As filed with the Securities and Exchange Commission on July 22, 2015

Registration No. 333-205041

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

AMENDMENT NO. 2
to
FORM S-11
REGISTRATION STATEMENT
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933
OF SECURITIES OF CERTAIN REAL ESTATE COMPANIES

RIVERBANC MULTIFAMILY INVESTORS, INC.
(Exact name of registrant as specified in its charter)

227 West Trade Street
Suite 900
Charlotte, North Carolina 28202
(980) 224-4180
(Address, including zip code, and telephone number, including area code, of the registrant’s principal executive offices)

Kevin Donlon
RiverBanc Multifamily Investors, Inc.
227 West Trade Street
Suite 900
Charlotte, North Carolina 28202
(980) 224-4180
(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:

Christopher C. Green, Esq.
Mark W. Wickersham, Esq.
Hunton & Williams LLP
Bank of America Plaza, Suite 4100
600 Peachtree Street, NE
Atlanta, Georgia 30308
Tel (404) 888-4000
Fax (404) 888-4190 Andrew S. Epstein, Esq.
Clifford Chance US LLP
31 West 52nd Street
New York, New York 10019
Tel (212) 878-8000
Fax (212) 878-8375

Approximate date of commencement of proposed sale to public: As soon as practicable after the effectiveness of the registration statement.

If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act, check the following box: o

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration number of the earlier effective registration statement for the same offering. o

If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration number of the earlier effective registration statement for the same offering. o

If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	o	Accelerated filed	o
Non-accelerated filer	☒	Smaller reporting company	o
(Do not check if a smaller reporting company)

CALCULATION OF REGISTRATION FEE

Title of Securities Being Registered	Proposed Maximum Aggregate Offering Price(1)		Amount of Registration Fee(2)
Common Stock, $0.01 par value per share	$	87,400,000	$	10,156

(1) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o) of the Securities Act of 1933, as amended. Includes shares of common stock that may be purchased by the underwriters solely to cover over-allotments, if any.

(2) Of the registration filing fee due for this offering, $116.20 was previously paid in connection with the initial filing of this registration statement on Form S-11 (File No. 333-205041) with the U.S. Securities and Exchange Commission on June 17, 2015.

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale thereof is not permitted.

SUBJECT TO COMPLETION, DATED JULY 22, 2015

PROSPECTUS

3,800,000 Shares

 

RIVERBANC MULTIFAMILY INVESTORS, INC.

Common Stock

RiverBanc Multifamily Investors, Inc. is a Maryland corporation recently formed to succeed the business of our predecessor, RB Multifamily Investors LLC, whereby we will acquire and manage a diverse portfolio of structured investments in multifamily apartment communities. Upon completion of this offering and consummation of our formation transactions, we will own preferred equity and joint venture investments in, and mezzanine loans secured by, an aggregate of 16 multifamily apartment properties with an aggregate of 5,623 apartment units. We will be externally managed and advised by RiverBanc LLC, an investment management firm and registered investment adviser.

This is our initial public offering. We are selling 3,800,000 shares of our common stock, $0.01 par value per share. We expect the public offering price to be between $19.00 and $20.00 per share. Currently, no public market exists for the shares. We have applied to list our common stock on The NASDAQ Stock Market LLC, or Nasdaq, under the symbol “RMI.”

We intend to elect and qualify to be taxed as a real estate investment trust, or REIT, for U.S. federal income tax purposes commencing with our short taxable year ending December 31, 2015. Shares of our common stock are subject to restrictions on ownership and transfer that are intended, among other purposes, to assist us in qualifying and maintaining our qualification as a REIT. Our charter, subject to certain exceptions, limits ownership to no more than 9.8% in value or in number of shares, whichever is more restrictive, of the outstanding shares of any class or series of our capital stock, except that New York Mortgage Trust, Inc. may own up to 100% of the shares of our common stock as long as it continues to qualify as a REIT. In addition, our charter contains various other restrictions on the ownership and transfer of shares of our stock. See “Description of Our Capital Stock—Restrictions on Ownership and Transfer.”

We are an “emerging growth company” under the federal securities laws and are eligible for certain reduced public company reporting requirements. Investing in our common stock involves a high degree of risk. See “Risk Factors” beginning on page 32 of this prospectus.

Neither the Securities and Exchange Commission, or the SEC, nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

	Per Share	Total
Public offering price	$	$
Underwriting discounts and commissions(1)(2)	$	$
Proceeds, before expenses, to us	$	$

(1) See “Underwriting” for additional disclosure regarding the underwriting discounts and commissions and other expenses payable to the underwriters by us.

(2) We have agreed to pay Robert W. Baird & Co. Incorporated and Keefe, Bruyette & Woods, Inc. a financial advisory fee in connection with our formation transactions in an amount equal to, in the aggregate, 0.75% of the gross proceeds of this offering (including with respect to any shares of our common stock issued pursuant to exercise by the underwriters in whole or in part of their option to purchase additional shares).

We have granted the underwriters a 30-day option to purchase up to 570,000 additional shares of our common stock at the public offering price, less the underwriting discounts and commissions. If the underwriters exercise this option in full, the total underwriting discounts and commissions payable by us will be $       and our total proceeds, before expenses, will be $      .

Delivery of the shares of our common stock in book-entry form will be made on or about             , 2015.

Baird Keefe, Bruyette & Woods
A Stifel Company SunTrust Robinson Humphrey

Nomura Oppenheimer & Co.

J.J.B. Hilliard, W.L. Lyons, LLC

Prospectus Dated             , 2015

TABLE OF CONTENTS

PROSPECTUS SUMMARY	1
RISK FACTORS	32
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS	73
USE OF PROCEEDS	75
DISTRIBUTION POLICY	76
CAPITALIZATION	77
SELECTED FINANCIAL AND OPERATING DATA	78
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	80
DILUTION	99
OUR BUSINESS	101
MANAGEMENT	132
OUR MANAGER AND THE MANAGEMENT AGREEMENT	145
STRUCTURE AND FORMATION OF OUR COMPANY	157
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS	163
POLICIES WITH RESPECT TO CERTAIN ACTIVITIES	167
PRINCIPAL STOCKHOLDERS	174
DESCRIPTION OF OUR CAPITAL STOCK	176
CERTAIN PROVISIONS OF MARYLAND LAW AND OF OUR CHARTER AND BYLAWS	181
SHARES ELIGIBLE FOR FUTURE SALE	188
OUR OPERATING PARTNERSHIP AND THE PARTNERSHIP AGREEMENT	191
MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS	197
ERISA CONSIDERATIONS	221
UNDERWRITING	223
LEGAL MATTERS	226
EXPERTS	226
ADDITIONAL INFORMATION	227
INDEX TO FINANCIAL STATEMENTS	F-1

You should rely only upon the information contained in this prospectus and any free writing prospectus provided or approved by us. We have not, and the underwriters have not, authorized any other person to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely upon it. We are not, and the underwriters are not, making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. The information in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of shares of our common stock.

Industry and Market Data

We use industry forecasts and projections and market data throughout this prospectus, including data from publicly available information and industry publications. The forecasts and projections are based on industry surveys and the preparers’ experience in the industry, and there can be no assurance that any of the projections will be achieved. We believe that the surveys and market research others have performed are reliable, but we have not independently verified this information, and the accuracy and completeness of the information are not guaranteed.

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PROSPECTUS SUMMARY

This summary highlights key aspects of this offering. This summary is not complete and does not contain all of the information that you should consider before making your investment decision. You should carefully read this entire prospectus, including the more detailed information set forth under the caption “Risk Factors,” the historical and pro forma financial statements, including the related notes thereto, appearing elsewhere in this prospectus, and any free writing prospectus provided or approved by us before investing in our common stock.

Unless the context otherwise requires or indicates, references in this prospectus to “we,” “us,” “our,” “the company,” “our company” and “RMI” refer to RiverBanc Multifamily Investors, Inc., a Maryland corporation, together with its consolidated subsidiaries, including RiverBanc Multifamily LP, a Delaware limited partnership, which we refer to in this prospectus as “our operating partnership,” and RB Multifamily Investors LLC, a Delaware limited liability company, which will become a subsidiary of our operating partnership upon completion of this offering and consummation of our formation transactions and which we refer to in this prospectus as “Predecessor.” We refer to RiverBanc LLC, a North Carolina limited liability company and our external manager, as “our Manager.” We use the terms “multifamily apartment properties” and “multifamily apartment communities” interchangeably in this prospectus. The historical operations described in this prospectus refer to the historical operations of our Predecessor. We have generally described the business operations in this prospectus as if the historical operations of our Predecessor had been conducted by us.

Unless the context otherwise requires or indicates, the information set forth in this prospectus assumes that (i) our formation transactions, described in detail elsewhere in this prospectus, have been completed; (ii) the underwriters’ option to purchase up to 570,000 additional shares of our common stock is not exercised; (iii) the shares of our common stock to be sold in this offering are sold at $19.50 per share, which is the midpoint of the range of the public offering price per share set forth on the front cover of this prospectus; and (iv) the value of each share of our common stock issuable in our formation transactions is equivalent to the initial public offering price of one share of our common stock.

Our Company

Overview

RiverBanc Multifamily Investors, Inc. is a Maryland corporation recently formed to succeed the business of our Predecessor, RB Multifamily Investors LLC, whereby we will acquire and manage a diverse portfolio of structured investments in multifamily apartment communities. We make our investments principally in the form of preferred equity or joint venture investments in, and mezzanine loans secured by multifamily apartment properties. We have no employees and are externally managed and advised by our Manager, RiverBanc LLC, an investment management firm and registered investment adviser under the Investment Advisers Act of 1940. Our Manager was founded in 2010 and since then has sourced and managed over $400 million of direct and indirect investments in multifamily apartment properties on behalf of both public and private institutional investors. Our Manager’s management team has extensive experience executing the type of investment strategy we will pursue.

From its inception in July 2013 through June 30, 2015, our Predecessor received aggregate equity investments of approximately $69.0 million from affiliates of Ellington Management Group, L.L.C., or Ellington, and our founders, which include our Chief Executive Officer, Kevin Donlon, New York Mortgage Trust, Inc., or NYMT, a REIT that is listed on the Nasdaq under the symbol “NYMT,” and JMP Holding LLC, or JMP, a wholly-owned subsidiary of JMP Group LLC, a full-service investment banking and asset management firm that is listed on the New York Stock Exchange, or NYSE, under the symbol “JMP.” We refer to Mr. Donlon, NYMT and JMP, collectively, as the “Contributing Investors” and our founders.

In connection with our formation transactions, which will substantially be consummated concurrently with the completion of this offering, we will: (i) issue an aggregate of 1,062,976 shares of our common stock to acquire from the Contributing Investors 100% of the common equity

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interests in our Predecessor, which owns joint venture equity interests in five multifamily apartment properties, a preferred equity interest in one multifamily apartment property and three mezzanine loans secured by three multifamily apartment properties and has one joint venture equity interest in a multifamily apartment property under contract to acquire (collectively, the “Predecessor Investment Portfolio”); (ii) issue 1,737,024 shares of our common stock to NYMT in connection with our acquisition from NYMT of 100% of its preferred equity interests (having an aggregate liquidation preference $32.7 million) in our Predecessor; and (iii) use a portion of the net proceeds from this offering to pay approximately $28.5 million in cash to acquire from a wholly-owned subsidiary of NYMT a portfolio of five preferred equity investments in five multifamily apartment properties (which includes one preferred equity investment in a multifamily apartment property that NYMT has under contract to acquire that is expected to close in August 2015) and one mezzanine loan secured by one multifamily apartment property that NYMT has under an executed loan agreement, which is expected to fund in August 2015 concurrent with the refinancing of the senior mortgage loan on this property (collectively, the “NYMT Contributed Assets”). We refer to these transactions as our “formation transactions” and to these 16 assets that comprise the Predecessor Investment Portfolio and the NYMT Contributed Assets collectively as “our Initial Portfolio.” The assets that will comprise our Initial Portfolio are managed or were sourced directly by our Manager, which is 100% owned directly or indirectly by the Contributing Investors. Each of the NYMT Contributed Assets was originated or sourced by our Manager and was or will be funded by NYMT with the expectation that we would eventually acquire these assets at a price equal to NYMT’s outstanding investment in the assets, plus any accrued interest or preferred return thereon.

We will elect and intend to operate our business in a manner that will enable us to qualify to be taxed as a REIT for U.S. federal income tax purposes commencing with our short taxable year ending December 31, 2015. In addition, we intend to maintain our exclusion from registration under the Investment Company Act of 1940, as amended, or the Investment Company Act.

Business Objectives

Our primary business objective is to generate attractive, risk-adjusted current income and capital appreciation for our stockholders by investing in a diversified portfolio of structured investments in multifamily apartment communities. In order to achieve our objective, we seek to:

• Preserve, protect and grow our capital on a tax-efficient basis by investing in multifamily apartment properties with unique or compelling attributes that provide an opportunity for value creation and improved returns through capital improvements or enhanced management practices;

• Provide stable dividends to our stockholders by allocating a significant portion of our capital to preferred equity or debt investments that may mitigate the negative effects of market downturns on our income stream; and

• Opportunistically manage and rebalance our portfolio throughout various market cycles.

Investment Highlights

• Attractive asset class. We operate as a specialist in the multifamily housing sector, which we believe is a highly attractive commercial real estate asset class due to the diversified nature of the tenancy, favorable demographic trends and the current support for the industry provided by the U.S. federal government.

• Sizeable existing portfolio. Our Initial Portfolio is comprised of over $105 million of investments that have been or are expected to be made directly in or secured by 16 multifamily apartment properties with an aggregate of 5,623 apartment units, which provides immediate cash flow and asset diversity.

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• Stable current income. We expect our Initial Portfolio and future investments in multifamily apartment properties to provide a durable source of cash flow for distributions to our stockholders due to (i) the scale and diversity of our tenant base, (ii) the fixed income structure of many of our assets, and (iii) the benefits of utilizing long-term fixed rate senior mortgage debt.

• Potential for capital appreciation through a property-level value-add approach. We believe many properties owned by entities in which we have a joint venture equity investment provide the opportunity for significant rental rate increases through improved management practices and long-term value appreciation through capital improvements.

• Diverse investment portfolio of joint venture equity and high-yield fixed income assets. In addition to joint venture equity interests, which generally represent a common equity interest in a joint venture that owns a multifamily apartment community, our Initial Portfolio includes preferred equity interests and mezzanine loans, which we believe provide downside protection due to the seniority of such assets to our operating partners’ or borrowers’ equity capital. We believe that this diversification will allow us to deliver more stable returns over time than if we focused solely on joint venture equity.

• Scalability of business model. Our investment strategy of becoming a financial partner to multifamily apartment property owners and operators by joint venturing with or lending to entrepreneurial operating partners allows us to source assets or obtain investment referrals through a wide variety of channels, including senior lenders, government-sponsored entities, or GSEs, brokers and the direct relationships of our Manager. By acquiring assets in this manner, we believe we benefit from the complementary knowledge and ongoing property-level efforts of our operating partners. Furthermore, we believe that our role as a financial partner allows us operating flexibility and enables us to scale our business more efficiently than many other REITs.

• Alignment of interests between our Manager and our stockholders. We have negotiated the terms of our Manager’s base management and incentive fees to align our Manager’s interests with those of our stockholders, including a base management fee that is calculated based on our adjusted equity market capitalization. Furthermore, upon completion of this offering and consummation of our formation transactions, the Contributing Investors and their affiliates will own approximately 42.4% of our outstanding common stock on a fully diluted basis. We believe that the ownership of our common stock directly or indirectly by our founders and the owners of our Manager will further align our Manager’s interests with those of our stockholders. Moreover, at the discretion of our independent directors, up to 50% of our incentive fee may be paid in shares of our common stock, which may further increase our Manager’s ownership of our company over time.

• Uniquely positioned to access industry information. Our Manager also manages a securitized multifamily mortgage portfolio for NYMT that includes investments in first-loss commercial mortgage backed securities, or CMBS, secured by more than 500 multifamily apartment properties. Our Manager’s initial underwriting of this portfolio, ongoing surveillance of the assets and other loan servicing responsibilities provide our Manager with extensive ongoing market intelligence, property performance data and operating partner interaction that we believe will benefit our sourcing and asset management of our Initial Portfolio and future investments in similar properties.

• Tax advantages. Because of the structure of our formation transactions and the fact that all of our Predecessor’s joint venture investments have been made within the past two years (the majority have been made within the past 12 months), we expect that our adjusted tax basis in the real property in which we indirectly own an interest will be at or near the fair market value of the property. Consequently, our depreciation deductions from those properties will be higher than would be the case if we were simply a lender, or if we acquired our indirect interest in those properties in a carryover basis transaction or if our

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Predecessor had already claimed material depreciation deductions with respect to those properties. Because of the significant depreciation deductions we expect to receive from those properties, we anticipate that a sizeable portion of the distributions paid by us in the near term will constitute a return of capital and not be taxable to stockholders.

The Market Opportunity in Multifamily Real Estate

We believe multifamily apartment communities offer a compelling commercial real estate investment opportunity when both risk and reward are considered. We believe the factors and trends listed below support our conclusion:

• Large-scale investment opportunity. According to the National Multifamily Housing Council, the United States has approximately $2.5 trillion of multifamily apartment properties and the transaction volume in this property market exceeded $110 billion in 2014. The multifamily apartment real estate market is the first property sector to reach this level. Continued high transaction volume in this market is expected to provide an attractive investment environment that fits our investment strategy.

• Continuing robust demand from apartment renters. Historically, employment growth and new household formation have been the top drivers of increased demand for apartments. Employers added an average of 246,000 jobs per month in the United States during 2014 and 203,000 jobs per month during the first six months of 2015, according to the U.S. Department of Labor. We believe that household formation will be robust in the next five years due to the substantial increase of millennials that have a tendency to rent, immigration and the release of pent-up demand.

• Supply shortage. According to Freddie Mac, the demand for multifamily housing over the next 10 years is expected to be at least 4.4 million units. Other studies indicate that the demand may be greater, such as the research report issued by the Federal Reserve Board of Kansas City that found that demand for multifamily units is expected to be in the range of 400,000 to 550,000 units per year, depending on the magnitude and timing of the release of pent-up demand. However, Freddie Mac estimates only 3.1 million units will be constructed over this period. We expect that the middle-market apartment availability will remain constricted so long as new construction costs are higher than market values.

• Diverse and stable income stream. Investments in multifamily apartment properties differ from other commercial real estate investments because of the short-term nature of the leases, the larger number of individual leases and the fact that the leases are for households and not businesses. We believe these characteristics mitigate many of the risks of commercial real estate investments by generally providing more stable rental demand, more flexibility to increase rental rates, the ability to diversify risk among numerous tenants and lower and more predictable costs of replacing tenants.

• Federal government support for the multifamily housing industry. The U.S. federal government utilizes Fannie Mae, Freddie Mac and the Federal Housing Administration, or FHA, as tools to support the overall availability and affordability of the U.S. housing market, including multifamily apartment properties. We believe that the stabilizing role these agencies play in the U.S. multifamily housing market materially mitigates the risk of multifamily apartment properties as compared to other property types.

Our Investment Strategy

Structured Multifamily Apartment Investment Business Model

We intend to position our company in the marketplace, like our Predecessor, as a real estate investor focused on debt and equity transactions involving multifamily apartment communities. We do not seek to be the sole owner and day-to-day manager of properties. Rather, we intend to participate as a “capital partner” by lending to or co-investing alongside a project-level sponsor that has already identified an attractive investment opportunity.

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We believe our strategy will provide attractive risk-adjusted returns to our company and our stockholders over both the short- and long-term investment horizons for the following reasons:

• As a well-capitalized public company with a management team that possesses significant experience and numerous relationships in the multifamily apartment industry, we expect a wide variety of potential operating partners will present numerous investment opportunities to us annually, allowing us to be selective in terms of both property transactions and our operating partners and to source new investments opportunistically;

• Our operating partners contribute to our local market knowledge, operating expertise and transaction sourcing network;

• We are able to opportunistically diversify our investments across numerous geographic markets, investment structures and operating partners, providing us the ability for diverse portfolio construction;

• We benefit from the scale and efficiencies of high-quality property management, which, in the case of our joint venture equity and preferred equity investments, can be quickly replaced in the event these on-site property managers do not perform in accordance with expectations of our partners and us; and

• Owning structured equity or debt assets, as opposed to whole-property ownership, allows us to negotiate terms or features in transactions that we believe provide additional principal protection and more stable returns.

Middle Market Investment Opportunities

We intend to focus on middle market assets, which we generally define as investments in multifamily apartment properties having market values between $15 million and $75 million and typically requiring less than $20 million of total equity or subordinate debt capital. We believe there are opportunities for above-market returns by investing in middle market properties that are not pursued by larger capital markets investors. Because institutional funding sources (such as life insurance companies, banks and conduits) tend to pursue higher-end properties in top-tier markets along the east and west coasts of the United States, middle-market project sponsors in secondary markets have greater difficulty arranging private capital, especially in times of economic stress. We believe our focus on these middle market transactions differentiates us from many of our competitors and our Manager has extensive experience with these assets.

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Target Markets

Although our Initial Portfolio includes investments in multifamily apartment communities geographically concentrated in the southeastern United States, our investments will not be limited to any particular geographic area in the United States. Generally, we will focus our sourcing efforts on markets that have above-average population growth and above-average net absorption rates, which we have determined to be primarily in the southeastern United States (the states shown in blue in the map below).

Our Initial Portfolio Locations

 

Garden-style Apartment Communities

The majority of the multifamily apartment properties that we target are garden-style apartment properties that consist of over 200 units with on-site dedicated leasing and management. “Garden-style” properties are predominantly wood-frame construction with surface parking and no elevators, providing for lower capital costs for owners when compared to mid- and high-rise multifamily apartment properties. These properties attract tenants by offering large amenity packages that often include swimming pools, fitness centers, business centers, clubhouses and security gates. These properties are also characterized by lower density (on average, approximately 20 units per acre, as compared to urban infill properties which may encompass significantly more units, depending on building height, built on several acres or less) and more open “green space.” We believe garden-style apartment properties generally cater to middle-class renters, the largest and most diverse multifamily renter segment in the United States.

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Properties That Have Existing Cash Flow with Upside

We generally pursue existing multifamily apartment properties that have in-place cash flow. In addition, we target assets having unique or compelling attributes that provide an opportunity for value creation and increased returns through the combination of better management or capital improvements that will lead to net cash flow growth and capital gains. Generally, we target properties that are or have been:

• located in a particularly dynamic submarket with strong prospects for rental growth;

• located in smaller markets that are underserved and more attractively priced;

• poorly managed by the previous owner, creating an opportunity for overall net income growth through better management practices;

• undercapitalized and may benefit from an investment in physical improvements; or

• highly stable and are suitably positioned to support high-yield preferred equity or mezzanine debt within their capital structure.

Pursue Privately Negotiated and Off-Market Transactions

We believe that our Manager’s dedicated acquisition team has a network of industry relationships throughout the United States that will allow us to pursue many potential investment opportunities through privately negotiated, off-market or lightly marketed transactions, including directly through a project-level sponsor. Off-market and lightly marketed transactions are characterized by a lack of a formal marketing process and a lack of widely disseminated marketing materials. We believe off-market and lightly marketed transactions can be more attractive than investments sourced through auction or capital markets intermediaries, as those widely marketed types of transactions often price at a higher level than off-market transactions.

Partner with Experienced Operators

We recognize the importance of a strong local operating partner that can bring local market knowledge and day-to-day on-site involvement. Our Manager has existing relationships with multiple operating partners who may provide attractive investment opportunities to us in the future.

We intend to continue investing with our existing operating partners and also to pursue new relationships with successful real estate entrepreneurs in order to identify attractive investment opportunities for our portfolio. We will generally seek experienced property-level operators or real estate entrepreneurs who have the ability to identify and manage strong investment opportunities but may lack the financial resources to fully fund the capital needed for a property acquisition. In our Manager’s experience, regional operating partners can provide superior oversight as co-investors in the property. Our Manager’s asset management team will work with our operating partners to oversee the implementation of each property’s business plan, including budgeting, capital expenditures and improved management practices.

We will require our operating partners to materially co-invest in every investment we make with them. Our common equity investments in joint ventures that own multifamily apartment properties have historically represented between 60% and 90% of the total equity capital contributed to the joint venture which is subordinate to any senior mortgage on the property, with our operating partner providing the balance of the equity capital, and we expect our future investments to have similar investment percentages. Our preferred equity investments and mezzanine loans have typically been structured such that our operating partner contributes approximately 25% to 50% of the capital that is subordinate to the senior loan on the property and that represents total subordination to us of at least 10% of the property value. We believe that requiring our operating partners to materially co-invest with us creates a significant incentive for our operating partners to increase operating income and property value through operational changes and property enhancements, aligning their interests with ours.

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Investment Types

We expect to invest in multifamily apartment communities at various levels within the capital structure of each property-owning entity. As we originate or select investments for our portfolio, we intend to evaluate the risks and benefits of each investment while taking into consideration our portfolio’s overall composition of investment structures. In general terms, the typical investment structures that we will pursue will be in the form of joint venture equity, preferred equity, mezzanine loans and other high-yield investments. We also may invest, from time to time, based on market conditions, in CMBS and other multifamily or mortgage-related assets to enable us to qualify or maintain our qualification as a REIT or otherwise.

Our Investment Process

Identification of New Investments

Our Manager has sourced all of the assets in our Initial Portfolio and will be responsible for sourcing all new opportunities that may meet our criteria. Our Manager’s strategy is to cast a very wide net, review as many opportunities as possible and select the most attractive assets for further discussions and analysis.

We have positioned ourselves in the marketplace so as not to be viewed as a competitor to either senior mortgage lenders or potential operating partners. We believe this strategy allows us to maintain relationships and access opportunities that might otherwise not be available to us. Debt providers (such as mortgage conduits and the GSEs, such as Freddie Mac and Fannie Mae) often refer opportunities to our Manager because they do not view our Manager or us as direct competitors given that neither of us provides or brokers first-mortgage debt. Real estate owners, operators and developers often contact us directly with opportunities because we do not directly compete with them as neither we nor our Manager directly bid to buy multifamily properties. Our Manager often collaborates with the senior debt provider and the operating partner to optimize the capital structure. We believe that several of our operating partners have completed multiple investments with our Manager because our Manager has been able to tailor capital solutions to fit their specific needs, has been responsive to their requests and has acted with integrity in its dealings with these partners, which has allowed us to build and strengthen our relationship with these partners over time.

We believe that our Manager’s network and experience within the multifamily apartment industry will serve to substantially supplement the scale and scope of our investment sourcing and origination platform and that the opportunity to review many different proposals greatly increases our overall market intelligence and provides perspective into the operations of potential competitors. See “Our Business—Our Investment Process.”

Underwriting and Approval Process

Our Manager has developed a comprehensive credit underwriting process. Prior to funding, a proposed transaction is analyzed and a written credit memorandum is prepared, which generally includes a description of the prospective operating partner, the collateral and the proposed use of investment proceeds, a comparison of competitive properties, financial analysis of property statements and rent rolls, a breakdown of loan and investment terms, an analysis and summary of key investment factors such as senior loan coverage, debt yield, investment current yield and investment total return, and a review and an analysis of the property relative to its competitors in the market. Each transaction is presented for approval to our Manager’s Investment Committee, which will initially consist of our Chief Executive Officer, our President, our Chief Operating Officer, our Chief Financial Officer and our Managing Director of Acquisitions. All transactions require the approval of at least four of the members of our Manager’s Investment Committee.

Due Diligence

We believe that thorough and thoughtful due diligence is critical. Our Manager applies a bottom-up approach to identify property strengths and mitigate potential transaction risks, including analyzing or conducting any or all of the following: detailed site inspections of both the

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target property and local competitors, in-depth property cash flow modeling, third-party appraisals, engineering and environmental assessments, operating partner background checks and outside counsel review of transaction documentation.

Ongoing Portfolio Management

Risk management has been and will continue to be a fundamental principle in our Manager’s construction of our Initial Portfolio and in the management of each new transaction we enter into in the future. Our Manager employs a dedicated team of four professionals, separate and apart from its investment team, to oversee, monitor and enhance the performance and credit quality of our assets.

Procedures for ongoing asset management and monitoring of credit quality of each of our assets include regularly scheduled site inspections of portfolio properties by representatives of our Manager to assess property physical condition and performance of on-site staff and competitive activity in the submarket. Our Manager also formulates annual budgets and performance goals alongside our operating partners for use in measuring the ongoing asset performance and credit quality of our assets.

Our Manager understands the importance of having close interaction with operating partners in order to mitigate credit risk and maximize the performance and value of its assets. To this end, our Manager communicates regularly with each of its operating partners.

In reviewing the performance and credit quality of our investments in preferred equity and mezzanine loans, we monitor on an ongoing basis the timeliness of payments of principal and interest on the investment, the debt service coverage ratios, debt yields and other performance metrics of our investments, the quality and financial condition of the borrower, operating member and/or property-level manager, as applicable, and the effect of the investment on our qualification as a REIT.

We believe the multifamily apartment properties underlying our Initial Portfolio have performed well to date. In the event that one of our operating partners fails to satisfy its obligations under the applicable operating agreement, we believe that our Manager’s prior experience provides us with the knowledge to successfully workout assets that experience credit difficulties. Furthermore, in the event of a payment or covenant default in connection with a mezzanine loan or preferred equity investment, or in the event of a covenant default by the operating partner of a joint venture, we believe that the terms we have negotiated with our borrowers and operating partners provide us protections and control features that will allow us to adequately protect our investment, such as our ability to take over day-to-day management of the property, replace on-site property management, invest capital as needed or sell the property. We believe our Manager will work diligently and creatively for our benefit to reposition any assets that we acquire and manage, or the multifamily apartment properties to which those assets relate, should these assets or properties experience credit difficulties in the future.

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Our Initial Portfolio

The following two tables present an overview of our Initial Portfolio, based on information as of March 31, 2015, unless otherwise indicated.

For purposes of this prospectus, the terms “joint venture properties” and “joint venture investments” denote the properties in which we hold a common equity interest through a joint venture with an operating partner and our common equity investment in a joint venture property, respectively.

Property Name	Date of Investment	Ownership Interest	Return Structure	Required Redemption or Maturity Date
Joint Venture Investments:
Station at Mason Creek(1)	September 2013	78%	Variable distribution based on property performance	none
The Flats@55Twelve(1)	June 2014	85%	Variable distribution based on property performance	none
Summer Chase(1)	October 2014	80%	Variable distribution based on property performance	none
Two Addison Place(1)	November 2014	90%	Variable distribution based on property performance	none
Terraces at Lake Mary(1)	January 2015	80%	Variable distribution based on property performance	none
Preserve at Port Royal(1)	(3)	78%	Variable distribution based on property performance	none
Preferred Equity Investments:
Monterey Ranch(1)	October 2014	Preferred Partnership Interest	Preferred return(6) of 12.00%	11/02/2021
Canter Chase(2)	December 2014	Preferred Partnership Interest	Preferred return(6) of 12.50%	12/17/2024
The Clusters(2)	June 2014	Preferred Partnership Interest	Preferred return(6) of 12.00%	07/06/2024
Garden District(2)	June 2015	Preferred Partnership Interest	Preferred return(6) of 12.00%	08/01/2022
Villages of Sage Creek(2)	April 2015	Preferred Partnership Interest	Preferred return(6) of 12.25%	05/01/2022
Riverchase Landing(2)	(5)	Preferred Partnership Interest	Preferred return(6) of 12.25%	(4)
Mezzanine Loan Investments:
Waters at Bluff Springs(1)	July 2014	Mezzanine Loan	Fixed interest rate(7) of 13.50%	11/01/2023
Waters at Elm Creek(1)	July 2014	Mezzanine Loan	Fixed interest rate(7) of 13.50%	11/01/2023
Highlands at Gwinnett Stadium(1)	January 2015	Mezzanine Loan	Fixed interest rate(7) of 12.00%	04/01/2025
Fountains at Andover(2)	(8)	Mezzanine Loan	Fixed interest rate(7) of 12.50%	(9)

(1) This investment is part of the Predecessor Investment Portfolio.

(2) This investment is one of the NYMT Contributed Assets.

(3) Our Predecessor has this investment under contract to acquire, with closing expected in August 2015.

(4) Redemption will occur approximately seven years from the closing date.

(5) NYMT has this investment under contract to acquire, with closing by NYMT expected in August 2015.

(6) Preferred return represents the rate of return we must receive before the operating partner receives any return of its initial investment. While the majority of such return for the preferred equity investment in our Initial Portfolio constitutes periodic cash payments, such return may also include a non-cash accrual component. See Note 4 to historical financial statements of the Predecessor as of and for the three months ended March 31, 2015 included elsewhere in this prospectus.

(7) The fixed interest rate represents the fixed accrual rate for this asset. While the majority of such return for the mezzanine loan investment in our Initial Portfolio constitutes periodic cash payments, such return may also include a non-cash accrual component. See Note 4 to historical financial statements of the Predecessor as of and for the three months ended March 31, 2015 included elsewhere in this prospectus.

(8) NYMT has entered into a loan agreement pursuant to which it will fund the loan concurrent with the refinancing of the senior mortgage loan on this property, which is expected to occur in August 2015.

(9) Redemption will occur approximately ten years from the closing date.

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Property Name	Location	Market	Number of Units		Average Unit Size (Sq. Ft.)		Year Built	Average Effective Monthly Rent Per Unit(1)			% Physically Occupied(2)
Joint Venture Investments:
Station at Mason Creek	Katy, TX	Houston, TX		291		772	2001	$	1,000			90.7	%
The Flats@55Twelve	Durham, NC	Raleigh/Durham, NC		268		1,003	2001	$	968			89.6	%
Summer Chase	Little River, SC	Myrtle Beach, SC		168		960	2000	$	756			95.8	%
Two Addison Place	Pooler, GA	Savannah, GA		325		1,061	2014	$	1,097			80.3	%
Terraces at Lake Mary	Lake Mary, FL	Orlando, FL		284		988	1998	$	924			90.8	%
Preserve at Port Royal	Port Royal, SC	Beaufort, SC		400		974	2004-2006		(3)			(3)
Subtotal/Weighted Average(4)	6 assets			1,736		962
Preferred Equity Investments:
Monterey Ranch	Austin, TX	Austin, TX		1,072		823	1995-1999	$	1,083			91.8	%
Canter Chase	Louisville, KY	Louisville, KY		256		921	1988	$	850			93.4	%
The Clusters	Midland, TX	Midland, TX		352		746	1982	$	1,260			89.5	%
Garden District	Simpsonville, SC	Greenville, SC		223		946	2008		(3	)		(3	)
Villages of Sage Creek	Austin, TX	Austin, TX		450		893	2002		(3	)		(3	)
Riverchase Landing	Hoover, AL	Birmingham, AL		468		1,594	1984-1992		(3	)		(3	)
Subtotal/Weighted Average(4)	6 assets			2,821		971
Mezzanine Loan Investments:
Waters at Bluff Springs	Austin, TX	Austin, TX		300		798	2001	$	869			98.7	%
Waters at Elm Creek	San Antonio, TX	San Antonio, TX		200		833	1999	$	792			92.0	%
Highlands at Gwinnett Stadium	Lawrenceville, GA	Atlanta, GA		248		1,119	2013	$	1,108			90.7	%
Fountains at Andover	Lexington, KY	Lexington, KY		318		861	1996		(3	)		(3	)
Subtotal/Weighted Average(4)	4 assets			1,066		898
Grand Total/Weighted Average(4)	16 assets			5,623		954

(1) Average effective monthly rent per unit is equal to (i) the gross potential rent minus any tenant concessions divided by (ii) the total number of units, and divided by (iii) the number of available months of data. Gross potential rent is calculated as the sum of the actual in-place monthly rents plus the sum of the current offered monthly rents for any vacant units (based on market rents) at the property.

(2) Percentage physically occupied is equal to the number of occupied units, excluding model and administrative units for which no rent is paid, divided by the total number of units. The physical occupancy for  The Clusters is as of March 27, 2015.

(3) The investment in the property was or will be acquired by our Predecessor or its affiliates or an affiliate of NYMT subsequent to March 31, 2015.

(4) Weighted Average unit size is weighted by the number of units.

Summary Risk Factors

Investing in our common stock involves a high degree of risk. Prospective investors are urged to carefully consider the matters discussed under “Risk Factors” prior to making an investment in our common stock. Such risks include, but are not limited to:

• We have no operating history and may not be able to operate our business successfully or generate sufficient revenue to make or sustain distributions to our stockholders.

• Our Manager and our officers have no experience managing a REIT or a publicly traded company.

• Our Initial Portfolio includes interests in or loans securing 16 multifamily apartment communities located primarily in markets in the southeastern United States. Any adverse developments in local economic conditions or the demand for apartment units in these markets may negatively impact our results of operations.

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• Our revenues are significantly influenced by demand for multifamily apartment properties generally, and a decrease in such demand will likely have a greater adverse effect on our revenues than if we owned a more diversified portfolio.

• Upon completion of this offering and consummation of our formation transactions, the Contributing Investors will own, directly or indirectly, an aggregate 42.4% beneficial interest in our company on a fully diluted basis and may have the ability to exercise significant influence on our company and our operating partnership, including the approval of significant corporate transactions.

• In connection with our formation transactions, we have not obtained a fairness opinion or independent third-party appraisal of the interests or assets being contributed to us, and the consideration to be paid by us in our formation transactions was not negotiated on an arm’s-length basis and may exceed the fair market value of the interests and other assets in our Initial Portfolio.

• We are dependent on our Manager and its key personnel for our success.

• The Management Agreement was not negotiated on an arm’s-length basis and may not be as favorable to us as if it had been negotiated with an unaffiliated third party.

• Termination of the Management Agreement, even for poor performance, could be difficult and costly, including as a result of termination fees, and may cause us to be unable to execute our business plan.

• We will require additional capital to continue to operate and grow our business and investment portfolio, and the failure to obtain such capital through financing or funding transactions would have a material adverse effect on our business, financial condition, results of operations and ability to make distributions to our stockholders.

• Any indebtedness to be incurred in the future, whether secured by individual properties in which we invest or unsecured, could subject us to increased risk of loss, which could have a material adverse effect on our results of operations and our ability to make distributions to our stockholders.

• Failure to qualify as a REIT, or failure to remain qualified as a REIT, would cause us to be taxed as a regular corporation, which would substantially reduce funds available for distributions to our stockholders.

• We may pay distributions from offering proceeds, borrowings or the sale of assets to the extent that distributions exceed earnings or cash flow from our investment activities.

• Loss of our exemption from registration under the Investment Company Act would adversely affect our results of operations, the market price of shares of our common stock and our ability to distribute dividends.

• We compete with our Manager’s other accounts for access to our Manager.

• We compete with other accounts managed by our Manager for opportunities to acquire assets, which are allocated in accordance with our Manager’s investment allocation policies.

• There will be conflicts of interest in our relationship with our Manager, which could result in decisions that are not in the best interests of our stockholders.

If we are unable to effectively manage these and other risks, our ability to meet our investment objectives would be substantially impaired. In turn, the value of our common stock and our ability to make distributions to our stockholders would be materially negatively impacted.

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Our Manager

Upon completion of this offering and consummation of our formation transactions, we will be externally managed and advised by our Manager, RiverBanc LLC, an investment management firm and registered investment adviser under the Investment Advisers Act of 1940. Our Manager was founded in 2010 and has sourced and managed over $400 million of direct and indirect investments in multifamily apartment properties on behalf of both public and private institutional investors. Our senior management team has an extensive history of working together. Our Chief Executive Officer, Kevin Donlon, and our Chief Operating Officer, Stephen Hogue, have worked together for more than 20 years at both KPMG LLP and Banc of America Securities LLC. While at Banc of America Securities LLC, Kevin Donlon and Stephen Hogue also worked with Douglas Neal and Emily Stiller during each of their respective tenures at Banc of America Securities LLC and certain of its affiliates. Additionally, Kevin Donlon, Emily Stiller and Steven Brannan worked together at Helix Financial Group LLC and BlackRock, Inc., or BlackRock. We believe our Manager and its executives possess significant experience and have numerous relationships in the multifamily apartment industry because of their prior career achievements, as well as their contributions over the past four years to the growth and the financial performance of the investments they have managed.

Our Manager is collectively owned directly or indirectly by the Contributing Investors, with an affiliate of Mr. Donlon owning a majority interest. Pursuant to the terms of a management agreement that we will enter into concurrent with the completion of this offering, or the Management Agreement, our Manager will provide us with our management team and appropriate support personnel, and we will have access to the management, infrastructure, personnel and other resources of our Manager necessary for the implementation and execution of our business and growth strategies. Our Manager has substantial discretion with respect to the selection of specific investments consistent with our investment objectives and strategy.

We will be able to draw upon the experience, expertise and relationships of our Manager’s senior executives and team of support personnel, which will provide expertise in asset management, portfolio management, finance, administration, legal, compliance, investor relations, asset valuation, risk management, information technology and other operational functions in connection with our investment activities. We expect to benefit from the personnel of our Manager and the relationships and experience of our Manager’s management team in order to create value for our stockholders. See “Our Manager and the Management Agreement.”

Compensation to Our Manager

Set forth below is a summary of the fees and expense reimbursements that we expect to pay our Manager under the Management Agreement for managing our business and assets. For additional information with respect to the compensation of our Manager, see “Our Manager and the Management Agreement—Management Agreement.”

Fee or Reimbursement Type

Description

Base Management Fee

An amount equal to: 0.375% (1.5% per annum) of our adjusted equity market capitalization for the preceding quarter. For purposes of calculating the quarterly base management fee, the adjusted equity market capitalization shall be (i) the product of (1) the average daily closing price of shares of our common stock during the relevant quarter (the “Average Quarterly Stock Price”), multiplied by (2) the sum of (a) the average daily number of shares of our common stock issued and outstanding during the relevant quarter, (b) the maximum number of shares of our common stock issuable pursuant to any outstanding convertible securities, rights, options or warrants to subscribe for, purchase or otherwise acquire shares of our common stock as of the end of the relevant quarter that are in the money based on the Average Quarterly Stock Price, and (c) the average daily number of

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Fee or Reimbursement Type	Description
	common stock equivalent securities (such as common units or LTIP units that may be issued by our operating partnership) issued and outstanding during the relevant quarter (and not already included in the calculation of clauses (a) or (b) above), minus (ii) the aggregate consideration payable to us on the applicable date upon the redemption, exercise, conversion and/or exchange of any of the securities included in the calculation of clause (b) above. For the avoidance of doubt, all shares of our common stock or common stock equivalent securities issued to our Manager as incentive fee compensation under the Management Agreement will be treated as issued and outstanding for purposes of clauses (a) or (c) above, as applicable, from the first day of the quarter in which such incentive fee compensation is paid. Our Manager uses the proceeds from its base management fee in part to pay compensation to its officers and personnel who, notwithstanding that certain of them also are our officers, receive no cash compensation directly from us. The base management fee is payable independent of the performance of our investments.
Incentive Fee	A fee payable with respect to each calendar quarter (or part thereof that the Management Agreement is in effect) in arrears in an amount, not less than zero, equal to the difference between (1) the product of (a) 20% and (b) the difference between (i) our Adjusted Core FFO (as defined below) for the most recent 12-month period (or such lesser number of completed calendar quarters, if applicable), including the calendar quarter (or part thereof) for which the calculation of incentive compensation is being made, and (ii) the product of (A) our Equity (as defined below) in the most recent 12-month period (or such lesser number of completed calendar quarters, if applicable), including the calendar quarter (or part thereof) for which the calculation of the incentive compensation is being made, and (B) 8.0% per annum (which we hereinafter refer to as the “incentive hurdle amount”), and (2) the sum of any incentive fee paid to our Manager with respect to the first three calendar quarters of the most recent 12-month period (or such lesser number of completed calendar quarters preceding the applicable period, if applicable); provided, however, that no incentive fee shall be payable with respect to any calendar quarter unless Adjusted Core FFO for the 12 most recently completed calendar quarters (or such lesser number of completed calendar quarters following completion of this offering) is greater than zero. “Equity” means the weighted average of the issue price per share of shares of our common stock issued by us in offerings and other transactions, multiplied by the daily average number of all shares of our common stock outstanding on a fully diluted basis (including common stock equivalent securities (such as LTIP Units or common units), any restricted stock units, restricted shares of our common stock and shares of our common stock underlying awards granted under the 2015 Equity Incentive Plan). For purposes of calculating the incentive fee during the first 12 months after completion of this offering, Adjusted Core FFO

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Fee or Reimbursement Type	Description
	will be determined by annualizing the applicable period following completion of this offering.
	“Adjusted Core FFO” is our net income (loss), computed in accordance with accounting principles generally accepted in the United States, or GAAP, (adjusted for our pro-rata share of consolidated real estate-related items, less amounts attributable to noncontrolling interests, and our estimated share of such items that are included in earnings of unconsolidated real estate joint venture investments, as applicable), after adjusting to exclude: (i) acquisition, pursuit and other one-time transaction expenses; (ii) non-cash equity-based compensation expense; (iii) incentive fees earned by our Manager (including any PIK-Related Incentive Fee (as defined below)); (iv) depreciation and amortization of real estate-related investments; (v) amortization of deferred financing costs; (vi) expenses related to the issuance of our debt or equity securities; (vii) any unrealized gains or losses or other similar non-cash items that are included in net income (loss) for the applicable reporting period, regardless of whether such items are included in other comprehensive income or loss, or in net income (loss); and (viii) one-time events pursuant to changes in GAAP and certain material non-cash income or expense items, in each case after discussions between our Manager and the independent directors of our board of directors and approved by a majority of our independent directors.
	The portion of the incentive fee attributable to non-cash accrual income on our mezzanine debt and preferred equity investments (“PIK Income”) for which associated cash proceeds have not yet been received (“PIK-Related Incentive Fee”) will be deferred until amounts associated with such income are actually received in cash; provided, however, that all or a portion of the deferred PIK-Related Incentive Fee, regardless of the quarter in which it was deferred, will be payable, but only if and to the extent that cumulative payments of PIK-Related Incentive Fees since our inception do not exceed 0.50% of our adjusted equity market capitalization (as defined in the Management Agreement) for the preceding quarter (“PIK-Related Incentive Fee Cap”). Any deferred PIK-Related Incentive Fee will be included in the calculation of any termination fee to be paid upon termination of the Management Agreement.
	At the discretion of our independent directors, up to 50% of the incentive fee payable to our Manager may be paid in shares of our common stock.
Expense Reimbursement	We will be required to reimburse our Manager for third-party operating expenses related to us that are incurred by our Manager, including expenses relating to legal, accounting, due diligence and other services. Our reimbursement obligation is not subject to any dollar limitation. Expenses will be reimbursed in cash on a monthly basis. We will not reimburse our Manager for the salaries and other compensation of its personnel and other direct expenses related to the operation of the Manager.

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Fee or Reimbursement Type

Description

Termination Fee

An amount equal to three times the sum of the average annual base management fee and the average annual incentive fee (including any deferred PIK-Related Incentive Fee) earned by our Manager, in each case during the 24-month period immediately preceding the most recently completed fiscal quarter prior to such termination of the Management Agreement (i) by us without cause or (ii) by our Manager if we materially breach the Management Agreement.

Organizational Structure

Upon completion of this offering and consummation of our formation transactions, we will be a holding company, and our primary asset will be our ownership interest in our operating partnership. The following chart illustrates our expected organizational structure immediately following completion of this offering and our formation transactions:

 

(1) Represents an aggregate of 1,500 LTIP units that will be issued to our three independent directors upon completion of this offering and consummation of our formation transactions. See “Our Operating Partnership and the Partnership Agreement—LTIP Units.”

(2) We will make a joint election with RiverBanc Multifamily Investors TRS, Inc., or our TRS, for our TRS to be treated as a taxable REIT subsidiary, or TRS, for U.S. federal income tax purposes. Our TRS will provide certain non-customary services to tenants of properties in which we have made joint venture or preferred equity investments.

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Our Formation Transactions

Our Company

We were formed as a Maryland corporation in February 2015 and will commence operations upon completion of this offering and consummation of our formation transactions. We will conduct our business through an UPREIT structure in which our investments will be owned by our operating partnership directly or through limited partnerships, limited liability companies or other subsidiaries, as described below under “—Our Operating Partnership.” We are the sole general partner of our operating partnership and, upon completion of this offering and consummation of our formation transactions, we will own approximately 99.98% of the partnership interests in our operating partnership. Our board of directors will oversee our business and affairs.

Our Operating Partnership

Following completion of this offering and our formation transactions, substantially all of our assets will be indirectly held by, and our operations will be conducted through, our operating partnership. We will contribute the net proceeds from this offering to our operating partnership in exchange for common units. Our interest in our operating partnership will generally entitle us to share in cash distributions from, and in the profits and losses of, our operating partnership in proportion to our percentage ownership. As the sole general partner of our operating partnership, we will have the exclusive power under the partnership agreement to manage and conduct its business and affairs, subject to certain limited approval and voting rights of the limited partners, which are described more fully in “Our Operating Partnership and the Partnership Agreement.”

Formation Transactions

Upon completion of this offering, pursuant to a series of transactions, we will: (i) issue an aggregate of 1,062,976 shares of our common stock in connection with our operating partnership’s acquisition of 100% of the common equity interests in our Predecessor, which owns the Predecessor Investment Portfolio; (ii) issue 1,737,024 shares of our common stock to NYMT in connection with our acquisition from NYMT of 100% of its preferred equity interests (having an aggregate liquidation preference of $32.7 million) in our Predecessor; and (iii) use a portion of the net proceeds from this offering to pay approximately $28.5 million in cash to RB Commercial Mortgage LLC, a wholly-owned subsidiary of NYMT (“RB Commercial Mortgage”), to acquire the NYMT Contributed Assets. The number of shares of our common stock issuable to the Contributing Investors in our formation transactions is based upon the Contributing Investors’ estimates of (i) in the case of common equity interests in our Predecessor, the value of the investments that comprise the Predecessor Investment Portfolio and the outstanding preferred units of our Predecessor that will be held by Ellington upon completion of this offering and (ii) in the case of the preferred equity interests held by NYMT, the aggregate liquidation preference of the preferred equity held by NYMT that is currently outstanding. Concurrently with the completion of our formation transactions and this offering, our Predecessor will pay to NYMT any accrued preferred returns on its preferred equity interest in our Predecessor for the period July 1, 2015 to the closing of this offering in cash, which are expected to be approximately $0.3 million. The cash consideration to be paid by us to RB Commercial Mortgage in exchange for the NYMT Contributed Assets represents the aggregate principal balance of the investments outstanding (or expected to be outstanding in the case of pending acquisitions) as of, and accrued but unpaid preferred distributions or interest on such assets to, the date on which we complete our acquisition of these assets. The estimates of the value of these assets and interests were based on various factors, including the historical performance of the subject property to which our investment relates, the structure of the investment, market conditions, market required rates of return, the duration of the investment and, in the case of mezzanine loans, the outstanding principal balance of the loan. See “Structure and Formation of Our Company—Determination of Consideration Payable in Our Formation Transactions.”

The values of shares of our common stock set forth below and elsewhere in this prospectus assume a value per share equal to the midpoint of the range of the public offering price per share

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set forth on the front cover of this prospectus. Pursuant to the terms of the contribution agreement, the number of shares of our common stock to be received by the Contributing Investors as consideration for the interests in our Predecessor that will be contributed to us in our formation transactions is fixed. As a result, in the event the public offering price per share is less than the midpoint of the range of the public offering price per share set forth on the front cover of this prospectus, the value of the shares of our common stock issuable to the Contributing Investors will decrease. Conversely, in the event the public offering price per share is greater than the midpoint of the range of the public offering price per share set forth on the front cover of this prospectus, the value of the shares of our common stock issuable to the Contributing Investors will increase.

Our Predecessor is a Delaware limited liability company in which the Contributing Investors collectively beneficially own 100% of the outstanding common equity interests and in which NYMT and affiliates of Ellington own 100% of the preferred equity interests as of the date of this prospectus. The investments that will be contributed to us in our formation transactions that comprise our Initial Portfolio are managed or were sourced directly by our Manager. See “Certain Relationships and Related Party Transactions.” Upon completion of this offering and consummation of our formation transactions, the Contributing Investors will beneficially own approximately 42.4% of our outstanding common stock on a fully diluted basis. The Contributing Investors have agreed not to sell or otherwise transfer any of the shares of our common stock owned by them for a period of 180 days after the completion of this offering and the consummation of our formation transactions.

The following transactions, which collectively comprise our formation transactions, have occurred or will occur substantially concurrently with the completion of this offering:

• We were formed as a Maryland corporation and our operating partnership was formed as a Delaware limited partnership.

• Pursuant to a contribution agreement between the Contributing Investors and us, we will acquire (i) 100% of the common equity ownership interests in our Predecessor in exchange for an aggregate of 1,062,976 shares of our common stock and (ii) 100% of the preferred equity ownership interests in our Predecessor that are held by NYMT in exchange for 1,737,024 shares of our common stock. Substantially concurrent with the consummation of this contribution transaction, the preferred equity interests that we acquire in our Predecessor will be converted to a common equity interest, at which time we will contribute this 100% common equity interest in our Predecessor to our operating partnership in exchange for 2,800,000 common units. Prior to or concurrent with the completion of this offering and our formation transactions, Ellington Housing Investments LLC will redeem its outstanding preferred equity interests in our Predecessor, with EF CMO LLC contributing additional capital to our Predecessor in exchange for additional preferred equity interests such that Ellington will hold preferred equity interests in our Predecessor having an aggregate liquidation preference of approximately $16.3 million upon completion of this offering and our formation transactions. We sometimes refer to these preferred equity interests to be held by Ellington as the “subsidiary preferred units.” For more information regarding the terms of the subsidiary preferred units following the completion of this offering, see “Structure and Formation of Our Company—Subsidiary Operating Agreement and Subsidiary Preferred Units.” Concurrently with the completion of our formation transactions and this offering, our Predecessor will pay to Ellington Housing Investments LLC for the period July 1, 2015 to the closing of this offering any accrued preferred returns on its preferred equity interests in our Predecessor that are being redeemed, which are expected to be approximately $0.1 million, and our Manager has agreed to pay EF CMO LLC approximately $0.2 million in connection with its additional capital contribution. As a result of the consummation of this contribution transaction, our operating partnership will own a 100% common equity interest in our Predecessor.

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• Pursuant to contribution agreements among RB Commercial Mortgage, NYMT and us, we will acquire all of RB Commercial Mortgage’s interests in the NYMT Contributed Assets in exchange for aggregate cash consideration of approximately $28.5 million.

• Concurrent with or prior to the completion of this offering, we will enter into a registration rights agreement pursuant to which the Contributing Investors will have certain registration rights covering the resale of shares of our common stock issued in our formation transactions.

• Concurrent with the completion of this offering, both we, our operating partnership and our Predecessor will enter into the Management Agreement with our Manager.

Our Founders

We consider our Chief Executive Officer and the Chairman of our board of directors, Kevin Donlon, NYMT and JMP to be our founders, because each took initiative in funding and organizing our business and each is a Contributing Investor in our formation transactions. Mr. Donlon is also the founder and Chief Executive Officer and beneficially owns and controls 59.4% of the outstanding equity interests of our Manager. NYMT, a REIT that invests primarily in mortgage-related and financial assets, completed its initial public offering in 2004 and is listed on the Nasdaq under the symbol “NYMT.” NYMT is managed by a five-member board of directors, a majority of whom are independent under the Nasdaq listing standards, and, as of March 31, 2015, had a common equity market capitalization of approximately $837.7 million. JMP is a wholly-owned subsidiary of JMP Group Inc., which is a wholly-owned subsidiary of JMP Group LLC, a NYSE-listed company under the symbol “JMP.” JMP is managed by a nine-member board of directors, a majority of whom are independent under NYSE listing rules and, as of March 31, 2015, had a common equity market capitalization of approximately $190.9 million. JMP and NYMT own approximately 20.6% and 20.0%, respectively, of the outstanding equity interests of our Manager. See “Certain Relationships and Related Party Transactions.”

Benefits of Our Formation Transactions to Related Parties

In connection with the completion of this offering and consummation of our formation transactions, certain of our directors, executive officers and affiliates of our Manager will receive material benefits described in “Certain Relationships and Related Transactions,” including the following:

• Donlon Family LLC, of which Mr. Donlon, our Chief Executive Officer, is the sole member, will receive 58,131 shares of our common stock with an aggregate value of approximately $1.1 million in connection with our formation transactions. As a result, Mr. Donlon will beneficially own approximately 0.88% of our outstanding common stock on a fully diluted basis.

• NYMT will receive 2,451,211 shares of our common stock with an aggregate value of approximately $47.8 million and RB Commercial Mortgage will receive approximately $28.5 million in cash in connection with our formation transactions. As a result, NYMT will beneficially own approximately 37.13% of our outstanding common stock on a fully diluted basis. In addition, concurrently with the completion of our formation transactions and this offering, our Predecessor will pay to NYMT any accrued preferred returns on its preferred equity interest in our Predecessor for the period July 1, 2015 to the closing of this offering in cash, which are expected to be approximately $0.3 million.

• JMP, which is a wholly-owned subsidiary of JMP Group LLC, will receive 290,658 shares of our common stock with an aggregate value of approximately $5.7 million in connection with our formation transactions. As a result, JMP will beneficially own approximately 4.40% of our outstanding common stock on a fully diluted basis.

• Concurrent with or prior to the completion of this offering, we will enter into a registration rights agreement with the Contributing Investors. Under the registration rights agreement, subject to certain limitations and the terms of the lock-up agreements described herein,

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we will agree to register the resale of the shares of common stock issued in our formation transactions. Except as described in the registration rights agreement, we will agree to pay all of the expenses relating to these securities registrations. See “Certain Relationships and Related Party Transactions—Registration Rights Agreement” and “Shares Eligible for Future Sale—Registration Rights.”

• Concurrent with the completion of this offering, we, our operating partnership and our Predecessor will enter into the Management Agreement with our Manager, pursuant to which our Manager will provide for the day-to-day management of our operations. The Management Agreement requires our Manager to manage our business affairs in conformity with the policies and the investment guidelines that are approved and monitored by our board of directors. All of our officers also serve as officers, employees and/or directors of our Manager or one of its other affiliates and our President and one of our directors (who is also the principal executive officer of NYMT) are members of NYMT’s board of directors. In addition, the Contributing Investors collectively beneficially own 100% of our Manager, which entitles them to indirectly receive a portion of the management fees that we pay to our Manager. As a result, the Management Agreement between us, our operating partnership, our Predecessor and our Manager was negotiated between related parties, and the terms, including fees payable and expenses reimbursable, may not be as favorable to us as if the agreement had been negotiated with an unaffiliated third party. See “Our Manager and the Management Agreement,” “Risk Factors—Risks Related to Our Manager and the Management Agreement” and “Certain Relationships and Related Party Transactions—Management Agreement.”

• We intend to enter into indemnification agreements with our directors and executive officers at the completion of this offering, providing for procedures for indemnification by us to the fullest extent permitted by law and advancements by us of certain expenses and costs relating to claims, suits or proceedings arising from their service to us or, at our request, service to other entities, as officers or directors.

• We have adopted the 2015 Incentive Plan, under which we may grant cash or equity incentive awards to our directors, officers, employees and consultants, including employees of our Manager. Upon completion of this offering and consummation of our formation transactions, we intend to issue 500 LTIP units to each of our independent directors. See “Management—2015 Equity Incentive Plan.” We do not at this time intend to grant cash or equity incentive awards to employees of our Manager, although there can be no assurance that we will not grant awards to employees of our Manager in the future.

Conflicts of Interest

We are subject to conflicts of interest arising out of our relationship with our Manager and its affiliates, including the Contributing Investors, and the nature of these conflicts of interest may vary. In addition to the investment management services it provides to our Predecessor, our Manager managed approximately $254 million of capital, as of March 31, 2015, on behalf of NYMT that is invested in multifamily CMBS and certain commercial real estate-related debt investments, including preferred equity and mezzanine loans, and approximately $0.8 million of capital, as of March 31, 2015, for a limited liability company formed in May 2013 that is now in “wind-down” mode and of which Mr. Donlon is the “lead capital member.” This limited liability company currently owns an undeveloped parcel of land and 17 residential home lots offered for sale, and we do not expect this limited liability company to develop the land or lots owned by it. Our Manager has agreed that this limited liability company will not invest in our targeted assets in the future. Subject to its obligations under the Management Agreement, although our Manager may in the future provide investment management services to various other clients, our Manager has agreed that, during the term of the Management Agreement, it will allocate all future investment opportunities involving the origination or sourcing of joint venture equity ownership and preferred equity ownership interests in entities that own, and mezzanine loans secured by, multifamily apartment properties to us; provided, however, that our Manager will be permitted to offer all or a portion of such investment opportunity to another account, on substantially the same terms as

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those presented to us, if the investment opportunity is presented by our Manager to our board of directors for their approval (whether or not it conforms to our investment guidelines) and a majority of the independent and disinterested directors of our board of directors vote against proceeding with the transaction. However, if our board of directors modifies our investment guidelines in a manner that alters (in a way that is materially adverse to our Manager) or otherwise eliminates our Manager’s authority under the investment guidelines with respect to any of the investment opportunities described in the immediately preceding sentence and our Manager does not consent to such modification, our Manager may void its agreement with respect to the allocation of future similar investment opportunities that are impacted by the change. There may be circumstances in which our Manager could direct operations in our company in a manner that would benefit the interests of its affiliates, including the Contributing Investors and their affiliates, or other clients. All of our executive officers and our Chairman are employees of our Manager or one or more of its affiliates and our President and one of our director nominees (who is also the principal executive officer of NYMT) are members of NYMT’s board of directors. As a result, our Manager and our officers may have conflicts between their duties to us and their duties to, and interests in, our Manager and its affiliates. See “Certain Relationships and Related Party Transactions—Related Party Transaction Policy.”

We may acquire or sell assets in which our Manager or its affiliates have or may have an interest. Similarly, our Manager or its affiliates may acquire or sell assets in which we have or may have an interest, and we may engage in transactions directly with our Manager or its affiliates. Our Manager and its affiliates may have economic interests in or relationships with entities whose securities we may acquire. In particular, such persons may make or hold an investment in securities that we acquire that may be pari passu, senior or junior in ranking to our interest in the securities or in which partners, security holders, officers, directors, agents or employees of such persons serve on boards of directors or otherwise have ongoing relationships. Each of such ownership and other relationships may result in securities laws restrictions on transactions in such securities and otherwise create conflicts of interest. In such instances, our Manager may, in its sole discretion, make recommendations and decisions regarding such securities for other clients that may be the same as or different from those made with respect to such securities and may take actions (or omit to take actions) in the context of these other economic interests or relationships the consequences of which may be adverse to our interests.

Some of the investments we target are also targeted assets of other clients managed by our Manager now and in the future and, except as described in the paragraph immediately below and subject to its obligations under the Management Agreement, our Manager has no duty to allocate such opportunities in a manner that preferentially favors us. Subject to our Manager’s written investment allocation policy, our Manager makes available to us all opportunities to acquire assets that it determines, in its reasonable and good faith judgment, based on our objectives, policies and strategies, and other relevant factors, are appropriate for us, it being understood that we might not participate in each such opportunity.

Subject to the terms of the Management Agreement, our Manager’s investment allocation policy provides that it will offer all direct investments in multifamily apartment properties, such as joint venture equity ownership and preferred equity ownership interests in entities that own, and mezzanine loans secured by, multifamily apartment properties to us, unless the investment is presented by our Manager to our board of directors for their approval (whether or not it conforms to our investment guidelines) and a majority of the independent and disinterested directors of our board of directors vote against proceeding with the transaction, in which case it will then be offered first to NYMT and then to other accounts, while our Managers’ investment allocation policy provides that investment opportunities in securitized assets, such as mortgage-backed securities or collateralized debt obligations, will be offered first to NYMT, second to us and thereafter to other accounts. In the event our Manager believes that investments other than those described in this paragraph meet the investment guidelines for more than one account, our Manager may offer the opportunities to multiple accounts in proportion to their needs and available capital; provided that,

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on an overall basis, each account is treated equitably. Should we and one or more accounts of the Manager be involved in the same investment, our Manager will follow the approval process of our related person transactions policy. See “Certain Relationships and Related Party Transactions—Related Party Transaction Policy.”

In deciding whether to issue additional debt or equity securities, we will rely in part on recommendations made by our Manager. While such decisions are subject to the approval of our board of directors, our Chairman is also an employee of our Manager and our President and one of our director nominees (who is also the principal executive officer of NYMT) are members of NYMT’s board of directors. Because our Manager will earn a management fee from us that is based on our adjusted equity market capitalization, our Manager may have an incentive to recommend that we issue additional equity securities.

The officers of our Manager and its affiliates will devote as much time to us as our Manager deems appropriate, however, these officers may have conflicts in allocating their time and services among us and the other clients that our Manager manages, particularly during economic downturns and other times when we will need focused support and assistance from our Manager.

The Contributing Investors collectively beneficially own 100% of our Manager. Upon completion of this offering and consummation of our formation transactions, the Contributing Investors and their affiliates will own approximately 42.4% of our outstanding common stock on a fully diluted basis. Consequently, these stockholders will be able to significantly influence our business and operations through our Manager and may be able to significantly influence the outcome of matters which require the approval of our board of directors or are submitted for stockholder action, including the approval of significant corporate transactions, including business combinations, consolidations and mergers. Such matters also may include decisions related to future capital raises, investment strategy, dividend declarations, financing decisions and decisions regarding our Manager. NYMT, JMP and their affiliates are also in the business of making investments in companies and assets and may from time to time acquire and hold interests in businesses that compete directly or indirectly with us or investments that we target. NYMT or JMP may also pursue investment opportunities that are complementary to our business, and, as a result, those investment opportunities may not be available to us.

In addition, pursuant to a stockholder agreement between NYMT and us that will be effective upon completion of our formation transactions and this offering, so long as NYMT and its affiliates beneficially own at least 10.0% of our outstanding common stock (assuming all outstanding common units and LTIP units are exchanged for shares of our common stock), NYMT will have the right to designate one director nominee to our board of directors. In the event NYMT and its affiliates beneficially own at least 20.0% of our outstanding common stock (assuming all outstanding common units and LTIP units are exchanged for shares of our common stock) as of the one-year anniversary of the completion of this offering, pursuant to the stockholder agreement, we will increase the size of our board of directors from five directors to six directors, at which time NYMT will have the right to designate the additional independent director that will fill the new board seat. See “Certain Relationships and Related Party Transactions—Stockholder Agreement.” As long as the Contributing Investors or their affiliates continue to own a significant amount of our outstanding common stock, or one or more of their affiliates serve on our board of directors, the Contributing Investors may continue to be able to influence our decisions.

As a result of the foregoing, our Manager or certain of its affiliates may have conflicts of interest in allocating their time and activity among, and performing their investment management services on behalf of, our company and other clients that it manages. In situations in which our Manager has a conflict of interest, we may not receive the full benefit of our Manager’s expertise.

Financing Policy

We intend to use prudent amounts of leverage in making our investments, which we define as having total indebtedness of not more than approximately 50% of the fair market value of all of our investments, but the leverage on specific investments may exceed this level. However, we are not subject to any limitations on the amount of leverage we may use, and accordingly, the amount of

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leverage we use may be significantly less or greater than we currently anticipate. We will use corporate leverage for the sole purpose of financing our portfolio and not for the purpose of speculating on changes in the interest rates. We expect our leverage to decline commensurately as we execute our business plan to grow our net asset value.

Our board of directors has the authority to change our financing policies at any time and without stockholder approval. If our board of directors changes our policies regarding our use of leverage, we expect that it will consider many factors, including the lending standards of GSEs, such as Fannie Mae and Freddie Mac, for loans in connection with the financing of apartment properties, the leverage ratios of publicly traded REITs with similar investment strategies, the cost of leverage as compared to expected operating net revenues and general market conditions. In the event our board of directors elects in the future to change our financing policies, we will report on and explain any changes to the extent required by applicable securities laws and regulations. Moreover, because our charter and bylaws do not require us to notify stockholders of any changes to our financing policies, we expect not to disclose in a formal way any such changes unless required at that time by applicable law or regulation. As a practical matter, however, we expect to communicate with our stockholders at least quarterly through quarterly and annual reports to stockholders and we expect to keep our stockholders informed of significant decisions or actions taken by our board of directors with respect to our financing policies.

To the extent we operate on a leveraged basis, we expect to have more funds available for investment and other purposes than if we operated on a non-leveraged basis, and we believe that operating on a leveraged basis will allow us to acquire more investments than would otherwise be possible, resulting in a larger and more diversified portfolio. See “Risk Factors—Risks Related to Debt Financing.”

Distribution Policy

We intend to make regular quarterly distributions to our common stockholders. Distributions declared by us will be authorized by our board of directors in its sole discretion out of funds legally available therefor and will depend upon a number of factors, including restrictions under applicable law, the capital requirements of our company and the distribution requirements necessary to qualify and maintain our qualification as a REIT. We may be required to fund distributions from working capital or with a portion of the net proceeds from this offering or borrow to provide funds for such distributions, or we may choose to make a portion of the required distributions in the form of a taxable stock dividend to preserve our cash balance. See “Distribution Policy.”

Our Tax Status

We will elect and intend to operate our business in a manner that will enable us to qualify to be taxed as a REIT for U.S. federal income tax purposes commencing with our short taxable year ending December 31, 2015. Our qualification as a REIT will depend upon our ability to meet, on a continuing basis, through actual investment and operating results, various complex requirements under the Internal Revenue Code of 1986, as amended, or the Code, relating to, among other things, the sources of our gross income, the composition and values of our assets, our distribution levels and the diversity of ownership of our capital stock. We believe that we will be organized in conformity with the requirements for qualification as a REIT under the Code and that our intended manner of operation will enable us to meet the requirements for qualification and taxation as a REIT for U.S. federal income tax purposes commencing with our short taxable year ending December 31, 2015.

As a REIT, we generally will not be subject to U.S. federal income tax on our taxable income that we distribute currently to our stockholders. Under the Code, REITs are subject to numerous organizational and operational requirements, including a requirement that they distribute on an annual basis at least 90% of their REIT taxable income, determined without regard to the deduction for dividends paid and excluding any net capital gains. If we fail to qualify for taxation as a REIT in any taxable year and do not qualify for certain statutory relief provisions, our income for that year

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will be subject to tax at regular corporate rates, and we would be disqualified from taxation as a REIT for the four taxable years following the year during which we ceased to qualify as a REIT. Even if we qualify as a REIT for U.S. federal income tax purposes, we may still be subject to state and local taxes on our income and assets and to U.S. federal income and excise taxes on our undistributed income. Additionally, any income earned by our TRS, or any TRS that we form or acquire in the future, will be fully subject to U.S. federal, state and local corporate income tax.

Restrictions on Ownership and Transfer

Under the partnership agreement of our operating partnership, holders of common units may not transfer their common units without our prior consent, as the sole general partner of our operating partnership. Each of our executive officers, directors and director nominees has agreed not to sell or otherwise transfer or encumber any shares of our common stock or securities convertible or exchangeable into our common stock (including LTIP units) owned by them at the completion of this offering or thereafter acquired by them for a period of 180 days without the written consent of the representatives of the underwriters of this offering. In addition, the Contributing Investors have agreed with the underwriters not to sell or otherwise transfer any of the shares of our common stock owned by them for a period of 180 days after the completion of this offering and the consummation of our formation transactions.

Due to limitations on the concentration of ownership of REIT stock imposed by the Code, effective upon completion of this offering and subject to certain exceptions, our charter will provide that no person may beneficially or constructively own more than 9.8% in value or in number of shares, whichever is more restrictive, of the outstanding shares of any class or series of our capital stock, except that NYMT may own up to 100% of the shares of our common stock as long as it continues to qualify as a REIT. See “Description of Our Capital Stock—Restrictions on Ownership and Transfer.”

Our charter will also prohibit any person from, among other things:

• beneficially or constructively owning or transferring shares of our capital stock if such ownership or transfer would result in our being “closely held” within the meaning of Section 856(h) of the Code (without regard to whether the ownership interest is held during the last half of a year);

• transferring shares of our capital stock if such transfer would result in our capital stock being owned by fewer than 100 persons; and

• beneficially or constructively owning or transferring shares of our capital stock if such beneficial or constructive ownership or transfer would otherwise cause us to fail to qualify as a REIT under the Code.

Our board of directors, in its sole discretion, may exempt (prospectively or retroactively) a person from the 9.8% ownership limit and certain other restrictions in our charter and may establish or increase an excepted holder percentage limit for such person if our board of directors obtains such representations, covenants and undertakings as it deems appropriate in order to conclude that granting the exemption or establishing or increasing the excepted holder percentage limit will not cause us to lose our status as a REIT.

Our charter will also provide that any ownership or purported transfer of our stock in violation of the foregoing restrictions will result in the shares owned or transferred in such violation being automatically transferred to one or more charitable trusts for the benefit of a charitable beneficiary and the purported owner or transferee acquiring no rights in such shares, except that any transfer that results in the violation of the restriction relating to shares of our capital stock being beneficially owned by fewer than 100 persons will be void ab initio. If the transfer to the trust is ineffective for any reason to prevent a violation of the restriction, the transfer that would have resulted in such violation will be void ab initio and the purported owner or transferee will have no right in such shares.

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Policies Relating to the Investment Company Act

We intend to conduct our operations so that neither we, our operating partnership, RB Multifamily Investors LLC nor the subsidiaries of RB Multifamily Investors LLC are required to register as investment companies under the Investment Company Act. We, our operating partnership and RB Multifamily Investors LLC are structured as holding companies, holding virtually no assets, other than cash, directly. Our non-cash assets are held through three primary subsidiaries of RB Multifamily Investors LLC, RMI I LLC, RMI II LLC and RMI III LLC, and a fourth majority-owned subsidiary of RB Multifamily Investors LLC, Bent Tree JV Holdings LLC (“Bent Tree”), which owns a single parcel of real estate.

Section 3(a)(1)(A) of the Investment Company Act defines an investment company as any issuer that is or holds itself out as being engaged primarily in the business of investing, reinvesting or trading in securities. Section 3(a)(1)(C) of the Investment Company Act defines an investment company as any issuer that is engaged or proposes to engage in the business of investing, reinvesting, owning, holding or trading in securities and owns or proposes to acquire investment securities having a value exceeding 40% of the value of the issuer’s total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis, which we refer to as the “40% Test.” Excluded from the term “investment securities,” among other things, are U.S. government securities and securities issued by majority-owned subsidiaries that are not themselves investment companies and are not relying on the exception from the definition of investment company set forth in Section 3(c)(1) or Section 3(c)(7) of the Investment Company Act. Accordingly, under Section 3(a)(1) of the Investment Company Act, in relevant part, a company is not deemed to be an “investment company” if (i) it neither is, nor holds itself out as being, engaged primarily, nor proposes to engage primarily, in the business of investing, reinvesting or trading in securities; and (ii) it neither is engaged nor proposes to engage in the business of investing, reinvesting, owning, holding or trading in securities and does not own or propose to acquire “investment securities” having a value exceeding 40% of the value of its total assets on an unconsolidated basis.

We believe that we, our operating partnership, RB Multifamily Investors LLC and RMI I LLC will not fall within either definition of investment company. We, our operating partnership and RB Multifamily Investors LLC are not engaged in the business of investing, reinvesting or trading in securities, but instead are engaged in the business of our wholly-owned or majority-owned subsidiaries.

RMI I LLC will have at least 60% of its assets in what we call “joint ventures.” These “joint ventures” own real estate. We treat these “joint ventures” as majority-owned subsidiaries. The determination of whether an entity is a majority-owned subsidiary of our company is made by us. The Investment Company Act defines a majority-owned subsidiary of a person as a company 50% or more of the outstanding voting securities of which are owned by such person, or by another company which is a majority-owned subsidiary of such person. The Investment Company Act further defines voting securities as any security presently entitling the owner or holder thereof to vote for the election of directors of a company. With respect to the “joint ventures” that are governed by a board of managers, we have the right to vote on at least 50% of the board seats.

In some instances, the joint ventures are managed by their members, rather than by a board of managers. Thus, the membership interests do not fall squarely within the definition of voting securities, but we nevertheless consider these joint ventures to be majority-owned subsidiaries. The SEC staff has taken the position that limited partnership interests may be voting securities if one or more limited partners has the right to take part in the conduct or control of the partnership’s business or if the limited partners’ economic interests effectively gives them the power to exercise a controlling influence over the partnership. We believe the same analysis applies to limited liability company interests. Where there is no board of managers for a joint venture, we have 50% of the voting rights with respect to “major decisions” to be made, including any major decisions with respect to the assets of the companies. Thus, because we have 50% or more of the voting rights in these joint ventures, we consider them to be our majority-owned subsidiaries. We have not asked the SEC staff for concurrence of our analysis, our treatment of such securities as voting securities, or whether these joint ventures may be treated in the manner in which we intend, and it

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is possible that the SEC staff could disagree with any of our determinations. If the SEC staff were to disagree with our treatment of one or more companies as majority-owned subsidiaries, we would need to adjust our strategy and our assets. Any such adjustment in our strategy could have a material adverse effect on us.

Similarly, Bent Tree is a joint venture owned directly by RB Multifamily Investors LLC, and it is a majority-owned subsidiary that owns real estate. Thus, both RMI I LLC and Bent Tree satisfy the 40% Test. RMI II LLC will rely upon Section 3(c)(5)(C) as its exclusion from the registration requirements of the Investment Company Act. Section 3(c)(5)(C), as interpreted by the staff of the SEC, requires RMI II LLC to invest at least 55% of its portfolio in “mortgages and other liens on and interests in real estate,” which we refer to as “qualifying real estate assets,” and maintain at least 80% of its assets in qualifying real estate assets or other real estate-related assets. RMI II LLC will satisfy these tests by investing, primarily, in those mezzanine loans that are qualifying real estate assets. RMI III LLC will invest in preferred equity in real estate, which are securities and not qualifying real estate assets. Thus, RMI III LLC will rely upon Section 3(c)(7). Our operating partnership’s interest in RMI III LLC will constitute an investment security. Accordingly, we and our operating partnership will continue to satisfy the 40% Test so long as the value of our investment in RMI III LLC, on an unconsolidated basis, is less than 40% of the value of our investment in all subsidiaries of the operating partnership.

To maintain compliance with the Investment Company Act exceptions, we, our operating partnership or our subsidiaries may be unable to sell assets we would otherwise want to sell and may need to sell assets we would otherwise wish to retain. In addition, we, our operating partnership or our subsidiaries may have to acquire additional income- or loss-generating assets that we might not otherwise have acquired or may have to forego opportunities to acquire interests in companies that we would otherwise want to acquire and that may be important to our investment strategy. If our subsidiaries fail to satisfy the requirements of any exemption or exclusion under the Investment Company Act, we could be characterized as an investment company. Our Manager will continually review our investment activity to attempt to ensure that we will not be required to register as an investment company. Among other things, our Manager will attempt to monitor the proportion of our portfolio that is placed in investments in securities.

Implications of Being an Emerging Growth Company

We qualify as an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. An emerging growth company may take advantage of specified reduced reporting requirements and is relieved of certain other significant requirements that are otherwise generally applicable to public companies. For as long as we are an emerging growth company, among other things:

• we are exempt from the requirement to obtain an attestation and report from our auditors on the assessment of our internal control over financial reporting pursuant to the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act;

• we are permitted to provide less extensive disclosure about our executive compensation arrangements and certain other disclosures; and

• we are not required to give our stockholders non-binding advisory votes on executive compensation or golden parachute arrangements.

We may take advantage of these provisions until December 31, 2020 or such earlier time that we are no longer an emerging growth company. We would cease to be an emerging growth company if we have more than $1 billion in annual revenues, have more than $700 million in market value of shares of our common stock held by non-affiliates, or issue more than $1 billion of non-convertible debt securities over a three-year period.

In addition, Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended, or the Securities Act, for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting

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standards until those standards would otherwise apply to private companies. An emerging growth company may opt out of the extended transition period for complying with new or revised accounting standards. A decision to opt out, however, is irrevocable. We have elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we can adopt the standard for the private company. This may make comparison of our financial statements with a public company that either is not an emerging growth company or is an emerging growth company that has opted out of using the extended transition period difficult or impossible as different or revised accounting standards may be used.

Corporate Information

We were formed in 2015 as a corporation under the laws of the State of Maryland. Our principal executive offices are located at 227 West Trade Street, Suite 900, Charlotte, North Carolina 28202. Our telephone number is (980) 224-4180. Our internet address is www.riverbancreit.com. Our internet website and the information contained therein or connected thereto do not constitute a part of this prospectus or any amendment or supplement hereto.

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The Offering

Common stock offered by us

3,800,000 shares

Common stock to be outstanding upon completion of this offering and consummation of our formation transactions⁽¹⁾

6,600,000 shares

Common stock and LTIP units to be outstanding upon completion of this offering and consummation of our formation transactions⁽¹⁾

6,600,000 shares and 1,500 LTIP units

Use of proceeds

We estimate that the net proceeds from this offering, after deducting the underwriting discounts and commissions and estimated expenses and financial advisory fees payable by us, will be approximately $67.4 million, or approximately $77.7 million if the underwriters’ option to purchase additional shares of our common stock is exercised in full. We intend to use approximately $28.5 million of the net proceeds to acquire the NYMT Contributed Assets, approximately $9.1 million to fund our Predecessor’s contract to acquire a joint venture equity investment in the Preserve at Port Royal, which is expected to close in August 2015, and substantially all of the remaining net proceeds to fund our future acquisition of joint venture equity ownership and preferred equity ownership in, and mezzanine debt and other high-yield investments secured by, multifamily apartment properties, and for general corporate purposes, including financing, operating expenses and our other expenses.

Until these future investments can be identified and consummated, we intend to invest the net proceeds in interest-bearing short-term investment-grade securities or money-market accounts that are consistent with our intention to qualify as a REIT and maintain our exemption from registration under the Investment Company Act, including, for example, government and government agency certificates, certificates of deposit and interest-bearing bank deposits.

Distribution policy

We intend to make regular quarterly distributions to our common stockholders. Distributions declared by us will be authorized by our board of directors in its sole discretion out of funds legally available therefor and will depend upon a number of factors, including restrictions under applicable law, the capital

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requirements of our company and the distribution requirements necessary to qualify and maintain our qualification as a REIT. See “Distribution Policy.”

Ownership and transfer restrictions

To assist us in qualifying as a REIT, among other purposes, our charter generally limits beneficial and constructive ownership by any person to no more than 9.8% in value or in number of shares, whichever is more restrictive, of the outstanding shares of any class or series of our common stock, except NYMT may own up to 100% of the shares of our common stock as long as it continues to qualify as a REIT. In addition, our charter contains various other restrictions on the ownership and transfer of shares of our common stock. See “Description of Our Capital Stock—Restrictions on Ownership and Transfer.”

Proposed Nasdaq symbol

We have applied to list our shares of common stock on the Nasdaq (Nasdaq Capital Market) under the symbol “RMI.”

Risk factors

Investing in our common stock involves risks. See “Risk Factors” and other information in this prospectus for a discussion of factors you should consider carefully before investing in our common stock.

(1) Includes 2,800,000 shares of our common stock issued in our formation transactions. Excludes (i) up to 570,000 shares of our common stock that may be issued by us upon exercise of the underwriters’ option to purchase additional shares of our common stock, (ii) 328,500 shares of our common stock available for future issuance under our 2015 Incentive Plan and (iii) 100 shares, purchased for an aggregate purchase price of $1,000 by Mr. Donlon in connection with our initial capitalization, which we will repurchase for $1,000 immediately prior to the closing of this offering.

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SUMMARY PRO FORMA AND HISTORICAL FINANCIAL AND OPERATING DATA

The following table sets forth summary financial and operating data on (i) a pro forma basis for our company after giving effect to this offering and our formation transactions and (ii) a historical basis for our Predecessor. Upon completion of our formation transactions and this offering, we will acquire: (i) 100% of the common equity interests in our Predecessor, which owns the Predecessor Investment Portfolio; (ii) 100% of the preferred equity ownership interests in our Predecessor that are held by NYMT; and (iii) the NYMT Contributed Assets, which, together with the Predecessor Investment Portfolio, will collectively comprise our Initial Portfolio.

We have not presented historical information for RiverBanc Multifamily Investors, Inc. because we have not had any corporate activity since our formation and because we believe that a discussion of the results of RiverBanc Multifamily Investors, Inc. would not be meaningful.

You should read the following summary financial and operating data in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” our unaudited pro forma consolidated financial statements and related notes, and the historical financial statements and related notes of our Predecessor included elsewhere in this prospectus.

The unaudited pro forma consolidated balance sheet data is presented as if our formation transactions and this offering had occurred on March 31, 2015 and the unaudited pro forma consolidated statements of operations and other data for the three months ended March 31, 2015 and the year ended December 31, 2014 are presented as if our formation transactions and this offering had occurred on January 1, 2014. The pro forma financial information is not necessarily indicative of what our actual financial condition would have been as of March 31, 2015 or what our actual results of operations would have been assuming our formation transactions and this offering had been completed as of January 1, 2014, nor does it purport to represent our future financial position or results of operations.

The unaudited summary historical balance sheet information as of March 31, 2015 and statement of operations data for the three-month periods ended March 31, 2015 and 2014 have been derived from the unaudited financial statements of our Predecessor included elsewhere in this prospectus. The summary historical balance sheet information as of December 31, 2014 and 2013, and the historical statement of operations data for the year ended December 31, 2014 and the period from July 24, 2013 (inception) to December 31, 2013 have been derived from the audited financial statements of our Predecessor, which are included elsewhere in this prospectus.

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	For the Three Months Ended March 31,									For the Year Ended December 31,						For the Period from July 24, 2013 (inception) to December 31,
	2015			2015			2014			2014			2014			2013
	Company Pro Forma Consolidated (Unaudited)			Predecessor Historical (Unaudited)			Predecessor Historical (Unaudited)			Company Pro Forma Consolidated (Unaudited)			Predecessor Historical			Predecessor Historical
	(dollars in thousands)
Operating Data:
Equity in Loss of Unconsolidated Real Estate Entities	$	(789	)	$	(2,768	)	$	(737	)	$	(14,648	)	$	(5,450	)	$	(1,391	)
Equity in Loss of Unconsolidated Real Estate Entity Held for Disposition		—			—			(2	)		—			(11	)		(28	)
Interest Income		1,647			702			—			6,698			660			—
Other Income		116			116			—			—			—			—
Total Income		974			(1,951	)		(739	)		(7,950	)		(4,801	)		(1,419	)
Total Expenses		491			84			8			2,018			167			11
Net Income (Loss)		483			(2,034	)		(747	)		(9,968	)		(4,968	)		(1,430	)
Net Income (Loss) Available to Common Members/Stockholders		74			(3,198	)		(747	)		(11,599	)		(5,889	)		(1,430	)
Other Data:
Cash Flows Provided by (Used in) Operating Activities				$	809		$	(3	)				$	514		$	(9	)
Cash Flows (Used in) Provided by Investing Activities					(13,170	)		113						(46,204	)		(9,500	)
Cash Flows Provided by (Used in) Financing Activities					13,389			(144	)					47,338			9,550
Funds From Operations (Negative Funds From Operations)(1)	$	1,817			(35	)		120		$	3,304			(846	)		(282	)
Core Funds From Operations(1)		1,857			348			130			5,620			412			131
Balance Sheet Data (as of end of period):
Investments in Unconsolidated Real Estate Entities	$	41,931		$	32,831		$	4,759		$	45,098		$	26,998		$	5,609
Investment in Unconsolidated Real Estate Entity Held for Disposition		—			—			2,470			—			—			2,472
Investments in Real Estate Preferred Equity and Debt, net		52,397			23,944			—			52,878			18,528			—
Total Assets		127,144			59,731			7,236			129,662			48,189			8,122
Total Liabilities		1,512			1,512			7			832			832			2
Preferred Members’ Equity		16,255			48,937			—			16,255			34,877			—
Common Members’ Equity		—			9,282			7,229			—			12,481			8,120
Common Stockholders’ Equity		109,348			—			—			112,546			—			—
Total Equity		125,633			58,220			7,229			128,831			47,358			8,120

(1) See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for more detailed explanations of Funds From Operations, or FFO, and Core Funds From Operations, or Core FFO, and reconciliations of FFO and Core FFO to net income computed in accordance with GAAP.

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RISK FACTORS

An investment in our common stock involves significant risks. You should carefully consider the following risk factors in conjunction with the other information contained in this prospectus before making an investment decision. The risks discussed in this prospectus could materially adversely affect our business, results of operations, liquidity, financial condition and ability to pay dividends, could cause the value of our common stock to decline significantly, and you could lose part or all of your investment. The risks and uncertainties described below are not the only ones we face, but do represent those risks and uncertainties that we believe are material to us. Additional risks and uncertainties not presently known to us or that, as of the date of this prospectus, we deem immaterial may also harm our business. Some statements in this prospectus, including statements in the following risk factors, constitute forward-looking statements. See “Cautionary Note Regarding Forward-Looking Statements.”

Risks Related to Our Business

We have no operating history and may not be able to operate our business successfully or generate sufficient revenue to make or sustain distributions to our stockholders.

We will commence operations upon completion of this offering and consummation of our formation transactions. As a result, we have no operating history. We cannot assure you that we will be able to operate our business successfully or implement our operating policies and strategies. The results of our operations will depend on several factors, including the availability of opportunities for the acquisition of targeted assets, the level and volatility of interest rates, the availability of adequate short- and long-term financing, conditions in the financial markets and general economic conditions.

Our Manager and our officers have no experience managing a REIT or a publicly traded company.

Our senior management team and that of our Manager have no prior experience in managing a REIT. Moreover, our Manager and most members of our senior management team have no experience managing a publicly traded REIT. We cannot assure you that the past experience of our Manager and our officers will be sufficient to successfully operate our company as a REIT or a publicly traded company, including the requirements to timely meet disclosure requirements of the SEC, comply with REIT provisions of the Code and comply with the Sarbanes-Oxley Act.

We face numerous risks associated with the real estate industry that could adversely affect our results of operations through decreased revenues or increased costs.

As a company that makes, holds and manages investments in real estate, we are subject to various changes in real estate conditions, and any negative trends in such real estate conditions may adversely affect our results of operations through decreased revenues or increased costs. These conditions include:

• changes in national, regional and local economic conditions, which may be negatively impacted by concerns about inflation, deflation, government deficits, high unemployment rates, decreased consumer confidence and liquidity concerns, particularly in markets in which we have a high concentration of property investments;

• changes in governmental laws and regulations, fiscal policies and zoning ordinances and the related costs of compliance with laws and regulations, fiscal policies and ordinances;

• fluctuations in interest rates, which could adversely affect our ability or our operating partners’ ability to obtain financing on favorable terms or at all;

• the inability of tenants to pay rent to the properties in which we invest;

• the existence and quality of competing properties, such as the attractiveness of the properties we invest in as compared to competing properties based on considerations such as convenience of location, rental rates, amenities and safety record;

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• increased operating costs, including increased real property taxes, maintenance, insurance and utilities costs;

• weather conditions that may increase or decrease energy costs and other weather-related expenses;

• oversupply of apartments, single-family housing or other residential housing or a reduction in demand for real estate residential housing in the markets where the properties we invest in are located;

• a favorable interest rate environment that may result in a significant number of potential residents of the apartment communities in which we invest deciding to purchase homes instead of renting;

• changes in, or increased costs of compliance with, laws and/or governmental regulations, including those governing usage, zoning, the environment and taxes; and

• rent control or stabilization laws, or other laws regulating rental housing, which could prevent our operating partners from raising rents to offset increases in operating costs.

Moreover, other factors may adversely affect our results of operations, including potential liability under environmental and other laws and other unforeseen events, acts of God, including earthquakes, floods and other natural disasters, which may result in uninsured losses, acts of war or terrorism, including the consequences of terrorist attacks, such as those that occurred on September 11, 2001, costs of remediation and liabilities associated with environmental conditions such as indoor mold and the potential for uninsured or under-insured property losses. Any or all of these factors, and the other factors discussed in the following risk factors, could materially adversely affect our business, results of operations, financial condition and ability to make distributions to our stockholders.

Adverse economic conditions may adversely affect our results of operations and, as a result, our ability to make distributions to our stockholders or to realize appreciation in the value of our joint venture equity investments.

Our operating results may be adversely affected by market and economic challenges, which may adversely affect our returns and profitability and, as a result, our ability to make distributions to our stockholders or to realize appreciation in the value of our joint venture equity investments. These market and economic challenges include, but are not limited to, the following:

• any future downturn in the U.S. economy and the related reduction in spending, reduced home prices and high unemployment could result in tenant defaults under leases, vacancies at the multifamily apartment communities in which we invest and concessions or reduced rental rates at such apartment communities under new leases due to reduced demand;

• the rate of household formation or population growth in the markets we target or a continued or exacerbated economic slow-down experienced by the local economies where the multifamily apartment properties in which we invest are located or by the real estate industry generally may result in changes in supply of or demand for apartment units in the markets we target; and

• the failure of the real estate market to attract the same level of capital investment in the future that it attracts at the time of our investment or a reduction in the number of companies seeking to acquire properties may result in the value of our joint venture properties not appreciating or decreasing significantly below the amount we pay for these investments.

The length and severity of any economic slow-down or downturn cannot be predicted. Our business, results of operations, financial condition and ability to make distributions to our stockholders could be materially and adversely affected to the extent that an economic slow-down or downturn is prolonged or becomes severe.

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Increases in interest rates could adversely affect the value of our fixed-rate assets, which could result in reduced earnings or losses and negatively affect our profitability as well as the cash available for distribution to our stockholders.

In a normal yield curve environment, our fixed rate assets will generally decline in value if long-term interest rates increase. Declines in market value in these assets may ultimately reduce earnings or result in losses to us, which may negatively affect cash available for distribution to our stockholders.

A significant risk associated with these assets is the risk that both long-term and short-term interest rates will increase significantly. If long-term rates increased significantly, the market value of our fixed-rate assets could decline. At the same time, an increase in short-term interest rates would increase the amount of interest owed on short-term borrowings, if any, such as bank credit facilities (including term loans and revolving facilities) we may enter into to finance the acquisition and origination of our assets, which could result in reduced earnings or losses and negatively affect our profitability.

Our Initial Portfolio includes interests in or loans secured by 16 multifamily apartment communities located primarily in markets in the southeastern United States. Any adverse developments in the multifamily apartment market generally, or in local economic conditions or the demand for apartment units in these markets may negatively impact our results of operations.

Our Initial Portfolio includes investments in multifamily apartment communities geographically concentrated in the southeastern United States, and our portfolio going forward may consist primarily of the same. As of March 31, 2015, 47.4%, 14.1%, 10.2% and 10.2% of the aggregate apartment units at the properties included in our Initial Portfolio were located in Texas, South Carolina, Kentucky and Georgia, respectively. In particular, as of March 31, 2015, 32.4% of the aggregate apartment units at the properties included in our Initial Portfolio were located in or around Austin, Texas. As such, we are currently susceptible to local economic conditions and the supply of and demand for apartment units generally and in these markets in particular. If there is a downturn in the economy or an oversupply of or decrease in demand for apartment units generally or in these markets in particular, our business, results of operations, financial condition and ability to make distributions to our stockholders could be materially adversely affected to a greater extent than if our property investments were more diversified in terms of both geography and industry focus.

We may not be successful, or may suffer from delays, in identifying and consummating suitable investment opportunities.

Our investment strategy requires us, through our Manager, to identify suitable investment opportunities compatible with our investment criteria. Our Manager may not be successful in identifying suitable opportunities that meet our criteria or in consummating investments on satisfactory terms or at all. Our ability to make investments on favorable terms may be constrained by several factors including, but not limited to, competition from other investors with significant capital, including other publicly traded REITs and institutional investment funds, which may significantly increase investment costs and the inability to finance an investment on favorable terms or at all. This failure to identify or consummate investments may impede our growth and negatively affect our cash available for distribution to our stockholders.

Additionally, as a public company, we are subject to the ongoing reporting requirements under the Securities Exchange Act of 1934, as amended, or the Exchange Act. Pursuant to the Exchange Act, we may be required to file with the SEC financial statements of joint venture properties in which we acquire an interest. To the extent any required financial statements are not available or cannot be obtained, we may not be able to acquire an interest in a joint venture property that may otherwise represent a suitable investment.

Until we identify and consummate suitable investments, we intend to invest the net proceeds from this offering in interest-bearing, short-term investment-grade securities or money market accounts which typically will yield significantly less than what we expect our targeted investments

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will yield. As a result, to the extent we experience delays in identifying and consummating potential investments with the net proceeds from this offering, our business, results of operations, financial condition and ability to make distributions to our stockholders could be materially adversely affected.

Our revenues are significantly influenced by demand for multifamily apartment properties generally, and a decrease in such demand will likely have a greater adverse effect on our revenues than if we owned a more diversified portfolio.

Our Initial Portfolio is comprised predominately of investments in or secured by multifamily apartment properties, and we expect that our portfolio going forward will focus predominately on the same. As a result, we are subject to risks inherent in investments focused in a single industry, and a decrease in the demand for multifamily apartment properties would likely have a greater adverse effect on our revenues and results of operations than if we owned a more diversified portfolio. Resident demand at multifamily apartment properties may be adversely affected by, among other things, reduced household spending, reduced home prices, high unemployment, the rate of household formation or population growth in the markets in which we invest, changes in interest rates or the changes in supply of, or demand for, similar or competing multifamily apartment properties in an area. Reduced resident demand could cause downward pressure on occupancy and market rents at the properties in which we invest, which could cause a decrease in our revenue. In addition, decreased demand could also impair the ability of our joint venture properties or operating partners to satisfy their substantial debt service obligations or make distributions or payments of principal or interest to us, which in turn could materially adversely affect our business, results of operations, financial condition and ability to make distributions to our stockholders.

Property-level expenses at the properties we invest in may remain constant or increase, even if revenues at these properties decrease, causing the results of operations at these properties to be adversely affected, which, in turn, could have a materially negative impact on our results of operations.

Costs associated with multifamily apartment properties, such as mortgage payments, real estate taxes, insurance premiums and maintenance costs, are relatively inflexible and generally do not decrease, and may increase, regardless of occupancy, when rental rates decrease, a tenant fails to pay rent or other circumstances cause a reduction in property revenues. As a result, if revenues drop at one or more properties in which we invest and our operating partners are unable to reduce operating expenses at the corresponding properties, the results of operations at these properties will be adversely affected and this, in turn, could materially adversely affect our business, results of operations, financial condition and ability to make distributions to our stockholders.

Climate change could materially and adversely affect us.

To the extent that climate change does occur, we may experience extreme weather and changes in precipitation and temperature, all of which may result in physical damage or a decrease in demand for our properties located in areas affected by these conditions. Should the impact of climate change be material in nature or occur for lengthy periods of time, we could be materially and adversely affected.

In addition, changes in federal and state legislation and regulation on climate change could result in increased capital expenditures to improve the energy efficiency of the properties in which we invest without a corresponding increase in revenue.

We are subject to risks from natural disasters such as hurricanes and severe weather, which could materially and adversely affect us.

Natural disasters and severe weather such as earthquakes, floods, tornadoes or hurricanes may result in significant damage to our properties. The extent of our casualty losses and loss in operating income in connection with such events is a function of the severity of the event and the

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total amount of exposure in the affected area. Any such event could have a material adverse effect on us. As a result of our geographic concentration of properties in Texas and the southeastern United States, a single destructive event (such as a hurricane) affecting a region is likely to have an even greater impact on us. As of March 31, 2015, 47.4%, 14.1%, 10.2% and 10.2% of the aggregate apartment units at the properties included in our Initial Portfolio were located in Texas, South Carolina, Kentucky and Georgia, respectively. Moreover, as of March 31, 2015, 32.4% of the aggregate apartment units at the properties included in our Initial Portfolio were located in or around Austin, Texas. Any natural disasters or severe weather impacting these regions could materially adversely affect our business, results of operations, financial condition and ability to make distributions to our stockholders.

Competition from other multifamily apartment properties for tenants could reduce our profitability.

The apartment property industry is highly competitive and these competitors may be willing to offer space at rates below our rates, causing the multifamily apartment properties that we invest in to lose existing or potential tenants, thereby reducing occupancy and revenues at these properties and this could materially adversely affect our business, results of operations, financial condition and ability to make distributions to our stockholders. We expect competition for tenants will come from many sources in both the immediate vicinity and in the larger geographic market where the multifamily apartment communities we invest in are located.

Increased competition and increased affordability of single-family homes could limit our ability to retain residents, lease apartment units or increase or maintain rents.

Any multifamily apartment properties in which we may invest will most likely compete with numerous housing alternatives in attracting residents, including single-family homes, as well as single-family and multifamily homes available to rent. Competitive housing in a particular area and the increasing affordability of single-family homes available to rent or buy caused by declining mortgage interest rates and government programs to promote home ownership could adversely affect our ability to retain residents, lease apartment units and increase or maintain rental rates, which in turn could materially adversely affect our business, results of operations, financial condition and ability to make distributions to our stockholders.

Competition could adversely affect our ability to acquire or invest in multifamily apartment properties.

We expect other real estate investors, including insurance companies, pension and investment funds, private investors, and other multifamily apartment REITs, will compete with us to acquire or invest in multifamily apartment properties. This competition could increase prices for the type of investments we would likely pursue and adversely affect our ability to acquire or invest in these properties or the profitability of such properties upon acquisition or investment.

Increased construction of similar properties that compete with the multifamily apartment properties in which we invest in any particular location could adversely affect the operating results of these properties and our cash available for distribution to our stockholders.

We may invest in multifamily apartment properties in locations which experience increases in construction of properties that compete with the properties in which we invest. This increased competition and construction could:

• make it more difficult for our operating partners to find tenants to lease units;

• force our operating partners to lower rental prices in order to lease units in their respective multifamily apartment properties; and

• substantially reduce the revenues we derive from our investments in these properties.

Short-term apartment leases expose us to the effects of declining market rent, which could adversely impact our earnings.

Substantially all of the apartment leases at the properties we invest in are for terms of one year or less. Because these leases generally permit the residents to leave at the end of the lease

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term without penalty, our earnings may be impacted more quickly by declines in market rents than if these leases were for longer terms, which could have a material adverse effect on our business, results of operations, financial condition and ability to make distributions to our stockholders.

The costs of compliance with environmental laws and other governmental laws and regulations may adversely affect our income and the cash available for any distributions.

All real property and the operations conducted on real property are subject to federal, state and local laws and regulations relating to environmental protection and human health and safety. Examples of federal laws include: the National Environmental Policy Act, the Comprehensive Environmental Response, Compensation, and Liability Act, the Solid Waste Disposal Act as amended by the Resource Conservation and Recovery Act, the Federal Water Pollution Control Act, the Federal Clean Air Act, the Toxic Substances Control Act, the Emergency Planning and Community Right to Know Act and the Hazard Communication Act. These laws and regulations generally govern wastewater discharges, air emissions, the operation and removal of underground and above-ground storage tanks, the use, storage, treatment, transportation and disposal of solid and hazardous materials, and the remediation of contamination associated with disposals. Some of these laws and regulations may impose joint and several liability on residents, owners or operators for the costs of investigation or remediation of contaminated properties, regardless of fault or the legality of the original disposal. In addition, the presence of these substances, or the failure to properly remediate these substances, may limit or eliminate affect the ability to sell or rent, or to use a property as collateral for future borrowing.

There may also be potential liability associated with lead-based paint arising from lawsuits alleging personal injury and related claims. A structure built prior to 1978 may contain lead-based paint and may present a potential for exposure to lead; however, structures built after 1978 are not likely to contain lead-based paint.

A property’s value may also be affected by its proximity to electric transmission lines. Electric transmission lines are one of many sources of electro-magnetic fields, or EMFs, to which people may be exposed. Research completed regarding potential health concerns associated with exposure to EMFs has produced inconclusive results. Notwithstanding the lack of conclusive scientific evidence, some states now regulate the strength of electric and magnetic fields emanating from electric transmission lines, and other states have required transmission facilities to measure for levels of EMFs. On occasion, lawsuits have been filed (primarily against electric utilities) that allege personal injuries from exposure to transmission lines and EMFs, as well as from fear of adverse health effects due to such exposure. This fear of adverse health effects from transmission lines has been considered both when property values are determined to obtain financing and in condemnation proceedings. We may not, in certain circumstances, search for electric transmission lines near the properties that we invest in, but are aware of the potential exposure to damage claims by persons exposed to EMFs.

Indoor air quality issues, including mold and radon, have been highlighted in the media in recent years and mold and radon claims from lessees may be on the rise. Because the law relating to mold and radon is unsettled and subject to change, we, the properties in which we invest and/or our operating partners could incur losses from claims relating to the presence of, or exposure to, mold, radon, other microbial organisms or other gases, particularly if insurance is inadequate to cover such losses. The properties in which we invest may also incur unexpected expenses relating to the abatement of mold, which could reduce the revenues we derive from our investment in such properties.

Limited quantities of asbestos-containing materials are present in various building materials such as floor coverings, ceiling texture material, acoustical tiles and decorative treatment. Environmental laws govern the presence, maintenance and removal of asbestos. These laws could be used to impose liability for release of, and exposure to, hazardous substances, including asbestos-containing materials, into the air. Such laws require that owners or operators of buildings containing asbestos (i) properly manage and maintain the asbestos, (ii) notify and train those who may come into contact with asbestos and (iii) undertake special precautions, including removal or other abatement, if asbestos would be disturbed during renovation or demolition of a building.

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These laws may allow third parties to seek recovery from owners or operators of real properties for personal injury associated with exposure to asbestos fibers. As the owner of interests in joint venture properties or the holder of subordinate investments in multifamily apartment properties, our revenues from these properties may be adversely impacted and, in the case of our joint venture properties, we may be liable for all or a portion of any such costs.

Compliance with new or more stringent laws or regulations or stricter interpretation of existing laws may require material expenditures by us and/or our operating partners. We cannot assure you that future laws, ordinances or regulations will not impose any material environmental liability, or that the current environmental condition of the properties in which we invest will not be affected by the operations of residents, existing conditions of the land, operations in the vicinity of the properties, or the activities of unrelated third parties. In addition, there are various local, state and federal fire, health, life-safety and similar regulations that these properties may be required to comply with. Failure to comply with applicable laws and regulations could result in fines and/or damages, suspension of personnel of our operating partners and/or other sanctions, which could materially adversely affect our business, results of operations, financial condition and ability to make distributions to our stockholders.

Discovery of previously undetected environmentally hazardous conditions may adversely affect our operating results.

Under various federal, state and local environmental laws, ordinances and regulations, a current or previous owner or operator of real property may be liable for the cost of removal or remediation of hazardous or toxic substances on, under or in such property. The costs of removal or remediation could be substantial. These laws often impose liability whether or not the owner or operator knew of, or was responsible for, the presence of the hazardous or toxic substances.

Environmental laws also may impose restrictions on the manner in which a property may be used or businesses may be operated, and these restrictions may require substantial expenditures. Environmental laws provide for sanctions in the event of noncompliance and may be enforced by governmental agencies or, in certain circumstances, by private parties. Certain environmental laws and common law principles govern the presence, maintenance, removal and disposal of certain building materials, including asbestos and lead-based paint (which are both discussed above).

The cost of defending against any claims of liability, of compliance with environmental regulatory requirements, of remediating any contaminated property, or of paying personal injury claims could materially adversely affect our business, investments or results of operations and, consequently, amounts available for distribution to our stockholders.

We cannot assure that the properties in which we invest will not have any material environmental conditions, liabilities or compliance concerns. Accordingly, we have no way of determining at this time the magnitude of any potential liability to which we or the properties in which we invest may be subject arising out of environmental conditions or violations with respect to these properties. If we do incur material environmental liabilities in the future, we may face significant remediation costs, which may materially adversely affect our business, results of operations, financial condition and ability to make distributions to our stockholders.

A change in the U.S. government policy with regard to Fannie Mae and Freddie Mac could adversely impact our financial condition.

Fannie Mae and Freddie Mac are a major source of financing for the apartment real estate sector. We and other participants in the apartment real estate sector depend heavily on Fannie Mae and Freddie Mac to finance growth by purchasing or guaranteeing apartment loans. In February 2011, the U.S. Treasury released a white paper entitled “Reforming America’s Housing Finance Market” in which the U.S. Treasury outlined three possible options for reforming the U.S. federal government’s role in housing finance. Under each option, the role of the U.S. federal government in the mortgage market would be reduced. Each of Fannie Mae and Freddie Mac could be dissolved and the U.S. federal government could determine to stop providing liquidity support of any kind to the mortgage market. We do not know when or if Fannie Mae or Freddie Mac will

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restrict their support of lending to the apartment real estate industry or to us in particular. A final decision by the government to eliminate Fannie Mae or Freddie Mac, or reduce their acquisitions or guarantees of apartment real estate mortgage loans, may adversely affect interest rates, capital availability and the ability of a multifamily apartment property to refinance existing debt obligations as they come due and to obtain additional long-term financing on favorable terms or at all and this could materially negative impact the revenues we derive from our investments in multifamily apartment properties and otherwise increase the credit risk of our investments, and as a result, materially adversely affect our business, results of operations, financial condition and ability to make distributions to our stockholders.

If we are not able to cost-effectively maximize the life of our properties, we may incur greater than anticipated capital expenditure costs, which may adversely affect our ability to make distributions to our stockholders.

A majority of the properties in which we will have an interest upon completion of this offering and consummation of our formation transactions are more than ten years old. Older properties may carry certain risks including unanticipated repair costs, increased maintenance costs and cost overruns due to the need for special materials and fixtures specific to older properties. Although we seek operating partners that will, and encourage our existing operating partners to, take a proactive approach to property preservation, including through the use of a preventative maintenance plan and selective improvements that mitigate the cost impact of maintaining exterior building features and aging building components, if we are not able to cost-effectively maximize the life of the properties in which we invest, we and our operating partners may incur greater than anticipated capital expenditure costs which may materially adversely affect our business, results of operations, financial condition and ability to make distributions to our stockholders.

Any uninsured losses or high insurance premiums will reduce our net income and the amount of our cash distributions to stockholders.

Our Manager will attempt to ensure adequate insurance is obtained to cover significant areas of risk to us as a company and to the properties in which we invest. However, there are types of losses at the property level, generally catastrophic in nature, such as losses due to wars, acts of terrorism, earthquakes, floods, hurricanes, pollution or environmental matters, which are uninsurable or not economically insurable, or may be insured subject to limitations, such as large deductibles or co-payments. The properties in which we invest may not have adequate coverage for such losses. If any such property were to incur a casualty loss that is not fully insured, the value of the property will be reduced by any such uninsured loss, which could have a materially negative impact on our results of operations and financial condition. Also, to the extent that we or the properties in which we invest must pay unexpectedly large amounts for insurance, we could suffer reduced earnings that would result in lower distributions to stockholders. In addition, we may not be able to collect rent on units that are damaged due to such events while expenses will remain the same or potentially increase. This may substantially reduce our earnings.

The lack of liquidity in many of our investments may adversely affect our business.

Many of the investments we make may be subject to legal, contractual and other restrictions on resale or will otherwise be less liquid than publicly traded securities. In addition, direct investments in real estate are relatively illiquid. The illiquidity of many of our investments may make it difficult for us to sell such investments if the need or desire arises. In addition, if we are required to liquidate all or a portion of our investments quickly, we may realize significantly less than the value at which we have previously recorded those investments, or we may be unsuccessful in consummating any such transaction at all. As a result, our ability to vary our investments in response to changes in economic and other conditions may be relatively limited, which could materially adversely affect our business, results of operations, financial condition and ability to make distributions to our stockholders.

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Our revenue and net income may vary significantly from one period to another due to investments in value-add properties and portfolio acquisitions, which could increase the variability of our earnings and cash distributions.

We may, from time to time, make investments in value-add properties that have existing cash flow which are in various phases of development, redevelopment or repositioning and where we believe that, through limited capital expenditures, the property can generate enhanced returns for us (which we sometimes refer to as value-add properties), which may cause our revenues and net income to fluctuate significantly from one period to another. Properties may not produce any revenue while in development and properties may experience reduced revenue during redevelopment. During any period when the number of our projects in development or redevelopment or those with significant capital requirements increases without a corresponding increase in stable revenue-producing properties, our revenues and net income will likely decrease and we could have losses. Moreover, value-add properties subject us to the risks of higher than expected construction costs, failure to complete projects on a timely basis, failure of the properties to perform at expected levels upon completion of development or redevelopment, and increased borrowings necessary to fund higher than expected construction or other costs related to the project. The occurrence of one or more of these risks could materially adversely affect our business, results of operations, financial condition and ability to make distributions to our stockholders.

Our investments could be adversely affected if one of our operating partners or property managers performs poorly at one of our projects, which could adversely affect returns to our stockholders.

In general, we expect to rely on our operating partners for the day-to-day management and maintenance of the multifamily apartment properties in which we invest. We will have no control or only limited influence over the day-to-day management and maintenance of such properties. Our operating partners are not fiduciaries to us, and in some cases, may have significantly less capital invested in a project than us. In addition, our operating partners engage property managers, which provide on-site management services. One or more of our operating partners or property managers may perform poorly in managing one or more of our project investments for a variety of reasons, including failure to properly adhere to budgets or properly consummate the property business plan. If one of our operating partners or property managers does not perform well at one of our projects, we may not be able to ameliorate the adverse effects of poor performance by terminating the operating partner or property manager and finding a replacement partner to manage our projects in a timely manner. In such an instance, our business, results of operations, financial condition and ability to make distributions to our stockholders could be materially adversely affected.

Actions of our operating partners could subject us to liabilities in excess of those contemplated or prevent us from taking actions which are in the best interests of our stockholders, which could result in lower investment returns to our stockholders.

We have entered into, and in the future intend to enter into, joint ventures with operating partners to acquire or improve properties. We may also make investments in properties through partnerships, co-tenancies or other co-ownership arrangements. Such investments may involve risks not otherwise present when acquiring real estate directly, including, for example:

• that our operating partners may share certain approval rights over major decisions;

• that our operating partners may at any time have economic or business interests or goals which are or which become inconsistent with our business interests or goals, including inconsistent goals relating to the sale of properties held in the joint venture or the timing of termination or liquidation of the joint venture;

• the possibility that our operating partner in a property might become insolvent or bankrupt;

• the possibility that we may incur liabilities as a result of an action taken by one of our operating partners;

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• that one of our operating partners may be in a position to take action contrary to our instructions or requests or contrary to our policies or objectives, including our policy with respect to qualifying and maintaining our qualification as a REIT;

• disputes between us and our operating partners may result in litigation or arbitration that would increase our expenses and prevent our officers and directors from focusing their time and effort on our business, which may subject the properties owned by the applicable joint venture to additional risk;

• under certain joint venture arrangements, neither venture partner may have the power to control the venture, and an impasse could be reached which might have a negative influence on the joint venture; or

• that we will rely on our operating partners to provide us with accurate financial information regarding the performance of the joint venture properties in which we invest on a timely basis to enable us to satisfy our annual, quarterly and periodic reporting obligations under the Exchange Act and our operating partners and the joint venture entities in which we invest may have inadequate internal controls or procedures that could cause us to fail to meet our reporting obligations and other requirements under the federal securities laws.

Actions by one of our operating partners or one of the property managers of the multifamily properties in which we invest, which are generally out of our control, might subject us to liabilities in excess of those contemplated and thus reduce your investment returns. If we have a right of first refusal or buy/sell right to buy out an operating partner, we may be unable to finance such a buy-out if it becomes exercisable or we may be required to purchase such interest at a time when it would not otherwise be in our best interest to do so. If our interest is subject to a buy/sell right, we may not have sufficient cash, available borrowing capacity or other capital resources to allow us to elect to purchase the interest of our operating partner that is subject to the buy/sell right, in which case we may be forced to sell our interest as the result of the exercise of such right when we would otherwise prefer to keep our interest. Finally, we may not be able to sell our interest in a joint venture if we desire to exit the venture.

If we, our operating partners or the joint ventures in which we invest determine to sell a property or properties in which we have an interest, the value of those properties may be impacted by first mortgage assumption restriction or the non-assumability of our first-mortgage debt.

The properties in which we invest or the joint ventures through which we own our interest in those properties, may agree to first-mortgage loan repayment restrictions or penalties in connection with obtaining financing. These provisions could materially restrict us, the joint ventures in which we invest or our operating partners from selling, otherwise disposing of or refinancing the properties. This may affect the ability of our joint ventures or operating partners to take actions during a period that would otherwise be in the best interests of our stockholders and, therefore, could adversely impact the market value of our common stock. In particular, these provisions could preclude us, our joint ventures or our operating partners from participating in a major transaction that could result in a disposition of assets or change in control that might be in the best interests of our stockholders.

We may acquire investments in properties that provide operating partnership lock-out provisions to the contributor, which may prohibit the sale or refinancing of the property during the operating partnership lock-out period.

We may acquire investments in properties in exchange for common units in our operating partnership and the properties in which we invest may agree to restrictions on sales or refinancing, called “lock-out” provisions, which are intended to preserve favorable tax treatment for the owners of such properties who sell their interests to us or one of our joint ventures. Additionally, lock-out provisions could materially restrict us, our joint ventures or our operating partners from selling, otherwise disposing of or refinancing properties. This may affect our ability to turn our investments into cash and thus affect cash available to return capital to you. Lock-out provisions could impair

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our ability or the ability of our joint ventures or operating partners to take actions during the lock-out period that would otherwise be in the best interests of our stockholders and, therefore, could adversely impact the market value of our common stock. In particular, lock-out provisions could preclude us, our joint ventures or our operating partners from participating in a major transaction that could result in a disposition of assets or change in control that might be in the best interests of our stockholders.

The preferred equity investments or mezzanine loan assets that we may invest in are generally subordinate to senior or other loans secured by income-producing properties.

We invest in mezzanine loans, which take the form of subordinated loans secured by second mortgages on the underlying property or loans secured by a pledge of the ownership interests of either the entity owning the property or a pledge of the ownership interests of the entity that owns the interest in the entity owning the property. We also make preferred equity investments in entities that own property. In addition, mezzanine loans and preferred equity investments are often used to achieve a very high leverage on properties, resulting in less equity in the property and increasing the risk of loss of principal or investment. If a borrower defaults on our mezzanine loan or debt senior to our loan, or in the event of a borrower bankruptcy, our mezzanine loan or preferred equity investment will be satisfied only after the senior debt, in the case of a mezzanine loan, or all senior and subordinated debt, in the case of a preferred equity investment, is paid in full. Where senior debt exists, the presence of intercreditor arrangements may limit our ability to amend our loan documents, assign our loans, accept prepayments, exercise our remedies or control decisions made in bankruptcy proceedings relating to borrowers or preferred equity investors. As a result, we may not recover some or all of our investment, which could result in significant losses that would materially adversely affect our business, results of operations, financial condition and ability to make distributions to our stockholders.

Investments in preferred equity involve a greater risk of loss than traditional debt financing.

We invest in real estate preferred equity, which involves a higher degree of risk than first-mortgage loans due to a variety of factors, including the risk that, similar to mezzanine loans, such investments are subordinate to first-mortgage loans and are not collateralized by property underlying the investment and, in certain instances, may not have financial performance covenants. Although as a holder of preferred equity we may enhance our position with covenants that limit the activities of the entity in which we have an interest and protect our equity by obtaining an exclusive right to control the underlying property upon discovery by us that a changeover event has occurred under an operating agreement for one of our preferred equity investments, we would only be able to proceed (subject in some cases to a minimum cure period) against the entity in which we have an interest, and not the property owned by such entity and underlying our investment. Further, preferred equity does not ordinarily afford the holder with the full range of protections of a creditor. As a result, we may not recover some or all of our investment. See “Our Business—Our Operating Agreements—Preferred Equity Investments.”

We may invest in other multifamily assets, including CMBS that are subordinate to more senior securities issued by the applicable securitization, which entails certain risks.

We may invest in other multifamily assets, including principal-only multifamily CMBS that represent the first loss tranche of a multifamily mortgage loan securitization. These first loss principal-only securities are subject to the first risk of loss if any losses are realized on the underlying mortgage loans in the securitization. CMBS generally entitle the holders thereof to receive payments that depend primarily on the cash flow from a specified pool of commercial or multifamily mortgage loans. Consequently, the CMBS, and in particular, first loss principal-only CMBS, will be adversely affected by payment defaults, delinquencies and losses on the underlying mortgage loans, each of which could have a material adverse effect our business, results of operations, financial condition and ability to make distributions to our stockholders.

We also may invest in interest-only multifamily CMBS issued by multifamily mortgage loan securitizations. However, these interest-only multifamily CMBS typically only receive payments of

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interest to the extent that there are funds available in the securitization to make the payment and may introduce increased risks since these securities have no underlying principal cash flows.

We may be subject to lender liability claims.

In recent years, a number of judicial decisions have upheld the right of borrowers to sue lending institutions on the basis of various evolving legal theories, collectively termed “lender liability.” Generally, lender liability is founded on the premise that a lender has either violated a duty, whether implied or contractual, of good faith and fair dealing owed to the borrower or has assumed a degree of control over the borrower resulting in the creation of a fiduciary duty owed to the borrower or its other creditors or stockholders. We cannot assure prospective investors that such claims will not arise or that we will not be subject to significant liability if a claim of this type did arise.

Our Manager will conduct due diligence on potential investments, but such due diligence may not reveal all of the risks associated with such investments and may not reveal other weaknesses in such investments, which could lead to losses.

Before acquiring certain assets, our Manager conducts due diligence on the underlying property or investment as described in “Our Business—Our Investment Process—Due Diligence.” There can be no assurance that our Manager’s due diligence process will uncover all relevant facts or that any purchase will be successful, which could result in losses on these investments, which, in turn, could materially adversely affect our business, results of operations, financial condition and ability to make distributions to our stockholders.

The occurrence of cyber-incidents, or a deficiency in our cybersecurity or in those of any of our operating partners, their affiliates, or their property managers, could negatively impact our business by causing a disruption to the operations at the properties in which we invest, a compromise or corruption of confidential information or damage to our business relationships or reputation, all of which could negatively impact our business and results of operations.

A cyber incident is considered to be any adverse event that threatens the confidentiality, integrity, or availability of our information resources or the information resources of our operating partners or their affiliates. More specifically, a cyber-incident is an intentional attack or an unintentional event that can include gaining unauthorized access to systems to disrupt operations, corrupt data, or steal confidential information. As our, our operating partners’, and their related property managers’ reliance on technology has increased, so have the risks posed to our systems, our operating partners’ systems, and the related property managers’ systems, both internal and those that have been outsourced. The primary risks that could directly result from the occurrence of a cyber-incident include operational interruption and private data exposure. We, through our Manager, will make commercially reasonable efforts to monitor the processes, procedures and controls of our partners and property managers to help mitigate these risks. However, due to the variety in size and experience of our operating partners and the related property managers, there are varying levels of protection in existence. Current measures, as well as our increased awareness of a risk of a cyber-incident, do not guarantee that our business and results of operations will not be negatively impacted by such an incident.

We may become subject to litigation or threatened litigation that may divert management’s time and attention, require us to pay damages and expenses or restrict the operation of our business.

We may become subject to disputes with commercial parties with whom we maintain relationships or other parties with whom we do business. Any such dispute could result in litigation between us and the other parties. Whether or not any dispute actually proceeds to litigation, we may be required to devote significant management time and attention to its successful resolution (through litigation, settlement or otherwise), which would detract from our management's ability to focus on our business. Any such resolution could involve the payment of damages or expenses by us, which may be significant. In addition, any such resolution could involve our agreement with terms that restrict the operation of our business.

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We also could be sued for personal injuries or property damage occurring on the properties in which we invest. The liability insurance we maintain may not cover all costs and expenses arising from such lawsuits.

Loss of our exemption from registration under the Investment Company Act would adversely affect our results of operations, the market price of shares of our common stock and our ability to distribute dividends.

We intend to conduct our operations so that neither we, our operating partnership, RB Multifamily Investors LLC nor the subsidiaries of RB Multifamily Investors LLC are required to register as investment companies under the Investment Company Act. We, our operating partnership and RB Multifamily Investors LLC are structured as holding companies, holding virtually no assets, other than cash, directly. Our non-cash assets are held through three primary subsidiaries of RB Multifamily Investors LLC, RMI I LLC, RMI II LLC and RMI III LLC, and a fourth majority-owned subsidiary of RB Multifamily Investors LLC, Bent Tree, which owns a single parcel of real estate.

Section 3(a)(1)(A) of the Investment Company Act defines an investment company as any issuer that is or holds itself out as being engaged primarily in the business of investing, reinvesting or trading in securities. Section 3(a)(1)(C) of the Investment Company Act defines an investment company as any issuer that is engaged or proposes to engage in the business of investing, reinvesting, owning, holding or trading in securities and owns or proposes to acquire investment securities having a value exceeding 40% of the value of the issuer’s total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis, which we refer to as the “40% Test.” Excluded from the term “investment securities,” among other things, are U.S. government securities and securities issued by majority-owned subsidiaries that are not themselves investment companies and are not relying on the exception from the definition of investment company set forth in Section 3(c)(1) or Section 3(c)(7) of the Investment Company Act. Accordingly, under Section 3(a)(1) of the Investment Company Act, in relevant part, a company is not deemed to be an “investment company” if (i) it neither is, nor holds itself out as being, engaged primarily, nor proposes to engage primarily, in the business of investing, reinvesting or trading in securities; and (ii) it neither is engaged nor proposes to engage in the business of investing, reinvesting, owning, holding or trading in securities and does not own or propose to acquire “investment securities” having a value exceeding 40% of the value of its total assets on an unconsolidated basis.

We believe that we, our operating partnership, RB Multifamily Investors LLC and RMI I LLC will not fall within either definition of investment company. We, our operating partnership and RB Multifamily Investors LLC are not engaged in the business of investing, reinvesting or trading in securities, but instead are engaged in the business of our wholly-owned or majority-owned subsidiaries.

RMI I LLC will have at least 60% of its assets in what we call “joint ventures.” These “joint ventures” own real estate. We treat these “joint ventures” as majority-owned subsidiaries. The determination of whether an entity is a majority-owned subsidiary of our company is made by us. The Investment Company Act defines a majority-owned subsidiary of a person as a company 50% or more of the outstanding voting securities of which are owned by such person, or by another company which is a majority-owned subsidiary of such person. The Investment Company Act further defines voting securities as any security presently entitling the owner or holder thereof to vote for the election of directors of a company. With respect to the “joint ventures” that are governed by a board of managers, we have the right to vote on at least 50% of the board seats.

In some instances, the joint ventures are managed by their members, rather than by a board of managers. Thus, the membership interests do not fall squarely within the definition of voting securities, but we nevertheless consider these joint ventures to be majority-owned subsidiaries. The SEC staff has taken the position that limited partnership interests may be voting securities if one or more limited partners has the right to take part in the conduct or control of the partnership’s business or if the limited partners’ economic interests effectively gives them the power to exercise a controlling influence over the partnership. We believe the same analysis applies to limited liability company interests. Where there is no board of managers for a joint venture, we have 50%

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of the voting rights with respect to “major decisions” to be made, including any major decisions with respect to the assets of the companies. Thus, because we have 50% or more of the voting rights in these joint ventures, we consider them to be our majority-owned subsidiaries. We have not asked the SEC staff for concurrence of our analysis, our treatment of such securities as voting securities, or whether these joint ventures may be treated in the manner in which we intend, and it is possible that the SEC staff could disagree with any of our determinations. If the SEC staff were to disagree with our treatment of one or more companies as majority-owned subsidiaries, we would need to adjust our strategy and our assets. Any such adjustment in our strategy could have a material adverse effect on us.

Similarly, Bent Tree is a joint venture owned directly by RB Multifamily Investors LLC, and it is a majority-owned subsidiary that owns real estate. Thus, both RMI I LLC and Bent Tree satisfy the 40% Test. RMI II LLC will rely upon Section 3(c)(5)(C) as its exclusion from the registration requirements of the Investment Company Act. Section 3(c)(5)(C), as interpreted by the staff of the SEC, requires RMI II LLC to invest at least 55% of its portfolio in “mortgages and other liens on and interests in real estate,” which we refer to as “qualifying real estate assets,” and maintain at least 80% of its assets in qualifying real estate assets or other real estate-related assets. RMI II LLC will satisfy these tests by investing, primarily, in those mezzanine loans that are qualifying real estate assets. RMI III LLC will invest in preferred equity in real estate, which are securities and not qualifying real estate assets. Thus, RMI III LLC will rely upon Section 3(c)(7). Our operating partnership’s interest in RMI III LLC will constitute an investment security. Accordingly, we and our operating partnership will continue to satisfy the 40% Test so long as the value of our investment in RMI III LLC, on an unconsolidated basis, is less than 40% of the value of our investment in all subsidiaries of the operating partnership.

To maintain compliance with the Investment Company Act exceptions, we, our operating partnership or our subsidiaries may be unable to sell assets we would otherwise want to sell and may need to sell assets we would otherwise wish to retain. In addition, we, our operating partnership or our subsidiaries may have to acquire additional income- or loss-generating assets that we might not otherwise have acquired or may have to forego opportunities to acquire interests in companies that we would otherwise want to acquire and that may be important to our investment strategy. If our subsidiaries fail to satisfy the requirements of any exemption or exclusion under the Investment Company Act, we could be characterized as an investment company. Our Manager will continually review our investment activity to attempt to ensure that we will not be required to register as an investment company. Among other things, our Manager will attempt to monitor the proportion of our portfolio that is placed in investments in securities. The occurrence of any of these events could materially adversely affect our business, results of operations, financial condition and ability to make distributions to our stockholders.

For more information on issues related to compliance with the Investment Company Act, see “Policies With Respect to Certain Activities—Policies Relating to the Investment Company Act.”

If we fail to implement and maintain an effective system of integrated internal controls, we may not be able to accurately report our financial results.

As a new publicly traded company, we will be required to comply with the applicable provisions of the Sarbanes-Oxley Act, which requires, among other things, that we establish and maintain effective internal controls and procedures for financial reporting and effective disclosure controls and procedures for making required filings with the SEC. Effective internal and disclosure controls are necessary for us to provide reliable financial reports and effectively prevent fraud and to operate successfully as a public company. If we cannot provide reliable financial reports or prevent fraud, our reputation and operating results would be harmed.

The process for designing and implementing an effective system of integrated internal controls is a continuous effort that requires significant resources and devotion of time. As part of the ongoing monitoring of internal controls required of publicly traded companies, we may discover material weaknesses in our internal controls. As a result of weaknesses that may be identified in our internal controls, we may also identify certain deficiencies in some of our disclosure controls and procedures that we believe require remediation. If we discover

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weaknesses, we will make efforts to improve our internal and disclosure controls. However, there is no assurance that we will be successful. In addition, as an emerging growth company, our independent registered public accounting firm will not be required to formally attest to the effectiveness of our internal control over financial reporting until the later of the year following our first annual report required to be filed with the SEC and the date we are no longer an emerging growth company, which may be up to a full five fiscal years following the completion of this offering.

Any failure to maintain effective controls or timely effect any necessary improvement of our internal and disclosure controls could harm operating results or cause us to fail to meet our reporting obligations, which could affect our ability to remain listed with the Nasdaq. Ineffective internal and disclosure controls could also cause investors to lose confidence in our reported financial information, which would likely have a negative effect on the per share trading price of our common stock.

Costs associated with, and the risk of failing to comply with, the Americans with Disabilities Act may affect our cash available for distributions.

We generally expect that the properties in which we invest will be subject to the Americans with Disabilities Act of 1990, as amended, or the ADA. Under the ADA, all places of public accommodation are required to comply with federal requirements related to access and use by disabled persons. The ADA has separate compliance requirements for “public accommodations” and “commercial facilities” that generally require that buildings and services be made accessible and available to people with disabilities. The ADA does not apply to individually owned or leased housing in the private sector not used as a public accommodation, including condominium or apartment properties. However, places of public accommodation located in residential buildings, such as rental and sales offices, commercial spaces, and hotel accommodations, are covered by the ADA Standards. Complying with the ADA’s requirements could require removal of access barriers and could result in the imposition of injunctive relief, monetary penalties, and attorney’s fees. Violations of analogous state or local public accommodation laws could, in some cases, result in the imposition of an award of damages to private litigants. We will attempt to invest in properties that comply with the ADA or place the burden on the seller or a third party to ensure compliance with such laws. However, we cannot assure you that we will be able to invest in properties or allocate responsibilities in this manner. If we cannot, our joint venture properties or our operating partners may incur costs to comply with these laws and this could materially adversely affect our business, results of operations, financial condition and ability to make distributions to our stockholders.

Most of the properties in which we invest must comply with the Fair Housing Amendments Act of 1988, or the FHAA, and failure to comply may affect our earnings and our cash available for distribution to our stockholders.

Most of the properties in which we invest must comply with the FHAA, which requires that apartment properties first occupied after March 13, 1991 be accessible to handicapped residents and visitors. As with the ADA, compliance with the FHAA could require removal of structural barriers to handicapped access in a community, including the interiors of apartment units covered under the FHAA. Recently there has been heightened scrutiny of apartment housing properties for compliance with the requirements of the FHAA and the ADA and an increasing number of substantial enforcement actions and private lawsuits have been brought against apartment communities to ensure compliance with these requirements. Noncompliance with the FHAA could result in the imposition of fines, awards of damages to private litigants, payment of attorneys’ fees and other costs to plaintiffs, substantial litigation costs and substantial costs of remediation, which could materially adversely affect our business, results of operations, financial condition and ability to make distributions to our stockholders.

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Risks Related to Our Formation Transactions

Upon completion of this offering and consummation of our formation transactions, the Contributing Investors will own, directly or indirectly, an aggregate 42.4% beneficial interest in our company on a fully diluted basis and may have the ability to exercise significant influence over our company and our operating partnership, including the approval of significant corporate transactions.

Upon completion of this offering and consummation of our formation transactions, Mr. Donlon, JMP and NYMT will directly or indirectly beneficially own approximately 0.88%, 4.40% and 37.13%, respectively, of our outstanding common stock on a fully diluted basis (or approximately 0.81%, 4.05%, and 34.18%, respectively, if the underwriters fully exercise their option to purchase additional shares of our common stock), and Mr. Donlon will be a director of our company. In addition, the Contributing Investors collectively beneficially own 100% of our Manager. Consequently, these stockholders will be able to significantly influence our business and operations through our Manager and may be able to significantly influence the outcome of matters submitted for stockholder action, including the approval of significant corporate transactions, including business combinations, consolidations and mergers. Similarly, the Contributing Investors may have influence over transactions that we engage in including transactions which require the approval of our directors. One of our directors and one of our executive officers are members of NYMT’s board of directors. Such items may include decisions related to future capital raises, investment strategy, dividend declarations, financing decisions and decisions regarding our Manager. NYMT, JMP and their affiliates are also in the business of making investments in companies and assets and may from time to time acquire and hold interests in businesses that compete directly or indirectly with us or investments that we target. NYMT or JMP may also pursue investment opportunities that are complementary to our business, and, as a result, those investment opportunities may not be available to us.

In addition, pursuant to a stockholder agreement between NYMT and us that will be effective upon completion of our formation transactions and this offering, so long as NYMT and its affiliates beneficially own at least 10.0% of our outstanding common stock (assuming all outstanding common units and LTIP units are exchanged for shares of our common stock), NYMT will have the right to designate one director nominee to our board of directors. In the event NYMT and its affiliates beneficially own at least 20.0% of our outstanding common stock (assuming all outstanding common units and LTIP units are exchanged for shares of our common stock) as of the one-year anniversary of the completion of this offering, pursuant to the stockholder agreement, we will increase the size of our board of directors from five directors to six directors, at which time NYMT will have the right to designate the additional independent director that will fill the new board seat. As long as the Contributing Investors or their affiliates continue to own a significant amount of our outstanding common stock, or one or more of their affiliates serve on our board of directors, the Contributing Investors may continue to be able to influence our decisions.

We may in the future become a “controlled company” under Nasdaq listing rules, in which case we could elect to be exempt from certain of the corporate governance rules for Nasdaq-listed companies, which could make our common stock less attractive to some investors or otherwise harm our stock price.

Upon completion of our formation transactions and the consummation of this offering, we expect that NYMT will beneficially own approximately 37.1% of our outstanding shares of common stock. NYMT may elect in the future to increase its ownership interest in our common stock. In the event NYMT beneficially owns greater than 50.0% of our outstanding common stock. We may qualify in the future as a “controlled company” under the corporate governance rules for Nasdaq-listed companies. Should we qualify for, and elect to utilize, the “controlled company” exemption under Nasdaq rules, we would not be required to have a majority of our board of directors be independent, nor would we be required to have a compensation committee or an independent nominating function. Accordingly, should we qualify for and elect to utilize the

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“controlled company” exemption, you may not have the same protections afforded to stockholders of companies that are subject to all of the corporate governance rules for Nasdaq-listed companies which could make our common stock less attractive to some investors or otherwise harm our stock price.

In connection with our formation transactions, we have not obtained a fairness opinion or independent third-party appraisal of the interests or assets being contributed to us, and the consideration to be paid by us in our formation transactions was not negotiated on an arm’s-length basis and may exceed the fair market value of the interests and other assets in our Initial Portfolio.

In connection with our formation transactions, we have not obtained a fairness opinion or independent third-party appraisal of the interests or assets being contributed to us. The number of shares of our common stock to be paid to the Contributing Investors in our formation transactions is fixed and is based upon the Contributing Investors’ estimates of (i) in the case of common equity interests in our Predecessor, the value of the investments that comprise the Predecessor Investment Portfolio and the outstanding preferred units of our Predecessor that will be held by Ellington upon completion of this offering and, (ii) in the case of the preferred equity interests held by NYMT, the aggregate liquidation preference of the preferred equity held by NYMT that is currently outstanding. The cash consideration to be paid by us to RB Commercial Mortgage in exchange for the NYMT Contributed Assets represents the aggregate principal balance of the investments outstanding (or expected to be outstanding in the case of pending acquisitions) as of and accrued but unpaid preferred distributions or interest on such investments to, the date on which we complete our acquisition of these assets. The estimates of the value of these assets and interests were based on various factors, including the historical performance of the subject property to which our investment relates, the structure of the investment, market conditions, market required rates of return and the duration of the investment. As a result, the consideration to be paid by us to the Contributing Investors and RB Commercial Mortgage was not based on arm’s-length negotiations and was not approved by any independent directors. The consideration we will pay to acquire the investments that comprise our Initial Portfolio may exceed the fair market value of these assets and we could realize less value from these assets than we would have if the assets had been acquired through arm’s-length negotiations. See “Certain Relationships and Related Transactions.”

We may assume unknown liabilities in connection with our formation transactions which could result in unexpected liabilities and expenses.

As part of our formation transactions, we will receive certain assets or interests in certain assets subject to existing liabilities, some of which may be unknown to us at the time of our formation transactions. Unknown liabilities might include liabilities for cleanup or remediation of undisclosed environmental conditions, claims of tenants, vendors or other persons dealing with the entities prior to this offering (including those that had not been asserted or threatened prior to this offering), tax liabilities, and accrued but unpaid liabilities incurred in the ordinary course of business. Our recourse with respect to such liabilities may be limited. Depending upon the amount or nature of such liabilities, our business, results of operations, financial condition and ability to make distributions to our stockholders may be materially adversely affected.

We will not obtain new Phase I environmental site assessments, property condition reports, surveys or title reports in connection with our formation transactions, and the assessments or reports obtained before our investment in these properties do not provide assurance that we will not be exposed to environmental liabilities at our properties.

We will not obtain new Phase I environmental site assessments, nor will we obtain new property condition reports, surveys or title reports, with respect to any of the properties underlying the investments that comprise our Initial Portfolio prior to our formation transactions. No assurances can be given that any of the prior Phase I environmental site assessments or other property reports previously obtained (dating from February 2013 through May 2015) identify all environmental conditions impacting the properties because material environmental conditions

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may have gone undetected at the time of the assessment or report or may have developed since the Phase I environmental site assessments were conducted or the property reports were issued. The Phase I environmental site assessments are also of limited scope and do not include comprehensive asbestos, lead-based paint or lead in drinking water assessments. We also cannot guarantee that a prior owner or tenant of a property or that an adjacent property owner has not created a material environmental condition that is unknown to us or that there are no other unknown material environmental conditions as to any one or more of the properties underlying our investments. There also exists the risk that material environmental conditions, liabilities or compliance concerns may arise in the future. The realization of any or all of these risks may materially adversely affect our business, results of operations, financial condition and ability to make distributions to our stockholders.

We may pursue less vigorous enforcement of the terms of the agreements relating to our formation transactions and other agreements because of conflicts of interest with certain of our officers and directors and affiliates of our Manager, and the terms of those agreements may be less favorable to us than they might otherwise have been if they had been negotiated on an arm’s-length basis.

The agreements between our company and the Contributing Investors and an affiliate of NYMT relating to our formation transactions contain limited representations and warranties and have limited express indemnification rights in the event of a breach of those agreements. Pursuant to these contribution agreements, the Contributing Investors and NYMT have agreed to indemnify us for breaches of such representations and warranties for one year after the completion of this offering up to a maximum amount of 10% of the consideration payable to the Contributing Investors and RB Commercial Mortgage in our formation transactions. In addition, Mr. Donlon, our Chief Executive Officer, currently serves as an officer of our Manager. Consequently, he has a fiduciary duty to act in the best interests of the funds our Manager manages. Even if we have actionable rights, we may choose not to enforce, or to enforce less vigorously, our rights under these agreements or under other agreements we may have with these parties, because of our desire to maintain positive relationships with these individuals and entities.

If we or NYMT are unable to complete the three pending investments that our Predecessor or NYMT currently have under contract to acquire or under a binding loan agreement to fund in a timely fashion or at all, we will have no designated use for a portion of the net proceeds from this offering and may experience delays in locating and securing attractive alternative investments, which would result in a reduction of the amount of cash flow initially available to us.

We anticipate that our Predecessor’s acquisition of a joint venture equity investment in the Preserve at Port Royal will close in August 2015, and that NYMT’s acquisition of a preferred equity investment in Riverchase Landing and its origination of a mezzanine loan secured by Fountains at Andover will be completed in August 2015, all of which may occur after the completion of this offering. However, we cannot assure you that these pending investments will be completed on the anticipated schedule or at all because the transactions are subject to a variety of factors, such as the satisfaction of closing conditions, including the receipt of third-party consents and approvals.

If we do not complete one or more of these pending investments in a timely fashion or at all, we may experience delays in locating and securing attractive alternative investments. These delays would result in our future operating results not meeting expectations and adversely affect our ability to make distributions to our stockholders. If we are unable to complete one or more of these pending investments, we will have no specific designated use for a portion of the net proceeds from this offering and investors will be unable to evaluate in advance the manner in which we invest these net proceeds or the economic merits of the assets we may ultimately acquire with these net proceeds.

Risks Related to Our Manager and the Management Agreement

We are dependent on our Manager and its key personnel for our success.

We are externally advised by our Manager and, pursuant to the Management Agreement, our Manager is not obligated to dedicate any specific personnel exclusively to us, nor is its personnel obligated to dedicate any specific portion of their time to the management of our business. As a

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result, we cannot provide any assurances regarding the amount of time our Manager will dedicate to the management of our business. Moreover, each of our officers and one of our non-independent directors is also an employee of our Manager or one of its affiliates, and has significant responsibilities for other investment vehicles currently managed by our Manager, and may not always be able to devote sufficient time to the management of our business. Consequently, we may not receive the level of support and assistance that we otherwise might receive if we were internally managed.

In addition, we offer no assurance that our Manager will remain our manager or that we will continue to have access to our Manager’s principals and professionals. The initial term of our Management Agreement with our Manager only extends for four years from the date of the closing of this offering, with automatic one-year renewals thereafter, and may be terminated earlier under certain circumstances. If the Management Agreement is terminated or not renewed and no suitable replacement is found to manage us, we may not be able to execute our business plan, which could have a material adverse effect our business, results of operations, financial condition and ability to make distributions to our stockholders.

The inability of our Manager to retain or obtain key personnel could delay or hinder implementation of our investment strategies, which could impair our ability to make distributions and could reduce the value of your investment.

We do not have any employees of our own. Instead, our Manager is obligated to supply us with substantially all of our senior management team, including our Chief Executive Officer, President, Chief Financial Officer and Chief Operating Officer. Subject to investment, leverage and other guidelines or policies adopted by our board of directors, our Manager has significant discretion regarding the implementation of our investment and operating policies and strategies. Accordingly, we believe that our success will depend significantly upon the experience, skill, resources, relationships and contacts of the senior officers and key personnel of our Manager and its affiliates. In particular, our success depends to a significant degree upon the contributions of Mr. Donlon, Ms. Stiller, Mr. Hogue and Mr. Brannan, all of whom are senior officers of our Manager. If any of these people were to cease their affiliation with us or our Manager, either we or our Manager may be unable to find suitable replacements, and our operating results could suffer. We believe that our future success depends, in large part, upon our Manager’s ability to hire and retain highly skilled personnel. Competition for highly skilled personnel is intense, and our Manager may be unsuccessful in attracting and retaining such skilled personnel. If we lose or are unable to obtain the services of highly skilled personnel, our ability to implement our investment strategies could be delayed or hindered and this could materially adversely affect our business, results of operations, financial condition and ability to make distributions to our stockholders.

Termination of the Management Agreement, even for poor performance, could be difficult and costly, including as a result of termination fees, and may cause us to be unable to execute our business plan.

Termination of the Management Agreement without cause, even for poor performance, could be difficult and costly. We may terminate the Management Agreement without cause if at least two-thirds of our independent directors determine either (i) there has been unsatisfactory performance by our Manager that is materially detrimental to us or (ii) the terms of the base management and incentive fee under the Management Agreement are not, taken as a whole, in accordance with then-current market terms for such fees. We may generally terminate our Manager for “cause” (as defined in the Management Agreement); provided that if we are terminating due to a “change of control” of our Manager (as defined in the Management Agreement), a majority of our independent directors must determine such change of control is materially detrimental to us prior to any termination. If we terminate the Management Agreement without cause, or if our Manager terminates the Management Agreement because of a material breach by us, we must pay our Manager a termination fee payable in cash. The termination fee, if any, will generally be equal to three times the sum of the average annual base management fee and average annual incentive fee earned by our Manager during the 24-month period immediately

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preceding the most recently completed fiscal quarter prior to such termination. These provisions may substantially restrict our ability to terminate the Management Agreement without cause and would cause us to incur substantial costs in connection with such a termination.

We may pay our Manager an incentive fee on certain investments that include a deferred interest or return feature.

The incentive fee payable by us to our Manager may create more of an incentive for our Manager to make investments that include a deferred interest or return feature than would be the case in the absence of such a compensation arrangement. The terms of the preferred equity investments and mezzanine loans that we underwrite require the borrower or joint venture entity to make quarterly or monthly minimum cash payments of interest or preferred returns at levels that may range from 48% to 100% of the stated accrual rate for the investment. In some cases, the terms of these investments will cause the minimum cash payment to increase over the term of the investment and in all cases, the terms will require the borrower or joint venture entity to pay the remaining outstanding balance and all other accrual and unpaid amounts due at maturity of the investment. The portion of the payments that equal the difference between our stated accrual rate for the investment (as specified in the operating agreement or loan agreement for the investment) and the minimum cash payments received by us on these investments plus any sweep of excess cash flow as required by the applicable agreement are treated as non-cash accrual, or PIK, interest and are recognized as non-cash income until they are paid. Under these investments, we accrue interest or preferred returns during the term of the investment at the stated accrual rate specified in the applicable investment agreement but may not receive 100% of the cash income from the investment until the end of the term. However, our definition of Adjusted Core FFO, which is used to calculate our incentive fee, includes accrued interest and preferred returns. Thus, a portion of this incentive fee is based on income that we have not yet received in cash, and may never receive.

Because we are dependent upon our Manager and its affiliates to conduct our operations, any adverse changes in the financial health of our Manager or its affiliates or our relationship with them could hinder our operating performance and the return on your investment.

We are dependent on our Manager and its affiliates to manage our operations and acquire and manage our investments. Under the direction of our board of directors, and subject to our investment guidelines, our Manager makes all decisions with respect to the management of our company. To conduct its operations, our Manager depends upon the fees and other compensation that it receives from us in connection with managing our company and from other entities and investors with respect to investment management services it provides, including NYMT and certain of its affiliates. Any adverse changes in the financial condition of our Manager or its affiliates, or our relationship with our Manager, could hinder its ability to successfully manage our operations and our portfolio of investments, which would materially adversely affect our business, results of operations, financial condition and ability to make distributions to our stockholders.

We compete with our Manager’s other accounts for access to our Manager.

Our Manager currently manages other accounts with a focus that overlaps with our investment focus, and expects to continue to do so in the future. Our Manager is not restricted in any way from sponsoring or accepting capital from new accounts, even for investing in asset classes or strategies that are similar to, or overlapping with, our asset classes or strategies. Therefore, we compete for access to the benefits that our relationship with our Manager provides us.

We compete with other accounts managed by our Manager for opportunities to acquire assets, which are allocated in accordance with our Manager’s investment allocation policies.

In addition to the investment management services it provides to us, our Manager manages multifamily CMBS and certain commercial real estate-related debt investments, including preferred equity and mezzanine loans, on behalf of NYMT, one of the Contributing Investors in our formation

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transactions, and approximately $0.8 million of capital, as of March 31, 2015, for a limited liability company that currently owns an undeveloped parcel of land and 17 residential home lots offered for sale and for which Mr. Donlon is the “lead capital member.” In addition, subject to its obligations under the Management Agreement, our Manager may in the future provide investment management services to various other clients that have strategies that are similar to, or overlap with our strategy and, except as provided in our Manager’s investment allocation policy, our Manager has no duty to allocate such opportunities in a manner that preferentially favors us. Our Manager makes available to us all opportunities to acquire assets that it determines, in its reasonable and good faith judgment, based on our objectives, policies and strategies, and other relevant factors, are appropriate for us in accordance with our Manager’s written investment allocation policy, it being understood that we might not participate in each such opportunity.

Subject to the terms of the Management Agreement, our Manager’s investment allocation policy provides that it will offer all direct investments in multifamily apartment properties, such as joint venture equity ownership and preferred equity ownership interests in entities that own, and mezzanine loans secured by, multifamily apartment properties to us, unless the investment is presented by our Manager to our board of directors for their approval (whether or not it conforms to our investment guidelines) and a majority of the independent and disinterested directors of our board of directors vote against proceeding with the transaction, in which case it will then be offered first to NYMT and then to other accounts, while our manager’s investment allocation policy provides that investment opportunities in securitized assets, such as mortgage-backed securities or collateralized debt obligations, will be offered first to NYMT, second to us and thereafter to other accounts. However, if our board of directors modifies our investment guidelines in a manner that alters (in a way that is materially adverse to our Manager) or otherwise eliminates our Manager’s authority under the investment guidelines with respect to any of the investment opportunities described in the immediately preceding sentence and our Manager does not consent to such modification, our Manager may void its agreement with respect to the allocation of future similar investment opportunities that are impacted by the change. In the event our Manager believes that investments other than those described in this paragraph meet the investment guidelines for more than one account, our Manager may offer the opportunities to multiple accounts in proportion to their needs and available capital; provided that, on an overall basis, each account is treated equitably. Should we and one or more accounts of the Manager be involved in the same investment, our Manager will follow the approval process of our related person transactions policy. See “Certain Relationships and Related Party Transactions—Related Party Transaction Policy.” Therefore, we may compete with our Manager’s other accounts for certain investment opportunities and we may not have first priority for or the right to obtain each investment we find attractive.

The base management fee payable to our Manager is payable regardless of the performance of our portfolio, which may reduce our Manager’s incentive to devote the time and effort to seeking profitable opportunities for our portfolio.

We will pay our Manager base management fees based on our adjusted equity market capitalization regardless of the performance of our business. Our Manager’s entitlement to non-performance-based compensation might reduce its incentive to devote the time and effort of its professionals to seeking profitable opportunities for our business, which could result in a reduction in our performance and could materially adversely affect our business, results of operations, financial condition and ability to make distributions to our stockholders.

The incentive fee payable to our Manager under the Management Agreement is payable quarterly and is based on our Adjusted Core FFO and therefore, may cause our Manager to select investments in more risky assets to increase its incentive compensation.

Our Manager is entitled to receive incentive compensation based upon our achievement of targeted levels of Adjusted Core FFO. In evaluating investments and other management strategies, the opportunity to earn incentive compensation based on Adjusted Core FFO may lead our Manager to place undue emphasis on the maximization of Adjusted Core FFO at the expense of

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other criteria, such as preservation of capital, in order to achieve higher incentive compensation. Investments with higher yield potential are generally riskier or more speculative. This could result in increased risk to the value of our investment portfolio.

Our board of directors will approve very broad investment guidelines for our Manager and will not approve each investment and financing decision made by our Manager unless required by our investment guidelines.

Our Manager will be authorized to follow very broad investment guidelines established by our board of directors. Our board of directors will periodically review our investment guidelines and our portfolio and asset management decisions. However, it generally will not review all of our proposed investments and asset-management decisions. In addition, in conducting periodic reviews, our board of directors will rely primarily on information provided to it by our Manager. Furthermore, transactions entered into by our Manager may be costly, difficult or impossible to unwind by the time they are reviewed by our board of directors. Our Manager will have great latitude within the broad parameters of our investment guidelines in determining the types and amounts of assets in which to invest on our behalf, including making investments that may result in returns that are substantially below expectations or result in losses, which would materially adversely affect our business, results of operations, financial condition and ability to make distributions to our stockholders.

The Management Agreement was not negotiated on an arm’s-length basis and may not be as favorable to us as if it had been negotiated with an unaffiliated third party.

Our executive officers, one of whom is the chairman of our board of directors, are officers of our Manager, and the Contributing Investors whom will collectively beneficially own approximately 42.4% of our outstanding common stock upon completion of this offering and consummation of our formation transactions, collectively beneficially own 100% of our Manager. As a result, the Management Agreement was negotiated between related parties and its terms, including fees payable to our Manager, may not be as favorable to us as if it had been negotiated with an unaffiliated third party. In addition, we may choose not to enforce, or to enforce less vigorously, our rights under the Management Agreement because of our desire to maintain our ongoing relationship with our Manager and its affiliates.

There will be conflicts of interest in our relationship with our Manager, which could result in decisions that are not in the best interests of our stockholders.

We are subject to conflicts of interest arising out of our relationship with our Manager and its affiliates. Currently, all of our executive officers and our Chairman are employees of our Manager or one or more of its affiliates. As a result, our Manager and our officers may have conflicts between their duties to us and their duties to, and interests in, our Manager and its affiliates.

Our charter contains provisions that permit our Manager and our directors and officers, and their affiliates (which includes NYMT and JMP), to compete with us, own any investments or engage in any business activities (including investments and business activities that are similar to our current or proposed investments or business activities) or buy, sell or trade any securities or commodities for their own accounts (including taking positions contrary to ours), and our charter provides that, to the maximum extent permitted by law, no such person will be liable to us or any stockholder by reason of the fact that the person participates in any such activity. Our charter also provides that, to the maximum extent permitted by law, our Manager and our directors and officers, and their affiliates, are not required to present any business opportunity to us unless the opportunity was expressly offered to such person in his or her capacity as a director or officer of our company.

We may acquire or sell assets in which our Manager or its affiliates have or may have an interest. Similarly, our Manager or its affiliates may acquire or sell assets in which we have or may have an interest. Although such acquisitions or dispositions may present conflicts of interest, we nonetheless may pursue and consummate such transactions. Additionally, we may engage in transactions directly with our Manager or its affiliates, including the purchase and sale of all or a

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portion of a portfolio asset. Any such transaction will be subject to our related party transaction policy and may, depending on size, require the approval of our audit committee. See “Certain Relationships and Related Party Transactions—Related Party Transaction Policy.”

Acquisitions made for entities with similar objectives may be different from those made on our behalf. Our Manager or its affiliates may have economic interests in or relationships with others in whose obligations or securities we may acquire. In particular, such persons may make or hold an investment in securities that we acquire that may be pari passu, senior or junior in ranking to our interest in the securities or in which partners, security holders, officers, directors, agents or employees of such persons serve on boards of directors or otherwise have ongoing relationships. Each of such ownership and other relationships may result in securities laws restrictions on transactions in such securities and otherwise create conflicts of interest. In such instances, our Manager may, in its sole discretion, make recommendations and decisions regarding such securities for other entities that may be the same as or different from those made with respect to such securities and may take actions (or omit to take actions) in the context of these other economic interests or relationships the consequences of which may be adverse to our interests.

In deciding whether to issue additional debt or equity securities, we will rely in part on recommendations made by our Manager. While such decisions are subject to the approval of our board of directors, our Chairman is also an employee of our Manager and our President and one of our directors (who is also the principal executive officer of NYMT) are members of NYMT’s board of directors. Because our Manager will earn a management fee from us that is based on our adjusted equity market capitalization, our Manager may have an incentive to recommend that we issue additional equity securities. See below for further discussion of the adverse impact future debt or equity offerings could have on shares of our common stock. Future offerings of debt securities, which would rank senior to our common stock upon liquidation, and future offerings of equity securities which would dilute the common stock holdings of our existing stockholders and may be senior to our common stock for the purposes of dividend and liquidating distributions, may adversely affect the market price of shares of our common stock.

The officers of our Manager and its affiliates will devote as much time to us as our Manager deems appropriate, however, these officers may have conflicts in allocating their time and services among us and the accounts of other entities our Manager manages, including NYMT. During economic downturns and other times when we will need focused support and assistance from our Manager, other entities that our Manager advises or manages will likewise require greater focus and attention, placing our Manager’s resources in high demand. In such situations, we may not receive the necessary support and assistance we require or would otherwise receive if we were internally managed or if our Manager did not manage other entities.

Our Manager’s liability is limited under the Management Agreement and we have agreed to indemnify our Manager against certain liabilities. As a result, we could experience poor performance or losses for which our Manager would not be liable.

Pursuant to the Management Agreement, our Manager does not assume any responsibility other than to render the services called for thereunder in good faith and is not responsible for any action of our board of directors in following or declining to follow its advice or recommendations. Under the terms of the Management Agreement, our Manager, its officers, members, managers, directors, personnel, any person controlling or controlled by our Manager and any person providing sub-advisory services to our Manager are not liable to us, any subsidiary of ours, our directors, our stockholders or any subsidiary’s stockholders or partners for acts or omissions performed in accordance with and pursuant to the Management Agreement, except by reason of acts or omissions constituting bad faith, willful misconduct, gross negligence or reckless disregard of their duties under the Management Agreement. In addition, we have agreed to indemnify our Manager, its officers, members, managers, directors, personnel, any person controlling or controlled by our Manager and any person providing sub-advisory services to our Manager with

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respect to all expenses, losses, damages, liabilities, demands, charges and claims arising from acts or omissions of any such indemnified party not constituting bad faith, willful misconduct, gross negligence or reckless disregard of duties, performed in good faith in accordance with and pursuant to the Management Agreement.

Risks Related to Debt Financing

We will require additional capital to continue to grow our business and investment portfolio, and the failure to obtain such capital through financing or funding transactions may have a material adverse effect on our business, financial condition, results of operations and ability to make distributions to our stockholders.

We require capital to fund our targeted investments to fund distributions to our stockholders and to repay principal and interest on our borrowings. We expect to meet our capital requirements using cash on hand, cash flow generated from our operations and principal and interest payments received from our investments. However, because of distribution requirements imposed on us to qualify as a REIT, which generally require that we distribute to our stockholders 90% of our annual taxable income (excluding net capital gains), our ability to finance our growth must largely be funded by external sources of capital. As a result, we will have to rely on third-party sources of capital, including public and private offerings of securities and debt financings. Financing may not be available to us when needed, on favorable terms, or at all. In the event that we are unable to obtain adequate financing to fund or grow our business, it would have a material adverse effect on our ability to make additional investments and make our debt service payments and our financial condition and the ability to make distributions to our stockholders would be materially adversely affected.

We intend to use prudent amounts of leverage, but even prudent amounts of leverage will exacerbate any losses we incur on our current and future investments and may reduce cash available for distribution to our stockholders. Moreover, we are not subject to any limitations on the amount of leverage we may use, and accordingly, the amount of leverage we use may be significantly less or greater than we currently anticipate.

Although we currently do not leverage our investments through direct borrowings, we intend to use prudent amounts of leverage in making our investments in the future, which we define as having total indebtedness of not more than approximately 50% of the fair market value of all of our investments, but the leverage on specific investments may exceed this level. However, we are not subject to any limitations on the amount of leverage we may use, on a single investment or in total, and accordingly, the amount of leverage we use may be significantly less or greater than we currently anticipate.

Our board of directors has the authority to change our financing policies at any time and without stockholder approval. If our board of directors changes our policies regarding our use of leverage, we expect that it will consider many factors, including the lending standards of GSEs, such as Fannie Mae and Freddie Mac, for loans in connection with the financing of apartment properties, the leverage ratios of publicly traded REITs with similar investment strategies, the cost of leverage as compared to expected operating net revenues, and general market conditions.

The amount of leverage we incur on a specific investment will vary depending on the asset type, our ability to obtain borrowings, the cost of the debt and our lenders’ estimates of the value of our portfolio’s cash flow. The return on our investments and cash available for distribution to our stockholders may be reduced to the extent that changes in market conditions cause the cost of our financing to increase relative to the income that can be derived from the assets we own. Further, any leverage on our equity will exacerbate any losses we incur.

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Any indebtedness to be incurred in the future, whether secured by individual properties in which we invest or unsecured, could subject us to increased risk of loss, which could have a material adverse effect on our results of operations and our ability to make distributions to our stockholders.

We may incur indebtedness in the future, whether secured by individual properties in which we invest or unsecured, which, together with the subsidiary preferred units, which we view as a form of debt, could subject us to several risks, including, among others, that:

• our cash flow from operations may be insufficient to make required payments of principal of and interest on the debt or we may fail to comply with any of the other covenants contained in the debt agreements, which is likely to result in:

• acceleration of such debt (and any other debt containing a cross-default or cross-acceleration provision) that we may be unable to repay from internal funds or to refinance on favorable terms, or at all;

• our inability to borrow unused amounts under our financing arrangements, even if we are current in payments on borrowings under those arrangements; and

• the loss of some or all of our assets to foreclosure or sale;

• our debt may increase our vulnerability to adverse economic and industry conditions with no assurance that investment yields will increase with higher financing costs;

• we may be required to dedicate a substantial portion of our cash flow from operations to payments on our debt, thereby reducing funds available for operations, future business opportunities, stockholder distributions or other purposes; and

• we may not be able to refinance debt that matures prior to the investment it was used to finance on favorable terms, or at all.

High mortgage rates may make it difficult for us to finance or refinance joint venture investments, which could reduce the number of joint venture investments we can make, our cash flow from operations and the amount of cash distributions we can make.

If mortgage debt is unavailable at reasonable rates, we and our operating partner may not be able to finance potential investments. All of the multifamily properties in which we have invested are encumbered by senior mortgage debt. As a result, we or our operating partners run the risk of being unable to refinance the properties when the debt becomes due or of being unable to refinance on favorable terms. If interest rates are higher when these properties are refinanced, our income could be reduced. Moreover, we or our operating partners may be unable to refinance properties. If any of these events occurs, our cash flow will be reduced. This, in turn, will reduce cash available for distribution to you and may hinder our ability to raise capital by issuing more stock or borrowing more money.

Lenders may require us or the entities in which we invest to enter into restrictive covenants relating to our operations or the operations of the entities in which we invest, which could limit our ability to make distributions to you.

When providing financing, a lender may impose restrictions on us or the entities in which we invest that could affect our distribution and operating policies or those of the entities in which we invest, and this in turn could affect our ability or the ability of the entities in which we invest to incur additional debt. Loan documents we enter into in connection with a joint venture equity or preferred equity investment or otherwise may contain covenants that limit our ability or the ability of the entities in which we invest to further mortgage the property, discontinue insurance coverage, or replace our Manager. These or other limitations may limit our flexibility and prevent us from achieving our operating plans, which could materially adversely affect our business, results of operations, financial condition and ability to make distributions to our stockholders.

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Lenders may be able to recover against our other properties under our mortgage loans.

In financing our investments, we may seek to obtain secured nonrecourse loans, however, we may enter into recourse loans. If we use recourse financing for our investments, in addition to the assets securing the loan, the lender would have the ability to look to our other assets for satisfaction of the debt if the proceeds from the sale or other disposition of the assets securing the loan are insufficient to fully repay it when required. Also, in order to facilitate the sale of a property, we may allow the buyer to purchase the property subject to an existing loan whereby we remain responsible for the debt.

If we are required to make payments under any “bad boy” carve-out guaranties that we may provide in connection with certain mortgages and related loans, our business and financial results could be materially adversely affected.

In obtaining certain nonrecourse loans in connection with an investment or otherwise, we or the entities in which we invest may provide standard carve-out guaranties. These guaranties are only applicable if and when the borrower directly, or indirectly through agreement with an affiliate, operating partner or other third party, voluntarily files a bankruptcy or similar liquidation or reorganization action or takes other actions that are fraudulent or improper (commonly referred to as “bad boy” guaranties). Although we believe that “bad boy” carve-out guaranties are not guaranties of payment in the event of foreclosure or other actions of the foreclosing lender that are beyond the borrower’s control, some lenders in the real estate industry have recently sought to make claims for payment under such guaranties. In the event such a claim were made against us or the entities in which we invest under a “bad boy” carve-out guaranty following foreclosure on mortgages or related loans, and such claim were successful, our business, results of operations, financial condition and ability to make distributions to our stockholders could be materially adversely affected.

To hedge against interest rate fluctuations, we or the entities that issue our joint venture and preferred equity investments may use derivative financial instruments that may be costly and ineffective, may reduce the overall returns on your investment, and may expose us to the credit risk of counterparties.

To the extent consistent with qualifying as a REIT, we or the entities that issue our joint venture and preferred equity investments may use derivative financial instruments to hedge exposures to interest rate fluctuations on loans secured by our assets and investments in collateralized mortgage-backed securities. Derivative instruments may include interest rate swap contracts, interest rate cap or floor contracts, futures or forward contracts, options or repurchase agreements. Our actual hedging decisions will be determined in light of the facts and circumstances existing at the time of the hedge and may differ from time to time.

To the extent that we or the entities that issue our joint venture and preferred equity investments use derivative financial instruments to hedge against interest rate fluctuations, we or the entities that issue our joint venture and preferred equity investments will be exposed to financing, basis risk and legal enforceability risks. In this context, credit risk is the failure of the counterparty to perform under the terms of the derivative contract. If the fair value of a derivative contract is positive, the counterparty owes us, which creates credit risk for us. Basis risk occurs when the index upon which the contract is based is more or less variable than the index upon which the hedged asset or liability is based, thereby making the hedge less effective. Finally, legal enforceability risks encompass general contractual risks, including the risk that the counterparty will breach the terms of, or fail to perform its obligations under, the derivative contract. If we or the entities that issue our joint venture and preferred equity investments are unable to manage these risks effectively, our business, results of operations, financial condition and ability to make distributions to our stockholders could be materially adversely affected.

Complying with REIT requirements may limit our ability to hedge risk effectively.

The REIT provisions of the Code may limit our ability and the ability of the entities that issue our joint venture and preferred equity investments to hedge the risks inherent to our operations and those of our operating partners. From time to time, we or the entities that issue our joint

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venture and preferred equity investments may enter into hedging transactions with respect to one or more of our assets or liabilities or the properties or liabilities of the entities that issue our joint venture and preferred equity investments. Our hedging transactions or those of the entities that issue our joint venture and preferred equity investments may include entering into interest rate swaps, caps and floors, options to purchase these items, and futures and forward contracts. Any income or gain derived by us from transactions that hedge certain risks, such as the risk of changes in interest rates, will not be treated as gross income for purposes of either the 75% or the 95% income test, as defined below in “Material U.S. Federal Income Tax Considerations—Gross Income Tests,” unless specific requirements are met. Such requirements include that the hedging transaction be properly identified within prescribed time periods and that the transaction either (1) hedges risks associated with indebtedness issued by us that is incurred to acquire or carry real estate assets or (2) manages the risks of currency fluctuations with respect to income or gain that qualifies under the 75% or 95% income test (or assets that generate such income). To the extent that we do not properly identify such transactions as hedges, hedge with other types of financial instruments, or hedge other types of indebtedness, the income from those transactions is not likely to be treated as qualifying income for purposes of the 75% and 95% income tests. Although our operating partners are required to obtain our consent prior to entering into such a hedging transaction, it is possible that an operating partner might fail to obtain our consent as required and as a result, we may be exposed to this failure to properly identify a hedge for purposes of our REIT compliance. As a result of these rules, we and the entities that issue our joint venture and preferred equity investments may have to limit the use of hedging techniques that might otherwise be advantageous, especially during times when interest rates are, or are expected to be, rising, which could result in greater risks associated with interest rate or other changes than we would otherwise incur.

You may not receive any profits resulting from the sale of one of our investments, or receive such profits in a timely manner, because we may provide financing for the purchaser of such investment.

If we liquidate our company, you may experience a delay before receiving your share of the proceeds of such liquidation. In a forced or voluntary liquidation, we may sell our investments either subject to or upon the assumption of any then outstanding mortgage debt or, alternatively, may provide financing to purchasers. We may take a purchase money obligation secured by a mortgage as partial payment. We do not have any limitations or restrictions on our taking such purchase money obligations. To the extent we receive promissory notes or other property instead of cash from sales, such proceeds, other than any interest payable on those proceeds, will not be included in net sale proceeds until and to the extent the promissory notes or other property are actually paid, sold, refinanced or otherwise disposed of. In certain cases, we may receive initial down payments in the year of sale in an amount less than the selling price and subsequent payments may be spread over a number of years. In such cases, you may experience a delay in the distribution of the proceeds of a sale until such time.

Risks Related to Our Organizational Structure

The ownership limits in our charter may discourage a takeover or business combination that may have benefited our stockholders.

To assist us in qualifying as a REIT, among other purposes, our charter generally restricts the beneficial or constructive ownership of our shares of capital stock by any person to no more than 9.8% in value or in number of shares, whichever is more restrictive, of the outstanding shares of any class or series of our capital stock, except that NYMT may own up to 100% of the shares of our common stock as long as it continues to qualify as a REIT. This and other restrictions on ownership and transfer of our common stock contained in our charter may discourage a change of control of us and may deter individuals or entities from making tender offers for our common stock on terms that might be financially attractive to you or which may cause a change in our management. In addition to deterring potential transactions that may be favorable to our stockholders, these provisions may also decrease your ability to sell our common stock.

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Our stockholders’ ability to control our operations is severely limited.

Our major strategies, policies and guidelines, including our strategies, policies and guidelines regarding investments, financing, growth, debt capitalization, REIT qualification and distributions, are determined by our board of directors. Our board of directors may amend or revise these and other strategies, policies and guidelines, including our investment guidelines, without a vote of our stockholders. However, as discussed above, the Contributing Investors and their affiliates will own a significant portion of the outstanding shares of our common stock upon completion of this offering and may be able to significantly influence transactions and other matters that require the approval or consideration or our board of directors. See “—Risks Related to Our Formation Transactions—Upon completion of this offering and consummation of our formation transactions, the Contributing Investors will own, directly or indirectly, an aggregate 42.4% beneficial interest in our company on a fully diluted basis and may have the ability to exercise significant influence over our company and our operating partnership, including the approval of significant corporate transactions.”

Conflicts of interest could arise between our directors’ and officers’ duties and our duties to our operating partnership.

Our directors and officers have duties to our company under Maryland law in connection with their management of our company. At the same time, we have fiduciary duties, as a general partner, to our operating partnership and the limited partners under Delaware law in connection with the management of our operating partnership. Our duties as general partner to our operating partnership and its partners may conflict with the duties of our directors and officers to our company and stockholders. The partnership agreement provides that in the event of a conflict between the interests of our stockholders, on the one hand, and the limited partners of the operating partnership, on the other hand, we, as the general partner, will endeavor in good faith to resolve the conflict in a manner not adverse to either our stockholders or the limited partners; provided, however, that for so long as we own a controlling interest in the operating partnership, any such conflict that we, in our sole and absolute discretion, determine cannot be resolved in a manner not adverse to either our stockholders or the limited partners shall be resolved in favor of our stockholders and we shall not be liable for monetary damages for losses sustained, liabilities incurred or benefits not derived by the limited partners in connection with such decisions.

Certain provisions of Maryland law could inhibit a change in our control.

Certain provisions of the Maryland General Corporation Law, or the MGCL, may have the effect of inhibiting a third party from making a proposal to acquire us or of impeding a change in our control under circumstances that otherwise could provide the holders of our common stock with the opportunity to realize a premium over the then-prevailing market price of such shares of our common stock.

Our board of directors may elect for us to become subject to the “business combination” provisions of the MGCL that, subject to limitations, prohibit certain business combinations (including a merger, consolidation, share exchange, or, in circumstances specified in the statute, an asset transfer or issuance or reclassification of equity securities) between us and an “interested stockholder” (defined generally as any person who beneficially owns 10% or more of our then outstanding voting capital stock or an affiliate or associate of ours who, at any time within the two-year period prior to the date in question, was the beneficial owner of 10% or more of our then outstanding voting capital stock) or an affiliate thereof for five years after the most recent date on which the interested stockholder becomes an interested stockholder. After the five-year prohibition, any business combination between us and an interested stockholder generally must be recommended by our board of directors and approved by the affirmative vote of at least (1) 80% of the votes entitled to be cast by holders of outstanding shares of our voting capital stock; and (2) two-thirds of the votes entitled to be cast by holders of our voting capital stock of the corporation other than shares held by the interested stockholder with whom or with whose affiliate the business combination is to be effected or held by an affiliate or associate of the interested stockholder. These super-majority vote requirements do not apply if our common stockholders

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receive a minimum price, as defined under the MGCL, for their shares in the form of cash or other consideration in the same form as previously paid by the interested stockholder for its shares. These provisions of the MGCL do not apply, however, to business combinations that are approved or exempted by a board of directors prior to the time that the interested stockholder becomes an interested stockholder. Pursuant to the statute, our board of directors has by resolution exempted business combinations (i) between us and any other person, provided that the business combination is first approved by our board of directors, including a majority of our directors who are not affiliates or associates of such person and (ii) between us and our Manager or any of its affiliates and associates, or any person acting in concert with any of the foregoing. This resolution, however, may be altered or repealed in whole or in part at any time. If this resolution is repealed, or our board of directors does not otherwise approve a business combination, this statute may discourage others from trying to acquire control of us and increase the difficulty of consummating any offer. See “Certain Provisions of Maryland Law and of Our Charter and Bylaws—Business Combinations.”

The “control share” provisions of the MGCL provide that “control shares” of a Maryland corporation (defined as voting shares which, when aggregated with all other shares controlled by the stockholder (except solely by virtue of a revocable proxy), entitle the stockholder to exercise one of three increasing ranges of voting power in the election of directors) acquired in a “control share acquisition” (defined as the direct or indirect acquisition of ownership or control of issued and outstanding “control shares”) have no voting rights, with respect to those shares, except to the extent approved by its stockholders by the affirmative vote of at least two-thirds of all the votes entitled to be cast on the matter, excluding votes entitled to be cast by the acquirer of control shares, the officers of the Maryland corporation and the directors of the Maryland corporation who are also employees of the Maryland corporation. Our bylaws contain a provision exempting from the control share acquisition statute any and all acquisitions by any person of our shares. There can be no assurance that this provision will not be amended or eliminated at any time in the future. See “Certain Provisions of Maryland Law and of Our Charter and Bylaws—Control Share Acquisitions.”

The provisions of Title 3, Subtitle 8 of the MGCL permit our board of directors, without stockholder approval and regardless of what is currently provided in our charter or bylaws, to implement certain provisions if we have a class of equity securities registered under the Exchange Act (which we will have upon the completion of this offering), and at least three independent directors. These provisions may have the effect of inhibiting a third party from making an acquisition proposal for us or of delaying, deferring or preventing a change in our control under circumstances that otherwise could provide the holders of our common stock with the opportunity to realize a premium over the then current market price. Our charter contains a provision whereby we elect, at such time as we become eligible to do so, to be subject to the provisions of Title 3, Subtitle 8 of the MGCL relating to the filling of vacancies on our board of directors. See “Certain Provisions of Maryland Law and of Our Charter and Bylaws—Maryland Unsolicited Takeovers Act.”

We will be required to materially increase the return paid to holders of the subsidiary preferred units and may be required to sell all of the Predecessor Investment Portfolio if a changeover event (as defined in the operating agreement of our Predecessor) occurs, either of which could have a material adverse impact on our financial condition and results of operations.

The amended and restated operating agreement of our Predecessor that will become effective concurrent with the closing of our formation transactions, which we refer to as our “subsidiary operating agreement,” defines a “changeover event” as the occurrence (without cure during any available cure period) of any of the following events or circumstances: our Predecessor fails to make a payment of the quarterly return payable to its preferred members; any subsidiary preferred units remain outstanding on or after July 1, 2018; our Predecessor becomes the subject of a petition in bankruptcy or similar proceeding; our Predecessor sells all or substantially all of its assets; our Predecessor breaches any covenant set forth in the subsidiary operating agreement; and, for so long as our Manager has any authority delegated to it by our operating partnership (as managing member of our Predecessor), our Manager materially violates the subsidiary operating agreement or the Management Agreement. If a changeover event occurs, the subsidiary operating

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agreement requires the following, among other things, to take place: the return required to be paid to the holders of the subsidiary preferred units will be increased to 15.0% per annum, such holders will become first in priority for all distributions of our Predecessor and our operating partnership will be required, unless the preferred members approve another course of action, to sell, in a commercially reasonable manner, all of our Predecessor’s assets, which include the Predecessor Investment Portfolio. If our operating partnership is required to sell all of our Predecessor’s assets, the amount of our investments would be significantly reduced. Either the significant reduction in the amount of our investments or the significant increase in the preferred return could materially adversely affect our business, results of operations, financial condition and ability to make distributions to our stockholders.

We may not be able, in the future, to generate sufficient cash flow from our investments to make required distributions to the holders of the subsidiary preferred units and to make dividend payments to our stockholders.

The subsidiary operating agreement of our Predecessor requires our Predecessor to pay to the holders of the subsidiary preferred units, on a quarterly basis, a preferred return of 10.0% per annum (unless increased to 15.0% per annum as a result of a changeover event) on such holders’ adjusted capital contributions (as defined in the subsidiary operating agreement) to our Predecessor. Upon completion of our formation transactions, the preferred members’ adjusted capital contributions will be $16.3 million. If the Predecessor Investment Portfolio does not provide enough cash for our Predecessor to satisfy the required distributions to its preferred members, we may be required to fund additional capital to our Predecessor, which would reduce the cash we have available for investments and distributions to our stockholders. Moreover, if our Initial Portfolio (including the Predecessor Investment Portfolio) and future investments in multifamily apartment properties do not provide enough cash to fund our Predecessor’s required distributions to its preferred members, we may experience a changeover event, which would materially adversely affect our business, results of operations, financial condition and ability to make distributions to our stockholders.

Our authorized but unissued common and preferred stock may prevent a change in our control.

Our charter authorizes us to issue additional authorized but unissued shares of our common stock and preferred stock. In addition, our charter permits our board of directors to amend, without stockholder approval, our charter to increase or decrease the aggregate number of our authorized shares of stock or the number of shares of stock of any class or series that we have authority to issue. Our board of directors may also classify or reclassify any unissued shares of our common stock or preferred stock and may set the preferences, rights and other terms of the classified or reclassified shares of our common stock or preferred stock. As a result, among other things, our board of directors may establish a class or series of common stock or preferred stock that could delay, defer or prevent a transaction or a change in our control that might involve a premium price for shares of our common stock or otherwise be in the best interests of our stockholders.

Certain provisions in the partnership agreement for our operating partnership may delay or prevent unsolicited acquisitions of us.

Provisions in the partnership agreement for our operating partnership may delay or make more difficult unsolicited acquisitions of us or changes in our control. These provisions could discourage third parties from making proposals involving an unsolicited acquisition of us or change of our control, although some stockholders might consider such proposals, if made, desirable. These provisions include, among others:

• redemption rights of qualifying parties;

• transfer restrictions on the common units;

• the ability of the general partner in some cases to amend the partnership agreement without the consent of the limited partners; and

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• the right of the limited partners to consent to transfers of the general partnership interest and mergers under specified circumstances.

Our rights and the rights of our stockholders to take action against our directors and officers are limited, which could limit your recourse in the event of actions not in your best interests.

Under Maryland law generally, each of our directors must act in good faith, in a manner he or she reasonably believes to be in our best interests and with the care that an ordinary prudent person in a like position would use under similar circumstances. Our charter limits the liability of our present and former directors and officers to us and our stockholders for money damages to the maximum extent permitted under Maryland law. Under current Maryland law, our present and former directors and officers will not have any liability to us or our stockholders for money damages other than liability resulting from:

• actual receipt of an improper benefit or profit in money, property or services; or

• active and deliberate dishonesty by the director or officer that was established by a final judgment and is material to the cause of action.

In addition, our charter authorizes us to indemnify our present and former directors and officers for actions taken by them in those and other capacities to the maximum extent permitted by Maryland law. Our bylaws require us to indemnify each present and former director or officer, to the maximum extent permitted by Maryland law, in the defense of any proceeding to which he or she is made, or threatened to be made, a party by reason of his or her service to us as a director or officer or in certain other capacities. In addition, we may be obligated to pay or reimburse the expenses incurred by our present and former directors and officers without requiring a preliminary determination of their ultimate entitlement to indemnification.

As a result, we and our stockholders may have more limited rights against our present and former directors and officers than might otherwise exist absent the current provisions in our charter and bylaws or that might exist with other companies, which could limit your recourse in the event of actions not in your best interest.

Our charter contains provisions that make removal of our directors and filling vacancies difficult, which could make it difficult for our stockholders to effect changes to our management.

Our charter provides that, subject to the rights of holders of any class of series of preferred stock, a director may be removed, with or without cause, but only by the affirmative vote of stockholders entitled to cast at least two-thirds of the votes entitled to be cast generally in the election of directors. Vacancies may be filled only by a majority of the remaining directors in office, even if less than a quorum, and any individual elected to fill such vacancy will serve for the remainder of the full term of the class of directors in which the vacancy occurred and until a successor is duly elected and qualifies. These requirements make it more difficult for our stockholders to change our management by removing and replacing directors and may prevent a change in our control that is in the best interests of our stockholders.

Our charter generally does not permit ownership in excess of 9.8% of any class or series of our capital stock, and attempts to acquire our capital stock in excess of the ownership limit will be ineffective unless an exemption is granted by our board of directors.

Our charter generally prohibits beneficial or constructive ownership by any person of more than 9.8% in value or in number of shares, whichever is more restrictive, of any class or series of our outstanding shares of capital stock, except that NYMT may own up to 100% of the shares of our common stock as long as it continues to qualify as a REIT, and contains certain other limitations on the ownership and transfer of our capital stock. Our board of directors, in its sole discretion, may grant an exemption (prospectively or retroactively) to certain of these prohibitions, subject to certain conditions and receipt by our board of such representations, covenants, and undertakings as our board of directors may deem appropriate. Our board of directors may from time to time increase or decrease the ownership limit for one or more persons. Any decrease in the ownership limit generally applicable to all stockholders will not be effective for any person whose

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percentage ownership of our shares is in excess of such decreased ownership limit until such time as such person’s percentage ownership of our shares equals or falls below such decreased ownership limit, and any further acquisition of our shares in excess of such decreased ownership limit will be in violation of the decreased ownership limit. Our board of directors may not increase the ownership limit (whether for one person or all stockholders) if such increase would allow five or fewer individuals (which is defined under the Code to include certain entities) to beneficially own more than 49.9% in value of our outstanding shares of capital stock.

Our charter’s constructive ownership rules are complex and may cause the outstanding shares of our common stock owned by a group of related individuals or entities to be deemed to be constructively owned by one individual or entity. As a result, the acquisition of less than 9.8% of the outstanding shares of any class or series of our capital stock by an individual or entity could cause that individual or entity to own constructively in excess of 9.8% of the outstanding shares of capital stock of such class or series and thus violate the ownership limit or other restrictions on ownership and transfer of our common stock. Any attempt to own our common stock or preferred stock (if and when issued) in excess of the ownership limit without the consent of our board of directors or in a manner that would cause us to be “closely held” under Section 856(h) of the Code (without regard to whether the shares are held during the last half of a taxable year) or otherwise fail to qualify as a REIT will result in the shares being automatically transferred to a trustee for a charitable trust or, if the transfer to the charitable trust is not automatically effective to prevent a violation of the ownership limit or the restrictions on ownership and transfer of our shares of capital stock, any such transfer of our shares of capital stock will be void ab initio. Further, any transfer of our shares that would result in our shares being beneficially owned by fewer than 100 persons will be void ab initio.

Risks Related to this Offering

There is currently no public market for our common stock, a trading market for our common stock may never develop following this offering and our common stock price may be volatile and could decline substantially following this offering.

Shares of our common stock are newly issued securities for which there is no established trading market. We have applied to have our common stock listed on the Nasdaq, but there can be no assurance that an active trading market for our common stock will develop. Accordingly, no assurance can be given as to the ability of our stockholders to sell their common stock or the price that our stockholders may obtain for their common stock.

If an active market does not develop or is not maintained, the market price of our common stock may decline and you may not be able to sell our common stock. Even if an active trading market develops for our common stock subsequent to this offering, the market price of our common stock may be highly volatile and subject to wide fluctuations. Our financial performance, government regulatory action, tax laws, interest rates and market conditions in general could have a significant impact on the future market price of our common stock. Some of the factors that could negatively affect our share price or result in fluctuations in our share price include:

• actual or anticipated variations in our quarterly operating results;

• increases in market interest rates that lead purchasers of our shares to demand a higher yield;

• changes in market valuations of similar companies;

• adverse market reaction to any increased indebtedness we incur in the future;

• additions or departures of key personnel;

• actions by stockholders;

• speculation in the press or investment community;

• general market, economic and political conditions, including the recent economic slowdown and dislocation in the global credit markets;

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• our operating performance and the performance of other similar companies;

• changes in accounting principles; and

• passage of legislation or other regulatory developments that adversely affect us or our industry.

Our Manager has broad discretion to determine the specific use of the net offering proceeds, and the use of proceeds may not increase our revenues or market value.

As of the date of this prospectus, we have broadly characterized the amount of the net proceeds from this offering that will be used for the various purposes described under “Use of Proceeds.” Our Manager will have considerable discretion in the specific application of the net proceeds, may apply the net proceeds in ways other than those we currently expect, and may apply the net proceeds in ways that may not increase our revenues or our market value. You will not have the opportunity, as part of your investment decision, to assess whether the proceeds from this offering are being used appropriately.

Future offerings of debt securities, which would rank senior to our common stock upon our bankruptcy liquidation, and future offerings of equity securities which would dilute the common stock holdings of our existing stockholders and may be senior to our common stock for the purposes of dividend and liquidating distributions, may adversely affect the market price of our common stock.

In the future, we may attempt to increase our capital resources by making offerings of debt securities or additional offerings of equity securities. Upon bankruptcy or liquidation, holders of our debt securities and shares of preferred stock and lenders with respect to other borrowings will receive a distribution of our available assets prior to the holders of our common stock. Our preferred stock, if issued, could have a preference on liquidating distributions or a preference on dividend payments or both that could limit our ability to pay a dividend or other distribution to the holders of our common stock. Because our decision to issue securities in any future offering will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of our future offerings. Thus, holders of our common stock bear the risk of our future offerings reducing the market price of our common stock and diluting their stock holdings in our company.

An increase in market interest rates may have an adverse effect on the market price of our common stock and our ability to pay distributions to our stockholders.

One of the factors that investors may consider in deciding whether to buy or sell our common stock is our dividend rate as a percentage of our stock price, relative to market interest rates. If market interest rates increase, prospective investors may demand a higher dividend rate on our common stock or seek alternative investments paying higher dividends or interest. As a result, interest rate fluctuations and capital market conditions can affect the market price of our common stock. For instance, if interest rates rise without an increase in our dividend rate, the market price of our common stock could decrease because potential investors may require a higher dividend yield on our common stock as market rates on interest-bearing instruments such as bonds rise. In addition, to the extent we have variable rate debt, rising interest rates would result in increased interest expense on our variable rate debt, thereby adversely affecting our cash flow and our ability to service our indebtedness and make distributions to our stockholders.

We may pay distributions from offering proceeds, borrowings or the sale of assets to the extent that distributions exceed earnings or cash flow from our investment activities.

We may pay distributions from offering proceeds, borrowings or the sale of assets to the extent that distributions exceed earnings or cash flow from our investment activities. Such distributions would reduce the amount of cash we have available for investing and other purposes and could be dilutive to our financial results. In addition, funding our distributions from our net proceeds may constitute a return of capital to our investors, which would have the effect of reducing each stockholder’s basis in its common stock.

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The offering price per share of our common stock may not accurately reflect its actual value.

Immediately prior to this offering, there was no public market for our common stock. The initial public offering price was determined by negotiations between us and the representatives of the underwriters of this offering. Among the factors considered in determining the initial public offering price were our future prospects and those of our industry in general, our revenues, results of operations and certain other financial and operating information in recent periods, and the valuation measures, market prices of securities and certain financial and operating information of companies engaged in activities similar to ours. The offering price per share of our common stock offered under this prospectus may not accurately reflect the value of our common stock and may not be realized upon any subsequent disposition of the shares.

We qualify as an “emerging growth company” and plan to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies.

We qualify as an “emerging growth company” as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act. Pursuant to Section 107 of the JOBS Act, as an emerging growth company, we are permitted to take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards, which would allow us to delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this extended transition period. As a result of our election to utilize the extended transition period, our financial statements may not be comparable to those of other public companies that comply with such new or revised accounting standards. We do not know if some investors will find our common stock less attractive as a result of this election. The result may be a less active trading market for shares of our common and the price per share may be more volatile.

For as long as we are an “emerging growth company,” we will not be required to comply with certain reporting requirements, including those relating to accounting standards and disclosure about our executive compensation, that apply to other public companies.

For so long as we are an “emerging growth company,” we will be eligible to take advantage of certain exemptions from various reporting requirements that are applicable to public companies that are not “emerging growth companies,” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and of stockholder approval of any golden parachute payments not previously approved. We have not made a decision whether to take advantage of any or all of these exemptions. If we do take advantage of any of these exemptions, we do not know if some investors will find our common stock less attractive as a result. The result may be a less active trading market for shares of our common and the price per share may be more volatile.

We could remain an emerging growth company for up to five years or until the earliest of (a) the last day of the first fiscal year in which our annual gross revenues exceed $1 billion, (b) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of shares of our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, or (c) the date on which we have issued more than $1 billion in non-convertible debt securities during the preceding three-year period.

We will incur new costs as a result of becoming a public company, and such costs may increase if and when we cease to be an “emerging growth company.”

As a public company, we will incur significant legal, accounting, insurance and other expenses that we have not incurred as a private company, including costs associated with public company reporting requirements. The expenses incurred by public companies generally for reporting and corporate governance purposes have been increasing. We expect compliance with these public

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reporting requirements and associated rules and regulations to increase expenses, particularly after we are no longer an “emerging growth company,” although we are currently unable to estimate theses costs with any degree of certainty. We could be an emerging growth company for up to five years, although circumstances could cause us to lose that status earlier, which could result in our incurring additional costs applicable to public companies that are not emerging growth companies. As a public company, we will be required to document and assess our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act. Section 404 requires annual management assessments of the effectiveness of our internal control over financial reporting and, after we are no longer an emerging growth company for purposes of the JOBS Act, our independent registered public accounting firm may need to express an opinion on the effectiveness of our internal control over financial reporting. To the extent applicable, these reporting and other obligations place or will place significant demands on our management, administrative, operational, internal audit and accounting resources and will cause us to incur significant expenses.

Sales of shares of our common stock, or the perception that such sales will occur, may have adverse effects on our share price.

We cannot predict the effect, if any, of future sales of our common stock, or the availability of shares for future sales, on the market price of our common stock. Sales of substantial amounts of our common stock, the sale of shares of our common stock that will be held by the Contributing Investors upon completion of this offering and consummation of our formation transactions, and the sale of any shares we may issue under our 2015 Incentive Plan, or the perception that these sales could occur, may adversely affect prevailing market prices for our common stock. In connection with this offering, we, our officers and directors and our Manager and its executive officers will enter into lock-up agreements with the underwriters that prevent us and each of these persons, subject to exceptions, from offering additional shares of our common stock for up to 180 days after the date of this prospectus, as described in “Underwriting.” In addition, the Contributing Investors have indicated that they will enter into lock-up agreements with the underwriters covering a period of months after the completion of this offering and the consummation of our formation transactions with respect to the shares of our common stock that they will own upon of this offering and our formation transactions. Given the size of this offering, we may be required to conduct an offering or offerings to raise additional funds. These lock-up provisions, at any time and without notice, may be released. If the restrictions under the lock-up agreements are waived, particularly with respect to the lock-up agreements executed by the Contributing Investors, shares of our common stock may become available for sale or resale into the market, subject to applicable law, which could materially reduce the market price for our common stock.

We have not established a minimum dividend payment level and we cannot assure you of our ability to pay dividends in the future or the amount of any dividends.

Our board of directors will determine the amount and timing of distributions in its sole discretion. Our board of directors will consider all relevant factors, including the amount of cash available for distribution, capital expenditure and reserve requirements, general operational requirements and the requirements necessary to qualify as a REIT. We cannot assure you how long it may take to generate sufficient available cash flow to make distributions nor can we assure you that sufficient cash will be available to make distributions to you. We may borrow funds, return capital, make taxable distributions of our stock or debt securities, or sell assets to make distributions. We cannot predict the amount of distributions you may receive. We may be unable to pay or maintain cash distributions or increase distributions over time.

Moreover, because we may receive income from our investments at various times during our fiscal year, distributions paid may not reflect our income earned in that particular distribution period. The amount of cash available for distributions will be affected by many factors, such as our ability to acquire investments as offering proceeds become available and the income from those investments. In addition, to the extent we make distributions to stockholders with sources other than cash flow from operations, the amount of cash that is available for investment in real estate

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assets will be reduced, which will in turn negatively impact our ability to achieve our investment objectives and limit our ability to make future distributions to our stockholders.

You will experience immediate and material dilution in connection with the purchase of shares of our common stock in this offering.

As of March 31, 2015, the historical net tangible book value of our company, after giving effect to our acquisition of 100% of NYMT’s preferred equity interests in our Predecessor but before giving effect to this offering, was approximately $42.0 million, or $14.99 per share of our common stock held by our prior investors. As a result, the pro forma net tangible book value per share of common stock after the completion of this offering and our formation transactions will be less than the initial public offering price. The purchasers of shares of our common stock offered hereby will experience immediate and substantial dilution of $2.93 per share in the pro forma net tangible book value per share of our common stock, based on the midpoint of the range of the public offering price per share set forth on the front cover of this prospectus. See “Dilution.”

Risks Related to Our Status as a REIT

Failure to qualify as a REIT, or failure to remain qualified as a REIT, would cause us to be taxed as a regular corporation, which would substantially reduce funds available for distributions to our stockholders.

We believe that our organization and proposed method of operation will enable us to meet the requirements for qualification and taxation as a REIT commencing with our short taxable year ending December 31, 2015. However, we cannot assure you that we will qualify and remain qualified as a REIT. In connection with this offering, we will receive an opinion from Hunton & Williams LLP that, commencing with our short taxable year ending December 31, 2015, we will be organized in conformity with the requirements for qualification and taxation as a REIT under the U.S. federal income tax laws and our proposed method of operation will enable us to satisfy the requirements for qualification and taxation as a REIT under the U.S. federal income tax laws for our short taxable year ending December 31, 2015 and subsequent taxable years. Investors should be aware that Hunton & Williams LLP’s opinion will be based upon customary assumptions, will be conditioned upon certain representations made by us as to factual matters, including representations regarding the nature of our assets and the conduct of our business, is not binding upon the Internal Revenue Service, or the IRS, or any court and speaks as of the date issued. In addition, Hunton & Williams LLP’s opinion will be based on existing U.S. federal income tax law governing qualification as a REIT, which is subject to change either prospectively or retroactively. Moreover, our qualification and taxation as a REIT depend upon our ability to meet on a continuing basis, through actual annual operating results, certain qualification tests set forth in the federal tax laws. Hunton & Williams LLP will not review our compliance with those tests on a continuing basis. Accordingly, no assurance can be given that our actual results of operations for any particular taxable year will satisfy such requirements.

If we fail to qualify as a REIT in any taxable year, funds available for distributions to our stockholders would be substantially reduced because:

• we would not be allowed a deduction for dividends paid to stockholders in computing our taxable income and would be subject to U.S. federal income tax at regular corporate rates;

• we could be subject to the federal alternative minimum tax and possibly increased state and local taxes; and

• unless we are entitled to relief under certain U.S. federal income tax laws, we could not re-elect REIT status for the four taxable years after the year in which we failed to qualify as a REIT.

In addition, if we fail to qualify as a REIT, we will no longer be required to make distributions. As a result of all these factors, our failure to qualify as a REIT could impair our ability to expand our business and raise capital, and it would adversely affect the value of our common stock. See “Material U.S. Federal Income Tax Considerations” for a discussion of material U.S. federal income tax consequences relating to us and our common stock.

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Even if we qualify as a REIT, we may face other tax liabilities that reduce our cash flows.

Even if we qualify for taxation as a REIT, we may be subject to certain federal, state and local taxes on our income and assets, including taxes on any undistributed income, tax on income from some activities conducted as a result of a foreclosure, and state or local income, property and transfer taxes. In addition, any TRS in which we own an interest will be subject to regular corporate federal, state and local taxes. Any of these taxes would decrease cash available for distributions to stockholders.

Complying with REIT requirements may cause us to forego otherwise attractive opportunities or liquidate otherwise attractive investments.

To qualify as a REIT for U.S. federal income tax purposes, we must continually satisfy tests concerning, among other things, the sources of our income, the nature and diversification of our assets, the amounts we distribute to our stockholders and the ownership of our capital stock. In order to meet these tests, we may be required to forego investments we might otherwise make. Thus, compliance with the REIT requirements may hinder our performance.

In particular, we must ensure that at the end of each calendar quarter, at least 75% of the value of our assets consists of cash, cash items, government securities and qualified real estate assets, or the “75% asset test.” The remainder of our investment in securities (other than government securities, securities of TRSs and qualified real estate assets) generally cannot include more than 10% of the outstanding voting securities of any one issuer, or the “10% vote test” or more than 10% of the total value of the outstanding securities of any one issuer, or the “10% value test.” In addition, in general, no more than 5% of the value of our assets (other than government securities, securities of TRSs and qualified real estate assets) can consist of the securities of any one issuer, or the “5% asset test,” and no more than 25% of the value of our total assets can be represented by the securities of one or more TRSs. If we fail to comply with these requirements at the end of any calendar quarter, we must correct the failure within 30 days after the end of the calendar quarter or qualify for certain statutory relief provisions to avoid losing our REIT qualification and suffering adverse tax consequences. As a result, we may be required to liquidate otherwise attractive investments. These actions could have the effect of reducing our income and amounts available for distribution to our stockholders.

We may fail to qualify as a REIT because of the activities and assets of the entities that issue our joint venture equity and preferred equity investments.

Our joint venture equity and preferred equity investments will be in the form of limited partner or non-managing member interests in partnerships and limited liability companies. For purposes of the REIT income and asset tests, we will be treated as receiving our proportionate share of the income earned by those partnerships and limited liability companies and as owning our proportionate share of assets for those entities. Although the character of our income and assets for purposes of REIT income and asset tests will depend upon those partnerships’ and limited liability companies’ income and assets, we will typically have limited control over the operations of the partnerships and limited liability companies in which we own joint venture equity and preferred equity investments. If a partnership or limited liability company in which we own an interest takes or expects to take actions that could jeopardize our qualification as a REIT or require us to pay tax, we may be forced to dispose of our interest in such entity. In addition, a partnership or limited liability company could take an action that could cause us to fail a REIT gross income or asset test, and we may not become aware of such action in time to dispose of our interest in the partnership or limited liability company or take other corrective action on a timely basis. In that case, we could fail to qualify as a REIT unless we are able to qualify for a statutory REIT “savings” provision, which may require us to pay a significant penalty tax to maintain our REIT qualification.

We may fail to qualify as a REIT if the IRS successfully challenges the treatment of our preferred equity investments as equity for U.S. federal income tax purposes or challenges the treatment of our mezzanine loans as debt for U.S. federal income tax purposes.

There is limited case law and administrative guidance addressing whether instruments similar to our preferred equity investments and mezzanine loans will be treated as equity or debt for U.S.

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federal income tax purposes. We expect that our preferred equity investments generally will be treated as equity for U.S. federal income tax purposes and that our mezzanine loans generally will be treated as a debt for U.S. federal income tax purposes, but we do not anticipate obtaining private letter rulings from the IRS or opinions of counsel on the characterization of those investments for U.S. federal income tax purposes. If the IRS successfully asserts a preferred equity investment is debt for U.S. federal income tax purposes, then that investment may be treated as a nonqualifying asset for purposes of the 75% asset test and as producing nonqualifying income for 75% gross income test. In addition, such an investment may be subject to the 10% value test and the 5% asset test, and it is possible that a preferred equity investment that is treated as debt for U.S. federal income tax purposes could cause us to fail one or more of the foregoing tests. Alternatively, if a mezzanine loan is treated as equity for U.S. federal income tax purposes, we would be treated as owning the assets held by the partnership or limited liability company that issued the mezzanine loan and we would be treated as receiving our proportionate share of the income of that entity. If that partnership or limited liability company owned nonqualifying assets or earned nonqualifying income, we may not be able to satisfy all of the REIT income or asset tests. Accordingly, we could fail to qualify as a REIT if the IRS does not respect our classification of our preferred equity investments and mezzanine loans for U.S. federal income tax purposes unless we are able to qualify for a statutory REIT “savings” provision, which may require us to pay a significant penalty tax to maintain our REIT qualification.

The failure of a mezzanine loan to qualify as a real estate asset could adversely affect our ability to qualify as a REIT.

The IRS has issued Revenue Procedure 2003-65, which provides a safe harbor pursuant to which a mezzanine loan that is secured by interests in a pass-through entity will be treated by the IRS as a real estate asset for purposes of the REIT tests, and interest derived from such a loan will be treated as qualifying mortgage interest for purposes of the 75% gross income test. Although the Revenue Procedure provides a safe harbor on which taxpayers may rely, it does not prescribe rules of substantive tax law. We will likely originate and acquire mezzanine loans that do not satisfy all of the requirements for reliance on the safe harbor set forth in the Revenue Procedure. Consequently, there can be no assurance that the IRS will not successfully challenge the tax treatment of such loans, which could jeopardize our ability to qualify as a REIT.

Failure to make required distributions would subject us to U.S. federal corporate income tax.

We intend to operate in a manner so as to qualify as a REIT for U.S. federal income tax purposes. In order to qualify as a REIT, we generally are required to distribute at least 90% of our REIT taxable income, determined without regard to the dividends paid deduction and excluding any net capital gain, each year to our stockholders. To the extent that we satisfy this distribution requirement, but distribute less than 100% of our REIT taxable income, we will be subject to U.S. federal corporate income tax on our undistributed taxable income. In addition, we will be subject to a 4% nondeductible excise tax if the actual amount that we pay out to our stockholders in a calendar year is less than a minimum amount specified under the Code.

The prohibited transactions tax may limit our ability to dispose of our assets.

A REIT’s net income from prohibited transactions is subject to a 100% tax. In general, prohibited transactions are sales or other dispositions of property other than foreclosure property, held primarily for sale to customers in the ordinary course of business. We may be subject to the prohibited transaction tax equal to 100% of net gain upon a disposition of our assets. Although a safe harbor to the characterization of the sale of real property by a REIT as a prohibited transaction is available, we cannot assure you that we can comply with the safe harbor or that we will avoid owning assets that may be characterized as held primarily for sale to customers in the ordinary course of business. Consequently, we may choose not to engage in certain sales of our assets or may conduct such sales through a TRS, which would be subject to federal and state income taxation.

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We may pay taxable dividends in shares of our common stock and cash, in which case stockholders may sell shares of our common stock to pay tax on such dividends, placing downward pressure on the market price of our common stock.

We may distribute taxable dividends that are payable in cash and common stock at the election of each stockholder. The IRS has issued private letter rulings to other REITs treating certain distributions that are paid partly in cash and partly in stock as taxable dividends that would satisfy the REIT annual distribution requirement and qualify for the dividends paid deduction for U.S. federal income tax purposes. Those rulings may be relied upon only by taxpayers to whom they were issued, but we could request a similar ruling from the IRS. In addition, the IRS previously issued a revenue procedure authorizing publicly traded REITs to make elective cash/stock dividends, but that revenue procedure does not apply to our 2015 and future taxable years. Accordingly, it is unclear whether and to what extent we will be able to make taxable dividends payable in cash and common stock.

If we made a taxable dividend payable in cash and common stock, taxable stockholders receiving such dividends will be required to include the full amount of the dividend as ordinary income to the extent of our current and accumulated earnings and profits, as determined for U.S. federal income tax purposes. As a result, stockholders may be required to pay income tax with respect to such dividends in excess of the cash dividends received. If a U.S. stockholder sells the common stock that it receives as a dividend in order to pay this tax, the sales proceeds may be less than the amount included in income with respect to the dividend, depending on the market price of our common stock at the time of the sale. Furthermore, with respect to certain non-U.S. stockholders, we may be required to withhold U.S. federal income tax with respect to such dividends, including in respect of all or a portion of such dividend that is payable in common stock. If we made a taxable dividend payable in cash and our common stock and a significant number of our stockholders determine to sell shares of our common stock in order to pay taxes owed on dividends, it may put downward pressure on the trading price of our common stock. We do not currently intend to pay taxable dividends of our common stock and cash, although we may choose to do so in the future.

The ability of our board of directors to revoke our REIT qualification without stockholder approval may cause adverse consequences to our stockholders.

Our charter provides that our board of directors may revoke or otherwise terminate our REIT election, without the approval of our stockholders, if it determines that it is no longer in our best interests to continue to qualify as a REIT; provided, however, that pursuant to our contribution agreement with RB Commercial Mortgage and NYMT, we have agreed that we will not knowingly revoke or otherwise terminate our election to be taxed as a REIT for any taxable year in which NYMT owns, directly or indirectly more than 10% of the voting power in, or more than 10% of shares of our common stock. If we cease to qualify as a REIT, we would become subject to U.S. federal income tax on our taxable income and would no longer be required to distribute most of our taxable income to our stockholders, which may have adverse consequences on our total return to our stockholders.

Dividends payable by REITs do not qualify for the reduced tax rates available for some dividends.

The maximum tax rate applicable to “qualified dividend income” payable to U.S. stockholders that are taxed at individual rates is 20%. Dividends payable by REITs, however, generally are not eligible for the reduced rates on qualified dividend income. The more favorable rates applicable to regular corporate qualified dividends could cause investors who are taxed at individual rates to perceive investments in REITs to be relatively less attractive than investments in the stocks of non-REIT corporations that pay dividends, which could adversely affect the value of the shares of REITs, including our common stock.

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To maintain our REIT qualification, we may be forced to borrow funds during unfavorable market conditions, and the unavailability of such capital on favorable terms at the desired times, or at all, may cause us to curtail our investment activities or dispose of assets at inopportune times and/or on unfavorable terms, which could materially adversely affect our financial condition, results of operations and cash flow.

To qualify as a REIT, we generally must distribute to our stockholders at least 90% of our REIT taxable income each year, excluding net capital gains, and we will be subject to regular corporate income taxes to the extent that we distribute less than 100% of our REIT taxable income each year. In addition, we will be subject to a 4% nondeductible excise tax on the amount, if any, by which distributions paid by us in any calendar year are less than the sum of 85% of our ordinary income, 95% of our capital gain net income and 100% of our undistributed income from prior years. In order to maintain our REIT qualification and avoid the payment of income and excise taxes, we may need to borrow funds to meet the REIT distribution requirements even if the then prevailing market conditions are not favorable for these borrowings. These borrowing needs could result from, among other things, differences in timing between the actual receipt of cash and inclusion of income for U.S. federal income tax purposes, or the effect of non-deductible capital expenditures, the creation of reserves or required principal or amortization payments. These sources, however, may not be available on favorable terms or at all. Our access to third-party sources of capital depends on a number of factors, including the market’s perception of our growth potential, our current debt levels, the market price of our common stock, and our current and potential future earnings. We cannot assure you that we will have access to such capital on favorable terms at the desired times, or at all, which may cause us to curtail our investment activities or dispose of assets at inopportune times and/or on unfavorable terms, which could materially adversely affect our business, results of operations, financial condition and ability to make distributions to our stockholders.

We may be subject to adverse legislative or regulatory tax changes that could reduce the market price of our common stock.

At any time, the U.S. federal income tax laws governing REITs or the administrative interpretations of those laws may be amended. We cannot predict when or if any new U.S. federal income tax law, regulation or administrative interpretation, or any amendment to any existing U.S. federal income tax law, regulation or administrative interpretation, will be adopted, promulgated or become effective and any such law, regulation, or interpretation may take effect retroactively. We and our stockholders could be adversely affected by any such change in the U.S. federal income tax laws, regulations or administrative interpretations.

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Benefit Plan Risks Under ERISA or the Code

If you fail to meet the fiduciary and other standards under the Employee Retirement Income Security Act of 1974, as amended, or the Code as a result of an investment in our stock, you could be subject to criminal and civil penalties.

Special considerations apply to the purchase of stock by employee benefit plans subject to the fiduciary rules of title I of the Employee Retirement Income Security Act of 1974, as amended, or ERISA, including pension or profit sharing plans and entities that hold assets of such plans, which we refer to as ERISA Plans, and plans and accounts that, even if not subject to ERISA, are subject to the prohibited transaction rules of Section 4975 of the Code, including IRAs, Keogh Plans, and medical savings accounts and any entity that is deemed to hold “plan assets” by virtue of investments in such entity by ERISA Plans and plans subject to Section 4975 of the Code. (Collectively, we refer to ERISA Plans, plans subject to Section 4975 of the Code and such entities as “Benefit Plans” or “Benefit Plan Investors.”) If you are investing the assets of any Benefit Plan, you should consider whether:

• your investment will be consistent with your fiduciary obligations under ERISA and the Code;

• your investment will be made in accordance with the documents and instruments governing the Benefit Plan, including the Plan’s investment policy;

• your investment will satisfy the prudence and diversification requirements of Sections 404(a)(1)(B) and 404(a)(1)(C) of ERISA, if applicable, and other applicable provisions of ERISA and the Code;

• your investment will impair the liquidity of the Benefit Plan;

• your investment will produce “unrelated business taxable income” for the Benefit Plan;

• you will be able to satisfy plan liquidity requirements as there may be only a limited market to sell or otherwise dispose of our stock; and

• your investment will constitute a prohibited transaction under Section 406 of ERISA or Section 4975 of the Code.

Failure to satisfy the fiduciary standards of conduct and other applicable requirements of ERISA and the Code may result in the imposition of civil and criminal penalties, and can subject the fiduciary to claims for damages or for equitable remedies. In addition, if an investment in our shares constitutes a prohibited transaction under ERISA or the Code, the fiduciary or IRA owner who authorized or directed the investment may be subject to the imposition of excise taxes with respect to the amount invested. In the case of a prohibited transaction involving an IRA owner, the IRA may be disqualified and all of the assets of the IRA may be deemed distributed and subjected to tax. Benefit Plan Investors should consult with counsel before making an investment in shares of our common stock.

Plans that are not subject to ERISA or the prohibited transactions of the Code, such as government plans or church plans, may be subject to similar requirements under state law. The fiduciaries of such plans should satisfy themselves that the investment satisfies applicable law.

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Statements included in this prospectus that are not historical facts (including any statements concerning investment objectives, other plans and objectives of management for future operations or economic performance, or assumptions or forecasts related thereto) are forward-looking statements. These statements are only predictions. We caution that forward-looking statements are not guarantees. Actual events or our investments and results of operations could differ materially from those expressed or implied in any forward-looking statements. Forward-looking statements are typically identified by the use of terms such as “may,” “should,” “expect,” “could,” “intend,” “plan,” “anticipate,” “estimate,” “believe,” “continue,” “predict,” “potential” or the negative of such terms and other comparable terminology.

The forward-looking statements included herein are based upon our current expectations, plans, estimates, assumptions and beliefs that involve numerous risks and uncertainties. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond our control. Although we believe that the expectations reflected in such forward-looking statements are based on reasonable assumptions, our actual results and performance could differ materially from those set forth in the forward-looking statements. Factors that could have a material adverse effect on our operations and future prospects include, but are not limited to:

• the factors included in this prospectus, including those set forth under the headings “Prospectus Summary,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Our Business;”

• our ability to timely and successfully complete the three pending investments that are included in our Initial Portfolio;

• our ability to invest the net proceeds from this offering in the manner set forth in this prospectus;

• the competitive environment in which we operate;

• real estate risks, including fluctuations in real estate values and the general economic climate in local markets and competition for tenants in such markets;

• decreased rental rates or increasing vacancy rates;

• the ability of our property-level operating partners to lease units at the multifamily apartment properties to which our investments relate;

• potential defaults on or non-renewal of leases by tenants at the properties to which our investments relate;

• the ability of the multifamily apartment properties to which our investments relate to meet the required principal and interest payments due on any financing secured by such property;

• our ability to obtain financing for our investments;

• investment risks, including failure of such investments to perform in accordance with projections;

• the timing of investments and dispositions;

• the performance of our property-level operating partners;

• potential natural disasters such as hurricanes, tornadoes or flooding, among others;

• national, international, regional and local economic conditions;

• the general level of interest rates;

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• potential changes in the law or governmental regulations that affect us and interpretations of those laws and regulations, including changes in real estate and zoning or tax laws, and potential increases in real property tax rates;

• financing risks, including the risks that our cash flows from operations may be insufficient to meet required payments of principal and interest and we may be unable to refinance our existing debt upon maturity or obtain new financing on attractive terms or at all;

• lack of or insufficient amounts of insurance;

• our ability to maintain our qualification as a REIT and maintain our exclusion from registration under the Investment Company Act;

• litigation, including costs associated with prosecuting or defending claims and any adverse outcomes;

• possible environmental liabilities, including costs, fines or penalties that may be incurred due to necessary remediation of contamination of properties in which we presently invest or will invest in the future; and

• conflicts of interest arising out of our relationship with our Manager and Operating Partnership and NYMT and their affiliates.

Any of the assumptions underlying forward-looking statements could be inaccurate. You are cautioned not to place undue reliance on any forward-looking statements included in this prospectus. All forward-looking statements are made as of the date of this prospectus and the risk that actual results will differ materially from the expectations expressed in this prospectus will increase with the passage of time. Except as otherwise required by the federal securities laws, we undertake no obligation to publicly update or revise any forward-looking statements after the date of this prospectus, whether as a result of new information, future events, changed circumstances or any other reason. In light of the significant uncertainties inherent in the forward-looking statements included in this prospectus, including, without limitation, the risks described under “Risk Factors,” the inclusion of such forward-looking statements should not be regarded as a representation by us or any other person that the objectives and plans set forth in this prospectus will be achieved.

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USE OF PROCEEDS

We estimate that the net proceeds we will receive from this offering, after deducting underwriting discounts and commissions and estimated offering expenses and financial advisory fees of approximately $6.7 million payable by us, will be approximately $67.4 million (or approximately $77.7 million if the underwriters’ option to purchase additional shares of our common stock is exercised in full), assuming a public offering price of $19.50 per share, which is the midpoint of the range of the public offering price per share set forth on the front cover of this prospectus. We will contribute the net proceeds from this offering to our operating partnership in exchange for common units.

We intend to use approximately $28.5 million of the net proceeds to acquire the NYMT Contributed Assets, approximately $9.1 million to fund our Predecessor’s contract to acquire a joint venture equity investment in the Preserve at Port Royal, which is expected to close in August 2015, and substantially all of the remaining net proceeds to fund our future acquisition of joint venture equity ownership and preferred equity ownership in, and mezzanine debt and other high-yield investments secured by, multifamily apartment properties, and for general corporate purposes, including financing, operating expenses and our other expenses.

Until future investments can be identified and consummated, we intend to invest the net proceeds in interest-bearing short-term investment-grade securities or money-market accounts that are consistent with our intention to qualify as a REIT, including, for example, government and government agency certificates, certificates of deposit and interest-bearing bank deposits. We expect that these initial investments will provide a lower net return than we expect to receive from investments in our targeted assets.

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DISTRIBUTION POLICY

We intend to make regular quarterly distributions to our common stockholders.

Our ability to make distributions in the future will depend upon our actual results of operations and earnings, economic conditions and other factors that could differ materially from our current expectations. Our actual results of operations will be affected by a number of factors, including the revenue we receive from our investments, our operating expenses, interest expense, the ability of the tenants at the properties in which we invest to meet their obligations and unanticipated expenditures. For more information regarding risk factors that could materially adversely affect our actual results of operations, see “Risk Factors.” Distributions declared by us will be authorized by our board of directors in its sole discretion out of funds legally available therefor and will be dependent upon a number of factors, including restrictions under applicable law, the capital requirements of our company and the distribution requirements necessary to qualify and maintain our qualification as a REIT. We may be required to fund distributions from working capital or with a portion of the net proceeds from this offering or borrow to provide funds for such distributions, or we may choose to make a portion of the required distributions in the form of a taxable stock dividend to preserve our cash balance or reduce our distribution. We currently anticipate that we will declare our first quarterly distribution commencing with the quarter ending September 30, 2015.

In order to qualify as a REIT, we must distribute to our stockholders, on an annual basis, at least 90% of our REIT taxable income, determined without regard to the deduction for dividends paid and excluding net capital gains. In addition, we will be subject to U.S. federal income tax at regular corporate rates to the extent that we distribute less than 100% of our net taxable income (including net capital gains) and will be subject to a 4% nondeductible excise tax on the amount by which our distributions in any calendar year are less than a minimum amount specified under U.S. federal income tax laws. We intend to distribute our net income to our stockholders in a manner intended to satisfy the REIT 90% distribution requirement and to avoid U.S. federal income tax liability on our income and the 4% nondeductible excise tax. We anticipate that our estimated cash available for distribution will exceed the annual distribution requirements applicable to REITs. However, under some circumstances, we may be required to use cash reserves, incur debt or liquidate assets at rates or times that we regard as unfavorable or make a taxable distribution of our shares in order to satisfy the REIT 90% distribution requirement and to avoid U.S. federal income tax and the 4% nondeductible excise tax in that year.

Furthermore, we anticipate that, at least initially, our distributions will exceed our current and accumulated earnings and profits for the relevant taxable year, as determined for U.S. federal income tax purposes, due to non-cash expenses, primarily depreciation and amortization charges that we expect to incur. Therefore, all or a portion of these distributions may represent a return of capital for U.S. federal income tax purposes. The extent to which our distributions exceed our current and accumulated earnings and profits may vary substantially from year to year. To the extent that a distribution is treated as a return of capital for U.S. federal income tax purposes, it will reduce a holder’s adjusted tax basis in the holder’s shares, and to the extent that it exceeds the holder’s adjusted tax basis it will be treated as gain resulting from a sale or exchange of such shares. As a result, the gain (or loss) recognized on the sale of that common stock or upon our liquidation will be decreased (or increased) accordingly. For a more complete discussion of the tax treatment of distributions to holders of our common stock, see “Material U.S. Federal Income Tax Considerations.”

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CAPITALIZATION

The following table sets forth our Predecessor’s cash and cash equivalents and capitalization as of March 31, 2015 on an actual basis; our cash and cash equivalents and capitalization on a consolidated as adjusted basis to give effect to the completion of our formation transactions, including the issuance of 2,800,000 shares of our common stock to the Contributing Investors; and our cash and cash equivalents and capitalization on a pro forma consolidated basis to give effect to (i) the completion of the formation transactions, including the issuance of 2,800,000 shares of our common stock to the Contributing Investors, (ii) the issuance and sale of 3,800,000 shares of our common stock in this offering for net proceeds of approximately $67.4 million, after deducting the underwriting discounts and commissions and estimated offering expenses and financial advisory fees payable by us, assuming a public offering price of $19.50 per share, which is the midpoint of the range of the public offering price per share set forth on the front cover of this prospectus; and (iii) the grant of an aggregate of 1,500 LTIP units to our independent directors.

This table should be read in conjunction with “Use of Proceeds,” “Selected Financial and Operating Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our Predecessor’s historical audited and unaudited financial statements and the unaudited pro forma financial information and related notes appearing elsewhere in this prospectus.

	As of March 31, 2015
	Predecessor Historical (unaudited)		Company Consolidated As Adjusted (unaudited)(1)			Company Pro Forma Consolidated (unaudited)(1)(2)
	(in thousands, except share information)
Cash and Cash Equivalents	$	2,717	$	2,717		$	32,503
Note Payable	$	—	$	28,527	(2)		—
Preferred Members’ Equity	$	48,937	$	16,255		$	16,255
Common Members’ Equity		9,282		—			—
Stockholders’ Equity:
Preferred stock, $0.01 par value per share, no shares authorized, issued and outstanding, actual; 50,000,000 shares authorized, no shares issued and outstanding, consolidated as adjusted and pro forma consolidated		—		—			—
Common stock, $0.01 par value per share, 1,000 shares authorized, no shares issued and outstanding, actual; 450,000,000 shares authorized, 2,800,000 shares issued and outstanding, consolidated as adjusted; 450,000,000 shares authorized, 6,600,000 shares issued and outstanding, pro forma consolidated		—		28			66
Additional paid-in capital		—		41,936			109,282
Retained Earnings		—		—			—
Noncontrolling Interests in our Operating Partnership		—		—			29
Total Members’/Stockholders’ Equity		58,219		58,219			125,632
Total Capitalization	$	58,219	$	86,746		$	125,632

(1) The Company Consolidated As Adjusted and Company Pro Forma Consolidated columns do not give effect to the payment in cash by our Predecessor of approximately $0.3 million to NYMT and approximately $0.1 million to Ellington Housing Investments LLC as payment of the expected accrued preferred distributions payable on their respective preferred equity interests in our Predecessor for the period July 1, 2015 to the closing of this offering since those payments will occur subsequent to March 31, 2015.

(2) For purposes of this presentation only, amounts include approximately $28.5 million representing the cash purchase for our acquisition of the NYMT Contributed Assets as if we acquired those assets on March 31, 2015, which equals the outstanding balance or investment, as applicable, and accrued returns or interest as of March 31, 2015. We will pay approximately $28.5 million in cash from the net proceeds of this offering to acquire the NYMT Contributed Assets, which amount is equal to the outstanding balance or investment, as applicable, and accrued returns or interest on the assets as of the date we complete our acquisition of such assets.

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SELECTED FINANCIAL AND OPERATING DATA

The following table sets forth selected financial and operating data on (i) a pro forma basis for our company after giving effect to this offering and our formation transactions and (ii) a historical basis for our Predecessor. Upon completion of our formation transactions and this offering, we will acquire: (i) 100% of the common equity interests in our Predecessor, which owns the Predecessor Investment Portfolio; (ii) 100% of the preferred equity ownership interests in our Predecessor that are held by NYMT; and (iii) the NYMT Contributed Assets, which, together with the Predecessor Investment Portfolio, will collectively comprise our Initial Portfolio.

We have not presented historical information for RiverBanc Multifamily Investors, Inc. because we have not had any corporate activity since our formation and because we believe that a discussion of the results of RiverBanc Multifamily Investors, Inc. would not be meaningful.

You should read the following selected financial and operating data in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” our unaudited pro forma consolidated financial statements and related notes, and the historical financial statements and related notes of our Predecessor included elsewhere in this prospectus.

The unaudited pro forma consolidated balance sheet data is presented as if our formation transactions and this offering had occurred on March 31, 2015 and the unaudited pro forma consolidated statements of operations and other data for the three months ended March 31, 2015 and the year ended December 31, 2014 are presented as if our formation transactions and this offering had occurred on January 1, 2014. The pro forma financial information is not necessarily indicative of what our actual financial condition would have been as of March 31, 2015 or what our actual results of operations would have been assuming our formation transactions and this offering had been completed as of January 1, 2014, nor does it purport to represent our future financial position or results of operations.

The unaudited selected historical balance sheet information as of March 31, 2015 and statement of operations data for the three-month periods ended March 31, 2015 and 2014 have been derived from the unaudited financial statements of our Predecessor included elsewhere in this prospectus. The selected historical balance sheet information as of December 31, 2014 and 2013, and the historical statement of operations data for the year ended December 31, 2014 and the period from July 24, 2013 (inception) to December 31, 2013 have been derived from the audited financial statements of our Predecessor, which are included elsewhere in this prospectus.

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	For the Three Months Ended March 31,									For the Year Ended December 31,						For the Period from July 24, 2013 (inception) to December 31,
	2015			2015			2014			2014			2014			2013
	Company Pro Forma Consolidated (Unaudited)			Predecessor Historical (Unaudited)			Predecessor Historical (Unaudited)			Company Pro Forma Consolidated (Unaudited)			Predecessor Historical			Predecessor Historical
	(dollars in thousands)
Operating Data:
Equity in Loss of Unconsolidated Real Estate Entities	$	(789	)	$	(2,768	)	$	(737	)	$	(14,648	)	$	(5,450	)	$	(1,391	)
Equity in Loss of Unconsolidated Real Estate Entity Held for Disposition		—			—			(2	)		—			(11	)		(28	)
Interest Income		1,647			702			—			6,698			660			—
Other Income		116			116			—			—			—			—
Total Income		974			(1,951	)		(739	)		(7,950	)		(4,801	)		(1,419	)
Total Expenses		491			84			8			2,018			167			11
Net Income (Loss)		483			(2,034	)		(747	)		(9,968	)		(4,968	)		(1,430	)
Net Income (Loss) Available to Common Members/Stockholders		74			(3,198	)		(747	)		(11,599	)		(5,889	)		(1,430	)
Other Data:
Cash Flows Provided by (Used in) Operating Activities				$	809		$	(3	)				$	514		$	(9	)
Cash Flows (Used in) Provided by Investing Activities					(13,170	)		113						(46,204	)		(9,500	)
Cash Flows Provided by (Used in) Financing Activities					13,389			(144	)					47,338			9,550
Funds From Operations (Negative Funds From Operations)(1)	$	1,817			(35	)		120		$	3,304			(846	)		(282	)
Core Funds From Operations(1)		1,857			348			130			5,620			412			131
Balance Sheet Data (as of end of period):
Investments in Unconsolidated Real Estate Entities	$	41,931		$	32,831		$	4,759		$	45,098		$	26,998		$	5,609
Investment in Unconsolidated Real Estate Entity Held for Disposition		—			—			2,470			—			—			2,472
Investments in Real Estate Preferred Equity and Debt, net		52,397			23,944			—			52,878			18,528			—
Total Assets		127,144			59,731			7,236			129,662			48,189			8,122
Total Liabilities		1,512			1,512			7			832			832			2
Preferred Members’ Equity		16,255			48,937			—			16,255			34,877			—
Common Members’ Equity		—			9,282			7,229			—			12,481			8,120
Common Stockholders’ Equity		109,348			—			—			112,546			—			—
Total Equity		125,633			58,220			7,229			128,831			47,358			8,120

(1) See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for more detailed explanations of FFO and Core FFO and reconciliations of FFO and Core FFO to net income computed in accordance with GAAP.

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MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis is based on, and should be read in conjunction with the audited historical financial statements and related notes thereto as of and for the year ended December 31, 2014 and the period from July 24, 2013 (inception) to December 31, 2013 of RB Multifamily Investors LLC, our Predecessor. We have not had any corporate activity since our formation, other than the issuance of 100 shares of our common stock in connection with our initial capitalization and activities in preparation for our formation transactions and this offering. Accordingly, we believe that a discussion of our results of operations would not be meaningful, and this discussion and analysis therefore only discusses the results of our Predecessor. For more information regarding our Predecessor, see “Selected Financial and Operating Data.” Where appropriate, the following discussion includes analysis of the effects of our formation transactions and this offering. These effects are reflected in the unaudited pro forma consolidated financial statements located elsewhere in this prospectus. As used in this section, unless the context otherwise requires, “we,” “us,” “our” and “our company” means RiverBanc Multifamily Investors, Inc. and its consolidated subsidiaries upon completion of this offering and consummation of our formation transactions.

Overview

We were formed to acquire and manage a diverse portfolio of structured investments in multifamily apartment communities. Our primary business objective is to generate attractive, risk-adjusted current income and capital appreciation for our stockholders through investments in the form of joint venture equity ownership and preferred equity ownership in, and mezzanine debt and other high-yield investments secured by, those multifamily apartment communities. We were formed in February 2015 to succeed the business of our Predecessor, RB Multifamily Investors LLC.

Upon completion of this offering, pursuant to a series of transactions, we will: (i) issue an aggregate of 1,062,976 shares of our common stock in connection with our acquisition of 100% of the common equity interests in our Predecessor, which owns joint venture equity interests in five multifamily apartment properties, a preferred equity interest in one multifamily apartment property and three mezzanine loans secured by three multifamily apartment properties and has one joint venture equity interest in a multifamily apartment property under contract to acquire (collectively, the “Predecessor Investment Portfolio”), from an affiliate of Mr. Donlon, our Chief Executive Officer, JMP and NYMT; (ii) issue 1,737,024 shares of our common stock to NYMT in connection with our acquisition of its preferred equity interests (having an aggregate liquidation preference of $32.7 million) in our Predecessor; and (iii) use a portion of the net proceeds from this offering to pay approximately $28.5 million in cash to acquire a portfolio of five preferred equity investments in five multifamily apartment properties (which includes one preferred equity investment in a multifamily apartment property that NYMT has under contract to acquire that is expected to close in August 2015) and one mezzanine loan secured by one multifamily apartment property that NYMT has under an executed loan agreement, which is expected to fund in August 2015 concurrent with the refinancing of the senior mortgage loan on this property (collectively, the “NYMT Contributed Assets”) from a wholly-owned subsidiary of NYMT. We refer to these transactions as our formation transactions, to these 16 assets as our Initial Portfolio and to these entities contributing their interests in our Predecessor as the “Contributing Investors.” Concurrently with the completion of our formation transactions and this offering, our Predecessor will pay to NYMT and Ellington Housing Investments LLC any accrued preferred returns on their respective preferred equity interests in our Predecessor for the period July 1, 2015 to the closing of this offering in cash, which are expected to be approximately $0.3 million and approximately $0.1 million, respectively. See “Structure and Formation of Our Company—Formation Transactions.”

As a result of this offering and our formation transactions, our future financial condition and results of operations will differ significantly from, and will not be comparable with, the historical financial condition and results of operations of our Predecessor. Please refer to our unaudited pro forma consolidated financial statements and related notes included elsewhere in this prospectus,

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which present on a pro forma basis the condition and results of our company as if our formation transactions and this offering had all occurred on March 31, 2015 for the pro forma consolidated balance sheet and on January 1, 2014 for the pro forma consolidated statements of operations. The unaudited pro forma consolidated financial statements are not necessarily indicative of what our actual financial position and results of operations would have been as of the date or for the periods indicated, nor does it propose to represent our future financial position or results of operations.

We are structured as an UPREIT and, as such, will own our investment portfolio and conduct our business through our operating partnership and its subsidiaries. Upon completion of our formation transactions, our Predecessor will become a subsidiary of our operating partnership. We will serve as the sole general partner of and expect to own an approximately 99.98% interest in our operating partnership upon completion of this offering and consummation of our formation transactions.

We will elect and intend to operate our business in a manner that will enable us to qualify to be taxed as a REIT under Sections 856 through 860 of the Code commencing with our short taxable year ending December 31, 2015. In order to continue to qualify as a REIT, we must distribute to our stockholders each calendar year at least 90% of our taxable income (excluding net capital gains). If we qualify as a REIT for federal income tax purposes, we generally will not be subject to federal income tax on income that we distribute to our stockholders. If we fail to qualify as a REIT in any taxable year, we will be subject to federal income tax on our taxable income at regular corporate rates and will not be permitted to qualify as a REIT for four years following the year in which our qualification is denied. Such an event could materially and adversely affect our net income and results of operations.

Upon completion of this offering and consummation of our formation transactions, we will be externally managed and advised by our Manager. Our Manager is owned directly or indirectly by the Contributing Investors, with Donlon Family LLC, of which Mr. Donlon is the sole member, owning a majority interest. Pursuant to the terms of a management agreement that we will enter into concurrent with the completion of this offering and the consummation of our formation transactions, or Management Agreement, our Manager will provide us with our management team and appropriate support personnel, and we will have access to the management, infrastructure, personnel and other resources of our Manager necessary for the implementation and execution of our business and growth strategies. Our Manager has substantial discretion with respect to the selection of specific investments consistent with our investment objectives and strategy.

Factors That May Influence Future Results of Operations

Business and Strategy

We expect to continue our Predecessor’s investment strategy of acquiring joint venture equity ownership and preferred equity investments in, and providing mezzanine loans for, multifamily apartment communities. We believe that a thoughtful and ongoing aggregation of such investments will result in a diversified portfolio that will produce sustainable returns which are attractive in light of the associated risks. Future results of operations may be affected, either positively or negatively, by our ability to execute this strategy.

Conditions in Our Markets

We are not aware of any other material trends or uncertainties, favorable or unfavorable, other than national economic conditions affecting our targeted portfolio, the multifamily housing industry and real estate generally, which may be reasonably anticipated to have a material impact on the revenues to be derived from the operation of our assets.

Leasing Activity

Consistent with most multifamily apartment communities, the apartment properties to which our investments relate have lease terms that are generally one year. Changes in the demand for the apartment units may significantly affect both the occupancy and the rental rates charged to

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tenants at the properties in which we invest. We expect that both the management practices we implement together with our property-level operating partners, as well as the capital improvements to the multifamily apartment properties to which our investments relate will increase demand for units at these properties and positively affect the ability to grow property level revenues at these properties. However, overbuilding of apartments or other economic factors in the submarkets in which we invest could negatively impact leasing activity at the multifamily apartment properties in which we invest.

Management, General and Administrative Expenses

Following this offering, we expect to incur increased management, general and administrative expenses, including legal, accounting and other expenses related to corporate governance, public reporting and compliance with various provisions of the Sarbanes-Oxley Act, as compared to our Predecessor.

Composition of our Initial Portfolio

A majority of the investments that comprise our Initial Portfolio consist of, and we currently expect that 40% to 60% of our new investments in the near term will be, preferred equity investments in, and mezzanine loans to, multifamily apartment communities, in each case, as measured by allocated capital. We generally consider these investments to be fixed income investments. Each of these investments accrues interest or a preferred return to us at a stated rate and our interest payments or preferred return are senior in priority to our operating partner’s capital return. While increases or decreases in property level cash flow will affect the creditworthiness of our investments, small increases or decreases in property-level cash flow are not expected to have a direct effect on the income of our company. Alternatively, we currently expect that 40% to 60% of our new investments in the near term will consist of joint venture equity investments in multifamily apartment communities. These investments will provide a variable rate of return based on the performance of the underlying properties, which performance will be influenced by the factors described above.

Results of Operations of our Predecessor

	For the Three Months Ended March 31,						For the Year Ended December 31,			For the Period from July 24, 2013 (inception) to December 31,
	2015			2014			2014			2013
	Predecessor Historical (unaudited)			Predecessor Historical (unaudited)			Predecessor Historical			Predecessor Historical
	(dollars in thousands)
Operating Data:
Equity in Loss of Unconsolidated Real Estate Entities	$	(2,768	)	$	(737	)	$	(5,450	)	$	(1,391	)
Equity in Loss of Unconsolidated Real Estate Entity Held for Disposition		—			(2	)		(11	)		(28	)
Interest Income		702			—			660			—
Other Income		116			—			—			—
Total Income		(1,951	)		(739	)		(4,801	)		(1,419	)
Total Expenses		84			8			167			11
Net Loss		(2,034	)		(747	)		(4,968	)		(1,430	)
Net Loss Available to Common Members		(3,198	)		(747	)		(5,889	)		(1,430	)
Balance Sheet Data (as of end of period):
Investments in Unconsolidated Real Estate Entities	$	32,831		$	4,759		$	26,998		$	5,609
Investment in Unconsolidated Real Estate Entity Held for Disposition		—			2,470			—			2,472
Investments in Real Estate Preferred Equity and Debt, net		23,944			—			18,528			—
Total Assets		59,731			7,236			48,189			8,122

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	For the Three Months Ended March 31,						For the Year Ended December 31,			For the Period from July 24, 2013 (inception) to December 31,
	2015			2014			2014			2013
	Predecessor Historical (unaudited)			Predecessor Historical (unaudited)			Predecessor Historical			Predecessor Historical
	(dollars in thousands)
Total Liabilities		1,512			7			832			2
Preferred Members’ Equity		48,937			—			34,877			—
Common Members’ Equity		9,282			7,229			12,481			8,120
Total Equity		58,220			7,229			47,358			8,120
Other Data
Cash Flows Provided by (Used in) Operating Activities	$	809		$	(3	)	$	514		$	(9	)
Cash Flows (Used in) Provided by Investing Activities		(13,170	)		113			(46,204	)		(9,500	)
Cash Flows Provided by (Used in) Financing Activities		13,389			(144	)		47,338			9,550

Three Months Ended March 31, 2015 Compared to Three Months Ended March 31, 2014

Our Predecessor’s total income decreased $1.21 million to $(1.95) million for the three months ended March 31, 2015 from $(0.74) million for the three months ended March 31, 2014. The decrease is primarily attributable to the acquisition of four additional unconsolidated real estate entities during the period from April 1, 2014 through March 31, 2015 resulting in increases in our Predecessor’s share of depreciation and amortization of real estate assets. This decrease was partially offset by an increase in interest income resulting from the acquisition of three mezzanine loans and one preferred equity investment during the period from April 1, 2014 through March 31, 2015.

Our Predecessor’s expenses increased $0.07 million to $0.08 million for the three months ended March 31, 2015 from $0.01 million for the three months ended March 31, 2014. Expenses were comprised primarily of base management fees to our Predecessor’s manager, RiverBanc LLC, which increased $0.08 million to $0.08 million for the three months ended March 31, 2015 from $0 for the three months ended March 31, 2014.

Year Ended December 31, 2014 Compared to the Period from July 24, 2013 (inception) to December 31, 2013

Our Predecessor’s total income decreased $3.38 million to $(4.80) million for the year ended December 31, 2014 from $(1.42) million for the period from July 24, 2013 (inception) to December 31, 2013. The decrease is primarily attributable to the acquisition of three additional unconsolidated real estate entities in the year ended December 31, 2014 resulting in increases in our Predecessor’s share of depreciation and amortization of real estate assets. This decrease was partially offset by an increase in interest income resulting from the acquisition of two mezzanine loans and one preferred equity investment in the year ended December 31, 2014.

Our Predecessor’s expenses increased $0.16 million to $0.17 million for the year ended December 31, 2014 from $0.01 million for the period from July 24, 2013 (inception) to December 31, 2013. Expenses were comprised primarily of base management fees to our Predecessor’s manager, RiverBanc LLC, which increased $0.11 million to $0.11 million for the year ended December 31, 2014 from $0 for the period from July 24, 2013 (inception) to December 31, 2013 and professional fees and other expenses which increased $0.05 million to $0.06 million for the year ended December 31, 2014 from $0.01 million for the period from July 24, 2013 (inception) to December 31, 2013.

Non-GAAP Financial Measures

Net Operating Income

Net operating income is a non-GAAP financial measure that we define as rental and other property revenues, less total property and maintenance expenses, property management fees, real

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estate taxes, general and administrative expenses, and property insurance. We believe that net operating income is an important supplemental measure of operating performance for a REIT’s operating real estate because it provides a measure of the core operations, rather than factoring in depreciation and amortization, financing costs, acquisition costs, and other corporate expenses. Net operating income is a commonly utilized performance measure in the REIT industry, but is not a substitute for the GAAP-compliant measure of net income (loss). See “Initial Portfolio—Joint Venture Investments” for a reconciliation of net operating income to net income (loss) for each of our joint venture investments.

Funds from Operations (FFO) and Core Funds from Operations (Core FFO)

Funds from operations, or FFO, is a non-GAAP financial measure that is widely recognized as a measure of REIT operating performance. We believe FFO provides relevant and meaningful information about our operating performance that is necessary, along with net income (loss) and cash flows, for an understanding of our operating results. We believe FFO is a meaningful disclosure as a supplement to net income. Net income assumes that the values of real estate assets diminish predictably over time as reflected through depreciation and amortization expenses. Because the values of real estate assets fluctuate due to market conditions, the presentation of operating results for a REIT, using historical accounting for depreciation, could be less informative. We compute FFO in accordance with the standards established by the National Association of Real Estate Investment Trusts, or NAREIT, as net income or loss (computed in accordance with GAAP), excluding gains and losses on sales and impairments of real estate, real estate-related depreciation and amortization expense, and after adjustments for unconsolidated joint ventures. Adjustments for unconsolidated joint ventures are calculated to reflect FFO on the same basis.

Core FFO is a computation made by analysts and investors to measure a real estate company’s operating performance by removing from the determination of FFO the effect of items that do not reflect ongoing property operations, including acquisition expenses, expensed costs related to the issuance of shares of our common stock and equity-based compensation expenses. Our unconsolidated real estate entities incur acquisition expenses in connection with acquisitions of real estate properties and expense those costs when incurred in accordance with GAAP. As these expenses are one-time and reflective of investing activities rather than operating performance, we add back our share of these costs to FFO in determining Core FFO.

Our calculation of Core FFO differs from the methodology used for calculating Core FFO by certain other REITs and, accordingly, our Core FFO may not be comparable to Core FFO reported by other REITs. Our management utilizes FFO and Core FFO as measures of our operating performance, and believes they are also useful to investors, because they facilitate an understanding of our operating performance after adjustment for certain non-cash items, such as depreciation and amortization expenses, and acquisition expenses and pursuit costs that are required by GAAP to be expensed but may not necessarily be indicative of current operating performance and that may not accurately compare our operating performance between periods. Furthermore, although FFO, Core FFO and other supplemental performance measures are defined in various ways throughout the REIT industry, we also believe that FFO and Core FFO may provide us and our investors with an additional useful measure to compare our financial performance with that of certain other REITs.

Neither FFO nor Core FFO is equivalent to net income or cash generated from operating activities determined in accordance with GAAP. Furthermore, FFO and Core FFO do not represent amounts available for management’s discretionary use because of needed capital replacement or expansion, debt service obligations or other commitments or uncertainties. Neither FFO nor Core FFO should be considered as an alternative to net income (determined in accordance with GAAP) as an indicator of our operating performance, as a measure of our liquidity or as indicative of funds available for our cash needs, including our ability to pay cash dividends.

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Set forth below is a reconciliation of pro forma and historical net income (loss) available to common stockholders/members to our pro forma and historical FFO and Core FFO for the three-month periods presented:

	For the Three Months Ended March 31,
	2015		2015			2014
	Company Pro Forma Consolidated (Unaudited)		Predecessor Historical (Unaudited)			Predecessor Historical (Unaudited)
	(dollars in thousands)
Funds From Operations:
Net Income (Loss) Available to Common Stockholders/Members	$	74	$	(3,198	)	$	(747	)
Adjustments:
Our share of real estate depreciation and amortization from unconsolidated real estate entities		1,743		3,163			867
Funds From Operations (Negative Funds From Operations)	$	1,817	$	(35	)	$	120
Core Funds From Operations:
Funds From Operations (Negative Funds From Operations)	$	1,817	$	(35	)	$	120
Adjustments:
Our share of amortization of deferred financing costs and acquisition fees and expenses from unconsolidated real estate entities		40		383			10
Core Funds From Operations	$	1,857	$	348		$	130

Set forth below is a reconciliation of pro forma and historical net loss available to common stockholders/members to pro forma and historical FFO and Core FFO for the periods presented:

	For the Year Ended December 31, 2014						For the Period from July 24, 2013 (inception) to December 31, 2013
	Company Pro Forma Consolidated (Unaudited)			Predecessor Historical			Predecessor Historical
	(dollars in thousands)
Funds From Operations:
Net Loss Available to Common Stockholders/Members	$	(11,599	)	$	(5,889	)	$	(1,430	)
Adjustments:
Our share of real estate depreciation and amortization from unconsolidated real estate entities		14,903			5,043			1,148
Funds From Operations (Negative Funds From Operations)	$	3,304		$	(846	)	$	(282	)
Core Funds From Operations:
Funds From Operations (Negative Funds From Operations)	$	3,304		$	(846	)	$	(282	)
Adjustments:
Our share of amortization of deferred financing costs and acquisition fees and expenses from unconsolidated real estate entities		2,316			1,258			413
Core Funds From Operations	$	5,620		$	412		$	131

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Initial Portfolio

The following table presents an overview of the investments that comprise our Initial Portfolio, based on information as of March 31, 2015 unless otherwise indicated.

Property Name	Date of Investment	Ownership Interest	Return Structure	Required Redemption or Maturity Date
Joint Venture Investments:
Station at Mason Creek(1)	September 2013	78%	Variable distribution based on property performance	none
The Flats@55Twelve(1)	June 2014	85%	Variable distribution based on property performance	none
Summer Chase(1)	October 2014	80%	Variable distribution based on property performance	none
Two Addison Place(1)	November 2014	90%	Variable distribution based on property performance	none
Terraces at Lake Mary(1)	January 2015	80%	Variable distribution based on property performance	none
Preserve at Port Royal(1)	(3)	78%	Variable distribution based on property performance	none
Preferred Equity Investments:
Monterey Ranch(1)	October 2014	Preferred Partnership Interest	Preferred return(6) of 12.00%	11/02/2021
Canter Chase(2)	December 2014	Preferred Partnership Interest	Preferred return(6) of 12.50%	12/17/2024
The Clusters(2)	June 2014	Preferred Partnership Interest	Preferred return(6) of 12.00%	07/06/2024
Garden District(2)	June 2015	Preferred Partnership Interest	Preferred return(6) of 12.00%	08/01/2022
Villages of Sage Creek(2)	April 2015	Preferred Partnership Interest	Preferred return(6) of 12.25%	05/01/2022
Riverchase Landing(2)	(5)	Preferred Partnership Interest	Preferred return(6) of 12.25%	(4)
Mezzanine Loan Investments:
Waters at Bluff Springs(1)	July 2014	Mezzanine Loan	Fixed interest rate(7) of 13.50%	11/01/2023
Waters at Elm Creek(1)	July 2014	Mezzanine Loan	Fixed interest rate(7) of 13.50%	11/01/2023
Highlands at Gwinnett Stadium(1)	January 2015	Mezzanine Loan	Fixed interest rate(7) of 12.00%	04/01/2025
Fountains at Andover(2)	(8)	Mezzanine Loan	Fixed interest rate(7) of 12.50%	(9)

(1) This investment is part of the Predecessor Investment Portfolio.

(2) This investment is one of the NYMT Contributed Assets.

(3) Our Predecessor has this investment under contract to acquire, with closing expected in August 2015.

(4) Redemption will occur approximately seven years from the closing date.

(5) NYMT has this investment under contract to acquire, with closing by NYMT expected in August 2015.

(6) Preferred return represents the rate of return we must receive before the operating partner receives any return of its initial investment. While the majority of such return for the preferred equity investment in our Initial Portfolio constitutes periodic cash payments, such return may also include a non-cash accrual component. See Note 4 to historical financial statements of the Predecessor as of and for the three months ended March 31, 2015 included elsewhere in this prospectus.

(7) The fixed interest rate represents the fixed accrual rate for this asset. While the majority of such return for the mezzanine loan investment in our Initial Portfolio constitutes periodic cash payments, such return may also include a non-cash accrual component. See Note 4 to historical financial statements of the Predecessor as of and for the three months ended March 31, 2015 included elsewhere in this prospectus.

(8) NYMT has entered into a loan agreement pursuant to which it will fund the loan concurrent with the refinancing of the senior mortgage loan on this property, which is expected to occur in August 2015.

(9) Redemption will occur approximately ten years from the closing date.

Concentrations

The following table summarizes the concentrations of our Initial Portfolio by investment type based on aggregate apartment units as of March 31, 2015:

Investment Type	Units(1)		%
Joint Venture Equity		1,736		30.9	%
Preferred Equity		2,821		50.2	%
Mezzanine Debt		1,066		19.0	%
Total		5,623		100.0	%

(1) Includes properties in which the investment was or will be acquired by our Predecessor or its affiliates or an affiliate of NYMT subsequent to March 31, 2015.

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The following table summarizes the concentrations of our Initial Portfolio by metropolitan statistical area, or MSA, based on aggregate apartment units as of March 31, 2015, December 31, 2014 and December 31, 2013:

	March 31, 2015					December 31, 2014					December 31, 2013
MSA	Units		%			Units		%			Units		%
Houston-The Woodlands-Sugar Land, TX		291		5.2	%		291		9.0	%		291		36.8	%
Durham-Chapel Hill, NC		268		4.8	%		268		8.3	%		—		—
Savannah, GA		325		5.8	%		325		10.1	%		—		—
Myrtle Beach-Conway-North Myrtle Beach, SC-NC		168		3.0	%		168		5.2	%		—		—
Orlando-Kissimmee-Sanford, FL		284		5.1	%		—		—			—		—
Austin-Round Rock, TX(1)		1,822		32.4	%		1,372		42.5	%		300		37.9	%
San Antonio-New Braunfels, TX		200		3.6	%		200		6.2	%		200		25.3	%
Atlanta-Sandy Springs-Roswell, GA		248		4.4	%		—		—			—		—
Louisville-Jefferson County, KY-IN		256		4.6	%		256		7.9	%		—		—
Lexington-Fayette, KY(1)		318		5.7	%		—		—			—		—
Greenville-Anderson-Mauldin, SC(1)		223		4.0	%		—		—			—		—
Midland, TX		352		6.3	%		352		10.9	%		—		—
Hilton Head Island-Bluffton-Beaufort, SC(1)		400		7.1	%		—		—			—		—
Birmingham-Hoover, AL(1)		468		8.3	%		—		—			—		—
Total		5,623		100.0	%		3,232		100.0	%		791		100.0	%

(1) Includes properties in which the investment was or will be acquired by our Predecessor or its affiliates or an affiliate of NYMT subsequent to March 31, 2015.

Mezzanine Loans and Preferred Equity Investments

Each of our mezzanine loans and preferred equity investments accrue interest and preferred returns, respectively, on a monthly basis. The following table presents the terms of each mezzanine loan and preferred equity investment as of March 31, 2015:

Property	Outstanding Balance		Interest or Preferred Return Accrual Rate(1)			Fixed/ Floating		Maturity or Redemption Date
Mezzanine Loans
Waters at Bluff Springs	$	3,585,762		13.50	%		Fixed		11/01/2023
Waters at Elm Creek		1,381,912		13.50	%		Fixed		11/01/2023
Highlands at Gwinnett Stadium		5,959,037		12.00	%		Fixed		04/01/2025
Fountains at Andover(2)		3,500,000		12.50	%		Fixed	(3)
Subtotal / Weighted Average(4)	$	14,426,710		12.64	%
Preferred Equity
Monterey Ranch	$	13,400,000		12.00	%		Fixed		11/02/2021
Canter Chase		3,505,209		12.50	%		Fixed		12/17/2024
The Clusters		3,497,607		12.00	%		Fixed		07/06/2024
Garden District(2)		4,350,000		12.00	%		Fixed		08/01/2022
Villages of Sage Creek(2)		5,100,000		12.25	%		Fixed		05/01/2022
Riverchase Landing(2)		8,500,000		12.25	%		Fixed	(5)
Subtotal / Weighted Average(4)	$	38,352,816		12.13	%
Total / Weighted Average(4)	$	52,779,526		12.27	%

(1) The Interest or Preferred Return Accrual Rate represents the interest rate for our mezzanine loans or the minimum yield to the preferred equity investor that is due on our preferred equity investments. See “Risk Factors—Risks Related to Our Manager and the Management Agreement—We may pay our Manager an incentive fee on certain investments that include a deferred interest or return feature.”

(2) This investment was or will be acquired by our Predecessor or its affiliates or an affiliate of NYMT subsequent to March 31, 2015.

(3) Redemption will occur approximately ten years from the closing date for this asset.

(4) Interest or Preferred Return Accrual Rate is weighted by the outstanding balance.

(5) Redemption will occur approximately seven years from the closing date for this asset.

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Joint Venture Investments

The following table presents a summary of net operating income for our unconsolidated real estate entities for the three months ended March 31, 2015 and provides a reconciliation of that non-GAAP financial measure to net income (loss) for the same period:

Property	Average Effective Monthly Rent Per Unit(1)		Economic Occupancy(2)			Physical Occupancy			Collections(3)		Operating Expenses(4)		Property Management Fees		Net Operating Income		Acquisition Costs		Mortgage Interest		Depreciation and Amortization		GAAP Net Income (Loss)			Predecessor Ownership Share			Predecessor Share of GAAP Net Income (Loss)
Station at Mason Creek	$	1,000		90.5	%		90.7	%	$	900,519	$	468,487	$	25,374	$	406,658	$	0	$	207,350	$	373,786	$	(174,477	)		78.0	%	$	(136,092	)
The Flats@55 Twelve		968		84.4	%		89.6	%		762,083		296,650		18,750		446,682		0		270,318		459,078		(282,714	)		85.0	%		(240,307	)
Two Addison Place		1,097		76.6	%		80.3	%		904,233		401,087		26,420		476,726		0		352,542		1,399,342		(1,275,158	)		90.0	%		(1,147,642	)
Summer Chase		756		95.2	%		95.8	%		385,394		140,961		14,914		229,519		0		89,068		571,202		(430,751	)		80.0	%		(344,601	)
Terraces at Lake Mary		924		90.8	%		90.8	%		782,413		299,681		24,134		458,599		429,811		197,813		955,701		(1,124,727	)		80.0	%		(899,781	)
Preserve at Port Royal(5)	(5)		(5)			(5)			(5)		(5)		(5)		(5)		(5)		(5)		(5)		(5)			(5)			(5)
Total/Weighted Average(6)	$	970		86.6	%		88.6	%	$	3,734,642	$	1,606,866	$	109,592	$	2,018,185	$	429,811	$	1,117,091	$	3,759,109	$	(3,287,827	)		83.0	%	$	(2,768,423	)

(1) Average effective monthly rent per unit is equal to (i) the gross potential rent minus any tenant concessions divided by (ii) the total number of units, and divided by (iii) the number of available months of data. Gross potential rent is calculated as the sum of the actual in-place monthly rents plus the sum of the current offered monthly rents for any vacant units (based on market rents) at the property.

(2) Economic occupancy is equal to (i) the gross potential rent minus any tenant concessions, vacancy or other rental losses divided by (ii) the gross potential rent, based on the available data. For the year of acquisition, if there was any period of missing data, the information is the average of the available data. Gross potential rent is calculated as the sum of the actual in-place monthly rents plus the sum of the current offered monthly rents for any vacant units (based on market rents) at the property.

(3) Collections are calculated as the sum of rental revenue and other income from operations actually collected from the property.

(4) Operating expenses include controllable expenses, such as salaries, repairs and maintenance, utilities, advertising, and administrative fees, as well as non-controllable expenses, such as real estate taxes and insurance, but exclude property management fees.

(5) Represents a pending acquisition, which is currently expected to be consummated by our Predecessor or its affiliates in August 2015. We cannot assure you that this pending acquisition will be completed because the transaction is subject to a variety of factors, such as the satisfaction of closing conditions.

(6) Excludes Preserve at Port Royal. Average effective monthly rent per unit, economic occupancy, physical occupancy and Predecessor ownership share are weighted by number of units.

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Initial Portfolio Investment FFO and Core FFO

The following table illustrates the pro forma FFO and Core FFO contributed by each investment in the Initial Portfolio for the three months ended March 31, 2015 as if we owned the investment on January 1, 2014 and provides a reconciliation of these non-GAAP financial measures to net income (loss) available to common stockholders for the same period:

(dollars in thousands)
Investment Name	Allocated Investment GAAP Net Income (Loss)			Allocated Portion of Real Estate Depreciation/ Amortization		Investment FFO Before Other Income and Company Expenses			Allocated Portion of Acquisition Fees and Amortization of Deferred Financing Costs		Investment Core FFO Before Other Income and Company Expenses
Joint Venture Investments:
Station at Mason Creek	$	(136	)	$	292	$	156		$	10	$	166
The Flats@55Twelve		(240	)		390		150			8		158
Summer Chase		(35	)		148		113			2		115
Two Addison Place		(289	)		401		112			13		125
Terraces at Lake Mary		12			196		208			6		214
Preserve at Port Royal(1)		(101	)		316		215			1		216
Preferred Equity Investments:
Monterey Ranch		407					407					407
Canter Chase		109					109					109
The Clusters		105					105					105
Garden District		131					131					131
Villages of Sage Creek		162					162					162
Riverchase Landing(2)		260					260					260
Mezzanine Loan Investments:
Waters at Bluff Springs		124					124					124
Waters at Elm Creek		48					48					48
Highlands at Gwinnett Stadium		188					188					188
Fountains at Andover(3)		114					114					114
Investment Total	$	859				$	2,602				$	2,642
Other Income		116
Management Fees		(483	)
Company Operating Expenses		(9	)
Preferred Members’ Dividend		(409	)
Net Income Attributable to Noncontrolling Interests		—
Net Income Available to Common Stockholders	$	74
Other Income							116
Management Fees							(483	)
Company Operating Expenses							(9	)
Preferred Members’ Dividend							(409	)
Net Income Attributable to Noncontrolling Interests							—
Total FFO						$	1,817
Other Income												116
Management Fees												(483	)
Company Operating Expenses												(9	)
Preferred Members’ Dividend												(409	)
Net Income Attributable to Noncontrolling Interests												—
Total Core FFO											$	1,857

(1) Represents a pending acquisition, which is currently expected to be consummated by our Predecessor or its affiliates in August 2015. We cannot assure you that this pending acquisition will be completed because the transaction is subject to a variety of factors, such as the satisfaction of closing conditions.

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(2) Represents a pending acquisition that NYMT has under contract to acquire, which is currently expected to close in August 2015. We cannot assure you that this pending acquisition will be completed because the transaction is subject to a variety of factors, such as the satisfaction of closing conditions.

(3) Represents a pending investment for which NYMT has executed a binding loan agreement, which is expected to close in August 2015. We cannot assure you that this pending investment will be completed because the transaction is subject to a variety of factors, such as the satisfaction of closing conditions.

Capital Improvement Programs

For many of our properties, our operating partners are in the process of executing a “value-add” program in which various forms of capital expenditures are made in order to improve the property cosmetically, increase its attractiveness to potential renters and drive overall rental rate growth. We expect the effect of these improvements and the resulting increase in property net cash flow to have a positive impact on the earnings and property values of our joint venture properties, and improve the credit profile of our mezzanine loan and preferred equity investments. Generally the cost of such improvements are reserved by the partnership that owns the applicable multifamily apartment property at the time of acquisition or refinancing of the property. In some cases capital expenditures may be funded through the recurring cash flow of the property. The cost of these capital improvement programs for the multifamily apartment properties that comprise our Initial Portfolio are not anticipated, as of the date of this prospectus, to be material to us.

Liquidity and Capital Resources

Liquidity is a measure of our ability to meet potential cash requirements, including ongoing commitments to repay borrowings, fund and maintain our assets and operations, make distributions to our stockholders and other general business needs. We will use significant cash to purchase our target investments, repay principal and interest on our borrowings, pay dividends or the liquidation preference on the outstanding preferred equity of our Predecessor (a portion of which will remain outstanding after this offering), make distributions to our stockholders and fund our operations. Our primary sources of cash will generally consist of (i) operating income from our joint venture investments, (ii) preferred distributions from our preferred equity investments, (iii) interest income from our mezzanine loans and (iv) the net proceeds from future offerings. We expect that our primary sources of financing will be, to the extent available to us, through (i) senior mortgage loans, (ii) securitizations of preferred equity and mezzanine loans and (iii) public offerings of our equity or debt securities. In the future, we may utilize other sources of financing to the extent available to us.

We believe our available cash balances, other financing arrangements and cash flows from operations will be sufficient to fund our liquidity requirements with respect to our existing portfolio for the next 12 months. We expect to raise capital in this offering, increase our borrowings and make acquisitions in the future, which would have a significant impact on our future results of operations. In general, we expect that our income and expenses related to our portfolio will increase in future periods as a result of anticipated future acquisitions of real estate. Should our liquidity needs exceed our available sources of liquidity, we believe that we could sell assets to raise additional cash. We may not be able to obtain additional financing when we desire to do so or on terms and conditions acceptable to us. If we fail to obtain additional financing, our ability to maintain or grow our business will be constrained.

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As of March 31, 2015 and December 31, 2014 and 2013, our Predecessor maintained cash and cash equivalents of approximately $2.72 million, $1.69 million and $0.04 million, respectively. Our Predecessor’s cash and cash equivalents were generated from the following activities for the periods indicated:

	For the Three Months Ended March 31,						For the Year Ended December 31,			For the Period from July 24, 2013 (inception) to December 31,
	2015			2014			2014			2013
	(Unaudited)			(Unaudited)
	(dollars in thousands)
Cash Provided by (Used in) Operating Activities	$	809		$	(3	)	$	514		$	(9	)
Cash (Used in) Provided by Investing Activities		(13,170	)		113			(46,204	)		(9,500	)
Cash Provided by (Used in) Financing Activities		13,389			(144	)		47,338			9,550
Net Change in Cash and Cash Equivalents		1,028			(34	)		1,648			41
Cash and Cash Equivalents - Beginning of Period		1,689			41			41			—
Cash and Cash Equivalents - End of Period	$	2,717		$	7		$	1,689		$	41

During the three months ended March 31, 2015, our Predecessor generated $0.81 million of cash from operating activities and $13.39 million from financing activities, which was partially offset by $13.17 million of cash used in investing activities. Cash generated from financing activities included $14.1 million in net proceeds from capital contributions by holders of preferred equity, which were partially offset by $0.67 million in dividends paid to holders of preferred equity. Cash used in investing activities included $14.8 million to purchase investments, which was partially offset by a $0.84 million reduction in deposit on an investment and a $0.76 million return of capital from investments.

During the year ended December 31, 2014 our Predecessor generated $0.51 million of cash from operating activities and $47.34 million from financing activities, which was partially offset by $46.20 million of cash used in investing activities. Cash generated from financing activities included $34.88 million in net proceeds from capital contributions by holders of preferred equity and $12.95 million in capital contributions by holders of common equity, which were partially offset by $0.25 million in dividends paid to holders of preferred equity and $0.24 million in distributions to holders of common equity. Cash used in investing activities included $46.23 million to purchase investments and a $0.84 million deposit on an investment, which was partially offset by a $0.87 million return of capital from investments.

Capital Markets

We may seek to raise further equity capital and issue debt and preferred securities in order to fund our future investments. For example, we may seek to enhance the returns on our mezzanine loan and preferred equity investments, through securitizations, if available. To the extent available, we intend to securitize the senior portion of some of our investments, while retaining the subordinate securities in our investment portfolio. The securitization of this senior portion will be accounted for as either a “sale” and the loans will be removed from our balance sheet or as a “financing” and will be classified as “securitized loans” on our balance sheet, depending upon the structure of the securitization.

Financing

We intend to use prudent amounts of leverage to increase potential returns to our stockholders. To that end, subject to qualifying and maintaining our qualification as a REIT and maintaining our exemption from registration under the Investment Company Act, we intend to use

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borrowings to fund the origination or acquisition of our target investments. The amount of leverage we will deploy for particular investments in our target investments will depend upon our Manager’s assessment of a variety of factors, which may include the anticipated liquidity and price volatility of the assets in our investment portfolio, the potential for losses and extension risk in our portfolio, the gap between the duration of our assets and liabilities, including hedges, the availability and cost of financing the assets, our opinion of the creditworthiness of our financing counterparties, the health of the U.S. economy and commercial mortgage markets, our outlook for the level and volatility of interest rates, the slope of the yield curve, the credit quality of our assets, the collateral underlying our assets, and our outlook for asset spreads relative to the London Interbank Offered Rate, or LIBOR, curve.

We expect to continue our acquisition of properties through joint ventures by utilizing fixed rate senior mortgage loans with remaining terms of four years or greater. We also expect that any preferred equity or mezzanine loan investments by us will be made in connection with property transactions that utilize fixed rate senior mortgage loans that, in most cases, have a remaining term that is longer than, or coincides with, our expected redemption or maturity date. In the event that we enter into a transaction involving a senior floating rate mortgage loan, we expect that the property owner would utilize some form of interest rate hedging or interest rate cap strategy in order to avoid floating rate risk.

Contractual Obligations and Commitments

Concurrent with the completion of this offering, we will enter into the Management Agreement with our Manager. Our Manager will be entitled to receive a base management fee, an incentive fee and the reimbursement of certain expenses. See “Our Manager and the Management Agreement—Management Agreement—Management Fees, Incentive Fees and Expense Reimbursements.” Our Manager will use the proceeds from its management fee in part to pay compensation to its officers and personnel who, notwithstanding that certain of them also are our officers, will receive no cash compensation directly from us. We expect to enter into certain contracts that may contain a variety of indemnification obligations, principally with brokers, underwriters and counterparties to repurchase agreements. The maximum potential future payment amount we could be required to pay under these indemnification obligations may be unlimited.

Pursuant to the subsidiary operating agreement, our Predecessor must pay to the holders of the subsidiary preferred units, on a quarterly basis, a preferred return of 10.0% per annum (unless increased to 15.0% per annum as a result of any changeover event, including if our operating partnership does not exercise its option to cause our Predecessor to repurchase the subsidiary preferred units before July 1, 2018) on such holders’ adjusted capital contributions (as defined in the subsidiary operating agreement) to our Predecessor. See “Structure and Formation of Our Company—Subsidiary Operating Agreement and Subsidiary Preferred Units.” As of March 31, 2015, the holders of subsidiary preferred units had aggregate adjusted capital contributions of $49.0 million, representing an annual preferred return of $4.9 million payable by our Predecessor. Upon completion of our formation transactions, the sole preferred member is expected to own outstanding subsidiary preferred units representing aggregate adjusted capital contributions of $16.3 million, representing an annual preferred return of $1.6 million payable by our Predecessor.

At any time, our operating partnership, as the managing member of our Predecessor, has the option (but not the obligation), subject to the approval of our independent and disinterested directors, to cause our Predecessor to repurchase all outstanding subsidiary preferred units. Pursuant to the subsidiary operating agreement, the purchase price payable to each preferred member for all of its subsidiary preferred units is an amount equal to the preferred member’s redemption amount, which is an amount equal to (i) the adjusted capital contribution with respect to such preferred member’s subsidiary preferred units, plus (ii) any accrued but unpaid preferred

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return measured through the date of the payment of the redemption amount, plus (iii) a redemption premium, with the redemption premium representing an amount that is equal to:

• the preferred return that would have been paid to such preferred member through July 1, 2016 if the subsidiary preferred units were outstanding through such date (exclusive of any amounts actually paid to such preferred member pursuant to clause (ii) above), if the redemption amount is paid before July 1, 2016;

• 1.0% of the adjusted capital contribution with respect to such preferred member’s subsidiary preferred units as of the date of the payment of the redemption amount, if the redemption amount is paid on or after July 1, 2016 but before July 1, 2017; or

• zero, if the redemption amount is paid on or after July 1, 2017;

provided, however, that if the redemption amount is paid within three months following the completion of this offering and consummation of our formation transactions, the redemption premium will be zero with respect to 8,170,567 of the subsidiary preferred units.

Inflation

Lease terms at the multifamily apartment properties in which we intend to invest, as well as our Initial Portfolio, are generally for terms of approximately one year in duration. Because of this, we believe our investments and the underlying properties to which those investments relate are able to compensate for the effects of inflation through annual rental rate adjustments, if necessary. We do not believe that inflation has had a material impact on our Predecessor’s historical financial position or results of operations.

Off-Balance Sheet Arrangements

As described under “—Critical Accounting Policies and Use of Estimates,” many of our investments are in non-consolidated entities or financial partnerships, such as entities often referred to as joint ventures. With respect to our Initial Portfolio we have not guaranteed any obligations of non-consolidated entities or entered into any commitment or intent to provide additional funding to any such entities.

Dividends

We intend to make regular quarterly distributions to holders of our common stock. U.S. federal income tax law generally requires that a REIT annually distribute at least 90% of its REIT taxable income, without regard to the deduction for dividends paid and excluding net capital gains, and that it pay tax at regular corporate rates to the extent that it annually distributes less than 100% of its net taxable income. We intend to pay, if and to the extent authorized by our board of directors, regular quarterly dividends to our stockholders in an amount equal to or in excess of our net taxable income. Before we pay any dividend, whether for U.S. federal income tax purposes or otherwise, we must first meet both our operating requirements and debt service on any secured funding facilities, other lending facilities, and other debt payable, including required distributions on the outstanding preferred equity interests in our Predecessor. If our cash available for distribution is less than our net taxable income, we could be required to sell assets or borrow funds to make cash distributions or we may make a portion of the required distribution in the form of a taxable stock distribution or distribution of debt securities. In addition, prior to the time we have fully deployed the net proceeds from this offering to directly originate our target investments, we may fund our quarterly distributions out of such net proceeds.

Critical Accounting Policies and Use of Estimates

We consider the accounting policies discussed below to be critical to an understanding of how we report our financial condition and results of operations because their application places the most significant demands on the judgment of our management.

Our financial statements are prepared on the accrual basis of accounting in accordance with GAAP. The preparation of financial statements in conformity with GAAP requires management to

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make use of estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates.

Consolidation Policy and Investments in Unconsolidated Real Estate Entities

We first analyze our joint venture common equity investments in real estate entities to determine if the real estate entity is a variable interest entity, or a VIE, in accordance with Accounting Standards Codification, or ASC, 810, Consolidation, and if so, whether we are the primary beneficiary requiring consolidation. A VIE is an entity that has (i) insufficient equity to permit it to finance its activities without additional subordinated financial support or (ii) equity holders that lack the characteristics of a controlling financial interest. VIEs are consolidated by the primary beneficiary, which is the entity that has both the power to direct the activities that most significantly impact the entity’s economic performance and the obligation to absorb losses or the right to receive benefits from the entity that potentially could be significant to the entity. Variable interests in a VIE are contractual, ownership or other financial interests that change with changes in the fair value of the VIE’s net assets. We continuously re-assess at each level of the real estate entity whether the entity is a VIE and, if it is, whether we are the primary beneficiary of the VIE. If we determine that a real estate entity in which we hold an interest qualifies as a VIE and we are its primary beneficiary, we consolidate that entity.

We have determined that one of our real estate equity investments, WR Savannah Holdings LLC (also referred to as Two Addison Place), is a VIE in accordance with ASC 810, however we do not consolidate the entity. We have determined that we do not have a controlling financial interest and are not the primary beneficiary of the VIE, as the Company does not have the power to direct the activities that most significantly impact the entity’s economic performance. Our maximum exposure does not exceed the carrying amount of our investment.

We have determined that our other real estate equity investments are not VIEs. As a result, we assess consolidation under all other provisions of ASC 810. These provisions provide for consolidation for majority-owned entities through majority voting interest in the company providing control, or through determination of control by us being the general partner in a limited partnership or the controlling member of a limited liability company.

In assessing whether we are in control of and requiring consolidation of the limited liability company and partnership venture structures, we evaluate the respective rights and privileges afforded each member or partner (collectively referred to as “member”). We would not be deemed to control the entity if any of the other members have either (i) substantive kickout rights providing the ability to dissolve (liquidate) the entity or otherwise remove the managing member or general partner without cause or (ii) substantive participating rights in the entity. Substantive participating rights (whether granted by contract or law) provide for the ability to effectively participate in significant decisions of the entity that would be expected to be made in the ordinary course of business.

We have determined that we do not have control under any of the above described circumstances, but do have significant influence; therefore, we account for these unconsolidated investments under the equity method. The equity method of accounting requires these investments to be initially recorded at cost and subsequently increased (decreased) for our share of net income (loss), including eliminations for our share of inter-company transactions, and increased (decreased) for contributions (distributions). The proportionate share of the results of operations of these investments is recorded in our earning or losses. We periodically review our investments for impairment based on projected cash flows from the entity over the holding period. When any impairment is identified, the investments are written down to recoverable amounts.

Investments in Real Estate Preferred Equity and Debt

We invest in mezzanine loans and preferred equity of entities that have significant real estate assets. A mezzanine loan is secured by a pledge of the borrower’s equity ownership in the property. Unlike a mortgage, this loan does not represent a lien on the property. Therefore, it is

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always junior and subordinate to any first-lien as well as second liens, if applicable, on the property. These loans are senior to any preferred equity or common equity interests. Purchasers of mezzanine loans benefit from a right to foreclose on the ownership equity in a more efficient manner than senior mortgage debt.

A preferred equity investment is an equity investment in the entity that owns the underlying property. Preferred equity is not secured by the underlying property, but holders have priority relative to common equity holders on cash flow distributions and proceeds from capital events. In addition, preferred equity holders may be able to enhance their position and protect their equity position with covenants that limit the entity’s activities and grant the holder the exclusive right to control the property after an event of default.

Mezzanine loans and preferred equity investments, where the risks and payment characteristics are equivalent to mezzanine loans, are generally intended to be held to maturity and the carrying values of these investments are stated at unpaid principal balance, adjusted for any unamortized premium or discount and deferred fees or expenses, net of valuation allowances, if any. We have evaluated our real estate debt and preferred equity investments for accounting treatment as loans versus real estate utilizing the guidance provided by the ADC Arrangements Subsection of ASC 310, Receivables. For each loan, the characteristics and the facts and circumstances indicate that loan accounting treatment is appropriate. We accrete or amortize any discounts or premiums and deferred fees and expenses over the life of the related loan receivable utilizing the effective interest method or straight line-method, if the result is not materially different.

We evaluate the collectibility of both interest and principal of each loan, if circumstances warrant, to determine whether it is impaired. A loan is impaired when, based on current information and events, it is probable that we will be unable to collect all amounts due according to the existing contractual terms. When a loan is impaired, the amount of the loss accrual is calculated by comparing the carrying amount of the investment to the estimated fair value of the loan or, as a practical expedient, to the value of the collateral if the loan is collateral dependent. Mezzanine loans and preferred equity investments where the risks and payment characteristics are equivalent to an equity investment are accounted for using the equity method of accounting.

Interest income is accrued and recognized as revenue when earned according to the terms of the loans and when, in the opinion of management, it is collectible. The accrual of interest on loans is discontinued when, in management’s opinion, the interest is not collectible in the normal course of business, but in all cases when payment becomes greater than 90 days delinquent. Loans return to accrual status when principal and interest become current and are anticipated to be fully collectible.

Income Taxes

Our financial results are generally not expected to reflect provisions for current or deferred income taxes. We believe that we will operate in a manner that will allow us to qualify for taxation as a REIT. As a result of our expected REIT qualification, we do not generally expect to pay U.S. federal corporate level taxes. Many of the REIT requirements, however, are highly technical and complex. To qualify as a REIT, we must meet a number of organizational and operational requirements, including a requirement to distribute annually at least 90% of our taxable income to our stockholders. If we fail to qualify as a REIT in any taxable year, we will be subject to U.S. federal and state income taxes at regular corporate rates (including any applicable alternative minimum tax) and may not be able to qualify as a REIT for four subsequent taxable years. Even if we qualify for taxation as a REIT, we may be subject to certain U.S. federal, state and local taxes on our income and property and to U.S. federal income and excise taxes on our undistributed REIT taxable income.

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Accounting Policies of Unconsolidated Real Estate Entities

Our significant accounting policies of investments in unconsolidated real estate entities are:

Acquisition of Investment Properties

We allocate the purchase price of properties to net tangible and identified intangible assets acquired based on their fair values in accordance with ASC 805, Business Combinations. In making estimates of fair values for purposes of allocating purchase price, we utilize a number of sources, including independent appraisals that may be obtained in connection with the acquisition or financing of the respective property, analysis of recently-acquired and existing comparable properties in the portfolio and other market data. We also consider information obtained about each property as a result of pre-acquisition due diligence, marketing and leasing activities in estimating the fair value of the tangible and intangible assets acquired. We consider the value of acquired in-place leases and utilize an amortization period that is the average remaining term of the acquired leases. In-place residential leases’ average remaining term at acquisition approximates six months. In addition, we are required to expense acquisition-related costs as incurred.

Impairment of Long-Lived Assets

We periodically evaluate long-lived assets, including investments in real estate, for indicators of impairment. The judgments regarding the existence of impairment indicators are based on factors such as operational performance, market conditions and legal and environmental concerns, as well as ability to hold and intent with regard to each asset. Future events could occur which would cause us to conclude that impairment indicators exist and an impairment is warranted. If impairment indicators exist for long-lived assets to be held and used, and the expected future undiscounted cash flows are less than the carrying amount of the asset, then we will record an impairment loss for the difference between the fair value of the asset and its carrying amount. If the asset is to be disposed of, then an impairment loss is recognized for the difference between the estimated fair value of the asset, less costs to sell, and its carrying amount.

Depreciation of Investment in Real Estate

We depreciate the building component of our investment in real estate over a 30-year estimated useful life, building improvements over a 15-year to 30-year estimated useful life and furniture, fixtures and equipment over a 5-year estimated useful life, all of which are judgmental determinations. Betterments and certain costs directly related to the improvement of real estate are capitalized. Expenditures for ordinary maintenance and repairs are expensed to operations as incurred.

Revenue Recognition

Our multifamily apartment communities have operating leases with apartment residents with terms averaging 12 months. We recognize rental revenue related to these leases, net of any concessions, on a straight-line basis over the term of the lease.

Recent Accounting Pronouncements

In February 2015, the FASB issued Accounting Standards Update, or ASU, 2015-02, “Consolidation (Topic 810)” (“ASU 2015-02”), which amends the consolidation requirements in ASC 810, Consolidation. ASU 2015-02 affects reporting entities that are required to evaluate whether they should consolidate certain legal entities. All legal entities are subject to reevaluation under the revised consolidation model. Specifically, the amendments: (i) modify the evaluation of whether limited partnerships and similar legal entities are VIEs or voting interest entities, (ii) eliminate the presumption that a general partner should consolidate a limited partnership, (iii) affect the consolidated analysis of reporting entities that are involved with VIEs, particularly those that have fee arrangements and related party relationships and (iv) provide a scope exception for certain entities that comply or operate in accordance with requirements that are similar to those in

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Rule 2a-7 of the Investment Company Act of 1940. ASU 2015-02 is effective for annual reporting periods beginning after December 15, 2015, and interim periods within those fiscal years. We are currently evaluating the provisions of this guidance.

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”). The guidance outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including the guidance on real estate derecognition for most transactions. ASU 2014-09 provides that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2016, and interim periods within those years and permits the use of either the retrospective or cumulative effect transition method. We are currently evaluating the provisions of this guidance.

In April 2014, the FASB issued ASU 2014-08, “Presentation of Financial Statements (Topic 205) and Property, Plant and Equipment (Topic 360) - Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity” (“ASU 2014-08”). ASU 2014-08 changes the threshold for disclosing discontinued operations and the related disclosure requirements. Pursuant to ASU 2014-08, only disposals representing a strategic shift, such as a major line of business, a major geographical area or a major equity investment, should be presented as a discontinued operation. The guidance is to be applied prospectively to new disposals and new classifications of disposal groups as held for sale after the effective date. ASU 2014-08 is effective for annual periods beginning on or after December 15, 2014 with early adoption permitted. We adopted ASU 2014-08 effective January 1, 2014.

Quantitative and Qualitative Disclosures About Market Risk

Market risk includes risks that arise from changes in interest rates, foreign currency exchange rates, commodity prices, equity prices and other market changes that affect market-sensitive instruments. In pursuing our business strategies, the primary market risks to which we are directly or indirectly exposed is interest rate risk and credit risk.

Interest Rate Risk

Interest rates are highly sensitive to many factors, including fiscal and monetary policies and domestic and international economic and political considerations, as well as other factors that are also beyond our control. As of March 31, 2015, our Predecessor had no outstanding indebtedness and we expect to have no outstanding indebtedness upon completion of this offering and consummation of our formation transactions. In addition, as of March 31, 2015, the investments that comprise the Predecessor Investment Portfolio are subordinate to conventional fixed-rate senior mortgage loans and we expect that the balance of the investments in our Initial Portfolio upon completion of this offering will be subordinate to conventional fixed-rate senior mortgage loans, thereby reducing our indirect exposure to higher interest rates until the loans mature. We may in the future directly incur debt, or invest in properties that are secured by debt, that has variable interest rates, or we may refinance or may cause our operating partners to refinance existing senior mortgage loans at a higher fixed or variable interest rate in the future. In such case, we expect that our direct or indirect primary interest rate exposure will be the daily LIBOR. On a limited basis, we also may use derivative financial instruments to manage interest rate risk. We will not use such derivatives for trading or other speculative purposes.

Credit Risk

Our investments are subject to credit risk. The performance and value of the joint venture equity and preferred equity investments and mezzanine loans we acquire or originate and manage depend upon the applicable operating partner’s or borrower’s ability to operate the multifamily properties that ultimately serve as or underlay the collateral for our assets so that they produce cash flows adequate to pay distributions, interest or principal due to us. To monitor this risk, our

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Manager employs a dedicated team of four professionals, separate and apart from its investment team, to oversee, monitor and enhance the performance and credit quality of our assets. Procedures for ongoing investment management and monitoring of credit quality of each of our assets include, among other things, financial statement analysis and regularly scheduled site inspections of portfolio properties by representatives of our Manager to assess property physical condition, performance of on-site staff and competitive activity in the submarket. Our Manager also formulates annual budgets and performance goals alongside our operating partners for use in measuring the ongoing investment performance and credit quality of our assets.

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DILUTION

Purchasers of our common stock in this offering will experience an immediate and substantial dilution of the net tangible book value of shares of our common stock from the initial public offering price. As of March 31, 2015, our historical net tangible book value was approximately $9.3 million, or $8.73 per share of common stock held by existing common equity investors. After giving effect to our acquisition of 100% of NYMT’s preferred equity interests in our Predecessor (the “Preferred Contribution Transaction”) but before giving effect to this offering and our acquisition of the NYMT Contributed Assets, our net tangible book value at March 31, 2015 would have been approximately $42.0 million, or $14.99 per share of our common stock. After giving effect to our formation transactions and the sale of the shares of our common stock offered by this prospectus, based on the midpoint of the range of the public offering price per share set forth on the front cover of this prospectus, including the expected use of the net proceeds from this offering as described under “Use of Proceeds,” and the deduction of underwriting discounts and commissions, financial advisory fees and estimated offering and formation transaction expenses, our pro forma net tangible book value as of March 31, 2015 would have been approximately $109.4 million, or $16.57 per share of our common stock. This amount represents an immediate increase in net tangible book value of $7.84 per share to existing common equity investors and $1.58 to existing preferred equity investors in our Predecessor and an immediate dilution in pro forma net tangible book value of $2.93 per share of our common stock to new investors in this offering. See “Risk Factors—Risks Related to this Offering—You will experience immediate and material dilution in connection with the purchase of shares of our common stock in this offering.” The following table illustrates this per-share dilution:

Assumed initial public offering price per share of our common stock(1)			$	19.50
Historical net tangible book value per share(2)			$	8.73
Increase in net tangible book value per share attributable to the Preferred Contribution Transaction but before this offering(3)	$	6.26
Increase in net tangible book value per share (after the Preferred Contribution Transaction) attributable to this offering and our acquisition of the NYMT Contributed Assets(4)	$	1.58
Increase in historical net tangible book value per share attributable to our formation transactions and this offering			$	7.84
Pro forma net tangible book value per share of our common stock after our formation transactions and this offering(5)			$	16.57
Dilution in pro forma net tangible book value per share to new investors(6)			$	2.93

(1) Based on the midpoint of the range of the public offering price per share set forth on the front cover of this prospectus.

(2) Historical net tangible book value per share is determined at March 31, 2015 by subtracting the total liabilities from the total book value of our Predecessor’s tangible assets at March 31, 2015 and dividing the difference by the number of shares of our common stock issuable to the Contributing Investors in exchange for their common equity interests in our Predecessor in connection with the formation transactions.

(3) The increase in net tangible book value per share attributable to the Preferred Contribution Transaction but before this offering is the difference between (a) historical net tangible book value per share before our formation transactions and this offering and (b) the net tangible book value per share after the Preferred Contribution Transaction but before this offering and our acquisition of the NYMT Contributed Assets. The historical net tangible book value per share after the Preferred Contribution Transaction but before this offering is determined at March 31, 2015 by subtracting the total liabilities from the total book value of our Predecessor’s tangible assets and dividing the difference by the number of shares of our common stock issuable to the Contributing Investors in our formation transactions. This calculation does not give effect to the payment in cash by our Predecessor of approximately $0.3 million to NYMT and approximately $0.1 million to Ellington Housing Investments LLC as payment of the expected accrued preferred distributions payable on their respective preferred equity interests in our Predecessor for the period July 1, 2015 to the closing of this offering.

(4) The increase in net tangible book value per share (after the Preferred Contribution Transaction) attributable to this offering and our acquisition of the NYMT Contributed Assets is determined by subtracting (a) the net tangible book value after the Preferred Contribution Transaction but before this offering and our acquisition of the NYMT Contributed Assets (see note (3) above) from (b) the pro forma net tangible book value per share after our formation transactions and this offering (see note (5) below).

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(5) Based on pro forma net tangible book value of approximately $109.4 million divided by 6,600,000 shares of our common stock, not including (a) up to 570,000 shares of our common stock issuable upon the exercise of the underwriters’ option to purchase additional shares of our common stock and (b) 330,000 shares of our common stock available for issuance under our 2015 Incentive Plan.

(6) Dilution is determined by subtracting pro forma net tangible book value per share of common stock after giving effect to our formation transactions and this offering from the initial public offering price paid by a new investor for a share of our common stock.

The table below summarizes, as of March 31, 2015, on a pro forma basis after giving effect to the formation transactions and this offering, the differences between the number of shares of our common stock to be issued, the total consideration paid and the average price per share paid by the new investors purchasing shares in this offering and shares purchased by, or awarded to, the Contributing Investors and directors, executive officers and employees of our company in connection with the completion of this offering and our formation transactions.

	Shares/ LTIP Units Purchased					Total Consideration(1)					Average Amount Per Share/ LTIP Unit
	Number		Percentage			Amount		Percentage
Contributing investors		2,800,000		42.42	%	$	52,682,267		41.55	%	$	18.82
Independent directors		1,500		0.02	%	$	—		—		$	0.00
New investors		3,800,000		57.56	%	$	74,100,000		58.45	%	$	19.50
Total		6,601,500		100.0	%	$	126,782,267		100.0	%	$	19.21

(1) Total consideration of the Contributing Investors represents the Contributing Investors’ cost-basis of their investment in our Predecessor as of March 31, 2015.

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OUR BUSINESS

Overview

We were recently formed to succeed the business of our Predecessor, whereby we will acquire and manage a diverse portfolio of structured investments in multifamily apartment communities. We make our investments principally in the form of preferred equity and joint venture investments in, and mezzanine loans secured by multifamily apartment properties. We have no employees and are externally managed and advised by our Manager, RiverBanc LLC, an investment management firm and registered investment adviser under the Investment Advisers Act of 1940. Our Manager was founded in 2010 and since then has sourced and managed over $400 million of direct and indirect investments in multifamily apartment properties on behalf of both public and private institutional investors. Our Manager’s management team has extensive experience executing the type of investment strategy we will pursue.

From its inception in July 2013 through June 30, 2015, our Predecessor received aggregate equity investments of approximately $69.0 million from Ellington and our founders, which includes our Chief Executive Officer, Kevin Donlon, NYMT, a REIT that is listed on the Nasdaq under the symbol “NYMT,” and JMP, a wholly-owned subsidiary of JMP Group LLC, a full-service investment banking and asset management firm that is listed on the NYSE under the symbol “JMP.” We refer to Mr. Donlon, NYMT and JMP, collectively, as the “Contributing Investors” and our founders.

In connection with our formation transactions, which will substantially be consummated concurrently with the completion of this offering, we will: (i) issue an aggregate of 1,062,976 shares of our common stock to acquire from the Contributing Investors 100% of the common equity interests in our Predecessor, which owns the Predecessor Investment Portfolio; (ii) issue 1,737,024 shares of our common stock to NYMT in connection with our acquisition from NYMT of 100% of its preferred equity interests (having an aggregate liquidation preference of $32.7 million) in our Predecessor; and (iii) use a portion of the net proceeds from this offering to pay approximately $28.5 million in cash to acquire from a wholly-owned subsidiary of NYMT the NYMT Contributed Assets. We refer to these transactions as “our formation transactions” and to these 16 assets that comprise the Predecessor Investment Portfolio and the NYMT Contributed Assets collectively as “our Initial Portfolio.” The assets that will comprise our Initial Portfolio are managed or were sourced directly by our Manager, which is 100% owned directly or indirectly by the Contributing Investors. Each of the NYMT Contributed Assets was originated or sourced by our Manager and was or will be funded by NYMT with the expectation that we would eventually acquire these assets at a price equal to NYMT’s outstanding investment in the assets, plus any accrued interest or preferred return thereon.

Upon completion of this offering and consummation of our formation transactions, we will own joint venture equity interests in joint ventures that own approximately six multifamily apartment properties with an aggregate of 1,736 apartment units, preferred equity interests in six multifamily apartment properties with an aggregate of 2,821 apartment units and four mezzanine loans secured by four multifamily apartment properties with an aggregate of 1,066 apartment units.

We will elect and intend to operate our business in a manner that will enable us to qualify to be taxed as a REIT for U.S. federal income tax purposes commencing with our short taxable year ending December 31, 2015. In addition, we intend to maintain our exclusion from registration under the Investment Company Act.

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Business Objectives

Our primary business objective is to generate attractive, risk-adjusted current income and capital appreciation for our stockholders by investing in a diversified portfolio of structured investments in multifamily apartment communities. In order to achieve our objective, we seek to:

• Preserve, protect and grow our capital on a tax-efficient basis by investing in multifamily apartment properties with unique or compelling attributes that provide an opportunity for value creation and improved returns through capital improvements or enhanced management practices;

• Provide stable dividends to our stockholders by allocating a significant portion of our capital to preferred equity or debt investments that may mitigate the negative effects of market downturns on our income stream; and

• Opportunistically manage and rebalance our portfolio throughout various market cycles.

Investment Highlights

• Attractive asset class.   We operate as a specialist in the multifamily housing sector, which we believe is a highly attractive commercial real estate asset class due to the diversified nature of the tenancy, favorable demographic trends and the current support for the industry provided by the U.S. federal government.

• Sizeable existing portfolio.   Our Initial Portfolio is comprised of over $105 million of investments that have been or are expected to be made directly in or secured by 16 multifamily apartment properties with an aggregate of 5,623 apartment units, which provides immediate cash flow and asset diversity.

• Stable current income.   We expect our Initial Portfolio and future investments in multifamily apartment properties to provide a durable source of cash flow for distributions to our stockholders due to (i) the scale and diversity of our tenant base, (ii) the fixed income structure of many of our assets, and (iii) the benefits of utilizing long-term fixed rate senior mortgage debt.

• Potential for capital appreciation through a property-level value-add approach.   We believe many properties owned by entities in which we have a joint venture equity investment provide the opportunity for significant rental rate increases through improved management practices and long-term value appreciation through capital improvements.

• Diverse investment portfolio of joint venture equity and high-yield fixed income assets.   In addition to joint venture equity interests, which generally represent a common equity interest in a joint venture that owns a multifamily apartment community, our Initial Portfolio includes preferred equity interests and mezzanine loans, which we believe provide downside protection due to the seniority of such assets to our operating partners’ or borrowers’ equity capital. We believe that this diversification will allow us to deliver more stable returns over time than if we focused solely on joint venture equity.

• Scalability of business model.   Our investment strategy of becoming a financial partner to multifamily apartment property owners and operators by joint venturing with or lending to entrepreneurial operating partners allows us to source assets or obtain investments referrals through a wide variety of channels, including senior lenders, or GSEs, brokers and the direct relationships of our Manager. By acquiring assets in this manner, we believe we benefit from the complementary knowledge and ongoing property-level efforts of our operating partners. Furthermore, we believe that our role as a financial partner allows us operating flexibility and enables us to scale our business more efficiently than many other REITs.

• Alignment of interests between our Manager and our stockholders.   We have negotiated the terms of our Manager’s base management and incentive fees to align our Manager’s interests with those of our stockholders, including a base management fee that is calculated based on our adjusted equity market capitalization. Furthermore, upon

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completion of this offering and consummation of our formation transactions, the Contributing Investors and their affiliates will own approximately 42.4% of our outstanding common stock on a fully diluted basis. We believe that the ownership of our common stock directly or indirectly by our founders and the owners of our Manager will further align our Manager’s interests with those of our stockholders. Moreover, at the discretion of our independent directors, up to 50% of our incentive fee may be paid in shares of our common stock, which may further increase our Manager’s ownership of our company over time.

• Uniquely positioned to access industry information. Our Manager also manages a securitized multifamily mortgage portfolio for NYMT that includes investments in first-loss CMBS, secured by more than 500 multifamily apartment properties. Our Manager’s initial underwriting of this portfolio, ongoing surveillance of the assets and other loan servicing responsibilities provide our Manager with extensive ongoing market intelligence, property performance data and operating partner interaction that we believe will benefit our sourcing and asset management of our Initial Portfolio and future investments in similar properties.

• Tax advantages.   Because of the structure of our formation transactions and the fact that all of our Predecessor’s joint venture investments have been made within the past two years (the majority have been made within the past 12 months), we expect that our adjusted tax basis in the real property in which we indirectly own an interest will be at or near the fair market value of the property. Consequently, our depreciation deductions from those properties will be higher than would be the case if we were simply a lender, or if we acquired our indirect interest in those properties in a carryover basis transaction or if our Predecessor had already claimed material depreciation deductions with respect to those properties. Because of the significant depreciation deductions we expect to receive from those properties, we anticipate that a sizeable portion of the distributions paid by us in the near term will constitute a return of capital and not be taxable to stockholders.

The Market Opportunity in Multifamily Real Estate

We believe multifamily apartment communities offer a compelling commercial real estate investment opportunity when both risk and reward are considered. We believe the following factors and trends support this conclusion.

Large-Scale Investment Opportunity

According to National Multifamily Housing Council, the United States has approximately $2.5 trillion of multifamily apartment properties.

Our business strategy is to focus solely on the private owners of multifamily apartment communities, which represents approximately 94.2% of the market.

U.S. Multifamily Apartment Property Ownership

 

Source: National Multifamily Housing Council; Bloomberg, June 2015

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The multifamily investment market is highly liquid, as transaction volume exceeded $110 billion in 2014 surpassing the prior record level of $105 billion set in 2013, becoming the first property sector to reach this level.

United States Multifamily Transaction Volume
2002-2014

 

Source: JLL Multifamily Outlook, Fall 2014 and Winter 2015

As depicted below, private operators and investment managers dominated the transaction activity through the Fall of 2014. Public REITs, non-traded REITs and real estate operating companies represented only 4% of the transaction volume (exclusive of public REIT mergers).

Transaction Volume by Buyer

 

Source: JLL Multifamily Outlook Fall 2014

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We believe that continued high transaction volume in this market, primarily with private sellers, will provide an active investment environment that fits our investment strategy.

Continuing Robust Demand from Apartment Renters

Historically, employment growth and new household formation are the top drivers of increased demand for apartments.

Employers added an average of 246,000 non-farm jobs per month in the United States during 2014 according to the U.S. Department of Labor, marking the strongest growth in the labor market in 15 years. In June 2015, non-farm jobs increased by 223,000 and through the first six months of 2015, the non-farm jobs have increased an average of 203,000 per month. According to Freddie Mac’s Insights on Housing Finance dated February 2015, the fastest-growing careers in the United States have only average or below average rates of homeownership, and the homeownership rate will continue to decline through 2020 (meaning that the percentage of households that rent will increase). In addition, the Bureau of Labor Statistics has projected that the typical entry-level education required for 33 million of the 50 million expected job openings over the next decade will be no greater than high school.

The chart below sets forth the annual percentage growth rates for employment in the United States for the period 2000 through 2014.

U.S. Employment Annual Growth
2000 – 2014

 

Source: Bureau of Labor Statistics

Household formation is also a key driver of demand for the multifamily market. Freddie Mac’s Insights on Housing dated February 2015 stated that as many as two million U.S. households became renters in 2014.

Rental demand generally is expected to stay strong as the combination of demographic changes, shifting preferences, and urbanization continue to fuel renter household growth.

The U.S. homeownership rate, having reached a high of 69.2% at the end of 2004, has steadily decreased to 63.7% as of March 31, 2015 according to the Census Bureau. This rate represents the lowest level of homeownership in over 20 years. We believe that stringent lending standards and economic uncertainties continue to contribute to the decision by many to rent rather than buy their

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homes, and continue to put downward pressure on the home ownership rate. As a result of the recent recession, many homeowners have been forced to become renters and many renters on the cusp of being eligible to buy a home have decided to postpone purchasing a home. With approximately 123 million households in the U.S., each 1% decline in the homeownership rate adds a potential additional 1.2 million new rental households.

The following chart sets forth the homeownership rate in the United States on a quarterly basis for the period 1995 through the first quarter of 2015.

U.S. Homeownership Rate
Quarterly, 1995 – First Quarter 2015

 

Source: U.S. Census Bureau, March 31, 2015

The generation of Americans referred to as “millennials” (individuals currently aged 18 to 34) are generally described as career-oriented, mobile and well educated. According to Marcus & Millichap’s 2015 National Apartment Report, 68% of the 1.6 million millennials will rent rather than purchase a home in the next five years. In addition, 3.3 million millennials are living at home, which is above the long-term average. We believe that the burden of student debt (estimated to be over $1.2 trillion in 2013 by the Consumer Finance Protection Bureau) and the recent housing industry crisis have motivated the majority of millennials to rent apartments, rather than buy a home.

By 2025, the number of single-person households is projected to equal the number of households with children according to Freddie Mac. Single-person households are increasing because millennials are delaying marriage further than any prior generation and divorce rates are increasing for “baby boomers” that no longer have children living at home.

According to the U.S. Census Bureau, all of the net gain in working-age employment (ages 16 to 65) since 2000 has been filled by immigrants. Immigrants to the United States typically start out as renters, and many remain so longer-term according to research conducted by Freddie Mac in July 2014.

Supply Shortage

Freddie Mac’s Insights on Housing dated February 2015 stated that most markets are readily absorbing the new supply of rental units, with only a handful of top-tier properties in urban markets experiencing modest rises in vacancy rates and increased concessions.

Freddie Mac estimates that the projected demand for additional multifamily housing will be approximately 4.4 million units over the next ten years. Other studies indicate that demand may be

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greater, such as the research report issued by the Federal Reserve Board of Kansas City that found that the demand for multifamily units is expected to be in the range of 400,000 to 550,000 units per year, depending on the magnitude and timing of the release of pent-up demand.

In terms of supply, Freddie Mac estimates only 3.1 million units will be constructed over this period, which implies a shortfall of 1.3 million units. We expect that the middle-market apartment availability will remain constricted so long as new construction costs are higher than market values.

U.S. Aggregate Multifamily Demand vs. Supply
2015 − 2025

 

Source: Freddie Mac Multifamily Mid-Year Outlook 2014 and Freddie Mac Insights on Housing Finance, July 2014.

Diverse and Stable Income Stream

Investments in multifamily apartment properties differ from certain other commercial real estate investments because of the short-term nature of the leases, the larger number of individual leases and the fact that the leases are for households and not businesses. We believe these characteristics mitigate many of the risks of commercial real estate investments in the following ways:

• Multifamily leases generally have terms of less than or equal to one year, providing landlords with the ability to increase rents more frequently than commercial leases and offering inherently greater potential for continued revenue growth;

• Cash flow from each property is generated from a diverse group of numerous tenants, limiting the negative impact of losing any single tenant;

• Demand for multifamily rental accommodation is more stable than the commercial rental marketplace, reflecting demographic trends and the need for housing, unlike its commercial counterpart which is governed to a greater extent by economic business cycles; and

• Improvement costs necessary to attract and retain tenants are generally lower and more predictable than in the case of commercial tenants.

Federal Government Support for the Multifamily Housing Industry

The U.S. federal government continues to utilize Fannie Mae, Freddie Mac and the FHA to provide support to the overall availability and affordability of the U.S. housing market, including multifamily apartment properties. These federal finance agencies have implemented their support

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primarily by facilitating secondary market liquidity for loans and by providing inexpensive, long-term debt directly to property owners, especially during periods of market unrest. According to the Joint Center for Housing Studies at Harvard University, in 2007 alone, portfolio purchases surged by fully $29 billion to $56 billion, more than twice as much any previous year. Moreover, during the wake of the currency crisis in 1998 and again after the terrorist attacks of September 11, 2001 and the 2001 recession, Fannie Mae and Freddie Mac increased portfolio purchases and guarantees of multifamily debt.

We believe that these finance agencies will continue to play a significant role in the U.S. multifamily housing market which will continue to materially mitigate the risk of multifamily apartment properties as compared to other property types.

Our Investment Strategy

Structured Multifamily Apartment Investment Business Model

We intend to position our company in the marketplace, like our Predecessor, as a real estate investor focused on debt and equity transactions involving multifamily apartment communities. We do not seek to be the sole owner and day-to-day manager of properties. Rather, we intend to participate as a “capital partner” by lending to or co-investing alongside a project-level sponsor that has already identified an attractive investment opportunity.

We believe our strategy will provide attractive risk-adjusted returns to our company and our stockholders over both the short- and long-term investment horizons for the following reasons:

• As a well-capitalized public company with a management team that possesses significant experience and numerous relationships in the multifamily apartment industry, we expect a wide variety of potential operating partners will present numerous investment opportunities to us annually, allowing us to be selective in terms of both property transactions and our operating partners and to source new investments opportunistically;

• Our operating partners contribute to our local market knowledge, operating expertise and transaction sourcing network;

• We are able to opportunistically diversify our investments across numerous geographic markets, investment structures and operating partners, providing us the ability for prudent portfolio construction;

• We benefit from the scale and efficiencies of high-quality property management, which, in the case of our joint venture equity and preferred equity investments, can be quickly replaced in the event these on-site property managers do not perform in accordance with expectations of our partners and us; and

• Owning structured equity or debt assets, as opposed to whole-property ownership, allows us to negotiate terms or features in transactions that we believe provide additional principal protection and more stable returns.

Middle Market Investment Opportunities

We intend to focus on middle market assets, which we generally define as investments in multifamily apartment properties having market values between $15 million and $75 million and typically requiring less than $20 million of total equity or subordinate debt capital. We believe there are opportunities for above-market returns by investing in middle market properties that are not pursued by larger capital markets investors. Because institutional funding sources (such as life insurance companies, banks and conduits) tend to pursue higher-end properties in top-tier markets along the east and west coasts of the United States, middle-market project sponsors in secondary markets have greater difficulty arranging private capital, especially in times of economic stress. We believe our focus on these middle market transactions differentiates us from many of our competitors and our Manager has extensive experience with these assets.

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Target Markets

Although our Initial Portfolio includes investments in multifamily apartment communities geographically concentrated in the southeastern United States, our investments will not be limited to any particular geographic area in the United States. Generally, we will focus our sourcing efforts on markets that have above-average population growth and above-average net absorption rates, which we have determined to be primarily in the southeastern United States (the states shown in blue in the map below).

Our Initial Portfolio Locations

 

The multifamily apartment properties included in our Initial Portfolio and the markets we will generally target for sourcing investments are located in the southeastern United States, which region includes 12 of the top 15 markets in the United States as measured by their net absorption rate (as defined by Jones Lang LaSalle, or JLL, Multifamily Outlook in 2014, which is the net change in rented units to the total units available in a given market for the year). In addition, the population growth rates for markets associated with investments in our Initial Portfolio generally exceed the population growth rate for the United States.

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Garden-style Apartment Communities 

The majority of the multifamily apartment properties that we target are garden-style apartment properties that consist of over 200 units with on-site dedicated leasing and management. “Garden-style” properties are predominantly wood-frame construction with surface parking and no elevators, providing for lower capital costs for owners when compared to mid- and high-rise multifamily apartment properties. These properties attract tenants by offering large amenity packages that often include swimming pools, fitness centers, business centers, clubhouses and security gates. These properties are also characterized by lower density (on average, approximately 20 units per acre, as compared to urban infill properties which may encompass significantly more units, depending on building height, built on several acres or less) and more open “green space.” We believe garden-style apartment properties generally cater to middle-class renters, the largest and most diverse multifamily renter segment in the United States.

Properties That Have Existing Cash Flow with Upside

We generally pursue existing multifamily apartment properties that have in-place cash flow. In addition, we target assets having unique or compelling attributes that provide an opportunity for value creation and increased returns through the combination of better management or capital improvements that will lead to net cash flow growth and capital gains. Generally, we target properties that are or have been:

• located in a particularly dynamic submarket with strong prospects for rental growth;

• located in smaller markets that are underserved and more attractively priced;

• poorly managed by the previous owner, creating an opportunity for overall net income growth through better management practices;

• undercapitalized and may benefit from an investment in physical improvements; or

• highly stable and are suitably positioned to support high-yield preferred equity or mezzanine debt within their capital structure.

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Pursue Privately Negotiated and Off-Market Transactions

We believe that our Manager’s dedicated acquisition team has a network of industry relationships throughout the United States that will allow us to pursue many potential investment opportunities through privately negotiated, off-market or lightly marketed transactions, including directly through a project-level sponsor. Off-market and lightly marketed transactions are characterized by a lack of a formal marketing process and a lack of widely disseminated marketing materials. We believe off-market and lightly marketed transactions can be more attractive than investments sourced through auction or capital markets intermediaries, as those widely marketed types of transactions often price at a higher level than off-market transactions.

Partner with Experienced Operators

We recognize the importance of a strong local operating partner that can bring local market knowledge and day-to-day on-site involvement. Our Manager has existing relationships with multiple operating partners who may provide attractive investment opportunities to us in the future.

We intend to continue investing with our existing operating partners and also to pursue new relationships with successful real estate entrepreneurs in order to identify attractive investment opportunities for our portfolio. We will generally seek experienced property-level operators or real estate entrepreneurs who have the ability to identify and manage strong investment opportunities but may lack the financial resources to fully fund the capital needed for a property acquisition. In our Manager’s experience, regional operating partners can provide superior oversight as co-investors in the property. Our Manager’s asset management team will work with our operating partners to oversee the implementation of each property’s business plan, including budgeting, capital expenditures and improved management practices.

We will require our operating partners to materially co-invest in every investment we make with them. Our common equity investments in joint ventures that own multifamily apartment properties have historically represented between 60% and 90% of the total equity capital contributed to the joint venture which is subordinate to any senior mortgage on the property, with our operating partner providing the balance of the equity capital, and we expect our future investments to have similar investment percentages. Our preferred equity investments and mezzanine loans have typically been structured such that our operating partner contributes approximately 25% to 50% of the capital that is subordinate to the senior loan on the property and that represents total subordination to us of at least 10% of the property value. We believe that requiring our operating partners to materially co-invest with us creates a significant incentive for our operating partners to increase operating income and property value through operational changes and property enhancements, aligning their interests with ours.

Investment Types

We expect to invest in multifamily apartment communities at various levels within the capital structure of each property-owning entity. As we originate or select investments for our portfolio, we intend to evaluate the risks and benefits of each investment while taking into consideration our portfolio’s overall composition of investment structures. In general terms, the typical investment structures that we will pursue will be in the form of joint venture equity, preferred equity, mezzanine loans and other high-yield investments. We also may invest from time to time in CMBS, although we do not presently expect such investments to comprise a significant part of our investment allocation.

Joint Venture Equity – We expect to make joint venture investments in entities that own multifamily apartment properties. Joint venture equity is a direct common equity ownership interest in an entity that owns a property. In this type of investment, the return of capital to us is variable and will be made on a pari passu basis between us and the other operating partners. In most cases, we expect to provide between 50% and 95% of the total equity capital for the joint venture, with our operating partner providing the balance of the equity capital, although we prefer to provide approximately 80% of the total equity capital in these structures. We typically require

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the operating agreement that governs our joint venture investment to provide for a minimum 10% hurdle return to all investors before the manager of a joint venture property, which is typically affiliated with our operating partners, will become eligible for any promoted interest. We generally expect to underwrite our joint venture equity investments such that our investments in these assets will produce an approximately 15% gross internal rate of return on our investment over our expected holding period, which is typically five to seven years. We expect to allocate approximately 50% to 65% of our equity capital to these types of investments, with the balance of our equity capital allocated to the other investment structures described below, although initially, we expect to allocate approximately 50% of our equity capital to this investment structure. Upon completion of this offering and consummation of our formation transactions, joint venture equity investments will comprise approximately 49.8% of the sum of the initial investment amount (or estimated initial investment amount for investments currently under contract for acquisition), in the case of the joint venture equity investments and preferred equity investments plus the sum of the outstanding balance at March 31, 2015 (or estimated initial investment balance for investments currently under contract for acquisition) in the case of the mezzanine loans, in our Initial Portfolio.

Preferred Equity – We expect to originate preferred equity investments in entities that directly or indirectly own multifamily apartment properties. Preferred equity is not secured, but holders have priority relative to the common equity on cash flow distributions and proceeds from capital events. In addition, as a preferred holder we may seek to enhance our position and protect our equity position with covenants that limit the entity’s activities and grant to the preferred holders the right to control the property upon default under relevant loan agreements or under the terms of our preferred equity investments. Occasionally, the first mortgage on a property prohibits additional liens and a preferred equity structure provides an attractive financing alternative. With preferred equity investments, we may become a special limited partner or member in the ownership entity and may be entitled to take certain actions, or cause a liquidation, upon a default. Under the typical arrangement, the preferred equity investor receives a stated return, and the common equity investor receives all cash flow only after that return has been met. Preferred equity typically is more highly leveraged, with loan-to-value ratios of 85% to 90%. We expect our preferred equity investments will have mandatory redemption dates that will generally be coterminous with the maturity date for the senior loan on the property, and we expect to hold these investments until the mandatory redemption date.

We generally intend to underwrite these investments such that our investment in these assets will produce not less than an approximately 12% current return on investment, plus fees. We expect to initially allocate approximately 35% of our equity capital to these types of investment structures.

Upon completion of this offering and consummation of our formation transactions, preferred equity investments will comprise approximately 36.5% of the sum of the initial investment amount (or estimated initial investment amount for investments currently under contract for acquisition), in the case of the joint venture equity investments and preferred equity investments plus the sum of the outstanding balance at March 31, 2015 (or estimated initial investment balance for investments currently under contract for acquisition) in the case of the mezzanine loans, in our Initial Portfolio.

Mezzanine Loans – We anticipate making mezzanine loans that are senior to the operating partner’s equity in, and subordinate to a first-mortgage loan on, a property. These loans are secured by pledges of ownership interests, in whole or in part, in entities that directly or indirectly own the real property. In addition, we may require other collateral to secure mezzanine loans, including letters of credit, personal guarantees or collateral unrelated to the property.

We may structure our mezzanine loans so that we receive a stated fixed or variable interest rate on the loan as well as a percentage of gross revenues and a percentage of the increase in the fair market value of the property securing the loan, payable upon maturity, refinancing or sale of the property. Our mezzanine loans may also have prepayment lockouts, prepayment penalties, minimum profit hurdles or other mechanisms to protect and enhance returns in the event of

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premature repayment. We expect these investments will typically range in size from $3 to $16 million, have terms from three to ten years and typically bear interest at a rate of 12% to 14% in the current market. Mezzanine loans usually have loan-to-value ratios between 85% and 90%.

Similar to our preferred equity investments, we generally expect to underwrite our mezzanine loans such that a loan will produce not less than an approximately 12% current return on investment, plus fees. We expect to initially allocate approximately 15% of our equity capital to these types of investment structures.

Mezzanine loans typically have maturities that match the maturity of the related first-mortgage loan but may have shorter or longer terms. We expect to hold these investments to maturity. Upon completion of this offering and consummation of our formation transactions, mezzanine loans will comprise approximately 13.7% of the sum of the initial investment amount (or estimated initial investment amount for investments currently under contract for acquisition), in the case of the joint venture equity investments and preferred equity investments plus the sum of the outstanding balance at March 31, 2015 (or estimated initial investment balance for investments currently under contract for acquisition) in the case of the mezzanine loans, in our Initial Portfolio.

Other – We may also acquire investments that are structured with terms that reflect a combination of the investment structures described above. In some circumstances, the acquisition of properties may require project-specific debt. Leverage at the individual investment level will be at our Manager’s discretion, subject to our investment guidelines. All indebtedness that is recourse to us (other than standard nonrecourse carve-outs) will be subject to approval by our board of directors. We also may invest, from time to time, based on market conditions, in CMBS and other multifamily or mortgage-related assets to enable us to qualify or maintain our qualification as a REIT or otherwise.

Our Investment Process

Identification of New Investments

Our Manager has sourced all of the assets in our Initial Portfolio and will be responsible for sourcing all new opportunities that may meet our criteria. Our Manager’s strategy is to cast a very wide net, review as many opportunities as possible and select the most attractive assets for further discussions and analysis.

We have positioned ourselves in the marketplace so as not to be viewed as a competitor to either senior mortgage lenders or potential operating partners. We believe this strategy allows us to maintain relationships and access opportunities that might otherwise not be available to us. Debt providers (such as mortgage conduits and the GSEs, such as Freddie Mac and Fannie Mae) often refer opportunities to our Manager because they do not view our Manager or us as direct competitors given that neither of us provides or brokers first-mortgage debt. Real estate owners, operators and developers often contact us directly with opportunities because we do not directly compete with them as neither we nor our Manager directly bid to buy multifamily properties. Our Manager often collaborates with the senior debt provider and the operating partner to optimize the capital structure. We believe that several of our operating partners have completed multiple investments with our Manager because our Manager has been able to tailor capital solutions to fit their specific needs, has been responsive to their requests and has acted with integrity in its dealings with these partners, which has allowed us to build and strengthen our relationship with these partners over time.

Our Manager sources investment opportunities through its expansive network of contacts within the multifamily apartment industry and the greater finance community. As a result of this network, our Manager maintains relationships with:

• public and private multifamily apartment operators and developers;

• principal investment banks and commercial banks;

• commercial mortgage and commercial brokerage firms;

• GSEs, such as Fannie Mae and Freddie Mac, and commercial servicers and conduits;

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• law and accounting firms; and

• other multifamily apartment investment originators.

We believe that our Manager’s network and experience within the multifamily apartment industry will serve to substantially supplement the scale and scope of our investment sourcing and origination platform and that the opportunity to review many different proposals greatly increases our overall market intelligence and provides perspective into the operations of potential competitors.

Underwriting and Approval Process

Our Manager has developed a comprehensive credit underwriting process. Prior to funding, a proposed transaction is analyzed and a written credit memorandum is prepared, which generally includes a description of the prospective operating partner, the collateral and the proposed use of investment proceeds, a comparison of competitive properties, financial analysis of property statements and rent rolls, a breakdown of loan and investment terms, an analysis and summary of key investment factors such as senior loan coverage, debt yield, investment current yield and investment total return, and a review and an analysis of the property relative to its competitors in the market. Each transaction is presented for approval to our Manager’s Investment Committee, which will initially consist of our Chief Executive Officer, our President, our Chief Operating Officer, our Chief Financial Officer and our Managing Director of Acquisitions. All transactions require the approval of at least four of the members of our Manager’s Investment Committee.

Step 1: Screening / Risk Management

Once an investment opportunity is identified, our Manager conducts an initial credit analysis and screening to assess whether pursuing this particular investment meets our return thresholds and underwriting criteria. This analysis is based on several identified key factors including, among other things:

• whether the subject property is located in a strategically targeted market;

• income levels and employment growth trends in the relevant market;

• barriers to entry that would limit competition (zoning laws, building permit availability, supply of undeveloped or developable real estate, local building costs and construction costs, among other factors);

• the location, construction quality, condition and design of the property;

• the safety and security of the surrounding submarket;

• the current and projected cash flow of the property;

• the ability to increase cash flow through better management practices or capital improvements;

• purchase price relative to the replacement cost of the property;

• the terms of existing resident leases, including the potential for rent increases;

• the occupancy and demand by residents for properties of a similar type in the vicinity (the overall market and submarket);

• the prospects for liquidity through sale, financing or refinancing of the property;

• purchase prices and yields of comparable properties, if any;

• competition from existing properties and properties under development and the potential for the construction of new properties in the area;

• potential for opportunistic selling based on demand and price of high-quality assets, including condominium conversions; and

• the operating partner’s background and experience in the multifamily industry.

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Furthermore, our Manager analyzes the potential investment in relation to our investment guidelines and its impact on our qualification as a REIT and our exemption from registration under the Investment Company Act. Our Manager also evaluates whether a potential investment opportunity will cause the portfolio to be too heavily weighted to any specific operating partner, strategy or geography.

Step 2: Manager’s Investment Committee Review

Upon completion of the review in Step 1 above, and our Manager’s determination that the investment opportunity matches our desired risk and return investment criteria in accordance with our existing asset portfolio, the investment is presented to our Manager’s Investment Committee for consideration. This presentation includes an overview of the sponsor, location, proposed uses for investment proceeds, description of capital structure, current market data and identified risk factors. Following our Manager’s Investment Committee review and discussion of the presentation, should our Manager’s Investment Committee conclude that the investment opportunity meets the appropriate guidelines, our Manager will submit a formal, non-binding proposal to the operating partner.

Upon acceptance by the operating partner of our proposal, the investment opportunity proceeds to Step 3, where it undergoes more comprehensive due diligence and underwriting.

Step 3: Due Diligence / Underwriting

Our Manager employs a value-driven approach to underwriting and due diligence. Our Manager utilizes a credit-based examination to analyze the risk and return profile of an investment opportunity and appropriate capital pricing, terms and structure based on that analysis. Our Manager performs an underwriting review to incorporate detailed financial cash flow modeling, which is used to derive comprehensive credit characteristics and general terms of the investment, such as cash yield targets, cash flow coverage ratios, investment structure and investment terms. Our Manager includes in its due diligence and underwriting platform a detailed review of multifamily fundamentals, including relative market rental rates, ancillary revenue streams, vacancy trends and operating expenses in addition to a background check on key members of the operating partner. Our Manager also performs a thorough valuation of the investment’s underlying collateral in which our Manager uses comparable properties and cash flow modeling to drive the analysis. In addition to generating a valuation, our Manager uses these analyses to determine the investment’s exposure and sensitivity to market factors as well as the prospective ability of the operating partner to, at some point, exit the investment through a sale or recapitalize the property.

Our Manager also conducts a top-down underwriting approach, using market research, among other resources, to examine the overall market of an investment opportunity, observing key MSA factors such as average household income, unemployment rate, employment growth, population growth, market rents and the competitive landscape. Our Manager’s underwriting process is structured so as to provide us with a better understanding of the broader capital structure of the transaction and to help us ensure that we identify and negotiate for appropriate controls and rights within a prospective investment.

In addition to the market and property analysis conducted by our Manager, when suitable, our Manager engages third-party consultants or professionals to conduct engineering and environmental reviews or to complete property condition reports, Phase I Environmental Site Assessments and appraisals. Our Manager’s Investment Committee will affirmatively determine during its review in Step 2 whether such third-party reports will be obtained. Our Manager also conducts on-site property visits and reviews the operating partner’s operational history and its future business plans for the underlying investment assets.

Step 4: Final Manager’s Investment Committee Review / Closing

Upon completion of the prescribed due diligence and underwriting process, along with a favorable investment thesis by our Manager’s investment professionals, a final credit memorandum is prepared for our Manager’s Investment Committee. Every potential investment requires consent by our Manager’s Investment Committee before the investment can be executed.

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Upon our Manager’s Investment Committee approval and subject to the satisfaction of the conditions negotiated in definitive investment documents, the investment opportunity closes and funds are advanced.

Due Diligence

We believe that thorough and thoughtful due diligence is critical. Our Manager applies a bottom-up approach to identify property strengths and mitigate potential transaction risks, including analyzing or conducting any or all of the following: detailed site inspections of both the target property and local competitors, in-depth property cash flow modeling, third-party appraisals, engineering and environmental assessments, operating partner background checks and outside counsel review of transaction documentation.

Ongoing Portfolio Management

Risk management has been and will continue to be a fundamental principle in our Manager’s construction of our Initial Portfolio and in the management of each new transaction we enter into in the future. Our Manager employs a dedicated team of professionals, separate and apart from its investment team, to oversee, monitor and enhance the performance and credit quality of our assets.

Procedures for ongoing asset management and monitoring of credit quality of each of our assets include regularly scheduled site inspections of portfolio properties by representatives of our Manager to assess property physical condition and performance of on-site staff and competitive activity in the submarket. Our Manager also formulates annual budgets and performance goals alongside our operating partners for use in measuring the ongoing asset performance and credit quality of our assets.

Our Manager collects, analyzes and evaluates property-level operating statements and performs regular reporting of revenues, expenses and occupancy in order to continually monitor investment performance. Property financials are routinely compared to the annual budgets and initial projections in order to ascertain whether each investment is performing as projected. The results of these reviews are presented to us in written investment valuation reports provided by our Manager on at least a quarterly basis.

Our Manager understands the importance of having close interaction with operating partners in order to mitigate credit risk and maximize the performance and value of its assets. To this end, our Manager communicates regularly with each of its operating partners.

In reviewing the performance and credit quality of our investments in preferred equity and mezzanine loans, we monitor on an ongoing basis the timeliness of payments of principal and interest on the investment, the debt service coverage ratios, debt yields and other performance metrics of our investments, the quality and financial condition of the borrower, operating member and/or property-level manager, as applicable, and the effect of the investment on our qualification as a REIT.

If a borrower or operating partner in one of our mezzanine loans or preferred equity investments is unable to meet its required monthly or quarterly payment obligations to us, we expect to assume the role of day-to-day manager of the underlying property through either a foreclosure of a mezzanine loan or by assuming the operating partner role in a preferred equity investment, as provided in the loan agreement or preferred equity operating agreements for these investments. In either case, after gaining full control of the property, we will evaluate the effectiveness of the current on-site property manager and replace the manager if we conclude that such a change is likely to improve the performance of the property and, in turn, our investment. We will also evaluate the need to invest additional capital in the property, similar to other value-add investments. In these situations, rather than immediately selling or marketing the property for sale, we expect to continue to hold our investment in the property by identifying and partnering with new operating partners.

Our role in joint venture investments is more collaborative than the mezzanine loan or preferred equity investments in which we receive a stated fixed return. We work closely with our

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operating partners and have approval and consent rights for major decisions throughout the term of our investment. We will only assume the role of day-to-day manager of the property if our operating partner commits certain changeover events, such as bad acts or allows the joint venture to default on its senior mortgage loan, subject in certain cases to a cure period. Either we or are operating partner have the ability to force a sale of the property following the third anniversary of our joint venture, with a right of first offer to us. See “—Our Operating Agreements.”

We believe the multifamily apartment properties underlying our Initial Portfolio have performed well to date. In the event that one of our operating partners fails to satisfy its obligations under the applicable operating agreement, we believe that our Manager’s prior experience provides us with the knowledge to successfully workout assets that experience credit difficulties. Furthermore, in the event of a payment or covenant default in connection with a mezzanine loan or preferred equity investment, or in the event of a covenant default by the operating partner of a joint venture, we believe that the terms we have negotiated with our borrowers and operating partners provide us protections and control features that will allow us to adequately protect our investment, such as our ability to take over day-to-day management of the property, replace on-site property management, invest capital as needed or sell the property. We believe our Manager will work diligently and creatively for our benefit to reposition any assets that we acquire and manage, or the multifamily apartment properties to which those assets relate, should these assets or properties experience credit difficulties in the future.

Our Manager

Our Manager was founded in 2010 and has sourced and managed over $400 million of direct and indirect investments in multifamily apartment properties on behalf of both public and private institutional investors. Our senior management team has an extensive history of working together. Our Chief Executive Officer, Kevin Donlon, and our Chief Operating Officer, Stephen Hogue, have worked together for more than 20 years at both KPMG LLP and Banc of America Securities. While at Banc of America Securities LLC, Kevin Donlon and Stephen Hogue also worked with Douglas Neal and Emily Stiller during each of their respective tenures at Banc of America Securities LLC and certain of its affiliates. Additionally, Kevin Donlon, Emily Stiller and Steven Brannan worked together at Helix Financial Group LLC and BlackRock. We believe our Manager and its executives possess significant experience and have numerous relationships in the multifamily apartment industry because of their prior career achievements, as well as their contributions over the past four years to the growth and the financial performance of the investments they have managed.

Our Manager is collectively owned, directly or indirectly, by the Contributing Investors, with an affiliate of Mr. Donlon owning a majority interest. Pursuant to the terms of the Management Agreement, which we will enter into concurrent with the completion of this offering, our Manager will provide us with our management team and appropriate support personnel, and we will have access to the management, infrastructure, personnel and other resources of our Manager necessary for the implementation and execution of our business and growth strategies. Our Manager has substantial discretion with respect to the selection of specific investments consistent with our investment objectives and strategy.

We will be able to draw upon the experience, expertise and relationships of our Manager’s senior executives and team of support personnel, which will provide expertise in asset management, portfolio management, finance, administration, legal, compliance, investor relations, asset valuation, risk management, information technology and other operational functions in connection with our investment activities. We expect to benefit from the personnel of our Manager and the relationships and experience of our Manager’s management team in order to create value for our stockholders. See “Our Manager and the Management Agreement.”

Our officers and key employees of our Manager are seasoned professionals with extensive backgrounds in real estate investment, structured finance and property valuation, some of whom have worked together in various prior roles dating back to 1995. Our Manager’s focus on multifamily apartment properties and housing-related transactions has allowed it to develop a reputation as an active provider of capital to the multifamily housing finance sector. Our Manager

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has been in the multifamily residential market since 2010 and had assets under management of $318 million as of March 31, 2015. The scale and breadth of the assets managed by our Manager has resulted in our Manager regularly interfacing with owners and operators of multifamily apartment and housing-related projects and their intermediaries. This regular interaction with the owners and operators of the properties we target for investment has allowed our Manager to develop extensive personal relationships with current and potential partners that help it to identify investment opportunities prior to their being widely marketed. Our Manager also employs national advertising campaigns and personal calling efforts and frequently participates in industry events to bolster its market presence. We expect that our Manager’s market presence in the multifamily finance sector will provide us with access to investment opportunities and referrals, and will permit us to be more selective in identifying partners to co-invest with.

We believe the Management Agreement will provide significant benefits to our stockholders. Due to our relationship with our Manager, our company will not be burdened by the high expenses associated with employing our own management team and infrastructure, and instead will rely on our Manager to provide these services in exchange for management fees, which we believe are lower than the costs associated with managing internally. In addition, the Management Agreement provides us access to a team of executive, management, investment, capital markets and administrative personnel that we believe, given our size and stage of development, is likely to be more capable and diverse than we would otherwise be able to attract at this stage of our life cycle.

Pursuant to the Management Agreement, we will pay our Manager and its affiliates fees and reimburse certain expenses for services rendered to us. For a more complete explanation of the fees and expenses, see “Our Manager and the Management Agreement.”

Our Initial Portfolio

The following two tables present certain information relating to the assets that comprise our Initial Portfolio, based on information as of March 31, 2015, unless otherwise indicated.

For purposes of this prospectus, the terms “joint venture properties” and “joint venture investments” denote the properties in which we hold a common equity interest through a joint venture with an operating partner and our common equity investment in a joint venture property, respectively.

Property Name	Date of Investment	Ownership Interest	Return Structure	Required Redemption or Maturity Date
Joint Venture Investments:
Station at Mason Creek(1)	September 2013	78%	Variable distribution based on property performance	none
The Flats@55Twelve(1)	June 2014	85%	Variable distribution based on property performance	none
Summer Chase(1)	October 2014	80%	Variable distribution based on property performance	none
Two Addison Place(1)	November 2014	90%	Variable distribution based on property performance	none
Terraces at Lake Mary(1)	January 2015	80%	Variable distribution based on property performance	none
Preserve at Port Royal(1)	(3)	78%	Variable distribution based on property performance	none
Preferred Equity Investments:
Monterey Ranch(1)	October 2014	Preferred Partnership Interest	Preferred return(6) of 12.00%	11/02/2021
Canter Chase(2)	December 2014	Preferred Partnership Interest	Preferred return(6) of 12.50%	12/17/2024
The Clusters(2)	June 2014	Preferred Partnership Interest	Preferred return(6) of 12.00%	07/06/2024
Garden District(2)	June 2015	Preferred Partnership Interest	Preferred return(6) of 12.00%	08/01/2022
Villages of Sage Creek(2)	April 2015	Preferred Partnership Interest	Preferred return(6) of 12.25%	05/01/2022
Riverchase Landing(2)	(5)	Preferred Partnership Interest	Preferred return(6) of 12.25%	(4)

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Property Name	Date of Investment	Ownership Interest	Return Structure	Required Redemption or Maturity Date
Mezzanine Loan Investments:
Waters at Bluff Springs(1)	July 2014	Mezzanine Loan	Fixed interest rate(7) of 13.50%	11/01/2023
Waters at Elm Creek(1)	July 2014	Mezzanine Loan	Fixed interest rate(7) of 13.50%	11/01/2023
Highlands at Gwinnett Stadium(1)	January 2015	Mezzanine Loan	Fixed interest rate(7) of 12.00%	04/01/2025
Fountains at Andover(2)	(8)	Mezzanine Loan	Fixed interest rate(7) of 12.50%	(9)

(1) This investment is part of the Predecessor Investment Portfolio.

(2) This investment is one of the NYMT Contributed Assets.

(3) Our Predecessor has this investment under contract to acquire, with closing expected in August 2015.

(4) Redemption will occur approximately seven years from the closing date for this asset.

(5) NYMT has this investment under contract to acquire, with closing by NYMT expected in August 2015.

(6) Preferred return represents the rate of return we must receive before the operating partner receives any return of its initial investment. While the majority of such return for the preferred equity investment in our Initial Portfolio constitutes periodic cash payments, such return may also include a non-cash accrual component. See Note 4 to historical financial statements of the Predecessor as of and for the three months ended March 31, 2015 included elsewhere in this prospectus.

(7) The fixed interest rate represents the accrual rate for this asset. While the majority of such return for the mezzanine loan investment in our Initial Portfolio constitutes periodic cash payments, such return may also include a non-cash accrual component. See Note 4 to historical financial statements of the Predecessor as of and for the three months ended March 31, 2015 included elsewhere in this prospectus.

(8) NYMT has entered into a loan agreement pursuant to which it will fund the loan concurrent with the refinancing of the senior mortgage loan on this property, which is expected to occur in August 2015.

(9) Redemption will occur approximately ten years from the closing date for this asset.

Property Name	Location	Market	Number of Units		Average Unit Size (Sq. Ft.)		Year Built	Average Effective Monthly Rent Per Unit(1)			% Physically Occupied (2)
Joint Venture Investments:
Station at Mason Creek	Katy, TX	Houston, TX		291		772	2001	$	1,000			90.7	%
The Flats@55Twelve	Durham, NC	Raleigh/Durham, NC		268		1,003	2001	$	968			89.6	%
Summer Chase	Little River, SC	Myrtle Beach, SC		168		960	2000	$	756			95.8	%
Two Addison Place	Pooler, GA	Savannah, GA		325		1,061	2014	$	1,097			80.3	%
Terraces at Lake Mary	Lake Mary, FL	Orlando, FL		284		988	1998	$	924			90.8	%
Preserve at Port Royal	Port Royal, SC	Beaufort, SC		400		974	2004-2006		(3	)		(3	)
Subtotal/Weighted Average(4)	6 assets			1,736		962
Preferred Equity Investments:
Monterey Ranch	Austin, TX	Austin, TX		1,072		823	1995-1999	$	1,083			91.8	%
Canter Chase	Louisville, KY	Louisville, KY		256		921	1988	$	850			93.4	%
The Clusters	Midland, TX	Midland, TX		352		746	1982	$	1,260			89.5	%
Garden District	Simpsonville, SC	Greenville, SC		223		946	2008		(3	)		(3	)
Villages of Sage Creek	Austin, TX	Austin, TX		450		893	2002		(3	)		(3	)
Riverchase Landing	Hoover, AL	Birmingham, AL		468		1,594	1984-1992		(3	)		(3	)
Subtotal/Weighted Average(4)	6 assets			2,821		971
Mezzanine Loan Investments:
Waters at Bluff Springs	Austin, TX	Austin, TX		300		798	2001	$	869			98.7	%
Waters at Elm Creek	San Antonio, TX	San Antonio, TX		200		833	1999	$	792			92.0	%
Highlands at Gwinnett Stadium	Lawrenceville, GA	Atlanta, GA		248		1,119	2013	$	1,108			90.7	%
Fountains at Andover	Lexington, KY	Lexington, KY		318		861	1996		(3	)		(3	)
Subtotal/Weighted Average(4)	4 assets			1,066		898
Grand Total/Weighted Average(4)	16 assets			5,623		954

(1) Average effective monthly rent per unit is equal to (i) the gross potential rent minus any tenant concessions divided by (ii) the total number of units, and divided by (iii) the number of available months of data. Gross potential rent is calculated as the sum of the actual in-place monthly rents plus the sum of the current offered monthly rents for any vacant units (based on market rents) at the property.

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(2) Percentage physically occupied is equal to the number of occupied units, excluding model and administrative units for which no rent is paid, divided by the total number of units. The physical occupancy at  The Clusters is as of March 27, 2015.

(3) The investment in the property was or will be acquired by our Predecessor or its affiliates or an affiliate of NYMT subsequent to March 31, 2015.

(4) Weighted Average unit size is weighted by the number of units.

The following table provides information about the debt, including senior loans not held by us, secured by properties underlying preferred equity investments and mezzanine loan investments in our Initial Portfolio, as of March 31, 2015:

Property Name	Property Value(2)		Senior Loan Balance		Senior LTV			Current Balance(1)		Combined LTV(3)			Senior Loan Interest Rate
Preferred Equity Investments:
Monterey Ranch	$	137,400,000	$	107,200,000		78.0	%	$	13,400,000		87.8	%		3.81	%
Canter Chase		25,700,000		17,700,000		68.9	%		3,505,209		82.5	%		3.87	%
The Clusters		38,080,000		27,950,000		73.4	%		3,497,607		82.6	%		4.49	%
Garden District(4)		23,200,000		16,008,000		69.0	%		4,350,000		87.8	%		4.06	%
Villages of Sage Creek(4)		48,500,000		35,700,000		73.6	%		5,100,000		84.1	%		3.71	%
Riverchase Landing(4)(5)		36,400,000		24,802,428		68.1	%		8,500,000		91.5	%		3.88	%
Subtotal / Weighted Average(7)(8)(9)	$	309,280,000	$	229,360,428		74.4	%	$	38,352,816		86.7	%		3.91	%
Mezzanine Loan Investments:
Waters at Bluff Springs	$	23,500,000	$	15,866,374		67.5	%	$	3,585,762		82.8	%		2.89	%
Waters at Elm Creek		12,800,000		9,604,757		75.0	%		1,381,912		85.8	%		3.86	%
Highlands at Gwinnett Stadium(6)		33,500,000		22,331,956		66.7	%		5,959,037		84.5	%		4.25	%
Fountains at Andover(4)(5)		30,400,000		22,050,000		72.5	%		3,500,000		84.0	%		4.50	%
Subtotal / Weighted Average(7)(8)(9)	$	100,200,000	$	69,853,086		69.9	%	$	14,426,710		84.1	%		3.97	%
Grand Total/Weighted Average(7)(8)(9)	$	409,480,000	$	299,213,514		73.3	%	$	52,779,526		86.0	%		3.92	%

(1) Represents balance held by our Predecessor or its affiliates or an affiliate of NYMT as of March 31, 2015.

(2) Per appraisal performed within six months prior to the date of the original investment.

(3) Calculated as the sum of the senior mortgage loan balance and the balance of our Predecessor’s or its affiliates’ or an affiliate of NYMT’s investment as of March 31, 2015 divided by the appraised value.

(4) The investment in the property was or will be acquired by our Predecessor or its affiliates or an affiliate of NYMT subsequent to March 31, 2015.

(5) Estimated future senior loan balance and senior loan interest rate upon acquisition of the investment.

(6) Property was purchased by the mezzanine loan borrower for approximately $32 million in January 2015.

(7) Weighted Average Senior LTV is weighted on the senior loan balance.

(8) Weighted Average Combined LTV is weighted on the sum of the current balance and the senior loan balance.

(9) Weighted Average Senior Loan Interest Rate is weighted on the senior loan balance.

Sale or Redemption of Investments

There are no assets that we are currently considering selling. On an opportunistic basis and subject to compliance with certain restrictions relating to our intended qualification to be taxed as a REIT, we intend to sell assets in cases where we have successfully executed our value creation plans and where we believe the investment has limited additional upside relative to other opportunities, in order to harvest profits and to reinvest proceeds to maximize stockholder value. See “—Our Operating Agreements.”

Description of Leases

Each resident of each of the multifamily apartment properties to which our joint venture equity and preferred equity ownership interests relate must execute a lease agreement with one of the joint ventures that owns the property or one of its affiliates. These leases typically follow standard forms produced by the National Apartment Association or by the state apartment association where the apartment community is located. Under such leases, residents are responsible for payment of monthly rental charges and, depending on the credit risk associated with the resident,

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may be required to pay an initial security deposit. Under the typical lease, the landlord is responsible for all real estate taxes, special assessments (if applicable), community-level utilities, insurance on the building improvements, building repairs, and other building operation and management costs. Individual residents are generally responsible for the utility costs of their apartment home and for insuring their personal possessions. Lease terms are generally for terms of approximately one year in duration.

Historical Performance of Our Properties

The following table provides a summary of information regarding each of the joint venture properties in our Initial Portfolio for the years ended December 31, 2014, 2013, 2012, 2011 and 2010:

	Year Ended December 31, 2014					Year Ended December 31, 2013						Year Ended December 31, 2012						Year Ended December 31, 2011						Year Ended December 31, 2010
Property	Average Effective Monthly Rent Per Unit		Average Economic Occupancy			Average Effective Monthly Rent Per Unit			Average Economic Occupancy			Average Effective Monthly Rent Per Unit			Average Economic Occupancy			Average Effective Monthly Rent Per Unit			Average Economic Occupancy			Average Effective Monthly Rent Per Unit			Average Economic Occupancy
Station at Mason Creek(1)(4)	$	952		91.4	%	$	865			95.3	%	$	779			93.4	%	$	751			84.1	%		(3	)		(3	)
The Flats@55Twelve(1)(5)	$	975		84.2	%	$	976			86.6	%	$	925			85.8	%	$	888			82.1	%		(3	)		(3	)
Two Addison Place(1)(2)(5)	$	1,093		41.5	%		(3	)		(3	)		(3	)		(3	)		(3	)		(3	)		(3	)		(3	)
Summer Chase(1)(5)	$	726		88.0	%	$	711			83.5	%	$	702			80.2	%	$	692			76.9	%		(3	)		(3	)
Terraces at Lake Mary(1)(6)	$	934		82.9	%	$	743			87.6	%	$	708			97.4	%	$	707			94.6	%		(3	)		(3	)
Preserve at Port Royal(1)(6)	$	846		91.2	%		(3	)		(3	)		(3	)		(3	)		(3	)		(3	)		(3	)		(3	)

(1) Average effective monthly rent per unit is equal to (i) the gross potential rent minus any tenant concessions for the applicable year, divided by (ii) the total number of units, and divided by (iii) the number of available months of data. Economic occupancy is equal to (i) the gross potential rent less any tenant concessions, vacancy or other rental losses for the applicable year divided by (ii) the gross potential rent for the year, based on the available months of data. Any information related to the period prior to our acquisition is from the previous owner’s financial statements. For the year of acquisition, if there was any period of missing data, the information is the average of the available data. Gross potential rent is calculated as the sum of the actual in-place monthly rents plus the sum of the current offered monthly rents for any vacant units (based on market rents) at the property.

(2) Two Addison Place commenced leasing in late 2013 and remained in lease-up during 2014.

(3) The period presented was prior to our acquisition of the property and we do not have historical information relating to monthly rent or occupancy for such period.

(4) Investment acquired in 2013.

(5) Investment acquired in 2014.

(6) Investment was or will be acquired in 2015.

Real Estate Tax and Depreciation Information

The following table sets forth certain real estate tax information for the year ended December 31, 2014 for each of the joint venture properties in our Initial Portfolio:

Property	2014 Tax Basis		2014 Realty Taxes		2014 Realty Tax Rate
Station at Mason Creek	$	23,805,411	$	668,746	2.809218%
The Flats@55Twelve	$	19,732,120	$	273,152	1.384300%
Two Addison Place	$	11,214,120	$	355,521	3.170300%
Summer Chase	$	6,628,900	$	82,698	1.247531%
Terraces at Lake Mary(1)(2)
School	$	12,685,914	$	100,181	0.789700%
Other(3)	$	10,578,730	$	80,738	0.763210%
Preserve at Port Royal(1)	$	31,250,000	$	496,292	1.588134%

(1) The investment in the property was or will be acquired by our Predecessor or its affiliates subsequent to December 31, 2014.

(2) The property is taxed on a differing basis by each taxing authority.

(3) Other taxing authorities include county, road, fire and St. Johns Water Management.

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The following table sets forth, for the year ended December 31, 2014, the components upon which our joint ventures take depreciation (on a tax basis), including the claimed useful life and depreciation method, for each of the joint venture properties in our Initial Portfolio:

Depreciation Component

	Land			Building(1)			Building Improve- ments(1)			Land Improve- ments			Furniture, Fixtures, and Equipment			Furniture, Fixtures, and Equipment			Total
	Useful Life
Property	N/A			27.5 years			27.5 years			15 years			7 years			5 years
Station at Mason Creek	$	3,617,314		$	12,452,084		$	597,592		$	1,950,099	(2)	$	154,514	(3)	$	6,066,711	(3)	$	24,838,314
The Flats @ 55Twelve	$	5,039,917		$	19,058,587		$	73,166		$	3,205,505	(4)	$	—		$	6,320,861	(5)	$	33,698,036
Two Addison Place	$	9,116,137		$	34,192,355		$	7,748		$	8,950	(6)	$	—		$	2,288,659	(6)	$	45,613,849
Summer Chase	$	1,650,000		$	9,607,851		$	1,525		$	20,054	(7)	$	7,129	(8)	$	10,774	(8)	$	11,297,333
Terraces at Lake Mary			(9)			(9)			(9)			(9)			(9)			(9)			(9)
Preserve at Port Royal			(9)			(9)			(9)			(9)			(9)			(9)			(9)

(1) Depreciated on a straight-line method, mid-month convention.

(2) Depreciated on a 150% declining balance method, mid-year convention.

(3) Depreciated on a double declining balance method, mid-year convention.

(4) Depreciated on a 150% declining balance method, mid-year and mid-quarter conventions.

(5) Depreciated on a double declining balance method, mid-year and mid-quarter conventions.

(6) Depreciated on a straight-line method, mid-quarter convention.

(7) Depreciated on a 150% declining balance method, mid-quarter convention.

(8) Depreciated on a double declining balance method, mid-quarter convention.

(9) The investment in the property was or will be acquired by our Predecessor or its affiliates subsequent to December 31, 2014.

Debt Obligations

Debt Obligations Secured by Our Joint Venture Properties

Each of our joint venture properties secures a mortgage loan used to finance the acquisition of the property. The following is a summary of the mortgage loans that encumber the joint venture properties as of March 31, 2015:

	As of March 31, 2015
Property	Outstanding Principal		Interest Rate			Fixed/ Floating	Maturity Date
Station at Mason Creek(1)	$	16,461,645		4.705	%	Fixed	08/01/2018
The Flats@55Twelve	$	26,000,000		4.020	%	Fixed	07/01/2021
Two Addison Place(2)	$	33,937,000		3.990	%	Fixed	12/01/2021
Summer Chase	$	7,760,000		4.440	%	Fixed	11/01/2024
Terraces at Lake Mary	$	22,150,000		3.720	%	Fixed	02/01/2025
Preserve at Port Royal(3)(4)	$	29,201,500		4.455	%	Fixed	05/01/2022

(1) Station at Mason Creek has two senior loans: one loan with an original principal balance of $14 million at a rate of 4.63% and a supplemental loan with an original principal balance of $2.86 million at a rate of 5.07%. As of March 31, 2015, both of the loans were in the amortization phase with monthly payments of $72,021 and $15,476, respectively, and remaining principal balances of $13,658,802 and $2,802,843, respectively. The blended interest rate is equal to 4.705%.

(2) Pursuant to the senior mortgage loan on this property, the joint venture that owns this property is required to maintain a cash reserve fund (“Reserve Fund”), which may be released by the lender if the mortgage is paid in full or stabilization of the property occurs prior to the required stabilization date or the stabilization prepayment and related premium have been paid. As of March 31, 2015, the Reserve Fund was comprised of $4.697 million.

(3) Represents a pending acquisition that our Predecessor has under contract to acquire, which is currently expected to close in August 2015. Information about the property in this table is based on preliminary information available to us as of the date of this prospectus.

(4) Preserve at Port Royal has two senior loans: one loan with an original principal balance of $23,512,500 at a rate of 4.33% and a supplemental loan with an original principal balance of $5,689,000 at a rate of 4.97%. The blended interest rate is equal to 4.455%.

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Debt Obligations Senior to Our Mezzanine Loans and Preferred Equity Interests

All properties that either secure a mezzanine loan investment, or in which we hold a preferred equity interest, also secure a senior mortgage loan. With respect to the properties to which the mezzanine loans and preferred equity investments in our Initial Portfolio relate, each of these loans bears interest at a fixed rate that ranges from 2.89% to 4.50% and matures between November 2021 and February 2054.

Every property to which the mezzanine loans and preferred equity investments in our Initial Portfolio relate has long-term, fixed-rate, assumable first-mortgage financing. In the event that interest rates rise, including first-mortgage financing rates, we believe that a potential buyer will pay a higher price for a property that has below-market, assumable financing. Also, the mortgage financing on these properties has recourse only to the property and is non-recourse to us, except for standard non-recourse carve-outs.

Our Operating Agreements

Joint Venture Equity Investments

Upon completion of this offering and consummation of our formation transactions, we will own joint venture equity ownership interests in six multifamily apartment properties through joint ventures under a limited liability company operating agreement or a limited partnership agreement, which we refer to as “joint venture entities.” We sometimes refer to these agreements in this prospectus as our “joint venture agreements.” In the future, we may acquire additional joint venture equity or preferred equity investments and enter into additional joint venture agreements as part of our investment strategy. Our future joint venture agreements may have terms different from the general terms of our current joint venture agreements that are summarized below.

Upon completion of our formation transactions, our Predecessor or another subsidiary of the Company will be a party to operating agreements for the limited liability companies that own Station at Mason Creek, The Flats@55Twelve, Two Addison Place, Summer Chase, Terraces at Lake Mary and Preserve at Port Royal with our respective operating partner for such property.

Term.   The joint venture agreements provide for a perpetual term, unless terminated earlier.

Management of the Joint Venture Entities.   Our operating partners generally will serve as the “operating member” and manager of the joint venture entities in which we will hold a joint venture common equity ownership interest and we will serve as the “capital member” or “capital partner.” As such, our operating partners will have the sole discretion to manage the day-to-day business and affairs of the respective joint venture entities to which they are a party, including the preparation and submission of an annual business plan that covers operating, capital expenditure, leasing and development budgets for each property, which annual business plan will require our approval. In the event we and our operating partners are unable to reach agreement regarding an annual business plan for any given year, the joint venture entity will adhere to the prior year’s approved business plan, subject to adjustment based on the consumer price index.

Under the respective joint venture agreements, other than actions, expenditures or decisions that qualify as “major decisions,” which require the approval of both the capital member and the manager, the manager has the right to take any and all action it deems necessary or appropriate for the operation of the property without our prior consent. Pursuant to the joint venture agreements, a major decision includes:

• the refinancing or defeasing all or any portion of the senior mortgage loan on the property or encumbering or transferring all or a portion of the property, or granting of any security interest in the joint venture entity, the property owning entity, the property or other joint venture entity or property owning entity assets (other than certain liens not exceeding a minimum amount);

• except as set forth in an annual business plan and subject to certain exceptions, the determination of the terms and conditions of all joint venture entity or property owning

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entity borrowings, refinancings, and defeasances, or any material amendment or modification of any senior mortgage loan document, or any exercise of any extension option contained in the senior mortgage loan documents;

• making loans to, or guaranteeing the indebtedness of a third party;

• adopting, updating, supplementing, amending or revising, or deviating from any approved annual business plan, in each case either (A) in excess of 5% of such business plan or (B) in excess of 10% of any line item of such business plan;

• modifying or terminating any insurance required under the senior mortgage loan documents or under the joint venture agreement;

• causing the joint venture entity to acquire any direct or indirect interest in land or other real property or interest therein other than the property;

• any material improvement, renovation or refurbishment of the property, change in the zoning of the property or removal, demolition or material alteration of the improvements or the equipment on the property (other than routine replacement of such equipment);

• any determination to restore the property after casualty or condemnation for loss or damage costing in excess of $250,000 to restore;

• all material matters relating to the property’s compliance with environmental, zoning, health and access laws;

• granting any concessions by or placing restrictions on the joint venture entity, property owning entity or property in connection with obtaining zoning, variances, maps approval, entitlements, permits or other governmental approvals, and the creation of any title exceptions;

• entering into, modifying or terminating any material property contract or arrangement for property or asset management;

• any material change in the method of conducting the business of the joint venture entity or the property owning entity;

• using or referencing in any way the name of, or affiliation with, the capital member or any of its affiliates in any business representation or advertising;

• confessing judgment on behalf of the joint venture entity, settling any litigation, arbitration or administrative proceedings requiring payment in excess of $50,000 or instituting any legal action for damages in excess of $50,000;

• filing any petition or consenting to file any petition that would subject the joint venture entity to a bankruptcy;

• issuing any equity in the joint venture entity or its subsidiaries, incurring any debt by the joint venture entity or its subsidiaries, acquiring or creating a subsidiary of the joint venture entity or consolidating the joint venture entity with another entity;

• entering into any transaction or agreement involving the joint venture entity, on the one hand, and any member or affiliate of a member, on the other hand, unless specifically set out in the business plan or operating budget;

• any direct or indirect transfer, sale or pledge of equity interest in the joint venture entity or the property owning entity, however transfer of certain passive interests in the operating member is permissible without consent under some of our joint venture agreements;

• any call for the members to provide additional capital contributions; and

• amending or modifying the joint venture agreement or purchase and sale agreement of the property.

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Upon the discovery by us that a changeover event (as defined below) has occurred, we may, among other things, and subject to certain conditions, (i) remove the manager, whereupon we may appoint ourselves, one of our affiliates or a third party as manager, (ii) make an offer to purchase the operating member’s entire interest in the joint venture in accordance with the buy-sell provision of the joint venture agreement, and/or (iii) purchase the operating member’s entire interest in the joint venture entity, or cause the joint venture entity to redeem the entire interest of the operating member under the joint venture agreement.

Our joint venture agreements generally define a “changeover event” as the occurrence (without cure during any available cure period) of any of the following events or circumstances, among others, provided such event was not expressly approved in writing by us or directly caused by our actions:

• a prohibited act by the operating member (subject to certain exceptions);

• an intentional or knowing breach of any representation or warranty under the joint venture agreement by the operating member and certain others;

• certain criminal acts by a principal or misapplication by a principal of any funds derived from the property, fraud, physical waste, willful misconduct, intentional misrepresentation or gross negligence or liquidation or dissolution;

• notice from the senior mortgage lender of the occurrence of a default and expiration of any applicable cure period under any senior mortgage loan document;

• the bankruptcy of the joint venture entity or the property owning entity;

• the joint venture entity’s or the property owning entity’s failure to maintain required insurance or to pay on a timely basis any taxes or assessments affecting the property (subject to certain exceptions);

• the manager’s taking of any major decision without obtaining our consent; or

• failure to fully repay the senior mortgage loan at maturity.

Distributions.   Any distributions of cash or securities from a joint venture entity require our approval as capital member. Operating revenues and other property proceeds will be distributed generally on a quarterly basis and after payment of property-level expenses and obligations under the senior mortgage loan documents, among other things, to all members in proportion to their percentage interests, subject to a promote interest that the manager of the property may receive based on the joint venture entity meeting certain return thresholds. Generally, the managers of our joint venture entities, which are typically affiliated with the operating member, will not become eligible to receive a promote interest in the distributions from our joint venture entities until each member has received not less than a 10% or higher internal rate of return on its initial capital contributions, following which the manager is eligible to receive (i) 20% to 25% of allocated distributions from the joint venture entity until each member has received a 15% internal rate of return on its initial capital contribution and (ii) a further enhanced portion of the allocated distributions once each member has achieved a return in excess of 15%.

Transfer of Ownership Interests.   Subject to certain exceptions and any transfer limitation set forth in a senior mortgage loan document, all of our joint venture agreements except for Summer Chase and Two Addison Place generally permit us to transfer our ownership interests in a joint venture entity to affiliates or unaffiliated third parties without the consent of the operating member; provided, however, that, under certain joint venture agreements we may be restricted in transferring our ownership interests in the joint venture entity to an unaffiliated third party unless the transfer is designed to leverage, monetize, securitize or restructure all or a portion of our ownership interest. In addition, the transfer of certain passive interests in the operating member will be permitted without our consent under certain of our joint venture agreements. In order to transfer our interests in the joint venture entities that own Summer Chase and Two Addison Place, we generally must obtain consent from the operating member.

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Under the terms of the joint venture agreements, a member is entitled to exercise a right-to-market provision starting on the third anniversary of the acquisition of the property by the property-owning entity or upon the receipt of an offer to purchase that meets certain thresholds. Pursuant to the right-to-market provision, the non-exercising member will have the right to (i) purchase the property at the right-to-market minimum price, (ii) agree to sell its ownership interest in the property to the exercising member for the right-to-market minimum price, or (iii) permit the joint venture entity to proceed to a third-party sale.

Dissolution and Liquidation.   The joint venture entities will be dissolved upon the occurrence of (i) the sale or disposition of all of the assets of the joint venture entity, (ii) the written agreement of the capital member and operating member or (iii) upon the occurrence of any event which, as a matter of law, requires that the joint venture entity be dissolved. Upon dissolution, liquidation of an entity’s assets will commence with proceeds first being distributed to creditors and then to the members on a pro rata basis in proportion to their respective interests in the entity.

Preferred Equity Investments

Upon completion of our formation transactions, our Predecessor or another subsidiary of our company will be a party to operating agreements for the limited liability companies that own Monterey Ranch, Canter Chase, The Clusters, Garden District, Villages of Sage Creek and Riverchase Landing with the respective operating partner for such property.

The terms of the operating agreements through which we hold our preferred equity investments are substantially similar to the general terms of the joint venture agreements described above in “—Joint Venture Equity Investments” with respect to the term, the management of the joint venture entities, major decisions and changeover events, except that the operating agreements for our preferred equity investments also provide that a failure by the joint venture to distribute the required monthly distribution on or prior to the due date, subject in some cases to a minimum cure period, shall constitute a changeover event. Upon discovery by us that a changeover event has occurred under an operating agreement for one of our preferred equity investments, we may, among other things, and subject to certain conditions, (i) remove the manager, whereupon we may appoint ourselves, one of our affiliates or a third party as manager, (ii) cause the operating partner to replace the property manager with a property manager that is acceptable to the senior mortgage lender and us, (iii) cause our preferred return to increase generally by 600 to 700 basis points and/or (iv) prohibit the joint venture from making any distributions to the operating member until such time as we have received our required redemption amount under the operating agreement.

Distributions. Any distributions of cash or securities from a joint venture entity require our approval as capital member. Operating revenues and other property proceeds will generally be distributed on a monthly basis and after payment of property-level expenses and obligations under the senior mortgage loan documents, among other things, to us, generally, until we receive a stated preferred return, which ranges in the agreements from 12% to 12.5%. Generally, our operating partner will only receive distributed amounts on its initial investment only after our stated preferred return has been met. If the joint venture fails to distribute the required monthly distribution on or prior to its due date, subject in some cases to a minimum cure period, our preferred return will increase generally by 600 to 700 basis points. The agreements require that, in general, the joint venture entity will use its commercially reasonable, best efforts to liquidate investments rather than making distributions of property (other than cash and other than in complete liquidation of the joint venture entity or a member’s interest in the entity), or distributions in kind. Prior to making a distribution in kind, the capital accounts of the members shall be adjusted to reflect the manner in which the unrealized income, gain, loss and deduction inherent in the property to be distributed would be allocated among the members if there were a taxable disposition of the property on the date of distribution.

Transfer of Ownership Interests. Subject to certain exceptions and any transfer limitation set forth in a senior mortgage loan document, our joint venture agreements generally only permit us to transfer our preferred equity ownership interests to entities controlled by the capital member or

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one of its affiliates, except that under our joint venture agreement for The Clusters and Canter Chase, we generally must obtain consent from the operating member for any transfer.

Dissolution and Liquidation. Dissolution and liquidation provisions under the joint venture agreements through which we hold our preferred equity investments are substantially similar to the comparable terms of the joint venture agreements for our joint venture equity investments, except that any returns to members will be distributed first to us, generally, until we receive our stated preferred return.

Our Mezzanine Loan Agreements

Upon completion of this offering and consummation of our formation transactions, we will be a mezzanine lender under four separate mezzanine loan agreements. We sometimes refer to these agreements in this prospectus as our “mezzanine loan agreements.” In the future, we expect to assume or enter into additional mezzanine loan agreements as a lender as part of our investment strategy. Our future mezzanine loan agreements may have terms different from the general terms of our current mezzanine loan agreements that are discussed below.

Maturity Date. The mezzanine loans issued pursuant to our mezzanine loan agreements mature approximately nine to ten years from the date of origination.

Loan Payments. Our mezzanine loan agreements generally require the borrower to make minimum quarterly interest payments that range from 6% to 13.5% (with accrual rates between 12% to 13.5%) per annum, and in some cases, also require semi-annual payments of principal, with any remaining outstanding principal balance and all accrued and unpaid interest and all other amounts due at maturity. If an event of default occurs and continues beyond any applicable grace period, the borrower will be required to pay to us a quarterly payment at the default interest rate, which is generally 600 to 700 basis points higher than the fixed accrual interest rate for our loans, and a default reserve payment that is generally equal to the sum of the surplus cash minus the default quarterly payment.

Negative Covenants and Other Agreements of the Borrower. Pursuant to our mezzanine loan agreements, our borrowers agree generally:

• to not consent to or permit the amendment, modification, waiver or termination of any of the senior loan documents for the subject property or any organizational documents of the borrower or the property owner, in each case, without our written consent;

• to not (i) dissolve or liquidate, in whole or in part, or take any action that could have the effect of causing a dissolution or liquidation of any subsidiary of the borrower, (ii) consolidate or merge with or into any other entity, (iii) make an assignment for the benefit of creditors, file a petition in bankruptcy, petition or apply to any tribunal for the appointment of a custodian, receiver or trustee for it, or for a substantial part of its property, or commence any proceeding under any bankruptcy, reorganization, arrangement, readjustment of debt or liquidation law, (iv) cause or permit the loan collateral or other assets or property of the borrower to be subject to any lien (other than as provided for in the mezzanine loan agreement), (v) transfer, in one transaction or a series of transactions, all, or substantially all, of its assets (except as required or permitted by the mezzanine loan agreement), (vi) acquire the assets of any other person (except those owned as of the date hereof), (vii) make any material changes in the borrower's present method of conducting business, or (viii) loan money to any person;

• to not issue, nor permit the property owner to issue, any securities or other interests in the borrower or property owner other than those issued on the date of the mezzanine loan agreement;

• to not give its consent or approval to any of the actions of the property owner which may materially impair or negatively affect the subject multifamily property without our prior consent;

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• to not enter into any agreement, instrument or undertaking by which it or its assets are bound, except for such liabilities, not material in the aggregate, that are incidental to its activities as owner of the property owner;

• to not, and not permit the property owner to, modify any leases, terminate or accept the surrender of any leases, waive or release any other party from the performance or observance of any obligation or condition under such leases except in the normal course of business in a manner which is consistent with sound and customary leasing and management practices, without our prior written consent;

• to not, and to not permit the property owner to, approve any appointment of a new property manager without our prior written consent;

• upon either (i) an event of default or (ii) or the debt service coverage ratio for the property falling below a certain threshold, the borrower will vote to cause the property owner to (A) terminate any management agreement then in place, and (B) enter into a management agreement with a replacement manager that is acceptable to us; and

• to submit to us for our approval an annual budget for the subject multifamily property.

In addition, our borrowers have agreed that, similar to a comparable provision in our joint venture agreements, that they will not take any action, expend any sum or incur any obligation that constitutes a “major decision” (as defined in the agreements) without our written approval.

Events of Default and Remedies. Our mezzanine loan agreements include customary “events of default,” including defaults on the senior loan, a failure by the borrower to pay any principal or interest on the loan when due or within any applicable grace period in accordance with the terms of the mezzanine loan agreement, or any other amount payable upon a prepayment of the loan when due in accordance with the terms of the mezzanine loan agreement, the breach of any material representation or warranty made by the borrower in connection with the origination of this loan, and the breach by the borrower of certain provisions of the mezzanine loan agreement (in some cases subject to materiality qualifiers and cure periods). If any event of default shall occur and be continuing beyond any applicable grace period, then we may accelerate the obligation and declare all amounts outstanding and accrued and any other amounts due under the mezzanine loan agreement, including any applicable loan exit fee, to be immediately due and payable. In addition, we may, subject to the terms of any applicable pledge agreement relating to the loan, foreclose on or otherwise enforce the borrower's obligations against the loan collateral and may exercise all the rights and remedies of a secured party under the Uniform Commercial Code.

Other Matters

Regulation

Multifamily apartment properties are subject to various laws, ordinances and regulations, including regulations relating to common areas, such as swimming pools, activity centers and recreational facilities. We believe that each of the properties to which the investments in our Initial Portfolio relate have the necessary permits and approvals to operate its business.

Americans with Disabilities Act

The ADA does not apply to individually owned or leased housing in the private sector not used as a public accommodation, including condominium or apartment properties. However, places of public accommodation located in residential buildings, such as rental and sales offices, commercial spaces, and hotel accommodations, are covered by the ADA Standards. The ADA may require removal of structural barriers to access by persons with disabilities in certain public areas of our properties. We believe that our joint venture properties are in substantial compliance with the ADA and that we will not be required to make substantial capital expenditures to address the requirements of the ADA. However, noncompliance with the ADA could result in the imposition of unanticipated expenses to comply with the ADA, monetary penalties and attorney’s fees, and analogous state or local public accommodation laws could result in the imposition of an award of

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damages to private litigants. The obligation to provide accessible accommodations is an ongoing one, and we will continue to assess the properties in which we invest, be it through a joint venture equity ownership or otherwise, and make, or cause our operating partners to make, alterations as appropriate in this respect. See “Risk Factors—Risks Related to Our Business—Costs associated with, and the risk of failing to comply with, the Americans with Disabilities Act may affect our cash available for distributions.”

Fair Housing Act

The Fair Housing Act, its state law counterparts and the regulations promulgated by the U.S. Department of Housing and Urban Development and various state agencies prohibit discrimination in housing on the basis of race or color, national origin, religion, sex, familial status (including children under the age of 18 living with parents or legal custodians, pregnant women and people securing custody of children under 18) or handicap (disability) and, in some states, financial capability. A failure by the multifamily apartment properties to which our investments relate to comply with these laws could result in litigation, fines, penalties or other adverse claims against these properties and their owners or managers, or could result in limitations or restrictions on the ability of these properties or entities to operate, any of which could materially and adversely affect us. We believe that our joint venture properties are operated in substantial compliance with the Fair Housing Act. See “Risk Factors—Risks Related to Our Business—Most of the properties in which we invest must comply with the Fair Housing Amendments Act of 1988, or the FHAA, and failure to comply may affect our earnings and our cash available for distribution to our stockholders.”

Environmental Matters

Under various federal, state and local laws and regulations relating to the environment, as a current or former owner or operator of real property, we may be liable for costs and damages resulting from the presence or discharge of hazardous or toxic substances, waste or petroleum products at, on, in, under, or migrating from such property, including costs to investigate and clean up such contamination and liability for natural resources. Such laws often impose liability without regard to whether the owner or operator knew of, or was responsible for, the presence of such contamination, and the liability may be joint and several. These liabilities could be substantial and the cost of any required remediation, removal, fines, or other costs could exceed the value of the property and/or our aggregate assets. In addition, the presence of contamination or the failure to remediate contamination at the properties to which our investments relate may expose us to third-party liability for costs of remediation and/or personal or property damage or materially adversely affect the ability to sell, lease or develop such properties or to borrow using the properties as collateral. In addition, environmental laws may create liens on contaminated sites in favor of the government for damages and costs it incurs to address such contamination. Moreover, if contamination is discovered on these properties, environmental laws may impose restrictions on the manner in which such property may be used or businesses may be operated, and these restrictions may require substantial expenditures.

A Phase I Environmental Site Assessment is a report that identifies potential or existing environmental contamination liabilities. Site assessments are intended to discover and evaluate information regarding the environmental condition of the assessed property and surrounding properties. These assessments do not generally include soil samplings, subsurface investigations or an asbestos survey. None of the site assessments identified any known past or present contamination that we believe would have a material adverse effect on the properties or the business, assets or operations of such properties. However, the assessments are limited in scope and may have failed to identify all environmental conditions or concerns. A prior owner or operator of a property or historic operations at the properties to which the investments in our Initial Portfolio relate, or operations and conditions at nearby properties, may have created a material environmental condition that is not known to us, our partners or the independent consultants preparing the site assessments. Material environmental conditions may have arisen after the review was completed or may arise in the future, and future laws, ordinances or

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regulations may impose material additional environmental liability. Moreover, conditions identified in environmental assessments that did not appear material at that time, may in the future result in material liability.

Environmental laws also govern the presence, maintenance and removal of hazardous materials in building materials (e.g., asbestos and lead), and may impose fines and penalties for failure to comply with these requirements or expose us to third-party liability (e.g., liability for personal injury associated with exposure to asbestos). Such laws require that owners or operators of buildings containing hazardous materials properly manage and maintain certain hazardous materials, adequately notify or train those who may come into contact with certain hazardous materials, and undertake special precautions, including removal or other abatement, if certain hazardous materials would be disturbed during renovation or demolition of a building. In addition, the properties to which our investments relate are subject to various federal, state, and local environmental and health and safety requirements, such as state and local fire requirements.

When excessive moisture accumulates in buildings or on building materials, mold growth may occur, particularly if the moisture problem remains undiscovered or is not addressed over a period of time. Some molds may produce airborne toxins or irritants. Indoor air quality issues can also stem from inadequate ventilation, radon, chemical contamination from indoor or outdoor sources, and other biological contaminants such as pollen, viruses and bacteria. Indoor exposure to airborne toxins or irritants above certain levels can be alleged to cause a variety of adverse health effects and symptoms, including allergic or other reactions. As a result, the presence of significant mold or other airborne contaminants at any of the properties to which our investments relate could require us to undertake a costly remediation program to contain or remove the mold or other airborne contaminants from the affected property or increase indoor ventilation. In addition, the presence of significant mold or other airborne contaminants could expose us or our affiliates and the properties to which our investments relate to liability from tenants or others if property damage or personal injury occurs. We are not presently aware of any material adverse indoor air quality issues at the properties to which the investments in our Initial Portfolio relate.

The cost of future environmental compliance may materially and adversely affect us. See “Risk Factors — Risks Related to Our Business—The costs of compliance with environmental laws and other governmental laws and regulations may adversely affect our income and the cash available for any distributions.”

Insurance

The property-level entities that own the properties to which the investments in our Initial Portfolio relate carry comprehensive general liability and property (including fire, extended coverage and rental loss) insurance covering all such properties. We consider the policy specifications and insured limits to be in line with coverage customarily obtained by owners of similar properties and adequate and appropriate given the relative risk of loss and the cost of the coverage. Moreover, even if the property-level entities that own the properties to which the investments in our Initial Portfolio relate do have coverage on a particular risk, it may not be sufficient to fully cover all losses. While these entities maintain insurance against terrorism, earthquakes, hurricanes and flooding, there are certain types of losses, such as lease and other contract claims, acts of war and other acts of God that generally are not insured because such coverage is not available or it is not available at commercially reasonable rates. Moreover, we cannot predict whether all of the coverage that the property-level entities that own the properties to which the investments in our Initial Portfolio relate maintain will be available to them in the future, or what the future costs or limitations on any coverage that is available to them will be.

Competition

In sourcing and acquiring or originating investments for our portfolio, we will compete with other mortgage REITs, equity REITs, specialty finance companies, savings and loan associations, banks, mortgage bankers, insurance companies, mutual funds, institutional investors, investment banking firms, other lenders, governmental bodies and other entities, many of which have greater

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financial resources and lower costs of capital available to them than we have. In addition, there are a number of mortgage REITs with asset acquisition objectives similar to or overlapping with our objectives, and others may be organized in the future, which may increase competition for the available investments suitable for us. Competitive variables include market presence and visibility, size of the proposed investment and underwriting standards. To the extent that a competitor is willing to risk larger amounts of capital in a particular transaction or to employ more liberal underwriting standards when evaluating potential investments than we are, our revenue and profit margins could be impacted. Our competitors may also be willing to accept lower returns on their investments and may succeed in buying the assets that we have targeted for acquisition. Although we believe that we are well positioned to compete effectively in each facet of our business, there is enormous competition in our market sector and there can be no assurance that we will compete effectively or that we will not encounter further increased competition in the future that could limit our ability to conduct our business effectively.

Staffing

We will be externally managed by our Manager pursuant to the Management Agreement. Our Chief Executive Officer and each of our other executive officers are employees of our Manager. We do not expect to have any employees. See “Our Manager and the Management Agreement.”

Legal Proceedings

Neither we nor, to our knowledge, our Manager are currently subject to any legal proceedings which we or our Manager consider to be material.

Our Corporate Information

Our principal executive offices are located at 227 West Trade Street, Suite 900, Charlotte, North Carolina 28202. Our telephone number is (980) 224-4180. Our website is www.riverbancreit.com. The information found on, or otherwise accessible through, our website is not incorporated into, and does not form a part of, this prospectus or any other report or document we file with or furnish to the SEC.

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MANAGEMENT

Our Executive Officers and Directors

Immediately prior to the commencement of the trading of our common stock on the Nasdaq, our board of directors will consist of five members, each of whom has been nominated for election and consented to serve. We believe that our board of directors will determine that three members of our board of directors will be “independent” directors in accordance with the listing standards of the Nasdaq. Our board of directors will be responsible for determining independence. Each of our directors will be elected by our stockholders at our annual meeting of stockholders to serve until the next annual meeting of our stockholders and until his or her successor is duly elected and qualifies. Our bylaws provide that a majority of the entire board of directors may at any time increase or decrease the number of directors. However, unless our bylaws are amended, the number of directors may never be less than one nor more than 15. See “Certain Provisions of Maryland Law and of Our Charter and Bylaws—Number of Directors; Election of Directors; Vacancies.” The first annual meeting of our stockholders after this offering will be held in 2016. Our executive officers serve at the pleasure of our board of directors.

The following table sets forth certain information concerning the persons who are or who will become upon completion of this offering our executive officers and directors:

Name	Age	Position
Kevin M. Donlon	47	Chairman and Chief Executive Officer
Douglas E. Neal	55	President
Stephen L. Hogue	48	Chief Operating Officer and Secretary
Emily A. Stiller	39	Chief Financial Officer and Treasurer
Steven B. Brannan	35	Managing Director of Acquisitions
Steven R. Mumma	57	Director
Katharine R. Briggs*†	41	Director Nominee
Robert W. Simmons*†	57	Director Nominee
C. Reynolds Thompson III*†	52	Director Nominee

* This individual has agreed to become a member of our board of directors upon completion of this offering.

† This director nominee is independent in accordance with the listing standards of the Nasdaq and will become a member of our board of directors effective immediately prior to the commencement of the trading of our common stock on the Nasdaq.

Biographical Information

Set forth below is certain biographical information concerning the persons who are or will become upon completion of this offering our executive officers and directors.

Executive Officers

Kevin Donlon, Chief Executive Officer and Chairman of our Board. Mr. Donlon is the Founder and Chief Executive Officer of our Manager and he will serve as our Chief Executive Officer and Chairman of our board of directors. His diverse career has spanned many facets of the real estate capital markets including roles as chief executive, principal investor, investment banker, consultant and entrepreneur. Mr. Donlon founded our Manager in 2010 and has served as its Chief Executive Officer since that time. Previously, Mr. Donlon was a Managing Director with BlackRock following its acquisition of Helix Financial Group LLC in January 2010. Mr. Donlon founded Helix Financial Group LLC in May 2004 to provide advisory, underwriting and analytical services to the commercial real estate capital markets arena. He acted as Chief Executive and managed a team of more than 175 employees until his departure from BlackRock in August 2010.

From 1997 to 2004 Mr. Donlon was a Principal in the CMBS Capital Markets Group of Banc of America Securities LLC where he managed over $10 billion of loan origination, securities underwriting and debt placement. During his seven years with Banc of America Securities LLC,

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Mr. Donlon was a central figure in growing the platform from $800 million in annual originations to over $12 billion in annual originations. In addition, he participated in all facets of the capital markets, including large loan origination, credit tenant lease financing, credit derivatives, and mergers and acquisitions.

Between 1991 and 1996, Mr. Donlon worked with KPMG LLP and Kenneth Leventhal & Co., where he specialized in the valuation, due diligence and financial modeling of both performing and nonperforming commercial real estate.

Mr. Donlon received a Bachelor of Science in Accounting from The Pennsylvania State University and has been Certified as a Public Accountant in the State of Maryland (inactive).

Douglas Neal, President. Mr. Neal is President of our Manager. Mr. Neal has extensive experience in real estate investment and finance as investment banker, capital markets advisor, developer and owner. Prior to joining RiverBanc in May 2015, Mr. Neal was the founder and Managing Partner of Neal Capital, an advisory firm focused on raising private equity for private real estate companies, including those that specialized in multifamily, medical office, net lease, and industrial properties. Mr. Neal is currently a member of the board of directors of NYMT and previously served as its Chairman from 2012 to March 2015.

Prior to founding Neal Capital, Mr. Neal was a founding member of the Real Estate Investment Banking Group at Bank of America Merrill Lynch and its predecessors in 1991 and served as a Managing Director in this group from February 1998 to October 2011. Mr. Neal held various other positions with such predecessors from 1991 to 1998. During his tenure at Bank of America Merrill Lynch, Mr. Neal completed numerous advisory and capital raising assignments for real estate and real estate finance companies totaling more than $46 billion in transaction volume. Mr. Neal has substantial experience in raising public and private equity, as well as structuring and capitalizing joint ventures for public and private real estate companies. In addition, he advised a wide variety of public companies regarding mergers and acquisitions, strategic alliances, capital raising and recapitalizations.

Prior to joining Bank of America Merrill Lynch, from 1983 to 1989, Mr. Neal co-owned and managed a real estate company that developed a variety of commercial real estate properties, including apartments, condominiums, industrial buildings, retail buildings and a hotel.

Mr. Neal received a Master of Business Administration in Real Estate and Finance from the Kenan-Flagler School at the University of North Carolina at Chapel Hill and holds a Bachelor of Science in Civil Engineering with distinction from Cornell University.

Stephen Hogue, Chief Operating Officer and Secretary. Mr. Hogue will serve as our Chief Operating Officer and Secretary. His responsibilities include oversight of property operations, credit surveillance, and investor reporting functions. Mr. Hogue’s career experience includes various roles within the real estate capital markets arena as both an investment banker and management consultant.

Mr. Hogue has served as the Chief Operating Officer of our Manager since 2011, where he has overseen the acquisitions of the firm’s CMBS portfolio under management and continues to oversee all asset management activities. Prior to joining our Manager in July 2011, Mr. Hogue was an independent financial consultant from 1999 until 2011 where he worked on various multifamily loan underwriting and securitization assignments. Mr. Hogue was a Principal in the CMBS Capital Markets Group of Bank of America Merrill Lynch and its predecessors from 1999 to 2009 where he managed over $100 billion of fixed and floating rate CMBS transactions. His responsibilities included collateral due diligence, rating agency coordination, investor collateral reviews and other legal and regulatory matters. Mr. Hogue also managed whole loan pool purchases, asset dispositions and development of proprietary Banc of America Securities LLC’s software. Between 1995 and 1999 Mr. Hogue worked with the asset securitization practices of KPMG LLP and PricewaterhouseCoopers LLP where he worked as a consultant to issuers and investors of mortgage and asset backed securities.

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Mr. Hogue received a Bachelor of Science in Finance from Virginia Polytechnic Institute and State University and a Master of Business Administration with a Finance concentration from Virginia Polytechnic Institute and State University.

Emily Stiller, Chief Financial Officer and Treasurer. Ms. Stiller will serve as our Chief Financial Officer and Treasurer. She has served as Controller and Chief Compliance Officer of our Manager since September 2013. She is responsible for financial accounting and reporting oversight, treasury management, and the firm’s regulatory compliance. Ms. Stiller has over 15 years of financial services experience with a focus on commercial real estate lending. Ms. Stiller previously performed a similar role from March 2012 through September 2013 as the Controller for Ciena Capital LLC, a subsidiary of Ares Capital Corporation, where she was responsible for accounting, financial reporting, and treasury management for a commercial real estate and small business loan servicer with a diverse portfolio that included government-guaranteed and securitized loans. Previously, Ms. Stiller worked with BlackRock, following its acquisition of Helix Financial, from October 2008 through March 2012 overseeing financial reporting activities for its clients and as a Senior Manager at TIAA-CREF with responsibility for valuation, accounting and reporting for private equity investments. Ms. Stiller was also a member of the Real Estate Structured Finance group at Bank of America, N.A. where she worked closely with the CMBS origination, securitization, and servicing teams and she began her career at PricewaterhouseCoopers LLP.

Ms. Stiller received a Bachelor of Science in Commerce with a concentration in accounting from the McIntire School of Commerce at the University of Virginia. She is also a Certified Public Accountant in North Carolina.

Steven Brannan, Managing Director of Acquisitions. Mr. Brannan will serve as our Managing Director of Acquisitions and is a Managing Director with our Manager, where he focuses on the sourcing, analysis and execution of new investment opportunities. Mr. Brannan has been involved with commercial real estate and the capital markets through both consulting and investment for over ten years.

Prior to joining RiverBanc in September 2012, Mr. Brannan served as a Director at BlackRock, following its acquisition of Helix Financial, which he joined in April 2006. At BlackRock, he was a principal architect in the design and implementation of the firm’s proprietary valuation and investment analysis technology platform for CMBS. In this role Mr. Brannan managed detailed performance and financial analysis for the entire CMBS universe. He also managed due diligence, underwriting, and financial modeling for all types of commercial real estate transactions, including Freddie Mac and CMBS loan underwriting, property acquisitions and servicing platform valuations. Prior to BlackRock, Mr. Brannan was employed by Paramount Financial Group, a subsidiary of GMAC focused on affordable multifamily investments. Mr. Brannan received a Bachelor of Science in Economics from Vanderbilt University.

Directors

For biographical information concerning Mr. Donlon, see “—Biographical Information—Executive Officers.” Biographical information concerning Mr. Mumma and each of our directors nominees, three of whom are expected to be independent in accordance with the listing standards of the Nasdaq, is set forth below.

Steven R. Mumma. Mr. Mumma has served as the President and Chief Executive Officer of NYMT since February 2009. Mr. Mumma previously served as the President and Co-Chief Executive Officer of NYMT from March 2007 to February 2009. Prior to serving in the above capacities, Mr. Mumma served as Chief Investment Officer of NYMT, a position to which he was named in July 2005, and as Chief Operating Officer, commencing in November 2003. Mr. Mumma is a member of the board of directors of NYMT and has served as Chairman of the board of directors of NYMT since March 2015. From September 2000 to September 2003, Mr. Mumma was a Vice President of Natexis ABM Corp., a wholly-owned subsidiary of Natexis Banques Populaires. From 1997 to 2000, Mr. Mumma served as a Vice President of Mortgage-Backed Securities trading for Credit Agricole. Prior to joining Credit Agricole, from 1988 to 1997, Mr. Mumma was a Vice President of Natexis ABM Corp. Prior to joining Natexis ABM Corp., from 1986 to 1988, Mr. Mumma

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was a Controller for PaineWebber Real Estate Securities Inc., the mortgage-backed trading subsidiary of PaineWebber Inc. Prior to joining PaineWebber, from 1981 to 1985, Mr. Mumma worked for Citibank in its Capital Markets Group, as well as for Ernst & Young LLP. Mr. Mumma received a Bachelor of Business Administration cum laude from Texas A&M University.

Our board of directors concluded that Mr. Mumma should serve as a director of our company because of his significant operational, financial and accounting experience in the mortgage-backed securities industry, where he has worked for more than 20 years, as well as his current role as President and Chief Executive Officer of a publicly traded REIT that primarily invests in mortgage-related and financial assets.

Katharine R. Briggs. Ms. Briggs has served as the Chief Operating Officer of B2R Finance L.P., a specialty finance and technology company, since August 2014. Prior to joining B2R Finance L.P., Ms. Briggs served as a Managing Director of BlackRock Solutions where she specialized in domestic and European commercial real estate debt and securities from October 2005 to August 2014. Before her time at BlackRock Solutions, Ms. Briggs was Vice President of Finance at Summit Properties, Inc., a $2 billion publicly traded multifamily REIT. Ms. Briggs also served as Assistant Vice President at First Union Securities where her role focused on originating and underwriting bridge, mezzanine and equity commercial real estate investments. Ms. Briggs began her career as a tax consultant with PricewaterhouseCoopers LLP.

Ms. Briggs received a Bachelor of Science in Finance/Accounting from Washington and Lee University and has been Certified as a Public Accountant in the State of North Carolina (inactive).

Our board of directors concluded that Ms. Briggs should serve as a director of our company because of her extensive experience in residential and multifamily mortgage operations, capital markets and finance, as well as her previous experience as Vice President of Finance at a publicly traded REIT.

Robert W. Simmons. Mr. Simmons has served as the Executive Director for the Council for Children’s Rights, Inc., a non-profit organization that provides children advocacy and legal representation in the Southeast since April 2015. Mr. Simmons previously served on the Council for Children’s Rights, Inc. board of directors until March 2015. Prior to Mr. Simmons time at the Council for Children’s Rights, Inc., Mr. Simmons was a partner in the law firm of McGuireWoods LLP in the Real Estate and Land Use Department from April 2008 until March 2015 and served as the Chair of this department from January 2010 to April 2012. Prior to joining McGuireWoods LLP, Mr. Simmons was a partner in the law firm of Helms, Mulliss & Wickers PLLC from February 2005 until its merger with McGuireWoods LLP in March 2008 and a partner at Robinson, Bradshaw & Hinson, PA. Mr. Simmons practice focused on commercial real estate and commercial lending with an emphasis in retail development and leasing.

Mr. Simmons holds a Bachelor of Arts in Political Science and English from the University of North Carolina at Chapel Hill and a Juris Doctor from the University of Virginia School of Law. Mr. Simmons is admitted to practice law in North Carolina.

Our board of directors concluded that Mr. Simmons should serve as a director of our company because of his extensive experience in the legal field focusing on commercial real estate transactions, including lending, development and leasing.

C. Reynolds Thompson III. Mr. Thompson has served as the Chairman and Chief Investment Officer of Select Strategies Realty, a retail real estate investment, development, management and leasing company, since October 2014. Mr. Thompson is responsible for the investment activities of Select Strategies Realty. Prior to joining Select Strategies Realty, Mr. Thompson was President and Chief Financial Officer of Colonial Properties Trust, a $4 billion publicly traded REIT with a portfolio of multifamily, office, retail and mixed-use assets, from December 2008 to January 2013. During his 16-year career with Colonial Properties Trust, Mr. Thompson held various positions, including Chief Executive Officer, Chief Operating Officer and Chief Investment Officer. Mr. Thompson has extensive public company management, operating and investment experience having raised $950 million in equity, $2.5 billion in debt and completed acquisitions totaling $4.1 billion,

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developments totaling $1.5 billion, dispositions totaling $5 billion and joint ventures totaling $3.5 billion. Mr. Thompson also has expertise in strategic planning, investment analysis, capital markets, financial reporting, regulatory compliance and investor relations.

Prior to joining Colonial Properties Trust in February 1997, Mr. Thompson worked in acquisitions and due diligence for Carr America Realty Corporation, a then publicly traded REIT. Mr. Thompson began his career as a commercial lending officer at SunTrust Banks, Inc.

Mr. Thompson is a member of the Board of Visitors of the University of Alabama Culverhouse College of Commerce and Business Administration, the International Council of Shopping Centers and has served on the Board of Directors for the Birmingham Business Alliance, the United Way of Central Alabama and the board of Governors for the National Association of Real Estate Investment Trusts. Mr. Thompson holds a Bachelor of Science with Special Attainments in Commerce from Washington and Lee University.

Our board of directors concluded that Mr. Thompson should serve as a director of our company because of his public company leadership, financial reporting and operations experience as the executive officer of a publicly traded REIT that invested in multifamily properties.

Founders

We consider our Chief Executive Officer and the Chairman of our board of directors, Kevin Donlon, NYMT and JMP to be our founders, because each took initiative in funding and organizing our business and each is a Contributing Investor in our formation transactions. Mr. Donlon is also the founder and Chief Executive Officer and beneficially owns and controls 59.4% of the outstanding equity interests of our Manager. NYMT, a REIT that invests primarily in mortgage-related and financial assets, completed its initial public offering in 2004 and is listed on the Nasdaq under the symbol “NYMT.” NYMT is managed by a five-member board of directors, a majority of whom are independent under Nasdaq listing rules, and, as of March 31, 2015, had a common equity market capitalization of approximately $837.7 million. JMP is a wholly-owned subsidiary of JMP Group Inc., which is a wholly-owned subsidiary of JMP Group LLC, a NYSE-listed company under the symbol “JMP.” JMP is managed by a nine-member board of directors, a majority of whom are independent under NYSE listing rules and, as of March 31, 2015, had a common equity market capitalization of approximately $190.9 million. JMP and NYMT own approximately 20.6% and 20.0%, respectively, of the outstanding equity interests of our Manager. See “Certain Relationships and Related Party Transactions.”

Corporate Governance Profile—Board of Directors and Committees

We have structured our corporate governance in a manner we believe closely aligns our interests with those of our stockholders. Notable features of our corporate governance structure include the following:

• our board of directors is not classified; each of our directors is subject to re-election annually;

• of the five people who will serve on our board of directors immediately upon the commencement of the trading of our common stock on the Nasdaq, three will be independent in accordance with the listing standards of the Nasdaq and Rule 10A-3 under the Exchange Act;

• at least one of our directors will qualify as an “audit committee financial expert” as defined by the SEC;

• we intend to comply with the requirements of the Nasdaq listing standards, including having committees comprised solely of independent directors;

• we have opted out of the business combination and control share acquisition statutes in the MGCL; and

• we do not have a stockholder rights plan.

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Our business is managed by our Manager, subject to the supervision and oversight of our board of directors, which has established investment guidelines for our Manager to follow in its day-to-day management of our business. A majority of our board of directors will be independent in accordance with the listing standards of the Nasdaq and the regulations of the SEC. Our directors will keep informed about our business at meetings of our board of directors and its committees and through supplemental reports and communications. Our independent directors will meet regularly in executive sessions without the presence of our executive officers.

Committees of Our Board of Directors

Effective upon the appointment of our director nominees to our board of directors, our board of directors will have three standing committees: an audit committee, a compensation committee and a nominating and corporate governance committee. The principal functions of each committee are briefly described below. We intend to comply with the listing requirements and other rules and regulations of the Nasdaq, as amended or modified from time to time, and each of these committees will be comprised exclusively of independent directors. Additionally, our board of directors may from time to time establish certain other committees to facilitate the management of our company.

Audit Committee

Effective upon the appointment of our director nominees to our board of directors, our audit committee will be comprised of Messrs. Simmons and Thompson and Ms. Briggs, with Mr. Thompson serving as chairman. We have determined that Mr. Thompson will qualify as an “audit committee financial expert” as that term is defined by applicable SEC regulations and, as such, will meet the corresponding rules of the Nasdaq. We have determined that each of the audit committee members is able to read and understand fundamental financial statements, as required by the Nasdaq. Prior to completion of this offering, we will adopt an audit committee charter, which will detail the principal functions of the audit committee, including oversight related to:

• our accounting and financial reporting processes;

• the integrity of our consolidated financial statements and financial reporting process;

• our systems of disclosure controls and procedures and internal control over financial reporting;

• our compliance with financial, legal and regulatory requirements;

• the evaluation of the qualifications, independence and performance of our independent registered public accounting firm;

• the performance of our internal audit function; and

• our overall risk profile.

Our audit committee will also be responsible for engaging an independent registered public accounting firm, reviewing with the independent registered public accounting firm the plans and results of the audit engagement, approving professional services provided by the independent registered public accounting firm, including all audit and non-audit services, reviewing the independence of the independent registered public accounting firm, considering the range of audit and non-audit fees and reviewing the adequacy of our internal accounting controls. Our audit committee also will prepare the audit committee report required by SEC regulations to be included in our annual proxy statement.

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Compensation Committee

Effective upon the appointment of our director nominees to our board of directors, our compensation committee will be comprised of Messrs. Simmons and Thompson and Ms. Briggs, with Ms. Briggs serving as chairman. Prior to completion of this offering, we will to adopt a compensation committee charter, which will detail the principal functions of the compensation committee, including:

• reviewing our director and executive compensation policies and plans;

• implementing and administering our incentive compensation equity-based remuneration plans, including the 2015 Incentive Plan;

• assisting management in complying with our proxy statement and annual report disclosure requirements;

• producing a report on executive compensation to be included in our annual proxy statement; and

• reviewing, evaluating and recommending changes, if appropriate, to the remuneration for our independent directors.

Nominating and Corporate Governance Committee

Effective upon the appointment of our director nominees to our board of directors, our compensation committee will be comprised of Messrs. Simmons and Thompson and Ms. Briggs, with Mr. Simmons serving as chairman. Prior to completion of this offering, we will adopt a nominating and corporate governance committee charter, which will detail the principal functions of the nominating and corporate governance committee, including:

• identifying and recommending to the full board of directors qualified candidates for election as directors and recommending nominees for election as directors at the annual meeting of stockholders;

• developing and recommending to our board of directors corporate governance guidelines and implementing and monitoring such guidelines;

• reviewing and making recommendations on matters involving the general operation of our board of directors, including board size and composition, and committee composition and structure;

• recommending to our board of directors nominees for each committee of our board of directors;

• annually facilitating the assessment of our board of directors’ performance as a whole and of the individual directors, as required by applicable law and regulations; and

• overseeing our board of directors’ evaluation of management.

In identifying and recommending nominees for directors, the nominating and corporate governance committee may consider diversity of relevant experience, expertise and background.

Stockholder Agreement

In connection with our formation transactions and this offering, we will enter into a stockholder agreement with NYMT pursuant to which NYMT will have certain rights to designate a specific number of our director nominees in the future. See “Certain Relationships and Related Party Transaction—Stockholder Agreement.”

Compensation Committee Interlocks and Insider Participation

None of the members of our compensation committee is or has been employed by us. None of our executive officers currently serves, or in the past three years has served, as a member of our board of directors or compensation committee of another entity that has one or more executive officers serving on our board of directors or compensation committee.

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Code of Business Conduct and Ethics

Our board of directors has established a code of business conduct and ethics that applies to our officers and directors and to our Manager’s officers, directors and employees when such individuals are acting for or on our behalf. Among other matters, our code of business conduct and ethics is designed to deter wrongdoing and to promote:

• honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;

• full, fair, accurate, timely and understandable disclosure in our SEC reports and other public communications;

• compliance with applicable governmental laws, rules and regulations;

• prompt internal reporting of violations of the code to appropriate persons identified in the code; and

• accountability for adherence to the code.

Any waiver of the code of business conduct and ethics for our executive officers or directors may be made only by our board of directors or one of our board committees and will be promptly disclosed as required by law or stock exchange regulations.

Compensation of Directors and Officers

Director Compensation

As compensation for serving on our board of directors, each of our independent directors will receive an annual fee of $50,000. The chairman of the audit committee will receive an additional $10,000 per year. Neither of Messrs. Donlon or Mumma will receive compensation for his service as a director. In addition, we will reimburse our directors for their reasonable out-of-pocket expenses incurred in attending board of directors and committee meetings. We have not made any payments to any of our directors or director nominees to date.

Concurrently with the completion of this offering, we expect to grant 500 LTIP units to each of our independent directors pursuant to our 2015 Incentive Plan. See “—2015 Equity Incentive Plan.” All LTIP units granted to independent directors will vest ratably on the first anniversary of the date of grant, subject to such director’s continued service on our board of directors.

Our Board of Directors may change the compensation of our independent directors in its discretion.

Executive Officer Compensation

Because the Management Agreement provides that our Manager is responsible for managing our affairs, our executive officers, who are all employees of our Manager, do not receive cash compensation directly from us for serving as our executive officers. However, in their capacities as officers or employees of our Manager, or its affiliates, they devote a portion of their time to our affairs as is required for the performance of the duties of our Manager under the Management Agreement.

Our Manager compensates each of our executive officers. We will pay our Manager a management fee, and our Manager will use the proceeds from the management fee in part to pay compensation to its officers and employees. Our Manager has informed us that, because the services performed by these officers or employees in their capacities as such are performed in a significant part, but not exclusively, for us, it cannot segregate and identify that portion of the compensation awarded to, earned by or paid to our executive officers by our Manager that relates solely to their services to us. From time to time in the future, we may grant under the 2015 Incentive Plan restricted shares of our common, options to purchase our common stock or LTIP

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units to our executive officers and certain officers and employees of our Manager and other individuals who provide services to us, as designated by our Manager. As of the date of this prospectus, we have not made any grants under the 2015 Incentive Plan to any of our executive officers or employees of our Manager.

2015 Equity Incentive Plan

As discussed above, on July 2, 2015, our board of directors adopted, and on July 2, 2015, our stockholders approved, the 2015 Incentive Plan to attract and retain members of our board of directors, executive officers and other key employees, including officers, employees and other service providers of our Manager and operating partnership and their affiliates. The 2015 Incentive Plan provides for the grant of options to purchase shares of our common stock, stock awards, stock appreciation rights, performance units, incentive awards and other equity-based awards. We do not at this time, intend to grant cash or equity incentive awards to employees of our Manager, although there can be no assurance that we will not grant awards to employees of our Manager in the future.

Administration of the 2015 Incentive Plan

The 2015 Incentive Plan will be administered by the compensation committee of our board of directors, except that the 2015 Incentive Plan will be administered by our board of directors with respect to awards made to directors who are not our employees or employees of our Manager or our operating partnership. This summary uses the term “administrator” to refer to the compensation committee or our board of directors, as applicable. The administrator will approve all terms of awards under the 2015 Incentive Plan. The administrator will also approve who will receive grants under the 2015 Incentive Plan and the number of shares of our common stock subject to each grant.

Eligibility

Employees and officers of our company and our affiliates (including officers and employees of our Manager and our operating partnership and their affiliates) and members of our board of directors are eligible to receive grants under the 2015 Incentive Plan. In addition, individuals who provide significant services to us or an affiliate, including individuals who provide services to us or an affiliate by virtue of employment with, or providing services to, our Manager or operating partnership may receive grants under the 2015 Incentive Plan.

Share Authorization

The aggregate number of shares of our common stock that may be issued under the 2015 Incentive Plan is equal to 5% of the number of shares of our common stock that will be outstanding upon completion of our formation transactions and this offering, or 330,000 shares.

In connection with stock splits, dividends, recapitalizations and certain other events, our board will make equitable adjustments that it deems appropriate in the aggregate number of shares of our common stock that may be issued under the 2015 Incentive Plan and the terms of outstanding awards.

If any options or stock appreciation rights terminate, expire or are canceled, forfeited, exchanged or surrendered without having been exercised or are paid in cash without delivery of common stock or if any stock awards, performance units or other equity-based awards are forfeited, the shares of our common stock subject to such awards will again be available for purposes of the 2015 Incentive Plan. Shares of our common stock tendered or withheld to satisfy the exercise price of an award or for tax withholding are also available for future grants under the 2015 Incentive Plan.

Options

The 2015 Incentive Plan authorizes the grant of incentive stock options (under Section 422 of the Code) and options that do not qualify as incentive stock options. The exercise price of each option will be determined by the administrator, provided that the price cannot be less than 100% of

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the fair market value of the shares of our common stock on the date on which the option is granted (or 110% of the shares’ fair market value on the grant date in the case of an incentive stock option granted to an individual who is a “ten percent stockholder” under Sections 422 and 424 of the Code). Except for adjustments to equitably reflect stock splits, stock dividends or similar events, the exercise price of an outstanding option may not be reduced without the approval of our stockholders. The exercise price for any option is generally payable (i) in cash, (ii) by certified check, (iii) by the surrender of shares of our common stock (or attestation of ownership of shares of our common stock) with an aggregate fair market value on the date on which the option is exercised, equal to the exercise price, or (iv) by payment through a broker in accordance with procedures established by the Federal Reserve Board. The term of an option cannot exceed ten years from the date of grant (or five years in the case of an incentive stock option granted to an individual who is a “ten percent stockholder”). Incentive stock options may only be granted to our employees and employees of our subsidiaries.

Stock Awards

The 2015 Incentive Plan also provides for the grant of stock awards. A stock award is an award of shares of our common stock that may be subject to vesting requirements, restrictions on transfer and other restrictions as the administrator determines in its sole discretion on the date of grant. The restrictions, if any, may lapse over a specified period of time or through the satisfaction of conditions, in installments or otherwise, as the administrator may determine. A participant who receives a stock award will have all of the rights of a stockholder as to those shares, including, without limitation, voting rights and the right to receive distributions. During the period, if any, when stock awards are non-transferable or forfeitable, (i) a participant is prohibited from selling, transferring, pledging, exchanging, hypothecating or otherwise disposing of the participant’s stock award shares, (ii) we will retain custody of any certificates and may postpone the distribution of dividends until (and to the extent that) the stock award vests and (iii) a participant must deliver a stock power to us for each stock award.

Stock Appreciation Rights

The 2015 Incentive Plan authorizes the grant of stock appreciation rights. A stock appreciation right provides the participant with the right to receive, upon exercise of the stock appreciation right, cash, shares of our common stock or a combination of the two. The amount that the participant will receive upon exercise of the stock appreciation right generally will equal the excess of the fair market value of the shares of our common stock on the date of exercise over the shares’ fair market value on the date of grant. Stock appreciation rights will become exercisable in accordance with terms determined by the administrator. Stock appreciation rights may be granted in tandem with an option grant or as independents grants. The term of a stock appreciation right cannot exceed ten years from the date of grant or five years in the case of a stock appreciation right granted in tandem with an incentive stock option awarded to an individual who is a “ten percent stockholder.”

Performance Units

The 2015 Incentive Plan also authorizes the grant of performance units. Performance units represent the participant’s right to receive an amount, based on the value of a specified or determinable number of shares of our common stock, if performance goals or other requirements established by the administrator are met. The administrator will determine the applicable performance period, the performance goals and such other conditions that apply to the performance unit. Performance goals may relate to our financial performance, the participant’s performance or such other criteria determined by the administrator. If the performance goals are met, performance units will be paid in cash, shares of our common stock, other securities or property or a combination thereof.

Incentive Awards

The 2015 Incentive Plan also authorizes us to make incentive awards. An incentive award entitles the participant to receive a payment if certain requirements are met. The administrator will establish the requirements that must be met before an incentive award is earned and the

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requirements may be stated with reference to one or more performance measures or criteria prescribed by the administrator. A performance goal or objective may be expressed on an absolute basis or relative to the performance of one or more similarly situated companies or a published index and may be adjusted for unusual or non-recurring events and changes in applicable tax laws or accounting principles. An incentive award that is earned will be settled in a single payment which may be in cash, common stock or a combination of cash and common stock.

Other Equity-Based Awards

The administrator may grant other types of stock-based awards as other equity-based awards, including LTIP units, under the 2015 Incentive Plan. Other equity-based awards are payable in cash, shares of our common stock or shares or units of such other equity, or a combination thereof, as determined by the administrator. The terms and conditions of other equity-based awards are determined by the administrator, and may include a requirement that objectives stated with reference to one or more performance measures are attained.

LTIP units are a special class of partnership interest in our operating partnership. Each LTIP unit awarded will be deemed equivalent to an award of one share of common stock under the 2015 Incentive Plan, reducing the 2015 Incentive Plan’s aggregate share authorization for other awards on a one-for-one basis. We will not receive a tax deduction for the value of any LTIP units granted to participants. The vesting period for any LTIP units, if any, will be determined at the time of issuance. LTIP units, whether vested or not, will receive the same quarterly per-unit distributions as common units, which distributions will generally equal the per share distributions on shares of our common stock. This treatment with respect to quarterly distributions is similar to the expected treatment of our stock awards, which will generally receive full dividends whether vested or not. Initially, LTIP units will not have full parity with common units with respect to liquidating distributions. Under the terms of the LTIP units, our operating partnership will revalue its assets upon the occurrence of certain specified events, and any increase in the operating partnership’s valuation from the time of the last revaluation until such event will be allocated first to the holders of LTIP units to equalize the capital accounts of such holders with the capital accounts of holders of common units. Upon equalization of the capital accounts of the holders of LTIP units with the other holders of common units, the LTIP units will achieve full parity with common units for all purposes, including with respect to liquidating distributions. If such parity is reached, vested LTIP units may be converted into an equal number of common units at any time, and thereafter enjoy all the rights of common units, including redemption/exchange rights. However, there are circumstances under which such parity would not be reached. Until and unless such parity is reached, the value that a holder of LTIP units will realize for a given number of vested LTIP units will be less than the value of an equal number of shares of our common stock.

Dividend Equivalent Rights

The administrator may grant dividend equivalent rights in connection with the grant of performance units, other equity-based awards and incentive awards granted under the 2015 Incentive Plan. Dividend equivalent rights may be paid currently or accrued as contingent cash obligations (in which case they may be deemed to have been reinvested in shares of our common stock or otherwise reinvested) and may be payable in cash, shares of our common stock or other property or a combination thereof. The administrator will determine the terms of any dividend equivalent rights.

Initial Awards

Upon completion of this offering and consummation of our formation transactions, we expect to grant to our three independent directors an aggregate of 1,500 LTIP units.

These initial awards of LTIP units will vest on the first anniversary of the completion of this offering. Once vested, these awards of LTIP units may convert to common units upon reaching capital account equivalency with the common units held by our company, and may then be settled in shares of our common stock. The recipients of these initial awards of LTIP units will be entitled to receive “distribution equivalents” with respect to such LTIP units, whether or not vested, at the same time as distributions are paid to the holders of our common stock.

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Change in Control

If we experience a change in control, outstanding options, stock appreciation rights, stock awards, performance units, incentive awards or other equity based awards (including LTIP units) will automatically become vested. Thus, outstanding options and stock appreciation rights will be fully exercisable upon the change in control, restrictions and conditions on outstanding stock awards and other equity-based awards will lapse upon the change in control and performance units, incentive awards and other equity-based awards (including LTIP units) will become earned and nonforfeitable in their entirety upon the change in control. The administrator may provide that outstanding awards (all of which will then be vested) will be assumed by the surviving entity or will be replaced by a comparable substitute award of substantially equal value granted by the surviving entity. The administrator may also provide that participants must surrender their outstanding options and stock appreciation rights, stock awards, performance units, incentive awards and other equity based awards (including LTIP units) (all of which will then be vested) in exchange for a payment, in cash or shares of our common stock or other securities or consideration received by stockholders in the change in control transaction, equal to the value received by stockholders in the change in control transaction (or, in the case of options and stock appreciation rights, the amount by which that transaction value exceeds the exercise price) after acceleration of vesting for the change in control.

In summary, a change in control under the 2015 Incentive Plan occurs if:

• a person, entity or affiliated group (with certain exceptions) acquires, in a transaction or series of transactions, more than 50% of the total combined voting power of our outstanding securities;

• there occurs a merger, consolidation, reorganization, or business combination, unless the holders of our voting securities immediately prior to such transaction have more than 50% of the combined voting power of the securities in the successor entity or its parent;

• we (i) sell or dispose of all or substantially all of our assets or (ii) acquire assets or stock of another entity, unless the holders of our voting securities immediately prior to such transaction have more than 50% of the combined voting power of the securities in the successor entity or its parent; or

• during any period of two consecutive years, individuals who, at the beginning of such period, constitute our board of directors together with any new directors (other than individuals who become directors in connection with certain transactions or election contests) cease for any reason to constitute a majority of our board of directors.

The Code has special rules that apply to “parachute payments,” i.e., compensation or benefits the payment of which is contingent upon a change in control. If certain individuals receive parachute payments in excess of a safe harbor amount prescribed by the Code, the payor is denied a federal income tax deduction for a portion of the payments and the recipient must pay a 20% excise tax, in addition to income tax, on a portion of the payments.

If we experience a change in control, benefits provided under the 2015 Incentive Plan could be treated as parachute payments. In that event, the 2015 Incentive Plan provides that the benefits under the 2015 Incentive Plan, and all other parachute payments provided under other plans and agreements, will be reduced to the safe harbor amount, i.e., the maximum amount that may be paid without excise tax liability or loss of deduction, if the reduction allows the participant to receive greater after-tax benefits. The benefits under the 2015 Incentive Plan and other plans and agreements will not be reduced, however, if the participant will receive greater after-tax benefits (taking into account the 20% excise tax payable by the participant) by receiving the total benefits. The 2015 Incentive Plan also provides that these provisions do not apply to a participant who has an agreement with us providing that the individual cannot receive payments in excess of the safe harbor amount.

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Amendment; Termination

Our board of directors may amend or terminate the 2015 Incentive Plan at any time, provided that no such termination or amendment may adversely impair the rights of participants under outstanding awards. Our stockholders must approve any amendment if such approval is required under applicable law or stock exchange requirements. Our stockholders also must approve, among other things, any amendment that materially increases the benefits accruing to participants under the 2015 Incentive Plan, materially increases the aggregate number of shares of our common stock that may be issued under the 2015 Incentive Plan (other than on account of stock dividends, stock splits, or other changes in capitalization as described above) or materially modifies the requirements as to eligibility for participation in the 2015 Incentive Plan. Unless terminated sooner by our board of directors or extended with stockholder approval, the 2015 Incentive Plan will terminate on the day before the tenth anniversary of the date our board of directors adopted the 2015 Incentive Plan.

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OUR MANAGER AND THE MANAGEMENT AGREEMENT

Our Manager

Upon completion of this offering and consummation of our formation transactions, we will be externally managed and advised by our Manager, RiverBanc LLC, pursuant to a Management Agreement. See “—The Management Agreement.” Our Manager was founded in 2010 and since then has sourced and managed over $400 million of direct and indirect investments in multifamily apartment properties on behalf of both public and private institutional investors. Our Chief Executive Officer, President, Chief Operating Officer, Chief Financial Officer and Managing Director of Acquisitions are also officers of our Manager. One of our directors, Mr. Donlon, is also an officer of our Manager. Our Manager is primarily responsible for managing our day-to-day business affairs and assets and carrying out the directives of our board of directors. Our Manager maintains a contractual as opposed to a fiduciary relationship with us. Our Manager will conduct our operations and manage our portfolio of investments. Our Manager is collectively owned directly or indirectly by the Contributing Investors in our formation transactions.

Our officers and key employees of our Manager are seasoned professionals with extensive backgrounds in real estate investment, structured finance and property valuation, some of whom have worked together in various prior roles dating back to 1995. Our Manager has analyzed or underwritten properties having a value of more than $21 billion during the past four years. Our Manager’s focus on multifamily apartment properties and housing-related transactions has allowed it to develop a reputation as an active provider of capital to the multifamily housing finance sector. The scale and breadth of the assets managed by our Manager has resulted in our Manager regularly interfacing with owners and operators of multifamily apartment and housing-related projects and their intermediaries. This regular interaction with the owners and operators of the properties we target for investment has allowed our Manager to develop extensive personal relationships with current and potential partners that help it to identify investment opportunities prior to their being widely marketed. Our Manager also employs national advertising campaigns and personal calling efforts and frequently participates in industry events to bolster its market presence. We expect that our Manager’s market presence in the multifamily finance sector will provide us with superior access to investment opportunities and referrals, and will permit us to be more selective in identifying partners to co-invest with.

We believe the Management Agreement will provide significant benefits to our stockholders. Our company will not be burdened by the high expenses associated with employing our own management team and infrastructure, and instead will rely on our Manager to provide these services in exchange for management fees, which we believe are lower than the costs associated with managing internally. In addition, the Management Agreement provides us access to a team of executive, management, investment, capital markets and administrative personnel that we believe, given our size and stage of development, is likely to be more capable and diverse than we would otherwise be able to attract at this stage of our life cycle.

Biographical Information

The following table sets forth certain information with respect to the individuals who currently serve as our executive officers and as officers of our Manager:

Name	Age	Position with Our Company
Kevin M. Donlon	47	Chairman and Chief Executive Officer
Douglas E. Neal	55	President
Stephen L. Hogue	48	Chief Operating Officer and Secretary
Emily A. Stiller	39	Chief Financial Officer and Treasurer
Steven B. Brannan	35	Managing Director of Acquisitions

For biographical information concerning each of our executive officers, see “Management—Biographical Information—Executive Officers.”

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Management Agreement

Concurent with the completion of this offering and consummation of our formation transactions, we will enter into the Management Agreement with our Manager pursuant to which it will provide for the day-to-day management of our operations. The Management Agreement will require our Manager to manage our business affairs in conformity with the investment guidelines and other policies that are approved and monitored by our board of directors. Our Manager’s role as Manager will be under the supervision and direction of our board of directors. Our Manager also serves as an external manager to NYMT and certain of its affiliates with respect to its investments in multifamily CMBS and certain commercial real estate-related to debt investments, and provides investment management services to certain other investment vehicles.

Management Services

Our Manager will be responsible for (1) the selection, purchase and sale of investments in our portfolio, (2) our financing activities, and (3) providing us with advisory services. In addition, our Manager will be responsible for our day-to-day operations and will perform (or will cause to be performed) such services and activities relating to our assets and operations as may be appropriate, which may include, without limitation, the following:

• serving as our consultant with respect to the periodic review of the investment guidelines and other parameters for our investments, financing activities and operations, any modification to which will be approved by our board of directors;

• investigating, analyzing and selecting possible investment opportunities and acquiring, financing, retaining, selling, restructuring or disposing of investments in our portfolio consistent with the investment guidelines;

• with respect to prospective purchases, sales, exchanges or merger of investments that result in the acquisition of any investment in our portfolio or any financing transaction with respect any investment in our portfolio incurring any mortgage or other indebtedness, conducting negotiations (including negotiation of definitive agreements) on our behalf with sellers, purchasers and brokers and, if applicable, their respective agents and representatives;

• negotiating and entering into, on our behalf, interest rate protection agreements, and other agreements and instruments required for us to conduct our business;

• effecting any private placement of interests in us or our operating partnership, or in tenancy in common or other interests in the investments in our portfolio as may be approved by our board of directors;

• engaging and supervising, on our behalf and at our expense, independent contractors that provide investment banking, securities brokerage, mortgage brokerage, real estate brokerage, other financial services, due diligence services, underwriting review services, legal and accounting services, and all other services (including transfer agent and registrar services) as may be required relating to our operations, our actual and potential investments for our portfolio or financing transactions;

• coordinating and managing operations of any joint venture or co-investment interests held by us and conducting all matters with the respective joint venture or co- investment partners;

• providing executive and administrative personnel, office space and office services required in rendering services to us;

• administering the day-to-day operations and performing and supervising the performance of such other administrative functions necessary to our management as may be agreed upon by our Manager and our board of directors, including, without limitation, the collection of revenues and the payment of our debts and obligations and maintenance of or contract for appropriate computer services to perform such administrative functions;

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• communicating on our behalf with the holders of any of our or our operating partnership’s equity or debt securities as required to satisfy the reporting and other requirements of any governmental bodies or agencies or trading markets and to maintain effective relations with such holders;

• counseling our board of directors and us in connection with policy decisions to be made by our board of directors;

• evaluating and recommending to our board of directors hedging strategies and engaging in hedging activities on our behalf, consistent with such strategies and our investment guidelines, as so modified from time to time;

• counseling our board of directors and us regarding the maintenance of our ability to qualify as a REIT and monitoring compliance with the various REIT qualification tests and other rules set out in the Code and regulations thereunder and using commercially reasonable efforts to cause us to continue to qualify for taxation as a REIT;

• counseling us regarding the maintenance of our exemption from the status of an investment company required to register under the Investment Company Act, monitoring compliance with the requirements for maintaining such exemption and using commercially reasonable efforts to cause us to maintain such exemption from such status;

• furnishing reports and statistical and economic research to us regarding our activities and services performed for us by our Manager, including reports to our board of directors with respect to potential conflicts of interest involving our Manager or its affiliates;

• monitoring the operating performance of the investments in our portfolio and providing periodic reports with respect thereto to our board of directors, including comparative information with respect to such operating performance and budgeted or projected operating results;

• investing and reinvesting any moneys and securities of ours (including investing in short-term investments pending investment in other investments, payment of fees, costs and expenses related thereto, or payments of dividends or distributions to our stockholders, members or partners, as applicable) and advising us as to our capital structure and capital raising;

• causing us to retain qualified accountants and legal counsel, as applicable, to assist in developing appropriate accounting procedures and systems, internal controls and other compliance procedures and testing systems with respect to financial reporting obligations and compliance with the provisions of the Code applicable to REITs and, if applicable, TRSs, and to conduct quarterly compliance reviews with respect thereto;

• assisting us in qualifying to do business in all applicable jurisdictions and to obtain and maintain all appropriate licenses;

• assisting us in complying with all regulatory requirements applicable to us in respect of our business activities, including preparing or causing to be prepared all financial statements required under applicable regulations and contractual undertakings and all reports and documents, if any, required under the Exchange Act or the Securities Act, or by the applicable Securities Exchange;

• assisting us in taking all necessary action to enable us to make required tax filings and reports, including soliciting stockholders for required information to the extent required by the provisions of the Code applicable to REITs;

• handling and resolving all claims, disputes or controversies (including all litigation, arbitration, settlement or other proceedings or negotiations) in which we may be involved or to which we may be subject arising out of our day-to-day operations (other than with our Manager or its affiliates), subject to such limitations or parameters as may be imposed from time to time by our board of directors;

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• using commercially reasonable efforts to cause expenses incurred by us or on our behalf to be commercially reasonable or commercially customary and within any budgeted parameters or expense guidelines set by our board of directors from time to time;

• serving as our consultant with respect to decisions regarding any of our financings, hedging activities, borrowings or joint venture arrangements undertaken by us, including (1) assisting us, in developing criteria for debt and equity financing that is specifically tailored to our investment objectives, and (2) advising us with respect to obtaining appropriate financing for our investments;

• acting as a liaison to or engaging and supervising, on our behalf, independent contractors that provide investment banking, securities brokerage, mortgage brokerage, real estate brokerage, other financial services, real estate services, commercial services, due diligence services, underwriting review services, legal and accounting services, and all other services (including investor relations and transfer agent and registrar services) as may be required relating to our operations;

• arranging marketing materials, advertising, industry group activities (such as conference participations and industry organization memberships) and other promotional efforts designed to promote our business;

• performing such other services as may be required from time to time for management and other activities relating to our assets and business as our board of directors shall reasonably request or our Manager shall deem appropriate under the particular circumstances; and

• using commercially reasonable efforts to cause us to comply with all applicable laws.

Liability and Indemnification

Pursuant to the Management Agreement, our Manager will not assume any responsibility other than to render the services called for thereunder in good faith and will not be responsible for any action of our board of directors in following or declining to follow its advice or recommendations. Our Manager maintains a contractual as opposed to a fiduciary relationship with us (however, to the extent that officers of our Manager also serve as officers of our company, such officers will owe us duties under Maryland law in their capacity as officers of our company, which may include the duty to exercise reasonable care and skill in the performance of such officers’ responsibilities, as well as the duties of loyalty, good faith and candid disclosure). Under the terms of the Management Agreement, our Manager, its officers, members, managers, directors, personnel, any person controlling or controlled by our Manager and any person providing sub-advisory services to our Manager will not be liable to us, any subsidiary of ours, our directors, our stockholders or any subsidiary’s stockholders or partners for acts or omissions performed in accordance with and pursuant to the Management Agreement, except because of acts or omissions constituting bad faith, willful misconduct, gross negligence, or reckless disregard of their duties under the Management Agreement, as determined by a final non-appealable order of a court of competent jurisdiction. We have agreed to indemnify and hold harmless our Manager, its officers, members, managers, directors, personnel, any person controlling or controlled by our Manager and any person providing sub-advisory services to our Manager with respect to all expenses, losses, damages, liabilities, demands, charges and claims arising from acts or omissions of such indemnified party not constituting bad faith, willful misconduct, gross negligence, or reckless disregard of duties, performed in good faith in accordance with and pursuant to the Management Agreement as determined by a final, non-appealable order of a court of competent jurisdiction, or those incurred in connection with the Manager’s proper release of our money or other property, as set forth in the Management Agreement. Additionally, we have agreed to advance funds to any of the indemnified parties for legal fees and other costs and expenses incurred as a result of any claim, suit, action or proceeding for which indemnification is sought, provided, that such Manager indemnified party undertakes to repay the advanced funds to us in the event it is ultimately determined that indemnification is not appropriate. Our Manager has agreed to indemnify and hold harmless us, our directors and officers, personnel, agents and any

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persons controlling or controlled by us with respect to all expenses, losses, damages, liabilities, demands, charges and claims arising from acts or omissions of our Manager constituting bad faith, willful misconduct, gross negligence or reckless disregard of its duties under the Management Agreement or any claims by our Manager’s personnel relating to the terms and conditions of their employment by our Manager. Our Manager will not be liable for errors that may result from ordinary negligence, such as errors in the investment decision making process (such as a transaction that was effected in violation of our investment guidelines). Notwithstanding the foregoing, our Manager will carry errors and omissions and other customary insurance upon the completion of this offering, naming us and our operating partnership as additional insureds.

Management Team

Pursuant to the terms of the Management Agreement, our Manager is required to provide us with our management team, including a chief executive officer, president, chief financial officer and chief operating officer, along with appropriate support personnel, to provide the management services to be provided by our Manager to us. None of the officers or employees of our Manager will be dedicated exclusively to us. Members of our management team will be required to devote such time as is necessary and appropriate and commensurate with the level of our activity.

Our Manager is required to refrain from any action that, in its sole judgment made in good faith, (1) is not in compliance with the investment guidelines, (2) would adversely and materially affect our status as a REIT under the Code, our status as an entity intended to be exempted or excluded from investment company status under the Investment Company Act, or our operating partnership’s status as a partnership for U.S. federal income tax purposes or (3) would conflict with or violate any law, rule or regulation of any governmental body or agency having jurisdiction over us or of the Nasdaq or any securities exchange on which our securities are listed or that would otherwise not be permitted by our charter or bylaws. If our Manager is ordered to take any action by our board of directors, our Manager will promptly notify our board of directors if it is our Manager’s judgment that such action would adversely and materially affect such status or conflict with or violate any such law, rule or regulation or our charter or bylaws. Our Manager, its directors, members, officers, stockholders, managers, personnel, employees and any person controlling or controlled by our Manager and any person providing sub-advisory services to our Manager will not be liable to us, our board of directors, our stockholders, partners or members, for any act or omission by our Manager, its directors, officers, stockholders or employees except as provided in the Management Agreement and as set forth in the contribution agreements.

Term and Termination

The Management Agreement may be amended or modified by agreement between us and our Manager. The initial term of the Management Agreement expires on the fourth anniversary of the closing of this offering and will be automatically renewed for a one-year term on each anniversary date thereafter unless we or our Manager elects not to renew as described below. Our board of directors will review our Manager’s performance and that the terms of the fees payable under the Management Agreement annually and, following the initial term, the Management Agreement may be terminated annually upon the affirmative vote of at least two-thirds of the independent directors of our board of directors, based upon (1) unsatisfactory performance by Manager that is materially detrimental to us or (2) our determination that the fees payable to our Manager are not in accordance with then-current market terms for such fees charged by investment management companies rendering services similar to those rendered by our Manager after reasonable investigation by our board of directors as to the market terms for such fees charged by similarly situated managers, subject to our Manager’s right to prevent such termination due to then current market terms for such fees by accepting a reduction of the fees agreed to by at least two-thirds of the independent directors of our board of directors. We must provide 180 days prior notice of any such termination. Unless terminated for cause or our Manager elects not to renew the Management Agreement, each as described below, our Manager will be paid a termination fee equal to three times the sum of the average annual base management fee and the average annual incentive fee (including any deferred PIK-Related Incentive Fee) earned by our Manager, in each

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case during the 24-month period immediately preceding such termination, calculated as of the end of the most recently completed fiscal quarter before the date of termination.

We may also terminate the Management Agreement at any time, including during the initial term, without the payment of any termination fee, with 30 days prior written notice from our board of directors for cause, which is defined as:

• our Manager’s continued breach of any material provision of the Management Agreement following a period of 30 days after written notice of such breach (or 45 days after written notice of such breach if our Manager, under certain circumstances, has taken steps to cure such breach within 30 days of the written notice);

• the commencement of any proceeding with respect to the bankruptcy or insolvency of our Manager, including an order for relief in an involuntary bankruptcy case or our Manager authorizing or filing a voluntary bankruptcy petition;

• any change of control of our Manager which a majority of the independent directors of our board of directors determines is materially detrimental to us;

• our Manager commits fraud against us, misappropriates or embezzles our funds, or acts, or fails to act, in a manner constituting gross negligence, or acts in a manner constituting bad faith or willful misconduct, in the performance of its duties under any of its management agreements; provided, however, that if any of these actions or omissions is caused by an employee and/or officer of our Manager or one of its affiliates and the Manager takes all necessary and appropriate action against such person and cures the damage caused by such actions or omissions within 30 days of the Manager’s actual knowledge of its commission or omission, the Management Agreement shall not be terminable;

• our Manager is convicted (including a plea of nolo contendere) of a felony; and

• the dissolution of our Manager.

Our Manager may terminate the Management Agreement if we become required to register as an investment company under the Investment Company Act, with such termination deemed to occur immediately before such event, in which case we would not be required to pay a termination fee. Our Manager may decline to renew the Management Agreement by providing us with 180 days written notice, in which case we would not be required to pay a termination fee. In addition, if we default in the performance of any material term of the agreement and the default continues for a period of 30 days after written notice to us, our Manager may terminate the Management Agreement upon 60 days’ written notice. If the Management Agreement is terminated by our Manager upon our breach, we would be required to pay our Manager the termination fee described above.

Our Manager may delegate certain of its duties under the Management Agreement to any of its affiliates without the approval of our board of directors provided that our Manager remains liable for any such affiliate’s performance. Our Manager may not assign the Management Agreement unless such assignment is consented to in writing by us and with the consent of a majority of the independent and disinterested directors of our board of directors.

We may not assign our rights or responsibilities under the Management Agreement without the prior written consent of our Manager, except in the case of assignment to another REIT or other organization which is our successor (by merger, consolidation, purchase of assets, or other transaction), in which case such successor organization will be bound under the Management Agreement and by the terms of such assignment in the same manner as we are bound under the Management Agreement.

Management Fees, Incentive Fees and Expense Reimbursements

We do not expect to maintain an office or directly employ personnel. Instead we will rely on the facilities and resources of our Manager to manage our day-to-day operations.

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Base Management Fee

We will pay our Manager a base management fee, calculated and payable quarterly in arrears, in an amount equal to: 0.375% (1.5% per annum) of our adjusted equity market capitalization for the preceding quarter. For purposes of calculating the quarterly base management fee, the adjusted equity market capitalization shall be (i) the product of (1) the Average Quarterly Stock Price, multiplied by (2) the sum of (a) the daily average number of shares of our common stock issued and outstanding during the relevant quarter, (b) the maximum number of shares of our common stock issuable pursuant to any outstanding convertible securities, rights, options or warrants to subscribe for, purchase or otherwise acquire shares of our common stock as of the end of the relevant quarter that are in the money based on the Average Quarterly Stock Price, and (c) the daily average number of common stock equivalent securities (such as common units or LTIP units that may be issued by our operating partnership) issued and outstanding during the relevant quarter (and not already included in the calculation of clauses (a) or (b) above), minus (ii) the aggregate consideration payable to us on the applicable date upon the redemption, exercise, conversion and/or exchange of any of the securities included in the calculation of clause (b) above. For the avoidance of doubt, all shares of our common stock or common stock equivalent securities issued to our Manager as incentive fee compensation under the Management Agreement will be treated as issued and outstanding for purposes of clauses (a) or (c) above, as applicable, from the first day of the quarter in which such incentive fee compensation is paid. Our Manager uses the proceeds from its base management fee in part to pay compensation to its officers and personnel who, notwithstanding that certain of them also are our officers, receive no cash compensation directly from us. The base management fee is payable independent of the performance of our investments.

The base management fee of our Manager shall be calculated within 30 days after the end of each quarter and such calculation shall be promptly delivered to us. We are obligated to pay the quarterly installment of the base management fee calculated for that quarter in cash within five business days after delivery to us of the written statement of our Manager setting forth the computation of the base management fee for such quarter.

Incentive Fee

We will pay our Manager an incentive fee payable with respect to each calendar quarter (or part thereof that the Management Agreement is in effect) in arrears in an amount, not less than zero, equal to the difference between (1) the product of (a) 20% and (b) the difference between (i) our Adjusted Core FFO for the most recent 12-month period (or such lesser number of completed calendar quarters, if applicable), including the calendar quarter (or part thereof) for which the calculation of incentive compensation is being made, and (ii) the incentive hurdle amount (which is the product of (A) our Equity in the most recent 12-month period (or such lesser number of completed calendar quarters, if applicable), including the calendar quarter (or part thereof) for which the calculation of the incentive compensation is being made, and (B) 8.0% per annum), and (2) the sum of any incentive fee paid to our Manager with respect to the first three calendar quarters of the most recent 12-month period (or such lesser number of completed calendar quarters preceding the applicable period, if applicable); provided, however, that no incentive fee shall be payable with respect to any calendar quarter unless Adjusted Core FFO for the 12 most recently completed calendar quarters (or such lesser number of completed calendar quarters following completion of this offering) is greater than zero. “Equity” means the weighted average of the issue price of shares of our common stock issued by us in offerings and other transactions, multiplied by the daily average number of all shares of our common stock outstanding on a fully diluted basis (including common stock equivalent securities (such as LTIP units or common units) any restricted stock units, restricted shares of our common stock and shares of common stock underlying awards granted under the 2015 equity Incentive Plan. For purposes of calculating the incentive fee, “Adjusted Core FFO” is our net income (loss), computed

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in accordance with GAAP (adjusted for our pro-rata share of consolidated real estate-related items, less amounts attributable to noncontrolling interests, and our estimated share of such items that are included in earnings of unconsolidated real estate joint venture investments, as applicable), after adjusting to exclude:

• acquisition, pursuit and other one-time transaction expenses;

• non-cash equity-based compensation expense;

• incentive fees earned by our Manager (including any PIK-Related Incentive Fee (as defined below));

• depreciation and amortization of real estate-related investments;

• amortization of deferred financing costs;

• expenses related to the issuance of our debt or equity securities;

• any unrealized gains or losses or other similar non-cash items that are included in net income (loss) for the applicable reporting period, regardless of whether such items are included in other comprehensive income or loss, or in net income (loss); and

• one-time events pursuant to changes in GAAP and certain material non-cash income or expense items, in each case after discussions between our Manager and the independent directors of our board of directors and approved by a majority of our independent directors.

For the avoidance of doubt, all adjustments involving (i) consolidated real estate transactions not wholly owned by us or (ii) nonconsolidated real estate transactions shall be adjusted on a pro rata basis to remove the portion attributable to a noncontrolling, partner or joint venture interest.

Any PIK-Related Incentive Fee earned by our Manager will be deferred until the associated PIK Income is actually received in cash; provided, however, that all or a portion of the deferred PIK-Related Incentive Fee, regardless of the quarter in which it was deferred, will be payable, but only if and to the extent that cumulative payments of PIK-Related Incentive Fees since our inception do not exceed the PIK-Related Incentive Fee Cap. Any deferred PIK-Related Incentive Fee will be included in the calculation of any termination fee to be paid upon termination of the Management Agreement.

For the avoidance of doubt, if cash proceeds related to PIK Income are received in a quarter subsequent to the quarter in which the associated PIK-Related Incentive Fee was paid to our Manager, the amount of such associated PIK-Related Incentive Fee will be deducted from the cumulative payments for the calculation of the PIK-Related Incentive Fee Cap.

Our Manager will compute each quarterly installment of the incentive fee within 45 days after the end of the calendar quarter with respect to which such installment is payable and promptly deliver such calculation to our board of directors. The amount of the installment shown in the calculation will be due and payable in cash no later than five business days after delivery of such computation to our board of directors; provided, however, that at the discretion of our independent directors, up to 50% of the incentive fee payable to our manager may be paid in shares of our common stock. Any shares of our common stock issued to our manager as payment of a portion of the incentive fee will be fully vested upon issuance.

Reimbursement of Expenses

We will be required to reimburse our Manager for the expenses described below. Expense reimbursements to our Manager will be made in cash on a monthly basis following the end of each month. Our reimbursement obligation is not subject to any dollar limitation. Because our Manager’s personnel perform certain legal, accounting, due diligence tasks and other services that outside professionals or outside consultants otherwise would perform, our Manager is paid or

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reimbursed for the documented cost of performing such tasks, provided that such costs and reimbursements are in amounts which are no greater than those which would be payable to outside professionals or consultants engaged to perform such services pursuant to agreements negotiated on an arm’s-length basis.

We also pay all of our operating expenses, except those specifically required to be borne by our Manager under the Management Agreement. The expenses required to be paid by us include, but are not limited to:

• marketing, pursuit, due diligence and other acquisition expenses incurred in connection with the selection and acquisition of our investments;

• general and administrative expenses of us and our subsidiaries;

• expenses incurred in connection with the issuance of our securities, any financing transaction and other costs incident to the acquisition, development, redevelopment, construction, repositioning, leasing, disposition and financing of our investments;

• costs of legal, tax, accounting, consulting, auditing and other similar services rendered for us by providers retained by our Manager or, if provided by our Manager’s personnel, in amounts which are no greater than those that would be payable to outside professionals or consultants engaged to perform such services pursuant to agreements negotiated on an arm’s-length basis;

• the compensation, if any, and expenses of our independent directors and the cost of liability insurance to indemnify us and our directors and officers;

• costs associated with the establishment and maintenance of any of our credit facilities, other financing arrangements or other indebtedness of ours (including commitment fees, accounting fees, legal fees, closing costs and other similar costs) or any of our securities offerings;

• expenses connected with communications to holders of our or our subsidiaries’ securities and other bookkeeping and clerical work necessary in maintaining relations with holders of such securities and in complying with the continuous reporting and other requirements of governmental bodies or agencies, including, without limitation, all costs of preparing and filing required reports with the SEC, the costs payable by us to any transfer agent and registrar in connection with any of our securities, the fees payable by us to any securities exchange in connection with the listing of our securities, costs of preparing, printing and mailing our annual report and proxy materials with respect to any meeting of our stockholders as applicable and any investor relations activities conducted on our behalf;

• costs associated with any computer software or hardware, including but not limited to electronic equipment, cloud-based services or purchased information technology services from third-party vendors that are used for us;

• expenses incurred by managers, officers, personnel or agents of our Manager for travel on our behalf and other out-of-pocket expenses incurred by managers, officers, personnel or agents of our Manager in connection with the acquisition, development, redevelopment, construction, repositioning, leasing, financing, refinancing, sale or other disposition of an investment of ours or establishment or support of any of our securities offerings, or in connection with any financing transaction with respect to any of our investments;

• costs and expenses incurred with respect to market information systems and publications, research publications and materials, and settlement, clearing and custodial fees and expenses;

• compensation and expenses of our custodian, if any;

• the costs of maintaining compliance with all federal, state and local rules and regulations or any other regulatory agency;

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• all taxes and license fees;

• all insurance costs incurred in connection with the operation of our business except for the costs attributable to the insurance that our Manager elects to carry for itself and its personnel;

• costs and expenses incurred in contracting with third parties;

• all other costs and expenses relating to our business and investment operations, including, without limitation, the costs and expenses of acquiring, owning, protecting, maintaining, developing and disposing of our investments, including appraisal, reporting, audit and legal fees;

• expenses relating to any offices or office facilities, including, but not limited to, disaster backup recovery sites and facilities, maintained for us, any of our subsidiaries or our investments separate from the office or offices of our Manager;

• expenses connected with the payments of interest, dividends or distributions in cash or any other form authorized or caused to be made by our board of directors to or on account of holders of our or our subsidiaries’ securities, including, without limitation, in connection with any dividend reinvestment plan;

• any judgment or settlement of pending or threatened proceedings (whether civil, criminal or otherwise) against us or any subsidiaries, or against any trustee, director, partner, member or officer of us or any of our subsidiaries in his or her capacity as such for which we or any of our subsidiaries is required to indemnify such trustee, director, partner, member or officer pursuant to the applicable governing document or other instrument or agreement or by any court or governmental agency; and

• all other expenses actually incurred by our Manager (except as described below) that are reasonably necessary for the performance by our Manager of its duties and functions under the Management Agreement, provided that such expenses are in amounts no greater than those that would be payable to third-party professionals or consultants engaged to perform such services pursuant to agreements negotiated on an arm’s-length basis.

We will not reimburse our Manager for the expenses (including, without limitation, salaries, bonus and other wages, payroll taxes and the cost of employee benefit plans and cost of insurance) of its personnel or any of its subsidiaries who provide services to us pursuant to the Management Agreement. In addition, we will not be required to pay our pro-rata portion or reimburse our Manager for expenses related to the operation of our Manager such as rent, telephone, utilities, office furniture, equipment, machinery and other office, internal and overhead expenses of our Manager and its affiliates required for our operations.

Investment Guidelines

The Management Agreement requires that all new investments be made in accordance with the following investment guidelines:

• no investment shall be made without the approval of at least four members of our Manager’s investment committee, which will initially be comprised of Kevin Donlon, our Chairman and Chief Executive Officer, our President, our Chief Operating Officer, our Chief Financial Officer, and our Managing Director of Acquisitions;

• no investment shall be made that would cause us to fail to qualify as a REIT under the Code;

• no investment shall be made that would cause us or any of our subsidiaries to be required to be registered as an investment company under the Investment Company Act;

• our investments will be predominantly in the form of joint venture equity ownership and preferred equity ownership in, and mezzanine debt and other high-yield investments secured by, multifamily apartment properties;

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• prior to the deployment of capital into investments, our Manager may cause our capital to be invested in any short-term investments in money market funds, bank accounts, overnight repurchase agreements with primary Federal Reserve Bank dealers collateralized by direct U.S. government obligations, highly rated commercial mortgage backed securities and other instruments or investments determined by our Manager to be of high quality;

• not more than 25% of our equity (as defined in the Management Agreement) will be invested in any individual investment without the approval of our board of directors; and

• any equity investment in excess of $30 million requires the approval of our board of directors.

These investment guidelines may be amended, restated, supplemented or waived pursuant to the approval of our board of directors (which must include a majority of the independent directors on our board of directors) from time to time, but without the approval of our stockholders.

Investment Allocation Policy

We rely on our Manager, and the executive officers and professionals of our Manager, to identify suitable investments. Our Manager currently manages approximately $254 million of capital, as of March 31, 2015, on behalf of NYMT that is invested in multifamily CMBS and certain commercial real estate-related debt investments, including preferred equity and mezzanine loans, and approximately $0.8 million of capital, as of March 31, 2015, for a limited liability company formed in May 2013 that is now in “wind-down” mode and of which Mr. Donlon is the “lead capital member.” This limited liability company currently owns an undeveloped parcel of land and 17 residential home lots offered for sale, and we do not expect this limited liability company to develop the land or lots owned by it. Our Manager has agreed that this limited liability company will not invest in our targeted assets in the future. Subject to its obligations under the Management Agreement, although our Manager may in the future provide investment management services to various other clients, our Manager has agreed that, during the term of the Management Agreement, it will allocate all future investment opportunities involving the origination or sourcing of joint venture equity ownership and preferred equity ownership interests in entities that own, and mezzanine loans secured by, multifamily apartment properties to us; provided, however, that our Manager will be permitted to offer all or a portion of such investment opportunity to another account, on substantially the same terms as those presented to us, if the investment opportunity is presented by our Manager to our board of directors for their approval (whether or not it conforms to our investment guidelines) and a majority of the independent and disinterested directors of our board of directors vote against proceeding with the transaction. However, if our board of directors modifies our investment guidelines in a manner that alters (in a way that is materially adverse to our Manager) or otherwise eliminates our Manager’s authority under the investment guidelines with respect to any of the investment opportunities described in the immediately preceding sentence and our Manager does not consent to such modification, our Manager may void its agreement with respect to the allocation of future similar investment opportunities that are impacted by the change. As such, certain investment opportunities may be suitable for us as well as other clients of our Manager and its affiliates, and we and such other clients will rely upon the same executive officers and professionals of our Manager to identify suitable investments for us.

Some of the investments we target are also targeted assets of other clients managed by our Manager now and in the future and, except as described in the paragraph immediately below and subject to its obligations under the Management Agreement, our Manager has no duty to allocate such opportunities in a manner that preferentially favors us. Subject to our Manager’s written investment allocation policy, our Manager makes available to us all opportunities to acquire assets that it determines, in its reasonable and good faith judgment, based on our objectives, policies and strategies, and other relevant factors, are appropriate for us, it being understood that we might not participate in each such opportunity.

Subject to the terms of the Management Agreement, our Manager’s investment allocation policy provides that it will offer all direct investments in multifamily apartment properties, such as

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joint venture equity ownership and preferred equity ownership interests in entities that own, and mezzanine loans secured by, multifamily apartment properties to us, unless the investment is presented by our Manager to our board of directors for their approval (whether or not it conforms to our investment guidelines) and a majority of the independent and disinterested directors of our board of directors vote against proceeding with the transaction, in which case it will then be offered first to NYMT and then to other accounts, while our manager’s investment allocation policy provides that investment opportunities in securitized assets, such as mortgage-backed securities or collateralized debt obligations, will be offered first to NYMT, second to us and thereafter to other accounts. In the event our Manager believes that investments other than those described in the two immediately preceding sentences meet the investment guidelines for more than one account, our Manager may offer the opportunities to multiple accounts in proportion to their needs and available capital; provided that, on an overall basis, each account is treated equitably. Should we and one or more accounts of the Manager be involved in the same investment, our Manager will follow the approval process of our related person transactions policy. See “Certain Relationships and Related Party Transactions—Related Party Transaction Policy.”

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STRUCTURE AND FORMATION OF OUR COMPANY

Our Formation Transactions and Structure

Our Company

We were formed as a Maryland corporation in February 2015 and will commence operations upon completion of this offering and our formation transactions. We will conduct our business through an UPREIT structure in which our investments will be owned by our operating partnership directly or through limited partnerships, limited liability companies or other subsidiaries, as described below under “—Our Operating Partnership.” We are the sole general partner of our operating partnership and, upon completion of this offering and our formation transactions, we will own approximately 99.98% of the partnership interests in our operating partnership. Our board of directors will oversee our business and affairs.

Our Operating Partnership

Following completion of this offering and our formation transactions, substantially all of our assets will be indirectly held by, and our operations will be conducted through, our operating partnership. We will contribute the net proceeds from this offering and our Initial Portfolio to our operating partnership in exchange for common units. Our interest in our operating partnership will generally entitle us to share in cash distributions from, and in the profits and losses of, our operating partnership in proportion to our percentage ownership. As the sole general partner of our operating partnership, we will have the exclusive power under the partnership agreement to manage and conduct its business and affairs, subject to certain limited approval and voting rights of the limited partners, which are described more fully in “Our Operating Partnership and the Partnership Agreement.”

Formation Transactions

Upon completion of this offering, pursuant to a series of contribution transactions, we will: (i) issue an aggregate of 1,062,976 shares of our common stock in connection with our operating partnership’s acquisition of 100% of the common equity interests in our Predecessor, which owns the Predecessor Investment Portfolio; (ii) issue 1,737,024 shares of our common stock to NYMT in connection with our acquisition from NYMT of 100% of its preferred equity interests (having an aggregate liquidation preference of $32.7 million) in our Predecessor; and (iii) use a portion of the net proceeds from this offering to pay approximately $28.5 million in cash to RB Commercial Mortgage to acquire the NYMT Contributed Assets. The number of shares of our common stock to be paid to the Contributing Investors in our formation transactions in exchange for their equity interests in our Predecessor is fixed pursuant to the terms of the contribution agreement. The number of shares of our common stock issuable to the Contributing Investors in our formation transactions is based upon the Contributing Investors’ estimates of (i) in the case of common equity interests in our Predecessor, the value of the investments that comprise the Predecessor Investment Portfolio and the outstanding preferred units of our Predecessor that will be held by Ellington upon completion of this offering and (ii) in the case of the preferred equity interests held by NYMT, the aggregate liquidation preference of the preferred equity held by NYMT that is currently outstanding. Concurrently with the completion of our formation transactions and this offering, our Predecessor will pay to NYMT any accrued preferred returns on its preferred equity interest in our Predecessor for the period July 1, 2015 to the closing of this offering in cash, which are expected to be approximately $0.3 million. The cash consideration to be paid by us to RB Commercial Mortgage in exchange for the NYMT Contributed Assets represents the aggregate principal balance of the investments outstanding (or expected to be outstanding in the case of pending acquisitions) as of, and accrued but unpaid preferred distributions or interest on such assets to, the date on which we complete our acquisition of these assets. The estimates of the value of these assets and interests were based on various factors, including the historical performance of the subject property to which our investment relates, the structure of the investment, market conditions, market required rates of return, the duration of the investment and, in the case of mezzanine loans, the outstanding principal balance of the loan. See “—Determination of Consideration Payable in Our Formation Transactions.”

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The values of shares of our common stock set forth below and elsewhere in this prospectus assume a value per share equal to the midpoint of the range of the public offering price per share set forth on the front cover of this prospectus. Pursuant to the terms of the contribution agreement, the number of shares of our common stock to be received by the Contributing Investors as consideration for the interests in our Predecessor that will be contributed to us in our formation transactions is fixed. As a result, in the event the public offering price per share is less than the midpoint of the range of the public offering price per share set forth on the front cover of this prospectus, the value of the shares of our common stock issuable to the Contributing Investors will decrease. Conversely, in the event the public offering price per share is greater than the midpoint of the range of the public offering price per share set forth on the front cover of this prospectus, the value of the shares of our common stock issuable to the Contributing Investors will increase.

Our Predecessor is a Delaware limited liability company in which the Contributing Investors collectively beneficially own 100% of the outstanding common equity interests and in which NYMT and affiliates of Ellington own 100% of the preferred equity interests as of the date of this prospectus. The investments that will be contributed to or acquired by us in our formation transactions that comprise our Initial Portfolio are managed or were sourced directly by our Manager. Upon completion of this offering and consummation of our formation transactions, the Contributing Investors will beneficially own approximately 42.4% of our outstanding common stock on a fully diluted basis. The Contributing Investors have agreed not to sell or otherwise transfer any of the shares of our common stock owned by them for a period of 180 days following the completion of this offering and the consummation of our formation transactions.

The following formation transactions have occurred or will occur substantially concurrently with the completion of this offering:

• We were formed as a Maryland corporation and our operating partnership was formed as a Delaware limited partnership.

• Pursuant to a contribution agreement between the Contributing Investors and us, we will acquire (i) 100% of the common equity ownership interests in our Predecessor in exchange for an aggregate of 1,062,976 shares of our common stock and (ii) 100% of the preferred equity ownership interests in our Predecessor that are held by NYMT in exchange for 1,737,024 shares of our common stock. Substantially concurrent with the consummation of this contribution transaction, the preferred equity interests that we acquire in our Predecessor will be converted to a common equity interest, at which time we will contribute this 100% common equity interest in our Predecessor to our operating partnership in exchange for 2,800,000 common units. Concurrently with the completion of our formation transactions and this offering, our Predecessor will pay to NYMT any accrued preferred returns on its preferred equity interest in our Predecessor for the period July 1, 2015 to the closing of this offering in cash, which are expected to be approximately $0.3 million. Prior to or concurrent with the completion of this offering and our formation transactions, Ellington Housing Investments LLC will redeem its outstanding preferred equity interests in our Predecessor, with EF CMO LLC contributing additional capital to our Predecessor in exchange for additional preferred equity interests such that Ellington will hold preferred equity interests in our Predecessor having an aggregate liquidation preference of approximately $16.3 million upon completion of this offering and our formation transactions. We sometimes refer to these preferred equity interests to be held by Ellington as the “subsidiary preferred units.” Concurrently with the completion of our formation transactions and this offering, our Predecessor will pay to Ellington Housing Investments LLC for the period July 1, 2015 to the closing of this offering any accrued preferred returns on its preferred equity interests in our Predecessor that are being redeemed, which are expected to be approximately $0.1 million, and our Manager has agreed to pay EF CMO LLC approximately $0.2 million in connection with its additional capital contribution. As a result of the consummation of this contribution transaction, our operating partnership will own a 100% common equity interest in our Predecessor which

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owns the Predecessor Investment Portfolio. Each of the Contributing Investors that will receive shares of our common stock in this contribution transaction has a substantive, pre-existing relationship with us and is an “accredited investor” as defined under Regulation D of the Securities Act. The issuance of shares of our common stock to the Contributing Investors will be effected in reliance upon exemptions from registration provided by Section 4(a)(2) of the Securities Act and Regulation D thereunder.

• Pursuant to contribution agreements among RB Commercial Mortgage, NYMT and us, we will acquire all of RB Commercial Mortgage’s interests in the NYMT Contributed Assets in exchange for aggregate cash consideration of approximately $28.5 million.

• Concurrent with or prior to the completion of this offering, we will enter into a registration rights agreement pursuant to which the Contributing Investors and an affiliate of NYMT will have certain registration rights covering the resale of shares of our common stock issued in our formation transactions.

• Concurrent with the completion of this offering, both we, our operating partnership and our Predecessor will enter into a new management agreement with our Manager.

Benefits of Our Formation Transactions to Related Parties

In connection with the completion of this offering and consummation of our formation transactions, certain of our directors, executive officers and affiliates of our Manager will receive material benefits described in “Certain Relationships and Related Transactions,” including the following:

• Donlon Family LLC, of which Mr. Donlon, our Chief Executive Officer, is the sole member, will receive 58,131 shares of our common stock with an aggregate value of approximately $1.1 million in connection with our formation transactions. As a result, Mr. Donlon will beneficially own approximately 0.88% of our outstanding common stock on a fully diluted basis.

• NYMT will receive 2,451,211 shares of our common stock with an aggregate value of approximately $47.8 million and RB Commercial Mortgage will receive approximately $28.5 million in cash in connection with our formation transactions. As a result, NYMT will beneficially own approximately 37.13% of our outstanding common stock on a fully diluted basis. In addition, concurrently with the completion of our formation transactions and this offering, our Predecessor will pay to NYMT any accrued preferred returns on its preferred equity interest in our Predecessor for the period July 1, 2015 to the closing of this offering in cash, which are expected to be approximately $0.3 million.

• JMP, which is a wholly-owned subsidiary of JMP Group LLC, will receive 290,658 shares of our common stock with an aggregate value of approximately $5.7 million in connection with our formation transactions. As a result, JMP will beneficially own approximately 4.40% of our outstanding common stock on a fully diluted basis.

• Concurrent with or prior to the closing of this offering, we will enter into a registration rights agreement with the Contributing Investors. Under the registration rights agreement, subject to certain limitations and the terms of the lock-up agreements described herein, we will agree to register the resale of the shares of common stock issued in our formation transactions. See “Certain Relationships and Related Transactions—Registration Rights Agreement” and “Shares Eligible for Future Sale—Registration Rights.”

• Concurrent with the closing of this offering, we, our operating partnership and our Predecessor will enter into the Management Agreement with our Manager, pursuant to which our Manager will provide for the day-to-day management of our operations. The Management Agreement requires our Manager to manage our business affairs in conformity with the policies and the investment guidelines that are approved and monitored by our board of directors. All of our officers also serve as officers, employees and/or directors of our Manager or one of its other affiliates. In addition, the Contributing

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Investors or their affiliates collectively beneficially own 100% of our Manager, which entitles them to indirectly receive a portion of the management fees that we pay to our Manager. As a result, the Management Agreement between us, our operating partnership, our Predecessor and our Manager was negotiated between related parties, and the terms, including fees payable and expenses reimbursable, may not be as favorable to us as if the agreement had been negotiated with an unaffiliated third party. See “Our Manager and the Management Agreement,” “Risk Factors—Risks Related to Our Manager and the Management Agreement” and “Certain Relationships and Related Party Transactions—Management Agreement.”

• We intend to enter into indemnification agreements with our directors and executive officers at the completion of this offering, providing for procedures for indemnification by us to the fullest extent permitted by law and advancements by us of certain expenses and costs relating to claims, suits or proceedings arising from their service to us or, at our request, service to other entities, as officers or directors.

• We have adopted the 2015 Incentive Plan, under which we may grant cash or equity incentive awards to our directors, officers, employees and consultants, including employees of our Manager. Upon completion of this offering and consummation of our formation transactions, we intend to issue 500 LTIP units to each of our independent directors. See “Management—2015 Equity Incentive Plan.” We do not at this time intend to grant cash or equity incentive awards to employees of our Manager, although there can be no assurance that we will not grant awards to employees of our Manager in the future.

Subsidiary Operating Agreement and Subsidiary Preferred Units

In order to enable, in part, our acquisition of certain preferred equity interests in our Predecessor, the conversion of those interests into common equity interests in our Predecessor and our contribution of those common equity interests to our operating partnership, the operating agreement of our Predecessor will be amended and restated substantially concurrent with the completion of our formation transactions. We refer to the amended and restated operating agreement of our Predecessor that will become effective substantially concurrent with our formation transactions as the “subsidiary operating agreement.” Under the subsidiary operating agreement, our operating partnership will be the sole managing member and own 100% of the common units of our Predecessor, while EF CMO LLC, a wholly-owned subsidiary of Ellington Financial LLC, an NYSE-listed company, which is managed by an affiliate of Ellington Management Group, L.L.C., will be the sole preferred member of our Predecessor upon completion of this offering and consummation of our formation transactions. As the managing member, our operating partnership will manage our Predecessor and may, in its sole discretion (but subject to certain restrictions set forth in the subsidiary operating agreement and subject to the approval of our board of directors, including a majority of the independent and disinterested directors), delegate any of its rights, powers and authority to anyone or any entity, including our Manager, it deems appropriate.

Pursuant to the subsidiary operating agreement, our Predecessor must pay to the holders of the subsidiary preferred units, on a quarterly basis, a preferred return of 10.0% per annum (unless increased to 15.0% per annum as a result of any changeover event (described below) including if our operating partnership does not exercise its option (described below) to cause our Predecessor to repurchase the subsidiary preferred units before July 1, 2018) on such holders’ adjusted capital contributions (as defined in the agreement) to our Predecessor. Upon completion of our formation transactions, the preferred members are expected to own subsidiary preferred units representing $16.3 million of aggregate adjusted capital contributions, representing an annual preferred return of $1.6 million payable by our Predecessor.

At any time, our operating partnership, as the managing member, has the option (but not the obligation), subject to the approval of our independent and disinterested directors, to cause our Predecessor to repurchase all outstanding subsidiary preferred units and, upon making such an election, the preferred members will be required to sell all of their subsidiary preferred units to our

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Predecessor. Pursuant to the subsidiary operating agreement, the purchase price payable to each preferred member for all of its subsidiary preferred units will be an amount equal to the preferred member’s redemption amount, which is an amount equal to (i) the adjusted capital contribution with respect to such preferred member’s subsidiary preferred units, plus (ii) any accrued but unpaid preferred return measured through the date of the payment of the redemption amount, plus (iii) a redemption premium, with the redemption premium representing an amount that is equal to:

• the preferred return that would have been paid to such preferred member through July 1, 2016 if the subsidiary preferred units were outstanding through such date (exclusive of any amounts actually paid to such preferred member pursuant to clause (ii) above), if the redemption amount is paid before July 1, 2016;

• 1.0% of the adjusted capital contribution with respect to such preferred member’s subsidiary preferred units as of the date of the payment of the redemption amount, if the redemption amount is paid on or after July 1, 2016 but before July 1, 2017; or

• zero, if the redemption amount is paid on or after July 1, 2017;

provided, however, that if the redemption amount is paid within three months following the completion of this offering and consummation of our formation transactions, the redemption premium will be zero with respect to 8,170,567 of the subsidiary preferred units.

If a changeover event occurs, the following, among other things, shall occur: the preferred return will be increased to 15.0% per annum, the preferred members will become first in priority for all distributions of our Predecessor and our operating partnership will be required, unless the preferred members approve another course of action, to sell all of our Predecessor’s assets in a commercially reasonable manner. The subsidiary operating agreement defines a “changeover event” as the occurrence (without cure during any available cure period) of any of the following events or circumstances: our Predecessor fails to make a quarterly payment of the preferred return; our Predecessor becomes the subject of a petition in bankruptcy or similar proceeding; our Predecessor sells all or substantially all of its assets; our Predecessors breaches any covenant set forth in the subsidiary operating agreement; for so long as our Manager has any authority delegated to it by our operating partnership (as managing member of our Predecessor), our Manager materially violates the subsidiary operating agreement or the Management Agreement, our Manager commits an act of fraud or embezzlement against our Predecessor, or our Manager is grossly negligent or commits willful misconduct in performing its duties under the subsidiary operating agreement in a way that is materially detrimental to our Predecessor; and any subsidiary preferred units are outstanding on or after July 1, 2018.

The subsidiary operating agreement also prohibits our Predecessor from, among other things, doing any of the following without the preferred members’ written consent:

• causing the ratio of adjusted capital contributions of all the preferred members to the adjusted capital contributions of all the common members to exceed 25%;

• generally from incurring nonrecourse indebtedness in excess of a maximum of 80% loan to value on a weighted average basis for all investments owned by the Predecessor and we have further agreed that our Predecessor shall not incur, directly or indirectly, any additional indebtedness on any of the assets in the Predecessor Investment Portfolio in excess of that in place on such assets as of July 1, 2015;

• making distributions to the common members during any fiscal quarter if the cash generated from investments and collected by our Predecessor during the preceding fiscal quarter does not exceed the product of (i) 1.25 and (ii) the total preferred return due to the preferred members on the succeeding quarterly due date (except that cash retained by our Predecessor in any one quarter, and not distributed to the common members, may be distributed in subsequent quarters provided that such product is exceeded for that quarter); and

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• making distributions to the common members after the occurrence and during the continuance of an event of default under any agreement to which our Predecessor is a party that evidences indebtedness for borrowed money.

Determination of Consideration Payable in Our Formation Transactions

The number of shares of our common stock to be paid to the Contributing Investors in our formation transactions is fixed pursuant to the terms of the related contribution agreement and is based upon the Contributing Investors’ estimates of (i) in the case of common equity interests in our Predecessor, the value of the investments that comprise the Predecessor Investment Portfolio and the outstanding preferred units of our Predecessor that will be held by Ellington upon completion of this offering and (ii) in the case of the preferred equity interests held by NYMT, the aggregate liquidation preference of the preferred equity held by NYMT that is currently outstanding. Concurrently with the completion of our formation transactions and this offering, our Predecessor will pay to NYMT any accrued preferred returns on its preferred equity interest in our Predecessor for the period July 1, 2015 to the closing of this offering in cash, which are expected to be approximately $0.3 million. The cash consideration to be paid by us to RB Commercial Mortgage in exchange for the NYMT Contributed Assets represents the aggregate principal balance of the investments outstanding (or expected to be outstanding in the case of pending acquisitions) as of, and accrued but unpaid preferred distributions or interest on such assets to, the date on which we complete, our acquisition of these assets. The estimates of the value of these interests and the NYMT Contributed Assets were based on various factors, including the historical performance of the subject property to which our investment relates, the structure of the investment, market conditions, market required rates of return, the duration of the investment and, in the case of mezzanine loans, the outstanding principal balance of the loan. The actual value of the shares of our common stock issuable pursuant to our formation transactions will be determined at pricing of this offering based on the initial public offering price of our common stock, which will be determined as described below under the heading “—Determination of Offering Price.” See “Risk Factors—Risks Related to Our Formation Transactions—In connection with our formation transactions, we have not obtained a fairness opinion or independent third-party appraisal of the interests or assets being contributed to us, and the consideration to be paid by us in our formation transactions was not negotiated on an arm’s-length basis and may exceed the fair market value of the interests and other assets in our Initial Portfolio.”

Determination of Offering Price

Prior to this offering, there has been no public market for our common stock. The initial public offering price was negotiated between the underwriters and us. In determining the initial public offering price of our common stock, the underwriters considered, among other factors, the history and prospects for the industry in which we compete, our financial information, the ability of our management and our business potential and earning prospects, the prevailing securities markets at the time of this offering, and the recent market prices of, and the demand for, publicly traded shares of companies the underwriters deemed generally comparable. The initial public offering price does not necessarily bear any relationship to the book value of our assets or the assets to be acquired in our formation transactions, our financial condition or any other established criteria of value and may not be indicative of the market price for our common stock after this offering. We have not obtained a fairness opinion or any third-party appraisals of the interests and assets to be contributed to or acquired by us in our formation transactions for purposes of determining how much we should pay for such assets. The consideration to be given by us for the interests and assets in our formation transactions may exceed their fair market value. See “Risk Factors—Risks Related to this Offering—You will experience immediate and material dilution in connection with the purchase of our shares of our common stock in this offering.”

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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

Our Formation Transactions

The interests in our Initial Portfolio that we will own, through our operating partnership, upon completion of this offering and consummation of our formation transactions are currently owned directly or indirectly by the Contributing Investors or their affiliates. Donlon Family LLC, an affiliate of Mr. Donlon, JMP and NYMT, each of which is a founder of our company, are members of our Predecessor and currently own 5.5%, 27.3% and 67.2% of the common equity interests in our Predecessor, while NYMT owned preferred equity interests in our Predecessor having an aggregate liquidation preference of approximately $32.7 million as of June 30, 2015. In addition, an affiliate of NYMT, RB Commercial Mortgage, has agreed to sell to us its interests in the NYMT Contributed Assets for approximately $28.5 million in cash. The number of shares of our common stock to be paid to the Contributing Investors in our formation transactions is fixed pursuant to the terms of the related contribution agreement and is based upon the Contributing Investors’ estimates of (i) in the case of common equity interests in our Predecessor, the value of the investments that comprise the Predecessor Investment Portfolio and the outstanding preferred units of our Predecessor that will be held by Ellington upon completion of this offering and (ii) in the case of the preferred equity interests held by NYMT, the aggregate liquidation preference of the preferred equity held by NYMT that is currently outstanding. Concurrently with the completion of our formation transactions and this offering, our Predecessor will pay to NYMT any accrued preferred returns on its preferred equity interest in our Predecessor for the period July 1, 2015 to the closing of this offering in cash, which are expected to be approximately $0.3 million. The cash consideration to be paid by us to RB Commercial Mortgage in exchange for the NYMT Contributed Assets represents the aggregate principal balance of the investments outstanding (or expected to be outstanding in the case of pending investments) as of, and accrued but unpaid preferred distributions or interest on such assets to, the date on which we complete our acquisition of these assets. The estimates of the value of these assets and interests were based on various factors, including the historical performance of the subject property to which our investment relates, the structure of the investment, market conditions, market required rates of return and the duration of the investment. See “Structure and Formation of Our Company—Determination of Consideration Payable in Our Formation Transactions.” The values of shares of our common stock set forth below and elsewhere in this prospectus assume a value per share equal to the midpoint of the range of the public offering price per share set forth on the front cover of this prospectus. Pursuant to the terms of the related contribution agreement, the number of shares of our common stock to be received by the Contributing Investors as consideration for the interests in our Predecessor that will be contributed to us in our formation transactions is fixed. As a result, in the event the public offering price per share is less than the midpoint of the range of the public offering price per share set forth on the front cover of this prospectus, the value of the shares of our common stock issuable to the Contributing Investors will decrease. Conversely, in the event the public offering price per share is greater than the midpoint of the range of the public offering price per share set forth on the front cover of this prospectus, the value of the shares of our common stock issuable to the Contributing Investors will increase.

The following table sets forth the consideration to be indirectly received by Mr. Donlon, our Chief Executive Officer, and directly received by each of JMP and NYMT, in connection with our formation transactions, assuming the value of a share of our common stock is equal to the midpoint of the range of the public offering price per share set forth on the front cover of this prospectus.

Contributing Investors	Relationship to Us	Number of Shares of Common Stock Received in Formation Transactions		Total Value of Formation Transaction Consideration			Contributing Investors’ Cost Basis as of March 31, 2015
Donlon Family LLC(1)	Affiliate of our Chairman and Chief Executive Officer		58,131	$	1,133,564		$	1,093,750
JMP Holding LLC(2)	Affiliate of our Manager and stockholder		290,658	$	5,667,823		$	5,468,750
New York Mortgage Trust, Inc.	Affiliate of our Manager and stockholder		2,451,211	$	47,798,613(3	)	$	46,119,767

(1) Mr. Donlon is the sole member of Donlon Family LLC.

(2) JMP Holding LLC is a wholly-owned subsidiary of JMP Group LLC.

(3) Excludes approximately $28.5 million in cash to be paid to RB Commercial Mortgage as consideration for our

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acquisition of the NYMT Contributed Assets. RB Commercial Mortgage is a wholly-owned subsidiary of NYMT. Excludes approximately $0.3 milllion in cash to be paid to NYMT by our Predecessor concurrent with the closing of the offering as a payment of the expected accrued preferred distribution on the preferred equity interests of our Predecessor held by NYMT for the period July, 1, 2015 to the closing of this offering.

Upon completion of this offering and consummation of our formation transactions, Mr. Donlon, JMP and NYMT will directly or indirectly beneficially own approximately 0.88%, 4.40% and 37.13%, respectively, of our outstanding common stock on a fully diluted basis.

We have not obtained a fairness opinion or any third-party appraisals of the interests or assets to be contributed to or acquired by us in our formation transactions for purposes of determining how much we should pay for such interests or assets. As a result, the consideration to be paid by us to the Contributing Investors and RB Commercial Mortgage was not based on arm’s-length negotiations and was not approved by any independent directors. The consideration we will pay to acquire our Initial Portfolio may exceed its fair market value and we could realize less value from these investments than we would have if the investments had been acquired through arm’s-length negotiations.

Management Agreement

Concurrent with the closing of this offering, we, our operating partnership and our Predecessor will enter into the Management Agreement with our Manager, pursuant to which our Manager will provide for the day-to-day management of our operations. The Management Agreement requires our Manager to manage our business affairs in conformity with the policies and the investment guidelines that are approved and monitored by our board of directors. All of our officers also serve as officers, employees and/or directors of our Manager or one of their affiliates and our President and one of our directors (who is also the principal executive officer of NYMT) are members of NYMT’s board of directors. As a result, the Management Agreement was negotiated between related parties, and the terms, including fees payable, may not be as favorable to us as if it had been negotiated with an unaffiliated third party. See “Our Manager and the Management Agreement” and “Risk Factors—Risks Related to Our Manager and the Management Agreement.” In addition, Mr. Donlon, JMP and NYMT directly or indirectly own approximately 59.4%, 20.6% and 20.0%, respectively, of our Manager, which entitles them to indirectly receive a portion of the management fees that we pay to our Manager.

If the Management Agreement had been in place for the three months ended March 31, 2015, the year ended December 31, 2014, and the period ended December 31, 2013, the amounts payable to our Manager thereunder for such periods would have been as set forth in the following table:

Management Fee Type	Three Months Ended March 31, 2015		Year Ended December 31, 2014		Period Ended December 31, 2013(1)
Base Management Fee(2)	$	75,000	$	181,769	$	40,490
Incentive Fee	$	0	$	0	$	0

(1) Represents the period from July 24, 2013, (our Predecessor’s inception) to December 31, 2013.

(2) For purposes of calculating the base management fee, we have assumed that our Predecessor’s common equity equaled our adjusted equity market capitalization for the periods indicated.

In connection with our formation transactions and this offering, NYMT has agreed to waive a provision in its management agreement with our Manager which would have otherwise prevented our Manager from advising any other entity that is organized to qualify as a REIT. Pursuant to this waiver, NYMT has agreed to waive this restriction as it relates to our Manager’s entry into the Management Agreement and our Manager serving as our advisor.

Registration Rights Agreement

Concurrent with or prior to the completion of this offering, we will enter into a registration rights agreement with the various entities receiving shares of our common stock in our formation transactions, some of which are affiliated with certain of our directors and executive officers and their affiliates. Under the registration rights agreement, subject to certain limitations and the terms

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of the lock-up arrangements described herein, we will agree to file a “shelf registration” statement for the remaining registrable shares as soon as practicable after we become eligible to use Form S-3 and we must maintain effectiveness of such shelf registration statement until all the registrable shares have been sold under the shelf registration statement or are eligible for sale pursuant to Rule 144 under the Securities Act. The registration rights agreement also provides that certain holders of the registrable shares and their direct and indirect transferees will have the right to demand that we cause their registrable shares to be registered for resale on a registration statement. In addition, if we propose to file a registration statement with respect to a public offering of our common stock for our own account or for the account of others, subject to certain exceptions, we must give notice of the proposed filing to the applicable holders of the registrable shares as soon as practicable and offer the applicable holders the opportunity to include in the registration statement such amount of registrable shares as they may request, subject to customary underwriter cutback provisions. However, the registration rights agreement also provides that no holder of registrable shares will be able to exercise such demand rights and piggyback rights described above until the first anniversary of the closing of this offering and, in no case shall these rights apply to Mr. Donlon, Donlon Family LLC or their successors and assigns. Except as described in the registration rights agreement, we will agree to pay all of the expenses relating to such registration statements.

Stockholder Agreement

Pursuant to a stockholder agreement between NYMT and us that will be effective upon completion of our formation transactions and this offering, so long as NYMT and its affiliates beneficially own at least 10.0% of our outstanding common stock (assuming all outstanding common units and LTIP units are exchanged for shares of our common stock), NYMT will have the right to designate one director nominee to our board of directors. We have further agreed that we will increase the size of our board of directors to six directors on the thirteen month anniversary of the completion of this offering (or the first business day following such anniversary if such anniversary falls on a date other than a business day) by appointing an additional director that will qualify as independent in accordance with the Nasdaq listing rules (the “Additional Director Seat”), unless NYMT expressly agrees in writing to waive this obligation on our part. Pursuant to the stockholder agreement, if NYMT and its affiliates beneficially own at least 20.0% of our outstanding common stock (assuming all outstanding common units and LTIP units are exchanged for shares of our common stock) as of the one-year anniversary of the completion of this offering, NYMT will have the right to designate the director that will fill the Additional Director Seat. From and after the date on which the director that fills the Additional Director Seat takes office, for so long as NYMT and its affiliates beneficially own at least 20.0% of our outstanding common stock (assuming all outstanding common units and LTIP units are exchanged for shares of our common stock), NYMT will have the right to designate two director nominees to our board of directors (including the independent director nominee that will fill the Additional Director Seat). Upon completion of our formation transactions and this offering, we expect that NYMT will beneficially own approximately 37.13% of our outstanding common stock on a fully diluted basis. Subject to the requirements for the designation of the Additional Director Seat discussed above, the number of director nominees that NYMT will have the right to designate may be reduced in the future as follows (in each case assuming all outstanding common units and LTIP units are exchanged for shares of our common stock):

• from and after the time that NYMT and its affiliates beneficially own less than 20.0%, but at least 10.0% of our outstanding common stock, the number of director nominees that NYMT will have the right to designate will be reduced to one (which designee may or may not qualify as independent); and

• from and after the time that NYMT and its affiliates beneficially own less than 10.0% of our outstanding common stock, the number of director nominees that NYMT will have the right to designate will be reduced to zero.

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At such time as NYMT no longer has the right to designate at least one director nominee to our board of directors, the stockholder agreement shall terminate. NYMT will not have the right to transfer or assign its rights under the stockholders agreement to any other party.

Indemnification Agreements

We intend to enter into indemnification agreements with each of our current and future directors and executive officers which will require us to indemnify such persons to the fullest extent permitted by the MGCL and to pay such persons’ expenses, including attorneys’ fees, in defending any civil, criminal or other proceedings related to their service on our behalf in advance of final disposition of such proceeding. See “Certain Provisions of Maryland Law and Our Charter and Bylaws—Indemnification and Limitation of Directors’ and Officers’ Liability.”

Related Party Transaction Policy

Our board of directors has adopted a written policy regarding the approval of any “related person transaction,” which is any transaction or series of transactions in which we or any of our subsidiaries is or are to be a participant, where the amount involved exceeds $120,000, and a “related person” (as defined under SEC rules), which includes our Manager, the Contributing Investors and each of their affiliates, has a direct or indirect material interest. Under the policy, a related person would be required to promptly disclose to our principal financial officer any related person transaction and all material facts about the transaction. Our principal financial officer will then assess and promptly communicate that information to the audit committee of our board of directors. Based on its consideration of all of the relevant facts and circumstances, our audit committee will decide whether or not to approve such transaction. If we were to become aware of an existing related person transaction that has not been pre-approved under this policy, the transaction would be referred to our audit committee, which would evaluate all options available, including ratification, revision or termination of such transaction. Our policy requires any director who may be interested in a related person transaction to recuse himself or herself from any consideration of such related person transaction.

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POLICIES WITH RESPECT TO CERTAIN ACTIVITIES

The following is a discussion of certain of our investment, financing and other policies. These policies have been determined by our board of directors and may be amended or revised from time to time by our board of directors without a vote of our stockholders, except as set forth below. Any change to any of these policies, however, would be made by our board of directors only after a review and analysis of that change, in light of then-existing business and other circumstances, and then only if our directors believe, in the exercise of their business judgment, that it is advisable to do so and in our and our stockholders’ best interests.

General

Our major strategies, policies and guidelines, including our strategies, policies and guidelines regarding investments, financing, growth, debt capitalization, REIT qualification and distributions, are determined by our board of directors. Our board of directors may amend or revise these and other strategies, policies and guidelines, including our investment guidelines, without a vote of our stockholders. In the event our board of directors elects in the future to change these and other strategies, policies and guidelines, we will publicly disclose and explain any such changes to the extent required by applicable securities laws and regulations. Moreover, because our charter and bylaws do not require us to notify stockholders of any changes to our strategies, policies and guidelines, we expect not to disclose in a formal way any such changes unless required at that time by applicable law or regulation. As a practical matter, however, we expect to communicate with our stockholders at least quarterly through quarterly and annual reports to stockholders and we expect to keep our stockholders informed of significant decisions or actions taken by our board of directors with respect to our major strategies, policies and guidelines.

Our Investment Policies

General

Our Manager is authorized to follow very broad investment guidelines established by our board of directors. Our board of directors will periodically review our investment guidelines and our portfolio and asset management decisions. However, it generally will not review all of our proposed investments and asset-management decisions. In addition, in conducting periodic reviews, our board of directors will rely primarily on information provided to it by our Manager. Furthermore, transactions entered into by our Manager may be costly, difficult or impossible to unwind by the time they are reviewed by our board of directors. Our Manager will have great latitude within the broad parameters of our investment guidelines in determining the types and amounts of assets in which to invest on our behalf.

Investment in Real Estate, Interests in Real Estate or Real Estate-Related Debt

We conduct all of our investment activities through our operating partnership and its affiliates. Our objective is to generate attractive, risk-adjusted current income and total returns for our stockholders through investments in the form of joint venture equity ownership and preferred equity ownership in, and mezzanine debt and other high-yield investments secured by, multifamily apartment communities. For a discussion of our business objectives and investment strategy, see “Our Business.”

We seek to acquire assets in accordance with our investment guidelines. Although we intend to focus on the types of investments discussed above under “Our Business,” our future investment activities will not be limited to any geographic area, investment type or to a specified percentage of our assets. While we may diversify in terms of investment type, property locations, size and market, we do not have any limit on the amount or percentage of our assets that may be invested in any one property, any one geographic area or any single investment type. We intend to engage in such future investment activities in a manner that is consistent with our intention to qualify as a REIT for federal income tax purposes and to maintain our exclusion from registration under the Investment Company Act. We may also invest from time to time in capital projects intended to expand or improve the properties to which the investments in our Initial Portfolio relate or that we may subsequently acquire.

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We may make adjustments based on, among other things, prevailing real estate credit, interest and financial market conditions, the availability of attractive investment opportunities, the availability of capital and the composition of our portfolio. We will not forego an attractive investment because it does not fit within our targeted asset class or portfolio composition. We may purchase or invest in any type of real estate that we determine is in the best interest of our stockholders.

We believe the probability of meeting our investment objectives will be maximized through the careful selection and underwriting of assets. Our Manager employs a value-driven approach to underwriting and due diligence, which includes, among other things, a credit-based examination to analyze the risk and return profile of a potential investment, detailed financial cash flow modeling, a detailed review of multifamily fundamentals and a thorough valuation of the investment’s underlying collateral.

The properties to which our investments relate are frequently subject to existing mortgage financing and other indebtedness or to new indebtedness incurred by property-level owners when we acquire or refinance these investments. We do not place any limitations on (i) the number or amount of mortgages which may be placed on any one piece of property or (ii) the amount or percentage of assets that will be invested in any specific property, subject to our qualification as a REIT and to maintenance of our exclusion from registration under the Investment Company Act.

At times, we may invest in unimproved properties. We will consider a property to be an unimproved property if it was not acquired for the purpose of producing rental or other operating income, has no development or construction in process at the time of acquisition, and no development or construction is planned to commence within one year of the acquisition.

On an opportunistic basis and subject to compliance with certain restrictions relating to our intended qualification to be taxed as a REIT, we expect to sell assets in cases where we have successfully executed our value creation plans and where we believe the investment has limited additional upside relative to other opportunities, in order to harvest profits and to reinvest proceeds to maximize stockholder value.

Investments in Securities of or Interests in Persons Primarily Engaged in Real Estate Activities and Other Issuers

Although we have no current intention of doing so, subject to the percentage of ownership limitations, asset tests and gross income tests necessary for REIT qualification, we may invest, without stockholder approval, in securities of other REITs, other entities engaged in real estate activities or other issuers. We may invest in the debt or equity securities of such entities, including for the purpose of exercising control over such entities. We have no current plans to invest in entities that are not engaged in real estate activities. While we may attempt to diversify our investments, in terms of property locations, size and market, we do not have any limit on the amount or percentage of our assets that may be invested in one entity, property or geographic area. In any event, we do not intend that any such investments in securities will require us to register as an investment company under the Investment Company Act, and we intend to divest of securities before any registration of such securities would be required.

Investments in Other Securities

Other than as described above, we do not presently intend to invest in any additional securities such as bonds, preferred stock or common stock.

Conflicts of Interest

We are subject to conflicts of interest arising out of our relationship with our Manager and its affiliates, including the Contributing Investors, and the nature of these conflicts of interest may vary. In addition to the investment management services it provides to our Predecessor, our Manager managed approximately $254 million of capital, as of March 31, 2015, on behalf of NYMT that is invested in multifamily CMBS and certain commercial real estate-related debt investments,

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including preferred equity and mezzanine loans, and approximately $0.8 million of capital, as of March 31, 2015, for a limited liability company formed in May 2013 that is now in “wind-down” mode and of which Mr. Donlon is the “lead capital member.” This limited liability company currently owns an undeveloped parcel of land and 17 residential home lots offered for sale, and we do not expect this limited liability company to develop the land or lots owned by it. Our Manager has agreed that this limited liability company will not invest in our targeted assets in the future. Subject to its obligations under the Management Agreement, although our Manager may in the future provide investment management services to various other clients, our Manager has agreed that, during the term of the Management Agreement, it will allocate all future investment opportunities involving the origination or sourcing of joint venture equity ownership and preferred equity ownership interests in entities that own, and mezzanine loans secured by, multifamily apartment properties to us; provided, however, that our Manager will be permitted to offer all or a portion of such investment opportunity to another account, on substantially the same terms as those presented to us, if the investment opportunity is presented by our Manager to our board of directors for their approval (whether or not it conforms to our investment guidelines) and a majority of the independent and disinterested directors of our board of directors vote against proceeding with the transaction. However, if our board of directors modifies our investment guidelines in a manner that alters (in a way that is materially adverse to our Manager) or otherwise eliminates our Manager’s authority under the investment guidelines with respect to any of the investment opportunities described in the immediately preceding sentence and our Manager does not consent to such modification, our Manager may void its agreement with respect to the allocation of future similar investment opportunities that are impacted by the change. There may be circumstances in which our Manager could direct operations in our company in a manner that would benefit the interests of its affiliates, including the Contributing Investors and their affiliates, or other clients. All of our executive officers and our Chairman are employees of our Manager or one or more of its affiliates and our President and one of our directors (who is also the principal executive officer of NYMT) are members of NYMT’s board of directors. As a result, our Manager and our officers may have conflicts between their duties to us and their duties to, and interests in, our Manager and its affiliates.

We may acquire or sell assets in which our Manager or its affiliates have or may have an interest. Similarly, our Manager or its affiliates may acquire or sell assets in which we have or may have an interest, and we may engage in transactions directly with our Manager or its affiliates. Our Manager and its affiliates may have economic interests in or relationships with entities whose securities we may acquire. In particular, such persons may make or hold an investment in securities that we acquire that may be pari passu, senior or junior in ranking to our interest in the securities or in which partners, security holders, officers, directors, agents or employees of such persons serve on boards of directors or otherwise have ongoing relationships. Each of such ownership and other relationships may result in securities laws restrictions on transactions in such securities and otherwise create conflicts of interest. In such instances, our Manager may, in its sole discretion, make recommendations and decisions regarding such securities for other clients that may be the same as or different from those made with respect to such securities and may take actions (or omit to take actions) in the context of these other economic interests or relationships the consequences of which may be adverse to our interests.

Some of the investments we target are also targeted assets of other clients managed by our Manager now and in the future and, except as described in the paragraph immediately below and subject to its obligations under the Management Agreement, our Manager has no duty to allocate such opportunities in a manner that preferentially favors us. Subject to our Manager’s written investment allocation policy, our Manager makes available to us all opportunities to acquire assets that it determines, in its reasonable and good faith judgment, based on our objectives, policies and strategies, and other relevant factors, are appropriate for us, it being understood that we might not participate in each such opportunity.

Subject to the terms of the Management Agreement, our Manager’s investment allocation policy provides that it will offer all direct investments in multifamily apartment properties, such as joint venture equity ownership and preferred equity ownership interests in entities that own, and

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mezzanine loans secured by, multifamily apartment properties to us, unless the investment is presented by our Manager to our board of directors for their approval (whether or not it conforms to our investment guidelines) and a majority of the independent and disinterested directors of our board of directors vote against proceeding with the transaction, in which case it will then be offered first to NYMT and then to other accounts, while our manager’s investment allocation policy provides that investment opportunities in securitized assets, such as mortgage-backed securities or collateralized debt obligations, will be offered first to NYMT, second to us and thereafter to other accounts. In the event our Manager believes that investments other than those described in the two immediately preceding sentences meet the investment guidelines for more than one account, our Manager may offer the opportunities to multiple accounts in proportion to their needs and available capital; provided that, on an overall basis, each account is treated equitably. Should we and one or more accounts of the Manager be involved in the same investment, our Manager will follow the approval process of our related person transactions policy. See “Certain Relationships and Related Party Transactions—Related Party Transaction Policy.”

Other

We do not have a formal portfolio turnover policy and currently do not intend to adopt one.

Financing Policy

We intend to use prudent amounts of leverage in making our investments, which we define as having total indebtedness of not more than approximately 50% of the fair market value of all of our investments, but the leverage on specific investments may exceed this level. However, we are not subject to any limitations on the amount of leverage we may use, and accordingly, the amount of leverage we use may be significantly less or greater than we currently anticipate. We will use corporate leverage for the sole purpose of financing our portfolio and not for the purpose of speculating on changes in the interest rates. We expect our leverage to decline commensurately as we execute our business plan to grow our net asset value.

Our board of directors has the authority to change our financing policies at any time and without stockholder approval. If our board of directors changes our policies regarding our use of leverage, we expect that it will consider many factors, including the lending standards of GSEs, such as Fannie Mae and Freddie Mac, for loans in connection with the financing of apartment properties, the leverage ratios of publicly traded REITs with similar investment strategies, the cost of leverage as compared to expected operating net revenues, and general market conditions.

To the extent we operate on a leveraged basis, we expect to have more funds available for investment and other purposes than if we operated on a non-leveraged basis, and we believe that operating on a leveraged basis will allow us to acquire more investments than would otherwise be possible, resulting in a larger and more diversified portfolio. See “Risk Factors—Risks Related to Debt Financing.”

Policies Relating to the Investment Company Act

We intend to conduct our operations so that neither we, our operating partnership, RB Multifamily Investors LLC nor the subsidiaries of RB Multifamily Investors LLC are required to register as investment companies under the Investment Company Act. We, our operating partnership and RB Multifamily Investors LLC are structured as holding companies, holding virtually no assets, other than cash, directly. Our non-cash assets are held through three primary subsidiaries of RB Multifamily Investors LLC, RMI I LLC, RMI II LLC and RMI III LLC, and a fourth majority-owned subsidiary of RB Multifamily Investors LLC, Bent Tree, which owns a single parcel of real estate.

Section 3(a)(1)(A) of the Investment Company Act defines an investment company as any issuer that is or holds itself out as being engaged primarily in the business of investing, reinvesting or trading in securities. Section 3(a)(1)(C) of the Investment Company Act defines an investment company as any issuer that is engaged or proposes to engage in the business of investing, reinvesting, owning, holding or trading in securities and owns or proposes to acquire investment

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securities having a value exceeding 40% of the value of the issuer’s total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis, which we refer to as the “40% Test.” Excluded from the term “investment securities,” among other things, are U.S. government securities and securities issued by majority-owned subsidiaries that are not themselves investment companies and are not relying on the exception from the definition of investment company set forth in Section 3(c)(1) or Section 3(c)(7) of the Investment Company Act. Accordingly, under Section 3(a)(1) of the Investment Company Act, in relevant part, a company is not deemed to be an “investment company” if (i) it neither is, nor holds itself out as being, engaged primarily, nor proposes to engage primarily, in the business of investing, reinvesting or trading in securities; and (ii) it neither is engaged nor proposes to engage in the business of investing, reinvesting, owning, holding or trading in securities and does not own or propose to acquire “investment securities” having a value exceeding 40% of the value of its total assets on an unconsolidated basis.

We believe that we, our operating partnership, RB Multifamily Investors LLC and RMI I LLC will not fall within either definition of investment company. We, our operating partnership and RB Multifamily Investors LLC are not engaged in the business of investing, reinvesting or trading in securities, but instead are engaged in the business of our wholly-owned or majority-owned subsidiaries.

RMI I LLC will have at least 60% of its assets in what we call “joint ventures.” These “joint ventures” own real estate. We treat these “joint ventures” as majority-owned subsidiaries. The determination of whether an entity is a majority-owned subsidiary of our company is made by us. The Investment Company Act defines a majority-owned subsidiary of a person as a company 50% or more of the outstanding voting securities of which are owned by such person, or by another company which is a majority-owned subsidiary of such person. The Investment Company Act further defines voting securities as any security presently entitling the owner or holder thereof to vote for the election of directors of a company. With respect to the “joint ventures” that are governed by a board of managers, we have the right to vote on at least 50% of the board seats.

In some instances, the joint ventures are managed by their members, rather than by a board of managers. Thus, the membership interests do not fall squarely within the definition of voting securities, but we nevertheless consider these joint ventures to be majority-owned subsidiaries. The SEC staff has taken the position that limited partnership interests may be voting securities if one or more limited partners has the right to take part in the conduct or control of the partnership’s business or if the limited partners’ economic interests effectively gives them the power to exercise a controlling influence over the partnership. We believe the same analysis applies to limited liability company interests. Where there is no board of managers for a joint venture, we have 50% of the voting rights with respect to “major decisions” to be made, including any major decisions with respect to the assets of the companies. Thus, because we have 50% or more of the voting rights in these joint ventures, we consider them to be our majority-owned subsidiaries. We have not asked the SEC staff for concurrence of our analysis, our treatment of such securities as voting securities, or whether these joint ventures may be treated in the manner in which we intend, and it is possible that the SEC staff could disagree with any of our determinations. If the SEC staff were to disagree with our treatment of one or more companies as majority-owned subsidiaries, we would need to adjust our strategy and our assets. Any such adjustment in our strategy could have a material adverse effect on us.

Similarly, Bent Tree is a joint venture owned directly by RB Multifamily Investors LLC, and it is a majority-owned subsidiary that owns real estate. Thus, both RMI I LLC and Bent Tree satisfy the 40% Test. RMI II LLC will rely upon Section 3(c)(5)(C) as its exclusion from the registration requirements of the Investment Company Act. Section 3(c)(5)(C), as interpreted by the staff of the SEC, requires RMI II LLC to invest at least 55% of its portfolio in “mortgages and other liens on and interests in real estate,” which we refer to as “qualifying real estate assets,” and maintain at least 80% of its assets in qualifying real estate assets or other real estate-related assets. RMI II LLC will satisfy these tests by investing, primarily, in those mezzanine loans that are qualifying real estate assets. RMI III LLC will invest in preferred equity in real estate, which are securities and not qualifying real estate assets. Thus, RMI III LLC will rely upon Section 3(c)(7). Our operating

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partnership’s interest in RMI III LLC will constitute an investment security. Accordingly, we and our operating partnership will continue to satisfy the 40% Test so long as the value of our investment in RMI III LLC, on an unconsolidated basis, is less than 40% of the value of our investment in all subsidiaries of the operating partnership.

To maintain compliance with the Investment Company Act exceptions, we, our operating partnership or our subsidiaries may be unable to sell assets we would otherwise want to sell and may need to sell assets we would otherwise wish to retain. In addition, we, our operating partnership or our subsidiaries may have to acquire additional income- or loss-generating assets that we might not otherwise have acquired or may have to forego opportunities to acquire interests in companies that we would otherwise want to acquire and that may be important to our investment strategy. If our subsidiaries fail to satisfy the requirements of any exemption or exclusion under the Investment Company Act, we could be characterized as an investment company. Our Manager will continually review our investment activity to attempt to ensure that we will not be required to register as an investment company. Among other things, our Manager will attempt to monitor the proportion of our portfolio that is placed in investments in securities.

Interested Director and Officer Transactions

Pursuant to the MGCL, a contract or other transaction between us and a director or between us and any other corporation or other entity in which any of our directors is a director or has a material financial interest is not void or voidable solely on the grounds of such common directorship or interest. The common directorship or interest, the presence of such director at the meeting at which the contract or transaction is authorized, approved or ratified or the counting of the director’s vote in favor thereof will not render the transaction void or voidable if:

• the fact of the common directorship or interest is disclosed or known to our board of directors or a committee of our board of directors, and our board of directors or such committee authorizes, approves or ratifies the transaction or contract by the affirmative vote of a majority of disinterested directors, even if the disinterested directors constitute less than a quorum;

• the fact of the common directorship or interest is disclosed or known to our stockholders entitled to vote thereon, and the transaction is authorized, approved or ratified by a majority of the votes cast by the stockholders entitled to vote, other than the votes of shares owned of record or beneficially by the interested director or corporation or other entity; or

• the transaction or contract is fair and reasonable to us at the time it is authorized, ratified or approved.

We have adopted a policy that requires that all existing or proposed transactions, arrangements, relationships, or series of similar transactions, arrangements or relationships, involving an amount in excess of $120,000 in which we, our operating partnership or any of our subsidiaries is a participant, and in which any of our directors or executive officers, any immediate family member of a director or executive officer, any 5.0% stockholders in us, or any immediate family member of any such stockholder, had or will have a direct or indirect material interest, be considered and approved by our audit committee. See “Certain Relationships and Related Party Transactions—Related Party Transaction Policy.”

Lending Policies

We may not make loans to our directors, officers or other employees except in accordance with our code of business conduct and ethics and applicable law. We do not have a policy limiting our ability to make loans to other persons. We have not engaged in any lending activities in the past, and we do not intend to do so in the future.

Equity Capital Policies

To the extent that our board of directors determines to obtain additional capital, we may issue debt or equity securities, including common units or senior securities of our operating partnership,

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retain earnings (subject to provisions in the Code requiring distributions of income to qualify and maintain our qualification as a REIT) or pursue a combination of these methods. As long as our operating partnership is in existence, we will generally contribute the proceeds from all equity capital issued by us to our operating partnership in exchange for additional interests in our operating partnership, which will dilute the ownership interests of the limited partners in our operating partnership.

Existing common stockholders will have no preemptive rights to common or preferred stock or units issued in any securities offering by us, and any such offering might cause a dilution of a stockholder’s investment in us. Although we have no current plans to do so, we may in the future issue shares of capital stock or common units in connection with acquisitions of assets.

We may, under certain circumstances, purchase shares of our common stock or other securities in the open market or in private transactions with our stockholders, provided that those purchases are approved by our board of directors. Our board of directors has no present intention of causing us to repurchase any shares of our common stock or other securities, and any such action would only be taken in conformity with applicable federal and state laws and the applicable requirements for qualification as a REIT.

Reporting Policies

We are subject to the information reporting requirements of the Exchange Act. Pursuant to these requirements, we file periodic reports, proxy statements and other information, including audited financial statements, with the SEC. See “Additional Information.”

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PRINCIPAL STOCKHOLDERS

The table below sets forth, as of the completion of this offering and our formation transactions, certain information regarding the beneficial ownership of shares of our common stock and shares of our common stock issuable upon redemption of common units immediately following the completion of this offering and our contribution transactions for (1) each person who is expected to be the beneficial owner of 5% or more of our outstanding shares of our common stock immediately following the completion of this offering, (2) each of our named executive officers, directors and the persons who will become our directors immediately prior to the commencement of the trading of our common stock on Nasdaq and (3) all of our directors, executive officers and the persons who will become our directors immediately prior to the commencement of the trading of our common stock on Nasdaq as a group. This table assumes that our contribution transactions and this offering are completed, and gives effect to the expected issuance of shares of our common stock and LTIP units in connection with this offering and our formation transactions (based on the midpoint of the range of the public offering price per share set forth on the front cover of this prospectus). Each person named in the table has sole voting and investment power with respect to all of the shares of our common stock shown as beneficially owned by such person, except as otherwise set forth in the notes to the table. The extent to which a person will hold shares of our common stock as opposed to LTIP units is set forth in the footnotes below.

The SEC has defined “beneficial ownership” of a security to mean the possession, directly or indirectly, of voting power and/or investment power over such security. A stockholder is also deemed to be, as of any date, the beneficial owner of all securities that such stockholder has the right to acquire within 60 days after that date through (1) the exercise of any option, warrant or right, (2) the conversion of a security, (3) the power to revoke a trust, discretionary account or similar arrangement or (4) the automatic termination of a trust, discretionary account or similar arrangement. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, shares of our common stock subject to options or other rights (as set forth above) held by that person that are exercisable as of the completion of this offering or will become exercisable within 60 days thereafter, are deemed outstanding, while such shares are not deemed outstanding for purposes of computing percentage ownership of any other person.

Name of Beneficial Owner(1)	Number of Shares Beneficially Owned Immediately Prior to This Offering(2)		Number of Shares Beneficially Owned Upon Completion of This Offering		Number of Shares and LTIP units Beneficially Owned		Percentage of all Shares(3)			Percentage of all Shares and LTIP units(3)
Kevin M. Donlon(4)		100		58,131		58,131			*			*
Douglas E. Neal		—		—		—		—			—
Stephen L. Hogue		—		—		—		—			—
Emily A. Stiller		—		—		—		—			—
Steven B. Brannan		—		—		—		—			—
Steven R. Mumma		—		—		—		—			—
Katharine R. Briggs**		—		—		500			*			*
Robert W. Simmons**		—		—		500			*			*
C. Reynolds Thompson III**		—		—		500			*			*
New York Mortgage Trust, Inc.(5)		—		2,451,211		2,451,211		37.14	%		37.13	%
JMP Group LLC(6)		—		290,658		290,658		4.40	%		4.40	%
All executive officers, directors and director nominees as a group (9 persons)		100		58,131		59,631			*			*

* Less than 1.0%

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** This individual has agreed to become a member of our board of directors immediately prior to the commencement of the trading of our common stock on Nasdaq.

(1) The address of each beneficial owner listed, other than those holders that beneficially own greater than 5% of our outstanding shares of our common stock, is 227 West Trade Street, Suite 900, Charlotte, North Carolina 28202. No shares or common units beneficially owned by any executive officer, director or director nominee have been pledged as security for a loan.

(2) We had 100 shares issued and outstanding immediately prior to this offering, all of which were held by, Mr. Donlon. Immediately prior to completion of this offering, we will repurchase these shares for $1,000 from Mr. Donlon.

(3) Assumes an aggregate of 6,600,000 shares of our common stock and an aggregate of 1,500 LTIP units are outstanding immediately following the completion of this offering, which does not reflect shares of our common stock reserved for issuance upon exercise of the underwriters’ option to purchase additional shares of our common stock.

(4) Represents shares of our common stock held directly by Donlon Family LLC, of which Mr. Donlon is the sole member.

(5) Represents 2,451,211 shares of our common stock held directly by NYMT. The address of NYMT is 275 Madison Avenue, New York, New York 10016. Voting and investment power over these shares is held by a majority of the independent directors of NYMT’s board of directors.

(6) Represents 290,658 shares of our common stock held directly by JMP Holding LLC, of which JMP Group Inc. is the sole member. JMP Group Inc. is a wholly-owned subsidiary of JMP Group LLC. The address of JMP Group LLC is 600 Montgomery Street, San Francisco, California 94111.

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DESCRIPTION OF OUR CAPITAL STOCK

The following is a summary of the rights and preferences of our capital stock. While we believe that the following description covers the material terms of our capital stock, the description may not contain all of the information that is important to you. We encourage you to read carefully this entire prospectus, our charter and bylaws and the relevant provisions of Maryland law for a more complete understanding of our capital stock. Copies of our charter and bylaws are filed as exhibits to the registration statement of which this prospectus is a part and the following summary, to the extent it relates to those documents, is qualified in its entirety by reference thereto. See “Additional Information.”

General

Our charter provides that we may issue up to 500,000,000 shares of capital stock, consisting of 450,000,000 shares of common stock, $0.01 par value per share, and 50,000,000 shares of preferred stock, $0.01 par value per share. Our charter authorizes our board of directors, with the approval of a majority of the entire board of directors, to amend our charter to increase or decrease the aggregate number of authorized shares of stock or the number of shares of stock of any class or series that we have authority to issue without stockholder approval. Upon completion of this offering and consummation of our formation transactions, we expect 6,601,500 shares of our common stock will be outstanding on a fully diluted basis (or 7,171,500 shares if the underwriters fully exercise their option to purchase up to 570,000 shares). No shares of preferred stock will be issued and outstanding upon completion of this offering.

Under Maryland law, stockholders are not personally liable for the obligations of a Maryland corporation solely as a result of their status as stockholders.

Common Stock

All of the shares of our common stock offered by this prospectus will be duly authorized and validly issued, and, upon completion of this offering, will be fully paid and non-assessable. Subject to the preferential rights, if any, of holders of any other class or series of stock and to the provisions of our charter regarding the restrictions on ownership and transfer of stock, holders of shares of our common stock are entitled to receive dividends and other distributions on such shares of stock out of assets legally available therefor if, as and when authorized by our board of directors and declared by us, and the holders of shares of our common stock are entitled to share ratably in our assets legally available for distribution to our stockholders in the event of our liquidation, dissolution or winding up after payment of or adequate provision for all of our known debts and liabilities, and subject to the rights of holders of our preferred stock, if any outstanding at such time, except that, to the extent we incur any tax under the Code as the result of any “excess inclusion income” of ours being allocated to a “disqualified organization” that holds shares of our stock in record name, we will reduce distributions to such stockholder in an amount equal to such tax paid by us that is attributable to such stockholder’s ownership in accordance with applicable Treasury Regulations.

The shares of our common stock that we are offering will be issued by us and do not represent any interest or obligation of our Manager or any of its affiliates. Further, the shares are not a deposit or other obligation of any bank, are not an insurance policy of any insurance company and are not insured or guaranteed by the FDIC, any other governmental agency or any insurance company. The shares of our common stock will not benefit from any insurance guaranty coverage or any similar protection.

Subject to the provisions of our charter regarding the restrictions on ownership and transfer of shares of stock and except as may otherwise be specified in the terms of any class or series of stock, each outstanding share of common stock entitles the holder to one vote on all matters submitted to a vote of stockholders, including the election of directors, and, except as provided with respect to any other class or series of stock, the holders of such common stock will possess the exclusive voting power. There is no cumulative voting in the election of our directors, which means that, subject to the rights of holders of any other class or series of stock, the stockholders

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entitled to cast a majority of the votes entitled to be cast in the election of directors can elect all of the directors then standing for election, and the remaining stockholders will not be able to elect any directors. Directors are elected by a plurality of all votes cast in the election of directors.

Holders of shares of common stock generally have no preference, conversion, exchange, sinking fund, redemption or appraisal rights and have no preemptive rights to subscribe for any of our securities. Subject to the restrictions on ownership and transfer of stock contained in our charter and the terms of any other class or series of stock, all of shares of our common stock will have equal dividend, liquidation and other rights.

Under the MGCL, a Maryland corporation generally cannot dissolve, amend its charter, merge, convert or consolidate with another entity, sell all or substantially all of its assets, engage in a statutory share exchange unless the action is advised by our board of directors and approved by the affirmative vote of stockholders entitled to cast at least two-thirds of the votes entitled to be cast on the matter unless a lesser percentage (but not less than a majority) is specified in the corporation’s charter. Except for amendments to the provisions of our charter relating to directors and the vote required to amend the director and amendment provisions (each of which requires the affirmative vote of stockholders entitled to cast not less than two-thirds of all the votes to be cast on the matter) and certain amendments described in our charter that require only approval by our board of directors, these actions may be taken only if advised by our board of directors and approved by the affirmative vote of stockholders entitled to case a majority of all votes entitled to be cast on the matter.

Power to Reclassify Our Unissued Shares of Stock

Our charter authorizes our board of directors to classify and reclassify any unissued shares of common or preferred stock into other classes or series of stock, including one or more classes or series of stock that have priority with respect to voting rights, dividends or upon liquidation over our common stock, and authorize us to issue the newly classified shares. Prior to issuance of shares of each class or series, our board of directors is required by Maryland law and by our charter to set, subject to the provisions of our charter regarding the restrictions on ownership and transfer of our stock, the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications and terms or conditions of redemption for each class or series. Our board of directors may take these actions without stockholder approval unless stockholder approval is required by the rules of any stock exchange or automatic quotation system on which our securities are then listed or traded. Therefore, our board could authorize the issuance of shares of common or preferred stock with terms and conditions that could have the effect of delaying, deferring or preventing a change in control or other transaction that might involve a premium price for shares of our common stock or otherwise be in the best interest of our stockholders. No shares of preferred stock are presently outstanding, and we currently have no plans to issue any shares of preferred stock.

Power to Increase or Decrease Authorized Shares of Stock and Issue Additional Shares of Common and Preferred Stock

We believe that the power of our board of directors to amend our charter to increase or decrease the number of authorized shares of stock, to authorize us to issue additional authorized but unissued shares of common or preferred stock and to classify or reclassify unissued shares of common or preferred stock and thereafter to authorize us to issue such classified or reclassified shares of stock will provide us with increased flexibility in structuring possible future financings and acquisitions and in meeting other needs that might arise. The additional classes or series, as well as the additional shares of common stock, will be available for issuance without further action by our stockholders, unless such approval is required by the rules of any stock exchange or automated quotation system on which our securities are then listed or traded. Although our board of directors does not intend to do so, it could authorize us to issue a class or series of stock that could, depending upon the terms of the particular class or series, delay, defer or prevent a change in control or other transaction that might involve a premium price for shares of our common stock or otherwise be in the best interest of our stockholders.

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Restrictions on Ownership and Transfer

In order to qualify as a REIT for each taxable year beginning after December 31, 2015, our shares of stock must be beneficially owned by 100 or more persons during at least 335 days of a taxable year of 12 months or during a proportionate part of a shorter taxable year. Also, for our taxable years beginning after December 31, 2015, no more than 50% of the value of our outstanding shares of stock may be owned, directly or constructively, by five or fewer individuals (as defined in the Code to include certain entities) during the second half of any taxable year.

Because our board of directors believes it is at present essential for us to qualify as a REIT, among other purposes, our charter provides that, subject to certain exceptions, upon completion of this offering, no person may beneficially or constructively own under the attribution provisions of the Code, more than 9.8% in value or in number of shares, whichever is more restrictive, of the outstanding shares of any class or series of our capital stock, except that NYMT may own up to 100% of the shares of our common stock as long as it continues to qualify as a REIT. We refer to the foregoing restriction as the “ownership limit.”

Our charter also prohibits any person from (i) beneficially or constructively owning our shares of our capital stock if such ownership would result in our being “closely held” under Section 856(h) of the Code (without regard to whether the ownership interest is held during the last half of the taxable year), (ii) transferring our shares, if such transfer would result in our capital stock being beneficially owned by fewer than 100 persons (determined under the principles of Section 856(a)(5) of the Code) and (iii) beneficially or constructively owning shares of our capital stock if such ownership would otherwise cause us to fail to qualify as a REIT.

Our board of directors, in its sole discretion, prospectively or retroactively, may exempt a person from the ownership limit and may establish or increase an excepted holder limit for such person. The person seeking an exemption must provide to our board of directors any such representations, covenants and undertakings as our board of directors may deem appropriate in order to conclude that granting the exemption and/or establishing or increasing an excepted holder limit, as the case may be, will not cause us to fail to qualify as a REIT. Our board of directors may also require a ruling from the IRS or an opinion of counsel in order to determine or ensure our qualification as a REIT. Our board of directors may from time to time increase or decrease the ownership limit for one or more persons, but any decreased ownership limit will not be effective for any person whose percentage ownership of our stock is in excess of the decreased ownership limit until the person’s percentage ownership of our stock equals or falls below the decreased ownership limit (although any acquisition of our stock in excess of the decreased ownership limit will be in violation of the decreased ownership limit). Our board of directors may not increase the ownership limit if the increase, taking into account any excepted holder limits, would allow five or fewer individuals (including certain entities) to beneficially own more than 49.9% in value of our outstanding shares of capital stock.

Any person who acquires or attempts or intends to acquire beneficial or constructive ownership of shares of our stock that will or may violate the ownership limit or any of the other foregoing restrictions on ownership and transfer of shares of our stock, or who is the intended transferee of shares of our stock which are transferred to the trust (as described below), must give written notice immediately to us or, in the case of a proposed or attempted transaction, give at least 15 days prior written notice and must provide us with such other information as we may request in order to determine the effect, if any, of such transfer on our qualification as a REIT.

Any attempted transfer of our stock that, if effective, would result in a violation of any of the foregoing restrictions on ownership and transfer of our stock, will cause the number of shares causing the violation (rounded up to the nearest whole share) to be automatically transferred to one or more charitable trusts for the exclusive benefit of one or more charitable beneficiaries and the purported transferee will not acquire any rights in such shares, except that any transfer that results in the violation of the restriction relating to our shares being beneficially owned by fewer than 100 persons will be void ab initio and the purported transferee will not acquire any rights in such shares. The automatic transfer will be deemed to be effective as of the close of business on the business day (as defined in our charter) prior to the date of the transfer. If, for any reason, the

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transfer to the trust would not be effective to prevent the violation of the foregoing restrictions, our charter provides that the purported transfer in violation of the restrictions will be void ab initio and the purported transferee will not acquire any rights in such shares. Shares of our stock held in the trust will be deemed to be issued and outstanding. The purported transferee will not benefit economically from ownership of any shares of stock held in the trust, will have no rights to dividends and no rights to vote or other rights attributable to the shares of stock held in the trust.

The trustee of the trust will have all voting rights and rights to dividends or other distributions with respect to shares of stock held in the trust. These rights will be exercised for the exclusive benefit of the charitable beneficiary. Any dividend or other distribution paid prior to our discovery that shares of stock have been transferred to the trust will be paid by the recipient to the trustee upon demand. Any dividend or other distribution authorized but unpaid will be paid when due to the trustee. Any dividend or distribution paid to the trustee will be held in trust for the charitable beneficiary. Subject to Maryland law, effective as of the date that the shares have been transferred to the trust, the trustee will have the authority in the trustees sole discretion (i) to rescind as void any vote cast by the purported transferee prior to our discovery that the shares have been transferred to the trust and (ii) to recast the vote in accordance with the desires of the trustee acting for the benefit of the charitable beneficiary. However, if we have already taken irreversible corporate action, then the trustee will not have the authority to rescind and recast the vote.

Within 20 days of receiving notice from us that shares of our stock have been transferred to the trust, the trustee must sell the shares to a person designated by the trustee, whose ownership of the shares of stock will not violate the above ownership and transfer limitations. Upon such sale, the interest of the charitable beneficiary in the shares of stock sold will terminate and the trustee must distribute the net proceeds of the sale to the purported transferee and to the charitable beneficiary as follows: The purported transferee will receive the lesser of (i) the price paid by the purported transferee for the shares of stock or, if the purported transferee did not give value for the shares in connection with the event causing the shares to be held in trust, the market price (as defined in our charter) of the shares on the day of the event causing the shares to be held in the trust and (ii) the price received by the trustee from the sale or other disposition of the shares (net of any commissions and other expenses). Any net sale proceeds in excess of the amount payable to the purported transferee and dividends or other distributions held by the trustee will be paid immediately to the charitable beneficiary. The trustee may reduce the amount payable to the purported transferee by the amount of dividends and other distributions paid to the purported transferee and owed by the purported transferee to the trustee. If, prior to our discovery that shares have been transferred to the trust, the shares are sold by the purported transferee, then (i) the shares will be deemed to have been sold on behalf of the trust and (ii) to the extent that the purported transferee received an amount for the shares that exceeds the amount the purported transferee was entitled to receive, the excess must be paid to the trustee upon demand.

In addition, shares of our stock held in the trust will be deemed to have been offered for sale to us, or our designee, at a price per share equal to the lesser of (i) the price per share in the transaction that resulted in the transfer to the trust (or, if the event that resulted in the transfer to the trust did not involve a purchase of the shares at market price, the market price of the shares on the day of the event causing the shares to be held in the trust) and (ii) the market price on the date we accept, or our designee accepts, the offer, which we may reduce by the amount of dividends and other distributions paid to the purported transferee and owed by the purported transferee to the trustee and pay such amount instead to the trust for the benefit of the charitable beneficiary. We will have the right to accept the offer until the trustee has sold the shares. Upon a sale to us, the interest of the charitable beneficiary in the shares of stock sold will terminate and the trustee must distribute the net proceeds of the sale to the purported transferee and any dividends or other distributions held by the trustee must be paid to the charitable beneficiary.

All certificated shares of stock will bear a legend referring to the restrictions described above (or a declaration that we will furnish a full statement about certain restrictions on transferability to a stockholder on request and without charge).

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Every owner of 5% or more (or such lower percentage as required by the Code or the regulations promulgated thereunder) in number or value of our outstanding shares of stock, including common stock, within 30 days after the end of each taxable year, must give written notice to us stating the name and address of such owner, the number of shares of each class and series of stock which the owner beneficially owns and a description of the manner in which the shares are held. Each such owner must also provide to us such additional information as we may request in order to determine the effect, if any, of such beneficial ownership on our qualification as a REIT and to ensure compliance with the restrictions on ownership and transfer of our stock. In addition, each owner of our stock must, upon demand, provide to us such information as we may request in order to determine our qualification as a REIT and to comply with the requirements of any taxing authority or governmental authority or to determine such compliance and to ensure compliance with the ownership limit.

These ownership and transfer limitations could delay, defer or prevent a transaction or a change in control that might involve a premium price for our securities or might otherwise be in the best interests of our stockholders.

These restrictions on ownership and transfer of our stock will not apply if our board of directors determines that it is no longer in our best interests to attempt to qualify, or to continue to qualify, as a REIT or that compliance is no longer required in order for us to qualify as a REIT; provided, however that pursuant to our contribution agreements with RB Commercial Mortgage and NYMT, we have agreed that we will not knowingly revoke or otherwise terminate our election to be taxed as a REIT for any taxable year in which NYMT owns, directly or indirectly, more than 10% of the voting power in, or more than 10% of the shares of our common stock.

Stock Exchange Listing

We have applied to list our common stock listed on the Nasdaq under the symbol “RMI.”

Transfer Agent and Registrar

The transfer agent and registrar for our common stock is American Stock Transfer & Trust Company, LLC.

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CERTAIN PROVISIONS OF MARYLAND LAW AND OF OUR CHARTER AND BYLAWS

Although the following summary describes certain provisions of Maryland law and of our charter and bylaws as they will be in effect upon the completion of this offering, it is not a complete description of Maryland law and our charter and bylaws. We encourage you to read carefully this entire prospectus, our charter and bylaws and the related provisions of Maryland law. Copies of our charter and bylaws are filed as exhibits to the registration statement of which this prospectus is a part. See “Additional Information.”

Number of Directors; Election of Directors; Vacancies

At each annual meeting of stockholders, our stockholders will elect each of our directors to serve until the next annual meeting of stockholders and until his or her successor is duly elected and qualified. Our charter and bylaws provide that the number of directors of our company may be established, increased or decreased only by a majority of our entire board of directors but may not be fewer than the minimum number required under the MGCL, which is one, nor, unless our bylaws are amended, more than 15. Upon the completion of this offering, we expect that our board of directors will consist of five directors, three of whom we expect our board of directors will determine to be “independent” directors in accordance with the listing standards of Nasdaq. Our charter and bylaws also provide that, except as may be provided by our board of directors in setting the terms of any class or series of shares, any and all vacancies on our board of directors may be filled only by the affirmative vote of a majority of the remaining directors in office, even if the remaining directors do not constitute a quorum, and any individual elected to fill such vacancy will serve for the remainder of the full term of the directorship in which such vacancy occurred and until a successor is duly elected and qualified.

A plurality of all votes cast in the election of directors at a meeting of stockholders at which a quorum is present is sufficient to elect a director. The presence in person or by proxy of stockholders entitled to cast a majority of all the votes entitled to be cast at a meeting constitutes a quorum.

Removal of Directors

Our charter provides that, subject to the rights of holders of one or more classes or series of preferred stock, a director may be removed with or without cause, but only by the affirmative vote of at least two-thirds of the votes entitled to be cast generally in the election of directors. These provisions, when coupled with the exclusive power of our board of directors to fill vacancies on our board of directors, generally precludes stockholders from removing incumbent directors except for “cause” and with a substantial affirmative vote and filling the vacancies created by such removal with their own nominees.

Business Combinations

Maryland law prohibits certain “business combinations” between a Maryland corporation and an interested stockholder or an affiliate of an interested stockholder for five years after the most recent date on which the interested stockholder becomes an interested stockholder. These business combinations include a merger, consolidation, share exchange, or, in circumstances specified in the statute, an asset transfer or issuance or transfer or reclassification of equity securities, liquidation plan or reclassification of equity securities. Maryland law defines an interested stockholder as:

• any person or entity who beneficially owns, directly or indirectly, 10% or more of the voting power of a corporation’s outstanding voting stock; or

• an affiliate or associate of a corporation who, at any time within the two-year period prior to the date in question, was the beneficial owner of 10% or more of the voting power of the then-outstanding voting stock of the corporation.

A person is not an interested stockholder if the board of directors approves in advance the transaction by which the person otherwise would have become an interested stockholder.

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However, in approving a transaction, the board of directors may provide that its approval is subject to compliance, at or after the time of approval, with any terms and conditions determined by the board of directors.

After the five-year prohibition, any business combination between the Maryland corporation and an interested stockholder or an affiliate of an interested stockholder generally must be recommended by the board of directors of the corporation and approved by the affirmative vote of at least:

• 80% of the votes entitled to be cast by holders of our outstanding shares of voting stock of the corporation; and

• two-thirds of the votes entitled to be cast by holders of our voting stock of the corporation other than stock held by the interested stockholder with whom or with whose affiliate the business combination is to be effected or stock held by an affiliate or associate of the interested stockholder.

These super-majority vote requirements do not apply if, among other conditions, the corporation’s common stockholders receive a minimum price, as defined under Maryland law, for their shares in the form of cash or other consideration in the same form as previously paid by the interested stockholder for its stock.

The statute permits various exemptions from its provisions, including business combinations that are exempted by the board of directors prior to the time that the interested stockholder becomes an interested stockholder.

As permitted by the MGCL, our board of directors has adopted a resolution exempting any business combination (i) between us and any other person from the provisions of this statute, provided that the business combination has first been approved by our board of directors, including a majority of our directors who are not affiliated or associated with such other person and (ii) between us and our Manager or any of their affiliates or associates, or any person acting in concert with any of the foregoing. Consequently, the five-year prohibition and the supermajority vote requirements will not apply to business combinations between us and the persons described above. As a result, these persons may be able to enter into business combinations with us that may not be in the best interest of our stockholders without compliance by our company with the supermajority vote requirements and other provisions of the statute. However, this resolution may be altered or repealed in whole or in part at any time and we may opt back into the business combination provisions of the MGCL. If this resolution is repealed, the statute may discourage others from trying to acquire control of us and increase the difficulty of consummating any offer.

Control Share Acquisitions

Maryland law provides that a holder of “control shares” of a Maryland corporation acquired in a “control share acquisition” has no voting rights with respect to those shares, except to the extent approved by a vote of two-thirds of the votes entitled to be cast on the matter. Shares owned by the acquiring person, or by officers of the corporation or by directors of the corporation who are also employees of the corporation are excluded from the shares entitled to vote on the matter. “Control shares” are voting shares of stock which, if aggregated with all other shares of stock currently owned by the acquiring person, or in respect of which the acquiring person is able to exercise or direct the exercise of voting power (except solely by virtue of a revocable proxy), would entitle the acquiring person to exercise voting power in electing directors within one of the following ranges of voting power:

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

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

• a majority or more of all voting power.

Control shares do not include shares the acquiring person is then entitled to vote as a result of having previously obtained stockholder approval. A “control share acquisition” means the

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acquisition, directly or indirectly, by any person, of ownership of, or the power to direct the exercise of voting power with respect to, issued and outstanding control shares, subject to certain exceptions. A person who has made or proposes to make a control share acquisition may compel the board of directors to call a special meeting of stockholders to be held within 50 days of demand to consider the voting rights of the shares. The right to compel the calling of a special meeting is subject to the satisfaction of certain conditions, including an undertaking to pay the expenses of the meeting and making an “acquiring person statement” as described in the MGCL. If no request for a meeting is made, the corporation may present the question at any stockholders meeting.

If voting rights of control shares are not approved at the stockholders meeting or if the acquiring person does not deliver an “acquiring person statement”, then, subject to certain conditions and limitations, the corporation may redeem any or all of the control shares, except those for which voting rights have previously been approved, for fair value. Fair value is determined, without regard to the absence of voting rights for the control shares, as of the date of the last control share acquisition by the acquiror or of any meeting of stockholders at which the voting rights of the shares were considered and not approved. If voting rights for control shares are approved at a stockholders meeting and the acquiror becomes entitled to vote a majority of the shares entitled to vote, all other stockholders may exercise appraisal rights. The fair value of the shares for purposes of these appraisal rights may not be less than the highest price per share paid by the acquiror in the control share acquisition. The control share acquisition statute does not apply to shares acquired in a merger, consolidation or share exchange if the corporation is a party to the transaction, nor does it apply to acquisitions approved by or exempted by the charter or bylaws of the corporation.

Our bylaws contain a provision exempting from the control share acquisition statute any and all acquisitions by any person of shares of our stock. As a result, any and all acquisitions by any person of our capital stock will not be affected by the control share acquisitions statute. Unless our bylaws are amended to modify or eliminate this provision, the control share acquisition statute will continue to have no effect on acquisitions of our capital stock. There can be no assurance that this provision will not be amended or eliminated at any time in the future.

Maryland Unsolicited Takeovers Act

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

• a classified board;

• a two-thirds vote requirement for removing a director;

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

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

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

In our charter, we have elected, at such time as we become eligible (which we expect to be upon the closing of this offering), to be subject to the provisions of Subtitle 8 relating to the filling of vacancies on our board of directors. Through provisions in our charter and bylaws unrelated to Subtitle 8, we already (i) require a two-thirds vote for the removal of any director from the board, (ii) vest in the board the exclusive power to fix the number of directorships and (iii) provide that, unless called by the Chairman of our board of directors, our Chief Executive Officer, our President or our board of directors, a special meeting of stockholders may only be called by our secretary upon the written request of the stockholders entitled to cast not less than a majority of all the votes

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entitled to be cast at the meeting. We have not elected to create a classified board. In the future, our board of directors may elect, without stockholder approval, to create a classified board or adopt one or more of the other provisions of Subtitle 8.

Meetings of Stockholders

Under our bylaws, annual meetings of stockholders will be held each year on a date and at the time set by our board of directors. Our bylaws provide that special meetings of stockholders may be called only by our board of directors, the Chairman of our board of directors, our Chief Executive Officer, our President or, in the case of a stockholder requested special meeting, by our Secretary upon the written request of the stockholders entitled to cast not less than a majority of all votes entitled to be cast at such meeting who have complied with the procedures set forth in our bylaws. Only matters set forth in the notice of the special meeting may be considered and acted upon at such a meeting.

Extraordinary Transactions

Under the MGCL, a Maryland corporation generally cannot dissolve, merge, convert, sell all or substantially all of its assets, engage in statutory share exchange or engage in similar transactions outside of the ordinary course of business unless approved by the affirmative vote of stockholders entitled to cast at least two-thirds of the votes entitled to be cast on the matter unless a lesser percentage (but not less than a majority of all of the votes entitled to be cast on the matter) is set forth in the corporation’s charter. As permitted by MGCL, our charter provides that any of these actions, if advised by our board of directors, may be approved by the affirmative vote of stockholders entitled to cast a majority of all the votes entitled to be cast on the matter. However, many of our operating assets will be held by our subsidiaries, and these subsidiaries may be able to sell all or substantially all of their assets or merge with another entity without the approval of our stockholders.

Amendment to Our Charter and Bylaws

Under the MGCL, a Maryland corporation generally cannot amend its charter unless advised by its board of directors and approved by the affirmative vote of stockholders entitled to cast at least two-thirds of the votes entitled to be cast on the matter unless a lesser percentage (but not less than a majority of all of the votes entitled to be cast on the matter) is set forth in the corporation’s charter. Except for amendments to the provisions of our charter related to directors and the vote required to amend the director and amendment provisions (each of which requires the affirmative vote of stockholders entitled to cast not less than two-thirds of all the votes entitled to be cast on the matter) and certain amendments described in our charter that require only approval by our board of directors, our charter may be amended only if advised by our board of directors and approved by the affirmative vote of stockholders entitled to cast a majority of all the votes entitled to be cast on the matter.

Our board of directors has the exclusive power to adopt, alter or repeal any provision of our bylaws and to make new bylaws.

Dissolution

Our dissolution must be declared advisable by a majority of our entire board of directors and approved by the affirmative vote of stockholders entitled to cast a majority of all the votes entitled to be cast on the matter.

Advance Notice of Director Nominations and New Business

Our bylaws provide that, with respect to an annual meeting of stockholders, nominations of individuals for election to our board of directors at an annual meeting and the proposal of business to be considered by stockholders may be made only (i) pursuant to our notice of the meeting, (ii) by or at the direction of our board of directors or (iii) by a stockholder of record both at the time of giving the advance notice required by the bylaws and at the time of the annual

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meeting, who is entitled to vote at the meeting in the election of such individual so nominated or on such other business and who has complied with the advance notice provisions set forth in our bylaws. Our bylaws currently require the stockholder generally to provide notice to the secretary containing the information required by our bylaws not less than 120 days nor more than 150 days prior to the first anniversary of the date of our proxy statement for the solicitation of proxies for election of directors at the preceding year’s annual meeting, or with respect to our first annual meeting as a public company, not more than 150 days before the date of such meeting and not less than the later of 120 days before the date of such meeting or 10 days after the date on which we first publicly announce the date of such meeting.

With respect to special meetings of stockholders, only the business specified in our notice of meeting may be brought before the meeting. Nominations of individuals for election to our board of directors at a special meeting may be made only (1) by or at the direction of our board of directors or (2) provided that the special meeting has been called in accordance with our bylaws for the purpose of electing directors, by a stockholder of record both at the time of giving advance notice required by our bylaws and at the time of the meeting, who is entitled to vote at the meeting in the election of each individual so nominated and who has complied with the advance notice provisions set forth in our bylaws. Such stockholder may nominate one or more individuals, as the case may be, for election as a director if the stockholder’s notice containing the information required by our bylaws is delivered to the secretary not earlier than the 120th day prior to such special meeting and not later than 5:00 p.m., eastern time, on the later of (i) the 90th day prior to such special meeting or (ii) the tenth day following the day on which public announcement is first made of the date of the special meeting and the proposed nominees of our board of directors to be elected at the meeting.

Anti-takeover Effect of Certain Provisions of Maryland Law and of Our Charter and Bylaws

If the applicable exemption in our bylaws is repealed and the applicable resolution of our board of directors is repealed, the control share acquisition provisions and the business combination provisions of the MGCL, respectively, as well as the provisions in our charter and bylaws, as applicable, on removal of directors and the filling of director vacancies and the restrictions on ownership and transfer of stock, together with the advance notice and stockholder-requested special meeting provisions of our bylaws, alone or in combination, could serve to delay, deter or prevent a transaction or a change in our control that might involve a premium price for holders of our common stock or otherwise be in their best interests.

Corporate Opportunities

Our charter contains provisions that permit our Manager and our directors and officers, and their affiliates (which includes NYMT and JMP), to compete with us, own any investments or engage in any business activities (including investments and business activities that are similar to our current or proposed investments or business activities) or buy, sell or trade any securities or commodities for their own accounts (including taking positions contrary to ours), and our charter provides that, to the maximum extent permitted by law, no such person will be liable to us or any stockholder by reason of the fact that the person participates in any such activity. Our charter also provides that, to the maximum extent permitted by law, our Manager and our directors and officers, and their affiliates, are not required to present any business opportunity to us unless the opportunity was expressly offered to such person in his or her capacity as a director or officer of our company.

Exclusive Forum

Our bylaws provide that, unless we consent in writing to the selection of an alternative forum, the Circuit Court for Baltimore City, Maryland, or, if that court does not have jurisdiction, the U.S. District Court for the District of Maryland, Baltimore Division, will be the sole and exclusive forum for (a) any derivative action or proceeding brought on our behalf, (b) any action asserting a claim of breach of any duty owed by any or our directors or officers to us or our stockholders, (c) any action asserting a claim against us or any of our directors, or officers arising pursuant to any

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provision of the MGCL, our charter or our bylaws, (d) any action asserting a claim against us or any of our directors or officers that is governed by the internal affairs doctrine. Any person or entity purchasing or otherwise acquiring any interest in shares of our stock will be deemed to have notice of and consented to the provisions of our charter and bylaws, including the exclusive forum provisions in our bylaws.

Indemnification and Limitation of Directors’ and Officers’ Liability

Maryland law permits us to include in our charter a provision eliminating the liability of our directors and officers to us and our stockholders for money damages except for liability resulting from:

• actual receipt of an improper benefit in money, property or services, or

• active and deliberate dishonesty that is established by a final judgment and is material to the cause of action.

Maryland law permits us to indemnify and advance expenses to its directors, officers, employees and agents. Our charter contains a provision which eliminates the liability of our directors and officers to the maximum extent permitted by Maryland law. Our charter also authorizes us, and our bylaws require us, to the maximum extent permitted by Maryland law, to indemnify and, without requiring a preliminary determination of the ultimate entitlement to indemnification, to pay or reimburse reasonable expenses in advance of final disposition of a proceeding to (i) any present or former director or officer or (ii) any individual who, while serving as our director or officer and at our request, serves or has served another corporation, real estate investment trust, limited liability company, partnership, joint venture, trust, employee benefit plan or any other enterprise as a director, officer, trustee, member, manager or partner, in either case, who is made or threatened to be made a party to or witness in the proceeding by reason of his or her service in any such capacity, from and against any claim or liability to which the individual may become subject or incur by reason of his or her service in any such capacity. Our charter and bylaws also permit us to indemnify and advance expenses to any individual who served any of our Predecessors in any of the capacities described above and any employee or agent of us or any of our Predecessors.

Maryland law requires us (unless our charter were to provide otherwise which our charter does not) to indemnify a director or officer who has been successful, on the merits or otherwise, in the defense of any proceeding to which he or she is made a party by reason of his or her service in that capacity. Maryland law permits us to indemnify our present and former directors and officers, among others, against judgments, penalties, fines, settlements and reasonable expenses actually incurred by them in connection with any proceeding to which they may be made or threatened to be made a party by reason of their service in those or other capacities unless it is established that:

• the act or omission of the director or officer was material to the matter giving rise to the proceeding and (i) was committed in bad faith or (ii) was the result of active and deliberate dishonesty;

• the director or officer actually received an improper personal benefit in money, property or services; or

• in the case of any criminal proceeding, the director or officer had reasonable cause to believe that the act or omission was unlawful.

However, under Maryland law, we may not indemnify a director or officer in a suit by or on behalf of us in which the director or officer has been adjudged liable to us, or in which the director or officer was adjudged liable on the basis that personal benefit was improperly received. A court may order indemnification if it determines that the director or officer is fairly and reasonably entitled to indemnification, even though the director or officer did not meet the prescribed standard of conduct or was adjudged liable on the basis that personal benefit was improperly received. However, indemnification for an adverse judgment in a suit by or on behalf of us, or for a judgment of liability on the basis that personal benefit was improperly received, is limited to expenses.

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In addition, the MGCL permits us to advance reasonable expenses to a director or officer upon our receipt of:

• a written affirmation by the director or officer of his or her good faith belief that he or she has met the standard of conduct necessary for indemnification by us; and

• a written undertaking by the director or officer or on his or her behalf to repay the amount paid or reimbursed if it is ultimately determined that he or she did not meet the standard of conduct.

Upon completion of this offering and consummation of our formation transactions, we expect to enter into indemnification agreements with each of our directors and executive officers that provide for indemnification to the maximum extent permitted by Maryland law and advancement by us of expenses and costs relating to certain claims, suits or proceedings arising from their service to us.

Insofar as the foregoing provisions permit indemnification of directors, officers or persons controlling us for liability arising under the Securities Act, we have been informed that in the opinion of the SEC, this indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

REIT Qualification

Our charter provides that our board of directors may revoke or otherwise terminate our REIT election, without approval of our stockholders, if it determines that it is no longer in our best interest to attempt to, or to continue to, qualify as a REIT; provided, however that pursuant to our contribution agreements with RB Commercial Mortgage and NYMT, we have agreed that we will not knowingly revoke or otherwise terminate our election to be taxed as a REIT for any taxable year in which NYMT owns, directly or indirectly, more than 10% of the voting power in, or more than 10% of the shares of our common stock.

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SHARES ELIGIBLE FOR FUTURE SALE

General

Upon completion of this offering and consummation of our formation transactions, we will have 6,600,000 outstanding shares of our common stock (7,170,000 shares if the underwriters’ option to purchase additional shares of our common stock is exercised in full), including 3,800,000 shares issued in this offering (4,370,000 shares if the underwriters’ option to purchase additional shares of our common stock is exercised in full) and 2,800,000 shares issued to the Contributing Investors and their affiliates in consideration of our formation transactions. Upon completion of this offering and consummation of our formation transactions, we will cause our operating partnership to issue an aggregate of 1,500 LTIP units to our independent directors. We will reserve 1,500 shares of our common stock for issuance in connection with LTIP units to be granted to these directors. In addition, upon completion of this offering and consummation of our formation transactions, 328,500 shares of our common stock will be available for future issuance under the 2015 Incentive Plan.

Of these shares, the 3,800,000 shares sold in this offering (4,370,000 shares if the underwriters’ option to purchase additional shares of our common stock is exercised in full) will be freely transferable without restriction or further registration under the Securities Act, subject to the limitations on ownership set forth in our charter, except for any shares purchased in this offering by our “affiliates,” as that term is defined by Rule 144 under the Securities Act. The shares of our common stock issued to the Contributing Investors and their affiliates pursuant to our formation transactions will be “restricted shares” as defined in Rule 144.

Prior to this offering, there has been no public market for our common stock. We have applied to list our common stock on the Nasdaq. No assurance can be given as to (1) the likelihood that an active market for shares of our common stock will develop, (2) the liquidity of any such market, (3) the ability of the stockholders to sell the shares or (4) the prices that stockholders may obtain for any of the shares. No prediction can be made as to the effect, if any, that future sales of shares, or the availability of shares for future sale, will have on the market price prevailing from time to time. Sales of substantial amounts of our common stock (including shares issued upon the redemption of common units or LTIP units), or the perception that such sales could occur, may adversely affect prevailing market prices of our common stock. See “Risk Factors—Risks Related to this Offering—Sales of shares of our common stock, or the perception that such sales will occur, may have adverse effects on our share price.”

For a description of certain restrictions on transfers of shares of our common stock held by certain of our stockholders, see “Description of Our Capital Stock—Restrictions on Ownership and Transfer.”

Rule 144

After giving effect to this offering, 2,800,000 shares of our outstanding shares of common stock will be “restricted” securities under the meaning of Rule 144 under the Securities Act, and may not be sold in the absence of registration under the Securities Act unless an exemption from registration is available, including the exemption provided by Rule 144.

In general, under Rule 144 as currently in effect, beginning 90 days after the date of this prospectus, a person who is not deemed to have been an affiliate of ours at any time during the three months preceding a sale and who has beneficially owned shares considered to be restricted securities under Rule 144 for at least six months would be entitled to sell those shares, subject only to the availability of current public information about us. A non-affiliated person who has beneficially owned shares considered to be restricted securities under Rule 144 for at least one year would be entitled to sell those shares without regard to the provisions of Rule 144.

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An affiliate of ours who has beneficially owned shares of our common stock for at least six months would be entitled to sell, within any three-month periods, a number of shares that does not exceed the greater of:

• 1.0% of the shares of our common stock then outstanding, which will equal approximately 66,000 shares immediately after this offering (71,700 shares if the underwriters exercise their option to purchase additional shares of our common stock in full); or

• the average weekly trading volume of our common stock on the Nasdaq during the four calendar weeks preceding the date on which notice of the sale is filed with the SEC.

Sales under Rule 144 by our affiliates or persons selling shares on behalf of our affiliates are also subject to manner of sale provisions, notice requirements and the availability of current public information about us.

Registration Rights

Concurrent with or prior to the completion of this offering, we will enter into a registration rights agreement with the various entities receiving shares of our common stock in our formation transactions, some of which are affiliated with certain of our directors and executive officers and their affiliates. Under the registration rights agreement, subject to certain limitations and the terms of the lock-up arrangements described herein, we will agree to file a “shelf registration” statement for the remaining registrable shares as soon as practicable after we become eligible to use Form S-3 and we must maintain effectiveness of such shelf registration statement until all the registrable shares have been sold under the shelf registration statement or are eligible for sale pursuant to Rule 144 under the Securities Act. The registration rights agreement also provides that certain holders of the registrable shares and their direct and indirect transferees will have the right to demand that we cause their registrable shares to be registered for resale on a registration statement. In addition, if we propose to file a registration statement with respect to a public offering of our common stock for our own account or for the account of others, subject to certain exceptions, we must give notice of the proposed filing to the applicable holders of the registrable shares as soon as practicable and offer the applicable holders the opportunity to include in the registration statement such amount of registrable shares as they may request, subject to customary underwriter cutback provisions. However, the registration rights agreement also provides that no holder of registrable shares will be able to exercise such demand rights and piggyback rights described above until the first anniversary of the closing of this offering and, in no case shall these rights apply to Mr. Donlon, Donlon Family LLC or their successors and assigns. Except as described in the registration rights agreement, we will agree to pay all of the expenses relating to such registration statements.

2015 Equity Incentive Plan

On July 2, 2015, our board of directors adopted, and our stockholders approved, the 2015 Incentive Plan to attract and retain members of our board of directors, executive officers and other key employees, including officers, employees and other service providers of our Manager and operating partnership and their affiliates. The 2015 Incentive Plan provides for the grant of options to purchase shares of our common stock, stock awards, stock appreciation rights, performance units, incentive awards and other equity-based awards. We do not at this time, intend to grant cash or equity incentive awards to employees of our Manager, although there can be no assurance that we will not grant awards to employees of our Manager in the future.

We intend to file with the SEC a Registration Statement on Form S-8 covering the shares of our common stock issuable under our 2015 Incentive Plan. Shares of our common stock covered by this registration statement, including any shares of our common stock issuable upon the exercise of options or shares of restricted common stock, will be eligible for transfer or resale without restriction under the Securities Act unless held by affiliates.

Lock-Up Agreements

We, our executive officers and directors and our Manager and its executive officers have entered into lock-up agreements with the underwriters. Under these agreements, we and each of

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these persons may not, without the prior written approval of the representatives, subject to certain exceptions, offer, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly, any of shares of our common stock or any securities convertible into or exercisable or exchangeable for shares of our common stock, enter into a transaction which would have the same effect, or enter into any swap, hedge or other arrangement that transfers, in whole or in part, any of the economic consequences of ownership of the shares of our common stock, whether any such aforementioned transaction is to be settled by delivery of the shares of our common stock or such other securities, in cash or otherwise, or publicly disclose the intention to make any such offer, sale, pledge or disposition, or to enter into any such transaction, swap, hedge or other arrangement. These restrictions will be in effect for a period of 180 days after the date of this prospectus (subject to extension under certain circumstances). At any time and without public notice, the representatives of the underwriters may in their sole discretion release some or all of the securities from these lock-up agreements. Furthermore, the Contributing Investors have entered into lock-up agreements with the underwriters prohibiting the sale, transfer or other disposition of shares of our common stock, or any securities convertible into or exercisable or exchangeable for shares of our common stock, without prior written consent of the representatives for a period of 180 days following the completion of this offering.

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OUR OPERATING PARTNERSHIP AND THE PARTNERSHIP AGREEMENT

The following is a summary of the material terms of the First Amended and Restated Agreement of Limited Partnership of our operating partnership (the “partnership agreement”), which we will enter into upon completion of our formation transactions and this offering. The summary does not purport to be complete and is subject to and qualified in its entirety by reference to the form of the partnership agreement, which is an exhibit to the registration statement of which this prospectus is a part. See “Additional Information.”

Management

We are the sole general partner (the “general partner”) of our operating partnership, RiverBanc Multifamily LP, a Delaware limited partnership. We will conduct substantially all of our operations and make substantially all of our investments through our operating partnership. Pursuant to the partnership agreement, we, as the general partner, will have full, complete and exclusive responsibility and discretion in the management and control of our operating partnership, including the ability to cause our operating partnership to enter into certain major transactions including acquisitions, dispositions, refinancings and selection of lessees, to make distributions to partners and to cause changes in our operating partnership’s business activities.

Transferability of Interests

Holders of common units may not transfer their common units without our consent, as the general partner. We may not engage in any merger, consolidation or other combination, or sale of all or substantially all of our assets in a transaction that results in a change in control of our company unless:

• we receive the consent of limited partners holding more than 50% of the partnership interests of the limited partners (other than those held by us or our subsidiaries);

• as a result of such transaction, all limited partners (other than us or our subsidiaries) will receive, or have the right to receive, for each common unit an amount of cash, securities or other property equal or substantially equivalent in value to the product of the conversion factor and the greatest amount of cash, securities or other property per share of our common stock paid in the transaction to any holder of our common stock, provided that if, in connection with the transaction, a purchase, tender or exchange offer shall have been made to and accepted by the holders of more than 50% of the outstanding shares of our common stock, each holder of common units (other than those held by us or our subsidiaries) shall be given the option to exchange its common units for the greatest amount of cash, securities or other property that a limited partner would have received had it (A) exercised its redemption right (described below) and (B) sold, tendered or exchanged pursuant to the offer common stock received upon exercise of the redemption right immediately prior to the expiration of the offer; or

• we are the surviving entity in the transaction and either (A) our stockholders do not receive cash, securities or other property in the transaction or (B) all limited partners (other than us or our subsidiaries) receive for each common unit an amount of cash, securities or other property equal or substantially equivalent in value to the product of the conversion factor and the greatest amount of cash, securities or other property per share of our common stock received in the transaction by any holder of our common stock.

We also may merge with or into or consolidate with another entity if immediately after such merger or consolidation (i) substantially all of the assets of the successor or surviving entity, other than common units held by us, are contributed, directly or indirectly, to the partnership as a capital contribution in exchange for common units with a fair market value equal to the value of the assets so contributed as determined by the survivor in good faith and (ii) the survivor expressly agrees to assume all of the obligations we, as the general partner, have under the partnership agreement, and the partnership agreement shall be amended after any such merger or consolidation so as to arrive at a new method of calculating the amounts payable upon exercise of the redemption right that approximates the existing method for such calculation as closely as reasonably possible.

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We, as the general partner, also may (i) transfer all or any portion of our general partnership interest to (A) a wholly-owned subsidiary of ours or (B) a parent company of ours, and following such transfer may withdraw as the general partner, and (ii) engage in a transaction required by law or by the rules of any national securities exchange or OTC interdealer quotation system on which our common stock is listed or traded.

We, as the general partner, without the consent of the limited partners, may (i) merge or consolidate our operating partnership with or into any other domestic or foreign partnership, limited partnership, limited liability company or corporation or (ii) sell all or substantially all of the assets of our operating partnership, in each case in a transaction pursuant to which the limited partners (other than us or any of our subsidiaries) receive consideration as set forth above.

Capital Contributions

We will contribute, directly, to our operating partnership substantially all of the net proceeds from this offering as a capital contribution in exchange for common units. Upon completion of our formation transactions and this offering and the contribution of our Initial Portfolio and the net proceeds from this offering to our operating partnership, we will own an approximate 99.98% (99.98% if the underwriters exercise their option to purchase additional shares of our common stock in full) interest in our operating partnership. The partnership agreement provides that if our operating partnership requires additional funds at any time in excess of funds available to our operating partnership from borrowing or capital contributions, we may borrow such funds from a financial institution or other lender and lend such funds to our operating partnership on the same terms and conditions as are applicable to our borrowing of such funds. Under the partnership agreement, we will be obligated to contribute the net proceeds from any future offering of common or preferred equity securities as additional capital to our operating partnership. If we contribute additional capital to our operating partnership, we will receive additional common or preferred units, as applicable, and our percentage interest will be increased on a proportionate basis based upon the amount of such additional capital contributions and the value of our operating partnership at the time of such contributions. Conversely, the percentage interests of the limited partners will be decreased on a proportionate basis in the event of additional capital contributions by us. In addition, if we contribute additional capital to our operating partnership, we, as the general partner, will revalue the property of our operating partnership to its fair market value (as determined by us, as the general partner) and the capital accounts of the partners will be adjusted to reflect the manner in which the unrealized gain or loss inherent in such property (that has not been reflected in the capital accounts previously) would be allocated among the partners under the terms of the partnership agreement if there were a taxable disposition of such property for its fair market value (as determined by us, as the general partner) on the date of the revaluation. Our operating partnership may issue preferred partnership interests, in connection with acquisitions of property or otherwise, which could have priority over common partnership interests with respect to distributions from our operating partnership, including the partnership interests we own as the general partner.

Redemption Rights

Pursuant to the partnership agreement, limited partners, other than us, will receive redemption rights, which will enable them to cause our operating partnership to redeem their common units in exchange for cash or, at our option, as the general partner, for shares of our common stock on a one-for-one basis, commencing one year from the date of issuance of such units. Redemptions will generally occur only on the first day of each calendar quarter. Limited partners must submit an irrevocable notice to our operating partnership of the intention to be redeemed no less than 60 days prior to the redemption date, and each limited partner must submit for redemption at least 1,000 common units or, if such limited partner holds less than 1,000 common units, all the common units owned by such limited partner. The number of shares of common stock issuable upon redemption of common units held by limited partners may be adjusted upon the occurrence of certain events such as share dividends, share subdivisions or combinations. We expect to fund any cash redemptions out of available cash or borrowings.

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Notwithstanding the foregoing, a limited partner will not be entitled to exercise its redemption rights if the delivery of common stock to the redeeming limited partner would:

• result in any person owning, directly or indirectly, shares of common stock in excess of the stock ownership limit in our charter;

• result in our being owned by fewer than 100 persons (determined without reference to any rules of attribution);

• result in our being “closely held” within the meaning of Section 856(h) of the Code; or

• cause the acquisition of common stock by such redeeming limited partner to be “integrated” with any other distribution of common stock or common units for purposes of complying with the registration provisions of the Securities Act.

We, as the general partner, may, in our sole and absolute discretion, waive any of these restrictions.

The partnership agreement requires that our operating partnership be operated in a manner that enables us to satisfy the requirements for being classified as a REIT, to avoid any federal income or excise tax liability imposed by the Code (other than any federal income tax liability associated with our retained capital gains) and to ensure that the partnership will not be classified as a “publicly-traded partnership” taxable as a corporation under Section 7704 of the Code.

Partnership Expenses

In addition to the administrative and operating costs and expenses incurred by our operating partnership, our operating partnership generally will pay all of our administrative costs and expenses, including:

• all expenses relating to our continuity of existence and our subsidiaries’ operations;

• all expenses relating to offerings and registration of securities;

• all expenses associated with any repurchase by us of any securities;

• all expenses associated with the preparation and filing of any of our periodic or other reports and communications under federal, state or local laws or regulations;

• all expenses associated with our compliance with laws, rules and regulations promulgated by any regulatory body;

• all administrative costs and expenses, including salaries and other payments to directors, officers or employees;

• all expenses associated with any 401(k) plan, incentive plan, bonus plan or other plan providing compensation to our employees;

• all expenses incurred by us relating to any issuance or redemption of common units; and

• all of our other operating or administrative costs incurred in the ordinary course of business on behalf of our operating partnership.

These expenses, however, do not include any of our administrative and operating costs and expenses incurred that are attributable to properties that, in the future, may be owned by us directly rather than by our operating partnership or its subsidiaries.

General Partner Duties

Our directors and officers have duties under applicable Maryland law to oversee our management in a manner consistent with our best interests. At the same time, we, as the general partner, have fiduciary duties to manage our operating partnership in a manner beneficial to our operating partnership and its partners. As the general partner, our duties to our operating partnership and its limited partners, therefore, may come into conflict with the duties of our directors and officers to us. The partnership agreement provides that in the event of a conflict

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between the interests of our stockholders, on the one hand, and the limited partners of the operating partnership, on the other hand, we, as the general partner, will endeavor in good faith to resolve the conflict in a manner not adverse to either our stockholders or the limited partners; provided, however, that for so long as we own a controlling interest in the operating partnership, any such conflict that we, in our sole and absolute discretion, determine cannot be resolved in a manner not adverse to either our stockholders or the limited partners shall be resolved in favor of our stockholders and we shall not be liable for monetary damages for losses sustained, liabilities incurred or benefits not derived by the limited partners in connection with such decisions.

Distributions

The partnership agreement provides that our operating partnership will distribute cash from operations (including net sale or refinancing proceeds, but excluding net proceeds from the sale of our operating partnership’s property in connection with the liquidation of our operating partnership) at such time and in such amounts as determined by us, as the general partner, in our sole discretion, to us and the other limited partners in accordance with their respective percentage interests in our operating partnership.

Upon liquidation of our operating partnership, after payment of, or adequate provision for, debts and obligations of the partnership, including any partner loans, any remaining assets of the partnership will be distributed to us and the other limited partners with positive capital accounts in accordance with their respective positive capital account balances.

LTIP Units

LTIP units are a class of common units in our operating partnership and outstanding LTIP units will receive the same quarterly per-unit profit distributions as the other outstanding units in our operating partnership. Upon completion of this offering and consummation of our formation transactions, we will issue an aggregate of 1,500 LTIP units to our three independent directors. LTIP units will not have full parity with other outstanding units with respect to liquidating distributions. Generally, under the terms of the LTIP units, our operating partnership will revalue its assets upon the occurrence of certain specified events, and any increase in valuation from the last revaluation of our operating partnership assets until such event will be allocated first to the LTIP unit holders to equalize the capital accounts of such holders with the capital accounts of holders of our other outstanding common units. Upon equalization of the capital accounts of the LTIP unit holders with the capital accounts of the other holders of our common units, the LTIP units will achieve full parity with our other common units for all purposes, including with respect to liquidating distributions. If such parity is reached, vested LTIP units may be converted into an equal number of common units at any time, and thereafter enjoy all the rights of such units, including redemption rights. However, there are circumstances under which such parity would not be reached. Until and unless such parity is reached, the value for a given number of vested LTIP units will be less than the value of an equal number of shares of our common stock.

Allocations

Profits and losses of the partnership (including depreciation and amortization deductions) for each fiscal year generally will be allocated to us and the other limited partners in accordance with the respective percentage interests in our operating partnership. All such allocations will be subject to compliance with the provisions of Sections 704(b) and 704(c) of the Code and Treasury regulations promulgated thereunder. To the extent Treasury regulations promulgated pursuant to Section 704(c) of the Code permit, we, as the general partner, shall have the authority to elect the method to be used by our operating partnership for allocating items with respect to (i) the difference between our Predecessor’s adjusted tax basis in our portfolio and the proceeds from this offering that we contribute to our operating partnership in exchange for common units and (ii) contributed property acquired for common units for which fair market value differs from the adjusted tax basis at the time of contribution. Any such election shall be binding on all partners. Upon the occurrence of certain specified events, our operating partnership will revalue its assets

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and any net increase in valuation will be allocated first to the LTIP units to equalize the capital accounts of such holders with the capital accounts of the holders of the other outstanding units in our operating partnership.

Amendments of the Partnership Agreement

We, as the general partner, without the consent of the limited partners, may amend the partnership agreement in any respect; provided that the following amendments require the consent of limited partners holding more than 50% of the partnership interests of the limited partners (other than those held by us or our subsidiaries):

• any amendment affecting the operation of the conversion factor (for holders of common units and LTIP units) or the redemption right (except as otherwise provided in the partnership agreement) in a manner that adversely affects the limited partners in any material respect;

• any amendment that would adversely affect the rights of the limited partners to receive the distributions payable to them under the partnership agreement, other than with respect to the issuance of additional common units pursuant to the partnership agreement;

• any amendment that would alter our operating partnership’s allocations of profit and loss to the limited partners, other than with respect to the issuance of additional common units pursuant to the partnership agreement; or

• any amendment that would impose on the limited partners any obligation to make additional capital contributions to our operating partnership.

Indemnification and Limitation of Liability

The limited partners of our operating partnership expressly acknowledge that we, as the general partner, will act for the benefit of our operating partnership, the limited partners (including us) and our stockholders collectively and that we will be under no obligation to consider the separate interests of the limited partners (including, without limitation, the tax consequences to some or all of the limited partners) in deciding whether to cause our operating partnership to take, or decline to take, any actions. The partnership agreement provides that in the event of a conflict between the interests of our stockholders on the one hand, and the limited partners of our operating partnership on the other hand, we, as the general partner, will endeavor in good faith to resolve the conflict in a manner not adverse to either our stockholders or the limited partners, provided, however, that so long as we own a controlling interest in our operating partnership, any such conflict that we, as the general partner, in our sole and absolute discretion, determine cannot be resolved in a manner not adverse to either our stockholders or the limited partners will be resolved in favor of our stockholders, and we will not be liable for monetary damages for losses sustained, liabilities incurred or benefits not derived by the limited partners in connection with such decisions.

To the extent permitted by applicable law, the partnership agreement provides for the indemnification of us, as the general partner, and our officers, directors, employees, agents and any other persons we may designate from and against any and all claims arising from operations of our operating partnership in which any indemnitee may be involved, or is threatened to be involved, as a party or otherwise, unless it is established by a court of competent jurisdiction that:

• the act or omission of the indemnitee was material to the matter giving rise to the proceeding and either was committed in bad faith or was the result of active and deliberate dishonesty;

• the indemnitee actually received an improper personal benefit in money, property or services; or

• in the case of any criminal proceeding, the indemnitee had reasonable cause to believe that the act or omission was unlawful.

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Similarly, we, as the general partner, and our officers, directors, agents or employees, will not be liable for monetary damages to our operating partnership or the limited partners for losses sustained or liabilities incurred as a result of errors in judgment or mistakes of fact or law or of any act or omission so long as any such party acted in good faith.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling our company pursuant to the foregoing provisions, we have been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

Term

Our operating partnership will continue indefinitely or until sooner dissolved upon:

• the bankruptcy, dissolution, removal or withdrawal of us as the general partner (unless the limited partners elect to continue the partnership);

• the passage of 90 days after the sale or other disposition of all or substantially all of the assets of the partnership;

• the redemption of all common units (other than those held by us, if any) unless we decide to continue the partnership by the admission of one or more limited partners; or

• an election by us in our capacity as the general partner.

Tax Matters

The partnership agreement provides that we, as the general partner, will be the tax matters partner of our operating partnership and, as such, will have authority to handle tax audits and to make tax elections under the Code on behalf of our operating partnership.

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MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS

This section summarizes the material U.S. federal income tax considerations that you, as a prospective investor, may consider relevant in connection with the purchase, ownership and disposition of our common stock. Hunton & Williams LLP has acted as our counsel, has reviewed this summary, and is of the opinion that the discussion contained herein is accurate in all material respects. Because this section is a summary, it does not address all aspects of taxation that may be relevant to particular stockholders in light of their personal investment or tax circumstances, or to certain types of stockholders that are subject to special treatment under the U.S. federal income tax laws, such as:

• insurance companies;

• tax-exempt organizations (except to the limited extent discussed in “—Taxation of Tax-Exempt Stockholders” below);

• financial institutions or broker-dealers;

• non-U.S. individuals and foreign corporations (except to the limited extent discussed in “—Taxation of Non-U.S. Stockholders” below);

• U.S. expatriates;

• persons who mark-to-market our common stock;

• subchapter S corporations;

• U.S. stockholders (as defined below) whose functional currency is not the U.S. dollar;

• regulated investment companies and REITs;

• trusts and estates;

• persons who receive our common stock through the exercise of employee stock options or otherwise as compensation;

• persons holding our common stock as part of a “straddle,” “hedge,” “conversion transaction,” “synthetic security” or other integrated investment;

• persons subject to the alternative minimum tax provisions of the Code; and

• persons holding our common stock through a partnership or similar pass-through entity.

This summary assumes that stockholders hold our shares as capital assets for U.S. federal income tax purposes, which generally means property held for investment.

The statements in this section are not intended to be, and should not be construed as, tax advice. The statements in this section are based on the Code, final, temporary and proposed Treasury regulations, the legislative history of the Code, current administrative interpretations and practices of the IRS, and court decisions. The reference to IRS interpretations and practices includes the IRS practices and policies endorsed in private letter rulings, which are not binding on the IRS except with respect to the taxpayer that receives the ruling. In each case, these sources are relied upon as they exist on the date of this discussion. Future legislation, Treasury regulations, administrative interpretations and court decisions could change the current law or adversely affect existing interpretations of current law on which the information in this section is based. Any such change could apply retroactively. We have not received any rulings from the IRS concerning our qualification as a REIT. Accordingly, even if there is no change in the applicable law, no assurance can be provided that the statements made in the following discussion, which do not bind the IRS or the courts, will not be challenged by the IRS or will be sustained by a court if so challenged.

WE URGE YOU TO CONSULT YOUR TAX ADVISOR REGARDING THE SPECIFIC TAX CONSEQUENCES TO YOU OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF OUR COMMON STOCK AND OF OUR ELECTION TO BE TAXED AS A REIT. SPECIFICALLY, YOU ARE URGED TO CONSULT YOUR TAX ADVISOR REGARDING THE FEDERAL, STATE, LOCAL, FOREIGN, AND OTHER

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TAX CONSEQUENCES OF SUCH PURCHASE, OWNERSHIP, DISPOSITION AND ELECTION, AND REGARDING POTENTIAL CHANGES IN APPLICABLE TAX LAWS.

Taxation of Our Company

We were organized on February 13, 2015 as a Maryland corporation. We have elected to be taxed as a pass-through entity under subchapter S of the Code, but intend to revoke our S election prior to the completion of this offering. We will elect to be taxed as a REIT for U.S. federal income tax purposes commencing with our short taxable year ending December 31, 2015. We believe that, commencing with such short taxable year, we will be organized and will operate in such a manner as to qualify for taxation as a REIT under the U.S. federal income tax laws, and we intend to continue to operate in such a manner, but no assurances can be given that we will operate in a manner so as to qualify or remain qualified as a REIT. This section discusses the laws governing the U.S. federal income tax treatment of a REIT and its stockholders. These laws are highly technical and complex.

In connection with this offering, Hunton & Williams LLP will render an opinion that, commencing with our short taxable year ending December 31, 2015, we will be organized in conformity with the requirements for qualification and taxation as a REIT under the U.S. federal income tax laws, and our proposed method of operation will enable us to satisfy the requirements for qualification and taxation as a REIT under the U.S. federal income tax laws for our taxable year ending December 31, 2015 and subsequent taxable years. Investors should be aware that Hunton & Williams LLP’s opinion is based upon customary assumptions, will be conditioned upon certain representations made by us as to factual matters, including representations regarding the nature of our assets and the conduct of our business, is not binding upon the IRS, or any court and speaks as of the date issued. In addition, Hunton & Williams LLP’s opinion will be based on existing U.S. federal income tax law governing qualification as a REIT, which is subject to change either prospectively or retroactively. Moreover, our qualification and taxation as a REIT will depend upon our ability to meet on a continuing basis, through actual results, certain qualification tests set forth in the U.S. federal income tax laws. Those qualification tests involve the percentage of income that we earn from specified sources, the percentage of our assets that falls within specified categories, the diversity of our capital stock ownership, and the percentage of our earnings that we distribute. Hunton & Williams LLP will not review our compliance with those tests on a continuing basis. Accordingly, no assurance can be given that our actual results of operations for any particular taxable year will satisfy such requirements. Hunton & Williams LLP’s opinion does not foreclose the possibility that we may have to use one or more of the REIT savings provisions described below, which could require us to pay an excise or penalty tax (which could be material) in order for us to maintain our REIT qualification. For a discussion of the tax consequences of our failure to qualify as a REIT, see “— Failure to Qualify.”

If we qualify as a REIT, we generally will not be subject to U.S. federal income tax on the taxable income that we distribute to our stockholders. The benefit of that tax treatment is that it avoids the “double taxation,” or taxation at both the corporate and stockholder levels, that generally results from owning stock in a corporation. However, we will be subject to U.S. federal tax in the following circumstances:

• We will pay U.S. federal income tax on any taxable income, including undistributed net capital gain, that we do not distribute to stockholders during, or within a specified time period after, the calendar year in which the income is earned.

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

• We will pay income tax at the highest corporate rate on:

• net income from the sale or other disposition of property acquired through foreclosure (“foreclosure property”) that we hold primarily for sale to customers in the ordinary course of business, and

• other non-qualifying income from foreclosure property.

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• We will pay a 100% tax on net income from sales or other dispositions of property, other than foreclosure property, that we hold primarily for sale to customers in the ordinary course of business.

• If we fail to satisfy one or both of the 75% gross income test or the 95% gross income test, as described below under “—Gross Income Tests,” and nonetheless continue to qualify as a REIT because we meet other requirements, we will pay a 100% tax on:

• the gross income attributable to the greater of the amount by which we fail the 75% gross income test or the 95% gross income test, in either case, multiplied by

• a fraction intended to reflect our profitability.

• If we fail to distribute during a calendar year at least the sum of (1) 85% of our REIT ordinary income for the year, (2) 95% of our REIT capital gain net income for the year, and (3) any undistributed taxable income required to be distributed from earlier periods, we will pay a 4% nondeductible excise tax on the excess of the required distribution over the amount we actually distributed.

• We may elect to retain and pay income tax on our net long-term capital gain. In that case, a stockholder would be taxed on its proportionate share of our undistributed long-term capital gain (to the extent that we made a timely designation of such gain to the stockholders) and would receive a credit or refund for its proportionate share of the tax we paid.

• We will be subject to a 100% excise tax on transactions with our TRS, and any TRS we form in the future, that are not conducted on an arm’s-length basis.

• If we fail to satisfy any of the asset tests, other than a de minimis failure of the 5% asset test, the 10% vote test or 10% value test, as described below under “—Asset Tests,” as long as the failure was due to reasonable cause and not to willful neglect, we file a description of each asset that caused such failure with the IRS, and we dispose of the assets causing the failure or otherwise comply with the asset tests within six months after the last day of the quarter in which we identify such failure, we may retain our REIT qualification, but we will be required to pay a tax equal to the greater of $50,000 or the highest federal income tax rate then applicable to U.S. corporations on the net income from the nonqualifying assets during the period in which we failed to satisfy the asset tests.

• If we fail to satisfy one or more requirements for REIT qualification, other than the gross income tests and the asset tests, and such failure is due to reasonable cause and not to willful neglect, we may retain our REIT qualification, but we will be required to pay a penalty of $50,000 for each such failure.

• If we acquire any asset from an entity treated as a C corporation, or a corporation that generally is subject to full corporate-level tax, in a merger or other transaction in which we acquire a basis in the asset that is determined by reference either to such entity’s basis in the asset or to another asset, we will pay tax at the highest regular corporate rate applicable if we recognize gain on the sale or disposition of the asset during the 10-year period after we acquire the asset provided no election is made for the transaction to be taxable on a current basis. The amount of gain on which we will pay tax is the lesser of:

• the amount of gain that we recognize at the time of the sale or disposition, and

• the amount of gain that we would have recognized if we had sold the asset at the time we acquired it.

• We may be required to pay monetary penalties to the IRS in certain circumstances, including if we fail to meet record-keeping requirements intended to monitor our compliance with rules relating to the composition of a REIT’s stockholders, as described below in “—Recordkeeping Requirements.”

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• The earnings of our lower-tier entities that are treated as C corporations, including our TRS, and any TRSs we form in the future, will be subject to U.S. federal corporate income tax.

In addition, notwithstanding our qualification as a REIT, we may also have to pay certain state and local income taxes because not all states and localities treat REITs in the same manner that they are treated for U.S. federal income tax purposes. Moreover, as further described below, our TRS and any TRSs we form in the future will be subject to federal, state and local corporate income tax on their taxable income.

Requirements for Qualification

A REIT is a corporation, trust, or association that meets each of the following requirements:

1. It is managed by one or more trustees or directors.

2. Its beneficial ownership is evidenced by transferable shares, or by transferable certificates of beneficial interest.

3. It would be taxable as a domestic corporation, but for the REIT provisions of the U.S. federal income tax laws.

4. It is neither a financial institution nor an insurance company subject to special provisions of the U.S. federal income tax laws.

5. At least 100 persons are beneficial owners of its shares or ownership certificates.

6. Not more than 50% in value of its outstanding shares or ownership certificates is owned, directly or indirectly, by five or fewer individuals, which the Code defines to include certain entities, during the last half of any taxable year.

7. It elects to be a REIT, or has made such election for a previous taxable year that has not been terminated or revoked, and satisfies all relevant filing and other administrative requirements established by the IRS that must be met to elect and maintain REIT status.

8. It meets certain other qualification tests, described below, regarding the nature of its income and assets and the amount of its distributions to stockholders.

9. It uses a calendar year for U.S. federal income tax purposes and complies with the recordkeeping requirements of the U.S. federal income tax laws.

We must meet requirements 1 through 4, 8 and 9 during our entire taxable year and must meet requirement 5 during at least 335 days of a taxable year of 12 months, or during a proportionate part of a taxable year of less than 12 months. Requirements 5 and 6 will apply to us beginning with our 2016 taxable year. If we comply with all the requirements for ascertaining the ownership of our outstanding shares in a taxable year and have no reason to know that we violated requirement 6, we will be deemed to have satisfied requirement 6 for that taxable year. For purposes of determining stock ownership under requirement 6, an “individual” generally includes a supplemental unemployment compensation benefits plan, a private foundation, or a portion of a trust permanently set aside or used exclusively for charitable purposes. An “individual,” however, generally does not include a trust that is a qualified employee pension or profit sharing trust under the U.S. federal income tax laws, and beneficiaries of such a trust will be treated as holding our shares in proportion to their actuarial interests in the trust for purposes of requirement 6.

Our charter provides restrictions regarding the transfer and ownership of shares of our capital stock. See “Description of Our Capital Stock—Restrictions on Ownership and Transfer.” We believe that we will issue sufficient stock with sufficient diversity of ownership in this offering to allow us to satisfy requirements 5 and 6 above. The restrictions in our charter are intended (among other things) to assist us in continuing to satisfy requirements 5 and 6 above. These restrictions, however, may not ensure that we will, in all cases, be able to satisfy such share ownership requirements. If we fail to satisfy these share ownership requirements, our qualification as a REIT may terminate.

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Qualified REIT Subsidiaries.   A corporation that is a “qualified REIT subsidiary” is not treated as a corporation separate from its parent REIT. All assets, liabilities, and items of income, deduction, and credit of a “qualified REIT subsidiary” are treated as assets, liabilities, and items of income, deduction, and credit of the REIT. A “qualified REIT subsidiary” is a corporation, other than a TRS, all of the stock of which is owned by the REIT. Thus, in applying the requirements described herein, any “qualified REIT subsidiary” that we own will be ignored, and all assets, liabilities, and items of income, deduction, and credit of such subsidiary will be treated as our assets, liabilities, and items of income, deduction, and credit.

Other Disregarded Entities and Partnerships.   An unincorporated domestic entity, such as a partnership or limited liability company that has a single owner, generally is not treated as an entity separate from its owner for U.S. federal income tax purposes. An unincorporated domestic entity with two or more owners is generally treated as a partnership for U.S. federal income tax purposes. In the case of a REIT that is a partner in a partnership that has other partners, the REIT is treated as owning its proportionate share of the assets of the partnership and as earning its allocable share of the gross income of the partnership for purposes of the applicable REIT qualification tests. Our proportionate share for purposes of the 10% value test (see “—Asset Tests”) will be based on our proportionate interest in the equity interests and certain debt securities issued by the partnership. For all of the other asset and income tests, our proportionate share will be based on our proportionate interest in the capital interests in the partnership. Our proportionate share of the assets, liabilities, and items of income of any partnership, joint venture, or limited liability company that is treated as a partnership for U.S. federal income tax purposes in which we acquire an equity interest, directly or indirectly, including as a result of our joint venture equity and preferred equity investments in partnerships and limited liability companies, will be treated as our assets and gross income for purposes of applying the various REIT qualification requirements.

Our joint venture equity and preferred equity investments will be in the form of limited partner or non-managing member interests in partnerships and limited liability companies. Although the character of our income and assets for purposes of REIT income and asset tests will depend upon those partnerships’ and limited liability companies’ income and assets, we will typically have limited control over the operations of the partnerships and limited liability companies that issue our joint venture equity and preferred equity investments. If a partnership or limited liability company in which we own an interest takes or expects to take actions that could jeopardize our qualification as a REIT or require us to pay tax, we may be forced to dispose of our interest in such entity. In addition, a partnership or limited liability company could take an action which could cause us to fail a REIT gross income or asset test, and we may not become aware of such action in time to dispose of our interest in the partnership or limited liability company or take other corrective action on a timely basis. In that case, we could fail to qualify as a REIT unless we were entitled to relief, as described below.

Taxable REIT Subsidiaries.   A REIT may own up to 100% of the shares of one or more TRSs. A TRS is a fully taxable corporation that may earn income that would not be qualifying income if earned directly by the parent REIT. The subsidiary and the REIT must jointly elect to treat the subsidiary as a TRS. A corporation of which a TRS directly or indirectly owns more than 35% of the voting power or value of the securities will automatically be treated as a TRS. We will not be treated as holding the assets of a TRS or as receiving any income that the TRS earns. Rather, the stock issued by a TRS to us will be an asset in our hands, and we will treat the distributions paid to us from such TRS, if any, as income. This treatment may affect our compliance with the gross income and asset tests. Because we will not include the assets and income of TRSs in determining our compliance with the REIT requirements, we may use such entities to undertake activities indirectly, such as earning fee income, that the REIT rules might otherwise preclude us from doing directly or through pass-through subsidiaries. Overall, no more than 25% of the value of a REIT’s assets may consist of stock or securities of one or more TRSs.

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A TRS pays income tax at regular corporate rates on any income that it earns. In addition, the TRS rules limit the deductibility of interest paid or accrued by a TRS to its parent REIT to assure that the TRS is subject to an appropriate level of corporate taxation. Further, the rules impose a 100% excise tax on transactions between a TRS and its parent REIT or the REIT’s tenants that are not conducted on an arm’s-length basis.

A TRS may not directly or indirectly operate or manage any health care facilities or lodging facilities or provide rights to any brand name under which any health care facility or lodging facility is operated. A TRS is not considered to operate or manage a “qualified health care property” or “qualified lodging facility” solely because the TRS directly or indirectly possesses a license, permit, or similar instrument enabling it to do so.

Rent that we receive from a TRS will qualify as “rents from real property” as long as (1) at least 90% of the leased space in the property is leased to persons other than TRSs and related party tenants, and (2) the amount paid by the TRS to rent space at the property is substantially comparable to rents paid by other tenants of the property for comparable space, as described in further detail below under “—Gross Income Tests—Rents from Real Property.” If we lease space to a TRS in the future, we will seek to comply with these requirements.

We currently own interests in one TRS, RiverBanc Multifamily Investors TRS, Inc.. We will make a joint election with our TRS for our TRS to be treated as a TRS. Our TRS will provide certain non-customary services to tenants of properties in which we have joint venture or preferred equity investments. We may form one or more additional TRSs in the future.

Gross Income Tests

We must satisfy two gross income tests annually to maintain our qualification as a REIT. First, at least 75% of our gross income for each taxable year must consist of defined types of income that we derive, directly or indirectly, from investments relating to real property or mortgages on real property or qualified temporary investment income. Qualifying income for purposes of that 75% gross income test generally includes:

• rents from real property;

• interest on debt secured by mortgages on real property, or on interests in real property;

• dividends or other distributions on, and gain from the sale of, shares in other REITs;

• gain from the sale of real estate assets;

• income and gain derived from foreclosure property; and

• income derived from the temporary investment of new capital that is attributable to the issuance of our stock or a public offering of our debt with a maturity date of at least five years and that we receive during the one-year period beginning on the date on which we received such new capital.

Second, in general, at least 95% of our gross income for each taxable year must consist of income that is qualifying income for purposes of the 75% gross income test, other types of interest and dividends, gain from the sale or disposition of shares or securities, or any combination of these. Cancellation of indebtedness income and gross income from our sale of property that we hold primarily for sale to customers in the ordinary course of business is excluded from both the numerator and the denominator in both gross income tests. In addition, income and gain from “hedging transactions” that we enter into to hedge indebtedness incurred or to be incurred to acquire or carry real estate assets and that are clearly and timely identified as such will be excluded from both the numerator and the denominator for purposes of the 75% and 95% gross income tests. In addition, certain foreign currency gains will be excluded from gross income for purposes of one or both of the gross income tests. See “—Foreign Currency Gain.” The following paragraphs discuss the specific application of the gross income tests to us.

Rents from Real Property.   Although we do not anticipate owning real property directly, the partnerships and limited liability companies that will issue our joint venture equity and preferred

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equity investments will own multifamily apartment properties, and we will be treated as receiving our proportionate share of their income, including any rents, for purposes of the 75% and 95% gross income tests. Rents that we are treated as receiving from real property will qualify as “rents from real property,” which is qualifying income for purposes of the 75% and 95% gross income tests, subject to the following conditions:

• First, the rent must not be based, in whole or in part, on the income or profits of any person, but may be based on a fixed percentage or percentages of receipts or sales.

• Second, neither we nor a direct or indirect owner of 10% or more of our stock may own, actually or constructively, 10% or more of a tenant from whom we receive rent, other than a TRS.

• Third, if the rent attributable to personal property leased in connection with a lease of real property is 15% or less of the total rent received under the lease, then the rent attributable to personal property will qualify as rents from real property. However, if the 15% threshold is exceeded, the rent attributable to personal property will not qualify as rents from real property.

• Fourth, we generally must not operate or manage real property or furnish or render services to our tenants, other than through an “independent contractor” who is adequately compensated and from whom we do not derive revenue. However, we need not provide services through an “independent contractor,” but instead may provide services directly to our tenants, if the services are “usually or customarily rendered” in connection with the rental of space for occupancy only and are not considered to be provided for the tenants’ convenience. In addition, we may provide a minimal amount of “noncustomary” services to the tenants of a property, other than through an independent contractor, as long as our income from the services (valued at not less than 150% of our direct cost of performing such services) does not exceed 1% of our income from the related property. Furthermore, we may own up to 100% of the stock of a TRS which may provide customary and noncustomary services to our tenants without tainting our rental income from the related properties.

Interest.   The term “interest” generally does not include any amount received or accrued, directly or indirectly, if the determination of such amount depends in whole or in part on the income or profits of any person. However, interest generally may include the following:

• an amount that is based on a fixed percentage or percentages of receipts or sales; and

• an amount that is based on the income or profits of a debtor, as long as the debtor derives substantially all of its income from the real property securing the debt from leasing substantially all of its interest in the property, and only to the extent that the amounts received by the debtor would be qualifying “rents from real property” if received directly by a REIT.

If a loan contains a provision that entitles a REIT to a percentage of the borrower’s gain upon the sale of the real property securing the loan or a percentage of the appreciation in the property’s value as of a specific date, income attributable to that loan provision will be treated as gain from the sale of the property securing the loan, which generally is qualifying income for purposes of both gross income tests.

Interest on debt secured by mortgages on real property or on interests in real property, including, for this purpose, prepayment penalties, loan assumption fees and late payment charges that are not compensation for services, generally is qualifying income for purposes of the 75% gross income test. In general, under applicable Treasury Regulations, if a loan is secured by real property and other property and the highest principal amount of the loan outstanding during a taxable year exceeds the fair market value of the real property securing the loan determined as of: (i) the date we agreed to acquire or originate the loan; or (ii) as discussed further below, in the event of a “significant modification,” the date we modified the loan, then a portion of the interest income from such loan will not be qualifying income for purposes of the 75% gross income test,

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but will be qualifying income for purposes of the 95% gross income test. Although the law is not entirely clear, a portion of the loan will likely be a non-qualifying asset for purposes of the 75% asset test. The non-qualifying portion of such a loan would be subject to, among other requirements the 10% value test. See “—Asset Tests” below.

We intend to originate and acquire mezzanine loans, which are loans secured by equity interests in an entity that directly or indirectly owns real property, rather than by a direct mortgage of the real property. In Revenue Procedure 2003-65, the IRS established a safe harbor under which loans secured by a first priority security interest in ownership interests in a partnership or limited liability company owning real property will be treated as real estate assets for purposes of the REIT asset tests described below, and interest derived from those loans will be treated as qualifying income for both the 75% and 95% gross income tests, provided several requirements are satisfied.

Although the Revenue Procedure provides a safe harbor on which taxpayers may rely, it does not prescribe rules of substantive tax law. Moreover, we expect that our mezzanine loans typically will not meet all of the requirements for reliance on the safe harbor. Nevertheless, we believe our mezzanine loans typically will qualify as real estate assets for purposes of the REIT asset tests, and interest derived from these loans will be treated as qualifying income for both the 75% and 95% gross income tests. To the extent any mezzanine loans that we originate or acquire do not qualify as real estate assets, the interest income from the loans will be qualifying income for purposes of the 95% gross income test, but there is a risk that such interest income will not be qualifying income for purposes of the 75% gross income test. We intend to invest in mezzanine loans in a manner that will enable us to satisfy the REIT gross income and asset tests.

There is limited case law and administrative guidance addressing whether instruments similar to our preferred equity investments and mezzanine loans will be treated as equity or debt for U.S. federal income tax purposes. We expect that our preferred equity investments generally will be treated as equity for U.S. federal income tax purposes and that our mezzanine loans generally will be treated as a debt for U.S. federal income tax purposes, but we do not anticipate obtaining private letter rulings from the IRS or opinions of counsel on the characterization of those investments for U.S. federal income tax purposes. If the IRS successfully asserts that a preferred equity investment is debt for U.S. federal income tax purposes, then that investment may be treated as producing interest income that would be qualifying income for the 95% gross income test, but not for the 75% gross income test. Alternatively, if a mezzanine loan is treated as equity for U.S. federal income tax purposes, we would be treated as owning the assets held by the partnership or limited liability company that issued the mezzanine loan. As a result, we would not be treated as receiving interest income from the mezzanine loan, but rather we would be treated as receiving our proportionate share of the income of the entity that issued the mezzanine loan, and there can be no assurance that such an entity will not derive nonqualifying income for purposes of the 75% or 95% gross income test. If the IRS successfully challenges the classification of our preferred equity investments acquired or our mezzanine loans as debt for U.S. federal income tax purposes, no assurance can be provided that will not fail to satisfy the 75% or 95% gross income test.

The terms of our mezzanine loans may in the future be modified. Under the Code, if the terms of a loan are modified in a manner constituting a “significant modification,” such modification triggers a deemed exchange of the original loan for the modified loan. IRS Revenue Procedure 2014-51 provides a safe harbor pursuant to which we will not be required to redetermine the fair market value of the real property securing a loan for purposes of the gross income and asset tests in connection with a loan modification that is: (i) occasioned by a borrower default; or (ii) made at a time when we reasonably believe that the modification to the loan will substantially reduce a significant risk of default on the original loan. No assurance can be provided our loan modifications, if any, will qualify for the safe harbor provided in Revenue Procedure 2014-51. To the extent we significantly modify loans in a manner that does not qualify for that safe harbor, we will be required to redetermine the value of the real property securing the loan at the time it was significantly modified. In determining the value of the real property securing such a loan, we generally will not obtain third-party appraisals but rather will rely on internal valuations. No

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assurance can be provided that the IRS will not successfully challenge any such internal valuations. If the terms of our mezzanine loans are significantly modified in a manner that does not qualify for the safe harbor in Revenue Procedure 2014-51 and the fair market value of the real property securing such loans has decreased significantly, we could fail the 75% gross income test, the 75% asset test and/or the 10% value test.

Dividends.   Our share of any dividends received from any corporation (including any TRS, but excluding any REIT) in which we own an equity interest will qualify for purposes of the 95% gross income test but not for purposes of the 75% gross income test. Our share of any dividends received from any other REIT in which we own an equity interest, if any, will be qualifying income for purposes of both gross income tests.

Prohibited Transactions.   A REIT will incur a 100% tax on the net income (including foreign currency gain) derived from any sale or other disposition of property, other than foreclosure property, that the REIT holds primarily for sale to customers in the ordinary course of a trade or business. We believe that none of our assets, including the assets that will be held by the partnerships and limited liability companies that will issue our joint venture equity and preferred equity investments, will be held primarily for sale to customers and that a sale of any of those assets will not be in the ordinary course of our business. Whether a REIT holds an asset “primarily for sale to customers in the ordinary course of a trade or business” depends, however, on the facts and circumstances in effect from time to time, including those related to a particular asset. A safe harbor to the characterization of the sale of property by a REIT as a prohibited transaction and the 100% prohibited transaction tax is available if the following requirements are met:

• the REIT has held the property for not less than two years;

• the aggregate expenditures made by the REIT, or any partner of the REIT, during the two-year period preceding the date of the sale that are includable in the basis of the property do not exceed 30% of the selling price of the property;

• either (1) during the year in question, the REIT did not make more than seven sales of property other than foreclosure property or sales to which Section 1033 of the Code applies, (2) the aggregate adjusted bases of all such properties sold by the REIT during the year did not exceed 10% of the aggregate bases of all of the assets of the REIT at the beginning of the year or (3) the aggregate fair market value of all such properties sold by the REIT during the year did not exceed 10% of the aggregate fair market value of all of the assets of the REIT at the beginning of the year

• in the case of real property not acquired through foreclosure or lease termination, the REIT has held the property for at least two years for the production of rental income; and

• if the REIT has made more than seven sales of non-foreclosure property during the taxable year, substantially all of the marketing and development expenditures with respect to the property were made through an independent contractor from whom the REIT derives no income.

We will attempt to comply with the terms of the safe-harbor provisions in the U.S. federal income tax laws prescribing when a property sale will not be characterized as a prohibited transaction. In addition, we intend to conduct our operations to avoid owning property that may be characterized as property that we hold “primarily for sale to customers in the ordinary course or a trade or business.” We cannot assure you, however, that we can comply with the safe-harbor provisions or that we will avoid owning property that may be characterized as property that we hold “primarily for sale to customers in the ordinary course of a trade or business.” The 100% tax will not apply to gains from the sale of property that is held through a TRS or other taxable corporation, although such income will be taxed to the corporation at regular corporate income tax rates.

Fee Income.   Fee income generally will not be qualifying income for purposes of either the 75% or 95% gross income tests. Any fees earned by a TRS will not be included for purposes of the gross income tests.

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Foreclosure Property.   We will be subject to tax at the maximum corporate rate on any income from foreclosure property, which includes certain foreign currency gains and related deductions, other than income that otherwise would be qualifying income for purposes of the 75% gross income test, less expenses directly connected with the production of that income. However, gross income from foreclosure property will qualify under the 75% and 95% gross income tests. Foreclosure property is any real property, including interests in real property, and any personal property incident to such real property:

• that is acquired by a REIT as the result of the REIT having bid on such property at foreclosure, or having otherwise reduced such property to ownership or possession by agreement or process of law, after there was a default or default was imminent on a lease of such property or on indebtedness that such property secured;

• for which the related loan was acquired by the REIT at a time when the default was not imminent or anticipated; and

• for which the REIT makes a proper election to treat the property as foreclosure property.

A REIT will not be considered to have foreclosed on a property where the REIT takes control of the property as a mortgagee-in-possession and cannot receive any profit or sustain any loss except as a creditor of the mortgagor. Property generally ceases to be foreclosure property at the end of the third taxable year (or, with respect to qualified health care property, the second taxable year) following the taxable year in which the REIT acquired the property, or longer if an extension is granted by the Secretary of the Treasury. However, this grace period terminates and foreclosure property ceases to be foreclosure property on the first day:

• on which a lease is entered into for the property that, by its terms, will give rise to income that does not qualify for purposes of the 75% gross income test, or any amount is received or accrued, directly or indirectly, pursuant to a lease entered into on or after such day that will give rise to income that does not qualify for purposes of the 75% gross income test;

• on which any construction takes place on the property, other than completion of a building or any other improvement, where more than 10% of the construction was completed before default became imminent; or

• which is more than 90 days after the day on which the REIT acquired the property and the property is used in a trade or business which is conducted by the REIT, other than through an independent contractor from whom the REIT itself does not derive or receive any income.

Hedging Transactions.   From time to time, we or our operating partnership may enter into hedging transactions with respect to one or more of our assets or liabilities. Our hedging activities may include entering into interest rate swaps, caps, and floors, options to purchase such items, and futures and forward contracts. Income and gain from “hedging transactions” will be excluded from gross income for purposes of both the 75% and 95% gross income tests provided we satisfy the indemnification requirements discussed below. A “hedging transaction” means either (1) any transaction entered into in the normal course of our or our operating partnership’s trade or business primarily to manage the risk of interest rate, price changes, or currency fluctuations with respect to borrowings made or to be made, or ordinary obligations incurred or to be incurred, to acquire or carry real estate assets and (2) any transaction entered into primarily to manage the risk of currency fluctuations with respect to any item of income or gain that would be qualifying income under the 75% or 95% gross income test (or any property which generates such income or gain). We are required to clearly identify any such hedging transaction before the close of the day on which it was acquired, originated, or entered into and to satisfy other identification requirements. We intend to structure any hedging transactions in a manner that does not jeopardize our qualification as a REIT.

Foreign Currency Gain.   Certain foreign currency gains will be excluded from gross income for purposes of one or both of the gross income tests. “Real estate foreign exchange gain” will be excluded from gross income for purposes of the 75% and 95% gross income tests. Real estate

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foreign exchange gain generally includes foreign currency gain attributable to any item of income or gain that is qualifying income for purposes of the 75% gross income test, foreign currency gain attributable to the acquisition or ownership of (or becoming or being the obligor under) obligations secured by mortgages on real property or an interest in real property and certain foreign currency gain attributable to certain “qualified business units” of a REIT. “Passive foreign exchange gain” will be excluded from gross income for purposes of the 95% gross income test. Passive foreign exchange gain generally includes real estate foreign exchange gain as described above, and also includes foreign currency gain attributable to any item of income or gain that is qualifying income for purposes of the 95% gross income test and foreign currency gain attributable to the acquisition or ownership of (or becoming or being the obligor under) obligations. These exclusions for real estate foreign exchange gain and passive foreign exchange gain do not apply to any foreign currency gain derived from dealing, or engaging in substantial and regular trading, in securities. Such gain is treated as nonqualifying income for purposes of both the 75% and 95% gross income tests.

Failure to Satisfy Gross Income Tests.   We will monitor our sources of income so as to ensure our compliance with gross income tests. If we fail to satisfy one or both of the gross income tests for any taxable year, we nevertheless may qualify as a REIT for that year if we qualify for relief under certain provisions of the U.S. federal income tax laws. Those relief provisions are available if:

• our failure to meet those tests is due to reasonable cause and not to willful neglect; and

• following such failure for any taxable year, we file a schedule of the sources of our income in accordance with regulations prescribed by the Secretary of the U.S. Treasury.

We cannot predict, however, whether in all circumstances we would qualify for the relief provisions. In addition, as discussed above in “—Taxation of Our Company,” even if the relief provisions apply, we would incur a 100% tax on the gross income attributable to the greater of the amount by which we fail the 75% gross income test or the 95% gross income test multiplied, in either case, by a fraction intended to reflect our profitability.

Asset Tests

To qualify as a REIT, we also must satisfy the following asset tests at the end of each quarter of each taxable year. First, at least 75% of the value of our total assets must consist of:

• cash or cash items, including certain receivables and money market funds and, in certain circumstances, foreign currencies;

• government securities;

• interests in real property, including leaseholds and options to acquire real property and leaseholds;

• interests in mortgage loans secured by real property;

• stock in other REITs; and

• investments in stock or debt instruments during the one-year period following our receipt of new capital that we raise through equity offerings or public offerings of debt with at least a five-year term.

Second, of our investments not included in the 75% asset class, the value of our interest in any one issuer’s securities may not exceed 5% of the value of our total assets, or the 5% asset test.

Third, of our investments not included in the 75% asset class, we may not own more than 10% of the voting power of any one issuer’s outstanding securities or 10% of the value of any one issuer’s outstanding securities, or the 10% vote test or 10% value test, respectively.

Fourth, no more than 25% of the value of our total assets may consist of the securities of one or more TRSs.

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Fifth, no more than 25% of the value of our total assets may consist of the securities of TRSs and other non-TRS taxable subsidiaries and other assets that are not qualifying assets for purposes of the 75% asset test, or the 25% securities test.

For purposes of the 5% asset test, the 10% vote test and the 10% value test, the term “securities” does not include shares in another REIT, equity or debt securities of a qualified REIT subsidiary or a TRS, mortgage loans that constitute real estate assets, or equity interests in a partnership. The term “securities,” however, generally includes debt securities issued by a partnership or another REIT, except that for purposes of the 10% value test, the term “securities” does not include:

• “Straight debt” securities, which is defined as a written unconditional promise to pay on demand or on a specified date a sum certain in money if (1) the debt is not convertible, directly or indirectly, into equity, and (2) the interest rate and interest payment dates are not contingent on profits, the borrower’s discretion, or similar factors. “Straight debt” securities do not include any securities issued by a partnership or a corporation in which we or any controlled TRS (i.e., a TRS in which we own directly or indirectly more than 50% of the voting power or value of the stock) hold non-“straight debt” securities that have an aggregate value of more than 1% of the issuer’s outstanding securities. However, “straight debt” securities include debt subject to the following contingencies:

• a contingency relating to the time of payment of interest or principal, as long as either (1) there is no change to the effective yield of the debt obligation, other than a change to the annual yield that does not exceed the greater of 0.25% or 5% of the annual yield, or (2) neither the aggregate issue price nor the aggregate face amount of the issuer’s debt obligations held by us exceeds $1 million and no more than 12 months of unaccrued interest on the debt obligations can be required to be prepaid; and

• a contingency relating to the time or amount of payment upon a default or prepayment of a debt obligation, as long as the contingency is consistent with customary commercial practice.

• Any loan to an individual or an estate;

• Any “section 467 rental agreement,” other than an agreement with a related party tenant;

• Any obligation to pay “rents from real property”;

• Certain securities issued by governmental entities;

• Any security issued by a REIT;

• Any debt instrument issued by an entity treated as a partnership for U.S. federal income tax purposes in which we are a partner to the extent of our proportionate interest in the equity and debt securities of the partnership; and

• Any debt instrument issued by an entity treated as a partnership for U.S. federal income tax purposes not described in the preceding bullet points if at least 75% of the partnership’s gross income, excluding income from prohibited transactions, is qualifying income for purposes of the 75% gross income test described above in “—Gross Income Tests.”

For purposes of the 10% value test, our proportionate share of the assets of a partnership is our proportionate interest in any securities issued by the partnership, without regard to the securities described in the last two bullet points above.

We believe that our proposed investments will comply with the foregoing asset tests, and we intend to monitor compliance on an ongoing basis. However, independent appraisals will not be obtained to support our conclusions as to the value of our assets or the value of any particular investment. As described above, Revenue Procedure 2003-65 provides a safe harbor pursuant to which certain mezzanine loans secured by a first priority security interest in ownership interests in a partnership or limited liability company will be treated as qualifying assets for purposes of the

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75% asset test (and therefore, are not subject to the 5% asset test and the 10% vote or value test). See “—Gross Income Tests.” Although we anticipate that our mezzanine loans typically will not qualify for that safe harbor, we believe our mezzanine loans should be treated as qualifying assets for the 75% asset test or should be excluded from the definition of securities for purposes of the 10% vote or value test. We intend to originate and acquire mezzanine loans only to the extent such loans will not cause us to fail the asset tests described above.

Moreover, there is limited case law and administrative guidance addressing whether instruments similar to our preferred equity investments and mezzanine loans will be treated as equity or debt for U.S. federal income tax purposes. We expect that our preferred equity investments generally will be treated as equity for U.S. federal income tax purposes and that our mezzanine loans generally will be treated as a debt for U.S. federal income tax purposes, but we do not anticipate obtaining private letter rulings from the IRS or opinions of counsel on the characterization of those investments for U.S. federal income tax purposes. If the IRS successfully asserts a preferred equity investment is debt for U.S. federal income tax purposes, then that investment may be treated as a nonqualifying asset for purposes of the 75% asset test and would be subject to the 10% value test and the 5% asset test. It is possible that a preferred equity investment that is treated as debt for U.S. federal income tax purposes could cause us to fail one or more of those tests. Alternatively, if a mezzanine loan is treated as equity for U.S. federal income tax purposes, we would be treated as owning the assets held by the partnership or limited liability company that issued the mezzanine loan. If that partnership or limited liability company owned nonqualifying assets, we may not be able to satisfy all of the asset tests.

We will monitor the status of our assets for purposes of the various asset tests and will manage our portfolio in order to comply at all times with such tests. However, there is no assurance that we will not inadvertently fail to comply with such tests. If we fail to satisfy the asset tests at the end of a calendar quarter, we will not lose our REIT qualification if:

• we satisfied the asset tests at the end of the preceding calendar quarter; and

• the discrepancy between the value of our assets and the asset test requirements arose from changes in the market values of our assets and was not wholly or partly caused by the acquisition of one or more non-qualifying assets.

If we did not satisfy the condition described in the second item, above, we still could avoid disqualification by eliminating any discrepancy within 30 days after the close of the calendar quarter in which it arose.

If we violate the 5% asset test, the 10% vote test or the 10% value test described above, we will not lose our REIT qualification if (1) the failure is de minimis (up to the lesser of 1% of our assets or $10 million) and (2) we dispose of assets causing the failure or otherwise comply with the asset tests within six months after the last day of the quarter in which we identify such failure. In the event of a failure of any of the asset tests (other than de minimis failures described in the preceding sentence), as long as the failure was due to reasonable cause and not to willful neglect, we will not lose our REIT qualification if we (1) dispose of assets causing the failure or otherwise comply with the asset tests within six months after the last day of the quarter in which we identify the failure, (2) we file a description of each asset causing the failure with the IRS and (3) pay a tax equal to the greater of $50,000 or 35% of the net income from the assets causing the failure during the period in which we failed to satisfy the asset tests.

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Distribution Requirements

Each year, we must distribute dividends, other than capital gain dividends and deemed distributions of retained capital gain, to our stockholders in an aggregate amount at least equal to:

• the sum of:

• 90% of our “REIT taxable income,” computed without regard to the dividends paid deduction and our net capital gain or loss, and

• 90% of our after-tax net income, if any, from foreclosure property, minus

• the sum of certain items of non-cash income.

We must pay such distributions in the taxable year to which they relate, or in the following taxable year if either (1) we declare the distribution before we timely file our U.S. federal income tax return for the year and pay the distribution on or before the first regular dividend payment date after such declaration or (2) we declare the distribution in October, November or December of the taxable year, payable to stockholders of record on a specified day in any such month, and we actually pay the dividend before the end of January of the following year. The distributions under clause (1) are taxable to the stockholders in the year in which paid, and the distributions in clause (2) are treated as paid on December 31st of the prior taxable year. In both instances, these distributions relate to our prior taxable year for purposes of the 90% distribution requirement.

We will pay U.S. federal income tax on taxable income, including net capital gain, that we do not distribute to stockholders. Furthermore, if we fail to distribute during a calendar year, or by the end of January following the calendar year in the case of distributions with declaration and record dates falling in the last three months of the calendar year, at least the sum of:

• 85% of our REIT ordinary income for such year,

• 95% of our REIT capital gain net income for such year, and

• any undistributed taxable income from prior periods.

We will incur a 4% nondeductible excise tax on the excess of such required distribution over the amounts we actually distribute.

We may elect to retain and pay income tax on the net long-term capital gain we receive in a taxable year. If we so elect, we will be treated as having distributed any such retained amount for purposes of the 4% nondeductible excise tax described above. We intend to make timely distributions sufficient to satisfy the annual distribution requirements and to avoid corporate income tax and the 4% nondeductible excise tax.

It is possible that, from time to time, we may experience timing differences between the actual receipt of income and actual payment of deductible expenses and the inclusion of that income and deduction of such expenses in arriving at our REIT taxable income. For example, we may not deduct recognized capital losses from our “REIT taxable income.” Further, it is possible that, from time to time, we may be allocated taxable income or gain from an entity in which we have made a joint venture equity or preferred equity investment that exceeds the cash distributions we receive from the entity. As a result of the foregoing, we may have less cash than is necessary to distribute taxable income sufficient to avoid corporate income tax and the excise tax imposed on certain undistributed income or even to meet the 90% distribution requirement. In such a situation, we may need to borrow funds or, if possible, pay taxable dividends of our capital stock or debt securities.

We may satisfy the 90% distribution test with taxable distributions of our stock or debt securities. The IRS has issued private letter rulings to other REITs treating certain distributions that are paid partly in cash and partly in stock as dividends that would satisfy the REIT annual distribution requirement and qualify for the dividends paid deduction for U.S. federal income tax purposes. Those rulings may be relied upon only by taxpayers whom they were issued, but we could request a similar ruling from the IRS. In addition, the IRS previously issued a revenue procedure creating a safe harbor authorizing publicly traded REITs to make elective cash/stock

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dividends, but that safe harbor has expired. Accordingly, it is unclear whether and to what extent we will be able to make taxable dividends payable in cash and stock. We have no current intention to make a taxable dividend payable in our stock.

Under certain circumstances, we may be able to correct a failure to meet the distribution requirement for a year by paying “deficiency dividends” to our stockholders in a later year. We may include such deficiency dividends in our deduction for dividends paid for the earlier year. Although we may be able to avoid income tax on amounts distributed as deficiency dividends, we will be required to pay interest to the IRS based upon the amount of any deduction we take for deficiency dividends.

Recordkeeping Requirements

We must maintain certain records in order to qualify as a REIT. In addition, to avoid a monetary penalty, we must request on an annual basis information from our stockholders designed to disclose the actual ownership of our outstanding stock. We intend to comply with these requirements.

Failure to Qualify

If we fail to satisfy one or more requirements for REIT qualification, other than the gross income tests and the asset tests, we could avoid disqualification if our failure is due to reasonable cause and not to willful neglect and we pay a penalty of $50,000 for each such failure. In addition, there are relief provisions for a failure of the gross income tests and asset tests, as described in “—Gross Income Tests” and “—Asset Tests.”

If we fail to qualify as a REIT in any taxable year, and no relief provision applies, we would be subject to U.S. federal income tax and any applicable alternative minimum tax on our taxable income at regular corporate rates. In calculating our taxable income in a year in which we fail to qualify as a REIT, we would not be able to deduct amounts paid out to stockholders. In fact, we would not be required to distribute any amounts to stockholders in that year. In such event, to the extent of our current and accumulated earnings and profits, distributions to stockholders generally would be taxable as ordinary income. Subject to certain limitations of the U.S. federal income tax laws, corporate stockholders may be eligible for the dividends received deduction and stockholders taxed at individual rates may be eligible for the reduced federal income tax rate of up to 20% on such dividends. Unless we qualified for relief under specific statutory provisions, we also would be disqualified from taxation as a REIT for the four taxable years following the year during which we ceased to qualify as a REIT. We cannot predict whether in all circumstances we would qualify for such statutory relief.

Taxation of Taxable U.S. Stockholders

As used herein, the term “U.S. stockholder” means a holder of our common stock that for U.S. federal income tax purposes is:

• a citizen or resident of the United States;

• a corporation (including an entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States, any of its states or the District of Columbia;

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

• any trust if (1) a court is able to exercise primary supervision over the administration of such trust and one or more U.S. persons have the authority to control all substantial decisions of the trust or (2) it has a valid election in place to be treated as a U.S. person.

If a partnership, entity or arrangement treated as a partnership for U.S. federal income tax purposes holds our common stock, the U.S. federal income tax treatment of a partner in the

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partnership will generally depend on the status of the partner and the activities of the partnership. If you are a partner in a partnership holding our common stock, you should consult your tax advisor regarding the consequences of the ownership and disposition of our common stock by the partnership.

As long as we qualify as a REIT, a taxable U.S. stockholder must generally take into account as ordinary income distributions made out of our current or accumulated earnings and profits that we do not designate as capital gain dividends or retained long-term capital gain.

A U.S. stockholder will not qualify for the dividends received deduction generally available to corporations. In addition, dividends paid to a U.S. stockholder generally will not qualify for the reduced tax rates for “qualified dividend income.” The maximum tax rate for qualified dividend income received by U.S. stockholders taxed at individual rates is 20%. The maximum tax rate on qualified dividend income is lower than the maximum tax rate on ordinary income, which is currently 39.6%. Qualified dividend income generally includes dividends paid by domestic C corporations and certain qualified foreign corporations to U.S. stockholders that are taxed at individual rates. Because we are not generally subject to federal income tax on the portion of our REIT taxable income distributed to our stockholders (see “—Taxation of Our Company” above), our dividends generally will not be eligible for the reduced rates on qualified dividend income. As a result, our ordinary REIT dividends will be taxed at the higher tax rates applicable to ordinary income. However, the reduced tax rates for qualified dividend income will apply to our ordinary REIT dividends (1) attributable to dividends received by us from non-REIT corporations, including a TRS, and (2) to the extent attributable to income upon which we have paid corporate income tax (e.g., to the extent that we distribute less than 100% of our taxable income). In general, to qualify for the reduced tax rates on qualified dividend income, a stockholder must hold our common stock for more than 60 days during the 121-day period beginning on the date that is 60 days before the date on which our common stock becomes ex-dividend. Individuals, trusts and estates whose income exceeds certain thresholds are also subject to a 3.8% Medicare tax on dividends received from us.

A U.S. stockholder generally will take into account as long-term capital gain any distributions that we designate as capital gain dividends without regard to the period for which the U.S. stockholder has held our common stock. We generally will designate our capital gain dividends as either 20% or 25% rate distributions. See “—Capital Gains and Losses.” A corporate U.S. stockholder, however, may be required to treat up to 20% of certain capital gain dividends as ordinary income.

We may elect to retain and pay income tax on the net long-term capital gain that we receive in a taxable year. In that case, to the extent that we designate such amount in a timely notice to such stockholder, a U.S. stockholder would be taxed on its proportionate share of our undistributed long-term capital gain. The U.S. stockholder would receive a credit for its proportionate share of the tax we paid. The U.S. stockholder would increase the basis in its stock by the amount of its proportionate share of our undistributed long-term capital gain, minus its share of the tax we paid.

A U.S. stockholder will not incur tax on a distribution in excess of our current and accumulated earnings and profits if the distribution does not exceed the adjusted basis of the U.S. stockholder’s common stock. Instead, the distribution will reduce the adjusted basis of such stock. A U.S. stockholder will recognize a distribution in excess of both our current and accumulated earnings and profits and the U.S. stockholder’s adjusted basis in his or her stock as long-term capital gain, or short-term capital gain if the shares of stock have been held for one year or less, assuming the shares of stock are a capital asset in the hands of the U.S. stockholder. In addition, if we declare a distribution in October, November, or December of any year that is payable to a U.S. stockholder of record on a specified date in any such month, such distribution will be treated as both paid by us and received by the U.S. stockholder on December 31 of such year, provided that we actually pay the distribution during January of the following calendar year. We will notify U.S. stockholders after the close of our taxable year as to the portions of the distributions attributable to that year that constitute ordinary income, return of capital and capital gain.

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U.S. stockholders may not include in their individual income tax returns any of our net operating losses or capital losses. Instead, these losses are generally carried over by us for potential offset against our future income. Taxable distributions from us and gain from the disposition of our common stock will not be treated as passive activity income and, therefore, stockholders generally will not be able to apply any “passive activity losses,” such as losses from certain types of limited partnerships in which the U.S. stockholder is a limited partner, against such income. In addition, taxable distributions from us and gain from the disposition of our common stock generally will be treated as investment income for purposes of the investment interest limitations.

Taxation of U.S. Stockholders on the Disposition of Common Stock.   A U.S. stockholder who is not a dealer in securities must generally treat any gain or loss realized upon a taxable disposition of our common stock as long-term capital gain or loss if the U.S. stockholder has held our common stock for more than one year and otherwise as short-term capital gain or loss. In general, a U.S. stockholder will realize gain or loss in an amount equal to the difference between the sum of the fair market value of any property and the amount of cash received in such disposition and the U.S. stockholder’s adjusted tax basis. A stockholder’s adjusted tax basis generally will equal the U.S. stockholder’s acquisition cost, increased by the excess of net capital gains deemed distributed to the U.S. stockholder (discussed above) less tax deemed paid on such gains and reduced by any returns of capital. However, a U.S. stockholder must treat any loss upon a sale or exchange of common stock held by such stockholder for six months or less as a long-term capital loss to the extent of capital gain dividends and any other actual or deemed distributions from us that such U.S. stockholder treats as long-term capital gain. All or a portion of any loss that a U.S. stockholder realizes upon a taxable disposition of shares of our common stock may be disallowed if the U.S. stockholder purchases other shares of our common stock within 30 days before or after the disposition.

Capital Gains and Losses.   A taxpayer generally must hold a capital asset for more than one year for gain or loss derived from its sale or exchange to be treated as long-term capital gain or loss. The highest marginal individual income tax rate currently is 39.6%. The maximum tax rate on long-term capital gain applicable to taxpayers taxed at individual rates is 20% for sales and exchanges of assets held for more than one year. The maximum tax rate on long-term capital gain from the sale or exchange of “Section 1250 property,” or depreciable real property, is 25%, which applies to the lesser of the total amount of the gain or the accumulated depreciation on the Section 1250 property. Individuals, trusts and estates whose income exceeds certain thresholds are also subject to a 3.8% Medicare tax on gain from the sale of our common stock.

With respect to distributions that we designate as capital gain dividends and any retained capital gain that we are deemed to distribute, we generally may designate whether such a distribution is taxable to U.S. stockholders taxed at individual rates currently at a 20% or 25% rate. Thus, the tax rate differential between capital gain and ordinary income for those taxpayers may be significant. In addition, the characterization of income as capital gain or ordinary income may affect the deductibility of capital losses. A non-corporate taxpayer may deduct capital losses not offset by capital gains against its ordinary income only up to a maximum annual amount of $3,000. A non-corporate taxpayer may carry forward unused capital losses indefinitely. A corporate taxpayer must pay tax on its net capital gain at ordinary corporate rates. A corporate taxpayer may deduct capital losses only to the extent of capital gains, with unused losses being carried back three years and forward five years.

New Legislation Relating to Foreign Accounts.   Under the Foreign Account Tax Compliance Act, or FATCA, a U.S. withholding tax at a 30% rate generally will be imposed on dividends paid to certain U.S. stockholders who own our common stock through foreign accounts or foreign intermediaries if certain disclosure requirements related to U.S. accounts or ownership are not satisfied. In addition, if those disclosure requirements are not satisfied, a U.S. withholding tax at a 30% rate will be imposed, for payments made after December 31, 2016, on proceeds from the sale of our common stock received by U.S. stockholders who own our common stock through foreign accounts or foreign intermediaries. If payment of withholding taxes is required, non-U.S. holders

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that are otherwise eligible for an exemption from, or reduction of, U.S. withholding taxes with respect to such dividends and proceeds will be required to seek a refund from the IRS to obtain the benefit of such exemption or reduction. We will not pay any additional amounts in respect of any amounts withheld.

Taxation of Tax-Exempt Stockholders

Tax-exempt entities, including qualified employee pension and profit sharing trusts and individual retirement accounts, generally are exempt from U.S. federal income taxation. However, they are subject to taxation on their unrelated business taxable income, or UBTI. Although many investments in real estate generate UBTI, the IRS has issued a ruling that dividend distributions from a REIT to an exempt employee pension trust do not constitute UBTI so long as the exempt employee pension trust does not otherwise use the shares of the REIT in an unrelated trade or business of the pension trust. Based on that ruling, amounts that we distribute to tax-exempt stockholders generally should not constitute UBTI. However, if a tax-exempt stockholder were to finance (or be deemed to finance) its acquisition of common stock with debt, a portion of the income that it receives from us would constitute UBTI pursuant to the “debt-financed property” rules. Moreover, social clubs, voluntary employee benefit associations, supplemental unemployment benefit trusts and qualified group legal services plans that are exempt from taxation under special provisions of the U.S. federal income tax laws are subject to different UBTI rules, which generally will require them to characterize distributions that they receive from us as UBTI. Finally, in certain circumstances, a qualified employee pension or profit sharing trust that owns more than 10% of our capital stock must treat a percentage of the dividends that it receives from us as UBTI. Such percentage is equal to the gross income we derive from an unrelated trade or business, determined as if we were a pension trust, divided by our total gross income for the year in which we pay the dividends. That rule applies to a pension trust holding more than 10% of our capital stock only if:

• the percentage of our dividends that the tax-exempt trust must treat as UBTI is at least 5%;

• we qualify as a REIT by reason of the modification of the rule requiring that no more than 50% of our capital stock be owned by five or fewer individuals that allows the beneficiaries of the pension trust to be treated as holding our capital stock in proportion to their actuarial interests in the pension trust; and

• either:

• one pension trust owns more than 25% of the value of our capital stock; or

• a group of pension trusts individually holding more than 10% of the value of our capital stock collectively owns more than 50% of the value of our capital stock.

We urge tax-exempt stockholders to consult their own tax advisors regarding the U.S. federal, state and local tax consequences of owning our common stock.

Taxation of Non-U.S. Stockholders

The term “non-U.S. stockholder” means a holder of our common stock that is not a U.S. stockholder, a partnership (or entity treated as a partnership for U.S. federal income tax purposes) or a tax-exempt stockholder. The rules governing U.S. federal income taxation of nonresident alien individuals, foreign corporations, foreign partnerships, and other foreign stockholders are complex. This section is only a summary of such rules. We urge non-U.S. stockholders to consult their own tax advisors to determine the impact of federal, state, and local income tax laws on the purchase, ownership and disposition of our common stock, including any reporting requirements.

Distributions.   A non-U.S. stockholder that receives a distribution that is not attributable to gain from our sale or exchange of a “United States real property interest,” or USRPI, as defined below, and that we do not designate as a capital gain dividend or retained capital gain will recognize ordinary income to the extent that we pay such distribution out of our current or accumulated earnings and profits. A withholding tax equal to 30% of the gross amount of the

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distribution ordinarily will apply to such distribution unless an applicable tax treaty reduces or eliminates the tax. However, if a distribution is treated as effectively connected with the non-U.S. stockholder’s conduct of a U.S. trade or business, the non-U.S. stockholder generally will be subject to U.S. federal income tax on the distribution at graduated rates, in the same manner as U.S. stockholders are taxed with respect to such distribution, and a non-U.S. stockholder that is a corporation also may be subject to the 30% branch profits tax with respect to that distribution. We plan to withhold U.S. income tax at the rate of 30% on the gross amount of any such distribution paid to a non-U.S. stockholder unless either:

• a lower treaty rate applies and the non-U.S. stockholder provides us with an IRS Form W-8BEN or W-8BEN-E evidencing eligibility for that reduced rate with us;

• the non-U.S. stockholder provides us with an IRS Form W-8ECI claiming that the distribution is effectively connected income; or

• the distribution is treated as attributable to a sale of a USRPI under FIRPTA (discussed below).

A non-U.S. stockholder will not incur tax on a distribution in excess of our current and accumulated earnings and profits if the excess portion of such distribution does not exceed the adjusted basis of its common stock. Instead, the excess portion of such distribution will reduce the adjusted basis of such stock. A non-U.S. stockholder will be subject to tax on a distribution that exceeds both our current and accumulated earnings and profits and the adjusted basis of its common stock, if the non-U.S. stockholder otherwise would be subject to tax on gain from the sale or disposition of its common stock, as described below. We must withhold 10% of any distribution that exceeds our current and accumulated earnings and profits. Consequently, although we intend to withhold at a rate of 30% on the entire amount of any distribution, to the extent that we do not do so, we will withhold at a rate of 10% on any portion of a distribution not subject to withholding at a rate of 30%. Because we generally cannot determine at the time we make a distribution whether the distribution will exceed our current and accumulated earnings and profits, we normally will withhold tax on the entire amount of any distribution at the same rate as we would withhold on a dividend. However, a non-U.S. stockholder may claim a refund of amounts that we withhold if we later determine that a distribution in fact exceeded our current and accumulated earnings and profits.

For any year in which we qualify as a REIT, a non-U.S. stockholder may incur tax on distributions that are attributable to gain from our sale or exchange of a USRPI under the Foreign Investment in Real Property Act of 1980, or FIRPTA. A USRPI includes certain interests in real property and stock in corporations at least 50% of whose assets consist of interests in real property. Under FIRPTA, a non-U.S. stockholder is taxed on distributions attributable to gain from sales of USRPIs as if such gain were effectively connected with a U.S. business of the non-U.S. stockholder. A non-U.S. stockholder thus would be taxed on such a distribution at the normal capital gains rates applicable to U.S. stockholders, subject to applicable alternative minimum tax and a special alternative minimum tax in the case of a nonresident alien individual. A non-U.S. corporate stockholder not entitled to treaty relief or exemption also may be subject to the 30% branch profits tax on such a distribution.

However, if our common stock is regularly traded on an established securities market in the United States, capital gain distributions on our common stock that are attributable to our sale of a USRPI will be treated as ordinary dividends rather than as gain from the sale of a USRPI, as long as the non-U.S. stockholder did not own more than 5% of our common stock at any time during the one-year period preceding the distribution. As a result, non-U.S. stockholders generally will be subject to withholding tax on such capital gain distributions in the same manner as they are subject to withholding tax on ordinary dividends. We anticipate that our common stock will be regularly traded on an established securities market in the United States immediately following this offering. If our common stock is not regularly traded on an established securities market in the United States, capital gain distributions that are attributable to our sale of USRPIs will be subject to tax under FIRPTA, as described in the preceding paragraph. In such case, we must withhold 35% of

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any distribution that we could designate as a capital gain dividend. A non-U.S. stockholder may receive a credit against its tax liability for the amount we withhold. Moreover, if a non-U.S. stockholder disposes of our common stock during the 30-day period preceding a dividend payment, and such non-U.S. stockholder (or a person related to such non-U.S. stockholder) acquires or enters into a contract or option to acquire our common stock within 61 days of the first day of the 30-day period described above, and any portion of such dividend payment would, but for the disposition, be treated as a USRPI capital gain to such non-U.S. stockholder, then such non-U.S. stockholder will be treated as having USRPI capital gain in an amount that, but for the disposition, would have been treated as USRPI capital gain.

Dispositions.   Non-U.S. stockholders could incur tax under FIRPTA with respect to gain realized upon a disposition of our common stock if we are a United States real property holding corporation during a specified testing period. If at least 50% of a REIT’s assets are USRPI, then the REIT will be a United States real property holding corporation. We anticipate that we will be a United States real property holding corporation based on our investment strategy. However, even if we are a United States real property holding corporation, a non-U.S. stockholder generally would not incur tax under FIRPTA on gain from the sale of our common stock if we are a “domestically controlled qualified investment entity.”

A “domestically controlled qualified investment entity” includes a REIT in which, at all times during a specified testing period, less than 50% in value of its shares are held directly or indirectly by non-U.S. stockholders. We cannot assure you that this test will be met.

If our common stock is regularly traded on an established securities market, an additional exception to the tax under FIRPTA will be available with respect to our common stock, even if we do not qualify as a domestically controlled qualified investment entity at the time the non-U.S. stockholder sells our common stock. Under that exception, the gain from such a sale by such a non-U.S. stockholder will not be subject to tax under FIRPTA if (1) our common stock is treated as being regularly traded under applicable Treasury Regulations on an established securities market and (2) the non-U.S. stockholder owned, actually or constructively, 5% or less of our common stock at all times during a specified testing period. As noted above, we anticipate that our common stock will be regularly traded on an established securities market immediately following the completion of this offering.

If the gain on the sale of our common stock were taxed under FIRPTA, a non-U.S. stockholder would be taxed on that gain in the same manner as U.S. stockholders, subject to applicable alternative minimum tax and a special alternative minimum tax in the case of nonresident alien individuals. In addition, distributions that are subject to tax under FIRPTA also may be subject to a 30% branch profits tax when made to a non-U.S. stockholder treated as a corporation (under U.S. federal income tax principles) that is not otherwise entitled to treaty exemption. Finally, if we are not a domestically controlled qualified investment entity at the time our stock is sold and the non-U.S. stockholder does not qualify for the exemptions described in the preceding paragraph, under FIRPTA the purchaser of our common stock also may be required to withhold 10% of the purchase price and remit this amount to the IRS on behalf of the selling non-U.S. stockholder.

With respect to individual non-U.S. stockholders, even if not subject to FIRPTA, capital gains recognized from the sale of our common stock will be taxable to such non-U.S. stockholder if he or she is a non-resident alien individual who is present in the United States for 183 days or more during the taxable year and some other conditions apply, in which case the non-resident alien individual may be subject to a U.S. federal income tax on his or her U.S. source capital gain.

New Legislation Related to Foreign Accounts.   Under FATCA, a U.S. withholding tax at a 30% rate will be imposed on dividends paid on the common stock received by certain non-U.S. stockholders if they held our stock through foreign entities that fail to meet certain disclosure requirements related to U.S. persons that either have accounts with such entities or own equity interests in such entities. In addition, if those disclosure requirements are not satisfied, a U.S. withholding tax at a 30% rate will be imposed on proceeds from the sale of the common stock received after December 31, 2016.

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Information Reporting Requirements and Withholding

We will report to our stockholders and to the IRS the amount of distributions we pay during each calendar year, and the amount of tax we withhold, if any. Under the backup withholding rules, a stockholder may be subject to backup withholding at a rate of 28% with respect to distributions unless the stockholder:

• is a corporation or qualifies for certain other exempt categories and, when required, demonstrates this fact; or

• provides a taxpayer identification number, certifies as to no loss of exemption from backup withholding, and otherwise complies with the applicable requirements of the backup withholding rules.

A stockholder who does not provide us with its correct taxpayer identification number also may be subject to penalties imposed by the IRS. Any amount paid as backup withholding will be creditable against the stockholder’s income tax liability. In addition, we may be required to withhold a portion of capital gain distributions to any stockholders who fail to certify their non-foreign status to us.

Backup withholding will generally not apply to payments of dividends made by us or our paying agents, in their capacities as such, to a non-U.S. stockholder provided that the non-U.S. stockholder furnishes to us or our paying agent the required certification as to its non-U.S. status, such as providing a valid IRS Form W-8BEN, W-8BEN-E or W-8ECI, or certain other requirements are met. Notwithstanding the foregoing, backup withholding may apply if either we or our paying agent has actual knowledge, or reason to know, that the holder is a U.S. person that is not an exempt recipient. Payments of the proceeds from a disposition or a redemption effected outside the U.S. by a non-U.S. stockholder made by or through a foreign office of a broker generally will not be subject to information reporting or backup withholding. However, information reporting (but not backup withholding) generally will apply to such a payment if the broker has certain connections with the U.S. unless the broker has documentary evidence in its records that the beneficial owner is a non-U.S. stockholder and specified conditions are met or an exemption is otherwise established. Payment of the proceeds from a disposition by a non-U.S. stockholder of common stock made by or through the U.S. office of a broker is generally subject to information reporting and backup withholding unless the non-U.S. stockholder certifies under penalties of perjury that it is not a U.S. person and satisfies certain other requirements, or otherwise establishes an exemption from information reporting and backup withholding.

Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be refunded or credited against the stockholder’s U.S. federal income tax liability if certain required information is furnished to the IRS. Stockholders should consult their own tax advisors regarding application of backup withholding to them and the availability of, and procedure for obtaining an exemption from, backup withholding.

Other Tax Consequences

Tax Aspects of Our Investments in Our Operating Partnership and Subsidiary Partnerships

The following discussion summarizes certain U.S. federal income tax considerations applicable to our direct or indirect investments in our operating partnership and any partnerships or limited liability companies, such as the entities that will issue our joint venture equity and preferred equity investments, that we form or acquire (each individually a “Partnership” and, collectively, the “Partnerships”). The discussion does not cover state or local tax laws or any federal tax laws other than income tax laws.

Classification as Partnerships.   We will include in our income our distributive share of each Partnership’s income and deduct our distributive share of each Partnership’s losses only if such Partnership is classified for U.S. federal income tax purposes as a partnership (or an entity that is disregarded for U.S. federal income tax purposes if the entity is treated as having only one owner

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for U.S. federal income tax purposes) rather than as a corporation or an association taxable as a corporation. An unincorporated entity with at least two owners or members will be classified as a partnership, rather than as a corporation, for U.S. federal income tax purposes if it:

• is treated as a partnership under the Treasury Regulations relating to entity classification (the “check-the-box regulations”); and

• is not a “publicly-traded partnership.”

Under the check-the-box regulations, an unincorporated entity with at least two owners or members may elect to be classified either as an association taxable as a corporation or as a partnership. If such an entity does not make an election, it generally will be treated as a partnership (or an entity that is disregarded for U.S. federal income tax purposes if the entity is treated as having only one owner or member for U.S. federal income tax purposes) for U.S. federal income tax purposes. Our operating partnership intends to be classified as a partnership for U.S. federal income tax purposes and will not elect to be treated as an association taxable as a corporation under the check-the-box regulations.

A publicly-traded partnership is a partnership whose interests are traded on an established securities market or are readily tradable on a secondary market or the substantial equivalent thereof. A publicly-traded partnership will not, however, be treated as a corporation for any taxable year if, for each taxable year beginning after December 31, 1987 in which it was classified as a publicly-traded partnership, 90% or more of the partnership’s gross income for such year consists of certain passive-type income, including real property rents, gains from the sale or other disposition of real property, interest, and dividends, or (the “90% passive income exception”). Treasury Regulations provide limited safe harbors from the definition of a publicly-traded partnership. Pursuant to one of those safe harbors (the “private placement exclusion”), interests in a partnership will not be treated as readily tradable on a secondary market or the substantial equivalent thereof if (1) all interests in the partnership were issued in a transaction or transactions that were not required to be registered under the Securities Act, and (2) the partnership does not have more than 100 partners at any time during the partnership’s taxable year. In determining the number of partners in a partnership, a person owning an interest in a partnership, grantor trust, or S corporation that owns an interest in the partnership is treated as a partner in such partnership only if (1) substantially all of the value of the owner’s interest in the entity is attributable to the entity’s direct or indirect interest in the partnership and (2) a principal purpose of the use of the entity is to permit the partnership to satisfy the 100-partner limitation. We expect that our operating partnership and any other partnership or limited liability company in which we own an interest will qualify for the private placement exception.

We have not requested, and do not intend to request, a ruling from the IRS or an opinion of counsel that our operating partnership will be classified as a partnership for U.S. federal income tax purposes. If for any reason our operating partnership were taxable as a corporation, rather than as a partnership, for U.S. federal income tax purposes, we likely would not be able to qualify as a REIT unless we qualified for certain relief provisions. See “—Gross Income Tests” and “—Asset Tests.” In addition, any change in a Partnership’s status for tax purposes might be treated as a taxable event, in which case we might incur tax liability without any related cash distribution. See “—Distribution Requirements.” Further, items of income and deduction of such Partnership would not pass through to its partners, and its partners would be treated as stockholders for tax purposes. Consequently, such Partnership would be required to pay income tax at corporate rates on its net income, and distributions to its partners would constitute dividends that would not be deductible in computing such Partnership’s taxable income.

Income Taxation of the Partnerships and their Partners

Partners, Not the Partnerships, Subject to Tax.   A partnership is not a taxable entity for U.S. federal income tax purposes. Rather, we are required to take into account our allocable share of each Partnership’s income, gains, losses, deductions, and credits for any taxable year of such Partnership ending within or with our taxable year, without regard to whether we have received or will receive any distribution from such Partnership.

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Partnership Allocations.   Although a partnership agreement generally will determine the allocation of income and losses among partners, such allocations will be disregarded for tax purposes if they do not comply with the provisions of the U.S. federal income tax laws governing partnership allocations. If an allocation is not recognized for U.S. federal income tax purposes, the item subject to the allocation will be reallocated in accordance with the partners’ interests in the partnership, which will be determined by taking into account all of the facts and circumstances relating to the economic arrangement of the partners with respect to such item. Each Partnership’s allocations of taxable income, gain, and loss are intended to comply with the requirements of the U.S. federal income tax laws governing partnership allocations.

Tax Allocations With Respect to Partnership Properties.   Income, gain, loss, and deduction attributable to appreciated or depreciated property that is contributed to a partnership in exchange for an interest in the partnership must be allocated in a manner such that the contributing partner is charged with, or benefits from, respectively, the unrealized gain or unrealized loss associated with the property at the time of the contribution (the “704(c) Allocations”). The amount of the unrealized gain or unrealized loss (“built-in gain” or “built-in loss”) is generally equal to the difference between the fair market value of the contributed property at the time of contribution and the adjusted tax basis of such property at the time of contribution (a “book-tax difference”). Any property purchased for cash initially will have an adjusted tax basis equal to its fair market value, resulting in no book-tax difference. A book-tax difference generally is decreased on an annual basis as a result of depreciation deductions to the contributing partner for book purposes but not for tax purposes. The 704(c) Allocations are solely for federal income tax purposes and do not affect the book capital accounts or other economic or legal arrangements among the partners. We anticipate that our operating partnership will have a tax basis in our initial assets that is equal to their fair market value, but assets may be contributed to our operating partnership in the future in carryover basis transactions, which would result in a book-tax difference. As a result of a book-tax difference on any asset contributed in the future, we would have a lower adjusted tax basis with respect to that portion of our operating partnership’s assets than we would have with respect to assets having a tax basis equal to fair market value at the time of acquisition. This would result in lower depreciation deductions with respect to the portion of our operating partnership’s assets attributable to such contributions, which could cause us to be allocated tax gain in excess of book gain in the event of a property disposition.

The U.S. Treasury Department has issued regulations requiring partnerships to use a “reasonable method” for allocating items with respect to which there is a book-tax difference and outlining several reasonable allocation methods. Under certain available methods, the carryover basis of contributed properties in the hands of our operating partnership (1) could cause us to be allocated lower amounts of depreciation deductions for tax purposes than would be allocated to us if all contributed properties were to have a tax basis equal to their fair market value at the time of the contribution and (2) in the event of a sale of such properties, could cause us to be allocated taxable gain in excess of the economic or book gain allocated to us as a result of such sale, with a corresponding benefit to the contributing partners. An allocation described in (2) above might cause us to recognize taxable income in excess of cash proceeds in the event of a sale or other disposition of property, which may adversely affect our ability to comply with the REIT distribution requirements and may result in a greater portion of our distributions being taxed as dividends. We have not yet decided what method our operating partnership will use to account for book-tax differences.

Sale of a Partnership’s Property

Generally, any gain realized by a Partnership on the sale of property held by the Partnership for more than one year will be long-term capital gain, except for any portion of such gain that is treated as depreciation or cost recovery recapture. Under Section 704(c) of the Code, any gain or loss recognized by a Partnership on the disposition of contributed properties will be allocated first to the partners of the Partnership who contributed such properties to the extent of their built-in gain or built-in loss on those properties for U.S. federal income tax purposes. The partners’ built-in gain or built-in loss on such contributed properties will equal the difference between the partners’

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proportionate share of the book value of those properties and the partners’ tax basis allocable to those properties at the time of the contribution as reduced for any decrease in the “book-tax difference.” See “—Income Taxation of the Partnerships and their Partners—Tax Allocations With Respect to Partnership Properties.” Any remaining gain or loss recognized by the Partnership on the disposition of the contributed properties, and any gain or loss recognized by the Partnership on the disposition of the other properties, will be allocated among the partners in accordance with their respective percentage interests in the Partnership.

Our share of any gain realized by a Partnership on the sale of any property held by the Partnership as inventory or other property held primarily for sale to customers in the ordinary course of the Partnership’s trade or business will be treated as income from a prohibited transaction that is subject to a 100% penalty tax. Such prohibited transaction income also may have an adverse effect upon our ability to satisfy the income tests for REIT status. See “—Gross Income Tests.” We do not presently intend to acquire or hold, or to acquire an interest in any Partnership that holds or will acquire, any property that represents inventory or other property held primarily for sale to customers in the ordinary course of our or such Partnership’s trade or business.

Legislative or Other Actions Affecting REITs

The present federal income tax treatment of REITs may be modified, possibly with retroactive effect, by legislative, judicial or administrative action at any time. The REIT rules are constantly under review by persons involved in the legislative process and by the IRS and the U.S. Treasury Department which may result in statutory changes as well as revisions to regulations and interpretations. Additionally, several of the tax considerations described herein are currently under review and are subject to change. Prospective stockholders are urged to consult with their own tax advisors regarding the effect of potential changes to the federal tax laws on an investment in our common stock.

State and Local Taxes

We and/or you may be subject to taxation by various states and localities, including those in which we or a stockholder transacts business, owns property or resides. The state and local tax treatment may differ from the U.S. federal income tax treatment described above. Consequently, you should consult your tax advisors regarding the effect of state and local tax laws upon an investment in our common stock.

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ERISA CONSIDERATIONS

The following is a summary of material considerations arising under ERISA and the prohibited transaction provisions of the Code that may be relevant to a prospective purchaser, including plans and arrangements subject to the fiduciary rules of ERISA (“ERISA Plans”); plans and accounts that are subject to the prohibited transaction rules of Section 4975 of the Code, including IRAs, Keogh plans, and medical savings accounts and any entity that is deemed to hold “plan assets” by virtue of investments in such entity by ERISA Plans and plans subject to Section 4975 of the Code (together with ERISA Plans and plans subject to Section 4978 of the Code and such entities, “Benefit Plans” or “Benefit Plan Investors”); and governmental plans, church plans, and foreign plans that are exempt from ERISA and the prohibited transaction provisions of the Code but that may be subject to state law or other requirements, which we refer to as Other Plans. This discussion does not address all the aspects of ERISA, the Code or other laws that may be applicable to a Benefit Plan or Other Plan, in light of their particular circumstances.

In considering whether to invest a portion of the assets of a Benefit Plan or Other Plan, fiduciaries should consider, among other things, whether the investment:

• will be consistent with applicable fiduciary obligations;

• will be in accordance with the documents and instruments covering the investments by such plan, including its investment policy;

• in the case of an ERISA plan, will satisfy the prudence and diversification requirements of Sections 404(a)(1)(B) and 404(a)(1)(C) of ERISA, if applicable, and other provisions of the Code and ERISA;

• will impair the liquidity of the Benefit Plan or Other Plan;

• will result in unrelated business taxable income to the plan; and

• will provide sufficient liquidity, as there may be only a limited market to sell or otherwise dispose of our stock.

ERISA and the corresponding provisions of the Code prohibit a wide range of transactions involving the assets of the Benefit Plan and persons who have specified relationships to the Benefit Plan, who are “parties in interest” within the meaning of ERISA and, “disqualified persons” within the meaning of the Code. Thus, a designated plan fiduciary of a Benefit Plan considering an investment in our shares should also consider whether the acquisition or the continued holding of our shares might constitute or give rise to a prohibited transaction. Fiduciaries of Other Plans should satisfy themselves that the investment is in accord with applicable law.

Section 3(42) of ERISA and regulations issued by the Department of Labor provide guidance on the definition of plan assets under ERISA. These regulations also apply under the Code for purposes of the prohibited transaction rules. Under the regulations, if a plan acquires an equity interest in an entity which is neither a “publicly-offered security” nor a security issued by an investment company registered under the Investment Company Act, the plan’s assets would include both the equity interest and an undivided interest in each of the entity’s underlying assets unless an exception from the plan asset regulations applies.

The regulations define a publicly-offered security as a security that is:

• “widely-held;”

• “freely-transferable;” and

• either part of a class of securities registered under Section 12(b) or 12(g) of the Exchange Act, or sold in connection with an effective registration statement under the Securities Act, provided the securities are registered under the Exchange Act within 120 days (or such later time as may be allowed by the SEC) after the end of the fiscal year of the issuer during which the offering occurred.

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The regulations provide that a security is “widely held” only if it is part of a class of securities that is owned by 100 or more investors independent of the issuer and of one another. A security will not fail to be widely held because the number of independent investors falls below 100 subsequent to the initial public offering as a result of events beyond the issuer’s control. Upon completion of this offering, we expect that our common stock will be held by 100 or more independent investors.

The regulations provide that whether a security is “freely transferable” is a factual question to be determined on the basis of all relevant facts and circumstances. If a security is part of an offering in which the minimum investment is $10,000 or less, the regulations provide that certain restrictions ordinarily will not, alone or in combination, affect the determination of whether a security is freely transferable. The restrictions identified in the regulations which will not ordinarily prevent a security from being freely transferable include:

• any restriction on or prohibition against any transfer or assignment that would result in the termination or reclassification of an entity for federal or state tax purposes, or that otherwise would violate any federal or state law or court order;

• any requirement that advance notice of a transfer or assignment be given to the issuer;

• any administrative procedure that establishes an effective date, or an event, such as completion of an offering, prior to which a transfer or assignment will not be effective;

• any restriction on or prohibition against any transfer or assignment to an ineligible or unsuitable investor; and

• any limitation or restriction on transfer or assignment that is not imposed by the issuer or a person acting on behalf of the issuer.

We believe that the restrictions imposed under our charter on the ownership and transfer of our common stock should not prevent our common stock from being freely transferable for purposes of the Department of Labor plan asset regulations. However, no assurance can be given that the Department of Labor or the Treasury Department will not reach a contrary conclusion.

The shares of our common stock to be sold in this offering will be sold pursuant to an effective registration statement under the Securities Act and will be registered under Section 12(b) of the Exchange Act at the completion of this offering. Accordingly, we believe that our shares of common stock issued in this offering should satisfy the requirements of the “publicly-offered securities” exception.

If the underlying assets of our company were treated by the Department of Labor as “plan assets,” the management of our company would be treated as fiduciaries with respect to Benefit Plan stockholders and the prohibited transaction restrictions of ERISA and the Code could apply to transactions involving our assets and transactions with “parties in interest” (as defined in ERISA) or “disqualified persons” (as defined in Section 4975 of the Code) with respect to Benefit Plan stockholders. If the underlying assets of our company were treated as “plan assets,” an investment in our company also might constitute an improper delegation of fiduciary responsibility to our company under ERISA and expose the ERISA Plan fiduciary to co-fiduciary liability under ERISA and might result in an impermissible commingling of plan assets with other property.

If a prohibited transaction were to occur, an excise tax equal to 15% of the amount involved would be imposed under the Code, with an additional 100% excise tax if the prohibited transaction is not “corrected.” Such taxes will be imposed on any disqualified person who participates in the prohibited transaction. In addition, our Manager, and possibly other fiduciaries of Benefit Plan stockholders subject to ERISA who permitted such prohibited transaction to occur or who otherwise breached their fiduciary responsibilities, could be required to restore to the plan any losses suffered by the ERISA Plan or any profits realized by these fiduciaries as a result of the transaction or beach. With respect to an IRA or similar account that invests in our company, the occurrence of a prohibited transaction involving the individual who established the IRA, or his or her beneficiary, would cause the IRA to lose its tax-exempt status. In that event, the IRA or other account owner generally would be taxed on the fair market value of all the assets in the account as of the first day of the owner’s taxable year in which the prohibited transaction occurred.

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UNDERWRITING

Robert W. Baird & Co. Incorporated, Keefe, Bruyette & Woods, Inc. and SunTrust Robinson Humphrey, Inc. are acting as representatives of each of the underwriters named below. Subject to the terms and conditions set forth in an underwriting agreement amongst us, our Manager, our Operating Partnership and the underwriters, we have agreed to sell to the underwriters, and each of the underwriters has agreed, severally and not jointly, to purchase from us, the number of shares of common stock set forth opposite its name below.

Underwriters	Number of Shares
Robert W. Baird & Co. Incorporated
Keefe, Bruyette & Woods, Inc.
SunTrust Robinson Humphrey, Inc.
Nomura Securities International, Inc.
Oppenheimer & Co. Inc.
J.J.B. Hilliard, W.L. Lyons, LLC
Total		3,800,000

Subject to the terms and conditions set forth in the underwriting agreement, the underwriters have agreed, severally and not jointly, to purchase all of the shares sold under the underwriting agreement if any of these shares are purchased. If an underwriter defaults, the underwriting agreement provides that the purchase commitments of the nondefaulting underwriters may be increased or the underwriting agreement may be terminated.

We have agreed to indemnify the underwriters against certain liabilities, including liabilities under the Securities Act, or to contribute to payments the underwriters may be required to make in respect of those liabilities.

The underwriters are offering the shares, subject to prior sale, when, as and if issued to and accepted by them, subject to approval of legal matters by their counsel, including the validity of the shares, and other conditions contained in the underwriting agreement, such as the receipt by the underwriters of officer’s certificates and legal opinions. The underwriters reserve the right to withdraw, cancel or modify offers to the public and to reject orders in whole or in part.

Commissions and Discounts

The representatives have advised us that the underwriters propose initially to offer the shares to the public at the public offering price set forth on the cover page of this prospectus and to dealers at that price less a concession not in excess of $          per share. The underwriters to this offering agree not to sell any of the securities to, or for the benefit of, a broker-dealer that is not an underwriter of these securities. After the initial offering, the public offering price, concession or any other term of this offering may be changed. Certain of the underwriters may sell shares to the public through one or more of their affiliates as selling agents.

The following table shows the public offering price, underwriting discount and proceeds before expenses to us. The information assumes either no exercise or full exercise by the underwriter of their option to purchase additional shares.

	Per Share		Without Option		With Option
Public offering price	$		$		$
Underwriting discount	$		$		$
Proceeds, before expenses, to us	$		$		$

We have agreed to pay Robert W. Baird & Co. Incorporated and Keefe, Bruyette & Woods, Inc. a financial advisory fee in connection with our formation transactions in an amount equal to, in the aggregate, 0.75% of the gross proceeds of this offering (including with respect to any shares of our common stock issued pursuant to exercise by the underwriters in whole or in part of their option to purchase additional shares).

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The expenses of this offering, not including the underwriting discount and financial advisory fee, are estimated at approximately $1.5 million and are payable by us. We have agreed to reimburse the underwriters for certain of their expenses in an amount not to exceed $20,000.

Option to Purchase Additional Shares

We have granted an option to the underwriters, exercisable for 30 days after the date of this prospectus, to purchase up to 570,000 additional shares at the public offering price, less the underwriting discount. If the underwriters exercise this option, each will be obligated, subject to conditions contained in the underwriting agreement, to purchase a number of additional shares proportionate to that underwriter's initial amount reflected in the above table.

No Sales of Similar Securities

We, our Manager and our Operating Partnership have, and each of their executive officers and directors, each executive officer of our Manager, and each of the Contributing Investors has agreed not to sell or transfer any common stock or securities convertible into, exchangeable for, exercisable for, or repayable with common stock, for 180 days after the date of this prospectus without first obtaining the written consent of the representatives. Specifically, we and these other persons have agreed, with certain limited exceptions, not to directly or indirectly

• issue, offer, sell, pledge, contract to sell, sell any option, or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, make any short sale, lend or otherwise transfer or dispose of directly or indirectly, any shares of our common stock or any securities convertible into or exercisable or exchangeable for our common stock

• enter into any swap, forward contract, hedging transaction or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of our common stock,

• file any registration statement with the SEC relating to the offering of any shares of our common stock or any securities convertible into or exercisable or exchangeable for our common stock, or

• publicly disclose or announce an intention to effect any transaction specified above.

The restrictions described above shall not apply to the sale of shares in the offering, sales of shares of our common stock or other securities acquired in open market transactions after the completion of the offering, provided that no filing under Section 16(a) of the Exchange Act shall be required or shall be voluntarily made in connection with such sales, transfers of shares of common stock or any security convertible into our common stock as a bona fide gift, amongst other limited scenarios.

Listing

We have applied to list our common stock on the Nasdaq under the symbol “RMI.”

Price Stabilization, Short Positions and Penalty Bids

Until the distribution of the shares is completed, SEC rules may limit underwriters and selling group members from bidding for and purchasing our common stock. However, the representatives may engage in transactions that stabilize the price of the common stock, such as bids or purchases to peg, fix or maintain that price.

In connection with this offering, the underwriters may purchase and sell our common stock in the open market. These transactions may include short sales, purchases on the open market to cover positions created by short sales and stabilizing transactions. Short sales involve the sale by the underwriters of a greater number of shares than they are required to purchase in this offering. “Covered” short sales are sales made in an amount not greater than the underwriters’ option to purchase additional shares described above. The underwriters may close out any covered short position by either exercising their option to purchase additional shares or purchasing shares in the open market.

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In determining the source of shares to close out the covered short position, the underwriters will consider, among other things, the price of shares available for purchase in the open market as compared to the price at which they may purchase shares through the option granted to them. “Naked” short sales are sales in excess of such option. The underwriters must close out any naked short position by purchasing shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of our common stock in the open market after pricing that could adversely affect investors who purchase in this offering. Stabilizing transactions consist of various bids for or purchases of shares of common stock made by the underwriters in the open market prior to the completion of this offering.

The underwriters may also impose a penalty bid. This occurs when a particular underwriter repays to the underwriters a portion of the underwriting discount received by it because the representatives have repurchased shares sold by or for the account of such underwriter in stabilizing or short covering transactions.

Similar to other purchase transactions, the underwriters’ purchases to cover the syndicate short sales may have the effect of raising or maintaining the market price of our common stock or preventing or retarding a decline in the market price of our common stock. As a result, the price of our common stock may be higher than the price that might otherwise exist in the open market. The underwriters may conduct these transactions on the Nasdaq, in the over-the-counter market or otherwise.

Neither we nor any of the underwriters make any representation or prediction as to the direction or magnitude of any effect that the transactions described above may have on the price of our common stock. In addition, neither we nor any of the underwriters make any representation that the representative will engage in these transactions or that these transactions, once commenced, will not be discontinued without notice.

Electronic Distribution

In connection with this offering, certain of the underwriters or securities dealers may distribute prospectuses by electronic means, such as e-mail.

Other Relationships

Some of the underwriters and their affiliates have engaged in, and may in the future engage in, investment banking and other commercial dealings in the ordinary course of business with us or our affiliates. They have received, or may in the future receive, customary fees and commissions for these transactions.

In addition, in the ordinary course of their business activities, the underwriters and their affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers. Such investments and securities activities may involve securities and/or instruments of ours or our affiliates. The underwriters and their affiliates may also make investment recommendations and/or publish or express independent research views in respect of such securities or financial instruments and may hold, or recommend to clients that they acquire, long and/or short positions in such securities and instruments.

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LEGAL MATTERS

Certain legal matters will be passed upon for us by Hunton & Williams LLP. The statements under the caption “Material U.S. Federal Income Tax Considerations” as they relate to federal income tax matters have been reviewed by Hunton & Williams LLP, and Hunton & Williams LLP has opined as to certain income tax matters relating to an investment in our common stock. Certain legal matters will be passed upon for the underwriters by Clifford Chance US LLP. Venable LLP will pass upon the validity of the shares of our common stock sold in this offering and certain other matters of Maryland law. Clifford Chance US LLP will rely on Venable LLP for certain matters of Maryland law and Hunton & Williams LLP for certain matters of North Carolina law.

EXPERTS

The audited financial statements of RiverBanc Multifamily Investors, Inc., RB Multifamily Investors LLC, Bent Tree JV Holdings, LLC, Evergreens JV Holdings, LLC, Kiawah River View Investors LLC and WR Savannah Holdings, LLC included in this prospectus and elsewhere in the registration statement have been so included in reliance upon the reports of Grant Thornton LLP, independent registered public accountants, upon the authority of said firm.

The financial statement of Station at Mason Creek for the year ended December 31, 2012; the financial statement of The Flats@55Twelve for the year ended December 31, 2013; the financial statement of Two Addison Place for the nine months ended September 30, 2014; the financial statement of Terraces at Lake Mary for the year ended December 31, 2014; and the financial statement of Preserve at Port Royal for the year ended December 31, 2014 appearing in this prospectus have been audited by HLB Gross Collins, P.C., an independent registered public accounting firm, as set forth in their reports thereon appearing elsewhere herein, and are included in reliance upon such reports given on the authority of such firm as experts in accounting and auditing.

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ADDITIONAL INFORMATION

We have filed with the SEC a registration statement on Form S-11, as amended, of which this prospectus is a part, under the Securities Act with respect to the shares of our common stock offered by this prospectus. This prospectus does not contain all of the information set forth in the registration statement, portions of which have been omitted as permitted by the rules and regulations of the SEC. Statements contained in this prospectus as to the content of any contract or other document filed as an exhibit to the registration statement are necessarily summaries of such contract or other document, with each such statement being qualified in all respects by such reference and the schedules and exhibits to this prospectus. For additional information regarding our company and the shares of our common stock offered by this prospectus, reference is made by this prospectus to the registration statement and such schedules and exhibits.

We will provide to each person, including any beneficial owner, to whom our prospectus is delivered, upon request, a copy of any or all of the information that we have incorporated by reference into our prospectus but not delivered with our prospectus. To receive a free copy of any of the documents incorporated by reference in our prospectus, other than exhibits, unless they are specifically incorporated by reference in those documents, call or write us at:

RiverBanc Multifamily Investors, Inc.
227 West Trade Street
Suite 900
Charlotte, North Carolina 28202
(980) 224-4180

The registration statement and the schedules and exhibits forming a part of the registration statement filed by us with the SEC can be inspected and copies can be obtained from the SEC at Room 1580, 100 F Street, N.E., Washington, D.C. 20549. Copies of such materials can be obtained from the Public Reference Section of the SEC, Room 1580, 100 F Street, N.E., Washington, D.C. 20549, at prescribed rates. In addition, the SEC maintains a website that contains reports, proxies and information statements and other information regarding our company and other registrants that have been filed electronically with the SEC. The address of that website is http://www.sec.gov.

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INDEX TO FINANCIAL STATEMENTS

	Page
RiverBanc Multifamily Investors, Inc.
Unaudited Pro Forma Consolidated Financial Statements:
Unaudited Pro Forma Consolidated Balance Sheet as of March 31, 2015		F-6
Unaudited Pro Forma Consolidated Statement of Operations for the Three Months Ended March 31, 2015		F-7
Unaudited Pro Forma Consolidated Statement of Operations for the Year Ended December 31, 2014		F-8
Notes to Unaudited Pro Forma Consolidated Financial Statements		F-9
Historical Financial Statements:
Report of Independent Registered Public Accounting Firm		F-21
Consolidated Balance Sheet as of March 31, 2015		F-22
Notes to Consolidated Balance Sheet		F-23
RB Multifamily Investors LLC Financial Statements
Unaudited Financial Statements:
Balance Sheets as of March 31, 2015 (Unaudited) and December 31, 2014		F-25
Statements of Operations for the Three Months Ended March 31, 2015 and 2014 (Unaudited)		F-26
Statement of Changes in Members’ Equity for the Three Months Ended March 31, 2015 (Unaudited)		F-27
Statements of Cash Flows for the Three Months Ended March 31, 2015 and 2014 (Unaudited)		F-28
Notes to Financial Statements		F-29
Historical Financial Statements:
Report of Independent Registered Public Accounting Firm		F-38
Balance Sheets as of December 31, 2014 and 2013		F-39
Statements of Operations for the Year Ended December 31, 2014 and the Period from July 24, 2013 (Inception) to December 31, 2013		F-40
Statements of Changes in Members’ Equity for the Year Ended December 31, 2014 and the Period from July 24, 2013 (Inception) to December 31, 2013		F-41
Statements of Cash Flows for the Year Ended December 31, 2014 and the Period from July 24, 2013 (Inception) to December 31, 2013		F-42
Notes to Financial Statements		F-43
Financial Statements for Significant Properties Required by Rule 3-14 of Regulation S-X:
Station at Mason Creek
Independent Auditors’ Report		F-52
Statements of Revenues in Excess of Certain Expenses		F-53
Notes to Statements of Revenues in Excess of Certain Expenses		F-54
The Flats@55Twelve
Independent Auditors’ Report		F-55
Statements of Revenues in Excess of Certain Expenses		F-56
Notes to Statements of Revenues in Excess of Certain Expenses		F-57
Two Addison Place
Independent Auditors’ Report		F-58
Statement of Revenues in Excess of Certain Expenses		F-59
Notes to Statement of Revenues in Excess of Certain Expenses		F-60

F-1

	Page
Terraces at Lake Mary
Independent Auditors’ Report		F-61
Statement of Revenues in Excess of Certain Expenses		F-62
Notes to Statement of Revenues in Excess of Certain Expenses		F-63
Preserve at Port Royal
Independent Auditors’ Report		F-64
Statements of Revenues in Excess of Certain Expenses		F-65
Notes to Statements of Revenues in Excess of Certain Expenses		F-66
Financial Statements for Joint Venture Entities Required by Rule 3-09 of Regulation S-X:
Bent Tree JV Holdings, LLC
Report of Independent Certified Public Accountants		F-67
Balance Sheet as of December 31, 2014		F-68
Statement of Operations for the Year Ended December 31, 2014		F-69
Statement of Changes in Members’ Equity for the Year Ended December 31, 2014		F-70
Statement of Cash Flows for the Year Ended December 31, 2014		F-71
Notes to Financial Statements		F-72
Report of Independent Certified Public Accountants		F-75
Balance Sheet as of December 31, 2013		F-76
Statement of Operations for the Period from July 22, 2013 (Inception) to December 31, 2013		F-77
Statement of Changes in Members’ Equity for the Period from July 22, 2013 (Inception) to December 31, 2013		F-78
Statement of Cash Flows for the Period from July 22, 2013 (Inception) to December 31, 2013		F-79
Notes to Financial Statements		F-80
Evergreens JV Holdings, LLC
Report of Independent Certified Public Accountants		F-84
Balance Sheet as of December 31, 2014		F-85
Statement of Operations for the Period from May 13, 2014 (Inception) to December 31, 2014		F-86
Statement of Changes in Members’ Equity for the Period from May 13, 2014 (Inception) to December 31, 2014		F-87
Statement of Cash Flows for the Period from May 13, 2014 (Inception) to December 31, 2014		F-88
Notes to Financial Statements		F-89
Kiawah River View Investors LLC
Report of Independent Certified Public Accountants		F-93
Balance Sheet as of December 31, 2013		F-94
Statement of Operations for the Period from June 28, 2013 (Inception) to December 31, 2013		F-95
Statement of Changes in Members’ Equity for the Period from June 28, 2013 (Inception) to December 31, 2013		F-96
Statement of Cash Flows for the Period from June 28, 2013 (Inception) to December 31, 2013		F-97
Notes to Financial Statements		F-98

F-2

	Page
WR Savannah Holdings, LLC
Report of Independent Certified Public Accountants		F-101
Balance Sheet as of December 31, 2014		F-102
Statement of Operations for the Period from October 3, 2014 (Inception) to December 31, 2014		F-103
Statement of Changes in Members’ Equity for the Period from October 3, 2014 (Inception) to December 31, 2014		F-104
Statement of Cash Flows for the Period from October 3, 2014 (Inception) to December 31, 2014		F-105
Notes to Financial Statements		F-106

F-3

RiverBanc Multifamily Investors, Inc.
   
Unaudited Pro Forma Consolidated Financial Statements

RiverBanc Multifamily Investors, Inc. (together with its consolidated subsidiaries, the “Company,” “we,” “our” or “us”) is a Maryland corporation that was formed on February 13, 2015 to succeed to the business of RB Multifamily Investors LLC, a Delaware limited liability company (“RBMI LLC” or our “Predecessor”). RiverBanc Multifamily LP (our “Operating Partnership”) was formed as a Delaware limited partnership on March 6, 2015. Upon completion of the Offering (as defined below) and the related formation transactions, we expect our operations to be carried on through our Operating Partnership. At such time, the Company will be the sole general partner of, and will have control of, our Operating Partnership, and we will own approximately 99.98% of our Operating Partnership on a fully diluted basis. Accordingly, we will consolidate the assets, liabilities and results of operations of our Operating Partnership.

The Company has not had any corporate activity since our formation other than (i) entering into a subscription agreement for the issuance of 100 shares of common stock, $0.01 par value per share (“Common Stock”), for $1,000 in cash in connection with the Company’s initial capitalization and (ii) activities in preparation for the Company’s initial public offerings of its Common Stock (the “Offering”) and the formation transactions. Accordingly, we believe that a discussion of the results of the Company would not be meaningful, and we have, therefore, set forth below a discussion regarding the historical operations of our Predecessor only.

As of March 31, 2015, our Predecessor owned joint venture equity interests in five multifamily apartment properties, a preferred equity interest in one multifamily apartment property and three mezzanine loans secured by three multifamily apartment properties. Subsequent to March 31, 2015, our Predecessor entered into an agreement to acquire a joint venture equity interest in a multifamily apartment property which is expected to close in August 2015 (the “Port Royal Transaction”). Concurrently with the completion of the Offering, Donlon Family LLC (“Donlon”), New York Mortgage Trust, Inc. (“NYMT”), and JMP Holding LLC (“JMP” and together with Donlon and NYMT, the “Contributing Investors”) will contribute to us and we will acquire (i) 100% of the common equity ownership interests in our Predecessor in exchange for an aggregate of 1,062,976 shares of our common stock and (ii) 100% of the preferred equity ownership interests in our Predecessor that are held by NYMT in exchange for 1,737,024 shares of our common stock. Substantially concurrent with the consummation of this contribution transaction, the preferred equity interests that we acquire in our Predecessor will be converted to a common equity interest, at which time we will contribute this 100% common equity interest in our Predecessor to our operating partnership in exchange for 2,800,000 common units. Prior to or concurrent with the completion of the Offering and our formation transactions, Ellington Housing Investments LLC will redeem its outstanding preferred equity interests in our Predecessor, with EF CMO LLC contributing additional capital to our Predecessor such that Ellington will hold preferred equity interests in our Predecessor having an aggregate liquidation preference of approximately $16.3 million upon completion of the Offering and our formation transactions. We sometimes refer to these preferred equity interests held by Ellington as the “subsidiary preferred units.” As a result of the consummation of this contribution transaction, our operating partnership will own a 100% common equity interest in our Predecessor. In addition, pursuant to contribution agreements between RB Commercial Mortgage LLC, a wholly-owned subsidiary of NYMT, NYMT and us, we will acquire from RB Commercial Mortgage LLC a portfolio of five preferred equity investments in five multifamily apartment properties (which includes one preferred equity investment in a multifamily apartment property that NYMT has under contract to acquire that is expected to close in August 2015) and one mezzanine loan secured by one multifamily apartment property that NYMT has under an executed loan agreement, which is expected to fund in August 2015 concurrent with the refinancing of the senior mortgage loan on this property (collectively the “NYMT Contributed Assets”) in exchange for aggregate cash consideration of $28.5 million. As a result, upon completion of the Offering and our formation transactions, we will own joint venture

F-4

equity interests in joint ventures that own six multifamily properties with an aggregate of 1,736 apartment units, preferred equity interests in six multifamily properties with an aggregate of 2,821 apartment units and four mezzanine loans secured by four multifamily properties with an aggregate of 1,066 apartment units.

The unaudited pro forma consolidated financial statements have been derived from our Predecessor’s historical financial statements included elsewhere in this prospectus. The unaudited pro forma consolidated balance sheet as of March 31, 2015 is presented to reflect adjustments to our Predecessor’s historical balance sheet as of March 31, 2015 as if the Offering and the related formation transactions were completed on March 31, 2015. The unaudited pro forma consolidated statements of operations for the three months ended March 31, 2015 and for the year ended December 31, 2014 are presented as if the Offering and the related formation transactions were completed on January 1, 2014.

All completed and planned investment acquisitions are accounted for in the following unaudited pro forma consolidated financial statements using the acquisition method of accounting. For our Predecessor’s completed and planned investments in unconsolidated real estate entities, the total consideration paid for the respective real estate purchased is allocated by the joint venture to the assets acquired and the liabilities assumed at their respective fair values on the date of acquisition. The fair value of these assets and liabilities is allocated in accordance with Accounting Standards Codification 805, Business Combinations (“ASC 805”). The allocations of the purchase price for the planned acquisition of investment in unconsolidated real estate entity reflected in these unaudited pro forma consolidated financial statements have not been finalized and are based upon preliminary estimates of fair values, which is the best available information as of the date of this prospectus. The final determination of the fair values of these assets and liabilities will be based on the actual valuations of tangible and intangible assets and liabilities that exist as of the date the transaction is completed. Consequently, amounts preliminarily allocated to identifiable tangible and intangible assets and liabilities for the planned acquisition could change significantly from those used in the following unaudited pro forma consolidated financial statements and could result in a material change in depreciation and amortization of tangible and intangible assets and liabilities. With respect to the NYMT Contributed Assets, although NYMT is an affiliate of both our Predecessor and the Company, we are not under common control. Accordingly, the purchase of the NYMT Contributed Assets is accounted for in the following unaudited pro forma consolidated financial statements as asset acquisitions with net proceeds from the Offering at fair value in accordance with ASC 805.

The following unaudited pro forma consolidated financial statements should be read in conjunction with (i) the historical financial statements and the related notes thereto included elsewhere in this prospectus and (ii) the “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” sections in this prospectus. We have based the unaudited pro forma adjustments on available information and assumptions that we believe are reasonable. The following unaudited pro forma consolidated financial statements are presented for informational purposes only and are not necessarily indicative of (1) what our actual financial position would have been as of March 31, 2015 assuming the Offering and the related formation transactions had all been completed on March 31, 2015, (2) what actual results of operations would have been for the three months ended March 31, 2015 and for the year ended December 31, 2014 assuming the Offering and the related formation transactions were completed as of the beginning of the first period presented, or (3) our future results of operations or financial condition as of any future date or for any future period, as applicable.

F-5

RiverBanc Multifamily Investors, Inc.
Unaudited Pro Forma Consolidated Balance Sheet
March 31, 2015

	RiverBanc Multifamily Investors, Inc.		Predecessor		Pro Forma Before Offering		Proceeds From and Uses of Offering		Other Pro Forma Adjustments			Probable Predecessor and NYMT Acquisitions			Company Pro Forma
	(a)		(b)				(c)		(d)			(e)
ASSETS:
Investments in Unconsolidated Real Estate Entities	$	—	$	32,831,089	$	32,831,089	$	—	$	—		$	9,100,000		$	41,931,089
Investments in Real Estate Preferred Equity and Debt, net		—		23,944,461		23,944,461		16,452,816		—			12,000,000			52,397,277
Cash and Cash Equivalents		—		2,716,692		2,716,692		50,886,312		—			(21,100,000	)		32,503,004
Accrued Interest Receivable		—		229,981		229,981		73,872		—			—			303,853
Other Assets		1,000		8,937		9,937		—		(1,000	)		—			8,937
TOTAL ASSETS	$	1,000	$	59,731,160	$	59,732,160	$	67,413,000	$	(1,000	)	$	—		$	127,144,160
LIABILITIES AND EQUITY:
LIABILITIES:
Preferred Members' Dividend Payable	$	—	$	1,163,830	$	1,163,830	$	—	$	—		$	—		$	1,163,830
Deferred Revenue		—		265,500		265,500		—		—			—			265,500
Management Fee Payable		—		75,000		75,000		—		—			—			75,000
Accrued Expenses and Other Liabilities		—		7,200		7,200		—		—			—			7,200
TOTAL LIABILITIES		—		1,511,530		1,511,530		—		—			—			1,511,530
EQUITY:
Common Stock, $0.01 par value		1		—		1		38,000		27,999			—			66,000
Additional Paid-In Capital		999		—		999		67,375,000		41,906,247			—			109,282,246
Retained Earnings		—		—		—		—		—			—			—
Preferred Members' Equity (Liquidation preference of $49,023,402 and $16,341,134 Pro Forma)		—		48,937,402		48,937,402		—		(32,682,268	)		—			16,255,134
Common Members' Equity		—		9,282,228		9,282,228		—		(9,282,228	)		—			—
Total Members'/ Stockholders' Equity		1,000		58,219,630		58,220,630		67,413,000		(30,250	)		—			125,603,380
Noncontrolling Interests		—		—		—		—		29,250			—			29,250
TOTAL EQUITY		1,000		58,219,630		58,220,630		67,413,000		(1,000	)		—			125,632,630
TOTAL LIABILITIES AND EQUITY	$	1,000	$	59,731,160	$	59,732,160	$	67,413,000	$	(1,000	)	$	—		$	127,144,160

See Notes to Unaudited Pro Forma Consolidated Financial Statements.

F-6

RiverBanc Multifamily Investors, Inc.
Unaudited Pro Forma Consolidated Statement of Operations
Three Months Ended March 31, 2015

	RiverBanc Multifamily Investors, Inc.		Predecessor			Predecessor Pro Forma Adjustments			Company Pro Forma Before Formation Transactions			Pro Forma Activity From Formation Transactions
												Closed NYMT Contributed Asset Activity		Other			Probable Predecessor and NYMT Acquisitions			Company Pro Forma
	(A)		(B)			(C)						(D)		(E)			(F)
INCOME:
Equity in (Loss) Income of Unconsolidated Real Estate Entities	$	—	$	(2,768,425	)	$	2,079,907		$	(688,518	)	$	—	$	—		$	(100,784	)	$	(789,302	)
Interest Income		—		701,833			64,825			766,658			506,725		—			373,964			1,647,347
Other Income		—		116,000			—			116,000			—		—			—			116,000
TOTAL INCOME		—		(1,950,592	)		2,144,732			194,140			506,725		—			273,180			974,045
EXPENSES:
Management Fees		—		75,000			—			75,000			—		407,735			—			482,735
Professional Fees and Other Expenses		—		8,755			—			8,755			—		—			—			8,755
TOTAL EXPENSES		—		83,755			—			83,755			—		407,735			—			491,490
Net (Loss) Income		—		(2,034,347	)		2,144,732			110,385			506,725		(407,735	)		273,180			482,555
Preferred Members' Dividend		—		(1,163,830	)		(61,756	)		(1,225,586	)		—		817,057			—			(408,529	)
Net Loss (Income) Attributable to Noncontrolling Interests		—		—			—			—			—		(17	)		—			(17	)
Net (Loss) Income Available to Common Members/Stockholders	$	—	$	(3,198,177	)	$	2,082,976		$	(1,115,201	)	$	506,725	$	409,305		$	273,180		$	74,009

Pro Forma earnings (loss) per share-basic	(G	)	$	0.01
Pro Forma earnings (loss) per share-diluted	(G	)	$	0.01
Pro Forma weighted average shares outstanding-basic	(G	)		6,600,000
Pro Forma weighted average shares outstanding-diluted	(G	)		6,601,500

See Notes to Unaudited Pro Forma Consolidated Financial Statements.

F-7

RiverBanc Multifamily Investors, Inc.

Unaudited Pro Forma Consolidated Statement of Operations
Year Ended December 31, 2014

	RiverBanc Multifamily Investors, Inc.		Predecessor			Predecessor Acquisitions / Dispositions			Predecessor Pro Forma Adjustments			Company Pro Forma Before Formation Transactions			Pro Forma Activity From Formation Transactions
															Closed NYMT Contributed Asset Activity		Other			Probable Predecessor and NYMT Acquisitions			Company Pro Forma
	(AA)		(BB)			(CC)			(DD)						(EE)		(FF)			(GG)
INCOME:
Equity in Loss of Unconsolidated Real Estate Entities	$	—	$	(5,449,933	)	$	(2,413,294	)	$	(3,708,080	)	$	(11,571,307	)	$	—	$	—		$	(3,076,875	)	$	(14,648,182	)
Equity in Loss of Unconsolidated Real Estate Entity
Held for Disposition		—		(11,185	)		11,185			—			—			—		—			—			—
Interest Income		—		660,248			746,828			1,742,829			3,149,905			2,041,740		—			1,506,574			6,698,219
TOTAL INCOME		—		(4,800,870	)		(1,655,281	)		(1,965,251	)		(8,421,402	)		2,041,740		—			(1,570,301	)		(7,949,963	)
EXPENSES:
Management Fees		—		109,676			—			190,324			300,000			—		1,630,939			—			1,930,939
Professional Fees and Other Expenses		—		57,768			—			—			57,768			—		29,250			—			87,018
TOTAL EXPENSES		—		167,444			—			190,324			357,768			—		1,660,189			—			2,017,957
Net (Loss) Income		—		(4,968,314	)		(1,655,281	)		(2,155,575	)		(8,779,170	)		2,041,740		(1,660,189	)		(1,570,301	)		(9,967,920	)
Preferred Members' Dividend		—		(921,045	)		(1,406,000	)		(2,575,295	)		(4,902,340	)		—		3,268,227			—			(1,634,113	)
Net Loss (Income) Attributable to Noncontrolling Interests		—		—			—			—			—			—		2,636			—			2,636
Net Loss Available to Common Members/ Stockholders	$	—	$	(5,889,359	)	$	(3,061,281	)	$	(4,730,870	)	$	(13,681,510	)	$	2,041,740	$	1,610,674		$	(1,570,301	)	$	(11,599,397	)

Pro Forma earnings (loss) per share-basic	(HH	)	$	(1.76	)
Pro Forma earnings (loss) per share-diluted	(HH	)	$	(1.76	)
Pro Forma weighted average shares outstanding-basic	(HH	)		6,600,000
Pro Forma weighted average shares outstanding-diluted	(HH	)		6,601,500

See Notes to Unaudited Pro Forma Consolidated Financial Statements.

F-8

RiverBanc Multifamily Investors, Inc.
Notes to Unaudited Pro Forma Consolidated Financial Statements

1. Adjustments to the Unaudited Pro Forma Consolidated Balance Sheet as of March 31, 2015

(a) Represents the historical consolidated balance sheet of RiverBanc Multifamily Investors, Inc. and subsidiaries as of March 31, 2015. RiverBanc Multifamily Investors, Inc. was formed on February 13, 2015 and has had no activity since its inception other than entering into a subscription agreement for the issuance of 100 shares of common stock for $10 per share with the sole shareholder, Kevin Donlon, on February 13, 2015 and the subsequent funding of the initial capitalization on May 29, 2015. Immediately prior to the closing of the Offering, the Company will repurchase the 100 shares of common stock issued in the initial capitalization for $10 per share.

(b) Represents the historical balance sheet of our Predecessor, RB Multifamily Investors LLC, as of March 31, 2015 and includes the Predecessor’s investments in unconsolidated real estate entities as listed below:

Investment	Initial Investment		Return of Capital			Equity in Loss of Unconsolidated Real Estate Entity			As of March 31, 2015
Station at Mason Creek	$	7,000,000	$	(522,276	)	$	(2,760,648	)	$	3,717,076
The Flats @ 55Twelve		7,796,000		(267,596	)		(2,852,271	)		4,676,133
Summer Chase		3,600,000		(100,000	)		(832,014	)		2,667,986
Two Addison Place		15,933,975		—			(2,264,300	)		13,669,675
Terraces at Lake Mary		9,000,000		—			(899,781	)		8,100,219
Total	$	43,329,975	$	(889,872	)	$	(9,609,014	)	$	32,831,089

The historical balance sheet also includes the Predecessor’s investments in real estate preferred equity and debt, net as listed below:

Investment	As of March 31, 2015
Monterey Ranch	$	13,259,190
Waters at Bluff Springs		3,548,503
Waters at Elm Creek		1,367,552
Highlands at Gwinnett Stadium		5,769,216
Total	$	23,944,461

The historical financial statements of the Predecessor as of and for the three months ended March 31, 2015 are included elsewhere in this prospectus.

F-9

(c) Reflects gross proceeds from the Offering of $74.1 million, which will be reduced by approximately $6.7 million to reflect underwriters’ discounts and commissions, financial advisory fees and other costs of the Offering payable by the Company, resulting in net proceeds to the Company of $67.4 million. These costs will be charged against the gross offering proceeds upon completion of the Offering. As of March 31, 2015, $344,022 of these costs had been incurred by our Predecessor and our Manager. A portion of the net proceeds from the Offering will be used to acquire the Closed NYMT Contributed Assets. A summary is as follows:

Gross Proceeds	$	74,100,000
Less:
Underwriters' Discount, Commissions, Financial Advisory Fees, and Offering Expenses		(6,342,978	)
Offering Costs Incurred by Predecessor and Manager through March 31, 2015		(344,022	)
Net Proceeds From Offering	$	67,413,000

Closed NYMT Contributed Asset	Investment Type	Principal Balance			Accrued Interest			Total Purchase Price
The Clusters	Preferred Equity	$	(3,497,607	)	$	(36,142	)	$	(3,533,749	)
Canter Chase	Preferred Equity		(3,505,209	)		(37,730	)		(3,542,939	)
Garden District	Preferred Equity		(4,350,000	)		—			(4,350,000	)
Villages of Sage Creek	Preferred Equity		(5,100,000	)		—			(5,100,000	)
Total Closed NYMT Contributed Assets		$	(16,452,816	)	$	(73,872	)	$	(16,526,688	)
Net Proceeds Remaining								$	50,886,312

(d) As consideration for the contributions of the Predecessor’s common equity interests, the Company will issue an aggregate of 1,062,976 shares of common stock to the Contributing Investors. Concurrently, the Company will issue 1,737,024 shares of common stock to NYMT in connection with its contribution of 100% of its preferred equity interests (having an aggregate liquidation preference of $32.7 million) in our Predecessor. Also reflects the issuance of 1,500 LTIP units in the Operating Partnership to the Company’s independent directors upon completion of the Offering and repurchase of shares held by the sole shareholder immediately prior to the Offering.

(e) Represents the following probable acquisitions which either the Predecessor or NYMT have under contract to acquire at the amounts listed below. The Company expects to purchase the probable NYMT Contributed Assets immediately after NYMT completes its acquisition of these assets.

Probable Acquisition	Investment Type	Investment Amount
Preserve at Port Royal(1)	Joint Venture	$	9,100,000

Probable NYMT Contributed Asset	Investment Type	Total Purchase Price
Riverchase Landing(2)	Preferred Equity		8,500,000
Fountains at Andover(2)	Mezzanine Loan		3,500,000
Total Probable NYMT Contributed Assets		$	12,000,000
Total Probable Predecessor and NYMT Acquisitions		$	21,100,000

(1) The Predecessor has this investment under contract to acquire, with closing expected in August 2015.

(2) NYMT has this investment under contract to acquire or has executed a binding loan agreement, with closing by NYMT expected in August 2015.

F-10

2. Adjustments to the Unaudited Pro Forma Consolidated Statement of Operations for the Three Months Ended March 31, 2015

(A) Represents the historical consolidated statement of operations of RiverBanc Multifamily Investors, Inc. and subsidiaries for the three months ended March 31, 2015. RiverBanc Multifamily Investors, Inc. was formed on February 13, 2015 and has had no activity since its inception other than entering into a subscription agreement for the issuance of 100 shares of common stock for $10 per share with the sole shareholder, Kevin Donlon, on February 13, 2015 and the subsequent funding of the initial capitalization on May 29, 2015.

(B) Represents the historical statement of operations of the Predecessor for the three months ended March 31, 2015. The historical financial statements of the Predecessor as of and for the three months ended March 31, 2015 are included elsewhere in this prospectus.

(C) Represents adjustments for the Predecessor’s investment portfolio as if each asset had been acquired on January 1, 2014, including a corresponding increase in preferred members’ dividend as if such capital had been contributed on January 1, 2014.

Joint Venture Investments

The Predecessor’s joint venture investments are accounted for under the equity method of accounting and the pro forma adjustment is calculated as if the assets had been acquired on January 1, 2014. The historical equity in net income (loss) recorded by the Predecessor in the three months ended March 31, 2015 is then deducted from the pro forma net income (loss) to arrive at the pro forma adjustment.

The following table details the pro forma adjustment for each Predecessor joint venture investment for the three months ended March 31, 2015:

	Station at Mason Creek			The Flats @ 55Twelve(1)			Summer Chase(1)			Two Addison Place(1)			Terraces at Lake Mary(1)			Total
Rental revenues	$	900,516		$	762,083		$	385,395		$	904,233		$	782,413		$	3,734,640
Operating, general and administrative expenses		(493,861	)		(315,400	)		(155,875	)		(427,507	)		(323,814	)		(1,716,457	)
Interest expense		(207,350	)		(270,318	)		(89,068	)		(352,542	)		(197,813	)		(1,117,091	)
Depreciation expense		(373,786	)		(459,078	)		(184,951	)		(445,069	)		(245,438	)		(1,708,322	)
Amortization expense		—			—			—			—			—			—
Acquisition costs		—			—			—			—			—			—
Pro Forma net income (loss) for the three months ended March 31, 2015 as if acquired January 1, 2014	$	(174,481	)	$	(282,713	)	$	(44,499	)	$	(320,885	)	$	15,348		$	(807,230	)
Predecessor’s ownership percentage		78	%		85	%		80	%		90	%		80	%
Predecessor’s share of Pro Forma net income (loss) for the three months ended March 31, 2015	$	(136,095	)	$	(240,306	)	$	(35,599	)	$	(288,796	)	$	12,278		$	(688,518	)
Net income (loss) recorded by Predecessor in the three months ended March 31, 2015 (2)		(136,095	)		(240,306	)		(344,601	)		(1,147,642	)		(899,781	)		(2,768,425	)
Pro Forma adjustment for the three months ended March 31, 2015	$	—		$	—		$	309,002		$	858,846		$	912,059		$	2,079,907

(1) The information set forth in this column reflects management's estimate of the revenues and expenses for this property for the period from January 1, 2015 through March 31, 2015 as if the property was acquired by the joint venture on January 1, 2014. The joint venture accounts for the acquisition of the property under the purchase method of accounting in accordance with ASC 805, Business Combinations, and records the estimated fair values of the assets and liabilities acquired. Depreciation and amortization expenses are calculated as a result of the purchase accounting adjustments and management's evaluations of the estimated useful lives of fixed assets and intangibles as if the property was owned on January 1, 2014.

(2) See Note 3 to the unaudited financial statements of the Predecessor included elsewhere in this prospectus.

F-11

Preferred Equity Investment

For the preferred equity investment accounted for as a loan, the pro forma adjustment is calculated by assuming that the investment was originated with the same terms on January 1, 2014. The interest income recorded by the Predecessor in the three months ended March 31, 2015 is then deducted from the pro forma interest income to arrive at the pro forma adjustment.

The following table details the pro forma adjustment for the Predecessor’s preferred equity investment in Monterey Ranch for the three months ended March 31, 2015:

Investment	Pro Forma For the Three Months Ended March 31, 2015		Recorded by Predecessor in the Three Months Ended March 31, 2015		Pro Forma Adjustment For the Three Months Ended March 31, 2015
Monterey Ranch	$	406,914	$	406,914	$	—
Total	$	406,914	$	406,914	$	—

Mezzanine Loan Investments

For mezzanine loan investments originated subsequent to January 1, 2014, the pro forma adjustment is calculated by assuming that the loan was originated with the same terms on January 1, 2014. For mezzanine loan investments originated prior to January 1, 2014, the pro forma adjustment is calculated by assuming that the Predecessor acquired the loan on January 1, 2014. The interest income recorded by the Predecessor in the three months ended March 31, 2015 is then deducted from the pro forma interest income to arrive at the pro forma adjustment.

The following table details the pro forma adjustment for the Predecessor’s mezzanine loan investments for the three months ended March 31, 2015:

Investment	Pro Forma For the Three Months Ended March 31, 2015		Recorded by Predecessor in the Three Months Ended March 31, 2015		Pro Forma Adjustment For the Three Months Ended March 31, 2015
Waters at Bluff Springs	$	124,218	$	124,218	$	—
Waters at Elm Creek		47,873		47,873		—
Highlands at Gwinnett Stadium		187,654		122,829		64,825
	$	359,745	$	294,920	$	64,825

(D) Represents adjustments to reflect the Company’s interest income earned on preferred equity investments accounted for as loans for the three months ended March 31, 2015 assuming that the investment was originated with the same terms on January 1, 2014 and that the formation transactions occurred on January 1, 2014, as detailed below:

Investment	Pro Forma Adjustment For the Three Months Ended March 31, 2015
The Clusters	$	105,000
Canter Chase		109,375
Garden District		130,500
Villages of Sage Creek		161,850
Total	$	506,725

F-12

(E) Represents the contribution of the Contributing Investors’ common equity ownership interests in the Predecessor and the contribution of NYMT’s preferred equity ownership interests in the Predecessor in exchange for common stock in the Company issued in connection with the formation transactions and the associated reversal of preferred member dividend related to such preferred equity.

Management Fees

Reflects an adjustment to the management fee expense to reflect the terms of the new management agreement that will be in place at the closing of the Offering. As outlined in the "Our Manager and the Management Agreement" section, under the caption "Base Management Fees," included elsewhere in this prospectus, we will enter into a new management agreement with our Manager based upon an annual fee of 1.5% of our adjusted equity market capitalization. This adjustment reflects the total management fee expense that would have been incurred under the new agreement. We have estimated the Company’s adjusted equity market capitalization based upon the midpoint of the range of the public offering price per share set forth on the cover page of this prospectus and have assumed that the shares of common stock sold in the Offering, the shares issued to the Contributing Investors in the formation transactions and the LTIP units issued to the Company’s independent directors (converted on a one-for-one basis into the Company’s common stock) upon completion of the Offering, totaling 6,601,500 shares, were outstanding throughout the entire period to calculate the Company’s adjusted equity market capitalization.

General and Administrative Expenses

Additional general and administrative costs the Company expects to incur as a result of becoming a public company include, but are not limited to, board of directors’ fees and expenses, directors and officers insurance, incremental audit, tax, and legal fees, transfer agent fees, Nasdaq listing fees and other expenses related to corporate governance, SEC reporting and other compliance matters. Upon completion of the Offering and the formation transactions, the Company expects that its annual general and administrative expenses, for the twelve month period following the Offering, will be approximately $1.5 million, before additional non-cash compensation expenses, if any, related to LTIP units; actual amounts incurred may differ from this estimate. As the Company has not yet entered into contracts with third parties to provide the services included within this estimate, no adjustment for general and administrative expenses has been made to the pro forma statement of operations.

Net Loss (Income) Attributable to Noncontrolling Interests   

Reflects the allocation of pro forma net income (loss) attributable to noncontrolling interests in our Operating Partnership in the form of an aggregate 1,500 LTIP units to be issued to the Company’s independent directors upon completion of the Offering.

F-13

(F) Represents adjustments for the following probable acquisitions which either the Predecessor or NYMT have under contract to acquire.

Joint Venture Investment

Represents adjustment to reflect the Company's probable acquisition of a joint venture investment in Preserve at Port Royal. This investment will be accounted for under the equity method of accounting and the pro forma adjustment is calculated as if the asset had been acquired on January 1, 2014. The following table details the Predecessor probable acquisition adjustment for the three months ended March 31, 2015:

	Preserve at Port Royal(1)
Rental revenues	$	1,101,291
Operating, general and administrative expenses		(499,580	)
Interest expense		(325,194	)
Depreciation expense		(405,726	)
Amortization expense		—
Acquisition costs		—
Pro Forma net loss for the three months ended March 31, 2015 as if acquired January 1, 2014	$	(129,209	)
Predecessor's ownership percentage		78	%
Predecessor's share of Pro Forma net loss for the three months ended March 31, 2015	$	(100,784	)

(1) This investment is under contract and expected to be acquired in 2015. The information set forth in this column reflects management's estimate of the revenues and expenses for the property for the period from January 1, 2015 through March 31, 2015 as if the property was acquired by the joint venture in which the Predecessor expects to acquire a 78% common equity interest on January 1, 2014. Management's estimates of revenues and operating expenses are based on accounting and financial information provided by the seller to the joint venture. The joint venture will account for the acquisition of the property under the purchase method of accounting in accordance with ASC 805, Business Combinations, and will record the estimated fair values of the assets and liabilities acquired. Depreciation and amortization expenses are calculated as a result of the purchase accounting adjustments and management's evaluations of the estimated useful lives of fixed assets and intangibles as if the property was owned on January 1, 2014.

Preferred Equity Investment

Represents adjustment to reflect the Company's interest income earned on the preferred equity investment accounted for as a loan for the three months ended March 31, 2015 assuming that the investment was originated with the same terms on January 1, 2014 and that the NYMT probable acquisition, and expected purchase by the Company, occurred on January 1, 2014, as detailed below: 

Investment	Pro Forma Adjustment For the Three Months Ended March 31, 2015(1)
Riverchase Landing	$	260,313
Total	$	260,313

(1) This investment is under contract and expected to close in August 2015.

F-14

Mezzanine Loan Investment

Represents adjustment to reflect the Company's interest income earned on the mezzanine loan investment for the three months ended March 31, 2015 assuming that the loan was originated with the same terms on January 1, 2014 and that the NYMT probable acquisition, and the expected purchase by the Company, occurred on January 1, 2014, as detailed below:

Investment	Pro Forma Adjustment For the Three Months Ended March 31, 2015(1)
Fountains at Andover	$	113,651
Total	$	113,651

(1) This investment is under a binding loan agreement and expected to close in August 2015.

(G) Below is the calculation of pro forma basic and diluted weighted average common shares outstanding:

Common shares issued in the Offering	3,800,000
Common shares issued to the Contributing Investors in exchange for Predecessor common equity interests	1,062,976
Common shares issued to NYMT in exchange for Predecessor preferred equity interests	1,737,024
Pro Forma weighted average shares outstanding - basic	6,600,000
LTIP units convertible into common stock equivalents	1,500
Pro Forma weighted average shares outstanding - diluted	6,601,500

3. Adjustments to the Unaudited Pro Forma Consolidated Statement of Operations for the Year Ended December 31, 2014

(AA) Represents the pro forma consolidated statement of operations of RiverBanc Multifamily Investors, Inc. and subsidiaries as if the Company had been formed in the year ended December 31, 2014. RiverBanc Multifamily Investors, Inc. was formed on February 13, 2015 and has had no activity since its inception other than entering into a subscription agreement for the issuance of 100 shares of common stock for $10 per share with the sole shareholder, Kevin Donlon, on February 13, 2015 and the subsequent funding of the initial capitalization on May 29, 2015.

(BB) Represents the historical statement of operations of the Predecessor for the year ended December 31, 2014. The historical financial statements of the Predecessor as of and for the year ended December 31, 2014 are included elsewhere in this prospectus.

(CC) Represents the Predecessor’s purchase of two investments that occurred subsequent to December 31, 2014 and eliminates the Predecessor’s equity in net loss of one investment that was distributed to the common members in the year ended December 31, 2014.

Acquisitions

a. The Predecessor’s joint venture investment in Terraces at Lake Mary that occurred on January 8, 2015, funded by additional preferred equity contributions to the Predecessor. This investment is accounted for under the equity method of accounting and the pro forma adjustment is calculated as if the asset had been acquired on January 1, 2014.

F-15

b. The Predecessor’s mezzanine loan investment in Highlands at Gwinnett Stadium that occurred on January 30, 2015. The pro forma adjustment is calculated by assuming the loan was originated with the same terms on January 1, 2014.

The following tables detail the Predecessor’s pro forma acquisition adjustment amount for each asset for the year ended December 31, 2014:

Joint Venture Investment

	Terraces at Lake Mary(1)
Rental revenues	$	3,119,054
Operating, general and administrative expenses		(1,962,396	)
Interest expense		(855,341	)
Depreciation expense		(1,183,491	)
Amortization expense		(1,704,632	)
Acquisition costs		(429,811	)
Pro Forma net loss for the year ended December 31, 2014 as if acquired January 1, 2014	$	(3,016,617	)
Predecessor's ownership percentage		80	%
Predecessor's share of Pro Forma net loss for the year ended December 31, 2014	$	(2,413,294	)

(1) This investment was acquired in 2015. The information set forth in this column reflects management's estimate of the revenues and expenses for the property for the period from January 1, 2014 through December 31, 2014 as if the property was acquired by the joint venture in which the Predecessor owns a common equity interest on January 1, 2014. Management's estimates of revenues and operating expenses are based on accounting and financial information provided by the seller to the joint venture. The joint venture accounts for the acquisition of the property under the purchase method of accounting in accordance with ASC 805, Business Combinations, and records the estimated fair values of the assets and liabilities acquired. Depreciation and amortization expenses are calculated as a result of the purchase accounting adjustments and management's evaluations of the estimated useful lives of fixed assets and intangibles as if the property was owned on January 1, 2014.

Mezzanine Loan Investment

Investment	Pro Forma Adjustment For the Year Ended December 31, 2014
Highlands at Gwinnett Stadium	$	746,828
Total	$	746,828

A corresponding increase in preferred members’ dividend related to the preferred equity capital contributions that funded these investments as if such capital had been contributed on January 1, 2014 is also reflected.

Dispositions

The Predecessor disposed of its membership interest in Kiawah River View Investors LLC in the year ended December 31, 2014. This joint venture investment was distributed to the Predecessor’s common members on June 30, 2014 and the pro forma adjustment eliminates the Predecessor’s equity in the net loss of this entity in the amount of $11,185.

(DD) Represents adjustments for the Predecessor’s investment portfolio as if each asset had been acquired on January 1, 2014, including a corresponding increase in preferred members’ dividend as if such capital had been contributed by the preferred members on January 1, 2014.

F-16

Joint Venture Investments

The Predecessor’s joint venture investments are accounted for under the equity method of accounting and the pro forma adjustment is calculated as if the assets had been acquired on January 1, 2014. The equity in net loss recorded by the Predecessor in the year ended December 31, 2014 is then deducted from the pro forma net loss to arrive at the pro forma adjustment.

The following table details the pro forma adjustment for each Predecessor joint venture investment for the year ended December 31, 2014:

	Station at Mason Creek			The Flats @ 55Twelve(1)			Summer Chase(1)			Two Addison Place(1)			Total
Rental revenues	$	3,394,194		$	3,016,123		$	1,505,730		$	3,537,712		$	11,453,759
Operating, general and administrative expenses		(1,917,425	)		(1,518,913	)		(837,240	)		(1,788,660	)		(6,062,238	)
Interest expense		(847,805	)		(1,110,305	)		(362,016	)		(1,455,306	)		(3,775,432	)
Depreciation expense		(1,459,047	)		(1,912,248	)		(734,196	)		(1,765,279	)		(5,870,770	)
Amortization expense		(751,838	)		(1,683,073	)		(772,491	)		(1,908,556	)		(5,115,958	)
Acquisition costs		—			(549,448	)		(213,352	)		(618,888	)		(1,381,688	)
Pro Forma net loss for the year ended December 31, 2014 as if acquired January 1, 2014	$	(1,581,921	)	$	(3,757,864	)	$	(1,413,565	)	$	(3,998,977	)	$	(10,752,327	)
Predecessor's ownership percentage		78	%		85	%		80	%		90	%
Predecessor's share of Pro Forma net loss for the year ended December 31, 2014	$	(1,233,898	)	$	(3,194,184	)	$	(1,130,852	)	$	(3,599,079	)	$	(9,158,013	)
Recorded by Predecessor in the year ended December 31, 2014 (2)		(1,233,898	)		(2,611,964	)		(487,413	)		(1,116,658	)		(5,449,933	)
Pro Forma adjustment for the year ended December 31, 2014	$	—		$	(582,220	)	$	(643,439	)	$	(2,482,421	)	$	(3,708,080	)

(1) The information set forth in this column reflects management's estimate of the revenues and expenses for this property for the period from January 1, 2014 through December 31, 2014 as if the property was acquired by the joint venture in which the Predecessor owns a common equity interest on January 1, 2014. The joint venture accounts for the acquisition of the property under the purchase method of accounting in accordance with ASC 805, Business Combinations, and records the estimated fair values of the assets and liabilities acquired. Depreciation and amortization expenses are calculated as a result of the purchase accounting adjustments and management's evaluations of the estimated useful lives of fixed assets and intangibles as if the property was owned on January 1, 2014.

(2) See Note 3 to the audited financial statements of the Predecessor included elsewhere in this prospectus.

Preferred Equity Investment

For the preferred equity investment accounted for as a loan, the pro forma adjustment is calculated by assuming that the investment was originated with the same terms on January 1, 2014. The interest income recorded by the Predecessor in the year ended December 31, 2014 is then deducted from the pro forma interest income to arrive at the pro forma adjustment.

The following table details the pro forma adjustment for the Predecessor’s preferred equity investment in Monterey Ranch for the year ended December 31, 2014:

Investment	Pro Forma For the Year Ended December 31, 2014		Recorded by Predecessor in the Year Ended December 31, 2014		Pro Forma Adjustment For the Year Ended December 31, 2014
Monterey Ranch	$	1,649,989	$	289,143	$	1,360,846
Total	$	1,649,989	$	289,143	$	1,360,846

F-17

Mezzanine Loan Investments

For mezzanine loan investments originated prior to January 1, 2014, the pro forma adjustment is calculated by assuming that the Predecessor acquired the loan on January 1, 2014. The interest income recorded by the Predecessor in the year ended December 31, 2014 is then deducted from the pro forma interest income to arrive at the pro forma adjustment.

The following table details the pro forma adjustment for the Predecessor’s mezzanine loan investments for the year ended December 31, 2014:

Investment	Pro Forma For the Year Ended December 31, 2014		Recorded by Predecessor in the Year Ended December 31, 2014		Pro Forma Adjustment For the Year Ended December 31, 2014
Waters at Bluff Springs	$	543,582	$	267,868	$	275,714
Waters at Elm Creek		209,505		103,236		106,269
Total	$	753,087	$	371,104	$	381,983

(EE) Represents adjustments to reflect the Company’s interest income earned on preferred equity investments accounted for as loans for the year ended December 31, 2014 assuming that the investment was originated with the same terms on January 1, 2014 and that the formation transactions occurred on January 1, 2014, as detailed below:

Investment	Pro Forma Adjustment For the Year Ended December 31, 2014
The Clusters	$	425,833
Canter Chase		443,576
Garden District		529,250
Villages of Sage Creek		643,081
Total	$	2,041,740

(FF) Represents the contribution of the Contributing Investors’ common equity ownership interests in the Predecessor and the contribution of NYMT’s preferred equity ownership interests in the Predecessor in exchange for common stock in the Company issued in connection with the formation transactions and the associated reversal of preferred member dividend related to such preferred equity.

Management Fees

Reflects an adjustment to the management fee expense to reflect the terms of the new management agreement that will be in place at the closing of the Offering. As outlined in the "Our Manager and the Management Agreement" section, under the caption "Base Management Fees," included elsewhere in this prospectus, we will enter into a new management agreement with our Manager based upon an annual fee of 1.5% of our adjusted equity market capitalization. This adjustment reflects the total management fee expense that would have been incurred under the new agreement. We have estimated the Company’s adjusted equity market capitalization based upon the midpoint of the range of the public offering price per share set forth on the cover page of this prospectus and have assumed that the shares of common stock sold in the Offering, the shares issued to the Contributing Investors in the formation transactions and the LTIP units issued to the Company’s independent directors (converted on a one-for-one basis into the Company’s common stock) upon completion of the Offering, totaling 6,601,500 shares, were outstanding throughout the entire period to calculate the Company’s adjusted equity market capitalization.

F-18

General and Administrative Expenses

Additional general and administrative costs the Company expects to incur as a result of becoming a public company include, but are not limited to, board of directors’ fees and expenses, directors and officers insurance, incremental audit, tax, and legal fees, transfer agent fees, Nasdaq listing fees and other expenses related to corporate governance, SEC reporting and other compliance matters. Upon completion of the Offering and the formation transactions, the Company expects that its annual general and administrative expenses will be approximately $1.5 million before additional non-cash compensation expense of approximately $29,250 related to LTIP units; actual amounts incurred may differ from this estimate. As the Company has not yet entered into contracts with third parties to provide the services included within this estimate, no adjustment for general and administrative expenses has been made to the pro forma statement of operations.

Net Loss (Income) Attributable to Noncontrolling Interests

Reflects the allocation of pro forma net income (loss) attributable to noncontrolling interests in our Operating Partnership in the form of an aggregate 1,500 LTIP units to be issued to the Company’s independent directors upon completion of the Offering.

(GG) Represents adjustments for the following probable acquisitions which either the Predecessor or NYMT have under contract to acquire.

Joint Venture Investment

Represents adjustment to reflect the Company’s probable acquisition of a joint venture investment in Preserve at Port Royal. This investment will be accounted for under the equity method of accounting and the pro forma adjustment is calculated as if the asset had been acquired on January 1, 2014. The following table details the Predecessor probable acquisition adjustment for the year ended December 31, 2014:

	Preserve at Port Royal (1)
Rental revenues	$	4,248,709
Operating, general and administrative expenses		(1,851,723	)
Interest expense		(1,321,320	)
Depreciation expense		(1,622,906	)
Amortization expense		(2,607,472	)
Acquisition costs		(790,000	)
Pro Forma net loss for the year ended December 31, 2014 as if acquired January 1, 2014	$	(3,944,712	)
Predecessor’s ownership percentage		78	%
Predecessor’s share of Pro Forma net loss for the year ended December 31, 2014	$	(3,076,875	)

(1) This investment is under contract and expected to be acquired in 2015. The information set forth in this column reflects management's estimate of the revenues and expenses for the property for the period from January 1, 2014 through December 31, 2014 as if the property was acquired by the joint venture in which the Predecessor expects to acquire a 78% common equity interest on January 1, 2014. Management's estimates of revenues and operating expenses are based on accounting and financial information provided by the seller to the joint venture. The joint venture will account for the acquisition of the property under the purchase method of accounting in accordance with ASC 805, Business Combinations, and will record the estimated fair values of the assets and liabilities acquired. Depreciation and amortization expenses are calculated as a result of the purchase accounting adjustments and management's evaluations of the estimated useful lives of fixed assets and intangibles as if the property was owned on January 1, 2014.

F-19

Preferred Equity Investment

Represents adjustment to reflect the Company's interest income earned on the preferred equity investment accounted for as a loan for the year ended December 31, 2014 assuming that the investment was originated with the same terms on January 1, 2014 and that the NYMT probable acquisition, and expected purchase by the Company, occurred on January 1, 2014, as detailed below:

Investment	Pro Forma Adjustment For the Year Ended December 31, 2014(1)
Riverchase Landing	$	1,055,712
Total	$	1,055,712

(1) This investment is under contract and expected to close in August 2015.

Mezzanine Loan Investment

Represents adjustment to reflect the Company's interest income earned on the mezzanine loan investment for the year ended December 31, 2014 assuming that the loan was originated with the same terms on January 1, 2014 and that the NYMT probable acquisition, and the expected purchase by the Company, occurred on January 1, 2014, as detailed below:

Investment	Pro Forma Adjustment For the Year Ended December 31, 2014(1)
Fountains at Andover	$	450,862
Total	$	450,862

(1) This investment is under a binding loan agreement and expected to close in August 2015.

(HH) Below is the calculation of pro forma basic and diluted weighted average common shares outstanding:

Common shares issued in the Offering	3,800,000
Common shares issued to the Contributing Investors in exchange for Predecessor common equity interests	1,062,976
Common shares issued to NYMT in exchange for Predecessor preferred equity interests	1,737,024
Pro Forma weighted average shares outstanding - basic	6,600,000
LTIP units convertible into common stock equivalents	1,500
Pro Forma weighted average shares outstanding - diluted	6,601,500

F-20

RiverBanc Multifamily Investors, Inc.

Report of Independent Registered Public Accounting Firm

Board of Directors
RiverBanc Multifamily Investors, Inc.

We have audited the accompanying consolidated balance sheet of RiverBanc Multifamily Investors, Inc. (a Maryland corporation) (the “Company”) as of March 31, 2015. This financial statement is the responsibility of the Company’s management. Our responsibility is to express an opinion on this financial statement based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statement referred to above presents fairly, in all material respects, the financial position of RiverBanc Multifamily Investors, Inc. as of March 31, 2015, in conformity with accounting principles generally accepted in the United States of America.

/s/ Grant Thornton LLP

Charlotte, NC
June 16, 2015

F-21

RiverBanc Multifamily Investors, Inc.

Consolidated Balance Sheet
March 31, 2015

ASSETS:
Subscription Receivable	$	1,000
TOTAL ASSETS	$	1,000
STOCKHOLDER’S EQUITY:
Common Stock, $0.01 par value; 1,000 shares authorized, 100 shares subscribed	$	1
Additional Paid-In Capital		999
TOTAL EQUITY	$	1,000

The accompanying notes are an integral part of these financial statements.

F-22

RiverBanc Multifamily Investors, Inc.

Notes to Consolidated Balance Sheet

1.   Organization and Nature of Business

RiverBanc Multifamily Investors, Inc. (the “Company”) was incorporated in Maryland on February 13, 2015. The Company has not had any corporate activity since its formation. The Company is the general partner and majority owner of RiverBanc Multifamily LP (the “Operating Partnership”), which was formed in Delaware on March 6, 2015. The Company’s predecessor business, RB Multifamily Investors LLC (“RMI LLC”), a Delaware limited liability company, is engaged in the acquisition and management of private investments in multifamily apartment communities. As of March 31, 2015, RMI LLC owned five joint venture investments, one preferred equity investment, and three mezzanine loan investments.

The Company has filed a Registration Statement on Form S-11 with the Securities and Exchange Commission with respect to a proposed underwritten initial public offering (the “Offering”) of its common stock. Concurrently with the consummation of the Offering, RMI LLC will become a wholly-owned subsidiary of the Operating Partnership.

The operations of the Company will be carried on through the Operating Partner. It is the intent of the Company to elect and qualify to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code commencing with the taxable year ended December 31, 2015.

The Company will be externally managed by RiverBanc LLC.

2.   Significant Accounting Policies

Basis of Presentation

The accompanying financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Accordingly, actual results may differ from those estimates.

Income Taxes

As a REIT, the Company will be permitted to deduct dividends paid to its stockholders, eliminating the U.S. federal taxation of income represented by such distributions at the Company level, provided certain requirements are met. REITs are subject to a number of organizational and operational requirements. If the Company fails to qualify as a REIT in any taxable year, the Company will be subject to U.S. federal income tax (including any applicable alternative minimum tax) on its taxable income at regular corporate tax rates and will not be permitted to qualify as a REIT for four years following the year in which our qualification is denied.

Offering Costs

In connection with the Offering, affiliates have incurred or will incur legal, accounting, and related costs, which will be reimbursed by the Company upon consummation of the Offering. Such costs will be deducted from the gross proceeds from the Offering. Offering costs have not been accrued because the Company does not have an obligation to reimburse its affiliates for such costs until the closing of the Offering. As of March 31, 2015, the Company’s affiliates had incurred costs in connection with the Offering of $344,022.

F-23

3.   Stockholder’s Equity

Under the Company’s articles of incorporation, the total number of shares initially authorized for issuance is 1,000 shares of common stock, $0.01 par value per share. The Company’s Board of Directors may amend the articles of incorporation to increase or decrease the number of authorized shares.

On February 13, 2015, the Company entered into a subscription agreement to issue 100 shares of common stock at $10 per share to its sole stockholder.

4.   Subsequent Events

The Company has evaluated subsequent events through June 16, 2015, the date which the consolidated balance sheet was available to be issued, and has determined that, except for the disclosure below, there were no subsequent event matters that require recognition or disclosure in the accompanying financial statement.

In May 2015, the sole stockholder provided $1,000 cash consideration for its subscription of 100 shares of the Company’s common stock.

F-24

RB Multifamily Investors LLC
(A Delaware Limited Liability Company)

Balance Sheets

	March 31, 2015 (Unaudited)		December 31, 2014
ASSETS:
Investments in Unconsolidated Real Estate Entities	$	32,831,089	$	26,998,011
Investments in Real Estate Preferred Equity and Debt, net		23,944,461		18,528,432
Cash and Cash Equivalents		2,716,692		1,688,763
Accrued Interest Receivable		229,981		121,336
Other Assets		8,937		12,897
Investment Deposit		—		840,000
TOTAL ASSETS	$	59,731,160	$	48,189,439
LIABILITIES AND MEMBERS’ EQUITY:
LIABILITIES:
Preferred Members’ Dividend Payable	$	1,163,830	$	671,045
Deferred Revenue		265,500		15,000
Management Fee Payable		75,000		70,277
Accrued Expenses and Other Liabilities		7,200		75,310
TOTAL LIABILITIES		1,511,530		831,632
MEMBERS’ EQUITY:
Preferred Members’ Equity (Liquidation preference of $49,023,402 and $34,963,402, respectively)		48,937,402		34,877,402
Common Members’ Equity		9,282,228		12,480,405
TOTAL MEMBERS’ EQUITY		58,219,630		47,357,807
TOTAL LIABILITIES AND MEMBERS’ EQUITY	$	59,731,160	$	48,189,439

The accompanying notes are an integral part of these financial statements.

F-25

RB Multifamily Investors LLC
(A Delaware Limited Liability Company)

Statements of Operations
For the Three Months Ended March 31, 2015 and 2014 (Unaudited)

	March 31,
	2015			2014
INCOME:
Equity in Loss of Unconsolidated Real Estate Entities	$	(2,768,425	)	$	(736,957	)
Equity in Loss of Unconsolidated Real Estate Entity Held for Disposition		—			(1,941	)
Interest Income		701,833			—
Other Income		116,000			—
TOTAL INCOME		(1,950,592	)		(738,898	)
EXPENSES:
Management Fees		75,000			—
Professional Fees and Other Expenses		8,755			7,914
TOTAL EXPENSES		83,755			7,914
Net Loss		(2,034,347	)		(746,812	)
Preferred Members’ Dividend		(1,163,830	)		—
Net Loss Available to Common Members	$	(3,198,177	)	$	(746,812	)

The accompanying notes are an integral part of these financial statements.

F-26

RB Multifamily Investors LLC
(A Delaware Limited Liability Company)

Statement of Changes in Members’ Equity
For the Three Months Ended March 31, 2015 (Unaudited)

	Preferred Members’ Equity		Common Members’ Equity			Total Members’ Equity
Balance – December 31, 2014	$	34,877,402	$	12,480,405		$	47,357,807
Capital Contributions		14,060,000		—			14,060,000
Net Loss Available to Common Members		—		(3,198,177	)		(3,198,177	)
Balance – March 31, 2015	$	48,937,402	$	9,282,228		$	58,219,630

The accompanying notes are an integral part of these financial statements.

F-27

RB Multifamily Investors LLC
(A Delaware Limited Liability Company)

Statements of Cash Flows
For the Three Months Ended March 31, 2015 and 2014 (Unaudited)

	2015			2014
Cash Flows from Operating Activities:
Net Loss	$	(2,034,347	)	$	(746,812	)
Adjustments to Reconcile Net Loss to
Net Cash Provided by (Used in) Operating Activities
Equity in Loss of Unconsolidated Real Estate Entities		2,768,425			736,957
Equity in Loss of Unconsolidated Real Estate Entity Held for Disposition		—			1,941
Accretion of Deferred Loan Fees		(7,130	)		—
Change in Assets and Liabilities:
Accrued Interest Receivable		(108,645	)		—
Other Assets		3,960			—
Deferred Revenue		250,500			—
Accrued Expenses and Other Liabilities		(68,110	)		5,001
Management Fee Payable		4,723			—
Net Cash Provided by (Used in) Operating Activities		809,376			(2,913	)
Cash Flows from Investing Activities:
Purchase of Investments, net		(14,767,000	)		—
Investment Deposit		840,000			—
Return of Capital from Investments in Unconsolidated Real Estate Entities		398,497			113,390
Return of Capital from Investments in Real Estate Preferred Equity and Debt		358,101			—
Net Cash (Used in) Provided by Investing Activities		(13,170,402	)		113,390
Cash Flows from Financing Activities:
Preferred Members’ Contributions		14,060,000			—
Preferred Members’ Dividend		(671,045	)		—
Common Members’ Distributions		—			(144,111	)
Net Cash Provided by (Used in) Financing Activities		13,388,955			(144,111	)
Net Change in Cash and Cash Equivalents		1,027,929			(33,634	)
Cash and Cash Equivalents – Beginning of Period		1,688,763			40,781
Cash and Cash Equivalents – End of Period	$	2,716,692		$	7,147
Supplemental Disclosures
Non-Cash Activity:
Preferred Members’ Dividend Payable	$	1,163,830		$	—

The accompanying notes are an integral part of these financial statements.

F-28

RB Multifamily Investors LLC
(A Delaware Limited Liability Company)

Notes to Financial Statements
For the Three Months Ended March 31, 2015

NOTE 1 — ORGANIZATION AND NATURE OF BUSINESS

RB Multifamily Investors LLC (the “Company”) is a Delaware limited liability company, which was formed on July 24, 2013. The purpose of the Company is to invest in multifamily apartment properties located in selected markets in the United States. The Company’s investments are in the form of equity, preferred equity and mezzanine loans.

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying balance sheet as of December 31, 2014 has been derived from audited financial statements. The accompanying balance sheet as of March 31, 2015, the accompanying statements of operations for the three months ended March 31, 2015 and 2014, the accompanying statement of changes to members’ equity and the accompanying statements of cash flows for the three months ended March 31, 2015 and 2014 are unaudited.

In the Company’s opinion, all adjustments (which include only normal recurring adjustments) necessary to present fairly the Company’s financial position, results of operations and cash flows have been made. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted in accordance with Article 10 of Regulation S-X and the instructions to Form 10-Q.

These financial statements should be read in conjunction with the audited financial statements and notes thereto. The results of operations for the three months ended March 31, 2015 are not necessarily indicative of the operating results for the full year.

The accompanying financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

Certain prior period amounts have been reclassified to conform to current period presentation.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Accordingly, actual results may differ from those estimates.

Fair Value Measurements

Fair value is defined as the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The GAAP fair value framework uses a three-tiered approach. Fair value measurements are classified and disclosed in one of the following three categories.

• Level 1- Unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities;

• Level 2- Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations in which significant inputs and significant value drivers are observable in active markets; and

• Level 3- Prices or valuation techniques where little or no market data is available that requires inputs that are significant to the fair value measurement and unobservable.

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If the inputs used to measure the fair value fall within different levels of the hierarchy, the fair value is determined based upon the lowest level input that is significant to the fair value measurement. The Company uses internal models and data to determine fair value and, therefore, its fair value measurements are classified within Level 3 of the fair value hierarchy.

Investments in Unconsolidated Real Estate Entities

The Company first analyzes its equity investments in real estate entities to determine if the real estate entity is a variable interest entity (a “VIE”) in accordance with Accounting Standards Codification 810, Consolidation (“ASC 810”) and if so, whether the Company is the primary beneficiary requiring consolidation. A VIE is an entity that has (i) insufficient equity to permit it to finance its activities without additional subordinated financial support or (ii) equity holders that lack the characteristics of a controlling financial interest. VIEs are consolidated by the primary beneficiary, which is the entity that has both the power to direct the activities that most significantly impact the entity’s economic performance and the obligation to absorb losses or the right to receive benefits from the entity that potentially could be significant to the entity. Variable interests in a VIE are contractual, ownership, or other financial interests that change with changes in the fair value of the VIE’s net assets. The Company continuously re-assesses at each level of the real estate entity whether the entity is (i) a VIE, and (ii) if the Company is the primary beneficiary of the VIE. If it was determined a real estate entity in which the Company holds an interest qualified as a VIE and the Company was the primary beneficiary, it would be consolidated.

The Company has determined that one of its real estate equity investments, WR Savannah Holdings LLC, is a VIE in accordance with ASC 810, however the Company does not consolidate the entity. The Company has determined that it does not have a controlling financial interest and is not the primary beneficiary of the VIE, as the Company does not have the power to direct the activities that most significantly impact the entity’s economic performance. The Company’s maximum exposure does not exceed the carrying amount of its investment.

The Company has determined that its other real estate equity investments are not VIEs. As a result, the Company assesses consolidation under all other provisions of ASC 810. These provisions provide for consolidation for majority-owned entities through majority voting interest in the company providing control, or through determination of control by the Company being the general partner in a limited partnership or the controlling member of a limited liability company.

In assessing whether the Company is in control of and requires consolidation of the limited liability company and partnership venture structures, the Company evaluates the respective rights and privileges afforded each member or partner (collectively referred to as “member”). The Company would not be deemed to control the entity if any of the other members have either (i) substantive kickout rights providing the ability to dissolve (liquidate) the entity or otherwise remove the managing member or general partner without cause or (ii) has substantive participating rights in the entity. Substantive participating rights (whether granted by contract or law) provide for the ability to effectively participate in significant decisions of the entity that would be expected to be made in the ordinary course of business.

The Company has determined that it does not have control under any of the above described circumstances, but does have significant influence; therefore, the Company accounts for these unconsolidated investments under the equity method. The equity method of accounting requires these investments to be initially recorded at cost and subsequently increased (decreased) for the Company’s share of net income (loss), including eliminations for the Company’s share of inter-company transactions, and increased (decreased) for contributions (distributions). The proportionate share of the results of operations of these investments is recorded in the Company’s earnings or losses. The Company periodically reviews its investments for impairment based on projected cash flows from the entity over the holding period. When any impairment is identified, the investments are written down to recoverable amounts.

Investments in Real Estate Preferred Equity and Debt   

The Company invests in mezzanine loans and preferred equity of entities that have significant real estate assets. A mezzanine loan is secured by a pledge of the borrower’s equity ownership in the

F-30

property. Unlike a mortgage, this loan does not represent a lien on the property. Therefore, it is always junior and subordinate to any first-lien as well as second liens, if applicable, on the property. These loans are senior to any preferred equity or common equity interests. Purchasers of mezzanine loans benefit from a right to foreclose on the ownership equity in a more efficient manner than senior mortgage debt.

A preferred equity investment is an equity investment in the entity that owns the underlying property. Preferred equity is not secured by the underlying property, but holders have priority relative to common equity holders on cash flow distributions and proceeds from capital events. In addition, preferred equity holders may be able to enhance their position and protect their equity position with covenants that limit the entity’s activities and grant the holder the exclusive right to control the property after an event of default.

Mezzanine loans and preferred equity investments, where the risks and payment characteristics are equivalent to mezzanine loans, are generally intended to be held to maturity and the carrying values of these investments are stated at unpaid principal balance, adjusted for any unamortized premium or discount and deferred fees or expenses, net of valuation allowances, if any. The Company has evaluated its real estate debt and preferred equity investments for accounting treatment as loans versus real estate utilizing the guidance provided by the ADC Arrangements Subsection of ASC 310, Receivables. For each loan, the characteristics and the facts and circumstances indicate that loan accounting treatment is appropriate. The Company accretes or amortizes any discounts or premiums and deferred fees and expenses over the life of the related loan receivable utilizing the effective interest method or straight line-method, if the result is not materially different.

The Company evaluates the collectibility of both interest and principal of each loan, if circumstances warrant, to determine whether it is impaired. A loan is impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the existing contractual terms. When a loan is impaired, the amount of the loss accrual is calculated by comparing the carrying amount of the investment to the estimated fair value of the loan or, as a practical expedient, to the value of the collateral if the loan is collateral dependent. Mezzanine loans and preferred equity investments where the risks and payment characteristics are equivalent to an equity investment are accounted for using the equity method of accounting.

Interest income is accrued and recognized as revenue when earned according to the terms of the loans and when, in the opinion of management, it is collectible. The accrual of interest on loans is discontinued when, in management’s opinion, the interest is not collectible in the normal course of business, but in all cases when payment becomes greater than 90 days delinquent. Loans return to accrual status when principal and interest become current and are anticipated to be fully collectible.

Cash and Cash Equivalents

Cash and cash equivalents include short-term, highly liquid investments with a maturity date at the time of purchase of three months or less. The Company maintains cash and cash equivalent balances which, at times during the year, may exceed the amount insured by the Federal Deposit Insurance Corporation. The Company manages the risk of loss by banking with reputable financial institutions.

Investment Deposits

The Company advances funds to its investments in unconsolidated real estate entities for acquisition and due diligence expenses and earnest money deposits prior to the consummation of the underlying real estate transaction. The Company evaluates the likelihood of the real estate transaction closing prior to advancing any funds and, upon determination that the real estate transaction will not close, deposits are returned, net of any expenses incurred.

F-31

Income Taxes

The Company is treated as a partnership for federal income tax purposes. As such, each member is responsible for the tax liability or benefit related to their distributive share of taxable income or loss. Accordingly, no provision for federal income taxes is reflected in the accompanying financial statements. The Company’s tax returns are subject to examination by federal, state and local taxing authorities. Because many types of transactions are susceptible to varying interpretation under federal, state and local income tax laws and regulations, the amounts reported in the accompanying financial statements may be subject to change at a later date upon final determination by the respective taxing authorities.

The Company determines whether a tax position of the Company is more likely than not to be sustained upon examination by the applicable taxing authority, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The tax benefit to be recognized is measured as the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement which could result in the Company recording a tax liability that would reduce members’ equity. The Company has assessed the tax positions of the Company’s federal, state and local tax returns for all open tax years since inception in 2013 through the effective date, and has concluded that it has no material uncertain tax liabilities to be recognized.

NOTE 3 — INVESTMENTS IN UNCONSOLIDATED REAL ESTATE ENTITIES

At March 31, 2015, the Company held equity investments in five individual limited liability companies, with real estate entity operating partners, which own five multifamily apartment properties located in Katy, Texas; Durham, North Carolina; Little River, South Carolina; Pooler, Georgia; and Lake Mary, Florida.

The following is a summary of the Company’s ownership interest by property, which the Company accounts for under the equity method of accounting:

Investment/Property	Investment Date	Ownership Interest
Bent Tree JV Holdings, LLC Station at Mason Creek Katy, Texas	9/23/2013	78%
Evergreens JV Holdings, LLC The Flats@55Twelve Durham, North Carolina	6/27/2014	85%
Summerchase LR Partners LLC Summer Chase Little River, South Carolina	10/7/2014	80%
WR Savannah Holdings, LLC Two Addison Place Pooler, Georgia	11/17/2014	90%
Lake Mary Realty Partners, LLC Terraces at Lake Mary Lake Mary, Florida	1/8/2015	80%

F-32

The carrying amount of the Company’s investments in unconsolidated real estate entities is as follows:

	March 31, 2015		December 31, 2014
Bent Tree JV Holdings, LLC	$	3,717,076	$	3,974,036
Evergreens JV Holdings, LLC		4,676,133		5,094,071
Summerchase LR Partners LLC		2,667,986		3,112,587
WR Savannah Holdings, LLC		13,669,675		14,817,317
Lake Mary Realty Partners, LLC		8,100,219		—
Total	$	32,831,089	$	26,998,011

The Company’s equity in loss of unconsolidated real estate entities is as follows:

	For the Three Months Ended March 31, 2015			For the Three Months Ended March 31, 2014
Bent Tree JV Holdings, LLC	$	(136,095	)	$	(736,957	)
Evergreens JV Holdings, LLC		(240,306	)		—
Summerchase LR Partners LLC		(344,601	)		—
WR Savannah Holdings, LLC		(1,147,642	)		—
Lake Mary Realty Partners, LLC		(899,781	)		—
Total	$	(2,768,425	)	$	(736,957	)

A summary of financial information for the unconsolidated real estate entities is as follows:

	March 31, 2015		December 31, 2014
Balance Sheets:
Real estate, net	$	132,531,070	$	104,423,828
Other assets		14,212,477		13,058,471
Total assets	$	146,743,547	$	117,482,299
Mortgages payable	$	106,308,645	$	84,226,941
Other liabilities		1,476,976		1,812,121
Total liabilities		107,785,621		86,039,062
Members’ equity		38,957,926		31,443,237
Total liabilities and members’ equity	$	146,743,547	$	117,482,299

	For the Three Months Ended March 31, 2015			For the Three Months Ended March 31, 2014
Operating Statements:
Rental and other revenues	$	3,734,642		$	814,734
Operating expenses		(1,716,457	)		(437,421	)
Income before acquisition costs, depreciation, amortization and mortgage interest		2,018,185			377,313
Acquisition Costs		(429,811	)		—
Depreciation and amortization		(3,759,110	)		(1,111,761	)
Mortgage interest		(1,117,091	)		(210,368	)
Net loss	$	(3,287,827	)	$	(944,816	)
Company’s share of net loss	$	(2,768,425	)	$	(736,957	)

F-33

At March 31, 2015 and December 31, 2014, mortgage notes payable of the unconsolidated real estate entities consisted of the following:

Property	Date of Loan		Fixed Interest Rate			Maturity Date			March 31, 2015		December 31, 2014
Station at Mason Creek		7/29/2011		4.63	%		8/1/2018(a	)	$	13,658,802	$	13,716,295
Station at Mason Creek		9/24/2013		5.07	%		8/1/2018(a	)		2,802,843		2,813,646
The Flats@55Twelve		6/30/2014		4.02	%		7/1/2021(b	)		26,000,000		26,000,000
Summer Chase		10/8/2014		4.44	%		11/1/2024(c	)		7,760,000		7,760,000
Two Addison Place		11/17/2014		3.99	%		12/1/2021(d	)		33,937,000		33,937,000
Terraces at Lake Mary		1/8/2015		3.72	%		2/1/2025(e	)		22,150,000		—
									$	106,308,645	$	84,226,941

(a) Requires monthly principal and interest payments based on a 30-year amortization schedule.

(b) Requires monthly interest only payments until August 2016, then monthly principal and interest payments based on a 30-year amortization schedule.

(c) Requires monthly interest only payments until maturity.

(d) Requires monthly interest only payments until January 2019, then monthly principal and interest payments based on a 30-year amortization schedule.

(e) Requires monthly interest only payments until March 2018, then monthly principal and interest payments based on a 30-year amortization schedule.

NOTE 4 — INVESTMENTS IN REAL ESTATE PREFERRED EQUITY AND DEBT

At March 31, 2015, the Company held preferred equity and debt investments in four individual limited liability companies that own four multifamily apartment properties, two of which are located in Austin, Texas, one of which is located in San Antonio, Texas and one of which is located in Lawrenceville, Georgia.

The following is a summary of the Company’s real estate preferred equity and debt investments by property:

Investment/Property	Acquisition Date		Investment Type	Interest Rate			Maturity Date		Interest Payment
AHF – Waters at Bluff Springs, LLC Waters at Bluff Springs Austin, Texas		7/1/2014	Mezzanine Loan		13.50	%		11/1/2023	(a)
AHF – Waters at Elm Creek, LLC Waters at Elm Creek San Antonio, Texas		7/1/2014	Mezzanine Loan		13.50	%		11/1/2023	(a)
NL/RB Monterey Ranch LLC Monterey Ranch Austin, Texas		10/29/2014	Preferred Equity		12.00	%		11/2/2021	(b)
Highlands – Mtg. Holdings, L.L.C. Highlands at Gwinnett Stadium Lawrenceville, Georgia		1/30/2015	Mezzanine Loan		12.00	%		4/1/2025	(c)

(a) Requires quarterly interest payments at 13.5% per annum and semi-annual principal payments equal to 50% of surplus cash as defined in the mezzanine loan agreement.

(b) Requires a minimum monthly payment equal to 6% per annum of the Company’s investment balance.

(c) Requires quarterly interest payments at 7% per annum and a payment reserve account held by the Company. Reserve amount of $265,500 as of March 31, 2015 is included in deferred revenue on the accompanying balance sheet.

F-34

The following is a summary of the Company’s real estate preferred equity and debt investments:

March 31, 2015
Investment	Investment Amount		Deferred Loan Fees			Carrying Value
AHF – Waters at Bluff Springs, LLC	$	3,548,503	$	—		$	3,548,503
AHF – Waters at Elm Creek, LLC		1,367,552		—			1,367,552
NL/RB Monterey Ranch LLC		13,400,000		(140,810	)		13,259,190
Highlands – Mtg. Holdings, L.L.C.		5,900,000		(130,784	)		5,769,216
Total	$	24,216,055	$	(271,594	)	$	23,944,461

December 31, 2014
Investment	Investment Amount		Deferred Loan Fees			Carrying Value
AHF – Waters at Bluff Springs, LLC	$	3,806,958	$	—		$	3,806,958
AHF – Waters at Elm Creek, LLC		1,467,198		—			1,467,198
NL/RB Monterey Ranch LLC		13,400,000		(145,724	)		13,254,276
Total	$	18,674,156	$	(145,724	)	$	18,528,432

The carrying amount and fair value of the Company’s investments in real estate preferred equity and debt is as follows:

	March 31, 2015				December 31, 2014
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
AHF – Waters at Bluff Springs, LLC	$	3,548,503	$	3,548,503	$	3,806,958	$	3,806,958
AHF – Waters at Elm Creek, LLC		1,367,552		1,367,552		1,467,198		1,467,198
NL/RB Monterey Ranch LLC		13,259,190		13,259,190		13,254,276		13,254,276
Highlands – Mtg. Holdings, L.L.C.		5,769,216		5,769,216		—		—
Total	$	23,944,461	$	23,944,461	$	18,528,432	$	18,528,432

The Company has determined that the significant inputs used to measure the fair value of its investments in real estate preferred equity and debt fall within Level 3 of the fair value hierarchy. Fair value is based on an internal valuation utilizing a discounted cash flow model. Since these investments have been receiving payments in accordance with their agreements and the rates are consistent with current market rates, the fair value was the same as the carrying amount at March 31, 2015 and December 31, 2014.

The table below represents quantitative information about the significant unobservable inputs used in the fair value measurement of Level 3 assets. Significant changes in any of those inputs would result in a significant change in the fair value measurement.

	As of March 31, 2015
	Fair Value		Number of Investments		Valuation Techniques	Unobservable Input	Range (Weighted Average)
Debt Investments	$	23,944,461		4	Discounted Cash Flows	Discount Rate	12.2% - 14.0% (12.6%)

	As of December 31, 2014
	Fair Value		Number of Investments		Valuation Techniques	Unobservable Input	Range (Weighted Average)
Debt Investments	$	18,528,432		3	Discounted Cash Flows	Discount Rate	12.2% - 14.1% (12.7%)

F-35

NOTE 5 — CONCENTRATION OF RISK

The geographic concentrations of credit risk and investments exceeding 10% of the aggregate investment in preferred equity, debt and equity as of March 31, 2015 and December 31, 2014, are as follows:

	March 31, 2015			December 31, 2014
Texas		39	%		50	%
Georgia		34	%		32	%
Florida		14	%		N/A
North Carolina		8	%		11	%
South Carolina		5	%		7	%

NOTE 6 — MEMBERS’ EQUITY

The Company’s membership interests are represented by two classes of units, Preferred Units and Common Units, as described in the Company’s Amended and Restated Limited Liability Company Agreement (the “Agreement”).

Preferred Members’ Equity

At March 31, 2015 and December 31, 2014, the Company had 49,023,402 and 34,963,402 Preferred Units issued and outstanding, respectively. The Preferred Units were issued at $1 per unit with a total capital commitment of $60,000,000. The Preferred Units are entitled to a preferred return of 10% per annum on the daily balances of such member’s Adjusted Capital Contribution, as defined in the Agreement, with respect to its Preferred Units, as measured from the date on which such Capital Contributions, as defined in the Agreement, were actually made. The Preferred Units have a liquidation preference of $1 per unit and are not mandatorily redeemable. The preferred return is calculated and paid on a quarterly basis and was $1,163,830 for the three months ended March 31, 2015. As of March 31, 2015 and December 31, 2014 the preferred return payable was in the amount of $1,163,830 and $671,045, respectively. The remaining net profit and net losses are allocated to the Common Members.

Common Members’ Equity

At March 31, 2015 and December 31, 2014, the Company had 20,000,000 Common Units issued and outstanding which were issued at $1 per unit.

Drag-Along Rights

If one or more Common Members holding, collectively, at least 51% of the Common Units (collectively, the “Dragging Member”), desire to have all the Common Members transfer all or substantially all of their Common Units to one or more persons that are not affiliates of the Dragging Member, then the Dragging Member shall have the right (the “Drag-Along Right”) but not the obligation, to require each other Common Member to tender for purchase to the third-party purchaser(s), on the same terms and conditions as apply to the Dragging Member, all of the Common Units of such Member.

Tag-Along Rights

If the Dragging Member proposes to sell more than 20% of his Common Units to a third-party purchaser in any transaction other than a public offering but does not exercise the Drag-Along Right, then each other Common Member shall have the right to include a pro rata amount of its Common Units in the transfer as further described in the Agreement.

NOTE 7 — RELATED PARTY TRANSACTIONS

On July 1, 2014, the Company entered into a management agreement with RiverBanc LLC (“RiverBanc”), an affiliated entity, pursuant to which RiverBanc administers the business activities and day-to-day operations of the Company and provides investment management services to the

F-36

Company. The agreement has a term that will expire on June 30, 2017, subject to automatic annual one-year renewals thereafter. The management agreement provides for a base management fee of 1.50% per annum of the average Aggregate Common Capital Contribution, as defined in the management agreement, and an incentive management fee calculated as 20% of the excess of Core Earnings, as defined in the management agreement, over 8% of average Aggregate Common Capital Contribution. The Company incurred base management fees of $75,000 and no incentive management fees for the three months ended March 31, 2015. The management fee payable was $75,000 and $70,277 at March 31, 2015 and December 31, 2014, respectively.

Amounts due to RiverBanc for expense reimbursements were $2,116 and $9,667 at March 31, 2015 and December 31, 2014, respectively and are included in accrued expenses and other liabilities on the accompanying balance sheet.

NOTE 8 — SUBSEQUENT EVENTS

The Company has evaluated subsequent events through June 16, 2015, the date which the financial statements were available to be issued, and has determined that except for the disclosures below, there were no subsequent event matters that require recognition or disclosure in the accompanying financial statements.

In April 2015, the Company entered into an agreement with a real estate entity partner to make an approximately $9,100,000 equity investment in a joint venture that will purchase a multifamily apartment property located in Port Royal, South Carolina. The joint venture is expected to close in August 2015. The Company will issue Preferred Units for the funding of this investment.

F-37

RB Multifamily Investors LLC Financial Statements

Report of Independent Registered Public Accounting Firm

Board of Directors
RB Multifamily Investors LLC

We have audited the accompanying balance sheets of RB Multifamily Investors LLC (a Delaware limited liability company) (the “Company”) as of December 31, 2014 and 2013, and the related statements of operations, changes in members’ equity, and cash flows for the year ended December 31, 2014 and the period from July 24, 2013 (Inception) to December 31, 2013. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of RB Multifamily Investors LLC as of December 31, 2014 and 2013, and the results of its operations and its cash flows for the year ended December 31, 2014 and the period from July 24, 2013 (Inception) to December 31, 2013 in conformity with accounting principles generally accepted in the United States of America.

/s/ Grant Thornton LLP
Charlotte, NC
June 16, 2015

F-38

RB Multifamily Investors LLC
(A Delaware Limited Liability Company)

Balance Sheets
December 31, 2014 and 2013

	2014		2013
ASSETS:
Investments in Unconsolidated Real Estate Entities	$	26,998,011	$	5,609,344
Investment in Unconsolidated Real Estate Entity Held for Disposition		—		2,471,962
Investments in Real Estate Preferred Equity and Debt, net		18,528,432		—
Cash and Cash Equivalents		1,688,763		40,781
Investment Deposit		840,000		—
Accrued Interest Receivable		121,336		—
Other Assets		12,897		—
TOTAL ASSETS	$	48,189,439	$	8,122,087
LIABILITIES AND MEMBERS’ EQUITY:
LIABILITIES:
Preferred Members’ Dividend Payable	$	671,045	$	—
Deferred Revenue		15,000		—
Accrued Expenses and Other Liabilities		75,310		2,435
Management Fee Payable		70,277		—
TOTAL LIABILITIES		831,632		2,435
MEMBERS’ EQUITY:
Preferred Members’ Equity (Liquidation preference of $34,963,402)		34,877,402		—
Common Members’ Equity		12,480,405		8,119,652
TOTAL MEMBERS’ EQUITY		47,357,807		8,119,652
TOTAL LIABILITIES AND MEMBERS’ EQUITY	$	48,189,439	$	8,122,087

The accompanying notes are an integral part of these financial statements.

F-39

RB Multifamily Investors LLC
(A Delaware Limited Liability Company)

Statements of Operations
Year Ended December 31, 2014 and the Period from
July 24, 2013 (Inception) to December 31, 2013

	2014			2013
INCOME:
Equity in Loss of Unconsolidated Real Estate Entities	$	(5,449,933	)	$	(1,390,656	)
Equity in Loss of Unconsolidated Real Estate Entity Held for Disposition		(11,185	)		(28,038	)
Interest Income		660,248			—
TOTAL INCOME		(4,800,870	)		(1,418,694	)
EXPENSES:
Management Fees		109,676			—
Professional Fees and Other Expenses		57,768			11,654
TOTAL EXPENSES		167,444			11,654
Net Loss		(4,968,314	)		(1,430,348	)
Preferred Members’ Dividend		(921,045	)		—
Net Loss Available to Common Members	$	(5,889,359	)	$	(1,430,348	)

The accompanying notes are an integral part of these financial statements.

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RB Multifamily Investors LLC
(A Delaware Limited Liability Company)

Statements of Changes in Members’ Equity
Year Ended December 31, 2014 and the Period from
July 24, 2013 (Inception) to December 31, 2013

	Preferred Members’ Equity			Common Members’ Equity			Total Members’ Equity
Balance - July 24, 2013	$	—		$	—		$	—
Capital Contributions		—			9,550,000			9,550,000
Net Loss Available to Common Members		—			(1,430,348	)		(1,430,348	)
Balance - December 31, 2013		—			8,119,652			8,119,652
Capital Contributions		34,963,402			12,950,000			47,913,402
Preferred Equity Issuance Costs		(86,000	)		—			(86,000	)
Net Loss Available to Common Members		—			(5,889,359	)		(5,889,359	)
Distributions/Redemptions		—			(2,699,888	)		(2,699,888	)
Balance - December 31, 2014	$	34,877,402		$	12,480,405		$	47,357,807

The accompanying notes are an integral part of these financial statements.

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RB Multifamily Investors LLC
(A Delaware Limited Liability Company)

Statements of Cash Flows
Year Ended December 31, 2014 and the Period from
July 24, 2013 (Inception) to December 31, 2013

	2014			2013
Cash Flows from Operating Activities:
Net Loss	$	(4,968,314	)	$	(1,430,348	)
Adjustments to Reconcile Net Loss to
Net Cash Provided by (Used in) Operating Activities:
Equity in Loss of Unconsolidated Real Estate Entities		5,449,933			1,390,656
Equity in Loss of Unconsolidated Real Estate Entity Held for Disposition		11,185			28,038
Accretion of Deferred Loan Fees		(3,276	)		—
Changes in Assets and Liabilities:
Accrued Interest Receivable		(121,336	)		—
Other Assets		(12,897	)		—
Deferred Revenue		15,000			—
Management Fee Payable		70,277			—
Accrued Expenses and Other Liabilities		72,875			2,435
Net Cash Provided by (Used in) Operating Activities		513,447			(9,219	)
Cash Flows from Investing Activities:
Purchase of Investments, net		(46,233,457	)		(9,500,000	)
Investment Deposit		(840,000	)		—
Return of Capital from Investments in Unconsolidated Real Estate Entities		491,374			—
Return of Capital from Investments in Real Estate Preferred Equity and Debt		378,326			—
Net Cash Used in Investing Activities		(46,203,757	)		(9,500,000	)
Cash Flows from Financing Activities:
Preferred Members’ Contributions, net of Equity Issuance Costs		34,877,402			—
Preferred Members’ Dividend		(250,000	)		—
Common Members’ Contributions		12,950,000			9,550,000
Common Members’ Distributions		(239,110	)		—
Proceeds from Loan		4,339,500			—
Repayment of Loan		(4,339,500	)		—
Net Cash Provided by Financing Activities		47,338,292			9,550,000
Net Change in Cash and Cash Equivalents		1,647,982			40,781
Cash and Cash Equivalents - Beginning of Period		40,781			—
Cash and Cash Equivalents - End of Period	$	1,688,763		$	40,781
Supplemental Disclosures
Cash Paid for Interest	$	6,027		$	—
Non-Cash Activity:
Preferred Members’ Dividend Payable	$	671,045		$	—
Distribution of Investment	$	2,460,778		$	—

The accompanying notes are an integral part of these financial statements.

F-42

RB Multifamily Investors LLC
(A Delaware Limited Liability Company)

Notes to Financial Statements
Year Ended December 31, 2014 and the Period from
July 24, 2013 (Inception) to December 31, 2013

Note 1 — Organization and Nature of Business

RB Multifamily Investors LLC (the “Company”) is a Delaware limited liability company, which was formed on July 24, 2013. The purpose of the Company is to invest in multifamily apartment properties located in selected markets in the United States. The Company’s investments are in the form of equity, preferred equity and mezzanine loans.

Note 2 — Summary of Significant Accounting Policies

Basis of Presentation

The accompanying financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Accordingly, actual results may differ from those estimates.

Fair Value Measurements

Fair value is defined as the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The GAAP fair value framework uses a three-tiered approach. Fair value measurements are classified and disclosed in one of the following three categories.

• Level 1- Unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities;

• Level 2- Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations in which significant inputs and significant value drivers are observable in active markets; and

• Level 3- Prices or valuation techniques where little or no market data is available that requires inputs that are significant to the fair value measurement and unobservable.

If the inputs used to measure the fair value fall within different levels of the hierarchy, the fair value is determined based upon the lowest level input that is significant to the fair value measurement. The Company uses internal models and data to determine fair value and, therefore, its fair value measurements are classified within Level 3 of the fair value hierarchy.

Investments in Unconsolidated Real Estate Entities

The Company first analyzes its equity investments in real estate entities to determine if the real estate entity is a variable interest entity (a “VIE”) in accordance with Accounting Standards Codification 810, Consolidation (“ASC 810”) and if so, whether the Company is the primary beneficiary requiring consolidation. A VIE is an entity that has (i) insufficient equity to permit it to finance its activities without additional subordinated financial support or (ii) equity holders that lack the characteristics of a controlling financial interest. VIEs are consolidated by the primary beneficiary, which is the entity that has both the power to direct the activities that most significantly impact the entity’s economic performance and the obligation to absorb losses or the right to receive benefits from the entity that potentially could be significant to the entity. Variable

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interests in a VIE are contractual, ownership, or other financial interests that change with changes in the fair value of the VIE’s net assets. The Company continuously re-assesses at each level of the real estate entity whether the entity is (i) a VIE, and (ii) if the Company is the primary beneficiary of the VIE. If it was determined a real estate entity in which the Company holds an interest qualified as a VIE and the Company was the primary beneficiary, it would be consolidated.

The Company has determined that one of its real estate equity investments at December 31, 2014, WR Savannah Holdings LLC, is a VIE in accordance with ASC 810, however the Company does not consolidate the entity. The Company has determined that it does not have a controlling financial interest and is not the primary beneficiary of the VIE, as the Company does not have the power to direct the activities that most significantly impact the entity’s economic performance. The Company’s maximum exposure does not exceed the carrying amount of its investment.

The Company has determined that its other real estate equity investments are not VIEs. As a result, the Company assesses consolidation under all other provisions of ASC 810. These provisions provide for consolidation for majority-owned entities through majority voting interest in the company providing control, or through determination of control by the Company being the general partner in a limited partnership or the controlling member of a limited liability company.

In assessing whether the Company is in control of and requires consolidation of the limited liability company and partnership venture structures, the Company evaluates the respective rights and privileges afforded each member or partner (collectively referred to as “member”). The Company would not be deemed to control the entity if any of the other members have either (i) substantive kickout rights providing the ability to dissolve (liquidate) the entity or otherwise remove the managing member or general partner without cause or (ii) has substantive participating rights in the entity. Substantive participating rights (whether granted by contract or law) provide for the ability to effectively participate in significant decisions of the entity that would be expected to be made in the ordinary course of business.

The Company has determined that it does not have control under any of the above described circumstances, but does have significant influence; therefore, the Company accounts for these unconsolidated investments under the equity method. The equity method of accounting requires these investments to be initially recorded at cost and subsequently increased (decreased) for the Company’s share of net income (loss), including eliminations for the Company’s share of inter-company transactions, and increased (decreased) for contributions (distributions). The proportionate share of the results of operations of these investments is recorded in the Company’s earnings or losses. The Company periodically reviews its investments for impairment based on projected cash flows from the entity over the holding period. When any impairment is identified, the investments are written down to recoverable amounts.

Investments in Real Estate Preferred Equity and Debt

The Company invests in mezzanine loans and preferred equity of entities that have significant real estate assets. A mezzanine loan is secured by a pledge of the borrower’s equity ownership in the property. Unlike a mortgage, this loan does not represent a lien on the property. Therefore, it is always junior and subordinate to any first-lien as well as second liens, if applicable, on the property. These loans are senior to any preferred equity or common equity interests. Purchasers of mezzanine loans benefit from a right to foreclose on the ownership equity in a more efficient manner than senior mortgage debt.

A preferred equity investment is an equity investment in the entity that owns the underlying property. Preferred equity is not secured by the underlying property, but holders have priority relative to common equity holders on cash flow distributions and proceeds from capital events. In addition, preferred equity holders may be able to enhance their position and protect their equity position with covenants that limit the entity’s activities and grant the holder the exclusive right to control the property after an event of default.

Mezzanine loans and preferred equity investments, where the risks and payment characteristics are equivalent to mezzanine loans, are generally intended to be held to maturity and the carrying

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values of these investments are stated at unpaid principal balance, adjusted for any unamortized premium or discount and deferred fees or expenses, net of valuation allowances, if any. The Company has evaluated its real estate debt and preferred equity investments for accounting treatment as loans versus real estate utilizing the guidance provided by the ADC Arrangements Subsection of ASC 310, Receivables. For each mezzanine loan and preferred equity investment, the characteristics and the facts and circumstances indicate that loan accounting treatment is appropriate. The Company accretes or amortizes any discounts or premiums and deferred fees and expenses over the life of the related asset utilizing the effective interest method or straight line-method, if the result is not materially different.

The Company evaluates the collectibility of both interest and principal of each loan, if circumstances warrant, to determine whether it is impaired. A loan is impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the existing contractual terms. When a loan is impaired, the amount of the loss accrual is calculated by comparing the carrying amount of the investment to the estimated fair value of the loan or, as a practical expedient, to the value of the collateral if the loan is collateral dependent. Mezzanine loans and preferred equity investments where the risks and payment characteristics are equivalent to an equity investment are accounted for using the equity method of accounting.

Interest income is accrued and recognized as revenue when earned according to the terms of the loans and when, in the opinion of management, it is collectible. The accrual of interest on loans is discontinued when, in management’s opinion, the interest is not collectible in the normal course of business, but in all cases when payment becomes greater than 90 days delinquent. Loans return to accrual status when principal and interest become current and are anticipated to be fully collectible.

Cash and Cash Equivalents

Cash and cash equivalents include short-term, highly liquid investments with a maturity date at the time of purchase of three months or less. The Company maintains cash and cash equivalent balances which, at times during the year, may exceed the amount insured by the Federal Deposit Insurance Corporation. The Company manages the risk of loss by banking with reputable financial institutions.

Investment Deposits

The Company advances funds to its investments in unconsolidated real estate entities for acquisition and due diligence expenses and earnest money deposits prior to the consummation of the underlying real estate transaction. The Company evaluates the likelihood of the real estate transaction closing prior to advancing any funds and, upon determination that the real estate transaction will not close, deposits are returned, net of any expenses incurred.

Income Taxes

The Company is treated as a partnership for federal income tax purposes. As such, each member is responsible for the tax liability or benefit related to their distributive share of taxable income or loss. Accordingly, no provision for federal income taxes is reflected in the accompanying financial statements. The Company’s tax returns are subject to examination by federal, state and local taxing authorities. Because many types of transactions are susceptible to varying interpretation under federal, state and local income tax laws and regulations, the amounts reported in the accompanying financial statements may be subject to change at a later date upon final determination by the respective taxing authorities.

The Company determines whether a tax position of the Company is more likely than not to be sustained upon examination by the applicable taxing authority, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The tax benefit to be recognized is measured as the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement which could result in the Company recording a tax liability

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that would reduce members’ equity. The Company has assessed the tax positions of the Company’s federal, state and local tax returns for all open tax years since inception in 2013 through December 31, 2014, and has concluded that it has no material uncertain tax liabilities to be recognized.

Note 3 — Investments in Unconsolidated Real Estate Entities

At December 31, 2014, the Company held equity investments in four individual limited liability companies, with real estate entity operating partners, that own four multifamily apartment properties located in Katy, Texas; Durham, North Carolina; Little River, South Carolina; and Pooler, Georgia. At December 31, 2013, the Company held investments in two individual limited liability companies, with real estate entity operating partners, one of which owns the multifamily apartment property in Katy, Texas and one of which owns a home development property in Kiawah Island, South Carolina. On June 30, 2014, the investment in the real estate entity related to the Kiawah Island property was distributed to the Common Members. The following is a summary of the Company’s ownership interest by property, which the Company accounts for under the equity method of accounting:

Investment/Property	Investment Date	Ownership Interest
Kiawah River View Investors LLC Kiawah Island Kiawah Island, South Carolina	8/6/2013	50%(a)
Bent Tree JV Holdings, LLC Station at Mason Creek Katy, Texas	9/23/2013	78%
Evergreens JV Holdings, LLC The Flats@55Twelve Durham, North Carolina	6/27/2014	85%
Summerchase LR Partners LLC Summer Chase Little River, South Carolina	10/7/2014	80%
WR Savannah Holdings, LLC Two Addison Place Pooler, Georgia	11/17/2014	90%

(a) Distributed to the Common Members on June 30, 2014.

The carrying amount of the Company’s investments in unconsolidated real estate entities is as follows:

	December 31, 2014		December 31, 2013
Bent Tree JV Holdings, LLC	$	3,974,036	$	5,609,344
Evergreens JV Holdings, LLC		5,094,071		—
Summerchase LR Partners LLC		3,112,587		—
WR Savannah Holdings, LLC		14,817,317		—
Total	$	26,998,011	$	5,609,344

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The Company’s equity in loss of unconsolidated real estate entities is as follows:

	For the Year Ended December 31, 2014			For the Period Ended December 31, 2013
Bent Tree JV Holdings, LLC	$	(1,233,898	)	$	(1,390,656	)
Evergreens JV Holdings, LLC		(2,611,964	)		—
Summerchase LR Partners LLC		(487,413	)		—
WR Savannah Holdings, LLC		(1,116,658	)		—
Total	$	(5,449,933	)	$	(1,390,656	)

A summary of financial information for the unconsolidated real estate entities (excluding the investment related to the Kiawah Island property) is as follows:

	December 31, 2014		December 31, 2013
Balance Sheets:
Real estate, net	$	104,423,828	$	21,425,684
Other assets		13,058,471		3,317,328
Total assets	$	117,482,299	$	24,743,012
Mortgages payable	$	84,226,941	$	16,784,794
Other liabilities		1,812,121		766,110
Total liabilities		86,039,062		17,550,904
Members’ equity		31,443,237		7,192,108
Total liabilities and members’ equity	$	117,482,299	$	24,743,012

	For the Year Ended December 31, 2014			For the Period Ended December 31, 2013
Operating Statements:
Rental and other revenues	$	5,664,491		$	873,338
Operating expenses		(3,025,543	)		(438,457	)
Income before acquisition costs, depreciation, amortization and mortgage interest		2,638,948			434,881
Acquisition costs		(1,381,688	)		(515,428	)
Depreciation and amortization		(6,101,877	)		(1,471,445	)
Mortgage interest		(1,660,199	)		(230,900	)
Net loss	$	(6,504,816	)	$	(1,782,892	)
Company’s share of net loss	$	(5,449,933	)	$	(1,390,656	)

The net assets of the unconsolidated real estate entity related to the Kiawah Island property were $4,943,925 at December 31, 2013. The net loss of this entity was $22,369 and $56,075 through the distribution date of June 30, 2014 and for the period ended December 31, 2013, respectively. The Company’s share of the net loss was $11,185 and $28,038 through the distribution date of June 30, 2014 and for the period ended December 31, 2013, respectively.

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At December 31, 2014 and 2013, mortgage notes payable of the unconsolidated real estate entities consisted of the following:

Property	Date of Loan		Fixed Interest Rate			Maturity Date			For the Year Ended December 31, 2014		For the Period Ended December 31, 2013
Station at Mason Creek		7/29/2011		4.63	%		8/1/2018(a	)	$	13,716,295	$	13,931,188
Station at Mason Creek		9/24/2013		5.07	%		8/1/2018(a	)		2,813,646		2,853,606
The Flats@55Twelve		6/30/2014		4.02	%		7/1/2021(b	)		26,000,000		—
Summer Chase		10/8/2014		4.44	%		11/1/2024(c	)		7,760,000		—
Two Addison Place		11/17/2014		3.99	%		12/1/2021(d	)		33,937,000		—
									$	84,226,941	$	16,784,794
Kiawah Island		8/7/2013		12.50	%		9/1/2020(e	)	$	—	$	6,500,000

(a) Requires monthly principal and interest payments based on a 30-year amortization schedule.

(b) Requires monthly interest only payments until August 1, 2016, then monthly principal and interest payments based on a 30-year amortization schedule.

(c) Requires monthly interest only payments until maturity.

(d) Requires monthly interest only payments until January 1, 2019, then monthly principal and interest payments based on a 30-year amortization schedule.

(e) Requires quarterly interest only payments at a pay rate of 9% until maturity, which is September 1, 2020. This investment was distributed to the Common Members on June 30, 2014.

Note 4 — Investments in Real Estate Preferred Equity and Debt

At December 31, 2014, the Company held preferred equity and debt investments in three individual limited liability companies that own three multifamily apartment properties, two of which are located in Austin, Texas and one of which is located in San Antonio, Texas. At December 31, 2013, the Company did not hold any debt investments.

The following is a summary of the Company’s debt investments by property:

Investment/Property	Acquisition Date		Investment Type	Interest Rate			Maturity		Interest Payment
AHF – Waters at Bluff Springs, LLC Waters at Bluff Springs Austin, Texas		7/1/2014	Mezzanine Loan		13.50	%		11/1/2023		(a	)
AHF – Waters at Elm Creek, LLC Waters at Elm Creek San Antonio, Texas		7/1/2014	Mezzanine Loan		13.50	%		11/1/2023		(a	)
NL/RB Monterey Ranch LLC Monterey Ranch Austin, Texas		10/29/2014	Preferred Equity		12.00	%		11/2/2021		(b	)

(a) Requires quarterly interest payments at 13.5% per annum and semi-annual principal payments equal to 50% of surplus cash as defined in the mezzanine loan agreement.

(b) Requires a minimum monthly payment equal to 6% per annum of the Company’s investment balance.

F-48

The following is a summary of the Company’s real estate preferred equity and debt investments:

	December 31, 2014
Investment	Investment Amount		Deferred Loan Fees			Carrying Value
AHF-Waters at Bluff Springs, LLC	$	3,806,958	$	—		$	3,806,958
AHF-Waters at Elm Creek, LLC		1,467,198		—			1,467,198
NL/RB Monterey Ranch LLC		13,400,000		(145,724	)		13,254,276
Total	$	18,674,156	$	(145,724	)	$	18,528,432

The carrying amount and fair value of the Company’s investments in real estate preferred equity and debt is as follows:

	December 31, 2014
Investment	Carrying Amount		Fair Value
AHF-Waters at Bluff Springs, LLC	$	3,806,958	$	3,806,958
AHF-Waters at Elm Creek, LLC		1,467,198		1,467,198
NL/RB Monterey Ranch LLC		13,254,276		13,254,276
Total	$	18,528,432	$	18,528,432

The Company has determined that the significant inputs used to measure the fair value of its investments in real estate preferred equity and debt fall within Level 3 of the fair value hierarchy. Fair value is based on an internal valuation utilizing a discounted cash flow model. Since these investments have been receiving payments in accordance with their agreements and the rates are consistent with current market rates, the fair value was the same as the carrying amount at December 31, 2014.

The table below represents quantitative information about the significant unobservable inputs used in the fair value measurement of Level 3 assets. Significant changes in any of those inputs would result in a significant change in the fair value measurement.

	As of December 31, 2014
	Fair Value		Number of Investments		Valuation Techniques	Unobservable Input	Range (Weighted Average)
Debt Investments	$	18,528,432		3	Discounted Cash Flows	Discount Rate	12.2% - 14.1% (12.7%)

Note 5 — Concentration of Risk

The geographic concentrations of credit risk and investments exceeding 10% of the aggregate investment in preferred equity, debt and equity as of December 31, 2014 and 2013, are as follows:

	December 31, 2014			December 31, 2013
Texas		50	%		69	%
Georgia		32	%		N/A
North Carolina		11	%		N/A
South Carolina		7	%		31	%

Note 6 — Members’ Equity

The Company’s membership interests are represented by two classes of units, Preferred Units and Common Units, as described in the Company’s Amended and Restated Limited Liability Company Agreement (the “Agreement”).

Preferred Members’ Equity

At December 31, 2014, the Company had 34,963,402 Preferred Units issued and outstanding which were issued at $1 per unit and a total capital commitment of $60,000,000. The Preferred Units are

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entitled to a preferred return of 10% per annum on the daily balances of such member’s Adjusted Capital Contribution, as defined in the Agreement, with respect to its Preferred Units, as measured from the date on which such Capital Contributions, as defined in the Agreement, were actually made. The Preferred Units have a liquidation preference of $34,963,402 and are not mandatorily redeemable. The preferred return is calculated and paid on a quarterly basis and was $921,045 for the year ended December 31, 2014, of which $671,045 was payable at December 31, 2014. The remaining net profit and net losses are allocated to the Common Members. At December 31, 2013, there were no Preferred Units issued and outstanding.

Common Members’ Equity

At December 31, 2014, the Company had 20,000,000 Common Units issued and outstanding which were issued at $1 per unit. On June 30, 2014, the Company distributed its investment in the real estate entity related to the Kiawah Island property and recorded a redemption of $2,460,778. At December 31, 2013, the Company had 9,550,000 Common Units issued and outstanding which were issued at $1 per unit.

Drag-Along Rights

If one or more Common Members holding, collectively, at least 51% of the Common Units (collectively, the “Dragging Member”), desire to have all the Common Members transfer all or substantially all of their Common Units to one or more persons that are not affiliates of the Dragging Member, then the Dragging Member shall have the right (the “Drag-Along Right”) but not the obligation, to require each other Common Member to tender for purchase to the third-party purchaser(s), on the same terms and conditions as apply to the Dragging Member, all of the Common Units of such Member.

Tag-Along Rights

If the Dragging Member proposes to sell more than 20% of his Common Units to a third-party purchaser in any transaction other than a public offering but does not exercise the Drag-Along Right, then each other Common Member shall have the right to include a pro rata amount of its Common Units in the transfer as further described in the Agreement.

Note 7 — Related Party Transactions

On June 26, 2014, the Company entered into a loan agreement with an affiliated entity for $4,339,500. The loan accrued interest at a rate of 10% per annum and was repaid on July 1, 2014. Related interest expense of $6,027 is included in professional fees and other expenses on the accompanying statements of operations.

On July 1, 2014, the Company purchased the AHF – Waters at Bluff Springs, LLC and AHF – Waters at Elm Creek, LLC mezzanine loans from an affiliated entity for unpaid principal balance and accrued interest in the amounts of $4,080,020 and $1,572,462, respectively.

On July 1, 2014, the Company entered into a management agreement with RiverBanc LLC (“RiverBanc”), an affiliated entity, pursuant to which RiverBanc administers the business activities and day-to-day operations of the Company and provides investment management services to the Company. The agreement has a term that will expire on June 30, 2017, subject to automatic annual one-year renewals thereafter. The management agreement provides for a base management fee of 1.50% per annum of the average Aggregate Common Capital Contribution, as defined in the management agreement, and an incentive management fee calculated as 20% of the excess of Core Earnings, as defined in the management agreement, over 8% of average Aggregate Common Capital Contribution. The Company incurred base management fees of $109,676 and no incentive management fees for the year ended December 31, 2014. The management fee payable was $70,277 at December 31, 2014.

Amounts due to RiverBanc for expense reimbursements were $9,667 at December 31, 2014 and are included in accrued expenses and other liabilities on the accompanying balance sheet.

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Note 8 — Subsequent Events

The Company has evaluated subsequent events through June 16, 2015, the date which the financial statements were available to be issued, and has determined that except for the disclosures below, there were no subsequent event matters that require recognition or disclosure in the accompanying financial statements.

In January 2015, the Company made a $9,000,000 equity investment in an individual limited liability company with a real estate entity partner that owns a multifamily apartment property located in Lake Mary, Florida. The Company’s ownership interest is 80%. At December 31, 2014, the Company had an $840,000 investment deposit related to this investment which is included on the accompanying balance sheet.

Also in January 2015, the Company made a $5,900,000 mezzanine loan to a limited liability company with an ownership interest in a multifamily apartment property located in Lawrenceville, Georgia. The loan carries an interest rate of 12.00% and has a maturity date of April 1, 2025.

In conjunction with the funding of new investments in January 2015, the Company issued 14,060,000 Preferred Units at $1 per unit.

In April 2015, the Company entered into an agreement with a real estate entity partner to make an approximately $9,100,000 equity investment in a joint venture that will purchase a multifamily apartment property located in Port Royal, South Carolina. The joint venture is expected to close in mid-July 2015. The Company will issue Preferred Units for the funding of this investment.

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Station at Mason Creek

Independent Auditors’ Report

To the Members of
RB Multifamily Investors LLC

We have audited the accompanying financial statement of

STATION AT MASON CREEK

which comprises the statement of revenues in excess of certain expenses (“the Historical Summary”) for the year ended December 31, 2012 and the related notes.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of the Historical Summary in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on the Historical Summary based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the Historical Summary. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the Historical Summary.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Restriction on Use

The accompanying Historical Summary was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission (for inclusion in the RiverBanc Multifamily Investors, Inc.’s registration statement on Form S-11) as discussed in Note 2 to the Historical Summary and is not intended to be a complete presentation of Station at Mason Creek’s revenues and expenses.

Opinion

In our opinion, the Historical Summary presents fairly, in all material respects, the revenues in excess of certain expenses discussed in Note 2 to the Historical Summary for the year ended December 31, 2012, in conformity with accounting principles generally accepted in the United States of America.

/s/ HLB Gross Collins, P.C.

Atlanta, Georgia
February 25, 2015

F-52

Station at Mason Creek

Statements of Revenues in Excess of Certain Expenses
Six Months Ended June 30, 2013 (Unaudited) and Year Ended December 31, 2012

	Six Months Ended June 30, 2013		Year Ended December 31, 2012
Revenues
Rental Revenue	$	1,395,311	$	2,602,638
Tenant Reimbursements and other income		150,417		236,596
Total revenues		1,545,728		2,839,234
Certain Expenses
Property operating expenses		371,239		729,055
Property taxes and insurance		250,020		573,611
Management and oversight fees		61,874		114,020
Total certain expenses		683,133		1,416,686
Revenues in excess of certain expenses	$	862,595	$	1,422,548

See accompanying notes to statements of revenues in excess of certain expenses.

F-53

Station at Mason Creek

Notes to Statements of Revenues in Excess of Certain Expenses

Six Months Ended June 30, 2013 (Unaudited) and Year Ended December 31, 2012

Note 1 – Business

Station at Mason Creek (the “Property”) consists of a 291-unit multifamily community located in Katy, Texas. RB Multifamily Investors LLC owns a 78% interest in a joint venture that purchased the Property on September 24, 2013.

Note 2 – Basis of Presentation

The Statements of Revenues in Excess of Certain Expenses (the “Historical Summary”) have been prepared for the purpose of complying with the provisions of Rule 3-14 of Regulation S-X promulgated by the Securities and Exchange Commission, as amended, for inclusion in RiverBanc Multifamily Investors, Inc.’s Registration Statement on Form S-11. Accordingly, the Historical Summary is not intended to be a complete presentation of the Property’s revenues and expenses.

Note 3 – Use of Estimates

The Historical Summary has been prepared on the accrual basis of accounting and require management of the Property to make estimates and assumptions that affect the reported amounts of the revenues and expenses during the reporting period. Actual results may differ from those estimates.

Note 4 – Unaudited Interim Information

In the opinion of the Property’s management, all adjustments, consisting only of normal and recurring adjustments, necessary for a fair presentation (in accordance with Basis of Presentation as described in Note 2) have been made to the accompanying unaudited amounts for the six months ended June 30, 2013.

Note 5 – Revenues

The Property contains multifamily housing units occupied under lease agreements with tenants with terms averaging one year or less. All leases are accounted for as operating leases. Rental income is recognized as earned over the life of the lease agreements on a straight-line basis. Some of the leases include provisions under which the Property is reimbursed for certain operating costs. Revenue related to these reimbursed costs is recognized in the period the applicable costs are incurred and billed to tenants pursuant to the lease agreements. Other income consists of charges billed to tenants for utilities, garage rental, pets, administrative, application and other fees and is recognized when earned.

Note 6 – Certain Expenses

Certain expenses include only those costs expected to be comparable to the proposed future operations of the Property. Property operating costs include property staff salaries, utilities, landscaping, insurance, repairs and maintenance, and other general costs associated with operating the Property. Costs such as depreciation, amortization, interest, and professional fees are excluded from the Historical Summary.

Note 7 – Subsequent Events

In preparation of the accompanying Historical Summary, subsequent events were evaluated for recognition or disclosure through February 25, 2015, which is the date the Historical Summary was available to be issued.

F-54

The Flats @ 55Twelve

Independent Auditors’ Report

To the Members of
RB Multifamily Investors LLC

We have audited the accompanying financial statement of

THE FLATS @ 55TWELVE

which comprises the statement of revenues in excess of certain expenses (“the Historical Summary”) for the year ended December 31, 2013 and the related notes.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of the Historical Summary in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on the Historical Summary based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the Historical Summary. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the Historical Summary.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Restriction on Use

The accompanying Historical Summary was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission (for inclusion in the RiverBanc Multifamily Investors, Inc.’s registration statement on Form S-11) as discussed in Note 2 to the Historical Summary and is not intended to be a complete presentation of The Flats @ 55Twelve’s revenues and expenses.

Opinion

In our opinion, the Historical Summary presents fairly, in all material respects, the revenues in excess of certain expenses discussed in Note 2 to the Historical Summary for the year ended December 31, 2013, in conformity with accounting principles generally accepted in the United States of America.

/s/ HLB Gross Collins, P.C.

Atlanta, Georgia
February 25, 2015

F-55

The Flats @ 55Twelve

Statements of Revenues in Excess of Certain Expenses
Three Months Ended March 31, 2014 (Unaudited) and Year Ended December 31, 2013

	Three Months Ended March 31, 2014		Year Ended December 31, 2013
Revenues
Rental Revenue	$	748,262	$	2,909,386
Tenant Reimbursements and other income		70,749		267,135
Total revenues		819,011		3,176,521
Certain Expenses
Property operating expenses		239,967		1,419,744
Property taxes and insurance		81,123		326,961
Management and oversight fees		57,400		222,645
Total certain expenses		378,490		1,969,350
Revenues in excess of certain expenses	$	440,521	$	1,207,171

See accompanying notes to statements of revenues in excess of certain expenses.

F-56

The Flats @ 55Twelve

Notes to Statements of Revenues in Excess of Certain Expenses

Three Months Ended March 31, 2014 (Unaudited) and Year Ended December 31, 2013

Note 1 – Business

The Flats @ 55Twelve (the “Property”) consists of a 268-unit multifamily community located in Durham, North Carolina. RB Multifamily Investors LLC owns an 85% interest in a joint venture that purchased the Property on June 30, 2014.

Note 2 – Basis of Presentation

The Statements of Revenues in Excess of Certain Expenses (the “Historical Summary”) have been prepared for the purpose of complying with the provisions of Rule 3-14 of Regulation S-X promulgated by the Securities and Exchange Commission, as amended, for inclusion in RiverBanc Multifamily Investors, Inc.’s Registration Statement on Form S-11. Accordingly, the Historical Summary is not intended to be a complete presentation of the Property’s revenues and expenses.

Note 3 – Use of Estimates

The Historical Summary has been prepared on the accrual basis of accounting and require management of the Property to make estimates and assumptions that affect the reported amounts of the revenues and expenses during the reporting period. Actual results may differ from those estimates.

Note 4 – Unaudited Interim Information

In the opinion of the Property’s management, all adjustments, consisting only of normal and recurring adjustments, necessary for a fair presentation (in accordance with Basis of Presentation as described in Note 2) have been made to the accompanying unaudited amounts for the three months ended March 31, 2014.

Note 5 – Revenues

The Property contains multifamily housing units occupied under lease agreements with tenants with terms averaging one year or less. All leases are accounted for as operating leases. Rental income is recognized as earned over the life of the lease agreements on a straight-line basis. Some of the leases include provisions under which the Property is reimbursed for certain operating costs. Revenue related to these reimbursed costs is recognized in the period the applicable costs are incurred and billed to tenants pursuant to the lease agreements. Other income consists of charges billed to tenants for utilities, garage rental, pets, administrative, application and other fees and is recognized when earned.

Note 6 – Certain Expenses

Certain expenses include only those costs expected to be comparable to the proposed future operations of the Property. Property operating costs include property staff salaries, utilities, landscaping, insurance, repairs and maintenance, and other general costs associated with operating the Property. Costs such as depreciation, amortization, interest, and professional fees are excluded from the Historical Summary.

Note 7 – Subsequent Events

In preparation of the accompanying Historical Summary, subsequent events were evaluated for recognition or disclosure through February 25, 2015, which is the date the Historical Summary was available to be issued.

F-57

Two Addison Place

Independent Auditors’ Report

To the Members of
RB Multifamily Investors LLC

We have audited the accompanying financial statement of

TWO ADDISON PLACE

which comprises the statement of revenues in excess of certain expenses (“the Historical Summary”) for the nine months ended September 30, 2014 and the related notes.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of the Historical Summary in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on the Historical Summary based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the Historical Summary. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the Historical Summary.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Restriction on Use

The accompanying Historical Summary was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission (for inclusion in the RiverBanc Multifamily Investors, Inc.’s registration statement on Form S-11) as discussed in Note 2 to the Historical Summary and is not intended to be a complete presentation of Two Addison Place’s revenues and expenses.

Opinion

In our opinion, the Historical Summary presents fairly, in all material respects, the revenues in excess of certain expenses discussed in Note 2 to the Historical Summary for the nine months ended September 30, 2014, in conformity with accounting principles generally accepted in the United States of America.

/s/ HLB Gross Collins, P.C.

Atlanta, Georgia
February 25, 2015

F-58

Two Addison Place

Statement of Revenues in Excess of Certain Expenses
Nine Months Ended September 30, 2014

Revenues
Rental Revenue	$	1,370,900
Tenant Reimbursements and other income		191,633
Total revenues		1,562,533
Certain Expenses
Property operating expenses		687,208
Property taxes and insurance		339,168
Management and oversight fees		46,536
Total certain expenses		1,072,912
Revenues in excess of certain expenses	$	489,621

See accompanying notes to statement of revenues in excess of certain expenses.

F-59

Two Addison Place

Notes to Statement of Revenues in Excess of Certain Expenses
Nine Months Ended September 30, 2014

Note 1 – Business

Two Addison Place (the “Property”) consists of a 325-unit multifamily community located in Pooler, Georgia for which construction was completed in 2014. RB Multifamily Investors LLC owns a 90% interest in a joint venture that purchased the Property on November 17, 2014.

Note 2 – Basis of Presentation

The Statement of Revenues in Excess of Certain Expenses (the “Historical Summary”) has been prepared for the purpose of complying with the provisions of Rule 3-14 of Regulation S-X promulgated by the Securities and Exchange Commission, as amended, for inclusion in RiverBanc Multifamily Investors, Inc.’s Registration Statement on Form S-11. Accordingly, the Historical Summary is not intended to be a complete presentation of the Property’s revenues and expenses.

Note 3 – Use of Estimates

The Historical Summary has been prepared on the accrual basis of accounting and require management of the Property to make estimates and assumptions that affect the reported amounts of the revenues and expenses during the reporting period. Actual results may differ from those estimates.

Note 4 – Revenues

The Property contains multifamily housing units occupied under lease agreements with tenants with terms averaging one year or less. For the entirety of the nine month period ended September 30, 2014, the Property was in lease-up. All leases are accounted for as operating leases. Rental income is recognized as earned over the life of the lease agreements on a straight-line basis. Some of the leases include provisions under which the Property is reimbursed for certain operating costs. Revenue related to these reimbursed costs is recognized in the period the applicable costs are incurred and billed to tenants pursuant to the lease agreements. Other income consists of charges billed to tenants for utilities, garage rental, pets, administrative, application and other fees and is recognized when earned.

Note 5 – Certain Expenses

Certain expenses include only those costs expected to be comparable to the proposed future operations of the Property. Property operating costs include property staff salaries, utilities, landscaping, insurance, repairs and maintenance, and other general costs associated with operating the Property. Costs such as depreciation, amortization, interest, and professional fees are excluded from the Historical Summary.

Note 6 – Subsequent Events

In preparation of the accompanying Historical Summary, subsequent events were evaluated for recognition or disclosure through February 25, 2015, which is the date the Historical Summary was available to be issued.

F-60

Terraces at Lake Mary

Independent Auditors’ Report

To the Members of
RB Multifamily Investors LLC

We have audited the accompanying financial statement of

TERRACES AT LAKE MARY

which comprises the statement of revenues in excess of certain expenses (“the Historical Summary”) for the year ended December 31, 2014 and the related notes.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of the Historical Summary in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on the Historical Summary based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the Historical Summary. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the Historical Summary.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Restriction on Use

The accompanying Historical Summary was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission (for inclusion in the RiverBanc Multifamily Investors, Inc.’s registration statement on Form S-11) as discussed in Note 2 to the Historical Summary and is not intended to be a complete presentation of Terraces at Lake Mary’s revenues and expenses.

Opinion

In our opinion, the Historical Summary presents fairly, in all material respects, the revenues in excess of certain expenses discussed in Note 2 to the Historical Summary for the year ended December 31, 2014, in conformity with accounting principles generally accepted in the United States of America.

/s/ HLB Gross Collins, P.C.

Atlanta, Georgia
February 25, 2015

F-61

Terraces at Lake Mary

Statement of Revenues in Excess of Certain Expenses
Year Ended December 31, 2014

Revenues
Rental Revenue	$	2,680,223
Tenant Reimbursements and other income		438,831
Total revenues		3,119,054
Certain Expenses
Property operating expenses		1,335,158
Property taxes and insurance		252,341
Management and oversight fees		155,843
Total certain expenses		1,743,342
Revenues in excess of certain expenses	$	1,375,712

See accompanying notes to statement of revenues in excess of certain expenses.

F-62

Terraces at Lake Mary

Notes to Statement of Revenues in Excess of Certain Expenses
Year Ended December 31, 2014

Note 1 – Business

Terraces at Lake Mary (the “Property”) consists of a 284-unit multifamily community located in Lake Mary, Florida. RB Multifamily Investors LLC owns an 80% interest in a joint venture that purchased the Property on January 8, 2015.

Note 2 – Basis of Presentation

The Statement of Revenues in Excess of Certain Expenses (the “Historical Summary”) has been prepared for the purpose of complying with the provisions of Rule 3-14 of Regulation S-X promulgated by the Securities and Exchange Commission, as amended, for inclusion in RiverBanc Multifamily Investors, Inc.’s Registration Statement on Form S-11. Accordingly, the Historical Summary is not intended to be a complete presentation of the Property’s revenues and expenses.

Note 3 – Use of Estimates

The Historical Summary has been prepared on the accrual basis of accounting and require management of the Property to make estimates and assumptions that affect the reported amounts of the revenues and expenses during the reporting period. Actual results may differ from those estimates.

Note 4 – Revenues

The Property contains multifamily housing units occupied under lease agreements with tenants with terms averaging one year or less. All leases are accounted for as operating leases. Rental income is recognized as earned over the life of the lease agreements on a straight-line basis. Some of the leases include provisions under which the Property is reimbursed for certain operating costs. Revenue related to these reimbursed costs is recognized in the period the applicable costs are incurred and billed to tenants pursuant to the lease agreements. Other income consists of charges billed to tenants for utilities, garage rental, pets, administrative, application and other fees and is recognized when earned.

Note 5 – Certain Expenses

Certain expenses include only those costs expected to be comparable to the proposed future operations of the Property. Property operating costs include property staff salaries, utilities, landscaping, insurance, repairs and maintenance, and other general costs associated with operating the Property. Costs such as depreciation, amortization, interest, and professional fees are excluded from the Historical Summary.

Note 6 – Subsequent Events

In preparation of the accompanying Historical Summary, subsequent events were evaluated for recognition or disclosure through February 25, 2015, which is the date the Historical Summary was available to be issued.

F-63

Preserve at Port Royal
Independent Auditors’ Report

To the Members of
RB Multifamily Investors LLC

We have audited the accompanying financial statement of

PRESERVE AT PORT ROYAL

which comprises the statement of revenues in excess of certain expenses (“the Historical Summary”) for the year ended December 31, 2014 and the related notes.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of the Historical Summary in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on the Historical Summary based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the Historical Summary. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the Historical Summary.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Restriction on Use

The accompanying Historical Summary was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission (for inclusion in the RiverBanc Multifamily Investors, Inc.’s registration statement on Form S-11) as discussed in Note 2 to the Historical Summary and is not intended to be a complete presentation of Preserve at Port Royal’s revenues and expenses.

Opinion

In our opinion, the Historical Summary presents fairly, in all material respects, the revenues in excess of certain expenses discussed in Note 2 to the Historical Summary for the year ended December 31, 2014, in conformity with accounting principles generally accepted in the United States of America.

/s/ HLB Gross Collins, P.C.

Atlanta, Georgia
June 8, 2015

F-64

Preserve at Port Royal
Statements of Revenues in Excess of Certain Expenses
Three Months Ended March 31, 2015 (Unaudited) and Year Ended December 31, 2014

	Three Months Ended March 31, 2015		Year Ended December 31, 2014
Revenues
Rental Revenue	$	958,460	$	3,740,767
Tenant Reimbursements and other income		124,616		511,290
Total revenues		1,083,076		4,252,057
Certain Expenses
Property operating expenses		276,356		1,101,396
Property taxes and insurance		148,752		592,697
Management and oversight fees		32,150		126,818
Total certain expenses		457,258		1,820,911
Revenues in excess of certain expenses	$	625,818	$	2,431,146

See accompanying notes to statements of revenues in excess of certain expenses.

F-65

Preserve at Port Royal
Notes to Statements of Revenues in Excess of Certain Expenses
Three Months Ended March 31, 2015 (Unaudited) and Year Ended December 31, 2014

Note 1 – Business

Preserve at Port Royal (the “Property”) consists of a 400-unit multifamily community located in Port Royal, South Carolina. RB Multifamily Investors LLC has entered into a commitment to acquire an 80% interest in a joint venture that will purchase the Property in July 2015.

Note 2 – Basis of Presentation

The Statements of Revenues in Excess of Certain Expenses (the “Historical Summary”) have been prepared for the purpose of complying with the provisions of Rule 3-14 of Regulation S-X promulgated by the Securities and Exchange Commission, as amended, for inclusion in RiverBanc Multifamily Investors, Inc.’s Registration Statement on Form S-11. Accordingly, the Historical Summary is not intended to be a complete presentation of the Property’s revenues and expenses.

Note 3 – Use of Estimates

The Historical Summary has been prepared on the accrual basis of accounting and requires management of the Property to make estimates and assumptions that affect the reported amounts of the revenues and expenses during the reporting period. Actual results may differ from those estimates.

Note 4 – Unaudited Interim Information

In the opinion of the Property’s management, all adjustments, consisting only of normal and recurring adjustments, necessary for a fair presentation (in accordance with Basis of Presentation as described in Note 2) have been made to the accompanying unaudited amounts for the three months ended March 31, 2015.

Note 5 – Revenues

The Property contains multifamily housing units occupied under lease agreements with tenants with terms averaging one year or less. All leases are accounted for as operating leases. Rental income is recognized as earned over the life of the lease agreements on a straight-line basis. Some of the leases include provisions under which the Property is reimbursed for certain operating costs. Revenue related to these reimbursed costs is recognized in the period the applicable costs are incurred and billed to tenants pursuant to the lease agreements. Other income consists of charges billed to tenants for utilities, garage rental, pets, administrative, application and other fees and is recognized when earned.

Note 6 – Certain Expenses

Certain expenses include only those costs expected to be comparable to the proposed future operations of the Property. Property operating costs include property staff salaries, utilities, landscaping, insurance, repairs and maintenance, and other general costs associated with operating the Property. Costs such as depreciation, amortization, interest, and professional fees are excluded from the Historical Summary.

Note 7 – Subsequent Events

In preparation of the accompanying Historical Summary, subsequent events were evaluated for recognition or disclosure through June 8, 2015, which is the date the Historical Summary was available to be issued.

F-66

Bent Tree JV Holdings, LLC

Report of Independent Certified Public Accountants

To the Members of
Bent Tree JV Holdings, LLC

We have audited the accompanying financial statements of Bent Tree JV Holdings, LLC (a Delaware Limited Liability Company), which comprise the balance sheet as of December 31, 2014, and the related statement of operations, changes in members’ equity, and cash flows for the year then ended, and the related notes to the financial statements.

Management’s responsibility for the financial statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Bent Tree JV Holdings, LLC as of December 31, 2014, and the results of its operations and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America.

/s/ Grant Thornton LLP

Charlotte, NC
June 17, 2015

F-67

Bent Tree JV Holdings, LLC
(A Delaware Limited Liability Company)
Balance Sheet
December 31, 2014

ASSETS:
Real Estate, net	$	20,764,363
Cash		804,985
Other Assets		782,711
Capitalized Finance Costs, net		192,504
TOTAL ASSETS	$	22,544,563
LIABILITIES AND MEMBERS’ EQUITY:
LIABILITIES:
Mortgages Payable	$	16,529,941
Accrued Expenses and Other Liabilities		919,065
TOTAL LIABILITIES		17,449,006
MEMBERS’ EQUITY:
Operating Member		1,121,522
Capital Member		3,974,035
TOTAL MEMBERS’ EQUITY		5,095,557
TOTAL LIABILITIES AND MEMBERS’ EQUITY	$	22,544,563

The accompanying notes are an integral part of these financial statements.

F-68

Bent Tree JV Holdings, LLC
(A Delaware Limited Liability Company)
Statement of Operations
For the Year Ended December 31, 2014

REVENUES:
Rental Revenue	$	3,064,296
Other Income		329,898
TOTAL REVENUES		3,394,194
EXPENSES:
Operating Expenses		1,106,546
Real Estate Taxes		668,746
Management Fees		142,134
Interest Expense		847,804
Amortization		751,838
Depreciation		1,459,048
TOTAL EXPENSES		4,976,116
Net Loss	$	(1,581,922	)

The accompanying notes are an integral part of these financial statements.

F-69

Bent Tree JV Holdings, LLC
(A Delaware Limited Liability Company)
Statement of Changes in Members’ Equity
For the Year Ended December 31, 2014

	Operating Member			Capital Member			Total Members' Equity
Balance - December 31, 2013	$	1,582,764		$	5,609,344		$	7,192,108
Distributions		(113,219	)		(401,410	)		(514,629	)
Net Loss		(348,023	)		(1,233,899	)		(1,581,922	)
Balance - December 31, 2014	$	1,121,522		$	3,974,035		$	5,095,557

The accompanying notes are an integral part of these financial statements.

F-70

Bent Tree JV Holdings, LLC
(A Delaware Limited Liability Company)
Statement of Cash Flows
For the Year Ended December 31, 2014

Cash Flows from Operating Activities:
Net Loss	$	(1,581,922	)
Adjustments to Reconcile Net Loss to
Net Cash Provided by Operating Activities:
Amortization		805,561
Depreciation		1,459,048
Changes in Assets and Liabilities:
Other Assets		(74,651	)
Accrued Expenses and Other Liabilities		152,955
Net Cash Provided by Operating Activities		760,991
Cash Flows from Investing Activities:
Additions of Real Estate		(797,727	)
Change in Replacement and Renovation Reserves		152,780
Net Cash Used in Investing Activities		(644,947	)
Cash Flows from Financing Activities:
Distributions		(514,629	)
Mortgage Payments		(254,853	)
Cash Used in Financing Activities		(769,482	)
Net Change in Cash		(653,438	)
Cash - Beginning of Year		1,458,423
Cash - End of Year	$	804,985
Supplemental Disclosures
Cash Paid for Interest	$	795,113

The accompanying notes are an integral part of these financial statements.

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Bent Tree JV Holdings, LLC
(A Delaware Limited Liability Company)
Notes to Financial Statements
December 31, 2014

Note 1 – Organization and Nature of Business

Bent Tree JV Holdings, LLC (the “Company”) is a Delaware limited liability company, which was formed on July 22, 2013. The purpose of the Company is to acquire, develop, construct and/or renovate, improve, maintain, lease and sell multifamily real estate. The Company acquired Station at Mason Creek (formerly known as Bent Tree), a 291 unit multifamily apartment complex in Katy, Texas, on September 24, 2013.

Note 2 – Summary of Significant Accounting Policies

Basis of Presentation

The accompanying financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Accordingly, actual results may differ from those estimates.

Fair Value Measurements

The Company believes that the carrying values of its financial instruments, which includes cash, other assets, accrued expenses and other liabilities, approximate fair value at December 31, 2014 due to their short term nature. The Company also believes that the carrying value of its mortgages payable approximates fair value at December 31, 2014.

Impairment of Long-Lived Assets

The Company periodically evaluates its long-lived assets for indicators of impairment. The judgments regarding the existence of impairment indicators are based on factors such as operational performance, market conditions and legal and environmental concerns, as well as the Company’s ability to hold and its intent with regard to each asset. Future events could occur which would cause the Company to conclude that impairment indicators exist and an impairment is warranted. If impairment indicators exist for long-lived assets to be held and used, and the expected future undiscounted cash flows are less than the carrying amount of the asset, then the Company will record an impairment loss for the difference between the fair value of the asset and its carrying amount. If the asset is to be disposed of, then an impairment loss is recognized for the difference between the estimated fair value of the asset, less costs to sell, and its carrying amount.

Depreciation of Real Estate

The Company depreciates the building component of its real estate over a 30-year estimated useful life, building improvements over a 15-year to 30-year estimated useful life and furniture, fixtures and equipment over a 5-year estimated useful life, all of which are judgmental determinations. Betterments and certain costs directly related to the improvement of real estate are capitalized. Expenditures for ordinary maintenance and repairs are expensed to operations as incurred.

Concentration of Risks

The Company’s sole real estate investment is a multifamily apartment complex (“Multifamily Apartments”) located in Katy, TX. Concentrations of market, interest rate and credit risk may exist with respect to the Multifamily Apartments. Market risk represents the potential for losses as a

F-72

result of changes in the fair value of its Multifamily Apartments. Interest rate risk includes the risk associated with changes in prevailing interest rates. Credit risk includes the possibility that a loss may occur from the failure of counterparties to make payments according to the terms of a contract. The Company’s exposure to risk at any point in time is generally limited to amounts recorded as assets on the accompanying balance sheet.

The Company may also be subject to geographic risk associated with its Multifamily Apartments in Katy, TX.

Revenue Recognition

The Company’s Multifamily Apartments have tenant operating leases with terms that average twelve months. The Company recognizes rental revenue related to these leases, net of any concessions, on a straight-line basis over the term of the lease.

Cash

Cash includes short-term, highly liquid investments with a maturity date at the time of purchase of three months or less. The Company maintains cash balances which, at times during the year, may exceed the amount insured by the Federal Deposit Insurance Corporation. The Company manages the risk of loss by banking with reputable financial institutions.

Other Assets

Other assets include restricted cash balances for reserves required by the senior mortgage lender for items such as property taxes, insurance, replacements and renovations.

Income Taxes

The Company is treated as a partnership for federal income tax purposes. As such, each member is responsible for the tax liability or benefit related to their distributive share of taxable income or loss. Accordingly, no provision for federal income taxes is reflected in the accompanying financial statements. The Company’s tax returns are subject to examination by federal, state and local taxing authorities. Because many types of transactions are susceptible to varying interpretation under federal, state and local income tax laws and regulations, the amounts reported in the accompanying financial statements may be subject to change at a later date upon final determination by the respective taxing authorities.

The Company determines whether a tax position of the Company is more likely than not to be sustained upon examination by the applicable taxing authority, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The tax benefit to be recognized is measured as the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement which could result in the Company recording a tax liability that would reduce members’ equity. The Company has assessed the tax positions of the Company’s federal, state and local tax returns for all open tax years since inception in 2013 through the effective date, and has concluded that it has no material uncertain tax liabilities to be recognized.

Note 3 – Real Estate

The following is a summary of the Company’s real estate, at cost less accumulated depreciation, as of December 31, 2014:

Land	$	1,795,435
Building		18,645,545
Furniture, fixtures and equipment		2,201,304
Real estate		22,642,284
Accumulated depreciation		(1,877,921	)
Real estate, net	$	20,764,363

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For the year ended December 31, 2014, depreciation of the Company’s real estate amounted to $1,459,048.

Note 4 – Mortgage Payable

In 2013, the Company acquired the Multifamily Apartments subject to a Freddie Mac mortgage and obtained supplemental financing from Freddie Mac at acquisition. The mortgages have fixed interest rates of 4.63% and 5.07%, in the amounts of $13,983,796 and $2,860,000, respectively. The mortgages require principal and interest payments based on a 30-year amortization schedule and mature on August 1, 2018. The mortgages are secured by the Multifamily Apartments which has a purchase price of $23,600,000. For the year ended December 31, 2014, the Company incurred interest expense on the mortgages in the amount of $794,081. In 2013, the Company paid and capitalized $259,658 for finance costs. As of December 31, 2014, the accumulated amortization of the capitalized finance costs was in the amount of $67,154. For the year ended December 31, 2014, amortization of capitalized finance costs in the amount of $53,723 is included in interest expense.

Note 5 – Members’ Equity

The Company’s membership interests are represented by two types of members, Operating and Capital (collectively, the “Members”), as described in the Company’s Limited Liability Company Agreement (the “Agreement”).

Capital Contributions

Pursuant to the Agreement, the Members committed and contributed capital to the Company in the amount of $8,975,000 as of December 31, 2014.

Distributions

In accordance with the Agreement, distributions will be allocated to the Members as follows:

a. First, 100% to each Member in the ratio of their respective membership interest until each Member has received their entire capital contributions and a 10% internal rate of return on their capital contributions

b. Second, 25% to the Operating Member and 75% to the Members in the ratio of their respective membership interest until the Members have each received a 15% internal rate of return on their capital contributions.

c. Thereafter, 40% to the Operating Member and 60% to the Members in the ratio of their respective membership interest.

Allocation of Net Income / Loss

Net income or net loss for each fiscal year is allocated to the Members in accordance with the Agreement, subject to specific allocations as defined in the Agreement.

Note 6 – Related Party Transactions

For the year ended December 31, 2014, the Company paid the Operating Member asset management fees in the amount of $45,000 and other professional fees in the amount of $1,800. Amounts due to the Operating Member for expense reimbursements totaled $1,440 at December 31, 2014 and are included in accrued expenses and other liabilities on the accompanying balance sheet.

Note 7 – Subsequent Events

The Company has evaluated subsequent events through June 17, 2015, the date which the financial statements were available to be issued, and has determined that there were no subsequent event matters that require recognition or disclosure in the accompanying financial statements.

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Bent Tree JV Holdings, LLC

Report of Independent Certified Public Accountants

To the Members of
Bent Tree JV Holdings, LLC

We have audited the accompanying financial statements of Bent Tree JV Holdings, LLC (a Delaware Limited Liability Company), which comprise the balance sheet as of December 31, 2013, and the related statement of operations, changes in members’ equity, and cash flows for the period from July 22, 2013 (Inception) to December 31, 2013, and the related notes to the financial statements.

Management’s responsibility for the financial statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Bent Tree JV Holdings, LLC as of December 31, 2013, and the results of its operations and its cash flows for the period from July 22, 2013 (Inception) to December 31, 2013 in accordance with accounting principles generally accepted in the United States of America.

/s/ Grant Thornton LLP

Charlotte, NC
June 17, 2015

F-75

Bent Tree JV Holdings, LLC
(A Delaware Limited Liability Company)
Balance Sheet
December 31, 2013

ASSETS:
Real Estate, net	$	21,425,684
Cash		1,458,423
Other Assets		860,840
In-Place Lease Costs, net		751,838
Capitalized Finance Costs, net		246,227
TOTAL ASSETS	$	24,743,012
LIABILITIES AND MEMBERS’ EQUITY:
LIABILITIES:
Mortgages Payable	$	16,784,794
Accrued Expenses and Other Liabilities		766,110
TOTAL LIABILITIES		17,550,904
MEMBERS’ EQUITY:
Operating Member		1,582,764
Capital Member		5,609,344
TOTAL MEMBERS’ EQUITY		7,192,108
TOTAL LIABILITIES AND MEMBERS’ EQUITY	$	24,743,012

The accompanying notes are an integral part of these financial statements.

F-76

Bent Tree JV Holdings, LLC
(A Delaware Limited Liability Company)
Statement of Operations
For the Period from July 22, 2013 (Inception) to
December 31, 2013

REVENUES:
Rental Revenue	$	805,635
Other Income		67,704
TOTAL REVENUES		873,339
EXPENSES:
Operating Expenses		256,151
Acquisition Expense		515,428
Real Estate Taxes		145,142
Management Fees		37,164
Interest Expense		230,900
Amortization		1,052,573
Depreciation		418,873
TOTAL EXPENSES		2,656,231
Net Loss	$	(1,782,892	)

The accompanying notes are an integral part of these financial statements.

F-77

Bent Tree JV Holdings, LLC
(A Delaware Limited Liability Company)
Statement of Changes in Members’ Equity
For the Period from July 22, 2013 (Inception) to
December 31, 2013

	Operating Member			Capital Member			Total Members' Equity
Balance – July 22, 2013 (Inception)	$	—		$	—		$	—
Capital Contributions		1,975,000			7,000,000			8,975,000
Net Loss		(392,236	)		(1,390,656	)		(1,782,892	)
Balance - December 31, 2013	$	1,582,764		$	5,609,344		$	7,192,108

The accompanying notes are an integral part of these financial statements.

F-78

Bent Tree JV Holdings, LLC
(A Delaware Limited Liability Company)
Statement of Cash Flows
For the Period from July 22, 2013 (Inception) to
December 31, 2013

Cash Flows from Operating Activities:
Net Loss	$	(1,782,892	)
Adjustments to Reconcile Net Loss to
Net Cash Used in Operating Activities:
Amortization		1,066,004
Depreciation		418,873
Changes in Assets and Liabilities:
Other Assets		(301,772	)
Accrued Expenses and Other Liabilities		238,105
Net Cash Used in Operating Activities		(361,682	)
Cash Flows from Investing Activities:
Purchase of Real Estate		(9,494,872	)
Additions of Real Estate		(48,968	)
Change in Replacement and Renovation Reserves		(152,395	)
Cash Used in Investing Activities		(9,696,235	)
Cash Flows from Financing Activities:
Capital Contributions		8,975,000
Capitalized Finance Costs		(259,658	)
Mortgage Proceeds		2,860,000
Mortgage Payments		(59,002	)
Net Cash Provided by Financing Activities		11,516,340
Net Change in Cash		1,458,423
Cash - Beginning of Period		—
Cash - End of Period	$	1,458,423
Supplemental Disclosures
Cash Paid for Interest	$	149,468

The accompanying notes are an integral part of these financial statements.

F-79

Bent Tree JV Holdings, LLC
(A Delaware Limited Liability Company)
Notes to Financial Statements
December 31, 2013

Note 1 – Organization and Nature of Business

Bent Tree JV Holdings, LLC (the “Company”) is a Delaware limited liability company, which was formed on July 22, 2013. The purpose of the Company is to acquire, develop, construct and/or renovate, improve, maintain, lease and sell multifamily real estate. The Company acquired Station at Mason Creek (formerly known as Bent Tree), a 291 unit multifamily apartment complex in Katy, Texas, on September 24, 2013.

Note 2 – Summary of Significant Accounting Policies

Basis of Presentation

The accompanying financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Accordingly, actual results may differ from those estimates.

Fair Value Measurements

The Company believes that the carrying values of its financial instruments, which includes cash, other assets, accrued expenses and other liabilities, approximate fair value at December 31, 2013 due to their short term nature.

Acquisition of Real Estate

The Company allocates the purchase price of real estate to net tangible and identified intangible assets acquired based on their fair values in accordance with ASC 805, Business Combinations. In making estimates of fair values for purposes of allocating purchase price, the Company utilizes a number of sources, including independent appraisals that may be obtained in connection with the acquisition or financing of the respective real estate, its own analysis of recently-acquired and existing comparable properties and other market data. The Company also considers information obtained about the real estate as a result of its pre-acquisition due diligence, marketing and leasing activities in estimating the fair value of the tangible and intangible assets acquired. The Company considers the value of acquired in-place leases and utilizes an amortization period that is the average remaining term of the acquired leases. In-place residential leases’ average term at acquisition was six months. In addition, the Company is required to expense acquisition-related costs as incurred.

Accordingly, upon acquisition of the real estate, the Company recorded land of $1,795,435, building in the amount of $17,903,736, furniture, fixtures and equipment in the amount of $2,096,418 and in-place lease costs in the amount of $1,804,411. The Company assumed a mortgage payable in the amount of $13,983,796 upon acquisition of the real estate and believes the carrying value of the mortgage payable approximated fair value upon acquisition and at December 31, 2013. The Company also assumed other assets in the amount of $406,673 and other liabilities in the amount of $528,005 upon acquisition, whose carrying values approximated fair value due to their short term nature.

Impairment of Long-Lived Assets

The Company periodically evaluates its long-lived assets for indicators of impairment. The judgments regarding the existence of impairment indicators are based on factors such as operational performance, market conditions and legal and environmental concerns, as well as the

F-80

Company’s ability to hold and its intent with regard to each asset. Future events could occur which would cause the Company to conclude that impairment indicators exist and an impairment is warranted. If impairment indicators exist for long-lived assets to be held and used, and the expected future undiscounted cash flows are less than the carrying amount of the asset, then the Company will record an impairment loss for the difference between the fair value of the asset and its carrying amount. If the asset is to be disposed of, then an impairment loss is recognized for the difference between the estimated fair value of the asset, less costs to sell, and its carrying amount.

Depreciation of Real Estate

The Company depreciates the building component of its real estate over a 30-year estimated useful life, building improvements over a 15-year to 30-year estimated useful life and furniture, fixtures and equipment over a 5-year estimated useful life, all of which are judgmental determinations. Betterments and certain costs directly related to the improvement of real estate are capitalized. Expenditures for ordinary maintenance and repairs are expensed to operations as incurred.

Concentration of Risks

The Company’s sole real estate investment is a multifamily apartment complex (“Multifamily Apartments”) located in Katy, TX. Concentrations of market, interest rate and credit risk may exist with respect to the Multifamily Apartments. Market risk represents the potential for losses as a result of changes in the fair value of its Multifamily Apartments. Interest rate risk includes the risk associated with changes in prevailing interest rates. Credit risk includes the possibility that a loss may occur from the failure of counterparties to make payments according to the terms of a contract. The Company’s exposure to risk at any point in time is generally limited to amounts recorded as assets on the accompanying balance sheet.

The Company may also be subject to geographic risk associated with its Multifamily Apartments in Katy, TX.

Revenue Recognition

The Company’s Multifamily Apartments have tenant operating leases with terms that average twelve months. The Company recognizes rental revenue related to these leases, net of any concessions, on a straight-line basis over the term of the lease.

Cash

Cash includes short-term, highly liquid investments with a maturity date at the time of purchase of three months or less. The Company maintains cash balances which, at times during the year, may exceed the amount insured by the Federal Deposit Insurance Corporation. The Company manages the risk of loss by banking with reputable financial institutions.

Other Assets

Other assets include restricted cash balances for reserves required by the senior mortgage lender for items such as property taxes, insurance, replacements and renovations.

Income Taxes

The Company is treated as a partnership for federal income tax purposes. As such, each member is responsible for the tax liability or benefit related to their distributive share of taxable income or loss. Accordingly, no provision for federal income taxes is reflected in the accompanying financial statements. The Company’s tax returns are subject to examination by federal, state and local taxing authorities. Because many types of transactions are susceptible to varying interpretation under federal, state and local income tax laws and regulations, the amounts reported in the accompanying financial statements may be subject to change at a later date upon final determination by the respective taxing authorities.

F-81

The Company determines whether a tax position of the Company is more likely than not to be sustained upon examination by the applicable taxing authority, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The tax benefit to be recognized is measured as the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement which could result in the Company recording a tax liability that would reduce members’ equity. The Company has assessed the tax positions of the Company’s federal, state and local tax returns for all open tax years since inception in 2013 through the effective date, and has concluded that it has no material uncertain tax liabilities to be recognized.

Note 3 – Real Estate

The following is a summary of the Company’s real estate, at cost less accumulated depreciation, as of December 31, 2013:

Land	$	1,795,435
Building		17,941,693
Furniture, fixtures and equipment		2,107,429
Real estate		21,844,557
Accumulated depreciation		(418,873	)
Real estate, net	$	21,425,684

For the period from July 22, 2013 (Inception) to December 31, 2013, depreciation of the Company’s real estate amounted to $418,873.

Note 4 – Mortgage Payable

The Company acquired the Multifamily Apartments subject to a Freddie Mac mortgage and obtained supplemental financing from Freddie Mac at acquisition. The mortgages have fixed interest rates of 4.63% and 5.07%, in the amounts of $13,983,796 and $2,860,000, respectively. The mortgages require principal and interest payments based on a 30-year amortization schedule and mature on August 1, 2018. The mortgages are secured by the Multifamily Apartments which has a purchase price of $23,600,000. For the Period from July 22, 2013 (Inception) to December 31, 2013, the Company incurred interest expense on the mortgages in the amount of $217,469. For the Period from July 22, 2013 (Inception) to December 31, 2013, the Company paid and capitalized $259,658 for finance costs. As of December 31, 2013, the accumulated amortization of the capitalized finance costs was in the amount of $13,431, which is also included in interest expense.

Note 5 – Members’ Equity

The Company’s membership interests are represented by two types of members, Operating and Capital (collectively, the “Members”), as described in the Company’s Limited Liability Company Agreement (the “Agreement”).

Capital Contributions

Pursuant to the Agreement, the Members committed and contributed capital to the Company in the amount of $8,975,000 as of December 31, 2013.

Distributions

In accordance with the Agreement, distributions will be allocated to the Members as follows:

a. First, 100% to each Member in the ratio of their respective membership interest until each Member has received their entire capital contributions and a 10% internal rate of return on their capital contributions

F-82

b. Second, 25% to the Operating Member and 75% to the Members in the ratio of their respective membership interest until the Members have each received a 15% internal rate of return on their capital contributions.

c. Thereafter, 40% to the Operating Member and 60% to the Members in the ratio of their respective membership interest.

Allocation of Net Income / Loss

Net income or net loss for each fiscal year is allocated to the Members in accordance with the Agreement, subject to specific allocations as defined in the Agreement.

Note 6 – Related Party Transactions

For the Period from July 22, 2013 (Inception) to December 31, 2013, the Company paid the Operating Member asset management fees in the amount of $12,125 and other professional fees in the amount of $450. In addition, the Operating Member received acquisition fees in the amount of $321,750 related to the purchase of Station at Mason Creek.

Amounts due to the Operating Member for expense reimbursements totaled $1,500 at December 31, 2013 and are included in accrued expenses and other liabilities on the accompanying balance sheet.

Note 7 – Subsequent Events

The Company has evaluated subsequent events through June 17, 2015, the date which the financial statements were available to be issued, and has determined that there were no subsequent event matters that require recognition or disclosure in the accompanying financial statements.

F-83

Evergreens JV Holdings, LLC

Report of Independent Certified Public Accountants

To the Members of
Evergreens JV Holdings, LLC

We have audited the accompanying financial statements of Evergreens JV Holdings, LLC (a Delaware Limited Liability Company), which comprise the balance sheet as of December 31, 2014, and the related statement of operations, changes in members’ equity, and cash flows for the period from May 13, 2014 (Inception) to December 31, 2014, and the related notes to the financial statements.

Management’s responsibility for the financial statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Evergreens JV Holdings, LLC as of December 31, 2014, and the results of its operations and its cash flows for the period from May 13, 2014 (Inception) to December 31, 2014 in accordance with accounting principles generally accepted in the United States of America.

/s/ Grant Thornton LLP

Charlotte, NC
June 17, 2015

F-84

Evergreens JV Holdings, LLC

(A Delaware Limited Liability Company)

Balance Sheet
December 31, 2014

ASSETS:
Real Estate, net	$	30,448,356
Cash		1,424,686
Other Assets		247,847
Capitalized Finance Costs, net		234,464
TOTAL ASSETS	$	32,355,353
LIABILITIES AND MEMBERS’ EQUITY:
LIABILITIES:
Mortgage Payable	$	26,000,000
Accrued Expenses and Other Liabilities		362,093
TOTAL LIABILITIES		26,362,093
MEMBERS’ EQUITY:
Operating Member		899,189
Capital Member		5,094,071
TOTAL MEMBERS’ EQUITY		5,993,260
TOTAL LIABILITIES AND MEMBERS’ EQUITY	$	32,355,353

The accompanying notes are an integral part of these financial statements.

F-85

Evergreens JV Holdings, LLC

(A Delaware Limited Liability Company)

Statement of Operations
For the Period from May 13, 2014 (Inception) to
December 31, 2014

REVENUES:
Rental Revenue	$	1,356,945
Other Income		151,116
TOTAL REVENUES		1,508,061
EXPENSES:
Operating Expenses		553,616
Acquisition Expense		549,447
Real Estate Taxes		139,092
Management Fees		64,872
Interest Expense		555,153
Amortization		1,683,073
Depreciation		1,035,707
TOTAL EXPENSES		4,580,960
Net Loss	$	(3,072,899	)

The accompanying notes are an integral part of these financial statements.

F-86

Evergreens JV Holdings, LLC

(A Delaware Limited Liability Company)

Statement of Changes in Members’ Equity
For the Period from May 13, 2014 (Inception) to
December 31, 2014

	Operating Member			Capital Member			Total Members' Equity
Balance – May 13, 2014 (Inception)	$	—		$	—		$	—
Capital Contributions		1,376,000			7,796,000			9,172,000
Distributions		(15,876	)		(89,965	)		(105,841	)
Net Loss		(460,935	)		(2,611,964	)		(3,072,899	)
Balance - December 31, 2014	$	899,189		$	5,094,071		$	5,993,260

The accompanying notes are an integral part of these financial statements.

F-87

Evergreens JV Holdings, LLC

(A Delaware Limited Liability Company)

Statement of Cash Flows
For the Period from May 13, 2014 (Inception) to
December 31, 2014

Cash Flows from Operating Activities:
Net Loss	$	(3,072,899	)
Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities:
Amortization		1,701,109
Depreciation		1,035,707
Changes in Assets and Liabilities:
Other Assets		68,287
Accrued Expenses and Other Liabilities		140,191
Net Cash Used in Operating Activities		(127,605	)
Cash Flows from Investing Activities:
Purchase of Real Estate		(33,123,464	)
Additions of Real Estate		(117,136	)
Change in Replacement and Renovation Reserves		(20,768	)
Cash Used in Investing Activities		(33,261,368	)
Cash Flows from Financing Activities:
Capital Contributions		9,172,000
Distributions		(105,841	)
Capitalized Finance Costs		(252,500	)
Mortgage Proceeds		26,000,000
Net Cash Provided by Financing Activities		34,813,659
Net Change in Cash		1,424,686
Cash - Beginning of Period		—
Cash - End of Period	$	1,424,686
Supplemental Disclosures
Cash Paid for Interest	$	447,113

The accompanying notes are an integral part of these financial statements.

F-88

Evergreens JV Holdings, LLC

(A Delaware Limited Liability Company)

Notes to Financial Statements
December 31, 2014

Note 1 – Organization and Nature of Business

Evergreens JV Holdings, LLC (the “Company”) is a Delaware limited liability company, which was formed on May 13, 2014. The purpose of the Company is to acquire, develop, construct and/or renovate, improve, maintain, lease and sell multifamily real estate. The Company acquired The Flats @ 55Twelve (formerly known as Evergreens at Mt. Moriah), a 268 unit multifamily apartment complex in Durham, NC on June 30, 2014.

Note 2 – Summary of Significant Accounting Policies

Basis of Presentation

The accompanying financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Accordingly, actual results may differ from those estimates.

Fair Value Measurements

The Company believes that the carrying values of its financial instruments, which includes cash, other assets, accrued expenses, and other liabilities, approximate fair value at December 31, 2014 due to their short term nature. The Company also believes that the carrying value of its mortgage payable approximates fair value at December 31, 2014.

Acquisition of Real Estate

The Company allocates the purchase price of real estate to net tangible and identified intangible assets acquired based on their fair values in accordance with ASC 805, Business Combinations. In making estimates of fair values for purposes of allocating purchase price, the Company utilizes a number of sources, including independent appraisals that may be obtained in connection with the acquisition or financing of the respective real estate, its own analysis of recently-acquired and existing comparable properties and other market data. The Company also considers information obtained about the real estate as a result of its pre-acquisition due diligence, marketing and leasing activities in estimating the fair value of the tangible and intangible assets acquired. The Company considers the value of acquired in-place leases and utilizes an amortization period that is the average remaining term of the acquired leases. In-place residential leases’ average term at acquisition was six months. In addition, the Company is required to expense acquisition-related costs as incurred.

Accordingly, upon acquisition of the real estate, the Company recorded land of $3,800,000, building in the amount of $24,863,915, furniture, fixtures and equipment in the amount of $2,703,012 and in-place lease costs in the amount of $1,683,073. The Company assumed other assets in the amount of $295,366 and liabilities in the amount of $221,902 upon acquisition, whose carrying values approximated fair value due to their short term nature.

Impairment of Long-Lived Assets

The Company periodically evaluates its long-lived assets for indicators of impairment. The judgments regarding the existence of impairment indicators are based on factors such as operational performance, market conditions and legal and environmental concerns, as well as the

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Company’s ability to hold and its intent with regard to each asset. Future events could occur which would cause the Company to conclude that impairment indicators exist and an impairment is warranted. If impairment indicators exist for long-lived assets to be held and used, and the expected future undiscounted cash flows are less than the carrying amount of the asset, then the Company will record an impairment loss for the difference between the fair value of the asset and its carrying amount. If the asset is to be disposed of, then an impairment loss is recognized for the difference between the estimated fair value of the asset, less costs to sell, and its carrying amount.

Depreciation of Real Estate

The Company depreciates the building component of its real estate over a 30-year estimated useful life, building improvements over a 15-year to 30-year estimated useful life and furniture, fixtures and equipment over a 5-year estimated useful life, all of which are judgmental determinations. Betterments and certain costs directly related to the improvement of real estate are capitalized. Expenditures for ordinary maintenance and repairs are expensed to operations as incurred.

Concentration of Risks

The Company’s sole real estate investment is a multifamily apartment complex (“Multifamily Apartments”) located in Durham, NC. Concentrations of market, interest rate and credit risk may exist with respect to the Multifamily Apartments. Market risk represents the potential for losses as a result of changes in the fair value of its Multifamily Apartments. Interest rate risk includes the risk associated with changes in prevailing interest rates. Credit risk includes the possibility that a loss may occur from the failure of counterparties to make payments according to the terms of a contract. The Company’s exposure to risk at any point in time is generally limited to amounts recorded as assets on the accompanying balance sheet.

The Company may also be subject to geographic risk associated with its Multifamily Apartments in Durham, NC.

Revenue Recognition

The Company’s Multifamily Apartments have tenant operating leases with terms that average twelve months. The Company recognizes rental revenue related to these leases, net of any concessions, on a straight-line basis over the term of the lease.

Cash

Cash includes short-term, highly liquid investments with a maturity date at the time of purchase of three months or less. The Company maintains cash balances which, at times during the year, may exceed the amount insured by the Federal Deposit Insurance Corporation. The Company manages the risk of loss by banking with reputable financial institutions.

Other Assets

Other assets include restricted cash balances for reserves required by the senior mortgage lender for items such as property taxes, insurance, replacements and renovations.

Income Taxes

The Company is treated as a partnership for federal income tax purposes. As such, each member is responsible for the tax liability or benefit related to their distributive share of taxable income or loss. Accordingly, no provision for federal income taxes is reflected in the accompanying financial statements. The Company’s tax returns are subject to examination by federal, state and local taxing authorities. Because many types of transactions are susceptible to varying interpretation under federal, state and local income tax laws and regulations, the amounts reported in the accompanying financial statements may be subject to change at a later date upon final determination by the respective taxing authorities.

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The Company determines whether a tax position of the Company is more likely than not to be sustained upon examination by the applicable taxing authority, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The tax benefit to be recognized is measured as the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement which could result in the Company recording a tax liability that would reduce members’ equity. The Company has assessed the tax positions of the Company’s federal, state and local tax returns for all open tax years since inception in 2014 through the effective date, and has concluded that it has no material uncertain tax liabilities to be recognized.

Note 3 – Real Estate

The following is a summary of the Company’s real estate, at cost less accumulated depreciation, as of December 31, 2014:

Land	$	3,800,000
Building		24,940,271
Furniture, fixtures and equipment		2,743,792
Real estate		31,484,063
Accumulated depreciation		(1,035,707	)
Real estate, net	$	30,448,356

For the period from May 13, 2014 (Inception) to December 31, 2014, depreciation of the Company’s real estate amounted to $1,035,707.

Note 4 – Mortgage Payable

On June 30, 2014 the Company obtained a mortgage with a fixed interest rate of 4.02% in the amount of $26,000,000. The mortgage requires monthly interest only payments until August 1, 2016 at which time the payments require principal and interest payments based on a 30-year amortization schedule. The mortgage is secured by the Multifamily Apartments which has a purchase price of $33,050,000. The mortgage has a maturity date of July 1, 2021. For the Period from May 13, 2014 (Inception) to December 31, 2014, the Company incurred interest expense on the mortgage in the amount of $537,117. For the Period from May 13, 2014 (Inception) to December 31, 2014, the Company paid and capitalized $252,500 for finance costs. As of December 31, 2014, the accumulated amortization of the capitalized finance costs was in the amount of $18,036, which is also included in interest expense.

Note 5 – Members’ Equity

The Company’s membership interests are represented by two types of members, Operating and Capital (collectively, the “Members”), as described in the Company’s Limited Liability Company Agreement (the “Agreement”).

Capital Contributions

Pursuant to the Agreement, the Members committed and contributed capital to the Company in the amount of $9,172,000 as of December 31, 2014.

Distributions

In accordance with the Agreement, distributions will be allocated to the Members as follows:

a. First, 100% to each Member in the ratio of their respective membership interest until each Member has received their entire capital contributions and a 10% internal rate of return on their capital contributions

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b. Second, 25% to the Operating Member and 75% to the Members in the ratio of their respective membership interest until the Members have each received a 15% internal rate of return on their capital contributions.

c. Thereafter, 40% to the Operating Member and 60% to the Members in the ratio of their respective membership interest.

Allocation of Net Income / Loss

Net income or net loss for each fiscal year is allocated to the Members in accordance with the Agreement, subject to specific allocations as defined in the Agreement.

Note 6 – Related Party Transactions

For the Period from May 13, 2014 (Inception) to December 31, 2014, the Company paid the Operating Member asset management fees in the amount of $22,932 and other professional fees in the amount of $750. In addition, the Operating Member received acquisition fees in the amount of $439,582 related to the purchase of The Flats @ 55Twelve.

Amounts due to the Operating Member for expense reimbursements totaled $1,440 at December 31, 2014 and are included in accrued expenses and other liabilities on the accompanying balance sheet.

Note 7 – Subsequent Events

The Company has evaluated subsequent events through June 17, 2015, the date which the financial statements were available to be issued, and has determined that there were no subsequent event matters that require recognition or disclosure in the accompanying financial statements.

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Kiawah River View Investors LLC

Report of Independent Certified Public Accountants

To the Members of
Kiawah River View Investors LLC

We have audited the accompanying financial statements of Kiawah River View Investors LLC (a Delaware Limited Liability Company), which comprise the balance sheet as of December 31, 2013, and the related statement of operations, changes in members’ equity, and cash flows for the period from June 28, 2013 (Inception) to December 31, 2013, and the related notes to the financial statements.

Management’s responsibility for the financial statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Kiawah River View Investors LLC as of December 31, 2013, and the results of its operations and its cash flows period from June 28, 2013 (Inception) to December 31, 2013 in accordance with accounting principles generally accepted in the United States of America.

/s/ Grant Thornton LLP

Charlotte, NC
June 17, 2015

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Kiawah River View Investors LLC

(A Delaware Limited Liability Company)

Balance Sheet
December 31, 2013

ASSETS:
Acquisition and Development Costs	$	9,533,177
Cash		1,371,947
Interest Reserve		347,632
Other Assets		30,000
Capitalized Finance Costs, net		166,817
TOTAL ASSETS	$	11,449,573
LIABILITIES AND MEMBERS’ EQUITY:
LIABILITIES:
Mortgage Note Payable	$	6,500,000
Accrued Expenses and Other Liabilities		5,648
TOTAL LIABILITIES		6,505,648
MEMBERS’ EQUITY:
TOTAL MEMBERS’ EQUITY		4,943,925
TOTAL LIABILITIES AND MEMBERS’ EQUITY	$	11,449,573

The accompanying notes are an integral part of these financial statements.

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Kiawah River View Investors LLC

(A Delaware Limited Liability Company)

Statement of Operations
For the Period from June 28, 2013 (Inception) to
December 31, 2013

EXPENSES:
General & Administrative Expenses	$	56,075
TOTAL EXPENSES		56,075
Net Loss	$	(56,075	)

The accompanying notes are an integral part of these financial statements.

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Kiawah River View Investors LLC

(A Delaware Limited Liability Company)

Statement of Changes in Members’ Equity
For the Period from June 28, 2013 (Inception) to
December 31, 2013

	Operating Member			PCP Realty LLC			Capital Member			Total Members' Equity
Balance – June 28, 2013 (Inception)	$	—		$	—		$	—		$	—
Capital Contributions		1,800,000			700,000			2,500,000			5,000,000
Net Loss		(20,187	)		(7,851	)		(28,037	)		(56,075	)
Balance - December 31, 2013	$	1,779,813		$	692,149		$	2,471,963		$	4,943,925

The accompanying notes are an integral part of these financial statements.

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Kiawah River View Investors LLC

(A Delaware Limited Liability Company)

Statement of Cash Flows

For the Period from June 28, 2013 (Inception) to
December 31, 2013

Cash Flows from Operating Activities:
Net Loss	$	(56,075	)
Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities:
Amortization		14,725
Changes in Assets and Liabilities:
Other Assets		(30,000	)
Accrued Expenses and Other Liabilities		5,648
Net Cash Used in Operating Activities		(65,702	)
Cash Flows from Investing Activity:
Acquisition and Development Costs		(9,533,177	)
Cash Used in Investing Activity		(9,533,177	)
Cash Flows from Financing Activities:
Capital Contributions		5,000,000
Mortgage Proceeds		6,500,000
Interest Reserve		(347,632	)
Capitalized Finance Costs		(181,542	)
Net Cash Provided by Financing Activities		10,970,826
Net Change in Cash		1,371,947
Cash - Beginning of Period		—
Cash - End of Period	$	1,371,947
Supplemental Disclosures
Cash Paid for Interest	$	237,368

The accompanying notes are an integral part of these financial statements.

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Kiawah River View Investors LLC

(A Delaware Limited Liability Company)

Notes to Financial Statements
December 31, 2013

Note 1 – Organization and Nature of Business

Kiawah River View Investors LLC (the “Company”) is a Delaware limited liability company, which was formed on June 28, 2013. The purpose of the Company is to acquire, develop, construct and/or renovate, improve, maintain, lease and sell real property. On August 7, 2013, the Company acquired approximately nine buildable acres of land that is entitled for 47 residential units in Kiawah Island, SC (the “Property”) for $8,750,000.

Note 2 – Summary of Significant Accounting Policies

Basis of Presentation

The accompanying financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Accordingly, actual results may differ from those estimates.

Fair Value Measurements

The Company believes that the carrying values of its financial instruments, which includes cash, other assets, accrued expenses and other liabilities, approximate fair value at December 31, 2013 due to their short term nature. The Company also believes that the carrying value of its mortgage note payable approximates fair value at December 31, 2013.

Acquisition & Development Costs

The Company’s expenditures which directly relate to the acquisition, development, construction and improvement of the Property are capitalized, at cost. During the development period, which culminates once the Property is substantially complete and ready for intended use, operating and carrying costs such as interest expense, real estate taxes, insurance and other direct costs are capitalized. Advertising and general administrative costs that do not relate to the development of the Property are expensed as incurred.

Impairment of Long-Lived Assets

The Company periodically evaluates its long-lived assets for indicators of impairment. The judgments regarding the existence of impairment indicators are based on factors such as operational performance, market conditions and legal and environmental concerns, as well as the Company’s ability to hold and its intent with regard to each asset. Future events could occur which would cause the Company to conclude that impairment indicators exist and an impairment is warranted. If impairment indicators exist for long-lived assets to be held and used, and the expected future undiscounted cash flows are less than the carrying amount of the asset, then the Company will record an impairment loss for the difference between the fair value of the asset and its carrying amount. If the asset is to be disposed of, then an impairment loss is recognized for the difference between the estimated fair value of the asset, less costs to sell, and its carrying amount.

Concentration of Risks

The Company’s sole real estate investment is the Property. Concentrations of market, interest rate and credit risk may exist with respect to the Property. Market risk represents the potential for losses as a result of changes in the fair value of the Property. Interest rate risk includes the risk

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associated with changes in prevailing interest rates. Credit risk includes the possibility that a loss may occur from the failure of counterparties to make payments according to the terms of a contract. The Company’s exposure to risk at any point in time is generally limited to amounts recorded as assets on the accompanying balance sheet.

The Company may also be subject to geographic risk associated with the Property in Kiawah Island, SC.

Cash

Cash includes short-term, highly liquid investments with a maturity date at the time of purchase of three months or less. The Company maintains cash balances which, at times during the year, may exceed the amount insured by the Federal Deposit Insurance Corporation. The Company manages the risk of loss by banking with reputable financial institutions.

Income Taxes

The Company is treated as a partnership for federal income tax purposes. As such, each member is responsible for the tax liability or benefit related to their distributive share of taxable income or loss. Accordingly, no provision for federal income taxes is reflected in the accompanying financial statements. The Company’s tax returns are subject to examination by federal, state and local taxing authorities. Because many types of transactions are susceptible to varying interpretation under federal, state and local income tax laws and regulations, the amounts reported in the accompanying financial statements may be subject to change at a later date upon final determination by the respective taxing authorities.

The Company determines whether a tax position of the Company is more likely than not to be sustained upon examination by the applicable taxing authority, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The tax benefit to be recognized is measured as the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement which could result in the Company recording a tax liability that would reduce members’ equity. The Company has assessed the tax positions of the Company’s federal, state and local tax returns for all open tax years since inception in 2013 through the effective date, and has concluded that it has no material uncertain tax liabilities to be recognized.

Note 3 – Mortgage Note Payable

On August 7, 2013, the Company obtained a construction mortgage with a fixed interest rate of 12.50% in the amount of $9,500,000 from an affiliate of the Capital Member. The mortgage requires quarterly interest only payments at a pay rate of 9% until maturity, which is September 1, 2020. The mortgage is secured by the property. As of December 31, 2013, the lender has disbursed $6,500,000 of the mortgage proceeds to the Company. For the Period from June 28, 2013 (Inception) to December 31, 2013, the Company paid and capitalized $181,542 for finance costs. For the Period from June 28, 2013 (Inception) to December 31, 2013, the Company capitalized interest expense on the mortgage in the amount of $237,368. As of December 31, 2013, the accumulated amortization of the capitalized finance costs was in the amount of $14,725, which is also capitalized.

Note 4 – Members’ Equity

The Company’s membership interests are represented by three types of members, Operating, PCP Realty LLC and Capital (collectively, the “Members”), as described in the Company’s Limited Liability Company Agreement (the “Agreement”).

Capital Contributions

Pursuant to the Agreement, the Members committed and contributed capital to the Company in the amount of $5,000,000 as of December 31, 2013.

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Distributions

In accordance with the Agreement, distributions will be allocated to the Members as follows:

a. First, 100% to each Member in the ratio of their respective membership interest until each Member has received their entire capital contributions and a 12.5% internal rate of return on their capital contributions.

b. Second, 25% to the Operating Member and 75% to the Members in the ratio of their respective membership interest until the Members have each received a 20% internal rate of return on their capital contributions.

c. Thereafter, 40% to the Operating Member and 60% to the Members in the ratio of their respective membership interest.

Allocation of Net Income / Loss

Net income or net loss for each fiscal year is allocated to the Members in accordance with the Agreement, subject to specific allocations as defined in the Agreement.

Note 5 – Related Party Transactions

For the Period from June 28, 2013 (Inception) to December 31, 2013, the Company paid the Operating Member asset management fees in the amount of $25,000, which have been capitalized in acquisition and development costs on the accompanying balance sheet.

Amounts due from the Operating Member were $30,000 at December 31, 2013 and are included in other assets on the accompanying balance sheet.

An affiliate of the Capital Member issued a mortgage note payable to the Company. See Note 3 for further detail.

Note 6 – Subsequent Events

The Company has evaluated subsequent events, through June 17, 2015, the date which the financial statements were available to be issued, and has determined that except for the disclosures below, there were no subsequent event matters that require recognition or disclosure in the accompanying financial statements.

Effective June 30, 2014, the Capital Member transferred their ownership interest in the Company to an affiliated entity.

In September 2014, the Company received an additional $1,141,832 disbursement on the construction mortgage. In January 2015, the Company entered into an agreement with the construction mortgage lender to defer quarterly interest payments due on January 1, 2015 and April 1, 2015 until July 1, 2015. This agreement also increased the fixed interest rate to 13.50%. In April 2015, the Company received an additional $444,000 disbursement on the construction mortgage.

F-100

WR Savannah Holdings, LLC

Report of Independent Certified Public Accountants

To the Members of
WR Savannah Holdings, LLC

We have audited the accompanying financial statements of WR Savannah Holdings, LLC (a Delaware Limited Liability Company), which comprise the balance sheet as of December 31, 2014, and the related statement of operations, changes in members’ equity, and cash flows for the period from October 3, 2014 (Inception) to December 31, 2014, and the related notes to the financial statements.

Management’s responsibility for the financial statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of WR Savannah Holdings, LLC as of December 31, 2014, and the results of its operations and its cash flows for the period from October 3, 2014 (Inception) to December 31, 2014, in accordance with accounting principles generally accepted in the United States of America.

/s/ Grant Thornton LLP

Charlotte, NC
June 17, 2015

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WR Savannah Holdings, LLC

(A Delaware Limited Liability Company)

Balance Sheet
December 31, 2014

ASSETS:
Real Estate, net	$	42,958,771
Cash		1,089,885
Reserve Fund		4,697,000
In-Place Lease Costs, net		1,431,409
Capitalized Finance Costs, net		387,910
Other Assets		155,668
TOTAL ASSETS	$	50,720,643
LIABILITIES AND MEMBERS’ EQUITY:
LIABILITIES:
Mortgages Payable	$	33,937,000
Accrued Expenses and Other Liabilities		319,958
TOTAL LIABILITIES	$	34,256,958
MEMBERS’ EQUITY:
Operating Member		1,646,368
Capital Member		14,817,317
TOTAL MEMBERS’ EQUITY	$	16,463,685
TOTAL LIABILITIES AND MEMBERS’ EQUITY	$	50,720,643

The accompanying notes are an integral part of these financial statements.

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WR Savannah Holdings, LLC

(A Delaware Limited Liability Company)

Statement of Operations
For the Period from October 3, 2014 (Inception) to
December 31, 2014

REVENUES:
Rental Revenue	$	400,059
Other Income		21,440
TOTAL REVENUES		421,499
EXPENSES:
Operating Expense		109,928
Acquisition Expense		618,888
Real Estate Taxes		43,831
Management Fees		17,909
Interest Expense		173,935
Amortization		477,137
Depreciation		220,602
TOTAL EXPENSES		1,662,230
Net Loss	$	(1,240,731	)

The accompanying notes are an integral part of these financial statements.

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WR Savannah Holdings, LLC

(A Delaware Limited Liability Company)

Statement of Changes in Members’ Equity
For the Period from October 3, 2014 (Inception) to
December 31, 2014

	Operating Member			Capital Member			Total Members' Equity
Balance – October 3, 2014 (Inception)	$	—		$	—		$	—
Capital Contributions		1,770,441			15,933,975			17,704,416
Net Loss		(124,073	)		(1,116,658	)		(1,240,731	)
Balance - December 31, 2014	$	1,646,368		$	14,817,317		$	16,463,685

The accompanying notes are an integral part of these financial statements.

F-104

WR Savannah Holdings, LLC

(A Delaware Limited Liability Company)

Statement of Cash Flows
For the Period from October 3, 2014 (Inception) to
December 31, 2014

Cash Flows from Operating Activities:
Net Loss	$	(1,240,731	)
Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities:
Amortization		481,811
Depreciation		220,602
Changes in Assets and Liabilities:
Other Assets		19,549
Accrued Expenses and Other Liabilities		6,502
Net Cash Used in Operating Activities		(512,267	)
Cash Flows from Investing Activities:
Purchase of Real Estate		(44,849,761	)
Additions of Real Estate		(99,919	)
Cash Used in Investing Activities		(44,949,680	)
Cash Flows from Financing Activities:
Capital Contributions		17,704,416
Capitalized Finance Costs		(392,584	)
Mortgage Proceeds		33,937,000
Reserve Fund		(4,697,000	)
Net Cash Provided by Financing Activities		46,551,832
Net Change in Cash		1,089,885
Cash - Beginning of Period		—
Cash - End of Period	$	1,089,885
Supplemental Disclosures
Cash Paid for Interest	$	52,659

The accompanying notes are an integral part of these financial statements.

F-105

WR Savannah Holdings, LLC

(A Delaware Limited Liability Company)

Notes to Financial Statements
December 31, 2014

Note 1 – Organization and Nature of Business

WR Savannah Holdings, LLC (the “Company”) is a Delaware limited liability company, which was formed on October 3, 2014. The purpose of the Company is to acquire, develop, construct and/or renovate, improve, maintain, lease and sell multifamily real estate. The Company acquired Two Addison Place, a 325 unit multifamily apartment complex in Pooler, GA on November 17, 2014.

Note 2 – Summary of Significant Accounting Policies

Basis of Presentation

The accompanying financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Accordingly, actual results may differ from those estimates.

Fair Value Measurements

The Company believes that the carrying values of its financial instruments, which includes cash, other assets, accrued expenses, and other liabilities, approximate fair value December 31, 2014 due to their short term nature. The Company also believes that the carrying value of its mortgage payable approximates fair value at December 31, 2014.

Acquisition of Real Estate

The Company allocates the purchase price of real estate to net tangible and identified intangible assets acquired based on their fair values in accordance with ASC 805, Business Combinations. In making estimates of fair values for purposes of allocating purchase price, the Company utilizes a number of sources, including independent appraisals that may be obtained in connection with the acquisition or financing of the respective real estate, its own analysis of recently-acquired and existing comparable properties and other market data. The Company also considers information obtained about the real estate as a result of its pre-acquisition due diligence, marketing and leasing activities in estimating the fair value of the tangible and intangible assets acquired. The Company considers the value of acquired in-place leases and utilizes an amortization period that is the average remaining term of the acquired leases. In-place residential leases’ average term at acquisition was six months. In addition, the Company is required to expense acquisition-related costs as incurred.

Accordingly, upon acquisition of the real estate, the Company recorded land of $1,836,245, building in the amount of $38,908,465, furniture, fixtures and equipment in the amount of $2,334,744 and in-place lease costs in the amount of $1,908,546. The Company assumed other assets in the amount of $175,217 and other liabilities in the amount of $313,456 upon acquisition, whose carrying values approximated fair value due to their short term nature.

Impairment of Long-Lived Assets

The Company periodically evaluates its long-lived assets for indicators of impairment. The judgments regarding the existence of impairment indicators are based on factors such as operational performance, market conditions and legal and environmental concerns, as well as the

F-106

Company’s ability to hold and its intent with regard to each asset. Future events could occur which would cause the Company to conclude that impairment indicators exist and an impairment is warranted. If impairment indicators exist for long-lived assets to be held and used, and the expected future undiscounted cash flows are less than the carrying amount of the asset, then the Company will record an impairment loss for the difference between the fair value of the asset and its carrying amount. If the asset is to be disposed of, then an impairment loss is recognized for the difference between the estimated fair value of the asset, less costs to sell, and its carrying amount.

Depreciation of Real Estate

The Company depreciates the building component of its real estate over a 30-year estimated useful life, building improvements over a 15-year to 30-year estimated useful life and furniture, fixtures and equipment over a 5-year estimated useful life, all of which are judgmental determinations. Betterments and certain costs directly related to the improvement of real estate are capitalized. Expenditures for ordinary maintenance and repairs are expensed to operations as incurred.

Concentration of Risks

The Company’s sole real estate investment is a multifamily apartment complex (“Multifamily Apartments”) located in Pooler, GA. Concentrations of market, interest rate and credit risk may exist with respect to the Multifamily Apartments. Market risk represents the potential for losses as a result of changes in the fair value of its Multifamily Apartments. Interest rate risk includes the risk associated with changes in prevailing interest rates. Credit risk includes the possibility that a loss may occur from the failure of counterparties to make payments according to the terms of a contract. The Company’s exposure to risk at any point in time is generally limited to amounts recorded as assets on the accompanying balance sheet.

The Company may also be subject to geographic risk associated with its Multifamily Apartments in Pooler, GA.

Revenue Recognition

The Company’s Multifamily Apartments have tenant operating leases with terms that average twelve months. The Company recognizes rental revenue related to these leases, net of any concessions, on a straight-line basis over the term of the lease.

Cash

Cash includes short-term, highly liquid investments with a maturity date at the time of purchase of three months or less. The Company maintains cash balances which, at times during the year, may exceed the amount insured by the Federal Deposit Insurance Corporation. The Company manages the risk of loss by banking with reputable financial institutions.

Other Assets

Other assets include restricted cash balances for reserves required by the senior mortgage lender for items such as property taxes, insurance and repairs.

Income Taxes

The Company is treated as a partnership for federal income tax purposes. As such, each member is responsible for the tax liability or benefit related to their distributive share of taxable income or loss. Accordingly, no provision for federal income taxes is reflected in the accompanying financial statements. The Company’s tax returns are subject to examination by federal, state and local taxing authorities. Because many types of transactions are susceptible to varying interpretation under federal, state and local income tax laws and regulations, the amounts reported in the accompanying financial statements may be subject to change at a later date upon final determination by the respective taxing authorities.

F-107

The Company determines whether a tax position of the Company is more likely than not to be sustained upon examination by the applicable taxing authority, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The tax benefit to be recognized is measured as the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement which could result in the Company recording a tax liability that would reduce members’ equity. The Company has assessed the tax positions of the Company’s federal, state and local tax returns for all open tax years since inception in 2014 through the effective date, and has concluded that it has no material uncertain tax liabilities to be recognized.

Note 3 – Real Estate

The following is a summary of the Company’s real estate, at cost less accumulated depreciation, as of December 31, 2014:

Land	$	1,836,245
Building		39,007,443
Furniture, fixtures and equipment		2,335,685
Real estate		43,179,373
Accumulated depreciation		(220,602	)
Real estate, net	$	42,958,771

For the period from October 3, 2014 (Inception) to December 31, 2014, depreciation of the Company’s real estate amounted to $220,602.

Note 4 – Mortgage Payable

On November 17, 2014 the Company obtained a mortgage with a fixed interest rate of 3.99% in the amount of $33,937,000. The mortgage requires monthly interest only payments until January 1, 2019 at which time the payments require principal and interest payments based on a 30-year amortization schedule. The mortgage is secured by the Multifamily Apartments which has a purchase price of $44,988,000. The mortgage has a maturity date of December 1, 2021. For the Period from October 3, 2014 (Inception) to December 31, 2014, the Company incurred interest expense on the mortgage in the amount of $169,261. For the Period from October 3, 2014 (Inception) to December 31, 2014 the Company paid and capitalized $392,584 for finance costs. As of December 31, 2014, the accumulated amortization of the capitalized finance costs was in the amount of $4,674, which is also included in interest expense.

Pursuant to the mortgage agreement, the Company is required to have a Stabilization Reserve Fund (the “Reserve Fund”). The Reserve Fund may be released by the lender if the mortgage is paid in full or if either the stabilization has occurred prior to the required stabilization date or the stabilization prepayment has been made together with the stabilization prepayment premium, as defined in the mortgage agreement.

Note 5 – Members’ Equity

The Company’s membership interests are represented by two types of members, Operating and Capital (collectively, the “Members”), as described in the Company’s Limited Liability Company Agreement (the “Agreement”).

Capital Contributions

Pursuant to the Agreement, the Members committed and contributed capital to the Company in the amount of $17,704,416 as of December 31, 2014.

F-108

Distributions

In accordance with the Agreement, distributions will be allocated to the Members as follows:

a. First, 100% to each Member in the ratio of their respective membership interest until each Member has received their entire capital contributions and a 10% internal rate of return on their capital contributions.

b. Second, 20% to the Operating Member and 80% to the Members in the ratio of their respective membership interest until the Members have each received a 15% internal rate of return on their capital contributions.

c. Thereafter, 30% to the Operating Member and 70% to the Members in the ratio of their respective membership interest.

Allocation of Net Income / Loss

Net income or net loss for each fiscal year is allocated to the Members in accordance with the Agreement, subject to specific allocations as defined in the Agreement.

Note 6 – Related Party Transactions

For the Period from October 3, 2014 (Inception) to period ended December 31, 2014, the Company paid the Operating Member asset management fees in the amount of $4,477. In addition, the Operating Member received acquisition fees in the amount of $455,124 related to the purchase of Two Addison Place.

Note 7 – Subsequent Events

The Company has evaluated subsequent events through June 17, 2015, the date which the financial statements were available to be issued, and has determined that there were no subsequent event matters that require recognition or disclosure in the accompanying financial statements.

F-109

3,800,000 Shares

 

RiverBanc Multifamily Investors, Inc.

Common Stock

PROSPECTUS

           , 2015

Baird Keefe, Bruyette & Woods
A Stifel Company SunTrust Robinson Humphrey

Nomura Oppenheimer & Co.

J.J.B. Hilliard, W.L. Lyons, LLC

Until           , 2015 (25 days after the date of this prospectus), all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 31.   Other Expenses of Issuance and Distribution.

The following table shows the fees and expenses, other than underwriting discounts, to be paid by us in connection with the sale and distribution of the securities being registered hereby. All amounts except the SEC registration fee and the FINRA fee are estimated.

SEC Registration Fee	$	10,156
Nasdaq Listing Fee		75,000
FINRA Filing Fee		13,610
Printing and Engraving Expenses		100,000
Legal Fees and Expenses		832,000
Accounting Fees and Expenses		400,000
Transfer Agent and Registrar Fees		5,000
Miscellaneous Expenses		61,750
Total	$	1,497,516

Item 32.   Sales to Special Parties.

On May 29, 2015, we issued 100 shares of our common stock to Kevin M. Donlon, our Chairman and Chief Executive Officer, in connection with the initial capitalization of our company for an aggregate purchase price of $1,000. The issuance of such shares was effected in reliance upon an exemption from registration provided by Section 4(a)(2) of the Securities Act and Regulation D thereunder. We will repurchase these shares for $1,000 immediately prior to the closing of this offering.

Item 33.   Recent Sales of Unregistered Securities.

On May 29, 2015, we issued 100 shares of our common stock to Kevin M. Donlon, our President and Chief Executive Officer, in connection with the initial capitalization of our company for an aggregate purchase price of $1,000. The issuance of such shares was effected in reliance upon an exemption from registration provided by Section 4(a)(2) of the Securities Act and Regulation D thereunder. We will repurchase these shares for $1,000 immediately prior to the closing of this offering.

In connection with our formation transactions, we will issue an aggregate of 2,800,000 shares of our common stock with an aggregate value of $54.6 million, based on the midpoint of the range of the public offering price set forth on the front cover of the prospectus that forms a part of this registration statement, to our Contributing Investors who own interests in the investments comprising our initial portfolio as consideration in our formation transactions. All such persons had a substantive, pre-existing relationship with us and made irrevocable elections to receive such securities in our formation transactions prior to the filing of this registration statement with the SEC and were not solicited by means of this registration statement. Prior to the filing of this registration statement, each such person consented to the contribution of their interests in our Predecessor to our subsidiaries or us. All of such persons are “accredited investors” as defined under Regulation D of the Securities Act. The issuance of such shares of our common stock will be effected in reliance upon exemptions from registration provided by Section 4(a)(2) of the Securities Act and Regulation D of the Securities Act.

Item 34.   Indemnification of Directors and Officers.

Maryland law permits a Maryland corporation to include in its charter a provision limiting the liability of its directors and officers to the corporation and its stockholders for money damages except for liability resulting from actual receipt of an improper benefit in money, property or services or active and deliberate dishonesty that is established by a final judgment and is material to the cause of action. Our charter contains such a provision that eliminates such liability to the maximum extent permitted by Maryland law.

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In addition, our charter authorizes us to obligate ourselves, and our bylaws obligate us to the maximum extent permitted by Maryland law in effect from time to time, to indemnify any present or former director or officer or any individual who, while a director or officer of our company and at the request of our company, serves or has served another corporation, real estate investment trust, partnership, limited liability company, joint venture, trust, employee benefit plan or other enterprise as a director, officer, trustee, partner, member or manager and who is made, or threatened to be made, a party to the proceeding by reason of his or her service in that capacity, from and against any claim or liability to which that individual may become subject or which that individual may incur by reason of his or her service in any such capacity and, without requiring a preliminary determination of the ultimate entitlement to indemnification, to pay or reimburse his or her reasonable expenses in advance of final disposition of a proceeding. Our charter and bylaws also permit our company to indemnify and advance expenses to any individual who served a predecessor of our company in any of the capacities described above and any employee or agent of our company or a predecessor of our company.

Maryland law requires us (unless our charter were to provide otherwise which our charter does not) to indemnify a director or officer who has been successful, on the merits or otherwise, in the defense of any proceeding to which he or she is made or threatened to be made a party by reason of his or her service in that capacity. Maryland law permits us to indemnify our present and former directors and officers, among others, against judgments, penalties, fines, settlements and reasonable expenses actually incurred by them in connection with any proceeding to which they may be made or threatened to be made a party by reason of their service in those or other capacities unless it is established that (a) the act or omission of the director or officer was material to the matter giving rise to the proceeding and (i) was committed in bad faith or (ii) was the result of active and deliberate dishonesty, (b) the director or officer actually received an improper personal benefit in money, property or services; or (c) in the case of any criminal proceeding, the director or officer had reasonable cause to believe that the act or omission was unlawful.

However, under Maryland law, we may not indemnify a director or officer who has been adjudged liable in a proceeding brought by or on behalf of us or in which the director or officer was adjudged liable on the basis that personal benefit was improperly received. A court may order indemnification if it determines that the director or officer is fairly and reasonably entitled to indemnification, even though the director or officer did not meet the prescribed standard of conduct or was adjudged liable on the basis that personal benefit was improperly received. However, indemnification for an adverse judgment in a suit by or on behalf of us, or for a judgment of liability on the basis that personal benefit was improperly received, is limited to expenses.

In addition, Maryland law permits us to advance reasonable expenses to a director or officer upon our receipt of (a) a written affirmation by the director or officer of his or her good faith belief that he or she has met the standard of conduct necessary for indemnification and (b) a written undertaking by the director or officer or on his or her behalf to repay the amount paid or reimbursed if it is ultimately determined that he or she did not meet the standard of conduct.

We also intend to enter into indemnification agreements with our directors and our executive officers providing for procedures for indemnification by us to the fullest extent permitted by Maryland law and advancement by us of expenses and costs relating to certain claims, suits or proceedings arising from their service to us.

We will obtain an insurance policy under which our directors and executive officers will be insured, subject to the limits of the policy, against certain losses arising from claims made against such directors and officers by reason of any acts or omissions covered under such policy in their respective capacities as directors or officers, including certain liabilities under the Securities Act of 1933, as amended.

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Insofar as the foregoing provisions permit indemnification of directors, officers or persons controlling us for liability arising under the Securities Act of 1933, as amended, we have been informed that in the opinion of the Securities and Exchange Commission, this indemnification is against public policy as expressed in the Securities Act of 1933, as amended, and is therefore unenforceable.

Item 35.   Treatment of Proceeds From Stock Being Registered.

None.

Item 36.   Financial Statements and Exhibits.

(a) Financial Statements.   See page F-1 of the prospectus that forms a part of this Registration Statement for an index to the financial statements included in the prospectus.

(b) Exhibits.   The list of exhibits filed with or incorporated by reference in this Registration Statement is set forth in the Exhibit Index following the signature page herein.

Item 37.   Undertakings.

(a) The undersigned registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreement, certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.

(b) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers or controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

(c) The undersigned registrant hereby further undertakes that:

1) For purposes of determining any liability under the Securities Act of 1933 the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or Rule 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.

2) For the purpose of determining any liability under the Securities Act of 1933 each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered herein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

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SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-11 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Charlotte, State of North Carolina on the 22nd day of July, 2015.

RIVERBANC MULTIFAMILY INVESTORS, INC.
By:	/s/ Kevin M. Donlon
	Kevin M. Donlon Chief Executive Officer

KNOW ALL MEN BY THESE PRESENTS, each person whose signature appears below hereby constitutes and appoints Kevin M. Donlon, Douglas E. Neal, Stephen L. Hogue, Emily A. Stiller and Steven B. Brannan his or her true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments and post-effective amendments to this Registration Statement and any registration statement filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and to file the same with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or his or her substitute, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

Name	Capacity	Date
/s/ Kevin M. Donlon	Chairman of the Board and Chief Executive Officer (principal executive officer)	July 22, 2015
Kevin M. Donlon
/s/ Emily A. Stiller	Chief Financial Officer and Treasurer (principal financial officer and principal accounting officer)	July 22, 2015
Emily A. Stiller
/s/ Steven R. Mumma	Director	July 22, 2015
Steven R. Mumma

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EXHIBIT INDEX

The following exhibits are included in this registration statement on Form S-11 (and are numbered in accordance with Item 601 of Regulation S-K).

Exhibit Number	Description
1.1	Form of Underwriting Agreement.
3.1	Form of Articles of Amendment and Restatement.**
3.2	Form of Amended and Restated Bylaws.**
4.1	Form of common stock certificate.**
5.1	Opinion of Venable LLP.
8.1	Opinion of Hunton & Williams LLP.
10.1	Form of Second Amended and Restated Limited Liability Company Agreement of RB Multifamily Investors LLC (superseded by Exhibit 10.13).**
10.2	Form of First Amended and Restated Agreement of Limited Partnership of RiverBanc Multifamily LP.**
10.3	Form of Management Agreement by and among RiverBanc Multifamily Investors, Inc., RiverBanc Multifamily LP, RB Multifamily Investors LLC and RiverBanc LLC.
10.4†	RiverBanc Multifamily Investors, Inc. 2015 Equity Incentive Plan.
10.5	Form of Indemnification Agreement between RiverBanc Multifamily Investors, Inc. and each of its directors and officers.**
10.6	Form of Registration Rights Agreement.**
10.7†	Form of LTIP Unit Award Agreement.**
10.8	Contribution Agreement, dated as of July 22, 2015, by and among Donlon Family LLC, New York Mortgage Trust, Inc., JMP Holding LLC, RiverBanc Multifamily LP and RiverBanc Multifamily Investors, Inc.
10.9	Contribution Agreement, dated as of July 22, 2015, by and among RB Commercial Mortgage LLC, New York Mortgage Trust, Inc., RiverBanc Multifamily LP and RiverBanc Multifamily Investors, Inc.
10.10	Contribution Agreement, dated as of July 22, 2015, by and among RB Commercial Mortgage LLC, New York Mortgage Trust, Inc., RiverBanc Multifamily LP and RiverBanc Multifamily Investors, Inc.
10.11	Form of Stockholder Agreement between RiverBanc Multifamily Investors, Inc. and New York Mortgage Trust, Inc.
10.12	Waiver Letter, dated as of June 30, 2015, by and among New York Mortgage Trust, Inc., RB Commercial Mortgage LLC, RiverBanc LLC, and RiverBanc Multifamily Investors, Inc.
10.13	Form of Second Amended and Restated Limited Liability Company Agreement of RB Multifamily Investors LLC.
21.1	List of Subsidiaries.**
23.1	Consent of Venable LLP (included in Exhibit 5.1).
23.2	Consent of Hunton & Williams LLP (included in Exhibit 8.1).
23.3	Consent of HLB Gross Collins, P.C.
23.4	Consent of Grant Thornton LLP.
23.5	Consent of Grant Thornton LLP.
24.1	Power of Attorney (included in the signature page to this registration statement).
99.1	Consent of Steven R. Mumma to be named as a director nominee.**
99.2	Consent of Katherine R. Briggs to be named as an independent director nominee.
99.3	Consent of Robert W. Simmons to be named as an independent director nominee.
99.4	Consent of C. Reynolds Thompson III to be named as an independent director nominee.

** Previously filed.

† Management contract or compensatory plan or arrangement.