Steadfast Income REIT, Inc. - FORM 10-Q - November 14, 2011

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
þ     
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
 
For the quarterly period ended September 30, 2011
OR
o     
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
 
For the transition period from                      to                     
Commission file number 333-160748
STEADFAST INCOME REIT, INC.
(Exact Name of Registrant as Specified in Its Charter)
Maryland
 
27-0351641
(State or Other Jurisdiction of
 
(I.R.S. Employer
Incorporation or Organization)
 
Identification No.)
 
 
 
18100 Von Karman Avenue, Suite 500
 
 
Irvine, California
 
92612
(Address of Principal Executive Offices)
 
(Zip Code)
(949) 852-0700
(Registrant’s Telephone Number, Including Area Code)
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No o
Indicate by check mark whether the registrant is a large accelerated filed, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large Accelerated filer o
Accelerated filer o 
Non-Accelerated filer o
(Do not check if smaller reporting company)
Smaller reporting company þ
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ
As of November 9, 2011, there were 3,472,997 shares of the Registrant’s common stock issued and outstanding.
 

STEADFAST INCOME REIT, INC.
INDEX
 
Page
 
 


1

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

STEADFAST INCOME REIT, INC.
CONSOLIDATED BALANCE SHEETS
 
September 30, 2011
 
December 31, 2010
 
(Unaudited)
 
 
ASSETS
Assets:
 
 
 
Real Estate:
 
 
 
Land
$
3,709,325

 
$
758,600

Building and improvements
40,191,261

 
15,569,680

Tenant origination and absorption costs
1,867,856

 
1,224,044

Total real estate, cost
45,768,442

 
17,552,324

Less accumulated depreciation and amortization
(2,390,610
)
 
(540,572
)
Total real estate, net
43,377,832

 
17,011,752

Cash and cash equivalents
9,040,820

 
2,858,197

Restricted cash
543,262

 
—

Rents and other receivables
220,120

 
119,210

Deferred financing costs and other assets, net
399,872

 
182,523

Total assets
$
53,581,906

 
$
20,171,682

LIABILITIES AND EQUITY
Liabilities:
 
 
 
Accounts payable and accrued liabilities
$
1,239,770

 
$
831,501

Notes payable
32,556,045

 
11,650,000

Distributions payable
162,703

 
63,566

Due to affiliates, net
467,691

 
381,910

Total liabilities
34,426,209

 
12,926,977

Commitments and contingencies (Note 9)

 

Redeemable common stock
376,528

 
57,827

Equity:
 
 
 
Stockholders’ Equity:
 
 
 
Preferred stock, $0.01 par value per share; 100,000,000 shares authorized, no shares issued and outstanding
—

 
—

Common stock, $0.01 par value per share; 999,999,000 shares authorized, 3,021,030 and 1,184,283 shares issued and outstanding at September 30, 2011 and December 31, 2010, respectively
30,210

 
11,843

Convertible stock, $0.01 par value per share; 1,000 shares authorized, 1,000 shares issued and outstanding as of September 30, 2011 and December 31, 2010
10

 
10

Additional paid-in capital
24,790,240

 
9,568,008

Cumulative distributions and net losses
(6,041,291
)
 
(2,392,983
)
Total stockholders’ equity
18,779,169

 
7,186,878

Noncontrolling interest
—

 
—

Total equity
18,779,169

 
7,186,878

Total liabilities and equity
$
53,581,906

 
$
20,171,682

See accompanying notes to consolidated financial statements.

2

PART I — FINANCIAL INFORMATION (continued)
Item 1. Financial Statements (continued)




STEADFAST INCOME REIT, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2011
 
2010
 
2011
 
2010
Revenues:
 
 
 
 
 
 
 
Rental income
$
1,629,652

 
$
263,425

 
$
3,367,794

 
$
263,425

Tenant reimbursements and other
147,834

 
14,226

 
365,238

 
14,226

Total revenues
1,777,486

 
277,651

 
3,733,032

 
277,651

Expenses:
 
 
 
 
 
 
 
Operating, maintenance and management
629,735

 
86,087

 
1,323,773

 
86,087

Real estate taxes and insurance
321,444

 
46,137

 
533,137

 
46,137

Fees to affiliates
355,698

 
217,408

 
868,382

 
217,408

Depreciation and amortization
629,085

 
175,558

 
1,850,038

 
175,558

Interest expense
375,346

 
56,799

 
759,431

 
56,799

General and administrative expenses
56,894

 
375,208

 
580,310

 
753,963

Other acquisition costs
140,241

 
101,992

 
478,432

 
149,507

 
2,508,443

 
1,059,189

 
6,393,503

 
1,485,459

Net loss
(730,957
)
 
(781,538
)
 
(2,660,471
)
 
(1,207,808
)
Net loss attributable to noncontrolling interest
—

 
1,000

 
—

 
1,000

Net loss attributable to common stockholders
$
(730,957
)
 
$
(780,538
)
 
$
(2,660,471
)
 
$
(1,206,808
)
Net loss per common share — basic and diluted
$
(0.29
)
 
$
(1.15
)
 
$
(1.40
)
 
$
(3.30
)
Weighted average number of common shares outstanding — basic and diluted
2,525,536

 
680,632

 
1,896,815

 
365,924

Distributions declared per common share
$
0.176

 
$
0.096

 
$
0.523

 
$
0.096

See accompanying notes to consolidated financial statements.

3

PART I — FINANCIAL INFORMATION (continued)
Item 1. Financial Statements (continued)




STEADFAST INCOME REIT, INC.
CONSOLIDATED STATEMENTS OF EQUITY
FOR THE YEAR ENDED DECEMBER 31, 2010
AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2011
(Unaudited)
 
Stockholders’ Equity
 
 
 
 
 
Common Stock
 
Convertible Stock
 
Additional Paid-
In Capital
 
Cumulative
Distributions &
Net Losses
 
Total Stockholders’
Equity
 
Noncontrolling
Interest
 
 
 
Shares
 
Amount
 
Shares
 
Amount
 
 
 
 
 
Total Equity
BALANCE, December 31, 2009
22,223

 
$
222

 
1,000

 
$
10

 
$
200,775

 
$
—

 
$
201,007

 
$
1,000

 
$
202,007

Issuance of common stock
1,162,060

 
11,621

 
—

 
—

 
10,893,889

 
—

 
10,905,510

 
—

 
10,905,510

Commissions on sales of common stock and related dealer manager fees to affiliates
—

 
—

 
—

 
—

 
(927,042
)
 
—

 
(927,042
)
 
—

 
(927,042
)
Transfers to redeemable common stock
—

 
—

 
—

 
—

 
(57,827
)
 
—

 
(57,827
)
 
—

 
(57,827
)
Other offering costs to affiliates
—

 
—

 
—

 
—

 
(596,561
)
 
—

 
(596,561
)
 
—

 
(596,561
)
Distributions declared
—

 
—

 
—

 
—

 
—

 
(230,402
)
 
(230,402
)
 
—

 
(230,402
)
Amortization of stock-based compensation
—

 
—

 
—

 
—

 
54,774

 
—

 
54,774

 
—

 
54,774

Net loss for the year ended December 31, 2010
—

 
—

 
—

 
—

 
—

 
(2,162,581
)
 
(2,162,581
)
 
(1,000
)
 
(2,163,581
)
BALANCE, December 31, 2010
1,184,283

 
11,843

 
1,000

 
10

 
9,568,008

 
(2,392,983
)
 
7,186,878

 
—

 
7,186,878

Issuance of common stock
1,836,747

 
18,367

 
—

 
—

 
18,170,897

 
—

 
18,189,264

 
—

 
18,189,264

Commissions on sales of common stock and related dealer manager fees to affiliates
—

 
—

 
—

 
—

 
(1,704,033
)
 
—

 
(1,704,033
)
 
—

 
(1,704,033
)
Transfers to redeemable common stock
—

 
—

 
—

 
—

 
(318,701
)
 
—

 
(318,701
)
 
—

 
(318,701
)
Other offering costs to affiliates
—

 
—

 
—

 
—

 
(969,427
)
 
—

 
(969,427
)
 
—

 
(969,427
)
Distributions declared
—

 
—

 
—

 
—

 
—

 
(987,837
)
 
(987,837
)
 
—

 
(987,837
)
Amortization of stock-based compensation
—

 
—

 
—

 
—

 
43,496

 
—

 
43,496

 
—

 
43,496

Net loss for the nine months ended September 30, 2011
—

 
—

 
—

 
—

 
—

 
(2,660,471
)
 
(2,660,471
)
 
—

 
(2,660,471
)
BALANCE, September 30, 2011
3,021,030

 
$
30,210

 
1,000

 
$
10

 
$
24,790,240

 
$
(6,041,291
)
 
$
18,779,169

 
$
—

 
$
18,779,169

See accompanying notes to consolidated financial statements.

4

PART I — FINANCIAL INFORMATION (continued)
Item 1. Financial Statements (continued)




STEADFAST INCOME REIT, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)

 
Nine Months Ended September 30,
 
2011
 
2010
Cash Flows from Operating Activities:
 
 
 
Net loss
$
(2,660,471
)
 
$
(1,207,808
)
Adjustments to reconcile net loss to net cash used in operating activities:
 
 
 
Depreciation and amortization
1,850,038

 
175,558

Amortization of deferred finance costs
19,844

 
274

Stock-based compensation
67,871

 
80,505

Changes in operating assets and liabilities:
 
 
 
Restricted cash
(247,696
)
 
—

Rent and other receivables
(69,785
)
 
(15,827
)
Other assets
(52,743
)
 
(15,706
)
Accounts payable and accrued liabilities
408,269

 
504,205

Due to affiliates, net
92,998

 
316,012

Net cash used in operating activities
(591,675
)
 
(162,787
)
Cash Flows from Investing Activities:
 
 
 
Acquisition of real estate investments
(28,135,000
)
 
(2,850,000
)
Addition to real estate investments
(81,118
)
 
—

Restricted cash
(295,566
)
 
—

Net cash used in investing activities
(28,511,684
)
 
(2,850,000
)
Cash Flows from Financing Activities:
 
 
 
Proceeds from issuance of notes payable
20,945,000

 
—

Principal payments on notes payable
(38,955
)
 
—

Proceeds from issuance of common stock
17,791,934

 
6,679,574

Payments of commissions on sale of common stock and related dealer manager fees
(1,704,033
)
 
(540,787
)
Reimbursement of other offering costs to affiliates
(976,643
)
 
(423,707
)
Payment of deferred financing costs
(184,450
)
 
(35,000
)
Distributions to common stockholders
(546,871
)
 
(24,449
)
Net cash provided by financing activities
35,285,982

 
5,655,631

Net increase in cash and cash equivalents
6,182,623

 
2,642,844

Cash and cash equivalents, beginning of period
2,858,197

 
202,007

Cash and cash equivalents, end of period
$
9,040,820

 
$
2,844,851

Supplemental Disclosures of Cash Flow Information:
 
 
 
Interest paid
$
640,606

 
$
23,275

Supplemental Disclosure of Noncash Transactions:
 
 
 
Increase in distributions payable
$
99,137

 
$
36,752

Issuance of note payable to acquire real estate
$
—

 
$
6,650,000

Distributions paid to common stockholders through common stock issuances pursuant to the dividend reinvestment plan
$
341,829

 
$
2,387

See accompanying notes to consolidated financial statements.

5

PART I — FINANCIAL INFORMATION (continued)
 
Item 1. Financial Statements (continued)

STEADFAST INCOME REIT, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2011
(unaudited)


1. Organization and Business
Steadfast Income REIT, Inc. (the “Company”) was formed on May 4, 2009 as a Maryland corporation that has elected to qualify as a real estate investment trust (“REIT”). On June 12, 2009, the Company was initially capitalized pursuant to the sale of 22,223 shares of common stock to Steadfast REIT Investments, LLC (the “Sponsor”) at a purchase price of $9.00 per share for an aggregate purchase price of $200,007. On July 10, 2009, Steadfast Income Advisors, LLC, a Delaware limited liability company formed on May 1, 2009 (the “Advisor”), invested $1,000 in the Company in exchange for 1,000 shares of convertible stock (the “Convertible Stock”) as described in Note 6.
Substantially all of the Company’s business is conducted through Steadfast Income REIT Operating Partnership, L.P., a Delaware limited partnership formed on July 6, 2009 (the “Operating Partnership”). The Company is the sole general partner of the Operating Partnership. As the Company accepts subscriptions for shares of its common stock, the Company will transfer substantially all of the net offering proceeds to the Operating Partnership in exchange for partnership interests and the Company’s percentage ownership in the Operating Partnership will increase proportionately. The Company and Advisor entered into an Amended and Restated Limited Partnership Agreement of the Operating Partnership (the “Partnership Agreement”) on September 28, 2009.
Private Offering
On October 13, 2009, the Company commenced a private offering of up to $94,000,000 in shares of the Company’s common stock at a purchase price of $9.40 per share (with discounts available for certain categories of purchasers) (the “Private Offering”). The Company offered its shares of common stock for sale in the Private Offering pursuant to a confidential private placement memorandum and only to persons that were “accredited investors,” as that term is defined under the Securities Act of 1933, as amended, and Regulation D promulgated thereunder. On July 9, 2010, the Company terminated the Private Offering and on July 19, 2010, the Company commenced its registered public offering described below. The Company sold 637,279 shares of common stock in the Private Offering for gross offering proceeds of $5,844,325.
Public Offering
On July 23, 2009, the Company filed a registration statement on Form S-11 with the Securities and Exchange Commission (the “SEC”) to offer a maximum of 150,000,000 shares of common stock for sale to the public at an initial price of $10.00 per share (with discounts available for certain categories of purchasers) (the “Public Offering”). The Company is also offering up to 15,789,474 shares of common stock pursuant to the Company’s distribution reinvestment plan (the “DRP”) at an initial price of $9.50 per share. The SEC declared the Company’s registration statement effective on July 9, 2010. The Company commenced its Public Offering on July 19, 2010. If the Company extends the Public Offering beyond two years from the date the registration statement was declared effective, the Company’s board of directors may, from time to time, in its sole discretion, change the price at which the Company offers shares of common stock to the public in the Public Offering or to its stockholders pursuant to the DRP to reflect changes in the Company’s estimated net asset value per share and other factors that the Company’s board of directors deems relevant. The Company may reallocate the shares between the Public Offering and the DRP. As of September 30, 2011, the Company had sold 2,331,567 shares of common stock in the Public Offering for gross offering proceeds of $23,184,202, including 39,634 shares of common stock issued pursuant to the DRP for gross offering proceeds of $376,528.

6

PART I — FINANCIAL INFORMATION (continued)
 
Item 1. Financial Statements (continued)

STEADFAST INCOME REIT, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2011
(unaudited)

The Company intends to use substantially all of the net proceeds from the Public Offering to invest in and manage a diverse portfolio of real estate investments, primarily in the multifamily sector, located throughout the United States. In addition to the Company’s focus on multifamily properties, the Company may also selectively invest in industrial properties and other types of commercial properties. The Company may also acquire or originate mortgage, mezzanine, bridge and other real estate loans and equity securities of other real estate companies.
The business of the Company is externally managed by the Advisor, pursuant to the Advisory Agreement dated as of May 4, 2010, as amended by Amendment No. 1 to the Amended and Restated Advisory Agreement, dated as of March 21, 2011 (as amended, the “Advisory Agreement”), which is subject to annual renewal by the Company’s board of directors. The Company has retained Steadfast Capital Markets Group, LLC (the “Dealer Manager”), an affiliate of the Company, to serve as the dealer manager of the Public Offering. The Dealer Manager is responsible for marketing the Company’s shares of common stock being offered pursuant to the Public Offering.
Pursuant to the Partnership Agreement, the Company contributes substantially all of the net offering proceeds to the Operating Partnership as a capital contribution. The Partnership Agreement provides that the Operating Partnership will be operated in a manner that will enable the Company to (1) satisfy the requirements for being classified as a REIT for tax purposes, (2) avoid any federal income or excise tax liability and (3) ensure that the Operating Partnership will not be classified as a “publicly traded partnership” for purposes of Section 7704 of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), which classification could result in the Operating Partnership being taxed as a corporation, rather than as a partnership. In addition to the administrative and operating costs and expenses incurred by the Operating Partnership in acquiring and operating real properties, the Operating Partnership will pay all of the Company’s administrative costs and expenses, and such expenses will be treated as expenses of the Operating Partnership.
The Company commenced its operations on August 11, 2010 upon acquiring a fee simple interest in a multifamily property located in Springfield, Illinois.

2. Summary of Significant Accounting Policies
Principles of Consolidation and Basis of Presentation
The consolidated financial statements include the accounts of the Company, the Operating Partnership and its subsidiaries. All significant intercompany balances and transactions are eliminated in consolidation. The financial statements of the Company’s subsidiaries are prepared using accounting policies consistent with those of the Company.
The accompanying unaudited consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information as contained within the Financial Accounting Standards Board (“FASB”), Accounting Standards Codification (“ASC”) and the rules and regulations of the SEC, including the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, the unaudited consolidated financial statements do not include all of the information and footnotes required by GAAP for audited financial statements. In the opinion of management, the financial statements for the unaudited interim periods presented include all adjustments that are of a normal and recurring nature and necessary for a fair and consistent presentation of the results of such periods. Operating results for the three and nine months ended September 30, 2011 are not necessarily indicative of the results that may be expected for the year ending December 31, 2011.
The consolidated financial statements herein should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010.

7

PART I — FINANCIAL INFORMATION (continued)
 
Item 1. Financial Statements (continued)

STEADFAST INCOME REIT, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2011
(unaudited)

Use of Estimates
The preparation of the consolidated financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could materially differ from those estimates.
Real Estate Assets
     Depreciation and Amortization
Real estate costs related to the development, construction and improvement of properties will be capitalized. Acquisition costs are expensed as incurred. Repair and maintenance and tenant turnover costs will be charged to expense as incurred and significant replacements and betterments will be capitalized. Repair and maintenance and tenant turnover costs include all costs that do not extend the useful life of the real estate asset. The Company considers the period of future benefit of an asset to determine its appropriate useful life and anticipates the estimated useful lives of assets by class to be generally as follows:
Buildings
 
25-40 years
Building improvements
 
5-25 years
Tenant improvements
 
Shorter of lease term or expected useful life
Tenant origination and absorption costs
 
Remaining term of related lease
Furniture, fixtures, and equipment
 
5-10 years
     Real Estate Purchase Price Allocation
The Company records the acquisition of income-producing real estate or real estate that will be used for the production of income as a business combination. All assets acquired and liabilities assumed in a business combination are measured at their acquisition-date fair values. Acquisition costs are expensed as incurred.
The Company assesses the acquisition-date fair values of all tangible assets, identifiable intangible assets and assumed liabilities using methods similar to those used by independent appraisers (e.g., discounted cash flow analysis) and that utilize appropriate discount and/or capitalization rates and available market information. Estimates of future cash flows are based on a number of factors including historical operating results, known and anticipated trends, and market and economic conditions. The fair value of tangible assets of an acquired property considers the value of the property as if it was vacant.
Intangible assets include the value of in-place leases, which represents the estimated value of the net cash flows of the in-place leases to be realized, as compared to the net cash flows that would have occurred had the property been vacant at the time of acquisition and subject to lease-up.
The Company estimates the value of tenant origination and absorption costs by considering the estimated carrying costs during hypothetical expected lease-up periods, considering current market conditions. In estimating carrying costs, the Company estimates the amount of lost rentals using market rates during the expected lease-up periods.

8

PART I — FINANCIAL INFORMATION (continued)
 
Item 1. Financial Statements (continued)

STEADFAST INCOME REIT, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2011
(unaudited)

The Company records above-market and below-market in-place lease values for acquired properties based on the present value (using an interest rate that reflects the risks associated with the leases acquired) of the difference between (1) the contractual amounts to be paid pursuant to the in-place leases and (2) the Company’s estimate of fair market lease rates for the corresponding in-place leases, measured over a period equal to the remaining cancelable term of the lease. The Company amortizes any capitalized above-market or below-market lease values as a reduction or increase to rental income over the remaining non-cancelable terms of the respective leases.
The total amount of other intangible assets acquired will be further allocated to in-place lease values and customer relationship intangible values based on the Company’s evaluation of the specific characteristics of each tenant’s lease and its overall relationship with that respective tenant. Characteristics that the Company considers in allocating these values include the nature and extent of existing business relationships with the tenant, growth prospects for developing new business with the tenant, and the tenant’s credit quality and expectations of lease renewals (including those existing under the terms of the lease agreement), among other factors.
The Company amortizes the value of in-place leases to expense over the remaining non-cancelable term of the respective leases. The value of customer relationship intangibles will be amortized to expense over the initial term and any renewal periods in the respective leases, but in no event will the amortization periods for the intangible assets exceed the remaining depreciable life of the building. Should a tenant terminate its lease, the unamortized portion of the in-place lease value and customer relationship intangibles would be charged to expense in that period.
Estimates of the fair values of the tangible assets, identifiable intangible assets and assumed liabilities require us to make significant assumptions to estimate market lease rates, property-operating expenses, carrying costs during lease-up periods, discount rates, market absorption periods, and the number of years the property will be held for investment. The use of inappropriate assumptions could result in an incorrect valuation of acquired tangible assets, identifiable intangible assets and assumed liabilities, which could impact the amount of the Company’s net income.
     Impairment of Real Estate Assets
The Company will continually monitor events and changes in circumstances that could indicate that the carrying amounts of the Company’s real estate and related intangible assets may not be recoverable. When indicators of potential impairment suggest that the carrying value of real estate and related intangible assets and liabilities may not be recoverable, the Company assesses the recoverability of the assets by estimating whether the Company will recover the carrying value of the asset through its undiscounted future cash flows and its eventual disposition. Based on this analysis, if the Company does not believe that it will be able to recover the carrying value of the real estate and related intangible assets and liabilities, the Company records an impairment loss to the extent that the carrying value exceeds the estimated fair value of the real estate and related intangible assets and liabilities. If any assumptions, projections or estimates regarding an asset changes in the future, the Company may have to record an impairment to reduce the net book value of such individual asset.
Rents and Other Receivables
The Company will periodically evaluate the collectability of amounts due from tenants and maintain an allowance for doubtful accounts for estimated losses resulting from the inability of tenants to make required payments under lease agreements. The Company exercises judgment in establishing these allowances and considers payment history and current credit status of tenants in developing these estimates. Due to the short-term nature of the operating leases, The Company does not maintain an allowance for deferred rent receivable related to the straight-lining of rents.

9

PART I — FINANCIAL INFORMATION (continued)
 
Item 1. Financial Statements (continued)

STEADFAST INCOME REIT, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2011
(unaudited)

Revenue Recognition
The Company leases apartment and condominium units under operating leases with terms generally of one year or less. Generally, credit investigations are performed for prospective residents and security deposits are obtained. The Company will recognize minimum rent, including rental abatements, concessions and contractual fixed increases attributable to operating leases, on a straight-line basis over the term of the related lease and amounts expected to be received in later years will be recorded as deferred rents. The Company records property operating expense reimbursements due from tenants for common area maintenance, real estate taxes, and other recoverable costs in the period the related expenses are incurred.
The Company recognizes gains on sales of real estate either in total or deferred for a period of time, depending on whether a sale has been consummated, the extent of the buyer’s investment in the property being sold, whether the receivable is subject to future subordination, and the degree of the Company’s continuing involvement with the property after the sale. If the criteria for profit recognition under the full-accrual method are not met, the Company will defer gain recognition and account for the continued operations of the property by applying the percentage-of-completion, reduced profit, deposit, installment or cost recovery method, as appropriate, until the appropriate criteria are met.
Cash and Cash Equivalents
The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Cash equivalents may include cash and short-term investments. Short-term investments are stated at cost, which approximates fair value. As of September 30, 2011 and December 31, 2010, the Company had amounts in excess of federally insured limits in deposit accounts with a financial institution. The Company limits such deposits to financial institutions with high credit standing.
Restricted Cash
Restricted cash represents those cash accounts for which the use of funds is restricted by loan covenants. As of September 30, 2011 and December 31, 2010, the Company had a restricted cash balance of $543,262 and $0, respectively, which represents amounts set aside as impounds for future property tax payments, property insurance payments and tenant improvement payments as required by agreements with the Company's lenders.
Deferred Financing Costs
The Company capitalizes deferred financing costs such as commitment fees, legal fees and other third party costs associated with obtaining commitments for financing that result in a closing of such financing. The Company amortizes these costs over the terms of the respective financing agreements using the interest method. The Company expenses unamortized deferred financing costs when the associated debt is refinanced or repaid before maturity unless specific rules are met that would allow for the carryover of such costs to the refinanced debt. Costs incurred in seeking financing transactions that do not close are expensed in the period in which it is determined that the financing will not close.

10

PART I — FINANCIAL INFORMATION (continued)
 
Item 1. Financial Statements (continued)

STEADFAST INCOME REIT, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2011
(unaudited)

Fair Value Measurements
Under GAAP, the Company is required to measure certain financial instruments at fair value on a recurring basis. In addition, the Company is required to measure other assets and liabilities at fair value on a non-recurring basis (e.g., carrying value of impaired real estate loans receivable and long-lived assets). Fair value is defined as the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The GAAP fair value framework uses a three-tiered approach. Fair value measurements are classified and disclosed in one of the following three categories:
•
Level 1: unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities;
•
Level 2: quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations in which significant inputs and significant value drivers are observable in active markets; and
•
Level 3: prices or valuation techniques where little or no market data is available that requires inputs that are both significant to the fair value measurement and unobservable.
When available, the Company utilizes quoted market prices from an independent third-party source to determine fair value and will classify such items in Level 1 or Level 2. In instances where the market is not active, regardless of the availability of a nonbinding quoted market price, observable inputs might not be relevant and could require the Company to make a significant adjustment to derive a fair value measurement. Additionally, in an inactive market, a market price quoted from an independent third party may rely more on models with inputs based on information available only to that independent third party. When the Company determines the market for a financial instrument owned by the Company to be illiquid or when market transactions for similar instruments do not appear orderly, the Company uses several valuation sources (including internal valuations, discounted cash flow analysis and quoted market prices) and will establish a fair value by assigning weights to the various valuation sources.
Changes in assumptions or estimation methodologies can have a material effect on these estimated fair values. In this regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, may not be realized in an immediate settlement of the instrument.
Fair Value of Financial Instruments
The accompanying consolidated balance sheets include the following financial instruments: cash and cash equivalents, restricted cash, rents and other receivables, accounts payable and accrued liabilities, due to affiliates and notes payable.
The Company considers the carrying value of cash and cash equivalents, restricted cash, rents and other receivables and accounts payable and accrued liabilities to approximate the fair value or these financial instruments based on the short duration between origination of the instruments and their expected realization. The fair value of amounts due to affiliates is not determinable due to the related party nature of such amounts.
The fair value of the notes payable is estimated using a discounted cash flow analysis using borrowing rates available to us for debt instruments with similar terms and maturities. As of September 30, 2011 and December 31, 2010, the fair value of the mortgage notes payable was $33,312,742 and $11,866,816, respectively, compared to the carrying value of $32,556,045 and $11,650,000, respectively.

11

PART I — FINANCIAL INFORMATION (continued)
 
Item 1. Financial Statements (continued)

STEADFAST INCOME REIT, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2011
(unaudited)

Accounting for Stock-Based Compensation
The Company amortizes the fair value of stock-based compensation awards to expense over the vesting period and records any dividend equivalents earned as dividends for financial reporting purposes. Stock-based compensation awards are valued at the fair value on the date of grant and amortized as an expense over the vesting period.
Distribution Policy
The Company has elected to be taxed as a REIT and to operate as a REIT beginning with its taxable year ending December 31, 2010. To maintain its qualification as a REIT, the Company intends to make distributions each taxable year equal to at least 90% of its REIT taxable income (which is determined without regard to the dividends paid deduction or net capital gain and which does not necessarily equal net income as calculated in accordance with GAAP). For the three and nine months ended September 30, 2011, distributions were based on daily record dates and calculated at a rate of $0.001917 per share per day. Each day during the period from January 1, 2011 through September 30, 2011 was a record date for distributions.
Distributions to stockholders are determined by the board of directors of the Company and are dependent upon a number of factors relating to the Company, including funds available for the payment of distributions, financial condition, the timing of property acquisitions, capital expenditure requirements and annual distribution requirements in order for the Company to qualify as a REIT under the Internal Revenue Code.
Organization and Offering Costs
Organization and offering expenses include all expenses (other than sales commissions and related dealer manager fees) to be paid by the Company in connection with the Public Offering and the Private Offering, including legal, accounting, printing, mailing and filing fees, charges of the Company’s transfer agent, expenses of organizing the Company, data processing fees, advertising and sales literature costs, transfer agent costs, bona fide out-of-pocket due diligence costs and amounts to reimburse the Advisor or its affiliates for the salaries of its employees and other costs in connection with preparing supplemental sales materials and providing other administrative services.
The Company may also reimburse costs of bona fide training and education meetings held by the Company (primarily travel, meal and lodging costs of registered representatives of broker-dealers), attendance and sponsorship fees and cost reimbursement of employees of the Company’s affiliates to attend seminars conducted by broker-dealers and, in certain cases, reimbursement to participating broker-dealers for technology costs associated with the Public Offering, costs and expenses related to such technology costs, and costs and expenses associated with the facilitation of the marketing of the Company’s shares and the ownership of the Company’s shares by such broker-dealers’ customers; provided, however, that the Company will not pay any of the foregoing costs to the extent that such payment would cause total underwriting compensation for the Public Offering to exceed 10% of the gross proceeds of the Public Offering, as required by the rules of the Financial Industry Regulatory Authority, Inc. (“FINRA”).
Pursuant to the Advisory Agreement and the dealer manager agreement (the “Dealer Manager Agreement”) by and among the Company, the Operating Partnership and the Dealer Manager, the Company is obligated to reimburse the Advisor, the Dealer Manager, or their affiliates, as applicable, for organization and offering costs paid by them on behalf of the Company, provided that the Advisor would be obligated to reimburse the Company to the extent selling commissions, dealer manager fees and organization and offering costs incurred by the Company in the Public Offering exceed 15% of gross offering proceeds of the Public Offering. Any reimbursement of expenses paid to Advisor will not exceed actual expenses incurred by the Advisor.

12

PART I — FINANCIAL INFORMATION (continued)
 
Item 1. Financial Statements (continued)

STEADFAST INCOME REIT, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2011
(unaudited)

Reimbursements to the Advisor, the Dealer Manager, or their affiliates, for offering costs paid by them on behalf of the Company with respect to the Private Offering are not limited to 15% of the gross offering proceeds of the Private Offering. However, the Company will not make reimbursements of offering costs in excess of 15% of the gross offering proceeds of the Private Offering unless approval is obtained from the Company’s independent directors. The independent directors have not approved the reimbursement of such excess costs from the Private Offering. Accordingly, the Company has not accrued for the reimbursement of organization and offering costs of the Private Offering in excess of the 15% of gross offering proceeds raised in the Private Offering until such time as these costs are approved by the independent directors of the Company.
Income Taxes
The Company has elected to be taxed as a REIT under the Internal Revenue Code beginning with the tax year ending December 31, 2010. To qualify as a REIT, the Company must meet certain organizational and operational requirements, including the requirement to distribute at least 90% of the Company’s annual REIT taxable income to stockholders (which is computed without regard to the dividends paid deduction or net capital gain and which does not necessarily equal net income as calculated in accordance with GAAP). As a REIT, the Company generally will not be subject to federal income tax to the extent it distributes qualifying dividends to its stockholders. If the Company fails to qualify as a REIT in any taxable year after the taxable year in which the Company initially elects to be taxed as a REIT, it will be subject to federal income tax on its taxable income at regular corporate income tax rates and generally will not be permitted to qualify for treatment as a REIT for federal income tax purposes for the four taxable years following the year during which qualification is lost, unless the Internal Revenue Service grants the Company relief under certain statutory provisions. Such an event could materially adversely affect the Company’s net income and net cash available for distribution to stockholders. However, the Company believes it is organized and operates in such a manner as to qualify for treatment as a REIT.
The Company follows the Income Taxes Topic of the ASC to recognize, measure, present and disclose in its accompanying consolidated financial statements uncertain tax positions that the Company has taken or expects to take on a tax return. As of September 30, 2011 and December 31, 2010, the Company did not have any liabilities for uncertain tax positions that it believes should be recognized in its accompanying consolidated financial statements. The Company has not been assessed interest or penalties by any major tax jurisdictions. The Company’s evaluation was performed for the tax year ended December 31, 2010.
Per Share Data
Basic earnings (loss) per share attributable for all periods presented are computed by dividing net income (loss) attributable to controlling interest by the weighted average number of shares of the Company’s common stock outstanding during the period. Diluted earnings (loss) per share are computed based on the weighted average number of shares of the Company’s common stock and all potentially dilutive securities, if any. Distributions declared per common share assumes each share was issued and outstanding each day during the period. Nonvested shares of the Company’s restricted common stock give rise to potentially dilutive shares of the Company’s common stock but such shares were excluded from the computation of diluted earnings per share because such shares were anti-dilutive during the period.
Segment Disclosure
The Company has determined that it has one reportable segment, with activities related to investing in multifamily properties. The Company’s investments in real estate are in different geographic regions, and management evaluates operating performance on an individual asset level. However, as each of the Company’s assets has similar economic characteristics, tenants and products and services, its assets have been aggregated into one reportable segment.

13

PART I — FINANCIAL INFORMATION (continued)
 
Item 1. Financial Statements (continued)

STEADFAST INCOME REIT, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2011
(unaudited)

Recently Issued Accounting Standard
In May 2011, the FASB issued ASU 2011-04 (“ASU No. 2011-04”), Fair Value Measurement (ASC Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S.GAAP and IFRSs which addresses changes to improve the comparability of fair value measurements presented and disclosed in financial statements prepared in accordance with GAAP and International Financial Reporting Standards and clarifies fair value measurement and disclosure requirements. ASU 2011-04 is effective for the first interim or annual period beginning after December 15, 2011 and should be applied prospectively. Early application is not permitted. The adoption of ASU 2011-04 is not expected to have a material impact on the Company’s consolidated financial statements.
3. Real Estate
As of September 30, 2011, the Company owned five multifamily properties. The following table provides summary information regarding the Company's property portfolio:
 
 
 
 
 
 
 
 
 
 
 
 
Average Occupancy as of
 
Average Monthly Rent as of
Property Name
 
Location
 
Purchase Date
 
Number
of Units
 
Contract Purchase Price
 
Initial
Mortgage Debt
 
Sep 30, 2011
 
Dec 31, 2010
 
Sep 30, 2011
 
Dec 31, 2010
Lincoln Tower Apartments
 
Springfield, IL
 
8/11/2010
 
190
 
$
9,500,000

 
$
6,650,000

 
95.8
%
 
90.0
%
 
$
791

 
$
743

Park Place Apartments
 
Des Moines, IA
 
12/22/2010
 
147
 
8,050,000

 
5,000,000

 
91.2
%
 
85.0
%
 
818

 
817

Arbor Pointe Apartments
 
Louisville, KY
 
5/5/2011
 
130
 
6,500,000

 
5,200,000

 
96.9
%
 
—
%
 
753

 
—

Clarion Park Apartments
 
Olathe, KS
 
6/28/2011
 
220
 
11,215,000

 
8,972,000

 
97.7
%
 
—
%
 
680

 
—

Cooper Creek Village
 
Louisville, KY
 
8/24/2011
 
123
 
10,420,000

 
6,773,000

 
85.4
%
 
—
%
 
908

 
—

 
 
 
 
 
 
810
 
$
45,685,000

 
$
32,595,000

 
94.1
%
 
87.8
%
 
$
790

 
$
780

Property acquisitions during the nine months ended September 30, 2011
On May 5, 2011, the Company acquired a fee simple interest in the Arbor Pointe Apartments located in Louisville, Kentucky (the “Arbor Pointe Property”), through a wholly-owned subsidiary of the Operating Partnership. The Arbor Pointe Property is comprised of 60 two-bedroom, garden style apartments and 70 three-bedroom townhouses and each apartment unit includes two bathrooms, central heat and air conditioning, a full set of kitchen appliances, washer and dryer connections and private patios or balconies. Common area amenities at the Arbor Pointe Property include an on-site management office, swimming pool, playground and community room. An acquisition fee of $133,565 was earned by the Advisor in connection with the acquisition of the Arbor Pointe Property.
On June 28, 2011, the Company acquired a fee simple interest in the Clarion Park Apartments located in Olathe, Kansas (the “Clarion Park Property”), through a wholly-owned subsidiary of the Operating Partnership. The Clarion Park Property is comprised of 220 one-, two- and three-bedroom, garden style apartments and two-bedroom townhouses. The units average 950 square feet and include a full set of kitchen appliances, washer and dryer connections and patios, with many units offering walk-in closets and outdoor storage. Common area amenities at the Clarion Park Property include an on-site management office, laundry room, playground, sports court and fitness trail. An acquisition fee of $229,118 was earned by the Advisor in connection with the acquisition of the Clarion Park Property.

14

PART I — FINANCIAL INFORMATION (continued)
 
Item 1. Financial Statements (continued)

STEADFAST INCOME REIT, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2011
(unaudited)

On August 24, 2011, the Company acquired a fee simple interest in the Cooper Creek Village Apartments located in Louisville, Kentucky (the “Cooper Creek Property”), through a wholly-owned subsidiary of the Operating Partnership. The Cooper Creek Property is comprised of 25 one-bedroom apartments, 56 two-bedroom apartments, 28 two-bedroom townhomes and 14 three-bedroom townhomes. The units range from 819 square foot one-bedroom units to 2,394 square foot three-bedroom units with amenities including fully-equipped kitchens, washer and dryer connections, spacious walk-in closets, security alarm systems, private balconies or patios, wood burning fireplaces, finished basements and vaulted ceilings, provided that some amenities are only available in select units. Common area amenities at the Cooper Creek Property include an executive business center, clubhouse, fitness center, playground and swimming pool, and laundry facilities. An acquisition fee of $212,526 was earned by the Advisor in connection with the acquisition of the Cooper Creek Property. The Cooper Creek Property has contributed $117,681 of revenues and $132,200 of net loss from the date of acquisition through September 30, 2011.
The purchase price for the Company's property portfolio was allocated as follows as of the respective closing dates of each acquisition:
Property Name
 
Land
 
Building and
Improvements
 
Tenant
Origination and
Absorption Costs
 
Total Purchase
Price
Lincoln Tower Apartments
 
$
258,600

 
$
8,741,736

 
$
499,664

 
$
9,500,000

Park Place Apartments
 
500,000

 
6,825,620

 
724,380

 
8,050,000

Arbor Pointe Apartments
 
886,124

 
5,436,189

 
177,687

 
6,500,000

Clarion Park Apartments
 
1,470,991

 
9,462,094

 
281,915

 
11,215,000

Cooper Creek Village
 
593,610

 
9,642,180

 
184,210

 
10,420,000

 
 
$
3,709,325

 
$
40,107,819

 
$
1,867,856

 
$
45,685,000


As of September 30, 2011 and December 31, 2010, accumulated depreciation and amortization related to the Company's consolidated real estate properties and related intangibles were as follows:
 
 
September 30, 2011
 
December 31, 2010
 
 
Land
 
Building and Improvements
 
Tenant Origination and Absorption
 
Land
 
Building and Improvements
 
Tenant Origination and Absorption
Investments in real estate
 
$
3,709,325

 
$
40,191,261

 
$
1,867,856

 
$
758,600

 
$
15,569,680

 
$
1,224,044

Less: Accumulated depreciation and amortization
 
—

 
(873,881
)
 
(1,516,729
)
 
—

 
(149,928
)
 
(390,644
)
Net investments in real estate and related lease intangibles
 
$
3,709,325

 
$
39,317,380

 
$
351,127

 
$
758,600

 
$
15,419,752

 
$
833,400

Depreciation and amortization expenses were $629,085 and $1,850,038 for the three and nine months ended September 30, 2011, respectively, and $175,558 for each of the three and nine months ended September 30, 2010.

15

PART I — FINANCIAL INFORMATION (continued)
 
Item 1. Financial Statements (continued)

STEADFAST INCOME REIT, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2011
(unaudited)

The decrease in net income as a result of amortization of the Company’s tenant origination and absorption costs for the three and nine months ended September 30, 2011 was $274,737 and $1,126,085, respectively, and $125,359 for each of the three and nine months ended September 30, 2010. Tenant origination and absorption costs had a weighted-average amortization period as of the date of acquisition of less than one year
As of September 30, 2011 and December 31, 2010, none of the Company's properties had above-market lease assets or below-market lease liabilities.
Operating Leases
As of September 30, 2011, the Company’s real estate portfolio comprised of 810 residential units and was 95.6% leased by a diverse group of tenants. For the three months ended September 30, 2011, the Company’s real estate portfolio earned approximately 97% and 3% of its rental income from residential tenants and commercial office tenants, respectively. For the nine months ended September 30, 2011, the Company's real estate portfolio earned approximately 96% and 4% of its rental income from residential tenants and commercial office tenants, respectively. For each of the three and nine months ended September 30, 2010, the Company’s real estate portfolio earned approximately 89% and 11% of its rental income from residential tenants and commercial office tenants, respectively. The residential tenant lease terms consist of lease durations equal to twelve months or less. The commercial office tenant leases consist of lease durations varying from three to five years.
Some residential and commercial leases contain provisions to extend the lease agreements, options for early termination after paying a specified penalty and other terms and conditions as negotiated. The Company retains substantially all of the risks and benefits of ownership of the real estate assets leased to tenants. Generally, upon the execution of a lease, the Company requires security deposits from tenants in the form of a cash deposit and/or a letter of credit for commercial tenants. Amounts required as security deposits vary depending upon the terms of the respective leases and the creditworthiness of the tenant, but generally are not significant amounts. Therefore, exposure to credit risk exists to the extent that a receivable from a tenant exceeds the amount of its security deposit. Security deposits received in cash related to tenant leases are included in accounts payables and accrued liabilities in the accompanying consolidated balance sheets and totaled $319,356 and $173,775 as of September 30, 2011 and December 31, 2010, respectively.
The future minimum rental receipts from the Company’s properties under non-cancelable operating leases attributable to commercial office tenants as of September 30, 2011 and thereafter is as follows:
October 1, 2011 through December 31, 2011
$
42,245

2012
151,476

2013
85,602

2014
19,783

Thereafter
—

 
$
299,106

As of September 30, 2011 and December 31, 2010, no tenant represented over 10% of the Company’s annualized base rent and there were no significant industry concentrations with respect to its commercial leases.


16

PART I — FINANCIAL INFORMATION (continued)
 
Item 1. Financial Statements (continued)

STEADFAST INCOME REIT, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2011
(unaudited)



17

PART I — FINANCIAL INFORMATION (continued)
 
Item 1. Financial Statements (continued)

STEADFAST INCOME REIT, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2011
(unaudited)

4. Deferred Financing Costs and Other Assets
As of September 30, 2011 and December 31, 2010, deferred financing costs and other assets, net of accumulated amortization, consisted of:
 
September 30, 2011
 
December 31, 2010
Deferred financing costs
$
256,950

 
$
72,500

Prepaid expenses
71,121

 
57,447

Other assets
92,754

 
53,686

 
420,825

 
183,633

Less: accumulated amortization
(20,953
)
 
(1,110
)
 
$
399,872

 
$
182,523

As of September 30, 2011 and December 31, 2010, the Company’s net deferred financing costs were $235,997 and $71,390, respectively.
5. Notes Payable
The following is a summary of notes payable secured by real property as of September 30, 2011 and December 31, 2010:
 
 
 
 
 
 
 
 
Principal
Outstanding at
Property Name
 
Payment
Type
 
Maturity
Date
 
Interest Rate (1)
 
September 30, 2011
 
December 31, 2010
Lincoln Tower Property (2)
 
Interest only
 
September 1, 2015
 
6.00%
 
$
6,650,000

 
$
6,650,000

Park Place Property (2)
 
Interest only
 
December 22, 2013
 
5.25%
 
5,000,000

 
5,000,000

Arbor Pointe Property
 
Principal and interest
 
June 1, 2018
 
4.86%
 
5,182,092

 
—

Clarion Park Property
 
Principal and interest
 
July 1, 2018
 
4.58%
 
8,950,953

 
—

Cooper Creek Property
 
Principal and interest (3)
 
September 1, 2018
 
3.89%
 
6,773,000

 
—

 
 
 
 
 
 
 
 
$
32,556,045

 
$
11,650,000

_____________________________
(1)
Interest on the notes accrues at a fixed rate per annum.
(2)
The Company has the option to extend the maturity date for up to two successive periods of 12 months each, subject to customary and market rate extension provisions.
(3)
A monthly payment of interest only is due and payable for twelve months, after which, a monthly payment of principal and interest is due and payable until the maturity date.

18

PART I — FINANCIAL INFORMATION (continued)
 
Item 1. Financial Statements (continued)

STEADFAST INCOME REIT, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2011
(unaudited)

The following is a summary of the Company's aggregate maturities as of September 30, 2011:
 
 
 
 
Remainder of
2011
 
Maturities During the Years Ending December 31,
Contractual Obligation
 
Total
 
 
2012
 
2013
 
2014
 
2015
 
Thereafter
Principal payments on outstanding debt obligations (1)
 
$
32,556,045

 
$
52,996

 
$
243,842

 
$
5,345,982

 
$
361,768

 
$
7,028,279

 
$
19,523,178

_____________________________
(1)
Projected principal payments on outstanding debt obligations are based on the terms of the notes payable agreements.
The Company’s notes payable contain customary financial and non-financial debt covenants. As of September 30, 2011 and December 31, 2010, the Company was in compliance with all financial debt covenants.
Interest expense of $132,231 and $33,250 was payable as of September 30, 2011 and December 31, 2010, respectively, which is included in accounts payable and accrued liabilities in the accompanying consolidated balance sheets.
6. Stockholders’ Equity
General
Under the Company’s Second Articles of Amendment and Restatement (the “Charter”), the total number of shares of capital stock authorized for issuance is 1,100,000,000 shares, consisting of 999,999,000 shares of common stock with a par value of $0.01 per share, 1,000 shares of convertible stock with a par value of $0.01 per share and 100,000,000 shares designated as preferred stock with a par value of $0.01 per share.
Common Stock
The shares of common stock entitle the holders to one vote per share on all matters upon which stockholders are entitled to vote, to receive dividends and other distributions as authorized by the Company’s board of directors in accordance with the Maryland General Corporation Law and to all rights of a stockholder pursuant to the Maryland General Corporation Law. The common stock has no preferences or preemptive, conversion or exchange rights.
During 2009, the Company issued 22,223 shares of common stock to the Sponsor for $200,007. As of September 30, 2011, the Company had issued 2,929,212 shares of common stock in its Private Offering and Public Offering for offering proceeds of $24,454,937, net of offering costs of $4,197,062. These offering costs primarily consist of selling commissions and dealer manager fees. As of September 30, 2011, the Company also had issued 39,634 shares of common stock at $9.50 per share pursuant to the DRP for total proceeds of $376,528. Offering proceeds include $124,650 and $93,525 of amounts receivable from the Company’s transfer agent as of September 30, 2011 and December 31, 2010, respectively, which are included in rents and other receivables in the accompanying consolidated balance sheets.
During the three and nine months ended September 30, 2011, the Company granted 7,500 shares of restricted stock to its independent directors at a fair value of $9.10 as compensation for services in connection with their re-election to the board of directors at the Company's annual meeting. During 2010, the Company granted 15,000 shares of restricted common stock to its independent directors at a fair value of $8.55 as compensation for services. The shares of restricted stock vest and become non-forfeitable in four equal annual installments beginning on the date of grant and ending on the third anniversary of the date of grant and will become fully vested and become non-forfeitable on the earlier to occur of (1) the termination of the independent director’s service as a director due to his or her death or disability, or (2) a change in control of the Company.

19

PART I — FINANCIAL INFORMATION (continued)
 
Item 1. Financial Statements (continued)

STEADFAST INCOME REIT, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2011
(unaudited)

Included in general and administrative expenses is $27,464 and $43,496 for the three and nine months ended September 30, 2011, respectively, and $8,016 and $46,758 for the three and nine months ended September 30, 2010, respectively, for compensation expense related to the issuance of restricted common stock. The weighted average remaining term of the restricted common stock is 1.98 years as of September 30, 2011.
For the three and nine months ended September 30, 2011, the Company issued 893 and 2,679 shares of common stock to an independent director as compensation, in lieu of cash, at a weighted average fair value of $9.10. Included in general and administrative expenses is $8,125 and $24,375 of compensation expense for independent director compensation issued as common stock in lieu of cash compensation for the three and nine months ended September 30, 2011, respectively. In addition, during the year ended December 31, 2010, the Company issued 4,782 shares of common stock to an independent director as compensation, in lieu of cash, at a weighted average fair value of $8.76.
Convertible Stock
The Company issued 1,000 shares of Convertible Stock to the Advisor for $1,000. The Convertible Stock will convert into shares of the Company’s common stock if and when: (A) the Company has made total distributions on the then outstanding shares of common stock equal to the original issue price of those shares plus an 8.0% cumulative, non- compounded, annual return on the original issue price of those shares, (B) subject to specified conditions, the Company lists the common stock for trading on a national securities exchange or (C) the Advisory Agreement is terminated or not renewed by the Company (other than for “cause” as defined in the Advisory Agreement). A “listing” will be deemed to have occurred on the effective date of any merger of the Company in which the consideration received by the holders of the Company’s common stock is the securities of another issuer that are listed on a national securities exchange. Upon conversion, each share of Convertible Stock will convert into a number of shares of common stock equal to 1/1000 of the quotient of (A) 10% of the amount, if any, by which (1) the Company’s “enterprise value” (as defined in the Charter) plus the aggregate value of distributions paid to date on the outstanding shares of common stock exceeds the (2) aggregate purchase price paid by the stockholders for those shares plus an 8.0% cumulative, non-compounded, annual return on the original issue price of those shares, divided by (B) the Company’s enterprise value divided by the number of outstanding shares of common stock, in each case calculated as of the date of the conversion. In the event of a termination or non-renewal of the Advisory Agreement by the Company for cause, the Convertible Stock will be redeemed by the Company for $1.00.
Preferred Stock
The Charter also provides the Company’s board of directors with the authority to issue one or more classes or series of preferred stock, and prior to the issuance of such shares of preferred stock, the board of directors shall have the power from time to time to classify or reclassify, in one or more series, any unissued shares and designate the preferences, rights and privileges of such shares of preferred stock. The Company’s board of directors is authorized to amend the Charter, without the approval of the stockholders, to increase the aggregate number of authorized shares of capital stock or the number of shares of any class or series that the Company has authority to issue. As of September 30, 2011 and December 31, 2010, no shares of the Company’s preferred stock were issued and outstanding.

20

PART I — FINANCIAL INFORMATION (continued)
 
Item 1. Financial Statements (continued)

STEADFAST INCOME REIT, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2011
(unaudited)

Distribution Reinvestment Plan
The Company’s board of directors has approved the DRP through which common stockholders may elect to reinvest an amount equal to the distributions declared on their shares of common stock in additional shares of the Company’s common stock in lieu of receiving cash distributions. The initial purchase price per share under the DRP is $9.50. If the Company extends the Public Offering beyond two years from the date of its commencement, the Company’s board of directors may, in its sole discretion, from time to time, change this price based upon changes in the Company’s estimated net asset value per share, the then current price of shares of the Company’s common stock in the Public Offering and other factors that the Company’s board of directors deems relevant.
No sales commissions or dealer manager fees are payable on shares sold through the DRP. The Company’s board of directors may terminate the DRP at its discretion at any time upon ten day notice to the Company’s stockholders. Following any termination of the DRP, all subsequent distributions to stockholders will be made in cash.
Share Repurchase Plan and Redeemable Common Stock
There is no market for the Company’s common stock and, as a result, there is risk that a stockholder may not be able to sell the Company’s stock at a time or price acceptable to the stockholder. To allow stockholders to receive liquidity for their shares of common stock in limited circumstances, the Company’s board of directors has approved a share repurchase plan.
Unless shares of common stock are being redeemed in connection with a stockholder’s death or disability, the Company may not redeem shares of common stock pursuant to the share repurchase plan until such shares have been outstanding for one year. In addition, the Company has limited the number of shares that may be redeemed pursuant to the share repurchase plan during any calendar year to: (1) 5% of the weighted-average number of shares outstanding during the prior calendar year and (2) those that can be funded from the net proceeds the Company received from the sale of shares under the DRP during the prior calendar year plus such additional funds as may be reserved for that purpose by the Company’s board of directors.
Under the share repurchase plan, prior to the completion of the Offering Stage (as defined below), the purchase price for shares repurchased by the Company under the plan will be as follows:
Share Purchase Anniversary
 
Repurchase Price
on Repurchase Date(1)
Less than 1 year
 
No Repurchase Allowed
1 year
 
92.5% of Primary Offering Price
2 years
 
95.0% of Primary Offering Price
3 years
 
97.5% of Primary Offering Price
4 years
 
100.0% of Primary Offering Price
In the event of a stockholder’s death or disability
 
Average Issue Price for Shares(2)
_____________________________
(1)
As adjusted for any stock dividends, combinations, splits, recapitalizations or any similar transaction with respect to the shares of common stock.
(2)
The purchase price per share for shares redeemed upon the death or disability of a stockholder will be equal to the average issue price per share for all of the stockholder’s shares.

21

PART I — FINANCIAL INFORMATION (continued)
 
Item 1. Financial Statements (continued)

STEADFAST INCOME REIT, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2011
(unaudited)

The purchase price per share for shares repurchased pursuant to the share repurchase plan will be further reduced by the aggregate amount of net proceeds per share, if any, distributed to the Company’s stockholders prior to the repurchase date as a result of the sale of one or more of the Company’s assets that constitutes a return of capital distribution as a result of such sales.
Notwithstanding the foregoing, following the completion of the Offering Stage, shares of the Company’s common stock will be repurchased at a price equal to a price based upon the Company’s most recently established estimated net asset value per share, which the Company will publicly disclose every six months beginning no later than six months following the completion of the Offering Stage based on periodic valuations by independent third party appraisers and qualified independent valuation experts selected by the Advisor. The “Offering Stage” will be considered complete on the first date that the Company is no longer publicly offering equity securities that are not listed on a national securities exchange, whether through the Public Offering or follow-on public equity offerings, provided the Company has not filed a registration statement for a follow-on public equity offering as of such date.
The Company’s board of directors may, in its sole discretion, amend, suspend or terminate the share repurchase plan at any time if it determines that the funds available to fund the share repurchase plan are needed for other business or operational purposes or that amendment, suspension or termination of the share repurchase plan is in the best interest of the Company’s stockholders. The share repurchase plan will terminate if the shares of the Company’s common stock are listed on a national securities exchange. The Company did not redeem any shares for the three and nine months ended September 30, 2011 and 2010.
Pursuant to the share repurchase plan, for the three and nine months ended September 30, 2011, the Company reclassified $156,006 and $318,701, respectively, from permanent equity to temporary equity, which is included as redeemable common stock on the accompanying consolidated balance sheets. The redeemable common stock balance at any given time will consist of (1) DRP proceeds from the prior year plus (2) DRP proceeds from the current year through the current period less (3) actual current year redemptions paid or pending redemption.
Distributions
The Company’s long-term policy will be to pay distributions from cash flow from operations. However, the Company expects to have insufficient cash flow from operations available for distribution until it makes substantial investments. In order to provide additional available funds to pay distributions, under certain circumstances the Company’s obligation to pay all fees due to the Advisor from the Company pursuant to the Advisory Agreement will be deferred up to an aggregate amount of $5,000,000 during the Offering Stage. If, during any calendar quarter during the Offering Stage, the distributions paid by the Company exceed funds from operations (“FFO”), as defined by the National Association of Real Estate Investment Trusts, plus (1) any acquisition expenses and acquisition fees expensed that are related to any property, loan or other investment acquired or expected to be acquired, and (2) any non-operating, non-cash charges incurred, such as impairments of property or loans, any other than temporary impairments of marketable securities, or other similar charges, for the quarter, which is defined in the Advisory Agreement as “Adjusted Funds From Operations,” the payment of fees the Company is obligated to pay the Advisor will be deferred in an amount equal to the amount by which distributions paid to stockholders for the quarter exceed Adjusted Funds From Operations for such quarter up to an amount equal to a 7.0% cumulative non-compounded annual return on stockholders’ invested capital, pro-rated for such quarter. As of September 30, 2011 and December 31, 2010, $345,805 and $166,836, respectively, of fees had been deferred pursuant to the Advisory Agreement.

22

PART I — FINANCIAL INFORMATION (continued)
 
Item 1. Financial Statements (continued)

STEADFAST INCOME REIT, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2011
(unaudited)

For purposes of calculating the amount of fees that may be deferred pursuant to the Advisory Agreement, the amount of distributions paid during a fiscal quarter shall include the value of shares of the Company’s common stock distributed pursuant to the DRP. Additionally, for purposes of calculating the difference between Adjusted Funds From Operations, and the amount of distributions paid during a measurement period, if Adjusted Funds From Operations during such period is negative, Adjusted Funds From Operations shall be deemed to be zero.
The Company is only obligated to pay the Advisor its deferred fees if and to the extent that cumulative Adjusted Funds From Operations for the period beginning on the date of the commencement of the Private Offering through the date of any such payment exceed the lesser of (1) the cumulative amount of any distributions paid to stockholders as of the date of such payment or (2) distributions (including the value of shares issued pursuant to the distribution reinvestment plan) equal to a 7.0% cumulative, non-compounded, annual return on invested capital for the period from the commencement of the Public Offering through the date of such payment. The Company’s obligation to pay the deferred fees will survive the termination of the Advisory Agreement and will continue to be subject to the repayment conditions above. The Company will not pay interest on the deferred fees if and when such fees are paid to the Advisor.
Distributions Declared
In connection with the acquisition of the Lincoln Tower Property, the Company’s board of directors declared a cash distribution to stockholders. Distributions (1) accrue daily to stockholders of record as of the close of business on each day, (2) are payable in cumulative amounts on or before the 15th day of each calendar month with respect to the prior month, and (3) are calculated at a rate of $0.001917 per share of common stock per day, which if paid each day over a 365-day period is equivalent to a 7.0% annualized distribution rate based on a purchase price of $10.00 per share of common stock. Stockholders may elect to receive cash distributions or purchase additional shares through the DRP.
Distributions declared for the three and nine months ended September 30, 2011 were $442,789 and $987,837, respectively, including $174,707 and $382,323, or 18,390 shares and 40,244 shares, respectively, of common stock attributable to the DRP.
As of September 30, 2011 and December 31, 2010, $162,703 and $63,566 distributions declared were payable, which included $63,623 and $23,127 of distributions reinvested pursuant to the DRP.
Distributions Paid
For the three and nine months ended September 30, 2011, the Company paid cash distributions of $238,089 and $546,871, respectively, which related to distributions declared for each day in the period from June 1, 2011 through August 31, 2011 and December 1, 2010 through August 31, 2011, respectively. Additionally, for the three and nine months ended September 30, 2011, 16,422 shares and 35,982 shares of common stock were issued pursuant to the DRP for gross offering proceeds of $156,007 and $341,829, respectively. For the three and nine months ended September 30, 2011, the Company paid total distributions of $394,096 and $888,700, respectively.


23

PART I — FINANCIAL INFORMATION (continued)
 
Item 1. Financial Statements (continued)

STEADFAST INCOME REIT, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2011
(unaudited)

7. Related Party Arrangements
The Company has entered into the Advisory Agreement with the Advisor and a Dealer Manager Agreement with the Dealer Manager with respect to the Public Offering. Pursuant to the Advisory Agreement and Dealer Manager Agreement, the Company is obligated to pay the Advisor and the Dealer Manager specified fees upon the provision of certain services related to the Public Offering, the investment of funds in real estate and real estate-related investments and the management of the Company’s investments and for other services (including, but not limited to, the disposition of investments). Subject to the limitations described below, the Company is also obligated to reimburse the Advisor and its affiliates for organization and offering costs incurred by the Advisor and its affiliates on behalf of the Company, and the Company is obligated to reimburse the Advisor and its affiliates for acquisition and origination expenses and certain operating expenses incurred on behalf of the Company or incurred in connection with providing services to the Company. As discussed in Note 6, in certain circumstances, the Company’s obligation to pay some or all of the fees due to the Advisor pursuant to the Advisory Agreement will be deferred up to an aggregate amount of $5,000,000.
Amounts attributable to the Advisor and its affiliates incurred for the three and nine months ended September 30, 2011 and 2010 are as follows:
 
Incurred For the Three Months Ended September 30,
 
Incurred For the Nine Months Ended September 30,
 
2011
 
2010
 
2011
 
2010
Consolidated Statements of Operations
 
 
 
 
 
 
 
Expensed
 
 
 
 
 
 
 
Organizational cost reimbursement
$
—

 
$
100,738

 
$
—

 
$
100,738

Investment management fees (1)
81,123

 
12,850

 
161,493

 
12,850

Acquisition fees (1)
212,526

 
192,761

 
575,209

 
192,761

Acquisition expenses (2)
39,512

 
101,992

 
174,572

 
149,507

Property management
 
 
 
 
 
 
 
Fees (1)
62,049

 
11,797

 
131,680

 
11,797

Reimbursement of onsite personnel (3)
199,034

 
33,660

 
414,112

 
33,660

Consolidated Balance Sheets
 
 
 
 
 
 
 
Additional paid-in-capital
 
 
 
 
 
 
 
Other offering costs reimbursement
477,870

 
111,134

 
969,427

 
423,707

Selling commissions
550,681

 
135,005

 
1,084,953

 
338,360

Dealer management fees
306,058

 
75,850

 
619,080

 
202,427

 
$
1,928,853

 
$
775,787

 
$
4,130,526

 
$
1,465,807

_____________________________
(1)
Included in fees to affiliates in the accompanying consolidated statements of operations for the three and nine months ended September 30, 2011 and 2010.
(2)
Included in other acquisition costs in the accompanying consolidated statements of operations for the three and nine months ended September 30, 2011 and 2010.
(3)
Included in operating, maintenance and management in the accompanying consolidated statements of operations for the three and nine months ended September 30, 2011 and 2010.

24

PART I — FINANCIAL INFORMATION (continued)
 
Item 1. Financial Statements (continued)

STEADFAST INCOME REIT, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2011
(unaudited)

Amounts attributable to the Advisor and its affiliates paid (received) for the three and nine months ended September 30, 2011 and 2010 are as follows:
 
Paid (Received) For the Three Months Ended September 30,
 
Paid (Received) For the Nine Months Ended September 30,
 
2011
 
2010
 
2011
 
2010
Consolidated Statements of Operations
 
 
 
 
 
 
 
Expensed
 
 
 
 
 
 
 
Organizational cost reimbursement
$
—

 
$
18,677

 
$
—

 
$
18,677

Investment management fees
44,604

 
—

 
44,604

 
—

Acquisition fees
443,627

 
—

 
666,269

 
—

Acquisition expenses
62,372

 
101,992

 
197,618

 
149,507

Property management
 
 
 
 
 
 
 
Fees
54,636

 
—

 
115,139

 
—

Reimbursement of onsite personnel
202,923

 
33,660

 
393,792

 
33,660

Consolidated Balance Sheets
 
 
 
 
 
 
 
Additional paid-in-capital
 
 
 
 
 
 
 
Other offering costs reimbursement
486,415

 
—

 
976,643

 
—

Selling commissions
550,681

 
135,005

 
1,084,953

 
338,360

Dealer management fees
306,058

 
75,850

 
619,080

 
202,427

Due to (from) affiliates
 
 
 
 
 
 
 
Due from Advisor
—

 
—

 
(53,353
)
 
—

 
$
2,151,316

 
$
365,184

 
$
4,044,745

 
$
742,631



25

PART I — FINANCIAL INFORMATION (continued)
 
Item 1. Financial Statements (continued)

STEADFAST INCOME REIT, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2011
(unaudited)

Amounts outstanding to the Advisor and its affiliates as of September 30, 2011 and December 31, 2010 are as follows:
 
Payable (Receivable) as of
 
September 30, 2011
 
December 31, 2010
Consolidated Statements of Operations
 
 
 
Expensed
 
 
 
Organizational cost reimbursement
$
—

 
$
—

Investment management fees (1)
148,730

 
31,841

Acquisition fees (2)
266,577

 
357,637

Acquisition expenses
8,509

 
31,555

Property management
 
 
 

Fees
23,555

 
7,014

Reimbursement of onsite personnel
20,320

 
—

Consolidated Balance Sheets
 
 
 
Additional paid-in-capital
 
 
 
Other offering costs reimbursement
—

 
7,216

Due to (from) affiliates
 
 
 
Due from Advisor
—

 
(53,353
)
 
$
467,691

 
$
381,910

_____________________________
(1)
Investment management fees earned by the Advisor that have been deferred as of September 30, 2011 and December 31, 2010, respectively, pursuant to the terms of the Advisory Agreement.
(2)
Acquisition fees earned by the advisor totaling $197,075 and $134,995 were deferred as of September 30, 2011 and December 31, 2010, respectively, pursuant to the terms of the Advisory Agreement. The remaining acquisition fees of $69,502 and $222,642 were due and payable and are included in due to affiliates in the accompanying balance sheets at September 30, 2011 and December 31, 2010, respectively.
Organizational and Offering Costs
Organization and offering costs (other than selling commissions and dealer manager fees) of the Company are initially being paid by the Advisor or its affiliates on behalf of the Company. These organization and other offering costs include all expenses to be paid by the Company in connection with the Public Offering and Private Offering, including legal, accounting, printing, mailing and filing fees, charges of the Company’s transfer agent, expenses of organizing the Company, data processing fees, advertising and sales literature costs, transfer agent costs, bona fide out-of-pocket due diligence costs and amounts to reimburse the Advisor or its affiliates for the salaries of its employees and other costs in connection with preparing supplemental sales materials and providing other administrative services in connection with the Public Offering and the Private Offering. Any reimbursement of expenses paid to the Advisor will not exceed actual expenses incurred by the Advisor. Organization costs include all expenses incurred by the Company in connection with the formation of the Company, including, but not limited to, legal fees and other costs to incorporate the Company.

26

PART I — FINANCIAL INFORMATION (continued)
 
Item 1. Financial Statements (continued)

STEADFAST INCOME REIT, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2011
(unaudited)

Pursuant to the Advisory Agreement, the Company is obligated to reimburse the Advisor or its affiliates, as applicable, for organization and offering costs paid by them on behalf of the Company in connection with the Public Offering, provided that the Advisor is obligated to reimburse the Company to the extent selling commissions, dealer manager fees and organization and offering costs incurred by the Company in the Public Offering exceed 15% of gross offering proceeds raised in the Public Offering.
Reimbursements to the Advisor or its affiliates for offering costs paid by them on behalf of the Company with respect to the Private Offering is not limited to 15% of the gross offering proceeds of the Private Offering. However, the Company will not make reimbursements of organization and offering costs in excess of 15% of the gross offering proceeds of the Private Offering unless approval is obtained from the independent directors of the Company. The independent directors have not approved the reimbursement of excess cost of the Private Offering. Accordingly, the Company has not accrued for the reimbursement of organization and offering costs of the Private Offering in excess of the 15% of gross offering proceeds raised through the Private Offering.
The amount of organization and offering (“O&O”) costs that is reimbursable or was paid from inception through September 30, 2011 is as follows:
Gross offering proceeds:
$
28,651,999

O&O limitation
15
%
Total O&O costs available to be paid/reimbursed
$
4,297,800

 
 
O&O expenses recorded
 
Sales commissions paid
$
1,669,915

Broker dealer fees paid
961,160

Private offering costs reimbursements
423,707

Public offering costs reimbursements
1,142,280

Organizational costs reimbursements
100,738

Total O&O costs reimbursements recorded by the company
$
4,297,800


The Company may also reimburse costs of bona fide training and education meetings held by the Company (primarily the travel, meal and lodging costs of registered representatives of broker-dealers), attendance and sponsorship fees and cost reimbursement of employees of the Company’s affiliates to attend seminars conducted by broker-dealers and, in special cases, reimbursement to participating broker-dealers for technology costs associated with the Public Offering, costs and expenses related to such technology costs, and costs and expenses associated with the facilitation of the marketing of the Company’s shares and the ownership of the Company’s shares by such broker-dealers’ customers; provided, however, that the Company will not pay any of the foregoing costs to the extent that such payment would cause total underwriting compensation to exceed 10% of the gross proceeds of the Public Offering, as required by the rules of FINRA.

27

PART I — FINANCIAL INFORMATION (continued)
 
Item 1. Financial Statements (continued)

STEADFAST INCOME REIT, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2011
(unaudited)

As of September 30, 2011 and December 31, 2010, the Advisor had incurred $9,911,775 and $5,713,747, respectively, of organizational and offering costs on behalf of the Company, of which $5,613,975 and $4,089,406, respectively, have been deferred as of the applicable date, as follows:
 
Incurred through December 31, 2010
 
Amounts
Recognized
 
Deferred as of December 31, 2010
 
Incurred for the Nine Months Ended September 30, 2011
 
Amounts
Recognized
 
Deferred as of September 30, 2011
Organizational expenses
$
100,738

 
$
100,738

 
$
—

 
$
—

 
$
—

 
$
—

Private Offering costs
2,301,719

 
876,649

 
1,425,070

 
—

 
—

 
1,425,070

Public Offering costs
3,311,290

 
646,954

 
2,664,336

 
4,198,028

 
2,673,459

 
4,188,905

 
$
5,713,747

 
$
1,624,341

 
$
4,089,406

 
$
4,198,028

 
$
2,673,459

 
$
5,613,975

Organization costs are expensed as incurred. Offering costs, including selling commissions and dealer manager fees, are deferred and charged to stockholders’ equity as such amounts are reimbursed to the Advisor, the Dealer Manager or their affiliates from gross offering proceeds. For the three and nine months ended September 30, 2011, the Company did not incur or reimburse any offering costs to the Advisor that were attributable to the Private Offering. From inception through September 30, 2011, the Company incurred $100,738 of organizational costs of which $100,738 was reimbursed to the Advisor. The Company reimbursed the Advisor $1,334,607 and $2,673,459 for the three and nine months ended September 30, 2011, respectively, and $129,811 and $442,384, for the three and nine months ended September 30, 2010, respectively, for organization and offering costs incurred resulting in $4,297,800 of reimbursements for organizational and offering costs from inception through September 30, 2011.
During the three and nine months ended September 30, 2011, the Company and the Advisor and its affiliates incurred $0 of organizational costs and $0 of offering costs related to the Private Offering. During the same periods, the Company and the Advisor and its affiliates incurred $1,721,853 and $4,198,028, respectively, of offering costs related to the Public Offering. For each of the three and nine months ended September 30, 2010, the Company and the Advisor and its affiliates incurred $100,738 of organizational costs and $111,134 and $423,707, respectively, of offering costs related to the Private Offering. During the three and nine months ended September 30, 2010, the Company and the Advisor and its affiliates incurred $682,801 and $1,029,537, respectively, of offering costs in connection with the Public Offering. After reimbursing offering costs associated with the Private Offering up to the 15% limitation of $876,649 ($1,425,070 of which remains potentially reimbursable to the Advisor subject to the approval of the independent directors as of September 30, 2011), the Company began reimbursing the Advisor for organization costs. After reimbursing organization costs, the Company commenced reimbursing the Advisor for offering costs incurred in connection with the Public Offering. The Company accrued $0 and $7,216 for the reimbursement of offering costs in the financial statements as of September 30, 2011 and December 31, 2010, respectively.
Investment Management Fee
The Company pays the Advisor a monthly investment management fee equal to one-twelfth of 0.80% of (1) the cost of real properties and real estate-related assets acquired directly by the Company or (2) the Company’s allocable cost of each real property or real estate-related asset acquired through a joint venture. Such fee will be calculated including acquisition fees, acquisition expenses and any debt attributable to such investments, or the Company’s proportionate share thereof in the case of investments made through joint ventures. During the three months ended September 30, 2011 and the year ended December 31, 2010, the distributions the Company paid exceeded the Company’s Adjusted Funds From Operations for each period; therefore, in accordance with the Advisory Agreement, $148,730 and $31,841 of investment management fees the Company was obligated to pay the Advisor have been deferred as of September 30, 2011 and December 31, 2010, respectively.

28

PART I — FINANCIAL INFORMATION (continued)
 
Item 1. Financial Statements (continued)

STEADFAST INCOME REIT, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2011
(unaudited)

Acquisition Fees and Expenses
The Company pays the Advisor an acquisition fee equal to 2.0% of (1) the purchase price in connection with the acquisition or origination of any type of real property or real estate-related asset acquired directly by the Company or (2) the Company’s allocable portion of the purchase price in connection with the acquisition or origination of any type of real property or real estate-related asset acquired through a joint venture, including any acquisition and origination expenses and any debt attributable to such investments. Acquisition fees of $69,502 and $222,642 were due and payable and included in due to affiliates in the accompanying balance sheets at September 30, 2011 and December 31, 2010, respectively. During the three months ended September 30, 2011 and the year ended December 31, 2010, the distributions the Company paid exceeded the Company’s Adjusted Funds From Operations for each period; therefore, in accordance with the Advisory Agreement, $197,075 and $134,995 of acquisition fees the Company was obligated to pay the Advisor have been deferred as of September 30, 2011 and December 31, 2010, respectively.
In addition to acquisition fees, the Company reimburses the Advisor for amounts directly incurred by the Advisor and amounts the Advisor pays to third parties in connection with the selection, acquisition or development of a property or acquisition of real estate-related assets, whether or not the Company ultimately acquires the property or the real estate-related assets. For the three and nine months ended September 30, 2011, the Advisor incurred $39,512 and $174,572, respectively, of direct acquisition costs and $100,729 and $303,860, respectively, of acquisition costs paid to third parties.
The Charter limits the Company’s ability to pay acquisition fees if the total of all acquisition fees and expenses relating to the purchase would exceed 6% of the contract purchase price. Under the Charter, a majority of the Company’s board of directors, including a majority of the independent directors, is required to approve any acquisition fees (or portion thereof) that would cause the total of all acquisition fees and expenses relating to an acquisition to exceed 6% of the contract purchase price. In connection with the purchase of securities, the acquisition fee may be paid to an affiliate of the Advisor that is registered as a FINRA member broker-dealer if applicable FINRA rules would prohibit the payment of the acquisition fee to a firm that is not a registered broker-dealer.
Property Management Fees and Expenses
The Company has entered into Property Management Agreements with Steadfast Management Company, Inc., an affiliate of the Sponsor (the “Property Manager”) in connection with the acquisition of each of the Companies properties. The property management fee payable with respect to each property under the Property Management Agreements (each a "Property Management Agreement") is equal to 3.5% of the annual gross revenue collected which is usual and customary for comparable property management services rendered to similar properties in similar geographic markets, as determined by the Advisor and approved by a majority of the Company’s board of directors, including a majority of the independent directors. Each Property Management Agreement has an initial one year term and will continue thereafter on a month-to-month basis unless either party gives prior notice of its desire to terminate the Property Management Agreement, provided that the Company may terminate the Property Management Agreement at any time without cause upon 30 days prior written notice to the Property Manager. In addition, the Company reimburses the Property Manager for the salaries and related benefits of on-site property management employees.

29

PART I — FINANCIAL INFORMATION (continued)
 
Item 1. Financial Statements (continued)

STEADFAST INCOME REIT, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2011
(unaudited)

Other Operating Expense Reimbursement
In addition to the various fees paid to the Advisor, the Company is obligated to pay directly or reimburse all expenses incurred in providing services to the Company, including the Company’s allocable share of the Advisor’s overhead, such as rent, employee costs, utilities and information technology costs. The Company will not reimburse the Advisor for employee costs in connection with services for which the Advisor or its affiliates receive acquisition fees or disposition fees or for the salaries the Advisor pays to the Company’s executive officers.
The Charter limits the Company’s operating expenses (as defined in the Charter) during any four fiscal quarters to the greater of 2% of the Company’s average invested assets or 25% of the Company’s net income for the same period (the “2% 25% Limitation”). The Company may reimburse the Advisor, at the end of each fiscal quarter, for operating expenses incurred by the Advisor; provided, however, that the Company shall not reimburse the Advisor at the end of any fiscal quarter for operating expenses that exceed the 2%/25% Limitation unless the independent directors have determined that such excess expenses were justified based on unusual and non-recurring factors. Commencing upon the fourth fiscal quarter following the fiscal quarter ended March 31, 2010, and at least annually thereafter, the Advisor must reimburse the Company for the amount by which the Company’s operating expenses for the preceding four fiscal quarters then ended exceed the 2%/25% Limitation. For purposes of determining the 2%/25% Limitation amount, “Average invested assets” means the average monthly book value of the Company’s assets invested directly or indirectly in equity interests and loans secured by real estate during the 12-month period before deducting depreciation, bad debts or other non-cash reserves. “Total operating expenses” means all expenses paid or incurred by the Company that are in any way related to the Company’s operation, including investment management fees, but excluding (a) the expenses of raising capital such as organization and offering expenses, legal, audit, accounting, underwriting, brokerage, listing, registration and other fees, printing and other such expenses and taxes incurred in connection with the issuance, distribution, transfer, listing and registration of shares of the Company’s common stock; (b) interest payments; (c) taxes; (d) non-cash expenditures such as depreciation, amortization and bad debt reserves; (e) reasonable incentive fees based on the gain in the sale of the Company’s assets; (f) acquisition fees and acquisition expenses (including expenses relating to potential acquisitions that the Company does not close); (g) real estate commissions on the resale of investments; and (h) other expenses connected with the acquisition, disposition, management and ownership of investments (including the costs of foreclosure, insurance premiums, legal services, maintenance, repair and improvement of real property).
On May 25, 2011, the Company entered into an Operating Expense Reimbursement and Guaranty Agreement (the “Reimbursement Agreement”), which provides that if, on the earlier of (1) the termination date of the Advisory Agreement and (2) December 31, 2011 (in each case, such date the “Determination Date”), the Company’s total operating expenses exceed the 2%/25% Limitation, measured for the Company’s entire operating history, then Advisor will reimburse the Company for the Excess Amount (the “Determination Date Payment”). For the four fiscal quarters ended September 30, 2011, the Company’s total operating expenses exceeded the 2%/25% Limitation by $890,676 (the “Excess Amount”). In connection with the Reimbursement Agreement, the payment of the Excess Amount was guaranteed by an affiliate of the Company.
The Reimbursement Agreement also provides that within 30 days of December 31 of each year subsequent to December 31, 2011, Advisor will be reimbursed by the Company for the Determination Date Payment, if any, to the extent that the Company’s total operating expenses through such date do not exceed the 2%/25% Limitation, measured from the commencement of the Company’s operations through such date. The Company will reimburse the Advisor on a quarterly basis for any future operating expenses incurred by the Advisor on behalf of the Company up to the 2%/25% Limitation for the prior four quarters, while any excess may be reimbursed by the Company, subject to approval and determination by the independent directors that a substantial justification for such excess exists, at such time as the Company’s operating expenses for the entire operating history do not exceed the 2%/25% Limitation, including any reimbursement. In connection with the Reimbursement Agreement, the Advisor agreed to pay all of the operating expenses of the Company beginning April 1, 2011, until such time as the Company’s cumulative operating expenses are below the 2%/25% Limitation. Additionally, the Advisor agreed that any acquisition fee to be actually paid pursuant to the Advisory Agreement during the fiscal quarter ending December 31, 2011 will be deferred until the Determination Date. To the extent the Advisor is obligated to make a Determination Date Payment, the Company will offset, as a reduction of the Determination Date Payment, any such deferred acquisition fee.

30

PART I — FINANCIAL INFORMATION (continued)
 
Item 1. Financial Statements (continued)

STEADFAST INCOME REIT, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2011
(unaudited)

The general and administrative expenses recognized by the Company and incurred by the Advisor on behalf of the Company, which are inclusive of total operating expenses for the three and nine months ended September 30, 2011, were as follows:
 
 
For the Three
Months Ended
September 30, 2011
 
For the Nine
Months Ended
September 30, 2011
General and administrative expenses recognized by the Company
 
$
56,894

 
$
580,310

General and administrative expenses incurred by the Advisor on behalf of the Company
 
491,396

 
892,211

 
 
$
548,290

 
$
1,472,521

For the three and nine months ended September 30, 2011, the Advisor and its affiliates incurred $491,396 and $892,211, respectively, of the Company’s operating expenses, of which $0 is included in due to affiliates, net, on the accompanying consolidated balance sheets as the independent directors have not approved, nor have they been requested to approve, the reimbursement of such amounts pursuant to the Reimbursement Agreement. As of December 31, 2010, the Company paid $53,353 of legal and accounting expenses attributable to the Advisor, which is included as a receivable in due to affiliates, net, on the accompanying consolidated balance sheets.
Disposition Fee
If the Advisor or its affiliates provides a substantial amount of services, as determined by the Company’s independent directors, in connection with the sale of a property or real estate-related asset, the Company will pay the Advisor or its affiliates 1.5% of the sales price of each property or real estate-related asset sold. No disposition fee will be paid for securities traded on a national securities exchange. To the extent the disposition fee is paid upon the sale of any assets other than real property, it will be included as an operating expense for purposes of the 2%/25% Limitation. In connection with the sale of securities, the disposition fee may be paid to an affiliate of the Advisor that is registered as a FINRA member broker-dealer if applicable FINRA rules would prohibit the payment of the disposition fee to a firm that is not a registered broker-dealer. The Charter limits the maximum amount of the disposition fees payable to the Advisor for the sale of any real property to the lesser of one-half of the brokerage commission paid or 3% of the contract sales price. As of September 30, 2011, the Company had not sold or otherwise disposed of property or real estate-related assets. Accordingly, the Company had not incurred any disposition fees as of September 30, 2011.
Selling Commissions and Dealer Manager Fees
The Company pays the Dealer Manager up to 6.5% and 3.5% of the gross offering proceeds from the primary offering as selling commissions and dealer manager fees, respectively. A reduced sales commission and dealer manager fee is paid in connection with volume discounts and certain other categories of sales. No sales commission or dealer manager fee is paid with respect to shares of common stock issued pursuant to the DRP. The Dealer Manager will reallow 100% of sales commissions earned to participating broker-dealers. The Dealer Manager may also reallow to any participating broker-dealer a portion of the dealer manager fee that is attributable to that participating broker-dealer to defray the marketing costs of that participating broker-dealer. The Dealer Manager will negotiate the reallowance of the dealer manager fee on a case-by-case basis with each participating broker-dealer subject to various factors associated with the cost of the marketing program.



31

PART I — FINANCIAL INFORMATION (continued)
 
Item 1. Financial Statements (continued)

STEADFAST INCOME REIT, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2011
(unaudited)

8. Incentive Award Plan and Independent Director Compensation
The Company has adopted an incentive plan (the “Incentive Award Plan”) that provides for the grant of equity awards to its employees, directors and consultants and those of the Company’s affiliates. The Incentive Award Plan authorizes the grant of non-qualified and incentive stock options, restricted stock awards, restricted stock units, stock appreciation rights, dividend equivalents and other stock-based awards or cash-based awards. No awards have been granted under such plan as of September 30, 2011 and December 31, 2010, except those awards granted to the independent directors as described below.
Under the Company’s independent directors’ compensation plan, which is a sub-plan of the Incentive Award Plan, each of the Company’s independent directors was entitled to receive 5,000 shares of restricted common stock in connection with the initial meeting of the Company’s full board of directors. The Company’s board of directors, and each of the independent directors, agreed to delay the initial grant of restricted stock until the Company raised $2,000,000 in gross offering proceeds in the Private Offering. In addition, on the date following an independent director’s re-election to the Company’s board of directors, he or she will receive 2,500 shares of restricted common stock. One-fourth of the shares of restricted common stock will generally vest and become non-forfeitable upon issuance and the remaining portion will vest in three equal annual installments beginning on the date of grant and ending on the third anniversary of the date of grant; provided, however, that the restricted stock will become fully vested and become non-forfeitable on the earlier to occur of (1) the termination of the independent director’s service as a director due to his or her death or disability, or (2) a change in control of the Company.
On April 15, 2010, after raising $2,000,000 in gross offering proceeds in the Private Offering, the Company granted each of the then three independent directors 5,000 shares of restricted common stock. On August 11, 2011, the Company granted each of the then three independent directors 2,500 shares of restricted common stock upon re-election to the Company's board of directors. In addition to the shares granted under the independent directors’ compensation plan, one of the independent directors has elected to receive 50% of the director compensation in stock. The Company recorded stock-based compensation expense of $35,589 and $67,871 for the three and nine months ended September 30, 2011, respectively.

9. Commitments and Contingencies
Economic Dependency
The Company is dependent on the Advisor and the Dealer Manager for certain services that are essential to the Company, including the sale of the Company’s shares of common and preferred stock available for issue; the identification, evaluation, negotiation, purchase, and disposition of real estate and real estate-related investments; management of the daily operations of the Company’s real estate and real estate-related investment portfolio; and other general and administrative responsibilities. In the event that these companies are unable to provide the respective services, the Company will be required to obtain such services from other sources.
Concentration of Credit Risk
As of September 30, 2011, the Company owned five real estate properties: the Lincoln Tower Property located in Springfield, Illinois, the Park Place Property located in Des Moines, Iowa, the Arbor Pointe Property located in Louisville, Kentucky, the Clarion Park Property located in Olathe, Kansas and the Cooper Creek Property located in Louisville, Kentucky. As a result of these acquisitions, the geographic concentration of the Company’s portfolio makes it particularly susceptible to adverse economic developments in the Springfield, Illinois, Des Moines, Iowa, Louisville, Kentucky and Olathe, Kansas apartment markets. Any adverse economic or real estate developments in these markets, such as business layoffs or downsizing, relocations of businesses, increased competition from other apartment communities, decrease in demand for apartments or any other changes, could adversely affect the Company’s operating results and its ability to make distributions to stockholders.

32

PART I — FINANCIAL INFORMATION (continued)
 
Item 1. Financial Statements (continued)

STEADFAST INCOME REIT, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2011
(unaudited)

Environmental
As an owner of real estate, the Company is subject to various environmental laws of federal, state and local governments. Although there can be no assurance, the Company is not aware of any environmental liability that could have a material adverse effect on its financial condition or results of operations. However, changes in applicable environmental laws and regulations, the uses and conditions of properties in the vicinity of the Company’s properties, the activities of its tenants and other environmental conditions of which the Company is unaware with respect to the properties could result in future environmental liabilities.
Legal Matters
From time to time, the Company is subject, or party, to legal proceedings that arise in the ordinary course of its business. Management is not aware of any legal proceedings of which the outcome is reasonably likely to have a material adverse effect on the Company’s results of operations or financial condition nor is the Company aware of any such legal proceedings contemplated by government agencies.

10. Pro Forma Information (unaudited)
The following unaudited pro forma information for the three and nine months ended September 30, 2011 and 2010 is presented as if the acquisitions of the Company’s multifamily properties had occurred on January 1, 2010. The pro forma information does not purport to represent what the Company’s results of operations would actually have been if such transactions, in fact, had occurred on that date, nor does it purport to represent the results of operations for future periods.
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
 
2011
 
2010
 
2011
 
2010
Revenues
 
$
1,984,181

 
$
1,853,523

 
$
5,826,081

 
$
5,560,569

Net loss
 
(549,832
)
 
(848,445
)
 
(1,824,669
)
 
(3,330,661
)
Net loss attributable to noncontrolling interest
 
—

 
1,000

 
—

 
1,000

Net loss attributable to common stockholders
 
$
(549,832
)
 
$
(847,445
)
 
$
(1,824,669
)
 
$
(3,329,661
)
Basic and diluted net loss per common share
 
$
(0.18
)
 
$
(0.28
)
 
$
(0.60
)
 
$
(1.10
)
The pro forma information reflects adjustments for actual revenues and expenses of the five properties acquired during 2010 and 2011 for the respective period prior to acquisition by the Company. Net loss has been adjusted as follows: (1) interest expense has been adjusted to reflect the additional interest expense that would have been charged had the Company acquired the properties on January 1, 2010 under the same financing arrangements as existed as of the acquisition date; (2) depreciation and amortization has been adjusted based on the Company’s basis in the properties; and (3) transaction costs have been adjusted for the acquisition of the properties.



33

PART I — FINANCIAL INFORMATION (continued)
 
Item 1. Financial Statements (continued)

STEADFAST INCOME REIT, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2011
(unaudited)

11. Subsequent Events
Distributions Paid
On October 12, 2011, the Company paid distributions of $162,703, which related to distributions declared for each day in the period from September 1, 2011 through September 30, 2011 and consisted of cash distributions paid in the amount of $99,080 and $63,623 in shares issued pursuant to the DRP.
On November 1, 2011, the Company paid distributions of $188,067, which related to distributions declared for each day in the period from October 1, 2011 through October 31, 2011 and consisted of cash distributions paid in the amount of $114,657 and $73,410 in shares issued pursuant to the DRP.
Status of the Offering
The Company commenced its Public Offering on July 19, 2010. As of November 9, 2011, the Company had sold 2,783,534 shares of common stock in the Public Offering for gross proceeds of $27,687,474, including 54,059 shares of common stock issued pursuant to the DRP for gross offering proceeds of $513,560. Total shares sold as of November 9, 2011 in the Private Offering and Public Offering were 3,420,813 shares representing gross proceeds of $33,531,798, including 54,059 shares of common stock issued pursuant to the DRP for gross offering proceeds of $513,560.


34

PART I — FINANCIAL INFORMATION (continued)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis should be read in conjunction with the accompanying financial statements of Steadfast Income REIT, Inc. and the notes thereto. As used herein, the terms “we,” “our” and “us” refer to Steadfast Income REIT, Inc., a Maryland corporation, and, as required by context, Steadfast Income REIT Operating Partnership, L.P., a Delaware limited partnership, which we refer to as our “operating partnership,” and to their subsidiaries.

Forward-Looking Statements
Certain statements included in this Quarterly Report on Form 10-Q that are not historical facts (including any statements concerning investment objectives, other plans and objectives of management for future operations or economic performance, or assumptions or forecasts related thereto) are forward-looking statements. These statements are only predictions. We caution that forward-looking statements are not guarantees. Actual events or our investments and results of operations could differ materially from those expressed or implied in any forward-looking statements. Forward-looking statements are typically identified by the use of terms such as “may,” “should,” “expect,” “could,” “intend,” “plan,” “anticipate,” “estimate,” “believe,” “continue,” “predict,” “potential” or the negative of such terms and other comparable terminology.
The forward-looking statements included herein are based upon our current expectations, plans, estimates, assumptions and beliefs, which involve numerous risks and uncertainties. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond our control. Although we believe that the expectations reflected in such forward-looking statements are based on reasonable assumptions, our actual results and performance could differ materially from those set forth in the forward-looking statements. Factors which could have a material adverse effect on our operations and future prospects include, but are not limited to:
•
the fact that we have a limited operating history as we commenced operations on August 11, 2010;
•
the fact that we have had a net loss for the nine months ended September 30, 2011 and for the year ended December 31, 2010;
•
our ability to raise proceeds in our continuous public offering;
•
our ability to effectively deploy the proceeds raised in our public offering of common stock;
•
changes in economic conditions generally and the real estate and debt markets specifically;
•
our ability to continue to successfully identify and acquire real estate and real estate-related assets on terms that are favorable to us;
•
risks inherent in the real estate business, including tenant defaults, potential liability relating to environmental matters and liquidity of real estate investments;
•
legislative or regulatory changes (including changes to the laws governing the taxation of real estate investment trusts, or REITs);
•
the availability of capital;
•
interest rates; and
•
changes to generally accepted accounting principles, or GAAP.
Any of the assumptions underlying the forward-looking statements included herein could be inaccurate, and undue reliance should not be placed on any forward-looking statements included herein. All forward-looking statements are made as of the date this quarterly report is filed with the Securities and Exchange Commission, or SEC, and the risk that actual results will differ materially from the expectations expressed herein will increase with the passage of time. Except as otherwise required by the federal securities laws, we undertake no obligation to publicly update or revise any forward-looking statements made herein, whether as a result of new information, future events, changed circumstances or any other reason.
All forward-looking statements included herein should be read in light of the factors identified in the “Risk Factors” section of our Annual Report on Form 10-K filed with the SEC on March 21, 2011.


35

PART I — FINANCIAL INFORMATION (continued)
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)


Overview
We are a Maryland corporation formed in May 2009 that commenced operations on August 11, 2010. We are dependent upon proceeds received from our continuous public offering of common stock and from any indebtedness that we may incur to conduct our proposed investment activities as described below. The capital required to purchase our investments will be obtained from our securities offerings and from any indebtedness that we may incur in connection with the investment or thereafter. We have initially been capitalized with $202,007; $200,007 of which was contributed by our sponsor, Steadfast REIT Investments, LLC, on June 12, 2009 in exchange for 22,223 shares of our common stock, and $1,000 of which was contributed by Steadfast Income Advisor, LLC, which we refer to as our “advisor,” on July 10, 2009 in exchange for 1,000 shares of our convertible stock. In addition, our advisor has invested $1,000 in our operating partnership in exchange for limited partnership interests.
On October 13, 2009, we commenced a private offering of up to $94,000,000 in shares of our common stock at a purchase price of $9.40 per share (with discounts available for certain categories of purchasers), which we refer to as the “private offering.” We offered shares of our common stock for sale in the private offering pursuant to a confidential private placement memorandum and only to persons that were “accredited investors,” as that term is defined under the Securities Act of 1933, as amended, or the Securities Act, and Regulation D promulgated thereunder. On or about July 9, 2010, we terminated our private offering, at which time we had raised gross proceeds of $5,844,325 from the sale of 637,279 shares of our common stock.
On July 23, 2009, we filed a registration statement on Form S-11 with the SEC to offer a maximum of 150,000,000 shares of common stock for sale to the public at an initial price of $10.00 per share, which we refer to as our “initial public offering.” We are also offering up to 15,789,474 shares of common stock pursuant to our distribution reinvestment plan at an initial price of $9.50 per share. The SEC declared our registration statement effective on July 9, 2010 and we commenced the initial public offering on July 19, 2010. If we extend the initial public offering beyond two years from the date our registration statement was declared effective, our board of directors may, from time to time, in its sole discretion, change the price at which we offer shares to the public in the initial public offering or to our stockholders pursuant to the distribution reinvestment plan to reflect changes in our estimated net asset value per share and other factors that our board of directors deems relevant. We may reallocate the shares registered for the initial public offering and those shares registered pursuant to the distribution reinvestment plan. As of September 30, 2011, we had sold 2,331,567 shares of common stock in our initial public offering for gross offering proceeds of $23,184,202, including 39,634 shares of common stock issued pursuant to our distribution reinvestment plan for gross offering proceeds of $376,528.
We intend to use substantially all of the net proceeds from our initial public offering to invest in a diverse portfolio of real estate and real estate-related assets, primarily in the multifamily sector. In addition to our focus on multifamily properties, we may also selectively invest in industrial properties and other types of commercial properties and real estate-related assets. We will experience a relative increase in liquidity as additional subscriptions for shares of our common stock are received and a relative decrease in liquidity as offering proceeds are used to acquire and operate our assets.
As of September 30, 2011, we owned five multifamily properties, the Lincoln Tower Apartments, or the Lincoln Tower property, located in Springfield, Illinois, the Park Place Condominiums, or the Park Place property, located in Des Moines, Iowa, the Arbor Pointe Apartments, or the Arbor Pointe property, located in Louisville, Kentucky, Clarion Park Apartments, or the Clarion Park property, located in Olathe, Kansas, and Cooper Creek Village, or the Cooper Creek property, located in Louisville, Kentucky. Our property portfolio consists of an aggregate of 810 multifamily units. The Lincoln Tower property also includes approximately 9,000 square feet of commercial office space. The total cost of our real estate portfolio was $45,685,000, exclusive of closing costs. At September 30, 2011, our portfolio was approximately 95.6% leased.

36

PART I — FINANCIAL INFORMATION (continued)
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)


Steadfast Income Advisor, LLC is our advisor. Subject to certain restrictions and limitations, our advisor manages our day-to-day operations and our portfolio of properties and real estate-related assets. Our advisor sources and presents investment opportunities to our board of directors. Our advisor also provides investment management, marketing, investor relations and other administrative services on our behalf. The dealer manager for our initial public offering is Steadfast Capital Markets Group, LLC, an affiliate of our advisor, which we refer to as the “dealer manager.”
Substantially all of our business is conducted through Steadfast Income REIT Operating Partnership, L.P., our operating partnership. We are the sole general partner of our operating partnership. The initial limited partner of our operating partnership is our advisor. As we accept subscriptions for shares, we transfer substantially all of the net proceeds of our offering to our operating partnership as a capital contribution. The limited partnership agreement of our operating partnership provides that our operating partnership will be operated in a manner that will enable us to (1) satisfy the requirements for being classified as a REIT for tax purposes, (2) avoid any federal income or excise tax liability and (3) ensure that our operating partnership will not be classified as a “publicly traded partnership” for purposes of Section 7704 of the Internal Revenue Code of 1986, as amended, or the Internal Revenue Code, which classification could result in our operating partnership being taxed as a corporation, rather than as a partnership. In addition to the administrative and operating costs and expenses incurred by our operating partnership in acquiring and operating real properties, our operating partnership will pay all of our administrative costs and expenses, and such expenses will be treated as expenses of our operating partnership.
We have elected to be taxed as a REIT for federal income tax purposes commencing with our tax filing for the tax year ending December 31, 2010, which means as a REIT we generally will not be subject to federal income tax on income that we distribute to our stockholders. If we fail to qualify as a REIT in any taxable year after the taxable year in which we initially elect to be taxed as a REIT, we will be subject to federal income tax on our taxable income at regular corporate rates and will not be permitted to qualify for treatment as a REIT for federal income tax purposes for four years following the year in which qualification is denied. Failing to qualify as a REIT could materially and adversely affect our net income.
2011 Real Estate Acquisitions
On May 5, 2011, we acquired a fee simple interest in the Arbor Pointe property for an aggregate purchase price of approximately $6,500,000, exclusive of closing costs. We financed the payment of the purchase price for the Arbor Pointe property with (1) proceeds from our initial public offering and (2) the proceeds of a secured loan in the aggregate principal amount of $5,200,000 from a regional bank.
On June 28, 2011, we acquired a fee simple interest in the Clarion Park property for an aggregate purchase price of approximately $11,215,000, exclusive of closing costs. We financed the payment of the purchase price for the Clarion Park property with (1) proceeds from our initial public offering and (2) the proceeds of a secured loan in the aggregate principal amount of $8,972,000 from a regional bank.
On August 24, 2011, we acquired a fee simple interest in the Cooper Creek property for an aggregate purchase price of approximately $10,420,000, exclusive of closing costs. We financed the payment of the purchase price for the Clarion Park property with (1) proceeds from our initial public offering and (2) the proceeds of a secured loan in the aggregate principal amount of $6,773,000 from a regional bank.


37

PART I — FINANCIAL INFORMATION (continued)
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)


Critical Accounting Policies
The preparation of our financial statements requires significant management judgments, assumptions and estimates about matters that are inherently uncertain. These judgments affect the reported amounts of assets and liabilities and our disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. With different estimates or assumptions, materially different amounts could be reported in our financial statements. Additionally, other companies may utilize different estimates that may impact the comparability of our results of operations to those of companies in similar businesses. A discussion of the accounting policies that management considers critical in that they involve significant management judgments, assumptions and estimates is included in our Annual Report on Form 10-K for the year ended December 31, 2010 filed with the SEC. There have been no significant changes to our accounting policies during 2011.
Organization and Offering Costs
Organization and offering expenses include all expenses (other than sales commissions and the dealer manager fee) to be paid by us in connection with our initial public offering and our private offering, including legal, accounting, printing, mailing and filing fees, charges of our transfer agent, expenses of organizing us, data processing fees, advertising and sales literature costs, transfer agent costs, bona fide out-of-pocket due diligence costs and amounts to reimburse our advisor or its affiliates for the salaries of its employees and other costs in connection with preparing supplemental sales materials and providing other administrative services. Any reimbursement of expenses paid to our advisor will not exceed expenses actually incurred by our advisor.
After the termination of our initial public offering, our advisor will reimburse us to the extent total organization and offering expenses plus sales commissions and dealer manager fees borne by us in connection with the initial public offering exceed 15% of the gross proceeds raised in our initial public offering. We may also reimburse costs of bona fide training and education meetings held by us (primarily the travel, meal and lodging costs of registered representatives of broker-dealers), attendance and sponsorship fees and cost reimbursement of employees of our affiliates to attend seminars conducted by broker-dealers and, in special cases, reimbursement to participating broker-dealers for technology costs associated with our initial public offering, costs and expenses related to such technology costs, and costs and expenses associated with the facilitation of the marketing of our shares and the ownership of our shares by such broker-dealers’ customers; provided, however, that we will not pay any of the foregoing costs to the extent that such payment would cause total underwriting compensation to exceed 10% of the gross proceeds of our initial public offering, as required by the rules of the Financial Industry Regulatory Authority, Inc., or FINRA.
Reimbursements to our advisor or its affiliates for organization and offering costs paid by them on our behalf with respect to our private offering is not limited to 15% of the gross offering proceeds of the private offering. However, we will not make reimbursements of organization and offering costs in excess of 15% of the gross offering proceeds of the private offering unless approval is obtained from our independent directors. The independent directors have not approved the reimbursement of excess private offering costs. Accordingly, we have not accrued for the reimbursement of organization and offering costs of the private offering in excess of the 15% of gross offering proceeds raised in our private offering.

38

PART I — FINANCIAL INFORMATION (continued)
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)


Income Taxes
We have elected to be taxed as a REIT under the Internal Revenue Code and believe we have operated as such beginning with the filing of our tax return for the taxable year ending December 31, 2010. To qualify as a REIT, we must meet certain organizational and operational requirements, including a requirement to distribute at least 90% of our annual REIT taxable income to stockholders (which is computed without regard to the dividends paid deduction or net capital gain and which does not necessarily equal net income as calculated in accordance with GAAP). As a REIT, we generally will not be subject to federal income tax to the extent we distribute qualifying dividends to our stockholders. If we fail to qualify as a REIT in any taxable year after the taxable year in which we initially elect to be taxed as a REIT, we will be subject to federal income tax on our taxable income at regular corporate income tax rates and generally will not be permitted to qualify for treatment as a REIT for federal income tax purposes for the four taxable years following the year during which qualification is lost, unless the Internal Revenue Service grants us relief under certain statutory provisions. Such an event could materially adversely affect our net income and net cash available for distribution to stockholders.
Distributions
As described below, our board of directors has declared daily distributions that are paid on a monthly basis. We expect to continue paying monthly distributions unless our results of operations, our general financial condition, general economic conditions or other factors prohibit us from doing so. During the early stages of our operations, we may declare distributions in excess of our funds from operations. As a result, our distribution rate and payment frequency may vary from time to time. However, to qualify as a REIT for tax purposes, we must make distributions equal to at least 90% of our “REIT taxable income” each year.
In order to provide additional available funds for us to pay distributions, under certain circumstances our obligation to pay all fees due to our advisor pursuant to the advisory agreement by and among us, our operating partnership and our advisor will be deferred up to an aggregate amount of $5 million during our offering stage (defined below). If, during any calendar quarter during our offering stage, the distributions we pay exceed our funds from operations, or FFO (as defined by the National Association of Real Estate Investment Trusts, or NAREIT), plus (1) any acquisition expenses and acquisition fees expensed by us that are related to any property, loan or other investment acquired or expected to be acquired by us and (2) any non-operating, non-cash charges incurred by us, such as impairments of property or loans, any other than temporary impairments of marketable securities, or other similar charges, for the quarter, which is defined in the advisory agreement as “adjusted funds from operations,” the payment of fees we are obligated to pay our advisor will be deferred in an amount equal to the amount by which the distributions paid to our stockholders for the quarter exceed our adjusted funds from operations up to an amount equal to a 7.0% cumulative non-compounded annual return on stockholders’ invested capital, prorated for such quarter. For purposes of this calculation, if our adjusted funds from operations is negative, adjusted funds from operations shall be deemed to be zero. As of September 30, 2011, we had deferred $345,805 in fees payable to our advisor pursuant to the terms of the advisory agreement. We deferred $143,203 during the three months ended September 30, 2011 as adjusted funds from operations did not exceed the total distributions paid for the quarter.
We are only obligated to pay our advisor for these deferred fees if and to the extent that our cumulative adjusted funds from operations for the period beginning on the date of the commencement of our private offering through the date of any such payment exceed the lesser of (1) the cumulative amount of any distributions paid to our stockholders as of the date of such payment or (2) an amount that is equal to a 7.0% cumulative, non-compounded, annual return on invested capital for our stockholders for the period from the commencement of our initial public offering through the date of such payment. Our obligation to pay the deferred fees will survive the termination of the advisory agreement and will continue to be subject to the repayment conditions above. We will not pay interest on the deferred fees if and when such fees are paid to our advisor. The amount of fees that may be deferred as described above is limited to an aggregate of $5 million.
The "offering stage" will be considered complete on the first date that we are no longer offering equity securities that are not listed on a national securities exchange, whether through our public offering or follow-on public equity offerings, provide we have not filed a registration statement for a follow-on public equity offering as of such date. "Adjusted funds from operations" is equivalent to modified funds from operations described herein. See "—Funds from Operations and Modified Funds from Operations."

39

PART I — FINANCIAL INFORMATION (continued)
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)


We accrue the probable and estimable amount of deferred fees and the deferred fees continue to accrue until the fees are either paid or it becomes remote that the fees will be paid to our advisor. We anticipate that any deferred fees will ultimately be paid and therefore will be accrued when incurred.
In connection with our acquisition of the Lincoln Tower property on August 11, 2010, our board of directors declared a cash distribution to our stockholders. Distributions (1) accrue daily to our stockholders of record as of the close of business on each day, (2) are payable in cumulative amounts on or before the 15th day of each calendar month with respect to the prior month and (3) are calculated at a rate of $0.001917 per share of common stock per day, which, if paid each day over a 365-day period, is equivalent to a 7.0% annualized distribution rate based on a purchase price of $10.00 per share of common stock. We made our first monthly distribution payment in September 2010.
The distributions paid during each of the last four fiscal quarters ended September 30, 2011, along with the amount of distributions reinvested pursuant to the distribution reinvestment plan, and the sources of our distributions were as follows:
 
 
Three Months Ended
 
 
September 30,
2011
 
June 30,
2011
 
March 31,
2011
 
December 31,
2010
Distributions paid in cash
 
$
238,089

 
$
176,308

 
$
132,474

 
$
107,687

Distributions reinvested
 
156,007

 
110,483

 
75,339

 
32,313

Total distributions
 
$
394,096

 
$
286,791

 
$
207,813

 
$
140,000

 
 
 
 
 
 
 
 
 
Source of distributions:
 
 
 
 
 
 
 
 
Cash flows from operations
 
$
—

 
$
—

 
$
—

 
$
—

Offering proceeds
 
238,089

 
176,308

 
132,474

 
107,687

Distributions reinvested
 
156,007

 
110,483

 
75,339

 
32,313

Total sources
 
$
394,096

 
$
286,791

 
$
207,813

 
$
140,000

For the three and nine months ended September 30, 2011 our net loss was $730,957 and $2,660,471, we had negative FFO of $101,872 and $810,433 and cash flow used in operations was $231,143 and $591,675, respectively. We funded our total distributions paid, which includes net cash distributions and dividends reinvested by stockholders, with funds from proceeds of our public offering. For information on how we calculate FFO and the reconciliation of FFO to net loss, see "—Funds from Operations and Modified Funds from Operations.”
Over the long-term, we expect that a percentage of our distributions will be paid from cash flow from operations (except with respect to distributions related to sales of our real estate and real estate-related investments). However, our operating performance cannot be accurately predicted and may deteriorate in the future due to numerous factors, including those discussed under “Forward-Looking Statements,” and “Results of Operations” herein. In the event our cash flow from operations decreases in the future, the level of our distributions may also decrease. In addition, future distributions declared and paid may exceed cash flow from operations.

40

PART I — FINANCIAL INFORMATION (continued)
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)


Inflation
Substantially all of our multifamily property leases will be for a term of one year or less. In an inflationary environment, this may allow us to realize increased rents upon renewal of existing leases or the beginning of new leases. Short-term leases generally will minimize our risk from the adverse effects of inflation, although these leases generally permit tenants to leave at the end of the lease term and therefore will expose us to the effects of a decline in market rents. In a deflationary rent environment, we may be exposed to declining rents more quickly under these shorter term leases.
With respect to our commercial properties, we include in our leases future provisions designed to protect us from the impact of inflation. These provisions include reimbursement billings for operating expense pass-through charges, real estate tax and insurance reimbursements, or in some cases annual reimbursement of operating expenses above a certain allowance. We believe that shorter term lease contracts on commercial properties lessen the impact of inflation due to the ability to adjust rental rates to market levels as leases expire.
As of September 30, 2011, we had not entered into any leases as a lessee.
REIT Compliance
To qualify as a REIT for tax purposes, we are required to distribute at least 90% of our REIT taxable income (which is computed without regard to the dividends paid deduction or net capital gain and which does not necessarily equal net income as calculated in accordance with GAAP) to our stockholders. We must also meet certain asset and income tests, as well as other requirements. We will monitor the business and transactions that may potentially impact our REIT status. If we fail to qualify as a REIT in any taxable year, we will be subject to federal income tax (including any applicable alternative minimum tax) on our taxable income at regular corporate rates.
Liquidity and Capital Resources
If we raise substantially less funds in our initial public offering than the maximum offering amount, we will make fewer investments resulting in less diversification in terms of the type, number and size of investments we make and the value of an investment in us would be more likely to fluctuate with the performance of the specific assets we acquire. Further, we will have certain fixed operating expenses, including certain expenses as a public REIT, regardless of whether we are able to raise substantial funds in our initial public offering. Our inability to raise substantial funds would increase our fixed operating expenses as a percentage of gross income, reducing our net income and limiting our ability to make distributions.
We use, and intend to use in the future, secured and unsecured borrowings for the acquisition of properties. Once we have fully invested the proceeds of our initial public offering, we expect that our overall borrowings will be 65% of the cost of our real properties (before deducting depreciation and amortization) plus the value of our other investments, although we expect to exceed this level during our offering stage in order to enable us to quickly build a diversified portfolio. Under our Second Articles of Amendment and Restatement, or our charter, we have a limitation on borrowing in excess of 300% of the value of our net assets, which generally approximates to 75% of the aggregate cost of our assets, though we may exceed this limit under certain circumstances. As of September 30, 2011, our borrowings were not in excess of 300% of the value of our net assets.
Our principal demand for funds will be to acquire properties and real estate-related assets, to pay operating expenses and interest on our outstanding indebtedness and to make distributions to our stockholders. Over time, we intend to generally fund our cash needs for items, other than asset acquisitions, from operations. Otherwise, we expect that our principal sources of working capital will include:
•
current cash balances;
•
sales of shares of common stock in our public offering;
•
various forms of secured financing;
•
equity capital from joint venture partners;
•
proceeds from our operating partnership’s private placements, if any; and
•
proceeds from our distribution reinvestment plan.
Over the short term, we believe that our sources of capital, specifically our cash balances, cash flow from operations, proceeds from our initial public offering, our ability to raise equity capital from joint venture partners, our ability to obtain various forms of secured financing and proceeds from our operating partnership’s private placements, if any, will be adequate to meet our liquidity requirements and capital commitments.

41

PART I — FINANCIAL INFORMATION (continued)
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)


Over the longer term, in addition to the sources of capital noted above which we will rely on to meet our short term liquidity requirements, we may also utilize additional secured and unsecured financings. We may also conduct additional public or private offerings. We expect these resources to be adequate to fund our operating activities, debt service and distributions, which we presently anticipate will grow over time, and will be sufficient to fund our ongoing acquisition activities as well as providing capital for investment in future development and other joint ventures along with potential forward purchase commitments. As of September 30, 2011, we had not identified any sources for these types of financings; however, we continue to evaluate possible sources of capital, including, without limitation, entering in to a credit facility. There can be no assurance that we will be able to obtain any such financings on favorable terms, if at all.
Our advisor may, but is not required to, establish working capital reserves from offering proceeds out of cash flow generated by our investments or out of proceeds from the sale of our investments. We do not anticipate establishing a general working capital reserve; however, we may establish capital reserves with respect to particular investments. We also may, but are not required to, establish reserves out of cash flow generated by investments or out of net sale proceeds in non-liquidating sale transactions. Working capital reserves are typically utilized to fund tenant improvements, leasing commissions and major capital expenditures. Our lenders also may require working capital reserves.
To the extent that the working capital reserve is insufficient to satisfy our cash requirements, additional funds may be provided from cash generated from operations or through short-term borrowing. In addition, subject to certain limitations described in our charter, we may incur indebtedness in connection with the acquisition of any real estate asset, refinance the debt thereon, arrange for the leveraging of any previously unfinanced property or reinvest the proceeds of financing or refinancing in additional properties.
Cash Flows Used in Operating Activities
During the nine months ended September 30, 2011, net cash used in operating activities was $591,675, which primarily comprised of general and administrative expenses offset by net cash from real estate rental activities. We expect that our cash flows from operating activities will increase in future periods as a result of anticipated future acquisitions of real estate and real estate-related investments.
Cash Flows Used in Investing Activities
During the nine months ended September 30, 2011, net cash used in investing activities was $28,511,684, and primarily consisted of the acquisition of the Arbor Pointe property, the Clarion Park property and the Cooper Creek property. Our cash used in investing activities will vary based on how quickly we raise funds in our ongoing initial public offering and how quickly we invest those funds towards acquisitions of real estate and real-estate related investments.
Cash Flows from Financing Activities
Our cash flows from financing consist primarily of proceeds from our ongoing initial public offering, net of distributions paid to our stockholders, and the issuance of notes payable. During the nine months ended September 30, 2011, net cash provided by financing activities was $35,285,982 and primarily consisted of $20,760,550 of proceeds from the issuance of notes payable, net of deferred financing costs in the amount of $184,450; $15,111,258 of cash provided by offering proceeds related to our initial public offering, net of (1) payments of commissions on sales of common stock and related dealer manager fees in the amount of $1,704,033, and (2) the reimbursement of other offering costs to affiliates in the amount of $976,643; and $546,871 of net cash distributions, after giving effect to distributions reinvested by stockholders of $341,829.

42

PART I — FINANCIAL INFORMATION (continued)
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)


Contractual Commitments and Contingencies
We use, and intend to use in the future, secured and unsecured debt as a means of providing additional funds for the acquisition of our properties and our real estate-related assets. We believe that the careful use of borrowings will help us achieve our diversification goals and potentially enhance the returns on our investments. We expect that our borrowings will be approximately 65% of the cost of our real properties (before deducting depreciation and amortization) plus the value of our other investments, after we have invested substantially all of the net offering proceeds. In order to facilitate investments in the early stages of our operations, we expect to temporarily borrow in excess of our long-term targeted debt level. Under our charter, we have a limitation on borrowing in excess of 300% of the value of our net assets which generally approximates to 75% of the aggregate cost of our assets. We may borrow in excess of this amount if such excess is approved by a majority of our independent directors and disclosed to stockholders in our next quarterly report, along with a justification for such excess. In such event, we will monitor our debt levels and take action to reduce any such excess as practicable. We do not intend to exceed our charter’s leverage limit except in the early stages of our operations when the costs of our investments are most likely to substantially exceed our net offering proceeds. Our aggregate borrowings are reviewed by our board of directors at least quarterly. As of September 30, 2011, our aggregate borrowings were not in excess of 300% of the value of our net assets.
In addition to using our capital resources for investing purposes and meeting our debt obligations, we expect to use our capital resources to make certain payments to our advisor and the dealer manager. During our organization and offering stage, these payments will include payments to the dealer manager for selling commissions and dealer manager fees and payments to the dealer manager and our advisor for reimbursement of certain organization and other offering expenses. However, our advisor has agreed to reimburse us to the extent that selling commissions, dealer manager fees and organization and other offering expenses incurred by us exceed 15% of our gross offering proceeds. During our acquisition and development stage, we expect to make payments to our advisor in connection with the selection and origination or purchase of real estate and real estate-related investments, the management of our assets and costs incurred by our advisor in providing services to us.
As of September 30, 2011, we had notes payable in the principal amount of $32,556,045. The following is a summary of our contractual obligations as of September 30, 2011:
 
 
 
 
 
 
Payments Due During the Years Ending December 31,
Contractual Obligation
 
Total
 
Remainder of
2011
 
2012
 
2013
 
2014
 
2015
 
Thereafter
Interest payments on outstanding debt obligations (1)
 
$
8,314,295

 
$
399,784

 
$
1,599,322

 
$
1,604,232

 
$
1,300,425

 
$
1,184,163

 
$
2,226,369

Principal payments on outstanding debt obligations (2)
 
$
32,556,045

 
$
52,996

 
$
243,842

 
$
5,345,982

 
$
361,768

 
$
7,028,279

 
$
19,523,178

_____________________________
(1)
Projected interest payments on outstanding debt obligations are based on the outstanding principal amounts and interest rates in effect at September 30, 2011. We incurred interest expense of $375,346 and $759,431 during the three and nine months ended September 30, 2011, respectively, including amortization of deferred financing costs totaling $11,023 and $19,843, respectively.
(2)
Projected principal payments on outstanding debt obligations are based on the terms of the notes payable agreements.


43

PART I — FINANCIAL INFORMATION (continued)
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)


Results of Operations
Overview
During the period from May 4, 2009 (inception) to August 11, 2010, we had been formed and had commenced and completed our private offering and commenced our initial public offering but had not yet commenced real estate operations, as we had not yet acquired any real estate investments. As a result, we had no material results of operations for that period. On August 11, 2010, we acquired our first real estate investment and, accordingly, commenced operations on that date.
Our results of operations for the three and nine months ended September 30, 2011 are not indicative of those expected in future periods. We have not yet invested all of the proceeds from our ongoing initial public offering received to date and expect to continue to raise additional capital, increase our borrowings and make future acquisitions, which would have a significant impact on our future results of operations. In general, we expect that our income and expenses related to our portfolio will increase in future periods as a result of anticipated future acquisitions of real estate and real estate-related investments.
Net loss
We had a net loss of $730,957 and $2,660,471 for the three and nine months ended September 30, 2011, respectively, primarily due to depreciation and amortization expenses, fees to affiliates, other acquisition costs, and operating expenses. We had a net loss of $781,538 and $1,207,808 for the three and nine months ended September 30, 2010, respectively, primarily due to the fact we were incurring expenses as a public company but did not begin operations until our first property acquisition on August 11, 2010.
Total revenues
Total revenues were $1,777,486 and $3,733,032 for the three and nine months ended September 30, 2011, respectively, and consisted primarily of $1,629,652 and $3,367,794 in rental revenues from multifamily properties. Total revenues were $277,651 for each of the three and nine months ended September 30, 2010, respectively, and consisted primarily of $263,425 in rental revenues from the one multifamily property we owned during the period. The increase in total revenues was primarily due to the fact that we owned five multifamily properties as of September 30, 2011 compared to one multifamily property as of September 30, 2010 and the average monthly rent of our property portfolio increased from $780 at December 31, 2010 to $790 at September 30, 2011. We expect rental income and tenant reimbursements to increase in future periods as a result of anticipated future acquisitions of real estate.
Operating expenses
Operating, maintenance and management expenses were $629,735 and $1,323,773 for the three and nine months ended September 30, 2011, respectively. We incurred these expenses in connection with the operations of our five multifamily properties. Operating, maintenance and management expenses were $86,087 for each of the three and nine months ended September 30, 2010 and related to the operation of the one property in our portfolio that was acquired on August 11, 2010.
Real estate taxes and insurance
Real estate taxes and insurance expenses were $321,444 and $533,137 for the three and nine months ended September 30, 2011, respectively. During the three months ended September 30, 2011, we recorded approximately $127,000 related to a revised estimate of property taxes. Real estate taxes and insurance expenses were $46,137 for each of the three and nine months ended September 30, 2010. We expect these amounts to increase in future periods as a result of anticipated future acquisitions of real estate.

44

PART I — FINANCIAL INFORMATION (continued)
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)


Fees to affiliates
Fees to affiliates owed pursuant to our advisory agreement were $355,698 and $868,382 for the three and nine months ended September 30, 2011, respectively. Fees to affiliates owed pursuant to our advisory agreement were $217,408 for each of the three and nine months ended September 30, 2010. We expect fees to affiliates to increase in future periods as a result of anticipated future acquisitions of real estate and real estate-related investments.
Depreciation and amortization
Depreciation and amortization expenses were $629,085 and $1,850,038 for the three and nine months ended September 30, 2011, respectively, and related primarily to depreciation and amortization expenses associated with our property portfolio. Depreciation and amortization expenses were $175,558 for each of the three and nine months ended September 30, 2010 and related primarily to depreciation and amortization expenses associated with the one property in our portfolio during the period. We expect these amounts to increase in future periods as a result of anticipated future acquisitions of real estate.
Interest expense
Interest expense was $375,346 and $759,431 for the three and nine months ended September 30, 2011, respectively. Included in interest expense is the amortization of deferred financing costs of $11,023 and $19,843 for the three and nine months ended September 30, 2011, respectively. Interest expense was $56,799 for each of the three and nine months ended September 30, 2010 and related to the financing of our first property acquisition. Our interest expense in future periods will vary based on our level of future borrowings, which will depend on the amount of proceeds raised in our ongoing initial public offering, the availability and cost of debt financing and the opportunity to acquire real estate and real estate-related investments meeting our investment objectives.
General and administrative expense
General and administrative expenses were $56,894 and $580,310 for the three and nine months ended September 30, 2011, respectively. General and administrative expenses were $375,208 and $753,963 for the three and nine months ended September 30, 2010, respectively. These general and administrative costs consisted primarily of legal fees, audit fees, transfer agent fees and other professional fees. The decrease in general and administrative expenses from the prior period is due primarily to our advisor incurring $491,396 and $892,211 of operating expenses on our behalf for the three and nine months ended September 30, 2011, respectively, which are not included in the accompanying consolidated statements of operations. We expect general and administrative expenses incurred by our advisor to increase in future periods as we acquire additional real estate and real estate-related investments but to decrease as a percentage of total revenue.
Other Acquisition Costs
Other acquisition costs were $140,241 and $478,432 for the three and nine months ended September 30, 2011, respectively, and relate primarily to the acquisition of real estate. Other acquisition costs were $101,992 and $149,507 for the three and nine months ended September 30, 2010 and were primarily related to our first property acquisition.
Funds from Operations and Modified Funds from Operations
GAAP basis accounting for real estate assets utilizes historical cost accounting and assumes real estate values diminish over time. Since real estate values historically rise and fall with market conditions, presentation of operating results of a REIT, using historical accounting for depreciation, may be less informative. In an effort to overcome the difference between real estate values and historical cost accounting for real estate assets, the Board of Governors of NAREIT established the measurement tool of funds from operations, or FFO. Since its introduction, FFO has become a widely used non-GAAP financial measure among REITs. We believe that FFO is helpful to our management and investors as an additional measure of the performance of an equity REIT. We compute FFO in accordance with standards established by the Board of Governors of NAREIT in its April 2002 White Paper, which we refer to as the “White Paper,” and related implementation guidance, which may differ from the methodology for calculating FFO utilized by other equity REITs, and, accordingly, may not be comparable to such other REITs. The White Paper defines FFO as net income (loss) (computed in accordance with GAAP), excluding gains (or losses) from sales of property, plus real estate related depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures.

45

PART I — FINANCIAL INFORMATION (continued)
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)


In addition to FFO, we use modified funds from operations, or MFFO, as a non-GAAP supplemental financial performance measure to evaluate our operating performance. We define MFFO consistent with the Investment Program Association’s Guideline 2010-01, Supplemental Performance Measure for Publicly Registered Non-Listed REITs: Modified Funds from Operations. MFFO includes funds generated by the operations of our real estate investments and funds used in our operations. MFFO is based on FFO, but includes certain additional adjustments which we believe are necessary due to changes in the accounting and reporting rules under GAAP that have been put into effect since the establishment of NAREIT’s definition of FFO. These changes have prompted a significant increase in the magnitude of non-cash and non-operating items included in FFO, as defined. Such items include acquisition fees and expenses, amortization of above and below market intangible lease assets and liabilities, the effects of straight-line rent revenue recognition, accretion of discounts and amortization of premiums on debt investments, non-cash impairment charges of real estate related investments, gains and losses on the extinguishment or sale of debt or hedges, fair value adjustments to derivative instruments that do not qualify for hedge accounting treatment, adjustments related to contingent purchase price obligations and adjustments for consolidated and unconsolidated partnerships and joint ventures.
We believe MFFO is useful to investors in evaluating how the assets in our current portfolio might perform after our offering and acquisition stage has been completed and, as a result, may provide an indication of the sustainability of our distributions in the future. However, as described in greater detail below, MFFO should not be considered as an alternative to net income (loss), nor as an indication of our liquidity. Many of the adjustments to MFFO are similar to adjustments required by SEC rules for the presentation of pro forma business combination disclosures, particularly acquisition expenses, gains or losses recognized in business combinations and other activity not representative of future activities. Because MFFO is primarily affected by the same factors as FFO but without non-operating changes, particularly valuation changes, we believe the presentation of MFFO is useful to investors because fluctuations in MFFO are more indicative of changes in operating activities. MFFO is also more comparable in evaluating our performance over time and as compared to other real estate companies, which may not be as involved in acquisition activities or as affected by impairments and other non-operating charges. Our calculation of “Adjusted Funds from Operations,” as defined in our advisory agreement, is consistent with the IPA calculation of MFFO.
MFFO has limitations as a performance measure in an offering such as ours where the price of a share of common stock is a stated value and there is no net asset value determination during the offering stage and for a period thereafter. MFFO is useful in assisting management and investors in assessing the sustainability of operating performance in future operating periods, and in particular, after the offering and acquisition stages are complete and net asset value is disclosed. MFFO is not a useful measure in evaluating net asset value because impairments are taken into account in determining net asset value but not in determining MFFO. Investors are cautioned that due to the fact that impairments are based on estimated future undiscounted cash flows and the relatively limited term of our operations, it could be difficult to recover any impairment charges.
FFO or MFFO should not be considered as an alternative to net income (loss), nor as indications of our liquidity, nor are they either indicative of funds available to fund our cash needs, including our ability to make distributions. In particular, as we are currently in the acquisition phase of our life cycle, acquisition costs and other adjustments which are increases to MFFO are, and may continue to be, a significant use of cash. MFFO also excludes impairment charges, rental revenue adjustments and unrealized gains and losses related to certain other fair value adjustments. Although the related holdings are not held for sale or used in trading activities, if the holdings were sold currently, it could affect our operating results. Accordingly, both FFO and MFFO should be reviewed in connection with other GAAP measurements. Our FFO and MFFO as presented may not be comparable to amounts calculated by other REITs.

46

PART I — FINANCIAL INFORMATION (continued)
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)


Our calculation of FFO and MFFO is presented in the following table for the three and nine months ended September 30, 2011:
 
For the Three
Months Ended
September 30, 2011
 
For the Nine
Months Ended
September 30, 2011
Reconciliation of net loss to MFFO:
 
 
 
Net loss
$
(730,957
)
 
$
(2,660,471
)
Depreciation of real estate assets
354,348

 
723,953

Amortization of lease-related costs
274,737

 
1,126,085

FFO
(101,872
)
 
(810,433
)
Acquisition fees and expenses
352,767

 
1,053,641

MFFO
$
250,895

 
$
243,208

Pursuant to the terms of our advisory agreement, because MFFO did not exceed distributions paid during the three months ended September 30, 2011, we deferred $143,203 of acquisition and investment management fees earned during the three months ended September 30, 2011. Acquisition fees and investment management fees of $69,502 and $0, respectively, are due and payable as of September 30, 2011 and are included in due to affiliates, net, in the accompanying consolidated balance sheet.
FFO and MFFO may be used to fund all or a portion of certain capitalizable items that are excluded from FFO and MFFO, such as tenant improvements, building improvements and deferred leasing costs.
Off-Balance Sheet Arrangements
As of September 30, 2011, we had no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial conditions, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
Related-Party Transactions and Agreements
We have entered into agreements with our advisor and its affiliates whereby we agree to pay certain fees to, or reimburse certain expenses of, our advisor or its affiliates for acquisition fees and expenses, organization and offering costs, sales commissions, dealer manager fees, asset and property management fees and reimbursement of operating costs. Refer to Note 7 to our condensed consolidated unaudited financial statements included in this Quarterly Report on Form 10-Q for a discussion of the various related-party transactions, agreements and fees.


47

PART I — FINANCIAL INFORMATION (continued)

Item 3. Qualitative and Quantitative Disclosure About Market Risk
We may be exposed to the effects of interest rate changes as a result of borrowings used to maintain liquidity and to fund the acquisition, expansion and refinancing of our real estate investment portfolio and operations. We may be also exposed to the effects of changes in interest rates as a result of the acquisition and origination of mortgage, mezzanine, bridge and other loans. Our profitability and the value of our investment portfolio may be adversely affected during any period as a result of interest rate changes. Our interest rate risk management objectives are to limit the impact of interest rate changes on earnings, prepayment penalties and cash flows and to lower overall borrowing costs. We have managed and will continue to manage interest rate risk by maintaining a ratio of fixed rate, long-term debt such that floating rate exposure is kept at an acceptable level. In addition, we may utilize a variety of financial instruments, including interest rate caps, floors and swap agreements, in order to limit the effects of changes in interest rates on our operations. When we use these types of derivatives to hedge the risk of interest-earning assets or interest-bearing liabilities, we may be subject to certain risks, including the risk that losses on a hedge position will reduce the funds available for payments to holders of our common stock and that the losses may exceed the amount we invested in the instruments.
We have borrowed funds at fixed rates and have not borrowed funds at variable rates. We intend to continue to do so for the foreseeable future. Interest rate fluctuations will generally not affect our future earnings or cash flows on our fixed rate debt unless such instruments mature or are otherwise terminated. However, interest rate changes will affect the fair value of our fixed rate instruments. At September 30, 2011, the fair value of our fixed rate debt was $33,312,742 and the carrying value of our fixed rate debt was $32,556,045. The fair value estimate of our fixed rate debt was estimated using a discounted cash flow analysis utilizing rates we would expect to pay for debt of a similar type and remaining maturity if the loans were originated at September 30, 2011. As we expect to hold our fixed rate instruments to maturity and the amounts due under such instruments would be limited to the outstanding principal balance and any accrued and unpaid interest, we do not expect that fluctuations in interest rates, and the resulting change in fair value of our fixed rate instruments, would have a significant impact on our operations.
The weighted-average interest rate of our fixed rate debt was 4.87% at September 30, 2011. The weighted-average interest rate represents the actual interest rate in effect at September 30, 2011 (consisting of the contractual interest rate), using interest rate indices as of September 30, 2011 where applicable.

Item 4. Controls and Procedures.
Disclosure Controls and Procedures
As of the end of the period covered by this report, our management, including our chief executive officer and our principal financial officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act). Based upon and as of the date of the evaluation, our chief executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report to ensure that information required to be disclosed in the reports we file and submit under the Exchange Act is recorded, processed, summarized and reported as and when required. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports we file and submit under the Exchange Act is accumulated and communicated to our management, including our chief executive officer and our principal financial officer, as appropriate to allow timely decisions regarding required disclosure.
Internal Control Over Financial Reporting
There have been no changes in our internal control over financial reporting that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.


48

PART II—OTHER INFORMATION

Item 1. Legal Proceedings.
None.

Item 1A. Risk Factors
None.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
During the three and nine months ended September 30, 2011, we did not sell any equity securities that were not registered under the Securities Act of 1933, or the Securities Act.
On July 9, 2010 our Registration Statement on Form S-11 (File No. 333-160748), registering a public offering of up to $1,650,000,000 in shares of our common stock, was declared effective under the Securities Act. We commenced our initial public offering on July 19, 2010. We are offering up to 150,000,000 shares of our common stock to the public in our primary offering at $10.00 per share and up to 15,789,474 shares of our common stock pursuant to our distribution reinvestment plan at $9.50 per share. Steadfast Capital Markets Group, LLC, an affiliate of our advisor, is serving as the dealer manager for our initial public offering. As of September 30, 2011, we had sold 2,968,846 shares of our common stock, including 39,634 shares issued pursuant to the distribution reinvestment plan, for gross offering proceeds of $29,028,527 in the private offering and public offering.
From inception through September 30, 2011, we had incurred selling commissions, dealer manager fees and organization and other offering costs in our public offering in the amounts set forth below. The dealer manager reallowed all of the selling commissions and a portion of the dealer manager fees to participating broker-dealers.

Type of Expense Amount
 
Amount
 
Estimated/
Actual
Selling commissions and dealer manager fees
 
$
2,178,133

 
Actual
Other organization and offering costs
 
1,243,018

 
Actual
Total expenses
 
$
3,421,151

 
 
Total public offering proceeds (excluding DRP proceeds)
 
$
22,807,674

 
Actual
Percentage of public offering proceeds used to pay for organization and offering costs
 
15
%
 
Actual

From the commencement of our initial public offering through September 30, 2011, the net offering proceeds to us, after deducting the total expenses incurred as described above, were $19,763,051 including net offering proceeds from our distribution reinvestment plan of $376,528. For the period from inception through September 30, 2011, the ratio of the cost of raising capital was approximately 15%.
We intend to use substantially all of the net proceeds from our initial public offering to invest in and manage a diverse portfolio of real estate investments, primarily in the multifamily sector, located throughout the United States. In addition to our focus on multifamily properties, we may also selectively invest in industrial properties and other types of commercial properties. We may also acquire or originate mortgage, bridge and other real estate loans and equity securities of other real estate companies. As of September 30, 2011, we had used approximately $13,090,000 in offering proceeds to partially fund the acquisition of five multifamily properties.
During the three and nine months ended September 30, 2011, we did not repurchase any of our securities, or redeem any shares of our common stock pursuant to our share redemption plan.

Item 3. Defaults Upon Senior Securities.
None.

Item 4. Reserved and Removed.

Item 5. Other Information.
None.


49

PART II—OTHER INFORMATION (continued)


Item 6. Exhibits.
Effective February 1, 2010, Steadfast Secure Income REIT, Inc., Steadfast Secure Income Advisor, LLC and Steadfast Secure Income REIT Operating Partnership, L.P. changed their names to Steadfast Income REIT, Inc., Steadfast Income Advisor, LLC and Steadfast Income REIT Operating Partnership, L.P., respectively. With respect to documents executed prior to the name change, the following Exhibit List refers to the entity names used prior to the name changes in order to accurately reflect the names of the entities that appear on such documents.
3.1
Second Articles of Amendment and Restatement of Steadfast Income REIT, Inc. (filed as Exhibit 3.1 to Pre-Effective Amendment No. 4 to the Company’s Registration Statement on Form S-11 (No. 333-160748) and incorporated herein by reference).
 
 
3.2
Bylaws of Steadfast Secure Income REIT, Inc. (filed as Exhibit 3.2 to the Company’s Registration Statement on Form S-11 (No. 333-160748) and incorporated herein by reference).
 
 
4.1
Form of Subscription Agreement (included as Appendix B to prospectus, incorporated by reference to Exhibit 4.1 to Post-Effective Amendment No. 5 to the Company’s Registration Statement on Form S-11 (No. 333-160748)).
 
 
4.2
Steadfast Income REIT, Inc. Distribution Reinvestment Plan (included as Appendix C to prospectus, incorporated by reference to Exhibit 4.2 to Post-Effective Amendment No. 5 to the Company’s Registration Statement on Form S-11 (No. 333-160748)).
 
 
10.1
Purchase and Sale Agreement and Joint Escrow Instructions, dated June 24, 2011, by and between Cooper Creek Village, LLC and Steadfast Asset Holdings, Inc. (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed August 19, 2011).
 
 
10.2
Second Amendment to Purchase and Sale Agreement and Joint Escrow Instructions, dated July 8, 2011, by and between Cooper Creek Village, LLC and Steadfast Asset Holdings, Inc. (incorporated by reference to Exhibit 10.3 to the Company's Form 8-K filed August 19, 2011).
 
 
10.3
Assignment and Assumption of Purchase Agreement, dated as of August 15, 2011, by and between Steadfast Asset
Holdings, Inc. and SIR Cooper Creek, LLC (Incorporated by reference to Exhibit 10.5 to the Company's Form 8-K filed August 19, 2011).

 
 
10.4
Property Management Agreement, dated as of August 24, 2011, by and between SIR Cooper Creek, LLC and Steadfast Management Company, Inc. (Incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed August 30, 2011).
 
 
10.5
Multifamily Note, dated as of August 24, 2011, by SIR Cooper Creek, LLC in favor of PNC Bank, National Association (Incorporated by reference to Exhibit 10.2 to the Company's Form 8-K filed August 30, 2011).
 
 
10.6
Multifamily Loan and Security Agreement, dated as of August 24, 2011, by and between SIR Cooper Creek, LLC and PNC Bank, National Association (Incorporated by reference to Exhibit 10.3 to the Company's Form 8-K filed August 30, 2011).
 
 
10.7
Multifamily Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing, dated as of August 24, 2011, by and among SIR Cooper Creek, LLC and PNC Bank, National Association (Incorporated by reference to Exhibit 10.4 to the Company's Form 8-K filed August 30, 2011).
 
 
10.8
Guaranty of Non-Recourse Obligations, dated as of August 24, 2011, by Steadfast Income REIT, Inc. to and for the benefit of PNC Bank, National Association (Incorporated by reference to Exhibit 10.5 to the Company's Form 8-K filed August 30, 2011).
 
 
10.9
Environmental Indemnity Agreement, dated August 24, 2011, by SIR Cooper Creek, LLC and PNC Bank, National Association (Incorporated by reference to Exhibit 10.6 to the Company's Form 8-K filed August 30, 2011).
 
 
31.1
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
 
 
31.2
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
 
 
32.1
Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 
 
32.2
Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

50

PART II—OTHER INFORMATION (continued)


99.1
Press Release dated November 14, 2011 announcing financial results for the quarterly period ended
September 30, 2011
 
 
101.INS 
XBRL Instance Document (Furnished herewith)
 
 
101.SCH 
XBRL Schema Document (Furnished herewith)
 
 
101.CAL 
XBRL Calculation Linkbase Document (Furnished herewith)
 
 
101.LAB 
XBRL Labels Linkbase Document (Furnished herewith)
 
 
101.PRE 
XBRL Presentation Linkbase Document (Furnished herewith)
 
 
101.DEF 
XBRL Definition Linkbase Document (Furnished herewith)


51

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

 
 
Steadfast Income REIT, Inc.
 
 
Date:
November 14, 2011
By:  
/s/ Rodney F. Emery  
 
 
 
 
Rodney F. Emery 
 
 
 
 
Chief Executive Officer, President and Chairman of the Board (Principal Executive Officer) 
 
 
 
 
 
 
Date:
November 14, 2011
By:  
/s/ Kevin J. Keating  
 
 
 
 
Kevin J. Keating 
 
 
 
 
Treasurer
(Principal Financial and Accounting Officer) 
 


EXHIBIT INDEX
Effective February 1, 2010, Steadfast Secure Income REIT, Inc., Steadfast Secure Income Advisor, LLC and Steadfast Secure Income REIT Operating Partnership, L.P. changed their names to Steadfast Income REIT, Inc., Steadfast Income Advisor, LLC and Steadfast Income REIT Operating Partnership, L.P., respectively. With respect to documents executed prior to the name change, the following Exhibit List refers to the entity names used prior to the name changes in order to accurately reflect the names of the entities that appear on such documents.

3.1
Second Articles of Amendment and Restatement of Steadfast Income REIT, Inc. (filed as Exhibit 3.1 to Pre-Effective Amendment No. 4 to the Company’s Registration Statement on Form S-11 (No. 333-160748) and incorporated herein by reference).
 
 
3.2
Bylaws of Steadfast Secure Income REIT, Inc. (filed as Exhibit 3.2 to the Company’s Registration Statement on Form S-11 (No. 333-160748) and incorporated herein by reference).
 
 
4.1
Form of Subscription Agreement (included as Appendix B to prospectus, incorporated by reference to Exhibit 4.1 to Post-Effective Amendment No. 5 to the Company’s Registration Statement on Form S-11 (No. 333-160748)).
 
 
4.2
Steadfast Income REIT, Inc. Distribution Reinvestment Plan (included as Appendix C to prospectus, incorporated by reference to Exhibit 4.2 to Post-Effective Amendment No. 5 to the Company’s Registration Statement on Form S-11 (No. 333-160748)).
 
 
10.1
Purchase and Sale Agreement and Joint Escrow Instructions, dated June 24, 2011, by and between Cooper Creek Village, LLC and Steadfast Asset Holdings, Inc. (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed August 19, 2011).
 
 
10.2
Second Amendment to Purchase and Sale Agreement and Joint Escrow Instructions, dated July 8, 2011, by and between Cooper Creek Village, LLC and Steadfast Asset Holdings, Inc. (incorporated by reference to Exhibit 10.3 to the Company's Form 8-K filed August 19, 2011).
 
 
10.3
Assignment and Assumption of Purchase Agreement, dated as of August 15, 2011, by and between Steadfast Asset
Holdings, Inc. and SIR Cooper Creek, LLC (Incorporated by reference to Exhibit 10.5 to the Company's Form 8-K filed August 19, 2011).
 
 
10.4
Property Management Agreement, dated as of August 24, 2011, by and between SIR Cooper Creek, LLC and Steadfast Management Company, Inc. (Incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed August 30, 2011).
 
 
10.5
Multifamily Note, dated as of August 24, 2011, by SIR Cooper Creek, LLC in favor of PNC Bank, National Association (Incorporated by reference to Exhibit 10.2 to the Company's Form 8-K filed August 30, 2011).
 
 
10.6
Multifamily Loan and Security Agreement, dated as of August 24, 2011, by and between SIR Cooper Creek, LLC and PNC Bank, National Association (Incorporated by reference to Exhibit 10.3 to the Company's Form 8-K filed August 30, 2011).
 
 
10.7
Multifamily Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing, dated as of August 24, 2011, by and among SIR Cooper Creek, LLC and PNC Bank, National Association (Incorporated by reference to Exhibit 10.4 to the Company's Form 8-K filed August 30, 2011).
 
 
10.8
Guaranty of Non-Recourse Obligations, dated as of August 24, 2011, by Steadfast Income REIT, Inc. to and for the benefit of PNC Bank, National Association (Incorporated by reference to Exhibit 10.5 to the Company's Form 8-K filed August 30, 2011).
 
 
10.9
Environmental Indemnity Agreement, dated August 24, 2011, by SIR Cooper Creek, LLC and PNC Bank, National Association (Incorporated by reference to Exhibit 10.6 to the Company's Form 8-K filed August 30, 2011).
 
 
31.1
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
 
 
31.2
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
 
 
32.1
Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 
 
32.2
Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

99.1
Press Release dated November 14, 2011 announcing financial results for the quarterly period ended
September 30, 2011
 
 
101.INS 
XBRL Instance Document (Furnished herewith)
 
 
101.SCH 
XBRL Schema Document (Furnished herewith)
 
 
101.CAL 
XBRL Calculation Linkbase Document (Furnished herewith)
 
 
101.LAB 
XBRL Labels Linkbase Document (Furnished herewith)
 
 
101.PRE 
XBRL Presentation Linkbase Document (Furnished herewith)
 
 
101.DEF 
XBRL Definition Linkbase Document (Furnished herewith)

Steadfast Income REIT, Inc. Reports