PHILADELPHIA--(BUSINESS WIRE)--Resource Real Estate, LLC, as the sponsor of Resource Real Estate Opportunity REIT, Inc., Resource Real Estate Opportunity REIT II, Inc. and Resource Apartment REIT III, Inc., announced today that the REITs have entered into definitive agreements pursuant to which Resource REIT II would acquire Resource REIT I and Resource REIT III in separate stock-for-stock transactions. The mergers will combine three highly complementary portfolios of suburban apartment communities in targeted markets with proven income and employment growth and will significantly improve scale, operating efficiencies and geographic diversification of the REITs.
Following the acquisition of its external advisor on September 8, 2020, Resource REIT I announced its intent to become self-advised and self-managed. As part of the same transaction, Resource REIT I also acquired the external advisors of Resource REIT II and Resource REIT III. It will continue to advise and manage Resource REIT II and Resource REIT III until the mergers are completed. The self-administration transaction provides immediate benefits to Resource REIT I stockholders, including a considerable reduction in the operating expenses of Resource REIT I. These benefits will extend to the combined company following the completion of the mergers of Resource REIT I into Resource REIT II and Resource REIT III into Resource REIT II.
“The merging of these three REITs is both strategic and transformative and will create a $3 billion self-managed REIT immediately accretive to earnings and cash flows,” said Alan Feldman, Chairman and CEO of the REITs. “Combining a seasoned management team that has worked together for fifteen years with a carefully assembled portfolio of apartment communities in some of the strongest suburban markets in the United States will afford many options for stockholder liquidity. The Resource portfolio caters to middle market renters and is approximately 94% occupied. Rent collections have consistently averaged approximately 98% of historical collections over the past five months in the throes of the nation’s COVID-19 pandemic. This is a testament to the resiliency of the asset class, the specific communities we own and our keen focus on operations and management.”
Andrew L. Farkas, Chairman and CEO of C-III Capital Partners LLC, which indirectly owns Resource, added: “We couldn’t be more pleased to help strategically position these three REITs for future growth and paths towards liquidity. The current environment will create numerous opportunities for companies such as the Resource REITs that possess strong balance sheets, sufficient scale, quality multifamily properties and an experienced and savvy management team. We are pleased to remain supportive as an important investor in the newly combined company.”
The merger transactions are expected to close in the fourth quarter of 2020, subject to certain closing conditions, including the approval of the mergers by Resource REIT I and Resource REIT III stockholders, as applicable. No action by the REIT II stockholders is required for either merger. The mergers are expected to close concurrently but are not conditioned on the consummation of each other. There can be no assurance that either or both of the merger transactions will be consummated.
Advisors
Robert A. Stanger & Co., Inc. acted as financial advisor to Resource REIT I’s special committee of the board of directors; Houlihan Lokey Capital, Inc. acted as financial advisor to Resource REIT II’s special committee of the board of directors; Truist acted as financial advisor to Resource REIT III’s special committee of the board of directors; Eastdil Secured acted as financial advisor to Resource. Morris Manning & Martin, LLP provided legal counsel to Resource REIT I’s special committee of the board of directors; Morrison & Foerster LLP provided legal counsel to Resource REIT II’s special committee of the board of directors; DLA Piper LLP (US) provided legal counsel to Resource REIT II; Miles & Stockbridge P.C. provided legal counsel to Resource REIT III’s special committee of the board of directors; Baker & McKenzie LLP provided legal counsel to Resource.
About Resource Real Estate and C-III Capital Partners
Resource Real Estate, LLC, the REITs’ sponsor, is an asset management company that specializes in real estate investments. The REITs collectively own approximately $3 billion of multifamily assets across 16 states as of June 30, 2020. Resource’s investments emphasize consistent value and long-term returns with an income orientation. Resource is an indirect, wholly-owned subsidiary of C-III Capital Partners LLC, a leading commercial real estate investment management and commercial real estate services company.
Additional information is available at https://www.resourcealts.com/.
