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ITEM
1.01
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ENTRY
INTO A MATERIAL DEFINITIVE AGREEMENT.
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Entry into Purchase and Sale Agreements for Topaz Portfolio
On June 17, 2019,
Bluerock Residential Growth REIT, Inc., a Maryland corporation (the “Company”), through certain wholly-owned
subsidiaries of its operating partnership, Bluerock Residential Holdings, L.P., a Delaware limited partnership (the
“Operating Partnership”), entered into three separate purchase and sale agreements, and three separate amendments
thereto, the terms and conditions of which are substantially similar in all material respects, for the sale to unaffiliated
third parties of the Company’s interests in a portfolio of five assets.
Sorrel Phillips Creek
Ranch Apartments
On
June 17, 2019, the Company, through a wholly-owned subsidiary of the Operating Partnership, entered into a Purchase and Sale
Agreement and a First Amendment to Purchase and Sale Agreement (together, the “Sorrel Phillips Creek Ranch Purchase
Agreement”) with Carter-Haston Holdings, L.L.C., a Delaware limited liability company and unaffiliated third party (the
“Sorrel Phillips Creek Ranch Purchaser”), for the sale by BR Carroll Phillips Creek Ranch, LLC (“Sorrel
Phillips Creek Ranch Owner”) of its entire right, title and interest in the improved real property commonly known as
Sorrel Phillips Creek Ranch Apartments, located at 5050 FM423, Frisco, Denton County, Texas 75036 (the “Sorrel Phillips
Creek Ranch Property”) for a purchase price of $57,904,000, subject to certain prorations and adjustments typical in a
real estate transaction. The net proceeds to the Company, after payment of closing costs and fees, are expected to be
approximately $17,275 million. Closing on the sale of the Sorrel Phillips Creek Ranch Property is expected to occur on or
before July 15, 2019.
ARIUM Palms at World
Gateway Apartments
On
June 17, 2019, the Company, through a wholly-owned subsidiary of the Operating Partnership, entered into a Purchase and Sale Agreement
and a First Amendment to Purchase and Sale Agreement (together, the “ARIUM Palms Purchase Agreement”) with KRE Topaz
Portfolio Investor LLC, a Delaware limited liability company and an unaffiliated third party (the “ARIUM Palms Purchaser”),
for the sale by BR World Gateway, LLC (“ARIUM Palms Owner”) of its entire right, title and interest in the real property
commonly known as ARIUM Palms at World Gateway Apartments, located at 9000 Avenue Pointe Circle, Orlando, Orange County, Florida
32821 (the “ARIUM Palms Property”) for a purchase price of $46,846,000, subject to certain prorations and adjustments
typical in a real estate transaction. The net proceeds to the Company, after payment of closing costs and fees, are expected to
be approximately $15,332 million. Closing on the sale of the ARIUM Palms Property is expected to occur on or before August 29,
2019, conditioned on the prior closing of the sale of the Company’s interests in the Sorrel Phillips Creek Ranch Property,
the Sovereign Property, the Leigh House Property and the Preston View Property under the Sorrel Phillips Creek Ranch Purchase
Agreement and the Three Property Purchase Agreement, as such capitalized terms are elsewhere defined herein.
The Sovereign Apartments,
Leigh House Apartments and Preston View Apartments
On
June 17, 2019, the Company, through certain wholly-owned subsidiaries of the Operating Partnership, entered into a Purchase and
Sale Agreement and a First Amendment to Purchase and Sale Agreement (together, the “Three Property Purchase Agreement,”
and collectively, with the Sorrel Phillips Creek Ranch Purchase Agreement and the ARIUM Palms Purchase Agreement, the “Topaz
Purchase Agreements”) with KRE Topaz Portfolio Investor LLC, a Delaware limited liability company and an unaffiliated third
party (the “Three Property Purchaser”), for the sale (a) by BR Carroll Keller Crossing, LLC (“Sovereign Owner”)
of its entire right, title and interest in the improved real property commonly known as The Sovereign Apartments, located at 5301
North Tarrant Parkway, Fort Worth, Tarrant County, Texas 76244 (the “Sovereign Property”) for an allocated purchase
price of $53,000,000; (b) by BR-TBR Lake Boone NC Owner, LLC (“Leigh House Owner”) of its entire right, title and
interest in the improved real property commonly known as Leigh House Apartments, located at 2421 Landmark Drive, Raleigh, Wake
County, North Carolina 27607 (the “Leigh House Property”) for an allocated purchase price of $51,975,000; and (c)
by BR Preston View, LLC (“Preston View Owner”) of its entire right, title and interest in the improved real property
commonly known as Preston View Apartments, located at 1000 Stony Court, Morrisville, Wake County, North Carolina 27560 (the “Preston
View Property”) for an allocated purchase price of $64,000,000. The aggregate sale price for the Sovereign Property, the
Leigh House Property and the Preston View Property is $168,975,000, subject to certain prorations and adjustments typical in a
real estate transaction. The aggregate net proceeds to the Company, after payment of closing costs and fees, are expected to be
approximately $57,696 million. Closing on the sale of the Sovereign Property, the Leigh House Property and the Preston View Property
pursuant to the Three Property Purchase Agreement is expected to occur on or before July 15, 2019.
Collectively, the Sorrel
Phillips Creek Ranch Property, the ARIUM Palms Property, the Sovereign Property, the Leigh House Property and the Preston View
Property are referred to herein as the “Topaz Portfolio.”
There can be
no assurance the sale of each property in the Topaz Portfolio will occur, as each sale is subject to various contingencies
as set forth in the Topaz Purchase Agreements. The Topaz Purchase Agreements also provide for certain
representations, warranties and covenants made individually by each of Sorrel Phillips Creek Ranch Owner, ARIUM Palms Owner,
Sovereign Owner, Leigh House Owner and Preston View Owner (collectively, the “Topaz Sellers”), the breach of
which at or prior to closing could entitle the applicable purchaser to certain rights and remedies, including certain
termination rights. In each case, each Topaz Sellers’ representations and warranties survive the applicable closing for
a period of one hundred eighty (180) days.
Purchase
Agreements: Interlocks
Contemporaneously with
the entry by the Company into the Topaz Purchase Agreements, on June 17, 2019, BR Four Corners Orlando, DST, a Delaware statutory
trust and an affiliate of the Company (“Landings Owner”), entered into a Purchase and Sale Agreement, and that certain
First Amendment to Purchase and Sale Agreement (together, the “Landings Purchase Agreement”), with Carter-Haston Holdings,
L.L.C., a Delaware limited liability company and unaffiliated third party (the “Landings Purchaser”), for the sale
by Landings Owner of its entire right, title and interest in the improved real property commonly known as Landings at Four Corners
Apartments, located in Davenport, Polk County, Florida (the “Landings Property”) for a purchase price of $51,275,000,
subject to certain prorations and adjustments typical in a real estate transaction, for which closing is expected to occur on or
before July 15, 2019. Neither the Company nor any subsidiary thereof holds an ownership interest in the Landings Property, nor
will the Company or any subsidiary thereof receive proceeds from the sale of the Landings Property. Collectively, the Landings
Purchase Agreement and the Topaz Purchase Agreements are referred to herein as the “Purchase Agreements;”
the Landings Property and the Topaz Portfolio are collectively referred to herein as the “Properties,” and
each, a “Property;” and Landings Owner and the Topaz Sellers are collectively referred to herein as the
“Sellers,” and each, a “Seller.”
Each of the Purchase Agreements is subject to certain interlocking provisions under which certain events under one Purchase Agreement
may result in the automatic termination of each of the other Purchase Agreements (the “Automatic Termination
Provision”). Additionally, under very limited circumstances, certain events under one Purchase Agreement may
give the applicable purchaser the right to terminate that Purchase Agreement alone (or, as to the Three Property Purchase
Agreement, to terminate that agreement only with respect to the relevant Property), while the other Purchase
Agreements remain in place as to all other Properties (the “Partial Termination Provision”).
Circumstances Triggering Automatic Termination Provision.
Under each of the Purchase Agreements, if the applicable purchaser (or applicable Seller) has the right to terminate such Purchase Agreement under its terms, then the Automatic Termination Provision applies, and all of the other Purchase Agreements automatically terminate as well. The grounds for termination under each Purchase
Agreement are comparable to the grounds for termination commonly found in a purchase agreement for a single-asset,
non-portfolio commercial real estate sale: default by a party (i.e., all Purchase Agreements are cross-defaulted),
failure of a closing condition, material casualty or condemnation (provided that if the casualty or condemnation qualifies as
a “Special Casualty” or “Special Condemnation” (as such terms are defined below), the Partial
Termination Provision will also apply), or a significant title or survey matter arising during the term of the Purchase Agreement, which matter the applicable Seller refuses to cure or cannot cure.
In addition, each of the Purchase Agreements provides that, in the event a representation or warranty of a Seller becomes untrue,
inaccurate or incorrect such that the cost of cure will exceed $500,000 (as to any one, or all, of the Properties),
the applicable Seller will nonetheless have the right to cure and to cause the purchaser to close on all of the Properties. However, in the event the applicable Seller elects not to cure, the purchaser can elect to terminate the
applicable Purchase Agreement. Under the Automatic Termination Provision addressed above, such termination would have
the further effect of terminating each of the other Purchase Agreements. In such event, the purchaser would be entitled
to recovery of its earnest money deposit, but would only be entitled to recovery of its expenses (up to a maximum of $250,000)
if the relevant representation or warranty is materially untrue, inaccurate or incorrect when made by the Seller, or
becomes untrue, inaccurate or incorrect due to a breach by the Seller.
Circumstances Triggering
Partial Termination Provision.
The applicable purchaser may terminate only
the applicable Purchase Agreement (or, as to the Three Property Purchase Agreement, Three Property Purchaser may terminate
that agreement only with respect to the applicable Property) in the event of (a) any damage to the applicable Property or any portion thereof by fire or other casualty for which the cost of repairs is expected to exceed ten percent (10%)
of the allocated purchase price for such Property (a “Special Casualty”), or (b) any condemnation or conveyance
in lieu of condemnation for the applicable Property which (i) permanently and materially impairs the current use or
value of such Property; (ii) permanently and materially impairs access to such Property from public roads;
(iii) reduces the number or utility of parking spaces at such Property; or (iv) prohibits, as a matter of applicable
law, the rebuilding or repair of certain improvements as they currently exist at such Property, and for which either
(A) the cost of restoration is expected to exceed ten percent (10%) of the allocated purchase price for such Property,
or (B) results in a diminution in value of such Property by more than ten percent (10%) of the allocated purchase price
for such Property (a “Special Condemnation”). In the event of a Special Casualty or a Special Condemnation
at a Property, the Partial Termination Provision under the applicable Purchase Agreement shall apply.
The foregoing descriptions
of the Topaz Purchase Agreements are qualified in their entirety by reference to the Sorrel Phillips Creek Ranch Purchase Agreement,
the ARIUM Palms Purchase Agreement and the Three Property Purchase Agreement, in each case including the First Amendment thereto,
copies of which are filed as Exhibit 10.1, Exhibit 10.2, Exhibit 10.3, Exhibit 10.4, Exhibit 10.5 and Exhibit 10.6 to this Current
Report on Form 8-K and are incorporated herein by reference.
Certain statements included
in this Current Report on Form 8-K are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933,
as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking
statements above include, but are not limited to, matters identified as expectations and matters with respect to the future disposition
of the Topaz Portfolio. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result
of new information, future events or otherwise. For more information regarding risks and uncertainties that may affect the Company’s
future results, please review the Company’s filings with the Securities and Exchange Commission (the “SEC”).