PART II AND III 2 tv509912_partiiandiii.htm PART II AND III

As submitted to the Securities and Exchange Commission on December 27, 2018

PART II – INFORMATION REQUIRED IN OFFERING CIRCULAR

Preliminary Offering Circular dated , 2019

An offering statement pursuant to Regulation A relating to these securities has been filed with the Securities and Exchange Commission. Information contained in this Preliminary Offering Circular is subject to completion or amendment. These securities may not be sold nor may offers to buy be accepted before the offering statement filed with the Commission is qualified. This Preliminary Offering Circular shall not constitute an offer to sell or the solicitation of an offer to buy nor may there be any sales of these securities in any state in which such offer, solicitation or sale would be unlawful before registration or qualification under the laws of any such state. We may elect to satisfy our obligation to deliver a Final Offering Circular by sending you a notice within two business days after the completion of our sale to you that contains the URL where the Final Offering Circular or the offering statement in which such Final Offering Circular was filed may be obtained.

OFFERING CIRCULAR

HAPPYNEST REIT, INC.

Sponsored by

Vitellus, LLC

Up to 5,000,000 Shares of Common Stock

Maximum Offering: $50,000,000

Minimum Offering: $300,000

HappyNest REIT, Inc. is offering up to 4,500,000 shares of common stock, par value $0.0001 per share (“common stock”), in this primary offering and up to 500,000 shares of common stock pursuant to our dividend reinvestment plan, in each case for an initial offering price of $10.00 per share, in accordance with Regulation A promulgated under the Securities Act of 1933, as amended (the “Securities Act”). We intend to distribute our shares principally through an online platform (the “HappyNest Platform”), owned by our Sponsor and licensed to us. Investors may access the HappyNest Platform using our mobile phone application or by visiting our website, www.myhappynest.com.

Our initial closing is contingent upon the sale of at least 30,000 shares of common stock in our primary offering at an offering price of $10.00 per share (the “minimum offering”). In addition, our Sponsor has committed to purchase an aggregate of 20,000 shares of common stock (including 100 shares of common stock already owned by our Sponsor), at $10.00 per share, for an aggregate purchase price of $200,000. Pursuant to such commitment, our Sponsor will purchase an additional 19,900 shares of our common stock at or prior to such time as we raise the minimum offering. We expect that the combined net proceeds from the satisfaction of the minimum offering and the private placement with our Sponsor will permit us to begin operations. We intend to reimburse our Sponsor, Advisor or their affiliates, as applicable, for all organization and offering expenses paid by them on our behalf, using up to 3.0% of the aggregate gross proceeds of this offering, once the minimum offering amount has been raised.

Until March 31, 2019, our common stock will be offered at a fixed price of $10.00 per share, an amount that was arbitrarily determined by our Sponsor. Beginning on March 31, 2019, the per share purchase price will be determined based on net asset value (“NAV”), and will equal the quotient of our NAV, divided by the number of our shares of common stock outstanding as of the end of the most recently completed semi-annual period (our “NAV per share”). The per share purchase price will be adjusted semi-annually, on September 30 and March 31 of each year. Although we do not intend to list our shares of common stock for trading on a stock exchange or other trading market, we have adopted a share repurchase program designed to provide our shareholders with limited liquidity, after a six-month holding period, for their investment in our shares. See “Share Repurchase Program” in this offering circular.

We intend to sell shares of our common stock directly to investors through the HappyNest Platform and not through registered broker-dealers and investment advisors who are typically paid commissions and fees for providing this service. Investors may purchase one or more shares. We intend to elect to qualify and be taxed as a real estate investment trust (“REIT”) for U.S. federal income tax purposes commencing with the taxable year ending December 31, 2018. To assist us in qualifying as a REIT, among other purposes, our charter contains certain restrictions relating to the ownership and transfer of our common stock. See “Description of Our Capital Stock — Restriction on Ownership of Shares” in this offering circular. This offering will terminate two years from commencement unless it is terminated by our Advisor at an earlier time.

There is currently no public trading market for our common stock. We do not intend to apply to have our common stock approved for trading on any public trading market upon the completion of this offering.

The offering will commence on the date of this offering circular. The proceeds of this offering will not be placed into an escrow account. We will not accept subscription payments associated with subscription agreements until we have sold the minimum offering. At the time the minimum threshold is met, we will accept subscription payments, shares of our common stock will be issued, and investors will become shareholders. If we do not meet the minimum threshold within 12 months after commencing this offering, we will cancel the offering and release all investors from their commitments.

Generally, no sale may be made to you in this offering if the aggregate purchase price you pay is more than 10% of the greater of your annual income or net worth. Different rules apply to accredited investors and non-natural persons. Before making any representation that your investment does not exceed applicable thresholds, we encourage you to review Rule 251(d)(2)(i)(C) of Regulation A. For general information on investing, we encourage you to refer to www.investor.gov.

Investing in our common stock is speculative and involves substantial risks. You should purchase these securities only if you can afford a complete loss of your investment. See “Risk Factors” beginning on page 25 to read about the more significant risks you should consider before buying shares of our common stock. These risks include the following:

We have no prior operating history, and as of the date of this offering, our total assets are $1,000 in cash.

Because this is a “blind pool” offering, you will not have the opportunity to evaluate our investments before we make them, which makes your investment more speculative.

This is a “best efforts” offering and we may be unable to raise the amount of funds in this offering to invest in a diversified portfolio of real estate and real estate-related investments in accordance with our investment strategy. We intend to commence operations after we sell 30,000 shares of common stock, at $10.00 per share, in this offering and complete the private placement with our Sponsor, pursuant to the terms of which our Sponsor has agreed to purchase an additional 19,900 shares of our common stock, at $10.00 per share, for an aggregate purchase price of $200,000, at or prior to such time as we raise the minimum offering.

Our Sponsor and its affiliates have not sponsored prior real estate investment programs that otherwise would be required to be disclosed under applicable rules and regulations of the SEC. Accordingly, this offering circular does not contain any information concerning prior performance of our Sponsor and its affiliates, which means that you will be unable to assess any results from their prior activities before deciding whether to purchase shares of our common stock.

At this early stage in its development, our Sponsor has funded substantially all operations with proceeds from private financings from individual investors. To continue the development of its platform, our Sponsor will require substantial additional funds. To meet its financing requirements in the future, our Sponsor may raise funds through equity offerings, debt financings or strategic alliances. Raising additional funds may involve agreements or covenants that restrict the Sponsor’s business activities and options. Additional funding may not be available to it on favorable terms, or at all. If our Sponsor is unable to obtain additional funds, it may be forced to reduce or terminate its operations. Any inability for our Sponsor to fund operations could have a substantial and adverse effect on the viability and operations of the HappyNest Platform. Additionally, if we are not able to raise substantial funds in this offering, and are unable to reimburse our Sponsor for any expenses that it has paid or will pay on our behalf, there could be an adverse effect on our Sponsor’s financial condition and operations, which could, in turn, adversely affect our operations.

We may fail to qualify as a REIT, which could adversely affect our operations and our ability to make dividends due to increased corporate tax obligations.

We are not required to obtain stockholder consent prior to changing our investment guidelines, which could result in our pursuing different types of investments than those described in this offering.

The only source of cash for dividends to investors will be cash flow from operations, cash proceeds generated from the dividend reinvestment plan, operating cash flow not intended for dividends, and/or borrowings and capital transactions, such as asset sales or refinancing proceeds. We will not use the net proceeds from our offering to pay dividends. In addition, the amount of cash available for dividends may be limited due to redemptions of our shares. Our board of directors will have flexibility to determine the allocation of available cash available as between the payment of dividends and redemption of our shares.

Initial dividends may not represent earnings from operations since we may declare dividends prior to acquiring significant assets. Our board of directors may choose to pay stockholders a larger dividend than available cash flow from operations may support, to the extent that the Sponsor and Advisor are willing, in its sole discretion, to defer reimbursements and fees due to them.

Our offering price has been set arbitrarily by our Sponsor prior to this offering, and may not be reflective of the value that we can ultimately achieve.

Our asset valuations and NAV calculations are subject to good faith assumptions and estimates determined by our Advisor. As a result, asset valuations and our NAV may not accurately reflect the price we would achieve by liquidating our entire portfolio.

We are unable to determine the amount of dividends that will be paid to investors and can provide no guarantee of any return on your investment.

Our shares are not traded on any exchange and we do not intend to list our shares on any exchange in the foreseeable future. Our share repurchase program may be restricted by our access to capital. Our charter provides that we may not repurchase shares of our common stock if such repurchase would materially impair our capital or operations as determined by our board of directors. Investors must be prepared to hold our shares for an indefinite length of time and share repurchases, if any, may be subject to changes in value from the original share purchase price.

We will not have an independent “due diligence” review of the offering because we do not use an underwriter or placement agent.

Our Sponsor may in the future establish and sponsor additional offerings, and our Advisor may in the future advise investment vehicles, including offerings and investment vehicles that pursue investment strategies similar to ours. To the extent that they undertake such activities, they may face conflicts of interest, including time constraints conflicts related to the allocation of investment opportunities among their programs.

This offering is being made pursuant to recently adopted rules and regulations under the newly revised Regulation A (commonly referred to as “Regulation A+”) of the Securities Act. The legal and compliance requirements of these rules and regulations, including ongoing reporting requirements related thereto, are relatively untested.

Real estate investments are subject to general downturns in the industry as well as downturns in specific geographic areas. Some retail real estate investments are subject to industry-specific downturns and pressures such as changes in consumer preferences, internet influences, and the like. We cannot predict that a tenant or tenants will remain in occupancy in a particular building or that any tenant will remain solvent. We also cannot predict the future value of our properties. Accordingly, we cannot guarantee that you will receive cash distributions or appreciation of your investment.

Retailers will face continued competition from discount or value retailers, factory outlet centers, wholesale clubs, mail order catalogues and operators and television shopping networks. In addition, improvements in technology and faster delivery speeds have spurred the increased popularity of shopping via the Internet. As a result, the “brick and mortar” retail industry is facing lower demand, reductions in sales revenues and increased bankruptcies throughout the United States. Such conditions could adversely affect any retail tenants we may have and, consequently, our funds available for distribution.

Mobile malware, viruses, hacking, and phishing attacks have become more prevalent in our industry and may occur on our systems in the future. The HappyNest Platform may be an attractive target for these sorts of attacks. Although it is difficult to determine what, if any, harm may directly result from an interruption or attack, any failure to maintain performance, reliability, security, and availability of our services and technical infrastructure to the satisfaction of our users may seriously harm our reputation and our ability to retain existing users and attract new users.

The United States Securities and Exchange Commission, or the SEC, does not pass upon the merits of or give its approval to any securities offered or the terms of the offering, nor does it pass upon the accuracy or completeness of any offering circular or other solicitation materials. These securities are offered pursuant to an exemption from registration with the SEC; however, the SEC has not made an independent determination that the securities offered are exempt from registration.

The use of projections or forecasts in this offering is prohibited. No one is permitted to make any oral or written predictions about the cash benefits or tax consequences you will receive from your investment in our common stock.

This offering circular follows the Form S-11 disclosure format.

HappyNest REIT, Inc.

1 N. 4^th Place, Suite 27L
Brooklyn, NY 11249

(718) 384-0678
www.myhappynest.com

The date of this offering circular is , 2019

HOW TO SUBSCRIBE

As of the date of this offering circular, this offering is only offered to investors located in the states of Connecticut, New Jersey and New York. Until such time as we update this offering circular to indicate that we are broadening the offering, we will only accept subscriptions from investors located in these three states. Investors in Connecticut, New Jersey and New York who are “qualified purchasers”, as defined herein, may purchase shares of our common stock. “Qualified purchasers” include: (i) “accredited investors” under Rule 501(a) of Regulation D and (ii) all other investors so long as their investment in our common stock does not represent more than 10% of the greater of their annual income or net worth (for natural persons), or 10% of the greater of annual revenue or net assets at fiscal year-end (for non-natural persons). Before making any representation that you are an accredited investor or that your investment does not exceed applicable thresholds, we encourage you to review Rule 501(a) of Regulation D and Rule 251(d)(2)(i)(C) of Regulation A. For general information on investing, we encourage you to refer to www.investor.gov.

Investors seeking to purchase shares of our common stock who satisfy the “qualified purchaser” standards should proceed as follows:

•

Create a new account, or log into your existing account, through the HappyNest Platform, available on Apple App Store and Google Play, or through our website at www.myhappynest.com, and authorize a funding account.

•

Read this entire offering circular, including any documents incorporated by reference herein, and any appendices and supplements accompanying this offering circular.

•

Electronically complete a subscription agreement for the desired investment amount. A specimen copy of the subscription agreement, including instructions for completing it, is included in this offering circular as Appendix A. Your electronic signature, whether digital or encrypted, included in the subscription agreement is intended to authenticate the subscription agreement and to have the same force and effect as a manual signature. Electronic signature means any electronic symbol or process associated with a record and adopted by you with your intent to sign such record.

•

Complete an ACH transfer request through the HappyNest Platform for the full purchase price of the shares of our common stock being subscribed for along with the completed subscription agreement. You will also have the opportunity to link one or more credit cards to the HappyNest Platform in order to automate transfers into your account. After you have satisfied the minimum purchase requirement of one share, at $10.00 per share, you will have the ability to adjust the settings of such automation, provided that each automated subscription must be for at least 0.5 shares, or $5.00, based on the current per share price.

By executing the subscription agreement and paying the total purchase price for shares of our common stock subscribed for, each investor agrees to accept the terms of the subscription agreement and attests that the investor meets the minimum standards of a “qualified purchaser”. “Qualified purchasers” include: (i) “accredited investors” under Rule 501(a) of Regulation D and (ii) all other investors so long as their investment in our common stock does not represent more than 10% of the greater of their annual income or net worth (for natural persons), or 10% of the greater of annual revenue or net assets at fiscal year-end (for non-natural persons).Subscriptions will be effective only upon our acceptance and we reserve the right to reject any subscription in whole or in part.

The minimum offering amount is $300,000 (not including amounts received or to be received in the private placements to our Sponsor) and we may not accept subscriptions until such time as we have received subscriptions equaling the minimum offering amount. Prior to our achieving the minimum offering amount, subscribers may revoke their subscription by providing us with a written notice requesting such rescission, to be sent to the following address:

Vitellus, LLC

1 N. 4^th Place

Suite 27L
Brooklyn, NY 11249
Attn: Investor Relations

Following the date on which the minimum offering amount has been achieved, subscriptions will be accepted or rejected within 15 days of receipt by us. We have until the date that is twelve months after the date of this offering circular to achieve the minimum offering amount.

We will not draw funds from any subscriber until the date we achieve the minimum offering amount or the date your subscription is accepted, whichever is later. If we accept your subscription, we will email you a confirmation.

IMPORTANT INFORMATION ABOUT THIS OFFERING CIRCULAR

Please carefully read the information in this offering circular and any accompanying offering circular supplements, which we refer to collectively as the offering circular. You should rely only on the information contained in this offering circular. We have not authorized anyone to provide you with different information. This offering circular may only be used where it is legal to sell these securities. You should not assume that the information contained in this offering circular is accurate as of any date later than the date hereof or such other dates as are stated herein or as of the respective dates of any documents or other information incorporated herein by reference.

This offering circular is part of an offering statement that we filed with the SEC using a continuous offering process. Periodically, as we make material investments or have other material developments, we will provide an offering circular supplement that may add, update or change information contained in this offering circular. Any statement that we make in this offering circular will be modified or superseded by any inconsistent statement made by us in a subsequent offering circular supplement. The offering statement we filed with the SEC includes exhibits that provide more detailed descriptions of the matters discussed in this offering circular. You should read this offering circular and the related exhibits filed with the SEC and any offering circular supplement, together with additional information contained in our annual reports, semi-annual reports and other reports and information statements that we will file periodically with the SEC. See the section entitled “Additional Information” below for more details.

The offering statement and all supplements and reports that we have filed or will file in the future can be read at the SEC website, www.sec.gov, on our HappyNest mobile app, or on our website at www.myhappynest.com. The contents of our website (other than the offering statement, this offering circular and the appendices and exhibits thereto) are not incorporated by reference in or otherwise a part of this offering circular.

Our Sponsor will be permitted to make a determination that the purchasers of such shares in this offering are “qualified purchasers” in reliance on the information and representations provided by the stockholder regarding the stockholder’s financial situation. “Qualified purchasers” include: (i) “accredited investors” under Rule 501(a) of Regulation D and (ii) all other investors so long as their investment in our common stock does not represent more than 10% of the greater of their annual income or net worth (for natural persons), or 10% of the greater of annual revenue or net assets at fiscal year-end (for non-natural persons). Before making any representation that you are an accredited investor or that your investment does not exceed applicable thresholds, we encourage you to review Rule 501 of Regulation D and Rule 251(d)(2)(i)(C) of Regulation A. For general information on investing, we encourage you to refer to www.investor.gov.

iii

STATE LAW EXEMPTION AND PURCHASE RESTRICTIONS

Shares of our common stock are being offered and sold only to “qualified purchasers” (as defined in Regulation A under the Securities Act). As a Tier 2 offering pursuant to Regulation A promulgated under the Securities Act, this offering will be exempt from state law “Blue Sky” review, subject to meeting certain state filing requirements and complying with certain anti-fraud provisions, to the extent that shares of our common stocks offered hereby are offered and sold only to “qualified purchasers” or at a time when our common stock is listed on a national securities exchange. “Qualified purchasers” include: (i) “accredited investors” under Rule 501(a) of Regulation D and (ii) all other investors so long as their investment in our common stock does not represent more than 10% of the greater of their annual income or net worth (for natural persons), or 10% of the greater of annual revenue or net assets at fiscal year-end (for non-natural persons). Accordingly, we reserve the right to reject any investor’s subscription in whole or in part for any reason, including if we determine in our sole and absolute discretion that such investor is not a “qualified purchaser” for purposes of Regulation A.

For purposes of determining whether a potential investor is a “qualified purchaser,” annual income and net worth are calculated as provided in the “accredited investor” definition under Rule 501 of Regulation D. In particular, net worth in all cases should be calculated excluding the value of an investor’s home, home furnishings and automobiles.

Table of Contents


HOW TO SUBSCRIBE	i
IMPORTANT INFORMATION ABOUT THIS OFFERING CIRCULAR	iii
STATE LAW EXEMPTION AND PURCHASE RESTRICTIONS	iv
QUESTIONS AND ANSWERS ABOUT THIS OFFERING	1
OFFERING SUMMARY	16
RISK FACTORS	25
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS	56
USE OF PROCEEDS	58
MANAGEMENT	59
VALUATION POLICIES	71
PRINCIPAL STOCKHOLDERS	74
CONFLICTS OF INTEREST	75
INVESTMENT OBJECTIVES AND STRATEGY	80
MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS	89
U.S. FEDERAL INCOME TAX CONSIDERATIONS	92
ERISA CONSIDERATIONS	104
DESCRIPTION OF OUR CAPITAL STOCK	107
DIVIDEND REINVESTMENT PLAN	115
SHARE REPURCHASE PROGRAM	117
THE OPERATING PARTNERSHIP AGREEMENT	119
PLAN OF DISTRIBUTION	124
LEGAL MATTERS	127
EXPERTS	127
ADDITIONAL INFORMATION	127
INDEX TO FINANCIAL STATEMENTS	F-1
APPENDIX A: FORM OF SUBSCRIPTION AGREEMENT	A-1
APPENDIX B: DIVIDEND REINVESTMENT PLAN	B-1

Unless otherwise indicated, data contained in this offering circular concerning the business of the company are based on information from various public sources. Although we believe that these data are generally reliable, such information is inherently imprecise, and our estimates and expectations based on these data involve a number of assumptions and limitations. As a result, you are cautioned not to give undue weight to such data, estimates or expectations.

Our logo and some of our trademarks and tradenames are used in this offering circular. This offering circular also includes trademarks, tradenames and service marks that are the property of other organizations. Solely for convenience, trademarks, tradenames and service marks referred to in this offering circular may appear without the ^®, ^™ and ^SMsymbols, but those references are not intended to indicate in any way that we will not assert to the fullest extent under applicable law our rights or the rights of the applicable licensor to these trademarks, tradenames and service marks.

QUESTIONS AND ANSWERS ABOUT THIS OFFERING

The following questions and answers about this offering highlight material information regarding us and this offering that is not otherwise addressed in the “Offering Summary” section of this offering circular. You should read this entire offering circular, including the section entitled “Risk Factors,” before deciding to purchase our common shares. The use of the terms “HappyNest”, the “Company”, “we”, “us” or “our” in this offering circular refer to HappyNest REIT, Inc. unless the context indicates otherwise.

What is HappyNest?

HappyNest REIT, Inc., or HappyNest, is a newly formed real estate investment trust, or REIT, that has been formed for the purpose of providing the opportunity to invest in a low-cost professionally managed portfolio of commercial real estate assets to investors who have, until recently, had limited access to these types of investments.

Our office is located at 1 N. 4^thPlace, 27L, Brooklyn, NY 11249. Our telephone number is (718) 384-0678, and our website address is www.myhappynest.com. HappyNest is not registered, and does not intend to register, as an investment company under the Investment Company Act of 1940. HappyNest intends to elect to be taxed as a REIT under the Internal Revenue Code of 1986, as amended (the “Code”), beginning with the taxable year ending December 31, 2018.

What are HappyNest’s key differentiators?

Our philosophy is a key differentiator. We believe that real estate investments should be a component of investors’ portfolios, either as an alternative to or in addition to equity and fixed income securities, and that these investment should be available to people regardless of their net income or net worth. We welcome you to invest if you have read this offering circular in its entirety, understand the risks of the investments that we intend to make using subscribers’ funds, have liquid capital to deploy and are a qualified purchaser, as described herein.

Our business is designed for modern investors who are accustomed to managing their personal finances on-the-go, often using their mobile phones. Our online investment platform leverages the reach of technology and the Internet to permit us to offer our shares directly to the general public (provided that each investor is a qualified purchaser) through the HappyNest Platform, which was developed by our Sponsor. The HappyNest Platform is available as an app for mobile users (through download from the iPhone App Store or Google Play Store) and through our website, www.myhappynest.com.

We offer a low fee model. With a $10.00 minimum initial investment, automated investing features, and low-fee structure, investors can invest through HappyNest in a professionally managed portfolio of commercial real estate assets in an easy to use manner.

What is the HappyNest Platform?

HappyNest Platform is a proprietary software application developed and owned by our Sponsor, and licensed to us. Investors may download our mobile application on either the Google Play Store or Apple’s App store. The HappyNest Platform provides investors with the ability to:

invest directly into this offering of our shares;

purchase additional shares of HappyNest;

receive dividends, access regular financial reporting, and review information regarding our real estate portfolio, including, but not limited to, location, annual rent, purchase price, yield, lease structure, and a brief explanation of the investment strategy; view investment performance and investment activity;

access offering circular and other legal documents;

initiate ACH funds transfers;

schedule weekly or monthly recurring investments;

submit requests for redemptions of our shares; and

contact our investor relations.

In the future, we intend to roll out our “Round Up program”. Under the Round Up program, investors may (but are not required to) set up recurring investments or join our Round Up program (our “Round Up program”). If an investor elects to participate in the RoundUp program, purchases that such investor makes using the linked credit card or bank account will be rounded up to the nearest dollar. The difference between the purchase amount and the nearest dollar is referred to herein as “digital spare change”. Digital spare change will be tracked and aggregated using back-end technology and will be swept into to an investor’s HappyNest account at such time as the digital spare change adds up to $5.00. Once the digital spare change is swept into an investor’s HappyNest account, investors may invest the digital spare change in shares of HappyNest common stock, hold the digital spare change in the HappyNest account for future investment, or withdraw the digital spare change from the HappyNest account and deposit it into the investor’s personal bank account. We expect that the HappyNest Platform will provide these functionalities through the “Settings” option. In order to participate in the Round Up program, an investor will be required to manually enroll and affirmatively elect to participate in the Round Up program. The investor will be required to link a credit card or bank account to the HappyNest Platform and will be prompted to input information such as a recurring investment amount and time schedule. While we intend to roll out the Round Up program in the future, there can be no assurance that the Round Up program will be implemented.

Who may purchase shares of our common stock in this offering?

Am I a stockholder in HappyNest if I send funds to HappyNest via the HappyNest Platform?

Yes. Net proceeds of funds provided to HappyNest via the HappyNest Platform will be used to purchase shares of HappyNest. HappyNest will then use those net proceeds to make commercial real-estate investments. Because the HappyNest Platform is linked to our shareholding structure, although you can use the educational features on the HappyNest Platform without becoming a stockholder in HappyNest, it is not possible to provide funds via the HappyNest Platform without becoming a stockholder in HappyNest or increasing your shareholdings in HappyNest.

What kind of real estate will HappyNest invest in?

HappyNest intends to invest in a diversified portfolio of single-tenant net leased income producing commercial properties and other commercial real estate related investments. We aim to provide our investors with stable and predictable cash distributions with the potential for long-term growth through an increase in the value of our assets. The “net” attribute of the net leases increases our predictability of cash flow by assigning the tenant responsibility for variable asset-level operating expenses, including, but not limited to real estate and other taxes, insurance, utilities, and property maintenance. This is different than a gross lease where the landlord is required to pay the majority of the property level operating expenses.

We plan to focus on investments with strong real estate fundamentals and long-term net leases to creditworthy tenants that provide for corporate lease guarantees, contractual rent increases, lease extension options, and limited landlord obligations. We may choose to acquire ownership interests, directly or indirectly in individual properties, portfolios of assets, or shares of or interests in other REITs. Our acquisition parameters are subject to change depending on real estate market conditions and investment opportunities available. Our board of directors reserves the right to pursue other investment types in primary, secondary or tertiary markets if believed to be in the best interest of our stockholders.

This offering is being made on a “best efforts” basis, meaning that we are only required to use our best efforts to sell shares of our common stock and have no firm commitment or obligation to purchase any of the shares. As a result, the amount of proceeds we raise in this offering may be substantially less than the amount we would need to achieve a broadly diversified property portfolio. If we are unable to raise substantial funds, we will make fewer investments resulting in less diversification in terms of the number of investments owned, the types of investments that we make, and the geographic regions in which our investments are located. In such event, the likelihood of our profitability being affected by the performance of any one of our investments will increase. Additionally, we are not limited in the number or size of our investments or the percentage of net proceeds we may dedicate to a single investment. Your investment in our shares will be subject to greater risk to the extent that we lack a diversified portfolio of investments. Further, we will have certain relatively fixed third-party expenses such as legal, tax and audit, regardless of whether we are able to raise substantial funds in this offering. Our inability to raise substantial funds could increase our fixed third-party expenses as a percentage of gross income, potentially reducing our net income and cash flow and potentially limiting our ability to make distributions.

Why has HappyNest chosen to focus on commercial real estate?

We believe that a primary benefit of investing in commercial real estate is a low correlation to public equity securities markets. While equity securities markets offer many benefits, they also have a great deal of volatility. Benefits provided by commercial real estate to investors can include capital preservation, stable current income and long-term capital appreciation potential.

How can HappyNest’s focus on net lease commercial real estate investments benefit me?

HappyNest plans to focus our investments on single-tenant commercial properties with strong real estate fundamentals, leased to creditworthy tenants via long-term net leases that provide for corporate lease guarantees, contractual rent increases, lease extension options, and limited landlord obligations. We may choose to acquire ownership interests directly or indirectly in individual properties, portfolios of assets, or shares of or interests in other REITs.

Net lease properties typically provide investors with several benefits:

Tenants with strong financials have a higher probability of paying their rent on time and in full;

Stable cash flow allows for more predictable and regular cash distributions to stockholders;

Long-term leases help insulate investors from short-term economic risks;

Corporate lease guarantees help to provide assurances that, unless the tenant files for bankruptcy, rent is paid to the landlord regardless of whether or not the business continues to operate at that location until the end of the contractual term;

The tenant assumes responsibility for property level expenses, operating and capital, which limits the volatility of cash flows that may occur from variable expenses associated with other lease structures;

Net lease assets have historically maintained a higher transactional velocity in down markets than other real estate investment types;

Contractual periodic rent help to preserve investor capital by providing a hedge against inflation; and

Net lease assets generally provide a greater risk premium, or additional yield expected by investors who tolerate the extra risk in an investment compared to that of a risk-free asset, than corporate bonds with the same credit risk.

The dollar may experience inflationary pressure that is likely to result in higher rental rates for commercial real estate in the future. While net-leases are generally long-term in nature, landlords will occasionally have the opportunity to renegotiate the in-place rental rates with the tenant at the end of the lease term that are more in-line with the growth in market rates. Stockholders may gain additional value from the portfolio realizing those higher rates, and/or from general market appreciation, preserving their real rates of return.

Will you use leverage?

Yes. We intend to utilize debt financing (i.e. mortgage debt) to complete some of our property acquisitions. Debt may come in many forms, including, but not limited to, bank loans, seller financing, institutional investors or high net worth individuals. We may use loan proceeds for the purchase of new assets, to refinance existing debt, pay share repurchase requests, and/or conduct property level repairs and maintenance.

Measured across our portfolio as a whole, we intend to maintain a debt ratio of 50% or less of our net assets (before deducting depreciation and other non-cash reserves and non-cash items). This debt ratio is determined on our portfolio as a whole, and does not restrict the amount of debt that may be incurred with respect to a particular property. For example, HappyNest could incur a loan of 65% of the total cost of a particular property, so long as the overall amount of debt across HappyNest’s entire portfolio remains at or below 50% of our net assets (before deducting depreciation and other non-cash reserves and non-cash items). We may choose to alter our debt policy in the future, in the sole discretion of the HappyNest Board.

What is a REIT?

A REIT, generally, is a company that owns and often operates income-producing real estate or real estate-related assets, and has the following characteristics:

managed by a Board of Directors or trustees;

the majority of its income is connected to real estate investment;

distributes at least 90% of its taxable income to stockholders annually in the form of dividends;

allows stockholders to invest in a professionally managed and diversified portfolio of real estate assets and other real estate related investments;

distributes its income to its stockholders, provided certain income tax requirements are satisfied, such distributions are not subject to federal corporate income taxes, with the effect that the company avoids the “double taxation” treatment of income normally experienced from investments in a corporation; and

may be subject to state and local taxes on its income and property and to federal income taxes on the income not distributed to stockholders.

What tax benefits does REIT status provide?

With certain exceptions, a qualifying REIT is not subject to entity-level federal income tax as long as it distributes an amount equal to 100% of its REIT taxable income each year. Shareholders pay federal income tax on dividends paid. Thus, in general, REIT income is subject to only one level of federal income tax.

How does HappyNest aim to maximize the amount of each investor’s funds that can be invested?

We plan to maximize the amount of each investor’s funds that can be invested by selling shares of HappyNest directly to investors through the HappyNest Platform, and not through registered broker-dealers or investment advisors who are paid commissions. Broker-dealers or financial planners are normally compensated between 6% to 9% of their clients’ investment in a REIT in the form of commission payments and expense reimbursements, regardless of whether the investor makes a return on his or her investment. Additionally, the dealer-manager responsible for marketing the shares to broker-dealers licensed by the Financial Industry Regulatory Authority, Inc. (“FINRA”), and investment advisors registered with the U.S. Securities and Exchange Commission (the “SEC”), may also charge a 2% to 3% commission for their efforts. These additional offering fees can add up quickly.

The payment arrangement between the Company and our Advisor is on terms that we believe will be more advantageous on the whole to the investor and will likely result in a greater amount of offering proceeds available for investment into income producing assets on behalf of our stockholders. We aim to invest a minimum of 97% of the gross offering proceeds into real estate investments. None of our Sponsor or Advisor or any other affiliated entity involved with the offer and sale of our common shares, is a member firm of FINRA and no person associated with us will be considered a broker solely based on their participation in the sale of our shares.

In addition, our Sponsor is entitled to charge us a monthly per subscriber account fee of $1 per subscriber account in respect of its grant to us of a license to use the HappyNest name and the HappyNest Platform. We will not pay our Sponsor any sales commissions or other fees for hosting this offering on the HappyNest Platform.

For a detailed explanation of the fees and expenses payable to our Advisor and our Sponsor, see “How will we compensate our Advisor?”, “How will we compensate our Sponsor?” and the section entitled “Compensation”.

How will you value your assets and shares?

Our board of directors, including a majority of our independent directors, has adopted valuation guidelines and methodologies for use in connection with the valuation of our assets and liabilities and the calculation of our NAV. The overarching principle of these guidelines is to produce a valuation that represents a fair and accurate estimate of the value of our investments or the price that would be received for our investments in an arm’s-length transaction between market participants, less our liabilities, balancing considerations of cost, speed and accuracy.

From the time that we commence operations, each calendar year, our board of directors, including a majority of our independent directors, will review the appropriateness of our valuation guidelines. The valuation guidelines will be administered by our Advisor. Our Advisor will provide our board with periodic valuation reports in connection with regularly scheduled board meetings, or at such other times as may be requested by the board. From time to time, our board, including a majority of our independent directors, may adopt changes to the valuation guidelines if, balancing considerations of cost, speed and accuracy, it (1) determines that such changes are likely to result in a more accurate reflection of the value of our assets and liabilities or our NAV or a more efficient or less costly procedure for the determination of the value of our assets and liabilities or our NAV without having a material adverse effect on the accuracy of such determination or (2) otherwise reasonably believes a change is appropriate for the determination of the value of our assets and liabilities or our NAV.

Our valuation policy has the following characteristics:

Absent unusual circumstances, our asset valuation policy provides that all of our assets (other than liquid non-real estate assets and securities, including cash and cash equivalents, or “liquid assets”) will be carried at cost for approximately the first year following acquisition.

After the first year from acquisition, our assets (other than liquid assets) will be valued on a semi-annual basis (on September 30 and March 31) using information believed by us to be accurate and appropriate. Our liquid assets will be valued on a monthly basis as of the end of each month.

Where our Advisor and Board believe that there has not been a material change in value of an asset, we intend to continue to use the most recent previous valuation for that asset.

However, in connection with the acquisition or disposition of assets on a basis other than for cash consideration (for example, in connection with utilization of our UPREIT structure), we expect to review the valuation of our assets, which may result in our revaluing our assets on dates other than September 30 and March 31.

Unusual circumstances that might affect the value of our assets and require an interim valuation (on a date other than September 30 or March 31 in the case of non-liquid assets, or any month end, in the case of liquid assets) include financial or economic events, such as lease terminations or renewals, unexpected capital expenditures, unforeseen structural or environmental issues and/or capital market events that may significantly impact our most recent asset value calculations. Except in the case of liquid assets, we generally intend to use a 5% change standard (with the 5% measured over our entire portfolio of assets, and not on an individual asset basis) as determining when such an unusual circumstance has required such that an interim valuation is needed. In the event that those unusual circumstances affect only particular assets, we expect that our interim valuation would be limited to those particular assets.

Valuations are subject to review and approval by the HappyNest Board.

Except in unusual circumstances, we do not anticipate obtaining external valuations. References to our conducting valuations in this heading refers to activities taken by our Advisor on behalf of us, with our Advisor undertaking these valuations through an internal team.

Because we will be valuing privately held assets, we will have to make assumptions and projections to conduct those valuations, and the assumptions and projections made could affect the ultimate value determined for those assets (whether on a positive or negative basis). There is no industry standard valuation method, making it possible for other analysts to arrive at different valuations.

Although our investment strategy will result in the acquisition of mainly commercial real estate properties, we may also own liquid assets, including pending acquisition of real estate properties, redemption of our shares or payment of dividends, to hedge against interest rate risk, to improve liquidity and to limit market exposure. Liquid assets will be valued on the basis of information provided by an independent third-party pricing service.

All material changes to our asset valuation policy are subect to approval by the HappyNest Board, including a majority of our independent directors. All Board approved material changes will be disclosed publicly in the reports we file with the SEC on a semi annual, annual, and supplements to the offering circular, as and to the extent required.

Our valuation policy for our shares will be based off the aggregate value determined for our assets. The gross value of our assets will be decreased by any liabilities and expenses at the HappyNest level (e.g., not related to specific assets), to derive an overall net asset value for HappyNest.

How and when will HappyNest calculate its NAV per share?

Until March 31, 2019, our common stock will be offered at a fixed price of $10.00 per share, the same as the price in this offering, an amount that was arbitrarily determined by our Sponsor.

Beginning on March 31, 2019, the per share purchase price will be determined based on NAV. On the basis of our NAV, we will determine our net asset value per share (our “NAV per share”). Our NAV per share will be equal to the quotient of our NAV divided by the number of shares of our common stock outstanding at the end of the most recently completed semi-annual period, subject to the calculation principles relating to the number of our outstanding shares as described in the section of this offering circular entitled “Valuation Policies and Our NAV”.

Generally, our NAV per share will be calculated once every six months, on September 30 and March 31, beginning on March 31, 2019. However, in the circumstances described above where we may value assets on a date other than September 30 or March 31 (such as in connection with the acquisition or disposition of assets on a basis other than for cash consideration or in unusual circumstances), we expect to review the valuation of our assets as of appropriate date.

The price per share for new share purchases, reinvestments and redemptions will be equal to our then-current NAV per share. Our NAV per share will not audited and may not reflect our fair market value if we were to list our common stock on a national exchange.

Where will our NAV per share be published?

Our most recently calculated NAV per share will published on our website (www.myhappynest.com), and in the “Documents” section of each investor’s account dashboard on the HappyNest Platform.

Who will cover our organization and offering costs?

Our Sponsor, Advisor or their affiliates intend to initially pay all of the costs associated with our organization and the offering of our common shares. We will begin reimbursing our Sponsor for these costs, up to a maximum of 3.0% of gross offering proceeds, without interest, after selling a minimum of 30,000 shares of common stock in this offering at an offering price of $10.00 per share. If any of these costs are paid by the Advisor or affiliates of the Advisor or Sponsor, the Sponsor will be responsible for reimbursing the Advisor or its affiliates.

Costs associated with our organization and offering of our common shares are any and all expenses related to our formation, offering costs, expenses for printing, engraving, mailing, salaries of employees while engaged in sales activity, charges of transfer agents, registrars, trustees, escrow holders, depositaries, experts, expenses of qualification of the sale of the securities under Federal and State lows, including taxes and fees, accountants’ and attorneys’ fees. For the sake of clarity, organization and offering costs to be reimbursed include costs from the commencement of preparation for this offering, and not only after we have sold the minimum of 30,000 shares of common stock in this offering. See “Compensation” for a more detailed explanation of the fees and expenses payable to our Advisor.

How will we compensate our Advisor?

We will pay our Advisor (1) a monthly asset management fee equal to 0.0417% of our “total invested value” as of the immediately preceding September 30 or March 31; (2) for acquisitions, 3.0% of the contract price of each property acquired by HappyNest, or when combined with all other broker fees paid by or on behalf of HappyNest in connection with the acquisition of such property, 6.0% of the contract price of such property; and (3) for disposition, 3.0% of the contract price of each property acquired by HappyNest, or when combined with all other broker fees paid by or on behalf of HappyNest in connection with the disposition of such property, 6.0% of the contract price of such property. The acquisition and disposition fee will be paid to our Advisor upon each acquisition or disposition of an investment by HappyNest. See “Compensation” for a more detailed explanation of the fees and expenses payable to our Advisor.

“Total invested value,” for any period, means the aggregate book value of our assets before reserves for amortization and depreciation, impairments or other similar non-cash reserves.

Who manages HappyNest?

Jesse Prince is our Chief Executive Officer and a member of our board of directors, and he is also the Chief Executive Officer of our Advisor.

Our Advisor, a wholly-owned subsidiary of our Sponsor, is responsible for sourcing, acquiring, and managing all real estate investments on our behalf, subject to oversight and approval by our board of directors. Our Advisor expects to source investment opportunities through various channels, including, but not limited to, our extensive network of owners, developers, lawyers, investment bankers, private equity groups, asset managers, real estate operating companies, REITs, real estate brokers, mortgage brokers, title insurance agencies, and lenders. Our Advisor has a fiduciary duty to us and to our stockholders. Our board of directors will supervise the acquisition process in an effort to ensure each investment is consistent with our strategy, accretive to the value of the entire portfolio, and in the best interest of our stockholders. We believe that the executive officers of our Advisor and our executive officer and board of directors, collectively have the hands-on experience and track record of success in both private and public real estate endeavors to successfully execute our investment strategy.

The primary responsibility for the management decisions of our Advisor, including the selection of real estate investments to be recommended to our board of directors and our Investment Committee at such time as it is formed, the negotiation for these investments and asset management decisions, resides in Jesse Prince. Jesse Prince is the Chief Executive Officer of us, of our Advisor and our Sponsor; he is also a member of our board of directors and a principal of our Sponsor. Mr. Prince will provide our board of directors with first-hand insights and recommendations on the execution of our business strategy and our operation. Mr. Prince has more than 10 years’ real estate experience as an investor, investment sales broker, asset manager and consultant and has participated as a principal in real estate transactions valued in excess of $20 million, and as an investment broker in real estate transactions valued in excess of $480 million. Mr. Prince has advised several public and private clients on real estate acquisition and financial strategies. Prior to forming HappyNest, Mr. Prince was responsible for developing one of the top producing investment sales teams at Stan Johnson Company, a single-tenant net lease focused investment advisory firm. Mr. Prince graduated from the United States Military Academy at West Point, managed hundreds of soldiers on multiple combat tours, and was honorably discharged from the Army in 2010 holding the rank of Captain. He holds a Master’s degree in Real Estate Finance from New York University where he graduated with “distinction”, and he is a licensed New York State Real Estate Broker.

Who is the Sponsor of HappyNest?

Messrs. Jesse Prince and Leonardo Sessa formed our Sponsor in February 2017, in pursuit of their vision of providing a low-cost professionally managed portfolio of commercial real estate assets to investors who have, until recently, had limited access to these types of investments. Our Sponsor is co-owned in equal measure by, and is jointly controlled by, Messrs. Prince and Sessa. HappyNest is the result of their vision. The HappyNest Platform was developed on behalf of our Sponsor and is owned by our Sponsor. Its address is 1 N 4^th Place, Suite 27L, Brooklyn, NY 11249.

How will we compensate our Sponsor?

Our Sponsor owns and operates the HappyNest Platform. We will enter into a license agreement with our Sponsor effective upon the commencement of this offering, pursuant to which our Sponsor will grant us a non-exclusive, royalty free license to use the name “HappyNest” and the HappyNest Platform. Our Sponsor shall be entitled to charge us a monthly per subscriber account fee of $1 per subscriber account in respect of its grant to us of a license to use the HappyNest name and the HappyNest Platform. We will not pay our Sponsor any sales commissions or other fees for hosting this offering on the HappyNest Platform.

In addition, we will reimburse our Sponsor of all organization and offering expenses paid on our behalf by our Sponsor, up to a maximum of 3.0% of the aggregate gross offering proceeds, once at least 30,000 shares of common stock have been sold in this offering at an offering price of $10.00 per share.

What is your ownership structure and who will operate your assets?

We plan to own all our assets and conduct the majority of operations through a limited partnership (the “Operating Partnership”), which will allow us to operate as an umbrella REIT (“UPREIT”). This chart shows our ownership structure:

HappyNest will not directly own any real estate properties in the UPREIT structure; rather it will own substantial interests in the Operating Partnership through being the Operating Partnership’s sole general partner and one of the limited partners in the Operating Partnership.

The UPREIT structure is an industry standard structure that we anticipate may provide several advantages in our investment activities compared to all-cash purchasers, when seeking investment opportunities from persons who might not otherwise sell their properties due to unfavorable tax consequences. For example, UPREIT structures allow a property owner to defer taxable capital gains by contributing their property to the Operating Partnership in exchange for limited partnership units in the Operating Partnership, or OP Units. OP Units will be exchangeable by those other property owners on a one for one basis for our shares at a price to be determined by our most recently published NAV at the time of exchange. Those other property owners will also have the right to have HappyNest redeem their OP Units on the same terms as our other stockholders in accordance with our share repurchase program, as described in more detail below. Those exchanges and redemptions will be a taxable event to those other property owners, so those other property owners may choose to exchange or redeem their shares over a period of time to spread out their tax liability over time.

Will I receive dividends on HappyNest shares?

We intend to pay dividends on a quarterly basis contingent upon the approval of our board of directors. HappyNest is a REIT, and tax requirements applicable to REITs require HappyNest to make annual dividends to our stockholders of at least 90% of our taxable income, which is computed without regard to the dividends-paid deduction or net capital gain. We intend to comply with these tax requirements, although our charter does not require that we make dividends to our stockholders and the decision on a percentage range of return for dividends to stockholders and the frequency will be based on our cash availability, financial condition and other factors that may be deemed relevant by our board of directors.

We expect to pay all dividends from cash flow from operations. Our cash flow from operations may decrease in the future, which may adversely affect our ability to maintain the level of our dividends. Our board of directors may also choose to pay stockholders a larger dividend than available cash flow from operations may support, limited to the extent that the Sponsor and Advisor are willing, in its sole discretion, to defer reimbursements and fees due to it. All deferred reimbursements and fees will not be subject to any interest and will be paid at the discretion of our board of directors. We will not use the net proceeds from our offering to pay dividends.

In addition, the amount of cash available for dividends may be limited due to redemptions of our shares, as described below. Our board of directors will have flexibility to determine the allocation of available cash available as between the payment of dividends and redemption of our shares.

Will my dividends be reinvested in additional HappyNest shares or will I receive them in cash?

You can choose to receive your dividends in cash or reinvest them in additional HappyNest shares. By subscribing for shares of our common stock through the HappyNest Platform you will be automatically enrolled in our dividend reinvestment plan. Unless you opt-out, our Advisor will automatically reinvest all of your dividends into additional shares of our common stock; provided, that you will have the option to opt in or opt out of the dividend reinvestment plan not more than one time per calendar year. The per share purchase price for HappyNest shares purchased with reinvested dividends will be the most recently determined NAV per share, as calculated as of the end of the semi-annual period ending on March 31 or September, or as otherwise more recently calculated in accordance with our valuation policies.

Our board of directors reserves the right to amend or terminate our dividend reinvestment plan at any time, and for any reason, with 10 days’ notice to stockholders. If you wish to opt-out of the dividend reinvestment plan and receive your dividends in cash, you must affirmatively notify us of your intent to do so through the HappyNest Platform.

Can I redeem my HappyNest shares?

We provide a share repurchase program for stockholders who wish to sell their share. We intend to allow the redemption of shares of common stock on a semi-annual basis, with effective dates of repurchase on March 31 and September 30 of each year. Shares will be repurchased at the NAV per share calculated as of such date. Stockholders may offer shares for repurchase, using the HappyNest Platform, at any time during the applicable semi-annual period, but not later than 30 days prior to the end of such semi-annual period. Stockholders may withdraw their submissions for repurchase at any time prior to 30 days prior to the end of the applicable semi-annual period.

Investors should be aware, however, that we will invest in commercial real estate, and real estate is a less liquid asset class than public equity and fixed income securities. Potential HappyNest investors should adopt a long-term investment mentality to realize the full benefits of compounding interest and capital appreciation. To minimize short-term “flipping” of HappyNest shares in a way that might be disruptive to orderly investment activities and that might adversely affect other stockholders with different investment time horizons, shares are (except in the limited circumstances described below) subject to a minimum holding period of six months before they are eligible for redemption. Redemption prices will be as follows:

Holding Period Since Date of Share Purchase	Redemption Price as a % of NAV per Share
6 months —1 year		97	%
1 year — 2 years		98	%
2 years — 3 years		99	%
More than 3 years		100	%

Our board of directors reserves the right to decline any request for share repurchase for any reason, or to amend, suspend or terminate the share repurchase program at any time upon no less than 30 days’ prior written notice. We reserve the right to allow stockholders, on a one-time basis per stockholder, to initiate a share repurchase without the above discounts and without regard to the six month minimum holding period described above. Our repurchase program also provides that in the event of the death or qualifying disability of a stockholder, upon provision of certain documentation to our transfer agent, we may repurchase shares prior to the end of the six month holding period and without application of the discounts to NAV per share described above. Our charter provides that we may not repurchase shares of our common stock if such repurchase would materially impair our capital or operations as determined by our board of directors. For example, the board of director may determine not to repurchase shares if, as a result of such repurchase, 25% or more of the value of any class of equity interests in the Company was held by benefit plan investors under Employee Retirement Income Security Act of 1974 (“ERISA”). See “ERISA Considerations”.

Are there limitations to the number of shares that I can redeem in any given time period?

We understand the importance to our stockholders of accessing their capital and will attempt to honor any and all redemption requests consistent with the limitations described below. The limitations below have been developed in consideration of a number of factors, including that real estate is an illiquid asset and that stockholders could be adversely affected by excess redemption requests of other stockholders. Investors with short-term horizons or who may need to sell an asset to raise money quickly should consider purchasing investments with greater liquidity.

We presently intend to limit aggregate repurchases annually to not more than 20% of the weighted average number of shares of common stock outstanding during the previous fiscal year (and, semi-annually, to not more than 10% of the weighted average number of shares of common stock outstanding during the previous fiscal year). All share repurchases will be subject to availability of capital and may come from various sources including, but not limited to, cash proceeds generated from the dividend reinvestment plan, securities offerings, operating cash flow not intended for dividends, and/or borrowings and capital transactions, such as asset sales or refinancing proceeds.

How I can monitor HappyNest’s performance?

Periodically, as we make material investments or have other material developments, we will provide a supplement to this offering circular that may add, update or change information contained in this offering circular. The offering statement filed with the SEC (of which this offering circular forms a part), this offering circular and all exhibits, appendices and supplements thereto, and all annual, semi-annual and current reports that we have filed or will file in the future with the SEC can be read at the SEC website, www.sec.gov, on our website at www.myhappynest.com, or accessed in the “Document” section of your HappyNest profile on the HappyNest Platform. Neither the contents of our website nor the contents of the HappyNest Platform (other than the offering statement, this offering circular and the appendices and exhibits thereto) are incorporated by reference in or otherwise a part of this offering circular.

How do you manage stockholder information?

The SEC mandates that any issuers conducting a Tier 2 offering under the Regulation A rules must engage the services of a stock transfer agent. The transfer agent must be registered with the SEC as outlined in Section 17A of the Exchange Act. We have engaged Colonial Stock Transfer Co., Inc. to provide the services of transfer agent and registrar.

How can HappyNest stockholders make and receive fund transfers?

Upon opening an account with HappyNest, stockholders will be prompted to link their bank accounts to the HappyNest Platform so that they may make and receive fund transfers.

What security features does HappyNest provide?

HappyNest’s user security policy is best summarized as “do not possess” – in other words, to retain as little personal information on our information systems as possible. User data is primarily maintained by credible third-party back office service providers who operate in the business of handling sensitive personal and financial information. The HappyNest Platform itself only stores each user’s email address in an encrypted database and relies on integrations with third-party systems for all financial transaction management. Our contracts with these third-party service providers obligate them to indemnify us in certain circumstances and include what we believe to be reasonable assurances of data privacy protection.

How does HappyNest use and protect personal information?

We will not share, sell, or rent individual personal information with anyone without receiving permission or otherwise in accordance with legal requirements. Information submitted to us is only available to eus and to our third-party vendors responsible for providing essential back office services. As described above, our user security policy is best summarized as “do not possess”.

What are the risks associated with investing in our common shares?

We have no prior operating history, and as of the date of this offering, our total assets are $1,000 in cash.

Because this is a “blind pool” offering, you will not have the opportunity to evaluate our investments before we make them, which makes your investment more speculative.

We may fail to qualify as a REIT, which could adversely affect our operations and our ability to make dividends due to increased corporate tax obligations.

We are not required to obtain stockholder consent prior to changing our investment guidelines, which could result in our pursuing different types of investments than those described in this offering.

Our offering price has been set by our Sponsor prior to this offering, and may not be reflective of the value that we can ultimately achieve.

We are unable to determine the amount of dividends that will be paid to investors and can provide no guarantee of any return on your investment.

We will not have an independent “due diligence” review of the offering because we do not use an underwriter or placement agent.

This offering is being made pursuant to recently adopted rules and regulations under the newly revised Regulation A promulgated under the Securities Act. The legal and compliance requirements of these rules and regulations, including ongoing reporting requirements related thereto, are relatively untested.

Real estate investments are subject to general downturns in the industry as well as downturns in specific geographic areas. Some retail real estate investments are subject industry-specific downturns and pressures such as changes in consumer preferences, internet influences, and the like. We cannot predict that a tenant or tenants will remain in occupancy in a particular building or that any tenant will remain solvent. We also cannot predict the future value of our properties. Accordingly, we cannot guarantee that you will receive cash distributions or appreciation of your investment.

You should only consider this investment if you are willing to lose your entire principal investment. See “Risk Factors” beginning on page 25 for a full description of our risks.

How does a “best efforts” offering work?

Offerings done on a “best efforts” basis will require us to use only best efforts to sell our common shares. We may not sell enough shares in this offering to invest in a diversified portfolio of real estate and real estate-related investments in accordance with our investment strategy.

What kind of offering is this?

We are offering up to 5,000,000 shares of common stock on a “best efforts” basis, including up to 500,000 shares of common stock pursuant to our dividend reinvestment plan at a price currently equal to our most recently determined NAV per share.

As described above, our common stock will be offered at a fixed price of $10.00 until our first valuation date of March 31, 2019. Beginning on March 31, 2019, the per share purchase price will be determined based on NAV. Our NAV per share will be the amount determined on a semi-annual basis in accordance with our valuation policy. Our NAV per share may be determined between semi-annual periods in circumstances described more fully herein. See “Valuation” for a more detailed explanation on how we determine NAV.

Is there a minimum investment?

Yes. You must initially purchase at least 1 common share in this offering, or $10.00 based on the current per share price. If you have satisfied the applicable minimum purchase requirement, you may purchase fractional shares in increments of at least 0.5 shares, or $5.00, based on the current per share price. Holders of fractional shares will generally have all of the rights and benefits, pro rata, as holders of full shares, except that fractional shares do not have voting rights.

Will I pay any upfront selling commissions?

No. We intend to sell our shares directly to the public and will not charge selling commissions as part of the price per common share purchased in this offering. Additionally, there is no dealer manager fee or other service-related fee in connection with the offering and sale of our common shares through the HappyNest Platform. We intend to invest a minimum of 97% of the gross offering proceeds into real estate investments.

Is there any minimum initial offering amount that must be sold prior to beginning operations?

Yes. We intend to commence operations after raising as little as $300,000 in this offering (not including $200,000 of aggregate proceeds raised from the sale of common stock to our Sponsor in private placements). Until the minimum threshold is met, wire transfers or bank or credit card authorizations for shares sold in this offering will not be processed and investors will not be admitted as stockholders. The funds will be drawn by us only after the $300,000 minimum offering amount has been raised.

What happens to my subscription if you don’t raise at least the $300,000 minimum threshold in this offering?

If the minimum threshold is not met by , 2019, we will cancel the offering. In such event, we will cancel or not process any ACH payments submitted by prospective investors as consideration for shares in this offering.

How long will the offering last?

This offering will terminate two years from the commencement of this offering ( , 2019). It will be necessary to file a new offering circular with the Securities and Exchange Commission, and many states, to continue offering shares prior to the termination date.

When will I get my detailed tax information?

We will provide you form 1099-DIV tax information by January 31 of the year following each taxable year.

Who can help answer my questions about the offering?

If you have more questions about the offering, or if you require additional copies of this offering circular, you can contact us by email investments@myhappynest.com or mail at:

Vitellus, LLC

1 N. 4^th Place

Suite 27L
Brooklyn, NY 11249
Attn: Investor Relations

OFFERING SUMMARY

This offering summary highlights material information regarding our business and this offering that is not otherwise addressed in the “Questions and Answers About this Offering” section of this offering circular. Because it is a summary, it may not contain all of the information that is important to you. To understand this offering fully, you should read the entire offering circular carefully, including the “Risk Factors” section before making a decision to invest in our common shares.

About the Company

HappyNest REIT, Inc. is a newly formed real estate investment trust, or REIT, that has been formed for the purpose of providing the opportunity to invest in a low-cost professionally managed portfolio of commercial real estate assets to investors who have, until recently, had limited access to these types of investments.

Our office is located at 1 N. 4^thPlace, 27L, Brooklyn, NY 11249. Our telephone number is (718) 384-0678, and our website address is www.myhappynest.com. HappyNest is not registered, and does not intend to register, as an investment company under the Investment Company Act of 1940. HappyNest intends to elect to be taxed as a REITunder the amended Tax Reform Act of 1986, beginning with the taxable year ending December 31, 2018.

Investment Strategy

We intend to seek to acquire a diversified portfolio of net lease properties. Although our investment strategy is intended to result in the acquisition of mainly commercial real estate properties, we may also own liquid assets (such as liquid non-real estate assets and securities, including cash and cash equivalents), including pending acquisition of real estate properties, redemption of our shares or payment of dividends, to hedge against interest rate risk, to improve liquidity and to limit market exposure.

We aim to provide our investors with stable and predictable cash distributions with the potential for long-term growth through an increase in the value of our assets. We intend to focus on internet resistant retail assets in highly visible and accessible locations. We will seek investment opportunities with long-term net leases to credit rated tenants with corporate lease guarantees, contractual rent increases. Long terms are intended to protect stockholders from near-term economic risks.

The “net” attribute of the leases is intended to increase our predictability of cash flow by assigning the tenant responsibility for variable asset-level operating expenses, including, but not limited to real estate and other taxes, insurance, utilities and property maintenance. This is different than a gross lease where the landlord is required to pay the majority of the property level operating expenses.

Net lease properties typically provide investors with several benefits:

Tenants with strong financials have a higher probability of paying their rent on time and in full;

Stable cash flow allows for more predictable and regular cash distributions to stockholders;

Long-term leases help to insulate investors from short-term economic risks;

The tenant assumes responsibility for property level expenses, operating and capital, which helps to limit the volatility of cash flows that may occur from variable expenses associated with other lease structures;

Net lease assets have historically tended to maintain a higher transactional velocity in down markets than other real estate investment types;

Contractual periodic rent help to preserve investor capital by providing a hedge against inflation; and

Net lease assets generally have been intended to provide a greater risk premium spread than corporate bonds with equal credit risk and minimal management.

We may seek to add value to our portfolio through active management and market awareness. Active management may include repositioning underperforming assets, exploiting short-term arbitrage opportunities to take advantage of market pricing inefficiencies, correctly timing sales, and financial structuring.

We reserve the right to pursue other investment types in primary, secondary or tertiary markets if believed to be in the best interest of our stockholders.

Investment Objectives

Our primary investment objectives are to:

deliver stable cash distributions at reasonable yields;

diversify our portfolio of assets by tenant, type, and/or geography;

increase portfolio value over time through appreciation, asset management, and financial structuring; and

preserve investor capital regardless of market conditions.

Market Opportunities

We believe that the single tenant net lease retail, office, and industrial sectors each continue to experience cap rate compression, which we believe are likely to ultimately result in increased asset valuations, due to a demand from private and 1031 exchange investors. That is a key component of our belief that invest in these assets is attractive.

Our Advisor

Our Advisor manages HappyNest pursuant to a contract with us. Our Advisor was formed as a New York limited liability company in February 2017, and it is currently a wholly-owned subsidiary of our Sponsor. Our Advisor is responsible for sourcing, acquiring, and managing all real estate investments on our behalf, subject to oversight and approval by our board of directors. Our Advisor expects to source investment opportunities through various channels, including, but not limited to, our extensive network of owners, developers, lawyers, investment bankers, private equity groups, asset managers, real estate operating companies, REITs, real estate brokers, mortgage brokers, title insurance agencies, and lenders. Our Advisor has a fiduciary duty to us and to our stockholders. The board of directors, or at such time as it is appointed the Investment Committee of our board of directors, will authorize and approve all investments that we make other than de minimis investments. The Investment Committee will be composed of a majority of independent directors.

About the HappyNest Platform

Our Structure

We plan to own all our assets and conduct the majority of operations through the Operating Partnership which will allow us to operate as an UPREIT. This chart shows our ownership structure:

Fees and Compensation to our Sponsor, Advisor and Independent Board Members

The following table summarizes all of the compensation and fees that we will pay to our Sponsor, Advisor and independent members of the HappyNest Board.

Type of Compensation	Determination of Amount	Maximum Amount from Offering (5,000,000 Shares Sold)

Organization and Offering Stage

Sponsor Fees - Organization and Offering Expenses	Reimbursement to our Sponsor of all organization and offering expenses paid on our behalf by our Sponsor, up to a maximum of 3.0% of the aggregate gross offering proceeds, once at least 30,000 shares of common stock have been sold in this offering at an offering price of $10.00 per share.	$1,500,000

Acquisition, Operations and Disposition Stage

Sponsor Fee	Our Sponsor shall be entitled to charge a monthly per subscriber account fee of $1 per subscriber account in respect of its license of the HappyNest name and the HappyNest Platform to us.	Not determinable at this time

Asset Management Fee	A monthly fee of 0.0417% of our “total invested value” as of the immediately preceding September 30 or March 31 (0.50% on a per annum basis), payable to our Advisor. “Total invested value,” for any period, means the aggregate book value of our assets before reserves for amortization and depreciation, impairments or other similar non-cash reserves.	Not determinable at this time

Acquisition Fee^*	3.0% of the contract price of a property (including all fees and expenses, other than those of the Advisor for which HappyNest is not responsible). Such fees and expenses will not exceed an amount that would result in HappyNest paying more than 6.0% of the contract price of a property when aggregated with all other broker broker fees paid by or on behalf of HappyNest in connection with such acquisition excluding fees and expenses. This fee will be paid to our Advisor upon each real estate investment or any other investment by HappyNest.	Not determinable at this time

Disposition Fee	3.0% of contract price of a property (including all fees and expenses). Such fees and expenses will not exceed an amount that would result in HappyNest paying more than 6.0% of the contract price of a property when aggregated with all other broker broker fees paid by or on behalf of HappyNest in connection with such acquisition excluding fees and expenses. This fee will be paid to our Advisor upon each disposition by HappyNest.	Not determinable at this time

Property Management Fee	Our Properties are intended to be triple-net single tenant properties with limited property management responsibilities. However, if our Advisor or its affiliates provides property management services for our real estate investments, we will pay fees up to 1.00% of effective gross revenues from the property being managed. We also will reimburse our Advisor or its affiliates for property-level expenses that it pays or incurs on our behalf. This does not include the Advisor’s overhead, employee costs borne by the Advisor, utilities or technology costs. Our Advisor or its affiliates may subcontract the performance of its property management duties to third parties and pay all or a portion of its property management fee to the third parties with whom it contracts for these services.	Not determinable at this time

Other Operating Expenses	We reimburse our Advisor for out-of-pocket expenses of third parties in connection with providing services to us. This does not include the Advisor’s overhead, employee costs borne by the Advisor, utilities or technology costs. The expense reimbursements that we pay to our Advisor also include expenses incurred by our Sponsor in the performance of services under the shared services agreement between our Advisor and our Sponsor, including any increases in insurance attributable to the management or operation of our Company.	Not determinable at this time

	Additional Fees and Compensation

Independent Director Compensation	We intend to grant each of the non-employee members of our board an initial equity grant of 5,000 restricted shares of common stock. In addition to the initial grant of restricted shares of common stock, we intend to grant members of our board 2,500 restricted shares of common stock each annually. In addition, we reimburse directors for reasonable out-of-pocket expenses incurred in connection with attendance at meetings of our board of directors.	Assuming a value of $10.00 per share of common stock, and assuming that the 5% limit has not been reached, $200,000 represents the aggregate value of the initial grant of restricted common shares, and $100,000 represents the aggregate value of the annual grant of restricted common shares (assuming we continue to have four non-employee board members).

* Several of the fees we pay our Advisor are a percentage of the purchase price or value of an investment, and these fees will be greater to the extent we fund acquisitions through the incurrence of debt which, along with our other liabilities, we expect to represent no more than 50% of our total net assets (before deducting depreciation and other non-cash reserves and non-cash items).

See “Compensation” for a more detailed explanation of the fees and expenses payable to our Sponsor, Advisor and their affiliates.

Summary of Risk Factors

Investing in our common stock involves a high degree of risk. You should carefully review the “Risk Factors” section of this offering circular, beginning on page 25, which contains a detailed discussion of the material risks that you should consider before you invest in our common stock.

Conflicts of Interest

Although currently HappyNest is the only investment vehicle sponsored or managed by our Sponsor and Advisor, certain of our officers may in the future serve as officers or employees of other vehicles that may in the future sponsored by our Sponsor, and other companies unaffiliated with our Sponsor. These other business activities may in the future reduce the time these persons spend managing our business. In addition, these persons may have obligations to those entities, the fulfillment of which might not be in the best interests of us, or any of our stockholders. Although currently HappyNest is the only investment vehicle sponsored or managed by our Sponsor and Advisor, if our Sponsor or Advisor sponsor or manage other investment vehicles in the future, our officers and our Advisor may face conflicts of interest in allocating sale, financing, leasing and other business opportunities among the real properties owned by the companies.

Distributions

We do not expect to declare any distributions until the proceeds from our public offering are invested and generating operating cash flow. Thereafter, we intend to pay dividends on a quarterly basis contingent upon the approval of our board of directors. We expect to pay all dividends from cash flow from operations. Our cash flow from operations may decrease in the future, which may adversely affect our ability to maintain the level of our dividends. Our board of directors may also choose to pay stockholders a larger dividend than available cash flow from operations may support, limited to the extent that the Sponsor and Advisor are willing, in its sole discretion, to defer reimbursements and fees due to it. All deferred reimbursements and fees will not be subject to any interest and will be paid at the discretion of our board of directors. We will not use the net proceeds from our offering to pay dividends. In addition, the amount of cash available for dividends may be limited due to redemptions of our shares pursuant to our share repurchase program. Our board of directors will have flexibility to determine the allocation of available cash available as between the payment of dividends and redemption of our shares.

Upon subscribing for shares of our common stock using the HappyNest Platform, stockholders will be automatically enrolled in our dividend reinvestment plan. Unless a stockholder opts out, using the options available on the HappyNest Platform, our Advisor will automatically reinvest all of such stockholder’s dividends into additional HappyNest shares; provided, that you will have the option to opt in or opt out of the dividend reinvestment plan not more than one time per calendar year. The per share purchase price for HappyNest shares purchased with reinvested dividends will be our most recently determined NAV per share, as calculated as of the end of the last semi-annual period ending on March 31 or September 30, or as otherwise more recently calculated in accordance with our valuation policies.

Leverage Policy

We intend to utilize debt financing (i.e. mortgage debt) to complete some of our property acquisitions. Measured across our portfolio as a whole, we intend to maintain a debt ratio of 50% or less of our net assets (before deducting depreciation and other non-cash reserves and non-cash items). This debt ratio is determined on our portfolio as a whole, and does not restrict the amount of debt that may be incurred with respect to a particular property. We may choose to alter our debt policy in the future, in the sole discretion of the HappyNest Board.

Valuation

Semi-annually, on September 30 and March 31 of each year, beginning on March 31, 2019, a finance team employed by or on behalf of our Advisor and acting under the supervision of our Advisor will calculate our NAV per share. Our NAV per share will be equal to the quotient of our NAV divided by the number of shares of our common stock outstanding at the end of the most recently completed semi-annual period, subject to the calculation principles relating to the number of our outstanding shares as described in the section of this offering circular entitled “Valuation Policies and Our NAV”. Until March 31, 2019, our common stock will be offered at a fixed price of $10.00 per share, the same as the price in this offering, an amount that was arbitrarily determined by our Sponsor.

Share Repurchase Program

We provide a share repurchase program for stockholders who wish to sell their share. We intend to allow the redemption of shares of common stock on a semi-annual basis, with effective dates of repurchase on March 31 and September 30 of each year. Shares will be repurchased at the NAV per share calculated as of such date. Stockholders may offer shares for repurchase by contacting Colonial Stock Transfer Company, Inc., our transfer agent, at any time during the applicable semi-annual period, but not later than 30 days prior to the end of such semi-annual period. Stockholders may withdraw their submissions for repurchase at any time prior to 30 days prior to the end of the applicable semi-annual period.

Holding Period Since Date of Share Purchase	Redemption Price as a % of NAV per Share
6 months —1 year		97	%
1 year — 2 years		98	%
2 years — 3 years		99	%
More than 3 years		100	%

Our board of directors reserves the right to decline any request for share repurchase for any reason, or to amend, suspend or terminate the share repurchase program at any time upon no less than 30 days’ prior written notice. We reserve the right to allow stockholders, on a one-time basis per stockholder, to terminate a share-purchase without the above discounts and without regard to the six month minimum holding period described above. Our repurchase program also provides that in the event of the death or qualifying disability of a stockholder, upon provision of documentation to our transfer agent as they may require, we may repurchase shares prior to the end of the six month holding period and without application of the discounts to NAV per share described above. Our charter provides that we may not repurchase shares of our common stock if such repurchase would materially impair our capital or operations as determined by our board of directors. For example, the board of director may determine not to repurchase shares if, as a result of such repurchase, 25% or more of the value of any class of equity interests in the Company was held by benefit plan investors under ERISA. See “ERISA Considerations”.

Investment Company Act Considerations

We intend to conduct our operations so that neither we, nor any of our subsidiaries, is required to register as investment companies under the Investment Company Act. 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.

We anticipate that we will hold real estate and real estate-related assets described below (i) directly, (ii) through wholly-owned subsidiaries, (iii) through majority-owned joint venture subsidiaries, and, (iv) to a lesser extent, through minority-owned joint venture subsidiaries.

We intend, directly or through our subsidiaries, to originate, invest in and manage a diversified portfolio of commercial real estate investments. We expect to use substantially all of the net proceeds from this offering to originate, acquire and structure a diversified portfolio of commercial real estate properties. We may also invest, to a limited extent, in commercial real estate loans, as well as commercial real estate-related debt securities and other real estate-related assets.

We will monitor our compliance with the 40% test and the holdings of our subsidiaries to ensure that each of our subsidiaries is in compliance with an applicable exemption or exclusion from registration as an investment company under the Investment Company Act.

The securities issued by any wholly-owned or majority-owned subsidiary that we may form and that are excluded from the definition of “investment company” based on Section 3(c)(1) or 3(c)(7) of the Investment Company Act, together with any other investment securities we may own, may not have a value in excess of 40% of the value of our total assets on an unconsolidated basis.

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. We treat companies in which we own at least a majority of the outstanding voting securities as majority-owned subsidiaries. The determination of whether an entity is a majority-owned subsidiary of our company is made by us. We also treat subsidiaries of which we or our wholly-owned or majority-owned subsidiary is the manager (in a manager-managed entity) or managing member (in a member-managed entity) or in which our agreement or the agreement of our wholly-owned or majority-owned subsidiary is required for all major decisions affecting the subsidiaries (referred to herein as “Controlled Subsidiaries”), as majority-owned subsidiaries even though none of the interests issued by such Controlled Subsidiaries meets the definition of voting securities under the Investment Company Act. We reached our conclusion on the basis that the interests issued by the Controlled Subsidiaries are the functional equivalent of voting securities. We have not asked the SEC staff for concurrence of our analysis 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.

We believe that neither we nor certain of our subsidiaries will be considered investment companies for purposes of Section 3(a)(1)(A) of the Investment Company Act because we and they will not engage primarily or hold themselves out as being primarily in the business of investing, reinvesting or trading in securities. Rather, we and such subsidiaries will be primarily engaged in non-investment company businesses related to real estate. Consequently, we and our subsidiaries expect to be able to conduct our operations such that none will be required to register as an investment company under the Investment Company Act.

Certain of our subsidiaries may also rely upon the exclusion from the definition of investment company under Section 3(c)(5)(C) of the Investment Company Act. Section 3(c)(5)(C), as interpreted by the staff of the SEC, requires an entity to invest at least 55% of its assets in “mortgages and other liens on and interests in real estate”, which we refer to as “qualifying real estate interests”, and at least 80% of its assets in qualifying real estate interests plus “real estate-related assets”.

Qualification for exemption from registration under the Investment Company Act will limit our ability to make certain investments. To the extent that the SEC staff provides more specific guidance regarding any of the matters bearing upon such exclusions, we may be required to adjust our strategy accordingly. Any additional guidance from the SEC staff could provide additional flexibility to us, or it could further inhibit our ability to pursue the strategies we have chosen.

The loss of our exclusion from regulation pursuant to the Investment Company Act could require us to restructure our operations, sell certain of our assets or abstain from the purchase of certain assets, which could have an adverse effect on our financial condition and results of operations. See “Risk Factors— Risks Related to Our Organization and Corporate Structure”.

RISK FACTORS

An investment in our common stock involves substantial risks. You should carefully consider the following risk factors in addition to the other information contained in this offering circular before purchasing shares. The occurrence of any of the following risks might cause you to lose a significant part of your investment. The risks and uncertainties discussed below are not the only ones we face, but do represent those risks and uncertainties that we believe are most significant to our business, operating results, prospects and financial condition. Some statements in this offering circular, including statements in the following risk factors, constitute forward-looking statements. Please refer to the section entitled “Cautionary Note Regarding Forward-Looking Statements”.

Risks Related to the Start-up Nature of Our Business, Our Advisor and Our Sponsor

We are a newly-formed entity with no operating history.

We are a newly-formed entity with no operating history. You should consider an investment in our common stock in light of the risks, uncertainties and difficulties frequently encountered by other newly-formed companies with similar objectives. To be successful in this market, we and our Advisor, who is not newly formed but is newly operational, must, among other things:

	●	identify and acquire real estate assets consistent with our investment strategies;

	●	raise additional funds, both for us and our Sponsor;

	●	increase awareness of our name within the investment products market;

	●	attract, integrate, motivate and retain qualified personnel to manage our day-to-day operations;

	●	respond to competition for our targeted real estate properties and other investments as well as for potential investors; and

	●	build and expand our operations structure to support our business.

There can be no assurance that we will achieve our investment objectives. As of the date of this offering circular, we have not made any investments in real estate or otherwise and do not own any properties or have any operations or independent financing.

We have minimal operating capital, no significant assets and no revenue from operations.

We have minimal operating capital consisting, as of the date of this offering circular, of an initial $1,000 investment by our Sponsor, and for the foreseeable future we will be dependent upon our ability to finance our operations from the sale of equity or other financing alternatives. There can be no assurance that we will be able to successfully raise operating capital. The failure to successfully raise operating capital, and the failure to attract qualified real estate companies and sufficient investor purchase commitments, could result in our bankruptcy or other event which would have a material adverse effect on us and our stockholders. We have no significant assets or financial resources, so such adverse event could put your investment dollars at significant risk.

Our Sponsor is a development stage company with limited operating history and no revenues to date. As a company in the early stages of development, our Sponsor faces increased risks, uncertainties, expenses and difficulties.

Our Sponsor and the owner and operator of the HappyNest Platform, has a limited operating history. For us to be successful, the volume of acquisitions originated through the HappyNest Platform will need to increase, which will require our Sponsor or its affiliates (including our Advisor) to increase its facilities, personnel and infrastructure to accommodate the greater obligations and demands on the HappyNest Platform. The HappyNest Platform is designed to maintain all transactions in real estate assets and stockholder records. Our Sponsor expects to constantly update its software and mobile application and expand its customer support services and retain an appropriate number of employees to maintain the operations of its platform. If our business grows substantially, our Sponsor may need to make significant new investments in personnel and infrastructure to support that growth. If our Sponsor is unable to increase the capacity of its platform and maintain the necessary infrastructure, or if our Advisor is unable to make significant investments on a timely basis or at reasonable costs, you may experience delays in receipt of distributions on our common stock, periodic downtime of the HappyNest Platform or other disruptions to our business and operations. If our Sponsor is unable to raise additional capital, it may face limits on its ability to operate as currently planned, which may adversely affect our ability to continue to operate.

Because this is a blind pool offering, you will not have the opportunity to evaluate our investments before we make them, which makes your investment more speculative.

Because we have not yet acquired any investments and are not committed to acquire any specific investments with the net proceeds of this offering, we are not able to provide you with information to assist you in evaluating the merits of any specific investments, except for investments that may be described in supplements to this offering circular. Because you will be unable to evaluate the economic merit of assets before we invest in them, you will have to rely entirely on the ability of our Advisor to select suitable and successful investment opportunities. These factors increase the risk that your investment may not generate returns comparable to those of our competitors.

If our Sponsor and Advisor fail to attract and retain key personnel, we may not be able to achieve our anticipated level of growth and our business could suffer.

Our future depends on the continued contributions of our executive officers and other key personnel of our Advisor and of our Sponsor, each of whom would be difficult to replace. In particular, Jesse Prince, the Co-founder/Chief Executive Officer of our Advisor and of our Sponsor, and Leonardo Sessa, the Co-founder/President of our Advisor and of our Sponsor, are critical to the management of our business and operations and the development of our strategic direction. The loss of the services of Jesse Prince, Leonardo Sessa or other key personnel of our Advisor and/or our Sponsor and the process to replace any of them could involve significant time and expense and may significantly delay or prevent the achievement of our business objectives. Additionally, our Advisor intends to hire various real estate and business professionals to manage various aspects of day-to-day operations, including but not limited to acquisitions, asset management, property management, marketing, and information technology. We believe that our success depends, in large part, upon our Advisor’s ability to attract and retain highly skilled professionals to fill these roles. Competition for such professionals is intense, and our Advisor may be unsuccessful in attracting and retaining such skilled professionals. If we lose or are unable to obtain the services of highly skilled professionals, our ability to implement our investment strategies could be delayed or hindered.

Our Sponsor will need to raise substantial additional capital to fund its operations, and if it fails to obtain additional funding, it may be unable to continue operations.

If our Sponsor were to enter bankruptcy proceedings, the operation of the HappyNest Platform and the activities with respect to our operations and business would be interrupted.

If our Sponsor were to enter bankruptcy proceedings or were to cease operations, we would be required to find other ways to meet obligations regarding our operations and business. Such alternatives could result in delays in the disbursement of distributions or the filing of reports or could require us to pay significant fees to another company that we engage to perform services for us.

Our Advisor is dependent on our ability to raise proceeds in this offering in order to pay the fees through which it will fund its operations. If it does not receive such fees, it will not be able to run our day-to-day operations without obtaining other sources of funding. If we fail to raise substantial proceeds in this offering to pay our Advisor, and if it fails to obtain additional funding, it may be unable to continue operations.

Our Advisor is responsible for sourcing, acquiring, and managing all real estate investments on our behalf, subject to oversight and approval by our board of directors. Our Advisor’s only present source of funding is the compensation that it will receive from us, and we will only be able to pay such compensation to the extent that we raise sufficient proceeds in this offering, unless our Advisor is able to raise substantial additional funds. To meet its financing requirements in the future, our Advisor may raise funds through equity offerings, debt financings or strategic alliances. Raising additional funds may involve agreements or covenants that restrict our Advisor’s business activities and options. Additional funding may not be available to it on favorable terms, or at all. If we are unable to raise sufficient proceeds in this offering to compensate our Advisor, and if our Advisor is unable to obtain additional funds, it may be forced to reduce or terminate its operations. Any inability for our Advisor to fund operations could have a substantial and adverse effect on the viability and operations of HappyNest.

We have no investment criteria limiting the size of each investment we make, and we currently have no investments. Any individual real estate investment that we make using the proceeds of this offering could represent a material percentage of our assets, and if that investment experiences a loss, the value of your investment in us could be significantly diminished.

Due to what we anticipate will be an initially relatively small asset base and an anticipated high concentration of our total assets in relatively large individual real estate assets, the value of your investment could vary more widely with the performance of specific assets than if the offering amount were greater or if we invested in a more diverse portfolio of properties. Because of this potential asset concentration, even modest changes in the value of our real estate assets could have a significant impact on the value of your investment.

We face significant competition for real estate investment opportunities, which may limit our ability to acquire suitable investments and achieve our investment objectives or pay distributions.

We face competition from various entities for real estate investment opportunities, including other REITs, pension funds, banks and insurance companies, investment funds and companies, partnerships and developers. Most of our current or potential competitors have significantly more financial, technical, marketing and other resources than we do and may be able to devote greater resources to the development, promotion, sale and support of their platforms and distribution channels, and may be able to take on more risk than we can. Larger real estate programs may enjoy significant competitive advantages that result from, among other things, a lower cost of capital and enhanced operating efficiencies. In addition, the number of entities and the amount of funds competing for suitable properties may increase. Any such increase would result in increased demand for these assets and therefore increased prices paid for them. If we pay higher prices for properties and other investments, our profitability will be reduced and you may experience a lower return on your investment. Our potential competitors may also have longer operating histories, more extensive customer bases, greater brand recognition and broader customer relationships than we have. These competitors may be better able to develop new products, to respond quickly to new technologies and to undertake more extensive marketing campaigns. The online real estate investing industry is driven by constant innovation. If we are unable to compete with such companies and meet the need for innovation, this offering may not raise enough proceeds for us to succeed in our business plan. Competition from these entities may reduce the number of suitable investment opportunities offered to us or increase the bargaining power of property owners seeking to sell. In addition, the number of entities and the amount of funds competing for suitable investments may increase. If we acquire investments at higher prices and/or by using less-than-ideal capital structures, our returns will be lower and the value of our assets may not appreciate or may decrease significantly below the amount we paid for such assets. If such events occur, our stockholders may experience a lower return on their investment.

If we are unable to find suitable investments, we may not be able to achieve our investment objectives or pay distributions.

Our ability to achieve our investment objectives and to pay distributions depends upon the performance of our Advisor in the acquisition of our investments and the ability of our Advisor to source investment opportunities for us through the open market or through established relationships with several net lease funds, developers, operators and other real estate professionals. The more money we raise in this offering, the greater our challenge will be to invest all of the net offering proceeds on attractive terms. We cannot assure you that our Advisor will be successful in obtaining suitable investments on financially attractive terms through our relationships or the open market or that, if our Advisor makes investments on our behalf, our objectives will be achieved. If we, through our Advisor, are unable to find suitable investments promptly, we will hold the proceeds from this offering in an interest-bearing account or invest the proceeds in short-term assets. If we would continue to be unsuccessful in locating suitable investments, we may ultimately decide to liquidate. In the event we are unable to timely locate suitable investments, we may be unable or limited in our ability to pay distributions and we may not be able to meet our investment objectives.

Failure to qualify as a REIT would reduce our net earnings available for investment or distribution.

Our qualification as a REIT will depend upon our ability to meet requirements regarding our organization and ownership, distributions of our income, the nature and diversification of our income and assets and other tests imposed by the Internal Revenue Code. If we fail to qualify as a REIT for any taxable year after electing REIT status, we will be subject to federal income tax on our taxable income at corporate rates. In addition, we would generally be ineligible to elect REIT treatment for four taxable years following the year in which we lost our REIT status. Losing our REIT status would reduce our net earnings available for investment or distribution to stockholders because of the additional tax liability. In addition, distributions would no longer qualify for the dividends-paid deduction and we would no longer be required to make distributions. If this occurs, we might be required to borrow funds or liquidate some investments in order to pay the applicable tax. See “Federal Income Tax Considerations”.

Risks Related to an Investment in Our Common Stock

This is a “best efforts” offering. If we are unable to raise substantial funds, we will be limited in the number and type of investments we may make, and the value of your investment will fluctuate with the performance of the specific properties we acquire.

Because we are selling our shares directly to the public, our stockholders will not have the benefit of an independent due diligence review of us, which is customarily performed in underwritten offerings; the absence of an independent due diligence review increases the risks and uncertainty our stockholders face.

Because there is no independent third-party underwriter selling our shares or managing the sales effort, there will be no outside independent review of our finances and operations in connection with the preparation of this offering, other than the attached independent audit of our financial statements. Other REITs who use a licensed broker-dealer to sell shares are subjected to a due diligence review by the underwriter or dealer manager to satisfy statutory duties under the Securities Act of 1933, as amended (the “Securities Act”), and the rules of FINRA or the national securities exchange where the REIT securities are listed. Therefore, our stockholders must rely on the information in this offering circular and will not have the benefit of an independent review and investigation of this offering of the type normally performed by an unaffiliated, independent underwriter in a public securities offering.

Due diligence reviews typically include an independent investigation of the background of a REIT’s sponsor, advisor and their affiliates, review of the offering documents and independent analysis of the plan of business and any underlying financial assumptions. A licensed broker-dealer also has “know your customer” obligations to determine whether the REIT investment is suitable for each individual investor. We intend to perform these tasks ourselves, but our investors do not benefit from a third-party review of these facts and considerations.

The offering price of our common stock was not established on an independent basis; the actual value of your investment may be substantially less than what you pay.

We established the offering price of our shares on an arbitrary basis. The selling price of our common stock bears no relationship to our book or asset values or to any other established criteria for valuing shares. Because the offering price is not based upon any independent valuation, the offering price may not be indicative of the proceeds that you would receive upon liquidation.

In addition, beginning on March 31, 2019, the per share purchase price will be determined based on NAV and will equal the quotient of our NAV, divided by the number of our shares of common stock outstanding as of the end of the most recently completed semi-annual period (our “NAV per share”), and will be adjusted semi-annually, on September 30 and March 31 of each year. There can be no assurance that the NAV per share will equal or exceed $10.00 in the future. If the NAV per share is valued at less than $10.00, you may lose some or all of your investment.

There is no public trading market for our common stock and there may never be one; therefore, it may be difficult for you to sell your shares.

There currently is no public market for our common stock and there may never be one. Our charter also prohibits the direct or constructive ownership of more than 9.8% of the outstanding shares of our common stock by any one person, unless exempted by our board of directors, which may deter large investors from purchasing your shares. Moreover, our share repurchase program includes numerous restrictions that would limit your ability to sell your shares to us. The HappyNest Board may reject any request for repurchase of shares, suspend (in whole or in part) the share repurchase program at any time and from time to time upon notice to our stockholders and amend or terminate our share repurchase program at any time upon 30 days’ notice to our stockholders. Our charter provides that we may not repurchase shares of our common stock if such repurchase would materially impair our capital or operations as determined by our board of directors. Therefore, it may be difficult for you to sell your shares promptly or at all. If you are able to sell your shares, you likely will have to sell them at a substantial discount to the price you paid for the shares. It also is likely that your shares would not be accepted as the primary collateral for a loan. You should purchase the shares only as a long-term investment because of the illiquid nature of the shares. See “Investor Suitability Standards,” “Description of Securities — Restrictions on Ownership and Transfer” and “Share Repurchase Program” elsewhere in this offering circular for a more complete discussion on the restrictions on your ability to transfer your shares.

Our stockholders may not be able to sell their shares under our share repurchase program.

We do not expect that a secondary market for resale of our common stock will develop, but we have adopted a share repurchase program for stockholders who wish to sell their shares. Our ability to repurchase shares depends upon the levels of our cash reserves (including dividend reinvestment proceeds), availability under any line of credit that we might have, the pace of new share sales, and our ability to sell properties and other investments. If we must sell properties or other investments in order to honor repurchase requests, the repurchase of shares offered for repurchase could be delayed until we have sold sufficient properties or investments to honor such requests. We expect that the property sale process, if required to honor repurchase requests, could take several months, and we cannot be sure how long it might take to raise sufficient capital from property sales and other sources to honor all such requests. We intend to honor such repurchase requests in the order they are received; provided, that our charter provides that we may not repurchase shares of our common stock if such repurchase would materially impair our capital or operations as determined by our board of directors. For example, the board of director may determine not to repurchase shares if, as a result of such repurchase, 25% or more of the value of any class of equity interests in the Company was held by benefit plan investors under ERISA. See “ERISA Considerations”.

Our board of directors may amend, suspend or terminate our share repurchase program upon 30 days’ notice to stockholders, provided that we may increase or decrease the funding available for the repurchase of shares pursuant to our share repurchase program upon ten business days’ notice to our stockholders. See “Description of Shares —Share Repurchase Program”, for more information about the program.

We may, at some future date, seek to list our shares on a national securities exchange to create a secondary market for our stock, but we have no current plan to do so, and for the foreseeable future stockholders should assume that the only available avenue to sell their shares will be our share repurchase program, described above.

If we are able to quickly raise a substantial amount of capital, we may have difficulty investing it in properties.

If we are able to quickly raise a substantial amount of capital during this offering, we may have difficulty identifying and purchasing suitable properties on attractive terms, and there could be a delay between the time we receive net proceeds from the sale of shares of our common stock in this offering and the time we invest the net proceeds. This could cause a delay in the time it takes your investment to realize its full potential return and could adversely affect our ability to pay distributions to you. Failure to minimize the amount of time between receipt of the net proceeds and investment in real estate assets consistent with our investment objectives would have a material adverse effect on our ability to pay distributions to you and the value of your investment.

Enrollment in our dividend reinvestment plan is automatic. Participation in our dividend reinvestment plan will restrict cash distributions to which a subscriber might otherwise be entitled and may also have tax consequences for such subscriber.

Pursuant to our dividend reinvestment plan, you will have all of your dividends and other distributions, excluding those dividends and other distributions that our board of directors designates as ineligible for reinvestment through the plan, reinvested in additional shares of our common stock, in lieu of receiving cash distributions. By subscribing for shares of common stock in this offering, you will automatically be enrolled in our dividend reinvestment plan, unless you opt out, and by participating in the plan you will forgo the right to receive any of your distributions in cash. You will have the opportunity to opt in or opt out of the dividend reinvestment plan no more than once per year. Additionally, if you participate in our dividend reinvestment plan and are subject to federal income taxation, you will incur a tax liability for distributions allocated to you even though you have not received the distributions in cash but rather had the distributions withheld and reinvested pursuant to our dividend reinvestment plan. Specifically, you will be treated as if you have received the distribution from us in cash and then applied such distribution to the purchase of additional shares. See “Tax Consequences of Participation in Dividend Reinvestment Plan”.

We may be unable to pay or maintain cash distributions or increase distributions over time.

There are many factors that can affect the availability and timing of cash distributions to stockholders who have opted out of participating in our dividend reinvestment plan. Distributions will be based principally on distribution expectations of our potential investors and cash available from our operations. The amount of cash available for distribution will be affected by many factors, such as our ability to buy properties as offering proceeds become available and our operating expense levels, as well as many other variables. Actual cash available for distribution may vary substantially from estimates. We cannot assure you that we will be able to pay or maintain distributions or that distributions will increase over time, nor can we give any assurance that rents from the properties will increase, or that future acquisitions of real properties will increase our cash available for distribution to stockholders. For a description of the factors that can affect the availability and timing of cash distributions to stockholders. See “Description of Our Capital Stock — Distributions”.

Initially, and from time to time on a going-forward basis, we may not generate sufficient cash flow from operations to fund distributions. If we pay distributions from sources other than our cash flow from operations, we will have less funds available for investments and your overall return will be reduced.

We expect to pay all dividends from cash flow from operations, although our organization documents do not prohibit us from paying distributions from any source, including, borrowings, offering proceeds or waivers of fees payable to our Advisor or sales of assets. Until the proceeds from this offering are fully invested, and from time to time during the operational stage, we may not generate sufficient cash flow from operations to fund distributions.

In addition, the amount of cash available for dividends may be limited due to redemptions of our shares; to the extent that we need to use cash to satisfy redemptions, we will not have such cash available for dividends. The HappyNest Board will have flexibility to determine the allocation of available cash available as between the payment of dividends and redemption of our shares.

If we pay distributions from financings or other sources other than our cash flow from operations, we will have less funds available for investments in real estate properties and the number of real estate properties that we invest in and the overall return to our stockholders may be reduced. If we fund distributions from borrowings, our interest expense and other financing costs, as well as the repayment of such borrowings, will reduce our earnings and cash flow from operations available for distribution in future periods, and accordingly your overall return may be reduced. If we fund distributions from the sale of assets, this will affect our ability to generate cash flows from operations in future periods.

We are offering shares of our common stock pursuant to Regulation A promulgated pursuant to the JOBS Act, and we cannot be certain if the reduced disclosure requirements applicable to Tier 2 issuers will make our common stock less attractive to investors as compared to a traditional initial public offering.

As a Tier 2 issuer, we will be subject to scaled disclosure and reporting requirements, which may make our common stock less attractive to investors as compared to a traditional initial public offering, which may make an investment in our common stock less attractive to investors who are accustomed to enhanced disclosure and more frequent financial reporting. In addition, given the relative lack of regulatory guidance regarding the recent amendments to Regulation A, there is a significant amount of regulatory uncertainty in regards to how the SEC or the individual state securities regulators will regulate both the offer and sale of our securities, as well as any ongoing compliance that we may be subject to. If our scaled disclosure and reporting requirements, or regulatory uncertainty regarding Regulation A, reduces the attractiveness of our common stock, we may be unable to raise the necessary funds necessary to commence operations, or to develop a diversified portfolio of real estate investments, which could severely affect the value of our common stock.

Our use of Form 1-A and our reliance on Regulation A for this offering may make it more difficult to raise capital as and when we need it, as compared to if we were conducting a traditional initial public offering on Form S-11.

Because of the exemptions from various reporting requirements provided to us under Regulation A and because we are only permitted to raise up to $50,000,000 in any 12-month period under Regulation A (although we may raise capital in other ways), we may be less attractive to investors and it may be difficult for us to raise additional capital as and when we need it. Investors may be unable to compare our business with other companies in our industry if they believe that our financial accounting is not as transparent as other companies in our industry. If we are unable to raise additional capital as and when we need it, our financial condition and results of operations may be materially and adversely affected.

Because we are limited in the amount of funds we can raise in this offering, we will be limited in the number and type of investments we make and the value of your investment in us will fluctuate with the performance of the specific assets we acquire.

Under Regulation A, we are only allowed to raise up to $50,000,000 in any 12-month period in this offering (although we may raise capital in other ways). We expect that a majority of the assets we acquire, at least initially, will be priced between $1 million to $10 million to quickly scale the quantity and diversity of assets in our overall portfolio. As a result, the amount of proceeds we raise in this offering may be substantially less than the amount we would need to achieve a diversified portfolio of investments, even if we are successful in raising the maximum offering amount. If we are unable to raise substantial funds, we will make fewer investments resulting in less diversification in terms of the type, number and size of investments that we make. In that case, the likelihood that any single asset’s performance would adversely affect our profitability will increase. Your investment in our shares will be subject to greater risk to the extent that we lack a diversified portfolio of investments. Further, we will have certain fixed operating expenses, including certain expenses as a public reporting company, regardless of whether we are able to raise substantial funds in this offering. Our inability to raise substantial funds would increase our fixed operating expenses as a percentage of gross income, reducing our net income and limiting our ability to make distributions.

There may be deficiencies with our internal controls that require improvements, and if we are unable to adequately evaluate internal controls, we may be subject to sanctions.

As a Tier 2 issuer, we will not need to provide a report on the effectiveness of our internal controls over financial reporting, and we will be exempt from the auditor attestation requirements concerning any such report so long as we are a Tier 2 issuer. We are in the process of evaluating whether our internal control procedures are effective and therefore there is a greater likelihood of undiscovered deficiencies in our internal controls or financial statements as compared to issuers that have conducted such evaluations.

We are an “emerging growth company” under the federal securities laws and will be subject to reduced public company reporting requirements.

In April 2012, President Obama signed into law the Jumpstart Our Business Startups Act, or the JOBS Act. We are an “emerging growth company”, as defined in the JOBS Act, and are eligible to take advantage of certain exemptions from, or reduced disclosure obligations relating to, various reporting requirements that are normally applicable to public companies. We could remain an “emerging growth company” for up to five years, or until the earliest of (1) the last day of the first fiscal year in which we have total annual gross revenue of $1.07 billion or more, (2) December 31 of the fiscal year 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 our common stock held by non-affiliates exceeds $700 million, measured as of the last business day of our most recently completed second fiscal quarter, and we have been publicly reporting for at least 12 months) or (3) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three year period. Under the JOBS Act, emerging growth companies are not required to (1) provide an auditor’s attestation report on management’s assessment of the effectiveness of internal control over financial reporting, pursuant to Section 404 of the Sarbanes-Oxley Act, (2) comply with new requirements adopted by the Public Company Accounting Oversight Board, or the PCAOB, which require mandatory audit firm rotation or a supplement to the auditor’s report in which the auditor must provide additional information about the audit and the issuer’s financial statements, (3) comply with new audit rules adopted by the PCAOB after April 5, 2012 (unless the SEC determines otherwise), (4) provide certain disclosures relating to executive compensation generally required for larger public companies or (5) hold stockholder advisory votes on executive compensation. If we take advantage of any of these exemptions, we do not know if some investors will find our common stock less attractive as a result.

Additionally, the JOBS Act provides that an “emerging growth company” may take advantage of an extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies. This means an “emerging growth company” can delay adopting certain accounting standards until such standards are otherwise applicable to private companies. However, we are electing to “opt out” of such extended transition period, and will therefore comply with new or revised accounting standards on the applicable dates on which the adoption of such standards are required for non-emerging growth companies. Section 107 of the JOBS Act provides that our decision to opt out of such extended transition period for compliance with new or revised accounting standards is irrevocable.

Risks Related to Our Organization and Corporate Structure

Our stockholders will have limited control over changes in our policies and operations, which increases the uncertainty and risks our stockholders face.

Our board of directors determines our major policies, including our policies regarding financing, growth, debt capitalization, REIT qualification and distributions. Our board of directors may amend or revise these and other policies without a vote of the stockholders. Under Maryland General Corporation Law and our articles of incorporation, our stockholders have a right to vote only on limited matters. Our board’s broad discretion in setting policies and our stockholders’ inability to exert control over those policies increases the uncertainty and risks our stockholders face.

Our charter limits the number of shares a person may own and permits our board of directors to issue classes of preferred stock with terms that may subordinate the rights of our common stockholders or discourage a third party from acquiring us in a manner that could result in a premium price to our stockholders.

Our charter, with certain exceptions, authorizes our directors to take such actions as are necessary and desirable to preserve our qualification as a REIT. To help us comply with the REIT ownership requirements of the Internal Revenue Code, our articles of incorporation prohibit a person from directly or constructively owning more than 9.8% of our outstanding shares, unless exempted by our board of directors. In addition, our board of directors may classify or reclassify any unissued common stock or preferred stock and establish the preferences, conversion or other rights, voting powers, restrictions, limitations as to distributions, qualifications and terms or conditions of repurchase of any such stock. Thus, our board of directors could authorize the issuance of preferred stock with priority as to distributions and amounts payable upon liquidation over the rights of the holders of our common stock. These provisions may have the effect of delaying, deferring or preventing a change in control of us, including an extraordinary transaction (such as a merger, tender offer or sale of all or substantially all of our assets) that might provide a premium price to holders of our common stock.

We may change our investment objectives and policies without stockholder approval.

We may make adjustments to our target portfolio based on real estate market conditions and investment opportunities, and we may change our investment objectives and policies at any time without the consent of our stockholders. These policies may change over time. The methods of implementing our investment policies also may vary, as new real estate development trends emerge and new investment techniques are developed. Our investment policies, the methods for their implementation, and our other objectives, policies and procedures may be altered by our Advisor without the approval of our stockholders. As a result, the nature of your investment could change without your consent.

Our investors’ interest in us could be diluted if we issue additional shares of common stock, which could reduce the overall value of their investment.

Our common stockholders do not have preemptive rights to any shares we issue in the future. Our charter authorizes us to issue 200,000,000 shares of common stock. Our board of directors may increase the number of authorized shares of common stock without stockholder approval. After our investors purchase shares in this offering, our board may elect to (i) sell additional shares in this or in future public offerings, including through our dividend reinvestment plan; (ii) issue equity interests in private offerings; (iii) issue shares to our Advisor and/or Sponsor, or their successors or assigns, in payment of outstanding fee obligations; (iv) issue shares of our common stock to sellers of properties or assets we acquire in connection with an exchange of limited partnership interests of the Operating Partnership; or (v) otherwise issue additional shares of our capital stock. To the extent we issue additional equity interests after our investors purchase shares, whether in this or future primary offerings, pursuant to our dividend reinvestment plan or otherwise, our investors’ percentage ownership interest in us would be diluted. In addition, depending upon the terms and pricing of any additional issuance of shares, the use of the proceeds and the value of our real estate investments, our investors could also experience dilution in the book value and NAV per share of their shares and in the earnings and distributions per share.

Our rights and the rights of our stockholders to recover claims against our independent directors are limited, which could reduce our stockholders’ and our recovery against our independent directors if they negligently cause us to incur losses.

Maryland law provides that a director has no liability in that capacity if he or she performs his or her duties in good faith, in a manner he or she reasonably believes to be in our best interests and with the care that an ordinarily prudent person in a like position would use under similar circumstances. Our bylaws provide that none of our independent directors shall be liable to us or our stockholders for monetary damages and that we will generally indemnify them for losses unless they are negligent or engage in willful misconduct. As a result, you and we may have more limited rights against our independent directors than might otherwise exist under common law, which could reduce your and our recovery from these persons if they act in a negligent manner. In addition, we may be obligated to fund the defense costs incurred by our independent directors (as well as by our other directors, officers, employees and agents) in some cases, which would decrease the cash otherwise available for distribution to you.

Although we will not currently be afforded the protection of the Maryland General Corporation Law relating to deterring or defending hostile takeovers, our board of directors could opt into these provisions of Maryland law in the future, which may discourage others from trying to acquire control of us and may prevent our stockholders from receiving a premium price for their stock in connection with a business combination.

Under Maryland law, “business combinations” between a Maryland corporation and certain interested stockholders or affiliates of interested stockholders are prohibited 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 reclassification of equity securities. Also under Maryland law, control shares of a Maryland corporation acquired in a control share acquisition have no voting rights 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 acquirer, an officer of the corporation or an employee of the corporation who is also a director of the corporation are excluded from the vote on whether to accord voting rights to the control shares. Should our board of directors opt into these provisions of Maryland law, it may discourage others from trying to acquire control of us and increase the difficulty of consummating any offer. Similarly, provisions of Title 3, Subtitle 8 of the Maryland General Corporation Law could provide similar anti-takeover protection. For more information about the business combination, control share acquisition and Subtitle 8 provisions of Maryland law, see ”Description of Shares—Business Combinations, Control Share Acquisitions, and—Subtitle 8”.

Our charter includes an anti-takeover provision that may discourage a stockholder from launching a tender offer for our shares.

Our charter provides that any tender offer made by a stockholder, including any “mini-tender” offer, must comply with most provisions of Regulation 14D of the Securities Exchange Act of 1934, as amended. The offering stockholder must provide our company notice of such tender offer at least 10 business days before initiating the tender offer. If the offering stockholder does not comply with these requirements, our company will have the right to repurchase that stockholder’s shares and any shares acquired in such tender offer. In addition, the noncomplying stockholder shall be responsible for all of our company’s expenses in connection with that stockholder’s noncompliance. This provision of our charter may discourage a stockholder from initiating a tender offer for our shares and prevent our stockholders from receiving a premium price for their shares in such a transaction.

Payment of fees to our Advisor, Sponsor and their affiliates reduces cash available for investment and distribution to our stockholders and increases the risk that our stockholders will not be able to recover the amount of their investment in our shares.

Our Advisor, Sponsor and their affiliates perform services for us in connection with the selection and acquisition of our real estate investments, the management and leasing of our real estate properties, the administration of our real estate-related investments and the disposition of our real estate investments. We pay them substantial fees for these services, which results in immediate dilution of the value of our stockholders’ investment and reduces the amount of cash available for investment or distribution to stockholders. Under certain circumstances, these fees may be comparable or higher than the commission which an investor would pay to a registered broker dealer or an investment advisor who was facilitating an investment, such as the purchase of publicly traded securities. Compensation to be paid to our Advisor may be increased subject to approval by our independent directors and the other limitations in our charter, which would further dilute our stockholders’ investment and reduce the amount of cash available for investment or distribution to stockholders. See “Compensation”.

You may be more likely to sustain a loss on your investment because our Sponsor does not have as strong an economic incentive to avoid losses as do sponsors who have made significant equity investments in their companies.

Because it has not made a significant equity investment in our company, our Sponsor will have little exposure to loss in the value of our common stock. Without this exposure, our investors may be at a greater risk of loss because our Sponsor does not have as much to lose from a decrease in the value of our shares as do those sponsors who make more significant equity investments in their companies.

Any adverse changes in our Advisor or Sponsor’s financial health or our relationship with our Sponsor or its affiliates could hinder our operating performance and the return on your investment.

We have engaged our Advisor to manage our operations and our portfolio of investments. Our Advisor utilizes its or our Sponsor’s personnel to perform services on its behalf for us. Our ability to achieve our investment objectives and to pay distributions is dependent upon the performance of our Advisor, Sponsor and their affiliates as well as our Advisor and Sponsor’s real estate professionals in the identification and acquisition or origination of investments, the management of our assets and operation of our day-to-day activities. Any adverse changes in our Sponsor’s financial condition or our relationship with our Advisor or Sponsor could hinder their ability to successfully manage our operations and our portfolio of investments. Our Sponsor will be continuing to raise funds to finance its operations, and an inability of our Sponsor to do so could adversely affect its, our Advisor’s and/or our ability to operate.

Your investment return may be reduced if we are required to register as an investment company under the Investment Company Act; if we or our subsidiaries become an unregistered investment company, we could not continue our business.

Neither we nor any of our subsidiaries intend to register as investment companies under the Investment Company Act. If we or our subsidiaries were obligated to register as investment companies, we would have to comply with a variety of substantive requirements under the Investment Company Act that impose, among other things:

limitations on capital structure;

restrictions on specified investments;

prohibitions on transactions with affiliates; and

compliance with reporting, record keeping, voting, proxy disclosure and other rules and regulations that would significantly increase our operating expenses

Under the relevant provisions of Section 3(a)(1) of the Investment Company Act, an investment company is any issuer that:

is or holds itself out as being engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting or trading in securities (the “primarily engaged test”); or

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 such issuer’s total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis (the “40% test”). “Investment securities” excludes U.S. government securities and securities of majority-owned subsidiaries that are not themselves investment companies and are not relying on the exception from the definition of investment company under Section 3(c)(1) or Section 3(c)(7) (relating to private investment companies).

We believe that neither we nor our Operating Partnership will be required to register as an investment company based on the following analysis. With respect to the 40% test, the entities through which we and our Operating Partnership intend to own our assets will be majority-owned subsidiaries that are not themselves investment companies and are not relying on the exceptions from the definition of investment company under Section 3(c)(1) or Section 3(c)(7).

With respect to the primarily engaged test, we and our Operating Partnership are holding companies and do not intend to invest or trade in securities ourselves. Rather, through the majority-owned subsidiaries of our Operating Partnership, we and our Operating Partnership are primarily engaged in the non-investment company businesses of these subsidiaries, namely the business of purchasing or otherwise acquiring real estate and real estate-related assets.

We believe that most of the subsidiaries of our Operating Partnership will be able to rely on Section 3(c)(5)(C) of the Investment Company Act for an exception from the definition of an investment company. (Any other subsidiaries of our Operating Partnership should be able to rely on the exceptions for private investment companies pursuant to Section 3(c)(1) and Section 3(c)(7) of the Investment Company Act.) As reflected in no-action letters, the SEC staff’s position on Section 3(c)(5)(C) generally requires that an issuer maintain at least 55% of its assets in “mortgages and other liens on and interests in real estate,” or qualifying assets; at least 80% of its assets in qualifying assets plus real estate-related assets; and no more than 20% of the value of its assets in other than qualifying assets and real estate-related assets, which we refer to as miscellaneous assets. To constitute a qualifying asset under this 55% requirement, a real estate interest must meet various criteria based on no-action letters. We expect that each of the subsidiaries of our Operating Partnership relying on Section 3(c)(5)(C) will invest at least 55% of its assets in qualifying assets, and approximately an additional 25% of its assets in other types of real estate-related assets. We expect to rely on guidance published by the SEC staff or on our analyses of guidance published with respect to types of assets to determine which assets are qualifying real estate assets and real estate-related assets.

To maintain compliance with the Investment Company Act, our subsidiaries may be unable to sell assets we would otherwise want them to sell and may need to sell assets we would otherwise wish them to retain. In addition, our subsidiaries may have to acquire additional assets that they might not otherwise have acquired or may have to forego opportunities to make investments that we would otherwise want them to make and would be important to our investment strategy. Moreover, the SEC or its staff may issue interpretations with respect to various types of assets that are contrary to our views and current SEC staff interpretations are subject to change, which increases the risk of non-compliance and the risk that we may be forced to make adverse changes to our portfolio. In this regard, we note that in 2011 the SEC issued a concept release indicating that the SEC and its staff were reviewing interpretive issues relating to Section 3(c)(5)(C) and soliciting views on the application of Section 3(c)(5)(C) to companies engaged in the business of acquiring mortgages and mortgage-related instruments. If we were required to register as an investment company but failed to do so, we would be prohibited from engaging in our business and criminal and civil actions could be brought against us. In addition, our contracts would be unenforceable unless a court required enforcement and a court could appoint a receiver to take control of us and liquidate our business.

For more information related to compliance with the Investment Company Act, see “Investment Objectives and Criteria—Investment Company Act and Certain Other Policies.”

Rapid changes in the values of our assets may make it more difficult for us to maintain our qualification as a REIT or our exception from the definition of an investment company under the Investment Company Act.

If the market value or income potential of our qualifying real estate assets changes as compared to the market value or income potential of our non-qualifying assets, or if the market value or income potential of our assets that are considered “real estate-related assets” under the Investment Company Act or REIT qualification tests changes as compared to the market value or income potential of our assets that are not considered “real estate-related assets” under the Investment Company Act or REIT qualification tests, whether as a result of increased interest rates, prepayment rates or other factors, we may need to modify our investment portfolio in order to maintain our REIT qualification or exception from the definition of an investment company. If the decline in asset values or income occurs quickly, this may be especially difficult, if not impossible, to accomplish. This difficulty may be exacerbated by the illiquid nature of many of the assets that we may own. We may have to make investment decisions that we otherwise would not make absent REIT and Investment Company Act considerations.

Laws intended to prohibit money laundering may require us to disclose investor information to regulatory authorities.

The Uniting and Strengthening America By Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, or the PATRIOT Act, requires that financial institutions establish and maintain compliance programs to guard against money laundering activities, and requires the Secretary of the U.S. Treasury, or the Treasury, to prescribe regulations in connection with anti-money laundering policies of financial institutions. The Financial Crimes Enforcement Network, or FinCEN, an agency of the Treasury, has announced that it is likely that such regulations would subject certain pooled investment vehicles to enact anti-money laundering policies. It is possible that there could be promulgated legislation or regulations that would require us or our service providers to share information with governmental authorities with respect to prospective investors in connection with the establishment of anti-money laundering procedures. Such legislation and regulations could require us to implement additional restrictions on the transfer shares of our common stock to comply with such legislation and regulations.

We intend to collect such information as is necessary to verify the identity of prospective stockholders and the source of the payment of subscription monies, or as is necessary to comply with any customer identification programs required by FinCEN or the SEC. If a prospective stockholder delays or fails to produce any information required for verification purposes, an application for, or transfer of, our common shares may be refused. We will not have the ability to reject a transfer of our common stock where all necessary information is provided and any other applicable transfer requirements, including those imposed under the transfer provisions of our charter, are satisfied.

Risks Related to Conflicts of Interest

The ability of our Sponsor, our Advisor and their respective officers and other personnel to engage in other business activities, including managing other similar companies, may reduce the time our Sponsor or our Advisor spends managing our business and may result in certain conflicts of interest.

There are conflicts of interest among us, our Advisor and its affiliates, including our Sponsor.

Our Chief Executive Officer, Jesse Prince, is also the Chief Executive Officer of our Advisor and a principal of our Sponsor. Our Sponsor is co-owned and controlled equally by Jesse Prince and Leonardo Sessa. All the agreements and arrangements between such parties, including those relating to compensation, are not the result of arm’s-length negotiations. Our Sponsor and Advisor and their affiliates will try to balance our interests with their own. However, to the extent that such parties take actions that are more favorable to other entities than us, these actions could have negative impact on our financial performance and, consequently, on distributions to stockholders and the value of our common shares.

We currently have an agreement with our Advisor to perform certain services for our real estate portfolio.

Our agreement with our Advisor provides that our Advisor or its affiliates may provide property management services for the real estate properties that we acquire. The fees, commissions and expense reimbursements paid to our Advisor or its affiliates in connection with these services have not and will not be determined with the benefit of arm’s length negotiations of the type normally conducted between unrelated parties. Even though all such agreements will be subject to approval by our independent directors, they could be on terms not as favorable to us as those we could receive from a third party.

The interests of our Advisor, its executive officers and its other affiliates may conflict with your interests.

Our charter provides our Advisor with broad powers and authority which may result in one or more conflicts of interest between your interests and those of our Advisor, its executive officers and its other affiliates. This risk is increased by our Advisor being controlled by Jesse Prince and Leonardo Sessa, who are each principals of our Sponsor and who may in the future participate, directly or indirectly in other offerings by our Sponsor and its affiliates. Potential conflicts of interest include, but are not limited to, the following:

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our Advisor, its executive officers and its other affiliates may continue to offer other real estate investment opportunities, including other equity offerings similar to this offering, and may make investments in real estate assets for their own respective accounts, whether or not competitive with our business;

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our Advisor, its executive officers and its other affiliates will not be required to disgorge any profits or fees or other compensation they may receive from any other business they own separately from us, and you will not be entitled to receive or share in any of the profits or fees or other compensation from any other business owned and operated by our Advisor, its executive officers and/or its other affiliates for their own benefit;

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we may engage our Advisor or affiliates of our Advisor to perform services at prevailing market rates. Prevailing market rates are determined by our Manager based on industry standards and expectations of what our Advisor would be able to negotiate with a third party on an arm’s length basis; and

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our Advisor, its executive officers and its other affiliates are not required to devote all of their time and efforts to our affairs.

Our Advisor faces conflicts of interest relating to its compensation structure, including the payment of acquisition fees and asset management fees, which could result in actions that are not necessarily in our stockholders’ long-term best interest.

Our Advisor is entitled to fees and distributions that are structured in a manner intended to provide incentives to our Advisor to perform in both our and our stockholders' long-term best interests. The fees to which our Advisor will be entitled include acquisition fees, asset management fees, disposition fees and other fees. Because our Advisor will be entitled to receive substantial compensation regardless of our performance, our Advisor’s interests may not be wholly aligned with the interests of our stockholders.

Asset management fees are based on our “total invested value”, which means, for any period, the aggregate book value of our assets before reserves for amortization and depreciation, impairments or other similar non-cash reserves. Compensation based on our total invested value may create an incentive for the Advisor to use more leverage to grow our asset base. In addition, our Advisor will receive the asset management fee with respect to the ongoing operation and management of properties based on the amount of our initial investment and capital expenditures and not on the performance of those investments, which could result in our Advisor not having adequate incentive to manage our portfolio to provide profitable operations during the period we hold our investments. On the other hand, our Advisor could be motivated to recommend riskier or more speculative investments in order to increase the fees payable to our Advisor or for us to generate the specified levels of performance or net sales proceeds that would entitle our Advisor to fees or distributions. Furthermore, our Advisor will receive an acquisition fee that is based on the contract purchase price of each property acquired or the origination or acquisition price of any real estate-related investment, rather than on the performance of those investments. Therefore, our Advisor may have an incentive to recommend investments more quickly or with a higher purchase price or investments that may not produce the maximum risk adjusted returns in order to receive such acquisition fees.

Our UPREIT structure may result in potential conflicts of interest with our Operating Partnership or limited partners in our Operating Partnership whose interests may not be aligned with those of our stockholders.

Conflicts of interest exist or could arise in the future as a result of the relationships between us and our affiliates, on the one hand, and our Operating Partnership or any partner thereof, on the other. Our directors and officers have duties to our company under applicable Maryland law in connection with their direction of the management of our company. At the same time, we, as sole member and general partner of our operating partnership, have duties to our Operating Partnership and to the limited partners under Delaware law in connection with the management of our Operating Partnership.

Under Delaware law, the general partner of a Delaware limited partnership has fiduciary duties of care and loyalty, and an obligation of good faith, to the partnership and its partners. While these duties and obligations cannot be eliminated entirely in the limited partnership agreement, Delaware law permits the parties to a limited partnership agreement to specify certain types or categories of activities that do not violate the general partner’s duty of loyalty and to modify the duty of care and obligation of good faith, so long as such modifications are not unreasonable. These duties as general partner of our Operating Partnership to the partnership and its partners may come into conflict with the interests of our company. Under the partnership agreement of our Operating Partnership, we anticipate that upon the admission of a person other than one of our subsidiaries as a limited partner in our Operating Partnership, the limited partners of our Operating Partnership will expressly agree that we are acting for the benefit of the Operating Partnership, the limited partners of our Operating Partnership and our stockholders, collectively. As general partner, we are under no obligation to give priority to the separate interests of the limited partners in deciding whether to cause our Operating Partnership to take or decline to take any actions. If there is a conflict between the interests of us or our stockholders, on the one hand, and the interests of the limited partners of our Operating Partnership other than us or our subsidiaries, on the other, we anticipate that the partnership agreement of our Operating Partnership will provide that any of our actions or failures to act that give priority to the separate interests of us or our stockholders that do not result in a violation of the contractual rights of the limited partners of our Operating Partnership under the partnership agreement will not violate the duties that we owe to our Operating Partnership and its partners.

Additionally, the partnership agreement of our Operating Partnership expressly limits our liability by providing that we and our directors, officers, agents and employees, will not be liable or accountable to our Operating Partnership or its partners for money damages. In addition, our Operating Partnership is required to indemnify us, our directors, officers and employees 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 that the act or omission of the indemnitee constituted fraud, intentional harm or gross negligence on the part of the indemnitee, the claim is brought by the indemnitee (other than to enforce the indemnitee’s rights to indemnification or advance of expenses) or the indemnitee is found to be liable to our Operating Partnership, and then only with respect to each such claim.

The provisions of Delaware law that allow the fiduciary duties of a general partner to be modified by a partnership agreement have not been tested in a court of law, and we have not obtained an opinion of counsel covering the provisions set forth in the partnership agreement that purport to waive or restrict our fiduciary duties.

The sale in this offering of 30,000 shares of common stock, while necessary to our business operations, is not designed as a protection for you, to indicate that your investment decision is shared by other unaffiliated investors.

Because there may be substantial purchases by affiliates of our Advisor, Sponsor, or other persons who will receive fees or other compensation or gain dependent upon the success of the offering, you should not place any reliance on the sale of 30,000 shares of our common stock as an indication of the merits of this offering. You must make your own investment decision as to the merits of this offering.

No rule, regulation, or industry practice requires that we calculate our NAV in a certain way, and our board of directors, including a majority of our independent directors, may adopt changes to our valuation guidelines.

There are no existing rules or regulatory bodies that specifically govern the manner in which we calculate our NAV and there is no established practice among publicly offered REITs, whether exchange-listed or not, for calculating NAV in order to establish a purchase and repurchase price. As a result, it is important that you pay particular attention to the specific methodologies and assumptions we use to calculate our NAV, as other publicly offered REITs may use different methodologies or assumptions to determine their NAV. In addition, our board of directors, including a majority of our independent directors, will review the appropriateness of our valuation guidelines at least annually and may, at any time, adopt changes to our valuation guidelines.

Legal counsel for our company, our Advisor and our Sponsor is the same law firm.

Herrick, Feinstein LLP acts as our legal counsel and as legal counsel for our Advisor and our Sponsor. Herrick, Feinstein LLP is not acting as counsel for the stockholders or any potential investor. There is a possibility in the future that the interests of the various parties may become adverse and, under the Code of Professional Responsibility of the legal profession, Herrick, Feinstein LLP may be precluded from representing any one or all of such parties. If any situation arises in which our interests appear to be in conflict with those of our Advisor and our Sponsor or their affiliates, additional counsel may be retained by one or more of the parties to assure that their interests are adequately protected. Moreover, should such a conflict not be readily apparent, Herrick, Feinstein LLP may inadvertently act in derogation of the interest of parties which could adversely affect us, and our ability to meet our investment objectives and, therefore, our stockholders.

Risks Related to the HappyNest Platform

We do not own the HappyNest name or HappyNest Platform, but were granted a license by our Sponsor to use both. Use of the name and HappyNest Platform by other parties or the termination of our license agreement may harm our business.

We have entered into a license agreement with our Sponsor effective upon the commencement of this offering, pursuant to which our Sponsor will grant us a non-exclusive, royalty-free license to use the name “HappyNest.” Under this agreement, we will have a right to use the “HappyNest” name and the HappyNest Platform as long as our Advisor continues to manage us. Our Sponsor will retain the right to continue using the “HappyNest” name. Our Sponsor is not precluded from licensing or transferring the ownership of the “HappyNest” name to third parties, some of whom may compete against us. Consequently, we will be unable to prevent any damage to the goodwill associated with our name that may occur as a result of the activities of our sponsor or others related to the use of our name. Furthermore, in the event the license agreement is terminated, we will be required to change our name and cease using the “HappyNest” name. Any of these events could disrupt our recognition in the market place, damage any goodwill we may have generated and otherwise harm our business.

If our security is compromised or if the HappyNest Platform, or any of the third parties that the HappyNest Platform utilizes, is subjected to attacks that frustrate or thwart our users’ ability to access our services, our users may cut back on or stop using the HappyNest Platform and services altogether, which could seriously harm our business.

Our efforts to protect the information that our users have shared with us may be unsuccessful due to the actions of third parties, software bugs, or other technical malfunctions, employee error or malfeasance, or other factors. In addition, third parties may attempt to fraudulently induce employees or users to disclose information to gain access to our data or our users’ data. If any of these events occur, our or our users’ information could be accessed or disclosed improperly. Our Privacy Policy governs how we may use and share the information that our users have provided us.

We have leveraged third party vendors to store and process sensitive financial information instead of storing it on our own systems. For example, we intend to roll out our Round Up program on the HappyNest Platform, which may utilize the technology of a third-party service provider. Any incidents involving our technology or the technology of a third-party services provider, where our users’ information is accessed without authorization or is improperly used, where funds of our users are misappropriated, or incidents that violate our or our third-party provider’s Terms of Service or policies, could damage our reputation and our brand and diminish our competitive position. In addition, affected users or government authorities could initiate legal or regulatory action against us over those incidents, which could cause us to incur significant expense and liability or result in orders or consent decrees forcing us to modify our business practices. Maintaining the trust of our users is important to sustain our growth, retention, and user engagement. Concerns over our privacy practices, whether actual or unfounded, could damage our reputation and brand and deter users, advertisers, and partners from using our products and services. Any of these occurrences could seriously harm our business.

Mobile malware, viruses, hacking and phishing attacks, spamming, and improper or illegal use of the HappyNest Platform, or of any of the third-parties services that the HappyNest Platform utilizes, could seriously harm our business and reputation.

Mobile malware, viruses, hacking, and phishing attacks have become more prevalent in our industry and may occur on our systems in the future. The HappyNest Platform, including the technology incorporated in the HappyNest Platform that is licensed from third parties, may be an attractive target for these sorts of attacks. Potential harms that could result from an attack on the HappyNest Platform range from a denial of service, illegal access to confidential user information, and misappropriation of funds. Although it is difficult to determine the extent of the harm that would result from an interruption or attack, any failure to maintain performance, reliability, security, and availability of our services and technical infrastructure to the satisfaction of our users may harm our users, and also seriously harm our reputation and our ability to retain existing users and attract new users.

Because we store, process, and use data, some of which contains personal information, we are subject to complex and evolving federal, state, and foreign laws and regulations regarding privacy, data protection, and other matters. Many of these laws and regulations are subject to change and uncertain interpretation, and could result in investigations, claims, changes to our business practices, increased cost of operations, and declines in user growth, retention, or engagement, any of which could seriously harm our business.

We are subject to a variety of laws and regulations in the United States that involve matters central to our business, including user privacy, data protection, content, intellectual property, distribution, electronic contracts and other communications, competition, protection of minors, consumer protection, taxation, and online-payment services. These laws and regulations constantly evolve and remain subject to significant change. In addition, the application and interpretation of these laws and regulations are often uncertain, particularly in the new and rapidly evolving industry in which we operate. Because we store, process, and use data, some of which contains personal information, we are subject to complex and evolving federal and state laws and regulations regarding privacy, data protection, and other matters. Many of these laws and regulations are subject to change and uncertain interpretation, and could result in investigations, claims, changes to our business practices, increased cost of operations, and declines in user growth, retention, or engagement, any of which could seriously harm our business.

Any significant disruption in service on the HappyNest Platform or in its computer systems could reduce the attractiveness of the investment platform and result in a loss of users.

If a catastrophic event resulted in a platform outage and physical data loss, the HappyNest Platform’s ability to perform its obligations would be materially and adversely affected. The satisfactory performance, reliability, and availability of our Sponsor’s technology and its underlying hosting services infrastructure are critical to successful operations, level of customer service, reputation and ability to attract new users and retain existing users. Our Sponsor’s hosting services infrastructure is provided by a third-party hosting provider (the “Hosting Provider”). In addition, we intend to roll out our Round Up program on the HappyNest Platform, which may utilize the technology of a third-party service provider. Our Sponsor also maintains a backup system at a separate location that is owned and operated by a third party. The Hosting Provider, and other third-party service providers, do not guarantee that users’ access to the HappyNest Platform will be uninterrupted, error-free or secure. Our Sponsor’s operations depend on the Hosting Provider’s, and other third-party service providers’ ability to protect its and our Sponsor’s systems in its facilities against damage or interruption from natural disasters, power or telecommunications failures, air quality, temperature, humidity and other environmental concerns, computer viruses or other attempts to harm our systems, criminal acts and similar events. If our Sponsor’s arrangement with the Hosting Provider, and other third-party service providers, is terminated, or there is a lapse of service or damage to its facilities, our Sponsor could experience interruptions in its service as well as delays and additional expense in arranging new facilities. Any interruptions or delays in service, whether as a result of an error by the Hosting Provider, other third-party service providers, or other third-party error, our Sponsor’s own error, natural disasters or security breaches, whether accidental or willful, could harm our ability to perform any services for corresponding project investments or maintain accurate accounts, and could harm our Sponsor’s relationships with its users and its reputations. Additionally, in the event of damage or interruption, our Sponsor’s insurance policies may not adequately compensate us for any losses that we may incur. Our Sponsor’s disaster recovery plan has not been tested under actual disaster conditions, and it may not have sufficient capacity to recover all data and services in the event of an outage at a facility operated by the Hosting Provider. These factors could prevent us from processing or posting payments on the corresponding investments, damage the brand and reputation, divert our sponsor’s employees’ attention, and cause users to abandon the HappyNest Platform.

Risks Related to Our Investments

Our real estate assets will be subject to the risks typically associated with real estate.

Our real estate assets will be subject to the risks typically associated with real estate. The value of real estate may be adversely affected by a number of risks, including:

	●	natural disasters such as hurricanes, earthquakes and floods;

	●	acts of war or terrorism;

	●	adverse changes in national and local economic and real estate conditions;

	●	an oversupply of (or a reduction in demand for) space in the areas where particular properties are located and the attractiveness of particular properties to prospective tenants;

	●	changes in governmental laws and regulations, fiscal policies and zoning ordinances and the related costs of compliance therewith and the potential for liability under applicable laws;

	●	costs of remediation and liabilities associated with environmental conditions affecting properties; and

	●	the potential for uninsured or underinsured property losses.

The value of each property is affected significantly by its ability to generate cash flow and net income, which in turn depends on the amount of rental or other income that can be generated net of expenses required to be incurred with respect to the property. Many expenditures associated with properties (such as operating expenses and capital expenditures) cannot be reduced when there is a reduction in income from the properties.

These factors may have a material adverse effect on the value that we can realize from our assets.

We may obtain only limited warranties when we purchase a property.

The seller of a property will often sell such property in its “as is” condition on a “where is” basis and “with all faults,” without any warranties of merchantability or fitness for a particular use or purpose. In addition, purchase agreements may contain only limited warranties, representations and indemnifications that will only survive for a limited period after the closing. Also, most sellers of large commercial properties are special purpose entities without significant assets other than the property itself. The purchase of properties with limited warranties or from undercapitalized sellers increases the risk that we may lose some or all of our invested capital in the property as well as the loss of rental income from that property.

We may finance properties with lock-out provisions, which may prohibit us from selling a property, or may require us to maintain specified debt levels for a period of years on some properties.

Lock-out provisions are provisions that generally prohibit repayment of a loan balance for a certain number of years following the origination date of a loan. Such provisions are typically provided by the code or the terms of the agreement underlying a loan. Lock-out provisions could materially restrict us from selling or otherwise disposing of or refinancing properties. These provisions would affect our ability to turn our investments into cash and thus affect cash available for share repurchases or distributions to stockholders. Lock-out provisions may prohibit us from reducing the outstanding indebtedness with respect to any properties, refinancing such indebtedness on a non-recourse basis at maturity, or increasing the amount of indebtedness with respect to such properties.

Lock-out provisions could impair our ability to take actions during the lock-out period that would otherwise be in your best interests and, therefore, may have an adverse impact on the value of the shares, relative to the value that would result if the lock-out provisions did not exist. In particular, lock-out provisions could preclude us from participating in major transactions that could result in a disposition of our assets or a change in control even though that disposition or change in control might be in your best interests.

Properties that become vacant could be difficult to re-lease or sell, which could diminish the return on these properties and adversely affect our cash flow and ability to pay distributions to our stockholders.

Properties may incur vacancies either by the expiration and non-renewal of tenant leases or the default of tenants under their leases. If vacancies continue for a long period of time, we may suffer reduced revenues resulting in less cash available for distribution to our stockholders.

We intend to purchase properties with (or enter into, as necessary) long-term leases with tenants, which may not result in fair market rental rates over time.

We intend to purchase properties with (or enter into, as necessary) long-term leases with tenants and include renewal options that specify a maximum rate increase. These leases would provide for rent to increase over time; however, if we do not accurately judge the potential for increases in market rental rates, we may set the terms of these long-term leases at levels such that, even after contractual rent increases, the rent under our long-term leases is less than then-current market rates. Further, we may have no ability to terminate those leases or to adjust the rent to then-prevailing market rates. As a result, our cash available for distribution could be lower than if we did not purchase properties with, or enter into, long-term leases.

We depend on tenants for our revenue generated by our real estate investments and, accordingly, our revenue generated by our real estate investments and our ability to make distributions to our stockholders are dependent upon the success and economic viability of our tenants and our ability to retain and attract tenants. Non-renewals, terminations or lease defaults could reduce our net income and limit our ability to make distributions to our stockholders.

The success of our real estate investments materially depends upon the financial stability of the tenants leasing the properties we own. The inability of a single major tenant or a significant number of smaller tenants to meet their rental obligations would significantly lower our net income. A non-renewal after the expiration of a lease term, termination or default by a tenant on its lease payments to us would cause us to lose the revenue associated with such lease and require us to find an alternative source of revenue to meet mortgage payments and prevent a foreclosure if the property is subject to a mortgage. In the event of a tenant default or bankruptcy, we may experience delays in enforcing our rights as landlord of a property and may incur substantial costs in protecting our investment and re-leasing the property. Tenants may have the right to terminate their leases upon the occurrence of certain customary events of default and, in other circumstances, may not renew their leases or, because of market conditions, may only be able to renew their leases on terms that are less favorable to us than the terms of their initial leases. Further, some of our assets may be outfitted to suit the particular needs of the tenants. We may have difficulty replacing the tenants of these properties if the outfitted space limits the types of businesses that could lease that space without major renovation. If a tenant does not renew, terminates or defaults on a lease, we may be unable to lease the property for the rent previously received or sell the property without incurring a loss. These events could cause us to reduce distributions to stockholders.

The bankruptcy or insolvency of our tenants or delays by our tenants in making rental payments could seriously harm our operating results and financial condition.

Any bankruptcy filings by or relating to any of our tenants could bar us from collecting pre-bankruptcy debts from that tenant, unless we receive an order permitting us to do so from the bankruptcy court. A tenant bankruptcy could delay our efforts to collect past due balances under the relevant leases, and could ultimately preclude full collection of these sums. If a lease is rejected by a tenant in bankruptcy, we would have only a general unsecured claim for damages. Any unsecured claim we hold against a bankrupt entity may be paid only to the extent that funds are available and only in the same percentage as is paid to all other holders of unsecured claims. We may recover substantially less than the full value of any unsecured claims, which would harm our financial condition.

Actions of our potential future tenants-in-common could reduce the returns on tenants-in-common investments and decrease our stockholders’ overall return.

We may enter into tenants-in-common or other joint ownership structures with third parties to acquire properties and other assets. Such investments may involve risks not otherwise present with other methods of investment, including, for example, the following risks:

our co-owner in an investment could become insolvent or bankrupt;

our co-owner may at any time have economic or business interests or goals that are or that become inconsistent with our business interests or goals;

our co-owner may be in a position to take action contrary to our instructions or requests or contrary to our policies or objectives; or

disputes between us and our co-owner 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 operations.

While we intend that any co-ownership investment that we enter into will be subject to a co-ownership contractual arrangement that will address some or all of the above issues, any of the above might still subject a property to liabilities in excess of those contemplated and thus reduce our returns on that investment and the value of your investment in us.

We anticipate involvement in a variety of litigation.

We anticipate involvement in a range of legal actions in the ordinary course of business. These actions may include eviction proceedings and other landlord-tenant disputes, challenges to title and ownership rights and issues with local officials arising from the condition or maintenance of one or more of our properties. These actions can be time-consuming and expensive. While we intend to vigorously defend any non-meritorious action or challenge, we cannot assure you that we will not be subject to expenses and losses that may adversely affect our operating results.

Actions of any joint venture partners that we may have in the future could reduce the returns on joint venture investments and decrease our shareholders’ overall return.

We may enter into joint ventures to acquire properties and other assets. We may also purchase properties in joint ventures or in partnerships, co-tenancies or other co-ownership arrangements. Such investments may involve risks not otherwise present with other methods of investment, including, for example, the following risks:

that our co-venturer, co-tenant or partner in an investment could become insolvent or bankrupt;

that such co-venturer, co-tenant or partner may at any time have economic or business interests or goals that are or that become inconsistent with our business interests or goals;

that such co-venturer, co-tenant or partner may be in a position to take action contrary to our instructions or requests or contrary to our policies or objectives; or

that disputes between us and our co-venturer, co-tenant or partner 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 operations.

Any of the above might subject a property to liabilities in excess of those contemplated and thus reduce our returns on that investment and the value of your investment.

Uninsured losses relating to real property could reduce our cash flow from operations and the return on our stockholders’ investment in us.

We expect that most of the properties we acquire will be subject to leases requiring the tenants thereunder to be financially responsible for property liability and casualty insurance. However, there are types of losses, generally catastrophic in nature, such as losses due to wars, acts of terrorism, earthquakes, floods, hurricanes, pollution or environmental matters that are uninsurable and/or that the tenants are not contractually obligated to provide insurance for. In such instances, we may be required to provide other financial support, either through financial assurances or self-insurance, to cover potential losses. We may not have adequate coverage for such losses. If any of our properties incurs a casualty loss that is not fully insured, the value of our assets will be reduced by any such uninsured loss, which will reduce the value of your investment in us. In addition, other than any working capital reserve and other reserves we may establish, we have limited sources of funding to repair or reconstruct any uninsured property.

We may not be able to sell our properties at a price equal to, or greater than, the price for which we purchased such properties, which may lead to a decrease in the value of our assets.

The value of a property to a potential purchaser may not increase over time, which may restrict our ability to sell a property, or if we are able to sell such property, may lead to a sale price less than the price that we paid to purchase the property.

If we provide financing to a purchaser in connection with the disposition of a property, we may be exposed to undesirable tax liabilities in the event that our taxable income exceeds the actual cash proceeds received in the sale.

While we generally intend to hold each property for a minimum of three years, on the recommendation of the Advisor, the HappyNest Board may choose to sell a property at any time if it determines that the sale of the property would be in the best interests of our stockholders. In such event, we may choose to provide seller financing to a purchaser, subject to the determination of the Advisor, in consultation with the HappyNest Board, that this is in the best interest of our stockholders. Lending a purchaser some or all of the purchase price may expose us to undesirable tax liabilities in the event that our taxable income exceeds the actual cash proceeds received in the sale.

Joint venture investments could be adversely affected by our lack of sole decision-making authority, our reliance on the financial condition of co-venturers and disputes between us and our co-venturers.

We may enter into joint ventures, partnerships and other co-ownership arrangements (including preferred equity investments) for the purpose of making investments. In such event, we would not be in a position to exercise sole decision-making authority regarding the joint venture. Investments in joint ventures may, under certain circumstances, involve risks not present were a third party not involved, including the possibility that partners or co-venturers might become bankrupt or fail to fund their required capital contributions. Co-venturers may have economic or other business interests or goals which are inconsistent with our business interests or goals, and may be in a position to take actions contrary to our policies or objectives. Such investments may also have the potential risk of impasses on decisions, such as a sale, because neither we nor the co-venturer would have full control over the joint venture. In addition, to the extent our participation represents a minority interest, a majority of the participants may be able to take actions which are not in our best interests because of our lack of full control. Disputes between us and co-venturers may result in litigation or arbitration that would increase our expenses and prevent our officers from focusing their time and effort on our business. Consequently, actions by or disputes with co-venturers might result in subjecting properties owned by the joint venture to additional risk. In addition, we may in certain circumstances be liable for the actions of our co-venturers.

Acquiring or attempting to acquire multiple properties in a single transaction may adversely affect our operations.

From time to time, we may attempt to acquire multiple properties in a single transaction. Multiple-property portfolio acquisitions are more complex and expensive than single-property acquisitions, and the risk that a portfolio acquisition does not close may be greater than in a single-property acquisition. A seller may require that a group of properties be purchased as a package even though we may not want to purchase one or more properties in the portfolio. In these situations, if we are unable to identify another person or entity to acquire the unwanted properties, we may be required to operate or attempt to dispose of these properties. To acquire multiple properties in a single transaction we may be required to accumulate a large amount of cash. We would expect the returns that we earn on such cash to be less than the ultimate returns in real property and therefore, accumulating such cash could reduce the funds available for distributions.

Most of our properties will depend upon a single tenant for their rental income, and our financial condition and ability to make distributions may be adversely affected by the bankruptcy or insolvency, a downturn in the business, or a tenant’s lease termination.

We expect that most of our properties will be occupied by only one tenant or will derive a majority of their rental income from one tenant and, therefore, the success of those properties will be materially dependent on the financial stability of such tenants. Lease payment defaults by tenants could cause us to reduce the amount of distributions we pay. A default of a tenant on its lease payments to us and the potential resulting vacancy would cause us to lose the revenue from the property and force us to find an alternative source of revenue to meet any mortgage payment and prevent a foreclosure if the property is subject to a mortgage. In the event of a default, we may experience delays in enforcing our rights as landlord and may incur substantial costs in protecting our investment and re-letting the property. If a lease is terminated or an existing tenant elects not to renew a lease upon its expiration, there is no assurance that we will be able to lease the property for the rent previously received or sell the property without incurring a loss. A default by a tenant, the failure of a guarantor to fulfill its obligations or other premature termination of a lease, or a tenant’s election not to extend a lease upon its expiration, could have an adverse effect on our financial condition and our ability to pay distributions.

If a tenant declares bankruptcy, we may be unable to collect balances due under relevant leases.

Any of our tenants, or any guarantor of a tenant’s lease obligations, could be subject to a bankruptcy proceeding pursuant to Title 11 of the bankruptcy laws of the United States. Such a bankruptcy filing would bar all efforts by us to collect pre-bankruptcy debts from these entities or their properties, unless we receive an enabling order from the bankruptcy court. Post-bankruptcy debts would be paid currently. If a lease is assumed, all pre-bankruptcy balances owing under it must be paid in full. If a lease is rejected by a tenant in bankruptcy, we would have a general unsecured claim for damages. If a lease is rejected, it is unlikely we would receive any payments from the tenant because our claim is capped at the rent reserved under the lease, without acceleration, for the greater of one year or 15% of the remaining term of the lease, but not greater than three years, plus rent already due but unpaid. This claim could be paid only in the event funds were available, and then only in the same percentage as that realized on other unsecured claims.

A tenant or lease guarantor bankruptcy could delay efforts to collect past due balances under the relevant leases, and could ultimately preclude full collection of these sums. Such an event could cause a decrease or cessation of rental payments that would mean a reduction in our cash flow and the amount available for distributions to you. In the event of a bankruptcy, we cannot assure you that the tenant or its trustee will assume our lease. If a given lease, or guaranty of a lease, is not assumed, our cash flow and the amounts available for distributions to you may be adversely affected. Further, our lenders may have a first priority claim to any recovery under the leases, any guarantees and any credit support, such as security deposits and letters of credit.

Purchasing single-tenant net lease properties that rely on one tenant for rent payments could increase the economic losses we experience from unexpected vacancy and may negatively impact our ability to make distributions to stockholders.

Most assets we acquire will derive the majority of their effective gross income from only one tenant. A loss of this income may intensify the economic impact we experience in the event of a tenant default or early termination of tenancy.

We rely on the rental revenue from each net lease property to sufficiently pay all operating expenses, service any mortgage payments, and produce excess cash flow for distributions. A sudden loss of income from a property encumbered by a mortgage note may cause us to use alternative funding sources to avoid foreclosure and may negatively impact our ability to make distributions to our stockholders.

We will diversify our portfolio by tenant to mitigate credit risk, however, we may own several properties with the same tenant or corporate guarantor. In the case of a tenant filing for bankruptcy pursuant, we may be unable to collect rent or other balances due under the terms of the lease(s).

History has shown that it is possible for financially strong publicly traded tenants to fall out of favor with the buying public during the primary term of the lease and ultimately go bankrupt. In the United States, bankruptcy is governed by federal law, and all of our tenants and guarantors could be subject to bankruptcy proceeding pursuant to Title 11 of the United State Code, also known as the United States Bankruptcy Code. Certain debtor protections provided under bankruptcy law may restrict our ability to collect rent or other outstanding balances from these entities or their properties, until the bankruptcy court issues a decision.

In the event of the tenant filing for bankruptcy, we may be unable to collect any or all of the outstanding balance, and our lenders may have a senior priority claim to any cash recovered from liquidation, letters of credit, security deposits, or any other form of credit support. Bankruptcy proceedings may delay or reduce the amount of cash flow available for distributions to our stockholders.

Fair market rental rates may increase at a greater rate than the contractual rent increases provided in the lease.

We intend to mainly purchase property with net leases that contain contractual periodic rental rate increases during the primary term and extension options. Dependent on local real estate market conditions, fair market rental rates may increase at a greater rate than rental growth provided by the lease. Below market rental rates may negatively impact the residual value potential of that property or our ability to secure favorable financing terms.

Our real estate investments may include special-use single tenant properties that may be difficult to sell or re-lease upon tenant defaults or early lease terminations.

We focus our investments on commercial properties, a number of which will be special use single tenant properties. With these properties, if the current lease is terminated or not renewed, we may be required to renovate the property or to make rent concessions in order to lease the property to another tenant or sell the property. In addition, in the event we are forced to sell the property, we may have difficulty selling it to a party other than the tenant or borrower due to the special purpose for which the property may have been designed. These and other limitations may affect our ability to sell or re-lease properties and adversely affect returns to you.

If a sale-leaseback transaction is recharacterized in a tenant’s bankruptcy proceeding, our financial condition could be adversely affected.

We may enter into sale-leaseback transactions, whereby we would purchase a property and then lease the same property back to the person from whom we purchased it. In the event of the bankruptcy of a tenant, a transaction structured as a sale-leaseback may be recharacterized as either a financing or a joint venture, either of which outcomes could adversely affect our business. If the sale-leaseback were recharacterized as a financing, we might not be considered the owner of the property, and as a result would have the status of a creditor in relation to the tenant. In that event, we would no longer have the right to sell or encumber our ownership interest in the property. Instead, we would have a claim against the tenant for the amounts owed under the lease, with the claim arguably secured by the property. The tenant/debtor might have the ability to propose a plan restructuring the term, interest rate and amortization schedule of its outstanding balance. If confirmed by the bankruptcy court, we could be bound by the new terms, and prevented from foreclosing our lien on the property. If the sale-leaseback were recharacterized as a joint venture, our lessee and we could be treated as co-venturers with regard to the property. As a result, we could be held liable, under some circumstances, for debts incurred by the lessee relating to the property. Either of these outcomes could adversely affect our cash flow and the amount available for distributions to you.

We have no established investment criteria limiting the geographic concentration of our investments in commercial real estate and real estate-related assets. If our investments are concentrated in an area that experiences adverse economic conditions, our investments may lose value and we may experience losses.

Certain of our investments in commercial real estate and real estate-related assets may be in one geographic location or secured by a single property or properties in one geographic location. These investments may carry the risks associated with significant geographical concentration. We have not established and do not plan to establish any investment criteria to limit our exposure to these risks for future investments. As a result, our investments may be overly concentrated in certain geographic areas, and we may experience losses as a result. A worsening of economic conditions in the geographic area in which our investments may be concentrated could have an adverse effect on our business, including reducing the demand for new financings, limiting the ability of customers to pay financed amounts and impairing the value of our collateral.

To the extent we acquire retail properties, our revenue will be significantly impacted by the success and economic viability of our retail anchor tenants. Our reliance on a single tenant or significant tenants in certain buildings may decrease our ability to lease vacated space and adversely affect the returns on our stockholders’ investment.

In the retail sector, a tenant occupying all or a large portion of the gross leasable area of a retail center, commonly referred to as an anchor tenant, may become insolvent, may suffer a downturn in business and default on or terminate its lease, or may decide not to renew its lease. Any of these events would result in a reduction or cessation in rental payments to us from that tenant and would adversely affect our financial condition. A lease termination by an anchor tenant could result in lease terminations or reductions in rent by other tenants whose leases may permit cancellation or rent reduction if an anchor tenant’s lease is terminated. In such event, we may be unable to re-lease the vacated space. Similarly, the leases of some anchor tenants may permit the anchor tenant to transfer its lease to another retailer. The transfer to a new anchor tenant could cause customer traffic in the retail center to decrease and thereby reduce the income generated by that retail center. A lease transfer to a new anchor tenant could also allow other tenants, under the terms of their respective leases, to make reduced rental payments or to terminate their leases. In the event that we are unable to re-lease the vacated space to a new anchor tenant, we may incur additional expenses in order to renovate and subdivide the space to be able to re-lease the space to more than one tenant.

Any retail tenants we may have will face competition from numerous retail channels and retail tenants may be disproportionately affected by current economic conditions. These events could reduce our profitability at any retail properties we acquire and affect our ability to pay distributions.

Disruptions in the financial markets or deteriorating economic conditions could adversely impact the commercial real estate market, including historical risk premium spreads, which could hinder our ability to implement our business strategy and generate returns to you.

The success of our business is significantly related to general economic conditions and, accordingly, our business could be harmed by an economic slowdown and downturn in real estate asset values. Periods of economic slowdown or recession, significantly rising interest rates, declining employment levels, decreasing demand for real estate, declining real estate values, or the public perception that any of these events may occur, could reduce volumes for any of our business lines.

Declining economic conditions could negatively impact commercial real estate fundamentals and result in lower occupancy, lower rental rates and declining values in our real estate portfolio and in the collateral securing our loan investments, which could have the following negative effects on us:

the values of our investments in commercial properties could decrease below the amounts paid for such investments; and/or

revenues from our properties could decrease due to fewer tenants and/or lower rental rates, making it more difficult for us to pay distributions or meet our debt service obligations on debt financing.

During an economic downturn, it may take longer for us to dispose of real estate investments, or the selling prices that we secure may be lower than originally anticipated. As a result, the carrying value of our real estate investments may be impaired and we could record losses as a result of such impairment. Further, as a result of our target leverage, our exposure to adverse general economic conditions would be heightened.

A downturn could make it difficult for us to obtain refinancing some of our debt obligations prior to or at maturity, or it could cause us not be able to refinance these obligations at terms as favorable as the terms of our initial indebtedness. In such an event, we may be unable to obtain additional debt financing on attractive terms or at all. If we are not able to refinance initial indebtedness on attractive terms, we may be forced to dispose of some of our assets.

All of the conditions described above could adversely impact our business performance and profitability, which could result in our failure to make distributions to our investors and could decrease the value of an investment in us. In addition, in an extreme deterioration of our business, we could have insufficient liquidity to meet our debt service obligations when they come due in future years. If we fail to meet our payment or other obligations under secured loans, the lenders will be entitled to proceed against the collateral granted to them to secure the debt owed.

Risks Associated with Debt Financing

We intend to obtain lines of credit, mortgage indebtedness and other borrowings, which increases our risk of loss due to potential foreclosure.

We intend to obtain lines of credit and long-term financing that may be secured by our properties and other assets. In some instances, we acquire real properties by financing a portion of the price of the properties and mortgaging or pledging some or all of the properties purchased as security for that debt. We may also incur mortgage debt on properties that we already own in order to obtain funds to acquire additional properties, to fund property improvements and other capital expenditures, to pay distributions and for other purposes. In addition, we may borrow as necessary or advisable to ensure that we maintain our qualification as a REIT for federal income tax purposes, including borrowings to satisfy the REIT requirement that we distribute at least 90% of our annual REIT taxable income to our stockholders (computed without regard to the dividends-paid deduction and excluding net capital gain). However, we can give our stockholders no assurance that we will be able to obtain such borrowings on satisfactory terms or at all.

If we do mortgage a property and there is a shortfall between the cash flow generated by that property and the cash flow needed to service mortgage debt on that property, then the amount of cash available for distribution to our stockholders may be reduced. In addition, incurring mortgage debt increases the risk of loss of a property since defaults on indebtedness secured by a property may result in lenders initiating foreclosure actions. In that case, we could lose the property securing the loan that is in default, reducing the value of our stockholders’ investment in us. For tax purposes, a foreclosure of any of our properties would be treated as a sale of the property for a purchase price equal to the outstanding balance of the debt secured by the mortgage. If the outstanding balance of the debt secured by the mortgage exceeds our tax basis in the property, we would recognize taxable income on foreclosure even though we would not necessarily receive any cash proceeds. We may give full or partial guarantees to lenders of mortgage or other debt on behalf of the entities that own our properties. When we give a guaranty on behalf of an entity that owns one of our properties, we will be responsible to the lender for satisfaction of all or a part of the debt or other amounts related to the debt if it is not paid by such entity. If any mortgages contain cross-collateralization or cross-default provisions, a default on a mortgage secured by a single property could affect mortgages secured by other properties.

We may utilize repurchase agreements as a component of our financing strategy. Repurchase agreements economically resemble short-term, variable-rate financing and usually require the maintenance of specific loan-to- collateral value ratios. If the market value of the assets subject to a repurchase agreement declines, we may be required to provide additional collateral or make cash payments to maintain the required loan-to-collateral value ratios. If we are unable to provide such collateral or cash repayments, we may lose our economic interest in the underlying assets.

We may also obtain recourse debt to finance our acquisitions and meet our REIT distribution requirements. If we have insufficient income to service our recourse debt obligations, our lenders could institute proceedings against us to foreclose upon our assets. If a lender successfully forecloses upon any of our assets, our ability to pay cash distributions to our stockholders will be limited and our stockholders could lose money.

High mortgage rates or changes in underwriting standards may make it difficult for us to finance or refinance properties, which could reduce the number of properties we can acquire, our cash flow from operations and the amount of cash available for distribution to our stockholders.

If mortgage debt is unavailable at reasonable rates, we may not be able to finance the purchase of properties. If we place mortgage debt on a property, we run the risk of being unable to refinance part or all of the debt when it becomes due or of being unable to refinance on favorable terms. If interest rates are higher when we refinance properties subject to mortgage debt, our income could be reduced. We may be unable to refinance or may only be able to partly refinance properties if underwriting standards, including loan to value ratios and yield requirements, among other requirements, are more strict than when we originally financed the properties. If any of these events occurs, our cash flow could be reduced and/or we might have to pay down existing mortgages. This, in turn, would reduce cash available for distribution to our stockholders, could cause us to require additional capital and may hinder our ability to raise capital by issuing more stock or by borrowing more money.

We may use leverage in connection with any real estate investments we make, which increases the risk of loss associated with this type of investment.

We may finance the acquisition of certain real estate-related investments with warehouse lines of credit and repurchase agreements. Although the use of leverage may enhance returns and increase the number of investments that we can make, it may also substantially increase the risk of loss. There can be no assurance that leveraged financing will be available to us on favorable terms or that, among other factors, the terms of such financing will parallel the maturities of the leases in underlying assets acquired. If alternative financing is not available, we may have to liquidate assets at unfavorable prices to pay off such financing. 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 we can derive from the assets we acquire.

Our debt service payments will reduce our cash available for distribution. We may not be able to meet our debt service obligations and, to the extent that we cannot, we risk the loss of some or all of our assets to foreclosure or sale to satisfy our debt obligations. If we utilize repurchase financing and if the market value of the assets subject to a repurchase agreement declines, we may be required to provide additional collateral or make cash payments to maintain the required loan-to-collateral value ratio. If we are unable to provide such collateral or cash repayments, we may lose our economic interest in the underlying assets. Further, credit facility providers and warehouse facility providers may require us to maintain a certain amount of cash reserves or to set aside unleveraged assets sufficient to maintain a specified liquidity position that would allow us to satisfy our collateral obligations. As a result, we may not be able to leverage our assets as fully as we would choose, which could reduce our return on assets. In the event that we are unable to meet these collateral obligations, our financial condition could deteriorate rapidly.

We may not be able to access financing sources on attractive terms, which could adversely affect our ability to execute our business plan.

We may finance our assets over the long-term through a variety of means, including repurchase agreements, credit facilities, issuances of commercial mortgage-backed securities and other structured financings. Our ability to execute this strategy will depend on various conditions in the markets for financing in this manner that are beyond our control, including lack of liquidity and greater credit spreads. We cannot be certain that these markets will remain an efficient source of long-term financing for our assets. If our strategy is not viable, we will have to find alternative forms of long-term financing for our assets, as secured revolving credit facilities and repurchase agreements may not accommodate long-term financing. This could subject us to more recourse indebtedness and the risk that debt service on less efficient forms of financing would require a larger portion of our cash flow, thereby reducing cash available for distribution to our stockholders and funds available for operations as well as for future business opportunities.

Lenders may require us to enter into restrictive covenants relating to our operations, which could limit our ability to pay distributions to our stockholders.

When providing financing, a lender may impose restrictions on us that affect our distribution and operating policies and our ability to incur additional debt. Loan agreements into which we enter may contain covenants that limit our ability to further mortgage a property or that prohibit us from discontinuing insurance coverage or replacing our advisor. These or other limitations would decrease our operating flexibility and our ability to achieve our operating objectives and limit our ability to pay distributions to our stockholders.

Increases in interest rates would increase the amount of our debt payments and limit our ability to pay distributions to our stockholders.

We may incur variable rate debt. Increases in interest rates will increase the cost of that debt, which could reduce our cash flow from operations and the cash we have available for distribution to our stockholders. In addition, if we need to repay existing debt during periods of rising interest rates, we could be required to liquidate one or more of our investments at times that may not permit realization of the maximum return on such investments.

We have broad authority to incur debt and debt levels could hinder our ability to make distributions and decrease the value of our stockholders’ investment in us.

We may incur debt until our total liabilities would exceed 50% of the cost of our tangible assets (before deducting depreciation or other noncash reserves) and we may exceed this limit with the approval of our independent directors. High debt levels would cause us to incur higher interest charges and higher debt service payments and may also be accompanied by restrictive covenants. These factors could limit the amount of cash we have available to distribute to our stockholders and could result in a decline in the value of our stockholders’ investment in us.

To hedge against interest rate fluctuations, we may use derivative financial instruments that may be costly and ineffective.

From time to time, we may use derivative financial instruments to hedge exposures to changes in interest rates on loans secured by our assets. 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 our currently anticipated hedging strategy. There is no assurance that our hedging strategy will achieve our objectives. We may be subject to costs, such as transaction fees or breakage costs, if we terminate these arrangements.

To the extent that we use derivative financial instruments to hedge against interest rate fluctuations, we will be exposed to credit risk, 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. As a result of the global credit crisis, there is a risk that counterparties could fail, shut down, file for bankruptcy or be unable to pay out contracts. The failure of a counterparty that holds collateral that we post in connection with an interest rate swap agreement could result in the loss of that collateral.

Costs imposed pursuant to laws and governmental regulations may reduce our net income and our cash available for distribution to our stockholders.

Real property and the operations conducted on real property are subject to federal, state and local laws and regulations relating to protection of the environment and human health. We could be subject to liability in the form of fines, penalties or damages for noncompliance with these laws and regulations. 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, the remediation of contamination associated with the release or disposal of solid and hazardous materials, the presence of toxic building materials and other health and safety-related concerns.

Some of these laws and regulations may impose joint and several liability on the tenants, owners or operators of real property for the costs to investigate or remediate contaminated properties, regardless of fault, whether the contamination occurred prior to purchase, or whether the acts causing the contamination were legal. Activities of our tenants, the condition of properties at the time we buy them, operations in the vicinity of our properties, such as the presence of underground storage tanks, or activities of unrelated third parties may affect our properties.

The presence of hazardous substances, or the failure to properly manage or remediate these substances, may hinder our ability to sell, rent or pledge such property as collateral for future borrowings. Any material expenditures, fines, penalties or damages we must pay will reduce our ability to pay distributions to our stockholders and may reduce the value of our stockholders’ investment in us.

The costs of defending against claims of environmental liability, of complying with environmental regulatory requirements, of remediating any contaminated property or of paying personal injury or other damage claims could reduce our cash available for distribution to our stockholders.

Under various federal, state and local environmental laws, ordinances and regulations, a current or previous real property owner or operator may be liable for the cost of removing or remediating hazardous or toxic substances on, under or in such property. These costs could be substantial. Such laws often impose liability whether or not the owner or operator knew of, or was responsible for, the presence of such hazardous or toxic substances. Environmental laws also may impose liens on property or restrictions on the manner in which property may be used or businesses may be operated, and these restrictions may require substantial expenditures or prevent us from entering into leases with prospective tenants that may be impacted by such laws. Environmental laws provide for sanctions for noncompliance and may be enforced by governmental agencies or, in certain circumstances, by private parties. Certain environmental laws and common law principles could be used to impose liability for the release of and exposure to hazardous substances, including asbestos-containing materials and lead-based paint. Third parties may seek recovery from real property owners or operators for personal injury or property damage associated with exposure to released hazardous substances and governments may seek recovery for natural resource damage. The costs of defending against claims of environmental liability, of complying with environmental regulatory requirements, of remediating any contaminated property, or of paying personal injury, property damage or natural resource damage claims could reduce our cash available for distribution to our stockholders.

We intend that most if not all of our real estate acquisitions be subject to Phase I environmental assessments prior to the time they are acquired; however, such assessments may not provide complete environmental histories due, for example, to limited available information about prior operations at the properties or other gaps in information at the time we acquire the property. A Phase I environmental assessment is an initial environmental investigation to identify potential environmental liabilities associated with the current and past uses of a given property. If any of our properties were found to contain hazardous or toxic substances after our acquisition, the value of our investment could decrease below the amount paid for such investment.

Costs associated with complying with the Americans with Disabilities Act may decrease our cash available for distribution.

Our properties may be subject to the Americans with Disabilities Act of 1990, as amended, or the Disabilities Act. Under the Disabilities Act, all places of public accommodation are required to comply with federal requirements related to access and use by disabled persons. The Disabilities Act 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 Disabilities Act’s requirements could require removal of access barriers and could result in the imposition of injunctive relief, monetary penalties or, in some cases, an award of damages. Any funds used for Disabilities Act compliance will reduce our net income and the amount of cash available for distribution to our stockholders.

Property taxes could increase due to property tax rate changes or reassessment, which could impact our cash flow.

Even if we qualify as a REIT for U.S. federal income tax purposes, we generally will be required to pay state and local taxes on our properties. The real property taxes on our properties may increase as property tax rates change or as our properties are assessed or reassessed by taxing authorities. If the property taxes we pay increase, our financial condition, results of operations, cash flow, common stock value and our ability to satisfy our principal and interest obligations and to make distributions to our stockholders could be adversely affected.

U.S. Federal Income Tax Risks

Failure to qualify as a REIT would subject us to federal income tax, which would reduce the cash available for distribution to our stockholders.

We expect to operate in a manner that will allow us to qualify as a REIT for federal income tax purposes. However, the federal income tax laws governing REITs are extremely complex, and interpretations of the federal income tax laws governing qualification as a REIT are limited. Qualifying as a REIT requires us to meet various tests regarding the nature of our assets and our income, the ownership of our outstanding stock, and the amount of our distributions on an ongoing basis. While we intend to operate so that we will qualify as a REIT, given the highly complex nature of the rules governing REITs, the ongoing importance of factual determinations, including the tax treatment of certain investments we may make, and the possibility of future changes in our circumstances, no assurance can be given that we will so qualify for any particular year. If we fail to qualify as a REIT in any calendar year and we do not qualify for certain statutory relief provisions, we would be required to pay entity-level federal income tax on our taxable income. We might need to borrow money or sell assets to pay that tax. Our payment of income tax would decrease the amount of our income available for distribution to our stockholders. Furthermore, if we fail to maintain our qualification as a REIT and we do not qualify for certain statutory relief provisions, we no longer would be required to distribute substantially all of our REIT taxable income to our stockholders. Unless our failure to qualify as a REIT were excused under federal tax laws, we would be disqualified from taxation as a REIT for the four taxable years following the year during which qualification was lost.

Our stockholders will have current tax liability on distributions they elect to reinvest in our common stock.

To the extent that our stockholders participate in our dividend reinvestment plan, they will be deemed to have received, and for income tax purposes will be taxed on, the amount reinvested in shares of our common stock to the extent the amount reinvested was not a tax-free return of capital. In addition, our stockholders will be treated for tax purposes as having received an additional distribution to the extent the shares are purchased at a discount to fair market value, if any. As a result, stockholders participating in the dividend reinvestment plan may have to use funds from other sources to pay their tax liability on the value of the shares of common stock received. See ”Description of Shares—Dividend Reinvestment Plan—Tax Consequences of Participation.”

Even if we qualify as a REIT for federal income tax purposes, we may be subject to other tax liabilities that reduce our cash flow and our ability to make distributions to our stockholders.

Even if we qualify as a REIT for federal income tax purposes, we may be subject to some federal, state and local taxes on our income or property. For example:

In order to qualify as a REIT, we must distribute annually at least 90% of our REIT taxable income to our stockholders (which is determined without regard to the dividends-paid deduction or net capital gain). To the extent that we satisfy the distribution requirement but distribute less than 100% of our REIT taxable income, we will be subject to federal corporate income tax on the undistributed income.

We will be subject to a 4% nondeductible excise tax on the amount, if any, by which distributions we pay 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.

Income and gain from “foreclosure property” is subject to special rules. Generally, income and gain from foreclosure property is subject to corporate income tax at the highest applicable rate.

If we sell an asset that we hold primarily for sale to customers in the ordinary course of business, our gain would be subject to the 100% “prohibited transaction” tax.

REIT distribution requirements could adversely affect our ability to execute our business plan.

As discussed above, we generally must distribute annually at least 90% of our REIT taxable income, subject to certain adjustments and excluding any net capital gain, in order for federal corporate income tax not to apply to earnings that we distribute. To the extent that we satisfy this distribution requirement, but distribute less than 100% of our REIT taxable income, we will be subject to federal corporate income tax on our undistributed REIT 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 federal tax laws. We intend to make distributions to our stockholders to comply with the REIT requirements of the Internal Revenue Code.

From time to time, we may generate taxable income greater than our income for financial reporting purposes, or our taxable income may be greater than our cash flow available for distribution to stockholders. If we do not have other funds available in these situations we could be required to borrow funds, sell investments at disadvantageous prices or find another alternative source of funds to make distributions sufficient to enable us to pay out enough of our taxable income to satisfy the REIT distribution requirements and to avoid corporate income tax and the 4% excise tax in a particular year. These alternatives could increase our costs or reduce our equity. Thus, compliance with the REIT requirements may hinder our ability to operate solely on the basis of maximizing profits.

To maintain our REIT status, we may be forced to forego otherwise attractive business or investment opportunities, which may delay or hinder our ability to meet our investment objectives and reduce our stockholders’ overall return.

To qualify as a REIT, we must satisfy certain tests on an ongoing basis concerning, among other things, the sources of our income, nature of our assets and the amounts we distribute to our stockholders. We may be required to make distributions to stockholders at times when it would be more advantageous to reinvest cash in our business or when we do not have funds readily available for distribution. Compliance with the REIT requirements may hinder our ability to operate solely on the basis of maximizing profits and reduce the value of our stockholders’ investment.

Potential characterization of distributions or gain on sale may be treated as unrelated business taxable income to tax-exempt investors.

If a tax-exempt stockholder has incurred debt to purchase or hold our common stock, then a portion of the distributions to and gains realized on the sale of common stock by such tax-exempt stockholder may be subject to federal income tax as unrelated business taxable income under the Internal Revenue Code.

Complying with REIT requirements may force us to liquidate otherwise attractive investments.

To qualify as a REIT, 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 REIT real estate assets, including certain mortgage loans and residential and commercial mortgage-backed securities. In addition, not more than 5% of the value of our total assets can be represented by securities of any one issuer, we may not hold securities possessing more than 10% of the total voting power or 10% of the total value of the outstanding securities of any one issuer, and no more than 20% of the value of our total assets can be represented by securities of one or more taxable REIT subsidiaries. If we fail to comply with these requirements at the end of any calendar quarter, we generally 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 from our portfolio otherwise attractive investments. These actions could have the effect of reducing our income and amounts available for distribution to our stockholders.

Ownership limitations may restrict change of control or business combination opportunities in which our stockholders might receive a premium for their shares.

In order for us to qualify as a REIT for each taxable year, no more than 50% in value of our outstanding capital stock may be owned, directly or indirectly, by five or fewer individuals during the last half of any calendar year. “Individuals” for this purpose include natural persons, and some entities such as private foundations. To preserve our REIT qualification, our charter generally prohibits any person from directly or constructively owning more than 9.8% of our outstanding shares. This ownership limitation could have the effect of discouraging a takeover or other transaction in which our stockholders might receive a premium for their shares over the then prevailing market price or which our stockholders might believe to be otherwise in their best interests.

We may be subject to adverse legislative or regulatory tax changes.

At any time, the federal income tax laws or regulations governing REITs or the administrative interpretations of those laws or regulations may be amended. We cannot predict when or if any new federal income tax law, regulation or administrative interpretation, or any amendment to any existing 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, or any new, federal income tax law, regulation or administrative interpretation.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

We make statements in this offering circular that are forward-looking statements within the meaning of the federal securities laws. The words “believe,” “estimate,” “expect,” “anticipate,” “intend,” “plan,” “seek,” “may,” and similar expressions or statements regarding future periods are intended to identify forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause our actual results, performance or achievements, or industry results, to differ materially from any predictions of future results, performance or achievements that we express or imply in this offering circular or in the information incorporated by reference into this offering circular.

The forward-looking statements included in this offering circular 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 which could have a material adverse effect on our operations and future prospects include, but are not limited to:

●	our ability to effectively deploy the proceeds raised in this offering;

●	changes in economic conditions generally and the real estate and securities markets specifically;

●	limited ability to dispose of assets because of the relative illiquidity of real estate investments;

●	intense competition in the real estate market that may limit our ability to attract or retain tenants or re-lease space;

●	defaults on or non-renewal of leases by tenants;

●	increased interest rates and operating costs;

●	our failure to obtain necessary outside financing;

●	decreased rental rates or increased vacancy rates;

●	the risk associated with potential breach or expiration of a ground lease, if any;

●	difficulties in identifying properties to complete, and consummating, real estate acquisitions, developments, joint ventures and dispositions;

●	our failure to successfully operate acquired properties and operations;

●	exposure to liability relating to environmental and health and safety matters;

●	changes in real estate and zoning laws and increases in real property tax rates;

●	failure of acquisitions to yield anticipated results;

●	risks associated with breaches of our data security;

●	our level of debt and the terms and limitations imposed on us by our debt agreements;

●	the need to invest additional equity in connection with debt refinancings as a result of reduced asset values;

●	our ability to retain our executive officers and other key personnel of our Advisor, our Sponsor and its affiliates;

●	expected rates of return provided to investors;

●	our Sponsor’s and Advisor’s ability to retain and hire competent employees and appropriately staff their operations;

●	legislative or regulatory changes impacting our business or our assets (including changes to SEC guidance related to Regulation A);

●	changes in business conditions and the market value of our assets, including changes in interest rates, prepayment risk, operator or borrower defaults or bankruptcy, and generally the increased risk of loss if our investments fail to perform as expected;

●	our ability to implement effective conflicts of interest policies and procedures;

●	our compliance with applicable local, state and federal laws, the Investment Company Act and other laws; and

●	changes to generally accepted accounting principles, or GAAP.

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 offering circular. All forward-looking statements are made as of the date of this offering circular and the risk that actual results will differ materially from the expectations expressed in this offering circular 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 offering circular, 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 offering circular, 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 offering circular will be achieved.

USE OF PROCEEDS

The table below sets forth our estimated use of proceeds from this offering and the private placements described below, assuming we sell in this offering: (i) 30,000 shares (not including the shares purchased or to be purchased in private placements with our Sponsor), the minimum offering amount, and (ii) 5,000,000 shares, the maximum offering amount. Shares of our common stock will be offered at a fixed price of $10.00 per share until March 31, 2019. Beginning on March 31, 2019, our price per share will be based on our NAV per share as of the end of the prior semi-annual period. Our price per share will be adjusted semi-annually, on March 31 and September 30 of each year. In addition, our Sponsor, has committed to purchase an aggregate of 20,000 shares of common stock from us, at $10.00 per share, having an aggregate purchase price of $200,000, with such private placement to close on or prior to the date on which we raise and accept at least $300,000 in this offering. Our Sponsor has already acquired the first 100 shares, at $10.00 per share, pursuant to such commitment, in connection with our formation, for net proceeds to us of $1,000.

We expect to use substantially all of the proceeds from this offering to invest in a diversified portfolio of real estate and real estate-related investments. We plan to focus our investments on single-tenant commercial properties with strong real estate fundamentals, leased to creditworthy tenants via long-term net leases that provide for corporate lease guarantees, contractual rent increases, lease extension options, and limited landlord obligations. We may choose to acquire ownership interests directly or indirectly in individual properties, portfolios of assets, or shares of or interests in other real estate investment trusts. We expect that any expenses or fees payable to our Advisor for its services in connection with managing our daily affairs, including but not limited to, the selection and acquisition or origination of our investments, will be paid from cash flow from operations. If such fees and expenses are not paid from cash flow (or waived) they will reduce the cash available for investment and distribution and will directly impact our quarterly NAV. See “Compensation” for more details regarding the fees that will be paid to our Advisor and its affiliates. Many of the amounts set forth in the table below represent our Advisor’s best estimate since they cannot be precisely calculated at this time.

We may not be able to promptly invest the net proceeds of this offering in real estate and real estate related assets. In the interim, we may invest in short-term, highly liquid or other authorized investments, subject to the requirements for qualification as a REIT. Such short-term investments will not earn as high of a return as we expect to earn on our real estate-related investments.

	Minimum Offering(1)			Maximum Offering
	Amount			Amount
Gross Offering Proceeds	$	300,000.00		$	50,000,000.00
Less:
Organization and Offering Expenses (2)(3)	$	(9,000.00	)	$	(1,500,000.00	)
Net Proceeds from this Offering	$	291,000.00		$	48,500,000.00
Net Proceeds from the Private Placements	$	200,000.00		$	200,000.00
Estimated Amount Available for Investments	$	491,000.00		$	48,700,000.00

(1) This is a “best efforts” offering. We will not start operations or draw down on investors’ funds and admit investors as shareholders until we have raised at least $300,000 in this offering (not including the $200,000 received or to be received in the private placement to our Sponsor). Until the minimum threshold is met, investors’ funds will be revocable and will remain at the investors’ bank/financial institution. If we do not raise $300,000 in this offering, we will cancel the offering and release all investors from their commitments.

(2) Investors will not pay upfront selling commissions in connection with the purchase of shares of our common stock. The Advisor or its affiliates will pay all of our organization and offering expenses. We will reimburse our Advisor and its affiliates for all of the costs incurred by our Advisor or its affiliates in connection with our organization and offering subject to a limit of 3.0% of gross offering proceeds. See “Compensation” for a description of additional fees and expenses that we will pay our Advisor.

(3) Amount reflected is an estimate. Includes all expenses in connection with the formation of the Company and the qualification of this offering, and the marketing and distribution of shares of our common stock, including, without limitation, expenses for printing, engraving and amending offering statements or supplementing offering circulars, mailing and distributing costs, telephones, internet and other telecommunications costs, all advertising and marketing expenses, charges of experts and fees, expenses and taxes related to the filing, registration and qualification of the sale of shares under federal and state laws, including taxes and fees and accountants’ and attorneys’ fees. See “Plan of Distribution”.

MANAGEMENT

Board of Directors

HappyNest operates under the direction of our board of directors, the members of which are accountable to us and our stockholders as fiduciaries. The HappyNest Board is responsible for the management and control of our affairs. In addition, our board has a fiduciary duty to our stockholders to supervise our relationship with our Advisor, who shall manage our day-to-day operations and our portfolio of real estate investments. The HappyNest Board will approve our investments in the targeted properties, communicate with our Advisor, and oversee our operations. Because of the conflicts of interest created by our relationships with our Advisor and various affiliates, many of the responsibilities of the HappyNest Board have been delegated to our independent directors under our Articles of Incorporation and are intended to be delegated to a committee that consists solely of independent directors. This committee is the Conflicts Committee and is discussed below and under ”Conflicts of Interest, Certain Conflict Resolution Measures – Conflicts Committee”.

We operate under articles of incorporation and bylaws which act as our governing documents. Our directors, including our independent directors, approved the provisions of our articles of incorporation and bylaws by resolutions adopted by unanimous consent prior to our first meeting of directors.

The term of office of each director is one year. Each director will serve until the next annual meeting of stockholders and until his successor has been duly elected and qualified. The presence in person or by proxy of stockholders entitled to cast a majority of all the votes entitled to be cast on any matter at any stockholder meeting constitutes a quorum. Under our charter, a majority of the shares entitled to vote and present in person or by proxy at a meeting of stockholders at which a quorum is present is required for the election of the directors at a meeting of stockholders called for that purpose. This means that, of the shares entitled to vote and present in person or by proxy, a director nominee needs to receive affirmative votes from a majority of such shares in order to be elected to our board of directors. Therefore, if a nominee receives fewer “for” votes than “withhold” votes in an election, then the nominee will not be elected.

Although our board of directors may increase or decrease the number of directors, a decrease may not have the effect of shortening the term of any incumbent director. Any director may resign at any time. Any director or the entire board of directors may be removed, with or without cause, by a vote of the holders of a majority of the shares then entitled to vote on the election of directors at any meeting of stockholders called expressly for that purpose. The notice of the meeting will indicate that the purpose, or one of the purposes, of the meeting is to determine if the director(s) shall be removed.

Unless otherwise provided by Maryland law, the HappyNest Board is responsible for selecting its own nominees and recommending them for election by the stockholders, provided that the Conflicts Committee will nominate replacements for any vacancies among the independent director positions. Unless filled by a vote of the stockholders as permitted by the Maryland General Corporation Law, a vacancy that results from the removal of a director will be filled by a vote of a majority of the remaining directors. Any vacancy on our board of directors for any other cause will be filled by a vote of a majority of the remaining directors, even if such majority vote is less than a quorum.

Our directors are accountable to us and our stockholders as fiduciaries. This means that our directors must perform their duties in good faith and in a manner each director believes to be in our and our stockholders’ best interests. Further, our directors must act with such care as a prudent person in a similar position would use under similar circumstances, including exercising reasonable inquiry when taking actions. However, our directors and executive officers are not required to devote all of their time to our business and must devote only such time to our affairs as their duties may require. We do not expect that our directors will be required to devote a substantial portion of their time to us in discharging their duties.

In addition to meetings of the various committees of the board, which committees we describe below, we expect our directors to hold at least four regular board meetings each year. The HappyNest Board has the authority to fix the compensation of all officers that it selects and may pay compensation to directors for services rendered to us in any other capacity, although we expect our Conflicts Committee would act on these matters.

Our general investment and borrowing policies are set forth in this offering circular. Our directors may establish further written policies on investments and borrowings and will monitor our administrative procedures, investment operations and performance to ensure that our executive officers and our advisor follow these policies and that these policies continue to be in the best interests of our stockholders. Unless modified by our directors, we will follow the policies on investments and borrowings set forth in this offering circular.

Selection of Our Board of Directors; Independent Directors

In determining the composition of the HappyNest Board, our initial board of directors’ goal was to assemble a group of persons whose individual skills, character, judgment, leadership experience, real estate experience and business acumen would complement each other and bring a diverse set of skills and experiences to our board as a whole. As provided in the NASAA REIT Guidelines, directors must have had at least three years of relevant experience in these fields, and at least one director must have had at least three years of relevant real estate experience. All of our current directors have three years’ relevant experience in the real estate business.

Our articles of incorporation provide that a majority of the HappyNest Board must be independent directors. Thomas K. Engberg serves as the Chairman of the HappyNest Board; he, Ryan Severino, Lindsay Ornstein and Christopher Caltabiano are our independent directors. An independent director is a person who meets the requirements set forth in our charter and who is not one of our officers or employees or an officer or employee of our Advisor, our Sponsor or any of their affiliates, and has not been so for the previous two years.

Executive Officers and Directors

We have provided below certain information about our executive officers and directors.

Name	Age	Position
Jesse Prince	35	Chief Executive Officer, Chief Financial Officer, President, Secretary, Treasurer & Director
Thomas K. Engberg	63	Chairman of the Board of Directors
Ryan Severino	42	Director
Lindsay Ornstein	40	Director
Christopher Caltabiano	42	Director

Jesse Prince, Chief Executive Officer, Chief Financial Officer, President, Secretary, Treasurer and Director – Mr. Prince serves as our Chief Executive Officer, Chief Financial Officer, President, Secretary and Treasurer and as a member of the HappyNest Board. As our Chief Executive Officer and a principal of our Advisor, Mr. Prince will provide the HappyNest Board with first-hand insights and recommendations on the execution of our business strategy and our operation. Together with Mr. Leonardo Sessa, Mr. Prince indirectly owns and controls our Advisor, and he has direct ownership and control of our Sponsor. Mr. Prince has more than 10 years’ real estate experience as an investor, investment sales broker, asset manager and consultant and has participated as a principal in real estate transactions valued in excess of $20 million, and as an investment broker in real estate transactions valued in excess of $480 million. Mr. Prince has advised several public and private clients on real estate acquisition and financial strategies. Prior to forming HappyNest, Mr. Prince was responsible for developing one of the top producing investment sales teams at Stan Johnson Company, a single-tenant net lease focused investment advisory firm. Mr. Prince graduated from the United States Military Academy at West Point, managed hundreds of soldiers on multiple combat tours, and was honorably discharged from the Army in 2010 holding the rank of Captain. He holds a Masters in Real Estate Finance from New York University where he graduated with “distinction” and is a licensed New York State Real Estate Broker. Jesse currently serves on the Board of Governors for the West Point Society of New York and the Military Affairs Committee for the Union League Club.

Thomas K. Engberg, Chairman of the Board of Directors – Thomas Engberg is Chief Investment Officer of Loja Group and Chief Executive of its subsidiary, Loja Real Estate, LLC. Loja is a private equity real estate fund manager focused on retail investments across the U.S. Mr. Engberg is a 35-year veteran of the retail real estate business. Since its inception in 2009 Mr. Engberg has directed Loja in the acquisition of over $450 million in retail properties on behalf of a separate account investor. Prior to joining Loja, Mr. Engberg was Executive Vice President of London based Capital & Counties USA, Inc. where he was responsible for building a retail development program in the Western U.S. During the 10 years preceding his time at Capital & Counties, Mr. Engberg served as Senior Vice President of Regency Centers Corporation where he was in charge of investments for the Northern California region. While at Regency, Mr. Engberg built a team that acquired and developed some 4 million square feet of retail space representing nearly $1 billion in value. Prior to joining Regency, Mr. Engberg was a principal in his own shopping center investment and development company, Douglas Thomas Properties. Mr. Engberg was the Northern California State Director for the International Council of Shopping Centers, and has served on various committees of that organization including Program and Governmental Affairs. He has served as Vice Chairman of the Board of the California Business Properties Association and is a founding member of The Belden Club, a San Francisco-based real estate organization. He is a 1977 graduate of the University of California, Davis with a degree in Economics.

Ryan Severino, Director – Ryan Severino is the chief economist at JLL where he manages the economics team and is responsible for global and regional economic research, analysis and forecasting as well as property market forecasting. Prior to JLL, Ryan served as senior economist and director of research at Reis in the research and economics department, the team responsible for the firm’s market forecasting, valuation, and portfolio analytics services. Ryan also served as the Associate Director of Research at MetLife Real Estate Investments where he was responsible for macroeconomic and real estate market analysis, formulating portfolio strategy, and conducting deal reviews. Before joining MetLife, Ryan served as the Director of Investment Strategy and Market Research at Starwood Capital Group where he directed the entire research effort at the firm. Ryan has also held research positions at Prudential Real Estate Investors and UBS. Additionally, Ryan currently serves as an Adjunct Professor of finance and economics at Columbia University and New York University teaching courses such as Urban Economics, Portfolio and Risk Management, Microeconomics, and Macroeconomics. He also has experience in real estate asset management, portfolio management, and acquisitions. Ryan’s original research has appeared in a number of journals such as the Wharton Real Estate Review and The Real Estate Finance Journal. His assessments of market conditions have appeared in international publications like The Economist, The Wall Street Journal, The New York Times, and The Financial Times and on business networks such as CNBC and Bloomberg. Ryan is a member of the CFA Institute, the American Economic Association, the National Association for Business Economics, ULI, and NCREIF. Ryan holds a master’s degree from Columbia University, where he studied International Finance and Economics, a bachelor’s degree from Georgetown University, where he studied Finance, Japanese, and Economics, and is a CFA Charterholder.

Lindsay Ornstein, Director – Lindsay Ornstein, is the co-founder and leader of the Transwestern New York. She also co-leads Transwestern’s New York Nonprofit Practice and Branding Services within the Transwestern Consulting Group. Lindsay’s experience exceeds 15 years and has completed over two million square feet of transactions. She has represented Robin Hood Foundation and their grantees for more than a decade. Recent work includes the co-location feasibility assessment of seven Robin Hood grantees into a shared 100,000 SF space. Lindsay is expert at communicating between nonprofit boards, staff, and funders. Lindsay graduated Summa Cum Laude and top of her class as a communications major from the University of Pennsylvania. Before joining Transwestern in 2011, Lindsay served as a principal and founding member of Centric Real Estate Advisors. Lindsay currently serves as chairman of the Young Men’s/Women’s Real Estate Association and was the 2017 Young Real Estate Professional of the Year.

Christopher P. Caltabiano, Director – Christopher P. Caltabiano, Asset Management & Investment Strategy, is currently responsible for overseeing asset management activities and investment strategies for a portfolio of Shorenstein’s assets located in various East Coast markets. Shorenstein is one of the country's oldest and most respected real estate organizations active nationally in the ownership and operation of high-quality office properties. Prior to Shorenstein Chris was a vice president at AIG Global Real Estate where he was responsible for sourcing new equity investments and managing the East Coast asset management team. He has also served as an associate for Rockwood Real Estate Advisors, and an analyst/consultant at Bloomberg Financial Markets. Mr. Caltabiano graduated from St. Johns University with a B.S., and from NYU Schack Institute of Real Estate with an M.S. He is an Adjunct Assistant Professor at the NYU Schack Institute of Real Estate and a frequent lecturer on real estate, corporate finance, valuation and risk management at the New York Institute of Finance, Technical University of Berlin and University of Amsterdam. His research on these subjects has been published in the Real Estate Review.

Committees of Our Board of Directors

The HappyNest Board may delegate many of its powers to one or more committees. Our charter requires that each committee consist of at least a majority of independent directors. Our board intends to appoint a Conflicts Committee, which will consist solely of independent directors, and an Audit Committee and an Investment Committee, each of which will consist of a majority of independent directors.

Conflicts Committee

In order to reduce or eliminate certain potential conflicts of interest, the board of directors intends to appoint a Conflicts Committee of the HappyNest Board prior to the date on which the minimum offering amount is raised, which will be composed of two of our independent directors, Ryan Severino and Lindsay Ornstein. The Conflicts Committee will operate pursuant to a Conflicts Committee charter, which will be adopted by the board of directors to define the committee’s responsibilities. The Conflicts Committee charter will authorize the Conflicts Committee to act on any matter permitted under Maryland law. Both the HappyNest Board and the Conflicts Committee must act upon those conflict-of-interest matters that cannot be delegated to a committee under Maryland law. The Conflicts Committee is also empowered to retain its own legal and financial advisors at our expense. See “Conflicts of Interest—Certain Conflict Resolution Measures”.

The Conflicts Committee charter will require that the Conflicts Committee discharge the board’s responsibilities relating to the nomination of independent directors and the compensation of our independent directors. Our Conflicts Committee also will discharge the board’s responsibilities relating to the compensation of our executives. Subject to the limitations in our charter and with stockholder approval, the Conflicts Committee may also create stock-award plans.

Audit Committee

The HappyNest Board has appointed an Audit Committee to assist the board in carrying out its responsibility as to the independence and competence of our independent public accountants. Two of the three intended members of the Audit Committee, Thomas Engberg and Ryan Severino, are independent members of the board of directors. The third member of the Audit Committee is Jesse Prince. The Audit Committee will operate pursuant to an Audit Committee charter adopted by the board of directors to define the committee’s responsibilities.

Investment Committee

The HappyNest Board has appointed an Investment Committee to assist our board of directors in fulfilling its oversight responsibilities by (i) reviewing and approving each investment we make, (ii) establishing our investment guidelines and policies, and overseeing our investments, and the investment activity of other accounts and funds held for our benefit, and (iii) overseeing the investment activities of our subsidiaries. The Investment Committee consists of two of our independent directors, Ryan Severino and Christopher Caltabiano, as well as Jesse Prince. The Investment Committee will operate pursuant to an Investment Committee charter, which has been adopted by the board of directors to define the committee’s responsibilities.

Compensation of Directors

We intend to grant each of the members of our board (1) as soon as practicable after the commencement of this offering, 5,000 shares of common stock, and (2) annually thereafter, 2,500 shares of common stock. The shares to be issued to directors will be restricted securities issued in private transactions in reliance on an exemption from registration requirements of the Securities Act under Section 4(a)(2) thereof, and we have not agreed to file a registration statement with respect to issuance of the shares to the directors. In addition, we intend to reimburse directors for reasonable out-of-pocket expenses incurred in connection with attendance at meetings of our board of directors. The aggregate number of shares of common stock that may be issued or used for reference purposes or with respect to which awards may be granted to directors will not exceed 5% of our outstanding common shares on a fully diluted basis at any time (subject to adjustment for stock splits, combinations, reclassifications, reorganizations and certain other specified events pursuant to the stock incentive plan).

The vesting schedule and restrictions on transferability for such shares will be determined by our Board of Directors in connection with each such award. The restrictions may lapse separately or in combination at such times, under such circumstances, including, without limitation, a specified period of service or the satisfaction of pre-established criteria, in such installments or otherwise, as our Board of Directors may determine. A member of the Board who is granted restricted common shares will have all of the rights of a stockholder, including, without limitation, the right to vote and the right to receive distributions on the shares of our common stock. Although distributions will be paid on restricted common shares, whether or not vested, at the same rate and on the same date as on common shares, holders of such restricted shares are prohibited from selling such restricted common shares until they vest.

Directors who are also executive officers of HappyNest, our Sponsor, or any of its affiliates will receive no compensation for services rendered as a director.

Compensation of Executive Officer

Any of our executive officers who are also employed by our Sponsor or Advisor will be compensated solely by our Sponsor or Advisor, as applicable, and not directly by HappyNest, for any services they perform on our behalf. Because we pay a fee to our Advisor pursuant to our advisory agreement, however, we do indirectly pay costs related to these individuals. At the time of this offering, Mr. Jesse Prince, our chief executive officer, is also the chief executive officer of our Sponsor and Advisor. HappyNest does not currently have a chief financial officer and is not actively recruiting one, but may decide to hire an individual to serve in such capacity in the future.

Advisor and Sponsor

Our Advisor is HappyNest Advisors, LLC, a limited liability company formed in the State of New York on February 21, 2017, and our Sponsor is Vitellus, LLC, a Delaware limited liability company formed on February 1, 2017. Our Advisor was originally named Crown Prince Holdings, LLC, and was wholly-owned by Jesse Prince. It has not previously had any operations. On March 5, 2018, the entity’s name was changed to HappyNest Advisors, LLC, and on March 8, 2018, Mr. Prince contributed 100% of the ownership interests in our Advisor to our Sponsor. Our Sponsor was formed on February 1, 2017. Our Sponsor is co-owned in equal measure by, and jointly controlled by, Messrs. Prince and Sessa. Our Sponsor and our Advisor are both headquartered at 1 N. 4^th Place, Suite 27L, Brooklyn, NY 11249. Our Advisor has contractual and fiduciary responsibilities to us and our stockholders.

All of our administrative functions and operations are managed and performed by our Advisor and its affiliates. Certain of our directors and executive officers are also executive officers of our Advisor and our Sponsor. We entered into an advisory agreement, or the Advisory Agreement, with our Advisor, which was unanimously approved by our board, including our independent directors, and which appointed our Advisor to manage, operate, direct and supervise our operations. In connection with advising us and managing our operations, our Advisor will face conflicts of interest. See “Risk Factors — Risks Related to Conflicts of Interest”. Our Advisor is subject to the supervision of the HappyNest Board and provides only the services that are delegated to it. Our independent directors are responsible for reviewing the performance of our Advisor and determining that the compensation to be paid to our advisor is reasonable in relation to the nature and quality of services performed and that our investment objectives are being carried out.

The Advisor expects to hire two real estate consultants to assist HappyNest with certain real estate and related services that the Advisor is obligated to provide to HappyNest under the Advisory Agreement.

Advisory Agreement

Under our Advisory Agreement with the Advisor, the obligations of our Advisor include:

Investment Advisory and Acquisition

Source and acquire assets that are consistent with our overall investment strategy to ensure the portfolio provides stockholders with diversification and sufficient cash flow for distributions;

Advise HappyNest on market conditions and its potential impact on the portfolio’s performance;

Supervise our debt financing strategies;

Source and negotiation joint ventures, limited partnerships and other co-investment relationships;

Conduct due diligence and underwriting for potential investments, including by obtaining information regarding the market, property, tenant, lease terms, and capital markets;

Prepare reports describing the merits and risks of acquisition opportunities along with recommendations to facilitate our boards’ consideration of such potential acquisitions;

Negotiate and execute, subject to Board approval, all agreements related to investments approved by the board; and

Manage the transaction process, including coordinating with third-party vendors such as legal, engineers, consultants, lenders, and co-investors to ensure the successful completion of approved investments.

Asset Management

Monitor market reports and property conditions to help our portfolio achieve desired performance and return metrics;

Develop and implement a strategy for managing property and portfolio level administration, operation, leasing, marketing, financing, capital improvements, refinancing and dispositions;

Identify, interview, and select persons necessary to help enable the Advisor to perform its obligations under the Advisory Agreement, including, but not limited to, lawyers, accountants, lenders, depositories, developers, property management companies, construction companies, technical managers, corporate fiduciaries, insurance agents, agents for collection, and escrow agents;

Coordinate and manage relationships between us and any of our co-investment partners;

Coordinate and manage tenant relationships and use commercially reasonable efforts to enforce HappyNest’s rights as landlord in the event of a default;

Monitor the management, operation and maintenance of the Property to assure that properties are being operated and maintained in an efficient, economic and satisfactory manner;

Consult with respect to the underwriting, analysis and budgeting of financing or borrowing arrangements or hedging activities undertaken with respect to our assets; and

Perform other services as may be requested by our Board of Directors and agreed to by our Advisor, from time to time, relating to our assets.

Financing Services

Source and negotiate terms for financing agreements;

Identify, source, and manage relationships with various third-party brokers, lenders, and other capital sources; and

Manage debt and/or equity financing transactions from inception to completion.

Disposition

Manage and execute asset dispositions, sales and liquidity transactions approved by the Board of Directors; and

Identify and recommend asset disposition opportunities to the Board of Directors that will be accretive to the value of our assets.

Stockholder Services

Determine and authorize cash distributions and dividend reinvestments in accordance with our distribution policy and dividend reinvestment plan;

Manage investor relations and notify stockholders of written and electronic reports through the HappyNest Platform; and

Approve and manage share repurchase requests in accordance with our share repurchase policy.

Accounting Services

Maintain accounting data necessary to prepare and file periodic reports required by the SEC and other regulatory agencies;

Keep and maintain our books and records;

Provide cash management services; and

Coordinate with third parties, including, but not limited to, tax and compliance services, risk management services, independent accountants, and consultants for all IRS and tax-related matters.

Other Administrative Services

Perform administrative functions required to manage our day-to-day operations;

Monitor all required reporting and stockholder records are being maintained by our transfer agent in accordance with applicable law;

Provide the Board of Directors with updates on any regulatory changes that may affect our compliance requirements;

Monitor our compliance with tax requirements relating to our status as a REIT;

Coordinate with transfer agent with regards to any distributions, special dividends, or other payments to stockholders; and

Acquire appropriate insurance coverage.

Additionally, we will reimburse our Advisor for all of the costs incurred by it or its affiliates in connection with our organization and this offering, subject a limit of 3.0% of the aggregate gross offering proceeds of this offering, once we raise at least $300,000 in this offering (inclusive of shares sold to the Sponsor, Advisor and/or their affiliates, if any). Organization and offering expenses consist of the actual legal, accounting, printing, marketing, advertising, filing fees, transfer agent costs and other accountable offering-related expenses, including but not limited to: (i) amounts to reimburse our Advisor and its affiliates (including our Sponsor) for all marketing related costs and expenses; (ii) personnel employed to respond to inquiries from prospective stockholders; and (iii) facilities and technology costs, insurance expenses and other costs and expenses associated with this offering and marketing of our shares of common stock. The expenses and payments subject to reimbursement by us include personnel and related direct employment or overhead costs related to existing / prospective investor relations of our Advisor and its affiliates.

If (i) we request that our Advisor perform services that are outside of the scope of the Advisory Agreement or (ii) there are changes to the regulatory environment in which we and our Advisor operate that significantly increases the level of services performed by our Advisor, such that the costs and expenses borne by our Advisor for which it is not entitled to separate reimbursement, such services will be separately compensated at rates and in amounts as are agreed to by our Advisor and our independent directors.

See “Compensation”, for a detailed discussion of the fees and reimbursements payable to our Advisor under the Advisory Agreement.

Our Advisory Agreement has an initial term of twelve months from the date of this offering, with annual renewals thereafter unless earlier terminated, with or without cause, by the action of a majority of the independent members of the HappyNest Board on at least 60 days’ notice (following the initial 12-month term). There are no limits on the number of renewal terms for our Advisory Agreement. There are no penalties to HappyNest for termination of our Advisory Agreement by our board. Our Advisor is bound by the terms of the Advisory Agreement to cooperate with any notice of termination from our board and, upon receipt of a notice of termination, to take all necessary steps to ensure an orderly transition of advisory functions to any successor.

It is the duty of our board of directors to evaluate the performance of our Advisor before renewing the Advisory Agreement. The criteria used in such evaluation will be reflected in the minutes of the meeting at which the performance and criteria are discussed. Our board will determine that any successor entity possesses sufficient qualifications to perform the advisory functions and that the compensation provided for in the Advisory Agreement is justified.

Our Advisor and its affiliates expect to engage in other business ventures and, as a result, they will not dedicate their resources exclusively to our business. However, pursuant to the Advisory Agreement, our Advisor must devote sufficient resources to our business to discharge its obligations to us. Our Advisor may assign the Advisory Agreement to an affiliate upon our approval. We may assign or transfer the Advisory Agreement to a successor entity.

Initial Investment by Our Sponsor

Our Sponsor purchased 100 shares of our common stock at a purchase price of $10.00 per share, for an aggregate purchase price of $1,000 in connection with our formation. Our Sponsor has committed to purchase an additional 19,900 shares of our common stock, at $10.00 per share, in a private placement, which shall close on or prior to the date on which we sell 30,000 shares of our common stock in this offering. Although nothing prohibits our Sponsor or its affiliates (including our Advisor) from acquiring additional shares of our common stock, neither our Sponsor nor any of its affiliates (including our Advisor) currently has any options or warrants to acquire any additional shares of our common stock other than as described above. Our Advisor is currently owned and controlled by our Sponsor, and is therefore indirectly owned and controlled by Messrs. Prince and Sessa.

Management Decisions

The primary responsibility for the management decisions of our Advisor, including the selection of real estate investments to be recommended to the HappyNest Board, the negotiation for these investments and asset management decisions, resides in Mr. Prince. All proposed investments that exceed de minimis amounts established by our board, including a majority of our independent directors, must be approved by at least a majority of our board, including a majority our independent directors. Unless otherwise provided by our articles of incorporation, the independent members of our board may approve a proposed investment without action by our full board of directors if the approving members of the independent members of our board constitute at least a majority of our total board of directors.

License Agreement

We will enter into a license agreement with our Sponsor effective upon the commencement of this offering, pursuant to which our Sponsor will grant us a non-exclusive, royalty free license to use the name “HappyNest” and the HappyNest Platform. We will conduct this offering on the HappyNest Platform, which will host this offering in connection with the distribution of the common shares offered pursuant to this offering circular. The HappyNest Platform is owned and operated by our Sponsor. Our Sponsor shall be entitled to charge a monthly per subscriber account fee of $1 per subscriber account in respect of its license of the HappyNest name and the HappyNest Platform to us. We will not pay our Sponsor any sales commissions for hosting this offering on the HappyNest Platform. Although the Sponsor intends to host other offerings in the future, this is the inaugural offering on the HappyNest Platform. We will have no rights to use the name “HappyNest” other than with respect to those granted by the license. In the event that we terminate our agreement with the Advisor, we would be required to change our name and cease use of the HappyNest Platform.

2018 Equity Compensation Plan

We have adopted the HappyNest REIT, Inc. 2018 Equity Compensation Plan (the “2018 Plan”), effective as of December 2018. Under such plan, we may grant equity-based incentive awards, including options, restricted stock, and other stock-based awards, to any directors, employees, advisors, and consultants that provide services to us or any of our subsidiaries on terms and conditions that are from time to time determined by us. An aggregate of 750,000 shares of our common stock are reserved for issuance under the 2018 Plan. The purpose of the 2018 Plan is to provide financial incentives for selected directors, employees, advisors, and consultants of the company, thereby promoting the long-term growth and financial success of the company.

COMPENSATION

Fees and Compensation to our Sponsor, Advisor and Independent Board Members

Our Advisor manages our day-to-day affairs and our portfolio of real estate investments, subject to the supervision of our board. The following table summarizes all of the compensation and fees that we pay to our Advisor and its affiliates (including our Sponsor), including amounts to reimburse their costs in providing services, and amounts that we pay to our independent directors. The following projections assume we raise $50 million by selling 5,000,000 shares of common stock in this offering at a price of $10.00 per share.

Type of Compensation	Determination of Amount	Maximum Amount from Offering (5,000,000 Shares Sold)

Organization and Offering Stage

Sponsor Fees - Organization and Offering Expenses	Reimbursement to our Sponsor of all organization and offering expenses paid on our behalf by our Sponsor, up to a maximum of 3.0% of the aggregate gross offering proceeds, once at least 30,000 shares of common stock have been sold in this offering at an offering price of $10.00 per share.	$1,500,000

Acquisition, Operations and Disposition Stage

Sponsor Fee	Our Sponsor shall be entitled to charge a monthly per subscriber account fee of $1 per subscriber account in respect of its license of the HappyNest name and the HappyNest Platform to us.	Not determinable at this time

Asset Management Fee	A monthly fee of 0.0417% of our “total invested value” as of the immediately preceding September 30 or March 31 (0.50% on a per annum basis), payable to our Advisor. “Total invested value,” for any period, means the aggregate book value of our assets before reserves for amortization and depreciation, impairments or other similar non-cash reserves.	Not determinable at this time

Acquisition Fee^*	3.0% of the contract price of a property (including all fees and expenses, other than those of the Advisor for which HappyNest is not responsible). Such fees and expenses will not exceed an amount that would result in HappyNest paying more than 6.0% of the contract price of a property when aggregated with all other broker broker fees paid by or on behalf of HappyNest in connection with such acquisition excluding fees and expenses. This fee will be paid to our Advisor upon each real estate investment or any other investment by HappyNest.	Not determinable at this time

Disposition Fee	3.0% of contract price of a property (including all fees and expenses). Such fees and expenses will not exceed an amount that would result in HappyNest paying more than 6.0% of the contract price of a property when aggregated with all other broker broker fees paid by or on behalf of HappyNest in connection with such acquisition excluding fees and expenses. This fee will be paid to our Advisor upon each disposition by HappyNest.	Not determinable at this time

Property Management Fee	Our Properties are intended to be triple-net single tenant properties with limited property management responsibilities. However, if our Advisor or its affiliates provides property management services for our real estate investments, we will pay fees up to 1.00% of effective gross revenues from the property being managed. We also will reimburse our Advisor or its affiliates for property-level expenses that it pays or incurs on our behalf. This does not include the Advisor’s overhead, employee costs borne by the Advisor, utilities or technology costs. Our Advisor or its affiliates may subcontract the performance of its property management duties to third parties and pay all or a portion of its property management fee to the third parties with whom it contracts for these services.	Not determinable at this time

Other Operating Expenses	We reimburse our Advisor for out-of-pocket expenses of third parties in connection with providing services to us. This does not include the Advisor’s overhead, employee costs borne by the Advisor, utilities or technology costs. The expense reimbursements that we pay to our Advisor also include expenses incurred by our Sponsor in the performance of services under the shared services agreement between our Advisor and our Sponsor, including any increases in insurance attributable to the management or operation of our Company.	Not determinable at this time

Additional Fees and Compensation

Independent Director Compensation

We intend to grant each of the non-employee members of our board an initial equity grant of 5,000 restricted shares of common stock. In addition to the initial grant of restricted shares of common stock, we intend to grant members of our board 2,500 restricted shares of common stock each annually. In addition, we reimburse directors for reasonable out-of-pocket expenses incurred in connection with attendance at meetings of our board of directors.

Assuming a value of $10.00 per share of common stock, and assuming that the 5% limit has not been reached, $200,000 represents the aggregate value of the initial grant of restricted common shares, and $100,000 represents the aggregate value of each annual grant of restricted common shares (assuming we continue to have four non-employee board members).

Liabilities and Indemnification of our Sponsor, Advisors, Officers, and Directors

To the extent permitted by Maryland law, our charter requires us to indemnify our Sponsor, Advisors and our and their officers, directors, and affiliates, or collectively Indemnified Persons, for losses incurred through their service to us in that capacity. Our obligation to indemnify Indemnified Persons is subject to the following conditions:

the party seeking indemnification acted in a manner which it believed to be in our best interests;

the party seeking indemnification was acting on our behalf in their official capacity;

in the case of an independent director, the liability or loss was not the result of gross negligence or deliberate misconduct by the independent director;

in the case of a non-independent director, our Advisor, our Sponsor or one of their affiliates, the liability or loss was not the result of negligence or misconduct by the party seeking exculpation or indemnification; and

the indemnification is recoverable only out of our net assets and not from assets of our stockholders.

We are restricted from providing indemnification of our directors, our Advisor, our Sponsor, and their affiliates for liabilities arising from or out of a violation of state or federal securities laws, unless one or more of the following conditions are met:

there has been a successful adjudication on the merits of each count involving alleged securities law violations;

the claims have been dismissed on the merits by a court of competent jurisdiction; or

a court of competent jurisdiction approves a settlement of the claims against the indemnitee and finds that indemnification of the settlement and the related costs should be made, and the court considering the request for indemnification has been advised of the position of the SEC and of the published position of any state securities regulatory authority in which the securities were offered as to indemnification for violations of securities laws.

The advancement of funds to our directors, Sponsor, Advisor or affiliates for any costs incurred, including, but not limited to legal expenses, as a result of any legal action requiring indemnification shall only be permissible if all of the following conditions are satisfied:

the legal action relates to acts or omissions with respect to the performance of duties or services on our behalf;

the legal action is initiated by a third party who is not one of our stockholders; or

the legal action is initiated by stockholders acting in his or her capacity as a stockholder with the advancement receiving approval by a court of competent jurisdiction.

Our directors, Sponsor, Advisor or affiliates will be liable for repayment of any advanced funds, including any applicable legal rate of interest accrued, if it is determined that their actions should not be entitled to indemnification. We have purchased and maintain liability insurance on behalf of all of our directors and officers for claims asserted against them while acting within their official capacity, but will not cover any actions found to be ineligible for indemnification by a court of competent jurisdiction.

VALUATION POLICIES

The HappyNest Board, including a majority of our independent directors, has adopted valuation guidelines and methodologies for use in connection with the valuation of our assets and liabilities and the calculation of our NAV. The overarching principle of these guidelines is to produce a valuation that represents a fair and accurate estimate of the value of our investments or the price that would be received for our investments in an arm’s-length transaction between market participants, less our liabilities.

From the time that we commence operations, each calendar year, our board of directors, including a majority of our independent directors, is required to review the appropriateness of our valuation guidelines. The valuation guidelines will be administered by our Advisor. Our Advisor will provide our board with periodic valuation reports in connection with regularly scheduled board meetings, or at such other times as may be requested by the board. From time to time, our board, including a majority of our independent directors, may adopt changes to the valuation guidelines if it (1) determines that such changes are likely to result in a more accurate reflection of the value of our assets and liabilities or our NAV or a more efficient or less costly procedure for the determination of the value of our assets and liabilities or our NAV without having a material adverse effect on the accuracy of such determination or (2) otherwise reasonably believes a change is appropriate for the determination of the value of our assets and liabilities or our NAV.

Asset Valuation Policy

Our asset valuation policy is intended to balance considerations of cost, speed and accuracy. Absent unusual circumstances, our asset valuation policy provides that all of our assets (other than liquid non-real estate assets and securities, including cash and cash equivalents, or “liquid assets”) will be carried at cost for approximately the first year following acquisition. After the first year from acquisition, our assets (other than liquid assets) will be valued on a semi-annual basis (on September 30 and March 31) using information believed by us or our Advisor to be accurate and appropriate. Where our finance team, Advisor and the HappyNest Board believe that there has not been a material change in value of an asset, we intend to continue to use the most recent previous valuation for that asset. In connection with the acquisition or disposition of assets on a basis other than for cash consideration (for example, in connection with utilization of our Operating Partnership), we expect to review the valuation of our assets, which may result in our revaluing our assets on dates other than September 30 and March 31.

Although our investment strategy is intended to result in the acquisition of mainly commercial real estate properties, we may also own liquid assets (such as liquid non-real estate assets and securities, including cash and cash equivalents), including pending acquisition of real estate properties, redemption of our shares or payment of dividends, to hedge against interest rate risk, to improve liquidity and to limit market exposure. Liquid assets will be valued on the basis of information provided by an independent third-party pricing service. Our liquid assets will be valued on a monthly basis as of the end of each month.

Any costs directly associated with our asset acquisitions, including, but not limited to legal expenses, surveys, title insurance, and engineer reports, will be amortized over a five-year period.

Valuations of our assets will be undertaken by a finance team employed by or on behalf of our Advisor and acting under the supervision of our Advisor. Except in unusual circumstances, we do not anticipate obtaining valuations of our assets (other than liquid assets, as described below) from external valuation firms. However, if our Advisor or the HappyNest Board deems an external valuation of certain or all of our assets to be appropriate, we expect to utilize an independent expert to undertake this valuation. For example, our charter provides in all cases in which real property is acquired from our Sponsor, Advisor, any of our directors or officers or any of their affiliates, the fair market value shall be determined by an independent expert selected by our independent directors not otherwise interested in the transaction. In such circumstances, we may use either one independent valuation firm for all applicable assets, or we may divide up the valuation work among multiple independent valuation firms. Each independent valuation firm will be provided with all material information required to complete a valuation in accordance with our asset valuation policy and the Uniform Standards of Professional Appraisal Practice. Our board may choose to replace any external valuation firm at any time by a simple majority vote.

Information used by our finance team, our Advisor and any independent valuation firm to value our assets (other than liquid assets, as described above) is expected to include market reports, physical inspections, if deemed necessary, and other resources believed by them to be accurate and appropriate concerning applicable capitalization rates, discount rates, interest rates, economic indicators, market velocity and each asset’s general condition. Our finance team, our Advisor and any independent valuation firm will be valuing privately held assets and will at times be required to make assumptions and projections about property market economics and performance, the regulatory environment, and other general business and economic matters to conduct those valuations. Those assumptions and projections could affect the ultimate value determined for those assets (whether on a positive or negative basis). The lack of an industry standard valuation method makes it possible for other analysts to arrive at different valuations for our real estate assets. The majority of our total assets will be commercial real estate property and other real estate related investments and therefore changes in the value of our portfolio will have a significant impact on the value of HappyNest as a whole and our NAV.

While the methodologies contained in the valuation guidelines are designed to operate reliably within a wide variety of circumstances, it is possible that in certain unanticipated situations or after the occurrence of certain extraordinary events (such as a terrorist attack or an act of nature), our Advisor’s ability to calculate the value of our assets and liabilities or our NAV may be impaired or delayed, including, without limitation, circumstances where there is a delay in accessing or receiving information from vendors or other reporting agents upon which our Advisor may rely upon in determining the value of our assets and liabilities or our NAV. In these circumstances, a more accurate valuation of our assets and liabilities or our NAV might be able to be obtained by using different assumptions or methodologies. Accordingly, in special situations when, in our Advisor’s reasonable judgment, the administration of the valuation guidelines would otherwise result in a valuation that does not represent a fair and accurate estimate of the value of our investment, our Advisor, the HappyNest Board or any independent valuation firm utilized may apply alternative methodologies; provided, that our Advisor and, if applicable, the independent valuation advisor, must notify our board of directors of any alternative methodologies utilized and their impact on the overall valuation of our investment at the next scheduled board meeting. Notwithstanding the foregoing, our board of directors may suspend the offering if it determines that the calculation of NAV is materially incorrect or there is a condition that restricts the valuation of a material portion of our assets.

Calculation of NAV Per Share

On the basis of our NAV, we will determine our NAV per share. Our NAV per share will be equal to the net aggregate asset value for HappyNest divided by the number of our outstanding shares of common stock as of the end of the most recently completed semi-annual period, subject to the calculation principles relating to the number of our outstanding shares as described below.

Generally, our NAV per share will be calculated once every six months, on September 30 and March 31, beginning on March 31, 2019. Until March 31, 2019, our common stock will be offered at a fixed price of $10.00 per share, the same as the price in this offering. However, in the circumstances described above where we may value assets on a date other than September 30 or March 31 (such as in connection with the acquisition or disposition of assets on a basis other than for cash consideration or in unusual circumstances), we expect to review the valuation of our assets as of appropriate date.

Usages of NAV and Principles of Calculation of NAV

We intend to use NAV per share to determine 1) the price at which we will offer our shares of our common stock to investors in our primary offering hereunder, 2) the price at which we issue shares in connection with acquiring assets for non-cash consideration or under our Operating Partnership, 3) the price at which we issue additional shares of our common stock under our dividend reinvestment plan, and 4) the price at which we repurchase shares of our common stock in accordance with our share repurchase program.

Because our NAV per share is calculated on a per-share basis, changes in our outstanding number of shares will change our NAV per share (even if there is no change in the underlying value of our assets). We note that the transactions described in the previous paragraph will cause the number of our shares outstanding to fluctuate.

We intend to utilize the following practices in calculating our NAV per share as well as transactions based off our NAV per share:

Share purchases (including pursuant to our dividend reinvestment plan) or redemptions to be effected pursuant to our share repurchase program as of the close of business on September 30, March 31, or the date of any other NAV per share adjustments, will be included in the number of outstanding shares of our common stock as of such date.

Subscriptions received prior to an updated NAV per share calculation will be executed at a price equal to our last published NAV per share, even if settlement occurs after we have published an updated NAV per share. In other words, the purchase price for the shares will be based on the NAV per share that was in effect at the time the subscription was executed.

Changes to our NAV per share, and if appropriate a brief description of the reason(s) for the changes, will be published in our subsequent public report to the SEC, on our website (www.myhappynest.com), and in the “document” section of your investment account on the HappyNest Platform.

PRINCIPAL STOCKHOLDERS

The following table sets forth the beneficial ownership of our common stock as of the date of this offering circular for each person or group that holds more than 5% of our common stock, for each executive officer and director of our company and for the executive officers of our company as a group.

Unless otherwise indicated below, each person or entity has an address in care of our principal executive offices at 1 N. 4^th Place, Suite 27L, Brooklyn, NY 11249.

Name of Beneficial Owner⁽¹⁾	Number of Shares Beneficially Owned			Percent of All Shares
5% Stockholders
Leonardo Sessa		100	⁽²⁾		100	%

Officers and Directors
Jesse Prince		100	⁽²⁾		100	%
Thomas K. Engberg		—			—
Ryan Severino		—			—
Lindsay Ornstein		—			—
Christopher Caltabiano		—			—
All executive officers and directors as a group (5 persons)		100			100	%
		100			100	%

(1)

Under SEC rules, a person is deemed to be a “beneficial owner” of a security if that person has or shares “voting power,” which includes the power to dispose of or to direct the disposition of such security. A person also is deemed to be a beneficial owner of any securities which that person has a right to acquire within 60 days. Under these rules, more than one person may be deemed to be a beneficial owner of the same securities and a person may be deemed to be a beneficial owner of securities as to which he or she has no economic or pecuniary interest.

(2)

Refers to shares of common stock held by our Sponsor. Messrs. Prince and Sessa, the co-founders of our Sponsor, jointly hold voting and dispositive power with respect to all securities owned by our Sponsor.

CONFLICTS OF INTEREST

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

General

Mr. Prince is our Chief Executive Officer and a member of our board of director. Additionally, he is the Chief Executive Officer of our Advisor and a principal of our Sponsor. In the future, other key real estate professionals that may join our us or our Advisor may also become key professionals of our Sponsor. In such capacities, Mr. Prince, and such other individuals have, or will have, as the case may be, legal obligations with respect to our Advisor and/or our Sponsor, as applicable, that are similar to their obligations to us. In the future, these individuals and other affiliates of our Advisor and Sponsor may organize other real estate-related or debt-related programs and acquire for their own account real estate-related investments that may be suitable for us.

Allocation of Investment Opportunities

Our Sponsor may in the future establish and sponsor additional offerings, and our Advisor may in the future advise investment vehicles, including offerings and investment vehicles that pursue investment strategies similar to ours. If a sale, financing, investment or other business opportunity would be suitable for more than one of either of their sponsored or advised programs, our Sponsor or Advisor, as applicable in each such case, will allocate it according to the policies and procedures adopted by our Sponsor and Advisor.

The policies of each of our Sponsor and Advisor generally are to allocate investment opportunities to their sponsored and advised programs on an equitable and fair basis, based on a variety of criteria, including, among other things, size of account and consistency with a program’s investment guidelines and strategies. However, conflicts of interest could arise in connection with transactions our Sponsor or Advisor effects on behalf of HappyNest, transactions our Sponsor or Advisor effect for other programs, and transactions that our Sponsor or Advisor or their affiliates engages in for his own account. Transactions entered into on behalf of these various parties may differ in substance, timing, and amount, due to, among other things, differences in investment objectives, abilities to take advantage of particular investment opportunities, or other factors affecting the appropriateness or suitability of particular investment activities. Differences could also be due to limitations on the size or availability of particular opportunities.

Our Sponsor and Advisor will allocate investments among the various programs in a manner they believe to be as fair and equitable as possible, considering each program’s objectives, limitations and capital available for investment, but programs may not all invest in the same financial instruments or in the same proportionate amounts. Although in any particular allocation of a transaction or series of transactions, we may be treated more or less favorably than other programs sponsored or advised by our Sponsor or advised by our Advisor, they will seek to treat HappyNest and their other sponsored or advised programs equitably on an overall basis. However, although the goal of our Sponsor and Advisor is to be fundamentally fair on an overall basis with respect to all programs, there can be no assurance that on an overall investment-by-investment basis a particular program will not be treated more favorably than another. Our Sponsor and Advisor will not knowingly or deliberately favor any sponsored program over another, although various factors may result in our company and such other programs achieving different results.

There also is the possibility that we will invest in opportunities that our Sponsor or Advisor has declined to invest in for other programs it has sponsored or advised on, and that these other programs may invest in opportunities not selected for investment by us.

Allocation of Time

We rely on our Sponsor and Advisor’s key professionals— presently, Mr. Prince and Mr. Sessa— for the day-to-day operation of our business. As a result of each of their interests in other entities that may be sponsored by our Sponsor or advised by our Advisor, as may exist in the future from time to time, each of their obligations to other investors and the fact that each of them may engage in other business activities on behalf of themselves and others, Mr. Prince and Mr. Sessa may face conflicts of interest in allocating their time among us, our Advisor, such other affiliates of our Sponsor or Advisor as may exist in the future from time to time, and such other business activities as either of them are involved in from time to time.

Receipt of Fees and Other Compensation by our Advisor and its Affiliates

Our Advisor will receive substantial fees from us, which fees will not be negotiated at arm’s length. These fees could influence our Advisor’s advice to us as well as the judgment of affiliates of our Advisor, some of whom also serve as our Advisor’s officers and as key members of our Sponsor. Among other matters, these compensation arrangements could affect their judgment with respect to:

●

the continuation, renewal or enforcement of provisions in our charter involving our Advisor and its affiliates;

●

public offerings of equity by us, which will likely entitle our Advisor to increased acquisition fees and asset management fees;

●

acquisitions of investments at higher purchase prices, which entitle our Advisor to higher acquisition fees, regardless of the quality or performance of the investment;

●

whether we seek stockholder approval to internalize our management, which may entail acquiring assets (such as office space, furnishings and technology costs) and the key members of our Sponsor or Advisor who are performing services for us for consideration that would be negotiated at that time and may result in these real estate professionals receiving more compensation from us than they currently receive from our Advisor; and

●

whether and when we seek to sell the company or its assets or to seek a merger of the company, including with companies affiliated or sponsored or managed by our Sponsor, our Advisor or their affiliates, any of which may entitle our Advisor to an exit fee, or seek a listing or quotation of our common shares, which would not entitle our Advisor to an exit fee.

No Independent Underwriter

As part of our strategy to reduce costs and to maximize the amount of offering proceeds that can be invested, we have conducting this offering without the aid of an independent underwriter. While this has the benefit of reducing costs, you will not have the benefit of an independent due diligence review and investigation of the type normally performed by an independent underwriter in connection with the offering of securities. See “Plan of Distribution”.

License Agreement

We will enter into a license agreement with our Sponsor effective upon the commencement of this offering, pursuant to which our Sponsor will grant us a non-exclusive, royalty free license to use the name “HappyNest”. Our Sponsor shall be entitled to charge a monthly per subscriber account fee of $1 per subscriber account in respect of its license of the HappyNest name and the HappyNest Platform to us. See “Management—License Agreement”.

Indemnification Agreements

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

Certain Conflict Resolution Measures

Conflicts Committee

In order to ameliorate the risks created by conflicts of interest, our board of directors intends to appoint a Conflicts Committee of our board of directors composed solely of our independent directors.

The Conflicts Committee will be authorized to act on any matter permitted under Maryland law. Both our board of directors and the Conflicts Committee must act upon those conflict-of-interest matters that cannot be delegated to a committee under Maryland law. The Conflicts Committee will also be empowered to retain its own legal and financial advisors at our expense. Among the matters we expect the Conflicts Committee to act upon are:

the continuation, renewal or enforcement of our agreements with our advisor and its affiliates, including the advisory agreement;

public offerings of securities;

sales of properties and other investments;

investments in properties and other assets;

borrowings;

transactions with affiliates;

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

whether and when we seek to list our shares of common stock on a national securities exchange;

whether and when we seek to become self-managed; and

whether and when we seek to sell HappyNest or substantially all of our assets.

Charter Provisions Relating to Conflicts of Interest

In addition to the appointment of the Conflicts Committee, our charter contains restrictions relating to conflicts of interest, including the following:

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

the size of the advisory fee in relation to the size, composition, and profitability of the Company;

the success of our Advisor in generating appropriate investment opportunities;

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

additional revenues realized by our Advisor and its affiliates through their relationship with us, including whether we pay them or they are paid by others with whom we do business;

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

the performance of our investment portfolio; and

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

Under our charter, we can only pay our Advisor or its affiliates an acquisition or disposition fee or commission in connection with the purchase or sale of an asset if: (i) the fee does not exceed 3.0% of the sales price of the asset; and (ii) if in connection with an acquisition or disposition in which commissions are paid to third parties unaffiliated with our Advisor or its affiliates, the commission paid to our advisor or its affiliates does not exceed 6.0% when combined with the commissions paid to such unaffiliated third parties. We do not intend to purchase assets from or sell assets to affiliates. However, if we do purchase an asset from or sell an asset to an affiliate, our organizational documents would not prohibit us from paying our Advisor or its affiliates an acquisition or disposition fee. Before we purchase or sell an asset from or to an affiliate, our charter would require that a majority of our board of directors (including a majority of our independent directors) not otherwise interested in the transaction conclude that the transaction is fair and reasonable to us.

Our charter also limits the amount of acquisition fees and acquisition expenses we can incur to a total of (i) 3.0% of the contract purchase price for the property, or (ii) when combined with all other broker fees paid by or on behalf of HappyNest in connection with the acquisition of such property, 6.0% of the contract price of such property. This limit may only be exceeded if a majority of our board of directors (including a majority of the independent directors) not otherwise interested in the transaction approves the fees and expenses and finds the transaction to be commercially competitive, fair and reasonable to us. Any increase in the acquisition fee stipulated in the advisory agreement would require the approval of a majority of the members of our board of directors.

Term of Advisory Agreement. Each advisory agreement shall have a term of no more than one year. A majority of our independent directors or our Advisor may terminate our advisory agreement with our Advisor with or without cause or penalty on 60 days’ written notice. In such event, our Advisor must cooperate with us and our directors in making an orderly transition of the advisory function.

Our Acquisitions and Dispositions. We will not purchase or lease assets in which our Sponsor, Advisor, any of our directors or officers or any of their affiliates has an interest, or sell assets to our Sponsor, Advisor, any of our directors or officers or any of their affiliates, without a determination by a majority of our board of directors (including a majority of our independent directors) not otherwise interested in the transaction that such transaction is fair and reasonable to us and at a price to us no greater than, in the case of a purchase or lease, the cost of the asset to the affiliated seller or lessor, unless there is substantial justification for the excess amount, and no less than the fair market value of such asset, unless there is a substantial justification for the discount. In no event may we acquire any such real property at an amount in excess of the cost of the property to the applicable affiliated party.

Valuations of our assets will be undertaken by a finance team employed by or on behalf of our Advisor. In cases in which a majority of our independent directors so determine, and in all cases in which real property is acquired from our Sponsor, Advisor, any of our directors or officers or any of their affiliates, the fair market value shall be determined by an independent expert selected by our independent directors not otherwise interested in the transaction.

Other Transactions Involving Affiliates. A majority of our board of directors (including a majority of our independent directors) not otherwise interested in the transactions must conclude that all other transactions, between us and our Sponsor, Advisor, any of our officers or directors or any of their affiliates are fair and reasonable to us and on terms and conditions not less favorable to us than those available from unaffiliated third parties.

Limitation on Operating Expenses. In the event that our independent directors do not determine such excess expenses are justified, our Advisor must reimburse us the amount by which our aggregate total operating expenses for the four fiscal quarters then ended exceed the greater of 2% of our average invested assets or 25% of our net income, unless our independent directors have determined that such excess expenses were justified based on unusual and non-recurring factors; provided, that this requirement is waived until the earlier of (x) December 31, 2019 and (y) the date on which our NAV first exceeds ten million dollars ($10,000,000). Average invested assets means the average of the aggregate book value of our properties, directly or indirectly held by us, that are invested in equity interests in, and loans secured by, real estate, before additions to reserves for amortization and depreciation, impairments, bad debts or other similar non-cash reserves, computed by taking the average of such values at the end of each month during the prior 12 month period, and calculated in accordance with GAAP. Total operating expenses means all expenses paid or incurred by us, as determined under GAAP, that are in any way related to our operation, including advisory fees, but excluding (i) the expenses of raising capital such as organization and offering expenses, legal, audit, accounting, underwriting, brokerage, listing, registration and other fees, printing and other such expenses and taxes incurred in connection with the issuance, distribution, transfer, registration and listing of our stock on a national securities exchange; (ii) interest payments; (iii) taxes; (iv) non-cash expenditures such as depreciation, amortization and bad debt reserves; (v) reasonable incentive fees; and (vi) acquisition fees, acquisition expenses (including expenses relating to potential investments that we do not close), disposition fees on the sale of real property and other expenses connected with the acquisition, disposition and ownership of real estate interests or other property (other than disposition fees on the sale of assets other than real property), including the costs of insurance premiums, legal services, maintenance, repair and improvement of property.

Repurchase of Our Shares. Our charter provides that we may not repurchase shares of our common stock if such repurchase would materially impair our capital or operations as determined by our board of directors. In addition, our charter prohibits us from paying a fee to our Sponsor, Advisor, our directors or officers, or any of their affiliates in connection with our repurchase of our common stock.

Loans to Affiliates. We will not make any loans to our Sponsor, Advisor or to our directors or officers or any of their affiliates. In addition, we will not borrow from any of them unless a majority of our board of directors (including a majority of our independent directors) not otherwise interested in the transaction approves the transaction as being fair, competitive and commercially reasonable and no less favorable to us than comparable loans between unaffiliated parties. These restrictions on loans will only apply to advances of cash that are commonly viewed as loans, as determined by our board of directors. By way of example only, the prohibition on loans would not restrict advances of cash for legal expenses or other costs incurred as a result of any legal action for which indemnification is being sought nor would the prohibition limit our ability to advance reimbursable expenses incurred by our Sponsor or Advisor, our directors or officers or their affiliates.

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

financial statements prepared in accordance with GAAP that are audited and reported on by independent certified public accountants.

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

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

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

a report from the conflicts committee that our policies are in the best interests of our common stockholders and the basis for such determination; and

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

Ratification of Charter Provisions. Our board of directors (including our independent directors) reviewed and ratified our charter by the vote of a majority of its members (including a majority of our independent directors), as required by our charter.

INVESTMENT OBJECTIVES AND STRATEGY

Overview

We intend to invest in a diversified portfolio of single-tenant net leased income producing commercial properties, commercial real estate debt instruments, and other commercial real estate related investments. We aim to provide our investors with stable and predictable cash distributions with the potential for long-term growth through an increase in the value of our assets.

We believe that real estate investments should be a component of investors’ portfolios, either as an alternative to or in addition to equity and fixed income securities. We believe that a primary benefit of investing in commercial real estate is a low correlation to public equity securities markets. While equity securities markets offer many benefits, they also have a great deal of volatility. We plan to focus on investments with strong real estate fundamentals and long-term net leases to creditworthy tenants that provide for corporate lease guarantees, contractual rent increases, lease extension options, and limited landlord obligations. We may choose to acquire ownership interests, directly or indirectly in individual properties, portfolios of assets, or shares of or interests in other REITs.

Our acquisition parameters are subject to change depending on real estate market conditions and investment opportunities available. Our board has the right to pursue other investment types in primary, secondary or tertiary markets if believed to be in the best interest of our stockholders, without a vote of stockholders.

Investment Philosophy and Guiding Principles

We value quality over yield

Seek the highest total returns at the lowest risk possible

Add-value through active management

Use quantitative risk analysis to guide investment decisions

Investment Objectives

Deliver stable cash distributions at reasonable yields;

Diversify our portfolio of assets by tenant, type, and/or geography;

Increase portfolio value over time through appreciation, asset management, and financial structuring; and

Preserve investor capital regardless of market conditions.

Investment Strategy