venue on Camelback			8,340		37,818			—			154		1,829			48,141
Old Farm			11,078		70,557			—			—		2,028			83,663
Stone Creek at Old Farm			3,493		19,407			—			—		519			23,419
Hollister Place			2,782		21,658			—			25		1,750			26,215
Rockledge Apartments			17,451		95,928			—			—		4,035			117,414
Atera Apartments			22,370		37,251			—			—		1,352			60,973
Cedar Pointe	(1)		2,372		24,053			—			—		711			27,136
Crestmont Reserve			4,124		20,138			—			64		735			25,061
Brandywine I & II			6,237		72,169			—			61		1,888			80,355
Bella Vista	(2)		10,942		36,417			919			47		806			49,131
The Enclave	(2)		11,046		29,813			769			49		639			42,316
The Heritage	(2)		6,835		34,147			750			47		672			42,451
Summers Landing			1,798		16,737			533			—		369			19,437
			203,748		914,771			2,971			612		57,545			1,179,647
Accumulated depreciation and amortization			—		(90,401	)		(2,120	)		—		(34,597	)		(127,118	)
Total Operating Properties		$	203,748	$	824,370		$	851		$	612	$	22,948		$	1,052,529
Held For Sale Property
Southpoint Reserve at Stoney Creek			6,120		11,399			—			—		847			18,366
Edgewater at Sandy Springs			14,290		44,608			—			146		5,438			64,482
Abbington Heights			1,770		17,202			—			—		1,614			20,586
Belmont at Duck Creek			1,910		17,455			—			4		1,527			20,896
The Ashlar			4,090		12,863			—			—		2,145			19,098
Heatherstone			2,320		8,154			—			—		1,263			11,737
The Pointe at the Foothills			4,840		47,012			—			—		2,256			54,108
Accumulated depreciation and amortization			—		(22,932	)		—			—		(10,373	)		(33,305	)
Total Held For Sale Property		$	35,340	$	135,761		$	—		$	150	$	4,717		$	175,968
Total		$	239,088	$	960,131		$	851		$	762	$	27,665		$	1,228,497

(1) The EAT that directly owned Cedar Pointe was consolidated as a VIE at December 31, 2018.  The master lease agreement with the EAT that directly owned Cedar Pointe terminated on February 20, 2019, at which time legal title to Cedar Pointe transferred to the Company.  Upon the transfer of title, the entity that directly owns Cedar Pointe was no longer considered a VIE.

(2) The EAT that directly owned Bella Vista, The Enclave and The Heritage was consolidated as a VIE at March 31, 2019.  The master lease agreement with the EAT that directly owned these properties terminated on July 27, 2019, as which time legal title transferred to the Company. Upon the transfer of title, the EAT that directly owned these properties was no longer considered a VIE.

As of December 31, 2018, the major components of the Company’s investments in multifamily properties were as follows (in thousands):

Operating Properties		Land		Buildings and Improvements			Intangible Lease Assets			Construction in Progress		Furniture, Fixtures and Equipment			Totals
Arbors on Forest Ridge		$	2,330	$	11,319		$	—		$	—	$	1,047		$	14,696
Cutter's Point			3,330		13,347			—			—		1,320			17,997
Eagle Crest			5,450		22,969			—			—		1,563			29,982
Silverbrook			4,860		26,485			—			60		3,230			34,635
Edgewater at Sandy Springs			14,290		44,186			—			349		5,083			63,908
Beechwood Terrace			1,390		21,123			—			31		1,670			24,214
Willow Grove			3,940		10,829			—			—		1,231			16,000
Woodbridge			3,650		13,125			—			—		1,536			18,311
Abbington Heights			1,770		17,140			—			—		1,539			20,449
The Summit at Sabal Park			5,770		13,447			—			43		1,347			20,607
Courtney Cove			5,880		13,170			—			—		1,268			20,318
Radbourne Lake			2,440		22,138			—			72		1,536			26,186
Timber Creek			11,260		13,582			—			—		1,556			26,398
Belmont at Duck Creek			1,910		17,397			—			—		1,471			20,778
Sabal Palm at Lake Buena Vista			7,580		41,336			—			—		1,280			50,196
Cornerstone			1,500		30,513			—			—		1,885			33,898
The Preserve at Terrell Mill			10,170		49,091			—			57		4,843			64,161
The Ashlar			4,090		12,845			—			—		2,017			18,952
Heatherstone			2,320		8,132			—			—		1,199			11,651
Versailles			6,720		21,513			—			—		3,033			31,266
Seasons 704 Apartments			7,480		14,223			—			—		1,288			22,991
Madera Point			4,920		17,570			—			—		1,431			23,921
The Pointe at the Foothills			4,840		46,998			—			—		2,078			53,916
Venue at 8651			2,350		18,084			—			—		2,499			22,933
Parc500			3,860		20,692			—			37		2,600			27,189
The Colonnade			8,340		37,086			—			567		1,604			47,597
Old Farm			11,078		70,471			—			—		1,800			83,349
Stone Creek at Old Farm			3,493		19,394			—			—		467			23,354
Hollister Place			2,782		21,389			—			135		1,410			25,716
Rockledge Apartments			17,451		95,484			—			428		3,314			116,677
Atera Apartments			22,371		36,563			—			86		1,151			60,171
Cedar Pointe	(1)		2,371		23,458			600			16		441			26,886
Crestmont Reserve			4,124		19,544			687			—		504			24,859
Brandywine I & II			6,237		70,961			1,762			—		1,215			80,175
			202,347		935,604			3,049			1,881		61,456			1,204,337
Accumulated depreciation and amortization			—		(95,364	)		(1,625	)		—		(37,135	)		(134,124	)
Total Operating Properties		$	202,347	$	840,240		$	1,424		$	1,881	$	24,321		$	1,070,213
Held For Sale Properties
Southpoint Reserve at Stoney Creek			6,120		11,319			—			—		787			18,226
Accumulated depreciation and amortization			—		(736	)		—			—		(161	)		(897	)
Total Held For Sale Properties		$	6,120	$	10,583		$	—		$	—	$	626		$	17,329
Total		$	208,467	$	850,823		$	1,424		$	1,881	$	24,947		$	1,087,542

(1) The EAT that directly owned Cedar Pointe was consolidated as a VIE at December 31, 2018.  The master lease agreement with the EAT that directly owned Cedar Pointe terminated on February 20, 2019, at which time legal title to Cedar Pointe transferred to the Company.  Upon the transfer of title, the entity that directly owns Cedar Pointe was no longer considered a VIE.

Summary of Acquired Properties

The Company acquired four properties during the six months ended June 30, 2019, as detailed in the table below (dollars in thousands);

Property Name	Location	Date of Acquisition	Purchase Price		Mortgage Debt (1)		# Units		Effective Ownership
Bella Vista	Phoenix, Arizona	January 28, 2019	$	48,400	$	29,040		248		100	%
The Enclave	Tempe, Arizona	January 28, 2019		41,800		25,322		204		100	%
The Heritage	Phoenix, Arizona	January 28, 2019		41,900		24,625		204		100	%
Summers Landing	Fort Worth, Texas	June 7, 2019		19,396		10,109		196		100	%
			$	151,496	$	89,096		852

(1) For additional information regarding the Company’s debt, see Note 6.

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Debt (Tables)

6 Months Ended

Jun. 30, 2019

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, 2019 (dollars in thousands):

Operating Properties		Type	Term(months)		Outstanding Principal (1)				Interest Rate (2)	Maturity Date
Arbors on Forest Ridge	(3)	Floating		84	$	13,130			4.08%	7/1/2024
Cutter's Point	(3)	Floating		84		16,640			4.08%	7/1/2024
Eagle Crest	(3)	Floating		84		29,510			4.08%	7/1/2024
Silverbrook	(3)	Floating		84		30,590			4.08%	7/1/2024
Beechwood Terrace	(3)	Floating		84		23,365			3.84%	9/1/2025
Willow Grove	(3)	Floating		84		14,818			4.18%	7/1/2024
Woodbridge	(3)	Floating		84		13,677			4.18%	7/1/2024
The Summit at Sabal Park	(3)	Floating		84		13,560			4.02%	7/1/2024
Courtney Cove	(3)	Floating		84		13,680			4.02%	7/1/2024
The Preserve at Terrell Mill	(3)	Floating		84		42,480			4.02%	7/1/2024
Versailles	(3)	Floating		84		23,880			4.02%	7/1/2024
Seasons 704 Apartments	(3)	Floating		84		17,460			4.02%	7/1/2024
Madera Point	(3)	Floating		84		15,150			4.02%	7/1/2024
Venue at 8651	(3)	Floating		84		13,734			4.18%	7/1/2024
The Venue on Camelback	(3)	Floating		84		28,093			4.08%	7/1/2024
Old Farm	(3)	Floating		84		52,886			4.08%	7/1/2024
Stone Creek at Old Farm	(3)	Floating		84		15,274			4.08%	7/1/2024
Timber Creek	(3)	Floating		84		24,100			3.66%	10/1/2025
Radbourne Lake	(3)	Floating		84		20,000			3.69%	10/1/2025
Sabal Palm at Lake Buena Vista	(3)	Floating		84		42,100			3.70%	9/1/2025
Cornerstone	(4)	Fixed		120		22,001			4.24%	3/1/2023
Parc500	(5)	Fixed		120		15,353			4.49%	8/1/2025
Hollister Place	(3)	Floating		84		14,811			3.74%	10/1/2025
Rockledge Apartments	(3)	Floating		84		68,100			3.97%	7/1/2024
Atera Apartments	(3)	Floating		84		29,500			3.88%	11/1/2024
Cedar Pointe	(6)	Floating		84		17,300			3.75%	9/1/2025
Crestmont Reserve	(3)	Floating		84		12,061			3.58%	10/1/2025
Brandywine I & II	(3)	Floating		84		43,835			3.58%	10/1/2025
Bella Vista	(7)	Floating		84		29,040			3.72%	2/1/2026
The Enclave	(7)	Floating		84		25,322			3.72%	2/1/2026
The Heritage	(7)	Floating		84		24,625			3.72%	2/1/2026
Summers Landing	(9)	Floating		84		10,109			3.58%	10/1/2025
					$	776,184
Fair market value adjustment						584		(8)
Deferred financing costs, net of accumulated amortization of $2,026						(6,795	)
					$	769,973
Held For Sale Property
Southpoint Reserve at Stoney Creek	(3)	Floating		84		13,281			4.51%	1/1/2022
Edgewater at Sandy Springs	(3)	Floating		84		52,000			4.08%	7/1/2024
Abbington Heights	(3)	Floating		84		16,920			3.65%	9/1/2025
Belmont at Duck Creek	(3)	Floating		84		17,760			3.79%	6/1/2025
The Ashlar	(3)	Floating		84		14,520			4.02%	7/1/2024
Heatherstone	(3)	Floating		84		8,880			4.02%	7/1/2024
The Pointe at the Foothills	(3)	Floating		84		34,800			4.02%	7/1/2024
					$	158,161
Deferred financing costs, net of accumulated amortization of $616						(1,525	)
					$	156,636

(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 fixed rate mortgage debt. One-month LIBOR as of June 30, 2019 was 2.3980%.

(3) Loan can be pre-paid in the first 12 months of the term in certain circumstances at par plus 5.00%. Starting in the 13^th month of the term through the 81^st 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.

(4) Debt in the amount of $18.0 million was assumed upon acquisition of this property and recorded 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 the 13^th month through August 31, 2022 and is pre-payable at par September 1, 2022 until maturity. Concurrently with the acquisition of the property, the Company 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, 2019, the total indebtedness secured by the property had a blended interest rate of 4.24%.

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

(6) Loan can be pre-paid in the first 12 months of the term in certain circumstances at par plus 5.00%.  Starting in the 13^th month of the term through the 81^st 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.  The EAT that directly owned Cedar Pointe was consolidated as a VIE at December 31, 2018.  The master lease agreement with the EAT that directly owned Cedar Pointe terminated on February 20, 2019, at which time legal title to Cedar Pointe transferred to the Company.  Upon the transfer of title, the entity that directly owns Cedar Pointe was no longer considered a VIE.

(7) Loan can be pre-paid in the first 12 months of the term in certain circumstances at par plus 5.00%. Starting in the 13^th month of the term through the 81^st 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. The EAT that directly owned Bella Vista, The Enclave and The Heritage was consolidated as a VIE at March 31, 2019.  The master lease agreement with the EAT that directly owned these properties terminated on July 27, 2019, as which time legal title transferred to the Company. Upon the transfer of title, the EAT that directly owned these properties was no longer considered a VIE.

(8) The Company reflected a valuation adjustment on its fixed rate debt for Parc500 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.

(9) Debt was assumed upon acquisition of this property and recorded at approximated fair value.  It can be pre-paid in the first 12 months of the term in certain circumstances at par plus 5.00%. Starting in the 13^th month of the term through the 81^st 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.

Schedule of Credit Facility

The following table contains summary information concerning the Company’s credit facility as of June 30, 2019 (dollars in thousands):

	Type	Term(months)		Outstanding Principal			Interest Rate (1)	Maturity Date
Corporate Credit Facility	Floating		24	$	52,500		4.65%	1/28/2021
Deferred financing costs, net of accumulated amortization of $134					(964	)
				$	51,536

(1) Interest rate is based on one-month LIBOR plus an applicable margin.  One-month LIBOR as of June 30, 2019 was 2.3980%.

Schedule of Debt Maturities

Schedule of Debt Maturities

The aggregate scheduled maturities, including amortizing principal payments, of total debt for the next five calendar years subsequent to June 30, 2019 are as follows (in thousands):

	Operating Properties		Held For Sale Property		Credit Facility		Total
2019	$	360	$	116		—	$	476
2020		744		263		—		1,007
2021		782		282		52,500		53,564
2022		817		12,620		—		13,437
2023		20,598		—		—		20,598
Thereafter		752,883		144,880		—		897,763
Total	$	776,184	$	158,161	$	52,500	$	986,845

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Fair Value of Derivative and Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2019

Fair Value Disclosures [Abstract]

Summary of Company's Outstanding Interest Rate Swaps

As of June 30, 2019, the Company had the following outstanding interest rate swaps that were designated as cash flow hedges of interest rate risk (dollars in thousands):

Effective Date	Termination Date	Counterparty	Notional		Fixed Rate (1)
July 1, 2016	June 1, 2021	KeyBank	$	100,000		1.1055	%
July 1, 2016	June 1, 2021	KeyBank		100,000		1.0210	%
July 1, 2016	June 1, 2021	KeyBank		100,000		0.9000	%
September 1, 2016	June 1, 2021	KeyBank		100,000		0.9560	%
April 1, 2017	April 1, 2022	KeyBank		100,000		1.9570	%
May 1, 2017	April 1, 2022	KeyBank		50,000		1.9610	%
July 1, 2017	July 1, 2022	KeyBank		100,000		1.7820	%
June 1, 2019	June 1, 2024	KeyBank		50,000		2.0020	%
June 1, 2019	June 1, 2024	SunTrust		50,000		2.0020	%
			$	750,000		1.4272	%	(2)

(1) The floating rate option for the interest rate swaps is one-month LIBOR. As of June 30, 2019, one-month LIBOR was 2.3980%.

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

Schedule of Outstanding Interest Rate Derivatives

As of June 30, 2019, 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		14	$	320,137

Summary of Derivative Financial Instruments and Classification on the Consolidated Balance Sheet

The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the consolidated balance sheets as of June 30, 2019 and December 31, 2018 (in thousands):

		Asset Derivatives				Liability Derivatives
	Balance Sheet Location	June 30, 2019		December 31, 2018		June 30, 2019		December 31, 2018
Derivatives designated as hedging instruments:
Interest rate swaps	Fair market value of interest rate swaps	$	5,125	$	18,141	$	3,615	$	—
Derivatives not designated as hedging instruments:
Interest rate caps	Prepaid and other assets		3		10		—		—
Total		$	5,128	$	18,151	$	3,615	$	—

Summary of Derivative Financial Instruments on Consolidated Statements of Operations and Comprehensive Income (Loss)

The tables below present the effect of the Company’s derivative financial instruments on the consolidated statements of operations and comprehensive income (loss) for the three and six months ended June 30, 2019 and 2018 (in thousands):

	Amount of gain (loss) recognized in OCI						Location of gain (loss) reclassified from accumulated	Amount of gain (loss) reclassified from OCI into income					Location of gain (loss) recognized	Amount of gain (loss) recognized in income
	2019			2018			OCI into income	2019		2018			in income	2019		2018
Derivatives designated as hedging instruments:
For the three months ended June 30,
Interest rate products	$	(9,064	)	$	3,653	(1)	Interest expense	$	1,882	$	904	(1)	Interest expense	$	—	$	—
For the six months ended June 30,
Interest rate products	$	(12,849	)	$	11,753	(1)	Interest expense	$	3,762	$	1,243	(1)	Interest expense	$	—	$	—	(2)

(1) Represents the effective portion of changes in fair value.

(2) Represents the ineffective portion of changes in fair value.

	Location of gain (loss)	Amount of gain (loss) recognized in income
	recognized in income	2019			2018
Derivatives not designated as hedging instruments:
For the three months ended June 30,
Interest rate products	Interest expense		(1	)		(12	)
For the six months ended June 30,
Interest rate products	Interest expense	$	(27	)	$	(2	)

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Stockholders' Equity (Tables)

6 Months Ended

Jun. 30, 2019

Equity [Abstract]

Summary of Restricted Stock Units

The following table includes the number of restricted stock units granted, vested, forfeited and outstanding as of June 30, 2019:

	2019
	Number of Units				Weighted Average Grant Date Fair Value
Outstanding January 1,		464,626
Granted		186,662				37.50
Vested		(148,091	)	(1)		23.10
Forfeited		(6,386	)			—
Outstanding June 30,		496,811		(2)	$	28.14

(1) Certain key employees of the Adviser elected to net the taxes owed upon vesting against the shares issued resulting in 143,642 shares being issued as shown on the Consolidated Statement of Stockholders’ Equity.  

(2) 49,772 restricted stock units vest in August 2019, 108,613 vest in February 2020, 69,530 vest in March 2020, 99,564 vest in February 2021, 99,563 vest in February 2022, 34,883 vest in February 2023 and 34,886 vest in February 2024.

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Earnings (Loss) Per Share (Tables)

6 Months Ended

Jun. 30, 2019

Earnings Per Share [Abstract]

Schedule of Computation of Basic and Diluted Earnings (Loss) Per Share

The following table sets forth the computation of basic and diluted earnings (loss) per share for the periods presented (in thousands, except per share amounts):

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2019			2018			2019			2018
Numerator for earnings (loss) per share:
Net income (loss)	$	(1,987	)	$	(1,666	)	$	(6,360	)	$	8,428
Net income (loss) attributable to redeemable noncontrolling interests in the Operating Partnership		(6	)		(5	)		(19	)		25
Net income (loss) attributable to common stockholders	$	(1,981	)	$	(1,661	)	$	(6,341	)	$	8,403
Denominator for earnings (loss) per share:
Weighted average common shares outstanding		23,736			20,780			23,643			20,883
Denominator for basic earnings (loss) per share		23,736			20,780			23,643			20,883
Weighted average unvested restricted stock units		497			515			496			479
Denominator for diluted earnings per share		24,233			21,295			24,139			21,362
Earnings (loss) per weighted average common share:
Basic	$	(0.08	)	$	(0.08	)	$	(0.27	)	$	0.40
Diluted	$	(0.08	)	$	(0.08	)	$	(0.27	)	$	0.39

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Noncontrolling Interests (Tables)

6 Months Ended

Jun. 30, 2019

Noncontrolling Interest [Abstract]

Schedule of Redeemable Noncontrolling Interests

The following table sets forth the redeemable noncontrolling interests in the OP for the six months ended June 30, 2019 (in thousands):

Redeemable noncontrolling interests in the OP, December 31, 2018	$	2,567
Net loss attributable to redeemable noncontrolling interests in the OP		(19	)
Other comprehensive loss attributable to redeemable noncontrolling interests in the OP		(50	)
Contributions from redeemable noncontrolling interests in the OP		197
Distributions to redeemable noncontrolling interests in the OP		(39	)
Adjustment to reflect redemption value of redeemable noncontrolling interests in the OP		376
Redeemable noncontrolling interests in the OP, June 30, 2019	$	3,032

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, 2019 and 2018 (in thousands):

		For the Three Months Ended June 30,				For the Six Months Ended June 30,
		2019		2018		2019		2018
Fees incurred
Property management fees	(1)	$	1,285	$	1,066	$	2,525	$	2,120
Construction supervision fees	(2)		340		283		564		570
Design Fees			60		—		60		—
Acquisition fees	(3)		—		—		308		—
Reimbursements
Payroll and benefits	(4)		4,000		3,347		8,311		7,135
Other reimbursements	(5)		928		563		1,561		1,024

(1) Included in property management fees on the 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. Acquisition fees are capitalized to real estate assets on the consolidated balance sheets.

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

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

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Subsequent Events (Tables)

6 Months Ended

Jun. 30, 2019

Subsequent Events [Abstract]

Summary of Acquired Properties

On July 17, 2019, the Company, through the OP, acquired the following properties (dollars in thousands):

Property Name	Location	Date of Acquisition	Purchase Price		Mortgage Debt		# Units		Effective Ownership
Residences at Glenview Reserve	Nashville, Tennessee	July 17, 2019	$	45,000	$	26,560		360		100	%
Residences at West Place	Orlando, Florida	July 17, 2019		55,000		33,817		342		100	%
			$	100,000	$	60,377		702

Summary of Sale Properties

On June 25, 2019, the Company, through the OP, entered into a purchase and sale agreement with a large real estate investment firm (the “Buyer”) for the sale of the following proprieties.  Closing of the disposition is subject to Buyer due diligence and customary closing conditions.  The sales of the properties are expected to close on or before August 30, 2019.

Property Name (1)	Location	Sales Price		Debt Outstanding (2)		Real Estate Carrying Value, net (2)
Edgewater at Sandy Springs	Atlanta, Georgia		101,250	$	52,000	$	52,685
Abbington Heights	Antioch, Tennessee		28,050		16,920		16,662
Belmont at Duck Creek	Garland, Texas		29,500		17,760		17,082
The Ashlar	Dallas, Texas		29,400		14,520		15,806
Heatherstone	Dallas, Texas		16,275		8,880		9,656
The Pointe at the Foothills	Mesa, Arizona		85,400		34,800		46,608
		$	289,875	$	144,880	$	158,499

(1) Property was classified as held for sale as of June 30, 2019.

(2) As of June 30, 2019.

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Organization and Description of Business - Additional Information (Details)	6 Months Ended
	Jun. 30, 2019 shares
Real Estate Properties [Line Items]
Date of incorporation	Sep. 19, 2014
OP Units, outstanding	23,819,402
OP Units owned	23,746,169
Percentage of OP Units, outstanding owned by company	99.70%
B H Equity
Real Estate Properties [Line Items]
Percentage of OP Units, outstanding owned by noncontrolling limited partner	0.30%
OP
Real Estate Properties [Line Items]
Percentage of ownership in portfolio	99.90%
TRS
Real Estate Properties [Line Items]
Percentage of ownership in portfolio	0.10%
Noncontrolling Limited Partner | B H Equity
Real Estate Properties [Line Items]
OP Units owned	73,233

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Summary of Significant Accounting Policies - Estimated Useful Lives of Assets (Details)	6 Months Ended
	Jun. 30, 2019
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)	6 Months Ended
	Jun. 30, 2019 USD ($) Property
Summary Of Significant Accounting Policies [Line Items]
Number of properties held for sale | Property	7
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%
Unrecognized tax benefit or expense, accrued interest or penalties	$ 0
Threshold public float limit for transition period	700,000,000
Accounting Standards Update 2017-12
Summary Of Significant Accounting Policies [Line Items]
Increase to OCI due to reclassification adjustment from AOCI on derivatives	$ 1,400,000
Minimum
Summary Of Significant Accounting Policies [Line Items]
Percentage of uncertain tax positions likelihood of being sustained	50.00%
Held for Sale
Summary Of Significant Accounting Policies [Line Items]
Other assets	$ 600,000
Other liabilities	$ 2,600,000

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Investments in Subsidiaries - Additional Information (Details)	6 Months Ended
	Jun. 30, 2019 subsidiary
Schedule Of Investments [Abstract]
Consolidated investment in SPEs	100.00%
Number of wholly owned subsidiaries	39

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Investments in Subsidiaries - Schedule of Ownership in Each Property (Details)	6 Months Ended
	Jun. 30, 2019	Dec. 31, 2018
Wholly Owned Subsidiaries And Variable Interest Entities [Line Items]
Effective ownership percentage, wholly owned subsidiary	100.00%
Arbors on Forest Ridge | Bedford | Texas
Wholly Owned Subsidiaries And Variable Interest Entities [Line Items]
Year of acquisition	2014
Effective ownership percentage, wholly owned subsidiary	100.00%	100.00%
Cutter's Point | Richardson | Texas
Wholly Owned Subsidiaries And Variable Interest Entities [Line Items]
Year of acquisition	2014
Effective ownership percentage, wholly owned subsidiary	100.00%	100.00%
Eagle Crest | Irving | Texas
Wholly Owned Subsidiaries And Variable Interest Entities [Line Items]
Year of acquisition	2014
Effective ownership percentage, wholly owned subsidiary	100.00%	100.00%
Silverbrook | Grand Prairie | Texas
Wholly Owned Subsidiaries And Variable Interest Entities [Line Items]
Year of acquisition	2014
Effective ownership percentage, wholly owned subsidiary	100.00%	100.00%
Edgewater at Sandy Springs | Atlanta | Georgia
Wholly Owned Subsidiaries And Variable Interest Entities [Line Items]
Year of acquisition	2014
Effective ownership percentage, wholly owned subsidiary	100.00%	100.00%
Beechwood Terrace | Antioch | Tennessee
Wholly Owned Subsidiaries And Variable Interest Entities [Line Items]
Year of acquisition	2014
Effective ownership percentage, wholly owned subsidiary	100.00%	100.00%
Willow Grove | Nashville | Tennessee
Wholly Owned Subsidiaries And Variable Interest Entities [Line Items]
Year of acquisition	2014
Effective ownership percentage, wholly owned subsidiary	100.00%	100.00%
Woodbridge | Nashville | Tennessee
Wholly Owned Subsidiaries And Variable Interest Entities [Line Items]
Year of acquisition	2014
Effective ownership percentage, wholly owned subsidiary	100.00%	100.00%
Abbington Heights | Antioch | Tennessee
Wholly Owned Subsidiaries And Variable Interest Entities [Line Items]
Year of acquisition	2014
Effective ownership percentage, wholly owned subsidiary	100.00%	100.00%
The Summit at Sabal Park | Tampa | Florida
Wholly Owned Subsidiaries And Variable Interest Entities [Line Items]
Year of acquisition	2014
Effective ownership percentage, wholly owned subsidiary	100.00%	100.00%
Courtney Cove | Tampa | Florida
Wholly Owned Subsidiaries And Variable Interest Entities [Line Items]
Year of acquisition	2014
Effective ownership percentage, wholly owned subsidiary	100.00%	100.00%
Radbourne Lake | Charlotte | North Carolina
Wholly Owned Subsidiaries And Variable Interest Entities [Line Items]
Year of acquisition	2014
Effective ownership percentage, wholly owned subsidiary	100.00%	100.00%
Timber Creek | Charlotte | North Carolina
Wholly Owned Subsidiaries And Variable Interest Entities [Line Items]
Year of acquisition	2014
Effective ownership percentage, wholly owned subsidiary	100.00%	100.00%
Belmont at Duck Creek | Garland | Texas
Wholly Owned Subsidiaries And Variable Interest Entities [Line Items]
Year of acquisition	2014
Effective ownership percentage, wholly owned subsidiary	100.00%	100.00%
Sabal Palm at Lake Buena Vista | Orlando | Florida
Wholly Owned Subsidiaries And Variable Interest Entities [Line Items]
Year of acquisition	2014
Effective ownership percentage, wholly owned subsidiary	100.00%	100.00%
Southpoint Reserve at Stoney Creek | Fredericksburg | Virginia
Wholly Owned Subsidiaries And Variable Interest Entities [Line Items]
Year of acquisition	2014
Effective ownership percentage, wholly owned subsidiary	100.00%	100.00%
Cornerstone | Orlando | Florida
Wholly Owned Subsidiaries And Variable Interest Entities [Line Items]
Year of acquisition	2015
Effective ownership percentage, wholly owned subsidiary	100.00%	100.00%
The Preserve at Terrell Mill | Marietta | Georgia
Wholly Owned Subsidiaries And Variable Interest Entities [Line Items]
Year of acquisition	2015
Effective ownership percentage, wholly owned subsidiary	100.00%	100.00%
The Ashlar | Dallas | Texas
Wholly Owned Subsidiaries And Variable Interest Entities [Line Items]
Year of acquisition	2015
Effective ownership percentage, wholly owned subsidiary	100.00%	100.00%
Heatherstone | Dallas | Texas
Wholly Owned Subsidiaries And Variable Interest Entities [Line Items]
Year of acquisition	2015
Effective ownership percentage, wholly owned subsidiary	100.00%	100.00%
Versailles | Dallas | Texas
Wholly Owned Subsidiaries And Variable Interest Entities [Line Items]
Year of acquisition	2015
Effective ownership percentage, wholly owned subsidiary	100.00%	100.00%
Seasons 704 Apartments | West Palm Beach | Florida
Wholly Owned Subsidiaries And Variable Interest Entities [Line Items]
Year of acquisition	2015
Effective ownership percentage, wholly owned subsidiary	100.00%	100.00%
Madera Point | Mesa | Arizona
Wholly Owned Subsidiaries And Variable Interest Entities [Line Items]
Year of acquisition	2015
Effective ownership percentage, wholly owned subsidiary	100.00%	100.00%
The Pointe at the Foothills | Mesa | Arizona
Wholly Owned Subsidiaries And Variable Interest Entities [Line Items]
Year of acquisition	2015
Effective ownership percentage, wholly owned subsidiary	100.00%	100.00%
Venue at 8651 | Fort Worth | Texas
Wholly Owned Subsidiaries And Variable Interest Entities [Line Items]
Year of acquisition	2015
Effective ownership percentage, wholly owned subsidiary	100.00%	100.00%
Parc500 | West Palm Beach | Florida
Wholly Owned Subsidiaries And Variable Interest Entities [Line Items]
Year of acquisition	2016
Effective ownership percentage, wholly owned subsidiary	100.00%	100.00%
The Venue on Camelback | Phoenix | Arizona
Wholly Owned Subsidiaries And Variable Interest Entities [Line Items]
Year of acquisition	2016
Effective ownership percentage, wholly owned subsidiary	100.00%	100.00%
Old Farm | Houston | Texas
Wholly Owned Subsidiaries And Variable Interest Entities [Line Items]
Year of acquisition	2016
Effective ownership percentage, wholly owned subsidiary	100.00%	100.00%
Stone Creek at Old Farm | Houston | Texas
Wholly Owned Subsidiaries And Variable Interest Entities [Line Items]
Year of acquisition	2016
Effective ownership percentage, wholly owned subsidiary	100.00%	100.00%
Hollister Place | Houston | Texas
Wholly Owned Subsidiaries And Variable Interest Entities [Line Items]
Year of acquisition	2017
Effective ownership percentage, wholly owned subsidiary	100.00%	100.00%
Rockledge Apartments | Marietta | Georgia
Wholly Owned Subsidiaries And Variable Interest Entities [Line Items]
Year of acquisition	2017
Effective ownership percentage, wholly owned subsidiary	100.00%	100.00%
Atera Apartments | Dallas | Texas
Wholly Owned Subsidiaries And Variable Interest Entities [Line Items]
Year of acquisition	2017
Effective ownership percentage, wholly owned subsidiary	100.00%	100.00%
Cedar Pointe | Antioch | Tennessee
Wholly Owned Subsidiaries And Variable Interest Entities [Line Items]
Year of acquisition	2018
Effective ownership percentage, wholly owned subsidiary	100.00%	100.00%
Crestmont Reserve | Dallas | Texas
Wholly Owned Subsidiaries And Variable Interest Entities [Line Items]
Year of acquisition	2018
Effective ownership percentage, wholly owned subsidiary	100.00%	100.00%
Brandywine I & II | Nashville | Tennessee
Wholly Owned Subsidiaries And Variable Interest Entities [Line Items]
Year of acquisition	2018
Effective ownership percentage, wholly owned subsidiary	100.00%	100.00%
Bella Vista | Phoenix | Arizona
Wholly Owned Subsidiaries And Variable Interest Entities [Line Items]
Year of acquisition	2019
Effective ownership percentage, wholly owned subsidiary	100.00%
The Enclave | Tempe | Arizona
Wholly Owned Subsidiaries And Variable Interest Entities [Line Items]
Year of acquisition	2019
Effective ownership percentage, wholly owned subsidiary	100.00%
The Heritage | Phoenix | Arizona
Wholly Owned Subsidiaries And Variable Interest Entities [Line Items]
Year of acquisition	2019
Effective ownership percentage, wholly owned subsidiary	100.00%
Summers Landing | Fort Worth | Texas
Wholly Owned Subsidiaries And Variable Interest Entities [Line Items]
Year of acquisition	2019
Effective ownership percentage, wholly owned subsidiary	100.00%

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Real Estate Investments Statistics - Additional Information (Details)	Jun. 30, 2019 Property
Multifamily Properties
Business Acquisition [Line Items]
Number of multifamily properties	39

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Real Estate Investments Statistics - Summary of Investment in Multifamily Properties (Details) ft² in Thousands		6 Months Ended
		Jun. 30, 2019 ft² Property $ / Property	Dec. 31, 2018 $ / Property
Real Estate Properties [Line Items]
Rentable Square Footage | ft²		11,803
Number of Units | Property		13,407
Arbors on Forest Ridge
Real Estate Properties [Line Items]
Rentable Square Footage | ft²		155
Number of Units | Property		210
Date Acquired		Jan. 31, 2014
Average Effective Monthly Rent Per Unit | $ / Property	[1]	874	870
% Occupied	[2]	95.20%	95.20%
Cutter's Point
Real Estate Properties [Line Items]
Rentable Square Footage | ft²		198
Number of Units | Property		196
Date Acquired		Jan. 31, 2014
Average Effective Monthly Rent Per Unit | $ / Property	[1]	1,138	1,109
% Occupied	[2]	94.90%	95.40%
Eagle Crest
Real Estate Properties [Line Items]
Rentable Square Footage | ft²		396
Number of Units | Property		447
Date Acquired		Jan. 31, 2014
Average Effective Monthly Rent Per Unit | $ / Property	[1]	946	922
% Occupied	[2]	95.70%	94.90%
Silverbrook
Real Estate Properties [Line Items]
Rentable Square Footage | ft²		526
Number of Units | Property		642
Date Acquired		Jan. 31, 2014
Average Effective Monthly Rent Per Unit | $ / Property	[1]	868	835
% Occupied	[2]	96.00%	94.90%
Edgewater at Sandy Springs
Real Estate Properties [Line Items]
Rentable Square Footage | ft²	[3]	727
Number of Units | Property	[3]	760
Date Acquired	[3]	Jul. 18, 2014
Average Effective Monthly Rent Per Unit | $ / Property	[1],[3]	976	950
% Occupied	[2],[3]	94.60%	94.10%
Beechwood Terrace
Real Estate Properties [Line Items]
Rentable Square Footage | ft²		272
Number of Units | Property		300
Date Acquired		Jul. 21, 2014
Average Effective Monthly Rent Per Unit | $ / Property	[1]	938	933
% Occupied	[2]	94.00%	93.70%
Willow Grove
Real Estate Properties [Line Items]
Rentable Square Footage | ft²		229
Number of Units | Property		244
Date Acquired		Jul. 21, 2014
Average Effective Monthly Rent Per Unit | $ / Property	[1]	991	960
% Occupied	[2]	94.30%	95.10%
Woodbridge
Real Estate Properties [Line Items]
Rentable Square Footage | ft²		247
Number of Units | Property		220
Date Acquired		Jul. 21, 2014
Average Effective Monthly Rent Per Unit | $ / Property	[1]	1,052	1,028
% Occupied	[2]	94.10%	94.10%
Abbington Heights
Real Estate Properties [Line Items]
Rentable Square Footage | ft²	[3]	239
Number of Units | Property	[3]	274
Date Acquired	[3]	Aug. 01, 2014
Average Effective Monthly Rent Per Unit | $ / Property	[1],[3]	891	889
% Occupied	[2],[3]	94.90%	92.00%
The Summit at Sabal Park
Real Estate Properties [Line Items]
Rentable Square Footage | ft²		205
Number of Units | Property		252
Date Acquired		Aug. 20, 2014
Average Effective Monthly Rent Per Unit | $ / Property	[1]	986	955
% Occupied	[2]	93.70%	94.40%
Courtney Cove
Real Estate Properties [Line Items]
Rentable Square Footage | ft²		225
Number of Units | Property		324
Date Acquired		Aug. 20, 2014
Average Effective Monthly Rent Per Unit | $ / Property	[1]	912	895
% Occupied	[2]	94.40%	95.70%
Radbourne Lake
Real Estate Properties [Line Items]
Rentable Square Footage | ft²		247
Number of Units | Property		225
Date Acquired		Sep. 30, 2014
Average Effective Monthly Rent Per Unit | $ / Property	[1]	1,100	1,082
% Occupied	[2]	95.60%	96.00%
Timber Creek
Real Estate Properties [Line Items]
Rentable Square Footage | ft²		248
Number of Units | Property		352
Date Acquired		Sep. 30, 2014
Average Effective Monthly Rent Per Unit | $ / Property	[1]	879	847
% Occupied	[2]	96.00%	92.60%
Belmont at Duck Creek
Real Estate Properties [Line Items]
Rentable Square Footage | ft²	[3]	198
Number of Units | Property	[3]	240
Date Acquired	[3]	Sep. 30, 2014
Average Effective Monthly Rent Per Unit | $ / Property	[1],[3]	1,050	1,030
% Occupied	[2],[3]	94.20%	92.10%
Sabal Palm at Lake Buena Vista
Real Estate Properties [Line Items]
Rentable Square Footage | ft²		371
Number of Units | Property		400
Date Acquired		Nov. 05, 2014
Average Effective Monthly Rent Per Unit | $ / Property	[1]	1,256	1,255
% Occupied	[2]	95.50%	96.50%
Southpoint Reserve at Stoney Creek
Real Estate Properties [Line Items]
Rentable Square Footage | ft²	[3]	116
Number of Units | Property	[3]	156
Date Acquired	[3]	Dec. 18, 2014
Average Effective Monthly Rent Per Unit | $ / Property	[1],[3]	1,133	1,093
% Occupied	[2],[3]	97.40%	98.10%
Cornerstone
Real Estate Properties [Line Items]
Rentable Square Footage | ft²		318
Number of Units | Property		430
Date Acquired		Jan. 15, 2015
Average Effective Monthly Rent Per Unit | $ / Property	[1]	1,042	1,007
% Occupied	[2]	93.30%	94.20%
The Preserve at Terrell Mill
Real Estate Properties [Line Items]
Rentable Square Footage | ft²		692
Number of Units | Property		752
Date Acquired		Feb. 06, 2015
Average Effective Monthly Rent Per Unit | $ / Property	[1]	954	921
% Occupied	[2]	93.40%	94.80%
The Ashlar
Real Estate Properties [Line Items]
Rentable Square Footage | ft²	[3]	206
Number of Units | Property	[3]	264
Date Acquired	[3]	Feb. 26, 2015
Average Effective Monthly Rent Per Unit | $ / Property	[1],[3]	884	859
% Occupied	[2],[3]	93.20%	94.30%
Heatherstone
Real Estate Properties [Line Items]
Rentable Square Footage | ft²	[3]	116
Number of Units | Property	[3]	152
Date Acquired	[3]	Feb. 26, 2015
Average Effective Monthly Rent Per Unit | $ / Property	[1],[3]	888	874
% Occupied	[2],[3]	96.10%	94.70%
Versailles
Real Estate Properties [Line Items]
Rentable Square Footage | ft²		301
Number of Units | Property		388
Date Acquired		Feb. 26, 2015
Average Effective Monthly Rent Per Unit | $ / Property	[1]	908	884
% Occupied	[2]	91.50%	96.40%
Seasons 704 Apartments
Real Estate Properties [Line Items]
Rentable Square Footage | ft²		217
Number of Units | Property		222
Date Acquired		Apr. 15, 2015
Average Effective Monthly Rent Per Unit | $ / Property	[1]	1,127	1,130
% Occupied	[2]	94.60%	96.80%
Madera Point
Real Estate Properties [Line Items]
Rentable Square Footage | ft²		193
Number of Units | Property		256
Date Acquired		Aug. 05, 2015
Average Effective Monthly Rent Per Unit | $ / Property	[1]	919	866
% Occupied	[2]	96.10%	94.50%
The Pointe at the Foothills
Real Estate Properties [Line Items]
Rentable Square Footage | ft²	[3]	473
Number of Units | Property	[3]	528
Date Acquired	[3]	Aug. 05, 2015
Average Effective Monthly Rent Per Unit | $ / Property	[1],[3]	909	859
% Occupied	[2],[3]	95.50%	95.10%
Venue at 8651
Real Estate Properties [Line Items]
Rentable Square Footage | ft²		289
Number of Units | Property		333
Date Acquired		Oct. 30, 2015
Average Effective Monthly Rent Per Unit | $ / Property	[1]	896	875
% Occupied	[2]	96.10%	92.80%
Parc500
Real Estate Properties [Line Items]
Rentable Square Footage | ft²		266
Number of Units | Property		217
Date Acquired		Jul. 27, 2016
Average Effective Monthly Rent Per Unit | $ / Property	[1]	1,275	1,254
% Occupied	[2]	94.90%	94.90%
The Venue on Camelback
Real Estate Properties [Line Items]
Rentable Square Footage | ft²		256
Number of Units | Property		415
Date Acquired		Oct. 11, 2016
Average Effective Monthly Rent Per Unit | $ / Property	[1]	751	719
% Occupied	[2]	93.00%	93.30%
Old Farm
Real Estate Properties [Line Items]
Rentable Square Footage | ft²		697
Number of Units | Property		734
Date Acquired		Dec. 29, 2016
Average Effective Monthly Rent Per Unit | $ / Property	[1]	1,168	1,176
% Occupied	[2]	93.50%	92.90%
Stone Creek at Old Farm
Real Estate Properties [Line Items]
Rentable Square Footage | ft²		186
Number of Units | Property		190
Date Acquired		Dec. 29, 2016
Average Effective Monthly Rent Per Unit | $ / Property	[1]	1,184	1,173
% Occupied	[2]	93.20%	96.80%
Hollister Place
Real Estate Properties [Line Items]
Rentable Square Footage | ft²		246
Number of Units | Property		260
Date Acquired		Feb. 01, 2017
Average Effective Monthly Rent Per Unit | $ / Property	[1]	990	984
% Occupied	[2]	95.40%	93.50%
Rockledge Apartments
Real Estate Properties [Line Items]
Rentable Square Footage | ft²		802
Number of Units | Property		708
Date Acquired		Jun. 30, 2017
Average Effective Monthly Rent Per Unit | $ / Property	[1]	1,224	1,186
% Occupied	[2]	94.50%	94.60%
Atera Apartments
Real Estate Properties [Line Items]
Rentable Square Footage | ft²		334
Number of Units | Property		380
Date Acquired		Oct. 25, 2017
Average Effective Monthly Rent Per Unit | $ / Property	[1]	1,245	1,232
% Occupied	[2]	96.80%	97.40%
Cedar Pointe
Real Estate Properties [Line Items]
Rentable Square Footage | ft²		224
Number of Units | Property		210
Date Acquired		Aug. 24, 2018
Average Effective Monthly Rent Per Unit | $ / Property	[1]	1,053	1,051
% Occupied	[2]	91.40%	95.70%
Crestmont Reserve
Real Estate Properties [Line Items]
Rentable Square Footage | ft²		199
Number of Units | Property		242
Date Acquired		Sep. 26, 2018
Average Effective Monthly Rent Per Unit | $ / Property	[1]	906	914
% Occupied	[2]	94.60%	94.60%
Brandywine I & II
Real Estate Properties [Line Items]
Rentable Square Footage | ft²		414
Number of Units | Property		632
Date Acquired		Sep. 26, 2018
Average Effective Monthly Rent Per Unit | $ / Property	[1]	970	957
% Occupied	[2]	92.90%	93.80%
Bella Vista
Real Estate Properties [Line Items]
Rentable Square Footage | ft²		243
Number of Units | Property		248
Date Acquired		Jan. 28, 2019
Average Effective Monthly Rent Per Unit | $ / Property	[1]	1,221
% Occupied	[2]	93.50%
The Enclave
Real Estate Properties [Line Items]
Rentable Square Footage | ft²		194
Number of Units | Property		204
Date Acquired		Jan. 28, 2019
Average Effective Monthly Rent Per Unit | $ / Property	[1]	1,266
% Occupied	[2]	93.60%
The Heritage
Real Estate Properties [Line Items]
Rentable Square Footage | ft²		199
Number of Units | Property		204
Date Acquired		Jan. 28, 2019
Average Effective Monthly Rent Per Unit | $ / Property	[1]	1,248
% Occupied	[2]	92.60%
Summers Landing
Real Estate Properties [Line Items]
Rentable Square Footage | ft²		139
Number of Units | Property		196
Date Acquired		Jun. 07, 2019
Average Effective Monthly Rent Per Unit | $ / Property	[1]	922
% Occupied	[2]	94.90%

[1] Average effective monthly rent per unit is equal to the average of the contractual rent for commenced leases as of June 30, 2019 and December 31, 2018, respectively, minus any tenant concessions over the term of the lease, divided by the number of units under commenced leases as of June 30, 2019 and December 31, 2018, respectively.

[2] Percent occupied is calculated as the number of units occupied as of June 30, 2019 and December 31, 2018, divided by the total number of units, expressed as a percentage.

[3] Property was classified as held for sale as of June 30, 2019.

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Real Estate Investments - Summary of Major Components of Investments in Multifamily Properties (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Real Estate Properties [Line Items]
Land	$ 203,748	$ 202,347
Buildings and improvements	914,771	935,604
Intangible lease assets	2,971	3,049
Construction in progress	612	1,881
Furniture, fixtures, and equipment	57,545	61,456
Real estate investment, gross	1,179,647	1,204,337
Accumulated depreciation and amortization	(127,118)	(134,124)
Total Net Operating Real Estate Investments	1,052,529	1,070,213
Accumulated depreciation and amortization	(33,305)	(897)
Total Net Real Estate Investments	1,228,497	1,087,542
Multifamily Properties
Real Estate Properties [Line Items]
Accumulated depreciation and amortization	(33,305)	(897)
Total Net Real Estate Investments	1,228,497	1,087,542
Multifamily Properties | Intangible Lease Assets
Real Estate Properties [Line Items]
Total Net Real Estate Investments	851	1,424
Multifamily Properties | Land
Real Estate Properties [Line Items]
Total Net Real Estate Investments	239,088	208,467
Multifamily Properties | Buildings and Improvements
Real Estate Properties [Line Items]
Accumulated depreciation and amortization	(22,932)	(736)
Total Net Real Estate Investments	960,131	850,823
Multifamily Properties | Construction in Progress
Real Estate Properties [Line Items]
Total Net Real Estate Investments	762	1,881
Multifamily Properties | Furniture, Fixtures, and Equipment
Real Estate Properties [Line Items]
Accumulated depreciation and amortization	(10,373)	(161)
Total Net Real Estate Investments	27,665	24,947
Multifamily Properties | Held For Sale Properties
Real Estate Properties [Line Items]
Total Net Operating Real Estate Investments	175,968	17,329
Multifamily Properties | Held For Sale Properties | Land
Real Estate Properties [Line Items]
Total Net Operating Real Estate Investments	35,340	6,120
Multifamily Properties | Held For Sale Properties | Buildings and Improvements
Real Estate Properties [Line Items]
Total Net Operating Real Estate Investments	135,761	10,583
Multifamily Properties | Held For Sale Properties | Construction in Progress
Real Estate Properties [Line Items]
Total Net Operating Real Estate Investments	150
Multifamily Properties | Held For Sale Properties | Furniture, Fixtures, and Equipment
Real Estate Properties [Line Items]
Total Net Operating Real Estate Investments	4,717	626
Multifamily Properties | Arbors on Forest Ridge
Real Estate Properties [Line Items]
Land	2,330	2,330
Buildings and improvements	11,498	11,319
Furniture, fixtures, and equipment	1,160	1,047
Real estate investment, gross	14,988	14,696
Multifamily Properties | Cutter's Point
Real Estate Properties [Line Items]
Land	3,330	3,330
Buildings and improvements	13,406	13,347
Construction in progress	13
Furniture, fixtures, and equipment	1,470	1,320
Real estate investment, gross	18,219	17,997
Multifamily Properties | Eagle Crest
Real Estate Properties [Line Items]
Land	5,450	5,450
Buildings and improvements	23,557	22,969
Furniture, fixtures, and equipment	1,652	1,563
Real estate investment, gross	30,659	29,982
Multifamily Properties | Silverbrook
Real Estate Properties [Line Items]
Land	4,860	4,860
Buildings and improvements	27,375	26,485
Construction in progress		60
Furniture, fixtures, and equipment	3,514	3,230
Real estate investment, gross	35,749	34,635
Multifamily Properties | Beechwood Terrace
Real Estate Properties [Line Items]
Land	1,390	1,390
Buildings and improvements	21,545	21,123
Construction in progress		31
Furniture, fixtures, and equipment	1,877	1,670
Real estate investment, gross	24,812	24,214
Multifamily Properties | Willow Grove
Real Estate Properties [Line Items]
Land	3,940	3,940
Buildings and improvements	11,065	10,829
Furniture, fixtures, and equipment	1,356	1,231
Real estate investment, gross	16,361	16,000
Multifamily Properties | Woodbridge
Real Estate Properties [Line Items]
Land	3,650	3,650
Buildings and improvements	13,224	13,125
Furniture, fixtures, and equipment	1,721	1,536
Real estate investment, gross	18,595	18,311
Multifamily Properties | The Summit at Sabal Park
Real Estate Properties [Line Items]
Land	5,770	5,770
Buildings and improvements	13,562	13,447
Construction in progress		43
Furniture, fixtures, and equipment	1,481	1,347
Real estate investment, gross	20,813	20,607
Multifamily Properties | Courtney Cove
Real Estate Properties [Line Items]
Land	5,880	5,880
Buildings and improvements	13,371	13,170
Furniture, fixtures, and equipment	1,397	1,268
Real estate investment, gross	20,648	20,318
Multifamily Properties | Radbourne Lake
Real Estate Properties [Line Items]
Land	2,440	2,440
Buildings and improvements	22,336	22,138
Construction in progress	51	72
Furniture, fixtures, and equipment	1,717	1,536
Real estate investment, gross	26,544	26,186
Multifamily Properties | Timber Creek
Real Estate Properties [Line Items]
Land	11,260	11,260
Buildings and improvements	13,894	13,582
Construction in progress	28
Furniture, fixtures, and equipment	2,016	1,556
Real estate investment, gross	27,198	26,398
Multifamily Properties | Sabal Palm at Lake Buena Vista
Real Estate Properties [Line Items]
Land	7,580	7,580
Buildings and improvements	41,561	41,336
Furniture, fixtures, and equipment	1,423	1,280
Real estate investment, gross	50,564	50,196
Multifamily Properties | Cornerstone
Real Estate Properties [Line Items]
Land	1,500	1,500
Buildings and improvements	30,538	30,513
Furniture, fixtures, and equipment	2,164	1,885
Real estate investment, gross	34,202	33,898
Multifamily Properties | The Preserve at Terrell Mill
Real Estate Properties [Line Items]
Land	10,170	10,170
Buildings and improvements	49,160	49,091
Construction in progress		57
Furniture, fixtures, and equipment	5,535	4,843
Real estate investment, gross	64,865	64,161
Multifamily Properties | Versailles
Real Estate Properties [Line Items]
Land	6,720	6,720
Buildings and improvements	21,832	21,513
Furniture, fixtures, and equipment	3,200	3,033
Real estate investment, gross	31,752	31,266
Multifamily Properties | Seasons 704 Apartments
Real Estate Properties [Line Items]
Land	7,480	7,480
Buildings and improvements	14,274	14,223
Furniture, fixtures, and equipment	1,372	1,288
Real estate investment, gross	23,126	22,991
Multifamily Properties | Madera Point
Real Estate Properties [Line Items]
Land	4,920	4,920
Buildings and improvements	17,588	17,570
Furniture, fixtures, and equipment	1,573	1,431
Real estate investment, gross	24,081	23,921
Multifamily Properties | Venue at 8651
Real Estate Properties [Line Items]
Land	2,350	2,350
Buildings and improvements	18,130	18,084
Furniture, fixtures, and equipment	2,717	2,499
Real estate investment, gross	23,197	22,933
Multifamily Properties | Parc500
Real Estate Properties [Line Items]
Land	3,860	3,860
Buildings and improvements	20,762	20,692
Construction in progress	73	37
Furniture, fixtures, and equipment	2,867	2,600
Real estate investment, gross	27,562	27,189
Multifamily Properties | The Venue on Camelback
Real Estate Properties [Line Items]
Land	8,340
Buildings and improvements	37,818
Construction in progress	154
Furniture, fixtures, and equipment	1,829
Real estate investment, gross	48,141
Multifamily Properties | The Colonnade
Real Estate Properties [Line Items]
Land		8,340
Buildings and improvements		37,086
Construction in progress		567
Furniture, fixtures, and equipment		1,604
Real estate investment, gross		47,597
Multifamily Properties | Old Farm
Real Estate Properties [Line Items]
Land	11,078	11,078
Buildings and improvements	70,557	70,471
Furniture, fixtures, and equipment	2,028	1,800
Real estate investment, gross	83,663	83,349
Multifamily Properties | Stone Creek at Old Farm
Real Estate Properties [Line Items]
Land	3,493	3,493
Buildings and improvements	19,407	19,394
Furniture, fixtures, and equipment	519	467
Real estate investment, gross	23,419	23,354
Multifamily Properties | Hollister Place
Real Estate Properties [Line Items]
Land	2,782	2,782
Buildings and improvements	21,658	21,389
Construction in progress	25	135
Furniture, fixtures, and equipment	1,750	1,410
Real estate investment, gross	26,215	25,716
Multifamily Properties | Rockledge Apartments
Real Estate Properties [Line Items]
Land	17,451	17,451
Buildings and improvements	95,928	95,484
Construction in progress		428
Furniture, fixtures, and equipment	4,035	3,314
Real estate investment, gross	117,414	116,677
Multifamily Properties | Atera Apartments
Real Estate Properties [Line Items]
Land	22,370	22,371
Buildings and improvements	37,251	36,563
Construction in progress		86
Furniture, fixtures, and equipment	1,352	1,151
Real estate investment, gross	60,973	60,171
Multifamily Properties | Cedar Pointe
Real Estate Properties [Line Items]
Land	2,372	2,371
Buildings and improvements	24,053	23,458
Intangible lease assets		600
Construction in progress		16
Furniture, fixtures, and equipment	711	441
Real estate investment, gross	27,136	26,886
Multifamily Properties | Crestmont Reserve
Real Estate Properties [Line Items]
Land	4,124	4,124
Buildings and improvements	20,138	19,544
Intangible lease assets		687
Construction in progress	64
Furniture, fixtures, and equipment	735	504
Real estate investment, gross	25,061	24,859
Multifamily Properties | Brandywine I & II
Real Estate Properties [Line Items]
Land	6,237	6,237
Buildings and improvements	72,169	70,961
Intangible lease assets		1,762
Construction in progress	61
Furniture, fixtures, and equipment	1,888	1,215
Real estate investment, gross	80,355	80,175
Multifamily Properties | Bella Vista
Real Estate Properties [Line Items]
Land	10,942
Buildings and improvements	36,417
Intangible lease assets	919
Construction in progress	47
Furniture, fixtures, and equipment	806
Real estate investment, gross	49,131
Multifamily Properties | The Enclave
Real Estate Properties [Line Items]
Land	11,046
Buildings and improvements	29,813
Intangible lease assets	769
Construction in progress	49
Furniture, fixtures, and equipment	639
Real estate investment, gross	42,316
Multifamily Properties | The Heritage
Real Estate Properties [Line Items]
Land	6,835
Buildings and improvements	34,147
Intangible lease assets	750
Construction in progress	47
Furniture, fixtures, and equipment	672
Real estate investment, gross	42,451
Multifamily Properties | Summers Landing
Real Estate Properties [Line Items]
Land	1,798
Buildings and improvements	16,737
Intangible lease assets	533
Furniture, fixtures, and equipment	369
Real estate investment, gross	19,437
Multifamily Properties | Southpoint Reserve at Stoney Creek | Held For Sale Properties
Real Estate Properties [Line Items]
Land	6,120	6,120
Buildings and improvements	11,399	11,319
Furniture, fixtures, and equipment	847	787
Real estate investment, gross	18,366	18,226
Multifamily Properties | Southpoint Reserve at Stoney Creek | Held For Sale Properties | Land
Real Estate Properties [Line Items]
Real estate investment, gross	6,120	6,120
Multifamily Properties | Southpoint Reserve at Stoney Creek | Held For Sale Properties | Buildings and Improvements
Real Estate Properties [Line Items]
Real estate investment, gross	11,399	11,319
Multifamily Properties | Southpoint Reserve at Stoney Creek | Held For Sale Properties | Furniture, Fixtures, and Equipment
Real Estate Properties [Line Items]
Real estate investment, gross	847	787
Multifamily Properties | Edgewater at Sandy Springs
Real Estate Properties [Line Items]
Land		14,290
Buildings and improvements		44,186
Construction in progress		349
Furniture, fixtures, and equipment		5,083
Real estate investment, gross		63,908
Multifamily Properties | Edgewater at Sandy Springs | Held For Sale Properties
Real Estate Properties [Line Items]
Land	14,290
Buildings and improvements	44,608
Construction in progress	146
Furniture, fixtures, and equipment	5,438
Real estate investment, gross	64,482
Multifamily Properties | Edgewater at Sandy Springs | Held For Sale Properties | Land
Real Estate Properties [Line Items]
Real estate investment, gross	14,290
Multifamily Properties | Edgewater at Sandy Springs | Held For Sale Properties | Buildings and Improvements
Real Estate Properties [Line Items]
Real estate investment, gross	44,608
Multifamily Properties | Edgewater at Sandy Springs | Held For Sale Properties | Construction in Progress
Real Estate Properties [Line Items]
Real estate investment, gross	146
Multifamily Properties | Edgewater at Sandy Springs | Held For Sale Properties | Furniture, Fixtures, and Equipment
Real Estate Properties [Line Items]
Real estate investment, gross	5,438
Multifamily Properties | Abbington Heights
Real Estate Properties [Line Items]
Land		1,770
Buildings and improvements		17,140
Furniture, fixtures, and equipment		1,539
Real estate investment, gross		20,449
Multifamily Properties | Abbington Heights | Held For Sale Properties
Real Estate Properties [Line Items]
Land	1,770
Buildings and improvements	17,202
Furniture, fixtures, and equipment	1,614
Real estate investment, gross	20,586
Multifamily Properties | Abbington Heights | Held For Sale Properties | Land
Real Estate Properties [Line Items]
Real estate investment, gross	1,770
Multifamily Properties | Abbington Heights | Held For Sale Properties | Buildings and Improvements
Real Estate Properties [Line Items]
Real estate investment, gross	17,202
Multifamily Properties | Abbington Heights | Held For Sale Properties | Furniture, Fixtures, and Equipment
Real Estate Properties [Line Items]
Real estate investment, gross	1,614
Multifamily Properties | Belmont at Duck Creek
Real Estate Properties [Line Items]
Land		1,910
Buildings and improvements		17,397
Furniture, fixtures, and equipment		1,471
Real estate investment, gross		20,778
Multifamily Properties | Belmont at Duck Creek | Held For Sale Properties
Real Estate Properties [Line Items]
Land	1,910
Buildings and improvements	17,455
Construction in progress	4
Furniture, fixtures, and equipment	1,527
Real estate investment, gross	20,896
Multifamily Properties | Belmont at Duck Creek | Held For Sale Properties | Land
Real Estate Properties [Line Items]
Real estate investment, gross	1,910
Multifamily Properties | Belmont at Duck Creek | Held For Sale Properties | Buildings and Improvements
Real Estate Properties [Line Items]
Real estate investment, gross	17,455
Multifamily Properties | Belmont at Duck Creek | Held For Sale Properties | Construction in Progress
Real Estate Properties [Line Items]
Real estate investment, gross	4
Multifamily Properties | Belmont at Duck Creek | Held For Sale Properties | Furniture, Fixtures, and Equipment
Real Estate Properties [Line Items]
Real estate investment, gross	1,527
Multifamily Properties | The Ashlar
Real Estate Properties [Line Items]
Land		4,090
Buildings and improvements		12,845
Furniture, fixtures, and equipment		2,017
Real estate investment, gross		18,952
Multifamily Properties | The Ashlar | Held For Sale Properties
Real Estate Properties [Line Items]
Land	4,090
Buildings and improvements	12,863
Furniture, fixtures, and equipment	2,145
Real estate investment, gross	19,098
Multifamily Properties | The Ashlar | Held For Sale Properties | Land
Real Estate Properties [Line Items]
Real estate investment, gross	4,090
Multifamily Properties | The Ashlar | Held For Sale Properties | Buildings and Improvements
Real Estate Properties [Line Items]
Real estate investment, gross	12,863
Multifamily Properties | The Ashlar | Held For Sale Properties | Furniture, Fixtures, and Equipment
Real Estate Properties [Line Items]
Real estate investment, gross	2,145
Multifamily Properties | Heatherstone
Real Estate Properties [Line Items]
Land		2,320
Buildings and improvements		8,132
Furniture, fixtures, and equipment		1,199
Real estate investment, gross		11,651
Multifamily Properties | Heatherstone | Held For Sale Properties
Real Estate Properties [Line Items]
Land	2,320
Buildings and improvements	8,154
Furniture, fixtures, and equipment	1,263
Real estate investment, gross	11,737
Multifamily Properties | Heatherstone | Held For Sale Properties | Land
Real Estate Properties [Line Items]
Real estate investment, gross	2,320
Multifamily Properties | Heatherstone | Held For Sale Properties | Buildings and Improvements
Real Estate Properties [Line Items]
Real estate investment, gross	8,154
Multifamily Properties | Heatherstone | Held For Sale Properties | Furniture, Fixtures, and Equipment
Real Estate Properties [Line Items]
Real estate investment, gross	1,263
Multifamily Properties | The Pointe at the Foothills
Real Estate Properties [Line Items]
Land		4,840
Buildings and improvements		46,998
Furniture, fixtures, and equipment		2,078
Real estate investment, gross		53,916
Multifamily Properties | The Pointe at the Foothills | Held For Sale Properties
Real Estate Properties [Line Items]
Land	4,840
Buildings and improvements	47,012
Furniture, fixtures, and equipment	2,256
Real estate investment, gross	54,108
Multifamily Properties | The Pointe at the Foothills | Held For Sale Properties | Land
Real Estate Properties [Line Items]
Real estate investment, gross	4,840
Multifamily Properties | The Pointe at the Foothills | Held For Sale Properties | Buildings and Improvements
Real Estate Properties [Line Items]
Real estate investment, gross	47,012
Multifamily Properties | The Pointe at the Foothills | Held For Sale Properties | Furniture, Fixtures, and Equipment
Real Estate Properties [Line Items]
Real estate investment, gross	2,256
Multifamily Properties | Operating Properties
Real Estate Properties [Line Items]
Real estate investment, gross	1,179,647	1,204,337
Accumulated depreciation and amortization	(127,118)	(134,124)
Total Net Operating Real Estate Investments	1,052,529	1,070,213
Multifamily Properties | Operating Properties | Intangible Lease Assets
Real Estate Properties [Line Items]
Real estate investment, gross	2,971	3,049
Accumulated depreciation and amortization	(2,120)	(1,625)
Total Net Operating Real Estate Investments	851	1,424
Multifamily Properties | Operating Properties | Land
Real Estate Properties [Line Items]
Real estate investment, gross	203,748	202,347
Total Net Operating Real Estate Investments	203,748	202,347
Multifamily Properties | Operating Properties | Buildings and Improvements
Real Estate Properties [Line Items]
Real estate investment, gross	914,771	935,604
Accumulated depreciation and amortization	(90,401)	(95,364)
Total Net Operating Real Estate Investments	824,370	840,240
Multifamily Properties | Operating Properties | Construction in Progress
Real Estate Properties [Line Items]
Real estate investment, gross	612	1,881
Total Net Operating Real Estate Investments	612	1,881
Multifamily Properties | Operating Properties | Furniture, Fixtures, and Equipment
Real Estate Properties [Line Items]
Real estate investment, gross	57,545	61,456
Accumulated depreciation and amortization	(34,597)	(37,135)
Total Net Operating Real Estate Investments	$ 22,948	$ 24,321

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Real Estate Investments - Additional Information (Details) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2019 USD ($)	Jun. 30, 2018 USD ($)	Jun. 30, 2019 USD ($) Property	Jun. 30, 2018 USD ($) Property
Real Estate Properties [Line Items]
Depreciation expense	$ 11.8	$ 10.8	$ 24.9	$ 21.6
Amortization expense of intangible lease assets	1.3	0.2	$ 3.5	$ 0.8
Number of properties acquired | Property			4	0
Number of real estate properties sold | Property			0	1
Sales of real estate		$ 30.0		$ 30.0
Intangible Lease Assets
Real Estate Properties [Line Items]
Amortization expense, remainder of year ended December 31, 2019	$ 0.9		$ 0.9

XML

Real Estate Investments - Summary of Acquired Properties (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2019 USD ($) Property
Real Estate Properties [Line Items]
Purchase Price	$ 151,496
Mortgage Debt	$ 89,096
Number of Units | Property	852
Effective ownership percentage, wholly owned subsidiary	100.00%
Bella Vista | Phoenix | Arizona
Real Estate Properties [Line Items]
Date of Acquisition	Jan. 28, 2019
Purchase Price	$ 48,400
Mortgage Debt	$ 29,040
Number of Units | Property	248
Effective ownership percentage, wholly owned subsidiary	100.00%
The Enclave | Tempe | Arizona
Real Estate Properties [Line Items]
Date of Acquisition	Jan. 28, 2019
Purchase Price	$ 41,800
Mortgage Debt	$ 25,322
Number of Units | Property	204
Effective ownership percentage, wholly owned subsidiary	100.00%
The Heritage | Phoenix | Arizona
Real Estate Properties [Line Items]
Date of Acquisition	Jan. 28, 2019
Purchase Price	$ 41,900
Mortgage Debt	$ 24,625
Number of Units | Property	204
Effective ownership percentage, wholly owned subsidiary	100.00%
Summers Landing | Fort Worth | Texas
Real Estate Properties [Line Items]
Date of Acquisition	Jun. 07, 2019
Purchase Price	$ 19,396
Mortgage Debt	$ 10,109
Number of Units | Property	196
Effective ownership percentage, wholly owned subsidiary	100.00%

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Debt - Summary of Mortgage Debt Nonrecourse to Company and Encumbers Multifamily Properties (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2019	Dec. 31, 2018
Debt Instrument [Line Items]
Mortgages payable, net	$ 769,973	$ 824,702
Mortgages Payable | Operating Properties
Debt Instrument [Line Items]
Outstanding Principal	776,184
Fair market value adjustment	584
Deferred financing costs, net of accumulated amortization	(6,795)
Mortgages payable, net	$ 769,973
Mortgages Payable | Arbors on Forest Ridge | Debt With Floating Interest Rate
Debt Instrument [Line Items]
Term (months)	84 months
Outstanding Principal	$ 13,130
Interest Rate	4.08%
Maturity Date	Jul. 01, 2024
Mortgages Payable | Cutter's Point | Debt With Floating Interest Rate
Debt Instrument [Line Items]
Term (months)	84 months
Outstanding Principal	$ 16,640
Interest Rate	4.08%
Maturity Date	Jul. 01, 2024
Mortgages Payable | Eagle Crest | Debt With Floating Interest Rate
Debt Instrument [Line Items]
Term (months)	84 months
Outstanding Principal	$ 29,510
Interest Rate	4.08%
Maturity Date	Jul. 01, 2024
Mortgages Payable | Silverbrook | Debt With Floating Interest Rate
Debt Instrument [Line Items]
Term (months)	84 months
Outstanding Principal	$ 30,590
Interest Rate	4.08%
Maturity Date	Jul. 01, 2024
Mortgages Payable | Beechwood Terrace | Debt With Floating Interest Rate
Debt Instrument [Line Items]
Term (months)	84 months
Outstanding Principal	$ 23,365
Interest Rate	3.84%
Maturity Date	Sep. 01, 2025
Mortgages Payable | Willow Grove | Debt With Floating Interest Rate
Debt Instrument [Line Items]
Term (months)	84 months
Outstanding Principal	$ 14,818
Interest Rate	4.18%
Maturity Date	Jul. 01, 2024
Mortgages Payable | Woodbridge | Debt With Floating Interest Rate
Debt Instrument [Line Items]
Term (months)	84 months
Outstanding Principal	$ 13,677
Interest Rate	4.18%
Maturity Date	Jul. 01, 2024
Mortgages Payable | The Summit at Sabal Park | Debt With Floating Interest Rate
Debt Instrument [Line Items]
Term (months)	84 months
Outstanding Principal	$ 13,560
Interest Rate	4.02%
Maturity Date	Jul. 01, 2024
Mortgages Payable | Courtney Cove | Debt With Floating Interest Rate
Debt Instrument [Line Items]
Term (months)	84 months
Outstanding Principal	$ 13,680
Interest Rate	4.02%
Maturity Date	Jul. 01, 2024
Mortgages Payable | The Preserve at Terrell Mill | Debt With Floating Interest Rate
Debt Instrument [Line Items]
Term (months)	84 months
Outstanding Principal	$ 42,480
Interest Rate	4.02%
Maturity Date	Jul. 01, 2024
Mortgages Payable | Versailles | Debt With Floating Interest Rate
Debt Instrument [Line Items]
Term (months)	84 months
Outstanding Principal	$ 23,880
Interest Rate	4.02%
Maturity Date	Jul. 01, 2024
Mortgages Payable | Seasons 704 Apartments | Debt With Floating Interest Rate
Debt Instrument [Line Items]
Term (months)	84 months
Outstanding Principal	$ 17,460
Interest Rate	4.02%
Maturity Date	Jul. 01, 2024
Mortgages Payable | Madera Point | Debt With Floating Interest Rate
Debt Instrument [Line Items]
Term (months)	84 months
Outstanding Principal	$ 15,150
Interest Rate	4.02%
Maturity Date	Jul. 01, 2024
Mortgages Payable | Venue at 8651 | Debt With Floating Interest Rate
Debt Instrument [Line Items]
Term (months)	84 months
Outstanding Principal	$ 13,734
Interest Rate	4.18%
Maturity Date	Jul. 01, 2024
Mortgages Payable | The Venue on Camelback | Debt With Floating Interest Rate
Debt Instrument [Line Items]
Term (months)	84 months
Outstanding Principal	$ 28,093
Interest Rate	4.08%
Maturity Date	Jul. 01, 2024
Mortgages Payable | Old Farm | Debt With Floating Interest Rate
Debt Instrument [Line Items]
Term (months)	84 months
Outstanding Principal	$ 52,886
Interest Rate	4.08%
Maturity Date	Jul. 01, 2024
Mortgages Payable | Stone Creek at Old Farm | Debt With Floating Interest Rate
Debt Instrument [Line Items]
Term (months)	84 months
Outstanding Principal	$ 15,274
Interest Rate	4.08%
Maturity Date	Jul. 01, 2024
Mortgages Payable | Timber Creek | Debt With Floating Interest Rate
Debt Instrument [Line Items]
Term (months)	84 months
Outstanding Principal	$ 24,100
Interest Rate	3.66%
Maturity Date	Oct. 01, 2025
Mortgages Payable | Radbourne Lake | Debt With Floating Interest Rate
Debt Instrument [Line Items]
Term (months)	84 months
Outstanding Principal	$ 20,000
Interest Rate	3.69%
Maturity Date	Oct. 01, 2025
Mortgages Payable | Sabal Palm at Lake Buena Vista | Debt With Floating Interest Rate
Debt Instrument [Line Items]
Term (months)	84 months
Outstanding Principal	$ 42,100
Interest Rate	3.70%
Maturity Date	Sep. 01, 2025
Mortgages Payable | Cornerstone | Debt With Fixed Interest Rate
Debt Instrument [Line Items]
Term (months)	120 months
Outstanding Principal	$ 22,001
Interest Rate	4.24%
Maturity Date	Mar. 01, 2023
Mortgages Payable | Parc500 | Debt With Fixed Interest Rate
Debt Instrument [Line Items]
Term (months)	120 months
Outstanding Principal	$ 15,353
Interest Rate	4.49%
Maturity Date	Aug. 01, 2025
Mortgages Payable | Hollister Place | Debt With Floating Interest Rate
Debt Instrument [Line Items]
Term (months)	84 months
Outstanding Principal	$ 14,811
Interest Rate	3.74%
Maturity Date	Oct. 01, 2025
Mortgages Payable | Rockledge Apartments | Debt With Floating Interest Rate
Debt Instrument [Line Items]
Term (months)	84 months
Outstanding Principal	$ 68,100
Interest Rate	3.97%
Maturity Date	Jul. 01, 2024
Mortgages Payable | Atera Apartments | Debt With Floating Interest Rate
Debt Instrument [Line Items]
Term (months)	84 months
Outstanding Principal	$ 29,500
Interest Rate	3.88%
Maturity Date	Nov. 01, 2024
Mortgages Payable | Cedar Pointe | Debt With Floating Interest Rate
Debt Instrument [Line Items]
Term (months)	84 months
Outstanding Principal	$ 17,300
Interest Rate	3.75%
Maturity Date	Sep. 01, 2025
Mortgages Payable | Crestmont Reserve | Debt With Floating Interest Rate
Debt Instrument [Line Items]
Term (months)	84 months
Outstanding Principal	$ 12,061
Interest Rate	3.58%
Maturity Date	Oct. 01, 2025
Mortgages Payable | Brandywine I & II | Debt With Floating Interest Rate
Debt Instrument [Line Items]
Term (months)	84 months
Outstanding Principal	$ 43,835
Interest Rate	3.58%
Maturity Date	Oct. 01, 2025
Mortgages Payable | Bella Vista | Debt With Floating Interest Rate
Debt Instrument [Line Items]
Term (months)	84 months
Outstanding Principal	$ 29,040
Interest Rate	3.72%
Maturity Date	Feb. 01, 2026
Mortgages Payable | The Enclave | Debt With Floating Interest Rate
Debt Instrument [Line Items]
Term (months)	84 months
Outstanding Principal	$ 25,322
Interest Rate	3.72%
Maturity Date	Feb. 01, 2026
Mortgages Payable | The Heritage | Debt With Floating Interest Rate
Debt Instrument [Line Items]
Term (months)	84 months
Outstanding Principal	$ 24,625
Interest Rate	3.72%
Maturity Date	Feb. 01, 2026
Mortgages Payable | Summers Landing | Debt With Floating Interest Rate
Debt Instrument [Line Items]
Term (months)	84 months
Outstanding Principal	$ 10,109
Interest Rate	3.58%
Maturity Date	Oct. 01, 2025
Mortgages Payable | Held For Sale Properties
Debt Instrument [Line Items]
Outstanding Principal	$ 158,161
Deferred financing costs, net of accumulated amortization	(1,525)
Mortgages payable, net	$ 156,636
Mortgages Payable | Held For Sale Properties | Southpoint Reserve at Stoney Creek | Debt With Floating Interest Rate
Debt Instrument [Line Items]
Term (months)	84 months
Outstanding Principal	$ 13,281
Interest Rate	4.51%
Maturity Date	Jan. 01, 2022
Mortgages Payable | Held For Sale Properties | Edgewater at Sandy Springs | Debt With Floating Interest Rate
Debt Instrument [Line Items]
Term (months)	84 months
Outstanding Principal	$ 52,000
Interest Rate	4.08%
Maturity Date	Jul. 01, 2024
Mortgages Payable | Held For Sale Properties | Abbington Heights | Debt With Floating Interest Rate
Debt Instrument [Line Items]
Term (months)	84 months
Outstanding Principal	$ 16,920
Interest Rate	3.65%
Maturity Date	Sep. 01, 2025
Mortgages Payable | Held For Sale Properties | Belmont at Duck Creek | Debt With Floating Interest Rate
Debt Instrument [Line Items]
Term (months)	84 months
Outstanding Principal	$ 17,760
Interest Rate	3.79%
Maturity Date	Jun. 01, 2025
Mortgages Payable | Held For Sale Properties | The Ashlar | Debt With Floating Interest Rate
Debt Instrument [Line Items]
Term (months)	84 months
Outstanding Principal	$ 14,520
Interest Rate	4.02%
Maturity Date	Jul. 01, 2024
Mortgages Payable | Held For Sale Properties | Heatherstone | Debt With Floating Interest Rate
Debt Instrument [Line Items]
Term (months)	84 months
Outstanding Principal	$ 8,880
Interest Rate	4.02%
Maturity Date	Jul. 01, 2024
Mortgages Payable | Held For Sale Properties | The Pointe at the Foothills | Debt With Floating Interest Rate
Debt Instrument [Line Items]
Term (months)	84 months
Outstanding Principal	$ 34,800
Interest Rate	4.02%
Maturity Date	Jul. 01, 2024

XML

Debt - Summary of Mortgage Debt Nonrecourse to Company and Encumbers Multifamily Properties (Parenthetical) (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2019 USD ($)
Debt Instrument [Line Items]
Deferred financing costs, net of accumulated amortization	$ 2,026
Cornerstone | Debt With Fixed Interest Rate
Debt Instrument [Line Items]
Interest Rate	4.09%
Fair value of debt assumed upon acquisition	$ 18,000
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.
Blended pay rate	4.24%
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%
13th month through 81st month | Cedar Pointe | Debt With Floating Interest Rate
Debt Instrument [Line Items]
Mortgage loans payable description	Loan can be pre-paid in the first 12 months of the term in certain circumstances 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%
13th month through 81st month | Bella Vista | Debt With Floating Interest Rate
Debt Instrument [Line Items]
Mortgage loans payable description	Loan can be pre-paid in the first 12 months of the term in certain circumstances 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%
13th month through 81st month | Summers Landing | Debt With Floating Interest Rate
Debt Instrument [Line Items]
Mortgage loans payable description	Debt was assumed upon acquisition of this property and recorded at approximated fair value. It can be pre-paid in the first 12 months of the term in certain circumstances 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%
First 12 months | Cedar Pointe | Debt With Floating Interest Rate
Debt Instrument [Line Items]
Loan prepayment fee as a percentage of unpaid principal balance	5.00%
First 12 months | Bella Vista | Debt With Floating Interest Rate
Debt Instrument [Line Items]
Loan prepayment fee as a percentage of unpaid principal balance	5.00%
First 12 months | Summers Landing | Debt With Floating Interest Rate
Debt Instrument [Line Items]
Loan prepayment fee as a percentage of unpaid principal balance	5.00%
First Mortgage | Cornerstone | 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 the 13th month through August 31, 2022 and is pre-payable at par September 1, 2022 until maturity.
Second Mortgage | Cornerstone | 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	$ 5,800
Last Four Months | Parc500
Debt Instrument [Line Items]
Mortgage loans payable description	Debt was assumed upon acquisition of this property and recorded at approximated fair value. The loan is open to pre-payment in the last four months of the term.
One-month LIBOR
Debt Instrument [Line Items]
Interest Rate	2.398%
Held For Sale Properties
Debt Instrument [Line Items]
Deferred financing costs, net of accumulated amortization	$ 616

XML

Debt - Additional Information (Details)		3 Months Ended		6 Months Ended		12 Months Ended
	Jan. 28, 2019 USD ($)	Jun. 30, 2019 USD ($)	Jun. 30, 2018 USD ($)	Jun. 30, 2019 USD ($) Property	Jun. 30, 2018 USD ($) Property	Dec. 31, 2019 USD ($) Property	Dec. 31, 2018 USD ($) Property	Jun. 29, 2019 USD ($)	Jun. 30, 2017 USD ($)
Debt Instrument [Line Items]
Number of properties acquired | Property				4	0
Credit facility proceeds received				$ 52,500,000	$ 5,000,000
Credit facility, net		$ 51,536,000		51,536,000
Write-off deferred financing costs		0	$ 100,000	0	500,000
Interest expense
Debt Instrument [Line Items]
Amortization of deferred financing fees		500,000	$ 400,000	900,000	$ 700,000
Corporate Credit Facility
Debt Instrument [Line Items]
Costs incurred on additional financing		964,000		964,000
Credit facility, net		51,536,000		51,536,000
Corporate Credit Facility | SunTrust Bank
Debt Instrument [Line Items]
Line of credit facility, maximum borrowing capacity	$ 75,000,000
Credit facility proceeds received	$ 52,500,000
Facility, term	24 months
Line of credit facility, extension term	12 months
Interest rate description	one-month LIBOR plus a range from 2.00% to 2.50%
Corporate Credit Facility | SunTrust Bank | Accordion Feature
Debt Instrument [Line Items]
Line of credit facility, maximum borrowing capacity	$ 75,000,000							$ 125,000,000
Costs incurred on additional financing								$ 500,000
Credit facility, net		$ 52,500,000		$ 52,500,000
Corporate Credit Facility | SunTrust Bank | Accordion Feature | Maximum
Debt Instrument [Line Items]
Line of credit facility, increase in facility amount	$ 140,000,000
Freddie Mac Multifamily Green Advantage Program
Debt Instrument [Line Items]
Mortgage debt financing, amount escrowed							$ 1,200,000		$ 4,200,000
Number of properties covered under mortgage loan program | Property				18
Number of properties acquired | Property							3
Number of properties refinanced | Property							7
Freddie Mac Multifamily Green Advantage Program | Scenario Forecast
Debt Instrument [Line Items]
Mortgage debt financing, amount escrowed						$ 600,000
Number of properties acquired | Property						4
One-month LIBOR | Corporate Credit Facility | SunTrust Bank
Debt Instrument [Line Items]
Period of LIBOR	1 month
One-month LIBOR | Corporate Credit Facility | SunTrust Bank | Maximum
Debt Instrument [Line Items]
Interest rate	2.50%
One-month LIBOR | Corporate Credit Facility | SunTrust Bank | Minimum
Debt Instrument [Line Items]
Interest rate	2.00%
Mortgages Payable
Debt Instrument [Line Items]
Weighted average interest rate of mortgage indebtedness		3.94%		3.94%			4.07%
Adjusted weighted average interest rate		3.16%		3.16%
Weighted average fixed rate		1.4272%		1.4272%
Mortgages Payable | One-month LIBOR
Debt Instrument [Line Items]
Weighted average interest rate of mortgage indebtedness		2.398%		2.398%			2.5027%
Weighted average decrease of spread in basis points				0.10%
Mortgages Payable | Floating Interest Rate Swap
Debt Instrument [Line Items]
Combined notional amount		$ 750,000,000		$ 750,000,000
Mortgages Payable | Interest Rate Swap
Debt Instrument [Line Items]
Mortgage indebtedness		$ 750,000,000		$ 750,000,000

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Debt - Summary of the Company's Credit Facility (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2019 USD ($)
Debt Instrument [Line Items]
Credit facilities, net	$ 51,536
Corporate Credit Facility
Debt Instrument [Line Items]
Deferred financing costs, net of accumulated amortization	(964)
Credit facilities, net	$ 51,536
Corporate Credit Facility | Debt With Floating Interest Rate
Debt Instrument [Line Items]
Term (months)	24 months
Interest Rate	4.65%
Maturity Date	Jan. 28, 2021
Credit facilities	$ 52,500

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Debt - Summary of the Company's Credit Facility (Parenthetical) (Details) $ in Thousands	Jun. 30, 2019 USD ($)
Debt Instrument [Line Items]
Deferred financing costs, net of accumulated amortization	$ 2,026
One-month LIBOR
Debt Instrument [Line Items]
Interest Rate	2.398%
Corporate Credit Facility
Debt Instrument [Line Items]
Deferred financing costs, net of accumulated amortization	$ 134

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Debt - Schedule of Debt Maturities (Details) $ in Thousands	Jun. 30, 2019 USD ($)
Debt Instrument [Line Items]
2019	$ 476
2020	1,007
2021	53,564
2022	13,437
2023	20,598
Thereafter	897,763
Total	986,845
Operating Properties
Debt Instrument [Line Items]
2019	360
2020	744
2021	782
2022	817
2023	20,598
Thereafter	752,883
Total	776,184
Credit Facility
Debt Instrument [Line Items]
2021	52,500
Total	52,500
Held For Sale Properties
Debt Instrument [Line Items]
2019	116
2020	263
2021	282
2022	12,620
Thereafter	144,880
Total	$ 158,161

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Fair Value of Derivative and Financial Instruments - Additional Information (Details)	6 Months Ended
	Jun. 30, 2019 USD ($) DerivativeInstrument	Jun. 30, 2018 USD ($) DerivativeInstrument
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Derivative financial instruments cap weighted average rate	5.82%
Impairment charges related to real estate assets	$ 0	$ 0
Designated as hedging instrument
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Gain (loss) ineffectiveness to derivatives designated as cash flow hedges	0	$ 0
Interest Rate Swap | One-month LIBOR
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Combined notional amount	$ 750,000,000
Interest rate description	floating interest rate (one-month LIBOR)
Weighted average fixed rate	1.4272%
Interest rate caps
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Combined notional amount	$ 320,100,000
Interest rate description	The interest rate cap agreements the Company has entered into effectively cap one-month LIBOR on $320.1 million of the Company’s floating rate mortgage indebtedness at a weighted average rate of 5.82%.
Interest rate caps | Not designated as hedging instrument
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Interest rate caps | DerivativeInstrument	14	11
Derivative notional amount	$ 320,137,000	$ 182,400,000
Minimum | Interest Rate Swap
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Interest rate term range	4 years
Minimum | Interest rate caps | One-month LIBOR
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Interest rate term range	3 years
Maximum | Interest Rate Swap
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Interest rate term range	5 years
Maximum | Interest rate caps | One-month LIBOR
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Interest rate term range	4 years

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Fair Value of Derivative and Financial Instruments - Summary of Company's Outstanding Interest Rate Swaps (Details)	6 Months Ended
	Jun. 30, 2019 USD ($)
Key Bank And Sun Trust Bank
Debt Instrument [Line Items]
Notional Amount	$ 750,000,000
Fixed Rate	1.4272%
Interest Rate Swap Transaction One | KeyBank
Debt Instrument [Line Items]
Effective Date	Jul. 01, 2016
Termination Date	Jun. 01, 2021
Notional Amount	$ 100,000,000
Fixed Rate	1.1055%
Interest Rate Swap Transaction Two | KeyBank
Debt Instrument [Line Items]
Effective Date	Jul. 01, 2016
Termination Date	Jun. 01, 2021
Notional Amount	$ 100,000,000
Fixed Rate	1.021%
Interest Rate Swap Transaction Three | KeyBank
Debt Instrument [Line Items]
Effective Date	Jul. 01, 2016
Termination Date	Jun. 01, 2021
Notional Amount	$ 100,000,000
Fixed Rate	0.90%
Interest Rate Swap Transaction Four | KeyBank
Debt Instrument [Line Items]
Effective Date	Sep. 01, 2016
Termination Date	Jun. 01, 2021
Notional Amount	$ 100,000,000
Fixed Rate	0.956%
Interest Rate Swap Transaction Five | KeyBank
Debt Instrument [Line Items]
Effective Date	Apr. 01, 2017
Termination Date	Apr. 01, 2022
Notional Amount	$ 100,000,000
Fixed Rate	1.957%
Interest Rate Swap Transaction Six | KeyBank
Debt Instrument [Line Items]
Effective Date	May 01, 2017
Termination Date	Apr. 01, 2022
Notional Amount	$ 50,000,000
Fixed Rate	1.961%
Interest Rate Swap Transaction Seven | KeyBank
Debt Instrument [Line Items]
Effective Date	Jul. 01, 2017
Termination Date	Jul. 01, 2022
Notional Amount	$ 100,000,000
Fixed Rate	1.782%
Interest Rate Swap Transaction Eight | KeyBank
Debt Instrument [Line Items]
Effective Date	Jun. 01, 2019
Termination Date	Jun. 01, 2024
Notional Amount	$ 50,000,000
Fixed Rate	2.002%
Interest Rate Swap Transaction Nine | SunTrust Bank
Debt Instrument [Line Items]
Effective Date	Jun. 01, 2019
Termination Date	Jun. 01, 2024
Notional Amount	$ 50,000,000
Fixed Rate	2.002%

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Fair Value of Derivative and Financial Instruments - Summary of Company's Outstanding Interest Rate Swaps (Parenthetical) (Details)	Jun. 30, 2019
One-month LIBOR | Key Bank And Sun Trust Bank
Debt Instrument [Line Items]
LIBOR, interest rate	2.398%

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Fair Value of Derivative and Financial Instruments - Outstanding Interest Rate Derivatives Not Designated as Cash Flow Hedges of Interest Rate Risk (Details) - Not designated as hedging instrument - Interest rate caps	Jun. 30, 2019 USD ($) DerivativeInstrument	Jun. 30, 2018 USD ($) DerivativeInstrument
Derivative Instruments And Hedging Activities Disclosures [Line Items]
Number of Instruments | DerivativeInstrument	14	11
Derivative notional amount | $	$ 320,137,000	$ 182,400,000

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Fair Value of Derivative and Financial Instruments - Summary of Derivative Financial Instruments and Classification on the Consolidated Balance Sheet (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Derivative Instruments And Hedging Activities Disclosures [Line Items]
Asset Derivatives	$ 5,128	$ 18,151
Liability Derivatives	3,615
Fair Market Value Of Interest Rate Swaps | Interest Rate Swap | Designated as hedging instrument
Derivative Instruments And Hedging Activities Disclosures [Line Items]
Asset Derivatives	5,125	18,141
Liability Derivatives	3,615
Prepaid and Other Assets | Interest rate caps | Not designated as hedging instrument
Derivative Instruments And Hedging Activities Disclosures [Line Items]
Asset Derivatives	$ 3	$ 10

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Fair Value of Derivative and Financial Instruments - Summary of Derivative Financial Instruments on Consolidated Statements of Operations and Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Derivative Instruments Gain Loss [Line Items]
Amount of gain (loss) recognized in OCI	$ (10,946)	$ 2,749	$ (16,611)	$ 10,510
Interest rate products | Interest expense
Derivative Instruments Gain Loss [Line Items]
Amount of gain (loss) recognized in OCI	(9,064)	3,653	(12,849)	11,753
Amount of gain (loss) reclassified from OCI into income	1,882	904	3,762	1,243
Amount of gain (loss) recognized in income	$ (1)	$ (12)	$ (27)	$ (2)

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Stockholders' Equity - Additional Information (Details) - USD ($)									3 Months Ended		6 Months Ended
	Jun. 30, 2019	Feb. 21, 2019	Feb. 20, 2019	Apr. 30, 2018	Feb. 15, 2018	Mar. 16, 2017	Aug. 11, 2016	Jun. 15, 2016	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Mar. 31, 2019	Dec. 31, 2018	Mar. 31, 2018	Dec. 31, 2017
Class Of Stock [Line Items]
Common stock, shares, issued	23,895,442								23,895,442		23,895,442			23,499,635
Common stock, shares, outstanding	23,895,442								23,895,442		23,895,442			23,499,635
Common stock, par value	$ 0.01							$ 0.01	$ 0.01		$ 0.01			$ 0.01
Share repurchase program, authorized amount				$ 40,000,000				$ 30,000,000
Stock repurchase program, expiration date				Jun. 15, 2020				Jun. 15, 2018
Stock repurchase program period in force				2 years				2 years
Share repurchase program, treasury stock shares	737,458										0
Share repurchase program, treasury stock, value	$ 16,694,000									$ 4,614,000		$ 9,672,000
Share repurchase program, treasury stock, per share	$ 22.64
Aggregate sale price of common stock									$ 9,452,000		$ 9,452,000
Proceeds from issuance of common stock											$ 9,452,000
Common Stock
Class Of Stock [Line Items]
Common stock, shares, issued	23,895,442								23,895,442	20,747,367	23,895,442	20,747,367	23,643,277	23,499,635	20,926,355	21,049,565
Aggregate sale price of common stock									$ 3,000		$ 3,000
Restricted Stock Units
Class Of Stock [Line Items]
Restricted stock units, granted											186,662
At-the-Market Offering
Class Of Stock [Line Items]
Shares, issued									252,165		252,165
Shares issued average price per share	$ 40.26								$ 40.26		$ 40.26
Proceeds from issuance of common stock									$ 9,400,000
Stock issuance costs									200,000
Other stock issuance costs									$ 500,000
At-the-Market Offering | Common Stock
Class Of Stock [Line Items]
Common stock, par value			$ 0.01
At-the-Market Offering | Maximum | Common Stock
Class Of Stock [Line Items]
Aggregate sale price of common stock			$ 100,000,000
2016 LTIP
Class Of Stock [Line Items]
Common stock, shares, issued											143,642
Common stock, shares, issued	384,410								384,410		384,410
Common stock, par value								$ 0.01
Number of shares authorized to issue								2,100,000
2016 LTIP | Restricted Stock Units
Class Of Stock [Line Items]
Equity-based compensation expense									$ 1,400,000	$ 1,100,000	$ 2,700,000	$ 2,000,000
Dividends earned on restricted stock units	$ 700,000								$ 700,000		$ 700,000
2016 LTIP | Restricted Stock Units | Director
Class Of Stock [Line Items]
Vesting period description											annually
2016 LTIP | Restricted Stock Units | Directors and Officers
Class Of Stock [Line Items]
Restricted stock units, granted						219,802	209,797
2016 LTIP | Restricted Stock Units | Directors, Officers, Employees and Certain Key Employees of Adviser
Class Of Stock [Line Items]
Restricted stock units, granted		186,662			275,795
2016 LTIP | Restricted Stock Units | Minimum | Officers, Employees and Certain Key Employees of Adviser
Class Of Stock [Line Items]
Restricted stock units, vesting period											3 years
2016 LTIP | Restricted Stock Units | Maximum | Officers, Employees and Certain Key Employees of Adviser
Class Of Stock [Line Items]
Restricted stock units, vesting period											5 years

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Stockholders' Equity - Summary of Restricted Stock Units (Details) - Restricted Stock Units	6 Months Ended
	Jun. 30, 2019 $ / shares shares
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of Units, Outstanding at beginning of the period	464,626
Number of Units, Granted	186,662
Number of Units, Vested	(148,091)
Number of Units, Forfeited	(6,386)
Number of Units, Outstanding at ending of the period	496,811
Weighted Average Grant Date Fair Value, Granted | $ / shares	$ 37.50
Weighted Average Grant Date Fair Value, Vested | $ / shares	23.10
Weighted Average Grant Date Fair Value, Outstanding at ending of the period | $ / shares	$ 28.14

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Stockholders' Equity - Summary of Restricted Stock Units (Parenthetical) (Details) - shares	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
Vest in August 2019
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Restricted stock units, vested	49,772
Vest in February 2020
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Restricted stock units, vested	108,613
Vest in March 2020
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Restricted stock units, vested	69,530
Vest in February 2021
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Restricted stock units, vested	99,564
Vest in February 2022
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Restricted stock units, vested	99,563
Vest in February 2023
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Restricted stock units, vested	34,883
Vest in February 2024
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Restricted stock units, vested	34,886
Common Stock
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock issued upon vesting awards	143,642	80,743

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Earnings (Loss) Per Share - Additional Information (Details)	6 Months Ended
	Jun. 30, 2019
Earnings Per Share [Abstract]
Stock conversion ratio	100.00%

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Earnings (Loss) Per Share - Schedule of Computation of Basic and Diluted Earnings (Loss) Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Numerator for earnings (loss) per share:
Net income (loss)	$ (1,987)	$ (1,666)	$ (6,360)	$ 8,428
Net income (loss) attributable to redeemable noncontrolling interests in the Operating Partnership	(6)	(5)	(19)	25
Net income (loss) attributable to common stockholders	$ (1,981)	$ (1,661)	$ (6,341)	$ 8,403
Denominator for earnings (loss) per share:
Weighted average common shares outstanding - basic	23,736	20,780	23,643	20,883
Weighted average unvested restricted stock units	497	515	496	479
Denominator for diluted earnings per share	24,233	21,295	24,139	21,362
Earnings (loss) per weighted average common share:
Basic	$ (0.08)	$ (0.08)	$ (0.27)	$ 0.40
Diluted	$ (0.08)	$ (0.08)	$ (0.27)	$ 0.39

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Noncontrolling Interests - Additional Information (Details)		6 Months Ended
	Jun. 30, 2017 USD ($)	Jun. 30, 2019 $ / Property $ / h	Aug. 01, 2017 USD ($) $ / shares shares
Minority Interest [Line Items]
Common units transferred to acquire ownership interest in properties of noncontrolling interest holders, per share | $ / shares			$ 27.31
Amount used for calculation of OP units of net asset value	$ 2,000,000
BH Equity Portfolio
Minority Interest [Line Items]
Percentage of noncontrolling interests in joint ventures acquired	100.00%
Consideration transferred to acquire ownership interest in properties of noncontrolling interest holders	$ 51,700,000
Payment to acquire ownership interest in properties of noncontrolling interest holders	$ 49,700,000
Common units transferred to acquire ownership interest in properties of noncontrolling interest holders | shares			73,233
Value of common units transferred to acquire ownership interest in properties of noncontrolling interest holders			$ 2,000,000
BH Equity Portfolio | B H Equity
Minority Interest [Line Items]
Percentage of ownership interests in portfolio	8.40%
BH Management Services, LLC
Minority Interest [Line Items]
Property management fee percent		3.00%
Other owner approved fees, per hour | $ / h		55
BH Management Services, LLC | Minimum
Minority Interest [Line Items]
Inspection of properties fee, per unit | $ / Property		15
Construction supervision fee, percent fee		5.00%
BH Management Services, LLC | Maximum
Minority Interest [Line Items]
Inspection of properties fee, per unit | $ / Property		25
Construction supervision fee, percent fee		6.00%

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Noncontrolling Interests - Schedule of Redeemable Noncontrolling Interests (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Noncontrolling Interest [Abstract]
Redeemable noncontrolling interests in the OP, December 31, 2018			$ 2,567
Net loss attributable to redeemable noncontrolling interests in the OP			(19)
Other comprehensive loss attributable to redeemable noncontrolling interests in the OP			(50)
Contributions from redeemable noncontrolling interests in the OP			197
Distributions to redeemable noncontrolling interests in the OP			(39)
Adjustment to reflect redemption value of redeemable noncontrolling interests in the OP	$ 250	$ 22	376	$ 22
Redeemable noncontrolling interests in the OP, June 30, 2019	$ 3,032		$ 3,032

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Noncontrolling Interests - Summary of Fees Incurred to BH And Its Affiliates As Well As Reimbursements Paid to BH (Details) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
		Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Fees incurred
Property management fees	[1]	$ 1,291	$ 1,066	$ 2,531	$ 2,120
BH Management Services, LLC
Fees incurred
Property management fees		1,285	1,066	2,525	2,120
Construction supervision fees		340	283	564	570
Design fees		60		60
Acquisition fees				308
Reimbursements
Payroll and benefits		4,000	3,347	8,311	7,135
Other reimbursements		$ 928	$ 563	$ 1,561	$ 1,024

[1] Fees incurred to an unaffiliated third party that is an affiliate of the noncontrolling limited partner of the Company’s operating partnership, NexPoint Residential Trust Operating Partnership, L.P. (see Note 10).

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Related Party Transactions - Additional Information (Details)	3 Months Ended		6 Months Ended		29 Months Ended
	Jun. 30, 2019 USD ($)	Jun. 30, 2018 USD ($)	Jun. 30, 2019 USD ($)	Jun. 30, 2018 USD ($)	Mar. 31, 2019 Property
Advisory and Administrative Fees
Related Party Transaction [Line Items]
Advisory fees waived for number of properties acquired | Property					12
NexPoint Real Estate Advisors, L.P
Related Party Transaction [Line Items]
Percentage of annual administrative fee, paid monthly			0.20%
Advisory and administrative fees on contributed assets			$ 5,400,000
Advisory and administrative fees percentage			1.20%
Advisory and administrative fees	$ 1,900,000	$ 1,900,000	$ 3,700,000	$ 3,700,000
Additional advisory and administrative fees	500,000	500,000	1,000,000	1,000,000
Advisory and administrative fees waived	$ 1,800,000	$ 900,000	3,300,000	1,800,000
NexPoint Real Estate Advisors, L.P | Maximum
Related Party Transaction [Line Items]
Advisory and administrative fees on contributed assets			$ 5,400,000
Advisory and administrative fees percentage			1.50%
NexPoint Real Estate Advisors, L.P | Predecessor
Related Party Transaction [Line Items]
Percentage of annual advisory, paid monthly			1.00%
NexBank Title, Inc.
Related Party Transaction [Line Items]
Payment to affiliate for services rendered			$ 0	$ 200,000

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Commitments and Contingencies - Additional Information (Details) - Self-Insurance Program		4 Months Ended
	Mar. 01, 2019 USD ($)	Jun. 30, 2019 USD ($) Claim
Loss Contingencies [Line Items]
Limit of losses for insurance claims	$ 100,000
Maximum insurance claim amount	$ 1,200,000
Insurance claims funded		$ 0
Amount of reserve for aggregate insurance claim		$ 0
Potential claims that met the criteria under ASC 450-20 | Claim		0

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Subsequent Events - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands					6 Months Ended
	Jul. 30, 2019	Jul. 29, 2019	Jul. 24, 2019	Jul. 01, 2019	Jun. 30, 2019	Jun. 30, 2018
Subsequent Event [Line Items]
Credit facilities proceeds received					$ 52,500	$ 5,000
Subsequent Event
Subsequent Event [Line Items]
Dividends payable, amount per share		$ 0.275
Dividends payable, date declared		Jul. 29, 2019
Dividends payable, date to be paid		Sep. 30, 2019
Dividends payable, date of record		Sep. 13, 2019
Subsequent Event | Residences at Glenview Reserve and Residences at West Place | Corporate Credit Facility
Subsequent Event [Line Items]
Credit facilities proceeds received	$ 104,200		$ 10,000	$ 41,700

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Subsequent Events - Summary of Acquired Properties (Details) $ in Thousands		6 Months Ended
	Jul. 17, 2019 USD ($) Property	Jun. 30, 2019 USD ($) Property
Subsequent Event [Line Items]
Purchase Price		$ 151,496
Mortgage Debt		$ 89,096
Number of Units | Property		852
Effective ownership percentage, wholly owned subsidiary		100.00%
Subsequent Event
Subsequent Event [Line Items]
Purchase Price	$ 100,000
Mortgage Debt	$ 60,377
Number of Units | Property	702
Subsequent Event | Residences at Glenview Reserve | Nashville | Tennessee
Subsequent Event [Line Items]
Date of Acquisition	Jul. 17, 2019
Purchase Price	$ 45,000
Mortgage Debt	$ 26,560
Number of Units | Property	360
Effective ownership percentage, wholly owned subsidiary	100.00%
Subsequent Event | Residences at West Place | Orlando | Florida
Subsequent Event [Line Items]
Date of Acquisition	Jul. 17, 2019
Purchase Price	$ 55,000
Mortgage Debt	$ 33,817
Number of Units | Property	342
Effective ownership percentage, wholly owned subsidiary	100.00%

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Subsequent Events - Summary of Sale Properties (Details) $ in Thousands	Jun. 30, 2019 USD ($)
Subsequent Event [Line Items]
Sales Price	$ 289,875
Debt Outstanding	144,880
Real Estate Carrying Value, net	158,499
Edgewater at Sandy Springs | Atlanta | Georgia
Subsequent Event [Line Items]
Sales Price	101,250
Debt Outstanding	52,000
Real Estate Carrying Value, net	52,685
Abbington Heights | Antioch | Tennessee
Subsequent Event [Line Items]
Sales Price	28,050
Debt Outstanding	16,920
Real Estate Carrying Value, net	16,662
Belmont at Duck Creek | Garland | Texas
Subsequent Event [Line Items]
Sales Price	29,500
Debt Outstanding	17,760
Real Estate Carrying Value, net	17,082
The Ashlar | Dallas | Texas
Subsequent Event [Line Items]
Sales Price	29,400
Debt Outstanding	14,520
Real Estate Carrying Value, net	15,806
Heatherstone | Dallas | Texas
Subsequent Event [Line Items]
Sales Price	16,275
Debt Outstanding	8,880
Real Estate Carrying Value, net	9,656
The Pointe at the Foothills | Mesa | Arizona
Subsequent Event [Line Items]
Sales Price	85,400
Debt Outstanding	34,800
Real Estate Carrying Value, net	$ 46,608