What Happened to Resource REIT? BREIT Paid $14.75 a Share in 2022

Three Resource REITs, one name on the statement

Resource America's affiliates sold three non-traded apartment REITs to retail investors, and a 2021 merger folded them together. If your old statement says "Resource Real Estate Opportunity REIT", "REIT II" or "Resource Apartment REIT III", the merger ratio you need is different.

In its 10-K, the combined company says it acquired REIT I and REIT III "in stock-for-stock transactions" and became self-managed, with 44 employees, because REIT I had bought the advisor from C-III Capital Partners in September 2020. At December 31, 2021 it owned 45 properties with 13,707 units in 13 states and had about 29,121 stockholders. REIT I was treated as the accounting acquirer because it was larger, but the company that survived and was later sold was REIT II.

This page is about Resource REIT, Inc., the non-traded REIT. It is not the interval fund formerly called Resource Real Estate Diversified Income Fund, a different vehicle that became a Goldman Sachs fund.

How the price was set: 69 bidders and a $9.06 value

The board was under a clock. The proxy says the charter required it to consider listing the stock or liquidating before February 2022, the sixth anniversary of the end of the offering. After the January 2021 mergers it sold some properties and, in September 2021, met nine financial advisors. Their feedback, in the proxy's words, was a projected listing price of $9.00 to $10.00 a share and possible sale offers of $12.00 to $13.00 "or higher".

The board recorded that the final price was "the result of arm's-length negotiations" including "several negotiated price increases" from Blackstone's $12.05, and its belief that the price was "the highest price that Blackstone was willing to pay". Bidder C's stock offer carried a higher headline range, but at its latest closing price it implied $14.41, and the board preferred the certainty of cash. In all, 69 potential bidders were invited and 35 signed confidentiality agreements.

The estimated value shown on statements was $9.06 throughout, set as of January 28, 2021 and never updated before the deal. That is how a $14.75 price became a "63% premium" in the proxy: the comparison was to a number a year old at signing, in a year when apartment prices rose. On January 23, 2022 the board reset the estimated value to $14.75 for statement purposes, "based solely on the consideration" BREIT would pay.

Lazard's fee, per the proxy, was $15.0 million for the sale plus an estimated incentive fee of about $10 million, with its quarterly and opinion fees credited against it.

What each group of holders received

The cash was the same $14.75 for every common share of the surviving company. What changed was how many surviving shares your original share had become. All figures below are per share, before taxes, and use the $14.75 price.

Before the deal, the January 2021 merger documents showed holders how they were doing. For REIT I and REIT III, the S-4/A statements include a "How has my investment performed?" calculation for an early and a later investor who took every distribution in cash. Those used REIT II's December 31, 2019 value of $9.08. Replacing that with the cash actually paid gives this (our arithmetic, same cash-to-date figures through June 30, 2020, excluding distributions after that date):

For a REIT II investor the filings give a daily distribution rate by year instead of a per-investor table. The rate was $0.00164384 a day, or $0.60 a year (6% of $10.00), from 2015 through 2018. It averaged $0.00127854 a day in 2019 (about $0.47), was $0.00109589 a day ($0.40 a year) in the first quarter of 2020, and was suspended on April 1, 2020. The 2021 10-K shows $0.28 declared for 2021 ($0.07 a quarter), and the Q1 2022 10-Q shows $0.07 paid on March 31, 2022. For someone who bought at $10.00 in January 2015, took the cash and held to the end, that adds up to about $3.32 of distributions plus $14.75, or about $18.07 per $10.00 (our arithmetic; DRP participants, anyone who sold or redeemed, and the tax character of the payments all change the answer, and we do not have the return-of-capital split).

What the figures do not include: distributions after June 30, 2020 for REIT I and REIT III holders (they received REIT II's 2021 and 2022 payments on their converted shares), the stock-dividend shares for investors whose statements show them, and any holder who sold early. Some of the REIT I and REIT III numbers are cash-to-date as of the 2020 S-4/A and cannot be rebuilt from later filings.

Estimated values, redemptions and what the heir got in December 2021

Redemptions had been narrow for two years. The 10-K says the share redemption program "has been suspended except for Special Redemptions" since the first quarter of 2020: death, qualifying disability or confinement to a long-term care facility. In December 2021, 184,236 shares were redeemed at an average of $9.06. A month later the same shares would have been worth $14.75, 62.8% more (our arithmetic). That is a fact about timing, not a finding about anyone's conduct: the $9.06 was the published value until the merger agreement. The program was suspended on January 23, 2022. In February 2022 the company repurchased 54,689 shares from employees at $14.75, to cover taxes on vesting.

Who else was paid

Convertible stock was a separate security: 50,000 shares, owned by affiliated persons, each paid $1,846.76 (about $92.3 million in all, our arithmetic). Its holders had signed written consents for 72.7% of the convertible vote on January 23, 2022 and did not vote at the meeting. Four executives' employment ended at closing under agreements the 8-K describes: three lump-sum severance payments totaling $10,875,000 and four retention or transaction bonuses totaling $5,830,000 (our arithmetic from the amounts in the filing). The merger agreement also set a $258 million termination payment owed to Resource REIT if Blackstone failed to close, and an $80 million payment owed by Resource REIT in some cases, such as accepting a rival offer.

What happened on the BREIT side

BREIT's own Q2 2022 10-Q lists the deal among its acquisitions: "an all-cash transaction valued at approximately $3.7 billion, including the assumption of debt", with Resource's "core portfolio" at 42 apartment communities and more than 12,600 units in Arizona, Colorado, Florida, Georgia and Texas. The proxy said BREIT expected to assume Resource's roughly $495 million structured credit facility, keep or repay about $715 million of mortgage loans, and fund the rest with debt and sponsor equity. It did not give an amount. For the vehicle that bought it, see our BREIT review and BREIT performance by year. A comparable apartment-REIT outcome, where holders received another company's stock instead of cash, is in what happened to the Steadfast REITs.

The filings stopped on May 19, 2022

The 8-K reports that "each holder of Company Common Stock and Company Convertible Stock issued and outstanding at the Merger Effective Time ceased to have any rights as a stockholder of the Company and instead has the right to receive the Merger Consideration." Resource REIT's Form 15 (Rule 12g-4(a)(1) and Rule 12h-3(b)(1)(i)) lists holders of record as "None", and EDGAR shows no later filing under CIK 1559484 than that day's. There will be no more 10-Ks and no more estimated values. The stock transfer books were closed on May 13, 2022.

Tax, unclaimed money and what an heir should look for

The cash was a taxable sale for U.S. federal income tax purposes, measured against your adjusted tax basis. The proxy says: "you will recognize gain or loss as a result of the merger measured by the difference, if any, between the common stock merger consideration you receive and your adjusted tax basis in your shares." It adds that withholding can apply, including under FIRPTA. The 2021 mergers were different: they were stock-for-stock deals intended to be reorganizations under Section 368(a), so a REIT I or REIT III holder generally did not recognize gain or loss then, and the old basis carried into the REIT II shares. For an heir, basis is normally the value at death under Section 1014 of the Code, which is why the December 2021 or 2022 statement matters. Our guide to reporting REIT sales on Form 8949 and Schedule D covers the mechanics.

Payment was automatic. The paying agent was to mail an "instruction request letter" to each record holder within five business days of closing, and the merger agreement says that on or after the first anniversary of closing (May 19, 2023) the surviving entity may take back funds the agent has not paid out, after which holders look to the surviving entity. Amounts that would otherwise go to a state under unclaimed-property law are paid to the state instead. If you or the person whose estate you manage never received the money, search the state unclaimed-property databases for the holder's name; each state runs its own.

What a reader can do with this

• Match your statement to the right row. The first thing on an old statement is the share class and the year. Use the table above: REIT I shares ran at 1.22423, REIT III at 0.925862, REIT II at one for one.
• Check the payment arrived. Look for a deposit of the cash after May 19, 2022, and for a broker or custodian statement showing the sale. If a stock certificate or transfer-agent account was never closed out, search unclaimed property.
• Rebuild basis before filing. Basis starts at what you paid (and what DRP shares cost), less any return-of-capital portion of distributions, and for inherited shares usually resets at date of death. The filings we read do not give the return-of-capital split for Resource REIT; your 1099-DIVs do.
• Do not wait for anything more. There was no earn-out, no CVR and no stock component, and the company no longer reports.
• If the money is being invested again, note that BREIT paid cash to Resource holders, not shares, so nothing carried over into BREIT. For the next decision see how non-traded REIT tender offers work, and for another sponsor's cash exit what happened to Columbia Property Trust.

FAQ

Sources, read on October 30, 2026: Resource REIT, Inc. (CIK 1559484) Form 8-K of May 19, 2022 and its Exhibit 99.1 press release (accession 0001193125-22-154737); Form 15-12G of May 19, 2022 (0001193125-22-154815); definitive merger proxy of March 14, 2022 (0001193125-22-074233); Form 8-K of May 16-17, 2022 on the vote (0001193125-22-152168); Form 8-K of May 6, 2022 on the stock transfer books (0001193125-22-143484); Forms 10-K for fiscal 2020 (0001564590-21-015432) and fiscal 2021 (0000950170-22-004631); Form 10-Q for the quarter ended March 31, 2022 (0000950170-22-009541); the January 28, 2021 merger S-4/A filings for REIT I (0001140361-20-024359) and REIT III (0001140361-20-024363); BREIT's (CIK 1662972) Form 10-Q for the quarter ended June 30, 2022 (0001662972-22-000103); SEC EDGAR submission records. Per-share conversions, totals and the REIT II example are our arithmetic. This is analysis of public documents, not investment, legal or tax advice.