Item 1.01. Entry into a Material
Definitive Agreement
Joint Venture - Victory Adobe
Apartments LLC
During
December 2017, the Issuer and Southeast Apartment Holdings, Inc., a Delaware corporation and a wholly owned indirect subsidiary
of Macquarie Group (“
Macquarie
”), entered into an arrangement named a Contribution Agreement (the “
Contribution
Agreement
”), under which TCI, subject to certain prerequisites described below, agreed to sell and convey interests
in certain completed multifamily projects and projects under development to a newly formed Victory Abode Apartments, LLC (“
V
Abode
”), which would be equally owned and controlled by TCI and Macquarie.
The
properties potentially to be transferred include approximately 44 completed and stabilized projects, 13 development projects
and TCI’s rights to develop 23 projects, should both TCI and Macquarie agree to develop those properties. The overall
acquisition property purchase price is estimated to be $890,625,000. The terms of the Contribution Agreement are very
detailed, but the total equity invested by TCI in the various projects (land and other costs incurred by TCI) will be assumed
by V Abode, along with the first money mortgage loans encumbering those projects. Also, TCI will receive from 10 of the 13
development projects an “earn-out” fee, which will be calculated after project stabilization (sometime between
one and two years after completion). Approximately 81.9% of the net cash purchase price will be funded by a Mezzanine loan
from a newly formed lending entity, which will also be jointly and equally owned by subsidiaries of TCI and Macquarie,
respectively.
There
are several conditions to the closing of the arrangement (requests for approval of which began in late May 2018), including that
title and survey of the properties must be acceptable, the Department of Housing and Urban Development (“
HUD
”)
and other first mortgage lenders must approve the assumptions by V Abode, and other consents are necessary.
A
due diligence period for Macquarie expired in March 2018, within which it had to review the various projects. A formal approval
submission was delivered to HUD at the end of May 2018. Certain management issues of V Abode remain to be resolved, and formal
approval by HUD must be received before the closing of the Contribution Agreement can be completed and funding/payments can occur.
Macquarie has, in the past, been a Lender to TCI and its subsidiaries, but otherwise does not have a material relationship with
TCI.
Potential
Sale of Commercial Office Buildings
On
June 14, 2018, indirect subsidiaries of TCI entered into four separate [but similar in form] agreements with Gravity Holdings,
LLC, a private Delaware limited liability company covering the potential sale of all TCI’s Commercial Office Buildings,
two of which are located in Dallas County, Texas, one in Irving, Texas and one in Houston, Texas. The four Agreements are all
subject to due diligence by the proposed purchaser, including review of title commitments and similar matters in real estate transactions.
Other than entry into the four separate agreements, Gravity Holdings, LLC has no material relationship with TCI and its subsidiaries.
Press Release
On
June 14, 2018, TCI announced the two matters described above in a press release. A copy of the announcement is attached as Exhibit
“99.1.” The information furnished pursuant to this Item 1.01 in this Current Report on Form 8-K including Exhibit
“99.1" attached hereto, shall not be deemed to be “filed” for purposes of Section 18 of the Securities
Exchange Act of 1934 or otherwise subject to the liabilities to that Section, unless we specifically incorporate it by reference
in a document filed under the Securities Act of 1933 of the Securities Exchange Act of 1934. We undertake no duty or obligation
to publicly update or revise any information furnished pursuant to this Item 1.01 of this Current Report on Form 8-K.