Harbert Calls for Sale of Bluerock Resi

Purpose of Transaction.

The Reporting Persons originally purchased the securities of the Issuer (the “Shares”) reported herein based on their belief that the securities were undervalued and represented an attractive investment opportunity. Depending upon overall market conditions, other investment opportunities available to the Reporting Persons, and the availability of Shares at prices that would make the purchase or sale of Shares desirable, the Reporting Persons may endeavor to increase or decrease their position in the Issuer through, among other things, the purchase or sale of Shares on the open market or in private transactions or otherwise, on such terms and at such times as the Reporting Persons may deem advisable.

The Reporting Persons believe that the Issuer has struggled to generate meaningful long-term shareholder value, as measured by total return since the Issuer’s initial public offering, relative performance to its peer group, and the sustained discount to net asset value. The Reporting Persons or their representatives have attempted to engage with management of the Issuer to discuss the reasons for this underperformance and to propose a potential solution. More specifically, the Reporting Persons firmly believe the status quo will result in continued underperformance, and that a sale of the Issuer is in the best interest of shareholders. To that end, the Fund recently made a bona-fide non-binding proposal to acquire the Issuer in an all-cash transaction at a substantial premium to the 60-day moving average, which was later revised to offer an even higher premium, subject to confirmatory due diligence (the “Proposals”). The Issuer’s Board of Directors (the “Board”) summarily rejected the Proposals without any substantive discussion with the Fund, and, as a result, the Fund withdrew its Proposals in their entirety.

The Reporting Persons believe transparency and dialogue with shareholders is a pillar of corporate governance best practices and a key ingredient for long-term outperformance. The Reporting Persons sincerely hope that the Issuer’s Board will immediately engage with the Reporting Persons, as one of the Issuer’s largest institutional investors, in good faith, in order to work collaboratively to unlock the true value of the Issuer in the near future.

Link to filing: https://www.sec.gov/Archives/edgar/data/1442626/000119312518310749/0001193125-18-310749-index.htm