SUBSEQUENT EVENTS

6 Months Ended

Jun. 30, 2024

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS

Internalization of PRO Structure

As discussed in Note 1, the Company completed the internalization of its PRO structure as of the Closing Date. As a result of the internalization, the Company purchased certain of each PRO’s assets, which included each PRO’s management contracts, PRO IP, and certain rights with respect to each PRO’s tenant insurance program. The Company plans to transition the majority of operations in a phased approach, which is expected to occur over the 12 month period following the Closing Date, and the Company has executed new asset management and property management agreements with a number of the PROs for all or a part of this transitionary period at newly negotiated management fees.

Consideration paid for the PROs management contracts and PRO IP totaled approximately $34.6 million, consisting of 775,210 OP units and $3.4 million in cash. The Company allocated the purchase price to intangible assets acquired, consisting of management contracts and the PROs' trade names. The Company also acquired certain rights associated with certain PROs' tenant insurance-related programs. The consideration paid for the rights associated with the tenant insurance-related programs was approximately $60.3 million, consisting of 773,656 OP units and $29.2 million in cash. In connection with the transactions described above, a company owned and controlled by Mark Van Mourick, a trustee of the Company, received 209,333 OP units with a value of approximately $8.4 million and approximately $2.9 million in cash.

Additionally, in connection with the internalization of its PRO structure, effective July 1, 2024, all 11,906,167 outstanding subordinated performance units (including all DownREIT subordinated performance units) were converted into an aggregate of 17,984,787 OP units and DownREIT OP units. Of these, Arlen Nordhagen, the vice chairperson of the Company's board of trustees, received 64,887 OP units with a value of approximately $2.6 million as a result of a noncontrolling investment in one of the PROs' affiliates. Each subordinated performance unit and DownREIT subordinated performance units were converted into a number of OP units and DownREIT OP units determined by dividing the average cash available for distribution (CAD) per unit on the series subordinated performance units and DownREIT subordinated performance units over a one-year period ending December 31, 2023, by 110% of the CAD per unit on the OP units determined over the same period. CAD per unit on the series subordinated performance units, DownREIT subordinated performance units, OP units and DownREIT OP units was determined by the Company based upon the application of the provisions of the operating partnership agreement applicable to the distributions of operating cash flow and capital transactions proceeds.

Repayment of Term Loan B

On July 29, 2024, the Company repaid in full the remaining $145.0 million of Term loan B using proceeds from the Revolver.

2023 Joint Venture Acquisitions

On July 30, 2024, the 2023 Joint Venture acquired a portfolio of five properties located in Texas for approximately $71.9 million. The 2023 Joint Venture financed the acquisition with capital contributions from venture members, of which the Company contributed approximately $18.0 million.