424B3 1 v381115_424b3.htm 424B3

Filed pursuant to Rule 424(b)(3)
Registration No. 333-190698

AMERICAN REALTY CAPITAL HOSPITALITY TRUST, INC.
SUPPLEMENT NO. 2, DATED JUNE 19, 2014,
TO THE PROSPECTUS, DATED JANUARY 7, 2014

This prospectus supplement, or this Supplement No. 2, is part of the prospectus of American Realty Capital Hospitality Trust, Inc., or the Company, dated January 7, 2014, or the Prospectus, as supplemented by Supplement No. 1, dated March 5, 2014, or Supplement No. 1. This Supplement No. 2 supplements, modifies, supersedes and replaces certain information contained in the Prospectus and Supplement No. 1 and should be read in conjunction with the Prospectus and Supplement No. 1. This Supplement No. 2 will be delivered with the Prospectus and Supplement No. 1. Unless the context suggests otherwise, the terms “we,” “us” and “our” used herein refer to the Company, together with its consolidated subsidiaries.

The purposes of this Supplement No. 2 are to:

disclose operating information including the status of the offering, management updates and the shares currently available for sale;
update disclosure relating to investor suitability standards;
update disclosure relating to risk factors;
update disclosure relating to the macroeconomic environment and the industry overview;
update disclosure relating to management in light of recent changes;
update disclosure relating to our real estate investments;
update disclosure relating to our financial obligations;
update policies relating to money market investments;
update disclosure relating to experts;
update our prior performance information;
replace Appendix A — Prior Performance Tables;
replace Appendix C-1 — Subscription Agreement and Appendix C-2 — Multi-Offering Subscription Agreement;
attach an unaudited pro forma condensed consolidated balance sheet as of March 31, 2014 and an unaudited pro forma condensed consolidated statement of operations for the three months ended March 31, 2014 and for the year ended December 31, 2013 as Annex A;
attach the unaudited condensed consolidated financial statements of W2007 Grace I, LLC as of March 31, 2014 and December 31, 2013 and for the three months ended March 31, 2014 and 2013 as Annex B;
attach the consolidated financial statements of W2007 Grace I, LLC as of December 31, 2013 and 2012 and for the years ended December 31, 2013, 2012 and 2011 as Annex C;
attach our Quarterly Report on Form 10-Q for the period ended March 31, 2014 as Annex D;
attach our Annual Report on Form 10-K for the year ended December 31, 2013 as Annex E.

This prospectus supplement contains “forward-looking statements” (as defined in Section 21E of the Securities Exchange Act of 1934, as amended), which reflect our expectations regarding future events. Except for historical information, the matters discussed in this prospectus supplement are forward-looking statements subject to certain risks and uncertainties. Actual results could differ materially from our projections. Factors that may contribute to these differences include, but are not limited to, the following: whether and when the transaction contemplated by the Agreement (defined below) will be consummated; unexpected costs or unexpected liabilities that may arise from the transaction described in the Agreement, whether or not consummated; market and other expectations, objectives, intentions and other statements that are not historical facts; the inability to retain key personnel; the effects of economic conditions and disruptions in financial

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markets upon business and leisure travel and the hotel markets in which we invest; our liquidity and refinancing demands; our ability to obtain, refinance or extend maturing debt; our ability to maintain compliance with covenants contained in our debt facilities; increases in interest rates and operating costs, including insurance premiums and real property taxes; changes in real estate and zoning laws or regulations; and future regulatory or legislative actions that could adversely affect us.

Additional risks are discussed below and in our filings with the Securities and Exchange Commission, including those appearing under the heading “Item 1A. Risk Factors” in our most recent Annual Report on Form 10-K and any subsequent Quarterly Report on Form 10-Q. Although we believe the expectations reflected in such forward-looking statements are based on reasonable assumptions, there can be no assurance that our expectations will be attained. The forward-looking statements are made as of the date of this prospectus supplement and we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law.

“Hampton Inn,” “Hampton Hotels,” “Homewood Suites,” “Embassy Suites” and “Hilton Garden Inn” are each a registered trademark of Hilton Worldwide or one of its affiliates. All references below to “Hilton” mean Hilton Worldwide and all of its affiliates and subsidiaries, and their respective officers, directors, agents, employees, accountants and attorneys. Hilton is not responsible for the content of this prospectus supplement, whether relating to hotel information, operating information, financial information, Hilton’s relationship with the Company or its affiliates, or otherwise. Hilton is not involved in any way, whether as an “issuer” or “underwriter” or otherwise, in the offering by the Company and receives no proceeds from the offering. Hilton has not expressed any approval or disapproval regarding this prospectus supplement or the offering related to this prospectus supplement, and the grant by Hilton of any franchise or other rights to the Company or its affiliates shall not be construed as any expression of approval or disapproval. Hilton has not assumed, and shall not have, any liability in connection with this prospectus supplement or the offering related to this prospectus supplement.

“Courtyard by Marriott,” “Fairfield Inn,” “Fairfield Inn & Suites,” “TownePlace Suites,” “Marriott,” “SpringHill Suites” and “Residence Inn” are each a registered trademark of Marriott International, Inc. or one of its affiliates. All references below to “Marriott” mean Marriott International, Inc. and all of its affiliates and subsidiaries, and their respective officers, directors, agents, employees, accountants and attorneys. Marriott is not responsible for the content of this prospectus supplement, whether relating to hotel information, operating information, financial information, Marriott’s relationship with the Company and its affiliates or otherwise. Marriott is not involved in any way, whether as an “issuer” or “underwriter” or otherwise, in the offering by the Company and receives no proceeds from the offering. Marriott has not expressed any approval or disapproval regarding this prospectus supplement or the offering related to this prospectus supplement, and the grant by Marriott of any franchise or other rights to the Company shall not be construed as any expression of approval or disapproval. Marriott has not assumed, and shall not have, any liability in connection with this prospectus supplement or the offering related to this prospectus supplement.

“Hyatt,” “Hyatt House” and “Hyatt Place” are each a registered trademark of Hyatt Hotels Corporation or one of its affiliates. All references below to “Hyatt” mean Hyatt Hotels Corporation and all of its affiliates and subsidiaries, and their respective officers, directors, agents, employees, accountants and attorneys. Hyatt is not responsible for the content of this prospectus supplement, whether relating to hotel information, operating information, financial information, Hyatt’s relationship with the Company or its affiliates, or otherwise. Hyatt is not involved in any way, whether as an “issuer” or “underwriter” or otherwise, in the offering by the Company and receives no proceeds from the offering. Hyatt has not expressed any approval or disapproval regarding this prospectus supplement or the offering related to this prospectus supplement, and the grant by Hyatt of any franchise or other rights to the Company or its affiliates shall not be construed as any expression of approval or disapproval. Hyatt has not assumed, and shall not have, any liability in connection with this prospectus supplement or the offering related to this prospectus supplement.

“Holiday Inn” and “Holiday Inn Express” are each a registered trademark of Intercontinental Hotels Group or one of its affiliates. All references below to “Intercontinental” mean Intercontinental Hotels Group and all of its affiliates and subsidiaries, and their respective officers, directors, agents, employees, accountants and attorneys. Intercontinental is not responsible for the content of this prospectus supplement, whether

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relating to hotel information, operating information, financial information, Intercontinental’s relationship with the Company or its affiliates, or otherwise. Intercontinental is not involved in any way, whether as an “issuer” or “underwriter” or otherwise, in the offering by the Company and receives no proceeds from the offering. Intercontinental has not expressed any approval or disapproval regarding this prospectus supplement or the offering related to this prospectus supplement, and the grant by Intercontinental of any franchise or other rights to the Company or its affiliates shall not be construed as any expression of approval or disapproval. Hyatt has not assumed, and shall not have, any liability in connection with this prospectus supplement or the offering related to this prospectus supplement.

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OPERATING INFORMATION

Status of the Offering

We commenced our reasonable best efforts initial public offering of up to 80.0 million shares of common stock on January 7, 2014 (excluding shares to be issued under the distribution reinvestment plan, or DRIP). On February 3, 2014, we satisfied the general escrow conditions of our initial public offering of common stock. On such date, we received and accepted aggregate subscriptions equal to the minimum of $2.0 million in shares of common stock, broke escrow and issued shares to AR Capital, LLC, the parent of our sponsor, in the amount of $0.5 million at a purchase price of $22.50 per share. Subscriptions from residents of Pennsylvania, Ohio and Washington will be held in escrow until we have received aggregate subscriptions of at least $100.0 million, $20.0 million and $20.0 million, respectively.

We will offer shares of our common stock until January 7, 2016, unless the offering is extended in accordance with the Prospectus, provided that the offering will be terminated if all 80.0 million shares of our common stock are sold before such date (subject to our right to reallocate shares offered pursuant to the DRIP for sale in our primary offering).

Management Updates

On May 23, 2014, Amy B. Boyle resigned from her roles as chief financial officer, treasurer and secretary of the Company, effective as of that same date. Ms. Boyle did not resign pursuant to any disagreement with the Company. Simultaneously with Ms. Boyle’s resignation, the Company’s board of directors appointed Nicholas Radesca to serve as the Company’s interim chief financial officer, treasurer and secretary. There are no related party transactions involving Mr. Radesca that are reportable under Item 404(a) of Regulation S-K. For a description of Nicholas Radesca’s experience, see his biography set forth in the second paragraph under “Prospectus Updates — Management” below.

Shares Currently Available for Sale

As of May 30, 2014, there are 0.5 million shares of our common stock outstanding. As of May 30, 2014, there are approximately 79.5 million shares of our common stock available for sale, excluding shares available under our DRIP.

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PROSPECTUS UPDATES

Cover Page

The sixth paragraph on the cover page of the Prospectus is hereby replaced in its entirety with the following disclosure.

OHIO, PENNSYLVANIA AND WASHINGTON INVESTORS:  The minimum closing amount is $2,000,000. Because the minimum closing amount is less than $200,000,000, you are cautioned to carefully evaluate this program’s ability to fully accomplish its stated objectives and inquire as to the current dollar volume of the program subscriptions. We will not release any proceeds for subscriptions from Ohio investors from escrow until we have $20,000,000 in aggregate subscriptions from other jurisdictions. We will not release any proceeds for subscriptions from Pennsylvania investors from escrow until we have $100,000,000 in aggregate subscriptions from other jurisdictions. We will not release any proceeds for subscriptions from Washington investors from escrow until we have $20,000,000 in aggregate subscriptions from other jurisdictions.”

Investor Suitability Standards

The section “Investor Suitability Standards — Massachusetts, Ohio, Oregon and New Mexico” on page ii of the Prospectus is hereby replaced in its entirety with the following disclosure.

“Massachusetts

An investor must have either (a) a minimum net worth of at least $250,000 or (b) an annual gross income of at least $70,000 and a net worth of at least $70,000. A Massachusetts investor’s aggregate investment in this Program and in other illiquid direct participation programs (including real estate investment trusts, business development programs, oil and gas programs, equipment leasing programs and commodity pools) may not exceed ten percent (10%) of his or her liquid net worth. “Liquid net worth” is defined as that portion of net worth (total assets exclusive of home, home furnishings and automobiles minus total liabilities) that is comprised of cash, cash equivalents and readily marketable securities.

New Mexico and Ohio

An investor must have either (a) a minimum net worth of at least $250,000 or (b) an annual gross income of at least $70,000 and a net worth of at least $70,000. A New Mexico and Ohio investor’s aggregate investment in us, shares of our affiliates and in other non-traded real estate investment programs may not exceed ten percent (10%) of his or her liquid net worth. “Liquid net worth” is defined as that portion of net worth (total assets exclusive of home, home furnishings and automobiles minus total liabilities) that is comprised of cash, cash equivalents and readily marketable securities. Note that Ohio investors cannot participate in the DRIP feature that reinvests distributions into subsequent affiliated programs.

Oregon

An investor must have either (a) a minimum net worth of at least $250,000 or (b) an annual gross income of at least $70,000 and a net worth of at least $70,000. The investor’s maximum investment in us and our affiliates also cannot exceed 10% of the Oregon resident’s net worth.”

The bullet point under the section “Investor Suitability Standards — New Jersey” on page ii of the Prospectus is hereby replaced in its entirety with the following disclosure.

“An investor who resides in the state of New Jersey must have either (i) a minimum liquid net worth of $100,000 and a minimum annual gross income of not less than $85,000 or (ii) a minimum liquid net worth of $350,000. Additionally, a New Jersey investor’s total investment in us, shares of our affiliates and other non-traded real estate investment trusts shall not exceed 10% of his or her liquid net worth. “Liquid net worth” is defined as that portion of net worth (total assets exclusive of home, home furnishings and automobiles minus total liabilities) that consists of cash, cash equivalents and readily marketable securities.”

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Prospectus Summary

The second paragraph of the question “Who is your advisor and what will its responsibilities be?” on page 3 of the Prospectus is hereby replaced in its entirety with the following disclosure.

“Our advisor is responsible for making decisions regarding the selection and the negotiation of real estate investments. Our advisor recommends all investments and dispositions to our board of directors. Other major decisions to be approved by our advisor, subject to the direction of our board of directors, include decisions with respect to the retention of investment banks, marketing methods with respect to this offering, the termination of this offering, the initiation of a follow-on offering, mergers and other change-of-control transactions, and certain significant press releases. Messrs. Kahane, Jonathan P. Mehlman and Nicholas Radesca, who are executive officers of our company, act as executive officers of our advisor. Mr. Mehlman has 22 years of experience in the hospitality industry. Bruce D. Wardinski, a co-chief executive officer of our advisor, has over 26 years of experience in the hospitality industry.”

The second paragraph of the question “What is the experience of your advisor?” on page 4 of the Prospectus is hereby replaced in its entirety with the following disclosure.

“Mr. Wardinski has over 26 years of experience in the hospitality sector. Mr. Mehlman, our advisor’s executive vice president and chief investment officer, has 22 years of experience in the hospitality sector, and Mr. Kahane, our advisor’s co-chief executive officer and president, has 16 years of experience in the hospitality sector, while Mr. Radesca, our advisor’s interim chief financial officer, treasurer and secretary, has more than 20 years of experience in financial reporting and accounting.”

Risk Factors

The following disclosure is hereby added immediately after the risk factor “Acquiring or attempting to acquire multiple properties in a single transaction may adversely affect our operations.” on page 55 of the Prospectus.

“Our earnings and FFO per share may decline as a result of the acquisition of the Portfolio.

Our earnings and FFO per share may decline as a result of, among other things, the acquisition of the Portfolio if we fail to achieve expected benefits and unanticipated costs relating to the transaction.

As a result of the additional indebtedness incurred to consummate the acquisition of the Portfolio, we may experience a potential material adverse effect on our financial condition and results of operations.

The consummation of the acquisition of the Portfolio is not subject to a financing condition. We plan to fund the purchase price through a combination of cash-on-hand, assumption of existing mezzanine and mortgage indebtedness, new mezzanine and mortgage financing, and issuance of preferred equity interests in two newly formed limited liability companies. Our incurrence of new indebtedness could have adverse consequences on our business, such as:

requiring us to use a substantial portion of our cash flow from operations to service our indebtedness, which would reduce the available cash flow to fund working capital, capital expenditures, development projects and other general corporate purposes and reduce cash for distributions;
limiting our ability to obtain additional financing to fund our working capital needs, acquisitions, capital expenditures or other debt service requirements or for other purposes;
increasing the costs of incurring additional debt;
increasing our exposure to floating interest rates;
limiting our ability to compete with other companies who are not as highly leveraged, as we may be less capable of responding to adverse economic and industry conditions;
restricting us from making strategic acquisitions, developing properties or exploiting business opportunities;

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restricting the way in which we conduct our business because of financial and operating covenants in the agreements governing our existing and future indebtedness;
exposing us to potential events of default (if not cured or waived) under covenants contained in our debt instruments that could have a material adverse effect on our business, financial condition and operating results;
increasing our vulnerability to a downturn in general economic conditions; and
limiting our ability to react to changing market conditions in our industry.

The impact of any of these potential adverse consequences could have a material adverse effect on our results of operations, financial condition and liquidity.

The acquisition of the Portfolio may be delayed or we may fail to consummate the acquisition of the Portfolio, which could have a material adverse impact on our financial condition and results of operations.

The acquisition of the Portfolio is subject to a number of conditions which, if not satisfied or waived, would adversely impact our ability to complete the transaction, and unexpected delays in the consummation of the transaction could impact our ability to timely achieve benefits associated with the transaction.

The acquisition of the Portfolio is subject to certain closing conditions, including, among other things, entering into replacement franchise agreements for each Hotel and obtaining the consent of certain ground lessors for certain Hotels. There can be no assurance that any condition to the closing of the transaction will be satisfied or waived, if permitted, or that any event, development or change will not occur prior to the consummation of the acquisition of the Portfolio that would prevent us from completing the transaction, including, without limitation, litigation affecting the Portfolio. Therefore, there can be no assurance with respect to the timing of the closing of the transaction or whether the transaction will be completed on the currently contemplated terms, other terms or at all.

If the transaction is not completed for any reason, we may be subject to several risks, including, but not limited to, the following:

the requirement that, under certain circumstances, including if the Seller terminates the Agreement because we have breached the Agreement, we may be required to forfeit the $50 million deposit we made;
the incurrence of substantial legal, accounting, financial advisory and costs relating to the transaction that are payable whether or not the transaction is completed;
the focus of our management being directed toward the transaction and integration planning instead of other opportunities that could have been beneficial to us; and

If the transaction is not completed, these risks may materially adversely affect our business, financial condition, operating results, cash flows, including our ability to service debt and to make distributions to our stockholders.

If we are unable to successfully integrate the operations of the Portfolio, our business and financial results may be negatively affected.

The acquisition of the Portfolio poses risks associated with acquisition activities. Such risks include, without limitation, the following:

the inability to successfully integrate the operations, maintain consistent standards, controls, policies and procedures, or realize the anticipated benefits of the acquisition of the Portfolio within the anticipated timeframe or at all;
acquired properties may fail to perform as expected;
certain acquired properties are located in a new market where we face risks associated with an incomplete knowledge or understanding of the local market, a limited number of established business relationships in the area and a relative unfamiliarity with local governmental and permitting procedures;

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diversion of our management’s attention away from other business concerns; and
the acquired properties may subject us to liabilities and without any recourse, or with only limited recourse, with respect to unknown liabilities (i.e. if a liability were asserted against us based upon ownership of those properties, we might have to pay substantial sums to settle it, which could adversely affect our cash flow).

We cannot assure you that we will be able to complete the integration of the Portfolio without encountering difficulties or that any such difficulties will not have a material adverse effect on us. Failure to realize the intended benefits of the Portfolio Acquisition could have a material adverse effect on our financial condition and results of operations.

Our franchisors may require us to make capital expenditures pursuant to property improvement plans, or PIPs, and the failure to make the expenditures required under the PIPs or to comply with brand standards could cause the franchisors or hotel brands to terminate the franchise or management agreements.

Our franchisors may require that we make renovations to certain of our hotels in connection with revisions to our franchise or management agreements. In addition, upon regular inspection of our hotels, our franchisors and hotel brands may determine that additional renovations are required to bring the physical condition of our hotels into compliance with the specifications and standards each franchisor or hotel brand has developed. In connection with the acquisitions of hotels, franchisors and hotel brands may also require PIPs, which set forth their renovation requirements. If we do not satisfy the PIP renovation requirements, the franchisor or hotel brand may have the right to terminate the applicable agreement. In addition, if we default on a franchise agreement as a result of our failure to comply with the PIP requirements, in general, we will be required to pay the franchisor liquidated damages.

Funds spent to maintain licensed brand standards or the loss of a brand license would adversely affect our financial condition and results of operations.

Our hotels operate under licensed brands, either through management or franchise agreements with hotel brand companies that permit us to do so, and we anticipate that the hotels we acquire in the future also will operate under licensed brands. We are therefore subject to the risks inherent in concentrating our hotels in several licensed brands. These risks include reductions in business following negative publicity related to one of our licensed brands or arising from or after a dispute with a hotel brand company.

The maintenance of the brand licenses for our hotels is subject to the hotel brand companies’ operating standards and other terms and conditions. Hotel brand companies periodically inspect our hotels to ensure that we and our lessees and third-party management companies follow their standards. Failure by us, our TRS or a third-party management company to maintain these standards or other terms and conditions could result in a brand license being terminated. If a brand license terminates due to our failure to make required improvements or to otherwise comply with its terms, we may also be liable to the hotel brand company for a termination payment, which will vary by hotel brand company and by hotel. As a condition of our continued holding of a brand license, a hotel brand company could also possibly require us to make capital expenditures, even if we do not believe the capital improvements are necessary or desirable or will result in an acceptable return on our investment. Nonetheless, we may risk losing a brand license if we do not make hotel brand company-required capital expenditures.

If a hotel brand company terminates the brand license, we may try either to obtain a suitable replacement brand or to operate the hotel without a brand license. The loss of a brand license could materially and adversely affect the operations or the underlying value of the hotel because of the loss of associated name recognition, marketing support and centralized reservation systems provided by the hotel brand company. A loss of a brand license for one or more hotels could materially and adversely affect the revenues and earnings generated by our lodging sector.

Conditions of franchise agreements could adversely affect us.

Assuming the successful acquisition of the Portfolio, our lodging properties will be operated pursuant to agreements with nationally recognized franchisors, including Hilton Worldwide, Marriott International, Hyatt Hotels Corporation and Intercontinental Hotels Group. These agreements generally contain specific standards

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for, and restrictions and limitations on, the operation and maintenance of a franchised hotel in order to maintain uniformity within the particular franchisor's system. These standards are subject to change, in some cases at the discretion of the franchisor, and may restrict our ability to make improvements or modifications to a hotel without the consent of the franchisor. Conversely, these standards may require us to make certain improvements or modifications to a hotel, even if we do not believe the capital improvements are necessary or desirable or will result in an acceptable return on our investment.

These agreements also permit the franchisor to terminate the agreement in certain cases, such as a failure to pay royalties and fees or to perform covenants contained in the franchise agreement, bankruptcy, abandonment of the franchise, commission of a felony, assignment of the franchise without the consent of the franchisor or failure to comply with applicable law or maintain applicable standards in the operation and condition of the relevant hotel. If a franchise license terminates due to our failure to comply with the terms and conditions of the agreement, we may be liable to the franchisor for a termination payment. These payments vary. Also, these franchise agreements do not renew automatically. If we were to lose a franchise agreement, there is no assurance that we would be able to enter into an agreement with a different franchisor.

Due to restrictions in our hotel management agreements, franchise agreements, mortgage agreements and ground leases, we may not be able to sell our hotels at the highest possible price or at all.

Our current property management agreements are long-term and contain certain restrictions on selling our hotels, which may affect the value of our hotels. The property management agreements that we have entered into, and those we expect to enter into in the future, contain provisions restricting our ability to dispose of our hotels which, in turn, may have an adverse affect on the value of our hotels. Our hotel management agreements generally prohibit the sale of a hotel to:

certain competitors of the manager;
purchasers who are insufficiently capitalized; or
purchasers who might jeopardize certain liquor or gaming licenses.

In addition, our current hotel management agreements contain initial terms ranging from six to forty years and certain agreements have renewal periods of three to ten years which are exercisable at the option of the owner. Because our hotels would have to be sold subject to the applicable hotel management agreement, the term length of a hotel management agreement may deter some potential purchasers and could adversely impact the price realized from any such sale. To the extent we receive lower sale proceeds, we could experience a material adverse effect on our business, financial condition, results of operations and our ability to make distributions to stockholders.”

The following disclosure is hereby added to the beginning of the section “Risk Factors — Lodging Industry Risks” on page 58 of the Prospectus.

“Our probable lack of diversification in property type and hotel brands increases the risk of investment.

Our primary area of investment is hotels and there is no limit on the number of properties of a particular hotel brand that we may acquire. Assuming that we successfully acquire the Portfolio, the majority of our hotels will be franchised with Hilton Worldwide, Marriott International, Inc., Hyatt Hotels Corporation, Intercontinental Hotels Group or their affiliates. The board reviews our properties and investments in terms of geographic and hotel brand diversification. Our profitability and our ability to diversify our investments, both geographically and by type of properties purchased, is limited by the amount of further funds at our disposal. If our assets become geographically concentrated, an economic downturn in one or more of the markets in which we have invested could have an adverse effect on our financial condition and our ability to make distributions.

Adverse trends in the hotel industry may impact our properties.

Our hotels are subject to all the risks and trends common to the hotel industry. Adverse trends in the hotel industry could adversely affect hotel occupancy and the rates that can be charged for hotel rooms. The success of our properties depends largely on the property operators’ ability to adapt to dominant trends in the hotel industry. These trends include greater competitive pressures, increased consolidation, a supply of hotel

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rooms that exceeds demand due to industry overbuilding, dependence on consumer spending patterns and changing demographics, the introduction of new concepts and products, availability of labor, price levels and general economic conditions. The success of a particular hotel brand, the ability of a hotel brand to fulfill any obligations to operators of its business, and trends in the hotel industry may affect our income and the funds we have available to distribute to our stockholders.”

Macroeconomic Environment

The following disclosure replaces in its entirety the disclosure under the section entitled “Business and Market Overview — Macroeconomic Environment” beginning on page 83 of the Prospectus.

Declining unemployment — Private sector hiring has improved with employment growth for 43 consecutive months and small firms have begun to hire again.

[GRAPHIC MISSING]

Source: Federal Reserve Bank of St. Louis, as of April 2014

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Low interest rates — In June 2013, the U.S. Federal Reserve reaffirmed its outlook on the economy and decided to keep the target range for the Federal Funds Rate at 0 to 0.25% and currently anticipates that exceptionally low levels for the federal funds rate are likely to be warranted at least through mid-2015. The Federal Reserve expects the economy to continue improving through 2015.

Federal Funds Rate

[GRAPHIC MISSING]

Source: Federal Reserve Bank of St. Louis, as of April 2014

Favorable Interest Rate Outlook: Historical Three-Month LIBOR / U.S. Ten-Year Treasury Yields

LIBOR and Treasury yields are currently very low and are projected to remain well below historical averages over the next several years.

[GRAPHIC MISSING]

Sources: FactSet and Bloomberg

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Strong Growth Fundamentals in the Four Quadrants of Hospitality: GDP, Jobs, Housing and Consumer Confidence:

GDP Growth — The U.S. economy has been growing slowly with healthy growth expected.

[GRAPHIC MISSING]

Sources: Federal Reserve Bank of St. Louis, Macroeconomic Advisers (June 6, 2014)

Job Growth — Monthly job growth has been positive since the fourth quarter of 2010.

[GRAPHIC MISSING]

Source: Federal Reserve Bank of St. Louis

Note: Job growth in thousands

Recovering Existing Home Sales — The housing market continues to recover from its trough in 2008.

[GRAPHIC MISSING]

Sources: Federal Reserve Bank of St. Louis, National Association of Realtors

Note: Existing home sales in thousands

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Rising Consumer Confidence:

[GRAPHIC MISSING]

Source: University of Michigan

Business Improvement — Corporate profit margins are still attractive. However, corporations do not yet have fully-restored confidence in the economy and do not feel they can aggressively invest in projects that will return attractive rates of return for their shareholders. This provides an opportunity for higher productivity and economic advancement moving forward.

Corporate Profits (After-Tax)

[GRAPHIC MISSING]

Source: Federal Reserve Bank of St. Louis, as of October 2013

Note: After tax profits as a % of U.S. GDP

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Scarcity of Debt Capital — The scarcity of debt capital for real estate contributed to the lack of CMBS and CDO financing. We believe that this scarcity has caused the pricing for real estate debt to be at attractive levels.

U.S. CMBS Issuance

[GRAPHIC MISSING]

Source: Commercial Mortgage Alert’s “Summary of CMBS Issuance.”

Note: Dollars in billions

Limited Capital to Refinance Maturing Loans — Over the next five years, the market’s capacity to provide refinancing capital is likely to be much less than the increasing volume of maturing CRE loans. As illustrated in the chart below, we believe that the large volume of expected loan maturities over the next few years will provide unique investment opportunities for providers of debt capital. According to Trepp, LLC, over $66 billion of commercial real estate debt will mature in 2014, with approximately $387 billion of such debt scheduled to mature between 2014 and 2017.

[GRAPHIC MISSING]

Source: Trepp, LLC (July 2013)
Note: Dollars in billions”

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Industry Overview

The following disclosure replaces in its entirety the disclosure under the section entitled “Business and Market Overview — Industry Overview” beginning on page 86 of the Prospectus.

“Hotel demand drivers are incredibly diverse, which makes overall changes in economic health (i.e., U.S. GDP growth) one of the best metrics for gauging the health of hotel demand.

Real U.S. GDP Growth vs. Hotel Demand

[GRAPHIC MISSING]

Sources: Federal Reserve Bank of St. Louis, U.S. Department of Commerce, and Smith Travel Research, as of April 2014

RevPAR Growth & U.S. GDP Growth

Growth in RevPAR has historically been closely correlated with growth in U.S. GDP. Lodging properties do not have a fixed lease structure, unlike other property types, and therefore rental rates on lodging properties can be determined on virtually a daily basis. As a result, lodging industry fundamentals tend to decline and also recover sharply and more quickly than other property types as economies enter, and exit, recessionary periods, respectively.

[GRAPHIC MISSING]

Sources: PKF Hospitality Research, LLC, Federal Reserve Bank of St. Louis, Macroeconomic Advisers (June 6, 2014)

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Historical Occupancy Growth & Rate Growth

After over four years since the end of the economic recession, both occupancy and ADR have recovered close to the level reached in mid-2005, signaling strong hospitality fundamentals. The current cycle is shaping up like prior cycles in that, historically, rate growth has become the dominant contributor to RevPAR growth after 2.0 to 2.5 years from the trough of the cycle.

[GRAPHIC MISSING]

Source: Smith Travel Research, as April 2014

Lodging Industry in the Midst of Extended Recovery Cycle

Over the past three economic cycles, cumulative GDP growth for the 19 quarters following the trough has ranged from 27% – 40%. At the current cycle’s 19-quarter mark, cumulative GDP stands at 19%, which indicates a slower growing economy but also one with considerable upside going forward.

[GRAPHIC MISSING]

Source: Bloomberg

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ADR Growth > Occupancy Growth

Occupancy at luxury, upper upscale, upscale and upper midscale hotels have surpassed each segment’s 15-year average, as well as the peak annual, occupancy achieved by each segment during the 2006 to 2007 period. Strong demand is expected to help lift ADR levels at hotels in the higher-priced chain scale segments moving forward.

[GRAPHIC MISSING]

Source: PKF Hospitality Research, LLC, Percent Change Annual 2013

ARC Hospitality Focus Segments: Strong Growth Over Next Four Years

Strong RevPAR outlook and demand growth in upper upscale, upscale and upper midscale hotels (ARC Hospitality focus segments) should support outsized property-level NOI growth for the foreseeable future.

Projected U.S. RevPAR Growth:

[GRAPHIC MISSING]

Source: PKF Hospitality Research, LLC

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ARC Hospitality Focus Segments: Substantial Untapped Future Upside Driven by ADR

Nominal ADR is generally on par with prior peak across all chain scales. In the previous lodging cycle, peak nominal ADR surpassed prior cycle peak by 15% – 25%.

LTM Nominal ADR

         
  Peak (5/1/01)   Peak (9/1/08)   Difference   Current   Curr. Vs. Peak
Industry   $ 86     $ 108       25.7 %    $ 111       2.9 % 
Upper Upscale     140       161       15.0 %      161       (0.0 %) 
Upscale     100       121       20.5 %      120       (0.3 %) 
Upper Midscale     75       90       18.3 %      91       3.4 % 

[GRAPHIC MISSING]

Source: Smith Travel Research

Select-Service Acquisition Strategy

Our acquisition strategy is primarily focused in the select-service sub-sector of the hospitality industry. We may also focus on the full-service sub-sector. As evidenced below, there are over 5,600 select-service hotels across the United States, all operating under national brand affiliations. We intend to pursue these types of hotels as primary investment targets for our REIT.

[GRAPHIC MISSING]

Source: Smith Travel Research, as of April 2014

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Supply & Demand Growth

The limited debt availability for new construction, coupled with the recent decline in industry and economic fundamentals are expected to limit new hotel room supply growth over the next several years. Moderate demand growth combined with limited increases in supply provide a positive backdrop for lodging fundamentals.

[GRAPHIC MISSING]

Source: Smith Travel Research, January 2014

[GRAPHIC MISSING]

Source: Smith Travel Research, PKF Hospitality Research, LLC

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Few Construction Starts = Low Supply Growth

New hotel rooms under construction in the U.S. remain near historical lows, nearly 60% below 2007.

[GRAPHIC MISSING]

Source: Smith Travel Research

Increasing ADR Metrics

ADR and job growth have proven to be strongly correlated historically, and as such, the continued rebound of the job market is a positive for the U.S. lodging sector.

[GRAPHIC MISSING]

Source: Federal Reserve Bank of St. Louis, Smith Travel Research

Expanding RevPAR Metrics – The lodging cycle is experiencing a period of robust growth, as peak to trough cumulative RevPAR growth is expected to be outsized compared to prior cycles.

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[GRAPHIC MISSING]

Sources: Federal Reserve Bank of St. Louis, Smith Travel Research, PKF Hospitality Research, LLC, Macroeconomic Advisers (June 6, 2014)

Potential Value Recovery Opportunities

The hotel sector is in the midst of a recovery from the most recent economic downturn. PKF Consulting USA, LLC, or PKF, has indicated that the NCREIF NPI Hotel Appreciation Sub-Index suggests that hotel values lag behind other major property types such as office, multifamily and retail in the level of recovery. The chart below depicts the value recovery rate across the hospitality industry as compared to other real estate sectors. The data indicates that lodging sector values remain approximately 27.4% below their peak prior to the downturn, while these other sectors have nearly achieved full recovery.

[GRAPHIC MISSING]

Source: PKF Hospitality Research, LLC

Annual Change in Net Operating Income in Hotel Sector

As illustrated in the following chart, the economic downturn generated the most substantial decline in lodging industry fundamentals over the past 75 years, which suggests significant potential for improvement as

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the economy continues to rebound. PKF estimated that hotel unit-level net operating incomes increased 12.7% and 10.2% year-over-year, in 2011 and 2012, respectively, and projects increases of 11.6% in 2013 and 17.7% in 2014.

Annual Change in Hotel Unit – Level Net Operating Income (Actual and Forecast)

[GRAPHIC MISSING]

Source: PKF Hospitality Research, LLC”

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Management

The following disclosure replaces in its entirety the table under the section entitled “Management —  General — Executive Officers and Directors” on page 94 of the Prospectus.

   
“Name   Age   Position(s)
Nicholas S. Schorsch   53   Chairman of the Board of Directors
William M. Kahane   66   Director, Chief Executive Officer and President
Jonathan P. Mehlman   48   Executive Vice President and Chief Investment Officer
Nicholas Radesca   48   Interim Chief Financial Officer, Treasurer and Secretary
Stanley R. Perla   70   Independent Director
Abby M. Wenzel   53   Independent Director
P. Sue Perrotty   60   Independent Director”

The following disclosure replaces in its entirety Amy B. Boyle’s biography on pages 95 and 96 of the Prospectus under the heading “Management — General — Executive Officers and Directors.”

Nicholas Radesca has served as the interim chief financial officer, treasurer and secretary of the Company, our advisor and our property manager since May 2014. Mr. Radesca has served as the chief financial officer and treasurer of American Energy Capital Partners, LP’s general partner since October 2013. Mr. Radesca has served as chief financial officer of ARC DNAV, the ARC DNAV advisor and the ARC DNAV property manager since January 2014. In addition, Mr. Radesca has served as chief financial officer of ARCT V, the ARCT V advisor and the ARCT V property manager since January 2014. Mr. Radesca has served as chief financial officer and treasurer of ARC RFT and the ARC RFT advisor since January 2013. Mr. Radesca has also served as chief financial officer and treasurer of BDCA and the BDCA advisor since February 2013. Mr. Radesca was appointed as secretary of BDCA in June 2013. Mr. Radesca has also served as the interim chief financial officer of ARC Global and ARC RCA, the ARC Global advisor, the ARC Global property manager, the ARC RCA advisor and the ARC RCA property manager since May 2014. Prior to joining American Realty Capital in December 2012, Mr. Radesca was employed by Solar Capital Management, LLC from March 2008 to May 2012, where he served as the chief financial officer and corporate secretary for Solar Capital Ltd. and its predecessor company, Solar Senior Capital Ltd., both of which are publicly traded business development companies. From 2006 to February 2008, Mr. Radesca served as the chief accounting officer at iStar, a publicly traded commercial REIT, where his responsibilities included overseeing accounting, tax and SEC reporting. Prior to iStar, Mr. Radesca served in various senior accounting and financial reporting roles at Fannie Mae, Del Monte Foods Company, Providian Financial Corporation and Bank of America. Mr. Radesca has more than 20 years of experience in financial reporting and accounting and is a licensed certified public accountant in New York and Virginia. Mr. Radesca holds a B.S. in accounting from the New York Institute of Technology and an M.B.A. from the California State University, East Bay.”

The following disclosure replaces in its entirety the table, and the paragraph immediately following such table, under the section entitled “Management — The Advisor” on page 102 of the Prospectus.

   
“Name   Age   Position(s)
William M. Kahane   66   Co-Chief Executive Officer and President
Bruce D. Wardinski   53   Co-Chief Executive Officer
Jonathan P. Mehlman   48   Executive Vice President and Chief Investment Officer
Nicholas Radesca   48   Interim Chief Financial Officer, Treasurer and Secretary

The backgrounds of Messrs. Kahane, Mehlman and Radesca are described in the “Management — General — Executive Officers and Directors” section of this prospectus. The background of Mr. Wardinski is described below.”

The following disclosure hereby replaces in its entirety the second sentence of the first paragraph under the section “Management — General — The Property Manager and the Sub-Property Manager” on page 104 of the Prospectus.

“Mr. Mehlman acts as chief investment officer and executive vice president of our property manager and Mr. Radesca acts as interim chief financial officer and executive vice president of our property manager.”

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The reference to “Amy B. Boyle” in the first paragraph under the section “Management — General — Investment Decisions” on page 113 of the Prospectus is hereby replaced with “Nicholas Radesca.”

The following disclosure hereby replaces in its entirety the second to last sentence of the second paragraph under the section “Management — General — Certain Relationships and Related Transactions” on page 113 of the Prospectus.

“Nicholas Radesca is the interim chief financial officer, treasurer and secretary of our company and our advisor.”

Money Market Investments

The following disclosure hereby replaces the section “Money Market Investments” on pages 150 – 151 of the Prospectus.

“Investments in Money Market Funds and Liquid Marketable Securities

Pending the purchase of other permitted investments, or to provide a working capital reserve described above, we may temporarily invest up to 5% of the proceeds of the equity capital raise in accounts managed by an affiliate of our advisor, National Fund Advisors, LLC, or NFA, in connection with which NFA may receive customary fees. The independent directors of our board will review the terms and conditions of any engagement of NFA, as well as the parameters of any such working capital reserve.

In addition, we may temporarily invest in one or more unaffiliated money market mutual funds or directly in certificates of deposit, commercial paper, interest-bearing government securities and other short-term instruments. We intend to hold substantially all funds, pending our investment in real estate or real estate-related assets, in assets which will allow us to continue to qualify as a REIT. These investments will be liquid and provide for appropriate safety of principal, such as cash, cash items and government securities. Cash items include cash on hand, cash deposited in time and demand accounts with financial institutions, receivables which arise in our ordinary course of operation, commercial paper and certificates of deposit. Generally, government securities are any securities issued or guaranteed as to principal or interest by the United States federal government. See the section entitled “Certain Material U.S. Federal Income Tax Considerations — Taxation — REIT Qualification Tests” in this prospectus.”

Description of Real Estate Investments

The following disclosure hereby replaces the section “Description of Potential Real Estate Investments” beginning on page 171 of the Prospectus.

“DESCRIPTION OF REAL ESTATE INVESTMENTS

Acquisitions

We have acquired the following real estate investments through May 30, 2014:

Courtyard — Baltimore, Maryland

On March 21, 2014, we, through wholly owned subsidiaries of our operating partnership, purchased the fee simple interest in The Courtyard Inner Harbor Hotel, or the Courtyard Baltimore, located in the Inner Harbor of Baltimore, Maryland. The Courtyard Baltimore is a select-service hotel that opened in 2000 and contains 205 rooms and approximately 2,700 total square feet of meeting space. The Courtyard Baltimore underwent renovations of approximately $3.0 million in the first quarter of 2013. The hotel’s average occupancy rate, average daily rate, or ADR, RevPAR, rooms available and room revenue for the past five years are as follows:

         
Period   Average Occupancy Rate   ADR   RevPAR   Rooms Available   Room Revenue (thousands)
Year Ended December 31, 2013     68.5 %    $ 172.58     $ 118.18       74,825     $ 8,843  
Year Ended December 31, 2012     69.9 %    $ 161.00     $ 112.47       75,030     $ 8,439  
Year Ended December 31, 2011     72.4 %    $ 153.45     $ 111.07       74,825     $ 8,311  
Year Ended December 31, 2010     69.1 %    $ 153.57     $ 106.07       74,825     $ 7,937  
Year Ended December 31, 2009     68.2 %    $ 148.23     $ 101.12       74,825     $ 7,566  

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Courtyard — Providence, Rhode Island

On March 21, 2014, we, through wholly owned subsidiaries of our operating partnership, purchased the fee simple interest in The Courtyard Providence Downtown Hotel, or the Courtyard Providence. The Courtyard Providence is a select-service hotel that opened in 2000 and is located in downtown Providence, Rhode Island, in close proximity to transportation hubs. The Courtyard Providence contains 216 rooms and approximately 3,500 total square feet of meeting space. The property underwent renovations totaling approximately $1.0 million in the first quarter of 2013. The hotel’s average occupancy rate, ADR, RevPAR, rooms available and room revenue for the past five years are as follows:

         
Period   Average Occupancy Rate   ADR   RevPAR   Rooms Available   Room Revenue (thousands)
Year Ended December 31, 2013     78.8 %    $ 135.80     $ 106.95       78,840     $ 8,432  
Year Ended December 31, 2012     75.3 %    $ 129.70     $ 97.68       79,056     $ 7,723  
Year Ended December 31, 2011     71.5 %    $ 126.49     $ 90.43       78,840     $ 7,130  
Year Ended December 31, 2010     72.7 %    $ 124.62     $ 90.60       78,840     $ 7,143  
Year Ended December 31, 2009     64.9 %    $ 131.22     $ 85.19       78,840     $ 6,716  

Homewood Suites — Stratford, Connecticut

On March 21, 2014, we, through wholly owned subsidiaries of our operating partnership, purchased the fee simple interest in The Homewood Suites which is located in Stratford, Connecticut, or the Homewood Suites Stratford. The Homewood Suites Stratford is a select-service hotel that opened in 2002 and is located in close proximity to New Haven, Connecticut. The property contains 135 rooms and approximately 1,100 total square feet of meeting space. The hotel’s average occupancy rate, ADR, RevPAR, rooms available and room revenue for the past five years are as follows:

         
Period   Average Occupancy Rate   ADR   RevPAR   Rooms Available   Room Revenue (thousands)
Year Ended December 31, 2013     77.1 %    $ 125.29     $ 96.54       49,275     $ 4,757  
Year Ended December 31, 2012     78.1 %    $ 121.18     $ 94.67       49,410     $ 4,678  
Year Ended December 31, 2011     79.5 %    $ 121.37     $ 96.46       49,275     $ 4,753  
Year Ended December 31, 2010     74.6 %    $ 122.94     $ 91.71       49,275     $ 4,519  
Year Ended December 31, 2009     69.8 %    $ 123.21     $ 86.01       49,275     $ 4,238  

Georgia Tech Hotel & Conference Center — Atlanta, Georgia

On March 21, 2014, we, through wholly owned subsidiaries of our operating partnership, purchased the operating lease interest in The Georgia Tech Hotel & Conference Center, or the Georgia Tech Hotel, located in midtown Atlanta, Georgia. The Georgia Tech Hotel is a full-service hotel that opened in 2003 and contains 252 rooms and approximately 21,000 total square feet of meeting space. The property underwent renovations totaling approximately $1.2 million in the fourth quarter of 2012. The original lease term for the Georgia Tech Hotel was 30 years, commencing in 2003. The hotel’s average occupancy rate, ADR, RevPAR, rooms available and room revenue for the past five years are as follows:

         
Period   Average Occupancy Rate   ADR   RevPAR   Rooms Available   Room Revenue (thousands)
Year Ended December 31, 2013     66.8 %    $ 137.70     $ 91.94       91,980     $ 8,457  
Year Ended December 31, 2012     70.4 %    $ 136.36     $ 95.96       92,232     $ 8,851  
Year Ended December 31, 2011     69.0 %    $ 131.13     $ 90.42       91,980     $ 8,317  
Year Ended December 31, 2010     68.3 %    $ 127.39     $ 87.00       91,980     $ 8,002  
Year Ended December 31, 2009     65.6 %    $ 127.66     $ 83.74       91,980     $ 7,702  

Hilton Garden Inn — Blacksburg, Virginia

On March 21, 2014, we, through wholly owned subsidiaries of our operating partnership, purchased interests in certain entities that retain a minority joint venture interest in The Hilton Garden Inn, located in Blacksburg,

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Virginia, or the Hilton Garden Inn Blacksburg. The Hilton Garden Inn Blacksburg is a select-service hotel that contains 137 rooms and approximately 1,280 total square feet of meeting space. The property opened in 2009 and is located in close proximity to the campus of Virginia Tech University. The hotel’s average occupancy rate, ADR, RevPAR, rooms available and room revenue for the past five years are as follows:

         
Period   Average Occupancy Rate   ADR   RevPAR   Rooms Available   Room Revenue (thousands)
Year Ended December 31, 2013     68.7 %    $ 118.28     $ 81.30       50,005     $ 4,065  
Year Ended December 31, 2012     65.8 %    $ 115.52     $ 76.06       50,142     $ 3,814  
Year Ended December 31, 2011     61.2 %    $ 109.90     $ 67.21       50,005     $ 3,361  
Year Ended December 31, 2010     58.8 %    $ 108.01     $ 63.48       50,005     $ 3,175  
Year Ended December 31, 2009     37.5 %    $ 119.16     $ 44.62       19,591     $ 874  

Westin — Virginia Beach, Virginia

On March 21, 2014, we, through wholly owned subsidiaries of our operating partnership, purchased interests in certain entities that retain a minority joint venture interest in The Westin Virginia Beach, located in Virginia Beach, Virginia, or the Westin Virginia Beach. The Westin Virginia Beach is a full-service hotel that opened in 2007 and contains 236 rooms and approximately 9,800 total square feet of meeting space. The hotel’s average occupancy rate, ADR, RevPAR, rooms available and room revenue for the past five years are as follows:

         
Period   Average Occupancy Rate   ADR   RevPAR   Rooms Available   Room Revenue (thousands)
Year Ended December 31, 2013     69.9 %    $ 130.11     $ 90.94       86,140     $ 7,833  
Year Ended December 31, 2012     75.8 %    $ 123.29     $ 93.44       86,376     $ 8,071  
Year Ended December 31, 2011     75.0 %    $ 116.53     $ 87.41       86,140     $ 7,529  
Year Ended December 31, 2010     70.7 %    $ 112.02     $ 79.20       86,140     $ 6,818  
Year Ended December 31, 2009     68.5 %    $ 110.82     $ 76.00       86,140     $ 6,542  

Probable Acquisitions

On May 23, 2014, we, through a wholly owned subsidiary of our operating partnership, entered into a Real Estate Sale Agreement, or the Agreement, with certain entities, collectively the Sellers, affiliated with one or more Whitehall Real Estate Funds, an investment fund controlled by The Goldman Sachs Group, Inc., pursuant to which one or more of our subsidiaries will acquire the fee simple or leasehold interests held by the Sellers in 126 hotels described below (each herein referred to as a Hotel and collectively as the Portfolio).

We currently anticipate closing this transaction in the fourth quarter of 2014. Although we have entered into the Agreement relating to the acquisition of the Portfolio, there is no guarantee that we will be able to consummate the acquisition of the Hotels.

The Hotels are located in 35 states, operate under franchise agreements under the Hilton Worldwide, Marriott International, Hyatt Hotels Corporation and Intercontinental Hotels Group brands and comprise a total of 14,934 rooms. For the year ended December 31, 2013, no individual Hotel accounted for 5.0% or more of the Portfolio’s total net operating income. The Portfolio’s average occupancy rate, ADR, RevPAR, rooms available and room revenue for the past five years are as follows:

         
Period   Average Occupancy Rate   ADR   RevPAR   Rooms Available (thousands)   Room Revenue (millions)
Year Ended December 31, 2013     72.3 %    $ 105.03     $ 75.91       5,450     $ 413.7  
Year Ended December 31, 2012     70.9 %    $ 102.16     $ 72.39       5,466     $ 395.7  
Year Ended December 31, 2011     69.4 %    $ 99.00     $ 68.74       5,451     $ 374.7  
Year Ended December 31, 2010     66.3 %    $ 97.30     $ 64.54       5,451     $ 351.9  
Year Ended December 31, 2009     63.1 %    $ 99.31     $ 62.70       5,452     $ 341.9  

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The Hotels were selected for potential acquisition because they each meet our investment criteria relating to location, market position and hotel condition. The Hotels are globally branded select-service and full-service hotels, and are located near landmarks such as corporate headquarters, colleges or universities, tourist attractions, airports, retail centers or convention centers. The Hotels are located in high barrier-to-entry markets with multiple demand generators and sustainable growth, and they are market share leaders in their respective locations. We believe each Hotel is currently well maintained, with minimum deferred maintenance or renovation required. The purchase price for the Hotels was determined based on a number of factors, including underwriting of historical and projected cash flow from the Hotel, discounted cash flow, internal rate of return and market comparable analyses, analyses of national comparable sales, inspection of each Hotel and its market, reviews of recent appraisal and loan documentation, as well as consultations with market experts such as brokers, appraisers, asset managers and the current property manager.

Real Estate Sale Agreement

The aggregate contract purchase price for the Portfolio is approximately $1.925 billion, exclusive of closing costs and subject to certain adjustments at closing. We anticipate funding approximately $271 million of the purchase price with cash-on-hand, funding approximately $976 million through the assumption of existing mezzanine and mortgage indebtedness, and funding approximately $227 million through additional mortgage and mezzanine financing. There can be no assurance that we will be able to assume such indebtedness, raise sufficient capital, secure alternative financing or secure additional financing on terms that we deem favorable or at all.

We anticipate that the remaining $451 million of the contract purchase price will be satisfied by the issuance of preferred equity interests in two newly-formed Delaware limited liability companies, ARC Hospitality Portfolio I Holdco, LLC and ARC Hospitality Portfolio II Holdco, LLC, each of which will be an indirect subsidiary of the Company and an indirect owner of the Portfolio. The holders of the preferred equity interests are entitled to monthly distributions at a rate of 7.50% per annum for the first 18 months following closing and 8.00% per annum thereafter. On liquidation, the preferred equity interests will be entitled to receive their original value (as reduced by redemptions) prior to any distributions being made to us or our stockholders. After the earlier to occur of either (i) the date of repayment in full of currently outstanding unsecured obligations of our operating partnership in the original principal amount of approximately $63 million or (ii) the date the gross amount of equity proceeds received by us exceeds $150 million, we will be required to use 35% of any equity offering proceeds to redeem the preferred equity interests at par, up to a maximum of $350 million for any 12-month period. We are also required in certain circumstances to apply debt proceeds to redeem the preferred equity interests at par. As of the end of the third year following the closing of the acquisition, we are required to have redeemed 50% of the preferred equity interests, and as of the end of the fourth year following the closing of the acquisition, we are required to redeem 100% of the preferred equity interests remaining outstanding at such time. In addition, we have the right, at its option, to redeem the preferred equity interests, in whole or in part, at any time at par. The holders of preferred equity interests will have certain customary consent rights over actions by us relating to the Portfolio. If we are unable to satisfy the redemptions requirements, the holders of preferred equity interests will have certain rights, including the ability to assume control of the operations of the Portfolio.

Pursuant to the terms of the Agreement, our obligation to consummate the acquisition of the Portfolio is subject to certain conditions customary to closing. Among other customary conditions, we must enter into replacement franchise agreements for each Hotel and we must obtain the consent of certain ground lessors for certain Hotels. On June 8, 2014, we made a $50 million customary earnest money deposit. This deposit was partially funded through a $45 million loan from one of our affiliates. The loan bears interest at a rate of 6.0% per annum and matures on May 27, 2015, however we have the right to extend the maturity date of the loan to May 27, 2016.

The Sellers have agreed to indemnify us against any losses incurred by us, to the extent that such losses arise out of breaches of their representations and warranties contained in the Agreement, breaches of certain covenants in the Agreement, and for any liabilities to third parties arising out of the use, operation or maintenance of the Hotels prior to the closing of the acquisition and, additionally, for any liabilities to any third parties arising out of the use, operation or maintenance of the Hotels prior to closing. The maximum aggregate liability of the Sellers pursuant to this indemnity is $30,000,000 and will only be paid if such losses

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exceed $10,000,000. We have agreed to indemnify the Sellers for any losses incurred by them, to the extent such losses arise out of breaches of our representations and warranties or certain covenants in the Agreement or certain other events for which buyers may typically indemnify sellers in connection with the sales of similar hotel properties and, additionally, for any liabilities to any third parties arising out of the use, operation or maintenance of the Hotels subsequent to closing of the acquisition. The Agreement contains customary representations and warranties by the Sellers.

Financial Obligations

MD/RI Loan

On March 21, 2014, we, through indirect wholly owned subsidiaries of our operating partnership, obtained a loan, or the MD/RI Loan, from German American Capital Corporation, or the Lender, in the amount of $45.5 million, secured by mortgages on the Courtyard Baltimore and the Courtyard Providence. The MD/RI Loan provides for monthly interest payments only with all principal outstanding being due on the maturity date, April 6, 2019. The MD/RI Loan bears interest at a stated fixed rate of 4.30% per annum.

The MD/RI Loan may not be prepaid prior to January 6, 2019, other than in respect of certain limited exceptions set forth in the loan agreement. The MD/RI Loan may be prepaid in whole without penalty or fee at any time from and after January 6, 2019. Also, the MD/RI Loan may be defeased in whole or in part from and after the earlier to occur of (i) March 21, 2017 and (ii) the second anniversary following the securitization of the MD/RI Loan upon at least 30 days prior notice to Lender provided that certain customary documentation and other requirements are met. In the event of a default, the lender has the right to exercise its remedies under the MD/RI Loan, including the right to accelerate the payment on any unpaid principal amount of the MD/RI Loan and/or foreclose on the properties.

Our operating partnership (together with AR Capital, LLC and certain individuals) has guaranteed (x) any losses that Lender may incur as a result of the occurrence of certain bad acts of the borrowers, operating lessees and/or our operating partnership, and (y) the payment of the MD/RI Loan upon the occurrence of certain other significant events, including bankruptcy and transfers in violation of the MD/RI Loan documents. Additionally, we (together with AR Capital, LLC and certain individuals) have agreed to indemnify Lender against any environmental liability Lender may incur resulting from environmental issues at the Courtyard Baltimore or the Courtyard Providence.

Fee and Leasehold Assets Note

On March 21, 2014, we, through our operating partnership, executed a promissory note, or the Fee and Leasehold Assets Note, in favor of BCC, the owner of 40% of the membership interests of the Sub-Property Manager, in the amount of approximately $58.1 million. The Fee and Leasehold Assets Note bears interest at a fixed rate of 6.8% per annum, with interest payable monthly in arrears beginning on April 1, 2014; provided that we may defer any interest amounts due on a monthly payment date occurring prior to July 7, 2014, or the Defer Period; provided, further, that we shall pay to BCC all accrued but unpaid interest outstanding on the first monthly payment date to occur after the Defer Period. The entire principal balance, together with all accrued and unpaid interest thereon, if any, is fully due and payable on the earlier of (i) within 10 business days after the date that we raise $150.0 million in our initial public offering and (ii) March 21, 2024. On the First Anniversary, an additional $3.0 million is due on the loan. If the Fee and Leasehold Assets Note has not been repaid prior to the First Anniversary, the Fee and Leasehold Assets Note will be amended and restated such that the principal balance is increased by $3.0 million; and on the Second Anniversary, an additional $0.5 million is due on the loan, if the Fee and Leasehold Assets Note has not been repaid prior to the Second Anniversary, the Fee and Leasehold Assets Note will be amended and restated such that the principal balance is increased by $0.5 million, in each case with interest payable from the date of the respective amendment and restatement of the Fee and Leasehold Assets Note. If the Fee and Leasehold Assets Note is repaid before the First Anniversary, the additional $3.0 million will be due on the First Anniversary and the additional $0.5 million will be due on the Second Anniversary. If the Fee and Leasehold Assets Note is repaid between the First Anniversary and the Second Anniversary, the additional $0.5 million will be due on the Second Anniversary.

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JV Note

On March 21, 2014, we, through our operating partnership, executed another promissory note, or the JV Note, in favor of BCC in the amount of $5.0 million. The JV Note bears interest at a fixed rate of 6.8% per annum, with interest payable monthly in arrears beginning on April 1, 2014; provided, that we may defer any interest amounts due during the Defer Period; provided, further, that we shall pay to BCC all accrued but unpaid interest outstanding on the first monthly payment date to occur after the Defer Period. The entire principal balance, together with all accrued and unpaid interest thereon, if any, is fully due and payable on the earlier of (i) within 10 business days after the date that we raise $150.0 million in our initial public offering and (ii) March 21, 2024.

Crestline Note

On March 21, 2014, we, through our operating partnership, executed another promissory note, or the Crestline Note, in favor of the Sub-Property Manager in the amount of approximately $1.78 million. The proceeds of the Crestline Note will be used to make certain improvements and upgrades to certain of our properties. The Crestline Note bears interest at a fixed rate of 4.5% per annum, with interest payable quarterly in arrears. The entire principal balance, together with all accrued and unpaid interest thereon, if any, is fully due and payable on March 21, 2019.”

Portfolio Mortgage Loan

In connection with the proposed acquisition of the Portfolio, we expect to assume from W2007 Equity Inns Realty, LLC and W2007 Equity Inns Realty, L.P., as borrowers, the obligations under a mortgage loan agreement, or the Portfolio Mortgage Loan, with German American Capital Corporation in the amount of $865.0 million, secured by mortgages on the Hotels. The Portfolio Mortgage Loan matures on May 1, 2016, subject to three (one-year) extension rights which, if all three are exercised, result in an outside maturity date of May 1, 2019 and has an interest rate of (i) for a LIBOR loan, LIBOR plus 3.30%, or the LIBOR Rate, and (ii) for a prime rate loan, the sum of the “Prime Rate” published in the Wall Street Journal plus the difference (expressed as a number of basis points) between (A) the sum of the LIBOR Rate, minus (B) the Prime Rate. The Portfolio Mortgage Loan is fully prepayable with certain prepayment penalties prior to May 1, 2015 and prepayable at par after May 1, 2015.

Portfolio Mezzanine Loan

In connection with the proposed acquisition of the Portfolio, we expect to assume from WNT Mezz I, LLC the obligations under a mezzanine loan agreement, or the Portfolio Mezzanine Loan, with German American Capital Corporation in the amount of $111.0 million, secured by a pledge of equity in the owner of the Hotels. The Mezzanine Loan matures on May 1, 2016, subject to three (one-year) extension rights which, if all three are exercised, result in an outside maturity date of May 1, 2019. The Mezzanine Loan has an interest rate of: (i) for a LIBOR loan, LIBOR plus 5.7705%, and (ii) for prime rate loans, the sum of the Prime Rate, plus the difference (expressed as a number of basis points) between (A) LIBOR plus 5.7705%, minus (B) the Prime Rate. The Mezzanine Loan is fully prepayable with certain prepayment penalties prior to May 1, 2015 and prepayable at par after May 1, 2015.

Prior Performance Summary

The following disclosure hereby replaces in its entirety the section “Prior Performance Summary” contained on pages 175 – 186 of the Prospectus.

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PRIOR PERFORMANCE SUMMARY

Prior Investment Programs

The information presented in this section represents the historical experience of the real estate programs managed or sponsored over the last ten years by Messrs. Schorsch and Kahane, the principals of our sponsor. While our targeted investment focus will primarily be on freestanding, commercial real estate properties, these prior real estate programs have a targeted investment focus primarily on commercial real estate, specifically net lease properties. In connection with ARCT’s internalization and listing on The NASDAQ Global Select Market in March 2012, Mr. Kahane has resigned from the various officer positions he held with the sponsor and its affiliates. Investors should not assume that they will experience returns, if any, comparable to those experienced by investors in such prior real estate programs. The prior performance of real estate investment programs sponsored by affiliates of Messrs. Schorsch and Kahane and our advisor may not be indicative of our future results. For an additional description of this risk, see section entitled “Risk Factors — Risks Related to an Investment in American Realty Capital Hospitality Trust, Inc.” in this prospectus. We are a company with a limited operating history, which makes our future performance difficult to predict.” The information summarized below is current as of December 31, 2013 (unless specifically stated otherwise) and is set forth in greater detail through the year ended December 31, 2013, in the Prior Performance Tables included in this prospectus. In addition, we will provide upon request to us and without charge, a copy of the most recent Annual Report on Form 10-K filed with the SEC by any public program within the last 24 months, and for a reasonable fee, a copy of the exhibits filed with such report. We intend to conduct this offering in conjunction with future offerings by one or more public and private real estate entities sponsored by American Realty Capital and its affiliates. To the extent that such entities have the same or similar investment strategies or objectives as ours, such entities may be in competition with us for the investments we make. See the section entitled “Conflicts of Interest” in this prospectus for additional information.

Summary Information

During the period from August 2007 (inception of the first program) to December 31, 2013, affiliates of our advisor have sponsored 15 public programs, all of which had raised funds as of December 31, 2013. From August 2007 (inception of the first public program) to December 31, 2013, our public programs, which include our company, ARCT, ARCT III, ARCT IV, PE-ARC, ARC-HT, ARCT V, NYRT, DNAV, ARCG, ARCP, ARC RCA, RFT, ARC HT II, PE-ARC II and ARC Global had raised $14.0 billion from 238,250 investors in public offerings. The public programs purchased 4,121 properties with an aggregate purchase price of $17.7 billion in 49 states, Washington D.C. and the Commonwealth of Puerto Rico and the United Kingdom. The investment objectives of each of these public programs are substantially identical to our investment objectives of (1) paying attractive and stable cash distributions, (2) preserving and returning stockholders’ capital contributions and (3) realizing appreciation in the value of our investments.

The following table details the percentage of properties located in the following states and U.S. territories as well as the United Kingdom based on purchase price:

 
State/Possession/Country   Purchase Price%
Alabama     2.1 % 
Alaska     0.0 % 
Arizona     1.4 % 
Arkansas     1.0 % 
California     5.1 % 
Colorado     1.8 % 
Connecticut     0.5 % 
Delaware     0.0 % 
District of Columbia     0.0 % 
Florida     4.5 % 
Georgia     5.3 % 
Idaho     0.3%  

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State/Possession/Country   Purchase Price%
Illinois     6.0 % 
Indiana     3.4 % 
Iowa     0.9 % 
Kansas     1.4 % 
Kentucky     1.5 % 
Louisiana     1.1 % 
Maine     0.3 % 
Maryland     1.5 % 
Massachusetts     1.2 % 
Michigan     2.7 % 
Minnesota     1.1 % 
Mississippi     1.4 % 
Missouri     2.6 % 
Montana     0.1 % 
Nebraska     0.6 % 
Nevada     0.7 % 
New Hampshire     0.3 % 
New Jersey     2.2 % 
New Mexico     0.5 % 
New York     15.1 % 
North Carolina     3.1 % 
North Dakota     0.3 % 
Ohio     4.0 % 
Oklahoma     0.9 % 
Oregon     0.9 % 
Pennsylvania     4.5 % 
Commonwealth of Puerto Rico     0.4 % 
Rhode Island     0.3 % 
South Carolina     2.3 % 
South Dakota     0.1 % 
Tennessee     1.7 % 
Texas     8.6 % 
United Kingdom     0.4 % 
Utah     0.5 % 
Vermont     0.1 % 
Virginia     1.9 % 
Washington     0.8 % 
West Virginia     0.4 % 
Wisconsin     2.0 % 
Wyoming     0.1 % 
       100 % 

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The properties are used by our tenants in the following industries based on purchase price:

 
Industry   Purchase Price%
Advertising     0.0 % 
Aerospace     1.0 % 
Agricultural Products & Services     0.1 % 
Auto Manufacturer     0.2 % 
Auto Retail     1.2 % 
Auto Services     0.6 % 
Casual Dining     4.1 % 
Consulting     0.1 % 
Consumer Goods     0.2 % 
Consumer Products     5.6 % 
Contract Research     0.1 % 
Discount Retail     5.0 % 
Distribution     0.3 % 
Diversified Industrial     0.7 % 
Education     0.0 % 
Family Dining     2.3 % 
Financial Services     2.4 % 
Fitness     0.1 % 
Food Storage     0.0 % 
Foot Apparel     0.1 % 
Freight     5.1 % 
Gas/Convenience     1.4 % 
Government Services     1.7 % 
Haircare Services     0.0 % 
Healthcare     13.1 % 
Heavy Equipment     0.1 % 
Home Maintenance     1.8 % 
Hotel     0.8 % 
Information and communications     0.1 % 
Insurance     3.1 % 
Jewelry     0.4 % 
Manufacturing     0.7 % 
Marine Products     0.0 % 
Media     0.2 % 
Medical Office     0.1 % 
Motor Cycle     0.1 % 
Office     10.0 % 
Oil/Gas     0.3 % 
Packaging     0.1 % 
Parking     0.0 % 
Pharmacy     6.7 % 
Printing Services     0.0 % 
Professional Services     0.4 % 
Publishing     0.1 % 
Quick Service Restaurant     7.1 % 
Refrigerated Warehousing     1.0%  

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Industry   Purchase Price%
Residential     0.2 % 
Restaurant     1.0 % 
Restaurant — Casual Dining     0.0 % 
Restaurant — Quick Service     0.2 % 
Retail     8.7 % 
Retail — Department Stores     1.0 % 
Retail — Discount     0.0 % 
Retail — Hobby/books/music     0.0 % 
Retail — Home furnishings     0.1 % 
Retail — Sporting Goods     0.2 % 
Retail — Wholesale     0.1 % 
Retail Banking     4.9 % 
Specialty Retail     2.0 % 
Storage Facility     0.0 % 
Supermarket     1.7 % 
Technology     0.8 % 
Telecommunications     0.4 % 
Transportation     0.0 % 
Travel Centers     0.1 % 
Utilities     0.1 % 
       100.0 % 

The purchased properties were 24.3% new and 75.7% used, based on purchase price. As of December 31, 2013, two of the purchased properties are under construction. As of December 31, 2013, three properties had been sold. The acquired properties were purchased with a combination of proceeds from the issuance of common stock, the issuance of convertible preferred stock, mortgage notes payable, short-term notes payable, revolving lines of credit, long-term notes payable issued in private placements and joint venture arrangements.

In addition, we will provide upon request to us and without charge, the more detailed information in Part II.

Programs of Our Sponsor

American Realty Capital Trust, Inc.

American Realty Capital Trust, Inc., or ARCT, incorporated on August 17, 2007, was a Maryland corporation that qualified as a REIT. ARCT was formed to acquire a diversified portfolio of commercial real estate, primarily freestanding single-tenant properties net leased to credit worthy tenants on a long-term basis. In January 2008, ARCT commenced an initial public offering on a “best efforts” basis to sell up to 150.0 million shares of common stock, excluding 25.0 million shares issuable pursuant to a distribution reinvestment plan, offered at a price of $10.00 per share, subject to certain volume and other discounts. In March 2008, ARCT commenced real estate operations. ARCT’s initial public offering closed in July 2011 having raised $1.7 billion in gross proceeds from the sale of 179.4 million shares of common stock and having incurred, cumulatively to that date, $198.0 million in offering costs, commissions and dealer manager fees for the sale of its common stock. ARCT operated as a non-traded REIT through February 29, 2012. Effective as of March 1, 2012, ARCT internalized the management services previously provided by American Realty Capital Advisors, LLC and its affiliates, as a result of which ARCP became a self-administered REIT managed full-time by its own management team, or the Internalization. Concurrent with the Internalization, ARCT listed its common stock on The NASDAQ Global Select Market under the symbol “ARCT”, or the Listing. In connection with the Listing, ARCT offered to purchase up to $220.0 million in shares of common stock from its stockholders, pursuant to a modified “Dutch Auction” cash tender offer, or the Tender Offer. As a result of the Tender Offer, in April 2012, ARCT had purchased 21.0 million shares of its common stock at a purchase price of $10.50 per share, for an aggregate cost of $220.0 million, excluding fees and expenses relating to the

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Tender Offer. On September 6, 2012, ARCT entered into an Agreement and Plan of Merger with Realty Income Corporation, a Maryland corporation and its subsidiary, which was subsequently amended on January 6, 2013. The merger was approved by both companies’ boards of directors and was subsequently approved by both companies’ stockholders on January 16, 2013. The merger closed on January 22, 2013, pursuant to which ARCT merged with and into a subsidiary of Realty Income Corporation and trading of ARCT’s shares was suspended at market close on that date. As of December 31, 2012, ARCT had total real estate investments, at cost, of $2.2 billion, comprised of 515 properties.

New York REIT, Inc.

New York REIT, Inc. (formerly American Realty Capital New York Recovery REIT, Inc.), or NYRT, a Maryland corporation, is the second publicly offered REIT sponsored by American Realty Capital. NYRT was incorporated on October 6, 2009 and qualified as a REIT beginning with the taxable year ended December 31, 2010. NYRT filed its initial registration statement with the SEC on November 12, 2009 and became effective on September 2, 2010. NYRT had received aggregate gross offering proceeds of $17.0 million from the sale of 2.0 million shares from a private offering to “accredited investors” (as defined in Regulation D as promulgated under the Securities Act). On December 15, 2011, NYRT exercised its option to convert all its outstanding preferred shares into 2.0 million shares of common stock on a one-to-one basis. As of February 28, 2014, NYRT had received aggregate gross proceeds of $1.7 billion which includes the sale of 169.7 million shares in its public offering, $17.0 million from its private offering and $32.2 million from its distribution reinvestment plan. As of February 28, 2014, there were 175.1 million shares of NYRT common stock outstanding, including restricted stock, converted preferred shares, and shares issued under its distribution reinvestment plan. As of February 28, 2014, NYRT had total real estate-related assets of $2.1 billion, comprised of 23 properties and one preferred equity investment. As of December 31, 2013, NYRT had incurred, cumulatively to that date, $174.9 million in selling commissions, dealer manager fees and offering costs for the sale of its common stock and $26.5 million for acquisition costs related to its portfolio of properties. On April 15, 2014, NYRT listed its common stock on the New York Stock Exchange under the symbol “NYRT,” or the NYRT Listing. In connection with the NYRT Listing, NYRT commenced a tender offer to purchase up to 23,255,814 shares of its common stock at a purchase price of $10.75 per share for an aggregate cost of approximately $250.0 million, excluding fees and expenses relating to the tender offer. As a result of the Tender Offer, in May 2014, NYRT had purchased 14,156,294 shares of its common stock at a purchase price of $10.75 per share, for an aggregate cost of approximately $152.2 million, excluding fees and expenses relating to the Tender Offer. On June 19, 2014, the closing price per share of common stock of NYRT was $11.82.

Phillips Edison — ARC Shopping Center REIT, Inc.

Phillips Edison — ARC Shopping Center REIT Inc., or PE-ARC, a Maryland corporation, is the third publicly offered REIT sponsored by American Realty Capital. PE-ARC was incorporated on October 13, 2009 and qualified as a REIT beginning with the taxable year ended December 31, 2010. PE-ARC filed its registration statement with the SEC on January 13, 2010 and became effective on August 12, 2010. PE-ARC invests primarily in necessity-based neighborhood and community shopping centers throughout the United States with a focus on well-located grocery-anchored shopping centers that are well occupied at the time of purchase and typically cost less than $20.0 million per property. As of February 28, 2014, PE-ARC had received aggregate gross offering proceeds of $1.8 billion which includes the sale of 176.9 million shares of common stock in its public offering and $30.6 million from its distribution reinvestment program. As of February 28, 2014, PE-ARC had acquired 87 properties and had total real estate investments at cost of $1.3 billion. As of December 31, 2013, PE-ARC had incurred, cumulatively to that date, $185.1 million in offering costs for the sale of its common stock and $25.0 million for acquisition costs related to its portfolio of properties.

American Realty Capital Healthcare Trust, Inc.

American Realty Capital Healthcare Trust, Inc., or ARC HT, a Maryland corporation, is the fourth publicly offered REIT sponsored by American Realty Capital. ARC HT was organized on August 23, 2010 and qualified as a REIT beginning with the taxable year ended December 31, 2011. ARC HT filed its registration statement with the SEC on August 27, 2010 and became effective on February 18, 2011. As of

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February 28, 2014, ARC HT had received aggregate gross offering proceeds of $1.8 billion which includes the sale of 174.4 million shares in its public offering and $69.1 million from its distribution reinvestment plan. As of February 28, 2014, ARC HT had acquired 120 healthcare-related properties, for a purchase price of $1.8 billion. As of December 31, 2013, ARC HT had incurred, cumulatively to that date, $197.5 million in offering costs for the sale of its common stock and $26.5 million for acquisition costs related to its portfolio of properties. On April 7, 2014, ARC HT listed its common stock on The NASDAQ Global Select Market under the symbol “HCT,” or the HCT Listing. In connection with the HCT Listing, HCT commenced a tender offer to purchase up to 13,636,364 shares of its common stock at a purchase price of $11.00 per share for an aggregate cost of approximately $150.0 million, excluding fees and expenses relating to the tender offer. As a result of the Tender Offer, in May 2014, HCT had purchased 13,636,363 shares of its common stock at a purchase price of $11.00 per share, for an aggregate cost of $150.0 million, excluding fees and expenses relating to the Tender Offer. On June 1, 2014, HCT entered into an Agreement and Plan of Merger with Ventas, Inc., a Delaware corporation and its subsidiary. The merger has been approved by both companies’ boards of directors but is subject to stockholder approval. The merger is expected to close in the fourth quarter of 2014. On June 19, 2014, the closing price per share of common stock of ARC HT was $10.85.

American Realty Capital — Retail Centers of America, Inc.

American Realty Capital — Retail Centers of America, Inc., or ARC RCA, a Maryland corporation, is the fifth publicly offered REIT sponsored by American Realty Capital. ARC RCA was organized on July 29, 2010 and qualified as a REIT beginning with the taxable year ended December 31, 2012. ARC RCA filed its registration statement with the SEC on September 14, 2010 and became effective on March 17, 2011. As of February 28, 2014, ARC RCA had received aggregate gross proceeds of $153.2 million which includes the sale of 15.3 million shares in its public offering and $1.0 million from its distribution reinvestment plan. As of February 28, 2014, ARC RCA had acquired three properties for a purchase price of $107.6 million. As of December 31, 2013, ARC RCA has incurred, cumulatively to that date, $14.9 million in offering costs for the sale of its common stock and $2.0 million for acquisition costs related to its portfolio of properties.

American Realty Capital Daily Net Asset Value Trust, Inc.

American Realty Capital Daily Net Asset Value Trust, Inc. (formerly known as American Realty Capital Trust II, Inc.), or ARC DNAV, a Maryland corporation, is the sixth publicly offered REIT sponsored by American Realty Capital. ARC DNAV was incorporated on September 10, 2010 and intends to elect and qualify to be taxed as a REIT beginning with the taxable year ended December 31, 2013, ARC DNAV filed its registration statement with the SEC on October 8, 2010 and became effective on August 15, 2011. As of February 28, 2014, ARC DNAV had received aggregate gross proceeds of $21.1 million which includes the sale of 2.1 million shares in its public offering and $0.5 million from its distribution reinvestment plan. As of February 28, 2014, ARC DNAV had acquired 13 properties with total real estate investments, at cost, of $32.8 million. As of December 31, 2013, ARC DNAV had incurred, cumulatively to that date, $6.1 million in offering costs from the sale of its common stock and $0.9 million for acquisition costs related to its portfolio of properties.

American Realty Capital Trust III, Inc.

American Realty Capital Trust III, Inc., or ARCT III, a Maryland corporation, was the seventh publicly offered REIT sponsored by American Realty Capital. ARCT III was incorporated on October 15, 2010 and qualified as a REIT beginning with the taxable year ended December 31, 2011. ARCT III filed its registration statement with the SEC on November 2, 2010 and became effective on March 31, 2011. As of February 28, 2013, ARCT III had received aggregate gross proceeds of $1.8 billion which includes the sale of 174.0 million shares in its public offering and $31.9 million from its distribution reinvestment plan. As of February 28, 2013, ARCT III owned 533 single-tenant, freestanding properties and had total real estate investments, at cost, of $1.7 billion. As of December 31, 2012, ARCT III had incurred, cumulatively to that date, $196.5 million in offering costs for the sale of its common stock and $40.8 million for acquisition costs related to its portfolio of properties. On December 17, 2012, ARCT III and ARCP entered into an Agreement and Plan of Merger under which ARCP acquired all of the outstanding shares of ARCT III. The merger was approved by the independent members of both companies’ boards of directors and was subsequently approved by both companies’ stockholders on February 26, 2013. On February 26, 2013, ARCP stockholders approved

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the issuance of common stock in connection with the merger and ARCT III stockholders approved the merger. The merger closed on February 28, 2013, pursuant to which ARCT III merged with and into a subsidiary of ARCP. On March 1, 2013, in connection with the merger, ARCT III stockholders received their respective cash or stock consideration from ARCP, as elected, pursuant to terms of the Agreement and Plans of Merger on March 1, 2013.

American Realty Capital Properties, Inc.

American Realty Capital Properties, Inc., or ARCP, a Maryland corporation, is the eighth publicly offered REIT sponsored by American Realty Capital. ARCP was incorporated on December 2, 2010 and qualified as a REIT beginning with the taxable year ended December 31, 2011. On September 6, 2011, ARCP completed its initial public offering of 5.6 million shares of common stock. ARCP’s common stock is traded on The NASDAQ Capital Market under the symbol “ARCP.” On November 2, 2011, ARCP completed an underwritten follow-on offering of 1.5 million shares of common stock. In addition, on November 7, 2011, ARCP closed on the underwriters’ overallotment option of an additional 0.1 million shares of common stock. On June 18, 2012, ARCP closed its secondary offering of 3.3 million shares of common stock. In addition, on July 9, 2012, ARCP closed on the underwriters’ overallotment option of an additional 0.5 million shares of common stock. On January 29, 2013, ARCP completed an underwritten public follow-on offering of 1.8 million shares of common stock and an additional 270,000 shares of common stock for the overallotment option of the underwriters. In January 2013, ARCP commenced its “at the market” equity offering under which ARCP has issued 553,300 shares of common stock. On February 28, 2013, ARCT III merged with and into a subsidiary of ARCP, pursuant to the Agreement and Plan of Merger entered into on December 17, 2012, under which ARCP acquired all of the outstanding shares of ARCT III. On March 1, 2013, in connection with the merger, ARCT III stockholders received, pursuant to terms of the Agreement and Plan of Merger, their respective cash or stock consideration from ARCP, as elected. On June 7, 2013, ARCP completed two private placement transactions through which it issued approximately 29.4 million shares of common stock and approximately 28.4 million shares of Series C convertible preferred stock. On November 12, 2013, ARCP closed on the two previously announced private placement transactions for the sale and issuance of approximately 15.1 million shares of common stock and approximately 21.7 million shares of a new Series D Cumulative Convertible Preferred Stock. Following the closing of ARCP’s merger with CapLease, Inc., ARCP converted all outstanding Series C Shares into shares of common stock. Pursuant to the limit in the Series C Articles Supplementary on the number of shares of common stock that could be issued upon conversion of Series C Shares, on November 12, 2013, ARCP converted 1.1 million Series C Shares into 1.4 million shares of common stock.

In aggregate, through February 28, 2014, ARCP has received 1.5 billion of proceeds from the sale of common and convertible preferred stock. As of February 28, 2014, ARCP owned 3,771 buildings, including properties purchased by ARCT III, freestanding properties and real estate investments, at a purchase price of 8.2 billion. On May 28, 2013, ARCP and CapLease, Inc., or CapLease, entered into an Agreement and Plan of Merger under which ARCP subsequently acquired all of the outstanding shares of CapLease. The merger was approved by both companies’ boards of directors and CapLease’s stockholders and closed on November 5, 2013. On July 1, 2013, ARCT IV and ARCP entered into an Agreement and Plan of Merger under which ARCP subsequently acquired all of the outstanding shares of ARCT IV. The merger was approved by both companies’ boards of directors and ARCT IV's stockholders and closed on January 3, 2014. Effective as of January 8, 2014, ARCP internalized the management services previously provided by American Realty Capital Advisors, LLC and its affiliates, as a result of which ARCP became a self-administered REIT managed full-time by its own management team. On October 22, 2013, ARCP entered into an Agreement and Plan of Merger with Cole Real Estate Investments, Inc., or Cole, under which ARCP subsequently acquired all of the outstanding shares of Cole. The merger was approved by both companies’ boards of directors and stockholders and closed on February 7, 2014. On June 19, 2014, the closing price per share of common stock of ARCP was $12.17.

American Realty Capital Global Trust, Inc.

American Realty Capital Global Trust, Inc., or ARC Global, a Maryland corporation, is the ninth publicly offered REIT sponsored by American Realty Capital. ARC Global was incorporated on July 13, 2011 and intends to elect and qualify to be taxed as a REIT beginning with the taxable year ended December 31, 2013.

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ARC Global filed its registration statement with the SEC on October 27, 2011, which was declared effective by the SEC on April 20, 2012. As of February 28, 2014, ARC Global received aggregate gross proceeds of $455.6 million which includes the sale of 45.7 million shares in its public offering and $2.3 million from its distribution reinvestment plan. As of February 28, 2014, ARC Global had acquired 42 properties with an aggregate base purchase price of $361.1 million. As of December 31, 2013, ARC Global had incurred, cumulatively to that date, $20.5 million in offering costs for the sale of its common stock and $8.0 million for acquisition costs related to its property acquisitions.

American Realty Capital Trust IV, Inc.

American Realty Capital Trust IV, Inc., or ARCT IV, a Maryland corporation, was the tenth publicly offered REIT sponsored by American Realty Capital. ARCT IV was incorporated on February 14, 2012 and intends to elect and qualify to be taxed as a REIT beginning with the taxable year ended December 31, 2012. ARCT IV filed its registration statement with the SEC on March 22, 2012, which was declared effective by the SEC on June 8, 2012. As of December 31, 2013, ARCT IV had received aggregate gross proceeds of $1.8 billion which includes the sale of 70.2 million shares in its public offering and $21.0 million under its distribution reinvestment plan. As of December 31, 2013, ARCT IV owned 1,231 freestanding properties at an aggregate purchase price of $2.2 billion. As of December 31, 2013, ARCT IV had incurred, cumulatively to that date, $197.1 million in offering costs for the sale of its common stock and $55.7 million for acquisition costs related to its portfolio of properties. On July 1, 2013, ARCT IV and ARCP entered into an Agreement and Plan of Merger under which ARCP subsequently acquired all of the outstanding shares of ARCT IV. The merger was approved by both companies’ boards of directors and was subsequently approved by ARCT IV's stockholders on January 3, 2014. The merger closed on January 3, 2014, pursuant to which ARCT IV merged with and into a subsidiary of ARCP.

American Realty Capital Healthcare Trust II, Inc.

American Realty Capital Healthcare Trust II, Inc., or ARC HT II, a Maryland corporation, is the eleventh publicly offered REIT sponsored by American Realty Capital. ARC HT II was incorporated on October 15, 2012 and intends to elect and qualify to be taxed as a REIT beginning with the taxable year ended December 31, 2013. ARC HT II filed its registration statement with the SEC on October 31, 2012, which was declared effective by the SEC on February 14, 2013. As of February 28, 2014, ARC HT II received aggregate gross proceeds of $402.5 million from the sale of 16.1 million shares in its public offering and $2.5 million from its distribution reinvestment plan. As of February 28, 2014, ARC HT II had acquired ten properties with a purchase price of $64.6 million. As of December 31, 2013, ARC HT II had incurred, cumulatively to that date, $24.8 million in offering costs for the sale of its common stock and $0.7 million for acquisition costs related to its portfolio of properties.

ARC Realty Finance Trust, Inc.

ARC Realty Finance Trust, Inc., or ARC RFT, a Maryland corporation, is the twelfth publicly offered REIT sponsored by American Realty Capital. ARC RFT was incorporated on November 15, 2012 and intends to elect and qualify to be taxed as a REIT beginning with the taxable year ended December 31, 2013. ARC RFT filed its registration statement publicly with the SEC on January 22, 2013, which was declared effective by the SEC on February 12, 2013. As of February 28, 2014, ARC RFT received aggregate gross proceeds of $57.5 million from the sale of 2.3 million shares in its public offering and $0.3 million from its distribution reinvestment plan. As of February 28, 2014, ARC RFT’s investments, at amortized cost, were $35.9 million. As of December 31, 2013, ARC RFT had incurred, cumulatively to that date, $5.9 million in offering costs for the sale of its common stock.

American Realty Capital Trust V, Inc.

American Realty Capital Trust V, Inc., or ARCT V, a Maryland corporation, is the thirteenth publicly offered REIT sponsored by American Realty Capital. ARCT V was incorporated on January 22, 2013 and intends to elect and qualify to be taxed as a REIT beginning with the taxable year ended December 31, 2013. ARCT V filed its registration statement publicly with the SEC on March 6, 2013, which was declared effective by the SEC on April 4, 2013. As of February 28, 2014, ARCT V received aggregate gross proceeds of $1.6 billion from the sale of 62.1 million shares in its public offering and $30.6 million from its distribution reinvestment plan. As of February 28, 2014, ARCT V owned 284 freestanding properties at an

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aggregate purchase price of $1.4 billion. As of December 31, 2013, ARCT V had incurred, cumulatively to that date, $174.0 million in offering costs for the sale of its common stock and $26.9 million for acquisition costs related to its portfolio of properties.

Phillips Edison — ARC Grocery Center REIT II, Inc.

Phillips Edison — ARC Grocery Center REIT II, Inc., or PE-ARC II, a Maryland corporation, is the fourteenth publicly offered REIT sponsored by American Realty Capital. PE-ARC II was incorporated on June 5, 2013 and intends to elect and qualify to be taxed as a REIT beginning with the taxable year ended December 31, 2013. PE-ARC II filed its registration statement with the SEC on August 13, 2013, which was declared effective by the SEC on November 25, 2013. As of February 28, 2014, PE-ARC II received aggregate gross proceeds of $45.4 million from the sale of 1.8 million shares in a private placement. As of February 28, 2014, PE-ARC II had not acquired any properties. As of December 31, 2013, PE-ARC II had incurred, cumulatively to that date, $1.9 million in offering costs for the sale of its common stock.

Business Development Corporation of America

The American Realty Capital group of companies also has sponsored Business Development Corporation of America, or BDCA, a Maryland corporation. BDCA was organized on May 5, 2010 and is a publicly offered specialty finance company which has elected to be treated as a business development company under the Investment Company Act. As of February 28, 2014, BDCA had raised gross proceeds of $883.2 million which includes the sale of 80.3 million shares in its public offering and $17.5 million from its distribution reinvestment plan. As of February 28, 2014, BDCA’s investments, at amortized cost, were $1.1 billion. As of December 31, 2013, BDCA had incurred, cumulatively to that date, $67.2 million in offering costs for the sale of its common stock.

American Energy Capital Partners, LP

The American Realty Capital group of companies also has sponsored American Energy Capital Partners, LP, or AEP, a Delaware limited partnership. AEP is American Realty Capital’s first oil and gas limited partnership and was organized on October 30, 2013. AEP was formed to acquire, develop, operate, produce and sell working and other interests in producing and non-producing oil and natural gas properties located onshore in the United States. AEP filed a registration statement with the SEC on December 13, 2013 which has yet to be declared effective. As of February 28, 2014, AEP had received an initial capital contribution of $1,000 and had raised no gross proceeds from its initial public offering. As of February 28, 2014, AEP had made no investments. As of February 28, 2014, AEP had yet to incur any offering costs for the sale of its limited partner interests.

American Realty Capital New York City REIT, Inc.

American Realty Capital New York City REIT, Inc., or ARC NYCR, a Maryland corporation, is the sixteenth publicly offered REIT sponsored by American Realty Capital. ARC NYCR was incorporated on December 19, 2013 and intends to elect and qualify to be taxed as a REIT beginning with the taxable year ended December 31, 2014. ARC NYCR filed its registration statement with the SEC on February 26, 2014, which was declared effective by the SEC on April 24, 2014. As of January 2, 2014, ARC NYCR received aggregate gross proceeds of $0.2 million from the sale of 8,888 shares in a private placement. As of January 2, 2014, ARC NYCR had not acquired any properties. As of January 2, 2014, ARC NYCR had incurred, cumulatively to that date, $0.2 million in offering costs for the sale of its common stock.

United Development Funding Income Fund V

United Development Funding Income Fund V, or UDF V, a Maryland corporation, is the seventeenth publicly offered REIT co-sponsored by American Realty Capital and UDF Holdings L.P. UDF V was incorporated on October 1, 2013 and intends to elect and qualify to be taxed as a REIT beginning with the taxable year ended December 31, 2014 or the first year during which UDF V commences real estate operations. UDF V filed its registration statement with the SEC on February 26, 2014, which has not yet been declared effective by the SEC. UDF V was formed to generate current interest income by investing in secured loans and producing profits from investments in residential real estate.

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Liquidity of Public Programs

In order to assist FINRA members in complying with FINRA Rule 2310(b)(3)(D), in this section we disclose the liquidity of prior public programs sponsored by American Realty Capital, our sponsor, which for this purpose excludes ARCP, a REIT that is and always has been listed on a national securities exchange, commencing with the NASDAQ Capital Market and, subsequently, the NASDAQ Global Select Market. Through December 31, 2013, American Realty Capital has sponsored the following other public programs (excluding ARCP): ARCT, NYRT, PE-ARC, ARC HT, ARC RCA, ARC DNAV, ARCT III, ARC Global, ARCT IV, ARC HT II, ARCT V, ARC RFT, BDCA, PE-ARC II and ARC NYCR.

ARCT was a non-traded REIT until March 1, 2012, when it listed its shares of common stock on The NASDAQ Global Select Market. ARCT’s prospectus for its initial public offering provided that it would seek to consummate a listing of shares of its common stock on a national securities exchange by the tenth anniversary of the commencement of its initial public offering. By listing its common stock on The NASDAQ Global Select Market, ARCT achieved a listing on a national securities exchange within the time it contemplated to do so. Additionally, ARCT III was a non-traded REIT until February 28, 2013, when it merged with and into ARCP. ARCT III’s prospectus for its initial public offering provided that ARCT III would seek to consummate a sale or merger by the fifth anniversary of the termination of its initial public offering. By merging with and into ARCP, ARCT III achieved a sale or merger within the time it contemplated to do so. Further, ARCT IV was a non-traded REIT until January 3, 2014, when it merged with and into ARCP. ARCT IV’s prospectus for its initial public offering provided that ARCT IV would seek to consummate a sale or merger by the sixth anniversary of the termination of its initial public offering. By merging with and into ARCP, ARCT IV achieved a sale or merger within the time it contemplated to do so. Additionally, ARC HT was a non-traded REIT until April 7, 2014, when it listed its shares of common stock on The NASDAQ Global Select Market. ARC HT’s prospectus for its initial public offering provided that it would seek to consummate a listing of its common stock on a national securities exchange by the eighth anniversary of the commencement of its initial public offering. By listing its common stock on The NASDAQ Global Select Market, ARC HT achieved a listing on a national securities exchange within the time it contemplated to do so. Further, NYRT was a non-traded REIT until April 15, 2014, when it listed its shares of common stock on the New York Stock Exchange. NYRT’s prospectus for its initial public offering provided that it would seek to consummate a listing of its common stock on a national securities exchange by the fifth anniversary of the termination of its initial public offering. By listing its common stock on the New York Stock Exchange, NYRT achieved a listing on a national securities exchange within the time it contemplated to do so. PE-ARC’s prospectus for its initial public offering provided that PE-ARC would seek to consummate a sale or merger by the fifth anniversary of the termination of its initial public offering. PE-ARC completed its offering on February 7, 2014.

The prospectus for each of these other public and programs states a date or time period by which it may be liquidated or engage in another liquidity event. Further, PE-ARC and ACRT V have completed their primary offering stages. ARC DNAV, ARC Global, ARC RFT, ARC HT II, BDCA and PE-ARC II are in their offering and acquisition stages. Other than ARCT, ARCT III and ARCT IV, none of these public programs have reached the stated date or time period by which they may be liquidated or engage in another liquidity event.

Adverse Business Developments and Conditions

The net losses incurred by the public and non-public programs are primarily attributable to non-cash items and acquisition expenses incurred for the purchases of properties which are not ongoing expenses for the operation of the properties and not the impairment of the programs’ real estate assets. With respect to ARCT for the years ended December 31, 2012, 2011, 2010 and 2009, the entire net loss was attributable to depreciation and amortization expenses incurred on the properties during the ownership period; and for the year ended December 31, 2008, 71% of the net losses were attributable to depreciation and amortization, and the remaining 29% of the net losses was attributable to the fair market valuation of certain derivative investments held. With respect to ARCT III for the year ended December 31, 2012, 98% of the net losses were attributable to depreciation and amortization expenses; and for the year ended December 31, 2011, 95% of the net losses were attributable to acquisition and transaction related expenses. With respect to ARCT IV for the year ended December 31, 2013, the net losses were primarily attributable to depreciation and amortization and acquisition and transaction related expenses; and for the year ended December 31, 2012,

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91% of the net losses were attributable to acquisition and transaction related expenses. With respect to PE-ARC for the years ended December 31, 2013 and 2012, the entire net loss was attributable to depreciation and amortization expenses; for the year ended December 31, 2011, the net losses were primarily attributable to depreciation and amortization and acquisition and transaction related expenses; and for the year ended December 31, 2010, the net losses were primarily attributable to acquisition and transaction related expenses and general and administrative expenses. With respect to ARC HT for the years ended December 31, 2013 and 2012, the entire net loss was attributable to depreciation and amortization expenses and for the year ended December 31, 2011, the net losses were primarily attributable to depreciation and amortization and acquisition and transaction related expenses. With respect to ARCT V for the year ended December 31, 2013, the entire net loss was attributable to acquisition and transaction related expenses. With respect to NYRT for the years ended December 31, 2013, 2012 and 2011, the net loss was attributable to depreciation and amortization expenses; and for the year ended December 31, 2010, the net losses were primarily attributable to depreciation and amortization and acquisition and transaction related expenses.

As of December 31, 2013, our sponsor’s public programs have purchased 4,121 properties. From 2008 to 2013, our sponsor’s programs referenced above have experienced a non-renewal of 91 leases, 81 of which have been leased to new tenants. Additionally, during this time our sponsor’s programs have experienced a renewal of 141 leases. Further, none of these programs have been subject to mortgage foreclosure or significant losses on the sales of properties during the same period of time.

Other than as disclosed above, there have been no major adverse business developments or conditions experienced by any program or non-program property that would be material to investors, including as a result of recent general economic conditions.”

Experts

The following disclosure is hereby added immediately after the heading “Experts” on page 251 of the Prospectus.

“The consolidated financial statements of W2007 Grace I, LLC and Subsidiaries at December 31, 2013 and 2012, and for each of the three years in the period ended December 31, 2013, appearing in this Prospectus and Registration Statement have been audited by Ernst & Young LLP, independent auditors, as set forth in their report thereon appearing elsewhere herein, and are included in reliance upon such report given on the authority of such firm as experts in accounting and auditing.

The consolidated financial statements of American Realty Capital Hospitality Trust, Inc. as of December 31, 2013, and for the year then ended, and the combined financial statements and schedule of the Barceló Portfolio (Predecessor) as of December 31, 2013 and for the year then ended have been included in the registration statement in reliance upon the reports of KPMG LLP, independent registered public accounting firm, appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing.”

Prior Performance Tables

The prior performance tables contained in Appendix A of the Prospectus are hereby replaced with prior performance tables attached to this Supplement No. 2 as Appendix A. The revised prior performance tables supersede and replace the prior performance tables contained in the Prospectus.

Subscription Agreements

The form of subscription agreement contained in Appendix C-1 of the Prospectus is hereby replaced with the revised form of subscription agreement attached to this Supplement No. 2 as Appendix C-1. The revised form of subscription agreement supersedes and replaces the form of subscription agreement contained in the Prospectus.

The form of multi-offering subscription agreement contained in Appendix C-2 of the Prospectus is hereby replaced with the revised form of multi-offering subscription agreement attached to this Supplement No. 2 as Appendix C-2. The revised form of multi-offering subscription agreement supersedes and replaces the prior form of multi-offering subscription agreement contained in the Prospectus.

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Privacy Policy Notice

The reference to “Amy B. Boyle” on page 3 of Appendix G of the Prospectus is hereby replaced with “Nicholas Radesca.”

Annex A

On June 2, 2014, we filed with the Securities and Exchange Commission as an exhibit to a Current Report on Form 8-K in connection with our entry into a Real Estate Sale Agreement to acquire 126 hotels, an unaudited pro forma condensed consolidated balance sheet as of March 31, 2014 and an unaudited pro forma condensed consolidated statement of operations for the three months ended March 31, 2014 and for the year ended December 31, 2013, which are attached as Annex A to this Supplement No. 2.

Annex B

On June 2, 2014, we filed with the Securities and Exchange Commission as an exhibit to a Current Report on Form 8-K in connection with our entry into a Real Estate Sale Agreement to acquire 126 hotels, the unaudited condensed consolidated financial statements of W2007 Grace I, LLC as of March 31, 2014 and December 31, 2013 and for the three months ended March 31, 2014 and 2013, which are attached as Annex B to this Supplement No. 2.

Annex C

On June 2, 2014, we filed with the Securities and Exchange Commission as an exhibit to a Current Report on Form 8-K in connection with our entry into a Real Estate Sale Agreement to acquire 126 hotels, the consolidated financial statements of W2007 Grace I, LLC as of December 31, 2013 and 2012 and for the years ended December 31, 2013, 2012 and 2011, which are attached as Annex C to this Supplement No. 2.

Annex D

On May 15, 2014, we filed with the Securities and Exchange Commission our Quarterly Report on Form 10-Q for the period ended March 31, 2014, which is attached as Annex D to this Supplement No. 2.

Annex E

On April 7, 2014, we filed with the Securities and Exchange Commission our Annual Report on Form 10-K for the year ended December 31, 2013, which is attached as Annex E to this Supplement No. 2.

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APPENDIX A

PRIOR PERFORMANCE TABLES

The tables below provide summarized information concerning programs sponsored directly or indirectly by the parent of our sponsor. The information contained herein is included solely to provide prospective investors with background to be used to evaluate the real estate experience of the parent of our sponsor and its affiliates. The parent of our sponsor’s prior public programs described in the following tables have investment objectives similar to ours. The parent of our sponsor considers programs that aim to preserve and protect investors' capital, provide stable cash distributions and generate capital appreciation to have investment objectives similar to those of our company. For additional information see the section entitled “Prior Performance Summary” in the prospectus.

Certain of the tables below provide information with respect to ARCT. ARCT was a public program sponsored by the parent of our sponsor. On January 22, 2013, ARCT merged with and into a subsidiary of Realty Income Corporation.

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 PARENT OF OUR SPONSOR OR ITS 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 AMERICAN REALTY CAPITAL HOSPITALITY TRUST, INC., 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).

YOU SHOULD NOT CONSTRUE INCLUSION OF THE FOLLOWING INFORMATION AS IMPLYING IN ANY MANNER THAT WE WILL HAVE RESULTS COMPARABLE TO THOSE REFLECTED IN THE INFORMATION BELOW BECAUSE THE YIELD AND CASH AVAILABLE AND OTHER FACTORS COULD BE SUBSTANTIALLY DIFFERENT IN OUR PROPERTIES.

The following tables are included herein:

A-1


 
 

TABLE 1
  
EXPERIENCE IN RAISING AND INVESTING FUNDS

Table I provides a summary of the experience of the parent of our sponsor and its affiliates in raising and investing funds for ARCT from its inception on August 17, 2007 to December 31, 2011, its last year before termination, ARCT III from its inception on October 15, 2010 to December 31, 2012, its last year before termination, ARCT IV from its inception on February 14, 2012 to December 31, 2013, PE-ARC from its inception on October 13, 2009 to December 31, 2013, HCT from its inception on August 23, 2010 to December 31, 2013, ARCT V from its inception on January 22, 2013 to December 31, 2013, and NYRT from its inception on October 6, 2009 to December 31, 2013. Information includes the dollar amount offered and raised, the length of the offering and the number of months to invest 90% of the amount available for investment.

             
             
(dollars in thousands)   ARCT(1)   ARCT III(2)   ARCT IV   PE-ARC   HCT   ARCT V   NYRT
Dollar amount offered   $ 1,500,000     $ 1,500,000     $ 1,500,000     $ 1,785,000     $ 1,500,000     $ 1,700,000     $ 1,500,000  
Dollar amount raised(3)     1,695,813       1,750,291       1,753,560       1,741,472       1,791,198       1,557,640       1,697,677 (4) 
Length of offerings
(in months)
    39       23       19       N/A (5)      N/A (5)      N/A (5)      N/A (5) 
Months to invest 90% of amount available for investment (from beginning of the offering)     39       18       14       N/A (6)      32       N/A (6)      40  

(1) ARCT completed its offering in July 2011. The data above includes uses of offering proceeds through December 31, 2011 and excludes proceeds received through private programs.
(2) ARCT III completed its offering in September 2012. The data above includes uses of offering proceeds through December 31, 2012.
(3) As of December 31, 2013. Includes share proceeds received through distribution reinvestment plans and shares reallocated from distribution reinvestment plans to the primary offerings.
(4) Excludes gross proceeds of $17.0 million received in a private placement during the year ended December 31, 2010.
(5) These offerings are closed, but a liquidity event has not occurred as of December 31, 2013.
(6) As of December 31, 2013 these offerings are still in the investment period and have not invested 90% of the amount offered. Assets are acquired as equity becomes available.

A-2


 
 

TABLE III
  
OPERATING RESULTS OF PRIOR PROGRAMS

Table III summarizes the operating results of ARCT from its inception on August 17, 2007 to December 31, 2011, its last year before termination, ARCT III from its inception on October 15, 2010 to December 31, 2012, its last year before termination, ARCT IV from its inception on February 14, 2012 to December 31, 2013, PE-ARC from its inception on October 13, 2009 to December 31, 2013, HCT from its inception on August 23, 2010 to December 31, 2013, ARCT V from its inception on January 22, 2013 to December 31, 2013, and NYRT from its inception on October 6, 2009 to December 31, 2013.

                   
  ARCT(2)   ARCT III(3)   ARCT IV
(dollars in thousands, except per share data)   Year Ended December 31, 2011   Year Ended December 31, 2010   Year Ended December 31, 2009   Year Ended December 31, 2008   Period From August 17, 2007 (Date of Inception) to December 31, 2007   Year Ended December 31, 2012   Year Ended December 31, 2011   Period From October 15, 2010 (Date of Inception) to December 31, 2010   Year Ended December 31, 2013   Period From February 14, 2012 (Date of Inception) to December 31, 2012
Summary Operating Results
                                                                                         
Gross revenues   $ 129,120     $ 44,773     $ 14,964     $ 5,546     $     $ 49,971     $ 795     $     $ 89,382     $ 414  
Operating expenses   $ 113,981     $ 36,919     $ 9,473     $ 3,441     $ 1     $ 75,580     $ 2,884     $     $ 139,559     $ 2,970  
Operating income (loss)   $ 15,139     $ 7,854     $ 5,491     $ 2,106     $ (1 )    $ (25,609 )    $ (2,089 )    $     $ (50,177 )    $ (2,556 ) 
Interest expense   $ (37,373 )    $ (18,109 )    $ (10,352 )    $ (4,774 )    $     $ (7,500 )    $ (36 )    $     $ (21,505 )    $  
Net income (loss)-GAAP basis   $ (23,955 )    $ (9,652 )    $ (4,315 )    $ (4,283 )    $ (1 )    $ (32,151 )    $ (2,124 )    $     $ (71,659 )    $ (2,537 ) 
Summary Statement of Cash Flows
                                                                                         
Net cash flows provided by (used in) operating activities   $ 49,525     $ 9,864     $ (2,526 )    $ 4,013     $ (200 )    $ 5,542     $ (1,177 )    $     $ 19,314     $ (2,170 ) 
Net cash flows provided by (used in) investing activities   $ (1,203,365 )    $ (555,136 )    $ (173,786 )    $ (97,456 )    $     $ (1,499,605 )    $ (72,453 )    $     $ (2,156,838 )    $ (76,916 ) 
Net cash flows provided by (used in) financing activities   $ 1,155,184     $ 572,247     $ 180,435     $ 94,330     $     $ 1,632,005     $ 89,813     $     $ 2,024,247     $ 214,788  
Amount and Source of Distributions
                                                                                         
Total distributions paid to common stockholders(1)   $ 86,597     $ 20,729     $ 3,176     $ 445     $     $ 55,611     $ 565     $     $ 90,520     $ 801  
Distribution data per $1,000 invested:
                                                                                         
Total distributions paid to common stockholders   $ 51.07     $ 34.32     $ 21.96     $ 37.97     $     $ 31.78     $ 5.50     $     $ 51.62     $ 3.14  
From operations and sales of properties   $ 26.38     $ 16.33     $     $ 25.26     $     $ 3.17     $     $     $ 11.01     $  
From all other sources (financing or offering proceeds)   $ 24.69     $ 17.99     $ 21.96     $ 12.71     $     $ 28.61     $ 5.50     $     $ 40.61     $ 3.14  
Summary Balance Sheet
                                                                                         
Total assets (before depreciation)   $ 2,232,151     $ 946,831     $ 350,569     $ 167,999     $ 938     $ 1,741,260     $ 90,496     $ 402     $ 2,274,944     $ 217,048  
Total assets (after depreciation)   $ 2,130,575     $ 914,054     $ 339,277     $ 164,942     $ 938     $ 1,709,383     $ 89,997     $ 402     $ 2,218,446     $ 216,743  
Total liabilities   $ 730,371     $ 411,390     $ 228,721     $ 163,183     $ 739     $ 252,386     $ 6,541     $ 202     $ 809,400     $ 2,733  
Estimated per share value     N/A       N/A       N/A       N/A       N/A       N/A       N/A       N/A       N/A       N/A  

A-3


 
 

                 
  PE-ARC   HCT
(dollars in thousands, except per share data)   Year Ended December 31, 2013   Year Ended December 31, 2012   Year Ended December 31, 2011   Year Ended December 31, 2010   Period From October 13, 2009 (Date of Inception) to December 31, 2009   Year Ended December 31, 2013   Year Ended December 31, 2012   Year Ended December 31, 2011   Period From August 23, 2010 (Date of Inception) to December 31, 2010
Summary Operating Results
                                                                                
Gross revenues   $ 73,165     $ 17,550     $ 3,529     $ 98     $     $ 125,353     $ 35,738     $ 3,314     $  
Operating expenses   $ 75,184     $ 18,804     $ 5,234     $ 808     $     $ 132,340     $ 37,209     $ 6,242     $ 1  
Operating income (loss)   $ (2,019 )    $ (1,254 )    $ (1,705 )    $ (710 )    $     $ (6,987 )    $ (1,471 )    $ (2,928 )    $ (1 ) 
Interest expense   $ (10,511 )    $ (3,020 )    $ (811 )    $ (38 )    $     $ (15,843 )    $ (9,184 )    $ (1,191 )    $  
Net income (loss)-GAAP basis   $ (12,350 )    $ (4,273 )    $ (2,516 )    $ (747 )    $     $ (22,172 )    $ (10,637 )    $ (4,117 )    $ (1 ) 
Summary Statement of Cash Flows
                                                                                
Net cash flows provided by (used in) operating activities   $ 18,540     $ 4,033     $ 593     $ 201     $     $ 53,011     $ 7,793     $ (2,161 )    $ (1 ) 
Net cash flows provided by (used in) investing activities   $ (776,219 )    $ (198,478 )    $ (56,149 )    $ (21,249 )    $     $ (942,718 )    $ (452,546 )    $ (53,348 )    $  
Net cash flows provided by (used in) financing activities   $ 1,210,275     $ 195,130     $ 61,818     $ 21,555     $ 200     $ 979,285     $ 453,584     $ 60,547     $ 1  
Amount and Source of Distributions
                                                                                
Total distributions paid to common stockholders(1)   $ 38,007     $ 3,673     $ 873     $     $     $ 95,839     $ 14,474     $ 675     $  
Distribution data per $1,000 invested:
                                                                                
Total distributions paid to common stockholders   $ 54.12     $ 56.43     $ 58.07     $     $     $ 53.50     $ 29.48     $ 91.49     $  
From operations and sales of properties   $ 26.40     $ 56.43     $ 39.44     $     $     $ 25.11     $ 15.87     $     $  
From all other sources (financing or offering proceeds)   $ 27.72     $     $ 18.62     $     $     $ 28.39     $ 13.61     $ 91.49     $  
Summary Balance Sheet
                                                                                
Total assets (before depreciation)   $ 1,767,110     $ 337,167     $ 87,463     $ 22,831     $ 1,143     $ 1,821,923     $ 711,930     $ 173,923     $ 844  
Total assets (after depreciation)   $ 1,721,527     $ 325,410     $ 85,192     $ 22,713     $ 1,143     $ 1,734,573     $ 690,668     $ 172,315     $ 844  
Total liabilities   $ 251,995     $ 173,139     $ 58,007     $ 21,556     $ 943     $ 298,829     $ 243,381     $ 118,490     $ 645  
Estimated per share value     N/A       N/A       N/A       N/A       N/A       N/A       N/A       N/A       N/A  

A-4


 
 

           
  ARCT V   NYRT
(dollars in thousands, except per share data)   Period From
January 22,
2013 (Date of
Inception) to
December 31,
2013
  Year Ended
December 31,
2013
  Year Ended
December 31,
2012
  Year Ended
December 31,
2011
  Year Ended
December 31,
2010
  Period From
October 6, 2009
(Date of
Inception) to
December 31,
2009
Summary Operating Results
                                                     
Gross revenues   $ 24,289     $ 55,887     $ 15,422     $ 7,535     $ 2,377     $  
Operating expenses   $ 47,105     $ 67,266     $ 16,787     $ 6,888     $ 3,179     $ 1  
Operating income (loss)   $ (22,816 )    $ (11,379 )    $ (1,365 )    $ 647     $ (802 )    $ (1 ) 
Interest expense   $ (485 )    $ (10,673 )    $ (4,994 )    $ (3,910 )    $ (1,070 )    $  
Net income (loss)-GAAP basis   $ (20,797 )    $ (19,311 )    $ (6,372 )    $ (3,265 )    $ (1,871 )    $ (1 ) 
Summary Statement of Cash Flows
                                                     
Net cash flows provided by (used in) operating activities   $ (13,617 )    $ 9,428     $ 3,030     $ 263     $ (1,234 )    $ 1  
Net cash flows provided by (used in) investing activities   $ (1,225,532 )    $ (1,309,508 )    $ (145,753 )    $ (25,736 )    $ (30,729 )    $  
Net cash flows provided by (used in) financing activities   $ 1,340,325     $ 1,528,103     $ 137,855     $ 35,346     $ 32,312     $ 1  
Amount and Source of Distributions
                                                     
Total distributions paid to common stockholders(1)   $ 35,277     $ 36,642     $ 6,703     $ 970 (4)    $ (4)    $  
Distribution data per $1,000 invested:
                                                     
Total distributions paid to common stockholders   $ 22.65     $ 21.58     $ 38.28     $ 22.27     $     $  
From operations and sales of properties   $     $ 5.55     $ 17.30     $ 6.04     $     $  
From all other sources (financing or offering proceeds)   $ 22.65     $ 16.03     $ 20.98     $ 16.23     $     $  
Summary Balance Sheet
                                                     
Total assets (before depreciation)   $ 1,362,322     $ 2,089,488     $ 380,113     $ 141,139     $ 70,948     $ 954  
Total assets (after depreciation)   $ 1,347,375     $ 2,048,305     $ 367,850     $ 136,964     $ 69,906     $ 954  
Total liabilities   $ 35,561     $ 599,046     $ 225,419     $ 85,773     $ 45,781     $ 755  
Estimated per share value     N/A       N/A       N/A       N/A       N/A       N/A  

N/A — not applicable.

(1) Distributions paid from proceeds from the sale of common stock and through distribution reinvestment plans.
(2) ARCT completed its offering in July 2011. The data above includes uses of offering proceeds through December 31, 2011. In March 2012, ARCT became a self-administered REIT and listed its common stock on The NASDAQ Global Select Market. On January 22, 2013, ARCT merged with and into a subsidiary of Realty Income Corporation and trading of ARCT's shares was suspended at market close on that date.
(3) ARCT III completed its offering in September 2012. The data above includes uses of offering proceeds through December 31, 2012. On February 28, 2013, ARCT III merged with and into a subsidiary of ARCP.
(4) Excludes distributions related to private placement programs.

A-5


 
 

TABLE IV
  
RESULTS OF COMPLETED PROGRAMS

Table IV includes the operations of ARCT from its inception on August 17, 2007 to December 31, 2011, its last year before termination, ARCT III from its inception on October 15, 2010 to December 31, 2012, its last year before termination, ARCT IV from its inception on February 14, 2012 to December 31, 2013, PE-ARC from its inception on October 13, 2009 to December 31, 2013, HCT from its inception on August 23, 2010 to December 31, 2013, ARCT V from its inception on January 22, 2013 to December 31, 2013, and NYRT from its inception on October 6, 2009 to December 31, 2013.

             
Program name (dollars in thousands)   ARCT(1)   ARCT III(2)   ARCT IV(3)   PE-ARC   HCT   ARCT V   NYRT
Date of program closing or occurrence of liquidity event     3/1/2012       2/26/2013       1/3/2014       N/A (5)      N/A (5)      N/A (5)      N/A (5) 
Duration of program (months)     50       23       19       N/A (5)      N/A (5)      N/A (5)      N/A (5) 
Dollar amount raised   $ 1,695,813     $ 1,750,291     $ 1,753,560     $ 1,741,472     $ 1,791,198     $ 1,557,640     $ 1,697,677 (4) 
Annualized Return on Investment     8.7 %(6)      22.0 %(7)      17.4 %(7)      N/A (5)      N/A (5)      N/A (5)      N/A (5) 
Median Annual Leverage     31.9 %      15.0 %      0.0 %      50.1 %      15.8 %      0.8 %      28.2 % 
Aggregate compensation paid or reimbursed to the sponsor or its affiliates   $ 184,213     $ 190,897     $ 193,486     $ 158,925     $ 190,285     $ 173,491     $ 161,696  

(1) ARCT completed its offering in July 2011. The data above includes uses of offering proceeds through December 31, 2011 and excludes proceeds received through private programs. On March 1, 2012, ARCT became a self-administered REIT and listed it common stock on the NASDAQ Global Select Market. ARCT's closing price per share on March 1, 2012 was $10.49. On January 22, 2013, ARCT merged with and into a subsidiary of Realty Income Corporation. Pursuant to the terms of the merger agreement, each share of ARCT common stock was converted into (i) $0.35 in cash, (ii) 0.2874 of a share of common stock of Realty Income Corporation and (iii) cash payable in lieu of any fractional shares of common stock of Realty Income Corporation. This liquidity event resulted in proceeds to ARCT stockholders of $2.2 billion.
(2) ARCT III completed its offering in September 2012. The data above includes uses of offering proceeds through December 31, 2012. On February 26, 2013, ARCT III merged with and into a subsidiary of ARCP. Pursuant to the terms of the merger agreement, each share of ARCT III's common stock was converted into the right to receive (i) 0.95 of a share of common stock of ARCP for those stockholders of ARCT III or (ii) $12.00 in cash. This liquidity event resulted in proceeds to ARCT III stockholders of $2.4 billion.
(3) On January 3, 2014, ARCT IV merged with and into a subsidiary of ARCP. Pursuant to the terms of the merger agreement, each share of ARCT IV's common stock was converted into the right to receive: (i) $9.00 in cash; (ii) 0.5190 of a share of common stock of ARCP's common stock; and (iii) 0.5937 of a share of ARCP's 6.70% Series F Cumulative Redeemable Preferred Stock. This liquidity event resulted in proceeds to ARCT IV stockholders of $2.1 billion.
(4) Excludes gross proceeds of $17.0 million received in a private placement during the year ended December 31, 2010.
(5) These programs have closed, but a liquidity event has not occurred as of December 31, 2013.
(6) Annualized return on investment was calculated as (a) the difference between the aggregate amounts distributed to investors and invested by investors, divided by (b) the aggregate amount invested by investors, divided by (c) the months of the offering. The aggregate amount distributed to investors includes distributions paid during the offering plus the shares outstanding multiplied by the volume weighted daily average price for the 30 day measurement period as defined in the incentive listing fee agreement.
(7) Annualized return on investment was calculated as (a) the difference between the aggregate amounts distributed to investors and invested by investors, divided by (b) the aggregate amount invested by investors, divided by (c) the months of the offering. The aggregate amount distributed to investors includes distributions paid during the offering and the shares outstanding at the time of the sale multiplied by the price paid per share.

A-6


 
 

TABLE V
  
SALES OR DISPOSALS OF PROGRAM

Table V summarizes the sales or disposals of properties by ARCT from its inception on August 17, 2007 to December 31, 2011, its last year before termination, ARCT III from its inception on October 15, 2010 to December 31, 2012, its last year before termination, ARCT IV from its inception on February 14, 2012 to December 31, 2013, PE-ARC from its inception on October 13, 2009 to December 31, 2013, HCT from its inception on August 23, 2010 to December 31, 2013, ARCT V from its inception on January 22, 2013 to December 31, 2013, and NYRT from its inception on October 6, 2009 to December 31, 2013.

                     
         Selling Price, Net of Closing costs and GAAP Adjustments   Cost of Properties Including
Closiing and Soft Costs
  Excess
(deficiency) of
Property
Operating Cash
Receipts Over
Cash
Expenditures(5)
Property (dollars in thousands)   Date Acquired   Date of Sale   Cash
received
net of
closing
costs
  Mortgage
balance at
time of
sale
  Purchase
money
mortgage
taken
back by
program(1)
  Adjustments
resulting from
application of
GAAP(2)
  Total(3)   Original
Mortgage
Financing
  Total
acquisition
cost, capital
improvement,
closing and
soft costs(4)
  Total
ARCT(6):
PNC Bank Branch –
New Jersey
    November – 08       September 2010     $ 388     $ 512     $     $     $ 900     $ 512     $ 187     $ 699     $ 1,035  
PNC Bank Branch –
New Jersey
    November – 08       January 2011     $ 79     $ 502     $     $     $ 581     $ 502     $ 178     $ 680     $ 1,305  

ARCT III(7)
ARCT IV:(8)
PE-ARC: Not applicable
HCT: Not applicable
ARCT V: Not applicable
NYRT: Not applicable

(1) No purchase money mortgages were taken back by program.
(2) Financial information for programs was prepared in accordance with GAAP, therefore GAAP adjustments are not applicable.
(3) All taxable gains were categorized as capital gains. None of these sales were reported on the installment basis.
(4) Amounts shown do not include a prorata share of the offering costs. There were no carried interests received in Lieu of commissions on connection with the acquisition of property.
(5) Amounts exclude the amounts included under “Selling Price Net of Closing Costs and GAAP Adjustments” or “Costs of Properties Including Closing Costs and Soft Costs” and exclude costs incurred in administration of the program not related to the operations of the property.
(6) On March 1, 2012, ARCT became a self-administered REIT and listed it common stock on the NASDAQ Global Select Market. ARCT's closing price per share on March 1, 2012 was $10.49. On January 22, 2013, ARCT merged with and into a subsidiary of Realty Income Corporation and all of ARCT's properties were acquired pursuant to the merger agreement. This liquidity event resulted in proceeds to ARCT stockholders of $2.2 billion.
(7) On February 26, 2013, ARCT III merged with and into a subsidiary of ARCP and all of ARCT III's properties were acquired pursuant to the merger agreement. This liquidity event resulted in proceeds to ARCT III stockholders of $2.4 billion.
(8) On January 3, 2014, ARCT IV merged with and into a subsidiary of ARCP and all of ARCT IV's properties were acquired pursuant to the merger agreement. This liquidity event resulted in proceeds to ARCT IV stockholders of $2.1 billion.

A-7


 
 

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Annex A

American Realty Capital Hospitality Trust, Inc.
 
Unaudited Pro Forma Condensed Consolidated Balance Sheet as of March 31, 2014 and Unaudited Pro Forma Condensed Consolidated Statement of Operations for the Three Months Ended March 31, 2014 and for the Year Ended December 31, 2013

Barceló Portfolio Acquisition

The unaudited Pro Forma Condensed Consolidated Statements of Operations have been prepared through the application of pro forma adjustments to the historical Condensed Consolidated Statements of Operations of American Realty Capital Hospitality Trust, Inc. (the “Company” and “ARC Hospitality”) reflecting the fee simple interest in three hotel properties, one hotel property subject to an operating lease, and equity interests in joint ventures that own two hotels (the “Barceló Portfolio”) which were acquired on March 21, 2014.

The unaudited Pro Forma Condensed Consolidated Statements of Operations and the related pro forma adjustments for the three months ended March 31, 2014 and year ended December 31, 2013 were prepared as if these transactions occurred on January 1, 2014 and 2013, respectively, and should be read in conjunction with the Company’s historical condensed consolidated financial statements and notes thereto and the Barceló Portfolio’s historical combined financial statements and notes thereto. The unaudited Pro Forma Condensed Consolidated Statements of Operations for the three months ended March 31, 2014 and for the year ended December 31, 2013 are not necessarily indicative of what the actual results of operations would have been had the Company acquired the Barceló Portfolio on January 1, 2014 and 2013, respectively, nor does it purport to present the future results of operations of the Company. Certain nonrecurring transactional expenses have been excluded from the unaudited Pro Forma Condensed Consolidated Statements of Operations for the three months ended March 31, 2014 and for the year ended December 31, 2013. These expenses are shown as a direct charge to accumulated deficit on the unaudited Pro Forma Condensed Consolidated Balance Sheet as of March 31, 2014.

No pro forma adjustments were made to the unaudited Pro Forma Condensed Consolidated Balance Sheet for the Barceló Acquisition as it is already reflected in the historical Condensed Consolidated Balance Sheet of the Company as of March 31, 2014.

Grace Portfolio Acquisition

The unaudited Pro Forma Condensed Consolidated Balance Sheet and the unaudited Pro Forma Condensed Consolidated Statements of Operations have been prepared through the application of pro forma adjustments to the historical Condensed Consolidated Balance Sheet and Statements of Operations of the Company reflecting the recent Real Estate Sale Agreement (the “Agreement”) entered into by a wholly owned subsidiary of the Company’s operating partnership and W2007 Equity Inns Realty, LLC, W2007 Equity Inns Realty, L.P., W2007 EQI Urbana Partnership, L.P., W2007 EQI Seattle Partnership, L.P., W2007 EQI Savannah 2 Partnership, L.P., W2007 EQI Rio Rancho Partnership, L.P., W2007 EQI Orlando Partnership, L.P., W2007 EQI Orlando 2 Partnership, L.P., W2007 EQI Naperville Partnership, L.P., W2007 EQI Milford Partnership, L.P., W2007 EQI Louisville Partnership, L.P., W2007 EQI Knoxville Partnership, L.P., W2007 EQI Jacksonville Partnership, L.P., W2007 EQI Indianapolis Partnership, L.P., W2007 EQI Houston Partnership, L.P., W2007 EQI HI Austin Partnership, L.P., W2007 EQI East Lansing Partnership, L.P., W2007 EQI Dalton Partnership, L.P., W2007 EQI College Station Partnership, L.P., W2007 EQI Carlsbad Partnership, L.P., W2007 EQI Augusta Partnership, L.P. and W2007 EQI Asheville Partnership, L.P. (collectively, the “Sellers”). Each of the Sellers is a wholly-owned subsidiary of W2007 Grace I, LLC (“Grace”), which is indirectly owned by one or more Whitehall Real Estate Funds controlled by The Goldman Sachs Group, Inc. Pursuant to the Agreement, one or more subsidiaries of the Company will acquire fee simple or leasehold interests held by Sellers in each of 126 hotels (“Grace Portfolio”).

The pending acquisitions are expected to close during the fourth quarter of 2014. Although we have entered into the Agreement relating to the acquisition of the Grace Portfolio, there is no guarantee that we will be able to consummate the acquisition of such assets. Accordingly, the Company cannot assure that the Grace Portfolio as presented in the unaudited Pro Forma Condensed Consolidated Balance Sheet and unaudited Pro Forma Condensed Consolidated Statements of Operations will be completed based on the terms of the transactions or at all.

A-1


 
 

The unaudited Pro Forma Condensed Consolidated Balance Sheet and unaudited Pro Forma Condensed Consolidated Statements of Operations assume that the transaction includes all 126 hotels in the Grace Portfolio. ARC Hospitality has the right under the Agreement to exclude certain fee simple or leasehold interests of the 126 hotels from the Grace Portfolio acquisition.

The unaudited Pro Forma Condensed Consolidated Balance Sheet and the related pro forma adjustments for March 31, 2014 were prepared as if these transactions occurred on March 31, 2014 and should be read in conjunction with the Company’s historical condensed consolidated financial statements and notes thereto and Grace’s historical condensed consolidated financial statements and notes thereto. The unaudited Pro Forma Condensed Consolidated Balance Sheet is not necessarily indicative of what the actual financial position would have been had the Company acquired the Grace Portfolio as of March 31, 2014 nor does it purport to present the future financial position of the Company.

The unaudited Pro Forma Condensed Consolidated Statements of Operations and the related pro forma adjustments for the three months ended March 31, 2014 and year ended December 31, 2013 were prepared as if these transactions occurred on January 1, 2014 and 2013, respectively, and should be read in conjunction with the Company’s historical condensed consolidated financial statements and notes thereto and Grace’s historical condensed consolidated financial statements and notes thereto. The unaudited Pro Forma Condensed Consolidated Statements of Operations for the three months ended March 31, 2014 and for the year ended December 31, 2013 are not necessarily indicative of what the actual results of operations would have been had the Company acquired the Grace Portfolio on January 1, 2014 and 2013, respectively, nor does it purport to present the future results of operations of the Company. Certain nonrecurring transactional expenses have been excluded from the unaudited Pro Forma Condensed Consolidated Statements of Operations for the three months ended March 31, 2014 and for the year ended December 31, 2013. These expenses are shown as a direct charge to accumulated deficit on the unaudited Pro Forma Condensed Consolidated Balance Sheet as of March 31, 2014.

A-2


 
 

American Realty Capital Hospitality Trust, Inc.
 
Unaudited Pro Forma Condensed Consolidated Balance Sheet
(In thousands)

         
  ARC
Hospitality (A)
March 31,
2014
  Grace (B) March 31,
2014
  Pro Forma Combined
March 31,
2014
  Pro Forma Adjustments
March 31,
2014
  Pro Forma
ARC Hospitality March 31,
2014
Assets
                                            
Real estate investments:
                                            
Land   $ 12,133     $ 277,500     $ 289,633     $ 21,773  C     $ 311,406  
Buildings and improvements     78,335       1,160,201       1,238,536       91,030  C       1,329,566  
Furniture, fixtures and equipment     4,793       324,203       328,996       25,437  C       354,433  
Leases     8,246       13,253       21,499       11,603  C       33,102  
Total real estate investments     103,507       1,775,157       1,878,664       149,843       2,028,507  
Less: accumulated depreciation and amortization     (122 )      (400,815 )      (400,937 )      400,815  D       (122 ) 
Total real estate investments, net     103,385       1,374,342       1,477,727       550,658       2,028,385  
Cash and cash equivalents     3,644       20,947       24,591       (3,177)   E       21,414  
Restricted cash     2,669       55,712       58,381       (45,681)   F       12,700  
Investments in unconsolidated entities     5,000             5,000             5,000  
Accounts receivable, net           9,221       9,221       (263)   G       8,958  
Prepaid expenses and other assets     3,003       5,330       8,333       (2,237)   H       6,096  
Deferred financing fees, net     1,598       550       2,148       11,403  I       13,551  
Deferred franchise fees, net           3,407       3,407       12,343  J       15,750  
Total Assets   $ 119,299     $ 1,469,509     $ 1,588,808     $ 523,046     $ 2,111,854  
Liabilities and Stockholders' Equity
                                   
Mortgage notes payable   $ 45,500     $ 1,160,912     $ 1,206,412     $ (184,912)   K     $ 1,021,500  
Promissory notes payable     64,849             64,849             64,849  
Redeemable equity instruments                       451,000  K       451,000  
Accounts payable and accrued expenses     10,118       66,411       76,529       (30,939)   L       45,590  
Due to affiliate     3,214             3,214       30,685  M       33,899  
Total liabilities     123,681       1,227,323       1,351,004       265,834       1,616,838  
Preferred stock           101,206       101,206       (101,206)   K        
Common stock     1             1       244  K       245  
Additional paid-in capital     905             905       537,608  K       538,513  
Accumulated deficit     (5,288 )      (34,020 )      (39,308 )      (4,434)   N       (43,742 ) 
Non-controlling equity purchase option           175,000       175,000       (175,000)   L        
Total stockholders' equity     (4,382 )      242,186       237,804       257,212       495,016  
Total Liabilities and Stockholders' Equity   $ 119,299     $ 1,469,509     $ 1,588,808     $ 523,046     $ 2,111,854  

Notes to unaudited Pro Forma Condensed Consolidated Balance Sheet

A Reflects the historical Condensed Consolidated Balance Sheet of the Company as of the date indicated.
B Reflects the historical Condensed Consolidated Balance Sheet of Grace as of the date indicated.
C Represents an adjustment to real estate investments as estimated by the Company's initial purchase price allocations, see table below.

     
(in thousands)   Grace Portfolio(1)   Adjustment   Estimated Purchase Price Allocation(2)
Land   $ 277,500     $ 21,773     $ 299,273  
Buildings and improvements     1,160,201       91,030       1,251,231  
Furniture, fixtures and equipment     324,203       25,437       349,640  
Leases     13,253       11,603       24,856  
Total real estate investments   $ 1,775,157     $ 149,843     $ 1,925,000  

A-3


 
 

(1) Per the March 31, 2014 condensed consolidated financial statements and notes to the condensed consolidated financial statements of Grace.
(2) The current aggregate contract purchase price for the Grace Portfolio is $1.925 billion, exclusive of closing costs and subject to certain adjustments at closing. This purchase price includes all 126 hotels in the Grace Portfolio and is subject to change at closing. The purchase price allocation is an estimate; the final purchase price allocation will be completed within one year of closing.
D Represents removal of prior accumulated depreciation per Grace's condensed consolidated financial statements as it is assumed the pro forma real estate investments were purchased as of the balance sheet date.
E Represents an adjustment to remove the cash and cash equivalents at the corporate level of Grace, which are not included in this transaction.
F Represents an adjustment to establish the estimated reserves as follows at closing, see table below.

     
(in thousands)   Grace(1)   Adjustment(2)   Pro Forma Reserves(3)
Working capital reserve   $ 33,413     $ (33,413 )