Hill Street Realty’s Private Multifamily REIT Files to Register With SEC

American Residential Housing Trust, a private multifamily real estate investment trust sponsored by Denver-based Hill Street Realty, filed Nov. 12 to register its common shares with the U.S. Securities and Exchange Commission, a voluntary step that will make it a public reporting company once the registration takes effect, while it continues to raise capital privately.

The trust was organized Jan. 28 as a Maryland statutory trust. On July 6, it completed mergers with HSR Income & Value REIT 2 Inc. and HSR Income & Value REIT 3 Inc., two private REITs sponsored by Hill Street Realty, and with their operating partnerships. Stockholders of the predecessor REITs received 1.001 and 1.003 Class L shares, respectively, for each share they held. The trust paid approximately $15.1 million in cash to non-accredited stockholders and to accredited stockholders who chose not to take shares.

After the merger, the trust had 22,654,201 Class L shares outstanding, held by 1,778 shareholders. The predecessor REITs had raised $242.2 million from investors as of June 30. Effective Sept. 1, the trust’s operating partnership also acquired HSR Multifamily Fund 6 LLC, which held interests in several of the same properties, in exchange for 1,122,429 operating partnership units.

The trust launched its ongoing private offering of Class L shares Aug. 3 under Rule 506(c) of Regulation D, open only to accredited investors. As of Sept. 30, it had sold 261,400 Class L shares for gross proceeds of approximately $2.6 million. It plans to add Class I shares to the offering after the registration becomes effective.

Seed Portfolio

The seed portfolio consists of 12 apartment communities totaling 1,452 units in California, Colorado, Utah, and Texas. The predecessor REITs bought the properties between November 2022 and December 2025 for a combined $431.4 million at 100% ownership. Five of the 12 are in Denver, including The Grant, a 197-unit community acquired in December 2025 for $70 million. The largest property is The William, a 327-unit community in Houston bought in December 2024 for $79.5 million.

One property, the 114-unit Avenue Heights in Salt Lake City, is being redeveloped and was unoccupied as of June 30. Physical occupancy at the 11 operating properties ranged from 78% to 100%.

The properties carry $250 million in fixed-rate mortgage debt at 100% ownership, with a weighted-average interest rate of 5.24% and a weighted-average remaining term of 4.24 years. The trust said its loan-to-value ratio on the seed portfolio was approximately 52% as of June 30. About $10.5 million of mortgage debt matures within 12 months, which the trust said it intends to refinance.

For the first six months of 2026, combined revenue rose to $13.8 million from $11.2 million a year earlier, and net loss attributable to common shareholders widened to $6.9 million from $5.4 million. Operating activities used $2.8 million in cash during the period. For full-year 2025, revenue was $23.3 million and net loss attributable to common shareholders was $9.1 million.

The trust also disclosed material weaknesses in internal control over financial reporting, identified while preparing the financial statements in the registration. It said the weaknesses resulted in material audit adjustments to its 2024 and 2025 financial statements and stem from the predecessors’ history as private companies that relied on fund-level, fair-value reporting. Remediation steps include hiring finance staff with public-company experience, engaging an outside accounting advisory firm, and forming an audit committee of independent trustees.

Strategy and Terms

The trust said it intends to operate as a nontraded, perpetual-life REIT that values its shares at net asset value. It plans to buy multifamily properties across the United States, spanning core, core-plus, value-add, and opportunistic strategies, generally at purchase prices of $20 million to $200 million. Development is capped at 20% of net asset value and the trust may hold up to 20% of its funds in a liquidity sleeve of cash and securities to support repurchases. It targets initial acquisition financing of approximately 60% of total project cost.

The REIT is externally managed by HSR ARHT Partners LLC, a Hill Street Realty subsidiary. The adviser receives an annual asset management fee of 1% of NAV for Class I shares and 0.8% for Class L shares, plus acquisition and disposition fees of 1%, a 0.2% refinancing fee, and a construction management fee of up to 5%. An affiliate, HSRMCO LLC, earns property management fees of 3.5% of gross revenue, or 4% for properties with fewer than 100 units. A subsidiary of the adviser holds a performance participation interest of 17.5% of total return on Class I and 15% on Class L, subject to a 7% hurdle with a catch-up. The trust said it intends to enter an agreement under which an affiliate of registered investment adviser Lido Advisors LLC will receive up to 5% of that performance allocation.

The trust calculates NAV quarterly and has paid monthly distributions of $0.03 per share since the merger closed. Its share repurchase plan is capped at 5% of NAV per quarter, and shares held less than one year are repurchased at 95% of the transaction price, with merger shares credited for their predecessor holding period. The trust said it has satisfied all repurchase requests to date.

The declaration of trust also gives legacy Class L holders a special repurchase right: if the trust sells a seed-portfolio property within five years of the merger for net proceeds of more than $1 million, it will repurchase eligible Class L shares, unless holders opt out, using up to 15% of those net proceeds. Separately, the board may restructure the trust to conduct a public offering as a nontraded REIT without a shareholder vote.

President and trustee Joseph Penner founded Hill Street Realty in 2001. Brett Brown, chief financial officer, previously held the same role at Tejon Ranch Co. and Alexander & Baldwin Inc. Hill Street Realty has raised more than $410 million in equity from individual investors since 2001, the trust said.

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