8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

____________________

FORM 8-K 

____________________

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of Earliest Event Reported): December 13, 2022

____________________

Cottonwood Communities, Inc.

(Exact Name of Registrant as Specified in Its Charter)

____________________

Maryland	000-56165	61-1805524
(State or other jurisdiction of incorporation)	(Commission file number)	(IRS employer identification number)

1245 Brickyard Road, Suite 250

Salt Lake City, Utah 84106

(Address of Principal Executive Offices)

(801) 278-0700

(Registrant’s Telephone Number, Including Area Code) 

____________________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
None	N/A	N/A

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). ☒

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

Item 1.01 Entry into a Material Definitive Agreement.

On December 13, 2022, Cottonwood Communities, Inc. (the "Company," "we," "our," or "us") entered a managing broker dealer agreement (the "Managing Broker Dealer Agreement"), to be effective as of December 1, 2022, with an unaffiliated third party to act as the managing broker dealer in connection with the Company's offering of up to 100,000,000 in shares of Series 2023 preferred stock of the Company, par value $0.01 per share, (the "Series 2023 Preferred Stock") on a best-efforts basis. The Series 2023 Preferred Stock will be offered and sold to accredited investors at a purchase price of $10.00 per share (the "Private Offering"). The Series 2023 Preferred Stock will not be registered under the Securities Act of 1933, as amended (the “Securities Act”) or the securities laws of any state, and will instead be issued in transactions exempt from the registration requirements of the Securities Act in reliance on Section 4(a)(2) and Rule 506(b) of Regulation D promulgated thereunder, and corresponding provisions of state securities laws, which exempt certain transactions by an issuer not involving a public offering. The Series 2023 Preferred Stock may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. There will be no general solicitation in connection with the offer or sale of the Series 2023 Preferred Stock

Pursuant to the terms of the Managing Broker Dealer Agreement, the managing broker dealer will receive selling commissions in an amount up to 6% of the gross offering proceeds from the Private Offering, which it will reallow to selling group members, and a placement fee in an amount up to 3% of the gross offering proceeds from the Private Offering, which it will reallow, in whole or in part, to certain wholesalers which are internal to affiliates CC Advisors III, LLC, the Company's external advisor (the "Advisor"). The Company will be responsible for paying all of the expenses associated with the Private Offering. In addition, the Managing Broker Dealer Agreement requires the Company to indemnify the managing broker dealer with respect to liabilities, including certain civil liabilities under the Securities Act, which may arise in connection with the Private Offering.

Amendment to Operating Partnership Agreement

On December 13, 2022, in connection with the Private Offering, the Company, as the sole member of the sole general partner of Cottonwood Residential O.P., LP, the operating partnership subsidiary for the Company (the “Operating Partnership”), executed the Fourth Amendment to the Sixth Amended and Restated Limited Partnership Agreement of Operating Partnership (the “OP Agreement”) to be effective as of December 1, 2022, among other things, creating a series of preferred units (the “Series 2023 Preferred Units”) that mirror the rights and preferences of the Series 2023 Preferred Stock, as described below in Item 3.03. The proceeds from the sale of the Series 2023 Preferred Stock will be contributed by the Company to the Operating Partnership in exchange for up to 10,000,000 Series 2023 Preferred Units.

Item 3.03 Material Modification to Rights of Security Holders.

Preferred Stock Articles Supplementary

On December 13, 2022, the Company filed with the State Department of Assessments and Taxation of the State of Maryland (the “SDAT”) Articles Supplementary to its Articles of Amendment and Restatement, as amended and supplemented, classifying and designating 10,000,000 shares of the authorized but unissued preferred stock, par value $0.01, as shares of the Series 2023 Preferred Stock (the “Series 2023 Preferred Stock Articles Supplementary”). As set forth in the Series 2023 Preferred Stock Articles Supplementary, the Series 2023 Preferred Stock, with respect to dividend rights and rights upon voluntary or involuntary liquidation, dissolution or winding up of the Company, ranks senior to the common stock, and on parity with the Series 2019 Preferred Stock, par value $0.01 per share, and any future class or series of the Company's capital stock expressly designated as ranking on parity with the Series 2023 Preferred Stock.

Stockholders of the Series 2023 Preferred Stock are entitled to, when and as authorized by the board of directors and declared by the Company, cash dividends at the rate of 6.0% per annum of $10.00 per share (equivalent to a fixed annual rate of $0.60 per share). Commencing July 1, 2027, such rate will increase to 6.25% per annum of $10.00 per share (equivalent to a fixed annual rate of $0.625 per share) and commencing July 1, 2028, such rate will increase to 6.50% per annum of $10.00 per share (equivalent to a fixed annual rate of $0.650 per share). The dividends on each share of the Series 2023 Preferred Stock will be payable monthly in arrears on or before the first day of each month or, if not a business day, the next succeeding business day. Dividends will accrue and be cumulative from and including the first date on which the Series 2023 Preferred Stock is issued.

Upon any voluntary or involuntary liquidation, dissolution or winding up of the Company, the stockholders of Series 2023 Preferred Stock will be entitled to receive a liquidation preference of $10.00 (the “Purchase Price”), plus any accrued and unpaid dividends (whether or not authorized or declared) thereon to and including the date of payment, before any payments are made to the holders of the common stock or other shares ranking junior to the Series 2023 Preferred Stock as to liquidation rights, none of which exist on the date hereof. The rights of the stockholders of the Series 2023 Preferred Stock to receive their liquidation preference will be subject to the proportionate rights of each other series or class of the Company's capital stock ranking on parity with the Series 2023 Preferred Stock as to liquidation.

The Company must redeem the Series 2023 Preferred Stock for cash at a redemption price per share equal to the Purchase Price plus any accrued and unpaid dividends thereon to, and including, the redemption date, to the extent there are funds legally available therefor on June 30, 2027, which date may be extended by two one-year extension options. The Company is permitted to redeem the Series 2023 Preferred Stock beginning on December 31, 2023 or (i) upon the listing of our shares of common stock for trading on a national securities exchange with at least three market makers or a New York Stock Exchange specialist, or (ii) upon the Company's entry into a binding commitment for any merger or combination of the Company or the sale of substantially all of the Company's assets, for cash at a redemption price per share equal to the Purchase Price plus any accrued and unpaid dividends thereon to, and including, the redemption date.

Item 5.03. Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

On December 13, 2022, the Company filed the Series 2023 Preferred Stock Articles Supplementary with the SDAT designating the rights, preferences and privileges of the Series 2023 Preferred Stock. The Series 2023 Preferred Stock Articles Supplementary were effective upon filing. The information about the Series 2023 Preferred Stock Articles Supplementary under Item 3.03 of this report, including the summary description of the rights, preferences and privileges of the Series 2023 Preferred Stock, is incorporated herein by reference.

The description of the Series 2023 Preferred Stock Articles Supplementary in this report does not purport to be complete and is qualified in its entirety by reference to the full text of the Series 2023 Preferred Stock Articles Supplementary, which is filed as Exhibit 3.1 hereto and is incorporated by reference herein.

Item 5.07 Submission of Matters to a Vote of Security Holders.

Results of Annual Meeting

On December 13, 2022, the Company held its 2022 annual meeting of stockholders (the "Annual Meeting") at 1245 Brickyard Road, Suite 250, Salt Lake City, Utah 84106. At the Annual Meeting, the Company’s stockholders voted in person or by proxy on (1) the election of the following individuals to the board of directors: Daniel Shaeffer, Chad Christensen, Jonathan Gardner, John Lunt, and Philip White; and (2) the ratification of the appointment of KPMG LLP (“KPMG”) as the Company’s independent registered public accounting firm for the year ending December 31, 2022.

All of the director nominees were elected. The number of votes cast for, against and abstaining from each of the director nominees and the number of broker non-votes were as follows:

	Votes For	Votes Against	Abstentions	Broker Non-Votes
Daniel Shaeffer	8,891,968	132,529	414,485	8,015,067
Chad Christensen	8,877,663	158,046	403,273	8,015,067
Jonathan Gardner	8,884,612	147,698	406,672	8,015,067
John Lunt	8,875,802	148,016	415,164	8,015,067
Philip White	8,862,884	164,105	411,993	8,015,067

The appointment of KPMG as the Company’s independent registered public accounting firm for the year ended December 31, 2022 was ratified. The results of the vote on the ratification of the appointment of KPMG as the Company’s independent registered public accounting firm for the year ending December 31, 2022 were as follows:

	Votes For	Votes Against	Abstentions	Broker Non-Votes
Ratification of KPMG Appointment	17,068,617	95,010	290,422	0

Item 8.01 Other Events.

November 30, 2022 NAV Calculation

Our board of directors, including a majority of our 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 our NAV. Our most recent NAV per share for each share class, which is updated as of the last calendar day of each month, is posted on our website at www.cottonwoodcommunities.com and is also available on our toll-free, automated telephone line at (888) 422-2584.

The November 30, 2022 NAV for our outstanding Class T, Class D, Class I, and Class A shares was calculated pursuant to these valuation guidelines.

Please see our Current Report on Form 8-K/A, filed with the SEC on June 8, 2021 and available on the SEC’s website at www.sec.gov, for a more detailed description of our valuation guidelines, including important disclosures regarding real property valuations, debt-related asset valuations and property management business valuations provided by Altus Group U.S. Inc. (the “Independent Valuation Advisor”). All parties engaged by us in the calculation of our NAV, including CC Advisors III, LLC, our advisor, are subject to the oversight of our board of directors. As described in our valuation guidelines, each real property is appraised by a third-party appraiser (the “Third-Party Appraisal Firm”) at least once per calendar year and reviewed by our advisor and the Independent Valuation Advisor. Additionally, the real property assets not appraised by the Third-Party Appraisal Firm in a given calendar month will be appraised for such calendar month by our Independent Valuation Advisor, and such appraisals are reviewed by our advisor.

Our Operating Partnership has certain classes or series of OP Units that are each economically equivalent to a corresponding class of shares. Accordingly, on the last day of each month, for such classes or series of OP Units, the NAV per OP Unit equals the NAV per share of the corresponding class. To the extent our Operating Partnership has classes of units that do not correspond to a class of our shares, such units will be valued in a manner consistent with our valuation guidelines. The NAV of our Operating Partnership on the last day of each month equals the sum of the NAVs of each fully-diluted outstanding OP Unit on such day. In calculating the fully-diluted outstanding OP Units we include all outstanding vested LTIP Units, unvested time-based LTIP Units and those performance-based LTIP Units that would be earned based on the internal rate of return as of such day.

Our total NAV in the following table includes the NAV of our outstanding classes of common stock as of November 30, 2022 (Class T, Class D, Class I, and Class A) as well as the partnership interests of the Operating Partnership held by parties other than us. The following table sets forth the components of our NAV as of November 30, 2022 and October 31, 2022:

	As of
Components of NAV*	November 30, 2022		October 31, 2022
Investments in Multifamily Operating Properties	$	2,399,539,386	$	2,327,260,768
Investments in Multifamily Development Properties	125,819,801		231,582,110
Investments in Real-estate Related Structured Investments	62,580,831		53,943,070
Investments in Land Held for Development	77,986,375		77,938,885
Operating Company and Other Net Current Assets	9,493,196		14,660,855
Cash and Cash Equivalents	11,455,051		14,465,047
Secured Real Estate Financing	(1,153,768,110)		(1,142,585,408)
Subordinated Unsecured Notes	(43,393,000)		(43,443,000)
Preferred Equity	(127,064,852)		(127,124,852)
Accrued Performance Participation Allocation	(24,639,165)		(30,297,984)
Net Asset Value	$	1,338,009,513	$	1,376,399,491
Fully-diluted Shares/Units Outstanding	66,918,871		66,905,811
* Presented as adjusted for our economic ownership percentage in each asset.

The following table provides a breakdown of our total NAV and NAV per share/unit by class as of November 30, 2022 and October 31, 2022:

	Class
	T		D		I		A		OP(1)		Total
As of November 30, 2022
Monthly NAV	$	93,280,093	$	516,216	$	73,225,644	$	537,873,431	$	633,114,129	$	1,338,009,513
Fully-diluted Outstanding Shares/Units	4,665,287		25,818		3,662,289		26,901,066		31,664,411		66,918,871
NAV per Fully-diluted Share/Unit	$	19.9945	$	19.9945	$	19.9945	$	19.9945	$	19.9945
As of October 31, 2022
Monthly NAV	$	93,393,303	$	280,619	$	72,286,501	$	556,656,626	$	653,782,442	$	1,376,399,491
Fully-diluted Outstanding Shares/Units	4,539,783		13,641		3,513,796		27,058,687		31,779,904		66,905,811
NAV per Fully-diluted Share/Unit	$	20.5722	$	20.5722	$	20.5722	$	20.5722	$	20.5722
(1) Includes the partnership interests of our Operating Partnership held by High Traverse Holdings, an entity beneficially owned by Daniel Shaeffer, Chad Christensen, Gregg Christensen and Eric Marlin and other Operating Partnership interests, including LTIP Units as described above, held by parties other than us.

Set forth below are the weighted averages of the key assumptions that were used by the Independent Appraisal Firms in the discounted cash flow methodology used in the November 30, 2022, valuations of our real property assets, based on property types.

	Discount Rate	Exit Capitalization Rate
Operating Assets	6.14%	4.79%
Development Assets	6.00%	4.50%
* Presented as adjusted for our economic ownership percentage in each asset, weighted by gross value.

A change in these assumptions would impact the calculation of the value of our operating and development assets. For example, assuming all other factors remain unchanged, the changes listed below would result in the following effects on our operating and development asset values:

Sensitivities	Change	Operating Asset Values	Development Asset Values
Discount Rate	0.25% decrease	2.4%	2.3%
	0.25% increase	(2.4)%	(2.2)%
Exit Capitalization Rate	0.25% decrease	4.1%	4.4%
	0.25% increase	(3.5)%	(4.0)%
* Presented as adjusted for our economic ownership percentage in each asset.

Forward-Looking Statements

This Current Report on Form 8-K includes certain statements that are intended to be deemed “forward-looking statements” within the meaning of, and to be covered by the safe harbor provisions contained in, Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such forward-looking statements are generally identifiable by the use of the words “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” “project,” “continue,” or other similar words or terms. These statements are based on certain assumptions and analyses made in light of our experience and our perception of historical trends, current conditions, expected future developments and other factors we believe are appropriate. Such statements are subject to a number of assumptions, risks and uncertainties that may cause our actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by these forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements. Among the factors that may cause results to vary are the extent to which the COVID-19 pandemic impacts our operations, the current economic slowdown, the rising interest rate environment and inflation, or the public perception that any of these events may continue, general economic and business (particularly real estate and capital market) conditions being less favorable than expected, the

business opportunities that may be presented to and pursued by us, changes in laws or regulations (including changes to laws governing the taxation of real estate investment trusts (“REITs”)), risk of acquisitions, availability and creditworthiness of prospective tenants, availability of capital (debt and equity), interest rate fluctuations, competition, supply and demand for properties in current and any proposed market areas in which we invest, our tenants’ ability and willingness to pay rent at current or increased levels, accounting principles, policies and guidelines applicable to REITs, environmental, regulatory and/or safety requirements, tenant bankruptcies and defaults, the availability and cost of comprehensive insurance, including coverage for terrorist acts, and other factors, many of which are beyond our control. For a further discussion of these factors and other risk factors that could lead to actual results materially different from those described in the forward-looking statements, see “Risk Factors” under Item 1A of Part 1 of our Annual Report on Form 10-K for the year ended December 31, 2021 and subsequent periodic and current reports filed with the SEC. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of future events, new information or otherwise.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits

Exhibit No.	Description
3.1	Articles Supplementary for the Series 2023 Preferred Stock of Cottonwood Communities, Inc.
99.1	Consent of Altus Group U.S. Inc.
104	Cover Page Interactive Data File (embedded within the Inline XBRL document).

SIGNATURE

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

COTTONWOOD COMMUNITIES, INC.
By:	/s/ Adam Larson
Name:	Adam Larson
Title:	Chief Financial Officer

Date:   December 16, 2022

EX-3.1

COTTONWOOD COMMUNITIES, INC.

ARTICLES SUPPLEMENTARY

Cottonwood Communities, Inc., a Maryland corporation (the “Corporation”), hereby certifies to the State Department of Assessments and Taxation of Maryland (the “SDAT”) that:

FIRST:

Under a power contained in Article VII of the charter of the Corporation (the “Charter”) and in accordance with Section 2-208 of the Maryland General Corporation Law, the Board of Directors of the Corporation (the “Board of Directors”), by duly adopted resolutions, classified 10,000,000 shares of authorized but unissued Preferred Stock, $.01 par value per share, of the Corporation as shares of Series 2023 Preferred Stock, and has provided for the issuance of such series, with the following preferences and other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications and terms and conditions of redemption (which, upon any restatement of the Charter, may be made a part of Article VII thereof, with any necessary or appropriate changes to the numeration or lettering of the sections or subsections hereof). Capitalized terms used but not defined herein shall have the meanings given to them in the Charter.

1.Designation and Number. A series of Preferred Stock, designated the Series 2023 Preferred Stock (the “Series 2023 Preferred Stock”), is hereby established. The number of authorized shares of Series 2023 Preferred Stock shall be 10,000,000.

2.Definitions. For purposes of the Series 2023 Preferred Stock, the following terms shall have the respective meanings indicated below.

(a)Business Day. The term “Business Day” shall mean each day, other than a Saturday or Sunday, which is not a day on which banks in the State of New York are required to close.

(b)Dividend Payment Date. The term “Dividend Payment Date” shall have the meaning as provided in Section 4 herein.

(c)Dividend Period. The term “Dividend Period” shall mean the respective period commencing on and including the first day of each month and ending on and including the day preceding the first day of the next succeeding Dividend Period (other than the initial Dividend Period and the Dividend Period during which any shares of Series 2023 Preferred Stock shall be redeemed or otherwise acquired by the Corporation).

(d)Dividend Record Date. The term “Dividend Record Date” shall have the meaning as provided in Section 4 herein.

(e)Early Redemption Period. The term “Early Redemption Period” shall mean any time on or after December 31, 2023.

(f)Junior Stock. The term “Junior Stock” shall have the meaning as provided in Section 3 herein.

(g)Parity Stock. The term “Parity Stock” shall have the meaning as provided in Section 3 herein.

(h)Purchase Price. The term “Purchase Price” shall have the meaning as provided in Section 5 herein.

(i)Redemption Deadline. The term “Redemption Deadline” shall have the meaning as provided in Section 6 herein.

(j)Special Redemption Event. The term “Special Redemption Event” shall mean the date upon which (i) the shares of Common Stock are listed for trading on a national securities exchange with at least 3 market makers or a New York Stock Exchange specialist or (ii) the Corporation enters into a binding commitment for any merger or combination of the Corporation or the sale of substantially all of the Corporation’s assets.

(k)Senior Stock. The term “Senior Stock” shall have the meaning as provided in Section 3 herein.

(l)Series 2019 Preferred Stock. The term “Series 2019 Preferred Stock” shall mean the Series 2019 Preferred Stock, $.01 par value per share, of the Corporation.

(m)Series 2023 Preferred Stock. The term “Series 2023 Preferred Stock” shall have the meaning as provided in Section 1 herein.

3.Rank. The Series 2023 Preferred Stock shall, with respect to priority of payment of dividends and other distributions and rights upon voluntary or involuntary liquidation, dissolution or winding up of the Corporation, rank: (a) senior to all classes or series of Common Stock and to any other class or series of stock of the Corporation issued in the future, unless the terms of such stock expressly provide that it ranks senior to, or on parity with, the Series 2023 Preferred Stock with respect to priority of payment of dividends and other distributions or rights upon voluntary or involuntary liquidation, dissolution or winding up of the Corporation (together with the Common Stock, the “Junior Stock”); (b) on parity with the Series 2019 Preferred Stock and any other class or series of stock of the Corporation, the terms of which expressly provide that it ranks on parity with the Series 2023 Preferred Stock with respect to priority of payment of dividends and other distributions and rights upon voluntary or involuntary liquidation, dissolution or winding up of the Corporation (the “Parity Stock”); and (c) junior to any class or series of stock of the Corporation which rank senior to the Series 2023 Preferred Stock with respect to priority of payment of dividends and other distributions or rights upon voluntary or involuntary liquidation, dissolution or winding up of the Corporation (the “Senior Stock”).

4.Dividends.

(a)Subject to the preferential rights of the holders of any class or series of stock of the Corporation ranking senior to the Series 2023 Preferred Stock with respect to priority of dividend payments, holders of shares of the Series 2023 Preferred Stock shall be entitled to receive, when and as authorized by the Board of Directors and declared by the Corporation, out of funds legally available for the payment of dividends, cash dividends at the rate of 6% per annum of $10.00 per share (equivalent to a fixed annual rate of $0.60 per share); provided, however, that, (i) commencing July 1, 2027, such rate shall increase to 6.25% per annum of $10.00 per share (equivalent to a fixed annual rate of $0.625 per share) and (ii) commencing July 1, 2028, such rate shall increase to 6.50% per annum of $10.00 per share (equivalent to a fixed annual rate of $0.65 per share). The dividends on each share of Series 2023 Preferred Stock shall be cumulative from the first date on which such share of Series 2023 Preferred Stock is issued or the end of the most recent Dividend Period for which dividends on the Series 2023 Preferred Stock (including such share) have been aggregated and paid and shall be payable monthly in arrears on or before the first day of each month or, if not a Business Day,

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the next succeeding Business Day (each, a “Dividend Payment Date”). Dividends shall be payable to holders of record as they appear in the stock records of the Corporation at the close of business on the applicable record date or dates, which shall be each day of the month immediately preceding the month in which the applicable Dividend Payment Date falls or such other date or dates designated by the Board of Directors for the determination of the holders of Series 2023 Preferred Stock entitled to receive dividends (each, a “Dividend Record Date”).

(b)No dividends on shares of Series 2023 Preferred Stock shall be authorized by the Board of Directors or declared by the Corporation or paid or set apart for payment by the Corporation at such time as the terms and provisions of any agreement of the Corporation, including any agreement relating to its indebtedness, prohibits such authorization, declaration, payment or setting apart for payment or provides that such authorization, declaration, payment or setting apart for payment would constitute a breach thereof or a default thereunder, or if such authorization, declaration, payment or setting apart for payment shall be restricted or prohibited by law.

(c)Notwithstanding the foregoing Section 4(b), dividends on the Series 2023 Preferred Stock shall accrue whether or not the Corporation has earnings, whether there are funds legally available for the payment of such dividends and whether or not such dividends are authorized by the Board of Directors or declared by the Corporation. No interest, or sum of money in lieu of interest, shall be payable in respect of any dividend payment or payments on the Series 2023 Preferred Stock which may be in arrears. When dividends are not paid in full (or a sum sufficient for such full payment is not so set apart) upon the Series 2023 Preferred Stock and the shares of any class or series of Parity Stock, all dividends declared upon the Series 2023 Preferred Stock and any class or series of Parity Stock shall be declared pro rata so that the amount of dividends declared per share of Series 2023 Preferred Stock and such class or series of Parity Stock shall in all cases bear to each other the same ratio that accumulated dividends per share on the Series 2023 Preferred Stock and such class or series of Parity Stock (which shall not include any accrual in respect of unpaid dividends for prior dividend periods if such Parity Stock does not have a cumulative dividend) bear to each other.

(d)Except as provided in the immediately preceding paragraph, unless full cumulative dividends on the Series 2023 Preferred Stock have been or contemporaneously are declared and paid in cash or declared and a sum sufficient for the payment thereof is set apart for payment (for purposes of these Articles Supplementary, “set apart for payment” shall mean the Corporation has determined it has sufficient cash available to pay such declared dividends) for all past Dividend Periods that have ended, no dividends (other than a dividend in shares of Junior Stock or in options, warrants or rights to subscribe for or purchase any such shares of Junior Stock) shall be declared and paid or declared and set apart for payment nor shall any other distribution be declared and made upon the Junior Stock or the Parity Stock, nor shall any shares of Junior Stock or Parity Stock be redeemed, purchased or otherwise acquired for any consideration (or any monies be paid to or made available for a sinking fund for the redemption of any such shares) by the Corporation (except (i) by conversion into or exchange for Junior Stock, (ii) the purchase of shares of Junior Stock or Parity Stock pursuant to the Charter to the extent necessary to preserve the Corporation’s qualification as a REIT for federal income tax purposes or (iii) the purchase or other acquisition of shares of Parity Stock pursuant to a purchase or exchange offer made on the same terms to holders of all outstanding shares of Series 2023 Preferred Stock). Holders of shares of the Series 2023 Preferred Stock shall not be entitled to any dividend, whether payable in cash, property or stock, in excess of full cumulative dividends on the Series 2023 Preferred Stock as provided above. Any dividend payment made on shares of the Series 2023 Preferred Stock shall first be credited against the earliest accrued but unpaid dividend due with respect to such shares which remains payable. Accrued but unpaid dividends on the Series 2023 Preferred Stock shall accrue as of the Dividend Payment Date on which they first become payable.

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5.Liquidation Preference. Upon any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, the holders of shares of Series 2023 Preferred Stock are entitled to be paid out of the assets of the Corporation legally available for distribution to its stockholders, after payment of or provision for the Corporation’s debts and other liabilities and subject to the preferential rights of the holders of any class or series of Senior Stock with respect to rights upon voluntary or involuntary liquidation, dissolution or winding up of the Corporation, a liquidation preference of $10.00 per share (the “Purchase Price”), plus an amount equal to any accrued and unpaid dividends (whether or not authorized or declared) thereon to and including the date of payment, but without interest, before any distribution of assets is made to holders of Junior Stock. If the assets of the Corporation legally available for distribution to stockholders are insufficient to pay in full the liquidation preference on the Series 2023 Preferred Stock and the liquidation preference on the shares of any class or series of Parity Stock, all assets distributed to the holders of the Series 2023 Preferred Stock and any class or series of Parity Stock shall be distributed pro rata so that the amount of assets distributed per share of Series 2023 Preferred Stock and such class or series of Parity Stock shall in all cases bear to each other the same ratio that the liquidation preference per share on the Series 2023 Preferred Stock and such class or series of Parity Stock bear to each other. After payment of the full amount of the liquidation distributions to which they are entitled, the holders of Series 2023 Preferred Stock shall have no right or claim to any of the remaining assets of the Corporation. The consolidation or merger of the Corporation with or into another entity, a merger of another entity with or into the Corporation, a statutory share exchange by the Corporation or a sale, lease, transfer or conveyance of all or substantially all of the Corporation’s property or business shall not be deemed to constitute a liquidation, dissolution or winding up of the Corporation. In determining whether a distribution (other than upon voluntary or involuntary liquidation, dissolution or winding up of the Corporation) by dividend, redemption or other acquisition of shares of stock of the Corporation or otherwise is permitted under the Maryland General Corporation Law, no effect shall be given to amounts that would be needed, if the Corporation were to be dissolved at the time of the distribution, to satisfy the preferential rights upon dissolution of holders of the Series 2023 Preferred Stock.

6.Mandatory Redemption. Unless the shares of Series 2023 Preferred Stock have been redeemed for cash pursuant to Section 7 or 8 below, the Corporation shall, on June 30, 2027 (the “Redemption Deadline”), to the extent there are funds legally available therefor and subject to the preferential rights of the holders of any Senior Stock with respect to priority of distributions, redeem all shares of Series 2023 Preferred Stock for cash at a redemption price per share equal to the Purchase Price plus an amount equal to all accrued and unpaid dividends thereon to, and including, the redemption date. Notwithstanding the foregoing, the Corporation may, in the sole discretion of the Board of Directors, extend the Redemption Deadline for up to 2 successive one-year periods, and any such extension of the Redemption Date shall be set forth in a Certificate of Notice filed with, and accepted for record by, the SDAT.

7.Optional Redemption.

(a)The Corporation may, at its option during the Early Redemption Period, redeem shares of Series 2023 Preferred Stock, in whole or from time to time in part, for cash at a redemption price per share equal to the Purchase Price plus an amount equal to all accrued and unpaid dividends thereon to, and including, the redemption date. Notwithstanding the foregoing, in the event of a redemption of shares of Series 2023 Preferred Stock after a Dividend Record Date and on or prior to the related Dividend Payment Date, the dividend payable on such Dividend Payment Date in respect of such shares called for redemption shall be payable on such Dividend Payment Date to the holders of record at the close of business on such Dividend Record Date and shall not be payable as part of the redemption price for such shares.

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(b)The redemption date shall be selected by the Corporation and shall be not less than 15 nor more than 90 days after the date on which the Corporation sends notice of the redemption. Such notice shall be sent by first class mail, postage pre-paid, to each record holder of the Series 2023 Preferred Stock at the respective mailing addresses of such holders as the same shall appear on the stock transfer records of the Corporation and shall state: (i) the redemption date; (ii) the redemption price payable on the redemption date, including, without limitation, a statement as to whether or not accrued and unpaid dividends shall be payable as part of the redemption price or payable on the next Dividend Payment Date to the record holder at the close of business on the relevant Dividend Record Date as described above; and (iii) that dividends on the shares to be redeemed shall cease to accrue on such redemption date. If less than all of the shares of Series 2023 Preferred Stock held by any holder are to be redeemed, the notice mailed to such holder shall also specify the number of shares of Series 2023 Preferred Stock held by such holder to be redeemed. No failure to give such notice or any defect therein or in the mailing thereof shall affect the validity of the proceedings for the redemption of any shares of Series 2023 Preferred Stock except as to the holder to whom notice was defective or not given.

(c)If fewer than all of the outstanding shares of Series 2023 Preferred Stock are to be redeemed, the Corporation shall redeem those shares pro rata unless the Board of Directors elects to provide the holders of such shares a “first come, first serve” redemption option.

(d)If notice of redemption of any shares of Series 2023 Preferred Stock has been given and if the funds necessary for such redemption have been set apart by the Corporation for the benefit of the holders of any shares of Series 2023 Preferred Stock so called for redemption, then, from and after the redemption date, dividends shall cease to accrue on such shares of Series 2023 Preferred Stock, such shares of Series 2023 Preferred Stock shall be redeemed in accordance with the notice and shall no longer be deemed outstanding and all rights of the holders of such shares of Series 2023 Preferred Stock shall terminate, except the right to receive the redemption price payable upon such redemption without interest thereon. No further action on the part of the holders of such shares shall be required.

(e)Unless full cumulative dividends on the Series 2023 Preferred Stock for all past Dividend Periods that have ended shall have been or contemporaneously are declared and paid in cash or declared and a sum sufficient for the payment thereof is set apart for payment, no shares of Series 2023 Preferred Stock shall be redeemed unless all outstanding shares of Series 2023 Preferred Stock are simultaneously redeemed, and the Corporation shall not purchase or otherwise acquire directly or indirectly any shares of Series 2023 Preferred Stock (except (i) by conversion into or exchange for Junior Stock, (ii) the purchase of shares of Series 2023 Preferred Stock pursuant to the Charter to the extent necessary to preserve the Corporation’s qualification as a REIT for federal income tax purposes or (iii) the purchase or other acquisition of shares of Series 2023 Preferred Stock pursuant to a purchase or exchange offer made on the same terms to holders of all outstanding shares of Series 2023 Preferred Stock).

8.Redemption Upon Special Redemption Event.

(a)In connection with a Special Redemption Event, the Corporation may, at its option, elect to redeem the Series 2023 Preferred Stock for cash at a redemption price per share equal to the Purchase Price plus an amount equal to all accrued and unpaid dividends thereon to, and including, the redemption date.

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(b)If the funds necessary for the redemption of Series 2023 Preferred Stock pursuant to this Section 8 have been set apart by the Corporation for the benefit of the holders of any shares of Series 2023 Preferred Stock to be redeemed, then, from and after the redemption date, dividends shall cease to accrue on such shares of Series 2023 Preferred Stock, such shares of Series 2023 Preferred Stock shall be redeemed in accordance with the notice and shall no longer be deemed outstanding and all rights of the holders of such shares of Series 2023 Preferred Stock shall terminate, except the right to receive the redemption price payable upon such redemption without interest thereon. No further action on the part of the holders of such shares shall be required. Notwithstanding anything to the contrary set forth above, in the event of a redemption of shares of Series 2023 Preferred Stock pursuant to this Section 8 after a Dividend Record Date and on or prior to the related Dividend Payment Date, the dividend payable on such Dividend Payment Date in respect of such shares to be redeemed shall be payable on such Dividend Payment Date to the holders of record at the close of business on such Dividend Record Date and shall not be payable as part of the redemption price for such shares.

9.Voting Rights. Holders of the Series 2023 Preferred Stock shall not have any voting rights.

10.Status of Redeemed Series 2023 Preferred Stock. All shares of Series 2023 Preferred Stock redeemed or otherwise acquired in any manner by the Corporation shall be retired and shall be restored to the status of authorized but unissued Preferred Stock, without designation as to class or series.

11.Assignability. The Corporation shall have the right, at any time, to assign the obligations of the Series 2023 Preferred Stock to a separate corporation provided that such corporation becomes the successor in interest to the Corporation.

SECOND: The shares of Series 2023 Preferred Stock have been classified and designated by the Board of Directors under the authority contained in the Charter.

THIRD: These Articles Supplementary have been approved by the Board of Directors in the manner and by the vote required by law.

FOURTH: The undersigned acknowledges these Articles Supplementary are the corporate act of the Corporation and, as to all matters or facts required to be verified under oath, the undersigned acknowledges that, to the best of his knowledge, information and belief, these matters and facts are true in all material respects and that this statement is made under the penalties for perjury.

[SIGNATURE PAGE FOLLOWS]

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IN WITNESS WHEREOF, the Corporation has caused these Articles Supplementary to be signed in its name and on its behalf by its Chief Executive Officer and attested by its Secretary on this 1st day of December, 2022.

ATTEST:	COTTONWOOD COMMUNITIES, INC.
/s/ Gregg Christensen	/s/ Daniel Shaeffer
Name: Gregg Christensen	Name: Daniel Shaeffer
Title: Secretary	Title: Chief Executive Officer

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EX-99.1

Exhibit 99.1

CONSENT OF INDEPENDENT VALUATION FIRM

We hereby consent to the reference to our name and the description of our role in the valuation process described in the Current Report on Form 8-K of Cottonwood Communities, Inc. as filed with the Securities and Exchange Commission on December 16, 2022, being incorporated by reference in the Registration Statement on Form S-8 (No. 333-263982) of Cottonwood Communities, Inc. 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.
December 16, 2022

XML

Cover	Dec. 13, 2022
Cover [Abstract]
Document Type	8-K
Document Period End Date	Dec. 13, 2022
Entity Registrant Name	Cottonwood Communities, Inc.
Entity Incorporation, State or Country Code	MD
Entity File Number	000-56165
Entity Tax Identification Number	61-1805524
Entity Address, Address Line One	1245 Brickyard Road
Entity Address, Address Line Two	Suite 250
Entity Address, City or Town	Salt Lake City
Entity Address, State or Province	UT
Entity Address, Postal Zip Code	84106
City Area Code	801
Local Phone Number	278-0700
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Entity Emerging Growth Company	true
Entity Ex Transition Period	true
Entity Central Index Key	0001692951
Amendment Flag	false
Current Fiscal Year End Date	--12-31