On February 7, 2020, the Company completed the Internalization and the Company’s management team and corporate staff, who were previously employed by BRE, became employees of an indirect subsidiary of the OP. The effect of the Internalization has been reflected in the Company’s operating results beginning on February 7, 2020.

In accordance with the Internalization, the Company was required to pay additional earnout consideration of up to $75,000 payable in four tranches of $10,000, $15,000, $25,000, and $25,000 when certain milestones related to the 40-day VWAP per REIT Share were achieved. The consideration consisted of a combination of cash, shares of the Company’s common stock, and OP Units, based on the same proportions paid in the base consideration.

As of September 30, 2021, the Company achieved all four VWAP milestones, thereby triggering the payout of all earnout tranches. Below is a summary of the shares of common stock and OP Units issued, and cash paid for each earnout tranche:


(in thousands, except per share amounts)
	Shares of							40-Day
	Common Stock		OP Units					VWAP of a
Tranche	Issued		Issued		Cash Paid			REIT Share		Achievement Date
1		145		248	$	1,926	(a)	$	22.50	June 16, 2021
2		218		371		2,888	(a)		23.75	July 14, 2021
3		363		620		4,117			24.375	September 21, 2021
4		363		620		4,117			25.00	September 21, 2021

(a)

Cash payments include amounts earned for dividends.

The following pro forma information summarizes selected financial information from the Company’s combined results of operations, as if the Internalization had occurred on January 1, 2019. These results contain certain adjustments totaling $1,929 and $8,068 of income, respectively, for the three and nine months ended September 30, 2020. These pro forma adjustments reflect the elimination of Internalization expenses and asset management, property management, and disposition fees between the Company and BRE and the Asset Manager in historic financial results, and adjustments to reflect compensation and related costs, incremental general and administrative expenses related to the Internalization, and incremental interest expense associated with the borrowing related to the Internalization. This pro forma information is presented for informational purposes only, and may not be indicative of what actual results of operations would have been had the Internalization occurred at the beginning of the period, nor does it purport to represent the results of future operations.

The condensed pro forma financial information is as follows:


	For the Three Months Ended		For the Nine Months Ended
(in thousands)	September 30, 2020		September 30, 2020
Revenues	$	80,744	$	239,346
Net income		11,640		42,982