Black Creek Diversified Property Fund Inc. (Form: 8-K, Received: 11/13/2020 13:24:44)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): October 31, 2020

BLACK CREEK DIVERSIFIED PROPERTY FUND INC.

(Exact Name of Registrant as Specified in its Charter)


Maryland	000-52596	30-0309068
(State or other jurisdiction of incorporation)	(Commission File No.)	(I.R.S. Employer Identification No.)


518 Seventeenth Street, 17^th Floor, Denver, CO		80202
(Address of Principal Executive Offices)		(Zip Code)

(303) 228-2200

(Registrant’s telephone number, including area code)

Not applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act: None

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 7.01 Regulation FD Disclosure.

On November 13, 2020, Black Creek Diversified Property Fund Inc. (referred to herein as the “Company,” “we,” “our,” or “us”), issued a letter to its stockholders regarding the views of the Company and Black Creek Group, LLC, an affiliate of the Company’s sponsor, on the impact of the novel coronavirus (“COVID-19”) pandemic on the commercial real estate industry and the Company. A copy of the letter is attached as Exhibit 99.2 to this Current Report on Form 8-K. The information in this Item 7.01 and Exhibit 99.2 attached hereto is being furnished, not filed, for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

Item 8.01 Other Events.

Most Recent Transaction Price and Net Asset Value Per Share

December 1, 2020 Transaction Price

The transaction price for each share class of our common stock for subscriptions accepted (and distribution reinvestment plan issuances) as of December 1, 2020 (and redemptions as of November 30, 2020) is as follows:


Share Class	Transaction Price (per share)
Class T	$	7.5261
Class S		7.5261
Class D		7.5261
Class I		7.5261
Class E		7.5261

The transaction price for each of our share classes is equal to such class’s NAV per share as of October 31, 2020. A calculation of the NAV per share is set forth below. The purchase price of our common stock for each share class equals the transaction price of such class, plus applicable upfront selling commissions and dealer manager fees.

October 31, 2020 NAV Per Share

Our board of directors, including a majority of our independent directors, has adopted valuation procedures, as amended from time to time, that contain a comprehensive set of methodologies to be used in connection with the calculation of our NAV. Our most recent NAV per share for each share class, which is updated as of the last calendar day of each month, is posted on our website at www.blackcreekdiversified.com and is also available on our toll-free, automated telephone line at (888) 310-9352. Please see our valuation procedures filed with our most recent Quarterly Report on Form 10-Q, which was filed with the Securities and Exchange Commission (the “SEC”) and is available on the SEC’s website at www.sec.gov, for a more detailed description of our valuation procedures, including important disclosure regarding real property valuations provided by Altus Group U.S Inc. (the “Independent Valuation Advisor”). All parties engaged by us in the calculation of our NAV, including Black Creek Diversified Property Advisors LLC (the “Advisor”), are subject to the oversight of our board of directors. Generally, all of our real properties are appraised each calendar month by the Independent Valuation Advisor, with such appraisals reviewed by our external advisor. Additionally, each real property is appraised by a third-party appraiser at least once per calendar year, as described in our valuation procedures.

As used below, “Fund Interests” means our outstanding shares of common stock, along with the partnership units in our operating partnership (“OP Units”) which may be held directly or indirectly by the Advisor, Black Creek Diversified Property Advisors Group LLC (the “Sponsor”), and third parties, and “Aggregate Fund NAV” means the NAV of all the Fund Interests.

The following table sets forth the components of Aggregate Fund NAV as of October 31, 2020 and September 30, 2020:


	As of
(in thousands)	October 31, 2020		September 30, 2020
Investments in office properties	$	749,250	$	749,850
Investments in retail properties		906,350		928,400
Investments in multi-family properties		308,600		308,400
Investments in industrial properties		404,900		382,800
Total investment in real estate properties		2,369,100		2,369,450
Debt-related investments		49,267		48,969
DST Program Loans		42,373		42,104
Total investments		2,460,740		2,460,523
Cash and cash equivalents		42,381		16,124
Restricted cash		9,951		10,316
Other assets		28,347		29,578
Line of credit, term loans and mortgage notes		(869,098)		(859,877)
Financing obligations associated with our DST Program		(469,777)		(450,128)
Other liabilities		(42,639)		(48,442)
Accrued performance-based fee		(3,717)		(3,343)
Accrued advisory fees		(1,489)		(1,470)
Aggregate Fund NAV	$	1,154,699	$	1,153,281
Total Fund Interests outstanding		153,427		153,292

The following table sets forth the NAV per Fund Interest as of October 31, 2020 and September 30, 2020:


			Class T		Class S		Class D		Class I		Class E
(in thousands, except per Fund Interest data)	Total		Shares		Shares		Shares		Shares		Shares		OP Units
As of October 31, 2020
Monthly NAV	$	1,154,699	$	70,052	$	168,627	$	29,687	$	336,185	$	463,946	$	86,202
Fund Interests outstanding		153,427		9,308		22,406		3,945		44,669		61,645		11,454
NAV Per Fund Interest	$	7.5261	$	7.5261	$	7.5261	$	7.5261	$	7.5261	$	7.5261	$	7.5261
As of September 30, 2020
Monthly NAV	$	1,153,281	$	68,775	$	167,303	$	29,487	$	334,263	$	467,055	$	86,398
Fund Interests outstanding		153,292		9,141		22,238		3,919		44,430		62,080		11,484
NAV Per Fund Interest	$	7.5234	$	7.5234	$	7.5234	$	7.5234	$	7.5234	$	7.5234	$	7.5234

Under GAAP, we record liabilities for ongoing distribution fees that (i) we currently owe Black Creek Capital Markets, LLC (the “Dealer Manager”) under the terms of our dealer manager agreement and (ii) we estimate we may pay to the Dealer Manager in future periods for shares of our common stock. As of October 31, 2020, we estimated approximately $14.9 million of ongoing distribution fees were potentially payable to the Dealer Manager. We do not deduct the liability for estimated future distribution fees in our calculation of NAV since we intend for our NAV to reflect our estimated value on the date that we determine our NAV. Accordingly, our estimated NAV at any given time does not include consideration of any estimated future distribution fees that may become payable after such date.

The valuations of our real property as of October 31, 2020 were provided by the Independent Valuation Advisor in accordance with our valuation procedures. Certain key assumptions that were used by the Independent Valuation Advisor in the discounted cash flow analysis are set forth in the following table based on weighted-averages by property type.


	Office		Retail		Multi‑family		Industrial		Weighted-Average Basis
Exit capitalization rate	6.30	%	6.29	%	5.40	%	5.70	%	6.08	%
Discount rate / internal rate of return	6.96	%	6.77	%	6.31	%	6.41	%	6.71	%
Average holding period (years)	10.0		10.0		10.0		10.0		10.0

A change in the exit capitalization and discount rates used would impact the calculation of the value of our real properties. For example, assuming all other factors remain constant, the changes listed below would result in the following effects on the value of our real properties:


Input	Hypothetical Change	Office		Retail		Multi‑family		Industrial		Weighted-Average Values
Exit capitalization rate (weighted-average)	0.25% decrease	3.01	%	2.50	%	3.02	%	3.07	%	2.83	%
	0.25% increase	(2.78)	%	(2.30)	%	(2.75)	%	(2.80)	%	(2.60)	%
Discount rate (weighted-average)	0.25% decrease	2.12	%	1.92	%	1.96	%	1.98	%	2.00	%
	0.25% increase	(2.06)	%	(1.87)	%	(1.91)	%	(1.94)	%	(1.95)	%

Forward-Looking Statements

This Current Report on Form 8-K includes certain statements that are intended to be deemed “forward-looking statements” within the meaning of, and to be covered by the safe harbor provisions contained in, Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such forward-looking statements are generally identifiable by the use of the words “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” “project,” “continue,” or other similar words or terms. These statements are based on certain assumptions and analyses made in light of our experience and our perception of historical trends, current conditions, expected future developments and other factors we believe are appropriate. Such statements are subject to a number of assumptions, risks and uncertainties that may cause our actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by these forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements. Among the factors that may cause results to vary are the negative impact of COVID-19 on our financial condition and results of operations being more significant than expected, the negative impact of COVID-19 on our customers being more significant than expected, general economic and business (particularly real estate and capital market) conditions being less favorable than expected, the business opportunities that may be presented to and pursued by us, changes in laws or regulations (including changes to laws governing the taxation of real estate investment trusts (“REITs”)), risk of acquisitions, availability and creditworthiness of prospective customers, availability of capital (debt and equity), interest rate fluctuations, competition, supply and demand for properties in current and any proposed market areas in which we invest, our customers’ ability and willingness to pay rent at current or increased levels, accounting principles, policies and guidelines applicable to REITs, environmental, regulatory and/or safety requirements, customer bankruptcies and defaults, the availability and cost of comprehensive insurance, including coverage for terrorist acts, and other factors, many of which are beyond our control. For a further discussion of these factors and other risk factors that could lead to actual results materially different from those described in the forward-looking statements, see “Risk Factors” under Item 1A of Part 1 of our Annual Report on Form 10-K for the year ended December 31, 2019 and subsequent periodic and current reports filed with the SEC. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of future events, new information or otherwise.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits


Exhibit Number		Description
99.1*		Consent of Altus Group U.S., Inc.
99.2*		Letter to Stockholders

* Filed herewith.

This communication is for existing stockholders of DPF and their financial professional representatives and may not be distributed to others. This communication is not an offer to sell or buy any securities.

Forward-Looking Statements

This letter includes certain statements that are intended to be deemed “forward-looking statements” within the meaning of, and to be covered by the safe harbor provisions contained in, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements are generally identifiable by the use of the words “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” “project,” “continue,” or other similar words or terms. These statements are based on certain assumptions and analyses made in light of our experience and our perception of historical trends, current conditions, expected future developments and other factors we believe are appropriate. Such statements are subject to a number of assumptions, risks and uncertainties that may cause our actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by these forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements. Among the factors that may cause results to vary are the negative impact of COVID-19 on our financial condition and results of operations being more significant than expected, the negative impact of COVID-19 on our tenants being more significant than expected, general economic and business (particularly real estate and capital market) conditions being less favorable than expected, the business opportunities that may be presented to and pursued by us, changes in laws or regulations (including changes to laws governing the taxation of real estate investment trusts (“REITs”)), risk of acquisitions, availability and creditworthiness of prospective tenants, availability of capital (debt and equity), interest rate fluctuations, competition, supply and demand for properties in current and any proposed market areas in which we invest, our tenants’ ability and willingness to pay rent at current or increased levels, accounting principles, policies and guidelines applicable to REITs, environmental, regulatory and/or safety requirements, tenant bankruptcies and defaults, the availability and cost of comprehensive insurance, including coverage for terrorist acts, and other factors, many of which are beyond our control. For a further discussion of these factors and other risk factors that could lead to actual results materially different from those described in the forward-looking statements, see “Risk Factors” under Item 1A of Part 1 of DPF’s Annual Report on Form 10-K for the year ended December 31, 2019 and subsequent periodic and current reports filed with the SEC. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of future events, new information or otherwise.

¹ Represents annualized distribution rate for Class I shares. Annualized distribution rate for Class S shares is 4.13%, for Class T shares is 4.13%, for Class D shares is 4.73% and for Class E shares is 4.98%. Reflects the current quarter’s distribution annualized minus distribution fees annualized, if applicable, and divided by NAV. The amount of distributions DPF may make is uncertain and is not guaranteed.

² See DPF’s Current Report on Form 8-K, filed with the SEC on November 13, 2020 for important additional information concerning the calculation of our NAV as of October 31, 2020.

³ NAV inception was September 30, 2012, which is when we first sold shares of our common stock after converting to an NAV-based REIT on July 12, 2012.

⁴ Total returns presented are based on the historical NAV and distributions per share of Class I shares. Performance varies by share class. For the month ended October 31, 2020, Class S shares (without sales load) returned 0.38%, Class S shares (with sales load) returned -3.01%, Class T shares (without sales load) returned 0.38%, Class T shares (with sales load) returned -3.01%, Class D shares returned 0.43%, and Class E shares returned 0.45%. During the same trailing one-year period, Class S shares (without sales load) returned 6.66%, Class S shares (with sales load) returned 3.05%, Class T shares (without sales load) returned 6.66%, Class T shares (with sales load) returned 3.05%, Class D shares returned 7.30%, and Class E shares returned 7.56%. During the same since NAV inception period, Class S shares (without sales load) returned 5.66% annualized, Class S shares (with sales load) returned 5.27% annualized, Class T shares (without sales load) returned 5.66% annualized, Class T shares (with sales load) returned 5.27% annualized, Class D shares returned 6.22% annualized, and Class E shares returned 6.70% annualized.

The historical returns since “NAV inception” show share performance since September 30, 2012, which is when DPF first sold Class A, W and I shares after converting to a NAV REIT on July 12, 2012. Subsequently, as a result of a share restructuring effective as of September 1, 2017, DPF’s outstanding Class A, W and I shares changed to Class T, Class D and a new version of Class I shares, respectively. DPF also created a new Class S share, with the same NAV per share and class-specific expenses as Class T shares. Accordingly, the presented returns of Class T and Class S shares reflect the performance of Class A shares since NAV inception through the restructuring date; the return of Class D shares shown reflects the performance of Class W shares since NAV inception through the restructuring date; and the return of the new version of Class I shares reflects the performance of the prior Class I shares since NAV inception through the restructuring date. In connection with the restructuring, DPF also revised its fee structure with its advisor and dealer manager and its NAV methodology, which will affect returns going forward. Please see DPF’s definitive proxy statement filed with the Securities and Exchange Commission on June 7, 2017, for more information about the fee changes and our pro forma estimates of how those fee changes would have affected returns on DPF shares in the years 2013-2016. Investors in DPF’s fixed price offerings prior to NAV inception on 09/30/12 are likely to have a lower return. Since NAV inception returns are annualized utilizing a compounding method consistent with the IPA Practice Guideline 2018.

The returns have been prepared using unaudited data and valuations of the underlying investments in DPF’s portfolio, which are estimates of fair value and form the basis for DPF’s NAV. Valuations based upon unaudited or estimated reports from the underlying investments may be subject to later adjustments or revisions, may not correspond to realized value and may not accurately reflect the price at which assets could be liquidated on any given day.

⁵ Amount excludes our multi-family properties as the majority of leases at such properties expire within 12 months.

⁶ Percentages reflect rent received through November 9, 2020.

⁷ Amount includes cash and cash equivalents and the fair value of real estate investments and debt-related investments not associated with the DST program (determined in accordance with our valuation procedures) as of October 31, 2020.

⁸ Calculated as outstanding principal balance of our borrowings less cash and cash equivalents, divided by the fair value of our real property and debt-related investments not associated with the DST Program (determined in accordance with our valuation procedures). Amounts represent balances as of October 31, 2020.


	Black Creek Diversified Property Fund Inc.
November 13, 2020
	By:	/s/ LAINIE P. MINNICK
		Lainie P. Minnick Managing Director, Chief Financial Officer and Treasurer


October 2020
Rent Collections⁶
Office	97.0%
Retail	97.1%
Industrial	96.7%
Multifamily	96.2%

Total	96.9%



Summary Statistics as of October 31, 2020
Assets Under Management ⁷		$2.5B
Number of Properties		53
Percent Leased		92.1%
Weighted Avg. Lease Term⁵		4.9 years
Commercial Tenant Count		446
Multifamily Unit Count		985


		/s/ Altus Group U.S. Inc.
		Altus Group U.S. Inc.
November 13, 2020