Attached files
| file | filename |
|---|---|
| EX-10.3 - EXHIBIT 10.3 - Steadfast Apartment REIT III, Inc. | ex103sugarmill_assgnofpsa.htm |
| EX-10.4 - EXHIBIT 10.4 - Steadfast Apartment REIT III, Inc. | ex104sugarmill_mgmtagmt.htm |
| EX-10.8 - EXHIBIT 10.8 - Steadfast Apartment REIT III, Inc. | ex108sugarmill_securityinst.htm |
| EX-10.5 - EXHIBIT 10.5 - Steadfast Apartment REIT III, Inc. | ex105sugarmill_constmgmtag.htm |
| EX-10.9 - EXHIBIT 10.9 - Steadfast Apartment REIT III, Inc. | ex109sugarmill_assignofmgm.htm |
| EX-99.1 - EXHIBIT 99.1 - Steadfast Apartment REIT III, Inc. | ex991pr27-sugarmillv212x11.htm |
| EX-10.10 - EXHIBIT 10.10 - Steadfast Apartment REIT III, Inc. | ex1010sugarmill_guaranty.htm |
| EX-10.7 - EXHIBIT 10.7 - Steadfast Apartment REIT III, Inc. | ex107sugarmill_note.htm |
| EX-10.6 - EXHIBIT 10.6 - Steadfast Apartment REIT III, Inc. | ex106sugarmill_loanagreeme.htm |
| EX-10.2 - EXHIBIT 10.2 - Steadfast Apartment REIT III, Inc. | ex102sugarmill_reinstatmen.htm |
| EX-10.1 - EXHIBIT 10.1 - Steadfast Apartment REIT III, Inc. | ex101sugarmill_psa.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
December 7, 2017
Steadfast Apartment REIT III, Inc. | |||||||||
(Exact Name of Registrant as Specified in Its Charter) | |||||||||
Maryland | 000-55772 | 47-4871012 | |||||||
(State or other jurisdiction of incorporation or organization) | (Commission File Number) | (I.R.S. Employer Identification No.) | |||||||
18100 Von Karman Avenue, Suite 500 Irvine, California 92612 (Address of principal executive offices) | |||||||||
(949) 852-0700 | |||||||||
(Registrant’s telephone number, including area code) | |||||||||
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:
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)) | ||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
| ||||
Emerging growth company x | ||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. x | ||||
Item 1.01 | Entry into a Material Definitive Agreement. |
The information set forth under Items 2.01 and 2.03 of this Current Report on Form 8-K is hereby incorporated by reference into this Item 1.01.
Item 2.01 | Completion of Acquisition or Disposition of Assets. |
Acquisition of Sugar Mill Apartments
On December 7, 2017 (the “Closing Date”), Steadfast Apartment REIT III, Inc. (the “Company”), through STAR III Sugar Mill, LLC (“STAR III Sugar Mill”), an indirect wholly-owned subsidiary of the Company, acquired from an unaffiliated third-party seller a fee simple interest in a 244-unit multifamily residential community located in Lawrenceville, Georgia, commonly known as Sugar Mill Apartments (the “Sugar Mill Property”). On the Closing Date, Steadfast Asset Holdings, Inc., an affiliate of the Advisor (defined below), assigned to STAR III Sugar Mill the Purchase and Sale Agreement, dated October 23, 2017, as reinstated and amended, for the purchase of the Sugar Mill Property.
STAR III Sugar Mill acquired the Sugar Mill Property for a contract purchase price of $35,275,000, exclusive of closing costs. STAR III Sugar Mill financed the acquisition of the Sugar Mill Property with a combination of (1) proceeds from the Company’s ongoing public offering and (2) a loan in the aggregate principal amount of $24,797,000 (the “Sugar Mill Loan”) from Walker & Dunlop, LLC (the “Lender”), pursuant to the requirements of the Freddie Mac Capital Markets Execution Program, as evidenced by the Multifamily Loan and Security Agreement (the “Loan Agreement”) and the Multifamily Note (the “Note” and, together with the Loan Agreement, the Mortgage, and the Guaranty, each dated as of the Closing Date and described in Item 2.03 below, the “Loan Documents”). For additional information on the terms of the Sugar Mill Loan, see Item 2.03 below.
Completed in 1997, the Sugar Mill Property includes 15 two-, three- and four-story buildings with one-, two- and three-bedroom apartment homes that average 1,094 square feet. In-place rents average $1,073 per month and the community currently is 97.54 percent occupied. Sugar Mill Property residents enjoy gated access, a clubhouse and business center, fitness center, swimming pool and spa, gas BBQ grills, tennis courts, a playground, detached garages, boat and RV storage, a car wash and dog park. Every apartment home in the community features nine-foot ceilings, fully equipped kitchens, private patios or balconies, ceiling fans, fireplaces, entry alert systems and in-unit washer/dryers.
Steadfast Apartment Advisor III, LLC (the “Advisor”) earned an acquisition fee of approximately $769,000 in connection with the acquisition of the Sugar Mill Property. The material terms of the agreements described above are qualified in their entirety by the agreements attached as Exhibits 10.1, 10.2 and 10.3 to this Current Report on Form 8-K and incorporated herein by reference.
Management of the Sugar Mill Property
On the Closing Date, STAR III Sugar Mill and Steadfast Management Company, Inc. (“Steadfast Management”), an affiliate of the Advisor, entered into a Property Management Agreement (the “Management Agreement”) pursuant to which Steadfast Management serves as the exclusive manager and leasing agent of the Sugar Mill Property. STAR III Sugar Mill pays Steadfast Management a monthly management fee in an amount equal to 3% of the Sugar Mill Property’s gross collections at the property for such month. In addition, the property manager may earn an incentive management fee equal to 1% of gross collections based on performance metrics as described in the Management Agreement.
The Management Agreement has an initial term that expires on December 7, 2018, and will continue thereafter on a month-to-month basis unless either party gives 60-days’ prior written notice of its desire to terminate the Management Agreement. STAR III Sugar Mill may terminate the Management Agreement at any time upon 30-days prior written notice to Steadfast Management in the event of the gross negligence, willful misconduct or bad acts of Steadfast Management or any of Steadfast Management’s employees. Either party may terminate the Management Agreement due to a material breach of the other party’s obligations under the Management Agreement that remains uncured for 30 days after notification of such breach. In the event of a termination of the Management Agreement by STAR III Sugar Mill without cause, STAR III Sugar Mill will pay a termination fee to Steadfast Management equal to three months of the monthly management fee based on the average gross collections for the three months preceding the date of termination.
On the Closing Date, STAR III Sugar Mill also entered into a Construction Management Services Agreement (the “Construction Services Agreement”) with Pacific Coast Land & Construction, Inc. (“PCL”), an affiliate of the Advisor. Pursuant to the Construction Services Agreement, PCL will provide construction management services with respect to capital improvements and renovations to be undertaken from time to time at the Sugar Mill Property for which it will be paid a construction management fee in an amount equal to 6% of the total cost of the improvements and revitalization (as defined in the Construction Services Agreement). In addition to the construction management fee, if PCL provides additional staffing for an improvement or revitalization, STAR III Sugar Mill will reimburse PCL for all costs associated with such staffing. The Construction Services Agreement may be terminated by either party with 30-days’ prior written notice to the other party.
The material terms of the agreements described above are qualified in their entirety by the agreements attached as Exhibits 10.4 and 10.5 to this Current Report on Form 8-K and incorporated herein by reference.
Item 2.03 | Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. |
In connection with the acquisition of the Sugar Mill Property, STAR III Sugar Mill borrowed $24,797,000 from the Lender pursuant to the Loan Documents. The Sugar Mill Loan has an 84-month term with a maturity date of January 1, 2025 (the “Maturity Date”). STAR III Sugar Mill paid a loan origination fee of $150,000 to the Lender in connection with the Sugar Mill Loan.
Interest on the outstanding principal balance of the Sugar Mill Loan accrues at an annual rate of 3.92% and a monthly interest payment is due and payable beginning February 1, 2018. The amount of each monthly installment of the interest payment will equal approximately $2,700 multiplied by the number of days in the month prior to the due date. Beginning February 1, 2021, and continuing until the Maturity Date, a monthly payment of interest and principal of approximately $117,244 is due and payable on the first day of each month, as further described in the Note. The entire outstanding principal balance and any accrued and unpaid interest on the Sugar Mill Loan is due and payable in full on the Maturity Date. STAR III Sugar Mill may voluntarily prepay the Sugar Mill Loan and related sums due to the Lender following the first anniversary of the Sugar Mill Loan, provided that STAR III Sugar Mill provides the Lender with prior notice of such prepayment and pays a prepayment fee, all in accordance with the terms of the Loan Agreement.
The performance of the obligations of STAR III Sugar Mill under the Sugar Mill Loan is secured by a Multifamily Deed to Secure Debt, Assignment of Rents and Security Agreement with respect to the Sugar Mill Property (the “Mortgage”). Additionally, pursuant to an Assignment of Management Agreement and Subordination of Management Fees, dated as of the Closing Date, STAR III Sugar Mill will assign all of its rights under the Management Agreement to the Lender upon an event of default under any of the Loan Documents. The Company entered into a Guaranty (the “Guaranty”) in connection with the Sugar Mill Loan. The Company absolutely, unconditionally and irrevocably guarantees to the Lender the full and prompt payment and performance when due of all amounts for which STAR III Sugar Mill is personally liable under the Loan Documents, in addition to all costs and expenses incurred by the Lender in enforcing such Guaranty.
The material terms of the agreements described above are qualified in their entirety by the agreements attached as Exhibits 10.6, 10.7, 10.8, 10.9 and 10.10 to this Current Report on Form 8-K and incorporated herein by reference.
Item 7.01 | Regulation FD Disclosure. |
On December 12, 2017, the Company distributed a press release announcing the acquisition of the Sugar Mill Property. The full text of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated by reference into this Item 7.01.
The information furnished under Item 7.01 of this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit | Description | |||
10.1 | ||||
10.2 | ||||
10.3 | ||||
10.4 | ||||
10.5 | ||||
10.6 | ||||
10.7 | ||||
10.8 | ||||
10.9 | ||||
10.10 | ||||
99.1 | ||||
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 III, INC. | |||
Date: | December 12, 2017 | By: | /s/ Kevin J. Keating______________ |
Kevin J. Keating | |||
Chief Financial Officer | |||