Reduction in OP units to be issued to MXT
Capital:
|
The number of OP units to be issued by our operating partnership to MXT Capital in exchange for its student housing business and interests in the predecessor entities will be reduced by 740,740 OP units (from 973,333 OP Units to 232,593 OP units). | |||
As a result, the value of the OP units to be issued by our operating partnership to MXT Capital will be reduced by approximately $10.0 million (from $13.1 million to $3.1 million). | ||||
Reduction in consideration to be received by the
Ricker Group:
|
The amount of consideration to be received by the Ricker Group in exchange for its interests in the predecessor entities and the entire ownership interest in the entities that own fee interests in certain properties that were subject to ground leases with the Ricker Group will be reduced as follows: | |||
· | Zero OP units will be issued to the Ricker Group (reduced from 66,667 OP units to 0 OP units); and | |||
· | The amount of cash will be reduced by $9.3 million (from $26.7 million to $17.4 million). | |||
As a result, the total value of the consideration to be received by the Ricker Group will be reduced by approximately $10.2 million (from $27.6 million to $17.4 million). |
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Reduction in consideration to be received by
HSRE:
|
The amount of cash to be received by HSRE for interests in our properties and in satisfaction of associated obligations to HSRE will be reduced by $7.0 million (from $31.0 million to $24.0 million). | |||
Elimination of option to
purchase three joint venture
properties:
|
In connection with reducing the consideration to be received by HSRE in our formation transactions, we cancelled our option to purchase HSREs post-formation transaction 50.1% interest in The Grove at Conway, The Grove at Huntsville and The Grove at Statesboro for an aggregate purchase price of $13.1 million (plus the assumption of $44.4 million of mortgage indebtedness), which was exercisable at our option at any time through December 31, 2010. Upon completion of the offering and our formation transactions, these three assets will be held by a joint venture with HSRE in which we will have a 49.9% ownership interest. | |||
Reduction in IPO awards under 2010 Incentive Award Plan: |
We have reduced the number of shares to be issued under the 2010 Incentive Award Plan upon completion of the offering by 19,320 shares (from 114,308 shares to 94,988 shares). As a result, the value of the shares to be issued under the 2010 Incentive Award Plan upon completion of the offering will be reduced by approximately $0.3 million. | |||
Changes in future awards under 2010 Incentive Award Plan: |
We have made the following changes in awards to be issued under our 2010 Incentive Award Plan in 2011, 2012 and 2013: | |||
· | Reduced the number of shares reserved for issuance in 2011 by 20,986 shares (from 54,723 shares to 33,737 shares; a decrease of approximately $0.3 million); | |||
· | Increased the number of shares reserved for issuance in 2012 by 11,059 shares (from 256,806 shares to 267,865 shares; an increase of approximately $0.1 million); and | |||
· | Increased the number of shares reserved for issuance in 2013 by 18,804 shares (from 200,832 shares to 219,636 shares; an increase of approximately $0.3 million). | |||
Elimination of structuring fee:
|
The company will not pay a structuring fee to Raymond James & Associates, Inc. equal to 0.60% of the total public offering price of our common stock sold in the offering. | |||
As a result, the net proceeds received by the company from the offering will increase by approximately $2.3 million. | ||||
Reduction in other offering expenses:
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We have reduced the estimated offering expenses payable by the company (excluding the reduction in IPO completion bonuses, which is discussed below) by approximately $1.1 million. | |||
As a result, the net proceeds received by the company from the offering will increase by approximately $1.1 million. | ||||
Reduction of cash paid to MXT Capital to repay
indebtedness:
|
The amount of net proceeds to be received by MXT Capital (which will be used by MXT Capital solely to repay indebtedness) will be reduced by approximately $1.2 million (from $4.5 million to $3.3 million). | |||
As a result, the net proceeds received by the company from the offering will increase by approximately $1.2 million. | ||||
Reduction in cash IPO completion bonuses:
|
We have reduced the aggregate cash bonuses to be paid to certain of our executive officers upon completion of the offering. | |||
As a result, the net proceeds received by the company |
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from the offering will increase by approximately $0.1 million. | ||||
Revised tax protection agreement to eliminate:
(i) agreement not to dispose of nine specified properties; and (ii) tax gross-up payment in connection with any
violation of such agreement:
|
The tax protection agreement that we will enter into with MXT Capital upon completion of the offering has been revised to eliminate (i) the prohibition against selling, exchanging or otherwise disposing of nine properties (The Grove at Asheville, The Grove at Carrollton, The Grove at Las Cruces, The Grove at MobilePhase I, The Grove at MobilePhase II, The Grove at Nacogdoches, The Grove at Stephenville, The Grove at Troy and The Grove at Waco) in a transaction that would cause the members of MXT Capital to realize taxable gain that was built-in, or the built-in gain, to such properties at the time of their contribution to our operating partnership; and (ii) our obligation to pay MXT Capital an amount equal to the federal, state and local taxes imposed on the built-in gain allocated to its members if we sell any of these nine properties at any time. | |||
Aggregate reduction in consideration paid to
certain contributors, IPO awards and certain
fees and expenses:
|
The foregoing reductions in consideration paid to certain contributors, IPO awards under our 2010 Incentive Plan and certain fees and expenses will aggregate to a total reduction of approximately $32.2 million. | |||
Ownership by MXT Capital and our executive
officers:
|
As a result of these changes, MXT Capitals and our executive officers fully diluted ownership of the company upon completion of the offering will be reduced by 2.5% (from 4.0% to 1.5%). |
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