ACQUISITIONS

6 Months Ended

Jun. 30, 2020

ACQUISITIONS

ACQUISITIONS

NOTE 16 – ACQUISITIONS

The Trust closed on the following acquisitions during the six months ended June 30, 2020.

Date	Property Name	Location	Property Type	Units/ Square Footage/ Acres		Acquisition Price
1/12/20	Wolf Creek	Fargo, ND	Apartment complex	54 units	$	4,968
1/31/20	Columbia Park Village	Grand Forks, ND	Apartment complex	12 units		612
3/1/20	Belmont East & West	Bismarck, ND	Apartment complex	26 units		1,494
3/1/20	Eastbrook	Bismarck, ND	Apartment complex	24 units		1,296
3/1/20	Hawn	Fargo, ND	Apartment complex	48 units		2,400
3/1/20	Rosser	Bismarck, ND	Apartment complex	24 units		1,296
					$	12,066
						(a)

(a) Acquisition price does not include capitalized closing costs and adjustments totaling $636, special assessments assumed and capitalized of $168 or additional costs incurred due to a difference in unit price of $26.

Total consideration given for acquisitions through June 30, 2020 was completed through issuing approximately 469,000 limited partnership units of the operating partnership valued at $19.25 per unit for an aggregate consideration of approximately $9,031, assumed liabilities of $265, a mortgage of $3,225 and cash of $375. The value of units issued in exchange for property is determined through a value established annually by our Board of Trustees, and reflects the fair value at the time of issuance.

The Trust had no acquisitions during the six months ended June 30, 2019.

The following table summarizes the acquisition date fair values, before prorations, the Trust recorded in conjunction with the acquisitions discussed above:

	Six Months Ended
	June 30,
		2020		2019
Land, building, tenant improvements and FF&E	$	12,896	$	-
Other liabilities		(265)		-
Net assets acquired		12,631		-
Equity/limited partnership unit consideration		(9,031)		-
New loans		(3,225)		-
Net cash consideration	$	375	$	-

Estimated Value of Units/Shares

The Board of Trustees determined an estimate of fair value for the trust shares in the first six months of 2020 and 2019.  In addition, the Board of Trustees, acting as general partner for the operating partnership, determined an estimate of fair value for the limited partnership units in the first six months of 2020 and 2019.  In determining this value, the Board relied upon their experience with, and knowledge about, the Trust’s real estate portfolio and debt obligations.  The Board typically determines the share price on an annual basis. The trustees determine the price in their discretion and use data points to guide their determination which is typically based on a consensus of opinion. In addition, the Board considers how the price chosen will affect existing share and unit values, redemption prices, dividend coverage ratios, yield percentages, dividend reinvestment factors, and future UPREIT transactions, among other considerations and information. The fair value was not determined based on, nor intended to comply with, fair value standards under US GAAP and the value may not be indicative of the price we would get for selling our assets in their current condition.

The Board determined the fair value of the shares and limited partnership units to be $19.25 per share/unit effective January 1, 2020. The Board determined the fair value of the shares and limited partnership units to be $19.00 per share/unit effective January 1, 2019.

Determination of price is a matter within the Board’s sole discretion. The Trust does not determine price based on any rote formula or specific factors. At this time, no shares are held in street name accounts and the Trust is not subject to FINRA’s specific pricing requirements set out in Rule 2340 or otherwise. Thus, the Trust does not employ any specific valuation methodology or formula. Rather, the Board looks to available data and information, which is often adjusted and weighted to comport more closely with the assets held by the Trust at the time of valuation. The principal valuation methodology utilized is the NAV calculation/direct capitalization method. The information made available to the Board is assembled by the Trust’s Advisor.

As with any valuation methodology, the methodologies utilized by the Board in reaching an estimate of the value of the shares and limited partnership units are based upon a number of estimates, assumptions, judgments or opinions that may, or may not, prove to be correct.  The use of different estimates, assumptions, judgments, or opinions would likely have resulted in significantly different estimates of the value of the shares and limited partnership units.  In addition, the Board’s estimate of share and limited partnership unit value is not based on the book values of our real estate, as determined by GAAP, as our book value for most real estate is based on the amortized cost of the property, subject to certain adjustments.

Furthermore, in reaching an estimate of the value of the shares and limited partnership units, the Board applied a liquidity discount to one valuation scenario in order to reflect the fact that the shares and limited partnership units are not currently traded on a national securities exchange and did not consider: a discount for debt that may include a prepayment obligation or a provision precluding assumption of the debt by a third party or the costs that are likely to be incurred in connection with an appropriate exit strategy, whether that strategy might be a listing of the limited partnership units or common shares on a national securities exchange or a merger or sale of our portfolio.