Maryland |
6798 |
61-1805524 | ||
(State or other jurisdiction of incorporation or organization) |
(Primary Standard Industrial Classification Code Number) |
(I.R.S. Employer Identification Number) |
Darryl Steinhause, Esq. Laura K. Sirianni, Esq. Kerry E. Johnson, Esq. DLA Piper LLP (US) 4141 Parklake Avenue, Suite 300 Raleigh, North Carolina 27612-2350 (919) 786-2000 |
Josh Schneiderman, Esq. Snell & Wilmer L.L.P. 350 South Grand Ave., Suite 3100 Los Angeles, California 90071 Tel: (213) 929-2500 |
Large accelerated filer | ☐ | Accelerated filer | ☐ | |||
☒ | Smaller reporting company | |||||
Emerging growth company |
• |
Ongoing Distributions |
• |
Broadened Potential Liquidity Options |
• |
Greater Diversification and Economies of Scale |
• |
Expanded Access to Investment Capital |
1. |
A proposal to approve the merger of Cottonwood Multifamily Opportunity Fund, Inc. with and into Cottonwood Communities GP Subsidiary, LLC, a wholly owned subsidiary of Cottonwood Communities, Inc. (“CCI”), pursuant to the Agreement and Plan of Merger, dated as of July 8, 2022, by and among Cottonwood Multifamily Opportunity Fund, Inc., Cottonwood Communities, Inc. and the other parties thereto (the “Merger Proposal”). |
2. |
A proposal to adjourn the Special Meeting to solicit additional proxies in favor of the Merger Proposal if there are not sufficient votes to approve the Merger Proposal, if necessary and as determined by the chair of the Special Meeting (the “Adjournment Proposal.”) |
By Order of the Board of Directors, Gregg Christensen, Secretary | ||
Salt Lake City, Utah [ ], 2022 |
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F-1 | ||||
ANNEXES | ||||
Annex A – Agreement and Plan of Merger | A-1 | |||
Annex B – Opinion of CMOF Special Committee’s Financial Advisor | B-1 | |||
Annex C – CCI’s Management’s Discussion & Analysis of Financial Condition | C-1 | |||
Annex D – CCI Significant Business Acquisition Financial Statements and Related Pro Forma Financial Information | D-1 | |||
Annex E – CMOF’s Management’s Discussion & Analysis of Financial Condition | E-1 |
1. | “2021 Mergers” are to the CRII Merger, the CMRI Merger, and the CMRII Merger, and where applicable in this proxy statement/prospectus may also include the CROP Merger, the CMRI OP Merger and the CMRII OP Merger; |
2. | “Acquisition Proposal” are to any bona fide proposal or offer from any person (other than CCI or any of its subsidiaries) made after the date of the Merger Agreement, whether in one transaction or a series of related transactions, relating to any (i) merger, consolidation, share exchange, business combination or similar transaction involving CMOF or any CMOF subsidiary that would |
constitute a “significant subsidiary” (as defined in Rule 1-02 of Regulation S-X) representing 20% or more of the consolidated assets of CMOF, (ii) sale or other disposition, by merger, consolidation, share exchange, business combination or any similar transaction, of any assets of CMOF or any CMOF subsidiaries that are significant subsidiaries representing 20% or more of the consolidated assets of CMOF, (iii) issue, sale or other disposition by CMOF of (including by way of merger, consolidation, share exchange, business combination or any similar transaction) securities (or options, rights or warrants to purchase, or securities convertible into, such securities) representing 20% or more of the votes associated with the outstanding CMOF Common Stock, (iv) tender offer or exchange offer in which any person or group will acquire beneficial ownership, or the right to acquire beneficial ownership, of 20% or more of the outstanding CMOF Common Stock, or (v) recapitalization, restructuring, liquidation, dissolution or other similar type of transaction with respect to CMOF in which a third party will acquire beneficial ownership of 20% or more of the outstanding shares of CMOF Common Stock; provided, however, that the term “Acquisition Proposal” shall not include (A) the Mergers or any of the other transactions contemplated by the Merger Agreement, or (B) any merger, consolidation, business combination, reorganization, recapitalization or similar transaction solely among CMOF and one or more of the CMOF subsidiaries or solely among the CMOF subsidiaries; |
3. | “Adjournment Proposal” are to the proposal to adjourn the Special Meeting to solicit additional proxies in favor of the Merger Proposal if there are not sufficient votes to approve the Merger Proposal, if necessary and as determined by the chair of the Special Meeting; |
4. | “Adverse Recommendation Change” generally means an action or inaction by the CMOF Board (or any committee thereof) to (i) change, withhold, withdraw, qualify or modify the CMOF Board’s recommendation with respect to the Mergers in a manner adverse to CCI (or announce its intention to do so), (ii) authorize, approve, endorse, declare advisable, adopt or recommend any Acquisition Proposal (or announce its intention to do so), (iii) authorize, cause or permit CMOF or any CMOF subsidiary to enter into any alternative acquisition agreement, (iv) take any formal action or make any recommendation or public statement in connection with a tender offer or exchange offer for CMOF Common Stock other than a recommendation against such offer or (v) fail to make the CMOF Board recommendation or to include the CMOF Board recommendation in this proxy statement/prospectus; |
5. | “Amended and Restated Advisory Agreement” are to the Amended and Restated Advisory Agreement dated May 7, 2021 entered into by CCI, CROP and CCI Advisor as renewed for an additional year on May 7, 2022; |
6. | “Broadridge” are to Broadridge Financial Solutions, Inc., CMOF’s proxy solicitor; |
7. | “CBRE Capital” are to CBRE Capital Advisors, Inc., the financial advisor of the CMOF Special Committee; |
8. | “CCA” are to Cottonwood Communities Advisors, LLC, a Delaware limited liability company, the sole owner of CCI Advisor; |
9. | “CCI” are to Cottonwood Communities, Inc., a Maryland corporation; |
10. | “CCI Advisor” are to CC Advisors III, LLC, a Delaware limited liability company, a wholly owned subsidiary of CCA and the advisor to CCI and CROP; |
11. | “CCI Benefit Plan” are to a benefit plan sponsored or maintained by CCI, CROP or a CCI subsidiary or for which any of the foregoing may have any liability or obligation. |
12. | “CCI Board” are to the board of directors of CCI; |
13. | “CCI Bylaws” are to the bylaws of CCI; |
14. | “CCI Charter” are to the Articles of Amendment and Restatement of CCI, as supplemented and amended; |
15. | “CCI Common Stock” are to the shares of Class A common stock, $0.01 par value per share, of CCI, and where applicable in this proxy statement/prospectus, may also include the other classes of common stock, $0.01 per share, of CCI, including the Class T, TX, D and I shares; |
16. | “CCI Conflicts Committee” are to the conflicts committee of the CCI Board as established pursuant to Article XIV of the CCI Charter; |
17. | “CCI Parties” are to CCI, CROP and Merger Sub; |
18. | “CCM” are to Cottonwood Communities Management, LLC, a Delaware limited liability company, a wholly owned subsidiary of Cottonwood Capital Management and the property manager of CCI, CCOP and their subsidiaries prior to the CROP Merger; |
19. | “CCOP” are to Cottonwood Communities O.P., L.P., a Delaware limited partnership; |
20. | “CCOP LTIP Units” are to the limited partner units of CCOP that were designated as LTIP Units in the CCOP Partnership Agreement and the documentation pursuant to which the LTIP Units were granted; |
21. | “CCOP Partnership Agreement” are to the Amended and Restated Limited Partnership Agreement of CCOP, dated as of February 1, 2020; |
22. | “CCOP Special LTIP Units” are to the CCOP LTIP Units that were designated as Special LTIP Units in the documentation pursuant to which the CCOP LTIP Units were granted; |
23. | “CCPM II” are to Cottonwood Capital Property Management II, LLC, a Delaware limited liability company, a subsidiary of CROP and the sponsor, property manager, and asset manager of CMOF; |
24. | “CMOF” are to Cottonwood Multifamily Opportunity Fund, Inc., a Maryland corporation; |
25. | “CMOF Board” are to the board of directors of CMOF; |
26. | “CMOF Bylaws” are to the bylaws of CMOF; |
27. | “CMOF Charter” are to the Second Articles of Amendment and Restatement of CMOF, as supplemented and amended; |
28. | “CMOF Common Stock” are to the shares of common stock, $0.01 par value per share, of CMOF; |
29. | “CMOF OP” are to Cottonwood Multifamily Opportunity Fund O.P., LP, a Delaware limited partnership, the operating partnership of CMOF; |
30. | “CMOF OP Partnership Agreement” are to the Amended and Restated Agreement of Limited Partnership of Cottonwood Multifamily Opportunity Fund O.P., LP, dated August 17, 2017; |
31. | “CMOF Parties” are to CMOF and CMOF OP; |
32. | “CMOF OP Partnership Unit” are to a limited partnership interest in CMOF OP under an amendment to the CMOF OP Partnership Agreement (the terms of which have been reasonably approved by CCI), which units will be issued by CMOF OP prior to the closing date in accordance with the Merger Agreement; |
33. | “CMOF Special Committee” are to the special committee of the CMOF Board that was formed by the CMOF Board to consider the Mergers and the other transactions contemplated by the Merger Agreement; |
34. | “CMRI” are to Cottonwood Multifamily REIT I, Inc., a Maryland corporation; |
35. | “CMRI Company Merger” are to the merger of CMRI with and into Merger Sub, with Merger Sub surviving the merger, pursuant to the CMRI Merger Agreement; |
36. | “CMRI Merger” are to the merger of CMRI with and into Merger Sub, with Merger Sub surviving the merger, pursuant to the CMRI Merger Agreement, and where applicable in this proxy statement/prospectus may also include the CMRI OP Merger; |
37. | “CMRI Merger Agreement” are to the Agreement and Plan of Merger, dated as of January 26, 2021, by and among the CCI Parties, CMRI and CMRI OP, as it may be amended from time to time; |
38. | “CMRI OP” are to Cottonwood Multifamily REIT I O.P., LP, a Delaware limited partnership, the operating partnership of CMRI; |
39. | “CMRI OP Merger” are to the merger of CMRI OP with and into CROP, with CROP surviving the merger, pursuant to the CMRI Merger Agreement; |
40. | “CMRII” are to Cottonwood Multifamily REIT II, Inc., a Maryland corporation; |
41. | “CMRII Company Merger” are to the merger of CMRII with and into Merger Sub, with Merger Sub surviving the merger, pursuant to the CMRII Merger Agreement; |
42. | “CMRII Merger” are to the merger of CMRII with and into Merger Sub, with Merger Sub surviving the merger, pursuant to the CMRII Merger Agreement, and where applicable in this proxy statement/prospectus may also include the CMRII OP Merger; |
43. | “CMRII Merger Agreement” are to the Agreement and Plan of Merger, dated as of January 26, 2021, by and among the CCI Parties, CMRII and CMRII OP, as it may be amended from time to time; |
44. | “CMRII OP” are to Cottonwood Multifamily REIT II O.P., LP, a Delaware limited partnership, the operating partnership of CMRII; |
45. | “CMRII OP Merger” are to the merger of CMRII OP with and into CROP (as successor to CCOP), with CROP surviving the merger, pursuant to the CMRII Merger Agreement; |
46. | “Code” are to the Internal Revenue Code of 1986, as amended; |
47. | “Combined Company” are to CCI and its consolidated subsidiaries (including the Surviving Entity) after the closing of the Mergers; |
48. | “Company Merger” are to the merger of CMOF with and into Merger Sub, with Merger Sub surviving the merger, pursuant to the Merger Agreement; |
49. | “Cottonwood Capital Management” are to Cottonwood Capital Management, Inc., a Delaware corporation, a wholly owned subsidiary of CROP and the owner of CCM and CCPM II; |
50. | “CRII” are to Cottonwood Residential II, Inc., a Maryland corporation; |
51. | “CRII Company Merger” are to the merger of CRII with and into Merger Sub, with Merger Sub surviving as a direct, wholly owned subsidiary of CCI; |
52. | “CRII Merger” are to the merger of CRII with and into Merger Sub, with Merger Sub surviving the merger, pursuant to the CRII Merger Agreement, and where applicable in this proxy statement/prospectus may also include the CROP Merger; |
53. | “CRII Merger Agreement” are to the Agreement and Plan of Merger, dated as of January 26, 2021, by and among the CCI Parties and CRII; |
54. | “CROP” are to Cottonwood Residential O.P., LP, a Delaware limited partnership, the operating partnership of CCI; |
55. | “CROP Common Units” are to the limited partnership interests in CROP designated as “Common Units” under the CROP Partnership Agreement and held by a limited partner; |
56. | “CROP LTIP Units” are to the limited partner interests in CROP designated as LTIP Units under the CROP Partnership Agreement and the documentation pursuant to which the LTIP Units are granted; |
57. | “CROP Merger” are to the merger of CCOP with and into CROP, with CROP surviving the merger, pursuant to the CRII Merger Agreement; |
58. | “CROP Partnership Agreement” are to the Sixth Amended and Restated Limited Partnership Agreement of CROP dated July 15, 2021, as amended; |
59. | “CROP Partnership Units” are to, collectively, the CROP Common Units, CROP LTIP Units and CROP Special LTIP Units; |
60. | “CROP Special LTIP Units” are to the CROP LTIP Units designated as Special LTIP Units in the documentation pursuant to which the CROP LTIP Units are granted; |
61. | “CROP Tax Protection Agreement” are to the tax protection agreement between CROP and HT Holdings dated January 26, 2021, which became effective as of the closing of the CROP Merger; |
62. | “CW Broadway Joint Venture” are to the joint venture between CROP and CMOF OP through CW Broadway JV, LLC that owns the development project in Salt Lake City, Utah referred to as Cottonwood on Broadway; |
63. | “CW Park Avenue Joint Venture” are to the joint venture between CROP and CMOF OP through CW Investor at Sugar House, LLC that owns the development project in Salt Lake City, Utah referred to as Park Avenue; |
64. | “DLA Piper” are to DLA Piper LLP (US), counsel to the CCI Conflicts Committee; |
65. | “DRULPA” are to the Delaware Revised Uniform Limited Partnership Act or any successor statute; |
66. | “ERISA” are to the Employee Retirement Income Security Act of 1974, as amended; |
67. | “Exchange Act” are to the Securities Exchange Act of 1934, as amended; |
68. | “HT Holdings” are to High Traverse Holdings, LLC, a Delaware limited liability company, which is beneficially owned by Daniel Shaeffer, Chad Christensen, Gregg Christensen and Eric Marlin; |
69. | “Independent Valuation Advisor” are to Altus Group U.S., Inc.; |
70. | “Investment Company Act” are to the Investment Company Act of 1940, as amended; |
71. | “Mergers” are to both the Company Merger and the OP Merger; |
72. | “Merger Agreement” are to the Agreement and Plan of Merger, dated as of July 8, 2022, by and among the CMOF Parties and the CCI Parties, as it may be amended from time to time, a copy of which is attached as Annex A to this proxy statement/prospectus; |
73. | “Merger Proposal” are to proposal to approve the Company Merger; |
74. | “Merger Consideration” are to the conversion of each share of CMOF Common Stock issued and outstanding immediately prior to the effective time of the Company Merger (other than shares of CMOF Common Stock owned by CCI or any wholly owned subsidiary of CCI or CMOF), into the right to receive 0.8669 shares of CCI Common Stock, pursuant to the terms of the Merger Agreement; |
75. | “Merger Sub” are to Cottonwood Communities GP Subsidiary, LLC, a Maryland limited liability company, a wholly owned subsidiary of CCI and the sole general partner of CROP; |
76. | “MGCL” are to the Maryland General Corporation Law or any successor statute; |
77. | “NAV” are to the net asset value of CCI, determined in accordance with valuation guidelines approved by the CCI Board; |
78. | “OP Merger” are to the merger of CMOF OP with and into CROP, with CROP surviving the merger, pursuant to the Merger Agreement; |
79. | “ordinary course of business” are to an action taken by a person or entity that is consistent with past practice and similar in nature and magnitude to actions customarily taken without any authorization by the board of directors in the course of normal day-to-day |
80. | “Outside Date” are to 11:59 p.m., New York City time, on April 8, 2023; |
81. | “Record Date” are to [ ], 2022, the date for determining the stockholders entitled to receive notice of, and to vote at, the Special Meeting; |
82. | “REIT” are to a real estate investment trust within the meaning of Section 856 of the Code; |
83. | “Restructuring” are to CCI’s amendment and supplementation of the CCI Charter to restructure the classes of shares that are available for sale in its public offering pursuant to which CCI renamed its prior Class T shares as Class TX shares and authorized and designated the Class T, Class D and Class I shares; |
84. | “SDAT” are to the State Department of Assessments and Taxation of Maryland; |
85. | “Securities Act” are to the Securities Act of 1933, as amended; |
86. | “Series 2019 Preferred Stock” are to the shares of Series 2019 preferred stock, $0.01 par value per share, of CCI; |
87. | “Series 2019 Preferred Units” are to the limited partnership interests in CROP designated as Series 2019 Preferred Units under the CROP Partnership Agreement and held by a limited partner; |
88. | “Snell & Wilmer” are to Snell & Wilmer, L.L.P, counsel to the CMOF Special Committee; |
89. | “Special Limited Partner” are to CC Advisors – SLP, LLC, an affiliate of CCI Advisor which owns a special limited partner interest in CROP; |
90. | “Special Meeting” are to the special meeting of the CMOF stockholders, at which the CMOF stockholders will be asked to consider and vote on the Merger Proposal and the Adjournment Proposal; |
91. | “Superior Proposal” are to a written Acquisition Proposal (except for purposes of this definition, the references in the definition of “Acquisition Proposal” to “20%” will be replaced with “50%”) that the CMOF Board (based on the recommendation of the CMOF Special Committee) determines in its good faith judgment (after consultation with its outside legal and financial advisors and after taking into account (i) all of the terms and conditions of the Acquisition Proposal and the Merger Agreement (as it may be proposed to be amended by CCI), and (ii) the feasibility and certainty of consummation of such Acquisition Proposal on the terms proposed (taking into account such legal, financial, regulatory and other aspects of such Acquisition Proposal and conditions to consummation thereof as the CMOF Special Committee determines in good faith to be material to such analysis) to be more favorable from a financial point of view to the stockholders of CMOF (in their capacities as stockholders) than the Mergers and the other transactions contemplated by the Merger Agreement (as it may be proposed to be amended by CCI); |
92. | “Surviving Entity” are to Merger Sub, a wholly owned subsidiary of CCI, after the effective time of the Company Merger; and |
93. | “TRS” are to a taxable REIT subsidiary. |
Q: |
What are the proposed Mergers? |
A: | The CMOF Parties and the CCI Parties have entered into the Merger Agreement pursuant to which CMOF will merge with and into Merger Sub, with Merger Sub surviving the Company Merger and continuing as a wholly owned subsidiary of CCI. In accordance with the applicable provisions of the MGCL, the separate existence of CMOF will cease at the effective time of the Company Merger. In addition, CMOF OP will merge with and into CROP, with CROP surviving the OP Merger. In accordance with the DRULPA, the separate existence of CMOF OP will cease at the effective time of the OP Merger. |
Q: |
What will happen in the Mergers? |
A: | At the effective time of the Company Merger, each issued and outstanding share of CMOF Common Stock (other than shares of CMOF Common Stock owned by CCI or any wholly owned subsidiary of CCI or CMOF) will be converted automatically into the right to receive 0.8669 shares of CCI Common Stock pursuant to the terms of the Merger Agreement. |
Q: |
Why am I receiving this proxy statement/prospectus? |
A: | This proxy statement/prospectus is being delivered to you as both a proxy statement of CMOF for the Special Meeting and a prospectus of CCI in connection with the Company Merger. The CMOF Board is using this proxy statement/prospectus to solicit proxies of the CMOF stockholders in connection with the Special Meeting. In addition, this proxy statement/prospectus constitutes the prospectus of CCI with respect to the shares of CCI Common Stock to be issued to the CMOF stockholders pursuant to the Merger Agreement. |
Q: |
What vote is required to approve the Merger Proposal? |
A: | The approval of the Merger Proposal requires the affirmative vote of at least a majority of the outstanding shares of CMOF Common Stock entitled to vote on such proposal at the Special Meeting. At the close of business on the Record Date, CROP owns 1,000 shares of CMOF Common Stock, which represent approximately 0.0199% of all the shares of CMOF Common Stock outstanding and entitled to vote at the |
Special Meeting. CCI, as the sole member of the sole general partner of CROP, has control over CROP and the voting and disposition of the shares of CMOF Common Stock held by CROP. Except for the shares of CMOF Common Stock held by CROP, no executive officers, directors or affiliates of CMOF own any shares of CMOF Common Stock. |
Q: |
Am I being asked to vote on any other proposals at the Special Meeting in addition to the Merger Proposal? |
A: | Yes. At the Special Meeting, CMOF stockholders will be asked to consider and vote to approve one or more adjournments of the Special Meeting to a later date, time or place, if necessary and as determined by the chair of the Special Meeting, to solicit additional proxies in favor of the Merger Proposal. The approval of the Adjournment Proposal requires the affirmative vote of at least a majority of all of the votes cast on such proposal at the Special Meeting. |
Q: |
How does the CMOF Board recommend that the CMOF stockholders vote? |
A: | The CMOF Board recommends that the CMOF stockholders vote FOR the proposal to approve the Company Merger and FOR the proposal to adjourn the Special Meeting, if necessary or appropriate, to solicit additional proxies in favor of the Merger Proposal. |
Q: |
When and where will the Special Meeting be held? |
A: | The Special Meeting will be held on [ ], 2022, at [ ] Mountain Time at the offices of CMOF located at 1245 Brickyard Road, Suite 250, Salt Lake City, Utah 84106. If you need directions to the location of the Special Meeting, please contact Investor Relations at (801) 278-0700. |
Q: |
Who can vote at the Special Meeting? |
A: | All holders of record of shares of CMOF Common Stock as of the close of business on the Record Date, [ ], 2022, are entitled to receive notice of and to vote at the Special Meeting. |
Q: |
What constitutes a quorum? |
A: | The CMOF Bylaws provide that the presence in person or by proxy of stockholders entitled to cast a majority of all the votes entitled to be cast constitutes a quorum at a meeting of its stockholders. Shares that are voted and shares abstaining from voting are treated as being present at the Special Meeting for purposes of determining whether a quorum is present. |
Q: |
Are there other transactions that the CMOF stockholders should be aware of? |
A: | Immediately before the OP Merger, CMOF OP will amend and restate the CMOF OP Partnership Agreement to admit third party limited partners and acquire all residual interests in the CW Park Avenue Joint Venture and the CW Broadway Joint Venture, which interests are currently beneficially held by Daniel |
Shaeffer, Chad Christensen, Gregg Christensen, Susan Hallenberg, Glenn Rand and Stan Hanks, in exchange for an aggregate 461,023 CMOF OP Partnership Units. The number of units to be issued was determined by reference to the underlying asset values supporting the negotiated exchange ratio of one CMOF OP Partnership Unit for 0.8669 CROP Common Units. |
Q: |
What fees will CCPM II and CCI Advisor receive in connection with the Mergers? |
A: | Neither CCPM II nor CCI Advisor will receive any fees directly in connection with the Mergers, but the asset management fee and the performance participation allocation that CCI Advisor or its affiliates receive from the Combined Company will likely increase due to the additional assets held by CCI following the Merger. In addition, following the Merger, CCPM II will no longer receive asset management fees for managing CMOF’s portfolio. See “The Companies—Cottonwood Communities, Inc.—Certain Transactions with Related Persons—Our Relationship with CCI Advisor” beginning on page [ ]. |
Q: |
Do any of CMOF’s executive officers or directors have interests in the Mergers that may differ from those of the CMOF stockholders? |
A: | Some of CMOF’s executive officers and directors have interests in the Mergers that are different from, or in addition to, the interests of the CMOF stockholders. The independent director of the CMOF Board is aware of and considered these interests, among other matters, in evaluating the Merger Agreement and the Mergers and in recommending that the CMOF stockholders vote FOR the Merger Proposal and FOR the Adjournment Proposal. For a description of these interests, refer to the section entitled “The Mergers—Interests of CMOF’s and CCI’s Directors and Executive Officers in the Mergers” beginning on page [ ]. |
Q: |
When are the Mergers expected to be completed? |
A: | CMOF and CCI expect to complete the Mergers as soon as reasonably practicable following satisfaction or waiver of all of the required conditions set forth in the Merger Agreement. If the CMOF stockholders approve the Company Merger, and if the other conditions to closing the Mergers are satisfied or waived, it is currently expected that the Mergers will be completed in the third or fourth quarter of 2022. However, there is no guarantee that the conditions to the Mergers will be satisfied or that the Mergers will close on the expected timeline or at all. CMOF and CCI have a mutual right to terminate the Merger Agreement if the Mergers are not completed by the Outside Date. See “The Merger Agreement—Termination of the Merger Agreement—Termination by Either CMOF or CCI” beginning on page [ ]. |
Q: |
How has my investment performed? |
A: | The following table shows per share information about the performance of an investment in CMOF for an “Early,” “Later” and “Representative” investor in CMOF. For purposes of the following, we assume that the Mergers closed on September 30, 2022, the date that is three business days following the Special Meeting. |
Investor |
Investment Amount (1) |
Estimated Value of Merger Consideration (2) |
Average Annual Return |
Cumulative Total Return |
Internal Rate of Return |
|||||||||||||||
Early |
$ | 10.00 | $ | 17.96 | 17.5 | % | 179.6 | % | 13.7 | % | ||||||||||
Later |
$ | 10.00 | $ | 17.96 | 25.6 | % | 179.6 | % | 20.7 | % | ||||||||||
Representative |
$ | 10.00 | $ | 17.96 | 21.3 | % | 179.6 | % | 16.9 | % |
(1) | The sales charges in connection with the Offering, which includes upfront selling commissions, dealer manager fees and issuer organization and offering expenses were paid by CCPM II, CMOF’s property and asset manager, without reimbursement by CMOF and did not reduce the gross proceeds to CMOF in the Offering. |
(2) | Estimated value of the Merger Consideration was determined based on the estimated value of the 0.8669 shares of CCI Common Stock to be received as consideration in the Company Merger using CCI’s NAV per share of CCI Common Stock as of June 30, 2022. |
Q: |
What are the anticipated U.S. federal income tax consequences to me of the proposed Mergers? |
A: | The Company Merger is intended to qualify as a “reorganization” within the meaning of Section 368(a) of the Code, and the closing of the Mergers is conditioned on the receipt by each of CMOF and CCI of an opinion from its respective counsel to that effect. Assuming the Company Merger qualifies as a reorganization, a U.S. holder of shares of CMOF Common Stock generally will not recognize gain or loss for U.S. federal income tax purposes upon the receipt of CCI Common Stock in exchange for shares of CMOF Common Stock in connection with the Company Merger. Non-U.S. holders are generally expected to recognize gain or loss for U.S. federal income tax purposes upon the receipt of CCI Common Stock in exchange for shares of CMOF Common Stock in connection with the Company Merger. |
Q: |
How will my receipt of CCI Common Stock in exchange for my CMOF Common Stock be recorded? Will I have to take any action in connection with the recording of such ownership of CCI Common Stock? Will such shares of CCI Common Stock be certificated or in book-entry form? |
A: | Pursuant to the Merger Agreement, as soon as practicable following the effective time of the Mergers, CCI will cause SS&C Technologies, Inc. (“SS&C”), the exchange agent in connection with the Mergers, to record the issuance of CCI Common Stock as Merger Consideration pursuant to the Merger Agreement. If the Mergers are consummated, you will not have to take any action in connection with the recording of your |
ownership of CCI Common Stock. Shares of CCI Common Stock issued as Merger Consideration to you will not be certificated and will be in book-entry form and will be recorded in the books and records of CCI. |
Q: |
Will my shares of CCI Common Stock be publicly traded? |
A: | Shares of CCI Common Stock are not publicly traded. |
Q: |
Are CMOF stockholders entitled to appraisal rights? |
A: | CMOF stockholders are not entitled to exercise any rights of an objecting stockholder provided for under Title 3, Subtitle 2 of the MGCL in connection with the Company Merger. |
Q: |
What do I need to do now? |
A: | After you have carefully read this proxy statement/prospectus, please respond by completing, signing and dating your proxy card or voting instruction card and returning it in the enclosed pre-addressed postage-paid envelope or by submitting your proxy by one of the other methods specified in your proxy card or voting instruction card as promptly as possible so that your shares of CMOF Common Stock will be represented and voted at the Special Meeting. The method by which you submit a proxy will in no way limit your right to vote at the Special Meeting if you later decide to attend the Special Meeting in person. |
Q: |
How will my proxy be voted? |
A: | All shares of CMOF Common Stock entitled to vote and represented by properly completed proxies received prior to the Special Meeting, and not revoked, will be voted at the Special Meeting as instructed on the proxies. If you properly sign, date and return a proxy card, but do not indicate how your shares of CMOF Common Stock should be voted on any proposal, the shares of CMOF Common Stock represented by your proxy will be voted as the CMOF Board recommends. If your shares are held in street name through a broker or other nominee and you do not provide voting instructions to your broker or other nominee, your shares of CMOF Common Stock will NOT be voted at the Special Meeting and may result in broker non-votes. |
Q: |
Can I, as a CMOF stockholder, revoke my proxy or change my vote after I have delivered my proxy? |
A: | Yes. You may revoke your proxy or change your vote at any time before your proxy is voted at the Special Meeting. For information on how to revoke your proxy or change your vote, see “The Special Meeting—Revocation of Proxies or Voting Instructions” beginning on page [ ]. |
Q: |
What does it mean if I receive more than one set of voting materials for the Special Meeting? |
A: | You may receive more than one set of voting materials for the Special Meeting, including multiple copies of this proxy statement/prospectus and multiple proxy cards or voting instruction cards. For example, if you hold your shares of CMOF Common Stock in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold your shares of CMOF Common Stock. If you are a holder of record and your shares of CMOF Common Stock are registered in more than one name, you may receive more than one proxy card. Please complete, sign, date and return each proxy card and voting instruction card that you receive or, if available, please submit your proxy by telephone or over the Internet. |
Q: |
Do I need identification to attend the Special Meeting in person? |
A: | Yes. Please bring proper identification, together with proof that you are a record owner of shares of CMOF Common Stock. If your shares are held in street name, please bring acceptable proof of ownership, such as a letter from your broker or an account statement showing that you beneficially owned shares of CMOF Common Stock on the Record Date. If your shares are held in street name, you must obtain a legal proxy from your broker or other nominee in order to vote at the Special Meeting. |
Q: |
Will a proxy solicitor be used? |
A: | CMOF has contracted with Broadridge to assist CMOF in the distribution of proxy materials and the solicitation of proxies. CMOF expects to pay Broadridge fees of approximately $87,000 to solicit and distribute proxies, which includes estimated postage of $9,450 and other out-of-pocket out-of-pocket |
A: | If you have any questions about the Mergers or how to submit your proxy or need additional copies of this proxy statement/prospectus, the enclosed proxy card or voting instructions, you should contact CMOF or Broadridge, the proxy solicitor: |
CMOF: Cottonwood Multifamily Opportunity Fund, Inc. Attention: Investor Relations 1245 Brickyard Road, Suite 250 Salt Lake City, Utah 84106 (801) 278-0700 |
Broadridge: Cottonwood Multifamily Opportunity Fund, Inc. c/o Broadridge Financial Solutions, Inc. 51 Mercedes Way Edgewood, NY 11717 833-501-4812 |
• | The Merger Consideration will not be adjusted in the event of any change in the relative values of CMOF or CCI. |
• | Completion of the Mergers is subject to many conditions and if these conditions are not satisfied or waived, the Mergers will not be completed, which could result in the expenditure of significant unrecoverable transaction costs. |
• | Failure to complete the Mergers could negatively impact the future business and financial results of CMOF. |
• | The pendency of the Mergers, including as a result of the restrictions on the operation of CMOF’s and CCI’s business during the period between signing the Merger Agreement and the completion of the Mergers, could adversely affect the business and operations of CMOF, CCI or both. |
• | Some of the directors and executive officers of CMOF have interests in seeing the Mergers completed that are different from, or in addition to, those of the CMOF stockholders. |
• | The Company Merger is subject to approval by the CMOF stockholders. |
• | The Merger Agreement prohibits CMOF from soliciting proposals after the date of the Merger Agreement and places conditions on its ability to accept a Superior Proposal, which may adversely affect the CMOF stockholders. |
• | CMOF and CCI each expect to incur substantial expenses related to the Mergers. |
• | The Company Merger is not a liquidity event for the CMOF stockholders. If a liquidity event is ever realized or if stockholders are otherwise able to sell their stock, the value received may be substantially less than what CMOF could have obtained by effecting a liquidity event at this time and substantially less than what stockholders paid for their investment in CMOF. |
• | CMOF stockholders’ ownership interests will be diluted by the Merger. |
• | Litigation, if any, challenging the Mergers may increase transaction costs and prevent the Mergers from becoming effective within the expected time frame. |
1. | a proposal to approve the Company Merger; and |
2. | a proposal to adjourn the Special Meeting to solicit additional proxies in favor of the Merger Proposal if there are not sufficient votes to approve the Merger Proposal, if necessary and as determined by the chair of the Special Meeting. |
• | CMOF receives an Acquisition Proposal that did not result from a material breach of the Merger Agreement and that Acquisition Proposal is not withdrawn; |
• | the CMOF Special Committee has determined that such Acquisition Proposal constitutes a Superior Proposal and, after consultation with outside legal counsel and its financial advisor, that failure to take such action would be inconsistent with the duties of the directors of CMOF under applicable law; |
• | CMOF has given CCI at least five business days’ prior written notice of its intention to take such action; and |
• | CCI and CMOF have negotiated in good faith during such notice period to enable CCI to propose in writing revisions to the terms of the Merger Agreement such that it would, in the good faith determination of the CMOF Board or the CMOF Special Committee, after consultation with outside legal counsel and its financial advisor, cause such Superior Proposal to no longer constitute a Superior Proposal. |
• | the approval by holders of CMOF Common Stock of the Company Merger has been obtained; |
• | no judgment, writ, stipulation, injunction, order or decree issued by any governmental authority of competent jurisdiction prohibiting the consummation of the Mergers remains in effect, and no law has been enacted, entered, promulgated or enforced by any governmental authority after the date of the Merger Agreement and remains in effect that prohibits, restrains, enjoins or makes illegal the consummation of the Mergers or the other transactions contemplated by the Merger Agreement; |
• | the registration statement on Form S-4 (the “Form S-4”) filed by CCI, of which this proxy statement/prospectus is a part, having been declared effective by the SEC, no stop order suspending the effectiveness of the Form S-4 having been issued by the SEC and no proceedings for that purpose will have been initiated by the SEC and not withdrawn; |
• | the truth and accuracy of the representations and warranties of each party made in the Merger Agreement as of the closing, subject to certain materiality standards; |
• | the performance in all material respects with all obligations and the compliance in all material respects with all agreements and covenants required by the Merger Agreement to be performed by each party on or prior to the closing date; |
• | from the date of the Merger Agreement through the effective time of the Mergers, there must not have occurred any event, circumstance, change, effect, development, condition or occurrence that, individually or in the aggregate, constitutes or would reasonably be expected to constitute a material adverse effect on a party; |
• | the parties must have delivered to the other party a certificate, dated as of the closing date, certifying that certain conditions have been satisfied; |
• | the receipt of an opinion of counsel by CMOF from counsel for CCI to the effect that CCI has been organized and has operated in conformity with the requirements for qualification and taxation as a REIT; and |
• | the receipt of an opinion of counsel of each party to the effect that the Company Merger will qualify as a reorganization within the meaning of Section 368(a) of the Code. |
• | the Mergers have not occurred on or before the Outside Date; |
• | there is any final, non-appealable order issued by a governmental authority of competent jurisdiction that permanently restrains or otherwise prohibits the transactions contemplated by the Merger Agreement; or |
• | the required approval of the holders of CMOF Common Stock of the Company Merger was not obtained at the Special Meeting, duly convened or at any adjournment or postponement thereof at which a vote on the Merger Proposal was taken. |
• | CMOF has breached any of its representations or warranties or failed to perform any of its obligations, covenants or agreements set forth in the Merger Agreement, which breach or failure to perform (i) would result in a failure of CMOF to satisfy certain closing conditions and (ii) cannot be cured or, if curable, is not cured by CMOF by the earlier of 30 days following written notice of such breach or failure from CCI to CMOF and two business days before the Outside Date; or |
• | at any time prior to obtaining the required approval of the CMOF stockholders, if (i) the CMOF Board has made an Adverse Recommendation Change, (ii) CMOF has failed to publicly recommend against any tender offer or exchange offer for CMOF Common Stock subject to Regulation 14D under the Exchange Act that constitutes an Acquisition Proposal (including by taking no position with respect to the acceptance of such tender offer or exchange offer by CMOF’s stockholders) within 10 business days after the commencement of such tender offer or |
exchange offer, (iii) at any time prior to the receipt of the required CMOF stockholder approval, the CMOF Board has failed to publicly reaffirm the CMOF Board’s recommendation in favor of the Company Merger within 10 business days following the date an Acquisition Proposal has been first publicly announced (or if the Special Meeting is scheduled to be held within 10 business days after the date an Acquisition Proposal is publicly announced, as far in advance of the date on which the Special Meeting is scheduled to be held as is reasonably practicable), (iv) CMOF enters into an alternative acquisition agreement, or (v) CMOF has materially violated any of its obligations described in “The Merger Agreement —Covenants and Agreements—No Solicitation; Superior Proposals.” |
• | CCI has breached any of its representations or warranties or failed to perform any of its obligations, covenants or agreements set forth in the Merger Agreement, which breach or failure to perform (i) would result in a failure of CCI to satisfy certain closing conditions and (ii) cannot be cured or, if curable, is not cured by CCI by the earlier of 30 days following written notice of such breach or failure from CMOF to CCI and two business days before the Outside Date; provided, however, that CMOF will not have the right to terminate the Merger Agreement pursuant to the foregoing if CMOF is then in breach of any of its representations or agreements set forth in the Merger Agreement such that CCI already had a right to terminate the Merger Agreement; |
• | at any time prior to obtaining the required CMOF stockholder approval to permit CMOF to enter into an alternative acquisition agreement with respect to a Superior Proposal so long as the termination payment described below in “—Termination Payment and Expense Reimbursement” is made in full to CCI prior to or concurrently with such termination; or |
• | If (i) all of the conditions described in “The Merger Agreement—Conditions to Completion of the Mergers—Mutual Closing Conditions” and “The Merger Agreement—Conditions to Completion of the Mergers—Additional Closing Conditions for the Benefit of the CCI Parties” have been and continue to be satisfied or waived by CCI (other than those conditions that by their nature cannot be satisfied other than at closing, provided that such conditions to be satisfied at the closing would be satisfied as of the date of the notice referenced in clause (ii) if the closing were to occur on the date of such notice), (ii) on or after the date the closing should have occurred pursuant to the Merger Agreement, CMOF has delivered written notice to CCI to the effect that all of the applicable conditions have been satisfied or waived by CCI (other than those conditions that by their nature cannot be satisfied other than at closing, provided that such conditions to be satisfied at the closing would be satisfied as of the date of such notice if the closing were to occur on the date of such notice) and CMOF is prepared to consummate the closing, and (iii) the CCI Parties fail to consummate the closing within three business days after delivery of the notice referenced in the preceding clause (ii), and CMOF was ready, willing and able to consummate the closing during such three business day period. |
• | changes in the respective businesses, operations, assets, liabilities and prospects of CMOF and CCI; |
• | changes in the estimated value per share of either the shares of CMOF Common Stock or CCI Common Stock; |
• | interest rates, general market and economic conditions and other factors generally affecting the businesses of CMOF and CCI; |
• | federal, state and local legislation, governmental regulation and legal developments in the businesses in which CMOF and CCI operate; |
• | dissident stockholder activity, including any stockholder litigation challenging the transaction; |
• | acquisitions, dispositions or new development opportunities; and |
• | other factors beyond the control of CMOF and CCI, including those described or referred to elsewhere in this “Risk Factors” section. |
• | CMOF being required, under certain circumstances, to pay to CCI a termination payment of $2,696,600 and up to $449,400 as reimbursement for CCI’s expenses; |
• | CMOF having to pay certain costs relating to the Mergers, such as legal, accounting, financial advisor, filing, printing and mailing fees; and |
• | the diversion of CMOF management focus and resources from operational matters and other strategic opportunities while working to implement the Mergers. |
• | it would be subject to U.S. federal corporate income tax on its net income for the years it did not qualify for taxation as a REIT (and, for such years, would not be allowed a deduction for dividends paid to stockholders in computing its taxable income); |
• | it could be subject to increased state and local taxes; |
• | unless it is entitled to relief under applicable statutory provisions, neither it nor any “successor” company could elect to be taxed as a REIT until the fifth taxable year following the year during which it was disqualified; and |
• | for five years following re-election of REIT status, upon a taxable disposition of an asset owned as of such re-election, it could be subject to corporate level tax with respect to any built-in gain inherent in such asset at the time of re-election. |
• | where CCI may acquire multifamily apartment communities in the United States; |
• | the percentage of CCI’s proceeds that may be invested in properties as compared with the percentage of its proceeds that it may invest in multifamily real estate-related assets; investment in direct interests in real estate and multifamily real estate-related assets will have differing risks and profit potential; or |
• | the percentage of CCI’s proceeds that it may invest in any one real estate investment (the greater the percentage of its offering proceeds invested in one asset, the greater the potential adverse effect on CCI if that asset is unprofitable). |
• | pursuant to Section 3(a)(1)(A), is or holds itself out as being engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting or trading in securities (the “primarily engaged test”); or |
• | pursuant to Section 3(a)(1)(C), is engaged or proposes to engage in the business of investing, reinvesting, owning, holding or trading in securities and owns or proposes to acquire “investment securities” having a value exceeding 40% of the value of such issuer’s total assets (exclusive of United States government securities and cash items) on an unconsolidated basis (the “40% test”). “Investment securities” excludes United States government securities and securities of majority-owned subsidiaries that are not themselves investment companies and are not relying on the exception from the definition of investment company under Section 3(c)(1) or Section 3(c)(7) (relating to private investment companies). |
• | that CCI’s co-venturer, co-tenant or partner in an investment could become insolvent or bankrupt; |
• | that such co-venturer, co-tenant or partner may at any time have economic or business interests or goals that are or that become inconsistent with CCI’s business interests or goals; |
• | that such co-venturer, co-tenant or partner may be in a position to take action contrary to CCI’s instructions or requests or contrary to its policies or objectives; or |
• | that disputes between CCI and its co-venturer, co-tenant or partner may result in litigation or arbitration that would increase CCI’s expenses and prevent CCI’s officers and directors from focusing their time and effort on its operations. |
• | stagger the CCI Board into three classes; |
• | require a two-thirds stockholder vote for removal of directors; |
• | provide that only the CCI Board can fix the size of the board; |
• | provide that all vacancies on the CCI Board, however created, may be filled only by the affirmative vote of a majority of the remaining directors in office; and |
• | responsibility and liability for the costs of investigation, removal, or remediation of hazardous substances released on or in real property, generally without regard to knowledge of or responsibility for the presence of the contaminants; |
• | liability for claims by third parties based on damages to natural resources or property, personal injuries, or costs of removal or remediation of hazardous or toxic substances in, on, or migrating from CCI’s property; |
• | responsibility for managing asbestos-containing building materials, and third-party claims for exposure to those materials; and |
• | environmental laws also may impose restrictions on the manner in which property may be used or businesses may be operated, and these restrictions may require expenditures. |
• | In order to qualify as a REIT, CCI must distribute annually at least 90% of its REIT taxable income to its stockholders (which is determined without regard to the dividends-paid deduction or net capital gain). To the extent that it satisfies the distribution requirement but distributes less than 100% of its REIT taxable income (and any net capital gain), CCI will be subject to federal corporate income tax on the undistributed income. |
• | CCI will be subject to a 4% nondeductible excise tax on the amount, if any, by which distributions CCI pays in any calendar year are less than the sum of 85% of its ordinary income, 95% of its capital gain net income and 100% of its undistributed income from prior years. |
• | If CCI elects to treat property that it acquires in connection with a foreclosure of a mortgage loan or certain leasehold terminations as “foreclosure property,” it may avoid the 100% tax on the gain from a resale of that property, but the income from the sale or operation of that property may be subject to corporate income tax at the highest applicable rate. |
• | If CCI sells an asset, other than foreclosure property, that CCI holds primarily for sale to customers in the ordinary course of business, CCI’s gain would be subject to the 100% “prohibited transaction” tax unless such sale were made by one of its taxable REIT subsidiaries or the sale met certain “safe harbor” requirements under the Code. |
• | the investment is consistent with the stockholder’s fiduciary and other obligations under ERISA and the Internal Revenue Code; |
• | the investment is made in accordance with the documents and instruments governing the plan or IRA, including the plan’s or account’s investment policy; |
• | the investment satisfies the prudence and diversification requirements of Sections 404(a)(1)(B) and 404(a)(1)(C) of ERISA and other applicable provisions of ERISA and the Internal Revenue Code; |
• | the investment in CCI’s shares, for which no trading market may exist, is consistent with the liquidity needs of the plan or IRA; |
• | the investment will not produce an unacceptable amount of “unrelated business taxable income” for the plan or IRA; |
• | the stockholder will be able to comply with the requirements under ERISA and the Internal Revenue Code to value the assets of the plan or IRA annually; and |
• | the investment will not constitute a non-exempt prohibited transaction under Section 406 of ERISA or Section 4975 of the Internal Revenue Code. |
• | the ability of CMOF to obtain the required stockholder approval; |
• | the satisfaction or waiver of other conditions in the Merger Agreement; |
• | the risk that the Mergers or other transactions contemplated by the Merger Agreement may not be completed in the time frame expected by the parties or at all; |
• | the occurrence of any event, change or other circumstances that could give rise to the termination of the Merger Agreement and that a termination under certain circumstances could cause CMOF to pay CCI a termination payment, as described under “The Merger Agreement—Termination of the Merger Agreement” beginning on page [ ]; |
• | the ability of CCI to acquire and dispose of properties, including properties to be acquired in the Mergers; |
• | changes in national, regional and local economic conditions; |
• | changes in financial markets and interest rates, or to the business or financial condition of CMOF, CCI, the Combined Company or their respective businesses; |
• | the nature and extent of future competition; |
• | the ability of CCI or the Combined Company to maintain its qualification as a REIT due to economic, market, legal, tax or other considerations; |
• | the availability to CCI, CMOF, or the Combined Company of financing and capital; and |
• | those additional risks and factors discussed in reports or prospectuses filed with the SEC by CMOF and CCI from time to time, including those discussed under the heading “Risk Factors” in this proxy statement/prospectus. |
Property Name |
Location |
Number of Units |
Average Unit Size (Sq Ft) |
Purchase Date |
Purchase Date Property Value |
Mortgage Debt Outstanding (1) |
Physical Occupancy Rate |
Percentage Owned by CROP |
Monthly Net Effective Rent |
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3800 Main (2) |
Houston, TX | 319 | 831 | May 2021 | $ | 58,100 | $ | 35,703 | 91.54 | % | 50.00 | % | $ | 1,477 | ||||||||||||||||||||
Alpha Mill |
Charlotte, NC | 267 | 830 | May 2021 | 69,500 | 39,044 | 94.76 | % | 57.21 | % | 1,470 | |||||||||||||||||||||||
Cason Estates |
Murfreesboro, TN | 262 | 1,078 | May 2021 | 51,400 | 33,594 | 97.71 | % | 100.00 | % | 1.335 | |||||||||||||||||||||||
Cottonwood |
Salt Lake City, UT | 264 | 834 | May 2021 | 47,300 | 21,645 | 94.70 | % | 100.00 | % | 1,265 | |||||||||||||||||||||||
Cottonwood Bayview |
St. Petersburg, FL | 309 | 805 | May 2021 | 95,900 | 46,953 | 95.79 | % | 71.00 | % | 2,233 | |||||||||||||||||||||||
Cottonwood One Upland |
Boston, MA | 262 | 1,160 | March 2020 | 103,600 | — | 96.56 | % | 100.00 | % | 2,482 | |||||||||||||||||||||||
Cottonwood Reserve |
Charlotte, NC | 352 | 1,021 | May 2021 | 77,500 | 38,187 | 96.07 | % | 91.14 | % | 1,338 | |||||||||||||||||||||||
Cottonwood Ridgeview |
Plano, TX | 322 | 1,156 | May 2021 | 70,000 | 65,300 | 95.34 | % | 90.45 | % | 1,601 | |||||||||||||||||||||||
Cottonwood West Palm |
West Palm Beach, FL | 245 | 1,122 | May 2019 | 66,900 | 35,995 | 95.92 | % | 100.00 | % | 2,091 | |||||||||||||||||||||||
Cottonwood Westside |
Atlanta, GA | 197 | 860 | May 2021 | 47,900 | 25,383 | 91.88 | % | 100.00 | % | 1,603 | |||||||||||||||||||||||
Enclave on Golden Triangle |
Keller, TX | 273 | 1,048 | May 2021 | 51,600 | 48,400 | 96.70 | % | 98.93 | % | 1,489 | |||||||||||||||||||||||
Fox Point |
Salt Lake City, UT | 398 | 841 | May 2021 | 79,400 | 46,000 | 96.48 | % | 52.75 | % | 1,265 | |||||||||||||||||||||||
Heights at Meridian |
Durham, NC | 339 | 997 | May 2021 | 79,900 | 36,180 | 93.81 | % | 100.00 | % | 1,408 | |||||||||||||||||||||||
Melrose |
Nashville, TN | 220 | 951 | May 2021 | 67,400 | 56,600 | 93.18 | % | 100.00 | % | 1,719 | |||||||||||||||||||||||
Melrose Phase II |
Nashville, TN | 139 | 675 | May 2021 | 40,350 | 32,400 | 96.40 | % | 79.82 | % | 1,519 | |||||||||||||||||||||||
Parc Westborough |
Boston, MA | 249 | 1,008 | May 2021 | 74,000 | — | 96.79 | % | 100.00 | % | 2,109 | |||||||||||||||||||||||
Pavilions |
Albuquerque, NM | 240 | 1,162 | May 2021 | 61,100 | 58,500 | 93.33 | % | 96.35 | % | 1,695 | |||||||||||||||||||||||
Raveneaux |
Houston, TX | 382 | 1,065 | May 2021 | 57,500 | 47,400 | 91.62 | % | 96.97 | % | 1,316 | |||||||||||||||||||||||
Regatta |
Houston, TX | 490 | 862 | May 2021 | 48,100 | 35,367 | 94.68 | % | 100.00 | % | 1,005 | |||||||||||||||||||||||
Retreat at Peachtree City |
Peachtree City, GA | 312 | 980 | May 2021 | 72,500 | 48,719 | 92.95 | % | 100.00 | % | 1,562 | |||||||||||||||||||||||
Scott Mountain |
Portland, OR | 262 | 927 | May 2021 | 70,700 | 48,373 | 94.66 | % | 95.80 | % | 1,563 | |||||||||||||||||||||||
Stonebriar of Frisco |
Frisco, TX | 306 | 963 | May 2021 | 59,200 | 53,600 | 96.41 | % | 84.19 | % | 1,389 | |||||||||||||||||||||||
Summer Park |
Buford, GA | 358 | 1,064 | May 2021 | 75,500 | 44,620 | 98.60 | % | 98.68 | % | 1,388 | |||||||||||||||||||||||
The Marq Highland Park (3) |
Tampa, FL | 239 | 999 | May 2021 | 65,700 | 34,459 | 99.16 | % | 100.00 | % | 1,858 | |||||||||||||||||||||||
Toscana at Valley Ridge |
Lewisville, TX | 288 | 738 | May 2021 | 47,700 | 30,700 | 99.31 | % | 58.60 | % | 1,153 | |||||||||||||||||||||||
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Total / Weighted-Average |
7,294 | 962 | $ | 1,638,750 | $ | 963,122 | 95.34 | % | $ | 1,536 | ||||||||||||||||||||||||
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(1) |
Mortgage debt outstanding is shown as if CROP owned 100% of the property. |
(2) |
On June 23, 2022, we sold 3800 Main. |
(3) |
Excludes the retail square footage in unit count and physical occupancy. |
Property Name |
Location |
Units to be Built |
Average Unit Size (Sq Ft) |
Purchase Date |
Estimated Completion Date |
Investment Amount |
Percentage Owned by CROP |
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Cottonwood on Broadway |
Salt Lake City, UT | 254 | 817 | May 2021 | 4Q2022 | $ | 6,020 | 18.84 | % (1) | |||||||||||||||||
Park Avenue |
Salt Lake City, UT | 234 | 714 | May 2021 | 2Q2022 | 8,017 | 23.57 | % (1) | ||||||||||||||||||
Sugarmont |
Salt Lake City, UT | 341 | 904 | May 2021 | 2Q2022 | 69,599 | 99.00 | % (3) | ||||||||||||||||||
Cottonwood on Highland (2) |
Millcreek, UT | 250 | 757 | May 2021 | 1Q2023 | 8,221 | 36.93 | % | ||||||||||||||||||
|
|
|
|
|||||||||||||||||||||||
Total |
1,079 | $ | 91,857 | |||||||||||||||||||||||
|
|
|
|
(1) |
CMOF indirectly owns a majority of the remaining interest. |
(2) |
Intended to qualify as a qualified opportunity zone investment. Excludes the commercial data in unit count. |
(3) |
The one percent interest not owned by us has limited rights, including the right to control on behalf of the joint venture the prosecution and resolution of all litigation, claims, or causes of action that the joint venture has or may have against certain third parties associated with the design and construction of Sugarmont, as well as the obligation to defend any crossclaims resulting from these actions. |
Property Name |
Location |
Investment Type |
Date of Initial Investment |
Number of Units |
Funding Commitment |
Amount Funded to Date |
||||||||||||
Lector85 |
Ybor City, FL | Preferred Equity | August 2019 | 254 | $ | 9,900 | $ | 9,900 | ||||||||||
Vernon Boulevard |
Queens, NY | Preferred Equity | July 2020 | 534 | 15,000 | 15,000 | ||||||||||||
Riverfront |
West Sacramento, CA | Preferred Equity | November 2020 | 285 | 15,092 | 15,092 | ||||||||||||
Integra Peaks at Damonte |
Reno, NV | Mezzanine Loan | June 2021 | 300 | 13,000 | 13,000 | ||||||||||||
|
|
|
|
|
|
|||||||||||||
Total |
1,373 | $ | 52,992 | $ | 52,992 | |||||||||||||
|
|
|
|
|
|
Property Name |
Location |
Purchase Date |
Investment Amount |
Percentage Owned by CROP |
||||||||
Block C (1)(2) |
Salt Lake City, UT | May 2021 | $ | 2,149 | 37.02 | % | ||||||
Jasper (2) |
Salt Lake City, UT | June 2021 | 3,307 | 100.00 | % | |||||||
3300 Cottonwood |
Salt Lake City, UT | October 2021 | 7,521 | 100.00 | % | |||||||
|
|
|||||||||||
Total |
$ | 12,977 | ||||||||||
|
|
(1) |
CMOF indirectly owns a majority of the remaining interest. |
(2) |
See “–Certain Transactions with Related Persons – Block C and Jasper Investments” for information regarding the restructuring of the ownership of Block C and Jasper after March 31, 2022, to admit members affiliated with us and our advisor. |
• | preserve, protect and return invested capital; |
• | pay stable cash distributions to stockholders; |
• | realize capital appreciation in the value of our investments over the long term; and |
• | provide a real estate investment alternative with lower expected volatility relative to public real estate companies whose securities trade daily on a stock exchange. |
• | Location |
property owners, typically, ensuring that no new construction will be completed until values rise to justify new (competing) product. Our advisor also seeks to anticipate broader market capital flows and invest where economic growth is expected to drive resident demand, but new supply is not yet on the horizon. Additional investment location considerations by our advisor include: |
• | Local Industry and Employment |
• | Demographics |
• | Infill Locations sub-markets undergoing redevelopment programs, land recycling initiatives or that generally exhibit high barrier to entry characteristics offer, in the opinion of our advisor, better investment prospects over the long run. |
• | Accessibility to Key Attractions block-by-block sub-market within a sub-market) during the investment selection process, including walkability scores, public transportation, crime rates, projected employment growth and access to popular dining, entertainment and retail venues, as well as sought after school districts. |
• | Time Horizon |
• | Asset-Specific Attributes |
• | Appropriate Leverage loan-to-value loan-to-value |
• | Financial Due Diligence |
consultants and other pertinent resources. CCI Advisor will also leverage a broad network of contacts in developing investment projections, such as strategic partners, local developers, appraisers, industry experts, third-party consultants, outside counsel, accountants and tax advisors. As necessary, third-party accounting consultants may be used to review relevant books and records, confirm cash flow information provided by a seller and conduct other similar types of analysis. |
• | Physical Due Diligence |
• | Legal and Tax Due Diligence |
• | Property management fees; |
• | Asset management fees; |
• | Construction management; |
• | Development oversight; |
• | Various ancillary businesses; and |
• | Certain operating cost reimbursements. |
• | the ratio of the amount of the investment to the value of the property by which it is secured; |
• | the amount of existing debt on the property and the priority thereof relative to our prospective investment; |
• | the property’s potential for capital appreciation; |
• | expected levels of rental and occupancy rates; |
• | current and projected cash flow of the property; |
• | potential for rental increases; |
• | the degree of liquidity of the investment; |
• | the geographic location of the property; |
• | the condition and use of the property; |
• | the property’s income-producing capacity; |
• | the quality, experience and creditworthiness of the borrower; and |
• | general economic conditions in the area where the property is located. |
• | invest more than 10% of our total assets in unimproved property or mortgage loans on unimproved property, which we define as property not acquired for the purpose of producing rental or other operating income or on which there is no development or construction in progress or planned to commence within one year; |
• | make or invest in mortgage loans unless an appraisal is available concerning the underlying property, except for those mortgage loans insured or guaranteed by a government or government agency; |
• | make or invest in mortgage loans, including construction loans, on any one property if the aggregate amount of all mortgage loans on such property would exceed an amount equal to 85% of the appraised value of such property as determined by appraisal, unless substantial justification exists for exceeding such limit because of the presence of other underwriting criteria; |
• | make an investment if the related acquisition fees and expenses are not reasonable or exceed 6% of the contract purchase price for the asset, provided that the investment may be made if a majority of the directors (including a majority of the members of our conflicts committee) not otherwise interested in the transaction determines that the transaction is commercially competitive, fair and reasonable to us; |
• | acquire equity securities unless a majority of our directors (including a majority of the members of our conflicts committee) not otherwise interested in the transaction approve such investment as being fair, competitive and commercially reasonable, provided that investments in equity securities in “publicly traded entities” that are otherwise approved by a majority of our directors (including a majority of the members of our conflicts committee) will be deemed fair, competitive and commercially reasonable if we acquire the equity securities through a trade that is effected in a recognized securities market (a “publicly traded entity” means any entity having securities listed on a national securities exchange or included for quotation on an inter-dealer quotation system) and provided further that this limitation does not apply to (i) acquisitions effected through the purchase of all of the equity securities of an existing entity, (ii) the investment in our wholly owned subsidiaries or (iii) investments in asset-backed securities; |
• | invest in real estate contracts of sale, otherwise known as land sale contracts, unless the contract is in recordable form and is appropriately recorded in the chain of title; |
• | invest in commodities or commodity futures contracts, except for futures contracts when used solely for the purpose of hedging in connection with our ordinary business of investing in real estate assets and mortgages; |
• | issue equity securities on a deferred payment basis or other similar arrangement; |
• | issue debt securities in the absence of adequate cash flow to cover debt service unless the historical debt service coverage (in the most recently completed fiscal year), as adjusted for known changes, is sufficient to service that higher level of debt as determined by the board of directors or a duly authorized executive officer; |
• | issue equity securities that are assessable after we have received the consideration for which our board of directors authorized their issuance; |
• | issue redeemable equity securities (as defined in the Investment Company Act), which restriction has no effect on our share repurchase program or the ability of CROP to issue redeemable partnership interests; or |
• | make distributions in kind, except for distributions of readily marketable securities, distributions of beneficial interests in a liquidating trust established for our dissolution and the liquidation of our assets in accordance with the terms of our charter or distributions that meet all of the following conditions: (i) our board of directors advises each stockholder of the risks associated with direct ownership of the property, (ii) our board of directors offers each stockholder the election of receiving such in kind distributions and (iii) in kind distributions are made only to those stockholders who accept such offer. |
• | pursuant to Section 3(a)(1)(A), is or holds itself out as being engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting or trading in securities (the “primarily engaged test”); or |
• | pursuant to Section 3(a)(1)(C), is engaged or proposes to engage in the business of investing, reinvesting, owning, holding or trading in securities and owns or proposes to acquire “investment securities” having a value exceeding 40% of the value of such issuer’s total assets (exclusive of United States government securities and cash items) on an unconsolidated basis (the “40% test”). “Investment securities” excludes United States government securities and securities of majority-owned subsidiaries that are not themselves investment companies and are not relying on the exception from the definition of investment company under Section 3(c)(1) or Section 3(c)(7) (relating to private investment companies). |
Class |
||||||||||||||||
T |
I |
A |
TX |
|||||||||||||
Outstanding shares |
1,380,718 | 608,019 | 23,387,745 | 17,525 | ||||||||||||
Number of stockholders |
167 | 101 | 4,477 | 6 |
Class T (1) |
Class D | Class I | ||||||||
Maximum Upfront Selling Commissions as a % of Transaction Price |
up to 3.0% | — | — | |||||||
Maximum Upfront Dealer Manager Fees as a % of Transaction Price |
0.5% | — | — |
(1) |
Such amounts may vary at certain participating broker-dealers, provided that the sum will not exceed 3.5% of the transaction price. |
Class T (1) |
Class D | Class I | ||||||||||
Distribution Fee as a % of NAV |
0.85 | % | 0.25 | % | None |
(1) |
Consists of an advisor distribution fee of 0.65% per annum and a dealer distribution fee of 0.20% per annum of the aggregate NAV for the Class T shares, however, with respect to Class T shares sold through certain participating broker-dealers, the advisor distribution fee and the dealer distribution fee may be other amounts, provided that the sum of such fees will always equal 0.85% per annum of the NAV of such shares. |
As of |
||||||||
Components of NAV* |
June 30, 2022 |
May 31, 2022 |
||||||
Investments in Multifamily Operating Properties |
$ | 2,060,169,849 | $ | 1,997,817,426 | ||||
Investments in Multifamily Development Properties |
237,851,785 | 233,395,900 | ||||||
Investments in Real-estate Related Structured Investments |
66,030,401 | 65,297,352 | ||||||
Operating Company, Land and Other Net Current Assets |
118,528,743 | 102,133,450 | ||||||
Cash and Cash Equivalents |
14,562,583 | 10,523,523 | ||||||
Secured Real Estate Financing |
(1,070,208,155 | ) | (1,001,249,924 | ) | ||||
Subordinated Unsecured Notes |
(43,443,000 | ) | (43,443,000 | ) | ||||
Preferred Equity |
(127,294,852 | ) | (127,294,852 | ) | ||||
Accrued Performance Participation Allocation |
(30,078,462 | ) | (29,212,962 | ) | ||||
|
|
|
|
|||||
Net Asset Value |
$ | 1,226,118,891 | $ | 1,207,966,913 | ||||
|
|
|
|
|||||
Fully-diluted Shares/Units Outstanding |
59,175,010 | 58,554,689 |
* | Presented as adjusted for our economic ownership percentage in each asset. |
Class |
||||||||||||||||||||||||||||
T |
D |
I |
A |
TX |
OP (1) |
Total |
||||||||||||||||||||||
As of June 30, 2022 |
||||||||||||||||||||||||||||
Monthly NAV |
$ | 61,018,655 | $ | 21,108 | $ | 36,718,741 | $ | 476,816,053 | $ | 363,226 | $ | 651,181,108 | $ | 1,226,118,891 | ||||||||||||||
Fully-diluted Outstanding Shares/Units |
2,944,885 | 1,019 | 1,772,122 | 23,012,120 | 17,530 | 31,427,334 | 59,175,010 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
NAV per Fully-diluted Share/Unit |
$ | 20.7202 | $ | 20.7202 | $ | 20.7202 | $ | 20.7202 | $ | 20.7202 | $ | 20.7202 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
As of May 31, 2022 |
||||||||||||||||||||||||||||
Monthly NAV |
$ | 53,171,315 | $ | 21,016 | $ | 27,545,054 | $ | 478,478,063 | $ | 361,607 | $ | 648,389,858 | $ | 1,207,966,913 | ||||||||||||||
Fully-diluted Outstanding Shares/Units |
2,577,413 | 1,019 | 1,335,212 | 23,193,627 | 17,528 | 31,429,890 | 58,554,689 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
NAV per Fully-diluted Share/Unit |
$ | 20.6297 | $ | 20.6297 | $ | 20.6297 | $ | 20.6297 | $ | 20.6297 | $ | 20.6297 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
Includes CROP Partnership Units held by High Traverse Holdings, an entity beneficially owned by Daniel Shaeffer, Chad Christensen, Gregg Christensen and Eric Marlin and other CROP Partnership Units, including LTIP Units as described above, held by parties other than us. |
Discount Rate |
Exit Capitalization Rate |
|||||||
Operating Assets |
5.60 | % | 4.40 | % | ||||
Development Assets |
5.83 | % | 4.40 | % |
* |
Presented as adjusted for our economic ownership percentage in each asset, weighted by gross value. |
Sensitivities |
Change |
Operating Asset Values |
Development Asset Values |
|||||||
Discount Rate |
0.25% decrease | 2.4 | % | 2.2 | % | |||||
0.25% increase | (2.4 | )% | (2.1 | )% | ||||||
Exit Capitalization Rate |
0.25% decrease | 4.2 | % | 4.4 | % | |||||
0.25% increase | (3.6 | )% | (3.9 | )% |
* |
Presented as adjusted for our economic ownership percentage in each asset. |
Date |
Class T |
Class D |
Class I |
Class A |
Class TX |
OP (1) |
||||||||||||||||||
May 31, 2022 |
$ | 20.6297 | $ | 20.6297 | $ | 20.6297 | $ | 20.6297 | $ | 20.6297 | $ | 20.6297 | ||||||||||||
April 30, 2022 |
$ | 20.0794 | — | $ | 20.0794 | $ | 20.0794 | $ | 20.0794 | $ | 20.0794 | |||||||||||||
March 31, 2022 |
$ | 19.6324 | — | $ | 19.6324 | $ | 19.6324 | $ | 19.6324 | $ | 19.6324 | |||||||||||||
February 28, 2022 |
$ | 18.9882 | — | $ | 18.9882 | $ | 18.9882 | $ | 18.9882 | $ | 18.9882 | |||||||||||||
January 31, 2022 |
$ | 18.4071 | — | $ | 18.4071 | $ | 18.4071 | $ | 18.4071 | $ | 18.4071 | |||||||||||||
December 31, 2021 |
— | — | $ | 17.2839 | $ | 17.2839 | $ | 17.2839 | $ | 17.2839 | ||||||||||||||
November 30, 2021 |
— | — | — | $ | 16.9316 | $ | 16.9316 | $ | 16.9316 | |||||||||||||||
October 31, 2021 |
— | — | — | $ | 16.3305 | $ | 16.3305 | $ | 16.3305 | |||||||||||||||
September 30, 2021 |
— | — | — | $ | 15.4799 | $ | 15.4799 | $ | 15.4799 | |||||||||||||||
August 31, 2021 |
— | — | — | $ | 12.8855 | $ | 12.8855 | $ | 12.8855 | |||||||||||||||
July 31, 2021 |
— | — | — | $ | 12.5373 | $ | 12.5373 | $ | 12.5373 | |||||||||||||||
June 30, 2021 |
— | — | — | $ | 11.7865 | $ | 11.7865 | $ | 11.7865 | |||||||||||||||
May 31, 2021 |
— | — | — | $ | 10.8488 | $ | 10.8488 | $ | 10.8488 | |||||||||||||||
May 7, 2021 (2) |
— | — | — | $ | 10.8315 | $ | 10.8315 | $ | 10.8315 |
(1) |
Includes the CROP Partnership Units held by High Traverse, an entity beneficially owned by Daniel Shaeffer, Chad Christensen, Gregg Christensen and Eric Marlin and other CROP Partnership Units, including LTIP units as described above, held by parties other than us. |
(2) |
All components of NAV are as of May 7, 2021 with the exception of the investments in multifamily operating properties, development properties and real-estate related structured investments which are based on information as of April 30, 2021. |
Three Months Ended March 31, 2022 |
Year Ended December 31, 2021 |
|||||||
Distributions paid in cash - common stockholders |
$ | 4,174 | $ | 9,482 | ||||
Distributions paid in cash to noncontrolling interests - limited partners |
5,460 | 10,591 | ||||||
Distributions of DRP (reinvested) |
466 | 141 | ||||||
|
|
|
|
|||||
Total distributions (1) |
$ | 10,100 | $ | 20,214 | ||||
|
|
|
|
|||||
Source of distributions (2) |
||||||||
Paid from cash flows provided by operations |
$ | — | $ | 11,044 | ||||
Paid from revolving credit facility |
— | 5,000 | ||||||
Paid from offering proceeds |
9,634 | 4,029 | ||||||
Offering proceeds from issuance of common stock pursuant to the DRP |
466 | 141 | ||||||
|
|
|
|
|||||
Total sources |
$ | 10,100 | $ | 20,214 | ||||
|
|
|
|
|||||
Net cash used in operating activities (2) |
$ | (14,806 | ) | $ | (2,816 | ) | ||
|
|
|
|
(1) |
Distributions are paid on a monthly basis. In general, distributions for all record dates of a given month are paid on or about the fifth business day of the following month. |
(2) |
The allocation of total sources are calculated on a quarterly basis. Generally, for purposes of determining the source of our distributions paid, we assume first that we use positive cash flow from operating activities from the relevant or prior quarter to fund distribution payments. As such, amounts reflected above as distributions paid from cash flows provided by operations may be from prior quarters which had positive cash flow from operations. |
Name |
Position(s) |
Age* |
||||
Daniel Shaeffer |
Chief Executive Officer and Director |
51 | ||||
Chad Christensen |
Executive Chairman of the Board of Directors and Director |
49 | ||||
Gregg Christensen |
Chief Legal Officer and Secretary; Advisory Board Member |
53 | ||||
Glenn Rand |
Chief Operating Officer; Advisory Board Member |
61 | ||||
Susan Hallenberg |
Chief Accounting Officer and Treasurer; Advisory Board Member |
54 | ||||
Enzio Cassinis |
President |
44 | ||||
Adam Larson |
Chief Financial Officer |
40 | ||||
Stan Hanks |
Executive Vice President |
54 | ||||
Eric Marlin |
Executive Vice President, Capital Markets |
48 | ||||
Paul Fredenberg |
Chief Investment Officer |
45 | ||||
Jonathan Gardner |
Independent Director |
45 | ||||
John Lunt |
Independent Director |
49 | ||||
Philip White |
Independent Director |
48 |
* | As of March 31, 2022 |
Name and Principal Position |
Base Salary |
|||
Daniel Shaeffer, Chief Executive Officer |
(1 | ) | ||
Gregg Christensen, Chief Legal officer and Secretary |
$ | 400,000 | ||
Glenn Rand, Chief Operating Officer |
$ | 400,000 |
(1) | Mr. Shaeffer, along with certain other of our executive officers, is employed by our advisor and its affiliates. Except for grants of equity incentive compensation that we make to all of our executive officers, Mr. Shaeffer is compensated by these entities, in part, for his service to us and our subsidiaries. See “—Certain Transactions with Related Persons” below for a discussion of the fees paid to our advisor and its affiliates. |
Executive Officer |
Date of Grant |
Number of Time-Based LTIP Units |
Value of Time-Based LTIP Units |
|||||||||
Daniel Shaeffer |
January 7, 2022 | 23,589 | $ | 407,710 | ||||||||
Gregg Christensen |
January 7, 2022 | 7,959 | $ | 137,563 | ||||||||
Glenn Rand |
January 7, 2022 | 6,201 | $ | 107,177 |
Executive Officer |
Date of Grant |
Number of Performance- Based LTIP Units |
Value of Performance -Based LTIP Units |
|||||||||
Daniel Shaeffer |
January 7, 2022 | 43,809 | $ | 757,190 | ||||||||
Gregg Christensen |
January 7, 2022 | 14,780 | $ | 255,456 | ||||||||
Glenn Rand |
January 7, 2022 | 11,517 | $ | 199,059 |
Internal Rate of Return |
Percentage Earned |
|||
Less than 6% |
— | % | ||
6% |
50 | % | ||
10% or greater |
100 | % |
Name and Principal Position |
Year |
Salary |
Non-Equity Incentive Plan Compensation |
Total |
||||||||||||
Daniel Shaeffer |
2021 | (1 |
) |
(1 |
) |
(1 |
) | |||||||||
Chief Executive Officer |
||||||||||||||||
Gregg Christensen |
2021 | $ | 375,000 | 315,000 | $ | 690,000 | ||||||||||
Chief Legal Officer and Secretary |
||||||||||||||||
Glenn Rand |
2021 | $ | 380,000 | 250,000 | $ | 630,000 | ||||||||||
Chief Operating Officer |
(1) | Mr. Shaeffer is an officer and employee of our advisor and its affiliates, and is compensated by these entities, in part, for his services to us or our subsidiaries. We do not directly compensate Mr. Shaeffer other than through stock awards. See “—Certain Transactions with Related Persons” below for a discussion of the fees paid to CC Advisor and its affiliates. |
Name |
Fees Earned or Paid in Cash in 2021 |
Stock Awards (1)(2) |
Total |
|||||||||
Daniel Shaeffer (3) |
$ | — | $ | — | $ | — | ||||||
Chad Christensen (3) |
— | — | — | |||||||||
Jonathan Gardner |
37,500 | 65,074 | 102,574 | |||||||||
John Lunt |
121,750 | 65,074 | 186,824 | |||||||||
Philip White |
37,500 | 65,074 | 102,574 | |||||||||
Gentry Jensen (4) |
73,000 | — | 73,000 | |||||||||
R. Brent Hardy (4) |
73,000 | — | 73,000 |
(1) | As of December 31, 2021, each of Mr. Gardner, Mr. Lunt and Mr. White held 3,765 unvested LTIP Units. |
(2) | Represents 3,765 LTIP Units granted to each of Messrs. Gardner, Lunt, and White on January 7, 2022 for compensation for the year ended December 31, 2021. The dollar value is computed in accordance with the Financial Accounting Standards Board’s Accounting Standards Codification 718, Compensation—Stock Compensation (“ASC Topic 718”). See Note 11 to our consolidated financial statements included in our annual report on Form 10-K for the year ended December 31, 2021, for a discussion of our accounting of LTIP Units and the assumptions used. The grant date fair value of each award granted on January 7, 2022 was $17.2839. |
(3) | Directors who are not independent of us do not receive compensation for their services as a director. |
(4) | Effective on the closing date of the CRII Merger, R. Brent Hardy and Gentry Jensen, two of our former independent directors, resigned from the board of directors. |
Plan Category |
Number of securities to be issued upon exercise of outstanding options, warrants and rights (1) |
Weighted- average exercise price of outstanding options, warrants and rights |
Number of securities remaining available for future issuance under equity compensation plans (2) |
|||||||||
Equity compensation plans approved by security holders |
— | — | — | |||||||||
Equity compensation plans not approved by security holders (3) |
1,099,775 | — | — | |||||||||
|
|
|
|
|
|
|||||||
Total |
1,099,775 | — | — | |||||||||
|
|
|
|
|
|
(1) |
Consists entirely of LTIP Units that, upon the satisfaction of certain conditions, are convertible into common units, which may then be redeemed for cash, or at our option, an equal number of shares of common stock, subject to certain restrictions. There is no exercise price associated with LTIP Units. |
(2) |
No additional securities have been reserved for issuance. |
(3) |
Our board of directors has granted awards of LTIP Units to our executive officers pursuant to the terms of award agreements and as contemplated in the CROP Partnership Agreement. |
Equity (in number of units) |
As of March 31, 2022 |
|||
General Partner Units |
25,297,131.86 | (1) | ||
CROP Common Units |
30,042,194.77 | (2) | ||
Series 2016 Preferred Units |
13,983,810.04 | (3) | ||
Series 2019 Preferred Units |
12,733,485.20 | |||
CROP LTIP Units |
1,357,850.50 | |||
Long-Term Debt (in dollars) |
|
|||
2017 6% Notes |
$ | 20,818,000 | ||
2019 6% Notes |
$ | 22,625,000 |
(1) |
Reflects the general partner units issued to CCGP Subsidiary, as general partner of CROP, which correspond to the shares of our common stock issued and outstanding. |
(2) |
Includes (i) 3,481,505 CROP Common Units issued to High Traverse Holdings, LLC (“High Traverse”), an entity beneficially owned by Daniel Shaeffer, Chad Christensen, Gregg Christensen and Eric Marlin (ii) vested LTIP units and (iii) CROP Common Units issued to persons who contributed real property to CROP in exchange for common limited partner units. |
(3) |
On April 18, 2022, CROP fully redeemed the Series 2016 Preferred Units for approximately $139.8 million. |
Name and Address of Beneficial Owner (1) |
Amount and Nature of Beneficial Ownership (2) |
Percent of all Shares (3) |
Percent of all Shares and Common Units (4) |
|||||||||
Daniel Shaeffer |
4,283,211 | (5) |
16.87 | % | 7.62 | % | ||||||
Chad Christensen |
4,283,211 | (5) |
16.87 | % | 7.62 | % | ||||||
Gregg Christensen |
3,850,024 | (5) |
15.16 | % | 6.85 | % | ||||||
Glenn Rand |
58,225 | (6) |
* | * | ||||||||
Enzio Cassinis |
50,607 | (6) |
* | * | ||||||||
Adam Larson |
39,069 | (6) |
* | * | ||||||||
Paul Fredenberg |
18,412 | (6) |
* | * | ||||||||
Susan Hallenberg |
50,509 | (6) |
* | * | ||||||||
Stan Hanks |
41,938 | (6) |
* | * | ||||||||
Eric Marlin |
3,567,178 | (5) |
14.05 | % | 6.34 | % | ||||||
Jonathan Gardner |
10,625 | (7) |
* | * | ||||||||
John Lunt |
8,683 | (7) |
* | * | ||||||||
Philip White |
20,865 | (8) |
* | * | ||||||||
All directors and executive officers as a group (13 persons) |
5,797,682 | 22.83 | % | 10.31 | % |
* | Indicates less than 1% of the outstanding common stock. |
(1) |
The address of each named beneficial owner is 1245 Brickyard Road, Suite 250, Salt Lake City, Utah 84106. |
(2) |
Ownership consists of shares of our common stock, CROP Common Units and CROP LTIP Units. Subject to certain restrictions, once issued, common units may be redeemed for cash, or at our option, an equal number of shares of our common stock. Upon achieving parity with the common units and becoming “redeemable” in accordance with the terms of the CROP Partnership Agreement, LTIP units may be redeemed for cash, or at our option, an equal number of shares of our common stock, subject to certain restrictions. |
(3) |
Based on 25,394,008 shares of our common stock outstanding as of March 31, 2022. In computing the percentage ownership of a person or group, we have assumed that the common units and LTIP units held by that person or persons in the group have been redeemed for shares of our common stock and that those shares are outstanding, but that no common units or LTIP units held by other persons are redeemed for shares of our common stock, notwithstanding that not all of the LTIP units have vested to date. |
(4) |
Based on 56,242,685 shares of common stock and common units outstanding as of March 31, 2022 on a fully-diluted basis, comprised of 25,394,008 shares of common stock and 30,848,677 shares of common stock issuable upon exchange or conversion of outstanding common units and LTIP units, respectively. |
(5) |
Includes 93,963, 93,963, 43,850 and 31,339 common units held by each of Messrs. Shaeffer, C. Christensen, G. Christensen and Marlin, respectively, and 687,743, 687,743, 304,669 and 54,334 LTIP units held by each of Messrs. Shaeffer, C. Christensen, G. Christensen and Marlin, respectively. Not all of the LTIP units have vested. Includes 3,481,505 common units held by HT Holdings, an entity owned and controlled by Messrs. Shaeffer, C. Christensen, G. Christensen and Marlin. Also includes 20,000 shares of common stock held by CCA, which is beneficially owned by Messrs. Shaeffer, C. Christensen, G. Christensen and Marlin (through entities they own and control or directly). In addition, Messrs. Shaeffer, C. Christensen and G. Christensen comprise the board of managers of CCA and, as such, may be deemed to have had beneficial ownership of the shares held by CCA. |
(6) |
Includes 3,633, 18,814, 12,543, 7,840, 3,633 and 3,633 common units held by each of Messrs. Rand, Cassinis, Larson, Fredenberg and Hanks and Ms. Hallenberg, respectively, and 54,592, 31,793, 26,526, 10,572, 38,305 and 46,876 LTIP units held by each of Messrs. Rand, Cassinis, Larson, Fredenberg and Hanks and Ms. Hallenberg, respectively. Not all of the LTIP units have vested. |
(7) |
Includes 10,265 and 8,683 LTIP units held by Messrs. Gardner and Lunt, respectively. Not all of the LTIP units have vested. |
(8) |
Includes 10,600 shares of our common stock and 10,265 LTIP units held by Mr. White. Not all of the LTIP units have vested. |
• | finding, presenting and recommending investment opportunities to us consistent with our investment policies and objectives; |
• | making certain real estate-related debt investment decisions for us, subject to the limitations in our charter and the direction and oversight of our board of directors; |
• | structuring the terms and conditions of our investments, sales and joint ventures; |
• | acquiring properties and other investments on our behalf in compliance with our investment objectives and policies; |
• | arranging for financing and refinancing of properties and our other investments; |
• | entering into leases and service contracts for our real properties; |
• | supervising and evaluating each loan servicer’s and property manager’s performance; |
• | reviewing and analyzing the operating and capital budgets of properties underlying our investments and properties we may acquire; |
• | entering into servicing contracts for our loans; |
• | assisting us in obtaining insurance; |
• | generating an annual budget for us; |
• | reviewing and analyzing financial information for each of our assets and the overall portfolio; |
• | formulating and overseeing the implementation of strategies for the administration, promotion, management, operation, maintenance, improvement, financing and refinancing, marketing, leasing and disposition of our properties and other investments; |
• | performing investor-relations services to the extent our advisor deems appropriate in light of our employment of certain personnel; |
• | maintaining our accounting and other records and assisting us in filing all reports required to be filed with the SEC, the IRS and other regulatory agencies to the extent our advisor deems appropriate in light of our employment of certain personnel; |
• | engaging and supervising the performance of our agents, including our registrar and transfer agent to the extent our advisor deems appropriate in light of our employment of certain personnel; and |
• | performing any other services reasonably requested by us. |
1. | First, if the Total Return for the applicable period exceeds the sum of (i) the Hurdle Amount for that period and (ii) the Loss Carryforward Amount (any such excess, “Excess Profits”), 100% of such Excess Profits until the total amount allocated to the Special Limited Partner equals 12.5% of the sum of (A) the Hurdle Amount for that period and (B) any amount allocated to the Special Limited Partner pursuant to this clause; and |
2. | Second, to the extent there are remaining Excess Profits, 12.5% of such remaining Excess Profits. |
• | Any amount by which Total Return falls below the Hurdle Amount and that does not constitute Loss Carryforward Amount will not be carried forward to subsequent periods. |
• | With respect to all CROP partnership units that are repurchased at the end of any month in connection with repurchases of shares of our common stock pursuant to our share repurchase plan, the Special Limited Partner will be entitled to such Performance Allocation in an amount calculated as described above calculated in respect of the portion of the year for which such CROP partnership units were outstanding, and proceeds for any such CROP partnership unit repurchase will be reduced by the amount of any such Performance Allocation. |
• | The Performance Allocation may be payable in cash or CROP Common Units at the election of the Special Limited Partner. If the Special Limited Partner elects to receive such distributions in CROP Common Units, the Special Limited Partner will receive the number of CROP Common Units that results from dividing the Performance Allocation by the net asset value per CROP Common Unit at the time of such distribution. If the Special Limited Partner elects to receive such distributions in CROP Common Units, the Special Limited Partner may request CROP to redeem such CROP Common Units from the Special Limited Partner at any time thereafter pursuant to the CROP Partnership Agreement. Any CROP Common Units received by the Special Limited Partner will not be subject to the one-year holding requirement with respect to the exchange right in the CROP Partnership Agreement. |
• | The measurement of the change in net asset value for the purpose of calculating the Total Return is subject to adjustment by our board of directors to account for any dividend, split, recapitalization or any other similar change in CROP’s capital structure or any distributions that our board of directors deems to be a return of capital if such changes are not already reflected in CROP’s net assets. |
• | The Special Limited Partner will not be obligated to return any portion of the Performance Allocation paid due to the subsequent performance of CROP. |
• | In the event that the Amended and Restated Advisory Agreement is terminated (including by means of non-renewal), the Special Limited Partner will be allocated any accrued Performance Allocation with respect to all CROP partnership units as of the date of such termination. |
Property Name |
Property Location |
Units to be Built |
Net Rentable Square Feet |
Estimated Completion |
Investme nt to Date |
Joint Venture Interest |
Dated Contracted |
|||||||||||||||||||
Park Avenue |
Salt Lake City, UT | 234 | 167,130 | Second Quarter 2022 | $ | 18,119,178 | 76.4 | % | 8/10/2018 | |||||||||||||||||
Cottonwood on Broadway |
Salt Lake City, UT | 254 | 207,642 | Fourth Quarter 2022 | $ | 25,929,117 | 81.2 | % | 8/6/2019 | |||||||||||||||||
Other Investment |
Property Location |
Description |
Investment to Date |
Joint Venture Interest |
Dated Contracted |
|||||||||||||||||||||
Block C (1) |
Millcreek, UT | Land held for development | $ | 3,656,378 | 63.0 | % | 1/14/2021 |
(1) |
See “–Certain Transactions with Related Persons – Block C ” for information regarding the restructuring of the ownership of Block C after March 31, 2022, to admit members affiliated with us and our advisor. |
• | preserve, protect and return invested capital; |
• | realize capital appreciation in the value of our investments over the long term; and |
• | pay cash distributions to stockholders from our investments or upon stabilization of our properties. |
• | being located in a primary market or a secondary market (as defined below); |
• | construction quality and design of the to be developed property; |
• | occupancy rates and demand for similar existing properties in the area; |
• | leasing rates and tenant trends, including median income, job growth and employment prospects in the local economy and other demographics; |
• | complexity of the development plan and the stabilization strategy; |
• | tax and regulatory issues related to developing and owning a multifamily construction and development project in the region, including potential tax incentives and credits from local, state and federal governments and agencies; |
• | estimated construction timeline, construction budget, and expected timing and cost of lease-up and stabilization; |
• | physical characteristics including quality of existing infrastructure and roadways and access to transportation, parks, schools, entertainment and other amenities; |
• | availability and pricing of construction financing; |
• | zoning, permitting and entitlement considerations; |
• | environmental issues, including results of environmental site assessments; |
• | the experience of, and our economic arrangement with, the proposed developer and operator; |
• | expectations that the planned multifamily construction and development project will have a minimum occupancy of at least 85% following stabilization; and |
• | expectations that the planned multifamily construction and development project will derive at least 75% of its projected stabilized net operating income from rental apartments. |
• | Orlando, Florida |
• | Atlanta, Georgia |
• | Dallas, Texas |
• | Houston, Texas |
• | Austin, Texas |
• | Phoenix, Arizona |
• | Denver, Colorado |
• | Salt Lake City, Utah |
• | Miami, Florida |
• | Tampa, Florida |
• | Portland, Oregon |
• | Charlotte, North Carolina |
• | Nashville, Tennessee |
• | Raleigh, North Carolina |
• | Durham, North Carolina |
• | San Antonio, Texas |
Name (1) |
Position(s) |
Age (2) | ||
Daniel Shaeffer | Chief Executive Officer, Director and Investment Committee Member | 51 | ||
Chad Christensen | President, Chairman of the Board, Director and Investment Committee Member | 49 | ||
Gregg Christensen | Chief Legal Officer, Secretary, Director and Investment Committee Member | 53 | ||
Susan Hallenberg | Chief Financial Officer | 54 | ||
Blake Bunker | Independent Director | 44 |
(1) |
The address of each director and executive officer listed is 1245 Brickyard Road, Suite 250, Salt Lake City, Utah 84106. |
(2) |
As of March 31, 2022. |
Name and Address of Beneficial Owner (1)(2) |
Amount and Nature of Beneficial Ownership |
Percentage |
||||||
Gregg Christensen |
— | — | ||||||
Susan Hallenberg |
— | — | ||||||
Daniel Shaeffer |
— | — | ||||||
Chad Christensen |
— | — | ||||||
Blake Bunker |
— | — | ||||||
All officers and directors as a group (five persons) |
— | — |
(1) | The address of each named beneficial owner is 1245 Brickyard Road, Suite 250, Salt Lake City, Utah 84106. |
(2) | Under SEC rules, a person is deemed to be a “beneficial owner” of a security if that person has or shares “voting power”, which includes the power to dispose of or to direct the disposition of such security. A person also is deemed to be a beneficial owner of any securities which that person has a right to acquire within 60 days. Under these rules, more than one person may be deemed to be a beneficial owner of the same securities and a person may be deemed to be a beneficial owner of securities as to which he or she has no economic or pecuniary interest. |
1. | a proposal to approve the Company Merger; and |
2. | a proposal to adjourn the Special Meeting to solicit additional proxies in favor of the Merger Proposal if there are not sufficient votes to approve the Merger Proposal, if necessary and as determined by the chair of the Special Meeting. |
• | Internet |
• | Telephone |
• | Mail pre-addressed postage-paid envelope provided. |
• | submitting notice in writing to CMOF’s Secretary, Gregg Christensen, at CMOF’s offices located at 1245 Brickyard Road, Suite 250, Salt Lake City, Utah 84106; |
• | executing and delivering a later-dated, properly executed proxy card or submitting a later-dated proxy by telephone or on the Internet; |
• | submitting another proxy via the Internet or by telephone; or |
• | voting in person at the Special Meeting. |
• | CMOF’s limited mix of assets within its portfolio expose it to customary risks associated with a limited investment portfolio such as downturns in the geographic regions in which CMOF’s assets are concentrated. |
• | The attractiveness of various alternatives considered was limited. Specifically, the CMOF Special Committee considered continuing existing operations, a separate stock-for-stock non-public U.S. multifamily REIT, a sale of assets for cash, and an equity recapitalization by private investors, among other alternatives. Each of such alternatives presented valuation and execution challenges that made them less desirable than the Mergers. |
• | The receipt of shares of CCI Common Stock as Merger Consideration provides the CMOF stockholders the opportunity to continue ownership in the Combined Company, which is expected to provide a number of significant potential benefits, including the following: |
• | better positioning for the Combined Company to take advantage of business opportunities; |
• | ability to receive regular income in the form of distributions from the Combined Company; |
• | potential for CMOF stockholders to participate in the share repurchase program of the Combined Company and access broadened liquidity options; |
• | the Combined Company will have significantly increased scale, including a more diversified portfolio (both in terms of asset type and geography); |
• | improved access to capital markets, which can be used to support acquisitions that drive growth in stockholder value; |
• | significant cost of capital advantages generally enjoyed by REITs with higher capitalizations; and |
• | upon liquidation, a REIT is generally not subject to an entity level tax due to the application of the dividends paid deduction, compared to certain subchapter C corporations where tax may be imposed on both entity and shareholder level gains. |
• | The integrated organizational structure of the Combined Company will allow CCI management and CCI Advisor to focus their efforts on the operation of the Combined Company, which is expected to result in operating and cost efficiencies. |
• | (i) The recommendation made by the CMOF Special Committee related to the proposed Mergers, (ii) the financial analysis reviewed by CBRE Capital with the CMOF Special Committee, (iii) the opinion of CBRE Capital orally rendered to the CMOF Special Committee on July 8, 2022 (which oral opinion was subsequently confirmed in writing by delivery of CBRE Capital’s written Opinion addressed to the CMOF Special Committee, dated July 8, 2022) to the effect that, as of such date, the consideration to be received by the holders of CMOF Common Stock in the Company Merger pursuant to the Merger Agreement was fair, from a financial point of view, to the holders of CMOF Common Stock. See “—Opinion of CMOF Special Committee’s Financial Advisor” beginning on page [ ]. |
• | The Merger Consideration is fixed and will not be adjusted in the event of any change in the relative values of CMOF or CCI, which limits the impact of external forces on the Mergers. |
• | The Merger Agreement provides CMOF the right, upon receipt of a written Acquisition Proposal that constitutes a Superior Proposal that did not result from a material breach of the non-solicitation provisions of the Merger Agreement, to give notice of its intention to terminate the Merger Agreement to enter into an agreement for a Superior Proposal and/or effect an Adverse Recommendation Change (as defined in “The Merger Agreement—Covenants and Agreements— No Solicitation; Change in Recommendation”), subject to certain conditions. |
• | The Merger Agreement provides the CMOF Board with the ability, under certain specified circumstances and subject to certain terms and conditions, (i) to consider an Acquisition Proposal if the CMOF Board or the CMOF Special Committee determines, in good faith, that it could reasonably be expected to lead to a Superior Proposal, (ii) to make an Adverse Recommendation Change, and (iii) to terminate the Merger Agreement in order to enter into an agreement with respect to a Superior Proposal upon payment to CCI of a $2,696,600 termination fee plus reimbursement of CCI’s expenses up to $449,400. |
• | The CMOF Board (or the CMOF Special Committee) may also make an Adverse Recommendation Change in response to a change in circumstance or development occurring or arising after the date of the Merger Agreement that materially affects the business, assets or operations of CMOF and its subsidiaries, taken as a whole, that was not known to or reasonably foreseeable by the CMOF Board prior to the execution of the Merger Agreement, which change in circumstances or development becomes known to the CMOF Board prior to receipt of the required CMOF stockholder approval, subject to specified terms and conditions. |
• | The Merger Agreement, the Mergers and the transactions contemplated by the Merger Agreement were negotiated between the CMOF Special Committee and its advisors, on the one hand, and the CCI Conflicts Committee and its advisors, on the other hand. |
• | The intent for the Company Merger to qualify as a reorganization for U.S. federal income tax purposes, resulting in the receipt of shares of CCI Common Stock in the Company Merger on a tax-deferred basis. |
• | The commitment on the part of each of CMOF and CCI to complete the Mergers as reflected in their respective obligations under the terms of the Merger Agreement and the absence of any required government consents. |
• | The risk that the value of the CCI Common Stock to be received by the CMOF stockholders may decline as a result of the Mergers if the Combined Company does not achieve the perceived benefits of the Mergers as rapidly or to the extent anticipated. |
• | The fact that the Company Merger is not a liquidity event for the CMOF stockholders, the risk that the Combined Company may not provide liquidity to the CMOF stockholders on favorable terms, and that certain alternatives considered (such as a cash sale of individual assets or a recapitalization) would, if successful, provide liquidity for the CMOF stockholders. |
• | The risk that the liquidity options available to the Combined Company could, when coupled with expected general and administrative expenses of the Combined Company, result in lower investor returns than other strategic alternatives currently available to CMOF. |
• | The terms of the Merger Agreement that limit the ability of CMOF to initiate, solicit, knowingly encourage or facilitate any inquiries or the making of any proposal, offer or other activities that constitute an Acquisition Proposal, which has the potential to create more value for the CMOF stockholders than the Mergers. |
• | The risk that, while the Mergers are expected to be completed, there is no assurance that all of the conditions to the parties’ obligations to complete the Mergers will be satisfied or waived. |
• | The risk of diverting management’s focus and resources from operational matters and other strategic opportunities while working to implement the Mergers. |
• | The risk of stockholder litigation relating to the Mergers. |
• | The obligations under the Merger Agreement regarding the restrictions on the operation of CMOF’s business during the period between signing the Merger Agreement and the completion of the Mergers may delay or prevent CMOF from undertaking business opportunities that may arise or any other actions it would otherwise take with respect to its operations absent the pending completion of the Mergers. |
• | The substantial costs to be incurred in connection with the Mergers, including the transaction expenses arising from the Mergers. |
• | CMOF and CCI have affiliates in common and, therefore, conflicts of interest may have been involved when the individuals that comprised the management teams of each entity that assisted the respective companies in connection with the Mergers, and some of CMOF’s directors and executive officers have interests with respect to the Mergers that are different from, and in addition to, those of the CMOF stockholders generally, as more fully described in the section entitled “—Interests of CMOF’s and CCI’s Directors and Executive Officers in the Mergers” in this proxy statement/prospectus. |
• | The risk that the CMOF stockholders do not approve the Company Merger. |
• | The fact that the Merger Agreement provides that CMOF will pay CCI a termination fee equal to $2,696,000 plus reimbursement of CCI’s expenses up to $449,400 if the Merger Agreement is terminated under certain circumstances, including (i) for a Superior Proposal, (ii) for an Adverse Recommendation Change or (iii) if CMOF eventually consummates an Acquisition Proposal within 12 months of certain related circumstances (provided the various conditions and procedural requirements are met). |
• | CCI is the indirect sponsor, property manager and asset manager for CMOF, and there are conflicts of interest inherent where the individuals who comprise the management teams of each entity assisted in connection with the Mergers. |
• | The CMOF stockholders are not entitled to dissenters’ or appraisal rights in connection with the Company Merger. |
• | CCI may continue to sell shares of CCI Common Stock at NAV, plus certain underwriting compensation, which may dilute the ownership interest of the CMOF stockholders in the Combined Company beyond what was contemplated by the Merger Consideration. |
• | The Merger Consideration is fixed and will not fluctuate as a result of changes in the value of CMOF or CCI, such that a decline in the value of CCI unmatched by a similar decline in the value of CMOF, or an increase in the value of CMOF without a similar increase in the value of CCI, would impact the relative value of CCI in a manner adverse to CMOF. |
• | The types and nature of the risks described under the section entitled “Risk Factors” in this proxy statement/prospectus. |
• | Income (Direct) Capitalization Approach |
• | Sales Comparison Approach |
• | Cost Approach |
• | Broker Opinion of Value |
Twelve Months Ended December 31, |
||||||||||||||||||||
2022 |
2023 |
2024 |
2025 |
2026 |
||||||||||||||||
Total Revenues |
$ | 1,687,819 | 8,747,902 | 10,784,409 | 11,107,517 | 11,440,938 | ||||||||||||||
Real Estate Operating Expenses |
(1,314,255 | ) | (2,581,133 | ) | (2,739,679 | ) | (2,821,858 | ) | (2,906,517 | ) | ||||||||||
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|
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Net Operating Income |
373,564 | 6,166,769 | 8,044,730 | 8,285,659 | 8,534,421 | |||||||||||||||
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REIT G&A and Other Expenses |
(974,748 | ) | (1,758,614 | ) | (1,788,864 | ) | (1,820,023 | ) | (1,851,958 | ) | ||||||||||
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EBITDA |
(601,183 | ) | 4,408,155 | 6,255,866 | 6,465,637 | 6,682,463 | ||||||||||||||
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Mortgage Interest Expense, net (1) |
(840,802 | ) | (3,030,081 | ) | (3,019,819 | ) | (3,887,589 | ) | (3,887,589 | ) | ||||||||||
Unsecured Note Interest Expense |
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Funds from Operations (FFO)/Core Funds from Operations (Core FFO) |
(1,441,986 | ) | 1,378,074 | 3,236,047 | 2,578,048 | 2,794,874 | ||||||||||||||
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Maintenance Capital Improvements |
(96,249 | ) | (98,655 | ) | (101,121 | ) | (103,649 | ) | (106,240 | ) | ||||||||||
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Core Adjusted Funds from Operations (Core AFFO) |
(1,538,234 | ) | 1,279,419 | 3,134,926 | 2,474,399 | 2,688,634 |
(1) | Assumes Park Ave. and Broadway properties are refinanced on January 1, 2023, and January 1, 2025, respectively at a fixed rate of 3.75%. |
• | banks, insurance companies, and other financial institutions; |
• | tax-exempt organizations or governmental organizations; |
• | S corporations, partnerships or other entities or arrangements treated as partnerships for U.S. federal income tax purposes (and investors therein); |
• | persons or entities who hold shares of CMOF Common Stock (or, following the Company Merger, CCI Common Stock) pursuant to the exercise of any employee stock option or otherwise as compensation; |
• | individuals subject to the alternative minimum tax; |
• | regulated investment companies and REITs; |
• | “controlled foreign corporations,” “passive foreign investment companies,” and corporations that accumulate earnings to avoid U.S. federal income tax; |
• | broker, dealers or traders in securities; |
• | United States expatriates and former citizens or long-term residents of the United States; |
• | persons holding shares of CMOF Common Stock (or, following the Company Merger, CCI Common Stock) as part of a hedge, straddle or other risk reduction strategy or as part of a conversion transaction or other integrated investment; |
• | persons or entities deemed to sell CMOF Common Stock (or, following the Company Merger, CCI Common Stock) under the constructive sale provisions of the Code; |
• | United States persons or entities whose functional currency is not the U.S. dollar; |
• | tax-qualified retirement plans; |
• | “qualified foreign pension funds” as defined in Section 897(l)(2) of the Code and entities all of the interests of which are held by one or more qualified foreign pension funds; |
• | “qualified shareholders” as defined in Section 897(k)(3)(A) of the Code; or |
• | persons or entities subject to special tax accounting rules as a result of any item of gross income with respect to the stock being taken into account in an applicable financial statement. |
• | an individual who is a citizen or resident of the United States; |
• | a corporation (or other entity taxable as a corporation) created or organized under the laws of the United States, any state thereof, or the District of Columbia; |
• | an estate, the income of which is subject to U.S. federal income taxation regardless of its source; or |
• | a trust that (i) is subject to the primary supervision of a United States court and the control of one or more “United States persons” (within the meaning of the Code) or (ii) has a valid election in effect under applicable Treasury Regulations to be treated as a United States person for U.S. federal income tax purposes. |
• | First, the Combined Company will be required to pay regular U.S. federal corporate income tax on any REIT taxable income, including net capital gain, that it does not distribute to stockholders during, or within a specified time period after, the calendar year in which the income is earned. |
• | Second, if the Combined Company has (i) net income from the sale or other disposition of “foreclosure property” held primarily for sale to customers in the ordinary course of business or (ii) other nonqualifying income from foreclosure property, the Combined Company will be required to pay regular U.S. federal corporate income tax on this income. To the extent that income from foreclosure property is otherwise qualifying income for purposes of the 75% gross income test, this tax is not applicable. Subject to certain other requirements, foreclosure property generally is defined as property the Combined Company acquired through foreclosure or after a default on a loan secured by the property or a lease of the property. See “—Foreclosure Property.” |
• | Third, the Combined Company will be required to pay a 100% tax on any net income from prohibited transactions. Prohibited transactions are, in general, sales or other taxable dispositions of property, other than foreclosure property, held as inventory or primarily for sale to customers in the ordinary course of business. |
• | Fourth, if the Combined Company fails to satisfy the 75% gross income test or the 95% gross income test, as described below, but has otherwise maintained its qualification as a REIT because certain other requirements are met, it will be required to pay a tax equal to (i) the greater of (A) the amount by which it fails to satisfy the 75% gross income test and (B) the amount by which it fails to satisfy the 95% gross income test, multiplied by (ii) a fraction intended to reflect its profitability. |
• | Fifth, if the Combined Company fails to satisfy any of the asset tests (other than a de minimis failure of the 5% asset test, the 10% vote test or the 10% value test), as described below, due to reasonable cause and not due to willful neglect, and the Combined Company nonetheless maintains its REIT qualification because of specified cure provisions, it will be required to pay a tax equal to the greater of $50,000 or the U.S. federal corporate income tax rate multiplied by the net income generated by the nonqualifying assets that caused the Combined Company to fail such test. |
• | Sixth, if the Combined Company fails to satisfy any provision of the Code that would result in its failure to qualify as a REIT (other than a violation of the gross income tests or certain violations of the asset tests, as described below) and the violation is due to reasonable cause and not due to willful neglect, the Combined Company may retain its REIT qualification, but it will be required to pay a penalty of $50,000 for each such failure. |
• | Seventh, the Combined Company will be required to pay a 4% nondeductible excise tax to the extent it fails to distribute during each calendar year at least the sum of (i) 85% of its ordinary income for the year, (ii) 95% of its capital gain net income for the year, and (iii) any undistributed taxable income from prior periods. |
• | Eighth, if the Combined Company acquires any asset from a corporation that is or has been a C corporation in a transaction in which the Combined Company’s tax basis in the asset is less than |
the fair market value of the asset, in each case determined as of the date on which it acquired the asset, and it subsequently recognizes gain on the disposition of the asset during the five-year period beginning on the date on which it acquired the asset, then it generally will be required to pay regular U.S. federal corporate income tax on this gain to the extent of the excess of (i) the fair market value of the asset over (ii) its adjusted tax basis in the asset, in each case determined as of the date on which it acquired the asset. |
• | Ninth, the Combined Company’s subsidiaries that are C corporations, including its TRSs described below, generally will be required to pay regular U.S. federal corporate income tax on their earnings. |
• | Tenth, the Combined Company will be required to pay a 100% excise tax on transactions with its TRSs that are not conducted on an arm’s-length basis. |
(1) | It is managed by one or more trustees or directors; |
(2) | Its beneficial ownership is evidenced by transferable shares of stock, or by transferable shares or certificates of beneficial ownership; |
(3) | It would be taxable as a domestic corporation, but for Sections 856 through 860 of the Code; |
(4) | It is not a financial institution or an insurance company within the meaning of certain provisions of the Code; |
(5) | It is beneficially owned by 100 or more persons; |
(6) | Not more than 50% in value of the outstanding stock or shares of beneficial interest of which are owned, actually or constructively, by five or fewer individuals, which the U.S. federal income tax laws define to include certain entities, during the last half of each taxable year; |
(7) | It elects to be a REIT, or has made such election for a previous taxable year, and satisfies all relevant filing and other administrative requirements established by the IRS that must be met to qualify to be taxed as a REIT for U.S. federal income tax purposes; |
(8) | It uses a calendar year for U.S. federal income tax purposes and complies with the recordkeeping requirements of the U.S. federal income tax laws; and |
(9) | It meets certain other requirements, described below, regarding the sources of its gross income, the nature and diversification of its assets and the distribution of its income. |
• | rents from real property; |
• | interest on debt secured by mortgages on real property or on interests in real property and interest on debt secured by mortgages on both real and personal property if the fair market value of such personal property does not exceed 15% of the total fair market value of all such property; |
• | dividends or other distributions on, and gain from the sale of, stock or shares of beneficial interest in other REITs; |
• | gain from the sale of real estate assets (other than gain from prohibited transactions); |
• | income and gain derived from foreclosure property; and |
• | income derived from the temporary investment of new capital attributable to the issuance of its stock or a public offering of its debt with a maturity date of at least five years and that the Combined Company received during the one-year period beginning on the date on which the Combined Company received such new capital. |
• | The amount of rent is not based in whole or in part on the income or profits of any person. However, an amount the Combined Company receives or accrues generally will not be excluded from the term “rents from real property” solely because it is based on a fixed percentage or percentages of receipts or sales; |
• | Neither the Combined Company nor an actual or constructive owner of 10% or more of its capital stock actually or constructively owns 10% or more of the interests in the assets or net profits of a |
non-corporate tenant, or, if the tenant is a corporation, 10% or more of the total combined voting power of all classes of stock entitled to vote or 10% or more of the total value of all classes of stock of the tenant. Rents the Combined Company receives from such a tenant that is a TRS of the Combined Company, however, will not be excluded from the definition of “rents from real property” as a result of this condition if at least 90% of the space at the property to which the rents relate is leased to third parties, and the rents paid by the TRS are substantially comparable to rents paid by the Combined Company’s other tenants for comparable space. Whether rents paid by a TRS are substantially comparable to rents paid by other tenants is determined at the time the lease with the TRS is entered into, extended, and modified, if such modification increases the rents due under such lease; |
• | Rent attributable to personal property, leased in connection with a lease of real property, is not greater than 15% of the total rent received under the lease. If this condition is not met, then the portion of the rent attributable to personal property will not qualify as “rents from real property.” To the extent that rent attributable to personal property, leased in connection with a lease of real property, exceeds 15% of the total rent received under the lease, the Combined Company may transfer a portion of such personal property to a TRS; and |
• | The Combined Company generally may not operate or manage the property or furnish or render noncustomary services to its tenants, subject to a 1% de minimis exception and except as provided below. The Combined Company may, however, perform services that are “usually or customarily rendered” in connection with the rental of space for occupancy only and are not otherwise considered “rendered to the occupant” of the property. Examples of these services include the provision of light, heat, or other utilities, trash removal and general maintenance of common areas. In addition, the Combined Company may employ an independent contractor from whom it derives no revenue to provide customary services to the Combined Company’s tenants, or a TRS (which may be wholly or partially owned by the Combined Company) to provide both customary and non-customary services to the Combined Company’s tenants without causing the rent the Combined Company receives from those tenants to fail to qualify as “rents from real property.” |
• | Cash or cash items, including certain receivables and shares in certain money market funds; |
• | Government securities; |
• | Interests in real property, including leaseholds and options to acquire real property and leaseholds; |
• | Interests in mortgage loans secured by real property, and interests in mortgage loans secured by both real property and personal property if the fair market value of such personal property does not exceed 15% of the total fair market value of all such property; |
• | Stock or shares of beneficial interest in other REITs; |
• | Investments in stock or debt instruments during the one-year period following its receipt of new capital that the Combined Company raises through equity offerings or public offerings of debt with at least a five-year term; |
• | Debt instruments of publicly offered REITs; and |
• | Personal property leased in connection with a lease of real property for which the rent attributable to personal property is not greater than 15% of the total rent received under the lease. |
• | 90% of its REIT taxable income; and |
• | 90% of its after-tax net income, if any, from foreclosure property; minus |
• | the excess of the sum of certain items of non-cash income over 5% of its REIT taxable income, computed without regard to the dividends paid deduction and its net capital gain. |
• | The Combined Company’s Common Stock that the non-U.S. holder receives in the exchange is a USRPI. |
• | Immediately following the exchange, the non-U.S. holder would be subject to U.S. taxation within the meaning of Treasury Regulations Section 1.897-5T(d)(1) on a disposition of the Combined Company’s Common Stock received in the exchange. |
• | The non-U.S. holder complies with the filing requirement in Treasury Regulations Section §1.897-5T(d)(1)(iii). |
• | the investment in the Combined Company’s common stock is treated as effectively connected with the conduct by the non-U.S. holder of a trade or business within the United States (and, if required by an applicable income tax treaty, the non-U.S. holder maintains a permanent establishment in the United States to which such dividends are attributable), in which case the non-U.S. holder will be subject to the same treatment as U.S. holders with respect to such gain, except that a non-U.S. holder that is a corporation may also be subject to a branch profits tax of up to 30%, as discussed above; or |
• | the non-U.S. holder is a nonresident alien individual who is present in the United States for 183 days or more during the taxable year and certain other conditions are met, in which case the non-U.S. holder will be subject to U.S. federal income tax at a rate of 30% on the non-U.S. holder’s capital gains (or such lower rate specified by an applicable income tax treaty), which may be offset by U.S. source capital losses of such non-U.S. holder (even though the individual is not considered a resident of the United States), provided the non-U.S. holder has timely filed U.S. federal income tax returns with respect to such losses. |
• | the gain is treated as effectively connected with the conduct by the non-U.S. holder of a trade or business within the United States (and, if required by an applicable income tax treaty, the non-U.S. holder maintains a permanent establishment in the United States to which such gain is attributable), in which case the non-U.S. holder will be subject to the same treatment as U.S. holders with respect to such gain, except that a non-U.S. holder that is a corporation may also be subject to the 30% branch profits tax (or such lower rate as may be specified by an applicable income tax treaty) on such gain, as adjusted for certain items; or |
• | the non-U.S. holder is a nonresident alien individual who is present in the United States for 183 days or more during the taxable year and certain other conditions are met, in which case the non-U.S. holder will be subject to a 30% tax on its capital gains (or such lower rate specified by an applicable income tax treaty), which may be offset by U.S. source capital losses of such non-U.S. holder (even though the individual is not considered a resident of the United States), provided the non-U.S. holder has timely filed U.S. federal income tax returns with respect to such losses. |
• | the holder fails to furnish the holder’s taxpayer identification number, which for an individual is ordinarily his or her social security number; |
• | the holder furnishes an incorrect taxpayer identification number; |
• | the applicable withholding agent is notified by the IRS that the holder previously failed to properly report payments of interest or dividends; or |
• | the holder fails to certify under penalties of perjury that the holder has furnished a correct taxpayer identification number and that the IRS has not notified the holder that the holder is subject to backup withholding. |
• | organization, valid existence, organizational documents, good standing, qualification to do business, and subsidiaries; |
• | due authorization, execution, delivery and enforceability of the Merger Agreement; |
• | CMOF Board and CMOF Special Committee approvals; |
• | stockholder vote in connection with the Company Merger; |
• | absence of any conflict with or violation of organizational documents or applicable laws, and the absence of any violation or breach of, or default or consent requirements under, certain agreements; |
• | capitalization; |
• | SEC filings and financial statements; |
• | inapplicability of the Investment Company Act; |
• | absence of improper payments; |
• | absence of certain changes to the conduct of CMOF’s business or any “material adverse effect” to CMOF, in each case, since December 31, 2021; |
• | no undisclosed liabilities; |
• | permits and compliance with law; |
• | litigation; |
• | real properties and leases; |
• | environmental matters; |
• | material contracts; |
• | tax matters; |
• | intellectual property; |
• | insurance; |
• | absence of employees and employee benefit plans; |
• | related-party transactions; |
• | broker’s, finder’s, investment banker’s or other similar fees; |
• | receipt of CBRE Capital’s written Opinion; and |
• | exemption of the Mergers from anti-takeover statutes. |
• | organization, valid existence, organizational documents, good standing, qualification to do business and subsidiaries; |
• | due authorization, execution, delivery and enforceability of the Merger Agreement; |
• | CCI Board and CCI Conflicts Committee approvals; |
• | absence of any conflict with or violation of organizational documents or applicable laws; |
• | capitalization; |
• | availability of shares of CCI Common Stock and CROP Common Units to be issued as the Merger Consideration; |
• | SEC filings and financial statements; |
• | internal accounting controls, compliance with the Sarbanes-Oxley Act, and the absence of improper payments; |
• | inapplicability of the Investment Company Act; |
• | absence of any “material adverse effect” to CCI since December 31, 2021; |
• | no undisclosed liabilities; |
• | permits and compliance with law; |
• | litigation; |
• | real properties and leases; |
• | environmental matters; |
• | material contracts; |
• | tax matters, including qualification as a REIT; |
• | insurance; |
• | broker’s, finder’s, investment banker’s, or other similar fees; |
• | benefit plans; |
• | related party transactions; |
• | receipt of an opinion from the CCI Conflicts Committee’s financial advisor; and |
• | the purposes, activities and ownership of Merger Sub. |
(i) | any failure of CMOF or CCI, as applicable, to meet any projections or forecasts or any estimates of earnings, revenues or other metrics for any period (provided that any event, circumstance, change, effect, development, condition or occurrence giving rise to such failure may be taken into account in determining whether there has been a material adverse effect), |
(ii) | any changes that generally affect the residential real estate industry in which the CMOF and its subsidiaries or CCI and its subsidiaries, as applicable, operate, |
(iii) | any changes in the U.S. or global economy or capital, financial or securities markets generally, including changes in interest or exchange rates, |
(iv) | any changes in the regulatory or political conditions in the United States or in any other country or region of the world, |
(v) | the commencement, escalation or worsening of a war or armed hostilities or the occurrence of acts of terrorism or sabotage occurring after the date of the Merger Agreement, |
(vi) | the taking of any action expressly required by the Merger Agreement, |
(vii) | earthquakes, hurricanes, floods or other natural disasters, |
(viii) | any epidemic, pandemic or disease outbreak (including the COVID-19 pandemic or any COVID-19 measures) and any material worsening of any epidemic, pandemic or disease outbreak threatened or existing as of the date hereof or any shutdown or material limiting of certain U.S. or foreign federal, state or local government services, declaration of martial law, quarantine or similar directive, guidance, policy or other similar action by any governmental authority in connection with any epidemic, pandemic or disease outbreak, |
(ix) | changes or prospective changes in GAAP or in any law of general applicability unrelated to the Mergers (or the interpretation or enforcement of the foregoing), or |
(x) | the public announcement of the Merger Agreement or the pendency of the Merger Agreement, including the impact thereof on the relationships of CMOF and its subsidiaries or CCI and its subsidiaries, as applicable, with their respective partners or other material third-party business relations; |
• | amend or propose to amend the CMOF Charter or the CMOF Bylaws, the certificate of limited partnership of CMOF OP, the CMOF OP Partnership Agreement or such equivalent organizational or governing documents of any material subsidiary of CMOF, or waive the aggregate stock ownership limit or common stock ownership limit or create an excepted holder limit (as defined in the CMOF Charter) under the CMOF Charter, other than as contemplated by the Merger Agreement in connection with a Superior Proposal; |
• | adjust, split, combine, reclassify or subdivide any shares of stock or other equity securities or ownership interests of CMOF or any subsidiaries of CMOF (other than a wholly owned subsidiary of CMOF); |
• | declare, set aside or pay any dividend on or make any other actual, constructive or deemed distributions (whether in cash, stock, property or otherwise) with respect to shares of CMOF Common Stock or any other equity securities or ownership interests in CMOF or any CMOF subsidiary or otherwise make any payment to its or their stockholders or other equity holders in their capacity as such, except for (i) the declaration and payment of dividends or other distributions to CMOF or CMOF OP by any directly or indirectly wholly owned subsidiary of CMOF, and (ii) distributions by any CMOF subsidiary that is not wholly owned, directly or indirectly, by CMOF or CMOF OP, in accordance with the requirements of the organizational documents of such CMOF subsidiary; |
• | except as required pursuant to the terms of any outstanding securities as set forth in the CMOF governing documents, redeem, repurchase or otherwise acquire, directly or indirectly, any shares of CMOF Common Stock or other equity or debt interests of CMOF or a CMOF subsidiary or securities convertible or exchangeable into or exercisable therefor; |
• | adopt a plan of merger or complete or partial liquidation or resolutions providing for or authorizing such merger, such liquidation or a dissolution, consolidation, recapitalization or bankruptcy reorganization, except in connection with any transaction permitted by the Merger Agreement in a manner that would not reasonably be expected to be materially adverse to the CMOF Parties or to prevent or impair their ability to consummate the Mergers; |
• | except for transactions among CMOF and one or more wholly owned subsidiaries of CMOF or among one or more wholly owned subsidiaries of CMOF, issue, sell, pledge, dispose, encumber or grant any shares of capital stock of CMOF or any of the capital stock or equity interests of any CMOF subsidiaries or any options, warrants, convertible securities or other rights of any kind to acquire any CMOF Common Stock or other equity securities or ownership interests of any CMOF subsidiary; |
• | enter into any contract or understanding with respect to the voting of any shares of CMOF Common Stock or other equity securities or ownership interests in CMOF or any of the CMOF subsidiaries; |
• | acquire or agree to acquire any material assets, except (i) acquisitions by CMOF or any wholly owned subsidiary of CMOF of or from an existing wholly owned subsidiary of CMOF and (ii) other acquisitions of personal property for a purchase price of less than $100,000 in the aggregate; |
• | sell, mortgage, pledge, lease, assign, transfer, dispose of or encumber, or effect a deed in lieu of foreclosure with respect to, any property or assets, except in the ordinary course of business, provided that any sale, mortgage, pledge, lease, assignment, transfer, disposition or deed in connection with the satisfaction of any margin call or the posting of collateral in connection with any contract to which CMOF or any CMOF subsidiary is a party will be considered to be done in the ordinary course of business; |
• | incur, create, assume, refinance, replace or prepay any indebtedness for borrowed money or guarantee such indebtedness of another person (other than a wholly owned subsidiary of CMOF), except (i) indebtedness incurred under CMOF’s or any CMOF subsidiary’s existing credit facilities in the ordinary course of business, (ii) i |
• | make any loans, advances or capital contributions to, or investments in, any other person (including to any of its officers, directors, affiliates, agents or consultants), make any change in its existing borrowing or lending arrangements for or on behalf of such persons, other than loans, advances or capital contributions to, or investments in, any wholly owned subsidiary of CMOF; |
• | enter into any “keep well” or similar agreement to maintain the financial condition of another entity; |
• | enter into, renew, modify, amend or terminate, or waive, release, compromise or assign any material rights or claims under, any CMOF material contract (or any contract that, if existing as of the date of the Merger Agreement, would be a CMOF material contract) in any material respect, other than (i) in the ordinary course of business, (ii) any termination or renewal in accordance with the terms of any existing CMOF material contract that occurs automatically without any action (other than notice of renewal) by CMOF or any CMOF subsidiary, or (iii) as may be reasonably necessary to comply with the terms of the Merger Agreement; |
• | authorize, make or commit to make any material capital expenditures other than in the ordinary course of business or to address obligations under existing contracts, or in conjunction with emergency repairs; |
• | make any payment, direct or indirect, of any liability of CMOF or any CMOF subsidiary before it comes due in accordance with its terms, other than in the ordinary course of business or in connection with dispositions or refinancings of any indebtedness otherwise permitted by the Merger Agreement; |
• | waive, release, assign, settle or compromise any material legal action or proceeding, other than waivers, releases, assignments, settlements or compromises that (i) (A) involve only the payment of monetary damages in an amount (less any portion of such payment payable under an existing property-level insurance policy or reserved for such matter by CMOF on the most recent balance sheet of CMOF made available to CCI as of the date of the Merger Agreement) no greater than $25,000 individually or $100,000 in the aggregate, (B) do not involve the imposition of injunctive relief against CMOF or any CMOF subsidiary or the Surviving Entity and (C) do not provide for any admission of material liability by CMOF or any of the CMOF subsidiaries, or (ii) are made with respect to any legal action or proceeding involving any present, former or purported holder or group of holders of capital stock of CMOF in accordance with the Merger Agreement; |
• | (i) hire any officer or employee of CMOF or any CMOF subsidiary, (ii) except where due to cause, terminate any officer of CMOF or any CMOF subsidiary, (iii) increase in any manner the amount of compensation or benefits of any officer of CMOF or any CMOF subsidiary or of any employee or officer of CCPM II or any affiliate thereof or (iv) enter into or adopt, amend or |
terminate any bonus or other compensation or employee benefits arrangement for any officer of CMOF or any CMOF subsidiary or any employee or officer of CCPM II or any affiliate thereof; |
• | fail to maintain all financial books and records in all material respects in accordance with GAAP or make any material change to its methods of accounting in effect on January 1, 2021, except as required by a change in GAAP or in applicable law, or make any change with respect to accounting policies, principles or practices unless required by GAAP; |
• | enter into any new line of business; |
• | form any new funds, joint ventures or non-traded REITs or other pooled investment vehicles; |
• | fail to duly and timely file all material reports and other material documents required to be filed with any governmental authority, subject to extensions permitted by law or applicable rules and regulations; |
• | enter into or modify in a manner adverse to CMOF any CMOF tax protection agreement; make, change or rescind any material election relating to taxes; change a material method of tax accounting; file or amend any material tax return; settle or compromise any material federal, state, local or foreign tax liability, audit, claim or assessment; enter into any material closing agreement related to taxes; knowingly surrender any right to claim any material tax refund; or give or request any waiver of a statute of limitations with respect to any material tax return, with certain exceptions; |
• | take any action, or fail to take any action, which action or failure would reasonably be expected to cause any CMOF subsidiary to cease to be treated as any of a partnership or disregarded entity for U.S. federal income tax purposes; |
• | take any action (or fail to take any action) that would make dissenters’, appraisal or similar rights available to the holders of CMOF Common Stock with respect to the Mergers or any other transactions contemplated by the Merger Agreement; |
• | permit any liens or encumbrances other than those permitted by the Merger Agreement or that would not reasonably be expected to have a material adverse effect; |
• | materially modify or reduce the amount of any insurance coverage provided by CMOF’s insurance policies; |
• | enter into certain related-party transactions except in the ordinary course of business or as provided for in the Merger Agreement; or |
• | authorize, or enter into any contract, agreement, commitment or arrangement to do any of the foregoing. |
• | amend or propose to amend the CCI Charter or the CCI Bylaws, the certificate of limited partnership of CROP, the CROP Partnership Agreement, or such equivalent organizational or governing documents of any material subsidiary of CCI (other than any amendments necessary to effect the Mergers or in connection with the issuance of CCI Common Stock and CROP Common Units) in a manner that would materially and adversely affect the rights of the holders of CMOF Common Stock relative to the treatment of existing holders of CCI Common Stock or would prevent, materially delay or materially impair the ability of the CCI Parties to perform their obligations under the Merger Agreement or to consummate the Mergers; |
• | amend the CCI distribution reinvestment plan or the CCI share repurchase program in a manner material to CCI; |
• | waive the aggregate stock ownership limit or the common stock ownership limit (each as defined in the CCI Charter) or create an excepted holder limit (as defined in the CCI Charter) under the CCI Charter; |
• | adjust, split, combine, reclassify or subdivide any shares of stock or other equity securities or ownership interests of CCI or CROP; |
• | declare, set aside, or pay any dividend on or make any other actual, constructive or deemed distributions (whether in cash, stock, property or otherwise) with respect to shares of CCI Common Stock or other equity securities or ownership interests in CCI or CROP or otherwise make any payment to their stockholders or other equity holders in their capacity as such, except for (i) the declaration and payment by CCI of regular dividends in accordance with past practice and at a rate not in excess of the regular cash dividend most recently declared prior to the date of the Merger Agreement with respect to CCI Common Stock, subject to customary increases in accordance with past practices, for the period up to the closing date, (ii) the declaration and payment by CROP of regular distributions in accordance with past practice, (iii) the declaration and payment by CCI and CROP, as applicable, of the payments required under the terms of the Series 2019 Preferred Stock and the corresponding Series 2019 Preferred Units, (iv) the declaration and payment of dividends or other distributions to CCI or CROP by any directly or indirectly wholly owned subsidiary of CCI and (v) distributions by any CCI subsidiary that is not wholly owned, directly or indirectly, by CCI or CROP, in accordance with the requirements of the organizational documents of such CCI subsidiary; provided that, notwithstanding the foregoing restrictions and limitations, CCI and any CCI subsidiary will be permitted to make distributions reasonably necessary for CCI to maintain its status as a REIT under the Code (or applicable state law) and avoid or reduce the imposition of any entity level income or excise tax under the Code (or applicable state law); |
• | except as required or contemplated, pursuant to the terms of (i) any outstanding securities as set forth in the CCI governing documents, (ii) the CCI share repurchase program or (iii) any securities or other awards issued under the Equity Incentive Plan or other CCI Benefit Plans, redeem, repurchase or otherwise acquire, directly or indirectly, any shares of CCI Common Stock or any shares of capital stock or other securities of any CCI subsidiary or securities convertible or exchangeable into or exercisable therefor; |
• | adopt a plan of merger or complete or partial liquidation or resolutions providing for or authorizing such merger, such liquidation or a dissolution, consolidation, recapitalization or bankruptcy reorganization, except in connection with any transaction among CCI and one or more wholly owned CCI subsidiaries or among one or more wholly owned CCI subsidiaries, in each case, in a manner that would not reasonably be expected to be materially adverse to CCI or to prevent or impair the ability of the CCI Parties to consummate the Mergers; |
• | except for (A) issuances of shares of CCI Common Stock registered with the SEC under the CCI Registration Statement on Form S-11 (File No. 333-258754), as amended or supplemented from time to time, in accordance with the plan of distribution set forth in such registration statement, (B) issuances of shares of CCI Common Stock pursuant to the CCI distribution reinvestment plan, (C) issuances of shares of CCI Common Stock upon the exercise or settlement of any securities or other awards outstanding as of the date of the Merger Agreement in accordance with the terms of the Equity Incentive Plan or other CCI Benefit Plans, (D) grants of securities or other awards under the Equity Incentive Plan in the ordinary course of business consistent with past practice, (E) issuances of shares of CCI Common Stock upon the exchange or conversion of CROP Partnership Units, (F) other issuances of CCI Common Stock or CROP Partnership Units; provided, that the gross proceeds to CCI from such issuances (excluding selling commissions, fees and other offering costs) is not less than the then-current NAV per fully-diluted share/unit, and (F) issuances by one or more wholly owned CCI subsidiaries of its capital stock or other equity interests to its parent or to another wholly owned CCI subsidiary, issue, sell, pledge, dispose, encumber or grant any shares of capital stock of CCI or the capital stock or equity interests of any of the CCI subsidiaries or any options, warrants, convertible securities or other rights of any kind to acquire capital stock of CCI or the common stock or other equity interests of any CCI subsidiary; |
• | enter into any contract or understanding with respect to the voting of any shares of CCI or any of the CCI subsidiaries; |
• | incur, create, assume, refinance, replace or prepay any indebtedness of another person (other than a wholly owned subsidiary of CCI), except (i) indebtedness incurred in the ordinary course of business, including indebtedness borrowed under CCI’s or any CCI subsidiary’s existing credit facilities, (ii) refinancing of existing indebtedness in the ordinary course of business (provided that the terms of such new indebtedness will not be materially more onerous on CCI compared to the existing indebtedness) and (iii) repayments of indebtedness in the ordinary course of business and mandatory payments under the terms of any indebtedness in accordance with its terms; |
• | enter into any “keep well” or similar agreement to maintain the financial condition of another entity; |
• | other than in the ordinary course of business, enter into, renew, modify, amend or terminate, or waive, release, compromise or assign any material rights or claims under, any CCI material contract (or any contract that, if existing as of the date of the Merger Agreement, would be a CCI material contract) in any material respect, other than any termination or renewal in accordance with the terms of any existing CCI material contract that occurs automatically without any action or as may be reasonably necessary to comply with the terms of the Merger Agreement; |
• | make any payment, direct or indirect, of any liability of CCI or any CCI subsidiary before it comes due in accordance with its terms, other than in the ordinary course of business or in connection with dispositions or refinancings of any indebtedness otherwise permitted by the Merger Agreement; |
• | waive, release, assign, settle or compromise any material legal; action or proceeding, other than waivers, releases, assignments, settlements or compromises that (i) (A) involve only the payment of monetary damages in an amount (less any portion of such payment payable under an existing property-level insurance policy or reserved for such matter by CCI on the most recent balance sheet included in the CCI’s reports filed with SEC as of the date of the Merger Agreement) no greater than $500,000 individually or $1,000,000 in the aggregate, (B) do not involve the imposition of injunctive relief against CCI or any CCI subsidiary or the Surviving Entity and (C) do not provide for any admission of material liability by CCI or any of the CCI subsidiaries, or (ii) are made with respect to any legal action or proceeding involving any present, former or |
purported holder or group of holders of capital stock of CCI in accordance with the Merger Agreement; |
• | fail to maintain all financial books and records in all material respects in accordance with GAAP or make any material change to its methods of accounting in effect on January 1, 2021, except as required by a change in GAAP or in applicable law, or make any change with respect to accounting policies, principles or practices unless required by GAAP; |
• | enter into any new line of business; |
• | other than in the ordinary course of business, form any new funds or joint ventures or form non-traded REITs or other pooled investment vehicles; |
• | modify in a manner adverse to CCI any CCI tax protection agreement; make, change or rescind any material election relating to taxes; change a material method of tax accounting; settle or compromise any material federal, state, local or foreign tax liability, audit, claim or assessment; enter into any material closing agreement related to taxes; knowingly surrender any right to claim any material tax refund; or give or request any waiver of a statute of limitations with respect to any material tax return, with certain exceptions; |
• | other than in the ordinary course of business, permit any liens or encumbrances other than those permitted by the Merger Agreement or that would not reasonably be expected to have a material adverse effect; |
• | materially modify or reduce the amount of any insurance coverage provided by CCI’s insurance policies; |
• | enter into certain related-party transactions except in the ordinary course of business or as provided for in the Merger Agreement; |
• | fail to remain a “publicly offered” REIT under Section 562(c) of the Code; |
• | fail to timely file all material reports and other material documents required to be filed with the SEC or any other governmental authority, subject to extensions permitted by law or applicable rules or regulations; |
• | take any action that would, or fail to take any action, the failure of which to be taken would, reasonably be expected to cause CCI to fail to qualify as a REIT; or |
• | authorize or enter into any contract or arrangement to do any of the foregoing. |
• | in the event of any notice or other communication received by such party from (i) any governmental authority in connection with the Mergers or (ii) any person alleging that the consent of such person may be required in connection with the Mergers; |
• | if (i) any representation or warranty made by such party in the Merger Agreement becomes untrue or inaccurate such that it would be reasonable to expect that the closing conditions set forth in the Merger Agreement would be incapable of being satisfied by the Outside Date or (ii) such party fails to comply with or satisfy in any material respect any covenant, condition, or agreement to be complied with or satisfied by it pursuant to the Merger Agreement; and |
• | of any action commenced, or to the knowledge of such party, threatened against, relating to or involving such party or any of its subsidiaries, which relates to the Merger Agreement, the Mergers or the other transactions contemplated by the Merger Agreement. |
• | the approval by holders of CMOF Common Stock of the Company Merger has been obtained; |
• | no judgment, writ, stipulation, injunction, order or decree issued by any governmental authority of competent jurisdiction prohibiting the consummation of the Mergers remains in effect, and no law has been enacted, entered, promulgated or enforced by any governmental authority after the date of the Merger Agreement and remains in effect that prohibits, restrains, enjoins or makes illegal the consummation of the Mergers or the other transactions contemplated by the Merger Agreement; and |
• | the Form S-4 having been declared effective by the SEC, no stop order suspending the effectiveness of the Form S-4 having been issued by the SEC and no proceedings for that purpose will have been initiated by the SEC and not withdrawn. |
• | the accuracy in all material respects, as of the date of the Merger Agreement and the effective time of the Mergers, of certain representations and warranties made in the Merger Agreement by the CCI Parties regarding (i) certain aspects of the organization and qualification of the CCI Parties, (ii) authority to enter into and approval of the Mergers and the Merger Agreement, (iii) conflicts requirements in connection with the Mergers, (iv) certain aspects of CCI’s capital structure, (v) exemption from registration under the Investment Company Act of CCI and its subsidiaries, (vi) certain tax matters with respect to CCI and its subsidiaries, and (vii) the absence of certain broker’s, finder’s, or other similar fee or commission in connection with the Mergers and other transactions contemplated by the Merger Agreement, except, in each case, representations and warranties made as of a specific date will be true and correct in all material respects only on such date; |
• | the accuracy in all but de minimis respects, as of the date of the Merger Agreement and the effective time of the Mergers, of certain representations and warranties made in the Merger Agreement by the CCI Parties regarding certain aspects of the organization and capital structure of the CCI Parties, except, in each case, representations and warranties made as of a specific date will be true and correct in all material respects only on such date; |
• | the accuracy, as of the date of the Merger Agreement and the effective time of the Mergers, of all other representations and warranties made in the Merger Agreement by the CCI Parties, except |
(i) representations and warranties made as of a specific date will be true and correct only on such date, and (ii) where the failure of such representations or warranties to be true and correct does not have, and would not reasonably be expected to have, individually or in the aggregate, a material adverse effect on CCI and its subsidiaries, taken as a whole; |
• | the CCI Parties must have performed and complied in all material respects with all agreements and covenants required by the Merger Agreement to be performed or complied with by them on or prior to the effective time of the Mergers; |
• | from the date of the Merger Agreement through the effective time of the Mergers, no event, circumstance, change, effect, development, condition or occurrence will exist or have occurred that, individually or in the aggregate, constitutes, or would reasonably be expected to constitute, a material adverse effect as to CCI and its subsidiaries, taken as a whole; |
• | CMOF must have received a certificate, dated the closing date of the Mergers, signed by the chief executive officer and chief financial officer of CCI, certifying that the conditions described in the five preceding bullet points have been satisfied; |
• | CMOF must have received the written opinion of DLA Piper, dated as of the closing date of the Mergers, regarding CCI’s qualification and taxation as a REIT under the Code commencing with CCI’s taxable year ended on December 31, 2019; and |
• | CMOF must have received the written opinion of Snell & Wilmer, dated as of the closing date of the Mergers, to the effect that, on the basis of the facts, representations and assumptions set forth or referred to in such opinion, the Company Merger will qualify as a reorganization within the meaning of Section 368(a) of the Code. |
• | the accuracy in all material respects, as of the date of the Merger Agreement and the effective time of the Mergers, of certain representations and warranties made in the Merger Agreement by the CMOF Parties regarding (i) certain aspects of the organization and qualification of the CMOF Parties, (ii) authority to enter into and approval of the Mergers and the Merger Agreement, (iii) conflicts or consent requirements in connection with the Mergers, (iv) certain aspects of CMOF’s capital structure, (v) exemption from registration under the Investment Company Act of CMOF and its subsidiaries, and (vi) the absence of certain broker’s, finder’s, or other similar fee or commission in connection with the Mergers and other transactions contemplated by the Merger Agreement, except, in each case, representations and warranties made as of a specific date will be true and correct in all material respects only on such date; |
• | the accuracy in all but de minimis respects, as of the date of the Merger Agreement and the effective time of the Mergers, of certain representations and warranties made in the Merger Agreement by the CMOF Parties regarding certain aspects of the organization and capital structure of the CMOF Parties, except representations and warranties made as of a specific date will be true and correct in all but de minimis respects only on such date; |
• | the accuracy, as of the date of the Merger Agreement and the effective time of the Mergers, of all other representations and warranties made in the Merger Agreement by the CMOF Parties, except (i) representations and warranties made as of a specific date will be true and correct only on such date, and (ii) where the failure of such representations or warranties to be true and correct does not have, and would not reasonably be expected to have, individually or in the aggregate, a material adverse effect on CMOF and its subsidiaries, taken as a whole; |
• | the CMOF Parties must have performed in all material respects all obligations and complied in all material respects with all agreements and covenants required to be performed by them under the Merger Agreement on or prior to the closing date of the Mergers; |
• | from the date of the Merger Agreement through the effective time of the Mergers, no event, circumstance, change, effect, development, condition or occurrence will exist or have occurred that, individually or in the aggregate, constitutes, or would reasonably be expected to constitute, a material adverse effect as to CMOF and its subsidiaries, taken as a whole; |
• | CCI must have received a certificate, dated the closing date of the Mergers, signed by the chief executive officer and chief financial officer of CMOF, certifying that the conditions described in the five preceding bullet points have been satisfied; and |
• | CCI must have received the written opinion of DLA Piper, dated as of the closing date of the Mergers, to the effect that, on the basis of the facts, representations and assumptions set forth or referred to in such opinion, the Company Merger will qualify as a reorganization within the meaning of Section 368(a) of the Code. |
• | the Mergers have not occurred on or before the Outside Date; provided, that this right to terminate will not be available to a party if the failure of such party to perform or comply in all material respects with any of its obligations, covenants or agreements under the Merger Agreement caused the failure of the Mergers to be consummated on the Outside Date; |
• | there is any final, non-appealable order issued by a governmental authority of competent jurisdiction that permanently restrains or otherwise prohibits the transactions contemplated by the Merger Agreement; provided, that this right to terminate will not be available to a party if the issuance of such final, non-appealable order was primarily due to the failure of such party to perform or comply in all material respects with any of its obligations, covenants or agreements under the Merger Agreement; or |
• | the required approval of holders of CMOF Common Stock of the Company Merger was not obtained at the Special Meeting, duly convened or at any adjournment or postponement thereof at which a vote on the Merger Proposal was taken; provided, that this right to terminate will not be available to a party if such failure was primarily due to the failure of such party to perform or comply in all material respects with any of its obligations, covenants or agreements under the Merger Agreement. |
(1) | if a breach of any representation or warranty or failure to perform or comply with any obligation, covenant or agreement on the part of the CCI Parties set forth in the Merger Agreement has occurred that would cause any of the closing conditions in the Merger Agreement not to be satisfied, which breach or failure to perform or comply cannot be cured or, if curable, is not cured by CCI by the earlier of 30 days following written notice thereof from CMOF to CCI and two business days before the Outside Date; provided, however, that CMOF will not have this right to terminate the Merger Agreement if CMOF is then in breach of any of its representations or agreements set forth in the Merger Agreement such that CCI had a right to terminate the Merger Agreement pursuant to clause (1) under “—Termination by CCI” below; |
(2) | if, at any time prior to obtaining the required approval of holders of CMOF Common Stock, the CMOF Board (or any committee thereof) shall have effected an Adverse Recommendation Change with respect to a Superior Proposal in accordance with the Merger Agreement; provided, however, that the Merger Agreement may not be so terminated unless CMOF has complied in all material respects with its obligations described above in “—Covenants and Agreements—No Solicitation; Superior Proposals” and CMOF has paid the termination payment to CCI in full in accordance with the Merger Agreement, concurrently with the occurrence of such termination and entered into the definitive agreement providing for the implementation of the Superior Proposal, and, in the event that such payment is not concurrently made or the definitive agreement is not concurrently entered into, such termination shall be null and void; or |
(3) | if (i) all of the closing conditions set forth in the Merger Agreement have been and continue to be satisfied or waived by CCI (other than those conditions that by their nature cannot be satisfied other than at closing, provided that such conditions to be satisfied at the closing would be satisfied as of the date of the notice referenced in clause (ii) if the closing were to occur on the date of such notice), (ii) on or after the date the closing should have occurred pursuant to the Merger Agreement, CMOF has delivered written notice to CCI to the effect that all of the applicable conditions have been satisfied or waived by CCI (other than those conditions that by their nature cannot be satisfied other than at closing, provided that such conditions to be satisfied at the closing would be satisfied as of the date of such notice if the closing were to occur on the date of such notice) and CMOF is prepared to consummate the closing, and (iii) the CCI Parties fail to consummate the closing within three business days after delivery of the notice referenced in the preceding clause (ii), and CMOF was ready, willing and able to consummate the closing during such three business day period. |
(1) | if a breach of any representation or warranty or failure to perform or comply with any obligation, covenant or agreement on the part of the CMOF Parties set forth in the Merger Agreement has occurred that would cause any of the closing conditions in the Merger Agreement not to be satisfied, which breach or failure to perform or comply cannot be cured or, if curable, is not cured by CMOF by the earlier of 30 days following of written notice thereof from CCI to CMOF and two business days before the Outside Date; provided, however, that CCI will not have this right to terminate the Merger Agreement if CCI is then in breach of any of its representations or agreements set forth in the Merger Agreement such that CMOF had a right to terminate the Merger Agreement pursuant to clause (1) under “—Termination by CMOF” above; or |
(2) | if, at any time prior to obtaining the required approval of holders of CMOF Common Stock, (i) the CMOF Board has made an Adverse Recommendation Change, (ii) CMOF has failed to publicly recommend against any tender offer or exchange offer for CMOF Common Stock subject to Regulation 14D under the Exchange Act that constitutes an Acquisition Proposal (including by taking no position with respect to the acceptance of such tender offer or exchange offer by CMOF’s stockholders) within 10 business days after the commencement of such tender offer or exchange offer, (iii) at any time prior to the receipt of the required CMOF stockholder approval, the CMOF Board has failed to publicly reaffirm the CMOF board’s recommendation in favor of the Mergers within business days following the date an Acquisition Proposal has been first publicly announced (or if the Special Meeting- is scheduled to be held within 10 business days after the date an Acquisition Proposal is publicly announced, as far in advance of the date on which the Special Meeting is scheduled to be held as is reasonably practicable), (iv) CMOF enters into an alternative acquisition agreement, or (v) CMOF has materially violated any of its obligations described above in “—Covenants and Agreements—No Solicitation; Superior Proposals.” |
(3) | (i) the Merger Agreement is terminated by CCI upon CMOF’s terminating breach described above in clause (1) under “—Termination by CCI,” or by CCI or CMOF if the Mergers have not occurred prior to the Outside Date (and at the time of such termination CMOF would not have been entitled to terminate the Merger Agreement due to any failure to close by CCI described above in clause (3) under “—Termination by CMOF”), or the required approval of the holders of CMOF Common Stock has not been obtained, (ii) prior to the breach or failure to perform giving rise to such right of termination, a bona fide Acquisition Proposal (with all percentages included in the definition of “Acquisition Proposal” increased to 50%) has been publicly announced, disclosed or otherwise communicated to the CMOF Board (or any committee thereof) or any person shall have publicly announced an intention (whether or not conditional) to make such an Acquisition Proposal (and, in the case of a termination due to the failure to obtain the required CMOF stockholder approval, such Acquisition Proposal or publicly proposed or announced intention shall have been made prior to the Special Meeting (or any adjournment or postponement thereof)), and (iii) within 12 months following such termination, CMOF enters into a definitive written agreement providing for the implementation of any Acquisition Proposal or any Acquisition Proposal is consummated; |
(4) | the Merger Agreement is terminated by CMOF in order to accept a Superior Proposal pursuant to clause (2) under “—Termination by CMOF” above; or |
(5) | the Merger Agreement is terminated by CCI pursuant to clause (2) under “—Termination by CCI” above. |
• | amend the charter to adversely affect the rights, preferences and privileges of the common stockholders; |
• | amend charter provisions relating to director qualifications, fiduciary duties, liability and indemnification, conflicts of interest, investment policies or investment restrictions; |
• | cause our liquidation or dissolution after our initial investment; |
• | sell all or substantially all of our assets other than in the ordinary course of business; or |
• | cause our merger or reorganization. |
• | specific disclosure to stockholders focusing on the terms of the offer and information about the bidder; |
• | the ability to allow stockholders to withdraw tendered shares while the offer remains open; |
• | the right to have tendered shares accepted on a pro rata basis throughout the term of the offer if the offer is for less than all of our shares; and |
• | that all stockholders of the subject class of shares be treated equally. |
• | one-tenth or more but less than one-third; |
• | one-third or more but less than a majority; or |
• | a majority or more of all voting power. |
• | a classified board; |
• | a two-thirds vote requirement for removing a director; |
• | a requirement that the number of directors be fixed only by vote of the directors; |
• | a requirement that a vacancy on the board be filled only by the remaining directors and for the remainder of the full term of the directorship in which the vacancy occurred; and |
• | a majority requirement for the calling of a special meeting of stockholders. |
• | a transaction involving our securities that have been for at least 12 months listed on a national securities exchange; or |
• | a transaction involving only our conversion into a trust or association if, as a consequence of the transaction, there will be no significant adverse change in the voting rights of our common stockholders, the term of our existence, the compensation to our advisor or our investment objectives. |
• | accepting the securities of the Roll-Up Entity offered in the proposed Roll-Up Transaction; or |
• | one of the following: |
• | that would result in our common stockholders having democracy rights in a Roll-Up Entity that are less than those provided in our charter and bylaws with respect to the election and removal of |
directors and the other voting rights of our common stockholders, annual reports, annual and special meetings of common stockholders, the amendment of our charter and our dissolution; |
• | that includes provisions that would operate to materially impede or frustrate the accumulation of shares by any purchaser of the securities of the Roll-Up Entity, except to the minimum extent necessary to preserve the tax status of the Roll-Up Entity, or that would limit the ability of an investor to exercise the voting rights of its securities of the Roll-Up Entity on the basis of the number of shares of common stock that such investor had held in us; |
• | in which investors’ rights of access to the records of the Roll-Up Entity would be less than those provided in our charter and described above in “—Inspection of Books and Records”; or |
• | in which any of the costs of the Roll-Up Transaction would be borne by us if the Roll-Up Transaction would not be approved by our common stockholders. |
• | Certain broker-dealers require that their clients process repurchases through their broker-dealer, which may impact the time necessary to process such repurchase request, impose more restrictive |
deadlines than described under our share repurchase program, impact the timing of a stockholder receiving repurchase proceeds and require different paperwork or process than described in our share repurchase program. Stockholders should contact their broker-dealer first if they want to request the repurchase of their shares. |
• | Under our share repurchase program, to the extent we choose to repurchase shares in any particular month we will only repurchase shares as of the opening of the last calendar day of that month (a “Repurchase Date”). To have your shares repurchased, your repurchase request and required documentation must be received in good order by 4:00 p.m. (Eastern time) on the second to last business day of the applicable month. Settlements of share repurchases will generally be made within three business days of the Repurchase Date. Repurchase requests received and processed by our transfer agent will be effected at a repurchase price equal to the transaction price on the applicable Repurchase Date (which will generally be equal to our prior month’s NAV per share), subject to any Early Repurchase Deduction. |
• | A stockholder may withdraw his or her repurchase request by notifying the transfer agent, directly or through the stockholder’s financial intermediary, on our toll-free telephone number, (844) 422-2584. The line is open on each business day between the hours of 9:00 a.m. and 6:00 p.m. (Eastern time). Repurchase requests must be cancelled before 4:00 p.m. (Eastern time) on the last business day of the applicable month. |
• | If a repurchase request is received after 4:00 p.m. (Eastern time) on the second to last business day of the applicable month, the repurchase request will be executed, if at all, on the next month’s Repurchase Date at the transaction price applicable to that month (subject to any Early Repurchase Deduction), unless such request is withdrawn prior to the repurchase. Repurchase requests received and processed by our transfer agent on a business day, but after the close of business on that day or on a day that is not a business day, will be deemed received on the next business day. All questions as to the form and validity (including time of receipt) of repurchase requests and notices of withdrawal will be determined by us, in our sole discretion, and such determination shall be final and binding. |
• | Repurchase requests may be made by mail or by contacting your financial intermediary, both subject to certain conditions described in this proxy statement/prospectus. If making a repurchase request by contacting your financial intermediary, your financial intermediary may require you to provide certain documentation or information. If making a repurchase request by mail to the transfer agent, you must complete and sign a repurchase authorization form, which can be found in our share repurchase program filed as an exhibit to the registration statement of which this proxy statement/prospectus forms a part and which will also be available on our website, cottonwoodcommunities.com |
• | Corporate investors and other non-individual entities must have an appropriate certification on file authorizing repurchases. A medallion signature guarantee may be required in connection with repurchase requests. |
• | For processed repurchases, stockholders may request that repurchase proceeds are to be paid by mailed check provided that the check is mailed to an address on file with the transfer agent for at least 30 days. Please check with your broker-dealer that such payment may be made via check or wire transfer, as further described below. |
• | Stockholders may also receive repurchase proceeds via wire transfer, provided that wiring instructions for their brokerage account or designated U.S. bank account are provided. For all repurchases paid via wire transfer, the funds will be wired to the account on file with the transfer agent or, upon instruction, to another financial institution provided that the stockholder has made the necessary funds transfer arrangements. The customer service representative can provide detailed instructions on establishing funding arrangements and designating a bank or brokerage account on file. Funds will be wired only to U.S. financial institutions (ACH network members). |
• | A medallion signature guarantee will be required in certain circumstances. The medallion signature process protects stockholders by verifying the authenticity of a signature and limiting unauthorized fraudulent transactions. A medallion signature guarantee may be obtained from a domestic bank or trust company, broker-dealer, clearing agency, savings association or other financial institution which participates in a medallion program recognized by the Securities Transfer Association. The three recognized medallion programs are the Securities Transfer Agents Medallion Program, the Stock Exchanges Medallion Program and the New York Stock Exchange, Inc. Medallion Signature Program. Signature guarantees from financial institutions that are not participating in any of these medallion programs will not be accepted. A notary public cannot provide signature guarantees. We reserve the right to amend, waive or discontinue this policy at any time and establish other criteria for verifying the authenticity of any repurchase or transaction request. We may require a medallion signature guarantee if, among other reasons: (1) the amount of the repurchase request is over $500,000; (2) a stockholder wishes to have proceeds transferred by wire to an account other than the designated bank or brokerage account on file for at least 30 days or sent to an address other than such stockholder’s address of record for the past 30 days; or (3) our transfer agent cannot confirm a stockholder’s identity or suspects fraudulent activity. |
• | If a stockholder has made multiple purchases of shares of our common stock, any repurchase request will be processed on a first in/first out basis unless otherwise requested in the repurchase request. |
• | if you are requesting that some but not all of your shares be repurchased, keep your balance above $500 to avoid minimum account repurchase, if applicable; |
• | you will not receive interest on amounts represented by uncashed repurchase checks; |
• | under applicable anti-money laundering regulations and other federal regulations, repurchase requests may be suspended, restricted or canceled and the proceeds may be withheld; and |
• | all shares of our common stock requested to be repurchased must be beneficially owned by the stockholder of record making the request or his or her estate, heir or beneficiary, or the party requesting the repurchase must be authorized to do so by the stockholder of record of the shares or his or her estate, heir or beneficiary, and such shares of common stock must be fully transferable and not subject to any liens or encumbrances. In certain cases, we may ask the requesting party to provide evidence satisfactory to us that the shares requested for repurchase are not subject to any liens or encumbrances. If we determine that a lien exists against the shares, we will not be obligated to repurchase any shares subject to the lien. |
• | any stockholder who requests that we repurchase its shares of our common stock within 30 calendar days of the purchase of such shares; |
• | transactions deemed harmful or excessive by us (including, but not limited to, patterns of purchases and repurchases), in our sole discretion; and |
• | transactions initiated by financial professionals, among multiple stockholder accounts, that in the aggregate are deemed harmful or excessive. |
• | purchases and requests for repurchase of our shares in the amount of $2,500 or less; |
• | purchases or repurchases initiated by us; and |
• | transactions subject to the trading policy of an intermediary that we deem materially similar to our policy. |
Month of: |
Total Number of Shares Repurchased (1) |
Repurchases as a Percentage of CCI’s NAV (2) |
Average Price Paid per Share |
Maximum Number of Shares Pending Repurchase Pursuant to Publicly Announced Plans or Programs (3) |
||||||||||||
June 2021 (4) |
— | 0.1039128 | % | — | — | |||||||||||
July 2021 |
16,389 | 0.2040498 | % | 9.628325 | — | |||||||||||
August 2021 |
54,117 | 0.0259429 | % | 11.0709 | — | |||||||||||
September 2021 |
7,272 | 0.083786 | % | 10.865667 | — | |||||||||||
October 2021 |
23,451 | 0.1855739 | % | 13.224029 | — | |||||||||||
November 2021 |
47,369 | 0.1930354 | % | 14.94411 | — | |||||||||||
December 2021 |
51,193 | 0.0713941 | % | 15.15376 | — | |||||||||||
January 2022 |
19,455 | 0.2515974 | % | 15.1234 | — | |||||||||||
February 2022 |
64,094 | 0.3666583 | % | 17.203538 | — | |||||||||||
March 2022 |
99,500 | 0.1039128 | % | 17.13687 | — | |||||||||||
Total |
382,840 | — | $ | 13.816733 | — |
(1) |
All shares have been repurchased pursuant to our share purchase program. |
(2) |
Represents aggregate NAV of the shares repurchased under our share repurchase plan over aggregate NAV of all shares of our common stock outstanding, in each case, based on our NAV as of the last calendar day of the prior month. Pursuant to our share repurchase program, we may repurchase up to 2% of the aggregate NAV of our common stock outstanding per month and 5% of the aggregate NAV of our common stock outstanding per calendar quarter. |
(3) |
All repurchase requests under our share repurchase plan were satisfied. We funded our repurchases with cash available from operations, financing activities and capital raising activities. |
(4) |
Our share purchase program was suspended in December 2020 in connection with the 2021 Mergers and resumed with its current terms for repurchases for the month of June 30, 2021. |
(6) | First, to the Special Limited Partner until the Special Limited Partner has received an amount equal to the performance participation interest (as described below). |
(7) | Second, to the holders of the Series 2019 Preferred Units as set forth in the partnership unit designations attached to the CROP Partnership Agreement; and |
(8) | Thereafter, to the Common Limited Partners, the LTIP Limited Partners and the General Partner in proportion to their percentage interests. |
(9) | First, if the Total Return for the applicable period exceeds the sum of (i) the Hurdle Amount for that period and (ii) the Loss Carryforward Amount (any such excess, “Excess Profits”), 100% of such Excess Profits until the total amount allocated to the Special Limited Partner equals 12.5% of the sum of (A) the Hurdle Amount for that period and (B) any amount allocated to the Special Limited Partner pursuant to this clause (this is commonly referred to as a “Catch-Up”); and |
(10) | Second, to the extent there are remaining Excess Profits, 12.5% of such remaining Excess Profits. |
• | Any amount by which Total Return falls below the Hurdle Amount and that does not constitute Loss Carryforward Amount will not be carried forward to subsequent periods. |
• | With respect to all partnership units that are repurchased at the end of any month in connection with repurchases of shares of CCI Common Stock pursuant to CCI’s share repurchase program, the Special Limited Partner will be entitled to a performance participation allocation in an amount calculated as described above calculated in respect of the portion of the year for which such CROP partnership units were outstanding, and proceeds for any such partnership unit repurchase will be reduced by the amount of any performance participation allocation. |
• | The performance participation interest may be payable in cash or CROP Common Units at the election of the Special Limited Partner. If the Special Limited Partner elects to receive such distributions in CROP Common Units, the Special Limited Partner will receive the number of CROP Common Units that results from dividing the performance participation interest by the net asset value per CROP Common Unit at the time of such distribution. If the Special Limited Partner elects to receive such distributions in CROP Common Units, the Special Limited Partner may request CROP to redeem such CROP Common Units from the Special Limited Partner at any time thereafter pursuant to the CROP Partnership Agreement. Any CROP Common Units received by the Special Limited Partner will not be subject to the one-year holding requirement with respect to the exchange right described below. |
• | The measurement of the change in net asset value for the purpose of calculating the Total Return is subject to adjustment by the CCI Board to account for any dividend, split, recapitalization or any other similar change in CROP’s capital structure or any distributions that the CCI Board deems to be a return of capital if such changes are not already reflected in CROP’s net assets. |
• | The Special Limited Partner will not be obligated to return any portion of the performance participation interest paid due to the subsequent performance of CROP. |
• | In the event that the advisory agreement is terminated (including by means of non-renewal), the Special Limited Partner will be allocated any accrued performance participation interest with respect to all CROP partnership units as of the date of such termination. |
• | acquire, purchase, own, operate, manage, lease, dispose of and exchange any property and other assets; |
• | develop land, construct buildings and make other improvements or renovations on property owned or leased by CROP; |
• | authorize, issue, sell, redeem or otherwise purchase any partnership interests or any securities of CROP; |
• | manage the financings of CROP and become a guarantor or co-maker on any indebtedness of the General Partners or its subsidiaries; |
• | make loans or advances to any person, including affiliates of the General Partner and CROP, for any purpose pertaining to the business of CROP; |
• | pay, either directly or by reimbursement, all administrative expenses to third parties, CCI, the General Partner or its affiliates; |
• | use assets of CROP for any purpose consistent with the CROP Partnership Agreement; |
• | lease all or any portion of any of CROP’s assets; |
• | prosecute, defend, arbitrate or compromise any and all claims or liabilities in favor of or against CROP, its partners or its assets; |
• | deal with any and all governmental agencies having jurisdiction over CROP’s assets or business; |
• | make or revoke any election permitted or required of CROP by any taxing authority and file all federal, state and local income tax returns on behalf of CROP; |
• | maintain such insurance coverage for the protection of CROP, its assets, or any other purpose convenient or beneficial to CROP and manage any insurance proceeds; |
• | hire and dismiss employees and contractors of CROP; |
• | retain legal counsel, accountants, consultants, real estate brokers and other persons for services of any kind in connection with CROP’s business and pay such remuneration as the General Partner deems reasonable; |
• | negotiate and enter into agreements on behalf of CROP; |
• | distribute cash or other assets of CROP in accordance with the CROP Partnership Agreement; |
• | form or acquire an interest in, and contribute property to, any limited or general partnership, joint venture, limited liability company, corporation, subsidiary or other entity or relationship; |
• | establish reserves for working capital, capital expenditures, contingent liabilities or any other purpose of CROP; |
• | merge, consolidate or combine CROP with or into another entity; |
• | take any and all actions necessary to adopt or modify any distribution reinvestment plan of CROP or CCI; and |
• | take all acts necessary to ensure CROP will not be classified as a “publicly traded partnership.” |
• | costs and expenses relating to the formation and operation of CCI, the General Partner and their subsidiaries, including any costs, expenses or fees payable to any director or officer of the General Partner or CCI; |
• | costs and expenses relating to any offering, issuance or registration of securities by CCI or the General Partner and all statements, reports, fees and expenses incidental thereto; |
• | costs and expenses associated with any repurchase of any securities by CCI or the General Partner; |
• | costs and expenses associated with the preparation and filing of any periodic or other reports and communications by CCI or the General Partner under federal, state or local laws or regulations; |
• | costs and expenses associated with compliance by CCI and the General Partner with laws, rules and regulations promulgated by any regulatory body, including the SEC; |
• | costs and expenses incurred by CCI or the General Partner relating to any issuance or redemption of any CROP partnership interests, CCI Common Stock or any other securities of CCI or the General Partner; and |
• | all other operating or administrative costs of CCI and the General Partner incurred in the ordinary course of their business on behalf of or in connection with CROP. |
• | any amendment affecting the operation of the conversion factor or exchange right in a manner adverse to the Common Limited Partners; |
• | any amendment that would adversely affect the rights of the Common Limited Partners to receive the distributions payable to them pursuant to the CROP Partnership Agreement (other than with respect to the issuance of additional Participating Partnership Units and CROP preferred units); |
• | any amendment that would economically reduce CROP’s relative share of net income and net loss to the limited partners (other than with respect to the issuance of additional Participating Partnership Units and CROP preferred units); or |
• | any amendment that would impose on the limited partners any obligation to make additional capital contributions to CROP. |
• | the General Partner declares bankruptcy, is removed or withdraws from CROP, provided, however, that the remaining partners may decide to continue the business of CROP; |
• | 90 days after the sale or other disposition of all or substantially all of the assets of CROP (but not a transfer to a General Partner subsidiary); or |
• | the determination by the General Partner that CROP should be dissolved. |
Cottonwood Communities, Inc. 1245 Brickyard Road, Suite 250 Salt Lake City, UT 84106 (801) 278-0770 ir@cottonwoodres.com |
Cottonwood Multifamily Opportunity Fund, Inc. 1245 Brickyard Road, Suite 250 Salt Lake City, UT 84106 (801) 278-0770 ir@cottonwoodres.com |
Financial Statements as of and for the Years Ended December 31, 2021 and 2020 (Audited) |
||||
Consolidated Financial Statements |
||||
F-2 |
||||
F-3 |
||||
F-4 |
||||
F-5 |
||||
F-6 |
||||
F-8 |
||||
Financial Statement Schedule |
||||
F-32 |
Financial Statements as of and for the Three Months Ended March 31, 2022 and 2021 (Unaudited) |
| |||
F-34 |
||||
F-35 |
||||
F-36 |
||||
F-37 |
||||
F-38 |
December 31, |
||||||||
2021 |
2020 |
|||||||
Assets |
||||||||
Real estate assets, net |
$ | $ | ||||||
Investments in unconsolidated real estate entities |
||||||||
Investments in real-estate related loans |
||||||||
Cash and cash equivalents |
||||||||
Restricted cash |
||||||||
Other assets |
||||||||
Total assets |
$ | $ | ||||||
Liabilities, Equity, and Noncontrolling Interests |
||||||||
Liabilities |
||||||||
Mortgage notes and revolving credit facility, net |
$ | $ | ||||||
Construction loans, net |
||||||||
Preferred stock, net |
||||||||
Unsecured promissory notes, net |
||||||||
Performance participation allocation due to affiliate |
||||||||
Accounts payable, accrued expenses and other liabilities |
||||||||
Total liabilities |
||||||||
Commitments and contingencies (Note 12) |
||||||||
Equity and noncontrolling interests |
||||||||
Stockholders’ equity |
||||||||
Common stock, Class I shares, $ |
||||||||
Common stock, Class A shares, $ |
||||||||
Common stock, Class TX shares, $ |
||||||||
Additional paid-in capital |
||||||||
Accumulated distributions |
( |
) | ( |
) | ||||
Accumulated deficit |
( |
) | ( |
) | ||||
Total stockholders’ equity |
||||||||
Noncontrolling interests |
||||||||
Limited partners |
||||||||
Partially owned entities |
||||||||
Total noncontrolling interests |
||||||||
Total equity and noncontrolling interests |
||||||||
Total liabilities, equity and noncontrolling interests |
$ | $ | ||||||
Year Ended December 31, |
||||||||
2021 |
2020 |
|||||||
Revenues |
||||||||
Rental and other property revenues |
$ | $ | ||||||
Property management revenues |
||||||||
Other revenues |
||||||||
Total revenues |
||||||||
Operating expenses |
||||||||
Property operations expense |
||||||||
Property management expense |
||||||||
Reimbursable operating expenses |
||||||||
Asset management fee |
||||||||
Performance participation allocation |
||||||||
Depreciation and amortization |
||||||||
General and administrative expenses |
||||||||
Total operating expenses |
||||||||
Loss from operations |
( |
) | ( |
) | ||||
Equity in earnings (losses) of unconsolidated real estate entities |
( |
) | ||||||
Interest income |
||||||||
Interest expense |
( |
) | ( |
) | ||||
Gain on sale of real estate assets |
||||||||
Other (expense) income |
||||||||
Loss before income taxes |
( |
) | ( |
) | ||||
Income tax expense |
( |
) | ||||||
Net loss |
( |
) | ( |
) | ||||
Net loss attributable to noncontrolling interests: |
||||||||
Limited partners |
||||||||
Partially owned entities |
||||||||
Net loss attributable to common stockholders |
$ | ( |
) | $ | ( |
) | ||
Weighted-average common shares outstanding |
||||||||
Net loss per common share - basic and diluted |
$ | ( |
) | $ | ( |
) | ||
Cottonwood Communities, Inc. Stockholders’ Equity |
Noncontrolling interests |
|||||||||||||||||||||||||||||||||||||||||||
Shares |
Par Value |
Additional Paid-In Capital |
Accumulated Distributions |
Accumulated Deficit |
Total Stockholders’ Equity |
Limited Partners |
Partially Owned Entities |
Total Equity and Noncontrolling Interests |
||||||||||||||||||||||||||||||||||||
Common Stock Class I |
Common Stock Class A |
Common Stock Class TX |
||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2019 |
$ | — | $ | $ | — | $ | $ | ( |
) | $ | ( |
) | $ | $ | — | $ | — | $ | ||||||||||||||||||||||||||
Issuance of common stock |
— | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||
Distribution reinvestment |
— | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||
Common stock repurchased |
( |
) | — | ( |
) | — | ( |
) | — | — | ( |
) | — | — | ( |
) | ||||||||||||||||||||||||||||
Share-based compensation |
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Distributions to investors |
— | — | — | — | — | ( |
) | — | ( |
) | — | — | ( |
) | ||||||||||||||||||||||||||||||
Net loss |
— | — | — | — | — | — | ( |
) | ( |
) | — | — | ( |
) | ||||||||||||||||||||||||||||||
Balance at December 31, 2020 |
— | — | ( |
) | ( |
) | — | — | ||||||||||||||||||||||||||||||||||||
Issuance of common stock |
— | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||
Offering costs |
— | — | — | — | ( |
) | — | — | ( |
) | — | — | ( |
) | ||||||||||||||||||||||||||||||
Distribution reinvestment |
— | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||
Common stock/OP Units repurchased |
( |
) | — | ( |
) | — | ( |
) | — | — | ( |
) | ( |
) | — | ( |
) | |||||||||||||||||||||||||||
Contributions from noncontrolling interests |
— | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
Acquisition of noncontrolling interests |
— | — | — | — | — | — | — | — | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||
CRII Merger |
— | — | — | — | ||||||||||||||||||||||||||||||||||||||||
CMRI Merger |
— | — | — | — | — | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||||
CMRII Merger |
— | — | — | — | — | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||||
Share-based compensation |
— | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
Distributions to investors |
— | — | — | — | — | ( |
) | — | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||
Net loss |
— | — | — | — | — | — | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||
Balance at December 31, 2021 |
$ | $ | $ | — | $ | $ | ( |
) | $ | ( |
) | $ | $ | $ | $ | |||||||||||||||||||||||||||||
For the Year Ended December 31, |
||||||||
2021 |
2020 |
|||||||
Cash flows from operating activities: |
||||||||
Net loss |
$ | ( |
) | $ | ( |
) | ||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: |
||||||||
Depreciation and amortization |
||||||||
Gain on sale of real estate assets |
( |
) | ||||||
Share-based compensation |
||||||||
Other operating |
||||||||
Equity in losses (earnings) of unconsolidated real estate entities |
( |
) | ||||||
Distributions from unconsolidated real estate entities - return on capital |
||||||||
Changes in operating assets and liabilities: |
||||||||
Other assets |
( |
) | ( |
) | ||||
Performance participation allocation |
||||||||
Accounts payable, accrued expenses and other liabilities |
( |
) | ||||||
Net cash provided by (used in) operating activities |
( |
) | ||||||
Cash flows from investing activities: |
||||||||
Cash, cash equivalents and restricted cash acquired in connection with the CRII Merger |
||||||||
Acquisition of real estate |
( |
) | ||||||
Acquisition of noncontrolling interest |
( |
) | ||||||
Capital expenditures and development activities |
( |
) | ( |
) | ||||
Investments in unconsolidated real estate entities |
( |
) | ( |
) | ||||
Proceeds from sale of real estate assets |
||||||||
Contributions to investments in real-estate related loans |
( |
) | ( |
) | ||||
Proceeds from settlement of investments in real-estate related loans |
||||||||
Other investing activities |
||||||||
Net cash used in investing activities |
( |
) | ( |
) | ||||
Cash flows from financing activities: |
||||||||
Principal payments on mortgage notes |
( |
) | ||||||
Proceeds from refinances, net |
||||||||
Proceeds from revolving credit facility |
||||||||
Repayments on revolving credit facility |
( |
) | ( |
) | ||||
Proceeds from construction loans |
||||||||
Proceeds from issuance of Series 2019 Preferred Stock, net of issuance costs |
||||||||
Repurchase of preferred stock |
( |
) | ||||||
Repurchase of unsecured promissory notes |
( |
) | ||||||
Proceeds from issuance of common stock, net |
||||||||
Repurchase of common stock/OP Units |
( |
) | ( |
) | ||||
Distributions to common stockholders |
( |
) | ( |
) | ||||
Distributions to noncontrolling interests - limited partners |
( |
) | ||||||
Distributions to noncontrolling interests - partially owned entities |
( |
) | ||||||
Net cash provided by financing activities |
||||||||
For the Year Ended December 31, |
||||||||
2021 |
2020 |
|||||||
Net increase (decrease) in cash and cash equivalents and restricted cash |
( |
) | ||||||
Cash and cash equivalents and restricted cash, beginning of period |
||||||||
Cash and cash equivalents and restricted cash, end of period |
$ | $ | ||||||
Reconciliation of cash and cash equivalents and restricted cash to the consolidated balance sheets: |
||||||||
Cash and cash equivalents |
$ | $ | ||||||
Restricted cash |
||||||||
Total cash and cash equivalents and restricted cash |
$ | $ | ||||||
Supplemental disclosure of cash flow information: |
||||||||
Cash paid for interest |
$ | $ | ||||||
Income taxes paid |
$ | $ | ||||||
Supplemental disclosure of non-cash investing and financing activities: |
||||||||
CRII Merger |
||||||||
Fair value of assets acquired and liabilities assumed with the CRII Merger: |
||||||||
Real estate assets |
$ | $ | ||||||
Investments in unconsolidated real estate entities |
$ | $ | ||||||
Intangibles |
$ | $ | ||||||
Debt |
$ | $ | ||||||
Preferred stock |
$ | $ | ||||||
Other assets acquired |
$ | $ | ||||||
Other liabilities assumed |
$ | $ | ||||||
Fair value of equity issued to CRII Shareholders in the CRII Merger |
$ | $ | ||||||
Fair value of noncontrolling interests from the CRII Merger |
$ | $ | ||||||
CMRI Merger |
||||||||
Settlement of promote upon closing of the CMRI Merger |
$ | $ | ||||||
Settlement of CMRI promissory notes and interest with CROP |
$ | $ | ||||||
Net liabilities assumed with the CMRI Merger |
$ | $ | ||||||
CMRII Merger |
||||||||
Settlement of promote upon closing of the CMRII Merger |
$ | $ | ||||||
Settlement of CMRII promissory notes and interest with CROP |
$ | $ | ||||||
Net liabilities assumed with the CMRII Merger |
$ | $ | ||||||
Credit facility entered into in conjunction with acquisition of real estate |
$ | $ |
Land improvements |
||
Buildings |
||
Building improvements |
||
Furniture, fixtures and equipment |
||
Intangible lease assets |
Over lease term |
Standard |
Description |
Required date of adoption |
Effect on the Financial Statements or Other Significant Matters | |||
ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments |
This ASU requires entities to estimate a lifetime expected credit loss for most financial assets, including trade and other receivables and other long term financings including available for sale and held-to-maturity 2018-19, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, which amends the scope of ASU 2016-13 and clarified that receivables arising from operating leases are not within the scope of the standard and should continue to be accounted for in accordance with the leases standard (Topic 842). |
January 1, 2023 | ASU 2016-13 affects entities holding financial assets and net investments in leases that are not accounted for at fair value through net income. The amendments in ASU 2016-13 require a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected. We are evaluating the impact of adopting ASU 2016-13 on our financial statements. |
December 31, 2021 |
December 31, 2020 |
|||||||
Land |
$ | $ | ||||||
Building and improvements |
||||||||
Furniture, fixtures and equipment |
||||||||
Intangible assets |
||||||||
Construction in progress (1) |
||||||||
Less: Accumulated depreciation and amortization |
( |
) (2) |
( |
) | ||||
Real estate assets, net |
$ | $ | ||||||
(1) | Includes construction in progress for our development projects and capitalized costs for improvements not yet placed in service at our stabilized properties. |
(2) | Includes the amortization of $ in-place lease assets acquired with the CRII Merger over a period of six months in 2021. |
CRII Common stock issued and outstanding |
||||
Exchange ratio |
||||
CCI common stock issued as consideration |
||||
CCI’s estimated value per share as of May 7, 2021 |
$ | |||
Value of CCI common stock issued as consideration |
$ | |||
Assets |
||||
Real estate assets (1) |
$ | |||
Investments in unconsolidated real estate entities |
||||
Cash and cash equivalents |
||||
Restricted cash |
||||
Other assets (2) |
||||
Total assets acquired |
$ | |||
Liabilities |
||||
Mortgage notes, net |
$ | |||
Construction loans |
||||
Preferred stock |
||||
Unsecured promissory notes |
||||
Accounts payable, accrued expenses and other liabilities |
||||
Total liabilities assumed |
||||
Consolidated net assets acquired |
||||
Noncontrolling interests (3) |
( |
) | ||
Net assets acquired |
$ | |||
(1) | Real estate assets acquired in connection with the CRII Merger include $ |
(2) | Other assets includes $ |
(3) | The fair value of noncontrolling interests is based on the fair value of assets and liabilities held by the noncontrolling interests at their ownership share. These values were determined using methods similar to those used by independent appraisers, and include using replacement cost estimates less depreciation, discounted cash flows, market comparisons, and direct capitalization of net operating income. |
Revenue |
$ | |||
Net loss |
$ | ( |
) |
Year Ended December 31, |
||||||||
2021 |
2020 |
|||||||
Pro forma revenue: |
||||||||
Historic results |
$ | $ | ||||||
CRII Merger (excluding those in historic results) |
||||||||
Total |
$ | $ | ||||||
Pro forma net loss: |
||||||||
Historic results |
$ | ( |
) | $ | ( |
) | ||
CRII Merger (excluding those in historic results) |
( |
) | ( |
) | ||||
Total |
$ | ( |
) | $ | ( |
) | ||
Consideration |
CMRI Merger |
CMRII Merger |
||||||
Common stock issued and outstanding |
||||||||
Exchange ratio |
||||||||
CCI common stock issued as consideration |
||||||||
Per share value of CCI Common Stock |
$ | $ | ||||||
Fair value of CCI Common Stock issued |
$ | $ | ||||||
Settlement of promote |
||||||||
Settlement of CMRI and CMRII promissory notes and interest with CROP |
||||||||
Net liabilities assumed |
||||||||
Total consideration |
$ | $ | ||||||
Change in equity |
CMRI Merger |
CMRII Merger |
||||||
Carrying amount of noncontrolling interest |
$ | $ | ||||||
Total consideration |
||||||||
Additional paid in capital adjustment |
$ | $ | ( |
) | ||||
Fair value of CCI Common Stock issued |
$ | $ | ||||||
Additional paid in capital adjustment |
( |
) | ||||||
Total change in equity |
$ | $ | ||||||
Allocated Amounts |
||||||||||||||||||||||||
Property |
Building |
Land |
Land Improvements |
Personal Property |
Intangible |
Total |
||||||||||||||||||
Cottonwood One Upland |
$ | $ | $ | $ | $ | $ |
Balance at December 31, |
||||||||||||||||
Property / Development |
Location |
% Owned |
2021 |
2020 |
||||||||||||
Stabilized Properties |
||||||||||||||||
3800 Main |
Houston, TX | % | $ | $ | — | |||||||||||
Alpha Mill (1) |
Charlotte, NC | % | — | |||||||||||||
Cottonwood Bayview (1) |
St. Petersburg, FL | % | — | |||||||||||||
Cottonwood Ridgeview (1) |
Plano, TX | % | — | |||||||||||||
Fox Point (1) |
Salt Lake City, UT | % | — | |||||||||||||
Toscana at Valley Ridge (1) |
Lewisville, TX | % | — | |||||||||||||
Melrose Phase II (1) |
Nashville, TN | % | — | |||||||||||||
Preferred Equity Investments |
||||||||||||||||
Lector85 |
Ybor City, FL | |||||||||||||||
Vernon Boulevard |
Queens, NY | |||||||||||||||
Riverfront |
West Sacramento, CA | |||||||||||||||
Other |
— | |||||||||||||||
Total |
$ | $ | ||||||||||||||
(1) | We account for our tenant in common interests in these properties as equity method investments. Refer to Note 2. |
For the Period Held as Equity Method Investments |
||||
Operating data: |
||||
Total revenues |
$ | |||
Total operating expenses |
||||
Total other expenses |
( |
) | ||
Net loss |
( |
) |
December 31, 2021 |
||||
Balance sheet data: |
||||
Real estate assets |
$ | |||
Cash and cash equivalents |
||||
Total assets |
||||
Mortgage notes, net |
||||
Total liabilities |
Principal Balance Outstanding |
||||||||||||||||
Indebtedness |
Weighted-Average Interest Rate |
Weighted-Average Remaining Term (1) |
December 31, 2021 |
December 31, 2020 |
||||||||||||
Fixed rate loans |
||||||||||||||||
Fixed rate mortgages |
% | $ | $ | |||||||||||||
Total fixed rate loans |
||||||||||||||||
Variable rate loans (2) |
||||||||||||||||
Floating rate mortgages |
% | |||||||||||||||
Variable rate revolving credit facility (3) |
% | |||||||||||||||
Total variable rate loans |
||||||||||||||||
Total secured loans |
||||||||||||||||
Unamortized debt issuance costs |
( |
) | ( |
) | ||||||||||||
Premium on assumed debt, net |
||||||||||||||||
Mortgage notes and revolving credit facility, net |
$ | $ | ||||||||||||||
(1) | For loans where we have the ability to exercise extension options at our own discretion, the maximum maturity date has been assumed. |
(2) | The interest rate of our variable rate loans is primarily based on one-month LIBOR. |
(3) | We may obtain advances secured against Cottonwood One Upland up to $ loan-to-value |
Year |
Total |
|||
2022 |
$ | |||
2023 (1) |
||||
2024 |
||||
2025 |
||||
2026 |
||||
Thereafter |
||||
$ | ||||
(1) | $ |
Development |
Interest Rate |
Final Expiration Date |
Loan Amount |
Amount Drawn at December 31, 2021 |
||||||||
Sugarmont (1) |
One-Month USD Libor + |
September 30, 2022 | $ | $ | ||||||||
Park Avenue |
One-Month USD Libor + |
November 30, 2023 | ||||||||||
Cottonwood on Broadway |
One-Month USD Libor + |
May 15, 2024 | ||||||||||
Cottonwood on Highland |
One-Month USD Libor + (2) |
December 1, 2024 | ||||||||||
$ | $ | |||||||||||
(1) | The Sugarmont construction loan was refinanced in January 2022. Refer to Note 13. |
(2) | The Libor rate for the Cottonwood on Highland construction loan is subject to a minimum floating index embedded floor rate of |
Offering Size |
Interest Rate |
Maturity Date |
December 31, 2021 |
|||||||||||||
2017 |
$ | % | December 31, 2022 | $ | ||||||||||||
2019 |
% | December 31, 2023 | ||||||||||||||
$ | $ | |||||||||||||||
• | Quoted prices for similar assets/liabilities in active markets; |
• | Quoted prices for identical or similar assets/liabilities in non-active markets (e.g., few transactions, limited information, non-current prices, high variability over time); |
• | Inputs other than quoted prices that are observable for the asset/liability (e.g., interest rates, yield curves, volatilities, default rates); and |
• | Inputs that are derived principally from or corroborated by other observable market data. |
As of December 31, 2021 |
As of December 31, 2020 |
|||||||||||||||
Carrying Value |
Fair Value |
Carrying Value |
Fair Value |
|||||||||||||
Financial Asset: |
||||||||||||||||
Investments in real-estate related loans |
$ | $ | $ | $ | ||||||||||||
Financial Liability: |
||||||||||||||||
Fixed rate mortgages |
$ | $ | $ | $ | ||||||||||||
Floating rate mortgages |
$ | $ | $ | $ | ||||||||||||
Variable rate revolving credit facility |
$ | $ | $ | $ | ||||||||||||
Construction loans |
$ | $ | $ | $ | ||||||||||||
Series 2016 Preferred Stock |
$ | $ | $ | $ | ||||||||||||
Series 2017 Preferred Stock |
$ | $ | $ | $ | ||||||||||||
Series 2019 Preferred Stock |
$ | $ | $ | $ | ||||||||||||
Unsecured promissory notes, net |
$ | $ | $ | $ |
Shares Outstanding at |
||||||||||||||||||||||||
Dividend Rate |
Extension Dividend Rate |
Redemption Date |
Maximum Extension Date |
December 31, 2021 |
December 31, 2020 |
|||||||||||||||||||
Series 2016 Preferred Stock (1) |
% | % | January 31, 2022 | January 31, 2023 | ||||||||||||||||||||
Series 2017 Preferred Stock |
% | % | January 31, 2022 | January 31, 2024 | ||||||||||||||||||||
Series 2019 Preferred Stock |
% | % | December 31, 2023 | December 31, 2025 |
(1) | As of December 31, 2021, we are currently in the first extension period on our Series 2016 Preferred Stock resulting in an extension dividend rate of |
Class |
||||||||||||||||
I |
A |
TX |
Total |
|||||||||||||
Balance at December 31, 2019 | ||||||||||||||||
Issuance of common stock |
||||||||||||||||
Distribution reinvestment |
||||||||||||||||
Repurchases of common stock |
( |
) | ( |
) | ||||||||||||
Balance at December 31, 2020 | ||||||||||||||||
Issuance of common stock |
||||||||||||||||
Distribution reinvestment |
||||||||||||||||
Repurchases of common stock |
( |
) | ( |
) | ||||||||||||
CRII Merger |
||||||||||||||||
CMRI Merger |
||||||||||||||||
CMRII Merger |
||||||||||||||||
Balance at December 31, 2021 |
||||||||||||||||
Shareholder Record Date |
Monthly Rate |
Annually |
||||||
September 25, 2021 |
$ | $ | ||||||
October 29, 2021 |
||||||||
November 30, 2021 |
||||||||
December 31, 2021 |
Share Purchase Anniversary |
Repurchase Price |
|||
Less than 1 year |
$ | |||
1 year |
$ | |||
2 years |
$ | |||
3 years |
$ | |||
4 years |
$ | |||
5 years |
$ | |||
A stockholder’s death or complete disability, 2 years or more (Series 2019), 6 years or more (Series 2016 and Series 2017) |
$ |
1. | Beginning one year after acquisition of a Common Limited OP Unit and continuing for the three-year period thereafter, the purchase price for the repurchased Common Limited OP Unit shall be equal to |
2. | Beginning four years after acquisition of a Common Limited OP Unit and continuing for the two-year period thereafter, the purchase price for the repurchased Common Limited OP Units shall be equal to |
3. | Beginning six years after acquisition of a Common Limited OP Unit and continuing thereafter, the purchase price for the repurchased Common Limited OP Unit shall be equal to |
Class |
||||||||||||||||||||
T |
I |
A |
TX |
Total |
||||||||||||||||
Shares issued through Primary Offering |
||||||||||||||||||||
Shares issued through DRP Offering |
||||||||||||||||||||
Gross Proceeds |
$ | $ | $ | $ | $ |
Shareholder Record Date |
Monthly Rate |
Annually |
||||||
January 31, 2022 |
$ | $ | ||||||
February 28, 2022 |
$ | $ | ||||||
March 31, 2022 |
$ | $ |
Initial Cost to Company |
Gross Amount Carried as of December 31, 2021 |
|||||||||||||||||||||||||||||||||||||||||||||||||
Description |
Location |
Ownership Percent |
Number of Units |
Encumbrances |
Land |
Buildings, Intangibles and Improvements |
Cost Capitalized Subsequent to Acquisition |
Land |
Buildings, Intangibles and Improvements |
Total (1) |
Accumulated Depreciation and Amortization (2) |
Year(s) Built |
Date Acquired |
|||||||||||||||||||||||||||||||||||||
Stabilized Multifamily Apartment Communities: |
||||||||||||||||||||||||||||||||||||||||||||||||||
Cason Estates |
Murfreesboro, TN | % | $ | ( |
) | $ | $ | $ | $ | $ | $ | $ | ( |
) | 2005 | 5/7/2021 | ||||||||||||||||||||||||||||||||||
Cottonwood |
Salt Lake City, UT | % | ( |
) | ( |
) | 1986 | 5/7/2021 | ||||||||||||||||||||||||||||||||||||||||||
Cottonwood One Upland |
Boston, MA | % | ( |
) | ( |
) | 2016 | 3/19/2020 | ||||||||||||||||||||||||||||||||||||||||||
Cottonwood Reserve |
Charlotte, NC | % | ( |
) | ( |
) | 2004 | 5/7/2021 | ||||||||||||||||||||||||||||||||||||||||||
Cottonwood West Palm |
West Palm Beach, FL | % | ( |
) | ( |
) | 2018 | 5/30/2019 | ||||||||||||||||||||||||||||||||||||||||||
Cottonwood Westside |
Atlanta, GA | % | ( |
) | ( |
) | 2014 | 5/7/2021 | ||||||||||||||||||||||||||||||||||||||||||
Enclave on Golden Triangle |
Keller, TX | % | ( |
) | ( |
) | 2006 | 5/7/2021 | ||||||||||||||||||||||||||||||||||||||||||
Heights at Meridian |
Durham, NC | % | ( |
) | ( |
) | 2015 | 5/7/2021 | ||||||||||||||||||||||||||||||||||||||||||
Melrose |
Nashville, TN | % | ( |
) | ( |
) | 2015 | 5/7/2021 | ||||||||||||||||||||||||||||||||||||||||||
Parc Westborough |
Boston, MA | % | ( |
) | ( |
) | 2016 | 5/7/2021 | ||||||||||||||||||||||||||||||||||||||||||
Pavilions |
Albuquerque, NM | % | ( |
) | ( |
) | 1992 | 5/7/2021 | ||||||||||||||||||||||||||||||||||||||||||
Raveneaux |
Houston, TX | % | ( |
) | ( |
) | 2000 | 5/7/2021 | ||||||||||||||||||||||||||||||||||||||||||
Regatta |
Houston, TX | % | ( |
) | ( |
) | 1968-1976 |
5/7/2021 | ||||||||||||||||||||||||||||||||||||||||||
Retreat at Peachtree City |
Peachtree City, GA | % | ( |
) | ( |
) | 1999 | 5/7/2021 | ||||||||||||||||||||||||||||||||||||||||||
Scott Mountain |
Portland, OR | % | ( |
) | ( |
) | 1997, 2000 | 5/7/2021 | ||||||||||||||||||||||||||||||||||||||||||
Stonebriar of Frisco |
Frisco, TX | % | ( |
) | ( |
) | 1999 | 5/7/2021 | ||||||||||||||||||||||||||||||||||||||||||
Summer Park |
Buford, GA | % | ( |
) | ( |
) | 2001 | 5/7/2021 | ||||||||||||||||||||||||||||||||||||||||||
The Marq Highland Park |
Tampa, FL | % | ( |
) | ( |
) | 2015 | 5/7/2021 | ||||||||||||||||||||||||||||||||||||||||||
Development Projects: |
||||||||||||||||||||||||||||||||||||||||||||||||||
Cottonwood on Broadway |
Salt Lake City, UT | % | ( |
) | N/A | 5/7/2021 | ||||||||||||||||||||||||||||||||||||||||||||
Park Avenue |
Salt Lake City, UT | % | ( |
) | N/A | 5/7/2021 | ||||||||||||||||||||||||||||||||||||||||||||
Sugarmont (3) |
Salt Lake City, UT | % | ( |
) | ( |
) | N/A | 5/7/2021 | ||||||||||||||||||||||||||||||||||||||||||
Cottonwood on Highland |
Millcreek, UT | % | N/A | 5/7/2021 | ||||||||||||||||||||||||||||||||||||||||||||||
Other Developments |
Various | Various | N/A | N/A | Various | |||||||||||||||||||||||||||||||||||||||||||||
Total |
$ |
( |
) |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
( |
) |
||||||||||||||||||||||||||||||||||||||
(1) | The aggregate cost of real estate for federal income tax purposes was $ |
(2) | Depreciation is recognized on a straight-line basis over the estimated useful asset lives of the related assets, which is |
(3) | Lease-up on initial available units at Sugarmont began in Q2 2021, with the completion of construction expected in Q2 2022. Sugarmont includes |
2021 |
2020 |
|||||||
Real estate assets: |
||||||||
Balance at beginning of the year |
$ | $ | ||||||
Additions during the year: |
||||||||
Acquisitions |
(1) |
|||||||
Improvements and development costs |
||||||||
Dispositions and deconsolidations during the year: |
||||||||
Dispositions and deconsolidations |
( |
) | ||||||
Balance at end of the year |
$ | $ | ||||||
Accumulated depreciation and amortization: |
||||||||
Balance at beginning of the year |
$ | ( |
) | $ | ( |
) | ||
Depreciation and amortization |
( |
) | ( |
) | ||||
Dispositions and deconsolidations |
||||||||
Balance at end of the year |
$ | ( |
) | $ | ( |
) | ||
(1) | Aside from a portion of the other development real estate assets listed on our “Schedule III—Real Estate and Accumulated Depreciation,” all of our 2021 acquisitions of real estate were from the merger with CRII, which was an affiliated entity. The CRII Merger was accounted for as a business combination in accordance with ASC 805. See Note 3 for additional information regarding the CRII Merger including the amount of real estate assets acquired as part of the merger. |
March 31, 2022 |
December 31, 2021 |
|||||||
Assets |
(Unaudited) | |||||||
Real estate assets, net |
$ | $ | ||||||
Investments in unconsolidated real estate entities |
||||||||
Investments in real-estate related loans |
||||||||
Cash and cash equivalents |
||||||||
Restricted cash |
||||||||
Other assets |
||||||||
Total assets |
$ | $ | ||||||
Liabilities, Equity, and Noncontrolling Interests |
||||||||
Liabilities |
||||||||
Mortgage notes and revolving credit facility, net |
$ | $ | ||||||
Construction loans, net |
||||||||
Preferred stock, net |
||||||||
Unsecured promissory notes, net |
||||||||
Performance participation allocation due to affiliate |
||||||||
Accounts payable, accrued expenses and other liabilities |
||||||||
Total liabilities |
||||||||
Commitments and contingencies (Note 11) |
||||||||
Equity and noncontrolling interests |
||||||||
Stockholders’ equity |
||||||||
Common stock, Class T shares, $ |
||||||||
Common stock, Class I shares, $ |
||||||||
Common stock, Class A shares, $ |
||||||||
Common stock, Class TX shares, $ |
||||||||
Additional paid-in capital |
||||||||
Accumulated distributions |
( |
) | ( |
) | ||||
Accumulated deficit |
( |
) | ( |
) | ||||
Total stockholders’ equity |
||||||||
Noncontrolling interests |
||||||||
Limited partners |
||||||||
Partially owned entities |
||||||||
Total noncontrolling interests |
||||||||
Total equity and noncontrolling interests |
||||||||
Total liabilities, equity and noncontrolling interests |
$ | $ | ||||||
Three Months Ended March 31, |
||||||||
2022 |
2021 |
|||||||
Revenues |
||||||||
Rental and other property revenues |
$ | $ | ||||||
Property management revenues |
||||||||
Other revenues |
||||||||
Total revenues |
||||||||
Operating expenses |
||||||||
Property operations expense |
||||||||
Property management expense |
||||||||
Asset management fee |
||||||||
Performance participation allocation |
||||||||
Depreciation and amortization |
||||||||
General and administrative expenses |
||||||||
Total operating expenses |
||||||||
Loss from operations |
( |
) | ( |
) | ||||
Equity in earnings of unconsolidated real estate entities |
||||||||
Interest income |
||||||||
Interest expense |
( |
) | ( |
) | ||||
Promote from incentive allocation agreement |
||||||||
Loss on debt extinguishment |
( |
) | ||||||
Other income |
||||||||
Income (loss) before income taxes |
( |
) | ||||||
Income tax expense |
( |
) | ||||||
Net loss |
( |
) | ( |
) | ||||
Net loss attributable to noncontrolling interests: |
||||||||
Limited partners |
||||||||
Partially owned entities |
||||||||
Net loss attributable to common stockholders |
$ | ( |
) | $ | ( |
) | ||
Weighted-average common shares outstanding |
||||||||
Net loss per common share—basic and diluted |
$ | ( |
) | $ | ( |
) | ||
Cottonwood Communities, Inc. Stockholders’ Equity |
Noncontrolling interests |
|||||||||||||||||||||||||||||||||||||||||||||||
Par Value |
Additional Paid-In Capital |
Accumulated Distributions |
Accumulated Deficit |
Total Stockholders’ Equity |
Limited Partners |
Partially Owned Entities |
Total Equity and Noncontrolling Interests |
|||||||||||||||||||||||||||||||||||||||||
Shares |
Common Stock Class T |
Common Stock Class I |
Common Stock Class A |
Common Stock Class TX |
||||||||||||||||||||||||||||||||||||||||||||
Balance at January 1, 2022 |
$ | $ | $ | $ | $ | $ | ( |
) | $ | ( |
) | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||
Issuance of common stock |
— | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Offering costs |
— | — | — | — | — | ( |
) | — | — | ( |
) | — | — | ( |
) | |||||||||||||||||||||||||||||||||
Distribution reinvestment |
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
Common stock/OP Units repurchased |
( |
) | — | — | ( |
) | — | ( |
) | — | — | ( |
) | ( |
) | — | ( |
) | ||||||||||||||||||||||||||||||
Contributions from noncontrolling interests |
— | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||
Share-based compensation |
— | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||
Distributions to investors |
— | — | — | — | — | — | ( |
) | — | ( |
) | ( |
) | ( |
) | ( |
) | |||||||||||||||||||||||||||||||
Net loss |
— | — | — | — | — | — | — | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | |||||||||||||||||||||||||||||||
Balance at March 31, 2022 |
$ | $ | $ | $ | $ | $ | ( |
) | $ | ( |
) | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||
Cottonwood Communities, Inc. Stockholders’ Equity |
Noncontrolling interests |
|||||||||||||||||||||||||||||||||||||||||||||||
Par Value |
Additional Paid-In Capital |
Accumulated Distributions |
Accumulated Deficit |
Total Stockholders’ Equity |
Limited Partners |
Partially Owned Entities |
Total Equity and Noncontrolling Interests |
|||||||||||||||||||||||||||||||||||||||||
Shares |
Common Stock Class T |
Common Stock Class I |
Common Stock Class A |
Common Stock Class TX |
||||||||||||||||||||||||||||||||||||||||||||
Balance at January 1, 2021 |
$ | $ | $ | $ | $ | $ | ( |
) | $ | ( |
) | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||
Share-based compensation |
— | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Distributions to investors |
— | — | — | — | — | — | ( |
) | — | ( |
) | — | — | ( |
) | |||||||||||||||||||||||||||||||||
Net loss |
— | — | — | — | — | — | — | ( |
) | ( |
) | — | — | ( |
) | |||||||||||||||||||||||||||||||||
Balance at March 31, 2021 |
$ | $ | $ | $ | $ | $ | ( |
) | $ | ( |
) | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||
Three Months Ended March 31, |
||||||||
2022 |
2021 |
|||||||
Cash flows from operating activities: |
||||||||
Net loss |
$ | ( |
) | $ | ( |
) | ||
Adjustments to reconcile net loss to net cash used in operating activities: |
||||||||
Depreciation and amortization |
||||||||
Share-based compensation |
||||||||
Other operating |
||||||||
Loss on debt extinguishment |
||||||||
Equity in earnings of unconsolidated real estate entities |
( |
) | ( |
) | ||||
Distributions from unconsolidated real estate entities—return on capital |
||||||||
Changes in operating assets and liabilities: |
||||||||
Other assets |
( |
) | ||||||
Performance participation allocation |
||||||||
Performance participation allocation payment |
( |
) | ||||||
Accounts payable, accrued expenses and other liabilities |
||||||||
|
|
|
|
|||||
Net cash used in operating activities |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Cash flows from investing activities: |
||||||||
Capital expenditures and development activities |
( |
) | ( |
) | ||||
Investments in unconsolidated real estate entities |
( |
) | ( |
) | ||||
Distributions from unconsolidated real estate entities—return on capital |
||||||||
Contributions to investments in real-estate related loans |
( |
) | ||||||
|
|
|
|
|||||
Net cash provided by (used in) investing activities |
( |
) | ||||||
|
|
|
|
|||||
Cash flows from financing activities: |
||||||||
Principal payments on mortgage notes |
( |
) | ||||||
Borrowings from revolving credit facility |
||||||||
Repayments on revolving credit facility |
( |
) | ( |
) | ||||
Borrowings under mortgage notes and term loans |
||||||||
Repayments of mortgage notes and term loans |
( |
) | ||||||
Deferred financing costs on mortgage notes and term loans |
( |
) | ||||||
Borrowings from construction loans |
||||||||
Repayments of construction loans |
( |
) | ||||||
Proceeds from issuance of Series 2019 Preferred Stock |
||||||||
Redemption of preferred stock |
( |
) | ||||||
Offering costs paid on issuance of preferred stock |
( |
) | ( |
) | ||||
Repurchase of unsecured promissory notes |
( |
) | ||||||
Proceeds from issuance of common stock |
||||||||
Repurchase of common stock/OP Units |
( |
) | ||||||
Offering costs paid on issuance of common stock |
( |
) | ||||||
Contributions from noncontrolling interests |
||||||||
Distributions to common stockholders |
( |
) | ( |
) | ||||
Distributions to noncontrolling interests—limited partners |
( |
) | ||||||
Distributions to noncontrolling interests—partially owned entities |
( |
) | ||||||
|
|
|
|
|||||
Net cash provided by financing activities |
||||||||
|
|
|
|
|||||
Net increase in cash and cash equivalents and restricted cash |
||||||||
Cash and cash equivalents and restricted cash, beginning of period |
||||||||
|
|
|
|
|||||
Cash and cash equivalents and restricted cash, end of period |
$ | $ | ||||||
|
|
|
|
|||||
Reconciliation of cash and cash equivalents and restricted cash to the condensed consolidated balance sheets: |
||||||||
Cash and cash equivalents |
$ | $ | ||||||
Restricted cash |
||||||||
|
|
|
|
|||||
Total cash and cash equivalents and restricted cash |
$ | $ | ||||||
|
|
|
|
1. |
Organization and Business |
March 31, 2022 |
December 31, 2021 |
|||||||
Land |
$ | $ | ||||||
Buildings and improvements |
||||||||
Furniture, fixtures and equipment |
||||||||
Intangible assets |
||||||||
Construction in progress (1) |
||||||||
|
|
|
|
|||||
Less: Accumulated depreciation and amortization (2) |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Real estate assets, net |
$ | $ | ||||||
|
|
|
|
(1) | Includes construction in progress for our development projects and capitalized costs for improvements not yet placed in service at our stabilized properties. |
(2) | Includes the amortization of $ in-place lease assets acquired with the CRII Merger over a period of six months in 2021. |
CRII Common stock issued and outstanding |
||||
Exchange ratio |
||||
CCI common stock issued as consideration |
||||
CCI’s estimated value per share as of May 7, 2021 |
$ | |||
Value of CCI common stock issued as consideration |
$ | |||
Assets |
||||
Real estate assets (1) |
$ | |||
Investments in unconsolidated real estate entities |
||||
Cash and cash equivalents |
||||
Restricted cash |
||||
Other assets (2) |
||||
Total assets acquired |
$ | |||
Liabilities |
||||
Mortgage notes, net |
$ | |||
Construction loans |
||||
Preferred stock |
||||
Unsecured promissory notes |
||||
Accounts payable, accrued expenses and other liabilities |
||||
Total liabilities assumed |
||||
Consolidated net assets acquired |
||||
Noncontrolling interests (3) |
( |
) | ||
Net assets acquired |
$ | |||
(1) | Real estate assets acquired in connection with the CRII Merger include $ |
merger date, the intangible lease assets acquired from the CRII Merger have been fully amortized by December 31, 2021. |
(2) | Other assets includes $ |
(3) | The fair value of noncontrolling interests is based on the fair value of assets and liabilities held by the noncontrolling interests at their ownership share. These values were determined using methods similar to those used by independent appraisers, and include using replacement cost estimates less depreciation, discounted cash flows, market comparisons, and direct capitalization of net operating income. |
Revenue |
$ | |||
Net income |
$ |
Three Months Ended March 31, |
||||||||
2022 |
2021 |
|||||||
Pro forma revenue: |
||||||||
Historic results |
$ | $ | ||||||
CRII Merger (excluding those in historic results) |
||||||||
Total |
$ | $ | ||||||
Pro forma net loss: |
||||||||
Historic results |
$ | ( |
) | $ | ( |
) | ||
CRII Merger (excluding those in historic results) |
( |
) | ||||||
Total |
$ | ( |
) | $ | ( |
) | ||
2021 Consideration |
CMRI Merger |
CMRII Merger |
||||||
Common stock issued and outstanding |
||||||||
Exchange ratio |
||||||||
CCI common stock issued as consideration |
||||||||
Per share value of CCI Common Stock |
$ | $ | ||||||
Fair value of CCI Common Stock issued |
$ | $ | ||||||
Settlement of promote |
||||||||
Settlement of CMRI and CMRII promissory notes and interest with CROP |
||||||||
Net liabilities assumed |
||||||||
Total consideration |
$ | $ | ||||||
2021 Change in equity |
CMRI Merger |
CMRII Merger |
||||||
Carrying amount of noncontrolling interest |
$ | $ | ||||||
Total consideration |
||||||||
Additional paid in capital adjustment |
$ | $ | ( |
) | ||||
Fair value of CCI Common Stock issued |
$ | $ | ||||||
Additional paid in capital adjustment |
( |
) | ||||||
Total change in equity |
$ | $ | ||||||
Balance at |
||||||||||||||||
Property / Development |
Location |
% Owned |
March 31, 2022 |
December 31, 2021 |
||||||||||||
Stabilized Assets |
||||||||||||||||
3800 Main |
Houston, TX | $ | $ | |||||||||||||
Alpha Mill (1) |
Charlotte, NC | |||||||||||||||
Cottonwood Bayview (1) |
St. Petersburg, FL | |||||||||||||||
Cottonwood Ridgeview (1) |
Plano, TX | |||||||||||||||
Fox Point (1) |
Salt Lake City, UT | |||||||||||||||
Toscana at Valley Ridge (1) |
Lewisville, TX | |||||||||||||||
Melrose Phase II (1) |
Nashville, TN | |||||||||||||||
Preferred Equity Investments |
||||||||||||||||
Lector85 |
Ybor City, FL | |||||||||||||||
Vernon Boulevard |
Queens, NY | |||||||||||||||
Riverfront |
West Sacramento, CA | |||||||||||||||
Other |
||||||||||||||||
Total |
$ | $ | ||||||||||||||
(1) | We account for our tenant-in-common |
Principal Balance Outstanding |
||||||||||||||||
Indebtedness |
Weighted-Average Interest Rate |
Weighted-Average Remaining Term (1) |
March 31, 2022 |
December 31, 2021 |
||||||||||||
Fixed rate loans |
||||||||||||||||
Fixed rate mortgages |
% | $ | $ | |||||||||||||
Total fixed rate loans |
||||||||||||||||
Variable rate loans (2) |
||||||||||||||||
Floating rate mortgages |
% | |||||||||||||||
Variable rate revolving credit facility (3) |
% | |||||||||||||||
Total variable rate loans |
||||||||||||||||
Total secured loans |
||||||||||||||||
Unamortized debt issuance costs |
( |
) | ( |
) | ||||||||||||
Premium on assumed debt, net |
||||||||||||||||
Mortgage notes and revolving credit facility, net |
$ | $ | ||||||||||||||
(1) | For loans where we have the ability to exercise extension options at our own discretion, the maximum maturity date has been assumed. |
(2) | The interest rate of our variable rate loans is primarily based on one-month LIBOR or one-month SOFR. |
(3) | We may obtain advances secured against Cottonwood One Upland and Parc Westborough up to $ loan-to-value |
Development |
Interest Rate |
Final Expiration Date |
Loan Amount |
Amount Drawn at March 31, 2022 |
||||||||
Park Avenue |
One-Month USD Libor + |
November 30, 2023 | $ | $ | ||||||||
Cottonwood on Broadway |
One-Month USD Libor + |
May 15, 2024 | ||||||||||
Cottonwood on Highland |
One-Month USD Libor + (1) |
December 1, 2024 | ||||||||||
$ | $ | |||||||||||
(1) | The Libor rate for the Cottonwood on Highland construction loan is subject to a minimum floating index embedded floor rate of |
Offering Size |
Interest Rate |
Maturity Date |
March 31, 2022 |
|||||||||||||
2017 |
$ | % | December 31, 2022 | $ | ||||||||||||
2019 |
% | December 31, 2023 | ||||||||||||||
$ |
$ |
|||||||||||||||
Year |
Total |
|||
2022 (1) |
$ | |||
2023 (2) |
||||
2024 |
||||
2025 |
||||
2026 |
||||
Thereafter |
||||
$ |
||||
(1) | $ |
(2) | $ |
• | Quoted prices for similar assets/liabilities in active markets; |
• | Quoted prices for identical or similar assets/liabilities in non-active markets (e.g., few transactions, limited information, non-current prices, high variability over time); |
• | Inputs other than quoted prices that are observable for the asset/liability (e.g., interest rates, yield curves, volatility, default rates); and |
• | Inputs that are derived principally from or corroborated by other observable market data. |
March 31, 2022 |
December 31, 2021 |
|||||||||||||||
Carrying Value |
Fair Value |
Carrying Value |
Fair Value |
|||||||||||||
Financial Asset: |
||||||||||||||||
Investments in real-estate related loans |
$ | $ | $ | $ | ||||||||||||
Financial Liability: |
||||||||||||||||
Fixed rate mortgages |
$ | $ | $ | $ | ||||||||||||
Floating rate mortgages |
$ | $ | $ | $ | ||||||||||||
Variable rate revolving credit facility |
$ | $ | $ | $ | ||||||||||||
Construction loans |
$ | $ | $ | $ | ||||||||||||
Series 2016 Preferred Stock |
$ | $ | $ | $ | ||||||||||||
Series 2017 Preferred Stock |
$ | $ | $ | $ | ||||||||||||
Series 2019 Preferred Stock |
$ | $ | $ | $ | ||||||||||||
Unsecured promissory notes |
$ | $ | $ | $ |
Shares Outstanding at |
||||||||||||||||||||||||
Dividend Rate |
Extension Dividend Rate |
Redemption Date |
Maximum Extension Date |
March 31, 2022 |
December 31, 2021 |
|||||||||||||||||||
Series 2016 Preferred Stock (1) |
% | % | January 31, 2022 | January 31, 2023 | ||||||||||||||||||||
Series 2017 Preferred Stock (2) |
% | % | January 31, 2022 | January 31, 2024 | ||||||||||||||||||||
Series 2019 Preferred Stock |
% | % | December 31, 2023 | December 31, 2025 |
(1) | As of March 31, 2022, we were in the second extension period on our Series 2016 Preferred Stock resulting in an extension dividend rate of |
(2) | We fully redeemed our Series 2017 Preferred Stock immediately after the January 31, 2022 redemption date for approximately $ |
Three Months Ended March 31, 2022 |
||||||||||||||||||||
Class T |
Class I |
Class A |
Class TX |
Total |
||||||||||||||||
December 31, 2021 |
||||||||||||||||||||
Issuance of common stock |
||||||||||||||||||||
Distribution reinvestment |
||||||||||||||||||||
Repurchases of common stock |
( |
) | ( |
) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
March 31, 2022 |
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
Shareholder Record Date |
Monthly Rate |
Annually |
||||||
January 31, 2022 |
$ | $ | ||||||
February 28, 2022 |
$ | $ | ||||||
March 31, 2022 |
$ | $ |
11. |
Commitments and Contingencies |
A-ii |
Page |
||||||
ARTICLE 10 GENERAL PROVISIONS | A-62 | |||||
Section 10.1 |
Non-survival of Representations and Warranties and Certain Covenants | A-62 | ||||
Section 10.2 |
Notices | A-62 | ||||
Section 10.3 |
Severability | A-63 | ||||
Section 10.4 |
Counterparts | A-63 | ||||
Section 10.5 |
Entire Agreement; No Third-Party Beneficiaries | A-63 | ||||
Section 10.6 |
Amendment; Extension; Waiver | A-63 | ||||
Section 10.7 |
Governing Law; Venue | A-64 | ||||
Section 10.8 |
Assignment | A-64 | ||||
Section 10.9 |
Specific Performance | A-64 | ||||
Section 10.10 |
Waiver of Jury Trial | A-64 | ||||
Section 10.11 |
Authorship | A-65 |
A-iii |
Defined Term |
Location of Definition | |
Adverse Recommendation Change | Section 7.3(d) | |
Agreement | Preamble | |
Articles of Merger | Section 2.3(a) | |
CCI | Preamble | |
CCI Board | Recitals | |
CCI Class A Common Stock | Section 5.4(a) | |
CCI Class D Common Stock | Section 5.4(a) | |
CCI Class I Common Stock | Section 5.4(a) | |
CCI Class T Common Stock | Section 5.4(a) | |
CCI Class TX Common Stock | Section 5.4(a) | |
CCI Common Stock | Section 5.4(a) | |
CCI Conflicts Committee | Recitals | |
CCI Disclosure Letter | Article 5 | |
CCI Financial Advisor | Section 5.19 | |
CCI Insurance Policies | Section 5.15 | |
CCI Material Contract | Section 5.13(a) | |
CCI Parties | Preamble | |
CCI Permits | Section 5.9(a) | |
CCI SEC Documents | Section 5.6(a) | |
CCI Subsidiary Partnership | Section 5.14(f) | |
CCI Tax Protection Agreement | Section 5.14(f) | |
CCI Terminating Breach | Section 9.1(c)(i) | |
CCI Voting Debt | Section 5.4(e) | |
Certificate of Merger | Section 2.3(b) | |
Closing | Section 2.2 | |
Closing Date | Section 2.2 | |
Company Merger | Recitals | |
Company Merger Consideration | Section 3.1(a)(i) | |
Company Merger Effective Time | Section 2.3(a) | |
CMOF | Preamble | |
CMOF Board | Recitals | |
CMOF Board Recommendation | Section 4.2(c) | |
CMOF Change Notice | Section 7.3(e)(i) | |
CMOF Common Stock | Section 4.4(a) | |
CMOF Disclosure Letter | Article 4 | |
CMOF Financial Advisor | Section 4.19 | |
CMOF Insurance Policies | Section 4.15 | |
CMOF Material Contract | Section 4.12(a) | |
CMOF OP | Preamble | |
CMOF Parties | Preamble | |
CMOF Permits | Section 4.8(a) | |
CMOF Preferred Stock | Section 4.4(a) | |
CMOF Proxy Materials | Section 7.1(a) | |
CMOF SEC Documents | Section 4.5(a) | |
CMOF Special Committee | Recitals | |
CMOF Subsidiary Partnership | Section 4.13(f) | |
CMOF Tax Protection Agreements | Section 4.13(f) |
Defined Term |
Location of Definition | |
CMOF Terminating Breach | Section 9.1(d)(i) | |
CMOF Voting Debt | Section 4.4(d) | |
CROP | Preamble | |
Delaware Secretary | Section 2.3(b) | |
DRULPA | Recitals | |
Escrow Agreement | Section 9.3(e) | |
Form S-4 |
Section 7.1(a) | |
Indemnified Parties | Section 7.7(a) | |
Interim Period | Section 6.1(a) | |
Mergers | Recitals | |
Merger Sub | Preamble | |
MGCL | Recitals | |
MLLCA | Recitals | |
Outside Date | Section 9.1(b)(i) | |
Partnership Merger | Recitals | |
Partnership Merger Consideration | Section 3.1(b)(ii) | |
Partnership Merger Effective Time | Section 2.3(b) | |
Party(ies) | Preamble | |
Permits | Section 4.8(a) | |
Qualified REIT Subsidiary | Section 5.14(d) | |
Qualifying REIT Income | Section 9.3(e)(i) | |
Recovery Costs | Section 9.3(d) | |
Registered Securities | Section 7.1(a) | |
Sarbanes-Oxley Act | Section 5.6(a) | |
SDAT | Section 2.3(a) | |
Surviving Company | Section 2.1(a) | |
Surviving OP | Section 2.1(b) | |
Takeover Statutes | Section 4.20 | |
Taxable REIT Subsidiary | Section 5.14(d) | |
Transfer Agent | Section 3.2(a) | |
Transfer Taxes | Section 7.10(d) |
(a) | if to CMOF or CMOF OP to: |
(b) | if to CCI, CROP or Merger Sub to: |
COTTONWOOD COMMUNITIES, INC. |
COTTONWOOD MULTIFAMILY OPPORTUNITY FUND, INC. | |||||||
By: | /s/ Daniel Shaeffer |
By: | /s/ Gregg Christensen | |||||
Name: | Daniel Shaeffer | Name: | Gregg Christensen | |||||
Title: | Chief Executive Officer | Title: | Chief Legal Officer |
COTTONWOOD COMMUNITIES GP SUBSIDIARY, LLC |
COTTONWOOD MULTIFAMILY OPPORTUNITY FUND O.P., LP | |||||||||||||
By: |
COTTONWOOD COMMUNITIES, INC. ,its sole member |
By: |
COTTONWOOD MULTIFAMILY OPPORTUNITY FUND, INC. , its general partner | |||||||||||
By: | /s/ Daniel Shaeffer |
By: | /s/ Gregg Christensen | |||||||||||
Name: | Daniel Shaeffer | Name: | Gregg Christensen | |||||||||||
Title: | Chief Executive Officer | Title: | Chief Legal Officer | |||||||||||
COTTONWOOD RESIDENTIAL O.P., LP |
||||||||||||||
By: | COTTONWOOD COMMUNITIES GP SUBSIDIARY, LLC, its general partner |
|||||||||||||
By: | COTTONWOOD COMMUNITIES, INC., its sole member |
|||||||||||||
By: |
/s/ Daniel Shaeffer |
|||||||||||||
Name: |
Daniel Shaeffer | |||||||||||||
Title: |
Chief Executive Officer |
1. | reviewed the principal financial terms set forth in the Draft Agreement, which for purposes of this opinion we have, with your permission, assumed to be identical in all material respects to the agreement to be executed; |
2. | reviewed the financial statements contained in certain public company filings of the Company and the Buyer; |
3. | reviewed MAI appraisals that were commissioned by CBRE Cap from CBRE’s Advisory Valuation and Services Group as of March 31, 2022 (the “MAI Appraisals”); |
4. | reviewed certain other financial and operating information with respect to the Properties, the Company and the Buyer (including, but not limited to, the Buyer’s third-party appraisals dated April 30, 2022 (the “ Altus Appraisals ”) that were provided to us by the Company, the Buyer and certain of their advisors and representatives; |
5. | reviewed the financial terms of recent transactions involving properties that we deemed comparable in certain respects to the Properties; |
6. | reviewed BOVs that were performed by CBRE’s multifamily brokers as of May 2, 2022 (the “BOVs”); |
7. | reviewed certain publicly available information and industry research reports we deemed appropriate to arrive at the conclusions set forth herein; and |
8. | performed such other analyses, and considered such other factors, as we considered appropriate. |
1. | proprietary research, including geographic market and multi-family capitalization rate surveys and economic reports, prepared by affiliates of CBRE Cap; |
2. | a proprietary comparable transaction database maintained by CBRE Cap and its affiliates; and |
3. | other documents made available to us by the Company and the Buyer. |
CBRE CAPITAL ADVISORS, INC. | ||
By: | /s/ James E. Scott | |
Printed Name: | James E. Scott | |
Title: | Managing Principal |
• | Acquired $1.5 billion of real estate and real estate-related assets. |
• | Assumed $622.1 million in property-level financing. |
• | Assumed $64.1 million in construction loans. |
• | Assumed $144.0 million in Series 2016 and Series 2017 Preferred Stock. |
• | Assumed $48.6 million of unsecured promissory notes. |
• | Restructured the classes of shares we offer. |
• | Revised our compensation arrangements with our advisor and its affiliates. |
• | Adopted a monthly NAV policy beginning on May 7, 2021. NAV was $10.8315 per share as of May 7, 2021 compared to $17.2839 as of December 31, 2021. |
• | Amended our share repurchase program to provide additional liquidity to our stockholders. |
• | Received shareholder approval to remove liquidation provisions in our charter. |
• | Invested $81.8 million in seven projects under various stages of development in the Salt Lake City, UT market. |
• | Contributed $12.4 million of preferred equity to Riverfront, a development in West Sacramento, CA. |
• | Provided a $13.0 mezzanine loan to Integra Peaks, a development in Reno, NV. |
• | |
• | Loaned an additional $1.1 million in B Notes to Dolce Twin Creeks, Phase II prior to being repaid the full $9.3 million of those notes. |
• | Sold a 43% interest in Alpha Mill for $34.8 million. |
• | Closed an aggregate of $13.4 million in property-level financing and repaid $24.6 million. |
• | Drew an additional $52.5 million on construction loans. |
• | Raised $78.9 million of proceeds from the sale of our Series 2019 Preferred Stock. |
• | Repaid $5.1 million of unsecured promissory notes. |
• | Launched our Follow-on Offering of up to $1.0 billion of shares of our common stock on November 4, 2021, raising $2.5 million through the end of the year. |
Property Name |
Location |
Number of Units |
Average Unit Size (Sq Ft) |
Purchase Date |
Purchase Date Property Value |
Mortgage Debt Outstanding (1) |
Net Effective Rent |
Physical Occupancy Rate |
Percentage Owned by CROP |
|||||||||||||||||||||||
3800 Main |
Houston, TX | 319 | 831 | May 2021 | $ | 58,100 | $ | 35,861 | $ | 1,449 | 93.7 | % | 50.0 | % | ||||||||||||||||||
Alpha Mill |
Charlotte, NC | 267 | 830 | May 2021 | 69,500 | 39,044 | 1,438 | 95.5 | % | 57.2 | % | |||||||||||||||||||||
Cason Estates |
Murfreesboro, TN | 262 | 1,078 | May 2021 | 51,400 | 33,594 | 1,299 | 98.1 | % | 100.0 | % | |||||||||||||||||||||
Cottonwood |
Salt Lake City, UT | 264 | 834 | May 2021 | 47,300 | 21,645 | 1,216 | 96.6 | % | 100.0 | % | |||||||||||||||||||||
Cottonwood Bayview |
St. Petersburg, FL | 309 | 805 | May 2021 | 95,900 | 47,205 | 2,163 | 98.1 | % | 71.0 | % | |||||||||||||||||||||
Cottonwood One Upland |
Boston, MA | 262 | 1,160 | March 2020 | 103,600 | 20,000 | 2,460 | 93.1 | % | 100.0 | % | |||||||||||||||||||||
Cottonwood Reserve |
Charlotte, NC | 352 | 1,021 | May 2021 | 77,500 | 38,314 | 1,299 | 94.3 | % | 91.1 | % | |||||||||||||||||||||
Cottonwood Ridgeview |
Plano, TX | 322 | 1,156 | May 2021 | 70,000 | 29,800 | 1,551 | 96.6 | % | 90.5 | % | |||||||||||||||||||||
Cottonwood West Palm |
West Palm Beach, FL | 245 | 1,122 | May 2019 | 66,900 | 35,995 | 1,987 | 95.1 | % | 100.0 | % | |||||||||||||||||||||
Cottonwood Westside |
Atlanta, GA | 197 | 860 | May 2021 | 47,900 | 25,506 | 1,558 | 92.9 | % | 100.0 | % | |||||||||||||||||||||
Enclave on Golden Triangle |
Keller, TX | 273 | 1,048 | May 2021 | 51,600 | 34,000 | 1,443 | 96.0 | % | 98.9 | % | |||||||||||||||||||||
Fox Point |
Salt Lake City, UT | 398 | 841 | May 2021 | 79,400 | 46,000 | 1,234 | 95.2 | % | 52.8 | % | |||||||||||||||||||||
Heights at Meridian |
Durham, NC | 339 | 997 | May 2021 | 79,900 | 33,750 | 1,379 | 96.5 | % | 100.0 | % | |||||||||||||||||||||
Melrose |
Nashville, TN | 220 | 951 | May 2021 | 67,400 | 47,100 | 1,683 | 96.4 | % | 100.0 | % | |||||||||||||||||||||
Melrose Phase II |
Nashville, TN | 139 | 617 | May 2021 | 40,350 | 21,500 | 1,505 | 92.1 | % | 79.8 | % | |||||||||||||||||||||
Parc Westborough |
Boston, MA | 249 | 1,008 | May 2021 | 74,000 | 38,010 | 2,076 | 98.4 | % | 100.0 | % | |||||||||||||||||||||
Pavilions |
Albuquerque, NM | 240 | 1,162 | May 2021 | 61,100 | 37,350 | 1,669 | 96.7 | % | 96.4 | % | |||||||||||||||||||||
Raveneaux |
Houston, TX | 382 | 1,065 | May 2021 | 57,500 | 26,675 | 1,274 | 92.4 | % | 97.0 | % | |||||||||||||||||||||
Regatta |
Houston, TX | 490 | 862 | May 2021 | 48,100 | 35,367 | 982 | 95.7 | % | 100.0 | % | |||||||||||||||||||||
Retreat at Peachtree City |
Peachtree City, GA | 312 | 980 | May 2021 | 72,500 | 48,719 | 1,530 | 94.9 | % | 100.0 | % | |||||||||||||||||||||
Scott Mountain |
Portland, OR | 262 | 927 | May 2021 | 70,700 | 48,373 | 1,537 | 90.8 | % | 95.8 | % | |||||||||||||||||||||
Stonebriar of Frisco |
Frisco, TX | 306 | 963 | May 2021 | 59,200 | 36,400 | 1,350 | 96.1 | % | 84.2 | % | |||||||||||||||||||||
Summer Park |
Buford, GA | 358 | 1,064 | May 2021 | 75,500 | 44,620 | 1,336 | 98.0 | % | 98.7 | % | |||||||||||||||||||||
The Marq Highland Park (2) |
Tampa, FL | 239 | 999 | May 2021 | 65,700 | 34,613 | 1,768 | 95.0 | % | 100.0 | % | |||||||||||||||||||||
Toscana at Valley Ridge |
Lewisville, TX | 288 | 738 | May 2021 | 47,700 | 30,700 | 1,113 | 98.6 | % | 58.6 | % | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Total / Weighted-Average |
7,294 | 961 | $ | 1,638,750 | $ | 890,141 | $ | 1,495 | 95.5% | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
(1) | Mortgage debt outstanding is shown as if CROP owned 100% of the property. |
(2) | Excludes the commercial data in units count and physical occupancy. |
Property Name |
Location |
Units to be Built |
Average Unit Size (Sq Ft) |
Purchase Date |
Estimated Completion Date |
Investment Amount |
Percentage Owned by CROP |
|||||||||||||||||||||
Cottonwood on Broadway |
Salt Lake City, UT | 254 | 817 | May 2021 | 4Q2022 | $ | 6,020 | 18.84 | % (1) | |||||||||||||||||||
Park Avenue |
Salt Lake City, UT | 234 | 714 | May 2021 | 1Q2022 | 7,824 | 23.56 | % (1) | ||||||||||||||||||||
Sugarmont |
Salt Lake City, UT | 341 | 904 | May 2021 | 2Q2022 | 67,034 | 99.00 | % (3) | ||||||||||||||||||||
Cottonwood on Highland (2) |
Millcreek, UT | 250 | 757 | May 2021 | 1Q2023 | 8,221 | 36.93 | % | ||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||||||
Total |
1,079 | $ | 89,099 | |||||||||||||||||||||||||
|
|
|
|
(1) | Cottonwood Multifamily Opportunity Fund, Inc., a fund sponsored by a subsidiary of CROP, indirectly owns a majority of the remaining interest. |
(2) | Intended to qualify as a qualified opportunity zone investment. Excludes the commercial data in unit count. |
(3) | The one percent interest not owned by us has limited rights, including the right to control on behalf of the joint venture the prosecution and resolution of all litigation, claims, or causes of action that the joint venture has or may have against certain third parties associated with the design and construction of Sugarmont, as well as the obligation to defend any cross claims resulting from these actions. |
Property Name |
Location |
Purchase Date |
Investment Amount |
Percentage Owned by CROP |
||||||||||||
Block C (1) |
Salt Lake City, UT | May 2021 | $ | 1,946 | 37.02 | % | ||||||||||
Jasper |
Salt Lake City, UT | June 2021 | 3,307 | 100.00 | % | |||||||||||
3300 Cottonwood |
Salt Lake City, UT | October 2021 | 7,521 | 100.00 | % | |||||||||||
|
|
|||||||||||||||
Total |
$ | 12,774 | ||||||||||||||
|
|
(1) | Cottonwood Multifamily Opportunity Fund, Inc., a fund sponsored by a subsidiary of CROP, indirectly owns a majority of the remaining interest. |
Property Name |
Location |
Investment Type |
Date of Initial Investment |
Number of Units |
Funding Commitment |
Amount Funded to Date |
||||||||||||||||||
Lector85 |
Ybor City, FL | Preferred Equity | August 2019 | 254 | $ | 9,900 | $ | 9,900 | ||||||||||||||||
Vernon Boulevard |
Queens, NY | Preferred Equity | July 2020 | 534 | 15,000 | 15,000 | ||||||||||||||||||
Riverfront |
West Sacramento, CA | Preferred Equity | November 2020 | 285 | 15,092 | 15,092 | ||||||||||||||||||
Integra Peaks at Damonte |
Reno, NV | Mezzanine Loan | June 2021 | 300 | 13,000 | 13,000 | ||||||||||||||||||
|
|
|
|
|
|
|||||||||||||||||||
Total |
1,373 | $ | 52,992 | $ | 52,992 | |||||||||||||||||||
|
|
|
|
|
|
Year Ended December 31, |
|
|||||||||||
2021 |
2020 |
Change |
||||||||||
Revenues |
||||||||||||
Rental and other property revenues |
$ | 73,129 | $ | 10,749 | $ | 62,380 | ||||||
Property management revenues |
8,597 | — | 8,597 | |||||||||
Other revenues |
1,455 | 576 | 879 | |||||||||
|
|
|
|
|
|
|||||||
Total revenues |
83,181 | 11,325 | 71,856 | |||||||||
Operating expenses |
||||||||||||
Property operations expense |
27,759 | 4,570 | 23,189 | |||||||||
Property management expense |
11,302 | — | 11,302 | |||||||||
Reimbursable operating expenses |
331 | 1,030 | (699 | ) | ||||||||
Asset management fee |
8,052 | 2,799 | 5,253 | |||||||||
Performance participation allocation |
51,761 | — | 51,761 | |||||||||
Depreciation and amortization |
63,397 | 6,966 | 56,431 | |||||||||
General and administrative expenses |
9,880 | 3,354 | 6,526 | |||||||||
|
|
|
|
|
|
|||||||
Total operating expenses |
172,482 | 18,719 | 153,763 | |||||||||
|
|
|
|
|
|
Year Ended December 31, |
|
|||||||||||
2021 |
2020 |
Change |
||||||||||
Loss from operations |
(89,301 | ) | (7,394 | ) | (81,907 | ) | ||||||
Equity in earnings (losses) of unconsolidated real estate entities |
(533 | ) | 2,113 | (2,646 | ) | |||||||
Interest income |
207 | 198 | 9 | |||||||||
Interest expense |
(26,954 | ) | (3,665 | ) | (23,289 | ) | ||||||
Gain on sale of real estate assets |
10,912 | — | 10,912 | |||||||||
Other (expense) income |
2 | 197 | (195 | ) | ||||||||
|
|
|
|
|
|
|||||||
Loss before income taxes |
(105,667 | ) | (8,551 | ) | (97,116 | ) | ||||||
Income tax expense |
(1,238 | ) | — | (1,238 | ) | |||||||
|
|
|
|
|
|
|||||||
Net loss |
(106,905 | ) | (8,551 | ) | (98,354 | ) | ||||||
Net loss attributable to noncontrolling interests: |
||||||||||||
Limited partners |
58,923 | — | 58,923 | |||||||||
Partially owned entities |
4,066 | — | 4,066 | |||||||||
|
|
|
|
|
|
|||||||
Net loss attributable to common stockholders |
$ | (43,916 | ) | $ | (8,551 | ) | $ | (35,365 | ) | |||
|
|
|
|
|
|
|||||||
Weighted-average common shares outstanding |
17,603,981 | 10,781,487 | 6,822,494 | |||||||||
|
|
|
|
|
|
|||||||
Net loss per common share—basic and diluted |
$ | (2.49 | ) | $ | (0.79 | ) | $ | (1.70 | ) | |||
|
|
|
|
|
|
Twelve Months Ended December 31, 2022 |
Thereafter |
|||||||
Debt repayments (1) |
$ | 82,170 | $ | 718,060 | ||||
Preferred Stock redemptions |
142,582 | 111,863 | ||||||
Interest payments |
32,630 | 113,443 | ||||||
Operating leases |
217 | 147 | ||||||
|
|
|
|
|||||
$ | 257,599 | $ | 943,513 | |||||
|
|
|
|
(1) | Includes mortgages notes, revolving credit facilities, construction loans and unsecured promissory notes. Scheduled interest payments included in these amounts for variable rate loans are presented using rates (including the impact of interest rate swaps) as of December 31, 2021. |
December 31, |
||||||||
2021 |
2020 |
|||||||
Distributions paid in cash—common stockholders |
$ | 9,482 | $ | 4,145 | ||||
Distributions paid in cash to noncontrolling interests—limited partners |
10,591 | — | ||||||
Distributions of DRP (reinvested) |
141 | 1,107 | ||||||
|
|
|
|
|||||
Total distributions (1) |
$ | 20,214 | $ | 5,252 | ||||
|
|
|
|
|||||
Source of distributions (2) |
||||||||
Paid from cash flows provided by operations |
$ | 11,044 | $ | 572 | ||||
Paid from revolving credit facility |
5,000 | — | ||||||
Paid from offering proceeds |
4,029 | 3,573 | ||||||
Offering proceeds from issuance of common stock pursuant to the DRP |
141 | 1,107 | ||||||
|
|
|
|
|||||
Total sources |
$ | 20,214 | $ | 5,252 | ||||
|
|
|
|
|||||
Net cash provided by (used in) operating activities (2) |
$ | 5,424 | $ | (2,816 | ) | |||
|
|
|
|
(1) | Distributions are paid on a monthly basis. In general, distributions for all record dates of a given month are paid on or about the fifth business day of the following month. |
(2) | The allocation of total sources are calculated on a quarterly basis. Generally, for purposes of determining the source of our distributions paid, we assume first that we use positive cash flow from operating activities from the relevant or prior quarter to fund distribution payments. As such, amounts reflected above as distributions paid from cash flows provided by operations may be from prior quarters which had positive cash flow from operations. |
2021 |
2022 |
|||||||||||||||
Property Name, Location |
Total Capital Deployed |
CCI/CROP Funded |
Capital Budgeted |
CCI/CROP Funded |
||||||||||||
Cottonwood on Broadway |
$ | 19,273 | $ | — | $ | 17,333 | $ | — | ||||||||
Sugarmont |
17,622 | — | 10,000 | 10,000 | ||||||||||||
Park Avenue |
15,676 | 1,907 | 7,480 | 1,305 | ||||||||||||
Cottonwood on Highland |
16,181 | — | 27,049 | 739 | ||||||||||||
All other properties |
15,939 | 10,767 | 1,005 | 1,005 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
$ | 84,691 | $ | 12,674 | $ | 62,867 | $ | 13,049 | |||||||||
|
|
|
|
|
|
|
|
For the Year Ended December 31, |
||||||||
2021 |
2020 |
|||||||
Net cash provided by (used in) operating activities |
$ | 5,424 | $ | (2,816 | ) | |||
Net cash used in investing activities |
(44,297 | ) | (83,284 | ) | ||||
Net cash provided by financing activities |
79,630 | 42,991 | ||||||
|
|
|
|
|||||
Net increase (decrease) in cash and cash equivalents and restricted cash |
40,757 | (43,109 | ) | |||||
|
|
|
|
Class |
Total |
|||||||||||||||||||
T |
I |
A |
TX |
|||||||||||||||||
Shares issued through Primary Offering |
1,394,087 | 442,888 | — | — | 1,836,975 | |||||||||||||||
Shares issued through DRP Offering |
19 | 456 | 26,120 | — | 26,595 | |||||||||||||||
Gross Proceeds |
$ | 25,000 | $ | 7,888 | $ | 458 | $ | — | $ | 33,346 |
Shareholder Record Date |
Monthly Rate |
Annually |
||||||
January 31, 2022 |
$ | 0.05833333 | $ | 0.70 | ||||
February 28, 2022 |
$ | 0.05916667 | $ | 0.71 | ||||
March 31, 2022 |
$ | 0.05916667 | $ | 0.71 |
• | Attained net loss attributable to common stockholders of $0.12 per diluted share, representing a 52% improvement compared to the same period in the prior year. |
• | Achieved funds from operations attributable to common stockholders and unit holders (“FFO”) of $0.11 per diluted share. Core FFO was also $0.06 per diluted share, representing a 100.0% increase compared to the same period in the prior year. |
• | NAV increased from $17.2839 as of December 31, 2021 to $19.6324 as of March 31, 2022, representing an increase of 13.6%. |
• | Closed an aggregate of $369.5 million in property-level financing and repaid $218.7 million. |
• | Construction loan draws equal to $9.2 million and repaid $59.7 million with permanent debt upon refinancing. |
• | Raised $14.2 million of net proceeds from the sale of our Series 2019 Preferred Stock. |
• | Fully redeemed our 2017 Preferred Stock for $2.7 million. |
• | Raised $33.4 million of net proceeds from the sale of stock issued under our Follow-on Offering. |
• | Realized a promote of $30.3 million from an incentive allocation agreement with a real estate firm. |
• | Paid the performance participation allocation of $51.8 million that was accrued during 2021. |
Property Name |
Location |
Number of Units |
Average Unit Size (Sq Ft) |
Purchase Date |
Purchase Date Property Value |
Mortgage Debt Outstanding (1) |
Physical Occupancy Rate |
Percentage Owned by CROP |
||||||||||||||||||||
3800 Main |
Houston, TX | 319 | 831 | May 2021 | $ | 58,100 | $ | 35,703 | 91.54 | % | 50.00 | % | ||||||||||||||||
Alpha Mill |
Charlotte, NC | 267 | 830 | May 2021 | 69,500 | 39,044 | 94.76 | % | 57.21 | % | ||||||||||||||||||
Cason Estates |
Murfreesboro, TN | 262 | 1,078 | May 2021 | 51,400 | 33,594 | 97.71 | % | 100.00 | % | ||||||||||||||||||
Cottonwood |
Salt Lake City, UT | 264 | 834 | May 2021 | 47,300 | 21,645 | 94.70 | % | 100.00 | % | ||||||||||||||||||
Cottonwood Bayview |
St. Petersburg, FL | 309 | 805 | May 2021 | 95,900 | 46,953 | 95.79 | % | 71.00 | % | ||||||||||||||||||
Cottonwood One Upland |
Boston, MA | 262 | 1,160 | March 2020 | 103,600 | — | 96.56 | % | 100.00 | % | ||||||||||||||||||
Cottonwood Reserve |
Charlotte, NC | 352 | 1,021 | May 2021 | 77,500 | 38,187 | 96.07 | % | 91.14 | % | ||||||||||||||||||
Cottonwood Ridgeview |
Plano, TX | 322 | 1,156 | May 2021 | 70,000 | 65,300 | 95.34 | % | 90.45 | % | ||||||||||||||||||
Cottonwood West Palm |
West Palm Beach, FL | 245 | 1,122 | May 2019 | 66,900 | 35,995 | 95.92 | % | 100.00 | % | ||||||||||||||||||
Cottonwood Westside |
Atlanta, GA | 197 | 860 | May 2021 | 47,900 | 25,383 | 91.88 | % | 100.00 | % | ||||||||||||||||||
Enclave on Golden Triangle |
Keller, TX | 273 | 1,048 | May 2021 | 51,600 | 48,400 | 96.70 | % | 98.93 | % | ||||||||||||||||||
Fox Point |
Salt Lake City, UT | 398 | 841 | May 2021 | 79,400 | 46,000 | 96.48 | % | 52.75 | % | ||||||||||||||||||
Heights at Meridian |
Durham, NC | 339 | 997 | May 2021 | 79,900 | 36,180 | 93.81 | % | 100.00 | % | ||||||||||||||||||
Melrose |
Nashville, TN | 220 | 951 | May 2021 | 67,400 | 56,600 | 93.18 | % | 100.00 | % | ||||||||||||||||||
Melrose Phase II |
Nashville, TN | 139 | 675 | May 2021 | 40,350 | 32,400 | 96.40 | % | 79.82 | % | ||||||||||||||||||
Parc Westborough |
Boston, MA | 249 | 1,008 | May 2021 | 74,000 | — | 96.79 | % | 100.00 | % | ||||||||||||||||||
Pavilions |
Albuquerque, NM | 240 | 1,162 | May 2021 | 61,100 | 58,500 | 93.33 | % | 96.35 | % | ||||||||||||||||||
Raveneaux |
Houston, TX | 382 | 1,065 | May 2021 | 57,500 | 47,400 | 91.62 | % | 96.97 | % | ||||||||||||||||||
Regatta |
Houston, TX | 490 | 862 | May 2021 | 48,100 | 35,367 | 94.68 | % | 100.00 | % | ||||||||||||||||||
Retreat at Peachtree City |
Peachtree City, GA | 312 | 980 | May 2021 | 72,500 | 48,719 | 92.95 | % | 100.00 | % |
Property Name |
Location |
Number of Units |
Average Unit Size (Sq Ft) |
Purchase Date |
Purchase Date Property Value |
Mortgage Debt Outstanding (1) |
Physical Occupancy Rate |
Percentage Owned by CROP |
||||||||||||||||||||||
Scott Mountain |
Portland, OR | 262 | 927 | May 2021 | 70,700 | 48,373 | 94.66 | % | 95.80 | % | ||||||||||||||||||||
Stonebriar of Frisco |
Frisco, TX | 306 | 963 | May 2021 | 59,200 | 53,600 | 96.41 | % | 84.19 | % | ||||||||||||||||||||
Summer Park |
Buford, GA | 358 | 1,064 | May 2021 | 75,500 | 44,620 | 98.60 | % | 98.68 | % | ||||||||||||||||||||
The Marq Highland Park (2) |
Tampa, FL | 239 | 999 | May 2021 | 65,700 | 34,459 | 99.16 | % | 100.00 | % | ||||||||||||||||||||
Toscana at Valley Ridge |
Lewisville, TX | 288 | 738 | May 2021 | 47,700 | 30,700 | 99.31 | % | 58.60 | % | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Total / Weighted-Average |
7,294 | 962 | $ | 1,638,750 | $ | 963,122 | 95.34 | % | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
(1) | Mortgage debt outstanding is shown as if CROP owned 100% of the property. |
(2) | Excludes the commercial data in units count and physical occupancy. |
Property Name |
Location |
Units to be Built |
Average Unit Size (Sq Ft) |
Purchase Date |
Estimated Completion Date |
Investment Amount |
Percentage Owned by CROP |
|||||||||||||||||||||
Cottonwood on Broadway |
Salt Lake City, UT | 254 | 817 | May 2021 | 4Q2022 | $ | 6,020 | 18.84 | % (1) | |||||||||||||||||||
Park Avenue |
Salt Lake City, UT | 234 | 714 | May 2021 | 2Q2022 | 8,017 | 23.57 | % (1) | ||||||||||||||||||||
Sugarmont |
Salt Lake City, UT | 341 | 904 | May 2021 | 2Q2022 | 69,599 | 99.00 | % (3) | ||||||||||||||||||||
Cottonwood on Highland (2) |
Millcreek, UT | 250 | 757 | May 2021 | 1Q2023 | 8,221 | 36.93 | % | ||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||||||
Total |
1,079 | $ | 91,857 | |||||||||||||||||||||||||
|
|
|
|
(1) | Cottonwood Multifamily Opportunity Fund, Inc., a fund sponsored by a subsidiary of CROP, indirectly owns a majority of the remaining interest. |
(2) | Intended to qualify as a qualified opportunity zone investment. Excludes the commercial data in unit count. |
(3) | The one percent interest not owned by us has limited rights, including the right to control on behalf of the joint venture the prosecution and resolution of all litigation, claims, or causes of action that the joint venture has or may have against certain third parties associated with the design and construction of Sugarmont, as well as the obligation to defend any crossclaims resulting from these actions. |
Property Name |
Location |
Investment Type |
Date of Initial Investment |
Number of Units |
Funding Commitment |
Amount Funded to Date |
||||||||||||||
Lector85 |
Ybor City, FL | Preferred Equity | August 2019 | 254 | $ | 9,900 | $ | 9,900 | ||||||||||||
Vernon Boulevard |
Queens, NY | Preferred Equity | July 2020 | 534 | 15,000 | 15,000 | ||||||||||||||
Riverfront |
West Sacramento, CA | Preferred Equity | November 2020 | 285 | 15,092 | 15,092 | ||||||||||||||
Integra Peaks at Damonte |
Reno, NV | Mezzanine Loan | June 2021 | 300 | 13,000 | 13,000 | ||||||||||||||
|
|
|
|
|
|
|||||||||||||||
Total |
1,373 | $ | 52,992 | $ | 52,992 | |||||||||||||||
|
|
|
|
|
|
Property Name |
Location |
Purchase Date |
Investment Amount |
Percentage Owned by CROP |
||||||||||||
Block C (1) |
Salt Lake City, UT | May 2021 | $ | 2,149 | 37.02 | % | ||||||||||
Jasper |
Salt Lake City, UT | June 2021 | 3,307 | 100.00 | % | |||||||||||
3300 Cottonwood |
Salt Lake City, UT | October 2021 | 7,521 | 100.00 | % | |||||||||||
|
|
|||||||||||||||
Total |
$ | 12,977 | ||||||||||||||
|
|
(1) | Cottonwood Multifamily Opportunity Fund, Inc., a fund sponsored by a subsidiary of CROP, indirectly owns a majority of the remaining interest. |
Three Months Ended March 31, |
||||||||||||
2022 |
2021 |
Change |
||||||||||
Revenues |
||||||||||||
Rental and other property revenues |
$ | 26,820 | $ | 3,172 | $ | 23,648 | ||||||
Property management revenues |
3,124 | — | 3,124 | |||||||||
Other revenues |
615 | 245 | 370 | |||||||||
|
|
|
|
|
|
|||||||
Total revenues |
30,559 | 3,417 | 27,142 | |||||||||
Operating expenses |
||||||||||||
Property operations expense |
9,672 | 1,348 | 8,324 | |||||||||
Property management expense |
4,952 | — | 4,952 | |||||||||
Asset management fee |
3,792 | 886 | 2,906 | |||||||||
Performance participation allocation |
19,934 | — | 19,934 | |||||||||
Depreciation and amortization |
11,268 | 1,338 | 9,930 | |||||||||
General and administrative expenses |
3,223 | 2,503 | 720 | |||||||||
|
|
|
|
|
|
|||||||
Total operating expenses |
52,841 | 6,075 | 46,766 | |||||||||
|
|
|
|
|
|
|||||||
Loss from operations |
(22,282 | ) | (2,658 | ) | (19,624 | ) | ||||||
Equity in earnings of unconsolidated real estate entities |
2,670 | 951 | 1,719 | |||||||||
Interest income |
16 | — | 16 | |||||||||
Interest expense |
(11,117 | ) | (1,330 | ) | (9,787 | ) | ||||||
Promote from incentive allocation agreement |
30,309 | — | 30,309 | |||||||||
Loss on debt extinguishment |
(551 | ) | — | (551 | ) | |||||||
Other income |
1,530 | 27 | 1,503 | |||||||||
|
|
|
|
|
|
|||||||
Income (loss) before income taxes |
575 | (3,010 | ) | 3,585 | ||||||||
Income tax expense |
(7,463 | ) | — | (7,463 | ) | |||||||
|
|
|
|
|
|
|||||||
Net loss |
(6,888 | ) | (3,010 | ) | (3,878 | ) | ||||||
Net loss attributable to noncontrolling interests: |
— | |||||||||||
Limited partners |
3,828 | — | 3,828 | |||||||||
Partially owned entities |
55 | — | 55 | |||||||||
|
|
|
|
|
|
|||||||
Net loss attributable to common stockholders |
$ | (3,005 | ) | $ | (3,010 | ) | $ | 5 | ||||
|
|
|
|
|
|
|||||||
Weighted-average common shares outstanding |
24,654,085 | 12,232,289 | 12,421,796 | |||||||||
|
|
|
|
|
|
|||||||
Net loss per common share—basic and diluted |
$ | (0.12 | ) | $ | (0.25 | ) | $ | 0.13 | ||||
|
|
|
|
|
|
Three Months Ended March 31, |
||||||||
2022 |
2021 |
|||||||
Net loss attributable to common stockholders |
$ | (3,005 | ) | $ | (3,010 | ) | ||
Adjustments to arrive at FFO: |
||||||||
Real estate related depreciation and amortization |
10,424 | 1,338 | ||||||
Depreciation and amortization from unconsolidated real estate entities |
2,343 | — | ||||||
Loss allocated to noncontrolling interests—limited partners |
(3,828 | ) | — | |||||
Amount attributable to above from noncontrolling interests—partially owned entities |
337 | — | ||||||
|
|
|
|
|||||
Funds from operations attributable to common stockholders and unit holders |
6,271 | (1,672 | ) | |||||
|
|
|
|
|||||
Adjustments: |
||||||||
Amortization of intangible assets |
844 | — | ||||||
Accretion of discount on preferred stock |
1,281 | 278 | ||||||
Performance participation allocation |
19,934 | — | ||||||
Promote from incentive allocation agreement (tax effected) |
(23,047 | ) | ||||||
Acquisition fees and expenses (1) |
73 | 1,709 | ||||||
Loss on debt extinguishment |
551 | — | ||||||
Gains on derivatives |
(1,427 | ) | ||||||
Other adjustments |
76 | 71 | ||||||
Amount attributable to above from unconsolidated real estate entities |
(1,012 | ) | — | |||||
Amount attributable to above from noncontrolling interests—partially owned entities |
53 | |||||||
|
|
|
|
|||||
Core funds from operations attributable to common stockholders and unit holders |
$ | 3,597 | $ | 386 | ||||
|
|
|
|
|||||
FFO per common share and unit—basic and diluted |
$ | 0.11 | $ | (0.14 | ) | |||
Core FFO per common share and unit—basic and diluted |
$ | 0.06 | $ | 0.03 | ||||
Weighted-average common shares and units outstanding |
56,059,856 | 12,232,289 |
(1) | Acquisition fees and expenses during the three months ended March 31, 2021 included costs associated with the CRII Merger, the CMRI Merger, and the CMRII Merger. |
Components of NAV* |
As of 3/31/2022 |
|||
Investments in Multifamily Operating Properties |
$ | 1,973,186 | ||
Investments in Multifamily Development Properties |
220,520 | |||
Investments in Real-estate Related Structured Investments |
63,832 | |||
Operating Company, Land and Other Net Current Assets |
76,021 | |||
Cash and Cash Equivalents |
75,508 | |||
Secured Real Estate Financing |
(965,051 | ) | ||
Subordinated Unsecured Notes |
(43,443 | ) | ||
Preferred Equity |
(267,173 | ) | ||
Accrued Performance Participation Allocation |
(19,934 | ) | ||
|
|
|||
NAV |
$ | 1,113,467 | ||
|
|
|||
Fully-diluted Shares/Units Outstanding |
56,715,620 |
* |
Presented as adjusted for the Company’s economic ownership percentage in each asset. |
Class |
Total |
|||||||||||||||||||||||
T |
I |
A |
TX |
OP (1) |
||||||||||||||||||||
As of March 31, 2022 |
||||||||||||||||||||||||
Monthly NAV |
$ | 27,158 | $ | 12,299 | $ | 457,206 | $ | 344 | $ | 616,460 | $ | 1,113,467 | ||||||||||||
Fully-diluted Outstanding Shares/Units |
1,383,342 | 626,463 | 23,288,245 | 17,525 | 31,400,045 | 56,715,620 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
NAV per Fully-diluted Share/Unit |
$ | 19.6324 | $ | 19.6324 | $ | 19.6324 | $ | 19.6324 | $ | 19.6324 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
(1) | Includes the partnership interests of CROP held by High Traverse Holdings, an entity beneficially owned by Daniel Shaeffer, Chad Christensen, Gregg Christensen and Eric Marlin and other CROP interests, including LTIP Units as described above, held by parties other than us. |
Discount Rate |
Exit Capitalization Rate |
|||||||
Operating Assets |
5.74 | % | 4.44 | % | ||||
Development Assets |
5.92 | % | 4.40 | % |
* |
Presented as adjusted for the Company’s economic ownership percentage in each asset, weighted by gross value. |
Sensitivities |
Change |
Operating Asset Values |
Development Asset Values |
|||||||||
Discount Rate |
0.25% decrease | 2.5 | % | 2.2 | % | |||||||
0.25% increase | (2.5 | )% | (2.2 | )% | ||||||||
|
|
|
|
|
|
|||||||
Exit Capitalization Rate |
0.25% decrease | 4.8 | % | 4.5 | % | |||||||
0.25% increase | (4.1 | )% | (4.1 | )% |
* |
Presented as adjusted for the Company’s economic ownership percentage in each asset. |
March 31, 2022 |
||||
Stockholders’ equity |
$ | 199,143 | ||
Non-controlling interests attributable to limited partners |
282,549 | |||
|
|
|||
Total partners’ capital of CROP under U.S. GAAP |
481,692 | |||
Adjustments at share: |
||||
Accumulated depreciation and amortization, consolidated and unconsolidated entities |
94,356 | |||
Goodwill |
(439 | ) | ||
Deferred tax liability |
3,661 | |||
Discount on preferred stock |
(9,588 | ) | ||
Unrealized net real estate and debt appreciation |
543,785 | |||
|
|
|||
NAV |
$ | 1,113,467 | ||
|
|
• | Our preferred stock is accounted for as a liability with associated issuance costs deferred and amortized under GAAP. These issuance costs are excluded for purposes of determining our NAV. |
• | We recorded goodwill for the difference between the transaction price of the CRII Merger and the fair value of identifiable assets acquired, liabilities assumed, and non-controlling interests. Goodwill was not included for purposes of determining our NAV. |
• | We recorded deferred tax liabilities for the tax effects on the difference in the value of certain assets recorded with the CRII Merger and their underlying tax basis. These deferred tax liabilities were excluded for purposes of determining our NAV. |
• | We depreciate our investments in real estate and amortize certain other assets and liabilities in accordance with GAAP. Such depreciation and amortization is not recorded for purposes of determining our NAV. |
• | Accumulated depreciation and amortization associated with our investments in unconsolidated real estate entities is also not recorded for purposes of determining our NAV. |
• | We manage properties on behalf of third parties and under certain agreements have contractual rights to receive promotional interests subject to minimum return hurdles. We do not recognize promotes under GAAP until a liquidation transaction is probable, but do include the fair value of promotes, using a hypothetical liquidation valuation method, for purposes of determining our NAV. |
• | Our investments in real estate are presented under historical cost in our GAAP consolidated financial statements. Additionally, our mortgage notes, revolving credit facility and construction loans (“Debt”) are presented at their carrying value in our consolidated GAAP financial statements. As such, any increases or decreases in the fair market value of our investments in real estate or our Debt are not included in our GAAP results. For purposes of determining our NAV, our investments in real estate and our Debt are recorded at fair value. |
Three Months Ended March 31, |
||||||||
2022 |
2021 |
|||||||
Net cash used in operating activities |
$ | (14,806 | ) | $ | (202 | ) | ||
Net cash provided by (used in) investing activities |
20,084 | (3,372 | ) | |||||
Net cash provided by financing activities |
99,517 | 6,360 | ||||||
|
|
|
|
|||||
Net increase in cash and cash equivalents and restricted cash |
$ | 104,795 | $ | 2,786 | ||||
|
|
|
|
Three Months Ended March 31, 2022 |
Year Ended December 31, 2021 |
|||||||
Distributions paid in cash—common stockholders |
$ | 4,174 | $ | 9,482 | ||||
Distributions paid in cash to noncontrolling interests—limited partners |
5,460 | 10,591 | ||||||
Distributions of DRP (reinvested) |
466 | 141 | ||||||
|
|
|
|
|||||
Total distributions (1) |
$ | 10,100 | $ | 20,214 | ||||
|
|
|
|
|||||
Source of distributions (2) |
||||||||
Paid from cash flows provided by operations |
$ | — | $ | 11,044 | ||||
Paid from revolving credit facility |
— | 5,000 | ||||||
Paid from offering proceeds |
9,634 | 4,029 | ||||||
Offering proceeds from issuance of common stock pursuant to the DRP |
466 | 141 | ||||||
|
|
|
|
|||||
Total sources |
$ | 10,100 | $ | 20,214 | ||||
|
|
|
|
|||||
Net cash used in operating activities (2) |
$ | (14,806 | ) | $ | (2,816 | ) | ||
|
|
|
|
(1) | Distributions are paid on a monthly basis. In general, distributions for all record dates of a given month are paid on or about the fifth business day of the following month. |
(2) | The allocation of total sources are calculated on a quarterly basis. Generally, for purposes of determining the source of our distributions paid, we assume first that we use positive cash flow from operating activities from the relevant or prior quarter to fund distribution payments. As such, amounts reflected above as distributions paid from cash flows provided by operations may be from prior quarters which had positive cash flow from operations. |
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D-61 |
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D-75 |
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D-107 |
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D-3 |
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Consolidated Financial Statements |
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D-4 |
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D-5 |
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D-6 |
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D-7 |
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D-9 |
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D-25 |
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D-26 |
December 31, |
||||||||
2020 |
2019 |
|||||||
Assets |
||||||||
Real estate assets, net |
$ | 823,569 | $ | 675,821 | ||||
Investments in unconsolidated real estate entities |
44,723 | 73,015 | ||||||
Cash and cash equivalents |
36,359 | 44,568 | ||||||
Restricted cash |
20,643 | 8,127 | ||||||
Related party notes |
9,177 | 9,208 | ||||||
Related party receivables |
1,187 | 1,485 | ||||||
Deficiency notes |
— | 10,130 | ||||||
Other assets |
36,163 | 38,378 | ||||||
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|
|
|||||
Total assets |
$ | 971,821 | $ | 860,732 | ||||
|
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|
|||||
Liabilities, Equity, and Noncontrolling Interests |
||||||||
Liabilities |
||||||||
Mortgage notes, net |
$ | 628,042 | $ | 568,451 | ||||
Construction loans, net |
50,007 | — | ||||||
Preferred stock, net |
143,532 | 139,986 | ||||||
Unsecured promissory notes, net |
46,642 | 44,829 | ||||||
Accounts payable, accrued expenses and other liabilities |
34,582 | 20,394 | ||||||
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|
|||||
Total liabilities |
902,805 | 773,660 | ||||||
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|
|||||
Commitments and contingencies ( Note 11 |
||||||||
Equity and Noncontrolling Interests |
||||||||
Stockholders’ equity |
||||||||
Common stock, $0.01 par value per share; 1,100,000,000 shares authorized, 213,484 and 297,650 shares issued and outstanding at December 31, 2020 and 2019, respectively |
2 | 3 | ||||||
Additional paid-in capital |
3,554 | 5,355 | ||||||
Cumulative distributions |
(380 | ) | (166 | ) | ||||
Accumulated deficit |
(1,897 | ) | (930 | ) | ||||
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|
|
|
|||||
Total stockholders’ equity |
1,279 | 4,262 | ||||||
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|
|
|
|||||
Noncontrolling interests |
||||||||
Limited partners |
(70,856 | ) | (35,634 | ) | ||||
Partially owned entities |
138,593 | 118,444 | ||||||
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|
|
|
|||||
Total noncontrolling interests |
67,737 | 82,810 | ||||||
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|
|
|||||
Total equity and noncontrolling interests |
69,016 | 87,072 | ||||||
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|
|||||
Total liabilities, equity and noncontrolling interests |
$ | 971,821 | $ | 860,732 |
For the Year Ended December 31, |
||||||||
2020 |
2019 |
|||||||
Revenues |
||||||||
Rental and other property revenues |
$ | 85,851 | $ | 85,203 | ||||
Property management and development |
15,532 | 12,545 | ||||||
Advisory services |
5,316 | 2,717 | ||||||
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|
|||||
Total revenues |
106,699 | 100,465 | ||||||
Operating expenses |
||||||||
Property operations |
34,266 | 35,189 | ||||||
Property management |
14,732 | 14,070 | ||||||
Depreciation and amortization |
32,858 | 32,793 | ||||||
General and administrative |
14,245 | 14,568 | ||||||
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|
|
|||||
Total operating expenses |
96,101 | 96,620 | ||||||
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|
|
|||||
Income from operations |
10,598 | 3,845 | ||||||
Equity in earnings of unconsolidated real estate entities |
589 | 1,179 | ||||||
Interest income |
4,137 | 1,412 | ||||||
Interest expense |
(41,704 | ) | (41,488 | ) | ||||
Gain on sale of unconsolidated real estate entities |
— | 6,823 | ||||||
Loss on consolidation of variable interest entity |
(2,543 | ) | — | |||||
Other expenses, net |
(2,387 | ) | (148 | ) | ||||
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|
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|
|||||
Loss before income taxes |
(31,310 | ) | (28,377 | ) | ||||
Income tax benefit (loss) |
3,590 | (292 | ) | |||||
|
|
|
|
|||||
Net loss |
(27,720 | ) | (28,669 | ) | ||||
Net loss attributable to noncontrolling interests: |
||||||||
Limited partners |
24,065 | 22,194 | ||||||
Partially owned entities |
2,688 | 5,546 | ||||||
|
|
|
|
|||||
Net loss attributable to common stockholders |
$ | (967 | ) | $ | (929 | ) | ||
|
|
|
|
Cottonwood Residential II, Inc. Stockholders’ Equity |
Noncontrolling Interests |
|||||||||||||||||||||||||||||||||||
Common Stock |
Additional Paid-In-Capital |
Cumulative Distributions |
Accumulated Deficit |
Total Stockholders’ Equity |
Limited Partners |
Partially Owned Entities |
Total Equity and Noncontrolling Interests |
|||||||||||||||||||||||||||||
Shares |
Amount |
|||||||||||||||||||||||||||||||||||
Balance at December 31, 2018 |
50 | $ | — | $ | 1 | $ | — | $ | (1 | ) | $ | 0 | $ | 2,989 | $ | 65,018 | $ | 68,007 | ||||||||||||||||||
Acquisition of consolidated real estate assets |
— | — | — | — | — | — | — | 28,866 | 28,866 | |||||||||||||||||||||||||||
OP Units issued for interests in unconsolidated real estate entities |
— | — | — | — | — | — | 9,697 | — | 9,697 | |||||||||||||||||||||||||||
Development contributions from noncontrolling interests |
— | — | — | — | — | — | — | 30,416 | 30,416 | |||||||||||||||||||||||||||
Advisor contributions from noncontrolling interests |
— | — | — | — | — | — | — | 6,457 | 6,457 | |||||||||||||||||||||||||||
Issuance of common stock, net of issuance costs |
297,600 | 3 | 5,354 | — | — | 5,357 | — | — | 5,357 | |||||||||||||||||||||||||||
Repurchase of OP Units |
— | — | — | — | — | — | (15,492 | ) | — | (15,492 | ) | |||||||||||||||||||||||||
Share based compensation |
— | — | — | — | — | — | 2,302 | — | 2,302 | |||||||||||||||||||||||||||
Other comprehensive income |
— | — | — | — | — | — | 143 | — | 143 | |||||||||||||||||||||||||||
Net loss |
— | — | — | — | (929 | ) | (929 | ) | (22,194 | ) | (5,546 | ) | (28,669 | ) | ||||||||||||||||||||||
Distributions |
— | — | — | (166 | ) | — | (166 | ) | (13,079 | ) | (6,767 | ) | (20,012 | ) | ||||||||||||||||||||||
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Balance at December 31, 2019 |
297,650 | $ | 3 | $ | 5,355 | $ | (166 | ) | $ | (930 | ) | $ | 4,262 | $ | (35,634 | ) | $ | 118,444 | $ | 87,072 | ||||||||||||||||
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|
|||||||||||||||||||
Development contributions from noncontrolling interests |
— | — | — | — | — | — | — | 20,453 | 20,453 | |||||||||||||||||||||||||||
Consolidation upon change of control ( Note 3 |
— | — | — | — | — | — | — | 15,430 | 15,430 | |||||||||||||||||||||||||||
Consolidation upon exchange of senior executive notes ( Note 5 |
— | — | — | — | — | — | (2,800 | ) | (2,800 | ) | ||||||||||||||||||||||||||
Interest acquired upon exchange of senior executive notes ( Note 5) |
— | — | — | — | — | — | 1,714 | (1,714 | ) | — | ||||||||||||||||||||||||||
Redemption of common stock |
(84,166 | ) | (1 | ) | (1,801 | ) | — | — | (1,802 | ) | — | — | (1,802 | ) | ||||||||||||||||||||||
Repurchase of OP Units |
— | — | — | — | — | — | (2,792 | ) | — | (2,792 | ) | |||||||||||||||||||||||||
Share based compensation |
— | — | — | — | — | — | 2,987 | — | 2,987 | |||||||||||||||||||||||||||
Other |
— | — | — | — | — | — | 356 | — | 356 | |||||||||||||||||||||||||||
Net loss |
— | — | — | — | (967 | ) | (967 | ) | (24,065 | ) | (2,688 | ) | (27,720 | ) | ||||||||||||||||||||||
Distributions |
— | — | — | (214 | ) | — | (214 | ) | (13,422 | ) | (8,532 | ) | (22,168 | ) | ||||||||||||||||||||||
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Balance at December 31, 2020 |
213,484 | $ | 2 | $ | 3,554 | $ | (380 | ) | $ | (1,897 | ) | $ | 1,279 | $ | (70,856 | ) | $ | 138,593 | $ | 69,016 | ||||||||||||||||
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|
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For the Year Ended December 31, |
||||||||
2020 |
2019 |
|||||||
Operating activities |
||||||||
Net loss |
$ | (27,720 | ) | $ | (28,669 | ) | ||
Adjustments to reconcile net loss to cash provided by operating activities: |
||||||||
Depreciation and amortization |
32,858 | 32,793 | ||||||
Amortization of deferred financing costs |
6,632 | 6,301 | ||||||
Loss on consolidation of variable interest entity |
2,543 | — | ||||||
Gain on sale of unconsolidated real estate entities |
— | (6,823 | ) | |||||
Share based compensation |
2,987 | 2,302 | ||||||
Other operating |
(64 | ) | 126 | |||||
Equity in earnings of unconsolidated real estate entities |
(589 | ) | (1,179 | ) | ||||
Distributions from unconsolidated real estate entities—return on capital |
4,310 | 4,389 | ||||||
Changes in operating assets and liabilities: |
||||||||
Other assets |
715 | 4,920 | ||||||
Accounts payable, accrued and other liabilities |
7,288 | 259 | ||||||
|
|
|
|
|||||
Net cash provided by operating activities |
28,960 | 14,419 | ||||||
|
|
|
|
|||||
Cash flows from investing activities |
||||||||
Acquisition of interests in consolidated real estate assets, net of cash and restricted cash acquired |
— | (1,675 | ) | |||||
Capital expenditures and development activities |
(56,343 | ) | (19,933 | ) | ||||
Contributions to developments from noncontrolling interests |
22,168 | 21,525 | ||||||
Investment in unconsolidated real estate entities |
(274 | ) | (9,186 | ) | ||||
Cash and restricted cash from consolidation of variable interest entity |
8,681 | — | ||||||
Distributions from unconsolidated real estate entities—return of capital |
— | 11,140 | ||||||
Related party receivables |
451 | (1,056 | ) | |||||
Related party notes |
(4,484 | ) | (4,553 | ) | ||||
Issuance of deficiency notes |
(30,942 | ) | (10,130 | ) | ||||
Contributions to Advisor from noncontrolling interests |
— | 6,457 | ||||||
Sponsored offering costs |
(3,992 | ) | (11,374 | ) | ||||
Other investing activities |
(15 | ) | (114 | ) | ||||
|
|
|
|
|||||
Net cash used in investing activities |
(64,750 | ) | (18,899 | ) | ||||
|
|
|
|
|||||
Cash flows from financing activities |
||||||||
Principal payments on mortgage notes |
(829 | ) | (918 | ) | ||||
Proceeds from mortgage notes, net of issuance costs |
218,291 | 117,132 | ||||||
Proceeds from construction loans |
8,361 | — | ||||||
Repayment of mortgage notes |
(158,834 | ) | (95,679 | ) | ||||
Redemption of preferred stock |
(1,192 | ) | (1,640 | ) | ||||
Issuance of unsecured promissory notes, net of issuance costs |
947 | 21,819 | ||||||
Issuance of common stock |
— | 5,665 | ||||||
Redemption of common stock |
(1,802 | ) | — | |||||
Repurchase of OP Units |
(2,792 | ) | (15,492 | ) | ||||
Distributions to common stockholders |
(214 | ) | (166 | ) | ||||
Distributions to noncontrolling interest holders |
(21,963 | ) | (19,908 | ) | ||||
Other financing activity |
124 | 467 | ||||||
|
|
|
|
|||||
Net cash provided by financing activities |
40,097 | 11,280 | ||||||
|
|
|
|
For the Year Ended December 31, |
||||||||
2020 |
2019 |
|||||||
Net increase in cash, cash equivalents and restricted cash |
4,307 | 6,800 | ||||||
Cash, cash equivalents, and restricted cash at the beginning of period |
52,695 | 45,895 | ||||||
|
|
|
|
|||||
Cash, cash equivalents, and restricted cash at the end of period |
$ |
57,002 |
$ |
52,695 |
||||
|
|
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|
|||||
Reconciliation of cash, cash equivalents and restricted cash to the consolidated balance sheets: |
| |||||||
Cash and cash equivalents |
$ | 36,359 | $ | 44,568 | ||||
Restricted cash |
20,643 | 8,127 | ||||||
|
|
|
|
|||||
Total cash, cash equivalents and restricted cash |
$ | 57,002 | $ | 52,695 | ||||
|
|
|
|
|||||
Supplemental schedule of cash flow information |
||||||||
Interest paid |
$ | 33,813 | $ | 34,688 | ||||
Income taxes paid (refunded), net |
(2,907 | ) | 90 | |||||
Supplemental schedule of noncash investing and financing activities |
||||||||
Consolidation upon change of control |
||||||||
Capitalized development costs |
$ | 119,532 | $ | — | ||||
Construction loan |
41,646 | — | ||||||
Elimination of deficiency notes |
41,072 | — | ||||||
Acquisition of investments in unconsolidated entities |
||||||||
Value of OP Units issued for investments in unconsolidated real estate entities |
— | 9,697 | ||||||
Note receivable exchanged for investment in unconsolidated real estate entity |
— | 2,474 | ||||||
Related party note issuance |
— | 4,655 | ||||||
Related party notes extinguished on exchange |
4,514 | — |
Land improvements |
5-15 | |
Building |
30 | |
Building improvements |
5-15 | |
Furniture, fixtures, and equipment |
5-15 |
Standard |
Description |
Required date of adoption |
Effect on the Financial Statements or Other Significant Matters | |||
ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments |
This ASU requires entities to estimate a lifetime expected credit loss for most financial assets, including trade and other receivables and other long term financings including available for sale and held-to-maturity 2018-19, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, which amends the scope of ASU 2016-13 and clarified that receivables arising from operating leases are not within the scope of the standard and should continue to be accounted for in accordance with the leases standard (Topic 842). |
January 1, 2023 | ASU 2016-13 affects entities holding financial assets and net investments in leases that are not accounted for at fair value through net income. The amendments in ASU 2016-13 require a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected. We are evaluating the impact of adopting ASU 2016-13 on our financial statements. |
December 31, |
||||||||
2020 |
2019 |
|||||||
Land |
$ | 121,029 | $ | 103,372 | ||||
Construction in progress |
168,836 | 15,570 | ||||||
Depreciable property: |
||||||||
Buildings and improvement |
624,672 | 624,671 | ||||||
Furniture, fixtures, and equipment |
30,114 | 26,302 | ||||||
Intangible assets |
17,976 | 17,976 | ||||||
|
|
|
|
|||||
962,627 | 787,891 | |||||||
Less: Accumulated depreciation and amortization |
(139,058 | ) | (112,070 | ) | ||||
|
|
|
|
|||||
Real estate assets, net |
$ | 823,569 | $ | 675,821 | ||||
|
|
|
|
Allocated Amounts |
||||||||||||||||||||||||
Property |
Consolidation Date |
Land |
Building |
Property Improvements |
Intangible |
Net Other |
||||||||||||||||||
Heights at Meridian |
January 8, 2019 | $ | 5,855 | $ | 52,920 | $ | 4,153 | $ | 1,658 | $ | 942 |
December 31, |
||||||||||||
Property |
% Owned |
2020 |
2019 |
|||||||||
Stabilized Assets |
||||||||||||
3800 Main |
50.0 | % | $ | 6,152 | $ | 6,892 | ||||||
Cottonwood Bayview |
71.0 | % | 21,127 | 22,368 | ||||||||
Cottonwood Ridgeview |
90.5 | % | 3,086 | 3,974 | ||||||||
Fox Point |
52.8 | % | 5,428 | 5,640 | ||||||||
Toscana at Valley Ridge |
58.6 | % | 3,689 | 3,988 | ||||||||
Development Projects |
||||||||||||
Sugarmont JV |
— | 24,690 | ||||||||||
Melrose Phase II |
4,175 | 4,175 | ||||||||||
Other |
1,066 | 1,288 | ||||||||||
|
|
|
|
|||||||||
Total |
$ | 44,723 | $ | 73,015 | ||||||||
|
|
|
|
December 31, |
||||||||||||||||
Lender |
Debtor |
Investment Type |
2020 |
2019 |
||||||||||||
Operating Partnership |
Senior Executives | |
Cottonwood Communities Advisor |
|
$ | 6,457 | $ | 6,457 | ||||||||
Operating Partnership |
Senior Executives | Park Avenue Development | — | 1,811 | ||||||||||||
Operating Partnership |
Senior Executives | Broadway Development | — | 940 | ||||||||||||
Cottonwood Communities Advisor |
|
Cottonwood Multifamily REIT I, Inc. |
|
Sponsored REIT | 996 | — | ||||||||||
Cottonwood Communities Advisor |
|
Cottonwood Multifamily REIT II, Inc. |
|
Sponsored REIT | 1,724 | — | ||||||||||
|
|
|
|
|||||||||||||
$ | 9,177 | $ | 9,208 | |||||||||||||
|
|
|
|
December 31, |
||||||||
2020 |
2019 |
|||||||
Fixed rate mortgage notes |
$ | 193,032 | $ | 252,275 | ||||
Variable rate mortgage notes |
440,813 | 321,317 | ||||||
|
|
|
|
|||||
Total mortgage notes |
633,845 | 573,592 | ||||||
Unamortized debt financing costs |
(5,803 | ) | (5,141 | ) | ||||
|
|
|
|
|||||
Mortgage notes, net |
$ | 628,042 | $ | 568,451 | ||||
|
|
|
|
Year |
Total |
|||
2021 |
$ | 1,371 | ||
2022 |
17,187 | |||
2023 |
83,465 | |||
2024 |
140,383 | |||
2025 |
4,135 | |||
Thereafter |
387,304 | |||
|
|
|||
$ | 633,845 | |||
|
|
Development |
Interest Rate |
Final Expiration Date |
Loan Amount |
Amount Drawn as of December 31, 2020 |
||||||||||||
Sugarmont |
3.50% | October 1, 2022 | $ | 63,250 | $ | 41,646 | ||||||||||
Park Ave |
Daily Libor + 1.9% | May 15, 2023 | 37,000 | 8,361 | ||||||||||||
|
|
|
|
|||||||||||||
$ | 100,250 | $ | 50,007 | |||||||||||||
|
|
|
|
December 31, |
||||||||||||||||||||
Offering Size |
Interest Rate |
Maturity Date |
2020 |
2019 |
||||||||||||||||
2017 6.25% Notes |
$ | 5,000 | 6.25 | % | December 31, 2021 | $ | 5,000 | $ | 4,000 | |||||||||||
2017 6% Notes |
35,000 | 6.00 | % | December 31, 2022 | 20,918 | 20,918 | ||||||||||||||
2019 6% Notes |
25,000 | 6.00 | % | December 31, 2023 | 22,725 | 22,675 | ||||||||||||||
Unamortized debt financing costs |
(2,001 | ) | (2,764 | ) | ||||||||||||||||
|
|
|
|
|
|
|||||||||||||||
$ | 65,000 | $ | 46,642 | $ | 44,829 | |||||||||||||||
|
|
|
|
|
|
Shares Outstanding at December 31, |
||||||||||||||||||||
Dividend Rate |
Extension Dividend Rate |
Redemption Date |
2020 |
2019 |
||||||||||||||||
Series 2016 Preferred Stock |
6.5 | % | 7.0 | % | January 31, 2021 | 14,149,943 | 14,277,566 | |||||||||||||
Series 2017 Preferred Stock |
7.5 | % | 8.0 | % | January 31, 2022 | 258,550 | 258,550 |
Shares Outstanding at December 31, |
||||||||||||
Class |
Shares Authorized |
2020 |
2019 |
|||||||||
Common Stock Total |
1,100,000,000 | 213,484 | 297,650 | |||||||||
Voting Common Stock |
50 | 50 | 50 | |||||||||
Non-Voting Common Stock |
2,000,000 | 213,434 | 213,434 | |||||||||
Non-Voting Series B Common Stock |
100,000 | — | 84,166 |
Initial Cost to Company |
December 31, 2020 |
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Property Name |
Property Location |
Number of Units |
Year(s) Built |
Percent Owned by the Operating Partnership |
Land |
Buildings, Intangibles and Improvements |
Cost Capitalized Subsequent to Acquisition |
Land |
Buildings and Fixtures |
Total |
Accumulated Depreciation and Amortization |
Total Cost, Net |
Encumbrances |
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Stabilized Multifamily Communities |
||||||||||||||||||||||||||||||||||||||||||||||||||||
Alpha Mill |
Charlotte, NC | 267 | 2007, 2014 | 10.0 | % | $ | 8,156 | $ | 43,770 | $ | 1,427 | $ | 8,156 | $ | 45,163 | $ | 53,319 | $ | (8,549 | ) | $ | 44,770 | $ | (36,265 | ) | |||||||||||||||||||||||||||
Cason Estates |
|
Murfreesboro, TN |
|
262 | 2005 | 100.0 | % | 1,865 | 25,028 | 440 | 1,865 | 25,463 | 27,328 | (4,568 | ) | 22,760 | (33,594 | ) | ||||||||||||||||||||||||||||||||||
Cottonwood |
|
Salt Lake City, UT |
|
264 | 1986 | 100.0 | % | 3,290 | 20,645 | 1,278 | 3,290 | 21,921 | 25,211 | (3,992 | ) | 21,219 | (21,645 | ) | ||||||||||||||||||||||||||||||||||
Cottonwood Reserve |
Charlotte, NC | 352 | 2004 | 91.1 | % | 2,911 | 34,987 | 11,277 | 3,757 | 45,411 | 49,168 | (10,180 | ) | 38,988 | (38,788 | ) | ||||||||||||||||||||||||||||||||||||
Cottonwood Westside |
Atlanta, GA | 197 | 2014 | 10.0 | % | 5,894 | 37,107 | 852 | 5,894 | 37,954 | 43,848 | (6,901 | ) | 36,947 | (25,655 | ) | ||||||||||||||||||||||||||||||||||||
Enclave at Golden Triangle |
Keller, TX | 273 | 2006 | 98.9 | % | 2,523 | 23,984 | 1,565 | 2,523 | 25,545 | 28,068 | (7,226 | ) | 20,842 | (34,000 | ) | ||||||||||||||||||||||||||||||||||||
Heights at Meridian |
Durham, NC | 339 | 2015 | 10.0 | % | 5,882 | 58,703 | 308 | 5,882 | 59,008 | 64,890 | (6,093 | ) | 58,797 | (33,750 | ) | ||||||||||||||||||||||||||||||||||||
Melrose |
Nashville, TN | 220 | 2015 | 100.0 | % | 6,181 | 52,920 | 458 | 6,181 | 53,371 | 59,552 | (10,036 | ) | 49,516 | (47,100 | ) | ||||||||||||||||||||||||||||||||||||
Parc Westborough |
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Westborough, MA |
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249 | 2016 | 35.7 | % | 10,221 | 55,179 | 269 | 10,221 | 55,444 | 65,665 | (7,068 | ) | 58,597 | (38,010 | ) | ||||||||||||||||||||||||||||||||||
Pavilions |
|
Albuquerque, NM |
|
240 | 1992 | 96.4 | % | 2,100 | 24,437 | 5,222 | 2,100 | 29,651 | 31,751 | (12,454 | ) | 19,297 | (37,350 | ) | ||||||||||||||||||||||||||||||||||
Raveneaux |
Houston, TX | 382 | 2000 | 97.0 | % | 3,423 | 45,308 | 2,387 | 3,423 | 47,688 | 51,111 | (9,816 | ) | 41,295 | (26,675 | ) | ||||||||||||||||||||||||||||||||||||
Regatta |
Houston, TX | 490 | 1968-1976 | 100.0 | % | 4,633 | 21,033 | 2,037 | 4,633 | 23,053 | 27,686 | (3,697 | ) | 23,989 | (35,367 | ) | ||||||||||||||||||||||||||||||||||||
Retreat at Peachtree |
|
Peachtree City, GA |
|
312 | 1999 | 100.0 | % | 6,415 | 38,790 | 1,666 | 6,415 | 40,446 | 46,861 | (9,979 | ) | 36,882 | (48,719 | ) | ||||||||||||||||||||||||||||||||||
Scott Mountain |
Portland, OR | 262 | 1997, 2000 | 95.8 | % | 3,500 | 34,672 | 2,496 | 3,500 | 37,163 | 40,663 | (9,352 | ) | 31,311 | (48,373 | ) | ||||||||||||||||||||||||||||||||||||
Stonebriar of Frisco |
Frisco, TX | 306 | 1999 | 84.2 | % | 3,785 | 22,843 | 3,110 | 3,785 | 25,958 | 29,743 | (7,922 | ) | 21,821 | (36,400 | ) | ||||||||||||||||||||||||||||||||||||
Summer Park |
Buford, GA | 358 | 2001 | 98.7 | % | 6,596 | 30,116 | 529 | 6,596 | 30,640 | 37,236 | (3,713 | ) | 33,523 | (44,620 | ) | ||||||||||||||||||||||||||||||||||||
Timber Ridge |
Mobile, AL | 320 | 1998, 2000 | 30.4 | % | 1,833 | 21,614 | 3,521 | 1,833 | 25,135 | 26,968 | (7,865 | ) | 19,103 | (15,274 | ) | ||||||||||||||||||||||||||||||||||||
The Marq Highland Park |
Tampa, FL | 239 | 2015 | 10.0 | % | 2,962 | 43,039 | 868 | 2,962 | 43,906 | 46,868 | (9,647 | ) | 37,221 | (32,260 | ) | ||||||||||||||||||||||||||||||||||||
Development Projects |
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Sugarmont |
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Salt Lake City, UT |
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341 | N/A | 60.6 | % | 15,037 | 113,179 | — | 15,037 | 113,460 | 128,497 | — | 128,497 | (41,646 | ) | |||||||||||||||||||||||||||||||||||
Broadway |
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Salt Lake City, UT |
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254 | N/A | 18.8 | % | 6,215 | 31,796 | — | 6,215 | 31,796 | 38,011 | — | 38,011 | (8,361 | ) | |||||||||||||||||||||||||||||||||||
Other Developments |
Various | 484 | N/A | Various | 16,761 | 22,373 | — | 16,761 | 23,422 | 40,183 | — | 40,183 | — | |||||||||||||||||||||||||||||||||||||||
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6,411 |
$ |
120,183 |
$ |
801,523 |
$ |
39,710 |
$ |
121,029 |
$ |
841,598 |
$ |
962,627 |
$ |
(139,058 |
) |
$ |
823,569 |
$ |
(683,852 |
) | ||||||||||||||||||||||||||||||||
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Balance Sheet Information as of December 31, 2020 |
Operating data for the period ending December 31, 2020 |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property |
Location |
% Owned |
Apartment Units |
Real Estate Assets, Net |
Other Assets |
Mortgage Debt |
Other Liabilities |
Equity |
Revenue |
Direct Expenses |
Interest |
Management Fee |
Net Operating Income |
Depreciation |
Other Income (Loss) |
Property Income (Loss) |
||||||||||||||||||||||||||||||||||||||||||||||||
3800 Main |
Houston, TX | 50.0 | % | 319 | $ | 44,850 | $ | 2,435 | $ | 36,283 | $ | 1,673 | $ | 9,329 | $ | 5,623 | $ | 2,937 | $ | 1,165 | $ | 148 | $ | 1,373 | $ | 1,721 | $ | (48 | ) | $ | (300 | ) | ||||||||||||||||||||||||||||||||
Cottonwood Bayview |
St. Petersburg, FL | 71.0 | % | 309 | 66,240 | 1,073 | 48,163 | 341 | 18,809 | 7,109 | 2,919 | 1,897 | 213 | 2,080 | 2,522 | 29 | (471 | ) | ||||||||||||||||||||||||||||||||||||||||||||||
Cottonwood Ridgeview |
Plano, TX | 90.5 | % | 322 | 36,369 | 1,744 | 30,394 | 1,294 | 6,425 | 5,740 | 2,516 | 1,330 | 172 | 1,722 | 1,689 | 57 | (24 | ) | ||||||||||||||||||||||||||||||||||||||||||||||
Fox Point |
Salt Lake City, UT | 52.8 | % | 398 | 25,263 | 1,171 | 20,809 | 338 | 5,287 | 5,461 | 1,721 | 705 | 218 | 2,817 | 1,226 | 8 | 1,583 | |||||||||||||||||||||||||||||||||||||||||||||||
Toscana at Valley Ridge |
Lewisville, TX | 58.6 | % | 288 | 24,103 | 1,355 | 18,157 | 806 | 6,495 | 4,019 | 1,698 | 824 | 121 | 1,376 | 1,150 | (50 | ) | 276 | ||||||||||||||||||||||||||||||||||||||||||||||
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1,636 | $ | 196,825 | $ | 7,778 | $ | 153,806 | $ | 4,452 | $ | 46,345 | $ | 27,952 | $ | 11,791 | $ | 5,921 | $ | 872 | $ | 9,368 | $ | 8,308 | $ | (4 | ) | $ | 1,064 | |||||||||||||||||||||||||||||||||||||
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Page |
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D-28 |
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Consolidated Financial Statements |
||||
D-29 |
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D-30 |
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D-31 |
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D-32 |
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D-33 |
December 31, |
||||||||
2020 |
2019 |
|||||||
Assets |
||||||||
Investments in joint ventures |
$ | 27,126 | $ | 31,478 | ||||
Cash and cash equivalents |
301 | 260 | ||||||
Related party receivables |
— | 13 | ||||||
Other assets |
58 | 46 | ||||||
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Total assets |
$ | 27,485 | $ | 31,797 | ||||
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Liabilities and equity |
||||||||
Liabilities: |
||||||||
Accounts payable and accrued liabilities |
259 | 327 | ||||||
Related party payables |
1,675 | 1,044 | ||||||
Promissory note to advisor |
996 | — | ||||||
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|||||
Total liabilities |
2,930 | 1,371 | ||||||
Commitments and contingencies (Note 7) |
||||||||
Equity: |
||||||||
Preferred stock, $0.01 par value, 100,000,000 shares authorized; no shares issued and outstanding |
— | — | ||||||
Common stock, $0.01 par value, 1,000,000,000 shares authorized; 4,904,045 and 4,941,345 shares issued and outstanding at December 31, 2020 and 2019, respectively |
49 | 49 | ||||||
Additional paid in capital |
48,948 | 49,365 | ||||||
Accumulated distributions |
(11,525 | ) | (8,693 | ) | ||||
Accumulated deficit |
(12,917 | ) | (10,295 | ) | ||||
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Total equity |
24,555 | 30,426 | ||||||
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Total liabilities and equity |
$ | 27,485 | $ | 31,797 | ||||
|
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|
Year Ended December 31, |
||||||||
2020 |
2019 |
|||||||
Equity in losses of joint ventures |
$ | (885 | ) | $ | (1,323 | ) | ||
Asset management fee to related party |
(1,108 | ) | (1,054 | ) | ||||
Other expenses |
(629 | ) | (277 | ) | ||||
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Net loss |
$ | (2,622 | ) | $ | (2,654 | ) | ||
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Net loss per basic and diluted common shares |
$ | (0.53 | ) | $ | (0.53 | ) | ||
Weighted average common shares outstanding, basic and diluted |
4,924,904 | 4,974,184 |
Common Stock |
||||||||||||||||||||||||
Shares |
Amount |
Additional Paid in Capital |
Accumulated Distributions |
Accumulated Deficit |
Total Equity |
|||||||||||||||||||
Balance at December 31, 2018 |
4,984,700 | $ | 50 | $ | 49,802 | $ | (5,836 | ) | $ | (7,641 | ) | $ | 36,375 | |||||||||||
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Common stock repurchases |
(43,355 | ) | (1 | ) | (437 | ) | — | — | (438 | ) | ||||||||||||||
Distributions to investors |
— | — | — | (2,857 | ) | — | (2,857 | ) | ||||||||||||||||
Net loss |
— | — | — | — | (2,654 | ) | (2,654 | ) | ||||||||||||||||
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Balance at December 31, 2019 |
4,941,345 | $ | 49 | $ | 49,365 | $ | (8,693 | ) | $ | (10,295 | ) | $ | 30,426 | |||||||||||
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Common stock repurchases |
(37,300 | ) | — | (417 | ) | — | — | (417 | ) | |||||||||||||||
Distributions to investors |
— | — | — | (2,832 | ) | — | (2,832 | ) | ||||||||||||||||
Net loss |
— | — | — | — | (2,622 | ) | (2,622 | ) | ||||||||||||||||
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Balance at December 31, 2020 |
4,904,045 | $ | 49 | $ | 48,948 | $ | (11,525 | ) | $ | (12,917 | ) | $ | 24,555 | |||||||||||
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Year Ended December 31, |
||||||||
2020 |
2019 |
|||||||
Operating activities |
||||||||
Net loss |
$ | (2,622 | ) | $ | (2,654 | ) | ||
Adjustments to reconcile net loss to net cash provided by operating activities: |
||||||||
Equity in losses of joint ventures |
885 | 1,323 | ||||||
Distributions of capital from joint ventures |
3,467 | 3,009 | ||||||
Changes in operating assets and liabilities: |
||||||||
Related party receivables |
13 | (13 | ) | |||||
Other assets |
(12 | ) | (21 | ) | ||||
Accounts payable and accrued liabilities |
(66 | ) | 38 | |||||
Related party payables |
631 | 913 | ||||||
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Net cash provided by operating activities |
2,296 | 2,595 | ||||||
Financing activities |
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Promissory note to advisor |
996 | — | ||||||
Common stock repurchases |
(417 | ) | (438 | ) | ||||
Distributions to common stockholders |
(2,834 | ) | (2,859 | ) | ||||
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Net cash used in financing activities |
(2,255 | ) | (3,297 | ) | ||||
Net increase (decrease) in cash and cash equivalents |
41 | (702 | ) | |||||
Cash and cash equivalents at beginning of period |
260 | 962 | ||||||
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Cash and cash equivalents at end of period |
$ | 301 | $ | 260 | ||||
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Alpha Mill |
Cottonwood Westside |
The Marq Highland Park |
Total |
|||||||||||||
2018 carrying value |
$ | 11,405 | $ | 13,469 | $ | 10,936 | $ | 35,810 | ||||||||
Equity in losses |
(440 | ) | (522 | ) | (361 | ) | (1,323 | ) | ||||||||
Distributions |
(1,016 | ) | (840 | ) | (1,153 | ) | (3,009 | ) | ||||||||
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2019 carrying value |
$ | 9,949 | $ | 12,107 | $ | 9,422 | $ | 31,478 | ||||||||
Equity in losses |
(326 | ) | (406 | ) | (153 | ) | (885 | ) | ||||||||
Distributions |
(1,169 | ) | (873 | ) | (1,425 | ) | (3,467 | ) | ||||||||
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2020 carrying value |
$ | 8,454 | $ | 10,828 | $ | 7,844 | $ | 27,126 | ||||||||
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Year Ended December 31, 2020 |
Alpha Mill |
Cottonwood Westside |
The Marq Highland Park |
Total |
Equity in Earnings (Losses) at 90% |
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Revenues |
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Rental and other operating income |
$ | 4,417 | $ | 3,539 | $ | 4,717 | $ | 12,673 | $ | 11,406 | ||||||||||
Operating expenses |
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Rental operations expense |
1,371 | 1,486 | 1,825 | 4,682 | 4,214 | |||||||||||||||
Advertising and marketing |
63 | 47 | 58 | 168 | 151 | |||||||||||||||
General and administrative |
77 | 64 | 59 | 200 | 180 | |||||||||||||||
Property management fees |
155 | 124 | 165 | 444 | 400 | |||||||||||||||
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Total operating expenses |
1,666 | 1,721 | 2,107 | 5,494 | 4,945 | |||||||||||||||
Net operating income |
2,751 | 1,818 | 2,610 | 7,179 | 6,461 | |||||||||||||||
Non operating expenses |
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Interest on Fannie Mae facility |
1,204 | 859 | 1,052 | 3,115 | 2,804 | |||||||||||||||
Depreciation and amortization |
1,734 | 1,376 | 1,692 | 4,802 | 4,322 | |||||||||||||||
Mark to market adjustments on interest rate caps |
23 | 17 | 17 | 57 | 51 | |||||||||||||||
Other non operating expenses |
152 | 17 | 19 | 188 | 169 | |||||||||||||||
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Net loss |
$ | (362 | ) | $ | (451 | ) | $ | (170 | ) | $ | (983 | ) | $ | (885 | ) | |||||
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|
Year Ended December 31, 2019 |
Alpha Mill |
Cottonwood Westside |
The Marq Highland Park |
Total |
Equity in Earnings (Losses) at 90% |
|||||||||||||||
Revenues |
||||||||||||||||||||
Rental and other operating income |
$ | 4,476 | $ | 3,619 | $ | 4,656 | $ | 12,751 | $ | 11,476 | ||||||||||
Operating expenses |
||||||||||||||||||||
Rental operations expense |
1,312 | 1,482 | 1,772 | 4,566 | 4,109 | |||||||||||||||
Advertising and marketing |
60 | 57 | 57 | 174 | 157 | |||||||||||||||
General and administrative |
85 | 67 | 63 | 215 | 194 | |||||||||||||||
Property management fees |
157 | 126 | 163 | 446 | 401 | |||||||||||||||
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Total operating expenses |
1,614 | 1,732 | 2,055 | 5,401 | 4,861 | |||||||||||||||
Net operating income |
2,862 | 1,887 | 2,601 | 7,350 | 6,615 | |||||||||||||||
Non operating expenses |
||||||||||||||||||||
Interest on Fannie Mae facility |
1,410 | 992 | 1,210 | 3,612 | 3,251 | |||||||||||||||
Depreciation and amortization |
1,708 | 1,364 | 1,676 | 4,748 | 4,273 | |||||||||||||||
Mark to market adjustments on interest rate caps |
217 | 105 | 107 | 429 | 386 | |||||||||||||||
Other non operating expenses |
16 | 5 | 10 | 31 | 28 | |||||||||||||||
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|
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Net loss |
$ | (489 | ) | $ | (579 | ) | $ | (402 | ) | $ | (1,470 | ) | $ | (1,323 | ) | |||||
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|
December 31, 2020 |
Alpha Mill |
Cottonwood Westside |
The Marq Highland Park |
Total |
||||||||||||
Real estate assets, net |
$ | 45,028 | $ | 37,105 | $ | 37,326 | $ | 119,459 | ||||||||
Other assets |
766 | 710 | 743 | 2,219 | ||||||||||||
Fannie Mae facility |
36,265 | 25,655 | 32,260 | 94,180 | ||||||||||||
Other liabilities |
345 | 217 | 244 | 806 | ||||||||||||
Equity |
9,184 | 11,943 | 5,565 | 26,692 |
December 31, 2019 |
Alpha Mill |
Cottonwood Westside |
The Marq Highland Park |
Total |
||||||||||||
Real estate assets, net |
$ | 46,574 | $ | 38,436 | $ | 38,952 | $ | 123,962 | ||||||||
Other assets |
870 | 814 | 938 | 2,622 | ||||||||||||
Fannie Mae facility |
36,265 | 25,655 | 32,260 | 94,180 | ||||||||||||
Other liabilities |
333 | 230 | 312 | 875 | ||||||||||||
Equity |
10,846 | 13,365 | 7,318 | 31,529 |
Share Purchase Anniversary |
Repurchase Price As a Percentage of Estimated Value | |
Less than 1 year |
No repurchase allowed | |
1 year |
80% | |
2 years |
85% | |
3 years |
90% | |
4 years and thereafter |
95% | |
In the event of a shareholder’s death or complete disability |
95% |
Page | ||||
D-45 |
||||
Consolidated Financial Statements |
||||
D-46 |
||||
D-47 |
||||
D-48 |
||||
D-49 |
||||
D-50 |
December 31, |
||||||||
2020 |
2019 |
|||||||
Assets |
||||||||
Investments in joint ventures |
$ | 37,676 | $ | 40,668 | ||||
Cash and cash equivalents |
169 | 141 | ||||||
Other assets |
87 | 38 | ||||||
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|
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Total assets |
$ | 37,932 | $ | 40,847 | ||||
|
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|
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Liabilities and equity |
||||||||
Liabilities: |
||||||||
Accounts payable and accrued liabilities |
301 | 339 | ||||||
Related party payables |
1,131 | 697 | ||||||
Promissory note to advisor |
1,725 | — | ||||||
|
|
|
|
|||||
Total liabilities |
$ | 3,157 | $ | 1,036 | ||||
Commitments and contingencies (Note 7) |
||||||||
Equity |
||||||||
Preferred stock, $0.01 par value, 100,000,000 shares authorized; no shares issued and outstanding |
— | — | ||||||
Common stock, $0.01 par value, 1,000,000,000 shares authorized; 4,881,490 and 4,969,990 shares issued and outstanding at December 31, 2020 and 2019, respectively |
49 | 50 | ||||||
Additional paid in capital |
48,915 | 49,676 | ||||||
Accumulated distributions |
(7,397 | ) | (4,813 | ) | ||||
Accumulated deficit |
(6,792 | ) | (5,102 | ) | ||||
|
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|
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Total equity |
34,775 | 39,811 | ||||||
|
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|
|
|||||
Total liabilities and equity |
$ | 37,932 | $ | 40,847 | ||||
|
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|
|
Year Ended December 31, |
||||||||
2020 |
2019 |
|||||||
Revenues |
||||||||
Interest income |
$ | — | $ | 14 | ||||
Expenses |
||||||||
Equity in losses of joint ventures |
(262 | ) | (2,350 | ) | ||||
Asset management fee to related party |
(807 | ) | (745 | ) | ||||
Other expenses |
(621 | ) | (522 | ) | ||||
|
|
|
|
|||||
Net loss |
$ | (1,690 | ) | $ | (3,603 | ) | ||
|
|
|
|
|||||
Net loss per basic and diluted common shares |
$ | (0.34 | ) | $ | (0.72 | ) | ||
Weighted average common shares outstanding, basic and diluted |
4,920,913 | 4,982,816 |
Common Stock |
||||||||||||||||||||||||
Shares |
Amount |
Additional Paid in Capital |
Accumulated Distributions |
Accumulated Deficit |
Total Equity |
|||||||||||||||||||
Balance at December 31, 2018 |
4,993,600 | $ | 50 | $ | 49,891 | $ | (2,195 | ) | $ | (1,499 | ) | $ | 46,247 | |||||||||||
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Common stock repurchases |
(23,610 | ) | — | (215 | ) | — | — | (215 | ) | |||||||||||||||
Distributions to investors |
— | — | — | (2,618 | ) | — | (2,618 | ) | ||||||||||||||||
Net loss |
— | — | — | — | (3,603 | ) | (3,603 | ) | ||||||||||||||||
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|
|
|
|
|
|
|
|||||||||||||
Balance at December 31, 2019 |
4,969,990 | $ | 50 | $ | 49,676 | $ | (4,813 | ) | $ | (5,102 | ) | $ | 39,811 | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Common stock repurchases |
(88,500 | ) | (1 | ) | (761 | ) | — | — | (762 | ) | ||||||||||||||
Distributions to investors |
— | — | — | (2,584 | ) | — | (2,584 | ) | ||||||||||||||||
Net loss |
— | — | — | — | (1,690 | ) | (1,690 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Balance at December 31, 2020 |
4,881,490 | $ | 49 | $ | 48,915 | $ | (7,397 | ) | $ | (6,792 | ) | $ | 34,775 | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
||||||||
2020 |
2019 |
|||||||
Operating activities |
||||||||
Net loss |
$ | (1,690 | ) | $ | (3,603 | ) | ||
Adjustments to reconcile net loss to net cash provided by operating activities: |
||||||||
Equity in losses of joint ventures |
262 | 2,350 | ||||||
Distributions of capital from joint ventures |
2,730 | 2,965 | ||||||
Changes in operating assets and liabilities: |
||||||||
Related party receivables |
— | 9 | ||||||
Other assets |
(49 | ) | 46 | |||||
Accounts payable and accrued liabilities |
(34 | ) | 101 | |||||
Related party payables |
434 | 695 | ||||||
|
|
|
|
|||||
Net cash provided by operating activities |
1,653 | 2,563 | ||||||
Investing activities |
||||||||
Investments in joint ventures |
— | (27,461 | ) | |||||
|
|
|
|
|||||
Net cash used in investing activities |
— | (27,461 | ) | |||||
Financing activities |
||||||||
Promissory note to advisor |
1,725 | — | ||||||
Common stock repurchases |
(762 | ) | (215 | ) | ||||
Distributions to common stockholders |
(2,588 | ) | (2,619 | ) | ||||
|
|
|
|
|||||
Net cash used in financing activities |
(1,625 | ) | (2,834 | ) | ||||
Net increase (decrease) in cash and cash equivalents |
28 | (27,732 | ) | |||||
Cash and cash equivalents at beginning of period |
141 | 27,873 | ||||||
|
|
|
|
|||||
Cash and cash equivalents at end of period |
$ | 169 | $ | 141 | ||||
|
|
|
|
Parc Westborough |
Heights at Meridian |
Total |
||||||||||
2018 carrying value |
$ | 17,117 | $ | — | $ | 17,117 | ||||||
Investment in Heights at Meridian |
— | 28,866 | 28,866 | |||||||||
Equity in losses |
(475 | ) | (1,875 | ) | (2,350 | ) | ||||||
Distributions |
(850 | ) | (2,115 | ) | (2,965 | ) | ||||||
|
|
|
|
|
|
|||||||
2019 carrying value |
$ | 15,792 | $ | 24,876 | $ | 40,668 | ||||||
Equity in losses |
116 | (378 | ) | (262 | ) | |||||||
Distributions |
(1,163 | ) | (1,567 | ) | (2,730 | ) | ||||||
|
|
|
|
|
|
|||||||
2020 carrying value |
$ | 14,745 | $ | 22,931 | $ | 37,676 | ||||||
|
|
|
|
|
|
Year Ended December 31, 2020 |
Parc Westborough |
Heights at Meridian |
Total |
Equity in Earnings (Losses) |
||||||||||||
Revenues |
||||||||||||||||
Rental and other operating income |
$ | 5,751 | $ | 5,614 | $ | 11,365 | $ | 8,753 | ||||||||
Operating expenses |
||||||||||||||||
Rental operations expense |
2,161 | 1,861 | 4,022 | 3,065 | ||||||||||||
Advertising and marketing |
43 | 31 | 74 | 56 | ||||||||||||
General and administrative |
93 | 104 | 197 | 153 | ||||||||||||
Property management fees |
201 | 197 | 398 | 307 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total operating expenses |
2,498 | 2,193 | 4,691 | 3,581 | ||||||||||||
Net operating income |
3,253 | 3,421 | 6,674 | 5,172 | ||||||||||||
Non operating expenses |
||||||||||||||||
Interest on Fannie Mae facility |
841 | 1,628 | 2,469 | 2,006 | ||||||||||||
Depreciation and amortization |
2,052 | 2,208 | 4,260 | 3,308 | ||||||||||||
Mark to market adjustments on interest rate cap |
1 | — | 1 | 1 | ||||||||||||
Other non operating expenses |
178 | 5 | 183 | 119 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net loss |
$ | 181 | $ | (420 | ) | $ | (239 | ) | $ | (262 | ) | |||||
|
|
|
|
|
|
|
|
Year Ended December 31, 2019 |
Parc Westborough |
Heights at Meridian |
Total |
Equity in Earnings (Losses) |
||||||||||||
Revenues |
||||||||||||||||
Rental and other operating income |
$ | 5,604 | $ | 5,527 | $ | 11,131 | $ | 8,580 | ||||||||
Operating expenses |
||||||||||||||||
Rental operations expense |
2,176 | 1,818 | 3,994 | 3,036 | ||||||||||||
Advertising and marketing |
48 | 28 | 76 | 56 | ||||||||||||
General and administrative |
96 | 117 | 213 | 167 | ||||||||||||
Property management fees |
196 | 193 | 389 | 300 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total operating expenses |
2,516 | 2,156 | 4,672 | 3,559 | ||||||||||||
Net operating income |
3,088 | 3,371 | 6,459 | 5,021 | ||||||||||||
Non operating expenses |
||||||||||||||||
Interest on Fannie Mae facility |
1,474 | 1,593 | 3,067 | 2,382 | ||||||||||||
Depreciation and amortization |
2,038 | 3,847 | 5,885 | 4,774 | ||||||||||||
Mark to market adjustments on interest rate cap |
111 | — | 111 | 71 | ||||||||||||
Other non operating expenses |
204 | 14 | 218 | 144 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net loss |
$ | (739 | ) | $ | (2,083 | ) | $ | (2,822 | ) | $ | (2,350 | ) | ||||
|
|
|
|
|
|
|
|
December 31, 2020 |
Parc Westborough |
Heights at Meridian |
Total |
|||||||||
Real estate assets, net |
$ | 58,848 | $ | 59,016 | $ | 117,864 | ||||||
Other assets |
1,574 | 688 | 2,262 | |||||||||
Fannie Mae facility |
38,010 | 33,750 | 71,760 | |||||||||
Other liabilities |
376 | 345 | 721 | |||||||||
Equity |
22,036 | 25,609 | 47,645 | |||||||||
December 31, 2019 |
Parc Westborough |
Heights at Meridian |
Total |
|||||||||
Real estate assets, net |
$ | 60,829 | $ | 61,168 | $ | 121,997 | ||||||
Other assets |
1,332 | 737 | 2,069 | |||||||||
Fannie Mae facility |
38,010 | 33,750 | 71,760 | |||||||||
Other liabilities |
488 | 385 | 873 | |||||||||
Equity |
23,663 | 27,770 | 51,433 |
Share Purchase Anniversary |
Repurchase Price As a Percentage of Estimated Value | |
Less than 1 year |
No repurchase allowed | |
1 year |
80% | |
2 years |
85% | |
3 years |
90% | |
4 years and thereafter |
95% | |
In the event of a shareholder’s death or complete disability |
95% |
Page | ||||
Condensed Consolidated Financial Statements |
||||
D-62 |
||||
D-63 |
||||
D-64 |
||||
D-65 |
||||
D-66 |
March 31, 2021 |
December 31, 2020 |
|||||||
Assets |
(unaudited) | |||||||
Real estate assets, net |
$ | 842,613 | $ | 823,569 | ||||
Investments in unconsolidated real estate entities |
40,532 | 44,723 | ||||||
Cash and cash equivalents |
29,484 | 36,359 | ||||||
Restricted cash |
20,195 | 20,643 | ||||||
Related party notes |
9,927 | 9,177 | ||||||
Related party receivables |
874 | 1,187 | ||||||
Other assets |
34,587 | 36,163 | ||||||
|
|
|
|
|||||
Total assets |
$ | 978,212 | $ | 971,821 | ||||
|
|
|
|
|||||
Liabilities, Equity, and Noncontrolling Interests |
||||||||
Liabilities |
||||||||
Mortgage notes, net |
$ | 628,023 | $ | 628,042 | ||||
Construction loans, net |
56,509 | 50,007 | ||||||
Preferred stock, net |
143,952 | 143,532 | ||||||
Unsecured promissory notes, net |
46,861 | 46,642 | ||||||
Accounts payable and accrued liabilities |
34,879 | 34,582 | ||||||
|
|
|
|
|||||
Total liabilities |
910,224 | 902,805 | ||||||
|
|
|
|
|||||
Commitments and contingencies ( Note 10 ) |
||||||||
Equity and noncontrolling Interests |
||||||||
Stockholders’ equity |
||||||||
Common stock, $0.01 par value per share; 1,000,000,000 shares authorized, 213,484 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively |
2 | 2 | ||||||
Additional paid-in capital |
3,554 | 3,554 | ||||||
Cumulative distributions |
(428 | ) | (380 | ) | ||||
Accumulated deficit |
(2,107 | ) | (1,897 | ) | ||||
|
|
|
|
|||||
Total stockholders’ equity |
1,021 | 1,279 | ||||||
|
|
|
|
|||||
Noncontrolling interests |
||||||||
Limited partners |
(76,685 | ) | (70,856 | ) | ||||
Partially owned entities |
143,652 | 138,593 | ||||||
|
|
|
|
|||||
Total noncontrolling interests |
66,967 | 67,737 | ||||||
|
|
|
|
|||||
Total equity and noncontrolling interests |
67,988 | 69,016 | ||||||
|
|
|
|
|||||
Total liabilities, equity and noncontrolling interests |
$ | 978,212 | $ | 971,821 |
Three Months Ended March 31, |
||||||||
2021 |
2020 |
|||||||
Revenues |
||||||||
Rental and other property revenues |
$ | 21,605 | $ | 21,614 | ||||
Property management and development |
3,198 | 3,507 | ||||||
Advisory services |
1,534 | 1,002 | ||||||
|
|
|
|
|||||
Total revenues |
26,337 | 26,123 | ||||||
Operating expenses |
||||||||
Property operations |
8,299 | 8,201 | ||||||
Property management |
3,309 | 3,820 | ||||||
Depreciation and amortization |
8,259 | 8,112 | ||||||
General and administrative |
4,598 | 3,690 | ||||||
|
|
|
|
|||||
Total operating expenses |
24,465 | 23,823 | ||||||
|
|
|
|
|||||
Income from operations |
1,872 | 2,300 | ||||||
Equity in earnings of unconsolidated real estate entities |
146 | 254 | ||||||
Interest income |
2,157 | 585 | ||||||
Interest expense |
(8,432 | ) | (10,907 | ) | ||||
Gain from distribution in excess of investment in unconsolidated real estate entity |
2,689 | — | ||||||
Gain on sale of unconsolidated real estate assets |
— | (1,059 | ) | |||||
Other income (expenses), net |
(1,836 | ) | (160 | ) | ||||
|
|
|
|
|||||
Loss before income taxes |
(3,404 | ) | (8,987 | ) | ||||
Income tax benefit (loss) |
(341 | ) | — | |||||
|
|
|
|
|||||
Net loss |
(3,745 | ) | (8,987 | ) | ||||
Net loss attributable to noncontrolling interests: |
||||||||
Limited partners |
3,110 | 7,755 | ||||||
Partially owned entities |
425 | 840 | ||||||
|
|
|
|
|||||
Net loss attributable to common stockholders |
$ | (210 | ) | $ | (392 | ) | ||
|
|
|
|
Cottonwood Residential II, Inc. Stockholders’ Equity |
Noncontrolling Interests |
|||||||||||||||||||||||||||||||||||
Common Stock |
Additional Paid-In- Capital |
Cumulative Distributions |
Accumulated Deficit |
Total Stockholders’ Equity |
Limited Partners |
Partially Owned Entities |
Total Equity and Noncontrolling Interests |
|||||||||||||||||||||||||||||
Shares |
Amount |
|||||||||||||||||||||||||||||||||||
Balance at December 31, 2020 |
213,484 | $ | 2 | $ | 3,554 | $ | (380 | ) | $ | (1,897 | ) | $ | 1,279 | $ | (70,856 | ) | $ | 138,593 | $ | 69,016 | ||||||||||||||||
Development contributions from noncontrolling interests |
— | — | — | — | — | — | — | 6,789 | 6,789 | |||||||||||||||||||||||||||
Repurchase of OP Units |
— | — | — | — | — | — | (250 | ) | — | (250 | ) | |||||||||||||||||||||||||
Share based compensation |
— | — | — | — | — | — | 879 | — | 879 | |||||||||||||||||||||||||||
Net loss |
— | — | — | — | (210 | ) | (210 | ) | (3,110 | ) | (425 | ) | (3,745 | ) | ||||||||||||||||||||||
Distributions |
— | — | — | (48 | ) | — | (48 | ) | (3,348 | ) | (1,305 | ) | (4,701 | ) | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Balance at March 31, 2021 |
213,484 | $ | 2 | $ | 3,554 | $ | (428 | ) | $ | (2,107 | ) | $ | 1,021 | $ | (76,685 | ) | $ | 143,652 | $ | 67,988 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cottonwood Residential II, Inc. Stockholders’ Equity |
Noncontrolling Interests |
|||||||||||||||||||||||||||||||||||
Common Stock |
Additional Paid-In- Capital |
Cumulative Distributions |
Accumulated Deficit |
Total Stockholders’ Equity |
Limited Partners |
Partially Owned Entities |
Total Equity and Noncontrolling Interests |
|||||||||||||||||||||||||||||
Shares |
Amount |
|||||||||||||||||||||||||||||||||||
Balance at December 31, 2019 |
297,650 | $ | 3 | $ | 5,355 | $ | (166 | ) | $ | (930 | ) | $ | 4,262 | $ | (35,634 | ) | $ | 118,444 | $ | 87,072 | ||||||||||||||||
Development contributions from noncontrolling interests |
— | — | — | — | — | — | — | 5,206 | 5,206 | |||||||||||||||||||||||||||
Repurchase of OP Units |
— | — | — | — | — | — | (281 | ) | — | (281 | ) | |||||||||||||||||||||||||
Share based compensation |
— | — | — | — | — | — | 745 | — | 745 | |||||||||||||||||||||||||||
Other |
— | — | (13 | ) | — | — | (13 | ) | 193 | — | 180 | |||||||||||||||||||||||||
Net loss |
— | — | — | — | (392 | ) | (392 | ) | (7,755 | ) | (840 | ) | (8,987 | ) | ||||||||||||||||||||||
Distributions |
— | — | — | (66 | ) | — | (66 | ) | (3,366 | ) | (2,307 | ) | (5,739 | ) | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Balance at March 31, 2020 |
297,650 | $ | 3 | $ | 5,342 | $ | (232 | ) | $ | (1,322 | ) | $ | 3,791 | $ | (46,098 | ) | $ | 120,503 | $ | 78,196 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
||||||||
2021 |
2020 |
|||||||
Operating activities |
||||||||
Net loss |
$ | (3,745 | ) | $ | (8,987 | ) | ||
Adjustments to reconcile net loss to cash provided by operating activities: |
||||||||
Depreciation and amortization |
8,259 | 8,112 | ||||||
Amortization of deferred financing costs |
852 | 1,668 | ||||||
Share based compensation |
879 | 745 | ||||||
Equity in earnings of unconsolidated real estate entities |
(146 | ) | (254 | ) | ||||
Distributions from unconsolidated real estate entities - return on capital |
4,337 | 773 | ||||||
Changes in operating assets and liabilities: |
||||||||
Other assets |
247 | 1,330 | ||||||
Accounts payable, accrued and other liabilities |
294 | (2,166 | ) | |||||
|
|
|
|
|||||
Net cash provided by operating activities |
10,977 | 1,221 | ||||||
|
|
|
|
|||||
Cash flows from investing activities |
||||||||
Capital expenditures and development activities |
(25,846 | ) | (5,010 | ) | ||||
Contributions to developments from noncontrolling interests |
6,789 | 5,206 | ||||||
Investment in unconsolidated real estate entities |
— | (28 | ) | |||||
Related party receivables |
286 | (792 | ) | |||||
Related party notes |
(750 | ) | (705 | ) | ||||
Issuance of deficiency notes |
— | (5,747 | ) | |||||
Sponsored offering costs |
(36 | ) | (1,493 | ) | ||||
Other investing activities |
(67 | ) | 1 | |||||
|
|
|
|
|||||
Net cash used in investing activities |
(19,624 | ) | (8,568 | ) | ||||
|
|
|
|
|||||
Cash flows from financing activities |
||||||||
Principal payments on mortgage notes |
(231 | ) | (238 | ) | ||||
Proceeds from mortgage notes and construction loans, net of issuance costs |
6,504 | 64,735 | ||||||
Repayment of mortgage notes |
— | (39,996 | ) | |||||
Loss on debt extinguishment |
— | 412 | ||||||
Redemption of preferred stock |
— | (433 | ) | |||||
Issuance of unsecured promissory notes, net of issuance costs |
— | 945 | ||||||
Repurchase of OP Units |
(250 | ) | (281 | ) | ||||
Distributions to common stockholders |
(48 | ) | (66 | ) | ||||
Distributions to noncontrolling interest holders |
(4,649 | ) | (5,665 | ) | ||||
Other financing activities |
(3 | ) | 177 | |||||
|
|
|
|
|||||
Net cash provided by financing activities |
1,323 | 19,590 | ||||||
|
|
|
|
|||||
Net (decrease) increase in cash, cash equivalents and restricted cash |
(7,324 | ) | 12,243 | |||||
Cash, cash equivalents, and restricted cash at the beginning of period |
57,003 | 52,695 | ||||||
|
|
|
|
|||||
Cash, cash equivalents, and restricted cash at the end of period |
$ |
49,679 |
$ |
64,938 |
||||
|
|
|
|
|||||
Reconciliation of cash, cash equivalents and restricted cash to the consolidated balance sheets: |
| |||||||
Cash and cash equivalents |
$ | 29,484 | $ | 54,687 | ||||
Restricted cash |
20,195 | 10,251 | ||||||
|
|
|
|
|||||
Total cash, cash equivalents and restricted cash |
$ | 49,679 | $ | 64,938 | ||||
|
|
|
|
March 31, 2021 |
December 31, 2020 |
|||||||
Land |
$ | 121,029 | $ | 121,029 | ||||
Construction in progress |
193,838 | 168,835 | ||||||
Depreciable property: |
||||||||
Buildings and improvement |
624,671 | 624,671 | ||||||
Furniture, fixtures, and equipment |
30,957 | 30,116 | ||||||
Intangible assets |
17,976 | 17,976 | ||||||
|
|
|
|
|||||
988,471 | 962,627 | |||||||
Less: Accumulated depreciation and amortization |
(145,858 | ) | (139,058 | ) | ||||
|
|
|
|
|||||
Real estate assets, net |
$ | 842,613 | $ | 823,569 | ||||
|
|
|
|
Property |
% Owned |
March 31, 2021 |
December 31, 2020 |
|||||||||
Stabilized Assets |
||||||||||||
3800 Main |
50.0 | % | $ | 5,918 | $ | 6,152 | ||||||
Cottonwood Bayview |
71.0 | % | 20,821 | 21,127 | ||||||||
Cottonwood Ridgeview |
90.5 | % | 3,043 | 3,086 | ||||||||
Fox Point |
52.8 | % | 5,519 | 5,428 | ||||||||
Toscana at Valley Ridge |
58.6 | % | — | 3,689 | ||||||||
Development Project |
||||||||||||
Melrose Phase II |
4,175 | 4,175 | ||||||||||
Other |
1,056 | 1,066 | ||||||||||
|
|
|
|
|||||||||
Total |
$ | 40,532 | $ | 44,723 | ||||||||
|
|
|
|
Lender |
Debtor |
Investment Type |
March 31, 2021 |
|||||||||
Operating Partnership |
Senior Executives | Cottonwood Communities Advisor | $ | 6,457 | ||||||||
Operating Partnership |
Cottonwood Multifamily REIT I, Inc. | Sponsored REIT | 1,465 | |||||||||
Operating Partnership |
|
Cottonwood Multifamily REIT II, Inc. |
|
Sponsored REIT | 2,005 | |||||||
|
|
|||||||||||
$ | 9,927 | |||||||||||
|
|
March 31, 2021 |
December 31, 2020 |
|||||||
Fixed rate mortgage notes |
$ | 193,032 | $ | 193,032 | ||||
Variable rate mortgage notes |
440,813 | 440,813 | ||||||
|
|
|
|
|||||
Total mortgage notes |
633,845 | 633,845 | ||||||
Debt financing costs |
(5,822 | ) | (5,803 | ) | ||||
|
|
|
|
|||||
Mortgage notes, net |
$ | 628,023 | $ | 628,042 | ||||
|
|
|
|
Year |
Total |
|||
2021 |
$ | 1,371 | ||
2022 |
17,187 | |||
2023 |
83,465 | |||
2024 |
140,383 | |||
2025 |
4,135 | |||
Thereafter |
387,304 | |||
|
|
|||
$ | 633,845 | |||
|
|
Amount Drawn as of |
||||||||||||||||||||
Development |
Interest Rate |
Final Expiration Date |
Loan Amount |
March 31, 2021 |
December 31, 2020 |
|||||||||||||||
Sugarmont |
3.50% | October 1, 2022 | $ | 63,250 | $ | 41,646 | $ | 41,646 | ||||||||||||
Park Ave |
Daily Libor + 1.9% | May 15, 2023 | 37,000 | 12,009 | 8,361 | |||||||||||||||
Broadway |
Daily Libor + 1.9% | May 15, 2024 | 44,625 | 2,854 | — | |||||||||||||||
|
|
|
|
|
|
|||||||||||||||
$ | 144,875 | $ | 56,509 | $ | 50,007 | |||||||||||||||
|
|
|
|
|
|
Offering Size |
Interest Rate |
Maturity Date |
March 31, 2021 |
December 31, 2020 |
||||||||||||||||
2017 6.25% Notes |
$ | 5,000 | 6.25 | % | December 31, 2021 | $ | 5,000 | $ | 5,000 | |||||||||||
2017 6% Notes |
35,000 | 6.00 | % | December 31, 2022 | 20,918 | 20,918 | ||||||||||||||
2019 6% Notes |
25,000 | 6.00 | % | December 31, 2023 | 22,725 | 22,725 | ||||||||||||||
Unamortized debt financing costs |
(1,782 | ) | (2,001 | ) | ||||||||||||||||
|
|
|
|
|
|
|||||||||||||||
$ | 65,000 | $ | 46,861 | $ | 46,642 | |||||||||||||||
|
|
|
|
|
|
Shares Outstanding at |
||||||||||||||||||||
Dividend Rate |
Extension Dividend Rate |
Redemption Date |
March 31, 2021 |
December 31, 2020 |
||||||||||||||||
Series 2016 Preferred Stock |
6.5 | % | 7.0 | % | January 31, 2022 | 14,149,943 | 14,149,943 | |||||||||||||
Series 2017 Preferred Stock |
7.5 | % | 8.0 | % | January 31, 2022 | 258,550 | 258,550 |
Shares Outstanding at |
||||||||||||
Class |
Shares Authorized |
March 31, 2021 |
December 31, 2020 |
|||||||||
Common Stock Total |
1,100,000,000 | 213,484 | 213,484 | |||||||||
Voting Common Stock |
50 | 50 | 50 | |||||||||
Non-Voting Common Stock |
2,000,000 | 213,434 | 213,434 |
Page | ||||
D-76 |
||||
D-77 |
||||
D-78 |
||||
D-79 |
||||
D-80 |
June 30, 2021 |
December 31, 2020 |
|||||||
(Unaudited) | (Audited) | |||||||
Assets |
||||||||
Investments in joint ventures |
$ | 25,114 | $ | 27,126 | ||||
Cash and cash equivalents |
479 | 301 | ||||||
Related party receivables |
— | — | ||||||
Other assets |
22 | 58 | ||||||
|
|
|
|
|||||
Total assets |
$ | 25,615 | $ | 27,485 | ||||
|
|
|
|
|||||
Liabilities and equity |
||||||||
Liabilities: |
||||||||
Accounts payable and accrued liabilities |
379 | 259 | ||||||
Related party payables |
2,268 | 1,675 | ||||||
Promissory note to related party |
1,466 | 996 | ||||||
|
|
|
|
|||||
Total liabilities |
4,113 | 2,930 | ||||||
Commitments and contingencies (Note 7) |
||||||||
Equity: |
||||||||
Preferred stock, $0.01 par value; 100,000,000 shares authorized, no shares issued and outstanding |
— | — | ||||||
Common stock, $0.01 par value, 1,000,000,000 shares authorized; 4,904,045 shares issued and outstanding at both June 30, 2021 and December 31, 2020 |
49 | 49 | ||||||
Additional paid in capital |
48,948 | 48,948 | ||||||
Accumulated distributions |
(12,935 | ) | (11,525 | ) | ||||
Accumulated deficit |
(14,560 | ) | (12,917 | ) | ||||
|
|
|
|
|||||
Total equity |
21,502 | 24,555 | ||||||
|
|
|
|
|||||
Total liabilities and equity |
$ | 25,615 | $ | 27,485 | ||||
|
|
|
|
Six Months Ended June 30, |
||||||||
2021 |
2020 |
|||||||
(Unaudited) | (Unaudited) | |||||||
Equity in losses of joint ventures |
$ | (431 | ) | $ | (469 | ) | ||
Asset management fee to related party |
(548 | ) | (556 | ) | ||||
Other expenses |
(664 | ) | (258 | ) | ||||
|
|
|
|
|||||
Net loss |
$ | (1,643 | ) | $ | (1,283 | ) | ||
|
|
|
|
|||||
Net loss per basic and diluted common shares |
$ | (0.34 | ) | $ | (0.26 | ) | ||
Weighted average common shares outstanding, basic and diluted |
4,904,045 | 4,941,193 |
Common Stock |
||||||||||||||||||||||||
Shares |
Amount |
Additional Paid in Capital |
Accumulated Distributions |
Accumulated Deficit |
Total Equity |
|||||||||||||||||||
Balance at December 31, 2020 (Audited) |
4,904,045 | $ | 49 | $ | 48,948 | $ | (11,525 | ) | $ | (12,917 | ) | $ | 24,555 | |||||||||||
Distributions to investors |
— | — | — | (1,410 | ) | — | (1,410 | ) | ||||||||||||||||
Net loss |
— | — | — | — | (1,643 | ) | (1,643 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Balance at June 30, 2021 (Unaudited) |
4,904,045 | $ | 49 | $ | 48,948 | $ | (12,935 | ) | $ | (14,560 | ) | $ | 21,502 | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock |
||||||||||||||||||||||||
Shares |
Amount |
Additional Paid in Capital |
Accumulated Distributions |
Accumulated Deficit |
Total Equity |
|||||||||||||||||||
Balance at December 31, 2019 (Audited) |
4,941,345 | $ | 49 | $ | 49,365 | $ | (8,693 | ) | $ | (10,295 | ) | $ | 30,426 | |||||||||||
Common stock repurchases |
(27,700 | ) | — | (310 | ) | — | — | (310 | ) | |||||||||||||||
Distributions to investors |
— | — | — | (1,421 | ) | — | (1,421 | ) | ||||||||||||||||
Net loss |
— | — | — | — | (1,283 | ) | (1,283 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Balance at June 30, 2020 (Unaudited) |
4,913,645 | $ | 49 | $ | 49,055 | $ | (10,114 | ) | $ | (11,578 | ) | $ | 27,412 | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, |
||||||||
2021 |
2020 |
|||||||
(Unaudited) | (Unaudited) | |||||||
Operating activities |
||||||||
Net loss |
$ | (1,643 | ) | $ | (1,283 | ) | ||
Adjustments to reconcile net loss to net cash provided by operating activities: |
||||||||
Equity in losses of joint ventures |
431 | 469 | ||||||
Distributions of capital from joint ventures |
1,581 | 1,790 | ||||||
Changes in operating assets and liabilities: |
||||||||
Related party receivables |
— | 13 | ||||||
Other assets |
36 | 23 | ||||||
Accounts payable and accrued liabilities |
120 | (45 | ) | |||||
Related party payables |
593 | 57 | ||||||
|
|
|
|
|||||
Net cash provided by operating activities |
1,118 | 1,024 | ||||||
Financing activities |
||||||||
Promissory note to related party |
470 | 789 | ||||||
Common stock repurchases |
— | (310 | ) | |||||
Distributions to common stockholders |
(1,410 | ) | (1,421 | ) | ||||
|
|
|
|
|||||
Net cash used in financing activities |
(940 | ) | (942 | ) | ||||
Net increase in cash and cash equivalents |
178 | 82 | ||||||
Cash and cash equivalents at beginning of period |
301 | 260 | ||||||
|
|
|
|
|||||
Cash and cash equivalents at end of period |
$ | 479 | $ | 342 | ||||
|
|
|
|
Alpha Mill |
Cottonwood Westside |
The Marq Highland Park |
Total |
|||||||||||||
2020 carrying value |
$ | 8,454 | $ | 10,828 | $ | 7,844 | $ | 27,126 | ||||||||
Equity in losses |
(261 | ) | (239 | ) | 69 | (431 | ) | |||||||||
Distributions |
(459 | ) | (379 | ) | (743 | ) | (1,581 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
June 30, 2021 carrying value |
$ | 7,734 | $ | 10,210 | $ | 7,170 | $ | 25,114 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Alpha Mill |
Cottonwood Westside |
The Marq Highland Park |
Total |
|||||||||||||
2019 carrying value |
$ | 9,949 | $ | 12,107 | $ | 9,422 | $ | 31,478 | ||||||||
Equity in losses |
(109 | ) | (209 | ) | (151 | ) | (469 | ) | ||||||||
Distributions |
(637 | ) | (457 | ) | (696 | ) | (1,790 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
June 30, 2020 carrying value |
$ | 9,203 | $ | 11,441 | $ | 8,575 | $ | 29,219 | ||||||||
|
|
|
|
|
|
|
|
Six Months Ended June 30, 2021 |
Alpha Mill |
Cottonwood Westside |
The Marq Highland Park |
Total at 100% |
Equity in Earnings (Losses) at 90% |
|||||||||||||||
Revenues |
||||||||||||||||||||
Rental and other operating income |
$ | 2,130 | $ | 1,734 | $ | 2,519 | $ | 6,383 | $ | 5,745 | ||||||||||
Operating expenses |
||||||||||||||||||||
Rental operations expense |
648 | 786 | 961 | 2,395 | 2,156 | |||||||||||||||
Advertising and marketing |
29 | 22 | 19 | 70 | 63 | |||||||||||||||
General and administrative |
35 | 29 | 24 | 88 | 79 | |||||||||||||||
Property management fees |
75 | 63 | 88 | 226 | 203 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total operating expenses |
787 | 900 | 1,092 | 2,779 | 2,501 | |||||||||||||||
Net operating income |
1,343 | 834 | 1,427 | 3,604 | 3,244 | |||||||||||||||
Non-operating expenses |
||||||||||||||||||||
Interest on Fannie Mae facility |
531 | 381 | 483 | 1,395 | 1,256 | |||||||||||||||
Depreciation and amortization |
903 | 710 | 857 | 2,470 | 2,223 | |||||||||||||||
Other non-operating expenses |
199 | 9 | 10 | 218 | 196 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net (loss) income |
$ | (290 | ) | $ | (266 | ) | $ | 77 | $ | (479 | ) | $ | (431 | ) | ||||||
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, 2020 |
Alpha Mill |
Cottonwood Westside |
The Marq Highland Park |
Total at 100% |
Equity in Earnings (Losses) at 90% |
|||||||||||||||
Revenues |
||||||||||||||||||||
Rental and other operating income |
$ | 2,261 | $ | 1,780 | $ | 2,318 | $ | 6,359 | $ | 5,723 | ||||||||||
Operating expenses |
||||||||||||||||||||
Rental operations expense |
687 | 740 | 930 | 2,357 | 2,121 | |||||||||||||||
Advertising and marketing |
25 | 24 | 31 | 80 | 72 | |||||||||||||||
General and administrative |
36 | 35 | 30 | 101 | 91 | |||||||||||||||
Property management fees |
79 | 63 | 82 | 224 | 202 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total operating expenses |
827 | 862 | 1,073 | 2,762 | 2,486 | |||||||||||||||
Net operating income |
1,434 | 918 | 1,245 | 3,597 | 3,237 | |||||||||||||||
Non-operating expenses |
||||||||||||||||||||
Interest on Fannie Mae facility |
635 | 451 | 551 | 1,637 | 1,473 | |||||||||||||||
Depreciation and amortization |
864 | 688 | 845 | 2,397 | 2,157 | |||||||||||||||
Mark-to-market |
— | (1 | ) | — | (1 | ) | (1 | ) | ||||||||||||
Other non-operating expenses |
56 | 11 | 18 | 85 | 77 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net loss |
$ | (121 | ) | $ | (231 | ) | $ | (169 | ) | $ | (521 | ) | $ | (469 | ) | |||||
|
|
|
|
|
|
|
|
|
|
June 30, 2021 |
Alpha Mill |
Cottonwood Westside |
The Marq Highland Park |
Total |
||||||||||||
Real estate assets, net |
$ | 44,279 | $ | 36,464 | $ | 36,520 | $ | 117,263 | ||||||||
Other assets |
889 | 1,040 | 1,309 | 3,238 | ||||||||||||
Fannie Mae facility |
36,265 | 25,655 | 32,260 | 94,180 | ||||||||||||
Other liabilities |
518 | 593 | 754 | 1,865 | ||||||||||||
Equity |
8,385 | 11,256 | 4,815 | 24,456 |
December 31, 2020 |
Alpha Mill |
Cottonwood Westside |
The Marq Highland Park |
Total |
||||||||||||
Real estate assets, net |
$ | 45,028 | $ | 37,105 | $ | 37,326 | $ | 119,459 | ||||||||
Other assets |
766 | 710 | 743 | 2,219 | ||||||||||||
Fannie Mae facility |
36,265 | 25,655 | 32,260 | 94,180 | ||||||||||||
Other liabilities |
345 | 217 | 244 | 806 | ||||||||||||
Equity |
9,184 | 11,943 | 5,565 | 26,692 |
Share Purchase Anniversary |
Repurchase Price as a Percentage of Estimated Value | |
Less than 1 year |
No repurchase allowed | |
1 year |
80% | |
2 years |
85% | |
3 years |
90% | |
4 years and thereafter |
95% | |
In the event of a shareholder’s death or complete disability |
95% |
Page | ||||
D-92 |
||||
D-93 |
||||
D-94 |
||||
D-95 |
||||
D-96 |
June 30, 2021 |
December 31, 2020 |
|||||||
(Unaudited) | (Audited) | |||||||
Assets |
||||||||
Investments in joint ventures |
$ | 36,121 | $ | 37,676 | ||||
Cash and cash equivalents |
307 | 169 | ||||||
Other assets |
61 | 87 | ||||||
|
|
|
|
|||||
Total assets |
$ | 36,489 | $ | 37,932 | ||||
|
|
|
|
|||||
Liabilities and equity |
||||||||
Liabilities: |
||||||||
Accounts payable and accrued liabilities |
229 | 301 | ||||||
Related party payables |
1,596 | 1,131 | ||||||
Promissory note to related party |
2,342 | 1,725 | ||||||
|
|
|
|
|||||
Total liabilities |
4,167 | 3,157 | ||||||
Commitments and contingencies (Note 7) |
||||||||
Equity: |
||||||||
Preferred stock, $0.01 par value; 100,000,000 shares authorized, no shares issued and outstanding |
— | — | ||||||
Common stock, $0.01 par value, 1,000,000,000 shares authorized; 4,881,490 shares issued and outstanding at both June 30, 2021 and December 31, 2020 |
49 | 49 | ||||||
Additional paid in capital |
48,915 | 48,915 | ||||||
Accumulated distributions |
(8,678 | ) | (7,397 | ) | ||||
Accumulated deficit |
(7,964 | ) | (6,792 | ) | ||||
|
|
|
|
|||||
Total equity |
32,322 | 34,775 | ||||||
|
|
|
|
|||||
Total liabilities and equity |
$ | 36,489 | $ | 37,932 | ||||
|
|
|
|
Six Months Ended June 30, |
||||||||
2021 |
2020 |
|||||||
(Unaudited) | (Unaudited) | |||||||
Equity in losses of joint ventures |
$ | (12 | ) | $ | (151 | ) | ||
Asset management fee to related party |
(398 | ) | (407 | ) | ||||
Other expenses |
(762 | ) | (245 | ) | ||||
|
|
|
|
|||||
Net loss |
$ | (1,172 | ) | $ | (803 | ) | ||
|
|
|
|
|||||
Net loss per basic and diluted common shares |
$ | (0.24 | ) | $ | (0.16 | ) | ||
Weighted average common shares outstanding, basic and diluted |
4,881,490 | 4,959,270 |
Common Stock |
||||||||||||||||||||||||
Shares |
Amount |
Additional Paid in Capital |
Accumulated Distributions |
Accumulated Deficit |
Total Equity |
|||||||||||||||||||
Balance at December 31, 2020 (Audited) |
4,881,490 | $ | 49 | $ | 48,915 | $ | (7,397 | ) | $ | (6,792 | ) | $ | 34,775 | |||||||||||
Distributions to investors |
— | — | — | (1,281 | ) | — | (1,281 | ) | ||||||||||||||||
Net loss |
— | — | — | — | (1,172 | ) | (1,172 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Balance at June 30, 2021 (Unaudited) |
4,881,490 | $ | 49 | $ | 48,915 | $ | (8,678 | ) | $ | (7,964 | ) | $ | 32,322 | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Common Stock |
||||||||||||||||||||||||
Shares |
Amount |
Additional Paid in Capital |
Accumulated Distributions |
Accumulated Deficit |
Total Equity |
|||||||||||||||||||
Balance at December 31, 2019 (Audited) |
4,969,990 | $ | 50 | $ | 49,676 | $ | (4,813 | ) | $ | (5,102 | ) | $ | 39,811 | |||||||||||
Common stock repurchases |
(85,500 | ) | (1 | ) | (731 | ) | — | — | (732 | ) | ||||||||||||||
Distributions to investors |
— | — | — | (1,302 | ) | — | (1,302 | ) | ||||||||||||||||
Net loss |
— | — | — | — | (803 | ) | (803 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Balance at June 30, 2020 (Unaudited) |
4,884,490 | $ | 49 | $ | 48,945 | $ | (6,115 | ) | $ | (5,905 | ) | $ | 36,974 | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, |
||||||||
2021 |
2020 |
|||||||
(Unaudited) | (Unaudited) | |||||||
Operating activities |
||||||||
Net loss |
$ | (1,172 | ) | $ | (803 | ) | ||
Adjustments to reconcile net loss to net cash provided by operating activities: |
||||||||
Equity in losses of joint ventures |
12 | 151 | ||||||
Distributions of capital from joint ventures |
1,543 | 1,291 | ||||||
Changes in operating assets and liabilities: |
||||||||
Other assets |
26 | 22 | ||||||
Accounts payable and accrued liabilities |
(72 | ) | (82 | ) | ||||
Related party payables |
465 | (11 | ) | |||||
|
|
|
|
|||||
Net cash provided by operating activities |
802 | 568 | ||||||
Financing activities |
||||||||
Promissory note to related party |
617 | 1,645 | ||||||
Common stock repurchases |
— | (732 | ) | |||||
Distributions to common stockholders |
(1,281 | ) | (1,303 | ) | ||||
|
|
|
|
|||||
Net cash used in financing activities |
(664 | ) | (390 | ) | ||||
Net increase in cash and cash equivalents |
138 | 178 | ||||||
Cash and cash equivalents at beginning of period |
169 | 141 | ||||||
|
|
|
|
|||||
Cash and cash equivalents at end of period |
$ | 307 | $ | 319 | ||||
|
|
|
|
Parc Westborough |
Heights at Meridian |
Total |
||||||||||
2020 carrying value |
$ | 14,745 | $ | 22,931 | $ | 37,676 | ||||||
Equity in losses |
170 | (182 | ) | (12 | ) | |||||||
Distributions |
(764 | ) | (779 | ) | (1,543 | ) | ||||||
|
|
|
|
|
|
|||||||
June 30, 2021 carrying value |
$ | 14,151 | $ | 21,970 | $ | 36,121 | ||||||
Parc Westborough |
Heights at Meridian |
Total |
||||||||||
2019 carrying value |
$ | 15,792 | $ | 24,876 | $ | 40,668 | ||||||
Equity in losses |
(12 | ) | (139 | ) | (151 | ) | ||||||
Distributions |
(485 | ) | (806 | ) | (1,291 | ) | ||||||
|
|
|
|
|
|
|||||||
June 30, 2020 carrying value |
$ | 15,295 | $ | 23,931 | $ | 39,226 |
Six Months Ended June 30, 2021 |
Parc Westborough |
Heights at Meridian |
Total at 100% |
Equity in Earnings (Losses) |
||||||||||||
Revenues |
||||||||||||||||
Rental and other operating income |
$ | 2,952 | $ | 2,821 | $ | 5,773 | $ | 4,439 | ||||||||
Operating expenses |
||||||||||||||||
Rental operations expense |
1,119 | 937 | 2,056 | 1,564 | ||||||||||||
Advertising and marketing |
25 | 14 | 39 | 29 | ||||||||||||
General and administrative |
39 | 47 | 86 | 67 | ||||||||||||
Property management fees |
103 | 100 | 203 | 156 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total operating expenses |
1,286 | 1,098 | 2,384 | 1,816 | ||||||||||||
Net operating income |
1,666 | 1,723 | 3,389 | 2,623 | ||||||||||||
Non-operating expenses |
||||||||||||||||
Interest on Fannie Mae facility |
305 | 784 | 1,089 | 902 | ||||||||||||
Depreciation and amortization |
1,046 | 1,129 | 2,175 | 1,689 | ||||||||||||
Other non-operating expenses |
51 | 12 | 63 | 44 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net income (loss) |
$ | 264 | $ | (202 | ) | $ | 62 | $ | (12 | ) |
Six Months Ended June 30, 2020 |
Parc Westborough |
Heights at Meridian |
Total at 100% |
Equity in Earnings (Losses) |
||||||||||||
Revenues |
||||||||||||||||
Rental and other operating income |
$ | 2,903 | $ | 2,831 | $ | 5,734 | $ | 4,416 | ||||||||
Operating expenses |
||||||||||||||||
Rental operations expense |
1,085 | 906 | 1,991 | 1,514 | ||||||||||||
Advertising and marketing |
23 | 10 | 33 | 24 | ||||||||||||
General and administrative |
46 | 55 | 101 | 79 | ||||||||||||
Property management fees |
102 | 99 | 201 | 155 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total operating expenses |
1,256 | 1,070 | 2,326 | 1,772 | ||||||||||||
Net operating income |
1,647 | 1,761 | 3,408 | 2,644 | ||||||||||||
Non-operating expenses |
||||||||||||||||
Interest on Fannie Mae facility |
507 | 810 | 1,317 | 1,055 | ||||||||||||
Depreciation and amortization |
1,025 | 1,103 | 2,128 | 1,652 | ||||||||||||
Mark-to-market |
(2 | ) | — | (2 | ) | (1 | ) | |||||||||
Other non-operating expenses |
136 | 2 | 138 | 89 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net loss |
$ | (19 | ) | $ | (154 | ) | $ | (173 | ) | $ | (151 | ) |
June 30, 2021 |
Parc Westborough |
Heights at Meridian |
Total |
|||||||||
Real estate assets, net |
$ | 57,944 | $ | 57,934 | $ | 115,878 | ||||||
Other assets |
1,580 | 1,034 | 2,614 | |||||||||
Fannie Mae facility |
38,010 | 33,750 | 71,760 | |||||||||
Other liabilities |
400 | 677 | 1,077 | |||||||||
Equity |
21,114 | 24,541 | 45,655 | |||||||||
December 31, 2020 |
Parc Westborough |
Heights at Meridian |
Total |
|||||||||
Real estate assets, net |
$ | 58,848 | $ | 59,016 | $ | 117,864 | ||||||
Other assets |
1,574 | 688 | 2,262 | |||||||||
Fannie Mae facility |
38,010 | 33,750 | 71,760 | |||||||||
Other liabilities |
376 | 345 | 721 | |||||||||
Equity |
22,036 | 25,609 | 47,645 |
Share Purchase Anniversary |
Repurchase Price as a Percentage of Estimated Value | |
Less than 1 year |
No repurchase allowed | |
1 year |
80% | |
2 years |
85% | |
3 years |
90% | |
4 years and thereafter |
95% | |
In the event of a shareholder’s death or complete disability |
95% |
Page | ||||
D-108 |
||||
D-109 |
||||
D-110 |
• | the historical consolidated financial information of CCI for the year ended December 31, 2021, derived from CCI’s audited consolidated financial statements, which is included in the proxy statement/prospectus; |
• | pro forma adjustments to give effect to the Combined Merger on CCI’s consolidated statements of operations for the year ended December 31, 2021, as if the Combined Merger closed on January 1, 2021. |
• | CCI’s unaudited consolidated financial statements and the related notes thereto as of and for the three months ended March 31, 2022, which is included in the proxy statement/prospectus and |
• | CCI’s audited consolidated financial statements and the related notes thereto as of and for the year ended December 31, 2021, which is included in the proxy statement/prospectus. |
CCI Historical December 31, 2021 |
Autonomous Entity Adjustments |
Note |
Pro Forma Combined Transaction Accounting Adjustments |
Note |
Pro Forma Combined Company |
|||||||||||||||||||
(Audited) | ||||||||||||||||||||||||
Revenues |
||||||||||||||||||||||||
Rental and other property revenues |
$ | 73,129 | $ | — | $ | 29,273 | (a |
) |
$ | 102,402 | ||||||||||||||
Property management revenues |
8,597 | — | 3,891 | (a |
) |
12,488 | ||||||||||||||||||
Other income |
1,455 | — | 1 | (a |
) |
1,456 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||
Total revenues |
83,181 | — | 33,165 | 116,346 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||
Expenses |
||||||||||||||||||||||||
Property operations expense |
27,759 | — | 11,065 | (a |
) |
38,824 | ||||||||||||||||||
Property management expense |
11,302 | — | 7,215 | (a |
) |
18,517 | ||||||||||||||||||
Reimbursable operating expenses to related parties |
331 | (331 | ) | (b | ) | — | — | |||||||||||||||||
Asset management fee to related party |
8,052 | — | 1,555 | (b |
) |
9,607 | ||||||||||||||||||
Performance participation allocation |
51,761 | — | — | 51,761 | ||||||||||||||||||||
Depreciation and amortization |
63,397 | — | 15,510 | (a |
) (d) |
78,907 | ||||||||||||||||||
General and administrative expenses |
9,880 | 331 | (b | ) | 3,925 | (a |
) (e) |
14,136 | ||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||
Total operating expenses |
172,482 | — | 39,270 | 211,752 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||
Loss from operations |
(89,301 | ) | — | (6,105 | ) | (95,406 | ) | |||||||||||||||||
Equity in earnings (losses) of unconsolidated real estate entities |
(533 | ) | — | (210 | ) | (a |
) (f) |
(743 | ) | |||||||||||||||
Interest income |
207 | (106 | ) | (g | ) | 3,067 | (a |
) |
3,168 | |||||||||||||||
Interest expense |
(26,954 | ) | — | (10,364 | ) | (a |
) |
(37,318 | ) | |||||||||||||||
Gain on sale of real estate assets |
10,912 | — | — | 10,912 | ||||||||||||||||||||
Other income |
2 | — | — | 2 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||
Loss before income taxes |
(105,667 | ) | — | (13,612 | ) | (119,279 | ) | |||||||||||||||||
Income tax expense |
(1,238 | ) | — | — | (1,238 | ) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||
Net loss |
(106,905 | ) | — | (13,612 | ) | (120,517 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||
Net loss attributable to noncontrolling interests: |
||||||||||||||||||||||||
Limited partners |
58,923 | — | 9,646 | (h |
) |
68,569 | ||||||||||||||||||
Partially owned entities |
4,066 | — | 173 | (h |
) |
4,239 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||
Net loss attributable to common stockholders |
$ | (43,916 | ) | $ | — | $ | (3,793 | ) | $ | (47,709 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||
Weighted average shares outstanding |
17,603,981 | — | 6,020,615 | (i |
) |
23,624,596 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||
Net loss per common share - basic and diluted |
$ | (2.49 | ) | $ | — | $ | (0.63 | ) | $ | (2.02 | ) | |||||||||||||
|
|
|
|
|
|
|
|
Property Name |
Property Location |
Units to be Built |
Net Rentable Square Feet |
Estimated Completion |
Investment at 12/31/21 |
Joint Venture Interest |
Dated Contracted |
|||||||||||||||||||
Park Avenue |
Salt Lake City, UT | 234 | 167,130 | Second Quarter 2022 | $ | 17,489,183 | 76.4 | % | 8/10/2018 | |||||||||||||||||
Cottonwood on Broadway |
Salt Lake City, UT | 254 | 207,642 | Fourth Quarter 2022 | $ | 25,929,117 | 81.2 | % | 8/6/2019 | |||||||||||||||||
Other Investment |
Property Location |
Description |
Investment at 12/31/21 |
Joint Venture Interest |
Dated Contracted |
|||||||||||||||||||||
Block C |
Millcreek, UT | Land held for development | $ | 3,310,000 | 63.0 | % | 1/14/2021 |
December 31, |
||||||||
2021 |
2020 |
|||||||
Cash |
$ | 27,059 | $ | 38,621 | ||||
Development Costs |
56,005,041 | 32,196,512 | ||||||
Accounts Payable and Accrued Liabilities |
3,630,713 | 2,132,789 | ||||||
Construction Loan |
29,520,255 | 8,361,057 |
December 31, |
||||||||
2021 |
2020 |
|||||||
Cash |
$ | 86,866 | $ | 215,284 | ||||
Development Costs |
61,994,132 | 31,795,659 | ||||||
Accounts Payable and Accrued Liabilities |
3,941,969 | 5,707,553 | ||||||
Construction Loan |
27,474,967 | — |
Property Name |
Property Location |
Units to be Built |
Net Rentable Square Feet |
Estimated Completion |
Investment to Date |
Joint Venture Interest |
Dated Contracted |
|||||||||||||||||||||
Park Avenue |
Salt Lake City, UT | 234 | 167,130 | Second Quarter 2022 | $ | 18,119,178 | 76.4 | % | 8/10/2018 | |||||||||||||||||||
Cottonwood on Broadway |
Salt Lake City, UT | 254 | 207,642 | Fourth Quarter 2022 | $ | 25,929,117 | 81.2 | % | 8/6/2019 | |||||||||||||||||||
Other Investment |
Property Location |
Description |
Investment to Date |
Joint Venture Interest |
Dated Contracted |
|||||||||||||||||||||||
Block C |
Millcreek, UT | Land held for development | $ | 3,656,378 | 62.8 | % | 1/14/2021 |
Item 20. |
Indemnification of Directors and Officers |
Item 21. |
Exhibits and Financial Statement Schedules. |
(a) | The following is a list of exhibits filed as part of this registration statement. |
23.4 | Consent of KPMG LLP, independent registered public accounting firm, regarding Cottonwood Multifamily REIT II, Inc.** | |
23.5 | Consent of DLA Piper LLP (US) (included in Exhibits 5.1, 8.1, and 8.3)* | |
23.6 | Consent of Snell & Wilmer L.L.P. (included in Exhibit 8.2)* | |
24.1 | Power of Attorney (included on signature page of registration statement)** | |
99.1 | Share Repurchase Program Effective as of October 7, 2021, incorporated by reference to Exhibit 99.1 to the Registration Statement on Form S-11 filed October 21, 2021 and incorporated | |
99.2 | Consent of CBRE Capital Advisors, Inc.** | |
99.3 | Consent of Altus Group U.S., Inc.** | |
101.INS | Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)** | |
101.SCH | Inline XBRL Taxonomy Extension Schema** | |
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase** | |
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase** | |
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase** | |
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase** | |
104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)** | |
107 |
* | To be filed by amendment. |
** | Filed herewith. |
Item 22. |
Undertakings |
COTTONWOOD COMMUNITIES, INC. | ||
By: | /s/ Adam Larson | |
Adam Larson | ||
Chief Financial Officer |
Name |
Title |
Date | ||
/s/ Daniel Shaeffer Daniel Shaeffer |
Chief Executive Officer and Director (principal executive officer) |
July 22, 2022 | ||
/s/ Susan Hallenberg Susan Hallenberg |
Chief Accounting Officer and Treasurer (principal accounting officer) |
July 22, 2022 | ||
/s/ Adam Larson Adam Larson |
Chief Financial Officer (principal financial officer) |
July 22, 2022 | ||
/s/ Chad Christensen Chad Christensen |
Executive Chairman of the Board and Director | July 22, 2022 | ||
/s/ Jonathan Gardner Jonathan Gardner |
Director | July 22, 2022 | ||
/s/ John Lunt John Lunt |
Director | July 22, 2022 | ||
/s/ Philip White Philip White |
Director | July 22, 2022 |
Exhibit 23.1
Consent of Independent Registered Public Accounting Firm
We consent to the use of our report dated March 29, 2022, with respect to the consolidated financial statements and financial statement schedule III of Cottonwood Communities, Inc. included herein and to the reference to our firm under the heading Experts in the prospectus.
/s/ KPMG LLP
Denver, Colorado
July 22, 2022
Exhibit 23.2
Consent of Independent Registered Public Accounting Firm
We consent to the use of our report dated May 4, 2021, with respect to the consolidated financial statements of Cottonwood Residential II, Inc. included herein and to the reference to our firm under the heading Experts in the prospectus.
/s/KPMG LLP
Denver, Colorado
July 22, 2022
Exhibit 23.3
Consent of Independent Registered Public Accounting Firm
We consent to the use of our report dated April 8, 2021, with respect to the consolidated financial statements of Cottonwood Multifamily REIT I, Inc. included herein and to the reference to our firm under the heading Experts in the prospectus.
/s/KPMG LLP
Denver, Colorado
July 22, 2022
Exhibit 23.4
Consent of Independent Registered Public Accounting Firm
We consent to the use of our report dated April 8, 2021, with respect to the consolidated financial statements of Cottonwood Multifamily REIT II, Inc. included herein and to the reference to our firm under the heading Experts in the prospectus.
/s/KPMG LLP
Denver, Colorado
July 22, 2022
Exhibit 99.2
CONSENT OF CBRE CAPITAL ADVISORS, INC.
We hereby consent to the inclusion of our opinion letter, dated July 8, 2022, to the Special Committee of the Board of Directors of Cottonwood Multifamily Opportunity Fund, Inc. as Annex B to the Proxy Statement/Prospectus included in the Registration Statement filed with the Securities and Exchange Commission today and any amendments thereto and the references to our firm and our opinion, including the quotation or summarization of such opinion in such Registration Statement and any amendments thereto, under the headings SUMMARY Opinion of CMOF Special Committees Financial Advisor, THE MERGER Recommendation of the CMOF Board and Its Reasons for the Merger, THE MERGER Opinion of CMOF Special Committees Financial Advisor and THE MERGER Summary of Financial Analysis of CBRE Capital. Our opinion is not to be filed with, included in or referred to in whole or in part in any other registration statement, proxy statement or any other document, except in accordance with our prior written consent.
In giving our consent, we do not admit that we come within the category of persons whose consent is required under Section 7 of the Securities Act of 1933, as amended, or the rules and regulations of the Securities and Exchange Commission thereunder, nor do we admit that we are experts with respect to any part of such Registration Statement within the meaning of the term experts as used in the Securities Act of 1933, as amended, or the rules and regulations of the Securities and Exchange Commission thereunder.
Dated: July 22, 2022
/s/ CBRE Capital Advisors, Inc. |
CBRE CAPITAL ADVISORS, INC. |
Exhibit 99.3
Consent of Independent Valuation Advisor
We hereby consent to the description of our role in the valuation process set forth under the heading The Companies Cottonwood Communities, Inc. Net Asset Value Calculation and Valuation Guidelines Independent Valuation Advisor and The Companies Cottonwood Communities, Inc. Net Asset Value Calculation and Valuation Guidelines Valuation of Consolidated Assets and Liabilities Real Property Assets in Cottonwood Communities, Inc.s Registration Statement on Form S-4 (No. 333- ) filed on the date hereof. In giving such consent, we do not thereby admit that we are in the category of persons whose consent is required under Section 7 of the Securities Act of 1933.
/s/ Altus Group U.S. Inc. |
Altus Group U.S. Inc. |
July 22, 2022
Exhibit 107
Calculation of Filing Fee Tables
Form S-4
(Form Type)
Cottonwood Communities, Inc.
(Exact Name of Registrant as Specified in Governing Instruments)
Table 1Newly Registered and Carry Forward Securities
Security Type |
Security Title |
Fee Calculation or Carry Forward Rule |
Amount Registered |
Proposed Maximum Offering Price Per Unit |
Maximum Aggregate Offering Price |
Fee Rate |
Amount of Registration Fee |
Carry Forward Form Type |
Carry Forward File Number |
Carry Forward Initial Effective Date |
Filing Fee Previously Paid In Connection with Unsold Securities to be Carried Forward |
|||||||||||||||||||||||||||||||||||
Newly Registered Securities | ||||||||||||||||||||||||||||||||||||||||||||||
Fees to Be Paid | Equity | |
Class A Common Stock |
|
457(o) | | | $89,829,669.241 (1) | $92.70 | $8327.21 | | | | | ||||||||||||||||||||||||||||||||
Fees Previously Paid | | | | | | | | | | | | | ||||||||||||||||||||||||||||||||||
Carry Forward Securities | ||||||||||||||||||||||||||||||||||||||||||||||
Carry Forward Securities | | | | | | | | | | | | | ||||||||||||||||||||||||||||||||||
Total Offering Amounts | $89,829,669.241 | $8327.21 | ||||||||||||||||||||||||||||||||||||||||||||
Total Fees Previously Paid | | |||||||||||||||||||||||||||||||||||||||||||||
Total Fee Offsets | | |||||||||||||||||||||||||||||||||||||||||||||
Net Fee Due | $8327.21 |
(1) | Estimated solely for purposes of calculating the registration fee required by Section 6(b) of the Securities Act, and calculated pursuant to Rule 457(f)(2) of the Securities Act. This amount was calculated as the product of (x) the estimated maximum number of shares of the Registrants common stock, par value $0.01 per share, to be issued in connection with the merger described herein, based on the product of (i) 5,001,001 shares, par value $0.01 per share, of Cottonwood Multifamily Opportunity Fund, Inc. shares outstanding as of July 22, 2022, and (ii) the exchange ratio of 0.8669 shares of the Registrants Class A Common Stock per share of Cottonwood Multifamily Opportunity Fund, Inc., and (y) the most recently declared Net Asset Value (NAV) for the Registrants Class A Common Stock, or $20.7202 per share. The Registrant has used its NAV per share for this calculation because there is no established market for the Registrants shares of common stock. The Registrants board of directors, including a majority of its independent directors, has adopted valuation guidelines, as amended from time to time, that contain a comprehensive set of methodologies to be used in connection with the calculation of the Registrants NAV. The June 30, 2022 NAV for the Registrants outstanding Class A shares was $20.7202. |
Table 2Fee Offset Claims and Sources
Registrant or Filer Name |
Form or Filing Type |
File Number |
Initial Filing Date |
Filing Date |
Fee Offset Claimed |
Security Type Associated with Fee Offset Claimed |
Security Title Associated with Fee Offset Claimed |
Unsold Securities Associated with Fee Offset Claimed |
Unsold Claimed |
Fee Paid with Fee Offset Source | ||||||||||||
Rules 457(b) and 0-11(a)(2) | ||||||||||||||||||||||
Fee Offset Claims | | | | | ||||||||||||||||||
Fee Offset Sources | | | | | | |||||||||||||||||
Rule 457(p) | ||||||||||||||||||||||
Fee Offset Claims | | | | | | | | | | |||||||||||||
Fee Offset Sources | | | | | |
Table 3Combined Prospectuses
Security Type | Security Class Title |
Amount of Securities Previously Registered |
Maximum Aggregate Offering Price of Securities Previously Registered |
Form Type | File Number | Initial Effective Date | ||||||
| | | | | | |
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