UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported):
August 28, 2014
Steadfast Apartment REIT, Inc.
(Exact Name of Registrant as Specified in Charter)
 
 
 
 
 
Maryland
 
333-191049
 
36-4769184
(State or Other Jurisdiction
 
(Commission File Number)
 
(IRS Employer
of Incorporation)
 
 
 
Identification No.)
18100 Von Karman Avenue, Suite 500
Irvine, California 92612
(Address of Principal Executive Offices, including Zip Code)
Registrant’s telephone number, including area code: (949) 852-0700
Not applicable
(Former Name or Former Address, if Changed Since Last Report)
     Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2.):
 
o
 
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
 
 
 
 
o
 
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
 
 
 
 
o
 
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
 
 
 
 
o
 
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 





Item 9.01
Financial Statements and Exhibits.
     Steadfast Apartment REIT, Inc. (the “Company”), through its consolidated subsidiaries, has acquired fee simple interests in the following two multifamily properties: the Club at Summer Valley Apartments (“Club at Summer Valley”), acquired by the Company on August 28, 2014, and the Terrace Cove Apartments (“Terrace Cove”), acquired by the Company on August 28, 2014. The Company is filing this Current Report on Form 8-K/A to amend the Current Report on Form 8-K filed with the Securities and Exchange Commission (the “SEC”) on September 4, 2014, to provide the required financial information related to the acquisitions of Club at Summer Valley and Terrace Cove.
This Current Report on Form 8-K/A hereby amends the Company’s Current Report on Form 8-K relating to the acquisitions of Club at Summer Valley and Terrace Cove, filed with the SEC on September 4, 2014.
(a)     Financial Statements of Real Estate Acquired.
I.
Club at Summer Valley
 
 
 
 
 
 
 
Report of Independent Auditors
 
 
Statements of Revenues Over Certain Operating Expenses for the Six Months Ended
June 30, 2014 (unaudited) and the Year Ended December 31, 2013
 
 
Notes to Statements of Revenues Over Certain Operating Expenses for the Six Months Ended
June 30, 2014 (unaudited) and the Year Ended December 31, 2013
 
 
 
 
 
II.
Terrace Cove
 
 
 
 
 
 
 
Report of Independent Auditors
 
 
Statements of Revenues Over Certain Operating Expenses for the Six Months Ended
June 30, 2014 (unaudited) and the Year Ended December 31, 2013
 
 
Notes to Statements of Revenues Over Certain Operating Expenses for the Six Months Ended
June 30, 2014 (unaudited) and the Year Ended December 31, 2013
 
(b)     Pro Forma Financial Information.
Steadfast Apartment REIT, Inc.
 
 
 
 
 
Summary of Unaudited Pro Forma Financial Statements
 
Unaudited Pro Forma Balance Sheet as of June 30, 2014
 
Unaudited Pro Forma Statement of Operations for the Six Months Ended June 30, 2014
 
Unaudited Pro Forma Statement of Operations for the Year Ended December 31, 2013
 





Report of Independent Auditors
To the Board of Directors and Stockholders of
Steadfast Apartment REIT, Inc.
We have audited the accompanying statement of revenues over certain operating expenses of the Club at Summer Valley Apartments (“Club at Summer Valley”) for the year ended December 31, 2013, and the related notes to the financial statement.
Management’s Responsibility for the Financial Statement
Management is responsible for the preparation and fair presentation of the statement of revenues over certain operating expenses in conformity with U.S. generally accepted accounting principles; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of the statement of revenues over certain operating expenses that are free of material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on the statement of revenues over certain operating expenses based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the statement of revenues over certain operating expenses is free of material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the statement of revenues over certain operating expenses. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the statement of revenues over certain operating expenses, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the statement of revenues over certain operating expenses in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the statement of revenues over certain operating expenses.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the statement of revenues over certain operating expenses referred to above presents fairly, in all material respects, the revenues and certain operating expenses as described in Note 2 for the year ended December 31, 2013, in conformity with U.S. generally accepted accounting principles.
Basis of Accounting
As described in Note 2 to the financial statement, the statement of revenues over certain operating expenses was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission, and is not intended to be a complete presentation of Club at Summer Valley’s revenues and expenses. Our opinion is not modified with respect to this matter.
/s/ Ernst & Young LLP
Irvine, California
November 12, 2014

F-1



CLUB AT SUMMER VALLEY
STATEMENTS OF REVENUES OVER CERTAIN OPERATING EXPENSES
 
For the Six Months Ended June 30, 2014
 
For the Year Ended December 31, 2013
 
(unaudited)
 
 
Revenues:
 
 
 
Rental income
$
1,194,280

 
$
2,311,558

Tenant reimbursements and other
111,638

 
217,136

Total revenues
1,305,918

 
2,528,694

 
 
 
 
Expenses:
 
 
 
Operating, maintenance, and management
439,188

 
876,658

Real estate taxes and insurance
200,571

 
385,460

General and administrative expenses
1,952

 
4,999

Total expenses
641,711

 
1,267,117

Revenues over certain operating expenses
$
664,207

 
$
1,261,577

See accompanying notes to statements of revenues over certain operating expenses.


F-2



CLUB AT SUMMER VALLEY
NOTES TO STATEMENTS OF REVENUES OVER CERTAIN OPERATING EXPENSES
For the Six Months Ended June 30, 2014 (unaudited)
and the Year Ended December 31, 2013
1.     DESCRIPTION OF REAL ESTATE PROPERTY
On August 28, 2014, Steadfast Apartment REIT, Inc. (the “Company”), through a consolidated subsidiary, acquired a fee simple interest in a multifamily property located in Austin, Texas, commonly known as the Club at Summer Valley Apartments (“Club at Summer Valley”) for an aggregate purchase price of $21,500,000, exclusive of closing costs. The Company financed the payment of the purchase price for Club at Summer Valley with a combination of (1) proceeds from the Company’s public offering and (2) a loan in the aggregate principal amount of $15,050,000.
Club at Summer Valley was constructed in 1983 and is composed of 17 one-, two- and three-story buildings. Club at Summer Valley contains 260 apartments consisting of 204 one-bedroom apartments and 56 two-bedroom apartments. The apartments range in size from 563 to 1,229 square feet and average 741 square feet.
The Company is a Maryland corporation formed to invest in and manage a diverse portfolio of real estate investments, primarily in the multifamily sector, located throughout the United States.
2.     BASIS OF PRESENTATION
The accompanying statements of revenues over certain operating expenses have been prepared to comply with the rules and regulations of the Securities and Exchange Commission (“SEC”).
Club at Summer Valley is not a legal entity and the accompanying statements of revenues over certain expenses are not representative of the actual operations for the periods presented, as certain revenues and expenses have been excluded that may not be comparable to the revenues and expenses the Company expects to incur in the future operations of Club at Summer Valley. Excluded items include interest, depreciation and amortization, and general and administrative costs not directly comparable to the future operations of Club at Summer Valley.
The accompanying unaudited statement of revenues over certain operating expenses for the six months ended June 30, 2014 has been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information as contained within the Financial Accounting Standards Board Accounting Standards Codification and the rules and regulations of the SEC, including the instructions to Form 8-K and Article 3-14 of Regulation S-X. Accordingly, the unaudited statement of revenues over certain operating expenses does not include all of the information and footnotes required by GAAP for audited financial statements. In the opinion of management, the statement of revenues over certain operating expenses for the unaudited interim period presented includes all adjustments, which are of a normal and recurring nature, necessary for a fair and consistent presentation of the results for such period. Operating results for the six months ended June 30, 2014 are not necessarily indicative of the results that may be expected for the year ending December 31, 2014.
An audited statement of revenues over certain operating expenses is being presented for the most recent year available instead of the three most recent years based on the following factors: (1) Club at Summer Valley was acquired from an unaffiliated party; and (2) based on due diligence of Club at Summer Valley conducted by the Company, management is not aware of any material factors relating to Club at Summer Valley that would cause this financial information not to be indicative of future operating results.
Square footage, occupancy and other measures used to describe real estate included in the notes to statements of revenues over certain operating expenses are presented on an unaudited basis.

F-3



CLUB AT SUMMER VALLEY
NOTES TO STATEMENTS OF REVENUES OVER CERTAIN OPERATING EXPENSES (CONTINUED)
For the Six Months Ended June 30, 2014 (unaudited)
and the Year Ended December 31, 2013

3.     SIGNIFICANT ACCOUNTING POLICIES
Revenue Recognition
Club at Summer Valley leases residential apartment units under operating leases generally with terms of one year or less. Rental revenue, including rental abatements, concessions and contractual fixed increases, is recognized on a straight-line basis over the term of the related lease. Tenant reimbursements and other income consists of charges billed to tenants for utilities, parking, application and other fees. Tenant reimbursements and other income are recognized when earned.
Use of Estimates
The preparation of financial statements, as described in Note 2 and in conformity with GAAP, requires management to make estimates and assumptions that affect the reported amounts of revenues and expenses during the reporting period. Actual results could materially differ from those estimates.
4.     COMMITMENTS AND CONTINGENCIES
Litigation
Club at Summer Valley may become 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 probable or reasonably possible to have a material adverse effect on its results of operations or financial condition.
Other Matters
The Company is not aware of any material environmental liabilities relating to Club at Summer Valley that could have a material adverse effect on its financial condition or results of operations. However, changes in applicable environmental laws and regulations or other environmental conditions with respect to Club at Summer Valley could result in future environmental liabilities.
5.     SUBSEQUENT EVENTS
The Company evaluates subsequent events through the date the statements of revenues over certain operating expenses are issued. The accompanying statements of revenues over certain operating expenses were issued on November 12, 2014.

F-4



Report of Independent Auditors
To the Board of Directors and Stockholders of
Steadfast Apartment REIT, Inc.
We have audited the accompanying statement of revenues over certain operating expenses of the Terrace Cove Apartments (“Terrace Cove”) for the year ended December 31, 2013, and the related notes to the financial statement.
Management’s Responsibility for the Financial Statement
Management is responsible for the preparation and fair presentation of the statement of revenues over certain operating expenses in conformity with U.S. generally accepted accounting principles; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of the statement of revenues over certain operating expenses that are free of material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on the statement of revenues over certain operating expenses based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the statement of revenues over certain operating expenses is free of material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the statement of revenues over certain operating expenses. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the statement of revenues over certain operating expenses, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the statement of revenues over certain operating expenses in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the statement of revenues over certain operating expenses.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the statement of revenues over certain operating expenses referred to above presents fairly, in all material respects, the revenues and certain operating expenses as described in Note 2 for the year ended December 31, 2013, in conformity with U.S. generally accepted accounting principles.
Basis of Accounting
As described in Note 2 to the financial statement, the statement of revenues over certain operating expenses was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission, and is not intended to be a complete presentation of Terrace Cove’s revenues and expenses. Our opinion is not modified with respect to this matter.
/s/ Ernst & Young LLP
Irvine, California
November 12, 2014


F-5



TERRACE COVE
STATEMENTS OF REVENUES OVER CERTAIN OPERATING EXPENSES
 
For the Six Months Ended June 30, 2014
 
For the Year Ended December 31, 2013
 
(unaudited)
 
 
Revenues:
 
 
 
Rental income
$
1,316,211

 
$
2,541,252

Tenant reimbursements and other
99,865

 
206,661

Total revenues
1,416,076

 
2,747,913

 
 
 
 
Expenses:
 
 
 
Operating, maintenance, and management
483,869

 
961,996

Real estate taxes and insurance
216,192

 
413,023

General and administrative expenses
1,611

 
3,286

Total expenses
701,672

 
1,378,305

Revenues over certain operating expenses
$
714,404

 
$
1,369,608

See accompanying notes to statements of revenues over certain operating expenses.




F-6



TERRACE COVE
NOTES TO STATEMENTS OF REVENUES OVER CERTAIN OPERATING EXPENSES
For the Six Months Ended June 30, 2014 (unaudited)
and the Year Ended December 31, 2013

1.     DESCRIPTION OF REAL ESTATE PROPERTY
On August 28, 2014, Steadfast Apartment REIT, Inc. (the “Company”), through a consolidated subsidiary, acquired a fee simple interest in a multifamily property located in Austin, Texas, commonly known as the Terrace Cove Apartments (“Terrace Cove”) for an aggregate purchase price of $23,500,000, exclusive of closing costs. The Company financed the payment of the purchase price for Terrace Cove with a combination of (1) proceeds from the Company’s public offering and (2) a loan in the aggregate principal amount of $16,450,000.
Terrace Cove was constructed in 1986 and is composed of 21 one-, two- and three-story buildings. Terrace Cove contains 304 apartments consisting of 180 one-bedroom apartments and 124 two-bedroom apartments. The apartments range in size from 587 to 894 square feet and average 712 square feet.
The Company is a Maryland corporation formed to invest in and manage a diverse portfolio of real estate investments, primarily in the multifamily sector, located throughout the United States.
2.     BASIS OF PRESENTATION
The accompanying statements of revenues over certain operating expenses have been prepared to comply with the rules and regulations of the Securities and Exchange Commission (“SEC”).
Terrace Cove is not a legal entity and the accompanying statements of revenues over certain operating expenses are not representative of the actual operations for the periods presented, as certain revenues and expenses have been excluded that may not be comparable to the revenues and expenses the Company expects to incur in the future operations of Terrace Cove. Excluded items include interest, depreciation and amortization, and general and administrative costs not directly comparable to the future operations of Terrace Cove.
The accompanying unaudited statement of revenues over certain operating expenses for the six months ended June 30, 2014 has been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information as contained within the Financial Accounting Standards Board Accounting Standards Codification and the rules and regulations of the SEC, including the instructions to Form 8-K and Article 3-14 of Regulation S-X. Accordingly, the unaudited statement of revenues over certain operating expenses does not include all of the information and footnotes required by GAAP for audited financial statements. In the opinion of management, the statement of revenues over certain operating expenses for the unaudited interim period presented includes all adjustments, which are of a normal and recurring nature, necessary for a fair and consistent presentation of the results for such period. Operating results for the six months ended June 30, 2014 are not necessarily indicative of the results that may be expected for the year ending December 31, 2014.
An audited statement of revenues over certain operating expenses is being presented for the most recent year available instead of the three most recent years based on the following factors: (1) Terrace Cove was acquired from an unaffiliated party; and (2) based on due diligence of Terrace Cove conducted by the Company, management is not aware of any material factors relating to Terrace Cove that would cause this financial information not to be indicative of future operating results.
Square footage, occupancy and other measures used to describe real estate included in the notes to statements of revenues over certain operating expenses are presented on an unaudited basis.

F-7



TERRACE COVE
NOTES TO STATEMENTS OF REVENUES OVER CERTAIN OPERATING EXPENSES (CONTINUED)
For the Six Months Ended June 30, 2014 (unaudited)
and the Year Ended December 31, 2013

3.     SIGNIFICANT ACCOUNTING POLICIES
Revenue Recognition
Terrace Cove leases residential apartment units under operating leases generally with terms of one year or less. Rental revenue, including rental abatements, concessions and contractual fixed increases, is recognized on a straight-line basis over the term of the related lease. Tenant reimbursements and other income consists of charges billed to tenants for utilities, parking, application and other fees. Tenant reimbursements and other income are recognized when earned.
Use of Estimates
The preparation of financial statements, as described in Note 2 and in conformity with GAAP, requires management to make estimates and assumptions that affect the reported amounts of revenues and expenses during the reporting period. Actual results could materially differ from those estimates.
4.     COMMITMENTS AND CONTINGENCIES
Litigation
Terrace Cove may become 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 probable or reasonably possible to have a material adverse effect on its results of operations or financial condition.
Other Matters
The Company is not aware of any material environmental liabilities relating to Terrace Cove that could have a material adverse effect on its financial condition or results of operations. However, changes in applicable environmental laws and regulations or other environmental conditions with respect to Terrace Cove could result in future environmental liabilities.
5.     SUBSEQUENT EVENTS
The Company evaluates subsequent events through the date the statements of revenues over certain operating expenses are issued. The accompanying statements of revenues over certain operating expenses were issued on November 12, 2014.

F-8



STEADFAST APARTMENT REIT, INC.
SUMMARY OF UNAUDITED PRO FORMA FINANCIAL STATEMENTS
The following pro forma information should be read in conjunction with the Company’s historical consolidated financial statements and the notes thereto as filed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013, which was filed with the Securities and Exchange Commission (“SEC”) on March 21, 2014, and the Company’s Quarterly Report on Form 10-Q for the six months ended June 30, 2014, which was filed with the SEC on August 13, 2014. In addition, this pro forma information should be read in conjunction with the statements of revenues over certain operating expenses and the notes thereto of the Villages at Spring Hill Apartments (“Spring Hill”) and the Harrison Place Apartments (“Harrison Place”), which have been included in the Company’s prior filings with the SEC, and the statements of revenues over certain operating expenses and the notes thereto of Club at Summer Valley and Terrace Cove, which are included herein.
The following unaudited pro forma balance sheet as of June 30, 2014 has been prepared to give effect to the acquisition of Club at Summer Valley, and the acquisition of Terrace Cove, each of which occurred on August 28, 2014, as if such acquisitions occurred on June 30, 2014. Spring Hill and Harrison Place were acquired on May 22, 2014 and June 30, 2014, respectively, and are recorded in the Company’s historical balance sheet as of June 30, 2014.
The following unaudited pro forma statements of operations for the six months ended June 30, 2014 and for the year ended December 31, 2013 have been prepared to give effect to the acquisitions of Spring Hill, Harrison Place, Club at Summer Valley and Terrace Cove (collectively referred to as the “Portfolio Properties”) as if the acquisitions occurred on January 1, 2013.
These unaudited pro forma financial statements are prepared for informational purposes only and are not necessarily indicative of future results or of actual results that would have been achieved had the acquisitions of the Portfolio Properties been consummated as of January 1, 2013. The audited statements of revenues over certain operating expenses of Spring Hill and Harrison Place have been previously filed on Form 8-K/A with the SEC on August 8, 2014.

F-9

STEADFAST APARTMENT REIT, INC.
UNAUDITED PRO FORMA BALANCE SHEET

As of June 30, 2014
 
Steadfast Apartment REIT, Inc. Historical (a)
 
Pro Forma Adjustments
 
 
 
 
Club at Summer Valley (b)
 
Terrace Cove (b)
 
Offering Proceeds (c)
 
Pro Forma Total
Assets:
 
 
 
 
 
 
 
 
 
Real Estate:
 
 
 
 
 
 
 
 
 
Land
$
4,218,001

 
$
4,850,153

 
$
5,469,361

 
$

 
$
14,537,515

Building and improvements
36,947,757

 
15,986,068

 
17,287,565

 

 
70,221,390

Tenant origination and absorption costs
907,377

 
663,779

 
743,074

 

 
2,314,230

Total real estate, cost
42,073,135

 
21,500,000

 
23,500,000

 

 
87,073,135

Less accumulated depreciation and amortization
(150,296
)
 

 

 

 
(150,296
)
Total real estate, net
41,922,839

 
21,500,000

 
23,500,000

 

 
86,922,839

Cash and cash equivalents
5,858,143

 
(6,579,411
)
 
(7,246,119
)
 
31,870,308

 
23,902,921

Restricted cash
231,292

 
345,530

 
398,299

 

 
975,121

Rents and other receivables
352,660

 

 

 

 
352,660

Deferred financing costs and other assets, net
588,616

 
285,280

 
312,805

 

 
1,186,701

Total assets
$
48,953,550

 
$
15,551,399

 
$
16,964,985

 
$
31,870,308

 
$
113,340,242

 
 
 
 
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
 
 
Accounts payable and accrued liabilities
$
870,034

 
$
633,158

 
$
643,983

 
$

 
$
2,147,175

Mortgage notes payable
29,470,000

 
15,050,000

 
16,450,000

 

 
60,970,000

Distributions payable
83,626

 

 

 

 
83,626

Due to affiliates
401,560

 
382,251

(d)
419,484

(d)

 
1,203,295

Total liabilities
30,825,220

 
16,065,409

 
17,513,467

 

 
64,404,096

Commitments and Contingencies
 
 
 
 
 
 
 
 
 
Redeemable common stock
25,066

 

 

 

 
25,066

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, 1,615,242 shares issued and outstanding and 4,167,638 pro forma shares as of June 30, 2014
16,152

 

 

 
25,524

 
41,676

Convertible stock, $0.01 par value per share; 1,000 shares issued and outstanding as of June 30, 2014
10

 

 

 

 
10

Additional paid-in capital
20,257,966

 

 

 
31,844,784

 
52,102,750

Cumulative distributions and net losses
(2,170,864
)
 
(514,010
)
(d)
(548,482
)
(d)

 
(3,233,356
)
Total stockholders’ equity
18,103,264

 
(514,010
)
 
(548,482
)
 
31,870,308

 
48,911,080

Total liabilities and stockholders’ equity
$
48,953,550

 
$
15,551,399

 
$
16,964,985

 
$
31,870,308

 
$
113,340,242


F-10



STEADFAST APARTMENT REIT, INC.
NOTES TO UNAUDITED PRO FORMA BALANCE SHEET
As of June 30, 2014
(a)
Historical financial information as of June 30, 2014, derived from the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2014.
(b)
Represents adjustments to the balance sheet of the Company to give effect to the acquisitions of Club at Summer Valley and Terrace Cove and related cash, other assets and liabilities as if the acquisitions had occurred on June 30, 2014. The aggregate purchase price of Club at Summer Valley and Terrace Cove, exclusive of closing and other acquisition costs, was approximately $45.0 million, and was funded with proceeds from the Company’s initial public offering and with financing in the amount of approximately $31.5 million. The Company recorded the cost of tangible assets and identifiable intangible assets acquired based on their estimated fair values. The purchase price allocation for these acquisitions are preliminary and subject to change.
(c)
The pro forma adjustments assume the actual net proceeds raised in the Company’s initial public offering during the period from July 1, 2014 through September 30, 2014 were raised as of June 30, 2014.
(d)
Represents the acquisition related fees and expenses incurred in connection with the acquisitions of Club at Summer Valley and Terrace Cove, including loan coordination fees incurred in connection with obtaining mortgage debt on such acquired properties, not included in the historical results of the Company.


F-11



STEADFAST APARTMENT REIT, INC.
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
For the Six Months Ended June 30, 2014

 
Steadfast Apartment REIT, Inc. Historical (a)
 
Spring Hill (b)
 
Harrison Place (b)
 
Club at Summer Valley (b)
 
Terrace Cove (b)
 
Pro Forma Adjustments
 
Pro Forma Total
 
Revenues:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rental income
$
184,579

 
$
399,266

 
$
705,268

 
$
1,194,280

 
$
1,316,211

 
$
935,955

(c)
$
4,735,559

 
Tenant reimbursements and other
8,285

 
32,760

 
53,703

 
111,638

 
99,865

 
72,631

(c)
378,882

 
Total revenues
192,864

 
432,026

 
758,971

 
1,305,918

 
1,416,076

 
1,008,586

 
5,114,441

 
Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating, maintenance and management
56,558

 
150,710

 
232,125

 
439,188

 
483,869

 
147,845

(d)
1,510,295

 
Real estate taxes and insurance
20,351

 
44,012

 
138,771

 
200,571

 
216,192

 
379,376

(e)
999,273

 
Fees to affiliates
802,419

 

 

 

 

 
(361,602
)
(f)
440,817

 
Depreciation and amortization
150,296

 

 

 

 

 
1,322,489

(g)
1,472,785

 
Interest expense
118,069

 

 

 

 

 
658,102

(h)
776,171

 
General and administrative expenses
546,289

 
2,466

 
3,375

 
1,952

 
1,611

 

 
555,693

 
Acquisition costs
424,830

 

 

 

 

 
(416,532
)
(i)
8,298

 
Total expenses
2,118,812

 
197,188

 
374,271

 
641,711

 
701,672

 
1,729,678

 
5,763,332

 
Net (loss) income
$
(1,925,948
)
 
$
234,838

 
$
384,700

 
$
664,207

 
$
714,404

 
$
(721,092
)
 
$
(648,891
)
 
Net loss per common share – basic and diluted
$
(4.74
)
 
 
 
 
 
 
 
 
 
 
 
$
(0.16
)
 
Weighted-average number of common shares outstanding, basic and diluted
406,157

 
 
 
 
 
 
 
 
 
 
 
4,167,638

(j)






F-12



STEADFAST APARTMENT REIT, INC.
NOTES TO UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
For the Six Months Ended June 30, 2014
(a)
Historical financial information for the six months ended June 30, 2014 derived from the Company’s Quarterly Report on Form 10-Q for the six months ended June 30, 2014.
(b)
Represents the historical operations of the Portfolio Properties under the previous owners as reported in the Statements of Revenues Over Certain Operating Expenses.
(c)
Represents additional revenues (not reflected in the historical operations of the previous owners or the Company) for the six months ended June 30, 2014, based on management estimates as if the Portfolio Properties were acquired on January 1, 2013, as follows:
Portfolio Properties
 
Rental Income
For the Six Months Ended June 30, 2014
 
Tenant Reimbursement and Other For the Six Months Ended June 30, 2014
Spring Hill
 
$
230,687

 
$
18,928

Harrison Place
 
705,268

 
53,703

Club at Summer Valley
 

 

Terrace Cove
 

 

 
 
$
935,955

 
$
72,631

(d)
Represents additional operating and maintenance expenses (not reflected in the historical operations of the previous owners or the Company) and the exclusion of property management fees recorded in the historical operations of the previous owners that are not comparable to the expense the Company expects to incur in the future operations of the Portfolio Properties, as follows:
Portfolio Properties
 
Operating and Maintenance Expenses
For the Six Months Ended June 30, 2014
 
Property Management Fees
For the Six Months Ended June 30, 2014
 
Total
Spring Hill
 
$
75,755

 
$
(19,595
)
 
$
56,160

Harrison Place
 
203,639

 
(30,724
)
 
172,915

Club at Summer Valley
 

 
(39,001
)
 
(39,001
)
Terrace Cove
 

 
(42,229
)
 
(42,229
)
 
 
$
279,394

 
$
(131,549
)
 
$
147,845

(e)
Represents additional real estate taxes and insurance expense (not reflected in the historical operations of the previous owners or the Company) for the six months ended June 30, 2014, based on management estimates as if the Portfolio Properties were acquired on January 1, 2013, as follows:
Portfolio Properties
 
Real Estate
Taxes and Insurance
For the Six Months Ended June 30, 2014
Spring Hill
 
$
38,398

Harrison Place
 
181,267

Club at Summer Valley
 
74,755

Terrace Cove
 
84,956

 
 
$
379,376


F-13




(f)
Represents adjustments made to fees to affiliates for the six months ended June 30, 2014 to include the fees to affiliates (not reflected in the historical statement of operations of the Company) for the six months ended June 30, 2014 that would be due to affiliates or excluded from fees to affiliates (reflected in the historical statements of operations of the Company) that would not have been due to affiliates for the six months ended June 30, 2014 had the Portfolio Properties been acquired on January 1, 2013. The pro forma total fees to affiliates are as follows:
Acquisition Fees: Acquisition fees are payable based on 1.0% of the sum of the acquisition costs of the Portfolio Properties, including the acquisition expenses (with the total acquisition fees and acquisition expenses payable to the Company’s external advisor, Steadfast Apartment Advisor, LLC (“Advisor”) being subject to a limitation of 4.5% of the contract purchase price), as set out in the Advisory Agreement by and among the Company, its operating partnership and Advisor (“Advisory Agreement”).
Loan Coordination Fees: Loan coordination fees are payable based on 1.0% of the amount of new debt financed or outstanding debt assumed, as set out in the Advisory Agreement.
Investment Management Fees: Investment management fees are payable to the Advisor, based on an annual fee, payable monthly, of 0.5% of the acquisition cost of the Portfolio Properties, including acquisition fees, acquisition expenses and any debt attributable to the Portfolio Properties, as set out in the Advisory Agreement.
Property Management Fees: Property management fees are payable to the Company's affiliated property manager based on 3.0% of the monthly gross revenues of the Portfolio Properties, as set out in the Property Management Agreement for each property.
The acquisition fees and loan coordination fees that would not have been payable to the Advisor, investment management fees that would have been payable to the Advisor and the property management fees that would have been payable to the affiliated property managers were:
 
 
For the Six Months Ended June 30, 2014
Portfolio Properties
 
Acquisition Fees
 
Loan Coordination Fees
 
Investment
Management
Fees
 
Property
Management
Fees
 
Total
Spring Hill
 
$
(145,167
)
 
$
(99,400
)
 
$
28,916

 
$
20,449

 
$
(195,202
)
Harrison Place
 
(295,919
)
 
(195,300
)
 
74,720

 
45,538

 
(370,961
)
Club at Summer Valley
 

 

 
58,517

 
39,178

 
97,695

Terrace Cove
 

 

 
64,384

 
42,482

 
106,866

 
 
$
(441,086
)
 
$
(294,700
)
 
$
226,537

 
$
147,647

 
$
(361,602
)
(g)
Represents depreciation and amortization expense (not reflected in the historical statement of operations of the Company) for the six months ended June 30, 2014, as if the Portfolio Properties were acquired on January 1, 2013, as follows:
Portfolio Properties
 
Depreciation and Amortization Expense
For the Six Months Ended June 30, 2014
Spring Hill
 
$
187,029

Harrison Place
 
482,446

Club at Summer Valley
 
313,696

Terrace Cove
 
339,318

 
 
$
1,322,489

Depreciation expense on the purchase price of building and furniture and fixtures is recognized using the straight-line method over an estimated useful life of 27.5 years and 5 years, respectively. Depreciation expense on the purchase price of tenant improvements is recognized using the straight-line method over the life of the lease. Amortization expense on lease intangible costs is recognized using the straight-line method over the life of the lease.

F-14




(h)
Represents interest expense (not reflected in the historical statement of operations of the Company) for the six months ended June 30, 2014, as if the borrowings attributable to the Portfolio Properties were borrowed on January 1, 2013, as follows:
Portfolio Properties
 
Initial Mortgage Debt
 
Interest Expense
For the Six Months Ended June 30, 2014
Spring Hill
 
$
9,940,000

 
$
89,432

Harrison Place
 
19,530,000

 
207,678

Club at Summer Valley
 
15,050,000

 
172,474

Terrace Cove
 
16,450,000

 
188,518

 
 
$
60,970,000

 
$
658,102

(i)
Represents actual acquisition costs incurred by the Company and reflected in the historical statement of operations for the six months ended June 30, 2014 that would not have been incurred during this period if the Portfolio Properties were acquired on January 1, 2013, as follows:
Portfolio Properties
 
Acquisition Costs
For the Six Months Ended June 30, 2014
Spring Hill
 
$
226,670

Harrison Place
 
189,862

Club at Summer Valley
 

Terrace Cove
 

 
 
$
416,532

(j)
Represents the actual number of shares of the Company’s common stock outstanding as of September 30, 2014. The calculation assumes that these shares were issued and the related proceeds were raised on January 1, 2013.

F-15



STEADFAST APARTMENT REIT, INC.
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
For the Year Ended December 31, 2013

 
Steadfast Apartment REIT, Inc. Historical (a)
 
Spring Hill (b)
 
Harrison Place (b)
 
Club at Summer Valley (b)
 
Terrace Cove (b)
 
Pro Forma Adjustments
 
Pro Forma Total
 
Revenues:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rental income
$

 
$
1,582,389

 
$
2,818,939

 
$
2,311,558

 
$
2,541,252

 
$

 
$
9,254,138

 
Tenant reimbursements and other

 
120,779

 
255,765

 
217,136

 
206,661

 

 
800,341

 
Total revenues

 
1,703,168

 
3,074,704

 
2,528,694

 
2,747,913

 

 
10,054,479

 
Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating, maintenance and management

 
791,493

 
1,011,043

 
876,658

 
961,996

 
(358,307
)
(c)
3,282,883

 
Real estate taxes and insurance

 
157,210

 
532,250

 
385,460

 
413,023

 
514,008

(d)
2,001,951

 
Fees to affiliates

 

 

 

 

 
2,307,704

(e)
2,307,704

 
Depreciation and amortization

 

 

 

 

 
5,059,306

(f)
5,059,306

 
Interest expense

 

 

 

 

 
1,389,586

(g)
1,389,586

 
General and administrative expenses
86,644

 
8,696

 
13,657

 
4,999

 
3,286

 

 
117,282

 
Acquisition costs

 

 

 

 

 
801,012

(h)
801,012

 
Total expenses
86,644

 
957,399

 
1,556,950

 
1,267,117

 
1,378,305

 
9,713,309

 
14,959,724

 
Net (loss) income
$
(86,644
)
 
$
745,769

 
$
1,517,754

 
$
1,261,577

 
$
1,369,608

 
$
(9,713,309
)
 
$
(4,905,245
)
 
Net loss per common share – basic and diluted
$
(7.06
)
 
 
 
 
 
 
 
 
 
 
 
$
(1.18
)
 
Weighted-average number of common shares outstanding, basic and diluted
12,273

 
 
 
 
 
 
 
 
 
 
 
4,167,638

(i)



F-16



STEADFAST APARTMENT REIT, INC.
NOTES TO UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
For the Year Ended December 31, 2013
(a)
Historical financial information for the year ended December 31, 2013 derived from the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2013.
(b)
Represents the historical operations of the Portfolio Properties under the previous owners as reported in the Statements of Revenues Over Certain Operating Expenses.
(c)
Represents the exclusion of the following property management fees recorded in the historical operations of the previous owners that are not comparable to the expense the Company expects to incur in the future operations of the Portfolio Properties:
Portfolio Properties
 
Property Management Fees
For the Year Ended December 31, 2013
Spring Hill
 
$
79,046

Harrison Place
 
122,314

Club at Summer Valley
 
75,255

Terrace Cove
 
81,692

 
 
$
358,307

(d)
Represents additional real estate taxes and insurance expense (not reflected in the historical operations of the previous owners) for the year ended December 31, 2013, based on management estimates as if the Portfolio Properties were acquired on January 1, 2013, as follows:
Portfolio Properties
 
Real Estate
Taxes and Insurance
For the Year Ended December 31, 2013
Spring Hill
 
$
51,717

Harrison Place
 
107,828

Club at Summer Valley
 
165,191

Terrace Cove
 
189,272

 
 
$
514,008

(e)
Represents fees to affiliates (not reflected in the historical statement of operations of the Company) for the year ended December 31, 2013 that would be due to affiliates had the Portfolio Properties been acquired on January 1, 2013. The pro forma total fees to affiliates are as follows:
Acquisition Fees: Acquisition fees are payable based on 1.0% of the sum of the acquisition costs of the Portfolio Properties, including acquisition expenses (with the total acquisition fees and acquisition expenses payable to the Advisor being subject to a limitation of 4.5% of the contract purchase price), as set out in the Advisory Agreement.
Loan Coordination Fees: Loan coordination fees are payable based on 1.0% of the amount of new debt financed or outstanding debt assumed, as set out in the Advisory Agreement.
Investment Management Fees: Investment management fees are payable to the Advisor based on an annual fee, payable monthly, of 0.5% of the acquisition cost of the Portfolio Properties, including acquisition fees, acquisition expenses and any debt attributable to the Portfolio Properties, as set out in the Advisory Agreement.
Property Management Fees: Property management fees are payable to the Company's affiliated property manager based on 3.0% of the monthly gross revenues of the Portfolio Properties, as set out in the Property Management Agreement for each property.

F-17



The acquisition fees, investment management fees, and loan coordination fees that would be due to the Advisor and the property management fees that would be due to the affiliated property managers had the Portfolio Properties been acquired on January 1, 2013 were:
 
 
For the Year Ended December 31, 2013
Portfolio Properties
 
Acquisition
Fees
 
Loan Coordination Fees
 
Investment Management Fees
 
Property
Management
Fees
 
Total
Spring Hill
 
$
145,167

 
$
99,400

 
$
73,309

 
$
51,095

 
$
368,971

Harrison Place
 
295,919

 
195,300

 
149,439

 
92,241

 
732,899

Club at Summer Valley
 
231,751

 
150,500

 
117,034

 
75,861

 
575,146

Terrace Cove
 
254,984

 
164,500

 
128,767

 
82,437

 
630,688

 
 
$
927,821

 
$
609,700

 
$
468,549

 
$
301,634

 
$
2,307,704

(f)
Represents depreciation and amortization expense (not reflected in the historical statement of operations of the Company) for the year ended December 31, 2013, as if the Portfolio Properties were acquired on January 1, 2013, as follows:
Portfolio Properties
 
Depreciation and Amortization Expense
For the Year Ended December 31, 2013
Spring Hill
 
$
893,778

Harrison Place
 
1,452,647

Club at Summer Valley
 
1,291,171

Terrace Cove
 
1,421,710

 
 
$
5,059,306

Depreciation expense on the purchase price of building and furniture and fixtures is recognized using the straight-line method over an estimated useful life of 27.5 years and 5 years, respectively. Depreciation expense on the purchase price of tenant improvements is recognized using the straight-line method over the life of the lease. Amortization expense on lease intangible costs is recognized using the straight-line method over the life of the lease.
(g)
Represents interest expense (not reflected in the historical statement of operations of the Company) for the year ended December 31, 2013, as if the borrowings attributable to the Portfolio Properties were borrowed on January 1, 2013, as follows:
Portfolio Properties
 
Initial Mortgage Debt
 
Interest Expense
For the Year Ended December 31, 2013
Spring Hill
 
$
9,940,000

 
$
244,595

Harrison Place
 
19,530,000

 
421,094

Club at Summer Valley
 
15,050,000

 
345,862

Terrace Cove
 
16,450,000

 
378,035

 
 
$
60,970,000

 
$
1,389,586


F-18




(h)
Represents adjustments made to acquisition costs (not reflected in the historical statement of operations of the Company) for the year ended December 31, 2013, to include those amounts incurred by the Company that were attributable to the Portfolio Properties, as if the assets had been acquired on January 1, 2013.
Portfolio Properties
 
Acquisition Costs
For the Year Ended December 31, 2013
Spring Hill
 
$
226,670

Harrison Place
 
189,862

Club at Summer Valley
 
189,711

Terrace Cove
 
194,769

 
 
$
801,012

(i)
Represents the actual number of shares of the Company’s common stock outstanding as of September 30, 2014. The calculation assumes that these shares were issued and the related proceeds were raised on January 1, 2013.

F-19



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 hereunto duly authorized.
 
 
STEADFAST APARTMENT REIT, INC.
 
 
 
 
Date:
November 12, 2014
By:
/s/ Kevin J. Keating
 
 
 
Kevin J. Keating
 
 
 
Principal Financial and Accounting Officer