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): September 14, 2018
RESOURCE APARTMENT REIT III, Inc.
(Exact name of registrant as specified in its charter)
Commission file number: 000-55923
Maryland (State or other jurisdiction of incorporation or organization) | 47-4608249 (I.R.S. Employer Identification No.) | |
1845 Walnut Street, 18th Floor, Philadelphia, PA, 19103 (Address of principal executive offices) (Zip code) | ||
(215) 231-7050 (Registrant's telephone number, including area code) | ||
(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 following obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the securities Act (17CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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 ☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒
Item 1.01. Entry into a Material Definitive Agreement.
The information in this Report set forth under Item 2.03 regarding the financing arrangements into which Resource Apartment REIT III, Inc. (the “Company”) entered is incorporated herein by reference.
Item 2.01. Completion of Acquisition or Disposition of Assets.
On September 14, 2018, a wholly-owned subsidiary of the Company purchased a multifamily community located in Riverview, Florida (the “Florida Property”) from an unaffiliated seller. The Florida Property is an apartment community with 204 units and amenities, including a swimming pool, clubhouse, a fitness center, and a dog park. The Florida Property encompasses 205,471 rentable square feet. The Florida Property was constructed in 1990 and is currently 93% leased.
The contract purchase price of the Florida Property was $28.7 million, excluding closing costs. The Company funded the purchase price with proceeds from its ongoing public offering and proceeds from the mortgage loan discussed in Item 2.03 below. The Company believes that the Florida Property is suitable for its intended purpose and adequately insured; however, the Company intends to make certain renovations to the unit interiors of the Florida Property.
Item 2.03. Creation of Direct Financial Obligation or an Obligation Under an Of-Balance Sheet Arrangement of Registrant.
On September 14, 2018, the Company, through a wholly owned subsidiary, entered into a seven-year secured mortgage loan with CBRE Capital Markets, Inc., an unaffiliated lender, for borrowings of approximately $21.8 million secured by the Florida Property (the “Florida Property Mortgage Loan”). The Florida Property Mortgage Loan matures on October 1, 2025. The Florida Property Mortgage Loan bears interest at a fixed rate of 4.36%. Monthly payments are interest only for the first three years. Beginning on November 1, 2021, the Company will pay both principal and interest based on 30-year amortization. Any remaining principal balance and all accrued and unpaid interest and fees will be due at maturity.
After any lockout period (if any), prepayment in full is permitted on any scheduled payment date, provided a prepayment premium is paid. The prepayment premium will be based on the greater of (i) the yield maintenance prepayment formula and (ii) 1% of the amount of the principal being repaid, for any prepayment made prior to October 1, 2023. The prepayment premium will be 1% of the amount of principal being repaid for any prepayment made from (and including) October 1, 2023 through June 30, 2025. No prepayment premium is required after July 1, 2025. The non-recourse carveouts under the loan documents for the Florida Property Mortgage Loan are guaranteed by the Company.
Item 9.01. Financial Statements and Exhibits.
(a) Financial Statements.
Since it is impracticable to provide the required financial statements for the acquired real property described above at the time of this filing, and no financial statements (audited or unaudited) are available at this time, we hereby confirm that we intend to file the required financial statements on or before November 30, 2018, by amendment to this Form 8-K.
(b) Pro Forma Financial Information.
See Paragraph (a) above.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
RESOURCE APARTMENT REIT III, INC. | ||||
Dated: September 18, 2018 | By: | /s/ Alan F. Feldman | ||
Alan F. Feldman | ||||
Chief Executive Officer | ||||