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): August 31, 2017
A8KPACLOGO.JPG
Preferred Apartment Communities, Inc.
(Exact Name of Registrant as Specified in its Charter)

Maryland
001-34995
27-1712193
(State or other Jurisdiction
of Incorporation)
(Commission File Number)
(I.R.S. Employer
Identification No.)
3284 Northside Parkway NW, Suite 150, Atlanta, Georgia
30327
(Address of Principal Executive Offices)
(Zip Code)
Registrant's telephone number, including area code:   (770) 818-4100
_____________________
 
(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:
[ ]
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))
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 1.01    Entry into a Material Definitive Agreement .



On August 31, 2017, Preferred Apartment Communities, Inc. (" we ", " us ", or the " Company "), Preferred Apartment Communities Operating Partnership, L.P. (the " Partnership ") and Preferred Apartment Advisors, LLC (our " Manager ") executed Amendment No. 2 to the Sixth Amended and Restated Management Agreement, effective as of July 1, 2017 (the " Amendment "). The Amendment amends the Sixth Amended and Restated Management Agreement among the Company, the Partnership and the Manager (as previously amended or modified, the " Sixth Amended and Restated Management Agreement ").

The Amendment modifies the Sixth Amended and Restated Management Agreement by reducing the loan coordination fee payable to the Manager from 1.6% of (x) the initial amount of new debt financed or outstanding debt assumed secured directly by any type of Real Estate Asset owned, directly or indirectly; or (y) the additional amount of any supplemental financing secured directly by any type of Real Estate Asset owned, directly or indirectly, to 0.6% of (a) the initial amount of any debt financed or refinanced, or outstanding debt assumed secured directly by any type of Real Estate Asset owned, directly or indirectly; or (b) the additional amount of any supplemental financing secured directly by any type of Real Estate Asset owned, directly or indirectly. The Amendment also modifies the Sixth Amended and Restated Management Agreement by adding an acquisition fee payable to the Manager equal to 1% of the purchase price of any Investment.

Under the Sixth Amended and Restated Management Agreement, as amended, our Manager continues to be responsible for administering our day-to-day business operations, identifying and acquiring targeted real estate investments, overseeing the management of our investments, handling the disposition of our real estate investments, and providing us with our management team and appropriate support personnel.

The foregoing summary of the Amendment is qualified in its entirety by reference to the Amendment, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K and incorporated by reference herein.

Item 9.01    Financial Statements and Exhibits .

(d)     Exhibits.



1


SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
PREFERRED APARTMENT COMMUNITIES, INC.
(Registrant)

Date: September 1, 2017
By:
 /s/ Jeffrey R. Sprain
 
 
Jeffrey R. Sprain
 
 
Executive Vice President, General Counsel and Secretary




AMENDMENT NO. 2
TO THE
SIXTH AMENDED AND RESTATED MANAGEMENT AGREEMENT

This Amendment No. 2 (the " Amendment ") to the Sixth Amended and Restated Management Agreement effective as of June 3, 2016, (as previously amended or modified, the " Management Agreement "), among Preferred Apartment Communities, Inc., a Maryland corporation (the " Company "), Preferred Apartment Communities Operating Partnership, L.P., a Delaware limited partnership (" PACOP "), and Preferred Apartment Advisors, LLC, a Delaware limited liability company (the " Manager "), is entered into as of August 31, 2017 (" Execution Date ") effective as of July 1, 2017 (the " Effective Date "). Capitalized terms used herein and not otherwise defined shall have the meanings ascribed to them in the Management Agreement.

WHEREAS , PACOP is governed by that certain Sixth Amended and Restated Agreement of Limited Partnership effective as of June 3, 2016 (as amended or modified, the " Partnership Agreement "); and

WHEREAS , upon the terms set forth in this Amendment, the Manager has agreed to amend certain terms related to certain fees payable to the Manager by the Company and PACOP.

NOW, THEREFORE , in consideration of the foregoing and of the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company, PACOP and the Manager agree to amend the Management Agreement as follows:
    
1.
Fee Modifications. Section 7 of the Management Agreement is hereby amended to:

a.
Delete in its entirety Section 7(k) and replace it with the following:

(k) Loan Coordination Fee . The Company will pay the Manager or its assignees a Loan Coordination Fee equal to 0.6% of: (1) the initial amount of any debt financed or refinanced, or outstanding debt assumed secured directly by any type of Real Estate Asset owned, directly or indirectly; (2) the additional amount of any supplemental financing secured directly by any type of Real Estate Asset owned, directly or indirectly; or (3) the Company’s allocable portion of the fees in items 7(k)(1) – (2) related to any type of Real Estate Asset owned through a Joint Venture, based on the purchase price or other valuation of the Joint Venture and the Company's ownership percentage (defined as the percentage of the equity investment by all Company Entities in the Joint Venture compared to the total of all equity investments in the Joint Venture). The Company shall pay to the Manager or its permitted assignees the Loan Coordination Fee promptly upon the closing of the financing or refinancing.
b.
Add the following Section 7(m):

(m)     Acquisition Fee . The Company shall pay an Acquisition Fee to the Manager or its assignees as compensation for services rendered in connection with the investigation, selection and acquisition (by purchase, investment or exchange) of Investments. The total Acquisition Fee payable to the Manager or its assignees shall equal 1.0% of the purchase price of Real Estate Assets, along with reimbursement of Acquisition Expenses actually incurred by the Manager or any of its Affiliates; provided , however , that no Acquisition Fee will be payable until the Closing Date, although such fees may accrue before the Closing Date. The purchase price of Real Estate Assets shall equal the amount paid or allocated to the acquisition (by purchase, investment or exchange) of the Real Estate Assets exclusive of expenses related thereto, and exclusive of Acquisition Fees. The purchase price allocable for an Investment held through a Joint Venture shall equal the product of (i) the purchase price of, or the amount advanced for, the Investment, as applicable,


determined as stated above, and (ii) the direct or indirect ownership percentage in the Joint Venture held directly or indirectly by any Company Entity. For purposes of this paragraph, “ ownership percentage ” shall be the percentage of capital stock, membership interests, partnership interests or other equity interests held by any Company Entity, without regard to classification of such equity interests. The Company shall pay to the Manager or its assignees the Acquisition Fee promptly upon the closing of the Investment, subject to the proviso set forth above.

2.
Definitions . Section 1(a) of the Management Agreement is amended as follows:
a.
the definition of "Acquisition Expenses" is deleted and replaced with the following:
“ Acquisition Expenses” means any and all expenses, exclusive of Acquisition Fees, Loan Origination Fees and Loan Coordination Fees, incurred by the Company, the Manager or any of their respective Affiliates in connection with the selection, evaluation, acquisition, origination, making or development of any Investment, whether or not acquired, including legal fees and expenses, travel and communications expenses, property inspection expenses, third party brokerage or finder’s fees, costs of appraisals, nonrefundable option payments on property not acquired, accounting fees and expenses, title insurance premiums and expenses, survey expenses, closing costs and the costs of performing due diligence.

b.
the following definition(s) are added in alphabetical order:

" Acquisition Fee " has the meaning set forth in Section 7(m).


3.
Ratification; Effect on Management Agreement.

a.
Ratification . The Management Agreement, as amended hereby, shall remain in full force and effect and is hereby ratified and confirmed in all respects.

b.
Effect on the Management Agreement . On and after the date hereof, each reference in the Management Agreement to "this Agreement," "herein," "hereof," "hereunder," or words of similar import shall mean and be a reference to the Management Agreement as amended hereby.
[ Signature page follows .]


IN WITNESS WHEREOF, each of the parties hereto has executed this Amendment as of the Execution Date, effective as of the Effective Date.
PREFERRED APARTMENT COMMUNITIES, INC.
By:
/s/ John A. Williams         
Name: John A. Williams
Title: Chief Executive Officer
PREFERRED APARTMENT COMMUNITIES OPERATING PARTNERSHIP, L.P.
By:
Preferred Apartment Communities, Inc.
its General Partner
By:
/s/ John A. Williams         
Name: John A. Williams
Title: Chief Executive Officer
PREFERRED APARTMENT ADVISORS, LLC
By:
NELL Partners, Inc.,
its Managing Member
By:
/s/ John A. Williams    
Name: John A. Williams
Title: Chief Executive Officer

[Signature Page to Amendment No. 2 to Sixth Amended and Restated Management Agreement]