Resource Real Estate Opportunity REIT Inc., Resource Real Estate Opportunity REIT II Inc., and Resource Apartment REIT III Inc., three non-traded real estate investment trusts sponsored by Resource Real Estate, have agreed to merge to create a $3 billion self-managed REIT.
Resource REIT II plans to acquire Resource REIT I and Resource REIT III in separate stock-for-stock transactions. The mergers will combine three portfolios of suburban apartment communities in markets with income and employment growth. Resource claims that the transaction will “significantly improve” scale, operating efficiencies and geographic diversification of the REITs.
The merger transactions are expected to close during the fourth quarter of 2020, pending the approval of Resource REIT I and Resource REIT III stockholders, as well as other conditions.
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 and will continue to advise and manage the REITs until the mergers are completed.
“Combining a seasoned management team that has worked together for 15 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,” said Alan Feldman, chairman and chief executive officer of the REITs.
Feldman added that the Resource portfolio caters to middle market renters and is approximately 94 percent occupied, with rent collections averaging approximately 98 percent over the past five months during the COVID-19 pandemic.
Resource Real Estate Opportunity REIT launched in June 2010 and raised $645.8 million in investor equity prior to closing in December 2013. As of June 30, 2020, the company’s $920 million portfolio included 28 multifamily properties and one performing loan.
Resource Real Estate Opportunity REIT II’s primary offering launched in February 2014, closed in February 2016 and raised $645 million in equity, as of the third quarter of 2019. As of June 30, 2020, the REIT’s $717 million investment portfolio included 17 multifamily properties.
Resource Apartment REIT III’s offering was declared effective in April 2016 and raised roughly $117 million in investor equity, as of June 30, 2020. The offering closed in October 2019. The REIT’s $191 million investment portfolio was comprised of six multifamily properties, as of the second quarter 2020.
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 is an indirect, wholly-owned subsidiary of C-III Capital Partners LLC, a commercial real estate investment management and commercial real estate services company.