UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

FOR THE QUARTERLY PERIOD ENDED ~~SEPTEMBER 30, 2017~~MARCH 31, 2019

☐	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: 000-55765

Inland Residential Properties Trust, Inc.

(Exact name of registrant as specified in its charter)

Maryland		80-0966998
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

2901 Butterfield Road, Oak Brook, Illinois		60523
(Address of principal executive offices)		(Zip Code)

~~630-218-8000~~

(Registrant’s telephone number, including area ~~code)~~code: 630-218-8000

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 ~~the~~such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ 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 ~~and post~~ 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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

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

Title of each class

Trading

Symbol(s)

Name of each exchange on which registered

None

As of ~~October 31, 2017,~~May 9, 2019 there were ~~1,440,253~~2,183,727 shares of the registrant’s Class A common stock ~~401,754 shares of Class T common stock and 179,287 shares of Class T-3 common stock~~ outstanding.

INLAND RESIDENTIAL PROPERTIES TRUST, INC.

TABLE OF CONTENTS

		Page
Part I - Financial Information
Item 1.	Financial Statements

	Consolidated ~~Balance Sheets as~~Statements of ~~September 30, 2017 (unaudited)~~Net Assets (Liquidation Basis) at March 31, 2019 and December 31, ~~201~~2018 (unaudited)6	3

	Consolidated ~~Statements~~Statement of ~~Operations~~Changes in Net Assets (Liquidation Basis) for the three ~~and nine~~ months ended ~~September 30, 2017 and 2016~~March 31, 2019 (unaudited)	4

	Consolidated Statement of ~~Equity~~Operations (Going Concern Basis) for the ~~nine~~three months ended ~~September 30, 2017~~ March 31, 2018 (unaudited)	5

	Consolidated ~~Statements~~Statement of ~~Cash Flows~~Equity (Going Concern Basis) for the ~~nine~~three months ended ~~September 30, 2017 and 2016~~March 31, 2018 (unaudited)	6

	Consolidated Statement of Cash Flows (Going Concern Basis) for the three months ended March 31, 2018 (unaudited)	7

	Notes to Consolidated Financial Statements (unaudited)	89

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2422

Item 4.	Controls and Procedures	2522

Part II - Other Information
Item 1.	Legal Proceedings	2623

Item 1A.	Risk Factors	2623

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2724

Item 3.	Defaults Upon Senior Securities	2824

Item 4.	Mine Safety Disclosures	2824

Item 5.	Other Information	2824

Item 6.	Exhibits	2924

Signatures		3226

INLAND RESIDENTIAL PROPERTIES TRUST, INC.

CONSOLIDATED ~~BALANCE SHEETS~~STATEMENTS OF NET ASSETS (LIQUIDATION BASIS)

AT MARCH 31, 2019 and DECEMBER 31, 2018

(unaudited)

	March 31, 2019		December 31, 2018
ASSETS
Real estate investments at fair value	$	40,000,000	$	87,000,000
Cash		23,605,274		14,226,863
Total assets		63,605,274		101,226,863

LIABILITIES
Mortgages payable	$	21,930,000	$	49,380,000
Due to related parties		5,329,775		5,256,839
Transaction costs payable		425,751		1,245,970
Liabilities for estimated costs in excess of estimated receipts during liquidation		734,498		373,261
Total liabilities		28,420,024		56,256,070

Commitments and contingencies

Net assets in liquidation	$	35,185,250	$	44,970,793

See accompanying notes to consolidated financial statements.

September 30,
2017
(unaudited)

December 31,
2016

ASSETS

Assets:

Real estate:

Land

$
9,845,410

$
6,301,838

Building and other improvements

93,889,256

38,889,177

Total real estate

103,734,666

45,191,015

Less: accumulated depreciation

(3,476,700
)

(1,822,971
)
Net real estate

100,257,966

43,368,044

Cash and cash equivalents

3,125,185

9,038,642

Accounts and rents receivable

43,481

17,961

Acquired in place lease intangibles, net

730,999

—

Other assets

453,652

458,316

Total assets

$
104,611,283

$
52,882,963

LIABILITIES AND EQUITY

Liabilities:

Mortgages and note payable, net

$
69,903,047

$
27,447,459

Accounts payable and accrued expenses

944,218

232,736

Distributions payable

190,834

137,207

Due to related parties

6,275,230

5,684,753

Other liabilities

171,559

67,287

Total liabilities

77,484,888

33,569,442

Commitments and contingencies

Stockholders’ equity:

Preferred stock, $.001 par value, 50,000,000 shares authorized, none outstanding

—

—

Class A common stock, $.001 par value, 320,000,000 shares authorized, 1,420,776 shares and 1,098,858 shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively

1,420

1,099

Class T common stock, $.001 par value, 40,000,000 shares authorized, 399,285 shares and 284,283 shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively

399

284

Class T-3 common stock, $.001 par value, 40,000,000 shares authorized, 147,805 shares and none issued and outstanding as of September 30, 2017 and December 31, 2016, respectively

148

—

Additional paid in capital (net of offering costs of $10,538,615 and $8,268,768 as of September 30, 2017 and December 31, 2016, respectively)

37,519,623

25,539,970

Distributions and accumulated losses

(10,395,195
)

(6,227,832
)
Total stockholders’ equity

27,126,395

19,313,521

Total liabilities and stockholders’ equity

$
104,611,283

$
52,882,963

INLAND RESIDENTIAL PROPERTIES TRUST, INC.

CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS (LIQUIDATION BASIS)

(unaudited)


	Three Months Ended March 31,
	2019

Net Assets in Liquidation at December 31, 2018	$	44,970,793
Initial liquidating distribution		(9,900,000	)
Change in estimated costs to be incurred during liquidation		114,457
Net Assets in Liquidation at March 31, 2019	$	35,185,250

See accompanying notes to consolidated financial statements.

INLAND RESIDENTIAL PROPERTIES TRUST, INC.

CONSOLIDATED STATEMENT OF OPERATIONS (GOING CONCERN BASIS)

(unaudited)

	Three Months Ended March 31,
	2018
Income:
Rental income	$	2,312,334
Other property income		287,541
Total income		2,599,875

Expenses:
Property operating expenses		830,893
Real estate tax expense		280,659
General and administrative expenses		480,600
Business management fee		158,415
Depreciation and amortization		1,050,613
Total expenses		2,801,180

Operating (loss)		(201,305	)

Interest expense		(611,634	)
Interest and other income		6,949

Net loss	$	(805,990	)

Net loss per common share, basic and diluted	$	(0.37	)

Weighted average number of common shares outstanding, basic and diluted		2,152,649

See accompanying notes to consolidated financial statements.

INLAND RESIDENTIAL PROPERTIES TRUST, INC.

CONSOLIDATED STATEMENT OF EQUITY (GOING CONCERN BASIS)

(unaudited)

	Common Stock													Additional			Distributions and
	Class A				Class T					Class T-3				Paid-In			Accumulated
	Shares		Amount		Shares			Amount		Shares		Amount		Capital			Losses			Total
Balance at December 31, 2017		1,479,155	$	1,479		404,069		$	404		243,346	$	243	$	47,049,832		$	(12,058,132	)	$	34,993,826
Proceeds from the offering		—		—		2,296			2		14,499		15		404,983			—			405,000
Offering costs		—		—		—			—		—		—		(34,724	)		—			(34,724	)
Issuance of shares from distribution reinvestment plan		9,564		9		2,702			3		1,464		1		321,932			—			321,945
Shares repurchased		—		—		(220	)		—		—		—		(5,146	)		—			(5,146	)
Distributions declared		—		—		—			—		—		—		—			(636,913	)		(636,913	)
Net loss		—		—		—			—		—		—		—			(805,990	)		(805,990	)
Equity based compensation		37		—		—			—		—		—		3,311			—			3,311
Balance at March 31, 2018		1,488,756	$	1,488		408,847		$	409		259,309	$	259	$	47,740,188		$	(13,501,035	)	$	34,241,309

See accompanying notes to consolidated financial statements.

INLAND RESIDENTIAL PROPERTIES TRUST, INC.

CONSOLIDATED STATEMENTS OF ~~OPERATIONS~~CASH FLOWS (GOING CONCERN BASIS)

(unaudited)

Three Months Ended
September 30,

Nine Months Ended
September 30,

2017

2016

2017

2016

Income:

Rental income

$
2,055,873

$
905,464

$
4,254,327

$
2,665,759

Other property income

229,634

87,204

474,139

263,928

Total income

2,285,507

992,668

4,728,466

2,929,687

Expenses:

Property operating expenses

722,891

299,274

1,419,557

900,845

Real estate tax expense

244,451

90,283

498,450

264,836

General and administrative expenses

350,982

201,349

1,045,499

802,033

Business management fee

158,154

68,665

318,609

205,850

Acquisition related costs

16,484

—

87,963

—

Depreciation and amortization

1,153,501

378,531

2,132,208

1,451,356

Total expenses

2,646,463

1,038,102

5,502,286

3,624,920

Operating loss

(360,956
)

(45,434
)

(773,820
)

(695,233
)

Interest expense

(677,534
)

(322,478
)

(1,353,084
)

(1,121,542
)
Interest and other income

6,393

—

30,907

—

Net loss

$
(1,032,097
)

$
(367,912
)

$
(2,095,997
)

$
(1,816,775
)

Net loss per common share, basic and diluted

$
(0.55
)

$
(0.39
)

$
(1.24
)

$
(2.65
)

Weighted average number of common shares outstanding, basic
and diluted

1,885,318

942,839

1,692,974

685,934

~~See accompanying notes to consolidated financial statements.~~

~~INLAND RESIDENTIAL PROPERTIES TRUST, INC.~~

~~CONSOLIDATED STATEMENT OF EQUITY~~

~~(unaudited)~~

Common Stock

Additional

Distributions
and

Class A

Class T

Class T-3

Paid-In

Accumulated

Shares

Amount

Shares

Amount

Shares

Amount

Capital

Losses

Total

Balance at December 31, 2016

1,098,858

$
1,099

284,283

$
284

—

$
—

$
25,539,970

$
(6,227,832
)

$
19,313,521

Proceeds from the offering

282,677

282

103,570

103

146,623

147

12,965,923

—

12,966,455

Offering costs

—

—

—

—

—

—

(2,269,847
)

—

(2,269,847
)
Discount on shares to related parties

—

—

—

—

—

—

24,530

—

24,530

Issuance of shares from distribution reinvestment plan

25,255

25

7,030

7

744

1

777,117

—

777,150

Shares repurchased

(3,317
)

(3
)

(424
)

—

—

—

(80,812
)

—

(80,815
)
Distributions declared

—

—

—

—

—

—

—

(1,517,491
)

(1,517,491
)
Stock dividends issued

17,120

17

4,826

5

438

—

553,853

(553,875
)

—

Net loss

—

—

—

—

—

—

—

(2,095,997
)

(2,095,997
)
Equity based compensation

183

—

—

—

—

—

8,889

—

8,889

Balance at September 30, 2017

1,420,776

$
1,420

399,285

$
399

147,805

$
148

$
37,519,623

$
(10,395,195
)

$
27,126,395

~~See accompanying notes to consolidated financial statements.~~

~~INLAND RESIDENTIAL PROPERTIES TRUST, INC.~~

~~CONSOLIDATED STATEMENTS OF CASH FLOWS~~

~~(unaudited)~~

	Nine Months Ended September 30,						Three Months Ended March 31,
	2017			2016			2018
Cash flows from operating activities:
Net loss	$	(2,095,997	)	$	(1,816,775	)	$	(805,990	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		2,132,208			1,451,356			1,050,613
Amortization of debt issuance costs		18,888			102,698			10,262
Amortization of equity based compensation		8,889			10,920			3,311
Discount on shares issued to related parties		24,530			19,356
Changes in assets and liabilities:
Accounts payable and accrued expenses		295,328			(74,984	)		270,204
Accounts and rents receivable		(44,929	)		15,082			31,170
Due to related parties		410,670			227,083			197,204
Other liabilities		36,332			6,637			48,161
Other assets		93,182			66,086			79,993
Net cash flows provided by operating activities		879,101			7,459			884,928

Cash flows from investing activities:
Purchase of real estate		(59,288,960	)		—
Capital expenditures		(60,328	)		(101,318	)		(75,566	)
Net cash flows used in investing activities		(59,349,288	)		(101,318	)		(75,566	)

Cash flows from financing activities:
Payment of mortgage and note payable		(2,200,000	)		(18,300,000	)
Proceeds from mortgages and note payable		44,930,000			—
Payment of note payable								(3,500,000	)
Proceeds from offering		12,966,455			18,741,902			405,000
Payment of debt issuance costs		(293,300	)		(329	)
Distributions paid		(686,715	)		(297,691	)		(308,964	)
Shares repurchased		(80,815	)		—			(5,146	)
Payment of offering costs		(2,078,895	)		(2,482,210	)		(224,846	)
Net cash flows provided by (used in) financing activities		52,556,730			(2,338,328	)		(3,633,956	)

Net decrease in cash and cash equivalents	$	(5,913,457	)	$	(2,432,187	)	$	(2,824,594	)
Cash and cash equivalents, at beginning of the period		9,038,642			5,281,172			7,556,763
Cash and cash equivalents, at end of period	$	3,125,185		$	2,848,985		$	4,732,169

See accompanying notes to consolidated financial statements.

INLAND RESIDENTIAL PROPERTIES TRUST, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (GOING CONCERN BASIS) (continued)

(unaudited)

Nine Months Ended
September 30,

2017

2016

Supplemental disclosure of cash flow information:

In conjunction with the purchase of real estate, the Company acquired assets
and assumed liabilities as follows:

Land

$
3,543,573

$
—

Building and other improvements

53,188,092

—

Furniture, fixtures and equipment

1,767,003

—

Acquired in place lease intangibles

1,194,134

—

Assumed assets and liabilities, net

(403,842
)

—

Purchase of real estate

$
59,288,960

$
—

Supplemental schedule of non-cash investing and financing activities:

Cash paid for interest

$
1,406,141

$
1,028,884

Distributions payable

$
190,834

$
103,354

Accrued offering costs payable

$
732,675

$
461,312

Stock dividends issued

$
553,875

$
119,788

Common stock issued through distribution reinvestment plan

$
777,150

$
256,050

	Three Months Ended March 31,
	2018
Supplemental disclosure of cash flow information:

Cash paid for interest	$	622,446

Distributions payable	$	219,862

Accrued offering costs payable	$	532,357

Common stock issued through distribution reinvestment plan	$	321,945

See accompanying notes to consolidated financial statements.

INLAND RESIDENTIAL PROPERTIES TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~September 30, 2017~~March 31, 2019

(unaudited)

The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and with instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. Readers of this Quarterly Report should refer to the audited consolidated financial statements of Inland Residential Properties Trust, Inc. (which may be referred to herein as the “Company,” “we,” “us,” or “our”) for the year ended December 31, ~~2016,~~2018, which are included in the Company’s ~~2016~~2018 Annual Report on Form 10-K, as certain footnote disclosures contained in such audited consolidated financial statements have been omitted from this Quarterly Report.

NOTE 1 - ORGANIZATION

The Company was formed on December 19, 2013 to primarily acquire and manage a portfolio of multi-family properties located primarily in the top 100 United States metropolitan statistical areas, which generally contain populations greater than 500,000 people. The Company entered into a business management agreement (as amended, the “Business Management Agreement”) with Inland Residential Business Manager & Advisor, Inc. (the “Business Manager”), an indirect wholly owned subsidiary of Inland Real Estate Investment Corporation (the “Sponsor”), to be the Business Manager to the Company. Substantially all of the Company’s business is conducted through Inland Residential Operating Partnership, L.P. ~~(the “operating~~the (“operating partnership”), of which the Company is the sole general partner. The Company elected to be taxed as a real estate investment trust for U.S. federal income tax purposes ~~(“REIT”)~~ under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended, beginning with the tax year ended December 31, 2015.

On September 17, 2018, the Company’s board of directors approved the sale of all or substantially all of the Company’s assets, the Company’s liquidation and the Company’s dissolution pursuant to a plan of liquidation (the “Plan of Liquidation”), subject to the approval of the Company’s stockholders. The Company’s stockholders approved the Plan of Liquidation on December 18, 2018. The approval of the Plan of Liquidation by the Company’s stockholders caused the Company’s basis of accounting to change from the going-concern basis (the “Going-Concern Basis”) to the liquidation basis of accounting (the “Liquidation Basis of Accounting”).

On March 29, 2019, the Company sold to an unaffiliated third party “The Retreat at Market Square,” located in Frederick, Maryland, for a sale price of $47,000,000. At ~~September 30, 2017,~~the closing, the Company received net proceeds of $18,758,218 representing the sale price of $47,000,000, net of closing costs, commissions, and certain prorations and adjustments, and the full repayment of $27,450,000 in mortgage debt that encumbered the property.

At March 31, 2019, the Company owned ~~real estate consisting of three~~one multi-family ~~communities~~community totaling ~~623~~332 residential units. The ~~properties consist~~property consists of ~~677,142~~376,968 square feet of ~~residential and 10,609 square feet of retail~~ gross leasable area. During the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2019, the ~~properties’ weighted~~property’s average ~~daily~~ occupancy ~~for residential~~ was ~~92.1%~~92.3% and at ~~September 30, 2017, 590~~March 31, 2019, 307 units, or ~~94.7%~~96.4% of the total ~~residential~~ units were leased. ~~At September 30, 2017, 100%~~While pursuing liquidation pursuant to the Plan of Liquidation, the Company intends to continue to manage its remaining real estate property.

The Plan of Liquidation

Pursuant to the plan, the Company expects to sell or otherwise dispose of all or substantially all of its properties and assets (including any assets held by the operating partnership and its and the Company’s subsidiaries). Following the completion of the ~~retail units were occupied.~~sale or transfer of all of its assets in accordance with the Plan of Liquidation, the Company will pay or provide for its liabilities and expenses, distribute the remaining proceeds of the liquidation of its assets to its stockholders, wind up its operations and dissolve.

Pursuant to the Plan of Liquidation, on January 25, 2019, the Company paid an initial liquidating distribution of $4.53 per share of the Company’s Class A common stock, $.001 par value per share (“Class A Share”), to stockholders of record as of the close of business on January 25, 2019 (the “Initial Liquidating Distribution”). For information on the Company’s payment of the Second Liquidating Distribution (defined in Note 12 below), see Note 12, “Subsequent Events — Second Liquidating Distribution.”

The Company’s common stock is currently registered under the Securities and Exchange Act of 1934, as amended (the “Exchange Act”). The Company may, after filing its articles of dissolution, seek relief from the Securities and Exchange Commission (the “SEC”) from the reporting requirements under the Exchange Act. The Company anticipates that, if relief is granted, the Company would continue to file current reports on Form 8-K to disclose material events relating to its liquidation and dissolution, along with any other reports that the SEC might require, but would discontinue filing Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q.

INLAND RESIDENTIAL PROPERTIES TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Disclosures discussing all significant accounting policies are set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2016,~~2018, as filed with the ~~Securities and Exchange Commission~~SEC on March ~~17, 2017,~~29, 2019, under the heading ~~“Note~~Note 2 ~~- Summary~~– “Summary of Significant Accounting Policies.” There has been no change to the Company’s significant accounting policies during the ~~nine~~three months ended ~~September 30, 2017.~~March 31, 2019 except as noted below.

General

The accompanying consolidated financial statements have been prepared in accordance with U.S. GAAP and require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. In the opinion of management, all adjustments necessary for a fair statement, in all material respects, of the financial position and results of operations for the periods are presented. Actual results could differ from those estimates. The results of operations for the interim periods are not necessarily indicative of the results for the entire year.

Basis of Presentation

~~Recent~~Pre Plan of Liquidation

All financial results and disclosures for the three months ended March 31, 2018, which was completed prior to the Company adopting the Liquidation Basis of Accounting, ~~Pronouncements~~

~~In November 2016,~~are presented on a Going-Concern Basis, which contemplated the ~~Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2016-18,~~ ~~Statement~~realization of ~~Cash Flows (Topic 230): Restricted Cash.~~ ~~The new update will require that amounts described as restricted cash~~assets and ~~restricted cash equivalents be included~~liabilities in ~~beginning~~the normal course of business. As a result, the consolidated statement of operations, the consolidated statement of equity and ~~ending-of-period reconciliation of cash shown on~~ the consolidated statement of cash ~~flows.~~flows for the three months ended March 31, 2018 are presented on a Going-Concern Basis. For a discussion of significant accounting polices applicable to the going concern financial statements, see the Company’s 2018 Annual Report on Form 10-K.

Post Plan of Liquidation

As a result of the approval of the Plan of Liquidation by the Company’s stockholders, the Company has adopted the Liquidation Basis of Accounting as of December 18, 2018 and for the subsequent periods in accordance with U.S. GAAP. The ~~amendment~~consolidated statements of net assets, presented as of March 31, 2019 and December 31, 2018, and the consolidated statement of changes in net assets, presented for the three months ended March 31, 2019, are presented using the Liquidation Basis of Accounting.

The consolidated statements of net assets presents the estimated amount of net assets that the Company expects to be available for distribution at the end of its Plan of Liquidation. Accordingly, as of March 31, 2019 and December 31, 2018 the Company’s net assets are presented at estimated net realizable value, or liquidation value, which represents the estimated amount of cash that the Company expects to collect on disposal of assets as it carries out the Plan of Liquidation. The liquidation value of the Company’s assets is ~~effective~~presented on an undiscounted basis. Liabilities are carried at their contractual amounts due or estimated settlement amounts.

The consolidated statement of changes in net assets reflects changes in net assets in liquidation for ~~fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted.~~ the three months ended March 31, 2019, as further described below.

The Company ~~does not believe~~accrues costs and income that ~~ASU No. 2016-18~~it expects to incur and earn through the end of liquidation to the extent it has a reasonable basis for estimation. These amounts are classified as a liability for estimated costs in excess of estimated receipts during liquidation on the consolidated statements of net assets. The Company currently estimates that it will have ~~a material impact on its consolidated financial statements~~costs in excess of estimated receipts during the liquidation. These amounts can vary significantly due to, among other things, the timing and ~~related disclosures.~~

~~In February 2016,~~estimates for the ~~FASB issued ASU No. 2016-02,~~ ~~Leases (Topic 842).The new standard establishes a right-of-use (ROU) model that requires a lessee~~amounts associated with discharging known and contingent liabilities and the costs associated with the winding up of operations. These costs are estimated and are anticipated to ~~record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will~~ be ~~classified as either finance or operating. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis~~paid out over the ~~term of the lease. The new standard requires lessors to account~~liquidation period. See Note 4 — “Net Assets in Liquidation” for ~~leases using an approach that is substantially equivalent to existing guidance for sales-type leases, direct financing leases and~~further discussion.

810

INLAND RESIDENTIAL PROPERTIES TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

~~operating leases.~~ ~~ASU No. 2016-02 supersedes the previous leases standard,~~ ~~Leases~~ ~~(Topic 840).~~ The Company anticipates that it will be required to bifurcate certain lease revenues between lease and non-lease components. Additionally, only incremental direct leasing costs may be capitalized under this new guidance, which is consistent with the Company’s existing policies. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company expects to adopt the guidance on a modified retrospective basis and upon adoption of the Leases guidance, non-lease components of new, extended or modified leases, including common area maintenance reimbursements, will be accounted for under the Revenue from Contracts with Customers guidance as described below.

~~In May 2014, the FASB issued ASU No. 2014-09,~~ ~~Revenue from Contracts with Customers~~, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective, although it will not affect the accounting for rental related revenues. The new standard is effective for the Company on January 1, 2018. Early adoption is permitted but not prior to the original effective date of January 1, 2017. The standard permits the use of either the retrospective or cumulative effect transition method. Once ASU No. 2016-02 becomes effective, the new revenue standard will apply to certain executory costs and other non-lease components even though the revenue for such activities are not separately stipulated in the tenant’s lease. The Company is currently evaluating the specific revenue streams that could be most significantly impacted by this ASU and expects that the revenue recognition from these activities and other miscellaneous income will be generally consistent with current recognition methods, and therefore does not expect material changes to the consolidated financial statements as a result of adoption. Common area reimbursements to be impacted by ASU No. 2014-09 will not be addressed until the Company's adoption of ASU No. 2016-02, considering its revisions to accounting for common area maintenance described above.

NOTE 3 – EQUITY

The Company ~~is authorized to sell up to $1,000,000,000 of shares of common stock consisting~~commenced an offering of Class A ~~common stock, $.001 par value per share (“Class A Shares”), at a price~~Shares and shares of ~~$25.00 per share,~~ Class T common stock, $.001 par value per share (“Class T Shares”), at a price of $23.95 per share, and Class T-3 common stock, $.001 par value per share (“Class T-3 Shares” and, together with the Class A Shares and the Class T Shares, the “Shares”), at a price of $24.14 per share, in any combination, in an initial “reasonable best efforts” offering (the “Offering”). The Company is also authorized to issue up to $190,000,000 of Class A, Class T and Class T-3 Shares at a per share price of $23.75, $22.81 and $22.81, respectively, pursuant to the Company’s distribution reinvestment plan (as amended, the “DRP”). The Company commenced its Offering of Class A Shares and Class T Shares on February 17, 2015 (the “Offering”) and, effective February 2, 2017, the Company reallocated certain of the remaining shares offered in the Offering to offer shares of Class T-3 ~~Shares.~~

common stock, $.001 par value per share (“Class T-3 Shares”). The Company ceased accepting subscription agreements dated after December 31, 2017 and terminated the Offering on January 3, 2018. Excluding ~~DRP proceeds,~~the distribution reinvestment plan (as amended, the “DRP”), the Company ~~generated~~issued 1,401,711 Class A Shares, 390,230 Class T Shares and 255,666 Class T-3 Shares generating gross proceeds of ~~$6,946,458, $2,480,508 and $3,539,489~~approximately $50 million from ~~sales~~the Offering. On January 23, 2019, all of ~~its Class A Shares,~~the Company’s outstanding Class T Shares and Class T-3 Shares ~~respectively, during the nine months ended September 30, 2017.~~automatically converted to Class A Shares. As of ~~September 30, 2017,~~March 31, 2019, the Company had ~~1,420,776, 399,285 and 147,805~~2,183,727 Class A Shares ~~Class T Shares and Class T-3 Shares outstanding, respectively.~~outstanding.

~~For the nine months ended September 30, 2017,~~Historically, the Company ~~declared cash distributions of $1,517,491, paid total distributions of $1,463,865 and issued stock dividends of 22,384 shares to stockholders.~~

~~INLAND RESIDENTIAL PROPERTIES TRUST, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(unaudited)~~

~~The Company provides~~provided the following programs to facilitate additional investment in the Company’s shares and to provide limited liquidity for stockholders. On September 17, 2018, in contemplation of the Plan of Liquidation, which was still pending at that time, the Company’s board of directors determined to terminate the Company’s DRP and share repurchase program (“SRP”).

Distribution Reinvestment Plan

~~The~~Prior to September 17, 2018, which was prior to the transition to the Liquidation Basis of Accounting, the Company ~~provides~~provided stockholders with the option to purchase additional shares from the Company by automatically reinvesting cash distributions through the DRP, subject to certain share ownership restrictions. For participants in the DRP, cash distributions paid on Class A Shares, Class T Shares and Class T-3 Shares, as applicable, ~~are~~were used to purchase Class A Shares, Class T Shares and Class T-3 Shares, respectively. Such purchases under the DRP ~~are~~were not subject to selling commissions, dealer manager fees, distribution and stockholder servicing fees or reimbursement of issuer costs in connection with shares of common stock issued through the DRP. The price per share for shares of common stock purchased under the DRP ~~and are~~were made initially at a price of $23.75, $22.81 and $22.81 per Class A Share, Class T Share and Class T-3
Share, ~~respectively. The~~respectively, until February 5, 2018 when the Company reported estimated per share net asset values of its common stock. Beginning with the February 2018 distribution payments made to stockholders in March 2018 until the Company terminated the DRP in September 2018, shares of common stock purchased under the DRP were at a price ~~is subject~~equal to ~~change after the earlier of (1) the change of the public offering price in a public “reasonable best efforts” offering of the Company’s Class A Shares from $25.00~~$23.15 per Class A Share, ~~Class T Shares from $23.95~~$24.32 per Class T Share ~~or Class T-3 Shares from $24.14~~and $23.55 per Class T-3 Share, as applicable, if there is a change, and (2) termination of all “reasonable best efforts” public offerings of the Company’s Class A Shares, Class T Shares or Class T-3 Shares, as applicable.Share.

Distributions reinvested through the DRP were ~~$777,150 and $256,050~~$321,945 for the ~~nine~~three months ended ~~September 30, 2017 and 2016, respectively.~~March 31, 2018.

Share Repurchase Program

~~Under~~Prior to September 17, 2018, which was prior to the ~~share repurchase program (as amended,~~transition to the ~~“SRP”),~~Liquidation Basis of Accounting, under the SRP, the Company iswas authorized, in its discretion, to purchase shares from stockholders who purchased their shares from the Company or received their shares through a non-cash transfer and who ~~have~~had held their shares for at least one year, if requested. Subject to funds being available, the Company ~~limits~~limited the number of shares repurchased during any calendar year to ~~no more than~~ 5% of the number of shares of common stock outstanding on December 31st of the previous calendar year. Funding for the SRP iswas limited to the proceeds that the Company ~~receives~~received from the DRP during the same period. In the case of repurchases made upon the death of a stockholder or qualifying disability, as defined in the SRP, neither the one year holding period, the limit regarding funds available from the DRP nor the 5% limit applies. The SRP will immediately terminate if the Company’s shares become listed for trading on a national securities exchange. In addition, the Company’s board of directors, in its sole direction, may, at any time, amend, suspend or terminate the SRP.applied.

Repurchases through the SRP were ~~$71,649 for Class A Shares and $9,166 for Class T Shares in~~$5,146 during the ~~nine~~three months ended ~~September 30, 2017. There were no repurchases through the SRP in the nine months ended September 30, 2016.~~

March 31, 2018.

NOTE 4 – ~~ACQUISITIONS~~NET ASSETS IN LIQUIDATION

~~During~~Net assets in liquidation decreased by $9,785,543 during the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2019 to $35,185,250. The changes were due to the Initial Liquidating Distribution of $9,900,000 and a $114,457 reduction in estimated costs to be incurred during liquidation. Net assets in liquidation includes projections of costs and expenses to be incurred during the period required to complete the Plan of Liquidation. There is inherent uncertainty with these estimates, and they could change materially based on changes in the underlying assumptions of the projected cash flows. The amount of net cash proceeds available for distribution pursuant to the Plan of Liquidation depends on a variety of factors, including, but not limited to, the amount required to pay both existing liabilities and obligations as well as any contingent liabilities and the cost of operating the Company through the date of its ~~wholly owned subsidiaries, acquired the properties listed below from unaffiliated third parties.~~final dissolution. The ~~Commons at Town Center was financed by entering into a seven-year mortgage loan for $13,800,000 and an eight-month note payable for $9,200,000. Verandas at Mitylene was funded~~ ~~with the proceeds of a ten–year mortgage loan for approximately $21,900,000 and offering proceeds of approximately $14,700,000.~~net

~~2017 Acquisitions~~

Date
Acquired

Property Name

Location

Total
Number of Residential
Units

Square
Footage

Purchase
Price (b)

2nd Quarter

5/3/2017

Commons at Town Center

Vernon Hills, IL

85

105,442

(a)
$
23,000,000

3rd Quarter

7/27/2017

Verandas at Mitylene

Montgomery, AL

332

376,968

$
36,550,000

1011

INLAND RESIDENTIAL PROPERTIES TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

~~(a)~~

~~Total does not include five units comprising 10,609 square feet of extended first floor retail space.~~

~~(b)~~

~~Contractual purchase price excluding closing credits.~~

~~The acquisitions were accounted for as asset acquisitions. For~~assets in liquidation value is based on certain assumptions and estimates and may not reflect the ~~nine months ended September 30, 2017, the Company incurred $318,780 of total acquisition costs, $230,817 of which were capitalized as the acquisition of net real estate~~amount that our stockholders will receive in the ~~accompanying consolidated balance sheets and $87,963~~Plan of ~~acquisition, dead deal and transaction related costs that are recorded in acquisition related costs in the accompanying consolidated statements of operations.~~ Liquidation.

The following table presents certain additional information regarding the Company’s acquisitions during the nine months ended September 30, 2017. The amounts recognized for major assets acquired and liabilities assumed as of the acquisition date are as follows:

For the Nine Months Ended September 30,

2017

Land

$
3,543,573

Building and other improvements

53,188,092

Furniture, fixtures and equipment

1,767,003

Acquired in place lease intangibles

1,194,134

Assumed assets and liabilities, net

(403,842
)

Total

$
59,288,960

NOTE 5 – ACQUIRED INTANGIBLE ASSETS

~~The following table summarizes the Company’s identified intangible assets and liabilities as of September 30, 2017 and December 31, 2016:~~

September 30, 2017

December 31, 2016

Intangible assets:

Acquired in place lease value

$
1,194,134

$
—

Accumulated amortization

(463,135
)

—

Acquired lease intangibles, net

$
730,999

$
—

~~As of September 30, 2017, the weighted average amortization period for acquired in place lease intangibles is 1.3 years.~~

~~The portion of the purchase price allocated to acquired in place lease value is amortized on a straight-line basis over the acquired leases’ weighted average remaining term.~~

Amortization pertaining to acquired in place lease value is summarized below:

Three Months Ended September 30,

Nine Months Ended September 30,

Amortization recorded as amortization expense:

2017

2016

2017

2016

Acquired in place lease value

$
351,094

$
—

$
463,135

$
—

~~INLAND RESIDENTIAL PROPERTIES TRUST, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(unaudited)~~

~~Estimated amortization of the respective intangible lease assets and liabilities as of September 30, 2017 for each of the five succeeding years and thereafter is as follows:~~

Acquired
In-Place
Leases

2017 (remainder of year)

$
395,325

2018

179,847

2019

85,035

2020

48,976

2021

21,816

Thereafter

—

Total

$
730,999


	Three Months Ended March 31,
Amortization recorded as amortization expense:	2018
Acquired in place lease value	$	116,070

NOTE 6 – MORTGAGES ~~AND NOTE~~ PAYABLE, NET

As of ~~September 30, 2017~~March 31, 2019 and December 31, ~~2016,~~2018, the Company had the following mortgages ~~and note~~ payable:

September 30, 2017

December 31, 2016

Type of Debt

Maturity Date

Interest Rate per Annum

Principal
Amount

Weighted Average
Interest Rate

Principal
Amount

Weighted Average
Interest Rate

Mortgage -The Retreat at Market Square

September 30, 2023

3.64
%

$
27,450,000

$
27,450,000

3.64
%
Mortgage - Commons at Town Center

May 3, 2024

3.69
%

13,800,000

—

Mortgage - Verandas at Mitylene

August 1, 2027

3.88
%

21,930,000

—

Total Mortgages

$
63,180,000

3.73
%

$
27,450,000

3.64
%
Note Payable - Commons at Town Center

January 3, 2018

5.40
%

7,000,000

5.40
%

—

—

Total debt before debt issuance costs

$
70,180,000

3.90
%

$
27,450,000

3.64
%
Unamortized debt issuance costs

(276,953
)

(2,541
)

Total debt

$
69,903,047

$
27,447,459

					March 31, 2019					December 31, 2018
Type of Debt	Maturity Date	Interest Rate per Annum			Principal Amount		Weighted Average Interest Rate			Principal Amount		Weighted Average Interest Rate
Mortgages Payable:
The Retreat at Market Square	September 30, 2023 (1)		3.64	%	$	—				$	27,450,000
Verandas at Mitylene	August 1, 2027		3.88	%		21,930,000					21,930,000
Total debt					$	21,930,000		3.88	%	$	49,380,000		3.75	%

(1)

The mortgage was paid in full in connection with the sale of the property on March 29, 2019.

The Company estimates the fair value of its total debt by discounting the future cash flows of each instrument at rates currently offered for similar debt instruments of comparable maturities by the Company’s lenders using Level 3 inputs. The carrying value of the Company’s debt ~~excluding unamortized debt issuance costs~~ was ~~$70,180,000~~$21,930,000 and ~~$27,450,000~~$49,380,000 as of ~~September 30, 2017~~March 31, 2019 and December 31, ~~2016,~~2018, respectively, and its estimated fair value was ~~$69,197,574~~$21,930,000 and ~~$26,957,385~~$49,380,000 as of ~~September 30, 2017~~March 31, 2019 and December 31, ~~2016,~~2018, respectively.

~~Mortgages~~

The mortgage ~~loans require~~loan requires compliance with certain covenants such as debt service ratios, investment restrictions and distribution limitations. As of ~~September 30, 2017,~~March 31, 2019, the Company is in compliance with all financial covenants related to its mortgage ~~loans.~~loan.

NOTE 7 – DISTRIBUTIONS

In light of the Plan of Liquidation, the Company’s board of directors ceased declaring and paying regular distributions to the Company’s stockholders following the distributions to stockholders of record with respect to each day during the month of October 2018. From January 1, 2018 through February 28, 2018, distributions were declared in a daily amount equal to $0.003424658 per Class A Share, $0.002768493 per Class T Share and $0.003306849 per Class T-3 Share, based on a 365-day period. From March 1 through March 31, 2018, distributions were declared in a daily amount equal to $0.003424658 per Class A Share, $0.002758488 per Class T Share and $0.003323017 per Class T-3 Share, based on a 365-day period.

~~Note Payable~~

INLAND RESIDENTIAL PROPERTIES TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

The note payable has customary affirmative, negative and financial covenants, agreements, representations, warranties and borrowing conditions including various customary events of default. The Sponsor has agreed to guarantee the obligations or liabilities of the Company’s subsidiary to lender under the note payable. The Company has not paid, and will not pay, any fees or other consideration to the Sponsor for this guarantee. ~~As of September 30, 2017, the Company is in compliance with all financial covenants related to the~~ ~~note payable. For the three month period ending September 30, 2017, the Company paid $2,200,000 to reduce the principal balance on the~~ ~~note payable~~.

~~As of September 30, 2017, scheduled principal payments and maturities on the Company’s mortgages and note payable were as follows:~~

September 30, 2017

Scheduled Principal Payments and Maturities by Year:

Scheduled
Principal
Payments

Maturities of Mortgages

Maturity of Note Payable

Total

2017 (remainder of the year)

$
—

$
—

$
—

$
—

2018

—

—

7,000,000

7,000,000

2019

—

—

—

—

2020

—

—

—

—

2021

124,063

—

—

124,063

Thereafter

853,206

62,202,731

—

63,055,937

Total

$
977,269

$
62,202,731

$
7,000,000

$
70,180,000

~~The weighted average years to maturity for the Company’s debt is 6.75 years.~~

~~NOTE 7 – DISTRIBUTIONS~~

The Company currently pays distributions based on daily record dates, payable in arrears the following month, equal to a daily amount of $0.003424658 per Class A Share, $0.002768493 per Class T Share and $0.003306849 per Class T-3 Share, based upon a 365-day year. The Company issued 22,384 in stock dividends during the nine months ended September 30, 2017. The table below presents the distributions paid and declared for the three and nine months ended September 30, 2017 and 2016.

	Three Months Ended				Nine Months Ended				Three Months Ended
	September 30,				September 30,				March 31,
	2017		2016		2017		2016		2018
Distributions paid	$	554,733	$	382,440	$	1,463,865	$	553,741	$	308,964
Distributions declared	$	569,307	$	290,835	$	1,517,491	$	633,357	$	636,913

NOTE 8 – EARNINGS (LOSS) PER SHARE

Basic earnings (loss) per share (“EPS”) are computed by dividing net income (loss) by the weighted average number of common shares outstanding for the period (the “common shares”). Diluted EPS is computed by dividing net income (loss) by the common shares plus common share equivalents. The Company excludes antidilutive restricted shares from the calculation of weighted-average shares for diluted EPS. As a result of a net loss for the three ~~and nine~~ months ended ~~September 30, 2017, 479 and 843~~March 31, 2018, 640 shares ~~respectively,~~ were excluded from the computation of diluted EPS, because they would have been antidilutive. As a result of a net loss for the three and nine months ended September 30, 2016, 468 and 340 shares, respectively, were excluded from the computation of diluted EPS, because they would have been antidilutive.

NOTE 9 – EQUITY-BASED COMPENSATION

In accordance with the Company’s Employee and Director Incentive Restricted Share Plan (the “RSP”), restricted shares are issued to non-employee directors as compensation.

Under the RSP, restricted shares generally vest over a one to three year vesting period from the date of the grant based on the specific terms of the grant. ~~The grant-date value of the restricted shares is amortized over the vesting period representing the requisite service~~

~~INLAND RESIDENTIAL PROPERTIES TRUST, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(unaudited)~~

~~period.~~ At vesting, any restrictions on the shares lapse. The number of shares that may be issued under the RSP is limited to 5% of outstanding shares.

At March 31, 2019, there were no unvested restricted shares. Upon the approval of the Plan of Liquidation by the Company’s stockholders on December 18, 2018, all 1,791 outstanding restricted shares held by the Company’s non-employee directors vested immediately and the unamortized balance was expensed. Prior to the transition to Liquidation Basis of Accounting, the grant-date value of the restricted shares was amortized over the vesting period representing the requisite service period. Compensation expense associated with the director restricted shares is included in general and administrative expenses in the accompanying consolidated financial statements. Compensation expense under the RSP was ~~$3,750 and $8,889~~$3,311 for the three ~~and nine~~ months ended September 30, 2017, respectively. Compensation under the RSP was $4,844 and $10,920 for the three and nine months ended September 30, 2016, respectively. As of September 30, 2017, the Company had $16,366 of unrecognized compensation cost related to the unvested restricted share awards. The weighted average remaining period that compensation expense related to unvested restricted shares will be recognized is 1.60 years. A summary of the status of the restricted shares is presented below:March 31, 2018.

Shares

Weighted
Average
Grant Date
Fair Value

Aggregate
Intrinsic
Value

Outstanding at December 31, 2016

804

$
18,334

$
18,334

Granted

658

15,000

15,000

Vested

(183
)

(4,167
)

(4,167
)
Forfeited

—

—

—

Outstanding at September 30, 2017

1,279

$
29,167

$
29,167

NOTE 10 – SEGMENT REPORTING

The Company has one reportable segment, multi-family real estate, as defined by U.S. GAAP for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2019 and ~~2016.~~2018.

INLAND RESIDENTIAL PROPERTIES TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

NOTE 11 – TRANSACTIONS WITH RELATED PARTIES

The following table summarizes the Company’s related party transactions for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2019 and ~~2016.~~2018. The Sponsor and its affiliates will not require repayment of acquisition related costs (fee), certain offering costs, mortgage financing fee and Sponsor non-interest bearing advances until subsequent to 12 months from the issuance of this report or upon liquidation if earlier.

															Three Months Ended March 31,				Amount Unpaid as of
		Three Months Ended September 30,				Nine Months Ended September 30,				Amount Unpaid as of					Liquidation Basis		Going Concern Basis
		2017		2016		2017		2016		September 30, 2017		December 31, 2016			2019		2018		March 31, 2019		December 31, 2018
General and administrative reimbursements	(a)	$	113,404	$	57,023	$	323,436	$	314,819	$	112,709	$	80,386	(a)	$	102,026	$	166,826	$	69,029	$	97,041
Affiliate share purchase discounts	(b)		—		4,814		24,530		19,356		—		—
Total general and administrative costs		$	113,404	$	61,837	$	347,966	$	334,175	$	112,709	$	80,386

Acquisition related costs	(c)	$	41,714	$	—	$	200,061	$	—	$	698,835	$	686,250	(b)		—	$	—	$	686,250	$	686,250
Offering costs	(d)	$	341,566	$	622,450	$	1,451,749	$	1,897,066	$	1,656,554	$	1,476,746	(c)		—	$	20,151	$	1,011,419	$	1,011,419
Reimbursement of offering costs														(d)		—	$	3,976	$	432,228	$	432,228
Business management fee	(e)	$	158,154	$	68,665	$	318,609	$	205,850	$	684,604	$	365,995	(e)	$	100,948	$	158,415	$	1,066,474	$	965,526
Mortgage financing fee	(f)	$	—	$	—	$	—	$	—	$	114,375	$	114,375	(f)		—	$	—	$	114,375	$	114,375
Sponsor non-interest bearing advances	(g)	$	—	$	—	$	—	$	—	$	2,950,000	$	2,950,000	(g)		—	$	—	$	1,950,000	$	1,950,000

Property management fee		$	83,654	$	40,987	$	184,208	$	117,715	$	—	$	—		$	79,767	$	104,447	$	—	$	—
Property operating expenses			218,509		85,357		348,223		254,347		58,153		11,001			144,370		219,448		—		—
Total property operating expenses	(h)	$	302,163	$	126,344	$	532,431	$	372,062	$	58,153	$	11,001	(h)	$	224,137	$	323,895	$	—	$	—

(a)

The Business Manager and its affiliates are entitled to reimbursement for certain general and administrative expenses incurred relating to the Company’s administration. Such costs are included in general and administrative expenses in the accompanying consolidated statements of operations. Unpaid amounts are included in due to related parties in the accompanying consolidated ~~balance sheets.~~

~~INLAND RESIDENTIAL PROPERTIES TRUST, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(unaudited)~~

~~(b)~~

~~The Company established a discount stock purchase policy for affiliates~~statements of net assets as of March 31, 2019 and affiliates of the Business Manager that enable them to purchase shares of common stock at $22.81 per share. The Company sold 11,201 and 8,838 shares to affiliates during the nine months ended September 30, 2017 and 2016, respectively.December 31, 2018.

~~(c)~~(b)

Prior to August 8, 2016 under the Business Management Agreement, the Company was required to pay the Business Manager or its affiliates an acquisition fee equal to 1.5% of the “contract purchase price,” as defined in that agreement, of each property and real estate-related asset acquired. The Business Management Agreement was amended to, among other things, delete the obligation to pay acquisition fees, real estate sales commissions and mortgage financing fees payable to the Business Manager by the Company with respect to transactions occurring on or after August 8, 2016. The Business Manager and its affiliates continue to be reimbursed for acquisition related costs of the Business Manager and its affiliates relating to the Company’s acquisition of properties and real estate assets, regardless of whether the Company acquires the properties or real estate assets, subject to the limits provided in the amended agreement. ~~Of the $200,061~~There were no related party acquisition costs incurred during the three months ended March 31, 2019 and fees, $145,270 were capitalized in the accompanying consolidated balance sheets and $54,791 of such costs are included in acquisition related costs in the accompanying consolidated statements of operations.2018. Acquisition fees earned prior to August 8, 2016, which have been previously accrued for and are owed to the Business Manager, are expected to be paid in the future and are included in due to related parties in the accompanying consolidated ~~balance sheets.~~statements of net assets as of March 31, 2019 and December 31, 2018. The Business Manager will not require the repayment of $686,250 until at least one-year after the filing date of this report or upon liquidation, if earlier.

~~(d)~~(c)

The Company ~~reimburses~~reimbursed the Sponsor and its affiliates for costs and other expenses of the Offering. Offering costs are offset against the stockholders’ equity accounts. ~~Unpaid~~As of March 31, 2019 and December 31, 2018, unpaid amounts are included in due to related parties in the ~~accompanying~~ consolidated ~~balance sheets.~~statements of net assets An affiliate of the Business Manager also ~~receives~~received selling commissions equal to 6.0% of the sale price for each Class A Share sold, 2.0% of the sale price for each Class T Share sold and 3.0% of the sale price for each Class T-3 Share sold and a dealer manager fee equal to 2.75% of the sale price for each Class A and Class T Share sold and 2.5% of the sale price for each Class T-3 Share sold, the majority of which iswas re-allowed (paid) to third party soliciting dealers. The Company ~~does~~did not pay selling commissions or the dealer manager fee in connection with shares issued through the DRP and ~~pays~~paid no or reduced selling commissions and dealer manager fees in connection with certain special sales. ~~Unpaid amounts are included in due~~Prior to ~~related parties in~~November 1, 2018, the accompanying consolidated balance sheets. Other organization and offering expenses, excluding selling commissions and dealer manager fees, will not exceed 2.0% of the gross offering proceeds. To the extent that all other organization and offering expenses exceed the maximum expense cap, the excess expenses will beCompany paid by the Business Manager with no recourse to the Company. These expenses include registration and filing fees, legal and accounting fees, printing and mailing expenses, bank fees and other administrative expenses. The Company pays a distribution and stockholder servicing fee equal to 1.0% per annum of the purchase price per share (or, once reported, the amount of the Company’s estimated value per share) for each Class T Share and Class T-3 Share sold in the Offering. The fee iswas not paid at the time of the purchase. The Company ~~accounts~~accounted for the total fee

INLAND RESIDENTIAL PROPERTIES TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

as a charge to equity at the time each Class T Share or Class T-3 Share iswas sold in the Offering and ~~records~~recorded a corresponding payable in due to related parties. The distribution and stockholder servicing fee iswas payable monthly in arrears as it ~~becomes~~became contractually due. At ~~September 30, 2017~~March 31, 2019 and December 31, ~~2016,~~2018, there were no unpaid distribution and stockholder servicing fees. The Sponsor will not require the repayment of the unpaid ~~fee~~offering costs equal to ~~$509,356~~$1,011,419 until at least one-year after the filing date of this report or upon liquidation, if earlier.

(d)

Organization and ~~$335,327, respectively, was recorded~~offering expenses, excluding selling commissions and dealer manager fees (“other organization and offering expenses”), could not exceed 2.0% of the gross Offering proceeds (the “maximum expense cap”). To the extent that other organization and offering expenses exceeded the maximum expense cap, the excess expenses were required to be paid by the Business Manager with no recourse to the Company. Other organization and offering expenses exceeded the maximum expense cap. Total offering costs were $10,972,727, of which $7,070,590 were other organization and offering expenses subject to the maximum expense cap. These expenses include registration and filing fees, legal and accounting fees, printing and mailing expenses, bank fees and other administrative expenses. Total proceeds raised in the Offering were $50,140,908, resulting in cap excess of $6,067,772. The Business Manager reimbursed the Company an estimated amount of $6,500,000 during the year ended December 31, 2017. This amount includes an overpayment of $432,228 which is included in due to related parties in the accompanying consolidated ~~balance sheets.~~statements of net assets at March 31, 2019 and December 31, 2018.

(e)

The Company pays the Business Manager an annual business management fee equal to 0.6% of its “average invested assets,” payable quarterly in an amount equal to 0.15% of the Company’s average invested assets as of the last day of the immediately preceding quarter. “Average invested assets” means, for any period, the average of the aggregate book value of the Company’s assets, including all intangibles and goodwill, invested, directly or indirectly, in equity interests in, and loans secured by, properties, as well as amounts invested in securities or consolidated and unconsolidated joint ventures or other partnerships, before reserves for amortization and depreciation or bad debts, impairments or other similar non-cash reserves, computed by taking the average of these values at the end of each month during the relevant calendar quarter. Unpaid amounts as of March 31, 2019 and December 31, 2018 are included in due to related parties in the ~~accompanying~~ consolidated ~~balance sheets.~~statements of net assets.

(f)

Prior to August 8, 2016 under the Business Management Agreement, the Company was required to pay the Business Manager, or its affiliates, a mortgage financing fee equal to 0.25% of the amount available or borrowed under the financing or the assumed debt if the Business Manager or its affiliates provided services in connection with the origination or refinancing of any debt that the Company obtained and used to finance properties or other assets, or that was assumed, directly or indirectly, in connection with the acquisition of properties or other assets. Pursuant to the amended Business Management Agreement, mortgage financing fees were eliminated with respect to transactions occurring on or after August 8, 2016. Mortgage financing fees earned

~~INLAND RESIDENTIAL PROPERTIES TRUST, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(unaudited)~~

prior to August 8, 2016, which have been previously accrued for and are owed to the Business Manager, are expected to be paid in the future and are included in due to related parties in the ~~accompanying~~ consolidated ~~balance sheets.~~statements of net assets as of March 31, 2019 and December 31, 2018. The Business Manager will not require the repayment of $114,375 until at least one-year after the filing date of this report or upon liquidation, if earlier.

(g)

This amount represents non-interest bearing advances made by the Sponsor which the Company intends to repay. Unpaid amounts are included in due to related parties in the accompanying consolidated ~~balance sheets.~~statements of net assets as of March 31, 2019 and December 31, 2018. The Sponsor will not require the repayment of $1,950,000 until at least one-year after the filing date of this report, or upon liquidation, if earlier.

(h)

The Company pays Inland Residential Real Estate Services LLC (the “Real Estate Manager”) a monthly property management fee of up to 4% of the gross income from any property managed directly by the Real Estate Manager or its affiliates. The Real Estate Manager may reduce, in its sole discretion, the amount of the management fee payable in connection with a particular property, subject to these limits. The Company also reimburses the Real Estate Manager and its affiliates for property-level expenses that they pay or incur on the Company’s behalf, including the salaries, bonuses, benefits and severance payments for persons performing services, including without limitation acquisition due diligence services, for the Real Estate Manager and its affiliates (excluding the executive officers of the Real Estate Manager and the Company’s executive officers).

~~NOTE 12 – OPERATING LEASES~~

The Company’s residential lease terms are generally for twelve months or less. The retail lease terms range from 1 to 4 years. Minimum lease payments to be received under retail operating leases as of September 30, 2017 for the years indicated, assuming no expiring leases are renewed, are as follows:15

INLAND RESIDENTIAL PROPERTIES TRUST, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Minimum Lease
Payments

2017 (remainder of year)

$
67,713

2018

257,350

2019

254,650

2020

172,750

2021

78,119

Thereafter

—

Total

$
830,582

(unaudited)

NOTE 1312 – SUBSEQUENT EVENTS

Second Liquidating Distribution

~~Note Payable~~

~~Subsequent to September 30, 2017,~~On April 2, 2019, the Company ~~paid $2,000,000 to reduce~~declared the ~~principal balance on the~~ ~~note payable~~.

~~Cash distributions~~

~~The Company’s board~~Second Liquidating Distribution of ~~directors declared cash distributions payable~~$8.59 per Class A Share to stockholders of record as of ~~Class A, Class T and Class T-3 Shares each day beginning on~~ the close of business ~~October~~on April 2, 2019. The Second Liquidating Distribution was paid on April 11, 2019 from the net proceeds of the sale of “The Retreat at Market Square.”

Estimated Value Per Share

Upon the payment of the Second Liquidating Distribution on April 11, 2019, the previously Estimated Per Share NAV as of February 1, ~~2017 through~~2019 was reduced to reflect payment of the ~~close~~Second Liquidating Distribution of business February 28, 2018. Through that date distributions were declared in a daily amount equal to $0.003424658 per Class A Share, $0.002768493 per Class T Share and $0.003306849 per Class T-3 Share, based on a 365-day period. Distributions were paid monthly in arrears as follows.$8.59.

Distribution Month

Month
Distribution Paid

Gross Amount
of Distribution
Paid

Distribution Reinvested
through DRP

Shares
Issued

Net Cash Distribution

September 2017

October 2017

$
190,907

$
101,608

4,325

$
89,299

October 2017

November 2017

$
204,163

$
106,270

4,525

$
97,893

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Certain statements in this Quarterly Report on Form 10-Q constitute “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 Securities Exchange Act of 1934, as amended (the “Exchange Act”). Words such as “may,” “could,” “should,” “expect,” “intend,” “plan,” “goal,” “seek,” “anticipate,” “believe,” “estimate,” “predict,” “variables,” “potential,” “continue,” “expand,” “maintain,” “create,” “strategies,” “likely,” “will,” “would” and variations of these terms and similar expressions, or the negative of these terms or similar expressions, are intended to identify forward-looking statements.

These forward-looking statements are not historical facts but reflect the intent, belief or current expectations of the management of Inland Residential Properties Trust, Inc. (which we refer to herein as the “Company,” “we,” “our” or “us”) based on their knowledge and understanding of the business and industry, the economy and other future conditions. These statements are not guarantees of future performance, and we caution stockholders not to place undue reliance on forward-looking statements. Actual results may differ materially from those expressed or forecasted in the forward-looking statements due to a variety of risks, uncertainties and other factors, including but not limited to the factors listed and described under “Risk Factors” in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, ~~2016,~~2018, as filed with the Securities and Exchange Commission (the “SEC”) on March ~~17, 2017,~~29, 2019, and factors described below:

There is no established public trading market for our shares which are, and ~~our stockholders may not~~will continue to be, able to sell their shares under our share repurchase program (as amended, the “SRP”) and, if our stockholders are able to sell their shares under the SRP, they may not be able to recover the amount of their investment in our shares;illiquid;

Our board ~~does not have any current plans~~of directors may terminate or delay implementation of the sale of all or substantially all of our assets, our liquidation and our dissolution pursuant to ~~list~~a plan of liquidation approved by our ~~shares or pursue any other liquidity event,~~stockholders on December 18, 2018 (the “Plan of Liquidation”);

Although we anticipate selling all of our assets and completing our liquidation within sixmonths after the December 18, 2018 stockholder approval of the Plan of Liquidation, we cannot guarantee ~~that a liquidity event will occur;~~

To date, we have not generated sufficient cash flow from operations to pay distributions, and, therefore, we have paid, and may continue to pay, distributions from the net proceeds of our “reasonable best efforts” offering (the “Offering”) and distribution reinvestment plan (as amended, the “DRP”), which reduces the amount or exact timing of ~~cash we ultimately have to invest in assets, negatively impacting the value of our stockholders’ investment and is dilutive~~any additional liquidating distributions to our stockholders;

•

During September 2018, in contemplation of the Plan of Liquidation, which was still pending at that time, our board of directors determined that we will cease declaring and paying regular distributions to our stockholders after the previously-declared October 2018 distributions. There can be no assurance we will resume paying distributions, or at what rate;

~~Based on sales volume to date, we expect to raise substantially less than the maximum offering amount in~~Because our ~~Offering which will continue until February 16, 2018. Because we expect to raise substantially less than the maximum offering amount, we will not be able to invest in as diverse a~~ portfolio only consists of ~~properties as we otherwise would, which will cause the value of our stockholders' investment to vary more widely with the performance of specific assets, and cause~~one property, our fixed operating expenses to constitute a greater percentage of our gross ~~income. Raising fewer proceeds in our Offering, therefore, increases the risk that our stockholders will not receive~~income and, as a result, may make it more difficult to generate sufficient income to provide for a full return of ~~their investment.~~

We have incurred net losses on a U.S. generally accepted accounting principles (“U.S. GAAP”) basis for the three and nine months ended September 30, 2017 and 2016 and for the year ended December 31, 2016;invested capital to stockholders;

Our charter generally limits the total amount we may borrow to 300% of our net assets, equivalent to 75% of the costs of our assets;

~~The interest of later investors~~Disruptions in ~~our common stock will be diluted as a result~~the financial markets and uncertain economic conditions could adversely affect the value of our ~~payment of stock dividends that have been declared and will be further diluted if we make additional stock dividends;~~

~~We may not be able to raise capital sufficient to achieve our investment objectives;~~

~~The prior performance of programs sponsored by Inland Real Estate Investment Corporation (our “Sponsor”) should not be used to predict our future results;~~

~~Market disruptions may adversely impact many aspects of our operating results and operating condition;~~

~~The number and value of~~remaining real estate ~~assets~~property and the amount of any additional liquidating distributions we ~~acquire will depend, in part, on the net proceeds raised in~~pay to our ~~Offering;~~stockholders;

We do not have employees and ~~will~~instead rely on Inland Residential Business Manager & Advisor, Inc. or our “Business Manager” and Inland Residential Real Estate Services LLC or our “Real Estate Manager” to manage our business and assets;

Persons performing services for our Business Manager and our Real Estate Manager are employed by ~~our Sponsor~~Inland Real Estate Investment Corporation (our “Sponsor”) or its affiliates and face competing demands for their time and service;

We do not have arm’s-length agreements with our Business Manager, Real Estate Manager or other affiliates of our Sponsor;

Our Sponsor may face a conflict of interest in allocating personnel and resources between its affiliates, our Business Manager and our Real Estate Manager;

•

~~We may suffer from delays in selecting, acquiring and developing suitable assets;~~

~~We rely on entities affiliated with our Sponsor to identify real estate assets;~~

We pay fees, which may be significant, to our Business Manager, Real Estate Manager and other affiliates of our Sponsor;

~~We have not identified all of the specific real estate assets that we will acquire with the net proceeds raised in our Offering, thus it is a “blind pool” offering;~~

~~Any properties that we acquire and own may compete with the properties owned by other programs sponsored by our Sponsor or Inland Private Capital Corporation for, among other things, tenants;~~

There are limits on the ownership and transferability of our shares; and

If we fail to continue to qualify as a ~~REIT,~~real estate investment trust, our operations and distributions to stockholders will be adversely affected.

Forward-looking statements in this Quarterly Report on Form 10-Q reflect our management’s view only as of the date of this Quarterly Report, and may ultimately prove to be incorrect or false. We undertake no obligation to update or revise forward-looking

statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results except as required by applicable law. We intend for these forward-looking statements to be covered by the applicable safe harbor provisions created by Section 27A of the Securities Act and Section 21E of the Exchange Act.

The following discussion and analysis relates to the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2019 and ~~2016~~2018 and as of ~~September 30, 2017~~March 31, 2019 and December 31, ~~2016.~~2018. You should read the following discussion and analysis along with our consolidated financial statements and the related notes included in this report.

Overview

We are an externally managed Maryland corporation formed in December 2013 to primarily acquire and manage a portfolio of multi-family properties located primarily in the top 100 United States metropolitan statistical areas, which generally contain populations greater than 500,000 people. We ~~expect that our real estate portfolio will consist primarily of “stabilized” Class A and Class B multi-family properties. We~~ are managed by our Business Manager. Substantially all of our business is conducted through Inland Residential Operating Partnership, L.P. ~~(the “operating partnership”)~~, of which we are the sole general partner. We elected to be taxed as a real estate investment trust ~~(“REIT”)~~ under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended, beginning with our taxable year ended December 31, 2015.

We ~~are authorized to sell up to $1,000,000,000~~commenced our “reasonable best efforts” offering (the “Offering”) of shares of Class A common stock, ~~which consist~~$.001 par value per share (“Class A Shares”) and shares of Class ~~A Shares, at a price of $25.00~~T common stock, $.001 par value per share (“Class T Shares, at a price of $23.95 per share, and Class T-3 Shares, at a price of $24.14 per share, in any combination, on a “reasonable best efforts” basis. We are also authorized to issue up to $190,000,000 of Class A, Class T and Class T-3 Shares at a per share price of $23.75, $22.81 and $22.81, respectively, pursuant to our DRP. We commenced our Offering of Class A Shares and Class T SharesShares”) on February 17, 2015 and, effective February 2, 2017, we reallocated certain of the remaining shares being offered in our Offering to offer shares of Class T-3 ~~Shares.~~common stock, $.001 par value per share (“Class T-3 Shares”). We ceased accepting subscriptions agreements dated after December 31, 2017 and terminated the Offering on January 3, 2018. Excluding the distribution reinvestment plan (as amended, the “DRP”), the Company issued 1,401,711 Class A Shares, 390,230 Class T Shares and 255,666 Class T-3 Shares generating gross proceeds of approximately $50 million from the Offering.

~~Company Highlights – Three Months Ended~~Plan of Liquidation

On September ~~30, 2017~~17, 2018, our board of directors approved the Plan of Liquidation, subject to the approval of our stockholders. On December 18, 2018, our stockholders approved the Plan of Liquidation. As a result of our stockholders’ approval of the Plan of Liquidation, we adopted the liquidation basis of accounting (the “Liquidation Basis of Accounting”) as of December 18, 2018.

~~Acquisitions~~

~~During~~Pursuant to the ~~three months ended September 30, 2017,~~ plan, we acquired a fee simple interest in a 376,968 square foot apartment community known as the Verandas at Mitylene located in Montgomery, Alabama. We purchased the Verandas at Mitylene for approximately $36.6 million, plus closing costs.expect to, among other things:

~~Financings~~

~~The acquisition~~sell or otherwise dispose of ~~Verandas at Mitylene was financed by obtaining a mortgage loan, secured~~all or substantially all of our assets (including, without limitation, any assets held by the ~~property,~~operating partnership and its and our subsidiaries) in ~~an aggregate principal amount equal~~exchange for cash or other assets that may be conveniently liquidated or distributed;

pay or provide for our liabilities and expenses, which may include establishing a reserve fund to ~~approximately $21.9 million,~~pay contingent or unknown liabilities;

distribute our current cash and the remaining ~~purchase~~proceeds of the liquidation to stockholders after paying or providing for our liabilities and expenses, and take all necessary or advisable actions to wind up our affairs; and

wind up our operations and dissolve the Company, all in accordance with the Plan of Liquidation.

We anticipate selling all of our assets and completing our liquidation within six months after the December 18, 2018 stockholder approval of the Plan of Liquidation. While pursuing our liquidation pursuant to the Plan of Liquidation, we intend to continue to manage our remaining real estate property. We have paid two liquidating distributions to our stockholders during the liquidation process as described further below and expect to pay the final liquidating distribution after we sell our remaining real estate property, pay all of our known liabilities and provide for unknown or contingent liabilities.

However, we can give no assurance regarding the timing of the sale of our remaining real estate property in connection with the implementation of the Plan of Liquidation, the sale price ~~was funded with offering proceeds.~~

~~For~~we will receive for the ~~three~~property, and the amount or timing of any additional liquidating distributions we pay to our stockholders. If we cannot sell our remaining real estate property and pay our debts within twenty-four months ~~ended September 30, 2017,~~from December 18, 2018, we ~~paid $2.2 million towards~~intend to transfer and assign our remaining assets and liabilities to a liquidating trust and distribute beneficial interests in the ~~note payable~~liquidating trust to our stockholders equivalent to each stockholder’s ownership interests in the Company at that ~~partially funded the acquisition of Commons at Town Center.~~time.

~~Capital~~

~~Excluding DRP proceeds, we generated gross proceeds~~In light of ~~approximately $1.5 million, $0.2 million~~the Plan of Liquidation, our board of directors ceased declaring and ~~$1.6 million from sales~~paying regular distributions to our stockholders following the distributions to stockholders of record with respect to each day during the month of October 2018. On January 23, 2019, all of our ~~Class A Shares,~~outstanding Class T Shares and Class T-3 Shares ~~respectively, during~~automatically converted to Class A Shares. On January 25, 2019, we paid an initial liquidating distribution of $4.53 per Class A Share to our stockholders of record as of the ~~three months ended~~close of business on January 25, 2019 (the “Initial Liquidating Distribution”). On April 11, 2019, we paid a second liquidating distribution of $8.59 per Class A Share to our stockholders of record as of the close of business on April 2, 2019 (the “Second Liquidating Distribution”). The Initial Liquidating Distribution was funded from the net proceeds of the sale of our first property, “The Commons at Town Center,” and the Second Liquidating Distribution was funded from the net proceeds of the sale of our second property, “The Retreat at Market Square.”

On February 5, 2019, our board of directors unanimously approved an estimated per share net asset value of Class A Shares (the “Estimated Per Share NAV”) as of February 1, 2019 equal to $16.06 per Class A Share. The Estimated Per Share NAV as of February 1, 2019 represented an estimate, prepared by the Business Manager, of the total cash that may be available to distribute to our stockholders in one or more liquidating distributions pursuant to the Plan of Liquidation equal to approximately $20.59 per Class A Share, reduced by the Initial Liquidating Distribution. Upon the payment of the Second Liquidating Distribution on April 11, 2019, the Estimated Per Share NAV as of February 1, 2019 of $16.06 was reduced to $7.47, reflecting payment of the Second Liquidating Distribution of $8.59. There can be no guarantee as to the exact amount of net liquidation proceeds that ultimately will be available for distribution to our stockholders pursuant to the Plan of Liquidation. This amount may vary from the Estimated Per Share NAV and the net assets in liquidation value per Class A Share. See “Item 1A. Risk Factors - Both the Estimated Per Share NAV and net assets in liquidation value per Class A Share are based on certain assumptions and estimates and may not reflect the amount that our stockholders will receive.” During the course of liquidating and dissolving, we may incur unanticipated expenses and liabilities all of which are likely to reduce the cash available for any additional liquidating distribution to our stockholders.

Historically, we provided the DRP and a share repurchase program (“SRP”) to facilitate additional investment in our shares and to provide limited liquidity for stockholders. On September ~~30, 2017.~~17, 2018, in contemplation of the Plan of Liquidation, which was still pending at that time, the Company’s board of directors determined to terminate the DRP and SRP.

~~Select Property Information~~Sales Pursuant to the Plan of Liquidation

~~As of September 30, 2017,~~

The Commons at Town Center – property sale – On December 20, 2018, we ~~owned three communities~~sold to an unaffiliated third party “The Commons at Town Center,” located in ~~three states consisting~~Vernon Hills, Illinois, for a sale price of ~~623 residential units. In addition,~~$24.6 million. At the closing, we ~~own ground level retail space totaling 10,609 square feet at one~~received net proceeds of approximately $9.9 million representing the sale price of $24.6 million, net of closing costs, commissions, and certain prorations and adjustments, and the full repayment of $13.8 million in mortgage debt that encumbered the property. We own and lease retail space at our properties when we believe the retail space will increase the attractiveness of our communities and add convenience to our residents. The table below presents information for each of our communities as of September 30, 2017.

Community
Location

Total Number of Residential Units

Average Rental Rate per Residential Unit (a)

2017 Residential Average Occupancy

Leased Residential Units

Purchase Price

Debt Balance

Interest Rate (b)

The Retreat at Market Square
Frederick, MD

206

$
1,539

93.2
%

196

$
45,727,557

$
27,450,000

3.64
%
Commons at Town Center
Vernon Hills, IL

85

1,931

91.8
%

79

23,000,000

20,800,000

4.37
%
Verandas at Mitylene
Montgomery, AL

332

903

91.6
%

315

36,550,000

21,930,000

3.88
%

Total

623

$
1,255

590

$
105,277,557

$
70,180,000

~~(a)~~

~~Average rental rate per residential unit is for the last month of the period presented.~~

~~(b)~~

~~Weighted average interest rate as of September 30, 2017.~~

~~Our communities include garden-style apartments generally defined as properties with multiple one~~The Retreat at Market Square – property sale – On March 29, 2019, we sold to ~~three story buildings~~an unaffiliated third party “The Retreat at Market Square,” located in ~~landscaped settings~~Frederick, Maryland, for a sale price of $47.0 million. At the closing, we received net proceeds of approximately $18.8 million representing the sale price of $47.0 million, net of closing costs, commissions, and ~~mid-rise apartments situated~~certain prorations and adjustments, and the full repayment of approximately $27.5 million in ~~more urban settings. The following table sets forth a summary of our communities by building type as of September 30, 2017.~~mortgage debt that encumbered the property.

The Verandas at Mitylene – contract for sale – On December 21, 2018, we entered into a contract to sell to an unaffiliated third party “The Verandas at Mitylene,” located in Montgomery, Alabama, for a sale price of approximately $40.5 million minus the principal amount outstanding on an approximately $21.9 million mortgage loan to be assumed by the buyer, closing costs, commissions, and certain prorations and adjustments. Sale of the property is subject to conditions contained in the agreement, as amended on January 23, 2019 and February 19, 2019, including the lender’s approval of the buyer’s assumption of the mortgage loan. On April 9, 2019, the buyer exercised its right under the agreement to extend the loan assumption period until May 12, 2019. On May 9, 2019, the buyer exercised the second loan extension for an additional thirty days. If the buyer does not receive loan assumption approval by the end of the second extension period, either party may terminate the agreement.

~~Type~~		~~Residential Units~~
~~Garden-style~~		~~538~~
~~Mid-rise~~		85

Liquidity and Capital Resources

General

Our primary uses and sources of cash are as follows:

Uses		Sources
Short-term liquidity and capital needs such as:		•	Cash receipts from our ~~tenants~~remaining property
•	Interest & principal payments on ~~our~~ mortgage ~~loans~~loan	•	Proceeds from the ~~Offering including the DRP~~
•	~~Interest and principal payments on~~sale of our ~~note payable~~			•	~~Proceeds from new mortgage loans~~remaining property
•	Property operating expenses for our remaining property
•	General and administrative expenses including expenses in connection with the Plan of Liquidation
•	~~Distributions~~Final liquidating distribution to stockholders
•	Non-transaction based fees payable to our Business Manager and Real Estate Manager
•	~~Payment of offering costs~~
•	~~Repurchases of shares under the SRP~~

~~Long-term liquidity and capital needs such as:~~
•	~~Acquisition of real estate investments~~
•	~~Interest & principal payments on our mortgage loans~~
•	~~Payment of offering costs~~
•	Capital expenditures
•	~~Repurchases~~Liquidation costs
•	Payment to Sponsor and its affiliates of ~~shares under the SRP~~deferred advances and fees

We intend to use our cash on hand, proceeds from the sale of our remaining real estate property and cash flow from operations generated by our remaining real estate property as our primary sources of liquidity during liquidation. Cash flows from operations from our remaining real estate property is primarily dependent upon the occupancy level of the property, the rental rates on our leases, the collectability of rent and how well we manage our expenditures. As of March 31, 2019, we ~~continue~~owned one real estate property, which was 96.4% occupied and which is under contract to sell. We anticipate completing the sale of this property during the second quarter of 2019. However, we can give no assurance regarding the timing of the sale of our ~~capital raising efforts, a majority~~remaining real estate property in connection with the implementation of the Plan of Liquidation, the sale price we will receive for the property, and the amount or timing of any additional liquidating distributions we pay to our stockholders. We believe that potential net proceeds from the sale of our remaining real estate property, cash flow from operations and cash on hand will be sufficient to meet our liquidity needs during our liquidation. Following the completion of the sale or transfer of all of our assets in accordance with the Plan of Liquidation, we will pay or provide for our liabilities and expenses, distribute the remaining proceeds of the liquidation of our assets to our stockholders, wind up our operations and dissolve.

During the three months ended March 31, 2019, we sold one real estate property. On March 29, 2019, we completed the sale of “The Retreat at Market Square.” At the closing, we received net proceeds of approximately $18.8 million representing the sale price of $47.0 million, net of closing costs, commissions, and certain prorations and adjustments, and the full repayment of approximately $27.5 million in mortgage debt that encumbered the property.

As of March 31, 2019, our total debt outstanding, excluding unamortized debt issuance costs, of approximately $21.9 million consisted of one mortgage loan which bore interest at 3.88% per annum.

On April 11, 2019, we paid the Second Liquidating Distribution in an aggregate amount of $18.8 million. The Second Liquidating Distribution was funded from the net proceeds ~~will be used to repay~~of the ~~outstanding balance on the~~ ~~note payable~~. ~~The Sponsor has agreed to guarantee the obligations or liabilities of our subsidiary to lender under our note payable.~~ In the event the amount raised is insufficient to repay the remaining balance owed at maturity, we will rely on the Sponsor guarantee to pay off any remaining amount due. Amounts paid on our behalf would become due to the Sponsor and would not bear interest or have a defined due date. The amount would be repaid with future operating proceeds or upon sale of ~~our assets,~~“The Retreat at Market Square.”

The DRP and SRP were terminated on September 17, 2018 in contemplation of the Plan of Liquidation, which ~~would reduce the amount of cash we have available to pay distributions or fund operations.~~was still pending at that time.

Cash ~~Flow Analysis~~

Nine Months Ended
September 30,

Change

2017

2016

2017 vs. 2016

Net cash flows provided by operating activities

$
879,101

$
7,459

$
871,642

Net cash flows used in investing activities

$
(59,349,288
)

$
(101,318
)

$
(59,247,970
)
Net cash flows provided by (used in) financing activities

$
52,556,730

$
(2,338,328
)

$
54,895,058

Flows for the Three Months Ended March 31, 2018

Operating activities

Cash provided by operating activities ~~increased $0.9 million~~was $884,928 for the ~~nine~~three months ended ~~September 30, 2017 compared to the nine months ended September 30, 2016~~March 31, 2018 primarily ~~due to payments made in 2016 related to our 2015 acquisition,~~from cash generated from property ~~operations from our recent acquisitions and timing of payments.~~operations.

Investing activities

Nine Months Ended
September 30,

Change

2017

2016

2017 vs. 2016

Purchase of real estate

$
(59,288,960
)

$
—

$
(59,288,960
)
Capital expenditures

(60,328
)

(101,318
)

40,990

Net cash flows used in investing activities

$
(59,349,288
)

$
(101,318
)

$
(59,247,970
)

WeCash used ~~more cash~~ in ~~our~~ investing activities of $75,566 for the ~~nine~~three months ended ~~September 30, 2017 compared~~March 31, 2018 related to ~~the nine months ended September 30, 2016 primarily due to the acquisition of Commons~~improvements at ~~Town Center and Verandas at Mitylene in 2017.~~certain properties.

Financing activities

Nine Months Ended
September 30,

Change

2017

2016

2017 vs. 2016

Proceeds from offering net of offering costs

$
10,887,560

$
16,259,692

$
(5,372,132
)
Distributions paid

(686,715
)

(297,691
)

(389,024
)
Shares repurchased

(80,815
)

—

(80,815
)
Total changes related to debt

42,436,700

(18,300,329
)

60,737,029

Net cash provided by (used in) financing activities

$
52,556,730

$
(2,338,328
)

$
54,895,058

Cash ~~provided by~~used in financing activities ~~increased $54.9 million~~was $3,633,956 for the ~~nine~~three months ended ~~September 30, 2017 compared to~~March 31, 2018. During the ~~nine~~three months ended ~~September 30, 2016. During the nine months ended September 30, 2017 and 2016,~~March 31, 2018, we generated proceeds from the sale of our shares, net of offering costs paid, of ~~approximately $10.9 million and $16.3 million, respectively.~~$180,154. During the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2018, we ~~obtained mortgage loans and a~~ paid off our note payable in an aggregate amount of ~~$44.9 million to finance our acquisitions and paid $2.2 million toward our~~ ~~note payable~~.$3,500,000. During the ~~nine~~three months ended ~~September 30, 2016,~~March 31, 2018, we paid ~~$18.3 million toward our mortgage loan. During the nine months ended September 30, 2017 and 2016, we paid approximately $0.7 million and $0.3 million, respectively,~~$308,964 in distributions and repurchased ~~$80,815~~$5,146 of shares in ~~2017.~~2018.

Results of Operations

As a result of our stockholders’ approval of the Plan of Liquidation and our adoption of Liquidation Basis of Accounting as of December 18, 2018, the results of operations for the current year period are not comparable to the prior year period.

Changes in Net Assets in Liquidation for the Three Months Ended March 31, 2019

Net assets in liquidation decreased by $9,785,543 during the three months ended March 31, 2019 to $35,185,250. The changes were due to the Initial Liquidating Distribution of $9,900,000 and a $114,457 reduction in estimated costs to be incurred during liquidation. Net assets in liquidation includes projections of costs and expenses to be incurred during the period required to complete the Plan of Liquidation. There is inherent uncertainty with these estimates, and they could change materially based on changes in the underlying assumptions of the projected cash flows. The amount of net cash proceeds available for distribution pursuant to the Plan of Liquidation depends on a variety of factors, including, but not limited to, the amount required to pay both existing liabilities and obligations as well as any contingent liabilities and the cost of operating the Company through the date of its final dissolution. The net assets in liquidation value is based on certain assumptions and estimates and may not reflect the amount that our stockholders will receive in the Plan of Liquidation.

Distributions

A summary of the cash distributions declared and paid, and cash flows provided by operations for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2018:

	Three Months Ended March 31,
	2018

Total cash distributions declared	$	636,913

Total cash distributions paid	$	630,909
Cash distributions paid		308,964
Distributions reinvested via DRP		321,945

Cash flows provided by operations	$	884,928
Net offering proceeds	$	180,154

Subsequent to our payment of the October 2018 monthly distribution on November 1, 2018, we ceased paying regular monthly distributions. We do not expect to pay regular distributions during the liquidation process. On January 25, 2019, we paid an Initial Liquidating Distribution payable to stockholders in the amount of $9.9 million, or $4.53 per Class A Share. The Initial Liquidating Distribution was funded from the net proceeds of the sale of “The Commons at Town Center.” On April 11, 2019, we paid the Second Liquidating Distribution payable to stockholders in the amount of $18.8 million, or $8.59 per Class A Share. The Second Liquidating Distribution was funded from the net proceeds of the sale of “The Retreat at Market Square.”

As a result of our stockholders’ approval of the Plan of Liquidation and ~~2016 is~~our adoption of Liquidation Basis of Accounting as ~~follows:~~

Nine Months Ended
September 30,

2017

2016

Total cash distributions declared

$
1,517,491

$
633,357

Distributions declared per Class A Share ⁽¹⁾

$
0.94

$
0.94

Distributions declared per Class T Share ⁽¹⁾

$
0.76

$
0.76

Distributions declared per Class T-3 Share ⁽¹⁾

$
0.90

$
—

Total cash distributions paid ⁽²⁾

$
1,463,865

$
553,741

Cash distributions paid

686,715

297,691

Distributions reinvested via DRP

777,150

256,050

Cash flow provided by operations

$
879,101

$
7,459

Net offering proceeds ⁽³⁾

$
10,887,560

$
16,259,692

~~(1)~~

~~Per share amounts are based on weighted average number of Class A Shares, Class T Shares or Class T-3 shares outstanding, as applicable. For~~of December 18, 2018, the nine months ended September 30, 2017 and 2016, the distributions declared per Class T Share are less than the distributions declared per Class A Share by an amount equal to the distribution and stockholder servicing fee paid per Class T Share of $0.18. For the nine months ended September 30, 2017, the distributions declared per Class T-3 Share are less than the distributions declared per Class A Share by an amount equal to $0.03, which represents a portion of the distribution and stockholder servicing fee. The remaining distribution and stockholder servicing fee per Class T-3 Share of approximately $0.15 will impact the estimated value per share of the Class T-3 Shares.

~~(2)~~

~~Approximately 39.9% and 98.7% of cash distributions paid for the nine months ended September 30, 2017 and 2016, respectively, were paid from the net proceeds of our Offering.~~

~~(3)~~

~~The Offering commenced on February 17, 2015.~~

~~Results of operations~~

~~The following discussion is based on our consolidated financial statements for the three and nine months ended September 30, 2017 and 2016.~~

~~These sections describe and compare our~~ results of operations for the ~~three and nine months ended September 30, 2017 and 2016. We generate almost all of our net operating income from property operations. In order~~current year period are not comparable to ~~evaluate our overall portfolio, management analyzes~~ the net operating income of our property that we have owned and operated for both periods presented, in their entirety, referred to herein as “same store” properties. By evaluating the property net operating income of our “same store” properties, management is able to monitor the operations of our existing properties for comparable periods to measure the performance of our current portfolio and determine the effects of our new acquisitions on net income.

prior year period.

~~Comparison of the three months ended September 30, 2017 and 2016~~

A total of one multi-family property was acquired on or before July 1, 2016 and represents our “same store” property during the three months ended September 30, 2017 and 2016. “Non-same store,” as reflected in the table below, consists of properties acquired after July 1, 2016. For the three months ended September 30, 2017 and 2016, two properties constituted non-same store properties. The following table presents property net operating income broken out between same store and non-same store, prior to amortization of intangibles, interest, and depreciation and amortization for the three months ended September 30, 2017 and 2016, along with a reconciliation to net loss, calculated in accordance with U.S. GAAP.

Total

Same Store

Non-Same Store

Three Months Ended
September 30,

Three Months Ended
September 30,

Three Months Ended
September 30,

2017

2016

Change

2017

2016

Change

2017

2016

Change

Rental income
$
2,055,873

$
905,464

$
1,150,409

$
902,170

$
905,464

$
(3,294
)

$
1,153,703

$
—

$
1,153,703

Other property income

229,634

87,204

142,430

86,739

87,204

(465
)

142,895

—

$
142,895

Total income
$
2,285,507

$
992,668

$
1,292,839

$
988,909

$
992,668

$
(3,759
)

$
1,296,598

$
—

$
1,296,598

Property operating expenses
$
722,891

$
299,274

$
423,617

$
329,922

$
299,274

$
30,648

$
392,969

—

$
392,969

Real estate tax expense

244,451

90,283

154,168

89,820

90,283

(463
)

154,631

—

154,631

Total property operating expenses
$
967,342

$
389,557

$
577,785

$
419,742

$
389,557

$
30,185

$
547,600

$
—

$
547,600

Property net operating income
$
1,318,165

$
603,111

$
715,054

$
569,167

$
603,111

$
(33,944
)

$
748,998

$
—

$
748,998

General and administrative expenses

(350,982
)

(201,349
)

(149,633
)

Acquisition related costs

(16,484
)

—

(16,484
)

Business management fee

(158,154
)

(68,665
)

(89,489
)

Depreciation and amortization

(1,153,501
)

(378,531
)

(774,970
)

Interest expense

(677,534
)

(322,478
)

(355,056
)

Interest and other income

6,393

—

6,393

Net loss
$
(1,032,097
)

$
(367,912
)

$
(664,185
)

~~Net loss.~~ ~~Net loss was $1,032,097 and $367,912 for the three months ended September 30, 2017 and 2016, respectively.~~

~~Total property net operating income.~~ On a “same store” basis, comparing the results of operations of our investment property owned during the three months ended September 30, 2017 with the results of the same investment property owned during the three months ended September 30, 2016 property net operating income decreased $33,944. The decrease is primarily due to increased property operating expenses as a result of a common area painting project.

~~“Non-same store” total property net operating income increased $748,998 during 2017 as compared to 2016. The increase is a result of acquiring two additional properties after July 1, 2016.~~

~~General and Administrative expenses.~~ ~~General and administrative expenses increased $149,633 in 2017 compared to 2016. This increase is primarily due to growth in our portfolio.~~

~~Acquisition related costs.~~ ~~Acquisition related expenses increased $16,484 in 2017 compared to 2016. The increase is attributed to our acquisition related activity.~~

~~Business management fee.~~ ~~Business management fees increased $89,489 in 2017 compared to 2016. The increase is due to the acquisition of two additional properties which increased assets under management.~~

~~Depreciation and Amortization.~~ ~~Depreciation and amortization increased $774,970 in 2017, as compared to 2016. The increase is primarily due to the two acquisitions in 2017.~~

~~Interest Expense.~~ ~~Interest expense increased $355,056 in 2017 compared to 2016. The increase is primarily due to additional financings after October 1, 2016.~~

~~Interest and other income.~~ ~~Interest and other income increased $6,392. The increase is primarily due to higher interest earned as a result of higher cash balances in 2017 compared to 2016.~~

~~Comparison of the nine months ended September 30, 2017 and 2016~~

A total of one multi-family property was acquired on or before January 1, 2016 and represents our “same store” property during the nine months ended September 30, 2017 and 2016. “Non-same store,” as reflected in the table below, consists of properties acquired after January 1, 2016. For the nine months ended September 30, 2017 and 2016, two properties constituted non-same store properties. The following table presents property net operating income broken out between same store and non-same store, prior to amortization of intangibles, interest, and depreciation and amortization for the nine months ended September 30, 2017 and 2016, along with a reconciliation to net loss, calculated in accordance with U.S. GAAP.

Total

Same Store

Non-Same Store

Nine Months Ended
September 30,

Nine Months Ended
September 30,

Nine Months Ended
September 30,

2017

2016

Change

2017

2016

Change

2017

2016

Change

Rental income
$
4,254,327

$
2,665,759

$
1,588,568

$
2,733,015

$
2,665,759

$
67,256

$
1,521,312

$
—

$
1,521,312

Other property income

474,139

263,928

210,211

282,906

263,928

18,978

191,233

—

191,233

Total income
$
4,728,466

$
2,929,687

$
1,798,779

$
3,015,921

$
2,929,687

$
86,234

$
1,712,545

$
—

$
1,712,545

Property operating expenses
$
1,419,557

$
900,845

$
518,712

$
916,461

$
900,845

$
15,616

$
503,096

—

$
503,096

Real estate tax expense

498,450

264,836

233,614

267,359

264,836

2,523

231,091

—

231,091

Total property operating expenses
$
1,918,007

$
1,165,681

$
752,326

$
1,183,820

$
1,165,681

$
18,139

$
734,187

$
—

$
734,187

Property net operating income
$
2,810,459

$
1,764,006

$
1,046,453

$
1,832,101

$
1,764,006

$
68,095

$
978,358

$
—

$
978,358

General and administrative expenses

(1,045,499
)

(802,033
)

(243,466
)

Acquisition related costs

(87,963
)

—

(87,963
)

Business management fee

(318,609
)

(205,850
)

(112,759
)

Depreciation and amortization

(2,132,208
)

(1,451,356
)

(680,852
)

Interest expense

(1,353,084
)

(1,121,542
)

(231,542
)

Interest and other income

30,907

—

30,907

Net loss
$
(2,095,997
)

$
(1,816,775
)

$
(279,222
)

~~Net loss.~~ ~~Net loss was $2,095,997 and $1,816,775 for the nine months ended September 30, 2017 and 2016, respectively.~~

~~Total property net operating income.~~ ~~On a “same store” basis, comparing the results of operations of our investment property owned during the full nine months ended~~ ~~September 30, 2017,~~ ~~with the results of the same investment property owned during the full nine months ended~~ ~~September 30, 2016, property net operating income increased~~ ~~$68,095.~~ The increase is due to increased property income due to increased occupancy and markets rents, offset by increased property operating expenses due primarily to an increase in common area painting projects.

~~“Non-same store” total property net operating income increased $978,358 during 2017 as compared to 2016. The increase is a result of acquiring two additional properties after January 1, 2016.~~

~~General and administrative expenses.~~ ~~General and administrative expenses increased $243,466 in 2017 compared to 2016. The increase is primarily due to the growth in our portfolio.~~

~~Acquisition related costs.~~ ~~Acquisition related expenses increased $87,963 in 2017 compared to 2016. The increase is attributed to our acquisition related activity.~~

~~Business management fee.~~ ~~Business management fees increased $112,759 in 2017 compared to 2016. The increase is due to the acquisition of two properties which increased assets under management.~~

~~Depreciation and amortization.~~ ~~Depreciation and amortization increased $680,852 in 2017, as compared to 2016. This increase is due to acquisitions during 2017.~~

~~Interest Expense.~~ ~~Interest expense increased $231,542 in 2017 compared to 2016. The increase is due to borrowings to fund recent acquisitions.~~

~~Interest and other income.~~ ~~Interest and other income increased $30,907. The increase is primarily due to higher interest earned as a result of higher cash balances in 2017 compared to 2016.~~

Critical Accounting Policies

Disclosures discussing all significant accounting policies are set forth in our Annual Report on Form 10-K for the year ended December 31, ~~2016,~~2018, as filed with the ~~Securities and Exchange Commission~~SEC on March ~~17, 2017,~~29, 2019, under the heading “Critical Accounting Policies”. There have been no changes to our critical accounting policies during the three months ended ~~September 30, 2017.~~March 31, 2019.

Off-Balance Sheet Arrangements

We currently have no off-balance sheet arrangements that are reasonably likely to have a material current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Subsequent Events

For information related to subsequent events, reference is made to Note 1312 – “Subsequent Events” which is included in our ~~September 30, 2017~~March 31, 2019 Notes to Consolidated Financial Statements in Item 1.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

~~We are exposed to interest rate changes primarily as a result of long-term debt used to purchase properties or other real estate assets, maintain liquidity~~Quantitative and ~~fund capital expenditures or operations. We seek to limit the impact of interest rate changes on earnings and cash flows and to lower our overall borrowing costs. As of September 30, 2017,~~ we had outstanding debt of approximately $70.2 million, excluding unamortized debt issuance costs. The weighted average interest rate was 3.90%. With regard to fixed rate financing, interest rate fluctuations generally affect the fair value, but not our earnings or cash flows. Therefore, interest rate risk does not have a significant impact on our fixed rate debt obligations until their maturity or earlier prepayment.

With regard to any variable rate financing, our Business Manager will assess our interest rate cash flow risk by continually identifying and monitoring changes in interest rate exposures that may adversely impact expected future cash flows and by evaluating hedging opportunities. Our Business Manager will maintain risk management control systems to monitor interest rate cash flow risk attributable to both of our outstanding or forecasted debt obligations as well as our potential offsetting hedge positions. While this hedging strategy will be designed to minimize the impact on our net income and funds from operations from changes in interest rates, the overall returns on stockholder investments may be reduced. Presently, we do not have any variable rate debt.

We may use derivative financial instruments to hedge exposures to changes in interest rates on loans secured by our assets. Derivative instruments may include interest rate swap contracts, interest rate cap or floor contracts, futures or forward contracts, options or repurchase agreements. Our actual hedging decisions will be determined in light of the facts and circumstances existing at the time of the hedge and may differ from our currently anticipated hedging strategy. If we use derivative financial instruments to hedge against interest rate fluctuations, we will be exposed to both credit risk and market risk. Credit risk is the failure of the counterparty to perform under the terms of the derivative contract. If the fair value of a derivative contract is positive, the counterparty will owe us, which creates credit risk for us because the counterparty may not perform. Market risk is the adverse effect on the value of a financial instrument that results from a change in interest rates. We will seek to manage thequalitative disclosures about market risk associated with interest-rate contracts by establishing and monitoring parameters that limit the types and degree of market risk that may be undertaken. There is no assurance we will be successful. Presently, we do not have ~~any derivative financial instruments.~~been omitted as permitted under rules applicable to smaller reporting companies.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

Our management has evaluated, with the participation of our principal executive and principal financial officers, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on that evaluation, the principal executive and principal financial officers have concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report.

Changes in Internal Control over Financial Reporting

There were no changes to our internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) or Rule 15d-15(f)) during the three months ended ~~September 30, 2017~~March 31, 2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Part II - Other Information

Item 1. Legal Proceedings

We are not a party to, and none of our properties are ~~not~~ subject to, any material pending legal proceedings.

Item 1A. Risk Factors

The following risk factors supplement the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2018.

We ~~have incurred a net loss on a U.S. GAAP basis for the nine months ended September 30, 2017.~~

We incurred a net loss on a U.S. GAAP basis for the three and nine months ended September 30, 2017 of approximately $1.0 million and $2.1 million, respectively. Our loss can be attributed, in part, to property operating, interest, general and administrative expenses and depreciation and amortization. We may incur net losses in the future, which could have a material adverse impact on our financial condition, operations, cash flow, and our ability to service our indebtedness and pay distributions to our stockholders. We are subject to all of the business risks and uncertainties associated with any business, including the risk that the value of a stockholder’s investment could decline substantially. We were formed in December 2013 and, as of September 30, 2017, acquired three multi-family communities. We cannot ~~assure our stockholders that, in the future, we will be profitable or that we will realize growth in the value of our assets.~~

To date, we have not generated sufficient cash flow from operations to pay distributions, and, therefore, we have paid, and may continue to pay, distributions from the net proceeds of our Offering and DRP, which reducesdetermine at this time the amount or timing of ~~cash we ultimately have to invest in assets, negatively impacting the value of our stockholders’ investment, and is dilutive~~any further liquidating distributions to our stockholders.

We ~~have not yet generated sufficient cash flow from operations to fund~~paid the Initial Liquidating Distribution of $4.53 per Class A Share in January 2019 and the Second Liquidating Distribution of $8.59 per Class A Share in April 2019. We anticipate paying an additional liquidating distribution ~~payments and may not do so unless our asset base grows significantly. Our organizational documents permit us~~or distributions in the future, but we cannot determine at this time when we will be able to pay, ~~distributions from sources other than cash flow from operations. Specifically, some~~ or ~~all~~the amount of, any further liquidating distributions. The ultimate amount that we will distribute to stockholders in the liquidation will depend upon the actual amount of our ~~distributions may be paid from retained cash flow, from borrowings and from cash flow from investing activities, including~~liabilities, the ~~net~~actual proceeds from the sale of our ~~assets, or from~~properties, the ~~net proceeds~~actual fees and expenses incurred in connection with the sale of our ~~Offering~~properties, the actual expenses incurred in the administration of our properties prior to disposition, the actual general and ~~DRP. Accordingly, until such time as we are generating cash flow from operations sufficient~~administrative expenses of the Company, our ability to ~~cover distributions we have paid and will likely~~ continue to ~~pay distributions from~~meet the ~~net proceeds~~requirements necessary to retain our status as a REIT throughout the period of the liquidation process, our ability to avoid entity-level U.S. federal income and excise taxes throughout the period of the liquidation process and other factors. If our liabilities (including, without limitation, tax liabilities and compliance costs) are greater than we currently expect or if the sales price of our ~~Offering and DRP or other sources. We have not established any limit on the extent to which~~remaining property is less than we may use alternate sources, including borrowings or proceeds of the Offering and DRP, to pay distributions. There is no assurance we will generate sufficient cash flow from operations to cover distributions. We began declaringexpect, distributions to stockholders of record during November 2015. Of the cash distributions paid to stockholders through September 30, 2017, 58% ($1.4 million) have been paid from the net proceeds of our Offering and DRP. To the extent we pay cash distributions, or a portion thereof, from sources other than cash flow from operations, we will have less capital available to invest in properties and other real estate-related assets, the book value per share may decline, and there will be ~~no assurance~~reduced.

While we have previously provided estimates about the timing and amount of liquidating distributions that we will make, these estimates are based on multiple assumptions, one or more of which may prove to be ~~able~~incorrect, and the actual amount of liquidating distributions we pay to ~~sustain distributions at that level.~~

~~Based on sales volume to date, we expect to raise substantially~~our stockholders may be more or less than these estimates. No assurance can be given regarding the ~~maximum offering~~actual amount our stockholders will receive in ~~our Offering which~~liquidating distributions pursuant to the Plan of Liquidation or when they will ~~continue until February 16, 2018. Because we expect to raise substantially less than~~be paid.

Both the ~~maximum offering~~Estimated Per Share NAV and net assets in liquidation value per Class A Share are based on certain assumptions and estimates and may not reflect the amount we will not be able to invest in as diverse a portfolio of properties as we otherwise would, which will cause the value of our stockholders' investment to vary more widely with the performance of specific assets, and cause our fixed operating expenses to constitute a greater percentage of our gross income. Raising fewer proceeds in our Offering, therefore, increases the risk that our stockholders will ~~not receive a full return of their investment.~~

receive.

~~Shares~~The Estimated Per Share NAV as of April 11, 2019 of $7.47 per Class A Share (which reflects the payment of the Second Liquidating Distribution of $8.59 per Class A Share) are based on certain assumptions and estimates. There can be no guarantee as to the exact amount of net liquidation proceeds that ultimately will be available for distribution to our ~~common stock are being offered~~stockholders pursuant to the Plan of Liquidation. This amount may vary from the Estimated Per Share NAV and the net assets in liquidation included in the accompanying consolidated financial statements. Moreover, neither the Estimated Per Share NAV nor the net assets in liquidation value per Class A Share represents: (i) the price at which our shares would trade on a ~~“reasonable best efforts” basis through~~national securities exchange, (ii) the amount per share a ~~public offering, which commenced on February 17, 2015. As of September 30, 2017,~~stockholder would obtain if he, she or it tried to sell his, her or its shares, (iii) the amount per share stockholders would receive if we ~~have sold approximately $45.9 million of~~liquidated our ~~shares through~~assets and distributed the ~~Offering~~proceeds after paying all our expenses and ~~have invested in three properties. Our Offering will continue until February 16, 2018. As we continue~~liabilities or (iv) the price a third party would pay to acquire our ~~capital raising efforts, a majority of~~Company. There is also no assurance that the ~~net proceeds~~methodology used to estimate our value per share will be ~~used~~acceptable to ~~repay~~broker dealers for customer account purposes or to the ~~outstanding balance on a note payable~~Financial Industry Regulatory Authority, Inc. or that ~~matures on January 3, 2018. As of September 30, 2017,~~it will satisfy the ~~outstanding balance~~applicable annual valuation requirements under the ~~note payable was $7 million. Subsequent to September 30, 2017, we paid $2 million to reduce~~Employee Retirement Income Security Act of 1974, as amended (“ERISA”), and the outstanding balance to $5 million. Our ability to make additional investments will be limited until we are able to pay off the outstanding balance on the note payable. In the event the amount raised is insufficient to repay the remaining balance owed at maturity, we will rely on the Sponsor guarantee to pay off any remaining amount due and amounts paid on our behalf would become due to the Sponsor. We expect to repay the amount with future operating proceeds or upon sale of our assets. We cannot guarantee that we will have sufficient future operating proceeds to repay the Sponsor, in which case we may need to sell our assets. Unless we raise significant additional proceeds, we will not be able to achieve a broadly diversified portfolio. Adverse developmentsInternal Revenue Code with respect to employee benefit plans subject to ERISA and other retirement plans or accounts subject to Section 4975 of the Internal Revenue Code.

These estimates of what a ~~single asset~~stockholder may ultimately receive in total from our liquidation are based on assumptions that may not be accurate or complete and include, among other things, estimates and assumptions as to the actual amount of time it will take to complete the implementation of the Plan of Liquidation and whether we will be required to provide for any unknown and outstanding liabilities or expenses, which may include the establishment of a ~~geographic region~~reserve fund or transferring assets to a liquidating trust to pay contingent liabilities and ongoing expenses in an amount to be determined as information concerning such contingencies and expenses becomes available. We will ~~have a greater adverse impact on~~continue to incur liabilities and expenses from operations prior to the dissolution of the Company. Our estimates regarding our ~~operations than they otherwise would. In addition,~~expense levels may be inaccurate. Any unexpected claims, liabilities or expenses that arise, or any claims, liabilities or expenses that exceed our estimates, will reduce the amount of cash available for distribution to stockholders.

our inability to raise substantial funds has increased our fixed operating expenses as a percentage of our gross income. Each of these factors could have an adverse effect on our financial condition and ability to make distributions to our stockholders.

Item 2. Unregistered Sales of ~~Equity~~Equity Securities and Use of Proceeds

On February 17, 2015, our Registration Statement on Form S-11 (File No. 333-199129), covering a public offering of up to $1,190,000,000 of shares of Class A and Class T common stock was declared effective under the Securities Act, and on February 2, 2017, Post-Effective Amendment No. 9 to our Registration Statement on Form S-11 (File No. 333-199129), reallocating certain of the remaining shares being offered to offer Class T-3 Shares as a new class of common stock pursuant to the Offering and the DRP, was declared effective under the Securities Act. The Offering commenced on February 17, 2015 and is ongoing.

We are offering up to $1,000,000,000 of Class A Shares, Class T Shares and Class T-3 Shares, in any combination. We are also offering up to $190,000,000 of Class A, Class T and Class T-3 Shares in the DRP. We reserve the right to reallocate the shares between our reasonable best efforts Offering and the DRP, and among share classes.

~~From the effective date of the Offering through September 30, 2017, we had sold the following securities in the Offering and the DRP for the following aggregate offering proceeds:~~

~~1,349,902 Class A Shares, 384,760 Class T Shares and 146,623 Class T-3 Shares, equal to $45,899,384 in aggregate gross offering proceeds, in the reasonable best efforts Offering.~~

~~41,686 Class A Shares, 9,209 Class T Shares and 744 Class T-3 Shares, equal to $1,217,071 in aggregate gross offering proceeds, pursuant to the DRP.~~

~~From the effective date of the Offering through September 30, 2017, we have paid the following costs in connection with the issuance and distribution of the registered securities:~~

Type of Costs

Amount

Offering costs paid to related parties (1)

$
3,950,896

Offering costs paid to non-related parties

3,338,958

Total offering costs paid

$
7,289,854

~~(1)~~

“Offering costs to related parties” include selling commissions, dealer manager fees and due diligence expense reimbursements paid to Inland Securities Corporation, which re-allowed all or a portion of these amounts to soliciting dealers that are not related to Inland Securities Corporation.

From the effective date of the Offering through September 30, 2017, the net offering proceeds to us from the Offering and the DRP, after deducting the total expenses incurred described above, were approximately $39.8 million. As of September 30, 2017, we used $20.5 million to repay a portion of our debt which was originally incurred in connection with the purchase of real estate, approximately $15.5 million in related costs associated with our purchase of real estate, of which approximately $0.2 million was paid to related parties and approximately $1.4 million to pay distributions. The remaining proceeds were held as cash at September 30, 2017.

Recent Sales of Unregistered Equity Securities

During the period covered by this quarterly report, we did not sell any equity securities that were not registered under the Securities Act.

Share Repurchase Program

The SRP is designed to provide eligible stockholders with limited, interim liquidity by enabling them to sell shares back to us. The terms under which we may repurchase shares may differ between repurchases upon the death or “qualifying disability” of a stockholder or “Exceptional Repurchases” and all other repurchases or “Ordinary Repurchases.” The repurchase price for Ordinary Repurchases is equal to $21.60 per share, $21.61 per share and $21.61 per share for Class A Shares, Class T Shares and Class T-3 Shares, respectively, until the initial valuation date, and thereafter the repurchase price is equal to 96.0%On September 17, 2018, in contemplation of the ~~most recent applicable estimated value per share reported by us.~~

~~In the case~~Plan of ~~Ordinary Repurchases, we may repurchase shares beneficially owned by a stockholder continuously for~~Liquidation which was still pending at least one year and who purchased their shares from us or received their shares through a non-cash transfer, if requested, if we choose to repurchase them. However, in the event a stockholder is having all of his or her shares repurchased, our board may waive the one-year holding requirement for shares purchased under our DRP. We may make Ordinary Repurchases only if we have sufficient funds available to complete the repurchase. In any given calendar month, we are authorized to use only the proceeds from our DRP during that month to make Ordinary Repurchases; provided that, if we have excess funds during any particular month, we may, but are not obligated to, carry those excess funds to the subsequent calendar month for the purpose of making Ordinary Repurchases. Subject to funds being available, in the case of Ordinary Repurchases, we limit the number of shares repurchased during any calendar year to no more than 5% of the number of Class A Shares, Class T Shares and Class T-3 Shares outstanding on December 31st of the previous calendar year. In the event that we determine not to repurchase all of the shares presented during any month, including as a result of having insufficient funds or satisfying the 5% limit, to the extent we decide to repurchase shares, shares will be repurchased on a pro rata basis up to the limits described above. Any stockholder whose Ordinary Repurchase request has been partially accepted in a particular calendar month will have the remainder of his or her request included with all new repurchase requests we have received in the immediately following calendar month, unless he or she chooses to withdraw that request.

In the case of Exceptional Repurchases, we may repurchase shares at a repurchase price equal to $22.50 per share, $22.51 per share and $22.51 per share for Class A Shares, Class T Shares and Class T-3 Shares, respectively, until the initial valuation date, and thereafter the repurchase price is equal to 100.0% of the most recent applicable estimated value per share reported by us. Exceptional Repurchases are not subject to a one-year holding period, or the 5% repurchase limit discussed above, and may be repurchased with funds from any source.

~~The SRP will immediately terminate if our shares become listed for trading on a national securities exchange. In addition,~~time, our board of directors ~~in its sole discretion, may, at any time, amend, suspend or terminate~~approved the termination of the SRP.

~~During the three months ended September 30, 2017, we repurchased 3,317 Class A Shares and 424 Class T Shares under the SRP.~~

Period

Total Shares
Requested
to be
Repurchased

Total Number
of Shares
Repurchased

Average
Price Paid
per Share

Amount of Shares Repurchased

Total Number
of Shares
Repurchased
as Part of
Publicly
Announced
Plans or
Programs(1)

Maximum Number of Shares
that May Yet be
Purchased Under
the Plans
or Programs

July 2017

2,695

2,695

$
21.60

$
58,204

2,695

66,462

August 2017

492

492

$
21.61

$
10,632

492

65,970

September 2017

554

554

$
21.62

$
11,979

554

65,416

Total

3,741

3,741

$
21.60

$
80,815

3,741

~~(1)~~

~~Our SRP was announced on February 17, 2015.~~

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not Applicable.

Item 5. Other Information

Not Applicable.

Item 6. Exhibits

The representations, warranties and covenants made by us in any agreement filed as an exhibit to this Form 10-Q are made solely for the benefit of the parties to the agreement, including, in some cases, for the purpose of allocating risk among the parties to the agreement, and should not be deemed to be representations, warranties or covenants to, or with, you. Moreover, these representations, warranties and covenants should not be relied upon as accurately describing or reflecting the current state of our affairs.

The exhibits filed in response to Item 601 of Regulation S-K are listed on the Exhibit Index attached hereto and are incorporated herein by reference.

Exhibit Index

Exhibit No.		Description

3.1		Articles of Amendment and Restatement of Inland Residential Properties Trust, Inc., dated February 17, 2015 (incorporated by reference to Exhibit 3.1 to Post-Effective Amendment No. 1 to the Registrant’s Form S-11 Registration Statement, as filed by the Registrant with the Securities and Exchange Commission on February 18, 2015 (file number 333-199129))

~~10.1~~3.2		~~Purchase and Sale Agreement,~~Articles of Amendment of Inland Residential Properties Trust, Inc., dated ~~May 30, 2017, by and between Inland Real Estate Acquisitions, Inc. and Verandas at Mitylene, LLC~~March 12, 2015 (incorporated by reference to Exhibit ~~10.1~~3.1 to the Registrant’s Current Report on Form 8-K, as filed by the Registrant with the Securities and Exchange Commission on ~~August~~March 16, 2015 (file number 333-199129))

3.3		Articles of Amendment of Inland Residential Properties Trust, Inc., dated May 29, 2015 (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K, as filed by the Registrant with the Securities and Exchange Commission on June 3, 2015 (file number 333-199129))

3.4		Articles Supplementary of Inland Residential Properties Trust, Inc. (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K, as filed by the Registrant with the Securities and Exchange Commission on February 2, 2017 (file number 333-199129))

3.5		Certificate of Correction of Inland Residential Properties Trust, Inc., dated December 15, 2015 (incorporated by reference to Exhibit 3.4 to Post-Effective Amendment No. 6 to the Registrant’s Form S-11 Registration Statement, as filed by the Registrant with the Securities and Exchange Commission on December 30, 2015 (file number 333-199129))

3.6		Bylaws of Inland Residential Properties Trust, Inc. (incorporated by reference to Exhibit 3.2 to the Registrant’s Form S-11 Registration Statement, as filed by the Registrant with the Securities and Exchange Commission on October 3, 2014 (file number 333-199129))

10.1		Amendment to Purchase and Sale Agreement between IRESI Montgomery Mitylene, L.L.C. and B & M Development Company, L.L.C., dated January 23, 2019 (incorporated by reference to Exhibit 10.32 to the Registrant’s Annual Report on Form 10-K, as filed by the Registrant with the Securities and Exchange Commission on March 29, 2019 (file number 000-55765))

10.2		~~First~~Second Amendment to Purchase and Sale Agreement between IRESI Montgomery Mitylene, L.L.C. and B & M Development Company, L.L.C., dated ~~June 12, 2017, by and between Inland Real Estate Acquisitions, Inc. and Verandas at Mitylene, LLC~~February 19, 2019 (incorporated by reference to Exhibit ~~10.2~~10.33 to the Registrant’s ~~Current~~Annual Report on Form ~~8-K,~~10-K, as filed by the Registrant with the Securities and Exchange Commission on ~~August 2, 2017~~March 29, 2019 (file number 000-55765))

10.3		~~Second Amendment to~~ Purchase and Sale Agreement between IRESI Frederick Market Square, L.L.C. and 515 22nd Street Limited Partnership, dated ~~July 6, 2017, by and between Inland Real Estate Acquisitions, Inc. and Verandas at Mitylene, LLC~~February 12, 2019 (incorporated by reference to Exhibit ~~10.3~~10.34 to the Registrant’s ~~Current~~Annual Report on Form ~~8-K,~~10-K, as filed by the Registrant with the Securities and Exchange Commission on ~~August 2, 2017~~March 29, 2019 (file number 000-55765))

~~10.4~~		Third Amendment to Purchase and Sale Agreement, dated July 19, 2017, by and between Inland Real Estate Acquisitions, Inc. and Verandas at Mitylene, LLC (incorporated by reference to Exhibit 10.4 to the Registrant’s Current Report on Form 8-K, as filed by the Registrant with the Securities and Exchange Commission on August 2, 2017 (file number 000-55765))

~~10.5~~		Assignment and Assumption of Purchase and Sale Agreement, dated July 27, 2017, by and between Inland Real Estate Acquisitions, Inc. and IRESI Montgomery Mitylene, L.L.C. (incorporated by reference to Exhibit 10.5 to the Registrant’s Current Report on Form 8-K, as filed by the Registrant with the Securities and Exchange Commission on August 2, 2017 (file number 000-55765))

~~10.6~~		Bill of Sale and Assignment and Assumption of Leases and Service Contracts, dated July 27, 2017, by and between IRESI Montgomery Mitylene, L.L.C. and Verandas at Mitylene, LLC (incorporated by reference to Exhibit 10.6 to the Registrant’s Current Report on Form 8-K, as filed by the Registrant with the Securities and Exchange Commission on August 2, 2017 (file number 000-55765))

~~10.7~~		Multifamily Loan and Security Agreement, dated July 27, 2017, by and between IRESI Montgomery Mitylene, L.L.C. and Berkadia Commercial Mortgage LLC (incorporated by reference to Exhibit 10.39 to Post-Effective Amendment No. 13 to the Registrant’s Form S-11 Registration Statement, as filed by the Registrant with the Securities and Exchange Commission on October 13, 2017 (file number 333-199129))

~~10.8~~		Agreement for Amendment of Documents, dated July 27, 2017, by and between IRESI Montgomery Mitylene, L.L.C. and Inland Residential Properties Trust, Inc. for the benefit of Berkadia Commercial Mortgage LLC and Federal Home Loan Mortgage Corporation (incorporated by reference to Exhibit 10.40 to Post-Effective Amendment No. 13 to the Registrant’s Form S-11 Registration Statement, as filed by the Registrant with the Securities and Exchange Commission on October 13, 2017 (file number 333-199129))

~~10.9~~		Multifamily Note, dated July 27, 2017, by IRESI Montgomery Mitylene, L.L.C. for the benefit of Berkadia Commercial Mortgage LLC (incorporated by reference to Exhibit 10.41 to Post-Effective Amendment No. 13 to the Registrant’s Form S-11 Registration Statement, as filed by the Registrant with the Securities and Exchange Commission on October 13, 2017 (file number 333-199129))
~~10.10~~		Multifamily Mortgage, Assignment of Rents and Security Agreement, dated July 27, 2017, between IRESI Montgomery Mitylene, L.L.C. to Berkadia Commercial Mortgage LLC (incorporated by reference to Exhibit 10.42 to Post-Effective Amendment No. 13 to the Registrant’s Form S-11 Registration Statement, as filed by the Registrant with the Securities and Exchange Commission on October 13, 2017 (file number 333-199129)

~~Exhibit~~ ~~No.~~		~~Description~~
~~10.11~~		Guaranty, dated July 27, 2017, by Inland Residential Properties Trust, Inc. for the benefit of Berkadia Commercial Mortgage LLC (incorporated by reference to Exhibit 10.43 to Post-Effective Amendment No. 13 to the Registrant’s Form ~~S-11 Registration Statement, as filed by the Registrant with the Securities and Exchange Commission on October 13, 2017 (file number 333-199129))~~

31.1		Certification by Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*

31.2		Certification by Co-Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*

~~31.3~~		~~Certification by Co-Principal~~Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*

32.1		Certification by Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*

32.2		Certification by Co-Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*

~~32.3~~		~~Certification by Co-Principal~~Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*

101		The following financial information from our Quarterly Report on Form 10-Q for the period ended ~~September 30, 2017,~~March 31, 2019, filed with the Securities and Exchange Commission on ~~November 7, 2017~~May 14, 2019 is formatted in Extensible Business Reporting Language (“XBRL”): (i) Consolidated ~~Balance Sheets;~~Statements of Net Assets; (ii) Consolidated ~~Statements~~Statement of ~~Operations;~~Changes in Net Assets; (iii) Consolidated Statement of ~~Equity;~~Operations; (iv) Consolidated ~~Statements~~Statement of Equity; (v) Consolidated Statement of Cash Flows; and (v) Notes to Consolidated Financial Statements (tagged as blocks of text)

*	Filed ~~as part of this Quarterly Report on Form 10-Q.~~herewith.

SIGNATURES

Pursuant to the requirements 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.

INLAND RESIDENTIAL PROPERTIES TRUST, INC.

		/s/ Mitchell A. Sabshon
By:		Mitchell A. Sabshon
		President and Chief Executive Officer
Date:		~~November 7, 2017~~May 14, 2019

		/s/ Catherine L. Lynch
By:		Catherine L. Lynch
		Chief Financial Officer and Treasurer (~~Co-Principal~~Principal Financial Officer)
Date:		~~November 7, 2017~~

		~~/s/ David Z. Lichterman~~
~~By:~~		~~David Z. Lichterman~~
		~~Vice President, Treasurer and~~ ~~Chief Accounting Officer~~ ~~(Co-Principal Financial Officer and Principal Accounting Officer)~~
~~Date:~~		~~November 7, 2017~~May 14, 2019

3226

	September 30, 2017 (unaudited)			December 31, 2016
ASSETS
Assets:
Real estate:
Land	$	9,845,410		$	6,301,838
Building and other improvements		93,889,256			38,889,177
Total real estate		103,734,666			45,191,015
Less: accumulated depreciation		(3,476,700	)		(1,822,971	)
Net real estate		100,257,966			43,368,044
Cash and cash equivalents		3,125,185			9,038,642
Accounts and rents receivable		43,481			17,961
Acquired in place lease intangibles, net		730,999			—
Other assets		453,652			458,316
Total assets	$	104,611,283		$	52,882,963

LIABILITIES AND EQUITY
Liabilities:
Mortgages and note payable, net	$	69,903,047		$	27,447,459
Accounts payable and accrued expenses		944,218			232,736
Distributions payable		190,834			137,207
Due to related parties		6,275,230			5,684,753
Other liabilities		171,559			67,287
Total liabilities		77,484,888			33,569,442

Commitments and contingencies

Stockholders’ equity:
Preferred stock, $.001 par value, 50,000,000 shares authorized, none outstanding		—			—
Class A common stock, $.001 par value, 320,000,000 shares authorized, 1,420,776 shares and 1,098,858 shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively		1,420			1,099
Class T common stock, $.001 par value, 40,000,000 shares authorized, 399,285 shares and 284,283 shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively		399			284
Class T-3 common stock, $.001 par value, 40,000,000 shares authorized, 147,805 shares and none issued and outstanding as of September 30, 2017 and December 31, 2016, respectively		148			—
Additional paid in capital (net of offering costs of $10,538,615 and $8,268,768 as of September 30, 2017 and December 31, 2016, respectively)		37,519,623			25,539,970
Distributions and accumulated losses		(10,395,195	)		(6,227,832	)
Total stockholders’ equity		27,126,395			19,313,521
Total liabilities and stockholders’ equity	$	104,611,283		$	52,882,963

	For the Nine Months Ended September 30,
	2017
Land	$	3,543,573
Building and other improvements		53,188,092
Furniture, fixtures and equipment		1,767,003
Acquired in place lease intangibles		1,194,134
Assumed assets and liabilities, net		(403,842	)
Total	$	59,288,960

	September 30, 2017			December 31, 2016
Intangible assets:
Acquired in place lease value	$	1,194,134		$	—
Accumulated amortization		(463,135	)		—
Acquired lease intangibles, net	$	730,999		$	—


	Three Months Ended September 30,				Nine Months Ended September 30,
Amortization recorded as amortization expense:	2017		2016		2017		2016
Acquired in place lease value	$	351,094	$	—	$	463,135	$	—

	Acquired In-Place Leases
2017 (remainder of year)	$	395,325
2018		179,847
2019		85,035
2020		48,976
2021		21,816
Thereafter		—
Total	$	730,999

	September 30, 2017
Scheduled Principal Payments and Maturities by Year:	Scheduled Principal Payments		Maturities of Mortgages		Maturity of Note Payable		Total
2017 (remainder of the year)	$	—	$	—	$	—	$	—
2018		—		—		7,000,000		7,000,000
2019		—		—		—		—
2020		—		—		—		—
2021		124,063		—		—		124,063
Thereafter		853,206		62,202,731		—		63,055,937
Total	$	977,269	$	62,202,731	$	7,000,000	$	70,180,000

	Shares			Weighted Average Grant Date Fair Value			Aggregate Intrinsic Value
Outstanding at December 31, 2016		804		$	18,334		$	18,334
Granted		658			15,000			15,000
Vested		(183	)		(4,167	)		(4,167	)
Forfeited		—			—			—
Outstanding at September 30, 2017		1,279		$	29,167		$	29,167

	Minimum Lease Payments
2017 (remainder of year)	$	67,713
2018		257,350
2019		254,650
2020		172,750
2021		78,119
Thereafter		—
Total	$	830,582

Community	Location	Total Number of Residential Units		Average Rental Rate per Residential Unit (a)		2017 Residential Average Occupancy			Leased Residential Units		Purchase Price		Debt Balance		Interest Rate (b)
The Retreat at Market Square	Frederick, MD		206	$	1,539		93.2	%	196		$	45,727,557	$	27,450,000		3.64	%
Commons at Town Center	Vernon Hills, IL		85		1,931		91.8	%	79			23,000,000		20,800,000		4.37	%
Verandas at Mitylene	Montgomery, AL		332		903		91.6	%	315			36,550,000		21,930,000		3.88	%
	Total		623	$	1,255					590	$	105,277,557	$	70,180,000

	Nine Months Ended September 30,						Change
	2017			2016			2017 vs. 2016
Net cash flows provided by operating activities	$	879,101		$	7,459		$	871,642
Net cash flows used in investing activities	$	(59,349,288	)	$	(101,318	)	$	(59,247,970	)
Net cash flows provided by (used in) financing activities	$	52,556,730		$	(2,338,328	)	$	54,895,058

	Total									Same Store							Non-Same Store
	Three Months Ended September 30,									Three Months Ended September 30,							Three Months Ended September 30,
	2017			2016			Change			2017		2016		Change			2017		2016		Change
Rental income	$	2,055,873		$	905,464		$	1,150,409		$	902,170	$	905,464	$	(3,294	)	$	1,153,703	$	—	$	1,153,703
Other property income		229,634			87,204			142,430			86,739		87,204		(465	)		142,895		—	$	142,895
Total income	$	2,285,507		$	992,668		$	1,292,839		$	988,909	$	992,668	$	(3,759	)	$	1,296,598	$	—	$	1,296,598

Property operating expenses	$	722,891		$	299,274		$	423,617		$	329,922	$	299,274	$	30,648		$	392,969		—	$	392,969
Real estate tax expense		244,451			90,283			154,168			89,820		90,283		(463	)		154,631		—		154,631
Total property operating expenses	$	967,342		$	389,557		$	577,785		$	419,742	$	389,557	$	30,185		$	547,600	$	—	$	547,600

Property net operating income	$	1,318,165		$	603,111		$	715,054		$	569,167	$	603,111	$	(33,944	)	$	748,998	$	—	$	748,998

General and administrative expenses		(350,982	)		(201,349	)		(149,633	)
Acquisition related costs		(16,484	)		—			(16,484	)
Business management fee		(158,154	)		(68,665	)		(89,489	)
Depreciation and amortization		(1,153,501	)		(378,531	)		(774,970	)
Interest expense		(677,534	)		(322,478	)		(355,056	)
Interest and other income		6,393			—			6,393
Net loss	$	(1,032,097	)	$	(367,912	)	$	(664,185	)

Type of Costs	Amount
Offering costs paid to related parties (1)	$	3,950,896
Offering costs paid to non-related parties		3,338,958
Total offering costs paid	$	7,289,854

Period	Total Shares Requested to be Repurchased		Total Number of Shares Repurchased		Average Price Paid per Share		Amount of Shares Repurchased		Total Number of Shares Repurchased as Part of Publicly Announced Plans or Programs(1)		Maximum Number of Shares that May Yet be Purchased Under the Plans or Programs

July 2017		2,695		2,695	$	21.60	$	58,204		2,695		66,462
August 2017		492		492	$	21.61	$	10,632		492		65,970
September 2017		554		554	$	21.62	$	11,979		554		65,416
Total		3,741		3,741	$	21.60	$	80,815		3,741