NOTE 3: Investments in Real Estate

As of December 31, 2017, our investments in real estate consisted of 52 apartment properties (unaudited). The table below summarizes our investments in real estate:

	2017			2016			Depreciable Lives (In years)
Land	$	193,026		$	165,120		-
Building		1,279,777			1,066,611		40
Furniture, fixtures and equipment		31,353			17,625		5-10
Total investment in real estate	$	1,504,156		$	1,249,356
Accumulated depreciation		(84,097	)		(51,511	)
Investments in real estate, net	$	1,420,059		$	1,197,845

As of December 31, 2017 and 2016, we had investments in real estate valued at $0 and $60,786, respectively, classified as held for sale.

Acquisitions

The below table summarizes the acquisitions for the year ended December 31, 2017:

Property Name	Date of Purchase	Location	Units (unaudited)		Purchase Price
Lakes of Northdale	2/27/2017	Tampa, FL	216		$	29,750
Haverford Place	5/24/2017	Lexington, KY	160		$	14,240
South Terrace (1)	6/30/2017	Durham, NC	328		$	42,950
Cherry Grove (2)	9/26/2017	North Myrtle Beach, SC	172		$	16,157
Riverchase (2)	9/26/2017	Indianapolis, IN	216		$	18,899
Kensington (2)	9/26/2017	Canal Winchester, OH	264		$	24,409
Schirm Farms (2)	9/26/2017	Canal Winchester, OH	264		$	23,749
Live Oak Trace (2)	10/25/2017	Baton Rouge, LA	264		$	28,501
Tides at Calabash (2)	11/14/2017	Wilmington, NC	168		$	14,269
Brunswick Point (2)	12/12/2017	Wilmington, NC	288		$	30,661
Total				2,340	$	243,585

(1)

This property was acquired from a joint venture of which our former advisor was a controlling member. See Note 8: Related Party Transactions and Arrangements. In conjunction with this acquisition, we issued IROP units to third parties that were members of the joint venture that owned the property. See Note 6: Stockholder Equity and Noncontrolling Interests.

(2)

These properties were acquired as a part of our acquisition of a nine-community portfolio (the HPI Portfolio), totaling 2,353 units (unaudited), which we agreed to acquire on September 3, 2017 for a total purchase price of $228,144. In connection with the acquisition of these properties, we incurred defeasance costs totaling $3,624, which are included in Acquisition related debt extinguishment expenses within the Consolidated Statements of Operations.

The following table summarizes the aggregate fair value of the assets and liabilities associated with the properties acquired, outside of the HPI Portfolio, during the year ended December 31, 2017, on the date of acquisition, accounted for under FASB ASC Topic 805.

Description	Fair Value of Asset Acquired During the Year Ended December 31, 2017
Assets acquired:
Investments in real estate	$	86,012
Accounts receivable and other assets		331
Intangible assets		928
Total assets acquired	$	87,271
Liabilities assumed:
Indebtedness	$	-
Accounts payable and accrued expenses		398
Accrued interest payable		-
Other liabilities		150
Total liabilities assumed	$	548
Estimated fair value of net assets acquired	$	86,723

The following table summarizes the aggregate fair value of the assets and liabilities associated with the HPI Portfolio properties acquired during the year ended December 31, 2017, on the date of acquisition, accounted for under FASB ASC Topic 805.

Description	Fair Value of Asset Acquired During the Year Ended December 31, 2017
Assets acquired:
Investments in real estate	$	155,059
Accounts receivable and other assets		290
Intangible assets		1,587
Total assets acquired	$	156,936
Liabilities assumed:
Indebtedness	$	18,977
Accounts payable and accrued expenses		1,479
Accrued interest payable		-
Other liabilities		607
Total liabilities assumed	$	21,063
Estimated fair value of net assets acquired	$	135,873

The table below presents the revenue and net income, excluding any acquisition and defeasance costs, for the properties acquired during the year ended December 31, 2017 as reported in our consolidated financial statements.

	For the Year Ended December 31, 2017
Property	Total revenue		Net Income allocable to common shares
Lakes of Northdale	$	2,603	$	709
Haverford Place		1,078		302
South Terrace		2,071		379
Cherry Grove		526		140
Riverchase		533		70
Kensington		736		187
Schirm Farms		711		170
Live Oak Trace		424		108
Tides at Calabash		315		177
Brunswick Point		137		24
Total	$	9,134	$	2,266

The table below represents the revenue, net income and earnings per share effect of the properties acquired during the year ended December 31, 2017, as reported in our consolidated financial statements and on a pro forma basis as if the acquisition occurred on January 1, 2016. These pro forma results are not necessarily indicative of the results that actually would have occurred if the acquisition had occurred on the first day of the periods presented, nor does the pro forma financial information purport to represent the results of operations for future periods.

Description	For the Year Ended December 31, 2017		For the Year Ended December 31, 2016
Pro forma total revenue (unaudited)	$	177,642	$	177,412
Pro forma net income (loss) allocable to common shares (unaudited)		36,219		(3,398	)
Earnings (loss) per share attributable to common shareholders:
Basic-pro forma (unaudited)	$	0.49	$	(0.07	)
Diluted-pro forma (unaudited)	$	0.49	$	(0.07	)

On May 1, 2015 we acquired a 236 unit (unaudited) residential community located in Indianapolis, Indiana known as Bayview Club. We acquired the property for an aggregate purchase price of $25,250 exclusive of closing costs.

On September 17, 2015 the merger with Trade Street Residential, or TSRE, closed. As part of this merger we acquired 19 properties containing 4,989 units (unaudited). Net assets acquired was $328,240 and fair value of the consideration transferred totaled $263,636, consisting of $109,857 of common shares and $13,998 of IRT OP units, and cash consideration of $139,781. As the fair value of the net assets acquired exceeded the fair value of the consideration, we recognized a gain from a bargain purchase of $64,604.

During 2016, we received additional information regarding estimates we had made for certain accrued expenses related to our acquisition of TSRE. This information led to an increase in the fair value of the net assets we acquired of $732, which was recognized during the year ended December 31, 2016.

In January 2018, we acquired two properties, Creekside and Hartshire, that had a total of 716 units (unaudited) for a combined purchase price of $71,498. These properties were the final two remaining properties that were a part of the HPI Portfolio acquisition. These properties were in Indianapolis, IN and Atlanta, GA. In January 2018, we also acquired The Chelsea, a 312-unit (unaudited) property in Columbus, OH, for $36,750.

Dispositions

The below table summarizes the dispositions for the year ended December 31, 2017 and also presents each property’s contribution to net income allocable to common shares, excluding the impact of the gain on sale:

							Net income allocable to common shares
Property Name	Date of Sale	Sale Price		Gain (loss) on sale (1)			For the Year Ended December 31, 2017		For the Year Ended December 31, 2016
Copper Mill	5/5/2017	$	32,000	$	15,595		$	548	$	1,105
Heritage Trace	6/1/2017		11,600		(1,256	)		240		(47	)
Berkshire Square	6/9/2017		16,000		1,510			201		306
Crossings	11/28/2017		27,200		3,061			1,374		941
Total		$	86,800	$	18,910		$	2,363	$	2,305

(1)

The gain (loss) on sale for these properties is net of $4,251 of defeasance and debt prepayment premium costs. All properties were previously classified as held for sale.

The below table summarizes the dispositions for the year ended December 31, 2016 and also presents each property’s contribution to net income (loss) allocable to common shares, excluding the impact of the gain (loss) on sale:


Property Name	Date of Sale	Sale Price		Gain (loss) on sale
Cumberland Glen (1)	02/18/2016	$	18,000	$	2,452
Belle Creek	04/07/2016		23,000		14,191
Tresa	05/05/2016		47,000		15,142
Total		$	88,000	$	31,785

(1)

Gain (loss) on sale related to this property includes a defeasance premium of $1,343.

On December 22, 2015, we disposed of one multi-family real estate property for a total sale price of $33,600. We recorded a gain on the sale of this asset of $6,420.

On October 15, 2015, we sold a parcel of land acquired in the TSRE merger for $3,350. After considering actual closing costs, we recognized a loss on the sale of this asset of $8.