Cottonwood Residential, Inc. (CRI) recently sent a letter and Information Statement to common stockholders. On August 1, 2018, the Company executed an agreement to sell approximately $440 million in assets (12 properties) as the first step in recapitalizing the Company in order to repay and redeem the various interests held by FrontRange Capital Partners and Equity Resource Investments, including debt obligations held by them which rank senior to Cottonwood’s preferred stock.
The Company intends to liquidate five additional properties as part of this Recapitalization Plan. As part of the Plan, 100% of the interests held by the non-voting common stockholders of CRI will also be redeemed. Assuming that the five properties are sold within the expected market value range, the Company anticipates making distributions to the CRI non-voting common stockholders of between $18.75 to $19.57 per share. While individual outcomes will vary based on the initial purchase price, generally this appears to represent a positive outcome for investors.
The Company also sent a letter to its preferred stockholders informing them that the Company will continue to pay the same monthly cash distributions. Preferred stockholders are not expected to be impacted by this transaction.
We anticipate the full liquidation to occur beginning in the 4th quarter of 2018 and 1st quarter of 2019. This is to take advantage of the favorable real estate market we are currently in.
If you have further questions please reach out to our office at (360) 828-1469, and we will be happy to go over this information further with you.