10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549  

FORM 10-Q

(Mark One)

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES   EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2020

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES   EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission file number 000-55923

RESOURCE APARTMENT REIT III, Inc.

(Exact name of registrant as specified in its charter)

Maryland	47-4608249
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)
1845 Walnut Street, 18th Floor, Philadelphia, PA, 19103
(Address of principal executive offices) (Zip code)
(215) 231-7050
(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: None

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
n/a	n/a	n/a

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes ☑ No  ☐  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company.  See definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer.	☐
Non-accelerated filer	☑	Smaller reporting company	☑
		Emerging growth company	☑

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.  ☑

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  Yes ☐ No ☑

As of May 4, 2020, there were 625,848 outstanding shares of Class A common stock, 1,121,639 outstanding shares of Class T common stock, and 10,406,822 outstanding shares of Class I common stock of Resource Apartment REIT III, Inc.

RESOURCE APARTMENT REIT III, INC.

INDEX TO QUARTERLY REPORT

ON FORM 10-Q

		PAGE
PART I	FINANCIAL INFORMATION
ITEM 1.	Financial Statements
	Consolidated Balance Sheets – March 31, 2020 (unaudited) and December 31, 2019	4
	Consolidated Statements of Operations and Comprehensive Loss - For the Three Months Ended March 31, 2020 and 2019 (unaudited)	5
	Consolidated Statements of Changes in Stockholders' Equity – Three Months Ended March 31, 2020 and 2019 (unaudited)	7
	Consolidated Statements of Cash Flows - For the Three Months Ended March 31, 2020 and 2019 (unaudited)	8
	Notes to Consolidated Financial Statements – March 31, 2020 (unaudited)	9
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	32
ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	44
ITEM 4.	Controls and Procedures	44
PART II	OTHER INFORMATION
ITEM 1.	Legal Proceedings	45
ITEM 1A.	Risk Factors	45
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	46
ITEM 6.	Exhibits	48
SIGNATURES		49

2

Forward-Looking Statements

Certain statements included in this Quarterly Report on Form 10-Q are forward-looking statements.  Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts.  In some cases, you can identify forward-looking statements by terms such as "anticipate," "believe," "could," "estimate," "expects," "intend," "may," "plan," "potential," "project," "should," "will" and "would" or the negative of these terms or other comparable terminology.  You should not rely on forward-looking statements since they involve known and unknown risks, uncertainties and other factors which are, in some cases, beyond the Company’s control and which could materially affect the Company’s results of operations, financial condition, cash flows, performance or future achievements or events. Currently, one of the most significant factors is the potential adverse effect of the current pandemic of the novel coronavirus, or COVID-19, on the financial condition, results of operations, cash flows and performance of the Company, particularly its ability to collect rent, the personal financial condition of its tenants and their ability to pay rent, and the real estate market and the global economy and financial markets. On March 11, 2020, the World Health Organization declared COVID-19 a pandemic, and on March 13, 2020, the United States declared a national emergency with respect to COVID-19. The extent to which COVID-19 impacts the Company and its tenants will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact, and the direct and indirect economic effects of the pandemic and containment measures, among others. Moreover, you should interpret many of the risks identified in our Annual Report on Form 10-K for the year ended December 31, 2019 as being heightened as a result of the ongoing and numerous adverse impacts of COVID-19. Actual results may differ materially from those contemplated by such forward-looking statements.  Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof.  We undertake no obligation to publicly revise or update these forward-looking statements to reflect events or circumstances after the date of this report, except as may be required under applicable law.

3

PART I. FINANCIAL INFORMATION

ITEM 1.    FINANCIAL STATEMENTS

RESOURCE APARTMENT REIT III, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands)

	March 31, 2020			December 31, 2019
	(unaudited)
ASSETS
Investments:
Rental properties, net	$	192,812		$	196,483
Identified intangible assets, net		—			173
Total investments		192,812			196,656
Cash		25,193			28,430
Restricted cash		1,761			1,916
Tenant receivables, net		36			31
Due from related parties		2			—
Prepaid expenses and other assets		937			599
Total assets	$	220,741		$	227,632
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Mortgage notes payable, net	$	143,980		$	145,503
Accounts payable and accrued expenses		1,516			2,552
Accrued real estate taxes		724			601
Due to related parties		3,036			4,938
Tenant prepayments		158			194
Security deposits		391			382
Distributions payable		—			1,587
Total liabilities		149,805			155,757
Stockholders’ equity:
Preferred stock, par value $0.01: 10,000,000 shares authorized, none issued and    outstanding		—			—
Convertible stock, par value $0.01: 50,000 shares authorized, issued and outstanding		1			1
Class A common stock, par value $0.01: 25,000,000 shares authorized, 625,848 and 628,691 issued and outstanding, respectively		6			6
Class T common stock, par value $0.01: 25,000,000 shares authorized, 1,121,639 and 1,115,458 issued and outstanding, respectively		11			11
Class I common stock, par value $0.01: 75,000,000 shares authorized, 10,406,822 and 10,327,291 issued and outstanding, respectively		104			103
Additional paid-in capital		104,480			103,725
Accumulated other comprehensive loss		(26	)		(32	)
Accumulated deficit		(33,640	)		(31,939	)
Total stockholders’ equity		70,936			71,875
Total liabilities and stockholders’ equity	$	220,741		$	227,632

The accompanying notes are an integral part of these consolidated financial statements.

4

RESOURCE APARTMENT REIT III, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(in thousands, except per share data)

(unaudited)

	Three Months Ended March 31,
	2020			2019
Revenues:
Rental income	$	5,089		$	3,723
Total revenues		5,089			3,723
Expenses:
Rental operating - expenses		869			682
Rental operating - payroll		489			371
Rental operating - real estate taxes		730			497
Subtotal- rental operating		2,088			1,550
Property management fees		—			2
Management fees - related parties		780			574
General and administrative		416			860
Loss on disposal of assets		129			87
Depreciation and amortization expense		2,360			2,237
Total expenses		5,773			5,310
Loss before net gains on dispositions		(684	)		(1,587	)
Net gain on disposition of property		530			—
Loss before other income (expense)		(154	)		(1,587	)
Other income (expense):
Interest income		27			70
Interest expense		(1,543	)		(1,268	)
Total other income (expense)		(1,516	)		(1,198	)
Net loss	$	(1,670	)	$	(2,785	)
Other comprehensive (loss) income:
Designated derivatives, fair value adjustments		6			(2	)
Total other comprehensive (loss) income		6			(2	)
Comprehensive loss	$	(1,664	)	$	(2,787	)

The accompanying notes are an integral part of these consolidated financial statements.

5

RESOURCE APARTMENT REIT III, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - (continued)

(in thousands, except per share data)

(unaudited)

	Three Months Ended March 31,
	2020			2019
Class A common stock:
Net loss attributable to Class A common stockholders	$	(88	)	$	(170	)
Net loss per Class A share, basic and diluted	$	(0.14	)	$	(0.27	)
Weighted average Class A common shares outstanding, basic and diluted		629			635
Class T common stock:
Net loss attributable to Class T common stockholders	$	(130	)	$	(325	)
Net loss per Class T share, basic and diluted	$	(0.12	)	$	(0.29	)
Weighted average Class T common shares outstanding, basic and diluted		1,118			1,114
Class R common stock:
Net loss attributable to Class R common stockholders	$	—		$	(2,200	)
Net loss per Class R share, basic and diluted	$	—		$	(0.28	)
Weighted average Class R common shares outstanding, basic and diluted		—			7,937
Class I common stock:
Net loss attributable to Class I common stockholders	$	(1,452	)	$	(90	)
Net loss per Class I share, basic and diluted	$	(0.14	)	$	(0.24	)
Weighted average Class I common shares outstanding, basic and diluted		10,355			380

The accompanying notes are an integral part of these consolidated financial statements

6

RESOURCE APARTMENT REIT III, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

FOR THE THREE MONTHS ENDEDMARCH 31, 2020 AND 2019

(in thousands)

(unaudited)

	Common Stock																			Convertible Stock
	Shares											Amount
	A Shares			T Shares			R Shares		I Shares			A Shares		T Shares		R Shares		I Shares		Shares		Amount		Additional Paid-in Capital			Accumulated Other Comprehensive Loss			Accumulated Deficit			Total
Balance, at January 1, 2020		629			1,115			—		10,327		$	6	$	11	$	—	$	103		50	$	1	$	103,725		$	(32	)	$	(31,939	)	$	71,875
True-up of prior year cash distributions declared		—			—			—		—			—		—		—		—		—		—		—			—			(31	)		(31	)
Common stock issued through distribution reinvestment plan		2			10			—		82			—		—		—		1		—		—		856			—			—			857
Other comprehensive income		—			—			—		—			—		—		—		—		—		—		—			6			—			6
Net loss		—			—			—		—			—		—		—		—		—		—		—			—			(1,670	)		(1,670	)
Share redemptions		(5	)		(3	)		—		(2	)		—		—		—		—		—		—		(101	)		—			—			(101	)
Balance, at March 31, 2020		626			1,122			—		10,407		$	6	$	11	$	—	$	104		50	$	1	$	104,480		$	(26	)	$	(33,640	)	$	70,936

Balance, at January 1, 2019	634	1,111	7,182	330	$	6	$	11	$	72	$	3	50	$	1	$	77,896		$	(40	)	$	(15,459	)	$	62,490
Issuance of common stock	—	—	1,510	126		—		—		15		2	—		—		15,777			—			—			15,794
Offering costs	—	—	—	—		—		—		—		—	—		—		(1,876	)		—			—			(1,876	)
Cash distributions declared	—	—	—	—		—		—		—		—	—		—		—			—			(1,258	)		(1,258	)
Common stock issued through distribution reinvestment plan	3	8	52	—		—		—		—		—	—		—		577			—			—			577
Other comprehensive loss	—	—	—	—		—		—		—		—	—		—		—			(2	)		—			(2	)
Net loss	—	—	—	—		—		—		—		—	—		—		—			—			(2,785	)		(2,785	)
Balance, at March 31, 2019	637	1,119	8,744	456	$	6	$	11	$	87	$	5	50	$	1	$	92,374		$	(42	)	$	(19,502	)	$	72,940

The accompanying notes are an integral part of this consolidated financial statement.

7

RESOURCE APARTMENT REIT III, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

	Three Months Ended March 31,
	2020			2019
Cash flows from operating activities:
Net loss	$	(1,670	)	$	(2,785	)
Adjustment to reconcile net loss to net cash used in operating activities:
Loss on disposal of assets		129			87
Depreciation and amortization		2,360			2,237
Amortization of deferred financing costs		74			59
Net gain on disposition of property		(530	)		—
Realized loss on change in fair value of interest rate cap		6			1
Changes in operating assets and liabilities:
Tenant receivables, net		(8	)		7
Due from related parties		(2	)		3
Prepaid expenses and other assets		(341	)		(155	)
Due to related parties		(1,901	)		(408	)
Accounts payable and accrued expenses		37			645
Tenant prepayments		(37	)		53
Security deposits		22			1
Net cash used in operating activities		(1,861	)		(255	)
Cash flows from investing activities:
Proceeds from disposal of properties, net of closing costs		1,340			—
Property acquisition		—			(7,286	)
Capital expenditures		(1,904	)		(1,130	)
Net cash used in investing activities		(564	)		(8,416	)
Cash flows from financing activities:
Net proceeds from issuance of common stock		—			15,894
Redemptions of common stock		(101	)		—
Payments on borrowings		(105	)		(9	)
Payment of deferred financing costs		—			(269	)
Distributions paid on common stock		(761	)		(493	)
Net cash (used in) provided by financing activities		(967	)		15,123
Net (decrease) increase in cash and restricted cash		(3,392	)		6,452
Cash and restricted cash at beginning of period		30,346			33,711
Cash and restricted cash at end of period	$	26,954		$	40,163
Reconciliation to consolidated balance sheets:
Cash	$	25,193		$	38,702
Restricted Cash		1,761			1,461
Cash and restricted cash at end of period	$	26,954		$	40,163

The accompanying notes are an integral part of these consolidated financial statements.

8

RESOURCE APARTMENT REIT III, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2020

(unaudited)

NOTE 1 - NATURE OF BUSINESS AND OPERATIONS

Resource Apartment REIT III, Inc. (the "Company") was organized in Maryland on July 15, 2015. The Company launched an initial public offering on April 28, 2016 pursuant to which it offered up to $1.1 billion of shares of its common stock, consisting of up to $1.0 billion of shares in its primary offering and up to $100.0 million of shares pursuant to its distribution reinvestment plan (the "DRIP").

Through July 2, 2017, the Company offered shares of Class A and Class T common stock in the primary and DRIP offering. As of July 3, 2017, the Company ceased offering shares of Class A and Class T common stock in its primary offering and commenced offering shares of Class R and Class I common stock in both the primary and DRIP offering.

The Company ceased offering shares in the primary offering on October 31, 2019 and ceased processing subscriptions in the offering on November 15, 2019. The Company continues to offer Class A, Class T and Class I shares pursuant to the DRIP.

As of March 31, 2020, the Company has raised aggregate gross primary offering proceeds of approximately $111.4 million from the sale of 601,207 Class A shares, 1,049,996 Class T shares, 9,356,067 Class R shares and 624,325 Class I shares of common stock.

On June 27, 2018, March 21, 2019, and March 19, 2020, the board of directors of the Company determined an estimated net asset value (“NAV”) per share of the common stock of $9.05, $9.12, and $9.01, respectively, based on the estimated market value of the portfolio of investments of the Company as of March 31, 2018, December 31, 2018, and December 31, 2019, respectively.  Based on the estimated NAV per share, the board of directors established updated offering prices for shares of Class R and Class I common stock to be sold in the primary portion of the initial public offering by adding certain offering costs to the estimated NAV per share.  Pursuant to the terms of the DRIP, following the establishment of an estimated NAV per share, shares of common stock are sold at the most recent estimated NAV per share.

The prices per share for each class of shares of the Company's common stock through March 31, 2020 were as follows:

	Class A		Class T		Class R		Class I
Primary Offering Price
Inception through July 2, 2017	$	10.00	$	9.47	n/a		n/a
July 3, 2017 through July 1, 2018	n/a		n/a		$	9.52	$	9.13
July 2, 2018 through March 24, 2019	n/a		n/a		$	9.68	$	9.28
March 25, 2019 through October 31, 2019	n/a		n/a		$	9.75	$	9.35
Offering Price under the DRIP
Inception through July 2, 2017	$	9.60	$	9.09	n/a		n/a
July 3, 2017 through July 1, 2018	$	9.60	$	9.09	$	9.14	$	8.90
July 2, 2018 through March 24, 2019 (1)	$	9.05	$	9.05	$	9.05	$	9.05
March 25, 2019 through March 30, 2020 (1)	$	9.12	$	9.12	$	9.12	$	9.12
March 31, 2020 (1)	$	9.01	$	9.01	n/a		$	9.01

(1) Shares of common stock pursuant to the DRIP are sold at the Company’s most recent estimated NAV per share.

Resource REIT Advisor, LLC (the "Advisor"), an indirect wholly-owned subsidiary of Resource America, Inc. ("RAI"), contributed $200,000 to the Company in exchange for 20,000 shares of Class A common stock on August 10, 2015. On June 29, 2016, RAI purchased 222,222 shares of Class A common stock for $2.0 million in the offering. On August 5, 2016, the Advisor exchanged 5,000 shares of common stock for 50,000 shares of convertible stock. Under limited circumstances, these shares may be converted into shares of the Company's Class A common stock satisfying its obligation to pay the Advisor an incentive fee and diluting its other stockholders’ interest in the Company.

RAI is a wholly-owned subsidiary of C-III Capital Partners, LLC ("C-III"), a leading commercial real estate investment management and services company engaged in a broad range of activities. C-III controls the Advisor, Resource

9

RESOURCE APARTMENT REIT III, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

MARCH 31, 2020

(unaudited)

Securities LLC ("Resource Securities"), the Company's dealer manager, and Resource Apartment Manager III, LLC (the "Manager"), the Company's property manager. C-III also controls all of the shares of the Company's common stock held by RAI and the Advisor.

The Company’s objective is to take advantage of the multifamily investing and lending platforms of Resource Real Estate, LLC (its "Sponsor") to invest in apartment communities in order to provide the investor with growing cash flow and increasing asset values. The Company has acquired underperforming apartments which it will renovate and stabilize in order to increase rents.

The Company elected to be taxed as a real estate investment trust ("REIT") for U.S. federal income tax purposes under the provisions of the Internal Revenue Code of 1986, as amended, commencing with its taxable year ending December 31, 2017. As such, to maintain its REIT qualification for U.S. federal income tax purposes, the Company is generally required to distribute at least 90% of its net income (excluding net capital gains) to its stockholders as well as comply with certain other requirements. Accordingly, the Company generally will not be subject to U.S. federal income taxes to the extent that it annually distributes all of its REIT taxable income to its stockholders. The Company also operates its business in a manner that will permit it to maintain its exemption from registration under the Investment Company Act of 1940, as amended.

The consolidated financial statements and the information and tables contained in the notes thereto are unaudited. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") have been condensed or omitted pursuant to the rules and regulations of the U.S. Securities and Exchange Commission ("SEC"), pertaining to interim financial statements in Form 10-Q. However, in the opinion of management, these interim financial statements include all the necessary adjustments to fairly present the results of the interim periods presented. The consolidated balance sheet as of December 31, 2019 was derived from the audited consolidated financial statements as of and for the year ended, December 31, 2019. The unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. The results of operations for the three months ended March 31, 2020 may not necessarily be indicative of the results of operations for the full year ending December 31, 2020.

COVID-19 Pandemic

Currently, one of the most significant risks and uncertainties facing the Company and the real estate industry generally is the potential adverse effect of the ongoing public health crisis of the novel coronavirus disease (“COVID-19”) pandemic. The extent to which the COVID-19 pandemic impacts the Company’s operations and those of its tenants will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact, and the direct and indirect economic effects of the pandemic and containment measures, among others. See Note 15, “Subsequent Events” for a further discussion on the COVID-19 pandemic.

10

RESOURCE APARTMENT REIT III, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

MARCH 31, 2020

(unaudited)

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A summary of the significant accounting policies consistently applied in the preparation of the accompanying consolidated financial statements follows:

Basis of Presentation

The accompanying consolidated financial statements have been prepared in conformity with GAAP.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries as follows:

Subsidiaries	Number of Units		Property Location
Resource Apartment REIT III Holdings, LLC	N/A		N/A
Resource Apartment REIT III OP, LP	N/A		N/A
RRE Payne Place Holdings, LLC	N/A(1)		N/A(1)
RRE Bay Club Holdings, LLC		220	Jacksonville, FL
RRE Tramore Village Holdings, LLC		324	Austell, GA
RRE Matthews Reserve Holdings, LLC		212	Matthews, NC
RRE Kensington Holdings, LLC		204	Riverview, FL
RRE Wimbledon Oaks Holdings, LLC		248	Arlington, TX
RRE Summit Holdings, LLC		141	Alexandria, VA
		1,349

N/A - Not applicable

(1) Property was sold on March 5, 2020.

All intercompany accounts and transactions have been eliminated in consolidation.

Segment Reporting

The Company does not evaluate performance on a relationship-specific or transactional basis and does not distinguish its principal business or group its operations on a geographical basis for purposes of measuring performance. Accordingly, the Company believes it has a single operating segment for reporting purposes in accordance with GAAP.

Concentration of Risk

At March 31, 2020, the Company's real estate investments in Florida, Georgia, and Virginia represented 28%, 22%, and 19%, respectively, of the net book value of its rental property assets. Any adverse economic or real estate developments in these markets, such as the impact of the COVID-19 pandemic, business layoffs or downsizing, industry slowdowns, relocations of businesses, adverse weather events, changing demographics and other factors, or any decrease in demand for multifamily rentals resulting from the local business climate, could adversely affect the Company's operating results and its ability to make distributions to stockholders.

11

RESOURCE APARTMENT REIT III, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

MARCH 31, 2020

(unaudited)

Use of Estimates

The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

Adoption of New Accounting Standards

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13 "Financial Instruments - Credit Losses", which requires measurement and recognition of expected credit losses for financial assets held. On January 1, 2020, the Company adopted ASU No. 2016-13 and the adoption had no impact on its consolidated financial statements and disclosures since the Company did not have instruments subject to this guidance at the adoption or at March 31, 2020.  

In January 2017, FASB issued ASU No. 2017-04, "Intangibles- Goodwill and Other (Topic 350): Simplifying the Accounting for Goodwill Impairment", which alters the current goodwill impairment testing procedures. On January 1, 2020, the Company adopted ASU No. 2017-04 and the adoption did not have a significant impact on its consolidated financial statements due to the fact that the Company did not have any goodwill subject to this guidance at the adoption or at March 31, 2020.

In August 2018, FASB issued ASU No. 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement”. This update removes, modifies and adds certain disclosure requirements in the FASB Accounting Standards Codification ("ASC") 820, “Fair Value Measurement”. On January 1, 2020, the Company adopted ASU No. 2018-13 and the adoption did not have a significant impact on its consolidated financial statements due to the fact there were no required changes to the Company’s disclosures.

In November 2018, FASB issued ASU 2018-19, “Codification Improvements to Topic 326, Financial Instruments-Credit Losses.” ASU 2018-19 clarifies that receivables arising from operating leases are not within the scope of Subtopic 326-20. Instead, impairment of receivables arising from operating leases should be accounted for in accordance with ASC 842, Leases. On January 1, 2020, the Company adopted ASU No. 2018-19 and the adoption did not have a material effect on its consolidated financial statements and disclosures.

In March 2020, FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848)”. ASU 2020-04 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. During the three months ended March 31, 2020, the Company has elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation.  The Company continues to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur.  

Real Estate Investments

The Company records acquired real estate at fair value on their respective acquisition dates. The Company considers the period of future benefit of an asset to determine its appropriate useful life and depreciates the asset using the straight line method. The Company anticipates the estimated useful lives of its assets by class as follows:

Buildings	27.5 years
Building improvements	5.0 to 27.5 years
Furniture, fixtures, and equipment	3.0 to 5.0 years
Tenant improvements	Shorter of lease term or expected useful life
Lease intangibles	Weighted average remaining term of related leases

12

RESOURCE APARTMENT REIT III, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

MARCH 31, 2020

(unaudited)

Improvements and replacements in excess of $1,000 are capitalized when they have a useful life greater than or equal to one year. The Manager earns a construction management fee of 5% of actual aggregate costs to construct improvements, or to repair, rehab or reconstruct a property. These costs are capitalized along with the related asset. Costs of repairs and maintenance are expensed as incurred.

Impairment of Long Lived Assets

When circumstances indicate the carrying value of a property may not be recoverable, the Company reviews the asset for impairment. This review is based on an estimate of the future undiscounted cash flows, excluding interest charges, expected to result from the property’s use and eventual disposition. The review also considers factors such as expected future operating income, market and other applicable trends and residual value, as well as the effects of leasing demand, competition and other factors.

If impairment exists, due to the inability to recover the carrying value of a property, an impairment loss will be recorded to the extent that the carrying value exceeds the estimated fair value of the property for properties to be held and used. For properties held for sale, the impairment loss is the adjustment to fair value less estimated cost to dispose of the asset. These assessments have a direct impact on net income because recording an impairment loss results in an immediate negative adjustment to net income.As of March 31, 2020, the Company evaluated whether the global economic disruption caused by the COVID-19 pandemic was an impairment indicator. The Company examined a number of factors and concluded that there was no indication that the carrying value of the Company’s investments in real estate might not be recoverable as of March 31, 2020. There were no impairment losses recorded on long lived assets during the three months ended March 31, 2020 and 2019.

Allocation of Purchase Price of Acquired Assets

Acquisitions that do not meet the definition of a business under ASU No, 2017-01 are accounted for as asset acquisitions. In most cases, the Company believes acquisitions of real estate will no longer be considered a business combination as in most cases substantially all of the fair value is concentrated in a single identifiable asset or group of tangible assets that are physically attached to each other (land and building). However, if the Company determines that substantially all of the fair value of the gross assets acquired is not concentrated in either a single identifiable asset or in a group of similar identifiable assets, the Company will then perform an assessment to determine whether the set is a business by using the framework outlined in the ASU. If the Company determines that the acquired asset is not a business, the Company will allocate the cost of the acquisition including transaction costs to the assets acquired or liabilities assumed based on their related fair value.

Upon the acquisition of real properties, the Company allocates the purchase price to tangible assets, consisting of land, building, fixtures and improvements, and identified intangible lease assets and liabilities, consisting of the value of above-market and below-market leases, as applicable, other value of in-place leases and value of tenant relationships, based in each case on their fair values.

The Company records above-market and below-market in-place lease values for acquired properties based on the present value (using an interest rate that reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to the in-place leases and (ii) management’s estimate of fair market lease rates for the corresponding in-place leases, measured over a period equal to the remaining non-cancelable term of the lease. The Company amortizes any capitalized above-market or below-market lease values as an increase or reduction to rental income over the remaining non-cancelable terms of the respective leases, which the Company expects will range from one month to one year.

The Company measures the aggregate value of other intangible assets acquired based on the difference between (i) the property valued with existing in-place leases adjusted to market rental rates and (ii) the property valued as if vacant. Management’s estimates of value are determined by independent appraisers (e.g., discounted cash flow analysis). Factors to be considered in the analysis include an estimate of carrying costs during hypothetical expected lease-up periods considering current market conditions and costs to execute similar leases.

The Company also considers information obtained about each property as a result of its pre-acquisition due diligence, marketing and leasing activities in estimating the fair value of the tangible and intangible assets acquired. In estimating carrying costs, management includes real estate taxes, insurance and other operating expenses and estimates of lost rentals at market rates during the expected lease-up periods. Management also estimates costs to execute similar leases including leasing

13

RESOURCE APARTMENT REIT III, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

MARCH 31, 2020

(unaudited)

commissions and legal and other related expenses to the extent that such costs have not already been incurred in connection with a new lease origination as part of the transaction.

The total amount of other intangible assets acquired is further allocated to in-place lease values and customer relationship intangible values based on management’s evaluation of the specific characteristics of each tenant’s lease and the Company’s overall relationship with that respective tenant. Characteristics to be considered by management in allocating these values include the nature and extent of the Company’s existing business relationships with the tenant, growth prospects for developing new business with the tenant, the tenant’s credit quality and expectations of lease renewals (including those existing under the terms of the lease agreement), among other factors.

The Company amortizes the value of in-place leases to expense over the weighted average remaining term of the underlying leases. The value of customer relationship intangibles is amortized to expense over the initial term and any renewal periods in the respective leases, but in no event will the amortization periods for the intangible assets exceed the remaining depreciable life of the building.

The determination of the fair value of the assets and liabilities acquired requires the use of significant assumptions with regard to current market rental rates, discount rates and other variables. The use of inappropriate estimates would result in an incorrect assessment of the fair value of these assets and liabilities, which could impact the amount of the Company’s reported net income.

Revenue Recognition

The Company recognizes minimum rent, including rental abatements and contractual fixed increases attributable to operating leases, where collection has been considered probable, on a straight-line basis over the term of the related lease. The future minimum rental payments to be received from noncancelable operating leases for residential rental properties are approximately $10.8 million and approximately $530,000 for the 12 month periods ending March 31, 2021 and 2022, respectively, and none thereafter.

Revenue is primarily derived from the rental of residential housing units for which the Company receives minimum rents and utility reimbursements pursuant to underlying tenant lease agreements. The Company also receives other ancillary fees for administration of leases, late payments, amenities, and revenue sharing arrangements for cable income from contracts with cable providers at the Company's properties. A performance obligation is a promise in a contract to transfer a distinct good or service to a customer. The Company records the utility reimbursement income and ancillary charges in the period when the performance obligation is completed, either at a point in time or on a monthly basis as the service is utilized.

Tenant Receivables

Tenant receivables are stated in the consolidated financial statements as amounts due from tenants net of an allowance for uncollectible receivables. Payment terms vary and receivables outstanding longer than the payment terms are considered past due. The Company determines its allowance by considering a number of factors, including the length of time receivables are past due, security deposits held, the Company’s previous loss history, the tenants’ current ability to pay their obligations to the Company, and the condition of the general economy and the industry as a whole. The Company writes off receivables when they become uncollectible. At March 31, 2020 and December 31, 2019, the Company recorded $1,501 and $3,927 of allowances for uncollectible receivables, respectively.

Income Taxes

The Company elected to be taxed as a REIT commencing with its taxable year ending December 31, 2017. As a REIT, the Company will generally not be subject to corporate U.S. federal or state income tax to the extent that it makes qualifying distributions to its stockholders, and provided it satisfies, on a continuing basis, through actual investment and operating results, the REIT requirements including certain asset, income, distribution and stock ownership tests. If the Company fails to qualify as a REIT, and does not qualify for certain statutory relief provisions, it will be subject to U.S. federal, state and local income taxes and may be precluded from qualifying as a REIT for the subsequent four taxable years following the year in which it lost its REIT qualification. Accordingly, the Company’s failure to qualify as a REIT could have a material adverse impact on its results of operations and amounts available for distribution to its stockholders.

The dividends paid deduction of a REIT for qualifying dividends to its stockholders is computed using the Company’s taxable income as opposed to net income reported on the financial statements. Taxable income, generally, differs from net

14

RESOURCE APARTMENT REIT III, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

MARCH 31, 2020

(unaudited)

income reported on the financial statements because the determination of taxable income is based on tax provisions and not financial accounting principles.

The Company may elect to treat certain of its subsidiaries as a taxable REIT subsidiary ("TRS"). In general, a TRS may hold assets and engage in activities that the Company cannot hold or engage in directly and generally may engage in any real estate or non-real estate-related business. A TRS is subject to U.S. federal, state and local corporate income taxes. At March 31, 2020 and December 31, 2019, the Company did not treat any of its subsidiaries as a TRS.

While a TRS may generate net income, a TRS can declare dividends to the Company which will be included in the Company’s taxable income and necessitate a distribution to its stockholders. Conversely, if the Company retains earnings at a TRS level, no distribution is required and the Company can increase book equity of the consolidated entity.

The Company is subject to examination by the U.S. Internal Revenue Service and by the taxing authorities in other states in which the Company has significant business operations. The Company is not currently undergoing any examinations by taxing authorities. The Company is not subject to IRS examination for the tax return years 2015 and prior.

Earnings Per Share

Basic earnings per share are computed by dividing net income (loss) attributable to common stockholders for each period by the weighted-average common shares outstanding during the period for each share class. Diluted net income (loss) per share takes into account the potential dilution that could occur if securities or other contracts to issue common stock were exercised and converted to common stock. None of the 50,000 shares of convertible stock (discussed in Note 10) are included in the diluted earnings per share calculations because the necessary conditions for conversion have not been satisfied as of March 31, 2020 (were such date to represent the end of the contingency period). For the purposes of calculating earnings per share, all common shares and per share information in the financial statements have been retroactively adjusted for the effect of any stock dividends and stock splits. For the three months ended March 31, 2020 and 2019, common shares potentially issuable to settle distributions payable are excluded from the calculation of diluted earnings per share calculations, as their inclusion would be anti-dilutive.

In accordance with ASC 260-10-45, "Earnings Per Share", the Company uses the two-class method to calculate earnings per share. Basic earnings per share is calculated based on dividends declared and the rights of common shares and participating securities in any undistributed earnings, which represents net income remaining after deduction of dividends declared during the period. The undistributed earnings are allocated to all outstanding common shares based on their relative percentage of each class of shares to the total number of outstanding shares. The Company did not have any participating securities outstanding other than Class A common stock, Class T common stock, Class R common stock and Class I common stock during the periods presented (see Note 10).

Organization and Offering Costs

Organization and offering costs (other than selling commissions, dealer manager fees, and distribution and shareholder servicing fees) of the Company were initially paid by the Advisor on behalf of the Company.

Pursuant to the Advisory Agreement between the Company and the Advisor, the Company was obligated to reimburse the Advisor for organization and other offering costs paid by the Advisor on behalf of the Company, up to an amount equal to 4.0% of gross offering proceeds as of the termination of the initial public offering as the Company raised less than $500.0 million in the primary portion of the initial public offering.

The Advisory Agreement provides that the Company is not responsible for the repayment of any unreimbursed organization and offering expenses or operational expenses incurred by the Advisor on the Company’s behalf through March 31, 2018 until after the termination of the primary portion of the Company’s ongoing initial public offering. Additionally, such unreimbursed organization and offering expenses or operational expenses incurred or paid by the Advisor on the Company’s behalf through March 31, 2018 are required to be reimbursed ratably starting after the termination of the primary portion of the Company’s ongoing initial public offering through April 30, 2021 for organization and offering expenses and through April 30, 2020 for operating expenses. These payments began on November 1, 2019.  During the three months ended March 31, 2020, the Company repaid $1.9 million to the Advisor for both deferred organization and offering and operational expenses.

Organization costs, which included all expenses incurred by the Company in connection with its formation, including but not limited to legal fees and other costs to incorporate, were expensed as incurred. Prior to the Company breaking escrow,

15

RESOURCE APARTMENT REIT III, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

MARCH 31, 2020

(unaudited)

the Advisor incurred approximately $104,000 of formation and other operating expenses on the Company's behalf, which will not be reimbursed to the Advisor.

Outstanding Class T shares issued in the Company's primary offering were subject to an annual distribution and shareholder servicing fee in the amount of 1% of the estimated NAV of the share (1% of purchase price prior to June 29, 2018) for up to five years from the date on which such share is issued. Effective November 1, 2019, the Company ceased accruing the distribution and shareholder servicing fee on each Class T share as the Company had reached certain underwriting compensation limits.

Outstanding Class R shares issued in the Company's primary offering were also subject to an annual distribution and shareholder servicing fee in the amount of 1% of the estimated NAV of the share (1% of purchase price prior to June 29, 2018). Effective November 1, 2019, following the termination of the initial public offering, each of the outstanding Class R shares of common stock automatically converted into a Class I share of common stock pursuant to the terms of the Articles Supplementary for the Class R shares and the Company ceased accruing the distribution and shareholder servicing fee with respect to Class R shares as the Company no longer had any Class R shares outstanding. 

The Company initially recorded distribution and shareholder servicing fees as a reduction to additional paid-in capital and the related liability in an amount equal to the maximum fees payable in relation to the Class T and Class R shares on the date the shares were issued. The liability was relieved over time, as the fees were paid to the Dealer Manager. Upon termination of the offering, the fees were no longer payable as described above and the liability was adjusted accordingly.

NOTE 3 - SUPPLEMENTAL CASH FLOW INFORMATION

The following table presents the Company's supplemental cash flow information (in thousands):

	Three Months Ended March 31,
	2020		2019
Non-cash operating, financing and investing activities:
Offering costs payable to related parties	$	—	$	324
Distribution and shareholder servicing fee payable to    related parties		—		240
Cash distributions on common stock declared but not    yet paid		—		1,225
Stock issued from distribution reinvestment plan		857		577
Subscriptions receivable		—		262
Escrow deposits funded directly by mortgage notes payable		—		350
Non-cash activity related to acquisitions:
Mortgage notes payable used to acquire real properties		—		18,060
Non-cash activity related to sales:
Mortgage notes payable settled directly with proceeds from sale of rental property		1,519		—
Cash paid during the period for:
Interest	$	1,476	$	1,133

16

RESOURCE APARTMENT REIT III, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

MARCH 31, 2020

(unaudited)

NOTE 4 - RESTRICTED CASH

Restricted cash represents escrow deposits with lenders to be used to pay real estate taxes, insurance, and capital improvements. The following table presents a summary of the components of the Company's restricted cash (in thousands):

	March 31, 2020		December 31, 2019
Real estate taxes	$	944	$	979
Insurance		151		179
Capital improvements		666		758
Total	$	1,761	$	1,916

In addition, the Company designated unrestricted cash for capital expenditures of $7.4 million and $8.1 million at March 31, 2020 and December 31, 2019,respectively.

NOTE 5 - RENTAL PROPERTIES, NET

The following table presents the Company's investment in rental properties (in thousands):

	March 31, 2020			December 31, 2019
Land	$	29,800		$	31,220
Building and improvements		171,458			171,265
Furniture, fixtures, and equipment		4,420			4,014
Construction in progress		340			1,205
		206,018			207,704
Less: accumulated depreciation		(13,206	)		(11,221	)
Total rental property, net	$	192,812		$	196,483

Depreciation expense for the three months ended March 31, 2020 and 2019 was $2.2 million and $1.6 million respectively.

Loss on disposal of assets:  During the three months ended March 31, 2020 and 2019, the Company recorded losses on the disposal of assets of approximately $129,000 and $87,000, respectively, due to the replacement of appliances at its rental properties in conjunction with unit upgrades.  

NOTE 6 – DISPOSITION OF PROPERTY

The following table presents the Company’s disposition activity during the three months ended March 31, 2020 (in thousands):

Multifamily Community	Location	Sale Date	Contract Sales Price		Net Gain on Disposition		Revenue Attributable to Property Sold		Net Income Attributable to Property Sold (1)
Payne Place	Alexandria, Virginia	March 5, 2020	$	3,100	$	530	$	32	$	3

(1) Excludes net gain on disposition.

17

RESOURCE APARTMENT REIT III, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

MARCH 31, 2020

(unaudited)

NOTE 7 - IDENTIFIED INTANGIBLE ASSETS, NET

Identified intangible assets, net, consist of acquired in-place rental leases. The net carrying value of the leases at March 31, 2020 and December 31, 2019 was $0 and approximately $173,000, respectively, net of the accumulated amortization of $4.6 million and $4.4 million, respectively. At March 31, 2020, intangible assets were fully amortized.

Amortization for the three months ended March 31, 2020 and 2019 was approximately $173,000 and $639,000, respectively.

NOTE 8 - MORTGAGE NOTES PAYABLE

The following table presents a summary of the Company's mortgage notes payable, net (in thousands):

	March 31, 2020							December 31, 2019
Collateral	Outstanding Borrowings		Deferred Financing Costs, net			Carrying Value		Outstanding borrowings		Deferred Financing Costs, net			Carrying Value
Payne Place	$	—	$	—		$	—	$	1,525	$	(28	)	$	1,497
Bay Club		21,298		(196	)		21,102		21,398		(208	)		21,190
Tramore Village		32,625		(289	)		32,336		32,625		(304	)		32,321
Matthews Reserve		23,850		(255	)		23,595		23,850		(267	)		23,583
The Park at Kensington		21,760		(248	)		21,512		21,760		(260	)		21,500
Wimbledon Oaks		18,410		(225	)		18,185		18,410		(235	)		18,175
Summit		27,580		(330	)		27,250		27,580		(343	)		27,237
Total	$	145,523	$	(1,543	)	$	143,980	$	147,148	$	(1,645	)	$	145,503

18

RESOURCE APARTMENT REIT III, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

MARCH 31, 2020

(unaudited)

The following table presents additional information about the Company's mortgage notes payable, net (in thousands, except percentages):

Collateral	Maturity Date	Annual Interest Rate				Average Monthly Debt Service		Average Monthly Escrow
Bay Club	8/1/2024		2.86	%	(1)(4)	$	89	$	56
Tramore Village	4/1/2025		2.79	%	(2)(5)		77		84
Matthews Reserve	9/1/2025		4.47	%	(3)(5)		90		20
The Park at Kensington	10/1/2025		4.36	%	(3)(5)		80		53
Wimbledon Oaks	3/1/2026		4.33	%	(3)(5)		67		64
Summit	7/1/2026		3.84	%	(3)(5)		89		43

(1) Variable rate based on one-month LIBOR of 0.99% (at March 31, 2020) plus 1.87%, with a maximum interest rate of 5.75%.

(2) Variable rate based on one-month LIBOR of 0.99% (at March 31, 2020) plus 1.80%, with a maximum interest rate of 6.25%.

(3) Fixed rate.

(4) Monthly payment of principal and interest required.  

(5) Monthly interest-only payment currently required.

All of the mortgage notes are collateralized by a first mortgage lien on the assets of the respective property named in the table above. The amount outstanding on the mortgages may be prepaid in full during the entire term with a prepayment penalty for a portion of the term.

The following table presents the Company's annual principal payments on outstanding borrowings for each of the next five years ending March 31, and thereafter (in thousands):

2021	$	452
2022		1,446
2023		2,574
2024		2,822
2025		21,843
Thereafter		116,386
	$	145,523

Deferred financing costs incurred to obtain financing are amortized over the term of the related debt. During the three months ended March 31, 2020 and 2019, amortization of deferred financing costs of approximately $74,000 and $59,000, respectively, was included in interest expense. Accumulated amortization at March 31, 2020 and December 31, 2019 was approximately $483,000and $415,000, respectively.

The following table presents the Company's estimated amortization of the existing deferred financing costs for the next five years ending March 31, and thereafter (in thousands):

2021	$	294
2022		292
2023		288
2024		284
2025		248
Thereafter		137
	$	1,543

19

RESOURCE APARTMENT REIT III, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

MARCH 31, 2020

(unaudited)

NOTE 9 - CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

Relationship with the Advisor

The Company is externally managed and advised by the Advisor. Pursuant to the terms of the Advisory Agreement, the Advisor provides the Company with its management team, including its officers, along with appropriate support personnel. The Advisor will be reimbursed for the Company’s allocable share of costs for Advisor personnel, including allocable personnel salaries and benefits. Each of the Company’s officers is an employee of the Sponsor or one of its affiliates. The Company does not expect to have any employees. The Advisor is not obligated to dedicate any specific portion of its time or its employees' time to the Company’s business. The Advisor and any employees of the Sponsor or its affiliates acting on behalf of the Advisor, are at all times subject to the supervision and oversight of the Company’s board of directors and have only such functions and authority as the Company delegates to it. Effective April 28, 2020, the Company renewed the Advisory Agreement with the Advisor through April 27, 2021.

During the course of the offering, the Advisor provided offering-related services to the Company and advanced funds to the Company for both operating costs and organization and offering costs. These amounts were to be reimbursed to the Advisor from the proceeds from the offering, subject to the aforementioned limits on organization and offering expense reimbursements. As of March 31, 2020, the Company incurred a total of $9.2 million of organization and offering costs, of which the Advisor advanced $9.0 million on a cumulative basis on behalf of the Company. The Company paid the remaining amount of approximately $249,000 of these costs directly. The maximum liability of the Company was $4.4 million based on the limit on organization and offering expenses payable by the Company included in the Advisory Agreement, which was comprised of the $249,000 initially paid by the Company and $4.2 million of the advance from the Advisor. An adjustment was made during the year ended December 31, 2019 to relieve the Company from the remaining $4.8 million liability due to the Advisor. As of March 31, 2020, the Company has reimbursed $1.7 million to the Advisor.  

The Advisory Agreement has a one -year term and may be renewed for an unlimited number of successive one -year terms upon the approval of the Conflicts Committee of the Company's board of directors. Under the Advisory Agreement, the Advisor will receive fees and will be reimbursed for its expenses as set forth below:

Acquisition fees. The Advisor earns an acquisition fee of 2.0% of the cost of investments acquired on behalf of the Company, plus any capital reserves allocated, or the amount funded by the Company to acquire or originate loans, including acquisition expenses and any debt attributable to such investments.

Asset management fees. The Advisor earns a monthly asset management fee equal to 0.083% (one-twelfth of 1.0%) of the appraised asset value for all assets owned at the end of each month, without deduction for depreciation, bad debts or other non-cash reserves. The asset management fee is based only on the portion of the costs or value attributable to the Company’s investment in an asset if the Company does not own all of an asset and does not manage or control the asset.

Disposition fees. The Advisor earns a disposition fee in connection with the sale of a property equal to the lesser of one-half of the aggregate brokerage commission paid, or if none is paid, 2.0% of the contract sales price.

Debt financing fees. The Advisor will earn a debt financing fee equal to 0.5% of the amount available under any debt financing obtained.

Expense reimbursements. The Company paid directly or reimbursed the Advisor for all of the expenses paid or incurred by the Advisor or its affiliates on behalf of the Company or in connection with the services provided to the Company in relation to its public offering, including its distribution reinvestment plan offering. This includes all organization and offering costs of up to 4.0% of gross offering proceeds as the Company raised less than $500.0 million in the primary offering. Reimbursements also include expenses the Advisor incurs in connection with providing services to the Company, including the Company’s allocable share of costs for Advisor personnel and overhead, out-of-pocket expenses incurred in connection with the selection and acquisition of properties or other real estate related debt investments, whether or not the Company ultimately acquires the investment. However, the Company will not reimburse the Advisor or its affiliates for employee costs in connection with services for which the Advisor earns acquisition or disposition fees. Prior to the Company breaking escrow, the Advisor incurred approximately $104,000 of formation and other operating expenses the Company's behalf, which will not be reimbursed to the Advisor.

20

RESOURCE APARTMENT REIT III, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

MARCH 31, 2020

(unaudited)

On April 13, 2018, the board of directors approved an amendment to the Advisory Agreement that provides that the Company is not responsible for the reimbursement of any unreimbursed organization and offering expenses or operational expenses incurred by the Advisor on the Company’s behalf through March 31, 2018 until after the termination of the primary portion of the Company’s ongoing initial public offering. Additionally, the amendment provides that such unreimbursed organization and offering expenses or operational expenses incurred or paid by the Advisor on the Company’s behalf through March 31, 2018 will be reimbursed ratably starting after the termination of the primary portion of the Company’s ongoing initial public offering through April 30, 2021 for organization and offering expenses and through April 30, 2020 for operating expenses.The payments commenced on November 1, 2019.

Relationship with the Manager

The Manager manages real estate properties and real estate-related debt investments and coordinates the leasing of, and manages construction activities related to, some of the Company’s real estate properties pursuant to the terms of the management agreement with the Manager.

Property management fees. The Manager earns a property management fee equal to 4.5% of actual gross cash receipts from the operations of real property investments that it manages and an oversight fee in the same amount on any real property investments that are managed by third parties. Property management fees are deducted directly from the property's operating account by the property manager. The Manager subcontracts operational management of the properties to an unaffiliated third party and pays for those services from its property management fee. Any property management fees paid to unaffiliated third party property managers in excess of 4.5% of actual gross receipts will be reimbursed to the Company by the Advisor.

Construction management fees. The Manager earns a construction management fee equal to 5.0% of actual aggregate costs to construct improvements to a property.

Debt servicing fees. The Manager will earn a debt servicing fee equal to 2.75% of gross receipts from real estate-related debt investments.

Expense reimbursement. During the ordinary course of business, the Manager or other affiliates of RAI may pay certain shared operating expenses on behalf of the Company. The Company is obligated to reimburse the Manager or other affiliates for such shared operating expenses.

Relationship with Resource Securities

Resource Securities, an affiliate of the Advisor, serves as the Company’s dealer manager and was responsible for marketing the Company’s shares during the primary public offering.

Dealer manager fee and selling commissions. Pursuant to the terms of the amended and restated dealer manager agreement with Resource Securities, the Company generally paid Resource Securities a selling commission of up to 3.0% of gross offering proceeds from the sale of Class R shares and a dealer manager fee of up to 3.5% of gross offering proceeds from the sale of Class R shares (but the aggregate of such fees shall not exceed 5.5% of gross offering proceeds). The Company generally paid Resource Securities a dealer manager fee of up to 1.5% of gross offering proceeds from the sale of the Class I shares. Resource Securities allowed all selling commissions earned and a portion of the dealer manager fee as a marketing fee to participating broker-dealers. No selling commissions or dealer manager fees were earned by Resource Securities in connection with sales under the distribution reinvestment plan. Additionally, the Company may reimburse Resource Securities for bona fide due diligence expenses.

21

RESOURCE APARTMENT REIT III, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

MARCH 31, 2020

(unaudited)

Distribution and shareholder servicing fee. Resource Securities was paid an annual fee of 1.0% of the NAV (purchase price prior to June 29, 2018) per share of Class T common stock sold in the primary offering for up to five years from the date on which each share was issued.Resource Securities was also paid an annual fee of 1.0% of the NAV (purchase price prior to June 29, 2018) per share of Class R common stock sold in the primary offering subject to the terms of the Class R shares as included in the Articles Supplementary. Effective November 1, 2019, pursuant to the terms of the Class T and Class R shares, no further distribution and shareholder servicing fees were payable to Resource Securities so the Company ceased to accrue the distribution and shareholder servicing fee.

Relationship with RAI and C-III

Property loss pool. Until February 28, 2019, the Company's properties participated in a property loss self-insurance pool with other properties directly and indirectly managed by RAI and C-III, which was backed by a catastrophic insurance policy. The pool covered losses up to $2.5 million, in aggregate, after a $25,000 deductible per incident. Claims beyond the insurance pool limits were covered by the catastrophic insurance policy, which covered claims up to $250.0 million, after either a $25,000 or a $100,000 deductible per incident, depending on location and/or type of loss. Therefore, unforeseen or catastrophic losses in excess of the Company's insured limits could have a material adverse effect on the Company's financial condition and operating results.

Beginning March 1, 2019, the Company now participates (with other properties directly and indirectly managed by RAI and C-III) only in the catastrophic insurance policy, which covers claims up to $250.0 million, after either a $25,000 or a $100,000 deductible per incident, depending on location and/or type of loss. Therefore, unforeseen or catastrophic losses in excess of the Company's insured limits could have a material adverse effect on the Company's financial condition and operating results. Substantially all of the receivables from related parties represent insurance deposits held in escrow by RAI and C-III related to the self-insurance pool which, if unused, will be returned to the Company.

General liability coverage.  The Company also participates (with other properties directly and indirectly managed by RAI and C-III) in a general liability policy. The insured limit for the general liability policy is $76.0 million in total claims, after a $25,000 deductible per incident.

Internal audit fees. RAI performs internal audit services for the Company.

Directors and officers liability insurance. The Company participates in a liability insurance program for directors and officers coverage with other C-III managed entities and subsidiaries for coverage up to $100.0 million.

22

RESOURCE APARTMENT REIT III, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

MARCH 31, 2020

(unaudited)

The following table presents the Company's amounts receivable from and amounts payable to such related parties (in thousands):

	March 31, 2020		December 31, 2019
Due from related parties:
Advisor	$	2	$	—
	$	2	$	—
Due to related parties:
Advisor:
Organization and offering costs	$	2,499	$	3,076
Operating expense reimbursements (including prepaid expenses)		447		1,778
		2,946		4,854
Manager:
Property management fees		78		81
Operating expense reimbursements		—		3
		78		84
Other:
Resource Real Estate Opportunity REIT I deposited check	12			—
	$	3,036	$	4,938

23

RESOURCE APARTMENT REIT III, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

MARCH 31, 2020

(unaudited)

The following table presents the Company's fees earned by and expenses incurred from such related parties (in thousands):

	Three Months Ended March 31,
	2020		2019
Fees earned / expenses incurred:
Advisor:
Acquisition fees and acquisition related reimbursements (1)	$	—	$	610
Asset management fees (2)		555		415
Disposition fees (10)		62		—
Debt financing fees (3)		—		92
Organization and offering costs (4)		—		324
Operating expense reimbursement (5)(9)		6		405
Manager:
Property management fees (2)	$	225	$	159
Construction management fees (1)		130		42
Operating expense reimbursements (6)		—		30
RAI:
Internal audit fee (5)	$	—	$	12
Resource Securities:
Selling commissions and dealer-manager fees (7)	$	—	$	820
Distribution and shareholder servicing fee (7)(8)		—		424
Other:
The Planning & Zoning Resource Company (1)	$	—	$	1

(1) Capitalized and included in Rental properties, net on the consolidated balance sheets.

(2) Included in Management fees - related parties on the consolidated statements of operations and comprehensive loss.

(3) Included in Mortgage notes payable on the consolidated balance sheets.

(4) Organizational expenses were expensed when incurred and offering costs are included in Deferred offering costs until they are charged to Stockholders' equity on the consolidated balance sheets as proceeds are raised in the offering.

(5)   Included in General and administrative on the consolidated statements of operations and comprehensive loss and excludes third party costs that are advanced by the Advisor.

(6) Included in Rental operating expenses on the consolidated statements of operations and comprehensive loss.

(7) Included in Stockholders' equity on the consolidated balance sheets.

(8) During the year ended December 31, 2019, there was an adjustment in conjunction with the termination of the primary offering; see Note 2.

(9) During the year ended December 31, 2019, the Advisor suspended the allocation of rent and payroll costs to the Company.

(10) Included in Net gain on disposition of property on the consolidated statements of operations and comprehensive loss.

24

RESOURCE APARTMENT REIT III, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

MARCH 31, 2020

(unaudited)

NOTE 10 - EARNINGS PER SHARE

The following table presents a reconciliation of basic and diluted earnings/(loss) per share for the periods presented as follows (in thousands, except per share data):

	Three Months Ended March 31,
	2020			2019
Net loss	$	(1,670	)	$	(2,785	)
Less: Class A common stock cash distributions declared		—			85
Less: Class T common stock cash distributions declared		27			123
Less: Class R common stock cash distributions declared		—			988
Less: Class I common stock cash distributions declared		4			62
Undistributed net loss attributable to common stockholders	$	(1,701	)	$	(4,043	)
Class A common stock:
Undistributed net loss attributable to Class A common    stockholders	$	(88	)	$	(255	)
Class A common stock cash distributions declared		—			85
Net loss attributable to Class A common stockholders	$	(88	)	$	(170	)
Net loss per Class A common share, basic and diluted	$	(0.14	)	$	(0.27	)
Weighted-average number of Class A common shares    outstanding, basic and diluted (1)		629			635
Class T common stock:
Undistributed net loss attributable to Class T    common stockholders	$	(157	)	$	(448	)
Class T common stock cash distributions declared		27			123
Net loss attributable to Class T common stockholders	$	(130	)	$	(325	)
Net loss per Class T common share, basic and diluted	$	(0.12	)	$	(0.29	)
Weighted-average number of Class T common shares    outstanding, basic and diluted		1,118			1,114
Class R common stock:
Undistributed net loss attributable to Class R    common stockholders	$	—		$	(3,188	)
Class R common stock cash distributions declared		—			988
Net loss attributable to Class R common stockholders	$	—		$	(2,200	)
Net loss per Class R common share, basic and diluted	$	—		$	(0.28	)
Weighted-average number of Class R common shares    outstanding, basic and diluted		—			7,937
Class I common stock:
Undistributed net loss attributable to Class I    common stockholders	$	(1,456	)	$	(152	)
Class I common stock cash distributions declared		4			62
Net loss attributable to Class I common stockholders	$	(1,452	)	$	(90	)
Net loss per Class I common share, basic and diluted	$	(0.14	)	$	(0.24	)
Weighted-average number of Class I common shares    outstanding, basic and diluted		10,355			380

(1)Weighted-average number of shares excludes the convertible stock as they are not participating securities.

25

RESOURCE APARTMENT REIT III, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

MARCH 31, 2020

(unaudited)

NOTE 11 - EQUITY

Preferred Stock

The Company’s charter authorizes the Company to issue 10 million shares of its $0.01 par value preferred stock. As of March 31, 2020, no shares of preferred stock were issued or outstanding.

Convertible Stock

The Company’s charter authorizes the Company to issue 50,000 shares of its $0.01 par value convertible stock. On August 5, 2016, the Company's board of directors approved the issuance of 50,000 convertible shares in exchange for 5,000 shares of Class A common stock. As of March 31, 2020, the Company had 50,000 shares of $0.01 par value convertible stock outstanding, which are owned by the Advisor. The convertible stock will convert into shares of the Company’s Class A common stock upon the occurrence of (a) the Company having paid distributions to common stockholders that in the aggregate equal 100% of the price at which the Company originally sold the shares plus an amount sufficient to produce a 6% cumulative, non-compounded annual return on the shares at that price; or (b) if the Company lists its common stock on a national securities exchange or the Company consummates a merger pursuant to which consideration received by the stockholders is securities of another issuer that are listed on a national securities exchange.

Each of these two events is a "Triggering Event."  Upon a Triggering Event, the Company's convertible stock will, unless its Advisory Agreement has been terminated or not renewed on account of a material breach by its Advisor, generally be converted into a number of shares of common stock equal to 1/50,000 of the quotient of:

(A) 15% of the amount, if any, by which

(1) the value of the Company as of the date of the event triggering the conversion plus the total distributions paid to its stockholders through such date on the then-outstanding shares of its common stock exceeds

(2) the sum of the aggregate issue price of those outstanding shares plus a 6% cumulative, non-compounded, annual return on the issue price of those outstanding shares as of the date of the event triggering the conversion, divided by

(B) the value of the Company divided by the number of outstanding shares of common stock, in each case, as of the date of the event triggering the conversion.

No triggering events have occurred or were considered probable to occur as of March 31, 2020.

Common Stock

The Company’s charter authorizes the issuance of 1 billion shares of common stock with a par value of $0.01 per share, of which, the Company has allocated 750 million shares as Class R common stock; 75 million shares as Class I common stock; 25 million shares as Class A common stock; and 25 million shares as Class T common stock. 125 million shares of common stock remain undesignated. As of July 3, 2017, the Company ceased offering shares of Class A and Class T common stock and commenced the offering of Class R and Class I common stock in its primary offering. The Company ceased offering Class R and Class I shares in the primary offering on October 31, 2019 and ceased processing subscriptions in the offering on November 15, 2019. The Company continues to offer shares of Class A, Class T, and Class I common stock pursuant to the DRIP.

On November 1, 2019, each Class R share of common stock of the Company automatically converted into a Class I share of common stock of the Company pursuant to the terms of the Articles Supplementary for the Class R shares. The Class R shares converted into Class I shares on a one-for-one basis, because the most recently approved estimated net asset value per share approved by its board of directors ($9.12 as of March 21, 2019) was the same for all classes of common stock. Stockholders who received Class I shares upon the conversion will no longer be subject to the class-specific expenses associated with Class R shares.  As of November 1, 2019, the Company no longer has any shares of Class R common stock outstanding.

26

RESOURCE APARTMENT REIT III, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

MARCH 31, 2020

(unaudited)

AtMarch 31, 2020, shares of the Company's $0.01 par value Class A, Class T, Class R, and Class I common stock have been issued as follows (dollars in thousands):

	Class A					Class T					Class R					Class I
	Shares Issued			Gross Proceeds		Shares Issued			Gross Proceeds		Shares Issued			Gross Proceeds		Shares Issued			Gross Proceeds
Shared issued through primary offering (1)		586,207		$	5,601		1,049,996		$	9,943		9,356,068		$	89,917		624,325		$	5,760
Shares issued through stock dividends		12,860			—		15,495			—		—			—		—			—
Shares issued through distribution reinvestment plan		34,179			318		91,763			834		356,453			3,244		115,513			1,050
Shares issued in conjunction with the Advisor's initial investment, net of 5,000 share conversion		15,000			200		—			—		—			—		—			—
Total		648,246		$	6,119		1,157,254		$	10,777		9,712,521		$	93,161		739,838		$	6,810
Shares redeemed and retired		(22,398	)				(35,615	)				(32,122	)				(13,415	)
Class R share conversion (2)		—					—					(9,680,399	)				9,680,399
Total shares issued and outstanding at March 31, 2020		625,848					1,121,639					—					10,406,822

(1) Includes 222,222 of Class A shares issued to RAI.

(2) On November 1, 2019, all outstanding Class R shares converted to Class I shares.

Share Redemption Program

During the three months ended March 31, 2020, the Company redeemed shares of its outstanding Class A, Class T, and Class I common stock, as follows:

	Class A				Class T				Class I
Period	Total Number of Shares Redeemed		Average Price Paid per Share		Total Number of Shares Redeemed		Average Price Paid per Share		Total Number of Shares Redeemed		Average Price Paid per Share
January 2020		—		—		—		—		—		—
February 2020		—		—		—		—		—		—
March 2020		5,484	$	8.89		3,587	$	8.89		2,416	$	8.44
		5,484				3,587				2,416

All redemptions requests tendered were honored during thethree months ended March 31, 2020.

The Company will not redeem in excess of 5% of the weighted-average number of shares of common stock outstanding during the 12-month period immediately prior to the effective date of redemption. The Company's board of directors will determine at least quarterly whether it has sufficient excess cash to repurchase shares. Generally, the cash available for redemptions will be limited to proceeds from the Company's distribution reinvestment plan plus, if the Company has positive operating cash flow from the previous fiscal year, 1% of all operating cash flow from the previous year.

The Company's board of directors, in its sole discretion, may suspend, terminate or amend the Company's share redemption program without stockholder approval upon 30 days' notice if it determines that such suspension, termination or amendment is in the Company's best interest. The Company's board may also reduce the number of shares purchased under the share redemption program if it determines the funds otherwise available to fund the Company's share redemption program are needed for other purposes.

These limitations apply to all redemptions, including redemptions sought upon a stockholder's death, qualifying disability or confinement to a long-term care facility.

On March 27, 2020, the board of directors of the Company suspended the share redemption program with exceptions for redemptions sought upon a stockholder’s death, qualifying disability or confinement to a long-term care facility. The suspension is effective as of April 29, 2020. While the share redemption program is partially suspended, both pending and new redemption requests for redemptions submitted other than in connection with a stockholder’s death, qualifying disability or

27

RESOURCE APARTMENT REIT III, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

MARCH 31, 2020

(unaudited)

confinement to a long-term care facility will not be honored or retained, but will be cancelled with the ability to resubmit if the share redemption program is fully resumed.

Distributions

During the year ended December 31, 2019, the Company’s board of directors declared cash distributions on the outstanding shares of all classes of its common stock based on daily record dates for the period from December 31, 2019 through March 30, 2020 which were paid on January 31, 2020, February 28, 2020, and March 31, 2020.

The distributions were calculated based on the stockholders of record each day during the period at a rate of $0.001469178 per share per day.

Distributions were generally paid to stockholders on the last business day of the month for which the distribution has accrued. Distributions reinvested pursuant to the distribution reinvestment plan are reinvested in shares of the same class as the shares on which distributions are made.

There were no distributions declared during the three months ended March 31, 2020.

The following table presents information regarding the Company's distributions paid to stockholders during the three months ended March 31, 2020 (in thousands):

	Three Months Ended March 31, 2020
	Class A		Class T		Class R		Class I		Total
True-up of prior year cash distributions declared	$	—	$	27	$	—	$	4	$	31
Distributions reinvested in shares of common stock paid	$	24	$	89	$	—	$	744	$	857
Cash distributions paid		60		61		—		640		761
Total distributions paid	$	84	$	150	$	—	$	1,384	$	1,618

The Company announced on March 30, 2020 that it was suspending distributions as of April 1, 2020 in order to preserve cash and offset any impact to the Company’s liquidity that may occur as a result of the COVID-19 pandemic on its operations.

NOTE 12 - FAIR VALUE MEASURES AND DISCLOSURES

In analyzing the fair value of its financial investments accounted for on a fair value basis, the Company follows the fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The Company determines fair value based on quoted prices when available or, if quoted prices are not available, through the use of alternative approaches, such as discounting the expected cash flows using market interest rates commensurate with the credit quality and duration of the investment. The fair value of cash, tenant receivables and accounts payable, approximate their carrying value due to their short nature. The hierarchy followed defines three levels of inputs that may be used to measure fair value:

Level 1 - Quoted prices in active markets for identical assets and liabilities that the reporting entity has the ability to access at the measurement date.

Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset and liability or can be corroborated with observable market data for substantially the entire contractual term of the asset or liability.

Level 3 - Unobservable inputs that reflect the entity’s own assumptions about the assumptions that market participants would use in the pricing of the asset or liability and are consequently not based on market activity, but rather through particular valuation techniques.

The determination of where an asset or liability falls in the hierarchy requires significant judgment. The Company evaluates its hierarchy disclosures each quarter; depending on various factors, it is possible that an asset or liability may be classified differently from quarter to quarter. However, the Company expects that changes in classifications between levels will be rare.

28

RESOURCE APARTMENT REIT III, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

MARCH 31, 2020

(unaudited)

The fair value of rental properties is usually estimated based on information obtained from a number of sources, including information obtained about each property as a result of pre-acquisition due diligence, marketing and leasing activities. The Company allocates the purchase price of properties to acquired tangible assets, consisting of land, buildings, fixtures and improvements, and identified intangible lease assets and liabilities, consisting of the value of above-market and below-market leases, as applicable, the value of in-place leases and the value of tenant relationships, based in each case on their fair values.

Derivatives are reported at fair value in the consolidated balance sheets and are valued by a third party pricing agent using an income approach with models that use, as their primary inputs, readily observable market parameters. This valuation process considers factors including interest rate yield curves, time value, credit and volatility factors. (Level 2).

The following table presents information about the Company's assets measured at fair value on a recurring basis and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value (in thousands):

	Level 1		Level 2		Level 3		Total
March 31, 2020
Assets:
Interest rate caps	$	—	$	1	$	—	$	1
December 31, 2019
Assets:
Interest rate caps	$	—	$	—	$	—	$	—

The carrying and fair values of the Company’s mortgage notes payable-outstanding borrowings, which were not carried at fair value on the consolidated balance sheets at March 31, 2020 and December 31, 2019 were as follows (in thousands):

	March 31, 2020				December 31, 2019
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Mortgage notes payable- outstanding borrowings	$	145,523	$	144,927	$	147,148	$	144,902

The carrying amount of the mortgage notes payable presented above is the outstanding borrowings excluding premium or discount and deferred finance costs, net. At March 31, 2020, the fair value of mortgage notes payable was estimated using a discounted cash flow model and rates available to the Company for debt with similar terms and remaining maturity.

NOTE 13 - DERIVATIVES AND HEDGING ACTIVITIES

Risk Management Objective of Using Derivatives

The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources, and duration of its debt funding and the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Company’s derivative financial instruments are used to manage differences in the amount, timing, and duration of the Company’s known or expected cash receipts and its known or expected cash payments principally related to the Company’s investments and borrowings.

As a condition to certain of the Company’s financing facilities, from time to time the Company may be required to enter into certain derivative transactions as may be required by the lender. These transactions would generally be in line with the Company’s own risk management objectives and also serve to protect the lender.

29

RESOURCE APARTMENT REIT III, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

MARCH 31, 2020

(unaudited)

Cash Flow Hedges of Interest Rate Risk

The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company entered into two interest rate caps that were designated as cash flow hedges. Interest rate caps designated as cash flow hedges involve the receipt of variable amounts from a counterparty if interest rates rise above the strike rate on the contract in exchange for an up-front premium.

The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive income and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. During the three months ended March 31, 2020, such derivatives were used to hedge the variable cash flows, indexed to USD-LIBOR, associated with existing variable-rate loan agreements. The ineffective portion of the change in fair value of the derivatives will be recognized directly in earnings. During the three months ended March 31, 2020 and 2019, the Company recorded $5,659 and $853, respectively, of hedge ineffectiveness in earnings.

Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on the Company's variable-rate debt. At March 31, 2020, the Company estimates that an additional $26,756 will be reclassified as an increase to interest expense over the next 12 months.

The following table presents the Company's outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk at March 31, 2020 and December 31, 2019 (dollars in thousands):

	Interest Rate Derivative	Number of Instruments	Notional Amount		Maturity Dates
March 31, 2020	Interest rate caps	2	$	54,145	August 1, 2020 and April 1, 2021
December 31, 2019	Interest rate caps	2	$	54,145	August 1, 2020 and April 1, 2021

Tabular Disclosure of Fair Values of Derivative Instruments on the Balance Sheet

The following table presents the fair value of the Company’s derivative financial instruments as well as their classification on the consolidated balance sheets at March 31, 2020 and December 31, 2019 (in thousands):

Asset Derivatives				Liability Derivatives
March 31, 2020		December 31, 2019		March 31, 2020		December 31, 2019
Balance Sheet	Fair Value	Balance Sheet	Fair Value	Balance Sheet	Fair Value	Balance Sheet	Fair Value
Prepaid expenses and other assets	$          1	Prepaid expenses and other assets	$         —	—	$          —	—	$          —

NOTE 14 - OPERATING EXPENSE LIMITATION

Under its charter, the Company must limit its total operating expenses to the greater of 2% of its average invested assets or 25% of its net income for the four most recently completed fiscal quarters, unless the Conflicts Committee of the Company’s board of directors has determined that such excess expenses were justified based on unusual and non-recurring factors.Operating expenses for the four fiscal quarters ended March 31, 2020 were in compliance with the charter imposed limitation.

NOTE 15 - SUBSEQUENT EVENTS

The Company has evaluated subsequent events through the filing of this report and determined that there have not been any events that have occurred that would require adjustments to or disclosures in the consolidated financial statements, except for the following:

Renewal of Advisory Agreement

Effective April 28, 2020, the Company renewed the Advisory Agreement with the Advisor through April 27, 2021. The terms of the agreement are identical to those of the Advisory Agreement in effect through April 27, 2020.

30

RESOURCE APARTMENT REIT III, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

MARCH 31, 2020

(unaudited)

COVID-19 Pandemic

The Company is closely monitoring the impact of the COVID-19 pandemic on all aspects of its business, including how the pandemic will impact its tenants. While the Company did not incur significant disruptions from the COVID-19 pandemic during the three months ended March 31, 2020, during April 2020, a small percent of tenants have requested rent deferral as a result of the pandemic. The Company is evaluating each tenant rent relief request on an individual basis, considering a number of factors. Not all tenant requests will ultimately result in modified agreements, nor is the Company forgoing its contractual rights under its lease agreements.

On April 10, 2020, FASB issued a Staff Q&A to respond to some frequently asked questions about accounting for lease concessions related to the effects of the COVID-19 pandemic. Consequently, for concessions related to the effects of the COVID-19 pandemic, an entity will not have to analyze each lease to determine whether enforceable rights and obligations for concessions exist in the lease and can elect to apply or not apply the lease modification guidance to those leases. Entities may make the elections for any lessor-provided concessions related to the effects of the COVID-19 pandemic (e.g., deferrals of lease payments) as long as the concession does not result in a substantial increase in the rights of the lessor or the obligations of the lessee.

The Company is unable to predict the impact that the pandemic will have on its financial condition, results of operations and cash flows due to numerous uncertainties. The extent to which the COVID-19 pandemic impacts the Company’s operations and those of its tenants will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact, and the direct and indirect economic effects of the pandemic and containment measures, among others.

31

ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (unaudited)

The following discussion and analysis should be read in conjunction with the accompanying financial statements of Resource Apartment REIT III, Inc. and the notes thereto. See also "Cautionary Note Regarding Forward-Looking Statements" preceding Part I, as well as the notes to our financial statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations provided in our Annual Report on Form 10-K for the year ended December 31, 2019. As used herein, the terms "we," "our" and "us" refer to Resource Apartment REIT III, Inc., a Maryland corporation, and, as required by context, Resource Apartment REIT III OP, LP, a Delaware limited partnership, and to their subsidiaries.

Overview

Resource Apartment REIT III, Inc. is a Maryland corporation that intends to take advantage of its sponsor's multifamily investing and lending platforms to invest in apartment communities in order to provide stockholders with growing cash flow and increasing asset values. We have acquired underperforming apartments which we will renovate and stabilize in order to increase rents. Our primary public offering stage terminated as of October 31, 2019 having raised substantially less than the maximum offering amount. Therefore, we do not expect to be able to invest in as diverse a portfolio of properties as we otherwise would. We may make adjustments to our target portfolio based on real estate market conditions and investment opportunities. We will not forego a good investment because it does not precisely fit our expected portfolio composition. Thus, to the extent that Resource REIT Advisor, LLC (our "Advisor") presents us with attractive investment opportunities that allow us to meet the real estate investment trust ("REIT") requirements under the Internal Revenue Code of 1986, as amended, our portfolio composition may vary from what we initially expect.

COVID-19 Pandemic and Portfolio Outlook

Since initially being reported in December 2019, COVID-19 has spread around the world, including to every state in the United States. On March 11, 2020, the World Health Organization declared COVID-19 a pandemic, and on March 13, 2020, the United States declared a national emergency with respect to COVID-19. The COVID-19 pandemic has severely impacted global economic activity and caused significant volatility and negative pressure in financial markets. The global impact of the pandemic is rapidly evolving and many countries, including the United States, have reacted by instituting quarantines, mandating business and school closures and restricting travel. As a result, the COVID-19 pandemic is negatively impacting almost every industry, including the real estate industry, directly or indirectly. The rapid development and fluidity of the COVID-19 pandemic precludes any prediction as to the ultimate adverse impact the pandemic may have on our business, financial condition, results of operations and cash flows.

In the near term many of our tenants may suffer difficulties with their personal financial situations as a result of job loss or reduced income and, depending upon the duration of quarantines and the corresponding economic slowdown, some of our tenants have or will seek rent deferrals or become unable to pay their rent. As of April 30, 2020, we had received April rent payments equal to approximately 97.3% of the monthly rent for April, which is a reduction in the rate of collections of approximately 0.9% from our rent collections in March 2020. In addition, we have approved short-term rent relief requests, most often in the form of rent deferral requests, or requests for further discussion, from approximately 0.1% of our tenants, equal to approximately 0.1% of our monthly rent for April. Not all tenant requests will ultimately result in modified agreements, nor are we forgoing our contractual rights under our lease agreements. April collections and rent relief requests to-date may not be indicative of collections or requests in any future period. The impact of the COVID-19 pandemic on our rental revenue for the second quarter of 2020 and thereafter cannot however, be determined at present. In addition, we expect the economic disruptions caused by the COVID-19 pandemic will cause elevated credit losses and impede our ability to increase rental rates or lease vacant units, in particular if our current tenants default on their leases and vacate. We are temporarily waiving late fees, halting evictions, and offering a payment deferral plan to residents who have been adversely financially impacted by the COVID-19 pandemic. To help mitigate the impact on our operating results of the COVID-19 pandemic, we have initiated various operational cost saving initiatives across our portfolio. In addition, we have taken measures to preserve cash and offset any impact to our liquidity that may occur as a result of the COVID-19 pandemic. These measures included the suspension of distributions as of April 1, 2020 as well as the partial suspension of our share redemption program effective April 29, 2020. Additionally, most of our value-add rehabilitation projects will be deferred temporarily.

The COVID-19 pandemic or a future pandemic, epidemic or outbreak of infectious disease affecting states or regions in which we operate and our multifamily tenants reside and work could have material and adverse effects on our business,

32

financial condition, results of operations and cash flows due to, among other factors: reduced economic activity, general economic decline or recession, which may result in job loss or bankruptcy for residents at our properties and may cause our residents to be unable to make rent payments to us timely, or at all, or to otherwise seek modifications of lease obligations; health or other government authorities requiring the closure of offices or other businesses or instituting quarantines of personnel as the result of, or in order to avoid, exposure to a contagious disease; disruption in supply and delivery chains; a general decline in business activity and demand for real estate; difficulty accessing debt and equity capital on attractive terms, or at all, and a severe disruption and instability in the global financial markets or deteriorations in credit and financing conditions, which may affect our access to capital necessary to fund business operations or address maturing liabilities on a timely basis; and the potential negative impact on the health of personnel of our advisor, particularly if a significant number of our advisor’s employees are impacted, which would result in a deterioration in our ability to ensure business continuity and maintain our properties during a disruption.

The extent to which the COVID-19 pandemic or any other pandemic, epidemic or disease impacts our operations and those of our tenants will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact, and the direct and indirect economic effects of the pandemic and containment measures, among others. However, notwithstanding the challenging economic circumstances created by the COVID-19 pandemic, we believe our focus on multifamily assets makes us better positioned relative to other classes of real estate to withstand many of the adverse impacts of the COVID-19 pandemic as housing is a basic need, rather than a discretionary expense.  In addition, as noted above, we have taken several steps to offset any disruptions in rent that may occur as a result of the COVIC-19 pandemic.  Further, we have no debt maturing until August 2024 and are conservatively leveraged with an aggregate portfolio leverage of 66%.Nevertheless, the COVID-19 pandemic (or a future pandemic, epidemic or disease) presents material uncertainty and risk with respect to our business, financial condition, results of operations and cash flows.

Results of Operations

We were formed on July 15, 2015. We commenced active real estate operations on August 19, 2016 with the acquisition of our first multifamily property. Since our inception, we have acquired interests in seven multifamily properties. At March 31, 2020, we owned six multifamily properties.

Although the COVID-19 pandemic did not significantly impact our operating results for the quarter ending March 31, 2020, we expect that the COVID-19 outbreak will adversely affect our business, financial condition, results of operations and cash flows going forward, including but not limited to, rental revenues and leasing activity, in ways that may vary widely depending on the duration and magnitude of the COVID-19 pandemic and ensuing economic turmoil, as well as numerous factors, many of which are outside of our control, as discussed above.

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Three Months Ended March 31, 2020Compared to theThree Months Ended March 31, 2019

The following table sets forth the results of our operations:

	Three Months Ended March 31,
	2020			2019
Revenues:
Rental income	$	5,089		$	3,723
Total revenues		5,089			3,723
Expenses:
Rental operating - expenses		869			682
Rental operating - payroll		489			371
Rental operating - real estate taxes		730			497
Subtotal- rental operating		2,088			1,550
Property management fees		—			2
Management fees - related parties		780			574
General and administrative		416			860
Loss on disposal of assets		129			87
Depreciation and amortization expense		2,360			2,237
Total expenses		5,773			5,310
Loss before net gains on dispositions		(684	)		(1,587	)
Net gain on disposition of property		530			—
Loss before other income (expense)		(154	)		(1,587	)
Other income (expense):
Interest income		27			70
Interest expense		(1,543	)		(1,268	)
Total other income (expense)		(1,516	)		(1,198	)
Net loss	$	(1,670	)	$	(2,785	)

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The following table presents the results of operations separated into three categories: the results of operations of the four properties that we owned for the entirety of both periods presented, properties purchased or sold during either of the periods presented and company level activity for thethree months ended March 31, 2020 and 2019 (in thousands):

	Three Months Ended March 31, 2020												Three Months Ended March 31, 2019
	Properties owned both periods			Properties purchased/sold during either period			Company level activity			Total			Properties owned both periods			Properties purchased/sold during either period			Company level activity			Total
Revenues:
Rental income	$	3,446		$	1,643		$	—		$	5,089		$	3,251		$	472		$	—		$	3,723
Total revenues		3,446			1,643			—			5,089			3,251			472			—			3,723
Expenses:
Rental operating -expenses		477			392			—			869			636			46			—			682
Rental operating - payroll		320			169			—			489			318			53			—			371
Rental operating - real estate taxes		371			359			—			730			390			107			—			497
Subtotal- rental operating		1,168			920			—			2,088			1,344			206			—			1,550
Property management fees		—			—			—			—			—			2			—			2
Management fees - related parties		153			72			555			780			144			15			415			574
General and administrative		99			54			263			416			156			20			684			860
Loss on disposal of assets		98			31			—			129			87			—			—			87
Depreciation and amortization expense		1,571			789			—			2,360			1,915			322			—			2,237
Total expenses		3,089			1,866			818			5,773			3,646			565			1,099			5,310
Loss before net gains on dispositions		357			(223	)		(818	)		(684	)		(395	)		(93	)		(1,099	)		(1,587	)
Net gain on disposition of property		—			530			—			530			—			—			—			—
Loss before other income (expense)		357			307			(818	)		(154	)		(395	)		(93	)		(1,099	)		(1,587	)
Other income (expense):
Interest income		5			1			21			27			—			—			70			70
Interest expense		(1,039	)		(504	)		—			(1,543	)		(1,144	)		(124	)		—			(1,268	)
Total other income (expense)		(1,034	)		(503	)		21			(1,516	)		(1,144	)		(124	)		70			(1,198	)
Net loss	$	(677	)	$	(196	)	$	(797	)	$	(1,670	)	$	(1,539	)	$	(217	)	$	(1,029	)	$	(2,785	)

Total revenues

Total revenues for the three months ended March 31, 2020 increased by $1.4 million as compared to the three months ended March 31, 2019 due to six properties comprised of 1,349 units owned for the entire quarter ended March 31, 2020 as compared to only five properties comprised of 971 units owned for the entire quarter ended March 31, 2019. In addition, the increase reflects the implementation of our investment strategy to increase monthly rental income after renovating and stabilizing operations.

Rental operating - expenses, payroll, and real estate taxes

Rental operating - expenses, payroll, and real estate taxes for the three months ended March 31, 2020 increased by approximately $538,000 as compared to the three months ended March 31, 2019 due to six properties comprised of 1,349 units owned for the entire quarter ended March 31, 2020 as compared to only five properties comprised of 971 units owned for the entire quarter ended March 31, 2019.

Management fees - related parties

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Management fees - related parties expense for the three months ended March 31, 2020 increased by approximately $206,000 as compared to the three months ended March 31, 2019 due to an increase in property management fees and asset management fees due to six properties comprised of 1,349 units owned for the entire quarter ended March 31, 2020 as compared to only five properties comprised of 971 units owned for the entire quarter ended March 31, 2019.

General and administrative

General and administrative expense for the three months ended March 31, 2020 decreased by approximately $444,000 as compared to the three months ended March 31, 2019 due to a decrease in allocated expenses effective July 1, 2019.

Depreciation and amortization

Depreciation and amortization expense is comprised of the depreciation on our rental properties and amortization of intangible assets related to in-place leases which are amortized over a period of approximately six to eight months after acquisition.  Depreciation expense for the three months ended March 31, 2020 increased by approximately $589,000 as compared to the three months ended March 31, 2019 due to six properties comprised of 1,349 units owned for the entire quarter ended March 31, 2020 as compared to only five properties comprised of 971 units owned for the entire quarter ended March 31, 2019. Amortization expense for the three months ended March 31, 2020 decreased by approximately $466,000 as compared to the three months ended March 31, 2019 due to in-place leases being fully amortized during the three months ended March 31, 2020.

Interest expense

Interest expense for the three months ended March 31, 2020 increased by approximately $275,000 as compared to the three months ended March 31, 2019 due to six properties comprised of 1,349 units owned for the entire quarter ended March 31, 2020 as compared to only five properties comprised of 971 units owned for the entire quarter ended March 31, 2019.

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Liquidity and Capital Resources

On April 28, 2016, our Registration Statement on Form S-11 (File No. 333-207740), covering a public offering of up to $1.1 billion of shares of our common stock, consisting of up to $1.0 billion of shares in our primary offering and up to $100.0 million of shares pursuant to our distribution reinvestment plan ("DRIP") was declared effective under the Securities Act of 1933, as amended (the “Securities Act”).

Through July 2, 2017, we offered shares of Class A and Class T common stock.  As of July 3, 2017, we ceased offering shares of Class A and Class T common stock in our primary offering and commenced offering shares of Class R and Class I common stock.

The primary portion of our initial public offering closed on October 31, 2019, having raised aggregate primary offering proceeds of $111.4 million from the sale of 601,207 Class A shares, 1,049,996 Class T shares, 9,356,067 Class R shares and 624,325 Class I shares of common stock. We are continuing to offer Class A, Class T, and Class I shares pursuant to the DRIP.

We anticipate deriving the capital required to conduct our operations from our operating income, the proceeds of our DRIP offering, from secured or unsecured financings from banks or other lenders and from proceeds from the sale of assets. At March 31, 2020, we have purchased seven properties using both offering proceeds and debt financing and have sold one property.

Our primary public offering stage terminated as of October 31, 2019 having raised substantially less than the maximum offering amount. Therefore, we have made fewer investments resulting in less diversification in terms of the type, number and size of investments we make and the value of an investment in us will fluctuate with the performance of the specific assets we have acquired. Further, we will have certain fixed operating expenses, including certain expenses as a publicly registered REIT. Our fixed operating expenses as a percentage of gross income will reduce our net income and could limit our ability to make distributions.

We intend to make reserve allocations as necessary to aid our objective of preserving capital for our investors by supporting the maintenance and viability of properties we acquire in the future. If reserves and any other available income become insufficient to cover our operating expenses and liabilities, it may be necessary to obtain additional funds by borrowing, refinancing properties or liquidating our investment in one or more properties, debt investments or other assets we may hold. We cannot assure you that we will be able to access additional funds when we need them or upon acceptable terms. In addition, our ability to derive the capital needed to conduct our operations may be adversely affected by the impact of the COVID-19 pandemic as discussed above.

Capital Expenditures

We deployed a total of $1.9 million during the three months ended March 31, 2020 for capital expenditures (in thousands) We expect capital expenditures to be reduced in future periods as we have temporarily suspended certain capital improvement projects at our properties in order to preserve cash and offset any impact to our liquidity that may occur as a result of the COVID-19 pandemic on our operations:

Multifamily Community	Capital deployed during three months ended March 31, 2020		Remaining capital budgeted
Payne Place	$	—	$	—
Bay Club		122		570
Tramore Village		464		1,083
Matthews		304		1,297
Kensington		197		1,205
Wimbledon Oaks		518		797
Summit		299		2,415
	$	1,904

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Gross offering proceeds

At March 31, 2020, shares of our $0.01 par value Class A, Class T, Class R, and Class I common stock have been issued as follows (dollars in thousands):

	Class A					Class T					Class R					Class I
	Shares Issued			Gross Proceeds		Shares Issued			Gross Proceeds		Shares Issued			Gross Proceeds		Shares Issued			Gross Proceeds
Shared issued through primary offering (1)		586,207		$	5,601		1,049,996		$	9,943		9,356,068		$	89,917		624,325		$	5,760
Shares issued through stock dividends		12,860			—		15,495			—		—			—		—			—
Shares issued through distribution reinvestment plan		34,179			318		91,763			834		356,453			3,244		115,513			1,050
Shares issued in conjunction with the Advisor's initial investment, net of 5,000 share conversion		15,000			200		—			—		—			—		—			—
Total		648,246		$	6,119		1,157,254		$	10,777		9,712,521		$	93,161		739,838		$	6,810
Shares redeemed and retired		(22,398	)				(35,615	)				(32,122	)				(13,415	)
Class R share conversion (2)		—					—					(9,680,399	)				9,680,399
Total shares issued and outstanding at March 31, 2020		625,848					1,121,639					—					10,406,822

(1)Includes 222,222of Class A shares issued to RAI.

(2)On November 1, 2019, all outstanding Class R shares converted to Class I shares.

Debt

The following table presents a summary of our mortgage notes payable, net (in thousands):

	March 31, 2020							December 31, 2019
Collateral	Outstanding Borrowings		Deferred Financing Costs, net			Carrying Value		Outstanding borrowings		Deferred Financing Costs, net			Carrying Value
Payne Place	$	—	$	—		$	—	$	1,525	$	(28	)	$	1,497
Bay Club		21,298		(196	)		21,102		21,398		(208	)		21,190
Tramore Village		32,625		(289	)		32,336		32,625		(304	)		32,321
Matthews Reserve		23,850		(255	)		23,595		23,850		(267	)		23,583
The Park at Kensington		21,760		(248	)		21,512		21,760		(260	)		21,500
Wimbledon Oaks		18,410		(225	)		18,185		18,410		(235	)		18,175
Summit		27,580		(330	)		27,250		27,580		(343	)		27,237
Total	$	145,523	$	(1,543	)	$	143,980	$	147,148	$	(1,645	)	$	145,503

For maturity dates, related interest rates, monthly debt service, and monthly escrow payments, see Note 8 of the notes to our consolidated financial statements.

As of March 31, 2020, the weighted average interest rate of all our outstanding indebtedness was 3.71%.

Although there is no limit on the amount we can borrow to acquire a single real estate investment, we may not leverage our assets with debt financing such that our borrowings are in excess of 300% of our net assets unless a majority of our independent directors find substantial justification for borrowing a greater amount. Examples of such a substantial justification include, without limitation, obtaining funds for the following: (i) to repay existing obligations, (ii) to pay sufficient distributions to maintain REIT status, or (iii) to buy an asset where an exceptional acquisition opportunity presents itself and the terms of the debt agreement and the nature of the asset are such that the debt does not increase the risk that we would become unable to meet

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our financial obligations as they became due. On a total portfolio basis, however, based on current lending market conditions, we expect to leverage our assets in an amount equal to 65% to 75% of the cost of our assets.

We have financed the acquisition costs of real estate investments by causing our subsidiaries to borrow directly from third-party financial institutions or other commercial lenders. The properties acquired serve as collateral for the debt we incurred and are nonrecourse to us. Additionally, we may obtain corporate-level financing through a line of credit from third-party financial institutions or other commercial lenders and our assets would serve as collateral for this type of debt incurred to acquire real estate investments.

Central banks and regulators in a number of major jurisdictions (including both the U.S. and the U.K.) have convened working groups to find, and implement the transition to, suitable replacements for Interbank Offered Rates (“IBORs”), including London Interbank Offered Rate (“LIBOR”). The Financial Conduct Authority of the U.K., which regulates LIBOR, has announced it will not compel panel banks to contribute to LIBOR after 2021.

We have exposure to IBORs through floating rate mortgage debt with maturity dates beyond 2021 for which the interest rates are tied to LIBOR. There is currently no definitive information regarding the future utilization of LIBOR or of any particular replacement rate. Any changes in benchmark interest rates could increase our cost of capital, which could impact our results of operations, cash flows, and the market value of our real estate investments.

Organization and Offering Costs

We incurred organization and offering costs in pursuit of our capital raise. Our organization and offering costs (other than selling commissions, the dealer manager fees and distribution and shareholder servicing fees) were initially being paid by the Advisor on our behalf. Organization costs included all expenses that we incurred in connection with our formation, including but not limited to legal fees and other costs to incorporate.

Pursuant to the Advisory Agreement, we are obligated to reimburse the Advisor for organization and offering costs paid by the Advisor on our behalf, up to an amount equal to 4.0% of gross offering proceeds as of the termination of this offering as we raised less than $500.0 million in the primary offering. These organization and offering expenses included all actual expenses (other than selling commissions, the dealer manager fee and the distribution and shareholder servicing fee), including reimbursements to our Advisor for the portion of named executive officer salaries allocable to activities related to this offering, to be incurred on our behalf and paid by us in connection with the offering.

Our Advisory Agreement provides that we were not responsible for the repayment of any unreimbursed organization and offering expenses or operational expenses incurred by our Advisor on our behalf through March 31, 2018 until after the termination of the primary portion of our ongoing initial public offering. Additionally, the Advisory Agreement provides that such unreimbursed organization and offering expenses or operational expenses incurred or paid by our Advisor on our behalf through March 31, 2018 are required to be reimbursed ratably starting after the termination of the primary portion of our ongoing initial public offering through April 30, 2021 for organization and offering expenses and through April 30, 2020 for operating expenses. These payments began on November 1, 2019.

As of March 31, 2020, we have incurred approximately $9.2 million for public offering costs consisting of accounting, advertising, allocated payroll, due diligence, marketing, legal and similar costs. Initially, we had paid approximately $249,000 of these costs directly and our Advisor advanced $9.0 million on our behalf.

Of this total, we have charged $4.4 million to equity, which represents the portion of deferred offering costs allocated to each share of common stock sold in the public offering and is the maximum liability for organization and offering costs, based on the 4.0% limit described above. Due to the maximum liability of $4.4 million, we are responsible for the $249,000 initially paid by us and $4.2 million of the advance from our Advisor. An adjustment was made during the year ended December 31, 2019, to relieve us from the remaining $4.8 million liability due to our Advisor. As of March 31, 2020, we have reimbursed $1.7 million to our Advisor.

Organization costs, which include all expenses incurred by us in connection with our formation, including but not limited to legal fees and other costs to incorporate, were expensed as incurred.

Outstanding Class T shares issued in our primary offering were subject to an annual distribution and shareholder servicing fee in the amount of 1% of the estimated NAV of the share (1% of purchase price prior to June 29, 2018) for up to five years from the date on which such share is issued. Effective November 1, 2019, in connection with the termination of our initial public primary offering, we ceased accruing the distribution and shareholder servicing fee on each Class T share as we had reached certain underwriting compensation limits.

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Outstanding Class R shares issued in our primary offering were also subject to an annual distribution and shareholder servicing fee in the amount of 1% of the estimated NAV of the share (1% of purchase price prior to June 29, 2018).Effective November 1, 2019, following the termination of our initial public primary offering, each of our Class R shares of common stock automatically converted into a Class I share of common stock pursuant to the terms of the Articles Supplementary for the Class R shares and we ceased accruing the distribution and shareholder servicing fee with respect to Class R shares as we no longer had any Class R shares outstanding.

We recorded the distribution and shareholder servicing fees as a reduction to additional paid-in capital and the related liability in an amount equal to the maximum fees payable in relation to the Class T and Class R shares on the date the shares are issued. The liability was relieved over time, as the fees were paid to the Dealer Manager, or as the fees are adjusted (if the fees were no longer payable pursuant to the conditions described above).

Asset Management Costs

We expect to use our operating income to make payments to our Advisor for the management of our assets and costs incurred by our Advisor in providing services to us.

Operating Expenses

At the end of each fiscal quarter, our Advisor must reimburse us the amount by which our aggregate total operating expenses for the four fiscal quarters then ended exceed the greater of 2% of our average invested assets or 25% of our net income, unless the Conflicts Committee of our Board has determined that such excess expenses were justified based on unusual and non-recurring factors.Operating expenses for the four quarters ended March 31, 2020 were in compliance with the charter-imposed limitation.

Operating expenses for the four fiscal quarters ended March 31, 2020 exceeded the charter imposed limitation; however, the conflicts committee determined that the relationship of our operating expenses to our average invested assets was justified for these periods given the costs of operating a public company and the early stage of our operations.

"Average invested assets" means the average monthly book value of our assets invested, directly or indirectly, in equity interests in and loans secured by real estate during the 12-month period before deducting depreciation, bad debts or other non-cash reserves. "Total operating expenses" means all expenses paid or incurred by us, as determined under accounting principles generally accepted in the United States ("GAAP"), that are in any way related to our operation, including advisory fees, but excluding (i) the expenses of raising capital such as organization and offering expenses, legal, audit, accounting, underwriting, brokerage, listing, registration and other fees, printing and other such expenses and taxes incurred in connection with the issuance, distribution, transfer, registration and stock exchange listing of our stock; (ii) interest payments; (iii) taxes; (iv) non-cash expenditures such as depreciation, amortization and bad debt reserves; (v) incentive fees paid in accordance with the NASAA Statement of Policy Regarding Real Estate Investment Trusts (the "NASAA REIT Guidelines"); (vi) acquisition fees and expenses (including expenses relating to potential investments that we do not close); (vii) real estate commissions on the sale of property; and (viii) other fees and expenses connected with the acquisition, disposition, management and ownership of real estate interests, loans or other property (such as the costs of foreclosure, insurance premiums, legal services, maintenance, repair and improvement of property).

Distributions

For the three months ended March 31, 2020, we paid aggregate distributions, as follows (in thousands):

	Three Months Ended March 31, 2020
	Class A		Class T		Class R		Class I		Total
True-up of prior year cash distributions declared	$	—	$	27	$	—	$	4	$	31
Distributions reinvested in shares of common stock paid	$	24	$	89	$	—	$	744	$	857
Cash distributions paid		60		61		—		640		761
Total distributions paid	$	84	$	150	$	—	$	1,384	$	1,618

We announced on March 30, 2020 that we were suspending distributions as of April 1, 2020 in order to preserve cash and offset any impact to the Company’s liquidity that may occur as a result of the COVID-19 pandemic on our operations.

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Distributions paid and sources of distributions paid were as follows for thethree months ended March 31, 2020(in thousands):

	Distributions Paid									Sources of Distributions Paid
										Property Dispositions	Offering Proceeds
2020	Cash		Distributions Reinvested (DRIP)		Total		Cash Used in Operating Activities			Amount Paid / Percent of Total	Amount Paid / Percent of Total
First quarter	$	761	$	857	$	1,618	$	(1,861	)	$530 / 33%	$1,088 / 67%

Cash distributions paid since inception were as follows (in thousands):

Fiscal Period Paid	Per Share (1)	Distributions Reinvested in Shares of Common Stock		Net Cash Distributions		Total Aggregate Distributions
12 months ended December 31, 2016	$0.000547945 per day	$	4	$	11	$	15,904
Seven months ended July 31, 2017	$0.000547945 per day		41		48		88,694
Five months ended December 31, 2017	$0.001434521 per day		248		228		476,274
Six months ended June 30, 2018	$0.001434521 per day		606		496		1,102
Six months ended December 31, 2018	$0.001458630 per day		923		781		1,703,753
Three months ended March 31, 2019	$0.001458630 per day		577		493		1,070
Nine months ended December 31, 2019	$0.001469178 per day		2,189		1,964		4,153
Three months ended March 31, 2020	$0.001469178 per day		857		761		1,618
		$	5,445	$	4,782	$	2,292,568

(1)Distributions for Class T and Class R shareholders were reduced for the distribution and shareholder servicing fee through October 31, 2019.

Our net loss attributable to common stockholders for the three months ended March 31, 2020 was $1.7 million and net cash used in operating activities was $1.9 million. Our cumulative cash distributions and net loss attributable to common stockholders from inception through March 31, 2020 are $10.2 million and $23.1 million, respectively. We have funded our cumulative distributions, which include net cash distributions and distributions reinvested by stockholders, with cash flows from operating activities, proceeds from our public offering, proceeds from debt financing and proceeds from property dispositions. To the extent that we pay distributions from sources other than our cash flow from operating activities, we will have fewer funds available for investment in commercial real estate and real estate-related debt, the overall return to our stockholders may be reduced and subsequent investors may experience dilution.

Funds from Operations and Modified Funds from Operations

Funds from operations, or FFO, is a non-GAAP financial performance measure that is widely recognized as a measure of REIT operating performance. We use FFO as defined by the National Association of Real Estate Investment Trusts to be net income (loss), computed in accordance with GAAP excluding extraordinary items, as defined by GAAP, and gains (or losses) from sales of property (including deemed sales and settlements of pre-existing relationships), plus depreciation and amortization on real estate assets, and after related adjustments for unconsolidated partnerships, joint ventures and subsidiaries and noncontrolling interests. We believe that FFO is helpful to our investors and our management as a measure of operating performance because it excludes real estate-related depreciation and amortization, gains and losses from property dispositions, and extraordinary items, and as a result, when compared year to year, reflects the impact on operations from trends in occupancy rates, rental rates, operating costs, development activities, general and administrative expenses, and interest costs, which are not immediately apparent from net income. Historical cost accounting for real estate assets in accordance with GAAP implicitly assumes that the value of real estate and intangibles diminishes predictably over time. Since real estate values have historically risen or fallen with market conditions, many industry investors and analysts have considered the presentation of operating results for real estate companies that use historical cost accounting alone to be insufficient. As a result, our management believes that the use of FFO, together with the required GAAP presentations, is helpful for our investors in understanding our performance. Factors that impact FFO include start-up costs, fixed costs, delay in buying assets, lower yields on cash held in accounts, income from portfolio properties and other portfolio assets, interest rates on acquisition financing and operating expenses.

Since FFO was promulgated, GAAP has adopted several new accounting pronouncements, such that management and many investors and analysts have considered the presentation of FFO alone to be insufficient. Accordingly, in addition to FFO,

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we use modified funds from operations, or MFFO, as defined by the Investment Program Association, or IPA. MFFO excludes from FFO the following items:

(1) straight-line rent amounts, both income and expense;

(2) amortization of above- or below-market intangible lease assets and liabilities;

(3) amortization of discounts and premiums on debt investments;

(4) impairment charges;

(5) gains or losses from the early extinguishment of debt;

(6) gains or losses on the extinguishment or sales of hedges, foreign exchange, securities and other derivatives holdings except where the trading of such instruments is a fundamental attribute of our operations;

(7) gains or losses related to fair-value adjustments for derivatives not qualifying for hedge accounting, including interest rate and foreign exchange derivatives;

(8) gains or losses related to consolidation from, or deconsolidation to, equity accounting;

(9) gains or losses related to contingent purchase price adjustments; and

(10) adjustments related to the above items for unconsolidated entities in the application of equity accounting.

As explained below, management’s evaluation of our operating performance excludes the items considered in the calculation based on the following economic considerations. Many of the adjustments in arriving at MFFO are not applicable to us. Nevertheless, we explain below the reasons for each of the adjustments made in arriving at our MFFO definition:

• Adjustments for straight-line rents and amortization of discounts and premiums on debt investments. In the proper application of GAAP, rental receipts and discounts and premiums on debt investments are allocated to periods using various systematic methodologies. This application will result in income recognition that could be significantly different than underlying contract terms. By adjusting for these items, MFFO provides useful supplemental information on the realized economic impact of lease terms and debt investments and aligns results with management’s analysis of operating performance.

• Adjustments for amortization of above or below market intangible lease assets. Similar to depreciation and amortization of other real estate related assets that are excluded from FFO, GAAP implicitly assumes that the value of intangibles diminishes predictably over time and that these charges be recognized currently in revenue. Since real estate values and market lease rates in the aggregate have historically risen or fallen with market conditions, management believes that by excluding these charges, MFFO provides useful supplemental information on the performance of the real estate.

• Impairment charges, gains or losses related to fair-value adjustments for derivatives not qualifying for hedge accounting and gains or losses related to contingent purchase price adjustments. Each of these items relates to a fair value adjustment, which is based on the impact of current market fluctuations and underlying assessments of general market conditions and specific performance of the holding which may not be directly attributable to current operating performance. As these gains or losses relate to underlying long-term assets and liabilities, management believes MFFO provides useful supplemental information by focusing on the changes in our core operating fundamentals rather than changes that may reflect anticipated gains or losses. In particular, because GAAP impairment charges are not allowed to be reversed if the underlying fair values improve or because the timing of impairment charges may lag the onset of certain operating consequences, we believe MFFO provides useful supplemental information related to current consequences, benefits and sustainability related to rental rate, occupancy and other core operating fundamentals.

• Adjustment for gains or losses related to early extinguishment of hedges, debt, consolidation or deconsolidation and contingent purchase price. Similar to extraordinary items excluded from FFO, these adjustments are not related to continuing operations. By excluding these items, management believes that MFFO provides supplemental information related to sustainable operations that will be more comparable between other reporting periods and to other real estate operators.

By providing MFFO, we believe we are presenting useful information that also assists investors and analysts in the assessment of the sustainability of our operating performance after our acquisition stage is completed. We also believe that MFFO is a recognized measure of sustainable operating performance by the real estate industry. MFFO is useful in comparing the sustainability of our operating performance after our acquisition stage is completed with the sustainability of the operating performance of other real estate companies that are not as involved in acquisition activities or as affected by other MFFO adjustments.

A core element of our investment strategy and operations is the acquisition of distressed and value-add properties and the rehabilitation and renovation of such properties in an effort to create additional value in such properties.  As part of our

42

operations, we intend to realize gains from such value-add efforts through the strategic disposition of such properties after we have added value through the execution of our business plan.  As we do not intend to hold any of our properties for a specific amount of time, we intend to take advantage of opportunities to realize gains from our value-add efforts on a regular basis during the course of our operations as such opportunities become available, in all events subject to the rules regarding "prohibited transactions" of real estate investment trusts of the Internal Revenue Code.  Therefore, we also use adjusted funds from operations attributable to common stockholders, or AFFO, in addition to FFO and MFFO when evaluating our operations.  We calculate AFFO by adding/subtracting gains/losses realized on sales of our properties from MFFO.  We believe that AFFO presents useful information that assists investors and analysts in the assessment of our operating performance as it is reflective of the impact that regular, strategic property dispositions have on our continuing operations.

Neither FFO, MFFO nor AFFO should be considered as an alternative to net loss attributable to common stockholders, nor is an indication of our liquidity, nor are any of these measures indicative of funds available to fund our cash needs, including our ability to fund distributions. Accordingly, FFO, MFFO and AFFO should be reviewed in connection with other GAAP measurements. Our FFO, MFFO and AFFO as presented may not be comparable to amounts calculated by other REITs.   Further, during the current period of uncertainty and business disruptions as a result of the outbreak of COVID-19, FFO, MFFO and AFFO are much more limited measures of assessing our operating performance.  See “—Management’s Discussion and Analysis of Financial Condition and Results of Operations -- COVID-19 Pandemic and Portfolio Outlook” for a discussion of the impact of the outbreak of COVID-19 on our business.

The following section presents our calculation of FFO, MFFO and AFFO, in addition to providing additional information related to our operations (in thousands):

	Three Months Ended March 31,
	2020			2019
Net loss - GAAP	$	(1,670	)	$	(2,785	)
Net gain on disposition of property		(530	)		—
Depreciation expense		2,187			1,598
FFO attributable to common stockholders		(13	)		(1,187	)
Adjustments for straight-line rents		4			(3	)
Amortization of intangible lease assets		173			639
MFFO attributable to common stockholders		164			(551	)
Net gain on disposition of property		530			—
AFFO attributable to common stockholders	$	694		$	(551	)
Basic and diluted net loss per common share - GAAP	$	(0.14	)	$	(0.28	)
FFO per share	$	—		$	(0.12	)
MFFO per share	$	0.01		$	(0.05	)
AFFO per share	$	0.06		$	(0.05	)
Weighted average shares outstanding (1)		12,102			10,066

(1)None of the shares of convertible stock are included in the diluted earnings per share calculations because the necessary conditions for conversion have not been satisfied as of both March 31, 2020 and 2019.

Critical Accounting Policies

For a discussion of our critical accounting policies and estimates, see the discussion in our Annual Report on Form 10-K for the year ended December 31, 2019 under "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies."

Subsequent Events

We have evaluated subsequent events and determined that no events have occurred, which would require an adjustment to or additional disclosure in the consolidated financial statements, except for the following:

Renewal of Advisory Agreement

Effective April 28, 2020, we renewed the Advisory Agreement with our Advisor through April 27, 2021. The terms of the agreement are identical to those of the Advisory Agreement in effect through April 27, 2020.

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COVID-19 Pandemic

We are closely monitoring the impact of the COVID-19 pandemic on all aspects of our business, including how the pandemic will impact our tenants. While we did not incur significant disruptions from the COVID-19 pandemic during the three months ended March 31, 2020, in the month of April 2020, a small percent of tenants have requested rent deferral as a result of the pandemic. We are evaluating each tenant rent relief request on an individual basis, considering a number of factors. Not all tenant requests will ultimately result in modified agreements, nor are we forgoing our contractual rights under our lease agreements.

On April 10, 2020, FASB issued a Staff Q&A to respond to some frequently asked questions about accounting for lease concessions related to the effects of the COVID-19 pandemic. Consequently, for concessions related to the effects of the COVID-19 pandemic, an entity will not have to analyze each lease to determine whether enforceable rights and obligations for concessions exist in the lease and can elect to apply or not apply the lease modification guidance to those leases. Entities may make the elections for any lessor-provided concessions related to the effects of the COVID-19 pandemic (e.g., deferrals of lease payments) as long as the concession does not result in a substantial increase in the rights of the lessor or the obligations of the lessee.

We are unable to predict the impact that the pandemic will have on our financial condition, results of operations and cash flows due to numerous uncertainties. The extent to which the COVID-19 pandemic impacts our operations and those of our tenants will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact, and the direct and indirect economic effects of the pandemic and containment measures, among others.

ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Quantitative and qualitative disclosures about market risk have been omitted as permitted under rules applicable to smaller reporting companies.

ITEM 4.    CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our periodic reports under the Securities Exchange Act of 1934, as amended, or the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to our principal executive officer and our principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, our management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Under the supervision of our principal executive officer and principal financial officer, we have carried out an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based upon that evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures are effective as of March 31, 2020.

Changes in Internal Control over Financial Reporting

There has been no change in our internal control over financial reporting that occurred during the quarter endedMarch 31, 2020 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1.    LEGAL PROCEEDINGS

From time to time, we may become party to legal proceedings, which arise in the ordinary course of our business. We are not currently involved in any legal proceedings of which the outcome is reasonably likely to have a material adverse effect on our results of operations or financial condition, nor are we aware of any such legal proceedings contemplated by governmental authorities.

ITEM 1A.    RISK FACTORS

Please see the risks discussed below and in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2019.

The COVID-19 pandemic or any future pandemic, epidemic or outbreak of infectious disease could have material and adverse effects on our business, financial condition, results of operations and cash flows and the markets and communities in which we operate and our multifamily residents work and reside.

Since initially being reported in December 2019, COVID-19 has spread around the world, including to every state in the United States. On March 11, 2020, the World Health Organization declared COVID-19 a pandemic, and on March 13, 2020, the United States declared a national emergency with respect to COVID-19. The COVID-19 pandemic has severely impacted global economic activity and caused significant volatility and negative pressure in financial markets. The global impact of the outbreak has been rapidly evolving and many countries, including the United States, have reacted by instituting quarantines, mandating business and school closures and restricting travel. As a result, the COVID-19 pandemic is negatively impacting almost every industry directly or indirectly. Many experts predict that the COVID-19 pandemic will trigger a period of global economic slowdown or recession. The rapid development and fluidity of the COVID-19 pandemic precludes any prediction as to the ultimate adverse impact of COVID-19.

The COVID-19 pandemic or any future pandemic, epidemic or outbreak of infectious disease affecting states or regions in which we operate and our multifamily tenants work and reside could have material and adverse effects on our business, financial condition, results of operations and cash flows due to, among other factors:

• reduced economic activity, general economic decline or recession, which may result in job loss or bankruptcy for residents at our properties and may cause our residents to be unable to make rent payments to us timely, or at all, or to otherwise seek modifications of lease obligations;

• health or other government authorities requiring the closure of offices or other businesses or instituting quarantines of personnel as the result of, or in order to avoid, exposure to a contagious disease;

• disruption in supply and delivery chains;

• a general decline in business activity and demand for real estate;

• federal, state and/or local laws or regulations or lender requirements implemented in response to COVID-19 that may prohibit us from evicting tenants at our properties;

• difficulty accessing debt and equity capital on attractive terms, or at all, and a severe disruption and instability in the global financial markets or deteriorations in credit and financing conditions, which may affect our access to capital necessary to fund business operations or address maturing liabilities on a timely basis; and

• the potential negative impact on the health of our advisor’s personnel, particularly if a significant number of our advisor’s employees are impacted, which would result in a deterioration in our ability to ensure business continuity and maintain our properties during a disruption.

The ultimate impact of the COVID-19 pandemic or a similar health epidemic is highly uncertain and subject to change. We do not yet know the full extent of potential impacts on our business and operations, our residents’ financial situation or the global economy as a whole.  Nevertheless, it appears reasonably likely in the near term that many of our tenants may suffer reductions in income and, depending upon the duration of quarantines and the corresponding economic slowdown, some of our tenants will seek rent deferrals or become unable to pay their rent.  In the last month, we have received a small percent of requests for such deferrals.  If tenants default on their rent and vacate, the ability to re-lease this space is likely to be more difficult if the economic slowdown continues and any long term impact of this situation, even after an economic rebound, remains unclear.  While the spread of COVID-19 may eventually be contained or mitigated, there is no guarantee that a future outbreak or any other widespread epidemics will not occur, or that the global economy will recover, either of which could materially harm our business.

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The current offering price of shares under our distribution reinvestment plan is equal to 100% of our current estimated value per share which was derived from the estimated value of our investments as of December 31, 2019 and approved by our board of directors on March 19, 2020.  It does not take into account developments in our portfolio or the markets since December 31, 2019, including the current business disruptions as a result of the COVID-19 pandemic. As a result of these developments, a reinvestment of distributions in our common stock bears increased risk.  

Pursuant to our distribution reinvestment plan, participants in the distribution reinvestment plan acquire shares of our common stock under the plan at a price equal to 100% of the estimated value per share of our common stock. As such, participants currently acquire shares of the Company’s common stock under the plan at a price equal to $9.01 per share. The value of our shares will fluctuate over time in response to developments related to the performance of individual assets in the portfolio and the management of those assets, the real estate and finance markets and due to other factors. As such, the estimated value per share does not take into account developments in our portfolio since December 31, 2019. In particular, the outbreak of the COVID-19 pandemic, together with the resulting restrictions on travel and quarantines imposed, has had a negative impact on the economy and business activity globally as discussed in the risk factor above. These risks are not priced into our most recent estimated value per share and given the uncertainty, no assurances can be given that the purchase price of shares of our common stock reflect the underlying value of our assets.  As a result, a reinvestment of distribution in our common stock bears increased risk.

For a full description of the methodologies and assumptions used to value our assets and liabilities in connection with the calculation of our most estimated value per share, see Part II, Item 5, “Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities — Market Information” of the Company’s annual report on Form 10-K for the year ended December 31, 2019.

ITEM 2.    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Unregistered Sales of Equity Securities

All securities sold by us during the three months ended March 31, 2020 were sold in an offering registered under the Securities Act of 1933.

Share Redemption Program

Our common stock is currently not listed on a national securities exchange and we will not seek to list our common stock unless and until such time as our Board determines that the listing of our common stock would be in the best interests of our stockholders. In order to provide stockholders with the benefit of some interim liquidity, our Board has adopted a share repurchase program that enables our stockholders to sell their shares back to us after they have held them for at least one year, subject to significant conditions and limitations. The terms of our share repurchase program are more flexible in cases involving the death or disability of a stockholder.

We may reject any request for repurchase of shares. Repurchases of shares of our common stock, when requested, generally will be made quarterly. We limit the number of shares repurchased during any calendar year to 5.0% of the weighted-average number of shares of common stock outstanding during the 12-month period immediately prior to the effective date of redemption. In addition, we are only authorized to repurchase shares using proceeds from our DRIP plus 1.0% of the operating cash flow from the previous fiscal year (to the extent positive). Due to these limitations, we cannot guarantee that we will be able to accommodate all repurchase requests.

A stockholder must have beneficially held the shares for at least one year prior to offering them for sale to us through our share repurchase program, unless the shares are being repurchased in connection with a stockholder’s death, qualifying disability, or certain other involuntary exigent circumstances, in which our Board reserves the right, in its sole discretion, at any time and from time to time, to waive the one-year holding period requirement.

Shares repurchased in connection with a stockholder’s death or qualifying disability are repurchased at a price per share equal to 100% of the current NAV.

Shares repurchased in connection with a stockholder’s other involuntary exigent circumstances, such as bankruptcy or a mandatory distribution requirement under a stockholder’s IRA, within one year from the purchase date, will be repurchased at

46

a price per share equal to the price per share we would pay had the stockholder held the shares for one year from the purchase date, and at all other times in accordance with the terms described below.

Shares received as a stock dividend are redeemed at the redemption price applicable to that stockholder’s initial share purchase anniversary.

Unless the shares of our common stock were repurchased in connection with a stockholder’s death or qualifying disability, the purchase price for shares repurchased under our share repurchase program were as set forth below as of March 31, 2020:  

Share Purchase Anniversary	Redemption Price
Less than 1 year	No repurchase allowed
1 year	$	8.44
2 years	$	8.66
3 years	$	8.89
4 years	$	9.12

During the three months ended March 31, 2020, we redeemed shares of our Class A, Class T and Class I common stock as follows:

	Class A				Class T				Class I
Period	Total Number of Shares Redeemed		Average Price Paid per Share		Total Number of Shares Redeemed		Average Price Paid per Share		Total Number of Shares Redeemed		Average Price Paid per Share
January 2020		—		—		—		—		—		—
February 2020		—		—		—		—		—		—
March 2020		5,484	$	8.89		3,587	$	8.89		2,416	$	8.44
		5,484				3,587				2,416

All redemption requests submitted in good order were honored for the three months ended March 31, 2020.

On March 27, 2020, our board of directors approved the partial suspension of the share redemption program, effective as of April 29, 2020. As a result, our board of directors will not consider any redemption requests submitted for the second quarter of 2020 except for redemptions sought in connection with a stockholder’s death, qualifying disability or confinement to long-term care, which are not impacted by this suspension.

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ITEM 6.    EXHIBITS

Exhibit No.	Description
3.1	Amended and Restated Articles of Incorporation (incorporated by reference to Exhibit 3.1 to Pre-Effective Amendment No. 3 to the Company’s Registration Statement on Form S-11 (No. 333-207740) filed April 11, 2016)
3.2	Bylaws (incorporated by reference to Exhibit 3.2 to the Company’s Registration Statement on Form S-11 (No. 333-207740) filed November 2, 2015)
3.3	Articles of Amendment (incorporated by reference to Exhibit 3.3 to Pre-Effective Amendment No. 1 to Post-Effective Amendment No. 5 to the Company’s Registration Statement on Form S-11 (No. 333-207740) filed June 28, 2017)
3.4	Articles Supplementary for the Class R shares of common stock  (incorporated by reference to Exhibit 3.4 to Pre-Effective Amendment No. 1 to Post-Effective Amendment No. 5 to the Company’s Registration Statement on Form S-11 (No. 333-207740) filed June 28, 2017)
3.5	Articles Supplementary for the Class I shares of common stock (incorporated by reference to Exhibit 3.5 to Pre-Effective Amendment No. 1 to Post-Effective Amendment No. 5 to the Company’s Registration Statement on Form S-11 (No. 333-207740) filed June 28, 2017)
4.1	Statement regarding restrictions on transferability of shares of common stock (to appear on stock certificate or to be sent upon request and without charge to stockholders issued shares without certificates) (incorporated by reference to Exhibit 4.2 to the Company’s Registration Statement on Form S-11 (No. 333-207740) filed November 2, 2015)
4.2	Second Amended and Restated Distribution Reinvestment Plan (incorporated by reference to Exhibit 99.1 to the Company's Current Report on Form 8-K filed June 29, 2018)
10.1	Form of Indemnification Agreement between the Company and each independent director of the Company (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed March 16, 2020)
10.2	Advisory Agreement by and between the Resource Apartment REIT III, Inc. and REIT Advisor, LLC, dated April 28, 2020 (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed April 28, 2020)
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Chief Executive Officer pursuant to Section 1350 18 U.S.C., as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of Chief Financial Officer pursuant to Section 1350 18 U.S.C., as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
99.1	Second Amended and Restated Share Redemption Program (incorporated by reference to Exhibit 99.1 to the Company's Current Report on Form 8-K filed July 24, 2018)
101.1	Interactive Data Files

48

SIGNATURES

Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	RESOURCE APARTMENT REIT III, INC.
May 11, 2020		By:	/s/ Alan F. Feldman
			Alan F. Feldman
			Chief Executive Officer
			(Principal Executive Officer)
May 11, 2020		By:	/s/ Steven R. Saltzman
			Steven R. Saltzman
			Chief Financial Officer
			(Principal Financial and Accounting Officer)

49

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Alan F. Feldman, certify that:

1) I have reviewed this quarterly report on Form 10-Q for the quarter ended March 31, 2020 of Resource Apartment REIT III, Inc.;

2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4) The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5) The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

		RESOURCE APARTMENT REIT III, INC.
May 11, 2020	By:	/s/ Alan F. Feldman
		Alan F. Feldman
		Chief Executive Officer
		(Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Steven R. Saltzman, certify that:

1) I have reviewed this quarterly report on Form 10-Q for the quarter ended March 31, 2020 of Resource Apartment REIT III, Inc.;

2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4) The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5) The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

		RESOURCE APARTMENT REIT III, INC.
May 11, 2020	By:	/s/ Steven R. Saltzman
		Steven R. Saltzman
		Chief Financial Officer
		(Principal Financial Officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Resource Apartment REIT III, Inc. (the "Company”) on Form 10-Q for the quarter ended March 31, 2020 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Alan F. Feldman, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

		RESOURCE APARTMENT REIT III, INC.
May 11, 2020	By:	/s/ Alan F. Feldman
		Alan F. Feldman
		Chief Executive Officer
		(Principal Executive Officer)

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Resource Apartment REIT III, Inc. (the "Company”) on Form 10-Q for the quarter ended March 31, 2020 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Steven R. Saltzman, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

		RESOURCE APARTMENT REIT III, INC.
May 11, 2020	By:	/s/ Steven R. Saltzman
		Steven R. Saltzman
		Chief Financial Officer
		(Principal Financial Officer)

XML

Operating Expense Limitation

3 Months Ended

Mar. 31, 2020

Other Income And Expenses [Abstract]

Operating Expense Limitation

NOTE 14 - OPERATING EXPENSE LIMITATION

Under its charter, the Company must limit its total operating expenses to the greater of 2% of its average invested assets or 25% of its net income for the four most recently completed fiscal quarters, unless the Conflicts Committee of the Company’s board of directors has determined that such excess expenses were justified based on unusual and non-recurring factors.Operating expenses for the four fiscal quarters ended March 31, 2020 were in compliance with the charter imposed limitation.

XML

Summary of Significant Accounting Policies (Tables)

3 Months Ended

Mar. 31, 2020

Accounting Policies [Abstract]

Schedule of Subsidiaries

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries as follows:

Subsidiaries	Number of Units		Property Location
Resource Apartment REIT III Holdings, LLC	N/A		N/A
Resource Apartment REIT III OP, LP	N/A		N/A
RRE Payne Place Holdings, LLC	N/A(1)		N/A(1)
RRE Bay Club Holdings, LLC		220	Jacksonville, FL
RRE Tramore Village Holdings, LLC		324	Austell, GA
RRE Matthews Reserve Holdings, LLC		212	Matthews, NC
RRE Kensington Holdings, LLC		204	Riverview, FL
RRE Wimbledon Oaks Holdings, LLC		248	Arlington, TX
RRE Summit Holdings, LLC		141	Alexandria, VA
		1,349

N/A - Not applicable

(1) Property was sold on March 5, 2020.

Estimated Useful Lives of Assets

The Company anticipates the estimated useful lives of its assets by class as follows:

Buildings	27.5 years
Building improvements	5.0 to 27.5 years
Furniture, fixtures, and equipment	3.0 to 5.0 years
Tenant improvements	Shorter of lease term or expected useful life
Lease intangibles	Weighted average remaining term of related leases

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Disposition of Property (Tables)

3 Months Ended

Mar. 31, 2020

Discontinued Operations And Disposal Groups [Abstract]

Summary of Disposition Activity

The following table presents the Company’s disposition activity during the three months ended March 31, 2020 (in thousands):

Multifamily Community	Location	Sale Date	Contract Sales Price		Net Gain on Disposition		Revenue Attributable to Property Sold		Net Income Attributable to Property Sold (1)
Payne Place	Alexandria, Virginia	March 5, 2020	$	3,100	$	530	$	32	$	3

(1) Excludes net gain on disposition.

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Derivatives and Hedging Activities - Narrative (Details) - USD ($)	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Derivative Instruments And Hedging Activities Disclosure [Abstract]
Hedge ineffectiveness in earnings	$ 5,659	$ 853
Amount estimated to be reclassified	$ 26,756

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Mortgage Notes Payable - Schedule of Mortgage Notes Payable, Net (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Dec. 31, 2019
Debt Instrument [Line Items]
Outstanding Borrowings	$ 145,523
Deferred Financing Costs, net	(1,543)
Mortgages
Debt Instrument [Line Items]
Outstanding Borrowings	145,523	$ 147,148
Deferred Financing Costs, net	(1,543)	(1,645)
Carrying Value	143,980	145,503
Mortgages | Payne Place
Debt Instrument [Line Items]
Outstanding Borrowings		1,525
Deferred Financing Costs, net		(28)
Carrying Value		1,497
Mortgages | Bay Club
Debt Instrument [Line Items]
Outstanding Borrowings	21,298	21,398
Deferred Financing Costs, net	(196)	(208)
Carrying Value	$ 21,102	21,190
Maturity Date	Aug. 01, 2024
Annual Interest Rate (as percent)	2.86%
Average Monthly Debt Service	$ 89
Average Monthly Escrow	56
Mortgages | Tramore Village
Debt Instrument [Line Items]
Outstanding Borrowings	32,625	32,625
Deferred Financing Costs, net	(289)	(304)
Carrying Value	$ 32,336	32,321
Maturity Date	Apr. 01, 2025
Annual Interest Rate (as percent)	2.79%
Average Monthly Debt Service	$ 77
Average Monthly Escrow	84
Mortgages | Matthews Reserve
Debt Instrument [Line Items]
Outstanding Borrowings	23,850	23,850
Deferred Financing Costs, net	(255)	(267)
Carrying Value	$ 23,595	23,583
Maturity Date	Sep. 01, 2025
Annual Interest Rate (as percent)	4.47%
Average Monthly Debt Service	$ 90
Average Monthly Escrow	20
Mortgages | The Park at Kensington
Debt Instrument [Line Items]
Outstanding Borrowings	21,760	21,760
Deferred Financing Costs, net	(248)	(260)
Carrying Value	$ 21,512	21,500
Maturity Date	Oct. 01, 2025
Annual Interest Rate (as percent)	4.36%
Average Monthly Debt Service	$ 80
Average Monthly Escrow	53
Mortgages | Wimbledon Oaks
Debt Instrument [Line Items]
Outstanding Borrowings	18,410	18,410
Deferred Financing Costs, net	(225)	(235)
Carrying Value	$ 18,185	18,175
Maturity Date	Mar. 01, 2026
Annual Interest Rate (as percent)	4.33%
Average Monthly Debt Service	$ 67
Average Monthly Escrow	64
Mortgages | Summit
Debt Instrument [Line Items]
Outstanding Borrowings	27,580	27,580
Deferred Financing Costs, net	(330)	(343)
Carrying Value	$ 27,250	$ 27,237
Maturity Date	Jul. 01, 2026
Annual Interest Rate (as percent)	3.84%
Average Monthly Debt Service	$ 89
Average Monthly Escrow	$ 43

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Rental Properties, Net (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Real Estate [Abstract]
Land	$ 29,800	$ 31,220
Building and improvements	171,458	171,265
Furniture, fixtures, and equipment	4,420	4,014
Construction in progress	340	1,205
Rental property, at cost	206,018	207,704
Less: accumulated depreciation	(13,206)	(11,221)
Total rental property, net	$ 192,812	$ 196,483

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Summary of Significant Accounting Policies - Estimated Useful Lives of Assets (Details)	3 Months Ended
	Mar. 31, 2020
Buildings
Property, Plant and Equipment [Line Items]
Real estate investments, useful life (in years)	27 years 6 months
Building improvements | Minimum
Property, Plant and Equipment [Line Items]
Real estate investments, useful life (in years)	5 years
Building improvements | Maximum
Property, Plant and Equipment [Line Items]
Real estate investments, useful life (in years)	27 years 6 months
Furniture, fixtures, and equipment | Minimum
Property, Plant and Equipment [Line Items]
Real estate investments, useful life (in years)	3 years
Furniture, fixtures, and equipment | Maximum
Property, Plant and Equipment [Line Items]
Real estate investments, useful life (in years)	5 years

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Mortgage Notes Payable - Narrative (Details) - USD ($)	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019
Debt Instrument [Line Items]
Amortization of deferred financing costs	$ 74,000	$ 59,000
Accumulated amortization of deferred financing costs	483,000		$ 415,000
Interest Expense
Debt Instrument [Line Items]
Amortization of deferred financing costs	$ 74,000	$ 59,000

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Earnings Per Share - Schedule of Earnings Per Share, Basic and Diluted (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Net loss	$ (1,670)	$ (2,785)
Undistributed net loss attributable to common stockholders	(1,701)	(4,043)
Common stock cash distributions declared		1,258
Class A Common Stock
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Undistributed net loss attributable to common stockholders	(88)	(255)
Common stock cash distributions declared		85
Net loss attributable to common stockholders	$ (88)	$ (170)
Net loss per common share, basic and diluted (in dollars per share)	$ (0.14)	$ (0.27)
Weighted-average shares outstanding, basic and diluted (in shares)	629	635
Class T Common Stock
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Undistributed net loss attributable to common stockholders	$ (157)	$ (448)
Common stock cash distributions declared	27	123
Net loss attributable to common stockholders	$ (130)	$ (325)
Net loss per common share, basic and diluted (in dollars per share)	$ (0.12)	$ (0.29)
Weighted-average shares outstanding, basic and diluted (in shares)	1,118	1,114
Class R Common Stock
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Undistributed net loss attributable to common stockholders		$ (3,188)
Common stock cash distributions declared		988
Net loss attributable to common stockholders		$ (2,200)
Net loss per common share, basic and diluted (in dollars per share)		$ (0.28)
Weighted-average shares outstanding, basic and diluted (in shares)		7,937
Class I Common Stock
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Undistributed net loss attributable to common stockholders	$ (1,456)	$ (152)
Common stock cash distributions declared	4	62
Net loss attributable to common stockholders	$ (1,452)	$ (90)
Net loss per common share, basic and diluted (in dollars per share)	$ (0.14)	$ (0.24)
Weighted-average shares outstanding, basic and diluted (in shares)	10,355	380

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Equity - Schedule of Stock Redemptions (Details) - $ / shares	1 Months Ended			3 Months Ended
	Mar. 31, 2020	Feb. 29, 2020	Jan. 31, 2020	Mar. 31, 2020
Class A Common Stock
Class of Stock [Line Items]
Total Number of Shares Redeemed (in shares)	5,484	0	0	5,484
Average Price Paid per Share (in dollars per share)	$ 8.89	$ 0.00	$ 0.00	$ 0.00
Class T Common Stock
Class of Stock [Line Items]
Total Number of Shares Redeemed (in shares)	3,587	0	0	3,587
Average Price Paid per Share (in dollars per share)	$ 8.89	$ 0.00	$ 0.00	$ 0.00
Class I Common Stock
Class of Stock [Line Items]
Total Number of Shares Redeemed (in shares)	2,416	0	0	2,416
Average Price Paid per Share (in dollars per share)	$ 8.44	$ 0.00	$ 0.00	$ 0.00

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Summary of Significant Accounting Policies - Schedule of Subsidiaries (Details)	Mar. 31, 2020 unit
Property, Plant and Equipment [Line Items]
Number of Units	1,349
RRE Bay Club Holdings, LLC
Property, Plant and Equipment [Line Items]
Number of Units	220
RRE Tramore Village Holdings, LLC
Property, Plant and Equipment [Line Items]
Number of Units	324
RRE Matthews Reserve Holdings, LLC
Property, Plant and Equipment [Line Items]
Number of Units	212
RRE Kensington Holdings, LLC
Property, Plant and Equipment [Line Items]
Number of Units	204
RRE Wimbledon Oaks Holdings, LLC
Property, Plant and Equipment [Line Items]
Number of Units	248
RRE Summit Holdings, LLC
Property, Plant and Equipment [Line Items]
Number of Units	141

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Consolidated Balance Sheets (Parentheticals) - $ / shares	Mar. 31, 2020	Dec. 31, 2019	Jun. 28, 2017
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized (in shares)	10,000,000	10,000,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.01
Common stock, shares authorized (in shares)	1,000,000,000		125,000,000
Convertible Stock
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized (in shares)	50,000	50,000
Preferred stock, shares issued (in shares)	50,000	50,000
Preferred stock, shares outstanding (in shares)	50,000	50,000
Class A Common Stock
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	25,000,000	25,000,000
Common stock, shares issued (in shares)	625,848	628,691
Common stock, shares outstanding (in shares)	625,848	628,691
Class T Common Stock
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	25,000,000	25,000,000
Common stock, shares issued (in shares)	1,121,639	1,115,458
Common stock, shares outstanding (in shares)	1,121,639	1,115,458
Class I Common Stock
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	75,000,000	75,000,000
Common stock, shares issued (in shares)	10,406,822	10,327,291
Common stock, shares outstanding (in shares)	10,406,822	10,327,291

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Fair Value Measures and Disclosures (Tables)

3 Months Ended

Mar. 31, 2020

Fair Value Disclosures [Abstract]

Fair Value, Assets Measured on Recurring Basis

The following table presents information about the Company's assets measured at fair value on a recurring basis and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value (in thousands):

	Level 1		Level 2		Level 3		Total
March 31, 2020
Assets:
Interest rate caps	$	—	$	1	$	—	$	1
December 31, 2019
Assets:
Interest rate caps	$	—	$	—	$	—	$	—

Schedule of Carrying and Fair Values

The carrying and fair values of the Company’s mortgage notes payable-outstanding borrowings, which were not carried at fair value on the consolidated balance sheets at March 31, 2020 and December 31, 2019 were as follows (in thousands):

	March 31, 2020				December 31, 2019
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Mortgage notes payable- outstanding borrowings	$	145,523	$	144,927	$	147,148	$	144,902

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Mortgage Notes Payable (Tables)

3 Months Ended

Mar. 31, 2020

Debt Disclosure [Abstract]

Schedule of Mortgage Notes Payable, Net

The following table presents a summary of the Company's mortgage notes payable, net (in thousands):

	March 31, 2020							December 31, 2019
Collateral	Outstanding Borrowings		Deferred Financing Costs, net			Carrying Value		Outstanding borrowings		Deferred Financing Costs, net			Carrying Value
Payne Place	$	—	$	—		$	—	$	1,525	$	(28	)	$	1,497
Bay Club		21,298		(196	)		21,102		21,398		(208	)		21,190
Tramore Village		32,625		(289	)		32,336		32,625		(304	)		32,321
Matthews Reserve		23,850		(255	)		23,595		23,850		(267	)		23,583
The Park at Kensington		21,760		(248	)		21,512		21,760		(260	)		21,500
Wimbledon Oaks		18,410		(225	)		18,185		18,410		(235	)		18,175
Summit		27,580		(330	)		27,250		27,580		(343	)		27,237
Total	$	145,523	$	(1,543	)	$	143,980	$	147,148	$	(1,645	)	$	145,503

The following table presents additional information about the Company's mortgage notes payable, net (in thousands, except percentages):

Collateral	Maturity Date	Annual Interest Rate				Average Monthly Debt Service		Average Monthly Escrow
Bay Club	8/1/2024		2.86	%	(1)(4)	$	89	$	56
Tramore Village	4/1/2025		2.79	%	(2)(5)		77		84
Matthews Reserve	9/1/2025		4.47	%	(3)(5)		90		20
The Park at Kensington	10/1/2025		4.36	%	(3)(5)		80		53
Wimbledon Oaks	3/1/2026		4.33	%	(3)(5)		67		64
Summit	7/1/2026		3.84	%	(3)(5)		89		43

(1) Variable rate based on one-month LIBOR of 0.99% (at March 31, 2020) plus 1.87%, with a maximum interest rate of 5.75%.

(2) Variable rate based on one-month LIBOR of 0.99% (at March 31, 2020) plus 1.80%, with a maximum interest rate of 6.25%.

(3) Fixed rate.

(4) Monthly payment of principal and interest required.  

(5) Monthly interest-only payment currently required.

Schedule of Annual Principal Payments

The following table presents the Company's annual principal payments on outstanding borrowings for each of the next five years ending March 31, and thereafter (in thousands):

2021	$	452
2022		1,446
2023		2,574
2024		2,822
2025		21,843
Thereafter		116,386
	$	145,523

Schedule of Estimated Amortization

The following table presents the Company's estimated amortization of the existing deferred financing costs for the next five years ending March 31, and thereafter (in thousands):

2021	$	294
2022		292
2023		288
2024		284
2025		248
Thereafter		137
	$	1,543

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Consolidated Statements of Cash Flows (unaudited) (Parentheticals) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019	Mar. 31, 2019	Dec. 31, 2018
Reconciliation to consolidated balance sheets:
Cash	$ 25,193	$ 28,430	$ 38,702
Restricted Cash	1,761	1,916	1,461
Subtotal- cash and restricted cash	$ 26,954	$ 30,346	$ 40,163	$ 33,711

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Disposition of Property

3 Months Ended

Mar. 31, 2020

Discontinued Operations And Disposal Groups [Abstract]

Disposition of Property

NOTE 6 – DISPOSITION OF PROPERTY

The following table presents the Company’s disposition activity during the three months ended March 31, 2020 (in thousands):

Multifamily Community	Location	Sale Date	Contract Sales Price		Net Gain on Disposition		Revenue Attributable to Property Sold		Net Income Attributable to Property Sold (1)
Payne Place	Alexandria, Virginia	March 5, 2020	$	3,100	$	530	$	32	$	3

(1) Excludes net gain on disposition.

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Earnings Per Share

3 Months Ended

Mar. 31, 2020

Earnings Per Share [Abstract]

Earnings Per Share

NOTE 10 - EARNINGS PER SHARE

The following table presents a reconciliation of basic and diluted earnings/(loss) per share for the periods presented as follows (in thousands, except per share data):

	Three Months Ended March 31,
	2020			2019
Net loss	$	(1,670	)	$	(2,785	)
Less: Class A common stock cash distributions declared		—			85
Less: Class T common stock cash distributions declared		27			123
Less: Class R common stock cash distributions declared		—			988
Less: Class I common stock cash distributions declared		4			62
Undistributed net loss attributable to common stockholders	$	(1,701	)	$	(4,043	)
Class A common stock:
Undistributed net loss attributable to Class A common    stockholders	$	(88	)	$	(255	)
Class A common stock cash distributions declared		—			85
Net loss attributable to Class A common stockholders	$	(88	)	$	(170	)
Net loss per Class A common share, basic and diluted	$	(0.14	)	$	(0.27	)
Weighted-average number of Class A common shares    outstanding, basic and diluted (1)		629			635
Class T common stock:
Undistributed net loss attributable to Class T    common stockholders	$	(157	)	$	(448	)
Class T common stock cash distributions declared		27			123
Net loss attributable to Class T common stockholders	$	(130	)	$	(325	)
Net loss per Class T common share, basic and diluted	$	(0.12	)	$	(0.29	)
Weighted-average number of Class T common shares    outstanding, basic and diluted		1,118			1,114
Class R common stock:
Undistributed net loss attributable to Class R    common stockholders	$	—		$	(3,188	)
Class R common stock cash distributions declared		—			988
Net loss attributable to Class R common stockholders	$	—		$	(2,200	)
Net loss per Class R common share, basic and diluted	$	—		$	(0.28	)
Weighted-average number of Class R common shares    outstanding, basic and diluted		—			7,937
Class I common stock:
Undistributed net loss attributable to Class I    common stockholders	$	(1,456	)	$	(152	)
Class I common stock cash distributions declared		4			62
Net loss attributable to Class I common stockholders	$	(1,452	)	$	(90	)
Net loss per Class I common share, basic and diluted	$	(0.14	)	$	(0.24	)
Weighted-average number of Class I common shares    outstanding, basic and diluted		10,355			380

(1)Weighted-average number of shares excludes the convertible stock as they are not participating securities.

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Equity - Schedule of Stock Issuances (Parenthetical) (Details) - shares	3 Months Ended
	Mar. 31, 2020	Dec. 31, 2019
Class A
Class of Stock [Line Items]
Total shares issued (in shares)	625,848	628,691
Advisor
Class of Stock [Line Items]
Issuance of convertible shares (in shares)	5,000
Advisor | Class A
Class of Stock [Line Items]
Total shares issued (in shares)	15,000
Shared issued through primary offering | Class A
Class of Stock [Line Items]
Total shares issued (in shares)	586,207
Advisor | Shared issued through primary offering | Class A
Class of Stock [Line Items]
Total shares issued (in shares)	222,222

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Mortgage Notes Payable - Annual Principal Payments on Mortgage Notes Payable (Details) $ in Thousands	Mar. 31, 2020 USD ($)
Debt Disclosure [Abstract]
2021	$ 452
2022	1,446
2023	2,574
2024	2,822
2025	21,843
Thereafter	116,386
Total principal payments	$ 145,523

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Certain Relationships and Related Party Transactions - Schedule of Fees Earned and Expenses Incurred (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019
Related Party Transaction [Line Items]
Due from related parties	$ 2
Due to related parties	3,036		$ 4,938
Advisor
Related Party Transaction [Line Items]
Due from related parties	2
Due to related parties	2,946		4,854
Advisor | Debt financing fees
Related Party Transaction [Line Items]
Fees earned / expenses incurred		$ 92
Advisor | Organization and offering costs
Related Party Transaction [Line Items]
Due to related parties	2,499		3,076
Fees earned / expenses incurred		324
Advisor | Operating expense reimbursements
Related Party Transaction [Line Items]
Due to related parties	447		1,778
Fees earned / expenses incurred	6	405
Advisor | Asset management fees
Related Party Transaction [Line Items]
Fees earned / expenses incurred	555	415
Advisor | Related Party Acquisition Fees
Related Party Transaction [Line Items]
Fees earned / expenses incurred		610
Advisor | Disposition fees
Related Party Transaction [Line Items]
Fees earned / expenses incurred	62
Manager
Related Party Transaction [Line Items]
Due to related parties	78		84
Manager | Operating expense reimbursements
Related Party Transaction [Line Items]
Due to related parties			3
Manager | Asset management fees
Related Party Transaction [Line Items]
Due to related parties	78		$ 81
Fees earned / expenses incurred	225	159
Manager | Construction management fees
Related Party Transaction [Line Items]
Fees earned / expenses incurred	130	42
Manager | Operating expense reimbursements
Related Party Transaction [Line Items]
Fees earned / expenses incurred		30
Other | Resource Real Estate Opportunity REIT I deposited check
Related Party Transaction [Line Items]
Due to related parties	$ 12
RAI | Internal audit fee
Related Party Transaction [Line Items]
Fees earned / expenses incurred		12
Resource Securities | Selling commissions and dealer-manager fees
Related Party Transaction [Line Items]
Fees earned / expenses incurred		820
Resource Securities | Distribution and shareholder servicing fee
Related Party Transaction [Line Items]
Fees earned / expenses incurred		424
The Planning and Zoning Resource Company
Related Party Transaction [Line Items]
Fees earned / expenses incurred		$ 1

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Derivatives and Hedging Activities (Tables)

3 Months Ended

Mar. 31, 2020

Derivative Instruments And Hedging Activities Disclosure [Abstract]

Schedule of Derivative Instruments

The following table presents the Company's outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk at March 31, 2020 and December 31, 2019 (dollars in thousands):

	Interest Rate Derivative	Number of Instruments	Notional Amount		Maturity Dates
March 31, 2020	Interest rate caps	2	$	54,145	August 1, 2020 and April 1, 2021
December 31, 2019	Interest rate caps	2	$	54,145	August 1, 2020 and April 1, 2021

Schedule of Fair Values of Derivative Instruments on the Balance Sheet

The following table presents the fair value of the Company’s derivative financial instruments as well as their classification on the consolidated balance sheets at March 31, 2020 and December 31, 2019 (in thousands):

Asset Derivatives				Liability Derivatives
March 31, 2020		December 31, 2019		March 31, 2020		December 31, 2019
Balance Sheet	Fair Value	Balance Sheet	Fair Value	Balance Sheet	Fair Value	Balance Sheet	Fair Value
Prepaid expenses and other assets	$          1	Prepaid expenses and other assets	$         —	—	$          —	—	$          —

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Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Investments:
Rental properties, net	$ 192,812	$ 196,483
Identified intangible assets, net		173
Total investments	192,812	196,656
Cash	25,193	28,430
Restricted cash	1,761	1,916
Tenant receivables, net	36	31
Due from related parties	2
Prepaid expenses and other assets	937	599
Total assets	220,741	227,632
Liabilities:
Mortgage notes payable, net	143,980	145,503
Accounts payable and accrued expenses	1,516	2,552
Accrued real estate taxes	724	601
Due to related parties	3,036	4,938
Tenant prepayments	158	194
Security deposits	391	382
Distributions payable		1,587
Total liabilities	149,805	155,757
Stockholders’ equity:
Additional paid-in capital	104,480	103,725
Accumulated other comprehensive loss	(26)	(32)
Accumulated deficit	(33,640)	(31,939)
Total stockholders’ equity	70,936	71,875
Total liabilities and stockholders’ equity	220,741	227,632
Convertible Stock
Stockholders’ equity:
Preferred stock	1	1
Class A Common Stock
Stockholders’ equity:
Common stock	6	6
Class T Common Stock
Stockholders’ equity:
Common stock	11	11
Class I Common Stock
Stockholders’ equity:
Common stock	$ 104	$ 103

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Consolidated Statements of Cash Flows (unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Cash flows from operating activities:
Net loss	$ (1,670,000)	$ (2,785,000)
Adjustment to reconcile net loss to net cash used in operating activities:
Loss on disposal of assets	129,000	87,000
Depreciation and amortization expense	2,360,000	2,237,000
Amortization of deferred financing costs	74,000	59,000
Net gain on disposition of property	(530,000)
Realized loss on change in fair value of interest rate cap	5,659	853
Changes in operating assets and liabilities:
Tenant receivables, net	(8,000)	7,000
Due from related parties	(2,000)	3,000
Prepaid expenses and other assets	(341,000)	(155,000)
Due to related parties	(1,901,000)	(408,000)
Accounts payable and accrued expenses	37,000	645,000
Tenant prepayments	(37,000)	53,000
Security deposits	22,000	1,000
Net cash used in operating activities	(1,861,000)	(255,000)
Cash flows from investing activities:
Proceeds from disposal of properties, net of closing costs	1,340,000
Property acquisition		(7,286,000)
Capital expenditures	(1,904,000)	(1,130,000)
Net cash used in investing activities	(564,000)	(8,416,000)
Cash flows from financing activities:
Net proceeds from issuance of common stock		15,894,000
Redemptions of common stock	(101,000)
Payments on borrowings	(105,000)	(9,000)
Payment of deferred financing costs		(269,000)
Distributions paid on common stock	(761,000)	(493,000)
Net cash (used in) provided by financing activities	(967,000)	15,123,000
Net (decrease) increase in cash and restricted cash	(3,392,000)	6,452,000
Cash and restricted cash at beginning of period	30,346,000	33,711,000
Cash and restricted cash at end of period	$ 26,954,000	$ 40,163,000

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Certain Relationships and Related Party Transactions (Tables)

3 Months Ended

Mar. 31, 2020

Related Party Transactions [Abstract]

Schedule of Related Party Transactions

The following table presents the Company's amounts receivable from and amounts payable to such related parties (in thousands):

	March 31, 2020		December 31, 2019
Due from related parties:
Advisor	$	2	$	—
	$	2	$	—
Due to related parties:
Advisor:
Organization and offering costs	$	2,499	$	3,076
Operating expense reimbursements (including prepaid expenses)		447		1,778
		2,946		4,854
Manager:
Property management fees		78		81
Operating expense reimbursements		—		3
		78		84
Other:
Resource Real Estate Opportunity REIT I deposited check	12			—
	$	3,036	$	4,938

The following table presents the Company's fees earned by and expenses incurred from such related parties (in thousands):

	Three Months Ended March 31,
	2020		2019
Fees earned / expenses incurred:
Advisor:
Acquisition fees and acquisition related reimbursements (1)	$	—	$	610
Asset management fees (2)		555		415
Disposition fees (10)		62		—
Debt financing fees (3)		—		92
Organization and offering costs (4)		—		324
Operating expense reimbursement (5)(9)		6		405
Manager:
Property management fees (2)	$	225	$	159
Construction management fees (1)		130		42
Operating expense reimbursements (6)		—		30
RAI:
Internal audit fee (5)	$	—	$	12
Resource Securities:
Selling commissions and dealer-manager fees (7)	$	—	$	820
Distribution and shareholder servicing fee (7)(8)		—		424
Other:
The Planning & Zoning Resource Company (1)	$	—	$	1

(1) Capitalized and included in Rental properties, net on the consolidated balance sheets.

(2) Included in Management fees - related parties on the consolidated statements of operations and comprehensive loss.

(3) Included in Mortgage notes payable on the consolidated balance sheets.

(4) Organizational expenses were expensed when incurred and offering costs are included in Deferred offering costs until they are charged to Stockholders' equity on the consolidated balance sheets as proceeds are raised in the offering.

(5)   Included in General and administrative on the consolidated statements of operations and comprehensive loss and excludes third party costs that are advanced by the Advisor.

(6) Included in Rental operating expenses on the consolidated statements of operations and comprehensive loss.

(7) Included in Stockholders' equity on the consolidated balance sheets.

(8) During the year ended December 31, 2019, there was an adjustment in conjunction with the termination of the primary offering; see Note 2.

(9) During the year ended December 31, 2019, the Advisor suspended the allocation of rent and payroll costs to the Company.

(10) Included in Net gain on disposition of property on the consolidated statements of operations and comprehensive loss.

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Summary of Significant Accounting Policies - Narrative (Details)		3 Months Ended
	Aug. 05, 2016 shares	Mar. 31, 2020 USD ($) segment	Mar. 31, 2019 USD ($)	Dec. 31, 2019 USD ($)
Property, Plant and Equipment [Line Items]
Number of operating segments | segment		1
Improvements and replacements in excess of threshold, capitalized amount (as percent)		$ 1,000,000
Improvements and replacements, useful life greater than or equal to one year, capitalization threshold (in years)		1 year
Construction management fee (as percent)		5.00%
Impairment of long-lived assets		$ 0	$ 0
Future minimum payments receivable, current		10,800,000
Future minimum payments receivable, in two years		530,000
Future minimum payments receivable, thereafter		0
Allowance for uncollectible receivables		1,501		$ 3,927
Deferred organization and offering and operational expenses repaid		1,900,000
Advisor
Property, Plant and Equipment [Line Items]
Formation and other operating expenses		$ 104,000
Primary Offering Price | Advisor
Property, Plant and Equipment [Line Items]
Approximate reimbursement of organization and offering expenses to be reimbursed, option one (as percent)		4.00%
Offering proceeds, threshold, option one (less than)		$ 500,000,000
Convertible Stock
Property, Plant and Equipment [Line Items]
Issuance of convertible shares (in shares) | shares	50,000
Class T Common Stock
Property, Plant and Equipment [Line Items]
Annual fee, percentage of purchase price of common stock sold (as percent)		1.00%
Class T Common Stock | Resource Securities
Property, Plant and Equipment [Line Items]
Annual fee, percentage of purchase price of common stock sold (as percent)		1.00%
Class R Common Stock
Property, Plant and Equipment [Line Items]
Annual fee, percentage of purchase price of common stock sold (as percent)		1.00%
Class R Common Stock | Resource Securities
Property, Plant and Equipment [Line Items]
Annual fee, percentage of purchase price of common stock sold (as percent)		1.00%
Percentage of shares outstanding held by related party		0.00%
Minimum
Property, Plant and Equipment [Line Items]
Remaining term of lease		1 month
Maximum
Property, Plant and Equipment [Line Items]
Remaining term of lease		1 year
Maximum | Class T Common Stock
Property, Plant and Equipment [Line Items]
Annual distribution and shareholder servicing fee, term		5 years
Net Assets, Geographic Area | FL
Property, Plant and Equipment [Line Items]
Concentration risk (as percent)		28.00%
Net Assets, Geographic Area | GA
Property, Plant and Equipment [Line Items]
Concentration risk (as percent)		22.00%
Net Assets, Geographic Area | VA
Property, Plant and Equipment [Line Items]
Concentration risk (as percent)		19.00%

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Rental Properties, Net

3 Months Ended

Mar. 31, 2020

Real Estate [Abstract]

Rental Properties, Net

NOTE 5 - RENTAL PROPERTIES, NET

The following table presents the Company's investment in rental properties (in thousands):

	March 31, 2020			December 31, 2019
Land	$	29,800		$	31,220
Building and improvements		171,458			171,265
Furniture, fixtures, and equipment		4,420			4,014
Construction in progress		340			1,205
		206,018			207,704
Less: accumulated depreciation		(13,206	)		(11,221	)
Total rental property, net	$	192,812		$	196,483

Depreciation expense for the three months ended March 31, 2020 and 2019 was $2.2 million and $1.6 million respectively.

Loss on disposal of assets:  During the three months ended March 31, 2020 and 2019, the Company recorded losses on the disposal of assets of approximately $129,000 and $87,000, respectively, due to the replacement of appliances at its rental properties in conjunction with unit upgrades.  

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Certain Relationships and Related Party Transactions

3 Months Ended

Mar. 31, 2020

Related Party Transactions [Abstract]

Certain Relationships and Related Party Transactions

NOTE 9 - CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

Relationship with the Advisor

The Company is externally managed and advised by the Advisor. Pursuant to the terms of the Advisory Agreement, the Advisor provides the Company with its management team, including its officers, along with appropriate support personnel. The Advisor will be reimbursed for the Company’s allocable share of costs for Advisor personnel, including allocable personnel salaries and benefits. Each of the Company’s officers is an employee of the Sponsor or one of its affiliates. The Company does not expect to have any employees. The Advisor is not obligated to dedicate any specific portion of its time or its employees' time to the Company’s business. The Advisor and any employees of the Sponsor or its affiliates acting on behalf of the Advisor, are at all times subject to the supervision and oversight of the Company’s board of directors and have only such functions and authority as the Company delegates to it. Effective April 28, 2020, the Company renewed the Advisory Agreement with the Advisor through April 27, 2021.

During the course of the offering, the Advisor provided offering-related services to the Company and advanced funds to the Company for both operating costs and organization and offering costs. These amounts were to be reimbursed to the Advisor from the proceeds from the offering, subject to the aforementioned limits on organization and offering expense reimbursements. As of March 31, 2020, the Company incurred a total of $9.2 million of organization and offering costs, of which the Advisor advanced $9.0 million on a cumulative basis on behalf of the Company. The Company paid the remaining amount of approximately $249,000 of these costs directly. The maximum liability of the Company was $4.4 million based on the limit on organization and offering expenses payable by the Company included in the Advisory Agreement, which was comprised of the $249,000 initially paid by the Company and $4.2 million of the advance from the Advisor. An adjustment was made during the year ended December 31, 2019 to relieve the Company from the remaining $4.8 million liability due to the Advisor. As of March 31, 2020, the Company has reimbursed $1.7 million to the Advisor.  

The Advisory Agreement has a one -year term and may be renewed for an unlimited number of successive one -year terms upon the approval of the Conflicts Committee of the Company's board of directors. Under the Advisory Agreement, the Advisor will receive fees and will be reimbursed for its expenses as set forth below:

Acquisition fees. The Advisor earns an acquisition fee of 2.0% of the cost of investments acquired on behalf of the Company, plus any capital reserves allocated, or the amount funded by the Company to acquire or originate loans, including acquisition expenses and any debt attributable to such investments.

Asset management fees. The Advisor earns a monthly asset management fee equal to 0.083% (one-twelfth of 1.0%) of the appraised asset value for all assets owned at the end of each month, without deduction for depreciation, bad debts or other non-cash reserves. The asset management fee is based only on the portion of the costs or value attributable to the Company’s investment in an asset if the Company does not own all of an asset and does not manage or control the asset.

Disposition fees. The Advisor earns a disposition fee in connection with the sale of a property equal to the lesser of one-half of the aggregate brokerage commission paid, or if none is paid, 2.0% of the contract sales price.

Debt financing fees. The Advisor will earn a debt financing fee equal to 0.5% of the amount available under any debt financing obtained.

Expense reimbursements. The Company paid directly or reimbursed the Advisor for all of the expenses paid or incurred by the Advisor or its affiliates on behalf of the Company or in connection with the services provided to the Company in relation to its public offering, including its distribution reinvestment plan offering. This includes all organization and offering costs of up to 4.0% of gross offering proceeds as the Company raised less than $500.0 million in the primary offering. Reimbursements also include expenses the Advisor incurs in connection with providing services to the Company, including the Company’s allocable share of costs for Advisor personnel and overhead, out-of-pocket expenses incurred in connection with the selection and acquisition of properties or other real estate related debt investments, whether or not the Company ultimately acquires the investment. However, the Company will not reimburse the Advisor or its affiliates for employee costs in connection with services for which the Advisor earns acquisition or disposition fees. Prior to the Company breaking escrow, the Advisor incurred approximately $104,000 of formation and other operating expenses the Company's behalf, which will not be reimbursed to the Advisor.

On April 13, 2018, the board of directors approved an amendment to the Advisory Agreement that provides that the Company is not responsible for the reimbursement of any unreimbursed organization and offering expenses or operational expenses incurred by the Advisor on the Company’s behalf through March 31, 2018 until after the termination of the primary portion of the Company’s ongoing initial public offering. Additionally, the amendment provides that such unreimbursed organization and offering expenses or operational expenses incurred or paid by the Advisor on the Company’s behalf through March 31, 2018 will be reimbursed ratably starting after the termination of the primary portion of the Company’s ongoing initial public offering through April 30, 2021 for organization and offering expenses and through April 30, 2020 for operating expenses. The payments commenced on November 1, 2019.

Relationship with the Manager

The Manager manages real estate properties and real estate-related debt investments and coordinates the leasing of, and manages construction activities related to, some of the Company’s real estate properties pursuant to the terms of the management agreement with the Manager.

Property management fees. The Manager earns a property management fee equal to 4.5% of actual gross cash receipts from the operations of real property investments that it manages and an oversight fee in the same amount on any real property investments that are managed by third parties. Property management fees are deducted directly from the property's operating account by the property manager. The Manager subcontracts operational management of the properties to an unaffiliated third party and pays for those services from its property management fee. Any property management fees paid to unaffiliated third party property managers in excess of 4.5% of actual gross receipts will be reimbursed to the Company by the Advisor.

Construction management fees. The Manager earns a construction management fee equal to 5.0% of actual aggregate costs to construct improvements to a property.

Debt servicing fees. The Manager will earn a debt servicing fee equal to 2.75% of gross receipts from real estate-related debt investments.

Expense reimbursement. During the ordinary course of business, the Manager or other affiliates of RAI may pay certain shared operating expenses on behalf of the Company. The Company is obligated to reimburse the Manager or other affiliates for such shared operating expenses.

Relationship with Resource Securities

Resource Securities, an affiliate of the Advisor, serves as the Company’s dealer manager and was responsible for marketing the Company’s shares during the primary public offering.

Dealer manager fee and selling commissions. Pursuant to the terms of the amended and restated dealer manager agreement with Resource Securities, the Company generally paid Resource Securities a selling commission of up to 3.0% of gross offering proceeds from the sale of Class R shares and a dealer manager fee of up to 3.5% of gross offering proceeds from the sale of Class R shares (but the aggregate of such fees shall not exceed 5.5% of gross offering proceeds). The Company generally paid Resource Securities a dealer manager fee of up to 1.5% of gross offering proceeds from the sale of the Class I shares. Resource Securities allowed all selling commissions earned and a portion of the dealer manager fee as a marketing fee to participating broker-dealers. No selling commissions or dealer manager fees were earned by Resource Securities in connection with sales under the distribution reinvestment plan. Additionally, the Company may reimburse Resource Securities for bona fide due diligence expenses.

Distribution and shareholder servicing fee. Resource Securities was paid an annual fee of 1.0% of the NAV (purchase price prior to June 29, 2018) per share of Class T common stock sold in the primary offering for up to five years from the date on which each share was issued. Resource Securities was also paid an annual fee of 1.0% of the NAV (purchase price prior to June 29, 2018) per share of Class R common stock sold in the primary offering subject to the terms of the Class R shares as included in the Articles Supplementary. Effective November 1, 2019, pursuant to the terms of the Class T and Class R shares, no further distribution and shareholder servicing fees were payable to Resource Securities so the Company ceased to accrue the distribution and shareholder servicing fee.

Relationship with RAI and C-III

Property loss pool. Until February 28, 2019, the Company's properties participated in a property loss self-insurance pool with other properties directly and indirectly managed by RAI and C-III, which was backed by a catastrophic insurance policy. The pool covered losses up to $2.5 million, in aggregate, after a $25,000 deductible per incident. Claims beyond the insurance pool limits were covered by the catastrophic insurance policy, which covered claims up to $250.0 million, after either a $25,000 or a $100,000 deductible per incident, depending on location and/or type of loss. Therefore, unforeseen or catastrophic losses in excess of the Company's insured limits could have a material adverse effect on the Company's financial condition and operating results.

Beginning March 1, 2019, the Company now participates (with other properties directly and indirectly managed by RAI and C-III) only in the catastrophic insurance policy, which covers claims up to $250.0 million, after either a $25,000 or a $100,000 deductible per incident, depending on location and/or type of loss. Therefore, unforeseen or catastrophic losses in excess of the Company's insured limits could have a material adverse effect on the Company's financial condition and operating results. Substantially all of the receivables from related parties represent insurance deposits held in escrow by RAI and C-III related to the self-insurance pool which, if unused, will be returned to the Company.

General liability coverage.  The Company also participates (with other properties directly and indirectly managed by RAI and C-III) in a general liability policy. The insured limit for the general liability policy is $76.0 million in total claims, after a $25,000 deductible per incident.

Internal audit fees. RAI performs internal audit services for the Company.

Directors and officers liability insurance. The Company participates in a liability insurance program for directors and officers coverage with other C-III managed entities and subsidiaries for coverage up to $100.0 million.

The following table presents the Company's amounts receivable from and amounts payable to such related parties (in thousands):

	March 31, 2020		December 31, 2019
Due from related parties:
Advisor	$	2	$	—
	$	2	$	—
Due to related parties:
Advisor:
Organization and offering costs	$	2,499	$	3,076
Operating expense reimbursements (including prepaid expenses)		447		1,778
		2,946		4,854
Manager:
Property management fees		78		81
Operating expense reimbursements		—		3
		78		84
Other:
Resource Real Estate Opportunity REIT I deposited check	12			—
	$	3,036	$	4,938

The following table presents the Company's fees earned by and expenses incurred from such related parties (in thousands):

	Three Months Ended March 31,
	2020		2019
Fees earned / expenses incurred:
Advisor:
Acquisition fees and acquisition related reimbursements (1)	$	—	$	610
Asset management fees (2)		555		415
Disposition fees (10)		62		—
Debt financing fees (3)		—		92
Organization and offering costs (4)		—		324
Operating expense reimbursement (5)(9)		6		405
Manager:
Property management fees (2)	$	225	$	159
Construction management fees (1)		130		42
Operating expense reimbursements (6)		—		30
RAI:
Internal audit fee (5)	$	—	$	12
Resource Securities:
Selling commissions and dealer-manager fees (7)	$	—	$	820
Distribution and shareholder servicing fee (7)(8)		—		424
Other:
The Planning & Zoning Resource Company (1)	$	—	$	1

(1) Capitalized and included in Rental properties, net on the consolidated balance sheets.

(2) Included in Management fees - related parties on the consolidated statements of operations and comprehensive loss.

(3) Included in Mortgage notes payable on the consolidated balance sheets.

(4) Organizational expenses were expensed when incurred and offering costs are included in Deferred offering costs until they are charged to Stockholders' equity on the consolidated balance sheets as proceeds are raised in the offering.

(5)   Included in General and administrative on the consolidated statements of operations and comprehensive loss and excludes third party costs that are advanced by the Advisor.

(6) Included in Rental operating expenses on the consolidated statements of operations and comprehensive loss.

(7) Included in Stockholders' equity on the consolidated balance sheets.

(8) During the year ended December 31, 2019, there was an adjustment in conjunction with the termination of the primary offering; see Note 2.

(9) During the year ended December 31, 2019, the Advisor suspended the allocation of rent and payroll costs to the Company.

(10) Included in Net gain on disposition of property on the consolidated statements of operations and comprehensive loss.

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Rental Properties, Net (Tables)

3 Months Ended

Mar. 31, 2020

Real Estate [Abstract]

Summary of Investment in Rental Property

The following table presents the Company's investment in rental properties (in thousands):

	March 31, 2020			December 31, 2019
Land	$	29,800		$	31,220
Building and improvements		171,458			171,265
Furniture, fixtures, and equipment		4,420			4,014
Construction in progress		340			1,205
		206,018			207,704
Less: accumulated depreciation		(13,206	)		(11,221	)
Total rental property, net	$	192,812		$	196,483

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Derivatives and Hedging Activities

3 Months Ended

Mar. 31, 2020

Derivative Instruments And Hedging Activities Disclosure [Abstract]

Derivative and Hedging Activities

NOTE 13 - DERIVATIVES AND HEDGING ACTIVITIES

Risk Management Objective of Using Derivatives

The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources, and duration of its debt funding and the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Company’s derivative financial instruments are used to manage differences in the amount, timing, and duration of the Company’s known or expected cash receipts and its known or expected cash payments principally related to the Company’s investments and borrowings.

As a condition to certain of the Company’s financing facilities, from time to time the Company may be required to enter into certain derivative transactions as may be required by the lender. These transactions would generally be in line with the Company’s own risk management objectives and also serve to protect the lender.

Cash Flow Hedges of Interest Rate Risk

The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company entered into two interest rate caps that were designated as cash flow hedges. Interest rate caps designated as cash flow hedges involve the receipt of variable amounts from a counterparty if interest rates rise above the strike rate on the contract in exchange for an up-front premium.

The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive income and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. During the three months ended March 31, 2020, such derivatives were used to hedge the variable cash flows, indexed to USD-LIBOR, associated with existing variable-rate loan agreements. The ineffective portion of the change in fair value of the derivatives will be recognized directly in earnings. During the three months ended March 31, 2020 and 2019, the Company recorded $5,659 and $853, respectively, of hedge ineffectiveness in earnings.

Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on the Company's variable-rate debt. At March 31, 2020, the Company estimates that an additional $26,756 will be reclassified as an increase to interest expense over the next 12 months.

The following table presents the Company's outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk at March 31, 2020 and December 31, 2019 (dollars in thousands):

	Interest Rate Derivative	Number of Instruments	Notional Amount		Maturity Dates
March 31, 2020	Interest rate caps	2	$	54,145	August 1, 2020 and April 1, 2021
December 31, 2019	Interest rate caps	2	$	54,145	August 1, 2020 and April 1, 2021

Tabular Disclosure of Fair Values of Derivative Instruments on the Balance Sheet

The following table presents the fair value of the Company’s derivative financial instruments as well as their classification on the consolidated balance sheets at March 31, 2020 and December 31, 2019 (in thousands):

Asset Derivatives				Liability Derivatives
March 31, 2020		December 31, 2019		March 31, 2020		December 31, 2019
Balance Sheet	Fair Value	Balance Sheet	Fair Value	Balance Sheet	Fair Value	Balance Sheet	Fair Value
Prepaid expenses and other assets	$          1	Prepaid expenses and other assets	$         —	—	$          —	—	$          —

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Nature of Business and Operations (Tables)

3 Months Ended

Mar. 31, 2020

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Schedule of Initial Price Per Share for Each Stock Class

The prices per share for each class of shares of the Company's common stock through March 31, 2020 were as follows:

	Class A		Class T		Class R		Class I
Primary Offering Price
Inception through July 2, 2017	$	10.00	$	9.47	n/a		n/a
July 3, 2017 through July 1, 2018	n/a		n/a		$	9.52	$	9.13
July 2, 2018 through March 24, 2019	n/a		n/a		$	9.68	$	9.28
March 25, 2019 through October 31, 2019	n/a		n/a		$	9.75	$	9.35
Offering Price under the DRIP
Inception through July 2, 2017	$	9.60	$	9.09	n/a		n/a
July 3, 2017 through July 1, 2018	$	9.60	$	9.09	$	9.14	$	8.90
July 2, 2018 through March 24, 2019 (1)	$	9.05	$	9.05	$	9.05	$	9.05
March 25, 2019 through March 30, 2020 (1)	$	9.12	$	9.12	$	9.12	$	9.12
March 31, 2020 (1)	$	9.01	$	9.01	n/a		$	9.01

(1) Shares of common stock pursuant to the DRIP are sold at the Company’s most recent estimated NAV per share.

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Fair Value Measures and Disclosures - Schedule of Carrying and Fair Values (Details) - Payne Place - Mortgages - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Carrying Amount
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Mortgage notes payable- outstanding borrowings	$ 145,523	$ 147,148
Fair Value
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Mortgage notes payable- outstanding borrowings	$ 144,927	$ 144,902

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Operating Expense Limitation - Narrative (Details)	3 Months Ended
	Mar. 31, 2020
Other Income And Expenses [Abstract]
Limitation on total operating expenses, percentage of average invested assets for the four most recently completed fiscal quarters	2.00%
Limitation on total operating expenses, percentage of net income for the four most recently completed fiscal quarters	25.00%

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Rental Properties, Net - Narrative (Details) - USD ($)	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Real Estate [Abstract]
Depreciation expense	$ 2,200,000	$ 1,600,000
Loss on disposal of assets	$ 129,000	$ 87,000

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Supplemental Cash Flow Information - Schedule of Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019
Non-cash operating, financing and investing activities:
Offering costs payable to related parties		$ 324
Distribution and shareholder servicing fee payable to related parties		240
Cash distributions on common stock declared but not yet paid		1,225	$ 1,587
Stock issued from distribution reinvestment plan	$ 857	577
Subscriptions receivable		262
Escrow deposits funded directly by mortgage notes payable		350
Non-cash activity related to acquisitions:
Mortgage notes payable used to acquire real properties		18,060
Non-cash activity related to sales:
Mortgage notes payable settled directly with proceeds from sale of rental property	1,519
Cash paid during the period for:
Interest	$ 1,476	$ 1,133

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Mortgage Notes Payable - Schedule of Mortgage Notes Payable, Net (Parenthetical) (Details) - Mortgages	3 Months Ended
	Mar. 31, 2020
Bay Club
Debt Instrument [Line Items]
Basis spread (as percent)	1.87%
Effective rate (as percent)	5.75%
Bay Club | LIBOR
Debt Instrument [Line Items]
Basis spread (as percent)	0.99%
Tramore Village
Debt Instrument [Line Items]
Basis spread (as percent)	1.80%
Effective rate (as percent)	6.25%
Tramore Village | LIBOR
Debt Instrument [Line Items]
Basis spread (as percent)	0.99%

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Mortgage Notes Payable - Amortization of Deferred Financing Costs (Details) $ in Thousands	Mar. 31, 2020 USD ($)
Debt Disclosure [Abstract]
2021	$ 294
2022	292
2023	288
2024	284
2025	248
Thereafter	137
Deferred financing costs	$ 1,543

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Equity - Narrative (Details)			3 Months Ended
	Nov. 01, 2019	Aug. 05, 2016 shares	Mar. 31, 2020 USD ($) event $ / shares shares	Mar. 30, 2020 $ / shares	Mar. 19, 2020 $ / shares	Dec. 31, 2019 $ / shares shares	Mar. 21, 2019 $ / shares	Jun. 27, 2018 $ / shares	Jun. 28, 2017 shares
Class of Stock [Line Items]
Preferred stock, shares authorized (in shares) | shares			10,000,000			10,000,000
Preferred stock, par value (in dollars per share) | $ / shares			$ 0.01			$ 0.01
Preferred stock, shares issued (in shares) | shares			0			0
Preferred stock, shares outstanding (in shares) | shares			0			0
Common stock, conversion terms, percent of paid distributions equal to price at which shares were originally sold (as percent)			100.00%
Percent of annual return on shares at price equal to distributions paid (as percent)			6.00%
Number of possible triggering events | event			2
Conversion basis			0.00002
Triggering event, option one (as percent)			15.00%
Percentage of non-compounded annual return, option one (as percent)			6.00%
Convertible stock number of triggering events | event			0
Common stock, shares authorized (in shares) | shares			1,000,000,000						125,000,000
Common stock, par value (in dollars per share) | $ / shares			$ 0.01
Net asset value | $ / shares					$ 9.01		$ 9.12	$ 9.05
Maximum shares redeemable as percent of the weighted-average common stock outstanding (as percent)			5.00%
Percent of operating cash flow (as percent)			1.00%
Notice period for amending share redemption program			30 days
Dividends declared, daily accrual amount (in dollars per share) | $ / shares				$ 0.001469178
Distributions declared | $			$ 0
Convertible Stock
Class of Stock [Line Items]
Preferred stock, shares authorized (in shares) | shares			50,000			50,000
Preferred stock, par value (in dollars per share) | $ / shares			$ 0.01			$ 0.01
Preferred stock, shares issued (in shares) | shares			50,000			50,000
Preferred stock, shares outstanding (in shares) | shares			50,000			50,000
Issuance of convertible shares (in shares) | shares		50,000
Class A
Class of Stock [Line Items]
Number of shares exchanged (in shares) | shares		5,000
Common stock, shares authorized (in shares) | shares			25,000,000			25,000,000
Common stock, par value (in dollars per share) | $ / shares			$ 0.01			$ 0.01
Net asset value | $ / shares							9.12
Class T
Class of Stock [Line Items]
Common stock, shares authorized (in shares) | shares			25,000,000			25,000,000
Common stock, par value (in dollars per share) | $ / shares			$ 0.01			$ 0.01
Net asset value | $ / shares							9.12
Class R
Class of Stock [Line Items]
Common stock, shares authorized (in shares) | shares			750,000,000
Common stock, par value (in dollars per share) | $ / shares			$ 0.01
Net asset value | $ / shares							9.12
Class I
Class of Stock [Line Items]
Common stock, shares authorized (in shares) | shares			75,000,000			75,000,000
Common stock, par value (in dollars per share) | $ / shares			$ 0.01			$ 0.01
Common stock conversion ratio	1
Net asset value | $ / shares							$ 9.12

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Supplemental Cash Flow Information

3 Months Ended

Mar. 31, 2020

Supplemental Cash Flow Elements [Abstract]

Supplemental Cash Flow Information

NOTE 3 - SUPPLEMENTAL CASH FLOW INFORMATION

The following table presents the Company's supplemental cash flow information (in thousands):

	Three Months Ended March 31,
	2020		2019
Non-cash operating, financing and investing activities:
Offering costs payable to related parties	$	—	$	324
Distribution and shareholder servicing fee payable to    related parties		—		240
Cash distributions on common stock declared but not    yet paid		—		1,225
Stock issued from distribution reinvestment plan		857		577
Subscriptions receivable		—		262
Escrow deposits funded directly by mortgage notes payable		—		350
Non-cash activity related to acquisitions:
Mortgage notes payable used to acquire real properties		—		18,060
Non-cash activity related to sales:
Mortgage notes payable settled directly with proceeds from sale of rental property		1,519		—
Cash paid during the period for:
Interest	$	1,476	$	1,133

XML

Identified Intangible Assets, Net

3 Months Ended

Mar. 31, 2020

Goodwill And Intangible Assets Disclosure [Abstract]

Identified Intangible Assets, Net

NOTE 7 - IDENTIFIED INTANGIBLE ASSETS, NET

Identified intangible assets, net, consist of acquired in-place rental leases. The net carrying value of the leases at March 31, 2020 and December 31, 2019 was $0 and approximately $173,000, respectively, net of the accumulated amortization of $4.6 million and $4.4 million, respectively. At March 31, 2020, intangible assets were fully amortized.

Amortization for the three months ended March 31, 2020 and 2019 was approximately $173,000 and $639,000, respectively.

XML

Equity

3 Months Ended

Mar. 31, 2020

Equity [Abstract]

Equity

NOTE 11 - EQUITY

Preferred Stock

The Company’s charter authorizes the Company to issue 10 million shares of its $0.01 par value preferred stock. As of March 31, 2020, no shares of preferred stock were issued or outstanding.

Convertible Stock

The Company’s charter authorizes the Company to issue 50,000 shares of its $0.01 par value convertible stock. On August 5, 2016, the Company's board of directors approved the issuance of 50,000 convertible shares in exchange for 5,000 shares of Class A common stock. As of March 31, 2020, the Company had 50,000 shares of $0.01 par value convertible stock outstanding, which are owned by the Advisor. The convertible stock will convert into shares of the Company’s Class A common stock upon the occurrence of (a) the Company having paid distributions to common stockholders that in the aggregate equal 100% of the price at which the Company originally sold the shares plus an amount sufficient to produce a 6% cumulative, non-compounded annual return on the shares at that price; or (b) if the Company lists its common stock on a national securities exchange or the Company consummates a merger pursuant to which consideration received by the stockholders is securities of another issuer that are listed on a national securities exchange.

Each of these two events is a "Triggering Event."  Upon a Triggering Event, the Company's convertible stock will, unless its Advisory Agreement has been terminated or not renewed on account of a material breach by its Advisor, generally be converted into a number of shares of common stock equal to 1/50,000 of the quotient of:

(A) 15% of the amount, if any, by which

(1) the value of the Company as of the date of the event triggering the conversion plus the total distributions paid to its stockholders through such date on the then-outstanding shares of its common stock exceeds

(2) the sum of the aggregate issue price of those outstanding shares plus a 6% cumulative, non-compounded, annual return on the issue price of those outstanding shares as of the date of the event triggering the conversion, divided by

(B) the value of the Company divided by the number of outstanding shares of common stock, in each case, as of the date of the event triggering the conversion.

No triggering events have occurred or were considered probable to occur as of March 31, 2020.

Common Stock

The Company’s charter authorizes the issuance of 1 billion shares of common stock with a par value of $0.01 per share, of which, the Company has allocated 750 million shares as Class R common stock; 75 million shares as Class I common stock; 25 million shares as Class A common stock; and 25 million shares as Class T common stock. 125 million shares of common stock remain undesignated. As of July 3, 2017, the Company ceased offering shares of Class A and Class T common stock and commenced the offering of Class R and Class I common stock in its primary offering. The Company ceased offering Class R and Class I shares in the primary offering on October 31, 2019 and ceased processing subscriptions in the offering on November 15, 2019. The Company continues to offer shares of Class A, Class T, and Class I common stock pursuant to the DRIP.

On November 1, 2019, each Class R share of common stock of the Company automatically converted into a Class I share of common stock of the Company pursuant to the terms of the Articles Supplementary for the Class R shares. The Class R shares converted into Class I shares on a one-for-one basis, because the most recently approved estimated net asset value per share approved by its board of directors ($9.12 as of March 21, 2019) was the same for all classes of common stock. Stockholders who received Class I shares upon the conversion will no longer be subject to the class-specific expenses associated with Class R shares.  As of November 1, 2019, the Company no longer has any shares of Class R common stock outstanding.

At March 31, 2020, shares of the Company's $0.01 par value Class A, Class T, Class R, and Class I common stock have been issued as follows (dollars in thousands):

	Class A					Class T					Class R					Class I
	Shares Issued			Gross Proceeds		Shares Issued			Gross Proceeds		Shares Issued			Gross Proceeds		Shares Issued			Gross Proceeds
Shared issued through primary offering (1)		586,207		$	5,601		1,049,996		$	9,943		9,356,068		$	89,917		624,325		$	5,760
Shares issued through stock dividends		12,860			—		15,495			—		—			—		—			—
Shares issued through distribution reinvestment plan		34,179			318		91,763			834		356,453			3,244		115,513			1,050
Shares issued in conjunction with the Advisor's initial investment, net of 5,000 share conversion		15,000			200		—			—		—			—		—			—
Total		648,246		$	6,119		1,157,254		$	10,777		9,712,521		$	93,161		739,838		$	6,810
Shares redeemed and retired		(22,398	)				(35,615	)				(32,122	)				(13,415	)
Class R share conversion (2)		—					—					(9,680,399	)				9,680,399
Total shares issued and outstanding at March 31, 2020		625,848					1,121,639					—					10,406,822

(1) Includes 222,222 of Class A shares issued to RAI.

(2) On November 1, 2019, all outstanding Class R shares converted to Class I shares.

Share Redemption Program

During the three months ended March 31, 2020, the Company redeemed shares of its outstanding Class A, Class T, and Class I common stock, as follows:

	Class A				Class T				Class I
Period	Total Number of Shares Redeemed		Average Price Paid per Share		Total Number of Shares Redeemed		Average Price Paid per Share		Total Number of Shares Redeemed		Average Price Paid per Share
January 2020		—		—		—		—		—		—
February 2020		—		—		—		—		—		—
March 2020		5,484	$	8.89		3,587	$	8.89		2,416	$	8.44
		5,484				3,587				2,416

All redemptions requests tendered were honored during thethree months ended March 31, 2020.

The Company will not redeem in excess of 5% of the weighted-average number of shares of common stock outstanding during the 12-month period immediately prior to the effective date of redemption. The Company's board of directors will determine at least quarterly whether it has sufficient excess cash to repurchase shares. Generally, the cash available for redemptions will be limited to proceeds from the Company's distribution reinvestment plan plus, if the Company has positive operating cash flow from the previous fiscal year, 1% of all operating cash flow from the previous year.

The Company's board of directors, in its sole discretion, may suspend, terminate or amend the Company's share redemption program without stockholder approval upon 30 days' notice if it determines that such suspension, termination or amendment is in the Company's best interest. The Company's board may also reduce the number of shares purchased under the share redemption program if it determines the funds otherwise available to fund the Company's share redemption program are needed for other purposes.

These limitations apply to all redemptions, including redemptions sought upon a stockholder's death, qualifying disability or confinement to a long-term care facility.

On March 27, 2020, the board of directors of the Company suspended the share redemption program with exceptions for redemptions sought upon a stockholder’s death, qualifying disability or confinement to a long-term care facility. The suspension is effective as of April 29, 2020. While the share redemption program is partially suspended, both pending and new redemption requests for redemptions submitted other than in connection with a stockholder’s death, qualifying disability or confinement to a long-term care facility will not be honored or retained, but will be cancelled with the ability to resubmit if the share redemption program is fully resumed.

Distributions

During the year ended December 31, 2019, the Company’s board of directors declared cash distributions on the outstanding shares of all classes of its common stock based on daily record dates for the period from December 31, 2019 through March 30, 2020 which were paid on January 31, 2020, February 28, 2020, and March 31, 2020.

The distributions were calculated based on the stockholders of record each day during the period at a rate of $0.001469178 per share per day.

Distributions were generally paid to stockholders on the last business day of the month for which the distribution has accrued. Distributions reinvested pursuant to the distribution reinvestment plan are reinvested in shares of the same class as the shares on which distributions are made.

There were no distributions declared during the three months ended March 31, 2020.

The following table presents information regarding the Company's distributions paid to stockholders during the three months ended March 31, 2020 (in thousands):

	Three Months Ended March 31, 2020
	Class A		Class T		Class R		Class I		Total
True-up of prior year cash distributions declared	$	—	$	27	$	—	$	4	$	31
Distributions reinvested in shares of common stock paid	$	24	$	89	$	—	$	744	$	857
Cash distributions paid		60		61		—		640		761
Total distributions paid	$	84	$	150	$	—	$	1,384	$	1,618

The Company announced on March 30, 2020 that it was suspending distributions as of April 1, 2020 in order to preserve cash and offset any impact to the Company’s liquidity that may occur as a result of the COVID-19 pandemic on its operations.

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Nature of Business and Operations - Initial Offering Price (Details) - $ / shares	Mar. 31, 2020	Mar. 19, 2020	Mar. 21, 2019	Jun. 27, 2018
Class of Stock [Line Items]
Net asset value		$ 9.01	$ 9.12	$ 9.05
Class A
Class of Stock [Line Items]
Net asset value			9.12
Class A | Primary Offering Price | Inception through July 2, 2017
Class of Stock [Line Items]
Primary Offering Price	$ 10.00
Class A | Shares issued through distribution reinvestment plan | Inception through July 2, 2017
Class of Stock [Line Items]
Primary Offering Price	9.60
Class A | Shares issued through distribution reinvestment plan | July 3, 2017 through July 1, 2018
Class of Stock [Line Items]
Primary Offering Price	9.60
Class A | Shares issued through distribution reinvestment plan | July 2, 2018 through March 24, 2019
Class of Stock [Line Items]
Primary Offering Price	9.05
Class A | Shares issued through distribution reinvestment plan | March 25, 2019 through March 30, 2020
Class of Stock [Line Items]
Primary Offering Price	9.12
Class A | Shares issued through distribution reinvestment plan | March 31, 2020
Class of Stock [Line Items]
Primary Offering Price	9.01
Class T Common Stock
Class of Stock [Line Items]
Net asset value			9.12
Class T Common Stock | Primary Offering Price | Inception through July 2, 2017
Class of Stock [Line Items]
Primary Offering Price	9.47
Class T Common Stock | Shares issued through distribution reinvestment plan | Inception through July 2, 2017
Class of Stock [Line Items]
Primary Offering Price	9.09
Class T Common Stock | Shares issued through distribution reinvestment plan | July 3, 2017 through July 1, 2018
Class of Stock [Line Items]
Primary Offering Price	9.09
Class T Common Stock | Shares issued through distribution reinvestment plan | July 2, 2018 through March 24, 2019
Class of Stock [Line Items]
Primary Offering Price	9.05
Class T Common Stock | Shares issued through distribution reinvestment plan | March 25, 2019 through March 30, 2020
Class of Stock [Line Items]
Primary Offering Price	9.12
Class T Common Stock | Shares issued through distribution reinvestment plan | March 31, 2020
Class of Stock [Line Items]
Primary Offering Price	9.01
Class R Common Stock
Class of Stock [Line Items]
Net asset value			9.12
Class R Common Stock | Primary Offering Price | July 3, 2017 through July 1, 2018
Class of Stock [Line Items]
Primary Offering Price	9.52
Class R Common Stock | Primary Offering Price | July 2, 2018 through March 24, 2019
Class of Stock [Line Items]
Primary Offering Price	9.68
Class R Common Stock | Primary Offering Price | March 25, 2019 through October 31, 2019
Class of Stock [Line Items]
Primary Offering Price	9.75
Class R Common Stock | Shares issued through distribution reinvestment plan | July 3, 2017 through July 1, 2018
Class of Stock [Line Items]
Primary Offering Price	9.14
Class R Common Stock | Shares issued through distribution reinvestment plan | July 2, 2018 through March 24, 2019
Class of Stock [Line Items]
Primary Offering Price	9.05
Class R Common Stock | Shares issued through distribution reinvestment plan | March 25, 2019 through March 30, 2020
Class of Stock [Line Items]
Primary Offering Price	9.12
Class I Common Stock
Class of Stock [Line Items]
Net asset value			$ 9.12
Class I Common Stock | Primary Offering Price | July 3, 2017 through July 1, 2018
Class of Stock [Line Items]
Primary Offering Price	9.13
Class I Common Stock | Primary Offering Price | July 2, 2018 through March 24, 2019
Class of Stock [Line Items]
Primary Offering Price	9.28
Class I Common Stock | Primary Offering Price | March 25, 2019 through October 31, 2019
Class of Stock [Line Items]
Primary Offering Price	9.35
Class I Common Stock | Shares issued through distribution reinvestment plan | July 3, 2017 through July 1, 2018
Class of Stock [Line Items]
Primary Offering Price	8.90
Class I Common Stock | Shares issued through distribution reinvestment plan | July 2, 2018 through March 24, 2019
Class of Stock [Line Items]
Primary Offering Price	9.05
Class I Common Stock | Shares issued through distribution reinvestment plan | March 25, 2019 through March 30, 2020
Class of Stock [Line Items]
Primary Offering Price	9.12
Class I Common Stock | Shares issued through distribution reinvestment plan | March 31, 2020
Class of Stock [Line Items]
Primary Offering Price	$ 9.01

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Equity (Tables)

3 Months Ended

Mar. 31, 2020

Equity [Abstract]

Schedule of Stock Issuances

At March 31, 2020, shares of the Company's $0.01 par value Class A, Class T, Class R, and Class I common stock have been issued as follows (dollars in thousands):

	Class A					Class T					Class R					Class I
	Shares Issued			Gross Proceeds		Shares Issued			Gross Proceeds		Shares Issued			Gross Proceeds		Shares Issued			Gross Proceeds
Shared issued through primary offering (1)		586,207		$	5,601		1,049,996		$	9,943		9,356,068		$	89,917		624,325		$	5,760
Shares issued through stock dividends		12,860			—		15,495			—		—			—		—			—
Shares issued through distribution reinvestment plan		34,179			318		91,763			834		356,453			3,244		115,513			1,050
Shares issued in conjunction with the Advisor's initial investment, net of 5,000 share conversion		15,000			200		—			—		—			—		—			—
Total		648,246		$	6,119		1,157,254		$	10,777		9,712,521		$	93,161		739,838		$	6,810
Shares redeemed and retired		(22,398	)				(35,615	)				(32,122	)				(13,415	)
Class R share conversion (2)		—					—					(9,680,399	)				9,680,399
Total shares issued and outstanding at March 31, 2020		625,848					1,121,639					—					10,406,822

(1) Includes 222,222 of Class A shares issued to RAI.

(2) On November 1, 2019, all outstanding Class R shares converted to Class I shares.

Schedule of Stock Redemptions

During the three months ended March 31, 2020, the Company redeemed shares of its outstanding Class A, Class T, and Class I common stock, as follows:

	Class A				Class T				Class I
Period	Total Number of Shares Redeemed		Average Price Paid per Share		Total Number of Shares Redeemed		Average Price Paid per Share		Total Number of Shares Redeemed		Average Price Paid per Share
January 2020		—		—		—		—		—		—
February 2020		—		—		—		—		—		—
March 2020		5,484	$	8.89		3,587	$	8.89		2,416	$	8.44
		5,484				3,587				2,416

Dividends Declared

The following table presents information regarding the Company's distributions paid to stockholders during the three months ended March 31, 2020 (in thousands):

	Three Months Ended March 31, 2020
	Class A		Class T		Class R		Class I		Total
True-up of prior year cash distributions declared	$	—	$	27	$	—	$	4	$	31
Distributions reinvested in shares of common stock paid	$	24	$	89	$	—	$	744	$	857
Cash distributions paid		60		61		—		640		761
Total distributions paid	$	84	$	150	$	—	$	1,384	$	1,618

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Consolidated Statements of Operations and Comprehensive Loss (unaudited) - USD ($) shares in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Revenues:
Rental income	$ 5,089,000	$ 3,723,000
Total revenues	5,089,000	3,723,000
Expenses:
Rental operating - expenses	869,000	682,000
Rental operating - payroll	489,000	371,000
Rental operating - real estate taxes	730,000	497,000
Subtotal- rental operating	2,088,000	1,550,000
Property management fees		2,000
Management fees - related parties	780,000	574,000
General and administrative	416,000	860,000
Loss on disposal of assets	129,000	87,000
Depreciation and amortization expense	2,360,000	2,237,000
Total expenses	5,773,000	5,310,000
Loss before net gains on dispositions	(684,000)	(1,587,000)
Net gain on disposition of property	530,000
Loss before other income (expense)	(154,000)	(1,587,000)
Other income (expense):
Interest income	27,000	70,000
Interest expense	(1,543,000)	(1,268,000)
Total other income (expense)	(1,516,000)	(1,198,000)
Net loss	(1,670,000)	(2,785,000)
Other comprehensive (loss) income:
Designated derivatives, fair value adjustments	6,000	(2,000)
Total other comprehensive (loss) income	6,000	(2,000)
Comprehensive loss	(1,664,000)	(2,787,000)
Class A Common Stock
Other comprehensive (loss) income:
Net loss attributable to common stockholders	$ (88,000)	$ (170,000)
Net loss per common share, basic and diluted (in dollars per share)	$ (0.14)	$ (0.27)
Weighted-average shares outstanding, basic and diluted (in shares)	629	635
Class T Common Stock
Other comprehensive (loss) income:
Net loss attributable to common stockholders	$ (130,000)	$ (325,000)
Net loss per common share, basic and diluted (in dollars per share)	$ (0.12)	$ (0.29)
Weighted-average shares outstanding, basic and diluted (in shares)	1,118	1,114
Class R Common Stock
Other comprehensive (loss) income:
Net loss attributable to common stockholders		$ (2,200,000)
Net loss per common share, basic and diluted (in dollars per share)		$ (0.28)
Weighted-average shares outstanding, basic and diluted (in shares)		7,937
Class I Common Stock
Other comprehensive (loss) income:
Net loss attributable to common stockholders	$ (1,452,000)	$ (90,000)
Net loss per common share, basic and diluted (in dollars per share)	$ (0.14)	$ (0.24)
Weighted-average shares outstanding, basic and diluted (in shares)	10,355	380

XML

Nature of Business and Operations

3 Months Ended

Mar. 31, 2020

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Nature of Business and Operations

NOTE 1 - NATURE OF BUSINESS AND OPERATIONS

Resource Apartment REIT III, Inc. (the "Company") was organized in Maryland on July 15, 2015. The Company launched an initial public offering on April 28, 2016 pursuant to which it offered up to $1.1 billion of shares of its common stock, consisting of up to $1.0 billion of shares in its primary offering and up to $100.0 million of shares pursuant to its distribution reinvestment plan (the "DRIP").

Through July 2, 2017, the Company offered shares of Class A and Class T common stock in the primary and DRIP offering. As of July 3, 2017, the Company ceased offering shares of Class A and Class T common stock in its primary offering and commenced offering shares of Class R and Class I common stock in both the primary and DRIP offering.

The Company ceased offering shares in the primary offering on October 31, 2019 and ceased processing subscriptions in the offering on November 15, 2019. The Company continues to offer Class A, Class T and Class I shares pursuant to the DRIP.

As of March 31, 2020, the Company has raised aggregate gross primary offering proceeds of approximately $111.4 million from the sale of 601,207 Class A shares, 1,049,996 Class T shares, 9,356,067 Class R shares and 624,325 Class I shares of common stock.

On June 27, 2018, March 21, 2019, and March 19, 2020, the board of directors of the Company determined an estimated net asset value (“NAV”) per share of the common stock of $9.05, $9.12, and $9.01, respectively, based on the estimated market value of the portfolio of investments of the Company as of March 31, 2018, December 31, 2018, and December 31, 2019, respectively.  Based on the estimated NAV per share, the board of directors established updated offering prices for shares of Class R and Class I common stock to be sold in the primary portion of the initial public offering by adding certain offering costs to the estimated NAV per share.  Pursuant to the terms of the DRIP, following the establishment of an estimated NAV per share, shares of common stock are sold at the most recent estimated NAV per share.

The prices per share for each class of shares of the Company's common stock through March 31, 2020 were as follows:

	Class A		Class T		Class R		Class I
Primary Offering Price
Inception through July 2, 2017	$	10.00	$	9.47	n/a		n/a
July 3, 2017 through July 1, 2018	n/a		n/a		$	9.52	$	9.13
July 2, 2018 through March 24, 2019	n/a		n/a		$	9.68	$	9.28
March 25, 2019 through October 31, 2019	n/a		n/a		$	9.75	$	9.35
Offering Price under the DRIP
Inception through July 2, 2017	$	9.60	$	9.09	n/a		n/a
July 3, 2017 through July 1, 2018	$	9.60	$	9.09	$	9.14	$	8.90
July 2, 2018 through March 24, 2019 (1)	$	9.05	$	9.05	$	9.05	$	9.05
March 25, 2019 through March 30, 2020 (1)	$	9.12	$	9.12	$	9.12	$	9.12
March 31, 2020 (1)	$	9.01	$	9.01	n/a		$	9.01

(1) Shares of common stock pursuant to the DRIP are sold at the Company’s most recent estimated NAV per share.

Resource REIT Advisor, LLC (the "Advisor"), an indirect wholly-owned subsidiary of Resource America, Inc. ("RAI"), contributed $200,000 to the Company in exchange for 20,000 shares of Class A common stock on August 10, 2015. On June 29, 2016, RAI purchased 222,222 shares of Class A common stock for $2.0 million in the offering. On August 5, 2016, the Advisor exchanged 5,000 shares of common stock for 50,000 shares of convertible stock. Under limited circumstances, these shares may be converted into shares of the Company's Class A common stock satisfying its obligation to pay the Advisor an incentive fee and diluting its other stockholders’ interest in the Company.

RAI is a wholly-owned subsidiary of C-III Capital Partners, LLC ("C-III"), a leading commercial real estate investment management and services company engaged in a broad range of activities. C-III controls the Advisor, Resource Securities LLC ("Resource Securities"), the Company's dealer manager, and Resource Apartment Manager III, LLC (the "Manager"), the Company's property manager. C-III also controls all of the shares of the Company's common stock held by RAI and the Advisor.

The Company’s objective is to take advantage of the multifamily investing and lending platforms of Resource Real Estate, LLC (its "Sponsor") to invest in apartment communities in order to provide the investor with growing cash flow and increasing asset values. The Company has acquired underperforming apartments which it will renovate and stabilize in order to increase rents.

The Company elected to be taxed as a real estate investment trust ("REIT") for U.S. federal income tax purposes under the provisions of the Internal Revenue Code of 1986, as amended, commencing with its taxable year ending December 31, 2017. As such, to maintain its REIT qualification for U.S. federal income tax purposes, the Company is generally required to distribute at least 90% of its net income (excluding net capital gains) to its stockholders as well as comply with certain other requirements. Accordingly, the Company generally will not be subject to U.S. federal income taxes to the extent that it annually distributes all of its REIT taxable income to its stockholders. The Company also operates its business in a manner that will permit it to maintain its exemption from registration under the Investment Company Act of 1940, as amended.

The consolidated financial statements and the information and tables contained in the notes thereto are unaudited. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") have been condensed or omitted pursuant to the rules and regulations of the U.S. Securities and Exchange Commission ("SEC"), pertaining to interim financial statements in Form 10-Q. However, in the opinion of management, these interim financial statements include all the necessary adjustments to fairly present the results of the interim periods presented. The consolidated balance sheet as of December 31, 2019 was derived from the audited consolidated financial statements as of and for the year ended, December 31, 2019. The unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. The results of operations for the three months ended March 31, 2020 may not necessarily be indicative of the results of operations for the full year ending December 31, 2020.

COVID-19 Pandemic

Currently, one of the most significant risks and uncertainties facing the Company and the real estate industry generally is the potential adverse effect of the ongoing public health crisis of the novel coronavirus disease (“COVID-19”) pandemic. The extent to which the COVID-19 pandemic impacts the Company’s operations and those of its tenants will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact, and the direct and indirect economic effects of the pandemic and containment measures, among others. See Note 15, “Subsequent Events” for a further discussion on the COVID-19 pandemic.

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Subsequent Events

3 Months Ended

Mar. 31, 2020

Subsequent Events [Abstract]

Subsequent Events

NOTE 15 - SUBSEQUENT EVENTS

The Company has evaluated subsequent events through the filing of this report and determined that there have not been any events that have occurred that would require adjustments to or disclosures in the consolidated financial statements, except for the following:

Renewal of Advisory Agreement

Effective April 28, 2020, the Company renewed the Advisory Agreement with the Advisor through April 27, 2021. The terms of the agreement are identical to those of the Advisory Agreement in effect through April 27, 2020.

COVID-19 Pandemic

The Company is closely monitoring the impact of the COVID-19 pandemic on all aspects of its business, including how the pandemic will impact its tenants. While the Company did not incur significant disruptions from the COVID-19 pandemic during the three months ended March 31, 2020, during April 2020, a small percent of tenants have requested rent deferral as a result of the pandemic. The Company is evaluating each tenant rent relief request on an individual basis, considering a number of factors. Not all tenant requests will ultimately result in modified agreements, nor is the Company forgoing its contractual rights under its lease agreements.

On April 10, 2020, FASB issued a Staff Q&A to respond to some frequently asked questions about accounting for lease concessions related to the effects of the COVID-19 pandemic. Consequently, for concessions related to the effects of the COVID-19 pandemic, an entity will not have to analyze each lease to determine whether enforceable rights and obligations for concessions exist in the lease and can elect to apply or not apply the lease modification guidance to those leases. Entities may make the elections for any lessor-provided concessions related to the effects of the COVID-19 pandemic (e.g., deferrals of lease payments) as long as the concession does not result in a substantial increase in the rights of the lessor or the obligations of the lessee.

The Company is unable to predict the impact that the pandemic will have on its financial condition, results of operations and cash flows due to numerous uncertainties. The extent to which the COVID-19 pandemic impacts the Company’s operations and those of its tenants will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact, and the direct and indirect economic effects of the pandemic and containment measures, among others.

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Supplemental Cash Flow Information (Tables)

3 Months Ended

Mar. 31, 2020

Supplemental Cash Flow Elements [Abstract]

Schedule of Supplemental Cash Flow Information

The following table presents the Company's supplemental cash flow information (in thousands):

	Three Months Ended March 31,
	2020		2019
Non-cash operating, financing and investing activities:
Offering costs payable to related parties	$	—	$	324
Distribution and shareholder servicing fee payable to    related parties		—		240
Cash distributions on common stock declared but not    yet paid		—		1,225
Stock issued from distribution reinvestment plan		857		577
Subscriptions receivable		—		262
Escrow deposits funded directly by mortgage notes payable		—		350
Non-cash activity related to acquisitions:
Mortgage notes payable used to acquire real properties		—		18,060
Non-cash activity related to sales:
Mortgage notes payable settled directly with proceeds from sale of rental property		1,519		—
Cash paid during the period for:
Interest	$	1,476	$	1,133

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Identified Intangible Assets, Net - Narrative (Details) - USD ($)	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019
Finite Lived Intangible Assets [Line Items]
Value of leases, net of accumulated amortization			$ 173,000
Amortization of intangible assets	$ 173,000	$ 639,000
In-place leases
Finite Lived Intangible Assets [Line Items]
Value of leases, net of accumulated amortization	0		173,000
Accumulated amortization	$ 4,600,000		$ 4,400,000

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Restricted Cash - Narrative (Details) - USD ($) $ in Millions	Mar. 31, 2020	Dec. 31, 2019
Cash And Cash Equivalents [Abstract]
Unrestricted cash designated for capital expenditures	$ 7.4	$ 8.1

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Equity - Schedule of Distributions (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Class of Stock [Line Items]
True-up of prior year cash distributions declared	$ 31
Distributions reinvested in shares of common stock paid	857	$ 577
Cash distributions paid	761
Total distributions paid	1,618
Class A Common Stock
Class of Stock [Line Items]
True-up of prior year cash distributions declared	0
Distributions reinvested in shares of common stock paid	24
Cash distributions paid	60
Total distributions paid	84
Class T Common Stock
Class of Stock [Line Items]
True-up of prior year cash distributions declared	27
Distributions reinvested in shares of common stock paid	89
Cash distributions paid	61
Total distributions paid	150
Class R Common Stock
Class of Stock [Line Items]
True-up of prior year cash distributions declared	0
Distributions reinvested in shares of common stock paid	0
Cash distributions paid	0
Total distributions paid	0
Class I Common Stock
Class of Stock [Line Items]
True-up of prior year cash distributions declared	4
Distributions reinvested in shares of common stock paid	744
Cash distributions paid	640
Total distributions paid	$ 1,384

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Derivatives and Hedging Activities - Schedule of Derivative Instruments (Details) - Cash Flow Hedging - Interest Rate Cap	3 Months Ended	12 Months Ended
	Mar. 31, 2020 USD ($) instrument	Dec. 31, 2019 USD ($) instrument
Derivatives, Fair Value [Line Items]
Number of Instruments | instrument	2	2
Notional Amount | $	$ 54,145	$ 54,145
Maturity Dates, Earliest	Aug. 01, 2020	Aug. 01, 2020
Maturity Dates, Latest	Apr. 01, 2021	Apr. 01, 2021

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Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2020

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying consolidated financial statements have been prepared in conformity with GAAP.

Principles of Consolidation

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries as follows:

Subsidiaries	Number of Units		Property Location
Resource Apartment REIT III Holdings, LLC	N/A		N/A
Resource Apartment REIT III OP, LP	N/A		N/A
RRE Payne Place Holdings, LLC	N/A(1)		N/A(1)
RRE Bay Club Holdings, LLC		220	Jacksonville, FL
RRE Tramore Village Holdings, LLC		324	Austell, GA
RRE Matthews Reserve Holdings, LLC		212	Matthews, NC
RRE Kensington Holdings, LLC		204	Riverview, FL
RRE Wimbledon Oaks Holdings, LLC		248	Arlington, TX
RRE Summit Holdings, LLC		141	Alexandria, VA
		1,349

N/A - Not applicable

(1) Property was sold on March 5, 2020.

All intercompany accounts and transactions have been eliminated in consolidation.

Segment Reporting

Segment Reporting

The Company does not evaluate performance on a relationship-specific or transactional basis and does not distinguish its principal business or group its operations on a geographical basis for purposes of measuring performance. Accordingly, the Company believes it has a single operating segment for reporting purposes in accordance with GAAP.

Concentration of Risk

Concentration of Risk

At March 31, 2020, the Company's real estate investments in Florida, Georgia, and Virginia represented 28%, 22%, and 19%, respectively, of the net book value of its rental property assets. Any adverse economic or real estate developments in these markets, such as the impact of the COVID-19 pandemic, business layoffs or downsizing, industry slowdowns, relocations of businesses, adverse weather events, changing demographics and other factors, or any decrease in demand for multifamily rentals resulting from the local business climate, could adversely affect the Company's operating results and its ability to make distributions to stockholders.

Use of Estimates

Use of Estimates

The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

Adoption of New Accounting Standards

Adoption of New Accounting Standards

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13 "Financial Instruments - Credit Losses", which requires measurement and recognition of expected credit losses for financial assets held. On January 1, 2020, the Company adopted ASU No. 2016-13 and the adoption had no impact on its consolidated financial statements and disclosures since the Company did not have instruments subject to this guidance at the adoption or at March 31, 2020.  

In January 2017, FASB issued ASU No. 2017-04, "Intangibles- Goodwill and Other (Topic 350): Simplifying the Accounting for Goodwill Impairment", which alters the current goodwill impairment testing procedures. On January 1, 2020, the Company adopted ASU No. 2017-04 and the adoption did not have a significant impact on its consolidated financial statements due to the fact that the Company did not have any goodwill subject to this guidance at the adoption or at March 31, 2020.

In August 2018, FASB issued ASU No. 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement”. This update removes, modifies and adds certain disclosure requirements in the FASB Accounting Standards Codification ("ASC") 820, “Fair Value Measurement”. On January 1, 2020, the Company adopted ASU No. 2018-13 and the adoption did not have a significant impact on its consolidated financial statements due to the fact there were no required changes to the Company’s disclosures.

In November 2018, FASB issued ASU 2018-19, “Codification Improvements to Topic 326, Financial Instruments-Credit Losses.” ASU 2018-19 clarifies that receivables arising from operating leases are not within the scope of Subtopic 326-20. Instead, impairment of receivables arising from operating leases should be accounted for in accordance with ASC 842, Leases. On January 1, 2020, the Company adopted ASU No. 2018-19 and the adoption did not have a material effect on its consolidated financial statements and disclosures.

In March 2020, FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848)”. ASU 2020-04 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. During the three months ended March 31, 2020, the Company has elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation.  The Company continues to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur.  

Real Estate Investments

Real Estate Investments

The Company records acquired real estate at fair value on their respective acquisition dates. The Company considers the period of future benefit of an asset to determine its appropriate useful life and depreciates the asset using the straight line method. The Company anticipates the estimated useful lives of its assets by class as follows:

Buildings	27.5 years
Building improvements	5.0 to 27.5 years
Furniture, fixtures, and equipment	3.0 to 5.0 years
Tenant improvements	Shorter of lease term or expected useful life
Lease intangibles	Weighted average remaining term of related leases

Improvements and replacements in excess of $1,000 are capitalized when they have a useful life greater than or equal to one year. The Manager earns a construction management fee of 5% of actual aggregate costs to construct improvements, or to repair, rehab or reconstruct a property. These costs are capitalized along with the related asset. Costs of repairs and maintenance are expensed as incurred.

Impairment of Long Lived Assets

Impairment of Long Lived Assets

When circumstances indicate the carrying value of a property may not be recoverable, the Company reviews the asset for impairment. This review is based on an estimate of the future undiscounted cash flows, excluding interest charges, expected to result from the property’s use and eventual disposition. The review also considers factors such as expected future operating income, market and other applicable trends and residual value, as well as the effects of leasing demand, competition and other factors.

If impairment exists, due to the inability to recover the carrying value of a property, an impairment loss will be recorded to the extent that the carrying value exceeds the estimated fair value of the property for properties to be held and used. For properties held for sale, the impairment loss is the adjustment to fair value less estimated cost to dispose of the asset. These assessments have a direct impact on net income because recording an impairment loss results in an immediate negative adjustment to net income.As of March 31, 2020, the Company evaluated whether the global economic disruption caused by the COVID-19 pandemic was an impairment indicator. The Company examined a number of factors and concluded that there was no indication that the carrying value of the Company’s investments in real estate might not be recoverable as of March 31, 2020. There were no impairment losses recorded on long lived assets during the three months ended March 31, 2020 and 2019.

Allocation of Purchase Price of Acquired Assets

Allocation of Purchase Price of Acquired Assets

Acquisitions that do not meet the definition of a business under ASU No, 2017-01 are accounted for as asset acquisitions. In most cases, the Company believes acquisitions of real estate will no longer be considered a business combination as in most cases substantially all of the fair value is concentrated in a single identifiable asset or group of tangible assets that are physically attached to each other (land and building). However, if the Company determines that substantially all of the fair value of the gross assets acquired is not concentrated in either a single identifiable asset or in a group of similar identifiable assets, the Company will then perform an assessment to determine whether the set is a business by using the framework outlined in the ASU. If the Company determines that the acquired asset is not a business, the Company will allocate the cost of the acquisition including transaction costs to the assets acquired or liabilities assumed based on their related fair value.

Upon the acquisition of real properties, the Company allocates the purchase price to tangible assets, consisting of land, building, fixtures and improvements, and identified intangible lease assets and liabilities, consisting of the value of above-market and below-market leases, as applicable, other value of in-place leases and value of tenant relationships, based in each case on their fair values.

The Company records above-market and below-market in-place lease values for acquired properties based on the present value (using an interest rate that reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to the in-place leases and (ii) management’s estimate of fair market lease rates for the corresponding in-place leases, measured over a period equal to the remaining non-cancelable term of the lease. The Company amortizes any capitalized above-market or below-market lease values as an increase or reduction to rental income over the remaining non-cancelable terms of the respective leases, which the Company expects will range from one month to one year.

The Company measures the aggregate value of other intangible assets acquired based on the difference between (i) the property valued with existing in-place leases adjusted to market rental rates and (ii) the property valued as if vacant. Management’s estimates of value are determined by independent appraisers (e.g., discounted cash flow analysis). Factors to be considered in the analysis include an estimate of carrying costs during hypothetical expected lease-up periods considering current market conditions and costs to execute similar leases.

The Company also considers information obtained about each property as a result of its pre-acquisition due diligence, marketing and leasing activities in estimating the fair value of the tangible and intangible assets acquired. In estimating carrying costs, management includes real estate taxes, insurance and other operating expenses and estimates of lost rentals at market rates during the expected lease-up periods. Management also estimates costs to execute similar leases including leasing commissions and legal and other related expenses to the extent that such costs have not already been incurred in connection with a new lease origination as part of the transaction.

The total amount of other intangible assets acquired is further allocated to in-place lease values and customer relationship intangible values based on management’s evaluation of the specific characteristics of each tenant’s lease and the Company’s overall relationship with that respective tenant. Characteristics to be considered by management in allocating these values include the nature and extent of the Company’s existing business relationships with the tenant, growth prospects for developing new business with the tenant, the tenant’s credit quality and expectations of lease renewals (including those existing under the terms of the lease agreement), among other factors.

The Company amortizes the value of in-place leases to expense over the weighted average remaining term of the underlying leases. The value of customer relationship intangibles is amortized to expense over the initial term and any renewal periods in the respective leases, but in no event will the amortization periods for the intangible assets exceed the remaining depreciable life of the building.

The determination of the fair value of the assets and liabilities acquired requires the use of significant assumptions with regard to current market rental rates, discount rates and other variables. The use of inappropriate estimates would result in an incorrect assessment of the fair value of these assets and liabilities, which could impact the amount of the Company’s reported net income.

Revenue Recognition

Revenue Recognition

The Company recognizes minimum rent, including rental abatements and contractual fixed increases attributable to operating leases, where collection has been considered probable, on a straight-line basis over the term of the related lease. The future minimum rental payments to be received from noncancelable operating leases for residential rental properties are approximately $10.8 million and approximately $530,000 for the 12 month periods ending March 31, 2021 and 2022, respectively, and none thereafter.

Revenue is primarily derived from the rental of residential housing units for which the Company receives minimum rents and utility reimbursements pursuant to underlying tenant lease agreements. The Company also receives other ancillary fees for administration of leases, late payments, amenities, and revenue sharing arrangements for cable income from contracts with cable providers at the Company's properties. A performance obligation is a promise in a contract to transfer a distinct good or service to a customer. The Company records the utility reimbursement income and ancillary charges in the period when the performance obligation is completed, either at a point in time or on a monthly basis as the service is utilized.

Tenant Receivables

Tenant Receivables

Tenant receivables are stated in the consolidated financial statements as amounts due from tenants net of an allowance for uncollectible receivables. Payment terms vary and receivables outstanding longer than the payment terms are considered past due. The Company determines its allowance by considering a number of factors, including the length of time receivables are past due, security deposits held, the Company’s previous loss history, the tenants’ current ability to pay their obligations to the Company, and the condition of the general economy and the industry as a whole. The Company writes off receivables when they become uncollectible. At March 31, 2020 and December 31, 2019, the Company recorded $1,501 and $3,927 of allowances for uncollectible receivables, respectively.

Income Taxes

Income Taxes

The Company elected to be taxed as a REIT commencing with its taxable year ending December 31, 2017. As a REIT, the Company will generally not be subject to corporate U.S. federal or state income tax to the extent that it makes qualifying distributions to its stockholders, and provided it satisfies, on a continuing basis, through actual investment and operating results, the REIT requirements including certain asset, income, distribution and stock ownership tests. If the Company fails to qualify as a REIT, and does not qualify for certain statutory relief provisions, it will be subject to U.S. federal, state and local income taxes and may be precluded from qualifying as a REIT for the subsequent four taxable years following the year in which it lost its REIT qualification. Accordingly, the Company’s failure to qualify as a REIT could have a material adverse impact on its results of operations and amounts available for distribution to its stockholders.

The dividends paid deduction of a REIT for qualifying dividends to its stockholders is computed using the Company’s taxable income as opposed to net income reported on the financial statements. Taxable income, generally, differs from net income reported on the financial statements because the determination of taxable income is based on tax provisions and not financial accounting principles.

The Company may elect to treat certain of its subsidiaries as a taxable REIT subsidiary ("TRS"). In general, a TRS may hold assets and engage in activities that the Company cannot hold or engage in directly and generally may engage in any real estate or non-real estate-related business. A TRS is subject to U.S. federal, state and local corporate income taxes. At March 31, 2020 and December 31, 2019, the Company did not treat any of its subsidiaries as a TRS.

While a TRS may generate net income, a TRS can declare dividends to the Company which will be included in the Company’s taxable income and necessitate a distribution to its stockholders. Conversely, if the Company retains earnings at a TRS level, no distribution is required and the Company can increase book equity of the consolidated entity.

The Company is subject to examination by the U.S. Internal Revenue Service and by the taxing authorities in other states in which the Company has significant business operations. The Company is not currently undergoing any examinations by taxing authorities. The Company is not subject to IRS examination for the tax return years 2015 and prior.

Earnings Per Share

Earnings Per Share

Basic earnings per share are computed by dividing net income (loss) attributable to common stockholders for each period by the weighted-average common shares outstanding during the period for each share class. Diluted net income (loss) per share takes into account the potential dilution that could occur if securities or other contracts to issue common stock were exercised and converted to common stock. None of the 50,000 shares of convertible stock (discussed in Note 10) are included in the diluted earnings per share calculations because the necessary conditions for conversion have not been satisfied as of March 31, 2020 (were such date to represent the end of the contingency period). For the purposes of calculating earnings per share, all common shares and per share information in the financial statements have been retroactively adjusted for the effect of any stock dividends and stock splits. For the three months ended March 31, 2020 and 2019, common shares potentially issuable to settle distributions payable are excluded from the calculation of diluted earnings per share calculations, as their inclusion would be anti-dilutive.

In accordance with ASC 260-10-45, "Earnings Per Share", the Company uses the two-class method to calculate earnings per share. Basic earnings per share is calculated based on dividends declared and the rights of common shares and participating securities in any undistributed earnings, which represents net income remaining after deduction of dividends declared during the period. The undistributed earnings are allocated to all outstanding common shares based on their relative percentage of each class of shares to the total number of outstanding shares. The Company did not have any participating securities outstanding other than Class A common stock, Class T common stock, Class R common stock and Class I common stock during the periods presented (see Note 10).

Organization and Offering Costs

Organization and Offering Costs

Organization and offering costs (other than selling commissions, dealer manager fees, and distribution and shareholder servicing fees) of the Company were initially paid by the Advisor on behalf of the Company.

Pursuant to the Advisory Agreement between the Company and the Advisor, the Company was obligated to reimburse the Advisor for organization and other offering costs paid by the Advisor on behalf of the Company, up to an amount equal to 4.0% of gross offering proceeds as of the termination of the initial public offering as the Company raised less than $500.0 million in the primary portion of the initial public offering.

The Advisory Agreement provides that the Company is not responsible for the repayment of any unreimbursed organization and offering expenses or operational expenses incurred by the Advisor on the Company’s behalf through March 31, 2018 until after the termination of the primary portion of the Company’s ongoing initial public offering. Additionally, such unreimbursed organization and offering expenses or operational expenses incurred or paid by the Advisor on the Company’s behalf through March 31, 2018 are required to be reimbursed ratably starting after the termination of the primary portion of the Company’s ongoing initial public offering through April 30, 2021 for organization and offering expenses and through April 30, 2020 for operating expenses. These payments began on November 1, 2019.  During the three months ended March 31, 2020, the Company repaid $1.9 million to the Advisor for both deferred organization and offering and operational expenses.

Organization costs, which included all expenses incurred by the Company in connection with its formation, including but not limited to legal fees and other costs to incorporate, were expensed as incurred. Prior to the Company breaking escrow, the Advisor incurred approximately $104,000 of formation and other operating expenses on the Company's behalf, which will not be reimbursed to the Advisor.

Outstanding Class T shares issued in the Company's primary offering were subject to an annual distribution and shareholder servicing fee in the amount of 1% of the estimated NAV of the share (1% of purchase price prior to June 29, 2018) for up to five years from the date on which such share is issued. Effective November 1, 2019, the Company ceased accruing the distribution and shareholder servicing fee on each Class T share as the Company had reached certain underwriting compensation limits.

Outstanding Class R shares issued in the Company's primary offering were also subject to an annual distribution and shareholder servicing fee in the amount of 1% of the estimated NAV of the share (1% of purchase price prior to June 29, 2018). Effective November 1, 2019, following the termination of the initial public offering, each of the outstanding Class R shares of common stock automatically converted into a Class I share of common stock pursuant to the terms of the Articles Supplementary for the Class R shares and the Company ceased accruing the distribution and shareholder servicing fee with respect to Class R shares as the Company no longer had any Class R shares outstanding. 

The Company initially recorded distribution and shareholder servicing fees as a reduction to additional paid-in capital and the related liability in an amount equal to the maximum fees payable in relation to the Class T and Class R shares on the date the shares were issued. The liability was relieved over time, as the fees were paid to the Dealer Manager. Upon termination of the offering, the fees were no longer payable as described above and the liability was adjusted accordingly.

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Restricted Cash (Tables)

3 Months Ended

Mar. 31, 2020

Cash And Cash Equivalents [Abstract]

Schedule of Restricted Cash

The following table presents a summary of the components of the Company's restricted cash (in thousands):

	March 31, 2020		December 31, 2019
Real estate taxes	$	944	$	979
Insurance		151		179
Capital improvements		666		758
Total	$	1,761	$	1,916

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Disposition of Property - Summary of Disposition Activity (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2020 USD ($)
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Net Gain on Disposition	$ 530
Disposed of by Sale | Payne Place | Alexandria, Virginia
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Sale Date	Mar. 05, 2020
Contract Sales Price	$ 3,100
Net Gain on Disposition	530
Revenue Attributable to Property Sold	32
Net Income Attributable to Property Sold	$ 3

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Restricted Cash - Schedule of Restricted Cash (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Restricted Cash and Cash Equivalents Items [Line Items]
Restricted cash	$ 1,761	$ 1,916
Real Estate Taxes
Restricted Cash and Cash Equivalents Items [Line Items]
Restricted cash	944	979
Insurance
Restricted Cash and Cash Equivalents Items [Line Items]
Restricted cash	151	179
Capital Improvements
Restricted Cash and Cash Equivalents Items [Line Items]
Restricted cash	$ 666	$ 758

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Fair Value Measures and Disclosures - Assets Measured at Fair Value on Recurring Basis (Details) - Fair Value, Measurements, Recurring - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Interest rate caps	$ 1	$ 0
Level 1
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Interest rate caps	0	0
Level 2
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Interest rate caps	1	0
Level 3
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Interest rate caps	$ 0	$ 0

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Derivatives and Hedging Activities - Schedule of Fair Values of Derivative Instruments on the Balance Sheet (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Derivatives, Fair Value [Line Items]
Liability Derivatives	$ 0	$ 0
Prepaid Expenses And Other Assets
Derivatives, Fair Value [Line Items]
Asset Derivatives	$ 1

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Certain Relationships and Related Party Transactions - Narrative (Details) - USD ($)				3 Months Ended
	Mar. 01, 2019	Feb. 28, 2019	Apr. 23, 2017	Mar. 31, 2020	Dec. 31, 2019
Related Party Transaction [Line Items]
Liability				$ 3,036,000	$ 4,938,000
Insurance pool (up to)		$ 2,500,000
Property loss pool, deductible amount per incident		25,000
Catastrophic insurance (up to)	$ 250,000,000	250,000,000
General liability pool, deductible amount per incident			$ 25,000
General liability insurance, insured limit for general liability policy (up to)			$ 76,000,000
Class R Common Stock
Related Party Transaction [Line Items]
Annual fee, percentage of purchase price of common stock sold (as percent)				1.00%
Class T Common Stock
Related Party Transaction [Line Items]
Annual fee, percentage of purchase price of common stock sold (as percent)				1.00%
Maximum
Related Party Transaction [Line Items]
Catastrophic insurance, deductible amount per incident	100,000	100,000
Minimum
Related Party Transaction [Line Items]
Catastrophic insurance, deductible amount per incident	$ 25,000	$ 25,000
Advisor
Related Party Transaction [Line Items]
Cumulative advances from related party				$ 9,000,000
Total revenue incurred from related party				9,200,000
Liability				2,946,000	4,854,000
Related party costs				249,000
Advance from related party				4,200,000
Remaining liability					4,800,000
Reimbursed offering costs				$ 1,700,000
Term of advisory agreement				1 year
Acquisition fee (as a percent)				2.00%
Monthly asset management fee (as a percent)				0.083%
Disposition fee, as a percentage of the aggregate brokerage commission paid (as percent)				50.00%
Disposition fee (as percent)				2.00%
Debt financing fee (as percent)				0.50%
Formation and other operating expenses				$ 104,000
Advisor | Primary Offering Price
Related Party Transaction [Line Items]
Approximate reimbursement of organization and offering expenses to be reimbursed, option one (as percent)				4.00%
Offering proceeds, threshold, option one (less than)				$ 500,000,000
Advisor | Maximum
Related Party Transaction [Line Items]
Liability				4,400,000
Manager
Related Party Transaction [Line Items]
Liability				$ 78,000	$ 84,000
Property management fee (as percent)				4.50%
Construction management fee (as percent)				5.00%
Debt servicing fee (as percent)				2.75%
Resource Securities | Class R Common Stock
Related Party Transaction [Line Items]
Annual fee, percentage of purchase price of common stock sold (as percent)				1.00%
Resource Securities | Class T Common Stock
Related Party Transaction [Line Items]
Annual fee, percentage of purchase price of common stock sold (as percent)				1.00%
Resource Securities | Maximum | Class R Common Stock
Related Party Transaction [Line Items]
Selling commission (as percent)				3.00%
Dealer manager fee (as percent)				3.50%
Selling commission (as percent)				5.50%
Resource Securities | Maximum | Class I Common Stock
Related Party Transaction [Line Items]
Dealer manager fee (as percent)				1.50%
Resource Securities | Maximum | Class T Common Stock
Related Party Transaction [Line Items]
Period of time to receive annual fee from the date each share is issued				5 years
Resource America, Inc. and Affiliates
Related Party Transaction [Line Items]
Maximum amount covered for liability insurance program				$ 100,000,000

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Equity - Schedule of Stock Issuances (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Dec. 31, 2019
Class A
Class of Stock [Line Items]
Total shares issued (in shares)	625,848	628,691
Gross Proceeds	$ 6,119
Total	648,246
Shares redeemed and retired	(22,398)
Share conversion	0
Total shares outstanding (in shares)	625,848	628,691
Class T
Class of Stock [Line Items]
Total shares issued (in shares)	1,121,639	1,115,458
Gross Proceeds	$ 10,777
Total	1,157,254
Shares redeemed and retired	(35,615)
Share conversion	0
Total shares outstanding (in shares)	1,121,639	1,115,458
Class R
Class of Stock [Line Items]
Total shares issued (in shares)	0
Gross Proceeds	$ 93,161
Total	9,712,521
Shares redeemed and retired	(32,122)
Share conversion	(9,680,399)
Total shares outstanding (in shares)	0
Class I
Class of Stock [Line Items]
Total shares issued (in shares)	10,406,822	10,327,291
Gross Proceeds	$ 6,810
Total	739,838
Shares redeemed and retired	(13,415)
Share conversion	9,680,399
Total shares outstanding (in shares)	10,406,822	10,327,291
Shared issued through primary offering | Class A
Class of Stock [Line Items]
Total shares issued (in shares)	586,207
Gross Proceeds	$ 5,601
Shared issued through primary offering | Class T
Class of Stock [Line Items]
Total shares issued (in shares)	1,049,996
Gross Proceeds	$ 9,943
Shared issued through primary offering | Class R
Class of Stock [Line Items]
Total shares issued (in shares)	9,356,068
Gross Proceeds	$ 89,917
Shared issued through primary offering | Class I
Class of Stock [Line Items]
Total shares issued (in shares)	624,325
Gross Proceeds	$ 5,760
Shares issued through stock dividends | Class A
Class of Stock [Line Items]
Total shares issued (in shares)	12,860
Gross Proceeds	$ 0
Shares issued through stock dividends | Class T
Class of Stock [Line Items]
Total shares issued (in shares)	15,495
Gross Proceeds	$ 0
Shares issued through stock dividends | Class R
Class of Stock [Line Items]
Total shares issued (in shares)	0
Gross Proceeds	$ 0
Shares issued through stock dividends | Class I
Class of Stock [Line Items]
Total shares issued (in shares)	0
Gross Proceeds	$ 0
Shares issued through distribution reinvestment plan | Class A
Class of Stock [Line Items]
Total shares issued (in shares)	34,179
Gross Proceeds	$ 318
Shares issued through distribution reinvestment plan | Class T
Class of Stock [Line Items]
Total shares issued (in shares)	91,763
Gross Proceeds	$ 834
Shares issued through distribution reinvestment plan | Class R
Class of Stock [Line Items]
Total shares issued (in shares)	356,453
Gross Proceeds	$ 3,244
Shares issued through distribution reinvestment plan | Class I
Class of Stock [Line Items]
Total shares issued (in shares)	115,513
Gross Proceeds	$ 1,050
Advisor | Class A
Class of Stock [Line Items]
Total shares issued (in shares)	15,000
Gross Proceeds	$ 200
Advisor | Class T
Class of Stock [Line Items]
Total shares issued (in shares)	0
Gross Proceeds	$ 0
Advisor | Class R
Class of Stock [Line Items]
Total shares issued (in shares)	0
Gross Proceeds	$ 0
Advisor | Class I
Class of Stock [Line Items]
Total shares issued (in shares)	0
Gross Proceeds	$ 0

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Fair Value Measures and Disclosures

3 Months Ended

Mar. 31, 2020

Fair Value Disclosures [Abstract]

Fair Value Measures and Disclosures

NOTE 12 - FAIR VALUE MEASURES AND DISCLOSURES

In analyzing the fair value of its financial investments accounted for on a fair value basis, the Company follows the fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The Company determines fair value based on quoted prices when available or, if quoted prices are not available, through the use of alternative approaches, such as discounting the expected cash flows using market interest rates commensurate with the credit quality and duration of the investment. The fair value of cash, tenant receivables and accounts payable, approximate their carrying value due to their short nature. The hierarchy followed defines three levels of inputs that may be used to measure fair value:

Level 1 - Quoted prices in active markets for identical assets and liabilities that the reporting entity has the ability to access at the measurement date.

Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset and liability or can be corroborated with observable market data for substantially the entire contractual term of the asset or liability.

Level 3 - Unobservable inputs that reflect the entity’s own assumptions about the assumptions that market participants would use in the pricing of the asset or liability and are consequently not based on market activity, but rather through particular valuation techniques.

The determination of where an asset or liability falls in the hierarchy requires significant judgment. The Company evaluates its hierarchy disclosures each quarter; depending on various factors, it is possible that an asset or liability may be classified differently from quarter to quarter. However, the Company expects that changes in classifications between levels will be rare.

The fair value of rental properties is usually estimated based on information obtained from a number of sources, including information obtained about each property as a result of pre-acquisition due diligence, marketing and leasing activities. The Company allocates the purchase price of properties to acquired tangible assets, consisting of land, buildings, fixtures and improvements, and identified intangible lease assets and liabilities, consisting of the value of above-market and below-market leases, as applicable, the value of in-place leases and the value of tenant relationships, based in each case on their fair values.

Derivatives are reported at fair value in the consolidated balance sheets and are valued by a third party pricing agent using an income approach with models that use, as their primary inputs, readily observable market parameters. This valuation process considers factors including interest rate yield curves, time value, credit and volatility factors. (Level 2).

The following table presents information about the Company's assets measured at fair value on a recurring basis and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value (in thousands):

	Level 1		Level 2		Level 3		Total
March 31, 2020
Assets:
Interest rate caps	$	—	$	1	$	—	$	1
December 31, 2019
Assets:
Interest rate caps	$	—	$	—	$	—	$	—

The carrying and fair values of the Company’s mortgage notes payable-outstanding borrowings, which were not carried at fair value on the consolidated balance sheets at March 31, 2020 and December 31, 2019 were as follows (in thousands):

	March 31, 2020				December 31, 2019
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Mortgage notes payable- outstanding borrowings	$	145,523	$	144,927	$	147,148	$	144,902

The carrying amount of the mortgage notes payable presented above is the outstanding borrowings excluding premium or discount and deferred finance costs, net. At March 31, 2020, the fair value of mortgage notes payable was estimated using a discounted cash flow model and rates available to the Company for debt with similar terms and remaining maturity.

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Restricted Cash

3 Months Ended

Mar. 31, 2020

Cash And Cash Equivalents [Abstract]

Restricted Cash

NOTE 4 - RESTRICTED CASH

Restricted cash represents escrow deposits with lenders to be used to pay real estate taxes, insurance, and capital improvements. The following table presents a summary of the components of the Company's restricted cash (in thousands):

	March 31, 2020		December 31, 2019
Real estate taxes	$	944	$	979
Insurance		151		179
Capital improvements		666		758
Total	$	1,761	$	1,916

In addition, the Company designated unrestricted cash for capital expenditures of $7.4 million and $8.1 million at March 31, 2020 and December 31, 2019,respectively.

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Mortgage Notes Payable

3 Months Ended

Mar. 31, 2020

Debt Disclosure [Abstract]

Mortgage Notes Payable

NOTE 8 - MORTGAGE NOTES PAYABLE

The following table presents a summary of the Company's mortgage notes payable, net (in thousands):

	March 31, 2020							December 31, 2019
Collateral	Outstanding Borrowings		Deferred Financing Costs, net			Carrying Value		Outstanding borrowings		Deferred Financing Costs, net			Carrying Value
Payne Place	$	—	$	—		$	—	$	1,525	$	(28	)	$	1,497
Bay Club		21,298		(196	)		21,102		21,398		(208	)		21,190
Tramore Village		32,625		(289	)		32,336		32,625		(304	)		32,321
Matthews Reserve		23,850		(255	)		23,595		23,850		(267	)		23,583
The Park at Kensington		21,760		(248	)		21,512		21,760		(260	)		21,500
Wimbledon Oaks		18,410		(225	)		18,185		18,410		(235	)		18,175
Summit		27,580		(330	)		27,250		27,580		(343	)		27,237
Total	$	145,523	$	(1,543	)	$	143,980	$	147,148	$	(1,645	)	$	145,503

The following table presents additional information about the Company's mortgage notes payable, net (in thousands, except percentages):

Collateral	Maturity Date	Annual Interest Rate				Average Monthly Debt Service		Average Monthly Escrow
Bay Club	8/1/2024		2.86	%	(1)(4)	$	89	$	56
Tramore Village	4/1/2025		2.79	%	(2)(5)		77		84
Matthews Reserve	9/1/2025		4.47	%	(3)(5)		90		20
The Park at Kensington	10/1/2025		4.36	%	(3)(5)		80		53
Wimbledon Oaks	3/1/2026		4.33	%	(3)(5)		67		64
Summit	7/1/2026		3.84	%	(3)(5)		89		43

(1) Variable rate based on one-month LIBOR of 0.99% (at March 31, 2020) plus 1.87%, with a maximum interest rate of 5.75%.

(2) Variable rate based on one-month LIBOR of 0.99% (at March 31, 2020) plus 1.80%, with a maximum interest rate of 6.25%.

(3) Fixed rate.

(4) Monthly payment of principal and interest required.  

(5) Monthly interest-only payment currently required.

All of the mortgage notes are collateralized by a first mortgage lien on the assets of the respective property named in the table above. The amount outstanding on the mortgages may be prepaid in full during the entire term with a prepayment penalty for a portion of the term.

The following table presents the Company's annual principal payments on outstanding borrowings for each of the next five years ending March 31, and thereafter (in thousands):

2021	$	452
2022		1,446
2023		2,574
2024		2,822
2025		21,843
Thereafter		116,386
	$	145,523

Deferred financing costs incurred to obtain financing are amortized over the term of the related debt. During the three months ended March 31, 2020 and 2019, amortization of deferred financing costs of approximately $74,000 and $59,000, respectively, was included in interest expense. Accumulated amortization at March 31, 2020 and December 31, 2019 was approximately $483,000and $415,000, respectively.

The following table presents the Company's estimated amortization of the existing deferred financing costs for the next five years ending March 31, and thereafter (in thousands):

2021	$	294
2022		292
2023		288
2024		284
2025		248
Thereafter		137
	$	1,543

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Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2020

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A summary of the significant accounting policies consistently applied in the preparation of the accompanying consolidated financial statements follows:

Basis of Presentation

The accompanying consolidated financial statements have been prepared in conformity with GAAP.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries as follows:

Subsidiaries	Number of Units		Property Location
Resource Apartment REIT III Holdings, LLC	N/A		N/A
Resource Apartment REIT III OP, LP	N/A		N/A
RRE Payne Place Holdings, LLC	N/A(1)		N/A(1)
RRE Bay Club Holdings, LLC		220	Jacksonville, FL
RRE Tramore Village Holdings, LLC		324	Austell, GA
RRE Matthews Reserve Holdings, LLC		212	Matthews, NC
RRE Kensington Holdings, LLC		204	Riverview, FL
RRE Wimbledon Oaks Holdings, LLC		248	Arlington, TX
RRE Summit Holdings, LLC		141	Alexandria, VA
		1,349

N/A - Not applicable

(1) Property was sold on March 5, 2020.

All intercompany accounts and transactions have been eliminated in consolidation.

Segment Reporting

The Company does not evaluate performance on a relationship-specific or transactional basis and does not distinguish its principal business or group its operations on a geographical basis for purposes of measuring performance. Accordingly, the Company believes it has a single operating segment for reporting purposes in accordance with GAAP.

Concentration of Risk

At March 31, 2020, the Company's real estate investments in Florida, Georgia, and Virginia represented 28%, 22%, and 19%, respectively, of the net book value of its rental property assets. Any adverse economic or real estate developments in these markets, such as the impact of the COVID-19 pandemic, business layoffs or downsizing, industry slowdowns, relocations of businesses, adverse weather events, changing demographics and other factors, or any decrease in demand for multifamily rentals resulting from the local business climate, could adversely affect the Company's operating results and its ability to make distributions to stockholders.

Use of Estimates

The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

Adoption of New Accounting Standards

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13 "Financial Instruments - Credit Losses", which requires measurement and recognition of expected credit losses for financial assets held. On January 1, 2020, the Company adopted ASU No. 2016-13 and the adoption had no impact on its consolidated financial statements and disclosures since the Company did not have instruments subject to this guidance at the adoption or at March 31, 2020.  

In January 2017, FASB issued ASU No. 2017-04, "Intangibles- Goodwill and Other (Topic 350): Simplifying the Accounting for Goodwill Impairment", which alters the current goodwill impairment testing procedures. On January 1, 2020, the Company adopted ASU No. 2017-04 and the adoption did not have a significant impact on its consolidated financial statements due to the fact that the Company did not have any goodwill subject to this guidance at the adoption or at March 31, 2020.

In August 2018, FASB issued ASU No. 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement”. This update removes, modifies and adds certain disclosure requirements in the FASB Accounting Standards Codification ("ASC") 820, “Fair Value Measurement”. On January 1, 2020, the Company adopted ASU No. 2018-13 and the adoption did not have a significant impact on its consolidated financial statements due to the fact there were no required changes to the Company’s disclosures.

In November 2018, FASB issued ASU 2018-19, “Codification Improvements to Topic 326, Financial Instruments-Credit Losses.” ASU 2018-19 clarifies that receivables arising from operating leases are not within the scope of Subtopic 326-20. Instead, impairment of receivables arising from operating leases should be accounted for in accordance with ASC 842, Leases. On January 1, 2020, the Company adopted ASU No. 2018-19 and the adoption did not have a material effect on its consolidated financial statements and disclosures.

In March 2020, FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848)”. ASU 2020-04 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. During the three months ended March 31, 2020, the Company has elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation.  The Company continues to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur.  

Real Estate Investments

The Company records acquired real estate at fair value on their respective acquisition dates. The Company considers the period of future benefit of an asset to determine its appropriate useful life and depreciates the asset using the straight line method. The Company anticipates the estimated useful lives of its assets by class as follows:

Buildings	27.5 years
Building improvements	5.0 to 27.5 years
Furniture, fixtures, and equipment	3.0 to 5.0 years
Tenant improvements	Shorter of lease term or expected useful life
Lease intangibles	Weighted average remaining term of related leases

Improvements and replacements in excess of $1,000 are capitalized when they have a useful life greater than or equal to one year. The Manager earns a construction management fee of 5% of actual aggregate costs to construct improvements, or to repair, rehab or reconstruct a property. These costs are capitalized along with the related asset. Costs of repairs and maintenance are expensed as incurred.

Impairment of Long Lived Assets

When circumstances indicate the carrying value of a property may not be recoverable, the Company reviews the asset for impairment. This review is based on an estimate of the future undiscounted cash flows, excluding interest charges, expected to result from the property’s use and eventual disposition. The review also considers factors such as expected future operating income, market and other applicable trends and residual value, as well as the effects of leasing demand, competition and other factors.

If impairment exists, due to the inability to recover the carrying value of a property, an impairment loss will be recorded to the extent that the carrying value exceeds the estimated fair value of the property for properties to be held and used. For properties held for sale, the impairment loss is the adjustment to fair value less estimated cost to dispose of the asset. These assessments have a direct impact on net income because recording an impairment loss results in an immediate negative adjustment to net income.As of March 31, 2020, the Company evaluated whether the global economic disruption caused by the COVID-19 pandemic was an impairment indicator. The Company examined a number of factors and concluded that there was no indication that the carrying value of the Company’s investments in real estate might not be recoverable as of March 31, 2020. There were no impairment losses recorded on long lived assets during the three months ended March 31, 2020 and 2019.

Allocation of Purchase Price of Acquired Assets

Acquisitions that do not meet the definition of a business under ASU No, 2017-01 are accounted for as asset acquisitions. In most cases, the Company believes acquisitions of real estate will no longer be considered a business combination as in most cases substantially all of the fair value is concentrated in a single identifiable asset or group of tangible assets that are physically attached to each other (land and building). However, if the Company determines that substantially all of the fair value of the gross assets acquired is not concentrated in either a single identifiable asset or in a group of similar identifiable assets, the Company will then perform an assessment to determine whether the set is a business by using the framework outlined in the ASU. If the Company determines that the acquired asset is not a business, the Company will allocate the cost of the acquisition including transaction costs to the assets acquired or liabilities assumed based on their related fair value.

Upon the acquisition of real properties, the Company allocates the purchase price to tangible assets, consisting of land, building, fixtures and improvements, and identified intangible lease assets and liabilities, consisting of the value of above-market and below-market leases, as applicable, other value of in-place leases and value of tenant relationships, based in each case on their fair values.

The Company records above-market and below-market in-place lease values for acquired properties based on the present value (using an interest rate that reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to the in-place leases and (ii) management’s estimate of fair market lease rates for the corresponding in-place leases, measured over a period equal to the remaining non-cancelable term of the lease. The Company amortizes any capitalized above-market or below-market lease values as an increase or reduction to rental income over the remaining non-cancelable terms of the respective leases, which the Company expects will range from one month to one year.

The Company measures the aggregate value of other intangible assets acquired based on the difference between (i) the property valued with existing in-place leases adjusted to market rental rates and (ii) the property valued as if vacant. Management’s estimates of value are determined by independent appraisers (e.g., discounted cash flow analysis). Factors to be considered in the analysis include an estimate of carrying costs during hypothetical expected lease-up periods considering current market conditions and costs to execute similar leases.

The Company also considers information obtained about each property as a result of its pre-acquisition due diligence, marketing and leasing activities in estimating the fair value of the tangible and intangible assets acquired. In estimating carrying costs, management includes real estate taxes, insurance and other operating expenses and estimates of lost rentals at market rates during the expected lease-up periods. Management also estimates costs to execute similar leases including leasing commissions and legal and other related expenses to the extent that such costs have not already been incurred in connection with a new lease origination as part of the transaction.

The total amount of other intangible assets acquired is further allocated to in-place lease values and customer relationship intangible values based on management’s evaluation of the specific characteristics of each tenant’s lease and the Company’s overall relationship with that respective tenant. Characteristics to be considered by management in allocating these values include the nature and extent of the Company’s existing business relationships with the tenant, growth prospects for developing new business with the tenant, the tenant’s credit quality and expectations of lease renewals (including those existing under the terms of the lease agreement), among other factors.

The Company amortizes the value of in-place leases to expense over the weighted average remaining term of the underlying leases. The value of customer relationship intangibles is amortized to expense over the initial term and any renewal periods in the respective leases, but in no event will the amortization periods for the intangible assets exceed the remaining depreciable life of the building.

The determination of the fair value of the assets and liabilities acquired requires the use of significant assumptions with regard to current market rental rates, discount rates and other variables. The use of inappropriate estimates would result in an incorrect assessment of the fair value of these assets and liabilities, which could impact the amount of the Company’s reported net income.

Revenue Recognition

The Company recognizes minimum rent, including rental abatements and contractual fixed increases attributable to operating leases, where collection has been considered probable, on a straight-line basis over the term of the related lease. The future minimum rental payments to be received from noncancelable operating leases for residential rental properties are approximately $10.8 million and approximately $530,000 for the 12 month periods ending March 31, 2021 and 2022, respectively, and none thereafter.

Revenue is primarily derived from the rental of residential housing units for which the Company receives minimum rents and utility reimbursements pursuant to underlying tenant lease agreements. The Company also receives other ancillary fees for administration of leases, late payments, amenities, and revenue sharing arrangements for cable income from contracts with cable providers at the Company's properties. A performance obligation is a promise in a contract to transfer a distinct good or service to a customer. The Company records the utility reimbursement income and ancillary charges in the period when the performance obligation is completed, either at a point in time or on a monthly basis as the service is utilized.

Tenant Receivables

Tenant receivables are stated in the consolidated financial statements as amounts due from tenants net of an allowance for uncollectible receivables. Payment terms vary and receivables outstanding longer than the payment terms are considered past due. The Company determines its allowance by considering a number of factors, including the length of time receivables are past due, security deposits held, the Company’s previous loss history, the tenants’ current ability to pay their obligations to the Company, and the condition of the general economy and the industry as a whole. The Company writes off receivables when they become uncollectible. At March 31, 2020 and December 31, 2019, the Company recorded $1,501 and $3,927 of allowances for uncollectible receivables, respectively.

Income Taxes

The Company elected to be taxed as a REIT commencing with its taxable year ending December 31, 2017. As a REIT, the Company will generally not be subject to corporate U.S. federal or state income tax to the extent that it makes qualifying distributions to its stockholders, and provided it satisfies, on a continuing basis, through actual investment and operating results, the REIT requirements including certain asset, income, distribution and stock ownership tests. If the Company fails to qualify as a REIT, and does not qualify for certain statutory relief provisions, it will be subject to U.S. federal, state and local income taxes and may be precluded from qualifying as a REIT for the subsequent four taxable years following the year in which it lost its REIT qualification. Accordingly, the Company’s failure to qualify as a REIT could have a material adverse impact on its results of operations and amounts available for distribution to its stockholders.

The dividends paid deduction of a REIT for qualifying dividends to its stockholders is computed using the Company’s taxable income as opposed to net income reported on the financial statements. Taxable income, generally, differs from net income reported on the financial statements because the determination of taxable income is based on tax provisions and not financial accounting principles.

The Company may elect to treat certain of its subsidiaries as a taxable REIT subsidiary ("TRS"). In general, a TRS may hold assets and engage in activities that the Company cannot hold or engage in directly and generally may engage in any real estate or non-real estate-related business. A TRS is subject to U.S. federal, state and local corporate income taxes. At March 31, 2020 and December 31, 2019, the Company did not treat any of its subsidiaries as a TRS.

While a TRS may generate net income, a TRS can declare dividends to the Company which will be included in the Company’s taxable income and necessitate a distribution to its stockholders. Conversely, if the Company retains earnings at a TRS level, no distribution is required and the Company can increase book equity of the consolidated entity.

The Company is subject to examination by the U.S. Internal Revenue Service and by the taxing authorities in other states in which the Company has significant business operations. The Company is not currently undergoing any examinations by taxing authorities. The Company is not subject to IRS examination for the tax return years 2015 and prior.

Earnings Per Share

Basic earnings per share are computed by dividing net income (loss) attributable to common stockholders for each period by the weighted-average common shares outstanding during the period for each share class. Diluted net income (loss) per share takes into account the potential dilution that could occur if securities or other contracts to issue common stock were exercised and converted to common stock. None of the 50,000 shares of convertible stock (discussed in Note 10) are included in the diluted earnings per share calculations because the necessary conditions for conversion have not been satisfied as of March 31, 2020 (were such date to represent the end of the contingency period). For the purposes of calculating earnings per share, all common shares and per share information in the financial statements have been retroactively adjusted for the effect of any stock dividends and stock splits. For the three months ended March 31, 2020 and 2019, common shares potentially issuable to settle distributions payable are excluded from the calculation of diluted earnings per share calculations, as their inclusion would be anti-dilutive.

In accordance with ASC 260-10-45, "Earnings Per Share", the Company uses the two-class method to calculate earnings per share. Basic earnings per share is calculated based on dividends declared and the rights of common shares and participating securities in any undistributed earnings, which represents net income remaining after deduction of dividends declared during the period. The undistributed earnings are allocated to all outstanding common shares based on their relative percentage of each class of shares to the total number of outstanding shares. The Company did not have any participating securities outstanding other than Class A common stock, Class T common stock, Class R common stock and Class I common stock during the periods presented (see Note 10).

Organization and Offering Costs

Organization and offering costs (other than selling commissions, dealer manager fees, and distribution and shareholder servicing fees) of the Company were initially paid by the Advisor on behalf of the Company.

Pursuant to the Advisory Agreement between the Company and the Advisor, the Company was obligated to reimburse the Advisor for organization and other offering costs paid by the Advisor on behalf of the Company, up to an amount equal to 4.0% of gross offering proceeds as of the termination of the initial public offering as the Company raised less than $500.0 million in the primary portion of the initial public offering.

The Advisory Agreement provides that the Company is not responsible for the repayment of any unreimbursed organization and offering expenses or operational expenses incurred by the Advisor on the Company’s behalf through March 31, 2018 until after the termination of the primary portion of the Company’s ongoing initial public offering. Additionally, such unreimbursed organization and offering expenses or operational expenses incurred or paid by the Advisor on the Company’s behalf through March 31, 2018 are required to be reimbursed ratably starting after the termination of the primary portion of the Company’s ongoing initial public offering through April 30, 2021 for organization and offering expenses and through April 30, 2020 for operating expenses. These payments began on November 1, 2019.  During the three months ended March 31, 2020, the Company repaid $1.9 million to the Advisor for both deferred organization and offering and operational expenses.

Organization costs, which included all expenses incurred by the Company in connection with its formation, including but not limited to legal fees and other costs to incorporate, were expensed as incurred. Prior to the Company breaking escrow, the Advisor incurred approximately $104,000 of formation and other operating expenses on the Company's behalf, which will not be reimbursed to the Advisor.

Outstanding Class T shares issued in the Company's primary offering were subject to an annual distribution and shareholder servicing fee in the amount of 1% of the estimated NAV of the share (1% of purchase price prior to June 29, 2018) for up to five years from the date on which such share is issued. Effective November 1, 2019, the Company ceased accruing the distribution and shareholder servicing fee on each Class T share as the Company had reached certain underwriting compensation limits.

Outstanding Class R shares issued in the Company's primary offering were also subject to an annual distribution and shareholder servicing fee in the amount of 1% of the estimated NAV of the share (1% of purchase price prior to June 29, 2018). Effective November 1, 2019, following the termination of the initial public offering, each of the outstanding Class R shares of common stock automatically converted into a Class I share of common stock pursuant to the terms of the Articles Supplementary for the Class R shares and the Company ceased accruing the distribution and shareholder servicing fee with respect to Class R shares as the Company no longer had any Class R shares outstanding. 

The Company initially recorded distribution and shareholder servicing fees as a reduction to additional paid-in capital and the related liability in an amount equal to the maximum fees payable in relation to the Class T and Class R shares on the date the shares were issued. The liability was relieved over time, as the fees were paid to the Dealer Manager. Upon termination of the offering, the fees were no longer payable as described above and the liability was adjusted accordingly.

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Nature of Business and Operations (Details) - USD ($)				3 Months Ended
	Aug. 05, 2016	Jun. 29, 2016	Aug. 10, 2015	Mar. 31, 2019	Mar. 31, 2020
Class of Stock [Line Items]
Value of shares of common stock offered					$ 1,100,000,000
Consideration received on to date					$ 111,400,000
Issuance of common stock				$ 15,794,000
Advisor
Class of Stock [Line Items]
Issuance of common stock			$ 200,000
Issuance of stock (in shares)			20,000
Common stock exchanged (in shares)	5,000
Class A Common Stock
Class of Stock [Line Items]
Number of shares issued in transaction to date (in shares)					601,207
Class A Common Stock | Resource America, Inc.
Class of Stock [Line Items]
Issuance of common stock		$ 2,000,000
Issuance of stock (in shares)		222,222
Class T Common Stock
Class of Stock [Line Items]
Number of shares issued in transaction to date (in shares)					1,049,996
Class R Common Stock
Class of Stock [Line Items]
Number of shares issued in transaction to date (in shares)					9,356,067
Class I Common Stock
Class of Stock [Line Items]
Number of shares issued in transaction to date (in shares)					624,325
Convertible Common Stock | Advisor
Class of Stock [Line Items]
Issuance of stock (in shares)	50,000
Primary Offering Price
Class of Stock [Line Items]
Value of shares of common stock offered					$ 1,000,000,000
Shares issued through distribution reinvestment plan
Class of Stock [Line Items]
Value of shares of common stock offered					$ 100,000,000

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2020	May 04, 2020
Document Information [Line Items]
Entity Registrant Name	Resource Apartment REIT III, Inc.
Entity Central Index Key	0001652926
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Document Type	10-Q
Document Period End Date	Mar. 31, 2020
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q1
Amendment Flag	false
Entity Emerging Growth Company	true
Entity Small Business	true
Entity Ex Transition Period	true
Title of 12(b) Security	n/a
Trading Symbol	n/a
Document Quarterly Report	true
Document Transition Report	false
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Shell Company	false
Entity File Number	000-55923
Entity Tax Identification Number	47-4608249
Entity Incorporation, State or Country Code	MD
Entity Address, Address Line One	1845 Walnut Street, 18th Floor,
Entity Address, City or Town	Philadelphia
Entity Address, State or Province	PA
Entity Address, Postal Zip Code	19103
City Area Code	(215)
Local Phone Number	231-7050
Class A Common Stock
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		625,848
Class T Common Stock
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		1,121,639
Class I Common Stock
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		10,406,822

XML

Consolidated Statement of Changes in Stockholders' Equity (unaudited) - USD ($) $ in Thousands	Total	Class A Common Stock	Class T Common Stock	Class R Common Stock	Class I Common Stock	Common Stock Class A Common Stock	Common Stock Class T Common Stock	Common Stock Class R Common Stock	Common Stock Class I Common Stock	Preferred Stock Convertible Stock	Additional Paid-in Capital	Accumulated Other Comprehensive Loss	Accumulated Deficit
Beginning balance at Dec. 31, 2018	$ 62,490					$ 6	$ 11	$ 72	$ 3	$ 1	$ 77,896	$ (40)	$ (15,459)
Beginning balance (in shares) at Dec. 31, 2018						634	1,111	7,182	330	50
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock	15,794							$ 15	$ 2		15,777
Issuance of common stock (in shares)								1,510	126
Offering costs	(1,876)										(1,876)
Cash distributions declared	(1,258)	$ (85)	$ (123)	$ (988)	$ (62)								(1,258)
Common stock issued through distribution reinvestment plan	577										577
Common stock issued through distribution reinvestment plan (in shares)						3	8	52
Other comprehensive income (loss)	(2)											(2)
Net loss	(2,785)												(2,785)
Ending balance at Mar. 31, 2019	72,940					$ 6	$ 11	$ 87	$ 5	$ 1	92,374	(42)	(19,502)
Ending balance (in shares) at Mar. 31, 2019						637	1,119	8,744	456	50
Beginning balance at Dec. 31, 2019	71,875					$ 6	$ 11		$ 103	$ 1	103,725	(32)	(31,939)
Beginning balance (in shares) at Dec. 31, 2019		628,691	1,115,458		10,327,291	629	1,115		10,327	50
Increase (Decrease) in Stockholders' Equity [Roll Forward]
True-up of prior year cash distributions declared	(31)	$ 0	$ (27)	0	$ (4)								(31)
Cash distributions declared			(27)		(4)
Common stock issued through distribution reinvestment plan	857	$ 24	$ 89	$ 0	$ 744				$ 1		856
Common stock issued through distribution reinvestment plan (in shares)						2	10		82
Other comprehensive income (loss)	6											6
Net loss	(1,670)												(1,670)
Share redemptions	(101)										(101)
Share redemptions (in shares)		(5,484)	(3,587)		(2,416)	(5)	(3)		(2)
Ending balance at Mar. 31, 2020	$ 70,936					$ 6	$ 11		$ 104	$ 1	$ 104,480	$ (26)	$ (33,640)
Ending balance (in shares) at Mar. 31, 2020		625,848	1,121,639	0	10,406,822	626	1,122		10,407	50

XML

Earnings Per Share (Tables)

3 Months Ended

Mar. 31, 2020

Earnings Per Share [Abstract]

Schedule of Earnings Per Share, Basic and Diluted

The following table presents a reconciliation of basic and diluted earnings/(loss) per share for the periods presented as follows (in thousands, except per share data):

	Three Months Ended March 31,
	2020			2019
Net loss	$	(1,670	)	$	(2,785	)
Less: Class A common stock cash distributions declared		—			85
Less: Class T common stock cash distributions declared		27			123
Less: Class R common stock cash distributions declared		—			988
Less: Class I common stock cash distributions declared		4			62
Undistributed net loss attributable to common stockholders	$	(1,701	)	$	(4,043	)
Class A common stock:
Undistributed net loss attributable to Class A common    stockholders	$	(88	)	$	(255	)
Class A common stock cash distributions declared		—			85
Net loss attributable to Class A common stockholders	$	(88	)	$	(170	)
Net loss per Class A common share, basic and diluted	$	(0.14	)	$	(0.27	)
Weighted-average number of Class A common shares    outstanding, basic and diluted (1)		629			635
Class T common stock:
Undistributed net loss attributable to Class T    common stockholders	$	(157	)	$	(448	)
Class T common stock cash distributions declared		27			123
Net loss attributable to Class T common stockholders	$	(130	)	$	(325	)
Net loss per Class T common share, basic and diluted	$	(0.12	)	$	(0.29	)
Weighted-average number of Class T common shares    outstanding, basic and diluted		1,118			1,114
Class R common stock:
Undistributed net loss attributable to Class R    common stockholders	$	—		$	(3,188	)
Class R common stock cash distributions declared		—			988
Net loss attributable to Class R common stockholders	$	—		$	(2,200	)
Net loss per Class R common share, basic and diluted	$	—		$	(0.28	)
Weighted-average number of Class R common shares    outstanding, basic and diluted		—			7,937
Class I common stock:
Undistributed net loss attributable to Class I    common stockholders	$	(1,456	)	$	(152	)
Class I common stock cash distributions declared		4			62
Net loss attributable to Class I common stockholders	$	(1,452	)	$	(90	)
Net loss per Class I common share, basic and diluted	$	(0.14	)	$	(0.24	)
Weighted-average number of Class I common shares    outstanding, basic and diluted		10,355			380

(1)Weighted-average number of shares excludes the convertible stock as they are not participating securities.