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Section 1: 8-K (8-K)

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of report (Date of earliest event reported):
August 7, 2020

STEADFAST APARTMENT REIT, INC.
(Exact Name of Registrant as Specified in Charter)
   
Maryland000-5542836-4769184
(State or Other Jurisdiction of(Commission File Number)(I.R.S. Employer
Incorporation or Organization) Identification No.)
 
18100 Von Karman Avenue, Suite 500
Irvine, California 92612
(Address of Principal Executive Offices, including Zip Code)
Registrant’s Telephone Number, Including Area Code: (949) 852-0700

Not applicable
(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act: None

Title of each classTrading Symbol(s)Name of each exchange on which registered
N/AN/AN/A

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

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. ☐







Item 2.02 Results of Operations and Financial Condition.

On August 7, 2020, Steadfast Apartment REIT, Inc. (the “Company”) issued an earnings release announcing its financial results for the quarter ended June 30, 2020. A copy of the earnings release is being furnished as Exhibit 99.1 to this Current Report on Form 8-K.

The information contained in this Item 2.02, including the related information set forth in the earnings release attached hereto as Exhibit 99.1 and incorporated by reference herein, is being “furnished” and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by the specific reference in such filing.













































Item 8.01 Other Events.

Distribution Declaration

On August 4, 2020, the board of directors of Steadfast Apartment REIT, Inc. approved and authorized a daily distribution to stockholders of record as of the close of business on each day for the period commencing on September 1, 2020 and ending on September 30, 2020. The distributions will be equal to $0.002459 per share of the Company’s common stock per day, which if paid each day over a 366-day period is equivalent to a 6.0% annualized distribution rate based on the initial public offering price of $15.00 per share of common stock. The distributions for each record date in September 2020 will be paid in October 2020. The distributions will be payable to stockholders from legally available funds therefor.











































Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.
ExhibitsDescription
99.1















































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 hereunto duly authorized.

STEADFAST APARTMENT REIT, INC.
Date:August 10, 2020By:/s/ Ella S. Neyland
Ella S. Neyland
President, Chief Financial Officer and Treasurer


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Section 2: EX-99.1 (EX-99.1)

Document
EXHIBIT 99.1



404923565_logo1a02a03a4211.gif
18100 Von Karman Avenue
Suite 500
Irvine, CA 92612
949.852.0700

NEWS RELEASE
Contact: Jennifer Franklin
Phone: 949.427.1385
Email: jennifer@spotlightmarcom.com
STEADFAST APARTMENT REIT, INC. ANNOUNCES
RESULTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2020
Irvine, Calif., August 7, 2020 — Steadfast Apartment REIT, Inc. (the “Company”) announced today its operating results for the three and six months ended June 30, 2020.
The Company was not materially impacted by the COVID-19 pandemic during the second fiscal quarter of 2020. The Company continues to closely monitor the effects of COVID-19 on its residents, the employees of its advisor and property manager and vendors. The extent of the impact of COVID-19 on the Company's results of operations will depend, in part, on the duration of the pandemic, the success of efforts to contain it and the action taken in response to the outbreak, including government programs that provide financial support to mitigate the financial impact of COVID-19.
For the three and six months ended June 30, 2020, the Company had total revenues of $80.3 million and $134.0 million compared to $43.2 million and $85.8 million for the three and six months ended June 30, 2019. Net loss was $53.1 million and $62.7 million for the three and six months ended June 30, 2020, compared to $12.0 million and $24.4 million for the three and six months ended June 30, 2019. Total assets of the Company were $3.34 billion at June 30, 2020, and $1.43 billion at December 31, 2019. The Company's results of operations were primarily impacted by the Company's mergers with Steadfast Income REIT, Inc. and Steadfast Apartment REIT III, Inc. on March 6, 2020, that resulted in the acquisition of 36 multifamily properties and an interest in a joint venture, with an aggregate gross real estate value of approximately $1.5 billion.
As of June 30, 2020, the Company's portfolio consisted of (1) 73 properties (including three properties held for the development of apartment homes) in 14 states and (2) a 10% interest in one unconsolidated joint venture that owned 20 multifamily properties. The Company disposed of its joint venture interest subsequent to June 30, 2020.
Second Quarter Operational Highlights:
The Company:
Acquired one multifamily property with a total of 310 apartment homes for an aggregate purchase price of $60.0 million.
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Received proceeds of $158.3 million from borrowing on the Company's new master credit facility. 
Acquired land in Broomfield, CO for the development of new apartment homes.
Entered into a new revolving credit loan facility in an amount not to exceed $65.0 million, none of which was drawn as of June 30, 2020.
Invested $5.3 million in improvements to the Company's three real estate development projects during the six months ended June 30, 2020.
Invested $10.4 million in improvements to the Company's real estate portfolio during the six months ended June 30, 2020, compared to $9.9 million for the six months ended June 30, 2019.
Had $298.7 million of variable rate debt with a weighted average interest rate of 2.18% and $1,878.3 million of fixed rate debt with a weighted average interest rate of 3.95% as of June 30, 2020. The weighted average interest rate on the Company's total outstanding debt was 3.71% as of June 30, 2020.
Reported net cash provided by operating activities of $26.1 million for the six months ended June 30, 2020, compared to $11.2 million for the six months ended June 30, 2019. Net cash provided by investing activities was $31.2 million for the six months ended June 30, 2020, compared to $12.1 million used in investing activities for the six months ended June 30, 2019.
Reported net cash provided by financing activities of $161.5 million for the six months ended June 30, 2020, compared to $17.1 million used in financing activities for the six months ended June 30, 2019, which included $26.0 million and $12.5 million of distributions paid, net of $10.5 million and $10.8 million in non-cash distributions paid pursuant to the Company's distribution reinvestment plan for the six months ended June 30, 2020 and 2019, respectively.
Net operating income (“NOI”) increased to $43.7 million and $73.8 million for the three and six months ended June 30, 2020, from $24.2 million and $48.3 million for the three and six months ended June 30, 2019. (See the reconciliation of NOI to net loss and accompanying notes contained within this release for additional information on how the Company calculates NOI.)
Experienced an increase in funds from operations ("FFO"), as defined by the National Association of Real Estate Investment Trusts, to $8.9 million and $16.6 million for the three and six months ended June 30, 2020, from $6.5 million and $12.4 million for the three and six months ended June 30, 2019. (See the reconciliation of FFO to net loss and accompanying notes contained within this release for additional information on how the Company calculates FFO.)
Experienced an increase in modified funds from operations ("MFFO"), as defined by the Institute for Portfolio Alternatives (formerly known as the Investment Program Association), to $10.3 million and $17.9 million for the three and six months ended June 30, 2020, from $7.0 million and $13.5 million for the three and six months ended June 30, 2019. (See the reconciliation of MFFO to net loss and accompanying notes contained within this release for additional information on how the Company calculates MFFO.)
During the second quarter of 2020, the Company recognized an other-than-temporary impairment of $2.4 million on its investment in the joint venture and $5.0 million on two multifamily properties marketed for sale as it was determined that the carrying value wound not be recoverable. The Company also recorded an allowance for
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doubtful accounts of $1.3 million for the three months ended June 30, 2020, primarily as a result of the financial impact of COVID-19 on our tenants.
“While much remains unknown about the duration and the impact of the ongoing pandemic, our relative affordability positions Steadfast Apartment REIT well to retain residents and capitalize on what we believe will be demand acceleration in our well-located, moderate income apartment portfolio," said Ella Neyland, president of Steadfast Apartment REIT.

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About Steadfast Apartment REIT, Inc.
Steadfast Apartment REIT, Inc. is a real estate investment trust that was formed to acquire and operate a diverse portfolio of well-positioned, institutional-quality apartment communities in targeted markets throughout the United States that have demonstrated high occupancy and income levels across market cycles.
Steadfast Apartment REIT, Inc. is sponsored by Steadfast REIT Investments, LLC, an affiliate of Steadfast Companies, an Orange County, California-based group of affiliated real estate investment and operating companies that acquire, develop and manage real estate in the U.S. and Mexico.
Forward-Looking Statements
This release contains statements that constitute “forward-looking statements,” as such term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and such statements are intended to be covered by the safe harbor provided by the same. These statements are based on management’s current expectations and beliefs and are subject to a number of trends and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. The Company can give no assurance that its expectations will be attained. Factors that could cause actual results to differ materially from the Company’s expectations include, but are not limited to, risks related to the economic impact of the ongoing COVID-19 pandemic on our residents and employees of our advisor and property manager and the general economy; the availability of suitable investment opportunities; changes in interest rates; the availability and terms of financing; general economic conditions; market conditions; legislative and regulatory changes that could adversely affect the business of the Company; and other factors, including those set forth in the Risk Factors section of the Company’s public filings with the Securities and Exchange Commission (the "SEC") and other reports filed by the Company with the SEC, copies of which are available on the SEC’s website, www.sec.gov. The Company undertakes no obligation to update these statements for revisions or changes after the date of this release, except as required by law.
THIS PRESS RELEASE SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SECURITIES.
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FINANCIAL TABLES, NOTES AND EXHIBITS FOLLOW


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STEADFAST APARTMENT REIT, INC.

CONSOLIDATED BALANCE SHEETS

June 30, 2020December 31, 2019
ASSETS
Assets:
Real Estate:
Land
$344,242,749  $151,294,208  
Building and improvements
2,885,651,638  1,369,256,465  
Tenant origination and absorption costs
41,078,737  —  
Total real estate held for investment, cost
3,270,973,124  1,520,550,673  
Less accumulated depreciation and amortization
(358,922,535) (277,033,046) 
Total real estate held for investment, net
2,912,050,589  1,243,517,627  
Real estate held for development
29,745,781  5,687,977  
Real estate held for sale, net
—  21,665,762  
Total real estate, net
2,941,796,370  1,270,871,366  
  Cash and cash equivalents
330,674,998  74,806,649  
  Restricted cash
36,667,410  73,614,452  
  Investment in unconsolidated joint venture
18,984,491  —  
  Rents and other receivables
5,943,396  2,032,774  
  Assets related to real estate held for sale
—  118,570  
  Other assets
4,209,681  5,513,315  
Total assets
$3,338,276,346  $1,426,957,126  
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
 Accounts payable and accrued liabilities
$61,749,415  $30,265,713  
Notes payable:
    Mortgage notes payable, net
1,432,621,678  560,098,815  
     Credit facility, net
744,430,795  548,460,230  
Total notes payable, net
2,177,052,473  1,108,559,045  
    Distributions payable
8,232,272  4,021,509  
    Due to affiliates
5,994,733  7,305,570  
   Liabilities related to real estate held for sale
—  788,720  
Total liabilities
2,253,028,893  1,150,940,557  
Commitments and contingencies
Redeemable common stock
—  1,202,711  
Stockholders’ Equity:
 Preferred stock, $0.01 par value per share; 100,000,000 shares authorized, no shares issued and outstanding
—  —  
 Common stock, $0.01 par value per share; 999,998,000 shares authorized, 109,437,702 and 52,607,695 shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively
1,094,377  526,077  
 Convertible stock, $0.01 par value per share; 1,000 shares authorized, zero and 1,000 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively
—  10  
 Class A Convertible stock, $0.01 par value per share; 1,000 shares authorized, 1,000 and zero shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively
10  —  
  Additional paid-in capital
1,596,591,653  698,453,981  
  Cumulative distributions and net losses
(526,888,587) (424,166,210) 
Total Steadfast Apartment REIT, Inc. ("STAR") stockholders’ equity
1,070,797,453  274,813,858  
   Noncontrolling interest14,450,000  —  
Total equity1,085,247,453  274,813,858  
Total liabilities and stockholders’ equity
$3,338,276,346  $1,426,957,126  
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STEADFAST APARTMENT REIT, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS


Three Months Ended June 30,Six Months Ended June 30,
 2020201920202019
Revenues:
Rental income
$79,612,668  $42,887,126  $132,879,341  $85,204,046  
Other income
682,926  327,702  1,130,193  596,009  
Total revenues
80,295,594  43,214,828  134,009,534  85,800,055  
Expenses:
Operating, maintenance and management
19,719,766  10,509,511  32,216,328  20,567,785  
Real estate taxes and insurance
13,667,771  6,443,394  22,411,216  13,024,583  
Fees to affiliates
13,709,333  6,265,958  22,136,629  12,331,606  
Depreciation and amortization
53,455,666  18,515,635  82,031,561  36,797,927  
Interest expense
19,715,318  12,165,781  34,106,272  24,399,076  
General and administrative expenses
5,272,855  1,800,880  7,703,154  3,665,149  
   Impairment of real estate
5,039,937  —  5,039,937  —  
Total expenses
130,580,646  55,701,159  205,645,097  110,786,126  
Loss before other (loss) income
(50,285,052) (12,486,331) (71,635,563) (24,986,071) 
Other (loss) income:
Gain on sales of real estate, net
—  —  11,384,599  —  
Interest income
134,262  161,887  387,516  340,564  
Insurance proceeds in excess of losses incurred
57,689  331,434  124,412  334,834  
Equity in loss from unconsolidated joint venture
(2,968,207) —  (3,003,400) —  
Loss on debt extinguishment
—  —  —  (41,609) 
Total other (loss) income
(2,776,256) 493,321  8,893,127  633,789  
Net loss
$(53,061,308) $(11,993,010) $(62,742,436) (24,352,282) 
Income allocated to noncontrolling interest
163,314  —  163,314  —  
Net loss attributable to common stockholders
$(53,224,622) $(11,993,010) $(62,905,750) $(24,352,282) 
Loss per common share — basic and diluted
$(0.49) $(0.23) $(0.71) $(0.47) 
Weighted average number of common shares outstanding — basic and diluted
109,139,963  52,123,442  88,660,741  51,999,327  

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Steadfast Apartment REIT, Inc.
Non-GAAP Measures - FFO and MFFO Reconciliation
For the Three and Six Months Ended June 30, 2020 and 2019
Due to certain unique operating characteristics of real estate companies, as discussed below, National Association of Real Estate Investment Trusts ("NAREIT"), an industry trade group, has promulgated a measure known as funds from operations, or FFO, which the Company believes to be an appropriate supplemental measure to reflect the operating performance of a real estate investment trust ("REIT"). The use of FFO is recommended by the REIT industry as a supplemental performance measure. FFO is not equivalent to the Company's net income or loss as determined under U.S. generally accepted accounting principles ("GAAP").
The Company defines FFO, a non-GAAP financial measure, consistent with the standards established by the White Paper on FFO approved by the Board of Governors of NAREIT, as revised in December 2018 (the “White Paper”). The White Paper defines FFO as net income (loss) computed in accordance with GAAP, excluding gains or losses from sales of property and non-cash impairment charges of real estate related investments, plus real estate related depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. In particular, the Company believes it is appropriate to disregard impairment charges, as this is a fair value adjustment that is largely based on market fluctuations and assessments regarding general market conditions which can change over time. An asset will only be evaluated for impairment if certain impairment indications exist and if the carrying, or book value, exceeds the total estimated undiscounted future cash flows (including net rental and lease revenues, net proceeds on the sale of the property, and any other ancillary cash flows at a property or group level under GAAP) from such asset. Investors should note, however, that determinations of whether impairment charges have been incurred are based partly on anticipated operating performance, because estimated undiscounted future cash flows from a property, including estimated future net rental and lease revenues, net proceeds on the sale of the property, and certain other ancillary cash flows, are taken into account in determining whether an impairment charge has been incurred. While impairment charges are excluded from the calculation of FFO as described above, investors are cautioned that due to the fact that impairments are based on estimated future undiscounted cash flows and the relatively limited term of the Company's operations, it could be difficult to recover any impairment charges. The Company's FFO calculation complies with NAREIT’s policy described above.
The historical accounting convention used for real estate assets requires straight-line depreciation of buildings and improvements, which implies that the value of real estate assets diminishes predictably over time, especially if such assets are not adequately maintained or repaired and renovated as required by relevant circumstances and/or as requested or required by lessees for operational purposes in order to maintain the value disclosed. The Company believes that since real estate values
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historically rise and fall with market conditions, including inflation, interest rates, the business cycle, unemployment and consumer spending, presentations of operating results for a REIT using historical accounting for depreciation may be less informative. Historical accounting for real estate involves the use of GAAP. Any other method of accounting for real estate such as the fair value method cannot be construed to be any more accurate or relevant than the comparable methodologies of real estate valuation found in GAAP. Nevertheless, the Company believes that the use of FFO, which excludes the impact of real estate related depreciation and amortization, provides a more complete understanding of its performance to investors and to the Company's management, and when compared year over year, reflects the impact on its operations from trends in occupancy rates, rental rates, operating costs, general and administrative expenses, and interest costs, which may not be immediately apparent from net income. The Company adopted Accounting Standards Update, or ASU, 2016-02, Leases, or ASU 2016-02, on January 1, 2019, which requires the Company, as a lessee, to recognize a liability for obligations under a lease contract and a right-of-use asset. ASU 2017-01 now forms part of ASC 805, Business Combinations ("ASC 805"). The carrying amount of the right-of-use asset is amortized over the term of the lease. Because the Company has no ownership rights (current or residual) in the underlying asset, NAREIT concluded that the amortization of the right-of-use asset should not be added back to GAAP net income (loss) in calculating FFO. This amortization expense is included in FFO. However, FFO, and modified funds from operations, or MFFO as described below, should not be construed to be more relevant or accurate than the current GAAP methodology in calculating net income or in its applicability in evaluating the Company's operating performance. The method utilized to evaluate the value and performance of real estate under GAAP should be construed as a more relevant measure of operational performance and considered more prominently than the non-GAAP FFO and MFFO measures and the adjustments to GAAP in calculating FFO and MFFO.
Changes in the accounting and reporting promulgations under GAAP (for acquisition fees and expenses from a capitalization/depreciation model to an expensed-as-incurred model) that were put into effect in 2009 and other changes to GAAP accounting for real estate subsequent to the establishment of NAREIT’s definition of FFO have prompted an increase in cash-settled expenses, specifically acquisition fees and expenses for all industries as items that are expensed under GAAP, that are typically accounted for as operating expenses. The Company's management believes these fees and expenses do not affect the Company's overall long-term operating performance. Publicly registered, non-listed REITs typically have a significant amount of acquisition activity and are substantially more dynamic during their initial years of investment and operation. While other start-up entities may also experience significant acquisition activity during their initial years, the Company believes that public, non-listed REITs, like the Company, are unique in that they have a limited life with targeted exit strategies within a relatively limited time frame after acquisition activity ceases.
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Due to the above factors and other unique features of publicly registered, non-listed REITs, the Institute for Portfolio Alternatives ("IPA"), an industry trade group, has standardized a measure known as MFFO, which it has recommended as a supplemental measure for publicly registered non-listed REITs and which the Company believes to be another appropriate supplemental measure to reflect the operating performance of a public, non-listed REIT having the characteristics described above. MFFO is not equivalent to net income or loss as determined under GAAP, and MFFO may not be a useful measure of the impact of long-term operating performance on value if the Company does not continue to operate with a limited life and targeted exit strategy, as currently intended. The Company believes that, because MFFO excludes costs that it considers more reflective of investing activities and other non-operating items included in FFO and also excludes acquisition fees and expenses that are not capitalized, as discussed below, and affects its operations only in periods in which properties are acquired, MFFO can provide, on a going forward basis, an indication of the sustainability (that is, the capacity to continue to be maintained) of its operating performance after the period in which it is acquiring properties and once its portfolio is in place. By providing MFFO, the Company believes it is presenting useful information that assists investors and analysts to better assess the sustainability of its operating performance after its offering has been completed and its properties have been acquired. The Company also believes that MFFO is a recognized measure of sustainable operating performance by the non-listed REIT industry. Further, the Company believes MFFO is useful in comparing the sustainability of its operating performance after its offering and acquisitions are completed with the sustainability of the operating performance of other real estate companies that are not as involved in acquisition activities. Investors are cautioned that MFFO should only be used to assess the sustainability of the Company's operating performance after its offering has been completed and properties have been acquired, as it excludes acquisition costs that have a negative effect on the Company's operating performance during the periods in which properties are acquired.
The Company defines MFFO, a non-GAAP financial measure, consistent with the IPA’s Guideline 2010-01, Supplemental Performance Measure for Publicly Registered, Non-Listed REITs: Modified Funds from Operations (the Practice Guideline), issued by the IPA in November 2010. The Practice Guideline defines MFFO as FFO further adjusted for the following items, as applicable, included in the determination of GAAP net income: acquisition fees and expenses; amounts relating to deferred rent receivables and amortization of above and below market leases and liabilities (which are adjusted in order to reflect such payments from a GAAP accrual basis to a cash basis of disclosing the rent and lease payments); accretion of discounts and amortization of premiums on debt investments; mark-to-market adjustments included in net income; nonrecurring gains or losses included in net income from the extinguishment or sale of debt, hedges, foreign exchange, derivatives or securities holdings where trading of such holdings is not a fundamental attribute of the business plan, unrealized gains or losses resulting from consolidation from, or deconsolidation to, equity accounting, and after adjustments for consolidated and unconsolidated
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partnerships and joint ventures, with such adjustments calculated to reflect MFFO on the same basis. The accretion of discounts and amortization of premiums on debt investments, nonrecurring unrealized gains and losses on hedges, foreign exchange, derivatives or securities holdings, unrealized gains and losses resulting from consolidations, as well as other listed cash flow adjustments are adjustments made to net income in calculating the cash flows provided by operating activities and, in some cases, reflect gains or losses which are unrealized and may not ultimately be realized. While the Company relies on its external advisor for managing interest rate, hedge and foreign exchange risk, the Company does not retain an outside consultant to review all of its hedging agreements. Inasmuch as interest rate hedges are not a fundamental part of the Company's operations, the Company believes it is appropriate to exclude such non-recurring gains and losses in calculating MFFO, as such gains and losses are not reflective of on-going operations.
The Company's MFFO calculation complies with the IPA's Practice Guideline described above, except with respect to certain acquisition fees and expenses as discussed below. In calculating MFFO, the Company excludes acquisition related expenses, amortization of above and below market leases, fair value adjustments of derivative financial instruments, deferred rent receivables and the adjustments of such items related to noncontrolling interests. Historically under GAAP, acquisition fees and expenses were characterized as operating expenses in determining operating net income. However, following the publication of ASU 2017-01, which now forms part of ASC 805, acquisition fees and expenses are capitalized and depreciated under certain conditions. These expenses are paid in cash by the Company. All paid and accrued acquisition fees and expenses will have negative effects on returns to investors, the potential for future distributions, and cash flows generated by the Company, unless earnings from operations or net sales proceeds from the disposition of other properties are generated to cover the purchase price of the property, these fees and expenses and other costs related to such property. The acquisition of properties, and the corresponding acquisition fees and expenses, is the key operational feature of the Company's business plan to generate operational income and cash flow to fund distributions to stockholders. Further, under GAAP, certain contemplated non-cash fair value and other non-cash adjustments are considered operating non-cash adjustments to net income in determining cash flow from operating activities. In addition, the Company views fair value adjustments of derivatives and gains and losses from dispositions of assets as non-recurring items or items which are unrealized and may not ultimately be realized, and which are not reflective of on-going operations and are therefore typically adjusted for when assessing operating performance.
The Company's management uses MFFO and the adjustments used to calculate MFFO in order to evaluate the Company's performance against other public, non-listed REITs which have limited lives with short and defined acquisition periods and targeted exit strategies shortly thereafter. As noted above, MFFO may not be a useful measure of the impact of long-term operating performance on value if the Company does not continue to operate in this manner. The Company believes that its use of MFFO and the adjustments used to calculate MFFO allow the Company to present its performance in a manner that reflects
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certain characteristics that are unique to public, non-listed REITs, such as their limited life, limited and defined acquisition period and targeted exit strategy, and hence that the use of such measures is useful to investors. By excluding expensed acquisition costs that are not capitalized, the use of MFFO provides information consistent with the Company's management's analysis of the operating performance of the properties. Additionally, fair value adjustments, which are based on the impact of current market fluctuations and underlying assessments of general market conditions, but can also result from operational factors such as rental and occupancy rates, may not be directly related or attributable to the Company's current operating performance. By excluding such changes that may reflect anticipated and unrealized gains or losses, the Company believes MFFO provides useful supplemental information.
Presentation of this information is intended to provide useful information to investors as they compare the operating performance to that of other public, non-listed REITs, although it should be noted that not all public, non-listed REITs calculate FFO and MFFO the same way, so comparisons with other public, non-listed REITs may not be meaningful. Furthermore, FFO and MFFO are not necessarily indicative of cash flow available to fund cash needs and should not be considered as an alternative to net income (loss) or income (loss) from continuing operations as an indication of the Company's performance, as an alternative to cash flows from operations as an indication of the Company's liquidity, or indicative of funds available to fund the Company's cash needs, including the Company's ability to make distributions to stockholders. FFO and MFFO should be reviewed in conjunction with GAAP measurements as an indication of the Company's performance. MFFO is useful in assisting the Company's management and investors in assessing the sustainability of operating performance in future operating periods, and in particular, after the offering and acquisition stages are complete and net asset value is disclosed. MFFO is not a useful measure in evaluating net asset value because impairments are taken into account in determining net asset value but not in determining MFFO.
Neither the Securities and Exchange Commission (the "SEC"), NAREIT nor any other regulatory body has passed judgment on the acceptability of the adjustments that the Company uses to calculate FFO or MFFO. In the future, the SEC, NAREIT or another regulatory body may decide to standardize the allowable adjustments across the non-listed REIT industry and in response to such standardization the Company may have to adjust its calculation and characterization of FFO or MFFO accordingly.
11


The Company's calculation of FFO and MFFO is presented in the following table for the three and six months ended June 30, 2020 and 2019:
For the Three Months Ended June 30,
For the Six Months Ended June 30,
2020201920202019
Reconciliation of net loss to MFFO:
Net loss
$(53,061,308) $(11,993,010) $(62,742,436) $(24,352,282) 
   Depreciation of real estate assets
33,315,155  18,515,635  56,066,977  36,797,927  
   Amortization of lease-related costs(1)
20,138,302  —  25,961,107  —  
Gain on sales of real estate, net
—  —  (11,384,599) —  
Impairment of real estate(2)
5,039,937  —  5,039,937  —  
Impairment of unconsolidated joint venture(3)
2,442,411  —  2,442,411  —  
   Adjustments for investment in unconsolidated joint venture(4)
1,009,859  —  1,179,342  —  
FFO
8,884,356  6,522,625  16,562,739  12,445,645  
  Acquisition fees and expenses(5)(6)
1,344,282  449,711  1,357,429  808,468  
  Unrealized loss (gain) on derivative instruments
24,943  20,107  27,194  199,723  
  Loss on debt extinguishment
—  —  —  41,609  
  Amortization of below market leases
(1,671) —  (2,594) —  
MFFO
$10,251,910  $6,992,443  $17,944,768  $13,495,445  

_____________

(1) Amortization of lease-related costs for the three and six months ended June 30, 2020 and 2019, exclude amortization of operating lease right-of-use assets of $2,209 and $3,477 and $0 and $0, respectively, that is included in FFO.
(2) Reflects adjustments to add back impairment charges in the three and six months ended June 30, 2020, related to two of the Company's real estate assets.
(3) Reflects adjustments to add back impairment charges in the three and six months ended June 30, 2020, related to the Company's investment in its unconsolidated joint venture.
(4) Reflects adjustments to add back the Company's noncontrolling interest share of the adjustments to reconcile the Company's net loss attributable to common stockholders to FFO for the Company's equity investment in the unconsolidated joint venture, which principally consists of depreciation and amortization incurred by the Company's joint venture.
(5) By excluding expensed acquisition costs that are not capitalized, management believes MFFO provides useful supplemental information that is comparable for each type of real estate investment and is consistent with management’s analysis of the investing and operating performance of the Company's properties. Acquisition fees and expenses include payments to the Company's advisor or third parties. Historically under GAAP, acquisition fees and
12


expenses were considered operating expenses and as expenses included in the determination of net income (loss) and income (loss) from continuing operations, both of which are performance measures under GAAP. Following the publication of ASU 2017-01, which now forms part of ASC 805, acquisition fees and expenses are capitalized and depreciated under certain conditions. All paid and accrued acquisition fees and expenses will have negative effects on returns to investors, the potential for future distributions, and cash flows generated by the Company, unless earnings from operations or net sales proceeds from the disposition of properties are generated to cover the purchase price of the property, these fees and expenses and other costs related to the property. The acquisition of properties, and the corresponding acquisition fees and expenses, is the key operational feature of the Company's business plan to generate operational income and cash flow to fund distributions to its stockholders.
(6) Acquisition fees and expenses for the three and six months ended June 30, 2020 and 2019 include acquisition expenses of $1,344,282 and $1,357,429 and $449,711 and $808,468, respectively, that did not meet the criteria for capitalization under ASU 2017-01, which now forms part of ASC 805, and were recorded in general and administrative expenses in the accompanying consolidated statements of operations. These expenses largely pertained to the then-proposed SIR Merger and STAR III Merger and were incurred and expensed through the date of the Merger Agreement and to a lesser extent, pertained to the proposed internalization of management. Upon signing the Merger Agreement, merger related acquisition expenses met the definition of capitalized expenses and were therefore capitalized in the accompanying consolidated balance sheets thereby not impacting MFFO. Also included in expensed acquisition expenses are acquisition expenses related to real estate projects that did not come to fruition.

13


Steadfast Apartment REIT, Inc.
Non-GAAP Measures - Net Operating Income
For the Three and Six Months Ended June 30, 2020 and 2019
NOI is a non-GAAP financial measure of performance. NOI is used by investors and the Company's management to evaluate and compare the performance of the Company's properties, to determine trends in earnings and to compute the fair value of the Company's properties as it is not affected by (1) the cost of funds of the Company, (2) acquisition costs of the Company, (3) non-operating fees to affiliates, (4) the impact of depreciation and amortization expenses as well as gains or losses from the sale of operating real estate assets that are included in net income computed in accordance with GAAP, (5) general and administrative expenses and other gains and losses that are specific to the Company, or (6) impairment of real estate assets or other investments. The cost of funds is eliminated from net income (loss) because it is specific to the particular financing capabilities and constraints of the Company. The cost of funds is also eliminated because it is dependent on historical interest rates and other costs of capital as well as past decisions made by the Company regarding the appropriate mix of capital which may have changed or may change in the future. Acquisition costs (those that did not meet the criteria for capitalization under ASC 805) and non-operating fees to affiliates are eliminated because they do not reflect continuing operating costs of the property owner.
Depreciation and amortization expenses as well as gains or losses from the sale of operating real estate assets are eliminated because they may not accurately represent the actual change in value in the Company's multifamily properties that result from use of the properties or changes in market conditions. While certain aspects of real property do decline in value over time in a manner that is reasonably captured by depreciation and amortization, the value of the properties as a whole have historically increased or decreased as a result of changes in overall economic conditions instead of from actual use of the property or the passage of time. Gains and losses from the sale of real property vary from property to property and are affected by market conditions at the time of sale which will usually change from period to period. These gains and losses can create distortions when comparing one period to another or when comparing the Company's operating results to the operating results of other real estate companies that have not made similarly timed purchases or sales. The Company believes that eliminating these costs from net (loss) income is useful because the resulting measure captures the actual revenue generated and actual expenses incurred in operating its properties as well as trends in occupancy rates, rental rates and operating costs.
However, the usefulness of NOI is limited because it excludes general and administrative costs, interest expense, interest income and other expense, acquisition costs (those that did not meet the criteria for capitalization under ASC 805), certain fees paid to affiliates, depreciation and amortization expense and gains or losses from the sale of properties, impairment charges and other gains and losses as stipulated by GAAP, the level of capital expenditures and leasing costs necessary to maintain the
14


operating performance of the Company's properties, all of which are significant economic costs. NOI may fail to capture significant trends in these components of net income which further limits its usefulness.
NOI is a measure of the operating performance of the Company's properties but does not measure the Company's performance as a whole. NOI is therefore not a substitute for net income (loss) as computed in accordance with GAAP. This measure should be analyzed in conjunction with net income (loss) computed in accordance with GAAP. Other companies may use different methods for calculating NOI or similarly entitled measures and, accordingly, the Company's NOI may not be comparable to similarly entitled measures reported by other companies that do not define the measure exactly as the Company does.
The following is a reconciliation of the Company's NOI to net loss for the three and six months ended June 30, 2020 and 2019 computed in accordance with GAAP:
For the Three Months Ended June 30,For the Six Months Ended June 30,
2020201920202019
Net loss
$(53,061,308) $(11,993,010) $(62,742,436) $(24,352,282) 
Fees to affiliates(1)
9,651,793  4,174,176  15,495,182  8,334,328  
Depreciation and amortization
53,455,666  18,515,635  82,031,561  36,797,927  
Interest expense
19,715,318  12,165,781  34,106,272  24,399,076  
Loss on debt extinguishment
—  —  —  41,609  
General and administrative expenses
5,272,855  1,800,880  7,703,154  3,665,149  
Gain on sale of real estate
—  —  (11,384,599) —  
Other gains(2)
(191,951) (493,321) (511,928) (633,789) 
Adjustments for investment in unconsolidated joint venture(3)
1,369,425  —  1,653,219  —  
Other-than-temporary impairment of investment in unconsolidated joint venture(4)
2,442,411  —  2,442,411  —  
Impairment of real estate(5)
5,039,937  —  5,039,937  —  
Net operating income
$43,694,146  $24,170,141  $73,832,773  $48,252,018  
________________
(1)  Fees to affiliates for the three and six months ended June 30, 2020, exclude property management fees of $2,369,487 and $3,865,857 and other reimbursements of $1,688,053 and $2,775,590, respectively, that are included in NOI. Fees to affiliates for the three and six months ended June 30, 2019, exclude property management fees of $1,245,150 and $2,479,427 and other reimbursements of $846,632 and $1,517,851, respectively, that are included in NOI
(2) Other gains for the three and six months ended June 30, 2020 and 2019 include non-recurring insurance claim recoveries and interest income that are not included in NOI.
15


(3) Reflects adjustments to add back the Company's noncontrolling interest share of the adjustments to reconcile the Company's net loss attributable to common stockholders to NOI for the Company's equity investment in the unconsolidated joint venture, which principally consists of depreciation, amortization and interest expense incurred by the Company's joint venture as well as the amortization of outside basis difference.
(4) Reflects adjustment to add back OTTI loss of $2,442,411 in the three and six months ended June 30, 2020 relate to the Company's investment in the unconsolidated joint venture.
(5) Reflects adjustments to add back impairment charges in the three and six months ended June 30, 2020 related to two of the Company's real estate assets.

16


EXHIBIT A
MONTHLY PORTFOLIO SNAPSHOT - 2ND QUARTER

404923565_logoa03a05a4231.gif
Monthly Portfolio Snapshot
APRIL 2020
Property
Location
Total Units
Non-Revenue Units
Rentable Units
Average Occupied Units
Average % Occupied
% Leased
Multi-Family
Villages at Spring Hill ApartmentsSpring Hill, TN17617616794.9%95.9%
Harrison Place ApartmentsIndianapolis, IN307130628592.8%94.4%
The Residences on McGinnis FerrySuwanee, GA696169565594.1%95.6%
The 1800 at Barrett LakesKennesaw, GA500149946192.2%92.9%
The OasisColorado Springs, CO25225223794.0%95.4%
Columns on WetheringtonFlorence, KY19219217892.7%94.5%
Preston Hills at Mill CreekBuford, GA464246242892.2%94.1%
Eagle Lake Landing ApartmentsSpeedway, IN27727725893.1%95.8%
Reveal on CumberlandFishers, IN220121919990.5%94.5%
Heritage Place ApartmentsFranklin, TN1051059893.3%93.9%
Rosemont at East CobbMarietta, GA180117917496.7%97.8%
Ridge Crossings ApartmentsBirmingham, AL720171965991.5%92.7%
Bella Terra at City CenterAurora, CO304130328794.4%94.9%
Hearthstone at City CenterAurora, CO36036033994.2%94.8%
Arbors at BrookfieldMauldin, SC702270064692.0%93.1%
Carrington ParkKansas City, MO298129727692.6%93.0%
Delano at North Richland HillsNorth Richland Hills, TX263126224994.7%95.6%
Meadows at North Richland HillsNorth Richland Hills, TX252125122990.9%93.2%
Kensington by the VineyardEuless, TX259125824494.2%95.7%
Monticello by the VineyardEuless, TX354135332692.1%93.3%
The ShoresOklahoma City, OK300129928093.3%94.7%
Lakeside at CoppellCoppell, TX315131429794.3%95.3%
Meadows at River RunBolingbrook, IL374137333489.3%90.6%
Park Valley ApartmentsSmyrna, GA496149545892.3%93.7%
PeakView at T-Bone RanchGreeley, CO224122321194.2%95.3%
PeakView by Horseshoe LakeLoveland, CO222122120692.8%93.9%
Stoneridge FarmsSmyrna, TN336133530891.7%92.3%
Fielder's CreekEnglewood, CO217121620594.5%95.7%
Landings of BrentwoodBrentwood, TN724272268694.8%95.8%
1250 West ApartmentsMarietta, GA468246642891.5%92.5%
Sixteen50 @ Lake Ray HubbardRockwall, TX334133331494.0%95.0%
Eleven10 at Farmers MarketDallas, TX313331029193.0%94.5%
Patina FlatsLoveland, CO15515514392.3%93.5%
Clarion Park ApartmentsOlathe, KS220121920995.0%95.9%
Spring Creek ApartmentsEdmond, OK252125123492.9%94.4%
Montclair Parc Apartment HomesOklahoma City, OK360135933693.3%95.0%
Hilliard Park ApartmentsColumbus, OH201120019094.5%96.8%
Sycamore Terrace ApartmentsTerre Haute, IN25025023694.4%95.3%
Hilliard Summit ApartmentsColumbus, OH208120719995.7%97.2%
Forty 57 ApartmentsLexington, KY436143540793.3%94.7%
Riverford Crossing ApartmentsFrankfort, KY300129928595.0%96.3%
Montecito ApartmentsAustin, TX268226625494.8%96.0%
Hilliard Grand ApartmentsDublin, OH31431429794.6%95.2%
Deep Deuce at BricktownOklahoma City, OK294129327192.2%93.6%
Retreat at Quail NorthOklahoma City, OK240123922794.6%96.3%
Tapestry Park ApartmentsBirmingham, AL354135332992.9%94.4%
Bricegrove Park ApartmentsCanal Winchester, OH24024022694.2%95.9%
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404923565_logoa03a05a4231.gif
Monthly Portfolio Snapshot
APRIL 2020 - CONTINUED
Property
Location
Total Units
Non-Revenue Units
Rentable Units
Average Occupied Units
Average % Occupied
% Leased
Multi-Family
Retreat at Hamburg PlaceLexington, KY150114913992.7%94.7%
Villas at HuffmeisterHouston, TX294129327994.9%95.6%
Villas at KingwoodKingwood, TX330132930893.3%95.0%
Waterford Place at Riata RanchCypress, TX228122721393.4%94.7%
Carrington PlaceHouston, TX324132330493.8%95.3%
Carrington at Champion ForestHouston, TX284128326292.3%93.0%
Carrington Park at HuffmeisterCypress, TX232123121492.2%92.6%
Heritage Grand at Sienna PlantationMissouri City, TX240123922292.5%93.5%
Mallard Crossing ApartmentsLoveland, OH35035032994.0%94.4%
Reserve at CreeksideChattanooga, TN192119118596.4%97.6%
Oak Crossing ApartmentsFort Wayne, IN222122120994.1%95.7%
Double Creek FlatsPlainfield, IN24050422093.1%93.6%
Jefferson at the PerimeterDunwoody, GA50450446993.1%93.6%
Bristol VillageAurora, CO24024022694.2%95.5%
Canyon Resort at Great HillsAustin, TX256125523792.6%94.4%
Reflections on SweetwaterLawrenceville, GA280127925290.0%92.1%
The Pointe at Vista RidgeLewisville, TX300129928896.0%97.0%
Belmar VillasLakewood, CO31831829592.8%94.0%
Ansley at Princeton LakesAtlanta, GA306130527890.8%95.0%
Sugar MillLawrenceville, GA244124322592.2%94.3%
Avery PointIndianapolis, IN512151146490.6%93.7%
Cottage Trails at Culpepper LandingChesapeake, VA183118217595.6%97.1%
VV & MDallas, TX310130928190.6%91.5%
Total
21,8356222,03720,33093.1%94.5%
Commercial Space
Storage
LocationTotal UnitsTotal Storage UnitsOccupied Storage Units% Occupied
Park Valley Commercial
Smyrna, GA
111100.0%
     Retail
LocationTotal UnitsTotal Square FootageOccupied Square Footage% Occupied
Patina Flats
Loveland, CO
715,2065,22134.3%









18


404923565_logoa03a05a4231.gif
Monthly Portfolio Snapshot
MAY 2020
Property
Location
Total Units
Non-Revenue Units
Rentable Units
Average Occupied Units
Average % Occupied
% Leased
Multi-Family
Villages at Spring Hill ApartmentsSpring Hill, TN17617617096.6%97.4%
Harrison Place ApartmentsIndianapolis, IN307130628793.5%95.9%
The Residences on McGinnis FerrySuwanee, GA696169565193.5%95.2%
The 1800 at Barrett LakesKennesaw, GA500149946192.2%95.5%
The OasisColorado Springs, CO25225223894.4%98.0%
Columns on WetheringtonFlorence, KY19219217691.7%94.3%
Preston Hills at Mill CreekBuford, GA464246243293.1%95.3%
Eagle Lake Landing ApartmentsSpeedway, IN27727725792.8%96.8%
Reveal on CumberlandFishers, IN220121920191.4%93.9%
Heritage Place ApartmentsFranklin, TN1051059994.3%96.4%
Rosemont at East CobbMarietta, GA180117917496.7%97.8%
Ridge Crossings ApartmentsBirmingham, AL720171965791.3%94.8%
Bella Terra at City CenterAurora, CO304130328493.4%94.6%
Hearthstone at City CenterAurora, CO36036033893.9%96.5%
Arbors at BrookfieldMauldin, SC702270064792.2%94.7%
Carrington ParkKansas City, MO298129727190.9%92.5%
Delano at North Richland HillsNorth Richland Hills, TX263126224793.9%95.8%
Meadows at North Richland HillsNorth Richland Hills, TX252125123392.5%97.0%
Kensington by the VineyardEuless, TX259125824293.4%95.5%
Monticello by the VineyardEuless, TX354135332491.5%94.5%
The ShoresOklahoma City, OK300129927491.3%94.3%
Lakeside at CoppellCoppell, TX315131429694.0%96.1%
Meadows at River RunBolingbrook, IL374137333790.1%93.8%
Park Valley ApartmentsSmyrna, GA496149545992.5%94.5%
PeakView at T-Bone RanchGreeley, CO224122320692.0%94.4%
PeakView by Horseshoe LakeLoveland, CO222122120793.2%95.0%
Stoneridge FarmsSmyrna, TN336133530791.4%94.1%
Fielder's CreekEnglewood, CO217121620393.5%95.6%
Landings of BrentwoodBrentwood, TN724172368494.5%96.3%
1250 West ApartmentsMarietta, GA468246643592.9%95.8%
Sixteen50 @ Lake Ray HubbardRockwall, TX334133331393.7%95.4%
Eleven10 at Farmers MarketDallas, TX313430928591.1%95.0%
Patina Flats