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Chad Whatley is Executive Vice President of Product Distribution for our advisor. He is responsible for managing all aspects of national sales and national key accounts for United Realty Advisors and its platform of investment products. Those responsibilities include managing the internal and external wholesaling teams, building the selling group of participating broker-dealer firms within the independent broker dealer industry as well as registered investment advisors, and providing strategic direction for distribution and fund raising efforts.

Prior to joining our advisor, from February 2011 until January of 2014, Mr. Whatley was Executive Vice President of Sales-East for AEI Capital Corporation, one of the country’s oldest sponsors of non-traded real estate funds and 1031 tax-deferred property exchange offerings, and AEI Securities, a FINRA member firm. Mr. Whatley was responsible for marketing and promoting that firm’s real estate fund and 1031 tax-deferred property exchange offerings. From March of 2010 to February of 2011, Mr. Whatley was Regional Vice President of Sales at Commonwealth Capital Corporation. Mr. Whatley was responsible for raising capital and the marketing of that firm’s publicly registered equipment leasing funds and private Regulation D offerings. From November of 2006 to June of 2009, Mr. Whatley served as Regional Vice President of Sales at First American Funds. Mr. Whatley was responsible for raising capital for various equity and fixed income mutual funds across multiple platforms, which included the independent broker-dealer, wire-house and registered investment advisor channels. From February of 2002 to November of 2006, Mr. Whatley served as Assistant Vice President of Sales for Wells Real Estate Funds and Wells Investment Securities, a FINRA member firm. Mr. Whatley was responsible for assisting the Regional Vice President in raising capital for Wells’ family of non-traded REITs, mutual funds, and limited partnerships. From April of 2000 to July of 2001, Mr. Whatley first served as a Financial Advisor with American Express Financial Advisors and IDS Life responsible for managing assets for the benefits of his clients. From December of 2000 to July of 2001, Mr. Whatley served as an investment specialist with Charles Schwab and Company where he was part of a team responsible for executing trade strategies and cross-selling products to Schwab clients with assets in excess of $1 million dollars.

Mr. Whatley is currently registered with FINRA, and holds both Series 7 and Series 63 licenses. He graduated with Bachelor’s degree from Georgia State University in Atlanta, Georgia, and has been associated with several groups and associations within the financial services industry.

Alexander M. Libin is the Assistant General Counsel and Vice President, Operations of our advisor. Prior to joining our advisor, Mr. Libin was an attorney from August 2012 to February 2014 with the real estate practice group of Duval and Stachenfeld, LLP, New York’s largest real estate law firm. From November 2008 to August 2012, Mr. Libin served as President of Bull and Buddha LLC, a hospitality development company focused on dining and nightlife venues. Mr. Libin has been a member of the Board of Directors of the Children’s Media Project and the Dutchess County Arts Council. Mr. Libin earned a Bachelor's degree in History from New York University in 2008 and a Juris Doctorate from the Benjamin N. Cardozo School of Law in 2011.

Kevin Rice is Director of Marketing for our advisor. In this role, he is responsible for the development and implementation of strategic marketing and branding initiatives. These initiatives include the development and deployment of print and digital sales collateral, execution of awareness campaigns through selected communication channels, coordination of public relations matters, and all other marketing activities.

Prior to joining our advisor, from September 2011 until January 2014, Mr. Rice was employed by AEI Capital Corporation, one of the country’s oldest sponsors of non-traded real estate funds and 1031 tax-deferred property exchange offerings, and AEI Securities, a FINRA member firm. In his role as Business Development Manager-East, he was responsible for the marketing and direct sale of AEI’s core real estate investment programs to the financial advisor community. In this capacity Mr. Rice created sales and marketing collateral, developed systems to measure and track the efficacy of sales activities, and led the customization of the firm’s national sales CRM platform. From October 2010 through July 2011 he was a financial advisor with Ameriprise Financial Services, Inc.

Mr. Rice currently holds FINRA Series 7 and Series 63 licenses. He graduated with a Bachelor of Science degree in Business with a Marketing Concentration from the University of Minnesota’s Carlson School of Management.

Many of the services to be performed by United Realty Advisors LP in managing our day-to-day activities are summarized below. This summary is provided to illustrate the material functions that we expect United Realty Advisors LP will perform for us as our advisor, and it is not intended to include all the services that may be provided to us by third parties. Under the terms of the advisory agreement, United Realty Advisors LP has undertaken to use its reasonable best efforts to present to us investment opportunities consistent with our investment policies and objectives as adopted by our board of directors. In its performance of this undertaking, United Realty Advisors LP, either directly or indirectly, shall, among other duties and subject to the authority of our board of directors:

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find, evaluate, present and recommend to us investment opportunities consistent with our investment policies and objectives;

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serve as our investment and financial advisor and provide research and economic and statistical data in connection with our assets and our investment policies;

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provide the daily management and perform and supervise the various administrative functions necessary for our management and operations;

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investigate, select, and, on our behalf, engage and conduct business with such third parties as the advisor deems necessary to the proper performance of its obligations under the advisory agreement;

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consult with our officers and board of directors and assist the board of directors in the formulating and implementing of our financial policies;

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structure and negotiate the terms and conditions of our real estate acquisitions, sales or joint ventures;

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review and analyze each property’s operating and capital budget;

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acquire properties and make investments on our behalf in compliance with our investment objectives and policies;

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arrange, structure and negotiate financing and refinancing of properties;

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enter into leases of property and service contracts for assets and, to the extent necessary, perform all other operational functions for the maintenance and administration of such assets, including the servicing of mortgages; and

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maintain our accounting and other records and assist us in preparing, reviewing and filing all requests and returns required to be filed by us with the SEC, the IRS and other regulatory agencies.

The advisor may not acquire any property or finance any such acquisition, on our behalf, without the prior approval of a majority of our board of directors.

The advisory agreement has a one-year term, and may be renewed for an unlimited number of successive one-year periods. Additionally, either party may terminate the advisory agreement without cause or penalty upon 60 days’ written notice. If the advisory agreement is so terminated, our advisor is not entitled to any fees other than any fees then accured and owing. However, upon termination or non-renewal of the agreement, our sponsor will have the right to convert to its Sponsor Preferred Shares into Common Shares.

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A majority of our independent directors may elect to terminate the advisory agreement. Following the termination of our advisory agreement, our advisor is required to cooperate with us and take all reasonable steps requested by us to assist our board of directors in making an orderly transition of the advisory function.

We will pay our advisor fees and distributions and reimburse it for certain expenses incurred on our behalf. For a detailed description of the fees and expense reimbursements payable to our advisor, see “Compensation Table.”

United Realty Advisors LP and its officers, employees and affiliates engage in other business ventures and, as a result, their resources are not dedicated exclusively to our business. However, pursuant to the advisory agreement, United Realty Advisors LP is required to devote sufficient resources to our business to discharge its obligations. United Realty Advisors LP currently has 33 employees, each of whom dedicates a portion of his or her time providing services to our advisor. Our advisor is responsible for a pro rata portion of each employee’s compensation based upon the approximate percentage of time the employee dedicates to our advisor. United Realty Advisors LP may assign the advisory agreement to an affiliate upon approval of a majority of our directors (including a majority of our independent directors). We may not assign the advisory agreement except to a successor to us or our operating partnership. At least a majority of our directors must determine that any successor advisor possesses sufficient qualifications to perform the advisory function and to justify the compensation payable to the sucessor advisor. Our directors will base their determination on the general facts and circumstances that they deem applicable, including the overall experience and specific industry experience of the successor advisor and its management. Other factors that will be considered are the compensation to be paid to the successor advisor and any potential conflicts of interest that may occur.

Our Property Manager

We expect that a substantial majority of our real properties will be managed and leased by URA Property Management LLC, our property manager, a Delaware limited liability company wholly owned by our sponsor. Jacob Frydman holds a key position at our property manager. For more information about his background and experience, see “— Our Sponsor.”

We will pay our property manager a monthly property management fee of 4.5% of the monthly gross receipts generated at our properties for services it provides in connection with operating and managing the property. Gross receipts, as defined in the property management agreement, consists of rent, profit we derive from the sale of utilities to tenants, and amounts tenants pay for common area maintenance, real estate taxes, insurance, interest and any other payments of any nature (including attorneys’ fees and late fees and any proceeds of rent insurance). The property manager may reallow some of or all these fees to third parties for management services.

We expect to engage URA Property Management to provide construction and development management services for some of our properties. Other than with respect to tenant improvements, as described below, we will pay a construction and development management fee in an amount of 2% of the cost of any construction or development that our property manager undertakes. When our property manager provides construction management services with respect to tenant improvements, the construction and development management fee may be up to, but will not exceed, 5% of the cost of the tenant improvements.

We also expect to engage URA Property Management to provide leasing services with respect to our properties. We will pay to URA Property Management a leasing fee in an amount that is equal to 2% of the sum of all rent payments that a tenant will be contractually obligated to make under a renewal lease at the time of the execution of such renewal lease and 5% of the sum of all rent payments that a tenant will be contractually obligated to make under a new lease at the time of the execution of such new lease.

Our property management agreement with URA Property Management has a one-year term, and is subject to automatic successive one-year renewals. Each party has the right to terminate the agreement upon 30 days’ prior written notice without penalty.

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Our property manager will hire, direct and establish policies for employees who will have direct responsibility for the operations of each real property it manages, which may include, but will not be limited to, on-site managers and building and maintenance personnel. Our property manager also will direct the purchase of equipment and supplies and will supervise all maintenance activity.

Our Sponsor

Our sponsor, United Realty Advisor Holdings LLC, was formed on July 1, 2011 in order to sponsor the company. Mr. Frydman is the principal of our sponsor. Mr. Frydman is experienced in the real estate business. Because our advisor is controlled and indirectly majority-owned by Mr. Frydman, whom we refer to as the principal of the sponsor, and who controls and indirectly owns United Realty Advisor Holdings LLC, we consider ourselves to be sponsored by Mr. Frydman. In addition to the directors and executive officers listed above, our advisor will rely on our sponsor and on key professionals employed or retained by affiliates of our sponsor. These individuals have extensive real estate industry experience through multiple real estate cycles in their careers and have the expertise gained through hands-on experience in property selection, acquisitions/development, financing, asset and property management, leasing, construction management and dispositions.

Mr. Frydman has been in the real estate business for over 30 years. Our portfolio of assets is managed by our advisor, which is a scalable platform headed by Mr. Frydman, and which currently includes eight seasoned professionals who have each had not less than seven years’ experience in the real estate business. The advisor’s employees have extensive knowledge and expertise in a wide variety of commercial real estate sectors. Our sponsor’s senior management team has an average of 22 years of related real estate experience. The principal of our sponsor manages approximately 1.32 million square feet or $250 million of real estate and real estate-related assets. Our sponsor’s management team has experience investing and performing throughout a variety of market conditions and real estate cycles. The management team has long-term relationships with lenders, vendors, brokers and contractors, which we believe will assist us in effective execution of our investment and operating strategies.

Our sponsor’s in-house operating team is exclusively dedicated to its properties and those of its affiliates, including us. Our sponsor’s operating team includes professionals with experience in acquisitions, due diligence, financing, leasing, research, lease administration, property management, and construction, and are experienced in controlling every aspect of the property acquisition, leasing and management process. Key practice groups are set forth below:

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Acquisitions generate constant deal flow, streamlined evaluation process, and disciplined buying. This is enhanced through the reputation of our sponsor’s principal, longstanding relationships with brokers and property owners and a constant market presence.

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Due Diligence assesses issues and any foreseeable risks associated with a property being acquired, which might affect its value and price. This includes site visits, tenant interviews, tenant sales reviews, verification of leases, and review of environmental and property conditions. Upon acquisition, the team disseminates the information to the organization for an effective and efficient transition to operations.

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Finance builds and leverages lender relationships to secure financing at the lowest cost while managing flexibility, underwrites and finances all new acquisitions and forecasts operating results.

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Leasing teams are responsible for understanding each market and creating a tailored plan to obtain a tenant mix that optimizes the income stream.

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Research provides information including mapping, demographics, site-specific data, market information, and trend and void analyses to every department.

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Lease Administration negotiates the non-monetary provisions of leases and works closely with the leasing team to draft, review, and negotiate letters of intent, leases, amendments, renewals, and assignments while improving the quality of leases.

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Construction works closely with leasing and lease administration to provide cost estimating, analysis, conceptual design, and value engineering options. Smaller construction activities are undertaken in-house in an effort to minimize cost and time but we generally accept bids for larger construction projects, and development or redevelopment projects from third-party construction contractors, construction managers or subcontractors.

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Development includes feasibility studies, site plan design, coordination of architects, engineers and other professionals in connection with the development or redevelopment with our properties and overseeing the development process, including obtaining necessary permits, overseeing site work and construction management.

On December 18, 2013, Eli Verschleiser, our former President, Treasurer and Director, the former President of our advisor and a former principal of the sponsor, along with certain of his affiliates, initiated a lawsuit against Mr. Frydman and certain of his affiliates in New York County Supreme Court relating to an operating agreement for a transaction not related to our company or our advisor. In January, the court dismissed that lawsuit in its entirety, with prejudice, and the plaintiffs are seeking to reargue. On March 12, 2014, Mr. Frydman and certain of his affiliates initiated a lawsuit in the same court against Mr. Verschleiser for breach of contract. On March 14, 2014, Mr. Verschleiser filed a countersuit seeking rescission of the contract at issue. Mr. Frydman does not view this countersuit as material to us or to the advisor, and intends to file a motion to dismiss.

The background and experience of our sponsor and the senior real estate professionals employed or retained by United Realty and its affiliates are described above under “Management — Executive Officers and Directors.”

United Realty Partners LLC

United Realty Capital, LLC, a Delaware limited liability company controlled and indirectly owned by Mr. Frydman, was formed on October 11, 2011. Its name was changed to United Realty Partners LLC, or URP, on December 14, 2011. If our independent directors approve, we may engage URP, from time to time, to provide certain services, which might include brokerage services, services in connection with the origination or refinancing of debt, or advice in connection with joint venture opportunities and equity financing opportunities for our properties. We only engage URP for such services if it can provide the same level of service as an unaffiliated third party provider and at a cost similar to that of an unaffiliated third party. As a result, on a single acquisition transaction, we may pay to our affiliates an acquisition fee, a financing coordination fee, a supplemental brokerage fee, a supplemental financing fee and a supplemental joint venture advisory fee. For a more detailed discussion of compensation, see the table included in the “Compensation Table” section of this prospectus, including the footnotes thereto.

United Realty Securities

United Realty Securities, our dealer manager, is a division of Cabot Lodge Securities, LLC, a member firm of FINRA. Cabot Lodge was organized in October 2011 as a full service broker-dealer. United Realty Securities is indirectly owned by our sponsor. United Realty Securities provides certain wholesaling, sales, promotional and marketing assistance services to us in connection with the distribution of the Common Shares offered pursuant to this prospectus. It also may sell Common Shares at the retail level. The compensation we will pay to United Realty Securities in connection with this offering is described in the section of this prospectus captioned “Compensation Table.” See also “Plan of Distribution—Compensation We Will Pay for the Sale of Our Common Shares.”

United Realty Securities is controlled by Mr. Frydman, and is an affiliate of our advisor. See “Conflicts of Interest.”

The current officers of United Realty Securities are:

Name	Age	Positions
Jacob Frydman	56	Chairman of the Board of Directors
Craig Gould	44	Chief Executive Officer and President
Albert Akerman	61	Executive Vice President and Chief Compliance Officer

Jacob Frydman – See “ – Executive Officers and Directors.”

The backgrounds of Messrs. Gould and Akerman are described below:

Craig Gould is the Chief Executive Officer and President of United Realty Securities. He has over 15 years in senior management roles in the financial services industry, including CEO, National Sales Manager and Head of Investment Banking. Most recently, from January 2009 to October 2010, he was the President of Fintegra, a full service retail securities firm. Prior to Fintegra, from March 2004 to January 2009, he was the National Sales Manager for Wunderlich Securities, and from May 1995 to April 2002 he was the Vice Chairman of Olympic Cascade Financial Corporation (an AMEX listed company). In his previous roles he helped raise in excess of $500 million and managed over 25 initial public offerings. Mr. Gould has also been an officer or director for several public and private companies. Mr. Gould graduated with a B.A. from the University of Wisconsin-Madison.

Albert Ackerman is the Executive Vice President and Chief Compliance Officer of United Realty Securities. From May 2010 until August 2011, he was Senior Managing Director and Chief Compliance Officer of Andrew Garrett Inc., leading a four-person compliance and branch management team for a full service broker-dealer with twelve branches and eighty retail registered representatives. From November 2009 until April 2010 Mr. Akerman was a Financial Professional and Assistant District Manager with AXA Advisors, LLC. From September 2005 until August 2009, Mr. Akerman was the Chief Compliance Officer of David Lerner Associates, Inc. From March 2004 until September 2005, Mr. Akerman was the Chief Compliance Officer of Seaport Group Securities, LLC. From September 2001 until February 2004, Mr. Akerman was a Senior Compliance Officer at Barclays Capital Inc., focusing on fixed income trading businesses. From June 1999 until May 2001, Mr. Akerman was the Chief Compliance Officer of Bank of Tokyo’s securities affiliate, Tokyo-Mitsubishi Securities (USA) Inc. From January 1997 until February 1999, Mr. Akerman was employed as the Brokerage Audit Manager of Fidelity Investments and its wholly owned clearing agent, National Financial Services Corporation. Mr. Akerman graduated from Queens College in 1974 and holds registrations with FINRA as a Series 7, 24, 27, 66, 79 and 99. Mr. Akerman is also a commissioned Federal Bank Examiner and a Certified Information Systems Auditor, and he holds New York State Life, Accident and Health Insurance broker licenses.

We have entered into a dealer manager agreement with Cabot Lodge Securities, LLC. For a description of the terms of this agreement, see “Compensation Table” and “Plan of Distribution.”

Management Decisions

Our advisor is responsible for recommending investments to us, negotiating the purchase of these investments, and making or recommending asset management decisions on behalf. Subject to the direction or approval of our board of directors, the following major decisions will be made by our advisor: decisions with respect to the retention of investment banks; marketing methods with respect to this offering; the termination or extension of this offering; the initiation of a follow-on offering; mergers and other change-of-control transactions; and certain significant press releases. The individuals who will be primarily responsible for our advisor’s decisions with respect to all the foregoing matters are Messrs. Frydman and Vitale.

As required by our charter, acquisition decisions will ordinarily be based on the fair market value of the properties. If our independent directors so determine, or if an asset is acquired from our advisor, one or more of our directors, our sponsor or any of its affiliates, the fair market value will be determined by a qualified independent real estate appraiser selected by the independent directors. Appraisals are estimates of value and should not be relied on as measures of true worth or realizable value. We will maintain the appraisal in our records for at least five years, and copies of each appraisal will be available for review by our stockholders upon their request.

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COMPENSATION TABLE

We have no paid employees. Our advisor and its affiliates manage our day-to-day affairs. The following table summarizes all the compensation and fees we pay to our advisor and its affiliates, including amounts to reimburse their costs in providing services. In the sole discretion of our advisor, our property manager or our board of directors or URP, as applicable, certain fees and commissions may be paid, in whole or in part, in cash or Common Shares. The selling commissions may vary for different categories of purchasers. See “Plan of Distribution.” This table assumes the Common Shares are sold through distribution channels associated with the highest possible selling commissions and dealer manager fee. No effect is given to any Common Shares sold through our DRIP.

Type of Compensation	Determination of Amount	Amount Paid During Year Ended December 31, 2013	Estimated Amount for Maximum Offering (100,000,000 Common Shares)*(1)
	Organization and Offering Stage
Selling Commissions(2)	Prior to the NAV pricing start date, the dealer manager will be paid $0.73 per Common Share out of the Common Shares sold in our primary offering, and selling commissions will constitute approximately 7.0% of the offering price of $10.45 for Common Shares. Commencing on the NAV pricing start date, the dealer manager will receive from the gross proceeds selling commissions equal to 7.0% of our NAV per Common Share. No selling commissions will be paid on sales of Common Shares under our DRIP. The dealer manager will reallow all selling commissions to the participating broker-dealer or registered representative of the dealer manager who actually sold the Common Shares.	$292,557	$73,000,000 The actual amount will depend on the number of Common Shares sold.

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Type of Compensation		Determination of Amount		Amount Paid During Year Ended December 31, 2013			Estimated Amount for Maximum Offering (100,000,000 Common Shares)*(1)
Dealer Manager Fee(2)		Prior to the NAV pricing start date, the dealer manager will be paid $0.31 per Common Share out of Common Shares sold in our primary offering, and the dealer manager fee will constitute approximately 3.0% of the offering price of $10.45 per Common Share. Commencing on the NAV pricing start date, the dealer manager will receive from the gross proceeds a dealer manager fee equal to 3.0% of our NAV per Common Share. The dealer manager may reallow from the dealer manager fee up to $0.15 per Common Share (prior to the NAV pricing start date) or 1.5% of our NAV per Common Share (commencing on the NAV pricing start date) to any participating broker-dealer for marketing support.		$150,549

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Type of Compensation	Determination of Amount	Amount Paid During Year Ended December 31, 2013	Estimated Amount for Maximum Offering (100,000,000 Common Shares)*(1)
	No dealer manager fee will be paid with respect to sales under our DRIP.		$31,000,000 The actual amount will depend on the number of Common Shares sold.

Organization and Offering Expenses(3)	We will reimburse our advisor up to 2% of the total offering price paid by investors (which includes proceeds to us from the sale of Common Shares, plus applicable selling commissions and dealer manager fee) for organization and offering expenses, which may include reimbursements to be paid to the dealer manager, registered investment advisors and participating broker-dealers for due diligence fees set forth in detailed and itemized invoices.	$86,620	$20,900,000 The actual amount will depend on the number of Common Shares sold.

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Type of Compensation	Determination of Amount	Amount Paid During Year Ended December 31, 2013	Estimated Amount for Maximum Offering (100,000,000 Common Shares)*(1)
	Operational Stage
Acquisition Fees(4)	We will pay to our advisor or its assignees 1% of the contract purchase price of each property acquired (including our pro rata share (direct or indirect) of debt attributable to such property) or 1% of the amount advanced for a loan or other investment (including our pro rata share (direct or indirect) of debt attributable to such investment), as applicable. For purposes of this prospectus, “contract purchase price” or the “amount advanced for a loan or other investment” means the amount actually paid or allocated in respect of the purchase, development, constructionor improvement of a property or the amount actually paid or allocated in respect of the purchase of loans or other real estate-related assets, in each case inclusive of any indebtedness assumed or incurred in respect of such investment but exclusive of acquisition fees and acquisition expenses.(5)	$294,000	$9,201,000 (or $26,289,000 assuming we incur our expected leverage of 65% set forth in our investment guidelines).

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Type of Compensation		Determination of Amount		Amount Paid During Year Ended December 31, 2013			Estimated Amount for Maximum Offering (100,000,000 Common Shares)*(1)
Acquisition Expenses(5)		We will reimburse our advisor for expenses actually incurred related to selecting, evaluating and acquiring assets on our behalf, regardless of whether we actually acquire the related assets. In addition, we will pay third parties, or reimburse the advisor or its affiliates, for any investment-related expenses due to third parties, including, but not limited to, legal fees and expenses, travel and communications expenses, costs of appraisals, accounting fees and expenses, third-party brokerage or finder’s fees, title insurance expenses, survey expenses, property inspection expenses and other closing costs, regardless of whether we acquire the related assets. We estimate that total acquisition expenses (including those paid to third parties, as described above) will be approximately 0.6% of the purchase price of each property (including our pro rata share (direct or indirect) of debt attributable to such property) and 0.6% of the amount advanced for a loan or other investment (including our pro rata share (direct or indirect) of debt attributable to such investment). In no event will the total of all acquisition fees and acquisition expenses (including those paid to third parties, as described above) payable with respect to a particular investment exceed 6% of the contract purchase price of each property (including our pro rata share (direct or indirect) of debt attributable to such property) or 6% of the amount advanced for a loan or other investment (including our pro rata share (direct or indirect) of debt attributable to such investment), as applicable.		$992,907			$5,520,600 (or $15,773,000 assuming we incur our expected leverage of 65% set forth in our investment guidelines.

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Type of Compensation	Determination of Amount	Amount Paid During Year Ended December 31, 2013	Estimated Amount for Maximum Offering (100,000,000 Common Shares)*(1)
Construction and Development Management Fee(4),(6)	We expect to engage our property manager to provide construction and development management services for some of our properties. Other than with respect to tenant improvements, as described below, we will pay a construction and development management fee in an amount of 2% of the cost of any construction or development that our property manager undertakes. When our property manager provides construction management services with respect to tenant improvements, the construction and development management fee may be up to, but will not exceed, 5% of the cost of the tenant improvements.	None.	Not determinable at this time.

Asset Management Fees	Until the NAV pricing start date, we will pay our advisor or its assignees a monthly fee equal to one-twelfth (1/12) of 0.75% of the contract purchase price of each property (including our pro rata share (direct or indirect) of debt attributable to such property) then owned plus one-twelfth (1/12) of 0.75% of the amount advanced for each loan or other investment (including our pro rata share (direct or indirect) of debt attributable to such investment) then owned, payable on the first business day of each month. Commencing on the NAV pricing start date, we will pay our advisor or its assignees a monthly fee equal to the greater of (a) the amount as calculated in the preceding sentence, and (b) one-twelfth (1/12) of 1% of the average of our daily NAV for the preceding month, payable on the first business day of each month.(7)	$140,479	Not determinable at this time. Because the fee is based on a fixed percentage of NAV or contract purchase price or the amount advanced for a loan or other investment with respect to all our assets then owned during the months for which such fee is payable, there is no maximum dollar amount of this fee.

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Type of Compensation	Determination of Amount	Amount Paid During Year Ended Decmber 31, 2013	Estimated Amount for Maximum Offering (100,000,000 Common Shares)*(1)
Property Management Fees	Property management fees equal to 4.5% of the monthly gross receipts from the properties managed by our property manager will be payable monthly to our property manager. Our property manager may subcontract the performance of its property management duties to third parties, and our property manager may pay all or a portion of its property management fees to the third parties with whom it subcontracts for these services. We will reimburse the costs and expenses incurred by our property manager on our behalf, including legal, travel and other out-of-pocket expenses that are directly related to the management of specific properties, as well as the expenses of third-party service providers. We will not, however, reimburse our property manager for the fees of third-party service providers, for general overhead costs or for the wages and salaries and other employee-related expenses of employees of our property manager other than employees who are engaged in the on-site operation, management, maintenance or access control of our properties.	$65,096	Not determinable at this time. Because these fees are based on a percentage of the monthly gross receipts, there is no maximum dollar amount to these fees.

Leasing Fees(8)	We expect to engage our property manager to provide leasing services with respect to our properties. We will pay a leasing fee to our property manager in an amount that is equal to 2% of the sum of all rent payments that a tenant will be contractually obligated to make under a renewal lease at the time of the execution of such renewal lease and 5% of the sum of all rent payments that a tenant will be contractually obligated to make under a new lease at the time of the execution of such new lease. A leasing fee will be payable upon the execution of the applicable lease. Our property manager may subcontract the performance of its leasing duties to third parties, and our property manager may pay all or a portion of its leasing fees to the third parties with whom it subcontracts for these services.	None.	Not determinable at this time. Because these fees are based on the sum of all rent payments due under leases, there is no maximum dollar amount to these fees.

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Type of Compensation	Determination of Amount	Amount Paid During Year Ended December 31, 2013	Estimated Amount for Maximum Offering (100,000,000 Common Shares)*(1)
Oversight Fee	For services in overseeing property management and leasing services provided by any person or entity that is not our property manager or an affiliate of our property manager, we will pay our advisor an oversight fee equal to 1% of the gross revenues of the property managed.	$1,161	Not determinable at this time. Because the fee is based on a fixed percentage of gross revenue, there is no maximum dollar amount of this fee.

Operating Expenses(4)	We will reimburse our advisor’s costs of providing administrative services, subject to the limitation that we will not reimburse our advisor (except in limited circumstances) for any amount by which our total operating expenses (including the asset management fee) at the end of the four preceding fiscal quarters exceeds the greater of (i) 2% of average invested assets and (ii) 25% of net income other than any additions to reserves for depreciation, bad debt or other similar non-cash reserves and excluding any gain from the sale of assets for that period. For these purposes, “average invested assets” means, for any period, the average of the aggregate book value of our assets (including lease intangibles) invested, directly or indirectly, in equity interests in and loans secured by real estate assets (including amounts invested in REITs and other real estate operating companies) before deducting depreciation or bad debts or other non-cash reserves, computed by taking the average of these values at the end of each month during the period. Additionally, we will reimburse our advisor for personnel costs in connection with other services, in addition to paying an asset management fee; however, we will not reimburse our advisor for personnel costs in connection with services for which the advisor receives acquisition fees or real estate disposition commissions.(9)	Our advisor incurred $7,154,845 of total operating expenses during the period, of which $1,270,386 was reimbursed by us.	Not determinable at this time.

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Type of Compensation	Determination of Amount	Amount Paid During Year Ended December 31, 2013	Estimated Amount for Maximum Offering (100,000,000 Common Shares)*(1)
Financing Coordination Fee(4)	If our advisor provides services in connection with the origination or refinancing of any debt that we obtain and use, directly or indirectly, to finance properties or other investments, or that we assume, directly or indirectly, in connection with the acquisition of properties or other investments, we will pay the advisor or its assignees a financing coordination fee equal to 1% of the amount available or outstanding under such financing or such assumed debt. The advisor may reallow some of or all this financing coordination fee to reimburse third parties with whom it may subcontract to procure such financing.	$160,000	Not determinable at this time. Because the fee is based on a fixed percentage of any debt financing, there is no maximum dollar amount of this fee.

Supplemental Transaction-Based Advisory Fees(4)	If our independent directors approve, we may engage URP, from time to time, to provide certain services, which might include brokerage services, services in connection with the origination or refinancing of debt, or advice in connection with joint venture opportunities and equity financing opportunities for our properties. We only engage URP for such services if it can provide the same level of service as an unaffiliated third party provider and at a cost similar to that of an unaffiliated third party. As a result, on a single acquisition transaction, we may pay to our affiliates an acquisition fee, a financing coordination fee, a supplemental brokerage fee, a supplemental financing fee and a supplemental joint venture advisory fee.	$234,000	Not determinable at this time.

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Type of Compensation	Determination of Amount	Amount Paid During Year Ended December 31, 2013	Estimated Amount for Maximum Offering (100,000,000 Common Shares)*(1)
Awards Under Our Stock Incentive Plan	We have adopted a stock incentive plan, pursuant to which our independent directors, officers and employees (if we ever have employees) of our advisor and other affiliates, certain of our consultants and certain consultants to our advisor and other affiliates who, directly or indirectly, provide consulting services to us may be granted equity incentive awards in the form of stock options, stock appreciation rights, restricted stock, performance shares and other stock-based awards. Our compensation committee will determine all awards under our stock incentive plan and the vesting schedule for the grants.	$59,850 During the year ended December 31, 2013, we awarded 8,800 fully vested restricted shares to employees of and consultants to our advisor, and to associated persons of United Realty Securities. We also awarded 9,474 restricted shares to our independent directors in lieu of paying their annual fees in cash. These shares will vest over a 15-month period that began on April 1, 2013. During the year ended December 31, 2013 we expensed $54,000 related to the amortization of the independent directors’ retention-based restricted shares. In addition, subject to the vesting provisions described below and further subject to the provisions of our stock incentive plan, we agreed to award an aggregate of 275,000 retention-based restricted shares and an aggregate of 187,500 incentive restricted shares to certain officers and associated persons of United Realty Securities. The retention-based restricted shares will vest over a four- or five-year period, as applicable, on the anniversaries of each awardee’s hire date (assuming such awardee is still employed by United Realty Securities or our advisor, as applicable, as of such anniversary date). The incentive restricted shares will vest over a five-year period on the anniversaries of each awardee’s hire date (assuming such awardee is still employed by our advisor as of such anniversary date). The number of incentive restricted shares that will vest will be determined based on the number of Common Shares sold by participating dealers within each respective awardee’s geographic territory.	The aggregate number of Common Shares that may be issued or used for reference purposes or with respect to which awards may be granted under our stock incentive plan will not exceed 5.0% of our outstanding Common Shares on a fully diluted basis at any time and in any event will not exceed 5,000,000 Common Shares (subject to adjustment for stock splits, combinations, reclassifications, reorganizations and certain other specified events pursuant to the stock incentive plan).

Compensation of Independent Directors	We pay to each of our independent directors a retainer of $30,000 per year (the chairperson of the audit committee also will receive an additional annual award of $15,000), plus $2,000 for each board or board committee meeting the director attends in person, and $1,500 for each meeting the director attends by telephone or remotely. If there is a meeting of the board and one or more committees in a single day, the fees will be limited to $2,500 per day. We may issue Common Shares pursuant to our stock incentive plan in lieu of paying an independent director his or her annual fees or meeting fees in cash. Our independent directors also may receive awards under our stock incentive plan. Our compensation committee will determine all awards to our independent directors under our stock incentive plan and the vesting schedule for such awards.	$90,000 During the year ended Decemeber 31, 2013, we granted 9,474 shares of restricted stock to our independent directors in lieu of paying their annual fees in cash, and expensed $54,000 related to the amortization of such restricted stock.	The independent directors, as a group, will receive for a full fiscal year, estimated aggregate compensation of approximately $260,000, payable in cash or Common Shares.

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Type of Compensation		Determination of Amount		Amount Paid During Year Ended December 31, 2013			Estimated Amount for Maximum Offering (100,000,000 Common Shares)*(1)
Subordinated Share of Annual Cash Flows		Our advisor will receive, annually, an amount equal to 15% of any net cash flows in respect of each calendar year remaining after payment to holders of Common Shares of distributions (including from sources other than operating cash flow) for such calendar year, such that the holders of Common Shares have received a 7% pre-tax, non-compounded annual return on the capital contributed by holders of Common Shares. “Net cash flows” means, for any period, the excess of: (i) the sum of (A) our revenues for such period, as determined under GAAP, from ownership and/or operation of properties, loans and other investments and (B) the net cash proceeds we realize during such period from any sales of assets; over (ii) the sum of all costs and expenses paid or incurred by us, as determined under GAAP, that are in any way related to our operation or to corporate business, including advisory fees, the expenses of raising capital such as organization and offering expenses, legal, audit, accounting, underwriting, brokerage, listing, registration and other fees, printing and other such expenses and taxes incurred in connection with the issuance, distribution, transfer, registration and listing of our Common Shares, interest payments, taxes, non-cash expenditures such as depreciation, amortization and bad debt reserves, incentive fees paid in compliance with the NASAA REIT Guidelines, acquisition fees and acquisition expenses, real estate commissions on the sale of property and other fees and expenses connected with the acquisition, disposition, management and ownership of real estate interests, mortgage loans or other property (including the costs of foreclosure, insurance premiums, legal services, maintenance, repair and improvement of property). Our use of “net cash flow”, a non-GAAP measure, as a metric instead of GAAP net income likely will result in the payment of a higher amount to our advisor		None.			Actual amounts depend on the results of our operations; we cannot determine these amounts at the present time.

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Type of Compensation		Determination of Amount		Amount Paid During Year Ended December 31, 2013			Estimated Amount for Maximum Offering (100,000,000 Common Shares)*(1)
		than if our advisor were to receive, annually, an amount equal to 15% of GAAP net income after payment of such 7% annual return. We cannot assure you that we will provide such 7% annual return, which we have disclosed solely as a measure for our advisor’s incentive compensation. Because such 7% annual return may consist in part of distributions from sources other than operating cash flow, the source of such 7% annual return may not be entirely from net income; to the extent that the source of such 7% annual return is not from net income, then the value of your Common Shares may be impacted negatively. Our advisor may have an incentive to increase the amount of distributions from sources other than operating cash flow in order to maximize its subordinated share of annual cash flows. Our advisor may receive a subordinated share of annual cash flows even if distributions to holders of Common Shares have exceeded our cash flows from operations.		None.

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Type of Compensation	Determination of Amount	Amount Paid During Year Ended December 31, 2013	Estimated Amount for Maximum Offering (100,000,000 Common Shares)*(1)
	Liquidation/Listing Stage
Real Estate Disposition Commissions(4)	For substantial assistance in connection with the sale of properties, we will pay our advisor or its affiliates a real estate disposition commission equal to 2% of the contract sales price of such property, but in no event will such commission be greater than one-half of a real estate commission that is reasonable, customary and competitive in light of the size, type and location of the property ; provided, however, that in no event may the real estate commissions paid to our advisor, its affiliates and unaffiliated third parties exceed the lesser of 6% of the contract sales price and a real estate commission that is reasonable, customary and competitive in light of the size, type and location of the property . Our independent directors will determine whether the advisor or its affiliates have provided substantial assistance to us in connection with the sale of a property. Substantial assistance in connection with the sale of a property includes the preparation by our advisor or its affiliates of an investment package for the property (including an investment analysis, an asset description and other due diligence information) or such other substantial services performed by the advisor or its affiliates in connection with a sale.	None.	Not determinable at this time. Because the commission is based on a fixed percentage of the contract price for a sold property, there is no maximum dollar amount of these commissions.

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Type of Compensation		Determination of Amount		Amount Paid During Year Ended December 31, 2013			Estimated Amount for Maximum Offering (100,000,000 Common Shares)*(1)
Sponsor Preferred Shares (or Common Shares, if Sponsor Preferred Shares are converted)		Upon (and for 180 days following) the occurrence of a Triggering Event, as defined under “Description of Shares — Sponsor Preferred Shares,” each outstanding Sponsor Preferred Share becomes convertible into one Common Share for each $100 million, rounded down to the nearest $100 million, of gross proceeds raised by us through the date of conversion in this public offering and any subsequent public offering of Common Shares, combined. Following our liquidation, dissolution or winding up, our sponsor will receive 15% of the amount of any excess of the proceeds over the amount of Invested Capital, as defined below, plus a non-compounded pre-tax annual return to holders of Common Shares of 7% on Invested Capital. The term “Invested Capital” means the amount calculated by multiplying the total number of Common Shares issued by us by the original issue price for each such Common Share, reduced by an amount equal to the total number of Common Shares that we repurchased under our share repurchase program, as the same may be amended, supplemented or replaced from time to time, multiplied by the original issue price for each such repurchased Common Share when initially purchased from us.		None.			If the Sponsor Preferred Shares are converted into Common Shares, their value is estimated to range from $0 (if less than $100 million of gross proceeds is raised) to $52.25 million (if the maximum offering is sold). (These estimates assume that a Common Share is worth $10.45 and that no investors participate in our DRIP).(10)

For purposes of calculating the estimated fee amounts set forth in the table, we have not taken into consideration the effect that the repurchase of Common Shares by our stockholders (through our share repurchase program) would have upon such fee amounts.

(1)

Our dealer manager will repay to the company any excess over FINRA’s 10% cap if the offering is abruptly terminated after reaching the minimum amount, but before reaching the maximum amount, of offering proceeds.

(2)

The amount of selling commissions and dealer manager fee may be reduced under certain circumstances for volume discounts. See “Plan of Distribution” for a description of such provisions. In determining the amount of selling commissions and dealer manager fees, we have assumed that all Common Shares will be sold at the purchase price of $10.45 per Common Share, inclusive of selling commissions and dealer manager fees, that will apply until the NAV pricing start date.

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(3)

These organization and offering expenses include all costs and expenses to be paid by us in connection with our formation and an offering, including our legal, accounting, printing, mailing and filing fees, charge of our escrow agent, reimbursements to our dealer manager, registered investment advisors and participating broker-dealers for due diligence expenses set forth in detailed and itemized invoices, amounts to reimburse our advisor for its portion of the salaries of the employees of its affiliates who provide services to our advisor, and other costs in connection with administrative oversight of such offering and the marketing process, such as preparing supplemental sales materials, holding educational conferences and attending retail seminars conducted by our dealer manager or participating broker-dealers. Our advisor will advance our organization and offering expenses to the extent we do not have the funds to pay such expenses. We will reimburse our advisor up to 2% of the total offering price paid by investors (which includes proceeds to us from the sale of Common Shares, plus applicable selling commissions and dealer manager fee) for organization and offering expenses.

(4)

In the sole discretion of our advisor, our property manager or URP, as applicable, this fee, commission or expense reimbursement may be paid, in whole or in part, in cash or Common Shares, or any combination thereof. For the purposes of the payment of this fee, commission or expense reimbursement in Common Shares, prior to the NAV pricing start date, if an offering is underway, each Common Share will be valued at the per Common Share offering price minus the maximum selling commissions and dealer manager fee allowed in the offering. Commencing on the NAV pricing start date, each Common Share will be valued at NAV per Common Share.

(5)

In addition, if during the period ending two years after the close of the offering, we sell an investment and then reinvest in other investments, we will pay our advisor any acquisition fees in respect of such other investments, along with reimbursement of acquisition expenses in respect of such other investments; provided, however, that in no event shall the total of all acquisition fees and acquisition expenses (including any financing coordination fees) payable in respect of such reinvestment exceed 6% of the contract purchase price of each property (including our pro rata share (direct or indirect) of debt attributable to such property) or 6% of the amount advanced for a loan or other investment (including our pro rata share (direct or indirect) of debt attributable to such investment), as applicable.

(6)

We may make periodic progress payments or other cash advances to developers or builders of our properties prior to completion of development or construction only upon receipt of an architect’s certification as to the percentage of the project then completed and as to the dollar amount of the development or construction then completed. We intend to use such additional controls on disbursements to builders and developers as we deem necessary and prudent. We will not undertake improvements that would cause any of our income from the applicable property to be treated as other than rents from real property for purposes of the applicable REIT requirements described under the section titled “Material U.S. Federal Income Tax Considerations” in this prospectus.

(7)

The asset management fee may be paid, in whole or in part, at the discretion of our board of directors, in cash or Common Shares, or any combination thereof. For the purposes of the payment of the asset management fee in Common Shares, prior to the NAV pricing start date, if an offering is underway, each Common Share will be valued at the per Common Share offering price minus the maximum selling commissions and dealer manager fee allowed in the offering. Commencing on the NAV pricing start date, each Common Share will be valued at NAV per Common Share.

(8)

Leasing fees will be payable at the time of execution of a lease or renewal lease. If the tenant subsequently defaults under its lease obligations, in accordance with industry practice, our property manager will not be obligated to remit the leasing fees to us. Therefore, our property manager may have an incentive to lease to a less creditworthy tenant (a) in order to expedite the collection of a leasing fee, and (b) because if the tenant breaks the lease, our property manager may have a second opportunity to earn a leasing fee.

(9)

Operating expenses will include reimbursement of our advisor for personnel costs, including certain salaries and benefits payable to our officers who are also executive officers, key personnel or members of our advisor. See “Management.” The anticipated amount of reimbursement for compensation, including base salary, bonuses and related benefits, on an annual basis for our executive officers is approximately $600,000.

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(10)

Our sponsor will receive no compensation directly from us, except that, as described in various places throughout this prospectus, the issuance to our sponsor of its Sponsor Preferred Shares will result in us recognizing compensation expense for accounting purposes if certain events occur. Consistent with the accounting treatment, the Sponsor Preferred Shares will constitute an economic benefit to our sponsor measured by the difference between the purchase price for the Sponsor Preferred Shares and the value of Common Shares into which they are converted. Our sponsor’s ownership position as a result of the conversion of the Sponsor Preferred Shares will remain relatively constant at between 2.6% and 5.2% of the outstanding Common Shares at any given time (assuming (a) the maximum selling commissions and dealer manager fee, and (b) no reinvestments of distributions). If the maximum offering is achieved, for the consideration of $50,000, the potential value of our sponsor’s holdings at $10.45 per Common Share would be $52.25 million upon conversion, assuming no investors participate in our DRIP. Following our liquidation, dissolution or winding up, our sponsor will receive 15% of the amount of any excess of the proceeds over the amount of Invested Capital, as defined above and under “Description of Shares — Sponsor Preferred Shares,” plus a cumulative non-compounded pre-tax annual return to holders of Common Shares of 7% on Invested Capital.

The holder of outstanding Sponsor Preferred Shares has the right to convert any of such shares into Common Shares upon (and for 180 days following) the occurrence of any of the following events (each a “Triggering Event”):

•

the sale or transfer of substantially all of our assets, stock or business through exchange, merger, consolidation, lease, share exchange, sale or otherwise, other than a sale of assets in our liquidation, dissolution or winding up;

•

the termination or expiration without renewal of the advisory agreement, including the termination of the advisory agreement by our sponsor, which, as the sole manager of the general partner of our advisor, may terminate the agreement at any time, upon 60 days’ notice; or

•

the listing of our Common Shares on any national securities exchange.

There are no dividends payable on the Sponsor Preferred Shares. On our liquidation, dissolution or winding up, the holder of the Sponsor Preferred Shares will be entitled to receive 15% of the amount of any excess of the proceeds over the amount of Invested Capital plus a cumulative non-compounded pre-tax annual return to holders of Common Shares of 7% on Invested Capital.

Five hundred thousand shares of preferred stock were issued to our sponsor, and subsequently exchanged for Sponsor Preferred Shares, at a time when we had no material assets. Accordingly, the Sponsor Preferred Shares are in the nature of “founder’s shares” with no substantial value as of the date of issuance. For financial reporting, tax and other purposes, the issuance of the Sponsor Preferred Shares has not been, and will not have been prior to conversion, treated as compensation to our sponsor. Rather, expense related to issuance of the Sponsor Preferred Shares to our sponsor will be recognized only at such time as the number of Common Shares to be issued upon conversion of the Sponsor Preferred Shares can be reasonably estimated and a Triggering Event occurs. The expense at that time will be measured as the difference between the fair value of the Common Shares for which the Sponsor Preferred Shares can be converted and the amount paid for the Sponsor Preferred Shares.

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STOCK OWNERSHIP

The following table sets forth the beneficial ownership of our Common Shares as of March 31, 2014 for each person or group that holds more than 5% of our Common Shares, for each director and exee officer and for our directors and executive officers as a group. To our knowledge, each person that beneficially owns our Common Shares has sole voting and investment power with regard to such Common Shares.

	Number of Common Shares		Percent of
Name of Beneficial Owner(1)	Beneficially Owned		Class
United Realty Advisor Holdings LLC(2)		22,068		2.8	%
Jacob Frydman(2)		41,130		5.3	%
Richard J. Vitale, CFA		—		—
Joseph LoParrino		—		—
Dr. Daniel Z. Aronzon		3,409		*
David B. Newman		3,409		*
Robert Levine		3,409		*
All directors and officers as a group		52,357		6.6	%

	*	Less than 1%.
	(1)	The address of each beneficial owner listed is 60 Broad Street, 34th Floor, New York, New York 10004. We have also agreed to award restricted shares to certain officers and associated persons of United Realty Securities.

(2)

United Realty Advisor Holdings LLC is controlled and indirectly owned by Jacob Frydman.

In addition to the foregoing, our sponsor owns 500,000 Sponsor Preferred Shares. The Sponsor Preferred Shares are convertible into Common Shares pursuant to the formula and on the terms and subject to the conditions set forth under “Description of Shares — Sponsor Preferred Shares.”

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CONFLICTS OF INTEREST

We are subject to various conflicts of interest arising out of our relationships with our sponsor and its affiliates, some of whom serve as our executive officers and directors. We discuss these conflicts below and conclude this section with a discussion of the corporate governance measures we have adopted to ameliorate some of the risks posed by these conflicts.

Our Sponsor’s Interests in Other Real Estate Programs

General

All our executive officers, some of our directors, and other key professionals engaged by our advisor to provide services on our behalf are also officers, directors, managers, key professionals or holders of a direct or indirect controlling interest in our advisor, our property manager, URP and affiliates, which are the sponsors of other real estate programs. These individuals have legal and financial obligations with respect to those programs, entities and investors that are similar to their obligations to us. In the future, these individuals and other affiliates of our sponsor may organize other real estate programs, serve as the investment advisor to other investors and acquire for their own account real estate properties that may be suitable for us.

Every transaction that we enter into with our advisor, our property manager, United Realty Securities, URP or their respective affiliates is subject to an inherent conflict of interest. Our board of directors may encounter conflicts of interest in enforcing our rights against any affiliate if there is a default by or disagreement with an affiliate or in invoking powers, rights or options pursuant to any agreement between us and our advisor, our property manager, United Realty Securities, URP or any of their respective affiliates.

Competition for Investors

Our sponsor generally seeks to reduce the conflicts that may arise among its various programs by avoiding simultaneous public offerings by programs that have a substantially similar mix of targeted investment types. Nevertheless, there are likely to be periods during which one or more programs sponsored by our sponsor will be raising capital and which will compete with us for investment capital.

Joint Ventures with Affiliates

We have entered into and may continue to enter into joint venture agreements with our affiliates for the acquisition, development or improvement of properties or other investments that meet our investment objectives. Our advisor has some of the same executive officers and key employees as other affiliates of United Realty, and these persons may face conflicts of interest in determining whether and which program or other entity advised by an affiliate of our sponsor should enter into any particular joint venture agreement. Similarly, our sponsor and its affiliates have some of the same executive officers and key real estate professionals as we do, and, as a consequence, these persons may face conflicts of interest in determining whether and which program or entity sponsored or by United Realty or its principal should enter into any particular joint venture agreement with us. These persons also may face a conflict in structuring the terms of the relationship between our interests and the interests of the co-venturer affiliated with our sponsor and in managing the joint venture. Any joint venture agreement or transaction between us and a co-venturer affiliated with our sponsor will not have the benefit of arm’s-length negotiation of the type normally conducted between unrelated co-venturers. The co-venturer affiliated with our sponsor may have economic or business interests or goals that are or may become inconsistent with our business interests or goals. These co-venturers may thus benefit to our and your detriment.

Allocation of Investment Opportunities

We rely on our sponsor and the executive officers and other key real estate professionals at our advisor to identify suitable investment opportunities for us, with our advisor having primary responsibility for identifying suitable investments on our behalf. Jacob Frydman, as the principal of our sponsor, which is the sole manager of URTI GP, LLC, the general partner of our advisor, has adopted a policy that, for so long as he is the principal of the sole manager of the general partner of the advisor, Mr. Frydman will directly or through our advisor, present to us for our consideration any “REIT Opportunity” of which he becomes aware, whether he becomes aware of it through our advisor, our sponsor or any other of our affiliates, or by any other means. If we determine not to pursue the REIT Opportunity, Mr. Frydman may pursue the REIT Opportunity through any means. For purposes of the foregoing, “REIT Opportunity” means any investment opportunity that would be directly competitive with our investment strategies.

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Competition for Tenants and Others

Conflicts of interest may exist to the extent that we acquire properties in the same geographic areas where other programs or entities sponsored or advised by United Realty or its principal own properties. In such a case, a conflict could arise in the leasing of properties if we and another program or entity sponsored or advised by United Realty or its principal were to compete for the same tenants in negotiating leases, or a conflict could arise in connection with the resale of properties if we and another United Realty-sponsored program or affiliated entity were to attempt to sell similar properties at the same time. See “Risk Factors — Risks Related to Conflicts of Interest.” Conflicts of interest also may exist at such time as we or our sponsor’s affiliates seek to employ developers, contractors, building managers or other third parties. Our sponsor and its affiliates will seek to reduce conflicts that may arise with respect to properties available for sale or rent by making prospective purchasers or tenants aware of all such properties. Our sponsor and its affiliates also will seek to reduce conflicts relating to the employment of developers, contractors or building managers by making prospective service providers aware of all properties in need of their services. However, our sponsor and its affiliates cannot fully avoid these conflicts because they may establish differing terms for resales or leasing of the various properties or differing compensation arrangements for service providers at different properties.

Allocation of Our Affiliates’ Time

As a result of their interests in other programs, their obligations to other investors and the fact that they engage in and they will continue to engage in other business activities on behalf of themselves and others, our executive officers and our sponsor face conflicts of interest in allocating their time among us and other programs and other business activities in which they are involved. In addition, many of the same key professionals associated with our sponsor have existing obligations to other investments or programs sponsored by the principal of our sponsor and his affiliates. Our executive officers and the key professionals associated with our sponsor who provide services to us are not obligated to devote a fixed amount of their time to us, but our sponsor believes that our executive officers and the other key professionals have sufficient time to fully discharge their responsibilities to us and to the other business in which they are involved.

We believe that our executive officers will devote the time required to manage our business and expect that the amount of time a particular executive officer devotes to us will vary during the course of the year and depend on our business activities at a given time. For example, our executive officers may spend significantly more time focused on our activities when we are reviewing potential property acquisitions or negotiating a financing arrangement than during times when we are not. It is difficult to predict specific amounts of time an executive officer will devote to our company. We believe that Messrs. Frydman and Vitale will devote a substantial majority of their time to us. There is no assurance that our expectations are correct and our executive officers may devote more or less time to us than as described above.

Receipt of Fees and Other Compensation by Our Sponsor and its Affiliates

Our sponsor and its affiliates receive substantial fees from us, which fees have not been negotiated at arm’s length. These fees could influence our advisor’s advice to us as well as the judgment of affiliates of our sponsor, some of whom also serve as our executive officers and directors and the key real estate professionals of our sponsor. Among other matters, these compensation arrangements could affect their judgment with respect to:

•

the continuation, renewal or enforcement of our agreements with the advisor’s affiliates, including the advisory agreement, the property management agreement and the dealer manager agreement;

•

public offerings of equity by us, which will entitle our dealer manger to dealer manger fees, will likely entitle the advisor to increased acquisition and asset management fees and may result in us paying increased supplemental transaction-based fees to URP;

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•

sales of properties and other investments to third parties, which entitle the advisor to disposition commissions and a possible subordinated share of annual cash flows and may enable URP to collect supplemental transaction-based fees;

•

acquisitions of properties and other investments, which through our advisor, entitle the advisor to acquisition fees and asset management fees, which acquisition fees are based initially on the cost of the investment, including costs related to loan originations, and are not based on the quality of the investment or the quality of the services rendered to us, which may influence our advisor to recommend riskier transactions to us or create an incentive for our advisor to recommend that we purchase assets at higher prices;

•

whether to lease to a less creditworthy tenant, since our property manager will receive a leasing fee regardless of tenant quality, and a default by a tenant under its lease obligations may give our property manager an opportunity to earn an additional leasing fee;

•

borrowings to acquire properties and other investments and to originate loans, which borrowings will generate financing coordination fees and increase the acquisition and asset management fees payable to the advisor and may enable URP to collect supplemental transaction-based fees; and

•

whether and when we seek to become self-managed, which could lead to our acquisition of entities affiliated with our advisor at a price resulting in substantial compensation to our advisor.

Conflicts with Respect to Sponsor Preferred Shares

As discussed elsewhere in this prospectus, we have issued to our sponsor 500,000 shares of preferred stock, subsequently exchanged for Sponsor Preferred Shares. Upon (and for 180 days following) a Triggering Event, these Sponsor Preferred Shares are convertible into Common Shares. A “Triggering Event” is one of the following events: (1) the sale or transfer of substantially all of our assets, stock or business through exchange, merger, consolidation, lease, share exchange, sale or otherwise, other than a sale of assets in our liquidation, dissolution or winding up; (2) the termination or expiration without renewal of the advisory agreement; and (3) the listing of our Common Shares on any national securities exchange. The Triggering Event set forth in item (1) above could include a transaction with another program organized (either previously or in the future) by our sponsor (although no such transaction is now contemplated), subject to any required stockholder approval of the transaction. Thus, a transaction of the type set forth in item (1) above with another program organized by our sponsor could permit our sponsor to convert its Sponsor Preferred Shares into Common Shares, subject to any required stockholder approval of the transaction.

Each share of preferred stock subsequently exchanged for a Sponsor Preferred Share was issued in exchange for $0.10 per share. There are no dividends payable on the Sponsor Preferred Shares. Upon (and for 180 days following) a Triggering Event, the Sponsor Preferred Shares may be converted into Common Shares, thereby resulting in dilution of the interests of the other holders of the Common Shares in us. If the Sponsor Preferred Shares were converted into Common Shares, our sponsor would own approximately 2.6% to 5.2% of the total number of Common Shares outstanding following the conversion (assuming (a) the maximum selling commissions and dealer manager fee, and (b) no reinvestments of distributions) in exchange for an aggregate payment of $50,000. As the sole manager of the general partner of our advisor, our sponsor can influence both the timing and conversion of the Sponsor Preferred Shares and the resulting dilution of the other holders of our Common Shares; however, any of these actions would require board approval.

Our sponsor also could cause our advisor to terminate our advisory agreement at any time and without cause upon 60 days’ prior written notice. If our sponsor, as the sole manager of the general partner of our advisor, were to direct the termination of the agreement, it would trigger the convertibility of the Sponsor Preferred Shares pursuant to our charter. For a description of the Sponsor Preferred Shares, see “Description of Shares — Sponsor Preferred Shares.”

Our Board’s Loyalties to Current and Possibly to Future Programs sponsored by United Realty or its Principal

Some of our directors also may become directors of other programs sponsored by United Realty or its principal. The loyalties of our directors serving on the boards of these other entities or possibly on the boards of future programs sponsored by United Realty or its principal may conflict with the fiduciary duties they owe to us and may influence the judgment of our board when considering issues for us that also may affect other programs sponsored by United Realty or its principal, as follows:

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•

We could enter into transactions with other programs sponsored by United Realty or its principal, such as joint ventures or financing arrangements. Decisions of the board regarding the terms of those transactions may be influenced by certain members of the board and their loyalties to other programs sponsored by United Realty or its principal.

•

A decision of the board regarding the timing of a debt or equity offering could be influenced by concerns that the offering would compete with an offering of other programs sponsored by United Realty or its principal.

•

A decision of the board regarding the timing of property sales could be influenced by concerns that the sales would compete with those of other programs sponsored by United Realty or its principal.

Our Executive Officers and Some of Our Directors are Affiliates of Our Advisor and its Affiliates

Our executive officers, some of our directors, and the key real estate professionals at our advisor are also officers, directors, managers, key professionals or holders of a direct or indirect controlling interest in or for one or more of our advisor, our property manager, United Realty Securities, URP and their affiliates. As a result, they have loyalties to each of these entities, and to their stockholders, members or limited partners. These loyalties may from time to time conflict with the fiduciary duties that they owe to us.

Valuation Conflicts

After the NAV pricing start date, the asset management fee paid to our advisor may be based on NAV, which the advisor is responsible for calculating. Appraisals and valuations of our properties and investments in real estate-related assets, which are used to calculate NAV, are estimates and may not correspond to the amount that may be realized by the company upon a sale of such. Our advisor may be motivated to establish NAV at higher amounts than amounts that could actually be realized upon a sale because higher NAV may result in higher compensation to the advisor.

We also will compensate the independent appraisers we engage to appraise our properties; however, such compensation must be approved by a majority of our independent directors and will be based on prevailing market terms, which will probably include a fixed fee based upon the number of appraisals plus out-of-pocket expenses.

Affiliated Dealer Manager

Since United Realty Securities, our dealer manager, is an affiliate of our advisor, you will not have the benefit of an independent due diligence review and investigation of the type normally performed by an independent underwriter in connection with an offering of securities. See “Management—United Realty Securities.”

Certain Conflict Resolution Measures

Independent Directors

In order to ameliorate the risks created by conflicts of interest, our charter provides that, except for a period of 60 days following the death, resignation or removal of an independent director pending the election of such independent director’s successor, a majority of our board of directors will be independent directors. An “independent director” is a director who is not one of our officers or employees or an officer or employee of our sponsor or its affiliates and has not been so for the previous two years. Serving as a director of, or having an ownership interest in, another program sponsored by our sponsor will not, by itself, preclude independent director status. Our independent directors may act on any matter permitted under Maryland law. Both the board of directors and the independent directors must act upon those conflict-of-interest matters that cannot be delegated to a committee under Maryland law. Our independent directors as a group also may retain their own legal and financial advisors. Among the matters we expect the independent directors to act upon are:

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the continuation, renewal or enforcement of our agreements with our sponsor’s affiliates, including the advisory agreement and the property management agreement;

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public offerings of securities;

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sales of properties and other investments;

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investments in properties and other assets;

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originations of loans;

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borrowings;

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transactions with affiliates;

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compensation of our officers and directors who are affiliated with our advisor;

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whether and when we seek to list our Common Shares on a national securities exchange;

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whether and when we seek to become self-managed, which decision could lead to our acquisition of entities affiliated with our sponsor at a substantial price; and

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whether and when we seek to sell the company or its assets.

Our board of directors, or a majority of the independent directors that constitute a majority of our board of directors, must approve all proposed investments.

Restrictions on Competing Business Activities of Our Sponsor

Our advisor is required to present a continuing and suitable investment program to us that is consistent with our investment policies and objectives. Investment opportunities that are suitable for us also may be suitable for other programs sponsored by our sponsor or its principal. Jacob Frydman, as the principal of our sponsor, which is the sole manager of URTI GP, LLC, the general partner of our advisor, has adopted a REIT Opportunities policy that is intended to ameliorate this conflict. See “Conflicts of Interest — Our Sponsor’s Interests in Other Real Estate Programs — Allocation of Investment Opportunities.”

Other Charter Provisions Relating to Conflicts of Interest

In addition to mandating that a majority of our directors be independent, our charter contains many other restrictions relating to conflicts of interest, including the following:

Advisor Compensation. Our independent directors evaluate at least annually whether the compensation that we contract to pay to our advisor and its affiliates is reasonable in relation to the nature and quality of services performed and whether such compensation is within the limits prescribed by the charter. The independent directors supervise the performance of our advisor and its affiliates and the compensation we pay to them to determine whether the provisions of our compensation arrangements are being carried out. This evaluation is based on the following factors as well as any other factors deemed relevant by our independent directors:

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the amount of the fees and any other compensation, including stock-based compensation, if any, and the size of the advisory fee in relation to the size, composition and profitability of our portfolio;

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whether the expenses incurred by us are reasonable in light of our investment performance, net assets and net income and the fees and expenses of other comparable unaffiliated REITs;

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the success of our advisor in generating appropriate investment opportunities;

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the rates charged to other companies, including other REITs, by advisors performing similar services;

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additional revenues realized by our advisor and its affiliates through their relationship with us, including loan administration, underwriting or broker commissions, servicing, engineering, inspection and other fees, whether we pay them or they are paid by others with whom we do business;

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the quality and extent of service and advice furnished by our advisor and its affiliates;

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the performance of our investment portfolio; and

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the quality of our portfolio relative to the investments generated by our advisor and its affiliates for their own account and for their other clients.

Under our charter, we can only pay our advisor, a director, a sponsor or any affiliate thereof a disposition commission in connection with the sale of a property or other asset if such person provides a substantial amount of services in the effort to sell the property or asset. If a third-party broker is involved in the disposition and our advisor has provided a substantial amount of services in connection with the sale of the assets, our advisor may receive up to one-half of the brokerage commission paid so long as the commission paid to our advisor does not exceed 3% of the sales price of the property or other asset. If no brokerage commission to a third-party broker is paid, our advisor may receive a commission of up to 3% of the sales price of the property or other asset. Although our charter limits this commission to 3% of the sales price, our advisory agreement provides for a 2% fee. Moreover, our charter also provides that the commission, when added to all other disposition commissions paid to unaffiliated parties in connection with the sale, may not exceed the lesser of a competitive real estate commission or 6% of the sales price of the property or other asset. To the extent this disposition commission is paid upon the sale of any assets other than real property, it will count against the limit on “total operating expenses” described below.

Our charter also requires that any gain from the sale of assets that we may pay our advisor or an entity affiliated with our advisor be reasonable. Such an interest in gain from the sale of assets is presumed reasonable if it does not exceed 15% of the balance of the net sale proceeds remaining after payment to holders of Common Shares, in the aggregate, of an amount equal to 100% of the original issue price of the Common Shares, plus an amount equal to 6% of the original issue price of the Common Shares per year cumulative. Our advisory agreement sets a higher threshold for the payment of a subordinated share of annual cash flows than our charter requires. Under the advisory agreement, a subordinated share of annual cash flows may be paid only if the holders of Common Shares have first received distributions (as determined pursuant to the advisory agreement) for the respective calendar year, such that the holders of Common Shares have received a 7% pre-tax, non-compounded annual return on the capital contributed by holders of Common Shares. Any lowering of the threshold set forth in the advisory agreement would require the approval of a majority of our independent directors. The subordinated share of annual cash flows under the advisory agreement may derive from continuing operations or net sale proceeds; to the extent derived from continuing operations, it will count against the limit on “total operating expenses” described below.

If we ever decided to become self-managed by acquiring entities affiliated with our advisor, our charter would require that a majority of our directors, including a majority of our independent directors, not otherwise interested in the transaction, conclude, by a majority vote, that such internalization transaction is fair and reasonable to us and on terms and conditions no less favorable to us than those available from third parties.

Our charter also limits the amount of acquisition fees and acquisition expenses we can incur to a total of 6% of the contract purchase price for the property or, in the case of a loan, our charter limits origination fees and expenses we can incur to 6% of the funds advanced. This limit may only be exceeded if a majority of the board, including a majority of the independent directors, not otherwise interested in the transaction finds the transaction to be commercially competitive, fair and reasonable to us. Although our charter permits combined acquisition fees and expenses to equal 6% of the purchase price, our advisory agreement limits the acquisition fee to 1% of the purchase price (including any acquisition expenses and any debt attributable to such investments). Any increase in the acquisition fee stipulated in the advisory agreement would require the approval of a majority of our independent directors.

Term of Advisory Agreement. Each contract for the services of our advisor may not exceed one year, although there is no limit on the number of times that we may retain a particular advisor. The independent directors or our advisor may terminate our advisory agreement with our advisor without cause or penalty on 60 days’ written notice. By “without penalty,” we mean that we can terminate our advisor without having to compensate our advisor for income lost as a result of the termination of the advisory agreement. However, upon (and for 180 days following) the termination or nonrenewal of the advisory agreement, our sponsor will be entitled to convert its Sponsor Preferred Shares into Common Shares.

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Our Acquisitions. Our charter permits us to purchase or lease properties in which our advisor, any of our directors or officers or any of their respective affiliates has an interest if there is a determination by a majority of the board of directors, including a majority of the independent directors, not otherwise interested in the transaction that such transaction is fair and reasonable to us and at a price to us no greater than the cost of the property to the affiliated seller or lessor, unless there is substantial justification for the excess amount. In no event will we acquire any such property at an amount in excess of its current appraised value as determined by an independent expert selected by our independent directors not otherwise interested in the transaction. An appraisal is “current” if obtained within the prior year. If a property with a current appraisal is acquired indirectly from an affiliated seller through the acquisition of securities in an entity that directly or indirectly owns the property, a second appraisal on the value of the securities of the entity shall not be required if (a) the independent directors determine that such transaction is fair and reasonable, (b) the transaction is at a price to us no greater than the cost of the securities to the affiliated seller, (c) the entity has conducted no business other than the financing, acquisition and ownership of the property, and (d) the price paid by the entity to acquire the property did not exceed the current appraised value.

Mortgage Loans Involving Affiliates. Our charter prohibits us from investing in or making mortgage loans in which the transaction is with our advisor, our sponsor, our directors or officers or any of their respective affiliates, unless an independent expert appraises the underlying property. We must keep the appraisal for at least five years and make it available for inspection and duplication by any of our stockholders. In addition, we must obtain a mortgagee’s or owner’s title insurance policy or commitment as to the priority of the mortgage or the condition of the title. Our charter prohibits us from making or investing in any mortgage loans that are subordinate to any mortgage or equity interest of our advisor, our directors or officers or any of their respective affiliates.

Other Transactions Involving Affiliates. A majority of our directors, including a majority of the independent directors, not otherwise interested in the transaction must conclude that all other transactions between us and our advisor, our sponsor, any of our officers or directors or any of their respective affiliates, including any development services fees payable to such affiliates, are fair and reasonable to us and on terms and conditions not less favorable to us than those available from unaffiliated third parties.

Limitation on Operating Expenses. Our advisor must reimburse us each quarter the amount by which our aggregate total operating expenses for the four fiscal quarters then ended exceed the greater of 2% of our average invested assets and 25% of our net income, unless our independent directors have determined that such excess expenses were justified based on unusual and non-recurring factors. After the end of any fiscal quarter for which our total operating expenses exceed this 2%/25% limitation for the four fiscal quarters then ended, this fact will be disclosed in writing and sent to the holders of our Common Shares within 60 days. This fact also may be disclosed on Form 8-K within 60 days of the end of the quarter. Included in such disclosure will be an explanation of the factors considered by our independent directors in determining that such an excess was justified. “Average invested assets” means, for any period, the average of the aggregate book value of our assets (including lease intangibles) invested, directly or indirectly, in equity interests in and loans secured by real estate assets (including amounts invested in REITs and other real estate operating companies) before deducting depreciation or bad debts or other non-cash reserves, computed by taking the average of these values at the end of each month during the period. “Total operating expenses” means costs and all expenses paid or incurred by us, as determined under GAAP, that are in any way related to our operation, including advisory fees, but excluding: (a) the expenses of raising capital such as organization and offering expenses, legal, audit, accounting, underwriting, brokerage, listing, registration and other fees, printing and other such expenses and taxes incurred in connection with the issuance, distribution, transfer, registration and stock exchange listing of our stock; (b) interest payments; (c) taxes; (d) non-cash expenditures such as depreciation, amortization and bad debt reserves; (e) reasonable incentive fees based on the gain from the sale of our assets; (f) acquisition fees and acquisition expenses (including expenses relating to potential investments that we do not close); (g) real estate commissions on the sale of property and (h) other fees and expenses connected with the acquisition, disposition, management and ownership of real estate interests, mortgage loans, or other property (including the costs of foreclosure, insurance premiums, legal services, maintenance, repair and improvement of property).

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Issuance of Options and Warrants to Certain Affiliates. We may issue options or warrants, but not at exercise prices less than the fair market value of the underlying securities on the date of grant and not for consideration (which may include services) that in the judgment of the independent directors has a market value less than the value of such option or warrant on the date of grant. Any options or warrants we issue to our sponsor, our advisor, our directors, our sponsor or any of its affiliates shall not exceed an amount equal to 10% of the outstanding Common Shares on the date of grant.

Repurchase of Our Shares. Our charter prohibits us from paying a fee to our sponsor, our advisor, or our directors or officers or any of their respective affiliates in connection with our repurchase shares of our capital stock.

Loans. We will not make any loans to our advisor, or to our directors or officers or any of their respective affiliates, except for loans to wholly owned subsidiaries and except that we may make mortgage loans to such persons if an independent expert has appraised the underlying property. In addition, we will not borrow from these persons unless a majority of our directors, including a majority of the independent directors, not otherwise interested in the transaction approves the transaction as being fair, competitive and commercially reasonable and no less favorable to us than comparable loans between unaffiliated parties. These restrictions on loans will only apply to advances of cash that are commonly viewed as loans, as determined by the board of directors. By way of example only, the prohibition on loans would not restrict advances of cash for legal expenses or other costs incurred as a result of any legal action for which indemnification is being sought nor would the prohibition limit our ability to advance reimbursable expenses incurred by directors or officers or our advisor or its respective affiliates.

Reports to Stockholders. Our charter requires that we prepare an annual report and deliver it to our stockholders within 120 days after the end of each fiscal year. Our directors are required to take reasonable steps to ensure that the annual report complies with our charter provisions. Among the matters that must be included in the annual report or included in a proxy statement delivered with the annual report are:

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financial statements prepared in accordance with GAAP that are audited and reported on by an independent registered public accounting firm;

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the ratio of the costs of raising capital during the year to the capital raised;

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the aggregate amount of advisory fees and the aggregate amount of other fees paid to our advisor and any affiliates of our advisor by us or third parties doing business with us during the year;

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our total operating expenses for the year stated as a percentage of our average invested assets and as a percentage of our net income;

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a report from the independent directors that our policies are in the best interests of holders of our Common Shares and the basis for such determination; and

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a separately stated, full disclosure of all material terms, factors and circumstances surrounding any and all transactions involving us and our advisor, a director or any affiliate thereof during the year, which disclosure has been examined and commented upon in the report by the independent directors with regard to the fairness of such transactions.

Voting of Shares Owned by Affiliates. Our sponsor, our advisor, our directors and officers and their respective affiliates may not vote their shares regarding (a) the removal of any of them or (b) any transaction between any of them and us. In determining the requisite percentage in interest of shares necessary to approve any matter on which our sponsor, our advisor, our directors and any of their respective affiliates may not vote or consent, any shares owned by any of them will not be included.

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Ratification of Charter Provisions. As required by Section II.C.1 of the NASAA REIT Guidelines, our board of directors, including a majority of the independent directors, reviewed and ratified our charter at its first meeting.

Vote of Majority of Independent Directors Required. As required by Section II.C.3 of the NASAA REIT Guidelines, our board of directors, including a majority of the independent directors, must approve matters relating to the duties and restrictions set forth in such Section II.C.3.

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INVESTMENT OBJECTIVES AND CRITERIA

General

We are The Dual Strategy REIT. We intend to invest primarily in interests in real estate located in the United States, with a primary focus on the eastern United States and in markets that we believe are likely to benefit from favorable demographic changes, or that we believe are poised for strong economic growth. We may invest in interests in a wide variety of commercial property types, including office, industrial, retail and hospitality properties, single-tenant properties, multifamily properties, age-restricted residences and in other real estate-related assets. We expect to build a high-quality portfolio intended to generate current income and to provide capital preservation, capital appreciation and portfolio diversification. Our properties may be existing income-producing properties, newly constructed properties or properties under development or under construction. We also may seek to acquire assets from sellers who are distressed or who face time-sensitive selling deadlines, or from owners or institutions who have acquired assets through foreclosure. We may acquire assets directly or through joint ventures, by making an equity investment in a project or by making a mezzanine or bridge loan with a right to acquire equity in the project. We also may buy debt secured by an asset with a view toward acquiring the asset through foreclosure. We also may originate or invest in mortgages, bridge or mezzanine loans and tenant-in-common interests, or entities that make investments similar to the foregoing. Further, we may invest in real estate-related securities, including securities issued by other real estate companies.

We expect to invest approximately 80% of our funds in direct real estate investments and other equity interests, and approximately 20% of our funds in debt interests, which may include bridge or mezzanine loans. We expect this breakdown to remain approximately the same even if we raise an amount substantially less than our maximum offering amount.

Market Opportunity

We believe that the next several years should present a buying opportunity for investment in commercial real estate. Since 2008, commercial real estate prices generally have decreased, making it possible to acquire many properties for less than what such properties would have sold for at the height of the commercial real estate market in 2006 and 2007 and often for less than replacement cost. We also are in a historically low interest rate environment, which means that we expect to be able to borrow today at historically low interest rates. Leverage is one of the components that makes real estate attractive. When owners of real estate can borrow at a rate lower than the capitalization rates at which properties are priced, the owners will have positive leverage, resulting in net cash flow on invested equity at a rate higher than the capitalization rate.

It is our view and belief that we are approaching a “perfect storm” for property acquisitions now. Over the next few years, we believe several trends will occur which will make the acquisition of real estate assets attractive. We anticipate that a significant number of securitized loans that were originated at the height of the commercial real estate market in 2006 and 2007 will be coming due, which, when originally made, were at debt levels that will be difficult to refinance. We also expect that if certain regulations are promulgated relating to bank capital requirements, banks will sell real estate-related assets and foreclose on troubled real estate loans which they previously may have modified or extended. This should create a further buying opportunity for real estate investment. It is our view and belief that based on the sovereign debt crisis in Europe, many governments of industrialized nations will be forced to take actions that may result in an inflationary cycle in the mid- to long-term. For all these reasons, we believe we can acquire properties at below replacement cost, finance them with low interest rate debt, improve the value of the rental stream if and as inflation starts to take hold, and then dispose of the assets at higher prices towards the end of our holding period. If our view and belief are correct, we believe that our company will be well positioned to benefit based on the timing of its formation and expected types of asset acquisitions upon completion of the offering.

Our Dual Strategy

In order to meet our investment objectives we deploy a dual strategy in building our portfolio. The first strategy focuses on acquiring existing stabilized cash-flowing assets to support stable, consistent dividend distributions to our stockholders. The second strategy focuses on acquiring opportunistic assets which we can reposition, redevelop or remarket to create value enhancement and capital appreciation. By pursuing both strategies simultaneously we believe we can most effectively achieve our desired investment objectives. In executing on our investment objectives we will consider the state of the current real estate and capital markets in the United States in conjunction with our views of likely future developments which will impact both the real estate and capital markets in the United States.

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We are currently in a period of historically low interest rates, which we believe provides a unique opportunity for us to finance our acquisitions with low cost fixed-rate debt financing. It is our view that the current interest rate environment will remain stable over the short term based on pronouncements from the Federal Reserve Bank. However, based on global sovereign debt concerns and our view of where the capital markets will need to stabilize in the long term, we believe that interest rates will rise in the medium term. We also anticipate that while there is limited risk of inflation in the short term, given historic business cycles, inflation is likely to increase once the current low interest rate environment ends. Therefore, with respect to our strategy of acquiring stable, in-place cash-flowing assets, we perceive a unique opportunity to finance such assets with low interest financing as a way to effect a positive impact on cash flow, and, based on the length of term for which we are able to fix such interest rates, any assumable financing may be viewed by a potential purchaser as an attractive opportunity when we elect to exit such a transaction. Since we also believe that, on a longer term, inflation should play a significant role in the valuation of real estate assets, we will be focusing on acquiring properties which have shorter-term leases or leases which provide for periodic increases through fixed rent increases or adjustment based on increases in the consumer price index, as a way to guard against potential inflation. Therefore, we will generally not seek to acquire properties which are fully leased with fixed rents which are not adjustable if inflation occurs, except where leases are of shorter duration, or where our objectives may be achieved from other characteristics of such properties.

At the same time, we will be pursuing our second strategy of acquiring assets which we believe, because of their property-specific characteristics or their market characteristics, may benefit from unique repositioning opportunities or for development or redevelopment or that are located in markets which we believe show high growth potential or that are available from distressed sellers which present appropriate investments for us. We anticipate that typically, such assets will not have stable cash flows upon acquisition, and will generally require additional investment in the execution of a value-added strategy developed specifically for that asset, which is intended to provide significantly higher returns, and which generally will provide us with opportunities to realize growth in the value of such assets upon the sale or refinancing of such assets. We expect that typically, we will seek to exit from these more opportunistic acquisitions once we have achieved our intended goals, rather than continue to hold such assets for a longer term. This strategy involves more risk than real estate programs that have a targeted holding period for investments longer than ours, utilize leverage to a lesser degree or employ more conservative investment strategies, and we believe that we have a potential for a higher rate of return than comparable real estate programs.

Prior to acquiring an asset, our advisor will perform an analysis of the asset to determine whether it meets our investment criteria, including the probability of sale at an optimum price within our targeted holding period. Our advisor will use the information derived from the analysis in determining whether the asset is an appropriate investment for us. We intend to employ our dual investment strategies, with a view towards generating current cash flow as well as realizing growth in the value of our assets and hedging against inflation. We intend that our overall strategy will involve one or more of the following attributes:

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Diversified Portfolio — Once we have invested substantially all the proceeds of this offering, we expect to have acquired a well diversified portfolio based on property type, geography, investment strategy, tenant mix, lease expirations and other factors;

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Growth Markets or Growth Opportunities — We expect that our properties either will be located in established or growing markets based on trends in population growth, employment, household income, employment diversification and other key demographic factors, or will be opportunities for value enhancement based on the need for recapitalization, repositioning or redevelopment; and

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Discount To Replacement Cost — In the current acquisition environment, we expect to acquire properties at values based on current rents and at a substantial discount to replacement cost.

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We intend to focus on maximizing stockholder value. Some of the key elements of our financial strategy include:

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Seasoned Management — We will acquire and manage the portfolio through our advisor and its affiliates, including our sponsor’s seasoned team of ten professional managers who, although they have limited experience managing a public REIT, have over 150 years of combined operating history and extensive knowledge and expertise in commercial real estate;

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Property Focus — We will utilize a property-specific focus that combines intensive leasing plans with cost containment measures, with the expectation that it will deliver a solid and stable income stream;

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Stable Dividend — We intend to make monthly distributions. While we will seek to make distributions from operating revenues, we have made and may continue to make distributions at least partially from sources such as the proceeds of this offering or borrowings. Distributions from such sources would reduce the funds available for investment in properties and would reduce the amount of distributions we could make in the future. For more information, see “Risk Factors — Risks Related to an Investment in United Realty Trust Incorporated”;

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Prudent Leverage — We will target a prudent leverage strategy with an approximately 65% loan-to-value ratio on our portfolio (calculated once we have invested substantially all the offering proceeds). For purposes of calculating our 65% target leverage, we will determine the loan-to-value ratio on our portfolio based on the greater of the aggregate cost and the fair market value of our investments and other assets. Our charter allows us to incur leverage up to 300% of our total “net assets” (as defined in Section I.B of the NASAA REIT Guidelines) as of the date of any borrowing, which is generally expected to be approximately 75% of the cost of our investments. We may only exceed this 300% limit with the approval of a majority of our independent directors;

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Upside Potential — We expect our portfolio to have upside potential from a combination of lease-up, rent growth, cost containment and increased cash flow; and

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Exit Strategy — We expect to sell our assets, sell or merge our company or list our company, within six to nine years after the end of this offering, although we cannot guarantee an exit within this timeframe.

Our primary investment objectives are:

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to provide you with stable cash distributions;

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to preserve and protect your capital contribution;

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to provide you with portfolio diversification;

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to realize growth in the value of our assets upon the sale of such assets; and

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to provide you with the potential for future liquidity through the sale of our assets, a sale or merger of our company or a listing of our Common Shares on a national securities exchange. See “— Exit Strategy — Liquidity Event.”

We intend to hold our assets for a period of three to six years from the termination of our initial public offering. We believe that holding our assets for this period will enable us to capitalize on the potential for increased income and capital appreciation of such assets while also providing for a level of liquidity consistent with our investment strategy and fund life. Nonetheless, we may consider investing in properties and other assets with a different holding period if such investments provide an opportunity for an attractive return in a period that is consistent with the life of this fund. Further, economic or market conditions may influence us to hold our investments for different periods of time.

As a result of our dual strategy and our flexibility to invest in a variety of types of real estate and real estate-related assets rather than in specific limited asset types, our intent to target assets with significant possibilities for near-term capital appreciation or higher current income, and our use of a higher degree of leverage, we believe that our investments have the potential to provide a rate of return superior to real estate programs that invest in a limited range of asset types, have a longer targeted holding period, utilize leverage to a lesser degree or employ more conservative investment strategies. In cases where our advisor determines that it is advantageous to us to make investments in which our advisor or its affiliates do not have substantial experience, it is our advisor’s intention to employ persons, engage consultants or partner with third parties that have, in our advisor’s opinion, the relevant expertise necessary to assist our advisor in its consideration, making and administration of such investments.

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We may modify our acquisition and investment policies if our shares become listed for trading on a national securities exchange. For example, upon listing of our common stock, we may choose to sell more volatile properties and use the proceeds to acquire properties that are more likely to generate a stable return. Other factors also may cause us to modify our acquisition and investment policies.

Investments in Real Property

All of our investments will be in the United States, with a primary focus on the eastern United States and in markets that we believe are likely to benefit from favorable demographic changes, or that we believe are poised for strong economic growth. We may invest in interests in a wide variety of commercial property types, including office, industrial, retail and hospitality properties, single-tenant properties, multifamily properties, age-restricted residences and in other real properties. We will invest in a diversified portfolio of properties in terms of geography, type of property and industry of our tenants that will satisfy our investment objectives of preserving our capital and realizing capital appreciation upon the ultimate sale of our properties.

With respect to our first strategy, we will invest primarily in existing, stabilized income-producing properties which have shorter-term leases or leases which provide for periodic increases through fixed rent increases or adjustment based on increases in the consumer price index, as a way to guard against potential inflation. Therefore we will generally not seek to acquire properties which are fully leased on a long-term basis with fixed rents which are not adjustable if inflation occurs, except where leases are of shorter duration, or where our objectives may be achieved from other characteristics of such properties.

With respect to our second strategy, we will invest primarily in assets that we believe may be repositioned or redeveloped so that they will reach an optimum value within three to six years from the termination of our initial public offering. We may acquire properties with lower tenant quality or low occupancy rates and reposition them by seeking to improve the property, tenant quality and occupancy rates and thereby increase lease revenues and overall property value. Further, we may invest in properties that we believe are an attractive value because all or a portion of the tenant leases expire within a short period after the date of acquisition, and we intend to renew leases or replace existing tenants at the properties for improved returns. We may acquire properties in markets that are depressed or overbuilt with the anticipation that, within our targeted holding period, the markets will recover and favorably impact the value of these properties. We may also acquire properties from sellers who are distressed or face time-sensitive deadlines with the expectation that we can achieve better success with the properties. Many of the markets where we will acquire properties may have high growth potential in real estate lease rates and sale prices.

In making investment decisions for us, our advisor will consider relevant real estate property and financial factors, including the location of the property, its suitability for any development contemplated or in progress, its income-producing capacity, the prospects for long-range appreciation and its liquidity and income tax considerations.

Except with respect to limitations on acquiring properties located outside of the United States or in land not yet approved for development, we are not limited in the number or size of properties we may acquire or the percentage of net proceeds of this offering that we may invest in a single property. The number and mix of properties we acquire will depend upon real estate and market conditions and other circumstances existing at the time we acquire our properties and the amount of proceeds we raise in this offering.

We believe that successful commercial real estate investment requires the implementation of strategies that permit favorable purchases, effective asset and property management for enhanced current returns and maintenance of higher relative property values, and timely disposition for attractive capital appreciation. Our advisor uses modeling tools that our advisor believes will help us identify favorable property acquisitions and enable it to forecast growth. Using these tools together with our overall strategies, including individual market monitoring and ongoing analysis of macro- and micro-regional economic cycles, we expect to be better able to identify favorable acquisition targets, increase current returns and current distributions to investors, maintain higher relative portfolio property values, conduct appropriate development or redevelopment activities and execute timely dispositions at appropriate sales prices to enhance capital gains distributable to our investors.

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Generally, the purchase price that we will pay for any property will be based on the fair market value of the property as determined by a majority of our directors. In the cases where a majority of our independent directors require and in all cases in which the transaction is with our sponsor, any of our directors or our advisor or its affiliates, we will obtain an appraisal of fair market value by an independent expert selected by our independent directors. Regardless, we will generally obtain an independent appraisal for each property in which we invest. However, we will rely on our own independent analysis and not on appraisals in determining whether to invest in a particular property. Appraisals are estimates of value and should not be relied upon as measures of true worth or realizable value.

The purchase of any property type will be based upon the best interests of our company and our stockholders as determined by our board of directors and taking into consideration the same factors discussed above. Additionally, we may acquire properties that are under development or construction, undeveloped land, options to purchase properties and other real estate assets. In fact, we may invest in whatever types of interests in real estate that we believe are in our best interests.

Other Real Estate and Real Estate-Related Loans and Securities

Although not our primary focus, we may, from time to time, make investments in other real estate properties and real estate-related loans and securities. We do not expect these types of assets to exceed 20% of the proceeds of this offering, assuming we sell the maximum offering amount. If we raise substantially less than our maximum offering amount and we acquire a real estate-related asset early in our offering stage, our investments in real estate-related loans and securities could constitute a greater percentage of our portfolio. With respect to our investments in real estate-related assets, including mortgages, mezzanine, bridge and other loans, debt and derivative securities related to real estate and any non-controlling equity investments in other public REITs or real estate companies, we will focus primarily on investments in first mortgages secured by commercial properties. We do not intend that our investments in securities will require us or any of our subsidiaries to register as an “investment company” under the Investment Company Act.

Real Estate-Related Loans

We will focus on first and second mortgage loans. Other mortgage investments may consist of B-notes, mezzanine loans, bridge loans, distressed loans or “loan-to-own” opportunities. Our real estate-related loan strategy will be opportunistic. As a result, our board of directors has not placed any limitations on investments real estate-related loans as to factors such as credit rating or loan-to-value ratio.

Enhanced-Return Properties

We may invest in enhanced-return properties, which are higher-yield and higher-risk investments that may not be as well located or well occupied as the substantial majority of our properties. Examples of enhanced-return properties that we may acquire and reposition include: properties with moderate vacancies or near-term lease rollovers; poorly managed and positioned properties; properties owned by distressed sellers; and build-to-suit properties.

Investments in Equity Securities

We may make equity investments in other REITs and other real estate companies that operate assets meeting our investment objectives. We may purchase the common or preferred stock of these entities or options to acquire their stock. We may target a public company that owns commercial real estate or real estate-related assets when we believe its stock is trading at a discount to that company’s net asset value. We may eventually seek to acquire or gain a controlling interest in the companies that we target. We do not expect our non-controlling equity investments in other public companies to exceed 5% of the proceeds of this offering, assuming we sell the maximum offering amount, or to represent a substantial portion of our assets at any one time.

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Acquisition Policies

Geography. We intend to focus on properties located in the United States, with a primary focus on the eastern United States and on markets where we have an established market presence, or market knowledge and access to potential investments, as well as an ability to efficiently direct property management and leasing operations.

Our initial target markets will be growth markets with strong demographic growth, such as employment, household income, and economic diversity.

Additionally, our advisor may pursue properties in other markets demonstrating strong fundamentals, opportunities to acquire properties at prices below replacement cost, in properties with short-term leases that our advisor believes are poised to benefit from rental increases or longer term leases which are inflation- protected by tying rental rate increases to the Consumer Price Index, or CPI, and in assets which we otherwise believe can meet our investment objectives. Economic and real estate market conditions vary widely within each region and submarket, and we intend to spread our portfolio investments across multiple sub-markets in the eastern United States.

Investment Size and Term. We expect the majority of our investments will typically be more than $20 million; however, we may make investments above or below this amount to complement our portfolio and meet our investment objectives, and during the early phase of our investments, the typical investment will likely be significantly less than $20 million.

We intend to hold our properties for three to six years, which we believe is the optimal period to enable us to capitalize on the potential for increased income and capital appreciation of properties. For five years following the initial effective date of our initial public offering, we may reinvest proceeds from the sale of our assets, subject to amounts to be paid to stockholders for their payment of taxes. Following such time period, we will not reinvest proceeds from the sale of our assets except to the extent necessary to preserve, repair or maintain our existing assets. We expect to sell our assets, sell or merge our company or list our company within six to nine years after the end of this offering, although we cannot guarantee an exit within this timeframe. It is possible that economic and market conditions may influence us to hold our investments for different periods of time.

Real Property Investment Considerations. Our advisor will perform an in-depth review of each property acquired in the portfolio, including, but not limited to:

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geographic location and property type;

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condition and use of the property;

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market growth demographics;

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historical performance;

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current and projected cash flow;

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potential for capital appreciation;

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presence of existing and potential competition;

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prospects for liquidity through sale, financing or refinancing of the assets; and

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tax considerations.

Conditions to Closing Real Property Investments. Our advisor will perform a diligence review on each property that we purchase. We will not purchase any property unless and until we obtain what is generally referred to as a “Phase I” environmental site assessment and are generally satisfied with the environmental status of the property. A Phase I environmental site assessment consists of a visual survey of the building and the property in an attempt to identify areas of potential environmental concerns, visually observing neighboring properties to assess surface conditions or activities that may have an adverse environmental impact on the property, and contacting local governmental agency personnel and performing a regulatory agency file search in an attempt to determine any known environmental concerns in the immediate vicinity of the property. A Phase I environmental site assessment does not generally include any sampling or testing of soil, groundwater or building materials from the property. A “Phase II” environmental site assessment may include such sampling or testing, but we generally will not obtain a Phase II environmental site assessment unless our advisor determines that the results of the Phase I assessment would warrant it. We also will generally seek to condition our obligation to close the purchase of any investment on the delivery of certain documents from the seller or developer. Such documents may include, where available:

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plans and specifications;

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surveys;

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evidence of marketable title, subject to such liens and encumbrances as are acceptable to our advisor;

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title and liability insurance policies; and

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financial statements covering recent operations of properties having operating histories.

Tenant Improvements. We anticipate that tenant improvements required at the time we acquire a property will be funded from our offering proceeds. However, if a tenant of one of our properties does not renew its lease or otherwise vacates its space in one of our buildings, it is likely that, in order to attract new tenants, we may be required to expend substantial funds for tenant improvements and tenant refurbishments to the vacated space. We would expect to fund those improvements with offering proceeds, through third-party financings or working capital.

Terms of Leases. We will generally seek to acquire properties where leases provide for periodic rent increases or provide for periodic adjustments based on the CPI or other inflation-based indices, except where leases are of shorter duration, or where our objectives may be achieved from other characteristics of such properties. We expect that the majority of the non-residential leases we enter into or acquire will provide for tenant reimbursement of operating expenses. Operating expenses typically include real estate taxes, special assessments, insurance, utilities, common area maintenance and some building repairs. We also intend to include provisions in our non-residential leases that increase the amount of base rent payable at various points during the lease term or provide for the payment of additional rent calculated as a percentage of a tenant’s gross sales above predetermined thresholds. However, the terms and conditions of any leases we enter into may vary substantially from those described. To the extent material to our operations, we will describe the terms of the leases on properties we acquire by means of a supplement to this prospectus.

We will execute new tenant leases and existing tenant lease renewals, expansions, and extensions with terms that are dictated by the current submarket conditions and the verifiable creditworthiness of each particular tenant. In general, we expect to enter into standard commercial leases. These may include standard multi-tenant commercial leases, “triple net” leases or participating leases. In addition, we may enter into leases with a TRS of ours with respect to certain hospitality properties. Under standard multi-tenant commercial leases, tenants generally reimburse the landlord for their pro rata share of annual increases in operating expenses above the base amount of operating expenses established in the initial year of the lease term. Under triple net leases, tenants generally are responsible for their pro rata share of building operating expenses in full for each year of the lease term. Under participating leases, which are common for retail properties, the landlord shares in a percentage of the tenant’s revenue. We expect our standard multi-tenant and participating lease terms will have initial terms of not less than three years and will include renewal options that are granted at the greater of 95% of market rates or the existing rental rate at expiration. We expect our triple net leases will be for initial terms of ten years or more, and that any leases with TRSs would be for terms of five years, although we may have lease terms which differ in certain circumstances.

Multifamily Properties. We may acquire and develop multifamily properties for rental operations as apartment buildings or for conversion into condominiums. In each case, these multifamily communities will meet our investment objectives and may include conventional multifamily properties, such as mid-rise, high-rise, and garden-style properties, as well as student housing and age-restricted properties (typically requiring at least one resident of each unit to be 55 or older). Specifically, we may acquire multifamily assets that may benefit from enhancement or repositioning and development assets. We may purchase any type of residential property, including properties that require capital improvement or lease-up to enhance stockholder returns. Location, condition, design and amenities are key characteristics for apartment communities and condominiums. We will focus on major metropolitan areas and other markets and submarkets that are deemed likely to benefit from ongoing population shifts, or that are poised for high growth potential.

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The terms and conditions of any apartment lease that we enter into with our residents may vary substantially from those we describe in this prospectus. However, we expect that a majority of our leases will be standardized leases customarily used between landlords and residents for the specific type and use of the property in the geographic area where the property is located. In the case of apartment communities, such standardized leases generally have terms of one year or less. All prospective residents for our apartment communities will be required to submit a credit application.

Hospitality, Recreation and Leisure Properties. We also may acquire hospitality and recreation and leisure properties that meet our investment strategies. Such investments may include limited-service, extended-stay and full-service lodging facilities as well as all-inclusive resorts. We may acquire existing hospitality properties or properties under construction and development. We expect to acquire hospitality properties with high growth potential achievable through various strategies, such as brand repositioning, market-based recovery or improved management practices. If we acquire lodging properties, we will lease the hotel to a TRS in which we may own a 100% ownership interest. Our TRS will engage a third party in the business of operating hotels to manage the property.

When making hospitality investments we may also acquire recreation and leisure properties, such as marinas, ski resorts and spa and health facilities located on or near the hotel or resort properties we acquire. We may purchase existing marinas and related facilities and, to a lesser extent, develop new marinas where suitable opportunities exist. We expect the marinas that we acquire to derive a substantial percentage of their revenues from the rental of boat slips and dry boat storage facilities. In addition, these marinas may offer amenities and facilities that supplement their principal sources of revenue pursuant to leases and subleases. Such amenities and facilities may include boat rentals and sales, boat trailer storage facilities and boat supplies and repair services. We will also consider acquiring ski resorts and their related real estate assets. The ski resorts that we may seek to acquire likely will be managed by operators who provide services such as the sale of lift tickets and passes, ski and snowboard lesson packages, equipment rental and repair outlets and food and beverage sales. We may also acquire health clubs, athletic training facilities, wellness centers and spa facilities located on or near any hotels or resorts we acquire.

Tenant Creditworthiness. We will execute new tenant leases and tenant lease renewals, expansions and extensions with terms dictated by the current submarket conditions and the creditworthiness of each particular tenant. We will generally review relevant financial data collected from prospective tenants before consummating a lease transaction. Relevant financial data from potential tenants and guarantors include income statements and balance sheets for the current year and for prior periods, net worth or cash flow statements of guarantors and other information we deem relevant. If our advisor determines it appropriate, we may use industry credit rating services to the extent available to determine the creditworthiness of potential tenants and any personal guarantor or corporate guarantor of each potential tenant to the extent available. We will review the reports produced by these services together with relevant financial and other data collected from these parties before consummating a lease transaction. Such relevant data from potential tenants and guarantors include income statements and balance sheets for current and prior periods, net worth or cash flow of guarantors, and business plans and other data we deem relevant. However, in light of our desire to purchase properties that we believe present an opportunity for enhanced future value, any lesser creditworthiness of existing tenants may not be a significant factor in determining whether to acquire the property. We anticipate that we will invest in properties that we believe may be repositioned for greater value due, in whole or in part, to the presence of tenants that do not have strong credit. In such cases, our strategy will include undertaking efforts to attract new, more creditworthy tenants.

Real Estate-Related Loans and Securities Considerations. Although not our primary focus, we may, from time to time, make or invest in mortgage, bridge or mezzanine loans, and other loans relating to real property, including loans in connection with the acquisition of investments in entities that own real property. Our criteria for investing in loans will be substantially the same as those involved in our investment in properties; however, we also will evaluate such investments based on the current income opportunities presented. When determining whether to make investments in mortgage and other loans and securities, we will consider such factors as: positioning the overall portfolio to achieve an optimal mix of real estate properties and real estate-related loans and securities; the diversification benefits of the loans relative to the rest of the portfolio; the potential for the investment to deliver high current income and attractive risk-adjusted total returns; the likelihood that by acquiring the loan we may be able to acquire the real property securing the loan, and other factors considered important to meeting our investment objectives.

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We may acquire or retain loan servicing rights in connection with investments in real estate-related loans that we acquire or originate. If we retain the loan servicing rights, our advisor or one of its respective affiliates will service the loan or select a third-party provider to do so. We may structure, underwrite and originate some of the debt products in which we invest. Our underwriting process will involve comprehensive financial, structural, operational and legal due diligence to assess the risks of investments so that we can optimize pricing and structuring.

Our loan investments may be subject to regulation by federal, state and local authorities and subject to laws and judicial and administrative decisions imposing various requirements and restrictions, including, among other things, regulating credit-granting activities, establishing maximum interest rates and finance charges, requiring disclosure to customers, governing secured transactions and setting collection, repossession and claims handling procedures and other trade practices. In addition, certain states have enacted legislation requiring the licensing of mortgage bankers or other lenders, and these requirements may affect our ability to effectuate our proposed investments in loans.

We will not make or invest in mortgage loans on any one property if the aggregate amount of all mortgage loans outstanding on the property, including our borrowings, would exceed an amount equal to 85% of the appraised value of the property, unless we find substantial justification due to the presence of other underwriting criteria. We may find such justification in connection with the purchase of mortgage loans in cases in which we believe there is a high probability of our foreclosure upon the property in order to acquire the underlying assets and in which the cost of the mortgage loan investment does not exceed the appraised value of the underlying property. Such mortgages may or may not be insured or guaranteed by a governmental agency or another third party.

Acquisition of Properties from Our Affiliates

Under our charter, we are not precluded from acquiring real properties, directly or through joint ventures, from our affiliates, including from programs sponsored by our sponsor. We also are not precluded from providing mortgage or other financing to joint ventures in which we are a joint venturer, or to our affiliates, including loans secured by properties owned by our affiliates. Any such acquisitions or loans will be approved consistent with the conflict of interest procedures described in this prospectus, including approval by a majority of the board of directors and a majority of the independent directors, and receipt of an independent third-party appraisal of the asset to be acquired or financed.

Joint Ventures/Co-Investments

We will generally hold fee title or a long-term leasehold estate in the properties we acquire. We also may enter into joint ventures, partnerships and other co-ownership arrangements or participations with third parties as well as entities affiliated with our advisor for the purpose of obtaining interests in real estate properties and other real estate investments. We also may enter into joint ventures for the development or improvement of properties. Joint venture investments permit us to own interests in large properties and other investments without unduly restricting the diversity of our portfolio, allow us to potentially increase the return on invested capital, promote our brand name and increase market share and help us to obtain the participation of sophisticated partners in our real estate decisions. In determining whether to invest in a particular joint venture, our advisor will evaluate the real estate properties or real estate-related assets that such joint venture owns or is being formed to own under the same criteria described elsewhere in this prospectus for the selection of our investments.

We also will evaluate the potential joint venture partner as to its financial condition, operating capabilities and integrity. If the potential joint venture partner is an affiliate of our advisor, we will only enter into such joint venture if a majority of our directors, including a majority of our independent directors, not otherwise interested in the transaction, approve the transaction as being fair and reasonable to us and on substantially the same terms and conditions as those received by other joint venturers.

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We have not established any specific terms that we require in the joint venture agreements that we enter into. Instead, we will establish the terms with respect to any particular joint venture agreement on a case-by-case basis after our board of directors considers all the facts that are relevant, such as the nature and attributes of our other potential joint venture partners, the proposed structure of the joint venture, the nature of the operations, the liabilities and assets associated with the proposed joint venture and the size of our interest when compared to the interests owned by other partners in the venture. With respect to any joint venture we enter into, we expect to consider the following types of concerns and safeguards:

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Our ability to manage and control the joint venture — we will consider whether we should obtain certain approval rights in joint ventures we do not control. For proposed joint ventures in which we are to share control with another co-venturer, we will consider the procedures to address decisions if there is an impasse.

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Our ability to exit a joint venture — we will consider requiring buy/sell rights, repurchase rights or forced liquidation rights.

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Our ability to control transfers of interests held by other partners to the joint venture — we will consider requiring consent provisions, a right of first refusal or forced repurchase rights in connection with transfers.

Development and Construction of Properties

We may invest proceeds from the offering in properties on which improvements are to be constructed or completed. To help ensure performance by the builders of properties that are under construction, completion of such properties will generally be guaranteed at the contracted price by a completion bond or performance bond posted by the contractor or by major subcontractors to such project. Our advisor will enter into contracts on our behalf with contractors or developers for such construction services on terms and conditions approved by our board of directors. If we contract with our property manager for such projects we also will obtain the approval of a majority of our directors, including a majority of our independent directors not otherwise interested in the transaction, that the contract is fair and reasonable to us and on terms and conditions not less favorable to us than those available from unaffiliated third parties. Our advisor may rely upon the substantial net worth of the contractor or developer or a personal guarantee accompanied by financial statements showing a substantial net worth provided by an affiliate of the person entering into the construction or development contract as an alternative to a completion bond or performance bond. Development of real estate properties is subject to risks relating to a builder’s ability to control construction costs or to build in conformity with plans, specifications and timetables. See “Risk Factors — General Risks Related to Investments in Real Estate.”

We expect to engage our property manager to provide construction and development management services for some of our properties. Other than with respect to tenant improvements, as described below, we will pay a construction and development management fee in an amount of 2% of the cost of any construction or development that our property manager undertakes. When our property manager provides construction management services with respect to tenant improvements, the construction and development management fee may be up to, but will not exceed, 5% of the cost of the tenant improvements. We may make periodic progress payments or other cash advances to developers or builders of our properties prior to completion of development or construction only upon receipt of an architect’s certification as to the percentage of the project then completed and as to the dollar amount of the development or construction then completed. We intend to use such additional controls on disbursements to builders and developers as we deem necessary and prudent.

Borrowing Policies

We may use borrowing proceeds to finance acquisitions of new properties or other real estate-related loans and securities; to originate new loans; to pay for capital improvements, repairs or tenant build-outs to properties; to pay distributions; or to provide working capital. Careful use of debt will help us to achieve our diversification goals because we will have more funds available for investment. Our investment strategy is to utilize primarily secured and possibly unsecured debt to finance our investment portfolio; however, given the current debt market environment, we may elect to forego the use of debt on some of or all our future real estate acquisitions. We may elect to secure financing subsequent to the acquisition date on future real estate properties and initially acquire investments without debt financing. To the extent that we do not finance our properties and other investments, our ability to acquire additional properties and real estate-related investments will be restricted.

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Once we have fully invested the proceeds of this offering, assuming we sell the maximum amount, our portfolio-wide loan-to-value ratio (calculated after the close of this offering) will be approximately 65%. For purposes of calculating our 65% target leverage, we will determine the loan-to-value ratio on our portfolio based on the greater of the aggregate cost and the fair market value of our investments and other assets. There is no limitation on the amount we may borrow for the purchase of any single asset. Our charter allows us to incur leverage up to 300% of our total “net assets” (as defined in Section I.B of the NASAA REIT Guidelines) as of the date of any borrowing, which is generally expected to be approximately 75% of the cost of our investments. We may only exceed this 300% limit if a majority of our independent directors approves each borrowing in excess of this limit and we disclose such borrowing to our stockholders in our next quarterly report along with a justification for the excess borrowing. For example purposes only, substantial justification could be found by the independent directors: (a) if the value of our portfolio declined and new borrowings were necessary to repay existing obligations; (b) to pay sufficient distributions to maintain our REIT status; or (c) to buy a property where an exceptional acquisition opportunity presents itself and the terms of the debt and nature of the property are such that the debt does not materially increase the risk that we would become unable to meet our financial obligations as they became due. During the early stages of this offering, and to the extent financing in excess of our charter limit is available at attractive terms, we believe that the majority of our independent directors may be more likely to approve debt in excess of this limit. In all events, we expect that our secured and unsecured borrowings will be reasonable in relation to the net value of our assets and will be reviewed by our board of directors at least quarterly.

The form of our indebtedness may be long-term or short-term, secured or unsecured, fixed or floating rate or in the form of a revolving credit facility or repurchase agreements or warehouse lines of credit. Our advisor will seek to obtain financing on our behalf on the most favorable terms available. For a discussion of the risks associated with the use of debt, see “Risk Factors — Risks Associated with Debt Financing.”

Except with respect to the borrowing limits contained in our charter, we may reevaluate and change our debt policy in the future without a stockholder vote. Factors that we would consider when reevaluating or changing our debt policy include: then-current economic conditions, the relative cost and availability of debt and equity capital, any investment opportunities, the ability of our properties and other investments to generate sufficient cash flow to cover debt service requirements and other similar factors. Further, we may increase or decrease our ratio of debt to book value in connection with any change of our borrowing policies.

We will not borrow from our advisor or its affiliates to purchase properties or make other investments unless a majority of our directors, including a majority of the independent directors not otherwise interested in the transaction approves the transaction after determining that it is fair, competitive and commercially reasonable and no less favorable to us than comparable loans between unaffiliated parties. In order to arrive at such a determination, our directors will examine data regarding comparable loans between unaffiliated parties in consultation with counsel and independent financial advisors, investment bankers or mortgage brokers.

Certain Risk Management Policies

Credit Risk Management. We may be exposed to various levels of credit and special hazard risk depending on the nature of our underlying assets and the nature and level of credit enhancements supporting our assets. Our advisor will review and monitor credit risk and other risks of loss associated with each investment. In addition, we will seek to diversify our portfolio of assets to avoid undue geographic and other types of concentrations to the extent consistent with our investment objectives, focus and policies, although we may concentrate assets geographically at certain times during our operational stage in order to obtain operating and management efficiencies. Our board of directors will monitor the overall portfolio risk and levels of provision for loss.

Hedging Activities. Consistent with our intention to qualify as a REIT, we may engage in hedging transactions to protect our investment portfolio from interest rate fluctuations and other changes in market conditions. These transactions may include interest rate swaps, the purchase or sale of interest rate collars, caps or floors, options, mortgage derivatives and other hedging instruments. These instruments may be used to hedge as much of the interest rate risk as we determine is in the best interest of our stockholders, given the cost of such hedges and the need to maintain our qualification as a REIT. We may elect to bear a level of interest rate risk that could otherwise be hedged when we believe, based on all relevant facts, that bearing such risk is advisable.

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Equity Capital Policies

Our board of directors may amend our charter from time to time to increase or decrease the number of authorized shares of capital stock or the number of shares of stock of any class or series that we have authority to issue without stockholder approval. After your purchase in this offering, our board may elect to (a) sell additional shares in this or future public offerings, (b) issue equity interests in private offerings, (c) issue shares to our advisor, or its successors or assigns, in payment of an outstanding fee obligation, (d) issue equity incentive awards under our stock incentive plan or (e) issue Common Shares to sellers of assets we acquire in connection with an exchange of limited partnership interests of the operating partnership. To the extent we issue additional equity interests after your purchase in this offering, your percentage ownership interest in us will be diluted. In addition, depending upon the terms and pricing of any additional offerings and the value of our investments, you also may experience dilution in the book value and fair value of your Common Shares.

Disposition Policies

We expect to hold real property investments for three to six years, which we believe is likely to be the optimal period to enable us to capitalize on the potential for increased income and capital appreciation. The period that we will hold our investments in real estate-related assets will vary depending on the type of asset, interest rates and other factors. Our advisor will develop a well-defined exit strategy for each investment we make, initially at the time of acquisition as part of the original business plan for the asset, and thereafter by periodically reviewing each asset to determine the optimal time to sell the asset and generate a strong return. The determination of when a particular investment should be sold or otherwise disposed of will be made after considering relevant factors, including prevailing and projected economic conditions, whether the value of the asset is anticipated to decline substantially, whether we could apply the proceeds from the sale of the asset to make other investments consistent with our investment objectives, whether disposition of the asset would allow us to increase cash flow, and whether the sale of the asset would constitute a prohibited transaction under the Code or otherwise impact our status as a REIT.

Exit Strategy — Liquidity Event

It is our intention to begin the process of achieving a liquidity event not later than six to nine years after the termination of this offering, although we cannot guarantee an exit within this timeframe. A “liquidity event” could include a sale of all or substantially all of our assets, a sale or merger of our company or a listing of our Common Shares on a national securities exchange.

If we do not begin the process of achieving a liquidity event by the eighth anniversary of the termination of this offering, our charter requires either (a) an amendment to our charter to extend the deadline to begin the process of achieving a liquidity event, or (b) the holding of a stockholders meeting to vote on a proposal for an orderly liquidation of our portfolio.

If we seek and fail to obtain stockholder approval of a charter amendment extending the deadline with respect to a liquidity event, our charter requires us to submit a plan of liquidation for the approval of our stockholders. If we seek and fail to obtain stockholder approval of both such a charter amendment and such a plan of liquidation, we will continue our business. If we seek and obtain stockholder approval of such a plan of liquidation, we will begin an orderly sale of our properties and other assets. The precise timing of such sales would take account of the prevailing real estate and financial markets, the economic conditions in the submarkets where our properties are located and the U.S. federal income tax consequences to our stockholders. In making the decision to apply for listing of our Common Shares, our directors will try to determine whether listing our Common Shares or liquidating our assets will result in greater value for stockholders.

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One of the factors our board of directors will consider when making the determination of whether to list our Common Shares on a national securities exchange is the liquidity needs of our stockholders. In assessing whether to list, our board of directors would likely solicit input from financial advisors as to the likely demand for our Common Shares upon listing. If the board believed that after listing it would be difficult for stockholders to dispose of their Common Shares, then that factor would weigh against listing. However, this would not be the only factor considered by the board. If listing still appeared to be in the best long-term interest of our stockholders, despite the prospects of a relatively small market for our Common Shares upon the initial listing, the board may still opt to list our Common Shares. The board and the independent directors also would likely consider whether there was a large pent-up demand to sell our Common Shares when making decisions regarding listing or liquidation. The degree of participation in our DRIP and the number of requests for repurchases under our share repurchase program at this time could be an indicator of stockholder demand to liquidate their investment.

Investment Limitations

Our charter places numerous limitations on us with respect to the manner in which we may invest our funds or issue securities. Pursuant to our charter, we will not:

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borrow in excess of 300% of our total “net assets” (as defined in Section I.B of the NASAA REIT Guidelines) as of the date of any borrowing, unless approved by a majority of our independent directors;

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invest more than 10% of our total assets in unimproved real property or mortgage loans on unimproved real property, which we define as an equity interest in real property not acquired for the purpose of producing rental or other operating income and on which there is no development or construction in progress or planned in good faith to commence within one year;

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make or invest in mortgage loans unless an appraisal is obtained concerning the underlying property, except for those mortgage loans insured or guaranteed by a government or government agency;

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make or invest in mortgage loans, including construction loans, on any one property if the aggregate amount of all mortgage loans on such property would exceed an amount equal to 85% of the appraised value of such property as determined by appraisal, unless substantial justification exists for exceeding such limit because of the presence of other underwriting criteria;

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make an investment in a property if the related acquisition fees, financing fees and acquisition expenses are not reasonable or exceed 6% of the purchase price of the property or, in the case of a loan, acquire or originate a loan if the related origination fees and expenses are not reasonable or exceed 6% of the funds advanced; provided, that in the case of a property or loan, the investment may be made if a majority of the independent directors determines that the transaction is commercially competitive, fair and reasonable to us;

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acquire equity securities unless a majority of our directors (including a majority of our independent directors) not otherwise interested in the transaction approves such investment as being fair, competitive and commercially reasonable;

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invest in real estate contracts of sale, otherwise known as land sale contracts, unless the contract is in recordable form and is appropriately recorded in the chain of title;

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invest in commodities or commodity futures contracts, except for futures contracts when used solely for the purpose of hedging in connection with our ordinary business of investing in real estate assets and mortgages;

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engage in underwriting or the agency distribution of securities issued by others;

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issue equity securities on a deferred payment basis or similar arrangement;

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issue debt securities in the absence of adequate cash flow to cover debt service unless the historical debt service coverage (in the most recently completed fiscal year), as adjusted for known changes, is sufficient to service that higher level of debt as determined by the board of directors or a duly authorized executive officer;

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issue equity securities that are assessable after we have received the consideration for which our board of directors authorized their issuance; or

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issue equity securities redeemable solely at the option of the holder.

In addition, our charter includes many other investment limitations in connection with conflict-of-interest transactions, which limitations are described under “Conflicts of Interest.” Our charter also includes restrictions on roll-up transactions, which are described in the section “Description of Shares — Restrictions on Roll-up Transactions.”

Disclosure Policies with Respect to Future Probable Acquisitions

During this offering our advisor will be continually evaluating various potential investments and engaging in discussions and negotiations with sellers, developers and potential tenants regarding the purchase and development of properties and other investments for us. If we believe that a reasonable probability exists that we will acquire a specific property or other asset, whether directly or through a joint venture or otherwise, this prospectus will be supplemented to disclose the pending acquisition of such property. We expect that this will normally occur after the signing of a purchase agreement for the acquisition of a specific asset or upon the satisfaction or expiration of major contingencies in any such purchase agreement, depending on the particular circumstances surrounding each potential investment. A supplement to this prospectus will describe any improvements proposed to be constructed thereon and other information that we consider appropriate for an understanding of the transaction. Further data will be made available after any pending acquisition is consummated, also by means of a supplement to this prospectus, if appropriate. YOU SHOULD UNDERSTAND THAT THE DISCLOSURE OF ANY PROPOSED ACQUISITION CANNOT BE RELIED UPON AS AN ASSURANCE THAT WE WILL ULTIMATELY CONSUMMATE SUCH TRANSACTION OR THAT THE INFORMATION PROVIDED CONCERNING THE PROPOSED TRANSACTION WILL NOT CHANGE BETWEEN THE DATE OF THE SUPPLEMENT AND ANY ACTUAL PURCHASE.

Investment Limitations to Avoid Registration as an Investment Company

We intend to conduct our operations so that the company and its subsidiaries are not required to register as an investment company under the Investment Company Act. Under the Investment Company Act, in relevant part, a company is an “investment company” if:

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pursuant to Section 3(a)(1)(A), it is, or holds itself out as being, engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting or trading in securities; or

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pursuant to Section 3(a)(1)(C), it is engaged, or proposes to engage, in the business of investing, reinvesting, owning, holding or trading in securities and owns or proposes to acquire “investment securities” having a value exceeding 40% of the value of its total assets (exclusive of government securities and cash items) on an unconsolidated basis. “Investment securities” do not include U.S. government securities and securities of majority-owned subsidiaries that are not themselves investment companies and are not relying on the exception from the definition of investment company under Section 3(c)(1) or Section 3(c)(7) of the Investment Company Act.

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We intend to conduct our operations so that the company and most, if not all, of its wholly and majority-owned subsidiaries are not investment companies under the 40% test or can rely on Rule 3a-1 under the Investment Company Act. Rule 3a-1 under the Investment Company Act, generally provides that, notwithstanding Section 3(a)(1)(C) of the Investment Company Act, an issuer will not be deemed to be an “investment company” under the Investment Company Act; provided, that (a) it does not hold itself out as being engaged primarily, or propose to engage primarily, in the business of investing, reinvesting or trading in securities, and (b) on an unconsolidated basis no more than 45% of the value of its total assets, consolidated with the assets of any wholly owned subsidiary (exclusive of U.S. government securities and cash items), consists of, and no more than 45% of its net income after taxes, consolidated with the net income of any wholly owned subsidiary (for the last four fiscal quarters combined), is derived from, securities other than U.S. government securities, securities issued by employees’ securities companies, securities issued by certain majority-owned subsidiaries of such company and securities issued by certain companies that are controlled primarily by such company. We believe that we, our operating partnership and the subsidiaries of our operating partnership will satisfy this exclusion.

We will continuously monitor our holdings on an ongoing basis to determine the compliance of the company with Section 3(a)(1)(C) and the exemption provided in Rule 3a-1.

In addition, we believe that neither our company nor any of its wholly or majority-owned subsidiaries will be considered investment companies under Section 3(a)(1)(A) of the Investment Company Act because they will not engage primarily or propose to engage primarily, or hold themselves out as being engaged primarily in the business of investing, reinvesting or trading in securities. Rather, the company and its subsidiaries will be primarily engaged in non-investment company businesses related to real estate. Consequently, the company and its subsidiaries expect to be able to conduct their respective operations such that none of them will be an investment company under the Investment Company Act.

The determination of whether an entity is a majority-owned subsidiary of our company is made by us. The Investment Company Act defines a majority-owned subsidiary of a person as a company 50% or more of the outstanding voting securities of which are owned by such person, or by another company which is a majority-owned subsidiary of such person. The Investment Company Act further defines voting securities as any security presently entitling the owner or holder thereof to vote for the election of directors of a company. We treat entities in which we own at least a majority of the outstanding voting securities as majority-owned subsidiaries for purposes of the 40% test. We have not requested that the SEC staff approve our treatment of any entity as a majority-owned subsidiary and the SEC staff has not done so. If the SEC staff were to disagree with our treatment of one or more subsidiary entities as majority-owned subsidiaries, we would need to adjust our strategy and our assets in order to continue to comply with the 40% test. Any such adjustment in our strategy could have a material adverse effect on us.

A change in the value of any of our assets could cause us or one or more of our wholly or majority-owned subsidiaries to fall within the definition of “investment company” and negatively affect our ability to maintain our exemption from regulation under the Investment Company Act. To avoid being required to register the company or any of its subsidiaries as an investment company under the Investment Company Act, we may be unable to sell assets we would otherwise want to sell and may need to sell assets we would otherwise wish to retain. In addition, we may have to acquire additional income- or loss-generating assets that we might not otherwise have acquired or may have to forgo opportunities to acquire interests in companies that we would otherwise want to acquire and would be important to our investment strategy. Our advisor will continually review our investment activity to attempt to ensure that we will not be regulated as an investment company.

If we are required to register as an investment company under the Investment Company Act, we would become subject to substantial regulation with respect to our capital structure (including our ability to use borrowings), management, operations, transactions with affiliated persons (as defined in the Investment Company Act), and portfolio composition, including restrictions with respect to diversification and industry concentration and other matters. Compliance with the Investment Company Act would, accordingly, limit our ability to make certain investments and require us to significantly restructure our business plan.

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Change in Investment Objectives and Limitations

Our charter requires that our independent directors review our investment policies at least annually to determine that the policies we follow are in the best interests of our stockholders. Each determination and the basis therefor shall be set forth in the minutes of our board of directors. The methods of implementing our investment policies also may vary as new investment techniques are developed. Except as otherwise provided in our charter, our investment objectives and policies and the methods of implementing our investment objectives, may be altered by a majority of our directors, including a majority of the independent directors, without the approval of our stockholders.

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DESCRIPTION OF REAL ESTATE INVESTMENTS

Tilden House

On March 29, 2013, a joint venture between our operating partnership and Tilden LLC, the seller of the property, acquired a fee simple interest in Tilden House, a residential property located at 2520 Tilden Avenue in Brooklyn, New York. The acquisition was not an affiliated transaction, and prior to the acquisition, Tilden LLC did not have a material relationship with us.

Tilden House is a nine-story residential building, completed in 2007, with 117 apartments, community facility space and indoor and outdoor parking, comprising approximately 86,360 rentable square feet.

Capitalization

The purchase price for Tilden House was approximately $22.3 million, exclusive of brokerage commissions and closing costs. Brokerage commissions and closing costs were approximately $2.1 million. We funded the acquisition as follows: (i) $14.5 million with a new first mortgage loan secured by Tilden House, as described in more detail below; (ii) $7.5 million by Tilden LLC through the contribution of a portion of its equity in Tilden House to the joint venture, or the Tilden JV; and (iii) cash from our ongoing public offering in an amount which, when combined with the brokerage commissions and closing costs paid by our operating partnership, was approximately $2.3 million. In connection with the closing, we paid URP a supplemental transaction-based advisory fee for deal sourcing in the amount of $229,175 and paid our advisor an acquisition fee in the amount of $240,675 and a financing coordination fee in the amount of $145,000. Such amounts are not included in the purchase price of Tilden House described above.

Pursuant to the terms of a limited liability company agreement entered into by and between our operating partnership, as the managing member, and Tilden LLC, as the non-managing member, or the Tilden JV agreement, our operating partnership contributed approximately $2.3 million in cash to the Tilden JV, and Tilden LLC contributed equity in Tilden House valued at $7.5 million. Effective December 31, 2013, the Tilden JV agreement was amended. Under the amendment, Tilden LLC withdrew as a member of the Tilden JV and reallocated its membership interest to Siamak Kohanoff, the 100% owner of Tilden LLC. All references below to the Tilden JV agreement refer to the Tilden JV agreement as so amended.

Under the terms of the Tilden JV agreement, with respect to distributions of net operating cash flow, Mr. Kohanoff is entitled to a preferential cumulative non-compounded return of 7% per annum on his unrecovered contributions. With respect to distributions of net capital proceeds, Mr. Kohanoff is entitled to a return of unrecovered contributions plus any accrued and unpaid preferential return. Except as set forth below, Mr. Kohanoff is not entitled to any other distributions from the Tilden JV.

Additionally, Mr. Kohanoff is entitled to exchange his membership interest for such number of OP Units, as described in the section of this prospectus captioned “Summary of Our Operating Partnership Agreement”, equal to the quotient of the unrecovered contributions made by Mr. Kohanoff divided by $11.00, or the Put Right, if the “trigger event” occurs. The “trigger event” is defined as the New York City Department of Homeless Services, or the Department, entering into a new agreement or agreements (meeting certain conditions) with Highland Park Community Development Corporation, or Highland, to provide services to operate transitional housing units at Tilden House and such new agreement or agreements becoming effective as of June 30, 2014. In addition, if the trigger event occurs, our operating partnership will be entitled to cause Mr. Kohanoff to exchange his membership interest for the number of OP Units described above, or the Call Right. There can be no assurance that the trigger event, which is outside our control, will or will not occur.

If Mr. Kohanoff receives OP Units pursuant to the Call Right or the Put Right, he will receive exchange rights, which will enable him, after holding the OP Units for at least one year, to cause our operating partnership to exchange his OP Units for Common Shares. Further, if Mr. Kohanoff receives OP Units pursuant to the Call Right or the Put Right, he will retain an interest in the Tilden JV which will entitle him to a priority return equal to the amount by which distributions on the OP Units or Common Shares are less than a cumulative non-compounded return of 7% per annum.

If Mr. Kohanoff requests that we repurchase 100% (but not less than 100%) of the Common Shares issued on exchange of OP Units issued on exercise of the Put Right or the Call Right through our share repurchase program on the fifth anniversary of the execution of the Tilden JV agreement and such Common Shares are repurchased at a price of less than $11.00 per share, the Tilden JV will pay to Mr. Kohanoff the difference between $11.00 and the sale price.

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On March 29, 2013, the Tilden JV incurred a first mortgage loan from Doral Bank in an amount equal to $14.5 million to provide the acquisition funding for the Tilden House acquisition. The loan has an initial five-year term ending on April 30, 2018 and provides the Tilden JV with the option to extend the maturity date to April 30, 2023. The loan bears interest at a per annum fixed rate of 5.0%. The Tilden JV is required to make monthly principal and interest payments in an amount equal to approximately $78,000. If the term of the loan is not extended, $13.3 million will be due at maturity. If the term of the loan is extended for an additional five years, $11.8 million will be due at maturity.

The loan is secured by a mortgage on Tilden House, is guaranteed by URTI, and may be accelerated if a default or any of certain specified bankruptcy events occurs. The Tilden JV may prepay all or any portion of the principal amount upon the payment of a prepayment penalty.

Major Tenant/Lease Expiration

Tilden House is leased to Highland under a 25-year net lease, which expires on December 31, 2031, subject to Highland’s option to cancel the lease at the end of the fifteenth and twentieth years of the term. Highland has entered into a services agreement with the Department to provide transitional housing for families in need. Pursuant to the services agreement, the Department pays Highland a rate that is calculated to reimburse Highland for 100% of Highland’s approved costs, including the payment of rent. The rate cannot exceed 100% of Highland’s annual budget. Highland currently pays approximately $2.7 million annually in base rent, which increases every three years based on CPI. The current base rent equates to an annual rental income per rentable square foot of approximately $30.78. The services agreement extends through June 30, 2014, and we expect that it will be renewed through June 30, 2015. The payments made to Highland under the services agreement are the source of Highland’s rental payments under the lease.

The table below shows the occupancy rate and the average effective annual rent per rentable square foot as of December 31 for each of the last five years:

	2013			2012			2011			2010			2009
Occupancy rate		100	%		100	%		100	%		100	%		100	%
Average effective annual rent per rentable square foot	$	30.78		$	26.85		$	26.85		$	26.85		$	26.85

Other

We believe Tilden House is suitable and adequate for its uses. There are numerous family shelters in the area offering similar services to similar tenants, either operated by or under contract with the City of New York. Additionally, there are numerous multifamily properties in the area offering market rate rental apartments, although in our view, most of these buildings are older, or of a lower grade, than Tilden House.

We do not have any scheduled capital improvements.

We believe Tilden House is adequately insured.

The Federal tax basis for Tilden House is $15,129,000, and the property is being depreciated over 27.5 years on a straight-line basis. Annual realty taxes payable on Tilden House for the 2014 tax year are estimated to be approximately $340,486, at a rate of 10.32%, of which Highland will pay $323,892 and the Tilden JV will pay $16,594 pursuant to the terms of the lease.

Parker Avenue Property Promissory Note

On March 29, 2013, our advisor assigned to our operating partnership its 76.67% membership interest, with an agreed value of $1.15 million, in Parker Note Acquisition, LLC, or Note LLC. Note LLC is the owner of a promissory note, or the Promissory Note, dated March 1, 2010, in the original principal amount of $1.5 million, made by Parker Avenue Associates, LLC, or the Borrower, to 70 Parker Avenue Properties, Inc., or the Lender, which Promissory Note had previously been assigned by the Lender to Note LLC on May 6, 2011. The Promissory Note evidences a senior purchase-money mortgage loan, or the Loan, extended on March 1, 2010 by the Lender to the Borrower and is secured by properties located at 58 and 70 Parker Avenue, Poughkeepsie, New York, which we refer to, together, as the Parker Avenue Property.

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On March 27, 2013 McGrath Realty Inc. issued its broker’s opinion of value for the Parker Avenue Property, concluding a value range between $2.1 million and $2.3 million. On March 27, 2013 our advisor retained KTR Real Estate Advisors LLC, or KTR, to perform a self-contained appraisal of the Parker Avenue Property. On March 28, 2013, KTR issued a preliminary findings letter, subject to the completion of its appraisal, concluding that the current value of the Parker Avenue Property, based on preliminary findings, is at least $2.0 million. Our advisor assigned its interest in Note LLC to our operating partnership in satisfaction of a $1.15 million obligation owing by our advisor to us. Our board of directors approved the agreed value of the 76.67% membership interest in Note LLC based on what it determined to be the likely value of the Parker Avenue Property.

Previously, on March 28, 2013, Summer Investors, LLC, or Summer, an affiliate of Mr. Frydman, had assigned a 76.67% membership interest (out of its 100% membership interest) in Note LLC to our advisor, which 76.67% membership interest was further assigned to our operating partnership, as described above.

On March 29, 2013, our operating partnership formed Parker Note Holdings, LLC with Summer, or Note Holdings. On the same date, our operating partnership contributed to Note Holdings its 76.67% membership interest in Note LLC, and Summer contributed to Note Holdings its 23.33% membership interest in Note LLC.

No fees were paid to our sponsor or its affiliates in connection with the transactions described above.

Pursuant to the terms of the limited liability company agreement of Note Holdings, dated March 29, 2013, between our operating partnership, as the managing member, and Summer, as the non-managing member, or the Note Holdings JV agreement, our operating partnership’s capital contribution has an agreed value of $1.15 million, and represents a 76.67% membership interest in Note Holdings, and Summer’s capital contribution has an agreed value of $350,000, and represents a 23.33% membership interest in Note Holdings.

Under the terms of the Note Holdings JV agreement, distributions of available cash by Note Holdings will be made to each member on a pro rata basis in accordance with each member’s respective percentage membership interest. The Note Holdings JV agreement further provides that Summer assumes and agrees to be responsible for all obligations of Note LLC to the Lender that existed as of March 29, 2013. In addition, Summer has agreed to advance all litigation expenses associated with prosecuting the existing foreclosure action initiated by Note LLC with respect to the Loan (as further described below), and Note Holdings has agreed to reimburse Summer for litigation expenses only after Note Holdings has distributed $1.15 million to our operating partnership. If, after the collection of all the sums due Note LLC under the Loan (whether by payment from the Borrower, by sale of the Loan or, after the vesting of title to the Parker Avenue Property in Note Holdings or in Note LLC as a result of foreclosure, by sale of the Parker Avenue Property) and the distribution thereof by Note Holdings to the members, our operating partnership has not received aggregate distributions of at least $1.15 million, Summer will pay to Note Holdings the difference between $1.15 million and the aggregate distributions received by our operating partnership from Note Holdings, which amount Note Holdings will distribute to our operating partnership.

The Parker Avenue Property is directly adjacent to Walkway Over the Hudson State Historic Park, or the Walkway, which features a historic rail bridge converted in 2009 to a linear walkway spanning the Hudson River. At 212 feet tall and 1.28 miles long, it is the longest elevated pedestrian bridge in the world and a major New York state tourist attraction, and recorded over one million visitors in 2012.

The Parker Avenue Property consists of two tax parcels: parcel “A”, at 2.10 acres; and parcel “B”, at 0.93 acres; for a total of 3.03 acres. Parcel “B” is a vacant lot currently being utilized as an overflow parking area for the Walkway and the Dutchess Rail Trail. Although no rent is currently being collected, in our opinion, Parcel “B” presents an opportunity for us, if we were to take ownership of the Parker Avenue Property, to develop a paid parking facility. However, we have not taken ownership and consequently have no present plans to undertake any capital improvements.

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Parcel“A”, located directly across the street from the entrance to the Walkway, includes a vacant three-story brick loft building consisting of approximately 52,000 rentable square feet and several vacant outbuildings consisting of an aggregate of approximately 2,000 rentable square feet. We believe that, if we were to take ownership of the Parker Avenue Property, Parcel “A” presents a potential value-add redevelopment opportunity for retail, entertainment and cultural uses complementary to the Walkway. However, we have not taken ownership and consequently have no present plans to undertake any capital improvements. In our judgment, several redevelopment projects of brick warehouses into loft-style townhouses and apartments have had recent success in the local market. We believe that the potential for conversion of Parcel “A” is furthered elevated because the site is located only short distance from the Poughkeepsie Train Station and Metro-North, Main Street retail, Marist and Vassar Colleges, and St. Francis and Vassar Hospitals.

On May 29, 2012, as a result of payment and other defaults by the Borrower under the Loan, Note LLC filed a Notice of Pendency and initiated a mortgage foreclosure action with respect to the Parker Avenue Property in the Dutchess Supreme and County Court, or the Court. On March 10, 2013, the Court granted Note LLC’s motion for appointment of a receiver for its benefit, to, inter alia, rent or lease the Parker Avenue Property and collect rents and profits.

Other

We believe the Parker Avenue Property is suitable and adequate for its uses. There are numerous vacant lots and buildings in the area offering similar opportunities for development or redevelopment.

We believe that the Borrower has failed to maintain adequate insurance on the Parker Avenue Property. Note Holdings has commenced the process of binding insurance coverage on the Parker Avenue Property in an amount which it believes to be adequate.

The Borrower has failed to pay past due property taxes in the amount of $27,675, which amount Note Holdings intends to pay. Annual realty taxes payable on the Parker Avenue Property for the 2013 tax year are school taxes of $17,072 and property taxes of $19,368.

14 Highland Avenue

On August 2, 2013, we, through our operating partnership, acquired a 14.6% beneficial interest in a Delaware Statutory Trust, or DST, that on the same date acquired a property known as 14 Highland Avenue located in Yonkers, New York. The DST purchased 14 Highland Avenue for $2.1 million. The purchase was funded in part by a $1.5 million first mortgage loan made by Carver Federal Savings Bank to the DST. 14 Highland Avenue is a five-story residential building with 22 apartments and is 99% leased as of December 31, 2013. Our operating partnership issued to the seller 9,091 OP units with an agreed value of $100,000 as partial consideration for the interest in the DST.

Myrtle Beach Medical Office

On April 28, 2014, we, through our operating partnership, became contractually bound, through an assignment and assumption, subject to certain conditions customary to closing, to close on a purchase and sale agreement, or PSA, entered into on November 22, 2013, between 82ND-17, LLC and United Realty Capital, LLC, pursuant to which we will acquire the fee simple interest in a commercial property located at 945 82nd Parkway in Myrtle Beach, South Carolina. The seller of the property is 82ND-17, LLC. The seller does not have a material relationship with us other than with respect to the PSA.

The property is a two-story, triple-net leased medical office building built in 1999, with 44,323 rentable square feet and 224 onsite outdoor parking spaces. Situated on three acres at the intersection of US-17 and 82nd Parkway, the property is situated in close proximity to Grand Strand Regional Medical Center, or GSRMC, at the entrance to a corridor of medical office buildings related to or directly serving GSRMC.

Pursuant to the terms of the PSA, our obligation to close upon the acquisition is subject to certain conditions customary to commercial property acquisitions. We anticipate closing the acquisition of the property on or before May 21, 2014. There can be no assurance that the acquisition will be consummated. The PSA contains customary representations and warranties by the seller.

Capitalization

The contract purchase price for the property is approximately $14.5 million exclusive of brokerage commissions and closing costs. We intend to fund the property’s purchase price with proceeds from our ongoing initial public offering. We intend to obtain a first mortgage loan on the property in the amount of $10.3 million, either before or after closing, although there can be no assurance that we will obtain a first mortgage loan.

Major Tenants/Lease Expirations

The property is currently 100% leased to three tenants, all medical service providers. As of March 31, 2014, each tenant occupies more than 10% of the rentable square footage of the property. The first lease currently requires annualized rental income of approximately $333,000, is subject to 3.0% annual increases, expires in May 2020 and has no renewal option. The second lease requires annualized rental income of approximately $418,508, is subject to 2.0% - 4.0% annual increases based on CPI, expires in December 2019 and has two five-year renewal options by the tenant. The third lease requires annualized rental income of approximately $394,000, is subject to 2.0% - 4.0% annual increases based on CPI, expires in December 2019 and has two five-year renewal options by the tenant.

The table below shows the occupancy rate and the average effective annual rent per rentable square foot as of March 31 for each of the last five years:

	2014	2013	2012	2011	2010	2009
Occupancy rate	100%	100%	100%	100%	100%	*
Average effective annual rent per rentable square foot	$26.20	$25.66	$25.40	$24.67	$24.23	*

___________________

* Data not available.

The table below sets forth the lease expiration information for each of the next ten years (annualized rental income in thousands):

Year Ending December 31,	Number of Leases Expiring		Total Rentable Square Feet of Expiring Leases		% of Leased Area Represented by Expiring Leases		Minimum Annual Rent Under Expiring Leases(1)		% of Total Annualized Rental Income(1) Represented by Expiring Leases
2014		—		—		—		—		—
2015		—		—		—		—		—
2016		—		—		—		—		—
2017		—		—		—		—		—
2018		—		—		—		—		—
2019		2		32,004		72%		$896,898		70%
2020		1		12,319		28%		$385,958		30%
2021		—		—		—		—		—
2022		—		—		—		—		—
2023		—		—		—		—		—

___________________

(1)

As of December 31, 2013. Does not take into account any fixed or CPI-based annual increases.

Other

We believe the property is suitable and adequate for its uses. There are numerous facilities in the area offering similar spaces to similar tenants. We do not have any scheduled capital improvements. We believe the property is adequately insured.

The Federal tax basis, the rate and method of depreciation and the life claimed for purposes of depreciation will be determined based upon the completion of cost allocation studies in connection with finalizing our 2014 Federal tax return. Annual realty taxes payable on the property for the 2014 tax year are estimated to be approximately $71,000. The tax rate is not available as of the date of this filing.

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VALUATION POLICIES

Valuation Guidelines; Calculation of NAV

Our board of directors has adopted valuation guidelines to be used in connection with valuing our properties and other real estate-related assets and liabilities and calculating NAV. Valuations and calculations of NAV will begin on the NAV pricing start date, which could occur as late as January 15, 2015. Our advisor will administer our valuation guidelines. Commencing on the NAV pricing start date and at the beginning of each calendar year thereafter, our advisor will calculate the NAV based in part on the appraisals of our properties performed by the independent valuer and in accordance with the valuation guidelines established by our board of directors. Each of our properties will be appraised at least annually, and appraisals will be scheduled over the course of a year so that approximately 25% of all properties are appraised each quarter. These appraisals will be used internally solely to calculate our NAV and will not be disclosed to our stockholders or to the public. Our board will monitor on an ongoing basis our advisor’s compliance with our valuation guidelines. The calculation of our NAV is intended to be a calculation of fair value of our assets less our outstanding liabilities and may differ from our financial statements. As a public company, we are required to issue financial statements based on historical cost in accordance with GAAP. To calculate our NAV, we have adopted a model, as explained below, which attempts to adjust the value of our assets from historical cost to fair value in accordance with the GAAP principles set forth in FASB Accounting Standards Codification Topic 820, Fair Value Measurements and Disclosures, or Topic 820. We will engage KTR Valuation & Consulting Services, LLC, or KTR, a leading firm in the business of providing valuation advisory services and performing valuation analyses with respect to real estate assets and liabilities, to perform valuations of our portfolio and provide the metrics to be used in the calculation of NAV in the subsequent valuation, and such independent valuer (including any independent valuer selected by our board in substitution of a prior independent valuer) will not be affiliated with us or with our advisor or any of its or our affiliates. Along with any information available to the independent valuer based on its own contacts and experience, the independent valuer will have access to all information about our investment portfolio that the independent valuer deems relevant. Our advisor will use the valuations provided by the independent valuer as a basis for calculating NAV per Common Share and will, in its discretion and as appropriate, consider other factors in calculating NAV, including, without limitation, the metrics provided by the independent valuer for the calculation of NAV. Our advisor will calculate the fair value of our assets based on appraisals performed by our independent valuer and in accordance with these principles. Because these fair value calculations will involve significant professional judgment in the application of both observable and unobservable attributes, the calculated fair value of our assets may differ from their actual realizable value or future fair value. Furthermore, no rule or regulation requires that we calculate NAV in a certain way. While we believe our NAV calculation methodologies are consistent with standard industry principles, there is no established practice among non-traded REITs for calculating NAV in order to establish a purchase and repurchase price. As a result, other non-traded REITs may use different methodologies or assumptions to determine NAV.

The board of directors will oversee our advisor’s NAV calculation and will review and approve the valuations of the independent valuer and the metrics provided by the independent valuer for the calculation of NAV until the subsequent valuation. From time to time, our board, including a majority of our independent directors, may adopt changes to the valuation guidelines if it (a) determines that such changes are likely to result in a more accurate reflection of NAV or a more efficient or less costly procedure for the determination of NAV without having a material adverse effect on the accuracy of such determination or (b) otherwise reasonably believes a change is appropriate for the determination of NAV. While the methodologies contained in the valuation guidelines will be designed to operate reliably within a wide variety of circumstances, it is possible that in certain unanticipated situations or after the occurrence of certain extraordinary events (such as a terrorist attack or an act of nature), our advisor’s ability to calculate NAV may be impaired or delayed, including, without limitation, circumstances where there is a delay in accessing or receiving information from vendors or other reporting agents upon which our advisor may rely upon in determining the daily value of our NAV. In these circumstances, a more accurate valuation of our NAV could be obtained by using different assumptions or methodologies. The board of directors also will have the right to replace the independent valuer at any time by majority vote, and the board of directors also will be required to approve any changes to our valuation guidelines.

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At least annually, the board of directors will meet with representatives of the advisor and the independent valuer to receive their recommendations and to evaluate whether the valuation complies with our valuation guidelines. In the exercise of its business judgment, our board of directors will have sole discretion to accept or revise the independent valuer’s valuation, and the board of directors will be ultimately and solely responsible for the determination of value. The board of directors may elect to engage additional valuation firms to review the valuation. In special situations when, in our advisor’s reasonable judgment, the administration of the valuation guidelines would otherwise result in a valuation that does not represent a fair and accurate estimate of the value of our investment, our advisor and, to the extent of the independent valuer’s responsibilities with respect to the valuation of our real properties, the independent valuer, may apply alternative methodologies; provided, that our advisor and, if applicable, the independent valuer, must notify our board of directors of any alternative methodologies utilized and their impact on the overall valuation of the our investment at the next scheduled board meeting. Notwithstanding the foregoing, our board of directors may suspend the offering if it determines that the calculation of NAV is materially incorrect or there is a condition that restricts the valuation of a material portion of our assets.

Calculation of NAV and NAV Per Common Share

Commencing on the NAV pricing start date, in accordance with the valuation guidelines, our advisor will calculate our NAV after the end of each business day that the New York Stock Exchange is open for unrestricted trading. Changes in our daily NAV will reflect factors including, but not limited to, our portfolio income, interest expense and unrealized/realized gains (losses) on assets, and accruals for the asset management fee. The portfolio income will be calculated and accrued on the basis of data extracted from (a) the annual budget for each property and at the company level, including organization and offering expenses incurred following the offering commencement date and certain operating expenses, (b) material, unbudgeted non-recurring income and expense events such as capital expenditures, prepayment penalties, assumption fees, tenant buyouts, lease termination fees and tenant turnover with respect to our properties when our advisor becomes aware of such events and the relevant information is available and (c) material property acquisitions and dispositions occurring during the month. For the first month commencing on the NAV pricing start date, we will calculate and accrue portfolio income with respect to our properties based on their performance prior to the NAV pricing start date, and using the most recent valuation of each property. Commencing on the NAV pricing start date, for the first month following a property acquisition, we will calculate and accrue portfolio income with respect to such property based on its performance before the acquisition and the contractual arrangements in place at the time of the acquisition, as identified and reviewed through our due diligence and underwriting process in connection with the acquisition. Thereafter, on an ongoing basis, our advisor will adjust the accruals to reflect actual operating results and to appropriately reflect the outstanding receivable, payable and other account balances resulting from the accumulation of daily accruals for which financial information is available. The daily accrual of portfolio income also will include reimbursements to our advisor and dealer manager for organization and offering expenses incurred prior to the offering commencement date and paid on our behalf. Under GAAP, we would be required to recognize organization costs and acquisition fees and expenses as an expense when incurred, and offering costs as a reduction of equity. Any NAV calculation adhering to Topic 820 will not capitalize and amortize organization and offering costs or acqusition fees, as such costs and fees hold no value for stockholders after they have been paid in cash to the various service providers. After subtracting such liabilities from the value of the operating partnership’s assets, our advisor will multiply that amount by our percentage ownership interest in the operating partnership. Following the allocation of income and expenses as described above, NAV will be adjusted for reinvestments of distributions, repurchases of Common Shares, and expense accruals to determine the current day’s NAV. At the close of business on the date that is one business day after each record date for any declared distribution, which we refer to as the distribution adjustment date, our NAV will be reduced to reflect the accrual of our liability to pay the distribution to our stockholders of record as of the record date.

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Our advisor will be responsible for the ultimate calculation of our daily NAV, but its determinations will be subject to the review of our board, which will oversee our advisor’s NAV calculation and review the process used by our advisor to estimate accrued liabilities and calculate NAV at least once per quarter. The independent directors are responsible for reviewing the compensation to our advisor and determining that such compensation is reasonable in relation to the nature and quality of the services performed by our advisor, including the calculations of NAV, and our board will evaluate our advisor’s performance annually. If the independent directors or our board determine that our advisor’s fees are not appropriate in light of its performance and the services to be performed by our advisor, including the calculations of NAV, our board may request that our advisor reduce its fees, or it may terminate the advisory agreement and retain a new advisor.

The below tables are a hypothetical calculation illustrating the factors that are likely to impact our NAV calculation for Common Shares. This illustration assumes that the calculation occurs on a day which is not a distribution adjustment date and on which there are no reinvestments of distributions. If such hypothetical day were a distribution adjustment date, the adjustment to reflect the accrued distributions would reduce our NAV. The below tables assume that we have 100,000,000 Common Shares issued and outstanding with assets of $1,000,000,000. The amounts shown in the table below are for illustrative purposes only and are not indicative of our current or projected financial condition or performance:

	NAV
Beginning NAV on Hypothetical Trading Day	$	1,000,000,000
(per Common Share)		($10.00	)
Daily Activity:

Accrual of Portfolio Income		200,000
Accrual of Asset Management Fee(1)		(20,000	)
Accrual of Other Expenses		(80,000	)
Accrual of Organization and Offering Expenses(2)		(20,000	)
Unrealized/Realized Gains (Losses) on Assets and Liabilities		0
NAV Before Distribution Reinvestments and Repurchases of Common Shares	$	1,000,080,000
(per Common Share)		(10.0008	)
Distribution Reinvestments		0
Repurchases of Common Shares		(5,000	)
Ending NAV on Hypothetical Trading Day	$	1,000,075,000
(per Common Share)		(10.00075	)

	(1)	Accrued asset management fee allocated on a daily basis to Common Shares. Selling commissions and the dealer manager fee do not accrue because they are paid for by the purchaser at the time of sale.
	(2)	Any NAV calculation adhering to Topic 820 will not capitalize and amortize organization and offering costs or acqusition fees, as such costs and fees hold no value for stockholders after they have been paid in cash to the various service providers.

Limits on the Calculation of Our NAV Per Common Share

Although our primary goal in establishing our valuation guidelines is to produce a valuation that represents a reasonable estimate of the market value of our investments, or the price that would be received upon the sale of our investments in market transactions, our independent valuer will use methodologies based on judgments, assumptions and opinions about future events that may or may not prove to be correct, and if different judgments, assumptions or opinions were used, a different estimate would likely result. Furthermore, our NAV per Common Share that is published commencing on the NAV pricing start date may not fully reflect certain extraordinary events such as a terrorist attack or an act of nature because we may not be able to quantify the financial impact of such events on our portfolio right away. Our advisor will monitor our portfolio between valuations to determine whether there have been any extraordinary events that may have materially changed the estimated market value of the portfolio. We will announce any such extraordinary events and our advisor will analyze the impact of such extraordinary event on our portfolio and determine any appropriate adjustment to be made to our NAV. We will not, however, retroactively adjust NAV. To the extent that the extraordinary events may result in a material change in value of a specific property, our advisor or board of directors will order a new appraisal of such property, which will be prepared by the independent valuer. It is not known whether any resulting disparity will benefit repurchasing or non-repurchasing stockholders, or stockholders electing to purchase, or not electing to participate in our DRIP.

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Valuation of Our Properties

Wholly Owned Properties

Commencing on the NAV pricing start date and at the beginning of each calendar year thereafter, our advisor will develop a valuation plan with the objective of having each of our wholly owned properties appraised at least annually, with appraisals scheduled over the course of a year so that approximately 25% of all properties are appraised each quarter. Appraisals will be performed in accordance with the Uniform Standards of Professional Appraisal Practices, or USPAP, the real estate appraisal industry standards created by The Appraisal Foundation. Each appraisal must be reviewed, approved and signed by an individual with the professional designation of MAI (Member of the Appraisal Institute). Our independent valuer will generally perform the appraisals, but in its discretion, may engage other independent valuation firms to provide appraisals of certain of our properties. Any appraisal provided by a firm other than our independent valuer will be performed in accordance with our valuation guidelines and will not be incorporated into the calculation of our NAV until our independent valuer has confirmed the reasonableness of such appraisal.

Commencing on the NAV pricing start date, newly acquired wholly owned properties will initially be valued at cost and thereafter will join the annual appraisal cycle during the first full quarter in which we own the property. Development assets, if any, will be valued at cost plus capital expenditures and will join the annual appraisal cycle upon stabilization. Acquisition costs and expenses incurred in connection with the acquisition of multiple wholly owned properties that are not directly related to any single wholly owned property generally will be allocated among the applicable wholly owned properties pro rata based on relative values.

Properties purchased as a portfolio or held in a joint venture that acquires properties over time may be valued as a single asset. Real estate appraisals will be reported on a free and clear basis (for example no mortgage), irrespective of any property level financing that may be in place. We expect the primary methodology used to value properties will be the income approach, whereby value is derived by determining the present value of an asset’s stream of future cash flows (for example, discounted cash flow analysis). Consistent with industry practices, the income approach incorporates subjective judgments regarding comparable rental and operating expense data, the capitalization or discount rate, and projections of future rent and expenses based on appropriate evidence. Other methodologies that also may be used to value properties include sales comparisons and replacement cost approaches. Because the appraisals performed by our independent valuer involve subjective judgments, the fair value of our assets, which is included in our NAV, may not reflect the liquidation value or net realizable value of our properties.

Properties Held Through Joint Ventures

Properties held through joint ventures will be valued in a manner that is consistent with the guidelines described above for wholly owned properties. Once the value of a property held by the joint venture is determined by an independent appraisal, the value of our interest in the joint venture would then be determined by applying the distribution provisions of the applicable joint venture agreements to the value of the underlying property held by the joint venture.

Interim Valuations

Wholly owned properties and joint ventures may be valued more frequently than annually if our advisor believes that the value of a wholly owned property or joint venture has changed materially since the most recent annual valuation. For example, an unexpected termination or renewal of a material lease, a material change in vacancies, an unanticipated structural or environmental event at a property or capital market events may cause the value of a wholly owned property to change materially. Upon the occurrence of such a material event, and provided that our advisor is reasonably aware that such event has occurred, our advisor will promptly notify our independent valuer and request that the independent valuer promptly provide an estimate of the change in value of the property. Once the independent valuer has communicated the estimate of property value to our advisor, our advisor will include the revised value in our daily NAV calculation. In addition, the independent valuer, at its discretion, may perform an interim appraisal to confirm the estimated property value that was previously communicated to the advisor. In general, we expect that any estimates of value or interim appraisals will be performed as soon as possible after a determination by our advisor that a material change has occurred and the financial effects of such change will be quantifiable by the independent valuer. However, rapidly changing market conditions or material events may not be immediately reflected in our daily NAV. The resulting potential disparity in our NAV may inure to the benefit of repurchasing or non-repurchasing stockholders, or to stockholders who elect or do not elect to purchase Common Shares, or to participate in our DRIP, depending on whether our published NAV per Common Share for such class is overstated or understated.

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Valuation of Real Estate-Related Loans and Securities

Real estate-related loans and securities that we own or may acquire include debt and equity interests backed principally by real estate, such as the common and preferred stock of publicly traded real estate companies, mortgage loans, bridge loans and mezzanine loans. Commencing on the NAV pricing start date, in general, real estate-related assets will be valued according to the procedures specified below upon acquisition or issuance and then annually, or in the case of liquid securities, daily, as applicable, thereafter. Interim valuations of real estate-related assets that generally are valued annually may be performed if our advisor believes the value of the applicable asset has changed materially since the most recent valuation. In addition, our board of directors may retain additional independent valuation firms to assist with the valuation of our real estate-related assets.

Publicly Traded Real Estate-Related Securities

Publicly traded debt and equity real estate-related securities (such as bonds and shares issued by public REITs) that are not restricted as to salability or transferability will be valued by our advisor on the basis of publicly available information provided by third parties. Generally, the third parties will, upon our advisor’s request, look up the price of the last trade of such securities that was executed at or prior to closing on the valuation day or, in the absence of such trade, the last “bid” price. Our advisor may adjust the value of publicly traded debt and equity real estate-related securities that are restricted as to salability or transferability for a liquidity discount. In determining the amount of such discount, consideration will be given to the nature and length of such restriction and the relative volatility of the market price of the security.

Private Real Estate-Related Assets

Investments in privately placed debt instruments and securities of real estate-related operating businesses (other than joint ventures), such as real estate development or management companies, will be valued by our advisor at cost (purchase price plus all related acquisition costs and expenses, such as legal fees and closing costs) and, commencing on the NAV pricing start date, will be revalued annually at fair value. In evaluating the fair value of our interests in certain commingled investment vehicles (such as private real estate funds), values periodically assigned to such interests by the respective issuers or broker-dealers may be relied upon. Our board of directors may retain additional independent valuation firms to assist with the valuation of our private real estate-related assets.

Mortgage Loans, Mezzanine Loans and Bridge Loans

Individual investments in mortgages, mezzanine loans and bridge loans will be valued by our advisor at our acquisition cost and may be revalued by our advisor from time to time. Revaluations of mortgages will reflect the changes in value of the underlying real estate, with anticipated sale proceeds (estimated cash flows) discounted to their present value using a discount rate based on current market rates. Our board of directors may retain additional independent valuation firms to assist with the valuation of our private mortgage loans.

Valuation of Liquid Non-Real Estate-Related Assets

Liquid non-real estate-related assets include credit-rated government and corporate debt securities, publicly traded equity securities and cash and cash equivalents. Liquid non-real estate-related assets will be valued daily by our advisor.

Review of and Changes to Our Valuation Guidelines

Our advisor will review our valuation guidelines and methodologies with our board of directors at least annually. Any changes to our valuation guidelines require the approval of our board of directors, including a majority of our independent directors.

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Valuation of Our Real Estate Liabilities

Our advisor also will estimate the market value of our real estate-related liabilities by using industry- accepted methodologies. For example, mortgage loans collateralized by our real estate will usually be valued by comparing the differences between the contractual loan terms and current market loan terms, which usually involves the present value of any outstanding payments and maturity amount at a market based interest rate. The interest rate will reflect associated risks, including loan-to-value ratio, remaining term, the quality of the collateral and credit risk. Our advisor may base its determination on the independent valuer or other independent valuers in making this determination.

Operating Income

We will receive operating income from our investments intermittently, not daily. Therefore, we will estimate our net operating income rather than applying it when we actually receive it, and assume that we have earned (accrued) a proportionate amount on a daily basis. We will adjust the estimates based on our receipt of items of income and incurrence of expenses, but stockholders bear the risk that, until such adjustment, our net assets could be under- or over-valued.

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SELECTED FINANCIAL DATA

The selected financial data presented below has been derived from our consolidated financial statements as of the year ended December 31, 2013, 2012 and 2011.

	Year Ended December 31,
		2013		2012		2011
Real estate investments, net	$	22,334,510	$	—	$	—
Cash and cash equivalents	$	520,449	$	1,246,264	$	1,656
Total assets	$	27,942,347	$	1,246,264	$	1,656
Mortgage notes payables	$	15,855,304	$	50,646	$	—
Accounts payable and accrued expenses		283,265		68,599		—
Due to affiliates		—		50,646		—
Total liabilities		16,991,312		119,245		—
Total United Realty Trust Incorporated stockholders’ equity	$	2,481,794	$	1,127,019	$	1,656
Noncontrolling interests	$	8,469,243	$	—	$	—

	Year Ended December 31, 2013			Year Ended December 31, 2012
Revenues	$	2,330,037		$	—
Total operating expenses		3,945,115			617,572
Operating loss		(1,615,078	)		(617,572	)
Interest income		43			—
Interest expense		(658,940	)		—
Net loss	$	(2,273,975	)	$	(617,572	)
Net controlling interest		(417,962	)		—
Net loss attributable to United Realty Trust Incorporated	$	(2,691,937	)	$	(617,572	)

Weighted average shares outstanding
Basic and diluted		487,565			20,186
Net loss per Common Share
Basic and diluted per Common Share	$	(5.52	)	$	(30.60	)

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PRIOR PERFORMANCE SUMMARY

The narrative summary discusses prior investments sponsored by Jacob Frydman, the principal of United Realty Advisor Holdings LLC, or our sponsor, for (a) all programs sponsored by Mr. Frydman regardless of the investment objectives of such investments, and (b) for his own account. The information set forth is current as of March 31, 2014, except where a different date is specified. You are strongly encouraged to carefully read the section captioned “Prior Performance of Affiliates of Our Sponsor — Recent Adverse Business Developments” below for recent adverse developments that have occurred and may continue to occur that are not reflected in the tabular information included in this prospectus, including current and potential loan defaults and other adverse developments.

The following summary discusses the investment performance of the non-public real estate investment programs sponsored by Mr. Frydman and his affiliates which raised funds from outside investors during the 10 years ended March 31, 2014. These investments are referred to as “non-public program properties.” Additionally, the summary discusses the investment performance of the investments that Mr. Frydman made for his own account. These investments are referred to as “non-program properties.”

The information contained herein is included solely to provide prospective investors with background to be used to evaluate the real estate experience of our sponsor and its affiliates. The information summarized below is set forth in greater detail in the Prior Performance Tables included in this Prospectus. Investors should direct their attention to the Prior Performance Tables for further information regarding the prior performance of the sponsor and its affiliates. In addition, as part of our registration statement, we have filed with the Securities and Exchange Commission certain tables which report more detailed information regarding property acquisitions by prior programs.

THE INFORMATION IN THIS SECTION AND THE TABLES REFERENCED HEREIN SHOULD NOT BE CONSIDERED AS INDICATIVE OF HOW WE WILL PERFORM. THIS DISCUSSION REFERS TO THE PERFORMANCE OF PRIOR PROGRAMS AND PROPERTIES SPONSORED BY THE PRINCIPAL OF OUR SPONSOR OR HIS AFFILIATES OVER THE PERIODS LISTED THEREIN. IN ADDITION, THE TABLES INCLUDED WITH THIS PROSPECTUS (WHICH REFLECT RESULTS OVER THE PERIODS SPECIFIED IN EACH TABLE) DO NOT MEAN THAT WE WILL MAKE INVESTMENTS COMPARABLE TO THOSE REFLECTED IN SUCH TABLES. IF YOU PURCHASE SHARES IN UNITED REALTY TRUST INCORPORATED, YOU WILL NOT HAVE ANY OWNERSHIP INTEREST IN ANY OF THE REAL ESTATE PROGRAMS DESCRIBED IN THE TABLES (UNLESS YOU ARE ALSO AN INVESTOR IN THOSE REAL ESTATE PROGRAMS).

Our Sponsor

Our business is managed by United Realty Advisors LP, or our advisor, an affiliate of our sponsor. Our sponsor is controlled and indirectly owned by Mr. Frydman. Mr. Frydman is the Chairman of our board of directors and Chief Executive Officer of the Company. Our advisor is controlled by our sponsor, which is the sole manager of URTI GP, LLC, the general partner of our advisor.

Mr. Frydman has more than 30 years’ experience in developing and investing in real estate, infrastructure and business transactions. He has extensive experience investing in a wide variety of commercial property types, including office, industrial, retail, hospitality, multifamily and age-restricted residences, and in other real estate-related assets. Mr. Frydman has been involved in many facets of the real estate business, and has invested across many real estate asset classes, including existing income-producing properties, newly constructed properties and properties which he has acquired for development or construction. Mr. Frydman has executed on a variety of investment strategies, including core, value-added, and opportunistic investment strategies.

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Since 1996, Mr. Frydman and his affiliates have purchased 27 properties for an acquisition consideration of more than $261,000,000. These acquisitions include over 5 million square feet of existing, primarily commercial property, and over 1,000 acres of land slated for strategic development. In addition to these acquisitions, Mr. Frydman has participated as a principal and has been involved in or advised on over $2 billion of real property and infrastructure transactions. The transactions encompass a broad range of property types, including office, office condominium, shopping center, industrial, distribution, medical, parking, senior housing, student housing, golf course community, apartment, land development and planned unit development, or PUD.

Of the 27 properties acquired since 1996, 19 have been sold for aggregate consideration of $ $266,160,168. The acquisition consideration for these properties was $154,976,744, and the total invested equity was $28,982,618. Total distributions, including from operations, refinancing and sales, amounted to $98,070,899, or 337% of invested equity, of which $28,982,618 represented a return of capital and $69,088,281, or 237% of invested equity, represented a return on capital and, based on the holding period for each of the properties, represented an annualized return on capital of 109%.

Of the 27 properties acquired since 1996, 8 properties continue to be owned and operated by Mr. Frydman, on his own or with other individual investors. The acquisition consideration for these properties was $106,996,276 and the total invested equity was $25,391,145. Total distributions, including from operations, refinancing and sales through December 31, 2013 have amounted to $75,547,593, or 298% of invested equity.

Non-Public Program Properties

Of the 27 properties purchased by Mr. Frydman and his affiliates since 1996, 12 properties were purchased through 12 non-public programs composed of 177 passive investors who did not participate in the day-to-day operations of the programs or have any influence over investment decisions. Each property was held in a separate single-property special purpose entity. For each of these 27 single-property special purpose entities, Mr. Frydman acted either as sole controlling decision maker, or as a co-controlling decision maker with veto rights over all decisions. Mr. Frydman, on his own or with other individual investors, purchased these properties at an aggregate purchase price of $144,340,143 (consisting of $25,917,003 in equity and $157,172,269 in debt, including post-acquisition uses), and which comprised over 1.5 million square feet of commercial property and over 700 acres of land for development. As a percentage of the aggregate purchase price, 16% of the non-public program properties acquired were residential, inclusive of student housing properties and senior assisted living/medical properties, 64.4% were retail, 0% were industrial, and 19.6% were office. In addition, as a percentage of the aggregate purchase price, 0% of the properties acquired were new, 95.7% were used, and 4.3% were construction. Of these properties, 75% have been sold as of December 31, 2013. Mr. Frydman has developed residential projects, urban retail projects, suburban office buildings, medical office buildings, financial center office buildings, active adult communities, residential projects, senior housing, student housing, assisted living and specialized dementia care facilities.

In transactions where Mr. Frydman co-invested with other individual investors, Mr. Frydman’s initial investment constituted up to 25% of the initial invested equity, with dollar amounts ranging from approximately $50,000 to approximately $4 million. Mr. Frydman’s compensation in such transactions resulted primarily from a profits interest and from the return on his invested equity. Such a compensation structure differs from ours. Under our compensation structure, our sponsor and its affiliates receive substantial fees from us, which fees have not been negotiated at arm’s length and could influence our advisor’s advice to us, as well as the judgment of affiliates of our sponsor.

The non-public programs were similar to our program in that they invested in some of the same property types (including residential, retail and office), and their investors had limited ability to withdraw their investments. The investment objectives of the non-public programs, which were capital appreciation with a secondary objective of income, were similar to those of our second strategy, but differed from those of our first strategy, which are stable cash distributions, preservation of capital contributions, portfolio diversification, growth in the value of our assets upon their sale and the potential for future liquidity. The non-public programs also differed from us in that: (i) a substantial portion of Mr. Frydman’s returns came from refinancing and sales proceeds; (ii) Mr. Frydman used more leverage than we intend to; (iii) the non-public programs’ property-owning entities generally did not pay any acquisition fees, asset management fees or other fees, which we do intend to pay; (iv) in some cases the properties were leased to affiliates of the property-owning entities; (v) the operational documents of the non-public programs’ property-owning entities generally did not contain the prohibitions on self-dealing and the operational and investment limitations that apply to us; and (vi) the non-public programs generally took approximately one to six months to raise capital from third parties, in contrast to our multi-year offering period.

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Narrative Summary of Non-Public Program Property Acquisitions for the period 2005-2013

In 2005, McDonald Ave Acquisition, LLC, an affiliate of Mr. Frydman acquired a 47,000 square foot, 64-unit student residential building in Brooklyn, New York.

In 2006, affiliates of Mr. Frydman acquired three shopping centers: Surrey Forest Oaks, LLC acquired a 125,719 square foot retail center in Mount Airy, North Carolina, Surrey Fondren Investors, LLC acquired a 304,300 square foot community shopping center in Houston, Texas, and Surrey Inverness, LLC acquired a 204,070 square foot neighborhood center located in Inverness, Florida.

In 2007, Mr. Frydman and his affiliates acquired two properties consisting of a 65,912 square foot office building in Augusta, Maine acquired by 442 Civic Center Acquisitions, LLC, and a 183,379 square foot center in Medina, Ohio acquired by Surrey Medwick Acquisitions, LLC.

Non-Program Properties

Of the 27 properties purchased by Mr. Frydman, on his own or with other individual investors, since 1996, Mr. Frydman purchased 15 properties for his own account and did not raise funds from passive investors. These property acquisitions, for which the contract purchase price plus acquisition fees totaled $117,632,878 (consisting of $19,489,249 in equity and $124,770,000 in debt), included over 3.6 million square feet of primarily commercial property and over 200 acres of land for development.

Several of the prior non-program transactions involved non-passive investors, in contrast to our structure, where stockholders will be passive (subject to the rights granted to them by our organizational documents and Maryland law). However, in each prior non-program transaction, Mr. Frydman’s approval was a prerequisite to acquiring, operating or disposing of assets, and no non-passive investor was able to act independently of such approval, although non-passive investors’ consent would, in certain cases, be necessary in order for Mr. Frydman to make certain major decisions.

Narrative Summary of Non-Program Property Acquisitions for the Period 2005-2013

In 2006, (i) WA 319 Main, LLC, an affiliate of Mr. Frydman, acquired a 14,000 square foot retail building located in Poughkeepsie, New York, (ii) WA Route 9, LLC, an affiliate of Mr. Frydman, purchased a 208,000 square foot parcel of land in Poughkeepsie, New York to be used for a residential and retail development, and (iii) 700 North Delaware, LLC, an affiliate of Mr. Frydman, entered into a joint venture that purchased a nearly 2,000,000 square foot multi-purpose parcel of land in Philadelphia, Pennsylvania.

In 2007, CW Montgomery, LLC, an affiliate of Mr. Frydman, acquired a 509,000 square foot industrial property located in Albany, New York.

In 2008, Pine Street, LLC, an affiliate of Mr. Frydman, acquired a 53,000 square foot office building in Harrisburg, Pennsylvania.

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In 2011, 299 Main Dev, LLC and 325 Main Dev, LLC, both affiliates of Mr. Frydman, purchased two four-story office buildings in Poughkeepsie, New York, totaling 10,925 and 22,300 square feet each. Parker Note Acquisition, LLC, an affiliate of Mr. Frydman, also purchased a first mortgage note secured by two properties consisting of a 54,000 square foot historic factory and a completed parking lot in Poughkeepsie, New York.

For a comprehensive list of the legal names of entities which acquired properties purchased by Mr. Frydman and his affiliates since 1996, please see Exhibit 99.1 to the registration statement, of which this prospectus is a part, “Acquiring Entities of Properties Previously Purchased by Jacob Frydman and Affiliates.”

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Recent Adverse Business Developments

The investment properties and non-public program properties controlled by the principal of our sponsor and his affiliates have generally met and continue to meet their principal objectives. Two of the non-public program properties acquired over the past ten years have been adversely affected by market conditions and/or casualty. U.S. and international markets in recent years experienced volatility due to a combination of many factors, including decreasing values of residential and commercial real estate, limited access to credit, the collapse or near collapse of certain financial institutions, decreased consumer spending and a national and global recession. The liquidity disruptions in the credit markets during those years significantly limited the access to debt financing.

In May 2007, Mr. Frydman’s affiliate acquired a vacant 509,000 square foot industrial property located in Albany, New York. The property was financed by a $1.8 million loan. Mr. Frydman intended to adaptively redevelop the property by creating an approximately 1,000,000 square foot mixed-use project. In 2009, based on economic conditions that, in the view of the sponsor’s affiliate, would not permit the financing of such a project, the sponsor’s affiliate elected to stop making payments on the $1.8 million loan secured by the property. In 2010 the property was broken into and much of the building’s metals and wiring was stripped, causing a major fire in the building. In August 2011 the property was foreclosed on. As a result Mr. Frydman’s affiliate took a $300,000 loss.

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In 2007, Mr. Frydman and his affiliates acquired a 64,000 square foot office building in Augusta, Maine, which was 100% leased to the State of Maine Department of Health and Human Services. The lease expired in June 2012, and due to the state’s severe financial constraints, the state did not renew the lease. The loan matured in April 2012. Because the state did not exercise its renewal option, and no other tenants were sourced to replace the former tenant, a maturity default occurred, which resulted in the foreclosure of the property, which giving effect to distributions from operations resulted in a loss of $488,400.

Potential investors are encouraged to examine the Prior Performance Tables included in Appendix A of the prospectus, for more detailed information regarding the prior experience of our sponsor and its affiliates with respect to such properties.

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MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS

The following summary discusses the material U.S. federal income tax considerations associated with our qualification and taxation as a REIT and the acquisition, ownership and disposition of our Common Shares. This summary is based upon the laws, regulations, and reported judicial and administrative rulings and decisions in effect as of the date of this prospectus, all of which are subject to change, retroactively or prospectively, and to possibly differing interpretations. This summary does not purport to deal with the U.S. federal income and other tax consequences applicable to all investors in light of their particular investment or other circumstances, or to all categories of investors, some of whom may be subject to special rules (for example, insurance companies, entities treated as partnerships for U.S. federal income tax purposes and investors therein, trusts, financial institutions and broker-dealers and, except to the extent discussed below, tax-exempt organizations and Non-U.S. Stockholders, as defined below). No ruling on the U.S. federal, state, or local tax considerations relevant to our operation or to the purchase, ownership or disposition of our shares, has been requested from the IRS or other tax authority. No assurance can be given that the IRS would not assert, or that a court would not sustain, a position contrary to any of the tax consequences described below.

This summary is also based upon the assumption that the operation of the company, and of its subsidiaries and other lower-tier and affiliated entities, will in each case be in accordance with its applicable organizational documents or partnership agreements. This summary does not discuss the impact that U.S. state and local taxes and taxes imposed by non U.S. jurisdictions could have on the matters discussed in this summary. In addition, this summary assumes that security holders hold our Common Shares as a capital asset, which generally means as property held for investment.

Prospective investors are urged to consult their tax advisors in order to determine the U.S. federal, state, local, foreign and other tax consequences to them of the purchase, ownership and disposition of our Common Shares, the tax treatment of a REIT and the effect of potential changes in the applicable tax laws.

We intend to elect and qualify to be taxed as a REIT under the applicable provisions of the Code and the Treasury Regulations promulgated thereunder commencing with our taxable year ending December 31, 2013. We intend to continue operating as a REIT so long as our board of directors determines that REIT qualification remains advantageous to us. However, we cannot assure you that we will meet the applicable requirements under U.S. federal income tax laws, which are highly technical and complex.

In brief, a corporation that complies with the provisions in Code Sections 856 through 860, and qualifies as a REIT generally is not taxed on its net taxable income to the extent such income is currently distributed to stockholders, thereby completely or substantially eliminating the “double taxation” that a corporation and its stockholders generally bear together. However, as discussed in greater detail below, a corporation could be subject to U.S. federal income tax in some circumstances even if it qualifies as a REIT and would likely suffer adverse consequences, including reduced cash available for distribution to its stockholders, if it failed to qualify as a REIT.

Proskauer Rose LLP has acted as our tax counsel in connection with this registration statement. Proskauer Rose LLP is of the opinion that (i) commencing with our taxable year ended December 31, 2013, we have been organized in conformity with the requirements for qualification as a REIT under the Code, and our actual method of operation through the date hereof has enabled us to meet and, assuming our election to be treated as a REIT is not either revoked or intentionally terminated, our proposed method of operation will enable us to continue to meet, the requirements for qualification and taxation as a REIT under the Code, and (ii) our operating partnership will be taxed as a partnership or a disregarded entity and not an association or publicly traded partnership (within the meaning of Code Section 7704) subject to tax as a corporation, for U.S. federal income tax purposes beginning with its first taxable year. This opinion has been filed as an exhibit to the registration statement of which this prospectus is a part, and is based and conditioned, in part, on various assumptions and representations as to factual matters and covenants made to Proskauer Rose LLP by us and based upon certain terms and conditions set forth in the opinion. Our qualification as a REIT depends upon our ability to meet, through operation of the properties we acquire and our investment in other assets, the applicable requirements under U.S. federal income tax laws. Proskauer Rose LLP has not reviewed these operating results for compliance with the applicable requirements under U.S. federal income tax laws.

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Therefore, we cannot assure you that our actual operating results allow us to satisfy the applicable requirements to qualify as a REIT under U.S. federal income tax laws in any taxable year.

General

The term “REIT taxable income” means the taxable income as computed for a corporation which is not a REIT:

•

without the deductions allowed by Code Sections 241 through 247, and 249 (relating generally to the deduction for dividends received);

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excluding amounts equal to: the net income from foreclosure property and the net income derived from prohibited transactions;

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deducting amounts equal to: the net loss from foreclosure property, the net loss derived from prohibited transactions, the tax imposed by Code Section 857(b)(5) upon a failure to meet the 95% or the 75% gross income tests, the tax imposed by Code Section 856(c)(7)(C) upon a failure to meet the quarterly asset tests, the tax imposed by Code Section 856(g)(5) for otherwise avoiding REIT disqualification, and the tax imposed by Code Section 857(b)(7) on redetermined rents, redetermined deductions and excess interest;

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deducting the amount of dividends paid under Code Section 561, computed without regard to the amount of the net income from foreclosure property (which is excluded from REIT taxable income); and

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without regard to any change of annual accounting period pursuant to Code Section 443(b).

In any year in which we qualify as a REIT and have a valid election in place, we will claim deductions for the dividends we pay to the stockholders, and therefore will not be subject to U.S. federal income tax on that portion of our taxable income or capital gain which is distributed to our stockholders.

Although we can eliminate or substantially reduce our U.S. federal income tax liability by maintaining our REIT qualification and paying sufficient dividends, we will be subject to U.S. federal tax in the following circumstances:

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We will be taxed at normal corporate rates on any undistributed REIT taxable income or net capital gain.

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If we fail to satisfy either the 95% Gross Income Test or the 75% Gross Income Test (each of which is described below), but our failure is due to reasonable cause and not willful neglect, and we therefore maintain our REIT qualification, we will be subject to a tax equal to the product of (a) the amount by which we failed the 75% or 95% Test (whichever amount is greater) multiplied by (b) a fraction intended to reflect our profitability.

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We will be subject to an excise tax if we fail to currently distribute sufficient income. In order to make the “required distribution” with respect to a calendar year, we must distribute the sum of (1) 85% of our REIT ordinary income for the calendar year, (2) 95% of our REIT capital gain net income for the calendar year, and (3) the excess, if any, of the grossed up required distribution (as defined in the Code) for the preceding calendar year over the distributed amount for that preceding calendar year. Any excise tax liability would be equal to 4% of the difference between the amount required to be distributed under this formula and the amount actually distributed and would not be deductible by us.

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We may be subject to the corporate “alternative minimum tax” on our items of tax preference, including any deductions of net operating losses.

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If we have net income from prohibited transactions such income would be subject to a 100% tax. See “— REIT Qualification Tests — Prohibited Transactions.”

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We will be subject to U.S. federal income tax at the highest corporate rate on any non-qualifying income from foreclosure property, although we will not own any foreclosure property unless we make loans or accept purchase money notes secured by interests in real property and foreclose on the property following a default on the loan, or foreclose on property pursuant to a default on a lease.

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If we fail to satisfy any of the REIT asset tests, as described below, other than a failure of the 5% or 10% REIT assets tests that does not exceed a statutory de minimis amount as described more fully below, but our failure is due to reasonable cause and not due to willful neglect and we nonetheless maintain our REIT qualification because of specified cure provisions, we will be required to pay a tax equal to the greater of $50,000 or the amount determined by multiplying the highest corporate tax rate (currently 35%) by the net income generated by the non-qualifying assets during the period in which we failed to satisfy the asset tests.

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If we fail to satisfy any other provision of the Code that would result in our failure to qualify as a REIT (other than a gross income or asset test requirement) and that violation is due to reasonable cause, we may retain our REIT qualification, but we will be required to pay a penalty of $50,000 for each such failure.

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If we derive “excess inclusion income” from an interest in certain mortgage loan securitization structures (i.e., a “taxable mortgage pool” or a residual interest in a real estate mortgage investment conduit, or “REMIC”), we could be subject to corporate-level U.S. federal income tax at a 35% rate to the extent that such income is allocable to specified types of tax-exempt stockholders known as “disqualified organizations” that are not subject to UBTI. See the “Excess Inclusion Income” portion of this section below.

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We may be required to pay monetary penalties to the IRS in certain circumstances, including if we fail to meet record-keeping requirements intended to monitor our compliance with rules relating to the composition of our stockholders. Such penalties generally would not be deductible by us.

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If we acquire any asset from a corporation that is subject to full corporate-level U.S. federal income tax in a transaction in which our basis in the asset is determined by reference to the transferor corporation’s basis in the asset, and we recognize gain on the disposition of such an asset during the 10-year period beginning on the date we acquired such asset, then the excess of the fair market value as of the beginning of the applicable recognition period over our adjusted basis in such asset at the beginning of such recognition period will be subject to U.S. federal income tax at the highest regular corporate U.S. federal income tax rate. The results described in this paragraph assume that the non REIT corporation will not elect, in lieu of this treatment, to be subject to an immediate tax when the asset is acquired by us.

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A 100% tax may be imposed on transactions between us and a TRS that do not reflect arm’s-length terms.

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The earnings of our subsidiaries that are C corporations, including any subsidiary we may elect to treat as a TRS will generally be subject to U.S. federal corporate income tax.

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We may elect to retain and pay income tax on our net capital gain. In that case, a stockholder would include his, her or its proportionate share of our undistributed net capital gain (to the extent we make a timely designation of such gain to the stockholder) in his, her or its income as long-term capital gain, would be deemed to have paid the tax that we paid on such gain, and would be allowed a credit for his, her or its proportionate share of the tax deemed to have been paid, and an adjustment would be made to increase the stockholder’s basis in our Common Shares. Stockholders that are U.S. corporations will also appropriately adjust their earnings and profits for the retained capital gain in accordance with Treasury Regulations to be promulgated.

In addition, notwithstanding our qualification as a REIT, we and our subsidiaries may be subject to a variety of taxes, including state and local and foreign income, property, payroll and other taxes on our assets and operations. We could also be subject to tax in situations and on transactions not presently contemplated.

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REIT Qualification Tests

The Code defines a REIT as a corporation, trust or association:

(1)

that is managed by one or more trustees or directors;

(2)

the beneficial ownership of which is evidenced by transferable shares or by transferable certificates of beneficial interest;

(3)

that would be taxable as a domestic corporation but for its qualification as a REIT;

(4)

that is neither a financial institution nor an insurance company;

(5)

that meets the gross income, asset and annual distribution requirements;

(6)

the beneficial ownership of which is held by 100 or more persons on at least 335 days in each full taxable year, proportionately adjusted for a short taxable year;

(7)

generally in which, at any time during the last half of each taxable year, no more than 50% in value of the outstanding stock is owned, directly or indirectly, by five or fewer individuals (as defined in the Code to include specified entities);

(8)

that makes an election to be taxable as a REIT for the current taxable year, or has made this election for a previous taxable year, which election has not been revoked or terminated, and satisfies all relevant filing and other administrative requirements established by the IRS that must be met to maintain qualification as a REIT; and

(9)

that uses a calendar year for U.S. federal income tax purposes.

Conditions (1) through (5) must be met during each taxable year for which REIT qualification is sought, while conditions (6) and (7) do not have to be met until after the first taxable year for which a REIT election is made. We intend to adopt December 31 as our year end, thereby satisfying condition (9).

Ownership of Interests in Partnerships, Limited Liability Companies and Qualified REIT Subsidiaries. A REIT that is a partner in a partnership or a member in a limited liability company treated as a partnership for U.S. federal income tax purposes, will be deemed to own its proportionate share of the assets of the partnership or limited liability company, as the case may be, based on its interest in partnership capital, and will be deemed to be entitled to its proportionate share of the income of that entity. The assets and gross income of the partnership or limited liability company retain the same character in the hands of the REIT. Thus, our pro rata share of the assets and items of income of any partnership or limited liability company treated as a partnership or disregarded entity for U.S. federal income tax purposes in which we own an interest is treated as our assets and items of income for purposes of Asset Tests and Gross Income Tests (each as defined below).

We expect to control our subsidiary partnerships and limited liability companies and intend to operate them in a manner consistent with the requirements for our qualification as a REIT. If we become a limited partner or non-managing member in any partnership or limited liability company and such entity takes or expects to take actions that could jeopardize our qualification as a REIT or require us to pay tax, we may be forced to dispose of our interest in such entity. In addition, it is possible that a partnership or limited liability company could take an action which could cause us to fail a gross income or asset test, and that we would not become aware of such action in time to dispose of our interest in the partnership or limited liability company or take other corrective action on a timely basis. In that case, we could fail to qualify as a REIT unless we were entitled to relief, as described below.

We may from time to time own certain assets through subsidiaries that we intend to be treated as “qualified REIT subsidiaries.” A corporation will qualify as our qualified REIT subsidiary if we own 100% of the corporation’s outstanding stock and do not elect with the subsidiary to treat it as a TRS, as described below. A qualified REIT subsidiary is not treated as a separate corporation, and all assets, liabilities and items of income, gain, loss, deduction and credit of a qualified REIT subsidiary are treated as assets, liabilities and items of income, gain, loss, deduction and credit of the parent REIT for purposes of the Asset Tests and Gross Income Tests (each as defined below). A qualified REIT subsidiary is not subject to U.S. federal income tax, but may be subject to state or local tax, and our ownership of the stock of a qualified REIT subsidiary will not violate the restrictions on ownership of securities, as described below under “— Asset Tests.” Although we expect to hold all of our investments through the operating partnership, we also may hold investments separately, through qualified REIT subsidiaries. Because a qualified REIT subsidiary must be wholly owned by a REIT, any such subsidiary utilized by us would have to be owned by us, or another qualified REIT subsidiary, and would not be owned by the operating partnership.

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If a disregarded subsidiary ceases to be wholly owned by us (for example, if any equity interest in the subsidiary is acquired by a person other than us or another one of our disregarded subsidiaries), the subsidiary’s separate existence would no longer be disregarded for U.S. federal income tax purposes. Instead, it would have multiple owners and would be treated as either a partnership or a taxable corporation. Such an event could, depending on the circumstances, adversely affect our ability to satisfy the Asset and Gross Income Tests, including the requirement that REITs generally may not own, directly or indirectly, more than 10% of the value or voting power of the outstanding securities of another corporation. See “— Asset Tests” and “— Income Tests.”

Ownership of Interests in TRSs. We expect to own an interest in one or more TRS and may acquire securities in additional TRSs in the future. A TRS is a corporation other than a REIT in which a REIT directly or indirectly holds stock, and that has made a joint election with such REIT to be treated as a TRS. If a TRS owns more than 35% of the total voting power or value of the outstanding securities of another corporation, such other corporation will also be treated as a TRS. Other than some activities relating to lodging and health care facilities, a TRS may generally engage in any business, including investing in assets and engaging in activities that could not be held or conducted directly by us without jeopardizing our qualification as a REIT.

A TRS is subject to U.S. federal income tax as a regular C corporation. In addition, if certain tests regarding the TRS’s debt-to-equity ratio are not satisfied, a TRS generally may not deduct interest payments made in any year to an affiliated REIT to the extent that such payments exceed 50% of the TRS’s adjusted taxable income for that year (although the TRS may carry forward to, and deduct in, a succeeding year the disallowed interest amount if the 50% test is satisfied in that year). A REIT’s ownership of securities of a TRS is not subject to the 5% or 10% asset tests described below. See “— Asset Tests.”

In satisfying the tests described above, we must meet, among others, the following requirements:

Share Ownership Tests. The Common Shares and any other stock we issue must be held by a minimum of 100 persons (determined without attribution to the owners of any entity owning our stock) for at least 335 days in each full taxable year, proportionately adjusted for partial taxable years. In addition, we cannot be “closely held”, which means that at all times during the second half of each taxable year, no more than 50% in value of our stock may be owned, directly or indirectly, by five or fewer individuals (determined by applying certain attribution rules under the Code to the owners of any entity owning our stock) as specifically defined for this purpose. However, these two requirements do not apply until after the first taxable year an entity elects REIT status.

Our charter contains certain provisions intended, among other purposes, to enable us to meet requirements (6) and (7) above. First, subject to certain exceptions, our charter provides that no person may beneficially or constructively own (applying certain attribution rules under the Code) more than 9.8% in value of the aggregate of our outstanding shares of capital stock and not more than 9.8% (in value or in number of shares, whichever is more restrictive) of any of our outstanding Common Shares, as well as in certain other circumstances. See the section entitled “Description of Shares — Restrictions on Ownership of Shares” in this prospectus. Additionally, our DRIP, as well as the terms of the options granted to the independent directors, contain provisions that prevent them from causing a violation of these tests. Our charter also contains provisions requiring each holder of our shares to disclose, upon demand, constructive or beneficial ownership of shares as deemed necessary to comply with the requirements of the Code. Furthermore, stockholders failing or refusing to comply with our disclosure request will be required, under Treasury Regulations promulgated under the Code, to submit a statement of such information to the IRS at the time of filing their annual income tax returns for the year in which the request was made.

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Asset Tests. At the close of each calendar quarter of the taxable year, we must satisfy four tests based on the composition of our assets, or the Asset Tests. After initially meeting the Asset Tests at the close of any quarter, we will not lose our qualification as a REIT for failure to satisfy the Asset Tests at the end of a later quarter solely due to changes in value of our assets. In addition, if the failure to satisfy the Asset Tests results from an acquisition during a quarter, the failure generally can be cured by disposing of non-qualifying assets within 30 days after the close of that quarter. We intend to maintain adequate records of the value of our assets to ensure compliance with these tests and will act within 30 days after the close of any quarter as may be required to cure any noncompliance.

75% Asset Test. At least 75% of the value of our assets must be represented by “real estate assets,” cash, cash items (including receivables) and government securities, which we refer to as the 75% Asset Test. Real estate assets include (1) real property (including interests in real property and interests in mortgages on real property), (2) shares in other qualifying REITs and (3) any property (not otherwise a real estate asset) attributable to the temporary investment of “new capital” in stock or a debt instrument, but only for the one-year period beginning on the date we received the new capital. A real estate mortgage loan that we own generally will be treated as a real estate asset for purposes of the 75% Asset Test if, on the date that we acquire or originate the mortgage loan, the value of the real property securing the loan is equal to or greater than the principal amount of the loan. Property will qualify as being attributable to the temporary investment of new capital if the money used to purchase the stock or debt instrument is received by us in exchange for our stock (other than amounts received pursuant to our DRIP) or in a public offering of debt obligations that have a maturity of at least five years. Additionally, regular and residual interests in a REMIC are considered real estate assets. However, if less than 95% of the assets of a REMIC are real estate assets, we will be treated as holding and earning a proportionate share of the assets and income of the REMIC directly. In the case of any interests in grantor trusts, we would be treated as owning an undivided beneficial interest in the mortgage loans held by the grantor trust. Assets that do not qualify for purposes of the 75% test are subject to the additional asset tests described below under “— 25% Asset Test.”

We do not currently own interests in real properties but we intend to own such interests in the future. We anticipate that substantially all of our gross income will be from sources that will allow us to satisfy the income tests described below. Further, our purchase contracts for such real properties will apportion no more than 5% of the purchase price of any property to property other than “real property,” as defined in the Code. However, there can be no assurance that the IRS will not contest such purchase price allocation. If the IRS were to prevail, resulting in more than 5% of the purchase price of property being allocated to other than “real property,” we may be unable to continue to qualify as a REIT under the 75% Asset Test, and also may be subject to additional taxes, as described below. In addition, we intend to invest funds not used to acquire properties in cash sources, “new capital” investments or other liquid investments which allow us to continue to qualify under the 75% Asset Test. Therefore, our investment in real properties should constitute “real estate assets” and should allow us to meet the 75% Asset Test.

25% Asset Test. Except as described below, the remaining 25% of our assets may generally be invested without restriction, which we refer to as the 25% Asset Test. However, if we invest in any securities that do not qualify under the 75% Asset Test, such securities may not exceed either (1) 5% of the value of our assets as to any one issuer; or (2) 10% of the outstanding securities by vote or value of any one issuer. The 10% value test does not apply to certain “straight debt” and other excluded securities, as described in the Code, including but not limited to any loan to an individual or estate, any obligation to pay rents from real property and any security issued by a REIT. In addition, a partnership interest held by a REIT is not considered a “security” for purposes of the 10% value test; instead, the REIT is treated as owning directly its proportionate share of the partnership’s assets, which is based on the REIT’s proportionate interest in any securities issued by the partnership (disregarding for this purpose the general rule that a partnership interest is not a security), but excluding certain securities described in the Code.

For purposes of the 10% value test, “straight debt” means a written unconditional promise to pay on demand or on a specified date a sum certain in money if (i) the debt is not convertible, directly or indirectly, into stock, (ii) the interest rate and interest payment dates are not contingent on profits, the borrower’s discretion, or similar factors other than certain contingencies relating to the timing and amount of principal and interest payments, as described in the Code and (iii) in the case of an issuer which is a corporation or a partnership, securities that otherwise would be considered straight debt will not be so considered if we, and any of our “controlled taxable REIT subsidiaries” as defined in the Code, hold any securities of the corporate or partnership issuer which (a) are not straight debt or other excluded securities (prior to the application of this rule), and (b) have an aggregate value greater than 1% of the issuer’s outstanding securities (including, for the purposes of a partnership issuer, our interest as a partner in the partnership).

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We believe that our holdings of real estate assets and other securities comply with the foregoing REIT asset requirements, and we intend to monitor compliance on an ongoing basis. We may make real estate related debt investments; provided, that the underlying real estate meets our criteria for direct investment. A real estate mortgage loan that we own generally will be treated as a real estate asset for purposes of the 75% Asset Test if, on the date that we acquire or originate the mortgage loan, the value of the real property securing the loan is equal to or greater than the principal amount of the loan. Certain mezzanine loans we make or acquire may qualify for the safe harbor in Revenue Procedure 2003-65, 2003-2 C.B. 336, pursuant to which certain loans secured by a first priority security interest in ownership interests in a partnership or limited liability company will be treated as qualifying assets for purposes of the 75% Asset Test and the 10% vote or value test. We may hold some mezzanine loans that do not qualify for that safe harbor. Furthermore, we may acquire distressed debt investments that require subsequent modification by agreement with the borrower. If the outstanding principal balance of a mortgage loan exceeds the fair market value of the real property securing the loan at the time we commit to acquire the loan, or agree to modify the loan in a manner that is treated as an acquisition of a new loan for U.S. federal income tax purposes, then a portion of such loan may not be a qualifying real estate asset. Under current law it is not clear how to determine what portion of such a loan will be treated as a qualifying real estate asset. Under recently issued guidance, the IRS has stated that it will not challenge a REIT’s treatment of a loan as being in part a real estate asset if the REIT treats the loan as being a real estate asset in an amount that is equal to the lesser of the fair market value of the real property securing the loan, as of the date we committed to acquire or modify the loan, and the fair market value of the loan. However, uncertainties exist regarding the application of this guidance, particularly with respect to the proper treatment under the Asset Tests of mortgage loans acquired at a discount that increase in value following their acquisition, and no assurance can be given that the IRS would not challenge our treatment of such assets. While we intend to make such investments in such a manner as not to fail the asset tests described above, no assurance can be given that any such investments would not disqualify us as a REIT.

A REIT is able to cure certain asset test violations. As noted above, a REIT cannot own securities of any one issuer representing more than 5% of the total value of the REIT’s assets or more than 10% of the outstanding securities, by vote or value, of any one issuer. However, a REIT would not lose its REIT qualification for failing to satisfy these 5% or 10% asset tests in a quarter if the failure is due to the ownership of assets the total value of which does not exceed the lesser of (1) 1% of the total value of the REIT’s assets at the end of the quarter for which the measurement is done, or (2) $10 million; provided, that in either case the REIT either disposes of the assets within six months after the last day of the quarter in which the REIT identifies the failure (or such other time period prescribed by the Treasury), or otherwise meets the requirements of those rules by the end of that period.

If a REIT fails to meet any of the asset test requirements for a quarter and the failure exceeds the de minimis threshold described above, then the REIT still would be deemed to have satisfied the requirements if (1) following the REIT’s identification of the failure, the REIT files a schedule with a description of each asset that caused the failure, in accordance with regulations prescribed by the Treasury; (2) the failure was due to reasonable cause and not to willful neglect; (3) the REIT disposes of the assets within six months after the last day of the quarter in which the identification occurred or such other time period as is prescribed by the Treasury (or the requirements of the rules are otherwise met within that period); and (4) the REIT pays a tax on the failure equal to the greater of (1) $50,000, or (2) an amount determined (under regulations) by multiplying (x) the highest rate of tax for corporations under Code Section 11, by (y) the net income generated by the assets that caused the failure for the period beginning on the first date of the failure and ending on the date the REIT has disposed of the assets (or otherwise satisfies the requirements).

Gross Income Tests. For each calendar year, we must satisfy two separate tests based on the composition of our gross income, as defined under our method of accounting, or the Gross Income Tests.

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The 75% Gross Income Test. At least 75% of our gross income for the taxable year (excluding gross income from prohibited transactions) must result from (i) rents from real property, (ii) interest on obligations secured by mortgages on real property or on interests in real property, (iii) gains from the sale or other disposition of real property (including interests in real property and interests in mortgages on real property) other than property held primarily for sale to customers in the ordinary course of our trade or business, (iv) dividends from other qualifying REITs and gain (other than gain from prohibited transactions) from the sale of shares of other qualifying REITs, (v) other specified investments relating to real property or mortgages thereon, and (vi) for a limited time, temporary investment income (as described under the 75% Asset Test above). We refer to this requirement as the 75% Gross Income Test. We intend to invest funds not otherwise invested in real properties or mortgage-related investments in cash sources or other liquid investments which will allow us to qualify under the 75% Gross Income Test.

The 95% Gross Income Test. In addition to deriving 75% of our gross income from the sources listed above, at least 95% of our gross income (excluding gross income from prohibited transactions) for the taxable year must be derived from (i) sources which satisfy the 75% Gross Income Test, (ii) dividends, (iii) interest, or (iv) gain from the sale or disposition of stock or other securities that are not assets held primarily for sale to customers in the ordinary course of our trade or business. We refer to this requirement as the 95% Gross Income Test. It is important to note that dividends and interest on obligations not collateralized by an interest in real property qualify under the 95% Gross Income Test, but not under the 75% Gross Income Test. We intend to invest funds not otherwise invested in properties in cash sources or other liquid investments which will allow us to qualify under the 95% Gross Income Test.

Rents from Real Property. Income attributable to a lease of real property will generally qualify as “rents from real property” under the 75% Gross Income Test and the 95% Gross Income Test if such lease is respected as a true lease for U.S. federal income tax purposes (see “— Characterization of Property Leases”) and subject to the rules discussed below. Rent from a particular tenant will not qualify if we, or an owner of 10% or more of our stock, directly or indirectly, owns 10% or more of the voting stock or the total number of shares of all classes of stock in, or 10% or more of the assets or net profits of, the tenant (subject to certain exceptions). As described below, we expect that amounts received from our TRS, and TRSs we may form to facilitate our acquisition of lodging facilities, will satisfy the conditions of the exception for rents received from a TRS with the result that such amounts will be considered rents from real property. The portion of rent attributable to personal property rented in connection with real property will not qualify, unless the portion attributable to personal property is 15% or less of the total rent received under, or in connection with, the lease.

Generally, rent will not qualify if it is based in whole, or in part, on the income or profits of any person from the underlying property. However, rent will not fail to qualify if it is based on a fixed percentage (or designated varying percentages) of receipts or sales, including amounts above a base amount so long as the base amount is fixed at the time the lease is entered into, the provisions are in accordance with normal business practice and the arrangement is not an indirect method for basing rent on income or profits.

If a REIT operates or manages a property or furnishes or renders certain “impermissible services” to the tenants at the property, and the income derived from the services exceeds 1% of the total amount received by that REIT with respect to the property, then no amount received by the REIT with respect to the property will qualify as “rents from real property.” Impermissible services are services other than services “usually or customarily rendered” in connection with the rental of real property and not otherwise considered “rendered to the occupant.” For these purposes, the income that a REIT is considered to receive from the provision of “impermissible services” will not be less than 150% of the cost of providing the service. If the amount so received is 1% or less of the total amount received by us with respect to the property, then only the income from the impermissible services will not qualify as “rents from real property.” However, this rule generally will not apply if such services are provided to tenants through an independent contractor from whom we derive no revenue, or through a TRS. With respect to this rule, tenants will receive some services in connection with their leases of the real properties. Our intention is that the services to be provided are those usually or customarily rendered in connection with the rental of space, and therefore, providing these services will not cause the rents received with respect to the properties to fail to qualify as rents from real property for purposes of the 75% Gross Income Test (and the 95% Gross Income Test described below). The Board of Directors intends to hire qualifying independent contractors or to utilize our TRSs to render services which it believes, after consultation with our tax advisors, are not usually or customarily rendered in connection with the rental of space.

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In addition, we have represented that, with respect to our leasing activities, we will not (1) charge rent for any property that is based in whole or in part on the income or profits of any person (excluding rent based on a percentage of receipts or sales, as described above), (2) charge rent that will be attributable to personal property in an amount greater than 15% of the total rent received under the applicable lease, or (3) enter into any lease with a related party tenant.

Amounts received as rent from a TRS are not excluded from rents from real property by reason of the related party rules described above, if the activities of the TRS and the nature of the properties it leases meet certain requirements. Generally, amounts received by us from our TRSs with respect to any lodging facilities we own will be considered rents from real property only if the following conditions are met:

•

Each lodging facility must not be managed or operated by us or the TRS to which it is leased, but rather must be managed or operated by an eligible independent contractor that qualifies for U.S. federal tax purposes as an independent contractor that is actively engaged in the trade or business of operating lodging facilities for persons not related to us or the TRS. The test for such independent contractor’s eligibility is made at the time the independent contractor enters into a management agreement or other similar service contract with the TRS to operate the lodging facility;

•

The lodging facility is a (i) hotel, (ii) motel or (iii) other establishment, more than one-half of the dwelling units in which are used on a transient basis. A dwelling unit is generally understood to be used on a transient basis if, for more than one half of the days in which such unit is used on a rental basis during a taxable year, it is used by a tenant or series of tenants each of whom uses the unit for less than thirty days;

•

The TRS may not directly or indirectly provide to any person, under a franchise, license or otherwise, rights to any brand name under which any lodging facility is operated, except with respect to an independent contractor in relation to facilities it manages for or leases from us; and

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No wagering activities may be conducted at or in connection with our lodging facilities by any person who is engaged in the business of accepting wagers and who is legally authorized to engage in such business.

We expect that all lodging facilities we acquire will be operated in accordance with these requirements with the result that amounts received from a TRS will be considered rents from real property. The TRSs will pay regular corporate tax rates on any income they earn from the lease of our lodging facilities, as well as any other income they earn. In addition, the TRS rules limit the deductibility of interest paid or accrued by a TRS to its parent REIT to assure that the TRS is subject to an appropriate level of corporate taxation. Further, the rules impose a 100% excise tax on transactions between a TRS and its parent REIT or the REIT’s tenants whose terms are not on an arm’s-length basis.

Interest Income. It is possible that we will be paid interest on loans secured by real property. All interest income qualifies under the 95% Gross Income Test, and interest on loans secured by real property qualifies under the 75% Gross Income Test; provided, that in both cases the interest does not depend, in whole or in part, on the income or profits of any person (excluding amounts based on a fixed percentage of receipts or sales). If a loan is secured by both real property and other property, the interest on it may nevertheless qualify under the 75% Gross Income Test. We may acquire mortgage, mezzanine, bridge loans and other debt investments. Interest income constitutes qualifying mortgage interest for purposes of the 75% Gross Income Test to the extent that the obligation upon which such interest is paid is secured by a mortgage on real property. If we receive interest income with respect to a mortgage loan that is secured by both real property and other property, and the highest principal amount of the loan outstanding during a taxable year exceeds the fair market value of the real property on the date that we committed to acquire the loan, or agreed to modify the loan in a manner that is treated as an acquisition of a new loan for U.S. federal income tax purposes, then the interest income will be apportioned between the real property and the other collateral, and our income from the loan will qualify for purposes of the 75% Gross Income Test only to the extent that the interest is allocable to the real property. For purposes of the preceding sentence, however, under recently issued IRS guidance we do not need to re-determine the fair market value of real property in connection with a loan modification that is occasioned by a default or made at a time when we reasonably believe the modification to the loan will substantially reduce a significant risk of default on the original loan, and any such modification will not be treated as a prohibited transaction. All of our loans secured by real property will be structured so that the amount of the loan does not exceed the fair market value of the real property at the time of the loan commitment. Therefore, income generated through any investments in loans secured by real property should be treated as qualifying income under the 75% Gross Income Test.

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Any amount includible in our gross income with respect to a regular or residual interest in a REMIC generally is treated as interest on an obligation secured by a mortgage on real property. If, however, less than 95% of the assets of a REMIC consists of real estate assets (determined as if we held such assets), we will be treated as receiving directly our proportionate share of the income of the REMIC for purposes of determining the amount that is treated as interest on an obligation secured by a mortgage on real property.

Fee Income. We may receive various fees in connection with our operations. The fees generally will be qualifying income for purposes of both the 75% and 95% Gross Income Tests if they are received in consideration for entering into an agreement to make a loan secured by real property and the fees are not determined by income or profits. Other fees generally are not qualifying income for purposes of either the 75% or 95% Gross Income Test. Any fees earned by a TRS are not included for purposes of the Gross Income Tests.

Dividend Income. We may receive distributions from TRSs or other corporations that are not REITs or qualified REIT subsidiaries. These distributions are generally classified as dividends to the extent of the earnings and profits of the distributing corporation. Such distributions generally constitute qualifying income for purposes of the 95% Gross Income Test, but not the 75% Gross Income Test. Any dividends received by us from a REIT will be qualifying income for purposes of both the 95% and 75% Gross Income Tests.

We will monitor the amount of the dividend and other income from our TRSs and will take actions intended to keep this income, and any other non-qualifying income, within the limitations of the Gross Income Tests. Although we intend to take these actions to prevent a violation of the Gross Income Tests, we cannot guarantee that such actions will in all cases prevent such a violation.

Hedging Transactions. From time to time, we may enter into hedging transactions with respect to one or more of our assets or liabilities. Our hedging activities could take a variety of forms, including hedging instruments such as interest rate swap agreements, interest rate cap agreements, interest rate floor or collar agreements, investments in stripped securities receiving interest-only on the underlying assets, or IO Strips, options, futures contracts, forward contracts, similar financial instruments or other financial instruments that we deem appropriate. Income from a hedging transaction, including gain from the sale or disposition of such a transaction, that is clearly identified as a hedging transaction as specified in the Code will not constitute gross income and thus will be exempt from the 75% and 95% Gross Income Tests. The term “hedging transaction,” as used in the prior sentence, generally means any transaction we enter into in the normal course of our business primarily to manage risk of (1) interest rate changes or fluctuations with respect to borrowings made or to be made by us to acquire or carry real estate-related assets, or (2) currency fluctuations with respect to an item of qualifying income under the 75% or 95% Gross Income Test. To the extent that we do not properly identify such transactions as hedges or we hedge with other types of financial instruments, the income from those transactions is likely to be treated as non-qualifying income for purposes of the Gross Income Tests. We intend to structure any hedging transactions in a manner that does not jeopardize our qualification as a REIT.

Foreclosure Property. Foreclosure property is real property and any personal property incident to such real property (1) that is acquired by a REIT as a result of the REIT having bid on the property at foreclosure or having otherwise reduced the property to ownership or possession by agreement or process of law after there was a default (or default was imminent) on a lease of the property or a mortgage loan held by the REIT and secured by the property, (2) for which the related loan or lease was acquired by the REIT at a time when default was not imminent or anticipated and (3) for which such REIT makes a proper election to treat the property as foreclosure property. REITs generally are subject to tax at the maximum U.S. federal corporate tax rate (currently 35%) on any net income from foreclosure property, including any gain from the disposition of the foreclosure property, other than income that would otherwise be qualifying income for purposes of the 75% Gross Income Test. Any gain from the sale of property for which a foreclosure property election has been made will not be subject to the 100% tax on gains from prohibited transactions described above, even if the property would otherwise constitute inventory or dealer property in the hands of the selling REIT. If we believe we will receive any income from foreclosure property that is not qualifying income for purposes of the 75% Gross Income Test, we intend to elect to treat the related property as foreclosure property.

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Excess Inclusion Income. Pursuant to IRS guidance, a REIT’s excess inclusion income, including any excess inclusion income from a residual interest in a REMIC, must be allocated among its stockholders in proportion to dividends paid. The REIT is required to notify stockholders of the amount of “excess inclusion income” allocated to them. A stockholder’s share of excess inclusion income:

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cannot be offset by any net operating losses otherwise available to the stockholder;

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is subject to tax as UBTI in the hands of most types of stockholders that are otherwise generally exempt from U.S. federal income tax; and

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results in the application of U.S. federal income tax withholding at the maximum rate (30%), without reduction for any otherwise applicable income tax treaty or other exemption, to the extent allocable to most types of foreign stockholders.

See “— Taxation of U.S. Stockholders.” Pursuant to IRS guidance, to the extent that excess inclusion income is allocated to a tax-exempt stockholder of a REIT that is not subject to UBTI (such as a government entity or charitable remainder trust), the REIT may be subject to tax on this income at the highest applicable corporate tax rate (currently 35%). In that case, the REIT could reduce distributions to such stockholders by the amount of such tax paid by the REIT attributable to such stockholder’s ownership. Treasury regulations provide that such a reduction in distributions does not give rise to a preferential dividend that could adversely affect the REIT’s compliance with its distribution requirements. See “— Annual Distribution Requirements.” The manner in which excess inclusion income is calculated, or would be allocated to stockholders, including allocations among shares of different classes of stock, is not clear under current law. As required by IRS guidance, we intend to make such determinations using a reasonable method. Tax-exempt investors, foreign investors and taxpayers with net operating losses should carefully consider the tax consequences described above, and are urged to consult their tax advisors.

Satisfaction of the Gross Income Tests. Our share of income from the properties will primarily give rise to rental income and gains on sales of the properties, substantially all of which will generally qualify under the 75% Gross Income and 95% Gross Income Tests. Our anticipated operations indicate that it is likely that we will have little or no non-qualifying income to cause adverse U.S. federal income tax consequences.

As described above, we may establish one or more TRS with which we could enter into leases for any properties in which we may invest. The gross income generated by our TRSs would not be included in our gross income. However, we would realize gross income from these subsidiaries in the form of rents. In addition, any dividends from our TRSs to us would be included in our gross income and qualify for the 95% Gross Income Test, but not the 75% Gross Income Test.

If we fail to satisfy either the 75% Gross Income or 95% Gross Income Tests for any taxable year, we may retain our qualification as a REIT for such year if we satisfy the IRS that (i) the failure was due to reasonable cause and not due to willful neglect, (ii) we attach to our return a schedule describing the nature and amount of each item of our gross income, and (iii) any incorrect information on such schedule was not due to fraud with intent to evade U.S. federal income tax. If this relief provision is available, we would remain subject to tax equal to the greater of the amount by which we failed the 75% Gross Income Test or the 95% Gross Income Test, as applicable, multiplied by a fraction meant to reflect our profitability.

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Annual Distribution Requirements. In addition to the other tests described above, we are required to distribute dividends (other than capital gain dividends) to our stockholders each year in an amount at least equal to the excess of: (1) the sum of: (a) 90% of our REIT taxable income (determined without regard to the deduction for dividends paid and by excluding any net capital gain); and (b) 90% of the net income (after tax) from foreclosure property; less (2) the sum of some types of items of non-cash income. Whether sufficient amounts have been distributed is based on amounts paid in the taxable year to which they relate, or in the following taxable year if we: (1) declared a dividend before the due date of our tax return (including extensions); (2) distribute the dividend within the 12-month period following the close of the taxable year (and not later than the date of the first regular dividend payment made after such declaration); and (3) file an election with our tax return. Additionally, dividends that we declare in October, November or December in a given year payable to stockholders of record in any such month will be treated as having been paid on December 31st of that year so long as the dividends are actually paid during January of the following year. In order for distributions to be counted as satisfying the annual distribution requirements for REITs, and to provide us with a REIT-level tax deduction, the distributions must not be “preferential dividends.” A dividend is not a preferential dividend if the distribution is (1) pro rata among all outstanding shares of stock within a particular class, and (2) in accordance with the preferences among different classes of stock as set forth in our organizational documents. If we fail to meet the annual distribution requirements as a result of an adjustment to our U.S. federal income tax return by the IRS, or under certain other circumstances, we may cure the failure by paying a “deficiency dividend” (plus penalties and interest to the IRS) within a specified period.

If we do not distribute 100% of our REIT taxable income, we will be subject to U.S. federal income tax on the undistributed portion. We also will be subject to an excise tax if we fail to currently distribute sufficient income. In order to make the “required distribution” with respect to a calendar year and avoid the excise tax, we must distribute the sum of (1) 85% of our REIT ordinary income for the calendar year, (2) 95% of our REIT capital gain net income for the calendar year, and (3) the excess, if any, of the grossed up required distribution (as defined in the Code) for the preceding calendar year over the distributed amount for that preceding calendar year. Any excise tax liability would be equal to 4% of the difference between the amount required to be distributed and the amount actually distributed and would not be deductible by us.

We intend to pay sufficient dividends each year to satisfy the annual distribution requirements and avoid U.S. federal income and excise taxes on our earnings; however, it may not always be possible to do so. It is possible that we may not have sufficient cash or other liquid assets to meet the annual distribution requirements due to tax accounting rules and other timing differences. Other potential sources of non-cash taxable income include:

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“residual interests” in REMICs or taxable mortgage pools;

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loans held as assets that are issued at a discount and require the accrual of taxable economic interest in advance of receipt in cash; and

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loans on which the borrower is permitted to defer cash payments of interest, distressed loans on which we may be required to accrue taxable interest income even though the borrower is unable to make current servicing payments in cash, and debt securities purchased at a discount.

We will closely monitor the relationship between our REIT taxable income and cash flow, and if necessary to comply with the annual distribution requirements, will attempt to borrow funds to fully provide the necessary cash flow or to pay dividends in the form of taxable in-kind distributions of property, including taxable stock dividends.

Failure to Qualify. If we fail to qualify, for U.S. federal income tax purposes, as a REIT in any taxable year, we may be eligible for relief provisions if the failures are due to reasonable cause and not willful neglect and if a penalty tax is paid with respect to each failure to satisfy the applicable requirements. If the applicable relief provisions are not available or cannot be met, we will not be able to deduct our dividends and will be subject to U.S. federal income tax (including any applicable alternative minimum tax) on our taxable income at regular corporate rates, thereby reducing cash available for distributions. In such event, all distributions to stockholders (to the extent of our current and accumulated earnings and profits) will be taxable as ordinary dividend income. This “double taxation” results from our failure to qualify as a REIT. Unless entitled to relief under specific statutory provisions, we will not be eligible to elect REIT qualification for the four taxable years following the year during which qualification was lost.

Recordkeeping Requirements. We are required to maintain records and request on an annual basis information from specified stockholders. These requirements are designed to assist us in determining the actual ownership of our outstanding stock and maintaining our qualification as a REIT.

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Prohibited Transactions. As discussed above, we will be subject to a 100% U.S. federal income tax on any net income derived from “prohibited transactions.” Net income derived from prohibited transactions arises from the sale or exchange of property held for sale to customers in the ordinary course of our business which is not foreclosure property. There is an exception to this rule for the sale of property that:

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is a real estate asset under the 75% Asset Test;

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generally has been held for at least two years;

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has aggregate expenditures which are includable in the basis of the property not in excess of 30% of the net selling price;

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in some cases, was held for production of rental income for at least two years;

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in some cases, substantially all of the marketing and development expenditures were made through an independent contractor; and

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when combined with other sales in the year, either does not cause the REIT to have made more than seven sales of property during the taxable year (excluding sales of foreclosure property or in connection with an involuntary conversion) or occurs in a year when the REIT disposes of less than 10% of its assets (measured by U.S. federal income tax basis or fair market value, and ignoring involuntary dispositions and sales of foreclosure property).

Although we will eventually sell each of the properties, our primary intention in acquiring and operating the properties is the production of rental income and we do not expect to hold any property for sale to customers in the ordinary course of our business. The 100% tax will not apply to gains from the sale of property that is held through a TRS or other taxable corporation, although such income will be subject to tax in the hands of the corporation at regular corporate income tax rates. As a general matter, any condominium conversions we might undertake must satisfy these restrictions to avoid being “prohibited transactions,” which will limit the annual number of transactions.

Characterization of Property Leases. We may purchase either new or existing properties and lease them to tenants. We currently intend to structure our leases so that they qualify as true leases for U.S. federal income tax purposes. For example, with respect to each lease, we generally expect that:

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our operating partnership and the lessee will intend for their relationship to be that of a lessor and lessee, and such relationship will be documented by a lease agreement;

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the lessee will have the right to exclusive possession and use and quiet enjoyment of the properties covered by the lease during the term of the lease;

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the lessee will bear the cost of, and will be responsible for, day-to-day maintenance and repair of the properties other than the cost of certain capital expenditures, and will dictate through the property managers, who will work for the lessee during the terms of the leases, and how the properties will be operated and maintained;

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the lessee will bear all of the costs and expenses of operating the properties, including the cost of any inventory used in their operation, during the term of the lease, other than the cost of certain furniture, fixtures and equipment, and certain capital expenditures;

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the lessee will benefit from any savings and will bear the burdens of any increases in the costs of operating the properties during the term of the lease;

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If there is damage or destruction to a property, the lessee will be at economic risk because it will bear the economic burden of the loss in income from operation of the properties subject to the right, in certain circumstances, to terminate the lease if the lessor does not restore the property to its prior condition;

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the lessee will indemnify the lessor against all liabilities imposed on the lessor during the term of the lease by reason of (A) injury to persons or damage to property occurring at the properties or (B) the lessee’s use, management, maintenance or repair of the properties;

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the lessee will be obligated to pay, at a minimum, substantial base rent for the period of use of the properties under the lease;

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the lessee will stand to incur substantial losses or reap substantial gains depending on how successfully it, through the property managers, who work for the lessees during the terms of the leases, operates the properties;

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we expect that each lease that we enter into, at the time we enter into it (or at any time that any such lease is subsequently renewed or extended) will enable the tenant to derive a meaningful profit, after expenses and taking into account the risks associated with the lease, from the operation of the properties during the term of its leases; and

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upon termination of each lease, the applicable property will be expected to have a remaining useful life equal to at least 20% of its expected useful life on the date the lease is entered into, and a fair market value equal to at least 20% of its fair market value on the date the lease was entered into.

If, however, the IRS were to recharacterize our leases as service contracts or partnership agreements, rather than true leases, or disregarded altogether for tax purposes, all or part of the payments that we receive from the lessees would not be considered rent and would not otherwise satisfy the various requirements for qualification as “rents from real property.” In that case, we might not be able to satisfy either the 75% or 95% Gross Income Tests and, as a result, could lose our REIT qualification.

Tax Aspects of Investments in Partnerships

General. We anticipate holding direct or indirect interests in one or more partnerships, including the operating partnership. We intend to operate as an Umbrella Partnership REIT, or UPREIT, which is a structure whereby we would own a direct interest in the operating partnership, and the operating partnership would, in turn, own the properties and may possibly own interests in other non-corporate entities that own properties. Such non-corporate entities would generally be organized as limited liability companies, partnerships or trusts and would either be disregarded for U.S. federal income tax purposes (if the operating partnership were the sole owner) or treated as partnerships for U.S. federal income tax purposes.

The following is a summary of the U.S. federal income tax consequences of our investment in the operating partnership if the operating partnership is treated as a partnership for U.S. federal income tax purposes. This discussion should also generally apply to any investment by us in a property partnership or other non-corporate entity.

A partnership (that is not a publicly traded partnership taxed as a corporation) is not subject to tax as an entity for U.S. federal income tax purposes. Rather, partners are allocated their allocable share of the items of income, gain, loss, deduction and credit of the partnership, and are potentially subject to tax thereon, without regard to whether the partners receive any distributions from the partnership. We will be required to take into account our allocable share of the foregoing items for purposes of the various REIT gross income and asset tests, and in the computation of our REIT taxable income and U.S. federal income tax liability. Further, there can be no assurance that distributions from the operating partnership will be sufficient to pay the tax liabilities resulting from an investment in the operating partnership.

Generally, an entity with two or more members formed as a partnership or limited liability company under state law will be taxed as a partnership for U.S. federal income tax purposes unless it specifically elects otherwise. Because the operating partnership was formed as a partnership under state law, for U.S. federal income tax purposes the operating partnership will be treated as a partnership, if it has two or more partners, or a disregarded entity, if it is treated as having one partner. We intend that interests in the operating partnership (and any partnership invested in by the operating partnership) will fall within one of the “safe harbors” for the partnership to avoid being classified as a publicly traded partnership. However, our ability to satisfy the requirements of some of these safe harbors depends on the results of actual operations and accordingly no assurance can be given that any such partnership will at all times satisfy one of such safe harbors. We reserve the right to not satisfy any safe harbor. Even if a partnership is a publicly traded partnership, it generally will not be treated as a corporation if at least 90% of its gross income each taxable year is from certain sources, which generally include rents from real property and other types of passive income. We believe that our operating partnership will have sufficient qualifying income so that it would be taxed as a partnership, even if it were treated as a publicly traded partnership.

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If for any reason the operating partnership (or any partnership invested in by the operating partnership) is taxable as a corporation for U.S. federal income tax purposes, the character of our assets and items of gross income would change, and as a result, we would most likely be unable to satisfy the applicable REIT requirements under U.S. federal income tax laws discussed above. In addition, any change in the status of any partnership may be treated as a taxable event, in which case we could incur a tax liability without a related cash distribution. Further, if any partnership was treated as a corporation, items of income, gain, loss, deduction and credit of such partnership would be subject to corporate income tax, and the partners of any such partnership would be treated as stockholders, with distributions to such partners being treated as dividends.

Anti-abuse Treasury Regulations have been issued under the partnership provisions of the Code that authorize the IRS, in some abusive transactions involving partnerships, to disregard the form of a transaction and recast it as it deems appropriate. The anti-abuse regulations apply where a partnership is utilized in connection with a transaction (or series of related transactions) with a principal purpose of substantially reducing the present value of the partners’ aggregate U.S. federal tax liability in a manner inconsistent with the intent of the partnership provisions. The anti-abuse regulations contain an example in which a REIT contributes the proceeds of a public offering to a partnership in exchange for a general partnership interest. The limited partners contribute real property assets to the partnership, subject to liabilities that exceed their respective aggregate bases in such property. The example concludes that the use of the partnership is not inconsistent with the intent of the partnership provisions, and thus, cannot be recast by the IRS. However, the anti-abuse regulations are extraordinarily broad in scope and are applied based on an analysis of all the facts and circumstances. As a result, we cannot assure you that the IRS will not attempt to apply the anti-abuse regulations to us. Any such action could potentially jeopardize our qualification as a REIT and materially affect the tax consequences and economic return resulting from an investment in us.

Income Taxation of Partnerships and their Partners. Although a partnership agreement will generally determine the allocation of a partnership’s income and losses among the partners, such allocations may be disregarded for U.S. federal income tax purposes under Code Section 704(b) and the Treasury Regulations. If any allocation is not recognized for U.S. federal income tax purposes, the item subject to the allocation will be reallocated in accordance with the partners’ economic interests in the partnership. We believe that the allocations of taxable income and loss in the operating partnership agreement comply with the requirements of Code Section 704(b) and the Treasury Regulations. For a description of allocations by the operating partnership to the partners, see the section entitled “Summary of Our Operating Partnership Agreement” in this prospectus.

In some cases, special allocations of net profits or net losses will be required to comply with the U.S. federal income tax principles governing partnership tax allocations. Additionally, pursuant to Code Section 704(c), income, gain, loss and deduction attributable to property contributed to the operating partnership in exchange for an interest in the operating partnership must be allocated in a manner so that the contributing partner is charged with, or benefits from, the unrealized gain or loss attributable to the property at the time of contribution. The amount of such unrealized gain or loss is generally equal to the difference between the fair market value and the adjusted basis of the property at the time of contribution. These allocations are designed to eliminate book-tax differences by allocating to contributing partners lower amounts of depreciation deductions and increased taxable income and gain attributable to the contributed property than would ordinarily be the case for economic or book purposes. With respect to any property purchased by the operating partnership, such property will generally have an initial tax basis equal to its fair market value, and accordingly, Code Section 704(c) will not apply, except as described further below in this paragraph. The application of the principles of Code Section 704(c) in tiered partnership arrangements is not entirely clear. Accordingly, the IRS may assert a different allocation method than the one selected by the operating partnership to cure any book-tax differences. In certain circumstances, we create book-tax differences by adjusting the values of properties for economic or book purposes and generally the rules of Code Section 704(c) would apply to such differences as well.

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For U.S. federal income tax purposes, our depreciation deductions generally will be computed using the straight-line method. Commercial buildings, structural components and improvements are generally depreciated over 40 years. Shorter depreciation periods apply to other properties. Some improvements to land are depreciated over 15 years. With respect to such improvements, however, taxpayers may elect to depreciate these improvements over 20 years using the straight-line method. For properties contributed to the operating partnership, depreciation deductions are calculated based on the transferor’s basis and depreciation method. Because depreciation deductions are based on the transferor’s basis in the contributed property, the operating partnership generally would be entitled to less depreciation than if the properties were purchased in a taxable transaction. The burden of lower depreciation will generally fall first on the contributing partner, but also may reduce the depreciation allocated to other partners.

Gain on the sale or other disposition of depreciable property is characterized as ordinary income (rather than capital gain) to the extent of any depreciation recapture. Buildings and improvements depreciated under the straight-line method of depreciation are generally not subject to depreciation recapture unless the property was held for less than one year. However, individuals, trusts and estates that hold shares either directly or through a pass-through entity may be subject to tax on the disposition on such assets at a rate of 25% rather than at the normal capital gains rate, to the extent that such assets have been depreciated.

Some expenses incurred in the conduct of the operating partnership’s activities may not be deducted in the year they were paid. To the extent this occurs, the taxable income of the operating partnership may exceed its cash receipts for the year in which the expense is paid. As discussed above, the costs of acquiring properties must generally be recovered through depreciation deductions over a number of years. Prepaid interest and loan fees, and prepaid management fees are other examples of expenses that may not be deducted in the year they were paid.

Taxation of U.S. Stockholders

Taxation of Taxable U.S. Stockholders. As long as we qualify as a REIT, distributions paid to our U.S. stockholders out of current or accumulated earnings and profits (and not designated as capital gain dividends or qualified dividend income) will be ordinary income. Generally, for purposes of this discussion, a “U.S. Stockholder” is a person (other than a partnership or entity treated as a partnership for U.S. federal income tax purposes) that is, for U.S. federal income tax purposes:

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an individual citizen or resident of the United States for U.S. federal income tax purposes;

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a corporation, or other entity taxable as a corporation, created or organized in or under the laws of the United States, any state thereof or the District of Columbia;

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an estate the income of which is subject to U.S. federal income taxation regardless of its source; or

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a trust if (1) a court within the United States is able to exercise primary supervision over its administration and one or more U.S. persons have the authority to control all substantial decisions of the trust or (2) the trust has a valid election in effect under current Treasury Regulations to be treated as a U. S. person.

If a partnership or entity treated as a partnership for U.S. federal income tax purposes holds our Common Shares, the U.S. federal income tax treatment of a partner generally will depend upon the status of the partner and the activities of the partnership. A partner of a partnership holding our Common Shares should consult its own tax advisor regarding the U.S. federal income tax consequences to the partner of the acquisition, ownership and disposition of our stock by the partnership.

Distributions in excess of current and accumulated earnings and profits are treated first as a tax-deferred return of capital to the U.S. Stockholder, reducing the U.S. Stockholder’s tax basis in his, her or its Common Shares by the amount of such distribution, and then as capital gain. Because our earnings and profits are reduced for depreciation and other non-cash items, it is possible that a portion of each distribution will constitute a tax-deferred return of capital. Additionally, because distributions in excess of earnings and profits reduce the U.S. Stockholder’s basis in our stock, this will increase the U.S. Stockholder’s gain, or reduce the U.S. Stockholder’s loss, on any subsequent sale of the stock.

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Distributions that are designated as capital gain dividends will be taxed as long-term capital gain to the extent they do not exceed our actual net capital gain for the taxable year, without regard to the period for which the U.S. Stockholder that receives such distribution has held its stock. However, corporate stockholders may be required to treat up to 20% of some types of capital gain dividends as ordinary income. We also may decide to retain, rather than distribute, our net capital gain and pay any tax thereon. In such instances, U.S. Stockholders would include their proportionate shares of such gain in income as long-term capital gain, receive a credit on their returns for their proportionate share of our tax payments, and increase the tax basis of their shares of stock by the after-tax amount of such gain.

With respect to U.S. Stockholders who are taxed at the rates applicable to individuals, we may elect to designate a portion of our distributions paid to such U.S. Stockholders as “qualified dividend income.” A portion of a distribution that is properly designated as qualified dividend income is taxable to non-corporate U.S. Stockholders as capital gain; provided, that the U.S. Stockholder has held the Common Shares with respect to which the distribution is made for more than 60 days during the 121 day period beginning on the date that is 60 days before the date on which such Common Shares became ex-dividend with respect to the relevant distribution. The maximum amount of our distributions eligible to be designated as qualified dividend income for a taxable year is equal to the sum of:

(1)

the qualified dividend income received by us during such taxable year from C corporations (including any TRSs);

(2)

the excess of any “undistributed” REIT taxable income recognized during the immediately preceding year over the U.S. federal income tax paid by us with respect to such undistributed REIT taxable income; and

(3)

the excess of any income recognized during the immediately preceding year attributable to the sale of a built-in-gain asset that was acquired in a carry-over basis transaction from a non-REIT corporation or had appreciated at the time our REIT election became effective over the U.S. federal income tax paid by us with respect to such built in gain.

Generally, dividends that we receive will be treated as qualified dividend income for purposes of (1) above if the dividends are received from a regular, domestic C corporation, such as any TRSs, and specified holding period and other requirements are met.

Dividend income is characterized as “portfolio” income under the passive loss rules and cannot be offset by a stockholder’s current or suspended passive losses. Corporate stockholders cannot claim the dividends-received deduction for such dividends unless we lose our REIT qualification. Although U.S. Stockholders generally will recognize taxable income in the year that a distribution is received, any distribution we declare in October, November or December of any year and is payable to a U.S. Stockholder of record on a specific date in any such month will be treated as both paid by us and received by the U.S. Stockholder on December 31st of the year it was declared even if paid by us during January of the following calendar year. Because we are not a pass-through entity for U.S. federal income tax purposes, U.S. Stockholders may not use any of our operating or capital losses to reduce their tax liabilities.

We have the ability to declare a large portion of a dividend in shares of our stock. As long as a portion of such dividend is paid in cash (which portion can be as low as 20%) and certain requirements are met, the entire distribution will be treated as a dividend for U.S. federal income tax purposes. As a result, U.S. Stockholders will be taxed on 100% of the dividend in the same manner as a cash dividend, even though most of the dividend was paid in shares of our stock. In general, any dividend on shares of our preferred stock will be taxable as a dividend, regardless of whether any portion is paid in stock.

In general, the sale of our Common Shares held for more than 12 months will produce long-term capital gain or loss. All other sales will produce short-term gain or loss. In each case, the gain or loss is equal to the difference between the amount of cash and fair market value of any property received from the sale and the U.S. Stockholder’s basis in the Common Shares sold. However, any loss from a sale or exchange of Common Shares by a U.S. Stockholder who has held such stock for six months or less generally will be treated as a long-term capital loss, to the extent that the U.S. Stockholder treated our distributions as long-term capital gain. The use of capital losses is subject to limitations.

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If excess inclusion income from a REMIC residual interest is allocated to any stockholder, that income will be taxable in the hands of the stockholder and would not be offset by any net operating losses of the stockholder that would otherwise be available. As required by IRS guidance, we intend to notify our stockholders if a portion of a dividend paid by us is attributable to excess inclusion income.

Currently, the maximum tax rate applicable to individuals and certain other noncorporate taxpayers on net capital gain recognized on the sale or other disposition of shares is 20% and the maximum marginal tax rate payable by them on dividends received from corporations that are subject to a corporate level of tax has been reduced. Except in limited circumstances, as discussed above, this reduced tax rate will not apply to dividends paid by us.

Taxation of Tax-Exempt Stockholders. U.S. tax-exempt entities, including qualified employee pension and profit sharing trusts and individual retirement accounts, generally are exempt from U.S. federal income taxation. However, they are subject to taxation on their UBTI. While many investments in real estate may generate UBTI, the IRS has ruled that dividend distributions from a REIT to a tax-exempt entity do not constitute UBTI. Based on that ruling, our distributions to a U.S. Stockholder that is a domestic tax-exempt entity should not constitute UBTI unless such U.S. Stockholder borrows funds (or otherwise incurs acquisition indebtedness within the meaning of the Code) to acquire its common shares, or the common shares are otherwise used in an unrelated trade or business of the tax-exempt entity. Furthermore, part or all of the income or gain recognized with respect to our stock held by certain domestic tax-exempt entities including social clubs, voluntary employee benefit associations, supplemental unemployment benefit trusts and qualified group legal service plans (all of which are exempt from U.S. federal income taxation under Code Sections 501(c)(7), (9), (17) or (20)), may be treated as UBTI.

Special rules apply to the ownership of REIT shares by some tax-exempt pension trusts. If we would be “closely-held” (discussed above with respect to the share ownership tests) because the stock held by tax-exempt pension trusts was viewed as being held by the trusts rather than by their respective beneficiaries, tax-exempt pension trusts owning more than 10% by value of our stock may be required to treat a percentage of our dividends as UBTI. This rule applies if: (1) at least one tax-exempt pension trust owns more than 25% by value of our shares, or (2) one or more tax-exempt pension trusts (each owning more than 10% by value of our shares) hold in the aggregate more than 50% by value of our shares. The percentage treated as UBTI is our gross income (less direct expenses) derived from an unrelated trade or business (determined as if we were a tax-exempt pension trust) divided by our gross income from all sources (less direct expenses). If this percentage is less than 5%, however, none of the dividends will be treated as UBTI. Because of the restrictions in our charter regarding the ownership concentration of our Common Shares, we believe that a tax-exempt pension trust should not become subject to these rules. However, because our common shares may become publicly traded, we can give no assurance of this.

Prospective tax-exempt purchasers should consult their own tax advisors and financial planners as to the applicability of these rules and consequences to their particular circumstances.

Backup Withholding and Information Reporting. We will report to our U.S. Stockholders and the IRS the amount of dividends paid during each calendar year and the amount of any tax withheld. Under the backup withholding rules, a U.S. Stockholder may be subject to backup withholding at the current rate of 28% with respect to dividends paid, unless the U.S. Stockholder (1) is a corporation or comes within other exempt categories and, when required, demonstrates this fact or (2) provides a taxpayer identification number or social security number, certifies under penalties of perjury that such number is correct and that such U.S. Stockholder is not subject to backup withholding and otherwise complies with applicable requirements of the backup withholding rules. A U.S. Stockholder that does not provide his, her or its correct taxpayer identification number or social security number may also be subject to penalties imposed by the IRS. In addition, we may be required to withhold a portion of capital gain distribution to any U.S. Stockholder who fails to certify its non foreign status.

Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be allowed as a refund or a credit against such U.S. Stockholder’s U.S. federal income tax liability, provided the required information is furnished to the IRS.

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Taxation of Non-U.S. Stockholders

General. The rules governing the U.S. federal income taxation of Non-U.S. Stockholders are complex, and as such, only a summary of such rules is provided in this prospectus. Non-U.S. investors should consult with their own tax advisors and financial planners to determine the impact that U.S. federal, state and local income tax or similar laws will have on such investors as a result of an investment in our REIT. A “Non-U.S. Stockholder” means a person (other than a partnership or entity treated as a partnership for U.S. federal income tax purposes) that is not a U.S. Stockholder.

Distributions — In General. Distributions paid by us that are not attributable to gain from our sales or exchanges of USRPIs and not designated by us as capital gain dividends will be treated as dividends of ordinary income to the extent that they are made out of our current or accumulated earnings and profits. Such dividends to Non-U.S. Stockholders ordinarily will be subject to a withholding tax equal to 30% of the gross amount of the dividend unless an applicable tax treaty reduces or eliminates that tax. Under some treaties, however, lower rates generally applicable to dividends do not apply to dividends from REITs. If income from the investment in the common shares is treated as effectively connected with the Non-U.S. Stockholder’s conduct of a U.S. trade or business, the Non-U.S. Stockholder generally will be subject to a tax at the graduated rates applicable to ordinary income, in the same manner as U.S. stockholders are taxed with respect to such dividends (and also may be subject to the 30% branch profits tax in the case of a stockholder that is a foreign corporation that is not entitled to any treaty exemption). In general, Non-U.S. Stockholders will not be considered to be engaged in a U.S. trade or business solely as a result of their ownership of our stock. Dividends in excess of our current and accumulated earnings and profits will not be taxable to a stockholder to the extent they do not exceed the adjusted basis of the stockholder’s shares. Instead, they will reduce the adjusted basis of such shares. To the extent that such dividends exceed the adjusted basis of a Non-U.S. Stockholder’s shares, they will give rise to tax liability if the Non-U.S. Stockholder would otherwise be subject to tax on any gain from the sale or disposition of his shares, as described in the “Sales of Shares” portion of this Section below.

Distributions Attributable to Sale or Exchange of Real Property. Pursuant to FIRPTA, distributions that are attributable to gain from our sales or exchanges of USRPIs will be taxed to a Non-U.S. Stockholder as if such gain were effectively connected with a U.S. trade or business. Non-U.S. Stockholders would thus be taxed at the normal capital gain rates applicable to U.S. Stockholders, and would be subject to applicable alternative minimum tax and a special alternative minimum tax in the case of nonresident alien individuals. Also, such dividends may be subject to a 30% branch profits tax in the hands of a corporate Non-U.S. Stockholder not entitled to any treaty exemption. However, generally, pursuant to FIRPTA, a capital gain dividend from a REIT is not treated as effectively connected income for a Non-U.S. Stockholder if (1) the distribution is received with respect to a class of stock that is regularly traded on an established securities market located in the U.S.; and (2) the Non-U.S. Stockholder does not own more than 5% of the class of stock at any time during the one year period ending on the date of such distribution. However, it is not anticipated that our shares will be “regularly traded” on an established securities market for the foreseeable future, and therefore, this exception is not expected to apply.

U.S. Federal Income Tax Withholding on Distributions. For U.S. federal income tax withholding purposes, we will generally withhold tax at the rate of 30% on the amount of any distribution (other than distributions designated as capital gain dividends) made to a Non-U.S. Stockholder, unless the Non-U.S. Stockholder provides us with appropriate documentation (1) evidencing that such Non-U.S. Stockholder is eligible for an exemption or reduced rate under an applicable income tax treaty, generally an IRS Form W-8BEN (in which case we will withhold at the lower treaty rate) or (2) claiming that the dividend is effectively connected with the Non-U.S. Stockholder’s conduct of a trade or business within the U.S., generally an IRS Form W-8ECI (in which case we will not withhold tax). We are also generally required to withhold tax at the rate of 35% on the portion of any dividend to a Non-U.S. Stockholder that is or could be designated by us as a capital gain dividend, to the extent attributable to gain on a sale or exchange of an interest in U.S. real property. Such withheld amounts of tax do not represent actual tax liabilities, but rather, represent payments in respect of those tax liabilities described in the preceding two paragraphs. Therefore, such withheld amounts are creditable by the Non-U.S. Stockholder against its actual U.S. federal income tax liabilities, including those described in the preceding two paragraphs. The Non-U.S. Stockholder would be entitled to a refund of any amounts withheld in excess of such Non-U.S. Stockholder’s actual U.S. federal income tax liabilities, provided that the Non-U.S. Stockholder files applicable returns or refund claims with the IRS.

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Sales of Shares. Gain recognized by a Non-U.S. Stockholder upon a sale of shares generally will not be subject to U.S. federal income taxation; provided, that: (i) such gain is not effectively connected with the conduct by such Non-U.S. Stockholder of a trade or business within the U.S.; (ii) the Non-U.S. Stockholder is an individual and is not present in the U.S. for 183 days or more during the taxable year and certain other conditions apply; and (iii) (A) our REIT is “domestically controlled,” which generally means that less than 50% in value of our shares continues to be held directly or indirectly by foreign persons during a continuous five year period ending on the date of disposition or, if shorter, during the entire period of our existence, or (B) our common shares are “regularly traded” on an established securities market and the selling Non-U.S. Stockholder has not held more than 5% of our outstanding common shares at any time during the five-year period ending on the date of the sale.

We cannot assure you that we will qualify as “domestically controlled”. If we were not domestically controlled, a Non-U.S. Stockholder’s sale of common shares would be subject to tax, unless the common shares were regularly traded on an established securities market and the selling Non-U.S. Stockholder has not directly, or indirectly, owned during the five-year period ending on the date of sale more than 5% in value of our common shares. However, it is not anticipated that our common shares will be “regularly traded” on an established market. If the gain on the sale of shares were to be subject to taxation, the Non-U.S. Stockholder would be subject to the same treatment as U.S. Stockholders with respect to such gain, and the purchaser of such common shares may be required to withhold 10% of the gross purchase price.

If the proceeds of a disposition of Common Shares are paid by or through a U.S. office of a broker-dealer, the payment is generally subject to information reporting and to backup withholding unless the disposing Non-U.S. Stockholder certifies as to its name, address and non-U.S. status or otherwise establishes an exemption. Generally, U.S. information reporting and backup withholding will not apply to a payment of disposition proceeds if the payment is made outside the U.S. through a foreign office of a foreign broker-dealer. Under Treasury Regulations, if the proceeds from a disposition of Common Shares paid to or through a foreign office of a U.S. broker-dealer or a non-U.S. office of a foreign broker-dealer that is (i) a “controlled foreign corporation” for U.S. federal income tax purposes, (ii) a person 50% or more of whose gross income from all sources for a three-year period was effectively connected with a U.S. trade or business, (iii) a foreign partnership with one or more partners who are U.S. persons and who, in the aggregate, hold more than 50% of the income or capital interest in the partnership, or (iv) a foreign partnership engaged in the conduct of a trade or business in the U.S., then (A) backup withholding will not apply unless the broker-dealer has actual knowledge that the owner is not a Non-U.S. Stockholder, and (B) information reporting will not apply if the Non-U.S. Stockholder certifies its non-U.S. status and further certifies that it has not been, and at the time the certificate is furnished reasonably expects not to be, present in the U.S. for a period aggregating 183 days or more during each calendar year to which the certification pertains. Prospective foreign purchasers should consult their tax advisors and financial planners concerning these rules.

Medicare Tax

Certain net investment income earned by U.S. citizens and resident aliens and certain estates and trusts for taxable years beginning after December 31, 2012 is subject to a 3.8% Medicare tax. Net investment income includes, among other things, dividends on and capital gains from the sale or other disposition of shares of stock. Holders of shares of our common stock should consult their tax advisors regarding the effect, if any, of this tax on their ownership and disposition of such shares.

Foreign Accounts

Withholding taxes may apply to certain types of payments made to “foreign financial institutions” (as specially defined in the Code) and certain other non-U.S. entities. A withholding tax of 30% generally will be imposed on dividends on, and gross proceeds from the sale or other disposition of, our common stock paid to (a) a foreign financial institution unless such foreign financial institution agrees to verify, report and disclose its U.S. accountholders and meets certain other specified requirements or (b) a non-financial foreign entity that is the beneficial owner of the payment unless such entity certifies that it does not have any substantial U.S. owners or furnishes identifying information regarding each substantial U.S. owner and such entity meets certain other specified requirements. Applicable Treasury Regulations provide that these rules generally will apply to payments of dividends on our common stock made after December 31, 2013 and generally will apply to payments of gross proceeds from a sale or other disposition of our common stock after December 31, 2016. We will not pay any additional amounts in respect of any amounts withheld. U.S. Stockholders and Non-U.S. Stockholders are encouraged to consult their tax advisors regarding the particular consequences to them of this legislation and guidance.

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Other Tax Considerations

Distribution Reinvestment Program. Stockholders who participate in our DRIP will recognize taxable dividend income in the amount they would have received had they elected not to participate, even though they receive no cash. These deemed dividends will be treated as actual dividends from us to the participating stockholders and will retain the character and U.S. federal income tax effects applicable to all dividends. See “Taxation of U.S. Stockholders” in this section. Stock received under the program will have a holding period beginning with the day after purchase, and a U.S. federal income tax basis equal to its cost, which is the gross amount of the deemed distribution.

Share Repurchase Program. A repurchase of our shares will be treated under Code Section 302 as a taxable dividend (to the extent of our current or accumulated earnings and profits), unless the repurchase satisfies certain tests set forth in Code Section 302(b) enabling the repurchase to be treated as a sale or exchange of our shares. The repurchase will satisfy such test if it (i) is “substantially disproportionate” with respect to the stockholder, (ii) results in a “complete termination” of the stockholder’s stock interest in us, or (iii) is “not essentially equivalent to a dividend” with respect to the stockholder, all within the meaning of Code Section 302(b). In determining whether any of these tests have been met, shares considered to be owned by the stockholder by reason of certain constructive ownership rules set forth in the Code, as well as shares actually owned, must generally be taken into account. Because the determination as to whether any of the alternative tests of Code Section 302(b) are satisfied with respect to any particular stockholder of our shares will depend upon the facts and circumstances existing at the time the determination is made, prospective investors are advised to consult their own tax advisors to determine such tax treatment. If a repurchase of our shares is treated as a distribution that is taxable as dividend, the amount of the distribution would be measured by the amount of cash and the fair market value of any property received by the stockholders. The stockholder’s adjusted tax basis in such repurchased shares would be transferred to the stockholder’s remaining stockholdings in us. If, however, the stockholder has no remaining stockholdings in us, such basis may, under certain circumstances, be transferred to a related person or it may be lost entirely.

State, Local and Foreign Taxes. We and you may be subject to state, local or foreign taxation in various jurisdictions, including those in which we transact business or reside. Our and your state, local and foreign tax treatment may not conform to the U.S. federal income tax consequences discussed above. Any foreign taxes incurred by us would not pass through to stockholders as a credit against their U.S. federal income tax liability. You should consult your own tax advisors and financial planners regarding the effect of state, local and foreign tax laws on an investment in the common shares.

Legislative Proposals. You should recognize that our and your present U.S. federal income tax treatment may be modified by legislative, judicial or administrative actions at any time, which may be retroactive in effect. The rules dealing with U.S. federal income taxation are constantly under review by Congress, the IRS and the Treasury Department, and statutory changes as well as promulgation of new regulations, revisions to existing statutes, and revised interpretations of established concepts occur frequently. We are not currently aware of any pending legislation that would materially affect our or your taxation as described in this prospectus. You should, however, consult your advisors concerning the status of legislative proposals that may pertain to a purchase of our common shares.

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ERISA CONSIDERATIONS

General

The following is a summary of certain additional considerations associated with an investment in our Common Shares by tax-qualified pension, stock bonus or profit-sharing plans, employee benefit plans described in Section 3(3) and subject to Title I of ERISA, annuities described in Code Section 403(a) or (b), an individual retirement account or annuity described in Code Sections 408 or 408A, an Archer MSA described in Code Section 220(d), a health savings account described in Code Section 223(d), or a Coverdell education savings account described in Code Section 530, which are referred to in this section as Plans and IRAs, as applicable. This summary is based on provisions of ERISA and the Code, including amendments thereto through the date of this prospectus, and relevant regulations and opinions issued by the Department of Labor and the IRS through the date of this prospectus and is designed only to provide a general conceptual understanding of certain basic issues relevant to a Plan or IRA investor. We cannot assure you that adverse tax decisions or legislative, regulatory or administrative changes that would significantly modify the statements expressed herein will not occur. Any such changes may or may not apply to transactions entered into prior to the date of their enactment.

Our management has attempted to structure us in such a manner that we will be an attractive investment vehicle for Plans and IRAs. However, in considering an investment in our Common Shares, those involved with making such an investment decision should consider applicable provisions of the Code and ERISA. While each of the ERISA and Code issues discussed below may not apply to all Plans and IRAs, individuals involved with making investment decisions with respect to Plans and IRAs should carefully review the rules and exceptions described below, and determine their applicability to their situation. This discussion should not be considered legal advice and prospective investors are required to consult their own legal advisors on these matters.

In general, individuals making investment decisions with respect to Plans and IRAs should, at a minimum, consider:

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whether the investment is in accordance with the documents and instruments governing such Plan or IRA;

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whether the investment satisfies the prudence and diversification and other fiduciary requirements of ERISA, if applicable;

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whether the investment will result in UBTI to the Plan or IRA (see “Material U.S. Federal Income Tax Considerations — Taxation of U.S. Stockholders — Taxation of Tax-Exempt Stockholders”);

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whether there is sufficient liquidity for the Plan or IRA, considering the minimum and other distribution requirements under the Code and the liquidity needs of such Plan or IRA, after taking this investment into account;

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the need to value the assets of the Plan or IRA annually or more frequently; and

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whether the investment would constitute or give rise to a non-exempt prohibited transaction under ERISA or the Code, if applicable.

Additionally, individuals making investment decisions with respect to Plans and IRAs must remember that ERISA requires that the assets of an employee benefit plan must generally be held in trust.

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Minimum and Other Distribution Requirements — Plan Liquidity

Potential Plan or IRA investors who intend to purchase our Common Shares should consider the limited liquidity of an investment in our Common Shares as it relates to the minimum distribution requirements under the Code, if applicable, and as it relates to other distributions (such as, for example, cash out distributions) that may be required under the terms of the Plan or IRA from time to time. If the Common Shares are held in an IRA or Plan and, before we sell our properties, mandatory or other distributions are required to be made to the participant or beneficiary of such IRA or Plan, pursuant to the Code, then this could require that a distribution of the Common Shares be made in kind to such participant or beneficiary or that a rollover of such Common Shares be made to an IRA or other plan, which may not be permissible under the terms and provisions of the IRA or Plan. Even if permissible, a distribution of Common Shares in kind to a participant or beneficiary of an IRA or Plan must be included in the taxable income of the recipient for the year in which the Common Shares are received at the then-current fair market value of the Common Shares, even though there would be no corresponding cash distribution with which to pay the U.S. federal income tax liability arising because of the distribution of Common Shares. See “Risk Factors — U.S. Federal Income Tax Risks.” The fair market value of any such distribution-in-kind can be only an estimated value per Common Share because no public market for our Common Shares exists. See “— Annual or More Frequent Valuation Requirement.” Further, there can be no assurance that such estimated value could actually be realized by a stockholder because estimates do not necessarily indicate the price at which our Common Shares could be sold. Also, for distributions subject to mandatory U.S. federal income tax withholding under Section 3405 or other tax withholding provisions of the Code, the trustee of a Plan may have an obligation, even in situations involving in-kind distributions of Common Shares, to liquidate a portion of the in-kind Common Shares distributed in order to satisfy such withholding obligations, although there might be no market for such Common Shares. There also may be similar state or local tax withholding or other tax obligations that should be considered.

Annual or More Frequent Valuation Requirement

Fiduciaries of Plans may be required to determine the fair market value of the assets of such Plans on at least an annual basis and, sometimes, as frequently as quarterly. If the fair market value of any particular asset is not readily available, the fiduciary is required to make a good faith determination of that asset’s value. Also, a trustee or custodian of an IRA must provide an IRA participant and the IRS with a statement of the value of the IRA each year. However, currently, neither the IRS nor the Department of Labor has promulgated regulations specifying how “fair market value” should be determined.

Unless and until our Common Shares are listed on a national securities exchange, it is not expected that a public market for our Common Shares will develop. To assist fiduciaries of Plans subject to the annual reporting requirements of ERISA and IRA trustees or custodians to prepare reports relating to an investment in our Common Shares, we intend to provide reports of our quarterly and annual determinations of the current estimated share value to those fiduciaries (including IRA trustees and custodians) who identify themselves to us and request the reports. Until the NAV pricing start date, we expect to use the offering price of a Common Share in our initial public offering, which prior to the NAV pricing start date is $10.45, as the per share estimated value. Commencing on the NAV pricing start date, we will provide a daily NAV per Common Share.

There can be no assurance, however, with respect to any estimate of value that we prepare, including, without limitation, any daily NAV, that:

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the estimated value per Common Share would actually be realized by our stockholders upon liquidation, because these estimates do not necessarily indicate the price at which properties can be sold;

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our stockholders would be able to realize estimated net asset values if they were to attempt to sell their Common Shares, because no public market for our Common Shares exists, nor can it reasonably be assumed that any public market will ever exist; or

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the value, or method used to establish value, would comply with ERISA or Code requirements described above.

Fiduciary Obligations — Prohibited Transactions

Any person identified as a “fiduciary” with respect to a Plan has duties and obligations under ERISA as discussed herein. For purposes of ERISA, any person who exercises any authority or control with respect to the management or disposition of the assets of a Plan is considered to be a fiduciary of such Plan. Further, many transactions between a Plan or an IRA and a “party-in-interest” or a “disqualified person” with respect to such Plan or IRA are prohibited by ERISA or the Code. ERISA also requires generally that the assets of Plans be held in trust.

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If our properties and other assets were deemed to be assets of a Plan or IRA, referred to herein as “plan assets,” our directors would, and employees of our affiliates might be deemed fiduciaries of any Plans or IRAs investing as stockholders. If this were to occur, certain contemplated transactions between us and our directors and employees of our affiliates could be deemed to be “prohibited transactions.” Additionally, ERISA’s fiduciary standards applicable to investments by Plans would extend to our directors and possibly employees of our affiliates as Plan fiduciaries with respect to investments made by us.

Plan Assets — Definition

Prior to the passage of the Pension Protection Act of 2006, or the PPA, neither ERISA nor the Code contained a definition of “plan assets.” After the passage of the PPA, new Section 3(42) of ERISA now defines “plan assets” in accordance with Department of Labor regulations with certain express exceptions. A Department of Labor regulation, referred to in this discussion as the Plan Asset Regulation, as modified or deemed to be modified by the express provisions included in the PPA, provides guidelines as to whether, and under what circumstances, the underlying assets of an entity will be deemed to constitute “plan assets.” Under the Plan Asset Regulation, the assets of an entity in which a Plan or IRA makes an equity investment generally will be deemed to be assets of such Plan or IRA unless the entity satisfies one of the exceptions to this general rule. Generally, the exceptions require that the investment in the entity be one of the following:

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in securities issued by an investment company registered under the Investment Company Act;

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in “publicly offered securities,” defined generally as interests that are “freely transferable,” “widely held” and registered with the SEC;

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in an “operating company,” which includes “venture capital operating companies” and “real estate operating companies;” or

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in which equity participation by “benefit plan investors” is not significant.

Plan Assets — Registered Investment Company Exception

The Common Shares we are offering will not be issued by a registered investment company. Therefore we do not anticipate that we will qualify for the exception for investments issued by a registered investment company.

Plan Assets — Publicly Offered Securities Exemption

As noted above, if a Plan acquires “publicly offered securities,” the assets of the issuer of the securities will not be deemed to be “plan assets” under the Plan Asset Regulation. The definition of publicly offered securities requires that such securities be “widely held,” “freely transferable” and satisfy registration requirements under federal securities laws.

Under the Plan Asset Regulation, a class of securities will meet the registration requirements under federal securities laws if they are (a) part of a class of securities registered under section 12(b) or 12(g) of the Exchange Act, or (b) part of an offering of securities to the public pursuant to an effective registration statement under the Securities Act and the class of securities of which such security is a part is registered under the Exchange Act within 120 days (or such later time as may be allowed by the SEC) after the end of the fiscal year of the issuer during which the offering of such securities to the public occurred. We anticipate that we will meet the registration requirements under the Plan Asset Regulation with respect to the Common Shares. Also under the Plan Asset Regulation, a class of securities will be “widely held” if it is held by 100 or more persons independent of the issuer. We anticipate that this requirement will be easily met with respect to the Common Shares.

Although our Common Shares are intended to satisfy the registration requirements under this definition, and we expect that our Common Shares will be “widely held,” the “freely transferable” requirement must also be satisfied in order for us to qualify for the “publicly offered securities” exception.

The Plan Asset Regulation provides that “whether a security is ‘freely transferable’ is a factual question to be determined on the basis of all relevant facts and circumstances.” Our Common Shares are subject to certain restrictions on transferability typically found in REITs, and are intended to ensure that we continue to qualify for U.S. federal income tax treatment as a REIT. The Plan Asset Regulation provides, however, that where the minimum investment in a public offering of securities is $10,000 or less, the presence of a restriction on transferability intended to prohibit transfers that would result in a termination or reclassification of the entity for U.S. federal or state tax purposes will not ordinarily affect a determination that such securities are “freely transferable.” The minimum investment in our Common Shares is less than $10,000. Thus, the restrictions imposed in order to maintain our status as a REIT should not prevent the Common Shares from being deemed “freely transferable.” Therefore, we anticipate that we will meet the “publicly offered securities” exception with respect to the Common Shares, although there are no assurances that we will qualify for this exception.

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Plan Assets — Operating Company Exception

If we are deemed not to qualify for the “publicly offered securities” exemption for each class of our securities, the Plan Asset Regulation also provides an exception with respect to securities issued by an “operating company,” which includes “venture capital operating companies” and “real estate operating companies.” To constitute a venture capital operating company, 50% of more of the assets of the entity must be invested in “venture capital investments.” A venture capital investment is an investment in an operating company (other than a venture capital operating company but including a real estate operating company) as to which the entity has or obtains direct management rights. To constitute a real estate operating company, 50% or more of the assets of an entity must be invested in real estate which is managed or developed and with respect to which such entity has the right to substantially participate directly in the management or development activities.

While the Plan Asset Regulation and relevant opinions issued by the Department of Labor regarding real estate operating companies are not entirely clear as to whether an investment in real estate must be “direct”, it is common practice to insure that an investment is made either (a) “directly” into real estate, (b) through wholly owned subsidiaries, or (c) through entities in which all but a de minimis interest is separately held by an affiliate solely to comply with the minimum safe harbor requirements established by the IRS for classification as a partnership for U.S. federal income tax purposes. We have structured ourselves in a manner that may enable us to meet the venture capital operating company exception and our operating partnership to meet the real estate operating company exception.

Notwithstanding the foregoing, 50% of our operating partnership’s investments must be in real estate over which it maintains the right to substantially participate in the management and development activities. An example in the Plan Asset Regulation indicates that if 50% or more of an entity’s properties are subject to long-term leases under which substantially all management and maintenance activities with respect to the properties are the responsibility of the lessee, such that the entity merely assumes the risk of ownership of income-producing real property, then the entity may not be eligible for the “real estate operating company” exception. By contrast, a second example in the Plan Asset Regulation indicates that if 50% or more of an entity’s investments are in shopping centers in which individual stores are leased for relatively short periods to various merchants, as opposed to long-term leases where substantially all management and maintenance activities are the responsibility of the lessee, then the entity will likely qualify as a real estate operating company. The second example further provides that the entity may retain contractors, including affiliates, to conduct the management of the properties so long as the entity has the responsibility to supervise and the authority to terminate the contractors. We intend to use contractors over which we have the right to supervise and the authority to terminate. Due to the uncertainty of the application of the standards set forth in the Plan Asset Regulation and the fact that we expect to focus on investing in a wide variety of commercial property types, including office, industrial, retail and hospitality properties, single-tenant properties, multifamily properties, age-restricted residences, and in other real estate-related assets, there can be no assurance as to our ability to structure our operations, or the operations of our operating partnership, as the case may be, to qualify for the “venture capital operating company” and “real estate operating company” exceptions.

Plan Assets — Not Significant Investment Exception

The Plan Asset Regulation provides that equity participation in an entity by benefit plan investors is “significant” if at any time 25% or more of the value of any class of equity interests is held by benefit plan investors. As modified by the PPA, a “benefit plan investor” is now defined to mean an employee benefit plan subject to Part 4 of Subtitle B of Title I of ERISA, any plan to which Code Section 4975 applies and any entity whose underlying assets include plan assets by reason of a plan’s investment in such entity. If we determine that we fail to meet the “publicly offered securities” exception, as a result of a failure to sell an adequate number of Common Shares or otherwise, and we cannot ultimately establish that we are an operating company, we intend to restrict ownership of each class of equity interests held by benefit plan investors to an aggregate value of less than 25% and thus qualify for the exception for investments in which equity participation by benefit plan investors is not significant.

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Consequences of Holding Plan Assets

If our underlying assets were treated by the Department of Labor as “plan assets,” our management would be treated as fiduciaries with respect to each Plan or IRA stockholder, and an investment in our Common Shares might expose the fiduciaries of the Plan or IRA to co-fiduciary liability under ERISA for any breach by our management of the fiduciary duties mandated under ERISA. Further, if our assets are deemed to be “plan assets,” an investment by a Plan or IRA in our Common Shares might be deemed to result in an impermissible commingling of “plan assets” with other property.

If our management or affiliates were treated as fiduciaries with respect to Plan or IRA stockholders, the prohibited transaction restrictions of ERISA or the Code would apply to any transaction involving our assets. These restrictions could, for example, require that we avoid transactions with entities that are affiliated with our affiliates or us or restructure our activities in order to obtain an administrative exemption from the prohibited transaction restrictions. Alternatively, we might have to provide Plan or IRA stockholders with the opportunity to sell their Common Shares to us or we might dissolve or terminate.

Prohibited Transactions

Generally, both ERISA and the Code prohibit Plans and IRAs from engaging in certain transactions involving “plan assets” with specified parties, such as sales or exchanges or leasing of property, loans or other extensions of credit, furnishing goods or services, or transfers to, or use of, “plan assets.” The specified parties are referred to as “parties-in-interest” under ERISA and as “disqualified persons” under the Code. These definitions generally include “persons providing services” to the Plan or IRA, as well as employer sponsors of the Plan or IRA, fiduciaries and certain other individuals or entities affiliated with the foregoing.

A person generally is a fiduciary with respect to a Plan or IRA for these purposes if, among other things, the person has discretionary authority or control with respect to “plan assets” or provides investment advice for a fee with respect to “plan assets.” Under Department of Labor regulations, a person will be deemed to be providing investment advice if that person renders advice as to the advisability of investing in our Common Shares, and that person regularly provides investment advice to the Plan or IRA pursuant to a mutual agreement or understanding that such advice will serve as the primary basis for investment decisions, and that the advice will be individualized for the Plan or IRA based on its particular needs. Thus, if we are deemed to hold “plan assets,” our management could be characterized as fiduciaries with respect to such assets, and each would be deemed to be a party-in-interest under ERISA and a disqualified person under the Code with respect to investing Plans and IRAs. Whether or not we are deemed to hold “plan assets,” if we or our affiliates are affiliated with a Plan or IRA investor, we might be a disqualified person or party-in-interest with respect to such Plan or IRA investor, potentially resulting in a prohibited transaction merely upon investment by such Plan or IRA in our Common Shares.

Prohibited Transactions — Consequences

ERISA forbids Plans from engaging in non-exempt prohibited transactions. Fiduciaries of a Plan that allow a non-exempt prohibited transaction to occur will breach their fiduciary responsibilities under ERISA, and may be liable for any damage sustained by the Plan, as well as civil (and criminal, if the violation was willful) penalties. If it is determined by the Department of Labor or the IRS that a non-exempt prohibited transaction has occurred, any disqualified person or party-in-interest involved with the prohibited transaction would be required to reverse or unwind the transaction and, for a Plan, compensate the Plan for any loss resulting therefrom. Additionally, the Code requires that a disqualified person involved with a non-exempt prohibited transaction must pay an excise tax equal to a percentage of the “amount involved” in the transaction for each year in which the transaction remains uncorrected. The percentage is generally 15%, but is increased to 100% if the non-exempt prohibited transaction is not corrected promptly. For IRAs, if an IRA engages in a non-exempt prohibited transaction, the tax-exempt status of the IRA may be lost.

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Reporting

Based on certain revisions to the Form 5500 Annual Return, or Form 5500, that generally became effective on January 1, 2009, benefit plan investors may be required to report certain compensation paid by us (or by third parties) to our service providers as “reportable indirect compensation” on Schedule C to Form 5500. To the extent any compensation arrangements described herein constitute reportable indirect compensation, any such descriptions (other than compensation for which there is no formula used to calculate or determine compensation or an actual amount stated) are intended to satisfy the disclosure requirements for the alternative reporting option for “eligible indirect compensation,” as defined for purposes of Schedule C to Form 5500.

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DESCRIPTION OF SHARES

Our charter authorizes the issuance of 200,000,000 Common Shares and 50,000,000 shares of preferred stock, $0.01 par value per share, 500,000 shares of which are classified as Sponsor Preferred Shares. In addition, our board of directors may amend our charter from time to time without stockholder approval to increase or decrease the aggregate number of shares of stock or the number of shares of stock of any class or series that we have authority to issue. As of March 31, 2014, 790,468 Common Shares and 500,000 Sponsor Preferred Shares were issued and outstanding.

Common Shares

Subject to the restrictions on ownership and transfer of stock contained in our charter and except as may otherwise be specified in our charter, the holders of our Common Shares are entitled to one vote per Common Share on all matters submitted to a stockholder vote, including the election of our directors. There is no cumulative voting in the election of our directors. Therefore, the holders of a majority of our outstanding Common Shares can elect our entire board of directors. Except as our charter may provide with respect to any series of preferred stock that we may issue in the future, the holders of our Common Shares will possess exclusive voting power.

Holders of our Common Shares will be entitled to receive such distributions as authorized from time to time by our board of directors and declared by us out of legally available funds, subject to any preferential rights of any preferred stock that we issue in the future. In any liquidation, each outstanding Common Share entitles its holder to share (based on the percentage of Common Shares held) in the assets that remain after we pay our liabilities and any preferential distributions owed to preferred stockholders. Holders of Common Shares do not have preemptive rights, which means that you will not have an automatic option to purchase any new Common Shares that we issue, nor do holders of our Common Shares have any preference, conversion, exchange, sinking fund or redemption rights. Holders of Common Shares will not have appraisal rights unless our board of directors determines that appraisal rights apply, with respect to all or any classes or series of stock, to a particular transaction or all transactions occurring after the date of such determination in connection with which holders of such Common Shares would otherwise be entitled to exercise appraisal rights. Our Common Shares will be nonassessable by us upon our receipt of the consideration for which our board of directors authorized its issuance.

Our charter authorizes our board of directors to classify and reclassify any unissued Common Shares into other classes or series of stock. Prior to issuance of shares of each class or series, the board is required by Maryland law and by our charter to set, subject to our charter restrictions on ownership and transfer of our stock, the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications and terms and conditions of redemption for each class or series. Our board of directors has authorized the issuance of shares of our capital stock without certificates. We expect that, until our shares are listed on a national securities exchange, we will not issue Common Shares in certificated form. Information regarding restrictions on the transferability of our Common Shares that, under Maryland law, would otherwise have been required to appear on our stock certificates will instead be furnished to stockholders upon request and without charge.

We maintain a stock ledger that contains the name and address of each stockholder and the number of shares that the stockholder holds. With respect to uncertificated stock, we will continue to treat the stockholder registered on our stock ledger as the owner of the shares noted therein until the new owner delivers a properly executed form to us, which form we will provide to any registered holder upon request.

Preferred Stock

Our charter authorizes our board of directors to designate and issue one or more classes or series of preferred stock without approval of our holders of Common Shares. Prior to issuance of shares of each class or series, the board is required by Maryland law and by our charter to set, subject to our charter restrictions on ownership and transfer of our stock, the terms, preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications and terms and conditions of redemption of each class or series of preferred stock so issued, which may be more beneficial than the rights, preferences and privileges attributable to our Common Shares. The issuance of preferred stock could have the effect of delaying or preventing a change in control. Our board of directors has no present plans to issue preferred stock, other than the Sponsor Preferred Shares, but may do so at any time in the future without stockholder approval. However, the issuance of any additional shares of preferred stock must be approved by a majority of independent directors not otherwise interested in the transaction, who will have access at our expense to our legal counsel or to independent legal counsel.

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Sponsor Preferred Shares

Our authorized capital stock includes 500,000 Sponsor Preferred Shares. Our sponsor is the sole holder of the 500,000 issued and outstanding Sponsor Preferred Shares. There are no dividends payable on the Sponsor Preferred Shares. Holders of more than two-thirds of the Sponsor Preferred Shares, voting as a separate class, must approve any proposed amendment to the charter that would materially and adversely affect any right, preference, privilege or voting power of the Sponsor Preferred Shares.

Upon our liquidation, dissolution or winding up, each Sponsor Preferred Share is entitled to a preference in the amount of 15% of any excess of the net sales proceeds from the sale of all the assets in connection with such liquidation, dissolution or winding up over the sum of Invested Capital plus a cumulative non-compounded pre-tax annual return to holders of Common Shares of 7% on Invested Capital (as defined below) divided by the number of Sponsor Preferred Shares then outstanding. The term “Invested Capital” means the amount calculated by multiplying the total number of Common Shares issued by us by the original issue price for each such Common Share, reduced by an amount equal to the total number of Common Shares that we repurchased under our share repurchase program, as the same may be amended, supplemented or replaced from time to time, multiplied by the original issue price for each such repurchased Common Share when initially purchased from us.

The Sponsor Preferred Shares are convertible into Common Shares for 180 days following the occurrence of any of the following events (each a “Triggering Event”):

•

the listing of our Common Shares on any national securities exchange.

If the Sponsor Preferred Shares become convertible into Common Shares, each outstanding Sponsor Preferred Share may be converted into one Common Share for each $100 million, rounded down to the nearest $100 million, of gross proceeds raised by us through the date of conversion in this public offering and any subsequent public offering of Common Shares, combined.

No additional consideration is due upon the conversion of the Sponsor Preferred Shares. The conversion into Common Shares of the Sponsor Preferred Shares will result in dilution of the interests of the other holders of the Common Shares in us.

As the sole manager of the general partner of our advisor, our sponsor can influence whether substantially all of our assets, stock or business is transferred or sold, whether the advisory agreement is terminated or allowed to expire without renewal, and whether our Common Shares are listed, although board approval is required for us to take any of these actions (other than termination of the advisory agreement by our sponsor, as the sole manager of the general partner of our advisor). Accordingly, our sponsor can influence both the conversion of the Sponsor Preferred Shares issued to it and the resulting dilution of other holders of Common Shares.

The occurrence of a Triggering Event will entitle the holder, for a period of 180 days, to convert the Sponsor Preferred Shares into Common Shares, which Common Shares then will be entitled to dividend distributions and voting rights. The effect of a conversion of the Sponsor Preferred Shares is that our sponsor would own approximately 2.6% to 5.2% of the total number of Common Shares outstanding following the conversion (assuming (a) the maximum selling commissions and dealer manager fee, and (b) no reinvestments of distributions) in exchange for an aggregate payment $50,000.

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The reason the Sponsor Preferred Shares were issued was to give our sponsor a financial position consisting of between 2.6% and 5.2% of our outstanding Common Shares upon a conversion of the Sponsor Preferred Shares (assuming (a) the maximum selling commissions and dealer manager fee, and (b) no reinvestments of distributions) as an incentive for working toward the completion of a successful offering. Even though the conversion rate varies depending upon the number of Common Shares sold in this offering, our sponsor’s ownership position as a result of a conversion of the Sponsor Preferred Shares will remain relatively constant at between 2.6% and 5.2% of the outstanding Common Shares at any given time (assuming (a) the maximum selling commissions and dealer manager fee, and (b) no reinvestments of distributions).

Following the occurrence of a Triggering Event permitting conversion of the Sponsor Preferred Shares, we will disclose the convertibility of the Sponsor Preferred Shares in a supplement to this prospectus (if this offering is then still continuing) and in a Current Report on Form 8-K (as required by law). We also would expect to notify our stockholders of the occurrence of the conversion of any Sponsor Preferred Shares in our next quarterly or annual report sent to our stockholders, or, if we deem it appropriate, in a separate letter or notice mailed to our stockholders.

Meetings and Special Voting Requirements

An annual meeting of our stockholders will be held each year, at least 30 days after delivery of our annual report on the date and at the time and place set by our board of directors. Special meetings of stockholders may be called upon the request of a majority of our directors, a majority of our independent directors, our chief executive officer, our chairman or our president and must be called by our secretary to act on any matter that may properly be considered at a meeting of stockholders upon the written request of stockholders entitled to cast at least 10% of the votes entitled to be cast on such matter at the special meeting. Upon receipt of a written request of stockholders entitled to cast at least 10% of the votes entitled to be cast stating the purpose of the special meeting, our secretary will provide all our holders of Common Shares written notice of the meeting and the purpose of such meeting. The meeting must be held not less than 15 days or more than 60 days after the distribution of the notice of the meeting. The presence in person or by proxy of stockholders entitled to cast at least 50% of all the votes entitled to be cast on any matter that may properly be considered at any stockholder meeting constitutes a quorum. Unless otherwise provided by the Maryland General Corporation Law or our charter, the affirmative vote of a majority of all the votes cast is necessary to take stockholder action. With respect to the election of directors, each candidate nominated for election to the board of directors must receive the affirmative vote of a majority of the shares present, in person or by proxy, in order to be elected. Therefore, if a nominee receives fewer “for” votes than “withhold” votes in an election, then the nominee will not be elected.

Under the Maryland General Corporation Law and our charter, stockholders are generally entitled to vote at a duly held meeting at which a quorum is present on (1) amendments to our charter, (2) our liquidation or dissolution, (3) a merger, consolidation or sale or other disposition of all or substantially all of our assets, (4) a statutory share exchange and (5) election or removal of our directors, in each case without the necessity for concurrence by our board of directors. The affirmative vote of stockholders entitled to cast a majority of all the votes entitled to be cast is required to approve any such action (except that the affirmative vote of a majority of the shares represented in person or by proxy at a meeting at which a quorum is present is sufficient to elect a director).

Our advisory agreement with our advisor has a one-year term but may be renewed for an unlimited number of successive one-year periods upon the mutual consent of our advisor and us. Our independent directors annually review our advisory agreement with our advisor. Although the stockholders do not have the ability to vote to replace our advisor or to select a new advisor, stockholders do have the ability, by the affirmative vote of stockholders entitled to cast a majority of the votes entitled to be cast generally in the election of directors, to remove a director from our board with or without cause.

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Advance Notice for Stockholder Nominations for Directors and Proposals of New Business

In order for a stockholder to nominate a director or propose new business at the annual stockholders meeting, our bylaws generally require that the stockholder give notice of the nomination or proposal not earlier than the 150th day nor later than 5:00 p.m., Eastern Time, on the 120th day prior to the first anniversary of the date of the proxy statement for the preceding year’s annual stockholders meeting and be a stockholder of record both at the time of giving advance notice and at the time of the meeting and be entitled to vote in the election of each individual so nominated or on such other business, unless such nomination or proposal is made pursuant to the company’s notice of the meeting or by or at the direction of our board of directors. Our bylaws contain a similar notice requirement in connection with nominations for directors at a special meeting of stockholders called for the purpose of electing one or more directors. With respect to special meetings of stockholders, only the business specified in our notice of the meeting may be brought before the meeting. Nominations of individuals for election to the board of directors at a special meeting may be made only (i) pursuant to our notice of the meeting, (ii) by or at the direction of the board of directors, or (iii) provided that the board of directors has determined that directors will be elected at the meeting, by a stockholder who is a stockholder of record both at the time of giving advance notice of such nomination and at the time of the meeting, who is entitled to vote at the meeting in the election of each individual so nominated and who has complied with the advance notice provisions of the bylaws. Failure to comply with the notice provisions will make stockholders unable to nominate directors or propose new business.

Restrictions on Ownership of Shares

Ownership Limits

To maintain our REIT qualification following the taxable year for which we make our REIT election, not more than 50% in value of our outstanding shares may be owned, directly or indirectly, by five or fewer individuals (including certain entities treated as individuals under the Code) during the last half of each taxable year. In addition, at least 100 persons who are independent of us and each other must beneficially own our outstanding shares for at least 335 days per 12-month taxable year or during a proportionate part of a shorter taxable year. Each of the requirements specified in the two preceding sentences need not be met during a corporation’s initial tax year as a REIT. We intend to elect to be taxed as a REIT commencing with our taxable year ending December 31, 2013. We may prohibit certain acquisitions and transfers of Common Shares so as to ensure our continued qualification as a REIT under the Code. However, we cannot assure you that this prohibition will be effective.

To help ensure that we meet these tests, among other purposes, our charter prohibits any person or group of persons from acquiring, directly or indirectly, beneficial ownership of more than 9.8% in value of the aggregate of our outstanding shares of stock or more than 9.8% (in value or number of shares, whichever is more restrictive), of our outstanding Common Shares, unless exempted by our board of directors. Our board of directors may waive these ownership limits with respect to a particular person (prospectively or retroactively) if the board receives evidence that ownership in excess of the limits will not jeopardize our REIT status and certain other representations and undertakings required by our charter. For purposes of this provision, we treat corporations, partnerships and other entities as single persons. However, the board may not exempt any person whose ownership of our outstanding stock would result in our being “closely held” within the meaning of Section 856(h) of the Code or otherwise would result in our being “closely held” within the meaning of Section 856(h) of the Code or otherwise would result in our failing to qualify as a REIT. In order to be considered by the board for exemption, a person also must not own, directly or indirectly, an interest in our tenant (or a tenant of any entity which we own or control) that would cause us to own, directly or indirectly, more than a 9.9% in a tenant. The person seeking an exemption must represent to the satisfaction of the board that it will not violate these restrictions. The person also must agree that any violation or attempted violation of these restrictions will result in the automatic transfer of the shares of stock causing the violation to the charitable trust.

Any attempted transfer of our Common Shares that, if effective, would result in a violation of our ownership limits described above, our being “closely held” under Section 856(h) of the Code or otherwise failing to qualify as a REIT, or in our Common Shares being beneficially owned by fewer than 100 persons will be null and void or will cause the number of Common Shares causing the violation to be automatically transferred to a trust for the exclusive benefit of one or more charitable beneficiaries. The prohibited transferee will not acquire any rights in the Common Shares. The automatic transfer will be deemed to be effective as of the close of business on the business day prior to the date of the attempted transfer. We will designate a trustee of the trust that will not be affiliated with us or the prohibited transferee. We also will name one or more charitable organizations as a beneficiary of the trust.

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Shares held in trust will remain issued and outstanding Common Shares and will be entitled to the same rights and privileges as all other Common Shares. The prohibited transferee will not benefit economically from any of the Common Shares held in trust, will not have any rights to dividends or other distributions and will not have the right to vote or any other rights attributable to the Common Shares held in the trust. The trustee will receive all dividends and other distributions on the Common Shares held in trust and will hold such dividends or other distributions in trust for the benefit of the charitable beneficiary. The trustee may vote any Common Shares held in the trust. Subject to Maryland law, the trustee also will have the authority: (a) to rescind as void any vote cast by the prohibited transferee prior to our discovery that the Common Shares have been transferred to the trust and, (b) to recast the vote in accordance with the desires of the trustee acting for the benefit of the charitable beneficiary. However, if we have already taken irreversible corporate action, then the trustee will not have the authority to rescind and recast the vote.

Within 20 days of receiving notice from us that any of our Common Shares have been transferred to the trust for the charitable beneficiary, the trustee will sell those Common Shares to a person designated by the trustee whose ownership of the Common Shares will not violate the above ownership limitations. Upon the sale, the interest of the charitable beneficiary in the Common Shares sold will terminate and the trustee will distribute the net proceeds of the sale to the prohibited transferee and to the charitable beneficiary as follows. The prohibited transferee will receive an amount equal to the lesser of: (a) the price paid by the prohibited transferee for the Common Shares or, if the prohibited transferee did not give value for the Common Shares in connection with the event causing the Common Shares to be held in the trust (e.g., a gift, devise or other similar transaction), the market price (as defined in our charter) of the Common Shares on the day of the event causing the Common Shares to be held in the trust, and (b) the price received by the trustee from the sale or other disposition of the Common Shares. The trustee may reduce the amount payable to the prohibited transferee by the amount of dividends and other distributions which have been paid to the prohibited transferee and are owed by the prohibited transferee to the trustee. Any net sale proceeds in excess of the amount payable to the prohibited transferee will be paid immediately to the charitable beneficiary. If, prior to our discovery that Common Shares have been transferred to the trust, the Common Shares are sold by the prohibited transferee, then: (a) the Common Shares shall be deemed to have been sold on behalf of the trust, and (b) to the extent that the prohibited transferee received an amount for the Common Shares that exceeds the amount he was entitled to receive, the excess shall be paid to the trustee upon demand.

In addition, Common Shares held in the trust for the charitable beneficiary will be deemed to have been offered for sale to us, or our designee, at a price per Common Share equal to the lesser of: (a) the price per Common Share in the transaction that resulted in the transfer to the trust (or, in the case of a devise or gift, the market price at the time of the devise or gift), and (b) the market price on the date we, or our designee, accept the offer. We will have the right to accept the offer until the trustee has sold the Common Shares. Upon a sale to us, the interest of the charitable beneficiary in the Common Shares sold will terminate and the trustee will distribute the net proceeds of the sale to the prohibited transferee. We may reduce the amount payable to the prohibited transferee by the amount of dividends and other distributions which have been paid to the prohibited transferee and are owed by the prohibited transferee to the trustee. We may pay the amount of such reduction to the trustee for the benefit of the charitable beneficiary.

Any person who acquires Common Shares in violation of the foregoing restrictions or who would have owned the Common Shares that were transferred to any such trust must give us immediate written notice of such event, and any person who proposes or attempts to acquire or receive Common Shares in violation of the foregoing restrictions must give us at least 15 days’ written notice prior to such transaction. In both cases, such persons shall provide to us such other information as we may request in order to determine the effect, if any, of such transfer on our status as a REIT or that compliance is no longer required for REIT qualification.

The foregoing restrictions will continue to apply until our board of directors determines it is no longer in our best interest to continue to qualify as a REIT. The ownership limits do not apply to any underwriter in an offering of our shares or to a person or persons exempted from the ownership limits by our board of directors based upon appropriate assurances that our qualification as a REIT would not be jeopardized and certain other representations and undertakings required by our charter.

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Within 30 days after the end of each taxable year, every owner of 5% or more of our outstanding capital stock will be asked to deliver to us a statement setting forth the number of shares owned directly or indirectly by such person and a description of how such person holds the shares. Each such owner shall also provide us with such additional information as we may request in order to determine the effect, if any, of his or her beneficial ownership on our status as a REIT and to ensure compliance with our ownership limits.

These restrictions could delay, defer or prevent a transaction or change in control of our company that might involve a premium price for our Common Shares or otherwise be in the best interests of our stockholders.

Suitability Standards and Minimum Purchase Requirements

State securities laws and our charter require that purchasers of our Common Shares meet standards regarding (a) net worth or income, and (b) minimum purchase amounts. These standards are described above at “Investor Suitability Standards” immediately following the cover page of this prospectus and below at “Plan of Distribution — Minimum Purchase Requirements.” Subsequent purchasers, i.e., potential purchasers of your Common Shares, must also meet the net worth or income standards, and unless you are transferring all of your Common Shares, you may not transfer your Common Shares in a manner that causes you or your transferee to own fewer than the number of Common Shares required to meet the minimum purchase requirements, except for the following transfers without consideration: transfers by gift, transfers by inheritance, intrafamily transfers, family dissolutions, transfers to affiliates and transfers by operation of law. These suitability and minimum purchase requirements are applicable until our Common Shares are listed on a national securities exchange, and these requirements may make it more difficult for you to sell your Common Shares. We cannot assure you that our Common Shares will ever be listed on a national securities exchange.

Distributions

On December 28, 2012, our board of directors declared daily distributions on our Common Shares at a daily rate of $0.00210958904 per Common Share. The distributions began to accrue as of daily record dates beginning on January 1, 2013, and are aggregated and paid monthly, on payment dates determined by us, to stockholders who hold Common Shares as of such daily record dates. We expect to continue paying distributions monthly unless our results of operations, our general financial condition, general economic conditions or other factors make it imprudent to do so. The timing and amount of distributions will be determined by our board and will be influenced in part by its intention to comply with REIT requirements of the Code.

We expect to have little, if any, funds from operations available for distribution until we make substantial investments. Further, because we may receive income from interest or rents at various times during our fiscal year and because we may need funds from operations during a particular period to fund capital expenditures and other expenses, we expect that at least during the early stages of our development and from time to time during our operational stage, our board will authorize and we will declare distributions in anticipation of funds that we expect to receive during a later period and we will pay these distributions in advance of our actual receipt of these funds. In these instances, we expect to look to proceeds from this offering, to proceeds from the issuance of securities in the future, or to third-party borrowings, to fund our distributions. We also may fund such distributions from advances from our sponsor or from any waiver of fees by our advisor.

Our board has the authority under our organizational documents, to the extent permitted by Maryland law, to authorize the payment of distributions from any source without limits, including proceeds from this offering, from borrowings or from the proceeds from the issuance of securities in the future, and we expect that, at least in the early stages of our existence, we will use the proceeds of this offering to pay distributions.

To maintain our qualification as a REIT, we generally are required to make aggregate annual distributions to our stockholders of at least 90% of our REIT taxable income (which does not equal net income, as calculated in accordance with GAAP), determined without regard to the deduction for dividends paid and excluding any net capital gain. If we meet the REIT qualification requirements, we generally will not be subject to U.S. federal income tax on that portion of our taxable income or capital gain which is distributed to our stockholders.

See “Material U.S. Federal Income Tax Considerations — REIT Qualification Tests — Annual Distribution Requirements.” We expect that our board of directors will authorize distributions in excess of those required for us to maintain REIT status depending on our financial condition and such other factors as our board of directors deems relevant.

Each distribution will be accompanied by a notice which sets forth: (a) the record dates covered by the aggregate distribution payment; (b) the amount per Common Share that will be distributed; (c) the equivalent annualized yield; (d) the amount and percentage of the distribution paid from operations, offering proceeds and other sources; (e) the aggregate amount of such distribution; and (f) for those investors participating in the DRIP, a statement that a distribution statement will be provided in lieu of a check.

The following table shows the sources for the payment of distributions to common stockholders for the periods presented:

	Three months ended
	March 31, 2013					June 30, 2013					September 30, 2013
Distributions:				Percentage of Distributions					Percentage of Distributions					Percentage of Distributions
Distributions paid in cash	$	16,832			53.6%	$	52,100			60.2%	$	62,096			58.6%
Distributions reinvested		14,577			46.4%		34,435			39.8%		43,811			41.4%
Total distributions	$	31,409			100.0%	$	86,535			100.0%	$	105,907			100.0%
Source of distribution coverage:
Cash flows provided by operations	$	—			0.0%	$	—			0.0%	$	62,096			58.6%
Common Shares issued under the DRIP		14,577			46.4%		34,435			39.8%		43,811			41.4%
Proceeds from issuance of Common Shares		16,832			53.6%		52,100			60.2%		—			0%
Total sources of distributions	$	31,409			100.0%	$	86,535			100.0%	$	105,907			100.0%
Cash flows (used in) provided by operations (GAAP basis)	$	(2,328,232	)			$	(943,008	)			$	231,416
Net loss attributable to stockholders (in accordance with GAAP)	$	(1,969,778	)			$	(133,989	)			$	(185,281	)

	Three months ended December 31, 2013					Year Ended December 31, 2013
Distributions:				Percentage of Distributions					Percentage of Distributions
Distributions paid in cash	$	65,744			60.0%	$	196,749			59.0%
Distributions reinvested		43,740			40.0%		136,586			41.0%
Total distributions	$	109,484			100.0%	$	333,335			100.0%
Source of distribution coverage:
Cash flows provided by operations	$	—			0.0%	$	62,096			18.6%
Common Shares issued under the DRIP		43,740			40.0%		136,586			41.4%
Proceeds from issuance of Common Shares		65,744			60.0%		134,653			40.0%
Total sources of distributions	$	109,484			100.0%	$	333,335			100.0%
Cash flows (used in) provided by operations (GAAP basis)	$	(170,523	)			$	(3,210,348	)
Net loss attributable to stockholders (in accordance with GAAP)	$	(402,888	)			$	(2,691,937	)

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Inspection of Books and Records

As a part of our books and corporate records, we maintain at our principal office an alphabetical list of the names of our holders of Common Shares, along with their addresses and telephone numbers and the number of Common Shares held by each of them. We update this stockholder list at least quarterly. Except as noted below, we will make the list available for inspection at our principal office by a holder of Common Shares or his or her designated agent upon request of the stockholder and also will mail this list to any holder of Common Shares within 10 days of receipt of his or her request. We may impose a reasonable charge for expenses incurred in reproducing such list. Stockholders, however, may not sell or use this list for commercial purposes. The purposes for which stockholders may request this list include matters relating to their voting rights and the exercise of stockholder rights under the federal proxy laws.

If our advisor or our board of directors neglects or refuses to exhibit, produce or mail a copy of the list of holders of Common Shares as requested, our advisor or our board of directors, as the case may be, shall be liable to the stockholder requesting the list for the costs, including attorneys’ fees, incurred by any holder of Common Shares for compelling the production of the stockholder list and any actual damages suffered by the stockholder for the neglect or refusal to produce the list. It shall be a defense that the actual purpose and reason for the requests for inspection or for a copy of the stockholder list is not for a proper purpose but is instead for the purpose of securing such list of stockholders or other information for the purpose of selling such list or copies thereof, or of using the same for a commercial purpose (such as to solicit the purchase of our shares) other than in the interest of the applicant as a stockholder relative to the affairs of our company. We may require that the stockholder requesting the stockholder list represent that the request is not for a commercial purpose unrelated to the stockholder’s interest in our company. The remedies provided by our charter to stockholders requesting copies of the stockholder list are in addition to, and do not in any way limit, other remedies available to stockholders under federal law, or the law of any state.

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Business Combinations

Under the Maryland General Corporation Law, business combinations between a Maryland corporation and an interested stockholder or the interested stockholder’s affiliate are prohibited for five years after the most recent date on which the stockholder becomes an interested stockholder. For this purpose, the term “business combination” includes mergers, consolidations, share exchanges, and, in circumstances specified in the statute, asset transfers and issuances or reclassifications of equity securities. An “interested stockholder” is defined for this purpose as: (a) any person who beneficially owns ten percent or more of the voting power of the corporation’s outstanding voting stock or (b) an affiliate or associate of the corporation who, at any time within the two-year period prior to the date in question, was the beneficial owner of ten percent or more of the voting power of the then outstanding stock of the corporation. A person is not an interested stockholder under the statute if the board of directors approved in advance the transaction by which he otherwise would have become an interested stockholder. However, in approving a transaction, the board of directors may provide that its approval is subject to compliance, at or after the time of approval, with any terms and conditions determined by the board.

After the five-year prohibition, any business combination between the corporation and an interested stockholder generally must be recommended by the board of directors of the corporation and approved by the affirmative vote of at least: (a) 80% of the votes entitled to be cast by holders of outstanding voting stock of the corporation, voting together as a single voting group, and (b) two-thirds of the votes entitled to be cast by holders of voting stock of the corporation other than shares held by the interested stockholder or its affiliate with whom the business combination is to be effected, or held by an affiliate or associate of the interested stockholder, voting together as a single voting group.

These supermajority vote requirements do not apply if the corporation’s holders of Common Shares receive a minimum price, as defined under the Maryland General Corporation Law, for their shares in the form of cash or other consideration in the same form as previously paid by the interested stockholder for its shares.

None of these provisions of the Maryland General Corporation Law will apply, however, to business combinations that are approved or exempted by the board of directors of the corporation prior to the time that the interested stockholder becomes an interested stockholder. We have opted out of these provisions by resolution of our board of directors. However, our board of directors may, by resolution, opt in to the business combination statute in the future.

Control Share Acquisitions

The Maryland General Corporation Law provides that control shares of a Maryland corporation acquired in a control share acquisition have no voting rights except to the extent approved by the affirmative vote of stockholders entitled to cast two-thirds of the votes entitled to be cast on the matter. Shares owned by the acquirer, an officer of the corporation or an employee of the corporation who is also a director of the corporation are excluded from the vote on whether to accord voting rights to the control shares. “Control shares” are voting shares that, if aggregated with all other shares owned by the acquirer or with respect to which the acquirer has the right to vote or to direct the voting of, other than solely by virtue of revocable proxy, would entitle the acquirer to exercise voting power in electing directors within one of the following ranges of voting power:

•

one-tenth or more but less than one-third;

•

one-third or more but less than a majority; or

•

a majority or more of all voting power.

Control shares do not include shares the acquiring person is then entitled to vote as a result of having previously obtained stockholder approval. Except as otherwise specified in the statute, a “control share acquisition” means the acquisition of issued and outstanding control shares.

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Once a person who has made or proposes to make a control share acquisition has undertaken to pay expenses and has satisfied other required conditions, the person may compel the board of directors to call a special meeting of stockholders to be held within 50 days of the demand to consider the voting rights of the shares. If no request for a meeting is made, the corporation may itself present the question at any stockholders meeting.

If voting rights are not approved for the control shares at the meeting or if the acquiring person does not deliver an “acquiring person statement” for the control shares as required by the statute, the corporation may redeem any or all the control shares for their fair value, except for control shares for which voting rights have previously been approved. Fair value is to be determined for this purpose without regard to the absence of voting rights for the control shares, and is to be determined as of the date of the last control share acquisition or of any meeting of stockholders at which the voting rights for control shares are considered and not approved.

If voting rights for control shares are approved at a stockholders meeting and the acquirer becomes entitled to vote a majority of the shares entitled to vote, all other stockholders may exercise appraisal rights. The fair value of the shares as determined for purposes of these appraisal rights may not be less than the highest price per Common Share paid in the control share acquisition. Some of the limitations and restrictions otherwise applicable to the exercise of dissenters’ rights do not apply in the context of a control share acquisition.

The control share acquisition statute does not apply to shares acquired in a merger, consolidation or share exchange if the corporation is a party to the transaction or to acquisitions approved or exempted by the charter or bylaws of the corporation.

Our bylaws contain a provision exempting from the control share acquisition statute any and all acquisitions by any person of shares our stock. There can be no assurance that this provision will not be amended or eliminated at any time in the future.

Subtitle 8

Subtitle 8 of Title 3 of the Maryland General Corporation Law, or Subtitle 8, permits a Maryland corporation with a class of equity securities registered under the Exchange Act and at least three independent directors to elect to be subject, by provision in its charter or bylaws or a resolution of its board of directors and notwithstanding any contrary provision in the charter or bylaws, to any or all of five provisions:

•

a classified board;

•

a two-thirds vote requirement for removing a director;

•

a requirement that the number of directors be fixed only by vote of the directors;

•

a requirement that a vacancy on the board be filled only by the remaining directors and for the remainder of the full term of the directorship in which the vacancy occurred; and

•

a majority requirement for the calling of a special meeting of stockholders.

Pursuant to Subtitle 8, except as may be provided by our board of directors in setting the terms of any class or series of our preferred stock, we have elected to provide that vacancies on our board of directors be filled only by the remaining directors and for the remainder of the full term of the directorship in which the vacancy occurred. Although our board has no current intention to opt in to any of the other above provisions permitted under Maryland law, our charter does not prohibit our board from doing so. Becoming governed by any of these provisions could discourage an extraordinary transaction (such as a merger, tender offer or sale of all or substantially all of our assets) that might provide a premium price for holders of our securities. Note that through provisions in our charter and bylaws unrelated to Subtitle 8, we already vest in our board of directors the exclusive power to fix the number of directors, provided that the number is at least three.

Tender Offers

Our charter provides that any tender offer made by any person, including any “mini-tender” offer, must comply with certain notice and disclosure requirements. These procedural requirements with respect to tender offers apply to any widespread solicitation for shares of our stock at firm prices for a limited time period.

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In order for any person to conduct a tender offer for shares of our stock, our charter requires that the person comply with all the provisions of Regulation 14D of the Exchange Act (other than filing requirements) and provide us with notice of such tender offer at least 10 business days before initiating the tender offer. Regulation 14D requires any person initiating a tender offer to provide:

•

specific disclosure to stockholders focusing on the terms of the offer and information about the bidder;

•

the ability to allow stockholders to withdraw tendered shares while the offer remains open;

•

the right to have tendered shares accepted on a pro rata basis throughout the term of the offer if the offer is for less than all of our shares; and

•

for the equal treatment of all stockholders of the subject class of shares.

In addition to the foregoing, there are certain ramifications to any person who attempts to conduct a noncompliant tender offer. If any person makes a tender offer without complying with the provisions set forth above, the noncomplying person shall be responsible for all our expenses in connection with that person’s noncompliance.

Distribution Reinvestment Program

We have adopted a DRIP pursuant to which you may elect to have your dividends and other distributions reinvested in additional Common Shares. The following discussion summarizes the principal terms of our DRIP. Appendix C to this prospectus contains the full text of our DRIP as is currently in effect.

Eligibility

All our holders of Common Shares are eligible to participate in our DRIP; however, we may elect to deny your participation in our DRIP if you reside in a jurisdiction or foreign country where, in our judgment, the burden or expense of compliance with applicable securities laws makes your participation impracticable or inadvisable.

At any time prior to the listing of our Common Shares on a national stock exchange, you must cease participation in our DRIP if you no longer meet the suitability standards or cannot make the other investor representations set forth in the then-current prospectus or in the subscription agreement. Participants must notify us promptly when they no longer meet these standards. See “Investor Suitability Standards” (immediately following the cover page of this prospectus) and the form of subscription agreement attached hereto as Appendix B.

Election to Participate

You may elect to participate in our DRIP by completing the subscription agreement or other approved enrollment form available from the dealer manager or a participating broker-dealer. Your participation in our DRIP will begin with the next distribution made after receipt of your enrollment form. You can choose to have all or a portion of your distributions reinvested through our DRIP. You also may change the percentage of your distributions that will be reinvested at any time by completing a new enrollment form or other form provided for that purpose. You must make any election to increase your level of participation through your participating broker-dealer or the dealer manager.

Purchases of Common Shares

Common Shares will be purchased under our DRIP promptly after the date of each distribution payment. The purchase of fractional Common Shares is a permissible and likely result of the reinvestment of distributions under our DRIP.

Until the NAV pricing start date, the offering price per Common Share under our DRIP will be $10.00. After the NAV pricing start date, the offering price per Common Share under our DRIP will be equal to the NAV per Common Share. Please note that the NAV pricing start date could occur as late as January 15, 2015.

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Account Statements

You or your designee will receive a confirmation of your purchases under our DRIP no less than quarterly. Your confirmation will disclose the following information:

•

each distribution reinvested for your account during the period;

•

the date of the reinvestment;

•

the number and price of the Common Shares purchased by you; and

•

the total number of Common Shares in your account.

In addition, within 90 days after the end of each calendar year, we will provide you with an individualized report on your investment, including the purchase dates, purchase price, number of Common Shares owned and the amount of distributions made in the prior year. We also will provide to all participants in our DRIP, without charge, all supplements to and updated versions of this prospectus, to the extent required under applicable securities laws.

Fees and Commissions and Use of Proceeds

No selling commissions or dealer manager fee are payable on Common Shares sold under our DRIP. We expect to use the net proceeds from the sale of Common Shares under our DRIP for general corporate purposes, including, but not limited to, the following:

•

the repurchase of Common Shares under our share repurchase program;

•

capital expenditures, tenant improvement costs and leasing costs related to our investments in real estate properties;

•

funding reserves required by any financings of our investments;

•

funding obligations under any of our real estate loans;

•

investments in real estate properties and real estate-related loans and securities, which would include payment of acquisition fees to our advisor (see “Compensation Table”); and

•

the repayment of debt.

We cannot predict with any certainty how much, if any, DRIP proceeds will be available for specific purposes.

Voting

You may vote all Common Shares, including fractional Common Shares, that you acquire through our DRIP.

U.S. Federal Income Tax Consequences of Participation

If you elect to participate in our DRIP and are subject to U.S. federal income taxation, you will incur a tax liability for distributions allocated to you even though you have elected not to receive the distributions in cash but rather to have the distributions withheld and reinvested pursuant to our DRIP. Specifically, you will be treated as if you have received the distribution from us in cash and then applied such distribution to the purchase of additional shares. In addition, to the extent you purchase shares through our DRIP at a discount to their fair market value, you will be treated for tax purposes as receiving an additional distribution equal to the amount of the discount.

Until the NAV pricing start date, we expect that (a) the offering price per Common Share under our DRIP will be $10.00 per Common Share, (b) no secondary trading market for our Common Shares will develop and (c) our advisor will estimate the fair market value of a Common Share to be $10.45. Therefore, until the NAV pricing start date, participants in our DRIP will be treated as having received a distribution of $10.45 for each $10.00 reinvested by them under our DRIP. After the NAV pricing start date, the offering price per Common Share under our DRIP will be equal to the NAV per Common Share, which is intended to equal the fair market value of a Common Share. At no time will the offering price per Common Share under our DRIP be less than 95% of the fair market value per Common Share. You will be taxed on the amount of such distribution (including the discount from fair market value) as a dividend to the extent such distribution is from our current or accumulated earnings and profits, unless we have designated all or a portion of the distribution as a capital gain distribution. See “Material U.S. Federal Income Tax Considerations — Taxation of U.S. Stockholders” and “Material U.S. Federal Income Tax Considerations — Taxation of Non-U.S. Stockholders.”

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Termination of Participation

Once enrolled, you may continue to purchase Common Shares under our DRIP until we have sold all the Common Shares registered in this offering, have terminated this offering or have terminated our DRIP. You may terminate your participation in our DRIP at any time by providing us with written notice. For your termination to be effective for a particular distribution, we must have received your notice of termination at least 10 business days prior to the last day of the fiscal period to which the distribution relates. Any transfer of your Common Shares will effect a termination of the participation of those Common Shares in our DRIP. We will terminate your participation in our DRIP to the extent that a reinvestment of your distributions would cause you to violate the ownership limits contained in our charter, unless you have obtained an exemption from the ownership limits from our board of directors.

Amendment, Suspension or Termination of our DRIP

We may amend, suspend or terminate our DRIP for any reason at any time upon 10 days’ written notice to the participants. We may provide notice by including such information (a) in a current report on Form 8-K or in our annual or quarterly reports, all publicly filed with the SEC, or (b) in a separate mailing to the participants.

Reallocation of Available Shares

We reserve the right to reallocate the Common Shares we are offering between the primary offering and our DRIP.

Registrar and Transfer Agent

We will engage a third party to serve as the registrar and transfer agent for our Common Shares. The name and address of our transfer agent is as follows:

  Phoenix American Financial Services, Inc.
  2401 Kerner Boulevard
  San Rafael, CA 94901-5529

To ensure that any account changes are made promptly and accurately, all changes (including your address, ownership type and distribution mailing address) should be directed to the transfer agent.

Restrictions on Roll-Up Transactions

A Roll-up Transaction is a transaction involving the acquisition, merger, conversion or consolidation, directly or indirectly, of us and the issuance of securities of an entity that is created or would survive after the successful completion of a Roll-up Transaction, which we refer to as a Roll-up Entity. This term does not include:

•

a transaction involving securities of the Roll-Up Entity that have been for at least 12 months listed on a national securities exchange; or

•

a transaction involving only our conversion into a trust or association if, as a consequence of the transaction, there will be no significant adverse change in the voting rights of our holders of Common Shares, the term of our existence, the compensation to our advisor or our investment objectives.

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In connection with any proposed Roll-up Transaction, an appraisal of all our assets will be obtained from a competent independent appraiser. Our assets will be appraised on a consistent basis, and the appraisal will be based on an evaluation of all relevant information and will indicate the value of our assets as of a date immediately preceding the announcement of the proposed Roll-up Transaction. If the appraisal will be included in a prospectus used to offer the securities of a Roll-Up Entity, the appraisal will be filed with the SEC and, if applicable, the states in which registration of such securities is sought, as an exhibit to the registration statement for the offering. Accordingly, an issuer using the appraisal shall be subject to liability for violation of Section 11 of the Securities Act and comparable provisions under state laws for any material misrepresentations or material omissions in the appraisal. The appraisal will assume an orderly liquidation of assets over a 12-month period. The terms of the engagement of the independent appraiser will clearly state that the engagement is for our benefit and the benefit of our stockholders. A summary of the appraisal, indicating all material assumptions underlying the appraisal, will be included in a report to our stockholders in connection with any proposed Roll-up Transaction.

In connection with a proposed Roll-up Transaction, the person sponsoring the Roll-up Transaction must offer to our holders of Common Shares who vote “no” on the proposal the choice of:

(a)

accepting the securities of the Roll-up Entity offered in the proposed Roll-up Transaction; or

(b)

one of the following:

(i)

remaining as stockholders of us and preserving their interests in us on the same terms and conditions as existed previously; or

(ii)

receiving cash in an amount equal to the stockholders’ pro rata share of the appraised value of our net assets.

We are prohibited from participating in any proposed Roll-up Transaction:

•

that would result in our holders of Common Shares having voting rights in a Roll-up Entity that are less than those provided in our charter and bylaws, including rights with respect to the election and removal of directors, annual reports, annual and special meetings of stockholders, the amendment of our charter and our dissolution;

•

that includes provisions that would operate to materially impede or frustrate the accumulation of shares by any purchaser of the securities of the Roll-up Entity, except to the minimum extent necessary to preserve the tax status of the Roll-up Entity, or that would limit the ability of an investor to exercise the voting rights of its securities of the Roll-up Entity on the basis of the number of shares held by that investor;

•

in which investors’ rights of access to the records of the Roll-up Entity would be less than those provided in our charter and described in the section of this prospectus titled “Description of Shares — Meetings and Special Voting Requirements”; or

•

in which any of the costs of the Roll-up Transaction would be borne by us if the Roll-up Transaction is rejected by our holders of Common Shares.

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SHARE REPURCHASE PROGRAM

Under our share repurchase program, stockholders who have held their Common Shares for at least one year may request that we repurchase all or any portion, subject to certain minimum amounts described below, of their Common Shares on any business day. Generally, we will pay repurchase proceeds, less any applicable tax or other withholding required by law, by the third business day following the repurchase request day. Prior to the NAV pricing start date, stockholders may request the repurchase of their Common Shares (a) in the case of hardship, as defined below, at the total offering price paid, or (b) in the sole discretion of our advisor, at a price of 92% of the total offering price paid, but in neither event at a price greater than the offering price per Common Share under our DRIP. Commencing on the NAV pricing start date, the repurchases price per Common Share on any business day will be 95% of our NAV per Common Share for that day, calculated after the close of business on the repurchase request day, without giving effect to any share purchases or repurchases to be effected on such day; provided, however, that while the primary offering is ongoing, in no event will the repurchase price commencing on the NAV pricing start date exceed the then-current offering price under the primary offering. We define “hardship” to mean: (i) the death of a stockholder; (ii) the bankruptcy of a stockholder; (iii) a mandatory distribution under a stockholder’s IRA; or (iv) another involuntary exigent circumstance, as approved by our board. Please note that the NAV pricing start date could occur as late as January 15, 2015.

Commencing on the NAV pricing start date, if a stockholder’s repurchase request is received before 4:00 p.m. Eastern time such Common Shares will be repurchased at a price equal to 95% of our NAV per Common Share (subject to the limitation that if the primary offering is still ongoing, in no event will the repurchase price commencing on the NAV pricing start date exceed the then-current offering price under the primary offering) calculated after the close of business on that day. Commencing on the NAV pricing start date, if a stockholder’s request is received after 4 p.m. on any business day, or received on a day other than a business day, such Common Shares will be repurchased at 95% of our NAV per Common Share (subject to the limitation that if the primary offering is still ongoing, in no event will the repurchase price commencing on the NAV pricing start date exceed the then-current offering price under the primary offering) calculated after the close of business on the next business day. We refer to the day on which a repurchase request is received pursuant to our repurchase program as the “repurchase request day.” Although commencing on the NAV pricing start date a stockholder will not know at the time he or she requests the repurchase of Common Shares the exact price at which such repurchase request will be processed, the stockholder may cancel the repurchase request before it has been processed by notifying a customer service representative available on our toll-free, automated telephone line, (855) REIT-NAV. The line will be open on each business day between the hours of 9:00 a.m. and 7:00 p.m. (Eastern time). Repurchase requests submitted before 4:00 p.m. on a business day must be cancelled before 4:00 p.m. on the same day. Repurchase requests received after 4:00 p.m. on a business day, or at any time on a day that is not a business day, must be cancelled before 4:00 p.m. on the next business day. If we file a pricing supplement disclosing a change in the NAV per Common Share by more than 5% from the NAV per Common Share disclosed in the last filed prospectus or pricing supplement, all investors whose repurchase requests have not been processed will have the right to rescind the repurchase transaction within ten days of such filing. If the repurchase request is not cancelled before the applicable time described above, the stockholder will be contractually bound to the repurchase of the Common Shares and will not be permitted to cancel the request prior to the payment of repurchase proceeds. Because commencing on the NAV pricing start date our NAV per Common Share will be calculated at the close of each business day, the repurchase price may fluctuate between the repurchase request day and the date on which the company pays repurchase proceeds. If the repurchase request day is after the record date for a distribution payment but prior to the payment date for such distribution, the stockholder will be entitled to receive such distribution with respect to the repurchased Common Shares because the stockholder held them on the record date. At the close of business on the date that is one business day after each record date for any declared distribution, which we refer to as the distribution adjustment date, our NAV will be reduced to reflect the accrual of our liability to pay the distribution to our stockholders of record as of the record date.

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Prior to the NAV pricing start date, we will limit the Common Shares repurchased during any calendar quarter to 1.25% of the weighted average number of Common Shares outstanding during the previous calendar quarter, or approximately 5% of the weighted average number of Common Shares outstanding in any 12-month period. Commencing on the NAV pricing start date, we will limit Common Shares repurchased during any calendar quarter to 5% of our NAV as of the last day of the previous calendar quarter or as of the NAV pricing start date if it occurred during the then-current quarter, or approximately 20% of our NAV in any 12-month period. Furthermore, we may not have sufficient liquidity to honor all repurchase requests. We intend, commencing on the NAV pricing start date, to maintain the following percentage of the overall value of our portfolio in liquid assets that can be liquidated more readily than properties: (a) 15% of our NAV up to $333 million; (b) 10% of our NAV between $333 million and $667 million; and (c) 5% of our NAV in excess of $667 million. However, our stockholders should not expect that we will maintain liquid assets at or above these levels. To the extent that we maintain borrowing capacity under a line of credit, such available amount will be included in calculating our liquid assets. Our advisor will consider various factors in determining the amount of liquid assets we should maintain, including but not limited to our receipt of proceeds from sales of additional Common Shares, our cash flow from operations, available borrowing capacity under a line of credit, if any, our receipt of proceeds from any asset sale, and the use of cash to fund repurchases. The board will review the amount and sources of liquid assets on a quarterly basis.

If we reach our quarterly limit under our share repurchase program, if our share repurchase program is suspended, or if funds available for our share repurchase program are not sufficient to accommodate all requests, Common Shares will be repurchased as follows: (a) first, pro rata as to repurchases upon the death of a stockholder; (b) next, pro rata as to repurchases from stockholders who demonstrate, in the discretion of our board of directors, a bankruptcy or another involuntary exigent circumstance, as approved by our board; (c) next, pro rata as to repurchases from stockholders subject to a mandatory distribution requirement under such stockholder’s IRA; and (d) finally, pro rata as to all other repurchase requests.

On the first business day during any quarter in which we have reached that quarter’s repurchase limitation, we will publicly disclose such fact through a filing with the SEC and a posting on our website in order to notify stockholders that we will not accept additional repurchase requests during such quarter. In such event, unless our board of directors determines to suspend our share repurchase program, our share repurchase program will automatically and without stockholder notification resume on the first day of the calendar quarter following the quarter in which repurchases were suspended due to reaching such quarter’s volume limitation.

Our advisor will continuously monitor our capital needs and the amount of available liquid assets relative to our current business, as well as the volume of repurchase requests relative to the sales of new Common Shares. If our board of directors believes, in its business judgment, that repurchases may unnecessarily burden our short-term or long-term liquidity, adversely affect our operations or have a material adverse impact on non-repurchasing stockholders, then prior to the beginning of any quarter, our board of directors may set a limit on the number of Common Shares that may be repurchased in such quarter; provided , that prior to the NAV pricing start date, we will limit the Common Shares repurchased during such quarter to 1.25% of the weighted average number of Common Shares outstanding during such quarter, or approximately 5% of the weighted average number of Common Shares outstanding in any 12-month period; and provided, further, that commencing on the NAV pricing start date, we will limit the Common Shares repurchased during such quarter to 5% of our NAV as of the last day of the previous calendar quarter or as of the NAV pricing start date if it occurred during the then-current quarter, or approximately 20% of our NAV in any 12-month period. Stockholders may make multiple requests for repurchase during the quarter but may not exceed the maximum limits of repurchase established by our advisor.

There is no minimum holding period for Common Shares; however, because most of our assets will consist of real estate properties that cannot generally be readily liquidated without impacting our ability to realize full value upon their disposition, investment in the company should be considered a long-term investment.

In general, a stockholder or his or her estate, heir or beneficiary may present to us fewer than all the Common Shares then owned for repurchase, except that the minimum number of Common Shares that must be presented for repurchase shall be at least 25% of the holder’s Common Shares. However, if the repurchase is being requested due to a hardship, as defined above, and if the repurchase request is made within 180 days of the event giving rise to the hardship, a minimum of 10% of the stockholder’s Common Shares may be presented for repurchase; provided, however, that any future repurchase request by such stockholder must present for repurchase at least 25% of such stockholder’s remaining Common Shares.

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Repurchase requests may be made by mail or by phone. A stockholder who wishes to have Common Shares repurchased by mail must mail or deliver to us a written request on a form provided by us and executed by the stockholder, its trustee or authorized agent. An estate, heir or beneficiary that wishes to have Common Shares repurchased following the death of a stockholder must mail or deliver to us a written request on a form provided by us, including evidence acceptable to our board of directors of the death of the stockholder, and executed by the executor or executrix of the estate, the heir or beneficiary, or their trustee or authorized agent. Unrepurchased Common Shares may be passed to an estate, heir or beneficiary following the death of a stockholder. If the Common Shares are to be repurchased under any conditions outlined herein, we will forward any documents necessary to effect the repurchase, including any signature guaranty we may require.

Our sponsor, advisor, directors and affiliates are prohibited from receiving a fee on any share repurchases.

Our board of directors reserves the right, in its sole discretion, at any time and from time to time, to:

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change the purchase price for repurchases; or

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otherwise amend the terms of, suspend or terminate our share repurchase program.

The share repurchase program immediately will terminate if our Common Shares are listed on any national securities exchange. Any material modification, suspension or termination of our share repurchase program by our board of directors or our advisor will be disclosed to stockholders promptly, and not later than 30 days before such action, in a prospectus supplement or in special or periodic reports we file with the SEC, as well as in a press release or via our website and, as required by the Securities Act, in post-effective amendments to this or any other applicable registration statement. If there is a suspension or material modification of our repurchase program, our board also may modify or suspend our offering of Common Shares.

Stockholders are not required to sell their Common Shares to us. The share repurchase program is only intended to provide interim liquidity for stockholders until a liquidity event occurs, such as the listing of our Common Shares on a national stock exchange or our merger with a listed company. We cannot guarantee that a liquidity event will occur.

Common Shares we purchase under our share repurchase program will have the status of authorized but unissued Common Shares. Common Shares we acquire through our share repurchase program may be reissued in compliance with the Securities Act and applicable state securities laws.

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SUMMARY OF OUR OPERATING PARTNERSHIP AGREEMENT

The following is a summary of the agreement of limited partnership of United Realty Capital Operating Partnership, L.P., our operating partnership. This summary and the descriptions of the operating partnership agreement provisions elsewhere in this prospectus are qualified by the operating partnership agreement itself, which is filed as an exhibit to our registration statement, of which this prospectus is a part. See the section entitled “Where You Can Find Additional Information” in this prospectus.

Conducting our operations through the operating partnership allows the sellers of properties to contribute their property interests to the operating partnership in exchange for partnership interests rather than for cash or our common stock. This enables the seller to defer some or all of the potential taxable gain on the transfer. From the seller’s perspective, there are also differences between the ownership of common stock and partnership units, some of which may be material because they impact the business organization form, distribution rights, voting rights, transferability of equity interests received and U.S. federal income taxation.

Description of Partnership Units

Partnership interests in the operating partnership are divided into “units.” Initially, the operating partnership will have three classes of units: “GP Units”, “OP Units” and “Sponsor Preferred Units”.

GP Units

GP Units represent an interest as a general partner in the operating partnership and we, as general partner, will hold all such units. In return for our initial capital contribution of $200,000, the operating partnership issued to us 9,091 GP Units and 9,091 OP Units.

In our capacity as general partner, we manage the operating partnership and are liable for certain unpaid debts and liabilities of the operating partnership.

Limited Partnership Units Generally

Limited partnership units represent an interest as a limited partner in the operating partnership. OP Units and Sponsor Preferred Units represent different classes of limited partnership interests in the operating partnership.

The operating partnership may issue additional units and classes of units with rights different from, and superior to, those of limited partnership units of any class, without the consent of the limited partners. Holders of limited partnership units do not have any preemptive rights with respect to the issuance of additional units.

Limited partners of any class do not have the right to participate in the management of the operating partnership. Limited partners of any class who do not participate in the management of the operating partnership, by virtue of their status as limited partners, generally are not liable for the debts and liabilities of the operating partnership beyond the amount of their capital contributions. We, however, as the general partner of the operating partnership, are liable for any unpaid debts and liabilities. The voting rights of the limited partners of any class are generally limited to approval of specific types of amendments to the operating partnership agreement (some of which exclude OP Units owned or controlled by the general partner or any person who owns more than 50% of the outstanding voting interests in the general partner). With respect to such amendments, each OP Unit has one vote. See the section entitled “— Management of the Operating Partnership” below for a more detailed discussion of this subject.

In general, each OP Unit (and GP Unit) will share equally in distributions from the operating partnership when such distributions are declared by us, the general partner, which decision will be made in our sole discretion. Upon the operating partnership’s liquidation, OP Units (and GP Units) will share equally in the assets of the operating partnership that are available for distribution, after payment of all liabilities, establishment of reserves and after payment of any preferred return owed to holders of limited partnership preferred units, if any, as described in the section entitled “— Liquidation” below. In addition, a portion of the items of income, gain, loss and deduction of the operating partnership for U.S. federal income tax purposes may be allocated to a limited partnership unit, regardless of whether any distributions are made by the operating partnership. See the section entitled “Material U.S. Federal Income Tax Considerations — Tax Aspects of Investments in Partnerships” in this prospectus for a description of the manner in which income, gain, loss and deductions are allocated under the operating partnership agreement. As general partner, we may amend the allocation and distribution sections of the operating partnership agreement to reflect the issuance of additional units and classes of units without the consent of the limited partners.

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Under certain circumstances, limited partners holding OP Units may be restricted from transferring their interests without the consent of the general partner. See the section entitled “— Transferability of Interests” below for a discussion of certain restrictions imposed by the operating partnership agreement on such transfers.

OP Units

For each OP Unit received, investors generally will be required to contribute money or property, with a net equity value determined by the general partner. Limited partners holding OP Units will not be obligated to make additional capital contributions to the operating partnership. Further, such holders will not have the right to make additional capital contributions to the operating partnership or to purchase additional OP Units without our consent as general partner. For further information on capital contributions, see the section entitled “— Capital Contributions” below.

After owning an OP Unit for one year, a limited partner holding OP Units generally may, subject to certain restrictions, exchange OP Units for the cash value of a corresponding number of Common Shares or, at the option of the operating partnership, a corresponding number of Common Shares. See the section entitled “— Limited Partner Exchange Rights” below for a description of these rights and the amount and types of consideration a limited partner is entitled to receive upon exercise of such rights. These exchange rights are accelerated in the case of some extraordinary transactions. See the section entitled “— Extraordinary Transactions” below for an explanation of the exchange rights under such circumstances.

In return for a portion of our initial capital contribution, the operating partnership issued to us 9,091 OP Units. URTI LP, LLC, as the initial limited partner of the operating partnership, holds 182 OP Units representing its limited partnership interest in the operating partnership.

Sponsor Preferred Units

The operating partnership issued 500,000 Sponsor Preferred Units to us to correspond with our issuance of Sponsor Preferred Shares. The Sponsor Preferred Units represent a class of limited partnership units of the operating partnership that are subject to the additional terms contained in the operating partnership agreement and summarized here. Except as otherwise provided in the operating partnership agreement, Sponsor Preferred Units have the same rights, privileges and preferences as OP Units.

Sponsor Preferred Units shall not be entitled to distributions from the operating partnership except upon liquidation of the operating partnership. See the section entitled “— Liquidation” below for an explanation of distribution rights with respect to Sponsor Preferred Units. At the time that Sponsor Preferred Shares are converted into Common Shares, each Sponsor Preferred Unit shall automatically convert into the number of OP Units equal to the number of Common Shares into which the Sponsor Preferred Shares were converted (subject to adjustment in the event of any dividend, split, combination or other similar recapitalization with respect to the OP Units).

Management of the Operating Partnership

The operating partnership is organized as a Delaware limited partnership pursuant to the terms of the operating partnership agreement. We are the general partner of the operating partnership and expect to conduct substantially all of our business through it. Pursuant to the operating partnership agreement, we, as the general partner, will have full, exclusive and complete responsibility and discretion in the management and control of the partnership, including the ability to enter into major transactions, such as acquisitions, dispositions and refinancings, and to cause changes in the operating partnership’s business and distribution policies.

The limited partners, in their capacities as such, will have no authority to transact business for, or participate in the management or decisions of, the operating partnership, except as provided in the operating partnership agreement and as required by applicable law. Further, the limited partners have no right to remove us as the general partner.

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As general partner, we also may amend the operating partnership agreement without the consent of any other partners. However, the following amendments will require the consent of limited partners holding OP Units that are more than 50% of the then outstanding OP Units held by all the limited partners who are adversely affected:

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any amendment that alters or changes the distribution and liquidation rights of limited partners, subject to the exceptions discussed below under the “Distributions” portion of this section;

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any amendment that alters or changes the limited partner’s exchange rights;

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any amendment that imposes on limited partners any obligation to make additional capital contributions not contemplated by the operating partnership agreement; or

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any amendment that alters the terms of the operating partnership agreement regarding the rights of the limited partners with respect to extraordinary transactions.

Indemnification

To the extent permitted by law, the operating partnership agreement provides for indemnification of us when acting in our capacity as general partner. It also provides for indemnification of directors, officers and other persons that we may designate under the same conditions, and subject to the same restrictions, applicable to the indemnification of officers, directors, employees and stockholders under our charter. See the section entitled “Management — Limited Liability and Indemnification of Directors, Officers, Employees and Other Agents” in this prospectus.

Transferability of Interests

Under the operating partnership agreement, we may not withdraw from the partnership or transfer or assign all of our general partnership interest without the consent of holders of two-thirds of the limited partnership interests, except in connection with extraordinary transactions meeting the conditions set forth in the operating partnership agreement. Under certain circumstances and with the prior written consent of the general partner and satisfaction of other conditions set forth in the operating partnership agreement, holders of limited partnership units may withdraw from the partnership and transfer or encumber all or any part of their units. However, although a limited partner may be able to affect a transfer of partnership interests without the consent of the general partner, the transferee remains an economic interest owner only as an assignee until the general partner admits the assignee as a substitute limited partner, in its sole and absolute discretion.

In addition, limited partnership units are not registered under the federal or state securities laws. As a result, the ability of a holder to transfer its units may be restricted under such laws.

Extraordinary Transactions

The operating partnership agreement generally permits us and the operating partnership to engage in any authorized business combination without the consent of the limited partners. Generally, a business combination for these purposes is any merger, consolidation or other combination with or into another entity, or the acquisition, disposition, mortgage, pledge, encumbrance, hypothecation or exchange of all or substantially all of our assets. We are required to send to each limited partner notice of a proposed business combination at least 15 days prior to the record date for the stockholder vote on the combination, if any. Generally, a limited partner may not exercise its exchange rights until the units have been outstanding for at least one year. However, in the case of a proposed combination, each limited partner has the right to exercise its exchange right prior to the stockholder vote on the transaction, even if it has held its units for less than one year.

Issuance of Additional Units

As general partner of the operating partnership, we can, without the consent of the limited partners, cause the operating partnership to issue additional units representing general or limited partnership interests. A new issuance may include preferred units, which may have rights which are different than, and/or superior to, those of GP Units, OP Units and Sponsor Preferred Units. Furthermore, the operating partnership agreement requires the issuance of additional units to us corresponding with any issuance of stock by us whether pursuant to the DRIP, as a result of distributing stock in order to meet our annual distribution requirement to maintain our status as a REIT, or otherwise.

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Capital Contributions

The operating partnership agreement provides that, if the operating partnership requires additional funds at any time, or from time to time, in excess of funds available to it from prior borrowings, operating revenue or capital contributions, we, as general partner, have the right to raise additional funds required by the operating partnership by causing it to borrow the necessary funds from third parties on such terms and conditions as we deem appropriate. As an alternative to borrowing funds required by the operating partnership, we may contribute the amount of such required funds as an additional capital contribution. The operating partnership agreement also provides that we must contribute cash or other property received in exchange for the issuance of equity stock to the operating partnership in exchange for units unless the issuance was in connection with an acquisition of an asset to be held directly by the general partner and such issuance was approved by a majority of independent directors of the general partner. Upon the contribution of cash or other property received in exchange for the issuance of common shares, we will receive one GP Unit or OP Unit for each share issued by us. Upon the contribution of the cash or other property received in exchange for the issuance of each share of equity stock other than shares of common stock, we will receive one unit with rights and preferences respecting distributions corresponding to the rights and preferences of the equity stock that we issued. If we contribute additional capital to the operating partnership, our partnership interest will be increased on a proportionate basis. Conversely, the partnership interests of the other limited partners will be decreased on a proportionate basis if we contribute any additional capital.

Distributions

The operating partnership agreement sets forth the manner in which distributions from the partnership are made to unit holders. Distributions from the partnership are made at the times and in the amounts determined by us, as the general partner. Under the operating partnership agreement, preferred units, if any, may entitle their holders to distributions prior to the payment of distributions for the other units.

The operating partnership agreement provides that cash available for distribution will be distributed to the partners holding GP Units and/or OP Units in proportion to each such partner’s holdings of GP Units and/or OP Units. The operating partnership agreement also provides that, as general partner, we have the right to amend the distribution provisions of the operating partnership agreement to reflect the issuance of additional classes of units. The operating partnership agreement further provides that, as general partner, we shall use our best efforts to ensure sufficient distributions are made to meet our annual distribution requirements and to avoid U.S. federal income and excise taxes on our earnings.

Liquidation

Upon the liquidation of the operating partnership, after payment of debts and obligations, any remaining assets of the partnership will be distributed to the partners as follows:

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first, 100% to us as holder of GP Units and OP Units and any other holders of OP Units, in proportion to each such holder’s holdings of GP Units and/or OP Units, until the “net investment” balance (as defined below) is zero;

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second, 100% to us as holder of GP Units and OP Units and any other holders of OP Units, in proportion to each such holder’s holdings of GP Units and/or OP Units, until the “priority return” balance (as defined below) is zero; and

•

thereafter, 15% to us as holder of Sponsor Preferred Units, and 85% to be further distributed as follows: first, 100% to us as the holder of Sponsor Preferred Units, until the aggregate capital contributions made with respect to the Sponsor Preferred Units have been returned, and thereafter, 100% to us as holder of GP Units and OP Units and any other holders of OP Units, in proportion to each such holder’s holdings of GP Units and/or OP Units.

The ”net investment” balance means the excess, if any, of (1) gross proceeds raised from our stockholders in all offerings and capital contributions made by limited partners, over (2) in each case without duplication, all prior distributions to our stockholders of net sales proceeds, all amounts paid by us to repurchase shares of our stock pursuant to our share repurchase program or otherwise, all distributions to limited partners of net sale proceeds contained in cash available for distribution, all liquidating distributions of the type described above under the subparagraph “first” in the next preceding paragraph and all proceeds or property used to redeem limited partner interests (except those held directly or indirectly by the general partner). The “priority return” balance means the excess, if any, of (x) a 7% cumulative, non-compounded, pre-tax annual return on the “net investment” balance, as determined on a daily basis, over (y) all distributions of cash available for distribution to holders of GP Units and/or OP Units (other than amounts included in the determination of “net investment” balance) and all liquidating distributions of the type described under subparagraph “second” in the next preceding paragraph.

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Allocations

The operating partnership agreement provides that generally net income, net loss and, to the extent necessary, individual items of income, gain, loss or deduction of the operating partnership will be allocated among the partners in such a manner that the capital accounts of each partner, immediately after making such allocation, is, as nearly as possible, equal proportionately to the distributions that would be made to such partner if the operating partnership were dissolved, its affairs wound up and its assets were sold for cash, all operating partnership liabilities were satisfied, and the net assets of the operating partnership were distributed to the partners immediately after making such allocation.

In addition, the operating partnership agreement provides for the special allocation of certain items of deduction to URTI LP, LLC which may not otherwise be currently usable by, or provide a benefit to, us. Any such special allocations would be made in accordance with applicable tax law.

Operations

The operating partnership agreement requires that the partnership be operated in a manner that will:

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satisfy the requirements for our classification as a REIT;

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avoid any U.S. federal income or excise tax liability, unless we otherwise cease to qualify as a REIT; and

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ensure that the operating partnership will not be classified as a publicly traded partnership under the Code.

Pursuant to the operating partnership agreement, the operating partnership will assume and pay when due, or reimburse us for, payment of all administrative and operating costs and expenses incurred by the operating partnership and the administrative costs and expenses that we incur on behalf, or for the benefit, of the operating partnership.

Limited Partner Exchange Rights

Pursuant to the operating partnership agreement, each limited partner holding OP Units (other than us) has the right, but not the obligation, to exchange all or a portion of his, her or its OP Units for cash or, at our option, for shares of our common stock on such terms and subject to such conditions and restrictions as will be contained in one or more exchange rights agreement among us, as the general partner, the operating partnership and one or more limited partner; provided, however, that such OP Units have been outstanding for at least one year (or such lesser time as determined by the general partner). The form of the exchange rights agreement shall be provided by the general partner.

Exercise of exchange rights will be a taxable transaction in which gain or loss will be recognized by the limited partner exercising its right to exchange its units for the cash value of a corresponding number of shares of our common stock or, at the option of the operating partnership, a corresponding number of shares of our common stock, to the extent that the amount realized exceeds the limited partner’s adjusted basis in the units exchanged.

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Tax Matters

Pursuant to the operating partnership agreement, we are the tax matters partner of the operating partnership, and as such, have authority to make tax decisions under the Code on behalf of the operating partnership. Taxable income and loss generally will be allocated in a manner that reflects the entitlement of the general partner and limited partners to receive distributions from the operating partnership. We will file a federal income tax return annually on behalf of the operating partnership on IRS Form 1065 (or such other successor form) or on any other IRS form as may be required. As we are still in the early stages of development, it is not clear what form any special purpose entities would take for U.S. federal income tax purposes. To the extent that any special purpose entity is not wholly owned by the operating partnership or is a taxable REIT subsidiary, we will arrange for the preparation and filing of the appropriate tax returns for such special purpose entity for U.S. federal income tax purposes. For a description of other tax consequences stemming from our investment in the operating partnership, see the section entitled “Material U.S. Federal Income Tax Considerations — Tax Aspects of Investments in Partnerships” in this prospectus.

Duties and Conflicts

Except as otherwise set forth under the sections entitled “Conflicts of Interest” and “Management” in this prospectus, any limited partner may engage in other business activities outside the operating partnership, including business activities that directly compete with the operating partnership.

Term

The operating partnership will continue in full force and effect until December 31, 2099 or until sooner dissolved and terminated (i) upon our dissolution, bankruptcy, insolvency or termination, (ii) upon the sale or other disposition of all or substantially all the assets of the operating partnership unless we, as general partner, elect to continue the business of the operating partnership to collect the indebtedness or other consideration to be received in exchange for the assets of the operating partnership, or (iii) by operation of law.

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PLAN OF DISTRIBUTION

The Offering

We are offering a maximum of 100,000,000 Common Shares through United Realty Securities, our dealer manager, which is a division of Cabot Lodge, a broker-dealer registered with FINRA, in our primary offering at a price of $10.45 per Common Share, except as provided below. Following the NAV pricing start date, we will offer Common Shares in our primary offering at our NAV per Common Share, plus applicable selling commissions and dealer manager fees.

Our dealer manager also is one of the broker-dealers that solicits subscriptions for our Common Shares. Our dealer manager has entered into soliciting dealer agreements with certain other broker-dealers who are members of FINRA to authorize them to sell our Common Shares.

Our board of directors has arbitrarily determined the selling price of the Common Shares, consistent with comparable real estate investment programs in the market, and such price bears no relationship to our book or asset values, or to any other established criteria for valuing issued or outstanding Common Shares. Because the offering price is not based upon any independent valuation, the offering price is not indicative of the proceeds that you would receive upon liquidation.

The Common Shares are being offered on a “best efforts” basis, which means generally that the dealer manager is required to use its best efforts to sell the Common Shares but has no firm commitment or obligation to purchase any of the Common Shares. We also are offering up to 20,000,000 Common Shares for sale pursuant to our DRIP. We reserve the right to reallocate the Common Shares we are offering between the primary offering and our DRIP. Until the NAV pricing start date, the offering price per Common Share under our DRIP will be $10.00. After the NAV pricing start date, the offering price per Common Share under our DRIP will be equal to the NAV per Common Share. At no time will the offering price per Common Share under our DRIP be less than 95% of the fair market value per Common Share. We may amend, suspend or terminate our DRIP for any reason at any time upon 10 days’ notice to the participants. We may provide notice by including such information in a separate mailing to the participants. There will be no fees, commissions or expenses paid with respect to these Common Shares. The offering of our Common Shares will terminate on or before August 15, 2015, which is three years after the initial effective date of this offering. This offering must be registered in every state in which we offer or sell Common Shares. Generally, such registrations are for a period of one year. Thus, we may have to stop selling Common Shares in any state in which our registration is not renewed or otherwise extended annually. At the discretion of our board of directors, we may elect to extend the termination date of our offering of Common Shares reserved for issuance pursuant to our DRIP until we have sold all Common Shares allocated to such program through the reinvestment of distributions, in which case participants in our DRIP will be notified. We reserve the right to terminate this offering at any time prior to the stated termination date.

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Dealer Manager and Compensation We Will Pay for the Sale of Our Common Shares

Our dealer manager was organized in October 2011 for the purpose of participating in and facilitating the distribution of securities of real estate programs sponsored by United Realty and its affiliates. For additional information about our dealer manager, including information relating to our dealer manager’s affiliation with us, please refer to the section of this prospectus captioned “Management—United Realty Securities.”

Prior to the NAV pricing start date, sales of Common Shares, our dealer manager will receive selling commissions equal to $0.73 per Common Share out of the Common Shares sold in our primary offering. Our dealer manager will reallow all selling commissions to the participating broker-dealer or registered representative of the dealer manager who actually sold the Common Shares. The dealer manager also will receive a dealer manager fee equal to $0.31 per Common Share out of the Common Shares sold in our primary offering as compensation for acting as the dealer manager. Selling commissions and dealer manager fee will constitute approximately 7.0% and 3.0% of the offering price of $10.45 per Common Share, respectively, and together will constitute approximately (and slightly less than) 10.0% of such offering price. The dealer manager may reallow from the dealer manager fee up to $0.15 per Common Share to any participating broker-dealer for marketing support. We will not pay selling commissions or a dealer manager fee for Common Shares sold pursuant to our DRIP. We will not pay referral or similar fees to any accountants, attorneys or other persons in connection with the distribution of the Common Shares.

Commencing on the NAV pricing start date, the total of the selling commissions and dealer manager fees paid will equal 10.0% of our NAV, as applicable, and the offering price in our primary offering will be our NAV per Common Share plus 10.0%. Our deal manager will receive from the gross proceeds selling commissions equal to 7.0% of our NAV per Common Share. Our dealer manager will reallow all selling commissions to the participating broker-dealer or registered representative of the dealer manager who actually sold the Common Shares. The dealer manager also will receive from the gross proceeds a dealer manager fee equal to 3.0% of our NAV per Common Share as compensation for acting as the dealer manager. The dealer manager may reallow from the dealer manager fee up to 1.5% of our NAV per Common Share to any participating broker-dealer for marketing support. After the close of business on each business day, we will post the NAV per Common Share on our website at www.unitedrealtytrust.com. You may also obtain the daily determination of our NAV per Common Share by calling our toll-free, automated telephone line at (855) REIT-NAV. Commencing on the NAV pricing start date, any purchase orders that we receive prior to 4:00 p.m. Eastern time on a given business day will be executed at a price equal to our NAV per Common Share for that business day. Subscriptions that we receive after 4:00 p.m. Eastern time on a given business day or thereafter will be executed at a price equal to our NAV per Common Share as calculated by our advisor after the close of business on the next business day.

We will reimburse the dealer manager and any registered investment advisor or participating broker-dealer for reasonable bona fide due diligence expenses incurred by the dealer manager or such registered investment advisor or participating broker-dealer which are supported by a detailed itemized invoice. These due diligence reimbursements are not considered a part of the 10% underwriting compensation under FINRA Rule 2310(b)(4)(B)(vii) so long as they are included in a detailed and itemized invoice, although they are considered an organization and offering expense, and organization and offering expenses cannot exceed 15% of the offering proceeds.

The dealer manager does not intend to be a market maker and so will not execute trades for selling stockholders. Set forth below is a table indicating the estimated dealer manager compensation and expenses that will be paid in connection with the offering of Common Shares, assuming all Common Shares are sold prior to the NAV pricing start date.

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	Per Share		Total Maximum(1)
Primary offering:
Price to public	$	10.45	$	1,045,000,000
Dealer manager fee	$	0.31	$	31,000,000(2)
Selling commissions	$	0.73	$	73,000,000(2)
Net proceeds to United Realty Trust Incorporated (before expenses)	$	9.41	$	941,000,000	(2)
Distribution reinvestment program(3):
Price to public	$	10.00	$	200,000,000
Selling commissions		—		—
Dealer manager fee		—		—
Proceeds to United Realty Trust Incorporated	$	10.00	$	200,000,000

(1)

In addition to the amounts disclosed in this table, we agreed to award to certain other officers and associated persons of United Realty Securities, at no cost, the fully vested restricted shares and, subject to vesting restrictions, and further subject to the provisions of our stock incentive plan, the retention-based restricted shares and incentive restricted shares, that are disclosed under “Compensation Table—Awards Under Our Stock Incentive Plan.” Such restricted shares may not be sold, transferred, assigned or hypothecated until 180 days after the termination of our primary offering.

Our advisor also may provide to certain associated persons of United Realty Securities cash bonuses ranging from $1,000 to $5,000 based on the number of new soliciting dealers that any such United Realty Securities associated person recruits to join the selling group and for certain cash payments if United Realty Securities registered representatives meet certain sales levels.

The awards of restricted shares and the cash bonus awards described above may be deemed to be “underwriting compensation” by FINRA. As further discussed below, all amounts deemed to be “underwriting compensation” by FINRA will be subject to FINRA’s 10% cap.

(2)

The table assumes that the amounts of the selling commissions and dealer manager fee were and will be as disclosed herein for the life of this offering. However, the actual aggregate amounts of the selling commissions and dealer manager fee over the life of this offering will be lower than as set forth in this table, and the net proceeds (before expenses) higher, because prior to May 30, 2013, the amounts of the selling commissions and dealer manager fee were lower, as a percentage of the gross offering price of a Common Share, than the amounts described in this prospectus.

(3)

The table assumes a price under our DRIP of $10.00 per Common Share. Until the NAV pricing start date, Common Shares will be sold under our DRIP at a price of $10.00 per Common Share. Commencing on the NAV pricing start date, Common Shares will be sold under our DRIP at NAV per Common Share, which is an amount that may be higher or lower than $10.00 but that cannot be determined at this time. At no time will the offering price per Common Share under our DRIP be less than 95% of the fair market value per Common Share. No selling commissions or dealer manager fee are payable in connection with our DRIP.

We will not pay any selling commissions in connection with the sale of Common Shares to investors whose contracts for investment advisory and related brokerage services with their broker-dealer include a fixed or “wrap” fee feature. Investors may agree with their broker-dealer to reduce the amount of selling commissions payable with respect to the sale of their Common Shares down to zero if the investor (a) has engaged the services of a registered investment advisor or other financial advisor who will be paid compensation for investment advisory services or other financial or investment advice or (b) is investing through a bank trust account with respect to which the investor has delegated the decision-making authority for investments made through the account to a bank trust department. The net proceeds to us will not be affected by reducing the commissions payable in connection with such transaction. Neither our dealer manager nor its affiliates will directly or indirectly compensate any person engaged as an investment advisor or a bank trust department by a potential investor as an inducement for such investment advisor or bank trust department to advise favorably for an investment in our Common Shares.

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We or our affiliates also may provide permissible forms of non-cash compensation to registered representatives of our dealer manager and the participating broker-dealers, such as golf shirts, fruit baskets, cakes, chocolates, a bottle of wine, or tickets to a sporting event. In no event shall such items exceed an aggregate value of $100 per annum per participating salesperson, or be pre-conditioned on achievement of a sales target. The value of such items will be paid from the dealer manager fee and considered underwriting compensation subject to FINRA’s 10% cap pursuant to Rule 2310 in connection with this offering.

We have agreed to indemnify our dealer manager, and intend to indemnify participating broker-dealers and selected registered investment advisors, against certain liabilities arising under the Securities Act. However, the SEC takes the position that indemnification against liabilities arising under the Securities Act is against public policy and is unenforceable.

The compensation described above includes certain costs associated with the sale and distribution of our Common Shares that our sponsor may pay. We will not reimburse our sponsor for such payments. Nonetheless, such payments will be deemed to be “underwriting compensation” by FINRA. In accordance with the rules of FINRA, the table above sets forth the nature and estimated amount of all items that may be viewed as “underwriting compensation” by FINRA that are anticipated to be paid by us and our sponsor in connection with the offering. The amounts shown assume we sell all the Common Shares offered hereby and that all Common Shares are sold in our primary offering through participating broker-dealers, which is the distribution channel with the highest possible selling commissions and dealer manager fee.

It is illegal for us to pay or award any commissions or other compensation to any person engaged by you for investment advice as an inducement to such advisor to advise you to purchase our Common Shares; however, nothing herein will prohibit a registered broker-dealer or other properly licensed person from earning a selling commission in connection with a sale of the Common Shares.

To the extent necessary to comply with FINRA rules, we will provide, on an annual basis, a per share estimated value of our Common Shares, the method by which we developed such value and the date of the data we used to estimate such value.

In no event will the amount we pay to FINRA members exceed FINRA’s 10% cap pursuant to Rule 2310. All amounts deemed to be “underwriting compensation” by FINRA will be subject to FINRA’s 10% cap. Our dealer manager will repay to the company any excess amounts received over FINRA’s 10% cap if the offering is abruptly terminated after reaching the minimum amount, but before reaching the maximum amount, of offering proceeds.

If the offering is terminated, the dealer manager will be reimbursed only for its actual out-of-pocket expenses.

Common Shares Purchased by Affiliates, Friends, Institutional Investors and Participating Brokers

Our executive officers and directors, as well as officers and employees of our advisor and their family members (including spouses, parents, grandparents, children and siblings) or other affiliates, Friends and institutional investors, may purchase Common Shares. The offering price for such Common Shares will be (a) prior to the NAV pricing start date, $9.41 per Common Share, and (b) commencing on the NAV pricing start date, NAV per Common Share, in each case reflecting the fact that selling commissions and a dealer manager fee will not be payable in connection with such sales.

Additionally, participating broker-dealers, including their registered representatives and their immediate families, may purchase Common Shares, in the sole discretion of our dealer manager, at a purchase price that excludes the selling commission. Our dealer manager will not be permitted to purchase Common Shares.

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As used above and elsewhere in this prospectus, “Friends” means those individuals who have had longstanding business or personal relationships with our executive officers and directors. “Institutional investors” means institutional accredited investors as defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D promulgated under the Securities Act. The net offering proceeds we receive will not be affected by sales of Common Shares at a discount as set forth above. Our executive officers, directors and other affiliates, Friends, any institutional investors, and participating broker-dealers, including their registered representatives and their immediate families, who receive a discount will be expected to hold their Common Shares purchased as stockholders for investment and not with a view towards resale. In addition, Common Shares purchased by officers and employees of our advisor and their family members (including spouses, parents, grandparents, children and siblings) (each an “advisor affiliate”) will not be entitled to vote on any matter presented to the stockholders for a vote relating to the removal of our directors or United Realty Advisors LP as our advisor or any transaction between us and any of our directors, our advisor or any of their respective affiliates, and such Common Shares will be subject to a lock-up agreement among the purchaser, our advisor and us. Any Common Shares purchased by an advisor affiliate may not be sold by such advisor affiliate during the offering, or sold, transferred, assigned, pledged, or hypothecated, or be the subject of any hedging, short sale, derivative, put, or call transaction that would result in the effective economic disposition of the Common Shares by such advisor affiliate for a period of 180 days immediately following the date of effectiveness of or commencement of sales under this offering, except as provided in FINRA Rule 5110(g)(2). With the exception of the 18,182 Common Shares initially sold to United Realty Advisor Holdings LLC in connection with our organization, the 20,000 Common Shares that Mr. Frydman purchased for his own account in December 2012, and the Common Shares that our sponsor may receive upon conversion of its Sponsor Preferred Shares, no director, officer or advisor or any affiliate has owned or may own more than 9.8% in value or number of our outstanding Common Shares.

Volume Discounts

We will offer Common Shares with reduced selling commissions and, in some cases, reduced dealer manager fee, to “single purchasers” of Common Shares on orders exceeding $1,000,000. The reduced offering price will not affect the amount we receive for investment.

Prior to the NAV pricing start date, the offering price per Common Share set forth in the table below will apply to each Common Share within each volume range set forth in the table below.

Dollar Volume of Common Shares Purchased	Selling Commissions		Dealer Manager Fee		Offering Price Per Common Share to Investor
$2,612.50 to $1,000,000	$	0.73	$	0.31	$	10.45
$1,000,001 to $2,000,000	$	0.63	$	0.31	$	10.35
$2,000,001 to $3,000,000	$	0.53	$	0.31	$	10.25
$3,000,001 to $4,000,000	$	0.43	$	0.26	$	10.10
$4,000,001 to $9,999,999	$	0.33	$	0.21	$	9.95
$10,000,000 and above	$	0.23	$	0.21	$	9.85
	(as described below, subject to reduction)		(as described below, subject to reduction)		(as described below, subject to reduction)

Any reduction in the amount of the selling commissions and dealer manager fee in respect of volume discounts received will be credited to the investor in the form of additional Common Shares. Fractional Common Shares will be issued.

As an example, a single purchaser would receive 192,312.14 Common Shares for an investment of $2,000,000, the selling commission would be $130,726.02 and the dealer manager fee would be $59,616.76. The discount would be calculated as follows: the purchaser would acquire 95,693.78 Common Shares at a cost of $10.45 per Common Share and 96,618.36 Common Shares at a cost of $10.35 per Common Share and would pay selling commissions of $0.73 per Common Share and dealer manager fee of $0.31 per Common Share for 95,693.78 Common Shares and would pay selling commissions of $0.63 per Common Share and dealer manager fee of $0.31 per Common Share for 96,618.36 Common Shares. In no event will the proceeds to us be less than $9.41 per Common Share.

For purchases of $10,000,000 or more, in our sole discretion, selling commissions and dealer manager fee may be reduced to amounts lower than those set forth in the table above, but in no event will the proceeds to us be less than $9.41 per Common Share. Selling commissions and dealer manager fee paid will in all cases be the same for the same level of sales.

Commencing on the NAV pricing start date, the offering price per Common Share set forth in the table below will apply to each Common Share within each volume range set forth in the table below.

Dollar Volume of Common Shares Purchased	Selling Commissions	Dealer Manager Fee	Offering Price Per Common Share to Investor
2,873.75 (purchase price per Common Share assuming NAV per Common Share of $10.45) to $1,000,000	7.0% of NAV per Common Share	3.0% of NAV per Common Share	NAV per Common Share plus 10.0%
$1,000,001 to $2,000,000	6.0% of NAV per Common Share	3.0% of NAV per Common Share	NAV per Common Share plus 9.0%
$2,000,001 to $3,000,000	5.0% of NAV per Common Share	3.0% of NAV per Common Share	NAV per Common Share plus 8.0%
$3,000,001 to $4,000,000	4.0% of NAV per Common Share	2.0% of NAV per Common Share	NAV per Common Share plus 6.0%
$4,000,001 to $9,999,999	3.0% of NAV per Common Share	1.0% of NAV per Common Share	NAV per Common Share plus 4.0%
$10,000,000 and above	2.0% of NAV per Common Share (as described below, subject to reduction)	1.0% of NAV per Common Share (as described below, subject to reduction)	NAV per Common Share plus 3.0% (as described below, subject to reduction)

As an example, assuming an NAV per Common Share of $10.45, a single purchaser would receive 174,786.81 Common Shares for an investment of $2,000,000, the selling commission would be $118,682.23 and the dealer manager fee would be $54,795.67. The discount would be calculated as follows: the purchaser would acquire 86,994.35 Common Shares at a cost of $11.495 per Common Share and 87,792.46 Common Shares at a cost of $11.3905 per Common Share and would pay selling commissions of $0.7315 per Common Share and dealer manager fee of $0.3135 per Common Share for 86,994.35 Common Shares and would pay selling commissions of $0.627 per Common Share and dealer manager fee of $0.3135 per Common Share for 87,792.46 Common Shares. In no event will the proceeds to us be less than our NAV per Common Share.

For purchases of $10,000,000 or more, in our sole discretion, selling commissions and dealer manager fee may be reduced to amounts lower than those set forth in the table above, but in no event will the proceeds to us be less than our NAV per Common Share. Selling commissions and dealer manager fee paid will in all cases be the same for the same level of sales.

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If there is a sale of $10,000,000 or more with reduced selling commissions or a reduced dealer manager fee, we will supplement this prospectus to include: (a) the aggregate amount of the sale; (b) the total price per Common Share paid by the purchaser; and (c) a statement that other investors wishing to purchase at least the amount described in clause (a) above will pay no more per Common Share than the purchaser described in clause (b) above.

Orders may be combined for the purpose of determining the total selling commissions and dealer manager fee payable with respect to applications made by a “single purchaser,” so long as all the combined purchases are made through the same broker-dealer. The amount of total selling commissions and dealer manager fee thus computed will be apportioned pro rata among the individual orders on the basis of the respective amounts of the orders being combined. As used in this prospectus, the term “single purchaser” will include:

•

any person or entity, or persons or entities, acquiring shares as joint purchasers;

•

all profit-sharing, pension and other retirement trusts maintained by a given corporation, partnership or other entity;

•

all funds and foundations maintained by a given corporation, partnership or other entity;

•

all profit-sharing, pension and other retirement trusts and all funds or foundations over which a designated bank or other trustee, person or entity exercises discretionary authority with respect to an investment in our company; and

•

any person or entity, or persons or entities, acquiring shares that are clients of and are advised by a single investment adviser registered under the Investment Advisers Act of 1940.

If a single purchaser described in the last five categories above wishes to have its orders so combined, that purchaser will be required to request the treatment in writing, which request must set forth the basis for the discount and identify the orders to be combined. Any request will be subject to our verification that all the orders were made by a single purchaser.

Orders also may be combined for the purpose of determining the selling commissions and dealer manager fee payable in the case of orders by any purchaser described in any category above who, within 90 days of its initial purchase of Common Shares, orders additional Common Shares. In this event, the selling commissions and dealer manager fee payable with respect to the subsequent purchase of Common Shares will equal the selling commissions and dealer manager fee per Common Share which would have been payable in accordance with the schedule set forth above if all purchases had been made simultaneously. Purchases subsequent to this 90-day period will not qualify to be combined for a volume discount as described herein.

Unless investors indicate that orders are to be combined and provide all other requested information, we cannot be held responsible for failing to combine orders properly.

Purchases by entities not required to pay U.S. federal income tax may only be combined with purchases by other entities not required to pay U.S. federal income tax for purposes of computing amounts invested if investment decisions are made by the same person. If the investment decisions are made by an independent investment advisor, that investment advisor may not have any direct or indirect beneficial interest in any of the entities not required to pay U.S. federal income tax whose purchases are sought to be combined. You must mark the “Additional Investment” space on the subscription agreement signature page in order for purchases to be combined. We are not responsible for failing to combine purchases if you fail to mark the “Additional Investment” space.

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If the subscription agreements for the purchases to be combined are submitted at the same time, then the additional Common Shares to be credited to you as a result of such combined purchases will be credited on a pro rata basis. If the subscription agreements for the purchases to be combined are not submitted at the same time, then any additional Common Shares to be credited as a result of the combined purchases will be credited to the last component purchase, unless we are otherwise directed in writing at the time of the submission. However, the additional Common Shares to be credited to any entities not required to pay U.S. federal income tax whose purchases are combined for purposes of the volume discount will be credited only on a pro rata basis on the amount of the investment of each entity not required to pay U.S. federal income tax on their combined purchases.

California residents should be aware that volume discounts will not be available in connection with the sale of Common Shares made to California residents to the extent such discounts do not comply with the provisions of Rule 260.140.51 adopted pursuant to the California Corporate Securities Law of 1968. Pursuant to this rule, volume discounts can be made available to California residents only in accordance with the following conditions:

•

there can be no variance in the net proceeds to us from the sale of the Common Shares to different purchasers of the same offering;

•

all purchasers of the Common Shares must be informed of the availability of quantity discounts;

•

the same volume discounts must be allowed to all purchasers of Common Shares which are part of the offering;

•

the minimum amount of Common Shares as to which volume discounts are allowed cannot be less than $10,000;

•

the variance in the price of the Common Shares must result solely from a different range of commissions, and all discounts must be based on a uniform scale of commissions; and

•

no discounts are allowed to any group of purchasers.

Accordingly, volume discounts for California residents will be available in accordance with the foregoing table of uniform discount levels based on dollar volume of Common Shares purchased, but no discounts are allowed to any group of purchasers, and no subscriptions may be aggregated as part of a combined order for purposes of determining the number of Common Shares purchased.

Manner-of-Sale Discounts

We will offer Common Shares with reduced selling commissions to prospective investors who offer to purchase Common Shares via the Internet in response to a communication by us, by our dealer manager or by a participating broker-dealer that (a) is shown in print, on television or on the Internet, broadcasted on the radio or distributed through digital or social media; and (b) complies with Rule 134 under the Securities Act, including, to the extent applicable, Question 110.01 of the Securities Act Rules Compliance and Disclosure Interpretations; provided, that the participating broker-dealer receiving such offer to purchase has taken reasonable steps to verify that the prospective investor made such offer to purchase in response to such communication. "Reasonable steps" will include determining that the prospective investor has accessed a website containing, or "clicked through" a hyperlink to, an electronic copy of our prospectus, as supplemented to date, where such website address or hyperlink was provided in the communication. Prior to the NAV pricing start date, the offering price for such Common Shares will be $10.00, reflecting the fact that selling commissions will be $0.28 per Common Share, with a dealer manager fee in the amount of $0.31 per Common Share remaining payable in connection with such sales. Commencing on the NAV pricing start date, the offering price for such Common Shares will be our NAV per Common Share, plus selling commissions equal to 2.7% of our NAV per Common Share and a dealer manager fee equal to 3.0% of our NAV per Common Share. The reduced offering prices will not affect the amounts we receive for investment.

Subscription Process

To purchase Common Shares in this offering, you must complete and sign a subscription agreement, like the one contained in this prospectus as Appendix B. You should exercise care to ensure that the applicable subscription agreement is filled out correctly and completely.

By executing the subscription agreement, you will attest, among other things, that you:

•

have received the final prospectus;

•

accept the terms of our charter;

•

meet the minimum income and net worth requirements described in this prospectus;

•

are purchasing the Common Shares for your own account;

•

are purchasing the Common Shares for investment and not with a view towards resale (if you are among the categories of purchaser described above under “— Common Shares Purchased by Affiliates, Friends, Institutional Investors and Participating Broker-Dealers”);

•

acknowledge that the Common Shares are not liquid; and

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•

are in compliance with the USA PATRIOT Act and are not on any governmental authority watch list.

We include these representations in our subscription agreement in order to prevent persons who do not meet our suitability standards or other investment qualifications from subscribing to purchase our Common Shares.

Subscriptions will be effective only upon our acceptance, and we reserve the right to reject any subscription in whole or in part. We may not accept a subscription for Common Shares until at least five business days after the date you receive the final prospectus. Subject to compliance with Rule 15c2-4 of the Exchange Act, our dealer manager or the participating broker-dealers will promptly submit a subscriber’s check on the business day following receipt of the subscriber’s subscription documents and check. In certain circumstances where the suitability review procedures are more lengthy than customary, a subscriber’s check will be promptly deposited in compliance with Exchange Act Rule 15c2-4. The proceeds from your subscription will be deposited in a segregated escrow account and will be held in trust for your benefit, pending our acceptance of your subscription.

A sale of the Common Shares may not be completed until at least five business days after the subscriber receives our final prospectus as filed with the SEC pursuant to Rule 424(b) of the Securities Act. Within ten business days of our receipt of each completed subscription agreement, we will accept or reject the subscription. If we accept the subscription, we will mail a confirmation within three days. If for any reason we reject the subscription, we will promptly return the check and the subscription agreement, without interest (unless we reject your subscription because we fail to achieve the minimum offering) or deduction, within ten business days after rejecting it.

Investments by IRAs and Certain Qualified Plans

We may appoint one or more IRA custodians for investors in our Common Shares who desire to establish an IRA, SEP or certain other tax-deferred accounts or transfer or rollover existing accounts. We will provide the name(s) of any such additional IRA custodian(s) in a prospectus supplement. Our advisor may determine to pay the fees related to the establishment of investor accounts with such IRA custodians, and it also may pay the fees related to the maintenance of any such account for the first year following its establishment. Thereafter, we expect the IRA custodian(s) to provide this service to our stockholders with annual maintenance fees charged at a discounted rate. In the future, we may make similar arrangements for our investors with other custodians. Further information as to custodial services is available through your broker or may be requested from us.

Suitability Standards

Our sponsor, those selling Common Shares on our behalf and any participating broker-dealers and registered investment advisors recommending the purchase of Common Shares in this offering have the responsibility to make every reasonable effort to determine that your purchase of Common Shares in this offering is a suitable and appropriate investment for you based on information provided by you regarding your financial situation and investment objectives. In making this determination, these persons have the responsibility to ascertain that you:

	•	meet the minimum income and net worth standards set forth under “Investor Suitability Standards” immediately following the cover page of this prospectus;
	•	can reasonably benefit from an investment in our Common Shares based on your overall investment objectives and portfolio structure;
	•	are able to bear the economic risk of the investment based on your overall financial situation;
	•	are in a financial position appropriate to enable you to realize to a significant extent the benefits described in this prospectus of an investment in our Common Shares; and
	•	have apparent understanding of:
	•	the fundamental risks of the investment;

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•

the risk that you may lose your entire investment;

•

the lack of liquidity of our Common Shares;

•

the restrictions on transferability of our Common Shares;

•

the background and qualifications of our sponsor and its affiliates; and

•

the tax consequences of your investment.

Relevant information for this purpose will include at least your age, investment objectives, investment experience, income, net worth, financial situation and other investments as well as any other pertinent factors. Our sponsor, those selling Common Shares on our behalf and any participating broker-dealers and registered investment advisors recommending the purchase of Common Shares in this offering must maintain, for a six-year period, records of the information used to determine that an investment in Common Shares is suitable and appropriate for you.

Until our Common Shares are listed on a national securities exchange, subsequent purchasers, i.e., potential purchasers of your Common Shares, also must meet the net worth or income standards.

Minimum Purchase Requirements

You must initially purchase at least 250 Common Shares (prior to the NAV pricing start date, $2,612.50) to be eligible to participate in this offering. In order to satisfy this minimum purchase requirement, unless otherwise prohibited by state law, a husband and wife may jointly contribute funds from their separate IRAs; provided, that each such contribution is made in increments of $100. You should note that an investment in our Common Shares will not, in itself, create a retirement plan and that, in order to create a retirement plan, you must comply with all applicable provisions of ERISA or the Code, as applicable.

If you have satisfied the applicable minimum purchase requirement, any additional purchase must be in amounts of at least $100. The investment minimum for subsequent purchases does not apply to Common Shares purchased pursuant to our DRIP.

Unless you are transferring all your Common Shares, you may not transfer your Common Shares in a manner that causes you or your transferee to own fewer than the number of Common Shares required to meet the minimum purchase requirements, except for the following transfers without consideration: transfers by gift, transfers by inheritance, intrafamily transfers, family dissolutions, transfers to affiliates and transfers by operation of law. These minimum purchase requirements are applicable until our Common Shares are listed on a national securities exchange, and these requirements may make it more difficult for you to sell your Common Shares. We cannot assure that our Common Shares will ever be listed on a national securities exchange.

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SUPPLEMENTAL SALES MATERIAL

In addition to the prospectus, we are using supplemental sales material in connection with the offering of the Common Shares, although only when accompanied by or preceded by the delivery of the prospectus. The supplemental sales material does not contain all the information material to an investment decision and should only be reviewed after reading the prospectus. The sales material currently or anticipated to be used in permitted jurisdictions includes:

•

investor sales promotion brochures;

•

cover letters transmitting the prospectus;

•

brochures containing a summary description of the offering;

•

fact sheets describing the general nature of United Realty Trust Incorporated and our investment objectives;

•

asset flyers describing our recent acquisitions;

•

broker updates;

•

online investor presentations;

•

online banners and click-throughs;

•

website material;

•

electronic media presentations; and

•

client seminars and seminar advertisements and invitations.

All of the foregoing material is prepared by our advisor or its affiliates with the exception of third-party article reprints. In certain jurisdictions, some of or all such sales material may not be available. In addition, the sales material may contain certain quotes from various publications without obtaining the consent of the author or the publication for use of the quoted material in the sales material.

We are offering Common Shares only by means of the prospectus. Although the information contained in our supplemental sales materials will not conflict with any of the information contained in the prospectus, the supplemental materials do not purport to be complete and should not be considered a part of or as incorporated by reference in the prospectus, or the registration statement of which this prospectus is a part.

LEGAL MATTERS

The validity of the Common Shares being offered hereby has been passed upon for us by Venable LLP, Baltimore, Maryland. Proskauer Rose LLP, New York, New York, has reviewed the statements relating to certain U.S. federal income tax matters that are likely to be material to U.S. holders of our Common Shares under the caption “Material U.S. Federal Income Tax Considerations,” has passed upon our qualification as a REIT and has served as counsel for our advisor and certain of its affiliates. Neither Venable LLP nor Proskauer Rose LLP purports to represent our stockholders or potential investors, who should consult their own counsel.

EXPERTS

The consolidated financial statements of United Realty Trust Incorporated appearing in United Realty Trust Incorporated’s Annual Report on Form 10-K for the year ended December 31, 2013 (including schedules appearing therein), have been audited by Ernst & Young LLP, independent registered public accounting firm, as set forth in their report thereon, included therein, and incorporated herein by reference. Such consolidated financial statements are incorporated herein by reference in reliance upon such report given on the authority of such firm as experts in accounting and auditing.

INCORPORATION OF CERTAIN INFORMATION BY REFERENCE

We have elected to incorporate by reference certain information into this prospectus. By incorporating by reference, we are disclosing important information to you by referring you to documents we have filed separately with the SEC. The information incorporated by reference is deemed to be part of this prospectus. Any statement in a document incorporated by reference into this prospectus will be deemed to be modified or superseded to the extent a statement contained in this prospectus, any prospectus supplement or any other subsequently filed prospectus modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this prospectus, as supplemented, or the registration statement of which this prospectus, as supplemented, is a part.

You may read and copy any document we have electronically filed with the SEC at the SEC’s public reference room in Washington, D.C. at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information about the operation of the public reference room. In addition, any document we have electronically filed with the SEC is available at no cost to the public over the Internet at the SEC’s website at www.sec.gov. You can also access documents that are incorporated by reference into this prospectus at our website, www.unitedrealtytrust.com.

The following documents filed with the SEC are incorporated by reference in this prospectus, except for any document or portion thereof deemed to be furnished and not filed in accordance with SEC rules:

•

Annual Report on Form 10-K for the fiscal year ended December 31, 2013, filed with the SEC on March 31, 2014;

•

Preliminary Proxy Statement on Schedule 14A filed with the SEC on April 18, 2014; and

•

Definitive Proxy Statement on Schedule 14A filed with the SEC on April 30, 2014.

We will provide to each person, including any beneficial owner, to whom this prospectus is delivered, a copy of any or all of the information that we have incorporated by reference into this prospectus but not delivered with this prospectus. To receive a free copy of any of the reports or documents incorporated by reference in this prospectus, other than exhibits, unless they are specifically incorporated by reference in those documents, write or call us at 60 Broad Street, 34th Floor, New York, NY 10004, (212) 388-6800. The information relating to us contained in this prospectus does not purport to be comprehensive and should be read together with the information contained in the documents incorporated or deemed to be incorporated by reference in this prospectus.

WHERE YOU CAN FIND MORE INFORMATION

We have filed a registration statement on Form S-11 with the SEC with respect to the Common Shares to be issued in this offering. This prospectus is a part of that registration statement and, as permitted by SEC rules, does not include all the information you can find in the registration statement or the exhibits to the registration statement. For additional information relating to us, we refer you to the registration statement and the exhibits to the registration statement. Statements contained in this prospectus as to the contents of any contract or document are necessarily summaries of such contract or document and in each instance, if we have filed the contract or document as an exhibit to the registration statement, we refer you to the copy of the contract or document filed as an exhibit to the registration statement.

We file annual, quarterly and current reports, proxy statements and other information with the SEC. We will furnish our stockholders with annual reports containing consolidated financial statements certified by an independent registered public accounting firm. The registration statement and all these filings are available to the public over the Internet at the SEC’s website at www.sec.gov. You may read and copy any filed document at the SEC’s public reference room in Washington, D.C. at 100 F Street, N.E., Room 1580, Washington, D.C. Please call the SEC at (800) SEC-0330 for further information about the public reference room.

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APPENDIX A

PRIOR PERFORMANCE TABLES

The following provides information relating to real estate investments sponsored by Mr. Frydman or his affiliates during the five years ended December 31, 2012. The tables below provide information about properties to which third parties contributed capital, or in which Mr. Frydman invested for his own account.

The prior programs of the principal of our sponsor were similar to our program in that they invested in some of the same property types (including residential, retail and office) and their investors had limited ability to withdraw their investments. The investment objectives of the prior programs, which were capital appreciation with a secondary objective of income, were similar to those of our second strategy, but differed from those of our first strategy, which are stable cash distributions, preservation of capital contributions, portfolio diversification, growth in the value of our assets upon their sale and the potential for future liquidity. The non-public programs of Mr. Frydman also differed from us in that: (i) a substantial portion of their returns came from refinancing and sales proceeds; (ii) they used more leverage than we intend to; (iii) their property-owning entities generally did not pay any acquisition fees, asset management fees or other fees, which we do pay; (iv) in some cases the properties were leased to affiliates of the property-owning entities; (v) the operational documents of the property-owning entities generally did not contain the prohibitions on self-dealing and the operational and investment limitations that apply to us; and (vi) they generally took approximately one to six months to raise capital from third parties, in contrast to our multi-year offering period.

With respect to Mr. Frydman’s prior non-program transactions, generally, each transaction involved non-passive investors, in contrast to our structure, where stockholders are passive (subject to the rights granted to them by our organizational documents and Maryland law). However, in each prior non-program transaction, Mr. Frydman’s approval was a prerequisite to acquiring, operating or disposing of assets, and no non-passive investor was able to act independently of such approval, although non-passive investors’ consent would, in certain cases, be necessary in order for Mr. Frydman to make certain major decisions.

These tables provide information for use in evaluating the properties in which Mr. Frydman and his affiliates invested, the results of the operations of the properties, and compensation paid by his programs. The tables are furnished solely to provide prospective investors with information concerning the past performance of Mr. Frydman and his affiliates that raised capital from third parties. Information in the tables is current as of December 31, 2012. Investors are strongly encouraged to carefully review the section of this prospectus captioned “Prior Performance of Affiliates of Our Sponsor — Recent Adverse Business Developments” for a description of the adverse developments that have occurred over the past 10 years. These adverse business developments may not be reflected in the tabular information contained in this prospectus.

The non-public programs and non-program properties presented in Table III are presented on a GAAP basis, unless otherwise noted.

Prospective investors should read these tables carefully together with the summary information concerning the prior programs as set forth in “Prior Performance of Affiliates of Our Sponsor” elsewhere in this Prospectus.

A-1

INVESTORS IN UNITED REALTY TRUST INCORPORATED WILL NOT OWN ANY INTEREST IN THE PRIOR PROGRAM PROPERTIES AND SHOULD NOT ASSUME THAT THEY WILL EXPERIENCE RETURNS, IF ANY, COMPARABLE TO THOSE EXPERIENCED BY INVESTORS IN SUCH PRIOR PROGRAMS.

Additional information about these tables can be obtained by calling us at (212) 388-6800.

The following tables use certain financial terms. The following paragraphs briefly describe the meanings of these terms:

•

“Acquisition Costs” means fees related to the purchase of property, cash down payments, acquisition fees, and legal and other costs related to property acquisitions

•

“GAAP” refers to “Generally Accepted Accounting Principles” in the United States.

•

“Recapture” means the portion of taxable income from property sales or other dispositions that is taxed as ordinary income.

•

“Reserves” refers to offering proceeds designated for repairs and renovations to properties and offering proceeds not committed for expenditure and held for potential unforeseen cash requirements.

•

“Return of Capital” refers to distributions to investors in excess of net income.

A-2

TABLE I

EXPERIENCE IN RAISING AND INVESTING FUNDS FOR NON-PUBLIC PROGRAM PROPERTIES

NOT APPLICABLE

A-3

TABLE II

COMPENSATION FROM NON-PUBLIC PROGRAM PROPERTIES

NOT APPLICABLE

A-4

TABLE IV

RESULTS OF COMPLETED NON-PUBLIC PROGRAMS

Table IV summarizes information for Non-Public Program properties which have completed operations (no longer held properties) during the period January 1, 2010 to December 31, 2013. As outlined in the preceding narrative, Mr. Frydman's investment objectives seek capital appreciation with a secondary objective of income, with a different investment methodology than ours.

Property	University Place 385 McDonald Avenue Brooklyn, NY		442 Civic Center Dr Augusta, ME		Forest Oaks - Mount Airy, NC

Date of Closing of Offering	9/7/2005		3/7/2007		2/6/2006

Duration of Offering (months)	52		64.5		92

Dollar Amount Raised	$	675,515	$	2,124,000	$	2,190,285

Annualized Return (1)	11.32%		-3.35%		-0.61%

Median Annual Leverage	98.60%		75.01%		72.65%

Aggregate compensation paid or reimbursed to sponsor or its affiliates	$	900,000	$	111,962	$	1,144,305


(1) Annualized return on capital is calculated as (a) the difference bewteen the aggregate amounts distributed to investors and the total amount invested by investors divided by (b) the total amount invested by investors multiplied by the number of years held.

A-5

TABLE V

SALES OR DISPOSALS OF NON-PUBLIC PROGRAM PROPERTIES

Table V provides summary information on the results of sales or disposals of Non-Public Program properties during the period January 1, 2010 to December 31, 2013. As outlined in the preceding narrative, Mr. Frydman's investment objectives seek capital appreciation with a secondary objective of income, with a different investment methodology than that of ours.

					Selling Price, Net of Closing Costs and GAAP Adjustments								Cost of Properties, Including Closing and Soft Costs
Property	Date Acquired		Date of Sale		Cash Received, Net of Closing Costs		Mortgage Balance at Time of Sale		Purchase Money Mortgage Taken Back by Program	Adjustments Resulting from Application of GAAP	Total		Original Mortgage Financing		Total Acquisition Cost, Capital Improvement Closing and Soft Costs		Total		Excess (Deficiency) of Property Operating Cash Receipts Over Cash Expenditures
University Place 385 McDonald Avenue, Brooklyn, NY		9/7/2005		1/6/2010	$	1,006,660.00	$	13,017,017.57			$	14,023,677.57	$	12,000,000.00	$	675,515.03	$	12,675,515.03	$	331,144.97
442 Civic Center Dr, Augusta, ME		3/7/2007		7/26/2012	$	—	$	6,943,156.55			$	6,943,156.55	$	7,200,000.00	$	1,555,000.00	$	8,755,000.00	$	(383,084.00	)
Forest Oaks - Mount Airy, NC		2/6/2006		10/2/2013	$	1,588,440.27	$	5,906,958.63			$	7,495,398.90	$	6,756,490.00	$	1,959,390.00	$	8,715,880.00	$	(370,949.73	)

A-6

APPENDIX B

FORM OF SUBSCRIPTION AGREEMENT

B-1

B-2

B-3

B-4

B-5

B-6

B-7

APPENDIX C

DISTRIBUTION REINVESTMENT PROGRAM

C-1

DISTRIBUTION REINVESTMENT PROGRAM

Effective June 1, 2014

United Realty Trust Incorporated, a Maryland corporation (the “Company”), has adopted a distribution reinvestment program (the “DRIP”), the terms and conditions of which are set forth below.

1. Number of Common Shares Issuable. The number of shares of the Company’s common stock, par value $0.01 per share (“Common Shares”), authorized for issuance under the DRIP is 20,000,000; provided, however, that the Company reserves the right to increase or decrease such number by reallocating Common Shares from the Company’s initial public offering to the DRIP or from the DRIP to the Company’s initial public offering, respectively.

2. Participants. A “Participant” is a holder of Common Shares (“Stockholder”) electing to participate in the DRIP; provided, however, that the Company may elect to deny any such Stockholder participation in the DRIP if such Stockholder resides in a jurisdiction or foreign country where, in the Company’s judgment, the burden or expense of compliance with applicable securities laws makes such Stockholder’s participation impracticable or inadvisable; and provided, further, that a Participant must cease participation in the DRIP at such time as he, she or it no longer meets the suitability standards (as described in the section titled “Investor Suitability Standards” in the Company’s prospectus to be used in connection with the public offering and sale of the Common Shares (the “Prospectus”)) or cannot make the other investor representations set forth in the then-current Prospectus or in the then-current subscription agreement (the “Subscription Agreement”); and provided, further, that a Participant must notify the Company promptly when he, she or it no longer meets these standards.

3. Distribution Reinvestment. The Company will apply that portion (as designated by a Participant) of the dividends and other distributions (“Distributions”) declared and paid in respect of a Participant’s Common Shares to the purchase of additional Common Shares for such Participant. Such Common Shares will be sold through the dealer manager or participating broker-dealer through whom the Company sold the underlying Common Shares to which the Distributions relate unless the Participant makes a new election through a different distribution channel. The Company will not pay selling commissions or dealer manager fee on Common Shares sold under the DRIP. The purchase of fractional Common Shares is a permissible and likely result of the reinvestment of Distributions under the DRIP.

4. Procedures for Participation. A Stockholder may elect to become a Participant by completing and executing the Subscription Agreement or other Company-approved enrollment form available from the dealer manager or a participating broker-dealer. Participation in the DRIP will begin with the next Distribution made after receipt of a Participant’s enrollment form. A Participant can choose to have all or a portion of his, her or its Distributions reinvested through the DRIP. A Participant also may change the percentage of the Distributions that will be reinvested at any time by completing a new enrollment form or other form provided for that purpose. A Participant must make any election to increase his, her or its level of participation through the Participant’s participating broker-dealer or the dealer manager. Common Shares will be purchased under the DRIP promptly after the date of each Distribution.

5. Purchase Price of Common Shares Under the DRIP. Until the NAV Pricing Start Date (as defined below), Participants will acquire Common Shares under the DRIP at a price of $10.00 per Common Share. After the NAV Pricing Start Date, Participants will acquire Common Shares under the DRIP at a price equal to the Company’s net asset value (“NAV”) per Common Share, as estimated by United Realty Advisors LP, a Delaware limited partnership and an affiliate of the Company (the “Advisor”) or other firm chosen by the board of directors of the Company (the “Board of Directors”) for that purpose. The NAV Pricing Start Date will take place upon the earliest to occur of: (a) the Company investing in assets with an aggregate cost, including the Company’s pro rata share (direct or indirect) of debt attributable to such assets, in excess of $1 billion; (b) the Company raising net offering proceeds of in excess of $650 million in the Company’s initial public offering; (c) the Advisor's determination, subject to oversight by the Board of Directors, based in part on an appraisal of the Company's properties by the Company's independent valuer in accordance with the valuation guidelines established by the Board of Directors, that the NAV per Common Share is greater than $10.45; and (d) the date that is 29 months following the commencement of the Company’s initial public offering.

C-2

6. Taxation of Distributions. The reinvestment of Distributions in the DRIP does not relieve Participants of any taxes that may be payable as a result of such Distributions and their reinvestment pursuant to the terms of the DRIP. Until the NAV Pricing Start Date, the Company expects that the Advisor will estimate the fair market value of a Common Share to be $10.45. Therefore, until the NAV Pricing Start Date, Participants will be treated as having received a Distribution of $10.45 for each $10.00 reinvested by them under the DRIP. After the NAV Pricing Start Date, the offering price per Common Share under the DRIP will be equal to the NAV per Common Share, which is intended to equal the fair market value of a Common Share. At no time will the offering price per Common Share under the DRIP be less than 95% of the fair market value per Common Share.

7. Share Certificates. The Common Shares issuable under the DRIP shall be uncertificated unless and until the Board of Directors determines otherwise.

8. Voting of DRIP Common Shares. In connection with any matter requiring the vote of Stockholders, each Participant will be entitled to vote all Common Shares, including fractional Common Shares, acquired through the DRIP.

9. Reports. The Company shall provide each Participant or such Participant’s designee with a confirmation of such Participant’s purchases under the DRIP no less than quarterly. The Participant’s confirmation will disclose the following information: (i) each Distribution reinvested for the Participant’s account during the period; (ii) the date of each reinvestment; (iii) the number and price of the Common Shares purchased by the Participant; and (iv) the total number of Common Shares in the Participant’s account. In addition, within 90 days after the end of each calendar year, the Company shall provide each Participant with an individualized report on the Participant’s investment, including the purchase dates, purchase prices, number of Common Shares owned and the amount of Distributions made to such Participant in the prior year. The Company also shall provide to all Participants, without charge, all supplements to and updated versions of the Prospectus, to the extent required under applicable securities laws. The Company also shall provide such information as is reasonably requested by the dealer manager or a participating broker-dealer in order for the dealer manager or participating broker-dealer to meet its obligations to deliver written notification to Participants of the information required by Rule 10b-10(b) promulgated under the Securities Exchange Act of 1934, as amended.

10. Termination by Participant. Once enrolled, a Participant may continue to purchase Common Shares under the DRIP until the Company has sold all the Common Shares registered in the initial public offering, has terminated the initial public offering or has terminated the DRIP. A Participant may terminate participation in the DRIP at any time by delivering to the Company a written notice. To be effective with respect to a particular Distribution, such notice must have been received by the Company at least 10 business days prior to the last day of the fiscal period to which such Distribution relates. Any transfer of a Participant’s Common Shares will effect a termination of the participation of those Common Shares in the DRIP. The Company will terminate a Participant’s participation in the DRIP to the extent that a reinvestment of the Participant’s Distributions would cause the Participant to violate the ownership limits contained in the Company’s charter, unless the Participant has obtained an exemption from the ownership limits from the Board of Directors.

11. Amendment, Suspension or Termination of DRIP by the Company. The Company may amend, suspend or terminate the DRIP for any reason at any time upon 10 days’ written notice to the Participants. The Company may provide notice (a) in a current report on Form 8-K or in the Company’s annual or quarterly reports, all publicly filed with the Securities and Exchange Commission, or (b) in a separate mailing to the Participants.

12. Liability of the Company. The Company shall not be liable for any act done in good faith, or for any good faith omission to act.

13. Governing Law. The DRIP shall be governed by the laws of the State of Maryland.

C-3

United Realty Trust Incorporated

Maximum Offering of
100,000,000 Common Shares

PROSPECTUS

April 30, 2014

We have not authorized any dealer, salesperson or other individual to give any information or to make any representations that are not contained in this prospectus. If any such information or statements are given or made, you should not rely upon such information or representation. This prospectus does not constitute an offer to sell any securities other than those to which this prospectus relates, or an offer to sell, or a solicitation of an offer to buy, to any person in any jurisdiction where such an offer or solicitation would be unlawful. This prospectus speaks as of the date set forth above. You should not assume that the delivery of this prospectus or that any sale made pursuant to this prospectus implies that the information contained in this prospectus will remain fully accurate and correct as of any time subsequent to the date of this prospectus.

Our shares are not FDIC-insured, may lose value and are not bank guaranteed. See “Risk Factors,” beginning on page 32, to read about risks you should consider before buying our Common Shares.

	Maximum Offering (Not Including DRIP)
	Amount		Percent
Total offering price paid by investors	$	1,045,000,000		100.00	%
Less offering expenses:
Selling commissions and dealer manager fee(1)	$	104,000,000		9.95	%
Organization and offering expenses(2)	$	20,900,000		2.00	%
Amount available for investment or distribution	$	920,100,000		88.05	%
Acquisition:
Acquisition fees	$	9,201,000		0.88	%
Acquisition expenses	$	5,520,600		0.53	%
Amount invested in assets(3)	$	905,378,400		86.64	%

	Maximum Offering (Not Including DRIP)(1)
	Amount		Percent
Total offering price paid by investors	$	1,045,000,000		100.00	%

Less offering expenses:
Selling commissions and dealer manager fee(2)	$	104,000,000		9.95	%
Organization and offering expenses(3)	$	20,900,000		2.00	%
Amount available for investment or distribution(4)	$	920,100,000		88.05	%

Acquisition:
Acquisition fees(5)	$	9,201,000		0.88	%
Acquisition expenses(6)	$	5,520,600		0.53	%
Amount invested in assets(7)	$	905,378,400		86.64	%

	Price to Public(1)			Selling Commissions			Dealer Manager Fee			Net Proceeds (Before Expenses)
Primary Offering
Per Common Share	$	10.45	*	$	0.73	*	$	0.31	*	$	9.41
Total Maximum(2)	$	1,045,000,000	*	$	73,000,000	*	$	31,000,000	*	$	941,000,000
Distribution Reinvestment Program(3)
Per Common Share	$	10.00		$	0.00		$	0.00		$	10.00
Total Maximum	$	200,000,000		$	0.00		$	0.00		$	200,000,000

	(1)	The purchase price shown will apply until the NAV pricing start date. Commencing with the NAV pricing start date, we will offer Common Shares on our primary offering at our NAV per Common Share, plus applicable selling commissions and dealer manager fees.
	(2)	The table assumes that the amounts of the selling commissions and dealer manager fee were and will be, for the life of this offering, as disclosed herein with respect to the pre-NAV pricing start date commission structure. However, the actual aggregate amounts of the selling commissions and dealer manager fee over the life of this offering, assuming a pre-NAV pricing start date commission structure, will be lower than as set forth in this table, and the net proceeds (before expenses) higher, because prior to May 30, 2013, the amounts of the selling commissions and dealer manager fee were lower, as a percentage of the gross offering price of a Common Share, than the amounts described in this prospectus with respect to the pre-NAV pricing start date commission structure.

		Page
INVESTOR SUITABILITY STANDARDS		i
PROSPECTUS SUMMARY		1
RISK FACTORS		32
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS		83
ESTIMATED USE OF PROCEEDS		84
MANAGEMENT		87
COMPENSATION TABLE		104
STOCK OWNERSHIP		120
CONFLICTS OF INTEREST		121
INVESTMENT OBJECTIVES AND CRITERIA		130
DESCRIPTION OF REAL ESTATE INVESTMENTS		146
VALUATION POLICIES		150
SELECTED FINANCIAL DATA		156
PRIOR PERFORMANCE SUMMARY		157
MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS		163
ERISA CONSIDERATIONS		184
DESCRIPTION OF SHARES		190
SHARE REPURCHASE PROGRAM		203
SUMMARY OF OUR OPERATING PARTNERSHIP AGREEMENT		206
PLAN OF DISTRIBUTION		212
SUPPLEMENTAL SALES MATERIAL		221
LEGAL MATTERS		221
EXPERTS		221
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE		221
WHERE YOU CAN FIND MORE INFORMATION		221
Appendix A Prior Performance Tables		A-1
Appendix B Form of Subscription Agreement		B-1
Appendix C Distribution Reinvestment Program		C-1
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS		II-1

	(3)	Certain passive investors with limited voting rights who are not affiliated with our sponsor directly hold approximately 33% and 7% of the economic interests in URTI GP, LLC and United Realty Advisors LP, respectively. Jacob Frydman indirectly holds approximately 67% of the economic interests in URTI GP, LLC. Mr. Frydman indirectly holds a 100% interest in our sponsor and an approximately 55% indirect interest in our advisor.
	(4)	A division of Cabot Lodge Securities, LLC.

Name	Age*	Positions
Jacob Frydman	56	Chief Executive Officer, Secretary and Chairman of the Board of Directors
Richard J. Vitale, CFA	46	President and Director
Joseph LoParrino	46	Chief Accounting Officer and Treasurer
Dr. Daniel Z. Aronzon	66	Independent Director
Robert Levine	64	Independent Director
David B. Newman	53	Independent Director