Resource Real Estate Opportunity REIT, Inc., (”The Opportunity REIT”), declares a special, one-time, cash distribution in the amount of $0.15 per share to stockholders of record, May 15 th, 2012. The payable date is scheduled for May 31 st, 2012. The distribution will be paid from a portion of the proceeds of a non-recourse mortgage loan collateralized by the Iroquois Apartments, an asset currently held within the Opportunity REIT.
The Iroquois Apartments was originally acquired by the Opportunity REIT as non-performing debt for approximately $12 million, representing a 59% discount to replacement cost. Following foreclosure, significant capital investment and the introduction of experienced property management by the Opportunity REIT, the property is now a profitable, cash flowing, equity investment which has reached a level of positive net operating income. The financing of the Iroquois asset, and this cash distribution, exemplifies the successful execution of the Opportunity REIT’s strategy.
Through all-cash acquisitions, the Opportunity REIT seeks to acquire discounted multifamily real estate and create value for stockholders by making capital improvements to the properties and stabilizing occupancy rates to greater than 90 percent. As a means of harvesting this value, once created, the Opportunity REIT intends on periodically reducing its equity investment through the use of strategic non-recourse financing. The Opportunity REIT, however, is committed to maintaining a low to moderate level of overall leverage.
As a result of securing the Iroquois mortgage loan, the Opportunity REIT currently maintains an overall leverage ratio under 10 percent. Approximately, 20 percent of the proceeds from the Iroquois Mortgage Loan is being used to fund the special cash distribution which enables stockholders of record to receive an immediate, direct benefit from the value created in the Iroquois property. The remaining portion of the loan proceeds, approximately 80%, will be used to invest in additional real estate and real estate related assets that are in line with the Opportunity REIT’s investment objectives.
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