ITEM 3.02
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UNREGISTERED SALES OF EQUITY SECURITIES.
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Securities for Services
Quarterly Reimbursement under Administrative Services Agreement
On October 31, 2017,
Bluerock Residential Growth REIT, Inc. (the “Company”) entered into an Administrative Services Agreement (the “Administrative
Services Agreement”) with Bluerock Residential Holdings, L.P. (the “Operating Partnership”), Bluerock TRS Holdings,
LLC, a Delaware limited liability company and wholly-owned subsidiary of the Operating Partnership (the “OP Sub”),
and Bluerock REIT Operator, LLC, a Delaware limited liability company and wholly-owned subsidiary of the Company (the “REIT
Operator,” and collectively with the Company, the Operating Partnership and the OP Sub, the “Company Parties,”
and each, a “Company Party”), and Bluerock Real Estate, L.L.C., a Delaware limited liability company (“BRRE”)
and its affiliate, Bluerock Real Estate Holdings, LLC, a Delaware limited liability company (“BREH,” and together with
BRRE, the “BRRE Entities”). Pursuant to the Administrative Services Agreement, the BRRE Entities provide the Company
with certain human resources, investor relations, marketing, legal and other administrative services (the “Services”)
to facilitate the transition of the Company’s management of its operations, and enable the Company to benefit from operational
efficiencies created by access to such Services, following the internalization of the Company’s management. Under the Administrative
Services Agreement, the BRRE Entities are each entitled to quarterly reimbursement by the Company Parties for all costs incurred
in performing the Services (each, a “Quarterly ASA Reimbursement”), the calculation of which is reviewed by the Company’s
board of directors (the “Board”), and which is payable either in cash or in long-term incentive plan units of
the Operating Partnership (“LTIP Units”), at the election of the Board.
On October 31, 2019,
the BRRE Entities provided the Board with the calculation of the Quarterly ASA Reimbursement for the three months ended September
30, 2019. The Board, including its independent directors, having reviewed such calculation, authorized and approved payment of
the Quarterly ASA Reimbursement for the three months ended September 30, 2019 entirely in LTIP Units.
The Board, including
its independent directors, further approved the issuance by the Operating Partnership to the BRRE Entities, on November 7, 2019
(five business days following October 31, 2019) (the “Issuance Date”), of a number of LTIP Units equal to (i) the dollar
amount of the portion of the Quarterly ASA Reimbursement payable in such LTIP Units (calculated by the BRRE Entities as $910,115),
divided by (ii) the volume weighted average price per share of the Company’s Class A common stock, $0.01 par value per share,
on the NYSE American on the twenty (20) trading days prior to the Issuance Date (the “Q3 ASA Reimbursement LTIP Units”),
in payment of the Quarterly ASA Reimbursement.
On the Issuance Date
of November 7, 2019, the BRRE Entities calculated, as set forth in the Administrative Services Agreement, that 75,513 Q3 ASA Reimbursement
LTIP Units would be issued to the BRRE Entities in payment of the Quarterly ASA Reimbursement, and the Operating Partnership issued
75,513 Q3 ASA Reimbursement LTIP Units to the BRRE Entities in payment thereof.
The Board authorized
the Company, as the General Partner of the Operating Partnership, to cause the Operating Partnership to issue the Q3 ASA Reimbursement
LTIP Units to the BRRE Entities in reliance upon exemptions from registration provided by Section 4(a)(2) of the Securities Act
of 1933 and Regulation D. Each of the BRRE Entities has a substantive, pre-existing relationship with the Company and is an “accredited
investor” as defined in Regulation D.
The Q3 ASA Reimbursement
LTIP Units shall be fully vested upon issuance, and may convert to OP Units upon reaching capital account equivalency with the
OP Units held by the Company, and may then be settled in shares of the Company’s Class A common stock. The BRRE Entities
will be entitled to receive “distribution equivalents” with respect to the Q3 ASA Reimbursement LTIP Units at the time
distributions are paid to the holders of the Company’s Class A common stock.
Quarterly Reimbursement under Leasehold Cost-Sharing Agreement
On February 15, 2019,
the Company entered into a Leasehold Cost-Sharing Agreement (the “Cost-Sharing Agreement”) with the BRRE Entities with
respect to the corporate space subleased by the Company and the BRRE Entities (the “Sublease”) located at 1345 Avenue
of the Americas, New York, New York (the “NY Premises”), which serves as the Company’s headquarters. The Sublease
permits the Company, the BRRE Entities and certain of their respective subsidiaries and/or affiliates to share occupancy of the
NY Premises. The Cost-Sharing Agreement provides for the allocation and sharing between the Company and the BRRE Entities of the
costs under the Sublease, including costs associated with tenant improvements (collectively, “Sublease Costs”).
Pursuant to the Cost-Sharing
Agreement, the BRRE Entities are entitled to quarterly reimbursement by the Company for the Company’s share of Sublease Costs
attributable to such quarter (each, a “Quarterly CSA Reimbursement”), the calculation of which is reviewed by the Board,
and which is payable either in cash or in LTIP Units, at the election of the Board.
On October 31, 2019,
the BRRE Entities provided the Board with the calculation of the Quarterly CSA Reimbursement for the three months ended September
30, 2019. The Board, including its independent directors, having reviewed such calculation, authorized and approved payment of
the Quarterly CSA Reimbursement for the three months ended September 30, 2019 entirely in LTIP Units.
The Board, including
its independent directors, further approved the issuance by the Operating Partnership to the BRRE Entities, on the Issuance Date
of November 7, 2019, of a number of LTIP Units equal to (i) the dollar amount of the portion of the Quarterly CSA Reimbursement
payable in such LTIP Units (calculated by the BRRE Entities as $737,895), divided by (ii) the volume weighted average price per
share of the Company’s Class A common stock, $0.01 par value per share, on the NYSE American on the twenty (20) trading days
prior to the Issuance Date (the “Q3 CSA Reimbursement LTIP Units”), in payment of the Quarterly CSA Reimbursement.
On the Issuance Date
of November 7, 2019, the BRRE Entities calculated, as set forth in the Cost-Sharing Agreement, that 61,224 Q3 CSA Reimbursement
LTIP Units would be issued to the BRRE Entities in payment of the Quarterly CSA Reimbursement, and the Operating Partnership issued
61,224 Q3 CSA Reimbursement LTIP Units to the BRRE Entities in payment thereof.
The Board authorized
the Company, as the General Partner of the Operating Partnership, to cause the Operating Partnership to issue the Q3 CSA Reimbursement
LTIP Units to the BRRE Entities in reliance upon exemptions from registration provided by Section 4(a)(2) of the Securities Act
of 1933 and Regulation D. Each of the BRRE Entities has a substantive, pre-existing relationship with the Company and is an “accredited
investor” as defined in Regulation D.
The Q3 CSA Reimbursement
LTIP Units shall be fully vested upon issuance, and may convert to OP Units upon reaching capital account equivalency with the
OP Units held by the Company, and may then be settled in shares of the Company’s Class A common stock. The BRRE Entities
will be entitled to receive “distribution equivalents” with respect to the Q3 CSA Reimbursement LTIP Units at the time
distributions are paid to the holders of the Company’s Class A common stock.