Business Combinations and Sale of Joint Venture Equity Interests

12 Months Ended

Dec. 31, 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”), the entity through which the Company indirectly invested in the Springhouse property, and an additional 2.0% joint venture equity interest in BR Creekside Managing Member, LLC (the “Creekside Managing Member JV Entity”), the entity through which the Company indirectly invests in the Creekside property, for an aggregate purchase price of $202,532, excluding closing costs. The Company recognized a gain of $3,450,460, net of acquisition costs, related to the revaluation of its 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, the Company’s 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. As such, the Company began to consolidate these entities upon taking control.

Acquisition of Joint Venture Equity Interests

On October 2, 2012, through a wholly-owned subsidiary, the Company entered into a joint venture investment along with Bluerock Special Opportunity + Income Fund III, LLC (“SOIF III”), an affiliate of our Company’s Sponsor, and Waypoint Residential, LLC, an unaffiliated entity, to acquire 198 units of a 220-unit multifamily housing community commonly known as “Enders Place,” located in Orlando, Florida. The Company invested $4,716,846 to acquire a 48.4% indirect interest in the Enders property.

On October 18, 2012, through a wholly-owned subsidiary, the Company entered into a joint venture investment along with SOIF III, an affiliate of our Company’s Sponsor, and an affiliate of Stonehenge Real Estate Group, LLC, an unaffiliated entity, to develop a 266-unit, class A, mid-rise apartment community in Nashville, Tennessee, to be known as 23Hundred @ Berry Hill. The Company invested $3,788,725 to acquire a 58.575% indirect interest in the Berry Hill development. On December 17, 2012, the Company completed the purchase of an additional 5.158% indirect interest in the Berry Hill Property, for $369,034.

On December 17, 2012, through a wholly-owned subsidiary, the Company entered into a joint venture investment along with Bluerock Special Opportunity + Income Fund, LLC (“SOIF”) and BR MDA Investors, LLC, both of which are affiliates of our Sponsor, to acquire a 190 unit apartment complex commonly known as “MDA Apartments,” located in Chicago, Illinois. The Company invested $6,098,306 to acquire a 35.31% indirect interest in MDA Apartments. The Company recognized a gain of $7,297,942, net of acquisition costs, as the fair value of the complex exceeded the cost of its initial investment. The gain is recorded in “Gain on business combinations” in the Company’s Consolidated Statements of Operations.

Business Combination Summary Information

The following table presents certain additional information regarding our business combinations completed during the year ended December 31, 2012. The amounts allocated to the major assets acquired and liabilities assumed are based on independent third party appraisals, and are as follows:

	Springhouse at Newport News		The Reserve at Creekside Village		Enders Place at Baldwin Park		23Hundred @ Berry Hill		MDA Apartments		Total
Land	$	6,500,000	$	1,920,000	$	4,750,000	$	5,000,000	$	9,500,000	$	27,670,000
Building and improvements		27,481,311		17,919,495		19,156,045		1,012,549		50,814,244		116,383,644
Furniture, fixtures and equipment		1,010,818		416,796		523,710		-		455,359		2,406,683
In-place lease value		818,879		452,467		670,245		-		930,397		2,871,988
Deferred financing costs		-		-		363,772		212,325		115,217		691,314
Cash and cash equivalents		40,803		334,946		24,261		-		251,011		651,021
Restricted cash		272,999		373,004		646,610		5,000		896,111		2,193,724
Accounts receivables, prepaids and other		63,634		36,868		390,438		2,500		210,980		704,420
Total assets		36,188,444		21,453,576		26,525,081		6,232,374		63,173,319		153,572,794
Mortgage/construction payable		26,482,194		15,002,061		17,500,000		100		37,600,000		96,584,355
Accounts payable		1,667		44,594		-		-		-		46,261
Other accrued liabilities		249,595		228,211		516,207		-		551,405		1,545,418
Due to affiliates		495		1,087		-		-		-		1,582
Noncontrolling interest		5,816,058		4,628,334		4,745,697		2,750,856		11,171,233		29,112,178
Net Assets	$	3,638,435	$	1,549,289	$	3,763,177	$	3,481,418	$	13,850,681	$	26,283,000

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”), the entity through which the Company indirectly invested in the Meadowmont property, 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.

The following unaudited consolidated pro forma information is presented as if the above described acquisitions and sale of joint venture occurred 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 $3,426,267 for the year ended December 31, 2012. There were no acquisition or disposition related expenses during the year ended December 31, 2011. The Company has also excluded the related gain on business combinations, 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):

	December 31, 2012			December 31, 2011
Revenues	$	18,617		$	13,243
Depreciation and amortization		(7,159	)		(7,128	)
Net loss		2,229			(8,119	)
Net income (loss) attributable to noncontrolling interest		3,585			(3,304	)
Net loss attributable to common shareholders		(1,356	)		(4,815	)
Net loss per common share		(0.80	)		(5.95	)