# EDGAR Filing Document

**Accession Number:** 0001692951
**File Stem:** 0001692951-23-000052
**Filing Date:** 2023-3
**Character Count:** 938494
**Document Hash:** 54cb90309d0bc073336f89140b1f7657
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001692951-23-000052.hdr.sgml**: 20230324

**ACCESSION NUMBER**: 0001692951-23-000052

**CONFORMED SUBMISSION TYPE**: 10-K

**PUBLIC DOCUMENT COUNT**: 93

**CONFORMED PERIOD OF REPORT**: 20221231

**FILED AS OF DATE**: 20230324

**DATE AS OF CHANGE**: 20230324

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Cottonwood Communities, Inc.
- **CENTRAL INDEX KEY:** 0001692951
- **STANDARD INDUSTRIAL CLASSIFICATION:** REAL ESTATE INVESTMENT TRUSTS [6798]
- **IRS NUMBER:** 000000000
- **STATE OF INCORPORATION:** MD
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 10-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 000-56165
- **FILM NUMBER:** 23759935

**BUSINESS ADDRESS:**
- **STREET 1:** 1245 BRICKYARD RD.
- **STREET 2:** SUITE 250
- **CITY:** SALT LAKE CITY
- **STATE:** UT
- **ZIP:** 84106
- **BUSINESS PHONE:** 801-278-0700

**MAIL ADDRESS:**
- **STREET 1:** 1245 BRICKYARD RD.
- **STREET 2:** SUITE 250
- **CITY:** SALT LAKE CITY
- **STATE:** UT
- **ZIP:** 84106

?xml version="1.0" ? cci-20221231

<u>[**Table of Contents**](#idee5e1a1e23d41889d4214c8b88222aa_7)</u>

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

WASHINGTON, D.C. 20549

________________________________

**FORM 10-K** 

________________________________

🗷 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

**For the fiscal year ended December 31, 2022**

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

**For the Transition period from __________ to __________** 

Commission file number: **000-56165**

________________________________

![cci-20221231_g1.gif](cci-20221231_g1.gif)

**Cottonwood Communities, Inc.**

(Exact name of Registrant as specified in its charter)

________________________________

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| | |
|:---|:---|
| **Maryland** | **61-1805524** |
| (State or other jurisdiction of<br>incorporation or organization) | (I.R.S. Employer<br>Identification No.) |

---

**1245 Brickyard Road, Suite 250, Salt Lake City, UT 84106**

(Address of principal executive offices) (Zip code)

**(801) 278-0700**

(Registrant's telephone number, including area code)

________________________________

Securities registered pursuant to Section 12(b) of the Act:

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| | | |
|:---|:---|:---|
| **Title of Each Class** | **Trading Symbols** | **Name of each exchange on which registered** |

---

Securities registered pursuant to Section 12(g) of the Act:

Class T common stock, $0.01 par value per share

Class D common stock, $0.01 par value per share

Class I common stock, $0.01 par value per share

Class A common stock, $0.01 par value per share

Class TX common stock, $0.01 par value per share

________________________________

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<u>[**Table of Contents**](#idee5e1a1e23d41889d4214c8b88222aa_7)</u>

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No 🗷

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No 🗷

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes 🗷 No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes 🗷 No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

---

| | | | |
|:---|:---|:---|:---|
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| Non-accelerated filer | 🗷 | Smaller reporting company | 🗷 |
| | | Emerging growth company | 🗷 |

---

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 🗷

Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No 🗷

The aggregate market value of the common stock held by non-affiliates of the registrant: No established market exists for the registrant's common stock. The registrant publishes a net asset value ("NAV"), based on procedures and methodologies established by its board of directors, with an NAV on June 30, 2022, the last business day of the registrant's most recently completed second fiscal quarter, of $20.7202 per share for each class of share of common stock outstanding. As of December 31, 2022, the NAV was $19.5788 per share for each class of share of common stock outstanding. There were 27,700,700 shares of common stock held by non-affiliates at June 30, 2022, the last business day of the registrant's most recently completed second fiscal quarter.

As of March 21, 2023, there were 5,109,646 shares of the registrant's Class T common stock, 165,927 shares of the registrant's Class D common stock, 4,113,814 shares of the registrant's Class I common stock, and 26,173,599 shares of the registrant's Class A common stock outstanding.

------

<u>[**Table of Contents**](#idee5e1a1e23d41889d4214c8b88222aa_7)</u>

**Cottonwood Communities, Inc.**

**Form 10-K**

**For the Year Ended December 31, 2022** 

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| | | |
|:---|:---|:---|
| **Table of Contents** | **Table of Contents** | **Table of Contents** |
| | | **Page** |
| **Part I** | | |
| | <u>[Cautionary Language and Summary Risk Factors](#idee5e1a1e23d41889d4214c8b88222aa_10)</u> | <u>[1](#idee5e1a1e23d41889d4214c8b88222aa_10)</u> |
| Item 1. | <u>[Business](#idee5e1a1e23d41889d4214c8b88222aa_13)</u> | <u>[2](#idee5e1a1e23d41889d4214c8b88222aa_13)</u> |
| Item 1A. | <u>[Risk Factors](#idee5e1a1e23d41889d4214c8b88222aa_16)</u> | <u>[7](#idee5e1a1e23d41889d4214c8b88222aa_16)</u> |
| Item 1B. | <u>[Unresolved Staff Comments](#idee5e1a1e23d41889d4214c8b88222aa_19)</u> | <u>[41](#idee5e1a1e23d41889d4214c8b88222aa_19)</u> |
| Item 2. | <u>[Properties](#idee5e1a1e23d41889d4214c8b88222aa_22)</u> | <u>[41](#idee5e1a1e23d41889d4214c8b88222aa_22)</u> |
| Item 3. | <u>[Legal Proceedings](#idee5e1a1e23d41889d4214c8b88222aa_25)</u> | <u>[41](#idee5e1a1e23d41889d4214c8b88222aa_25)</u> |
| Item 4. | <u>[Mine Safety Disclosures](#idee5e1a1e23d41889d4214c8b88222aa_28)</u> | <u>[41](#idee5e1a1e23d41889d4214c8b88222aa_28)</u> |
| **Part II** | | |
| Item 5. | <u>[Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](#idee5e1a1e23d41889d4214c8b88222aa_31)</u> | <u>[42](#idee5e1a1e23d41889d4214c8b88222aa_31)</u> |
| Item 6. | <u>[\[Reserved\]](#idee5e1a1e23d41889d4214c8b88222aa_34)</u> | <u>[49](#idee5e1a1e23d41889d4214c8b88222aa_34)</u> |
| Item 7. | <u>[Management's Discussion and Analysis of Financial Condition and Results of Operations](#idee5e1a1e23d41889d4214c8b88222aa_37)</u> | <u>[49](#idee5e1a1e23d41889d4214c8b88222aa_37)</u> |
| Item 7A. | <u>[Quantitative and Qualitative Disclosures About Market Risk](#idee5e1a1e23d41889d4214c8b88222aa_40)</u> | <u>[60](#idee5e1a1e23d41889d4214c8b88222aa_40)</u> |
| Item 8. | <u>[Financial Statements and Supplementary Data](#idee5e1a1e23d41889d4214c8b88222aa_43)</u> | <u>[60](#idee5e1a1e23d41889d4214c8b88222aa_43)</u> |
| Item 9. | <u>[Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](#idee5e1a1e23d41889d4214c8b88222aa_46)</u> | <u>[60](#idee5e1a1e23d41889d4214c8b88222aa_46)</u> |
| Item 9A. | <u>[Controls and Procedures](#idee5e1a1e23d41889d4214c8b88222aa_49)</u> | <u>[61](#idee5e1a1e23d41889d4214c8b88222aa_49)</u> |
| Item 9B. | <u>[Other Information](#idee5e1a1e23d41889d4214c8b88222aa_52)</u> | <u>[61](#idee5e1a1e23d41889d4214c8b88222aa_52)</u> |
| Item 9C. | <u>[Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](#idee5e1a1e23d41889d4214c8b88222aa_55)</u> | <u>[62](#idee5e1a1e23d41889d4214c8b88222aa_55)</u> |
| **Part III** | | |
| Item 10. | <u>[Directors, Executive Officers and Corporate Governance](#idee5e1a1e23d41889d4214c8b88222aa_58)</u> | <u>[62](#idee5e1a1e23d41889d4214c8b88222aa_58)</u> |
| Item 11. | <u>[Executive Compensation](#idee5e1a1e23d41889d4214c8b88222aa_61)</u> | <u>[66](#idee5e1a1e23d41889d4214c8b88222aa_61)</u> |
| Item 12. | <u>[Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](#idee5e1a1e23d41889d4214c8b88222aa_64)</u> | <u>[73](#idee5e1a1e23d41889d4214c8b88222aa_64)</u> |
| Item 13. | <u>[Certain Relationships and Related Transactions, and Director Independence](#idee5e1a1e23d41889d4214c8b88222aa_67)</u> | <u>[75](#idee5e1a1e23d41889d4214c8b88222aa_67)</u> |
| Item 14. | <u>[Principal Accounting Fees and Services](#idee5e1a1e23d41889d4214c8b88222aa_70)</u> | <u>[88](#idee5e1a1e23d41889d4214c8b88222aa_70)</u> |
| **Part IV** | | |
| Item 15. | <u>[Exhibits, Financial Statement Schedules](#idee5e1a1e23d41889d4214c8b88222aa_73)</u> | <u>[89](#idee5e1a1e23d41889d4214c8b88222aa_73)</u> |
| Item 16. | <u>[Form 10–K Summary](#idee5e1a1e23d41889d4214c8b88222aa_76)</u> | <u>[92](#idee5e1a1e23d41889d4214c8b88222aa_76)</u> |
| <u>[Signatures](#idee5e1a1e23d41889d4214c8b88222aa_79)</u> | | <u>[93](#idee5e1a1e23d41889d4214c8b88222aa_79)</u> |

---

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<u>[**Table of Contents**](#idee5e1a1e23d41889d4214c8b88222aa_7)</u>

**Part I**

**CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS**

This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Exchange Act of 1934, as amended (the "Exchange Act"). Forward looking statements include statements about our business, including, in particular, statements about our plans, strategies and objectives. You can generally identify forward-looking statements by our use of forward-looking terminology such as "may," "will," "expect," "intend," "anticipate," "estimate," "believe," "continue," or other similar words. You should not rely on these forward-looking statements because the matters they describe are subject to known and unknown risks, uncertainties and other unpredictable factors, many of which are beyond our control. Our actual results, performance and achievements may be materially different from those expressed or implied by these forward-looking statements.

For a discussion of some of the risks and uncertainties, although not all risks and uncertainties, that could cause actual results to differ materially from those presented in our forward-looking statements, see the risks identified in "Summary Risk Factors" below and in Part I, Item 1A of this Annual Report on Form 10-K (the "Annual Report").

**SUMMARY RISK FACTORS** 

The following is a summary of the principal risks that could adversely affect our business, financial condition, results of operations and cash flows and an investment in our common stock. This summary highlights certain of the risks that are discussed further in this Annual Report but does not address all the risks that we face. For additional discussion of the risks summarized below and a discussion of other risks that we face, see "Risk Factors" in Part I, Item 1A of this Annual Report. &nbsp;&nbsp;&nbsp;&nbsp;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• There is no public trading market for shares of our common stock and the repurchase of shares by us will likely be the only way to dispose of your shares. Our share repurchase program provides stockholders with the opportunity to request that we repurchase their shares on a monthly basis, but we are not obligated to repurchase any shares and may choose to repurchase only some, or even none, of the shares that have been requested to be repurchased in any particular month in our discretion. In addition, repurchases are subject to available liquidity and other significant restrictions. Further, our board of directors may modify or suspend our share repurchase program if in its reasonable judgment it deems a suspension to be in our best interest and the best interest of our stockholders, such as when a repurchase request would place an undue burden on our liquidity, adversely affect our operations or risk having an adverse impact on the company that would outweigh the benefit of the repurchase offer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The offering price and repurchase price for shares of our common stock are generally based on our prior month's NAV plus, in the case of our offering price, applicable upfront selling commissions and dealer manager fees, and are not based on any public trading market. In addition to being up to a month old when share purchases and repurchases take place, our NAV does not currently represent our enterprise value and may not accurately reflect the actual prices at which our assets could be liquidated on any given day, the value a third party would pay for all or substantially all of our shares, or the price that our shares would trade at on a national stock exchange. Furthermore, our board of directors may amend our NAV procedures from time to time. Although there will be independent appraisals of our properties, the appraisal of properties is inherently subjective and our NAV may not accurately reflect the actual price at which our properties could be liquidated on any given day.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Investing in commercial real estate assets involves certain risks, including, but not limited to: changes in values caused by global, national, regional or local economic performance, the performance of the real estate sector, unemployment, stock market volatility and other impacts of the COVID-19 pandemic, demographic or capital market conditions; increases in interest rates and lack of availability of financing; vacancies, fluctuations in the average occupancy and rental rates for our residential properties; and residents experiencing financial hardships (resulting in an inability to pay rent). In particular, the current combination of the continued economic slowdown, rapidly rising interest rates and significant inflation (or the perception that any of these events may continue) as well as a lack of lending activity in the debt markets have contributed to considerable weakness in the commercial real estate markets. Continued disruptions in the financial markets and economic uncertainty could adversely affect our operations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We depend on our advisor to identify suitable investments and to manage our investments. There is no assurance that we will be able to successfully achieve our investment objectives.

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<u>[**Table of Contents**](#idee5e1a1e23d41889d4214c8b88222aa_7)</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We have paid distributions from offering proceeds and may continue to fund distributions with offering proceeds. We have not established a limit on the amount of proceeds from our offering that we may use to fund distributions. To the extent we fund distributions from sources other than our cash flow from operations, we will have less funds available for investment in multifamily apartment communities and multifamily real estate-related assets and the overall return to our stockholders may be reduced. Distributions may also be paid from other sources such as borrowings, advances or the deferral of fees and expense reimbursements. During the early stages of our operations, these distributions may constitute a return of capital.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Some of our officers and certain of our directors are also officers and directors of our sponsor, our advisor or its affiliates. As a result, our officers and affiliated directors are subject to conflicts of interest.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We pay certain fees and expenses to our advisor and its affiliates. These fees were not negotiated at arm's length and therefore may be higher than fees payable to unaffiliated third parties.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Development projects in which we invest will be subject to potential development and construction delays which could result in increased costs and risks and may hinder our operating results and ability to make distributions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We may incur significant debt in certain circumstances, including through the issuance of preferred equity that is accounted for as debt. Our use of leverage increases the risk of an investment in us. Loans we obtain may be collateralized by some or all of our investments, which will put those investments at risk of forfeiture if we are unable to pay our debts. Principal and interest payments on these loans and dividend payments on our preferred shares reduce the amount of money that would otherwise be available for other purposes.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Volatility in the debt markets could affect our ability to obtain financing for investments or other activities related to real estate assets and the diversification or value of our portfolio, potentially reducing cash available for distribution to our stockholders or our ability to make investments. In addition, volatility in the debt markets could negatively impact our loans with variable interest rates.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• If we fail to continue to qualify as a real estate investment trust ("REIT"), it would adversely affect our operations and our ability to make distributions to our stockholders because we will be subject to United States federal income tax at regular corporate rates with no ability to deduct distributions made to our stockholders.

In light of the significant uncertainties inherent in these forward looking statements, the inclusion of this information should not be regarded as a representation by us or any other person that our objectives and plans, which we consider to be reasonable, will be achieved. Except as otherwise required by federal securities laws, we do not undertake to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

**ITEM 1. BUSINESS**

References herein to the "Company," "CCI," "we," "us," or "our" refer to Cottonwood Communities, Inc., a Maryland corporation, and its subsidiaries, unless the context specifically requires otherwise.

**General Description of Business and Operations**

Cottonwood Communities, Inc. invests in a diverse portfolio of multifamily apartment communities and multifamily real estate-related assets throughout the United States. We are externally managed by our advisor, CC Advisors III, LLC ("CC Advisors III"), a wholly owned subsidiary of our sponsor, Cottonwood Communities Advisors, LLC ("CCA"). We were incorporated in Maryland in 2016. We own all of our assets through our operating partnership. Our operating partnership was Cottonwood Communities O.P., LP ("CCOP") prior to the CRII Merger (defined below) and is Cottonwood Residential O.P., LP ("CROP" or the "Operating Partnership") after the CRII Merger. We are the sole member of the sole general partner of the Operating Partnership and own general partner interests in the Operating Partnership alongside third-party limited partners.

Cottonwood Communities, Inc. is a non-traded, perpetual-life, NAV REIT. We qualified as a REIT for U.S. federal income tax purposes beginning with the taxable year ended December 31, 2019. We generally will not be subject to U.S. federal income taxes on our taxable income to the extent we annually distribute all of our net taxable income to stockholders and maintain our qualification as a REIT.

As December 31, 2022, we had received gross proceeds of $295.5 million from the sale of our common stock and $127.0 million from the sale of our Series 2019 Preferred Stock. We have contributed our net proceeds to the Operating Partnership in exchange for a corresponding number of mirrored OP units in the Operating Partnership ("CROP Units"). CROP has primarily used the net proceeds to make investments in real estate, multifamily real estate-related assets, and conduct its real estate-related operations.

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<u>[**Table of Contents**](#idee5e1a1e23d41889d4214c8b88222aa_7)</u>

As December 31, 2022, we had a portfolio of $2.6 billion in total assets, with 84.8% of our equity value in operating properties, 10.9% in development and 4.3% in real estate-related investments. We also currently manage approximately 10,100 units in stabilized assets, including approximately 8,000 units in stabilized properties we own or have ownership interests in. The following presents our real estate portfolio by market and investment type by fair value as of December 31, 2022:

![cci-20221231_g2.jpg](cci-20221231_g2.jpg)

Refer to Part II, Item 7. "<u>[Management's Discussion and Analysis - Our Investments](#idee5e1a1e23d41889d4214c8b88222aa_37)</u>" for further description of our portfolio.

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<u>[**Table of Contents**](#idee5e1a1e23d41889d4214c8b88222aa_7)</u>

**Investment Objectives**

Our investment objectives are to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• preserve, protect and return invested capital;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• pay stable cash distributions to stockholders;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• realize capital appreciation in the value of our investments over the long term; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• provide a real estate investment alternative with lower expected price volatility relative to public real estate companies whose securities trade daily on a stock exchange.

We seek to invest at least 65% of our assets in stabilized multifamily apartment communities and up to 35% in mortgage loans, preferred equity investments, mezzanine loans or equity investments in a property or land which will be developed into a multifamily apartment community.

**The CMOF Merger**

On July 8, 2022, we entered into an agreement and plan of merger with Cottonwood Multifamily Opportunity Fund, Inc. ("CMOF") and its operating partnership (the "CMOF OP") to merge CMOF with and into our wholly owned subsidiary and the CMOF OP with and into CROP through the exchange of stock-for-stock and units-for-units (the "CMOF Merger"). The CMOF Merger closed on September 27, 2022.

CROP was a joint venture partner with CMOF in all three of CMOF's investments: Park Avenue (development project), Cottonwood on Broadway (development project) and Block C, a joint venture owning land held for development for two projects called Westerly and Millcreek North. Following the CMOF Merger, we acquired CMOF's interest in these joint ventures increasing our percentage ownership interest in the joint ventures as follows: Park Avenue, 100.0%, Cottonwood on Broadway, 100.0% and Block C, 79.0%. The remaining interests in Block C are held by some of our officers and affiliated directors, either directly or indirectly.

**The 2021 Mergers**

On January 26, 2021, we entered into separate agreements with three affiliated REITs and their respective operating partnerships to merge through the exchange of stock-for-stock and units-for-units, respectively. The merger with Cottonwood Residential II, Inc. ("CRII") and its operating partnership (CROP) (the "CRII Merger") closed on May 7, 2021. The mergers with Cottonwood Multifamily REIT I, Inc. ("CMRI") and its operating partnership (the "CMRI Merger") and with Cottonwood Multifamily REIT II, Inc. ("CMRII") and its operating partnership (the "CMRII Merger") closed on July 15, 2021. We refer to the CRII Merger, the CMRI Merger and the CMRII Merger as the "2021 Mergers."

Through the 2021 Mergers we acquired interests in 22 stabilized multifamily apartment communities, four multifamily development projects, one structured investment, and land held for development. We also acquired CRII's property management business and its employees, an advisory contract with CMOF, and personnel who performed certain administrative and other services for us, including legal, accounting, property development oversight and certain services relating to construction management, stockholder relations, human resources, renter insurance and information technology.

CC Advisors III continues to manage our business as our external advisor pursuant to an amended and restated advisory agreement. With the exception of our Chief Legal Officer, Chief Operating Officer, Chief Accounting Officer, and Chief Development Officer, we do not employ our executive officers.

Refer to <u>[Note 1](#idee5e1a1e23d41889d4214c8b88222aa_103)</u> of the consolidated financial statements in this Annual Report on Form 10-K for further description of the CMOF Merger and the 2021 Mergers.

**Our Offerings**

From August 13, 2018 to December 22, 2020 we conducted an initial public offering of our Class A and Class TX (formerly Class T) common stock (the "Initial Offering"), raising $122.0 million. The Initial Offering ended December 2020 while we pursued the 2021 Mergers. On November 4, 2021, after the 2021 Mergers were completed, we registered with the SEC our ongoing offering of up to $1.0 billion of shares of common stock (the "Follow-on Offering"), consisting of up to $900.0 million in shares of common stock offered in a primary offering (the "Primary Offering") and $100.0 million in shares under our distribution reinvestment plan (the "DRP Offering"). As of December 31, 2022, we had raised gross proceeds of $173.5 million from the Follow-on Offering, including $2.5 million proceeds from the DRP Offering.

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<u>[**Table of Contents**](#idee5e1a1e23d41889d4214c8b88222aa_7)</u>

On November 8, 2019 we commenced a best-efforts private placement offering exempt from registration under the Securities Act pursuant to which we offered a maximum of $128.0 million in shares of Series 2019 Preferred Stock to accredited investors at a purchase price of $10.00 per share (the "2019 Private Offering"). By March 2022, the 2019 Private Offering was fully subscribed.

On December 13, 2022, we commenced a second best-efforts private placement offering exempt from registration under the Securities Act pursuant to which we are offering a maximum of $100.0 million in shares of our Series 2023 Preferred Stock to accredited investors at a purchase price of $10.00 per share (the "2023 Private Offering" and together with the 2019 Private Offering, the "Private Offerings").

**NAV-Based Perpetual-Life Strategy**

During 2021 we implemented changes to our public offering and business in pursuit of an NAV-based, perpetual-life strategy. We believe these changes, discussed below, enhance our equity capital raising efforts, diversify and grow our portfolio for the benefit of our stockholders, and increase liquidity to our stockholders in excess of what was previously available. We also believe being a perpetual-life REIT allows us to acquire and manage our investment portfolio in a more active and flexible manner by not limiting us with a predetermined operational period or the need to provide a "liquidity" event at the end of that period.

*New Share Classes*

We restructured the classes of shares we offer in our public offering. We renamed our prior Class T shares as Class TX shares and authorized and designated three new classes of shares: Class T, Class D and Class I shares for sale in our primary public offering. Class T, Class D and Class I shares have different upfront selling commissions and dealer manager fees, and different ongoing distribution fees payable to the dealer manager and reallowed to participating broker-dealers. We believe that having a number of different share classes with different distribution compensation structures improves our ability to sell shares and raise capital in the current market.

*Revised Advisory Fee Structure*

On May 7, 2021, we entered into an amended and restated advisory agreement and CROP entered into the Fifth Amended and Restated Limited Partnership Agreement. These agreements revised the compensation payable and the expenses that may be reimbursed to our advisor and its affiliates for its services to be consistent with that of a perpetual-life NAV REIT. Additional information about these fees is provided in Part III "Item 13. <u>[Certain Relationships and Related Transactions and Director Independence](#idee5e1a1e23d41889d4214c8b88222aa_67)</u>."

*Monthly NAV Determinations*

On May 27, 2021, our board of directors, including a majority of our independent directors, adopted valuation procedures that contain a comprehensive set of methodologies to be used in connection with the calculation of a NAV of the company and performed our initial NAV calculation. Since our initial determination of an NAV, we have determined and disclosed monthly our NAV per share for each share class as of the last calendar day of the prior month. We believe more frequent NAV calculations improves our ability to offer and repurchase our shares at the most fair prices, and also improves visibility and transparency into our performance.

*Revised Share Repurchase Program* 

Following the CRII Merger, our board of directors adopted a revised share repurchase program (the "SRP"). The SRP as revised provides that we may make monthly redemptions with an aggregate value of up to 5% of our NAV each quarter. In addition, we removed the funding restrictions from the SRP. For Class T, Class D and Class I shares, the redemption price equals the most recently disclosed monthly NAV, or 95% of the most recently disclosed NAV if the shares have been held for less than a year. For Class A shares, the repurchase price is at a declining discount to NAV depending on how long the stockholder has held the shares submitted for repurchase and is 100% of NAV after a six-year hold period.

*Charter Amendment*

In connection with our perpetual-life-strategy we sought and obtained stockholder approval to remove Article XVIII from our charter. Article XVIII was inconsistent with a perpetual-life-strategy as it required that if we did not list our shares of

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common stock on a national securities exchange by August 13, 2028, we must either seek stockholder approval of the liquidation of the company; or postpone the decision of whether to liquidate the company if a majority of the board of directors determines that liquidation is not then in the best interests of our stockholders. On December 17, 2021, we filed Articles of Amendment with the State Department of Assessment and Taxation of the State of Maryland to remove Article XVIII from our charter.

**Economic Dependency**

We are dependent on our advisor and its affiliates for certain services that are essential to us, including the identification, evaluation, negotiation, origination, acquisition and disposition of investments; and management of our business. In the event that our advisor is unable to provide these services, we will be required to obtain such services from other sources.

**Competitive Market Factors**

The success of our investment portfolio depends, in part, on our ability to invest in multifamily apartment communities that provide attractive and stable returns. We face competition from various entities for investment opportunities in multifamily apartment community properties, including other REITs, pension funds, insurance companies, investment funds and companies, partnerships, and developers. Many of these entities have substantially greater financial resources than we do and may be able to accept more risk than we can prudently manage. Our competitors may also be willing to accept lower returns on their investments and may succeed in buying the assets that we have targeted for acquisition. Competition from these entities may reduce the number of suitable investment opportunities offered to us or increase the bargaining power of property owners seeking to sell. Although we believe that we are well-positioned to compete effectively in each facet of our business, there is competition in our market sector and there can be no assurance that we will compete effectively or that we will not encounter increased competition in the future that could limit our ability to conduct our business effectively.

Furthermore, we face competition from other multifamily apartment communities for tenants. This competition could reduce occupancy levels and revenues at our multifamily apartment communities, which would adversely affect our operations. We expect to face competition from many sources. We will face competition from other multifamily apartment communities both in the immediate vicinity and in the larger geographic market where our apartment communities will be located. Overbuilding of multifamily apartment communities may occur. If so, this will increase the number of apartment units available and may decrease occupancy and apartment rental rates.

**Compliance with Federal, State and Local Environmental Law**

Under various federal, state and local environmental laws, ordinances and regulations, a current or previous real property owner or operator may be liable for the cost of removing or remediating hazardous or toxic substances on, under or in such property. These costs could be substantial. Such laws often impose liability whether or not the owner or operator knew of, or was responsible for, the presence of such hazardous or toxic substances. Environmental laws also may impose restrictions on the manner in which property may be used or businesses may be operated, and these restrictions may require substantial expenditures. Environmental laws provide for sanctions for noncompliance and may be enforced by governmental agencies or, in certain circumstances, by private parties. Certain environmental laws and common law principles could be used to impose liability for the release of and exposure to hazardous substances, including asbestos-containing materials. Third parties may seek recovery from real property owners or operators for personal injury or property damage associated with exposure to released hazardous substances. The cost of defending against claims of liability, of complying with environmental regulatory requirements, of remediating any contaminated property, or of paying personal injury claims could reduce the amounts available for distribution to our stockholders.

We intend to subject our multifamily apartment communities to an environmental assessment prior to acquisition; however, we may not be made aware of all the environmental liabilities associated with a property prior to its purchase. There may be hidden environmental hazards that may not be discovered prior to acquisition. The costs of investigation, remediation or removal of hazardous substances may be substantial. In addition, the presence of hazardous substances on one of our properties, or the failure to properly remediate a contaminated property, could adversely affect our ability to sell or rent the property or to borrow using the property as collateral.

**Human Capital Resources**

Our external advisor, CC Advisors III, through its team of real estate professionals, selects our investments and manages our business, subject to the direction and oversight of our board of directors.

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As of March 21, 2023, we employ 308 individuals, including our Chief Legal Officer, Chief Operating Officer, Chief Accounting Officer, and Chief Development Officer with 228 employees serving as "site" employees at our properties responsible for maintenance and leasing and the remainder considered corporate-level employees supporting our operations. We also rely on employees of our advisor for the management of our business and the employment of certain of our executive officers.

Our employees are responsible for performing various operational services for us, including property management, legal, accounting, property development oversight and certain services relating to construction management, stockholders, human resources, and information technology. Although we did not have employees until May 7, 2021, many of the same individuals who are now our employees have been involved in our operations through their employment with our advisor, affiliated property manager and their affiliates for an average of over four years. Approximately 50% of our employees are women and approximately 47% are members of racial or ethnic minority groups. We consider our relations with our employees to be good; none of our employees are represented by a labor union.

We believe the caliber and well-being of our people to be critical to our ability to attract talent and sustain an appealing company culture that promotes diversity, inclusion, transparency, innovation, teamwork, and excellence. To support these goals and objectives we provide best-in-class training resources, both in person and virtually, to develop the skills and talents of our people and to prevent discrimination and harassment. We dedicate significant time and attention to building a bench of talent that has a wide array of abilities and interests, and that is capable of promoting continuity and succession, when necessary.

We offer competitive and equitable compensation and benefits packages that include medical, dental, vision, disability and life insurance, 401k and HSA plans with company-matching contributions, equity grants, paid time off, as well as other resources and programs that support the health and well-being of our associates and their families. We frequently benchmark these compensation and benefits packages against industry peers and those of similar disciplines.

**Principal Executive Office**

Our principal executive offices are located at 1245 Brickyard Road, Suite 250, Salt Lake City, Utah 84106. Our website address is www.cottonwoodcommunities.com.

**Available Information**

Access to copies of our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, including exhibits to these reports, proxy statements and other filings with the SEC, including amendments to such filings, may be obtained free of charge at our website, www.cottonwoodcommunities.com, or through the SEC's website, *<u>http://www.sec.gov</u>*. These filings are available promptly after we file them with, or furnish them to, the SEC.

**Item 1A. Risk Factors**

*The following are some of the risks and uncertainties that could cause our actual results to differ materially from those presented in our forward-looking statements. The risks and uncertainties described below are not the only ones we face but do represent those risks and uncertainties that we believe are material to us. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also harm our business. Our stockholders may be referred to as "you" or "your" and Cottonwood Communities is referred to as CCI in this Item 1A. "Risk Factors" section.* 

**Risks Related to an Investment in our Common Stock**

***We have held most of our current investments for only a limited period of time and you will not have the opportunity to evaluate our future investments before we make them, which makes your investment more speculative.***

We have held most of our current investments for a limited period of time. Further, we are considered to be a "blind pool," and are not able to provide you with information to assist you in evaluating the merits of any specific properties or structured investments that we may acquire. Because we have not held our current investments for a long period of time, it may be difficult for you to evaluate our success in achieving our investment objectives. We will continue to seek to invest substantially all of our future net offering proceeds, after the payment of fees and expenses, in the acquisition of or investment in interests in properties and structured investments. However, because you will be unable to evaluate the economic merit of our future investments before we make them, you will have to rely entirely on the ability of our advisor to select suitable and successful investment opportunities. These factors increase the risk that your investment may not generate returns comparable to other real estate investment alternatives.

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***There is no public trading market for the shares of our common stock and we do not anticipate that there will be a public trading market for our shares; therefore, your ability to dispose of your shares will likely be limited to repurchase by us. If you do sell your shares to us, you may receive less than the price you paid.***

There is no current public trading market for shares of our common stock, and we do not expect that such a market will ever develop. Therefore, the repurchase of your shares by us will likely be the only way for you to dispose of your shares. We will repurchase shares at a price equal to the transaction price of the class of shares being repurchased on the date of repurchase (which will generally be equal to our prior month's NAV per share, which will be our most recently disclosed NAV at such time) and not based on the price at which you initially purchased your shares. We may repurchase your shares if you fail to maintain a minimum account balance of $500 of shares, even if your failure to meet the minimum account balance is caused solely by a decline in our NAV. Repurchases will be made at the transaction price in effect on the repurchase date, with the following exceptions (collectively, the "Early Repurchase Deduction"): (i) Class T, Class D and Class I shares that have not been outstanding for at least one year will be repurchased at 95.0% of the transaction price, (ii) Class A and Class TX shares that have been outstanding for at least five years and less than six years will be repurchased at 95.0% of the transaction price, (iii) Class A and Class TX shares that have been outstanding for at least three years and less than five years will be repurchased at 90.0% of the transaction price and (iv) Class A and Class TX shares that have been outstanding for at least one year and less than three years will be repurchased at 85.0% of the transaction price.

For purposes of the Early Repurchase Deduction, the holding period is measured from the date the stockholder acquired the share (the "Acquisition Date") through the first calendar day immediately following the prospective repurchase date. With respect to holders of Class A shares who acquired their shares pursuant to a merger transaction the Acquisition Date is the date the holder acquired the corresponding share that was exchanged in the merger transaction. In addition, with respect to Class A and Class TX shares acquired through our distribution reinvestment plan or issued pursuant to a stock dividend, the shares will be deemed to have been acquired on the same date as the initial share to which the distribution reinvestment plan share or stock dividend relate. The Acquisition Date for stockholders who received shares of our common stock in exchange for their CROP Units is measured as of the date the exchange occurred and they received shares of our common stock. The Early Repurchase Deduction will also generally apply to minimum account repurchases. With respect to Class T, Class D and Class I shares, the Early Repurchase Deduction will not apply to shares acquired through the Company's distribution reinvestment plan or issued pursuant to a stock dividend. Such Early Repurchase Deductions will inure indirectly to the benefit of our remaining stockholders. As a result of this and the fact that our NAV will fluctuate, you may receive less than the price you paid for your shares upon repurchase by us pursuant to our share repurchase program.

***Your ability to have your shares repurchased through our share repurchase program is limited. We may choose to repurchase fewer shares than have been requested to be repurchased, in our discretion at any time, and the amount of shares we may repurchase is subject to caps. Further, our board of directors may modify or suspend our share repurchase program if it deems such action to be in our best interest and the best interest of our stockholders.***

We may choose to repurchase fewer shares than have been requested in any particular month to be repurchased under our share repurchase program, or none at all, in our discretion at any time. We may repurchase fewer shares than have been requested to be repurchased due to lack of readily available funds because of adverse market conditions beyond our control, the need to maintain liquidity for our operations or because we have determined that investing in real property or other illiquid investments is a better use of our capital than repurchasing our shares. In addition, the total amount of shares that we will repurchase is limited, in any calendar month, to shares whose aggregate value (based on the repurchase price per share on the date of the repurchase) is no more than 2% of the aggregate NAV of our common stock outstanding as of the last day of the previous calendar month and, in any calendar quarter, to shares whose aggregate value is no more than 5% of the aggregate NAV of our common stock outstanding as of the last day of the previous calendar quarter. Further, our board of directors may modify or suspend our share repurchase program if in its reasonable judgment it deems a suspension to be in our best interest and the best interest of our stockholders, such as when a repurchase request would place an undue burden on our liquidity, adversely affect our operations or risk having an adverse impact on the company that would outweigh the benefit of the repurchase offer. Once the share repurchase program is suspended, our board of directors must consider at least quarterly whether the continued suspension of the share repurchase program is in our best interest and the best interest of our stockholders. Our board of directors cannot terminate our share repurchase program absent a liquidity event which results in stockholders receiving cash or securities listed on a national securities exchange or where otherwise required by law. If the full amount of all shares of our common stock requested to be repurchased in any given month are not repurchased, funds will be allocated pro rata based on the total number of shares of common stock being repurchased without regard to class and subject to the volume limitation. All unsatisfied repurchase requests must be resubmitted after the start of the next month or quarter, or upon the recommencement of the share repurchase program, as applicable.

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The vast majority of our assets consist of properties that cannot generally be readily liquidated without impacting our ability to realize full value upon their disposition. Therefore, we may not always have a sufficient amount of cash to immediately satisfy repurchase requests. Should repurchase requests, in our judgment, place an undue burden on our liquidity, adversely affect our operations or risk having an adverse impact on the company as a whole, or should we otherwise determine that investing our liquid assets in real properties or other illiquid investments rather than repurchasing our shares is in the best interests of the Company as a whole, then we may choose to repurchase fewer shares than have been requested to be repurchased, or none at all. Because we are not required to authorize the recommencement of the share repurchase program within any specified period of time, we may effectively terminate the plan by suspending it indefinitely. As a result, your ability to have your shares repurchased by us may be limited and at times you may not be able to liquidate your investment.

***We have incurred net losses under GAAP in the past and may incur net losses in the future, and we have an accumulated deficit and may continue to have an accumulated deficit in the future.***

For the years ended December 31, 2022 and 2021, we had consolidated net losses of $34.0 million and $106.9 million, respectively. As of December 31, 2022 and 2021, we had accumulated deficits of $71.5 million and $55.9 million, respectively. These amounts largely reflect the expense of real estate depreciation and amortization in accordance with GAAP, which was $54.6 million and $63.4 million during these periods. In addition, the years ended December 31, 2022 and 2021, also included $20.3 million and $51.8 million of charges related to the performance participation allocation.

Net loss and accumulated deficit are calculated and presented in accordance with GAAP, which, among other things, requires depreciation of real estate investments to be calculated on a straight-line basis. As a result, our operating results imply that the value of our real estate investments will decrease evenly over a set time period. However, we believe that the value of real estate investments will fluctuate over time based on market conditions. Thus, in addition to GAAP financial metrics, management reviews certain non-GAAP financial metrics, including funds from operations, or FFO and Core FFO. FFO measures operating performance that excludes gains or losses from sales of depreciable properties, real estate-related depreciation and amortization and after adjustments for our share of consolidated and unconsolidated entities. Core FFO excludes other items recorded under GAAP that we believe are not indicative of operating performance, including the accretion of discounts on preferred stock, share-based compensation, the promote from an incentive allocation agreement (tax effected), gains on derivatives, legal costs and settlements, the performance participation allocation, acquisition fees and expenses, and amortization of above or below intangible lease assets and liabilities. See Part II, Item 5. "<u>[Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities - Funds from Operations](#idee5e1a1e23d41889d4214c8b88222aa_31)</u>" for considerations on how to review this metric.

***Economic events that may cause our stockholders to request that we repurchase their shares may materially adversely affect our cash flow and our results of operations and financial condition.***

Economic events affecting the U.S. economy, such as the general negative performance of the real estate sector, could cause our stockholders to seek to sell their shares to us pursuant to our share repurchase program at a time when such events are adversely affecting the performance of our assets. Even if we decide to satisfy all resulting repurchase requests, our cash flow could be materially adversely affected. In addition, if we determine to sell assets to satisfy repurchase requests, we may not be able to realize the return on such assets that we may have been able to achieve had we sold at a more favorable time, and our results of operations and financial condition, including, without limitation, breadth of our portfolio by property type and location, could be materially adversely affected.

***Repurchases of common stock or CROP Units our advisor or the Special Limited Partner elects to receive in lieu of fees or distributions will reduce cash available for distribution to our stockholders.***

Our advisor or the Special Limited Partner may choose to receive our common stock or CROP Units in lieu of certain fees or distributions. Under certain circumstances CROP Units or shares of our common stock received as payment for management fees are required to be repurchased, in cash at the holder's election, and there may not be sufficient cash to make such a repurchase payment; therefore, we may need to use cash from operations, borrowings, offering proceeds or other sources to make the payment, which will reduce cash available for distribution to you or for investment in our operations. Repurchases of our shares or CROP Units from our advisor paid to our advisor as a management fee are not subject to the monthly and quarterly volume limitations or the Early Repurchase Deduction, and such repurchases may receive priority over other shares submitted for repurchase during such period. Repurchases of our shares or CROP Units from the Special Limited Partner distributed to the Special Limited Partner with respect to its performance participation interest are not subject to any requirement that the units be held for at least one year but are subject to the other provisions regarding the exchange right as contemplated by the Partnership Agreement.

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***We are required to pay substantial compensation to our advisor and its affiliates, which may be increased or decreased by a majority of our board of directors, including a majority of the independent directors. Payment of fees and expenses to our advisor and its affiliates reduces the cash available for distribution and increases the risk that you will not be able to recover the amount of your investment in our shares.***

Pursuant to our agreements with our advisor and its affiliates, we are obligated to pay substantial compensation to the advisor and its affiliates. Subject to limitations in our charter, the fees, compensation, income, expense reimbursements, interests and other payments that we are required to pay to the advisor and its affiliates may increase or decrease if such change is approved by a majority of our board of directors, including a majority of the independent directors. The compensation payable by us to our advisor and its affiliates may not be on terms that would result from arm's-length negotiations, is payable whether or not our stockholders receive distributions, and is based on our NAV, which our advisor is responsible for determining. These payments to the advisor and its affiliates will decrease the amount of cash we have available for operations and new investments and could negatively impact our NAV, our ability to pay distributions and your overall return.

***Purchases and repurchases of shares of our common stock are made based on the most recently disclosed NAV per share at such time, which is generally the prior month's NAV per share of our common stock.***

Generally, our offering price per share and the price at which we make repurchases of our shares will equal the prior month's NAV per share plus, in the case of our offering price, applicable upfront selling commissions and dealer manager fees. The NAV per share as of the date on which you make your subscription request or repurchase request may be significantly different than the offering price you pay or the repurchase price you receive. In addition, in cases where we believe there has been a material change (positive or negative) to our NAV per share since the end of the prior month, we may offer shares at a price that we believe reflects the NAV per share of such stock more appropriately than the prior month's NAV per share (including by updating a previously disclosed offering price) or suspend our offering and/or our share repurchase program. In such cases, the offering price and repurchase price will be our most recently disclosed NAV per share at such time.

***Valuations and appraisals of our properties, real estate-related assets and real estate-related liabilities are estimates of value and may not necessarily correspond to realizable value.***

The valuation methodologies used to value our properties and certain real estate-related assets involve subjective judgments regarding such factors as comparable sales, rental revenue and operating expense data, known contingencies, the capitalization or discount rate, and projections of future rent and expenses based on appropriate analysis. As a result, valuations and appraisals of our properties, real estate-related assets and real estate-related liabilities are only estimates of current market value. Ultimate realization of the value of an asset or liability depends to a great extent on economic and other conditions beyond our control and the control of Altus Group U.S. Inc. (the "Independent Valuation Advisor") and other parties involved in the valuation of our assets and liabilities. Further, these valuations may not necessarily represent the price at which an asset or liability would sell, because market prices of assets and liabilities can only be determined by negotiation between a willing buyer and seller. Valuations used for determining our NAV also are generally made without consideration of the expenses that would be incurred by us in connection with disposing of assets and liabilities. Therefore, the valuations of our properties, our investments in real estate-related assets and our liabilities may not correspond to the timely realizable value upon a sale of those assets and liabilities. In addition to being a month old when share purchases and repurchases take place, our NAV does not currently represent enterprise value and may not accurately reflect the actual prices at which our assets could be liquidated on any given day, the value a third party would pay for all or substantially all of our shares, or the price that our shares would trade at on a national stock exchange. There will be no retroactive adjustment in the valuation of such assets or liabilities, the price of our shares of common stock, the price we paid to repurchase shares of our common stock or NAV-based fees we paid to our advisor and the dealer manager to the extent such valuations prove to not accurately reflect the true estimate of value and are not a precise measure of realizable value. Because the price you will pay for shares of our common stock in our offering, and the price at which your shares may be repurchased by us pursuant to our share repurchase program, are generally based on our estimated NAV per share, you may pay more than realizable value or receive less than realizable value for your investment.

***Our NAV per share amounts may change materially if the appraised values of our properties materially change from prior appraisals or the actual operating results for a particular month differ from what we originally budgeted for that month.***

Our properties are appraised monthly by either the Independent Valuation Advisor or a third-party appraiser (the "Third-Party Appraisal Firm"). When these appraisals are considered by our advisor for purposes of determining our NAV, there may be a material change in our NAV per share amounts for each class of our common stock from those previously reported. In addition, actual operating results for a given month may differ from what we originally budgeted for that month, which may cause a material increase or decrease in the NAV per share amounts. We will not retroactively adjust the NAV per share of each class reported for the previous month. Therefore, because a new annual appraisal may differ materially from the

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prior appraisal or the actual results from operations may be better or worse than what we previously budgeted for a particular month, the adjustment to take into consideration the new appraisal or actual operating results may cause the NAV per share for each class of our common stock to increase or decrease, and such increase or decrease will occur in the month the adjustment is made.

***New acquisitions may be valued for purposes of our NAV at less than what we pay for them, which would dilute our NAV, or at more than what we pay for them, which would be accretive to our NAV.***

Pursuant to our valuation guidelines, the acquisition price of a newly acquired property will serve as the basis for the initial monthly appraisal performed by the Independent Valuation Advisor. The price we pay to acquire a property will provide a meaningful data point to the Independent Valuation Advisor in its determination of the initial fair market value of the property; however, the Independent Valuation Advisor may conclude that the price we paid to acquire a property is higher or lower than the current fair market value of the property, which shall be used for purposes of determining our NAV. This is true whether the acquisition is funded with cash, equity or a combination thereof. When we obtain the first appraisal performed by the Independent Valuation Advisor on a property, it may not appraise at a value equal to the purchase price, which could negatively affect our NAV. Large portfolio acquisitions, in particular, may require a "portfolio premium" to be paid by us in order to be a competitive bidder, and this "portfolio premium" may not be taken into consideration in calculating our NAV. We may make acquisitions (with cash or equity) of any size without stockholder approval, and such acquisitions may be dilutive or accretive to our NAV. In addition, acquisition expenses we incur in connection with new acquisitions will negatively impact our NAV.

***The NAV per share that we publish may not necessarily reflect changes in our NAV that are not immediately quantifiable.***

From time to time, we may experience events with respect to our investments that may have a material impact on our NAV. For example, and not by way of limitation, changes in governmental rules, regulations and fiscal policies, environmental legislation, acts of God, terrorism, social unrest, civil disturbances and major disturbances in financial markets may cause the value of a property to change materially. Similarly, negotiations, disputes and litigation that involve us and other parties may ultimately have a positive or negative impact on our NAV. The NAV per share of each class of our common stock as published for any given month may not reflect such extraordinary events to the extent that their financial impact is not immediately quantifiable. As a result, the NAV per share that we publish may not necessarily reflect changes in our NAV that are not immediately quantifiable, and the NAV per share of each class published after the announcement of a material event may differ significantly from our actual NAV per share for such class until such time as the financial impact is quantified and our NAV is appropriately adjusted in accordance with our valuation guidelines. The resulting potential disparity in our NAV may inure to the benefit of stockholders submitting for repurchase or stockholders not submitting for repurchase and new purchasers of our common stock, depending on whether our published NAV per share for such class is overstated or understated.

***The realizable value of specific properties may change before the value is adjusted by the Independent Valuation Advisor and reflected in the calculation of our NAV.***

Our valuation guidelines generally provide that the Independent Valuation Advisor will adjust a real property's valuation, as necessary, based on known events that have a material impact on the most recent value (adjustments for non-material events may also be made). We are dependent on our advisor to be reasonably aware of material events specific to our properties (such as tenant disputes, damage, litigation and environmental issues, as well as positive events) that may cause the value of a property to change materially and to promptly notify the Independent Valuation Advisor so that the information may be reflected in our real property portfolio valuation. Events may transpire that, for a period of time, are unknown to us or the Independent Valuation Advisor that may affect the value of a property, and until such information becomes known and is processed, the value of such asset may differ from the value used to determine our NAV. In addition, although we may have information that suggests a change in value of a property may have occurred, there may be a delay in the resulting change in value being reflected in our NAV until such information is appropriately reviewed, verified and processed. For example, we may receive an unsolicited offer, from an unrelated third party, to sell one of our assets at a price that is materially different than the price included in our NAV. Or, we may be aware of a change in collection, or a potential contract for capital expenditure. Where possible, adjustments generally are made based on events evidenced by proper final documentation. It is possible that an adjustment to the valuation of a property may occur prior to final documentation if the Independent Valuation Advisor determines that events warrant adjustments to certain assumptions that materially affect value. However, to the extent that an event has not yet become final based on proper documentation, its impact on the value of the applicable property may not be reflected (or may be only partially reflected) in the calculation of our NAV.

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***NAV calculations are not governed by governmental or independent securities, financial or accounting rules or standards. Our board of directors, including a majority of our independent directors, may adopt changes to the valuation guidelines.***

The methods used by our advisor to calculate our NAV, including the components used in calculating our NAV, is not prescribed by rules of the SEC or any other regulatory agency. Further, there are no accounting rules or standards that prescribe which components should be used in calculating NAV, and our NAV is not audited by our independent registered public accounting firm. We calculate and publish our NAV solely for purposes of establishing the price at which we sell and repurchase shares of our common stock, and you should not view our NAV as a measure of our historical or future financial condition or performance. The components and methodology used in calculating our NAV may differ from those used by other companies now or in the future.

In addition, calculations of our NAV, to the extent that they incorporate valuations of our assets and liabilities, are not prepared in accordance with generally accepted accounting principles. These valuations may differ from liquidation values that could be realized in the event that we were forced to sell assets.

Additionally, errors may occur in calculating our NAV, which could impact the price at which we sell and repurchase shares of our common stock and the amount of the advisor's management fee and the Special Limited Partner's performance participation interest. If such errors were to occur, our advisor, depending on the circumstances surrounding each error and the extent of any impact the error has on the price at which shares of our common stock were sold or repurchased or on the amount of our advisor's management fee or the Special Limited Partner's performance participation interest, may determine in its sole discretion to take certain corrective actions in response to such errors, including, subject to our advisor's policies and procedures, making adjustments to prior NAV calculations.

Each year our board of directors, including a majority of our independent directors, will review the appropriateness of our valuation guidelines and may, at any time, adopt changes to the valuation guidelines.

You should carefully review the disclosure of our valuation policies and how our NAV is calculated under Part II, Item 5. "<u>[Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](#idee5e1a1e23d41889d4214c8b88222aa_31)</u> - Net Asset Value".

***We will face significant competition for multifamily apartment communities and multifamily real estate-related assets, which may limit our ability to acquire suitable investments and achieve our investment objectives or make distributions.***

We compete to acquire multifamily apartment communities and multifamily real estate-related assets with other REITs, real estate limited partnerships, pension funds and their advisors, bank and insurance company investment accounts, and other entities. Many of our competitors have greater financial resources, and a greater ability to borrow funds to acquire properties, than we do. We cannot be sure that the board of directors and our advisor will be successful in obtaining suitable investments on financially attractive terms or that, if investments are made, our objectives will be achieved.

***If we are unable to find suitable investments or if we raise substantial offering proceeds in a short period of time and are unable to invest all of the offering proceeds promptly, we may not be able to achieve our investment objectives or make distributions.***

The more money we raise, the greater our challenge will be to invest all of our offering proceeds on attractive terms. If we are unable to promptly find suitable multifamily apartment communities or multifamily real estate-related assets, we will hold the proceeds from our offerings in an interest-bearing account, invest the proceeds in short-term investments, or pay down lines of credit. We could also suffer from delays in locating suitable investments. Our reliance on our advisor and sponsor and the real estate professionals that such persons retain to identify suitable investments for us at times when such persons are simultaneously seeking to identify suitable investments for other affiliated programs could also delay the investment of the proceeds of our offerings. Delays we encounter in the selection and acquisition of income-producing multifamily apartment communities or the acquisition or origination of multifamily real estate-related assets would likely limit our ability to make distributions to you and reduce your overall returns.

Furthermore, where we acquire properties prior to the start of construction or during the early stages of construction, it will typically take several years to complete construction and rent available space. Therefore, you could suffer delays in the receipt of distributions attributable to those particular properties.

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***Our success is dependent on general market and economic conditions.***

The real estate industry generally and the success of our investment activities in particular will both be affected by global and national economic and market conditions generally and by the local economic conditions where our properties are located. These factors may affect the level and volatility of real estate prices, which could impair our profitability or result in losses. In addition, general fluctuations in the market prices of securities and interest rates may affect our investment opportunities and the value of our investments. Our sponsor's financial condition may be adversely affected by a significant economic downturn and it may be subject to legal, regulatory, reputational and other unforeseen risks that could have a material adverse effect on its businesses and operations (including our advisor).

A recession, slowdown and/or sustained downturn in the U.S. real estate market, and to a lesser extent, the global economy (or any particular segment thereof) would have a pronounced impact on us, the value of our assets and our profitability, impede the ability of our assets to perform under or refinance their existing obligations, and impair our ability to effectively deploy our capital or realize upon investments on favorable terms. We could also be affected by any overall weakening of, or disruptions in, the financial markets. Any of the foregoing events could result in substantial losses to our business, which losses will likely be exacerbated by the presence of leverage in our investments capital structures.

For example, during the financial crisis, the availability of debt financing secured by commercial real estate was significantly restricted as a result of a prolonged tightening of lending standards. Due to the uncertainties created in the credit market, real estate investors were unable to obtain debt financing on attractive terms, which adversely affected investment returns on acquisitions and their ability to even make acquisitions or tenant improvements to existing holdings. Most recently, on March 10, 2023, Silicon Valley Bank ("SVB") was closed by the California Department of Financial Protection and Innovation, which appointed the FDIC as receiver. Although the Department of the Treasury, the Federal Reserve and the FDIC issued a joint statement on March 12, 2023 that all depositors of SVB would have access to all of their money after only one business day of closure, including funds held in uninsured deposit accounts, if another depository institution is subject to other adverse conditions in the financial or credit markets, it could impact access to our cash or cash equivalents and could adversely impact our operating liquidity and financial performance. In addition, if any parties with whom we conduct business are unable to access funds pursuant to such instruments or lending arrangements with such a financial institution, such parties' ability to pay their obligations to us or to enter into new commercial arrangements requiring additional payments to us could be adversely affected. Any future financial market disruptions may force us to use a greater proportion of our offering proceeds to finance our acquisitions and fund tenant improvements, reducing the number of acquisitions we would otherwise make.

***Recent macroeconomic trends, including inflation and rising interest rates, may adversely affect our business, financial condition and results of operations.***

During the year ended December 31, 2022, inflation in the United States accelerated and is currently expected to continue at an elevated level in the near-term. Beginning in 2022, in an effort to combat inflation and restore price stability, the Federal Reserve significantly raised its benchmark federal funds rate, which led to increases in interest rates in the credit markets. The Federal Reserve may continue to raise the federal funds rate, which will likely lead to higher interest rates in the credit markets and the possibility of slowing economic growth and/or a recession. Additionally, U.S. government policies implemented to address inflation, including actions by the Federal Reserve to increase interest rates, could negatively impact consumer spending and adversely impact the broader economy, resulting in job losses for many of our residents.

Rising inflation could also have an adverse impact on our financing costs (either through near-term borrowings on our variable rate debt, including our credit facilities, or refinancing of existing debt at higher interest rates), and general and administrative expenses and property operating expenses, as these costs could increase at a rate higher than our rental and other revenue. To the extent our exposure to increases in interest rates is not eliminated through interest rate caps or other protection agreements, such increases may also result in higher debt service costs, which will adversely affect our cash flows. Historically, during periods of increasing interest rates, real estate valuations have generally decreased due to rising capitalization rates, which tend to move directionally with interest rates. Consequently, prolonged periods of higher interest rates may negatively impact the valuation of our real estate assets. Although the extent of any prolonged periods of higher interest rates remains unknown at this time, negative impacts to our cost of capital may adversely affect our future business plans and growth, at least in the near term.

***We may not be able to operate our business successfully or generate sufficient revenue to make or sustain distributions to our stockholders.***

We cannot assure you that we will be able to operate our business successfully or implement our operating policies and strategies. We can provide no assurance that our performance will replicate the past performance of CROP, Cottonwood

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Residential, CRII or any program sponsored by CROP, Cottonwood Residential, or CRII. Our investment returns could be substantially lower than the returns achieved by CROP, Cottonwood Residential, and CRII. The results of our operations depend on several factors, including the availability of opportunities for the acquisition of target assets, the level and volatility of interest rates, the availability of short and long-term financing, and conditions in the financial markets and economic conditions.

***We are dependent upon our advisor and its affiliates and any adverse changes in the financial health of our advisor or its affiliates or our relationship with them could hinder our operating performance and the return on our stockholders' investment.***

We are dependent on our advisor to manage our operations and our portfolio of multifamily apartment communities and multifamily real estate-related assets. Any adverse change in the financial condition of our advisor or our relationship with our advisor could hinder its ability to successfully manage our operations and our portfolio of investments.

Our ability to achieve our investment objectives and to conduct our operations is dependent upon the performance of our advisor. Our advisor's business is sensitive to trends in the general economy, as well as the commercial real estate and credit markets. To the extent any decline in our sponsor's revenues and operating results impacts the performance of our advisor, our results of operations and financial condition could also suffer. If our relationship with our advisor, its affiliates and their real estate professionals is terminated for any reason, it will be difficult for us to implement our business strategy or manage our portfolio unless we engage another party to provide the services to be provided by our advisor, its affiliates and employees.

***We have paid distributions from offering proceeds. In the future we may continue to fund distributions with offering proceeds. To the extent we fund distributions from sources other than our cash flow from operations, we will have less funds available for investment in multifamily apartment communities and multifamily real estate-related assets and the overall return to our stockholders may be reduced.***

Our charter permits us to make distributions from any source, including offering proceeds or borrowings (which may constitute a return of capital), and our charter does not limit the amount of funds we may use from any source to pay such distributions. We intend to make distributions on our common stock on a per share basis with each share receiving the same distribution, subject to any class-specific expenses such as distribution fees on our Class T and Class D shares. If we fund distributions from financings, our offerings or other sources, we will have less funds available for investment in multifamily apartment communities and other multifamily real estate-related assets and the number of real estate properties that we invest in and the overall return to our stockholders may be reduced. If we fund distributions from borrowings, our interest expense and other financing costs, as well as the repayment of such borrowings, will reduce our earnings and cash flow from operations available for distribution in future periods. If we fund distributions from the sale of assets or the maturity, payoff or settlement of multifamily real estate-related assets, this will affect our ability to generate cash flows from operations in future periods.

During the early stages of our operations, it is likely that we will use sources of funds, which may constitute a return of capital to fund distributions. During our offering stage, when we may raise capital more quickly than we acquire income-producing assets, and for some period after, we may not be able to make distributions solely from our cash flow from operations. Further, because we may receive income from our investments at various times during our fiscal year and because we may need cash flow from operations during a particular period to fund capital expenditures and other expenses, we expect that at least during the early stages of our existence and from time to time during our operational stage, we will declare distributions in anticipation of cash flow that we expect to receive during a later period and we will make these distributions in advance of our actual receipt of these funds. In addition, to the extent our investments are in development or redevelopment projects or in properties that have significant capital requirements, our ability to make distributions may be negatively impacted, especially during our early periods of operation. In these instances, we expect to look to third party borrowings to fund our distributions. We may also fund such distributions from the sale of assets. To the extent distributions exceed cash flow from operations, a stockholder's basis in our stock will be reduced and, to the extent distributions exceed a stockholder's basis, the stockholder may recognize capital gain.

For the years ended December 31, 2022 and 2021, we paid aggregate distributions to common stockholders and limited partnership unitholders of $44.4 million and $20.2 million, including $42.2 million and $20.1 million of distributions paid in cash and $2.2 million and $0.1 million of distributions reinvested through our distribution reinvestment plan, respectively. Our net loss for the years ended December 31, 2022 and 2021 was $34.0 million and $106.9 million. Cash flows provided by operating activities were $8.6 million and $5.4 million for the years ended December 31, 2022 and 2021. We funded our total distributions paid during 2022, which includes net cash distributions and distributions reinvested by stockholders, with $23.4 million prior period cash provided by operating activities, $9.2 million from additional borrowings,

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and $9.6 million of offering proceeds. We funded our total distributions paid during 2021, which includes net cash distributions and distributions reinvested by stockholders, with $11.0 million prior period cash provided by operating activities, $5.0 million from additional borrowings, and $4.0 million of offering proceeds.

Generally, for purposes of determining the source of our distributions paid, we assume first that we use cash flow from operating activities from the relevant or prior periods to fund distribution payments. To the extent that we pay distributions from sources other than our cash flow from operating activities, we will have less funds available for the acquisition of real estate investments, the overall return to our stockholders may be reduced and subsequent investors will experience dilution. In addition, to the extent distributions exceed cash flow from operating activities, a stockholder's basis in our stock will be reduced and, to the extent distributions exceed a stockholder's basis, the stockholder may recognize capital gain.

***Our rights and the rights of our stockholders to recover claims against our officers and directors are limited, which could reduce your and our recovery against them if they negligently cause us to incur losses.***

Maryland law provides that an officer or director has no liability in that capacity if he or she performs his or her duties in good faith, in a manner he or she reasonably believes to be in our best interests and with the care that an ordinarily prudent person in a like position would use under similar circumstances. Our charter provides that our officers and directors will not be liable to us or our stockholders for monetary damages and that we will generally indemnify them for losses unless our directors are negligent or engage in misconduct or our independent directors are grossly negligent or engage in willful misconduct. As a result, you and we may have more limited rights against our officers and directors than might otherwise exist under common law, which could reduce our and your recovery from these persons if they act in a negligent manner. Our charter also requires us, to the maximum extent permitted by Maryland law, to indemnify and, without requiring a preliminary determination of the ultimate entitlement to indemnification, pay or reimburse reasonable expenses in advance of the final disposition of a proceeding to any individual who is a present or former director or officer and who is made or threatened to be made a party to the proceeding by reason of his or her service in that capacity or any individual who, while a director or officer and at our request, serves or has served as a director, officer, partner, member, manager or trustee of another corporation, partnership, limited liability company, joint venture, trust, employment benefit plan or other enterprise and who is made or threatened to be made a party to the proceeding by reason of his or her service in that capacity.

***CROP may be subject to tax indemnification obligations upon the taxable sale of certain of its properties. CROP will not have control of the assets that will be subject to an in-kind redemption transaction under the CROP Tax Protection Agreement.***

Pursuant to the tax protection agreement between CROP and High Traverse Holdings, LLC ("HT Holdings"), a Delaware limited liability company, which is beneficially owned by Daniel Shaeffer, Chad Christensen, Gregg Christensen and Eric Marlin, each of who are our executive officers and some of whom are our directors, (the "CROP Tax Protection Agreement"), CROP has agreed, until May 7, 2031, to indemnify HT Holdings (including Daniel Shaeffer, Chad Christensen, Gregg Christensen and Eric Marlin, as beneficial owners of HT Holdings, and their affiliated trusts and certain other entities) (collectively, the "protected partners") against certain tax consequences of a taxable transfer of all or any portion of the properties that are owned by CROP or any of its subsidiaries as of the closing date of the CROP Merger, subject to certain conditions and limitations. We estimate the maximum potential liability associated with the CROP Tax Protection Agreement to be approximately $39.9 million. Although this estimate has been made based on the best judgment of our management assuming current tax rates as well as the current state of residence of indemnified parties, both of which may change in the future, no assurances can be provided that the actual amount of any indemnification obligation would not exceed this estimate. These indemnification obligations could prevent CROP from selling its properties at times and on terms that are in the best interest of CROP, us and the respective equity owners of CROP and us and any indemnification payments that may become payable could be a significant expense for CROP and us. In addition, at any time after the closing (including after expiration of the tax protection term), each protected partner and CROP will have the right to exercise an in-kind redemption transaction (i.e., a redemption of all of the protected partner's interest in CROP in exchange for one or more assets of CROP at the then-current market price). This would eliminate CROP's indemnification obligations to the protected partner(s). The protected partners will have the right to select the assets of CROP necessary to effectuate the in-kind redemption transaction, subject to certain limitations. If an in-kind redemption transaction is effectuated, CROP's portfolio may become less geographically diverse and thus subject to greater market risk, and CROP may be required to transfer some of its prime assets to the protected partner(s).

In addition, CROP has entered and may in the future enter into tax indemnification agreements with certain persons who contributed their interests in properties to CROP in exchange for CROP Common Units. Generally, these current agreements provide that CROP will indemnify such contributors against certain tax consequences of a taxable sale of the property contributed by such contributors through 2025, subject to certain conditions and limitations. We estimate the maximum potential liability associated with these tax indemnification agreements to be approximately $31.5 million. Although

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this estimate has been made based on the best judgment of our management assuming current tax rates as well as the current state of residence of indemnified parties, both of which may change in the future, no assurances can be provided that the actual amount of any indemnification obligation would not exceed this estimate. Future tax indemnification agreements entered by CROP may extend such obligations beyond 2025. The obligations of CROP under these and future indemnification agreements may constrain CROP with respect to deciding to dispose of a particular property and may also result in financial obligations for us.

***We may change our targeted investments and our policies without stockholder consent.***

We invest in multifamily apartment communities (including certain multifamily apartment communities that include certain retail or other commercial uses) and multifamily real estate-related assets. Except under certain circumstances, we are not restricted as to the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• where we may acquire multifamily apartment communities in the United States;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the percentage of our proceeds that may be invested in properties as compared with the percentage of our proceeds that we may invest in multifamily real estate-related assets; investment in direct interests in real estate and multifamily real estate-related assets will have differing risks and profit potential; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the percentage of our proceeds that we may invest in any one real estate investment (the greater the percentage of our offering proceeds invested in one asset, the greater the potential adverse effect on us if that asset is unprofitable).

We may make adjustments to our target portfolio based on real estate market conditions and investment opportunities and we may change our targeted investments and investment guidelines at any time without the consent of our stockholders, which could result in our making investments that are different from, and possibly riskier than, the investments described in Part II, Item 7. "<u>[Management's Discussion and Analysis](#idee5e1a1e23d41889d4214c8b88222aa_37)</u>". A change in our targeted investments or investment guidelines could adversely affect the value of our common stock and our ability to make distributions to you.

Our board of directors determines our major policies, including our policies regarding financing, growth, REIT qualification, NAV methodologies and distributions. Our board of directors may amend or revise these and other policies without a vote of the stockholders. Under Maryland General Corporation Law and our charter, our stockholders have a right to vote only on limited matters. Our board of director's broad discretion in setting policies and our stockholders' inability to exert control over those policies increases the uncertainty and risks you face as a stockholder.

Our board of directors may change our investment objectives, targeted investments, borrowing policies or other corporate policies without stockholder approval. In addition, we may change the way our fees and expenses are incurred and allocated to different classes of stockholders. Our board of directors may decide that certain significant transactions that require stockholder approval such as dissolution, merger into another entity, consolidation or the sale or other disposition of all or substantially all of our assets, are in the best interests of our stockholders. Holders of all classes of our common stock have equal voting rights with respect to such matters and will vote as a single group rather than on a class-by-class basis. Accordingly, investors in our common stock are subject to the risk that our offering, business and operating plans may change.

***If our investments and future investments fail to perform as expected, cash distributions to our stockholders may decline.***

As December 31, 2022, we had a portfolio of $2.6 billion in total assets, with 84.8% of our equity value in operating properties, 10.9% in development and 4.3% in real estate-related investments. Each of our investments was based on an underwriting analysis with respect to each investment. If our investments do not perform as expected, whether as a result of the impact of the COVID-19 virus on the U.S. and world economies, or otherwise, or future acquisitions do not perform as expected, we may have less cash flow from operations available to fund distributions and investor returns may be reduced.

**Risks Related to Conflicts of Interest**

***Our advisor faces a conflict of interest because the fees it receives and the distributions to be received by the Special Limited Partner, an affiliate of our advisor, with respect to the Special Limited Partner's performance participation interest in the Operating Partnership are based in part on our NAV, which our advisor is responsible for determining.***

Our advisor is paid a management fee for its services based on our NAV, which is calculated by our advisor, based on valuations provided by independent appraisal firms. In addition, the allocation to be received by the Special Limited Partner with respect to its performance participation interest in the Operating Partnership will be based in part upon the Operating Partnership's net assets. The calculation of our NAV includes certain subjective judgments with respect to estimating, for example, the value of our portfolio and our accrued expenses, net portfolio income and liabilities, and therefore, our NAV may

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not correspond to realizable value upon a sale of those assets. In order to avoid a reduction in our NAV, the advisor may benefit by us retaining ownership of our assets at times when our stockholders may be better served by the sale or disposition of our assets. If our NAV is calculated in a way that is not reflective of our actual NAV, then the transaction price of shares of our common stock or the price paid for the repurchase of your shares of common stock on a given date may not accurately reflect the value of our portfolio, and your shares may be worth less than the transaction price or more than the repurchase price.

***Our advisor's management fee and the Special Limited Partner's performance participation interest may not create proper incentives or may induce our advisor and its affiliates to make certain investments or retain certain investments, including speculative investments, that increase the risk of our real estate portfolio.***

We pay our advisor a management fee regardless of the performance of our portfolio. Our advisor's entitlement to a management fee, which is not based upon performance metrics or goals, might reduce its incentive to devote its time and effort to seeking investments that provide attractive risk-adjusted returns for our portfolio. We may be required to pay our advisor a management fee in a particular period despite experiencing a net loss or a decline in the value of our portfolio during that period.

The existence of the Special Limited Partner's performance participation interest in the Operating Partnership, which is based on our total distributions plus the change in NAV per share, may create an incentive for our advisor to make riskier or more speculative investments on our behalf than it would otherwise make in the absence of such performance-based compensation. In addition, the change in NAV per share will be based on the value of our investments on the applicable measurement dates and not on realized gains or losses. As a result, the performance participation interest may receive distributions based on unrealized gains in certain assets at the time of such distributions and such gains may not be realized when those assets are eventually disposed of.

Because the management fee and performance participation are based on our NAV, our advisor may also be motivated to delay or curtail repurchases to maintain a higher NAV, which could increase amounts payable to our advisor and the Special Limited Partner. In order to avoid a reduction in our NAV, the advisor may also benefit by us retaining ownership of our assets at times when our stockholders may be better served by the sale or disposition of our assets.

***Our advisor, our officers and the real estate, debt finance, legal, management and accounting professionals we retain will face competing demands on their time and this may cause our operations and our stockholders' investment to suffer.***

Subject to the supervision of our board of directors, we rely on our advisor, our officers, and the real estate, debt finance, and management professionals that we retain to provide services to us for the management of our business. Our advisor and its affiliates may advise other real estate programs and rely on many of the same real estate, debt finance, and management professionals. As a result of their interests in other programs sponsored by our sponsor and their obligations to other investors, these professionals will likely face conflicts of interest in allocating their time among us and other programs sponsored by our advisor and its affiliates, as well as other business activities in which they are involved. During times of intense activity in other programs and ventures, these individuals may devote less time and fewer resources to our business than are necessary or appropriate to manage our business. If these events occur, the returns on our investments, and the value of your investment, may decline.

***All of our executive officers, some of our directors and the key real estate and debt finance professionals we retain face conflicts of interest related to their positions and/or significant ownership interests in our sponsor and advisor, which could hinder our ability to implement our business strategy and to generate returns to our stockholders.***

All of our executive officers, some of our directors, and the key real estate and debt finance professionals we retain are also executive officers, directors and/or key professionals of our advisor and sponsor. As a result, they owe fiduciary or other duties to each of these entities, their members and limited partners, which fiduciary or other duties may from time to time conflict with the fiduciary or other duties that they owe to us and our stockholders. Their loyalties to these other entities and investors could result in action or inaction that is detrimental to our business, which could harm the implementation of our business strategy and our investment and leasing opportunities. If we do not successfully implement our business strategy, we may be unable to generate the cash needed to make distributions to our stockholders and to maintain or increase the value of our assets. Because some of our officers and directors have a significant ownership interest in our sponsor and advisor, they may make decisions regarding the management of the properties which are not in the best interests of our stockholders.

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***Conflicts of interest could result in our management acting other than in our stockholders' best interest.***

We are party to an advisory agreement with CC Advisors III. CC Advisors III is owned by CCA which is currently beneficially owned and controlled by Daniel Shaeffer, Chad Christensen and Gregg Christensen who currently own 73.5% of CCA. Because our affiliated directors and certain of our officers have a significant ownership interest in and control our sponsor and advisor and have an indirect interest in the performance participation interest in the Operating Partnership they may make decisions regarding the advisory agreement or the Operating Partnership agreement which are not in the best interests of our stockholders.

CCA may sponsor or advise future real estate programs. We may compete with future programs and other affiliates of our advisor for opportunities to acquire or sell multifamily apartment communities and multifamily real estate-related assets, which may have an adverse impact on our operations. We may also buy or sell multifamily apartment communities and multifamily real estate-related assets at the same time as affiliates of our advisor. There may be a conflict of interest with respect to the selection of multifamily apartment communities and multifamily real estate-related assets to be purchased by us and/or our advisor and its affiliates. Affiliates of our advisor may own competing properties in the markets in which our multifamily apartment communities are located which may lead to conflicts of interests with respect to the operations and management of our multifamily apartment communities.

***The compensation we pay to our advisor and the Special Limited Partner in connection with the management of our business were determined without the benefit of arm's-length negotiations of the type normally conducted between unrelated parties.***

The fees, including the performance allocation, paid to our advisor and its affiliates for services provided by our advisor to us were determined without the benefit of arm's-length negotiations of the type normally conducted between unrelated parties, may be in excess of amounts that we would otherwise pay to third parties for such services and may reduce the amount of cash that would otherwise be available for investments in multifamily apartment communities and multifamily real estate-related assets and distributions to our stockholders.

***Our advisor faces conflicts of interest relating to the fees that we may pay to it and its affiliates, which could result in actions that are not necessarily in the long-term best interests of our stockholders.***

Pursuant to our operating partnership agreement, the Special Limited Partner is entitled to receive an allocation from the Operating Partnership with respect to its performance participation interest in the Operating Partnership. This participation interest is structured to provide incentive to our advisor to perform in our best interests and in the best interests of our stockholders. The amount of such compensation has not been determined as a result of arm's-length negotiations, and such amounts may be greater than otherwise would be payable to independent third parties. Because, however, our advisor is entitled to receive substantial minimum compensation regardless of performance, the interests of our advisor and its affiliates is not wholly aligned with those of our stockholders. In that regard, our advisor could be motivated to recommend riskier or more speculative investments in order for us to generate the specified levels of performance or sales proceeds that would entitle our advisor and its affiliates to additional compensation.

***Affiliates of our advisor have sponsored other entities and offerings and may sponsor additional entities and offerings in the future.***

It is possible that our advisor or its affiliates may form future REITs and sponsor other entities and offerings that may invest in assets that are similar to the multifamily apartment communities and multifamily real estate-related assets we intend to acquire. As a result, conflicts of interest with respect to time, selection of investments and management of our investments may occur if our advisor or its affiliates sponsor additional programs.

***If the advisory agreement with our advisor is terminated other than for cause (or non-renewal or termination by our advisor) on or before May 7, 2031, we will be required to pay a certain portion of the contingent acquisition fees and contingent financing fees provided for in our advisory agreement previously in effect.***

Our advisor was entitled to receive contingent acquisition fees related to our purchase of multifamily apartment communities and multifamily real estate-related assets and contingent financing fees related to our financing of multifamily apartment communities and multifamily real estate-related assets. Our advisor agreed to defer the payment of any acquisition fee or financing fee until our common stockholders' receipt of certain specified returns. In connection with the entry into the amended and restated advisory agreement on May 7, 2021, we eliminated our obligation to pay our advisor contingent acquisition fees and contingent financing fees except in the circumstance in which our advisory agreement is terminated other

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than for cause (or non-renewal or termination by our advisor) before May 7, 2031. If the advisory agreement is terminated other than for cause (or non-renewal or termination by our advisor), the contingent acquisition fees and contingent financing fees provided for in the previous advisory agreement will be due and payable in an amount equal to approximately $19.8 million ($22 million if the termination had occurred in year one reduced by 10% each year thereafter). Thus, there may be conflicts of interest with respect to the termination of the advisory agreement and the payment of the contingent acquisition fees and contingent financing fees.

***Our advisor may assign its obligations under the advisory agreement to its affiliates, who may not have the same expertise or provide the same level of service as our advisor.***

Under the advisory agreement, our advisor may assign its responsibilities under the agreement to any of its affiliates with the approval of the conflicts committee. If there is such an assignment or transfer, the assignee may not have comparable operational expertise, have sufficient personnel or manage our company as well as our advisor.

**Risks Related to Our Offering and Our Corporate Structure**

***Our charter limits the number of shares a person may own, which may discourage a takeover that could otherwise result in a premium price to our stockholders.***

Our charter, with certain exceptions, authorizes our directors to take such actions as are necessary and desirable to preserve our qualification as a REIT. To help us comply with the REIT ownership requirements of the Internal Revenue Code, our charter prohibits a person from directly or constructively owning more than 9.8% of our outstanding shares, unless exempted by our board of directors. This restriction may have the effect of delaying, deferring, or preventing a change in control of us, including an extraordinary transaction (such as a merger, tender offer or sale of all or substantially all of our assets) that might provide a premium price for holders of our common stock.

***Our charter permits our board of directors to issue stock with terms that may subordinate the rights of our common stockholders or discourage a third party from acquiring us in a manner that could result in a premium price to our stockholders.***

Our board of directors may classify or reclassify any unissued common stock or preferred stock and establish the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications and terms or conditions of redemption of any such stock. Thus, our board of directors could authorize the issuance of preferred stock with priority as to distributions and amounts payable upon liquidation over the rights of the holders of our common stock. Such preferred stock could also have the effect of delaying, deferring or preventing a change in control of us, including an extraordinary transaction (such as a merger, tender offer or sale of all or substantially all of our assets) that might provide a premium price to holders of our common stock.

***Holders of our preferred stock will have dividend, liquidation and other rights that are senior to the rights of the holders of our common stock.***

Our board of directors has the authority to designate and issue preferred stock with liquidation, dividend and other rights that are senior to those of our common stock. We have classified and designated 10,000,000 and 12,800,000 shares of our authorized but unissued preferred stock as shares of non-voting Series 2023 Preferred Stock and non-voting Series 2019 Preferred Stock, respectively. The outstanding shares of our Series 2023 Preferred Stock are entitled to receive a preferential dividend equal to a 6.0% cumulative but not compounded annual return (subject to an increase up to 6.5% in certain circumstances). The outstanding shares of our Series 2019 Preferred Stock are entitled to receive a preferred dividend equal to a 5.5% per annum cumulative but not compounded return (subject to an increase to 6.0% in certain circumstances). As of March 21, 2023, we had 2,761,203 and 12,637,166 shares of our Series 2023 Preferred Stock and Series 2019 Preferred Stock outstanding.

Holders of Series 2023 Preferred Stock and Series 2019 Preferred Stock are entitled to cumulative dividends before any dividends may be declared or set aside on our common stock, or the redemption of our common stock and a liquidation preference of $10.00 per share plus any accrued and unpaid distributions before any payment is made to holders of our common stock upon our voluntary or involuntary liquidation, dissolution or winding up. This will reduce the remaining amount of our assets, if any, available to distribute to holders of our common stock.

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***Our charter designates the Circuit Court for Baltimore City, Maryland as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit our stockholders' ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.***

Our charter provides that, unless we consent in writing to the selection of an alternative forum, the Circuit Court for Baltimore City, Maryland shall be the sole and exclusive forum for (a) any derivative action or proceeding brought on our behalf, (b) any action or proceeding asserting a claim of breach of any duty owed by any of our directors or officers or other employees to us or to our stockholders, (c) any action or proceeding asserting a claim arising pursuant to any provision of the Maryland General Corporation Law or our charter or our bylaws, or (d) any action or proceeding asserting a claim that is governed by the internal affairs doctrine, and any of our record or beneficial stockholders who is a party to such an action or proceeding shall cooperate in any request that we may make that the action or proceeding be assigned to the Court's Business and Technology Case Management Program. This choice of forum provision may limit a stockholder's ability to bring a claim in a judicial forum that the stockholder believes is favorable for disputes with us or our directors, officers or employees, which may discourage meritorious claims from being asserted against us and our directors, officers and employees. Alternatively, if a court were to find this provision of our charter inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect our business, financial condition or results of operations.

We adopted this provision because we believe it makes it less likely that we will be forced to incur the expense of defending duplicative actions in multiple forums and less likely that plaintiffs' attorneys will be able to employ such litigation to coerce us into otherwise unjustified settlements, and we believe the risk of a court declining to enforce this provision is remote, as the General Assembly of Maryland has specifically amended the Maryland General Corporation Law to authorize the adoption of such provisions. The exclusive forum provision of our charter does not establish exclusive jurisdiction in the Circuit Court for Baltimore City, Maryland for claims that arise under the Securities Act, the Exchange Act or other federal securities laws if there is exclusive or concurrent jurisdiction in the federal courts or for claims under state securities laws.

***Your investment return may be reduced if we are required to register as an investment company under the Investment Company Act; if our subsidiaries or we become an unregistered investment company, then we could not continue our business.***

Neither we nor any of our subsidiaries intend to register as investment companies under the Investment Company Act. If we or our subsidiaries were obligated to register as investment companies, then we would have to comply with a variety of substantive requirements under the Investment Company Act that impose, among other things:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• limitations on capital structure;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• restrictions on specified investments;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• prohibitions on transactions with affiliates; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• compliance with reporting, record keeping, voting, proxy disclosure and other rules and regulations that would significantly increase our operating expenses.

Under the relevant provisions of Section 3(a)(1) of the Investment Company Act, an investment company is any issuer that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• pursuant to Section 3(a)(1)(A), is or holds itself out as being engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting or trading in securities (the "primarily engaged test"); or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• pursuant to Section 3(a)(1)(C), is engaged or proposes to engage in the business of investing, reinvesting, owning, holding or trading in securities and owns or proposes to acquire "investment securities" having a value exceeding 40% of the value of such issuer's total assets (exclusive of United States government securities and cash items) on an unconsolidated basis (the "40% test"). "Investment securities" excludes United States government securities and securities of majority-owned subsidiaries that are not themselves investment companies and are not relying on the exception from the definition of investment company under Section 3(c)(1) or Section 3(c)(7) (relating to private investment companies).

Neither we nor the Operating Partnership should be required to register as an investment company under either of the tests above. With respect to the 40% test, most of the entities through which we and the Operating Partnership will own our assets will be majority-owned subsidiaries that will not themselves be investment companies and will not be relying on the exceptions from the definition of investment company under Section 3(c)(1) or Section 3(c)(7) (relating to private investment companies).

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With respect to the primarily engaged test, we and the Operating Partnership will be holding companies and do not intend to invest or trade in securities ourselves. Rather, through the majority-owned subsidiaries of the Operating Partnership, we and the Operating Partnership will be primarily engaged in the non-investment company businesses of these subsidiaries, namely the business of purchasing or otherwise acquiring real estate and real estate-related assets.

If any of the subsidiaries of the Operating Partnership fail to meet the 40% test, then we believe they will often be able to rely on Section 3(c)(5)(C) of the Investment Company Act for an exception from the definition of an investment company. As reflected in no-action letters, the SEC staff's position on Section 3(c)(5)(C) generally requires that an issuer maintain at least 55% of its assets in "mortgages and other liens on and interests in real estate" or qualifying assets; at least 80% of its assets in qualifying assets plus real estate-related assets; and no more than 20% of the value of its assets in other than qualifying assets and real estate-related assets. To constitute a qualifying asset under this 55% requirement, a real estate interest must meet various criteria based on no-action letters. We expect that any of the subsidiaries of the Operating Partnership relying on Section 3(c)(5)(C) will invest at least 55% of its assets in qualifying assets, with substantially all of its remaining assets in other types of real estate-related assets. If any subsidiary relies on Section 3(c)(5)(C), then we expect to rely on guidance published by the SEC staff or on our analyses of guidance published with respect to types of assets to determine which assets are qualifying real estate assets and real estate-related assets.

To maintain compliance with the Investment Company Act, our subsidiaries may be unable to sell assets we would otherwise want them to sell and may need to sell assets we would otherwise wish them to retain. In addition, our subsidiaries may have to acquire additional assets that they might not otherwise have acquired or may have to forego opportunities to make investments that we would otherwise want them to make and would be important to our investment strategy. Moreover, the SEC or its staff may issue interpretations with respect to various types of assets that are contrary to our views and current SEC staff interpretations are subject to change, which increases the risk of non-compliance and the risk that we may be forced to make adverse changes to our portfolio. In this regard, we note that in 2011 the SEC issued a concept release indicating that the SEC and its staff were reviewing interpretive issues relating to Section 3(c)(5)(C) and soliciting views on the application of Section 3(c)(5)(C) to companies engaged in the business of acquiring mortgages and mortgage related instruments. If we were required to register as an investment company but failed to do so, we would be prohibited from engaging in our business and criminal and civil actions could be brought against us. In addition, our contracts would be unenforceable unless a court required enforcement and a court could appoint a receiver to take control of us and liquidate our business.

***Rapid changes in the values of our assets may make it more difficult for us to maintain our qualification as a REIT or our exception from the definition of an investment company under the Investment Company Act.***

If the market value or income potential of our qualifying real estate assets changes as compared to the market value or income potential of our non-qualifying assets, or if the market value or income potential of our assets that are considered "real estate-related assets" under the Investment Company Act or REIT qualification tests changes as compared to the market value or income potential of our assets that are not considered "real estate-related assets" under the Investment Company Act or REIT qualification tests, whether as a result of increased interest rates, prepayment rates or other factors, we may need to modify our investment portfolio in order to maintain our REIT qualification or exception from the definition of an investment company. If the decline in asset values or income occurs quickly, this may be especially difficult, if not impossible, to accomplish. This difficulty may be exacerbated by the illiquid nature of many of the assets that we may own. We may have to make investment decisions that we otherwise would not make absent REIT and Investment Company Act considerations.

***Actions of our potential future joint venture partners could reduce the returns on joint venture investments and decrease our stockholders' overall return.***

We may enter into joint ventures with third parties or affiliates to acquire assets. We may also purchase and develop properties in joint ventures or in partnerships, co-tenancies or other co-ownership arrangements. Such investments may involve risks not otherwise present with other methods of investment, including, for example, the following risks:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• that our co-venturer, co-tenant or partner in an investment could become insolvent or bankrupt;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• that such co-venturer, co-tenant or partner may at any time have economic or business interests or goals that are or that become inconsistent with our business interests or goals;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• that such co-venturer, co-tenant or partner may be in a position to take action contrary to our instructions or requests or contrary to our policies or objectives; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• that disputes between us and our co-venturer, co-tenant or partner may result in litigation or arbitration that would increase our expenses and prevent our officers and directors from focusing their time and effort on our operations.

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Any of the above might subject a property to liabilities in excess of those contemplated and thus reduce our returns on that investment and the value of our stockholders' investment in us.

***If funds are not available from our distribution reinvestment plan offering for general corporate purposes, then we may have to use a greater proportion of our cash flow from operations to meet our general cash requirements, which would reduce cash available for distributions and could limit our ability to repurchase shares under our share repurchase program.***

We depend on the proceeds from our distribution reinvestment plan offering for general corporate purposes including, but not limited to: the repurchase of shares under our share repurchase program; capital expenditures, tenant improvement costs and leasing costs related to our real estate properties; reserves required by any financings of our real estate investments; the acquisition or origination of real estate investments; and the repayment of debt. We cannot predict with any certainty how much, if any, distribution reinvestment plan proceeds will be available for general corporate purposes. If such funds are not available from our distribution reinvestment plan offering, then we may have to use a greater proportion of our cash flow from operations to meet our general cash requirements, which would reduce cash available for distributions and could limit our ability to repurchase shares under our share repurchase program.

***Your interest in us will be diluted if we issue additional shares. Your interest in our assets will also be diluted if the Operating Partnership issues additional units.***

Holders of our common stock will not have preemptive rights to any shares we issue in the future. Under our charter, we have the authority to issue a total of 1,100,000,000 shares of capital stock. Of the total shares of stock authorized, 1,000,000,000 shares are classified as common stock with a par value of $0.01 per share, 125,000,000 of which are classified as Class A shares, 50,000,000 of which are classified as Class TX shares, 275,000,000 of which are classified as Class T shares, 275,000,000 of which are classified as Class D shares, 275,000,000 of which are classified as Class I shares, and 100,000,000 shares are classified as preferred stock with a par value of $0.01 per share, 12,800,000 of which are classified as Series 2019 and 10,000,000 of which are classified as Series 2023.

Our board of directors may amend our charter from time to time to increase or decrease the aggregate number of authorized shares of capital stock or the number of authorized shares of capital stock of any class or series without stockholder approval. After you purchase shares of common stock in our offering, our board of directors may elect, without stockholder approval, to: (1) sell additional shares in this or future public offerings; (2) issue shares of our common stock or CROP Units in private offerings; (3) issue shares of our common stock or units in the Operating Partnership to the advisor or the Special Limited Partner, or their successors or assigns, in payment of an outstanding obligation to pay fees for services rendered to us or the performance participation allocation; or (4) issue shares of our common stock or CROP Units to sellers of properties we acquire.

To the extent we issue additional shares of common stock after you purchase shares of common stock in our offering, your percentage ownership interest in us will be diluted. Because we hold all of our assets through the Operating Partnership, to the extent we issue additional units of the Operating Partnership after you purchase in our offering, your percentage ownership interest in our assets will be diluted. Because certain classes of the units of the Operating Partnership may, in the discretion of our board of directors, be exchanged for shares of our common stock, any merger, exchange or conversion between the Operating Partnership and another entity ultimately could result in the issuance of a substantial number of shares of our common stock, thereby diluting the percentage ownership interest of other stockholders. Because of these and other reasons, our stockholders may experience substantial dilution in their percentage ownership of our shares or their interests in the underlying assets held by the Operating Partnership. CROP Units may have different and preferential rights to the claims of common units of the Operating Partnership which correspond to the common stock held by our stockholders.

***If we are unable to obtain funding for future cash needs, cash distributions to our stockholders could be reduced and the value of our investments could decline.***

If we need additional capital in the future to improve or maintain our multifamily apartment communities or for any other reason, we may have to obtain financing from sources beyond our cash flow from operations, such as borrowings, sales of assets or future equity offerings. These sources of funding may not be available on attractive terms or at all. If we cannot procure additional funding for capital improvements, our investments may generate lower cash flows or decline in value, or both, which would limit our ability to make distributions to you and could reduce the value of your investment.

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***Our UPREIT structure may result in potential conflicts of interest with limited partners in the Operating Partnership whose interests may not be aligned with those of our stockholders.***

Our directors and officers have duties to our corporation and our stockholders under Maryland law and our charter in connection with their management of the corporation. At the same time, we, as the sole member of the sole general partner, have fiduciary duties under Delaware law to the Operating Partnership and to the limited partners in connection with the management of the Operating Partnership. Our duties as general partner of the Operating Partnership and its partners may come into conflict with the duties of our directors and officers to the corporation and our stockholders. Under Delaware law, a general partner of a Delaware limited partnership owes its limited partners the duties of good faith and fair dealing. Other duties, including fiduciary duties, may be modified or eliminated in the partnership's Partnership Agreement. The Partnership Agreement of the Operating Partnership provides that, for so long as we own a controlling interest in the Operating Partnership, any conflict that cannot be resolved in a manner not adverse to either our stockholders or the limited partners may be resolved in favor of our stockholders.

Additionally, the Partnership Agreement expressly limits our liability by providing that we and our officers, directors, agents and employees will not be liable or accountable to the Operating Partnership for losses sustained, liabilities incurred or benefits not derived if we or our officers, directors, agents or employees acted in good faith. In addition, the Operating Partnership is required to indemnify us and our officers, directors, employees, agents and designees to the extent permitted by applicable law and to the extent indemnification is not prohibited under Article XVI of our charter, from and against any and all claims arising from operations of the Operating Partnership, unless it is established that: (1) the act or omission was material to the matter giving rise to the proceeding and either was committed in bad faith or was the result of active and deliberate dishonesty; (2) the indemnified party received an improper personal benefit in money, property or services; or (3) in the case of a criminal proceeding, the indemnified person had reasonable cause to believe that the act or omission was unlawful.

The provisions of Delaware law that allow the fiduciary duties of a general partner to be modified by a partnership agreement have not been tested in a court of law, and we have not obtained an opinion of counsel covering the provisions set forth in the Partnership Agreement that purport to waive or restrict our fiduciary duties.

***Although we will not currently be afforded the protection of the Maryland General Corporation Law relating to deterring or defending hostile takeovers, our board of directors could opt into these provisions of Maryland law in the future, which may discourage others from trying to acquire control of us and may prevent our stockholders from receiving a premium price for their shares in connection with a business combination.***

Under Maryland law, "business combinations" between a Maryland corporation and certain interested stockholders or affiliates of interested stockholders are prohibited for five years after the most recent date on which the interested stockholder becomes an interested stockholder. These business combinations include a merger, consolidation, share exchange, or, in circumstances specified in the statute, an asset transfer or issuance or reclassification of equity securities. Also under Maryland law, control shares of a Maryland corporation acquired in a control share acquisition have no voting rights except to the extent approved by a vote of two-thirds of the votes entitled to be cast on the matter. Shares owned by the acquirer, an officer of the corporation, or an employee of the corporation who is also a director of the corporation are excluded from the vote on whether to accord voting rights to the control shares. Should our board of directors opt into these provisions of Maryland law, it may discourage others from trying to acquire control of us and increase the difficulty of consummating any offer. Similarly, provisions of Title 3, Subtitle 8 of the Maryland General Corporation Law could provide similar anti-takeover protection.

***Because Maryland law permits our board of directors to adopt certain anti-takeover measures without stockholder approval, investors may be less likely to receive a "control premium" for their shares.***

In 1999, the State of Maryland enacted legislation that enhances the power of Maryland corporations to protect themselves from unsolicited takeovers. Among other things, the legislation permits our board, without stockholder approval, to amend our charter to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• stagger our board of directors into three classes;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• require a two-thirds stockholder vote for removal of directors;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• provide that only the board can fix the size of the board;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• provide that all vacancies on the board, however created, may be filled only by the affirmative vote of a majority of the remaining directors in office; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• require that special stockholder meetings may only be called by holders of a majority of the voting shares entitled to be cast at the meeting.

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Under Maryland law, a corporation can opt to be governed by some or all of these provisions if it has a class of equity securities registered under the Exchange Act, and has at least three independent directors. Our charter does not prohibit our board from opting into any of the above provisions permitted under Maryland law. Becoming governed by any of these provisions could discourage an extraordinary transaction (such as a merger, tender offer or sale of all or substantially all of our assets) that might provide a premium price for holders of our securities.

***We could be negatively impacted by changes in our relationship with Fannie Mae or Freddie Mac, changes in the condition of Fannie Mae or Freddie Mac and by changes in government support for multi-family housing.***

Fannie Mae and Freddie Mac have been a major source of financing for multi-family real estate in the United States and we have used loan programs sponsored by these agencies to finance most of our acquisitions of multi-family properties. There have been ongoing discussion by the government and other interested parties with regard to the long term structure and viability of Fannie Mae and Freddie Mac, which could result in adjustments to guidelines for their loan products. Should these agencies have their mandates changed or reduced, lose key personnel, be disbanded or reorganized by the government or otherwise discontinue providing liquidity for the multi-family sector, our ability to obtain financing through loan programs sponsored by the agencies could be negatively impacted. In addition, changes in our relationships with Fannie Mae and Freddie Mac, and the lenders that participate in these loan programs, with respect to our existing mortgage financing could impact our ability to obtain comparable financing for new acquisitions or refinancing for our existing multi-family real estate investments. Should our access to financing provided through Fannie Mae and Freddie Mac loan programs be reduced or impaired, it would significantly reduce our access to debt capital and/or increase borrowing costs and could significantly limit our ability to acquire properties on acceptable terms and reduce the values to be realized upon property sales.

***Breaches of our data security could materially harm us, including our business, financial performance and reputation.***

We collect and retain certain personal information provided by our residents and employees. Security measures we have implemented to protect the confidentiality of this information may not prevent unauthorized access to this information. Any breach of our data security measures and loss of this information may result in legal liability and costs (including damages and penalties), as well as damage to our reputation, that could materially and adversely affect us, including our business and financial performance.

***We are an "emerging growth company" under the federal securities laws and are subject to reduced public company reporting requirements.***

We are an "emerging growth company," as defined in the Jumpstart Our Business Startups Act, or the JOBS Act, and are eligible to take advantage of certain exemptions from, or reduced disclosure obligations relating to, various reporting requirements that are normally applicable to public companies. We may retain our status as an "emerging growth company" for a maximum of five years, or until the earliest of (i) the last day of the first fiscal year in which it has total annual gross revenue of $1.07 billion or more, (ii) December 31 of the fiscal year that we become a "large accelerated filer" as defined in Rule 12b-2 under the Exchange Act (which would occur if the market value of our common stock held by non-affiliates exceeds $700 million, measured as of the last business day of our most recently completed second fiscal quarter, and we have been publicly reporting for at least 12 months) or (iii) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three-year period.

Under the JOBS Act, emerging growth companies (a) are permitted to provide audited financial statements for two fiscal years instead of three fiscal years required for other reporting companies, (b) are not required to provide certain disclosures relating to executive compensation generally required for larger public companies, (c) are not required to provide an auditor's attestation report on management's assessment of the effectiveness of internal control over financial reporting, pursuant to Section 404 of the Sarbanes-Oxley Act, (d) are not required to comply with the audit rules adopted by the Public Company Accounting Oversight Board ("PCAOB") after April 5, 2012 (unless the SEC determines otherwise) and (e) do not have to hold shareholder advisory votes on executive compensation. Taking advantage of any of these reduced requirements may make our common stock less attractive.

Additionally, the JOBS Act provides that an "emerging growth company" may take advantage of an extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies. This means an "emerging growth company" can delay adopting certain accounting standards until such standards are otherwise applicable to private companies. However, we have elected to "opt out" of such extended transition period and will therefore comply with new or revised accounting standards on the applicable dates on which the adoption of such standards is required for non-emerging growth companies. Section 107 of the JOBS Act provides that our decision to opt out of such extended transition period for compliance with new or revised accounting standards is irrevocable.

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We will lose our emerging growth company status on December 31, 2023. Accordingly, we will become subject to certain disclosure and compliance requirements that apply to other public companies but did not previously apply to us due to our status as an emerging growth company. We expect that the loss of emerging growth company status and compliance with the additional requirements of not being an emerging growth company will increase our legal and financial compliance costs and cause management and other personnel to divert attention from operational and other business matters to devote substantial time to public company reporting requirements.

**General Risks Related to Investments in Real Estate**

***We will not be diversified with respect to the class of assets that we own.***

We will invest, through the Operating Partnership, solely in multifamily apartment communities and multifamily real estate-related assets. While we intend to invest in a significant number of properties across several geographical locations and markets, we will not invest in a diverse set of asset classes. Further, we have no plans to acquire any assets other than assets consisting of multifamily apartment communities and multifamily real estate-related assets. Therefore, each of our investments could be subject to the same or similar rental property related risks and a decline in real estate values in general or a change in economic conditions which affects real property investment and rental markets could have a substantial adverse effect on our financial performance.

***If we fail to diversify our investment portfolio, downturns relating to certain geographic regions, types of assets, industries or business sectors may have a more significant adverse impact on our assets and our ability to make distributions than if we had a diversified investment portfolio.***

While we intend to diversify our portfolio of investments, we are not required to observe specific diversification criteria. Therefore, our investments in multifamily apartment communities and multifamily real estate-related assets may be concentrated in assets that are subject to higher risk of foreclosure or concentrated in a limited number of geographic locations. To the extent that our portfolio is concentrated in limited geographic regions, downturns relating generally to such region may result in a reduction in our net income and the value of our common stock and accordingly limit our ability to make distributions to you.

***There are risks inherent in the acquisition and management of multifamily apartment communities.***

There are risks associated with the operation of multifamily apartment communities, including, but not limited to, vacillations in the demand for residential space; risk of loss or damage to the improvements or property of tenants; environmental risks and other risks associated with ownership of real estate. Any of the above factors, or a combination thereof, could result in a decrease in the value of our investments which would have an adverse effect on our results of operations, reduce the cash flow available for distributions and the return on your investment.

***Rental levels at the multifamily apartment communities that we acquire can vary over time and we may not be able to maintain the occupancy rates we anticipate.***

We will make our determination regarding the acquisition of multifamily apartment communities that we acquire based, among other things, on the property's projected rent levels. However, there can be no assurance that a multifamily apartment community will continue to be occupied at the projected rents. It is anticipated that leases with the tenants at our multifamily apartment communities will generally be for terms of one year or less. If the tenants of the properties do not renew or extend their leases, if tenants default under their leases at the properties, if issues arise with respect to the permissibility of certain uses at the properties, if tenants of the properties terminate their leases, or if the terms of any renewal (including concessions to the tenants) are less favorable than existing lease terms, the operating results of the properties could be substantially affected. As a result, we may not be able to make distributions to the stockholders at the anticipated levels.

***We rely on our employees as well as third parties to provide property management services to our properties, should the staff of a particular property perform poorly, our operating results for that property will similarly be hindered and our net income may be reduced.***

We depend upon our employees as well as the performance of our third-party property managers to effectively manage our properties and real estate-related assets. Rising vacancies across real estate properties have resulted in increased pressure on real estate investors and their property managers to maintain adequate occupancy levels. In order to do so, we may have to offer inducements, such as free rent and resident amenities, to compete for residents. In addition, our property managers may be

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unsuccessful in their ability to collect rent resulting in increased collection loss and evict tenants for non-payment of rent permitting us to lease their space. Poor performance by those sales, leasing and other management staff members operating a particular property will necessarily translate into poor results of operations for that particular property. Should we or third parties fail to identify problems in the day-to-day management of a particular property or fail to take the appropriate corrective action in a timely manner, our operating results may be hindered and our net income reduced.

***It may be difficult for us to attract new tenants to our multifamily apartment communities.***

There can be no assurance that we will be able to maintain the occupancy rates at our multifamily apartment communities. The tenants at any multifamily apartment communities may have the right to terminate their leases upon the occurrence of specified events. The majority of leases at the properties are for terms of one year or less.

***Rent control and other changes in applicable laws, or noncompliance with applicable laws, could adversely affect our portfolio of residential properties.***

Lower revenue growth or significant unanticipated expenditures may result from changes in rent control or rent stabilization laws or other residential landlord/tenant laws. Municipalities may implement, consider or be urged by advocacy groups to consider rent control or rent stabilization laws and regulations or take other actions that could limit our ability to raise rents based on market conditions. These initiatives and any other future enactments of rent control or rent stabilization laws or other laws regulating residential housing, as well as any lawsuits against us arising from such rent control or other laws, may reduce rental revenues or increase operating costs. Such laws and regulations may limit our ability to charge market rents, increase rents, evict tenants or recover increases in our operating costs and could make it more difficult for us to dispose of properties in certain circumstances. Expenses associated with investments in residential properties, such as debt service, real estate taxes, insurance and maintenance costs, are generally not reduced when circumstances cause a reduction in rental income from such properties.

***Our inability to sell a multifamily apartment community at the time and on the terms we want could limit our ability to pay cash distributions to our stockholders.***

Many factors that are beyond our control affect the real estate market and could affect our ability to sell multifamily apartment communities for the price, on the terms or within the time frame that we desire. These factors include general economic conditions, the availability of financing, interest rates and other factors, including supply and demand. Because real estate investments are relatively illiquid, we have a limited ability to vary our portfolio in response to changes in economic or other conditions. Further, before we can sell a multifamily apartment community on the terms we want, it may be necessary to expend funds to correct defects or to make improvements. However, we can give no assurance that we will have the funds available to correct such defects or to make such improvements. We may be unable to sell our multifamily apartment communities at a profit. Our inability to sell multifamily apartment communities at the time and on the terms we want could reduce our cash flow and limit our ability to make distributions to our stockholders and could reduce the value of your investment.

***We may have no or only limited recourse for any problems later identified for multifamily apartment communities we acquire, which could materially and adversely affect us, including our results of operations.***

We anticipate sellers of multifamily apartment communities will sell such properties "as is," "where is" and "with all faults," without any warranties of merchantability or fitness for a particular use or purpose. In addition, purchase and sale agreements may contain limited warranties, representations and indemnifications that will only survive for a limited period after the closing. The purchase of multifamily apartment communities with no or limited warranties increases the risk that we may lose some or all of our invested capital in the property, as well as the loss of rental income from that multifamily apartment community, which could materially and adversely affect us.

***Costs imposed pursuant to governmental laws and regulations may reduce our net income and the cash available for distributions to our stockholders.***

Real property and the operations conducted on real property are subject to federal, state and local laws and regulations relating to protection of the environment and human health. We could be subject to liability in the form of fines, penalties or damages for noncompliance with these laws and regulations. These laws and regulations generally govern wastewater discharges, air emissions, the operation and removal of underground and above-ground storage tanks, the use, storage, treatment, transportation and disposal of solid and hazardous materials, the remediation of contamination associated with the

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release or disposal of solid and hazardous materials, the presence of toxic building materials and other health and safety-related concerns.

Some of these laws and regulations may impose joint and several liability on the tenants, owners or operators of real property for the costs to investigate or remediate contaminated properties, regardless of fault, whether the contamination occurred prior to purchase, or whether the acts causing the contamination were legal. Activities of our tenants, the condition of properties at the time we buy them, operations in the vicinity of our properties, such as the presence of underground storage tanks, or activities of unrelated third parties may affect our properties.

The presence of hazardous substances, or the failure to properly manage or remediate these substances, may hinder our ability to sell, rent, or pledge such property as collateral for future borrowings. Any material expenditures, fines, penalties or damages we must pay will reduce our ability to make distributions and may reduce the value of your investment.

***Potential liability for environmental matters could adversely affect our financial condition.***

Although we intend to subject our multifamily apartment communities to an environmental assessment prior to acquisition, we may not be made aware of all the environmental liabilities associated with a property prior to its purchase. There may be hidden environmental hazards that may not be discovered prior to acquisition. The costs of investigation, remediation or removal of hazardous substances may be substantial. In addition, the presence of hazardous substances on one of our properties, or the failure to properly remediate a contaminated property, could adversely affect our ability to sell or rent the property or to borrow using the property as collateral.

Various federal, state and local environmental laws impose responsibilities on an owner or operator of real estate and subject those persons to potential joint and several liabilities. Typical provisions of those laws include:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• responsibility and liability for the costs of investigation, removal, or remediation of hazardous substances released on or in real property, generally without regard to knowledge of or responsibility for the presence of the contaminants;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• liability for claims by third parties based on damages to natural resources or property, personal injuries, or costs of removal or remediation of hazardous or toxic substances in, on, or migrating from our property;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• responsibility for managing asbestos-containing building materials, and third-party claims for exposure to those materials; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• environmental laws also may impose restrictions on the manner in which property may be used or businesses may be operated, and these restrictions may require expenditures.

***Costs associated with complying with the Americans with Disabilities Act and the Fair Housing Amendment Act may decrease cash available for distributions.***

Our properties may be subject to the Americans with Disabilities Act of 1990, as amended, or the Disabilities Act and the Fair Housing Amendment Act, as amended, or the Fair Housing Act. Under the Disabilities Act, all places of public accommodation are required to comply with federal requirements related to access and use by disabled persons and may require owners of multifamily dwellings to make reasonable exceptions in their policies and operations to afford people with disabilities equal housing opportunities. The Disabilities Act has separate compliance requirements for "public accommodations" and "commercial facilities" that generally require that buildings and services be made accessible and available to people with disabilities. The Disabilities Act's requirements could require removal of access barriers and could result in the imposition of injunctive relief, monetary penalties, or, in some cases, an award of damages. The Fair Housing Act requires multifamily dwellings first occupied after March 13, 1991 to comply with design and construction requirements related to access and use by disabled persons. Any funds used for Disabilities Act and Fair Housing Act compliance will reduce our net income and the amount of cash available for distributions to you.

***Uninsured losses relating to real property or excessively expensive premiums for insurance coverage could reduce our cash flows and the return on our stockholders' investment.***

There are types of losses, generally catastrophic in nature, such as losses due to wars, acts of terrorism, earthquakes, floods, hurricanes, pollution, or environmental matters that are uninsurable or not economically insurable, or may be insured subject to limitations, such as large deductibles or co-payments. Insurance risks associated with potential acts of terrorism could sharply increase the premiums we pay for coverage against property and casualty claims. Additionally, mortgage lenders in some cases have begun to insist that commercial property owners purchase coverage against terrorism as a condition for providing mortgage loans. Such insurance policies may not be available at reasonable costs, which may increase our cost of obtaining financing. We may not have adequate coverage for such losses. If any of our properties incurs a casualty loss that is

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not fully insured, the value of our assets will be reduced by any such uninsured loss, which may reduce the value of your investment. In addition, other than any working capital reserve or other reserves we may establish, we have no source of funding to repair or reconstruct any uninsured property. Also, to the extent we must pay unexpectedly large amounts for insurance, we could suffer reduced earnings that would result in lower distributions to you.

***The properties will include certain amenities for the residents at the properties that could increase the potential liabilities at the properties.***

In addition to the apartment buildings, the properties will be improved with various amenities, such as swimming pools, exercise rooms, playgrounds, laundry facilities, business centers and/or rentable club houses. Certain claims could arise in the event that a personal injury, death, or injury to property should occur in, on, or around any of these improvements. In addition, certain of the multifamily apartment communities may be located in areas where dangerous wildlife live which could pose dangers to the residents at the applicable property. There can be no assurance that particular risks pertaining to these improvements that currently may be insured will continue to be insurable on an economical basis or that current levels of coverage will continue to be available. If a loss occurs that is partially or completely uninsured, we may lose all or part of the investment. We may be liable for any uninsured or underinsured personal injury, death or property damage claims. Liability in such cases may be unlimited but stockholders will not be personally liable.

***Competition and any increased affordability of single-family residential homes could limit our ability to lease our apartments or maintain or increase rents, which may materially and adversely affect us, including our financial condition, cash flows, results of operations and growth prospects.***

The multifamily industry is highly competitive, and we face competition from many sources, including from other multifamily apartment communities both in the immediate vicinity and the geographic markets where our properties are and will be located. If so, this would increase the number of apartment units available and may decrease occupancy and unit rental rates. Furthermore, multifamily apartment communities we acquire compete, or will compete, with numerous housing alternatives in attracting residents, including owner occupied single and multifamily homes available to rent or purchase. The number of competitive properties and/or condominiums in a particular area, or any increased affordability of owner occupied single and multifamily homes caused by declining housing prices, mortgage interest rates and government programs to promote home ownership, could adversely affect our ability to retain our residents, lease apartment units and maintain or increase rental rates. These factors could materially and adversely affect us.

***Increased construction of similar multifamily apartment communities that compete with our properties in any particular location may materially and adversely affect us, including our results of operations and our cash available for distribution to our stockholders.***

We may acquire multifamily apartment communities in locations that experience increases in construction of properties that compete with our properties. This increased competition and construction could make it more difficult for us to find residents to lease units in our multifamily apartment communities and/or force us to lower our rental rates in order to lease units in our properties, which could substantially reduce our revenues and could have a material adverse effect on us. In addition, overbuilding of multifamily apartment communities may occur.

***We may be unable to secure funds for future capital improvements, which could adversely impact our ability to make cash distributions to our stockholders.***

When residents do not renew their leases or otherwise vacate their apartment unit, in order to attract replacement residents, we may be required to expend funds for capital improvements to the vacated apartment homes. In addition, we may require substantial funds to renovate a multifamily apartment community in order to sell it, upgrade it or reposition it in the market. If we have insufficient capital reserves, we will have to obtain financing from other sources. We intend to establish capital reserves in an amount we, in our discretion, believe is necessary. A lender also may require escrow of capital reserves in excess of any established reserves. If these reserves or any reserves otherwise established are designated for other uses or are insufficient to meet our cash needs, we may have to obtain financing from either affiliated or unaffiliated sources to fund our cash requirements. We cannot assure our stockholders that sufficient financing will be available or, if available, will be available on economically feasible terms or on terms acceptable to us. Moreover, certain reserves required by lenders may be designated for specific uses and may not be available for capital purposes such as future capital improvements. Additional borrowing for capital needs and capital improvements will increase our interest expense, and therefore our financial condition and our ability to make cash distributions to our stockholders may be adversely affected.

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***Our multifamily apartment communities are subject to property taxes that may increase in the future, which could adversely affect our cash flow.***

Our multifamily apartment communities are subject to real and personal property taxes that may increase as tax rates change and as the multifamily apartment communities are assessed or reassessed by taxing authorities. As the owner of the multifamily apartment communities, we are ultimately responsible for payment of the taxes to the applicable government authorities. If we fail to pay any such taxes, the applicable taxing authority may place a lien on the real property and the real property may be subject to a tax sale.

***Increases in costs to own and maintain our properties may materially and adversely affect us, including our results of operations and cash flows.***

We may experience increased costs associated with operating expenses, including capital improvements, routine property maintenance, real estate taxes and utility expenses. Any increases in our expenses to own and maintain our properties would consequently reduce our results of operations and cash flows.

***Potential development and construction delays and resultant increased costs and risks may hinder our operating results and decrease our net income.***

We may acquire unimproved real property or properties that are under development or construction. Investments in such properties will be subject to the uncertainties associated with the development and construction of real property, including those related to re-zoning land for development, environmental concerns of governmental entities and/or community groups and our builders' ability to build in conformity with plans, specifications, budgeted costs and timetables. If a builder fails to perform, we may resort to legal action to rescind the purchase or the construction contract or to compel performance. A builder's performance may also be affected or delayed by conditions beyond the builder's control. Delays in completing construction could also give tenants the right to terminate preconstruction leases. We may incur additional risks when we make periodic progress payments or other advances to builders before they complete construction. These and other factors can result in increased costs of a project or loss of our investment. In addition, we will be subject to normal lease-up risks relating to newly constructed projects. We also must rely on rental income and expense projections and estimates of the fair market value of property upon completion of construction when agreeing upon a purchase price at the time we acquire the property. If our projections are inaccurate, we may pay too much for a property, and the return on our investment could suffer.

***Supply chain disruptions could create unexpected renovation or maintenance costs or delays and/or could impact our development projects, any of which could have a negative effect on our results of operations.***

The construction and building industry, similar to many other industries, has recently experienced worldwide supply chain disruptions due to a multitude of factors that are beyond our control, including the COVID-19 pandemic, and such disruptions may continue to occur. Materials, parts and labor have also increased in cost over the recent past, sometimes significantly and over a short period of time. Our development projects as well as small-scale construction projects, such as building renovations and maintenance or and tenant improvements required under leases are a routine and necessary part of our business. We may incur costs for our development projects or routine maintenance at our properties that exceeds our original estimates due to increased costs for materials or labor or other costs that are unexpected. We also may be unable to complete our development projects on schedule due to supply chain disruptions or labor shortages.

**Risks Related to Multifamily Real Estate-Related Assets**

***Our investments in multifamily real estate-related assets will be subject to the risks typically associated with real estate.***

Our investments in mortgage, mezzanine or other real estate loans will generally be directly or indirectly secured by a lien on real property (or the equity interests in an entity that owns real property) that, upon the occurrence of a default on the loan, could result in our taking ownership of the entity that owns the real estate. We will not know whether the values of the multifamily apartment communities ultimately indirectly securing our loans will remain at the levels existing on the dates of origination or acquisition of those loans. If the values of the underlying multifamily apartment communities drop, our risk will increase because of the lower value of the security associated with such loans. In this manner, real estate values could impact the values of our loan investments. Therefore, our multifamily real estate-related assets will be subject to the risks typically associated with real estate, which are described above under the heading "General Risks Related to Investments in Real Estate."

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***Any mortgage loans we acquire or originate and the mortgage loans underlying any mortgage securities we may invest in are subject to delinquency, foreclosure and loss, which could result in losses to us.***

Commercial real estate loans generally are secured by commercial real estate properties and are subject to risks of delinquency and foreclosure. The ability of a borrower to repay a loan secured by an income-producing property typically is dependent primarily upon the successful operation of such property rather than upon the existence of independent income or assets of the borrower. If the net operating income of the property is reduced, the borrower's ability to repay the loan may be impaired. Net operating income of an income-producing property can be affected by, among other things: tenant mix, success of tenant businesses, occupancy rates, property management decisions, property location and condition, competition from comparable types of properties, changes in laws that increase operating expenses or limit rents that may be charged, any need to address environmental contamination at the property, the occurrence of any uninsured casualty at the property, changes in national, regional or local economic conditions and/or specific industry segments, declines in regional or local real estate values, declines in regional or local rental or occupancy rates, increases in interest rates, real estate tax rates and other operating expenses, changes in governmental rules, fiscal policies and regulations (including environmental legislation), natural disasters, terrorism, social unrest and civil disturbances.

In the event of any default under any mortgage loan held by us, we will bear a risk of loss of principal and accrued interest to the extent of any deficiency between the value of the collateral and the principal and accrued interest of the mortgage loan, which could have a material adverse effect on our cash flow from operations. Foreclosure on a property securing a mortgage loan can be an expensive and lengthy process that could have a substantial negative effect on our anticipated return on the foreclosed investment. In the event of the bankruptcy of a mortgage loan borrower, the mortgage loan to such borrower will be deemed to be secured only to the extent of the value of the underlying collateral at the time of bankruptcy (as determined by the bankruptcy court), and the lien securing the mortgage loan will be subject to the avoidance powers of the bankruptcy trustee or debtor-in-possession to the extent the lien is unenforceable under state law.

***Delays in liquidating defaulted mortgage loans could reduce our investment returns.***

If there are defaults under any mortgage loan we acquire or originate, we may not be able to repossess and sell the underlying properties quickly. The resulting time delay could reduce the value of our investment in the defaulted mortgage loans. An action to foreclose on a property securing a mortgage loan is regulated by state statutes and regulations and is subject to many of the delays and expenses of other lawsuits if the borrower raises defenses or counterclaims. In the event of default by a borrower, these restrictions, among other factors, may impede our ability to foreclose on or sell the mortgaged property or to obtain proceeds sufficient to repay all amounts due to us on the mortgage loan.

***The mezzanine and bridge loans in which we may invest would involve greater risks of loss than loans secured by a first deed of trust or mortgage on property.***

We may invest in mezzanine and bridge loans that take the form of subordinated loans secured by a pledge of the ownership interests of either the entity owning (directly or indirectly) the real property or the entity that owns the interest in the entity owning the real property. These types of investments may involve a higher degree of risk than long-term senior mortgage lending secured by income-producing real property because the investment may become unsecured as a result of foreclosure by the senior lender. In the event of a bankruptcy of the entity providing the pledge of its ownership interests as security, we may not have full recourse to the assets of such entity, or the assets of the entity may not be sufficient to satisfy our mezzanine loan. If a borrower defaults on our mezzanine loan or debt senior to our loan, or in the event of a borrower bankruptcy, our mezzanine loan will be satisfied only after the senior debt. As a result, we may not recover some or all of our investment. In addition, mezzanine loans may have higher loan-to-value ratios than conventional mortgage loans, resulting in less equity in the real property and increasing the risk of loss of principal.

***The B Notes in which we invest may be subject to additional risks relating to the privately negotiated structure and terms of the transaction, which may result in losses to us.***

We have previously invested in a B Note and may do so again in the future. A B Note is a mortgage loan typically (i) secured by a first mortgage on a single large commercial property or group of related properties and (ii) subordinated to an A Note secured by the same first mortgage on the same collateral. As a result, if a borrower defaults, there may not be sufficient funds remaining for B Note holders after payment to the A Note holders. Since each transaction is privately negotiated, B Notes can vary in their structural characteristics and risks. For example, under the agreement between the A Note holders and the B Note holders, the A Note holders, whose economic interests may not align with the economic interests of the B Note holders, typically are empowered to take the lead on loan administration, on decisions whether to enforce or negotiate a work-out of a defaulted or stressed loan, and on pricing and market timing for the sale of foreclosed property. While the B Note holders can

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exercise some influence over those decisions through consent rights, the B Note holders typically lose their consent rights under certain circumstances, including if the liquidation value of the B Note, based on an appraisal, falls below an agreed threshold. We cannot predict the terms of each B Note investment. Further, B Notes typically are secured by a single property, and so reflect the increased risks associated with a single property compared to a pool of properties.

***We have invested in and may continue to invest in real estate-related equity, which is subordinate to any indebtedness, but involves different rights.***

We have invested in and may continue to invest in noncontrolling equity positions and other real estate-related interests. Preferred equity investments are subordinate to any indebtedness obtained by the entity, but senior to the owners' common equity. These interests are not secured by the underlying real estate, but upon the occurrence of a default, the preferred equity provider has the right to effectuate a change of control in certain circumstances with respect to the ownership of the property. Preferred equity investments typically earn a preferred return rather than interest payments and often have the right for such preferred return to accrue if there is insufficient cash flow to pay currently. The preferred return provided as a term of our preferred equity investments is not a measure of our investment performance and is not indicative of distributions that we may provide to investors. It should not be relied on to predict an investor's returns and is subject to the development and performance of the project for which the preferred equity is being provided. Furthermore, the preferred return is only a contractual preference on allocations, and is subordinate to any construction debt and senior preferred equity and there is no guarantee that it will be achieved or paid.

***We have invested in the preferred equity of other entities, the management of which may adversely affect our business.***

We have invested in the preferred equity of other entities. However, we will not control the management, investment decisions, or operations of these companies. Management of those enterprises may decide to change the nature of their assets, or management may otherwise change in a manner that is not satisfactory to us. We will have no ability to affect these management decisions and we may have only limited ability to dispose of our investments.

**Risks Associated with Debt Financing**

***We have obtained and are likely to continue to obtain mortgage indebtedness and other borrowings, which increases our risk of loss due to potential foreclosure.***

We have obtained and plan to continue obtain long-term financing that is secured by our multifamily apartment communities. In some instances, we may acquire multifamily apartment communities by financing a portion of the price of the multifamily apartment communities and mortgaging or pledging some or all of the multifamily apartment communities purchased as security for that debt. We may also incur mortgage debt on multifamily apartment communities that we already own in order to obtain funds to acquire additional multifamily apartment communities, to fund property improvements and other capital expenditures, to make distributions, and for other purposes. In addition, we may borrow as necessary or advisable to ensure that we maintain our qualification as a REIT for federal income tax purposes, including borrowings to satisfy the REIT requirement that we distribute at least 90% of our annual REIT taxable income to our stockholders (computed without regard to the dividends-paid deduction and excluding net capital gain). We, however, can give our stockholders no assurance that we will be able to obtain such borrowings on satisfactory terms.

Incurring mortgage debt increases the risk of loss of a multifamily apartment community since defaults on indebtedness secured by a multifamily apartment community may result in lenders initiating foreclosure actions. In that case, we could lose the multifamily apartment community securing the loan that is in default, reducing the value of our stockholders' investment. For tax purposes, a foreclosure of any of our multifamily apartment communities would be treated as a sale of the multifamily apartment community for a purchase price equal to the outstanding balance of the debt secured by the mortgage. If the outstanding balance of the debt secured by the mortgage exceeds our tax basis in the property, we would recognize taxable income on foreclosure even though we would not necessarily receive any cash proceeds. We may give full or partial guaranties to lenders of mortgage debt on behalf of the entities that own our multifamily apartment communities as well as with respect to debt associated with our preferred equity investments, mezzanine loans or equity investments in a property or land which will be developed into a multifamily apartment community. When we give a guaranty on behalf of an entity that owns one of our multifamily apartment communities or real estate-related assets, we will be responsible to the lender for satisfaction of the debt if it is not paid by such entity. If any mortgages contain cross-collateralization or cross-default provisions, a default on a single multifamily apartment community could affect many multifamily apartment communities.

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***Our multifamily apartment communities and multifamily real estate-related assets may be cross-collateralized.***

At December 31, 2022, we had $528.3 million of fixed rate debt and $575.5 million of variable rate debt, including our revolving credit facility and including $95.3 million of variable rate debt related to construction loans; $318.7 million, or 55.4% of our variable rate debt is accompanied by interest rate cap hedging instruments as required by the lenders. In addition, CROP has issued unsecured promissory notes in several private placement offerings, in an aggregate amount of $43.0 million at December 31, 2022. We may obtain additional lines of credit or other debt financing, or take additional advances on our existing lines of credit, which we may utilize to acquire multifamily apartment communities and multifamily real estate-related assets and fund our operations. Thus, our assets may be cross-collateralized. Information about the amount and terms of any new lines of credit are uncertain and will be negotiated by our officers. No assurance can be given that future cash flow will be sufficient to make the debt service payments on any loans and to cover all operating expenses.

If our revenues are insufficient to pay debt service and operating costs, we may be required to seek additional working capital. There can be no assurance that such additional funds will be available. The degree to which we are leveraged could have an adverse impact on us, including (i) increased vulnerability to adverse general economic and market conditions, (ii) impaired ability to expand and to respond to increased competition, (iii) impaired ability to obtain additional financing for future working capital, capital expenditures, general corporate or other purposes and (iv) requiring that a significant portion of cash provided by operating activities be used for the payment of debt obligations, thereby reducing funds available for operations and future business opportunities.

***High mortgage rates or changes in underwriting standards may make it difficult for us to finance or refinance multifamily apartment communities, which could reduce the number of multifamily apartment communities we can acquire, our cash flows from operations and the amount of cash distributions we can make.***

If mortgage debt is unavailable at reasonable rates, we may not be able to finance the purchase of multifamily apartment communities. If we place mortgage debt on a multifamily apartment community, we run the risk of being unable to refinance part or all of the multifamily apartment community when the debt becomes due or of being unable to refinance on favorable terms. If interest rates are higher when we refinance our multifamily apartment communities, our income could be reduced. We may be unable to refinance or may only be able to partly refinance our multifamily apartment communities if underwriting standards, including loan to value ratios and yield requirements, among other requirements, are stricter than when we originally financed the multifamily apartment communities. If any of these events occurs, our cash flow could be reduced and/or we might have to pay down existing mortgages. This, in turn, would reduce cash available for distribution to our stockholders, could cause us to require additional capital and may hinder our ability to raise capital by issuing more shares or by borrowing more money.

***Lenders may require us to enter into restrictive covenants relating to our operations, which could limit our ability to make distributions to our stockholders or replace our advisor.***

When providing financing, a lender may impose restrictions on us that affect our distribution and operating policies and our ability to incur additional debt. Loan agreements we enter into may contain covenants that limit our ability to further mortgage a property or that prohibit us from discontinuing insurance coverage or impose reserve requirements. In addition, our JP Morgan Credit Facility restricts our ability to remove our affiliated directors which may make it more difficult to replace our advisor. These or other limitations would decrease our operating flexibility and our ability to achieve our operating objectives.

***Our derivative financial instruments may not adequately offset interest rate volatility and require us to contribute more equity to our properties, which could reduce the number of multifamily apartment communities we can acquire, our cash flows from operations and the amount of cash distributions we can make.***

We may use derivative financial instruments, such as interest rate cap or collar agreements and interest rate swap agreements, to hedge exposures to changes in interest rates on loans secured by its assets, but no hedging strategy can protect us completely. These agreements involve risks, such as the risk that counterparties may fail to honor their obligations under these arrangements and that these arrangements may not be effective in reducing our exposure to interest rate changes. Interest rates are currently increasing. In addition, interest rate caps and the replacement of our expiring interest rate caps may be more expensive as a result of increasing interest rates. Further, in the event interest rates increase for any of our financings, we may be required to rebalance such financings by contributing more equity to our properties in order to comply with debt-service coverage ratios required by such financings. We cannot assure you that its hedging strategy and the derivatives that it uses will adequately offset the risk of interest rate volatility or that its hedging transactions will not result in losses. In addition, the use of such instruments may reduce the overall return on our investments. These instruments may also generate income that may not be treated as qualifying REIT income for purposes of the 75% or 95% REIT gross income tests.

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***Increases in interest rates and the future discontinuation of LIBOR could increase the amount of our interest payments and could reduce the amount of distributions our stockholders receive.***

At December 31, 2022, we had $575.5 million of variable rate debt, including our revolving credit facility and including $95.3 million of variable rate debt related to construction loans; $318.7 million, or 55.4% of our variable rate debt is accompanied by interest rate cap hedging instruments as required by the lenders. We may incur additional indebtedness in the future. Interest we pay reduces our cash flows. Since we have incurred and may continue to incur variable rate debt, increases in interest rates raise our interest costs, which reduces our cash flows. In addition, if we need to repay existing debt during periods of rising interest rates, we could be required to sell one or more of our properties at times or on terms which may not permit realization of the maximum return on such investments. Increases in interest rates may cause our operations to suffer and the amount of distributions our stockholders receive and their overall return on investment may decline.

Certain of our variable rate debt historically has borne interest at an interest rate determined based on a US Dollar London Interbank Offered Rate ("LIBOR"). On March 5, 2021, the United Kingdom's Financial Conduct Authority (the "FCA"), which regulates LIBOR, announced that all LIBOR settings will either cease to be provided by any administrator or no longer be representative (i) immediately after December 31, 2021, in the case of the 1-week and 2-month US dollar settings; and (ii) immediately after June 30, 2023, in the case of the remaining US dollar settings. The tenors that were extended to June 30, 2023 are more widely used and are the tenors used in our LIBOR-based debt. We may convert some of our LIBOR-based debt into debt based on the Secured Overnight Financing Rate ("SOFR"), which is the interest rate recommended by the Alternative Reference Rates Committee ("ARRC"), a steering committee comprised of U.S. financial market participants convened by the Federal Reserve Board and the New York Federal Reserve to help ensure a successful transition from LIBOR to a more robust reference rate.

SOFR is a broad measure of the cost of borrowing cash in the overnight U.S. treasury repo market and is a rate published by the Federal Reserve Bank of New York. On July 29, 2021, ARRC formally recommended CME Group's forward-looking Term SOFR as a benchmark rate for use in transition away from LIBOR. Term SOFR is a forward-looking rate based on SOFR futures. We may convert some of our LIBOR-based debt into debt based on Term SOFR. In order to convert LIBOR debt into SOFR or Term SOFR, based on ARRC recommendations and market practice, we generally are required by our lenders to pay a spread adjustment to LIBOR. This spread adjustment may increase our borrowing costs. Where we maintain hedge positions, we may be able to recover some of that spread adjustment by converting hedge positions. However, the spread adjustment recovered on hedge positions may be insufficient to cover our increased floating rate debt obligations resulting from the spread adjustment we pay for a conversion to SOFR.

We may be unable to convert all of our debt instruments to SOFR or Term SOFR prior to June 30, 2023. If we are unable to effect such conversions, our lenders may force conversions to a SOFR-based rate under any applicable LIBOR transition legislation or to a SOFR-based rate or another interest rate under the terms of our debt agreements. These forced conversions could result in higher all-in interest costs and could hinder our ability to maintain effective hedges, which could impact our financial performance.

***We have broad authority to incur debt and high debt levels could hinder our ability to make distributions and decrease the value of our stockholders' investment.***

Our charter limits our leverage to 300% of our net assets, and we may exceed this limit with the approval of the conflicts committee of our board of directors. High debt levels would cause us to incur higher interest charges and higher debt service payments and may also be accompanied by restrictive covenants. These factors could limit the amount of cash we have available to distribute and could result in a decline in the value of our stockholders' investment.

***Interest-only indebtedness may increase our risk of default and ultimately may reduce our funds available for distribution to our stockholders.***

Certain of our debt obligations that require interest-only payments for a number of years before we are required to make payments on the principal. During the interest-only period, the amount of each scheduled payment will be less than that of a traditional amortizing mortgage loan. The principal balance of the mortgage loan will not be reduced (except in the case of prepayments) because there are no scheduled monthly payments of principal during this period. After the interest- only period, we will be required either to make scheduled payments of amortized principal and interest or to make a lump-sum, or "balloon," payment at maturity. These required principal or balloon payments will increase the amount of our scheduled payments and may increase our risk of default under the related mortgage loan. If the mortgage loan has an adjustable interest rate, the amount

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of our scheduled payments also may increase at a time of rising interest rates. Increased payments and substantial principal or balloon maturity payments will reduce the funds available for distribution to our stockholders because cash otherwise available for distribution will be required to pay principal and interest associated with these mortgage loans.

***We are uncertain of our sources for funding our future capital needs. If we do not have sufficient funds from operations to cover our expenses or to fund improvements to our multifamily apartment communities and cannot obtain debt or equity financing on acceptable terms, our ability to cover our expenses or to fund improvements to our multifamily apartment communities may be adversely affected.***

The proceeds from our offering will be used primarily for investments in multifamily apartment communities and multifamily real estate-related assets. In the event that we develop a need for additional capital in the future for the improvement of our multifamily apartment communities or for any other reason, sources of funding may not be available to us. If we do not have sufficient funds from cash flow generated by our assets or out of net sale proceeds, or cannot obtain debt or equity financing on acceptable terms, our financial condition and ability to make distributions may be adversely affected.

**Federal Income Tax Risks**

***Failure to qualify as a REIT would reduce our net earnings available for investment or distribution.***

Our qualification as a REIT will depend upon our ability to meet requirements regarding our organization and ownership, distributions of our income, the nature and diversification of our income and assets and other tests imposed by the Internal Revenue Code. If we fail to qualify as a REIT for any taxable year after electing REIT status, we will be subject to federal income tax on our taxable income at corporate rates (a maximum rate of 35% applied through 2017, with a 21% rate beginning for 2018). In addition, we would generally be disqualified from treatment as a REIT for the four taxable years following the year in which we lost our REIT status. Losing our REIT status would reduce our net earnings available for investment or distribution to stockholders because of the additional tax liability. In addition, distributions to stockholders would no longer qualify for the dividends-paid deduction and we would no longer be required to pay distributions. If this occurs, we might be required to borrow funds or liquidate some investments in order to pay the applicable tax.

***Failure to qualify as a REIT would subject us to U.S. federal income tax, which would reduce the cash available for distribution to our stockholders.***

We believe that we have operated and will continue to operate in a manner that will allow us to continue to qualify as a REIT for federal income tax purposes, commencing with the taxable year ended December 31, 2019. However, the U.S. federal income tax laws governing REITs are extremely complex, and interpretations of the U.S. federal income tax laws governing qualification as a REIT are limited. Qualifying as a REIT requires us to meet various tests regarding the nature of our assets and our income, the ownership of our outstanding stock, and the amount of our distributions on an ongoing basis. Accordingly, we cannot be certain that we will be successful in operating so we can remain qualified as a REIT. While we intend to continue to operate so that we will qualify as a REIT, given the highly complex nature of the rules governing REITs, the ongoing importance of factual determinations, including the tax treatment of certain investments we may make, and the possibility of future changes in our circumstances, no assurance can be given that we will so qualify for any particular year.

If we fail to qualify as a REIT in any calendar year and we do not qualify for certain statutory relief provisions, we would be required to pay U.S. federal income tax on our taxable income. We might need to borrow money or sell assets to pay that tax. Our payment of income tax would decrease the amount of our income available for distribution to our stockholders. Furthermore, if we fail to maintain our qualification as a REIT and we do not qualify for certain statutory relief provisions, we no longer would be required to distribute substantially all of our REIT taxable income to our stockholders. Unless our failure to qualify as a REIT were excused under federal tax laws, we would be disqualified from taxation as a REIT for the four taxable years following the year during which qualification was lost.

***Our stockholders may have current tax liability on distributions they elect to reinvest in our common stock.***

If our stockholders participate in our distribution reinvestment plan, they will be deemed to have received, and for income tax purposes will be taxed on, the amount reinvested in shares of our common stock to the extent the amount reinvested was not a tax-free return of capital. In addition, our stockholders will be treated for tax purposes as having received an additional distribution to the extent the shares are purchased at a discount to fair market value, if any. As a result, unless our stockholders are tax-exempt entities, they may have to use funds from other sources to pay their tax liability on the value of the shares of common stock received.

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***Even if we qualify as a REIT for U.S. federal income tax purposes, we may be subject to federal, state, local or other tax liabilities that reduce our cash flow and our ability to pay distributions to our stockholders.***

Even if we qualify as a REIT for U.S. federal income tax purposes, we may be subject to some federal, state and local taxes on our income or property. For example:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• In order to qualify as a REIT, we must distribute annually at least 90% of our REIT taxable income to our stockholders (which is determined without regard to the dividends-paid deduction or net capital gain). To the extent that we satisfy the distribution requirement but distribute less than 100% of our REIT taxable income (and any net capital gain), we will be subject to federal corporate income tax on the undistributed income.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We will be subject to a 4% nondeductible excise tax on the amount, if any, by which distributions we pay in any calendar year are less than the sum of 85% of our ordinary income, 95% of our capital gain net income and 100% of our undistributed income from prior years.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• If we elect to treat property that we acquire in connection with a foreclosure of a mortgage loan or certain leasehold terminations as "foreclosure property," we may avoid the 100% tax on the gain from a resale of that property, but the income from the sale or operation of that property may be subject to corporate income tax at the highest applicable rate.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• If we sell an asset, other than foreclosure property, that we hold primarily for sale to customers in the ordinary course of business, our gain would be subject to the 100% "prohibited transaction" tax unless such sale were made by one of our taxable REIT subsidiaries or the sale met certain "safe harbor" requirements under the Internal Revenue Code.

***REIT distribution requirements could adversely affect our ability to execute our business plan.***

We generally must distribute annually at least 90% of our REIT taxable income, subject to certain adjustments and excluding any net capital gain, in order for federal corporate income tax not to apply to earnings that we distribute. To the extent that we satisfy this distribution requirement, but distribute less than 100% of our REIT taxable income (and any net capital gain), we will be subject to federal corporate income tax on our undistributed REIT taxable income. In addition, we will be subject to a 4% nondeductible excise tax if the actual amount that we pay out to our stockholders in a calendar year is less than a minimum amount specified under federal tax laws. We also may decide to retain net capital gain we earn from the sale or other disposition of our property and pay U.S. federal income tax directly on such income. In that event, our stockholders would be treated as if they earned that income and paid the tax on it directly. However, stockholders that are tax-exempt, such as charities or qualified pension plans, would have no benefit from their deemed payment of such tax liability unless they file U.S. federal income tax returns and thereon seek a refund of such tax. We also will be subject to corporate tax on any undistributed REIT taxable income. We intend to make distributions to our stockholders to comply with the REIT requirements of the Internal Revenue Code.

From time to time, we may generate taxable income greater than our income for financial reporting purposes, or our taxable income may be greater than our cash flow available for distribution to stockholders (for example, where a borrower defers the payment of interest in cash pursuant to a contractual right or otherwise). If we do not have other funds available in these situations we could be required to borrow funds, sell investments at disadvantageous prices or find another alternative source of funds to pay distributions sufficient to enable us to pay out enough of our taxable income to satisfy the REIT distribution requirements and to avoid corporate income tax and the 4% excise tax in a particular year. These alternatives could increase our costs or reduce our equity. Thus, compliance with the REIT requirements may hinder our ability to operate solely on the basis of maximizing profits.

***To maintain our REIT status, we may be forced to forego otherwise attractive business or investment opportunities, which may delay or hinder our ability to meet our investment objectives and reduce our stockholders' overall return.***

To qualify as a REIT, we must satisfy certain tests on an ongoing basis concerning, among other things, the sources of our income, nature of our assets and the amounts we distribute to our stockholders. We may be required to pay distributions to stockholders at times when it would be more advantageous to reinvest cash in our business or when we do not have funds readily available for distribution. Compliance with the REIT requirements may hinder our ability to operate solely on the basis of maximizing profits and reduce the value of our stockholders' investment.

***If the Operating Partnership fails to maintain its status as a partnership for U.S. federal income tax purposes, its income would be subject to taxation and our REIT status would be terminated.***

We intend to maintain the status of the Operating Partnership as a partnership for U.S. federal income tax purposes. However, if the Internal Revenue Service ("Internal Revenue Service" or "IRS") were to successfully challenge the status of the

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Operating Partnership as a partnership, it would be taxable as a corporation. In such event, this would reduce the amount of distributions that the Operating Partnership could make to us. This would also result in our losing REIT status and becoming subject to a corporate level tax on our own income. This would substantially reduce our cash available to pay distributions and the return on your investment. In addition, if any of the entities through which the Operating Partnership owns its properties, in whole or in part, loses its characterization as a partnership for U.S. federal income tax purposes, the underlying entity would become subject to taxation as a corporation, thereby reducing distributions to the Operating Partnership and jeopardizing our ability to maintain REIT status.

***Potential characterization of distributions or gain on sale may be treated as unrelated business taxable income to tax-exempt investors.***

If (i) all or a portion of our assets are subject to the rules relating to taxable mortgage pools, (ii) we are a "pension-held REIT," (iii) a tax-exempt stockholder has incurred debt to purchase or hold our common stock, or (iv) the residual Real Estate Mortgage Investment Conduit interests, or REMICs, we buy (if any) generate "excess inclusion income," then a portion of the distributions to and, in the case of a stockholder described in clause (iii), gains realized on the sale of common stock by such tax-exempt stockholder may be subject to U.S. federal income tax as unrelated business taxable income under the Internal Revenue Code.

***The tax on prohibited transactions will limit our ability to engage in transactions that would be treated as sales for U.S. federal income tax purposes.***

A REIT's net income from prohibited transactions is subject to a 100% tax. In general, prohibited transactions are sales or other dispositions of assets, other than foreclosure property, deemed held primarily for sale to customers in the ordinary course of business. We might be subject to this tax if we were to dispose of loans in a manner that was treated as a sale of the loans for U.S. federal income tax purposes. Therefore, in order to avoid the prohibited transactions tax, we may choose not to engage in certain sales of loans at the REIT level, and may limit the structures we utilize for our securitization transactions, even though the sales or structures might otherwise be beneficial to us.

It may be possible to reduce the impact of the prohibited transaction tax by conducting certain activities through taxable REIT subsidiaries. However, to the extent that we engage in such activities through taxable REIT subsidiaries, the income associated with such activities may be subject to full corporate income tax.

***Complying with REIT requirements may force us to liquidate otherwise attractive investments.***

To qualify as a REIT, we must ensure that at the end of each calendar quarter, at least 75% of the value of our assets consists of cash, cash items, government securities and qualified REIT real estate assets, including certain mortgage loans and residential and commercial mortgage-backed securities. The remainder of our investment in securities (other than government securities and qualified real estate assets) generally cannot include more than 10% of the outstanding voting securities of any one issuer or more than 10% of the total value of the outstanding securities of any one issuer. In addition, in general, no more than 5% of the value of our assets (other than government securities and qualified real estate assets) can consist of the securities of any one issuer, no more than 20% of the value of our total assets can be represented by securities of one or more taxable REIT subsidiaries and no more than 25% of the value of our total assets can be represented by "non-qualified publicly offered REIT debt instruments." If we fail to comply with these requirements at the end of any calendar quarter, we must correct the failure within 30 days after the end of the calendar quarter or qualify for certain statutory relief provisions to avoid losing our REIT qualification and suffering adverse tax consequences. As a result, we may be required to liquidate from our portfolio otherwise attractive investments. These actions could have the effect of reducing our income and amounts available for distribution to our stockholders.

***Liquidation of assets may jeopardize our REIT qualification.***

To qualify as a REIT, we must comply with requirements regarding our assets and our sources of income. If we are compelled to liquidate our investments to repay obligations to our lenders, we may be unable to comply with these requirements, ultimately jeopardizing our qualification as a REIT, or we may be subject to a 100% tax on any resultant gain if we sell assets that are treated as dealer property or inventory.

***Complying with REIT requirements may limit our ability to hedge effectively.***

The REIT provisions of the Internal Revenue Code may limit our ability to hedge our assets and operations. Under these provisions, any income that we generate from transactions intended to hedge our interest rate, inflation and/or currency

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risks will be excluded from gross income for purposes of the REIT 75% and 95% gross income tests if the purpose of the instrument is to (i) hedge interest rate risk on liabilities incurred to carry or acquire real estate, (ii) hedge risk of currency fluctuations with respect to any item of income or gain that would be qualifying income under the REIT 75% or 95% gross income tests, or (iii) manage risk with respect to the termination of certain prior hedging transactions described in (i) and/or (ii) above and, in each case, such instrument is properly identified under applicable Department of the Treasury regulations ("Treasury Regulations"). Income from hedging transactions that do not meet these requirements will generally constitute nonqualifying income for purposes of both the REIT 75% and 95% gross income tests. As a result of these rules, we may have to limit our use of hedging techniques that might otherwise be advantageous, which could result in greater risks associated with interest rate or other changes than we would otherwise incur.

***Our ownership of and relationship with our taxable REIT subsidiaries will be limited and a failure to comply with the limits would jeopardize our REIT status and may result in the application of a 100% excise tax.***

A REIT may own up to 100% of the stock of one or more taxable REIT subsidiaries. A taxable REIT subsidiary may earn income that would not be qualifying income if earned directly by the parent REIT. Both the subsidiary and the REIT must jointly elect to treat the subsidiary as a taxable REIT subsidiary. A corporation of which a taxable REIT subsidiary directly or indirectly owns more than 35% of the voting power or value of the stock will automatically be treated as a taxable REIT subsidiary. Overall, no more than 20% of the value of a REIT's assets may consist of stock or securities of one or more taxable REIT subsidiaries. A domestic taxable REIT subsidiary will pay federal, state and local income tax at regular corporate rates on any income that it earns. In addition, the taxable REIT subsidiary rules limit the deductibility of interest paid or accrued by a taxable REIT subsidiary to its parent REIT to assure that the taxable REIT subsidiary is subject to an appropriate level of corporate taxation. The rules also impose a 100% excise tax on certain transactions between a taxable REIT subsidiary and its parent REIT that are not conducted on an arm's-length basis. We cannot assure our stockholders that we will be able to comply with the 20% value limitation on ownership of taxable REIT subsidiary stock and securities on an ongoing basis so as to maintain REIT status or to avoid application of the 100% excise tax imposed on certain non-arm's length transactions.

***The ability of our board of directors to revoke our REIT qualification without stockholder approval may subject us to U.S. federal income tax and reduce distributions to our stockholders.***

Our charter provides that our board of directors may revoke or otherwise terminate our REIT election, without the approval of our stockholders, if it determines that it is no longer in our best interest to continue to qualify as a REIT. While we believe we have qualified and intend to continue to qualify to be taxed as a REIT, we may terminate our REIT election if we determine that qualifying as a REIT is no longer in our best interests. If we cease to be a REIT, we would become subject to U.S. federal income tax on our taxable income and would no longer be required to distribute most of our taxable income to our stockholders, which may have adverse consequences on our total return to our stockholders and on the market price of our common stock.

***Dividends payable by REITs do not qualify for the reduced tax rates.***

In general, the maximum tax rate for dividends payable to domestic stockholders that are individuals, trusts and estates is 20%. Dividends payable by REITs, however, are generally not eligible for this reduced rate; provided under current law, individuals may be able to deduct 20% of income received as ordinary REIT dividends, thus reducing the maximum effective U.S. federal income tax rate on such dividend. In addition, Treasury Regulations impose a minimum holding period for the 20% deduction that was not set forth in the Internal Revenue Code. Under the Treasury Regulations, in order for a REIT dividend with respect to a share of REIT stock to be treated as a qualified REIT dividend, the U.S. stockholder (i) must have held the share for more than 45 days during the 91-day period beginning on the date which is 45 days before the date on which such share becomes ex-dividend with respect to such dividend and (ii) cannot have been under an obligation to make related payments with respect to positions in substantially similar or related property, e.g., pursuant to a short sale. While this tax treatment does not adversely affect the taxation of REITs or dividends paid by REITs, the more favorable rates applicable to regular corporate dividends could cause investors who are individuals, trusts or estates to perceive investments in REITs to be relatively less attractive than investments in stock of non-REIT corporations that pay dividends, which could adversely affect the value of the stock of REITs, including our common stock.

***Qualifying as a REIT involves highly technical and complex provisions of the Internal Revenue Code.***

Qualification as a REIT involves the application of highly technical and complex Internal Revenue Code provisions for which only limited judicial and administrative authorities exist. Even a technical or inadvertent violation could jeopardize our REIT qualification. Our continued qualification as a REIT will depend on our satisfaction of certain asset, income, organizational, distribution, stockholder ownership and other requirements on a continuing basis. In addition, our ability to

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satisfy the requirements to qualify as a REIT depends in part on the actions of third parties over which we have no control or only limited influence, including in cases where we own an equity interest in an entity that is classified as a partnership for U.S. federal income tax purposes.

***The taxation of distributions to our stockholders can be complex; however, distributions that we make to our stockholders generally will be taxable as ordinary income, which may reduce your anticipated return from an investment in us.***

Distributions that we make to our taxable stockholders to the extent of our current and accumulated earnings and profits (and not designated as capital gain dividends or qualified dividend income) generally will be taxable as ordinary income. However, a portion of our distributions may (i) be designated by us as capital gain dividends generally taxable as long-term capital gain to the extent that they are attributable to net capital gain recognized by us, (ii) be designated by us as qualified dividend income generally to the extent they are attributable to dividends we receive from non-REIT corporations, such as our taxable REIT subsidiaries, or (iii) constitute a return of capital generally to the extent that they exceed our current and accumulated earnings and profits as determined for U.S. federal income tax purposes. A return of capital distribution is not taxable, but has the effect of reducing the basis of a stockholder's investment in our common stock.

***We may be required to pay some taxes due to actions of a taxable REIT subsidiary which would reduce our cash available for distribution to you.***

Any net taxable income earned directly by a taxable REIT subsidiary, or through entities that are disregarded for U.S. federal income tax purposes as entities separate from our taxable REIT subsidiaries, will be subject to federal and possibly state corporate income tax. In this regard, several provisions of the laws applicable to REITs and their subsidiaries ensure that a taxable REIT subsidiary will be subject to an appropriate level of U.S. federal income taxation. For example, a taxable REIT subsidiary may be limited in its ability to deduct certain interest payments made to an affiliated REIT. In addition, the REIT has to pay a 100% penalty tax on some payments that it receives or on some deductions taken by or payments made to a taxable REIT subsidiary if the economic arrangements between the REIT, the REIT's customers, and the taxable REIT subsidiary are not comparable to similar arrangements between unrelated parties. Finally, some state and local jurisdictions may tax some of our income even though as a REIT we are not subject to U.S. federal income tax on that income because not all states and localities follow the U.S. federal income tax treatment of REITs. To the extent that we and our affiliates are required to pay federal, state and local taxes, we will have less cash available for distributions to you.

***We may distribute our common stock in a taxable distribution, in which case you may sell shares of our common stock to pay tax on such distributions, and you may receive less in cash than the amount of the dividend that is taxable.***

We may make taxable distributions that are payable in cash and common stock. Under IRS Revenue Procedure 2017-45, as a publicly offered REIT, we may give stockholders a choice, subject to various limits and requirements, of receiving a dividend in cash or in common stock of the REIT. As long as at least 20% of the total dividend is available in cash and certain other requirements are satisfied, the IRS will treat the stock distribution as a dividend (to the extent applicable rules treat such distribution as being made out of the REIT's earnings and profits). This threshold has been temporarily reduced in the past, and may be reduced in the future, by IRS guidance. Taxable stockholders receiving stock will be required to include in income, as a dividend, the full value of such stock, to the extent of our current and accumulated earnings and profits for U.S. federal income tax purposes. As a result, a U.S. stockholder may be required to pay income tax with respect to such distributions in excess of the cash distributions received. If a U.S. stockholder sells the common stock that it receives as a dividend in order to pay this tax, the sales proceeds may be less than the amount recorded in earnings with respect to the dividend, depending on the market price of our common stock at the time of the sale. Furthermore, with respect to certain non-U.S. stockholders, we may be required to withhold U.S. federal income tax with respect to such dividends, including in respect of all or a portion of such dividend that is payable in common stock.

***Investments in other REITs and real estate partnerships could subject us to the tax risks associated with the tax status of such entities.***

We may invest in the securities of other REITs and real estate partnerships. Such investments are subject to the risk that any such REIT or partnership may fail to satisfy the requirements to qualify as a REIT or a partnership, as the case may be, in any given taxable year. In the case of a REIT, such failure would subject such entity to taxation as a corporation, may require such REIT to incur indebtedness to pay its tax liabilities, may reduce its ability to make distributions to us, and may render it ineligible to elect REIT status prior to the fifth taxable year following the year in which it fails to so qualify. In the case of a partnership, such failure could subject such partnership to an entity level tax and reduce the entity's ability to make distributions to us. In addition, such failures could, depending on the circumstances, jeopardize our ability to qualify as a REIT.

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***Non-U.S. stockholders will be subject to U.S. federal withholding tax and may be subject to U.S. federal income tax on distributions received from us and upon the disposition of our shares.***

Subject to certain exceptions, distributions received from us will be treated as dividends of ordinary income to the extent of our current or accumulated earnings and profits. Such dividends ordinarily will be subject to U.S. withholding tax at a 30% rate, or such lower rate as may be specified by an applicable income tax treaty, unless the distributions are treated as "effectively connected" with the conduct by the non-U.S. stockholder of a U.S. trade or business. Pursuant to the Foreign Investment in Real Property Tax Act of 1980, or FIRPTA, capital gain distributions attributable to sales or exchanges of "U.S. real property interests," or USRPIs, generally (subject to certain exceptions for "qualified foreign pension funds," entities all the interests of which are held by "qualified foreign pension funds," and certain "qualified shareholders") will be taxed to a non-U.S. stockholder as if such gain were effectively connected with a U.S. trade or business unless FIRPTA provides an exemption. However, a capital gain dividend will not be treated as effectively connected income if (i) the distribution is received with respect to a class of stock that is regularly traded on an established securities market located in the United States and (ii) the non-U.S. stockholder does not own more than 10% of the class of our stock at any time during the one-year period ending on the date the distribution is received. We do not anticipate that our shares will be "regularly traded" on an established securities market for the foreseeable future, and therefore, this exception is not expected to apply.

Gain recognized by a non-U.S. stockholder upon the sale or exchange of our common stock generally will not be subject to U.S. federal income taxation unless such stock constitutes a USRPI under FIRPTA (subject to specific FIRPTA exemptions for certain non-U.S. stockholders). Our common stock will not constitute a USRPI so long as we are a "domestically-controlled qualified investment entity." A domestically-controlled qualified investment entity includes a REIT if at all times during a specified testing period, less than 50% in value of such REIT's stock is held directly or indirectly by non-U.S. stockholders. We believe, but cannot assure you, that we will be a domestically-controlled qualified investment entity.

Even if we do not qualify as a domestically-controlled qualified investment entity at the time a non-U.S. stockholder sells or exchanges our common stock, gain arising from such a sale or exchange would not be subject to U.S. taxation under FIRPTA as a sale of a USRPI if: (a) our common stock is "regularly traded," as defined by applicable Treasury Regulations, on an established securities market, and (b) such non-U.S. stockholder owned, actually and constructively, 10% or less of our common stock at any time during the five-year period ending on the date of the sale. However, it is not anticipated that our common stock will be "regularly traded" on an established market. We encourage you to consult your tax advisor to determine the tax consequences applicable to you if you are a non-U.S. stockholder.

***We may be subject to adverse legislative or regulatory tax changes that could increase our tax liability, reduce our operating flexibility and reduce the price of our common stoc***k*.***

At any time, the U.S. federal income tax laws or regulations governing REITs or the administrative interpretations of those laws or regulations may be amended. We cannot predict when or if any new U.S. federal income tax law, regulation or administrative interpretation, or any amendment to any existing U.S. federal income tax law, regulation or administrative interpretation, will be adopted, promulgated or become effective and any such law, regulation or interpretation may take effect retroactively. We and our stockholders could be adversely affected by any such change in, or any new, U.S. federal income tax law, regulation or administrative interpretation. Although REITs generally receive certain tax advantages compared to entities taxed as regular corporations, it is possible that future legislation would result in a REIT having fewer tax advantages, and it could become more advantageous for a company that invests in real estate to elect to be treated for U.S. federal income tax purposes as a corporation. As a result, our charter authorizes our board of directors to revoke or otherwise terminate our REIT election, without the approval of our stockholders, if it determines that it is no longer in our best interests to qualify as a REIT. The impact of tax reform on an investment in our shares is uncertain.

On August 16, 2022, President Biden signed into law the Inflation Reduction Act of 2022, or the IRA. The IRA includes numerous tax provisions that impact corporations, including the implementation of a corporate alternative minimum tax as well as a 1% excise tax on certain stock repurchases and economically similar transactions. However, REITs are excluded from the definition of an "applicable corporation" and therefore are not subject to the corporate alternative minimum tax. Additionally, the 1% excise tax specifically does not apply to stock repurchases by REITs. We will continue to analyze and monitor the application of the IRA to our business; however, the effect of these changes on the value of our assets, shares of our common stock or market conditions generally, is uncertain.

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**Retirement Plan Risks**

***If you fail to meet the fiduciary and other standards under the Employee Retirement Income Security Act of 1974, as amended, or "ERISA," or the Internal Revenue Code as a result of an investment in our stock, you could be subject to criminal and civil penalties.***

There are special considerations that apply to employee benefit plans subject to ERISA (such as profit-sharing, section 401(k) or pension plans) and other retirement plans or accounts subject to Section 4975 of the Internal Revenue Code (such as an IRA) or any entity whose assets include such assets (each a "Benefit Plan") that are investing in our shares. If you are investing the assets of such a plan or account in our common stock, you should satisfy yourself that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• your investment is consistent with your fiduciary and other obligations under ERISA and the Internal Revenue Code;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• your investment is made in accordance with the documents and instruments governing the plan or IRA, including the plan's or account's investment policy;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• your investment satisfies the prudence and diversification requirements of Sections 404(a)(1)(B) and 404(a)(1)(C) of ERISA and other applicable provisions of ERISA and the Internal Revenue Code;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• your investment in our shares, for which no trading market may exist, is consistent with the liquidity needs of the plan or IRA;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• your investment will not produce an unacceptable amount of "unrelated business taxable income" for the plan or IRA;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• you will be able to comply with the requirements under ERISA and the Internal Revenue Code to value the assets of the plan or IRA annually; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• your investment will not constitute a non-exempt prohibited transaction under Section 406 of ERISA or Section 4975 of the Internal Revenue Code.

With respect to the annual valuation requirements described above, we expect to provide an estimated value of our net assets per share annually to those fiduciaries (including IRA trustees and custodians) who request it. Although this estimate will be based upon determinations of the NAV of our shares in accordance with our valuation guidelines, no assurance can be given that such estimated value will satisfy the applicable annual valuation requirements under ERISA and the Internal Revenue Code. The Department of Labor or the Internal Revenue Service may determine that a plan fiduciary or a fiduciary acting for an IRA is required to take further steps to determine the value of our common shares. In the absence of an appropriate determination of value, a plan fiduciary or a fiduciary acting for an IRA may be subject to damages, penalties or other sanctions.

Failure to satisfy the fiduciary standards of conduct and other applicable requirements of ERISA and the Internal Revenue Code may result in the imposition of civil and criminal penalties, and can subject the fiduciary to claims for damages or for equitable remedies, including liability for investment losses. In addition, if an investment in our shares constitutes a non-exempt prohibited transaction under ERISA or the Internal Revenue Code, the fiduciary or IRA owner who authorized or directed the investment may be subject to the imposition of excise taxes with respect to the amount invested. Additionally, the investment transaction may have to be undone. In the case of a prohibited transaction involving an IRA owner, the IRA may be disqualified as a tax-exempt account and all of the assets of the IRA may be deemed distributed and subjected to tax. ERISA plan fiduciaries and IRA owners should consult with counsel before making an investment in our shares.

***If our assets are deemed to be plan assets, our advisor and we may be exposed to liabilities under Title I of ERISA and the Internal Revenue Code.***

In some circumstances where an ERISA plan holds an interest in an entity, the assets of the entity are deemed to be ERISA plan assets unless an exception applies. This is known as the "look-through rule." Under those circumstances, the obligations and other responsibilities of plan sponsors, plan fiduciaries and plan administrators, and of parties in interest and disqualified persons, under Title I of ERISA and Section 4975 of the Internal Revenue Code, as applicable, may be applicable, and there may be liability under these and other provisions of ERISA and the Internal Revenue Code. We believe that our assets should not be treated as plan assets because the shares should qualify as "publicly-offered securities" that are exempt from the look-through rules under applicable Treasury Regulations. We note, however, that because certain limitations are imposed upon the transferability of shares so that we may qualify as a REIT, and perhaps for other reasons, it is possible that this exemption may not apply. If that is the case, and if CC Advisors III or we are exposed to liability under ERISA or the Internal Revenue Code, our performance and results of operations could be adversely affected. Prior to making an investment in us, you should consult with your legal and other advisors concerning the impact of ERISA and the Internal Revenue Code on your investment and our performance.

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We do not intend to provide investment advice to any potential investor for a fee. However, we, CC Advisors III and our respective affiliates receive certain fees and other consideration disclosed herein in connection with an investment. If it were determined we provided a Benefit Plan investor with investment advice for a fee, it could give rise to a determination that we constitute an investment advice fiduciary under ERISA. Such a determination could give rise to claims that our fee arrangements constitute non-exempt prohibited transactions under ERISA or the Internal Revenue Code and/or claims that we have breached a fiduciary duty to a Benefit Plan investor. Adverse determinations with respect to ERISA fiduciary status or non-exempt prohibited transactions could result in significant civil penalties and excise taxes.

**Item 1B. Unresolved Staff Comments**

None.

**Item 2. Properties**

See Part II, Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations - Our Investments" for an overview of our real estate investments.

**Item 3. Legal Proceedings**

From time to time, we may be involved in various claims and legal actions arising in the ordinary course of business. Management is not aware of any legal proceedings of which the outcome is reasonably likely to have a material adverse effect on our results of operations or financial condition, nor are we aware of any such legal proceedings contemplated by government authorities.

**Item 4. Mine Safety Disclosures**

Not applicable.

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<u>[**Table of Contents**](#idee5e1a1e23d41889d4214c8b88222aa_7)</u>

**Part II.** 

**Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities**

**Offering of Common Stock**

We are offering up to $900.0 million of Class T, Class D and Class I shares of our common stock through our Primary Offering and up to $100.0 million of Class T, Class D, Class I, and Class A shares of our common stock through our DRP Offering. Other than differences in upfront selling commissions, dealer manager fees, and ongoing distribution fees, each class of common stock has the same economics and voting rights. There is currently no public market for our shares and we currently have no plans to list our shares on a securities exchange.

The following table summarizes the upfront selling commission and dealer manager fee paid for each applicable share class in the Primary Offering as a percentage of the transaction price, which will generally be the most recently disclosed monthly NAV per share.

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| | | | |
|:---|:---|:---|:---|
| | Class T <sup>(1)</sup> | Class D | Class I |
| Maximum Upfront Selling Commissions as a % of Transaction Price | up to 3.0% |  |  |
| Maximum Upfront Dealer Manager Fees as a % of Transaction Price | 0.5% |  |  |
| <sup>(1)</sup> Such amounts may vary at certain participating broker-dealers, provided that the sum will not exceed 3.5% of the transaction price. | <sup>(1)</sup> Such amounts may vary at certain participating broker-dealers, provided that the sum will not exceed 3.5% of the transaction price. | <sup>(1)</sup> Such amounts may vary at certain participating broker-dealers, provided that the sum will not exceed 3.5% of the transaction price. | <sup>(1)</sup> Such amounts may vary at certain participating broker-dealers, provided that the sum will not exceed 3.5% of the transaction price. |

---

In addition, we will pay a wholesaling fee of up to 1.85% of the transaction price for all shares sold in the Primary Offering.

Subject to FINRA limitations on underwriting compensation and certain other limitations, the following table shows the distribution fees we pay the dealer manager with respect to the Class T, Class D and Class I on an annualized basis as a percentage of our NAV.

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| | | | |
|:---|:---|:---|:---|
| | Class T <sup>(1)</sup> | Class D | Class I |
| Distribution Fee as a % of NAV | 0.85% | 0.25% |  |
| <sup>(1)</sup> Consists of an advisor distribution fee of 0.65% per annum and a dealer distribution fee of 0.20% per annum of the aggregate NAV for the Class T shares, however, with respect to Class T shares sold through certain participating broker-dealers, the advisor distribution fee and the dealer distribution fee may be other amounts, provided that the sum of such fees will always equal 0.85% per annum of the NAV of such shares. | <sup>(1)</sup> Consists of an advisor distribution fee of 0.65% per annum and a dealer distribution fee of 0.20% per annum of the aggregate NAV for the Class T shares, however, with respect to Class T shares sold through certain participating broker-dealers, the advisor distribution fee and the dealer distribution fee may be other amounts, provided that the sum of such fees will always equal 0.85% per annum of the NAV of such shares. | <sup>(1)</sup> Consists of an advisor distribution fee of 0.65% per annum and a dealer distribution fee of 0.20% per annum of the aggregate NAV for the Class T shares, however, with respect to Class T shares sold through certain participating broker-dealers, the advisor distribution fee and the dealer distribution fee may be other amounts, provided that the sum of such fees will always equal 0.85% per annum of the NAV of such shares. | <sup>(1)</sup> Consists of an advisor distribution fee of 0.65% per annum and a dealer distribution fee of 0.20% per annum of the aggregate NAV for the Class T shares, however, with respect to Class T shares sold through certain participating broker-dealers, the advisor distribution fee and the dealer distribution fee may be other amounts, provided that the sum of such fees will always equal 0.85% per annum of the NAV of such shares. |

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The distribution fee is subject to a cap based on the total upfront selling commissions, dealer manager fees, and distribution fees paid in connection with the sale of the share in our primary offering. For Class T shares the cap is 8.5% and for Class D shares the cap is 8.0%. A lower cap may be agreed upon between the dealer manager and a participating broker-dealer. Once the cap is met, the Class T shares or Class D shares in each respective stockholder's account (including shares purchased through the distribution reinvestment plan or received as a stock dividend) will convert into a number of Class I shares (including any fractional shares) with an equivalent aggregate NAV as such shares.

The dealer manager for the public offering anticipates that all or a portion of the upfront selling commissions, dealer manager and distribution fees will be retained by, or reallowed (paid) to, participating broker-dealers and certain wholesalers, some of which are internal to our advisor and its affiliates. For the year ended December 31, 2022, the costs of raising capital in the Follow-on Offering represented 5.96% of the capital raised.

The purchase price per share for each class of common stock will vary and will generally equal our prior month's NAV per share, as determined monthly, plus applicable upfront selling commissions and dealer manager fees. Please see "Net Asset Value Calculation and Valuation Guidelines" in our <u>[prospectus](http://www.sec.gov/Archives/edgar/data/1692951/000119312521321212/d245232d424b3.htm)</u> for a detailed description of our valuation guidelines.

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<u>[**Table of Contents**](#idee5e1a1e23d41889d4214c8b88222aa_7)</u>

The following table presents our historical monthly NAV per share for our outstanding classes of shares and our CROP Units since we began reporting an NAV. Previously, we sold Class A and Class TX shares in our primary public offering at a fixed offering price of $10.00 per share.

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **Class** | **Class** | **Class** | **Class** | **Class** | **Class** |
|<br>**Date** | **T** | **D** | **I** | **A** | **TX** | **OP** |
| May 7, 2021 <sup>(1)</sup> | <sup>(2)</sup> | <sup>(2)</sup> | <sup>(2)</sup> | $10.8315 | $10.8315 | $10.8315 |
| May 31, 2021 | <sup>(2)</sup> | <sup>(2)</sup> | <sup>(2)</sup> | 10.8488 | 10.8488 | 10.8488 |
| June 30, 2021 | <sup>(2)</sup> | <sup>(2)</sup> | <sup>(2)</sup> | 11.7865 | 11.7865 | 11.7865 |
| July 31, 2021 | <sup>(2)</sup> | <sup>(2)</sup> | <sup>(2)</sup> | 12.5373 | 12.5373 | 12.5373 |
| August 31, 2021 | <sup>(2)</sup> | <sup>(2)</sup> | <sup>(2)</sup> | 12.8855 | 12.8855 | 12.8855 |
| September 30, 2021 | <sup>(2)</sup> | <sup>(2)</sup> | <sup>(2)</sup> | 15.4799 | 15.4799 | 15.4799 |
| October 31, 2021 | <sup>(2)</sup> | <sup>(2)</sup> | <sup>(2)</sup> | 16.3305 | 16.3305 | 16.3305 |
| November 30, 2021 | <sup>(2)</sup> | <sup>(2)</sup> | <sup>(2)</sup> | 16.9316 | 16.9316 | 16.9316 |
| December 31, 2021 | <sup>(2)</sup> | <sup>(2)</sup> | 17.2839 | 17.2839 | 17.2839 | 17.2839 |
| January 31, 2022 | 18.4071 | <sup>(2)</sup> | 18.4071 | 18.4071 | 18.4071 | 18.4071 |
| February 28, 2022 | 18.9882 | <sup>(2)</sup> | 18.9882 | 18.9882 | 18.9882 | 18.9882 |
| March 31, 2022 | 19.6324 | <sup>(2)</sup> | 19.6324 | 19.6324 | 19.6324 | 19.6324 |
| April 30, 2022 | 20.0794 | <sup>(2)</sup> | 20.0794 | 20.0794 | 20.0794 | 20.0794 |
| May 31, 2022 | 20.6297 | 20.6297 | 20.6297 | 20.6297 | 20.6297 | 20.6297 |
| June 30, 2022 | 20.7202 | 20.7202 | 20.7202 | 20.7202 | 20.7202 | 20.7202 |
| July 31, 2022 | 20.6991 | 20.6991 | 20.6991 | 20.6991 | 20.6991 | 20.6991 |
| August 31, 2022 | 20.7007 | 20.7007 | 20.7007 | 20.7007 | 20.7007 | 20.7007 |
| September 30, 2022 | 20.7056 | 20.7056 | 20.7056 | 20.7056 | <sup>(2)</sup> | 20.7056 |
| October 31, 2022 | 20.5722 | 20.5722 | 20.5722 | 20.5722 | <sup>(2)</sup> | 20.5722 |
| November 30, 2022 | 19.9945 | 19.9945 | 19.9945 | 19.9945 | <sup>(2)</sup> | 19.9945 |
| December 31, 2022 | 19.5788 | 19.5788 | 19.5788 | 19.5788 | <sup>(2)</sup> | 19.5788 |
| <sup>(1)</sup> All components of NAV are as of May 7, 2021 with the exception of the investments in multifamily operating properties, development properties and real-estate related structured investments which are based on information as of April 30, 2021. | <sup>(1)</sup> All components of NAV are as of May 7, 2021 with the exception of the investments in multifamily operating properties, development properties and real-estate related structured investments which are based on information as of April 30, 2021. | <sup>(1)</sup> All components of NAV are as of May 7, 2021 with the exception of the investments in multifamily operating properties, development properties and real-estate related structured investments which are based on information as of April 30, 2021. | <sup>(1)</sup> All components of NAV are as of May 7, 2021 with the exception of the investments in multifamily operating properties, development properties and real-estate related structured investments which are based on information as of April 30, 2021. | <sup>(1)</sup> All components of NAV are as of May 7, 2021 with the exception of the investments in multifamily operating properties, development properties and real-estate related structured investments which are based on information as of April 30, 2021. | <sup>(1)</sup> All components of NAV are as of May 7, 2021 with the exception of the investments in multifamily operating properties, development properties and real-estate related structured investments which are based on information as of April 30, 2021. | <sup>(1)</sup> All components of NAV are as of May 7, 2021 with the exception of the investments in multifamily operating properties, development properties and real-estate related structured investments which are based on information as of April 30, 2021. |
| <sup>(2)</sup> No shares were outstanding for this class of share as of the valuation date. | <sup>(2)</sup> No shares were outstanding for this class of share as of the valuation date. | <sup>(2)</sup> No shares were outstanding for this class of share as of the valuation date. | <sup>(2)</sup> No shares were outstanding for this class of share as of the valuation date. | <sup>(2)</sup> No shares were outstanding for this class of share as of the valuation date. | <sup>(2)</sup> No shares were outstanding for this class of share as of the valuation date. | <sup>(2)</sup> No shares were outstanding for this class of share as of the valuation date. |

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**Net Asset Value**

We calculate NAV per share in accordance with the valuation guidelines that have been approved by our board of directors. As described in those guidelines, each real property is appraised at least once per calendar year by a third-party appraiser and reviewed by our advisor and our independent valuation advisor. Additionally, the real property assets not appraised in a given calendar month by a third-party appraiser will be appraised for that calendar month by our independent valuation advisor, and such appraisals are reviewed by our advisor.

CROP has classes or series of OP units held by parties other than us that are economically equivalent to a corresponding class of shares and have the same value as our common stock. Our NAV is the value of CROP. Our NAV per share is calculated on a fully dilutive basis whereby outstanding classes or shares of CROP Units, including LTIP units that would be earned as of the valuation date, are included in fully-diluted shares/units outstanding.

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<u>[**Table of Contents**](#idee5e1a1e23d41889d4214c8b88222aa_7)</u>

The components of our NAV as of December 31, 2022 are as follows ($ and shares/units in thousands):

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| | |
|:---|:---|
| **Components of NAV\*** | **December 31, 2022** |
| Investments in Multifamily Operating Properties | $2372787 |
| Investments in Multifamily Development Properties | 130206 |
| Investments in Real-estate Related Structured Investments | 60821 |
| Investments in Land Held for Development | 78032 |
| Operating Company and Other Net Current Assets | 12034 |
| Cash and Cash Equivalents | 9461 |
| Secured Real Estate Financing | (1158364) |
| Subordinated Unsecured Notes | (42953) |
| Preferred Equity | (127065) |
| Accrued Performance Participation Allocation | (20688) |
| Net Asset Value | $1314271 |
| Fully-diluted Shares/Units Outstanding | 67127 |
| *\* Presented as adjusted for our economic ownership percentage in each asset.* | *\* Presented as adjusted for our economic ownership percentage in each asset.* |

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The following table provides a breakdown of our total NAV and NAV per share/unit by class as of December 31, 2022 ($ and shares/units in thousands, except per share/unit data):

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **Class** | **Class** | **Class** | **Class** | **Class** | |
| | **T** | **D** | **I** | **A** | **OP**<sup>(1)</sup> |<br>**Total** |
| **As of December 31, 2022** | | | | | | |
| Monthly NAV | $94274 | $1266 | $76246 | $520892 | $621593 | $1314271 |
| Fully-diluted Outstanding Shares/Units | 4815 | 65 | 3894 | 26605 | 31748 | 67127 |
| NAV per Fully-diluted Share/Unit | $19.5788 | $19.5788 | $19.5788 | $19.5788 | $19.5788 | $19.5788 |
| <sup>(1)</sup> Includes the partnership interests of the Operating Partnership held by High Traverse Holdings, an entity beneficially owned by Daniel Shaeffer, Chad Christensen, Gregg Christensen and Eric Marlin and other Operating Partnership interests, including LTIP Units as described above, held by parties other than us. | <sup>(1)</sup> Includes the partnership interests of the Operating Partnership held by High Traverse Holdings, an entity beneficially owned by Daniel Shaeffer, Chad Christensen, Gregg Christensen and Eric Marlin and other Operating Partnership interests, including LTIP Units as described above, held by parties other than us. | <sup>(1)</sup> Includes the partnership interests of the Operating Partnership held by High Traverse Holdings, an entity beneficially owned by Daniel Shaeffer, Chad Christensen, Gregg Christensen and Eric Marlin and other Operating Partnership interests, including LTIP Units as described above, held by parties other than us. | <sup>(1)</sup> Includes the partnership interests of the Operating Partnership held by High Traverse Holdings, an entity beneficially owned by Daniel Shaeffer, Chad Christensen, Gregg Christensen and Eric Marlin and other Operating Partnership interests, including LTIP Units as described above, held by parties other than us. | <sup>(1)</sup> Includes the partnership interests of the Operating Partnership held by High Traverse Holdings, an entity beneficially owned by Daniel Shaeffer, Chad Christensen, Gregg Christensen and Eric Marlin and other Operating Partnership interests, including LTIP Units as described above, held by parties other than us. | <sup>(1)</sup> Includes the partnership interests of the Operating Partnership held by High Traverse Holdings, an entity beneficially owned by Daniel Shaeffer, Chad Christensen, Gregg Christensen and Eric Marlin and other Operating Partnership interests, including LTIP Units as described above, held by parties other than us. | <sup>(1)</sup> Includes the partnership interests of the Operating Partnership held by High Traverse Holdings, an entity beneficially owned by Daniel Shaeffer, Chad Christensen, Gregg Christensen and Eric Marlin and other Operating Partnership interests, including LTIP Units as described above, held by parties other than us. |

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Below are the weighted averages of the key assumptions that were used by our independent appraisal advisor in the discounted cash flow methodology used in the December 31, 2022, valuations of our real property assets, based on property types.

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| | | |
|:---|:---|:---|
| | **Discount Rate** | **Exit Capitalization Rate** |
| Operating Assets | 6.18% | 4.81% |
| Development Assets | 6.00% | 4.50% |
| *\* Presented as adjusted for our economic ownership percentage in each asset, weighted by gross value.* | *\* Presented as adjusted for our economic ownership percentage in each asset, weighted by gross value.* | *\* Presented as adjusted for our economic ownership percentage in each asset, weighted by gross value.* |

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<u>[**Table of Contents**](#idee5e1a1e23d41889d4214c8b88222aa_7)</u>

A change in these assumptions would impact the calculation of the value of our operating and development assets. For example, assuming all other factors remain unchanged, the changes listed below would result in the following effects on our operating and development asset values:

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| | | | |
|:---|:---|:---|:---|
| **Sensitivities** | **Change** | **Operating Asset <br>Values** | **Development Asset <br>Values** |
| Discount Rate | 0.25% decrease | 2.4% | 2.2% |
|  | 0.25% increase | (2.3)% | (2.2)% |
| Exit Capitalization Rate | 0.25% decrease | 4.1% | 4.4% |
|  | 0.25% increase | (3.5)% | (3.9)% |
| *\* Presented as adjusted for our economic ownership percentage in each asset.* | *\* Presented as adjusted for our economic ownership percentage in each asset.* | *\* Presented as adjusted for our economic ownership percentage in each asset.* | *\* Presented as adjusted for our economic ownership percentage in each asset.* |

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The following table reconciles stockholders' equity and CROP partners' capital per our consolidated balance sheet to our NAV (in thousands):

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| | |
|:---|:---|
| | **December 31, 2022** |
| Stockholders' equity | $318789 |
| Non-controlling interests attributable to limited partners | 258679 |
| Total partners' capital of CROP under U.S. GAAP | 577468 |
| Adjustments at share: |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Accumulated depreciation and amortization, consolidated and unconsolidated entities | 140850 |
| &nbsp;&nbsp;&nbsp;&nbsp;Goodwill | (439) |
| &nbsp;&nbsp;&nbsp;&nbsp;Deferred tax liability | 9741 |
| &nbsp;&nbsp;&nbsp;&nbsp;Discount on preferred stock | (5675) |
| &nbsp;&nbsp;&nbsp;&nbsp;Unrealized net real estate and debt appreciation | 592326 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;NAV | $1314271 |

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The following describes the adjustments to reconcile GAAP stockholders' equity and CROP partners' capital per our consolidated balance sheet to our NAV:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We depreciate our investments in real estate and amortize certain other assets and liabilities in accordance with GAAP. Such depreciation and amortization is not recorded for purposes of determining our NAV.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We recorded goodwill for the difference between the transaction price of the CRII Merger and the fair value of identifiable assets acquired, liabilities assumed, and non-controlling interests. Goodwill was not included for purposes of determining our NAV.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We recorded certain deferred tax liabilities for the tax effects on the difference in the value of certain assets recorded with the CRII Merger and their underlying tax basis. These deferred tax liabilities are excluded for purposes of determining our NAV.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Our preferred stock is accounted for as a liability with associated issuance costs deferred and amortized under GAAP. These issuance costs are excluded for purposes of determining our NAV.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Our investments in real estate are presented under historical cost in our GAAP consolidated financial statements. Additionally, our mortgage notes, revolving credit facility and construction loans ("Debt") are presented at their carrying value in our consolidated GAAP financial statements. As such, any increases or decreases in the fair market value of our investments in real estate or our Debt are not included in our GAAP results. For purposes of determining our NAV, our investments in real estate and our Debt are recorded at fair value.

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**Distributions** 

We expect to pay distributions to holders of our common and preferred stock on a monthly basis based on monthly record dates. We have not established a minimum distribution level for holders of our common stock and are not required to make distributions to our common stockholders. Distributions are authorized and declared in the sole discretion of our board of directors. We have two classes of preferred stock outstanding. Each class of preferred stock is entitled to a fixed preferred dividend based on a cumulative, but not compounded, annual return. We may also issue stock dividends. Distributions for stockholders who elect to participate in our distribution reinvestment plan are reinvested into shares of the same class of our common stock as the shares to which the distributions relate.

To maintain our qualification as a REIT, we are required to make aggregate annual distributions to our common stockholders of at least 90% of our REIT taxable income (computed without regard to the dividends paid deduction and excluding net capital gain). Our board of directors may authorize distributions in excess of those required for us to maintain REIT status depending on our financial condition and such other factors as our board of directors deems relevant.

Our board of directors considers many factors before authorizing a distribution, including current and projected cash flow from operations, capital expenditure needs, general financial conditions and REIT qualification requirements. Our board may declare cash distributions that will be paid in advance of our receipt of cash flow that we expect to receive during a later period. We are not limited in the amount of distributions we can fund from sources other than cash flows from operations. Where we do not have sufficient cash flows from operations to cover our distributions, we may borrow funds, issue new securities or sell assets to make and cover our declared distributions, all or a portion of which could be deemed a return of capital.

For more information with respect to our distributions paid, see Part II, Item 7. "<u>[Management's Discussion and Analysis of Financial Condition and Results of Operations - Distributions](#idee5e1a1e23d41889d4214c8b88222aa_37)</u>."

**Funds from Operations**

We believe funds from operations, or FFO, is a beneficial indicator of the performance of an equity REIT and of our company. We compute FFO in accordance with the standards established by the National Association of Real Estate Investment Trusts, or NAREIT, as net income or loss (computed in accordance with GAAP), excluding gains or losses from sales of operating real estate assets (which can vary among owners of identical assets in similar conditions based on historical cost accounting and useful-life estimates), gains and losses from change in control, impairment losses on real estate assets, the cumulative effect of changes in accounting principles, real estate-related depreciation and amortization, and after adjustments for our share of unconsolidated partnerships and joint ventures.

We believe FFO facilitates comparisons of operating performance between periods and among other REITs. However, our computation of FFO may not be comparable to other REITs that do not define FFO in accordance with the NAREIT definition or that interpret the current NAREIT definition differently than we do. Our management believes that historical cost accounting for real estate assets in accordance with GAAP implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values have historically risen or fallen with market conditions, many industry investors and analysts have considered the presentation of operating results for real estate companies that use historical cost accounting to be insufficient by themselves. As a result, we believe that the use of FFO, together with the required GAAP presentations, provides a more complete understanding of our performance relative to our competitors and provides a more informed and appropriate basis on which to make decisions involving operating, financing, and investing activities.

We adjust FFO by the items below to arrive at Core FFO. Our management uses Core FFO as a measure of our operating performance. The performance participation allocation is excluded from Core FFO as the performance participation allocation is largely driven by appreciation of our net asset value which relies on factors outside of recurring operations, including capital allocation, strategic investment decisions and market factors independent of the ongoing operations of the Company. We believe excluding the performance participation allocation provides management and our stockholders a better understanding of the ongoing operating performance of our investments. Our calculation of Core FFO may differ from the methodology used for calculating Core FFO by other REITs and, accordingly, our Core FFO may not be comparable. We believe these measures are useful to investors because they facilitate an understanding of our operating performance after adjusting for non-cash expenses and other items not indicative of ongoing operating performance.

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<u>[**Table of Contents**](#idee5e1a1e23d41889d4214c8b88222aa_7)</u>

Neither FFO nor Core FFO is equivalent to net income or cash generated from operating activities determined in accordance with U.S. GAAP. Furthermore, FFO and Core FFO do not represent amounts available for management's discretionary use because of needed capital replacement or expansion, debt service obligations or other commitments or uncertainties. Neither FFO nor Core FFO should be considered as an alternative to net income as an indicator of our operating performance or as an alternative to cash flow from operating activities as a measure of our liquidity.

The following table presents a reconciliation of FFO and Core FFO to net loss attributable to CROP ($ in thousands, except share and per share data):

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| | | |
|:---|:---|:---|
| | **Year Ended December 31,** | **Year Ended December 31,** |
| | **2022** | **2021** |
| Net loss attributable to common stockholders | $(15649) | $(43916) |
| Adjustments to arrive at FFO: |  |  |
| &nbsp;&nbsp;Real estate related depreciation and amortization | 51265 | 61254 |
| &nbsp;&nbsp;Depreciation and amortization from unconsolidated real estate entities | 7768 | 11973 |
| &nbsp;&nbsp;Gain on sale of real estate assets |  | (10912) |
| &nbsp;&nbsp;Gain on sale of investments in unconsolidated real estate entities | (8129) |  |
| &nbsp;&nbsp;Loss allocated to noncontrolling interests - limited partners | (17594) | (58923) |
| &nbsp;&nbsp;Amount attributable to above from noncontrolling interests - partially owned entities | (888) | (5858) |
| &nbsp;&nbsp;Funds from operations attributable to common stockholders and unit holders | 16773 | (46382) |
| Adjustments: |  |  |
| &nbsp;&nbsp;Amortization of intangible assets | 3330 | 2143 |
| &nbsp;&nbsp;Accretion of discount on preferred stock | 5406 | 2350 |
| &nbsp;&nbsp;Accretion of below market leases | (555) | (834) |
| &nbsp;&nbsp;Performance participation allocation | 20320 | 51761 |
| &nbsp;&nbsp;Share based compensation <sup>(1)</sup> | 3774 | 1570 |
| &nbsp;&nbsp;Promote from incentive allocation agreement (tax effected) | (23334) |  |
| &nbsp;&nbsp;Gains on derivatives | (4048) |  |
| &nbsp;&nbsp;Acquisition fees and expenses <sup>(2)</sup> | 1824 | 3826 |
| &nbsp;&nbsp;Legal costs and settlements, net <sup>(1)</sup> | (7) | 839 |
| &nbsp;&nbsp;Other adjustments | (466) | (517) |
| &nbsp;&nbsp;Amount attributable to above from noncontrolling interests | (1290) | 1133 |
| Core funds from operations attributable to common stockholders and unit holders | $21727 | $15889 |
| FFO per common share and unit - basic and diluted | $0.28 | $(1.22) |
| Core FFO per common share and unit - basic and diluted | $0.36 | $0.42 |
| Weighted-average diluted common shares and units outstanding | 60705718 | 38076120 |
| <sup>(1)</sup> Core FFO was adjusted for these items beginning in 2022. Core FFO for 2021 was also adjusted by these items for comparability. | <sup>(1)</sup> Core FFO was adjusted for these items beginning in 2022. Core FFO for 2021 was also adjusted by these items for comparability. | <sup>(1)</sup> Core FFO was adjusted for these items beginning in 2022. Core FFO for 2021 was also adjusted by these items for comparability. |
| <sup>(2)</sup> Acquisition fees and expenses include costs associated with the CMOF Merger and the 2021 Mergers.  | <sup>(2)</sup> Acquisition fees and expenses include costs associated with the CMOF Merger and the 2021 Mergers.  | <sup>(2)</sup> Acquisition fees and expenses include costs associated with the CMOF Merger and the 2021 Mergers.  |

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**Unregistered Sale of Equity Securities** 

During the year ended December 31, 2022, we sold equity securities that were not registered under the Securities Act as described below.

On November 8, 2019, we launched the 2019 Private Offering, a best-efforts private placement offering exempt from registration pursuant to Rule 506(b) of Regulation D of the Securities Act. During the year ended December 31, 2022, we issued and sold 1,547,184 shares of our Series 2019 Preferred Stock in the Private Offering and received aggregate proceeds of $15.4 million. In connection with the sale of these shares in the 2019 Private Offering, we paid aggregate selling commissions of $1.0 million and placement fees of $0.3 million. In March 2022, the 2019 Private Offering was fully subscribed.

On December 13, 2022, we launched the 2023 Private Offering, a best-efforts private placement offering exempt from registration pursuant to Rule 506(b) of Regulation D of the Securities Act. No shares of our Series 2023 Preferred Stock had been sold as of December 31, 2022. Additional information about the 2023 Private Offering and sales of Series 2023 Preferred Stock in the 2023 Private Offering are disclosed under Item 3.02 in our Current Reports on Form 8-K.

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During the year ended December 31, 2022, we issued 280,889 shares of Class I common stock upon exchange of 280,889 CROP Units held by various limited partners. The issuance of such shares of common stock was effected in reliance upon an exemption from registration provided by Section 4(a)(2) under the Securities Act and the rules and regulations promulgated thereunder. We relied on the exemption based on representations given by the holders of the CROP Units.

On January 7, 2022 and February 4, 2022, we granted an aggregate of 11,296 and 14,754 LTIP Units, respectively, to our three independent directors as compensation for serving as directors. The LTIP Units have a one-year vesting schedule. The issuance of such shares of units was effected in reliance upon an exemption from registration provided by Section 4(a)(2) under the Securities Act and the rules and regulations promulgated thereunder.

On January 7, 2022, we granted an aggregate of 94,531 LTIP Units to our executive officers and certain of our employees as equity compensation. The LTIP Units vest over four years in equal installments on a quarterly basis, subject to continued service. In addition, on January 7, 2022, the compensation committee determined that 57,746 LTIP Units were earned by certain executive officers under performance unit awards made in January 2019. The earned LTIP units fully vest on the one-year anniversary of the last day of the performance period, subject to continued employment with us or our advisor and its affiliates. The issuance of such shares of units was effected in reliance upon an exemption from registration provided by Section 4(a)(2) under the Securities Act and the rules and regulations promulgated thereunder.

Over time, the LTIP Units can achieve full parity with CROP Units for all purposes. If such parity is reached, non-forfeitable LTIP Units may be converted into CROP Units. CROP Units may be redeemed for cash equal to the then-current market value of one share of Class I common stock or, at our election, for shares of our Class I common stock on a one-for-one basis.

On September 19, 2022, CROP issued 141,543 CROP Units in exchange for the 9.55% outstanding tenant-common-interests in Cottonwood Ridgeview. The issuance of such shares of units was effected in reliance upon an exemption from registration provided by Section 4(a)(2) under the Securities Act and the rules and regulations promulgated thereunder.

On March 22, 2022, the compensation committee of the Company approved the grant of 7,767 restricted shares of Class I common stock to non-executive level employees of the Company and of CC Advisors III and its affiliates for past and future services for the Company in a private transaction exempt from registration pursuant to Section 4(a)(2) of the Securities Act.

**Share Repurchase Program**

Under our share repurchase program, to the extent we choose to repurchase shares in any particular month, we will only repurchase shares as of the opening of the last calendar day of that month (a "Repurchase Date"). Repurchases will be made at the transaction price in effect on the Repurchase Date (which will generally be equal to our prior month's NAV per share), except that depending on the class of shares requested to be repurchased and how long the shares have been outstanding, the shares may be repurchased at a discount to the transaction price (an "Early Repurchase Deduction") as described in the Share Repurchase Program which is filed as exhibit 99.1 to this report, subject to certain limited exceptions. Settlements of share repurchases will generally be made within three business days of the Repurchase Date.

The total amount of aggregate repurchases of our Class T, Class D, Class I, Class A and Class TX shares (all of our classes of common stock) is limited to no more than 2% of the aggregate NAV of our common stock outstanding per month and no more than 5% of our aggregate NAV of our common stock outstanding per calendar quarter.

Should repurchase requests, in our judgment, place an undue burden on our liquidity, adversely affect our operations or risk having an adverse impact on the company as a whole, or should we otherwise determine that investing our liquid assets in real properties or other investments rather than repurchasing our shares is in the best interests of the company as a whole, we may choose to repurchase fewer shares in any particular month than have been requested to be repurchased, or none at all. Further, our board of directors may modify and suspend our share repurchase plan if it deems such action to be in our best interest and the best interest of our stockholders. In the event that we determine to repurchase some but not all of the shares submitted for repurchase during any month, shares repurchased at the end of the month will be repurchased on a pro rata basis. All unsatisfied repurchase requests must be resubmitted after the start of the next month or quarter, or upon the recommencement of the share repurchase plan, as applicable.

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If the transaction price for the applicable month is not made available by the tenth business day prior to the last business day of the month (or is changed after such date), then no repurchase requests will be accepted for such month and stockholders who wish to have their shares repurchased the following month must resubmit their repurchase requests.

During the three months ended December 31, 2022, we repurchased shares of our common stock in the following amounts at the then-applicable transaction price (reduced as applicable by the Early Repurchase Deduction):

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| | | | | |
|:---|:---|:---|:---|:---|
| **Month of:** | **Total Number of Shares Repurchased** <sup>(1)</sup> | **Repurchases as a Percentage of NAV** <sup>(2)</sup> | **Average Price Paid per Share** | **Maximum Number of Shares Pending Repurchase Pursuant to Publicly Announced Plans or Programs** <sup>(3)</sup> |
| October 2022 | 65524 | 0.1732167% | $18.9811 |  |
| November 2022 | 289665 | 0.7682443% | $19.1651 |  |
| December 2022 | 309134 | 0.7936880% | $18.0979 |  |
| Total | 664323 |  |  |  |
| <sup>(1)</sup> All shares have been repurchased pursuant to our share purchase program.  | <sup>(1)</sup> All shares have been repurchased pursuant to our share purchase program.  | <sup>(1)</sup> All shares have been repurchased pursuant to our share purchase program.  | <sup>(1)</sup> All shares have been repurchased pursuant to our share purchase program.  | <sup>(1)</sup> All shares have been repurchased pursuant to our share purchase program.  |
| <sup>(2)</sup> Represents aggregate NAV of the shares repurchased under our share repurchase plan over aggregate NAV of all shares of our common stock outstanding, in each case, based on our NAV as of the last calendar day of the prior month. Pursuant to our share repurchase program, we may repurchase up to 2% of the aggregate NAV of our common stock outstanding per month and 5% of the aggregate NAV of our common stock outstanding per calendar quarter.  | <sup>(2)</sup> Represents aggregate NAV of the shares repurchased under our share repurchase plan over aggregate NAV of all shares of our common stock outstanding, in each case, based on our NAV as of the last calendar day of the prior month. Pursuant to our share repurchase program, we may repurchase up to 2% of the aggregate NAV of our common stock outstanding per month and 5% of the aggregate NAV of our common stock outstanding per calendar quarter.  | <sup>(2)</sup> Represents aggregate NAV of the shares repurchased under our share repurchase plan over aggregate NAV of all shares of our common stock outstanding, in each case, based on our NAV as of the last calendar day of the prior month. Pursuant to our share repurchase program, we may repurchase up to 2% of the aggregate NAV of our common stock outstanding per month and 5% of the aggregate NAV of our common stock outstanding per calendar quarter.  | <sup>(2)</sup> Represents aggregate NAV of the shares repurchased under our share repurchase plan over aggregate NAV of all shares of our common stock outstanding, in each case, based on our NAV as of the last calendar day of the prior month. Pursuant to our share repurchase program, we may repurchase up to 2% of the aggregate NAV of our common stock outstanding per month and 5% of the aggregate NAV of our common stock outstanding per calendar quarter.  | <sup>(2)</sup> Represents aggregate NAV of the shares repurchased under our share repurchase plan over aggregate NAV of all shares of our common stock outstanding, in each case, based on our NAV as of the last calendar day of the prior month. Pursuant to our share repurchase program, we may repurchase up to 2% of the aggregate NAV of our common stock outstanding per month and 5% of the aggregate NAV of our common stock outstanding per calendar quarter.  |
| <sup>(3)</sup> All repurchase requests under our share repurchase plan were satisfied. We funded our repurchases with cash available from operations, financing activities and capital raising activities. | <sup>(3)</sup> All repurchase requests under our share repurchase plan were satisfied. We funded our repurchases with cash available from operations, financing activities and capital raising activities. | <sup>(3)</sup> All repurchase requests under our share repurchase plan were satisfied. We funded our repurchases with cash available from operations, financing activities and capital raising activities. | <sup>(3)</sup> All repurchase requests under our share repurchase plan were satisfied. We funded our repurchases with cash available from operations, financing activities and capital raising activities. | <sup>(3)</sup> All repurchase requests under our share repurchase plan were satisfied. We funded our repurchases with cash available from operations, financing activities and capital raising activities. |

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**Holders**

The following tables shows the number of shares and holders of each class of common equity outstanding as of March 21, 2023, including shares held by our affiliates:

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| | | | | |
|:---|:---|:---|:---|:---|
| | **Class** | **Class** | **Class** | **Class** |
| | **T** | **D** | **I** | **A** |
| Outstanding shares | 5109646 | 165927 | 4113814 | 26173599 |
| Number of stockholders | 1385 | 50 | 1069 | 5112 |

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**Item 6. [Reserved]**&nbsp;&nbsp;&nbsp;&nbsp;

**Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations**

The following discussion should be read in conjunction with the consolidated financial statements and notes thereto appearing elsewhere in this Annual Report on Form 10-K. In addition to historical data, this discussion contains forward-looking statements about our business, operations and financial performance based on current expectations that involve risks, uncertainties and assumptions. Our actual results may differ materially from those in this discussion as a result of various factors, including but not limited to those discussed under "<u>[Cautionary Note Regarding Forward Looking Statements](#idee5e1a1e23d41889d4214c8b88222aa_10)</u>" and in Item 1A, "<u>[Risk Factors](#idee5e1a1e23d41889d4214c8b88222aa_16)</u>."

&nbsp;&nbsp;&nbsp;&nbsp;

**Overview**

Cottonwood Communities, Inc. invests in a diverse portfolio of multifamily apartment communities and multifamily real estate-related assets throughout the United States. We are externally managed by our advisor, CC Advisors III, a wholly owned subsidiary of our sponsor, Cottonwood Communities Advisors, LLC. We were incorporated in Maryland in 2016. We hold all of our assets through the Operating Partnership. Our operating partnership was Cottonwood Communities O.P., LP ("CCOP") prior to the CRII Merger and is Cottonwood Residential O.P., LP after the CRII Merger. We are the sole member of the sole general partner of the Operating Partnership and own general partner interests in the Operating Partnership alongside third party limited partners.

Cottonwood Communities, Inc. is a non-traded perpetual-life, NAV REIT. We qualified as a REIT for U.S. federal income tax purposes beginning with the taxable year ended December 31, 2019. We generally will not be subject to U.S. federal income taxes on our taxable income to the extent we annually distribute all of our net taxable income to stockholders and maintain our qualification as a REIT.

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<u>[**Table of Contents**](#idee5e1a1e23d41889d4214c8b88222aa_7)</u>

As December 31, 2022, we had received net proceeds of $295.5 million from the sale of common stock and $127.0 million from the sale of Series 2019 Preferred Stock. We have contributed our net proceeds to CROP in exchange for a corresponding number of mirrored OP units in CROP. CROP has primarily used the net proceeds to make investments in real estate, multifamily real estate-related assets, and real estate related operations.

As of December 31, 2022, we had a portfolio of $2.6 billion in total assets, with 84.8% of our equity value in operating properties, 10.9% in development and 4.3% in real estate-related investments. Refer to the section "Our Investments" below for further description of our portfolio.

**2022 Activities**

The following highlights activities that occurred during the year ended December 31, 2022.

*Operating Results and Net Asset Value*

• Attained net loss attributable to common stockholders of $0.53 per diluted share compared to $2.49 for same period in the prior year.

• Achieved funds from operations attributable to common stockholders and unit holders ("FFO") of $0.28 per diluted share/unit. In addition, Core FFO was $0.36 per diluted share/unit, compared to $0.42 per share/unit for the same period in the prior year.

• Achieved stabilization of two developments, Sugarmont and Park Avenue.

• Determined net asset value of $19.5788 per share/unit at December 31, 2022, compared to $17.2839 per share/unit at December 31, 2021.

*Transaction Activity*

• Merged with Cottonwood Multifamily Opportunity Fund, Inc., acquiring the remaining interests in two development properties and an additional interest in a joint venture holding land for development.

• Acquired Cottonwood Lighthouse Point, a 243-unit apartment community in Pompano Beach, FL, for $95.5 million.

• Acquired Cottonwood Clermont, a 230-unit apartment community in Clermont, FL, for $85.0 million, through a 1031 exchange with the sale of our interest in 3800 Main.

• Acquired the remaining tenant-in-common interests of Cottonwood Ridgeview.

• Acquired a 26-acre complex called Galleria in Salt Lake City, UT, for $28.5 million with the intent to re-develop.

• Committed $33.4 million of preferred equity to 417 Callowhill, a multifamily development in Philadelphia, PA, funding $8.7 million in 2022.

• Received repayment of principal and accrued interest plus a $1.8 million minimum make-whole payment with the prepayment of our Integra Peaks mezzanine loan investment.

• Sold equity method investments in 3800 Main and Alpha Mill, recognizing $8.1 million of gains from these investments.

• Recapitalized Block C and Jasper (developments now known as Westerly, Millcreek North and The Archer), receiving $10.9 million from affiliated investors.

*Financing and Capital Raise Activity*

• Obtained an aggregate of $470.0 million in property-level financing, of which $264.5 million was at a fixed rate of 3.40%, and repaid $231.2 million.

• Increased the capacity of our revolving credit facility from $74.9 million to $125.0 million.

• Fully redeemed our Series 2016 Preferred Stock and Series 2017 Preferred Stock for $139.8 million and $2.6 million, respectively.

• Executed additional draws of $38.3 million on construction loans to further the completion of our development projects and refinanced $59.7 million of construction loans with permanent debt.

• Raised $15.5 million from the sale of Series 2019 Preferred Stock.

• Launched the Series 2023 Preferred Stock best efforts, private placement offering.

• Raised $170.8 million from the sale of common stock.

• Repurchased $28.4 million of common stock and CROP Units at an average discount of 8% to NAV.

• Distributed $20.0 million and $22.2 million to common stockholders and limited partners, respectively.

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<u>[**Table of Contents**](#idee5e1a1e23d41889d4214c8b88222aa_7)</u>

**Our Investments**

Our portfolio of investments consists of ownership interests or structured investment interests in 34 multifamily apartment communities in 12 states with approximately 9,800 units, including approximately 1,300 units in four multifamily apartment communities in which we have a structured investment interest and approximately 500 units in two multifamily apartment communities under construction. In addition, we have an ownership interest in four land sites planned for development.

Information regarding our investments as of December 31, 2022 is as follows:

*Stabilized Properties ($ in thousands, except net effective rents)* 

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| | | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| **Property Name** | **Market** | **Number<br>of Units** | **Average<br>Unit Size<br>(Sq Ft)** | **Purchase<br>Date** | **Purchase Price** | **Purchase Price** | | **Mortgage**<br>**Debt**<br>**Outstanding** <sup>(1)</sup> | **Mortgage**<br>**Debt**<br>**Outstanding** <sup>(1)</sup> | **Net Effective Rent** | **Net Effective Rent** | **Physical<br>Occupancy<br>Rate** | **Percentage<br>Owned by<br>CROP** |
| Alpha Mill | Charlotte, NC | 267 | 830 | May 2021 | $| 69500 |  | $| 39044 | $| 1657 | 97.00% | 28.29% |
| Cason Estates | Murfreesboro, TN | 262 | 1078 | May 2021 | 51400 | 51400 |  | 33594 | 33594 | 1449 | 1449 | 95.04% | 100.00% |
| Cottonwood Apartments | Salt Lake City, UT | 264 | 834 | May 2021 | 47300 | 47300 |  | 35430 | 35430 | 1388 | 1388 | 92.42% | 100.00% |
| Cottonwood Bayview | St. Petersburg, FL | 309 | 805 | May 2021 | 95900 | 95900 |  | 46209 | 46209 | 2490 | 2490 | 93.85% | 71.00% |
| Cottonwood Clermont | Clermont, FL | 230 | 1111 | Sept 2022 | 85000 | 85000 |  | 35411 | 35411 | 2082 | 2082 | 86.52% | 100.00% |
| Cottonwood Lighthouse Point | Pompano Beach, FL | 243 | 996 | June 2022 | 95500 | 95500 |  | 47964 | 47964 | 2157 | 2157 | 91.77% | 100.00% |
| Cottonwood One Upland | Boston, MA | 262 | 1160 | Mar 2020 | 103600 | 103600 |  | 32400 | 32400 | 2728 | 2728 | 96.18% | 100.00% |
| Cottonwood Reserve | Charlotte, NC | 352 | 1021 | May 2021 | 77500 | 77500 |  | 37817 | 37817 | 1468 | 1468 | 95.00% | 91.14% |
| Cottonwood Ridgeview | Plano, TX | 322 | 1156 | May 2021 | 72930 | 72930 | <sup>(2)</sup> | 65300 | 65300 | 1804 | 1804 | 96.58% | 100.00% |
| Cottonwood West Palm | West Palm Beach, FL | 245 | 1122 | May 2019 | 66900 | 66900 |  | 47978 | 47978 | 2332 | 2332 | 95.10% | 100.00% |
| Cottonwood Westside | Atlanta, GA | 197 | 860 | May 2021 | 47900 | 47900 |  | 25020 | 25020 | 1736 | 1736 | 93.40% | 100.00% |
| Enclave on Golden Triangle | Keller, TX | 273 | 1048 | May 2021 | 51600 | 51600 |  | 48400 | 48400 | 1681 | 1681 | 97.44% | 98.93% |
| Fox Point | Salt Lake City, UT | 398 | 841 | May 2021 | 79400 | 79400 |  | 46000 | 46000 | 1431 | 1431 | 92.71% | 52.75% |
| Heights at Meridian | Durham, NC | 339 | 997 | May 2021 | 79900 | 79900 |  | 45341 | 45341 | 1547 | 1547 | 94.99% | 100.00% |
| Melrose | Nashville, TN | 220 | 951 | May 2021 | 67400 | 67400 |  | 56600 | 56600 | 1879 | 1879 | 95.91% | 100.00% |
| Melrose Phase II | Nashville, TN | 139 | 675 | May 2021 | 40350 | 40350 |  | 32400 | 32400 | 1675 | 1675 | 91.37% | 79.82% |
| Parc Westborough | Boston, MA | 249 | 1008 | May 2021 | 74000 | 74000 |  | 21600 | 21600 | 2306 | 2306 | 93.98% | 100.00% |
| Park Avenue | Salt Lake City, UT | 234 | 714 | May 2021 | 67031 | 67031 | <sup>(3)</sup> | 37000 | 37000 | 1899 | 1899 | 94.44% | 100.00% |
| Pavilions | Albuquerque, NM | 240 | 1162 | May 2021 | 61100 | 61100 |  | 58500 | 58500 | 1797 | 1797 | 90.00% | 96.35% |
| Raveneaux | Houston, TX | 382 | 1065 | May 2021 | 57500 | 57500 |  | 47400 | 47400 | 1370 | 1370 | 95.03% | 96.97% |
| Regatta | Houston, TX | 490 | 862 | May 2021 | 48100 | 48100 |  | 35367 | 35367 | 1049 | 1049 | 93.46% | 100.00% |
| Retreat at Peachtree City | Peachtree City, GA | 312 | 980 | May 2021 | 72500 | 72500 |  | 48719 | 48719 | 1675 | 1675 | 95.19% | 100.00% |
| Scott Mountain | Portland, OR | 262 | 927 | May 2021 | 70700 | 70700 |  | 48373 | 48373 | 1661 | 1661 | 87.79% | 95.80% |
| Stonebriar of Frisco | Frisco, TX | 306 | 963 | May 2021 | 59200 | 59200 |  | 53600 | 53600 | 1540 | 1540 | 96.73% | 84.19% |
| Sugarmont | Salt Lake City, UT | 341 | 904 | May 2021 | 139473 | 139473 | <sup>(4)</sup> | 105000 | 105000 | 2236 | 2236 | 91.20% | 99.00% <sup>(5)</sup> |
| Summer Park | Buford, GA | 358 | 1064 | May 2021 | 75500 | 75500 |  | 44620 | 44620 | 1533 | 1533 | 94.97% | 98.68% |
| The Marq Highland Park <sup>(6)</sup> | Tampa, FL | 239 | 999 | May 2021 | 65700 | 65700 |  | 34005 | 34005 | 2059 | 2059 | 97.49% | 100.00% |
| Toscana at Valley Ridge | Lewisville, TX | 288 | 738 | May 2021 | 47700 | 47700 |  | 30700 | 30700 | 1279 | 1279 | 98.26% | 58.60% |
| **Total / Weighted-Average** |  | 8023 | 963 |  | $| 1970584 |  | $| 1239792 | $| 1742 | 94.17% | 86.59% |
| <sup>(1)</sup> Mortgage debt outstanding is shown as if CROP owned 100% of the property. | <sup>(1)</sup> Mortgage debt outstanding is shown as if CROP owned 100% of the property. | <sup>(1)</sup> Mortgage debt outstanding is shown as if CROP owned 100% of the property. | <sup>(1)</sup> Mortgage debt outstanding is shown as if CROP owned 100% of the property. | <sup>(1)</sup> Mortgage debt outstanding is shown as if CROP owned 100% of the property. | <sup>(1)</sup> Mortgage debt outstanding is shown as if CROP owned 100% of the property. | <sup>(1)</sup> Mortgage debt outstanding is shown as if CROP owned 100% of the property. | <sup>(1)</sup> Mortgage debt outstanding is shown as if CROP owned 100% of the property. | <sup>(1)</sup> Mortgage debt outstanding is shown as if CROP owned 100% of the property. | <sup>(1)</sup> Mortgage debt outstanding is shown as if CROP owned 100% of the property. | <sup>(1)</sup> Mortgage debt outstanding is shown as if CROP owned 100% of the property. | <sup>(1)</sup> Mortgage debt outstanding is shown as if CROP owned 100% of the property. | <sup>(1)</sup> Mortgage debt outstanding is shown as if CROP owned 100% of the property. | <sup>(1)</sup> Mortgage debt outstanding is shown as if CROP owned 100% of the property. |
| <sup>(2)</sup> We acquired 90.45% of Cottonwood Ridgeview with the CRII Merger at a value of $70.0 million. The remaining 9.55% was acquired through the issuance of CROP Units valued at $2.9 million on the close date in September 2022. | <sup>(2)</sup> We acquired 90.45% of Cottonwood Ridgeview with the CRII Merger at a value of $70.0 million. The remaining 9.55% was acquired through the issuance of CROP Units valued at $2.9 million on the close date in September 2022. | <sup>(2)</sup> We acquired 90.45% of Cottonwood Ridgeview with the CRII Merger at a value of $70.0 million. The remaining 9.55% was acquired through the issuance of CROP Units valued at $2.9 million on the close date in September 2022. | <sup>(2)</sup> We acquired 90.45% of Cottonwood Ridgeview with the CRII Merger at a value of $70.0 million. The remaining 9.55% was acquired through the issuance of CROP Units valued at $2.9 million on the close date in September 2022. | <sup>(2)</sup> We acquired 90.45% of Cottonwood Ridgeview with the CRII Merger at a value of $70.0 million. The remaining 9.55% was acquired through the issuance of CROP Units valued at $2.9 million on the close date in September 2022. | <sup>(2)</sup> We acquired 90.45% of Cottonwood Ridgeview with the CRII Merger at a value of $70.0 million. The remaining 9.55% was acquired through the issuance of CROP Units valued at $2.9 million on the close date in September 2022. | <sup>(2)</sup> We acquired 90.45% of Cottonwood Ridgeview with the CRII Merger at a value of $70.0 million. The remaining 9.55% was acquired through the issuance of CROP Units valued at $2.9 million on the close date in September 2022. | <sup>(2)</sup> We acquired 90.45% of Cottonwood Ridgeview with the CRII Merger at a value of $70.0 million. The remaining 9.55% was acquired through the issuance of CROP Units valued at $2.9 million on the close date in September 2022. | <sup>(2)</sup> We acquired 90.45% of Cottonwood Ridgeview with the CRII Merger at a value of $70.0 million. The remaining 9.55% was acquired through the issuance of CROP Units valued at $2.9 million on the close date in September 2022. | <sup>(2)</sup> We acquired 90.45% of Cottonwood Ridgeview with the CRII Merger at a value of $70.0 million. The remaining 9.55% was acquired through the issuance of CROP Units valued at $2.9 million on the close date in September 2022. | <sup>(2)</sup> We acquired 90.45% of Cottonwood Ridgeview with the CRII Merger at a value of $70.0 million. The remaining 9.55% was acquired through the issuance of CROP Units valued at $2.9 million on the close date in September 2022. | <sup>(2)</sup> We acquired 90.45% of Cottonwood Ridgeview with the CRII Merger at a value of $70.0 million. The remaining 9.55% was acquired through the issuance of CROP Units valued at $2.9 million on the close date in September 2022. | <sup>(2)</sup> We acquired 90.45% of Cottonwood Ridgeview with the CRII Merger at a value of $70.0 million. The remaining 9.55% was acquired through the issuance of CROP Units valued at $2.9 million on the close date in September 2022. | <sup>(2)</sup> We acquired 90.45% of Cottonwood Ridgeview with the CRII Merger at a value of $70.0 million. The remaining 9.55% was acquired through the issuance of CROP Units valued at $2.9 million on the close date in September 2022. |
| <sup>(3)</sup> We acquired a partial interest in the Park Avenue development joint venture with the CRII Merger at a value of $42.3 million and acquired the remaining ownership interest in the Park Avenue development joint venture with the CMOF Merger. The $67.0 million above represents the total capitalized costs on the project placed in service through December 31, 2022. | <sup>(3)</sup> We acquired a partial interest in the Park Avenue development joint venture with the CRII Merger at a value of $42.3 million and acquired the remaining ownership interest in the Park Avenue development joint venture with the CMOF Merger. The $67.0 million above represents the total capitalized costs on the project placed in service through December 31, 2022. | <sup>(3)</sup> We acquired a partial interest in the Park Avenue development joint venture with the CRII Merger at a value of $42.3 million and acquired the remaining ownership interest in the Park Avenue development joint venture with the CMOF Merger. The $67.0 million above represents the total capitalized costs on the project placed in service through December 31, 2022. | <sup>(3)</sup> We acquired a partial interest in the Park Avenue development joint venture with the CRII Merger at a value of $42.3 million and acquired the remaining ownership interest in the Park Avenue development joint venture with the CMOF Merger. The $67.0 million above represents the total capitalized costs on the project placed in service through December 31, 2022. | <sup>(3)</sup> We acquired a partial interest in the Park Avenue development joint venture with the CRII Merger at a value of $42.3 million and acquired the remaining ownership interest in the Park Avenue development joint venture with the CMOF Merger. The $67.0 million above represents the total capitalized costs on the project placed in service through December 31, 2022. | <sup>(3)</sup> We acquired a partial interest in the Park Avenue development joint venture with the CRII Merger at a value of $42.3 million and acquired the remaining ownership interest in the Park Avenue development joint venture with the CMOF Merger. The $67.0 million above represents the total capitalized costs on the project placed in service through December 31, 2022. | <sup>(3)</sup> We acquired a partial interest in the Park Avenue development joint venture with the CRII Merger at a value of $42.3 million and acquired the remaining ownership interest in the Park Avenue development joint venture with the CMOF Merger. The $67.0 million above represents the total capitalized costs on the project placed in service through December 31, 2022. | <sup>(3)</sup> We acquired a partial interest in the Park Avenue development joint venture with the CRII Merger at a value of $42.3 million and acquired the remaining ownership interest in the Park Avenue development joint venture with the CMOF Merger. The $67.0 million above represents the total capitalized costs on the project placed in service through December 31, 2022. | <sup>(3)</sup> We acquired a partial interest in the Park Avenue development joint venture with the CRII Merger at a value of $42.3 million and acquired the remaining ownership interest in the Park Avenue development joint venture with the CMOF Merger. The $67.0 million above represents the total capitalized costs on the project placed in service through December 31, 2022. | <sup>(3)</sup> We acquired a partial interest in the Park Avenue development joint venture with the CRII Merger at a value of $42.3 million and acquired the remaining ownership interest in the Park Avenue development joint venture with the CMOF Merger. The $67.0 million above represents the total capitalized costs on the project placed in service through December 31, 2022. | <sup>(3)</sup> We acquired a partial interest in the Park Avenue development joint venture with the CRII Merger at a value of $42.3 million and acquired the remaining ownership interest in the Park Avenue development joint venture with the CMOF Merger. The $67.0 million above represents the total capitalized costs on the project placed in service through December 31, 2022. | <sup>(3)</sup> We acquired a partial interest in the Park Avenue development joint venture with the CRII Merger at a value of $42.3 million and acquired the remaining ownership interest in the Park Avenue development joint venture with the CMOF Merger. The $67.0 million above represents the total capitalized costs on the project placed in service through December 31, 2022. | <sup>(3)</sup> We acquired a partial interest in the Park Avenue development joint venture with the CRII Merger at a value of $42.3 million and acquired the remaining ownership interest in the Park Avenue development joint venture with the CMOF Merger. The $67.0 million above represents the total capitalized costs on the project placed in service through December 31, 2022. | <sup>(3)</sup> We acquired a partial interest in the Park Avenue development joint venture with the CRII Merger at a value of $42.3 million and acquired the remaining ownership interest in the Park Avenue development joint venture with the CMOF Merger. The $67.0 million above represents the total capitalized costs on the project placed in service through December 31, 2022. |
| <sup>(4)</sup> We acquired the Sugarmont development with the CRII Merger at a value of $112.5 million. The $139.5 million above represents the total capitalized costs on the project placed in service through December 31, 2022. | <sup>(4)</sup> We acquired the Sugarmont development with the CRII Merger at a value of $112.5 million. The $139.5 million above represents the total capitalized costs on the project placed in service through December 31, 2022. | <sup>(4)</sup> We acquired the Sugarmont development with the CRII Merger at a value of $112.5 million. The $139.5 million above represents the total capitalized costs on the project placed in service through December 31, 2022. | <sup>(4)</sup> We acquired the Sugarmont development with the CRII Merger at a value of $112.5 million. The $139.5 million above represents the total capitalized costs on the project placed in service through December 31, 2022. | <sup>(4)</sup> We acquired the Sugarmont development with the CRII Merger at a value of $112.5 million. The $139.5 million above represents the total capitalized costs on the project placed in service through December 31, 2022. | <sup>(4)</sup> We acquired the Sugarmont development with the CRII Merger at a value of $112.5 million. The $139.5 million above represents the total capitalized costs on the project placed in service through December 31, 2022. | <sup>(4)</sup> We acquired the Sugarmont development with the CRII Merger at a value of $112.5 million. The $139.5 million above represents the total capitalized costs on the project placed in service through December 31, 2022. | <sup>(4)</sup> We acquired the Sugarmont development with the CRII Merger at a value of $112.5 million. The $139.5 million above represents the total capitalized costs on the project placed in service through December 31, 2022. | <sup>(4)</sup> We acquired the Sugarmont development with the CRII Merger at a value of $112.5 million. The $139.5 million above represents the total capitalized costs on the project placed in service through December 31, 2022. | <sup>(4)</sup> We acquired the Sugarmont development with the CRII Merger at a value of $112.5 million. The $139.5 million above represents the total capitalized costs on the project placed in service through December 31, 2022. | <sup>(4)</sup> We acquired the Sugarmont development with the CRII Merger at a value of $112.5 million. The $139.5 million above represents the total capitalized costs on the project placed in service through December 31, 2022. | <sup>(4)</sup> We acquired the Sugarmont development with the CRII Merger at a value of $112.5 million. The $139.5 million above represents the total capitalized costs on the project placed in service through December 31, 2022. | <sup>(4)</sup> We acquired the Sugarmont development with the CRII Merger at a value of $112.5 million. The $139.5 million above represents the total capitalized costs on the project placed in service through December 31, 2022. | <sup>(4)</sup> We acquired the Sugarmont development with the CRII Merger at a value of $112.5 million. The $139.5 million above represents the total capitalized costs on the project placed in service through December 31, 2022. |
| <sup>(5)</sup> The one percent interest not owned by us has limited rights, including the right to control on behalf of the joint venture the prosecution and resolution of all litigation, claims, or causes of action that the joint venture has or may have against certain third parties associated with the design and construction of Sugarmont, as well as the obligation to defend any cross claims resulting from these actions. | <sup>(5)</sup> The one percent interest not owned by us has limited rights, including the right to control on behalf of the joint venture the prosecution and resolution of all litigation, claims, or causes of action that the joint venture has or may have against certain third parties associated with the design and construction of Sugarmont, as well as the obligation to defend any cross claims resulting from these actions. | <sup>(5)</sup> The one percent interest not owned by us has limited rights, including the right to control on behalf of the joint venture the prosecution and resolution of all litigation, claims, or causes of action that the joint venture has or may have against certain third parties associated with the design and construction of Sugarmont, as well as the obligation to defend any cross claims resulting from these actions. | <sup>(5)</sup> The one percent interest not owned by us has limited rights, including the right to control on behalf of the joint venture the prosecution and resolution of all litigation, claims, or causes of action that the joint venture has or may have against certain third parties associated with the design and construction of Sugarmont, as well as the obligation to defend any cross claims resulting from these actions. | <sup>(5)</sup> The one percent interest not owned by us has limited rights, including the right to control on behalf of the joint venture the prosecution and resolution of all litigation, claims, or causes of action that the joint venture has or may have against certain third parties associated with the design and construction of Sugarmont, as well as the obligation to defend any cross claims resulting from these actions. | <sup>(5)</sup> The one percent interest not owned by us has limited rights, including the right to control on behalf of the joint venture the prosecution and resolution of all litigation, claims, or causes of action that the joint venture has or may have against certain third parties associated with the design and construction of Sugarmont, as well as the obligation to defend any cross claims resulting from these actions. | <sup>(5)</sup> The one percent interest not owned by us has limited rights, including the right to control on behalf of the joint venture the prosecution and resolution of all litigation, claims, or causes of action that the joint venture has or may have against certain third parties associated with the design and construction of Sugarmont, as well as the obligation to defend any cross claims resulting from these actions. | <sup>(5)</sup> The one percent interest not owned by us has limited rights, including the right to control on behalf of the joint venture the prosecution and resolution of all litigation, claims, or causes of action that the joint venture has or may have against certain third parties associated with the design and construction of Sugarmont, as well as the obligation to defend any cross claims resulting from these actions. | <sup>(5)</sup> The one percent interest not owned by us has limited rights, including the right to control on behalf of the joint venture the prosecution and resolution of all litigation, claims, or causes of action that the joint venture has or may have against certain third parties associated with the design and construction of Sugarmont, as well as the obligation to defend any cross claims resulting from these actions. | <sup>(5)</sup> The one percent interest not owned by us has limited rights, including the right to control on behalf of the joint venture the prosecution and resolution of all litigation, claims, or causes of action that the joint venture has or may have against certain third parties associated with the design and construction of Sugarmont, as well as the obligation to defend any cross claims resulting from these actions. | <sup>(5)</sup> The one percent interest not owned by us has limited rights, including the right to control on behalf of the joint venture the prosecution and resolution of all litigation, claims, or causes of action that the joint venture has or may have against certain third parties associated with the design and construction of Sugarmont, as well as the obligation to defend any cross claims resulting from these actions. | <sup>(5)</sup> The one percent interest not owned by us has limited rights, including the right to control on behalf of the joint venture the prosecution and resolution of all litigation, claims, or causes of action that the joint venture has or may have against certain third parties associated with the design and construction of Sugarmont, as well as the obligation to defend any cross claims resulting from these actions. | <sup>(5)</sup> The one percent interest not owned by us has limited rights, including the right to control on behalf of the joint venture the prosecution and resolution of all litigation, claims, or causes of action that the joint venture has or may have against certain third parties associated with the design and construction of Sugarmont, as well as the obligation to defend any cross claims resulting from these actions. | <sup>(5)</sup> The one percent interest not owned by us has limited rights, including the right to control on behalf of the joint venture the prosecution and resolution of all litigation, claims, or causes of action that the joint venture has or may have against certain third parties associated with the design and construction of Sugarmont, as well as the obligation to defend any cross claims resulting from these actions. |
| <sup>(6)</sup> Excludes the commercial data in units count and physical occupancy. | <sup>(6)</sup> Excludes the commercial data in units count and physical occupancy. | <sup>(6)</sup> Excludes the commercial data in units count and physical occupancy. | <sup>(6)</sup> Excludes the commercial data in units count and physical occupancy. | <sup>(6)</sup> Excludes the commercial data in units count and physical occupancy. | <sup>(6)</sup> Excludes the commercial data in units count and physical occupancy. | <sup>(6)</sup> Excludes the commercial data in units count and physical occupancy. | <sup>(6)</sup> Excludes the commercial data in units count and physical occupancy. | <sup>(6)</sup> Excludes the commercial data in units count and physical occupancy. | <sup>(6)</sup> Excludes the commercial data in units count and physical occupancy. | <sup>(6)</sup> Excludes the commercial data in units count and physical occupancy. | <sup>(6)</sup> Excludes the commercial data in units count and physical occupancy. | <sup>(6)</sup> Excludes the commercial data in units count and physical occupancy. | <sup>(6)</sup> Excludes the commercial data in units count and physical occupancy. |

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<u>[**Table of Contents**](#idee5e1a1e23d41889d4214c8b88222aa_7)</u>

*Development Properties ($ in thousands)*

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| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| **Property Name** | **Market** | **Units to<br>be Built** | **Average<br>Unit Size<br>(Sq Ft)** | **Purchase Date** | **Completion<br>Date** | **Total Project Investment** | **Total Project Investment** | **Construction Debt Outstanding** <sup>(1)</sup> | **Construction Debt Outstanding** <sup>(1)</sup> | **Percentage<br>Owned by<br>CROP** |
| Cottonwood Broadway | Salt Lake City, UT | 254 | 817 | May 2021 | 1Q2023 | $| 71703 | $| 39728 | 100.00% |
| Cottonwood Highland <sup>(2)</sup> | Salt Lake City, UT | 250 | 757 | May 2021 | 2Q2023 | 43894 | 43894 | 18599 | 18599 | 36.93% <sup>(2)</sup> |
| **Total** |  | 504 |  |  |  | $| 115597 | $| 58327 |  |
| <sup>(1)</sup> Construction debt outstanding is shown as if CROP owned 100% of the development property. | <sup>(1)</sup> Construction debt outstanding is shown as if CROP owned 100% of the development property. | <sup>(1)</sup> Construction debt outstanding is shown as if CROP owned 100% of the development property. | <sup>(1)</sup> Construction debt outstanding is shown as if CROP owned 100% of the development property. | <sup>(1)</sup> Construction debt outstanding is shown as if CROP owned 100% of the development property. | <sup>(1)</sup> Construction debt outstanding is shown as if CROP owned 100% of the development property. | <sup>(1)</sup> Construction debt outstanding is shown as if CROP owned 100% of the development property. | <sup>(1)</sup> Construction debt outstanding is shown as if CROP owned 100% of the development property. | <sup>(1)</sup> Construction debt outstanding is shown as if CROP owned 100% of the development property. | <sup>(1)</sup> Construction debt outstanding is shown as if CROP owned 100% of the development property. | <sup>(1)</sup> Construction debt outstanding is shown as if CROP owned 100% of the development property. |
| <sup>(2)</sup> Intended to qualify as a qualified opportunity zone investment. Excludes the commercial data in unit count. CROP's percentage ownership is not proportionate to the total amount CROP invested in the project. | <sup>(2)</sup> Intended to qualify as a qualified opportunity zone investment. Excludes the commercial data in unit count. CROP's percentage ownership is not proportionate to the total amount CROP invested in the project. | <sup>(2)</sup> Intended to qualify as a qualified opportunity zone investment. Excludes the commercial data in unit count. CROP's percentage ownership is not proportionate to the total amount CROP invested in the project. | <sup>(2)</sup> Intended to qualify as a qualified opportunity zone investment. Excludes the commercial data in unit count. CROP's percentage ownership is not proportionate to the total amount CROP invested in the project. | <sup>(2)</sup> Intended to qualify as a qualified opportunity zone investment. Excludes the commercial data in unit count. CROP's percentage ownership is not proportionate to the total amount CROP invested in the project. | <sup>(2)</sup> Intended to qualify as a qualified opportunity zone investment. Excludes the commercial data in unit count. CROP's percentage ownership is not proportionate to the total amount CROP invested in the project. | <sup>(2)</sup> Intended to qualify as a qualified opportunity zone investment. Excludes the commercial data in unit count. CROP's percentage ownership is not proportionate to the total amount CROP invested in the project. | <sup>(2)</sup> Intended to qualify as a qualified opportunity zone investment. Excludes the commercial data in unit count. CROP's percentage ownership is not proportionate to the total amount CROP invested in the project. | <sup>(2)</sup> Intended to qualify as a qualified opportunity zone investment. Excludes the commercial data in unit count. CROP's percentage ownership is not proportionate to the total amount CROP invested in the project. | <sup>(2)</sup> Intended to qualify as a qualified opportunity zone investment. Excludes the commercial data in unit count. CROP's percentage ownership is not proportionate to the total amount CROP invested in the project. | <sup>(2)</sup> Intended to qualify as a qualified opportunity zone investment. Excludes the commercial data in unit count. CROP's percentage ownership is not proportionate to the total amount CROP invested in the project. |

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*Structured Investments ($ in thousands)*

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **Property Name** | **Market** | **Investment Type** | **Date of Initial Investment** | **Number of Units** | **Funding Commitment** | **Amount Funded to Date** |
| Lector85 | Ybor City, FL | Preferred Equity | August 2019 | 254 | $9900 | $9900 |
| Astoria West (formerly Vernon) | Queens, NY | Preferred Equity | July 2020 | 534 | 15000 | 15000 |
| 801 Riverfront | West Sacramento, CA | Preferred Equity | November 2020 | 285 | 15092 | 15092 |
| 417 Callowhill | Philadelphia, PA | Preferred Equity | November 2022 | 220 | $33413 | $8746 |
| **Total** |  |  |  | 1293 | $73405 | $48738 |

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*Land Held for Development ($ in thousands)*

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Property Name** | **Market** | **Acreage** | **Purchase Date** | **Total Investment Amount** | **Percentage Owned by CROP** |
| Block C (now known as Westerly and Millcreek North) | Salt Lake City, UT | 2.84 acres | May 2021 | $37838 | 78.99% <sup>(1)</sup> |
| Jasper (now known as The Archer) | Salt Lake City, UT | 0.79 acres | June 2021 | 11889 | 79.90% <sup>(2)</sup> |
| 3300 Cottonwood | Salt Lake City, UT | 1.76 acres | October 2021 | 7521 | 100.00% |
| Galleria | Salt Lake City, UT | 26.07 acres | September 2022 | 28593 | 100.00% |
| **Total** |  |  |  | $85841 |  |
| <sup>(1)</sup> On June 28, 2022, Block C, the joint venture owning land for the development of Westerly and Millcreek North, was recapitalized. We provided additional capital contributions and obtained a majority interest, and subsequently increased our ownership interest again when we merged with CMOF on September 27, 2022. At the time of recapitalization, we admitted two affiliated entities as members in the joint venture (the "Affiliated Members"). The Affiliated Members are owned directly or indirectly by certain officers or directors, as well as certain employees of CROP and our advisor or its affiliates.  | <sup>(1)</sup> On June 28, 2022, Block C, the joint venture owning land for the development of Westerly and Millcreek North, was recapitalized. We provided additional capital contributions and obtained a majority interest, and subsequently increased our ownership interest again when we merged with CMOF on September 27, 2022. At the time of recapitalization, we admitted two affiliated entities as members in the joint venture (the "Affiliated Members"). The Affiliated Members are owned directly or indirectly by certain officers or directors, as well as certain employees of CROP and our advisor or its affiliates.  | <sup>(1)</sup> On June 28, 2022, Block C, the joint venture owning land for the development of Westerly and Millcreek North, was recapitalized. We provided additional capital contributions and obtained a majority interest, and subsequently increased our ownership interest again when we merged with CMOF on September 27, 2022. At the time of recapitalization, we admitted two affiliated entities as members in the joint venture (the "Affiliated Members"). The Affiliated Members are owned directly or indirectly by certain officers or directors, as well as certain employees of CROP and our advisor or its affiliates.  | <sup>(1)</sup> On June 28, 2022, Block C, the joint venture owning land for the development of Westerly and Millcreek North, was recapitalized. We provided additional capital contributions and obtained a majority interest, and subsequently increased our ownership interest again when we merged with CMOF on September 27, 2022. At the time of recapitalization, we admitted two affiliated entities as members in the joint venture (the "Affiliated Members"). The Affiliated Members are owned directly or indirectly by certain officers or directors, as well as certain employees of CROP and our advisor or its affiliates.  | <sup>(1)</sup> On June 28, 2022, Block C, the joint venture owning land for the development of Westerly and Millcreek North, was recapitalized. We provided additional capital contributions and obtained a majority interest, and subsequently increased our ownership interest again when we merged with CMOF on September 27, 2022. At the time of recapitalization, we admitted two affiliated entities as members in the joint venture (the "Affiliated Members"). The Affiliated Members are owned directly or indirectly by certain officers or directors, as well as certain employees of CROP and our advisor or its affiliates.  | <sup>(1)</sup> On June 28, 2022, Block C, the joint venture owning land for the development of Westerly and Millcreek North, was recapitalized. We provided additional capital contributions and obtained a majority interest, and subsequently increased our ownership interest again when we merged with CMOF on September 27, 2022. At the time of recapitalization, we admitted two affiliated entities as members in the joint venture (the "Affiliated Members"). The Affiliated Members are owned directly or indirectly by certain officers or directors, as well as certain employees of CROP and our advisor or its affiliates.  |
| <sup>(2)</sup> On June 28, 2022, the Affiliated Members were admitted as members in the The Archer joint venture and provided a capital contribution. | <sup>(2)</sup> On June 28, 2022, the Affiliated Members were admitted as members in the The Archer joint venture and provided a capital contribution. | <sup>(2)</sup> On June 28, 2022, the Affiliated Members were admitted as members in the The Archer joint venture and provided a capital contribution. | <sup>(2)</sup> On June 28, 2022, the Affiliated Members were admitted as members in the The Archer joint venture and provided a capital contribution. | <sup>(2)</sup> On June 28, 2022, the Affiliated Members were admitted as members in the The Archer joint venture and provided a capital contribution. | <sup>(2)</sup> On June 28, 2022, the Affiliated Members were admitted as members in the The Archer joint venture and provided a capital contribution. |

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<u>[**Table of Contents**](#idee5e1a1e23d41889d4214c8b88222aa_7)</u>

**Results of Operations**

Our results of operations for the years ended December 31, 2022 and 2021 are as follows ($ in thousands, except share and per share data):

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| | | | |
|:---|:---|:---|:---|
| | **Year Ended December 31,** | **Year Ended December 31,** | |
| | **2022** | **2021** | **Change** |
| **Revenues** |  |  |  |
| &nbsp;&nbsp;Rental and other property revenues | $123627 | $73129 | $50498 |
| &nbsp;&nbsp;Property management revenues | 11131 | 8597 | 2534 |
| &nbsp;&nbsp;Other revenues | 3544 | 1455 | 2089 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total revenues | 138302 | 83181 | 55121 |
| **Operating expenses** |  |  |  |
| &nbsp;&nbsp;Property operations expense | 44846 | 27759 | 17087 |
| &nbsp;&nbsp;Property management expense | 17839 | 11302 | 6537 |
| &nbsp;&nbsp;Asset management fee | 17786 | 8052 | 9734 |
| &nbsp;&nbsp;Performance participation allocation | 20320 | 51761 | (31441) |
| &nbsp;&nbsp;Depreciation and amortization | 54595 | 63397 | (8802) |
| &nbsp;&nbsp;General and administrative expenses | 11876 | 10211 | 1665 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total operating expenses | 167262 | 172482 | (5220) |
| Loss from operations | (28960) | (89301) | 60341 |
| &nbsp;&nbsp;Equity in earnings (losses) of unconsolidated real estate entities | 12393 | (533) | 12926 |
| &nbsp;&nbsp;Interest income | 92 | 207 | (115) |
| &nbsp;&nbsp;Interest expense | (52310) | (26954) | (25356) |
| &nbsp;&nbsp;Gain on sale of real estate assets |  | 10912 | (10912) |
| &nbsp;&nbsp;Gain on sale of unconsolidated real estate entities | 8129 |  | 8129 |
| &nbsp;&nbsp;Promote from incentive allocation agreement | 30702 |  | 30702 |
| &nbsp;&nbsp;Other income | 3883 | 2 | 3881 |
| Loss before income taxes | (26071) | (105667) | 79596 |
| &nbsp;&nbsp;Income tax expense | (7959) | (1238) | (6721) |
| &nbsp;&nbsp;&nbsp;&nbsp;**Net loss** | (34030) | (106905) | 72875 |
| Net loss attributable to noncontrolling interests: |  |  |  |
| &nbsp;&nbsp;Limited partners | 17594 | 58923 | (41329) |
| &nbsp;&nbsp;Partially owned entities | 787 | 4066 | (3279) |
| &nbsp;&nbsp;&nbsp;&nbsp;**Net loss attributable to common stockholders** | $(15649) | $(43916) | $28267 |
| Weighted-average common shares outstanding | 29274236 | 17603981 | 11670255 |
| Net loss per common share - basic and diluted | $(0.53) | $(2.49) | $1.96 |

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*Rental and Other Property Revenues, Property Operations Expense*

Rental and other property revenues increased $50.5 million and property operations expense increased $17.1 million. Additional rental and property revenues of $41.4 million and additional property operations expense of $13.9 million are attributable to a full year of activity in 2022 from the properties acquired with the 2021 Mergers compared to less than eight months of activity in 2021. The acquisitions of Cottonwood Clermont, Cottonwood Lighthouse, and Cottonwood Ridgeview in 2022 also contributed $7.6 million of rental and property revenues and $2.9 million of additional operations expense. In general, we had higher rents and higher operating costs across our portfolio.

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<u>[**Table of Contents**](#idee5e1a1e23d41889d4214c8b88222aa_7)</u>

*Property Management Revenues and Property Management Expenses*

Property management revenues and property management expenses increased $2.5 million and $6.5 million, respectively. The increase was due to a full year of activity in 2022 from the property management business acquired with the CRII Merger compared to less than eight months of activity in 2021. This was offset by the loss in February 2022 of a portfolio of 12 properties which we managed for a third party. Our consolidated properties are managed by us. The property management income received from our consolidated properties is eliminated with the associated expense at those properties.

*Asset Management Fee*

Asset management fees increased $9.7 million due to the increase in assets acquired through the 2021 Mergers, the increase in other assets and capital raised, and overall increases in real estate values and NAV combined with a revised fee structure in 2021. Asset management fees prior to May 7, 2021 were 1.25% of gross book value. After May 7, 2021 the asset management fee was the lesser of 0.0625% gross asset value or 0.125% of net asset value each month (0.75% and 1.5% annually), with values updated monthly.

*Performance Participation Allocation*

The performance participation allocation expense was $20.3 million for the year ended December 31, 2022 compared to $51.8 million for the year ended December 31, 2021. The performance participation allocation, as defined in our operating partnership agreement, is based on the total return to unit holders each year and paid to an affiliate of our advisor. Total return is primarily driven by appreciation to NAV. The performance participation allocation expense was lower in 2022 compared to 2021 as the total return was higher in 2021 compared to 2022. The total return for 2021 was calculated for the period from May 7, 2021, the effective date of the amended and restated operating agreement of CROP, to December 31, 2021. Refer to <u>[Note 10](#idee5e1a1e23d41889d4214c8b88222aa_136)</u> of the consolidated financial statements for additional information about the performance participation allocation.

*Depreciation and Amortization*

Depreciation and amortization decreased $8.8 million primarily due to certain intangible assets from the CRII Merger being fully amortized in 2021. Amortization expense for these intangible assets in 2021 was $31.8 million. This was offset by an increase of $15.9 million of depreciation due to a full year of depreciation in 2022 on properties acquired with the CRII Merger compared to less than eight months of depreciation in 2021. The acquisition of Cottonwood Lighthouse, Cottonwood Clermont, and Cottonwood Ridgeview in 2022 also contributed depreciation and amortization of $7.1 million.

*Equity in Earnings (Losses) of Unconsolidated Real Estate Entities*

Equity in earnings of unconsolidated real estate entities increased $12.9 million due to a full year of earnings in 2022 from the underlying properties of the equity method investments acquired with the CRII Merger compared to less than eight months of earnings in 2021. This is combined with the absence in 2022 of amortization from intangible assets acquired with the CRII Merger and increased rents. We also had increases in income on our preferred equity investments and other investments.

*Interest Expense*

Interest expense increased $25.4 million. Debt acquired with the CRII Merger accounted for $19.4 million of the increase due to a full year of interest in 2022 compared to less than eight months of interest in 2021 combined with higher interest rates and increased leverage on certain properties acquired. Other larger increases include $2.4 million from the acquisition of Cottonwood Lighthouse, Cottonwood Clermont, and Cottonwood Ridgeview in 2022 and $6.3 million from additional Series 2019 Preferred Stock issued. These increases were offset by a $3.5 million reduction in interest from our Series 2016 Preferred Stock that was redeemed in April 2022 and $1.2 million fewer prepayment penalties incurred in 2022.

*Gain on Sale of Real Estate Assets*

The $10.9 million gain on sale of real estate assets in 2021 is primarily from the sale of a 43% interest in Alpha Mill.

*Gain on Sale of Unconsolidated Real Estate Entities*

The gain on sale of unconsolidated real estate entities of $8.1 million in 2022 is from the sale of additional interests in Alpha Mill and the sale of 3800 Main to a third party.

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<u>[**Table of Contents**](#idee5e1a1e23d41889d4214c8b88222aa_7)</u>

*Promote from Incentive Allocation Agreement*

In 2018, CROP sold a portfolio of 12 properties to an unrelated real estate firm. Under the sales arrangement, CROP entered into an incentive allocation agreement that entitled CROP to participate in distributions from the portfolio should returns exceed certain amounts. During the first quarter of 2022 the real estate firm sold the portfolio of properties. Our taxable REIT subsidiary realized a promote distribution of $30.7 million from the sale. We managed the portfolio on behalf of the real estate firm prior to the portfolio being sold.

*Income Tax Expense*

Income tax expense increased $6.7 million primarily due to the tax liability on the $30.7 million promote distribution combined with higher income at our taxable REIT subsidiary.

*Other Income*

Other income increased $3.9 million primarily due to gains from increases in the fair value of our interest rate caps.

**Policies Regarding Operating Expenses**

Our advisor must reimburse us the amount by which our aggregate total operating expenses for the four fiscal quarters then ended exceed the greater of 2% of our average invested assets or 25% of our net income (the 2%/25% Limitation), unless the conflicts committee has determined that such excess expenses were justified based on unusual and non-recurring factors. For the four consecutive quarters ended December 31, 2022, our total operating expenses exceeded the 2%/25% Limitation.

Based upon a review of unusual and non-recurring factors, including but not limited to the performance participation allocation expense and the costs of the CMOF Merger, our independent directors determined that the excess expenses were justified.

**Liquidity and Capital Resources**

Our principal demands for funds during the short and long-term are and will be for the acquisition of multifamily apartment communities and investments in multifamily real estate-related assets; operating expenses, including the management fee we pay to our advisor and the performance participation allocation; capital expenditures, including those on our development projects; general and administrative expenses; payments under debt obligations; repurchases of common and preferred stock; and payments of distributions to stockholders. We will obtain the capital required to purchase multifamily apartment communities and make investments in multifamily real estate-related assets and conduct our operations from the proceeds of the 2023 Private Offering, the Follow-on Offering, from our credit facilities, other secured or unsecured financings from banks and other lenders, and from any undistributed funds from our operations.

We intend to strengthen our capital and liquidity positions by continuing to focus on our core fundamentals at the property level. Factors which could increase or decrease our future liquidity include but are not limited to operating performance of the properties, the rising interest rate environment, and the satisfaction of REIT dividend requirements.

As of December 31, 2022, we have $528.3 million of fixed rate debt and $575.5 million of variable rate debt, which includes $95.3 million of construction loans. We have interest rate cap hedging instruments on $318.7 million, or 55.4% of our variable rate debt. In addition, CROP has issued unsecured promissory notes in several private placement offerings, in an aggregate amount of $43.0 million as of December 31, 2022.

We have various credit facilities in place that provide us with additional liquidity. Our JP Morgan Revolving Credit Facility has a variable rate and is secured by Cottonwood One Upland and Parc Westborough. We may obtain advances secured against Cottonwood One Upland and Parc Westborough up to $125.0 million on the JP Morgan Revolving Credit Facility. We can draw upon or pay down the JP Morgan Revolving Credit Facility at our discretion, subject to loan-to-value requirements, debt service coverage ratios and other covenants and restrictions as set forth in the loan documents. As of December 31, 2022, we had advances of $54.0 million on the JP Morgan Revolving Credit Facility, with the amount we could borrow capped at $112.0 million primarily due to the rising interest rate environment. Additionally, we have three other facilities through Fannie Mae that may provide additional liquidity if necessary as long as we maintain certain loan-to-value ratios and other requirements as set forth in the loan documents.

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We must redeem the Series 2019 Preferred Stock for cash at a redemption price per share equal to $10.00 plus any accrued and unpaid dividends, to the extent there are funds legally available, on December 31, 2023. This date may be extended by two one-year extension options. As of December 31, 2022, we had $127.0 million shares of our Series 2019 Preferred Stock outstanding. Our Series 2017 Preferred Stock was fully redeemed in the first quarter of 2022 immediately following the January 31, 2022 redemption date for $2.6 million. On April 18, 2022, we fully redeemed the Series 2016 Preferred Stock for $139.8 million.

In addition to making investments in accordance with our investment objectives, we expect to use our capital resources to pay offering costs in connection with the Follow-on Offering and the 2023 Private Offering, as well as make certain payments to our advisor pursuant to the terms of our advisory management agreement.

To maintain our qualification as a REIT, we will be required to make aggregate annual distributions to our stockholders of at least 90% of our REIT taxable income (computed without regard to the dividends-paid deduction and excluding net capital gain). Our board of directors may authorize distributions in excess of those required for us to maintain REIT status depending on our financial condition and such other factors as our board of directors deems relevant.

***Material Cash Requirements***

Our expected material cash requirements for the 12 months ended December 31, 2023 and thereafter are comprised of (i) contractually obligated expenditures; (ii) other required expenditures; and (iii) capital expenditures.

*Contractually Obligated Expenditures*

The following table summarizes our debt payments (excluding extension options), redeemable preferred stock (excluding extension options, deferred financing costs and offering costs), interest payment obligations (excluding debt premiums and discounts, unused fees and deferred financing costs), remaining commitments on our preferred equity investments, obligations under non-cancelable operating leases (excluding renewal options), and obligations under our advisory agreement (excluding renewal options) as of December 31, 2022 ($ in thousands):

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| | | | | |
|:---|:---|:---|:---|:---|
| | **Twelve Months Ended December 31, 2023** | **Twelve Months Ended December 31, 2023** | **Thereafter** | **Thereafter** |
| Debt repayments <sup>(1)</sup> | $| 230187 | $| 916531 |
| Preferred stock redemptions <sup>(2)</sup> | 127065 | 127065 |  |  |
| Interest payments <sup>(3)</sup> | 60601 | 60601 | 230494 | 230494 |
| Preferred equity investments | 24666 | 24666 |  |  |
| Operating leases | 142 | 142 |  |  |
| Asset management fee <sup>(4)</sup> | 6552 | 6552 |  |  |
|  | $| 449213 | $| 1147025 |
| <sup>(1)</sup> Includes mortgages notes, unsecured promissory notes, revolving credit facilities, and construction loans. Of the amounts maturing in 2023, $20.7 million relates to our 2017 6% Unsecured Promissory Notes, which can be extended to December 31, 2024, $22.2 million relates to our 2019 6% Unsecured Promissory Notes, which can be extended to December 31, 2025, $54.0 million relates to our variable rate revolving credit facility, which can be extended to March 19, 2025, subject to the satisfaction of certain conditions, and $55.5 million relates to mortgage notes that were refinanced in February 2023. | <sup>(1)</sup> Includes mortgages notes, unsecured promissory notes, revolving credit facilities, and construction loans. Of the amounts maturing in 2023, $20.7 million relates to our 2017 6% Unsecured Promissory Notes, which can be extended to December 31, 2024, $22.2 million relates to our 2019 6% Unsecured Promissory Notes, which can be extended to December 31, 2025, $54.0 million relates to our variable rate revolving credit facility, which can be extended to March 19, 2025, subject to the satisfaction of certain conditions, and $55.5 million relates to mortgage notes that were refinanced in February 2023. | <sup>(1)</sup> Includes mortgages notes, unsecured promissory notes, revolving credit facilities, and construction loans. Of the amounts maturing in 2023, $20.7 million relates to our 2017 6% Unsecured Promissory Notes, which can be extended to December 31, 2024, $22.2 million relates to our 2019 6% Unsecured Promissory Notes, which can be extended to December 31, 2025, $54.0 million relates to our variable rate revolving credit facility, which can be extended to March 19, 2025, subject to the satisfaction of certain conditions, and $55.5 million relates to mortgage notes that were refinanced in February 2023. | <sup>(1)</sup> Includes mortgages notes, unsecured promissory notes, revolving credit facilities, and construction loans. Of the amounts maturing in 2023, $20.7 million relates to our 2017 6% Unsecured Promissory Notes, which can be extended to December 31, 2024, $22.2 million relates to our 2019 6% Unsecured Promissory Notes, which can be extended to December 31, 2025, $54.0 million relates to our variable rate revolving credit facility, which can be extended to March 19, 2025, subject to the satisfaction of certain conditions, and $55.5 million relates to mortgage notes that were refinanced in February 2023. | <sup>(1)</sup> Includes mortgages notes, unsecured promissory notes, revolving credit facilities, and construction loans. Of the amounts maturing in 2023, $20.7 million relates to our 2017 6% Unsecured Promissory Notes, which can be extended to December 31, 2024, $22.2 million relates to our 2019 6% Unsecured Promissory Notes, which can be extended to December 31, 2025, $54.0 million relates to our variable rate revolving credit facility, which can be extended to March 19, 2025, subject to the satisfaction of certain conditions, and $55.5 million relates to mortgage notes that were refinanced in February 2023. |
| <sup>(2)</sup> The Series 2019 Preferred stock can be extended to December 31, 2025. | <sup>(2)</sup> The Series 2019 Preferred stock can be extended to December 31, 2025. | <sup>(2)</sup> The Series 2019 Preferred stock can be extended to December 31, 2025. | <sup>(2)</sup> The Series 2019 Preferred stock can be extended to December 31, 2025. | <sup>(2)</sup> The Series 2019 Preferred stock can be extended to December 31, 2025. |
| <sup>(3)</sup> Scheduled interest payments included in these amounts for variable rate loans are presented using rates (including the impact of interest rate swaps) as of December 31, 2022. | <sup>(3)</sup> Scheduled interest payments included in these amounts for variable rate loans are presented using rates (including the impact of interest rate swaps) as of December 31, 2022. | <sup>(3)</sup> Scheduled interest payments included in these amounts for variable rate loans are presented using rates (including the impact of interest rate swaps) as of December 31, 2022. | <sup>(3)</sup> Scheduled interest payments included in these amounts for variable rate loans are presented using rates (including the impact of interest rate swaps) as of December 31, 2022. | <sup>(3)</sup> Scheduled interest payments included in these amounts for variable rate loans are presented using rates (including the impact of interest rate swaps) as of December 31, 2022. |
| <sup>(4)</sup> Estimate based on the value of the portfolio as of December 31, 2022 with fees through May 7, 2023, the advisory agreement renewal date. In addition, as long as the advisory agreement is in effect, we are obligated to pay an affiliate of the advisor a Performance Participation Allocation should certain return hurdles be met. Refer to <u>[Note 10](#idee5e1a1e23d41889d4214c8b88222aa_136)</u> of the consolidated financial statements. For the year ended December 31, 2022 the asset management fee was $17.8 million and the performance participation allocation was $20.3 million.  | <sup>(4)</sup> Estimate based on the value of the portfolio as of December 31, 2022 with fees through May 7, 2023, the advisory agreement renewal date. In addition, as long as the advisory agreement is in effect, we are obligated to pay an affiliate of the advisor a Performance Participation Allocation should certain return hurdles be met. Refer to <u>[Note 10](#idee5e1a1e23d41889d4214c8b88222aa_136)</u> of the consolidated financial statements. For the year ended December 31, 2022 the asset management fee was $17.8 million and the performance participation allocation was $20.3 million.  | <sup>(4)</sup> Estimate based on the value of the portfolio as of December 31, 2022 with fees through May 7, 2023, the advisory agreement renewal date. In addition, as long as the advisory agreement is in effect, we are obligated to pay an affiliate of the advisor a Performance Participation Allocation should certain return hurdles be met. Refer to <u>[Note 10](#idee5e1a1e23d41889d4214c8b88222aa_136)</u> of the consolidated financial statements. For the year ended December 31, 2022 the asset management fee was $17.8 million and the performance participation allocation was $20.3 million.  | <sup>(4)</sup> Estimate based on the value of the portfolio as of December 31, 2022 with fees through May 7, 2023, the advisory agreement renewal date. In addition, as long as the advisory agreement is in effect, we are obligated to pay an affiliate of the advisor a Performance Participation Allocation should certain return hurdles be met. Refer to <u>[Note 10](#idee5e1a1e23d41889d4214c8b88222aa_136)</u> of the consolidated financial statements. For the year ended December 31, 2022 the asset management fee was $17.8 million and the performance participation allocation was $20.3 million.  | <sup>(4)</sup> Estimate based on the value of the portfolio as of December 31, 2022 with fees through May 7, 2023, the advisory agreement renewal date. In addition, as long as the advisory agreement is in effect, we are obligated to pay an affiliate of the advisor a Performance Participation Allocation should certain return hurdles be met. Refer to <u>[Note 10](#idee5e1a1e23d41889d4214c8b88222aa_136)</u> of the consolidated financial statements. For the year ended December 31, 2022 the asset management fee was $17.8 million and the performance participation allocation was $20.3 million.  |

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Refer to subsequent events below for information on refinances, redemptions, or exercised extension options after December 31, 2022.

*Other Required Expenditures*

We incur certain other required expenditures in the ordinary course of business, such as utilities, insurance, real estate taxes, third-party management fees, certain capital expenditures related to the maintenance of our properties, and corporate level expenses. Additionally, we carry comprehensive insurance to protect our properties against various losses. The amount of

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insurance expense that we incur depends on the assessed value of our properties, prevailing market rates, changes in risk. Furthermore, we incur real estate taxes in the various jurisdictions in which we operate. The amount of real estate taxes that we incur depends on changes in the assessed value of our properties and changes in tax rates assessed by certain jurisdictions.

In order to continue to qualify as a REIT for federal income tax purposes, we must meet several organizational and operational requirements, including a requirement that we annually distribute to our stockholders at least 90% of our REIT taxable income, determined without regard to the deduction for dividends paid and excluding net capital gains. We intend to continue to satisfy this requirement and maintain our REIT status.

The following table shows distributions paid and cash flow provided by (used in) operating activities during the years ended December 31, 2022 and 2021 ($ in thousands):

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| | | |
|:---|:---|:---|
| | **December 31,** | **December 31,** |
| | **2022** | **2021** |
| Distributions paid in cash - common stockholders | $20032 | $9482 |
| Distributions paid in cash to noncontrolling interests - limited partners | 22198 | 10591 |
| Distributions of DRP (reinvested) | 2219 | 141 |
| &nbsp;&nbsp;Total distributions <sup>(1)</sup> | $44449 | $20214 |
| Source of distributions <sup>(2)</sup> |  |  |
| Paid from cash flows provided by operations | $23365 | $11044 |
| Paid from additional borrowings | 9231 | 5000 |
| Paid from offering proceeds | 9634 | 4029 |
| Offering proceeds from issuance of common stock pursuant to the DRP | 2219 | 141 |
| &nbsp;&nbsp;Total sources | $44449 | $20214 |
| Net cash provided by operating activities <sup>(2)</sup> | $8559 | $5424 |
| <sup>(1)</sup> Distributions are paid on a monthly basis. In general, distributions for all record dates of a given month are paid on or about the fifth business day of the following month. | <sup>(1)</sup> Distributions are paid on a monthly basis. In general, distributions for all record dates of a given month are paid on or about the fifth business day of the following month. | <sup>(1)</sup> Distributions are paid on a monthly basis. In general, distributions for all record dates of a given month are paid on or about the fifth business day of the following month. |
| <sup>(2)</sup> The allocation of total sources is calculated on a quarterly basis. Generally, for purposes of determining the source of our distributions paid, we assume first that we use positive cash flow from operating activities from the relevant or prior quarter to fund distribution payments. As such, amounts reflected above as distributions paid from cash flows provided by operations may be from prior quarters which had positive cash flow from operations. | <sup>(2)</sup> The allocation of total sources is calculated on a quarterly basis. Generally, for purposes of determining the source of our distributions paid, we assume first that we use positive cash flow from operating activities from the relevant or prior quarter to fund distribution payments. As such, amounts reflected above as distributions paid from cash flows provided by operations may be from prior quarters which had positive cash flow from operations. | <sup>(2)</sup> The allocation of total sources is calculated on a quarterly basis. Generally, for purposes of determining the source of our distributions paid, we assume first that we use positive cash flow from operating activities from the relevant or prior quarter to fund distribution payments. As such, amounts reflected above as distributions paid from cash flows provided by operations may be from prior quarters which had positive cash flow from operations. |

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For the year ended December 31, 2022, distributions declared to common stockholders and limited partners were $20.8 million and $22.3 million, respectively. For the year ended December 31, 2022, we paid cash distributions to common stockholders of $20.0 million and limited partners of $22.2 million. For the year ended December 31, 2022, our net loss was $34.0 million. Cash flows provided by operating activities for the year ended December 31, 2022 was $8.6 million.

*Capital Expenditures*

We deployed $88.6 million during the year ended December 31, 2022 for capital expenditures, funded by debt, proceeds from our offerings and sale of assets, joint venture partners, and property operations and have $52.4 million of capital expenditures budgeted for 2023. The properties in which we deployed the most capital during the year ended December 31, 2022, which were all under development in 2022, are listed separately and the capital expenditures made on all other properties are aggregated in "All other properties" below ($ in thousands):

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| | | | | |
|:---|:---|:---|:---|:---|
| | **2022** | **2022** | **2023** | **2023** |
|<br>**Property Name** | **Total Capital Deployed** | **CCI/CROP Funded** | **Capital Budgeted** | **CCI/CROP Funded** |
| Cottonwood Broadway | $13493 | $1095 | $5850 | $1165 |
| Sugarmont | 5869 | 5869 | 700 | 700 |
| Park Avenue | 7506 | 1858 | 50 | 50 |
| Cottonwood Highland | 20439 |  | 18000 |  |
| Galleria | 28593 | 28593 | 1500 | 1500 |
| All other properties | 12728 | 12206 | 26280 | 22680 |
|  | $88628 | $49621 | $52380 | $26095 |

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**Cash Flows**

The net change in our cash and cash equivalents and restricted cash is summarized as follows ($ in thousands):

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| | | |
|:---|:---|:---|
| | **For the Year Ended December 31,** | **For the Year Ended December 31,** |
| | **2022** | **2021** |
| Net cash provided by operating activities | $8559 | $5424 |
| Net cash used in investing activities | (166723) | (44297) |
| Net cash provided by financing activities | 208298 | 79630 |
| Net increase in cash and cash equivalents and restricted cash | 50134 | 40757 |

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Cash flows provided by operating activities increased $3.1 million primarily due to a full year of income from the properties acquired with the 2021 Mergers in 2022 compared to less than eight months of activity in 2021, the acquisitions of Cottonwood Clermont, Cottonwood Lighthouse, and Cottonwood Ridgeview in 2022, and income generated from our preferred equity investments and other investments.

Cash flows used in investing activities increased $122.4 million primarily due to $149.6 million of cash used in acquisitions in 2022, $3.9 million of additional cash used in development activities, and $78.0 million of cash provided by investing activities in 2021 that did not occur in 2022, which included $51.9 million from the CRII Merger. These increases were offset by fewer investments in unconsolidated real estate entities of $14.6 million, $28.8 million received from sales of unconsolidated real estate investments, $38.8 million of distributions received from unconsolidated real estate investments as a return of capital, $13.0 million from the payoff of a debt-related real estate investment, and $15.6 million of cash used in investing activities in 2021 that did not occur in 2022.

Cash flows provided by financing activities increased $128.6 million due to an increase of $203.4 million in mortgage notes, credit facilities, and construction loans, net of repayments and issuance costs, an increase of $155.6 million in net proceeds from the issuance of common stock, $11.9 million received from noncontrolling interests, and fewer repurchases of unsecured promissory notes of $4.5 million. This was offset by fewer issuances of preferred stock of $57.0 million, an increase of $141.4 million in preferred stock redemptions, an increase of $23.4 million in common stock and OP unit redemptions, and an increase of $25.0 million in distributions.

**Critical Accounting Estimates**

A critical accounting estimate is one that is both important to our financial condition and results of operations and that involves some degree of uncertainty. The preceding discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements and the notes thereto, which have been prepared in accordance with GAAP. The preparation of financial statements in conformity with GAAP requires management to make a number of estimates and assumptions that affect the reported amounts and disclosures in the consolidated financial statements. On an ongoing basis, we evaluate our estimates and assumptions based upon historical experience and various other factors and circumstances. We believe that our estimates and assumptions are reasonable under the circumstances; however, actual results may differ from these estimates and assumptions.

We believe that the estimates and assumptions summarized below are most important to the portrayal of our financial condition and results of operations because they involve a significant level of estimation uncertainty and they have had, or are reasonably likely to have, a material impact on our financial condition or results of operations. For a discussion of all of our significant accounting policies, refer to <u>[Note 2](#idee5e1a1e23d41889d4214c8b88222aa_106)</u> of the consolidated financial statements in this Annual Report on Form 10-K.

*Investments in Real Estate*

In accordance with Accounting Standards Codification Topic 805, *Business Combinations*, we determine whether an acquisition qualifies as a business combination or as an asset acquisition. We account for business combinations by recognizing assets acquired and liabilities assumed at their fair values as of the acquisition date. We account for asset acquisitions by allocating the total cost to the individual assets acquired and liabilities assumed on a relative fair value basis. Acquired assets and liabilities include land, building, furniture, fixtures and equipment, identified intangible assets, and debt.

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We may use significant subjective inputs in determining fair values. The methods we use are similar to those used by independent appraisers, and include using replacement cost estimates less depreciation, discounted cash flows, market comparisons, and direct capitalization of net operating income. The fair value of debt is a present value application which discounts the difference between the remaining contractual and market debt service payments at an equity discount rate. The equity discount rate is an estimated levered return and is calculated using the loan to value, unlevered property discount rate, and a market rate.

**Subsequent Events**

The following events occurred subsequent to December 31, 2022:

*Cottonwood Lighthouse Point Tenant In Common Sale*

On February 14, 2023 we sold tenant in common interests in Cottonwood Lighthouse Point for $13.6 million, reducing our ownership from 100% to 86.8%. As a result of this transaction, Cottonwood Lighthouse Point will be deconsolidated on February 14, 2023 and our remaining ownership interest in this property will be recorded as an investment in unconsolidated real estate.

*Financing Activity*

On February 28, 2023, we refinanced seven properties through individual, uncrossed loans with one lender for $326.0 million, receiving net proceeds of $58.0 million. The loans have a weighted average term of 6.8 years with a weighted average fixed rate of 5.08%. Two of the properties are unconsolidated.

On March 17, 2023, we exercised one of our two extension options on the JP Morgan Revolving Credit Facility and extended the maturity date of the credit facility to March 19, 2024.

On March 22, 2023, we entered a loan modification agreement with respect to the mortgage loan on Sugarmont to reduce the loan to $91.2 million and convert the interest rate from a floating rate to a fixed rate of 5.9%.

*Performance Participation Allocation Payment*

On March 2, 2023, we paid the $20.3 million owed to an affiliate of our advisor for the 2022 performance participation allocation.

*Status of the 2023 Private Offering*

As of March 21, 2023, we sold 2,761,203 shares of Series 2023 Preferred Stock for aggregate gross offering proceeds of $27.6 million. In connection with the sale of these shares in the 2023 Private Offering, the Company paid aggregate selling commissions of $1.6 million and placement fees of $0.8 million.

*Status of the Follow-on Offering*

We sold the following through our Follow-on Offering after December 31, 2022 ($ in thousands):

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **Class** | **Class** | **Class** | **Class** | |
| | **T** | **D** | **I** | **A** |<br>**Total** |
| Shares issued through Primary Offering | 312220 | 101083 | 257426 |  | 670729 |
| Shares issued through DRP Offering | 7428 | 171 | 6210 | 21751 | 35560 |
| Gross Proceeds | $6326 | $2014 | $5069 | $— | $13409 |

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*Distributions Declared - Common Stock*

The following monthly distributions have record dates after December 31, 2022:

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| | | |
|:---|:---|:---|
| Stockholder Record Date | Monthly Rate | Annually |
| January 31, 2023 | $0.06083333 | $0.73 |
| February 28, 2023 | $0.06083333 | $0.73 |
| March 31, 2023 | $0.06083333 | $0.73 |

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*Grant of LTIP Unit Awards*

On January 6, 2023, we issued LTIP Units from the Operating Partnership to our executive officers and certain employees as approved by our compensation committee. The compensation committee approved awards of time-based LTIP Units in an aggregate amount of $1,556,557. Each award will vest approximately one-quarter of the awarded amount on January 1, 2024, 2025, 2026 and 2027.

The compensation committee also approved awards of performance-based LTIP Units to our executive officers and certain of our employees in an aggregate target amount of $2,890,745. The actual amount of each performance-based LTIP Unit award will be determined at the conclusion of a three-year performance period and will depend on the internal rate of return as defined in the award agreement. The earned LTIP Units will become fully vested on the first anniversary of the last day of the performance period, subject to continued employment with the advisor or its affiliates. The number of units granted were valued by reference to our November 30, 2022 NAV per share as announced on December 16, 2022 of $19.9945.

*Equity Incentive Plan*

On January 6, 2023, we issued an aggregate grant of 15,723 restricted stock units with a four-year vesting schedule. Of this amount, 11,722 were issued pursuant to the Cottonwood Communities, Inc. 2022 Equity Incentive Plan.

**Item 7A. Quantitative and Qualitative Disclosures About Market Risk**

Quantitative and qualitative disclosures about market risk have been omitted as permitted under rules applicable to smaller reporting companies.

**Item 8. Financial Statements and Supplementary Data**

The financial statements required by this item and the report of the independent accountants thereon required by Item14(a)(2) appear as a separate section of this Annual Report on Form 10-K. See the accompanying Index to the Consolidated Financial Statements on page <u>[F-1](#idee5e1a1e23d41889d4214c8b88222aa_82)</u>.

**Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure**

None.

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**Item 9A. Controls and Procedures**

**Evaluation of Disclosure Controls and Procedures**

We maintain disclosure controls and procedures (as that term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) that are designed to ensure that information required to be disclosed in our reports under the Exchange Act are recorded, processed, and summarized and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. An evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this annual report on Form 10-K was made under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer. Based upon this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures (a) are effective to ensure that information required to be disclosed by us in reports filed or submitted under the Exchange Act is timely recorded, processed, summarized and reported and (b) include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

**Changes in Internal Controls over Financial Reporting**

There have been no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) that occurred during our most recent quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

**Management's Report on Internal Control Over Financial Reporting**

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control over financial reporting is a process designed under the supervision of our Chief Executive Officer and Chief Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our consolidated financial statements for external reporting purposes in accordance with accounting principles generally accepted in the United States of America (generally accepted accounting principles).

Our internal control over financial reporting includes policies and procedures that pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of assets of Cottonwood Communities, Inc.; provide reasonable assurances that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of management and directors; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on its consolidated financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. In addition, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.

Management conducted an assessment of the effectiveness of Cottonwood Communities, Inc.'s internal control over financial reporting as of December 31, 2022, based on the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") in *Internal Control - Integrated Framework (2013 Framework)*. Based on this assessment, management has determined that Cottonwood Communities, Inc.'s internal control over financial reporting as of December 31, 2022, was effective.

**Item 9B. Other Information**

None.

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**Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections**

Not applicable.

**Item 10. Directors, Executive Officers and Corporate Governance**

Our directors and executive officers are set forth below:

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| | | |
|:---|:---|:---|
| **<u>Name\*</u>** | **<u>Age</u>\*\*** | **<u>Positions</u>** |
| Daniel Shaeffer | 52 | Chief Executive Officer and Director |
| Chad Christensen | 50 | Executive Chairman of the Board of Directors and Director |
| Gregg Christensen | 54 | Chief Legal Officer and Secretary; Advisory Board Member |
| Glenn Rand | 62 | Chief Operating Officer; Advisory Board Member |
| Susan Hallenberg | 55 | Chief Accounting Officer and Treasurer; Advisory Board Member |
| Enzio Cassinis | 45 | President |
| Adam Larson | 41 | Chief Financial Officer |
| Stan Hanks | 55 | Chief Development Officer |
| Eric Marlin | 47 | Executive Vice President, Capital Markets |
| Paul Fredenberg | 46 | Chief Investment Officer |
| Jonathan Gardner | 46 | Independent Director |
| John Lunt | 50 | Independent Director |
| Philip White | 49 | Independent Director |
| \* The address of each executive officer and director listed is 1245 Brickyard Road, Suite 250, Salt Lake City, Utah 84106. | \* The address of each executive officer and director listed is 1245 Brickyard Road, Suite 250, Salt Lake City, Utah 84106. | \* The address of each executive officer and director listed is 1245 Brickyard Road, Suite 250, Salt Lake City, Utah 84106. |
| \*\* As of December 31, 2022 | \*\* As of December 31, 2022 | \*\* As of December 31, 2022 |

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**Daniel Shaeffer** has served as our Chief Executive Officer since May 2021 and as an affiliated director since July 2016. As of May 2021, Mr. Shaeffer is also Chief Executive Officer of CCA. Mr. Shaeffer served as the Chief Executive Officer and a director of CRII and its predecessor entities from 2004 through the closing of the CRII Merger. Mr. Shaeffer also served as our Chairman of the Board of directors from October 2018 through May 2021 and was formerly our Chief Executive Officer from December 2016 through September 2018. He was a director of CMRI and CMRII prior to the completion of the CMRI Merger and the CMRII Merger. He was a director and Chief Executive Officer of CMOF prior to the completion of the CMOF Merger. Mr. Shaeffer's primary responsibilities include overseeing acquisitions, capital markets and strategic planning for us and our affiliates.

Before co-founding Cottonwood Capital, LLC, a predecessor to CRII, in 2004, Mr. Shaeffer worked as a senior equities analyst with Wasatch Advisors of Salt Lake City. Prior to joining Wasatch Advisors, Mr. Shaeffer was a Vice President of Investment Banking at Morgan Stanley. Mr. Shaeffer began his career with Ernst & Young working in the firm's audit department. Mr. Shaeffer has been involved in real estate development, management, acquisition, disposition and financing since 2004.

Mr. Shaeffer holds an International Master of Business Administration from the University of Chicago Graduate School of Business and a Bachelor of Science in Accounting from Brigham Young University.

Our board of directors has determined that it is in the best interests of our company and our stockholders for Mr. Shaeffer, in light of his day-to-day company-specific operational experience, significant finance and market experience, and his real estate experience, to serve as a director on our board of directors.

**Chad Christensen** has served as the Executive Chairman of our board of directors since May 2021 and as an affiliated director since July 2016. As of May 2021, Mr. Christensen is also Executive Chairman of CCA. Mr. Christensen served as President and a director of CRII and its predecessor entities from 2004 through the closing of the CRII Merger. Mr. Christensen was formerly our President and Chairman of the Board from December 2016 through September 2018. He was a director of CMRI and CMRII prior to the completion of the CMRI Merger and the CMRII Merger. He served as President, Chairman of the Board, and a director of CMOF prior to the completion of the CMOF Merger. Mr. Christensen oversees financial and general operations for us and our affiliates. He is also actively involved in acquisitions, marketing and capital raising activities for us and our affiliates.

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Before co-founding Cottonwood Capital, LLC, a predecessor to CRII, in 2004, Mr. Christensen worked with the Stan Johnson Company, a national commercial Real Estate Brokerage firm in Tulsa, Oklahoma. Early in his career, Mr. Christensen founded Paramo Investment Company, a small investment management company. Mr. Christensen has been involved in real estate development, management, acquisition, disposition and financing since 2004.

Mr. Christensen holds a Master of Business Administration from The Wharton School at the University of Pennsylvania with an emphasis in Finance and Real Estate and a Bachelor of Arts in English from the University of Utah. Mr. Christensen also holds an active real estate license. Chad Christensen and Gregg Christensen are brothers.

Our board of directors has determined that it is in the best interests of our company and our stockholders for Mr. Christensen, in light of his day-to-day company-specific operational experience, significant finance and market experience, and his real estate experience, to serve as a director on our board of directors.

**Gregg Christensen** has served as our Chief Legal Officer and Secretary since December 2016 and as an Advisory Board Member since May 2021. Since May 2021, Mr. Christensen is also Chief Legal Officer and Secretary of CCA. Mr. Christensen served as the Chief Legal Officer and Secretary (formerly Executive Vice President, Secretary and General Counsel) and a director of CRII and its predecessor entities from 2007 through the closing of the CRII Merger. Mr. Christensen was a director on our board of directors from December 2016 to June 2018. Mr. Christensen held similar officer positions with CMRI, CMRII and CMOF prior to the completion of the CMRI Merger, the CMRII Merger and the CMOF Merger, respectively. In addition, he was a director of CMRI, CMRII and CMOF prior to the completion of the CMRI Merger, the CMRII Merger and the CMOF Merger, respectively. Mr. Christensen oversees and coordinates all legal aspects of us and our affiliates, and is also actively involved in operations, acquisitions and due diligence activities for us and our affiliates.

Prior to joining the Cottonwood organization, Mr. Christensen was a principal, managing director and general counsel of Cherokee & Walker, an investment company focused on real estate investments and private equity investments in real estate related companies. Previously, Mr. Christensen practiced law with Nelson & Senior in Salt Lake City. His areas of practice included real estate and corporate law. He is a member of the Utah State Bar, as well as the Bar of the United States District Court for the District of Utah. Mr. Christensen has been involved in real estate development, management, acquisition, disposition and financing since 1996.

Mr. Christensen holds an Honors Bachelor of Arts in English from the University of Utah and a Juris Doctorate from the University of Utah, S.J. Quinney College of Law. Gregg Christensen and Chad Christensen are brothers.

**Glenn Rand** has served as our Chief Operating Officer and as an Advisory Board Member since May 2021. Mr. Rand also has served as the Chief Operating Officer of CROP (and in other roles with CROP) since September 2013. In addition, he serves as Chief Operating Officer of CCA as of May 2021. Mr. Rand brings over 30 years of property management experience to us. He directs operations and provides strategic guidance with respect to acquisitions and asset management. Prior to joining CROP, he worked at Archstone, where he was responsible for the oversight of more than 30,000 apartment units. During his time at Archstone, Mr. Rand was President and Founder of Archstone Management Services, a third-party management company with over 50 assets under management, which was eventually sold to Gables Residential. As Chairman of Archstone's Pricing Committee, he was influential in the creation and national acceptance of LRO (revenue management) within Archstone, and eventually the apartment industry. He served on the Virginia Tech Management Board for many years and is consistently requested as a speaker at industry events.

**Susan Hallenberg** has served as our Chief Accounting Officer and Treasurer since October 2018 and as an Advisory Board Member since May 2021. As of May 2021, she is also Chief Accounting Officer and Treasurer at CCA. Ms. Hallenberg served as the Chief Financial Officer and Treasurer of CRII and its predecessor entity from May 2005 until the closing of the CRII Merger. Ms. Hallenberg served as our principal accounting officer and principal financial officer in her role as Chief Financial Officer from December 2016 through September 2018. Ms. Hallenberg also served as Chief Accounting Officer and Treasurer of CMRI and CMRII prior to the closing of the CMRI Merger and the CMRII Merger. She was also Chief Financial Officer and Treasurer of CMOF prior to the closing of the CMOF Merger.

Prior to joining the Cottonwood organization, Ms. Hallenberg served as Acquisitions Officer for Phillips Edison & Company, a real estate investment company. She also served as Vice President for Lend Lease Real Estate Investments, where her responsibilities included financial management of a large mixed-use real estate development project and the underwriting, financing and reporting on multifamily housing development opportunities in the Western United States using tax credit, tax-exempt bond, and conventional financing. She also worked for Aldrich Eastman & Waltch for two years as an Assistant

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Portfolio Controller. Ms. Hallenberg started her career at Ernst & Young where she worked in the firm's audit department for four years.

Ms. Hallenberg holds a Bachelor of Arts in Economics/Accounting from The College of the Holy Cross.

**Enzio Cassinis** has served as our President since May 2021. Mr. Cassinis served as our Chief Executive Officer and President from October 2018 through May 2021. In addition, Mr. Cassinis served as the Chief Executive Officer of CCA from October 2018 through May 2021 and currently serves as CCA's President since May 2021. Mr. Cassinis also served as the Chief Executive Officer and President of CMRI and CMRII from October 2018 through the closing of the CMRI Merger and the CMRII Merger.

From June 2013 through September 2018, Mr. Cassinis served in various roles at the Cottonwood organization, including as Senior Vice President of Corporate Strategy, where he was responsible for financial planning and analysis, balance sheet management and capital and venture formation activity. Prior to joining the Cottonwood organization in June 2013, Mr. Cassinis was Vice President of Investment Management at Archstone, one of the largest apartment operators and developers in the U.S. and Europe. There, he negotiated transactions in both foreign and domestic markets with transaction volume exceeding several billion dollars in total capitalization. Prior to Archstone, Mr. Cassinis worked as an attorney with Krendl, Krendl, Sachnoff & Way, PC (now Kutak Rock LLP) from February 2003 to May 2006, focusing his practice on corporate law and merger and acquisition transactions.

Mr. Cassinis earned a Master of Business Administration and Juris Doctorate (Order of St. Ives) from the University of Denver, and a Bachelor of Science in Business Administration from the University of Colorado at Boulder and is a CFA® charterholder.

**Adam Larson** has served as our Chief Financial Officer since October 2018. Mr. Larson also has served as the Chief Financial Officer of CCA since October 2018 and of CMRI and CMRII from October 2018 through the closing of the CMRI Merger and the CMRII Merger.

Through September 2018, Mr. Larson was the Senior Vice President of Asset Management of Cottonwood Residential, Inc. In this role he provided strategic guidance with respect to asset management, financial planning and analysis, and property operations. Prior to joining Cottonwood Residential, Inc. in June 2013, Mr. Larson worked in the Investment Banking Division at Goldman Sachs advising clients on mergers and acquisitions and other capital raising activities in the Real Estate, Consumer/Retail and Healthcare sectors. Mr. Larson previously worked at Barclays Capital, Bonneville Real Estate Capital and Hitachi Consulting.

Mr. Larson holds a Master of Business Administration from the University of Chicago Booth School of Business, and a Bachelor of Science in Business Management from Brigham Young University.

**Stan Hanks** has served as our Chief Development Officer since December 2021. Prior to that he was one of our Executive Vice Presidents. Mr. Hanks also has served as Executive Vice President of CROP since September 2012 and of CCA since May 2021. Mr. Hanks has over 20 years of multi-family experience. He is responsible for development project oversight and strategic initiatives. Prior to joining CROP, Mr. Hanks was a Senior Vice President and Principal at RealSource, a boutique multi-family real estate firm in Salt Lake City where he was involved with acquisitions, financing, asset management and capital raising. Prior to RealSource, Mr. Hanks was Vice President of Finance/Corporate Controller for TenFold Corporation, a software company in Utah that completed its IPO in 1999. Prior to TenFold, Mr. Hanks spent four years as an auditor at Coopers & Lybrand. Mr. Hanks earned a Bachelor of Accounting degree from the University of Utah in 1992.

**Eric Marlin** has served as our Executive Vice President of Capital Markets since May 2021. Mr. Marlin also has served as Executive Vice President of Capital Markets of CROP since February 2007 and of CCA since May 2021. His responsibilities include interfacing with broker-dealers and all retail-focused capital raising activities for Cottonwood affiliates. Previously, Mr. Marlin was Vice President of the Western Region for CORE Realty Holdings, LLC, a sponsor of tenant-in-common transactions. Prior to joining CORE, Mr. Marlin worked for Courtlandt Financial Group, a firm that specializes in Code Section 1031 exchanges. Prior to joining Courtlandt Financial Group, Mr. Marlin worked as a financial consultant with Merrill Lynch Private Client Group in Beverly Hills, California, where he focused primarily on financial planning and estate planning. Mr. Marlin holds a Bachelor of Arts in History of Public Policy from the University of California at Santa Barbara. He is a licensed securities representative with Series 7 and Series 66 licenses. Mr. Marlin also acted as a wholesaler internal to CRII in connection with the offerings.

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**Paul Fredenberg** has served as our Chief Investment Officer since October 2018. Mr. Fredenberg has also served as the Chief Investment Officer of CCA since October 2018 and of CMRI and CMRII from October 2018 through the completion of the CMRI Merger and the CMRII Merger.

Through September 2018, Mr. Fredenberg served as the Senior Vice President of Acquisitions of Cottonwood Residential, Inc. a position he had held since September 2005. As Senior Vice President of Acquisitions, he focused exclusively on sourcing and evaluating new multifamily investment opportunities for Cottonwood Residential, Inc. Prior to joining the Cottonwood organization in 2005, Mr. Fredenberg worked in the Investment Banking division of Wachovia Securities advising clients on mergers and acquisitions activities across multiple industries. He has also held investment banking and management consulting positions at Piper Jaffray and the Arbor Strategy Group.

Mr. Fredenberg holds a Master of Business Administration from the Wharton School at the University of Pennsylvania, a Master of Arts in Latin American Studies from the University of Pennsylvania, and a Bachelor of Arts in Economics from the University of Michigan, Ann Arbor.

**Jonathan Gardner** is one of our independent directors, a position he has held since May 2021. Mr. Gardner is a principal and founding partner at Gardner Batt, LLC, a Salt Lake City-based real estate development and investment firm. Mr. Gardner has developed or invested in over $2.0 billion of real estate in the last seven years, and he and his partners manage nearly two million square feet of office, multi-family, retail and warehouse space. Prior to starting Gardner Batt in 2014, Mr. Gardner spent four years with a family run real estate development office and, prior to that, four years as an investment banker handling corporate leveraged finance at CIBC World Markets' Private Finance Group. Mr. Gardner graduated magna cum laude from the University of Utah's David Eccles School of Business with an emphasis in Finance.

Our board of directors selected Mr. Gardner as an independent director for reasons including his significant experience in the real estate industry and prior knowledge of the portfolio of CRII as a non-affiliate director. Mr. Gardner's broad real estate experience provides him with key skills in responding to our business's financial, strategic and operational challenges and opportunities, and overseeing management. Our board of directors believes that the depth and breadth of Mr. Gardner's exposure to complex real estate, financial and strategic issues during his career make him a valuable asset to our board of directors.

**John Lunt** is one of our independent directors, a position he has held since June 2018. In January 2003, Mr. Lunt founded Lunt Capital Management, Inc., a registered investment advisor, and since January 2003, he has served as its President. The firm builds and manages investment strategies used by financial advisors around the United States and provides research and advice for investments across asset classes, including U.S. equities, international equities, fixed income, real estate, commodities and currencies. Mr. Lunt co-created the methodology for four index strategies calculated by S&P Dow Jones Indices. He is a charter member of the ETF Strategists Roundtable for key influencers associated with ETF management, and writes regularly about financial markets for ETFTrends.com. From 2001 to June 2014, he served on the board of the Utah Retirement Systems, a $19 billion pension fund, and from 2004 to 2007, he served as board President. From February 2013 to February 2022, Mr. Lunt served on the investment advisory committee for the $20 billion Utah Educational Savings Plan (My529) and from August 2017 to February 2022, he served as Chairman of the committee. Since September 2014, he has served as a member of the Board of Trustees for the $2 billion Utah School & Institutional Trust Funds Office. Since June of 2022, he has served as a trustee for the Utah Educational Assistance Authority and currently serves as the chair of the Audit Committee. He has been a featured speaker at investment conferences around the United States and has written extensively about financial markets.

Mr. Lunt graduated Magna Cum Laude with University Honors from Brigham Young University with a Bachelor of Arts in Economics, and he later received a Master of Business Administration in Finance and International Business from New York University. Mr. Lunt completed the Program for Advanced Trustee Studies at Harvard Law School and finished a number of courses at the New York Institute of Finance on trading and portfolio management.

Our board of directors selected Mr. Lunt as an independent director for reasons including his executive leadership experience, his professional and educational background, his network of relationships with finance and investment professionals and his extensive background and experience in public markets and in real estate and finance transactions and investments. In addition, his experience as founder and President of Lunt Capital Management and his service as a director of various pension funds provide him an understanding of the issues facing companies that make investments in real estate and oversee those investments.

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**Philip White** is one of our independent directors, a position he has held since May 2021. Mr. White has been a partner at Inflection Financial LLC since 2020. His firm oversees more than $250 million for individuals and company retirement plans. Previously, Mr. White was a partner at Retirement Plan Fiduciaries LLC since 2015 and President at Ducere Capital, a wealth management practice he founded in 2006. Mr. White also previously directed executive compensation and company stock and retirement plans for Rackspace Hosting. Early in his career, Mr. White served his country as a civil engineer officer in the United States Air Force. Mr. White earned his Master of Business Administration degree with Honors from The Wharton School at The University of Pennsylvania and is also a Distinguished Graduate of The United States Air Force Academy. Mr. White is a CFA® charterholder and is also a CERTIFIED FINANCIAL PLANNER™ practitioner.

Our board of directors selected Mr. White as an independent director for reasons including his experience in the real estate industry, executive compensation experience, his professional and educational background and prior knowledge of the portfolio of CRII as a non-affiliate director of CRII. With his background in executive compensation issues, Mr. White is particularly well-positioned to guide our board of directors on compensation issues and the employment of various individuals, including our Chief Accounting Officer and Chief Legal Officer. Our board of directors believes that these key attributes make him a valuable asset to our board of directors.

**Code of Ethics** 

We have adopted a Code of Conduct and Ethics that applies to all of our executive officers and directors including but not limited to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. A copy of our Code of Conduct and Ethics is available on our website at cottonwoodcommunities.com/corporate-governance/. Any amendment to, or a waiver from, a provision of the Code of Conduct and Ethics that would require disclosure under Item 5.05 of Form 8-K will be posted on our website.

**Audit Committee**

Our board of directors has established an audit committee composed entirely of independent directors. Audit Committee members are "independent", consistent with the qualifications set forth in Rule 10A-3 under the Exchange Act, applicable to boards of directors in general and audit committees in particular. Mr. Lunt is qualified as an audit committee financial expert within the meaning of Item 407(d)(5) of Regulation S-K under the Exchange Act.

Among other things, the audit committee will assist the board in overseeing:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our accounting and financial reporting processes;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the integrity and audits of our financial statements;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our compliance with legal and regulatory requirements;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the qualifications and independence of our independent registered public accounting firm; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the performance of our internal auditors and our independent registered public accounting firm.

The audit committee is also responsible for engaging our independent registered public accounting firm, reviewing with the independent registered public accounting firm the plans and results of the audit engagement, and considering and approving the audit and non-audit services and fees provided by the independent registered public accounting firm. The members of the audit committee are Messrs. Gardner, Lunt and White.

**Item 11. Executive Compensation**

**Overview**

This section discusses the components of the compensation we provide to our "named executive officers" who are listed in the "Summary Compensation Table" below. In 2022, our named executive officers were Daniel Shaeffer, our Chief Executive Officer, Chad Christensen, our Executive Chairman and Gregg Christensen, our Chief Legal Officer and Secretary.

Prior to May 7, 2021, the effective time of the CRII Merger, we had no employees, and all of our executive officers were employed by our advisor and its affiliates. As such, all of our executive officers were compensated by these entities, in part, for their services to us and our subsidiaries, and except for grants of LTIP Units (units in the Operating Partnership subject to time-based vesting) and Special LTIP Units (units in the Operating Partnership subject to performance-based vesting, and for purposes of our executive compensation discussion, referred to as required by context, collectively as the "LTIP Units") under our partnership agreement, we did not provide compensation to our executive officers prior to May 7, 2021.

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Following the CRII Merger, we employ certain of our executive officers, including one of our named executive officers, Mr. G. Christensen. Mr. Shaeffer and Mr. C. Christensen, along with certain other of our executive officers, are employed by our advisor and its affiliates. Except for grants of LTIP Units that we make to all of our executive officers, Mr. Shaeffer and Mr. C. Christensen, and those executive officers employed by our advisor and its affiliates are compensated by our advisor and its affiliates (and not us), in part, for their service to us and our subsidiaries. See Item 13 below for a discussion of the fees paid to CC Advisors III and its affiliates. All of our named executive officers are officers and/or employees of, or hold an indirect ownership interest in, CC Advisors III and/or its affiliates.

We are a "smaller reporting company" as defined in Rule 12b-2 under the Exchange Act and an "emerging growth company" as defined under the JOBS Act. As such, we are permitted to take advantage of certain reduced reporting requirements that are otherwise applicable generally to public companies.

**Compensation of Executive Officers**

*Executive Compensation Process*

Our compensation committee, which is composed of all of our independent directors, discharges our board of directors' responsibilities relating to the compensation that we pay to our named executive officers. This includes equity incentive compensation grants we make to all of our named executive officers as well as additional compensation we pay to named executive officers employed by us. Prior to the CRII Merger, except for LTIP Unit grants, our named executive officers did not receive any compensation from us.

In making compensation decisions for 2022, the compensation committee evaluated the performance of our chief executive officer and, together with our chief executive officer, assessed the individual performance of the other named executive officers. In addition, the compensation committee reviewed market-based compensation data provided by Ferguson Partners Consulting L.P., a nationally recognized compensation consulting firm specializing in the real estate industry ("FPC"). While the compensation committee considers these recommendations, along with data provided by its other advisors, it retains full discretion to set all compensation to our named executive officers that we pay directly.

*Engagement of Compensation Consultant*

The compensation committee is authorized to retain the services of one or more executive compensation consultants, in its discretion, to assist with the establishment and review of our compensation programs and related policies. The compensation committee has sole authority to hire, terminate and set the terms of any future engagement of FPC or any other compensation consultant.

For compensation advice in 2022, the compensation committee engaged FPC to provide market-based compensation data to assist the committee in the implementation of a comprehensive executive compensation program for those executive officers that we employ and an equity incentive compensation program for all of our executive officers that complements the compensation provided to our executive officers by our advisor and its affiliates. In connection with these efforts, FPC prepared for the compensation committee reports that included compensation analyses for each executive position, including those executive positions that are held by employees of our advisor and its affiliates, an analysis of a recommended peer group for the Company and a description of the methodology used to provide the compensation analyses. FPC researched competitive market practices, reviewed the proxy statements of its recommended peer group and checked its own proprietary information data bases. The compensation committee reviewed the information provided to the Company and approved the 2022 executive compensation program which included equity incentive compensation for all of our executive officers and full compensation for those executive officers that we employ.

*Components of Executive Compensation* 

The key elements of our executive compensation program for our executive officer employees include annual cash compensation, short-term incentive plan compensation as well as equity incentive compensation in the form of LTIP Units. Each element is discussed in detail below.

*Base Salary* 

Compensation for each executive officer we employ was established by our compensation committee. We believe that our executive officers' base salary levels are commensurate with their positions and are expected to provide a steady source of income sufficient to permit these officers to focus their time and attention on their work duties and responsibilities. Base

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salaries of our named executive officers employed by us periodically will be reviewed by the compensation committee. For 2023, the compensation committee did not elect to change the annual base salary from year end 2022 levels for Mr. G. Christensen ($400,000). Mr. Shaeffer and Mr. C. Christensen do not receive an annual base salary from us and are compensated by CC Advisors III and its affiliates.

*Short-Term Incentive Plan*

The short-term incentive plan is intended to compensate our executive officers for achieving annual company and strategic performance goals. The compensation committee believes that the opportunity to earn an annual cash bonus encourages our executive officers to achieve company and strategic performance goals, which fosters a performance-driven company culture that aligns the executives' interests with the stockholders' interests.

The short-term incentive plan allows our executive officers to earn a cash bonus based on various pre-defined and pre-weighted company and strategic performance goals established by the compensation committee (at least 50% of which are objective, calculable company performance measurements). Strategic performance goals are assessed subjectively.

The annual cash incentive bonus is the product of the named executive officer's target bonus (which is a percentage of his base salary) and a formula number that is based on the achievement of predetermined targets. Depending on the achievement of the predetermined targets, the actual annual cash incentive bonus may be less than, but not greater than the target bonus. For 2022, the compensation committee set Mr. G. Christensen's target bonus at 90% of his base salary.

The annual cash incentive bonus formula number for 2022 consisted of the following components: (i) 25% capital formation, (ii) 25% capital deployment efficiency, (iii) 25% portfolio characteristics and objectives, (iv) 15% same store net operating income (NOI) growth relative to the same store NOI growth of a pre-selected peer group, and (v) 10% total shareholder return (IRR). With respect to the specific formula components for 2022, the named executive officers received 74.3% of their target bonus based on the achievement of the predetermined targets. Based on our actual performance in 2022, the compensation committee approved an annual cash incentive bonus for Mr. G. Christensen in an amount of $267,372. Mr. Shaeffer and Mr. C. Christensen do not receive a cash incentive bonus from us and are compensated by CC Advisors III and its affiliates.

*Equity Incentive Compensation*

Our compensation committee acknowledges that the real estate industry is highly competitive and that experienced professionals have significant career mobility. Our compensation committee determined that through the annual grant of LTIP Units under our partnership agreement, with vesting based on continued employment or the achievement of performance goals, each over multi-year periods, we will attract, motivate and retain highly skilled executive officers who are committed to our core values of prudent risk-taking and integrity. Each year our compensation committee determines, in its sole discretion, the aggregate amount, type and terms of any equity grants to our named executive officers. For 2022, the compensation committee determined that annual equity awards should consist of approximately 35% in LTIP Units (subject to multi-year vesting) and 65% in Special LTIP Units (with a multi-year performance measuring period) for all named executive officers.

LTIP Units are a separate series of limited partnership units of the Operating Partnership, which are convertible into CROP Common Units upon achieving certain vesting and performance requirements. Awards of LTIP Units are subject to the conditions and restrictions determined by our compensation committee, including continued employment or service, computation of financial metrics and/or achievement of pre-established performance goals and objectives. If the conditions and/or restrictions included in an LTIP Unit award agreement are not attained, holders will forfeit the LTIP Units granted under such agreement. Unless otherwise provided, the LTIP Unit awards (whether vested or unvested) will entitle the holder to receive current distributions from the Operating Partnership, and the Special LTIP Units (whether vested or unvested) will entitle the holder to receive 10% of the current distributions from the Operating Partnership during the applicable performance period. When the LTIP Units have vested and sufficient income has been allocated to the holder of the vested LTIP Units, the LTIP Units will automatically convert to CROP Common Units on a one-for-one basis.

The compensation committee has deemed LTIP Unit awards to be an effective means to ensure alignment of the executives' interests with those of the stockholders. LTIP Units are structured as "profits interests" for U.S. federal income tax purposes, and we do not expect the grant, vesting or conversion of LTIP Units to produce a tax deduction for us based on current U.S. federal income tax law. As profits interests, the LTIP Units initially will not have full parity, on a per unit basis, with the CROP Common Units with respect to liquidating distributions. Upon the occurrence of specified events, the LTIP Units can, over time, achieve full parity with the CROP Common Units and therefore, accrete to an economic value for the holder equivalent to the CROP Common Units. If such parity is achieved, the LTIP Units may be converted, subject to the

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satisfaction of applicable vesting conditions, on a one-for-one basis into CROP Common Units upon the occurrence of certain events, by the holder for a cash amount based on the value of a share of our common stock or for shares of our common stock, on a one-for-one basis, at our election. However, there are circumstances under which the LTIP Units will not achieve parity with the CROP Common Units, and until such parity is reached, the value that a holder could realize for a given number of LTIP Units will be less than the value of an equal number of shares of our common stock and may be zero. The compensation committee believes that this characteristic of the LTIP units, that they achieve real value only if our share value appreciates, links executive compensation to our performance.

In January 2022, the compensation committee approved equity awards for fiscal year 2022 in dollar values, with the number of units granted calculated by dividing the dollar value of the approved awards by the most recently determined NAV of CROP Common Units. In determining the size of the long-term equity incentives awarded to the named executive officers for 2022 service, the compensation committee considered, among other things, the role and responsibilities of the individual, competitive factors and individual performance history. These awards were intended to enable our executive officers to establish a meaningful equity stake in the Company that would vest over a period of years based on continued service.

Our compensation committee currently expects to continue to grant LTIP Units awards to our named executive officers annually on the same terms and conditions; however, the committee's decision whether to approve any such awards in the future will depend on our performance, market trends and practices and other considerations.

*Time-Based LTIP Units* 

The following table sets forth the number and value of the time-based LTIP Units granted to our named executive officers in January 2022 for 2022 compensation. The time-based LTIP Units were issued on January 7, 2022 based on the grant date fair value determined in accordance with the Financial Accounting Standards Board's Accounting Standards Codification 718, Compensation—Stock Compensation ("ASC Topic 718"). The time-based LTIP Units vest annually in equal installments over a four-year period with the first 25% vesting on January 1, 2023, subject to continued service. Time based LTIP Units (whether vested or unvested) receive the same distribution per unit as the CROP Common Units.

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| | | | |
|:---|:---|:---|:---|
| **Executive Officer** | **Date of Grant** | **Number of Time-Based LTIP Units** | **Value of Time-Based LTIP Units** |
| Daniel Shaeffer | January 7, 2022 | 23589 | $407710 |
| Chad Christensen | January 7, 2022 | 23589 | $407710 |
| Gregg Christensen | January 7, 2022 | 7959 | $137563 |

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In January 2023, the compensation committee approved the grant of an aggregate of 46,691 LTIP Units to the named executive officers for 2023 compensation. The grants were made on January 6, 2023. These LTIP Unit awards vest annually in equal installments over a four-year period beginning on January 1, 2024, subject to continued service. The 2023 grants of LTIP Units will be reflected in the "Summary Compensation Table" and "2023 Grants of Plan-Based Awards" table in Part III of our Annual Report on Form 10-K for the year ended December 31, 2023.

*Special LTIP Units*

The following table sets forth the number and value of the Special LTIP Units (performance-based LTIP Units) granted to our named executive officers in January 2022. The Special LTIP Units were issued on January 7, 2022 based on the grant date fair value determined in accordance with ASC Topic 718. The actual amount of each award will be determined at the conclusion of the three-year performance period on December 31, 2024, and will depend on our internal rate of return (as defined in the award agreements).

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|:---|:---|:---|:---|
| **Executive Officer** | **Date of Grant** | **Number of Special LTIP Units** | **Value of Special LTIP Units** |
| Daniel Shaeffer | January 7, 2022 | 43809 | $757190 |
| Chad Christensen | January 7, 2022 | 43809 | $757190 |
| Gregg Christensen | January 7, 2022 | 14780 | $255456 |

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<u>[**Table of Contents**](#idee5e1a1e23d41889d4214c8b88222aa_7)</u>

Pursuant to the terms of the applicable award agreements, our named executive officers may earn up to 100% of the number of Special LTIP Units granted, plus deemed dividends on earned units, based on our internal rate of return during the performance period in accordance with the following schedule, with linear interpolation for performance between levels:

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| | |
|:---|:---|
| **Internal Rate of Return** | **Percentage Earned** |
| Less than 6% | —% |
| 6% | 50% |
| 10% or greater | 100% |

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None of the Special LTIP Units will be earned if our internal rate of return for the performance period is less than 6%, and the maximum number of Special LTIP Units will only be earned if our internal rate of return for the performance period is 10% or greater. The earned Special LTIP Units will become fully vested on the first anniversary of the last day of the performance period, subject to continued employment with us, or CC Advisors III or its affiliates. During the performance period, Special LTIP Units (whether vested or unvested) will entitle the holder to receive 10% of the current distribution per unit paid to holders of the CROP Common Units (based on the total number of Special LTIP Units granted). At the end of the performance period, if the internal rate of return equals or exceeds the performance threshold (6%), the holder will be entitled to receive an additional grant of LTIP Units equivalent to 90% of distributions that would have been paid on the earned Special LTIP Units during the performance period.

In January 2023, the compensation committee approved the grant of an aggregate target of 133,403 Special LTIP Units to the named executive officers for 2023 compensation. The 2023 grants of Special LTIP Units will be reflected in the "Summary Compensation Table" and "2023 Grants of Plan-Based Awards" table in Part III of our Annual Report on Form 10-K for the year ended December 31, 2023.

**Executive Officer Compensation Tables**

*Summary Compensation Table*

The following table sets forth the information required by Item 402 of Regulation S-K promulgated by the SEC. Prior to the effective time of the CRII Merger on May 7, 2021, we had no employees, and all of our executive officers were employed by our advisor and its affiliates. As such, all of our executive officers were compensated by these entities, in part, for their services to us and our subsidiaries and except for grants of equity incentive compensation that we made to certain of our executive officers commencing for the fiscal year 2020, we did not compensate our executive officers prior to May 7, 2021. Therefore, the table below reflects executive compensation that we paid for the year ended December 31, 2022 and the partial year commencing May 7, 2021. With respect to equity incentive awards, the dollar amounts indicated in the table under "Stock Awards" are the aggregate grant date fair value of awards computed in accordance with ASC Topic 718.

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Name and Principal Position** | **Year** | **Salary ($)** | **Stock** <br>**Awards ($)**<sup>(1)</sup> | **Non-Equity Incentive Plan Compensation ($)** | **Total ($)** |
| &nbsp;&nbsp;&nbsp;Daniel Shaeffer<br>Chief Executive Officer | 2022<br>2021 | <sup>(2)</sup><br><sup>(2)</sup> | 1141153<br> - | <sup>(2)</sup><br><sup>(2)</sup> | 1141153<br> - |
| &nbsp;&nbsp;&nbsp;Chad Christensen<br>Executive Chairman | 2022<br>2021 | <sup>(2)</sup><br><sup>(2)</sup> | 1141153<br> - | <sup>(2)</sup><br><sup>(2)</sup> | 1141153<br> - |
| &nbsp;&nbsp;&nbsp;Gregg Christensen<br>Chief Legal Officer and Secretary | 2022<br>2021 | 400000<br>375000 | 385000<br> - | 227372<br>315000 | 1012372<br>690000 |
| <sup>(1)</sup> For 2022, represents the total grant date fair value of LTIP Units and Special LTIP Units granted on January 7, 2022, determined in accordance with ASC Topic 718. Refer to <u>[Note 11](#idee5e1a1e23d41889d4214c8b88222aa_139)</u> to our consolidated financial statements included herein, for a discussion of our accounting of LTIP Units and the assumptions used.<br>The grant date fair values for the following named executive officers relating to 2022 LTIP Unit awards granted on January 7, 2022, are as follows: Daniel Shaeffer—$407,710; Chad Christensen—$407,710; Gregg Christensen—$137,563. The LTIP Unit awards granted in 2022 vest over four years from the date of grant in equal installments on a quarterly basis, subject to continued service.<br>The grant date fair values for the named executive officers relating to 2022 Special LTIP Unit awards granted on January 7, 2022, are as follows: Daniel Shaeffer—$757,190; Chad Christensen—$757,190; Gregg Christensen—$255,456. | <sup>(1)</sup> For 2022, represents the total grant date fair value of LTIP Units and Special LTIP Units granted on January 7, 2022, determined in accordance with ASC Topic 718. Refer to <u>[Note 11](#idee5e1a1e23d41889d4214c8b88222aa_139)</u> to our consolidated financial statements included herein, for a discussion of our accounting of LTIP Units and the assumptions used.<br>The grant date fair values for the following named executive officers relating to 2022 LTIP Unit awards granted on January 7, 2022, are as follows: Daniel Shaeffer—$407,710; Chad Christensen—$407,710; Gregg Christensen—$137,563. The LTIP Unit awards granted in 2022 vest over four years from the date of grant in equal installments on a quarterly basis, subject to continued service.<br>The grant date fair values for the named executive officers relating to 2022 Special LTIP Unit awards granted on January 7, 2022, are as follows: Daniel Shaeffer—$757,190; Chad Christensen—$757,190; Gregg Christensen—$255,456. | <sup>(1)</sup> For 2022, represents the total grant date fair value of LTIP Units and Special LTIP Units granted on January 7, 2022, determined in accordance with ASC Topic 718. Refer to <u>[Note 11](#idee5e1a1e23d41889d4214c8b88222aa_139)</u> to our consolidated financial statements included herein, for a discussion of our accounting of LTIP Units and the assumptions used.<br>The grant date fair values for the following named executive officers relating to 2022 LTIP Unit awards granted on January 7, 2022, are as follows: Daniel Shaeffer—$407,710; Chad Christensen—$407,710; Gregg Christensen—$137,563. The LTIP Unit awards granted in 2022 vest over four years from the date of grant in equal installments on a quarterly basis, subject to continued service.<br>The grant date fair values for the named executive officers relating to 2022 Special LTIP Unit awards granted on January 7, 2022, are as follows: Daniel Shaeffer—$757,190; Chad Christensen—$757,190; Gregg Christensen—$255,456. | <sup>(1)</sup> For 2022, represents the total grant date fair value of LTIP Units and Special LTIP Units granted on January 7, 2022, determined in accordance with ASC Topic 718. Refer to <u>[Note 11](#idee5e1a1e23d41889d4214c8b88222aa_139)</u> to our consolidated financial statements included herein, for a discussion of our accounting of LTIP Units and the assumptions used.<br>The grant date fair values for the following named executive officers relating to 2022 LTIP Unit awards granted on January 7, 2022, are as follows: Daniel Shaeffer—$407,710; Chad Christensen—$407,710; Gregg Christensen—$137,563. The LTIP Unit awards granted in 2022 vest over four years from the date of grant in equal installments on a quarterly basis, subject to continued service.<br>The grant date fair values for the named executive officers relating to 2022 Special LTIP Unit awards granted on January 7, 2022, are as follows: Daniel Shaeffer—$757,190; Chad Christensen—$757,190; Gregg Christensen—$255,456. | <sup>(1)</sup> For 2022, represents the total grant date fair value of LTIP Units and Special LTIP Units granted on January 7, 2022, determined in accordance with ASC Topic 718. Refer to <u>[Note 11](#idee5e1a1e23d41889d4214c8b88222aa_139)</u> to our consolidated financial statements included herein, for a discussion of our accounting of LTIP Units and the assumptions used.<br>The grant date fair values for the following named executive officers relating to 2022 LTIP Unit awards granted on January 7, 2022, are as follows: Daniel Shaeffer—$407,710; Chad Christensen—$407,710; Gregg Christensen—$137,563. The LTIP Unit awards granted in 2022 vest over four years from the date of grant in equal installments on a quarterly basis, subject to continued service.<br>The grant date fair values for the named executive officers relating to 2022 Special LTIP Unit awards granted on January 7, 2022, are as follows: Daniel Shaeffer—$757,190; Chad Christensen—$757,190; Gregg Christensen—$255,456. | <sup>(1)</sup> For 2022, represents the total grant date fair value of LTIP Units and Special LTIP Units granted on January 7, 2022, determined in accordance with ASC Topic 718. Refer to <u>[Note 11](#idee5e1a1e23d41889d4214c8b88222aa_139)</u> to our consolidated financial statements included herein, for a discussion of our accounting of LTIP Units and the assumptions used.<br>The grant date fair values for the following named executive officers relating to 2022 LTIP Unit awards granted on January 7, 2022, are as follows: Daniel Shaeffer—$407,710; Chad Christensen—$407,710; Gregg Christensen—$137,563. The LTIP Unit awards granted in 2022 vest over four years from the date of grant in equal installments on a quarterly basis, subject to continued service.<br>The grant date fair values for the named executive officers relating to 2022 Special LTIP Unit awards granted on January 7, 2022, are as follows: Daniel Shaeffer—$757,190; Chad Christensen—$757,190; Gregg Christensen—$255,456. |
| <sup>(2)</sup> Mr. Shaeffer and Mr. C. Christensen are each an officer and employee of our advisor and its affiliates, and are compensated by these entities, in part, for their respective service to us or our subsidiaries. We do not directly compensate Mr. Shaeffer or Mr. C. Christensen other than through LTIP Unit awards. Refer to <u>[Item 13](#idee5e1a1e23d41889d4214c8b88222aa_67)</u> below for a discussion of the fees paid to CC Advisors III and its affiliates. | <sup>(2)</sup> Mr. Shaeffer and Mr. C. Christensen are each an officer and employee of our advisor and its affiliates, and are compensated by these entities, in part, for their respective service to us or our subsidiaries. We do not directly compensate Mr. Shaeffer or Mr. C. Christensen other than through LTIP Unit awards. Refer to <u>[Item 13](#idee5e1a1e23d41889d4214c8b88222aa_67)</u> below for a discussion of the fees paid to CC Advisors III and its affiliates. | <sup>(2)</sup> Mr. Shaeffer and Mr. C. Christensen are each an officer and employee of our advisor and its affiliates, and are compensated by these entities, in part, for their respective service to us or our subsidiaries. We do not directly compensate Mr. Shaeffer or Mr. C. Christensen other than through LTIP Unit awards. Refer to <u>[Item 13](#idee5e1a1e23d41889d4214c8b88222aa_67)</u> below for a discussion of the fees paid to CC Advisors III and its affiliates. | <sup>(2)</sup> Mr. Shaeffer and Mr. C. Christensen are each an officer and employee of our advisor and its affiliates, and are compensated by these entities, in part, for their respective service to us or our subsidiaries. We do not directly compensate Mr. Shaeffer or Mr. C. Christensen other than through LTIP Unit awards. Refer to <u>[Item 13](#idee5e1a1e23d41889d4214c8b88222aa_67)</u> below for a discussion of the fees paid to CC Advisors III and its affiliates. | <sup>(2)</sup> Mr. Shaeffer and Mr. C. Christensen are each an officer and employee of our advisor and its affiliates, and are compensated by these entities, in part, for their respective service to us or our subsidiaries. We do not directly compensate Mr. Shaeffer or Mr. C. Christensen other than through LTIP Unit awards. Refer to <u>[Item 13](#idee5e1a1e23d41889d4214c8b88222aa_67)</u> below for a discussion of the fees paid to CC Advisors III and its affiliates. | <sup>(2)</sup> Mr. Shaeffer and Mr. C. Christensen are each an officer and employee of our advisor and its affiliates, and are compensated by these entities, in part, for their respective service to us or our subsidiaries. We do not directly compensate Mr. Shaeffer or Mr. C. Christensen other than through LTIP Unit awards. Refer to <u>[Item 13](#idee5e1a1e23d41889d4214c8b88222aa_67)</u> below for a discussion of the fees paid to CC Advisors III and its affiliates. |

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<u>[**Table of Contents**](#idee5e1a1e23d41889d4214c8b88222aa_7)</u>

*Outstanding Equity Awards at Fiscal Year-End 2022*

The following table sets forth information with respect to outstanding equity awards granted by our compensation committee and held by the named executive officers as of December 31, 2022. In addition to equity awards granted by us, our named executive officers hold equity awards related to their employment by CRII prior to the CRII Merger which are not reflected in the table below. No option awards were outstanding for the named executive officers as of December 31, 2022. The aggregate dollar values indicated in the table below for equity incentive plan awards are the market or payout values and not the grant date fair values determined in accordance with ASC Topic 718 or the compensation expense recognized in our consolidated financial statements. In addition, the number of unearned Special LTIP Units in the equity incentive plan awards are the target amounts that may be earned under the 2022 Special LTIP Unit awards. All of our named executive officers received their first grant of equity awards from the Company in 2022 and none of the awards have vested or been earned as of December 31, 2022.

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **Stock Awards** | **Stock Awards** | **Stock Awards** | **Stock Awards** | **Stock Awards** | **Stock Awards** |
|<br>**Name** | **Number of Shares or Units of Stock That Have Not Vested** <sup>(1)</sup> | **Market Value of Shares or Units That Have Not Vested** <sup>(2)</sup> | **Market Value of Shares or Units That Have Not Vested** <sup>(2)</sup> | **Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested** <sup>(3)</sup> | **Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested** <sup>(3)(4)</sup> | **Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested** <sup>(3)(4)</sup> |
| Daniel Shaeffer | 23589 | $| 471650 | 43809 | $| 875939 |
| Chad Christensen | 23589 | $| 471650 | 43809 | $| 875939 |
| Gregg Christensen | 7959 | $| 159136 | 14780 | $| 295519 |
| <sup>(1)</sup> Represents time-based LTIP Unit awards for which a portion of the awards remain unvested as of December 31, 2022. These awards were granted on January 7, 2022 with a grant date fair value of $16.9316 and vest annually in equal installments over a four-year period with the first 25% vesting on January 1, 2023, subject to continued service. | <sup>(1)</sup> Represents time-based LTIP Unit awards for which a portion of the awards remain unvested as of December 31, 2022. These awards were granted on January 7, 2022 with a grant date fair value of $16.9316 and vest annually in equal installments over a four-year period with the first 25% vesting on January 1, 2023, subject to continued service. | <sup>(1)</sup> Represents time-based LTIP Unit awards for which a portion of the awards remain unvested as of December 31, 2022. These awards were granted on January 7, 2022 with a grant date fair value of $16.9316 and vest annually in equal installments over a four-year period with the first 25% vesting on January 1, 2023, subject to continued service. | <sup>(1)</sup> Represents time-based LTIP Unit awards for which a portion of the awards remain unvested as of December 31, 2022. These awards were granted on January 7, 2022 with a grant date fair value of $16.9316 and vest annually in equal installments over a four-year period with the first 25% vesting on January 1, 2023, subject to continued service. | <sup>(1)</sup> Represents time-based LTIP Unit awards for which a portion of the awards remain unvested as of December 31, 2022. These awards were granted on January 7, 2022 with a grant date fair value of $16.9316 and vest annually in equal installments over a four-year period with the first 25% vesting on January 1, 2023, subject to continued service. | <sup>(1)</sup> Represents time-based LTIP Unit awards for which a portion of the awards remain unvested as of December 31, 2022. These awards were granted on January 7, 2022 with a grant date fair value of $16.9316 and vest annually in equal installments over a four-year period with the first 25% vesting on January 1, 2023, subject to continued service. | <sup>(1)</sup> Represents time-based LTIP Unit awards for which a portion of the awards remain unvested as of December 31, 2022. These awards were granted on January 7, 2022 with a grant date fair value of $16.9316 and vest annually in equal installments over a four-year period with the first 25% vesting on January 1, 2023, subject to continued service. |
| <sup>(2)</sup> Based on the NAV of our common stock as of November 30, 2022 of $19.9945, which was our most recently determined NAV as of December 31, 2022. | <sup>(2)</sup> Based on the NAV of our common stock as of November 30, 2022 of $19.9945, which was our most recently determined NAV as of December 31, 2022. | <sup>(2)</sup> Based on the NAV of our common stock as of November 30, 2022 of $19.9945, which was our most recently determined NAV as of December 31, 2022. | <sup>(2)</sup> Based on the NAV of our common stock as of November 30, 2022 of $19.9945, which was our most recently determined NAV as of December 31, 2022. | <sup>(2)</sup> Based on the NAV of our common stock as of November 30, 2022 of $19.9945, which was our most recently determined NAV as of December 31, 2022. | <sup>(2)</sup> Based on the NAV of our common stock as of November 30, 2022 of $19.9945, which was our most recently determined NAV as of December 31, 2022. | <sup>(2)</sup> Based on the NAV of our common stock as of November 30, 2022 of $19.9945, which was our most recently determined NAV as of December 31, 2022. |
| <sup>(3)</sup> Represents Special LTIP Unit awards (at target amounts) for which a portion of the awards remain unearned and unvested as of December 31, 2022, assuming the Special LTIP Unit awards are earned at the conclusion of the applicable measurement period. These awards were granted on January 7, 2022 with a grant date fair value of $16.9316 and vest on the first anniversary of the last day of the three-year performance period, subject to continued employment. | <sup>(3)</sup> Represents Special LTIP Unit awards (at target amounts) for which a portion of the awards remain unearned and unvested as of December 31, 2022, assuming the Special LTIP Unit awards are earned at the conclusion of the applicable measurement period. These awards were granted on January 7, 2022 with a grant date fair value of $16.9316 and vest on the first anniversary of the last day of the three-year performance period, subject to continued employment. | <sup>(3)</sup> Represents Special LTIP Unit awards (at target amounts) for which a portion of the awards remain unearned and unvested as of December 31, 2022, assuming the Special LTIP Unit awards are earned at the conclusion of the applicable measurement period. These awards were granted on January 7, 2022 with a grant date fair value of $16.9316 and vest on the first anniversary of the last day of the three-year performance period, subject to continued employment. | <sup>(3)</sup> Represents Special LTIP Unit awards (at target amounts) for which a portion of the awards remain unearned and unvested as of December 31, 2022, assuming the Special LTIP Unit awards are earned at the conclusion of the applicable measurement period. These awards were granted on January 7, 2022 with a grant date fair value of $16.9316 and vest on the first anniversary of the last day of the three-year performance period, subject to continued employment. | <sup>(3)</sup> Represents Special LTIP Unit awards (at target amounts) for which a portion of the awards remain unearned and unvested as of December 31, 2022, assuming the Special LTIP Unit awards are earned at the conclusion of the applicable measurement period. These awards were granted on January 7, 2022 with a grant date fair value of $16.9316 and vest on the first anniversary of the last day of the three-year performance period, subject to continued employment. | <sup>(3)</sup> Represents Special LTIP Unit awards (at target amounts) for which a portion of the awards remain unearned and unvested as of December 31, 2022, assuming the Special LTIP Unit awards are earned at the conclusion of the applicable measurement period. These awards were granted on January 7, 2022 with a grant date fair value of $16.9316 and vest on the first anniversary of the last day of the three-year performance period, subject to continued employment. | <sup>(3)</sup> Represents Special LTIP Unit awards (at target amounts) for which a portion of the awards remain unearned and unvested as of December 31, 2022, assuming the Special LTIP Unit awards are earned at the conclusion of the applicable measurement period. These awards were granted on January 7, 2022 with a grant date fair value of $16.9316 and vest on the first anniversary of the last day of the three-year performance period, subject to continued employment. |
| <sup>(4)</sup> Value is based on the NAV of our common stock as of November 30, 2022 of $19.9945, which was our most recently determined NAV as of December 31, 2022. The number and value set forth in the table above assumes that the named executive officers earn the target amounts of Special LTIP Units. Refer to footnote 3 above.  | <sup>(4)</sup> Value is based on the NAV of our common stock as of November 30, 2022 of $19.9945, which was our most recently determined NAV as of December 31, 2022. The number and value set forth in the table above assumes that the named executive officers earn the target amounts of Special LTIP Units. Refer to footnote 3 above.  | <sup>(4)</sup> Value is based on the NAV of our common stock as of November 30, 2022 of $19.9945, which was our most recently determined NAV as of December 31, 2022. The number and value set forth in the table above assumes that the named executive officers earn the target amounts of Special LTIP Units. Refer to footnote 3 above.  | <sup>(4)</sup> Value is based on the NAV of our common stock as of November 30, 2022 of $19.9945, which was our most recently determined NAV as of December 31, 2022. The number and value set forth in the table above assumes that the named executive officers earn the target amounts of Special LTIP Units. Refer to footnote 3 above.  | <sup>(4)</sup> Value is based on the NAV of our common stock as of November 30, 2022 of $19.9945, which was our most recently determined NAV as of December 31, 2022. The number and value set forth in the table above assumes that the named executive officers earn the target amounts of Special LTIP Units. Refer to footnote 3 above.  | <sup>(4)</sup> Value is based on the NAV of our common stock as of November 30, 2022 of $19.9945, which was our most recently determined NAV as of December 31, 2022. The number and value set forth in the table above assumes that the named executive officers earn the target amounts of Special LTIP Units. Refer to footnote 3 above.  | <sup>(4)</sup> Value is based on the NAV of our common stock as of November 30, 2022 of $19.9945, which was our most recently determined NAV as of December 31, 2022. The number and value set forth in the table above assumes that the named executive officers earn the target amounts of Special LTIP Units. Refer to footnote 3 above.  |

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*Termination and Change in Control Arrangements*

*Accelerated Vesting of Time-Based LTIP Units.* Pursuant to award agreements with our named executive officers, upon a "change in control" (as defined in the award agreements) or in the event of a termination of the executive officer's employment by the executive officer for "good reason" (as defined in the award agreements), by the Company without "cause" (as defined in the award agreements), or by reason of death or disability, all outstanding time-based LTIP Units will become fully vested.

*Accelerated Vesting of Special LTIP Units.* Pursuant to the terms of award agreements with our named executive officers, upon a "change in control" (as defined in the award agreements) or in the event of a termination of the executive officer's employment by the executive officer for "good reason" (as defined in the award agreements), by the Company without "cause" (as defined in the award agreements), or by reason of death or disability (each a "Qualified Termination"), after the grant date, but prior to the end of the performance period, the target number of award LTIP Units will be deemed earned. Upon a Qualified Termination after the end of the performance period, but prior to the vesting of the earned Special LTIP Units, all unvested earned Special LTIP Units will become fully vested.

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<u>[**Table of Contents**](#idee5e1a1e23d41889d4214c8b88222aa_7)</u>

**2022 Director Compensation Table**

The table below provides information regarding compensation paid to or earned by our directors during the year ended December 31, 2022 as required by Item 402(k) of Regulation S-K.

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| | | | |
|:---|:---|:---|:---|
| **Name** | **Fees Earned or Paid in Cash** | **Stock Awards** <sup>(1)(2)</sup> | **Total** |
| Daniel Shaeffer <sup>(3)</sup> | $— | $— | $— |
| Chad Christensen <sup>(3)</sup> | $— | $— | $— |
| Jonathan Gardner | $60000 | $85000 | $145000 |
| John Lunt | $65000 | $85000 | $150000 |
| Philip White | $60000 | $85000 | $145000 |
| <sup>(1)</sup> As of December 31, 2022, each of Merssrs. Gardner, Lunt and White held 10,265 unvested LTIP units. | <sup>(1)</sup> As of December 31, 2022, each of Merssrs. Gardner, Lunt and White held 10,265 unvested LTIP units. | <sup>(1)</sup> As of December 31, 2022, each of Merssrs. Gardner, Lunt and White held 10,265 unvested LTIP units. | <sup>(1)</sup> As of December 31, 2022, each of Merssrs. Gardner, Lunt and White held 10,265 unvested LTIP units. |
| <sup>(2)</sup> Represents 4,918 LTIP Units granted to each of Messrs. Gardner, Lunt, and White on February 4, 2022 for compensation for the year ended December 31, 2022. The dollar value is computed in accordance with the Financial Accounting Standards Board's Accounting Standards Codification 718, Compensation—Stock Compensation ("ASC Topic 718"). Refer to <u>[Note 11](#idee5e1a1e23d41889d4214c8b88222aa_139)</u> to our consolidated financial statements included herein, for a discussion of our accounting of LTIP units and the assumptions used. The grant date fair value of each award granted on February 4, 2022 was $17.2839. | <sup>(2)</sup> Represents 4,918 LTIP Units granted to each of Messrs. Gardner, Lunt, and White on February 4, 2022 for compensation for the year ended December 31, 2022. The dollar value is computed in accordance with the Financial Accounting Standards Board's Accounting Standards Codification 718, Compensation—Stock Compensation ("ASC Topic 718"). Refer to <u>[Note 11](#idee5e1a1e23d41889d4214c8b88222aa_139)</u> to our consolidated financial statements included herein, for a discussion of our accounting of LTIP units and the assumptions used. The grant date fair value of each award granted on February 4, 2022 was $17.2839. | <sup>(2)</sup> Represents 4,918 LTIP Units granted to each of Messrs. Gardner, Lunt, and White on February 4, 2022 for compensation for the year ended December 31, 2022. The dollar value is computed in accordance with the Financial Accounting Standards Board's Accounting Standards Codification 718, Compensation—Stock Compensation ("ASC Topic 718"). Refer to <u>[Note 11](#idee5e1a1e23d41889d4214c8b88222aa_139)</u> to our consolidated financial statements included herein, for a discussion of our accounting of LTIP units and the assumptions used. The grant date fair value of each award granted on February 4, 2022 was $17.2839. | <sup>(2)</sup> Represents 4,918 LTIP Units granted to each of Messrs. Gardner, Lunt, and White on February 4, 2022 for compensation for the year ended December 31, 2022. The dollar value is computed in accordance with the Financial Accounting Standards Board's Accounting Standards Codification 718, Compensation—Stock Compensation ("ASC Topic 718"). Refer to <u>[Note 11](#idee5e1a1e23d41889d4214c8b88222aa_139)</u> to our consolidated financial statements included herein, for a discussion of our accounting of LTIP units and the assumptions used. The grant date fair value of each award granted on February 4, 2022 was $17.2839. |
| <sup>(3)</sup> Directors who are not independent of us do not receive compensation for their services as a director. Each of Mr. Shaeffer and Mr. C. Christensen received grants of equity compensation in connection with their positions as executive officers of the Company which is reflected in the discussion of executive compensation above.  | <sup>(3)</sup> Directors who are not independent of us do not receive compensation for their services as a director. Each of Mr. Shaeffer and Mr. C. Christensen received grants of equity compensation in connection with their positions as executive officers of the Company which is reflected in the discussion of executive compensation above.  | <sup>(3)</sup> Directors who are not independent of us do not receive compensation for their services as a director. Each of Mr. Shaeffer and Mr. C. Christensen received grants of equity compensation in connection with their positions as executive officers of the Company which is reflected in the discussion of executive compensation above.  | <sup>(3)</sup> Directors who are not independent of us do not receive compensation for their services as a director. Each of Mr. Shaeffer and Mr. C. Christensen received grants of equity compensation in connection with their positions as executive officers of the Company which is reflected in the discussion of executive compensation above.  |

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**Director Compensation**

The compensation structure for our directors was approved following a review of peer board compensation data provided by FPC.

Annually, we pay a cash retainer of $50,000 to each independent director for their service as a director, as well as an equity grant of time-based LTIP Units in the Operating Partnership with a value of approximately $85,000 at the time of grant. The equity will have a one-year vesting schedule. The independent board members serving as chairperson of each of the audit, compensation and conflicts committees will receive an additional annual cash retainer of $15,000, $10,000 and $10,000, respectively.

We also reimburse our directors for their travel expenses incurred in connection with their attendance at board and committee meetings.

**Compensation Committee Interlocks and Insider Participation**

During 2022, the Compensation Committee was composed of Messrs. Gardner, Lunt and White, none of whom were officers or employees of the Company during the fiscal year ended December 31, 2022, and none of whom had any relationship requiring disclosure by the Company under Item 404 of Regulation S-K under the Exchange Act. During the year ended December 31, 2022, Messrs. Shaeffer and C. Christensen, affiliated members of our board of directors, served as directors and executive officers of CMOF. As described elsewhere in this Report, following the CRII Merger, we acted as the external advisor to CMOF and acquired CMOF in September 2022. Additional information regarding our relationship with CMOF is described under <u>[Item 13](#idee5e1a1e23d41889d4214c8b88222aa_67)</u> below.

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**Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters**

**Equity Compensation Plan Information**

On March 22, 2022, our board of directors adopted the 2022 Equity Incentive Plan (the "Equity Incentive Plan"). The Equity Incentive Plan provides for the granting of stock-based awards of our Class I shares of common stock, including restricted stock (consisting of restricted stock bonuses or restricted stock purchase rights), restricted stock unit awards and other stock-based awards to our employees, our directors, employees of our advisor or its affiliates, other advisors and consultants of ours and of our advisor selected by the plan administrator for participation in the Equity Incentive Plan. We may make awards outside of the Equity Incentive Plan when individuals are ineligible to participate in the Equity Incentive Plan. Although the Equity Incentive Plan permits us to grant awards to our executive officers and directors, we do not intend to issue awards to our executive officers or directors pursuant to the Equity Incentive Plan. Instead, our executive officers and directors will receive equity grants of LTIP Units in the Operating Partnership. Information regarding LTIP Units is included above under "Item 11. Executive Compensation – Compensation of Executive Officers – Equity Incentive Compensation."

Our compensation committee administers the Equity Incentive Plan as the plan administrator, with sole authority to select participants, determine the types of awards to be granted and determine all the terms and conditions of the awards, including whether the grant, vesting or settlement of awards may be subject to the attainment of one or more performance goals. Unless determined by the plan administrator, no award granted under the Equity Incentive Plan will be transferable except through the laws of descent and distribution.

An aggregate maximum of 300,000 shares of our common stock may be issued upon grant, vesting or exercise of awards under the Equity Incentive Plan. If any shares subject to an award are forfeited, repurchased (for an amount not greater than the participant's purchase price) or cancelled, or expire or terminate, in whole or in part, without the delivery of shares, then the shares covered by such forfeited, repurchased, cancelled, expired or terminated award will again be available for awards under the Equity Incentive Plan. Shares will not be treated as issued pursuant to the Equity Incentive Plan (a) with respect to any portion of an award that is settled in cash or (b) to the extent such shares are withheld or reacquired by us in satisfaction of tax withholding obligations. In the event of certain changes to our capital structure, such as, for example, a merger, consolidation, reorganization, reincorporation, recapitalization, reclassification, stock dividend, stock split, reverse stock split, split-up, split-off, combination of shares, or exchange of shares, our board of directors will make appropriate and proportionate adjustments to the number and kind of shares subject to the Equity Incentive Plan and any outstanding awards, and to the purchase price under any outstanding awards.

Under the Equity Incentive Plan, the plan administrator will determine the treatment of awards in the event of a change in our control. Unless earlier terminated by our board of directors, the Equity Incentive Plan will automatically expire on the later of March 22, 2032, or ten years from the most recent approval by our board of directors of an increase in the maximum aggregate number of shares of common stock issuable under the plan. Our board of directors may terminate the Equity Incentive Plan at any time. The expiration or other termination of the Equity Incentive Plan will have no adverse impact on any award that is outstanding at the time the Equity Incentive Plan expires or is terminated without the consent of the holder of the outstanding award. Our board of directors may amend the Equity Incentive Plan at any time, but no amendment will adversely affect any award on a retroactive basis without the consent of the holder of the outstanding award, and no amendment to the Equity Incentive Plan will be effective without the approval of our stockholders if such approval is required by any law, regulation or rule applicable to the Equity Incentive Plan. The same is true for any amendment to remove the prohibition on repricing. No amendment will be made that could jeopardize the status of the Company as a REIT under the Code.

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As of December 31, 2022, we have granted LTIP Units to our officers and directors and restricted stock units to our non-executive employees and employees of our advisor. The following table summarizes information, as of December 31, 2022, relating to equity compensation plans of the Company (including individual compensation arrangements) pursuant to which equity securities of the Company are authorized for issuance.

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| | | | |
|:---|:---|:---|:---|
| **Plan Category** | **Number of securities to be issued upon exercise of outstanding options, warrants and rights** <sup>(1)</sup> | **Weighted-average exercise price of outstanding options, warrants and rights** | **Number of securities remaining available for future issuance under equity compensation plans** <sup>(2)</sup> |
| Equity compensation plans approved by security holders |  |  |  |
| Equity compensation plans not approved by security holders <sup>(3)</sup> | 957995 |  | 289323 |
| Total | 957309 |  | 289323 |
| (1) Includes 939,512 LTIP Units in CROP (147,675 of which are vested), 10,677 restricted stock units granted pursuant to the Equity Incentive Plan (none of which are vested), and 7,767 restricted stock units granted outside of the Equity Incentive Plan (none of which are vested). Upon satisfaction of certain conditions, LTIP Units are convertible into CROP Common Units, which may then be redeemed for cash, or at our option, an equal number of shares of Class I common stock, subject to certain restrictions. There is no exercise price associated with LTIP Units or the restricted stock units. Excluded from the table above are 1,594,320 LTIP Units (1,164,238 of which are vested) awarded by CRII as equity compensation prior to the CRII Merger. LTIP Units subject to performance vesting conditions assume the maximum level of performance. | (1) Includes 939,512 LTIP Units in CROP (147,675 of which are vested), 10,677 restricted stock units granted pursuant to the Equity Incentive Plan (none of which are vested), and 7,767 restricted stock units granted outside of the Equity Incentive Plan (none of which are vested). Upon satisfaction of certain conditions, LTIP Units are convertible into CROP Common Units, which may then be redeemed for cash, or at our option, an equal number of shares of Class I common stock, subject to certain restrictions. There is no exercise price associated with LTIP Units or the restricted stock units. Excluded from the table above are 1,594,320 LTIP Units (1,164,238 of which are vested) awarded by CRII as equity compensation prior to the CRII Merger. LTIP Units subject to performance vesting conditions assume the maximum level of performance. | (1) Includes 939,512 LTIP Units in CROP (147,675 of which are vested), 10,677 restricted stock units granted pursuant to the Equity Incentive Plan (none of which are vested), and 7,767 restricted stock units granted outside of the Equity Incentive Plan (none of which are vested). Upon satisfaction of certain conditions, LTIP Units are convertible into CROP Common Units, which may then be redeemed for cash, or at our option, an equal number of shares of Class I common stock, subject to certain restrictions. There is no exercise price associated with LTIP Units or the restricted stock units. Excluded from the table above are 1,594,320 LTIP Units (1,164,238 of which are vested) awarded by CRII as equity compensation prior to the CRII Merger. LTIP Units subject to performance vesting conditions assume the maximum level of performance. | (1) Includes 939,512 LTIP Units in CROP (147,675 of which are vested), 10,677 restricted stock units granted pursuant to the Equity Incentive Plan (none of which are vested), and 7,767 restricted stock units granted outside of the Equity Incentive Plan (none of which are vested). Upon satisfaction of certain conditions, LTIP Units are convertible into CROP Common Units, which may then be redeemed for cash, or at our option, an equal number of shares of Class I common stock, subject to certain restrictions. There is no exercise price associated with LTIP Units or the restricted stock units. Excluded from the table above are 1,594,320 LTIP Units (1,164,238 of which are vested) awarded by CRII as equity compensation prior to the CRII Merger. LTIP Units subject to performance vesting conditions assume the maximum level of performance. |
| <sup>(2)</sup> The Equity Incentive Plan allows for the issuance of a maximum of 300,000 shares of common stock issued through restricted stock units or restricted stock awards. No additional securities have been reserved for issuance with respect to awards of LTIP Units in CROP. | <sup>(2)</sup> The Equity Incentive Plan allows for the issuance of a maximum of 300,000 shares of common stock issued through restricted stock units or restricted stock awards. No additional securities have been reserved for issuance with respect to awards of LTIP Units in CROP. | <sup>(2)</sup> The Equity Incentive Plan allows for the issuance of a maximum of 300,000 shares of common stock issued through restricted stock units or restricted stock awards. No additional securities have been reserved for issuance with respect to awards of LTIP Units in CROP. | <sup>(2)</sup> The Equity Incentive Plan allows for the issuance of a maximum of 300,000 shares of common stock issued through restricted stock units or restricted stock awards. No additional securities have been reserved for issuance with respect to awards of LTIP Units in CROP. |
| <sup>(3)</sup> LTIP Unit awards have been granted by our compensation committee of our board of directors pursuant to the terms of award agreements and as contemplated in the Operating Partnership Agreement for CROP. Restricted stock grants have been made to our non-executive employees and employees of our advisor pursuant to the Equity Incentive Plan as well as outside of the Equity Incentive Plan. | <sup>(3)</sup> LTIP Unit awards have been granted by our compensation committee of our board of directors pursuant to the terms of award agreements and as contemplated in the Operating Partnership Agreement for CROP. Restricted stock grants have been made to our non-executive employees and employees of our advisor pursuant to the Equity Incentive Plan as well as outside of the Equity Incentive Plan. | <sup>(3)</sup> LTIP Unit awards have been granted by our compensation committee of our board of directors pursuant to the terms of award agreements and as contemplated in the Operating Partnership Agreement for CROP. Restricted stock grants have been made to our non-executive employees and employees of our advisor pursuant to the Equity Incentive Plan as well as outside of the Equity Incentive Plan. | <sup>(3)</sup> LTIP Unit awards have been granted by our compensation committee of our board of directors pursuant to the terms of award agreements and as contemplated in the Operating Partnership Agreement for CROP. Restricted stock grants have been made to our non-executive employees and employees of our advisor pursuant to the Equity Incentive Plan as well as outside of the Equity Incentive Plan. |

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**Security Ownership of Certain Beneficial Owners and Management**

The following table sets forth, as of March 21, 2023, the amount of our common stock, CROP common units and CROP LTIP units beneficially owned by (i) any person who is known by us to be the beneficial owner of more than 5% of the outstanding shares of our common stock, (ii) our directors and named executive officers and (iv) all of our directors and executive officers as a group. Beneficial ownership is determined in accordance with the rules of the SEC includes securities that a person has the right to acquire within 60 days.

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|:---|:---|:---|:---|
| **Name and Address of Beneficial Owner** <sup>(1)</sup> | **Amount and Nature of Beneficial Ownership** <sup>(2)</sup> | **Percent of all Shares** <sup>(3)</sup> | **Percent of all Shares and Common Units** <sup>(4)</sup> |
| Daniel Shaeffer | 4445890<sup>(5)</sup> | 12.51% | 6.67% |
| Chad Christensen | 4445900 <sup>(5)</sup> | 12.51% | 6.67% |
| Gregg Christensen | 3928039 <sup>(5)</sup> | 11.05% | 5.89% |
| Jonathan Gardner | 16410 <sup>(6)</sup> | \* | \* |
| John Lunt | 12934 <sup>(6)</sup> | \* | \* |
| Philip White | 27009 <sup>(7)</sup> | \* | \* |
| All directors and executive officers as a group (13 persons) | 6389499 | 17.98% | 9.58% |
| \* Indicates less than 1% of the outstanding common stock. | \* Indicates less than 1% of the outstanding common stock. | \* Indicates less than 1% of the outstanding common stock. | \* Indicates less than 1% of the outstanding common stock. |
| <sup>(1)</sup> The address of each named beneficial owner is 1245 Brickyard Road, Suite 250, Salt Lake City, Utah 84106. | <sup>(1)</sup> The address of each named beneficial owner is 1245 Brickyard Road, Suite 250, Salt Lake City, Utah 84106. | <sup>(1)</sup> The address of each named beneficial owner is 1245 Brickyard Road, Suite 250, Salt Lake City, Utah 84106. | <sup>(1)</sup> The address of each named beneficial owner is 1245 Brickyard Road, Suite 250, Salt Lake City, Utah 84106. |
| <sup>(2)</sup> Ownership consists of shares of our common stock, CROP common units and CROP LTIP units. Subject to certain restrictions, common units may be exchanged for cash, or at our option, an equal number of shares of our common stock on the specified exchange date which is the first business day of the month that is at least 60 business days after the receipt by CROP of an exchange notice (the "Specified Exchange Date"). Upon achieving parity with the common units and becoming "exchangeable" in accordance with the terms of CROP's partnership agreement, LTIP units may be exchanged for cash, or at our option, an equal number of shares of our common stock, subject to certain restrictions, on the Specified Exchange Date. | <sup>(2)</sup> Ownership consists of shares of our common stock, CROP common units and CROP LTIP units. Subject to certain restrictions, common units may be exchanged for cash, or at our option, an equal number of shares of our common stock on the specified exchange date which is the first business day of the month that is at least 60 business days after the receipt by CROP of an exchange notice (the "Specified Exchange Date"). Upon achieving parity with the common units and becoming "exchangeable" in accordance with the terms of CROP's partnership agreement, LTIP units may be exchanged for cash, or at our option, an equal number of shares of our common stock, subject to certain restrictions, on the Specified Exchange Date. | <sup>(2)</sup> Ownership consists of shares of our common stock, CROP common units and CROP LTIP units. Subject to certain restrictions, common units may be exchanged for cash, or at our option, an equal number of shares of our common stock on the specified exchange date which is the first business day of the month that is at least 60 business days after the receipt by CROP of an exchange notice (the "Specified Exchange Date"). Upon achieving parity with the common units and becoming "exchangeable" in accordance with the terms of CROP's partnership agreement, LTIP units may be exchanged for cash, or at our option, an equal number of shares of our common stock, subject to certain restrictions, on the Specified Exchange Date. | <sup>(2)</sup> Ownership consists of shares of our common stock, CROP common units and CROP LTIP units. Subject to certain restrictions, common units may be exchanged for cash, or at our option, an equal number of shares of our common stock on the specified exchange date which is the first business day of the month that is at least 60 business days after the receipt by CROP of an exchange notice (the "Specified Exchange Date"). Upon achieving parity with the common units and becoming "exchangeable" in accordance with the terms of CROP's partnership agreement, LTIP units may be exchanged for cash, or at our option, an equal number of shares of our common stock, subject to certain restrictions, on the Specified Exchange Date. |
| <sup>(3)</sup> Based on 35,544,814 shares of our common stock outstanding as of March 6, 2023. In computing the percentage ownership of a person or group, we have assumed that the common units and LTIP units held by that person or persons in the group have been redeemed for shares of our common stock and that those shares are outstanding, but that no common units or LTIP units held by other persons are redeemed for shares of our common stock, notwithstanding that not all of the LTIP units have vested to date. | <sup>(3)</sup> Based on 35,544,814 shares of our common stock outstanding as of March 6, 2023. In computing the percentage ownership of a person or group, we have assumed that the common units and LTIP units held by that person or persons in the group have been redeemed for shares of our common stock and that those shares are outstanding, but that no common units or LTIP units held by other persons are redeemed for shares of our common stock, notwithstanding that not all of the LTIP units have vested to date. | <sup>(3)</sup> Based on 35,544,814 shares of our common stock outstanding as of March 6, 2023. In computing the percentage ownership of a person or group, we have assumed that the common units and LTIP units held by that person or persons in the group have been redeemed for shares of our common stock and that those shares are outstanding, but that no common units or LTIP units held by other persons are redeemed for shares of our common stock, notwithstanding that not all of the LTIP units have vested to date. | <sup>(3)</sup> Based on 35,544,814 shares of our common stock outstanding as of March 6, 2023. In computing the percentage ownership of a person or group, we have assumed that the common units and LTIP units held by that person or persons in the group have been redeemed for shares of our common stock and that those shares are outstanding, but that no common units or LTIP units held by other persons are redeemed for shares of our common stock, notwithstanding that not all of the LTIP units have vested to date. |
| <sup>(4)</sup> Based on 66,673,582 shares of common stock and common units outstanding as of March 6, 2023 on a fully-diluted basis, comprised of 35,544,814 shares of common stock and 31,128,768 shares of common stock issuable upon exchange or conversion of outstanding common units and LTIP units, respectively. | <sup>(4)</sup> Based on 66,673,582 shares of common stock and common units outstanding as of March 6, 2023 on a fully-diluted basis, comprised of 35,544,814 shares of common stock and 31,128,768 shares of common stock issuable upon exchange or conversion of outstanding common units and LTIP units, respectively. | <sup>(4)</sup> Based on 66,673,582 shares of common stock and common units outstanding as of March 6, 2023 on a fully-diluted basis, comprised of 35,544,814 shares of common stock and 31,128,768 shares of common stock issuable upon exchange or conversion of outstanding common units and LTIP units, respectively. | <sup>(4)</sup> Based on 66,673,582 shares of common stock and common units outstanding as of March 6, 2023 on a fully-diluted basis, comprised of 35,544,814 shares of common stock and 31,128,768 shares of common stock issuable upon exchange or conversion of outstanding common units and LTIP units, respectively. |
| <sup>(5)</sup> Includes 236,676, 236,676, and 115,126 common units held by each of Messrs. Shaeffer, C. Christensen, and G. Christensen, respectively, and 707,719, 707,719, and 311,408 LTIP units held by each of Messrs. Shaeffer, C. Christensen, and G. Christensen, respectively. Not all of the LTIP units have vested. Includes 3,481,505 common units held by HT Holdings, an entity owned and controlled by Messrs. Shaeffer, C. Christensen, G. Christensen and Mr. Eric Marlin. Also includes 20,000 shares of common stock held by CCA, which is beneficially owned by Messrs. Shaeffer, C. Christensen, G. Christensen and Marlin (through entities they own and control or directly). In addition, Messrs. Shaeffer, C. Christensen and G. Christensen comprise the board of managers of CCA and, as such, may be deemed to have had beneficial ownership of the shares held by CCA. | <sup>(5)</sup> Includes 236,676, 236,676, and 115,126 common units held by each of Messrs. Shaeffer, C. Christensen, and G. Christensen, respectively, and 707,719, 707,719, and 311,408 LTIP units held by each of Messrs. Shaeffer, C. Christensen, and G. Christensen, respectively. Not all of the LTIP units have vested. Includes 3,481,505 common units held by HT Holdings, an entity owned and controlled by Messrs. Shaeffer, C. Christensen, G. Christensen and Mr. Eric Marlin. Also includes 20,000 shares of common stock held by CCA, which is beneficially owned by Messrs. Shaeffer, C. Christensen, G. Christensen and Marlin (through entities they own and control or directly). In addition, Messrs. Shaeffer, C. Christensen and G. Christensen comprise the board of managers of CCA and, as such, may be deemed to have had beneficial ownership of the shares held by CCA. | <sup>(5)</sup> Includes 236,676, 236,676, and 115,126 common units held by each of Messrs. Shaeffer, C. Christensen, and G. Christensen, respectively, and 707,719, 707,719, and 311,408 LTIP units held by each of Messrs. Shaeffer, C. Christensen, and G. Christensen, respectively. Not all of the LTIP units have vested. Includes 3,481,505 common units held by HT Holdings, an entity owned and controlled by Messrs. Shaeffer, C. Christensen, G. Christensen and Mr. Eric Marlin. Also includes 20,000 shares of common stock held by CCA, which is beneficially owned by Messrs. Shaeffer, C. Christensen, G. Christensen and Marlin (through entities they own and control or directly). In addition, Messrs. Shaeffer, C. Christensen and G. Christensen comprise the board of managers of CCA and, as such, may be deemed to have had beneficial ownership of the shares held by CCA. | <sup>(5)</sup> Includes 236,676, 236,676, and 115,126 common units held by each of Messrs. Shaeffer, C. Christensen, and G. Christensen, respectively, and 707,719, 707,719, and 311,408 LTIP units held by each of Messrs. Shaeffer, C. Christensen, and G. Christensen, respectively. Not all of the LTIP units have vested. Includes 3,481,505 common units held by HT Holdings, an entity owned and controlled by Messrs. Shaeffer, C. Christensen, G. Christensen and Mr. Eric Marlin. Also includes 20,000 shares of common stock held by CCA, which is beneficially owned by Messrs. Shaeffer, C. Christensen, G. Christensen and Marlin (through entities they own and control or directly). In addition, Messrs. Shaeffer, C. Christensen and G. Christensen comprise the board of managers of CCA and, as such, may be deemed to have had beneficial ownership of the shares held by CCA. |
| <sup>(6)</sup> Includes 16,410 and 12,934 LTIP units held by Messrs. Gardner and Lunt, respectively. Not all of the LTIP units have vested. | <sup>(6)</sup> Includes 16,410 and 12,934 LTIP units held by Messrs. Gardner and Lunt, respectively. Not all of the LTIP units have vested. | <sup>(6)</sup> Includes 16,410 and 12,934 LTIP units held by Messrs. Gardner and Lunt, respectively. Not all of the LTIP units have vested. | <sup>(6)</sup> Includes 16,410 and 12,934 LTIP units held by Messrs. Gardner and Lunt, respectively. Not all of the LTIP units have vested. |
| <sup>(7)</sup> Includes 10,600 shares of our common stock and 16,410 LTIP units held by Mr. White. Not all of the LTIP units have vested. | <sup>(7)</sup> Includes 10,600 shares of our common stock and 16,410 LTIP units held by Mr. White. Not all of the LTIP units have vested. | <sup>(7)</sup> Includes 10,600 shares of our common stock and 16,410 LTIP units held by Mr. White. Not all of the LTIP units have vested. | <sup>(7)</sup> Includes 10,600 shares of our common stock and 16,410 LTIP units held by Mr. White. Not all of the LTIP units have vested. |

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**Item 13. Certain Relationships and Related Transactions, and Director Independence**

**Director Independence**

Our charter provides that a majority of our directors must be independent. We currently have three independent directors on our five-member board of directors. A majority of the directors on any committees established by the board must also be independent. Our board of directors has three standing committees: the audit committee, the conflicts committee and the compensation committee.

Under our charter, an independent director is a person who is not associated and has not been associated within the last two years, directly or indirectly, with our sponsor or advisor. A director is deemed to be associated with our sponsor or our advisor if he or she owns an interest in, is employed by, is an officer or director of, or has any material business or professional relationship with our sponsor, advisor or any of their affiliates, performs services (other than as a director) for us, is a director for more than three REITs organized by our sponsor or advised by our advisor. A business or professional relationship will be deemed material if the gross income derived by the director from our sponsor, our advisor and any of their affiliates exceeds 5% of (1) the director's annual gross revenue derived from all sources, during either of the last two years or (2) the director's net worth on a fair market value basis. An indirect relationship will include circumstances in which a director's spouse, parent, child, sibling, mother- or father-in-law, son- or daughter-in-law, or brother- or sister-in-law is or has been associated with our sponsor, advisor or any of their affiliates or the Company.

In addition, although our shares are not listed for trading on any national securities exchange, a majority of our directors, and all of the members of the audit committee, the conflicts committee, and the compensation committee are "independent" as defined by the New York Stock Exchange. The New York Stock Exchange standards provide that to qualify as an independent director, in addition to satisfying certain bright-line criteria, our board of directors must affirmatively determine that a director has no material relationship with us (either directly or as a partner, stockholder or officer of an organization that has a relationship with us). Our board of directors has affirmatively determined that each of our independent directors, Jonathan Gardner, John Lunt and Philip White, satisfies the New York Stock Exchange independence standards.

**Report of the Conflicts Committee**

As members of the conflicts committee of the board of directors, we have reviewed the corporate policies being followed by the Company and believe they are in the best interests of its stockholders. The basis for this conclusion is outlined below.

We have developed a system of policies and procedures designed to enable the objectives of the Company (as outlined in our charter) to be achieved. These policies, as described in our current prospectus, cover, among other things, investments in real estate and real estate-related assets, leverage, dispositions, administration of the Company, determination of our net asset value, conflict resolution and raising capital. We believe the Company's policies have been carefully and thoughtfully drafted to minimize risk while maximizing our ability to achieve our primary investment objectives.

Our advisor, CC Advisors III, has substantial discretion with respect to the selection of real properties, debt related investments and other real estate-related investments consistent with our investment objectives. In determining the specific types of real property and real estate-related investments to make or recommend, CC Advisors III considers certain criteria, including, but not limited to, the following: (i) positioning the overall portfolio to achieve a desired mix of real property and other real estate-related investments; (ii) diversification benefits relative to the rest of the real property and other real estate-related assets within our portfolio; (iii) potential for delivering current income and attractive risk-adjusted total returns; and (iv) opportunities for capital appreciation based on product repositioning, operating expense reductions and other factors.

As of December 31, 2022, our portfolio consists of ownership interests or structured investment interests in 34 multifamily apartment communities in 12 states with 9,820 units, including 1,293 units in four multifamily apartment communities in which we have a structured investment interest and another 504 units in two multifamily apartment communities under construction. In addition, we have an ownership interest in four land sites planned for development. We believe our portfolio as of December 31, 2022 is consistent with the objectives outlined in our charter and this Annual Report.

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We have reviewed the related party transactions as described below and in our opinion, the transactions are fair and reasonable to the Company and its stockholders. This report is limited to the policies being followed by the Company and the fairness of transactions with the advisor and its affiliates.

March 21, 2023 The Conflicts Committee of the Board of Directors: <br> Jonathan Gardner (Chairman), John Lunt and Philip White

**Our Policy Regarding Transactions with Related Persons**

Our charter requires the conflicts committee to review and approve all transactions between us and our advisor, and any of our officers or directors or any of their affiliates. Prior to entering into a transaction with a related party, a majority of the board of directors (including a majority of the conflicts committee) not otherwise interested in the transaction must conclude that the transaction is fair and reasonable to us and on terms and conditions not less favorable to us than those available from unaffiliated third parties. In addition, our Code of Conduct and Ethics lists examples of types of transactions with related parties that would create prohibited conflicts of interest and requires our officers and directors to be conscientious of actual and potential conflicts of interest with respect to our interests and to seek to avoid such conflicts or handle such conflicts in an ethical manner at all times consistent with applicable law. Our executive officers and directors are required to report potential and actual conflicts to the Compliance Officer, currently our Chief Legal Officer, or directly to the audit committee chair, as appropriate.

**Transactions with Related Persons**

The conflicts committee has reviewed the transactions between our affiliates and us since the beginning of 2021 as well as any such currently proposed transactions and determined them to be fair and reasonable to the Company. The following describes all transactions during the two years ended December 31, 2022 and currently proposed transactions involving us, our directors, our sponsor or advisor or any of their affiliates.

As further described below, we have entered into agreements with certain affiliates pursuant to which they provide services to us. Until May 7, 2021, the effective date of the CRII Merger, CRII acted as our sponsor and was the general partner of CROP. Until May 7, 2021, CRII, through its general partner interest in CROP, controlled CC Advisors III, our advisor, and Cottonwood Communities Management, LLC ("CC Management"), our affiliated property manager. CRII was managed by its board of directors, three of the five members of which were Daniel Shaeffer, Chad Christensen and Gregg Christensen. Daniel Shaeffer and Chad Christensen have served as our affiliated directors since our formation and currently serve as two of our executive officers. Gregg Christensen is one of our executive officers and an advisory board member.

In May 2021, CCA became our sponsor when CRII undertook a series of transactions in connection with the CRII Merger that resulted in CRII and CROP divesting their complete interest in CCA to an entity beneficially and majority owned and controlled by Messrs. Shaeffer, C. Christensen and G. Christensen. As of December 31, 2022, Messrs. Shaeffer, C. Christensen and G. Christensen currently beneficially own approximately 73.5% of CCA. CCA wholly owns CC Advisors III. All of our executive officers are also executive officers of CCA and CC Advisors III. In addition, all of our executive officers own an interest in CCA.

*Advisory Agreement* 

Our advisor manages our business subject to the supervision of our board of directors and only has such authority as we may delegate to it as our agent. We entered into our initial advisory agreement on August 13, 2018. Effective March 1, 2019, we amended our initial advisory agreement to remove the provision of property management services. On May 7, 2021, the closing date of the CRII Merger, we entered into the amended and restated advisory agreement (the "Amended and Restated Advisory Agreement"), which was renewed for an additional one-year term effective May 7 2022, to revise the compensation payable and the expenses that may be reimbursed to our advisor.

Under the terms of the advisory agreement in effect from January 1, 2021 through May 7, 2021 and the Amended and Restated Advisory Agreement that became effective on May 7, 2021, we paid the fees and expense reimbursements described below to our advisor from January 1, 2021 through December 31, 2022.

*Organization and Offering Expenses.* Pursuant to our advisory agreement that was in effect until May 7, 2021, our advisor was obligated to pay all of the organization and offering expenses associated with our initial public offering on our

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behalf with limited exceptions. As of May 7, 2021, our advisor incurred approximately $14.1 million in organizational and offering costs from the issuance of our common stock in the initial public offering.

Pursuant to the Amended and Restated Advisory Agreement, we reimburse our advisor for any organization and offering expenses that it incurs on our behalf as and when incurred. After termination of our primary offering, our advisor will reimburse us to the extent that the organization and offering expenses that we incur exceed 15% of the gross proceeds from any public offering. From May 7, 2021 through December 31, 2022, organizational and offering costs incurred by our advisor were not significant.

*Contingent Acquisition Fee and Contingent Financing Fee.* Pursuant to our advisory agreement that was in effect until May 7, 2021, if our advisor was terminated within the first 10 years of operations for any reason other than the advisor's fraud, gross negligence or willful misconduct, our advisor would receive a contingent acquisition fee and a contingent financing fee. If the Amended and Restated Advisory Agreement is terminated other than for cause (or non-renewal or termination by our advisor), the contingent acquisition fees and contingent financing fees provided for in our prior advisory agreement will be due and payable in an amount equal to approximately $22.0 million (if the termination occurs in year one) reduced by 10% each year thereafter.

*Acquisition Expense Reimbursement.* Subject to limitations in our charter, our advisor will be reimbursed for all out-of-pocket expenses incurred in connection with the selection and acquisition of real estate assets, whether or not the acquisition is consummated. Acquisition expenses reimbursed to our advisor during the years ended December 31, 2022 and December 31, 2021 were not significant, as we have generally incurred and paid such expenses directly.

*Asset Management Fee.* Pursuant to our advisory agreement that was in effect until May 7, 2021, our advisor received an annual asset management fee, paid monthly, of 1.25% of the gross book value of our assets. We incurred gross asset management fees of $1.2 million for the period from January 1, 2021 through May 7, 2021.

Pursuant to the Amended and Restated Advisory Agreement, our advisor receives a monthly asset management fee equal to 0.0625% of the gross asset value or GAV of CROP (subject to a cap of 0.125% of the net asset value or NAV of CROP), before giving effect to any accruals (related to the month for which the asset management fee is being calculated) for the asset management fee, distribution fees in connection with a securities offering, the Performance Allocation (as defined in the CROP Partnership Agreement and discussed below under "Operating Partnership Agreement") or any distributions. The GAV and NAV of CROP are determined in accordance with the valuation guidelines adopted by our board of directors and reflective of the ownership interest held by CROP in such gross assets. If we own assets other than through CROP, we will pay a corresponding fee to our advisor. From May 7, 2021 through December 31, 2021, and for the year ended December 31, 2022, we incurred asset management fees of $6.9 million and $17.8 million, respectively.

*Other Fees and Reimbursable Expenses*. Pursuant to our advisory agreement that was in effect until May 7, 2021, we reimbursed our advisor or its affiliates for all actual expenses paid or incurred by our advisor or its affiliates in connection with the services provided to us; provided, however, that we did not reimburse our advisor or its affiliates for salaries, wages and related benefits of personnel who performed investment advisory services for us or served as our executive officers. In addition, subject to the approval of our board of directors, we reimbursed our advisor or its affiliates for costs and fees associated with providing services to us that we would otherwise engage a third party to provide. Reimbursable company operating expenses to our advisor or its affiliates were $0.3 million for the period from January 1, 2021 through May 7, 2021.

Pursuant to the Amended and Restated Advisory Agreement, subject to the limitations on total operating expenses described below, our advisor is entitled to reimbursement of all costs and expenses incurred by it or its affiliates on our behalf, provided that our advisor is responsible for the expenses related to any and all of our advisor's personnel who provide investment advisory services pursuant to the Amended and Restated Advisory Agreement (including, without limitation, each of our executive officers and any directors who are also directors, officers or employees of our advisor or any of its affiliates), including, without limitation, salaries, bonuses and other wages, payroll taxes and the cost of employee benefit plans of such personnel, and costs of insurance with respect to such personnel; provided that we will be responsible for the personnel costs of our employees even if they are also directors or officers of our advisor or any of its affiliates except as provided for in the Reimbursement and Cost Sharing Agreement described below. We had no reimbursable company operating expenses to our advisor or its affiliates under the Amended and Restated Advisory Agreement for the year ended December 31, 2022.

Our advisor is required to reimburse us the amount by which our aggregate total operating expenses for the four consecutive fiscal quarters then ended exceed the greater of 2% of our average invested assets or 25% of our net income, unless our conflicts committee has determined that such excess expenses were justified based on unusual and non-recurring factors. "Average invested assets" means the average monthly book value of our assets during the 12-month period before deducting

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depreciation, bad debts or other non-cash reserves. "Total operating expenses" means all expenses paid or incurred by us that are in any way related to our operation, including advisory fees, but excluding (i) the expenses of raising capital to the extent paid by us such as organization and offering expenses, legal, audit, accounting, underwriting, brokerage, listing, registration and other fees, printing and other such expenses and taxes incurred in connection with the issuance, distribution, transfer, registration and stock exchange listing of our stock, (ii) interest payments, (iii) taxes, (iv) non-cash expenditures such as depreciation, amortization and bad debt reserves; (v) reasonable incentive fees based on the gain from the sale of our assets and (vi) acquisition fees, acquisition expenses (including expenses relating to potential investments that we do not close), disposition fees on the resale of property and other expenses connected with the acquisition, disposition and ownership of real estate interests, loans or other property (other than disposition fees on the sale of assets other than real property), including the costs of foreclosure, insurance premiums, legal services, maintenance, repair and improvement of property. Our conflicts committee determined that the relationship of our total operating expenses and our net assets was justified for each of the four consecutive fiscal quarters ending March 31, June 30, September 30 and December 31, 2021 and 2022 and approved total operating expenses in excess of the operating expense reimbursement obligation in each of these periods. For the fiscal year ended December 31, 2022, our total operating expenses were 2.8% and (191.9)% of each of our average invested assets and our net income, respectively.

*Operating Partnership Agreement*

*Performance Allocation.* In addition to the compensation payable and expenses reimbursed to our advisor pursuant to the Amended and Restated Advisory Agreement, an affiliate of our advisor, as the "Special Limited Partner" is entitled to receive a 12.5% promotional interest, subject to a 5% hurdle and certain limitations, under the terms of the amended and restated limited partnership agreement of CROP dated May 7, 2021, as further amended and restated, as described below. As of December 31, 2021, we had accrued $51.8 million for the Performance Allocation (as defined below), which was paid in cash on January 31, 2022. As of December 31, 2022, we had accrued $20.3 million for the Performance Allocation, which was paid in cash on March 2, 2023.

So long as the Amended and Restated Advisory Agreement has not been terminated (including by means of non-renewal), the Special Limited Partner will be entitled to an annual distribution (the "Performance Allocation"), promptly following the end of each year (which will accrue on a monthly basis) in an amount equal to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.First, if the Total Return for the applicable period exceeds the sum of (i) the Hurdle Amount for that period and (ii) the Loss Carryforward Amount (any such excess, "Excess Profits"), 100% of such Excess Profits until the total amount allocated to the Special Limited Partner equals 12.5% of the sum of (A) the Hurdle Amount for that period and (B) any amount allocated to the Special Limited Partner pursuant to this clause; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.Second, to the extent there are remaining Excess Profits, 12.5% of such remaining Excess Profits.

For purposes of this section:

"Hurdle Amount" refers to, for any period during a calendar year, an amount that results in a 5% annualized internal rate of return on the net asset value of the Participating Partnership Units outstanding at the beginning of the then-current calendar year (but for the year 2021, beginning as of May 7, 2021) and all Participating Partnership Units issued since the beginning of the applicable calendar year (but for the year 2021, beginning as of May 7, 2021), taking into account the timing and amount of all distributions accrued or paid (without duplication) on all such Participating Partnership Units and all issuances of Participating Partnership Units over the period and calculated in accordance with recognized industry practices. The ending net asset value of the Participating Partnership Units used in calculating the internal rate of return will be calculated before giving effect to any allocation or accrual to the Participating Performance Allocation and any applicable distribution fee expenses, provided that the calculation of the Hurdle Amount for any period will exclude any Participating Partnership Units repurchased during such period, which Participating Partnership Units will be subject to the Performance Allocation upon such repurchase as described below.

"Loss Carryforward Amount" refers to an amount initially equal to zero and which will cumulatively increase by the absolute value of any negative annual Total Return and decrease by any positive annual Total Return, provided that the Loss Carryforward Amount will at no time be less than zero, and provided further, that the calculation of the Loss Carryforward Amount will exclude the Total Return related to any Participating Partnership Units repurchased during such year, which Participating Partnership Units will be subject to the Performance Allocation upon such repurchase as described below.

"Participating Partnership Units" refers to the CROP Common Units, the CROP LTIP Units, the CROP Special LTIP Units or the CROP general partner units, and excludes any CROP preferred units.

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"Total Return" refers to for any period since the end of the prior calendar year (but for the year 2021, beginning as of May 7, 2021), the sum of: (i) all distributions accrued or paid (without duplication) on the Participating Partnership Units outstanding at the end of such period since the beginning of the then-current calendar year (but for the year 2021, beginning as of May 7, 2021) plus (ii) the change in aggregate net asset value of such Participating Partnership Units since the beginning of such year (but for the year 2021, since May 7, 2021), before giving effect to (A) changes resulting solely from the proceeds of issuances of the Participating Partnership Units, (B) any allocation or accrual to the Performance Allocation and (C) any applicable distribution fee expenses (including any payments made to the general partner for payment of such expenses). For the avoidance of doubt, the calculation of Total Return will (i) include any appreciation or depreciation in the net asset value of the Participating Partnership Units issued during the then-current calendar year (but for the year 2021, beginning as of May 7, 2021) but (ii) exclude the proceeds from the initial issuance of such Participating Partnership Units.

The following special provisions will be applicable to the Performance Allocation:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Any amount by which Total Return falls below the Hurdle Amount and that does not constitute Loss Carryforward Amount will not be carried forward to subsequent periods.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• With respect to all CROP partnership units that are repurchased at the end of any month in connection with repurchases of shares of our common stock pursuant to our share repurchase plan, the Special Limited Partner will be entitled to such Performance Allocation in an amount calculated as described above calculated in respect of the portion of the year for which such CROP partnership units were outstanding, and proceeds for any such CROP partnership unit repurchase will be reduced by the amount of any such Performance Allocation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The Performance Allocation may be payable in cash or CROP Common Units at the election of the Special Limited Partner. If the Special Limited Partner elects to receive such distributions in CROP Common Units, the Special Limited Partner will receive the number of CROP Common Units that results from dividing the Performance Allocation by the net asset value per CROP Common Unit at the time of such distribution. If the Special Limited Partner elects to receive such distributions in CROP Common Units, the Special Limited Partner may request CROP to redeem such CROP Common Units from the Special Limited Partner at any time thereafter pursuant to the Operating Partnership Agreement. Any CROP Common Units received by the Special Limited Partner will not be subject to the one-year holding requirement with respect to the exchange right in the Operating Partnership Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The measurement of the change in net asset value for the purpose of calculating the Total Return is subject to adjustment by our board of directors to account for any dividend, split, recapitalization or any other similar change in CROP's capital structure or any distributions that our board of directors deems to be a return of capital if such changes are not already reflected in CROP's net assets.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The Special Limited Partner will not be obligated to return any portion of the Performance Allocation paid due to the subsequent performance of CROP.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• In the event that the Amended and Restated Advisory Agreement is terminated (including by means of non-renewal), the Special Limited Partner will be allocated any accrued Performance Allocation with respect to all CROP partnership units as of the date of such termination.

*Dealer Manager and Managing Broker Dealer Agreements*

We have engaged Orchard Securities, LLC, ("Orchard Securities") to act as the dealer manager for the Follow-on Offering and the managing broker-dealer for the 2023 Private Offering and the 2019 Private Offering. In this capacity we pay (or paid) Orchard Securities certain underwriting compensation from the proceeds of the offerings as described below, all or a portion of which Orchard reallows (or reallowed) to wholesalers internal to our advisor and its affiliates.

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Specifically, in connection with the Follow-on Offering, we pay Orchard Securities the following upfront selling commissions, dealer manager fees and wholesaling fee in connection with the sale of shares in the primary portion of the Follow-on Offering. The upfront selling commission, dealer manager fee and wholesaling fee are a percentage of the transaction price for the shares available in the primary offering, which will generally be the prior month's NAV per share for such class. No upfront selling commissions or dealer manager fees are paid with respect to any shares sold under the distribution reinvestment plan offering.

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| | | | |
|:---|:---|:---|:---|
| | **Maximum Upfront Selling Commissions<br>as a % of Transaction Price** | **Maximum Upfront Dealer Manager Fees <br>as a % of Transaction Price** | **Maximum Upfront Wholesaling Fee <br>as a % of Transaction Price** |
| Class T shares | Up to 3.0% | 0.5% | Up to 1.85% |
| Class D shares |  |  | Up to 1.85% |
| Class I shares |  |  | Up to 1.85% |

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For the year ended December 31, 2021 and December 31, 2022, we paid $0.1 million and $5.6 million for the Follow-on Offering in selling commissions, dealer manager fees and wholesaling fees, a portion of which was reallowed to wholesalers internal to our advisor and its affiliates.

In connection with the 2019 Private Offering and the 2023 Private Offering, we paid or will pay, Orchard Securities a placement fee in an amount up to 3.0% of the gross proceeds from the sale of preferred shares in the offerings. For the year ended December 31, 2021 and December 31, 2022, we paid $2.4 million and $0.4 million in placement fees in connection with the 2019 Private Offering, all or a portion of which were reallowed to wholesalers internal to our advisor and its affiliates.

*Property Management Agreements*

For property management services, we paid CC Management, our affiliated property manager, a property management fee in an amount up to 3.5% of the annual gross revenues of the multifamily apartment communities that it managed for us. We incurred property management fees of $0.2 million for the period from January 1, 2021 through May 7, 2021.

As of the closing of the CRII Merger, property management services for our properties are performed by our employees; however, in some cases, circumstances may necessitate that we hire a local property manager to oversee the day-to-day operations at some of our properties.

*Equity Compensation to Advisor Employees*

In February and May 2021, respectively, our compensation committee approved aggregate grants of $675,000 time-based LTIP Units and $525,000 in targeted performance-based LTIP Units to certain of our executive officers and officers of our advisor, all of whom were employees of our advisor and its affiliates as equity compensation. In January 2022 and 2023, our compensation committee approved grants of LTIP Units to our executive officers and certain of our employees as equity compensation. The January 2022 grants included $1,660,553 time-based awards and $2,890,749 in targeted performance-based awards to employees of our advisor or its affiliates. The January 2023 awards included $1,556,557 time-based awards and $2,890,749 targeted performance-based awards granted to employees of our advisor or its affiliates. Each time-based award will vest approximately one-quarter of the awarded amount on January 1 in each of the four years following the grant date. The actual amount of each performance-based LTIP award will be determined at the conclusion of a three-year performance period and will depend on the internal rate of return as defined in the award agreement. The earned LTIP Units will become full vested on the first anniversary of the last day of the performance period, subject to continued employment with our advisor or its affiliates.

In April 2022 and January 2023, our compensation committee approved grants of restricted stock units with a four-year vesting schedule to our employees and employees of our advisor or its affiliates for services provided to us. Included in the amount of awards granted were $80,000 and $90,000 in restricted stock units in 2002 and 2023, respectively for employees of our advisor and its affiliates.

*2021 Mergers*

As further described below, on January 26, 2021, we entered into merger agreements to acquire each of CRII, CMRI and CMRII. All of the mergers were stock-for-stock transactions whereby each of CRII, CMRI and CMRII were merged into a

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wholly owned subsidiary of us (collectively, the "2021 Mergers"). Prior to their respective mergers, CMRI was externally managed by CC Advisors I, LLC ("CMRI Asset Manager") and CMRII was externally managed by CC Advisors II, LLC ("CMRII Asset Manager"). CMRI Asset Manager and CMRII Asset Manager were wholly owned subsidiaries of CCA. In addition, Daniel Shaeffer, Chad Christensen and Gregg Christensen were each affiliated directors of CMRI and CMRII.

Further, as a result of the merger with CRII, we acquired CRII's property management business.

*Merger with Cottonwood Residential II, Inc.* On January 26, 2021, we, CCOP, Cottonwood Communities GP Subsidiary, LLC, our wholly owned subsidiary ("Merger Sub") CRII and CROP, CRII's operating partnership, entered into an Agreement and Plan of Merger (the "CRII Merger Agreement").

Subject to the terms and conditions of the CRII Merger Agreement, (i) CRII merged with and into Merger Sub, with Merger Sub surviving as a direct, wholly owned subsidiary of us (the "CRII Company Merger") and (ii) CCOP merged with and into CROP, with CROP surviving (the "CROP Merger" and, together with the CRII Company Merger, referred to as the "CRII Merger"). On May 7, 2021, the CRII Merger was completed. At such time, the separate existence of CRII and CCOP ceased.

At the effective time of the CRII Company Merger, (i) each issued and outstanding share of CRII's common stock converted into 2.015 shares of our Class A common stock (ii) each issued and outstanding share of Series 2016 preferred stock of CRII converted into one share of our newly designated Series 2016 preferred stock, and (iii) each issued and outstanding share of Series 2017 preferred stock of CRII converted into one share of our newly designated Series 2017 preferred stock.

At the effective time of the CROP Merger, each participating partnership unit of CROP (i.e., all CROP partnership units other than preferred units) issued and outstanding immediately prior to the CROP Merger were split into 2.015 participating partnership units of CROP (the "CROP Unit Split"). Immediately following the CROP Unit Split, (i) each issued and outstanding Series 2019 preferred unit of CCOP (the "CCOP Series 2019 Preferred Units") converted into one Series 2019 preferred unit of CROP, the terms of which mirror the CCOP Series 2019 Preferred Units, (ii) each issued and outstanding LTIP Unit of CCOP (the "CCOP LTIP Units") converted into one LTIP Unit of CROP (the "CROP LTIP Units"), the terms and conditions of which mirror the CCOP LTIP Units, (iii) each issued and outstanding Special LTIP Unit of CCOP (the "CCOP Special LTIP Units") converted into one Special LTIP Unit of CROP ("CROP Special LTIP Units"), the terms and conditions of which mirror the CCOP Special LTIP Units, and (iv) except as set forth above, each issued and outstanding general partner unit and common limited partner unit of CCOP converted into one CROP Common Unit. After giving effect to the CROP Unit Split, each CROP Common Unit, general partner unit and CROP LTIP Unit issued and outstanding immediately prior to the effective time of the CROP Merger remains outstanding, and each CROP preferred unit issued and outstanding immediately prior to the effective time of the CROP Merger remains outstanding and continues to be held by Merger Sub, as the entity surviving the CRII Company Merger.

*Merger with Cottonwood Multifamily REIT I, Inc.* On January 26, 2021, we, CCOP, Merger Sub, CMRI and Cottonwood Multifamily REIT I O.P., LP ("CMRI OP") entered into an Agreement and Plan of Merger (the "CMRI Merger Agreement").

Subject to the terms and conditions of the CMRI Merger Agreement, (i) CMRI merged with and into Merger Sub, with Merger Sub surviving as our direct, wholly owned subsidiary (the "CMRI Company Merger") and (ii) CMRI OP merged with and into CROP, the successor of CCOP, with CROP surviving (the "CMRI OP Merger" and, together with the CMRI Company Merger, referred to as the "CMRI Merger"). On July 15, 2021, the CMRI Merger was completed. At such time, the separate existence of CMRI and CMRI OP ceased.

At the effective time of the CMRI Company Merger, each issued and outstanding share of CMRI's common stock converted into 1.175 shares of our Class A common stock.

At the effective time of the CMRI OP Merger, each partnership unit of CMRI OP issued and outstanding immediately prior to the CMRI OP Merger was split so that the total number of partnership units of CMRI OP then outstanding was equal to 4,904,045, which was the total number of shares of CMRI common stock that were issued and outstanding immediately prior to the CMRI OP Merger (the "CMRI OP Unit Split"). Immediately following the CMRI OP Unit Split, each partnership unit of CMRI OP converted into 1.175 CROP Common Units. Each partnership unit of CROP issued and outstanding immediately prior to the effective time of the CMRI OP Merger remains outstanding.

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*Merger with Cottonwood Multifamily REIT II, Inc.* On January 26, 2021, we, CCOP, Merger Sub, CMRII and Cottonwood Multifamily REIT II O.P., LP ("CMRII OP") entered into an Agreement and Plan of Merger (the "CMRII Merger Agreement").

Subject to the terms and conditions of the CMRII Merger Agreement, (i) CMRII merged with and into Merger Sub, with Merger Sub surviving as our direct, wholly owned subsidiary (the "CMRII Company Merger") and (ii) CMRII OP merged with and into CROP, the successor of CCOP, with CROP surviving (the "CMRII OP Merger" and, together with the CMRII Company Merger, referred to as the "CMRII Merger"). On July 15, 2021, the CMRII Merger was completed. At such time, the separate existence of CMRII and CMRII OP ceased.

At the effective time of the CMRII Company Merger, each issued and outstanding share of CMRII's common stock converted into 1.072 shares of our Class A common stock.

At the effective time of the CMRII OP Merger, each partnership unit of CMRII OP issued and outstanding immediately prior to the CMRII OP Merger was split so that the total number of partnership units of CMRII OP then outstanding was equal to 4,881,490, which was the total number of shares of CMRII common stock that were issued and outstanding immediately prior to the CMRII OP Merger (the "CMRII OP Unit Split"). Immediately following the CMRII OP Unit Split, each partnership unit of CMRII OP converted into 1.072 CROP Common Units. Each partnership unit of CROP issued and outstanding immediately prior to the effective time of the CMRII OP Merger remains outstanding.

*Additional Agreements Entered in Connection with the 2021 Mergers*

*Voting Agreement.* Concurrently with the execution of the CRII Merger Agreement, Cottonwood Residential Holdings, LLC ("CR Holdings"), High Traverse Holdings, LLC ("HT Holdings"), Daniel Shaeffer, Chad Christensen, Gregg Christensen and Eric Marlin (collectively, the "Affiliated Security Holders"), as the beneficial holders (through voting and investment power with respect to their interests in trusts or other entities they own or control) of 50 shares of CRII's voting common stock and of 2,034,378 CROP Common Units as of January 26, 2021, entered into a voting agreement with us (the "Voting Agreement"). Pursuant to the terms of the Voting Agreement, the Affiliated Security Holders delivered an irrevocable proxy to us with respect to CRII's voting common stock beneficially owned by them to vote in favor of or act by written consent to approve the CRII Merger. The shares of CRII's voting common stock held by the Affiliated Security Holders represented 100% of the issued and outstanding voting common stock of CRII and therefore, they provided the required stockholder approval for the CRII Merger without the approval of any other stockholders of CRII.

In addition, the Affiliated Security Holders delivered an irrevocable proxy to us with respect to the CROP Common Units beneficially owned by them to vote in favor of or act by written consent to approve the CRII Merger, the CROP Merger and the Operating Partnership Agreement; provided that such vote would only occur following the vote in favor of the matters by holders of a majority of the outstanding CROP Common Units held by disinterested limited partners. The CROP Common Units held by the Affiliated Security Holders represented approximately 17% of the total outstanding CROP Common Units as of January 26, 2021.

*Second Amended and Restated Three-Party Agreement.* Concurrently with the execution of the CRII Merger Agreement, we entered into the Second Amended and Restated Three-Party Agreement with CROP and our advisor to amend the obligation of our advisor to pay the organization and offering expenses relating to our initial public offering on our behalf as well as provide for the entry into the Amended and Restated Advisory Agreement upon the closing of the CRII Merger. Pursuant to the Second Amended and Restated Three-Party Agreement, organization and offering costs related to our initial public offering, with the exception of any costs associated with restructuring the terms of our initial public offering following the CRII Merger, would continue to be the obligation of our advisor until the Amended and Restated Advisory Agreement was executed. Pursuant to the Amended and Restated Advisory Agreement, our advisor is no longer obligated to pay the organization and offering expenses related to our initial public offering on our behalf except (i) as set forth in the Amended and Restated Advisory Agreement, which limits our organization and offering expenses to 15% of gross proceeds in the offering, and (ii) the deferred selling commission associated with our Class TX (formerly Class T) common shares sold in the offering as currently structured will continue to be the obligation of our advisor.

*Trademark License Agreement.* We entered into a Trademark License Agreement with CROP and our advisor as of the closing of the CRII Merger. Pursuant to the Trademark License Agreement, we granted to our advisor a non-exclusive license under our rights in certain trademarks related to the Cottonwood name to use and display the trademarks solely for the purpose of our advisor performing services identified in the agreement. The Trademark License Agreement provides for the payment of compensation by our advisor to us for the use of the trademarks. The Trademark License Agreement is co-terminus with the Amended and Restated Advisory Agreement. No amounts were paid or payable under this agreement as of December 31, 2022.

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*Reimbursement and Cost Sharing Agreement.* As of the closing of the CRII Merger, Cottonwood Capital Management, Inc. ("Cottonwood Capital Management"), a wholly owned subsidiary of CROP, entered into a Reimbursement and Cost Sharing Agreement with CCA, which owns our advisor, whereby Cottonwood Capital Management will make available to CCA on an as-needed basis certain employees of Cottonwood Capital Management to the extent the employees are not otherwise occupied in providing services for us or our subsidiaries. The employees will remain employees of Cottonwood Capital Management, and Cottonwood Capital Management will be responsible for all wages, salaries and other employee benefits provided to such employees. In performing work for CCA, the employees may use office space and office supplies and equipment of Cottonwood Capital Management. CCA will reimburse Cottonwood Capital Management for CCA's allocable share of all direct and indirect costs related to the employees, including wages, salaries and other employee benefits and allocable overhead expenses. CCA will reimburse Cottonwood Capital Management for CCA's allocable costs on a quarterly basis. The Reimbursement and Cost Sharing Agreement will terminate on the earlier of (i) the one-year anniversary of the effective date of the agreement and (ii) the termination of the Amended and Restated Advisory Agreement. Thereafter, the Reimbursement and Cost Sharing Agreement may be renewed for an unlimited number of successive one-year terms upon mutual consent of the parties. On May 7, 2022, we renewed the Reimbursement and Cost Sharing Agreement effective through May 7, 2023. Cottonwood Capital Management may, at any time and upon 60 days' prior written notice to CCA, cease to make its employees available to CCA. As of December 31, 2022, we had received $93,566 of reimbursable costs under this agreement.

*CROP Tax Protection Agreement.* Concurrently with the execution of the CRII Merger Agreement, CROP and HT Holdings, an entity owned and controlled by Messrs. Shaeffer, C. Christensen, G. Christensen and Marlin, entered into the CROP Tax Protection Agreement, which became effective as of the closing of the CROP Merger. Pursuant to the CROP Tax Protection Agreement, CROP agrees to indemnify the Protected Partners against certain tax consequences of a taxable transfer of all or any portion of the Protected Properties or any interest therein, subject to certain conditions and limitations. CROP's tax obligations under the CROP Tax Protection Agreement will expire one day after the 10th anniversary of the effective date of the CROP Tax Protection Agreement, subject to certain limitations. We estimate the maximum potential liability associated with the CROP Tax Protection Agreement to be approximately $39.9 million. Although this estimate has been made based on the best judgment of our management assuming current tax rates as well as the current state of residence of indemnified parties, both of which may change in the future, no assurances can be provided that the actual amount of any indemnification obligation would not exceed this estimate.

If CROP is required to indemnify a Protected Partner under the terms of the CROP Tax Protection Agreement, the sole right of such Protected Partner is to receive from CROP a payment in an amount equal to such Protected Partner's tax liability using the highest U.S. federal income tax rate applicable to the character of the gain and state income tax rate in the state where the Protected Partner resides, such payment to be grossed up so that the net amount received after such gross up is equal to the required payment. CROP will permit the Protected Partners to guarantee up to $50.0 million in the aggregate of CROP's liabilities to avoid certain adverse tax consequences. Either CROP or the Protected Partners may elect to transfer assets or receive a distribution of assets equal to the net fair market value of the CROP Units held by the Protected Partners in full liquidation and redemption of the CROP Units held by the Protected Partners. The Protected Partners will have the right to select the assets of CROP necessary to effectuate the in-kind redemption transaction, subject to certain limitations.

For purposes of the CROP Tax Protection Agreement:

"HT Holdings Units" refers to the limited partner interests in HT Holdings which were outstanding at the effective time of the CROP Merger.

"Permitted Transferee" refers to any person who holds HT Holdings Units and who acquired such HT Holdings Units from HT Holdings or another Permitted Transferee in a permitted disposition (generally includes transfers to family members, family trusts, beneficiaries of trusts and partners or members of entities), in which such person's adjusted basis in such HT Holdings Units, as determined for U.S. federal income tax purposes, is determined, in whole or in part, by reference to the adjusted basis of HT Holdings (or such other Permitted Transferee) in such HT Holdings Units and who has notified CROP of its status as a Permitted Transferee, subject to certain conditions and limitations.

"Protected Partners" refers to HT Holdings and each Permitted Transferee.

"Protected Properties" refers to the properties owned by CROP on the effective date of the Tax Protection Agreement, including any and all replacement property received in exchange for all or any portion of the Protected Properties pursuant to Section 1031 of the Internal Revenue Code of 1986, as amended (the "Code"), Code Section 1033, any other Code provision

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that provides for the non-recognition of income or gain or any transaction pursuant to which the tax basis of such property is determined in whole or in part by reference to the tax basis of all or any portion of the Protected Properties.

No amounts were paid or payable under this agreement as of December 31, 2022.

*Amended and Restated Promissory Note of CCA and CROP.* CCA issued a $13.0 million promissory note payable to CROP dated January 1, 2021 (the "CCA Note"). The CCA Note has a 10-year term with an interest rate of 7%. The CCA Note requires monthly payments of interest only through June 30, 2021 and thereafter, monthly payments of principal and interest in the amount of $150,941.02. CCA may prepay the principal balance under the CCA Note, in whole or in part, with all interest then accrued, at any time, without premium or penalty.

The CCA Note will accelerate upon termination of the Amended and Restated Advisory Agreement to the extent of amounts then owed by CROP to our advisor thereunder. If such acceleration occurs and CROP holds the CCA Note at such time, then we may offset any termination payments payable to our advisor under the Amended and Restated Advisory Agreement by the accelerated portion of the CCA Note.

Prior to the consummation of the CROP Merger, the CCA Note distribution was effected whereby the CCA Note was distributed by CROP to the holders of CROP's participating partnership units of record immediately prior to the CROP Merger, including CRII. CRII subsequently distributed its share in the CCA Note to its common stockholders of record immediately prior to the CRII Merger.

*Offset Agreement and Allonge to CCA.* In connection with the CCA Note, our advisor and CROP entered into an Offset Agreement dated January 1, 2021, which provides that upon certain events related to the CCA Note, CROP will have the right to offset payments due to our advisor under the terms of the Amended and Restated Advisory Agreement. In particular, in the event CROP were to become obligated to pay any amounts to our advisor as a result of the termination of the Amended and Restated Advisory Agreement, then, until the CCA Note is paid in full, CROP has the right to assign all or a portion of the CCA Note to our advisor as payment for any amounts due from CROP to our advisor. The Offset Agreement terminates upon the earlier of (i) payment of the CCA Note in full and (ii) completion of the CCA Note distribution (discussed above). The CCA Note distribution was effected prior to the closing of the CRII Merger and the Offset Agreement was terminated.

As a result of the termination of the Offset Agreement, CROP and CCA entered into an agreement (the "Allonge") with the CROP unitholders and the CRII stockholders of record who received an in-kind distribution of the CCA Note in connection with the CCA Note distribution. The Allonge provides for an offset arrangement similar to the Offset Agreement but was modified to account for the fact that the CCA Note is held by the CROP unitholders and the CRII stockholders of record immediately prior to the CROP Merger and the CRII Merger.

*Cottonwood Multifamily Opportunity Fund, Inc.*

*Background.* CMOF was a Maryland corporation that was sponsored by CROP and formed to invest in multifamily development projects and/or make mezzanine loans or preferred equity investments in multifamily construction and development projects. CMOF owned investments in two development projects and one investment in a land parcel held for development, all through separate joint ventures with CROP as follows: Park Avenue (development project), Cottonwood on Broadway (development project) and Block C, a joint venture owning land held for development for two projects called Westerly and Millcreek North, with a percentage ownership interest held by CMOF as of September 27, 2022, of 76.4%, 81.2%, and 63.0%, respectively, and the balance of a majority of the remaining interest held by CROP. In addition, Daniel Shaeffer, Chad Christensen and Gregg Christensen were each officers and directors of CMOF.

*Property Management.* Cottonwood Capital Property Management II, LLC ("CCPMII"), a wholly owned subsidiary of CROP, acted as the sponsor, property manager and asset manager for CMOF. As the property manager and asset manager for CMOF, CCPMII received compensation for the acquisition, management and disposition of CMOF's assets. Total compensation paid to CCPMII as the asset manager of CMOF for the year ended December 31, 2021 was $805,538, and was $601,493 for the period from January 1, 2022 through September 27, 2022 (the closing date of the CMOF Merger, as defined below). Upon the closing of the CROP Merger, we assumed the advisory contract with CMOF. We did not receive fees from CMOF until our acquisition of CCPMII at the closing of the CROP Merger on May 7, 2021.

*Merger.* On July 8, 2022, we, CROP, Merger Sub, CMOF, and CMOF OP entered into an Agreement and Plan of Merger (the "CMOF Merger Agreement").

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Subject to the terms and conditions of the CMOF Merger Agreement (i) CMOF merged with and into Merger Sub, with Merger Sub surviving as our direct, wholly owned subsidiary (the "CMOF Company Merger") and (ii) CMOF OP merged with and into CROP, with CROP surviving (the "CMOF OP Merger" and, together with the CMOF Company Merger, the "CMOF Merger"). On September 27, 2022, the CMOF Merger was completed. At such time, the separate existence of CMOF and CMOF OP ceased.

At the effective time of the CMOF Company Merger, each issued and outstanding share of CMOF's common stock converted into 0.8669 shares of our Class A common stock.

At the effective time of the CMOF OP Merger, each partnership unit of CMOF OP issued and outstanding immediately prior to the CMOF OP Merger converted into 0.8669 CROP Common Units, including CMOF OP units held by certain of our officers and directors as described below. Each partnership unit of CROP issued and outstanding immediately prior to the effective time of the CMOF OP Merger remains outstanding.

At the time of the CMOF Merger, certain outstanding promissory notes from CMOF held directly, or indirectly through affiliate entities, by Enzio Cassinis, Adam Larson and Eric Marlin, our executive officers, each in the amount of $425,000, were repaid with cash from the Company.

In addition, immediately prior to the effective time of the CMOF OP Merger, CMOF OP acquired the outstanding residual interests in a joint venture referred to as Park Avenue and a joint venture referred to as Broadway held by certain of our executive officers and directors in exchange for an aggregate 461,023 CMOF OP partnership units. As a result of CMOF OP's acquisition of the residual interests in the joint ventures, Daniel Shaeffer, Chad Christensen, Gregg Christensen and Susan Hallenberg directly or indirectly owned 164,585, 164,585, 82,062, and 6,597 CMOF OP partnership units, respectively, at the time of the CMOF OP Merger, which were converted into CROP Common Units at the time of the CMOF OP Merger as described above.

*Investment in 33*<sup>rd</sup> *and 13*<sup>th</sup> *- Millcreek*

On October 26, 2021, we, through a wholly owned subsidiary of CROP, entered a real estate purchase contract with 33rd and 13th, LLC (the "Seller"), to purchase a multifamily development project located on 1.76 acres of land and referred to as 33rd and 13th – Millcreek in Millcreek, Utah (the "Project") for $7.2 million. The Seller was directly or indirectly owned by the following individuals who are also our executive officers: Daniel Shaeffer (11.3636%), Chad Christensen (22.7273%), Gregg Christensen (11.3636%), Glenn Rand (2.2727%), Stan Hanks (2.2727%), Susan Hallenberg (1.8182%) and Eric Marlin (1.3636%). In addition, an unaffiliated third party owned 36.3636% of the Seller and the balance was owned by non-executive employees of us or our affiliates. The purchase of the Project was approved by our conflicts committee. In addition, the purchase price of the Project was established based on an appraisal provided by an independent third-party appraisal firm. On October 29, 2021, we acquired the Project.

*Membership Interest Purchase Agreement – Sugar House Commons, LLC*

On November 1, 2021, we, through a wholly owned subsidiary of CROP, entered a Membership Interest Purchase Agreement to sell all of the membership interests of Sugar House Commons, LLC ("Windsor Court") directly or indirectly to the following individuals who are also our executive officers: Daniel Shaeffer, Chad Christensen, Gregg Christensen and Eric Marlin for $510,000. The sole asset of Sugar House Commons, LLC is a 0.72-acre parcel of land located in Salt Lake City, Utah valued at $510,000 pursuant to a recent third-party appraisal report. The sale was approved by the conflicts committee. The disposition of Windsor Court closed in the fourth quarter of 2021.

*Richmond Guaranty* 

At the closing of the CRII Merger, the Company assumed a 50% payment guarantee provided by CRII and CROP, for certain obligations of Villas at Millcreek, LLC ("Richmond Borrower") with respect to a construction loan in the amount of $53.6 million obtained in connection with the development of Richmond at Millcreek, a development project sponsored by High Traverse Development, LLC. Certain of our officers and directors own an aggregate 13.91% of Richmond Borrower. A wholly owned subsidiary of CROP receives fees from High Traverse Development, LLC related to the development of Richmond at Millcreek. Richmond Borrower expects to increase the loan amount outstanding to $60.1 million in the second quarter of 2023.

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*Alpha Mill Transactions*

On November 2, 2021, we sold TIC interests in Alpha Mill (the "Alpha Mill TIC Interests") totaling 43% to certain unaffiliated third parties through a private offering for $34.8 million. On April 7, 2022, we sold an additional 29% in Alpha Mill (while we retain a 28% interest) to certain third parties for a total purchase price of $23.3 million. One of the purchasers of the Alpha Mill TIC Interests in the April 7, 2022 sale was the Christensen Marital Trust, a trust established by the father of Chad Christensen, one of our directors and Executive Chairman, and Gregg Christensen, our Chief Legal Officer and Secretary (the "Christensen Trust"). Messrs. C. Christensen and G. Christensen are two of the beneficiaries of the Christensen Trust. The Christensen Trust purchased its interest net of selling commissions in the amount of $244,444. The Christensen Trust's interest is 10.3%, acquired at a purchase price of $8.2 million. The net proceeds received by us for the sale of the shares to the Christensen Trust were the same as what we received from unaffiliated third parties.

On January 24, 2023 we launched a tender offer to investors in Alpha Mill TIC interests, including the Christensen Trust, pursuant to which we intend to acquire some or all of the outstanding Alpha Mill TIC interests in exchange for CROP Units at a tender price based on the December 31, 2022 appraised value for Alpha Mill utilized in the Company's NAV procedures and the December 31, 2022 NAV of the CROP Units.

*APT Cowork, LLC*

APT Cowork, LLC ("APT") is an entity formed to engage in the business of converting unused common space in multifamily apartment communities or retail space to revenue producing co-working space. Our officers and directors have a direct or indirect ownership interest in APT as follows: Glenn Rand (21.49%), Daniel Shaeffer (21.46%), Chad Christensen (21.46%), Gregg Christensen (8.89%), Eric Marlin (6.71%), Enzio Cassinis (5.25%), Adam Larson (2.81%), Susan Hallenberg (2.18%), Paul Fredenberg (1.83%), and Stan Hanks (1.06%). We, through our subsidiaries, have entered the following agreements with APT.

*Reimbursement and Cost Sharing Agreement.* We, through Cottonwood Capital Management, our taxable REIT subsidiary and a wholly owned subsidiary of CROP, have entered into a Reimbursement and Cost Sharing Agreement effective as of January 1, 2023, pursuant to which we will make certain employees available to APT to the extent they are not otherwise occupied in providing services to us and in exchange APT will reimburse us its allocable share of all direct and indirect costs related to the employees utilized by APT. Under the terms of the agreement, for any annual period, the amount of reimbursement pursuant to the agreement will not exceed $120,000. In addition, the agreement has a one-year term, but may be renewed for an unlimited number of successive one-year terms. No amounts were reimbursed under the cost sharing agreement during the year ended December 31, 2022.

*Coworking Space Design Agreement.* On August 9, 2022, our conflicts committee approved a form of Coworking Space Design Agreement to be entered by and between the property-owning limited liability company ("Landlord"), which will be a subsidiary of CROP, and APT. The form of agreement provides the terms on which APT may design and upgrade the amenities for the common areas at certain of our multifamily properties. The Coworking Space Design Agreement provides that in exchange for advising on coworking improvements at Landlord's property, Landlord will pay APT a one-time design and project management fee of $60,000, which may be increased up to $75,000 depending on the scope of the project. We have entered a Coworking Space Design Agreement with respect to twelve of our properties and expect to enter Coworking Space Design Agreements for an additional 13 of our properties over the next twelve months. For the year ended December 31, 2022, we paid or incurred fees to APT totaling $1,833,275 pursuant to the Coworking Space Design Agreement.

*Services Agreement.* On November 7, 2022, our conflicts committee approved a form of Services Agreement to be entered by and between Cottonwood Capital Management and APT. The form of agreement provides that APT will provide the ongoing administration of coworking services at the property subject to the agreement in exchange for $10.00 per apartment unit per month. In addition, there is a revenue sharing component of the agreement which provides that APT will pay Cottonwood Capital Management 50% of coworking revenue it receives at the properties. As of December 31, 2022, we had not yet entered any Services Agreements with respect to our properties but we entered into Service Agreement with respect to 10 of our properties effective January 1, 2023 and began paying APT $27,870 per month for those ten properties. We expect to enter into agreements for an additional fifteen of our properties over the next six to 12 months. Each of the properties for which we expect to enter a Services Agreement are or will be subject to a Coworking Space Design Agreement with APT pursuant to which APT will design and upgrade the amenities for the common areas at the properties.

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*Block C and Jasper* 

*Affiliated Members.* On June 28, 2022, we, through our indirect subsidiaries, admitted entities affiliated with us and our advisor, Brickyard QOF, LLC ("Brickyard QOF") and HV Millcreek, LLC ("Millcreek," and together with Brickyard QOF, the "Affiliated Members"), as members in CW Block C, LLC ("Block C"), a development joint venture with CROP (as successor to CMOF OP), and CW Jasper, LLC ("Jasper"), a development project owned 100% by CROP. The Affiliated Members are owned directly or indirectly by Daniel Shaeffer, Chad Christensen, Gregg Christensen, Enzio Cassinis, Eric Marlin, Susan Hallenberg, Stan Hanks, Glenn Rand and Adam Larson, each of whom are our officers or directors, as well as certain employees of CROP and our advisor or its affiliates. In connection with their admission as members, the Affiliated Members made an aggregate capital contribution of $8,499,221.74 and $2,375,778.26 to Block C and Jasper, respectively. Following the admission of the Affiliated Members to Block C and Jasper, the Affiliated Members own a 21.0134% interest in Block C, with Messrs. Shaeffer, C. Christensen, G. Christensen, Cassinis, Marlin, Hanks, Rand, Larson and Ms. Hallenberg having an indirect ownership interest of 4.6273%, 10.1125%, 3.5877%, 0.4831%, 0.3342%, 0.3000%, 0.1091%, 0.2387% and 0.6767%, respectively, in Block C, alongside our 64.4906% indirect ownership interest and CROP's 14.4960% ownership interest, and a 20.1025% interest in Jasper, with Messrs. Shaeffer, C. Christensen, G. Christensen, Cassinis, Marlin, Hanks, Rand, Larson and Ms. Hallenberg having an indirect ownership interest of 4.4267%, 9.6742%, 3.4322%, 0.4621%, 0.3197%, 0.2870%, 0.1043%, 0.2284% and 0.6474% respectively, in Jasper, alongside our 79.8975% interest. The investment in the projects by the Affiliated Members was established at an amount no greater than the recent appraised value of the project, as determined by an independent third-party appraiser and approved by the conflicts committee. The Affiliated Members will participate in the economics of Block C and Jasper on the same terms and conditions as us.

*Operating Agreements.* On August 11, 2022, we amended and restated the operating agreements of Block C (the "Block C Agreement") and Jasper (the "Jasper Agreement," and together with the Block C Agreement, the "Agreements") to reflect additional terms related to the admission of the Affiliated Members, among other things. The Block C Agreement provides that Block C QOF, a joint venture between CROP and Cottonwood Capital Management and managed by CROP ("Block C QOF"), CROP (including as successor to CMOF OP) and Brickyard QOF will act as co-managers with CROP managing the day-to-day operations of Block C. The Jasper Agreement provides that Block C QOF and Brickyard QOF will act as co-managers with Block C QOF managing the day-to-day operations of Jasper. Each of the Brickyard Agreement and the Jasper Agreement include the following terms. The unanimous consent of the managers is required for company actions, and certain major decisions, including decisions impacting mergers and whether Block C and Jasper maintain their Qualified Opportunity Fund status, which also require a majority approval of the members. In addition, after December 31, 2032, a manager may unilaterally require the company to take its development project(s) to market for sale, while the other managers of the company will have the first right of refusal to purchase the development project(s) if triggered before December 31, 2037 or the first right of offer to purchase the development project(s) if triggered on or after December 31, 2037. CROP or its affiliate are entitled to receive a development fee in an amount equal to 3% of the total development hard and soft costs for the development project(s) and CROP Property Management, LLC or its affiliate is entitled to receive a property management fee in an amount equal to 2.5% of the gross revenues of the development project(s).

*Merger and Additional Capital Contributions.* On March 21, 2023, our conflicts committee approved the merger of Jasper with and into Block C with Block C surviving the merger. Also on March 21, 2023, our conflicts committee approved an additional investment in Block C by us in the amount of up to $9.0 million with the opportunity for the Affiliated Members to participate pro rata alongside us on the same terms and conditions. The additional capital contribution to Block C was established at an amount no greater than the recent appraised value of the project, as determined by an independent third-party appraiser and approved by the conflicts committee.

*Reimbursement Policy*

For the year ended December 31, 2022, we reimbursed Daniel Shaeffer, our Chief Executive Officer and an affiliated director, $12,389 for expenses incurred by Mr. Shaeffer in connection with transportation he provided for himself and certain other officers of the Company related to approved business travel.

*Exchange of CROP Units*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*Christensen Marital Trust.* On November 7, 2022, the conflicts committee of the board of directors approved the exchange into shares of Class I common stock of the Company of 69,142.710 CROP Units held by the Christensen Marital Trust on the same terms and conditions available to unaffiliated third parties pursuant to the terms of the Operating Partnership Agreement. Upon exchange into Class I shares, the Christensen Trust may participate in the share repurchase program of the Company on the same terms and conditions as other holders.

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*Executive Officers.* On January 23, 2023, the conflicts committee of the board of directors approved the exchange into shares of Class I common stock of the Company of up to 525,423 CROP Units by the executive officers of the Company on the same terms and conditions available to unaffiliated third parties pursuant to the terms of the Operating Partnership Agreement. As approved by the conflicts committee, exchanges into Class I shares by an individual executive will be permitted up to the executive's proportionate share of the total amount approved for exchange (based on CROP Units that are eligible for exchange). No CROP Units held by executive officers were exchanged during each of the years ended December 31, 2021 or 2022.

*Repurchase of Executive Officer Shares*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On January 23, 2023, the conflicts committee of the board of directors approved an Insider Trading Policy for the Company which, among other matters, addresses the Company's policy for the repurchase of shares held by executive officers of the Company. Pursuant to the policy, in order that the Company retain maximum funds available to fund repurchases for non-affiliates, repurchase requests from executive officers will not be subject to the share repurchase program of the Company. Notwithstanding the foregoing, subject to the conditions discussed below, repurchase requests from executive officers will be considered on a monthly basis with the same pricing and similar procedures as applicable to the share repurchase program. Repurchase requests by executive officers will be subject to a quarterly review and approval by the conflicts committee, and each executive officer may submit no more than 25% of the total amount of shares exchanged from CROP Units per quarter. No shares held by executive officers were repurchased during each of the years ended December 31, 2021 or 2022.

*Lease Assignment*

We, through Cottonwood Capital Management, entered a Third Amendment & Partial Assignment of Office Lease Agreement with Sandlot Holdings, LLC and CCA pursuant to which CCA assigned to Cottonwood Capital Management all lease rights and obligations with respect to the principal offices of the Company at Suite 250, 1245 East Brickyard Road in Salt Lake City, Utah, along with a storage unit on the plaza level, effective January 1, 2022.

*Currently Proposed Transactions*

Other than as described above, there are no currently proposed material transactions with related persons other than those covered by the terms of the agreements described above.

**Item 14. Principal Accounting Fees and Services**

**Independent Auditors** 

During the years ended December 31, 2022 and 2021, KPMG LLP served as our independent auditor.

**Audit and Non-Audit Fees** 

Aggregate fees that we were billed for the fiscal years ended December 31, 2022 and 2021 by our independent registered public accounting firm, KPMG, were as follows (in thousands):

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| | | |
|:---|:---|:---|
| | **For the Year Ended December 31,** | **For the Year Ended December 31,** |
| | **2022** | **2021** |
| Audit fees <sup>(a)</sup> | $843 | $925 |
| Audit-related fees |  |  |
| Tax fees |  |  |
| All other fees |  |  |
| Total | $843 | $925 |
| <sup>(a)</sup> Audit fees include amounts billed to us related to annual financial statement audit work, quarterly financial statement reviews and review of SEC registration statements.  | <sup>(a)</sup> Audit fees include amounts billed to us related to annual financial statement audit work, quarterly financial statement reviews and review of SEC registration statements.  | <sup>(a)</sup> Audit fees include amounts billed to us related to annual financial statement audit work, quarterly financial statement reviews and review of SEC registration statements.  |

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The Audit Committee of our Board of Directors was advised that there were no services provided by KPMG that were unrelated to the audit of the annual fiscal year-end financial statements and the review of interim financial statements that could impair KPMG from maintaining its independence as our independent auditor.

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**Audit Committee Pre-Approval Policies and Procedures**

In order to ensure that the provision of such services does not impair the independent registered public accounting firm's independence, the audit committee charter imposes a duty on the audit committee to pre-approve all auditing services performed for us by our independent registered public accounting firm, as well as all permitted non-audit services. In determining whether or not to pre-approve services, the audit committee considers whether the service is a permissible service under the rules and regulations promulgated by the SEC. The audit committee may, in its discretion, delegate to one or more of its members the authority to pre-approve any audit or non-audit services to be performed by our independent registered public accounting firm, provided any such approval is presented to and approved by the full audit committee at its next scheduled meeting.

All services rendered KPMG for the years ended December 31, 2022 and 2021 were pre-approved in accordance with the policies and procedures described above.

**Part IV**

**Item 15. Exhibits, Financial Statement Schedules**

(a)(1) Financial Statements

See the accompanying Index to Financial Statement at page <u>[F-](#idee5e1a1e23d41889d4214c8b88222aa_82)[1](#idee5e1a1e23d41889d4214c8b88222aa_82)</u> of this report.

(a)(2) Financial Statement Schedules

Schedule III - Real Estate and Accumulated Depreciation is included at page <u>[F-](#idee5e1a1e23d41889d4214c8b88222aa_154)[33](#idee5e1a1e23d41889d4214c8b88222aa_154)</u> of this report.

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(a)(3) Exhibits

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| | |
|:---|:---|
| **Exhibit Number** | **Exhibit Description** |
| 2.1 | <u>[Agreement and Plan of Merger by and among the Company Cottonwood Communities O.P., LP, Cottonwood Communities GP Subsidiary, LLC, Cottonwood Residential O.P., LP and Cottonwood Residential II, Inc. dated as of January 26, 2021 (incorporated by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K filed February 1, 2021)](http://www.sec.gov/Archives/edgar/data/1692951/000114036121002949/nt10019365x1_ex2-1.htm)</u> |
| 2.2 | <u>[Agreement and Plan of Merger by and among the Company, Cottonwood Communities O.P, LP, Cottonwood Communities GP Subsidiary, LLC, Cottonwood Multifamily REIT I O.P., LP and Cottonwood Multifamily REIT I, Inc. dated as of January 26, 2021 (incorporated by reference to Exhibit 2.2 to the Company's Current Report on Form 8-K filed February 1, 2021)](http://www.sec.gov/Archives/edgar/data/1692951/000114036121002949/nt10019365x1_ex2-2.htm)</u> |
| 2.3 | <u>[Agreement and Plan of Merger by and among the Company, Cottonwood Communities O.P., LP, Cottonwood Communities GP Subsidiary, LLC, Cottonwood Multifamily REIT II O.P., LP and Cottonwood Multifamily REIT II, Inc. dated as of January 26, 2021 (incorporated by reference to Exhibit 2.3 to the Company's Current Report on Form 8-K filed February 1, 2021)](http://www.sec.gov/Archives/edgar/data/1692951/000114036121002949/nt10019365x1_ex2-3.htm)</u> |
| 2.4 | <u>[Agreement and Plan of Merger dated July 8, 2022, by and among CCI, Merger Sub, CROP, CMOF, and CMOF OP (incorporated by reference to Exhibit 2.1 to CCI's Current Report on Form 8-K filed July 13, 2022)](http://www.sec.gov/Archives/edgar/data/1692951/000119312522193007/d378994dex21.htm)</u> |
| 3.1 | <u>[Articles of Amendment and Restatement (incorporated by reference to Exhibit 3.1 to the Company's Registration Statement on Form S-11 (No. 333-215272) filed June 27, 2018)](http://www.sec.gov/Archives/edgar/data/1692951/000119312518204294/d574119dex31.htm)</u> |
| 3.2 | <u>[Bylaws (incorporated by reference to Exhibit 3.2 to the Company's Registration Statement on Form S-11 (No. 333-215272) filed December 22, 2016)](http://www.sec.gov/Archives/edgar/data/1692951/000119312516802208/d275505dex32.htm)</u> |
| 3.3 | <u>[Articles Supplementary - Class A Common Stock (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed August 19, 2019)](http://www.sec.gov/Archives/edgar/data/1692951/000169295119000031/cci-articlessupplementarya.htm)</u>  |
| 3.4 | <u>[Articles Supplementary - Class T Common Stock (incorporated by reference to Exhibit 3.2 to the Company's Current Report on Form 8-K filed August 19, 2019)](http://www.sec.gov/Archives/edgar/data/1692951/000169295119000031/cci-articlessupplementaryt.htm)</u> |
| 3.5 | <u>[Articles of Amendment (incorporated by reference to Exhibit 3.3 to the Company's Current Report on Form 8-K filed August 19, 2019)](http://www.sec.gov/Archives/edgar/data/1692951/000169295119000031/cci-articlesofamendmentaug.htm)</u> |
| 3.6 | <u>[Articles Supplementary - Preferred Stock (incorporated by reference to Exhibit 3.6 to the Company's Quarterly Report on Form 10-Q filed November 13, 2019)](http://www.sec.gov/Archives/edgar/data/1692951/000169295119000038/articlessupplpreferredstock.htm)</u> |
| 3.7 | <u>[Articles Supplementary for the Series 2019 Preferred Stock (incorporated by reference to Exhibit 3.3 to the Company's Current Report on Form 8-K filed April 2, 2021)](http://www.sec.gov/Archives/edgar/data/0001692951/000169295121000011/exhibit33-articlessuppleme.htm)</u> |
| 3.8 | <u>[Articles of Amendment for the Class TX shares of common stock (incorporated by reference to Exhibit 3.4 to the Company's Current Report on Form 8-K filed April 2, 2021)](http://www.sec.gov/Archives/edgar/data/0001692951/000169295121000011/exhibit34-articlessuppleme.htm)</u> |
| 3.9 | <u>[Articles Supplementary for the Class D, Class I and Class T shares of common stock (incorporated by reference to Exhibit 3.5 to the Company's Current Report on Form 8-K filed April 2, 2021)](http://www.sec.gov/Archives/edgar/data/0001692951/000169295121000011/exhibit35-articlessuppleme.htm)</u> |
| 3.10 | <u>[Articles Supplementary for the Class D shares of common stock (incorporated by reference to Exhibit 3.12 to the Company's Registration Statement on Form S-4/A (No. 333-255171) filed May 13, 2021)](http://www.sec.gov/Archives/edgar/data/1692951/000114036121017198/nt10022672x6_ex3-12.htm)</u> |
| 3.11 | <u>[Articles Supplementary for the Class D and Class T shares of common stock (incorporated by reference to Exhibit 3.1 to the Company's Post-Effective Amendment no. 7 to its Registration Statement on Form S-11 (No. 333-215272) filed August 11, 2021)](http://www.sec.gov/Archives/edgar/data/1692951/000119312521243363/d203934dex31.htm)</u> |
| 3.12 | <u>[Articles Supplementary for the Series 2019 Preferred Stock (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed October 18, 2021)](http://www.sec.gov/Archives/edgar/data/0001692951/000169295121000077/exhibit31-articlessuppleme.htm)</u> |
| 3.13 | <u>[Articles of Amendment (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed December 20, 2021)](http://www.sec.gov/Archives/edgar/data/0001692951/000169295121000117/exhibit31-cciamendmenttoch.htm)</u> |
| 3.14 | <u>[Articles Supplementary for the Series 2019 Preferred Stock (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed February 7, 2022)](http://www.sec.gov/Archives/edgar/data/0001692951/000169295122000012/exhibit31-articlessuppleme.htm)</u> |
| 3.15 | <u>[Articles Supplementary for the Series 2023 Preferred Stock of Cottonwood Communities, Inc. (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed December 16, 2022)](http://www.sec.gov/Archives/edgar/data/1692951/000169295122000124/exhibit31-articlessuppleme.htm)</u> |
| 4.1 | <u>[Form of Subscription Agreement (incorporated by reference to Appendix B to the prospectus included in the Company's Amendment no. 1 to the Registration Statement on Form S-11 (No. 333-258754) filed October 21, 2021)](http://www.sec.gov/Archives/edgar/data/1692951/000119312521304169/d245232ds11a.htm#toc245232_29)</u> |
| 4.2 | <u>[Statement regarding restrictions on transferability of shares of common stock (to appear on stock certificate or to be sent upon request and without charge to stockholders issued shares without certificates) (incorporated by reference to Exhibit 4.2 to the Company's Registration Statement on Form S-11 (No. 333-215272) filed June 27, 2018)](http://www.sec.gov/Archives/edgar/data/1692951/000119312518204294/d574119dex42.htm)</u> |
| 4.3 | <u>[Distribution Reinvestment Plan (incorporated by reference to Appendix A to the prospectus included in the Company's Amendment No. 1 to the Company's Registration Statement on Form S-11 (No. 333-258754) filed October 21, 2021)](http://www.sec.gov/Archives/edgar/data/1692951/000119312521304169/d245232ds11a.htm#toc245232_28)</u> |

---

------

<u>[**Table of Contents**](#idee5e1a1e23d41889d4214c8b88222aa_7)</u>

---

| | |
|:---|:---|
| 4.4\* | <u>[Description of the Company's Securities](ex44descriptionofthecompan.htm)</u> |
| 4.5 | <u>[Multiple Class Plan (incorporated by reference to Exhibit 4.1 to the Company's Post-Effective Amendment no. 7 to its Registration Statement on Form S-11 (No. 333-215272) filed August 11, 2021)](http://www.sec.gov/Archives/edgar/data/1692951/000119312521243363/d203934dex41.htm)</u> |
| 10.1 | <u>[Form of Performance-Based LTIP Unit Award Agreement (incorporated by reference to Exhibit 10.19 to the Company's Post-Effective Amendment No. 5 to the Registration Statement on Form S-11 (No. 333-215272) filed April 20, 2020)](http://www.sec.gov/Archives/edgar/data/1692951/000119312520111201/d901889dex1019.htm)</u> |
| 10.2 | <u>[Form of Time-Based LTIP Unit Award Agreement (incorporated by reference to Exhibit 10.20 to the Company's Post-Effective Amendment No. 5 to the Registration Statement on Form S-11 (No. 333-215272) filed April 20, 2020)](http://www.sec.gov/Archives/edgar/data/1692951/000119312520111201/d901889dex1020.htm)</u> |
| 10.3 | <u>[Trademark License Agreement dated May 7, 2021, by and among the Company, Cottonwood Residential O.P., LP and CC Advisors III, LLC (incorporated by reference to Exhibit 10.11 to the Company's Registration Statement on Form S-4/A (No. 333-255171) filed May 12, 2021)](http://www.sec.gov/Archives/edgar/data/1692951/000114036121016893/nt10022672x4_ex10-11.htm)</u> |
| 10.4 | <u>[Reimbursement and Cost Sharing Agreement dated May 7, 2021, by and among Cottonwood Capital Management, Inc. and Cottonwood Communities Advisors, LLC (incorporated by reference to Exhibit 10.10 to the Company's Registration Statement on Form S-4/A (No. 333-255171) filed May 12, 2021)](http://www.sec.gov/Archives/edgar/data/1692951/000114036121016893/nt10022672x4_ex10-10.htm)</u> |
| 10.5 | <u>[Master Credit Facility Agreement by and among CW Apartments, LLC, CW Alpha Mills Apartments, LLC, CW Westside Apartments, LLC and Berkadia Commercial Mortgage, LLC dated August 3, 2016 (incorporated by reference to Exhibit 1U-6 to Cottonwood Multifamily REIT I, Inc.'s Current Report on Form 1-U (No. 24R-00023) filed August 9, 2016)](http://www.sec.gov/Archives/edgar/data/1646910/000119312516676574/d239390dex1u6matctrct.htm)</u> |
| 10.6 | <u>[Tax Protection Agreement between Cottonwood Residential O.P., LP and High Traverse Holdings, LLC dated January 26, 2021 (incorporated by reference to Exhibit 10.9 to the Company's Registration Statement on Form S-4/A (No. 333-255171) filed May 12, 2021)](http://www.sec.gov/Archives/edgar/data/1692951/000114036121016893/nt10022672x4_ex10-9.htm)</u> |
| 10.7 | <u>[Form of Performance-Based CROP LTIP Unit Award Agreement (incorporated by reference to Exhibit 10.13 to the Company's Registration Statement on Form S-4/A (No. 333-255171) filed May 12, 2021)](http://www.sec.gov/Archives/edgar/data/1692951/000114036121016893/nt10022672x4_ex10-13.htm)</u> |
| 10.8 | <u>[Form of Time-Based CROP LTIP Unit Award Agreement (incorporated by reference to Exhibit 10.14 to the Company's Registration Statement on Form S-4/A (No. 333-255171) filed May 12, 2021)](http://www.sec.gov/Archives/edgar/data/1692951/000114036121016893/nt10022672x4_ex10-14.htm)</u> |
| 10.9 | <u>[Sixth Amended and Restated Limited Partnership Agreement of Cottonwood Residential O.P., LP dated July 15, 2021 (incorporated by reference to Exhibit 10.11 to the Company's Post-Effective Amendment no. 6 to its Registration Statement on Form S-11 (No. 333-215272) filed August 2, 2021)](http://www.sec.gov/Archives/edgar/data/0001692951/000119312521231841/d198995dex1011.htm)</u> |
| 10.10 | <u>[Dealer Manager Agreement (including the form of Soliciting Dealer Agreement) by and between the Company and Orchard Securities, LLC dated November 4, 2021 (incorporated by reference to Exhibit 1.1 to the Company's Current Report on Form 8-K filed November 10, 2021)](http://www.sec.gov/Archives/edgar/data/0001692951/000169295121000089/exhibit11-dealermanageragr.htm)</u> |
| 10.11 | <u>[First Amendment to the Sixth Amended and Restated Limited Partnership Agreement of Cottonwood Residential O.P., LP dated October 20, 2021 (incorporated by reference to Exhibit 10.15 to the Company's Amendment no. 1 to the Registration Statement on Form S-11 (No. 333-258754) filed October 21, 2021)](http://www.sec.gov/Archives/edgar/data/1692951/000119312521304169/d245232dex1015.htm)</u> |
| 10.12 | <u>[Cottonwood Communities, Inc. 2022 Equity Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company's Registration Statement on Form S-8 (No. 333-263982) filed March 30, 2022)](http://www.sec.gov/Archives/edgar/data/1692951/000119312522089864/d331998dex101.htm)</u> |
| 10.13 | <u>[Second Amendment to the Sixth Amended and Restated Limited Partnership Agreement of Cottonwood Residential O.P., LP dated as of January 1, 2022 and effective as of November 12, 2021 (incorporated by reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q filed May 12, 2022)](http://www.sec.gov/Archives/edgar/data/1692951/000169295122000050/ex102-secondamendmenttosix.htm)</u> |
| 10.14 | <u>[Third Amendment to the Sixth Amended and Restated Limited Partnership Agreement of Cottonwood Residential O.P., LP entered into effective as of February 7, 2022 (incorporated by reference to Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q filed May 12, 2022](http://www.sec.gov/Archives/edgar/data/1692951/000169295122000050/ex103-thirdamendmenttosixt.htm)</u> |
| 10.15 | <u>[Amended and Restated Advisory Agreement by and among the Company, Cottonwood Residential O.P., LP and CC Advisors III, LLC dated May 7, 2022, incorporated by reference to Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q filed May 12, 2022](http://www.sec.gov/Archives/edgar/data/1692951/000169295122000050/ex104-advisoryagreement202.htm)</u> |
| 10.16 | <u>[Renewal Agreement dated May 7, 2022 by and among Cottonwood Capital Management, Inc. and Cottonwood Communities Advisors, LLC with respect to Reimbursement and Cost Sharing Agreement dated May 7, 2021, incorporated by reference to Exhibit 10.5 to the Company's Quarterly Report on Form 10-Q filed May 12, 2022](http://www.sec.gov/Archives/edgar/data/1692951/000169295122000050/ex105-ccixreimbursementcos.htm)</u> |
| 10.17 | <u>[Second Amended and Restated Limited Liability Company Agreement of CW Block C, LLC by and among Cottonwood Block C QOF, LLC, Cottonwood Residential O.P., LP, Cottonwood Multifamily Opportunity Fund O.P., LP, Brickyard QOF, LLC and HV Millcreek, LLC effective as of August 11, 2022, and First Amendment to the Second Amended and Restated Limited Liability Company Agreement of CW Block C, LLC effective as of September 28, 2022 (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q filed November 9, 2022)](http://www.sec.gov/Archives/edgar/data/1692951/000169295122000112/ex101-cottonwoodblockcllcs.htm)</u> |
| 10.18 | <u>[Amended and Restated Limited Liability Company Agreement of CW Jasper, LLC by and among Cottonwood Block C QOF, LLC, Brickyard QOF, LLC and HV Millcreek, LLC effective as of August 11, 2022 (incorporated by reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q filed November](http://www.sec.gov/Archives/edgar/data/1692951/000169295122000112/ex102-cottonwoodjasperllca.htm)[9, 2022)](http://www.sec.gov/Archives/edgar/data/1692951/000169295122000112/ex102-cottonwoodjasperllca.htm)</u> |

---

------

<u>[**Table of Contents**](#idee5e1a1e23d41889d4214c8b88222aa_7)</u>

---

| | |
|:---|:---|
| 10.19 | <u>[Form of Coworking Space Design Agreement by and among property owning entity and APT Cowork, LLC (incorporated by reference to Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q filed November 9, 2022)](http://www.sec.gov/Archives/edgar/data/1692951/000169295122000112/ex103-formofcoworkingspace.htm)</u> |
| 10.20\* | <u>[Form Services Agreement by and between Cottonwood Capital Management, Inc. and APT Cowork, LLC](ex10ormofaptcoworkcoworkin.htm)</u> |
| 10.21\* | <u>[Fourth Amendment to the Sixth Amended and Restated Limited Partnership Agreement of Cottonwood Residential O.P., LP entered into effective as of December 1, 2022](ex1021-fourthamendmenttosi.htm)</u> |
| 10.22\* | <u>[Managing Broker-Dealer Agreement](ex1022-managingbrokerxdeal.htm)</u> |
| 10.23 | <u>[Revolving Loan and Security Agreement (One Upland) between KRE JAG One Upload Owner LLC and JPMorgan Chase Bank, N.A. dated March 19, 2020 (incorporated by reference to Exhibit 10.16 to the Company's Post-Effective Amendment no. 5 to its Registration Statement on Form S-11 as filed with the SEC on April 20, 2020)](http://www.sec.gov/Archives/edgar/data/1692951/000119312520111201/d901889dex1016.htm)</u> |
| 10.24 | <u>[Promissory Note between KRE JAG One Upland Owner LLC and JPMorgan Chase Bank, N.A. dated March 19, 2020 (incorporated by reference to Exhibit 10.17 to the Company's Post-Effective Amendment no. 5 to its Registration Statement on Form S-11 as filed with the SEC on April 20, 2020)](http://www.sec.gov/Archives/edgar/data/1692951/000119312520111201/d901889dex1017.htm)</u> |
| 21.1\* | <u>[Subsidiaries of the Company](ex211q422subsidiarieslist.htm)</u> |
| 23.1\* | <u>[Consent of KPMG LLP](ex231consentofkpmgllp.htm)</u> |
| 31.1\* | <u>[Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002](ex311q422sox302ceocertific.htm)</u> |
| 31.2\* | <u>[Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002](ex312q422sox302cfocertific.htm)</u> |

| 99.1 | <u>[Share Repurchase Program Effective as of October 7, 2021 (incorporated by reference to Exhibit 99.1 to the Company's Amendment no. 1 to its Registration Statement on Form S-11 (No. 333-258754) filed October 21, 2021](http://www.sec.gov/Archives/edgar/data/1692951/000119312521304169/d245232dex991.htm)</u> |
| 101.INS\* | XBRL Instance Document |
| 101.SCH\* | XBRL Taxonomy Extension Schema |
| 101.CAL\* | XBRL Taxonomy Extension Calculation Linkbase |
| 101.DEF\* | XBRL Taxonomy Extension Definition Linkbase |
| 101.LAB\* | XBRL Taxonomy Extension Label Linkbase |
| 101.PRE\* | XBRL Taxonomy Extension Presentation Linkbase |

---

\*Filed herewith

**Item 16. Form 10-K Summary**

None.

------

<u>[**Table of Contents**](#idee5e1a1e23d41889d4214c8b88222aa_7)</u>

**SIGNATURES**

&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the requirements of Section 13 or Section 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

---

| | |
|:---|:---|
| | **COTTONWOOD COMMUNITIES, INC.** |
| March 24, 2023 | /s/ Daniel Shaeffer |
| Date | Daniel Shaeffer, Chief Executive Officer and Director |
| | (Principal Executive Officer) |

---

&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

---

| | |
|:---|:---|
| March 24, 2023 | /s/ Adam Larson |
| Date | Adam Larson, Chief Financial Officer |
|  | (Principal Financial Officer) |
| March 24, 2023 | /s/ Susan Hallenberg |
| Date | Susan Hallenberg, Chief Accounting Officer and Treasurer |
|  | (Principal Accounting Officer) |
| March 24, 2023 | /s/ Daniel Shaeffer |
| Date | Daniel Shaeffer, Chief Executive Officer and Director |
|  | (Principal Executive Officer) |
| March 24, 2023 | /s/ Chad Christensen |
| Date | Chad Christensen, Executive Chairman of the Board and Director |
| March 24, 2023 | /s/ Jonathan Gardner |
| Date | Jonathan Gardner, Independent Director |
| March 24, 2023 | /s/ John Lunt |
| Date | John Lunt, Independent Director |
| March 24, 2023 | /s/ Philip White |
| Date | Philip White, Independent Director |

---

------

<u>[**Table of Contents**](#idee5e1a1e23d41889d4214c8b88222aa_7)</u>

---

| | |
|:---|:---|
| **Index to Consolidated Financial Statements** | **Index to Consolidated Financial Statements** |
| <u>Consolidated Financial Statements</u> |  |
| &nbsp;&nbsp;<u>[Report of Independent Registered Public Accounting Firm (PCAOB ID:](#idee5e1a1e23d41889d4214c8b88222aa_85)185[)](#idee5e1a1e23d41889d4214c8b88222aa_85)</u> | <u>[F -](#idee5e1a1e23d41889d4214c8b88222aa_85)[2](#idee5e1a1e23d41889d4214c8b88222aa_85)</u> |
| &nbsp;&nbsp;<u>[Consolidated Balance Sheets as of December 31, 2022 and 2021](#idee5e1a1e23d41889d4214c8b88222aa_88)</u> | <u>[F -](#idee5e1a1e23d41889d4214c8b88222aa_88)[3](#idee5e1a1e23d41889d4214c8b88222aa_88)</u> |
| &nbsp;&nbsp;<u>[Consolidated Statements of Operations for the Years Ended December 31, 2022 and 2021](#idee5e1a1e23d41889d4214c8b88222aa_91)</u> | <u>[F -](#idee5e1a1e23d41889d4214c8b88222aa_91)[4](#idee5e1a1e23d41889d4214c8b88222aa_91)</u> |
| &nbsp;&nbsp;<u>[Consolidated Statements of Stockholders' Equity for the Years Ended December 31, 2022 and 2021](#idee5e1a1e23d41889d4214c8b88222aa_94)</u> | <u>[F -](#idee5e1a1e23d41889d4214c8b88222aa_94)[5](#idee5e1a1e23d41889d4214c8b88222aa_94)</u> |
| &nbsp;&nbsp;<u>[Consolidated Statements of Cash Flows for the Years Ended December 31, 2022 and 2021](#idee5e1a1e23d41889d4214c8b88222aa_97)</u> | <u>[F -](#idee5e1a1e23d41889d4214c8b88222aa_97)[6](#idee5e1a1e23d41889d4214c8b88222aa_97)</u> |
| &nbsp;&nbsp;<u>[Notes to Consolidated Financial Statements](#idee5e1a1e23d41889d4214c8b88222aa_100)</u> | <u>[F -](#idee5e1a1e23d41889d4214c8b88222aa_100)[9](#idee5e1a1e23d41889d4214c8b88222aa_100)</u> |
| <u>Financial Statement Schedule</u> |  |
| &nbsp;&nbsp;<u>[Schedule III - Real Estate and Accumulated Depreciation](#idee5e1a1e23d41889d4214c8b88222aa_154)</u> | <u>[F -](#idee5e1a1e23d41889d4214c8b88222aa_154)[33](#idee5e1a1e23d41889d4214c8b88222aa_154)</u> |
| All other schedules are omitted because they are not applicable or the required information is shown in the financial statements or notes thereto. | All other schedules are omitted because they are not applicable or the required information is shown in the financial statements or notes thereto. |

---

F - 1

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<u>[**Table of Contents**](#idee5e1a1e23d41889d4214c8b88222aa_7)</u>

**Report of Independent Registered Public Accounting Firm**

To the Stockholders and Board of Directors

Cottonwood Communities, Inc.:

*Opinion on the Consolidated Financial Statements*

We have audited the accompanying consolidated balance sheets of Cottonwood Communities, Inc. and subsidiaries (the Company) as of December 31, 2022 and December 31, 2021, the related consolidated statements of operations, stockholders' equity, and cash flows for each of the years in the two-year period ended December 31, 2022, and the related notes and financial statement schedule III (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and December 31, 2021, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2022, in conformity with U.S. generally accepted accounting principles.

*Basis for Opinion*

These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/KPMG LLP

We have served as the Company's auditor since 2016.

Denver, Colorado

March 24, 2023

F - 2

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<u>[**Table of Contents**](#idee5e1a1e23d41889d4214c8b88222aa_7)</u>

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| | | |
|:---|:---|:---|
| **Cottonwood Communities, Inc.** | **Cottonwood Communities, Inc.** | **Cottonwood Communities, Inc.** |
| **Consolidated Balance Sheets** | **Consolidated Balance Sheets** | **Consolidated Balance Sheets** |
| (in thousands, except share and per share data) | (in thousands, except share and per share data) | (in thousands, except share and per share data) |
|  | **December 31,** | **December 31,** |
|  | **2022** | **2021** |
| **Assets** |  |  |
| &nbsp;&nbsp;Real estate assets, net | $1697607 | $1408483 |
| &nbsp;&nbsp;Investments in unconsolidated real estate entities | 133207 | 190733 |
| &nbsp;&nbsp;Investments in real-estate related loans |  | 13035 |
| &nbsp;&nbsp;Cash and cash equivalents | 63173 | 27169 |
| &nbsp;&nbsp;Restricted cash | 32351 | 18221 |
| &nbsp;&nbsp;Other assets | 29299 | 29249 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total assets | $1955637 | $1686890 |
| **Liabilities, Equity, and Noncontrolling Interests** |  |  |
| Liabilities |  |  |
| &nbsp;&nbsp;Mortgage notes and revolving credit facility, net | $1000137 | $642107 |
| &nbsp;&nbsp;Construction loans, net | 95327 | 116656 |
| &nbsp;&nbsp;Preferred stock, net | 121390 | 245268 |
| &nbsp;&nbsp;Unsecured promissory notes, net | 42953 | 43543 |
| &nbsp;&nbsp;Performance participation allocation due to affiliate | 20320 | 51761 |
| &nbsp;&nbsp;Accounts payable, accrued expenses and other liabilities | 65611 | 46886 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total liabilities | 1345738 | 1146221 |
| Commitments and contingencies (Note 12) |  |  |
| Equity and noncontrolling interests |  |  |
| Stockholders' equity |  |  |
| &nbsp;&nbsp;Common stock, Class T shares, $0.01 par value, 275,000,000 shares authorized; 4,815,122 shares issued and outstanding at December 31, 2022. No Class T shares were outstanding at December 31, 2021. | 48 |  |
| &nbsp;&nbsp;Common stock, Class D shares, $0.01 par value, 275,000,000 shares authorized; 64,673 shares issued and outstanding at December 31, 2022. No Class D shares were outstanding at December 31, 2021. | 1 |  |
| &nbsp;&nbsp;Common stock, Class I shares, $0.01 par value, 275,000,000 shares authorized; 3,861,049 and 151,286 shares issued and outstanding at December 31, 2022 and 2021, respectively. | 39 | 2 |
| &nbsp;&nbsp;Common stock, Class A shares, $0.01 par value, 125,000,000 shares authorized; 26,604,864 and 23,445,174 shares issued and outstanding at December 31, 2022 and 2021, respectively. | 266 | 234 |
| &nbsp;&nbsp;Common stock, Class TX shares, $0.01 par value, 50,000,000 shares authorized; zero and 17,520 shares issued and outstanding at December 31, 2022 and 2021, respectively. |  |  |
| &nbsp;&nbsp;&nbsp;Additional paid-in capital | 427997 | 252035 |
| &nbsp;&nbsp;&nbsp;Accumulated distributions | (38049) | (17273) |
| &nbsp;&nbsp;&nbsp;Accumulated deficit | (71513) | (55864) |
| &nbsp;&nbsp;&nbsp;&nbsp;Total stockholders' equity | 318789 | 179134 |
| Noncontrolling interests |  |  |
| &nbsp;&nbsp;Limited partners | 258679 | 291258 |
| &nbsp;&nbsp;Partially owned entities | 32431 | 70277 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total noncontrolling interests | 291110 | 361535 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total equity and noncontrolling interests | 609899 | 540669 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total liabilities, equity and noncontrolling interests | $1955637 | $1686890 |
| *See accompanying notes to consolidated financial statements* | *See accompanying notes to consolidated financial statements* | *See accompanying notes to consolidated financial statements* |

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F - 3

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<u>[**Table of Contents**](#idee5e1a1e23d41889d4214c8b88222aa_7)</u>

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| | | |
|:---|:---|:---|
| **Cottonwood Communities, Inc.** | **Cottonwood Communities, Inc.** | **Cottonwood Communities, Inc.** |
| **Consolidated Statements of Operations** | **Consolidated Statements of Operations** | **Consolidated Statements of Operations** |
| (in thousands, except share and per share data) | (in thousands, except share and per share data) | (in thousands, except share and per share data) |
|  | **Year Ended December 31,** | **Year Ended December 31,** |
|  | **2022** | **2021** |
| **Revenues** |  |  |
| &nbsp;&nbsp;Rental and other property revenues | $123627 | $73129 |
| &nbsp;&nbsp;Property management revenues | 11131 | 8597 |
| &nbsp;&nbsp;Other revenues | 3544 | 1455 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total revenues | 138302 | 83181 |
| **Operating expenses** |  |  |
| &nbsp;&nbsp;Property operations expense | 44846 | 27759 |
| &nbsp;&nbsp;Property management expense | 17839 | 11302 |
| &nbsp;&nbsp;Asset management fee | 17786 | 8052 |
| &nbsp;&nbsp;Performance participation allocation | 20320 | 51761 |
| &nbsp;&nbsp;Depreciation and amortization | 54595 | 63397 |
| &nbsp;&nbsp;General and administrative expenses | 11876 | 10211 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total operating expenses | 167262 | 172482 |
| Loss from operations | (28960) | (89301) |
| &nbsp;&nbsp;Equity in earnings (losses) of unconsolidated real estate entities | 12393 | (533) |
| &nbsp;&nbsp;Interest income | 92 | 207 |
| &nbsp;&nbsp;Interest expense | (52310) | (26954) |
| &nbsp;&nbsp;Gain on sale of real estate assets |  | 10912 |
| &nbsp;&nbsp;Gain on sale of unconsolidated real estate entities | 8129 |  |
| &nbsp;&nbsp;Promote from incentive allocation agreement | 30702 |  |
| &nbsp;&nbsp;Other income | 3883 | 2 |
| Loss before income taxes | (26071) | (105667) |
| &nbsp;&nbsp;Income tax expense | (7959) | (1238) |
| &nbsp;&nbsp;&nbsp;&nbsp;**Net loss** | (34030) | (106905) |
| Net loss attributable to noncontrolling interests: |  |  |
| &nbsp;&nbsp;Limited partners | 17594 | 58923 |
| &nbsp;&nbsp;Partially owned entities | 787 | 4066 |
| &nbsp;&nbsp;&nbsp;&nbsp;**Net loss attributable to common stockholders** | $(15649) | $(43916) |
| Weighted-average common shares outstanding | 29274236 | 17603981 |
| Net loss per common share - basic and diluted | $(0.53) | $(2.49) |
| *See accompanying notes to consolidated financial statements* | *See accompanying notes to consolidated financial statements* | *See accompanying notes to consolidated financial statements* |

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F - 4

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<u>[**Table of Contents**](#idee5e1a1e23d41889d4214c8b88222aa_7)</u>

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| | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| **Cottonwood Communities, Inc.** | **Cottonwood Communities, Inc.** | **Cottonwood Communities, Inc.** | **Cottonwood Communities, Inc.** | **Cottonwood Communities, Inc.** | **Cottonwood Communities, Inc.** | **Cottonwood Communities, Inc.** | **Cottonwood Communities, Inc.** | **Cottonwood Communities, Inc.** | **Cottonwood Communities, Inc.** | **Cottonwood Communities, Inc.** | **Cottonwood Communities, Inc.** | **Cottonwood Communities, Inc.** |
| **Consolidated Statements of Stockholders' Equity** | **Consolidated Statements of Stockholders' Equity** | **Consolidated Statements of Stockholders' Equity** | **Consolidated Statements of Stockholders' Equity** | **Consolidated Statements of Stockholders' Equity** | **Consolidated Statements of Stockholders' Equity** | **Consolidated Statements of Stockholders' Equity** | **Consolidated Statements of Stockholders' Equity** | **Consolidated Statements of Stockholders' Equity** | **Consolidated Statements of Stockholders' Equity** | **Consolidated Statements of Stockholders' Equity** | **Consolidated Statements of Stockholders' Equity** | **Consolidated Statements of Stockholders' Equity** |
| (in thousands, except share data) | (in thousands, except share data) | (in thousands, except share data) | (in thousands, except share data) | (in thousands, except share data) | (in thousands, except share data) | (in thousands, except share data) | (in thousands, except share data) | (in thousands, except share data) | (in thousands, except share data) | (in thousands, except share data) | (in thousands, except share data) | (in thousands, except share data) |
|  | **Cottonwood Communities, Inc. Stockholders' Equity** | **Cottonwood Communities, Inc. Stockholders' Equity** | **Cottonwood Communities, Inc. Stockholders' Equity** | **Cottonwood Communities, Inc. Stockholders' Equity** | **Cottonwood Communities, Inc. Stockholders' Equity** | **Cottonwood Communities, Inc. Stockholders' Equity** | **Cottonwood Communities, Inc. Stockholders' Equity** | **Cottonwood Communities, Inc. Stockholders' Equity** | **Cottonwood Communities, Inc. Stockholders' Equity** | **Noncontrolling interests** | **Noncontrolling interests** |  |
|  | **Par Value** | **Par Value** | **Par Value** | **Par Value** | **Par Value** | **Additional Paid-In Capital** | **Accumulated Distributions** | **Accumulated Deficit** | **Total Stockholders' Equity** | **Limited Partners** | **Partially Owned Entities** | **Total Equity and Noncontrolling Interests** |
|  | **Common Stock Class T** | **Common Stock Class D** | **Common Stock Class I** | **Common Stock Class A** | **Common Stock Class TX** | **Additional Paid-In Capital** | **Accumulated Distributions** | **Accumulated Deficit** | **Total Stockholders' Equity** | **Limited Partners** | **Partially Owned Entities** | **Total Equity and Noncontrolling Interests** |
| **Balance at December 31, 2020** | $— | $— | $— | $122 | $— | $121677 | $(7768) | $(11948) | $102083 | $— | $— | $102083 |
| &nbsp;&nbsp;Issuance of common stock |  |  | 2 |  |  | 2532 |  |  | 2534 |  |  | 2534 |
| &nbsp;&nbsp;Offering costs |  |  |  |  |  | (1705) |  |  | (1705) |  |  | (1705) |
| &nbsp;&nbsp;Distribution reinvestment |  |  |  |  |  | 141 |  |  | 141 |  |  | 141 |
| &nbsp;&nbsp;Common stock/OP Units repurchased |  |  |  | (2) |  | (2624) |  |  | (2626) | (2386) |  | (5012) |
| &nbsp;&nbsp;Contributions from noncontrolling interests |  |  |  |  |  |  |  |  |  |  | 869 | 869 |
| &nbsp;&nbsp;Acquisition of noncontrolling interests |  |  |  |  |  |  |  |  |  | (1271) | (280) | (1551) |
| &nbsp;&nbsp;CRII Merger |  |  |  | 4 |  | 4654 |  |  | 4658 | 363278 | 218380 | 586316 |
| &nbsp;&nbsp;CMRI Merger |  |  |  | 58 |  | 70036 |  |  | 70094 |  | (79447) | (9353) |
| &nbsp;&nbsp;CMRII Merger |  |  |  | 52 |  | 57324 |  |  | 57376 |  | (63752) | (6376) |
| &nbsp;&nbsp;Other |  |  |  |  |  |  |  |  |  | 1570 |  | 1570 |
| &nbsp;&nbsp;Distributions to investors |  |  |  |  |  |  | (9505) |  | (9505) | (11010) | (1427) | (21942) |
| &nbsp;&nbsp;Net loss |  |  |  |  |  |  |  | (43916) | (43916) | (58923) | (4066) | (106905) |
| **Balance at December 31, 2021** |  |  | 2 | 234 |  | 252035 | (17273) | (55864) | 179134 | 291258 | 70277 | 540669 |
| &nbsp;&nbsp;Issuance of common stock | 48 | 1 | 36 |  |  | 168392 |  |  | 168477 |  |  | 168477 |
| &nbsp;&nbsp;Offering costs |  |  |  |  |  | (14376) |  |  | (14376) |  |  | (14376) |
| &nbsp;&nbsp;Distribution reinvestment |  |  |  | 1 |  | 2363 |  |  | 2364 |  |  | 2364 |
| &nbsp;&nbsp;Exchanges and transfers |  |  | 3 |  |  | 5816 |  |  | 5819 | (5818) |  | 1 |
| &nbsp;&nbsp;OP Units issued for real estate interests |  |  |  |  |  |  |  |  |  | 2930 |  | 2930 |
| &nbsp;&nbsp;CMOF Merger |  |  |  | 43 |  | 39393 |  |  | 39436 | 8273 | (49178) | (1469) |
| &nbsp;&nbsp;Common stock/OP Units repurchased |  |  | (2) | (12) |  | (26883) |  |  | (26897) | (1482) |  | (28379) |
| &nbsp;&nbsp;Contributions from noncontrolling interests |  |  |  |  |  |  |  |  |  | (210) | 16491 | 16281 |
| &nbsp;&nbsp;Other |  |  |  |  |  | 1257 |  |  | 1257 | 3670 |  | 4927 |
| &nbsp;&nbsp;Distributions to investors |  |  |  |  |  |  | (20776) |  | (20776) | (22348) | (4372) | (47496) |
| &nbsp;&nbsp;Net loss |  |  |  |  |  |  |  | (15649) | (15649) | (17594) | (787) | (34030) |
| **Balance at December 31, 2022** | $48 | $1 | $39 | $266 | $— | $427997 | $(38049) | $(71513) | $318789 | $258679 | $32431 | $609899 |
| *See accompanying notes to consolidated financial statements* | *See accompanying notes to consolidated financial statements* | *See accompanying notes to consolidated financial statements* | *See accompanying notes to consolidated financial statements* | *See accompanying notes to consolidated financial statements* | *See accompanying notes to consolidated financial statements* | *See accompanying notes to consolidated financial statements* | *See accompanying notes to consolidated financial statements* | *See accompanying notes to consolidated financial statements* | *See accompanying notes to consolidated financial statements* | *See accompanying notes to consolidated financial statements* | *See accompanying notes to consolidated financial statements* | *See accompanying notes to consolidated financial statements* |

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| | | |
|:---|:---|:---|
| **Cottonwood Communities, Inc.** | **Cottonwood Communities, Inc.** | **Cottonwood Communities, Inc.** |
| **Consolidated Statements of Cash Flows** | **Consolidated Statements of Cash Flows** | **Consolidated Statements of Cash Flows** |
| (in thousands) | (in thousands) | (in thousands) |
|  | **For the Year Ended December 31,** | **For the Year Ended December 31,** |
|  | **2022** | **2021** |
| **Cash flows from operating activities:** |  |  |
| Net loss | $(34030) | $(106905) |
| Adjustments to reconcile net loss to net cash provided by operating activities: |  |  |
| &nbsp;&nbsp;Depreciation and amortization | 54595 | 63397 |
| &nbsp;&nbsp;Gain on sale of real estate assets |  | (10912) |
| &nbsp;&nbsp;Gain on sale of investments in unconsolidated real estate entities | (8129) |  |
| &nbsp;&nbsp;Share-based compensation | 3670 | 1570 |
| &nbsp;&nbsp;Other operating | 7104 | 1932 |
| &nbsp;&nbsp;Equity in earnings (losses) of unconsolidated real estate entities | (12393) | 533 |
| &nbsp;&nbsp;Distributions from unconsolidated real estate entities - return on capital | 14678 | 5429 |
| Changes in operating assets and liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;Other assets | (727) | (862) |
| &nbsp;&nbsp;&nbsp;Performance participation allocation | 20320 | 51761 |
| &nbsp;&nbsp;&nbsp;Performance participation allocation payment | (51761) |  |
| &nbsp;&nbsp;&nbsp;Accounts payable, accrued expenses and other liabilities | 15232 | (519) |
| &nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by operating activities | 8559 | 5424 |
| **Cash flows from investing activities:** |  |  |
| &nbsp;&nbsp;Acquisitions of real estate, net of cash acquired | (148216) |  |
| &nbsp;&nbsp;Settlement of related party notes and liabilities assumed with the CMOF Merger | (1469) |  |
| &nbsp;&nbsp;Cash, cash equivalents and restricted cash acquired in connection with the CRII Merger |  | 51943 |
| &nbsp;&nbsp;Capital expenditures and development activities | (88628) | (84692) |
| &nbsp;&nbsp;Proceeds from sale of real estate assets |  | 16812 |
| &nbsp;&nbsp;Investments in unconsolidated real estate entities | (8943) | (23545) |
| &nbsp;&nbsp;Proceeds from sale of investments in unconsolidated real estate entities | 28764 |  |
| &nbsp;&nbsp;Distributions from unconsolidated real estate entities - return of capital | 38769 |  |
| &nbsp;&nbsp;Contributions to investments in real-estate related loans |  | (14173) |
| &nbsp;&nbsp;Proceeds from settlement of investments in real-estate related loans | 13000 | 9332 |
| &nbsp;&nbsp;Other investing activities |  | 26 |
| &nbsp;&nbsp;&nbsp;&nbsp;Net cash used in investing activities | (166723) | (44297) |

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<u>[**Table of Contents**](#idee5e1a1e23d41889d4214c8b88222aa_7)</u>

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| | | |
|:---|:---|:---|
| **Cottonwood Communities, Inc.** | **Cottonwood Communities, Inc.** | **Cottonwood Communities, Inc.** |
| **Consolidated Statements of Cash Flows (continued)** | **Consolidated Statements of Cash Flows (continued)** | **Consolidated Statements of Cash Flows (continued)** |
| (in thousands) | (in thousands) | (in thousands) |
|  | **For the Year Ended December 31,** | **For the Year Ended December 31,** |
|  | **2022** | **2021** |
| **Cash flows from financing activities:** |  |  |
| &nbsp;&nbsp;Principal payments on mortgage notes | (1702) | (642) |
| &nbsp;&nbsp;Borrowings from revolving credit facility | 175000 | 8500 |
| &nbsp;&nbsp;Repayments on revolving credit facility | (141000) | (24000) |
| &nbsp;&nbsp;Borrowings under mortgage notes and term loans | 469976 | 5310 |
| &nbsp;&nbsp;Repayments of mortgage notes and term loans | (231177) |  |
| &nbsp;&nbsp;Deferred financing costs on mortgage notes and term loans | (5071) | (385) |
| &nbsp;&nbsp;Borrowings from construction loans | 38331 | 52542 |
| &nbsp;&nbsp;Repayments of construction loans | (59660) |  |
| &nbsp;&nbsp;Proceeds from issuance of Series 2019 Preferred Stock | 15472 | 78593 |
| &nbsp;&nbsp;Redemption of preferred stock | (142830) | (1421) |
| &nbsp;&nbsp;Offering costs paid on issuance of preferred stock | (1899) | (8065) |
| &nbsp;&nbsp;Repurchase of unsecured promissory notes | (561) | (5092) |
| &nbsp;&nbsp;Proceeds from issuance of common stock | 170841 | 2534 |
| &nbsp;&nbsp;Repurchase of common stock/OP Units | (28379) | (5012) |
| &nbsp;&nbsp;Offering costs paid on issuance of common stock | (14376) | (1705) |
| &nbsp;&nbsp;Contributions from noncontrolling interests | 11935 |  |
| &nbsp;&nbsp;Distributions to common stockholders | (20032) | (9482) |
| &nbsp;&nbsp;Distributions to noncontrolling interests - limited partners | (22198) | (10591) |
| &nbsp;&nbsp;Distributions to noncontrolling interests - partially owned entities | (4372) | (1454) |
| &nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by financing activities | 208298 | 79630 |
| **Net increase in cash and cash equivalents and restricted cash** | 50134 | 40757 |
| Cash and cash equivalents and restricted cash, beginning of period | 45390 | 4633 |
| **Cash and cash equivalents and restricted cash, end of period** | $95524 | $45390 |
| **Reconciliation of cash and cash equivalents and restricted cash to the consolidated balance sheets:** |  |  |
| &nbsp;&nbsp;Cash and cash equivalents | $63173 | $27169 |
| &nbsp;&nbsp;Restricted cash | 32351 | 18221 |
| Total cash and cash equivalents and restricted cash | $95524 | $45390 |

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<u>[**Table of Contents**](#idee5e1a1e23d41889d4214c8b88222aa_7)</u>

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| | | |
|:---|:---|:---|
| **Cottonwood Communities, Inc.** | **Cottonwood Communities, Inc.** | **Cottonwood Communities, Inc.** |
| **Consolidated Statements of Cash Flows (continued)** | **Consolidated Statements of Cash Flows (continued)** | **Consolidated Statements of Cash Flows (continued)** |
| (in thousands) | (in thousands) | (in thousands) |
|  | **For the Year Ended December 31,** | **For the Year Ended December 31,** |
|  | **2022** | **2021** |
| **Supplemental disclosure of cash flow information:** |  |  |
| Cash paid for interest | $45183 | $24659 |
| Income taxes paid | $1314 | $1068 |
| **Supplemental disclosure of non-cash investing and financing activities:** |  |  |
| *CMOF Merger* |  |  |
| &nbsp;&nbsp;CMOF related party notes assumed | $1327 | $— |
| &nbsp;&nbsp;Net other liabilities assumed | $142 | $— |
| *Cottonwood Ridgeview Acquisition* |  |  |
| &nbsp;&nbsp;Real estate assets, net of cash acquired | $62636 | $— |
| &nbsp;&nbsp;Mortgage note | $58192 | $— |
| &nbsp;&nbsp;Other assets and liabilities assumed, net | $642 | $— |
| &nbsp;&nbsp;Value of OP Units issued for real estate assets | $2930 | $— |
| *Cottonwood Clermont Acquisition* |  |  |
| &nbsp;&nbsp;Assumption of mortgage note | $35521 | $— |
| *CRII Merger* |  |  |
| &nbsp;&nbsp;Fair value of assets acquired and liabilities assumed with the CRII Merger: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Real estate assets | $— | $1291030 |
| &nbsp;&nbsp;&nbsp;&nbsp;Investments in unconsolidated real estate entities | $— | $120775 |
| &nbsp;&nbsp;&nbsp;&nbsp;Intangibles | $— | $32122 |
| &nbsp;&nbsp;&nbsp;&nbsp;Debt | $— | $734852 |
| &nbsp;&nbsp;&nbsp;&nbsp;Preferred stock | $— | $143979 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other assets acquired | $— | $62147 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other liabilities assumed | $— | $40926 |
| &nbsp;&nbsp;Fair value of equity issued to CRII Shareholders in the CRII Merger | $— | $4658 |
| &nbsp;&nbsp;Fair value of noncontrolling interests from the CRII Merger | $— | $581659 |
| *CMRI Merger* |  |  |
| &nbsp;&nbsp;Settlement of promote upon closing of the CMRI Merger | $— | $5585 |
| &nbsp;&nbsp;Settlement of CMRI promissory notes and interest with CROP | $— | $1545 |
| &nbsp;&nbsp;Net liabilities assumed with the CMRI Merger | $— | $2223 |
| *CMRII Merger* |  |  |
| &nbsp;&nbsp;Settlement of promote upon closing of the CMRII Merger | $— | $2424 |
| &nbsp;&nbsp;Settlement of CMRII promissory notes and interest with CROP | $— | $2475 |
| &nbsp;&nbsp;Net liabilities assumed with the CMRII Merger | $— | $1477 |
| *See accompanying notes to consolidated financial statements* | *See accompanying notes to consolidated financial statements* | *See accompanying notes to consolidated financial statements* |

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<u>[**Table of Contents**](#idee5e1a1e23d41889d4214c8b88222aa_7)</u>

**Cottonwood Communities, Inc.**

**Notes to Consolidated Financial Statements**

**1.&nbsp;&nbsp;&nbsp;&nbsp;Organization and Business**

Cottonwood Communities, Inc. (the "Company," "we," "us," or "our") invests in a diverse portfolio of multifamily apartment communities and multifamily real estate-related assets throughout the United States. We are externally managed by our advisor, CC Advisors III, LLC ("CC Advisors III"), a wholly owned subsidiary of our sponsor, Cottonwood Communities Advisors, LLC ("CCA"). We were incorporated in Maryland in 2016. We own all of our assets through our operating partnership. Our operating partnership was Cottonwood Communities O.P., LP ("CCOP") prior to the CRII Merger (defined below) and is Cottonwood Residential O.P., LP ("CROP" or the "Operating Partnership") after the CRII Merger. We are the sole member of the sole general partner of the Operating Partnership and own general partner interests in the Operating Partnership alongside third party limited partners.

Cottonwood Communities, Inc. is a non-traded, perpetual-life, net asset value ("NAV"), real estate investment trust ("REIT"). We qualified as a REIT for U.S. federal income tax purposes beginning with the taxable year ended December 31, 2019. We generally will not be subject to U.S. federal income taxes on our taxable income to the extent we annually distribute all of our net taxable income to stockholders and maintain our qualification as a REIT.

We conducted our initial public offering of common stock (the "Initial Offering") from August 13, 2018 to December 22, 2020, for which we received gross proceeds of $122.0 million. The Initial Offering ended December 2020 as we pursued the 2021 Mergers described below. On November 4, 2021, after the 2021 Mergers were completed, we registered with the SEC an offering of up to $1.0 billion of shares of common stock (the "Follow-on Offering"), consisting of up to $900.0 million in shares of common stock offered in a primary offering (the "Primary Offering") and $100.0 million in shares under our distribution reinvestment plan (the "DRP Offering"). As of December 31, 2022, we have raised gross proceeds of $173.5 million from the Follow-on Offering, including $2.5 million proceeds from the DRP Offering.

On November 8, 2019, we commenced a private placement offering exempt from registration under the Securities Act pursuant to which we offered a maximum of $128.0 million in shares of Series 2019 Preferred Stock to accredited investors at a purchase price of $10.00 per share (the "2019 Private Offering"). The Private Offering was fully subscribed in March 2022, having received gross proceeds of $127.0 million.

On December 13, 2022, we commenced a second private placement offering exempt from registration under the Securities Act pursuant to which we are offering a maximum of $100.0 million in shares of our Series 2023 Preferred Stock to accredited investors at a purchase price of $10.00 per share (the "2023 Private Offering" and together with the 2019 Private Offering, the "Private Offerings").

We own and operate a diverse portfolio of investments in multifamily apartment communities located in targeted markets throughout the United States. As of December 31, 2022, our portfolio consists of ownership interests or structured investment interests in 34 multifamily apartment communities in 12 states with 9,820 units, including 1,293 units in four multifamily apartment communities in which we have a structured investment interest and another 504 units in two multifamily apartment communities under construction. In addition, we have an ownership interest in four land sites planned for development.

**Cottonwood Multifamily Opportunity Fund, Inc. Merger**

On July 8, 2022, we entered into an agreement and plan of merger with Cottonwood Multifamily Opportunity Fund, Inc. ("CMOF") and its operating partnership (the "CMOF OP") to merge CMOF with and into our wholly owned subsidiary and the CMOF OP with and into CROP through the exchange of stock-for-stock and units-for-units (the "CMOF Merger"). The CMOF Merger closed on September 27, 2022.

CMOF stockholders received 0.8669 shares of our Class A common stock in exchange for each share of their CMOF common stock. We issued 4,335,367 shares of Class A common stock in connection with the CMOF Merger, at an aggregate value of $89.7 million on the close date.

In connection with the merger of the CMOF OP with and into CROP, the CMOF OP partnership units outstanding held by third parties were converted into CROP common units at the same ratio as the common stock.

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CROP was a joint venture partner with CMOF in all three of CMOF's investments: Park Avenue (development project), Cottonwood on Broadway (development project) and Block C, a joint venture owning land held for development in two projects called Westerly and Millcreek North. Following the CMOF Merger, we acquired CMOF's interest in these joint ventures, increasing our percentage ownership interest in the joint ventures as follows: Park Avenue, 100.0%, Cottonwood on Broadway, 100.0% and Block C, 79.0%. The remaining interests in the Block C joint venture are held either directly or indirectly by certain officers or directors, as well as certain employees of CROP and our advisor or its affiliates as discussed in <u>[Note 10](#idee5e1a1e23d41889d4214c8b88222aa_136)</u>. The three development projects we acquired additional interests in as a result of the CMOF Merger were already consolidated by us.

**The 2021 Mergers**

On January 26, 2021, we entered into stock-for-stock and unit-for unit merger agreements with three affiliated REITs and their operating partnerships. The merger with Cottonwood Residential II, Inc. ("CRII") and its operating partnership, CROP, (the "CRII Merger") closed on May 7, 2021. The merger with Cottonwood Multifamily REIT I, Inc. ("CMRI") and its operating partnership (the "CMRI Merger") closed on July 15, 2021. The merger with Cottonwood Multifamily REIT II, Inc. ("CMRII") and its operating partnership (the "CMRII Merger") also closed on July 15, 2021. We refer to the CRII Merger, the CMRI Merger and the CMRII Merger as the "2021 Mergers."

CRII stockholders received (i) 2.015 shares of our Class A common stock in exchange for their shares of common stock, (ii) one share of our Series 2016 Preferred Stock in exchange for their CRII Series 2016 Preferred Stock, and (iii) one share of our Series 2017 Preferred Stock in exchange for their CRII Series 2017 Preferred Stock.

CROP, the Operating Partnership of CRII, replaced CCOP as our operating partnership. The participating partnership units of CROP, which excluded preferred units, were split by a ratio of 2.015 ("CROP Unit Split"). Issued and outstanding partnership units of CCOP, which included Series 2019 Preferred Units, LTIP units, Special LTIP units, general partner units and common limited partnership units converted into corresponding units at CROP, the terms of which were identical to the converted CCOP partnership unit.

After giving effect of the CROP Unit Split, each preferred unit, general partner unit, common limited partnership unit, and LTIP unit of CROP remained issued and outstanding.

CMRI stockholders received 1.175 shares of our Class A common stock in exchange for their CMRI common stock. CMRII's stockholders received 1.072 shares of our Class A common stock in exchange for their CMRII common stock. In connection with the mergers of the operating partnerships of each of CMRI and CMRII with and into CROP, the partnership units outstanding, which were split to equal the amount of the common stock outstanding and were converted into CROP common units at the same ratio as the common stock. Each asset held by CMRI and CMRII was owned through joint ventures with CROP. As a result of the consummation of the CMRI Merger and the CMRII Merger, our ownership interest in the properties held through joint ventures with CMRI and CMRII increased to 100% on July 15, 2021.

Through the 2021 Mergers we acquired interests in 22 stabilized multifamily apartment communities, four multifamily development projects, one structured investment, and land held for development. We also acquired CRII's property management business and its employees, an advisory contract with CMOF, and personnel who performed certain administrative and other services for us on behalf of CC Advisors III.

CC Advisors III continues to manage our business as our external advisor pursuant to an amended and restated advisory agreement. With the exception of our Chief Legal Officer, Chief Operating Officer, Chief Accounting Officer and Chief Development Officer, we do not employ our executive officers.

Much of our structure and agreements have changed materially as a result of the 2021 Mergers. Accordingly, information presented in these consolidated financial statements may not be directly comparable to prior periods.

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<u>[**Table of Contents**](#idee5e1a1e23d41889d4214c8b88222aa_7)</u>

**2.&nbsp;&nbsp;&nbsp;&nbsp;Summary of Significant Accounting Policies**

*Basis of Presentation*

The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") and pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC"). In the opinion of management, the accompanying consolidated financial statements contain all adjustments and eliminations, consisting only of normal recurring adjustments necessary for a fair presentation in conformity with GAAP.

*Principles of Consolidation*

The consolidated financial statements include the accounts of the Company and subsidiaries under its control. The Operating Partnership and its subsidiaries are consolidated as they are controlled by CCI. All intercompany balances and transactions have been eliminated in consolidation.

Some of our partially owned and unconsolidated properties are owned through a tenant in common ("TIC interest") structure. TIC interests constitute separate and undivided interests in real property. TIC interests in properties for which we exercise significant influence are accounted for using the equity method of accounting until we have acquired a 100% interest in the property.

Number of units and certain other measures used to describe real estate assets included in the notes to the consolidated financial statements are presented on an unaudited basis.

Certain amounts in the prior year consolidated financial statements and notes to the consolidated financial statements have been reclassified to conform to the current year presentation. Such reclassifications did not impact previously reported net loss or accumulated deficit or change net cash provided by or used in operating, investing or financing activities.

*Use of Estimates*

The preparation of the consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

*Variable Interest Entities*

We invest in entities that qualify as variable interest entities ("VIEs"). All VIEs for which we are the primary beneficiary are consolidated. VIEs for which we are not the primary beneficiary are accounted for under the equity method. A VIE is a legal entity in which the equity investors at risk lack sufficient equity to finance the entity's activities without additional subordinated financial support or, as a group, the equity investors at risk lack the power to direct the entity's activities and the obligation to absorb the entity's expected losses or the right to receive the entity's expected residual returns. Qualitative and quantitative factors are considered in determining whether we are the primary beneficiary of a VIE, including, but not limited to, which activities most significantly impact economic performance, which party controls such activities, the amount and characteristics of our investments, the obligation or likelihood for us or other investors to provide financial support, and the management relationship of the property.

CROP is a VIE as the limited partners lack substantive kick-out rights and substantive participating rights. We are the primary beneficiary of CROP as we have the power to direct the activities that most significantly impact economic performance and the rights to receive economic benefits. Substantially all of our assets and liabilities are held in CROP.

In cases where we become the primarily beneficiary of a VIE, we recognized a gain or loss for the difference between the sum of (1) the fair value of any consideration paid, the fair value of the noncontrolling interest, and the reported amount of our equity method investment and (2) the net fair value of identifiable assets and liabilities of the VIE.

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*Investments in Real Estate*

In accordance with Accounting Standards Codification Topic 805, *Business Combinations*, we determine whether an acquisition qualifies as a business combination or as an asset acquisition.

We account for business combinations by recognizing assets acquired and liabilities assumed at their fair values as of the acquisition date and expensing transaction costs. Differences between the transaction price and the fair value of identifiable assets acquired, the liabilities assumed, and any non-controlling interest in the acquiree, are accounted for as goodwill, or conversely, as a gain on bargain purchase. Transaction costs are included within general and administrative expenses on our consolidated statements of operations as incurred. The CRII Merger was accounted for as a business combination.

We account for asset acquisitions by allocating the total cost to the individual assets acquired and liabilities assumed on a relative fair value basis. Real estate assets and liabilities include land, building, furniture, fixtures and equipment, other personal property, in-place lease intangibles and debt. Asset acquisition accounting is also used when we acquire a controlling interest through the acquisition of additional interests in partially owned real estate.

Fair values are determined using methods similar to those used by independent appraisers, and include using replacement cost estimates less depreciation, discounted cash flows, market comparisons, and direct capitalization of net operating income. The fair value of debt assumed is determined using a discounted cash flow analysis based on remaining loan terms and principal. Discount rates are based on management's estimates of current market interest rates for instruments with similar characteristics, and consider remaining loan term and loan-to-value ratio. The fair value of debt is a present value application which discounts the difference between the remaining contractual and market debt service payments at an equity discount rate. The equity discount rate is an estimated levered return and is calculated using the LTV, unlevered property discount rate, and a market rate.

*Real Estate Assets, Net*

We state real estate assets at cost, less accumulated depreciation and amortization. We capitalize costs related to the development, construction, improvement, and significant renovation of properties, which include capital replacements such as scheduled carpet replacement, new roofs, HVAC units, plumbing, concrete, masonry and other paving, pools and various exterior building improvements. We also capitalize salary costs directly attributable to significant renovation work.

We compute depreciation on a straight-line basis over the estimated useful lives of the related assets. Intangible lease assets are amortized to depreciation and amortization over the remaining lease term. The useful lives of our real estate assets are as follows (in years):

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| | |
|:---|:---|
| Land improvements | 5 - 15 |
| Buildings | 30 |
| Building improvements | 5 - 15 |
| Furniture, fixtures and equipment | 5 - 15 |
| Intangible lease assets | Over lease term |

---

We expense ordinary maintenance and repairs to operations as incurred. We capitalize significant renovations and improvements that improve and/or extend the useful life of an asset and amortize over their estimated useful life, generally five to 15 years.

*Impairment of Long-Lived Assets*

Long-lived assets include real estate assets, acquired intangible assets, and investments in real-estate related loans. Intangible assets are amortized on a straight-line basis over their estimated useful lives. On an annual basis, we assess potential impairment indicators of long-lived assets. We also review for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Indicators that may cause an impairment review include, but are not limited to, significant under-performance relative to historical or projected future operating results and significant market or economic trends. When we determine the carrying value of a long-lived asset may not be recoverable based upon the existence of one or more of the above indicators, we determine recoverability by comparing the carrying amount of the asset to the net future undiscounted cash flows the asset is expected to generate. We recognize, if appropriate, an impairment equal to the

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amount by which the carrying amount exceeds the fair value of the asset. No impairment losses were recognized for the years ended December 31, 2022 and 2021 related to our long-lived assets.

*Investments in Unconsolidated Real Estate Entities*

Real estate investments where we have significant noncontrolling influence and VIEs where we are not the primary beneficiary are accounted for under the equity method.

Equity method investments in unconsolidated real estate entities are recorded at cost, adjusted for our share of net earnings or losses each period, and reduced by distributions. Equity in earnings or losses is generally recognized based on our ownership interest in the earnings or losses of the unconsolidated real estate entities. We follow the "look through" approach for classification of distributions from unconsolidated real estate entities in the consolidated statements of cash flows. Under this approach, distributions are reported under operating cash flow unless the facts and circumstances of a specific distribution clearly indicate that it is a return of capital (e.g., a liquidating dividend or distribution of the proceeds from the entity's sale of assets), in which case it is reported as an investing activity.

We assess potential impairment of investments in unconsolidated real estate entities whenever events or changes in circumstances indicate that the fair value of the investment is less than its carrying value. To the extent impairment has occurred, and is not considered temporary, the impairment is measured as the excess of the carrying amount of the investment over the fair value of the investment. No impairment losses were recognized for the years ended December 31, 2022 and 2021 related to our investments in unconsolidated real estate entities.

*Cash and Cash Equivalents*

We consider all cash on deposit, money market funds and short-term investments with original maturities of three months or less to be cash and cash equivalents. We maintain cash in demand deposit accounts at several major commercial banks where balances in individual accounts at times exceeds FDIC insured amounts. To reduce the risk associated with the failure of such financial institutions, we periodically evaluate the credit quality of the financial institutions in which we hold deposits. We have not experienced any losses in such accounts.

*Restricted Cash*

Restricted cash includes a construction bond, residents' security deposits, cash in escrow for self-insurance retention, cash in escrow for acquisitions, escrow deposits held by title companies or by lenders for property taxes, insurance, debt service and replacement reserves, and utility deposits.

*Other Assets*

Other assets consist primarily of intangible assets acquired in connection with the CRII Merger, as well as receivables, interest rate caps, prepaid expenses, related party receivables and other assets.

*Unsecured Promissory Notes*

The 2017 6% Notes and the 2019 6% Notes are unsecured notes issued to investors outside of the United States. These unsecured promissory notes are described in <u>[Note 5](#idee5e1a1e23d41889d4214c8b88222aa_124)</u>. These instruments are similar in nature, have fixed interest rates and maturity dates, and are denominated in U.S. dollars.

*Preferred Stock*

Series 2016 Preferred Stock, Series 2017 Preferred Stock, Series 2019 Preferred Stock, and our recently designated Series 2023 Preferred Stock are described in <u>[Note 7](#idee5e1a1e23d41889d4214c8b88222aa_130)</u>. These instruments are similar in nature and are classified as liabilities on the consolidated balance sheet due to the mandatory redemption of these instruments on a fixed date for a fixed amount. Preferred stock distributions are recorded as interest expense.

*Debt Financing Costs*

Debt financing costs are presented as a direct deduction from the carrying amount of the associated debt liability, which includes mortgage notes, unsecured promissory notes, our revolving credit facility and preferred stock. Debt financing costs are amortized over the life of the related liability through interest expense.

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*Revenue Recognition*

 *&nbsp;&nbsp;&nbsp;&nbsp;*We lease our multifamily residential units with rents generally due on a monthly basis. Terms are one year or less, renewable upon consent of both parties on an annual or monthly basis. Rental and other property revenues is recognized in accordance with Accounting Standards Codification ("ASC") No. 842, *Leases* ("Topic 842"). Rental and other property revenues represented 89% of our total revenue for the year ended December 31, 2022.

Our non-lease related revenue consists of income earned from our property management, development, asset management and interest income from our investments in real-estate related loans. Property management and development revenue is derived primarily from our property management services, development and construction work, and internet services. Other revenues consists of interest revenue from our investments in real-estate related loans and asset management revenue from CMOF prior to the closing of the CMOF Merger on September 27, 2022.

Non-lease revenues are recognized in accordance with Accounting Standards Update No. 2014-09, *Revenue from Contracts with Customers* ("Topic 606") ("ASU 2014-09"), as subsequently amended. The guidance requires that revenue (outside of the scope of Topic 842) is recognized when a customer obtains control of promised goods or services in an amount that reflects the consideration the entity expects to receive in exchange for those goods or services.

*Performance Participation Allocation*

Under the terms of our operating partnership agreement, the Special Limited Partner, an affiliate of our advisor, is entitled to an allocation of CROP's total return to its capital account. The receipt of the performance participation allocation is subject to the ongoing effectiveness of our advisory agreement. As the performance participation allocation is associated with the performance of a service by the advisor, it is expensed in our consolidated statements of operations. Refer to <u>[Note 10](#idee5e1a1e23d41889d4214c8b88222aa_136)</u>.

*Income Taxes*

We elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended, beginning with the year ending December 31, 2019. The Company, as a REIT, is not subject to federal income tax with respect to that portion of its income that meets certain criteria and is distributed annually to stockholders. To continue to qualify as a REIT, we must meet certain organizational and operational requirements, including a requirement to distribute at least 90% of the REIT's taxable income, excluding net capital gains, to stockholders. We have adhered to, and intend to continue to adhere to, these requirements to maintain REIT status.

If we fail to qualify as a REIT in any taxable year, we will be subject to federal income tax on our taxable income at regular corporate income tax rates and generally will not be permitted to qualify for treatment as a REIT for federal income tax purposes for the four taxable years following the year during which qualification is lost unless the Internal Revenue Service grants relief under certain statutory provisions. As a qualified REIT, we are still subject to certain state and local taxes and may be subject to federal income and excise taxes on undistributed taxable income. In addition, taxable income from activities managed through our taxable REIT subsidiary ("TRS") are subject to federal, state and local income taxes. Provision for such taxes has been included in income tax expense on our consolidated statements of operations.

CROP is generally not subject to federal and state income taxes. OP Unit holders, including CCI, are subject to tax on their respective allocable shares of CROP's taxable income. However, there are certain states that require an entity level tax on CROP.

We determine deferred tax assets and liabilities applicable to the TRS based on differences between financial reporting and tax bases of existing assets and liabilities. A deferred tax asset is recognized for unused tax losses, tax credits and deductible temporary differences, only to the extent that it is more likely than not that future taxable profits will be available against which they can be utilized. We recognize interest and penalties relating to uncertain tax positions in income tax expense when incurred.

In 2022 we had $37.7 million of net Section 1231 gains allocated to our TRS, primarily from a promote received from an incentive allocation agreement. Refer to <u>[Note 9](#idee5e1a1e23d41889d4214c8b88222aa_1273)</u>. We recorded deferred tax liabilities of $9.2 million related to these gains in 2022. They are deferred as these Section 1231 gains have been or will be contributed to a Qualified Opportunity Zone fund, which provides tax benefits for development programs located in designated areas. We expect that these deferred tax liabilities will be realized in 2026.

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For the year ended December 31, 2022, we had an income tax provision of $8.0 million, of which $0.4 million was current and $7.6 million was deferred. For the year ended December 31, 2021, we had an income tax provision of $1.2 million of which $1.1 million was current and $0.1 million was deferred. As of December 31, 2022 and 2021, our net deferred tax liability was $9.7 million and $2.1 million, respectively, and is included in accounts payable, accrued expenses and other liabilities on the consolidated balance sheet.

*Noncontrolling Interests*

The portion of ownership interests in consolidated entities not held by CCI are reported as noncontrolling interests. Equity and net income (loss) attributable to CCI and to noncontrolling interests are presented separately on the consolidated financial statements. Changes in noncontrolling ownership interests, as in the case of the CMRI Merger and CMRII Merger, are accounted for as equity transactions.

<u>Noncontrolling interest – limited partners</u> – These noncontrolling interests represent ownership interest in CROP ("CROP Unit") not held by CCI, the general partner. Net income or loss is allocated to these limited partners of CROP based on their ownership percentage. Issuance of additional common stock by CCI or CROP Units to limited partners changes the ownership interests of both CCI and the limited partners of CROP.

Consistent with the one-for-one relationship between the CROP Units issued to CCI, limited partners are attributed a share of net income or loss in CROP based on their weighted-average ownership interest in CROP during the period.

<u>Noncontrolling interest – partially owned entities</u> – These noncontrolling interests represent ownership interests that are not held by us in consolidated entities. Net income (loss) is allocated to noncontrolling interests in partially owned entities based on ownership percentage in those entities.

Refer to <u>[Note 11](#idee5e1a1e23d41889d4214c8b88222aa_139)</u> for more information on our noncontrolling interests.

*Organization and Offering Costs*

Organization and offering costs in the Follow-on Offering are paid by purchasers of the shares through an adjustment to the purchase price of the share or their distribution (depending on the class of share purchased) or by us. They are recorded as an offset to equity. As of December 31, 2022, we had incurred $16.1 million of organization and offering costs with the Follow-on Offering.

Organization and offering costs in the 2019 Private Offering were paid by us. Offering costs are deferred and amortized up to the redemption date through interest expense. We incurred $13.2 million of organization and offering costs related to the 2019 Private Offering, which was fully subscribed and terminated in March 2022. Organization and offering costs in the 2023 Private Offering are paid by us and will be deferred and amortized up to the redemption date through interest expense. We incurred $0.2 million of organization and offering costs related to the 2023 Private Offering as of December 31, 2022.

*Recent Accounting Pronouncements*

The following table provides a brief description of recent accounting pronouncements that could have a material effect on our consolidated financial statements:

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| | | | |
|:---|:---|:---|:---|
| **Standard** | **Description** | **Required date of adoption** | **Effect on the Financial Statements or Other Significant Matters** |
| ASU 2016-13, *Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments* | This ASU requires entities to estimate a lifetime expected credit loss for most financial assets, including trade and other receivables and other long-term financings including available for sale and held-to-maturity debt securities, and loans. Subsequently, the FASB issued ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, which amends the scope of ASU 2016-13 and clarified that receivables arising from operating leases are not within the scope of the standard and should continue to be accounted for in accordance with the leases standard (Topic 842). | January 1, 2023 | ASU 2016-13 affects entities holding financial assets and net investments in leases that are not accounted for at fair value through net income. The amendments in ASU 2016-13 require a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected. We have evaluated the impact of adopting the new standard and do not expect significant adjustments to the consolidated financial statements as a result of adoption of this standard. |

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**3.&nbsp;&nbsp;&nbsp;&nbsp;Real Estate Assets, Net**

The following table summarizes the carrying amounts of our consolidated real estate assets ($ in thousands):

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| | | |
|:---|:---|:---|
| | **December 31, 2022** | **December 31, 2021** |
| Land | $267876 | $202531 |
| Building and improvements | 1348019 | 1074126 |
| Furniture, fixtures and equipment | 54067 | 37463 |
| Intangible assets | 40692 | 34905 |
| Construction in progress <sup>(1)</sup> | 106223 | 127493 |
|  | 1816877 | 1476518 |
| Less: Accumulated depreciation and amortization | (119270) | (68035) |
| Real estate assets, net | $1697607 | $1408483 |
| <sup>(1)</sup> Includes construction in progress for our development projects and capitalized costs for improvements not yet placed in service at our stabilized properties. | <sup>(1)</sup> Includes construction in progress for our development projects and capitalized costs for improvements not yet placed in service at our stabilized properties. | <sup>(1)</sup> Includes construction in progress for our development projects and capitalized costs for improvements not yet placed in service at our stabilized properties. |

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*CMOF Merger*

The acquisition of an additional ownership interest of a consolidated entity is accounted for as an equity transaction. The three development projects we acquired additional interests in as a result of the CMOF Merger were already consolidated by us. Accordingly, CMOF's noncontrolling interest in the three investments was reduced by its carrying amount, and the difference between the carrying amount and the consideration paid was recorded as an adjustment to our equity through additional paid-in capital as follows (in thousands, except share and per share data):

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| | |
|:---|:---|
| **2022 Consideration** | **CMOF Merger** |
| Common stock issued and outstanding | 5001000 |
| Exchange ratio | 0.8669 |
| CCI common stock issued as consideration | 4335367 |
| Per share value of CCI Common Stock | $20.7007 |
| &nbsp;&nbsp;&nbsp;&nbsp;Fair value of CCI Common Stock issued | $89745 |
| Fair value of CROP Units issued | 8273 |
| Settlement of CMOF related party notes and interest | 1327 |
| Settlement of net other liabilities of CMOF | 142 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total consideration | $99487 |
| **2022 Change in equity** | **CMOF Merger** |
| Carrying amount of noncontrolling interest | $49178 |
| Total consideration | 99487 |
| &nbsp;&nbsp;&nbsp;&nbsp;Additional paid in capital adjustment | $(50309) |
| Fair value of CCI Common Stock issued | $89745 |
| Additional paid in capital adjustment | (50309) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total change in equity | $39436 |

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*Asset acquisitions*

The following table summarizes the purchase price allocation of the real estate assets acquired or consolidated via asset acquisitions during the year ended December 31, 2022 (in thousands):

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| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | | | **Allocated Amounts** | **Allocated Amounts** | **Allocated Amounts** | **Allocated Amounts** | **Allocated Amounts** | **Allocated Amounts** |
|<br>**Property** |<br>**Location** |<br>**Date Consolidated** | **Building** | **Land** | **Furniture, Fixtures, and Equipment** | **Lease Intangibles** | **Debt Mark to Market** | **Total** |
| Cottonwood Lighthouse Point | Pompano Beach, FL | 6/22/22 | $76322 | $13647 | $3854 | $1783 | $— | $95606 |
| Cottonwood Ridgeview | Plano, TX | 9/19/22 | 54337 | 9275 | 3383 | 1603 | 1504 | 70102 |
| Cottonwood Clermont | Clermont, FL | 9/21/22 | 67400 | 5705 | 7561 | 1792 | 3428 | 85886 |
|  |  |  | $198059 | $28627 | $14798 | $5178 | $4932 | $251594 |

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The acquisition of Cottonwood Lighthouse Point was funded with debt of $48.0 million and available cash.

Cottonwood Ridgeview was consolidated when we issued 141,543 CROP Units to acquire the remaining 9.5% tenant-in-common interests in the property. The value of the CROP Units was $2.9 million on the close date based on the net asset value of CROP Units as of August 31, 2022. Cottonwood Ridgeview was previously accounted for as an equity method investment.

The acquisition of Cottonwood Clermont was funded through an assumed loan of $35.5 million and available cash, including Section 1031 exchange proceeds from the sale of 3800 Main.

In asset acquisitions, assets and liabilities are recorded at relative fair value. The weighted-average amortization period for the intangible lease assets acquired in connection with these acquisition was 0.5 years.

*Galleria Land Purchase*

On September 20, 2022, we acquired 26 acres of land for future development in Murray, Utah for $28.5 million.

*Block C*

On June 28, 2022, Block C, an early-stage development joint venture with CMOF, was recapitalized. Block C owns land for the development of two projects called Westerly and Millcreek North. Entities affiliated with us and our advisor contributed capital to the joint venture and were admitted as members. We contributed additional funds to obtain a controlling interest and consolidated the joint venture, which had previously been recorded as an equity method investment. On September 27, 2022, we acquired CMOF's interest in Block C as a result of the CMOF Merger. The joint venture consists of cash, land held for development, and payables. Refer to <u>[Note 10](#idee5e1a1e23d41889d4214c8b88222aa_136)</u> for further information on the Block C recapitalization.

*Alpha Mill Transaction*

On November 2, 2021, we sold TIC interests in Alpha Mill totaling 43% to certain unaffiliated third parties through a private offering for $34.8 million. Under the terms of the private offering, we have the option to re-acquire the TIC interests at fair value beginning on the second anniversary after the sale. The purchaser may elect to receive limited partnership units in the Operating Partnership or cash in the event we exercise our option.

As a result of this transaction, Alpha Mill was deconsolidated and we recorded a gain on sale of $10.8 million. After November 2, 2021, our remaining ownership interest in Alpha Mill is recorded as an investment in unconsolidated real estate. Refer to <u>[Note 4](#idee5e1a1e23d41889d4214c8b88222aa_118)</u>.

*CRII Merger*

On May 7, 2021, we completed the CRII Merger, which was accounted for as a business combination in accordance with ASC 805, *Business Combinations* ("ASC 805"). Based on an evaluation of the relevant factors and the guidance in ASC 805, CCI was determined to be both the legal and accounting acquirer. In order to make this determination, various factors were analyzed including which entity issued its equity interests, relative voting rights, existence of noncontrolling interests, control of the board of directors, management composition, relative size, transaction initiation, operational structure, relative composition of employees, and other factors. The most significant factor identified was the relative voting rights, as CCI stockholders hold the majority of the controlling financial (voting) interests. CCI also initiated the transaction and was the entity issuing common equity interests in the merger.

The consideration given in exchange for CRII was as follows ($ in thousands, except share and per share data):

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| | |
|:---|:---|
| CRII Common stock issued and outstanding | 213434 |
| Exchange ratio | 2.015 |
| CCI common stock issued as consideration | 430070 |
| CCI's estimated value per share as of May 7, 2021 | $10.83 |
| Value of CCI common stock issued as consideration | $4658 |

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The allocation of the purchase price below required significant judgment and represented management's best estimate of the fair value as of the acquisition date. The following table shows the purchase price allocation of CRII's identifiable assets and liabilities assumed as of May 7, 2021 ($ in thousands):

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| | |
|:---|:---|
| **Assets** | |
| &nbsp;&nbsp;Real estate assets <sup>(1)</sup> | $1291030 |
| &nbsp;&nbsp;Investments in unconsolidated real estate entities | 120775 |
| &nbsp;&nbsp;Cash and cash equivalents | 31799 |
| &nbsp;&nbsp;Restricted cash | 20144 |
| &nbsp;&nbsp;Other assets <sup>(2)</sup> | 42325 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total assets acquired | $1506073 |
| **Liabilities** |  |
| &nbsp;&nbsp;Mortgage notes, net | $622095 |
| &nbsp;&nbsp;Construction loans | 64114 |
| &nbsp;&nbsp;Preferred stock | 143979 |
| &nbsp;&nbsp;Unsecured promissory notes | 48643 |
| &nbsp;&nbsp;Accounts payable, accrued expenses and other liabilities | 40926 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total liabilities assumed | 919757 |
| Consolidated net assets acquired | 586316 |
| &nbsp;&nbsp;Noncontrolling interests <sup>(3)</sup> | (581659) |
| Net assets acquired | $4657 |
| <sup>(1)</sup> Real estate assets acquired in connection with the CRII Merger include $33.2 million of intangible lease assets, which have a weighted-average amortization period of 0.5 years. As such, based on the May 7, 2021 merger date, the intangible lease assets acquired from the CRII Merger have been fully amortized by December 31, 2021. | <sup>(1)</sup> Real estate assets acquired in connection with the CRII Merger include $33.2 million of intangible lease assets, which have a weighted-average amortization period of 0.5 years. As such, based on the May 7, 2021 merger date, the intangible lease assets acquired from the CRII Merger have been fully amortized by December 31, 2021. |
| <sup>(2)</sup> Other assets includes $32.1 million of intangible assets from the CRII Merger. Of this amount, $8.0 million related to a promote asset which was removed upon the closing of the CMRI Merger and the CMRII Merger, each on July 15, 2021. The remaining $24.1 million of intangible assets have a weighted-average amortization period of 8.8 years, and include $22.2 million related to the acquisition of CRII's property management and ancillary businesses (with a weighted-average amortization period of 9.2 years) and $1.9 million related to acquired disposition fees on certain properties and promotes on development assets (with a weighted-average amortization period of 3.8 years). | <sup>(2)</sup> Other assets includes $32.1 million of intangible assets from the CRII Merger. Of this amount, $8.0 million related to a promote asset which was removed upon the closing of the CMRI Merger and the CMRII Merger, each on July 15, 2021. The remaining $24.1 million of intangible assets have a weighted-average amortization period of 8.8 years, and include $22.2 million related to the acquisition of CRII's property management and ancillary businesses (with a weighted-average amortization period of 9.2 years) and $1.9 million related to acquired disposition fees on certain properties and promotes on development assets (with a weighted-average amortization period of 3.8 years). |
| <sup>(3)</sup> The fair value of noncontrolling interests is based on the fair value of assets and liabilities held by the noncontrolling interests at their ownership share. These values were determined using methods similar to those used by independent appraisers, and include using replacement cost estimates less depreciation, discounted cash flows, market comparisons, and direct capitalization of net operating income. | <sup>(3)</sup> The fair value of noncontrolling interests is based on the fair value of assets and liabilities held by the noncontrolling interests at their ownership share. These values were determined using methods similar to those used by independent appraisers, and include using replacement cost estimates less depreciation, discounted cash flows, market comparisons, and direct capitalization of net operating income. |

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As a result of the CRII Merger we consolidated 17 multifamily apartment communities and four development properties as well as added six multifamily apartment communities accounted for under the equity method of accounting.

The results of operations for the CRII Merger are included in the Company's statements of operations beginning on the May 7, 2021 merger closing date onward. The accompanying statements of operations include the following revenue and net income (loss) generated from the assets acquired and liabilities assumed with the CRII Merger (unaudited, in thousands):

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| | | |
|:---|:---|:---|
| | **Year Ended <br>December 31, 2022** | **Period From May 7, 2021 <br>to December 31, 2021** |
| Revenue | $114474 | $70211 |
| Net income (loss) <sup>(1)</sup> | $29912 | $(36830) |
| <sup>(1)</sup> The primary reasons for the changes in net income (loss) related to asset acquired and liabilities assumed with the CRII Merger for the year ended December 31, 2022 compared to the prior year are the $30.7 million incentive allocation promote recognized in 2022, the burn off of amortization in 2021 from the CRII Merger related intangibles, and a full year of income from the acquired assets in 2022 compared to less than eight months of income in 2021. | <sup>(1)</sup> The primary reasons for the changes in net income (loss) related to asset acquired and liabilities assumed with the CRII Merger for the year ended December 31, 2022 compared to the prior year are the $30.7 million incentive allocation promote recognized in 2022, the burn off of amortization in 2021 from the CRII Merger related intangibles, and a full year of income from the acquired assets in 2022 compared to less than eight months of income in 2021. | <sup>(1)</sup> The primary reasons for the changes in net income (loss) related to asset acquired and liabilities assumed with the CRII Merger for the year ended December 31, 2022 compared to the prior year are the $30.7 million incentive allocation promote recognized in 2022, the burn off of amortization in 2021 from the CRII Merger related intangibles, and a full year of income from the acquired assets in 2022 compared to less than eight months of income in 2021. |

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*Pro Forma Financial Information (unaudited)*

The following condensed pro forma operating information is presented as if the CRII Merger occurred in 2020 and had been included in operations as of January 1, 2020. The pro forma operating information excludes certain nonrecurring adjustments, such as acquisition fees and expenses incurred, to reflect the pro forma impact the acquisition would have on earnings on a continuous basis (in thousands):

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| | | |
|:---|:---|:---|
| | **Year Ended December 31,** | **Year Ended December 31,** |
| | 2022 | 2021 |
| **Pro forma revenue:** |  |  |
| &nbsp;&nbsp;Historic results | $138302 | $83181 |
| &nbsp;&nbsp;CRII Merger (excluding those in historic results) |  | 34140 |
| Total | $138302 | $117321 |
| **Pro forma net loss:** |  |  |
| &nbsp;&nbsp;Historic results | $(34030) | $(106905) |
| &nbsp;&nbsp;CRII Merger (excluding those in historic results) |  | (13298) |
| Total | $(34030) | $(120203) |

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&nbsp;&nbsp;&nbsp;&nbsp;

The pro forma information is not necessarily indicative of the results which actually would have occurred if the business combination had occurred on the first day of the periods presented, nor does the pro forma financial information purport to represent the results of operations for future periods.

*CMRI Merger and CMRII Merger*

With the closing of the CRII Merger in May 2021, we consolidated the properties that CMRI and CMRII invested in through joint ventures with CROP. As a result of the consummation of the CMRI Merger and the CMRII Merger in July 2021, our ownership interest in these properties increased to 100%. The acquisition of an additional ownership interest of a consolidated entity is accounted for as an equity transaction. Accordingly, CMRI's and CMRII's noncontrolling interest in the properties was reduced by its carrying amount, and the difference between the carrying amount and the consideration paid was recorded as an adjustment to our equity through additional paid-in capital. Information regarding these equity transactions is as follows (in thousands, except share and per share data):

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| | | |
|:---|:---|:---|
| **2021 Consideration** | **CMRI Merger** | **CMRII Merger** |
| Common stock issued and outstanding | 4904045 | 4881490 |
| Exchange ratio | 1.175 | 1.072 |
| CCI common stock issued as consideration | 5762253 | 5232957 |
| Per share value of CCI Common Stock | $11.7865 | $11.7865 |
| &nbsp;&nbsp;&nbsp;&nbsp;Fair value of CCI Common Stock issued | $67917 | $61678 |
| Settlement of promote | 5585 | 2424 |
| Settlement of CMRI and CMRII promissory notes and interest with CROP | 1545 | 2475 |
| Net liabilities assumed | 2223 | 1477 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total consideration | $77270 | $68054 |
| **2021 Change in equity** | **CMRI Merger** | **CMRII Merger** |
| Carrying amount of noncontrolling interest | $79447 | $63752 |
| Total consideration | 77270 | 68054 |
| &nbsp;&nbsp;&nbsp;&nbsp;Additional paid in capital adjustment | $2177 | $(4302) |
| Fair value of CCI Common Stock issued | $67917 | $61678 |
| Additional paid in capital adjustment | 2177 | (4302) |
| &nbsp;&nbsp;&nbsp;&nbsp;Total change in equity | $70094 | $57376 |

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<u>[**Table of Contents**](#idee5e1a1e23d41889d4214c8b88222aa_7)</u>

**4. Investments in Unconsolidated Real Estate Entities**

Our investments in unconsolidated real estate entities consist of ownership interests in stabilized properties and preferred equity investments as follows as of December 31, 2022 and 2021 (in thousands):

---

| | | | | |
|:---|:---|:---|:---|:---|
| | | | **Balance at December 31,** | **Balance at December 31,** |
|<br>**Property / Development** |<br>**Location** |<br>**% Owned** | **2022** | **2021** |
| *Stabilized Properties* |  |  |  |  |
| &nbsp;&nbsp;3800 Main <sup>(1)</sup> | Houston, TX | 0% <sup>(1)</sup> | $| 10347 |
| &nbsp;&nbsp;Alpha Mill <sup>(2) (3)</sup> | Charlotte, NC | 28.3% | 10470 | 22034 |
| &nbsp;&nbsp;Cottonwood Bayview <sup>(2)</sup> | St. Petersburg, FL | 71.0% | 30792 | 31399 |
| &nbsp;&nbsp;Cottonwood Ridgeview <sup>(4)</sup> | Plano, TX | 100% <sup>(4)</sup> |  | 34352 |
| &nbsp;&nbsp;Fox Point <sup>(2)</sup> | Salt Lake City, UT | 52.8% | 14794 | 16056 |
| &nbsp;&nbsp;Toscana at Valley Ridge <sup>(2)</sup> | Lewisville, TX | 58.6% | 9382 | 9370 |
| &nbsp;&nbsp;Melrose Phase II <sup>(2) (5)</sup> | Nashville, TN | 79.8% <sup>(5)</sup> | 6185 | 15523 |
| *Preferred Equity Investments* |  |  |  |  |
| &nbsp;&nbsp;Lector85 <sup>(6)</sup> | Ybor City, FL |  | 10006 | 13010 |
| &nbsp;&nbsp;Astoria West (formerly Vernon) | Queens, NY |  | 20567 | 18079 |
| &nbsp;&nbsp;801 Riverfront | West Sacramento, CA |  | 20259 | 16884 |
| &nbsp;&nbsp;417 Callowhill | Philadelphia, PA |  | 9949 |  |
| Other |  |  | 803 | 3679 |
| **Total** |  |  | $| 190733 |
| <sup>(1)</sup> On June 23, 2022, 3800 Main was sold. We received $16.8 million in cash for the sale and recognized a gain of $7.3 million. | <sup>(1)</sup> On June 23, 2022, 3800 Main was sold. We received $16.8 million in cash for the sale and recognized a gain of $7.3 million. | <sup>(1)</sup> On June 23, 2022, 3800 Main was sold. We received $16.8 million in cash for the sale and recognized a gain of $7.3 million. | <sup>(1)</sup> On June 23, 2022, 3800 Main was sold. We received $16.8 million in cash for the sale and recognized a gain of $7.3 million. | <sup>(1)</sup> On June 23, 2022, 3800 Main was sold. We received $16.8 million in cash for the sale and recognized a gain of $7.3 million. |
| <sup>(2)</sup> We account for our tenant in common interests in these properties as equity method investments. Refer to <u>[Note 2](#idee5e1a1e23d41889d4214c8b88222aa_106)</u>. | <sup>(2)</sup> We account for our tenant in common interests in these properties as equity method investments. Refer to <u>[Note 2](#idee5e1a1e23d41889d4214c8b88222aa_106)</u>. | <sup>(2)</sup> We account for our tenant in common interests in these properties as equity method investments. Refer to <u>[Note 2](#idee5e1a1e23d41889d4214c8b88222aa_106)</u>. | <sup>(2)</sup> We account for our tenant in common interests in these properties as equity method investments. Refer to <u>[Note 2](#idee5e1a1e23d41889d4214c8b88222aa_106)</u>. | <sup>(2)</sup> We account for our tenant in common interests in these properties as equity method investments. Refer to <u>[Note 2](#idee5e1a1e23d41889d4214c8b88222aa_106)</u>. |
| <sup>(3)</sup> On April 7, 2022, we sold 28.9% of our ownership interest in Alpha Mill for $11.9 million to certain third parties and recognized a gain of $0.8 million. Our remaining ownership in Alpha Mill is 28.3%. | <sup>(3)</sup> On April 7, 2022, we sold 28.9% of our ownership interest in Alpha Mill for $11.9 million to certain third parties and recognized a gain of $0.8 million. Our remaining ownership in Alpha Mill is 28.3%. | <sup>(3)</sup> On April 7, 2022, we sold 28.9% of our ownership interest in Alpha Mill for $11.9 million to certain third parties and recognized a gain of $0.8 million. Our remaining ownership in Alpha Mill is 28.3%. | <sup>(3)</sup> On April 7, 2022, we sold 28.9% of our ownership interest in Alpha Mill for $11.9 million to certain third parties and recognized a gain of $0.8 million. Our remaining ownership in Alpha Mill is 28.3%. | <sup>(3)</sup> On April 7, 2022, we sold 28.9% of our ownership interest in Alpha Mill for $11.9 million to certain third parties and recognized a gain of $0.8 million. Our remaining ownership in Alpha Mill is 28.3%. |
| <sup>(4)</sup> On September 19, 2022, we issued 141,543 CROP Units for the remaining 9.5% tenant-in-common interests in Cottonwood Ridgeview, resulting in the consolidation of the property from that date onward. The value of the CROP Units on the close date was $2.9 million based on the net asset value of CROP Units as of August 31, 2022. | <sup>(4)</sup> On September 19, 2022, we issued 141,543 CROP Units for the remaining 9.5% tenant-in-common interests in Cottonwood Ridgeview, resulting in the consolidation of the property from that date onward. The value of the CROP Units on the close date was $2.9 million based on the net asset value of CROP Units as of August 31, 2022. | <sup>(4)</sup> On September 19, 2022, we issued 141,543 CROP Units for the remaining 9.5% tenant-in-common interests in Cottonwood Ridgeview, resulting in the consolidation of the property from that date onward. The value of the CROP Units on the close date was $2.9 million based on the net asset value of CROP Units as of August 31, 2022. | <sup>(4)</sup> On September 19, 2022, we issued 141,543 CROP Units for the remaining 9.5% tenant-in-common interests in Cottonwood Ridgeview, resulting in the consolidation of the property from that date onward. The value of the CROP Units on the close date was $2.9 million based on the net asset value of CROP Units as of August 31, 2022. | <sup>(4)</sup> On September 19, 2022, we issued 141,543 CROP Units for the remaining 9.5% tenant-in-common interests in Cottonwood Ridgeview, resulting in the consolidation of the property from that date onward. The value of the CROP Units on the close date was $2.9 million based on the net asset value of CROP Units as of August 31, 2022. |
| <sup>(5)</sup> On December 28, 2021, we bought an additional 54.9% interest in Melrose Phase II for $10.6 million, increasing our ownership to 79.8%. | <sup>(5)</sup> On December 28, 2021, we bought an additional 54.9% interest in Melrose Phase II for $10.6 million, increasing our ownership to 79.8%. | <sup>(5)</sup> On December 28, 2021, we bought an additional 54.9% interest in Melrose Phase II for $10.6 million, increasing our ownership to 79.8%. | <sup>(5)</sup> On December 28, 2021, we bought an additional 54.9% interest in Melrose Phase II for $10.6 million, increasing our ownership to 79.8%. | <sup>(5)</sup> On December 28, 2021, we bought an additional 54.9% interest in Melrose Phase II for $10.6 million, increasing our ownership to 79.8%. |
| <sup>(6)</sup> On December 2, 2022, we received a distribution of $4.8 million from our Lector85 preferred equity investment as payment for interest accrued. | <sup>(6)</sup> On December 2, 2022, we received a distribution of $4.8 million from our Lector85 preferred equity investment as payment for interest accrued. | <sup>(6)</sup> On December 2, 2022, we received a distribution of $4.8 million from our Lector85 preferred equity investment as payment for interest accrued. | <sup>(6)</sup> On December 2, 2022, we received a distribution of $4.8 million from our Lector85 preferred equity investment as payment for interest accrued. | <sup>(6)</sup> On December 2, 2022, we received a distribution of $4.8 million from our Lector85 preferred equity investment as payment for interest accrued. |

---

With the exception of Alpha Mill, our investments in unconsolidated real estate entities for the stabilized properties above were acquired with the CRII Merger. Alpha Mill was 100% owned by us and consolidated at the time of the CRII Merger but was subsequently deconsolidated in November 2021 when we sold a portion of our interest in the property. Refer to <u>[Note 3](#idee5e1a1e23d41889d4214c8b88222aa_112)</u>. Equity in earnings for our stabilized assets for the year ended December 31, 2022 was $3.6 million. Equity in losses for our stabilized assets during the period from the CRII Merger closing on May 7, 2021 to December 31, 2021 was $6.1 million. During March 2022, we received $30.4 million and $8.3 million in distributions as a return of capital from debt refinances at Cottonwood Ridgeview and Melrose Phase II, respectively.

The following is a summary of certain balance sheet and operating data for our stabilized properties ($ in thousands):

---

| | | |
|:---|:---|:---|
| **Operating data:** | **2022 - For the Period Held as Equity Method Investments** | **2021 - For the Period Held as Equity Method Investments** |
| &nbsp;&nbsp;Total revenues | $35514 | $23514 |
| &nbsp;&nbsp;Total operating expenses | 14258 | 9941 |
| &nbsp;&nbsp;Total other expenses | (18871) | (24672) |
| &nbsp;&nbsp;Net income (loss) | 2385 | (11099) |
| **Balance sheet data:** | **December 31, 2022** | **December 31, 2021** |
| &nbsp;&nbsp;Real estate assets | $309404 | $440853 |
| &nbsp;&nbsp;Cash and cash equivalents | 4270 | 6361 |
| &nbsp;&nbsp;Total assets | 319734 | 452972 |
| &nbsp;&nbsp;Mortgage notes, net | 193939 | 250224 |
| &nbsp;&nbsp;Total liabilities | 197365 | 255768 |

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Our preferred equity investments are development projects with liquidation rights and priorities that are different from ownership percentages. As such, equity in earnings is determined using the hypothetical liquidation book value ("HLBV") method. Income or loss is recorded based on changes in what would be received should the entity liquidate all of its assets (as valued in accordance with GAAP) and distribute the resulting proceeds based on the terms of the respective agreements. The HLBV method is a balance sheet focused approach commonly applied to equity investments where cash distribution percentages vary at different points in time and are not directly linked to an equity holder's ownership percentage.

Equity in earnings for our preferred equity investments for the years ended December 31, 2022 and 2021 were $8.8 million and $5.6 million, respectively. During the year ended December 31, 2022, we funded $8.7 million towards the 417 Callowhill preferred equity investment and had a remaining commitment of $24.7 million. During the year ended December 31, 2021, we funded the remaining $12.4 million commitment on our 801 Riverfront preferred equity investment. As of December 31, 2022, we had fully funded our commitments on the Lector85, Astoria West and 801 Riverfront preferred equity investments.

**5.&nbsp;&nbsp;&nbsp;&nbsp;Debt**

*Mortgage Notes and Revolving Credit Facility*

The following table is a summary of the mortgage notes and revolving credit facility secured by our properties as of December 31, 2022 and 2021 ($ in thousands):

---

| | | | | |
|:---|:---|:---|:---|:---|
| | | | **Principal Balance Outstanding** | **Principal Balance Outstanding** |
|<br>**Indebtedness** |<br>**Weighted-Average Interest Rate** |<br>**Weighted-Average Remaining Term** <sup>(1)</sup> | **December 31, 2022** | **December 31, 2021** |
| *Fixed rate loans* |  |  |  |  |
| &nbsp;&nbsp;Fixed rate mortgages | 3.62% | 5.2 Years | $528308 | $213009 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total fixed rate loans |  |  | 528308 | 213009 |
| *Variable rate loans* <sup>(2)</sup> |  |  |  |  |
| &nbsp;&nbsp;Floating rate mortgages | 5.52% <sup>(3)</sup> | 6.7 Years | 426130 | 407022 |
| &nbsp;&nbsp;Variable rate revolving credit facility <sup>(4)</sup> | 5.79% | 2.2 Years | 54000 | 20000 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total variable rate loans |  |  | 480130 | 427022 |
| Total secured loans |  |  | 1008438 | 640031 |
| Unamortized debt issuance costs |  |  | (4878) | (940) |
| Premium on assumed debt, net |  |  | (3423) | 3016 |
| &nbsp;&nbsp;&nbsp;&nbsp;Mortgage notes and revolving credit facility, net |  |  | $1000137 | $642107 |
| <sup>(1)</sup> For loans where we have the ability to exercise extension options at our own discretion, the maximum maturity date has been assumed. | <sup>(1)</sup> For loans where we have the ability to exercise extension options at our own discretion, the maximum maturity date has been assumed. | <sup>(1)</sup> For loans where we have the ability to exercise extension options at our own discretion, the maximum maturity date has been assumed. | <sup>(1)</sup> For loans where we have the ability to exercise extension options at our own discretion, the maximum maturity date has been assumed. | <sup>(1)</sup> For loans where we have the ability to exercise extension options at our own discretion, the maximum maturity date has been assumed. |
| <sup>(2)</sup> The interest rate of our variable rate loans is primarily based on one-month LIBOR or one-month SOFR. | <sup>(2)</sup> The interest rate of our variable rate loans is primarily based on one-month LIBOR or one-month SOFR. | <sup>(2)</sup> The interest rate of our variable rate loans is primarily based on one-month LIBOR or one-month SOFR. | <sup>(2)</sup> The interest rate of our variable rate loans is primarily based on one-month LIBOR or one-month SOFR. | <sup>(2)</sup> The interest rate of our variable rate loans is primarily based on one-month LIBOR or one-month SOFR. |
| <sup>(3)</sup> Includes the impact of interest rate caps in effect on December 31, 2022. | <sup>(3)</sup> Includes the impact of interest rate caps in effect on December 31, 2022. | <sup>(3)</sup> Includes the impact of interest rate caps in effect on December 31, 2022. | <sup>(3)</sup> Includes the impact of interest rate caps in effect on December 31, 2022. | <sup>(3)</sup> Includes the impact of interest rate caps in effect on December 31, 2022. |
| <sup>(4)</sup> We may obtain advances secured against Cottonwood One Upland and Parc Westborough up to $125.0 million on our variable rate revolving credit facility, as long as certain loan-to-value ratios and other requirements are maintained. At December 31, 2022 the amount on our variable rate revolving credit facility was capped at $112.0 million primarily due to the interest rate environment. | <sup>(4)</sup> We may obtain advances secured against Cottonwood One Upland and Parc Westborough up to $125.0 million on our variable rate revolving credit facility, as long as certain loan-to-value ratios and other requirements are maintained. At December 31, 2022 the amount on our variable rate revolving credit facility was capped at $112.0 million primarily due to the interest rate environment. | <sup>(4)</sup> We may obtain advances secured against Cottonwood One Upland and Parc Westborough up to $125.0 million on our variable rate revolving credit facility, as long as certain loan-to-value ratios and other requirements are maintained. At December 31, 2022 the amount on our variable rate revolving credit facility was capped at $112.0 million primarily due to the interest rate environment. | <sup>(4)</sup> We may obtain advances secured against Cottonwood One Upland and Parc Westborough up to $125.0 million on our variable rate revolving credit facility, as long as certain loan-to-value ratios and other requirements are maintained. At December 31, 2022 the amount on our variable rate revolving credit facility was capped at $112.0 million primarily due to the interest rate environment. | <sup>(4)</sup> We may obtain advances secured against Cottonwood One Upland and Parc Westborough up to $125.0 million on our variable rate revolving credit facility, as long as certain loan-to-value ratios and other requirements are maintained. At December 31, 2022 the amount on our variable rate revolving credit facility was capped at $112.0 million primarily due to the interest rate environment. |

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We are in compliance with all covenants associated with our mortgage notes and revolving credit facility as of December 31, 2022.

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*Construction Loans*

Information on our construction loans are as follows ($ in thousands):

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Development** | **Interest Rate** | **Final Expiration Date** | **Loan Amount** | **Amount Drawn at <br>December 31, 2022** | **Amount Drawn at <br>December 31, 2021** |
| Sugarmont <sup>(1)</sup> | <sup>(1)</sup> | <sup>(1)</sup> | <sup>(1)</sup> | $— | $59660 |
| Park Avenue | One-Month USD SOFR + 1.75% | November 30, 2023 <sup>(2)</sup> | 37000 | 37000 | 29520 |
| Cottonwood Broadway | One-Month USD Libor + 1.9% | May 15, 2024 | 44625 | 39728 | 27476 |
| Cottonwood Highland | One-Month USD SOFR + 2.55% | May 1, 2029 | 44250 | 18599 |  |
|  |  |  | $125875 | $95327 | $116656 |
| <sup>(1)</sup> The Sugarmont construction loan was refinanced in January 2022 with a $105.0 million floating rate mortgage. | <sup>(1)</sup> The Sugarmont construction loan was refinanced in January 2022 with a $105.0 million floating rate mortgage. | <sup>(1)</sup> The Sugarmont construction loan was refinanced in January 2022 with a $105.0 million floating rate mortgage. | <sup>(1)</sup> The Sugarmont construction loan was refinanced in January 2022 with a $105.0 million floating rate mortgage. | <sup>(1)</sup> The Sugarmont construction loan was refinanced in January 2022 with a $105.0 million floating rate mortgage. | <sup>(1)</sup> The Sugarmont construction loan was refinanced in January 2022 with a $105.0 million floating rate mortgage. |
| <sup>(2)</sup> It is expected the Park Avenue loan will be refinanced in 2023. | <sup>(2)</sup> It is expected the Park Avenue loan will be refinanced in 2023. | <sup>(2)</sup> It is expected the Park Avenue loan will be refinanced in 2023. | <sup>(2)</sup> It is expected the Park Avenue loan will be refinanced in 2023. | <sup>(2)</sup> It is expected the Park Avenue loan will be refinanced in 2023. | <sup>(2)</sup> It is expected the Park Avenue loan will be refinanced in 2023. |

---

*Unsecured Promissory Notes, Net*

CROP issued notes to foreign investors outside of the United States. These notes are unsecured and subordinate to all of CROP's debt. Each note has extension options during which the interest rate will increase 0.25% each year.

&nbsp;&nbsp;&nbsp;&nbsp;Information on our unsecured promissory notes are as follows ($ in thousands):

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | **Offering Size** | **Offering Size** | **Interest Rate** | **Maturity Date** | **Maximum Extension Date** | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** |
| 2017 6% Notes <sup>(1)</sup> | $| 35000 | 6.00% | December 31, 2023 | December 31, 2024 | $| 20718 | $| 20918 |
| 2019 6% Notes | 25000 | 25000 | 6.00% | December 31, 2023 | December 31, 2025 | 22235 | 22235 | 22625 | 22625 |
|  | $| 60000 |  |  |  | $| 42953 | $| 43543 |
| <sup>(1)</sup> We exercised the option to extend the maturity date on our 2017 6% Notes for one additional year to December 31, 2023, which increased the interest rate to 6.25% for the period from January 1, 2023 to December 31, 2023. | <sup>(1)</sup> We exercised the option to extend the maturity date on our 2017 6% Notes for one additional year to December 31, 2023, which increased the interest rate to 6.25% for the period from January 1, 2023 to December 31, 2023. | <sup>(1)</sup> We exercised the option to extend the maturity date on our 2017 6% Notes for one additional year to December 31, 2023, which increased the interest rate to 6.25% for the period from January 1, 2023 to December 31, 2023. | <sup>(1)</sup> We exercised the option to extend the maturity date on our 2017 6% Notes for one additional year to December 31, 2023, which increased the interest rate to 6.25% for the period from January 1, 2023 to December 31, 2023. | <sup>(1)</sup> We exercised the option to extend the maturity date on our 2017 6% Notes for one additional year to December 31, 2023, which increased the interest rate to 6.25% for the period from January 1, 2023 to December 31, 2023. | <sup>(1)</sup> We exercised the option to extend the maturity date on our 2017 6% Notes for one additional year to December 31, 2023, which increased the interest rate to 6.25% for the period from January 1, 2023 to December 31, 2023. | <sup>(1)</sup> We exercised the option to extend the maturity date on our 2017 6% Notes for one additional year to December 31, 2023, which increased the interest rate to 6.25% for the period from January 1, 2023 to December 31, 2023. | <sup>(1)</sup> We exercised the option to extend the maturity date on our 2017 6% Notes for one additional year to December 31, 2023, which increased the interest rate to 6.25% for the period from January 1, 2023 to December 31, 2023. | <sup>(1)</sup> We exercised the option to extend the maturity date on our 2017 6% Notes for one additional year to December 31, 2023, which increased the interest rate to 6.25% for the period from January 1, 2023 to December 31, 2023. | <sup>(1)</sup> We exercised the option to extend the maturity date on our 2017 6% Notes for one additional year to December 31, 2023, which increased the interest rate to 6.25% for the period from January 1, 2023 to December 31, 2023. |

---

Our previously issued 2017 6.25% Notes were fully redeemed in December 2021 for $5.0 million prior to their December 31, 2021 maturity date.

The aggregate maturities, including amortizing principal payments on our debt for years subsequent to December 31, 2022 are as follows (in thousands):

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| **Year** | **Mortgage Notes and Revolving Credit Facility** | **Mortgage Notes and Revolving Credit Facility** | **Construction Loans** | **Construction Loans** | **Unsecured <br>Promissory Notes** | **Unsecured <br>Promissory Notes** | **Total** | **Total** |
| 2023 <sup>(1)</sup> | $| 110506 | $| 76728 | $| 42953 | $| 230187 |
| 2024 | 1008 | 1008 |  |  |  |  | 1008 | 1008 |
| 2025 | 3353 | 3353 |  |  |  |  | 3353 | 3353 |
| 2026 | 143696 | 143696 |  |  |  |  | 143696 | 143696 |
| 2027 | 369821 | 369821 |  |  |  |  | 369821 | 369821 |
| Thereafter | 380054 | 380054 | 18599 | 18599 |  |  | 398653 | 398653 |
|  | $| 1008438 | $| 95327 | $| 42953 | $| 1146718 |
| <sup>(1)</sup> Of the amounts maturing in 2023, $20.7 million relates to our 2017 6% Unsecured Promissory Notes, which can be extended to December 31, 2024, $22.2 million relates to our 2019 6% Unsecured Promissory Notes, which can be extended for two one-year periods to December 31, 2025, $54.0 million relates to our variable rate revolving credit facility, which can be extended for two one-year periods to March 19, 2025, subject to the satisfaction of certain conditions, and $55.5 million relates to mortgage notes that were refinanced in February 2023 as discussed in <u>[Note 13](#idee5e1a1e23d41889d4214c8b88222aa_148)</u>. | <sup>(1)</sup> Of the amounts maturing in 2023, $20.7 million relates to our 2017 6% Unsecured Promissory Notes, which can be extended to December 31, 2024, $22.2 million relates to our 2019 6% Unsecured Promissory Notes, which can be extended for two one-year periods to December 31, 2025, $54.0 million relates to our variable rate revolving credit facility, which can be extended for two one-year periods to March 19, 2025, subject to the satisfaction of certain conditions, and $55.5 million relates to mortgage notes that were refinanced in February 2023 as discussed in <u>[Note 13](#idee5e1a1e23d41889d4214c8b88222aa_148)</u>. | <sup>(1)</sup> Of the amounts maturing in 2023, $20.7 million relates to our 2017 6% Unsecured Promissory Notes, which can be extended to December 31, 2024, $22.2 million relates to our 2019 6% Unsecured Promissory Notes, which can be extended for two one-year periods to December 31, 2025, $54.0 million relates to our variable rate revolving credit facility, which can be extended for two one-year periods to March 19, 2025, subject to the satisfaction of certain conditions, and $55.5 million relates to mortgage notes that were refinanced in February 2023 as discussed in <u>[Note 13](#idee5e1a1e23d41889d4214c8b88222aa_148)</u>. | <sup>(1)</sup> Of the amounts maturing in 2023, $20.7 million relates to our 2017 6% Unsecured Promissory Notes, which can be extended to December 31, 2024, $22.2 million relates to our 2019 6% Unsecured Promissory Notes, which can be extended for two one-year periods to December 31, 2025, $54.0 million relates to our variable rate revolving credit facility, which can be extended for two one-year periods to March 19, 2025, subject to the satisfaction of certain conditions, and $55.5 million relates to mortgage notes that were refinanced in February 2023 as discussed in <u>[Note 13](#idee5e1a1e23d41889d4214c8b88222aa_148)</u>. | <sup>(1)</sup> Of the amounts maturing in 2023, $20.7 million relates to our 2017 6% Unsecured Promissory Notes, which can be extended to December 31, 2024, $22.2 million relates to our 2019 6% Unsecured Promissory Notes, which can be extended for two one-year periods to December 31, 2025, $54.0 million relates to our variable rate revolving credit facility, which can be extended for two one-year periods to March 19, 2025, subject to the satisfaction of certain conditions, and $55.5 million relates to mortgage notes that were refinanced in February 2023 as discussed in <u>[Note 13](#idee5e1a1e23d41889d4214c8b88222aa_148)</u>. | <sup>(1)</sup> Of the amounts maturing in 2023, $20.7 million relates to our 2017 6% Unsecured Promissory Notes, which can be extended to December 31, 2024, $22.2 million relates to our 2019 6% Unsecured Promissory Notes, which can be extended for two one-year periods to December 31, 2025, $54.0 million relates to our variable rate revolving credit facility, which can be extended for two one-year periods to March 19, 2025, subject to the satisfaction of certain conditions, and $55.5 million relates to mortgage notes that were refinanced in February 2023 as discussed in <u>[Note 13](#idee5e1a1e23d41889d4214c8b88222aa_148)</u>. | <sup>(1)</sup> Of the amounts maturing in 2023, $20.7 million relates to our 2017 6% Unsecured Promissory Notes, which can be extended to December 31, 2024, $22.2 million relates to our 2019 6% Unsecured Promissory Notes, which can be extended for two one-year periods to December 31, 2025, $54.0 million relates to our variable rate revolving credit facility, which can be extended for two one-year periods to March 19, 2025, subject to the satisfaction of certain conditions, and $55.5 million relates to mortgage notes that were refinanced in February 2023 as discussed in <u>[Note 13](#idee5e1a1e23d41889d4214c8b88222aa_148)</u>. | <sup>(1)</sup> Of the amounts maturing in 2023, $20.7 million relates to our 2017 6% Unsecured Promissory Notes, which can be extended to December 31, 2024, $22.2 million relates to our 2019 6% Unsecured Promissory Notes, which can be extended for two one-year periods to December 31, 2025, $54.0 million relates to our variable rate revolving credit facility, which can be extended for two one-year periods to March 19, 2025, subject to the satisfaction of certain conditions, and $55.5 million relates to mortgage notes that were refinanced in February 2023 as discussed in <u>[Note 13](#idee5e1a1e23d41889d4214c8b88222aa_148)</u>. | <sup>(1)</sup> Of the amounts maturing in 2023, $20.7 million relates to our 2017 6% Unsecured Promissory Notes, which can be extended to December 31, 2024, $22.2 million relates to our 2019 6% Unsecured Promissory Notes, which can be extended for two one-year periods to December 31, 2025, $54.0 million relates to our variable rate revolving credit facility, which can be extended for two one-year periods to March 19, 2025, subject to the satisfaction of certain conditions, and $55.5 million relates to mortgage notes that were refinanced in February 2023 as discussed in <u>[Note 13](#idee5e1a1e23d41889d4214c8b88222aa_148)</u>. |

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**6.&nbsp;&nbsp;&nbsp;&nbsp;Fair Value of Financial Instruments**

We estimate the fair value of our financial instruments using available market information and valuation methodologies we believe to be appropriate. As of December 31, 2022 and 2021, the fair values of cash and cash equivalents, restricted cash, other assets, related party payables, and accounts payable, accrued expenses and other liabilities approximate their carrying values due to the short-term nature of these instruments.

Fair value measurements are determined based on the assumptions that market participants would use in pricing the asset or liability. Fair value measurements are categorized into one of three levels of the fair value hierarchy based on the lowest level of significant input used. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. Considerable judgment and a high degree of subjectivity are involved in developing these estimates. These estimates may differ from the actual amounts that we could realize upon settlement.

The fair value hierarchy is as follows:

Level 1 - Quoted (unadjusted) prices in active markets for identical assets or liabilities.

Level 2 - Other observable inputs, either directly or indirectly, other than quoted prices included in Level 1, including:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Quoted prices for similar assets/liabilities in active markets;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Quoted prices for identical or similar assets/liabilities in non-active markets (e.g., few transactions, limited information, non-current prices, high variability over time);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Inputs other than quoted prices that are observable for the asset/liability (e.g., interest rates, yield curves, volatilities, default rates); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Inputs that are derived principally from or corroborated by other observable market data.

Level 3 - Unobservable inputs that cannot be corroborated by observable market data.

The table below includes the carrying value and fair value for our financial instruments for which it is practicable to estimate fair value (in thousands):

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **As of December 31, 2022** | **As of December 31, 2022** | **As of December 31, 2021** | **As of December 31, 2021** |
| | **Carrying Value** | **Fair Value** | **Carrying Value** | **Fair Value** |
| Financial Asset: |  |  |  |  |
| &nbsp;&nbsp;Investments in real-estate related loans | $— | $— | $13035 | $13035 |
| Financial Liability: |  |  |  |  |
| &nbsp;&nbsp;Fixed rate mortgages | $528308 | $509134 | $213009 | $216566 |
| &nbsp;&nbsp;Floating rate mortgages | $426130 | $421189 | $407022 | $409377 |
| &nbsp;&nbsp;Variable rate revolving credit facility | $54000 | $54000 | $20000 | $20000 |
| &nbsp;&nbsp;Construction loans | $95327 | $95327 | $116656 | $116656 |
| &nbsp;&nbsp;Series 2016 Preferred Stock | $— | $— | $139996 | $139996 |
| &nbsp;&nbsp;Series 2017 Preferred Stock | $— | $— | $2586 | $2586 |
| &nbsp;&nbsp;Series 2019 Preferred Stock | $127065 | $127065 | $111863 | $111863 |
| &nbsp;&nbsp;Unsecured promissory notes, net | $42953 | $42953 | $43543 | $43543 |

---

Our investments in real-estate related loans, fixed and floating rate mortgages, variable rate revolving credit facility, construction loans, preferred stock and unsecured promissory notes are categorized as Level 3 in the fair value hierarchy.

**7.&nbsp;&nbsp;&nbsp;&nbsp;Preferred Stock**

We have (or had) various classes of preferred stock: Series 2016, Series 2017, Series 2019 and Series 2023, each of which were or will be (with respect to Series 2023 Preferred Stock) offered at a price of $10.00 per share. Our Series 2016 Preferred Stock and the Series 2017 Preferred Stock were issued in connection with the CRII Merger in exchange for the corresponding series of preferred stock held at CRII and were both fully redeemed during 2022. In November 2019, we commenced the 2019 Private Offering for our Series 2019 Preferred Stock, and it was fully subscribed and terminated in March 2022. In December 2022, we commenced the 2023 Private Offering for our Series 2023 Preferred Stock. At December 31, 2022, no shares of Series 2023 Preferred Stock had been issued.

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Each class of preferred stock outstanding receives a fixed preferred dividend based on a cumulative, but not compounded, annual return. Each class has a fixed redemption date with extension options at our discretion, subject to an increase in the preferred dividend rate, and is classified as a liability on the consolidated balance sheets. We can also redeem our preferred stock early for cash plus all accrued and unpaid dividends. Our preferred stock ranks senior to our common stock and on parity with each other with respect to distribution rights and rights upon liquidation, dissolution or winding up.

Information on our preferred stock designated as of December 31, 2022 and 2021 is as follows:

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **Dividend Rate** | **Extension Dividend Rate** | **Redemption Date** | **Maximum Extension Date** | **Shares Outstanding at** | **Shares Outstanding at** |
| | **Dividend Rate** | **Extension Dividend Rate** | **Redemption Date** | **Maximum Extension Date** | **December 31, 2022** | **December 31, 2021** |
| Series 2016 Preferred Stock <sup>(1)</sup> | 6.5% | 7.0% | January 31, 2022 | January 31, 2023 |  | 13999560 |
| Series 2017 Preferred Stock <sup>(2)</sup> | 7.5% | 8.0% | January 31, 2022 | January 31, 2024 |  | 258550 |
| Series 2019 Preferred Stock | 5.5% | 6.0% | December 31, 2023 | December 31, 2025 | 12706485 | 11186301 |
| Series 2023 Preferred Stock | 6.0% | 6.5% <sup>(3)</sup> | June 30, 2027 | June 30, 2029 |  |  |
| <sup>(1)</sup> We fully redeemed our Series 2016 Preferred Stock on April 18, 2022 for $139.8 million. | <sup>(1)</sup> We fully redeemed our Series 2016 Preferred Stock on April 18, 2022 for $139.8 million. | <sup>(1)</sup> We fully redeemed our Series 2016 Preferred Stock on April 18, 2022 for $139.8 million. | <sup>(1)</sup> We fully redeemed our Series 2016 Preferred Stock on April 18, 2022 for $139.8 million. | <sup>(1)</sup> We fully redeemed our Series 2016 Preferred Stock on April 18, 2022 for $139.8 million. | <sup>(1)</sup> We fully redeemed our Series 2016 Preferred Stock on April 18, 2022 for $139.8 million. | <sup>(1)</sup> We fully redeemed our Series 2016 Preferred Stock on April 18, 2022 for $139.8 million. |
| <sup>(2)</sup> We fully redeemed our Series 2017 Preferred Stock immediately after the January 31, 2022 redemption date for $2.6 million. | <sup>(2)</sup> We fully redeemed our Series 2017 Preferred Stock immediately after the January 31, 2022 redemption date for $2.6 million. | <sup>(2)</sup> We fully redeemed our Series 2017 Preferred Stock immediately after the January 31, 2022 redemption date for $2.6 million. | <sup>(2)</sup> We fully redeemed our Series 2017 Preferred Stock immediately after the January 31, 2022 redemption date for $2.6 million. | <sup>(2)</sup> We fully redeemed our Series 2017 Preferred Stock immediately after the January 31, 2022 redemption date for $2.6 million. | <sup>(2)</sup> We fully redeemed our Series 2017 Preferred Stock immediately after the January 31, 2022 redemption date for $2.6 million. | <sup>(2)</sup> We fully redeemed our Series 2017 Preferred Stock immediately after the January 31, 2022 redemption date for $2.6 million. |
| <sup>(3)</sup> Represents the fully extended dividend rate. During the first-year extension the dividend rate is 6.25%. | <sup>(3)</sup> Represents the fully extended dividend rate. During the first-year extension the dividend rate is 6.25%. | <sup>(3)</sup> Represents the fully extended dividend rate. During the first-year extension the dividend rate is 6.25%. | <sup>(3)</sup> Represents the fully extended dividend rate. During the first-year extension the dividend rate is 6.25%. | <sup>(3)</sup> Represents the fully extended dividend rate. During the first-year extension the dividend rate is 6.25%. | <sup>(3)</sup> Represents the fully extended dividend rate. During the first-year extension the dividend rate is 6.25%. | <sup>(3)</sup> Represents the fully extended dividend rate. During the first-year extension the dividend rate is 6.25%. |

---

We issued $15.5 million of our Series 2019 Preferred Stock in the first quarter of 2022 prior to the termination of the Private Offering in March 2022. During the year ended December 31, 2021 we issued $78.9 million of Series 2019 Preferred Stock. During the years ended December 31, 2022 and 2021, we incurred $6.9 million and $3.6 million in dividends on our Series 2019 Preferred Stock, respectively. During 2022, we incurred $2.9 million in dividends on our Series 2016 Preferred Stock prior to their full redemption on April 18, 2022, and we incurred an insignificant amount in dividends on our Series 2017 Preferred Stock prior to their full redemption immediately after the January 31, 2022 redemption date. During the period from the CRII Merger closing on May 7, 2021 to December 31, 2021, we incurred $6.4 million and $0.1 million in dividends on our Series 2016 Preferred Stock and Series 2017 Preferred Stock, respectively.

During the year ended December 31, 2022, we repurchased 27,000 shares of Series 2019 Preferred Stock for $0.3 million. Additionally, we fully redeemed our Series 2017 Preferred Stock immediately after the January 31, 2022 redemption date for $2.6 million and we fully redeemed our Series 2016 Preferred Stock on April 18, 2022 for $139.8 million. During the year ended December 31, 2021, we repurchased 10,000 shares of Series 2019 Preferred Stock for $0.1 million and during the period from the CRII Merger closing on May 7, 2021 to December 31, 2021 we repurchased 139,740 shares of Series 2016 Preferred Stock for $1.3 million.

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**8.&nbsp;&nbsp;&nbsp;&nbsp;Stockholders' Equity**

*Common Stock*

The following table summarizes the changes in the shares outstanding for each class of outstanding common stock for the periods presented below:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **Class** | **Class** | **Class** | **Class** | **Class** | |
| | **T** | **D** | **I** | **A** | **TX** |<br>**Total** |
| Balance at December 31, 2020 |  |  |  | 12214771 | 17518 | 12232289 |
| &nbsp;&nbsp;&nbsp;Issuance of common stock |  |  | 151286 |  |  | 151286 |
| &nbsp;&nbsp;&nbsp;Distribution reinvestment |  |  |  | 8660 | 2 | 8662 |
| &nbsp;&nbsp;&nbsp;Repurchases of common stock |  |  |  | (203537) |  | (203537) |
| &nbsp;&nbsp;&nbsp;CRII Merger |  |  |  | 430070 |  | 430070 |
| &nbsp;&nbsp;&nbsp;CMRI Merger |  |  |  | 5762253 |  | 5762253 |
| &nbsp;&nbsp;&nbsp;CMRII Merger |  |  |  | 5232957 |  | 5232957 |
| Balance at December 31, 2021 |  |  | 151286 | 23445174 | 17520 | 23613980 |
| &nbsp;&nbsp;&nbsp;Issuance of common stock | 4814430 | 64645 | 3579515 |  |  | 8458590 |
| &nbsp;&nbsp;&nbsp;Distribution reinvestment | 10832 | 28 | 8334 | 93768 | 13 | 112975 |
| &nbsp;&nbsp;&nbsp;Exchanges and transfers <sup>(1)</sup> |  |  | 280889 | 17533 | (17533) | 280889 |
| &nbsp;&nbsp;&nbsp;CMOF Merger |  |  |  | 4335367 |  | 4335367 |
| &nbsp;&nbsp;&nbsp;Repurchases of common stock | (10140) |  | (158975) | (1286978) |  | (1456093) |
| Balance at December 31, 2022 | 4815122 | 64673 | 3861049 | 26604864 |  | 35345708 |
| <sup>(1)</sup> Exchanges represent the number of shares OP Unit holders have exchanged for Class I shares during the period. Transfers represent Class TX shares that were converted to Class A shares during the period. | <sup>(1)</sup> Exchanges represent the number of shares OP Unit holders have exchanged for Class I shares during the period. Transfers represent Class TX shares that were converted to Class A shares during the period. | <sup>(1)</sup> Exchanges represent the number of shares OP Unit holders have exchanged for Class I shares during the period. Transfers represent Class TX shares that were converted to Class A shares during the period. | <sup>(1)</sup> Exchanges represent the number of shares OP Unit holders have exchanged for Class I shares during the period. Transfers represent Class TX shares that were converted to Class A shares during the period. | <sup>(1)</sup> Exchanges represent the number of shares OP Unit holders have exchanged for Class I shares during the period. Transfers represent Class TX shares that were converted to Class A shares during the period. | <sup>(1)</sup> Exchanges represent the number of shares OP Unit holders have exchanged for Class I shares during the period. Transfers represent Class TX shares that were converted to Class A shares during the period. | <sup>(1)</sup> Exchanges represent the number of shares OP Unit holders have exchanged for Class I shares during the period. Transfers represent Class TX shares that were converted to Class A shares during the period. |

---

*Common Stock Distributions*

Distributions on our common stock are determined by the board of directors based on our financial condition and other relevant factors. Common stockholders may choose to receive cash distributions or purchase additional shares through our distribution reinvestment plan. For the year ended December 31, 2022, we paid aggregate distributions of $22.2 million, including $20.0 million distributions paid in cash and $2.2 million of distributions reinvested through our distribution reinvestment plan. For the year ended December 31, 2021, we paid aggregate distributions of $9.6 million, including $9.5 million distributions paid in cash and $0.1 million of distributions reinvested through our distribution reinvestment plan.

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Distributions were at a daily rate of $0.00013699, or $0.50 annually, per common share for the period of January 1, 2021 through August 30, 2021. In September 2021, we began declaring monthly distributions for each share of our common stock as shown in the table below:

---

| | | |
|:---|:---|:---|
| **Stockholder Record Date** | **Monthly Rate** | **Annually** |
| September 25, 2021 | $0.04333333 | $0.52 |
| October 29, 2021 | $0.04333333 | $0.52 |
| November 30, 2021 | $0.05416667 | $0.65 |
| December 31, 2021 | $0.05666667 | $0.68 |
| January 31, 2022 | $0.05833333 | $0.70 |
| February 28, 2022 | $0.05916667 | $0.71 |
| March 31, 2022 | $0.05916667 | $0.71 |
| April 30, 2022 | $0.05916667 | $0.71 |
| May 31, 2022 | $0.06000000 | $0.72 |
| June 30, 2022 | $0.06083333 | $0.73 |
| July 31, 2022 | $0.06083333 | $0.73 |
| August 31, 2022 | $0.06083333 | $0.73 |
| September 30, 2022 | $0.06083333 | $0.73 |
| October 31, 2022 | $0.06083333 | $0.73 |
| November 30, 2022 | $0.06083333 | $0.73 |
| December 31, 2022 | $0.06083333 | $0.73 |

---

For the year ended December 31, 2022, 100% (unaudited) of distributions to stockholders were reported as a return of capital or, to the extent they exceed a stockholder's adjusted tax basis, as gains from the sale or exchange of property.

*Repurchases*

During the year ended December 31, 2022, we repurchased 1,456,093 shares of common stock pursuant to our share repurchase program for $26.9 million, at an average repurchase price of $18.47. During the year ended December 31, 2021, we repurchased 203,537 shares of common stock pursuant to our share repurchase program for $2.6 million, at an average repurchase price of $12.90.

**9. Promote from Incentive Allocation Agreement**

In 2018, CROP sold a portfolio of 12 properties to an unrelated real estate firm, retaining management of the portfolio on behalf of the real estate firm. Under the sales arrangement, CROP entered into an incentive allocation agreement that entitled CROP to participate in distributions from the portfolio should returns exceed certain amounts. During the first quarter of 2022, the real estate firm sold this portfolio of properties. Our TRS realized a promote distribution of $30.7 million from the sale. As a result of the sale, we no longer manage this portfolio.

**10.&nbsp;&nbsp;&nbsp;&nbsp;Related-Party Transactions**

*Advisor Compensation*

CC Advisors III manages our business as our external advisor and, under the terms of our advisory agreement, performs certain services for us, including the identification, evaluation, negotiation, origination, acquisition and disposition of investments; and the management of our business. These activities are all subject to oversight by our board of directors. Our advisor is entitled to receive fees and compensation for services provided as mentioned below.

*Asset Management Fee*. Under the amended and restated advisory agreement entered May 7, 2021 and renewed for an additional one-year term as of May 7, 2022, CROP pays our advisor a monthly management fee equal to 0.0625% of GAV (gross asset value of CROP, calculated pursuant to our valuation guidelines and reflective of the ownership interest held by CROP in such gross assets), subject to a cap of 0.125% of net asset value of CROP. Prior to May 7, 2021, we paid our advisor an annual asset management fee in an amount equal to 1.25% per annum (paid monthly) of the gross book value of our assets as of the last day of the prior month.

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Asset management fees to our advisor for the years ended December 31, 2022 and 2021 were $17.8 million and $8.1 million, respectively.

*Acquisition Expense Reimbursement.* We will reimburse our advisor for out-of-pocket expenses in connection with the selection, evaluation, structuring, acquisition, financing and development of investments, whether or not such investments are acquired, and make payments to third parties or possibly certain of our advisor's affiliates in connection with providing services to us.

*Performance Participation Allocation.* In addition to the fees paid to our advisor for services provided pursuant to the advisory agreement, the Special Limited Partner holds a performance participation interest in CROP that entitles it to receive an allocation of CROP's total return to its capital account. CC Advisors III was initially the Special Limited Partner. Effective November 12, 2021, CC Advisors III assigned its special limited partner interest to its affiliate, CC Advisors – SLP, LLC. The performance participation allocation is an incentive fee indirectly paid to our advisor and receipt of the allocation is subject to the ongoing effectiveness of the advisory agreement. As the performance participation allocation is associated with the performance of a service by the advisor, it is expensed in our consolidated statements of operations.

Total return is defined as all distributions accrued or paid (without duplication) on Participating Partnership units (all units in CROP with the exception of preferred units and the Special Limited Partner Interest) plus the change in the aggregate net asset value of such Participating Partnership units. The annual total return will be allocated solely to the Special Limited Partner only after the other unit holders have received a total return of 5% (after recouping any loss carryforward amount) and such allocation will continue until the allocation between the Special Limited Partner and all other unit holders is equal to 12.5% and 87.5%, respectively. Thereafter, the Special Limited Partner will receive an allocation of 12.5% of the annual total return. The performance participation allocation is ultimately determined at the end of each calendar year, accrues monthly and will be paid in cash or Class I units at the election of the Special Limited Partner after the completion of each calendar year.

During the year ended December 31, 2022, we recognized $20.3 million of expense for the performance participation allocation as a result of the increase in the value of our net assets and dividends paid to stockholders, which was paid in cash on March 2, 2023. During the period from May 7, 2021, the date our operating partnership agreement was amended to provide the performance participation allocation, to December 31, 2021, we recognized $51.8 million of expense for the performance participation allocation, which was paid in cash in January 2022.

*Block C (now known as Westerly and Millcreek North) and Jasper (now known as The Archer) Investments*

On June 28, 2022, we, through our indirect subsidiaries, admitted entities affiliated with us and our advisor, Brickyard QOF, LLC ("Brickyard QOF") and HV Millcreek, LLC ("Millcreek," and together with Brickyard QOF, the "Affiliated Members") as members in CW Block C, LLC, a development joint venture with CMOF ("Block C"), and CW Jasper, LLC, a development project owned 100% by CROP ("The Archer"). Block C owns land held for development of two projects called Westerly and Millcreek North. The Affiliated Members are owned directly or indirectly by our officers or directors, as well as certain employees of CROP and our advisor or its affiliates. In connection with their admission as members, the Affiliated Members made an aggregate capital contribution of $8.5 million and $2.4 million to Block C and The Archer, respectively. The Affiliated Members participate in the economics of Block C and The Archer on the same terms and conditions as us. The operating agreements of Block C and The Archer were amended in August 2022 to reflect additional terms related to the admission of the Affiliated Members. Block C and The Archer are located in an Opportunity Zone, which provides tax benefits for development programs located in designated areas as established by Congress in the Tax Cuts and Jobs act of 2017. As of December 31, 2022, our ownership in The Archer was 79.9%. As a result of the consummation of the CMOF Merger on September 27, 2022, we acquired CMOF's joint venture interests in Block C, increasing our ownership interest to 79.0%.

*Reimbursable Operating Expenses*

Our advisor must reimburse us the amount by which our aggregate total operating expenses for the four fiscal quarters then ended exceed the greater of 2% of our average invested assets or 25% of our net income, unless the conflicts committee has determined that such excess expenses were justified based on unusual and non-recurring factors. Our conflicts committee determined that no reimbursement was required as of December 31, 2022.

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*Alpha Mill Transaction*

On April 7, 2022, we sold a 10.3% interest in Alpha Mill to a trust established by the father of Chad Christensen, one of our directors and Executive Chairman, and Gregg Christensen, our Chief Legal Officer and Secretary (the "Christensen Trust") for $8.2 million.

*Independent Director Compensation*

Annually, each independent director is paid a cash retainer of $50,000 for their service (prorated in 2021) and a grant of time-based LTIP Units with a value of $85,000 at the time of grant. The LTIP Units have a one-year vesting schedule. Independent board members serving as chairperson of each of the audit, compensation and conflicts committees receive an additional annual cash retainer of $15,000, $10,000 and $10,000, respectively.

**11.&nbsp;&nbsp;&nbsp;&nbsp;Noncontrolling Interests**

*Noncontrolling Interests - Limited Partners*

Common Limited OP Units and LTIP Units are CROP units not owned by us and collectively referred to as "Noncontrolling Interests – Limited Partners."

<u>Common Limited OP Units</u> - Common Limited OP Units share in the profits, losses and cash distributions of CROP as defined in the partnership agreement, subject to certain special allocations and receive distributions equivalent to distributions declared to the holders of CCI common stock.

During the year ended December 31, 2022, we paid aggregate distributions to noncontrolling OP Unit holders of $22.2 million. During the period from the CRII Merger on May 7, 2021 to December 31, 2021, we paid aggregate distributions to noncontrolling OP Unit holders of $10.6 million.

<u>LTIP Units</u> - Certain executives, directors and key employees receive LTIP Units in CROP as equity incentive compensation. LTIP Units are a separate series of limited partnership units, which are convertible into Common Limited OP Units upon achieving certain time vesting and performance requirements. Unless otherwise provided, the time vesting LTIP Units (whether vested or unvested) entitle the holder to receive current distributions from CROP, and the performance LTIP Units (whether vested or unvested) entitle the holder to receive 10% of the current distributions from CROP during the applicable performance period. When the LTIP Units have vested and sufficient income has been allocated to the holder of the vested LTIP Units, the LTIP Units will automatically convert to Common Limited OP Units in CROP on a one-for-one basis. LTIP Units constitute profits interests and have no voting rights in CROP.

As of December 31, 2022, there were 673,780 unvested time LTIP awards and 548,138 unvested performance LTIP awards outstanding. Share-based compensation, included within other in the consolidated statement stockholders' equity, was $3.7 million and $1.6 million for the years ended December 31, 2022 and 2021, respectively. Total unrecognized compensation expense for LTIP Units at December 31, 2022 is $8.0 million and is expected to be recognized on a straight-line basis through December 2025.

*Noncontrolling Interests - Partially Owned Entities*

As of December 31, 2022, noncontrolling interests in entities not wholly owned by us ranged from 1% to 63%, with the average being 12%.

On June 28, 2022, Block C was recapitalized. We contributed additional funds and obtained a controlling interest and consolidated the Block C joint venture, recording the Block C membership interests owned by CMOF and Affiliated Members at that time as noncontrolling interests. Upon recapitalization, additional noncontrolling interests were recorded with the Affiliated Members contribution to The Archer, an entity that was already consolidated.

With the CMOF Merger on September 27, 2022, we acquired the noncontrolling interest in Broadway, Park Ave, and Block C that were previously owned by CMOF. The remaining portion of Block C not owned by us continues to be recorded as noncontrolling interest.

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**12.&nbsp;&nbsp;&nbsp;&nbsp;Commitments and Contingencies**

*417 Callowhill*

As of December 31, 2022, we had a remaining commitment of up to $24.7 million on the 417 Callowhill preferred equity investment.

*Economic Dependency*

We are dependent on our advisor and its affiliates and the dealer manager for certain services that are essential to us, including the sale of our shares in our public and private offering; the identification, evaluation, negotiation, origination, acquisition and disposition of investments; management of the daily operations of our investment portfolio; and other general and administrative responsibilities. In the event that these companies are unable to provide the respective services, we will be required to obtain such services from other sources.

*Litigation*

We are subject to a variety of legal actions in the ordinary course of our business, most of which are covered by liability insurance. While the resolution of these matters cannot be predicted with certainty, as of December 31, 2022, we believe the final outcome of such legal proceedings and claims will not have a material adverse effect on our liquidity, financial position or results of operations.

*Richmond Guaranty* 

At the closing of the CRII Merger, the Company assumed a 50% payment guarantee provided by CRII and CROP, for certain obligations of Villas at Millcreek, LLC ("Richmond Borrower") with respect to a construction loan in the amount of $53.6 million obtained in connection with the development of Richmond at Millcreek, a development project sponsored by High Traverse Development, LLC. Certain of our officers and directors own an aggregate 13.91% of Richmond Borrower. A wholly owned subsidiary of CROP receives fees from High Traverse Development, LLC related to the development of Richmond at Millcreek.

*Environmental*

As an owner of real estate, we are subject to various federal, state and local environmental laws. Compliance with existing laws has not had a material adverse effect on us. However, we cannot predict the impact of new or changed laws or regulations on our properties or on properties that we may acquire in the future.

*Distribution Reinvestment Plan*

Our distribution reinvestment plan allows common stockholders to apply their dividends and other distributions towards the purchase of additional shares of common stock. The purchase price for shares purchased pursuant to our distribution reinvestment plan is the transaction price for such shares in effect on the distribution date, which is generally the most recently disclosed NAV per share. We suspended our distribution reinvestment plan in December 2020 and resumed our distribution reinvestment plan on November 4, 2021 when the SEC declared the Follow-on Offering effective.

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*Share Repurchase Programs*

<u>Preferred Stock</u>

Our board of directors has adopted a share repurchase program with respect to our preferred stock whereby, upon the request of a holder of our Series 2019 Preferred Stock and Series 2023 Preferred Stock, we may, at the sole discretion of the board of directors, repurchase their shares at the following prices, which are dependent on how long such preferred stockholder has held each share:

---

| | | |
|:---|:---|:---|
| | **Repurchase Price** | **Repurchase Price** |
|<br>**Share Purchase Anniversary** | **Series 2019** | **Series 2023** |
| Less than 1 year | $8.80 | $9.00 |
| 1 year | $9.00 | $9.00 |
| 2 years | $9.20 | $9.20 |
| 3 years | $9.40 | $9.40 |
| 4 years | $9.60 | $9.60 |
| 5 years | $9.80 | $9.80 |
| A stockholder's death or complete disability, 2 years or more | $10.00 | $10.00 |

---

Repurchase information on our preferred stock is disclosed in <u>[Note 7](#idee5e1a1e23d41889d4214c8b88222aa_130)</u> above.

<u>Common Stock</u>

We suspended our share repurchase program in December 2020. Our board of directors approved the resumption of the share repurchase program effective for repurchases for the month ended June 30, 2021 onward.

Our share repurchase program provides that we may make repurchases, at our discretion, with an aggregate value of up to 2% of our aggregate net asset value or "NAV" each month and up to 5% of our NAV each quarter. We have no restrictions on the source of funds used to repurchase shares pursuant to our share repurchase program.

For our Class T, Class D and Class I shares, the repurchase price is equal to the transaction price at the date of repurchase, or 95% of the transaction price on the repurchase date if the shares have been held for less than a year. For our Class A shares, the repurchase price will be equal to the transaction price at the date of repurchase, subject to the following: (i) shares that have been outstanding six years or more will be repurchased at 100% of the transaction price, (ii) shares that have been outstanding for at least five years and less than six years will be repurchased at 95.0% of the transaction price, (iii) shares that have been outstanding for at least three years and less than five years will be repurchased at 90.0% of the transaction price and (iv) shares that have been outstanding for at least one year and less than three years will be repurchased at 85.0% of the transaction price. The transaction price is the then-current offering price per share, which is generally the most recently disclosed NAV per share.

<u>Common Limited OP Units</u>

Beginning one year after acquiring any Common Limited OP Units, common limited partners have the right to request CROP repurchase their Common Limited OP Units as described below. We may, in our sole discretion, honor the repurchase request at the following prices:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.Beginning one year after acquisition of a Common Limited OP Unit and continuing for the three-year period thereafter, the purchase price for the repurchased Common Limited OP Unit shall be equal to 80% of the NAV of the Common Limited OP Units.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.Beginning four years after acquisition of a Common Limited OP Unit and continuing for the two-year period thereafter, the purchase price for the repurchased Common Limited OP Units shall be equal to 85% of the NAV of the CROP Common Units.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.Beginning six years after acquisition of a Common Limited OP Unit and continuing thereafter, the purchase price for the repurchased Common Limited OP Unit shall be equal to 90% of the NAV of the Common Limited OP Units.

Subject to our sole discretion, in the case of the death or complete disability of a limited partner, the repurchase of the Common Limited OP Units may occur at any time after acquisition of a Common Limited OP Unit and, if accepted by us, the purchase price for the repurchased Common Limited OP Units will be equal to 95% of the NAV of the Common Limited OP Units.

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**13.&nbsp;&nbsp;&nbsp;&nbsp;Subsequent Events**

We have evaluated subsequent events from December 31, 2022 up until the date the consolidated financial statements are issued for recognition or disclosure and have determined there are none to be reported or disclosed in the consolidated financial statements other than those mentioned below.

*Cottonwood Lighthouse Point Tenant In Common Sale*

On February 14, 2023 we sold tenant in common interests in Cottonwood Lighthouse Point for $13.6 million, reducing our ownership from 100% to 86.8%. As a result of this transaction, Cottonwood Lighthouse Point will be deconsolidated on February 14, 2023 and our remaining ownership interest in this property will be recorded as an investment in unconsolidated real estate.

*Financing Activity*

On February 28, 2023, we refinanced seven properties through individual, uncrossed loans with one lender for $326.0 million, receiving net proceeds of $58.0 million. The loans have a weighted average term of 6.8 years with a weighted average fixed rate of 5.08%. Two of the properties are unconsolidated.

On March 17, 2023, we exercised one of our two extension options on the JP Morgan Revolving Credit Facility and extended the maturity date of the credit facility to March 19, 2024.

On March 22, 2023, we entered a loan modification agreement with respect to the mortgage loan on Sugarmont to reduce the loan to $91.2 million and convert the interest rate from a floating rate to a fixed rate of 5.9%.

*Performance Participation Allocation Payment*

On March 2, 2023, we paid the $20.3 million owed to an affiliate of our Advisor for the 2022 performance participation allocation.

*Status of the 2023 Private Offering*

As of March 21, 2023, we sold 2,761,203 shares of Series 2023 Preferred Stock for aggregate gross offering proceeds of $27.6 million. In connection with the sale of these shares in the 2023 Private Offering, the Company paid aggregate selling commissions of $1.6 million and placement fees of $0.8 million.

*Status of the Follow-on Offering*

We sold the following through our Follow-on Offering after December 31, 2022 ($ in thousands):

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **Class** | **Class** | **Class** | **Class** | |
| | **T** | **D** | **I** | **A** |<br>**Total** |
| Shares issued through Primary Offering | 312220 | 101083 | 257426 |  | 670729 |
| Shares issued through DRP Offering | 7428 | 171 | 6210 | 21751 | 35560 |
| Gross Proceeds | $6326 | $2014 | $5069 | $— | $13409 |

---

*Distributions Declared - Common Stock*

We declared the following monthly distributions after December 31, 2022:

---

| | | |
|:---|:---|:---|
| Stockholder Record Date | Monthly Rate | Annually |
| January 31, 2023 | $0.06083333 | $0.73 |
| February 28, 2023 | $0.06083333 | $0.73 |
| March 31, 2023 | $0.06083333 | $0.73 |

---

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<u>[**Table of Contents**](#idee5e1a1e23d41889d4214c8b88222aa_7)</u>

*Grant of LTIP Unit Awards*

On January 6, 2023, we issued LTIP Units from the Operating Partnership to our executive officers and certain employees as approved by our compensation committee. The compensation committee approved awards of time-based LTIP Units in an aggregate amount of $1,556,557. Each award will vest approximately one-quarter of the awarded amount on January 1, 2024, 2025, 2026 and 2027.

The compensation committee also approved awards of performance-based LTIP Units to our executive officers and certain of our employees in an aggregate target amount of $2,890,745. The actual amount of each performance-based LTIP Unit award will be determined at the conclusion of a three-year performance period and will depend on the internal rate of return as defined in the award agreement. The earned LTIP Units will become fully vested on the first anniversary of the last day of the performance period, subject to continued employment with the advisor or its affiliates. The number of units granted were valued by reference to our November 30, 2022 NAV per share as announced on December 16, 2022 of $19.9945.

*Equity Incentive Plan*

On January 6, 2023, we issued an aggregate grant of 15,723 restricted stock units with a four-year vesting schedule. Of this amount, 11,722 were issued pursuant to the Cottonwood Communities, Inc. 2022 Equity Incentive Plan.

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<u>[**Table of Contents**](#idee5e1a1e23d41889d4214c8b88222aa_7)</u>

**Cottonwood Communities, Inc.**

**Schedule III - Real Estate and Accumulated Depreciation as of December 31, 2022 ($ in thousands)**

---

| | | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | | | | | **Initial Cost to Company** | **Initial Cost to Company** | | **Gross Amount Carried as of <br>December 31, 2022** | **Gross Amount Carried as of <br>December 31, 2022** | **Gross Amount Carried as of <br>December 31, 2022** | | | |
|<br>**Description** |<br>**Location** |<br>**Ownership Percent** |<br>**Number of Units** |<br>**Encumbrances** | **Land** | **Buildings, Intangibles and Improvements** |<br>**Cost Capitalized Subsequent to Acquisition** | **Land** | **Buildings, Intangibles and Improvements** | **Total** <sup>(1)</sup> |<br>**Accumulated Depreciation and Amortization** <sup>(2)</sup> |<br>**Year(s) Built** |<br>**Date Acquired** |
| *Stabilized Multifamily Apartment Communities:* | *Stabilized Multifamily Apartment Communities:* |  |  |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Cason Estates | Murfreesboro, TN | 100.0% | 262 | (33594) | 4806 | 46666 | 542 | 4806 | 47208 | 52014 | (4578) | 2005 | 5/7/2021 |
| &nbsp;&nbsp;Cottonwood Apartments | Salt Lake City, UT | 100.0% | 264 | (35430) | 6556 | 40745 | 1283 | 6556 | 42028 | 48584 | (3782) | 1986 | 5/7/2021 |
| &nbsp;&nbsp;Cottonwood Clermont | Clermont, FL | 100.0% | 230 | (35411) | 5705 | 76805 | 124 | 5705 | 76929 | 82634 | (1799) | 2020 | 9/21/2022 |
| &nbsp;&nbsp;Cottonwood Lighthouse Point | Pompano Beach, FL | 100.0% | 243 | (47964) | 13647 | 82447 | 443 | 13647 | 82890 | 96537 | (3871) | 2015 | 6/22/2022 |
| &nbsp;&nbsp;Cottonwood One Upland | Boston, MA | 100.0% | 262 | (32400) | 14515 | 89428 | 687 | 14515 | 90115 | 104630 | (11426) | 2016 | 3/19/2020 |
| &nbsp;&nbsp;Cottonwood Reserve | Charlotte, NC | 91.1% | 352 | (37817) | 12634 | 64986 | 804 | 12634 | 65790 | 78424 | (6522) | 2004, 2017 | 5/7/2021 |
| &nbsp;&nbsp;Cottonwood Ridgeview | Plano, TX | 100.0% | 322 | (65300) | 9275 | 59392 | 303 | 9275 | 59695 | 68970 | (1607) | 2004 | 9/19/2022 |
| &nbsp;&nbsp;Cottonwood West Palm | West Palm Beach, FL | 100.0% | 245 | (47978) | 9380 | 57073 | 657 | 9380 | 57730 | 67110 | (9062) | 2018 | 5/30/2019 |
| &nbsp;&nbsp;Cottonwood Westside | Atlanta, GA | 100.0% | 197 | (25020) | 8641 | 39324 | 247 | 8641 | 39571 | 48212 | (3738) | 2014 | 5/7/2021 |
| &nbsp;&nbsp;Enclave on Golden Triangle | Keller, TX | 98.9% | 273 | (48400) | 4888 | 46712 | 559 | 4888 | 47271 | 52159 | (4090) | 2006 | 5/7/2021 |
| &nbsp;&nbsp;Heights at Meridian | Durham, NC | 100.0% | 339 | (45341) | 5971 | 74022 | 573 | 5971 | 74595 | 80566 | (6815) | 2015 | 5/7/2021 |
| &nbsp;&nbsp;Melrose | Nashville, TN | 100.0% | 220 | (56600) | 8822 | 58676 | 226 | 8822 | 58902 | 67724 | (6097) | 2015 | 5/7/2021 |
| &nbsp;&nbsp;Parc Westborough | Boston, MA | 100.0% | 249 | (21600) | 12759 | 61302 | 405 | 12759 | 61707 | 74466 | (6302) | 2016 | 5/7/2021 |
| &nbsp;&nbsp;Park Avenue <sup>(3)</sup> | Salt Lake City, UT | 100.0% | 234 | (37000) | 12369 | 29931 | 25419 | 12369 | 55350 | 67719 | (1464) | 2022 | 5/7/2021 |
| &nbsp;&nbsp;Pavilions | Albuquerque, NM | 96.4% | 240 | (58500) | 5924 | 55177 | 500 | 5924 | 55677 | 61601 | (4732) | 1992 | 5/7/2021 |
| &nbsp;&nbsp;Raveneaux | Houston, TX | 97.0% | 382 | (47400) | 6249 | 51251 | 594 | 6249 | 51845 | 58094 | (4842) | 2000 | 5/7/2021 |
| &nbsp;&nbsp;Regatta | Houston, TX | 100.0% | 490 | (35367) | 8449 | 39651 | 924 | 8449 | 40575 | 49024 | (4226) | 1968-1976 | 5/7/2021 |
| &nbsp;&nbsp;Retreat at Peachtree City | Peachtree City, GA | 100.0% | 312 | (48719) | 5669 | 66888 | 707 | 5669 | 67595 | 73264 | (6677) | 1999 | 5/7/2021 |
| &nbsp;&nbsp;Scott Mountain | Portland, OR | 95.8% | 262 | (48373) | 6952 | 63758 | 403 | 6952 | 64161 | 71113 | (5330) | 1997, 2000 | 5/7/2021 |
| &nbsp;&nbsp;Stonebriar of Frisco | Frisco, TX | 84.2% | 306 | (53600) | 5737 | 53463 | 1171 | 5737 | 54634 | 60371 | (4667) | 1999 | 5/7/2021 |
| &nbsp;&nbsp;Sugarmont <sup>(3), (4)</sup> | Salt Lake City, UT | 99.0% | 341 | (105000) | 17838 | 94662 | 27304 | 17838 | 121966 | 139804 | (5193) | 2022 | 5/7/2021 |
| &nbsp;&nbsp;Summer Park | Buford, GA | 98.7% | 358 | (44620) | 9474 | 66200 | 495 | 9474 | 66695 | 76169 | (6450) | 2001 | 5/7/2021 |
| &nbsp;&nbsp;The Marq Highland Park | Tampa, FL | 100.0% | 239 | (34005) | 6280 | 59424 | 439 | 6280 | 59863 | 66143 | (6000) | 2015 | 5/7/2021 |
| *Development Projects:* |  |  |  |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Cottonwood Broadway | Salt Lake City, UT | 100.0% | 254 | (39728) | 11042 | 30958 | 33519 | 11042 | 64477 | 75519 |  | N/A | 5/7/2021 |
| &nbsp;&nbsp;Cottonwood Highland | Millcreek, UT | 36.9% | 250 | (18598) | 7405 | 1695 | 36235 | 7405 | 37930 | 45335 |  | N/A | 5/7/2021 |
| &nbsp;&nbsp;Other Developments | Various | Various | N/A |  | 46889 | 1150 | 2652 | 46889 | 3802 | 50691 |  | N/A | Various |
|  |  | **Total** | **7126** | **(1103765)** | **267876** | **1411786** | **137215** | **267876** | **1549001** | **1816877** | **(119270)** |  |  |
| <sup>(1)</sup> The aggregate cost of real estate for federal income tax purposes was $1.3 billion (unaudited) as of December 31, 2022. | <sup>(1)</sup> The aggregate cost of real estate for federal income tax purposes was $1.3 billion (unaudited) as of December 31, 2022. | <sup>(1)</sup> The aggregate cost of real estate for federal income tax purposes was $1.3 billion (unaudited) as of December 31, 2022. | <sup>(1)</sup> The aggregate cost of real estate for federal income tax purposes was $1.3 billion (unaudited) as of December 31, 2022. | <sup>(1)</sup> The aggregate cost of real estate for federal income tax purposes was $1.3 billion (unaudited) as of December 31, 2022. | <sup>(1)</sup> The aggregate cost of real estate for federal income tax purposes was $1.3 billion (unaudited) as of December 31, 2022. | <sup>(1)</sup> The aggregate cost of real estate for federal income tax purposes was $1.3 billion (unaudited) as of December 31, 2022. | <sup>(1)</sup> The aggregate cost of real estate for federal income tax purposes was $1.3 billion (unaudited) as of December 31, 2022. | <sup>(1)</sup> The aggregate cost of real estate for federal income tax purposes was $1.3 billion (unaudited) as of December 31, 2022. | <sup>(1)</sup> The aggregate cost of real estate for federal income tax purposes was $1.3 billion (unaudited) as of December 31, 2022. | <sup>(1)</sup> The aggregate cost of real estate for federal income tax purposes was $1.3 billion (unaudited) as of December 31, 2022. | <sup>(1)</sup> The aggregate cost of real estate for federal income tax purposes was $1.3 billion (unaudited) as of December 31, 2022. | <sup>(1)</sup> The aggregate cost of real estate for federal income tax purposes was $1.3 billion (unaudited) as of December 31, 2022. | <sup>(1)</sup> The aggregate cost of real estate for federal income tax purposes was $1.3 billion (unaudited) as of December 31, 2022. |
| <sup>(2)</sup> Depreciation is recognized on a straight-line basis over the estimated useful asset lives of the related assets, which is 30 years for buildings and ranges from five to 15 years for land improvements, building improvements and furniture, fixtures and equipment. Intangible assets are amortized to depreciation and amortization over the remaining lease term. | <sup>(2)</sup> Depreciation is recognized on a straight-line basis over the estimated useful asset lives of the related assets, which is 30 years for buildings and ranges from five to 15 years for land improvements, building improvements and furniture, fixtures and equipment. Intangible assets are amortized to depreciation and amortization over the remaining lease term. | <sup>(2)</sup> Depreciation is recognized on a straight-line basis over the estimated useful asset lives of the related assets, which is 30 years for buildings and ranges from five to 15 years for land improvements, building improvements and furniture, fixtures and equipment. Intangible assets are amortized to depreciation and amortization over the remaining lease term. | <sup>(2)</sup> Depreciation is recognized on a straight-line basis over the estimated useful asset lives of the related assets, which is 30 years for buildings and ranges from five to 15 years for land improvements, building improvements and furniture, fixtures and equipment. Intangible assets are amortized to depreciation and amortization over the remaining lease term. | <sup>(2)</sup> Depreciation is recognized on a straight-line basis over the estimated useful asset lives of the related assets, which is 30 years for buildings and ranges from five to 15 years for land improvements, building improvements and furniture, fixtures and equipment. Intangible assets are amortized to depreciation and amortization over the remaining lease term. | <sup>(2)</sup> Depreciation is recognized on a straight-line basis over the estimated useful asset lives of the related assets, which is 30 years for buildings and ranges from five to 15 years for land improvements, building improvements and furniture, fixtures and equipment. Intangible assets are amortized to depreciation and amortization over the remaining lease term. | <sup>(2)</sup> Depreciation is recognized on a straight-line basis over the estimated useful asset lives of the related assets, which is 30 years for buildings and ranges from five to 15 years for land improvements, building improvements and furniture, fixtures and equipment. Intangible assets are amortized to depreciation and amortization over the remaining lease term. | <sup>(2)</sup> Depreciation is recognized on a straight-line basis over the estimated useful asset lives of the related assets, which is 30 years for buildings and ranges from five to 15 years for land improvements, building improvements and furniture, fixtures and equipment. Intangible assets are amortized to depreciation and amortization over the remaining lease term. | <sup>(2)</sup> Depreciation is recognized on a straight-line basis over the estimated useful asset lives of the related assets, which is 30 years for buildings and ranges from five to 15 years for land improvements, building improvements and furniture, fixtures and equipment. Intangible assets are amortized to depreciation and amortization over the remaining lease term. | <sup>(2)</sup> Depreciation is recognized on a straight-line basis over the estimated useful asset lives of the related assets, which is 30 years for buildings and ranges from five to 15 years for land improvements, building improvements and furniture, fixtures and equipment. Intangible assets are amortized to depreciation and amortization over the remaining lease term. | <sup>(2)</sup> Depreciation is recognized on a straight-line basis over the estimated useful asset lives of the related assets, which is 30 years for buildings and ranges from five to 15 years for land improvements, building improvements and furniture, fixtures and equipment. Intangible assets are amortized to depreciation and amortization over the remaining lease term. | <sup>(2)</sup> Depreciation is recognized on a straight-line basis over the estimated useful asset lives of the related assets, which is 30 years for buildings and ranges from five to 15 years for land improvements, building improvements and furniture, fixtures and equipment. Intangible assets are amortized to depreciation and amortization over the remaining lease term. | <sup>(2)</sup> Depreciation is recognized on a straight-line basis over the estimated useful asset lives of the related assets, which is 30 years for buildings and ranges from five to 15 years for land improvements, building improvements and furniture, fixtures and equipment. Intangible assets are amortized to depreciation and amortization over the remaining lease term. | <sup>(2)</sup> Depreciation is recognized on a straight-line basis over the estimated useful asset lives of the related assets, which is 30 years for buildings and ranges from five to 15 years for land improvements, building improvements and furniture, fixtures and equipment. Intangible assets are amortized to depreciation and amortization over the remaining lease term. |
| <sup>(3)</sup> Park Avenue and Sugarmont were previously both development projects acquired and consolidated as part of the CRII Merger on May 7, 2021, but which have since been placed into service and reached stabilization. The costs capitalized subsequent to acquisition for these two properties above represent the development costs incurred to complete the projects since the initial acquisition date. | <sup>(3)</sup> Park Avenue and Sugarmont were previously both development projects acquired and consolidated as part of the CRII Merger on May 7, 2021, but which have since been placed into service and reached stabilization. The costs capitalized subsequent to acquisition for these two properties above represent the development costs incurred to complete the projects since the initial acquisition date. | <sup>(3)</sup> Park Avenue and Sugarmont were previously both development projects acquired and consolidated as part of the CRII Merger on May 7, 2021, but which have since been placed into service and reached stabilization. The costs capitalized subsequent to acquisition for these two properties above represent the development costs incurred to complete the projects since the initial acquisition date. | <sup>(3)</sup> Park Avenue and Sugarmont were previously both development projects acquired and consolidated as part of the CRII Merger on May 7, 2021, but which have since been placed into service and reached stabilization. The costs capitalized subsequent to acquisition for these two properties above represent the development costs incurred to complete the projects since the initial acquisition date. | <sup>(3)</sup> Park Avenue and Sugarmont were previously both development projects acquired and consolidated as part of the CRII Merger on May 7, 2021, but which have since been placed into service and reached stabilization. The costs capitalized subsequent to acquisition for these two properties above represent the development costs incurred to complete the projects since the initial acquisition date. | <sup>(3)</sup> Park Avenue and Sugarmont were previously both development projects acquired and consolidated as part of the CRII Merger on May 7, 2021, but which have since been placed into service and reached stabilization. The costs capitalized subsequent to acquisition for these two properties above represent the development costs incurred to complete the projects since the initial acquisition date. | <sup>(3)</sup> Park Avenue and Sugarmont were previously both development projects acquired and consolidated as part of the CRII Merger on May 7, 2021, but which have since been placed into service and reached stabilization. The costs capitalized subsequent to acquisition for these two properties above represent the development costs incurred to complete the projects since the initial acquisition date. | <sup>(3)</sup> Park Avenue and Sugarmont were previously both development projects acquired and consolidated as part of the CRII Merger on May 7, 2021, but which have since been placed into service and reached stabilization. The costs capitalized subsequent to acquisition for these two properties above represent the development costs incurred to complete the projects since the initial acquisition date. | <sup>(3)</sup> Park Avenue and Sugarmont were previously both development projects acquired and consolidated as part of the CRII Merger on May 7, 2021, but which have since been placed into service and reached stabilization. The costs capitalized subsequent to acquisition for these two properties above represent the development costs incurred to complete the projects since the initial acquisition date. | <sup>(3)</sup> Park Avenue and Sugarmont were previously both development projects acquired and consolidated as part of the CRII Merger on May 7, 2021, but which have since been placed into service and reached stabilization. The costs capitalized subsequent to acquisition for these two properties above represent the development costs incurred to complete the projects since the initial acquisition date. | <sup>(3)</sup> Park Avenue and Sugarmont were previously both development projects acquired and consolidated as part of the CRII Merger on May 7, 2021, but which have since been placed into service and reached stabilization. The costs capitalized subsequent to acquisition for these two properties above represent the development costs incurred to complete the projects since the initial acquisition date. | <sup>(3)</sup> Park Avenue and Sugarmont were previously both development projects acquired and consolidated as part of the CRII Merger on May 7, 2021, but which have since been placed into service and reached stabilization. The costs capitalized subsequent to acquisition for these two properties above represent the development costs incurred to complete the projects since the initial acquisition date. | <sup>(3)</sup> Park Avenue and Sugarmont were previously both development projects acquired and consolidated as part of the CRII Merger on May 7, 2021, but which have since been placed into service and reached stabilization. The costs capitalized subsequent to acquisition for these two properties above represent the development costs incurred to complete the projects since the initial acquisition date. | <sup>(3)</sup> Park Avenue and Sugarmont were previously both development projects acquired and consolidated as part of the CRII Merger on May 7, 2021, but which have since been placed into service and reached stabilization. The costs capitalized subsequent to acquisition for these two properties above represent the development costs incurred to complete the projects since the initial acquisition date. |
| <sup>(4)</sup> We own 99.0% of Sugarmont and the remaining one percent interest not owned by us has limited rights, including the right to control on behalf of the joint venture the prosecution and resolution of all litigation, claims, or causes of action that the joint venture has or may have against certain third parties associated with the design and construction of Sugarmont, as well as the obligation to defend any crossclaims resulting from these actions. | <sup>(4)</sup> We own 99.0% of Sugarmont and the remaining one percent interest not owned by us has limited rights, including the right to control on behalf of the joint venture the prosecution and resolution of all litigation, claims, or causes of action that the joint venture has or may have against certain third parties associated with the design and construction of Sugarmont, as well as the obligation to defend any crossclaims resulting from these actions. | <sup>(4)</sup> We own 99.0% of Sugarmont and the remaining one percent interest not owned by us has limited rights, including the right to control on behalf of the joint venture the prosecution and resolution of all litigation, claims, or causes of action that the joint venture has or may have against certain third parties associated with the design and construction of Sugarmont, as well as the obligation to defend any crossclaims resulting from these actions. | <sup>(4)</sup> We own 99.0% of Sugarmont and the remaining one percent interest not owned by us has limited rights, including the right to control on behalf of the joint venture the prosecution and resolution of all litigation, claims, or causes of action that the joint venture has or may have against certain third parties associated with the design and construction of Sugarmont, as well as the obligation to defend any crossclaims resulting from these actions. | <sup>(4)</sup> We own 99.0% of Sugarmont and the remaining one percent interest not owned by us has limited rights, including the right to control on behalf of the joint venture the prosecution and resolution of all litigation, claims, or causes of action that the joint venture has or may have against certain third parties associated with the design and construction of Sugarmont, as well as the obligation to defend any crossclaims resulting from these actions. | <sup>(4)</sup> We own 99.0% of Sugarmont and the remaining one percent interest not owned by us has limited rights, including the right to control on behalf of the joint venture the prosecution and resolution of all litigation, claims, or causes of action that the joint venture has or may have against certain third parties associated with the design and construction of Sugarmont, as well as the obligation to defend any crossclaims resulting from these actions. | <sup>(4)</sup> We own 99.0% of Sugarmont and the remaining one percent interest not owned by us has limited rights, including the right to control on behalf of the joint venture the prosecution and resolution of all litigation, claims, or causes of action that the joint venture has or may have against certain third parties associated with the design and construction of Sugarmont, as well as the obligation to defend any crossclaims resulting from these actions. | <sup>(4)</sup> We own 99.0% of Sugarmont and the remaining one percent interest not owned by us has limited rights, including the right to control on behalf of the joint venture the prosecution and resolution of all litigation, claims, or causes of action that the joint venture has or may have against certain third parties associated with the design and construction of Sugarmont, as well as the obligation to defend any crossclaims resulting from these actions. | <sup>(4)</sup> We own 99.0% of Sugarmont and the remaining one percent interest not owned by us has limited rights, including the right to control on behalf of the joint venture the prosecution and resolution of all litigation, claims, or causes of action that the joint venture has or may have against certain third parties associated with the design and construction of Sugarmont, as well as the obligation to defend any crossclaims resulting from these actions. | <sup>(4)</sup> We own 99.0% of Sugarmont and the remaining one percent interest not owned by us has limited rights, including the right to control on behalf of the joint venture the prosecution and resolution of all litigation, claims, or causes of action that the joint venture has or may have against certain third parties associated with the design and construction of Sugarmont, as well as the obligation to defend any crossclaims resulting from these actions. | <sup>(4)</sup> We own 99.0% of Sugarmont and the remaining one percent interest not owned by us has limited rights, including the right to control on behalf of the joint venture the prosecution and resolution of all litigation, claims, or causes of action that the joint venture has or may have against certain third parties associated with the design and construction of Sugarmont, as well as the obligation to defend any crossclaims resulting from these actions. | <sup>(4)</sup> We own 99.0% of Sugarmont and the remaining one percent interest not owned by us has limited rights, including the right to control on behalf of the joint venture the prosecution and resolution of all litigation, claims, or causes of action that the joint venture has or may have against certain third parties associated with the design and construction of Sugarmont, as well as the obligation to defend any crossclaims resulting from these actions. | <sup>(4)</sup> We own 99.0% of Sugarmont and the remaining one percent interest not owned by us has limited rights, including the right to control on behalf of the joint venture the prosecution and resolution of all litigation, claims, or causes of action that the joint venture has or may have against certain third parties associated with the design and construction of Sugarmont, as well as the obligation to defend any crossclaims resulting from these actions. | <sup>(4)</sup> We own 99.0% of Sugarmont and the remaining one percent interest not owned by us has limited rights, including the right to control on behalf of the joint venture the prosecution and resolution of all litigation, claims, or causes of action that the joint venture has or may have against certain third parties associated with the design and construction of Sugarmont, as well as the obligation to defend any crossclaims resulting from these actions. |

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F - 33

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The following table summarized the changes in our consolidated real estate assets and accumulated depreciation for the years ended December 31, 2022 and 2021 (in thousands):

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| | | | |
|:---|:---|:---|:---|
| | **2022** | **2021** | |
| **Real estate assets:** |  |  |  |
| &nbsp;&nbsp;Balance at beginning of the year | $1476518 | $170796 |  |
| &nbsp;&nbsp;Additions during the year: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Acquisitions | 284138 | 1295086 | <sup>(1)</sup> |
| &nbsp;&nbsp;&nbsp;&nbsp;Improvements and development costs | 56221 | 80775 |  |
| &nbsp;&nbsp;Dispositions and deconsolidations during the year: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Dispositions and deconsolidations |  | (70139) |  |
| &nbsp;&nbsp;Balance at end of the year | $1816877 | $1476518 |  |
| **Accumulated depreciation and amortization:** |  |  |  |
| &nbsp;&nbsp;Balance at beginning of the year | $(68035) | $(9704) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization | (51235) | (61243) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Dispositions and deconsolidations |  | 2912 |  |
| &nbsp;&nbsp;Balance at end of the year | $(119270) | $(68035) |  |
| <sup>(1)</sup> Aside from a portion of the other development real estate assets, all of our 2021 acquisitions of real estate were from the merger with CRII, which was an affiliated entity. The CRII Merger was accounted for as a business combination in accordance with ASC 805. See <u>[Note 3](#idee5e1a1e23d41889d4214c8b88222aa_112)</u> for additional information regarding the CRII Merger including the amount of real estate assets acquired as part of the merger. | <sup>(1)</sup> Aside from a portion of the other development real estate assets, all of our 2021 acquisitions of real estate were from the merger with CRII, which was an affiliated entity. The CRII Merger was accounted for as a business combination in accordance with ASC 805. See <u>[Note 3](#idee5e1a1e23d41889d4214c8b88222aa_112)</u> for additional information regarding the CRII Merger including the amount of real estate assets acquired as part of the merger. | <sup>(1)</sup> Aside from a portion of the other development real estate assets, all of our 2021 acquisitions of real estate were from the merger with CRII, which was an affiliated entity. The CRII Merger was accounted for as a business combination in accordance with ASC 805. See <u>[Note 3](#idee5e1a1e23d41889d4214c8b88222aa_112)</u> for additional information regarding the CRII Merger including the amount of real estate assets acquired as part of the merger. | <sup>(1)</sup> Aside from a portion of the other development real estate assets, all of our 2021 acquisitions of real estate were from the merger with CRII, which was an affiliated entity. The CRII Merger was accounted for as a business combination in accordance with ASC 805. See <u>[Note 3](#idee5e1a1e23d41889d4214c8b88222aa_112)</u> for additional information regarding the CRII Merger including the amount of real estate assets acquired as part of the merger. |

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F - 34

## Exhibit 4.4

**Exhibit 4.4**

**DESCRIPTION OF THE REGISTRANT'S SECURITIES**

**REGISTERED PURSUANT TO SECTION 12 OF THE**

**SECURITIES EXCHANGE ACT OF 1934**

Cottonwood Communities, Inc. has five classes of common stock registered under Section 12 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"): Class A common stock, $0.01 par value per share, Class TX common stock, $0.01 par value per share, Class T common stock, $0.01 par value per share, Class D common stock, $0.01 par value per share, and Class I common stock, $0.01 par value per share. As of the date of this filing, no shares of Class TX common stock are outstanding. References in the following discussion to "we," "our" and "us" and similar references mean Cottonwood Communities, Inc., excluding its subsidiaries, unless the context otherwise requires or otherwise expressly stated, and references to "you" and "your" mean holders of our common stock.

**Description of Our Common Stock**

*The following description of our common stock does not purport to be complete and is subject to and qualified in its entirety by reference to Maryland law and to our charter and bylaws, copies of which are filed as exhibits to the Annual Report on Form 10-K to which this Exhibit 4.4 is a part.*

**General**

Under our charter, we have the authority to issue a total of 1,100,000,000 shares of capital stock. Of the total shares of stock authorized, 1,000,000,000 shares are classified as common stock with a par value of $0.01 per share, 125,000,000 of which are classified as Class A shares, 50,000,000 of which are classified as Class TX shares, 275,000,000 of which are classified as Class T shares, 275,000,000 of which are classified as Class D shares, 275,000,000 of which are classified as Class I shares, and 100,000,000 shares are classified as preferred stock with a par value of $0.01 per share, 12,800,000 of which are classified as Series 2019 and 10,000,000 are classified as Series 2023. Our board of directors, with the approval of a majority of the entire board of directors and without any action by our stockholders, may amend our charter from time to time to increase or decrease the aggregate number of shares of capital stock or the number of shares of capital stock of any class or series that we have authority to issue.

**Common Stock**

Unless otherwise specified, the description of our common stock refers to our shares of Class A, Class TX, Class T, Class D and Class I common stock. Subject to the restrictions on the transfer and ownership of our common stock set forth in our charter and except as may otherwise be specified in our charter, and subject to the terms of any class or series of our preferred stock, the holders of our common stock have exclusive voting power and are entitled to one vote per share on all matters submitted to a stockholder vote, including the election of our directors. Our charter does not provide for cumulative voting in the election of our directors. Therefore, the holders of a majority of the outstanding shares of our common stock can elect all of our directors.

Holders of our common stock are entitled to such distributions as may be authorized by our board of directors and declared by us from time to time out of legally available funds, subject to any preferential rights of any preferred stock that is outstanding. In any liquidation, each outstanding share of common stock entitles its holder to share (based on the percentage of shares held) in the assets that remain after we pay our liabilities and any preferential distributions owed to preferred stockholders. Holders of our common stock have not been granted preemptive rights, which means that stockholders do not have an automatic option to purchase any new shares that we issue, nor do holders of our common stock have any preference, conversion, exchange, sinking fund, redemption or appraisal rights unless, in the case of appraisal rights, our board of directors determines that such rights apply, with respect to all or any classes or series of stock, to one or more transactions occurring after the date of such determination in connection with which such holders would otherwise be entitled to exercise appraisal rights.

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Our board of directors has authorized the issuance of shares of our stock without certificates; therefore, we will not issue certificates for shares of our stock. Shares of our stock will be held in "uncertificated" form which will eliminate the physical handling and safekeeping responsibilities inherent in owning transferable share certificates and eliminate the need to return a duly executed share certificate to effect a transfer. Information regarding restrictions on the transferability of our shares that, under Maryland law, would otherwise have been required to appear on our share certificates will instead be furnished to stockholders upon request and without charge. These requests should be delivered or mailed to: Cottonwood Communities, Inc., 1245 Brickyard Road, Suite 250, Salt Lake City, Utah 84106.

We maintain a stock ledger that contains the name and address of each stockholder and the number of shares that the stockholder holds. DST Systems, Inc. acts as our registrar and as the transfer agent for shares of our stock. With respect to uncertificated stock, we will continue to treat the stockholder registered on our stock ledger as the owner of the shares until the new owner delivers a properly executed form to us, which form we will provide to any registered holder upon request.

***Class T Shares***

Each Class T share issued in our ongoing primary offering is subject to an upfront selling commission of up to 3.0%, and an upfront dealer manager fee of 0.5%, of the transaction price of each Class T share sold in the offering on the date of the purchase, however such amounts may vary at certain participating broker-dealers provided that the sum will not exceed 3.5% of the transaction price. The dealer manager anticipates that all or a portion of the upfront selling commissions and dealer manager fees will be retained by, or reallowed (paid) to, participating broker-dealers.

We pay the dealer manager selling commissions over time as a distribution fee with respect to our outstanding Class T shares equal to 0.85% per annum of the aggregate NAV of our outstanding Class T shares. For each Class T share, this distribution fee consists of an advisor distribution fee and a dealer distribution fee. We expect that generally the advisor distribution fee will equal 0.65% per annum and the dealer distribution fee will equal 0.20% per annum, of the aggregate NAV of our outstanding Class T shares. However, with respect to Class T shares sold through certain participating broker-dealers, the advisor distribution fee and the dealer distribution fee may be other amounts, provided that the sum of such fees will always equal 0.85% per annum of the NAV of such shares. The distribution fees are paid monthly in arrears. Our dealer manager reallows (pays) or advances all or a portion of the distribution fees to participating broker-dealers and servicing broker-dealers, and will rebate distribution fees to us to the extent a broker-dealer is not eligible to receive them unless the total amount of distribution fees advanced has not been recouped or the dealer manager is serving as the broker of record with respect to such shares.

The upfront selling commission and dealer manager fee are each not payable in respect of any Class T shares sold pursuant to our distribution reinvestment plan, but such shares will be subject to the distribution fee payable with respect to all our outstanding Class T shares.

We will cease paying the distribution fee with respect to any Class T share held in a stockholder's account at the end of the month in which the dealer manager in conjunction with the transfer agent determines that total upfront selling commissions, dealer manager fees and distribution fees paid with respect to the shares held by such stockholder within such account would equal or exceed, in the aggregate, 8.5% (or a lower limit as set forth in the applicable agreement between the dealer manager and a participating broker-dealer at the time such shares were issued) of the gross proceeds from the sale of such shares and purchased in a primary offering (i.e., an offering other than a distribution reinvestment plan). At the end of such month, each such Class T share in such account (including shares in such account purchased through the distribution reinvestment plan or received as a stock dividend) will convert into a number of Class I shares (including any fractional shares) with an equivalent aggregate NAV as such share.

***Class D Shares***

No upfront selling commissions or dealer manager fees are paid for sales of any Class D shares.

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We pay the dealer manager selling commissions over time as a distribution fee with respect to our outstanding Class D shares equal to 0.25% per annum of the aggregate NAV of our outstanding Class D shares. The distribution fees are paid monthly in arrears. Our dealer manager reallows (pays) or advances all or a portion of the distribution fees to participating broker-dealers and servicing broker-dealers, and will rebate distribution fees to us to the extent a broker-dealer is not eligible to receive them unless the total amount of distribution fees advanced has not been recouped or the dealer manager is serving as the broker of record with respect to such shares.

Class D shares sold pursuant to our distribution reinvestment plan will be charged the distribution fee payable with respect to all our outstanding Class D shares.

Class D shares are generally available for purchase in our ongoing offering only (1) through fee-based programs, also known as wrap accounts, that provide access to Class D shares, (2) through participating broker-dealers that have alternative fee arrangements with their clients to provide access to Class D shares, (3) through transaction/brokerage platforms at participating broker-dealers, (4) through certain registered investment advisers, (5) through bank trust departments or any other organization or person authorized to act in a fiduciary capacity for its clients or customers or (6) by other categories of investors that we name in an amendment or supplement to this prospectus.

We will cease paying the distribution fee with respect to any Class D share held in a stockholder's account at the end of the month in which the dealer manager in conjunction with the transfer agent determines that total upfront selling commissions and distribution fees paid with respect to the shares held by such stockholder within such account would equal or exceed, in the aggregate, 8.0% (or a lower limit as set forth in the applicable agreement between the dealer manager and a participating broker-dealer at the time such shares were issued) of the gross proceeds from the sale of such shares and purchased in a primary offering (i.e., an offering other than a distribution reinvestment plan). At the end of such month, each such Class D share in such account (including shares in such account purchased through the distribution reinvestment plan or received as a stock dividend) will convert into a number of Class I shares (including any fractional shares) with an equivalent aggregate NAV as such share.

***Class I Shares***

No upfront selling commissions, dealer manager fees or distribution fees are paid for sales of any Class I shares.

Class I shares are generally available for purchase in our ongoing offering only (1) through fee-based programs, also known as wrap accounts, that provide access to Class I shares, (2) by endowments, foundations, pension funds and other institutional investors, (3) through participating broker-dealers that have alternative fee arrangements with their clients to provide access to Class I shares, (4) through certain registered investment advisers, (5) through bank trust departments or any other organization or person authorized to act in a fiduciary capacity for its clients or customers, (6) by our executive officers and directors and their immediate family members, as well as officers and employees of our advisor and its affiliates and their immediate family members, and joint venture partners, consultants and other service providers or (7) other categories of investors that we name in an amendment or supplement to this prospectus.

***Class A Shares***

The Class A shares were established on August 13, 2019, and all shares of our common stock outstanding as of such date were reclassified as Class A. Currently our Class A shares are only available for purchase in our distribution reinvestment plan offering by current holders of our Class A shares. No class specific expenses are associated with our Class A shares.

***Class TX Shares***

All of our Class TX shares have converted to Class A shares without any action on the part of the holder on a one-for-one basis pursuant to the terms of the Class TX shares. We do not anticipate issuing any future Class TX shares.

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***Other Terms of Common Stock***

If not already converted into Class I shares upon a determination that total upfront selling commissions, dealer manager fees, and distribution fees paid with respect to such shares would equal or exceed the applicable limit as described in the "—Class T Shares" and "—Class D Shares" sections above, each Class T share and Class D share held in a stockholder's account (including shares in such account purchased through the distribution reinvestment plan or received as stock dividend) will automatically and without any action on the part of the holder thereof convert into a number of Class I shares (including fractional shares) with an equivalent NAV as such share on the earliest of (i) a listing of Class I shares or (ii) our merger or consolidation with or into another entity in which we are not the surviving entity or the sale or other disposition of all or substantially all of our assets. In addition, after termination of a primary offering registered under the Securities Act, each Class T or Class D share sold in that primary offering, each Class T or Class D share sold under a distribution reinvestment plan pursuant to the same registration statement that was used for that primary offering, and each Class T or Class D share received as a stock dividend with respect to such shares sold in such primary offering or distribution reinvestment plan, shall automatically and without any action on the part of the holder thereof convert into a number of Class I shares (including fractional shares) with an equivalent NAV as such share, at the end of the month in which we, with the assistance of the dealer manager, determine that all underwriting compensation paid or incurred with respect to the offerings covered by that registration statement from all sources, determined pursuant to the rules and guidance of FINRA, would be in excess of 10% of the aggregate purchase price of all shares sold for our account through that primary offering. Further, immediately before any liquidation, dissolution or winding up, each Class T share and Class D share will automatically convert into a number of Class I shares (including any fractional shares) with an equivalent NAV as such share.

**Preferred Stock**

Our charter authorizes our board of directors to designate and issue one or more classes or series of preferred stock without approval of our common stockholders. Our board of directors may determine the relative rights, preferences and privileges of each class or series of preferred stock so issued, which may be more beneficial than the rights, preferences and privileges attributable to our common stock. The issuance of preferred stock could have the effect of delaying or preventing a change in control.

We currently have designated the following two series of preferred stock: Series 2019 and Series 2023. Other than the Series 2023 preferred stock to be issued in our ongoing private offering, our board of directors has no present plans to issue additional preferred stock but may do so at any time in the future without stockholder approval.

***Series 2019 Preferred Stock***

The Series 2019 preferred stock ranks senior to our common stock and on parity with the Series 2023 preferred stock with respect to distribution rights and rights upon liquidation, dissolution or winding up of us.

*Preferred Dividend*. Holders of the Series 2019 preferred stock are entitled to receive a preferred dividend equal to a 5.5% cumulative but not compounded annual return on the purchase price per share of $10.00. In the event that we extend the term of the Series 2019 preferred stock beyond December 31, 2023, the preferred dividend will increase to 6% during such extended term.

*Term*. Unless the Series 2019 preferred stock has been redeemed for cash in connection with an optional redemption or a special redemption event (each as described below), we will, on December 31, 2023 (which date may be extended for two successive one-year terms in our sole discretion), redeem all shares of Series 2019 preferred stock for cash at a redemption price per share equal to $10.00 plus an amount equal to all accrued and unpaid dividends thereon through the redemption date to the extent there are funds legally available therefor, and subject to the preferential rights of the holders of any class or series of our stock ranking senior to the Series 2019 Preferred Stock with respect to priority of distributions.

*Voting*. Holders of the Series 2019 preferred stock are not entitled to vote at any meeting of our stockholders for the election of directors or for any other purpose.

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*Optional Early Redemption*. Subject to the special redemption rights described below, we may, at our option, redeem shares of Series 2019 Preferred Stock, in whole or in part from time to time, for cash beginning on January 1, 2022 at a price per share equal to $10.00 plus an amount equal to all accrued and unpaid dividends thereon through the date on which such shares are redeemed. The redemption date will be selected by us and will be not less than 15 nor more than 60 days after the date on which we send notice of the optional redemption. Redemptions of some but not all of the shares of Series 2019 preferred stock will be made on a pro rata basis unless our board elects to provide the holders of such shares a "first come, first serve" redemption option.

*Special Redemption Rights*. Upon a special redemption event, we have the right to redeem the Series 2019 preferred stock at any time on a date selected by us in our sole discretion at a redemption price equal to $10.00 plus an amount equal to all accrued and unpaid dividends thereon through the redemption date, even if the special redemption event occurs prior to January 1, 2022. A "special redemption event" means the date on which shares of our common stock are listed for trading on a national securities exchange with at least three market makers or a New York Stock Exchange specialist.

*Repurchase Rights*. Upon the request of a holder of Series 2019 preferred stock and subject to certain hold periods and other restrictions, we may, in the sole discretion of our board of directors, repurchase shares of Series 2019 preferred stock from such stockholder at a repurchase price equal to 88%, 90%, 92%, 94% or 96% of the purchase price of $10.00 during the first, second, third, fourth and fifth years of ownership, respectively, and thereafter, at a repurchase price of 98% of the purchase price. In the event of the death or complete disability of a stockholder, we may, in the sole discretion of our board, repurchase the shares of Series 2019 preferred stock held by such stockholder at a repurchase price of $10.00, provided that such stockholder has held its shares for at least two years.

***Series 2023 Preferred Stock***

The Series 2023 preferred stock ranks senior to our common stock and on parity with the Series 2019 preferred stock with respect to distribution rights and rights upon liquidation, dissolution or winding up of us.

*Preferred Dividend*. Holders of the Series 2023 preferred stock are entitled to receive a preferred dividend equal to a 6.0% cumulative but not compounded annual return on the purchase price per share of $10.00. Commencing July 1, 2027, such rate will increase to 6.25% per annum of $10.00 per share and commencing July 1, 2028, such rate will increase to 6.50% per annum of $10.00 per share.

*Term*. Unless the Series 2023 preferred stock has been redeemed for cash in connection with an optional redemption or a special redemption event (each as described below), we will, on June 30, 2027 (which date may be extended for two successive one-year terms in our sole discretion), redeem all shares of Series 2023 preferred stock for cash at a redemption price per share equal to $10.00 plus an amount equal to all accrued and unpaid dividends thereon through the redemption date to the extent there are funds legally available therefor, and subject to the preferential rights of the holders of any class or series of our stock ranking senior to the Series 2023 Preferred Stock with respect to priority of distributions.

*Voting*. Holders of the Series 2023 preferred stock are not entitled to vote at any meeting of our stockholders for the election of directors or for any other purpose.

*Optional Early Redemption*. Subject to the special redemption rights described below, we may, at our option, redeem shares of Series 2023 Preferred Stock, in whole or in part from time to time, for cash beginning on December 31, 2023 at a price per share equal to $10.00 plus an amount equal to all accrued and unpaid dividends thereon through the date on which such shares are redeemed. The redemption date will be selected by us and will be not less than 15 nor more than 60 days after the date on which we send notice of the optional redemption. Redemptions of some but not all of the shares of Series 2023 preferred stock will be made on a pro rata basis unless our board elects to provide the holders of such shares a "first come, first serve" redemption option.

*Special Redemption Rights*. Upon a special redemption event, we have the right to redeem the Series 2023 preferred stock at any time on a date selected by us in our sole discretion at a redemption price equal to $10.00 plus an amount equal to all accrued and unpaid dividends thereon through the redemption date, even if the special redemption event occurs prior to December 31, 2023. A "special redemption event" means (i) the date on which

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shares of our common stock are listed for trading on a national securities exchange with at least three market makers or a New York Stock Exchange specialist, or (ii) upon our entry into a binding commitment for any merger or combination of us or the sale of substantially all of our assets.

*Repurchase Rights*. Upon the request of a holder of Series 2023 preferred stock and subject to certain hold periods and other restrictions, we may, in the sole discretion of our board of directors, repurchase shares of Series 2023 preferred stock from such stockholder at a repurchase price equal to 90%, 92%, 94%, or 96% of the purchase price of $10.00 during the first and second, third, fourth, fifth years of ownership, respectively, and thereafter, at a repurchase price of 98% of the purchase price. In the event of the death or complete disability of a stockholder, we may, in the sole discretion of our board, repurchase the shares of Series 2023 preferred stock held by such stockholder at a repurchase price of $10.00, provided that such stockholder has held its shares for at least two years.

**Meetings and Special Voting Requirements**

An annual meeting of our stockholders will be held each year, at least 30 days after delivery of our annual report. Special meetings of stockholders may be called only upon the request of a majority of our directors, a majority of our independent directors, our chief executive officer or our president or upon the written request of stockholders entitled to cast at least 10% of the votes entitled to be cast on such matter at the special meeting. Upon receipt of a written request of common stockholders holding the requisite number of shares stating the purpose of the special meeting, our secretary will provide all of our stockholders written notice of the meeting and the purpose of such meeting. The meeting must be held not less than 15 days nor more than 60 days after the distribution of the notice of the meeting. The presence in person or by proxy of stockholders entitled to cast 50% of all the votes entitled to be cast at any stockholder meeting constitutes a quorum. Unless otherwise provided by the Maryland General Corporation Law or our charter, the affirmative vote of a majority of all votes cast is necessary to take stockholder action. With respect to the election of directors, each candidate nominated for election to the board of directors must receive a majority of the votes cast by stockholders entitled to vote who are present, in person or by proxy, in order to be elected. Therefore, if a nominee receives fewer "for" votes than "withhold" votes in an election, then the nominee will not be elected.

Our charter provides that the concurrence of our board of directors is not required in order for the common stockholders to amend the charter, dissolve the corporation or remove directors. However, we have been advised that the MGCL does require board approval in order to amend our charter or dissolve. Without the approval of a majority of the shares of common stock entitled to vote on the matter, our board of directors may not:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• amend the charter to adversely affect the rights, preferences and privileges of the common stockholders;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• amend charter provisions relating to director qualifications, fiduciary duties, liability and indemnification, conflicts of interest, investment policies or investment restrictions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• cause our liquidation or dissolution after our initial investment;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• sell all or substantially all of our assets other than in the ordinary course of business; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• cause our merger or reorganization.

With respect to common stock owned by our advisor, CC Advisors III, LLC (referred to as "the Advisor" or "our advisor"), any director or any of their affiliates, neither our advisor nor any such director, nor any of their affiliates may vote or consent on matters submitted to stockholders regarding the removal of our advisor, such directors or any of their affiliates or any transaction between us and any of them. To the extent permitted by the Maryland General Corporation Law, in determining the requisite percentage in interest of shares necessary to approve a matter on which our advisor, our directors or their affiliates may not vote or consent, any shares owned by any of them will not be included.

**Advance Notice for Stockholder Nominations and Proposals of New Business**

Our bylaws provide that with respect to an annual meeting of stockholders, nominations of individuals for election to our board of directors and the proposal of business to be considered by stockholders may be made only (i) pursuant to our notice of the meeting, (ii) by or at the direction of our board of directors or (iii) by a stockholder who is a stockholder of record both at the time of giving the advance notice required by our bylaws and at the time of the meeting, who is entitled to vote at the meeting in the election of each individual so nominated or on any such

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other business and who has complied with the advance notice procedures of our bylaws. Our bylaws contain a similar notice requirement in connection with nominations for directors at a special meeting of stockholders called for the purpose of electing one or more directors. Failure to comply with the notice provisions will make stockholders unable to nominate directors or propose new business.

**Inspection of Books and Records**

Any stockholder will be permitted access to our corporate records to which it is entitled under applicable law at all reasonable times and may inspect and copy any of them for a reasonable copying charge. As a part of our books and records, we maintain at our principal office an alphabetical list of the names, addresses and telephone numbers of our stockholders, along with the number of shares of our common stock held by each of them. We update our stockholder list at least quarterly and it is available for inspection by any stockholder or its designated agent upon request. We will also mail a copy of the list to any stockholder within 10 days of the stockholder's request. We may impose a reasonable charge for expenses incurred in reproducing such list. Stockholders, however, may not sell or use this list for a commercial purpose other than in the interest of the applicant as a stockholder relative to the affairs of our company. The purposes for which stockholders may request this list include matters relating to their voting rights. Each common stockholder who receives a copy of the stockholder list must keep such list confidential and share such list only with its employees, representatives or agents who agree in writing to maintain the confidentiality of the stockholder list.

If our advisor or our board of directors neglects or refuses to exhibit, produce or mail a copy of the stockholder list as requested, our advisor or board, as the case may be, will be liable to the common stockholder requesting the list for the costs, including attorneys' fees, incurred by that stockholder for compelling the production of the stockholder list and any actual damages suffered by any common stockholder for the neglect or refusal to produce the list. It will be a defense that the actual purpose and reason for the requests for inspection or for a copy of the stockholder list is not for a proper purpose but is instead for the purpose of securing such list of stockholders or other information for the purpose of selling such list or copies thereof, or of using the same for a commercial purpose other than in the interest of the applicant as a stockholder relative to the affairs of our company. We may require that the stockholder requesting the stockholder list represent that the request is not for a commercial purpose unrelated to the stockholder's interest in our company. The remedies provided by our charter to stockholders requesting copies of the stockholder list are in addition to, and do not in any way limit, other remedies available to stockholders under federal law, or the law of any state.

Under the Maryland General Corporation Law, a common stockholder is also entitled to inspect and copy (at all reasonable times) the following corporate documents: bylaws, minutes of the proceedings of stockholders, annual statements of affairs, voting trust agreements and stock records for certain specified periods. In addition, within seven days after a request for such documents is presented to an officer or our resident agent, we will have the requested documents available on file at our principal office.

**Restriction on Ownership of Shares of Capital Stock**

***Ownership Limit***

To maintain our REIT qualification, not more than 50% in value of our outstanding shares may be owned, directly or indirectly, by five or fewer individuals (including certain entities treated as individuals under the Internal Revenue Code of 1986, as amended (the "Code")) during the last half of each taxable year. In addition, at least 100 persons who are independent of us and each other must beneficially own our outstanding shares for at least 335 days per 12-month taxable year or during a proportionate part of a shorter taxable year. Each of the requirements specified in the two preceding sentences will not apply to any period prior to the second year for which we elect to be taxed as a REIT. We may prohibit certain acquisitions and transfers of shares so as to ensure our continued qualification as a REIT under the Code. However, we cannot assure you that this prohibition will be effective.

To help ensure that we meet these tests, our charter prohibits any person or group of persons from acquiring, directly or indirectly, beneficial ownership of more than 9.8% of the value of our aggregate outstanding shares of capital stock or 9.8% of the value or number of shares, whichever is more restrictive, of our aggregate outstanding shares of common stock unless exempted (prospectively or retroactively) by our board of directors. Our board of directors may waive this ownership limit with respect to a particular person if the board of directors receives

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evidence, including certain representations required by our charter, that ownership in excess of the limit will not jeopardize our REIT status. For purposes of this provision, we treat corporations, partnerships and other entities as single persons.

Any attempted transfer of our shares that, if effective, would result in a violation of our shares being beneficially owned by fewer than 100 persons will be null and void and the prohibited transferee will not acquire any rights in such shares. Any attempted transfer of our shares that, if effective, would result in a violation of our ownership limit will be null and void and will cause the number of shares causing the violation to be automatically transferred to a trust for the exclusive benefit of one or more charitable beneficiaries and the prohibited transferee will not acquire any rights in such shares. The automatic transfer will be deemed to be effective as of the close of business on the business day prior to the date of the attempted transfer. We will designate a trustee of the trust that will not be affiliated with us or the prohibited transferee. We will also name one or more charitable organizations as a beneficiary of the trust.

Shares held in trust will remain issued and outstanding shares and will be entitled to the same rights and privileges as all other shares of the same class or series. The prohibited transferee will not benefit economically from any of the shares held in trust, will not have any rights to dividends or distributions and will not have the right to vote or any other rights attributable to the shares held in the trust. The trustee will receive all dividends and other distributions on the shares held in trust and will hold such dividends or other distributions in trust for the benefit of the charitable beneficiary. The trustee may vote any shares held in trust. Subject to Maryland law, the trustee will also have the authority (i) to rescind as void any vote cast by the prohibited transferee prior to our discovery that the shares have been transferred to the trustee and (ii) to recast the vote in accordance with the desires of the trustee acting for the benefit of the charitable beneficiary. However, if we have already taken irreversible corporate action, then the trustee will not have the authority to rescind and recast the vote.

Within 20 days of receiving notice from us that any of our shares of our stock have been transferred to the trust for the charitable beneficiary, the trustee will sell those shares to a person designated by the trustee whose ownership of the shares will not violate the above restrictions. Upon the sale, the interest of the charitable beneficiary in the shares sold will terminate and the trustee will distribute the net proceeds of the sale to the prohibited transferee and to the charitable beneficiary as follows. The prohibited transferee will receive the lesser of (i) the price paid by the prohibited transferee for the shares or, if the prohibited transferee did not give value for the shares in connection with the event causing the shares to be held in the trust (e.g., a gift, devise or other similar transaction), the "market price" (as defined in our charter) of the shares on the day of the event causing the shares to be held in the trust and (ii) the price per share received by the trustee from the sale or other disposition of the shares. The trustee may reduce the amount payable to the prohibited transferee by the amount of dividends and other distributions which have been paid to the prohibited transferee and are owed by the prohibited transferee to the trustee and by the amount of any costs incurred by us in connection with the transfer. Any net sale proceeds in excess of the amount payable to the prohibited transferee will be paid immediately to the charitable beneficiary. If, prior to our discovery that shares have been transferred to the trustee, the shares are sold by the prohibited transferee, then (i) the shares will be deemed to have been sold on behalf of the trust and (ii) to the extent that the prohibited transferee received an amount for the shares that exceeds the amount such prohibited transferee was entitled to receive as set forth in this paragraph, the excess will be paid to the trustee upon demand.

In addition, shares held in the trust for the charitable beneficiary will be deemed to have been offered for sale to us, or our designee, at a price per share equal to the lesser of (i) the price per share in the transaction that resulted in the transfer to the trust (or, in the case of a devise or gift, the market price (as defined in our charter) at the time of the devise or gift) and (ii) the market price (as defined in our charter) on the date we, or our designee, accept the offer, both as reduced by the amount of any costs incurred by us in connection with the transfer. We will have the right to accept the offer until the trustee has sold the shares held in trust. Upon a sale to us, the interest of the charitable beneficiary in the shares sold will terminate and the trustee will distribute the net proceeds of the sale to the prohibited transferee. We may reduce the amount payable to the prohibited transferee by the amount of dividends and other distributions which have been paid to the prohibited transferee and are owed by the prohibited transferee to the trustee. We may pay the amount of such reduction to the trustee for the benefit of the charitable beneficiary.

Any person who acquires or attempts to acquire shares in violation of the foregoing restrictions or who would have owned the shares that were transferred to any such trust must immediately notify us of such event, and any

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person who proposes or attempts to acquire or receive shares in violation of the foregoing restrictions must give us at least 15 days' written notice prior to such transaction. In both cases, such persons will provide to us such other information as we may request in order to determine the effect, if any, of such transfer on our status as a REIT.

The foregoing restrictions will continue to apply until our board of directors determines that it is no longer in our best interest to continue to qualify as a REIT or that compliance is no longer required in order for us to qualify as a REIT. The ownership limit does not apply to any underwriter in an offering of our shares or to a person or persons exempted from the ownership limit by our board of directors based upon appropriate assurances that our qualification as a REIT would not be jeopardized.

Within 30 days after the end of each taxable year, every owner of 5% or more of our outstanding capital stock (or such lower percentage as required by law or regulation) will be asked to deliver to us a statement setting forth the number of shares owned directly or indirectly by such person and a description of how such person holds the shares. Each such owner will also provide us with such additional information as we may request in order to determine the effect, if any, of its beneficial ownership on our status as a REIT and to ensure compliance with our ownership limit.

These restrictions could delay, defer or prevent a transaction or change in control of our company that might involve a premium price for our shares of common stock or otherwise be in the best interests of our stockholders.

***Suitability Standards and Minimum Purchase Requirements***

Our charter provides that, until our common stock is listed on a national securities exchange, the following provisions apply to purchases of our common stock in a public offering:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) &nbsp;&nbsp;&nbsp;&nbsp;To purchase our common stock in a public offering, the purchaser must represent to us:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;that such purchaser (or, in the case of sales to fiduciary accounts, that the beneficiary, the fiduciary account or the grantor or donor who directly or indirectly supplies the funds to purchase the shares if the grantor or donor is the fiduciary) has a minimum annual gross income of $70,000 and a net worth (excluding home, home furnishings and automobiles) of not less than $70,000; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;&nbsp;that such purchaser (or, in the case of sales to fiduciary accounts, that the beneficiary, the fiduciary account or the grantor or donor who directly or indirectly supplies the funds to purchase the shares if the grantor or donor is the fiduciary) has a net worth (excluding home, home furnishings and automobiles) of not less than $250,000.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;Each purchase of shares of common stock shall comply with the requirements regarding minimum initial and subsequent cash investment amounts set forth in our then effective registration statement as such registration statement has been amended or supplemented as of the date of such purchase or any higher or lower applicable state requirements with respect to minimum initial and subsequent cash investment amounts in effect as of the date of the issuance or transfer.

**Tender Offers by Stockholders**

Our charter provides that any tender offer made by a stockholder, including any "mini-tender" offer, must comply with certain notice and disclosure requirements. These procedural requirements with respect to tender offers apply to any widespread solicitation for shares of our stock at firm prices for a limited time period.

In order for one of our stockholders to conduct a tender offer to another stockholder, our charter requires that the stockholder comply with Regulation 14D of the Exchange Act and provide us with notice of such tender offer at least ten business days before initiating the tender offer. Pursuant to our charter, Regulation 14D would require any stockholder initiating a tender offer to provide:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• specific disclosure to stockholders focusing on the terms of the offer and information about the bidder;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the ability to allow stockholders to withdraw tendered shares while the offer remains open;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the right to have tendered shares accepted on a pro rata basis throughout the term of the offer if the offer is for less than all of our shares; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• that all stockholders of the subject class of shares be treated equally.

In addition to the foregoing, there are certain ramifications to stockholders should they attempt to conduct a noncompliant tender offer. If any stockholder initiates a tender offer without complying with the provisions set forth above, all tendering stockholders will have the opportunity to rescind the tender of their shares to the noncomplying stockholder within 30 days of our issuance of a position statement on such noncompliant tender offer. The noncomplying stockholder will also be responsible for all of our expenses in connection with that stockholder's noncompliance.

**Business Combinations**

Under the Maryland General Corporation Law, business combinations between a Maryland corporation and an interested stockholder or the interested stockholder's affiliate are prohibited for five years after the most recent date on which the stockholder becomes an interested stockholder. For this purpose, the term "business combination" includes mergers, consolidations, share exchanges, asset transfers and issuances or reclassifications of equity securities. An "interested stockholder" is defined for this purpose as: (i) any person who beneficially owns 10% or more of the voting power of the corporation's outstanding voting stock or (ii) an affiliate or associate of the corporation who, at any time within the two-year period prior to the date in question, was the beneficial owner of 10% or more of the voting power of the then outstanding stock of the corporation. A person is not an interested stockholder under the statute if the board of directors approved in advance the transaction by which such person otherwise would become an interested stockholder. However, in approving the transaction, the board of directors may provide that its approval is subject to compliance, at or after the time of approval, with any terms and conditions determined by the board of directors.

After the five-year prohibition, any business combination between the corporation and an interested stockholder generally must be recommended by the board of directors of the corporation and approved by the affirmative vote of at least (i) 80% of the votes entitled to be cast by holders of outstanding shares of the voting stock of the corporation and (ii) two-thirds of the votes entitled to be cast by holders of the voting stock of the corporation other than shares of stock held by the interested stockholder or its affiliate with whom the business combination is to be effected, or held by an affiliate or associate of the interested stockholder.

These super-majority vote requirements do not apply if the corporation's common stockholders receive a minimum price, as defined under the Maryland General Corporation Law, for their shares of common stock in the form of cash or other consideration in the same form as previously paid by the interested stockholder for its shares of common stock.

None of these provisions of the Maryland General Corporation Law will apply, however, to business combinations that are approved or exempted by the board of directors of the corporation prior to the time that the interested stockholder becomes an interested stockholder. We have opted out of these provisions by resolution of our board of directors. However, our board of directors may, by resolution, opt in to the business combination statute in the future.

**Control Share Acquisitions**

The Maryland General Corporation Law provides that control shares of a Maryland corporation acquired in a control share acquisition have no voting rights except to the extent approved by a vote of two-thirds of the votes entitled to be cast on the matter. Shares owned by the acquirer, an officer of the corporation or an employee of the corporation who is also a director of the corporation are excluded from the vote on whether to accord voting rights to the control shares. "Control shares" are voting shares that, if aggregated with all other shares owned by the acquirer or with respect to which the acquirer has the right to vote or to direct the voting of, other than solely by virtue of a revocable proxy, would entitle the acquirer to exercise voting power in electing directors within one of the following ranges of voting powers:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• one-tenth or more but less than one-third;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• one-third or more but less than a majority; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a majority or more of all voting power.

Control shares do not include shares the acquiring person is then entitled to vote as a result of having previously obtained stockholder approval. Except as otherwise specified in the statute, a "control share acquisition" means the acquisition of control shares.

Once a person who has made or proposes to make a control share acquisition has undertaken to pay expenses and has satisfied other required conditions, the person may compel the board of directors to call a special meeting of stockholders to be held within 50 days of the demand to consider the voting rights of the shares. If no request for a meeting is made, the corporation may itself present the question at any stockholders meeting.

If voting rights are not approved for the control shares at the meeting or if the acquiring person does not deliver an "acquiring person statement" for the control shares as required by the statute, the corporation may redeem any or all of the control shares for their fair value, except for control shares for which voting rights have previously been approved. Fair value is to be determined for this purpose without regard to the absence of voting rights for the control shares, and is to be determined as of the date of the last control share acquisition or of any meeting of stockholders at which the voting rights for control shares are considered and not approved.

If voting rights for control shares are approved at a stockholders' meeting and the acquirer becomes entitled to vote a majority of the shares entitled to vote, all other stockholders may exercise appraisal rights. The fair value of the shares as determined for purposes of these appraisal rights may not be less than the highest price per share paid in the control share acquisition. Some of the limitations and restrictions otherwise applicable to the exercise of dissenters' rights do not apply in the context of a control share acquisition.

The control share acquisition statute does not apply to shares of stock acquired in a merger, consolidation or share exchange if the corporation is a party to the transaction or to acquisitions approved or exempted by the charter or bylaws of the corporation.

Our bylaws contain a provision exempting from the control share acquisition statute any and all acquisitions by any person of our stock. There can be no assurance that this provision will not be amended or eliminated at any time in the future.

**Subtitle 8** 

Subtitle 8 of Title 3 of the Maryland General Corporation Law permits a Maryland corporation with a class of equity securities registered under the Exchange Act and at least three independent directors to elect to be subject, by provision in its charter or bylaws or a resolution of its board of directors and notwithstanding any contrary provision in its charter or bylaws, to any or all of five provisions:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a classified board;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a two-thirds vote requirement for removing a director;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a requirement that the number of directors be fixed only by vote of the directors;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a requirement that a vacancy on the board be filled only by the remaining directors and for the remainder of the full term of the directorship in which the vacancy occurred; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a majority requirement for the calling of a special meeting of stockholders.

Although our board of directors has no current intention to opt in to any of the above provisions permitted under Maryland law, our charter does not prohibit our board from doing so. Becoming governed by any of these provisions could discourage an extraordinary transaction (such as a merger, tender offer or sale of all or substantially all of our assets) that might provide a premium price for holders of our securities. Note that through provisions in our charter and bylaws unrelated to Subtitle 8, we already vest in our board of directors the exclusive power to fix

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the number of directors, provided that the number is not less than three. Our board of directors has the exclusive power to amend our bylaws.

**Exclusive Forum for Certain Litigation**

Our charter provides that, unless we consent in writing to the selection of an alternative forum, the Circuit Court for Baltimore City, Maryland will be the sole and exclusive forum for (i) any derivative action or proceeding brought on our behalf, (ii) any action or proceeding asserting a claim of breach of any duty owed by any of our directors or officers or other employees to us or to our stockholders, (iii) any action or proceeding asserting a claim arising pursuant to any provision of the MGCL or our charter or bylaws or (iv) any action or proceeding asserting a claim that is governed by the internal affairs doctrine, and any record or beneficial stockholder who is a party to such an action or proceeding must cooperate in any request that we may make that the action or proceeding be assigned to the Court's Business and Technology Case Management Program.

The exclusive forum provision of our charter does not establish exclusive jurisdiction in the Circuit Court for Baltimore City, Maryland for claims that arise under the Securities Act, the Exchange Act or other federal securities laws if there is exclusive or concurrent jurisdiction in the federal courts or for claims under state securities laws.

**Restrictions on Roll-Up Transactions**

A Roll-Up Transaction is a transaction involving the acquisition, merger, conversion or consolidation, directly or indirectly, of us and the issuance of securities of an entity that is created or would survive after the successful completion of the transaction, which we refer to as a Roll-Up Entity. This term does not include:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a transaction involving our securities that have been for at least 12 months listed on a national securities exchange; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a transaction involving only our conversion into a trust or association if, as a consequence of the transaction, there will be no significant adverse change in the voting rights of our common stockholders, the term of our existence, the compensation to our advisor or our investment objectives.

In connection with any proposed Roll-Up Transaction, an appraisal of all of our assets will be obtained from a competent independent expert. Our assets will be appraised on a consistent basis, and the appraisal will be based on an evaluation of all relevant information and will indicate the value of our assets as of a date immediately preceding the announcement of the proposed Roll-Up Transaction. If the appraisal will be included in a prospectus used to offer the securities of a Roll-Up Entity, the appraisal will be filed with the SEC and, if applicable, the states in which registration of such securities is sought, as an exhibit to the registration statement for the offering. The appraisal will assume an orderly liquidation of assets over a 12-month period. The terms of the engagement of the independent expert will clearly state that the engagement is for our benefit and the benefit of our stockholders. A summary of the appraisal, indicating all material assumptions underlying the appraisal, will be included in a report to our stockholders in connection with any proposed Roll-Up Transaction.

In connection with a proposed Roll-Up Transaction, the person sponsoring the Roll-Up Transaction must offer to our common stockholders who vote "no" on the proposal the choice of:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• accepting the securities of the Roll-Up Entity offered in the proposed Roll-Up Transaction; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• one of the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• remaining as common stockholders of us and preserving their interests in us on the same terms and conditions as existed previously; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• receiving cash in an amount equal to the stockholders' pro rata share of the appraised value of our net assets.

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We are prohibited from participating in any proposed Roll-Up Transaction:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• that would result in our common stockholders having democracy rights in a Roll-Up Entity that are less than those provided in our charter and bylaws with respect to the election and removal of directors and the other voting rights of our common stockholders, annual reports, annual and special meetings of common stockholders, the amendment of our charter and our dissolution;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• that includes provisions that would operate to materially impede or frustrate the accumulation of shares by any purchaser of the securities of the Roll-Up Entity, except to the minimum extent necessary to preserve the tax status of the Roll-Up Entity, or that would limit the ability of an investor to exercise the voting rights of its securities of the Roll-Up Entity on the basis of the number of shares of common stock that such investor had held in us;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• in which investors' rights of access to the records of the Roll-Up Entity would be less than those provided in our charter and described above in "—Inspection of Books and Records"; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• in which any of the costs of the Roll-Up Transaction would be borne by us if the Roll-Up Transaction would not be approved by our common stockholders.

## Exhibit 10.20

**Exhibit 10.20**

**COWORKING SPACE SERVICES AGREEMENT**

**SUMMARY OF BASIC INFORMATION**

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| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TERMS OF AGREEMENT | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;DESCRIPTION |
| **1.Owner/Tenant:** | Cottonwood Capital Management, Inc.<br>Address for Owner Notices:<br>1245 Brickyard Road, Ste. 250<br>Salt Lake City, UT 84106 |
| **2. Provider:** | APT Cowork, LLC, a Delaware limited liability company<br>Address for Provider Notices:<br>1245 Brickyard Road, Ste. 160<br>Salt Lake City, UT 84106 |
| **3. Term (<u>Section 1</u>).** |  |
| **&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.1 Agreement Term:** | 12 full calendar months following the Fee Commencement Date, plus any partial calendar month in which the Fee Commencement Date occurs. |
| **&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.2 Delivery & Fee Commencement Date:** | Owner shall permit the Provider to enter the Space upon full execution of this Agreement. <br>The "**Fee Commencement Date**" shall occur on the first day that Provider makes the Space for use by Coworking Members. For any partial month, the Fee shall be prorated accordingly.  |
| **4. Fee: (Section 2)** | $10.00 per unit per month payable to Provider; 50% of Provider's Coworking Revenue (as defined in Section 2) per month payable to Owner. |

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**<u>Coworking Space Services Agreement</u>**

This Coworking Space Services Agreement, including the Summary of Basic Information and all exhibits hereto (the "**Agreement**") is made by and between APT Cowork, LLC, a Delaware limited liability company ("**Provider**") and the undersigned tenant of the owner (and tenant hereinafter referred to as "**Owner**" but Provider acknowledges tenant is subject to a lease agreement with the owner) of the "**Space"**, located in the "**Building"** and "**Complex"**, each as such terms are defined in the attached **<u>Exhibit A</u>**. The Agreement shall be effective as of the date the Agreement is last executed by Owner and Provider, respectively (the "**Effective Date**").

1.&nbsp;&nbsp;&nbsp;&nbsp;**<u>AGREEMENT TERM</u>**. The terms and provisions of this Agreement shall be effective as of the date of this Agreement except for the provisions of this Agreement relating to the payment of a Fee (which shall begin on the Fee Commencement Date), or possession of the Space (which shall become effective as of the Delivery Date). The Agreement Term shall commence on the Fee Commencement Date, and shall continue for the Agreement Term.

2.&nbsp;&nbsp;&nbsp;&nbsp;**<u>FEE</u>**. Owner shall pay a Fee to Provider (and Provider to Owner) in the amount stated in **<u>Section 5</u>** of the Summary. For the purposes of this Agreement, "**Coworking Revenue**" is the total amount of all fees paid to Provider during the prior calendar month by Coworking Members and Coworking Guests for which Provider has designated the Space as the "Home Community," (which for purposes of this Agreement shall be defined as the primary coworking location of such Coworking Members and Coworking Guests as reasonably designated by Provider from time to time based on usage) for the following services (i) base services day passes for Resident guests and third party customers; (ii) conference room reservation; (iii) common area reservation; (iv) additional printing services; (v) back office support functions (mail). The Coworking Revenue shall not include any sales or use taxes, cash or credit refunds to Coworking Members on transactions previously reported as Coworking Revenue. Provider shall have sole discretion to set and modify its fee schedule for use of the Space by Coworking Members and Coworking Guests. The Fee shall be delivered to Owner at the address designated in the Summary, or at such other place as Owner may from time to time designate in writing, together with a statement of Provider's Coworking Revenue for the applicable month. The Fee shall be paid by Provider monthly in arrears, no later than the 15<sup>th</sup> day of each Month during the Agreement Term.

3.&nbsp;&nbsp;&nbsp;&nbsp;**<u>COWORKING IMPROVEMENTS</u>**.

&nbsp;&nbsp;&nbsp;&nbsp;3.1&nbsp;&nbsp;&nbsp;&nbsp;<u>Plans for Coworking Improvements</u>.&nbsp;&nbsp;&nbsp;&nbsp;Provider hereby accepts the Space as designed, furnished and depicted by Owner on **<u>Exhibit A</u>** ("**Coworking Plans**"). Any adjustments to the Coworking Plans shall be mutually agreed upon by Owner and Provider in writing. Provider may require Owner prepayment of any costs associated with adjustments to the Coworking Plans.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.2&nbsp;&nbsp;&nbsp;&nbsp;<u>Utilities, & Permits</u>. Unless (and only to the extent) designated in the Coworking Plans as the Provider's responsibility, Owner shall be responsible for providing at Owner's cost, all equipment, fixtures, and improvements which are reasonably necessary to equip the Space for coworking use in accordance with the Coworking Plans, specifically including but not limited to providing adequate access to, and capacity for, all necessary utilities including high speed internet on a separate, stand-alone, network that is only available for use by Provider, the Coworking Members, and Coworking Guests. Furthermore, unless specifically stated to the contrary in the Coworking Plans, Owner shall be solely responsible to obtain, at Owner's expense, any and all permits required for coworking use or any alteration of the Space contemplated by the Coworking Plans, including but not limited to all costs associated with obtaining an occupancy permit, building permits, and all other or similar expenses, fees, or any fines or assessments levied or imposed as a result of Owner not obtaining such permits. In the event that Owner or Provider (as the case may be), after diligent effort through such administrative processes, as are reasonably and normally required, is unable to obtain the permits required in order to construct the Coworking Facilities or operate the coworking business, then either party shall have the right to terminate this Agreement and declare the same null and void and of no further force and effect and without further liability to either party arising thereafter.

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4.&nbsp;&nbsp;&nbsp;&nbsp;**<u>USE OF SPACE</u>**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.1&nbsp;&nbsp;&nbsp;&nbsp;<u>Provider Services</u>. Provider shall use the Space as coworking space, and for uses incidental thereto, for the benefit of Building and Complex tenants and guests, and for the benefit of the customers of Provider's coworking business ("**Coworking Members**"), and guests of Coworking Members ("**Coworking Guests**"), to use the coworking facilities located within Space (the "**Coworking Facilities**"). In exchange for the Fee, Apt Co-Work shall make available the following base coworking space and amenities for Project residents and third-party customers: (i) non-exclusive desk space; (ii) enhanced data/internet services; (iii) printing services; (iv) HVAC and restrooms; (v) unreserved access to common areas for collaborative efforts; (vi) general kitchen space and appliances, all subject to policies adopted by Provider, and other reasonable security measures.

5.&nbsp;&nbsp;&nbsp;&nbsp;**<u>REPAIRS & MAINTENANCE</u>**. Owner shall, subject to Provider's obligations hereinafter provided, at all times during the Agreement Term, and at Owner's sole cost and expense, keep, maintain, and repair the Space, the Coworking Facilities, and all Building systems serving the Space (specifically including but not limited to high-speed internet access), in a functioning, neat, clean, safe, professional, and well-maintained condition, including the providing of regular janitorial services. Provider shall be responsible for the repair of any damage proximately caused by Coworking Members and Coworking Guests, normal wear and tear excepted. Each of Owner and Provider shall promptly notify the other of any damage to the Coworking Facilities or of any expected interruptions or outages to Building systems. It is Owner and Provider's intent that the Space and Coworking Facilities be maintained in an up to date, attractive condition. In the event that either Owner or Provider reasonably determines that any part of the Coworking Facilities (including equipment or furniture) need to be updated in order to meet such standards, then the party making such determination shall notify the other party in writing of the need for, and proposed extent of, such update, and Owner and Provider agree to thereafter negotiate in good faith for a period of thirty (30) days as to the scope and specifications of any updated improvements.

6.&nbsp;&nbsp;&nbsp;&nbsp;**<u>INSURANCE</u>**.

&nbsp;&nbsp;&nbsp;&nbsp;6.1&nbsp;&nbsp;&nbsp;&nbsp;<u>Indemnification and Waiver</u>. Provider shall indemnify, defend, protect, and hold harmless Owner, its agents, employees, and contractors (collectively "**Owner Parties**") from any and all third party claims for loss, cost, damage, expense and liability (including without limitation court costs and reasonable attorneys' fees) (collectively "**Losses**") incurred in connection with or arising from any acts, omissions or negligence of Provider, its agents, employees, or contractors (collectively, the "**Provider Parties**"), in, on, or about the Complex, occurring during the Agreement Term, provided that the terms of the foregoing indemnity shall not apply to the extent such Losses are attributable to the negligence act of omissions of the Owner Parties. Likewise, Owner shall indemnify, defend, protect, and hold harmless Provider Parties from any and all third party claims for Losses incurred in connection with or arising from any acts, omissions or negligence of Owner Parties during the Agreement Term, provided that the terms of the foregoing indemnity shall not apply to the extent such losses are attributable to the negligent act or omissions of the Provider Parties. The provisions of this <u>Section 6.1</u> shall survive the expiration or sooner termination of this Agreement with respect to any claims or liability occurring prior to such expiration or termination.

&nbsp;&nbsp;&nbsp;&nbsp;6.2&nbsp;&nbsp;&nbsp;&nbsp;<u>Provider's Insurance</u>. Provider shall maintain at Provider's cost and expense, Commercial/Comprehensive General Liability Insurance covering the insured against claims of bodily injury, personal injury and property damage (including loss of use thereof) arising out of Provider's operations, and contractual liabilities (covering the performance by Provider of its indemnity agreements) including a Broad Form endorsement covering the insuring provisions of this Agreement and the performance by Provider of the indemnity agreements set forth in <u>Section 6.1</u> of this Agreement, for limits of liability not less than One Million Dollars ($1,000,000.00) for each occurrence and Two Million Dollars ($2,000,000.00) annual aggregate. Provider's policy of insurance shall be primary as to all claims arising directly from Provider's operations, and provide that any insurance carried by Owner is excess and is non-contributing with any insurance requirement of Provider.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.3&nbsp;&nbsp;&nbsp;&nbsp;<u>Owner's Insurance</u>. Owner shall maintain at Owner's cost and expense: (i) Property Insurance covering all furniture, trade fixtures, equipment, and all other items of Owner's property on the Space, written on a "cause of loss" form for the full replacement cost value of the covered items and in amounts that meet any co-insurance clauses of the policies of insurance and shall include a vandalism and malicious mischief endorsement, and sprinkler leakage coverage; and (ii) Commercial/Comprehensive General Liability Insurance covering the insured against claims of bodily injury, personal injury, and property damage (including loss of use thereof) occurring within the Complex for limits of liability not less than One Million Dollars ($1,000,000.00) for each occurrence and Two Million Dollars ($2,000,000.00) annual aggregate. Owner's policies of insurance shall be primary insurance as to all claims occurring within the Complex other than as a direct result of Provider's operations, and any insurance carried by Provider is excess and is non-contributing with any insurance requirement of Owner.

&nbsp;&nbsp;&nbsp;&nbsp;6.4&nbsp;&nbsp;&nbsp;&nbsp;<u>Form of Policies</u>. Each policy of insurance shall (i) name Owner, Provider, and any other party it so specifies, as an additional insured; (ii) specifically cover the liability assumed by the insured under this Agreement, including, but not limited to, an insured's obligations under <u>Section 6.1</u> of this Agreement; (iii) be issued by an insurance company having a rating of not less than A-VIII in Best's Insurance Guide or which is otherwise acceptable to Owner and licensed to do business in the state in which the Space is located; (iv) provide that said insurance shall not be canceled or coverage changed unless thirty (30) days' prior written notice shall have been given to Owner and any mortgagee (except that only ten (10) days' notice shall be required for any termination due to failure to pay premiums). Each of Owner and Provider shall deliver said policy or policies or certificates thereof to the other party on or before the Delivery Date and at least thirty (30) days before the expiration dates thereof.

&nbsp;&nbsp;&nbsp;&nbsp;6.5&nbsp;&nbsp;&nbsp;&nbsp;<u>Subrogation</u>. Owner and Provider agree to have their respective insurance companies issuing property damage insurance waive any rights of subrogation that such companies may have against Owner or Provider, as the case may be, so long as the insurance carried by Owner and Provider, respectively, is not invalidated thereby. Notwithstanding anything to the contrary contained in this Agreement, Owner and Provider hereby waive any right that either may have against the other on account of any loss or damage to their respective property to the extent such loss or damage is insurable under the policies to be maintained in accordance with this Agreement.

7.&nbsp;&nbsp;&nbsp;&nbsp;**<u>ASSIGNMENT</u>**. Owner and Provider hereby agree that Provider shall not assign, or otherwise transfer, this Agreement or any interest hereunder, to permit any assignment or other such foregoing transfer of this Agreement or any interest hereunder by operation of law, without the advance written consent of Owner. Notwithstanding anything to the contrary contained in this Section 7 or the Agreement, Provider may transfer this Agreement without Owner's consent to (i) any corporation, limited liability company, partnership or other business entity that controls, is controlled by, or is under common control with Provider (specifically including, but not limited to an internal corporate reorganization of Provider constituting a mere change in its entity form, such as converting to a corporation); (ii) any corporation, limited liability company, partnership or other business entity resulting from the merger or consolidation with Provider; (iii) any entity that acquires substantially all of Provider's assets; (iv) a transfer of ownership or control in Provider; or (v) any issuance or subsequent transfer of voting stock to the public through a listing on a "national securities exchange" as defined in the Securities Exchange Act of 1934 (each of (i) through (v) is individually referred to herein as a "Permitted Transfer" to a "Permitted Transferee"). Any Permitted Transferee shall expressly assume in writing the obligations of Provider hereunder. Provider shall provide to Owner a fully executed copy of the transfer of this Agreement within thirty (30) days of such transfer, together with such other information as Owner shall reasonably require to confirm that the transfer in fact qualifies as a Permitted Transfer.

8.&nbsp;&nbsp;&nbsp;&nbsp;**<u>NOTICES</u>**. All notices, demands, statements or communications (collectively, "**Notices**") given or required to be given by either party to the other hereunder shall be in writing, shall be sent by United States certified or registered mail or a regionally or nationally recognized overnight courier service, postage prepaid, return receipt requested, or delivered personally (i) to Provider at the appropriate address set forth in <u>Section 2</u> of the Summary, or to such other place as Provider may from time to time designate in a Notice to Owner; or (ii) to Owner at the addresses set forth in <u>Section 1</u> of the Summary, or to such other firm or to such other place as Owner may from time to time designate in a Notice to Provider. Any Notice will be deemed given on the date it is mailed as provided in this <u>Section 8</u> or upon the date personal delivery is made.

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9.&nbsp;&nbsp;&nbsp;&nbsp;**<u>DEFAULTS; REMEDIES</u>**

&nbsp;&nbsp;&nbsp;&nbsp;9.1&nbsp;&nbsp;&nbsp;&nbsp;<u>Provider Events of Default</u>. The occurrence of any of the following shall constitute a "**Default**" of this Agreement by Provider:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.1.1&nbsp;&nbsp;&nbsp;&nbsp;Any failure by Provider to observe or perform any other provision, covenant, or condition of this Agreement to be observed or performed by Provider within twenty (20) days of written notice from Owner, provided that if the nature of the default claimed by Owner is such that it cannot be reasonably cured within such twenty (20) day period, no Default shall be deemed to have occurred so long as Provider commences to cure the alleged default within such twenty (20) day period, and thereafter diligently pursues the same to completion.

&nbsp;&nbsp;&nbsp;&nbsp;9.2&nbsp;&nbsp;&nbsp;&nbsp;<u>Owner Remedies Upon Default</u>. In addition to all rights and remedies to which Owner may be entitled at law or in equity, in the event of Default, Owner shall have the right, upon notice to Provider, to immediately terminate this Agreement and the license granted hereunder, and Owner shall have the right, at its sole option, to re-enter the Space, and to remove and dispose of all personalty from the Space at the sole cost and expense of Provider.

&nbsp;&nbsp;&nbsp;&nbsp;9.3&nbsp;&nbsp;&nbsp;&nbsp;<u>Owner Defaults</u>. Owner shall be in default under this Agreement if Owner fails to: (a) pay any obligation of Owner under this Agreement within fifteen (15) days of becoming due; or (b) begin performing any other obligation of Owner, within twenty (20) days after receipt of notice from Provider stating the obligation Owner has failed to perform, and diligently pursue completion of the required performance. In the event of a default by Owner, Provider may: (i) terminate any services provided to Owner pursuant to this Agreement, or (ii) exercise any and all other legal and equitable remedies available to Provider.&nbsp;&nbsp;&nbsp;&nbsp;

&nbsp;&nbsp;&nbsp;&nbsp;9.4&nbsp;&nbsp;&nbsp;&nbsp;<u>Waiver of Default</u>. No waiver by Owner or Provider of any violation or breach of any of the terms, provisions and covenants herein contained shall be deemed or construed to constitute a waiver of any other or later violation or breach of the same or any other of the terms, provisions, and covenants herein contained.

10.&nbsp;&nbsp;&nbsp;&nbsp;**<u>FORCE MAJEURE</u>**. Notwithstanding anything to the contrary contained in this Agreement, any prevention, delay or stoppage due to strikes, lockouts, labor disputes, acts of God, inability to obtain services, labor, or materials or reasonable substitutes therefor, governmental actions, civil commotions, fire or other casualty, epidemic, pandemic, disease, quarantine, or any other causes beyond the reasonable control of the party obligated to perform (collectively, "**Force Majeure**"), shall excuse the performance of such party for a period equal to any such Force Majeure and, therefore, if this Agreement specifies a time period for performance of an obligation of either party, that time period shall be extended by the period of any delay in such party's performance caused by a Force Majeure. In no event shall financial inability be considered to be an event of Force Majeure.

11.&nbsp;&nbsp;&nbsp;&nbsp;**<u>LIMITATIONS ON LIABILITY</u>**. Notwithstanding any contrary provision herein, neither Owner nor Provider shall be liable for any special, consequential, or punitive damages.

12.&nbsp;&nbsp;&nbsp;&nbsp;**<u>SIGNS</u>**. Any signs, notices, logos, pictures, names, or advertisements ("**Signage**") to be installed at the Space or anywhere at the Complex shall be subject to Owner's prior approval, which such approval will not be unreasonably withheld. Prior to the installation of any exterior signs, Provider will submit to Owner a proof for Owner's review. Provider is responsible for obtaining all required municipal approvals and permits for sign installation.

13.&nbsp;&nbsp;&nbsp;&nbsp;**<u>COMPLIANCE WITH LAW</u>**. Neither Provider nor Owner shall do anything or suffer anything to be done in or about the Space which will in any way conflict with any law, statute, ordinance or other governmental rule, regulation or requirement now in force or which may hereafter be enacted or promulgated. At its sole cost and expense, Owner shall promptly comply with all governmental regulations (including the making of any alterations to the Space required by applicable laws) with regards to accessibility and safety, including but not limited to the Americans with Disabilities Act. Should any standard or regulation now or hereafter be imposed on Owner or Provider by a state, federal or local governmental body charged with the establishment, regulation and enforcement of occupational,

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health or safety standards for employers, employees, landlords or tenants, then Owner agrees, at its sole cost and expense, to comply promptly with such standards or regulations.

14.&nbsp;&nbsp;&nbsp;&nbsp;**<u>LATE CHARGES</u>**. If any installment of Fee or any other sum due from Provider or Owner hereunder shall not be received by the party to whom it is due or such party's designee within fifteen (15) days after said amount is due, then the party charged with such payment shall pay to the other party a late charge equal to three percent (3%) of the amount due plus any reasonably attorneys' fees and costs incurred by reason of such party's failure to pay Fee and/or other charges when due hereunder. The late charge shall be in addition to all of a party's other rights and remedies hereunder or at law and shall not be construed as liquidated damages or as limiting remedies in any manner. In addition to the late charge described above, any Fee or other amounts owing hereunder which are not paid within fifteen (15) days after the date they are due shall thereafter bear interest until paid at a rate equal to twelve percent (12%) per annum, provided that in no case shall such rate be higher than the highest rate permitted by applicable law.

15.&nbsp;&nbsp;&nbsp;&nbsp;**<u>MISCELLANEOUS PROVISIONS</u>**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;15.1&nbsp;&nbsp;&nbsp;&nbsp;<u>Exclusivity & Non-Competition.</u> During the Term of this Agreement, Owner agrees that Provider shall be the exclusive provider of coworking space in the Complex. In addition, Owner agrees that it shall not designate, agree, or license, any other space within the Complex for coworking use for a period of one (1) year following the termination of this Agreement by Owner for any reason other than a Default by Provider. The foregoing one (1) year restriction shall also apply in the event of a termination of this Agreement by Provider due to any default by Owner hereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;15.2&nbsp;&nbsp;&nbsp;&nbsp;<u>Transfer of Owner's Interest</u>. Provider acknowledges that Owner has the right to transfer all or any portion of its interest in the Building and in this Agreement, and Provider agrees that in the event of any such transfer, so long as the transferee assumes all of Owner's obligations under this Agreement, Owner shall automatically be released from all liability under this Agreement and Provider agrees to look solely to such transferee for the performance of Owner's obligations hereunder after the date of transfer. The liability of any transferee of Owner shall be limited to the interest of such transferee in the Complex and such transferee shall be without personal liability under this Agreement, and Provider hereby expressly waives and releases such personal liability on behalf of itself and all persons claiming by, through or under Provider. Provider further acknowledges that Owner may assign its interest in this Agreement to a mortgage lender as additional security and agrees that such an assignment shall not release Owner from its obligations hereunder and that Provider shall continue to look to Owner for the performance of its obligations hereunder. In the event that either: (i) title to the Space is transferred pursuant to an arms-length sale of the Building or Complex by Owner to a third party; (ii) a mortgage lender forecloses on the Owner's interest or receives a deed to Owner's interest in lieu of such foreclosure; or (iii) Owner reasonably determines that this Agreement violates any material covenants to Owner's mortgage lender and Provider declines to modify the terms of the Agreement in order to remedy such violation within ten (10) days of Owner's request, then Owner shall have the option to terminate this Agreement upon thirty (30) day advance written notice to Provider, provided that the covenants of <u>Section 15.1</u> (Exclusivity & Non-Competition) shall survive such termination, and the terms of the Agreement shall continue to be enforceable with respect to any events occurring prior to the effective date of such termination.

&nbsp;&nbsp;&nbsp;&nbsp;15.3&nbsp;&nbsp;&nbsp;&nbsp;<u>Marketing the Coworking Facilities</u>. Owner and Provider agree to reasonably cooperate with each other in marketing the Coworking Facilities to residents of the Complex and other available leads, provided that neither party shall be obligated to incur any additional costs associated with such marketing unless and to the extent agreed in writing.

&nbsp;&nbsp;&nbsp;&nbsp;15.4&nbsp;&nbsp;&nbsp;&nbsp;<u>Confidentiality</u>. Each party shall retain in confidence the terms of this Agreement and all non-public information and know-how of the other party disclosed to such party (the "**Receiving Party**") in connection with this Agreement and the coworking services, which is either designated as confidential or proprietary, or which should reasonably be considered confidential or proprietary given the nature of the circumstance of disclosure, including but not limited to, non-public pricing and cost information, business plans and practices, sales information, business opportunities, applications, interfaces, affiliate lists, strategies, software, technologies, forecasts, intellectual property, designs, research, development,

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know-how, personnel, supplier information, customer lists, and databases ("**Confidential Information**"). Each party may disclose the Confidential Information of the other party only to those of its affiliates**,** employees and contractors who have a need to know such information for purposes contemplated by this Agreement and who are legally bound (by agreement or operation of law) by an obligation to maintain the confidential nature of such information at least as protective as the terms of this Agreement. Each party further agrees to hold, and to cause its employees and contractors to hold, all such Confidential Information of the other party in strict confidence, and to protect the Confidential Information of the other party from unauthorized disclosure using precautions at least as protective as those taken to protect its own confidential information of a similar nature but in no case less than reasonable precautions. Notwithstanding the foregoing, Confidential Information shall not include any information that: (i) was known by the Receiving Party prior to disclosure thereof by the other party; (ii) becomes generally known to the public through no fault of the Receiving Party and not in violation of this Agreement; (iii) is disclosed to the Receiving Party by a third party legally entitled to make such disclosure without violation of any obligation of confidentiality; or (iv) is independently developed by the Receiving Party without reference to any Confidential Information of the other party. Each party may also disclose Confidential Information as compelled to do so by court order, subpoena, or similar instrument legally compelling disclosure or as otherwise required by applicable law, provided that the party being compelled to make the disclosure shall (to the extent legally permitted) provide prompt written notice of such required disclosure to the other party and allow such other party the opportunity to seek a protective order. Notwithstanding the foregoing, each of Owner Provider may share the Agreement with its professional advisors, lenders, investors, and prospective assignees who agree to maintain the confidentiality thereof. It is understood and agreed that damages alone would be an inadequate remedy for the breach of this <u>Section 15.4</u>, and a party shall also have the right to seek specific performance of this provision and to seek injunctive relief to prevent any breach or continued breach of this Section by the other party.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;15.5&nbsp;&nbsp;&nbsp;&nbsp;<u>Time of Essence</u>. Time is of the essence with respect to all covenants, terms, conditions, and provisions of this Agreement and all times specified herein shall be strictly enforced, unless waived by Owner.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;15.6&nbsp;&nbsp;&nbsp;&nbsp;<u>Partial Invalidity</u>. If any term, provision or condition contained in this Agreement shall, to any extent, be invalid or unenforceable, the remainder of this Agreement, or the application of such term, provision or condition to persons or circumstances other than those with respect to which it is invalid or unenforceable, shall not be affected thereby, and each and every other term, provision and condition of this Agreement shall be valid and enforceable to the fullest extent possible permitted by law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;15.7&nbsp;&nbsp;&nbsp;&nbsp;<u>Entire Agreement</u>. It is understood and acknowledged that there are no oral agreements between the parties hereto affecting this Agreement and this Agreement supersedes and cancels any and all previous negotiations, arrangements, brochures, agreements and understandings, if any, between the parties hereto or displayed by Owner to Provider with respect to the subject matter thereof, and none thereof shall be used to interpret or construe this Agreement. This Agreement contains all of the terms, covenants, conditions, warranties and agreements of the parties relating in any manner to the rental, use and occupancy of the Space, shall be considered to be the only agreement between the parties hereto and their representatives and agents, and none of the terms, covenants, conditions or provisions of this Agreement can be modified, deleted or added to except in writing signed by the parties hereto. All negotiations and oral agreements acceptable to both parties have been merged into and are included herein. There are no other representations or warranties between the parties, and all reliance with respect to representations is based totally upon the representations and agreements contained in this Agreement. Notwithstanding the foregoing, Owner agrees to join with Provider in amending this Agreement, as required by any Provider lender, or in order to comply with any applicable real estate investment trust rules and regulations, so long as the effect of the required amendment will not have a material and adverse impact on the rights of Owner pursuant to this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;15.8&nbsp;&nbsp;&nbsp;&nbsp;<u>Attorneys' Fees</u>. If either party commences litigation against the other for the specific performance of this Agreement, for damages for the breach hereof or otherwise for enforcement of any remedy hereunder, the parties hereto agree to and hereby do waive any right to a trial by jury and, in the event of any such commencement of litigation, the prevailing party shall be entitled to recover from the other party such costs and reasonable attorneys' fees as may have been incurred, including any and all costs incurred in enforcing, perfecting and executing such judgment.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;15.9&nbsp;&nbsp;&nbsp;&nbsp;<u>Governing Law</u>. The laws of the State in which the Space is located shall govern the validity, construction, and enforcement of this Agreement. All parties to this Agreement waive the right to a jury in any action, claim, proceeding, counterclaim, or affirmative defenses brought by any of them against any other party related to any matters whatsoever arising under this Agreement, or their relationship as Owner and Provider, or Provider's use or occupancy of the Space or the Building. The provisions of this Agreement shall be construed, in all respects in accordance with the general tenor of such provisions, without reference to any rule or canon requiring or permitting the construction of provisions of documents against the interest of the party responsible for the drafting of the same, it being the intention and agreement of the parties that this Agreement shall be conclusively deemed to be the joint product of both parties and their counsel. This section shall survive the expiration of termination of the Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;15.10&nbsp;&nbsp;&nbsp;&nbsp;<u>Representations or Warranties</u>. Each of Provider and Owner hereby represent and warrant to the other that such party is duly organized, validly existing and in good standing under the laws of the State where the Space is located, with the requisite power and authority (corporate or otherwise) to carry on its business and to enter into and to perform its obligations under this Agreement. Each person executing this Agreement on behalf of either Provider or Owner hereby represents and warrants that (1) such person is duly and validly authorized to do so on behalf of the entity it purports to so bind, (2) if such party is a corporation or limited liability company, that such corporation or limited liability company has full right and authority to enter into this Agreement and to perform all of its obligations hereunder, and (c) the execution of this Agreement will not violate the terms of any agreements that such party may have with any other parties, including agreements, restrictive covenants, exclusives, and mortgages. Each party hereby warrants that this Agreement is valid and binding upon itself and enforceable against itself in accordance with its terms.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;15.11&nbsp;&nbsp;&nbsp;&nbsp;<u>Electronic Signature.</u> This Agreement may be executed by a party's signature transmitted by facsimile or by electronic mail in portable document format ("pdf") or through an electronic signature/online signature service such as "DocuSign", and copies of this Agreement executed and delivered by means of faxed or pdf signatures or by DocuSign or similar service shall have the same force and effect as copies hereof executed and delivered with original signatures.

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| | |
|:---|:---|
| IN WITNESS WHEREOF, Owner and Provider have caused this Agreement to be executed the day and date first above written. | IN WITNESS WHEREOF, Owner and Provider have caused this Agreement to be executed the day and date first above written. |
| **OWNER** | **PROVIDER** |
| Cottonwood Capital Management, Inc.,<br>a Delaware corporation<br>______________________________________<br>Print Name: ____________________________<br>Title: _________________________________ | APT Cowork, LLC, <br>a Delaware limited liability company<br>______________________________________<br>Print Name: ____________________________<br>Title: _________________________________ |

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**EXHIBIT A**

**<u>IDENTIFICATION OF THE SPACE, BUILDING, AND COMPLEX</u>**

[ATTACH SPACE PLAN FOR SPACE AND SITE PLAN FOR BUILDING & COMPLEX]

## Exhibit 10.21

**Exhibit 10.21**

FOURTH AMENDMENT TO THE<br>SIXTH AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT<br>OF<br>COTTONWOOD RESIDENTIAL O.P., LP

This Fourth Amendment (this "Amendment") to the Sixth Amended and Restated Limited Partnership Agreement (the "Agreement") of Cottonwood Residential O.P., LP, a Delaware limited partnership (the "Partnership"), is entered into effective as of December 1, 2022 and is entered into by and among Cottonwood Communities GP Subsidiary, LLC, a Maryland limited liability company (the "General Partner"), CC Advisors – SLP, LLC, a Delaware limited liability company (the "Special Limited Partner"), and the Limited Partners set forth on Exhibit A to the Agreement. Capitalized terms used in this Amendment are defined as set forth in the Agreement.

WHEREAS, the General Partner and the Limited Partners have determined it to be in the best interest of the Company to (i) reflect the assignment of the Special Limited Partner Interest from CC Advisors III, LLC, a Delaware limited liability company, to CC Advisors – SLP, LLC, a Delaware limited liability company, (ii) reflect the authorization of Series 2023 Preferred Units and (iii) make certain changes to the Agreement as set forth in this Amendment.

NOW, THEREFORE, in consideration of the preceding, the General Partners hereby amend the Agreement as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.&nbsp;&nbsp;&nbsp;&nbsp;All references to the Series 2016 Preferred Units in the Agreement are hereby deleted.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.&nbsp;&nbsp;&nbsp;&nbsp;All references to the Series 2017 Preferred Units in the Agreement are hereby deleted.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.&nbsp;&nbsp;&nbsp;&nbsp;Section 1 of the Agreement is amended to add the following definition:

"Series 2023 Preferred Unit" shall represent an interest in the Partnership entitling a holder of Series 2023 Preferred Units to the respective voting and other rights and Net Income and Net Loss as provided for in this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.&nbsp;&nbsp;&nbsp;&nbsp;The definition of "Special Limited Partner" in Section 1 of the Agreement shall be deleted and replaced with the following definition:

"Special Limited Partner" means CC Advisors – SLP, LLC, a Delaware limited liability company, or any successor advisor acting in such capacity under the terms of the Advisory Agreement, which shall be a limited partner of the Partnership and recognized as such under the Act, but not a "Limited Partner" within the meaning of this Agreement (other than to the extent it also owns Limited Partner Units).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.&nbsp;&nbsp;&nbsp;&nbsp;The definition of "Specified Exchange Date" in Section 1 of the Agreement shall be deleted and replaced with the following definition:

"Specified Exchange Date" means the first business day of the month that is at least 60 days after the receipt by the General Partner of the Exchange Notice.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.&nbsp;&nbsp;&nbsp;&nbsp;The following shall be added as Section 4.16:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.16&nbsp;&nbsp;&nbsp;&nbsp;<u>Issuance of Series 2023 Preferred Units</u>. The General Partner is authorized to cause the Partnership to issue the Series 2023 Preferred Units to CCI according to the Partnership Unit Designation of the Series 2023 Preferred Units provided on Exhibit K.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.&nbsp;&nbsp;&nbsp;&nbsp;Exhibit A of the Agreement shall be replaced with Exhibit A attached to this Amendment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.&nbsp;&nbsp;&nbsp;&nbsp;Exhibit K attached to this Amendment shall be added as Exhibit K to the Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.&nbsp;&nbsp;&nbsp;&nbsp;As amended hereby, the Agreement shall continue in full force and effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.&nbsp;&nbsp;&nbsp;&nbsp;The terms and provisions of this Amendment shall be binding upon and shall inure to the benefit of the successors and assigns of the respective Limited Partners.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.&nbsp;&nbsp;&nbsp;&nbsp;This Amendment may be executed in several counterparts, and all so executed shall constitute one Agreement, binding on all of the parties hereto, notwithstanding that all of the parties are not signatory to the original or the same counterpart.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12.&nbsp;&nbsp;&nbsp;&nbsp;Any electronic signature of a party to this Amendment and of a party to take any action related to this Amendment shall be valid as an original signature and shall be effective and binding. Any such electronic signature (including the signature(s) to this Amendment) shall be deemed (i) to be "written" or "in writing," (ii) to have been signed and (iii) to constitute a record established and maintained in the ordinary course of business and an original written record when printed from electronic files.

[*Signature Page Follows*]

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IN WITNESS WHEREOF, this Amendment is effective as of the date first set forth above.

GENERAL PARTNER:<br>Cottonwood Communities GP Subsidiary, LLC, a Maryland limited liability company<br>By:&nbsp;&nbsp;&nbsp;&nbsp;Cottonwood Communities, Inc., <br>&nbsp;&nbsp;&nbsp;&nbsp;a Maryland corporation, its sole member<br>&nbsp;&nbsp;&nbsp;&nbsp;By:*<u>/s/ Enzio Cassinis&nbsp;&nbsp;&nbsp;&nbsp;</u>*

Name: <u>Enzio Cassinis</u>*<u>&nbsp;&nbsp;&nbsp;&nbsp;</u>*

Title: <u>President</u>*<u>&nbsp;&nbsp;&nbsp;&nbsp;</u>*

SPECIAL LIMITED PARTNER:<br>CC Advisors – SLP, LLC, a Delaware limited liability company<br>By:*<u>/s/ Gregg Christensen&nbsp;&nbsp;&nbsp;&nbsp;</u>*

Name: <u>Gregg Christensen</u>*<u>&nbsp;&nbsp;&nbsp;&nbsp;</u>*

Title: <u>Chief Legal Officer</u>*<u>&nbsp;&nbsp;&nbsp;&nbsp;</u>*

LIMITED PARTNERS:<br>Executed on behalf of the Limited Partners pursuant to the power of attorney set forth in Section 9.2 of the Sixth Amended and Restated Agreement, as amended <br>Cottonwood Communities GP Subsidiary, LLC, a Maryland limited liability company<br>By:&nbsp;&nbsp;&nbsp;&nbsp;Cottonwood Communities, Inc., <br>&nbsp;&nbsp;&nbsp;&nbsp;a Maryland corporation, its sole member<br>&nbsp;&nbsp;&nbsp;&nbsp;By:*<u>/s/ Enzio Cassinis&nbsp;&nbsp;&nbsp;&nbsp;</u>*

Name: <u>Enzio Cassinis</u>*<u>&nbsp;&nbsp;&nbsp;&nbsp;</u>*

Title: <u>President</u>*<u>&nbsp;&nbsp;&nbsp;&nbsp;</u>*

------

EXHIBIT A<br><u>PARTNERS' CAPITAL CONTRIBUTIONS AND PERCENTAGE INTERESTS</u>

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| | | |
|:---|:---|:---|
| Partner | Units | Percentage Interest |
| GENERAL PARTNER |  |  |
| Cottonwood Communities GP Subsidiary, LLC<br>1245 Brickyard Rd, Suite 250<br>Salt Lake City, Utah 84106 | [On file with the Partnership] |  |
| SPECIAL LIMITED PARTNER |  |  |
| CC Advisors – SLP, LLC<br>1245 Brickyard Rd, Suite 30<br>Salt Lake City, Utah 84106 | [On file with the Partnership] |  |
| COMMON LIMITED PARTNERS |  |  |
| [On file with Partnership] | [On file with the Partnership] |  |
| SERIES 2019 PREFERRED LIMITED PARTNER |  |  |
| Cottonwood Communities, Inc.<br>1245 Brickyard Rd, Suite 250<br>Salt Lake City, Utah 84106 | [On file with the Partnership] |  |
| SERIES 2023 PREFERRED LIMITED PARTNER |  |  |
| Cottonwood Communities, Inc.<br>1245 Brickyard Rd, Suite 250<br>Salt Lake City, Utah 84106 | [On file with the Partnership] |  |

---

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EXHIBIT K

<u>PARTNERSHIP UNIT DESIGNATION OF<br>THE SERIES 2023 PREFERRED UNITS</u> 

1.&nbsp;&nbsp;&nbsp;&nbsp;<u>Number of Units and Designation</u>.

A class of Preferred Units is hereby designated as "Series 2023 Preferred Units," and the number of Preferred Units constituting such class shall equal 10,000,000.

2.&nbsp;&nbsp;&nbsp;&nbsp;<u>Definitions</u>.

For purposes of the Series 2023 Preferred Units, the following terms shall have the meanings indicated in this Section 2, and capitalized terms used and not otherwise defined herein shall have the respective meanings assigned thereto in the Agreement:

"Series 2019 Preferred Unit" means a Series 2019 Preferred Unit in the Partnership.

"Series 2023 Designation" shall mean this Partnership Unit Designation of Series 2023 Preferred Units.

"Series 2023 Distribution Payment Date" shall mean the first day of each month, or if not a business day, the next succeeding business day.

"Series 2023 Junior Partnership Units" has the meaning set forth in Section 7.3 of this Series 2023 Designation.

"Series 2023 Liquidation Preference" has the meaning set forth in Section 4.1 of this Series 2023 Designation.

"Series 2023 Parity Partnership Units" has the meaning set forth in Section 7.2 of this Series 2023 Designation.

"Series 2023 Purchase Price" shall mean $10.00 per Series 2023 Preferred Unit.

"Series 2023 Preferred Unit" means a Preferred Partnership Unit with the designations, preferences and relative, participating, optional or other special rights, powers and duties as are set forth in this Series 2023 Designation. It is the intention of the General Partner that each Series 2023 Preferred Unit shall be substantially the economic equivalent of one share of Series 2023 Preferred Stock.

"Series 2023 Preferred Stock" means the Series 2023 Preferred Stock, par value $0.01 per share, of CCI.

"Special Redemption Event" shall mean the date upon which (i) CCI's shares of common stock are listed for trading on a national securities exchange with at least 3 market makers or a New York Stock Exchange specialist or (ii) CCI enters into a binding commitment for any merger or combination of CCI or the sale of substantially all of CCI's assets.

3.&nbsp;&nbsp;&nbsp;&nbsp;<u>Distributions</u>.

On every Series 2023 Distribution Payment Date, the holder of record of the Series 2023 Preferred Units shall be entitled to receive distributions payable in cash in an amount per Series 2023 Preferred Unit equal to a 6% cumulative but not compounded per annum return on the Series 2023 Purchase Price (equivalent to a fixed annual rate of $0.60 per Series 2023 Preferred Unit) which will be determined on a daily basis; provided, however, that, (i) commencing July 1, 2027, such rate shall increase to 6.25% per annum of $10.00 per Series 2023 Preferred Unit (equivalent to a fixed annual rate of $0.625 per Series 2023 Preferred Unit) and (ii) commencing July 1, 2028, such rate shall increase to 6.50% per annum of $10.00 per Series 2023 Preferred Unit (equivalent to a fixed annual rate of $0.65 per Series 2023 Preferred Unit). Each such distribution shall be payable to the holder of record of the Series

EXHIBIT K

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2023 Preferred Units as set forth in the records of the Partnership at the close of business on the record date for the distribution payable with respect to the Series 2023 Preferred Stock on such Series 2023 Distribution Payment Date. The holders of Series 2023 Preferred Units shall not be entitled to any distributions on the Series 2023 Preferred Units, whether payable in cash, property or stock, except as provided herein.

4.&nbsp;&nbsp;&nbsp;&nbsp;<u>Liquidation Preference</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.1&nbsp;&nbsp;&nbsp;&nbsp;In the event of any liquidation, dissolution or winding up of the Partnership, whether voluntary or involuntary, before any payment or distribution of the Partnership (whether capital, surplus or otherwise) shall be made to or set apart for the holders of Series 2023 Junior Partnership Units, the holders of Series 2023 Preferred Units shall be entitled to receive $10.00 per Series 2023 Preferred Unit (the "Series 2023 Liquidation Preference"), plus an amount per Series 2023 Preferred Unit equal to all distributions (whether or not declared or earned) accrued and unpaid on the Series 2023 Preferred Unit; but such holders shall not be entitled to any further payment. Until the holders of the Series 2023 Preferred Units have been paid the Series 2023 Liquidation Preference in full, plus an amount equal to all distributions (whether or not declared or earned) accrued and unpaid on the Series 2023 Preferred Unit to the date of final distribution to such holders, no payment shall be made to any holder of Series 2023 Junior Partnership Units upon the liquidation, dissolution or winding up of the Partnership. If, upon any liquidation, dissolution or winding up of the Partnership, the assets of the Partnership, or proceeds thereof, distributable among the holders of Series 2023 Preferred Units shall be insufficient to pay in full the preferential amount aforesaid and liquidating payments on any Series 2023 Parity Partnership Units, then such assets, or the proceeds thereof, shall be distributed among the holders of Series 2023 Preferred Units and any such Series 2023 Parity Partnership Units ratably in the same proportion as the respective amounts that would be payable on such Series 2023 Preferred Units and any such other Series 2023 Parity Partnership Units if all amounts payable thereon were paid in full.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.2&nbsp;&nbsp;&nbsp;&nbsp;Upon any liquidation, dissolution or winding up of the Partnership, after payment shall have been made in full to the holders of Series 2023 Preferred Units and any Series 2023 Parity Partnership Units, as provided in this Section 4, any other series or class or classes of Series 2023 Junior Partnership Units shall, subject to the respective terms thereof, be entitled to receive any and all assets remaining to be paid or distributed, and the holders of the Series 2023 Preferred Units and any Series 2023 Parity Partnership Units shall not be entitled to share therein.

5.&nbsp;&nbsp;&nbsp;&nbsp;<u>Redemption</u>.

Series 2023 Preferred Units shall be redeemable by the Partnership as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.1&nbsp;&nbsp;&nbsp;&nbsp;Unless the Series 2023 Preferred Units have been earlier redeemed as set forth in Section 5.2 or Section 5.3, on June 30, 2027, the Partnership shall, to the extent there are funds legally available therefor and subject to the preferential rights of the holders of the Partnership Units that have a liquidation preference to the Series 2023 Preferred Units, redeem all of the Series 2023 Preferred Units for cash at a redemption price equal to the Series 2023 Purchase Price plus any accrued but unpaid distributions through the redemption date. Notwithstanding the above, the Partnership may, in the discretion of the General Partner and only if CCI has extended the term of the Series 2023 Preferred Stock, extend the redemption date for up to 2 successive one-year periods.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.2&nbsp;&nbsp;&nbsp;&nbsp;Subject to Section 5.3, the Partnership may, in the sole discretion of the General Partner, redeem for cash the Series 2023 Preferred Units at any time on or after December 31, 2023, in whole or in part, at a redemption price equal to the Series 2023 Purchase Price plus any accrued but unpaid distributions through the redemption date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.3&nbsp;&nbsp;&nbsp;&nbsp;In connection with a Special Redemption Event, the Partnership may, in the sole discretion of the General Partner, redeem for cash the Series 2023 Preferred Units at a redemption price equal to the Series 2023 Purchase Price plus any accrued but unpaid distributions through the redemption date.

EXHIBIT K

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6.&nbsp;&nbsp;&nbsp;&nbsp;<u>Cancellation of Units; Status of Reacquired Units</u>.

Upon the reacquisition in any manner by CCI of any shares of Series 2023 Preferred Stock, a like number of Series 2023 Preferred Units, automatically and without any further action by the holder of Series 2023 Preferred Units or the Partnership, shall be deemed cancelled. All Series 2023 Preferred Units that have been issued and reacquired in any manner by the Partnership shall be deemed cancelled.

7.&nbsp;&nbsp;&nbsp;&nbsp;<u>Ranking</u>.

Any class or series of Partnership Units of the Partnership shall be deemed to rank:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.1&nbsp;&nbsp;&nbsp;&nbsp;prior or senior to the Series 2023 Preferred Units, as to the payment of distributions and as to distributions of assets upon liquidation, dissolution or winding up, the holders of such class or series shall be entitled to the receipt of distributions or of amounts distributable upon liquidation, dissolution or winding up, as the case may be, in preference or priority to the holders of Series 2023 Preferred Units;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.2&nbsp;&nbsp;&nbsp;&nbsp;on a parity with the Series 2023 Preferred Units, as to the payment of distributions and as to distribution of assets upon liquidation, dissolution or winding up, whether or not the distribution rates, distribution payment dates or redemption or liquidation prices per unit or other denomination thereof be different from those of the Series 2023 Preferred Units, if the holders of such class or series of Partnership Units and the Series 2023 Preferred Units shall be entitled to the receipt of distributions and of amounts distributable upon liquidation, dissolution or winding up in proportion to their respective amounts of accrued and unpaid distributions per unit or other denomination or liquidation preferences, without preference or priority of one over the other, and expressly includes the Series 2019 Preferred Units (collectively, the "Series 2023 Parity Partnership Units"); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.3&nbsp;&nbsp;&nbsp;&nbsp;junior to the Series 2023 Preferred Units, as to the payment of distributions and as to the distribution of assets upon liquidation, dissolution or winding up, if (i) such class or series of Partnership Units shall be Common Units or (ii) the holders of Series 2023 Preferred Units shall be entitled to receipt of distributions or of amounts distributable upon liquidation, dissolution or winding up, as the case may be, in preference or priority to the holders of such class or series of Partnership Units (the Partnership Units referred to in clauses (i) and (ii) of this paragraph being hereinafter referred to, collectively, as "Series 2023 Junior Partnership Units").

8.&nbsp;&nbsp;&nbsp;&nbsp;<u>Special Allocations</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.1&nbsp;&nbsp;&nbsp;&nbsp;Gross income and, if necessary, gain shall be allocated to the holder of Series 2023 Preferred Units for any fiscal year (and, if necessary, subsequent fiscal years) to the extent that the holder of Series 2023 Preferred Units receives a distribution on any Series 2023 Preferred Units (other than for a return of its original Capital Contributions).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.2&nbsp;&nbsp;&nbsp;&nbsp;If any Series 2023 Preferred Units are redeemed pursuant to Section 5 hereof, for the fiscal year that includes such redemption (and, if necessary, for subsequent fiscal years), (i) gross income and gain (in such relative proportions as the General Partner in its discretion shall determine) shall be allocated to the holder of Series 2023 Preferred Units to the extent that the redemption amount paid or payable with respect to the Series 2023 Preferred Units so redeemed exceeds the aggregate Capital Contribution per Series 2023 Preferred Unit allocable to the Series 2023 Preferred Units so redeemed and (ii) deductions and losses (in such relative proportions as the General Partner in its discretion shall determine) shall be allocated to the holder of Series 2023 Preferred Units to the extent that the aggregate Capital Contribution per Series 2023 Preferred Unit allocable to the Series 2023 Preferred Units so redeemed exceeds the redemption amount paid or payable with respect to the Series 2023 Preferred Units so redeemed. The intent of this Section is that gain or loss shall be allocated so that the ending Capital Account of a holder of Series 2023 Preferred Units is equal to zero after a redemption.

9.&nbsp;&nbsp;&nbsp;&nbsp;<u>Restrictions on Ownership</u>.

The Series 2023 Preferred Units are not transferrable and must be owned and held at all times solely by CCI or the General Partner.

EXHIBIT K

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10.&nbsp;&nbsp;&nbsp;&nbsp;<u>Adjustments for Stock Splits, etc</u>.

If the number of outstanding shares of Series 2023 Preferred Stock is adjusted at any time or from time to time as a result of any stock dividend or any reclassification, subdivision or combination of the outstanding shares of Series 2023 Preferred Stock into a greater or smaller number of shares of Series 2023 Preferred Stock, then a similar adjustment to the number of outstanding Series 2023 Preferred Units shall be made in order to preserve the economic equivalence of the Series 2023 Preferred Stock and the Series 2023 Preferred Units.

11.&nbsp;&nbsp;&nbsp;&nbsp;<u>General</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.1&nbsp;&nbsp;&nbsp;&nbsp;The ownership of Series 2023 Preferred Units may (but need not, in the sole and absolute discretion of the General Partner) be evidenced by one or more certificates. The General Partner shall amend Exhibit A to the Agreement from time to time to the extent necessary to reflect accurately the issuance of, and subsequent redemption, or any other event having an effect on the ownership of, the Series 2023 Preferred Units.

11.2&nbsp;&nbsp;&nbsp;&nbsp;The rights of CCI, in its capacity as a holder of the Series 2023 Preferred Units, are in addition to and not in limitation of any other rights or authority of CCI in any other capacity under the Agreement or applicable law. In addition, nothing contained herein shall be deemed to limit or otherwise restrict the authority of CCI under the Agreement, other than in its capacity as a holder of the Series 2023 Preferred Units.

EXHIBIT K

## Exhibit 10.22

**Exhibit 10.22**

**MANAGING BROKER-DEALER AGREEMENT**

This Managing Broker-Dealer Agreement (this "Agreement") is entered into by and between Cottonwood Communities, Inc., a Maryland corporation (the "Issuer"), and [\*\*\*], a Utah limited liability company (the "Managing Broker-Dealer"), effective December 1, 2022 (the "Effective Date") regarding the offering and sale by the Issuer of up to $100,000,000 in shares of Series 2023 Preferred Stock (the "Securities") in the Issuer (the "Offering"). Capitalized terms used herein and not otherwise defined herein shall have the same meaning as set forth in the Cottonwood Communities, Inc. Confidential Private Placement Memorandum dated December 1, 2022, including the Exhibits, as may be amended or supplemented (the "Memorandum").

1.&nbsp;&nbsp;&nbsp;&nbsp;<u>Appointment of the Managing Broker-Dealer</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.1&nbsp;&nbsp;&nbsp;&nbsp;On the basis of the representations, warranties and covenants herein contained, but subject to the terms and conditions herein set forth, the Managing Broker-Dealer is hereby appointed and agrees to sell the Securities on a "best efforts" basis pursuant to: (i) Rule 506(b) of Regulation D ("Rule 506") promulgated under the Securities Act of 1933, as amended (the "Securities Act") and (ii) applicable state blue sky exemptions. The Managing Broker-Dealer is authorized to enlist other members of the Financial Industry Regulatory Authority, Inc. ("FINRA") acceptable to the Issuer (the "Selling Group Members") to sell the Securities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.2&nbsp;&nbsp;&nbsp;&nbsp;It is understood that no sale of the Securities shall be regarded as effective unless and until accepted by the Issuer. The Issuer reserves the right in its sole discretion to accept or reject any subscription agreement for the Securities (the "Investment Agreement") in whole or in part for a period of 30 days after receipt of the Investment Agreement. Any proposed subscription for the Securities not accepted within 30 days of receipt shall be deemed rejected. The Securities will be offered during a period commencing on the date of the Memorandum and continuing until the Offering Termination Date as defined in the Memorandum (the "Offering Period").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.3&nbsp;&nbsp;&nbsp;&nbsp;Subject to the performance by the Issuer of all the obligations to be performed hereunder and to the completeness and accuracy of all the Issuer's representations and warranties contained herein, the Managing Broker-Dealer hereby accepts such agency and agrees on the terms and conditions herein set forth to use its best efforts during the Offering Period to find qualified investors (the "Investors") for the Securities.

2.&nbsp;&nbsp;&nbsp;&nbsp;<u>Representations and Warranties of the Issuer</u>. The Issuer hereby represents and warrants to the Managing Broker-Dealer that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1&nbsp;&nbsp;&nbsp;&nbsp;The Issuer has been duly organized and is validly existing as a corporation in good standing under the laws of the state of Maryland, has all requisite power and authority to enter into this Agreement and has all requisite power and authority to conduct its business as described in the Memorandum.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.2&nbsp;&nbsp;&nbsp;&nbsp;No defaults exist in the due performance or observance of any material obligation, term, covenant or condition of any agreement or instrument to which the Issuer is a party or by which it is bound.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.3&nbsp;&nbsp;&nbsp;&nbsp;Subject to Section 3.3, the Memorandum does not include nor will it include, through the Offering Termination Date, any untrue statement of a material fact nor does it or will it omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.4&nbsp;&nbsp;&nbsp;&nbsp;No consent, approval, authorization or other order of any governmental authority is required in connection with the execution or delivery by the Issuer of this Agreement or the issuance and sale by the Issuer of the Securities, except such as may be required under the Securities Act or applicable state securities laws.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.5&nbsp;&nbsp;&nbsp;&nbsp;At the time of the issuance of the Securities, the Securities will have been duly authorized and validly issued, and upon payment therefor, will be fully paid and nonassessable and will conform to the description thereof contained in the Memorandum.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.6&nbsp;&nbsp;&nbsp;&nbsp;As of the Effective Date and at the time of any sale of the Securities (each, an "Applicable Date"), none of (i) the Issuer, (ii) any predecessor of the Issuer, (iii) any affiliated issuer of the Issuer, (iv) any director, executive officer, other officer participating in the Offering, general partner or managing member of the Issuer, (v) any beneficial owner of 20% or more of the Issuer's outstanding voting equity securities, calculated on the basis of voting power or (vi) any promoter connected with the Issuer in any capacity at the time of the sale of the Securities:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.6.1&nbsp;&nbsp;&nbsp;&nbsp;Has been convicted, within 10 years of any Applicable Date of any felony or misdemeanor that was:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;In connection with the purchase or sale of any security;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;Involving the making of any false filing with the Securities and Exchange Commission (the "SEC"); or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;Arising out of the conduct of the business of an underwriter, broker, dealer, municipal securities dealer, investment adviser or paid solicitor of purchasers of securities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.6.2&nbsp;&nbsp;&nbsp;&nbsp;Is subject to any order, judgment or decree of any court of competent jurisdiction, entered within 5 years before any Applicable Date, that, as of such Applicable Date, restrains or enjoins such person from engaging or continuing in any conduct or practice:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;In connection with the purchase or sale of any security;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;Involving the making of any false filing with the SEC; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;Arising out of the conduct of the business of an underwriter, broker, dealer, municipal securities dealer, investment adviser or paid solicitor of purchasers of securities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.6.3&nbsp;&nbsp;&nbsp;&nbsp;Is subject to a final order of a state securities commission (or an agency or officer of a state performing like functions), a state authority that supervises or examines banks, savings associations or credit unions, a state insurance commission (or an agency or officer of a state performing like functions), an appropriate federal banking agency, the U.S. Commodity Futures Trading Commission or the National Credit Union Administration that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;As of any Applicable Date, bars the person from:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;Association with an entity regulated by such commission, authority, agency or officer;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;&nbsp;Engaging in the business of securities, insurance or banking; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;&nbsp;&nbsp;Engaging in savings association or credit union activities; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;Constitutes a final order based on a violation of any law or regulation that prohibits fraudulent, manipulative or deceptive conduct entered within 10 years before any Applicable Date.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.6.4&nbsp;&nbsp;&nbsp;&nbsp;Is subject to an order of the SEC pursuant to sections 15(b) or 15B(c) of the Securities Exchange Act of 1934 (the "Exchange Act") or section 203(e) or (f) of the Investment Advisers Act of 1940 (the "Investment Advisers Act") that, as of any Applicable Date:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;Suspends or revokes such person's registration as a broker, dealer, municipal securities dealer or investment adviser;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;Places limitations on the activities, functions or operations of such person; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;Bars such person from being associated with any entity or from participating in the offering of any penny stock.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.6.5&nbsp;&nbsp;&nbsp;&nbsp;Is subject to any order of the SEC entered within 5 years before any Applicable Date, that, as of such Applicable Date, orders the person to cease and desist from committing or causing a violation or future violation of:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;Any scienter-based anti-fraud provisions of the federal securities laws including, without limitation, section 17(a)(1) of the Securities Act, section 10(b) of the Exchange Act and 17 CFR 240.10b-5, section 15(c)(1) of the Exchange Act and section 206(1) of the Investment Advisers Act, or any other rule or regulation thereunder; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;Section 5 of the Securities Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.6.6&nbsp;&nbsp;&nbsp;&nbsp;Is suspended or expelled from membership in, or suspended or barred from association with, a member of a registered national securities exchange or a registered national or affiliated securities association for any act or omission to act constituting conduct inconsistent with just and equitable principles of trade.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.6.7&nbsp;&nbsp;&nbsp;&nbsp;Has filed (as a registrant or issuer), or was or was named as an underwriter in, any registration statement or Regulation A offering statement filed with the SEC that, within 5 years of any Applicable Date, was the subject of a refusal order, stop order or order suspending the Regulation A exemption or, is, as of any Applicable Date, the subject of an investigation or proceeding to determine whether a stop order or suspension order should be issued.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.6.8&nbsp;&nbsp;&nbsp;&nbsp;Is subject to a United States Postal Service false representation order entered within 5 years before any Applicable Date, or is, as of any Applicable Date, subject to a temporary restraining order or preliminary injunction with respect to conduct alleged by the United States Postal Service to constitute a scheme or device for obtaining money or property through the mail by means of false representations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.6.9&nbsp;&nbsp;&nbsp;&nbsp;The Issuer agrees to immediately notify the Managing Broker-Dealer if there is a violation or potential violation of the representations set forth in this Section 2.6 during the Offering Period.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.7&nbsp;&nbsp;&nbsp;&nbsp;The representations and warranties made in this Section 2 are made as of the date hereof and shall be continuing representations and warranties throughout the Offering Period. In the event that any of these representations or warranties becomes untrue or is incorrect, the Issuer will immediately notify the Managing Broker-Dealer in writing of the fact which makes the representation or warranty untrue or incorrect.

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3.&nbsp;&nbsp;&nbsp;&nbsp;<u>Duties and Obligations of the Issuer</u>. The Issuer agrees that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.1&nbsp;&nbsp;&nbsp;&nbsp;The Issuer will deliver to the Managing Broker-Dealer such numbers of copies of the Memorandum and any amendment or supplement thereto, with all appendices thereto, as the Managing Broker-Dealer may reasonably request for the purposes contemplated by federal and applicable state securities laws. The Issuer also will deliver to the Managing Broker-Dealer such number of copies of any printed sales literature or other materials as the Managing Broker-Dealer may reasonably request in connection with the Offering.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.2&nbsp;&nbsp;&nbsp;&nbsp;The Issuer will comply with all requirements imposed upon it by the rules and regulations of the SEC, and by all applicable state securities laws and regulations, to permit the continuance of offers and sales of the Securities, in accordance with the provisions of this Agreement and the Memorandum, and will amend or supplement the Memorandum in order to make the Memorandum comply with the requirements of federal and applicable state securities laws and regulations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.3&nbsp;&nbsp;&nbsp;&nbsp;If at any time any event occurs as a result of which the Memorandum would include an untrue statement of a material fact or, in view of the circumstances under which it was made, omit to state any material fact necessary to make the statements therein not misleading, the Issuer will notify the Managing Broker-Dealer thereof, effect the preparation of an amendment or supplement to the Memorandum which will correct such statement or omission, and deliver to the Managing Broker-Dealer as many copies of such amendment or supplement to the Memorandum as the Managing Broker-Dealer may reasonably request.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.4&nbsp;&nbsp;&nbsp;&nbsp;The Issuer will apply the net proceeds from the Offering received by it in the manner set forth in the Memorandum.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.5&nbsp;&nbsp;&nbsp;&nbsp;Subject to the Managing Broker-Dealer's actions and the actions of others in connection with the Offering, the Issuer will comply with all requirements imposed upon it by Rule 506, the regulations thereunder, and applicable state securities laws. The Issuer will timely file a Form D with the SEC and state securities regulators when required. Upon request, the Issuer will furnish to the Managing Broker-Dealer a copy of such papers filed by the Issuer in connection with any such exemption.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.6&nbsp;&nbsp;&nbsp;&nbsp;The Issuer will furnish the holders of the Securities with the reports described in the Memorandum under "Reports," and will deliver to the Managing Broker-Dealer a copy of each such report at the time that such reports are furnished to the holders of the Securities, and such other information concerning the Issuer, as may reasonably be requested.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.7&nbsp;&nbsp;&nbsp;&nbsp;In order to use electronic delivery of the Offering documents, the Issuer will:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.7.1&nbsp;&nbsp;&nbsp;&nbsp;Provide a form of consent to electronic delivery to be signed by prospective Investors; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.7.2&nbsp;&nbsp;&nbsp;&nbsp;Comply with Sections I(A)1 (b) – (e), I(A)2(d), I(B)2, and I(C), (E), (G), (H), (I) and (J) of the NASAA Statement of Policy Regarding Use of Electronic Offering Documents and Electronic Signatures.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.8&nbsp;&nbsp;&nbsp;&nbsp;In order to use electronic signatures, the Issuer will (i) retain electronically signed documents in compliance with applicable laws and regulations, (ii) not condition participation in the Offering on the use of electronic signatures, (iii) maintain written policies and procedures covering the use of electronic signatures and (iv) provide a form of consent to electronic signatures to be signed by prospective Investors.

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4.&nbsp;&nbsp;&nbsp;&nbsp;<u>Representations and Warranties of the Managing Broker-Dealer</u>. The Managing Broker-Dealer represents and warrants that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.1&nbsp;&nbsp;&nbsp;&nbsp;The Managing Broker-Dealer is a duly organized Utah limited liability company in good standing and has all requisite power and authority to enter into this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.2&nbsp;&nbsp;&nbsp;&nbsp;This Agreement, when executed by the Managing Broker-Dealer, will have been duly authorized and will be a valid and binding agreement of the Managing Broker-Dealer, enforceable in accordance with its terms.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.3&nbsp;&nbsp;&nbsp;&nbsp;The consummation of the transactions contemplated herein and those contemplated by the Memorandum will not result in a breach or violation of any order, rule or regulation directed to the Managing Broker-Dealer by any court, FINRA or any federal or state regulatory body or administrative agency having jurisdiction over the Managing Broker-Dealer or its affiliates.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.4&nbsp;&nbsp;&nbsp;&nbsp;The Managing Broker-Dealer hereby confirms that it (i) is a member in good standing of FINRA, (ii) is qualified and fully registered to act as a broker-dealer within all states in which it will sell the Securities, (iii) is a broker-dealer duly registered with the SEC pursuant to the Exchange Act and (iv) will maintain all such registrations and qualifications in good standing for the duration of the Managing Broker-Dealer's involvement in the Offering. The Managing Broker-Dealer agrees to immediately notify the Issuer if it ceases to be a member of FINRA in good standing. The Managing Broker-Dealer will comply with all applicable laws, regulations, requirements and rules of the Securities Act, the Exchange Act, applicable state law and FINRA. The Managing Broker-Dealer has all required licenses and permits.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.5&nbsp;&nbsp;&nbsp;&nbsp;The Managing Broker-Dealer has reasonable grounds to believe, based on information made available to it by the Issuer, that all material facts are adequately and accurately disclosed in the Memorandum and provide an adequate basis for evaluating an investment in the Securities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.6&nbsp;&nbsp;&nbsp;&nbsp;This Agreement, or any supplement or amendment hereto, may be filed by the Issuer with the SEC or FINRA, if such filing should be required, and may be filed with, and may be subject to the approval of any applicable federal and applicable state securities regulatory agencies, if required.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.7&nbsp;&nbsp;&nbsp;&nbsp;No agreement will be made by the Managing Broker-Dealer with any person permitting the resale, repurchase or distribution of the Securities purchased by such person.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.8&nbsp;&nbsp;&nbsp;&nbsp;The Managing Broker-Dealer has established and implemented anti-money-laundering compliance programs, in accordance with FINRA Rule 3310 and Section 352 of the Money Laundering Abatement Act and Section 326 of the Patriot Act of 2001.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.9&nbsp;&nbsp;&nbsp;&nbsp;As of any Applicable Date, that none of (i) the Managing Broker-Dealer, (ii) any general partner or managing member of the Managing Broker-Dealer, (iii) any director, executive officer, other officer participating in the Offering, general partner or managing member of the Managing Broker-Dealer or (iv) any person associated with the Managing Broker-Dealer that has been or will be paid (directly or indirectly) remuneration for solicitation of Investors in connection with the sale of the Securities and directly paid by the Managing Broker-Dealer and specifically excluding payments pursuant to or through a Soliciting Dealer Agreement:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.9.1&nbsp;&nbsp;&nbsp;&nbsp;Has been convicted, within 10 years of any Applicable Date of any felony or misdemeanor that was:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;In connection with the purchase or sale of any security;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;Involving the making of any false filing with the SEC; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;Arising out of the conduct of the business of an underwriter, broker, dealer, municipal securities dealer, investment adviser or paid solicitor of purchasers of securities.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.9.2&nbsp;&nbsp;&nbsp;&nbsp;Is subject to any order, judgment or decree of any court of competent jurisdiction, entered within 5 years before any Applicable Date, that, as of such Applicable Date, restrains or enjoins such person from engaging or continuing in any conduct or practice:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;In connection with the purchase or sale of any security;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;Involving the making of any false filing with the SEC; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;Arising out of the conduct of the business of an underwriter, broker, dealer, municipal securities dealer, investment adviser or paid solicitor of purchasers of securities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.9.3&nbsp;&nbsp;&nbsp;&nbsp;Is subject to a final order of a state securities commission (or an agency or officer of a state performing like functions), a state authority that supervises or examines banks, savings associations or credit unions, a state insurance commission (or an agency or officer of a state performing like functions), an appropriate federal banking agency, the U.S. Commodity Futures Trading Commission or the National Credit Union Administration that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;As of any Applicable Date, bars the person from:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;Association with an entity regulated by such commission, authority, agency or officer;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;&nbsp;Engaging in the business of securities, insurance or banking; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;&nbsp;&nbsp;Engaging in savings association or credit union activities; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;Constitutes a final order based on a violation of any law or regulation that prohibits fraudulent, manipulative or deceptive conduct entered within 10 years before any Applicable Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.9.4&nbsp;&nbsp;&nbsp;&nbsp;Is subject to an order of the SEC pursuant to sections 15(b) or 15B(c) of the Exchange Act or section 203(e) or (f) of the Investment Advisers Act that, as of any Applicable Date:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;Suspends or revokes such person's registration as a broker, dealer, municipal securities dealer or investment adviser;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;Places limitations on the activities, functions or operations of such person; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;Bars such person from being associated with any entity or from participating in the offering of any penny stock.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.9.5&nbsp;&nbsp;&nbsp;&nbsp;Is subject to any order of the SEC entered within 5 years before any Applicable Date, that, as of such Applicable Date, orders the person to cease and desist from committing or causing a violation or future violation of:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;Any scienter-based anti-fraud provisions of the federal securities laws including, without limitation, section 17(a)(1) of the Securities Act, section 10(b) of the Exchange Act and 17 CFR 240.10b-5, section 15(c)(1) of the Exchange Act and section 206(1) of the Investment Advisers Act, or any other rule or regulation thereunder; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;Section 5 of the Securities Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.9.6&nbsp;&nbsp;&nbsp;&nbsp;Is suspended or expelled from membership in, or suspended or barred from association with, a member of a registered national securities exchange or a registered national or affiliated securities association for any act or omission to act constituting conduct inconsistent with just and equitable principles of trade.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.9.7&nbsp;&nbsp;&nbsp;&nbsp;Has filed (as a registrant or issuer), or was or was named as an underwriter in, any registration statement or Regulation A offering statement filed with the SEC that, within 5 years of any Applicable Date, was the subject of a refusal order, stop order or order suspending the Regulation A exemption or, is, as of any Applicable Date, the subject of an investigation or proceeding to determine whether a stop order or suspension order should be issued.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.9.8&nbsp;&nbsp;&nbsp;&nbsp;Is subject to a United States Postal Service false representation order entered within 5 years before any Applicable Date, or is, as of any Applicable Date, subject to a temporary restraining order or preliminary injunction with respect to conduct alleged by the United States Postal Service to constitute a scheme or device for obtaining money or property through the mail by means of false representations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.9.9&nbsp;&nbsp;&nbsp;&nbsp;The Managing Broker-Dealer agrees to immediately notify the Issuer if there is a violation or potential violation of the representations set forth in this Section 4.9 during the Offering Period.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.10&nbsp;&nbsp;&nbsp;&nbsp;The representations and warranties made in this Section 4 are and shall be continuing representations and warranties throughout the Offering Period. In the event that any of these representations or warranties becomes untrue, the Managing Broker-Dealer will immediately notify the Issuer in writing of the fact which makes the representation or warranty untrue.

5.&nbsp;&nbsp;&nbsp;&nbsp;<u>Duties and Obligations of the Managing Broker-Dealer</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.1&nbsp;&nbsp;&nbsp;&nbsp;The Managing Broker-Dealer will serve in a "best efforts" capacity in the offering, sale and distribution of the Securities. The Managing Broker-Dealer may offer the Securities as an agent, but all sales shall be made by the Issuer, acting through the Managing Broker-Dealer as an agent, and not by the Managing Broker-Dealer as a principal. The Managing Broker-Dealer shall have no authority to appoint any person or other entity as an agent or sub-agent of the Managing Broker-Dealer or the Issuer, except to appoint Selling Group Members acceptable to the Issuer in its sole discretion.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.2&nbsp;&nbsp;&nbsp;&nbsp;The Managing Broker-Dealer shall not execute any transaction in which an Investor invests in the Securities in a discretionary account without prior written approval of the transaction by the Investor.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.3&nbsp;&nbsp;&nbsp;&nbsp;The Managing Broker-Dealer will comply in all respects with the subscription procedures and plan of distribution set forth in the Memorandum.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.4&nbsp;&nbsp;&nbsp;&nbsp;In the event the Managing Broker-Dealer receives any customer funds for the Securities, the Managing Broker-Dealer will transmit such customer funds, not later than noon of the next business day following receipt of such funds for the Securities, to the Issuer or such bank as determined by the Issuer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.5&nbsp;&nbsp;&nbsp;&nbsp;The Managing Broker-Dealer shall complete all steps necessary to permit the Issuer to perform its obligations under this Agreement pursuant to exemptions available under applicable federal law and applicable state laws. The Managing Broker-Dealer shall conduct all of its solicitation and sales efforts in conformity with Rule 506 (including the limitation on general solicitation), and exemptions available under applicable state law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.6&nbsp;&nbsp;&nbsp;&nbsp;The Managing Broker-Dealer shall notify the Issuer of Investment Agreements it receives within 2 business days of receipt so that the Issuer may make any required federal or state law filings.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.7&nbsp;&nbsp;&nbsp;&nbsp;The Managing Broker-Dealer will immediately bring to the attention of the Issuer any circumstance or fact which causes the Managing Broker-Dealer to believe the Memorandum, or any other literature distributed pursuant to the Offering, or any information supplied by prospective Investors in their subscription materials, may be inaccurate or misleading.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.8&nbsp;&nbsp;&nbsp;&nbsp;The Managing Broker-Dealer will terminate the Offering upon request of the Issuer at any time and will, subject to the Managing Broker-Dealer's due diligence and desire to continue to act as managing broker-dealer for the Offering, resume the Offering upon the subsequent request of the Issuer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.9&nbsp;&nbsp;&nbsp;&nbsp;The Managing Broker-Dealer shall enter into a Soliciting Dealer Agreement in the form attached hereto as Exhibit A with each Selling Group Member, and shall not materially modify, amend or supplement the terms of the Soliciting Dealer Agreement without the prior written consent of the Issuer. For purposes of the above, any change in the compensation paid to a Selling Group Member will be deemed to be material.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.10&nbsp;&nbsp;&nbsp;&nbsp;The Managing Broker-Dealer will:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.10.1&nbsp;&nbsp;&nbsp;&nbsp;Maintain written policies and procedures covering the use of electronic offering documents;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.10.2&nbsp;&nbsp;&nbsp;&nbsp;Store the electronic offering documents in a non-rewriteable and non-erasable format;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.10.3&nbsp;&nbsp;&nbsp;&nbsp;Comply with any additional requirements imposed on the Issuer as set forth in Section 3.7, to the extent within its control;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.10.4&nbsp;&nbsp;&nbsp;&nbsp;Require the Selling Group Members to comply with the electronic delivery requirements set forth in the Soliciting Dealer Agreement; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.10.5&nbsp;&nbsp;&nbsp;&nbsp;Take prompt action in the event of a security breach to (i) identify and locate the breach, (ii) secure the affected information, (iii) suspend the use of the particular device or technology that has been compromised until information security has been restored and (iv) provide notice of the security breach to any Investor whose confidential personal information has been improperly accessed in connection with the security breach. Compliance with this item after the discovery of a security breach or any other breach of personal information shall not substitute or in any way affect other requirements or obligations, including notification, imposed on the Managing Broker-Dealer pursuant to applicable laws, regulations, or standards.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.11&nbsp;&nbsp;&nbsp;&nbsp; The Managing Broker-Dealer will require each Selling Group Member, as agent of the Issuer, if it uses electronic signatures in connection with the Offering, to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.11.1&nbsp;&nbsp;&nbsp;&nbsp;Receive a prospective Investor's prior, informed consent to obtain the use of electronic signatures in the form provided by the Issuer; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.11.2&nbsp;&nbsp;&nbsp;&nbsp;Comply with all of the provisions of the Policy Regarding Use of Electronic Signatures included in the NASAA Statement of Policy Regarding Use of Electronic Offering Documents and Electronic Signatures.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.12&nbsp;&nbsp;&nbsp;&nbsp;The Managing Broker-Dealer shall maintain written policies and procedures covering the use of electronic signatures.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.13&nbsp;&nbsp;&nbsp;&nbsp;The Managing Broker-Dealer will furnish to the Issuer upon request a complete list of all persons who have been offered the Securities (including the corresponding number of the Memorandum delivered to such persons) and such persons' places of residence.

6.&nbsp;&nbsp;&nbsp;&nbsp;<u>Compensation</u>. Subject to Section 7, as compensation for services rendered by the Managing Broker-Dealer under this Agreement, the Managing Broker-Dealer will be entitled to receive from the Issuer, as appropriate:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.1&nbsp;&nbsp;&nbsp;&nbsp;A selling commission in an amount up to 6% (which may be reduced or eliminated to the extent that the selling commission due with respect to an Investor's investment in Securities is reduced or eliminated) of the purchase price of the Securities sold by the Managing Broker-Dealer (the "Total

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Sales"), which it will reallow to the Selling Group Members; provided, however, that this amount will be reduced to the extent a lower commission rate is negotiated with a Selling Group Member and the commission rate will be the lower agreed upon rate. Notwithstanding the foregoing, for sales of Securities to registered investment advisors, the Managing Broker-Dealer shall not receive the selling commission.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.2&nbsp;&nbsp;&nbsp;&nbsp;A placement fee (i) equal to 3% of the Total Sales for sales of Securities through Selling Group Members, some of which may be reallowed to the Selling Group Members and (ii) equal to 1.95% of the Total Sales for sales of Securities through registered investment advisors, some of which will be reallowed to certain wholesalers.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.3&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the Dealer Manager Agreement by and between the Issuer and the Managing Broker-Dealer dated November 4, 2021 (the "Dealer Agreement"), a $3,000 monthly retention fee for sales of Securities to registered investment advisors, regardless of the volume of any such sales, which monthly retention fee in the Dealer Agreement shall be deemed to also apply to the sale of the Securities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.4&nbsp;&nbsp;&nbsp;&nbsp;The Managing Broker-Dealer may also sell the Securities as a Selling Group Member, thereby becoming entitled to selling commissions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.5&nbsp;&nbsp;&nbsp;&nbsp;The Issuer may also enter into agreements for the sale of the Securities to certain Investors with non-FINRA registered investment advisers, and the Managing Broker-Dealer shall assist in the administration of such arrangements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.6&nbsp;&nbsp;&nbsp;&nbsp;Notwithstanding the foregoing provisions of this Section 6, the Issuer reserves the right, in its sole discretion, to refuse to accept any or all Investment Agreements tendered by the Managing Broker-Dealer and/or to terminate the Offering at any time before the Offering Termination Date.

7.&nbsp;&nbsp;&nbsp;&nbsp;<u>Conditions to Payment of Commissions, Allowances and Expense Reimbursements</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.1&nbsp;&nbsp;&nbsp;&nbsp;No selling commissions, allowances, expense reimbursements or other compensation will be payable with respect to (i) any Investment Agreements that are rejected by the Issuer, or if the Issuer terminates the Offering for any reason whatsoever or (ii) any sale of the Securities by the Managing Broker-Dealer unless and until such time as the Issuer has received and accepted the total proceeds of any such sale.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.2&nbsp;&nbsp;&nbsp;&nbsp;Except as provided in Section 16, all other expenses incurred by the Managing Broker-Dealer in the performance of the Managing Broker-Dealer's obligations hereunder, including, but not limited to, expenses related to the Offering of the Securities and any attorneys' fees, shall be at the Managing Broker-Dealer's sole cost and expense, and the foregoing shall apply notwithstanding the fact that the Offering is not consummated for any reason.

8.&nbsp;&nbsp;&nbsp;&nbsp;<u>Offering</u>. The Offering of the Securities shall be at the offering price and upon the terms and conditions set forth in the Memorandum.

9.&nbsp;&nbsp;&nbsp;&nbsp;<u>Indemnification by the Issuer</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.1&nbsp;&nbsp;&nbsp;&nbsp;Subject to the conditions set forth below, the Issuer, with respect to the Offering, agrees to indemnify, defend and hold harmless the Managing Broker-Dealer and the Selling Group Members, and their respective owners, managers, members, trustees, partners, directors, officers, employees, agents, attorneys and accountants (the "Selling Parties") against any and all loss, liability, claim, damage and expense whatsoever ("Loss") arising out of or based upon:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.1.1&nbsp;&nbsp;&nbsp;&nbsp;Any untrue statement or alleged untrue statement of a material fact contained in the Memorandum or in any application or other document filed in any jurisdiction in order to qualify the Securities under or exempt the Offering of the Securities from the registration or qualification requirements of the securities laws thereof unless any of the Selling Parties know such statement to be untrue;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.1.2&nbsp;&nbsp;&nbsp;&nbsp;The omission or alleged omission from the Memorandum of a material fact required to be stated therein or necessary to make the statements therein not misleading unless any of the Selling Parties know such statement to be untrue;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.1.3&nbsp;&nbsp;&nbsp;&nbsp;The failure of the Issuer as a result of its acts or omissions to comply with any of the applicable provisions of the Securities Act, Rule 506 or the regulations thereunder, or any applicable state laws or regulations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.1.4&nbsp;&nbsp;&nbsp;&nbsp;Any verbal or written representations made in connection with the Offering by the Issuer in violation of the Securities Act, or any other applicable federal or state securities laws and regulations; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.1.5&nbsp;&nbsp;&nbsp;&nbsp;The breach by the Issuer of any term, condition, representation, warranty, obligation or covenant in this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.2&nbsp;&nbsp;&nbsp;&nbsp;If any action is brought against any of the Selling Parties in respect of which indemnity may be sought hereunder, the Managing Broker-Dealer or the Selling Group Members, as the case may be, shall promptly notify the Issuer in writing of the institution of such action, and the Issuer shall assume the defense of such action; provided, however, that the failure to notify the Issuer shall not affect the provisions in this Section 9 except to the extent such failure to notify the Issuer has a material and adverse effect on the defense of such claims. The affected Selling Parties shall have the right to employ counsel in any such case. The reasonable fees and expenses of such counsel shall be at the Issuer's expense and authorized in writing by the Issuer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.3&nbsp;&nbsp;&nbsp;&nbsp;The Issuer agrees to promptly notify the Managing Broker-Dealer of the commencement of any litigation or proceedings against the Issuer or any of its managers, members, partners, officers, directors, employees, agents, attorneys, accountants and affiliates in connection with the Offering.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.4&nbsp;&nbsp;&nbsp;&nbsp;The indemnity provided to the Managing Broker-Dealer pursuant to this Section 9 shall not apply to the extent that any Loss arises out of or is based upon:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.4.1&nbsp;&nbsp;&nbsp;&nbsp;any untrue statement or alleged untrue statement of material fact made by the Managing Broker-Dealer or any agent of the Managing Broker-Dealer, or any omission or alleged omission of a material fact required to be disclosed by the Managing Broker-Dealer or any agent of the Managing Broker-Dealer made in reliance upon and in conformity with written information furnished to the Issuer by the Managing Broker-Dealer specifically for use in the preparation of the Memorandum (or any amendment or supplement thereto) or any sales literature;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.4.2&nbsp;&nbsp;&nbsp;&nbsp;the failure to qualify the offer and sale of Securities for an exemption from registration under the Securities Act and applicable state securities laws, rules or regulations caused by an action or omission of the Managing Broker-Dealer;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.4.3&nbsp;&nbsp;&nbsp;&nbsp;the offer or sale by the Managing Broker-Dealer of a Security to a retail customer of the Managing Broker-Dealer who fails to meet the standards regarding suitability under any applicable federal, state, or FINRA laws, rules, and regulations; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.4.4&nbsp;&nbsp;&nbsp;&nbsp;the breach by the Managing Broker-Dealer of any term, condition, representation, warranty, obligation or covenant in this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.5&nbsp;&nbsp;&nbsp;&nbsp;The indemnity provided to the Selling Group Member pursuant to this Section 9 shall not apply to the extent that any Loss arises out of or is based upon:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.5.1&nbsp;&nbsp;&nbsp;&nbsp;any untrue statement or alleged untrue statement of material fact made by the Selling Group Member or any agent of the Selling Group Member, or any omission or alleged omission of a material fact required to be disclosed by the Selling Group Member or any agent of the Selling Group Member;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.5.2&nbsp;&nbsp;&nbsp;&nbsp;the failure to qualify the offer and sale of Securities for an exemption from registration under the Securities Act and applicable state securities laws, rules or regulations caused by an action or omission of the Selling Group Member;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.5.3&nbsp;&nbsp;&nbsp;&nbsp;the offer or sale by the Selling Group Member of a Security to a person who fails to meet the standards regarding suitability under any applicable federal, state, or FINRA laws, rules, and regulations; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.5.4&nbsp;&nbsp;&nbsp;&nbsp;the breach by the Selling Group Member of any term, condition, representation, warranty, obligation or covenant under its Soliciting Dealer Agreement with the Managing Broker-Dealer relating to the Offering.

10.&nbsp;&nbsp;&nbsp;&nbsp;<u>Indemnification by the Managing Broker-Dealer</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.1&nbsp;&nbsp;&nbsp;&nbsp;Subject to the conditions set forth below, the Managing Broker-Dealer agrees to indemnify, defend and hold harmless the Issuer and the Selling Group Members, and their respective owners, managers, members, trustees, partners, directors, officers, employees, agents, attorneys and accountants (the "ISGM Parties"), against any and all Loss arising out of or based upon:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.1.1&nbsp;&nbsp;&nbsp;&nbsp;Any verbal or written representations made in connection with the Offering by the Managing Broker-Dealer in violation of the Securities Act, or any other applicable federal or state securities laws and regulations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.1.2&nbsp;&nbsp;&nbsp;&nbsp;Any misrepresentation contained in any sales or other materials provided by the Managing Broker-Dealer to the Selling Group Members;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.1.3&nbsp;&nbsp;&nbsp;&nbsp;The Managing Broker-Dealer's failure to comply with any of the applicable provisions of the Securities Act, the Exchange Act, Rule 506, the applicable requirements and rules of FINRA or any applicable state laws or regulations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.1.4&nbsp;&nbsp;&nbsp;&nbsp;The breach by the Managing Broker-Dealer of any term, condition, representation, warranty, obligation or covenant in this Agreement; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.1.5&nbsp;&nbsp;&nbsp;&nbsp;Any electronic signatures and/or stamped signatures in any form which have been directly used by or obtained by the Managing Broker-Dealer with respect to this Agreement or in any Soliciting Dealer Agreement related to the Offering.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.2&nbsp;&nbsp;&nbsp;&nbsp;If any action is brought against any of the ISGM Parties in respect of which indemnity may be sought hereunder, the Issuer or the Selling Group Members, as the case may be, shall promptly notify the Managing Broker-Dealer in writing of the institution of such action, and the Managing Broker-Dealer shall assume the defense of such action; provided, however, that the failure to notify the Managing Broker-Dealer shall not affect the provisions in this Section 10 except to the extent such failure to notify the Managing Broker-Dealer has a material and adverse effect on the defense of such claims. The affected ISGM Parties shall have the right to employ counsel in any such case. The reasonable fees and expenses of such counsel shall be at the Managing Broker-Dealer's expense and authorized in writing by the Managing Broker-Dealer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.3&nbsp;&nbsp;&nbsp;&nbsp;The Managing Broker-Dealer agrees to promptly notify the Issuer of the commencement of any litigation or proceedings against the Managing Broker-Dealer or any of its managers, members, partners, officers, directors, employees, agents, attorneys, accountants and affiliates in connection with the Offering.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.4&nbsp;&nbsp;&nbsp;&nbsp;The indemnity provided to the Issuer pursuant to this Section 10 shall not apply to the extent that any Loss arises out of or is based upon:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.4.1&nbsp;&nbsp;&nbsp;&nbsp;any untrue statement or alleged untrue statement of material fact made by the Issuer or any agent of the Issuer (other than the Managing Broker-Dealer), or any omission or alleged omission of a material fact required to be disclosed by the Issuer or any agent of the Issuer (other than the Managing Broker-Dealer);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.4.2&nbsp;&nbsp;&nbsp;&nbsp;the failure to qualify the offer and sale of Securities for an exemption from registration under the Securities Act and applicable state securities laws, rules or regulations caused by an action or omission of the Issuer; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.4.3&nbsp;&nbsp;&nbsp;&nbsp;the breach by the Issuer of its representations, warranties or obligations in this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.5&nbsp;&nbsp;&nbsp;&nbsp;The indemnity provided to the Selling Group Member pursuant to this Section 10 shall not apply to the extent that any Loss arises out of or is based upon:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.5.1&nbsp;&nbsp;&nbsp;&nbsp;any untrue statement or alleged untrue statement of material fact made by the Selling Group Member or any agent of the Selling Group Member, or any omission or alleged omission of a material fact required to be disclosed by the Selling Group Member or any agent of the Selling Group Member;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.5.2&nbsp;&nbsp;&nbsp;&nbsp;the failure to qualify the offer and sale of Securities for an exemption from registration under the Securities Act and applicable state securities laws, rules or regulations caused by an action or omission of the Selling Group Member;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.5.3&nbsp;&nbsp;&nbsp;&nbsp;the offer or sale by the Selling Group Member of a Security to a person who fails to meet the standards regarding suitability under any applicable federal, state, or FINRA laws, rules and regulations; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.5.4&nbsp;&nbsp;&nbsp;&nbsp;the breach by the Selling Group Member of any term, condition, representation, warranty, obligation or covenant under its Soliciting Dealer Agreement with the Managing Broker-Dealer relating to the Offering.

11.&nbsp;&nbsp;&nbsp;&nbsp;<u>Indemnification by the Selling Group Member</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.1&nbsp;&nbsp;&nbsp;&nbsp;Subject to the conditions set forth below, each Selling Group Member agrees to indemnify, defend and hold harmless the Issuer and the Managing Broker-Dealer and their respective owners, managers, members, trustees, partners, directors, officers, employees, agents, attorneys and accountants (the "IMBD Parties"), against any and all Loss arising out of or based upon:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.1.1&nbsp;&nbsp;&nbsp;&nbsp;Any verbal or written representations made in connection with the Offering by such Selling Group Member, its employees or affiliates in violation of the Securities Act, or any other applicable federal or state securities laws and regulations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.1.2&nbsp;&nbsp;&nbsp;&nbsp;Any use of sales materials or use of unauthorized verbal representations by such Selling Group Member, its employees or affiliates concerning the Offering in violation of the Soliciting Dealer Agreement or otherwise;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.1.3&nbsp;&nbsp;&nbsp;&nbsp;Such Selling Group Member's failure to comply with any of the applicable provisions of the Securities Act, the Exchange Act, Rule 506, the applicable requirements and rules of FINRA or any applicable state laws or regulations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.1.4&nbsp;&nbsp;&nbsp;&nbsp;The breach by such Selling Group Member of any term, condition, representation, warranty, obligation or covenant of the Soliciting Dealer Agreement;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.1.5&nbsp;&nbsp;&nbsp;&nbsp;The failure by any Investor to comply with the Investor Suitability Requirements set forth in the section captioned "Who May Invest" in the Memorandum; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.1.6&nbsp;&nbsp;&nbsp;&nbsp;Any electronic signatures and/or stamped signatures in any form which have been used, obtained or relied upon by the Selling Group Member with respect to this Agreement, the applicable Soliciting Dealer Agreement or any Investment Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.2&nbsp;&nbsp;&nbsp;&nbsp;If any action is brought against any of the IMBD Parties in respect of which indemnity may be sought hereunder, the Issuer or the Managing Broker-Dealer shall promptly notify the applicable Selling Group Member in writing of the institution of such action, and the Selling Group Member shall assume the defense of such action; provided, however, that the failure to notify the Selling Group Member shall not affect the provisions in this Section 11 except to the extent such failure to notify the Selling Group Member has a material and adverse effect on the defense of such claims. The affected IMBD Parties shall have the right to employ counsel in any such case. The reasonable fees and expenses of such counsel shall be at such Selling Group Member's expense and authorized in writing by such Selling Group Member.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.3&nbsp;&nbsp;&nbsp;&nbsp;The Selling Group Member agrees to promptly notify the Issuer and the Managing Broker-Dealer of the commencement of any litigation or proceedings against the Selling Group Member or any of the Selling Group Member's managers, members, partners, officers, directors, employees, agents, attorneys, accountants and affiliates in connection with the Offering.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.4&nbsp;&nbsp;&nbsp;&nbsp;The indemnity provided to the Managing Broker-Dealer pursuant to this Section 11 shall not apply to the extent that any Loss arises out of or is based upon:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.4.1&nbsp;&nbsp;&nbsp;&nbsp;any untrue statement or alleged untrue statement of material fact made by the Managing Broker-Dealer or any agent of the Managing Broker-Dealer, or any omission or alleged omission of a material fact required to be disclosed by the Managing Broker-Dealer or any agent of the Managing Broker-Dealer made in reliance upon and in conformity with written information furnished to the Issuer by the Managing Broker-Dealer specifically for use in the preparation of the Memorandum or any sales literature;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.4.2&nbsp;&nbsp;&nbsp;&nbsp;the failure to qualify the offer and sale of Securities for an exemption from registration under the Securities Act and applicable state securities laws, rules or regulations caused by an action or omission of the Managing Broker-Dealer;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.4.3&nbsp;&nbsp;&nbsp;&nbsp;the offer or sale by the Managing Broker-Dealer of a Security to a retail customer of the Managing Broker-Dealer who fails to meet the standards regarding suitability under any applicable federal, state, or FINRA laws, rules, and regulations; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.4.4&nbsp;&nbsp;&nbsp;&nbsp;the breach by the Managing Broker-Dealer of any term, condition, representation, warranty, obligation or covenant in this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.5&nbsp;&nbsp;&nbsp;&nbsp;The indemnity provided to the Issuer pursuant to this Section 11 shall not apply to the extent that any Loss arises out of or is based upon:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.5.1&nbsp;&nbsp;&nbsp;&nbsp;any untrue statement or alleged untrue statement of material fact made by the Issuer or any agent of the Issuer (other than the Managing Broker-Dealer), or any omission or alleged omission of a material fact required to be disclosed by the Issuer or any agent of the Issuer (other than the Managing Broker-Dealer);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.5.2&nbsp;&nbsp;&nbsp;&nbsp;the failure to qualify the offer and sale of Securities for an exemption from registration under the Securities Act and applicable state securities laws, rules or regulations caused by an action or omission of the Issuer; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.5.3&nbsp;&nbsp;&nbsp;&nbsp;the breach by the Issuer of any term, condition, representation, warranty, obligation or covenant in this Agreement.

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12.&nbsp;&nbsp;&nbsp;&nbsp;<u>Contribution</u>. In order to provide for just and equitable contribution in circumstances in which the indemnification provided pursuant to Sections 9, 10, and 11 is for any reason held to be unavailable from the Issuer, the Managing Broker-Dealer or the Selling Group Members, as the case may be, the Issuer, the Managing Broker-Dealer and the Selling Group Members shall contribute to the aggregate Loss (including any amount paid in settlement of any action, suit, or proceeding or any claims asserted) in such amounts as a court of competent jurisdiction may determine (or in the case of settlement, in such amounts as may be agreed upon by the parties) in such proportion to reflect the relative fault of the Issuer, the Managing Broker-Dealer and the Selling Group Members and their respective owners, managers, members, trustees, partners, directors, officers, employees, agents, attorneys and accountants in connection with the events described in Sections 9, 10 and 11, as the case may be, which resulted in such Loss, as well as any other equitable considerations. The relative fault of the parties shall be determined by reference to, among other things, whether any untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Issuer, the Managing Broker-Dealer and the Selling Group Members and their respective owners, managers, members, trustees, partners, directors, officers, employees, agents, attorneys and accountants and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such omission or statement. The parties and any person who controls the Managing Broker-Dealer shall also have rights to contribution under this Section 12.

13.&nbsp;&nbsp;&nbsp;&nbsp;<u>Compliance</u>. All actions, direct or indirect, by the Managing Broker-Dealer and its agents, members, employees and affiliates, shall conform to (i) requirements applicable to broker-dealers under federal and applicable state securities laws, rules and regulations and (ii) applicable requirements and rules of FINRA.

14.&nbsp;&nbsp;&nbsp;&nbsp;<u>Privacy Act</u>. To protect Customer Information (as defined below) and to comply as may be necessary with the requirements of the Gramm-Leach-Bliley Act, the relevant state and federal regulations pursuant thereto and state privacy laws, the parties wish to include the confidentiality and non-disclosure obligations set forth herein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14.1&nbsp;&nbsp;&nbsp;&nbsp;"Customer Information" means any information contained on a customer's application or other form and all nonpublic personal information about a customer that a party receives from the other party. Customer Information shall include, but not be limited to, name, address, telephone number, social security number, health information and personal financial information (which may include consumer account number).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14.2&nbsp;&nbsp;&nbsp;&nbsp;The parties understand and acknowledge that they may be financial institutions subject to applicable federal and state customer and consumer privacy laws and regulations, including Title V of the Gramm-Leach-Bliley Act (15 U.S.C. 6801, et seq.) and regulations promulgated thereunder (collectively, the "Privacy Laws"), and any Customer Information that one party receives from the other party is received with limitations on its use and disclosure. The parties agree that they are prohibited from using the Customer Information received from the other party other than (i) as required by law, regulation or rule or (ii) to carry out the purposes for which one party discloses Customer Information to the other party pursuant to this Agreement, as permitted under the use in the ordinary course of business exception to the Privacy Laws.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14.3&nbsp;&nbsp;&nbsp;&nbsp;The parties shall establish and maintain safeguards against the unauthorized access, destruction, loss, or alteration of Customer Information in their control which are no less rigorous than those maintained by a party for its own information of a similar nature. In the event of any improper disclosure of any Customer Information, the party responsible for the disclosure will immediately notify the other party.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14.4&nbsp;&nbsp;&nbsp;&nbsp;The provisions of this Section 14 shall survive the termination of this Agreement.

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15.&nbsp;&nbsp;&nbsp;&nbsp;<u>Representations and Agreements to Survive Sale and Payment</u>. Except as the context otherwise requires, all representations, warranties and agreements contained in this Agreement shall be deemed to be representations, warranties and agreements at and as of the Offering Termination Date, and such representations, warranties and agreements by the Managing Broker-Dealer or the Issuer, including the indemnity agreements contained in Sections 9, 10 and 11 and the contribution agreements contained in Section 12 shall remain operative and in full force and effect regardless of any investigation made by the Managing Broker-Dealer, the Issuer and/or any controlling person, and shall survive the sale of, and payment for, the Securities.

16.&nbsp;&nbsp;&nbsp;&nbsp;<u>Costs of the Offering</u>. Except for the compensation payable to the Managing Broker-Dealer and the allowances and reimbursements described in Section 6, which are the sole obligations of the Issuer or its affiliates, the Managing Broker-Dealer will pay all of its own costs and expenses, including, but not limited to, all expenses necessary for the Managing Broker-Dealer to remain in compliance with any applicable federal, state or FINRA laws, rules or regulations in order to participate in the Offering as a broker-dealer, and the fees and costs of the Managing Broker-Dealer's counsel. The Issuer agrees to pay all other expenses incident to the performance of its obligations hereunder, including all expenses incident to filings with federal and state regulatory authorities and to the exemption of the Securities under federal and state securities laws, including fees and disbursements of the Issuer's counsel, and all costs of reproduction and distribution of the Memorandum and any amendment or supplement thereto.

17.&nbsp;&nbsp;&nbsp;&nbsp;<u>Termination</u>. This Agreement is terminable by any party for any reason whatsoever or for no reason at any time upon written notice to the other parties. Such termination shall not affect the indemnification agreements set forth in Sections 9, 10 and 11 or the contribution agreements set forth in Section 12.

18.&nbsp;&nbsp;&nbsp;&nbsp;<u>Governing Law</u>. This Agreement shall be governed by, subject to and construed in accordance with, the laws of the state of Utah without regard to conflict of law provisions.

19.&nbsp;&nbsp;&nbsp;&nbsp;<u>Venue</u>. Any action relating to or arising out of this Agreement shall be brought only in a court of competent jurisdiction located in Salt Lake County, Utah.

20.&nbsp;&nbsp;&nbsp;&nbsp;<u>Severability</u>. If any portion of this Agreement shall be held invalid or inoperative, then so far as is reasonable and possible (i) the remainder of this Agreement shall be considered valid and operative and (ii) effect shall be given to the intent manifested by the portion held invalid or inoperative.

21.&nbsp;&nbsp;&nbsp;&nbsp;<u>Counterparts</u>. This Agreement may be executed in 2 or more counterparts, each of which shall be deemed to be an original, and together which shall constitute one and the same instrument.

22.&nbsp;&nbsp;&nbsp;&nbsp;<u>Modification or Amendment</u>. This Agreement may not be modified or amended except by written agreement executed by the parties hereto.

23.&nbsp;&nbsp;&nbsp;&nbsp;<u>Notices</u>. All communications hereunder, except as herein otherwise specifically provided, shall be in writing and, (i) if sent to the Managing Broker-Dealer, shall be mailed or delivered to [\*\*\*], 365 Garden Grove Lane, Suite 100, Pleasant Grove, Utah 84062 or (ii) if sent to the Issuer, shall be mailed or delivered to Cottonwood Communities, Inc., 1245 East Brickyard Road, Suite 250, Salt Lake City, Utah 84106. The notice shall be deemed to be received on the date of its actual receipt by the party entitled thereto.

24.&nbsp;&nbsp;&nbsp;&nbsp;<u>Parties</u>. This Agreement shall be binding upon and inure solely to the benefit of the parties hereto, the parties referred to in Sections 9, 10, 11 and 12, their respective successors and assigns, and no other person shall have or be construed to have any legal or equitable right, remedy or claim under, in respect of, or by virtue of, this Agreement or any provision herein contained.

25.&nbsp;&nbsp;&nbsp;&nbsp;<u>Delay</u>. Neither the failure nor any delay on the part of any party to this Agreement to exercise any right, remedy, power or privilege under this Agreement shall operate as a waiver thereof, nor shall a waiver of any right, remedy, power or privilege with respect to any occurrence be construed as a waiver of such right, remedy, power or privilege with respect to any subsequent occurrence.

------

26.&nbsp;&nbsp;&nbsp;&nbsp;<u>Recovery of Costs</u>. If any legal action or other proceeding is brought for the enforcement of this Agreement, or because of an alleged dispute, breach, default or misrepresentation in connection with any of the provisions of this Agreement, the successful or prevailing party shall be entitled to recover reasonable attorneys' fees and other costs incurred in that action or proceeding (and any additional proceeding for the enforcement of a judgment) in addition to any other relief to which it or they may be entitled.

27.&nbsp;&nbsp;&nbsp;&nbsp;<u>Entire Agreement</u>. This Agreement contains the entire understanding between the parties hereto and supersedes any prior understandings or written or oral agreements between them respecting the subject matter hereof.

28.&nbsp;&nbsp;&nbsp;&nbsp;<u>Confirmation</u>. The Issuer agrees to confirm all orders for purchase of Securities that are accepted by the Issuer and provide such confirmation to the Managing Broker-Dealer and the Selling Group Members. To the extent practicable and permitted by law, all such confirmations may be provided electronically.

29.&nbsp;&nbsp;&nbsp;&nbsp;<u>Due Diligence</u>. The Issuer will authorize a collection of information regarding the Offering (the "Due Diligence Information"), which collection the Issuer may amend and supplement from time to time, to be delivered by the Managing Broker-Dealer to the Selling Group Members (or their agents performing due diligence) in connection with their due diligence review of the Offering. In the event a Selling Group Member (or its agent performing due diligence) requests access to additional information or otherwise wishes to conduct additional due diligence regarding the Offering, the Issuer and the Managing Broker-Dealer will reasonably cooperate with such Selling Group Member to accommodate such request. All Due Diligence Information received by the Managing Broker-Dealer and/or the Selling Group Members in connection with their due diligence review of the Offering are confidential and shall be maintained as confidential and not disclosed by the Managing Broker-Dealer or the Selling Group Members except to the extent such information is disclosed in the Memorandum.

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| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IN WITNESS WHEREOF, this Agreement has been executed as of the Effective Date. | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IN WITNESS WHEREOF, this Agreement has been executed as of the Effective Date. |
|  | ISSUER:<br>Cottonwood Communities, Inc., a Maryland corporation<br>By: <u>/s/ Gregg Christensen</u><br>Name: Gregg Christensen<br>Title: Chief Legal Officer<br>MANAGING BROKER-DEALER:<br>[\*\*\*], a Utah limited liability company<br>By:&nbsp;&nbsp;&nbsp;&nbsp;<u>/s/</u> [<u>\*\*\*</u>]<br>Name:&nbsp;&nbsp;&nbsp;&nbsp;[\*\*\*]<br>Title:&nbsp;&nbsp;&nbsp;&nbsp;President |
| <br>Commission checks to be sent to:<br>[\*\*\*]<br>365 Garden Grove Lane, Suite 100<br>Pleasant Grove, Utah 84062<br>Attn: Operations |  |

---

------

**EXHIBIT A<br>SOLICITING DEALER AGREEMENT**

## Exhibit 21.1

**Exhibit 21.1**

**Cottonwood Communities Inc.**

**Subsidiary List (By Jurisdiction)** 

**Delaware**

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| |
|:---|
| 1600 Barberry Lane Owner, LLC |
| 1600 Barberry Lane, LLC |
| 3300 Cottonwood, LLC |
| 3800 Main Investors, LLC  |
| 3800 Main, LLC |
| 5001 Enclave Member, LLC |
| 5001 Enclave O, LLC |
| Block C SPE, LLC |
| Block C SPE II, LLC |
| Broadway Opportunity Fund LLC |
| Brook Highland Place DST, LLC |
| CC 801 Riverfront, LLC |
| CC Astoria West, LLC |
| CC Callowhill, LLC |
| CC Clermont, LLC |
| CC Lector85, LLC |
| CC One Upland, LLC |
| CC Pompano Beach, LLC |
| CC Pompano Beach S, LLC |
| CC Pompano Beach TIC 2, LLC |
| CC Pompano Beach TIC 4, LLC |
| CC Reno Lender, LLC |
| CC West Palm Holding, LLC |
| CC West Palm, LLC |
| CCA Promissory Note Distribution LLC |
| CCPM II – Clearview, LLC |
| Certis Construction, LLC |
| Clearview TRS, LLC |
| Cottonwood Alpha Mills H, LLC |
| Cottonwood Arsenal H, LLC |
| Cottonwood at Forum H, LLC |
| Cottonwood at Trolley Square, LLC |
| Cottonwood Block C QOF, LLC |
| Cottonwood Capital Holdings, LLC |
| Cottonwood Capital Management, Inc. |
| Cottonwood Capital Property Management II, LLC |
| Cottonwood Capital, LLC |
| Cottonwood Communities Advisors Promote, LLC |
| Cottonwood Communities Management, LLC |
| Cottonwood Communities TRS, LLC |
| Cottonwood Courtney Manor H, LLC |
| Cottonwood Courtney Oaks H, LLC |
| Cottonwood Fox Point H, LLC |
| Cottonwood Galleria Owner LLC |

---

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

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| |
|:---|
| Cottonwood Highland Park H, LLC |
| Cottonwood Jasper, LLC |
| Cottonwood-Kirkwood, LLC |
| Cottonwood Legacy Heights H, LLC |
| Cottonwood Melrose II, LLC |
| Cottonwood Melrose, LLC |
| Cottonwood On Highland, LLC |
| Cottonwood Raveneaux Apartments, LLC |
| Cottonwood Raveneaux R, LLC |
| Cottonwood Regatta H, LLC |
| Cottonwood Residential O.P., LP |
| Cottonwood Scott Mountain H, LLC |
| Cottonwood Stonebriar H, LLC |
| Cottonwood Sugar House, LLC |
| Cottonwood Sugarmont, LLC |
| Cottonwood Summer Park Cash, LLC |
| Cottonwood Toscana H, LLC |
| Cottonwood TriPost, LLC |
| CR Digital, LLC |
| CROP PM – St. Pete, LLC |
| CROP Property Management, LLC |
| CW Alpha Mill Apartments, LP |
| CW Alpha Mill GP, LLC  |
| CW Alpha Mills JV, LLC |
| CW Block C, LLC |
| CW Broadway JV LLC |
| CW Cason, LLC |
| CW Clearview, LLC |
| CW Cottonwood Apartments, LLC |
| CW Heights at Meridian Apartments, LP |
| CW Heights at Meridian GP, LLC |
| CW Heights at Meridian H, LLC |
| CW Heights at Meridian JV, LLC |
| CW Highland Park Apartments, LLC |
| CW Highland Park JV, LLC |
| CW Investor at Sugar House LLC |
| CW Investor on Highland, LLC |
| CW Jasper, LLC |
| CW Multifamily Opportunity Fund GP, LLC |
| CW Reserve Apartments II, LP |
| CW Reserve Apartments, LP |
| CW Reserve GP, LLC |
| CW St. Pete 1031, LLC |
| CW St. Pete, LLC |
| CW Stonebriar, LLC |
| CW Sugar House JV GP, LLC |
| CW Sugar House JV, LLC |
| CW Sugar House, LLC |

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------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

---

| |
|:---|
| CW Westborough 1031, LLC |
| CW Westborough Apartments, LLC |
| CW Westborough H, LLC |
| CW Westborough JV, LLC |
| CW Westside Apartments, LLC |
| CW Westside H, LLC |
| CW Westside JV, LLC |
| CWC Cottonwood H, LLC |
| CWR-Pavilions, LLC |
| Ditaro, LLC |
| Forum at Grand Prairie, LLC |
| Haywood Storage, LLC |
| KRE JAG One Upland Owner LLC |
| Melrose Apartments, LLC |
| Melrose II S, LLC |
| Melrose II TIC, LLC |
| Pavilions, LLC |
| Plantations at Haywood M, LLC |
| Plantations at Haywood O, LLC |
| Regatta TRS, LLC |
| Resident Indemnity Management, LLC |
| Retreat at Peachtree City Apartments CW, LLC |
| Retreat at Peachtree City Apartments, LLC |
| Scott Mountain Apartments, LLC |
| Sequoia Stonebriar Owner, LLC |
| Sugarmont, LLC |
| Summer Park H, LLC |
| Summer Park Whitman, LLC |

---

**Maryland** 

Cottonwood Communities GP Subsidiary, LLC

**Utah** 

Albion Insurance Company, Inc.

Cottonwood Residential Real Estate Services, LLC

## Exhibit 23.1

**Exhibit 23.1**

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| |
|:---|
| **Consent of Independent Registered Public Accounting Firm** |
| We consent to the incorporation by reference in the registration statement (No. 333-263982) on Form S-8 of our report dated March 24, 2023, with respect to the consolidated financial statements of Cottonwood Communities, Inc. |

---

---

| | |
|:---|:---|
| | /s/ KPMG LLP |
| Denver, Colorado | |
| March 24, 2023 | |

---

## Exhibit 31.1

**Exhibit 31.1**

**CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER PURSUANT TO**

**SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 (18 U.S.C. SECTION 350)**

I, Daniel Shaeffer, certify that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.I have reviewed this annual report on Form 10-K of Cottonwood Communities, Inc. (the "registrant");

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c.Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d.Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: March 24, 2023

---

| |
|:---|
| /s/ Daniel Shaeffer |
| Daniel Shaeffer, Chief Executive Officer |

---

## Exhibit 31.2

**Exhibit 31.2**

**CERTIFICATION OF THE CHIEF FINANCIAL OFFICER PURSUANT TO**

**SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 (18 U.S.C. SECTION 350)**

I, Adam Larson, certify that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.I have reviewed this annual report on Form 10-K of Cottonwood Communities, Inc. (the "registrant");

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant, as of, and for, the periods presented in this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c.Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d.Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: March 24, 2023

---

| |
|:---|
| /s/ Adam Larson |
| Adam Larson, Chief Financial Officer |

---

## Exhibit 32.1

**Exhibit 32.1**

**CERTIFICATIONS PURSUANT TO**

**18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO**

**SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002**

**Certification of Chief Executive Officer**

&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and in connection with the Annual Report on Form 10-K of Cottonwood Communities, Inc. (the "Company") for the period ended December 31, 2022, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned, the Chief Executive Officer of the Company, certifies, to his knowledge, that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: March 24, 2022

---

| |
|:---|
| /s/ Daniel Shaeffer |
| Daniel Shaeffer, Chief Executive Officer |

---

## Exhibit 32.2

**Exhibit 32.2**

**CERTIFICATIONS PURSUANT TO**

**18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO**

**SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002**

**Certification of Chief Financial Officer**

&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and in connection with the Annual Report on Form 10-K of Cottonwood Communities, Inc. (the "Company") for the period ended December 31, 2022, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned, the Chief Financial Officer of the Company, certifies, to his knowledge, that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: March 24, 2023

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| |
|:---|
| /s/ Adam Larson |
| Adam Larson, Chief Financial Officer |

---

<br>