The security investment described herein relates solely to BRG’s Series B Preferred Stock and Warrants, non-traded securities of BRG which have not been listed on any national exchange. The risks and rewards of investing in the Series B Preferred Shares and Warrants are separate and distinct from an investment in BRG’s common stock listed on the NYSE American.
An investment in Bluerock Residential Growth REIT, Inc. (“BRG”) involves a high degree of risk. See the “Risk Factors” sections of the Prospectus Supplement and the accompanying Prospectus for a discussion of material risks related to an investment in our Series B Redeemable Preferred Stock and Warrants, which include, but are not limited to, the following:
- There is limited liquidity and no public market for the Series B Redeemable Preferred Stock or Warrants and we do not intend to list them on a securities exchange.
- If our Class A common stock is no longer listed on the NYSE American or another national securities exchange, we would be required to terminate the offering and could result in our raising gross proceeds substantially less than if the maximum offering is sold.
- Distributions paid from sources other than cash flow or funds from operations may constitute a return of capital and reduce investor returns. Rates of distribution to you may not be indicative of our operating results.
- We make no guarantee that we will make distributions.
- We established the offering price for the Units pursuant to negotiations among us and our affiliated dealer manager. As a result, the actual value of your investment may be substantially less than what you pay.
- Our management has broad discretion over the use of proceeds from the offering of the Series B Redeemable Preferred Stock and Warrants, and investors will not be able to evaluate the economic or other merits of our investments made with such proceeds prior to our making them.
- There are substantial conflicts of interest between us and our affiliates, including conflicts arising out of allocation of personnel to our activities, allocation of investment opportunities between us and investment vehicles of our affiliates, the purchase or sale of apartment properties, that might result in investment decisions that are not in the best interests of our stockholders.
- Upon the sale of any individual property, holders of Series B Redeemable Preferred Stock generally do not have a priority over holders of our common stock regarding return of capital.
- Our charter contains various restrictions on the ownership and transfer of our securities.
- After three years from the date of original issuance, we will be able to redeem the outstanding shares of Series B Redeemable Preferred Stock, without your consent, at 100% of the Stated Value per share, plus any accrued and unpaid dividends.
- If we experience significant liquidity problems, we may not be able to fulfill our obligation to redeem Series B preferred stock when submitted for redemption.
- Maintenance of our exemption from registration under the Investment Company Act of 1940 and our REIT qualification impose significant limitations on our operations.
- Holders of the Series B Redeemable Preferred Stock will have no voting rights or control over changes in our policies and operations. Our board of directors may approve changes to our policies without your approval.
- Our qualification as a REIT depends upon our satisfaction of numerous regulatory limitations and qualifications.
- We may fail to maintain our qualification as a REIT, which would result in higher taxes for us and reduced cash available for distribution to our stockholders.
Offering Expenses: In connection with the offering, BRG will pay selling commissions, dealer manager fee, and other offering expenses. Please see the Prospectus for a description of the offering expenses related to the offering.
BRG has filed a registration statement on Form S-3 (the “Registration Statement”) with the Securities and Exchange Commission (the “SEC”), including a prospectus (the “Prospectus”), with respect to the securities we may offer and sell from time to time, and has further filed with the SEC a prospectus supplement relating to the offering of the Series B Redeemable Preferred Stock and the Warrants (the “Prospectus Supplement”). A copy of the Prospectus Supplement and the accompanying Prospectus must be made available to you in connection with the offering of the Series B Redeemable Preferred Stock and the Warrants, and must be read in conjunction with these materials in order fully understand the risks of an investment in the offering.