Income Potential Across a Broader Portfolio

The current goal is to provide approximately 5–6% annual distributions, along with 1–2% annual NAV appreciation over time. Actual performance and distributions are not guaranteed.

Distributions, if and when authorized, are based on the performance of the REIT’s portfolio and paid on an equal per share basis to common stockholders.

The REIT intends to elect to be taxed as a real estate investment trust for U.S. federal income tax purposes and to operate in a manner that will allow it to qualify as a real estate investment trust.  In order to qualify and maintain its qualification as a real estate investment trust, the REIT is required under the Internal Revenue Code of 1986, as amended, to distribute annually at least 90% of its REIT taxable income (determined without regard to the deduction for dividends paid and excluding net capital gain) to stockholders. However, there is no assurance that the REIT will qualify or maintain its qualification as a real estate investment trust. If the REIT fails to qualify in any taxable year, it would be subject to U.S. federal income tax at regular corporate rates, which could reduce the cash available for distributions.

An UPREIT, or Umbrella Partnership Real Estate Investment Trust, is a REIT structure in which a real estate investment trust owns its properties and conducts its operations through an operating partnership, of which the real estate investment trust is the general partner or managing member. A property owner may contribute real estate to the operating partnership in exchange for limited partnership units (“OP Units”) instead of selling the property for cash. OP Units are intended to be economically equivalent to REIT shares and, subject to the operating partnership agreement, generally may be redeemed for cash or, at the real estate investment trust’s election, REIT shares. The exchange may allow the contributing owner to defer recognizing gain until a later taxable event.

Potentially, yes. Commencing one year from the date of issuance of OP Units, holders of OP Units may be able to redeem some or all of their OP Units for cash or, at the election of the REIT, for REIT shares on a one-for-one basis, subject to REIT share ownership limitations and certain other limitations. Redeeming OP Units for REIT shares or cash is a taxable event.

The UPREIT structure of the REIT may provide tax- and estate-planning opportunities for investors. Contributing a property to the operating partnership in exchange for OP Units may allow an investor to defer recognition of gain, but deferral is not guaranteed and depends on the specific transaction, including the investor’s share of project-level debt. Receipt of REIT shares or cash in exchange for a project interest or property is generally a taxable transaction, and a later redemption of OP Units for cash or REIT shares is generally taxable.

 Tax treatment and estate-planning outcomes depend on each investor’s individual circumstances and applicable law. Investors should consult their own tax, legal and financial advisors regarding their specific situation..

Investors who receive OP Units in a property contribution to the operating partnership may not convert them to cash or REIT shares for a one-year period commencing on the date of issuance.  If an investor has converted its OP units to REIT shares or invested directly in the REIT, the REIT has a Share Repurchase Plan under which stockholders may request quarterly repurchases. Repurchases are limited to 5% of aggregate NAV per quarter, are at the REIT’s discretion and may be reduced or suspended. Shares held less than one year are generally repurchased at 95% of the transaction price. You should expect to hold shares for an extended period.

The REIT is backed by the underlying real estate assets it owns, so the investment is tied to the value and performance of those assets rather than solely to the continued operation of Roers Companies. The REIT is externally managed by an affiliate of Roers Companies, giving investors the benefit of Roers’ experienced team for management, property-level services and NAV determination. Because the REIT depends on Roers for these functions, if Roers were unable to perform, the REIT’s operations and value could be materially and adversely affected.

Instead of being exposed to the performance of one individual property, investors participate in a portfolio of multifamily assets. This diversification can reduce concentration risk and may result in less volatility than owning an interest in a single property.

Roers Companies expects that a significant portion of eligible projects may ultimately be contributed to the REIT, subject to alignment with the REIT’s investment strategy and governance requirements. However, Roers Companies will continue evaluating the best outcome for each property and may sell a property to another buyer when that represents the strongest opportunity. The REIT may also acquire properties or other investments from unaffiliated third parties that align with its investment strategy.

The REIT is externally managed by an affiliate of Roers Companies, which has firsthand knowledge of many of the properties expected to be included in the portfolio because of its involvement in their development, ownership, and/or management. That familiarity provides Roers Companies with detailed knowledge of the assets and their operating history. Any acquisition of Roers-developed properties by the REIT remains subject to the REIT’s investment criteria, underwriting, valuation and conflict-management processes.

Investor materials may outline the potential REIT scenario for applicable projects, including an illustration of what a future contribution to the REIT and the resulting OP Unit ownership could look like for the investor.

Investors holding OP Units will receive a single IRS Form K-1 from the operating partnership regardless of the number of underlying properties. In the year a property is contributed or exchanged, an investor may receive two K-1s depending on the structure and timing. Because the operating partnership may own properties in multiple states, holders of OP Units may also be required to file income tax returns in those states. Investors holding REIT shares will have distributions reported to them on IRS Form 1099-DIV. Distributions to REIT stockholders may be taxable as ordinary dividends, capital gain dividends or a return of capital, depending on the REIT’s earnings and profits and each stockholder’s circumstances. Individual tax reporting may vary, so investors should consult their tax advisors.

Investors in the REIT will access account information and reports through an Investor Portal hosted by Yardi Investment Manager.

DST capabilities are not currently available. Select 1031 exchange opportunities may be available.  Please contact us to learn more about 1031 exchange opportunities and future DST opportunities.  Interests in a partnership or an LLC taxed as a partnership, REIT shares and OP Units generally are not like-kind real property, and a 1031 exchange generally cannot be used to acquire them.

The REIT is managed by a board of directors and operates within a formal corporate and regulatory structure that includes governance requirements, financial reporting, and audits.