The disclosure below describes our investment in Summer Wind Apartments and the Citation Club Apartments. All figures provided below are approximate.

On January 5, 2016, Bluerock Residential Growth REIT, Inc., through our operating partnership, Bluerock Residential Holdings, L.P., a Delaware limited partnership, or our Operating Partnership, made a joint venture investment in Summer Wind Apartments, a 368-unit, multi-family community located at 5301 Summerwind Drive, Naples, Florida 34109, or the Summer Wind Property, and Citation Club Apartments, a 320-unit, multi-family community located at 4110 Winners Circle, Sarasota, Florida 34238, or the Citation Club Property. Specifically, our Operating Partnership made the investment through BRG SW FL Portfolio, LLC, a Delaware limited liability company and a wholly owned subsidiary of our Operating Partnership, or BRG SW FL Portfolio, through BR SW FL Portfolio JV Member, LLC, a Delaware limited liability company and a wholly owned subsidiary of BRG SW FL Portfolio, or BR JV Member, acquired a 95.0% limited liability company interest, or the BRG SW FL Portfolio Interest, in BR Carroll SW FL Portfolio JV, LLC, or BR Carroll JV Entity.

The BR Carroll JV Entity is the owner and holder of 100% of the limited liability company interests in (i) BR Carroll Naples, LLC, a Delaware limited liability company, or Naples Owner; and (ii) BR Carroll Palmer Ranch, LLC, a Delaware limited liability company, or Palmer Ranch Owner.

Concurrently and through BR Carroll JV Entity, we caused Naples Owner to acquire the Summer Wind Property in fee simple from Summer Wind 368 Delaware, LLC, a Delaware limited liability company, or Summer Wind Seller, and Palmer Ranch Owner to acquire in fee simple the Citation Club Property from Citation 320 Delaware, LLC, a Delaware limited liability company, or Citation Seller.

The total purchase price paid to Summer Wind Seller for the Summer Wind Property, and to Citation Seller for the Citation Club Property, was an aggregate $86,250,000. The sale of the properties was based on arm’s length negotiations with an unaffiliated seller. In evaluating the (i) Summer Wind Property and (ii) Citation Club Property as potential investments, a variety of factors were considered, including overall valuation of net rental income, expected capital expenditures, submarket demographics, community features and amenities, location, price per unit and occupancy.

Following our acquisition of and investment in the Summer Wind Property, the organizational structure with respect to the ownership of the Summer Wind Property is such that: (i) the Summer Wind Property is owned by Naples Owner and (ii) Naples Owner is wholly owned by BR Carroll JV Entity. The BR Carroll JV Entity is a joint venture entity owned 95.0% by BR JV Member and 5.0% by Carroll Co-Invest IV SW FL Portfolio, LLC, a Georgia limited liability company, or the Carroll Member.

Following our acquisition of and investment in the Citation Club Property, the organizational structure with respect to the ownership of the Citation Club Property is such that: (i) the Citation Club Property is owned by Palmer Ranch Owner and (ii) Palmer Ranch Owner is wholly owned by BR Carroll JV Entity. As noted above, BR Carroll JV Entity is 95.0% owned by BR JV Member and 5.0% owned by Carroll Member.

BR Carroll JV Entity

BR JV Member initially invested approximately $29.5 million to acquire a 95.0% equity interest in the BR Carroll JV Entity, and the Carroll Member initially invested approximately $1.5 million to acquire a 5.0% equity interest in the BR Carroll JV Entity, and have entered into a joint venture operating agreement for the BR Carroll JV Entity, or the JV Agreement. The JV Agreement contains terms, conditions, and indemnities that are customary and standard for joint ventures in the real estate industry.

Management and Major Decisions

BR JV Member is manager of BR Carroll JV Entity, subject to oversight by a management committee with the majority voting power in favor of the representatives appointed by the BR JV Member. Under the JV Agreement, certain decisions of the management committee are subject to major decision rights reserved to the members. These major decisions require the consent of both members, and include: (i) any capital transaction, including a refinancing or sale of either the Summer Wind Property or the Citation Club Property; (ii) admission of additional members, subject to certain permitted affiliate transfers; (iii) liquidation, dissolution or termination of BR Carroll JV Entity, Naples Owner, or Palmer Ranch Owner; (iv) granting options, rights of first refusal, mortgages and similar interests in the Summer Wind Property or the Citation Club Property; (v) selling or otherwise disposing of the Summer Wind Property or Citation Club Property; (vi) acquiring real property or other assets other than the Summer Wind Property or Citation Club Property; (vii) taking actions that are reasonably likely to expose a party to liability under a loan guaranty; (viii) instituting or settling legal claims in excess of $50,000; (ix) entering into any agreement with an affiliated party; (x) amending, refinancing or replacing any financing to which BR Carroll JV Entity, Naples Owner, or Palmer Ranch Owner is a party, or which encumbers the Summer Wind Property or the Citation Club Property; (xi) incurring any capital expenses in excess of $50,000 unless pursuant to the approved annual business plan; (xii) making a loan to any member; (xiii) filing or initiating a bankruptcy or similar creditor protection action of BR Carroll JV Entity, Naples Owner, or Palmer Ranch Owner; (xiv) terminating the property management agreement for the Summer Wind Property or the Citation Club Property or declaring a default thereunder, subject to cure provisions; although BR JV Member has certain heightened remedial rights with respect to a default by the Carroll-affiliated property manager; (xv) any amendment to the organizational documents of the BR Carroll JV Entity, Naples Owner or Palmer Ranch Owner; or (xvi) making distributions to members other than in accordance with the JV Agreement. We refer to each of these herein as a JV Major Decision.

To the extent that BR JV Member and the Carroll Member are not able to agree on a JV Major Decision on or after January 5, 2018 either party may initiate a buy-sell process compelling the other member to purchase the initiating party’s membership interest or sell to the initiating party the non-initiating party’s membership interest. On or after January 5, 2018 either party may also initiate a process to compel the sale of either or both of the Summer Wind Property or the Citation Club Property, and if the non-initiating party rejects the offer of sale, the initiating party may put its membership interest in BR Carroll JV Entity to the non-initiating party.

Additional Capital Contributions

The JV Agreement provides that either member may call for mandatory, protective additional capital contributions to protect BR Carroll JV Entity’s interest in either the Summer Wind Property or the Citation Club Property (e.g., payment of taxes, repair of the property following uninsured damage, payment of insurance premiums, etc.), prevent a default under any financing (e.g., payment of debt service following an operating shortfall, reserves required by a lender, a reduction in principal required by a lender to meet loan to value requirements), or for funds required to refinance the property when the current financing has matured or will mature in the near future (e.g., commitment fees, loan application fees, equity infusions to meet market loan to value requirements, etc.). The JV Agreement further provides that the management committee may call for capital contributions as reasonably determined to be necessary to effect an investment or expenditure for any of the Summer Wind Property, the Citation Club Property or BR Carroll JV Entity.

Distributions

Pursuant to the provisions of the JV Agreement, distributions are made generally as follows: (i) first, to the members, pro rata, in accordance with their ownership percentages until each member has received the greater of an internal rate of return of 10% or a return on the member’s total capital contributions equal to 1.3x thereof, (ii) second, 25% to the Carroll Member and 75% to BR JV Member, until BR JV Member has received an internal rate of return of 15%, and (iii) thereafter, 35% to the Carroll Member and 65% to BR JV Member; provided, however, if certain events occur, including the bankruptcy or dissolution of the Carroll Member or the affiliated property manager, or the occurrence of any gross negligence, fraud, or willful bad acts by Carroll Member or its affiliates with respect to either the Summer Wind Property or the Citation Club Property, the distributions shall be made to the members, pro rata, in accordance with their percentage interests. Further, if a member fails to contribute required capital to the BR Carroll JV Entity, the other member has the right to make a loan to that defaulting member to fund the deficiency at a rate of 20% per annum, paid to the non-defaulting member from the defaulting member’s distributions until repaid in full.

Indirect Ownership Interests in the Summer Wind Property and the Citation Club Property

As a result of the structure described above, we hold a 95.0% indirect equity interest in the Summer Wind Property and the Citation Club Property, and the Carroll Member holds the remaining 5.0% indirect equity interest in both properties.

Description of the Summer Wind Property and the Citation Club Property

The Summer Wind Property is a multifamily community located at 5301 Summer Wind Drive, Naples, Florida 34109. The property consists of 46 two-story apartment buildings, situated on two rectangular parcels of land totaling 29.494 acres. Construction was completed in 1986. The Summer Wind Property contains a total of 368 units and an aggregate 324,872 square feet. The Summer Wind Property includes amenities such as a resident clubhouse and lounge, fitness/health center, pool, spa, onsite maintenance, public transportation and storage.

The Citation Club Property is a multifamily community located at 4110 Winners Circle, Sarasota, Florida 34238. The property consists of 31 two and three-story apartment buildings, situated on an irregularly shaped parcel of land totaling 23.078 acres. Construction was completed circa 1990-1991. The Citation Club Property contains a total of 320 units and an aggregate 330,700 square feet. The Citation Club Property includes a clubhouse and lounge, fitness/health center, pool, spa, onsite maintenance, public transportation and storage.

The Summer Wind Property and the Citation Club Property are each managed by Carroll Management Group, LLC, an unaffiliated entity, under two separate property management agreements. Under the property management agreements, the management fee for each property is 3% of monthly gross proceeds. During the initial 24-month period the management fee will be calculated and paid quarterly. Following the initial 24-month period, the management fee shall be computed and payable monthly in arrears. The management fee during the initial 24-month period shall be subordinated to the BR JV Member and Carroll Member receiving a 10% cash-on-cash return under the JV Agreement and deferred to the extent such return is not achieved. Carroll Management Group, LLC, is also entitled to a construction management fee equal to 5.0% of any expenses incurred in connection with (a) all interior renovation projects in excess of $10,000, in the aggregate, in any single calendar year, (b) any individual capital expenditure project set forth in the Annual Business Plan, as shown in Exhibit D to the JV Agreement and as amended from time to time, and (c) any other individual capital expenditure project the cost of which exceeds $10,000, which fee shall be calculated and paid upon each respective draw.