Business Combinations and Sale of Joint Venture Equity Interests

9 Months Ended

Sep. 30, 2012

Business Combinations and Sale Of Joint Venture Equity Interests [Abstract]

Business Combination Disclosure [Text Block]

Note 3 – Business Combinations and Sale of Joint Venture Equity Interests

Consolidation of Previously Unconsolidated Properties

In June 2012, the Company entered into a Membership Interest Purchase and Sale Agreement pursuant to which the Company completed the purchase of an additional 1.0% joint venture equity interest in BR Springhouse Managing Member, LLC (the “Springhouse Managing Member JV Entity”) and an additional 2.0% joint venture equity interest in BR Creekside Managing Member, LLC (the “Creekside Managing Member JV Entity”), for an aggregate purchase price of $202,532, excluding closing costs. We recognized a gain of $3,450,460, net of acquisition costs, related to the revaluation of our equity interest for the difference between our carrying value in the unconsolidated real estate joint ventures and the fair value of our ownership interests at acquisition. The fair value was derived from the price terms of the purchase agreement, which were determined based on Member Appraisal Institute (“MAI”), independent appraisals dated May 2012. The purchases closed at the end of June 2012.

As a result of the closings of the interest purchases, our joint venture interests in the Springhouse Managing Member JV Entity increased from 50% to 51% and our joint venture interests in the Creekside Managing Member JV Entity increased from 33.33% to 35.33%. In addition, the related joint venture operating agreements were modified to grant the Company sole control of the operations of both properties.

Business Combination Summary Information

The following table presents certain additional information regarding our business combinations completed in June 2012. The amounts allocated to the major assets acquired and liabilities assumed are preliminary, and are as follows:

	Springhouse at Newport News		The Reserve at Creekside Village		Total
Land	$	6,500,000	$	1,920,000	$	8,420,000
Building and improvements		27,481,311		17,919,495		45,400,806
Furniture, fixtures and equipment		1,010,818		416,796		1,427,614
In-place lease value		818,879		452,467		1,271,346
Cash and cash equivalents		40,803		334,946		375,749
Restricted cash		272,999		373,004		646,003
Accounts receivables, prepaids and other		63,634		36,868		100,502
Total assets		36,188,444		21,453,576		57,642,020
Mortgage payable		26,482,194		15,002,061		41,484,255
Accounts payable		1,667		44,594		46,261
Other accrued liabilities		249,595		228,211		477,806
Due to affiliates		495		1,087		1,582
Noncontrolling interest		5,816,058		4,628,334		10,444,392
Net Assets	$	3,638,435	$	1,549,289	$	5,187,724

Sale of Joint Venture Equity Interests

In June 2012, the Company sold all of its joint venture interest in BR Meadowmont Managing Member, LLC (the “Meadowmont Managing Member JV Entity”), for an aggregate sale price of $3,113,581, excluding closing costs and a disposition fee paid to an affiliate of the Advisor of $136,216 and recognized a gain on the sale of $2,014,533, net of disposition fees.

After the business combination and sale of joint venture equity interests, the Company has two consolidated multifamily properties and two unconsolidated multifamily properties as of September 30, 2012.

The following unaudited consolidated pro forma information is presented as if we acquired the additional joint venture interest in the Springhouse Managing Member JV Entity and the Creekside Managing Member JV Entity and sold our joint venture interest in the BR Meadowmont Managing Member JV Entity on January 1, 2011. The information excludes activity that is non-recurring and not representative of our future activity, primarily acquisition and disposition fees of $216,376 for both the three and nine months ended September 30, 2012, respectively. There were no acquisition or disposition related expenses during the three or nine months ended September 30, 2011. We have also excluded the related gain on revaluation of equity, as well as the gain on the sale of the Meadowmont Managing Member JV Entity equity interests. The information presented below is not necessarily indicative of what the actual results of operations would have been had we completed these transactions on January 1, 2011, nor does it purport to represent our future operations (in thousands, except per share data):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Revenues	$	1,557,675		$	1,540,165		$	4,657,892		$	4,490,259
Depreciation and amortization	$	(459,906	)	$	(450,007	)	$	(1,359,919	)	$	(2,621,366	)
Net loss	$	(1,113,930	)	$	(465,162	)	$	(1,710,806	)	$	(2,895,977	)
Net income (loss) attributable to noncontrolling interest	$	11,461		$	112,445		$	257,957		$	(588,227	)
Net loss attributable to common shareholders	$	(1,125,392	)	$	(577,607	)	$	(1,968,763	)	$	(2,307,749	)
Net loss per common share	$	(0.61	)	$	(0.70	)	$	(1.28	)	$	(3.06	)