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Steadfast Apartment REIT Internalizes Management

Steadfast Apartment REIT Inc., a publicly registered non-traded real estate investment trust, has transitioned to a self-managed company by purchasing all assets necessary for the operation of its business from Steadfast REIT Investments LLC and its affiliates.

Steadfast Apartment REIT Inc., a publicly registered non-traded real estate investment trust, has transitioned to a self-managed company by purchasing all assets necessary for the operation of its business from Steadfast REIT Investments LLC and its affiliates, including the external advisor, Steadfast Apartment Advisor LLC.

In March 2020, Steadfast Apartment REIT completed its mergers with affiliated non-traded REITs, Steadfast Income REIT Inc. and Steadfast Apartment REIT III Inc. The post-merger entity had a net asset value per share of $15.23, as of March 6, 2020.

The total consideration for the internalization transaction was paid in a combination of cash and Class B operating partnership units of the REIT’s operating partnership consisting of approximately $31.3 million in cash and nearly 6.2 million Class B operating partnership units, valued at $15.23 per unit. The company also repurchased the outstanding Class A convertible stock held by the advisor for $1,000.

“The decision to internalize management is both a testament to our progress and an important step in our future growth,” said Ella Neyland, president of Steadfast Apartment REIT. “We believe that the opportunity to reduce expenses going forward and secure a management team aligned with stockholder interests directly provides for greater control and execution.”

According to the company, the internalization transaction is expected to bring the following benefits:

  • The REIT projects a decrease in operating, maintenance and management expenses and fees due to affiliates of approximately $21 million annually, or $0.18 per share.
  • The REIT entered into employment agreements with all of its key executive officers, and a “significant portion” of the compensation includes equity in the company.
  • The company will be organized in a way that it believes is preferable to equity analysts and institutional investors if the board determines to list the shares on a national securities exchange in the future.

Steadfast Apartment REIT invests in apartment communities in targeted markets throughout the United States that have demonstrated high occupancy and income levels across market cycles. The REIT currently owns and/or manages a $3.5 billion portfolio of 70 apartment communities in 14 states.

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