Resource Real Estate Opportunity REIT, Inc. (“REIT I”) entered into definitive agreement to acquire Resource Real Estate Opportunity REIT II, Inc. (“REIT II”) on September 8, 2020. As per the terms, REIT I will receive 1.22423 shares of REIT II in a stock-for-stock transaction. Each issued and outstanding share of REIT I's convertible stock, will be converted into the right to receive $0.02 in cash. In a related deal, Resource Real Estate Opportunity REIT II, Inc. entered into definitive agreement to acquire Resource Apartment REIT III, Inc. on September 8, 2020. As a result of combination. continuing REIT II stockholders will own approximately 41.07% of the issued and outstanding shares of the combined company common stock, and former REIT I Stockholders will own approximately 58.39% of the issued and outstanding shares of common stock of the combined company. The combined company will be renamed Resource REIT, Inc. In case of termination, REIT I must pay to REIT II a termination fee of $22.99 million.

REIT I will hold a special meeting of its stockholders on January 26, 2021. In connection with the proposed transactions, on September 8, 2020, the Board of Directors made certain changes to the officers of REIT I. Alan Feldman was appointed President following the resignation of George Carleton and will continue to serve as Chief Executive Officer. Steven Saltzman was appointed Chief Accounting Officer and Vice President and Thomas Elliott was appointed Executive Vice President, Chief Financial Officer and Treasurer. Shelle Weisbaum continues as Chief Legal Officer, Senior Vice President and Secretary.

The transaction is subject to certain closing conditions, including the approval of the mergers by REIT I stockholders, Form S-4 shall have been declared effective by the SEC, consents, authorizations, orders or approvals of each Governmental Authority necessary for the consummation of the Merger, REIT I Designee shall have been elected to the REIT II Board, The REIT I charter amendment shall have become effective, the Contribution Agreement and all ancillary documents or agreements contemplated thereunder shall continue to be legal, valid, binding obligations of and enforceable against, the parties thereto, and shall continue to be in full force and effect and shall have not been subsequently rescinded, supplemented, modified or amended or withdrawn in any way and REIT I and REIT II  shall have received a written opinion, from respective legal advisors, to the effect that the REIT merger will qualify as a reorganization within the meaning of Section 368(a) of the Code.

The merger agreement was entered into after a thorough due diligence and negotiation process. The transaction has been unanimously approved by Board of Directors of REIT II and REIT I. On October 22, 2020, the board of directors of REIT I approved the partial resumption of the share redemption program of the REIT I, pursuant to which, subject to significant conditions and limitations of the program, stockholders of the REIT I can have their shares repurchased by REIT I. The resumption will be effective November 22, 2020. The mergers are expected to close concurrently but are not conditioned on the consummation of each other. As of January 26, 2021, REIT I shareholders approved the transaction. The merger transactions are expected to close in the fourth quarter of 2020. As of September 11, 2020, the transaction is expected to close in December 2020. As of October 20, 2020, the merger will be completed in the first quarter of 2021. The merger is expected to be dilutive to estimated net income and funds from operations (“FFO”) for REIT I stockholders.

Houlihan Lokey Capital, Inc. acted as financial advisor and fairness opinion provider and Heath D. Linsky, Domnick Bozzetti and Jay Blaivias of Morrison & Foerster LLP provided legal counsel to REIT II's special committee of the Board of Directors. Robert H. Bergdolt of DLA Piper LLP (US) provided legal counsel to REIT II. Morris, Manning & Martin, LLP acted as legal advisor and Robert A. Stanger & Company, Inc. acted as financial advisor and fairness opinion provider to REIT I's special committee of the board of directors. Eastdil Secured acted as financial advisor and Baker & McKenzie LLP acted as legal counsel to Resource Real Estate, LLC, as the sponsor of Resource Real Estate Opportunity REIT. DST Systems, Inc. acted as exchange agent and registrar to REIT II. Broadridge Financial Solutions, Inc. (NYSE:BR) acted as information agent to REIT I for a fees of approximately $460,000 to solicit and distribute proxies. Robert A. Stanger & Company, Inc. has been paid a fee of $250,000 in connection with this fairness opinion engagement and $880,000, inclusive of the opinion fees in connection with financial advisor services and a fee of approximately $3.62 million contingent upon the completion of the merger.