S-11 1 d189898ds11.htm S-11 S-11
Table of Contents

As filed with the Securities and Exchange Commission on June 29, 2021

Registration Statement No. 333-            

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM S-11

 

 

FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933

OF SECURITIES OF CERTAIN REAL ESTATE COMPANIES

 

 

ROX FINANCIAL LP

(Exact name of registrant as specified in its governing instruments)

 

 

250 Greenwich Street, 10th Floor

New York, New York 10007

(212) 650-4102

(Address, including Zip Code, and Telephone Number, including Area Code, of Registrant’s Principal Executive Offices)

 

 

David L. Ronn

Chief Legal Officer

250 Greenwich Street, 10th Floor

New York, New York 10007

(212) 650-4102

(Name, Address, including Zip Code, and Telephone Number, including Area Code, of Agent for Service)

 

 

Copies to:

 

Lewis W. Kneib

Michael Benjamin

William J. Cernius

Latham & Watkins LLP

885 Third Avenue

New York, New York 10022

(212) 906-1200

 

David P. Slotkin

Justin R. Salon

Morrison & Foerster LLP

2100 L Street, NW

Suite 900

Washington, D.C. 20037

(202) 887-1500

 

 

Approximate date of commencement of proposed sale to the public:

As soon as practicable after the effective date of this registration statement.

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

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

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

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

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

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

 

Large accelerated filer      Accelerated filer  
Non-accelerated filer      Smaller reporting company  
     Emerging growth company  

If an emerging growth company, indicate by check mark I the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(2)(2)(B) of the Securities Act.  ☐

 

 

CALCULATION OF REGISTRATION FEE

 

 

Title of Securities

to be Registered

 

Amount

to be

Registered

 

Proposed

Maximum

Offering Price

Per Share

 

Proposed

Maximum

Aggregate

Offering Price (1)

 

Amount of

Registration Fee (1)

Series AMZL shares

  9,487,500   $10.00   $94,875,000   $10,351

 

 

(1)

Estimated solely for the purpose of calculating the amount of the registration fee pursuant to Rule 457(o) under the Securities Act of 1933.

 

 

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

 

 

 


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

 

SUBJECT TO COMPLETION, PRELIMINARY PROSPECTUS DATED June 29, 2021

PRELIMINARY PROSPECTUS

ROX FINANCIAL LP

8,250,000 Series AMZL Shares

 

 

ROX Financial LP, or ROX LP, is a newly organized Delaware series limited partnership that has been formed to expand access to differentiated commercial real estate investment opportunities intended to be listed on NYSE Arca, Inc., or NYSE Arca. Our platform was built specifically to leverage the economies of scale enabled by our innovative Series structure to lower fees and execution costs, allowing investors to access opportunities that have previously been unavailable in the public markets.

Our goal is to empower investors to build a portfolio of commercial real estate securities based on their individual criteria. We believe our Series will be more accessible and liquid than private equity investments and more transparent and targeted than traditional listed REITs.

Each curated portfolio of properties or individual property will be held by a subsidiary owned by a separate series of ROX LP, each a Series. As a Delaware series limited partnership, the debts, liabilities, obligations and expenses incurred, contracted for or otherwise existing with respect to a particular Series are segregated and enforceable only against the assets of that Series and any associated general partner, as provided under Delaware law.

This is the initial public offering of ROX LP’s limited partner interests associated with Series AMZL, which we refer to as Series AMZL shares. We are offering the Series AMZL shares at an initial public offering price of $10.00 per share. We are selling only Series AMZL shares in this offering. Prior to this offering, there has been no public market for Series AMZL shares. We have applied to have Series AMZL shares listed on NYSE Arca under the symbol “AMZL.”

Series AMZL has been established to own the Amazon.com Services LLC, or Amazon, last-mile delivery station located in Oakley, California. We will use substantially all of the net proceeds from this offering and the concurrent private placements (as defined below) to purchase this property.

The seller of the property is an affiliate of NorthPoint Development LLC, or NorthPoint, one of the largest developers of industrial property in the U.S. An affiliate of NorthPoint has agreed to purchase 500,000 Series AMZL shares at the initial public offering price per share (without payment of any underwriting discounts) in a private placement to close simultaneously with the closing this offering. In addition, ROX Financial Inc., a Delaware corporation, or ROX Parent, has agreed to purchase 200,000 Series AMZL shares at the initial public offering price per share (without payment of any underwriting discounts) in a private placement to close simultaneously with the closing of this offering. We refer to those transactions throughout this prospectus as the concurrent private placements.

We intend for Series AMZL to elect to be taxed as a real estate investment trust, or REIT, for U.S. federal income tax purposes commencing with its taxable year ending December 31, 2021. To assist Series AMZL in qualifying as a REIT, among other reasons, our partnership agreement, subject to certain exceptions, contains restrictions on the number of Series AMZL shares that a person may own. Our partnership agreement provides that generally no person may own, or be deemed to own by virtue of the attribution provisions of the Internal Revenue Code of 1986, as amended, or the Code, more than 9.8% of the outstanding Series AMZL shares (by value or in number, whichever is more restrictive). Please see “ROX LP Partnership Agreement—Restrictions on Ownership and Transfer of Shares.” An investor in Series AMZL shares will receive a Form 1099 reporting annual distributions by Series AMZL.

The general partner of ROX LP is ROX Financial GP LLC, a Delaware limited liability company, or ROX GP. Its general partner interest in ROX LP and associated with Series AMZL is a non-economic interest, meaning that ROX GP will not receive any portion of any distributions made by Series AMZL. ROX GP is wholly owned by ROX Parent. ROX LP, on behalf of Series AMZL, has entered into a services and investment management agreement with RPS Securities LLC, a Texas limited liability company, or RPS Securities, which is wholly owned by ROX Parent.

 

 

We are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act. Investing in Series AMZL shares offered hereby involves risks. Please see “Risk Factors” beginning on page 25 of this prospectus for risk factors you should consider before investing in the Series AMZL shares offered hereby.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

 

     Per Series
AMZL Share
     Total  

Public offering price

   $ 10.00      $ 82,500,000  

Underwriting discounts and commissions (1)

     

Proceeds, before expenses, to Series AMZL

     

 

(1)

Please see “Underwriting” on page 168 of this prospectus for a description of the compensation payable to the underwriters.

We have granted the underwriters an option to purchase up to an additional 1,237,500 Series AMZL shares at the public offering price, less the underwriting discount, within 30 days after the date of this prospectus, solely to cover over-allotments, if any.

 

 

The underwriters expect to deliver the Series AMZL shares on or about                 , 2021.

 

 

UBS Investment Bank

Prospectus dated                  , 2021


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TABLE OF CONTENTS

 

MARKET DATA

     ii  

PRICING DATA

     ii  

PROSPECTUS SUMMARY

     1  

RISK FACTORS

     25  

FORWARD-LOOKING STATEMENTS

     58  

USE OF PROCEEDS

     60  

DISTRIBUTION POLICY

     61  

CAPITALIZATION

     64  

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

     65  

BUSINESS AND PROPERTY

     72  

MANAGEMENT

     97  

BOARD AND EXECUTIVE COMPENSATION

     105  

PRINCIPAL HOLDERS OF SERIES AMZL SHARES

     106  

DESCRIPTION OF SERIES AMZL SHARES

     107  

CONFLICTS OF INTEREST AND FIDUCIARY DUTIES

     109  

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

     116  

ROX LP PARTNERSHIP AGREEMENT

     119  

SERVICES AGREEMENT WITH RPS SECURITIES

     137  

LICENSE AGREEMENT WITH ROX PARENT

     140  

U.S. FEDERAL INCOME TAX CONSIDERATIONS

     141  

ERISA CONSIDERATIONS

     165  

UNDERWRITING

     168  

SERIES AMZL SHARES ELIGIBLE FOR FUTURE SALE

     171  

LEGAL MATTERS

     173  

EXPERTS

     173  

WHERE YOU CAN FIND ADDITIONAL INFORMATION

     174  

INDEX TO FINANCIAL STATEMENTS

     F-1  

APPENDIX A

     A-1  

You should rely only on the information contained in this prospectus or in any free writing prospectus prepared by us. We have not, and the underwriters have not, authorized anyone to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. We are not, and the underwriters are not, making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. You should assume that the information appearing in this prospectus and any free writing prospectus prepared by us is accurate only as of their respective dates or on the date or dates which are specified in these documents. The business, financial condition, liquidity, results of operations and prospects of ROX LP or Series AMZL may have changed since those dates.

 

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MARKET DATA

We use market data and industry forecasts and projections throughout this prospectus and have obtained certain market and industry data from publicly available industry publications. These sources generally state that the information they provide has been obtained from sources believed to be reliable, but that the accuracy and completeness of the information are not guaranteed. The forecasts and projections are based on industry surveys and the preparers’ experience in the industry, and there is no assurance that any of the projected amounts will be achieved. We have not independently verified this information.

PRICING DATA

Throughout this prospectus, we provide certain information based on the assumption that we price Series AMZL shares at $10.00 per Series AMZL share, which is the initial public offering price required to fund the acquisition of the property, fund cash reserves and pay other fees and expenses. For additional information, please see “Use of Proceeds.”

 

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PROSPECTUS SUMMARY

This prospectus relates to the offering of our Series AMZL shares. This summary highlights information included elsewhere in this prospectus. This summary does not contain all the information you should consider before investing in Series AMZL shares described herein. You should read and consider this entire prospectus carefully, including the sections titled “Risk Factors,” “Forward-Looking Statements” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” as well as the Series AMZL consolidated balance sheet and the related notes thereto included elsewhere in this prospectus, before making any investment decision. Unless the context otherwise requires, the terms “ROX LP,” “Partnership,” “we,” “us” and “our” mean, and similar terms refer to, ROX Financial LP. Unless indicated otherwise, the information included in this prospectus assumes that the underwriters’ over-allotment option is not exercised.

ROX LP Overview

ROX Financial LP, or ROX LP, is a newly organized Delaware series limited partnership that has been formed to expand public market access to differentiated commercial real estate investment opportunities. We intend for Series AMZL to be listed on NYSE Arca and to elect to be taxed as a real estate investment trust, or REIT, for U.S. federal income tax purposes commencing with its taxable year ending December 31, 2021. Our platform was built specifically to leverage the economies of scale enabled by our innovative Series structure to lower fees and execution costs, allowing investors to access opportunities that have previously been unavailable in the public markets.

Many of the wealthiest individuals and largest institutions invest directly in private equity commercial real estate because it offers a combination of potential value appreciation and income as part of a well-diversified investment portfolio. However, we estimate that more than 80% of the value of all commercial real estate in the United States is not tradable in the public markets and the asset class is frequently considered an “alternative” because investments are often opaque, complex and illiquid.

Public commercial real estate investing is primarily limited to listed real estate investment trusts, or REITs. Generally, listed REITs offer access to diverse portfolios of real estate similar to the way that mutual funds offer access to diverse portfolios of stocks and bonds.

We intend to provide more targeted investment opportunities by offering access to securities representing interests in curated portfolios of properties and individual properties that trade on a national securities exchange. Following this offering, we plan to periodically offer additional Series representing interests in curated portfolios of properties or individual properties with the following characteristics:

 

   

single tenant portfolios: multiple properties leased to a single tenant in one or more locations, which is our intention with Series AMZL;

 

   

single location portfolios: multiple properties leased to several tenants in a common location, such as an industrial park or a life sciences campus; and

 

   

single properties: a single property with significant scale and cash flow durability, such as a corporate headquarters or a stadium.

Our goal is to empower investors to build a portfolio of commercial real estate securities based on their individual criteria. We believe our Series will be more accessible and liquid than private equity investments and more transparent and targeted than traditional listed REITs.


 

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Series AMZL

Investment Case

While this offering is of interests in a Series owning a single property, we intend to build Series AMZL into a curated portfolio of logistics properties in one or more locations leased by Amazon.com Services LLC, or Amazon, or its affiliates. The property to be purchased with the net proceeds from this offering and the concurrent private placements is leased by Amazon and the guarantor of the lease is Amazon.com, Inc. Logistics facilities leased by Amazon are a material part of the U.S. industrial commercial real estate market, and we believe a curated portfolio of these properties should deliver an attractive risk-adjusted return that would appeal to investors seeking modest but consistent increases in distributions and potential for asset value appreciation.

High-quality logistics properties in attractive locations, particularly those classified as last-mile delivery stations, such as the property to be purchased with the net proceeds of this offering and the concurrent private placements, or the property, are an increasingly important component of the logistics supply chain. We believe demand for last-mile delivery stations will continue to grow over time as companies strive to ensure they are well-positioned to meet the needs of customers who have come to expect next or same day delivery of their e-commerce purchases.

We believe Series AMZL benefits from a number of attractive characteristics:

Built to suit last mile logistics property in a well-located, high barrier to entry market. The property is a 145,503 square foot mission-critical last-mile delivery station located in Oakley, California and completed in 2020. The property was built to Amazon’s specific standards, including specialized dock doors and a low floor to area ratio that accommodates substantial parking requirements. Oakley, California is located approximately 40 miles from both San Francisco and Sacramento, and, according to CBRE Group, Inc., or CBRE, more than 3.2 million households are accessible within a 50 mile radius. The site was identified by NorthPoint through an algorithm that amalgamates parameters such as residential commute times, container drayage reports, traffic flows and myriad other variables pertinent to labor economics. Other than this site, the surrounding area has limited land for industrial development.

Quality of the tenant. The property is leased by Amazon and the lease is guaranteed by Amazon.com, Inc., one of the larger and more creditworthy companies in the world.

Type and term of the lease. The lease is a 12 year, triple net lease that requires Amazon to pay or reimburse Series AMZL for all real estate taxes, landlord’s insurance and utilities of the property. The lease commenced on September 15, 2020, and the initial term expires on September 30, 2032. During its initial term, the lease has 2.0% annual contractual base rent increases. Amazon has the right to extend the lease until August 31, 2055, subject to an increase to then-prevailing market rental rates.

Strategic relationship with an experienced property developer and property manager. The property was developed, and will continue to be property managed by, NorthPoint. NorthPoint was founded in 2012 and has developed more than 100 million square feet of industrial and logistics properties, including for Amazon.com, Inc., Home Depot Inc., Walmart Inc., General Electric Company and General Motors Company. Series AMZL has executed a strategic cooperation agreement with NorthPoint pursuant to which NorthPoint has agreed to consult with us to provide strategic insight with respect to potential industrial commercial properties held by NorthPoint or other third-parties that would reasonably be expected to meet our investment criteria. In addition, NorthPoint has agreed that Series AMZL shall have the right for one year following the completion of this offering to offer to purchase two properties to be leased by Amazon in the same Contra Costra Logistics Center in which the property is located. One is an approximate 450,000 square foot facility to be used as an outbound cross dock fulfillment center expected to be occupied in September 2021, and the other is an approximate


 

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480,000 square foot facility to be used as an inbound cross dock fulfillment center expected to be occupied in July 2022. That right to offer to purchase is subject to the terms of all existing agreements with respect to any applicable property, including any tenant lease, joint venture or other agreement governing the ownership or transfer of the property.

Potential to expand Series AMZL from a single Amazon-leased property to multiple Amazon-leased properties. We intend to build Series AMZL into a portfolio of logistics properties in one or more locations that have Amazon as a common tenant. We intend to acquire properties that are newly built in prime locations and have a long-term net lease with regular contractual rental escalators. Although the property is currently unlevered, Series AMZL may incur or assume conservative net mortgage debt levels on Series AMZL or its properties in connection with future property acquisitions.

The Amazon Property

The property is a 145,503 square foot last-mile delivery station completed in 2020. The property was built to Amazon’s specific standards, including specialized dock doors and a low floor to area ratio that accommodates substantial parking requirements. Amazon has directly invested in the property by adding features including automated conveyor systems and electrical infrastructure for future vehicle charging stations. Amazon.com, Inc. describes their delivery stations as properties where customer orders are prepared for last-mile delivery to customers.

This type of property can be among the most difficult in the logistics supply chain to develop because of the:

 

   

lack of available land in densely populated, mature markets;

 

   

ability to procure entitlements for high flow-through facilities;

 

   

requirement for proximity to key transportation arteries;

 

   

need to access an appropriate base of labor; and

 

   

unique building/site design requirements such as segmented site ingress/egress and covered queueing lanes for delivery pick-up.

The property was developed by NorthPoint, a leading national developer, with nine office locations and more than 355 employees as of March 31, 2021. According to Real Capital Analytics, NorthPoint built more square feet of industrial commercial real estate in the United States than any other developer during the five year period ending June 15, 2020, completing 46,540,156 square feet, valued at an estimated aggregate value of $3.8 billion.

The property is located on a 25.05-acre site in the approximate 143-acre development known as the Contra Costa Logistics Center currently being developed by NorthPoint in Oakley, California. The Contra Costa Logistics Center is planned to hold five industrial properties comprising approximately 2.2 million square feet. Amazon currently occupies Building 1, the property. NorthPoint has signed a lease with Amazon for Building 5, an approximate 450,000 square foot facility to be used as an outbound cross dock fulfillment center that is expected to be occupied in September 2021, and expects to sign a lease with Amazon for Building 4, an approximate 480,000 square foot facility to be used as an inbound cross dock fulfillment center that is expected to be occupied in July 2022. We believe the combination of the property with two new adjacent facilities will create an important synergistic campus for Amazon’s fulfillment needs in Northern California.


 

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We believe the Oakley site’s advantages include a large, highly concentrated population with an above average 5-year projected growth, a substantial potential warehouse worker labor pool with a positive supply/demand balance and a receptive community and local political environment.

The following table provides information about the property as of March 31, 2021.

Property Summary

 

Total Buildings

   1

Total Stories

   1

Total Rentable Square Feet

   145,503

Lot Size

   25.05 acres

Percent Occupied

   100%

Floor Area Ratio (1)

   0.13

Clear Height Feet (2)

   32

Car Parking Spaces

   308

Van Parking

   706

Van Loading/Staging

   60/60

Year Built

   2020

 

(1)

The ratio of a building’s total floor area to the size of the land upon which it is built.

(2)

The usable height to which a tenant can store its product on racking, measured below any obstructions such as joists, lights or sprinklers.

The Tenant and the Lease

The property is fully leased to Amazon under a 12-year, triple net lease that commenced on September 15, 2020 and expires on September 30, 2032. The lease is guaranteed by Amazon.com, Inc., who guarantees the payment of all present and future payment obligations that are not paid under the lease up to 100% of the remaining base rent obligations under the lease, which includes any applicable rent escalations, but not any additional rent obligations under the lease, which generally address property utility expenses, real estate taxes and landlord’s insurance.

Amazon.com, Inc. is a U.S. based multinational corporation engaged in global sales of consumer products and subscriptions through various websites and computing, storage, database and service offerings for start-ups, enterprises, government agencies and academic institutions through Amazon Web Services. As of March 31, 2021, Amazon.com, Inc. ranked #2 on the 2020 Fortune 500 list of the largest U.S. corporations by total revenue and had a market capitalization of $1.7 trillion. As of March 31, 2021, Amazon.com, Inc. was rated AA- by Standard & Poor’s and A2 by Moody’s. However, Amazon.com, Inc.’s credit rating is not a recommendation to buy, sell or hold any Series AMZL shares and may be subject to revision or withdrawal at any time. Amazon.com Services LLC is not separately rated.

The historical audited and unaudited financial statements of Amazon.com, Inc. (which are not incorporated by reference into this prospectus) have been filed with the SEC and are available on the SEC’s website at www.sec.gov. You should not place undue reliance on such financial statements, as they are presented on a consolidated basis without Amazon.com Services LLC specific data and are therefore not necessarily indicative of Amazon.com Services LLC’s business, financial condition, liquidity, results of operations and prospects or its ability to make payments under the lease.


 

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The lease is triple net, meaning that Amazon is responsible for the direct payment or reimbursement of utility expenses, real estate taxes and landlord’s insurance which, upon our acquisition of the property, is payable to a wholly owned subsidiary of Series AMZL, which we refer to as the Series AMZL subsidiary. Amazon has a right of first offer with respect to a sale of the property that has been waived as it may relate to our purchase of the property and this offering, but would apply to any future sale of the property by us.

The following table provides information about the lease as of March 31, 2021.

Lease Summary

 

Lease Type

   Triple net

Annualized Base Rent (1)

   $3,225,754

Lease Commencement

   September 15, 2020

Initial Lease Term, Years

   12

Initial Lease Term Annual Rent Escalations

   2.0% of base rent

Lease Expiration Date

   September 30, 2032

Expiration of Last Lease Extension Period

   August 31, 2055

Tenant

   Amazon.com Services LLC

Guarantor

   Amazon.com, Inc.

Guarantor’s Credit Rating (S&P/Moody’s) (2)

   AA-/A2

 

(1)

Represents annualized monthly contractual base rent as of March 31, 2021. Annualized base rent does not include expense reimbursements. The lease is subject to 2.0% annual contractual rent increases commencing October 1, 2021.

(2)

A credit rating is not a recommendation to buy, sell or hold any Series AMZL shares and may be subject to revision or withdrawal at any time.

Property Management

Upon the closing of the purchase of the property, the Series AMZL subsidiary will enter into a commercial management agreement with NPD Management, LLC, or NPD Management, an affiliate of NorthPoint. NPD Management provides property management and entity management services for properties owned, affiliated and overseen by NorthPoint. NPD Management is currently the property manager for the Contra Costa Logistics Center in which the property is located. Please see “Business and Property—Series AMZL—The Property—Site Description.” Amazon is responsible for the payment of property management fees not to exceed 2.0% of the base rent payable under the lease. None of the property management fee will be payable by the Series AMZL subsidiary and therefore will not be borne by holders of Series AMZL shares.

Distribution Policy

We intend to pay cash distributions to the limited partners associated with Series AMZL, referred to as shareholders, out of assets legally available for distribution. We intend to make a pro rata distribution with respect to the period commencing upon the completion of this offering and the concurrent private placements and ending on September 30, 2021, based on a distribution rate of $0.0743 per Series AMZL share for a full quarter. On an annualized basis, this would be $0.2972 per Series AMZL share, or an annualized distribution rate of approximately 3.0% based on an assumed initial public offering price of $10.00 per Series AMZL share. The lease is subject to 2.0% annual contractual rent increases commencing October 1 of each year. We do not intend to reduce the annualized distribution per Series AMZL share if the underwriters exercise their over-allotment option. We intend to increase Series AMZL’s distribution rate annually as rent escalations permit unless Series


 

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AMZL’s results of operations, liquidity, cash flows, financial condition, or prospects, economic conditions or other factors differ materially from the assumptions used in projecting Series AMZL’s initial distribution rate. We intend to make distributions that will enable Series AMZL to meet the distribution requirements applicable to REITs and to eliminate or minimize its obligation to pay corporate-level federal income and excise taxes.

Any distributions will be at the sole discretion of the Board and their form, timing and amount, if any, will depend upon a number of factors, including Series AMZL’s actual and projected results of operations, liquidity, cash flows and financial condition, the revenue Series AMZL actually receives from the property, Series AMZL’s operating expenses, its debt service requirements (if any), its capital expenditures, prohibitions and other limitations under its financing arrangements (if any), its REIT taxable income, the annual REIT distribution requirements, applicable law and such other factors as ROX GP deems relevant. Please see “Distribution Policy.”

The Market and Submarket

The U.S. Industrial, Warehouse/Distribution and Last-mile Logistics Market

As the COVID-19 pandemic fallout continues to ripple through the U.S. real estate market, the industrial sector is an outlier with record-high rents, low vacancy levels and 44 consecutive quarters of positive net absorption. In the first quarter of 2021, the availability of industrial space was constrained, with a vacancy rate of approximately 4.4% and an availability rate of approximately 7%, approximately 30 basis points lower than the prior quarter and a record low, according to CBRE. First quarter of 2021 positive net absorption, or decrease in available supply, was 99.3 million square feet, the third strongest quarter on record and CBRE notes a large amount of the new construction that will be delivered in 2021 has been preleased, which is expected to sustain positive net absorption.

 

LOGO

Source: CBRE Research Q1 2021 U.S. Industrial & Logistics Figures, page 4

The industrial sector’s strong fundamentals have driven sale prices of industrial properties to record levels. The sector achieved a 14.1% annual total return through the first quarter of 2021 as tracked by the National Counsel of Real Estate Investment Fiduciaries, or NCREIF, Property Index, materially outperforming every other tracked sector. Additionally, 2020 marked a record ten straight years of industrial returns exceeding 10%, leading all asset types in NCREIF’s 43-year history.


 

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The pandemic has accelerated the secular tailwinds boosting industrial real estate, shedding light on the physical building blocks supporting e-commerce, particularly demand for the warehouses and distribution centers that handle the storage, sorting, re-packaging, and distribution of products. The shift from brick-and-mortar retail distribution to e-commerce has been dramatic and is likely to continue for the foreseeable future as retailers build a more efficient distribution capability to get goods to the consumer faster and at a lower cost. Year-over-year, e-commerce growth surged during the COVID-19 pandemic with fourth quarter 2020 e-commerce sales, adjusted for seasonal variation, but not for price changes, posting an increase of 32.0% from the fourth quarter of 2019 according to the United States Census Bureau. This growth put pressure on retailers, wholesalers and third-party logistics companies to find strategically located distribution centers that could quickly reach consumers while lowering transportation costs. CBRE estimates that approximately $1 billion in incremental e-commerce sales generates 1.25 million square feet of warehouse space demand.

 

LOGO

                   Source: U.S. Department of Commerce, US Census Bureau

                   News, May 18, 2021, Report CB21-71, page 1.

Low supply continued to drive industrial rents higher. In the United States, industrial triple net asking rents averaged $8.44 per square foot in the first quarter of 2021, up 7.1% year-over-year and an all-time high according to CBRE. A common problem for warehouse/distribution properties is a dearth of modern inventory with clear heights of at least 28’ to maximize the volume of goods that can be stacked and held before being re-sorted, repackaged, and distributed to the next destination. CBRE has observed that a high percentage of U.S. warehouse/distribution inventory is outdated and not properly equipped to meet the demands that e-commerce activity requires. CBRE reported the following statistics:

 

   

One billion square feet of U.S. warehouse/distribution inventory was built over the last ten years, but accounts for only 11% of the country’s total inventory.

 

   

The average age of the United States’ warehouse/distribution inventory is 34 years.

 

   

Nearly one billion square feet of total warehouse/distribution inventory is more than 50 years old and has clear heights of less than 20 feet.


 

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LOGO

Source: CBRE Research Q1 2021 U.S. Industrial & Logistics Figures, page 10.

We believe that the U.S. industrial real estate market will continue to experience low vacancy rates and robust development. Demand for industrial properties, particularly modern e-commerce logistics space should lead to continued rental rate growth in the long term.

The U.S. Amazon Logistics Market

Logistics facilities leased by Amazon are a significant part of the U.S. industrial commercial real estate market, representing more than 2.5% of all industrial supply. According to CBRE, Amazon occupied more than 379 million square feet of logistics real estate in the United States as of June 2021, spread across 1,066 facilities including fulfillment centers, regional sorting centers, last mile delivery stations, prime now hubs and food distribution centers. Amazon currently occupies more than 255 last mile delivery stations and has plans to occupy at least 43 more facilities in 2021.

Amazon relied on United Parcel Service, Inc., the United States Postal Service and FedEx Corporation for last mile deliveries until 2014, when the company began developing its own logistics network to reduce third-party dependence. Brian Olsavsky, Amazon.com., Inc.’s Chief Financial Officer commented on Amazon.com, Inc.’s first quarter 2021 analyst call that Amazon.com, Inc.’s current delivery cost is very competitive with their external options and the ability to control the entire flow of product from the warehouse to the end customer is important for customer satisfaction. By vertically integrating its logistics network and expanding its last mile delivery station network, we believe Amazon should be able to deliver a materially broader selection of inventory more quickly and more reliably than other retailers. We believe Amazon will remain committed to its mission critical last mile delivery station network for the long-term.

Given these dynamics, and Amazon.com, Inc.’s growing business and strong credit profile, Amazon logistics facilities trade actively in the private markets. We believe implied capitalization rates for newly built Amazon logistics facilities in the low 4% and high 3% range are common. We believe that in the current low interest rate environment, there is room for implied capitalization rates for Amazon logistics facilities, particularly last mile delivery stations in prime locations, to continue to push lower, resulting in higher sale prices.


 

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LOGO

Source: CBRE Amazon Middle Mile Logistics Portfolio Offering

Memorandum, page 4.

The Local Industrial and Warehouse/Distribution Market

The property is located in the Walnut Creek/I-680 Corridor market in Northern California, as defined by CBRE, and is notable for its lack of appropriate land zoned for industrial properties. The area had a vacancy rate of 5%, an availability rate of 8.9% and was the second smallest of 57 United States markets tracked by CBRE. CBRE noted that the Walnut Creek / I-680 Corridor market’s first quarter 2021 triple net industrial asking rent was $11.88 per square foot, the fifth highest in the United States, trailing only San Francisco, San Jose, Orange County and Northern Virginia.

CBRE further segmented the North/East Contra Costa submarket and noted this area had an overall vacancy rates of 2.6% as of year-end 2020, while the cities of Walnut Creek, Antioch and Concord all saw vacancy rates and availability rates under 1%.

The ROX Platform

ROX LP is a Delaware series limited partnership formed to facilitate public investment in curated portfolios of commercial real estate properties and individual properties. Our platform is built specifically to leverage the economies of scale enabled by our innovative structure to lower fees and execution costs so investors can access opportunities that had previously been unavailable in the public markets.

Each curated portfolio of properties or individual property will be held by a subsidiary owned by a separate Series. We expect the limited partner interests, or shares, associated with each Series to be independently listed on a national securities exchange. As a Delaware series limited partnership, the debts, liabilities, obligations and expenses incurred, contracted for or otherwise existing with respect to a particular Series are segregated and enforceable only against the assets of such Series and any associated general partner, as provided under Delaware law. ROX LP intends to treat each Series, including Series AMZL, as a separate business entity for U.S. federal income tax purposes and ROX LP as a non-entity for U.S. federal income tax purposes. ROX LP further intends for Series AMZL to elect to be taxed as a REIT for U.S. federal income tax purposes commencing with its taxable year ending December 31, 2021.


 

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The acquisition of the property is subject to the completion of this offering, the concurrent private placements and customary closing conditions.

Our Real Estate Investment Strategy

Our Series are intended to be curated investments, and we intend to follow a disciplined acquisition strategy. Following this offering, we plan to periodically offer additional Series representing interests in curated portfolios of properties or individual properties with the following characteristics:

 

   

single tenant portfolios: multiple properties leased to a single tenant in one or more locations, which is our intention with Series AMZL;

 

   

single location portfolios: multiple properties leased to several tenants in a common location, such as an industrial park or a life sciences campus; and

 

   

single properties: a single property with significant scale and cash flow durability, such as a corporate headquarters or other critical facility.

We are generally asset class agnostic, and our investment criteria include assessing each property’s market and submarket characteristics, condition and quality of construction, replacement cost and cost to re-lease. Our primary investment objective is to acquire and offer properties that will generate attractive risk-adjusted returns and support consistent and growing cash distributions.

Our focus is on properties with the following characteristics:

High-quality real estate: Our objective is to acquire stabilized properties located in high barrier to entry markets that we believe will appreciate over time. We prefer mission critical assets that are essential to a tenant’s operations or generation of sales and profits, including key distribution facilities, critical operations, top performing retail stores and corporate headquarters. We will generally target newly built, or recently renovated, properties that do not have near-term improvement obligations.

Creditworthy tenants: We target tenants with national reputations, a leading competitive position in their industry, a strong balance sheet and a solid credit profile. We believe tenants with these characteristics will consistently meet their rent obligations throughout various market cycles.

Favorable lease terms: We desire long-term leases with regular rent escalations that mitigate the effects of inflation. We target lease structures such as net leases that have the benefit of mitigating unknown or rising operating expenses, allowing us to provide consistent long-term cash distributions.

We anticipate that the industry relationships the management team of ROX GP has cultivated with leading developers, owners, brokers and other industry participants will continue to generate attractive marketed and off-market investment opportunities. In addition to the strategic cooperation agreement with NorthPoint, we and our affiliates are in discussions with potential sellers of properties in the industrial, multi-family, life science and net lease retail sectors that meet our initial focus characteristics. We and our affiliates are in varying stages of negotiation and have not completed our due diligence process with the sellers of these properties. As a result, there can be no assurance that these acquisitions will be completed on terms satisfactory to us or at all.

Investor Benefits

Our Series will allow investors to access curated commercial real estate opportunities that can help build a well-balanced, diversified investment portfolio. Investor benefits include:

Value-driven real estate strategy: High-quality real estate with credit worthy tenants and favorable lease terms will be key value drivers.


 

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Accessibility: Investors will have the ability to purchase shares representing economic interests of curated portfolios of properties or individual properties listed on a national securities exchange. We intend to provide investors the opportunity to invest alongside leading operators who have considerable knowledge of the property and its tenants. For some of these operators, it will be the first time that public market investors will be able to benefit from their expertise.

Transparency: We plan to provide detailed property and market information for each Series to empower investors to make well-informed decisions regarding a potential investment in a Series. We plan to disclose diligence documentation, including material leases, environmental reports, property condition reports and appraisals, in connection with each initial Series offering.

Liquidity: We have applied for a listing to trade the shares associated with a Series on the NYSE Arca exchange. Each Series will have its own unique ticker symbol and a lead market maker to facilitate trading activity. Commercial real estate is a dynamic asset class, and we believe the public market liquidity of our Series should allow investors to efficiently and proactively adjust their holdings to reflect evolving economic and demographic changes.

Flexibility: As more Series are listed, investors can choose to invest in a single Series or to create a tailored portfolio in multiple Series. This optionality allows investors to make decisions based on their personal investment objectives, risk tolerance and market expectations.

Cost Efficiency: We have designed our platform and structure to be cost efficient and provide shareholders more predictable and lower fees than many real estate investment vehicles. Series AMZL will pay RPS Securities a capped one-time transaction expense fee of 1.75% of the net proceeds from this offering and the concurrent private placements plus a one-time reimbursement of expenses directly related to the acquisition of the property. The transaction expense fee is a partial reimbursement of offering expenses incurred by RPS Securities and ROX Parent, such as legal, accounting, transfer agent, printing and other offering expenses. Any offering expenses in excess of the 1.75% fee, will not be incurred by Series AMZL. Series AMZL will pay a monthly management fee beginning September 1, 2021, calculated as one-twelfth of 65 basis points of the monthly average equity value of Series AMZL as observed on NYSE Arca. RPS Securities’ annual management fee generally will cover all costs related to its and its affiliates general and administrative expenses, except for a limited amount of specific reimbursable expenses. Furthermore, ROX GP and RPS Securities will not charge sales commissions or incentive fees or retain a carried interest or promote.

Real Estate Owner Benefits

We intend for the ROX platform to become a new and attractive disposition option for real estate owners with several benefits including:

Public market monetization. Owners can monetize all, or a portion, of a single property through public market transactions without bearing the associated public company reporting obligations.

Potential to stay involved. Our platform and structure allow owners potentially to remain in their role as property manager and retain a minority equity interest in the property.

Our Management Structure

The board members and executive officers of ROX GP have extensive experience in commercial real estate, capital markets and related functions.


 

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Our management structure includes a board of managers of ROX GP, which we refer to as the Board, an executive team of ROX GP and a board of advisors to ROX GP. Subject to limited exceptions, ROX GP has sole authority for the management and control of ROX LP and each Series. ROX GP manages all aspects of ROX LP’s and each Series’ capitalization and governance, including share offerings, exchange listings and required periodic reporting. The Board, through ROX GP, is the governing board for ROX LP and each Series.

Board. The initial Board is composed of three individuals, all of whom are independent as defined under the standards established by the NYSE. All three members of the Board have extensive institutional experience in the commercial real estate industry, including detailed knowledge of national securities exchange listed REITs. The Chair of the Board is Peter Braverman, the former president of Winthrop Management, a private commercial real estate management firm, and Winthrop Realty Trust, a multi-sector NYSE-listed REIT. The Chair of the Audit Committee of the Board is Howard S. Roth, the former global sector leader of the real estate, hospitality and construction practice at Ernst & Young LLP, a multinational professional services firm. The third member of the Board is Elizabeth A. Abdoo, a former executive of and senior advisor to Host Hotels & Resorts, Inc., a leading listed lodging REIT.

Executive Officers. The executive officers of ROX GP include four members with extensive experience in commercial real estate, capital markets and finance. The President and principal executive officer is Anthony Moro, whose previous experience includes serving as a managing director over more than two decades with The Bank of New York Mellon Corp, a global financial services firm. The Chief Financial Officer and principal accounting officer is Eyal Leibovitz, a senior financial executive with 32 years of experience of financial management, of which the last 22 years were with publicly-traded companies. The Chief Legal Officer is David Ronn, who has over 30 years of legal experience, including as a partner with international law firms, focused on corporate governance, mergers and acquisitions and capital markets matters for startups through public entities. The Senior Vice President—Real Estate is Shachar Melman, an experienced real estate acquisitions and asset management specialist, most recently with Ashkenazy Acquisition Corp., a private real estate investment firm.

Investment Advisory Board. The board of advisors to ROX GP, referred to as the Investment Advisory Board, is a team of four highly accomplished commercial real estate individuals. The Investment Advisory Board will act as a resource for the Board and executive officers of ROX GP with respect to real estate industry knowledge and strategy, particularly to review and provide feedback regarding potential properties from an overall investment perspective for the creation of value for our Series. The Investment Advisory Board members include: Marty Burger, the current Chief Executive Officer of Silverstein Properties Inc., a leading commercial real estate development, investment and management firm; Nathaniel Hagedorn, the founder and current Chief Executive Officer of NorthPoint, a leading industrial commercial real estate developer; David Hirsh, a real estate investor who retired in 2018 after working in real estate asset management at Blackstone Group Inc. and Citigroup Inc.; and Robert G. Leary, an institutional asset management executive and the former Chief Executive Officer of The Olayan Group and former Chief Executive Officer of Nuveen, LLC.

Summary Risk Factors

Investing in Series AMZL shares involves numerous risks, including the risks described in the section titled “Risk Factors” and elsewhere in this prospectus. You should carefully consider these risks before making an investment. The following are some of these risks, any of which could have an adverse effect on Series AMZL’s business financial condition, operating results, or prospects:

Risks Related to the Property

 

   

The property is substantially dependent on Amazon and is subject to risks involved with single tenant leases.


 

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Amazon has a right of first offer with respect to a sale of the property, which may limit the Series AMZL’s ability to obtain the highest price if a sale of the property is pursued.

 

   

The property has above-market rents, which may adversely affect the value, potential financing and ability to re-lease the property.

 

   

The property is built-to-suit and may be unable to sell or re-lease upon Amazon’s default or lease termination, and renewing the lease may require significant concession, inducements and/or capital expenditures.

 

   

The property may be subject to unknown or contingent liabilities for which there is no, or only limited, recourse against the current owners.

 

   

The ongoing COVID-19 pandemic, and restrictions intended to prevent its spread, could have a material adverse effect on us and Series AMZL.

 

   

Capital expenditure requirements at the property may be costly and require Series AMZL to incur debt, postpone improvements, reduce distributions or otherwise adversely affect the results of its operations and the market price of Series AMZL shares.

 

   

You could lose some or all of your investment if the property suffered an uninsured or underinsured loss.

 

   

Series AMZL may be exposed to the costs and risks of construction defects, which may also adversely affect the financial performance of Series AMZL.

Risks Related to Series AMZL

 

   

Series AMZL will initially hold an interest in a single property, a non-diversified investment.

 

   

Series AMZL may not be able to complete a purchase of the Amazon properties identified in the strategic cooperation agreement with NorthPoint.

 

   

The ability of Series AMZL to make distributions to shareholders is subject to fluctuations in its financial performance, operating results and unanticipated capital improvements requirements.

 

   

ROX GP will have significant discretion over the use of Series AMZL’s cash for reinvestment or for purposes other than making cash distributions to shareholders.

 

   

Any debt service obligations could adversely affect Series AMZL’s overall operating results, may jeopardize its qualification as a REIT and could adversely affect the ability of Series AMZL to make distributions to shareholders and the market price of Series AMZL shares.

Risks Related to Our Business and Operations

 

   

We are employing a novel business model, which may make an investment in Series AMZL shares difficult to evaluate as it is unique to the real estate industry.

 

   

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

Risks Related to Our Organizational and Management Structure

 

   

We are organized as a series limited partnership, which may lead to increased risk of liability.


 

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A court could potentially conclude that the assets and liabilities of one Series are not segregated from those of another Series and may thereby potentially expose assets in Series AMZL to the liabilities of another Series.

 

   

Series AMZL will depend on the performance of the property manager with respect to the property and could be materially and adversely affected if the property manager does not manage the property in Series AMZL’s best interests.

 

   

We and Series AMZL depend on RPS Securities for the success of Series AMZL and upon access to RPS Securities’ investment professionals and contractors. We may not find a suitable replacement for RPS Securities if the services agreement is terminated or if key personnel leave the employment of RPS Securities or otherwise become unavailable to us and Series AMZL.

 

   

If we or Series AMZL fail to implement and maintain an effective system of internal controls, Series AMZL may not be able to accurately determine the financial results of Series AMZL or prevent fraud. As a result, shareholders could lose confidence in the financial results of Series AMZL, which could harm its business and the value of Series AMZL shares.

 

   

If we or any Series were deemed to be an “investment company” under the Investment Company Act, applicable restrictions could make it impractical for us or the Series to continue its business as contemplated and could have a material adverse effect on its business.

 

   

Shareholders do not select ROX GP as our general partner or vote on the members of the Board. Accordingly, shareholders have limited ability to participate in or influence our management or the management of Series AMZL even as to fundamental matters.

 

   

Our partnership agreement contains Series AMZL ownership limits, which may delay or prevent a change of control.

 

   

For as long as ROX LP is an emerging growth company, ROX LP will not be required to comply with certain reporting requirements, including those relating to accounting standards, that apply to other public entities.

Risks Related to Potential Conflicts of Interest

 

   

There may be conflicts of interests among Series AMZL and other existing or future Series, which may result in opportunities that would benefit the property being allocated to another Series property owned another Series.

 

   

Under our partnership agreement and the services agreement, ROX GP and RPS Securities, respectively, and their respective affiliates have limited liability to us and Series AMZL, and we and Series AMZL have agreed to indemnify ROX GP and RPS Securities, respectively, and their respective affiliates against certain liabilities. As a result, Series AMZL could experience losses for which neither ROX GP nor RPS Securities, as applicable, or their respective affiliates would be liable, which could adversely affect the financial condition and operating performance of Series AMZL.

 

   

Our partnership agreement contains provisions that reduce or eliminate duties, including fiduciary duties, of ROX GP and limit remedies available to shareholders that might otherwise constitute a breach of duty.

 

   

RPS Securities, an affiliate of ROX GP, may have different financial incentives and motivations than shareholders due to the management and other fees payable to RPS Securities.

 

   

The ability of ROX GP, RPS Securities and their affiliates to manage multiple Series and the growth of their personnel may adversely affect the performance of Series AMZL.


 

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Risks Related to an Investment in Series AMZL Shares

 

   

Neither we nor ROX GP have established a minimum distribution payment level for Series AMZL and Series AMZL may be unable to generate sufficient cash flows from its operations to make distributions to shareholders at any time in the future.

 

   

ROX GP has the sole discretion to determine the timing, form and amount of any distributions to shareholders, and there can be no assurance as to the determinations ROX GP will make in respect of any of Series AMZL’s future distributions.

 

   

You should not place undue reliance on the appraisal of the property included elsewhere in this prospectus when considering whether to invest in Series AMZL shares.

 

   

We do not know whether an active, liquid and orderly trading market will develop for Series AMZL shares or what the market price of Series AMZL shares will be and as a result it may be difficult for you to sell Series AMZL shares.

 

   

The market price of Series AMZL shares may be volatile due to numerous circumstances beyond the control of ROX LP or Series AMZL.

 

   

You are not assured of a return of your investment, and under certain circumstances you could be required to return distributions made to you.

 

   

Series AMZL’s future acquisitions, if any, may not yield the returns it expects, and shareholders will not have an opportunity to evaluate these investments.

 

   

Sales of substantial amounts of Series AMZL shares in the public markets, or the perception that they might occur, could reduce the price of Series AMZL shares and may dilute your ownership interest in us.

Risks Related to Tax Matters

 

   

Failure of Series AMZL to be classified as a separate entity for U.S. federal income tax purposes could adversely affect the timing, amount and character of distributions to shareholders.

 

   

Failure of Series AMZL to qualify as a REIT would materially and adversely affect Series AMZL and the value of Series AMZL shares.

 

   

Complying with the REIT requirements may affect Series AMZL’s profitability and may force Series AMZL to liquidate or forgo otherwise attractive investments.

 

   

Dividends payable by REITs generally do not qualify for the reduced tax rates on dividend income from regular corporations, which could adversely affect the value of Series AMZL shares.

General Risk Factors

 

   

We are a newly formed entity and are subject to the risks of any newly established business enterprise, and we may not be able to successfully operate as a public company going forward.

Benefits to Related Persons

Summary of the Services Agreement with RPS Securities

ROX GP, in its capacity as the general partner of ROX LP and each Series, ROX LP, on behalf of Series AMZL, and RPS Securities LLC have entered into a services and investment management agreement (which we refer to as the services agreement) whereby RPS Securities has agreed to advise ROX LP and Series AMZL


 

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regarding, and assist ROX LP and Series AMZL in connection with negotiations related to, its business, including as follows:

 

   

the acquisition, management or disposition of interests in commercial real estate or, as the case may be, equity interests in any subsidiary;

 

   

related third-party equity or debt financing;

 

   

any public offering or private placement of Series AMZL shares; and

 

   

any other transaction, structuring or financing activities that may be requested by ROX LP on behalf of Series AMZL and agreed to by RPS Securities or suggested by RPS Securities and accepted by ROX LP on behalf of Series AMZL.

In consideration of RPS Securities’ provision of the above services, Series AMZL shall pay to RPS Securities:

 

Type

  

Description

  

Payment

Management fee

  

The monthly management fee paid by Series AMZL to RPS Securities will begin to accrue on September 1, 2021, and will be one twelfth of 65 basis points of the monthly average equity value of Series AMZL as observed on NYSE Arca. The management fee can be reduced at any time by RPS Securities in its sole discretion by notice to the Board and, after the third anniversary of the completion of this offering, can be increased by RPS Securities in its sole discretion at any time with at least 90 days prior notice to the Board. The management fee is intended to reimburse RPS Securities for certain expenses incurred in connection with providing management services to Series AMZL and, over time, may include a profit component. Any future adjustment to the management fee by RPS Securities may be made for any reason, including actual or anticipated changes to expenses or profits. The Board shall cause ROX LP to promptly disclose any change to the management fee in a current or periodic report and will give any other applicable notice thereof.

 

The monthly average equity value of Series AMZL shall be calculated by dividing the sum of the daily equity values of Series AMZL shares as observed on NYSE Arca for that month by the number of trading days in that month.

 

The daily equity value of Series AMZL shall be calculated for each trading day by multiplying the closing price of a Series AMZL share as observed on NYSE Arca on that trading day by the number of outstanding Series AMZL shares at the time of such close. A trading day shall mean any day on which NYSE Arca is open for trading.

   In cash within five business days of the end of the relevant calendar month.

Transaction expenses

   The transaction expenses to be paid by Series AMZL to RPS Securities for this offering of Series AMZL shares will be capped at 1.75% of the net proceeds of this offering    In cash simultaneous with the completion of this offering and the

 

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Type

  

Description

  

Payment

   and the concurrent private placements with net proceeds meaning the gross proceeds received by Series AMZL from this offering, after deduction of the underwriters’ discounts and commissions, and the concurrent private placements (which equates to approximately 1.65% based on the anticipated gross proceeds of this offering and the concurrent private placements).    concurrent private placements.

Asset sale fee

   Although Series AMZL is intended to be a permanent capital vehicle, circumstances may arise that makes selling the property in the best interests of shareholders. The services agreement allows RPS Securities to set a fee of up to 1.0% of the net proceeds to be received by Series AMZL from the closing of any sale or other disposition to a third party who is not an affiliate of ROX LP or ROX GP, of any property of Series AMZL, including but not limited to an equity interest owned by Series AMZL in the Series AMZL subsidiary, with net proceeds meaning the gross proceeds after deduction of any applicable broker’s fee.    In cash simultaneous with the closing of such sale or disposition.

In connection with the payment of the fees set forth above to RPS Securities by Series AMZL, RPS Securities on behalf of itself and its affiliates agrees to pay and not be reimbursed for all direct and indirect expenses in connection with its performance of its services, the performance by ROX GP or an affiliate of ROX GP of its duties on behalf of ROX LP or Series AMZL and the existence, management and operations of ROX LP, Series AMZL or ROX GP, other than expenses to be paid by ROX LP or Series AMZL as set forth in our partnership agreement. In that regard, the payment of the transaction expenses is intended to allow RPS Securities, at its discretion, to make distributions to ROX Parent that ROX Parent intends to use to offset transaction expenses and general and administrative expenses related to this offering and ongoing public existence costs related to ROX LP, specifically for Series AMZL and potentially in part to offset personnel costs related to the officers and employees of ROX Parent and its other affiliates. Please see “ROX LP Partnership Agreement—Reimbursement of Expenses.”

For Series AMZL, the services agreement has an initial term of three years from the date of the closing of this offering, with automatic renewals for successive one-year periods thereafter unless notice of non-renewal is given at least 90 days prior to the end of the initial or any renewal term. The services agreement may be terminated at any time upon the consent of ROX GP and RPS Securities or upon a material breach that is not cured 30 days after notice thereof and upon bankruptcy related filings or occurrences. If requested by ROX GP, RPS Securities will continue to provide assistance to ROX LP, Series AMZL and Series AMZL’s subsidiaries for up to 90 days after termination. If ROX GP terminates upon non-renewal, Series AMZL is required to pay to RPS Securities a termination fee equal to the prior month’s management fee multiplied by twenty-four. In addition, upon any termination, Series AMZL shall be required to pay any fees to RPS Securities for a period of one year after termination that relates to any activities for which services were provided prior to termination.

ROX GP agrees that any decision or action it takes in accordance with the services agreement will be approved by a majority of the independent members of the Board.

Other Benefits to Related Parties

Pursuant to our partnership agreement, ROX GP or its affiliates shall pay, and shall not charge or be reimbursed by, ROX LP or any Series for all direct and indirect expenses incurred or paid on behalf of ROX LP


 

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or a Series in its capacity as ROX GP for general or administrative expenses of ROX GP, ROX LP or a Series, except for the following, which shall be paid for, or reimbursed by, the applicable Series as allocated by ROX GP:

 

   

all third-party expenses related to the acquisition or disposition of any property, including any third-party expenses for brokers or related to the negotiation and closing of any third-party debt for Series AMZL or its subsidiaries;

 

   

any underwriting or private placement expenses and commissions of ROX LP or Series AMZL;

 

   

any taxes payable by ROX LP or Series AMZL due to activities of the ROX LP, Series AMZL or any of Series AMZL’s subsidiaries;

 

   

any state franchise or income tax or any tax based upon the revenues or gross margin of ROX LP, Series AMZL or any of Series AMZL’s subsidiaries;

 

   

expenses related to any claim, order, litigation or similar action by or against ROX LP, Series AMZL or any of Series AMZL’s subsidiaries, including any deductible under any applicable insurance policy;

 

   

expenses of ROX LP, Series AMZL or any of Series AMZL’s subsidiaries with respect to indemnification pursuant to our partnership agreement;

 

   

expenses incurred by a conflicts committee pursuant to our partnership agreement acting on behalf of Series AMZL, including any expenses related to third-party service providers engaged by a conflicts committee; and

 

   

all compensation and benefit costs of any member of the Board who could be a member of the conflicts committee to enable such members to retain their independence for the benefit of Series AMZL.

Based on the above and in connection with the completion of this offering, we anticipate the following reimbursements from Series AMZL to ROX GP and its affiliates:

 

Type of Compensation

  

Determination of Amount

 

Payment

Third-party acquisition expenses    Series AMZL will reimburse ROX GP and its affiliates for certain expenses incurred in connection the acquisition of the property. To date, ROX GP and its affiliates have incurred approximately $250,000 of these expenses. We estimate that, upon the completion of this offering, the concurrent private placements and the acquisition of the property, ROX GP and its affiliates will have incurred approximately $600,000 of these expenses.   Payable in cash to ROX GP and its affiliates upon completion of this offering.
Compensation to independent members of the Board   

Upon the completion of this offering, Series AMZL shall reimburse ROX GP for the first year’s annual cash compensation payable to each member of the Board, as applicable, as follows:

 

•  annual retainer: $20,000;

 

•  annual chair of Board retainer: $2,500;

 

•  annual audit committee chair retainer: $2,500; and

 

•  annual audit committee member (non-chair) retainer: $250.

  The first annual cash retainers will be paid to ROX GP upon completion of this offering and the concurrent private placements, while for subsequent years the payments shall be made in quarterly installments in arrears in time to allow ROX GP to pay

 

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Type of Compensation

  

Determination of Amount

 

Payment

     the Board. Annual cash retainers will be pro-rated for any partial calendar quarter of service.

The cash compensation of the Board is subject to change at the discretion of ROX Parent based on facts and circumstances, particularly as ROX LP issues additional Series AMZL shares or shares of other Series and the complexity of the management of Series AMZL and other Series based on the types and amounts of commercial real estate included in each Series. Pursuant to our partnership agreement, ROX GP determines the allocation of the above compensation to each Series or all Series, as applicable. Therefore, ROX GP may change that allocation from time to time based on changes to the above compensation, the number of Series and the types and amount of commercial real estate held by each Series. Please see “Board and Executive Compensation.”

Our Structure

ROX LP was organized as a Delaware series limited partnership on January 15, 2020, and will have a perpetual existence unless dissolved pursuant to the terms of our partnership agreement. ROX LP shall be the sole registrant for purposes of the Securities Act, the Exchange Act and the rules and regulations of the SEC. ROX LP shall also be an entity for purposes of the Delaware Revised Uniform Limited Partnership Act, 6 Del C. Section 17-101 et seq., as amended, supplemented or restated from time to time, and any successor to such statute, which we refer to as the Delaware Act, when referring to the partnership as a whole and for purposes as specified in our partnership agreement. We intend to treat ROX LP as a non-entity for U.S. federal income tax purposes. Please see “U.S. Federal Income Tax Considerations.”

ROX GP is a wholly owned subsidiary of ROX Parent. The rights and obligations of ROX GP as the general partner of ROX LP and associated with each Series are set forth in our partnership agreement and the applicable Series Designation. We are advised by RPS Securities, which is a wholly owned subsidiary of ROX Parent. RPS Securities is a FINRA member and an investment adviser registered with the SEC pursuant to the Investment Advisers Act of 1940, as amended, or the Advisers Act. RPS Securities has applied for registration as an investment adviser with the State of Texas and will withdraw its registration with the SEC once its registration with the state of Texas becomes effective. ROX LP operates its business in a manner that permits it to maintain its exclusion from registration under the Investment Company Act of 1940, as amended, or the Investment Company Act.

Although ROX GP has officers, neither ROX LP, Series AMZL nor ROX GP will have any employees. The employees required to provide ROX GP with the services necessary to oversee ROX LP and Series AMZL are provided pursuant to the services agreement with RPS Securities and the general and administrative costs related to those employees are subsumed in the fees set forth in that agreement.

We are managed and operated by ROX GP, through the Board and executive officers of ROX GP. ROX Parent has nominated and elected the initial Board, composed of three individuals, all of whom are independent as defined under the listing standards established by the NYSE. Each of the members of the Board holds office for an annual term, or until his or her resignation or removal by ROX Parent. The officers of ROX GP serve at the pleasure of the Board.

We will maintain a policy that the members of the Board shall be independent under applicable national securities exchange standards, and therefore, no officer of ROX GP will be a member of the Board. Our partnership agreement requires that the Board consist of at least a majority of independent directors. Unlike


 

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holders of common stock in a corporation, shareholders will have only limited voting rights on matters affecting the business or governance of ROX LP or Series AMZL, subject in all cases to any specific rights contained in our partnership agreement. Please see “ROX LP Partnership Agreement—Meetings; Voting.”

The debts, liabilities, obligations and expenses incurred, contracted for or otherwise existing with respect to Series AMZL are segregated and enforceable only against the assets of Series AMZL and any associated general partner, as provided under Delaware law.

The following chart shows the anticipated structure for Series AMZL immediately after giving effect to this offering, the concurrent private placements and the closing of the purchase of the property.

 

LOGO


 

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REIT Qualification

We intend for Series AMZL to elect and qualify to be taxed as a REIT for U.S. federal income tax purposes commencing with its taxable year ending December 31, 2021. We believe that Series AMZL has been organized in conformity with the requirements for qualification and taxation as a REIT under the Code, and that its intended manner of operation will enable it to meet the requirements for qualification and taxation as a REIT for its taxable year ending December 31, 2021, and thereafter. To qualify as a REIT, Series AMZL must meet on a continuing basis, through its organization and actual investment and operating results, various requirements under the Code relating to, among other things, the sources of its gross income, the composition and values of its assets, its distribution levels and the diversity of ownership of Series AMZL shares. If Series AMZL fails to qualify as a REIT in any taxable year and does not qualify for certain statutory relief provisions, it will be subject to U.S. federal corporate income tax and may be precluded from qualifying as a REIT for the subsequent four taxable years following the year during which it failed to qualify as a REIT. Even if Series AMZL qualifies for taxation as a REIT, it may be subject to certain U.S. federal, state and local taxes on its income or property. Please see “U.S. Federal Income Tax Considerations.” An investor in Series AMZL shares will receive a Form 1099 reporting annual distributions by Series AMZL.

Restrictions on Ownership of Series AMZL Shares

To assist Series AMZL in qualifying as a REIT, our partnership agreement, subject to certain exceptions, contains restrictions on the number of Series AMZL shares that a holder may own. Our partnership agreement provides that generally no holder may own, or be deemed to own by virtue of the attribution provisions of the Code, more than 9.8% of the outstanding Series AMZL shares (by value or in number, whichever is more restrictive). The Board may, in its sole and absolute discretion, waive the 9.8% ownership limit with respect to a particular holder of Series AMZL shares; provided, however, that the Board may only waive the 9.8% ownership limit after it is presented with evidence satisfactory to it that such ownership will not then or in the future jeopardize Series AMZL’s qualification as a REIT.

Our partnership agreement also prohibits any person from, among other things:

 

   

beneficially or constructively owning Series AMZL shares that would result in Series AMZL being “closely held” under Section 856(h) of the Code, or otherwise cause Series AMZL to fail to qualify as a REIT; and

 

   

transferring Series AMZL shares if such transfer would result in Series AMZL shares being owned by fewer than 100 persons.

In addition, our partnership agreement provides that any ownership or purported transfer of Series AMZL shares in violation of the foregoing restrictions will result in Series AMZL shares so owned or transferred being automatically transferred to a charitable trust for the benefit of a charitable beneficiary and the purported owner or transferee acquiring no rights in such Series AMZL shares. If a transfer to a charitable trust would be ineffective for any reason to prevent a violation of the restriction, the transfer resulting in such violation will, to the fullest extent permitted by law, be void from the time of such purported transfer.

Summary of Conflicts of Interest and Fiduciary Duties

ROX GP has a contractual duty to manage ROX LP and Series AMZL in a manner that it believes is not opposed to the interests of ROX LP and Series AMZL. However, the Board and officers of ROX GP also have duties to manage ROX GP in a manner beneficial to ROX Parent, the owner of ROX GP. ROX Parent and its affiliates are not prohibited from engaging in other business activities, including those that might be in direct competition with ROX LP. In addition, ROX Parent may compete with ROX LP for investment opportunities and


 

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may own an interest in entities that compete with ROX LP. As a result, conflicts of interest may arise in the future between ROX LP, Series AMZL and shareholders, on the one hand, and ROX Parent, ROX GP and their other affiliates, on the other hand.

Delaware law provides that Delaware limited partnerships may, in their partnership agreements, expand, restrict or eliminate the fiduciary duties owed by the general partner to limited partners and the partnership. Our partnership agreement limits the liability of, and replaces the fiduciary duties that would otherwise be owed by, ROX GP to shareholders, which also restricts the remedies available to shareholders for actions that might otherwise constitute a breach of duties by ROX GP or its Board or officers. Our partnership agreement also provides that affiliates of ROX GP, including ROX Parent, have no obligation to present business opportunities to ROX LP. By purchasing a Series AMZL share, the purchaser agrees to be bound by the terms of our partnership agreement, and each holder of Series AMZL shares is treated as having consented to various actions and potential conflicts of interest contemplated in our partnership agreement that might otherwise be considered a breach of fiduciary or other duties under Delaware law. For the avoidance of doubt, the foregoing shall not in any way reduce or eliminate any duties under the Advisers Act.

For a more detailed description of the conflicts of interest and duties of our general partner and its managers and officers, please see “Conflicts of Interest and Fiduciary Duties.” For a description of other relationships with our affiliates, please see “Certain Relationships and Related Party Transactions.

Implications of being an Emerging Growth Company

ROX LP is an “emerging growth company” as defined in the Jumpstart Our Business Startups Act, or the JOBS Act, and we intend to take advantage of certain exemptions from various disclosure and reporting requirements that are otherwise generally applicable to public companies, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports. We may take advantage of these exemptions for up to five years or such earlier time that we are no longer an emerging growth company. We will cease to be an emerging growth company on the earliest of:

 

   

the last day of the first fiscal year in which our annual gross revenues exceed $1.07 billion, subject to adjustment for inflation;

 

   

December 31 of the fiscal year that we become a “large accelerated filer” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended, or the Exchange Act, which would occur if the fair market value of shares associated with all Series that are held by non-affiliates exceeds $700.0 million 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;

 

   

the date on which we have issued more than $1.0 billion in non-convertible debt securities during the preceding three-year period; or

 

   

the end of the fiscal year following the fifth anniversary of our initial public offering.

The JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. This allows an emerging growth company to delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to avail ourselves of this exemption and, therefore, while we are an emerging growth company, we will not be subject to new or revised accounting standards at the same time that they become applicable to other public companies that are not emerging growth companies.


 

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Our Information

Our principal executive offices are located at 250 Greenwich Street, 10th Floor, New York, New York, 10007. Our telephone number is (212) 650-4102. Our website address is www.roxfinancial.com. Information contained on, or that can be accessed through, our website is not incorporated by reference into this prospectus, and you should not consider information on our website to be part of this prospectus. The ROX design logo and our other registered and common law trade names, trademarks, and service marks are the property of ROX Parent.


 

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THE OFFERING

 

Series AMZL shares offered by us

8,250,000 Series AMZL shares, plus up to an additional 1,237,500 Series AMZL shares if the underwriters’ over-allotment option is exercised in full.

 

Series AMZL shares to be outstanding after this offering and the concurrent private placements

8,950,000 Series AMZL shares or 10,187,500 Series AMZL shares if the underwriters’ over-allotment option is exercised in full.(1)

 

Use of proceeds from Series AMZL shares

We estimate that the aggregate net proceeds from this offering and the concurrent private placements, after deducting the underwriting discounts and commissions payable by Series AMZL, will be approximately $83.7 million (or $95.2 million if the underwriters’ over-allotment option is exercised in full) based on an assumed initial public offering price of $10.00 per Series AMZL share. Those net proceeds will be used to complete the acquisition of the property, fund cash reserves and pay other fees and expenses.

 

Proposed NYSE Arca symbol

AMZL

 

Risk Factors

An investment in Series AMZL shares involves various risks. You should consider carefully the risks discussed below under “Risk Factors” before purchasing any Series AMZL shares.

 

(1)

Includes 8,250,000 Series AMZL shares from this offering and 700,000 Series AMZL shares from the concurrent private placements.


 

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RISK FACTORS

An investment in Series AMZL shares involves risks. In addition to other information contained elsewhere in this prospectus, you should carefully consider the following risks before acquiring any Series AMZL shares offered by this prospectus. The occurrence of any of the following risks could materially and adversely affect the business, financial condition, liquidity, results of operations and prospects of ROX LP or of Series AMZL, the ability of Series AMZL to satisfy its debt service obligations (if any), the ability of Series AMZL to make cash distributions to shareholders (which we refer to collectively as “materially and adversely affecting” us or Series AMZL or having “a material adverse effect” on us or Series AMZL and comparable phrases) and the market price of Series AMZL shares, which could cause you to lose all or some of your investment in Series AMZL shares. Some statements in this prospectus, including statements in the following risk factors, constitute forward-looking statements. Please see “Forward-Looking Statements.”

Risks Related to the Property

The property is substantially dependent on Amazon and its affiliates and is subject to risks involved with single tenant leases.

Series AMZL will be the owner of a newly constructed logistics building, triple net leased to Amazon and guaranteed by Amazon.com, Inc. Given that all of the property revenue is derived from this single tenant, the success of the property is materially dependent on the financial stability of Amazon and Amazon.com, Inc. Either of these entities may experience a material business downturn and weakening of their financial condition, which could potentially result in their failure to make timely rental payments and/or a default under the lease or the guaranty. If either of these entities are unwilling or unable to perform their obligations under the lease or guarantee, Series AMZL could be materially and adversely affected. Lease payment defaults by Amazon or Amazon.com, Inc. could cause Series AMZL to reduce the distributions it pays. In the event of a default, Series AMZL may experience delays in enforcing its rights as landlord and may incur substantial costs in protecting Series AMZL’s investment and re-letting the property. If the lease is terminated or if Amazon fails to renew the lease, there is no assurance that Series AMZL will be able to lease the property for the rent previously received or sell the property without incurring a loss. In addition, until such time that a new net lease agreement commences, Series AMZL would be responsible for 100% of the operating costs following a lease termination at the property. A default by Amazon and the failure of Amazon.com, Inc. to fulfill its obligations or other premature termination of the lease or a failure of Amazon to renew the lease could have a material adverse effect on Series AMZL.

Series AMZL may be unable to benefit from increases in market rental rates because the lease is long-term and the rent escalations under the initial term of the lease are fixed.

The initial lease term of the property will expire on September 30, 2032, subject to four 5-year renewal options and a fifth 35-month renewal option. The initial term of the lease further provides for a fixed base rent, subject to preset, fixed increases in rent every year. As a result, during periods of high inflation, such rent escalators subject Series AMZL to the risk of receiving lower rental revenue than it otherwise would have been entitled to receive if the rent escalators were based on an increase in the consumer price index, or CPI, over a specified period. In addition, by entering into a longer-term lease, Series AMZL is subject to the risk during the initial term that it would not be able to increase its rental rates if prevailing land values or rental rates have increased. Any inability to take advantage of increases in prevailing land values or rental rates could adversely impact the value of the property and on the market price of Series AMZL shares.

Amazon has a right of first offer with respect to a sale of the property, which may limit the Series AMZL’s ability to obtain the highest price if a sale of the property is pursued.

Pursuant to the terms of the lease, if there is no event of default or pending event of default, Amazon has a right of first offer to purchase the property or any portion thereof if:

 

   

Series AMZL determines to offer all or any portion of the property for purchase; or

 

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Series AMZL receives a bona fide, unsolicited offer from a third-party to purchase all or any portion of the property.

The existence of this right of first offer could limit third-party offers for the property, inhibit Series AMZL’s ability to sell the property, adversely affect the timing of any sale of the property or adversely impact Series AMZL’s ability to obtain the highest possible price for the property during the term of the lease. Those situations could arise since Series AMZL would not be able to offer the property to potential purchasers through a competitive bid process or in a similar manner designed to maximize the value obtained for the property without first offering to sell it to Amazon.

The property has above-market rents, which may adversely affect the value, potential financing and ability to re-lease the property.

The property was built to Amazon’s specific standards, including specialized dock doors and a low floor to area ratio that accommodates substantial parking requirements. Due to the specificity of that construction, the rent pursuant to the lease is above-market. The existence of that above-market rent could adversely affect the property in various aspects, including the value of the property in a potential sale, Series AMZL’s ability to finance the property or Series AMZL’s ability to re-lease the property if the lease is terminated due to Amazon’s default or otherwise.

The property is built-to-suit and may be unable to sell or re-lease upon Amazon’s default or lease termination, and renewing the lease may require significant concession, inducements and/or capital expenditures.

We cannot assure you that the lease will be renewed upon its expiration in 2032 or earlier termination or that the property will be re-leased at rental rates equal to or above the then current rental rates, if at all. The property is a built-to-suit logistics facility. This type of property is relatively illiquid compared to other types of real estate assets. If the lease is terminated or not renewed and because the property has been built to suit Amazon’s specific needs and desires, Series AMZL may also incur significant costs to make the leased premises ready for another tenant and experience difficulty or a significant delay in releasing such property, as Series AMZL may be required to renovate the property or to make rent concessions to lease the property to another tenant, finance the property or sell the property. Additionally, Series AMZL may need to raise capital to make such expenditures. If Series AMZL is unable to do so or if capital is otherwise unavailable, Series AMZL may be unable to make the required expenditures. If the rental rates for the property decrease, if Amazon does not renew the lease or if Series AMZL is unable to re-lease the property, Series AMZL could be materially and adversely affected.

In addition, in the event Series AMZL is forced to sell the property, it may have difficulty selling it to a party other than Amazon. Further, if Series AMZL is unable to renew the lease or re-lease the property, the resale value could be diminished because the market value will depend in part upon the value of the underlying lease. These and other limitations may affect Series AMZL’s ability to sell or re-lease the property at similar rates to the lease and could materially and adversely affect Series AMZL.

The property may be subject to unknown or contingent liabilities for which there is no, or only limited, recourse against the current owners.

Although Series AMZL will obtain title insurance insuring against losses that may arise in connection with any liens, encumbrances or other title defects not listed as exceptions to coverage on the title policy, the property may be subject to other unknown or contingent liabilities that could cause Series AMZL to incur substantial costs for which Series AMZL may have no recourse, or only limited recourse, against the current owners. There is no guarantee that Series AMZL will recover any amounts with respect to losses due to breaches by any prior owner of its representations and warranties or arising out of successor liability from pre-closing liabilities. The current owner’s representations and warranties provided under the asset purchase agreement relating to the acquisition of

 

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the property are limited in scope and survive for a period of one year after the closing. In addition, the asset purchase agreement provides that the current owner and affiliated or related parties will only be liable for breaches of their representations and warranties if the losses arising from such breaches, in aggregate, exceed $100,000. Furthermore, under the asset purchase agreement, the current owner’s liability for such breaches is capped at $1.0 million, which may not be sufficient to cover all or any of the costs incurred by the Series AMZL subsidiary relating to such unknown or contingent liabilities. Further, the Series AMZL subsidiary may choose not to enforce, or to enforce less vigorously, its rights under the asset purchase agreement because of its desire to maintain the Series AMZL subsidiary’s ongoing relationships with the current owner and its affiliates, including the property manager, NPD Management. In addition, the total amount of costs and expenses that may be incurred with respect to liabilities associated with the property may exceed expectations, and the Series AMZL subsidiary may experience other unanticipated adverse effects, all of which may materially and adversely affect Series AMZL.

The ongoing COVID-19 pandemic, and restrictions intended to prevent its spread, could have a material adverse effect on us and Series AMZL.

The ongoing COVID-19 pandemic, and restrictions intended to prevent its spread, have already had a significant adverse impact on economic and market conditions around the world, including the United States and California, where the property is located. The impact of the COVID-19 pandemic continues to evolve. California initially reacted to the COVID-19 pandemic by instituting quarantines, restrictions on travel, “shelter in place” rules, stay-at-home orders, density limitations, social distancing measures, restrictions on types of business that may continue to operate. Although some state governments and other authorities were in varying stages of lifting or modifying some of these measures, California has generally been forced to reinstitute these measures and may, in the future, impose new, more restrictive measures, if the risks, or the perception of the risks, related to the COVID-19 pandemic worsen at any time. Furthermore, although in certain cases, exceptions are available for essential retail, research and laboratory activities and essential building services, such as cleaning and maintenance, there can be no assurance that such exceptions will enable us to avoid adverse impacts on us or Series AMZL. In addition, there can be no assurance as to how long restrictions intended to prevent the spread of COVID-19 may remain in place, and even if such restrictions are lifted, they may be reinstituted at a later date.

The ongoing COVID-19 pandemic, and restrictions intended to prevent its spread, could have significant adverse impacts on us and Series AMZL in a variety of ways that are difficult to predict. Such adverse impacts could depend on, among other factors, Amazon’s ability to manage its business to the extent its management or personnel are impacted in significant numbers by the COVID-19 pandemic and are not willing, available or allowed to conduct work and Amazon’s ability to ensure business continuity in the event its continuity of operations plan is not effective or improperly implemented or deployed during the COVID-19 pandemic.

The rapid development and fluidity of this situation precludes any prediction as to the ultimate adverse impact of the COVID-19 pandemic or restrictions intended to prevent its spread. Nevertheless, the ongoing COVID-19 pandemic, and restrictions intended to prevent its spread, and the current financial, economic and capital markets environment and future developments in these and other areas present material risks and uncertainties and could also have a material adverse effect on us and Series AMZL. Moreover, to the extent any of these risks and uncertainties adversely impact us, Series AMZL or Amazon in the ways described above or otherwise, they may also have the effect of heightening many of the other risks set forth in this “Risk Factors” section.

The property is in the logistics real estate sector and is subject to an economic downturn in that sector, as well as general economic trends, which could adversely impact the performance and reduce the value of the property.

As a single asset in a single sector, the property is exposed to risks of economic downturns in the logistics real estate sector to a greater extent than if the property had uses in, or could be repurposed without significant capital expenditure for, multiple real estate sectors.

 

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In addition, the property could experience adverse changes in market value due to decrease in demand for this type of asset or other unknown factors. Other factors outside the control of Series AMZL could also adversely impact the performance and reduce the value of the property. Such factors include, but are not limited to:

 

   

unfavorable trends or downturns in the national, regional or local economy;

 

   

increased levels of construction activity in the property’s market area;

 

   

government restrictions, regulations, and requirements, such as zoning or COVID-19 related restrictions; and

 

   

reduced availability and/or increased cost of financing.

Real estate assets are illiquid, and Series AMZL may be unable to sell the property if or when it decides to do so.

We expect Series AMZL to hold the property until such time as the Board decides that a sale or other disposition is appropriate given its investment objectives or as otherwise is required under our partnership agreement. Real estate is relatively illiquid, limiting Series AMZL’s ability to sell the property quickly in response to changes in economic or other conditions. In addition, the Code generally imposes a 100% prohibited transaction tax on Series AMZL’s profits derived from sales of properties held primarily for sale to customers in the ordinary course of business, which may limit Series AMZL’s ability to sell the property. Series AMZL’s ability to dispose of its properties on advantageous terms or at all depends on factors beyond Series AMZL’s control, including competition from other sellers and the availability of attractive financing for potential buyers. We cannot predict the various market conditions affecting real estate investments that will exist at any particular time in the future. Due to the uncertainty of market conditions which may affect the future disposition of any property, we cannot assure shareholders that Series AMZL will be able to sell the property at a profit or at all in the future. Accordingly, the extent to which shareholders will receive cash distributions and realize potential appreciation on the property will be dependent upon fluctuating market conditions. Furthermore, Series AMZL may be required to expend funds to correct defects or to make improvements before the property can be sold. We cannot assure shareholders that Series AMZL will have funds available to correct such defects or to make such improvements.

If the Board decides to sell the property, investors in Series AMZL may not receive a return on their investment.

We expect Series AMZL to hold the property until such time as Series AMZL decides that a sale or other disposition is appropriate given its investment objectives or as otherwise is required under our partnership agreement. Shareholders will not have any voting rights with respect to any such sale. If the property is the only property held by Series AMZL at the time of any such sale, Series AMZL will liquidate after such sale. If Series AMZL were to liquidate, it would distribute the net proceeds from the sale of the property to investors. If Series AMZL distributed the proceeds from such sale to investors, investors may not obtain their expected return on their investment in Series AMZL shares and may not be able to reinvest the net proceeds from the sale in an investment that results in a comparable return.

The property is not material to Amazon’s business, which could mean that Amazon may not pay as much attention to the property or focus on its obligations under the lease.

Although the property is generally operationally essential to Amazon for this location, meaning the property is essential to Amazon’s generation of sales and profits from this location, this feature does not guarantee that Amazon’s operations at the property will be successful or that Amazon will be able to meet all of its obligations to Series AMZL. The property location is not material to Amazon as a whole and Amazon could determine not to meet its obligations under the lease without a material effect to its business. Amazon’s decisions regarding its

 

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other logistics locations could cause Amazon to fail to comply with its obligations under the lease, which failure would not be material to Amazon.

You could lose some or all of your investment if the presence of hazardous substances on the property results in Series AMZL being required to incur clean-up or other remediation costs, and the presence of those substances could adversely affect any future sales price of the property.

The property was formerly part of a chemical manufacturing facility owned and operated by The Chemours Company FC, LLC, or Chemours (and its predecessor, E. I. du Pont de Nemours and Company). Remediation of the Chemours facility is ongoing and hazardous substances, wastes, and contaminants subject to regulation under state and federal environmental laws are known to be present in the soil and groundwater at or under portions of the property. Although there are no material remediation activities currently being conducted at the property, we cannot assure that further remediation will not be required in the future. Series AMZL will be entitled to liability protection for certain existing contamination afforded by the Agreement and Covenant Not to Sue, effective as of September 6, 2019, between the State of California, NP Oakley, LLC and Chemours, known as the prospective purchase agreement. However, Series AMZL may still, under certain circumstances, be required to remove the substances and clean up the property, particularly if previously unknown contamination is discovered or if Series AMZL, its tenant, or the property manager fails to comply with the prospective purchase agreement, applicable site use restrictions, exacerbates any known existing contamination, or causes new contamination. Series AMZL could be subjected to full recourse liability for the entire cost of any such removal and clean-up, even if the cost of such removal and clean-up exceeds the value of the property. Series AMZL could also be exposed to the risk of lost revenues during any clean-up. Should Series AMZL fail to remove the substances or sources and clean up the property, federal, state or local environmental agencies could perform such removal and clean-up and impose and subsequently foreclose liens on the property for the cost thereof. Series AMZL could also be subject to damages to the property tenant or find it difficult or impossible to sell or refinance the property prior to, during or even following any such clean-up. In addition, the presence of known environmental conditions on the property could affect any future sales price and reduce the amount of distributions upon a sale of the property.

Series AMZL may incur significant costs complying with the Americans with Disabilities Act and similar laws, which could adversely affect Series AMZL.

Under the Americans with Disabilities Act of 1990, or the ADA, all public accommodations must meet federal requirements related to access and use by disabled persons. If the property is not in compliance with the ADA, Series AMZL would be required to incur additional costs to bring the property into compliance. While Amazon is obligated to comply with the ADA and similar state and local provisions, and under the lease is obligated to cover costs associated with compliance, if required changes involve greater expenditures than anticipated, or if the changes must be made on a more accelerated basis than anticipated, the ability of Amazon to cover costs could be adversely affected. As a result, Series AMZL could be required to expend funds to comply with the provisions of the ADA and similar state and local laws on behalf of Amazon, which could adversely affect Series AMZL. Additional federal, state and local laws also may require modifications to the property or restrict Series AMZL’s ability to renovate the property. We cannot predict the ultimate cost of compliance with the ADA or other legislation. If Series AMZL incurs substantial costs to comply with the ADA and any other legislation, Series AMZL could be materially and adversely affected.

In addition, Series AMZL is required to operate the property in compliance with fire and safety regulations, building codes and other land use regulations. New and revised regulations and codes may be adopted by governmental agencies and bodies and become applicable to the property. Compliance could require substantial capital expenditures and may restrict Series AMZL’s ability to renovate the property.

 

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Capital expenditure requirements at the property may be costly and require Series AMZL to incur debt, postpone improvements, reduce distributions or otherwise adversely affect the results of its operations and the market price of Series AMZL shares.

The property will have an ongoing need for renovations and other capital improvements for which Series AMZL will be responsible, including repair and replacement of the roof deck and structural components, repair of the building slab and foundation and repair of exterior walls. Although no capital improvements are currently required and the timing and extent of any future capital improvements is not determinable at this time, these capital improvements may give rise to the following risks:

 

   

possible environmental problems;

 

   

construction cost overruns and delays;

 

   

a possible shortage of available cash to fund capital improvements and the related possibility that financing for these capital improvements may not be available on attractive terms or at all; and

 

   

uncertainties as to market demand or a loss of market demand after capital improvements have begun.

The costs of renovations and capital improvements could materially and adversely affect Series AMZL.

You could lose some or all of your investment if the property suffered an uninsured or underinsured loss.

While Series AMZL intends to carry reasonable amounts of comprehensive insurance, there are certain risks which may be uninsurable or not insurable on terms which we believe are economical. Such risks may include, for instance, windstorm, hail, earthquakes and floods or certain types of liability claims. The insurance market can be cyclical, and a recent trend has been toward reductions in coverage and even in availability, combined with increases, including very significant increases, in premiums. As a result, if the property were to experience a casualty or liability loss, the risk that the loss will be uninsured or underinsured is greater currently than it has been historically, which may materially and adversely affect Series AMZL. Because your investment in Series AMZL shares currently represents an investment in only a single property, your investment in Series AMZL shares could be lost, or its value significantly reduced, in the event of such an uninsured or underinsured casualty or liability loss.

Series AMZL may be exposed to the costs and risks of construction defects, which may also adversely affect the financial performance of Series AMZL.

Series AMZL may be exposed to the risk of construction defects not discovered until later in the life of the property, which can arise from inadequate construction plans and specifications, poor workmanship or defective materials. Correction of serious defects can be costly and time consuming. Moreover, certain defects may not become apparent until after the expiration of any contractors’ or suppliers’ warranties, if any. To mitigate against defects discovered after the expiration of the construction warranties, Series AMZL may obtain a builder’s liability policy on the property if economically feasible. However, there is no assurance that Series AMZL will obtain such a policy, or, if it does, that the policy will protect Series AMZL sufficiently against latent defects. Moreover, even when many of the costs are ultimately borne by an insurer, contractor or supplier, correction can be time consuming and cause substantial distraction.

Series AMZL’s ability to fully control the maintenance of the property may be limited.

Amazon is responsible for maintenance and other day-to-day management of the property under the lease. If the property is not adequately maintained in accordance with the terms of the lease, we may incur expenses for deferred maintenance or other liabilities once the property is no longer leased to Amazon. Although the property manager will review the property on a regular basis and be responsible for the oversight of the property, that oversight and any potential visits to the property are not comprehensive inspections and deferred maintenance

 

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items may go unnoticed. While the lease provides for recourse against Amazon in these instances, a bankrupt or financially-troubled tenant may be more likely to defer maintenance, and it may be more difficult to enforce remedies against such a tenant. Further, the Series AMZL subsidiary may choose not to enforce, or to enforce less vigorously, its rights under the lease because of its desire to maintain the Series AMZL subsidiary’s ongoing relationships with Amazon and its affiliates, including the guarantor.

You should not rely on the credit ratings of Amazon.com, Inc.

Amazon.com, Inc. is rated by certain rating agencies. Amazon.com Services LLC is not separately rated. The credit ratings are subject to ongoing evaluation by those credit rating agencies, and we cannot assure you that any such ratings will not be changed or withdrawn by those rating agencies in the future if, in their judgment, circumstances warrant. If those rating agencies assign a lower-than-expected rating or reduce or withdraw, or indicate that they may reduce or withdraw, the credit rating of Amazon.com, Inc., those actions could reduce the market value of Series AMZL shares.

Amazon.com, Inc. does not guarantee the additional rent obligations under the lease.

Amazon.com, Inc. does not guarantee the additional rent obligations under the lease. Accordingly, in the event the tenant fails to meet its additional rent obligations under the lease, Series AMZL would not have contractual recourse against the guarantor and may be required to pay significant operating expenses of the property, including real estate taxes and landlord’s insurance. For calendar year 2021 and based on the budget for the property for 2021, we believe the amount of these operating expenses will be approximately $400,000. However, that amount may change from year to year based on a variety of factors, including the condition of the property.

Risks Related to Series AMZL

Series AMZL will initially hold an interest in a single property, a non-diversified investment.

Series AMZL will initially make an investment in a single property, a non-diversified investment. Initially, Series AMZL’s return on its investment will depend on the revenues generated by the property and the appreciation of the value of the property over time. The value of the property may decline substantially after Series AMZL acquires it. As a result, an investment in Series AMZL shares will not provide you with the benefits that may come from greater investment diversification, which can reduce overall risk by balancing the financial losses of one investment asset or category of investment assets against possible financial gains in another asset or asset category. In addition, Series AMZL may not be able to complete acquisitions of other Amazon leased properties either under the strategic cooperation agreement with NorthPoint or otherwise.

Series AMZL may not be able to complete a purchase of the Amazon properties identified in the strategic cooperation agreement with NorthPoint.

Although Series AMZL has entered into a strategic cooperation agreement with NorthPoint that provides Series AMZL with the opportunity to acquire two other Amazon leased properties from NorthPoint, NorthPoint has no obligation to sell the two properties identified therein to Series AMZL. There can be no assurance that Series AMZL will be able to negotiate a price, cap rate, yield or other terms and conditions of a purchase of those properties that will be acceptable to either our Board or NorthPoint to complete the acquisitions of these properties.

The ability of Series AMZL to make distributions to shareholders is subject to fluctuations in its financial performance, operating results and unanticipated capital improvements requirements.

For Series AMZL to qualify for taxation as a REIT for U.S. federal income tax purposes, it will be required to distribute at least 90% of its REIT taxable income (determined before the deduction for dividends paid and

 

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excluding any net capital gains) each year to shareholders. To the extent Series AMZL satisfies the 90% distribution requirement but distributes less than 100% of its net taxable income, including any net capital gains, it will be subject to U.S. federal income tax on the retained taxable income. In the event of downturns in its operating results, unanticipated capital improvements to the property or other factors, Series AMZL may be unable to declare or pay distributions to shareholders. The timing and amount of distributions are in the sole discretion of ROX GP, which will consider, among other factors, Series AMZL’s financial performance, any debt service obligations, any debt covenants, capital expenditure requirements and REIT distribution requirements. We cannot assure you that Series AMZL will generate sufficient cash from the property to fund distributions to shareholders.

ROX GP will have significant discretion over the use of Series AMZL’s cash for reinvestment or for purposes other than making cash distributions to shareholders.

ROX GP has significant discretion under our partnership agreement to use the cash of Series AMZL not for distribution but rather for purchase of additional property consistent with the growth strategy for Series AMZL, capital improvements, creation or enhancement of reserves or any other expenditures ROX GP determines appropriate for Series AMZL. Any use of cash other than for Series AMZL to pay distributions to shareholders will reduce the cash distributions of Series AMZL and that use of cash may not increase the likelihood of future distributions.

Series AMZL’s operating results could be impaired if, due to a depletion of Series AMZL’s working capital reserves, Series AMZL becomes unable to undertake important property renovation, maintenance or improvements or is prevented from paying required operating expenses.

Series AMZL could require additional capital to properly renovate, maintain and improve its property or properties or to cover operating cash deficits if the operating expenses of the property were to exceed revenues. If additional capital is required, neither ROX LP nor Series AMZL may be able contribute any additional capital. A failure by Series AMZL to secure necessary capital could result in a reduction in the value of Series AMZL shares, a breach of the lease, a default under a future loan document or any other debt agreements or even a foreclosure and loss of its property or properties. In addition, in the event Amazon were to terminate or not renew its lease, Series AMZL could be required to deplete its working capital reserves to find a new tenant for the property.

Any debt service obligations could adversely affect Series AMZL’s overall operating results, may jeopardize its qualification as a REIT and could adversely affect the ability of Series AMZL to make distributions to shareholders and the market price of Series AMZL shares.

Although our structure as a Delaware series limited partnership limits potential liabilities between each Series, our partnership agreement does not contain limitations regarding the amount of debt that Series AMZL can incur, directly or indirectly, and the Board may approve increases in Series AMZL’s leverage at any time without the approval of the holders or Series AMZL shares. As a result, Series AMZL may be able to incur substantial additional debt, including secured debt, in the future. The incurrence of any new debt could subject Series AMZL to many risks, including the risk that:

 

   

Series AMZL’s operating cash flow will be insufficient to make required payments of principal and interest;

 

   

Series AMZL’s leverage may increase its vulnerability to adverse economic and industry conditions;

 

   

Series AMZL may be required to dedicate a substantial portion of its operating cash flow from operations to payments on its debt, thereby reducing cash available for distribution to shareholders, funds available for operations and capital expenditures or other purposes; and

 

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the terms of the debt may limit Series AMZL’s ability to make distributions to shareholders, which may adversely affect the market price of Series AMZL shares or the ability of Series AMZL to meet the distribution requirements applicable to REITs.

If Series AMZL violates covenants in a future loan or any other debt agreements or related obligations, Series AMZL could be required to repay all or a portion of its indebtedness before maturity at a time when Series AMZL might be unable to arrange financing for such repayment on attractive terms, if at all.

In addition, if Series AMZL violates restrictive covenants or fails to maintain financial ratios specified in a future loan document or any other debt agreements or related obligations, Series AMZL’s lenders would be entitled to accelerate its debt obligations, and its secured lenders or mortgagees may foreclose on its properties or its interests in the entities that own the properties that secure their loans and receive an assignment of rents and leases. Further, foreclosures could create taxable income without accompanying cash proceeds, a circumstance which could hinder Series AMZL’s ability to meet the REIT distribution requirements imposed by the Code.

If Series AMZL is unable to repay any of its future debt obligations, it may be forced to refinance debt or dispose of or further encumber its property or properties, which could adversely affect distributions to shareholders.

If Series AMZL does not have sufficient funds to repay any of its future debt at maturity or before maturity in the event of a breach of its debt agreements and its lenders exercise their right to accelerate repayment, it may be necessary to refinance the debt through additional debt or equity financings. If Series AMZL is unable to refinance its debt on acceptable terms, Series AMZL may be forced to dispose of its interest in the property on disadvantageous terms, potentially resulting in losses. To the extent Series AMZL cannot meet any future debt service obligations, it will risk losing the property or any interest therein. Adverse economic conditions could also cause the terms on which Series AMZL can borrow in the future to be unfavorable. Series AMZL could be required to liquidate its interest in the property to meet its debt service obligations at times that may not permit it to do so on favorable terms, in the time period it desires or at all.

Interest expense on any debt incurred may limit cash available for distribution to shareholders.

Series AMZL may in the future incur indebtedness that bears interest at variable rates. Higher interest rates could increase debt service requirements on any variable rate debt incurred and could reduce the amounts available for distribution to shareholders, as well as reduce funds available for operations, capital expenditure or other purposes.

Any secured debt obligations incurred will expose Series AMZL to increased risk of property losses to foreclosure.

Incurring mortgage or other secured debt increases the risk of property losses, because any defaults on indebtedness secured by a property or properties may result in foreclosure actions initiated by lenders and ultimately the loss of the property securing the loan. Any foreclosure on a mortgaged property could adversely affect the overall value of Series AMZL. For tax purposes, a foreclosure of a property would be treated as a sale of that 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 Series AMZL’s tax basis in the property, Series AMZL would recognize taxable income on foreclosure but would not receive any cash proceeds, which could hinder its ability to meet the REIT distribution requirements imposed by the Code. As a result, Series AMZL may be required to utilize other sources of cash for distributions of that income to shareholders.

 

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Failure to hedge effectively against interest rate changes in the future may adversely affect Series AMZL’s results of operations and its ability to make distributions to shareholders necessary to maintain Series AMZL’s qualification as a REIT.

Series AMZL may obtain in the future one or more forms of interest rate protection—in the form of swap agreements, interest rate cap contracts or similar agreements—to “hedge” against the possible negative effects of interest rate fluctuations. However, we cannot assure you that any hedging will relieve the adverse effects of interest rate increases on Series AMZL or that counterparties under these agreements will honor their obligations thereunder.

Although Series AMZL will not have any joint venture investments upon completion of this offering, Series AMZL may in the future acquire other properties where Amazon is the tenant, and such acquisitions may be through a joint venture. Any future joint venture investment could be adversely affected by Series AMZL’s lack of sole decision-making authority, its reliance on co-venturers’ financial condition and disputes between Series AMZL and its co-venturers and could expose Series AMZL to potential liabilities and losses.

Series AMZL may co-invest in the future with third parties through partnerships, joint ventures or other entities, or through acquiring non-controlling interests in, or sharing responsibility for, managing the affairs of a property, partnership, joint venture or other entity, which may subject Series AMZL to risks that may not be present with other methods of ownership, including the following:

 

   

Series AMZL would not be able to exercise sole decision-making authority regarding the property, partnership, joint venture or other entity, which would allow for impasses on decisions that could restrict Series AMZL’s ability to sell or transfer its interests in such entity or such entity’s ability to transfer or sell its assets;

 

   

partners or co-venturers might become bankrupt or fail to fund their share of required capital contributions, which could increase Series AMZL’s financial commitment to the partnership or joint venture;

 

   

partners or co-venturers may pursue economic or other business interests, policies or objectives that are competitive or inconsistent with Series AMZL;

 

   

if Series AMZL becomes a limited partner or non-managing member in any partnership or limited liability company, and such entity takes or expects to take actions that could jeopardize Series AMZL’s status as a REIT, subject it to regulation under the Investment Company Act or require it to pay tax, Series AMZL may be forced to dispose of its interest in such entity;

 

   

disputes between Series AMZL and partners or co-venturers may result in litigation or arbitration that would increase Series AMZL’s expenses and act as a significant distraction to RPS Securities, the executive officers of ROX GP and/or the Board; and

 

   

Series AMZL may, in certain circumstances, be liable for the actions of its third-party partners or co-venturers.

Actions by a co-venturer, co-tenant or partner may result in subjecting the assets of the joint venture to unexpected liabilities. Under joint venture arrangements, neither co-venturer may have the power to control the venture, and under certain circumstances, an impasse could result and this impasse could have an adverse impact on the operations and profitability of the joint venture.

If Series AMZL has a right of first refusal or buy/sell right to buy out a co-venturer or partner, it may be unable to finance such a buy-out if it becomes exercisable or Series AMZL is required to purchase such interest at a time when it would not otherwise be in its best interest to do so. If Series AMZL’s interest is subject to a buy/sell right, it may not have sufficient cash, available borrowing capacity or other capital resources to allow it to elect to purchase an interest of a co-venturer subject to the buy/sell right, in which case Series AMZL may be

 

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forced to sell its interest as the result of the exercise of such right when it would otherwise prefer to keep its interest. Finally, Series AMZL may not be able to sell its interest in a joint venture if it desires to exit the venture for any reason or if its interest is likewise subject to a right of first refusal of its co-venturer or partner, its ability to sell such interest may be adversely impacted by such right. Joint ownership arrangements with affiliates may also entail conflicts of interest.

Risks Related to Our Business and Operations

We are employing a novel business model, which may make an investment in Series AMZL shares difficult to evaluate as it is unique to the real estate industry.

We were formed to permit public investment in commercial real estate on a single-property basis. We are unaware of any public REIT that is currently attempting to implement a single-property strategy through multiple Series and, as a result, no peer company exists. We cannot predict the extent to which investor interest in Series AMZL shares will lead to the development of an active trading market or how liquid that market might become. Similarly, we cannot predict the extent to which we will be able to successfully complete public offerings of additional Series we intend to establish in the future and, accordingly, there may be no comparable publicly-traded companies or securities against which you will be able to evaluate the performance of Series AMZL shares.

The due diligence process that RPS Securities and its affiliates, including ROX GP, undertake may not reveal all facts that may be relevant in connection with your investment.

RPS Securities and its affiliates, including ROX GP, conduct due diligence that they deem reasonable and appropriate based on the known facts and circumstances applicable. The objective of the due diligence process is, in part, to undertake a risk assessment surrounding the property. When conducting due diligence, RPS Securities and its affiliates, including ROX GP, may be required to evaluate important and complex business, financial, regulatory, tax, accounting, environmental and legal issues. Outside consultants, legal advisors, accountants and investment banks may be involved in the due diligence process in varying degrees. Nevertheless, when conducting due diligence and making an assessment, RPS Securities and its affiliates, including ROX GP, rely on the resources available to them, including information provided by the seller, and, in some circumstances, third-party investigations and analysis. Series AMZL cannot be certain that the due diligence conducted by RPS Securities and its affiliates, including ROX GP, carried out with respect to the property will reveal or highlight all relevant facts that may be necessary or helpful in evaluating the risks of an investment in the income stream generated by the property. Instances of fraud, accounting irregularities and other improper, illegal or deceptive practices can be difficult to detect. Series AMZL cannot be certain that the due diligence conducted by RPS Securities and its affiliates, including ROX GP, will result in an investment being successful or that the actual financial performance of that investment will not fall short of the financial projections RPS Securities and its affiliates, including ROX GP, used when evaluating the property.

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

We or Series AMZL may be subject to litigation or threatened litigation. In particular, we and each Series are subject to the risk of complaints by tenants involving premises liability claims and alleged violations of landlord-tenant laws, which may give rise to litigation or governmental investigations, as well as claims and litigation relating to real estate rights, access, legal compliance or uses of properties, vendor contractual claims and asset purchase and sale related claims. Some of these claims may result in significant defense costs and potentially significant judgments against us or Series AMZL, some of which are not, or cannot be, insured against. Additionally, whether or not any dispute actually proceeds to litigation, we and Series AMZL may be required to devote significant management time and attention to its successful resolution (through litigation,

 

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settlement or otherwise), which would distract our management. Any such resolution could involve the payment of damages or expenses by us or Series AMZL, which may be significant, or involve our agreement with terms that restrict the operation of our or Series AMZL’s business. We generally intend to vigorously defend ourselves and Series AMZL; however, we cannot be certain of the ultimate outcomes of claims that may arise in the future. Resolution of these types of matters against us or Series AMZL may result in ROX LP or Series AMZL having to pay significant fines, judgments, or settlements, which, if uninsured, or if the fines, judgments, and settlements exceed insured levels, could adversely impact us or Series AMZL. Pursuant to our partnership agreement, claims payable by us or our general partner will be allocated to the applicable Series responsible for such lawsuit and will be payable by such Series. Certain litigation or the resolution of certain litigation may affect the availability or cost of some of insurance coverage and could expose us or Series AMZL to increased risks that would be uninsured. Certain litigation or threatened litigation may also adversely affect the alienability, marketability and sale of the property.

The alternative investment business is intensely competitive.

The alternative investment business is intensely competitive, with competition based on a variety of factors, including investment performance, business relationships, quality of service provided to investors, investor liquidity and willingness to invest, fund terms (including fees), brand recognition, types of products offered and business reputation. We will be competing with a number of private equity funds, specialized investment funds, hedge funds, corporate buyers, traditional asset managers, real estate development companies, commercial banks, investment banks and other financial institutions (as well as sovereign wealth funds and other institutional investors).

Additionally, developments in financial technology, or fintech, such as a distributed ledger technology or blockchain, have the potential to disrupt the financial industry and change the way financial institutions, as well as asset managers, do business. A number of factors increase our competitive risks:

 

   

a number of our and Series AMZL’s potential competitors have greater financial, technical, marketing and other resources and more personnel than we do;

 

   

some of Series AMZL’s investments may not perform as well as competitors’ investment products;

 

   

several of our competitors have significant amounts of capital, and many of them have similar investment objectives to ours, which may create additional competition for investment opportunities and may reduce the size and duration of pricing inefficiencies that otherwise could be exploited;

 

   

some of these competitors, including strategic competitors, may have a lower cost of capital and access to funding sources that are not available to us or Series AMZL, which may create competitive disadvantages with respect to investment opportunities;

 

   

some of our competitors may have higher risk tolerances, different risk assessments or lower return thresholds than us or Series AMZL, which could allow them to consider a wider variety of investments than us or Series AMZL;

 

   

some of our competitors may be subject to less regulation and accordingly may have more flexibility to undertake and execute certain businesses or investments than we or Series AMZL do or bear less compliance expense than us;

 

   

some of our competitors may have more flexibility than us or Series AMZL in raising investment funds;

 

   

some of our competitors may have better expertise or be regarded by investors as having better expertise in a specific asset class or geographic region than we do;

 

   

our competitors may institute low cost high speed financial applications and services based on artificial intelligence and new competitors may enter our investment space using new investment platforms based on artificial intelligence;

 

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there are relatively few barriers to entry impeding the formation of competitors, and the successful efforts of new entrants into our various businesses is expected to continue to result in increased competition;

 

   

some investors may prefer to pursue investments directly instead of investing through any Series; and

 

   

other industry participants may, from time to time, seek to recruit the professionals, the Board and other employees of ROX GP and its affiliates.

Risks Related to Our Organizational and Management Structure

We are organized as a series limited partnership, which may lead to increased risk of liability.

ROX LP is organized under the laws of the State of Delaware as a series limited partnership. This is a relatively new entity form with little available common law to clarify how it will be considered by various jurisdictions in which we intend to operate. In particular, not all states have recognized the series limited partnership entity form. If we have exposure to third party liability in such states, the courts, in application of that state’s law, may not give full faith and credit to the statutory limitations of liability under Delaware law for each Series. As a result, if such a claim made under the law of such a state were successful, it could create liability among various Series, which could materially and adversely impact us and Series AMZL.

A court could potentially conclude that the assets and liabilities of one Series are not segregated from those of another Series and may thereby potentially expose assets in Series AMZL to the liabilities of another Series.

In accordance with the Delaware Act, each Series is, and each other Series we may establish in the future will be, a separate Series and not itself a separate legal entity. Section 17-218 of the Delaware Act provides that, if certain conditions (as set forth in Section 17-218) are met, including that certain provisions are in our partnership agreement, and if the records maintained for any such Series account for the assets associated with such Series separately from the assets of ROX LP (if any), or any other Series, then the debts, liabilities, obligations and expenses incurred, contracted for or otherwise existing with respect to a particular Series shall be enforceable only against the assets of such Series and associated general partner and not against ROX LP generally or any other Series or any general partner not associated with such Series. Although the Delaware Act provides that records maintained for Series AMZL that reasonably identify its assets, including by specific listing, category, type, quantity, computational or allocational formula or procedure (including a percentage or share of any asset or assets) or by any other method where the identity of such assets is objectively determinable, will be deemed to account for the assets associated with such Series separately from the other assets of ROX LP (if any), or any other Series thereof, we are not aware of any court case that has interpreted Section 17-218 of the Delaware Act or provided any further guidance as to what is required for compliance. We intend to maintain separate and distinct records for each Series and account for them separately; however, it is possible a court could conclude that the methods used did not satisfy Section 17-218 of the Delaware Act and thus potentially expose the assets of Series AMZL to the liabilities of another Series. In addition, we are not aware of any court case that has tested the limitations on inter-series liability provided by Section 17-218 in federal bankruptcy courts and it is possible that a bankruptcy court could determine that the assets of Series AMZL should be applied to meet the liabilities of the other Series or the liabilities of ROX LP generally where the assets of such other Series or of ROX LP generally are insufficient to meet Series AMZL’s or ROX LP’s liabilities.

Series AMZL will depend on the performance of the property manager with respect to the property and could be materially and adversely affected if the property manager does not manage the property in Series AMZL’s best interests.

NPD Management, an affiliate of NorthPoint, will manage the property, and Series AMZL could be materially and adversely affected if the property manager fails to manage the property effectively.

In addition, from time to time, disputes may arise between Series AMZL and the property manager regarding the property manager’s performance or compliance with the terms of the commercial management

 

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agreement, which in turn could adversely affect the results of operations of the property. Series AMZL will generally attempt to resolve any such disputes through discussions and negotiations; however, if Series AMZL is unable to reach satisfactory results through discussions and negotiations, Series AMZL may choose to terminate the commercial management agreement, litigate the dispute or submit the matter to third-party dispute resolution, the outcome of which may be unfavorable to Series AMZL.

In the event that the commercial management agreement is terminated, we can provide no assurances that Series AMZL could find a replacement property manager in a timely manner, or at all, or that any replacement manager will be successful in operating the property. Furthermore, if the property manager is financially unable or unwilling to perform its obligations, Series AMZL’s ability to find a replacement property manager for the property could be challenging and time consuming and could cause Series AMZL to incur significant costs to obtain a new commercial management agreement for the property. Accordingly, if Series AMZL loses its commercial management agreement, the operations at the property could be materially and adversely affected, which could have a material adverse effect on Series AMZL.

We and Series AMZL depend on RPS Securities for the success of Series AMZL and upon access to RPS Securities’ investment professionals and contractors. We may not find a suitable replacement for RPS Securities if the services agreement is terminated or if key personnel leave the employment of RPS Securities or otherwise become unavailable to us and Series AMZL.

Neither we nor Series AMZL expect to have any employees and will rely completely on RPS Securities and its affiliates to provide Series AMZL with administrative and certain advisory services. Neither we nor Series AMZL have separate facilities and are completely reliant on RPS Securities and its affiliates, which has significant discretion as to the implementation of the operating policies and strategies of each Series and the Series properties. RPS Securities may not be able to successfully manage the property or implement the operating policies and strategies of Series AMZL successfully, which may affect Series AMZL’s ability to make or sustain distributions to shareholders.

We and Series AMZL depend on the diligence, skill and network of business contacts of RPS Securities and its affiliates. We and Series AMZL also expect to benefit from the personnel, relationships and experience of the executive team and other personnel of RPS Securities and its affiliates. The executive officers and key personnel of RPS Securities will assist and advise the Board to monitor and manage the property; therefore, the success of Series AMZL will depend on RPS Securities continued service. The departure of any of the senior personnel of RPS Securities or its affiliates, or of a significant number of the personnel of RPS Securities or its affiliates, could have a material adverse effect on the ability of Series AMZL to achieve its investment objectives. In addition, we offer no assurance that RPS Securities will continue to provide management services to Series AMZL or that we or Series AMZL will continue to have access to RPS Securities’ personnel. The services agreement has an initial term of three years, but may be terminated by RPS Securities or ROX GP on behalf of Series AMZL for a variety of reasons. If the services agreement is terminated and no suitable replacement is found, we may not be able to execute the business plan of Series AMZL.

Neither we nor any Series own the “ROX” name, but ROX LP and each Series may use the name pursuant to an agreement with ROX Parent. Use of the name by other parties or the termination of our license agreement may harm our business.

We have entered into an agreement with ROX Parent pursuant to which it has granted us and each Series a non-exclusive, royalty-free license to use the “ROX” name and various other intellectual property of ROX Parent. Consequently, we will be unable to prevent any damage to goodwill that may occur as a result of the activities of ROX Parent or its affiliates. Furthermore, in the event that the agreement is terminated, we will be required to change our name and cease using the name “ROX.” Any of these events could disrupt our recognition in the marketplace, damage any goodwill we may have generated and otherwise harm our business.

 

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If we or Series AMZL fail to implement and maintain an effective system of internal controls, Series AMZL may not be able to accurately determine the financial results of Series AMZL or prevent fraud. As a result, shareholders could lose confidence in the financial results of Series AMZL, which could harm its business and the value of Series AMZL shares.

Effective internal controls are necessary for us and Series AMZL to provide reliable financial reports and effectively prevent fraud. We are a newly formed entity that will develop financial and operational reporting and control systems. We may in the future discover areas of internal controls that need improvement. Section 404 of the Sarbanes-Oxley Act of 2002 will require us and Series AMZL to evaluate and report on our respective internal controls over financial reporting and, subject to the phase in provisions of JOBS Act, have our and Series AMZL’s independent auditors annually issue their own opinion on our and Series AMZL’s internal controls over financial reporting. While we intend to undertake substantial work to prepare for compliance with Section 404, we cannot be certain that we will be successful in implementing or maintaining adequate internal controls over our or Series AMZL’s financial reporting and financial processes. Furthermore, as we establish additional Series, the internal controls required for us and all outstanding Series will become more complex, and we will require significantly more resources to ensure the internal controls for each Series remain effective. If our or Series AMZL’s independent auditors discover a material weakness in our or Series AMZL’s internal controls, the disclosure of that fact, even if quickly remedied, could reduce the market value of Series AMZL shares. Additionally, the existence of any material weakness or significant deficiency in respect of Series AMZL’ internal controls would require management to devote significant time and incur significant expense to remediate any such material weaknesses or significant deficiencies and management may not be able to remediate any such material weaknesses or significant deficiencies in a timely manner.

If we or any Series were deemed to be an “investment company” under the Investment Company Act, applicable restrictions could make it impractical for us or the Series to continue its business as contemplated and could have a material adverse effect on its business.

An entity generally will be deemed to be an “investment company” for purposes of the Investment Company Act if:

 

   

it is or holds itself out as being engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting or trading in securities; or

 

   

absent an applicable exemption, it owns or proposes to acquire investment securities having a value exceeding 40% of the value of its total assets, exclusive of U.S. government securities and cash items, on an unconsolidated basis.

We believe that we are engaged primarily in the business of providing investors with direct equity ownership in single-property commercial real estate and not primarily in the business of investing, reinvesting or trading in securities. We hold ROX LP out as a holding company for the Series. We hold the Series out as REITs that, through Series subsidiaries that are wholly- or majority-owned subsidiaries of the Series, ultimately own and control commercial real estate. We do not propose to engage primarily in the business of investing, reinvesting or trading in securities. Accordingly, we do not believe that we are an “orthodox” investment company as defined in Section 3(a)(1)(A) of the Investment Company Act and described in the first bullet point above. Furthermore, neither we nor any of the Series have any material assets other than our interests in Series subsidiaries, which in turn have no material assets other than commercial real estate. We do not believe the equity interests held by the Series in Series subsidiaries are investment securities, and we believe that less than 40% of our total assets and each Series (exclusive of U.S. government securities and cash items) on an unconsolidated basis is composed of assets that could be considered investment securities. Accordingly, we do not believe that we or any Series is an inadvertent investment company by virtue of the 40% test in Section 3(a)(1)(C) of the Investment Company Act as described in the second bullet point above.

The Investment Company Act and the rules thereunder contain detailed parameters for the organization and operation of investment companies. Among other things, the Investment Company Act and the rules thereunder

 

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limit or prohibit transactions with affiliates, impose limitations on the issuance of debt and equity securities, generally prohibit the issuance of options and impose certain governance requirements. Although we intend to conduct our operations and that of each Series so that we and each Series will not be deemed to be an investment company under the Investment Company Act, if anything were to happen which would cause us or Series AMZL to be deemed to be an investment company under the Investment Company Act, requirements imposed by the Investment Company Act (including limitations on our capital structure, ability to transact business with affiliates and ability to compensate key employees) could make it impractical for us or Series AMZL to continue business as currently conducted, impair certain of our or Series AMZL’s agreements, and materially adversely affect the business, results of operations and financial condition of Series AMZL. In addition, we or Series AMZL may be required to conduct business in a manner that does not subject us or Series AMZL to the registration and other requirements of the Investment Company Act.

Shareholders do not select ROX GP as our general partner or vote on the members of the Board. Accordingly, shareholders have limited ability to participate in or influence our management or the management of Series AMZL even as to fundamental matters.

Holders of Series AMZL will have limited ability to influence decisions regarding Series AMZL’s business. Under our partnership agreement, shareholders have only limited voting rights, including with respect to certain amendments to our partnership agreement, certain mergers of ROX LP, a merger of Series AMZL with another Series, dissolution of ROX LP and termination or dissolution, as applicable, of Series AMZL. However, shareholders have no voting rights with respect to removing our general partner or electing the members of the Board. Furthermore, shareholders will have no right to propose nominees to the Board. As a result, shareholders will not have the typical mechanisms used by public company investors to hold management teams and boards of directors accountable. You should not purchase Series AMZL shares unless you are willing to entrust to our general partner and its affiliates with essentially all aspects of the management of your investment in Series AMZL shares.

Under our partnership agreement, ROX GP has full power and authority to do all things, other than those items that specifically require approval of shareholders or as may otherwise be set forth in a Series Designation, necessary or appropriate to conduct the business of ROX LP and any Series including, but not limited to, the following actions:

 

   

expending, lending, or borrowing money, assuming, guaranteeing, or otherwise contracting for, indebtedness and other liabilities, issuing evidences of indebtedness, including indebtedness that is convertible into equity interests of ROX LP, and incurring any other obligations;

 

   

making tax, regulatory and other filings, or rendering periodic or other reports to governmental or other agencies having jurisdiction over ROX LP’s and Series AMZL’s business or assets (to the extent that ROX LP has any assets);

 

   

acquiring, disposing, mortgaging, pledging, encumbering, hypothecating or exchanging assets of ROX LP (if any) and Series AMZL or the determination to merge or otherwise combine ROX LP or Series AMZL with or into another person;

 

   

using the assets of ROX LP (if any) and Series AMZL for purposes consistent with our partnership agreement, including financings, repayment or guarantees of obligations and making capital contributions;

 

   

negotiating, executing and performing contracts, conveyance or other instruments;

 

   

distributing cash or cash equivalents;

 

   

selecting, employing or dismissing employees, agents, outside attorneys, accountants, consultants and contractors and determining their compensation and other terms of employment or hiring;

 

   

maintaining insurance for the benefit ROX LP, Series AMZL, any subsidiaries and indemnitees;

 

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forming, acquiring an interest in, and contributing property and loaning money to, any partnerships, joint ventures, corporations, limited liability companies or other entity (including corporations, firms, trusts and unincorporated organizations);

 

   

controlling all matters affecting our rights and obligations, including bringing and defending actions at law or in equity or otherwise litigating, arbitrating or mediating, and incurring legal expense and settling claims and litigation;

 

   

indemnifying any person against liabilities and contingencies to the extent permitted by law;

 

   

entering into listing agreements with any national securities exchange and the delisting of some or all Series AMZL shares;

 

   

taking any action in connection with ROX LP’s or Series AMZL’s management of any of their subsidiaries;

 

   

purchasing, selling or otherwise acquiring or disposing of Series AMZL shares; and

 

   

entering into agreements with any of its affiliates, including to render services to Series AMZL or to itself in the discharge of its duties as ROX GP.

Our partnership agreement contains Series AMZL ownership limits, which may delay or prevent a change of control.

For Series AMZL to qualify as a REIT, no more than 50% in value of Series AMZL’s outstanding Series AMZL shares may be owned, directly or indirectly, by five or fewer individuals during the last half of any calendar year, and at least 100 persons must beneficially own Series AMZL shares during at least 335 days of a taxable year of 12 months, or during a proportionate portion of a shorter taxable year. “Individuals” for this purpose include natural persons, private foundations, some employee benefit plans and trusts and some charitable trusts. To assist Series AMZL to comply with these limitations, among other purposes, our partnership agreement generally prohibits any person from directly or indirectly owning more than 9.8% in value or in number, whichever is more restrictive, of the outstanding Series AMZL shares. These ownership limitations could have the effect of discouraging a takeover or other transaction in which shareholders might receive a premium for their Series AMZL shares over the then prevailing market price or which shareholders might believe to be otherwise in their best interests.

The constructive ownership rules under the Code are complex and may cause the outstanding Series AMZL shares owned by a group of related individuals or entities to be deemed to be constructively owned by one individual or entity. As a result, the acquisition of less than these percentages of the outstanding Series AMZL shares by an individual or entity could cause that individual or entity to own constructively in excess of these percentages of the outstanding Series AMZL shares and thus violate these ownership limits. Our partnership agreement provides that any attempt to own or transfer Series AMZL shares in excess of the ownership limits without the consent of ROX GP or in a manner that would cause Series AMZL to be “closely held” under Section 856(h) of the Code, without regard to whether Series AMZL shares are held during the last half of a taxable year, or would otherwise cause Series AMZL to fail to qualify as a REIT, will result in the applicable Series AMZL shares being deemed to be transferred to a trustee for a charitable trust or, if the transfer to the charitable trust is not automatically effective to prevent a violation of the ownership limits or the restrictions on ownership and transfer of Series AMZL shares, any such transfer of Series AMZL shares will, to the fullest extent permitted by law, be null and void.

For as long as ROX LP is an emerging growth company, ROX LP will not be required to comply with certain reporting requirements, including those relating to accounting standards, that apply to other public entities.

The JOBS Act contains provisions that, among other things, relax certain reporting requirements for “emerging growth companies,” including certain requirements relating to accounting standards and compensation

 

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disclosure. ROX LP is classified as an “emerging growth company” as defined in the JOBS Act. ROX LP will remain an “emerging growth company” until the earliest to occur of:

 

   

the last day of the fiscal year during which our total annual revenue equals or exceeds $1.07 billion (subject to adjustment for inflation);

 

   

the last day of the fiscal year following the fifth anniversary of this offering;

 

   

the date on which we have, during the previous 3-year period, issued more than $1.0 billion in non-convertible debt securities; or

 

   

the date on which we are deemed to be a “large accelerated filer” under the Exchange Act.

ROX LP intends to take advantage of exemptions from various reporting requirements that are applicable to most other public companies, whether or not they are classified as “emerging growth companies,” including, but not limited to, those that would require we:

 

   

provide an auditor’s attestation report on management’s assessment of the effectiveness of ROX LP’s or Series AMZL’s system of internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act of 2002;

 

   

comply with any new requirements adopted by the Public Company Accounting Oversight Board, or the PCAOB, requiring mandatory audit firm rotation or a supplement to the auditor’s report in which the auditor would be required to provide additional information about the audit and the financial statements of ROX LP or Series AMZL;

 

   

comply with any new audit rules adopted by the PCAOB after April 5, 2012, unless the SEC determines otherwise; or

 

   

provide certain disclosure regarding executive compensation of ROX GP required of larger public companies.

In addition, an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. This allows an emerging growth company to delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to avail ourselves of this exemption and, therefore, while we are an emerging growth company, we will not be subject to new or revised accounting standards at the same time that they become applicable to other public companies that are not emerging growth companies.

We cannot predict if investors will find Series AMZL shares less attractive if ROX LP chooses to rely on these exemptions. If some investors find Series AMZL shares less attractive as a result of any choices to reduce or delay the application of future disclosure, there may be a less active trading market for Series AMZL shares and the trading price may be more volatile.

By purchasing Series AMZL shares in this offering, you are bound by the fee shifting provision contained in our partnership agreement, which may discourage you to pursue actions against us.

Our partnership agreement provides that each shareholder agrees, to the fullest extent permitted by law, to reimburse us and our affiliates for all fees and expenses, including cost of appeal, if any, we may incur in connection with a claim, suit, action or proceeding brought by a shareholder for which the holder does not prevail in a judgment, other than for federal securities laws claims. THE FEE SHIFTING PROVISION CONTAINED IN OUR PARTNERSHIP AGREEMENT IS NOT INTENDED TO BE DEEMED A WAIVER BY ANY SHAREHOLDER OF OUR COMPLIANCE WITH THE FEDERAL SECURITIES LAWS AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER. THE FEE SHIFTING PROVISION CONTAINED IN OUR PARTNERSHIP AGREEMENT DOES NOT APPLY TO CLAIMS BROUGHT UNDER THE EXCHANGE ACT OR THE SECURITIES ACT.

 

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Risks Related to Potential Conflicts of Interest

There may be conflicts of interests among Series AMZL and other existing or future Series, which may result in opportunities that would benefit the property being allocated to another Series property owned another Series.

Series AMZL and any other existing or future Series, may own properties that compete with Series properties of another Series. If a sale, financing, leasing or other business opportunity would be suitable for Series AMZL or another Series, the Board will allocate it using its business judgment. Any allocation of this type may involve the consideration of a number of factors that the Board determines to be relevant. No Series will have any duty, responsibility or obligation to refrain from:

 

   

engaging in the same or similar activities or lines of business as any other Series;

 

   

doing business with any potential or actual tenant, lender, purchaser, supplier, customer or competitor of any other Series;

 

   

engaging in, or refraining from, any other activities whatsoever relating to any of the potential or actual tenants, lenders, purchasers, suppliers or customers of any other Series; or

 

   

making operational and financial decisions that could be considered to be detrimental to another Series.

In addition, any decisions by the Board to renew, extend, modify or terminate an agreement or arrangement, or enter into similar agreements or arrangements in the future, may benefit one Series more than the other Series, including Series AMZL, or limit or impair the ability of any Series to pursue business opportunities. Any of these decisions may benefit one Series more than another Series, including Series AMZL.

Under our partnership agreement and the services agreement, ROX GP and RPS Securities, respectively, and their respective affiliates have limited liability to us and Series AMZL, and we and Series AMZL have agreed to indemnify ROX GP and RPS Securities, respectively, and their respective affiliates against certain liabilities. As a result, Series AMZL could experience losses for which neither ROX GP nor RPS Securities, as applicable, or their respective affiliates would be liable, which could adversely affect the financial condition and operating performance of Series AMZL.

Pursuant to our partnership agreement and the services agreement, ROX GP and RPS Securities, respectively, in each case including its respective officers, members, managers, directors, personnel and other affiliates, are not liable to us and Series AMZL or shareholders for losses or benefits not derived by their operation of the business unless ROX GP or RPS Securities, as applicable, or its affiliates acted in bad faith (as defined in our partnership agreement) giving rise to the loss or benefit not derived or, in the case of a criminal matter, acted with knowledge that the indemnitee’s conduct was unlawful. Series AMZL will indemnify ROX GP and RPS Securities, respectively, and, in each case, its officers, members, managers, directors, personnel and other designees for expenses, losses, damages, liabilities, demands, charges and claims arising from acts of ROX GP or RPS Securities, as applicable, unless the action was taken or omitted with the belief that such action or omission was opposed to the interest of ROX LP or Series AMZL, or in the case of a criminal matter, acted with knowledge that the indemnitee’s conduct was unlawful.

In addition, additional conflicts exist and could arise in the future with RPS Securities, ROX GP and their respective affiliates, including ROX Parent and its executive officers who are also officers of ROX GP, including, without limitation: conflicts arising from our rights under agreements between us and ROX GP or RPS Securities, which we may choose not to enforce, or to enforce less vigorously, because of our desire to maintain our ongoing relationships with ROX GP or RPS Securities and their affiliates; conflicts in the amount of time that personnel of RPS Securities and its affiliates will spend on our affairs versus RPS Securities’ and its affiliates other affairs; conflicts in the amount of time that personnel of RPS Securities and its affiliates will spend on issues related to Series AMZL versus any other Series; and conflicts in future transactions that we may pursue with RPS Securities and its affiliates.

 

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Our partnership agreement contains provisions that reduce or eliminate duties, including fiduciary duties, of ROX GP and limit remedies available to shareholders that might otherwise constitute a breach of duty.

Our partnership agreement contains provisions that preemptively waive or consent to conduct by ROX GP and its affiliates that might otherwise raise issues about compliance with fiduciary duties or applicable law. For example, our partnership agreement provides that when ROX GP is acting for the benefit of Series AMZL, although ROX GP must act in accordance with the contractual standard of good faith, ROX GP may act without any fiduciary obligations. When ROX GP is permitted to or required to make a decision in its sole discretion or discretion or pursuant to any provision of our partnership agreement not subject to an express standard of good faith, then ROX GP is entitled to consider only such interests and factors as it desires and has no duty or obligation, fiduciary or otherwise, to give any consideration to any interest of or factors affecting ROX LP, Series AMZL or shareholders and will not be subject to any different standards imposed by our partnership agreement, otherwise existing at law, in equity or otherwise.

The modifications of fiduciary duties contained in our partnership agreement are expressly permitted by Delaware law. Hence, ROX LP, Series AMZL and shareholders only have recourse and are able to seek remedies against ROX GP if ROX GP breaches its obligations pursuant to our partnership agreement. Unless ROX GP breaches its contractual obligations pursuant to our partnership agreement, ROX LP, Series AMZL and shareholders do not have any recourse against ROX GP even if ROX GP were to act in a manner that was inconsistent with traditional fiduciary duties. Furthermore, even if there has been a breach of the obligations set forth in our partnership agreement, it provides that ROX GP or its officers and managers are not liable to ROX LP, Series AMZL or shareholders for errors of judgment or for any acts or omissions unless there has been a final and non-appealable judgment by a court of competent jurisdiction determining that ROX GP or its officers and managers acted in bad faith (as defined in our partnership agreement) or with respect to any criminal conduct, with the knowledge that its conduct was unlawful.

Whenever a potential conflict of interest exists between ROX LP, Series AMZL or any shareholders, on one hand, and ROX GP or its affiliates, on the other hand, ROX GP may resolve such conflict of interest.

A shareholder seeking to challenge this resolution of the conflict of interest would bear the burden of proving that ROX GP subjectively believed that such resolution was opposed to the best interests of ROX LP or Series AMZL.

RPS Securities, an affiliate of ROX GP, may have different financial incentives and motivations than shareholders due to the management and other fees payable to RPS Securities.

Pursuant to the services agreement, RPS Securities, an affiliate of ROX GP, is entitled to receive a management fee that is based on the equity value of Series AMZL, regardless of its financial performance. Accordingly, significant management fees will be payable to affiliates of ROX GP even if Series AMZL experiences losses. The management fee structure gives RPS Securities the incentive to maximize equity value by the issuance of new Series AMZL shares and the expansion of our scale of operations, regardless of the effect of this action on existing shareholders. In other words, the management fee structure rewards RPS Securities primarily based on the equity value of Series AMZL (as calculated in the services agreement), and not based on our returns to shareholders. In addition, RPS Securities is entitled to certain equity acquisition fees, which further reward RPS Securities for issuances of Series AMZL shares in the future, even if the net proceeds of such offerings cannot be invested in properties with attractive yield characteristics. Any such offering may dilute Series AMZL earnings and reduce distributions to Series AMZL’s then-existing shareholders, but would provide economic benefits to RPS Securities from both the increased management fees due to increased equity value and the equity acquisition fees payable in connection with any equity offering. In addition, RPS Securities has an economic incentive to fund future growth through the issuance of equity capital as opposed to employing debt. Although the use of debt would be expected to increase returns on equity, which might make the price of Series AMZL shares rise and, consequently, increase Series AMZL’s equity value, debt financing would not be

 

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expected to have the same direct and immediate impact on management fees and equity incentive fees as equity financing.

In addition to the risk that RPS Securities may have financial incentives to take actions that are contrary to the interests of shareholders, there is a risk that our fee structure does not provide adequate incentives to ensure that RPS Securities will devote its time and efforts to contain costs and maximize distributable cash. Because equity value can be increased through additional sales of Series AMZL shares at reduced prices that provide new investors with an appropriate yield and because RPS Securities is entitled to certain fees based on the net proceeds of any equity offering, there is a significant risk that RPS Securities could receive higher levels of compensation despite a failure to maximize distributable cash or achieve an attractive yield for shareholders.

In addition, RPS Securities is entitled to a percentage of the net proceeds from any sale or disposition of the property to a third party. Accordingly, RPS Securities may be incentivized to dispose of the property when it would otherwise be in the interest of shareholders not to do so. For further information regarding the fees payable pursuant to the services agreement, please see “Services Agreement with RPS Securities.”

ROX GP’s affiliates have other additional business responsibilities which could create conflicting demands on their time and resources and could therefore adversely affect the attention ROX GP or such affiliates give to, and the decisions it makes for, shareholders.

Pursuant to our partnership agreement, ROX GP may only serve as the general partner of ROX LP and each Series. However, our partnership agreement expressly permits affiliates of ROX GP to engage in other activities, including activities that may directly compete with ROX LP’s or Series AMZL’s business, such as acquiring properties of the same type and in the same general market area as the property. Those business activities could reduce the time that its affiliates devote to Series AMZL’s business. To the extent such activities are directly competitive with that of Series AMZL, those ROX GP affiliates’ separate business pursuits could adversely affect the performance of the property or the value of Series AMZL shares.

The ability of affiliates of ROX GP to engage in other business activities may reduce the time those affiliates spend managing the business of Series AMZL and may result in certain conflicts of interest.

Certain of the officers of ROX GP also serve or may serve as officers, directors, managers or employees of affiliates of ROX GP. These other business activities may reduce the time these persons spend managing the business of Series AMZL. In addition, these persons may have obligations to those entities, the fulfillment of which might not be in the best interests of ROX LP, Series AMZL or shareholders.

The ability of ROX GP, RPS Securities and their affiliates to manage multiple Series and the growth of their personnel may adversely affect the performance of Series AMZL.

The same personnel of ROX GP, RPS Securities and their affiliates are responsible for the management of all Series, including Series AMZL. Issues with Series other than Series AMZL may reduce the time available to focus on Series AMZL. In addition, if RPS and its affiliates are not able to increase the number of their personnel to take into account the workload for all Series or manage that increase effectively, their ability to effectively manage Series AMZL may be adversely affected, which could adversely affect the performance of the property or the value of Series AMZL shares.

We do not have a policy that expressly prohibits the managers, executive officers, security holders or affiliates of ROX GP from engaging for their own account in business activities of the types conducted by us or Series AMZL.

We do not have a policy that expressly prohibits the managers, executive officers, security holders or affiliates of ROX GP from engaging for their own account in business activities of the types conducted by us or

 

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Series AMZL. However, our code of business conduct and ethics contains a conflicts of interest policy that prohibits the managers and executive officers of ROX GP, as well as personnel of ROX GP or RPS Securities who provide services to us or Series AMZL, from engaging in any transaction that involves an actual conflict of interest with us without the approval of a majority of the independent members of the Board. In addition, the services agreement with RPS Securities does not prevent RPS Securities and its affiliates from engaging in additional management or investment opportunities, some of which could compete with us or Series AMZL.

Risks Related to an Investment in Series AMZL shares

Neither we nor ROX GP have established a minimum distribution payment level for Series AMZL and Series AMZL may be unable to generate sufficient cash flows from its operations to make distributions to shareholders at any time in the future.

Neither we nor ROX GP have established a minimum distribution payment level for Series AMZL. Series AMZL’s ability to make distributions to shareholders may be adversely affected by the risk factors described in this prospectus. Series AMZL may not generate sufficient income to make distributions to shareholders, and we cannot predict when distributions, consisting primarily of cash flow from the property, will commence.

ROX GP has the sole discretion to determine the timing, form and amount of any distributions to shareholders, and there can be no assurance as to the determinations ROX GP will make in respect of any of Series AMZL’s future distributions.

The Board has the sole discretion to determine the timing, form and amount of any distributions to shareholders, subject to applicable law. The Board will make determinations regarding distributions based upon, among other factors, the financial performance of Series AMZL, any debt service obligations, any debt covenants and capital expenditure requirements with respect to the property. No assurance can be given that Series AMZL will be able to make distributions to shareholders at any time in the future or that the level of any distributions Series AMZL may make to shareholders will increase or even be maintained over time, any of which could materially and adversely affect the market price of Series AMZL shares.

A portion of the distributions Series AMZL makes to shareholders may constitute a return of capital, which would have the effect of reducing the basis of a holder’s investment in Series AMZL shares.

Distributions that Series AMZL makes to shareholders generally will be taxable as dividend income. However, a portion of these distributions may be designated by Series AMZL as long-term capital gains to the extent that they are attributable to capital gain income recognized by Series AMZL or may constitute a return of capital to the extent that they exceed its current and accumulated earnings and profits as determined for U.S. federal income tax purposes. A return of capital will first reduce a holder’s adjusted tax basis in Series AMZL shares, and distributions made by Series AMZL in excess of Series AMZL’s current and accumulated earnings and profits and in excess of a holder’s adjusted tax basis in its Series AMZL shares will generally be taxable as capital gain.

The historical statement of revenue and certain operating expenses of the property and the unaudited pro forma consolidated financial statements of Series AMZL included elsewhere in this prospectus should not be considered as indicative of what Series AMZL’s future results or of any returns that may be expected on an investment in Series AMZL shares.

The historical statement of revenue and certain operating expenses of the property and the unaudited pro forma consolidated financial statements of Series AMZL that are included in this prospectus do not necessarily reflect what Series AMZL’s financial position or results of operations would have been had Series AMZL been an independent public company during the periods presented. Furthermore, this financial information is not necessarily indicative of Series AMZL’s financial position or results of operations will be in the future. It is

 

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impossible for us to accurately estimate all adjustments which may reflect all the significant changes that will occur in our cost structure, funding and operations as a result of this offering. For additional information, please see the historical statement of revenue and certain operating expenses of the property and the unaudited pro forma consolidated financial statements of Series AMZL, as well as “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” appearing elsewhere in this prospectus.

You should not place undue reliance on the historical combined balance sheet of ROX LP included elsewhere in this prospectus when considering whether to invest in Series AMZL shares.

The historical combined financial statements of ROX LP included in this prospectus are responsive to our financial statement reporting obligations under the Securities Act and the rules and regulations promulgated thereunder by the SEC. Such financial statements are presented on a combined basis, including the financial condition of all Series to be offered in this offering. However, pursuant to our partnership agreement and the Delaware Act, a purchaser of Series AMZL shares is making an investment solely in the assets, liabilities and future performance of Series AMZL. You should not therefore place undue reliance on the historical combined financial statements of ROX LP included elsewhere in this prospectus.

You should not place undue reliance on the appraisal of the property included elsewhere in this prospectus when considering whether to invest in Series AMZL shares.

We have received an appraisal of the property from BBG, Inc. dated May 10, 2021, with a valuation date of March 31, 2021. See “Experts.” The appraisal was prepared in conformity with the Uniform Standards of Professional Appraisal Practice and utilized three approaches to value: the cost approach, the sales comparison approach and the income capitalization approach, leading to a final opinion of the appraised value of the property by the appraiser. A copy of BBG, Inc.’s appraisal is filed as an exhibit to the registration statement of which this prospectus is a part. Please see “Where You Can Find Additional Information.” The appraised value of the property reflects the appraised market value as of the appraisal date. However, an appraised value and the methodology and data used in developing such appraised value are subject to various assumptions, risks and limitations, including with respect to the sales comparison approach and, in part, the cost approach (particularly with respect to the underlying land value), the relevance of comparable properties due to their various physical, locational, legal and geographic differences, the appropriateness of adjustments applied by the appraiser to such comparable properties and the sufficiency of comparable sales data and, with respect to the income capitalization approach, the comparability, relevance and sufficiency of market data regarding income, expenses and rates of return (particularly the appropriateness of the capitalization and discount rates applied). An appraised value is not a bona fide third-party offer to purchase the property or a guarantee of any value Series AMZL would obtain if it were to dispose of the property, obtain financing or engage in any other transaction as of the appraisal date or in the future. Accordingly, you should not place undue reliance on the appraisal of the property included elsewhere in this prospectus when considering whether to invest in Series AMZL shares.

We do not know whether an active, liquid and orderly trading market will develop for Series AMZL shares or what the market price of Series AMZL shares will be and as a result it may be difficult for you to sell Series AMZL shares.

Prior to this offering, there has been no market for Series AMZL shares, and an active trading market of Series AMZL shares may never develop or be sustained. Additionally, the market value of Series AMZL shares may decrease from the public offering price. As a result of these and other factors, you may be unable to resell Series AMZL shares at or above the public offering price. The lack of an active market may impair your ability to sell Series AMZL shares at the time you wish to sell them or at a price that you consider reasonable. The lack of an active market may also reduce the fair market value of Series AMZL shares. The market price of Series AMZL shares may be volatile, and you could lose all or part of your investment. Broad market and industry factors may negatively affect the market price of Series AMZL shares, regardless of Series AMZL’s actual operating performance. The realization of any of these risks could have a dramatic and material adverse impact on the market price of Series AMZL shares.

 

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The market price of Series AMZL shares may be volatile due to numerous circumstances beyond the control of ROX LP or Series AMZL.

The trading prices of equity securities issued by REITs historically have been affected by changes in market interest rates. One of the factors that may influence the price of Series AMZL shares is the annual yield from distributions on Series AMZL shares as compared to yields available on other investments. An increase in market interest rates, or a decrease in Series AMZL’s distributions to shareholders, may lead prospective purchasers of Series AMZL shares to demand a higher annual yield, which could reduce the market price of Series AMZL shares.

Other factors that could affect the market price of Series AMZL shares include the following:

 

   

changes in market valuations of companies in the commercial real estate industry;

 

   

changes in expectations of future financial performance of Series AMZL or changes in estimates of securities analysts;

 

   

fluctuations in stock market prices and volumes;

 

   

issuances of Series AMZL shares or other securities of Series AMZL in the future;

 

   

the addition or departure of key personnel of ROX GP or its affiliates; and

 

   

announcements by ROX LP or its competitors of acquisitions, investments or strategic alliances.

You are not assured of a return of your investment, and under certain circumstances you could be required to return distributions made to you.

If we were to make an impermissible distribution, a shareholder who received such a distribution and knew at the time of the distribution that the distribution was in violation of applicable law would be liable to Series AMZL for the amount of the distribution. Series AMZL’s operating revenues and sales proceeds must be applied first to its expenses, and any amounts realized on liquidation of ROX LP or the termination (or dissolution, to the extent Series AMZL has been converted to a registered series under the Delaware Act) of Series AMZL must be used first to satisfy all creditors, before any remaining revenues, proceeds or liquidation amounts may be made available to shareholders. Accordingly, there is no assurance that you will receive any return on your investment or even recover all or any portion of that investment. Moreover, although as a shareholder your financial risk will generally be limited to your invested capital, certain laws intended to protect creditors could require you to return some or all of a distribution if, at the time the distribution was made, Series AMZL’s or ROX LP’s liabilities exceeded the value of its assets or it was otherwise insolvent.

Series AMZL’s future acquisitions, if any, may not yield the returns it expects, and shareholders will not have an opportunity to evaluate these investments.

Series AMZL’s future acquisitions, if any, and its ability to successfully operate the properties it acquires in such acquisitions may be exposed to the following significant risks:

 

   

Series AMZL’s ability to identify well-performing properties and achieve its investment objectives depends upon the performance of RPS Securities and its affiliates in the acquisition of such investments and the determination of any financing arrangements;

 

   

even if Series AMZL is able to acquire a desired property, competition from other potential acquirers may significantly increase the purchase price;

 

   

Series AMZL may acquire properties that are not accretive to its results upon acquisition, and it may not successfully manage those properties to meet its expectations;

 

   

Series AMZL may spend more than budgeted amounts to make necessary improvements or renovations to acquired properties;

 

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Series AMZL may be unable to quickly and efficiently integrate new acquisitions, particularly acquisitions of portfolios of properties, into its existing operations, and as a result its results of operations and financial condition could be adversely affected; and

 

   

Series AMZL may acquire properties subject to liabilities and without any recourse, or with only limited recourse, with respect to unknown or greater than expected liabilities such as liabilities for clean-up of environmental contamination, claims by tenants, vendors or other persons dealing with the former owners of the properties, liabilities incurred in the ordinary course of business and claims for indemnification by general partners, directors, managers, officers and others indemnified by the former owners of the properties.

In addition, shareholders will be unable to evaluate the economic merits, transaction terms or other financial or operational data of specific real estate projects before Series AMZL invests in them. Series AMZL expects to rely entirely on the ability of RPS Securities and ROX GP to select suitable and successful investment opportunities. Series AMZL will not provide shareholders with information to evaluate Series AMZL’s proposed investments prior to its acquisition of those investments. Furthermore, ROX GP, the Board and RPS Securities will have broad discretion in implementing investment policies with respect to Series AMZL. These factors increase the risk that your investment in Series AMZL shares may not generate returns consistent with your expectations. Furthermore, to the extent Series AMZL acquires any additional properties, the risks described elsewhere in this “Risk Factors” would apply to those properties and the addition of those properties may have the effect of heightening many of the other risk and uncertainties set forth herein.

Shareholders may not be entitled to a jury trial with respect to claims arising under our partnership agreement, which could result in less favorable outcomes to the plaintiffs in any such action.

Our partnership agreement provides that, to the fullest extent permitted by law, shareholders waive the right to a jury trial of any claim they may have against us arising out of or relating to our operating agreement, including any claim under the U.S. federal securities laws.

If we opposed a jury trial demand based on the waiver, the court would determine whether the waiver was enforceable based on the facts and circumstances of that case in accordance with the applicable state and federal law. To our knowledge, the enforceability of a contractual pre-dispute jury trial waiver in connection with claims arising under the federal securities laws has not been finally adjudicated by the United States Supreme Court. However, we believe that a contractual pre-dispute jury trial waiver provision is generally enforceable, including under the laws of the State of Delaware, which govern our partnership agreement, by a federal or state court in the State of Delaware, which has exclusive jurisdiction over certain matters and non-exclusive jurisdiction over certain other matters arising under the partnership agreement. In determining whether to enforce a contractual pre-dispute jury trial waiver provision, courts will generally consider whether a party knowingly, intelligently and voluntarily waived the right to a jury trial. We believe that this is the case with respect to our partnership agreement. It is advisable that you consult legal counsel regarding the jury waiver provision before making an investment in Series AMZL shares.

If you or any other holders or beneficial owners of Series AMZL shares bring a claim against ROX LP or Series AMZL in connection with matters arising under our partnership agreement, including claims under federal securities laws, you or such other holder or beneficial owner may not be entitled to a jury trial with respect to such claims, which may have the effect of limiting and discouraging lawsuits against ROX LP or Series AMZL. If a lawsuit is brought against ROX LP or Series AMZL under our partnership agreement, it may be heard only by a judge or justice of the applicable trial court, which would be conducted according to different civil procedures and may result in different outcomes than a trial by jury would have, including results that could be less favorable to the plaintiffs in any such action.

Nevertheless, if this jury trial waiver provision is not permitted by applicable law, an action could proceed under the terms of our partnership agreement with a jury trial. No condition, stipulation or provision of our

 

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partnership agreement serves as a waiver by any holder or beneficial owner of shares or by ROX LP of compliance with the U.S. federal securities laws and the rules and regulations promulgated thereunder.

Sales of substantial amounts of Series AMZL shares in the public markets, or the perception that they might occur, could reduce the price of Series AMZL shares and may dilute your ownership interest in us.

Sales of substantial amounts of Series AMZL shares in the public market following this offering, or the perception that such sales could occur, could adversely affect the market price of Series AMZL shares and may make it more difficult for you to sell your Series AMZL shares at a time and price that you deem appropriate. Upon the completion of this offering and the concurrent private placements, we expect to have outstanding 8,950,000 Series AMZL shares or 10,187,500 Series AMZL shares if the underwriters’ over-allotment option is exercised in full.

The Series AMZL shares that we are selling in this offering may be resold immediately in the public market unless they are held by “affiliates,” as that term is defined in Rule 144 of the Securities Act. The Series AMZL shares to be purchased in the concurrent private placements will be “restricted securities” within the meaning of Rule 144 under the Securities Act and may not be sold in the absence of registration under the Securities Act unless an exemption from registration is available, including the exemptions contained in Rule 144. NP Oakley, LLC, an affiliate of NorthPoint, and ROX Parent (as well as ROX GP’s managers and officers) have agreed, subject to certain exceptions, not to sell or otherwise dispose of any of their Series AMZL shares from the date of this prospectus continuing through the date 180 days after the date of this prospectus, except with the underwriters’ prior written consent. Sales of a substantial number of such shares upon expiration of the lock-up agreements, the perception that such sales may occur, or early release of these agreements, could cause the market price of Series AMZL shares to fall or make it more difficult for you to sell your Series AMZL shares at a time and price that you deem appropriate.

We cannot predict the effect, if any, of future sales of Series AMZL shares on the market price of Series AMZL shares. Sales of substantial amounts of Series AMZL shares or the perception that such sales could occur may adversely affect the prevailing market price for Series AMZL shares. We may issue additional Series AMZL shares in subsequent public offerings or private placements to make new investments or for other purposes. We are not required to offer any Series AMZL shares (or any other shares) to existing shareholders on a preemptive basis. Therefore, it may not be possible for existing shareholders to participate in such future share issuances, which may dilute the existing interests of shareholders in Series AMZL.

Risks Related to Tax Matters

Failure of Series AMZL to be classified as a separate entity for U.S. federal income tax purposes could adversely affect the timing, amount and character of distributions to shareholders.

We intend to treat each Series, including Series AMZL, as a separate business entity for U.S. federal income tax purposes and ROX LP as a non-entity for U.S. federal income tax purposes. Consistent with this approach, the Internal Revenue Service (“IRS”) has issued proposed Treasury Regulations that provide that each individual series of a domestic series limited partnership will generally be treated as a separate entity formed under local law, with each such individual series’ classification for U.S. federal income tax purposes determined under general tax principles and the entity classification (“check-the-box”) rules. Although not expected based on the proposed Treasury Regulations, if the IRS were to adopt a different approach than the one adopted in the proposed Treasury Regulations and successfully challenge our treatment of each Series as a separate business entity and ROX LP as a non-entity for U.S. federal income tax purposes, we expect that ROX LP, together with every Series, would be treated as a single entity whose U.S. federal income tax treatment would be uncertain. For example, ROX LP and every Series could be treated, collectively, as a single corporation with multiple classes of equity interests that has filed an election to be taxed as a REIT for U.S. federal income tax purposes. In that event, the timing, amount and character of distributions to shareholders of each Series could be adversely impacted, and the ability of each Series to qualify as a REIT could be adversely impacted.

 

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Failure of Series AMZL to qualify as a REIT would materially and adversely affect Series AMZL and the value of Series AMZL shares.

Series AMZL has been organized and intends to operate in a manner that will enable it to qualify as a REIT for U.S. federal income tax purposes commencing with its taxable year ending December 31, 2021. Series AMZL has not requested, and does not intend to request, a ruling from the IRS, that it will qualify as a REIT, and the statements in this prospectus are not binding on the IRS or any court. Therefore, we cannot guarantee that Series AMZL will qualify as a REIT or that Series AMZL will remain qualified as such in the future. If Series AMZL loses its REIT status, it will face significant tax consequences that would substantially reduce Series AMZL’s cash available for distribution to holders Series AMZL shares for each of the years involved because:

 

   

Series AMZL would not be allowed a deduction for distributions to shareholders in computing its taxable income and would be subject to U.S. federal corporate income tax;

 

   

Series AMZL could be subject to increased state and local taxes; and

 

   

unless Series AMZL is entitled to relief under applicable statutory provisions, Series AMZL could not elect to be taxed as a REIT for four taxable years following the year during which it was disqualified.

Any such corporate tax liability could be substantial and would reduce the cash available for, among other things, Series AMZL’s operations and distributions to shareholders. In addition, if Series AMZL fails to qualify as a REIT, Series AMZL will not be required to make distributions to shareholders. As a result of all these factors, Series AMZL’s failure to qualify as a REIT also could impair its ability to expand its business and raise capital, and could materially and adversely affect the trading price of Series AMZL shares.

Qualification as a REIT involves the application of highly technical and complex Code provisions for which there are only limited judicial and administrative interpretations. The determination of various factual matters and circumstances not entirely within the control of Series AMZL may affect Series AMZL’s ability to qualify as a REIT. To qualify as a REIT, Series AMZL must satisfy a number of requirements, including requirements regarding the ownership of Series AMZL shares, requirements regarding the composition of Series AMZL’s assets and requirements regarding the sources of Series AMZL’s income. Also, Series AMZL must make distributions to its holders aggregating annually at least 90% of Series AMZL’s REIT taxable income, determined without regard to the dividends paid deduction and excluding any net capital gains.

In addition, legislation, new regulations, administrative interpretations or court decisions may materially and adversely affect investors of Series AMZL shares, Series AMZL’s ability to qualify as a REIT for U.S. federal income tax purposes or the desirability of an investment in a REIT relative to other investments.

Even if Series AMZL qualifies as a REIT for U.S. federal income tax purposes, Series AMZL may be subject to some federal, state and local income, property and excise taxes on its income or property and, in certain cases, a 100% penalty tax, in the event Series AMZL sells property as a dealer. In addition, Series AMZL’s taxable REIT subsidiary, or TRS (if any), will be subject to income tax as a regular corporation in the jurisdictions in which it operates.

Series AMZL will require significant oversight as a result of Series AMZL’s election to qualify as a REIT.

We intend for Series AMZL to elect and qualify to be taxed as a REIT for U.S. federal income tax purposes. To qualify as a REIT, Series AMZL must meet on a continuing basis, through its organization and actual investment and operating results, various requirements under the Code relating to, among other things, the sources of its gross income, the composition and values of its assets, its distribution levels and the diversity of ownership of Series AMZL shares. Satisfying these requirements involves monitoring various factual matters, applying highly technical and complex provisions of the Code and meeting ongoing reporting obligations, which may divert ROX GP’s and its affiliates’ attention from the operations of ROX LP and Series AMZL.

 

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If the Series AMZL subsidiary is treated as a corporation for U.S. federal income tax purposes, Series AMZL may cease to qualify as a REIT.

We believe that certain Series AMZL subsidiaries qualify as disregarded entities or partnerships for U.S. federal income tax purposes. As disregarded entities or partnerships for U.S. federal income tax purposes, such Series AMZL subsidiaries will not be subject to U.S. federal income tax on their income. Instead, in the case of a Series AMZL subsidiary treated as a partnership for U.S. federal income tax purposes, each of the applicable Series AMZL subsidiary’s partners, including Series AMZL, will be required to include in its income its allocable share of the applicable Series AMZL subsidiary’s income. No assurance can be provided, however, that the IRS will not challenge such Series AMZL subsidiary’s status as a disregarded entity or partnership for U.S. federal income tax purposes, or that a court would not sustain such a challenge. If the IRS were successful in treating any such Series AMZL subsidiary as a corporation for U.S. federal income tax purposes, Series AMZL would fail to meet the gross income tests and could fail certain of the asset tests applicable to REITs. As a result, Series AMZL could cease to qualify as a REIT and the applicable Series AMZL subsidiary would become subject to U.S. federal income tax and may become subject to state and local income tax. The payment by such Series AMZL subsidiary of income tax would significantly reduce the amount of cash available to such Series AMZL subsidiary to satisfy obligations to make principal and interest payments on its debt and to make distribution to its partners, including Series AMZL.

Complying with the REIT requirements may affect Series AMZL’s profitability and may force Series AMZL to liquidate or forgo otherwise attractive investments.

To qualify as a REIT, Series AMZL must continually satisfy tests concerning, among other things, the nature and diversification of assets, the sources of income and the amounts distributed to shareholders. Series AMZL may be required to liquidate or forgo otherwise attractive investments to satisfy the asset and income tests or to qualify under certain statutory relief provisions. Series AMZL also may be required to make distributions to shareholders at disadvantageous times or when Series AMZL does not have funds readily available for distribution. As a result, having to comply with the distribution requirement could cause Series AMZL: to sell assets in adverse market conditions; to borrow on unfavorable terms; or to distribute amounts that would otherwise be invested in future acquisitions, capital expenditures or repayment of debt. Accordingly, satisfying the REIT requirements could materially and adversely affect Series AMZL. Moreover, if Series AMZL is compelled to liquidate its investments to meet any of these asset, income or distribution tests, or to repay obligations to its lenders, Series AMZL may be unable to comply with one or more of the requirements applicable to REITs or may be subject to a 100% tax on any resulting gain if such sales constitute prohibited transactions.

Series AMZL may be forced to borrow funds to maintain its REIT status, and the unavailability of such capital on favorable terms at the desired times, or at all, may cause Series AMZL to curtail its investment activities and/or to dispose of assets at inopportune times, which could materially and adversely affect Series AMZL.

To qualify as a REIT, Series AMZL generally must distribute to holders or Series AMZL shares, at least 90% of its REIT taxable income each year, determined without regard to the dividends paid deduction and excluding any net capital gains, and Series AMZL will be subject to U.S. federal corporate income taxes on its undistributed taxable income to the extent that it distributes less than 100% of its REIT taxable income, determined without regard to the dividends paid deduction and including any net capital gains, each year. In addition, Series AMZL will be subject to a 4% nondeductible excise tax on the amount, if any, by which distributions paid by the Series in any calendar year are less than the sum of 85% of its ordinary income, 95% of its capital gain net income and 100% of its undistributed income from prior years. To maintain REIT status and avoid the payment of income and excise taxes, Series AMZL may need to borrow funds to meet the REIT distribution requirements even if the then prevailing market conditions are not favorable for these borrowings. These borrowing needs could result from, among other things, differences in timing between the actual receipt of

 

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cash and recognition of income for U.S. federal income tax purposes, or the effect of non-deductible capital expenditures, the creation of reserves or required debt or amortization payments. These sources, however, may not be available on favorable terms or at all. Series AMZL’ access to third-party sources of capital depends on a number of factors, including the market’s perception of Series AMZL’ growth potential, its current debt levels, the market price of Series AMZL shares and Series AMZL’s current and potential future earnings. We cannot assure you that Series AMZL will have access to such capital on favorable terms at the desired times, or at all, which may cause Series AMZL to curtail its investment activities and/or to dispose of assets at inopportune times, and could materially and adversely affect its financial condition, results of operations, cash flow, cash available for distributions to shareholders and per share trading price of Series AMZL shares.

Ownership of taxable REIT subsidiaries, each referred to as a TRS, is subject to certain restrictions, and Series AMZL will be required to pay a 100% penalty tax on certain income or deductions if its transactions with its TRSs are not conducted on arm’s length terms.

Series AMZL may own securities in TRSs. If a TRS owns more than 35% of the total voting power or value of the outstanding securities of another corporation, such other corporation will also be treated as a TRS. Other than some activities relating to lodging and health care facilities, a TRS may generally engage in any business, including the provision of customary or non-customary services to tenants of its parent REIT. A TRS is subject to U.S. federal income tax as a regular C corporation. In addition, a 100% excise tax will be imposed on certain transactions between a TRS and its parent REIT that are not conducted on an arm’s-length basis.

A REIT’s ownership of securities of a TRS is not subject to the 5% or 10% asset tests applicable to REITs. Not more than 25% of the value of Series AMZL’s total assets may be represented by securities (including securities of TRSs), other than those securities includable in the 75% asset test, and not more than 20% of the value of Series AMZL’s total assets may be represented by securities of TRSs. We anticipate that the aggregate value of the stock and securities of any TRS and other nonqualifying assets that Series AMZL would own will be less than 25% (or 20%, as applicable) of the value of Series AMZL’s total assets, and Series AMZL will monitor the value of these investments to ensure compliance with applicable ownership limitations. In addition, ROX GP intends to structure Series AMZL’s transactions with any TRSs that Series AMZL owns to ensure that they are entered into on arm’s-length terms to avoid incurring the 100% excise tax described above. There can be no assurance, however, that Series AMZL will be able to comply with the above limitations or to avoid application of the 100% excise tax discussed above.

Dividends payable by REITs generally do not qualify for the reduced tax rates on dividend income from regular corporations, which could adversely affect the value of Series AMZL shares.

Dividends treated as “qualified dividend income” payable to U.S. stockholders that are individuals, trusts and estates are generally subject to tax at preferential rates, currently at a maximum federal rate of 20%. Dividends payable by REITs, however, generally are not eligible for the preferential tax rates applicable to qualified dividend income. U.S. stockholders that are individuals, trusts and estates generally may deduct up to 20% of the ordinary dividends (e.g., dividends not designated as capital gain dividends or qualified dividend income) received from a REIT for taxable years beginning before January 1, 2026. Although this deduction reduces the effective tax rate applicable to certain dividends paid by REITs (generally to 29.6% assuming the shareholder is subject to the 37% maximum rate), such tax rate is still higher than the tax rate applicable to corporate dividends that constitute qualified dividend income. Accordingly, investors who are individuals, trusts and estates may perceive investments in REITs to be relatively less attractive than investments in the stocks of non-REIT corporations that pay dividends, which could materially and adversely affect the value of the shares of REITs, including the per share trading price of Series AMZL shares.

 

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The tax imposed on REITs engaging in “prohibited transactions” may limit Series AMZL’s ability to engage in transactions which would be treated as sales for U.S. federal income tax purposes.

A REIT’s net income from prohibited transactions is subject to a 100% penalty tax. In general, prohibited transactions are sales or other dispositions of property, other than foreclosure property, held primarily for sale to customers in the ordinary course of business. Although Series AMZL does not intend to hold any properties that would be characterized as held for sale to customers in the ordinary course of Series AMZL’s business, unless a sale or disposition qualifies under certain statutory safe harbors, such characterization is a factual determination and no guarantee can be given that the IRS would agree with Series AMZL’s characterization of its properties or that Series AMZL will always be able to make use of the available safe harbors.

The ability of ROX GP to revoke the REIT election of Series AMZL without the approval of holders or Series AMZL shares may cause adverse consequences to such holders.

Our partnership agreement provides that ROX GP may revoke or otherwise terminate the REIT election of Series AMZL, without the approval of holders or Series AMZL shares, if ROX GP determines that it is no longer in the best interest of Series AMZL to continue to qualify as a REIT. If Series AMZL ceases to qualify as a REIT, it would become subject to U.S. federal income tax on its net taxable income and it generally would no longer be required to distribute any of its net taxable income to holders or Series AMZL shares.

Legislative or regulatory tax changes related to REITs could materially and adversely affect our business.

At any time, the U.S. federal income tax laws or regulations governing REITs or the administrative interpretations of those laws or regulations may be changed, possibly with retroactive effect. We cannot predict if or when any new U.S. federal income tax law, regulation or administrative interpretation, or any amendment to any existing U.S. federal income tax law, regulation or administrative interpretation, will be adopted, promulgated or become effective or whether any such law, regulation or interpretation may take effect retroactively. Series AMZL and shareholders could be adversely affected by any such change in, or any new, U.S. federal income tax law, regulation or administrative interpretation. Also, the law relating to the tax treatment of other entities, or an investment in other entities, could change, making an investment in such other entities more attractive relative to an investment in a REIT.

General Risk Factors

We are a newly formed entity and are subject to the risks of any newly established business enterprise, and we may not be able to successfully operate as a public company going forward.

As a newly formed business entity, we are subject to the risks of any newly established business enterprise. We cannot assure you that we will be able to successfully operate ROX LP as a publicly traded entity, including the requirements to timely meet disclosure requirements of the SEC, and comply with the Sarbanes-Oxley Act of 2002, as amended. Upon the completion of this offering, we will be required to develop and implement control systems and procedures to satisfy our periodic and current reporting requirements under applicable SEC regulations and comply with the NYSE listing standards, and this offering could place a significant strain on our management systems, infrastructure and other resources. Failure to operate successfully as a public entity could materially and adversely affect us. In addition, we may not be able to effectively manage our anticipated growth, including in connection with any additional Series we expect to establish in the future, any of which could have a material adverse effect on us and Series AMZL.

Operational risks, including those associated with cyber security threats, may disrupt our businesses, result in losses or limit Series AMZL’s growth.

Series AMZL will rely heavily on the financial, technology, accounting, information and other data processing systems of us, ROX GP and RPS Securities and their affiliates. We, ROX GP, RPS Securities, their

 

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affiliates and Series AMZL face various security threats on a regular basis, including ongoing cyber security threats to and attacks on its information technology infrastructure that are intended to gain access to its proprietary information, destroy data or disable, degrade or sabotage its systems. These security threats could originate from a wide variety of sources, including unknown third parties, malware, computer viruses, attachments to e-mails, persons inside our organization or persons with access to systems inside our organization, and other significant disruptions of our information technology networks and related systems.

The risk of a security breach or disruption, particularly through cyber attack or cyber intrusion, including by computer hackers, foreign governments and cyber terrorists, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased. Such attacks may target us, ROX GP, RPS Securities, their affiliates or Series AMZL because they may hold a significant amount of confidential and sensitive information, about investments, investors, each property and potential investments. As a result, we, ROX GP, RPS Securities, their affiliates and Series AMZL may face a heightened risk of a security breach or disruption with respect to this information resulting from an attack by computer hackers, foreign governments, cyber extortionists or cyber terrorists. If successful, these types of attacks on our systems or the systems of ROX GP, RPS Securities or their affiliates could, among other things:

 

   

result in unauthorized access to, destruction, loss, theft, misappropriation or release of proprietary, confidential, sensitive or otherwise valuable information of ours, ROX GP, RPS Securities or others, including personally identifiable and account information that could be used for competitive disruptive, destructive or otherwise harmful purposes and outcomes;

 

   

result in unauthorized access to or changes to our financial accounting and reporting systems and related data;

 

   

result in the theft of funds;

 

   

result in the inability to maintain building systems relied on by tenants;

 

   

require significant management attention and resources to remedy any damage that results;

 

   

subject us, ROX GP, RPS Securities, their affiliates or Series AMZL to regulatory penalties or claims for breach of contract, damages, credits, penalties or terminations of leases or other agreements; or

 

   

damage our reputation among tenants and investors.

There can be no assurance that the various procedures and controls we, ROX GP, RPS Securities or their affiliates use to mitigate these threats will be sufficient to prevent disruptions to their systems, especially because the cyber-attack techniques used change frequently or are not recognized until launched, and because cyber-attacks can originate from a wide variety of sources. If any of these systems do not operate properly or are disabled for any reason or if there is any unauthorized disclosure of data, whether as a result of tampering, a breach of our network security systems, a cyber-incident or attack or otherwise, Series AMZL could suffer substantial financial loss, increased costs, a disruption of its businesses, liability to its funds and shareholders, regulatory intervention or reputational damage. The costs related to these cyber or other security threats or disruptions may not be fully insured or indemnified by other means.

Failure to maintain the security of information and technology networks, including personally identifiable employee and investor information, intellectual property and proprietary business information could have a material adverse effect on us and Series AMZL.

We, ROX GP, RPS Securities, their affiliates and Series AMZL are subject to various risks and costs associated with the collection, handling, storage and transmission of sensitive information, including those related to compliance with U.S. and foreign data collection and privacy laws and other contractual obligations, as well as those associated with the compromise of the systems collecting that information. In the ordinary course of business, we, ROX GP, RPS Securities, their affiliates and Series AMZL collect and store sensitive data,

 

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including proprietary business information and intellectual property, and personally identifiable information in data centers and on networks. The secure processing, maintenance and transmission of this information are critical to our operations and that of ROX GP, RPS Securities, their affiliates and Series AMZL. There can be no assurance that investments to ensure integrity of these systems or actions to safeguard against failures or security breaches will provide protection. In addition, ROX GP, its affiliates and their employees may be the target of fraudulent emails or other targeted attempts to gain unauthorized access to proprietary or sensitive information. A significant actual or potential theft, loss, corruption, exposure, fraudulent use or misuse of investor, employee or other personally identifiable or proprietary business data, whether by third parties or as a result of employee malfeasance or otherwise, non-compliance with our contractual or other legal obligations regarding such data or intellectual property or a violation of privacy and security policies with respect to such data could result in significant remediation and other costs, fines, litigation or regulatory actions against us, ROX GP, RPS Securities, their affiliates or Series AMZL by the U.S. federal and state governments, or other jurisdictions or by various regulatory organizations or exchanges. Such an event could additionally disrupt Series AMZL’s operations, damage our reputation or that of ROX GP, RPS Securities, their affiliates or Series AMZL, result in a loss of a competitive advantage, impact our or Series AMZL’s ability to provide timely and accurate financial data, and cause a loss of confidence in our services and financial reporting, which could materially adversely affect us and Series AMZL.

Third-party expectations relating to environmental, social and governance factors may impose additional costs and expose us and Series AMZL to new risks.

There is an increasing focus from certain investors and other stakeholders concerning corporate responsibility, specifically related to environmental, social and governance factors. Some investors may use these factors to guide their investment strategies and, in some cases, may choose not to invest in Series AMZL if they believe our or Series AMZL’s policies relating to corporate responsibility are inadequate. Third-party providers of corporate responsibility ratings and reports on companies have increased in number, resulting in varied and in some cases inconsistent standards. In addition, the criteria by which companies’ corporate responsibility practices are assessed are evolving, which could result in greater expectations of us and Series AMZL and cause us or Series AMZL to undertake costly initiatives to satisfy such new criteria. Alternatively, if we or Series AMZL elect not to or are unable to satisfy such new criteria or do not meet the criteria of a specific third-party provider, some investors may conclude that our or Series AMZL’s policies with respect to corporate responsibility are inadequate. We or series AMZL may face reputational damage in the event that our or Series AMZL’s corporate responsibility procedures or standards do not meet the standards set by various constituencies. Furthermore, if our or Series AMZL’s competitors’ corporate responsibility performance is perceived to be greater than ours or Series AMZL, potential or current investors may elect to invest with our competitors instead. In addition, in the event that we or Series AMZL communicate certain initiatives and goals regarding environmental, social and governance matters, we or Series AMZL could fail, or be perceived to fail, in our or Series AMZL’s achievement of such initiatives or goals, or we or Series AMZL could be criticized for the scope of such initiatives or goals. If we or Series AMZL fail to satisfy the expectations of investors, tenants and other stakeholders or our or Series AMZL’s initiatives are not executed as planned, our and Series AMZL’s reputation and financial results could be adversely affected.

All net proceeds in excess of applicable expenses will be paid to the seller of the Property, which will cause investors in this offering to be diluted.

The Series AMZL subsidiary’s agreement with the seller of the property requires the Series AMZL subsidiary to pay any net proceeds in excess of applicable expenses from this offering to the seller of the property. As a result, a larger offering size will simply mean that the Series AMZL subsidiary will pay more for the property rather than the proceeds being used for some other purpose. This arrangement will cause immediate and potentially substantial dilution to purchasers of Series AMZL shares in this offering.

 

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Future offerings of debt or equity securities ranking senior to Series AMZL shares may limit the operating and financial flexibility of Series AMZL and may adversely affect the market price of Series AMZL shares.

If we decide to issue debt or equity securities of Series AMZL in the future ranking senior to Series AMZL shares or Series AMZL otherwise incurs indebtedness, it is possible that these securities or indebtedness will be governed by an indenture or other instrument containing covenants restricting the operating flexibility of Series AMZL and limiting its ability to make distributions to shareholders. Additionally, any convertible or exchangeable securities of Series AMZL that we issue in the future may have rights, preferences and privileges, including with respect to distributions, more favorable than those of Series AMZL shares and may result in dilution to owners of Series AMZL shares. Because our decision to issue debt or equity securities of Series AMZL in any future offering or otherwise incur indebtedness of Series AMZL will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of future offerings or financings by or related to Series AMZL, any of which could reduce the market price of Series AMZL and dilute the value of Series AMZL shares.

 

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FORWARD-LOOKING STATEMENTS

Some of the statements under “Summary,” “Risk Factors,” “Use of Proceeds,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Business and Property,” “Distribution Policy” and elsewhere in this prospectus constitute forward-looking statements. These forward-looking statements are based on our beliefs, assumptions and expectations of the future performance of ROX LP, Series AMZL and the Series AMZL shares, taking into account information currently available to us as of the date of this prospectus. In some cases, you can identify forward-looking statements by terms such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “should” and “would” or the negative of these terms or other comparable terminology. Statements regarding the following subjects, among others, are forward-looking by their nature:

 

   

use of proceeds of this offering and the concurrent private placements;

 

   

the ability of Series AMZL to complete the acquisition of the property on the anticipated timeline or at all;

 

   

ROX LP’s and Series AMZL’s business strategy;

 

   

Series AMZL’s ability to acquire additional properties;

 

   

Series AMZL’s expected leverage;

 

   

Series AMZL’s and the Series AMZL subsidiary’s ability to obtain future financing arrangements, if needed;

 

   

estimates or statements relating to, and Series AMZL’s ability to make, future distributions;

 

   

Series AMZL’s ability to compete in the marketplace;

 

   

market, industry and economic trends; and

 

   

Series AMZL’s ability to qualify and maintain its qualification as a REIT for U.S. federal income tax purposes.

Our beliefs, assumptions and expectations can change as a result of many possible events or factors, not all of which are known to us or are within our control. If any such change occurs, the business, financial condition, liquidity, results of operations and prospects of ROX LP or Series AMZL, the ability of Series AMZL to satisfy its debt service obligations (if any), the ability of Series AMZL to make cash distributions to shareholders and the market price of Series AMZL shares may vary materially from those expressed in, or implied by, our forward-looking statements. You should carefully consider these risks before you make an investment decision with respect to Series AMZL shares, along with, among others, the following factors that could cause actual results to vary from our forward-looking statements:

 

   

the factors referenced in this prospectus, including those set forth under “Risk Factors” and “Business and Property;”

 

   

our ability and the ability of the property manager to successfully operate the property and generate sufficient operating cash flows to make and sustain distributions to shareholders;

 

   

the ability of RPS Securities to adequately provide advisory services to us;

 

   

general volatility of the capital markets;

 

   

defaults on or non-renewal of the lease by Amazon and Series AMZL’s ability to re-lease the property at or above current market rates;

 

   

adverse economic or real estate conditions generally, and specifically, in the State of California;

 

   

risks associated with an investment in real estate assets, which are illiquid, and with trends in the real estate industry;

 

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costs to comply with government regulations, including environmental remediations;

 

   

potential losses that may not be covered by insurance;

 

   

changes in Series AMZL’s investment objectives and business strategy;

 

   

our dependence on RPS Securities and the property manager and our ability to find a suitable replacement if RPS Securities or the property manager were to terminate the applicable agreement related to Series AMZL or its property;

 

   

limitations on Series AMZL’s business due to the REIT qualification requirements; and

 

   

the degree and nature of competition related to Series AMZL or the property.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. You should not rely on these forward-looking statements, which apply only as of the date of this prospectus. We are not obligated, and do not intend, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent we are required to do so in connection with our ongoing requirements under federal securities laws.

 

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USE OF PROCEEDS

We estimate that the aggregate net proceeds from this offering and the concurrent private placements, after deducting the underwriting discounts and commissions payable by Series AMZL, will be approximately $83.7 million (or $95.2 million if the underwriters’ over-allotment option is exercised in full) based on an assumed initial public offering price of $10.00 per Series AMZL share, which is the price required to fund the acquisition of the property and the related items set forth below.

 

   

$81.0 million to acquire the property from the current owner, subject to closing prorations and adjustments;

 

   

approximately $600,000 of cash reserves related to Series AMZL;

 

   

approximately $660,000 of real estate transaction costs related to the acquisition of the property, including expenses related to the title policy and related closing costs of the title company, a brokerage fee, the appraisal, the survey, the diligence reports (such as the property condition report, the environmental report, the seismic report and others), up to $175,000 of legal costs and up to $25,000 of accounting costs, some of which were previously paid by ROX Parent and will be reimbursed at closing; and

 

   

approximately $1.5 million of transaction expenses payable to RPS Securities, which is the capped amount that includes partial reimbursement of offering expenses incurred, such as legal, accounting, transfer agent, printing costs, filing and listing fees and other expenses.

For additional information regarding the reimbursements to ROX Parent, please see “Certain Relationships and Related Party Transactions.”

 

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DISTRIBUTION POLICY

We intend to make a pro rata distribution with respect to the period commencing upon the completion of this offering and the concurrent private placements and ending on September 30, 2021, based on a distribution rate of $0.0743 per Series AMZL share for a full quarter. On an annualized basis, this would be $0.2972 per Series AMZL share, or an annualized distribution rate of approximately 3.0% based on the price required to fund the acquisition of the property. We estimate that this initial annual distribution rate will represent approximately 100.0% of Series AMZL’s estimated cash available for distribution to shareholders for the 12 months ending March 31, 2022, assuming no exercise of the underwriters’ over-allotment option. We do not intend to reduce the annualized distribution per Series AMZL share if the underwriters exercise their over-allotment option. Our intended initial annual distribution rate has been established based on Series AMZL’s estimate of cash available for distribution for the 12 months ending March 31, 2022, which we have calculated based on adjustments to Series AMZL’s pro forma net income for the three months ended March 31, 2021. This estimate was based on Series AMZL’s pro forma operating results and does not take into account its long-term business and growth strategies, nor does it take into account any unanticipated expenditures it may have to make or any financings for such expenditures. In estimating Series AMZL’s cash available for distribution for the 12 months ending March 31, 2022, we have made certain assumptions as reflected in the table and footnotes below.

Because we have made the assumptions described herein in estimating Series AMZL’s cash available for distribution, we do not intend this estimate to be a projection or forecast of Series AMZL’s actual results of operations, liquidity or financial condition, and we have estimated Series AMZL’s cash available for distribution for the sole purpose of determining its estimated initial annual distribution amount. Our estimate of Series AMZL’s cash available for distribution should not be considered as an alternative to cash flow from operating activities (computed in accordance with GAAP) or as an indicator of Series AMZL’s liquidity or its ability to make distributions. In addition, the methodology upon which we made the adjustments described herein is not necessarily intended to be a basis for determining future distributions.

The lease is subject to 2.0% annual contractual rent increases commencing October 1 of each year. We intend to increase Series AMZL’s distribution rate annually as rent escalations permit unless Series AMZL’s results of operations, liquidity, cash flows, financial condition, or prospects, economic conditions or other factors differ materially from the assumptions used in projecting Series AMZL’s initial distribution rate. We can provide no assurances that we will be able to increase the distribution rate. We believe that our estimate of Series AMZL’s cash available for distribution constitutes a reasonable basis for setting the initial distribution rate. However, we cannot assure you that our estimate will prove accurate, and actual distributions may therefore be significantly below the expected distributions. Series AMZL’s actual results of operations will be affected by a number of factors, including the revenue received from the property, Series AMZL’s operating expenses, interest expense (if any) and unanticipated capital expenditures. Series AMZL may, from time to time, be required, or elect, to incur debt or otherwise to pay distributions.

We cannot assure you that Series AMZL’s estimated distributions will be made or sustained or that ROX GP will not change its distribution policy in the future. Any distributions will be at the sole discretion of ROX GP, and their form, timing and amount, if any, will depend upon a number of factors, including Series AMZL’s actual and projected results of operations, liquidity, cash flows and financial condition, the revenue Series AMZL actually receives from the property, Series AMZL’s operating expenses, its debt service requirements (if any), its capital expenditures, prohibitions and other limitations under its financing arrangements (if any), its REIT taxable income, the annual REIT distribution requirements, applicable law and such other factors as ROX GP deems relevant. For more information regarding risk factors that could materially and adversely affect Series AMZL and its ability to make cash distributions, please see “Risk Factors.” If Series AMZL’s operations do not generate sufficient cash flow to enable it to pay our intended or required distributions, Series AMZL may be required either to fund distributions from working capital, incur debt or raise equity or to reduce such distributions.

 

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Federal income tax law requires that a REIT distribute annually at least 90% of its REIT taxable income, determined without regard to the dividends paid deduction and excluding any net capital gains, and that it pay tax at the corporate rate to the extent that it annually distributes less than 100% of its REIT taxable income, determined without regard to the dividends paid deduction and including any net capital gains. In addition, a REIT will be required to pay a 4% nondeductible excise tax on the amount, if any, by which the distributions it makes in a calendar year are less than the sum of 85% of its ordinary income, 95% of its capital gain net income and 100% of its undistributed income from prior years. For more information, please see “U.S. Federal Income Tax Considerations.” We anticipate that Series AMZL’s estimated cash available for distribution will be sufficient to enable it to meet the annual distribution requirements applicable to REITs and to avoid or minimize the imposition of corporate and excise taxes. However, under some circumstances, Series AMZL may be required to make distributions in excess of cash available for distribution to meet these distribution requirements or to avoid or minimize the imposition of tax and Series AMZL may need to borrow funds to make certain distributions.

The following table sets forth calculations relating to the estimated initial distribution based on Series AMZL’s pro forma net income for the three months ended March 31, 2021, and is provided solely for the purpose of illustrating the estimated initial distribution and is not intended to be a basis for determining future distributions. Dollar amounts are in thousands except per Series AMZL share amounts.

 

Pro forma net income for the three months ended March 31, 2021

   $ 258  

Add: Increase in contractual rental revenues (1)

     32  

Add: Increase in rental revenues for 12-month period (2)

     2,419  

Add: Real estate depreciation and amortization

     390  

Add: Other depreciation and amortization

     91  

Subtract: Increase in management fees and general and administrative expenses for 12-month period (3)

     (436

Subtract: Non-cash rental revenues (4)

     (94
  

 

 

 

Estimated cash flows from operating activities for the 12 months ending March 31, 2022

   $ 2,660  

Less: Maintenance of working capital reserve (5)

     —    
  

 

 

 

Estimated cash available for distribution for the 12 months ending March 31, 2022 (6)

   $ 2,660  

Estimated initial annual distribution per Series AMZL share

   $ 0.2972  

Total estimated initial annual distribution to Series AMZL shareholders (7)

   $ 2,660  

Payout ratio (8)

     100

 

(1)

Represents the contractual base rent increase from scheduled annual rent escalations of 2.0% commencing October 1, 2021.

(2)

Reflects an increase in rental revenue due to a full 12 months of contractual base rent.

(3)

Reflects an increase in management fees and general and administrative expenses due to a full 12 months of operating the property with management fees commencing on September 1, 2021, based on an assumed daily equity value of 8,950,000 Series AMZL shares that would be outstanding upon completion of this offering and the concurrent private placements equal to the assumed public offering price of $10.00 per Series AMZL share, assuming no exervise of the underwriters’ over-allotment option. If the underwriters exercise their over-allotment option in full, the increase in management fees and general and administrative expenses for the 12 months ending March 31, 2022 would be $490,584, based on an assumed daily equity value of 10,187,500 Series AMZL shares that would be outstanding upon completion of this offering and the concurrent private placements equal to the assumed public offering price of $10.00 per Series AMZL share.

(4)

Represents net non-cash rental revenues associated with the straight-line adjustment to lease revenues and the amortization of intangible lease assets.

 

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(5)

Represents scheduled cash reserves set aside from cash flows from operating activities to satisfy short-term liquidity requirements. Does not reflect approximately $600,000 of cash reserves to be set aside from the net proceeds of this offering to satisfy such short-term liquidity requirements. See “Use of Proceeds.”

(6)

Assumes no exercise of the underwriters’ over-allotment option. If the underwriters exercise their over-allotment option in full, the estimated cash available for distribution to shareholders for the 12 months ending March 31, 2022 would be $2,605,615, assuming an increase in management fees and general and administrative expenses for the period as described in footnote (3) above.

(7)

Based on a total of 8,950,000 Series AMZL shares that would be outstanding upon completion of this offering and the concurrent private placements, assuming no exercise of the underwriters’ over-allotment option. If the underwriters exercise their over-allotment option in full, the total estimated initial annual distribution to Series AMZL shareholders would be $3.0 million.

(8)

Calculated as total estimated initial annual distribution to Series AMZL shareholders divided by Series AMZL’s estimated cash available for distribution for the 12 months ending March 31, 2022, assuming no exercise of the underwriters’ over-allotment option. If the underwriters exercise their over-allotment option in full, we estimate that the payout ratio would increase to approximately 113.9% (without giving effect to any increase in management fees and general and administrative expenses and decrease in estimated cash available for distribution to shareholders for the period as described in footnotes (3) and (6) above, which would increase the payout ratio to approximately 116.2%).

 

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CAPITALIZATION

The following table sets forth Series AMZL’s actual capitalization at March 31, 2021, and its pro forma capitalization as of March 31, 2021, after giving effect to this offering (assuming no exercise of the underwriters’ over-allotment option), the concurrent private placements and the acquisition of the property and the other adjustments described in the unaudited pro forma consolidated financial statements included elsewhere in this prospectus, based on an initial public offering price of $10.00 per Series AMZL share. This table should be read in conjunction with the sections entitled “Use of Proceeds” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Series AMZL’s historical and pro forma financial statements and related notes included elsewhere in this prospectus.

 

     March 31, 2021  
     Actual      Pro Forma (1)  

Total debt

   $ —        $ —    
  

 

 

    

 

 

 

1 Series AMZL share outstanding, actual, and 8,950,000 Series AMZL shares outstanding, pro forma

     100        83,725,000  
  

 

 

    

 

 

 

Total equity

     100        83,725,000  
  

 

 

    

 

 

 

Total capitalization

   $ 100      $ 83,725,000  
  

 

 

    

 

 

 

 

(1)

ROX Parent currently holds one Series AMZL share for which it made a capital contribution of $100. Upon the completion of this offering, Series AMZL shall redeem that Series AMZL share from ROX Parent for the original capital contribution of $100.

 

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

The following discussion pertains to the financial condition, results of operations and liquidity of Series AMZL. ROX Financial LP has no business operations other than those of any Series. On a combined basis, ROX Financial LP has no business operations during the period from its inception on January 15, 2020 through March 31, 2021. This discussion should be read together with “Business and Property,” the pro forma consolidated financial statements and the historical consolidated balance sheet, including the related notes to each of these financial statements, of Series AMZL that are included elsewhere in this prospectus. Where appropriate, this discussion includes the effects of the completion of the acquisition of the property, the completion of this offering, the concurrent private placements and the use of the net proceeds therefrom. This discussion also contains forward-looking statements based upon current expectations that involve risks and uncertainties. The actual results of Series AMZL may differ materially from those anticipated in the forward-looking statements as a result of various factors, including those set forth under “Forward-Looking Statements” and “Risk Factors” included elsewhere in this prospectus.

Overview

ROX Financial LP

ROX Financial LP, or ROX LP, is a newly organized Delaware series limited partnership that has been formed to expand public market access to differentiated commercial real estate investment opportunities. Our platform was built specifically to leverage the economies of scale enabled by our innovative Series structure to lower fees and execution costs, allowing investors to access opportunities that have previously been unavailable in the public markets.

Each curated portfolio of properties or individual property will be held by a subsidiary owned by a separate Series. We expect each Series to be independently listed on a national stock exchange. This is the initial public offering of ROX LP’s shares of limited partner interests associated with Series AMZL, which we refer to as Series AMZL shares. As a Delaware series limited partnership, the debts, liabilities, obligations and expenses incurred, contracted for or otherwise existing with respect to a particular Series are segregated and enforceable only against the assets of such Series and any associated general partner, as provided under Delaware law.

Series AMZL

This prospectus relates to the initial offering of Series AMZL shares. On November 19, 2020, Series AMZL was created for the purpose of acquiring the property. Additionally, on November 19, 2020, ROX AMZL Oakley CA LLC, a wholly owned subsidiary of Series AMZL, entered into a definitive agreement to purchase the property. The property is a 145,503 square foot delivery station completed in 2020. The property is fully leased to Amazon under a 12-year, triple net lease that commenced on September 15, 2020 and expires on September 30, 2032, with tenant options to extend. The lease is guaranteed by Amazon.com, Inc., who guarantees the payment of all present and future payment obligations that are not paid under the lease up to 100% of the remaining base rent obligations under the lease, which includes any applicable rent escalations, but not any additional rent obligations under the lease, which generally address property utility expenses, real estate taxes and landlord’s insurance. As of March 31, 2021, Amazon.com, Inc. was rated AA- by Standard & Poor’s and A2 by Moody’s. However, Amazon.com, Inc.’s credit rating is not a recommendation to buy, sell or hold any Series AMZL shares and may be subject to revision or withdrawal at any time. Amazon.com Services LLC is not separately rated. The acquisition of the property by the Series AMZL subsidiary is subject to the completion of this offering, the concurrent private placements and customary closing conditions.

Series AMZL will derive substantially all of its revenues from rents received from the lease. Minimum scheduled rent payments due under the lease for the first year of the lease are $3,225,754. Pursuant to the terms

 

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of the lease, base rent payments escalate by 2.0% annually during the initial 12-year lease term. Series AMZL will begin recognizing revenues related to the lease upon the closing of the property acquisition. The property will be the sole property of Series AMZL upon the closing of this offering and the concurrent private placements.

Results of Operations

During the period from November 19, 2020, through the date of this prospectus, Series AMZL had no operations. Operations will commence upon the concurrent completion of this offering, the concurrent private placements and the acquisition of the property.

COVID-19 Pandemic

The ongoing COVID-19 pandemic, and restrictions intended to prevent its spread, have already had a significant adverse impact on economic and market conditions around the world, including the United States and California, where the property is located. The impact of the COVID-19 pandemic continues to evolve. California initially reacted to the COVID-19 pandemic by instituting quarantines, restrictions on travel, “shelter in place” rules, stay-at-home orders, density limitations, social distancing measures, and restrictions on types of business that may continue to operate. Although some state governments and other authorities were in varying stages of lifting or modifying some of these measures, California has generally been forced to reinstitute these measures and may, in the future, impose new, more restrictive measures if the risks, or the perception of the risks, related to the COVID-19 pandemic worsen at any time. Furthermore, although in certain cases, exceptions are available for essential retail, research and laboratory activities and essential building services, such as cleaning and maintenance, there can be no assurance that such exceptions will enable us to avoid adverse impacts on us or Series AMZL. In addition, there can be no assurance as to how long restrictions intended to prevent the spread of COVID-19 may remain in place, and even if such restrictions are lifted, they may be reinstituted at a later date.

The rapid development and fluidity of this situation precludes any prediction as to the ultimate adverse impact of the COVID-19 pandemic or restrictions intended to prevent its spread. Nevertheless, the ongoing COVID-19 pandemic, and restrictions intended to prevent its spread, and the current financial, economic and capital markets environment and future developments in these and other areas present material risks and uncertainties and could also have a material adverse effect on us and Series AMZL. Please see “Risk Factors—The ongoing COVID-19 pandemic, and restrictions intended to prevent its spread, could have a material adverse effect on us and Series AMZL.”

Critical Accounting Policies

ROX LP, as an emerging growth company, has elected to use the extended transition period that allows us and Series AMZL to defer compliance with new or revised accounting standards. This allows ROX LP and Series AMZL to adopt new or revised accounting standards as of the effective date for nonpublic business entities. In certain circumstances, ROX LP and Series AMZL may early adopt the standards if allowed. The accounting policies of ROX LP and Series AMZL are the same. It is Series AMZL’s policy to evaluate the impact of new accounting standards for application to its business, financial condition, results of operations and cash flows as they become known.

The accounting policies of Series AMZL are determined in accordance with generally accepted accounting principles, or GAAP. The preparation of its consolidated financial statements requires management to make estimates and assumptions that are subjective in nature and, as a result, the actual results could differ materially from the estimates. A summary of significant accounting policies and procedures are included in “Note 2—Significant Accounting Policies” contained in the consolidated financial statements of Series AMZL, which relate to the period prior to the commencement of its business operations.

Series AMZL believes the critical accounting policies described below, among others, will require management to make significant estimates and assumptions used in the preparation of its consolidated financial statements upon the commencement of its business operations.

 

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Investments in Real Estate

Investments in real estate are carried at cost less accumulated depreciation and impairment losses, if any. The cost of investments in real estate reflects their purchase price. It is Series AMZL’s policy to depreciate land improvements over 15 years, buildings over 50 years and building improvements over 15 years. Lease incentives, in-place leases, above-market and below-market leases, and tenant improvements are amortized over the remaining initial lease term of the acquired lease. Amortization of in-place leases is recorded as amortization expense and amortization of above-market and below-market leases is recorded as an increase or decrease to rental revenues in the consolidated statement of operations. In the event that a tenant terminates an acquired lease prior to its expiration, the unamortized portion of the related intangible assets and liabilities is accelerated over the shortened lease period. Maintenance and repairs are expensed as incurred and major improvements are capitalized when they extend the useful life or improve the productive capacity of the property.

Series AMZL will evaluate each property acquisition to determine whether it should be accounted for as an asset acquisition or a business combination. If substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets, then the transaction is considered to be an asset acquisition. Series AMZL intends for the acquisition of the property to be accounted for as an asset acquisition.

The purchase price of an acquired property accounted for as an asset acquisition will be allocated to tangible assets and intangible assets and liabilities based on their relative fair values. Tangible assets generally include land, land improvements and buildings. Intangible assets may include the value of acquired in-place leases, above-market and below-market leases, and other identifiable intangible assets based on specific lease or property characteristics. Transaction costs incurred in connection with an asset acquisition are capitalized and included as part of the purchase price.

The fair value of tangible assets of an acquired property will be determined by valuing the property as if it were vacant utilizing a number of sources, including real estate valuations prepared by independent valuation firms. Management also considers information and other factors, including market conditions, the industry that the tenant operates in, characteristics of the real estate, such as location, size, demographics, value and comparative rental rates, tenant and/or guarantor credit profile and the importance of the location of the real estate to the operations of the tenant’s business. Management’s assessment of a tenant’s and/or guarantor’s credit profile includes, when available, reviews of reports and filings (including public credit ratings, financial statements and debt and equity analyst reports), corporate credit spreads, stock prices, market capitalization and other financial metrics. Series AMZL also uses the information obtained as a result of the pre-acquisition due diligence to evaluate potential asset retirement obligations and, when necessary, will record an asset retirement obligation as part of the purchase price allocation.

The estimated fair value of an acquired in-place lease equals the costs that would have been incurred to lease the property to its occupancy level at the date of acquisition. The in-place lease is amortized as of the date of acquisition over the remaining initial noncancellable term of the lease to amortization expense. Acquired above-market and below-market lease values are amortized based on their present value (using an interest rate that reflects the risks associated with the lease acquired) of the difference between the contractual amount to be paid pursuant to the in-place lease and management’s estimate of the fair market value lease rate at the time of acquisition.

Impairment of Long-Lived Assets

Long-lived assets of Series AMZL generally consist of the tangible and intangible assets associated with its real estate investment. Long-lived assets to be held and used are reviewed for impairment when events or changes in circumstances indicate that their carrying amounts may not be recoverable. If, and when, such events or changes in circumstances are present, an impairment exists to the extent the carrying value of the asset or asset

 

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group exceeds the sum of the undiscounted cash flows expected to result from the use of the asset or asset group and its eventual disposition. Such cash flows include expected future operating income, as adjusted for trends and prospects, as well as the effects of demand, competition and other factors. An impairment loss is measured as the amount by which the carrying amount of the asset or asset group exceeds the fair value of the asset or asset group. A significant judgment is made as to if and when impairment should be taken. Long-lived assets to be disposed of are reported at the lower of the carrying amount or fair value, less costs to sell.

Assumptions and estimates used in the recoverability analyses for future cash flows, discount rates and capitalization rates are complex and subjective. In evaluating long-lived assets for recoverability, management considers current market conditions, as well as its intentions with respect to holding or disposing of the asset. Management’s intentions with regard to the underlying assets might change as market conditions change, as well as due to other factors. The valuation of impaired assets is determined using generally accepted valuation techniques, including discounted cash flow analysis, income capitalization, analysis of recent comparable sales transactions, actual sales negotiations, and purchase offers received from third parties. A single valuation technique or multiple valuation techniques, as appropriate, may be used when estimating the fair value of real estate. Changes in economic and operating conditions or management’s intentions with regard to holding or disposing of the asset that occur subsequent to an impairment analyses could impact the assumptions used and results of future impairment analysis.

Revenue Recognition

The rental revenues of Series AMZL will be substantially derived from the rent received from Amazon. The lease is expected to be classified as an operating lease. Series AMZL’s revenue recognition policy is to recognize minimum base rents on a straight-line basis over the noncancelable term of the lease when collection of the lease payment is probable. The difference in rent received and the amount of rental revenue recognized on a straight-line basis is recorded as a tenant receivable or prepaid rent liability in the consolidated balance sheet. Capitalized above-market and below-market lease values resulting from the acquisition of the property are amortized as a decrease or increase, respectively, to rental income over the estimated period the tenant is expected to be leasing the property. Accurately estimating the term of the tenant lease is critical to the amount of revenue recognized and to the valuation of the tenant receivable or prepaid rent liability. Management also takes into account whether the collectability of rent is reasonably assured in determining the amount of straight-line rent to record. Any lease payments received from the tenant in advance of their due dates are deferred and recognized as a liability in the consolidated balance sheet.

The lease agreement contains provisions requiring Amazon to assume responsibility for operating costs of the property, including but not limited to property taxes, property insurance, common area maintenance, utilities and other third-party maintenance expenses. Under Accounting Standards Codification 842, Leases, or ASC 842, Series AMZL elected the practical expedient upon adoption at its inception on November 19, 2020 to combine common area maintenance, utilities and other recoveries from the tenant, which each meet the definition of non-lease components, with rental revenues because the recognition pattern of these non-lease components, which are not the predominant components of the lease, is the same as the lease component. The revenues related to non-lease components are recognized in the same period as the related expenses are incurred. Recoveries from the tenant related to property taxes and property insurance costs are not considered components of a lease and therefore no financial consideration from a lease is allocated to these expense reimbursements because they do not result in the transfer of a good or service to a tenant. Series AMZL records operating expenses related to the property on a net basis in the Series AMZL consolidated statement of operations when the tenant pays these costs directly to the third-party. Operating expenses that are paid by the property that are subject to recovery from Amazon pursuant to the lease are recorded on a gross basis in the Series AMZL consolidated statement of operations. Rental revenues associated with recoveries from Amazon are considered variable lease income and therefore are not included in the calculation of straight-line rent. Such amounts are recognized as income when the amounts are earned.

 

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To limit counterparty credit risk, we will typically seek to enter into leases with tenants with favorable credit ratings. However, we will regularly assess the collectability of tenant receivables by, among other things, evaluating the tenant’s payment history, changes in the tenant’s and/or guarantor’s credit profile, changes in the business performance at the property and new market developments and relevant current economic factors. As noted above, management’s assessment of a tenant’s and/or guarantor’s credit profile includes, when available, reviews of reports and filings (including public credit ratings, financial statements and debt and equity analyst reports), corporate credit spreads, stock prices, market capitalization and other financial metrics. If the probability of collection of rental income is reassessed during the lease term and no longer deemed probable, rental revenues for the tenant cease to be accounted for on a straight-line basis. In the period in which collectability is assessed and deemed unlikely, rental revenues for the specific tenant are recorded on a cash basis for this period and for future periods until either the lease expires, otherwise terminates or the circumstances negatively impacting the probability of collection are relieved. In addition, any related tenant receivables and accrued straight-line rent receivable are reversed in the period in which collectability is assessed and deemed unlikely and any future collection of these amounts is also recognized on a cash basis.

Leases

Under ASC 842, a lessor lease is classified as an operating lease if none of the following criteria are met: (i) ownership transfers to the tenant at the end of the lease term, (ii) the tenant has a purchase option that is reasonably expected to be exercised, (iii) the lease term is for a major part of the economic life of the leased property, (iv) the present value of the future lease payments and any residual value guaranteed by the tenant that is not already reflected in the lease payments equals or exceeds substantially all of the fair value of the leased property, and (v) the leased property is of such a specialized nature that it is expected to have no future alternative use at the end of the lease term. If one or more of these criteria are met, the lease will generally be classified as a sales-type lease, unless the lease contains a residual value guarantee from a third party other than the tenant, in which case it would be classified as a direct financing lease under certain circumstances in accordance with ASC 842. The acquired in-place lease at the property is expected to be classified as an operating lease.

Offering Costs

In connection with this offering and the concurrent private placements, affiliates of Series AMZL have or will incur legal, accounting, and related costs that will be paid by RPS Securities and its affiliates, a related party advisory services provider. RPS Securities and its affiliates are solely responsible for bearing these offering costs in accordance with the services agreement. For bearing these offering costs, RPS Securities will be paid transaction expenses from Series AMZL that is a capped amount of expense reimbursement that is solely contingent upon the completion of the offering. This fee will be capitalized and recorded as a reduction of partners’ capital on the consolidated balance sheet of Series AMZL.

Underwriting Discounts and Commissions

In connection with this offering, Series AMZL will incur underwriting discounts and commissions, which will be paid by Series AMZL. Such costs will be deducted from the proceeds of this offering when it is consummated and recorded as a reduction of partners’ capital on the consolidated balance sheet of Series AMZL.

Income Taxes

Series AMZL intends to elect to be taxed as a real estate investment trust, or REIT, for U.S. federal income tax purposes commencing with its taxable year ending December 31, 2021. Series AMZL believes that it has been established and intends to operate in a manner that will enable it to meet the requirements for qualification and taxation as a REIT commencing with such taxable year. To qualify as a REIT, Series AMZL must meet on a continuing basis, through its organization and actual investment and operating results, various requirements

 

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under the Code relating to, among other things, the sources of its gross income, the composition and values of its assets, its distribution levels and the diversity of ownership of Series AMZL shares. If Series AMZL fails to qualify as a REIT in any taxable year and does not qualify for certain statutory relief provisions, it will be subject to U.S. federal corporate income tax and may be precluded from qualifying as a REIT for the subsequent four taxable years following the year during which it failed to qualify as a REIT. Even if Series AMZL qualifies for taxation as a REIT, Series AMZL may be subject to certain U.S. federal, state and local taxes on its income or property. For additional information on income taxes, please see “U.S. Federal Income Tax Considerations.”

Liquidity and Capital Resources

We estimate that the net proceeds from this offering and the concurrent private placements, after deducting the underwriting discounts and commissions payable by Series AMZL, will be approximately $83.7 million (or $95.2 million if the underwriters’ over-allotment option is exercised in full) based on an assumed initial public offering price of $10.00 per Series AMZL share. We are dependent upon the net proceeds from this offering and the concurrent private placements to acquire the property and to pay the related transaction and advisory fees associated with this acquisition. If this offering is unsuccessful, including if we are unable to raise net proceeds of at least $83.5 million, the property will not be acquired.

Series AMZL’s short-term liquidity requirements following the completion of this offering and the concurrent private placements will primarily consist of operating expenses directly associated with its investment in real estate property and other expenditures, including compensation to independent members of the Board and management fee to RPS Securities. In addition, Series AMZL will require funds for future distributions expected to be paid to shareholders following completion of this offering. Series AMZL intends to satisfy its short-term liquidity requirements through cash reserves from this offering and cash flow generated from the rental revenues associated with the lease. The lease, which is with a single tenant for 100% of the property, commenced on September 15, 2020 and will expire on September 30, 2032, with tenant options to extend. Annualized base rent payments for the first year of the lease, beginning on September 15, 2020, are $3,225,754. The base rent payable pursuant to the lease escalates by 2.0% annually during the initial 12-year term, with the first rent escalation taking effect on October 1, 2021.

Series AMZL’s long-term liquidity requirements will primarily consist of property maintenance and capital improvement costs, including repair and replacement of the roof deck and structural components, repair of the building slab and foundation and repair of exterior walls.

To achieve and maintain Series AMZL’s qualification as a REIT, Series AMZL must make distributions to shareholders aggregating annually at least 90% of Series AMZL’s REIT taxable income excluding capital gains. As a result of this requirement, Series AMZL cannot rely on retained earnings to fund its business needs to the same extent as other entities that are not REITs. If Series AMZL does not have sufficient funds from its operations to fund its business needs, Series AMZL will need to find alternative ways to fund those needs. Such alternatives may include incurring indebtedness or issuing additional equity securities in public or private transactions, the availability and attractiveness of the terms of which cannot be assured.

As of March 31, 2021, Series AMZL had $100 of cash resulting from the initial investment from ROX Parent to ROX LP which was allocated to Series AMZL in exchange for one Series AMZL share issued to ROX Parent. We believe that following the completion of this offering and the concurrent private placements, Series AMZL will have access to sufficient capital to meet its capital needs for the foreseeable future. Although the property is currently unlevered, Series AMZL may incur or assume conservative net mortgage debt levels on Series AMZL or its properties in connection with future property acquisitions.

Controls and Procedures

We are not currently required to maintain an effective system of internal controls as defined by Section 404 of the Sarbanes-Oxley Act. We will be required to comply with the internal control requirements of the Sarbanes-

 

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Oxley Act for the first or second annual report on Form 10-K. Only in the event that we are deemed to be a large-accelerated filer or an accelerated filer and no longer an emerging growth company would we be required to comply with the independent registered public accounting firm attestation requirement. Further, for as long as we remain an emerging growth company as defined in the JOBS Act, we intend to take advantage of certain exemptions from various reporting requirements. Prior to the closing of this offering, we will not have completed an assessment of our internal controls, nor will our auditors have tested our systems.

Related Party Transactions

We have entered into an agreement with RPS Securities whereby Series AMZL will pay certain fees for management and advisory services. We have also entered into a license agreement with ROX Parent to receive a nontransferable, nonexclusive and worldwide license, on a royalty-free and as-is basis, to use certain intellectual property. Please see “Certain Relationships and Related Party Transactions,” “Services Agreement with RPS Securities” and “License Agreement with ROX Parent.”

Off-Balance Sheet Arrangements, Commitments, Contractual Obligations and Quarterly Results

As of March 31, 2021, Series AMZL did not have any off-balance sheet arrangements, commitments or contractual obligations. No unaudited quarterly operating data is included in this prospectus as Series AMZL has not conducted operations to date.

Quantitative and Qualitative Disclosures About Market Risks

Market risk includes risks that arise from changes in interest rates, foreign currency exchange rates, commodity prices and other market changes that affect market sensitive instruments. In pursuing its business plan, we expect that the primary market risk to which Series AMZL will be exposed is inflation.

We expect Series AMZL will be exposed to inflation risk as income from the long-term lease with Amazon will be the sole source of its cash flows from operations. Rent escalation provisions in the lease are designed to mitigate the adverse impact of inflation on Series AMZL. However, due to the long-term nature of the lease, such rent escalations may not increase enough to cover inflation.

 

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BUSINESS AND PROPERTY

ROX LP Overview

ROX Financial LP, or ROX LP, is a newly organized Delaware series limited partnership that has been formed to expand public market access to differentiated commercial real estate investment opportunities. We intend for Series AMZL to be listed on NYSE Arca and to elect to be taxed as a real estate investment trust, or REIT, for U.S. federal income tax purposes commencing with its taxable year ending December 31, 2021. Our platform was built specifically to leverage the economies of scale enabled by our innovative Series structure to lower fees and execution costs, allowing investors to access opportunities that have previously been unavailable in the public markets.

Many of the wealthiest individuals and largest institutions invest directly in private equity commercial real estate because it offers a combination of potential value appreciation and income as part of a well-diversified investment portfolio. However, we estimate that more than 80% of the value of all commercial real estate in the United States is not tradable in the public markets and the asset class is frequently considered an “alternative” because investments are often opaque, complex and illiquid.

Public commercial real estate investing is primarily limited to listed real estate investment trusts, or REITs. Generally, listed REITs offer access to diverse portfolios of real estate similar to the way that mutual funds offer access to diverse portfolios of stocks and bonds.

We intend to provide more targeted investment opportunities by offering access to securities representing interests in curated portfolios of properties and individual properties that trade on a national securities exchange. Following this offering, we plan to periodically offer additional Series representing interests in curated portfolios of properties or individual properties with the following characteristics:

 

   

single tenant portfolios: multiple properties leased to a single tenant in one or more locations, which is our intention with Series AMZL;

 

   

single location portfolios: multiple properties leased to several tenants in a common location, such as an industrial park or a life sciences campus; and

 

   

single properties: a single property with significant scale and cash flow durability, such as a corporate headquarters or other critical facility.

Our goal is to empower investors to build a portfolio of commercial real estate securities based on their individual criteria. We believe our Series will be more accessible and liquid than private equity investments and more transparent and targeted than traditional listed REITs.

Series AMZL

Investment Case

While this offering is of interests in a Series owning a single property, we intend to build Series AMZL into a curated portfolio of logistics properties in one or more locations leased by Amazon.com Services LLC, or Amazon, or its affiliates. The property to be purchased with the net proceeds from this offering and the concurrent private placements is leased by Amazon and the guarantor of the lease is Amazon.com, Inc. Logistics facilities leased by Amazon are a material part of the U.S. industrial commercial real estate market, and we believe a curated portfolio of these properties should deliver an attractive risk-adjusted return that would appeal to investors seeking modest but consistent increases in distributions and potential for asset value appreciation.

High-quality logistics properties in attractive locations, particularly those classified as last-mile delivery stations, such as the property to be purchased with the net proceeds of this offering and the concurrent private

 

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placements, or the property, are an increasingly important component of the logistics supply chain. We believe demand for last-mile delivery stations will continue to grow over time as companies strive to ensure they are well-positioned to meet the needs of customers who have come to expect next or same day delivery of their e-commerce purchases.

We believe Series AMZL benefits from a number of attractive characteristics:

Built to suit last mile logistics property in a well-located, high barrier to entry market. The property is a 145,503 square foot mission-critical last-mile delivery station located in Oakley, California and completed in 2020. The property was built to Amazon’s specific standards, including specialized dock doors and a low floor to area ratio that accommodates substantial parking requirements. Oakley, California is located approximately 40 miles from both San Francisco and Sacramento, and, according to CBRE Group, Inc., or CBRE, more than 3.2 million households are accessible within a 50 mile radius. The site was identified by NorthPoint through an algorithm that amalgamates parameters such as residential commute times, container drayage reports, traffic flows and myriad other variables pertinent to labor economics. Other than this site, the surrounding area has limited land for industrial development.

Quality of the tenant. The property is leased by Amazon and the lease is guaranteed by Amazon.com, Inc., one of the larger and more creditworthy companies in the world.

Type and term of the lease. The lease is a 12 year, triple net lease that requires Amazon to pay or reimburse Series AMZL for all real estate taxes, landlord’s insurance and utilities of the property. The lease commenced on September 15, 2020, and the initial term expires on September 30, 2032. During its initial term, the lease has 2.0% annual contractual base rent increases. Amazon has the right to extend the lease until August 31, 2055, subject to an increase to then-prevailing market rental rates.

Strategic relationship with an experienced property developer and property manager. The property was developed, and will continue to be property managed by, NorthPoint. NorthPoint was founded in 2012 and has developed more than 100 million square feet of industrial and logistics properties, including for Amazon.com, Inc., Home Depot Inc., Walmart Inc., General Electric Company and General Motors Company. Series AMZL has executed a strategic cooperation agreement with NorthPoint pursuant to which NorthPoint has agreed to consult with us to provide strategic insight with respect to potential industrial commercial properties held by NorthPoint or other third-parties that would reasonably be expected to meet our investment criteria. In addition, NorthPoint has agreed that Series AMZL shall have the right for one year following the completion of this offering to offer to purchase two properties to be leased by Amazon in the same Contra Costra Logistics Center in which the property is located. One is an approximate 450,000 square foot facility to be used as an outbound cross dock fulfillment center expected to be occupied in September 2021, and the other is an approximate 480,000 square foot facility to be used as an inbound cross dock fulfillment center expected to be occupied in July 2022. That right to offer to purchase is subject to the terms of all existing agreements with respect to any applicable property, including any tenant lease, joint venture or other agreement governing the ownership or transfer of the property.

Potential to expand Series AMZL from a single Amazon-leased property to multiple Amazon-leased properties. We intend to build Series AMZL into a portfolio of logistics properties in one or more locations that have Amazon as a common tenant. We intend to acquire properties that are newly built in prime locations and have a long-term net lease with regular contractual rental escalators. Although the property is currently unlevered, Series AMZL may incur or assume conservative net mortgage debt levels on Series AMZL or its properties in connection with future property acquisitions.

The Amazon Property

The property is a 145,503 square foot last-mile delivery station completed in 2020. The property was built to Amazon’s specific standards, including specialized dock doors and a low floor to area ratio that accommodates

 

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substantial parking requirements. Amazon has directly invested in the property by adding features including automated conveyor systems and electrical infrastructure for future vehicle charging stations. Amazon.com, Inc. describes their delivery stations as properties where customer orders are prepared for last-mile delivery to customers.

This type of property can be among the most difficult in the logistics supply chain to develop because of the:

 

   

lack of available land in densely populated, mature markets;

 

   

ability to procure entitlements for high flow-through facilities;

 

   

requirement for proximity to key transportation arteries;

 

   

need to access an appropriate base of labor; and

 

   

unique building/site design requirements such as segmented site ingress/egress and covered queueing lanes for delivery pick-up.

The property was developed by NorthPoint, a leading national developer, with nine office locations and more than 355 employees as of March 31, 2021. According to Real Capital Analytics, NorthPoint built more square feet of industrial commercial real estate in the United States than any other developer during the five year period ending June 15, 2020, completing 46,540,156 square feet, valued at an estimated aggregate value of $3.8 billion.

The property is located on a 25.05-acre site in the approximate 143-acre development known as the Contra Costa Logistics Center currently being developed by NorthPoint in Oakley, California. The Contra Costa Logistics Center is planned to hold five industrial properties comprising approximately 2.2 million square feet. Amazon currently occupies Building 1, the property. NorthPoint has signed a lease with Amazon for Building 5, an approximate 450,000 square foot facility to be used as an outbound cross dock fulfillment center that is expected to be occupied in September 2021, and expects to sign a lease with Amazon for Building 4, an approximate 480,000 square foot facility to be used as an inbound cross dock fulfillment center that is expected to be occupied in July 2022. We believe the combination of the property with two new adjacent facilities will create an important synergistic campus for Amazon’s fulfillment needs in Northern California.

We believe the Oakley site’s advantages include a large, highly concentrated population with an above average 5-year projected growth, a substantial potential warehouse worker labor pool with a positive supply/demand balance and a receptive community and local political environment.

The following table provides information about the property as of March 31, 2021.

Property Summary

 

Total Buildings

   1

Total Stories

   1

Total Rentable Square Feet

   145,503

Lot Size

   25.05 acres

Percent Occupied

   100%

Floor Area Ratio (1)

   0.13

Clear Height Feet (2)

   32

Car Parking Spaces

   308

Van Parking

   706

Van Loading/Staging

   60/60

Year Built

   2020

 

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(1)

The ratio of a building’s total floor area to the size of the land upon which it is built.

(2)

The usable height to which a tenant can store its product on racking, measured below any obstructions such as joists, lights or sprinklers.

Site Description

The property is located on a 25.05-acre site in the approximate 143-acre development known as the Contra Costa Logistics Center in Oakley, California a community of 42,543 with a median household income of $104,893 as of July 1, 2019, according to the United States Census Bureau. The site is located within 50 miles of five seaports, Benicia, Stockton, San Francisco, Oakland and Richmond. Notably, according to Northpoint, the property benefits from significantly lower drayage costs per container from the Port of Oakland than other California cities. At $402.50 per container, the drayage cost between the Port of Oakland and the property is lower than competitive locations. The site is the redevelopment of a brownfield site previously owned by The Chemours Company FC, LLC, or Chemours.

Transportation and Access

The property is located just off the intersection of the SR-4 and CA-160 highways, has onsite BNSF rail service and its own highway on-ramp at SR-160 and Wilbur Avenue. The location provides proximity to several airports, including Buchanan Field, Oakland International and Stockton Metropolitan and seaports including Oakland, the region’s primary port, and Stockton.

 

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Site Plan

 

LOGO

Property Condition

In general, the property was constructed within industry standards, has been well maintained and is in good condition. There has been no extensive building renovation since the property was built and no renovation plan currently exists.

 

   

Site. The property is located at an elevation of approximately 20 feet above mean sea level and the topography is relatively flat with minor slopes to accommodate site drainage. New landscaping consisting of deciduous trees, shrubs and ground cover is covered by an automatic irrigation system. Large facade signage identifies Amazon and cast-in-place concrete sidewalks are provided for pedestrian traffic. Pole-mounted lighting fixtures with LED lamps are spaced around the site, parking

 

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areas and along the main entrance drives. Building facade-mounted flood light fixtures with LED lamps provide exterior building perimeter and service areas. The canopy covered delivery van loading area is lighted by surface mounted 4 feet LED 2-lamp equipped fixtures. The site is improved with parking areas for 308 cars, including eight accessible spaces in accordance with Title III of the American with Disabilities Act, or the ADA. In addition, there are 706 van parking spaces, 60 van staging spaces and 60 van loading spaces. Four entry drives provide access to the property from the adjacent road frontages.

 

   

Structure. The property is constructed of slab-on-grade with no basement areas. Cast-in-place, reinforced concrete foundations support the exterior walls and load bearing interior walls and columns. Interior concrete and steel columns, typically approximately 50 x 50 lineal feet on center, support steel roof decking and rigid insulation.

 

   

Building Envelope. The property has a new low-slope fully-adhered, single-ply, 60 millimeter thick thermoplastic polyolefin-membrane roof. Exterior wall panels are made of structural tilt-up, precast concrete. The exterior has unique attributes, with suspended steel canopies covering the entrances and a large canopy area over the delivery van loading areas. Fourteen dock doors and six van loading doors facilitate package flow-through.

 

   

Building Interior. The lobby and office spaces generally have ceramic tile floors, painted gypsum wallboard walls and suspended acoustical tile ceilings. The warehouse areas have exposed concrete floors and exposed structure ceilings.

 

   

Accessibility—Americans with Disabilities Act. The property must comply with the ADA to the extent that the property is a “public accommodation” as defined by the ADA. Only the lobby area and the public restrooms fall into the “public accommodation” category. The property is in general conformance with the ADA.

 

   

Building Systems. The heating, ventilating and air conditioning, or HVAC, systems include office areas that are heated and cooled by seven gas/heating/electric cooling single-package rooftop units of 2-ton, 4-ton, 5-ton, 6-ton, 7-ton and 12-ton cooling capacity, manufactured by Carrier. The office area server rooms have two Carrier 3-ton split-system air conditioning systems with rooftop outdoor condensing units and indoor fan coils. The warehouse areas have exhaust fans for cooling in the summer and eight gas-fired make-up air rooftop furnace units for heating. The electrical main switchboard is rated for 4,000-Amp, 480Y/277-Volt, 3-phase, 4-wire service. Dry-type, step-down transformers reduce the higher service voltage down to 120/240-Volts for smaller scale equipment, appliances, wall receptacles and various lighting fixtures. The electrical equipment is made by General Electric. Fire and life safety features include an automatic sprinkler system, hardwired smoke and heat rise detectors with battery-backup, alarm pull stations at entrances to egress stairways and building entrances, illuminated exit lights with battery backup along exit paths, emergency battery lighting units, audible-visual alarm devices throughout, including in restrooms, portable fire extinguishers throughout the office areas and warehouse area.

All information in this “—Property Condition” section is derived from the Acquisition Property Condition Reported dated October 15, 2020, prepared by EBI Consulting, a copy of which is filed as an exhibit to the registration statement of which this prospectus is a part. Please see “Where You Can Find Additional Information.”

Seismic

Based upon EBI Consulting’s survey, utilizing the St-Risk statistical software program, the scenario expected loss for the property is estimated to be 6% of the replacement cost of the building. That analysis is based upon a 475-year return period and a 10% chance of exceedance in a 50-year exposure period. The property is not in an area subject to the Alquist-Priolo Earthquake Zoning Act. The building appears to have the basic elements of a lateral force resisting system to resist earthquakes. EBI Consulting has informed us that no existing

 

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or prior significant structural or foundation damage from previous earthquakes was reported or observed and that the project meets the building stability and site stability requirements.

Unless otherwise indicated, all information in this “—Seismic” section is derived from the Seismic Report (Probable Maximum Loss) dated October 15, 2020, prepared by EBI Consulting, a copy of which is filed as an exhibit to the registration statement of which this prospectus is a part. Please see “Where You Can Find Additional Information.”

Environmental Matters

The property is located in the southwest portion of a former chemical manufacturing facility owned and operated by Chemours (and its predecessor, E. I. du Pont de Nemours and Company, or DuPont). DuPont used approximately 54.3 acres of the 378-acre site for manufacturing of chlorofluorocarbons, fuel-additive anti-knock compounds and titanium dioxide. All manufacturing activities ceased by 1999, and the manufacturing structures were demolished shortly thereafter. The Chemours facility has undergone substantial investigation and remediation pursuant to a Resource Conservation and Recovery Act, or RCRA, Corrective Action program overseen by the California Department of Toxic Substance Control, or the DTSC, aspects of which remain ongoing. The Chemours facility is subject to a recorded Land Use Covenant, or the LUC, that limits a restricted area, covering approximately 130 acres of the facility, to non-residential uses and, among other restrictions, prohibits disturbance of soils or use of groundwater. In connection with NorthPoint’s purchase of 143 acres of the Chemours facility in 2019, DTSC, NorthPoint and Chemours entered into an Agreement and Covenant Not to Sue, or the PPA. Under the PPA, DTSC agreed that NorthPoint and qualified successors in interest are not responsible for remediation of the existing contamination, as defined in the PPA, subject to certain customary reservations of rights and conditioned on NorthPoint’s compliance with the terms of the PPA. The PPA’s obligations include, among other provisions, implementing and funding appropriate vapor intrusion mitigation systems, abiding by the terms of the LUC, and following a DTSC-approved soil and material management plan for any construction or excavation activities at the site. In connection with the closing of the acquisition of the property, Series AMZL will file the notifications necessary to receive the benefit of the PPA’s liability protections.

The majority of the property, while part of the Chemours facility, was not part of the site used by DuPont for manufacturing. The southern portion of the property (approximately two-thirds of the property) remained agricultural and was used for vineyards. The northern portion was developed with an office building and parking areas on the west side, an electrical substation near the center, and a manufacturing support area on the east side that included a power house and two aboveground fuel oil storage tanks. With the exception of the northeast corner, DTSC agreed, in 2006, that the remainder of the property, along with other non-manufacturing portions of the Chemours facility did not require further remediation. The northeast corner, however, remains within the RCRA Corrective Action facility boundary and is part of the restricted area defined in the LUC. Investigations in this portion of the site have identified elevated levels of diesel range organics, gasoline range organics and thallium in soil samples. In addition, based on site maps identifying the areas of groundwater contamination, a small portion of one of the groundwater plumes being addressed by Chemours overlaps with the edge of the northeast corner of the property. Based on existence of the LUC, EBI Consulting concluded that the northeast portion of the property constitutes a controlled recognized environmental condition, while the remainder of the property qualified as a historic recognized environmental condition.

In compliance with its obligations under the PPA, NorthPoint completed vapor intrusion investigations of the property in accordance with a previously approved DTSC workplan and submitted a report to DTSC on May 12, 2020. By letter dated May 21, 2020, DTSC approved construction of the warehouse on the property without a vapor intrusion mitigation system, based on findings that:

 

   

the proposed building location is not located over the mapped spatial footprint of the ground water plumes;

 

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subsurface contaminant concentrations at the proposed building location are at or below the Environmental Protection Agency’s residential screening numbers; and

 

   

the building is intended for commercial use only.

However, as noted by EBI Consulting, preliminary groundwater data from sampling locations immediately to the east of the property taken in March 2020 suggested that levels of chlorinated volatile organic compounds may be above local vapor intrusion screening levels. Although liability for the underlying contamination would presumably be Chemours’ responsibility, EBI Consulting identified this issue as a recognized environmental condition and recommended further investigation to confirm that this contamination does not pose an unacceptable vapor intrusion risk.

All information in this “—Environmental Matters” section is derived from the Phase I Environmental Site Assessment of the property dated April 13, 2021, prepared by EBI Consulting, a copy of which is filed as an exhibit to the registration statement of which this prospectus is a part. Please see “Where You Can Find Additional Information.”

The Tenant and the Lease

General

The property is fully leased to Amazon under a 12-year, triple net lease that commenced on September 15, 2020 and expires on September 30, 2032. The lease is guaranteed by Amazon.com, Inc., who guarantees the payment of all present and future payment obligations that are not paid under the lease up to 100% of the remaining base rent obligations under the lease, which includes any applicable rent escalations, but not any additional rent obligations under the lease, which generally address property utility expenses, real estate taxes and landlord’s insurance.

Amazon.com, Inc. is a U.S. based multinational corporation engaged in global sales of consumer products and subscriptions through various websites and computing, storage, database and service offerings for start-ups, enterprises, government agencies and academic institutions through Amazon Web Services. As of March 31, 2021, Amazon.com, Inc. ranked #2 on the 2020 Fortune 500 list of the largest U.S. corporations by total revenue and had a market capitalization of $1.7 trillion. As of March 31, 2021, Amazon.com, Inc. was rated AA- by Standard & Poor’s and A2 by Moody’s. However, Amazon.com, Inc.’s credit rating is not a recommendation to buy, sell or hold any Series AMZL shares and may be subject to revision or withdrawal at any time. Amazon.com Services LLC is not separately rated.

The historical audited and unaudited financial statements of Amazon.com, Inc. (which are not incorporated by reference into this prospectus) have been filed with the SEC and are available on the SEC’s website at www.sec.gov. You should not place undue reliance on such financial statements, as they are presented on a consolidated basis without Amazon.com Services LLC specific data and are therefore not necessarily indicative of Amazon.com Services LLC’s business, financial condition, liquidity, results of operations and prospects or its ability to make payments under the lease.

The lease is triple net, meaning that Amazon is responsible for the direct payment or reimbursement of utility expenses, real estate taxes and landlord’s insurance which, upon our acquisition of the property, is payable to a wholly owned subsidiary of Series AMZL, which we refer to as the Series AMZL subsidiary. Amazon has a right of first offer with respect to a sale of the property that has been waived as it may relate to our purchase of the property and this offering, but would apply to any future sale of the property by us.

 

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The following table provides information about the lease as of March 31, 2021.

 

Tenant

  Lease Expiration (1)     Annual Rent
Escalations (2)
    Remaining
Lease
Term
(Years)
    Total
Leased
Square
Feet (3)
    Percent
of
Property
Rentable
Square
Feet
    Annualized
Base

Rent (4)
    Annualized
Rent Per
Leased
Square
Foot (5)
    Percent
of
Property
Annualized
Rent
 

Amazon.com Services LLC

    September 30, 2032       2.0     11.5       145,503       100   $ 3,225,754     $ 22.17       100

 

(1)

Expiration date does not assume exercise of renewal or extension options. Amazon has the right to extend the lease term for up to four additional terms of five years each, and a fifth right to extend the term for a term of two years and eleven months. For each renewal period, the base rent is targeted to be prevailing market rent for new leases for comparable space and improvements, subject to the agreement of landlord and tenant.

(2)

Represents annual contractual base rent increases that commence October 1 of each year, beginning in 2021.

(3)

Calculated as total rentable square feet less square feet available for lease divided by total rentable square feet.

(4)

Represents annualized monthly contractual base rent as of March 31, 2021. Annualized base rent does not include expense reimbursements.

(5)

Represents annualized base rent divided by total leased square feet.

Annual Rent Escalations

The following table provides information about the contractual base rent during the initial term of the lease.

 

Beginning Date

   Ending Date      Square
Feet
     Annual
Rent
     Monthly
Rent
     Per Square
Foot Rate
 

September 15, 2020

     September 30, 2021        145,503      $ 3,225,754      $ 268,813      $ 22.17  

October 1, 2021

     September 30, 2022        145,503        3,290,269        274,189        22.61  

October 1, 2022

     September 30, 2023        145,503        3,356,074        279,673        23.07  

October 1, 2023

     September 30, 2024        145,503        3,423,196        285,266        23.53  

October 1, 2024

     September 30, 2025        145,503        3,491,660        290,972        24.00  

October 1, 2025

     September 30, 2026        145,503        3,561,493        296,791        24.48  

October 1, 2026

     September 30, 2027        145,503        3,632,723        302,727        24.97  

October 1, 2027

     September 30, 2028        145,503        3,705,377        308,781        25.47  

October 1, 2028

     September 30, 2029        145,503        3,779,485        314,957        25.98  

October 1, 2029

     September 30, 2030        145,503        3,855,074        321,256        26.49  

October 1, 2030

     September 30, 2031        145,503        3,932,176        327,681        27.02  

October 1, 2031

     September 30, 2032        145,503        4,010,819        334,235        27.57  

Additional Rent

During each month of the term of the lease, Amazon must pay to the Series AMZL subsidiary most of the operating expenses payable for the leased premises. Operating expenses payable by Amazon exclude items for which the Series AMZL subsidiary is explicitly responsible for under the lease and capital improvements, other than capital improvements with respect to exterior paint, asphalt and exterior concrete and swales and detention ponds located on the premises, and not maintained by owners association of the Contra Costa Logistics Center. Items for which the Series AMZL subsidiary is explicitly responsible for under the lease include:

 

   

non-recurring landscaping;

 

   

repair and replacement of roof deck and structural components;

 

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maintenance of the electrical system located outside the leased premises;

 

   

repair of the building slab and foundation;

 

   

repair of exterior walls;

 

   

maintenance of fire sprinkler systems; and

 

   

repair of subgrade utility lines outside of the leased premises.

Series AMZL will maintain capital reserves necessary to pay the above expenses. Please see “Use of Proceeds.” As the leased premises are newly-built, we do not expect these expenses to be material for several years. In future years, Series AMZL intends to retain cash from operations to enable it to pay these expenses as they may arise.

Amazon.com, Inc. does not guarantee the additional rent obligations under the lease. Accordingly, in the event the tenant fails to meet its additional rent obligations under the lease, Series AMZL would not have contractual recourse against the guarantor and may be required to pay significant operating expenses of the property, including real estate taxes and landlord’s insurance. For calendar year 2021 and based on the budget for the property for 2021, we believe the amount of these operating expenses will be approximately $400,000. However, that amount may change from year to year based on a variety of factors, including the condition of the property.

Tenant Improvements

The property has been developed to the standards typical of Amazon build-to-suit delivery station, that include:

 

   

Enhanced finishings such as a roofing system with a thicker insulation and membrane that provides a longer warranty than industry-standard products;

 

   

Motion-detector LED lighting and high velocity fans to improve energy efficiency;

 

   

Hydraulic docking systems and high-speed rollup doors to facilitate high-traffic movement;

 

   

Oversized structural members to resist lateral load from the roof without needing diagonal braces and 54’ x 56’ column spacing to maximize floor-space efficiency; and

 

   

Reinforced floor slabs to handle the large volume of vehicular traffic.

The seller of the property has informed us that Amazon has invested in platform-specific systems, including for underground electrical infrastructure that feed into car charging stations Amazon intends to install at a later day and tech-heavy conveyor systems. This buildout allows Amazon to track each package by laser-scanning the bar codes while light sensors are able to determine when each bin is full.

Lease Expiration

The lease expires on September 30, 2032. Amazon has the right to extend the lease term for up to four additional terms of five years each and a fifth right to extend the term for a term of two years and eleven months. For each renewal period, the base rent is marked to 100% of then-market rent for comparable space and operating expenses will be subject to the same recovery structure.

 

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Percent Leased and Base Rent

The following table sets forth the rentable square feet, percent leased, annualized rent per leased square foot and annual net effective rent per leased square foot under the lease as of the date indicated below. As the property improvements are newly constructed, the disclosure is limited.

 

Date

   Total
Rentable
Square
Feet (1)
     Percent
Leased (2)
    Annualized
Base

Rent Per
Leased
Square
Foot (3)
     Annual
Net Effective
Rate Per
Leased
Square

Foot (4)
 

March 31, 2021

     145,203        100   $ 22.17      $ 22.17  

 

(1)

Based on management’s estimate.

(2)

Calculated as total rentable square feet less square feet available for lease divided by total rentable square feet.

(3)

Represents annualized base rent divided by 145,503 leased square feet.

(4)

Annual net effective rent per leased square foot represents (if) actual base rent, excluding tenant reimbursements, for the 12-month period ended as of the measurement date indicated above (or such shorter period since lease commencement), calculated on a straight-line basis to amortize free rent periods and abatements, but without regard to tenant improvement allowances and leasing commissions, divided by (ii) the average square feet under lease for the 12 month period ended as of the measurement dates indicated above (or such shorter period since lease commencement).

Tenant Obligations with respect to the Property

Under the terms of the lease, Amazon is responsible for janitorial, security, general management, preventative maintenance and other enumerated building services. The Series AMZL subsidiary will be responsible for the repair and maintenance of the roof, exterior and load bearing walls, the foundation, the floor slabs and other structural elements of the building.

Tenant’s Right of First Offer

Pursuant to the terms of the lease, Amazon has a right of first offer to purchase the property or any portion thereof if:

 

   

the Series AMZL subsidiary determines to offer all or any portion of the property for purchase; or

 

   

the Series AMZL subsidiary receives a bona fide, unsolicited offer from a third-party to purchase all or any portion of the property.

In the event that Amazon’s right of first offer is triggered in either scenario described above, the Series AMZL subsidiary would deliver to Amazon an offer notice specifying the terms of that offer. Amazon has the right, within 10 days of receiving that notice, to deliver a notice electing to purchase all or a portion of the property pursuant to the economic terms described in the Series AMZL subsidiary’s notice to Amazon. The parties are required to promptly negotiate a purchase agreement. If Amazon fails to timely reply to the Series AMZL subsidiary’s offer notice, or elects not to exercise its right of first offer, the Series AMZL subsidiary is free to sell the property at a purchase price that is not more than 10% lower than the purchase price set forth in its offer notice and is not on terms and conditions materially different from those set forth in the offer notice.

In the scenario that Amazon’s right of first offer is triggered by a bona fide, unsolicited offer, if that offeror negotiates a purchase price that is more than 10% lower than set forth in the initial offer notice, or makes a materially different offer, Amazon’s right of first offer is triggered again. Additionally, if the Series AMZL subsidiary has not entered into the contract with the unsolicited offeror, or fails to close on a contract, within 180 days following the expiration of Amazon’s 10 day right of first offer period, Amazon will have a new right of first offer.

 

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Amazon’s right of first offer is continuous throughout the term of the lease and is binding on the landlord’s successors and assigns. The right of first offer will not apply in the event of:

 

   

a transfer to a landlord affiliate;

 

   

a collateral security transfers in connection with financing or transfers pursuant to a foreclosure; or

 

   

a portfolio sale consisting of three or more properties if the value of the property plus other property leased by an affiliate of Amazon part of such portfolio constitutes less than 50% of the value of such portfolio.

Property Management Agreement

General

Upon the closing of the purchase of the property, the Series AMZL subsidiary will enter into a commercial management agreement with NPD Management, LLC, or NPD Management, an affiliate of NorthPoint. NPD Management provides property management and entity management services for properties owned, affiliated and overseen by NorthPoint. NPD Management is currently the property manager for the Contra Costa Logistics Center in which the property is located. Please see “Business and Property—Series AMZL—The Property—Site Description. Amazon is responsible for the payment of property management fees not to exceed 2.0% of the base rent payable under the lease. None of the property management fee will be payable by the Series AMZL subsidiary and therefore will not be borne by holders of Series AMZL shares.

A copy of the Series AMZL commercial management agreement is filed as an exhibit to the registration statement of which this prospectus is a part. Please see “Where You Can Find Additional Information.”

Budget

Prior to closing, NPD Management and the Series AMZL subsidiary will agree on the budget for the property for calendar years 2021 and 2022. NPD Management shall submit a proposed budget to the Series AMZL subsidiary annually at least 90 days prior to the end of each calendar year. Once approved by the Series AMZL subsidiary, NPD Management shall have the authority to make the expenditures set forth in the budget. Without the approval of the Series AMZL subsidiary, NPD Management may exceed the budget by up to 10% for any line item and up to 5% of the budget as a whole. If forecasted net operating income indicates an unfavorable variance greater than 3% versus the approved budget, NPD Management shall submit a revised forecast. If the Series AMZL subsidiary does not approve a submitted budget at least 30 days prior to the start of a calendar year, the prior year’s budget shall remain applicable until the new budget is approved. Expenses outside of the approved budget can be paid only with prior consent of the Series AMZL subsidiary; provided, however, that without that approval, NPD Management may pay unbudgeted maintenance expenses not exceeding $1,000 and costs related to emergency repairs immediately necessary for the preservation or safety of a tenant, to protect personal property from damage or as required to avoid criminal liability for the Series AMZL subsidiary. NPD Management shall keep adequate and separate books and records related to the property and accounting practices as are reasonably satisfactory to the Series AMZL subsidiary.

Reports

NPD Management shall furnish monthly financial reports that include all pertinent information related to the financial activity of the property, including variances from the budget. NPD Management shall also furnish an annual financial report. The Series AMZL subsidiary shall have the right to audit all books and records related to the property. If an audit indicates a discrepancy greater than 3% of the budgeted income, manager is required to reimburse the Series AMZL subsidiary for the cost of that audit. All funds related to the budget and the property shall reside in an operating account at a bank specified by the Series AMZL subsidiary.

 

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Environmental Matters

NPD Management is responsible for ensuring the property is in compliance with applicable environmental regulations and rulings. Please see “—Series AMZL—Environmental Matters.” NPD Management shall hire, pay and supervise any employees and independent contracts necessary for the maintenance and operation of the property. All wages or other compensation payable to those persons are expenses solely of NPD Management.

Compensation

NPD Management shall be paid a management fee equal to the maximum reimbursable fee pursuant to the lease, which is 2.0% of the base rent and subject to escalations based on escalation of the rent. The maximum reimbursable fee pursuant to the lease that was payable to NPD Management in 2020 was approximately $19,000, based on the commencement of rent on September 15, 2020. The management fee is a recoverable cost from Amazon under the lease. Under the terms of the new agreement, none of the property management fee will be payable by the Series AMZL subsidiary and therefore will not be incurred by shareholders.

Term and Termination

The property management agreement has a one-year initial term and automatically renews for successive one-year terms unless notice is given at least 30 days prior to the end of any term. The agreement can be terminated at any time by either party with 30 days’ notice or upon a breach by a party that is not cured within 30 days. The agreement terminates immediately upon notice of bankruptcy event of a party.

Indemnification

The Series AMZL subsidiary indemnifies NPD Management and its affiliates for any act in the proper performance of their duties under the agreement; provided, that the indemnification will not apply in the case of willful misconduct, fraud or gross negligence. NPD Management indemnifies the Series AMZL subsidiary for those actions along with any action outside of the scope of authority granted to manager under the agreement.

In addition, NPD Management is liable for:

 

   

theft of assets by anyone affiliated, associated or employed by NPD Management;

 

   

overpayment of labor costs arising from fraud or gross negligence; and

 

   

the value of any payment from third parties to NPD Management’s employees or associates arising from the provision of goods or services to the property.

Insurance

NPD Management is required to maintain usual and customary insurance, including real estate managers’ errors and omissions insurance. NPD Management shall also require any subcontractors engaged to perform work at the property to have sufficient and customary insurance.

Financial and Legal Matters

Appraisal

We have received an appraisal of the property from BBG, Inc. BBG, Inc. has developed a value opinion of the property as of May 10, 2021, with a valuation date of March 31, 2021, of $81 million. The appraised value reflects the appraised market value as of that date from BBG, Inc., an independent appraisal firm employing state certified appraisers with local knowledge and expertise. Please see “Experts.” The appraisal was prepared in conformity with the Uniform Standards of Professional Appraisal Practice and utilized three approaches to value:

 

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the cost approach, the sales comparison approach and the income capitalization approach, leading to a final opinion of the appraised value of the property by the appraiser. A copy of BBG, Inc.’s appraisal is filed as an exhibit to the registration statement of which this prospectus is a part. Please see “Where You Can Find Additional Information.”

Asset Purchase Agreement

Pursuant to the Asset Purchase Agreement dated November 19, 2020, as amended, among ROX Parent, the Series AMZL subsidiary, NP Oakley Building I, LLC, as seller, and NP Oakley, LLC, referred to as the Series AMZL purchase agreement, the Series AMZL subsidiary will acquire all of the seller’s interests in the property.

The minimum purchase price to be paid to the seller pursuant to the Series AMZL purchase agreement, subject to adjustments as set forth in the purchase agreement, is $81.0 million. To achieve that amount, Series AMZL must raise at least approximately $83.5 million in the offering of Series AMZL shares to result in that minimum purchase price after deducting underwriting discounts and commissions, costs of this offering, the concurrent private placements and the other amounts to be paid or retained by Series AMZL. Please see “Use of Proceeds.” If the net proceeds of this offering and the concurrent private placements, after deducting underwriting discounts and commissions, is more than that minimum amount to be raised, the seller will be paid that excess after deducting the transaction expense to be paid to RPS Securities. At closing, the purchase price paid to the seller will be adjusted to account for the proration of rent paid by Amazon, utility services, prepaid amounts of licenses and permits and trade payables and as well as for the premium to be paid by the Series AMZL subsidiary for an environmental insurance policy on the property. Please see “—Series AMZL—Financial and Legal Matters—Environmental Insurance.” To the extent any of those prorations are not feasible at closing, the prorations shall be made no later than 90 days after the determination of the applicable amounts.

The acquisition of the property is subject to customary representations and warranties, covenants and closing conditions, and there can be no assurances those conditions will be satisfied.

Although the parties have agreed on the form of the title policy to be delivered at closing, if a title defect is disclosed by the title company prior to closing that would have an adverse effect on the title or ownership of the property, the seller can elect to cure. If the seller does not elect to cure, the Series AMZL subsidiary can elect to close regardless or terminate the agreement. However, if the defect is monetary in nature and the seller does not elect to cure, the Series AMZL subsidiary can also choose to close with an adjustment to the purchase price.

The seller agreed to cooperate with the Series AMZL subsidiary, until the first anniversary of the closing, by providing access to information as needed to comply with financial disclosure and other reporting obligations of the Series AMZL subsidiary and its affiliates.

NP Oakley, LLC, or NP Oakley, agreed that to the extent the Series AMZL subsidiary incurs losses due to a breach by Chemours pursuant to the purchase agreement by which the seller acquired the property, NP Oakley will use its commercially reasonable efforts to proceed against Chemours pursuant to that purchase agreement for the benefit of the Series AMZL subsidiary with respect to a claim for those losses. The Series AMZL subsidiary will be responsible for any third-party costs related to those claims, including cost of counsel.

NP Oakley and the seller agreed, jointly and severally, to indemnify the Series AMZL subsidiary for any losses incurred relating to any breach or inaccuracy of any of the representations or warranties of the seller and for any breach of any covenant or agreement made by the seller. The indemnification obligations will survive the closing for a period of one year and any claims must be made in that period. No indemnification claim can be made until the amount of actual damages exceeds $100,000, and if exceeded, the claim relates back to the first dollar of losses. The aggregate cap on liability is $1.0 million. Neither the seller nor the Series AMZL subsidiary can be liable for any punitive, exemplary, consequential, special or indirect damages. During that one-year period, seller has agreed not to wind up or liquidate and to retain cash reserves, in excess of its operating expenses, in an amount at least equal to the cap referenced above.

 

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If the seller fails to perform its obligations under the Series AMZL Purchase Agreement, the Series AMZL subsidiary can seek specific performance and require the seller to close. If the seller deliberately breaches a representation, warranty or covenant, that causes the Series AMZL subsidiary to incur other than nominal costs, the Series AMZL subsidiary can either terminate the agreement or waive that breach and subtract those costs from the purchase price.

A copy of the Series AMZL purchase agreement is filed as an exhibit to the registration statement of which this prospectus is a part. Please see “Where You Can Find Additional Information.”

Separately, on November 19, 2020, ROX Parent issued a warrant to purchase capital stock of ROX Parent to NP Oakley. Assuming the closing of the acquisition of the property, the warrant entitles NP Oakley to exercise the warrant into $500,000 of preferred stock of ROX Parent at a discount of 30% to the price to be negotiated by ROX Parent with the potential investors in ROX Parent’s next round of preferred equity financing. The warrant was issued to NP Oakley in exchange for its agreement to extend the closing of the property acquisition to allow us to complete the offering of the Series AMZL shares.

Series Financing Strategy

There will be no debt on the property upon completion of the offering. The Board will periodically review the need or desire for debt on the property and may modify or eliminate it without the approval of shareholders.

The Board will consider a number of factors when evaluating Series AMZL’s level of indebtedness and making financial decisions, which may include, among others, the following:

 

   

the development of a liquid trading market for the Series AMZL shares;

 

   

the decision to add other properties leased by Amazon or an affiliate to Series AMZL;

 

   

the interest rate of the proposed financing;

 

   

the extent to which the financing impacts the flexibility of the property manager to manage the property or properties;

 

   

prepayment penalties, defeasance and restrictions on refinancing;

 

   

our long-term objectives with respect to the financing;

 

   

Series AMZL’s target investment returns;

 

   

the ability of the property or properties to generate cash flow sufficient to cover expected debt service payments;

 

   

Series AMZL’s overall level of consolidated indebtedness;

 

   

timing of debt maturities;

 

   

provisions that require recourse;

 

   

corporate credit ratios, including debt service and fixed charge coverage, debt to EBITDA, debt to total market capitalization and debt to undepreciated assets; and

 

   

the overall ratio of fixed and variable rate debt.

Real Property Taxes

All real property taxes associated with the property are paid by Amazon. For tax year 2020, the property is valued as land-only. The lot size is 25.05 acres, or 1,091,178 square feet, and assessed at $745,000. The 2020-2021 tax will be approximately $8,387, split into two installments. This amount is expected to be sufficient to cover the ad-valorem assessment as well as special assessments associated with the property.

 

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REIT Status

We intend for Series AMZL to elect to be taxed as a REIT for U.S. federal income tax purposes commencing with its taxable year ending December 31, 2021. We believe that Series AMZL has been organized in conformity with the requirements for qualification and taxation as a REIT under the Code, and that its intended manner of operation will enable it to meet the requirements for qualification and taxation as a REIT for its taxable year ending December 31, 2021 and thereafter. To qualify as a REIT, Series AMZL must meet on a continuing basis, through its organization and actual investment and operating results, various requirements under the Code relating to, among other things, the sources of its gross income, the composition and values of its assets, its distribution levels and the diversity of ownership of Series AMZL shares. If Series AMZL fails to qualify as a REIT in any taxable year and does not qualify for certain statutory relief provisions, it will be subject to U.S. federal corporate income tax and may be precluded from qualifying as a REIT for the subsequent four taxable years following the year during which it failed to qualify as a REIT. Even if Series AMZL qualifies for taxation as a REIT, it may be subject to certain U.S. federal, state and local taxes on its income or property. Please see “U.S. Federal Income Tax Considerations.” An investor in Series AMZL shares will receive a Form 1099 reporting annual distributions by Series AMZL.

Environmental Insurance

Upon closing of the acquisition of the property, the Series AMZL subsidiary will purchase an environmental insurance policy from Great American Insurance Group, a company with an A.M. Best Rating of A+ (Superior) and a financial size category of (FSC): XV. That insurance policy will provide $10 million in total policy limits for a 10-year policy term. The Series AMZL subsidiary is the first named insured under the policy and Series AMZL is listed as an additional named insured.

Coverage under the policy includes:

 

   

for cleanup costs of new conditions on-site and off-site;

 

   

for cleanup costs of pre-existing conditions on-site and off-site for third party claims;

 

   

for third party bodily injury and property damage, including natural resource damages, of pre-existing and new conditions on-site and off-site;

 

   

for non-owned disposal sites;

 

   

for in-bound and out-bound contingent transportation liability;

 

   

for business interruption or contingent business interruption;

 

   

for diminution in value of a covered location; and

 

   

for legal defense expense, including additional 25% outside limits.

Casualty and Non-Environmental Insurance

The Series AMZL subsidiary and Series AMZL will maintain all applicable lines of insurance on the property and its operations. The amount and scope of insurance coverage provided by the policies maintained will be customary for similarly situated industrial properties in California. We believe the amount of insurance coverage the Series AMZL subsidiary and Series AMZL will obtain on the property will be adequate. We cannot assure you that in the future insurance will be available at a reasonable cost or that the Series AMZL subsidiary or Series AMZL will be able to maintain adequate levels of insurance coverage on the property. In addition, we cannot give any assurances as to the future financial viability of their insurers or that the insurance coverage provided will fully cover all losses on the property upon the occurrence of a catastrophic event.

Zoning

The property is located within the Planned Unit Development P-1 zoning district in the City of Oakley, California, with an existing land use as “warehouse.” Planned Unit Development P-1 has been implemented to

 

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promote a combination of employment and residential uses and promoted the placement of the most intensive non-residential development (commercial, business park and light industrial). We have been informed that the property’s conformance standard is “legal conforming,” with no nonconforming characteristics and no recommended actions.

Depreciation

The following table sets forth for the property upon which depreciation is taken, the federal tax basis upon completion of this offering, rate, method and life claimed with respect to the property for purposes of depreciation.

 

Property

   Federal
Tax Basis
     Rate   Method (1)    Life
Claimed

Land

   $ 22,014,588      N/A   None    N/A

Building and improvements

   $ 59,645,412      2.6%   MACRS    39

 

(1)

Unless otherwise noted, depreciation method and life claimed for the property is determined by reference to the IRS-mandated method for depreciating assets placed into service after 1986, known as the Modified Accelerated Cost Recovery System.

Competition

The leasing of real estate is highly competitive in the San Francisco–Oakland–Berkeley, California metropolitan statistical area, as defined by the United States Office of Management and Budget. The property and the Series AMZL subsidiary will compete with numerous acquirers, developers, owners and operators of commercial real estate, many of which own or may seek to acquire or develop properties similar to the property in the same market in which the property is located. The principal means of competition are rent charged, location, services provided and the nature and condition of the facility to be leased. In addition, the property and the Series AMZL subsidiary will face competition from other real estate companies including other REITs, private real estate funds, domestic and foreign financial institutions, life insurance companies, pension trusts, partnerships, individual investors and others that may have greater financial resources or access to capital than the property and the Series AMZL subsidiary. If the property’s and the Series AMZL subsidiary’s competitors offer space at rental rates below current market rates, below the rental rate that the property and the Series AMZL subsidiary currently charges Amazon, in better locations within the property’s market or in higher quality facilities, the property and the Series AMZL subsidiary may lose potential tenants and Series AMZL may be pressured to reduce the Series AMZL’s property’s rental rate below the rate that the property and the Series AMZL subsidiary currently charges or offer other concessions to retain Amazon when the lease expires.

Legal Proceedings

There are no legal proceedings regarding ROX LP, ROX GP, Series AMZL or the property

Our Policies with Respect to Certain Other Activities

If the Board determines that additional funding is required, Series AMZL may raise funds through offerings of equity or debt securities of Series AMZL, the use of leverage or the retention of cash flow (subject to provisions in the Code concerning distribution requirements and the taxability of undistributed REIT taxable income) or a combination of these methods. For information regarding Series AMZL’s use of leverage, please see “—Series AMZL—Financial and Legal Matters—Series Financing Strategy.” In the event that the Board determines to raise additional equity capital in respect of Series AMZL, it has the authority, without approval of shareholders, to authorize Series AMZL to issue additional Series AMZL shares or other classes of shares of Series AMZL, including with associated preferences, in any manner (including in exchange for cash or property) and on such terms and for such consideration as the Board deems appropriate, at any time.

 

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Series AMZL may repurchase or otherwise reacquire Series AMZL shares and may engage in such activities in the future. Neither ROX LP nor Series AMZL intends to engage in trading, underwriting or agency distribution or sale of securities of other issuers. Neither ROX LP nor Series AMZL has in the past invested, and is not expected in the future to invest, in the securities of other issuers for the purpose of exercising control over such issuers. Series AMZL has not made any loans to third parties, although Series AMZL may in the future make loans to third parties, including, without limitation, to its subsidiaries. Series AMZL intends to make investments in such a way that it will not be treated as an investment company under the Investment Company Act.

The primary business of Series AMZL will be to own its interest in the Series AMZL subsidiary, which will own and operate the property and any other properties to be acquired in the future.

The Board may change any of these policies at any time without prior notice to, or a vote of, shareholders.

The Market and Submarket

The Local Economy

The property is located in the San Francisco–Oakland–Berkeley, California metropolitan statistical area, or MSA, as defined by the United States Office of Management and Budget. The MSA is comprised of five counties: San Francisco, Alameda, Marin, Contra Costa and San Mateo. According to estimates by the United States Census Bureau, the MSA is the country’s 12th largest metropolitan area with a 2019 population of 4.7 million, representing an increase of 9.1% since 2010. The MSA’s population has a median age of 39.2 years and 1.7 million households with a median household income of $114,696, which is significantly higher than the national median of $65,712.

The San Francisco–Oakland–Berkeley, California MSA is an area commonly referred to as the Bay Area, a region surrounding the San Francisco, San Pablo and Suisun Bay estuaries in Northern California. The three principal cities of the Bay Area represent different employment clusters and are dominated by different, but commingled, industries. San Francisco is home to the region’s financial, business and tourism industries. The East Bay, centered around Oakland, is home to heavy industry, metalworking, oil and shipping, while San Jose is the heart of Silicon Valley, the leading global technology hub. Furthermore, the North Bay area is major center for the country’s agriculture and wine industry.

The property is in the City of Oakley in Contra Costa County, 40 miles east of San Francisco and 40 miles south of Sacramento. Oakley has a population of 42,542 as estimated in 2019 by the United States Census Bureau. We believe the City is a pro-development, pro-business community with an active City sponsored economic development program designed to promote growth.

The U.S. Industrial, Warehouse/Distribution and Last-mile Logistics Market

As the COVID-19 pandemic fallout continues to ripple through the U.S. real estate market, the industrial sector is an outlier with record-high rents, low vacancy levels and 44 consecutive quarters of positive net absorption. In the first quarter of 2021, the availability of industrial space was constrained, with a vacancy rate of approximately 4.4% and an availability rate of approximately 7%, approximately 30 basis points lower than the prior quarter and a record low, according to CBRE. First quarter of 2021 positive net absorption, or decrease in available supply, was 99.3 million square feet, the third strongest quarter on record and CBRE notes a large amount of the new construction that will be delivered in 2021 has been preleased, which is expected to sustain positive net absorption.

 

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LOGO

Source: CBRE Research Q1 2021 U.S. Industrial & Logistics Figures, page 4

The industrial sector’s strong fundamentals have driven sale prices of industrial properties to record levels. The sector achieved a 14.1% annual total return through the first quarter of 2021 as tracked by the National Counsel of Real Estate Investment Fiduciaries, or NCREIF, Property Index, materially outperforming every other tracked sector. Additionally, 2020 marked a record ten straight years of industrial returns exceeding 10%, leading all asset types in NCREIF’s 43-year history.

The pandemic has accelerated the secular tailwinds boosting industrial real estate, shedding light on the physical building blocks supporting e-commerce, particularly demand for the warehouses and distribution centers that handle the storage, sorting, re-packaging, and distribution of products. The shift from brick-and-mortar retail distribution to e-commerce has been dramatic and is likely to continue for the foreseeable future as retailers build a more efficient distribution capability to get goods to the consumer faster and at a lower cost. Year-over-year, e-commerce growth surged during the COVID-19 pandemic with fourth quarter 2020 e-commerce sales, adjusted for seasonal variation, but not for price changes, posting an increase of 32.0% from the fourth quarter of 2019 according to the United States Census Bureau. This growth put pressure on retailers, wholesalers and third-party logistics companies to find strategically located distribution centers that could quickly reach consumers while lowering transportation costs. CBRE estimates that approximately $1 billion in incremental e-commerce sales generates 1.25 million square feet of warehouse space demand.

 

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LOGO

                 Source: U.S. Department of Commerce, US Census Bureau

                 News, May 18, 2021, Report CB21-71, page 1.

Low supply continued to drive industrial rents higher. In the United States, industrial triple net asking rents averaged $8.44 per square foot in the first quarter of 2021, up 7.1% year-over-year and an all-time high according to CBRE. A common problem for warehouse/distribution properties is a dearth of modern inventory with clear heights of at least 28’ to maximize the volume of goods that can be stacked and held before being re-sorted, repackaged, and distributed to the next destination. CBRE has observed that a high percentage of U.S. warehouse/distribution inventory is outdated and not properly equipped to meet the demands that e-commerce activity requires. CBRE reported the following statistics:

 

   

One billion square feet of U.S. warehouse/distribution inventory was built over the last ten years, but accounts for only 11% of the country’s total inventory.

 

   

The average age of the United States’ warehouse/distribution inventory is 34 years.

 

   

Nearly one billion square feet of total warehouse/distribution inventory is more than 50 years old and has clear heights of less than 20 feet.

 

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LOGO

Source: CBRE Research Q1 2021 U.S. Industrial & Logistics Figures, page 10.

We believe that the U.S. industrial real estate market will continue to experience low vacancy rates and robust development. Demand for industrial properties, particularly modern e-commerce logistics space should lead to continued rental rate growth in the long term.

The U.S. Amazon Logistics Market

Logistics facilities leased by Amazon are a significant part of the U.S. industrial commercial real estate market, representing more than 2.5% of all industrial supply. According to CBRE, Amazon occupied more than 379 million square feet of logistics real estate in the United States as of June 2021, spread across 1,066 facilities including fulfillment centers, regional sorting centers, last mile delivery stations, prime now hubs and food distribution centers. Amazon currently occupies more than 255 last mile delivery stations and has plans to occupy at least 43 more facilities in 2021.

Amazon relied on United Parcel Service, Inc., the United States Postal Service and FedEx Corporation for last mile deliveries until 2014, when the company began developing its own logistics network to reduce third-party dependence. Brian Olsavsky, Amazon.com., Inc.’s Chief Financial Officer commented on Amazon.com, Inc.’s first quarter 2021 analyst call that Amazon.com, Inc.’s current delivery cost is very competitive with their external options and the ability to control the entire flow of product from the warehouse to the end customer is important for customer satisfaction. By vertically integrating its logistics network and expanding its last mile delivery station network, we believe Amazon should be able to deliver a materially broader selection of inventory more quickly and more reliably than other retailers. We believe Amazon will remain committed to its mission critical last mile delivery station network for the long-term.

Given these dynamics, and Amazon.com, Inc.’s growing business and strong credit profile, Amazon logistics facilities trade actively in the private markets. We believe implied capitalization rates for newly built Amazon logistics facilities in the low 4% and high 3% range are common. We believe that in the current low interest rate environment, there is room for implied capitalization rates for Amazon logistics facilities, particularly last mile delivery stations in prime locations, to continue to push lower, resulting in higher sale prices.

 

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LOGO

 

        Source: CBRE Amazon Middle Mile Logistics Portfolio Offering

        Memorandum, page 4.

The Local Industrial and Warehouse/Distribution Market

The property is located in the Walnut Creek/I-680 Corridor market in Northern California, as defined by CBRE, and is notable for its lack of appropriate land zoned for industrial properties. The area had a vacancy rate of 5%, an availability rate of 8.9% and was the second smallest of 57 United States markets tracked by CBRE. CBRE noted that the Walnut Creek/I-680 Corridor market’s first quarter 2021 triple net industrial asking rent was $11.88 per square foot, the fifth highest in the United States, trailing only San Francisco, San Jose, Orange County and Northern Virginia.

CBRE further segmented the North/East Contra Costa submarket and noted this area had an overall vacancy rates of 2.6% as of year-end 2020, while the cities of Walnut Creek, Antioch and Concord all saw vacancy rates and availability rates under 1%.

The ROX Platform

ROX LP is a Delaware series limited partnership formed to facilitate public investment in curated portfolios of commercial real estate properties and individual properties. Our platform is built specifically to leverage the economies of scale enabled by our innovative structure to lower fees and execution costs so investors can access opportunities that had previously been unavailable in the public markets.

Each curated portfolio of properties or individual property will be held by a subsidiary owned by a separate Series. We expect the shares associated with each Series to be independently listed on a national securities exchange. As a Delaware series limited partnership, the debts, liabilities, obligations and expenses incurred, contracted for or otherwise existing with respect to a particular Series are segregated and enforceable only against the assets of such Series and any associated general partner, as provided under Delaware law. ROX LP intends to treat each Series, including Series AMZL, as a separate business entity for U.S. federal income tax purposes and ROX LP as a non-entity for U.S. federal income tax purposes. ROX LP further intends for Series AMZL to elect to be taxed as a REIT for U.S. federal income tax purposes commencing with its taxable year ending December 31, 2021.

The acquisition of the property is subject to the completion of this offering, the concurrent private placements and customary closing conditions.

 

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Our Real Estate Investment Strategy

Our Series are intended to be curated investments, and we intend to follow a disciplined acquisition strategy. Following this offering, we plan to periodically offer additional Series representing interests in curated portfolios of properties or individual properties with the following characteristics:

 

   

single tenant portfolios: multiple properties leased to a single tenant in one or more locations, which is our intention with Series AMZL;

 

   

single location portfolios: multiple properties leased to several tenants in a common location, such as an industrial park or a life sciences campus; and

 

   

single properties: a single property with significant scale and cash flow durability, such as a corporate headquarters or other critical facility.

We are generally asset class agnostic, and our investment criteria include assessing each property’s market and submarket characteristics, condition and quality of construction, replacement cost and cost to re-lease. Our primary investment objective is to acquire and offer properties that will generate attractive risk-adjusted returns and support consistent and growing cash distributions.

Our focus is on properties with the following characteristics:

High-quality real estate: Our objective is to acquire stabilized properties located in high barrier to entry markets that we believe will appreciate over time. We prefer mission critical assets that are essential to a tenant’s operations or generation of sales and profits, including key distribution facilities, critical operations, top performing retail stores and corporate headquarters. We will generally target newly built, or recently renovated, properties that do not have near-term improvement obligations.

Creditworthy tenants: We target tenants with national reputations, a leading competitive position in their industry, a strong balance sheet and a solid credit profile. We believe tenants with these characteristics will consistently meet their rent obligations throughout various market cycles.

Favorable lease terms: We desire long-term leases with regular rent escalations that mitigate the effects of inflation. We target lease structures such as net leases that have the benefit of mitigating unknown or rising operating expenses, allowing us to provide consistent long-term cash distributions.

We anticipate that the industry relationships the management team of ROX GP has cultivated with leading developers, owners, brokers and other industry participants will continue to generate attractive marketed and off-market investment opportunities. In addition to the strategic cooperation agreement with NorthPoint, we and our affiliates are in discussions with potential sellers of properties in the industrial, multi-family, life science and net lease retail sectors that meet our initial focus characteristics. We and our affiliates are in varying stages of negotiation and have not completed our due diligence process with the sellers of these properties. As a result, there can be no assurance that these acquisitions will be completed on terms satisfactory to us or at all.

Investor Benefits

Our Series will allow investors to access curated commercial real estate opportunities that can help build a well-balanced, diversified investment portfolio. Investor benefits include:

Value-driven real estate strategy: High-quality real estate with credit worthy tenants and favorable lease terms will be key value drivers.

Accessibility: Investors will have the ability to purchase shares representing economic interests of curated portfolios of properties or individual properties listed on a national securities exchange. We intend to provide investors the opportunity to invest alongside leading operators who have considerable knowledge of the property and its tenants. For some of these operators, it will be the first time that public market investors will be able to benefit from their expertise.

 

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Transparency: We plan to provide detailed property and market information for each Series to empower investors to make well-informed decisions regarding a potential investment in a Series. We plan to disclose diligence documentation, including material leases, environmental reports, property condition reports and appraisals, in connection with each initial Series offering.

Liquidity: We have applied for a listing to trade the shares associated with a Series on the NYSE Arca exchange. Each Series will have its own unique ticker symbol and a lead market maker to facilitate trading activity. Commercial real estate is a dynamic asset class, and we believe the public market liquidity of our Series should allow investors to efficiently and proactively adjust their holdings to reflect evolving economic and demographic changes.

Flexibility: As more Series are listed, investors can choose to invest in a single Series or to create a tailored portfolio in multiple Series. This optionality allows investors to make decisions based on their personal investment objectives, risk tolerance and market expectations.

Cost Efficiency: We have designed our platform and structure to be cost efficient and provide shareholders more predictable and lower fees than many real estate investment vehicles. Series AMZL will pay RPS Securities a capped one-time transaction expense fee of 1.75% of the net proceeds from this offering and the concurrent private placements plus a one-time reimbursement of expenses directly related to the acquisition of the property. The transaction expense fee is a partial reimbursement of offering expenses incurred by RPS Securities and ROX Parent, such as legal, accounting, transfer agent, printing and other offering expenses. Any offering expenses in excess of the 1.75% fee, will not be incurred by Series AMZL. Series AMZL will pay a monthly management fee beginning September 1, 2021, calculated as one-twelfth of 65 basis points of the monthly average equity value of Series AMZL as observed on NYSE Arca. RPS Securities’ annual management fee generally will cover all costs related to its and its affiliates general and administrative expenses, except for a limited amount of specific reimbursable expenses. Furthermore, ROX GP and RPS Securities will not charge sales commissions or incentive fees or retain a carried interest or promote.

Real Estate Owner Benefits

We intend for the ROX platform to become a new and attractive disposition option for real estate owners with several benefits including:

Public market monetization. Owners can monetize all, or a portion, of a single property through public market transactions without bearing the associated public company reporting obligations.

Potential to stay involved. Our platform and structure allow owners potentially to remain in their role as property manager and retain a minority equity interest in the property.

Our Management Structure

The board members and executive officers of ROX GP have extensive experience in commercial real estate, capital markets and related functions.

Our management structure includes a board of managers of ROX GP, which we refer to as the Board, an executive team of ROX GP and a board of advisors to ROX GP. Subject to limited exceptions, ROX GP has sole authority for the management and control of ROX LP and each Series. ROX GP manages all aspects of ROX LP’s and each Series’ capitalization and governance, including share offerings, exchange listings and required periodic reporting. The Board, through ROX GP, is the governing board for ROX LP and each Series.

Board. The initial Board is composed of three individuals, all of whom are independent as defined under the standards established by the NYSE. All three members of the Board have extensive institutional experience in the

 

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commercial real estate industry, including detailed knowledge of national securities exchange listed REITs. The Chair is Peter Braverman, the former president of Winthrop Management, a private commercial real estate management firm, and Winthrop Realty Trust, a multi-sector NYSE-listed REIT. The Chair of the Audit Committee of the Board is Howard S. Roth, the former global sector leader of the real estate, hospitality and construction practice at Ernst & Young LLP, a multinational professional services firm. The third member of the Board is Elizabeth A. Abdoo, a former executive of and senior advisor to Host Hotels & Resorts, Inc., a leading listed lodging REIT.

Executive Officers. The executive officers of ROX GP include four members with extensive experience in commercial real estate, capital markets and finance. The President and principal executive officer is Anthony Moro, whose previous experience includes serving as a managing director over more than two decades with The Bank of New York Mellon Corp, a global financial services firm. The Chief Financial Officer and principal accounting officer is Eyal Leibovitz, a senior financial executive with 32 years of experience of financial management, of which the last 22 years were with publicly-traded companies. The Chief Legal Officer is David Ronn, who has over 30 years of legal experience, including as a partner with international law firms, focused on corporate governance, mergers and acquisitions and capital markets matters for startups through public entities. The Senior Vice President—Real Estate is Shachar Melman, an experienced real estate acquisitions and asset management specialist, most recently with Ashkenazy Acquisition Corp., a private real estate investment firm.

Investment Advisory Board. The board of advisors to ROX GP, referred to as the Investment Advisory Board, is a team of four highly accomplished commercial real estate individuals. The Investment Advisory Board will act as a resource for the Board and executive officers of ROX GP with respect to real estate industry knowledge and strategy, particularly to review and provide feedback regarding potential properties from an overall investment perspective for the creation of value for our Series. The Investment Advisory Board members include: Marty Burger, the current Chief Executive Officer of Silverstein Properties Inc., a leading commercial real estate development, investment and management firm; Nathaniel Hagedorn, the founder and current Chief Executive Officer of NorthPoint, a leading industrial commercial real estate developer; David Hirsh, a real estate investor who retired in 2018 after working in real estate asset management at Blackstone Group Inc. and Citigroup Inc.; and Robert G. Leary, an institutional asset management executive and the former Chief Executive Officer of The Olayan Group and former Chief Executive Officer of Nuveen, LLC.

 

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MANAGEMENT

General

We are managed and operated by ROX GP, through the Board and executive officers of ROX GP, a wholly owned subsidiary of ROX Parent. ROX Parent, as the sole member of ROX GP, will have the sole power to:

 

   

nominate and elect all members of the Board;

 

   

set the number of members of the Board;

 

   

remove any member of the Board, with or without cause, at any time; and

 

   

fill any vacancies on the Board.

Shareholders will not be entitled to elect our general partner or its Board or otherwise directly participate in our management or operations. Our general partner, through its Board, owes certain contractual duties to shareholders as well as a fiduciary duty to its owner, ROX Parent. Please see “Conflicts of Interest and Fiduciary Duties.”

ROX Parent has nominated and elected the initial Board, composed of three individuals, all of whom are independent as defined under the standards established by the NYSE. Our partnership agreement requires that the Board consist of at least a majority of independent directors. Each of the members of the Board holds office for an annual term or until his or her resignation or removal by ROX Parent. The officers of ROX GP serve at the pleasure of the Board.

The NYSE does not require a listed publicly-traded partnership, such as ROX LP, to establish a compensation committee or a nominating committee. However, ROX GP is required to have an audit committee of at least three members, and all its members are required to meet the independence and experience standards established by the NYSE, subject to certain transitional relief during the one-year period following completion of this offering.

All the executive officers of ROX GP will allocate their time between managing our business and affairs and the business and affairs of ROX Parent or its affiliates. The amount of time that the executive officers of ROX GP will devote to our business and the business of ROX Parent or its affiliates will vary in any given year based on a variety of factors, pursuant to services agreements. Please see “Services Agreement with RPS Securities.”

ROX LP’s and any Series’ operations will be conducted through, and each Series’ assets will be owned by, various subsidiaries. However, neither ROX GP, ROX LP, any Series nor any Series’ subsidiaries are expected to have any employees. RPS Securities’ and ROX GP’s affiliates have the sole responsibility for providing the personnel necessary to conduct the operations of ROX GP, and through RPS Securities and ROX GP for the benefit of ROX LP, any Series and any Series’ subsidiaries. ROX GP has a non-economic interest in ROX LP but affiliates of ROX GP will be paid certain fees for providing services to ROX LP, the Series and the Series’ subsidiaries and ROX LP is required to reimburse ROX GP and its affiliates for specified expenses. Please see “ROX LP Partnership Agreement—Reimbursement of Expenses” and “Services Agreement with RPS Securities.”

In evaluating director candidates, ROX Parent will assess whether a candidate possesses the integrity, judgment, knowledge, experience, skill and expertise that are likely to enhance the Board’s ability to manage and direct the affairs and business of ROX LP (through ROX GP), the applicable Series and any Series’ subsidiaries, including, when applicable, to enhance the ability of committees of the Board to fulfill their duties.

 

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Executive Officers and Members of the Board

The following table sets forth information for the executive officers and members of the Board upon the completion of this offering. Members of the Board hold office until their successors have been elected or qualified or until the earlier of their death, resignation, removal or disqualification. Executive officers serve at the discretion of the Board. There are no family relationships among any of the Board members or executive officers. All of the executive officers of ROX GP also serve as executives of ROX Parent and particular affiliates.

 

Name

   Age     

Position with ROX GP

Peter Braverman

     69     

Chair of the Board

Howard S. Roth

     64     

Board Member and Chair of the Audit Committee

Elizabeth A. Abdoo

     63     

Board Member

Anthony F. Moro

     51     

President (principal executive officer)

Eyal Leibovitz

     60     

Chief Financial Officer (principal financial officer)

David L. Ronn

     59     

Chief Legal Officer and Secretary

Shachar Melman

     36     

Senior Vice President – Real Estate

Biographical Information

Peter Braverman. Mr. Braverman was appointed as Chair of the Board on November 11, 2020. He served as the Vice Chairman (formerly President) of Winthrop Management from March 2013 through December 2020, at which time he retired. Previously he was President and Trustee as well as Executive Vice President/Vice Chairman of Winthrop Realty Trust, a NYSE-listed REIT liquidated in 2020 and an affiliate of Winthrop Management. In addition, Mr. Braverman served as Executive Vice President of Winthrop Realty Partners, L.P. between 1996 and 2018 and President of Concord Debt, Inc., a commercial lending platform. Mr. Braverman also served as Director and President of Shelbourne Properties, a group of three publicly traded REITs from their initial listing on the American Stock Exchange in 2002 until their liquidation in 2004. In addition, he was the President of Newkirk Realty Trust, a NYSE-listed REIT focused on triple net properties from its inception to its sale in 2007. Prior to 1996, Mr. Braverman was Executive Vice President of National Property Investors, an investment and property management firm. He also served as Vice President of Fischbach Corporation, formerly a NYSE-traded international construction firm. Mr. Braverman holds a B.S. in Industrial and Labor Relations from Cornell University and a J.D. from Emory University School of Law.

We believe that Mr. Braverman is qualified to serve on the Board due to his extensive REIT, transactional and capital markets experience. The analysis skills and financial expertise he developed over his significant career allows him to bring important overall guidance to the Board as its Chair.

Howard S. Roth. Mr. Roth was appointed as a member of the Board and as Chair of the Board’s Audit Committee on November 11, 2020. Mr. Roth, a certified public accountant, had a 32-year career at Ernst & Young, LLP including 10 years with predecessor firm Kenneth Leventhal & Co which merged into Ernst & Young in 1995. Mr. Roth led Ernst & Young LLP’s global real estate, hospitality and construction practice from January 2008 until June 2017, leading the practice to overall revenues of $2 billion prior to his retirement in June 2017. Prior to that, he led the firm’s Northeast real estate practice and New York real estate tax practices. Mr. Roth was also a member of the Ernst & Young LLP’s Global Practice Group, which consisted of the 125 senior leaders of the firm’s global partnership. Mr. Roth’s global leadership role included developing and implementing services, solutions and technical content in the changing assurance (GAAP, IFRS), tax, and regulatory environment. He also led that practice’s digital solutions efforts including cybersecurity, data analytics, smart buildings and workplace of the future. During his career, Mr. Roth served many of Ernst & Young LLP’s most significant global real estate, private equity and corporate clients in senior advisory, coordinating partner and tax partner capacities. His experience includes transactional analysis, entity structuring, regulatory and tax compliance and judicial and non-judicial reorganizations. Since June 2017, Mr. Roth has been

 

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a principal with HSR Advisors, LLC. Mr. Roth currently serves as the Chairman of the Audit Committee and member of the Nominating and Governance Committee of Lexington Realty Trust (NYSE: LXP). He also serves on the Advisory Boards of The Black Chamber Group, a private alternative asset manager, and Hodes Weill & Associates, a global real estate advisory firm. Mr. Roth graduated from Hofstra University with a B.B.A. in accounting, is a lifetime trustee and governor of the Urban Land Institute and a member of Nareit and the National Association of Corporate Directors. He also completed the Ernst & Young LLP sponsored Executive Management programs at the Harvard Business School and Northwestern’s Kellogg School of Management.

We believe Mr. Roth is qualified to serve on the Board due to his extensive experience as a director of public companies and his public accounting experience. Additionally, his 35 years of combined financial and accounting experience will allow him to provide guidance to the board of directors in overseeing the financial and accounting aspects of our operations.

Elizabeth A. Abdoo. Ms. Abdoo was appointed as a member of the Board on November 11, 2020. Ms. Abdoo joined Host Hotels & Resorts, Inc. (NASDQ: HST), the largest lodging REIT and one of the largest owners of upscale and luxury hotels, in 2001 as Senior Vice President, General Counsel and Secretary and served as Executive Vice President, General Counsel and Secretary from 2003 until November 2019. She served as Senior Advisor to that entity until April 2020. While at the company, she was a member of the investment committee responsible for the review, assessment and approval of real estate acquisitions, dispositions, investments, capital market activities and major capital expenditures. She staffed and led a high performing team of attorneys responsible for all legal affairs, while advising senior management and the board of directors and its committees on legal and regulatory matters, ethics and governance, human capital and enterprise risk management. In addition, her responsibilities included leading negotiations on major acquisitions and dispositions, joint ventures and public and private equity and debt offerings in the United States and internationally. From 1996 to 2001, Ms. Abdoo worked for Orbital Sciences Corporation (Northrup Grumman) with her last titles being Senior Vice President and Assistant General Counsel where she advised the company on mergers and acquisitions, finance and securities matters. Ms. Abdoo began her career as an associate at Winthrop, Stimson, Putnam & Roberts (now Pillsbury Winthrop Shaw Pittman LLP) in New York city and then at Hogan & Hartson LLP (now Hogan Lovells LLP) in Washington DC. Since 2019, Ms. Abdoo has been a board member of the Alliance for the Chesapeake Bay, where she chairs the governance committee and serves on the executive and finance committees. Since 2018, she has served on the Board of Visitors of Georgetown University Law Center and as a member of the finance committee. Ms. Abdoo has a B.A. in Government from Georgetown University (cum laude) and a J.D. from Georgetown University Law Center. She is a member of the State Bars of New York and the District of Columbia.

We believe Ms. Abdoo is qualified to serve on the Board due to her extensive REIT, real estate transactions, governance and legal experience for a public entity. In addition, her extensive legal skills and experience allow her to provide a different point of view for Board analysis and decisions.

Anthony F. Moro. Mr. Moro has served as President of ROX GP since its formation and is the principal executive officer of ROX GP. He also has served as President of ROX Parent and ROX Financial Services Inc., or ROX Financial Services, both since July 29, 2019. Mr. Moro is employed by ROX Financial Services in its New York, New York office. Mr. Moro is a senior financial services executive with 25 years of progressive experience in the global equity capital markets with expertise in deal structuring, market and regulatory practices, securities servicing, operations, investor relations and transaction management. Prior to joining ROX Parent, Mr. Moro spent more than two decades at The Bank of New York Mellon (NYSE: BK) beginning in June 1997. From 2011 through 2019, he served in BNY Mellon’s Issuer Services business as Managing Director, Depositary Receipts Regional Head for Europe, Middle East and Africa. Prior to that, he served as Regional Head for the Americas and as Head of Global Marketing, Depositary Receipts. At BNY Mellon, Mr. Moro was based in New York and London, where he led employees located on five continents and traveled to more than 60 countries. In that capacity, he helped securities issuers structure and market their initial public offerings and stock exchange listings and was a frequent speaker and thought leader on cross-border equity capital markets issues. Mr. Moro has a B.A. degree from Brown University in Political Science and Organizational Behavior and Management.

 

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Eyal Leibovitz. Mr. Leibovitz has served as Chief Financial Officer of ROX GP since its formation and of ROX Parent since July 1, 2019. He also has served as Chief Financial Officer of RealOneX Ltd since July 1, 2019. Mr. Leibovitz is employed by RealOneX Ltd., a wholly owned subsidiary of ROX Parent, in its Tel Aviv, Israel office. Mr. Leibovitz is a senior financial executive with 32 years of experience of financial management, of which the last 22 years were with publicly-traded companies acting as Chief Financial Officer, including from January 2017 through June 2019 (and continued thereafter on a part-time basis, which service will continue through August 2021) for Cellect Biotechnology Ltd. (NASDAQ: APOP), from January 2016 through December 2016 for Evogene Ltd. (NASDAQ: EVGN), from 2011 to 2015 for N-trig Ltd. and from 2007 to 2011 for Kamada Ltd. (NASDAQ: KMDA). From 2002 to 2007 Mr. Leibovitz served as the international controller of Harmonic Inc. (NASDAQ: HLIT) and from 1997 to 2002 as the co-founder and Chief Financial Officer of New Media Communications which was sold to Harmonic. Among his achievements, he led successful large-scale fund-raising efforts for those entities (including through initial public offerings, private investment in public equity rounds, public rights offerings, venture lending and public convertible debt) and multiple merger and acquisition transactions. As Chief Financial Officer for the foregoing public companies, he had responsibility for all financial reporting, Sarbanes-Oxley compliance, budget control, financial planning, strategic negotiations, investor and public relations, legal proceedings, operations and human resources. Mr. Leibovitz has B.B.A. degree from City University of New York in Finance and Management Information Systems.

David L. Ronn. Mr. Ronn has served as Chief Legal Officer and Secretary of ROX GP since its formation. Mr. Ronn also has served as General Counsel, Senior Vice President and Secretary of ROX Parent since July 1, 2019 and of ROX Financial Services since its formation. Mr. Ronn is employed by ROX Financial Services Inc. in its Houston, Texas office, with an allocation of part of his compensation expenses to RPS Securities, also in Houston, Texas. He has served as Chief Executive Officer of RPS Securities since its formation. Prior to joining ROX Parent, Mr. Ronn was a partner in the law firm of Orrick, Herrington & Sutcliffe LLP, based in Houston, Texas from February 2016 through June 2019, from where he assisted ROX Parent to develop its structure and organization together with its initial funding. From January 2011 through February 2016, Mr. Ronn was a partner at the law firm of McGuireWoods LLP in their Houston office. Mr. Ronn began his legal career in Houston with Bracewell & Patterson LLP (now Bracewell LLP) in November 1990 and made partner in January 1998. For over 30 years, Mr. Ronn’s legal practice focused on corporate governance, mergers and acquisitions and capital markets matters for startups through public entities, with concentrations in public and private securities offerings, structuring and board advice and master limited partnerships, generally in the oil and gas and technology industries. Mr. Ronn has a B.A. in French from Rice University, an M.B.A. in International Business, Finance and Marketing from the A.B. Freeman School of Business at Tulane University and a J.D. from the University of Houston. He is a member of the State Bar of Texas. Mr. Ronn is licensed by FINRA as a registered representative and has passed the SIE, Series 7, Series 24, Series 79 and Series 66 exams. Mr. Ronn was the first lawyer in Houston certified as a Leadership in Energy and Environmental Design (LEED)-accredited professional by the U.S. Green Building Council and owns the first LEED-H certified home in Houston.

Shachar Melman. Mr. Melman has served as Senior Vice President – Real Estate of ROX GP since its formation. He also has served as Senior Vice President – Real Estate of ROX Parent and ROX Financial Services, both since August 26, 2019. Mr. Melman is employed by ROX Financial Services in its New York, New York office. Mr. Melman is an experienced real estate acquisitions and asset management specialist with over 10 years in the industry. Prior to joining ROX Parent, Mr. Melman worked at Ashkenazy Acquisition Corp. in New York from February 2017 to July 2019, and before that at PBC USA, the global arm of Israel’s Property & Building Corp. from January 2015 to January 2017. Overall, Mr. Melman has sourced, closed and asset-managed over $2 billion of transactions across several real estate asset classes, including multifamily, office, retail and hospitality. Mr. Melman earned a B.A in Business Management & Political Science from the University of Haifa, Israel and an M.B.A. from the University of Michigan’s Ross School of Business, with a concentration in Real Estate and Finance. Prior to graduate school, he served as a Captain in the Israeli Navy where he held several combat leadership roles, including Weapons Officer and Executive Officer on a missile ship and Head of the Navy Weapons School.

 

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Committees of the Board

The Board will have a standing audit committee and an ad-hoc conflicts committee. We do not expect that the Board will have a compensation committee or a nominating committee, but rather that the board of directors of ROX Parent will determine the nomination, election and compensation of the members of the Board. ROX GP will not have any employees.

Audit Committee

We are required to have an audit committee of at least three members, and all its members are required to meet the independence and experience standards established by the NYSE and the Exchange Act, subject to certain transitional relief during the one-year period following completion of this offering the concurrent private placements as described above. The audit committee will assist the Board in its oversight of the integrity of the financial statements of each and Series and compliance with legal and regulatory requirements and partnership policies and controls. The audit committee will have the sole authority to:

 

   

retain and terminate our independent registered public accounting firm;

 

   

approve all auditing services and related fees and the terms thereof performed by our independent registered public accounting firm; and

 

   

pre-approve any non-audit services and tax services to be rendered by our independent registered public accounting firm.

The audit committee will also be responsible for confirming the independence and objectivity of our independent registered public accounting firm. Our independent registered public accounting firm will be given unrestricted access to the audit committee and our management.

All three of the Board members shall service on the audit committee. All three of those individuals are independent and “financially literate” under the applicable standards of the NYSE and the SEC. Mr. Roth is designated as the Chair and each of the members of the Audit Committee are designated as financial experts within the meaning of Item 407(d)(5) of Regulation S-K under the Exchange Act and with accounting and related financial management expertise within the meaning of the listing standards of the NYSE.

Conflicts Committee

All three of the independent members of the Board will serve on a conflicts committee, as necessary, to review specific matters that the Board believes may involve conflicts of interest and determines to submit to the conflicts committee for review. The conflicts committee will determine if the resolution of the conflict of interest is opposed to the interest of ROX LP or the relevant Series. The members of the conflicts committee may not be officers or employees of ROX GP or directors, managers, officers or employees of its affiliates, including ROX Parent, and must meet the independence standards established by the NYSE and the Exchange Act to serve on an audit committee of a board of directors. In addition, the members of our conflicts committee may not own any interest in ROX GP or its affiliates that is determined by the Board to have an adverse impact on the ability of such member to act in an independent manner with respect to the matter submitted to the conflicts committee. Any matters approved by the conflicts committee will be conclusively deemed to be approved by ROX LP and all shareholders and not a breach by ROX GP of any duties it may owe ROX LP, a Series or any shareholders.

Our partnership agreement provides that the conflicts committee of the Board may be comprised of one or more independent directors. For example, if because of resignation, disability, death or conflict of interest with respect to a party to a particular transaction, only one independent member of the Board is available or qualified to evaluate such transaction, the interests of the applicable shareholders of a Series may not be as well served as if the conflicts committee acted with at least two independent directors. A single-member conflicts committee would not have the benefit of discussion with, and input from, other independent members.

 

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Board Leadership Structure

With the policy of ROX GP being that all the members of the Board shall be independent, there will be a separation between the offices of chairman of the Board and principal executive officer. Members of the Board are designated or elected by ROX Parent. Accordingly, unlike holders of common stock in a corporation, shareholders will have only limited voting rights on matters affecting the business or governance of ROX LP or the applicable Series, subject in all cases to any specific rights contained in our partnership agreement. Please see “ROX LP Partnership Agreement—Meetings; Voting.”

Board Role in Risk Oversight

ROX GP governance guidelines provide that the Board is responsible for reviewing the process for assessing the major risks facing ROX LP and each Series and the options for their mitigation. This responsibility will be largely satisfied by ROX GP audit committee, which is responsible for reviewing and discussing with management and ROX LP independent registered public accounting firm major risk exposures to ROX LP and each Series and the policies management has implemented to monitor such exposures, including the financial risk exposures of ROX LP and each Series and risk management policies.

Code of Business Conduct and Ethics

The Board has established a code of business conduct and ethics that applies to the members of the Board and the officers of ROX GP, when such individuals are acting for or on behalf of ROX GP. Among other matters, ROX GP’s code of business conduct and ethics is designed to deter wrongdoing and to promote:

 

   

honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;

 

   

full, fair, accurate, timely and understandable disclosure in our SEC reports and other public communications;

 

   

compliance with applicable governmental laws, rules and regulations;

 

   

prompt internal reporting of violations of the code to appropriate persons identified in the code; and

 

   

accountability for adherence to the code.

Any waiver of the code of business conduct and ethics for our officers or the Board may be made only by the Board and will be promptly disclosed as required by law or stock exchange regulations.

Investment Advisory Board

The Investment Advisory Board will act as a resource for the Board and executive officers with respect to real estate industry knowledge and strategy, particularly to review and provide feedback regarding potential properties from an overall investment perspective for the creation of value for our Series. Members of the Investment Advisory Board have no written advisory agreement with us. Moreover, members of the Investment Advisory Board will not be under any fiduciary obligations to us nor will such members perform Board or committee functions, nor will such members have any voting or decision-making capacity on our behalf. Members of the Investment Advisory Board will also not be required to devote any specific amount of time to our efforts or be subject to the fiduciary requirements to which the Board members are subject. Accordingly, if members of the Investment Advisory Board become aware of a potential property acquisition opportunity that is suitable for any of the entities to which that member has fiduciary or contractual obligations, he or she will honor his or her fiduciary or contractual obligations to present such potential property acquisitions to that entity, and only present it to us if that entity rejects the opportunity. We may modify or expand our roster of members of the Investment Advisory Board. Any compensation to the Investment Advisory Board shall be paid by ROX Parent and shall not be borne by holders of Series AMZL shares.

 

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The Investment Advisory Board currently consists of:

Marty Burger. Mr. Burger is the Chief Executive Officer of Silverstein Properties, Inc, where he leads the company’s day to day activities, and focuses on its acquisition, development and financing efforts in the United States and abroad. Prior to joining Silverstein, Mr. Burger was President and Chief Executive Officer of Artisan Real Estate Ventures, a company he founded in 2006. Prior to Artisan, Mr. Burger spent 15 years at Related, including serving as President of Related Las Vegas and Executive Vice President of The Related Companies, L.P. From 1994 to 1997, Mr. Burger was a Vice President at The Blackstone Group working on acquisitions for its first three real estate opportunity funds. From 1993 to 1994, he worked for Goldman Sachs’ Whitehall Real Estate funds, also on the acquisition side. Prior to that, Mr. Burger spent five years at The Related Companies where he was a Vice President of Development and Acquisitions. Mr. Burger received a Bachelor of Science degree in Economics from the Wharton School of the University of Pennsylvania. He is a Trustee and a Governor of the Urban Land Institute, a member of the Global Board, and formerly a member of the America’s Executive Committee, the Chairman of the New York District Council, and Chairman of his Urban Development Mixed-Use Council. Mr. Burger is on the Executive Committee of the Zell/Lurie Real Estate Center at the Wharton School of the University of Pennsylvania, an Advisory Board Member of the Center for Real Estate and Finance at Cornell University, the Advisory Board of the New York University Schack Institute of Real Estate, and the Policy Advisory Board of the Fisher Center for Real Estate at the Haas School of Business at UC Berkeley. He is an active member of the Real Estate Roundtable in Washington, DC, and is on the Directors’ Advisory Council and the New York City Mortgage Committee of the M&T Bank. Mr. Burger is involved with Fuller Center, helping to create quality housing for those in need. He is a board member of SparkYouth, a charitable organization providing funds to multiple programs benefitting underprivileged inner-city children in the New York City metro area. He is a member of the Board of Trustees of the Battery Conservancy, a trustee of National Jewish Health, is on the Lincoln Center Real Estate and Construction Council, a board member of the Lincoln Square Business Improvement District, and is a board member of the Partnership for New York City. In addition, Mr. Burger is Co-Chair of the Real Estate Division of the Friends of the Israeli Defense Forces and has chaired multiple missions to Israel, and helps oversee the activities of the Downtown Division of the UJA Federation.

Nathaniel Hagedorn. Nathaniel Hagedorn is the founder and CEO of NorthPoint and is responsible for the company’s overall strategy and is principally focused on ensuring that NorthPoint continues to focus on its core values, maintaining the special culture it has created for its employees. NorthPoint was founded in 2012 and has developed more than 100 million square feet of industrial and logistics facilities, including for Amazon.com, Inc., Home Depot Inc., Walmart Inc., General Electric Company and General Motors Company. During the five year period ending June 15, 2020, NorthPoint was the largest builder of industrial commercial real estate in the United States, having built 46,540,156 square feet, valued at an estimated aggregate value of $3.8 billion. The NorthPoint group of companies includes real estate development and management, an international logistics and freight forwarding firm, a third party logistics company, a warehouse technology and supply chain integration company and an industrial architectural and engineering firm. Prior to NorthPoint, Mr. Hagedorn was at Briarcliff Development Company and took on increasing roles within the organization. Mr. Hagedorn received both a Master’s degree and Bachelor of Arts in Finance from the University of Missouri-Kansas City.

David Z. Hirsh. Mr. Hirsh is a real estate investor with more than 30 years of experience across all major real estate product types in most major U.S. markets. Over the course of his career, he has completed in excess of $30 billion in transactions and has developed a broad set of skills, including: portfolio management, leasing, asset sales and dispositions, lending and workouts and restructuring. In addition, he has a proven track record creating value rebranding hotels and strategically repositioning office buildings. Mr. Hirsh is currently a nominee for director of SILVERspac Inc. (NASDAQ: SLVR). Mr. Hirsh previously spent approximately 16 years, from 2002 to 2018, working in the real estate asset management group at Blackstone Group Inc. until his retirement in January 2018. During his tenure at Blackstone, Mr. Hirsh’s most significant responsibilities included day-to-day oversight and strategic management of Equity Office Properties from 2009 to 2018, IndCor Industrial Properties from 2013 to 2015, LXR Hotels and Resorts portfolio from 2004 to 2010 and several investments in

 

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the retail and senior housing sectors. Prior to joining Blackstone, Mr. Hirsh worked at Citigroup Inc. for approximately fifteen years, including six years in real estate asset management, where he led the hotel group, and five years in corporate finance specializing in corporate real estate and project lending. Mr. Hirsh is involved in several philanthropic efforts including the THANC Foundation and CaringKind. He is also an Adjunct Professor and Vice Chair of the Advisory Board at the New York University Schack Institute of Real Estate, a member of the executive advisory board of the New York University Entrepreneurial Institute and a Trustee at Pace University. Mr. Hirsh holds a Bachelor of Business Administration from Pace University and a Master of Science in Real Estate Development and Investment from New York University.

Robert G. Leary. Mr. Leary served as the Chief Executive Officer of The Olayan Group, a global investment firm, from May 2017 until July 2019, at which time he retired. Previously, he served as Chief Executive Officer of Nuveen, LLC, a leading investment management firm that was acquired in 2014 by Teachers Insurance & Annuity Association – College Retirement Equities Fund (TIAA-CREF). Mr. Leary joined TIAA-CREF in 2013 and was instrumental in the acquisition and invigoration of Nuveen as well as its integration with TIAA-CREF’s pre-existing asset management business. Mr. Leary began his career as an associate at the law firm of White & Case in New York and in 1989 opened that firm’s office in Saudi Arabia. He then moved into the financial services arena with leadership roles at J.P. Morgan & Co. and AIG Financial Products, and as CEO of ING Investment Management Americas and ING Insurance U.S. Mr. Leary currently serves on the boards of Citizens Bank, N.A., the primary subsidiary of Citizens Financial Group, Intact Financial Corporation, a major insurer publicly listed in Canada, and the National Forest Foundation, a non-profit organization that helps conserve and protect U.S. national forests. Mr. Leary holds a bachelor’s degree in political science from Union College and a law degree from Fordham University.

 

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BOARD AND EXECUTIVE COMPENSATION

Compensation of Board

ROX Parent has set the compensation for each member of the Board, as applicable, as follows:

 

   

Annual Retainer: $20,000 per Series.

 

   

Annual Chair of Board Retainer: $2,500 per Series up to a maximum of $10,000 in aggregate across all Series.

 

   

Annual Audit Committee Chair Retainer: $2,500 per Series up to a maximum of $10,000 in aggregate across all Series.

 

   

Annual Audit Committee Member (Non-Chair) Retainer: $250 per Series up to a maximum of $1,000 in aggregate across all Series.

The annual cash retainers will be paid in quarterly installments in arrears. Annual cash retainers will be pro-rated for any partial calendar quarter of service. The cash compensation of the Board is subject to change at the discretion of ROX Parent based on facts and circumstances, particularly as ROX LP issues additional Series AMZL shares or additional shares of other Series and the complexity of the management of the Series based on the types and amounts of commercial real estate included in each Series. Initially, the above compensation shall be allocated to Series AMZL by the Board. As we issue additional Series or acquire additional properties for Series AMZL, the compensation shall be allocated across all Series by ROX GP. Pursuant to our partnership agreement, ROX GP shall determine the allocation of the above compensation to each Series or all Series, as applicable. Therefore, ROX GP may change that allocation from time to time based on changes to the above compensation, the number of Series and the types and amount of commercial real estate held by each Series.

Share Ownership Guidelines

ROX Parent, has agreed to purchase 200,000 Series AMZL shares at the initial public offering price per share (without payment of any underwriting discounts) in a private placement to close simultaneously with the closing of this offering.

ROX Parent’s trading policy restricts its directors, managers, officers and employees, including those of any of its subsidiaries that includes the Board, from purchasing or selling any Series AMZL shares; provided, however, that such restriction does not apply to the independent members of the board of directors of ROX Parent due to their limited influence on the decisions of the Board or to ROX Parent’s purchase of Series AMZL shares in the concurrent private placement. ROX Parent may determine in the future that such guidelines can be amended if an effective ownership structure can be created to reduce or eliminate those potential conflicts. No such amendment is currently contemplated. Other than above, after the sale of the Series AMZL shares offered by this prospectus, ROX GP and its affiliates will not own any Series AMZL shares as of the closing of this offering.

Executive Compensation

Because all the officers of ROX GP are employees of affiliates of ROX Parent, those officers do not receive cash compensation from ROX GP for serving as ROX GP’s officers. ROX LP, on behalf of each Series, will pay RPS Securities certain fees as detailed in the services agreement between those entities. RPS Securities will, at its discretion, make distributions to ROX Parent that ROX Parent intends to use to offset transaction expenses and general and administrative expenses related to the offerings of shares and ongoing public existence costs related to ROX LP and each Series, potentially in part to offset personnel costs related to the officers and employees of ROX Parent and its other affiliates. Other than as part of the fees payable pursuant to the services agreement, neither ROX LP nor any Series shall reimburse ROX Parent or any of its affiliates directly for personnel costs, including salaries and benefits to be paid to individuals serving as named executive officers of ROX GP. Please see “Services Agreement with RPS Securities.” ROX LP does not have any employees. Consequently, neither we nor ROX GP has, and the Board has not considered, a compensation policy or program for ROX GP’s officers.

 

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PRINCIPAL HOLDERS OF SERIES AMZL SHARES

ROX Parent currently holds one Series AMZL share for which it made a capital contribution of $100. Upon the completion of this offering, Series AMZL shall redeem that Series AMZL share from ROX Parent for the original capital contribution of $100.

After the offering, none of the members of the Board or any executive officer of ROX GP holds, or will hold, Series AMZL shares. ROX Parent’s trading policy restricts its directors, managers, officers and employees, including those of any of its subsidiaries that includes the Board, from purchasing or selling any Series AMZL shares; provided, however, that such restriction does not apply to the independent members of the board of directors of ROX Parent due to their limited influence on the decisions of the Board or to ROX Parent’s purchase of Series AMZL shares in the concurrent private placement. ROX Parent may determine in the future that such guidelines can be amended if an effective ownership structure can be created to reduce or eliminate those potential conflicts. No such amendment is currently contemplated.

The following table sets forth certain information with respect to any Series AMZL shares owned by the Board, nominees for the Board and executive officers, and any individual or group of shareholders known to us and expected to be the beneficial owner of more than 5% of the Series AMZL shares to be issued and outstanding upon completion of this offering and the concurrent private placements. ROX LP and Series AMZL do not have any options or similar securities outstanding currently exercisable or exercisable within 60 days of the date of this prospectus.

 

Name and Address of Beneficial Owners (1)

   Series AMZL Shares
Beneficially Owned (1)
     % of Series AMZL
Shares Outstanding (2)
 

NP Oakley, LLC (3)

    4825 NW 41st Street, Suite 500
Riverside, Missouri 64150

     500,000        5.59

Peter Braverman

     —          *  

Howard S. Roth

     —          *  

Elizabeth A. Abdoo

     —          *  

Anthony F. Moro

     —          *  

Eyal Leibovitz

     —          *  

David L. Ronn

     —          *  

Shachar Melman

     —          *  

All executive officers, directors and nominees for director as a group (7 persons)

     —          *  

 

 *

Less than 1%

(1)

Except as otherwise indicated, the person listed as the beneficial owner of shares has sole voting power and dispositive power with respect to the shares. The address of each beneficial owner other than NP Oakley is 250 Greenwich Street, 10th Floor, New York, New York 10007.

(2)

Assuming the 82,500,000 Series AMZL shares in this offering and the 700,000 Series AMZL shares subject to the concurrent private placements are sold and the underwriters’ over-allotment option is not exercised.

(3)

The Series AMZL shares held by NP Oakley may be deemed to be beneficially owned by NPD Management, LLC, as its manager, NorthPoint Holdings, LLC and by Nathaniel Hagedorn based on the voting and dispositive power thereof. NPD Management, LLC, NorthPoint Holdings, LLC and Mr. Hagedorn disclaim beneficial ownership of any of these Series AMZL shares.

 

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DESCRIPTION OF ROX SERIES AMZL SHARES

The following is a summary of the Series AMZL designation and other specific terms and provisions for our Series AMZL shares. Please see “ROX LP Partnership Agreement” for a description of our partnership agreement and the general terms and provisions related to Series AMZL shares. The Series AMZL designation is attached as Schedule Series AMZL to our partnership agreement that is filed as an exhibit to the registration statement of which this prospectus is part and included in this prospectus as Appendix A. We will provide shareholders and prospective shareholders with a copy of the Series AMZL designation upon request at no charge.

Series Designation

The Series AMZL designation states the following:

 

   

Date of Establishment: November 19, 2020

 

   

Name of Series: Series AMZL

 

   

Status of Series: A protected series in accordance with Section 17-218 of the Delaware Act.

 

   

Relative Rights: No terms differ from those set forth in our partnership agreement.

 

   

Additional terms: None.

Series AMZL Subsidiary and Structure

Series AMZL owns 100% of ROX AMZL Oakley CA LLC, a Delaware limited liability company that will be the owner of the property upon closing of the purchase of the property.

 

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The following chart shows the anticipated structure for Series AMZL immediately after giving effect to this offering, the concurrent private placements and the closing of the purchase of the property. For a summary of the asset purchase agreement for the property, please see “Business and Property— Series AMZL—Financial and Legal Matters—Asset Purchase Agreement.”

 

LOGO

Transfer Agent and Registrar

The transfer agent and registrar for Series AMZL shares is Computershare Trust Company, N.A.

 

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CONFLICTS OF INTEREST AND FIDUCIARY DUTIES

Summary of Applicable Duties

The Delaware Revised Uniform Limited Partnership Act, which we refer to as the Delaware Act, provides that Delaware limited partnerships may, in their partnership agreements, expand, restrict or eliminate the fiduciary duties otherwise owed by the general partner to the limited partners and the partnership. Our partnership agreement contains provisions that eliminate and replace the fiduciary standards to which ROX GP would otherwise be held by state fiduciary duty law. Our partnership agreement also specifically defines the remedies available to shareholders for actions taken that, without these defined liability standards, might constitute breaches of fiduciary duty under applicable Delaware law.

When ROX GP is acting in its capacity as general partner of ROX LP or a Series, as opposed to in its individual capacity, it must act in good faith, meaning it must act in a manner that it believes is not opposed to the interest of ROX LP or a relevant Series. This duty to act in good faith is the default standard set forth under our partnership agreement and ROX GP will not be subject to any higher standard.

Our partnership agreement specifies decisions that ROX GP may make in its individual capacity and permits ROX GP to make these decisions free of any contractual or other duty owed to a shareholder. These provisions entitle ROX GP to consider only the interests and factors that it desires, and it has no duty or obligation to give any consideration to any interest of, or factors affecting, ROX LP, any Series, any subsidiaries thereof or any shareholder. These situations include:

 

   

to propose or approve any business for ROX LP or any Series;

 

   

the transfer of its general partner interest in ROX LP;

 

   

exceptions to ownership limits of shares;

 

   

declare and pay distributions on any shares;

 

   

its determination to propose amendments to our partnership agreement or a Series Designation; and

 

   

its determination whether to consent to any merger or consolidation or amendment of the partnership agreement.

When the directors and officers of ROX GP cause ROX GP to manage and operate business of ROX LP and all Series, the directors and officers must cause ROX GP to act in a manner consistent with ROX GP’s applicable duties. However, the directors and officers of ROX GP have fiduciary duties to manage ROX GP, including when it is acting in its capacity as ROX GP, in a manner beneficial to ROX Parent.

Conflicts may arise as a result of the duties of ROX GP and its directors and officers to act for the benefit of its owners, which may conflict with the interests of ROX LP, any Series and the shareholders. Where the directors and officers of ROX GP are causing ROX GP to act in its capacity as ROX GP, the directors and officers must cause ROX GP to act in good faith, meaning they cannot cause ROX GP to take an action that they believe is opposed to the interest of ROX LP or a Series. However, where a decision by ROX GP in its capacity as ROX GP is not clearly opposed to those interests but involves a conflict of interest, the directors of ROX GP may determine to submit the determination to the conflicts committee for review or to seek approval by the holders of the applicable shares of a Series, as described below.

Conflicts of Interest

Conflicts of interest exist and may arise in the future as a result of the relationships between ROX GP and its directors, officers and owners (including ROX Parent), on the one hand, and ROX LP, any Series and the shareholders, on the other hand.

 

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Whenever a conflict arises between ROX GP or its owners, on the one hand, and ROX LP, any Series or the shareholders, on the other hand, the resolution, course of action or transaction in respect of such conflict of interest shall be conclusively deemed approved by us, the applicable Series and all shareholders and shall not constitute a breach of our partnership agreement, of any agreement contemplated thereby or of any duty, if the resolution, course of action or transaction in respect of such conflict of interest is:

 

   

approved by the conflicts committee of the Board; or

 

   

approved by the holders of a majority of the outstanding shares of the affected Series, excluding any shares owned by ROX GP or any of its affiliates.

ROX GP may, but is not required to, seek the approval of such resolutions or courses of action from the conflicts committee of the Board or from the holders of a majority of the outstanding shares of the affected Series as described above. If ROX GP does not seek approval from the conflicts committee or from those shareholders as described above and the Board approves the resolution or course of action taken with respect to the conflict of interest, then it will be presumed that, in making its decision, the Board acted in good faith, and in any proceeding brought by or on behalf of us or any of the shareholders, the person bringing or prosecuting such proceeding will have the burden of overcoming such presumption and proving that such decision was not in good faith. Unless the resolution of a conflict is specifically provided for in our partnership agreement, the Board or the conflicts committee of the Board may consider any factors they determine in good faith to consider when resolving a conflict. An independent third party is not required to evaluate the resolution. Under our partnership agreement, all determinations, other actions or failures to act by ROX GP, the Board or any committee thereof (including the conflicts committee) will be presumed to be “in good faith” and in any proceeding brought by or on behalf of us or the shareholders, the person bringing or prosecuting such proceeding will have the burden of overcoming such presumption and proving that such decision was not in good faith.

Conflicts of interest could arise in the situations described below, among others:

Actions taken by ROX GP may affect the amount of cash available to pay distributions to shareholders of a Series.

The amount of cash that is available for distribution to shareholders of a Series is affected by decisions of ROX GP regarding such matters as:

 

   

amount and timing of asset purchases and sales;

 

   

cash expenditures;

 

   

borrowings;

 

   

entry into and repayment of current and future indebtedness;

 

   

issuance of additional shares of that Series; and

 

   

the creation, reduction or increase of reserves in any quarter.

In addition, arms’-length borrowings from third parties by ROX LP, a Series or their subsidiaries do not constitute a breach of any duty owed by ROX GP to the shareholders of any Series. All these actions may affect the amount of cash distributed to the shareholders of a particular Series.

For example, in the event a Series has not generated sufficient cash from its operations to distribute at least 90% of its net taxable income to maintain that Series’ election to qualify as a REIT, our partnership agreement permits that Series or its subsidiaries to borrow funds, which would enable the Series to make such distribution on all outstanding shares of that Series.

 

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The members of the Board and officers of ROX GP have a fiduciary duty to make decisions in the best interests of ROX Parent, the owner of ROX GP. Therefore, the officers and directors of ROX GP have fiduciary duties to make decisions that may be contrary to the interests of ROX LP and any Series.

All members of the Board will be independent under applicable listing standards in accordance with the provisions of our partnership agreement. However, members of the Board and officers of ROX GP have a fiduciary duty to make decisions in the best interests of ROX Parent, the owner of ROX GP. Therefore, the officers and directors of ROX GP have fiduciary duties to make decisions that may be contrary to the interests of ROX LP and any Series.

ROX GP can consider the interests of parties other than ROX LP, any Series or shareholders, such as ROX Parent or its affiliates, in exercising certain rights under our partnership agreement.

Our partnership agreement contains provisions that replace the standards to which ROX GP would otherwise be held by state fiduciary duty law. For example, our partnership agreement permits ROX GP to make a number of decisions in its individual capacity, as opposed to in its capacity as ROX GP. This entitles ROX GP to consider only the interests and factors that it desires, and it has no duty or obligation to give any consideration to any interest of, or factors affecting, ROX LP, any Series or any shareholder.

Because our partnership agreement contains provisions that replace the standards to which ROX GP would otherwise be held by state fiduciary duty law, it restricts the remedies available to shareholders for actions that, without the limitations, might constitute breaches of fiduciary duty.

In addition to the provisions described above because our partnership agreement contains provisions that replace the standards to which ROX GP would otherwise be held by state fiduciary duty law, it restricts the remedies available to shareholders for actions that might otherwise constitute breaches of fiduciary duty.

For example, our partnership agreement provides that:

 

   

ROX GP and its officers and members of the Board will not be liable for monetary damages or otherwise to ROX LP, any Series or shareholders for any losses sustained or liabilities incurred as a result of ROX GP’s, its officer’s or Board members’ determinations, acts or omissions in their capacities as general partner, officers or members of the Board, unless there has been a final and non-appealable judgment entered by a court of competent jurisdiction determining that such losses or liabilities were the result of the conduct of ROX GP or such officer or member of the Board engaged in by it in bad faith (as defined in our partnership agreement) or, with respect to any criminal conduct, with the knowledge that its conduct was unlawful; and

 

   

in resolving conflicts of interest, it will be presumed that in making its decision ROX GP, the Board or the conflicts committee of the Board acted in good faith, and in any proceeding brought by or on behalf of any limited partner or us, the person bringing or prosecuting such proceeding will have the burden of overcoming such presumption and proving that such decision was not in good faith.

By purchasing a share of any Series, the purchaser agrees to be bound by the provisions in our partnership agreement, including the provisions discussed above.

Shareholders have no right to enforce obligations of ROX GP and its affiliates under agreements with us.

Any agreements between ROX LP or any Series, on the one hand, and ROX GP and its affiliates, on the other, will not grant to the shareholders, separate and apart from us, the right to enforce the obligations of ROX GP and its affiliates in favor of ROX LP or any Series.

Contracts between ROX LP or any Series, on the one hand, and ROX GP and its affiliates, on the other, are not and will not be the result of arm’s-length negotiations.

Neither our partnership agreement nor any other agreement, contract or arrangement (including the services agreement with RPS Securities and the license agreement with ROX Parent) between ROX LP or any Series and

 

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ROX GP and its affiliates are or will be the result of arm’s-length negotiations and their terms, including fees payable to ROX GP and its affiliates, may not be as favorable to us as if they had been negotiated with unaffiliated third parties. ROX GP will determine, in good faith, the terms of any of such future transactions. Accordingly, we may pay more than market value for the services provided by ROX GP and its affiliates. The terms of these agreements, contracts and arrangements may not solely reflect the best interest of shareholders and may be overly favorable to the other party to such agreements, contracts and arrangements, including in terms of the substantial compensation to be paid to these parties. Further, we may choose not to enforce, or to enforce less vigorously, our rights under these agreements, contracts and arrangements because of our desire to maintain our ongoing relationships with ROX GP and its affiliates.

Except in limited circumstances, ROX GP has the power and authority to conduct the business of ROX LP and all Series without approval of the shareholders.

Under our partnership agreement, ROX GP has full power and authority to do all things, other than those items that require approval of shareholders or as may be otherwise set forth in a Series Designation, necessary or appropriate to conduct the business of ROX LP and any Series, including, but not limited to, the following actions:

 

   

expending, lending, or borrowing money, assuming, guaranteeing, or otherwise contracting for, indebtedness and other liabilities, issuing evidences of indebtedness, including indebtedness that is convertible into equity interests of ROX LP, and incurring any other obligations;

 

   

making tax, regulatory and other filings, or rendering periodic or other reports to governmental or other agencies having jurisdiction over ROX LP’s and any Series’ business or assets (to the extent that ROX LP has any assets);

 

   

acquiring, disposing, mortgaging, pledging, encumbering, hypothecating or exchanging assets of ROX LP (if any) and any Series or the determination to merge or otherwise combine ROX LP or a Series with or into another person;

 

   

using the assets of ROX LP (if any) and any Series for purposes consistent with our partnership agreement, including financings, repayment or guarantees of obligations and making capital contributions;

 

   

negotiating, executing and performing contracts, conveyance or other instruments;

 

   

distributing cash or cash equivalents;

 

   

selecting, employing or dismissing employees, agents, outside attorneys, accountants, consultants and contractors and determining their compensation and other terms of employment or hiring;

 

   

maintaining insurance for the benefit ROX LP, any Series, any subsidiaries and indemnitees;

 

   

forming, acquiring an interest in, and contributing property and loaning money to, any partnerships, joint ventures, corporations, limited liability companies or other entity (including corporations, firms, trusts and unincorporated organizations);

 

   

controlling all matters affecting our rights and obligations, including bringing and defending actions at law or in equity or otherwise litigating, arbitrating or mediating, and incurring legal expense and settling claims and litigation;

 

   

indemnifying any person against liabilities and contingencies to the extent permitted by law;

 

   

entering into listing agreements with any national securities exchange and the delisting of some or all shares;

 

   

taking any action in connection with ROX LP’s or a Series’ management of any of their subsidiaries;

 

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purchasing, selling or otherwise acquiring or disposing of shares; and

 

   

entering into agreements with any of its affiliates, including agreements to render services to any Series, a Series subsidiary or to itself in the discharge of its duties as ROX GP.

We may choose not to retain separate counsel for ourselves or for the shareholders.

The attorneys, independent accountants and others who perform services for ROX LP or any Series have been retained by ROX GP or its affiliates. Attorneys, independent accountants and others who perform services for ROX LP or any Series are selected by ROX GP or the conflicts committee of the Board and may perform services for ROX GP and its affiliates. ROX LP may retain separate counsel or the conflict committee in the event of a conflict of interest between ROX GP and its affiliates, on the one hand, and ROX LP or the shareholders, on the other, depending on the nature of the conflict, although ROX LP may choose not to do so.

ROX GP’s affiliates may compete with us, and neither ROX GP nor its affiliates have any obligation to present business opportunities to us.

Our partnership agreement provides that ROX GP will be restricted from engaging in any business activities other than acting as the general partner of ROX LP and associated with each Series, engaging in activities incidental to its ownership interest in ROX LP and providing management, advisory and administrative services to its affiliates or to other persons. However, affiliates of ROX GP, including ROX Parent and its other subsidiaries, are not prohibited from engaging in other businesses or activities, including those that might be in direct competition with us or any Series. In addition, ROX Parent and its other subsidiaries may compete with ROX LP or any Series for investment opportunities and may own an interest in entities that compete with ROX LP or any Series. Pursuant to the terms of our partnership agreement, the doctrine of corporate opportunity, or any analogous doctrine, does not apply to ROX GP or any of its affiliates, including ROX Parent or its or their executive, officers, directors and managers. Any such person or entity that becomes aware of a potential transaction, agreement, arrangement or other matter that may be an opportunity for ROX LP or any Series will not have any duty to communicate or offer such opportunity to ROX LP or any Series. Any such person or entity will not be liable to ROX LP, any Series or to any shareholder for breach of any fiduciary duty or other duty by reason of the fact that such person or entity pursues or acquires such opportunity for itself, directs such opportunity to another person or entity or does not communicate such opportunity or information to us.

Fiduciary Duties

Duties owed to shareholders by ROX GP are prescribed by law and by our partnership agreement. The Delaware Act provides that Delaware limited partnerships may, in their partnership agreements, expand, restrict or eliminate the fiduciary duties otherwise owed by the general partner to limited partners and the partnership, provided, however, that the implied contractual covenant of good faith and fair dealing may not be waived. For the avoidance of doubt, the foregoing shall not in any way reduce or eliminate any duties under the Advisers Act.

Our partnership agreement contains various provisions that eliminate and replace the fiduciary duties that might otherwise be owed by ROX GP. We have adopted these provisions to allow ROX GP or its affiliates to engage in transactions with us that otherwise might be prohibited by state law fiduciary standards and to consider the interests of other parties in addition to the interests of ROX LP, a Series or shareholders when resolving conflicts of interest. We believe this is appropriate and necessary because the Board has a duty to manage our partnership in good faith and a duty to manage ROX GP in a manner beneficial to its owner. Without these modifications, ROX GP’s ability to make decisions involving conflicts of interest would be restricted. Replacing the fiduciary duty standards in this manner benefits ROX GP by enabling it to take into consideration all parties involved in the proposed action. Replacing the fiduciary duty standards also strengthens the ability of ROX GP to attract and retain experienced and capable members of its Board and officers. Replacing the fiduciary duty standards represents a detriment to shareholders because it restricts the remedies available to shareholders for

 

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actions that, without those limitations, might constitute breaches of fiduciary duty, as described below, and permits ROX GP to consider the interests of third parties in addition to the interests of ROX LP, a Series or shareholders when resolving conflicts of interests.

The following is a summary of the fiduciary duties imposed on general partners of a limited partnership by the Delaware Act in the absence of partnership agreement provisions to the contrary, the contractual duties of ROX GP contained in our partnership agreement that replace the fiduciary duties that would otherwise be imposed by Delaware laws on ROX GP and the rights and remedies of shareholders with respect to these contractual duties:

 

State law fiduciary duty standards    Fiduciary duties are generally considered to include an obligation to act in good faith and with due care and loyalty. The duty of care, in the absence of a provision in a partnership agreement providing otherwise, would generally require a general partner to act for the partnership in the same manner as a prudent person would act on its own behalf. The duty of loyalty, in the absence of a provision in a partnership agreement providing otherwise, would generally require that any action taken or transaction engaged in be entirely fair to ROX LP.
Partnership agreement modified standards   

Our partnership agreement contains provisions that preemptively waive or consent to conduct by ROX GP and its affiliates that might otherwise raise issues as to compliance with fiduciary duties or applicable law. For example, our partnership agreement provides that when ROX GP is acting in its capacity as general partner of ROX LP or a Series, as opposed to in its individual capacity, it must act in good faith , meaning that it believed its actions or omissions were not opposed to the interest of ROX LP and any Series, and it will not be subject to any higher standard under applicable law.

 

In addition, when ROX GP is acting in its individual capacity, as opposed to in its capacity as general partner of ROX LP or a Series, it may act without any fiduciary obligation to ROX LP, any Series or shareholders whatsoever. These contractual provisions replace the fiduciary duty standards to which ROX GP would otherwise be held.

 

In making decisions, other than one where ROX GP is permitted to act in its sole discretion, it will be presumed that in making its decision ROX GP, the Board or the conflicts committee of the Board acted in good faith, and in any proceeding brought by or on behalf of any shareholder or us, the person bringing or prosecuting such proceeding will have the burden of overcoming such presumption and proving that such decision was not in good faith.

Rights and remedies of

shareholders

   Our partnership agreement does not provide shareholders with additional remedies beyond those provided under the Delaware Act. The Delaware Act generally provides that a limited partner may institute legal action on behalf of the partnership to recover damages from a third party where a general partner has refused to institute the action or where an effort to cause a general partner to do so is not likely to succeed. These actions include actions against a general partner for breach of its duties or of the partnership agreement. In addition, the statutory or case law of some jurisdictions may permit a limited partner to institute legal action on behalf of himself and all other similarly situated limited partners to recover damages from a general partner for violations of its fiduciary duties to the limited partners.

By purchasing Series AMZL shares, the purchaser agrees to be bound by the provisions in our partnership agreement, including the provisions discussed above. This is in accordance with the policy of the Delaware Act favoring the principle of freedom of contract and the enforceability of partnership agreements. The failure of a shareholder to sign a partnership agreement does not render the partnership agreement unenforceable against that person.

 

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Under our partnership agreement, we must indemnify ROX GP and its officers, managers and certain other specified persons to the fullest extent permitted by law, against liabilities, costs and expenses incurred by ROX GP or these other persons. We must provide this indemnification unless there has been a final and non-appealable judgment by a court of competent jurisdiction determining that such losses or liabilities were the result of the conduct of ROX GP or such officer or manager engaged in by it in bad faith (as defined in our partnership agreement) or, with respect to any criminal conduct, with the knowledge that its conduct was unlawful. Thus, ROX GP could be indemnified for its negligent acts if it meets the requirements set forth above. To the extent these provisions purport to include indemnification for liabilities arising under the Securities Act in the opinion of the SEC, such indemnification is contrary to public policy and, therefore, unenforceable.

 

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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

General

ROX LP’s and any Series’ operations will be conducted through, and each Series’ assets will be owned by, various subsidiaries. However, neither ROX LP, any Series nor any of Series AMZL’s Series’ subsidiaries are expected to have any employees. ROX GP and its affiliates have the sole responsibility for providing the personnel necessary to conduct the operations of ROX LP, any Series AMZL and any of Series AMZL’s subsidiaries. ROX GP has a non-economic interest in ROX LP, but affiliates of ROX GP will be paid certain fees for providing services to ROX LP, the Series and the Series’ subsidiaries and ROX LP is required to reimburse ROX GP and its affiliates for specified expenses.

Services Agreement

ROX GP, in its capacity as the general partner of ROX LP and Series AMZL, ROX LP, on behalf of Series AMZL, and RPS Securities have entered into a services agreement whereby RPS Securities has agreed to advise ROX LP and Series AMZL regarding, and assist ROX LP and Series AMZL in connection with negotiations related to, its business. Please see “Services Agreement with RPS Securities.” RPS Securities is entitled to receive payment of a management fee and transaction expenses and may receive an asset sale fee. In connection with the payment of these fees to RPS Securities by Series AMZL, RPS Securities on behalf of itself and its affiliates has agreed to pay and not be reimbursed for all direct and indirect expenses in connection with its performance of its services, the performance by ROX GP or an affiliate of ROX GP of its duties on behalf of ROX LP or Series AMZL and the existence, management and operations of ROX LP, Series AMZL or ROX GP, other than expenses to be paid by ROX LP or Series AMZL as set forth in our partnership agreement. In that regard, the payment of the transaction expenses is intended to allow RPS Securities, at its discretion, to make distributions to ROX Parent that ROX Parent intends to use to offset transaction expenses and general and administrative expenses related to the offering of Series AMZL shares and ongoing public existence costs related to ROX LP, specifically for Series AMZL and potentially in part to offset personnel costs related to the officers and employees of ROX Parent and its other affiliates. Please see “ROX LP Partnership Agreement—Reimbursement of Expenses.”

The services agreement has an initial term of three years, with automatic renewals for successive one-year periods thereafter unless notice of non-renewal is given at least 90 days prior to the end of the initial or any renewal term. The services agreement may be terminated at any time upon the consent of ROX GP and RPS Securities or upon a material breach that is not cured 30 days after notice thereof and upon bankruptcy related filings or occurrences. If requested by ROX GP, RPS Securities will continue to provide assistance to ROX LP, Series AMZL and Series AMZL’s subsidiaries for up to 90 days after termination. If ROX GP terminates upon non-renewal, Series AMZL is required to pay to RPS Securities a termination fee equal to the prior month’s management fee multiplied by twenty-four. In addition, Series AMZL shall be required to pay any fees to RPS Securities for a period of one year after termination that relates to any activities for which services were provided prior to termination.

RPS Securities is a FINRA member and is acting as our financial advisor in connection with this offering and the concurrent private placements for which it will be entitled to the payment of transaction expenses. The transaction expenses payable for this offering will be 1.75% of the net proceeds, with net proceeds meaning the gross proceeds received by Series AMZL from this offering, after deduction of the underwriters’ discounts and commissions, and the concurrent private placements (which equates to 1.65 % based on the gross proceeds of this offering). RPS Securities is not acting as an underwriter and will not sell or offer to sell any securities and will not identify, solicit or engage directly with potential investors. In addition, RPS Securities will not underwrite or purchase any of the offered Series AMZL shares, or otherwise participate in any such undertaking.

 

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Expense Reimbursement

Pursuant to our partnership agreement, ROX GP or its affiliates shall pay, and shall not charge or be reimbursed by, ROX LP or any Series for all direct and indirect expenses incurred or paid on behalf of ROX LP or a Series in its capacity as ROX GP for administrative or back office expenses of ROX GP, ROX LP or a Series, except for certain specified expenses, which shall be paid for, or reimbursed by, the applicable Series as allocated by ROX GP.

Series AMZL will reimburse ROX GP and its affiliates for certain expenses incurred in connection the acquisition of the property. To date, ROX GP and its affiliates have incurred approximately $250,000 of these expenses. We anticipate that, upon the completion of this offering, the concurrent private placements and acquisition of the property, ROX GP and its affiliates will have incurred approximately $600,000 of these expenses. Please see “ROX LP Partnership Agreement—Reimbursement of Expenses.”

License Agreement

ROX LP and ROX Parent have entered into a license agreement pursuant to which ROX Parent has granted to ROX LP a nontransferable, nonexclusive and worldwide license, on a royalty-free and as-is basis, to use certain intellectual property, including the ROX logo, the website www.roxfinancial.com and other applications, technology and work product. The license agreement has an initial term of 10 years, that is automatically renewed for successive one-year periods thereafter unless notice of non-renewal is given at least 90 days prior to the end of the initial or any renewal term. The license agreement may be terminated at any time upon mutual consent of the parties or upon a material breach that is not cured 30 days after notice thereof. Upon termination, all rights of ROX LP in the applicable intellectual property shall terminate and ROX LP shall discontinue the use thereof.

NorthPoint

ROX LP and Series AMZL have entered into certain transactions with NorthPoint and its affiliates. Please see “Business and Property—Series AMZL—Property Management Agreement,” and “Business and Property—Series AMZL—Financial and Legal Matters—Asset Purchase Agreement.”

Procedures for Review, Approval or Ratification of Transactions with Related Parties

We expect that the Board will adopt policies for the review, approval and ratification of transactions with related persons. We anticipate the Board will adopt a written code of business conduct and ethics, under which a member of the Board would be expected to bring to the attention of the principal executive officer or the Board any conflict or potential conflict of interest that may arise between the member of the Board in his or her personal capacity or any affiliate of that member in his or her personal capacity, on the one hand, and ROX LP, Series AMZL, any of Series AMZL’s subsidiaries or ROX GP on the other. The resolution of any such conflict or potential conflict should, at the discretion of the Board in light of the circumstances, be determined by a majority of the disinterested members of the Board.

If a conflict or potential conflict of interest arises between ROX GP or its affiliates, on the one hand, and ROX LP and the shareholders, on the other hand, the resolution of any such conflict or potential conflict should be addressed by the Board in accordance with the provisions of our partnership agreement. At the discretion of the Board in light of the circumstances, the resolution may be determined by the Board in its entirety, by a conflicts committee meeting the definitional requirements for such a committee under our partnership agreement or by approval of a Series Majority (excluding ROX GP and its affiliates).

Upon our adoption of our code of business conduct, we would expect that any executive officer of ROX GP will be required to avoid personal conflicts of interest unless approved by the Board.

 

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Please see “Conflicts of Interest and Fiduciary Duties—Conflicts of Interest” for additional information regarding the relevant provisions of our partnership agreement.

The code of business conduct and ethics described above will be adopted in connection with the completion of this offering, and as a result, any transactions described in this prospectus that occurred prior to that completion were not reviewed according to such procedures.

 

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ROX LP PARTNERSHIP AGREEMENT

The following is a summary of the material provisions of our partnership agreement, which is qualified by reference to our partnership agreement that is filed as an exhibit to the registration statement of which this prospectus is part and included in this prospectus as Appendix A. Please see “Where You Can Find Additional Information.” We will provide shareholders and prospective shareholders with a copy of our partnership agreement, upon request at no charge.

We summarize the following provisions of our partnership agreement elsewhere in this prospectus:

 

   

with regard to the duties of, and standard of care applicable to, ROX GP, please see “Conflicts of Interest and Fiduciary Duties”;

 

   

with regard to tax issues, please see “U.S. Federal Income Tax Considerations.”

Organization and Duration

ROX LP was organized as a Delaware series limited partnership on January 15, 2020, and has a perpetual existence unless dissolved pursuant to the terms of our partnership agreement. ROX LP shall be the sole registrant for purposes of the Securities Act, the Exchange Act and the rules and regulations of the SEC or any national securities exchange on which shares of a Series are listed or admitted to trading, as may be applicable. ROX LP shall also be an entity for purposes of the Delaware Act when referring to the partnership as a whole and for purposes as specified in our partnership agreement. We intend to treat ROX LP as a non-entity for purposes of U.S. federal income tax. Please see “U.S. Federal Income Tax Considerations.”

ROX LP is managed solely by ROX GP, as the general partner of ROX LP. Its general partner interest in ROX LP and associated with any Series is a non-economic interest, meaning that ROX GP will not receive any portion of any distributions made by a Series. No shareholder will participate in the operation, management or control of ROX LP’s or a Series’ business, transact any business in ROX LP’s or a Series’ name or have the power to sign documents for or otherwise bind ROX LP or a Series.

Purpose

Our purpose, as set forth in our partnership agreement, is limited to any business activity that is approved by ROX GP and that lawfully may be conducted by a series limited partnership (and the applicable Series) organized under Delaware law.

Series Designation

Each Series shall be established pursuant to a Series Designation and shall continue until terminated in accordance with our partnership agreement. In accordance with the Delaware Act, each Series described in this prospectus and every Series that ROX GP may establish in the future, will operate to the extent practicable as if it were a separate association for purposes of Delaware law, although a Series will not be a separate legal entity for state law purposes. Each Series will be treated as a separate business entity for U.S. federal income tax purposes and will elect to be treated as a REIT for U.S. federal income tax purposes. Please see “U.S. Federal Income Tax Considerations.”

The specific rights and obligations of shares of a Series are set forth in our partnership agreement and the Series Designation for the applicable Series. Each Series Designation shall set forth:

 

   

a name or names under which the business and affairs of that Series may be conducted;

 

   

whether that Series is a “protected series” in accordance with Section 17-218 of the Delaware Act or a “registered series” in accordance with Section 17-221 of the Delaware Act;

 

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the relative rights, powers, authority, privileges, preferences, duties, responsibilities, liabilities and obligations in respect of shares of that Series and the holders associated therewith to the extent such terms differ from those set forth in our partnership agreement;

 

   

the list of Series subsidiaries and Series property from which that Series will derive its economic benefits;

 

   

specific provisions governing the rights of that Series against a shareholder associated with that Series who fails to comply with the applicable provisions of our partnership agreement; and

 

   

any other provisions applicable to that Series.

Under the Delaware Act, if particular provisions are met, including that those provisions are in the certificate of limited partnership of ROX LP, the debts, liabilities, obligations and expenses incurred, contracted for or otherwise existing with respect to a particular series of ROX LP shall be enforceable only against the assets of that Series or the general partners associated with that Series and not against the assets of ROX LP (if any) generally, any other Series or any general partner not associated with that Series. Accordingly, the real property and other assets of one Series include only the real property, related assets and other assets that are held by that Series, including funds delivered for the purchase of shares in that Series. However, the limitations on inter-series liability provided by the Delaware Act have never been tested in federal bankruptcy courts and it is possible that a bankruptcy court could determine that the assets of one Series should be applied to meet the liabilities of the other Series or the liabilities of ROX LP generally where the assets of such other Series or of ROX LP (if any) are insufficient to meet the liabilities of a Series or ROX LP.

The limited partner interests in each Series will be denominated in shares. Our partnership agreement provides that we may issue an unlimited number of shares, including of any Series of shares already issued, without the approval of any shareholder. Please see “—Issuance of Additional Shares.”

All shares offered by this prospectus will be duly authorized and validly issued. Upon payment in full of the consideration payable with respect to the applicable shares offered by this prospectus, as determined by the Board, the shareholders will not be liable to ROX LP to make any additional capital contributions with respect to those shares, except for the return of distributions that in certain circumstances exceed the fair value of the property of the Series of which those shares are associated and for which a shareholder knew at the time of distribution that was the case.

Shareholders have no conversion, exchange, sinking fund, redemption or appraisal rights, no pre-emptive rights to subscribe for any securities of ROX LP or a Series and no preferential rights to distributions, except as may otherwise be set forth in a Series Designation.

Each Series will hold interests in its real property through newly organized or existing limited liability companies or limited partnerships which will be owned and controlled by the Series and, if applicable, the existing owners of that property. Upon the completion of the offering of shares of a Series, the net proceeds thereof will be invested by the applicable Series into the corresponding subsidiary that will hold that Series property, with the assets and liabilities of that subsidiary segregated from the property of any other Series. ROX GP will maintain separate and distinct records for each Series and account for each Series’ assets separately from all other Series. In accordance with the Delaware Act, each Series may carry on any lawful business, purpose or activity, other than the business of banking, and has the power and capacity to, in its own name, contract, hold title to assets, grant liens and security interests and sue and be sued. ROX LP intends for each Series to conduct its business, enter into contracts and hold title to assets in its own name to the extent such activities are not undertaken through any Series’ subsidiaries.

Shares of a Series will participate exclusively in the economic returns derived from interests in the Series property held by that Series. All consideration received by ROX LP for the issuance or sale of shares of a

 

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particular Series, together with all assets in which such consideration is invested or reinvested, and all income, earnings, profits and proceeds thereof, from whatever source derived, including any proceeds derived from the sale, exchange or liquidation of such assets (including for the avoidance of doubt, insurance proceeds with respect to such assets), and any funds or payments derived from any reinvestment of such proceeds, in whatever form, subject to the provisions of our partnership agreement, shall be held for the benefit of the shareholders of such Series, and not for the benefit of the shareholders of any other Series, and shall be accounted for and recorded upon the books and records of ROX LP separately from any assets associated with any other Series.

Cash Distributions

Our partnership agreement does not require us or a Series to pay distributions at any time or in any amount. Instead, the Board will adopt a cash distribution policy to be effective as of the completion of this offering and the concurrent private placements that will set forth ROX GP’s intention with respect to the distributions to be made to shareholders for each applicable Series. ROX GP, on behalf of each Series, intends to declare regular quarterly distributions to shareholders of each Series. Since ROX GP holds a non-economic interest, ROX GP will not receive any portion of any distributions made by a Series. U.S. federal income tax law generally requires that a REIT distribute annually at least 90% of its REIT taxable income, excluding net capital gains and determined without regard to the dividends-paid deduction, and that it pays U.S. federal corporate income tax to the extent that it annually distributes less than 100% of its net taxable income, including net capital gains. Please see “Distribution Policy.”

Capital Contributions

Shareholders are not obligated to make additional capital contributions.

Voting Rights

The following is a summary of the vote required from shareholders for approval of the matters specified below. Matters that call for the approval of more than 50% of the outstanding shares of an applicable Series, we refer to as a Series Majority. Matters that call for the approval of the holders of a Series Majority of every Series, we refer to as a Share Majority.

 

Issuance of additional shares    No approval rights
Amendment of our partnership agreement    Some amendments may be made by ROX GP without the approval of the shareholders. Other amendments generally require the approval of a Series Majority. Please see “—Amendment of Our Partnership Agreement.”
Merger of our partnership    Share Majority in particular circumstances. Please see “—Merger, Consolidation, Conversion, Sale or Other Disposition of Assets.”
Merger of two or more Series    Series Majority of the applicable Series. Please see “—Merger, Consolidation, Conversion, Sale or Other Disposition of Assets.”
Sale of Series Property    No approval rights. Please see “—Merger, Consolidation, Conversion, Sale or Other Disposition of Assets.”
Dissolution of our partnership    If proposed by ROX GP, a Share Majority. Please see “—Dissolution of ROX LP.”
Termination or Dissolution of a Series    If proposed by ROX GP, a Series Majority. However, 20% of the shareholders of a Series may propose the termination or dissolution, as applicable, of the applicable Series, subject to approval by a Series Majority. Please see “—Termination or Dissolution of a Series.”
Continuation of our business upon an event of withdrawal of ROX GP from the partnership    Share Majority. Please see “—Dissolution of ROX LP.”

 

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Removal of ROX GP    ROX GP may not be removed. Please see “—Withdrawal or Removal of ROX GP.”
Voting for members of the Board    Shareholders will not be able to nominate, vote for appointment or vote for removal of any member of the Board. Please see “—Meetings; Voting.”
Transfer of ROX GP interest    No approval rights. Please see “—Transfer of General Partner Interest.”
Transfer of ownership interests in ROX GP    No approval rights. Please see “—Transfer of Ownership Interests in ROX GP.”

Applicable Law; Forum, Venue and Jurisdiction

Our partnership agreement is governed by Delaware law. Our partnership agreement requires that any claims, suits, actions or proceedings:

 

   

arising out of or relating in any way to the partnership agreement (including any claims, suits or actions to interpret, apply or enforce the provisions of the partnership agreement or the duties, obligations or liabilities among shareholders or of shareholders to us, or the rights or powers of, or restrictions on, the shareholders or us);

 

   

brought in a derivative manner on our behalf;

 

   

asserting a claim of breach of a duty owed by any Board member, officer or other employee of us or ROX GP, or owed by ROX GP, to us or the shareholders;

 

   

asserting a claim arising pursuant to any provision of the Delaware Act; or

 

   

asserting a claim governed by the internal affairs doctrine;

shall be exclusively brought in the Court of Chancery of the State of Delaware (or, if such court does not have subject matter jurisdiction thereof, any other court located in the State of Delaware with subject matter jurisdiction), regardless of whether such claims, suits, actions or proceedings sound in contract, tort, fraud or otherwise, are based on common law, statutory, equitable, legal or other grounds, or are derivative or direct claims; provided, however, the foregoing does not apply to any claim, suit, action or proceeding brought to enforce any duty or liability created by the Exchange Act (or the rules and regulations thereunder) or the Securities Act (or the rules and regulations thereunder), which, to the fullest extent permitted by law, shall be exclusively brought in any federal district court of the United States.

In addition, our partnership agreement provides that each limited partner irrevocably waives the right to trial by jury in any such claim, suit, action or proceeding, including any claim under the U.S. federal securities laws. If we opposed a jury trial demand based on the waiver, the court would determine whether the waiver was enforceable under the facts and circumstances of that case in accordance with applicable case law. The waiver continues to apply to claims that arise during the period when a holder holds shares, whether the holder purchased the shares in this offering or a secondary transaction.

We believe that the foregoing provisions are necessary to include in our partnership agreement since ROX LP was formed in Delaware and Delaware is currently the only jurisdiction that has statutes relating to series limited partnerships. Delaware provides the best likelihood for rational court decisions for anyone making the above claims. In addition, since ROX LP intends to issue a multitude of Series with different shareholders for each Series and hence different interests than shareholders of other Series (as compared to other public entities that have a single group of public holders), we believe it would be burdensome and costly to shareholders for ROX LP and ROX GP to defend claims in multiple jurisdictions.

To the extent these exclusive forum provisions restrict the venue in which shareholders may bring claims arising under the federal securities laws, there is uncertainty as to whether a court would enforce such provisions. The exclusive forum provision in our partnership agreement will not relieve ROX LP of its duties to comply with the federal securities laws and the rules and regulations thereunder, and the shareholders will not be deemed to have waived ROX LP’s compliance with these laws, rules and regulations.

 

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Reimbursement of ROX LP Litigation Costs

Our partnership agreement provides that if shareholders or any persons holding a beneficial interest in a Series file a claim, suit, action or proceeding against us of a type identified in the bullet points under the above heading “—Applicable Law; Forum, Venue and Jurisdiction” and do not obtain a judgment on the merits that substantially achieves, in substance and amount, the full remedy sought in any such claim, suit, action or proceeding, then such partners or persons will be obligated to reimburse us and our affiliates, including ROX GP, the owners of ROX GP and any officer or manager of ROX GP, for all fees, costs and expenses of every kind and description, including but not limited to all reasonable attorneys’ fees and other litigation expenses, that the parties may incur in connection with such claim, suit, action or proceeding; provided, however, that the foregoing shall not apply to any claim, suit, action or proceeding brought to enforce any duty or liability created by the Exchange Act (or the rules and regulations thereunder) or the Securities Act (or the rules and regulations thereunder). Our partnership agreement does not define what constitutes a judgment that “substantially achieves, in substance and amount, the full remedy sought,” though we intend to apply a broad interpretation to such provision to apply the fee shifting provision broadly. However, there is no precise established definition of the phrase under applicable law. As a result, whether a specific judgment satisfies the foregoing criteria will be subject to judicial interpretation. By purchasing a share, a holder is irrevocably consenting to these reimbursement obligations as set forth in our partnership agreement.

Limited Liability

Assuming that a shareholder does not participate in the control of our business within the meaning of the Delaware Act and that a holder otherwise acts in conformity with the provisions of the partnership agreement, a holder’s liability under the Delaware Act will be limited, subject to possible exceptions, to the amount of capital that holder contributed to us for shares plus that holder’s portion of any undistributed profits and assets. However, if it were determined that the right, or exercise of the right, by the shareholders as a group:

 

   

to terminate a Series;

 

   

to approve some amendments to our partnership agreement; or

 

   

to take other action under our partnership agreement;

constituted “participation in the control” of our business for the purposes of the Delaware Act, then the shareholders could be held personally liable for our obligations under the laws of Delaware, to the same extent as ROX GP. This liability would extend to persons who transact business with us under the reasonable belief that the shareholder is a general partner. Neither our partnership agreement nor the Delaware Act specifically provides for legal recourse against ROX GP if shareholder were to lose limited liability through any fault of ROX GP. While this does not mean that a shareholder could not seek legal recourse, we know of no precedent for this type of a claim in Delaware case law.

Under the Delaware Act, a limited partnership may not make a distribution to a partner if, after the distribution, all liabilities of the limited partnership, other than liabilities to partners on account of their partnership interests and liabilities for which the recourse of creditors is limited to specific property of the partnership, would exceed the fair value of the assets of the limited partnership. To determine the fair value of the assets of a limited partnership, the Delaware Act provides that the fair value of property subject to liability for which recourse of creditors is limited shall be included in the assets of the limited partnership only to the extent that the fair value of that property exceeds the nonrecourse liability. The Delaware Act provides that a limited partner (or shareholder) who receives a distribution and knew at the time of the distribution that the distribution was in violation of the Delaware Act shall be liable to the limited partnership for the amount of the distribution for three years.

Following the completion of this offering, we expect that the Series subsidiaries will conduct business in several states and the Series subsidiaries may conduct business in other states or countries in the future.

 

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Maintenance of our limited liability as owner of a Series’ subsidiaries may require compliance with legal requirements in the jurisdictions in which the Series subsidiaries conduct business, including qualifying a Series’ subsidiaries to do business in those jurisdictions.

Limitations on the liability of members or limited partners for the obligations of a limited liability company or limited partnership have not been clearly established in many jurisdictions. If, by virtue of a Series’ ownership interest in Series subsidiaries or otherwise, it were determined that a Series was conducting business in any jurisdiction without compliance with the applicable statute, or that the right or exercise of the right by the shareholders as a group to terminate a Series, to approve some amendments to our partnership agreement or to take other action under our partnership agreement constituted “participation in the control” of our business for purposes of the statutes of any relevant jurisdiction, then the shareholders could be held personally liable for our obligations under the law of that jurisdiction to the same extent as ROX GP under the circumstances. We intend to operate in a manner that ROX GP considers reasonable and necessary or appropriate to preserve the limited liability of the shareholders.

Issuance of Additional Shares

Our partnership agreement authorizes us to issue an unlimited number of additional shares of any Series already established or any new Series for the consideration and on the terms and conditions determined by ROX GP without the approval of any shareholders.

Because of our structure, any issuance of shares in a Series will not dilute or affect the shareholders in any other Series. It is possible that we will fund additional acquisitions of real property through the issuance of additional shares of an already existing Series. Holders of any additional shares of an existing Series we issue will be entitled to share equally in the distributions for that Series with the then-existing shareholders in that Series. In addition, the issuance of additional shares of an already existing Series may dilute the value of the interests of the then-existing shareholders of that Series in the assets of that Series.

In accordance with Delaware law and the provisions of our partnership agreement, we may also issue additional shares of a Series that, as determined by ROX GP, may have rights to distributions or special voting rights to which the existing shares of that Series are not entitled. In addition, our partnership agreement does not prohibit a subsidiary of ROX LP or a Series from issuing equity interests, which may effectively rank senior to shares of that Series.

Except as provided in a separate agreement by ROX LP or as set forth in a Series Designation, no shareholder shall have any preemptive, preferential or other similar right with respect to the issuance of any shares.

Amendment of Our Partnership Agreement

General

Amendments to our partnership agreement or any Series Designation may be proposed only by ROX GP. However, ROX GP will have no duty or obligation to propose any amendment and may decline to do so free of any duty or obligation whatsoever to us or the shareholders, including any duty to act in the best interests of us or the shareholders. To adopt a proposed amendment, other than the amendments discussed below, ROX GP is required to seek written approval of the holders of the number of shares required to approve the amendment or to call a meeting of the shareholders to consider and vote upon the proposed amendment. Except as described below, an amendment must be approved by a Share Majority, if related to the partnership as a whole, or Series Majority, if related to a particular Series.

 

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Prohibited Amendments

No amendment may be made that would:

 

   

enlarge the obligations of any shareholder without its consent, unless approved by the applicable Series; or

 

   

enlarge the obligations of, restrict in any way any action by or rights of, or reduce in any way the amounts distributable, reimbursable or otherwise payable by us to ROX GP or any of its affiliates without the consent of ROX GP, which consent may be given or withheld in at its option.

The provision of our partnership agreement preventing the amendments having the effects described in the clauses above can be amended upon the approval of the holders of at least 90% of the outstanding shares of every outstanding Series, on a Series-by-Series basis.

No Approval of Shareholders

ROX GP may generally make amendments to our partnership agreement without the approval of any shareholder to reflect:

 

   

a change in the name of ROX LP or a Series, the location of our principal place of business, the registered agent of ROX LP or a Series or the registered office of ROX LP or a Series;

 

   

the admission, substitution, withdrawal or removal of partners in accordance with our partnership agreement;

 

   

a change that ROX GP determines to be necessary or appropriate to qualify or continue our qualification as a limited partnership or other entity in which the shareholders have limited liability under the laws of any state;

 

   

a change in the fiscal year or taxable year of ROX LP or any Series and related changes;

 

   

an amendment that is necessary, in the opinion of our counsel, to prevent ROX LP, a Series or ROX GP or its directors, managers, officers, agents or trustees from in any manner being subjected to the provisions of the Investment Company Act, the Advisers Act or “plan asset” regulations adopted under the Employee Retirement Income Security Act of 1974, or ERISA, whether or not substantially similar to plan asset regulations currently applied or proposed;

 

   

an amendment that ROX GP determines to be necessary or appropriate in connection with the creation, authorization or issuance of additional shares;

 

   

any amendment expressly permitted in our partnership agreement to be made by ROX GP acting alone;

 

   

an amendment effected, necessitated or contemplated by a merger agreement that has been approved under the terms of our partnership agreement;

 

   

conversions into, mergers with or conveyances to another limited liability entity that is newly formed and has no assets, liabilities or operations at the time of the conversion, merger or conveyance other than those it receives by way of the conversion, merger or conveyance; or

 

   

any amendment that ROX GP determines to be necessary or appropriate for the formation by ROX LP or a Series of, or investment by ROX LP or a Series in, any corporation, partnership or other entity, as otherwise permitted by our partnership agreement;

 

   

a change that ROX GP determines to be necessary or appropriate to ensure that a Series qualifies or will continue to qualify as a REIT for U.S. federal income tax purposes;

 

   

an amendment to a Series Designation and, if applicable, a Series Certificate of Registered Series, that ROX GP determines to be necessary or appropriate to reflect the conversion of a Series from a “protected series” to a “registered series,” both as set forth in the Delaware Act, or vice-versa;

 

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an amendment to a Series Designation to add additional Series subsidiaries due to additional acquisitions of Series property or to delete Series subsidiaries upon their sale or dissolution and liquidation;

 

   

an amendment to take into account a successor general partner for any Series in accordance with our partnership agreement if ROX GP remains as general partner for any Series; or

 

   

any other amendments substantially similar to any of the matters described in the clauses above.

In addition, ROX GP may make amendments to our partnership agreement or a Series Designation, without the approval of any shareholder, if ROX GP determines that those amendments:

 

   

do not adversely affect any shareholder, including any holder of a particular Series as compared to holders of any other Series and any holders of a particular Series as compared to holders of that same Series, except as set forth in the applicable Series Designation;

 

   

are necessary or appropriate to satisfy any requirements, conditions or guidelines contained in any opinion, directive, order, ruling or regulation of any federal or state agency or judicial authority or contained in any federal or state statute;

 

   

are necessary or appropriate to facilitate the trading of shares or to comply with any rule, regulation, guideline or requirement of any securities exchange on which shares are or will be listed for trading;

 

   

are necessary or appropriate for any action taken by ROX GP relating to splits or combinations of shares under the provisions of our partnership agreement; or

 

   

are required to effect the intent expressed in this prospectus or the intent of the provisions of our partnership agreement or are otherwise contemplated by our partnership agreement.

Opinion of Counsel and Shareholder Approval

Any amendment that ROX GP determines would have a material adverse effect on the rights or preferences of any Series in relation to any other Series must be approved by a Series Majority of the affected Series. However, no vote will be required by any Series that ROX GP determines are not so adversely affected. Any amendment that would reduce or increase the voting percentage required to take any action other than to call a meeting of shareholders is required to be approved by the affirmative vote of shareholders whose aggregate outstanding shares constitute not less than the voting requirement sought to be reduced. For amendments of the type not requiring approval of the shareholders, ROX GP will not be required to obtain an opinion of counsel that an amendment will not result in a loss of limited liability to the shareholders. No other amendments to our partnership agreement will become effective without the approval of holders of at least 90% of shares of all Series, on a Series-by-Series basis, unless we first obtain an opinion of counsel to the effect that the amendment will not affect the limited liability under applicable law of any shareholders.

Merger, Consolidation, Conversion, Sale or Other Disposition of Assets

A merger, consolidation or conversion of ROX LP or a Series requires the prior consent of ROX GP. However, ROX GP may decline to consent to any merger, consolidation or conversion and act in its sole discretion free of any duty or obligation whatsoever to us or the shareholders, including any duty to act in the best interest of us or the shareholders. Such transaction requires the approval of a Series Majority, if related solely to a Series, or a Share Majority, if related to ROX LP as a whole. However, ROX GP may consummate any merger without the prior approval of the shareholders if ROX LP is the surviving entity in the transaction, ROX GP has received an opinion of counsel regarding limited liability, the sole purpose of the transaction is to effect a mere change in the legal form of ROX LP into another limited liability entity and the governing instruments of the new entity provide shareholders with substantially the same rights and obligations as in our partnership agreement.

 

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ROX GP may effect the acquisition, disposition, mortgage, pledge, hypothecation or granting of a security interest in all or substantially all any Series property without the approval of any shareholders. ROX GP may also sell all or substantially all of Series property under a foreclosure or other realization upon those encumbrances without such approval.

The shareholders are not entitled to dissenters’ rights of appraisal under our partnership agreement or applicable Delaware law in the event of a conversion, merger or consolidation, a sale of substantially all the assets of a Series or any other similar transaction or event.

Dissolution of ROX LP

ROX LP will continue as a series limited partnership until dissolved under our partnership agreement. ROX LP will dissolve upon:

 

   

the election of ROX GP to dissolve us, if approved by a Share Majority;

 

   

there being no shareholders, unless we are continued without dissolution in accordance with applicable Delaware law;

 

   

the entry of a decree of judicial dissolution of ROX LP; or

 

   

the withdrawal of ROX GP as detailed below (or as otherwise required under the Delaware Act), unless:

 

   

a successor is elected and admitted to the partnership and associated with each Series and the partnership and each applicable Series are continued without dissolution or termination, as applicable, pursuant to our partnership agreement; or

 

   

the partnership and each applicable Series are otherwise continued without dissolution or termination, as applicable, in accordance with our partnership agreement and the Delaware act.

Upon a dissolution under the last clause above, the holders of a Share Majority, or a Series Majority with respect to any Series, may also elect, within specific time limitations, to continue our business on the same terms and conditions described in our partnership agreement by appointing as a successor general partner an entity approved by such holders, which is generally subject to our receipt of an opinion of counsel to the effect that the action would not result in the loss of limited liability under Delaware law of any shareholder.

Termination or Dissolution of a Series

A Series shall not be terminated or dissolved, as applicable, by the admission of additional shareholders or by the admission of a successor general partner in accordance with the terms of our partnership agreement. Unless otherwise provided in the Series Designation establishing a Series, a Series shall terminate or dissolve, as applicable, and its affairs shall be wound up, upon:

 

   

the dissolution of ROX LP;

 

   

the sale of all or substantially all the Series property;

 

   

an event set forth as an event of termination or dissolution, as applicable, of such Series in the Series Designation establishing that Series;

 

   

an election to terminate the Series by ROX GP that is approved by the affirmative vote of the applicable Series Majority;

 

   

an election to terminate the Series approved at a meeting of the shareholders of that Series in accordance with our partnership agreement by the affirmative vote of the applicable Series Majority;

 

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an event of withdrawal as defined in our partnership agreement (or as otherwise required under the Delaware Act) occurs with respect to a general partner associated with a Series, unless:

 

   

a successor is elected and admitted to the partnership and associated with such Series and the partnership and such Series are continued without termination or termination, as applicable, pursuant to our partnership agreement; or

 

   

the partnership and each applicable Series are otherwise continued without termination or dissolution, as applicable, pursuant to our partnership agreement and the Delaware Act; or

 

   

the entry of a decree of judicial termination or dissolution, as applicable, of such Series.

Liquidation and Distribution of Proceeds

Upon the dissolution of ROX LP or the termination or dissolution, as applicable, of a Series, the liquidator authorized to wind up the affairs of ROX LP or the applicable Series will, acting with all the powers of ROX GP that are necessary or appropriate, liquidate the assets of ROX LP (if any) or the applicable Series, subject to the Delaware Act, and apply the proceeds of the liquidation on a Series-by-Series basis to the shareholders of each applicable Series on a pro rata basis. ROX GP may appoint itself as the liquidator of ROX LP or any Series. If the liquidator is ROX GP, the only compensation to be paid ROX GP or its affiliates for such services shall be pursuant to the services agreement and reimbursement of expenses specifically to be paid by ROX LP or a Series. Please see “—Reimbursement of Expenses.” If ROX GP appoints a third party to act as liquidator, the liquidator may be removed at any time and for any reason by the holders of a Share Majority or relevant Series Majority, as applicable. The liquidator may defer liquidation or distribution of our or a Series’ assets for a reasonable period or distribute assets to shareholders in kind if it determines that a sale would be impractical or would cause undue loss to those holders.

Withdrawal or Removal of ROX GP

The withdrawal of ROX GP occurs under our partnership agreement only:

 

   

if ROX GP’s proposal to terminate a Series is not approved by the applicable Series Majority, ROX GP may voluntarily withdraw as the general partner of that Series;

 

   

upon the occurrence of a bankruptcy event of ROX GP as detailed in our partnership agreement, ROX GP shall have withdrawn as the general partner of ROX LP and each Series;

 

   

upon the dissolution and commencement of winding up of ROX GP, ROX GP shall have withdrawn as the general partner of ROX LP and each Series; or

 

   

if ROX GP transfers all of its general partner interest in accordance with our partnership agreement.

Our partnership agreement permits ROX GP to sell or otherwise transfer all its general partner interest in us without the approval of the shareholders. Please see “—Transfer of General Partner Interest.”

Upon withdrawal of ROX GP under any circumstances described above, other than as a result of a transfer by ROX GP of all or a part of its general partner interest in us, the holders of a Share Majority (or in the case of the first bullet point above, a Series Majority) may select a successor to that withdrawing general partner. If a successor is not elected, or is elected but an opinion of counsel regarding limited liability and tax matters cannot be obtained, ROX LP or the Series, as applicable, will be dissolved, wound up and liquidated. Please see “—Dissolution of ROX LP” and “—Termination or Dissolution of a Series.”

ROX GP may not be removed by shareholders.

In the event of the withdrawal of ROX GP under the circumstances described above, a successor general partner will be required to purchase the general partner interest and any interest in any services agreement of the

 

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departing general partner and its affiliates for a cash payment equal to the payments due pursuant to any applicable services agreements of ROX GP’s affiliates entered into with ROX LP through the date of withdrawal plus the reimbursement for expenses for which ROX LP is responsible pursuant to our partnership agreement. Please see “—Reimbursement of Expenses.”

Withdrawal of a Shareholder

A shareholder may not withdraw from ROX LP or a Series. However, upon the transfer of shares, the transferring holder shall cease to be a limited partner with respect to shares so transferred.

Transfer of General Partner Interest

At any time, ROX GP may in its sole discretion transfer all or any of its general partner interest to another person without the approval of any shareholder. As a condition of this transfer, the transferee must, among other things, assume the rights and duties of ROX GP, agree to be bound by the provisions of our partnership agreement, provide for a board-managed internal governance structure in its organizational documents (similar to that of ROX GP) and furnish an opinion of counsel regarding limited liability.

Transfer of Ownership Interests in ROX GP

At any time, the owner of ROX GP may sell or transfer all or part of its ownership interests in ROX GP without the approval of the shareholders.

Restrictions on Ownership and Transfer of Shares

No transfer of shares shall be made if the transfer would violate applicable federal or state securities laws or regulations of the SEC, any state securities commission or any other governmental authority. However, nothing in our partnership agreement shall preclude the settlement of transactions of shares entered into through the facilities of any national securities exchange on which shares are listed or admitted to trading.

For each Series to qualify as a REIT under the Code, shares of that Series must be owned by 100 or more persons during at least 335 days of a taxable year of 12 months (other than the first year for which an election to be a REIT has been made) or during a proportionate part of a shorter taxable year. Also, not more than 50% of the value of the outstanding shares of that Series may be owned, directly or indirectly, by five or fewer individuals (as defined in the Code to include certain entities) during the last half of a taxable year (other than the first year for which an election to be a REIT has been made). To qualify as a REIT, each Series must satisfy other requirements as well. Please see “U.S. Federal Income Tax Considerations—Requirements for Qualification as a REIT.”

To assist each Series to qualify as a REIT, our partnership agreement, subject to certain exceptions, contains restrictions on the number of shares of any Series that a person may own. Our partnership agreement provides that generally no person may own, or be deemed to own by virtue of the attribution provisions of the Code, more than 9.8% of the outstanding shares of any Series (by value or in number, whichever is more restrictive). We refer to these limits collectively as the “ownership limit.” An individual or entity that becomes subject to the ownership limit or any of the other restrictions on ownership and transfer of shares of any Series described below by a transfer or other event is referred to as a “prohibited owner” if, had the violative transfer or other event been effective, the individual or entity would have been a beneficial owner or, if appropriate, a record owner of shares.

The constructive ownership rules under the Code are complex and may cause shares of any Series owned actually or constructively by a group of related holders to be owned constructively by one individual or entity. As a result, the acquisition of less than 9.8% of the outstanding shares of any Series (by value or in number, whichever is more restrictive) or the acquisition of an interest in an entity that owns, actually or constructively, shares of any Series, could, nevertheless, cause that holder, or another individual or entity, to own constructively in excess of the ownership limit.

 

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The Board may in its sole and absolute discretion, and subject to such conditions as it may determine and the receipt of certain representations and undertakings, prospectively or retroactively, waive the ownership limit or establish a different limit on ownership, or excepted holder limit, for a shareholder of a particular Series if the holder’s ownership in excess of the ownership limit would not:

 

   

result in a Series being “closely held” within the meaning of Section 856(h) of the Code (without regard to whether the ownership interest is held during the last half of a taxable year);

 

   

result in any income received by a Series failing to qualify as rents from real property for purposes of the REIT requirements; or

 

   

otherwise result in a Series failing to qualify as a REIT.

As a condition of its waiver or grant of excepted holder limit, the Board may, but is not required to, require an opinion of counsel or IRS ruling satisfactory to the Board to determine or ensure a Series’ qualification as a REIT. In addition, ROX GP may permit an underwriter or placement agent that participates in a public offering or a private placement of shares to exceed the ownership limit, but only to the extent and period necessary to facilitate that public offering or private placement.

In connection with granting a waiver of the ownership limit, creating an excepted holder limit or at any other time, the Board may from time to time increase or decrease the ownership limit for all other holders unless, after giving effect to such increase, five or fewer individuals could beneficially or constructively own in the aggregate, more than 49.9% in value of shares then outstanding of a Series or such Series would otherwise fail to qualify as a REIT. Prior to the modification of the ownership limit, the Board may require opinions of counsel, affidavits, undertakings or agreements as it may deem necessary or advisable to determine or ensure a Series’ qualification as a REIT. A reduced ownership limit will not apply to any person or entity whose percentage ownership of shares of a Series is in excess of such decreased ownership limit until such time as such individual’s or entity’s percentage ownership of shares of a Series equals or falls below the decreased ownership limit, but any further acquisition of shares in excess of such percentage ownership of shares will be in violation of the ownership limit.

Our partnership agreement further prohibits:

 

   

any holder from beneficially or constructively owning, applying certain attribution rules of the Code, shares of a Series that would result in the Series being “closely held” under Section 856(h) of the Code, without regard to whether the ownership interest is held during the last half of a taxable year, or otherwise causing a Series to fail to qualify as a REIT; and

 

   

any person from transferring shares of a Series if such transfer would result in shares of that Series being owned by fewer than 100 persons, determined without reference to any rules of attribution.

Any person or entity who acquires or attempts or intends to acquire beneficial or constructive ownership of shares of a Series that will or may violate the ownership limit or any of the other foregoing restrictions on ownership and transfer of shares of such Series, or who would have owned shares of such Series transferred to a trust as described below, must immediately give written notice to ROX GP and the applicable Series of the event, or in the case of an attempted or proposed transaction, must give at least 15 days’ prior written notice to ROX GP and the applicable Series and provide ROX GP and the applicable Series with such other information as ROX GP or the applicable Series may request to determine the effect of such transfer on such Series’ qualification as a REIT. The foregoing restrictions on ownership and transfer of shares of a Series will not apply if ROX GP determines that it is no longer in the best interests of the Series to attempt to qualify, or to continue to qualify, as a REIT or that compliance with the restrictions and limitations on ownership and transfer of shares of the Series as described above is no longer required for the Series to qualify as a REIT.

If any transfer of shares of a Series would result in shares of that Series being beneficially owned by fewer than 100 persons, such transfer will, to the fullest extent permitted by law, be null and void and the intended

 

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transferee will acquire no rights in such shares. In addition, if any purported transfer of shares of a Series or any other event would otherwise result in any person violating the ownership limit or an excepted holder limit established by ROX GP or in the Series being “closely held” under Section 856(h) of the Code (without regard to whether the ownership interest is held during the last half of a taxable year) or otherwise failing to qualify as a REIT, then that number of shares (rounded up to the nearest whole share) that would cause the applicable Series to violate such restrictions will be automatically transferred to, and held by, a trust for the exclusive benefit of one or more charitable organizations selected by ROX GP and the intended transferee will acquire no rights in such shares. The automatic transfer will be effective as of the close of business on the business day prior to the date of the violative transfer or other event that results in a transfer to the trust. Any dividend or other distribution paid to the prohibited owner, prior to ROX GP’s discovery that shares had been automatically transferred to a trust as described above, must be repaid to the trustee upon demand for distribution to the beneficiary by the trust. If the transfer to the trust as described above is not automatically effective, for any reason, to prevent violation of the applicable ownership limit or the Series being “closely held” under Section 856(h) of the Code (without regard to whether the ownership interest is held during the last half of a taxable year) or otherwise failing to qualify as a REIT, then our partnership agreement provides that the transfer of shares will, to the fullest extent permitted by law, be null and void.

Shares of a Series transferred to the trustee are deemed offered for sale to the applicable Series, or its designee, at a price per share equal to the lesser of:

 

   

the price paid by the prohibited owner for shares (or, if the event that resulted in the transfer to the trust did not involve a purchase of such shares at market price, the last reported sales price on the national securities exchange on which those shares trade on the day of the event which resulted in the transfer of such shares to the trust); and

 

   

the market price on the date the applicable Series accepts, or its designee accepts, such offer.

In either case, the price shall be reduced for all related expenses of the applicable Series and ROX LP, which the trustee will pay to such Series and ROX LP prior to any distribution of funds to the prohibited owner.

The applicable Series may reduce the amount payable to the prohibited owner by the amount of any dividend or other distribution paid to the prohibited owner before ROX GP discovered that shares had been automatically transferred to the trust and that are then owed to the trustee as described above, and the applicable Series, or its designee, may pay the amount of any such reduction to the trustee for the benefit of the charitable beneficiary. The applicable Series, or its designee, has the right to accept such offer until the trustee has sold shares held in the trust as discussed below. Upon a sale to the applicable Series or its designee, the interest of the charitable beneficiary in shares sold terminates, the trustee must distribute the net proceeds of the sale to the prohibited owner and any dividends or other distributions held by the trustee with respect to such shares will be paid to the charitable beneficiary.

If the applicable Series does not buy shares, the trustee must, within 20 days of receiving notice from ROX GP of the transfer of shares to the trust, sell shares to a person or entity designated by the trustee who could own shares without violating the ownership limit or the other restrictions on ownership and transfer of shares of the Series. After the sale of shares, the interest of the charitable beneficiary in shares transferred to the trust will terminate and the trustee must distribute to the prohibited owner an amount equal to the lesser of:

 

   

the price paid by the prohibited owner for shares (or, if the event which resulted in the transfer to the trust did not involve a purchase of such shares at market price, the last reported sales price on the national securities exchange on which such shares trade on the day of the event which resulted in the transfer of such shares to the trust); and

 

   

the sales proceeds (net of commissions and other expenses of sale) received by the trust for shares.

In either case, less all related expenses of the applicable Series and ROX LP, which the trustee will pay to such Series and ROX LP prior to any distribution of funds to the prohibited owner.

 

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The trustee may reduce the amount payable to the prohibited owner by the amount of any dividend or other distribution paid to the prohibited owner before ROX GP discovered that shares had been automatically transferred to the trust and that are then owed to the trustee as described above. Any net sales proceeds in excess of the amount payable to the prohibited owner will be immediately paid to the charitable beneficiary, together with any dividends or other distributions thereon. In addition, if, prior to discovery by ROX GP that shares of a Series have been transferred to a trust, such shares are sold by a prohibited owner, then such shares will be deemed to have been sold on behalf of the trust and to the extent that the prohibited owner received an amount for or in respect of such shares that exceeds the amount that such prohibited owner was entitled to receive, such excess amount will be paid to the trustee upon demand. The prohibited owner has no rights in shares held by the trustee.

The trustee will be designated by ROX GP and will be unaffiliated with ROX GP, ROX LP and with any prohibited owner. Prior to the sale of any shares by the trust, the trustee will receive, in trust for the charitable beneficiary, all dividends and other distributions paid with respect to the applicable Series with respect to shares held in trust and may also exercise all voting rights with respect to shares held in trust. These rights will be exercised for the exclusive benefit of the charitable beneficiary. Any dividend or other distribution paid prior to ROX GP’s discovery that shares of a Series have been transferred to the trust will be paid by the recipient to the trustee upon demand.

Subject to Delaware law, effective as of the date that shares have been transferred to the trust, the trustee will have the authority, at the trustee’s sole discretion:

 

   

to rescind as void any vote cast by a prohibited owner prior to ROX GP’s discovery that shares have been transferred to the trust; and

 

   

to recast the vote in accordance with the desires of the trustee acting for the benefit of the charitable beneficiary. However, if ROX LP or the applicable Series has already taken irreversible action, then the trustee may not rescind and recast the vote.

In addition, if ROX GP determines in good faith that a proposed transfer or other event would violate the restrictions on ownership and transfer of shares of a Series, ROX GP may take such action as it deems advisable to refuse to give effect to or to prevent such transfer, including, but not limited to, causing the applicable Series to redeem shares of such Series on behalf of such Series at fair value (as defined in our partnership agreement), refusing to give effect to the transfer on the books of the applicable Series or ROX LP or instituting proceedings to enjoin the transfer.

Every owner of one-half percent or more (or such other percentage as required by the Code or the regulations promulgated thereunder) of shares of a Series, within 30 days after the end of each taxable year, must give ROX GP and the applicable Series written notice, stating the holder’s name and address, the number of shares of that Series that the holder actually or constructively beneficially owns and a description of the manner in which shares are held. Each such owner must provide to ROX GP in writing such additional information as it may request to determine the effect, if any, of the holder’s beneficial ownership on the Series’ qualification as a REIT and to ensure compliance with the ownership limit. In addition, each shareholder must provide to ROX GP and the applicable Series in writing such information as ROX GP or the applicable Series may request in good faith to determine any Series’ qualification as a REIT and to comply with the requirements of any taxing authority or governmental authority or to determine such compliance.

Any certificates representing shares of a Series will bear a legend referring to the restrictions described above.

These restrictions on ownership and transfer could delay, defer or prevent a transaction or a change in control that might involve a premium price for shares of a Series or otherwise be in the best interest of the shareholders of a Series.

 

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Anti-Takeover Effects

Our partnership agreement authorizes ROX GP to issue an unlimited number of additional shares without the consent of any shareholder. Please see “—Issuance of Additional Shares.” This ability to establish additional shares of a Series could render more difficult or discourage an attempt to obtain control over property of that Series by means of a tender offer, merger or otherwise. Shareholders will not have the right to remove ROX GP or vote for the Board. Please see “—Withdrawal or Removal of ROX GP” and “—Meetings; Voting.” However, 20% of the shareholders of any Series can initiate a vote to terminate a Series without approval of ROX GP. If that action is approved by the applicable Series Majority, the Series shall be terminated and ROX GP would be required to sell the applicable property or equity in subsidiaries of that Series.

Since ROX LP is a Delaware series limited partnership, the Delaware business combination statute, Section 203 of the Delaware General Corporation law, does not apply to ROX LP. Therefore, there are no statutory restrictions on a business combination for ROX LP or a Series such as a merger, asset sale or other transaction resulting in a financial benefit to an interested stockholder, which in ROX LP’s case would be a person or entity who, together with affiliates and associates, owns, or within three years prior did own, 15% or more of shares of the applicable Series.

Meetings; Voting

Record shareholders on the record date will be entitled to notice of, and to vote at, meetings of shareholders and to act upon matters for which approvals may be solicited. There is no requirement that ROX LP hold an annual meeting of shareholders, whether for ROX LP as a whole or per Series. ROX GP does not anticipate that any meeting of the shareholders will be called in the foreseeable future. Any action that is required or permitted to be taken by the shareholders may be taken either at a meeting of the shareholders or without a meeting if consents in writing describing the action so taken are signed by holders of the number of shares necessary to authorize or take that action at a meeting, if authorized by ROX GP; provided, however, that action by shareholders initiated by 20% of the outstanding shares of that Series will not require such authorization. Meetings of the shareholders of a particular Series may be called by ROX GP or by shareholders owning at least 20% of the outstanding shares of the Series for which a meeting is proposed. Shareholders may vote either in person or by proxy at meetings. The holders of a Series Majority of the applicable Series for which a meeting has been called, represented in person or by proxy, will constitute a quorum, unless any action by the shareholders requires approval by holders of a greater percentage of shares, in which case the quorum will be the greater percentage. At any meeting of the shareholders duly called and held in accordance with this Agreement at which a quorum is present, the act of shareholders that, in the aggregate, represent the applicable percentage interest required with respect to such action under the provisions of our partnership agreement shall be deemed to constitute the act of all such shareholders; provided, however, that if no specific percentage interest is required under our partnership agreement for such action, the act of a majority of the percentage interests of those shareholders present in person or by proxy at such a meeting shall be deemed to constitute the act of all such shareholders. ROX GP may postpone any meeting of shareholders one or more times for any reason by giving notice to the shareholders entitled to vote at such meeting. ROX GP may also adjourn any meeting of shareholders one or more times for any reason, including the absence of a quorum, without a vote of the shareholders.

Each record holder of a share has a vote according to his percentage interest in the applicable Series, although additional shares having special voting rights could be issued. Please see “—Issuance of Additional Shares.” Shares held in nominee or street name account will be voted by the broker or other nominee in accordance with the instruction of the beneficial owner unless the arrangement between the beneficial owner and his nominee provides otherwise.

Any notice, demand, request, report or proxy material required or permitted to be given or made to record shareholders under our partnership agreement will be delivered to the record holder by us or by the transfer agent.

 

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Election and Removal of Members of the Board

The board of directors of ROX Parent, as the sole owner of ROX GP, will have the sole power to:

 

   

nominate and elect all members of the Board;

 

   

set the number of members of the Board;

 

   

remove any member of the Board, with or without cause, at any time; and

 

   

fill any vacancies on the Board.

The number of members of the Board may not be less than one. Each member of the Board will hold office for an annual term, or until his or her resignation or removal by ROX Parent.

Since the shareholders will not have the right to nominate or vote for the appointment or removal of any member of the Board, ROX GP and ROX Parent have instituted the following policies for the benefit of the shareholders:

 

   

all members of the Board shall be independent, meaning each member shall:

 

   

not be an officer or employee of ROX GP or any of its affiliates or a director of any affiliate of ROX GP (other than of a subsidiary of ROX LP);

 

   

not be a holder of any ownership interest in ROX GP or any of its affiliates, including ROX LP or any of its subsidiaries, that would be likely to have an adverse impact on the ability of such director to act in an independent manner; and

 

   

be independent under the independence standards for directors who serve on an audit committee of a board of directors established by the rules and regulations of the SEC and by the national securities exchange on which any shares are listed or admitted to trading.

Note that shareholders can vote to terminate a Series without approval of ROX GP. Please see “—Termination or Dissolution of a Series.”

Indemnification

Under our partnership agreement, in most circumstances, we will indemnify the following persons, to the fullest extent permitted by law, from and against all losses, claims, damages, costs or similar events:

 

   

ROX GP;

 

   

any departing general partner;

 

   

any person who is or was an affiliate of ROX GP or any departing general partner;

 

   

any person who is or was a manager, managing member, general partner, director, officer, fiduciary or trustee of ROX LP, its subsidiaries, ROX GP, any departing general partner or any of their affiliates;

 

   

any person who is or was serving as a manager, managing member, general partner, director, officer, employee, agent, fiduciary or trustee of another person owing a fiduciary duty to ROX LP or its subsidiaries;

 

   

any person who directly or indirectly controls ROX GP or any departing general partner;

 

   

ROX LP in the context of any claim against a Series or any of its Series subsidiaries which claim also includes ROX; and

 

   

any person designated by ROX GP.

 

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An indemnitee shall not be indemnified if there has been a final and non-appealable judgment entered by a court of competent jurisdiction determining that, in respect of the matter for which that indemnitee is seeking indemnification pursuant to our partnership agreement, that indemnitee acted in bad faith (as defined in our partnership agreement) or, in the case of a criminal matter, acted with knowledge that the indemnitee’s conduct was unlawful. Any indemnification under these provisions will only be out of the assets of ROX LP (if any), with the indemnification costs allocated to the relevant Series as determined by ROX GP in good faith.

Unless ROX GP otherwise agrees, it will not be personally liable for, or have any obligation to contribute or lend funds or assets to us to enable us to effectuate, indemnification. ROX LP or a Series may purchase insurance against liabilities asserted against and expenses incurred by persons for our activities, regardless of whether we would have the power to indemnify the person against liabilities under our partnership agreement.

Reimbursement of Expenses

ROX GP or its affiliates shall pay, and shall not charge or be reimbursed by, ROX LP or any Series for all direct and indirect expenses incurred or paid on behalf of ROX LP or a Series in its capacity as ROX GP for administrative or back office expenses of ROX GP, ROX LP or a Series, except for the following which shall be paid for, or reimbursed by, the applicable Series as allocated by ROX GP:

 

   

all third-party expenses related to the acquisition or disposition of any Series property, including any third-party expenses for brokers or related to the negotiation and closing of any third-party debt for a Series or its subsidiaries.;

 

   

any underwriting or private placement expenses and commissions of ROX LP or a Series;

 

   

any taxes payable by ROX LP or a Series due to activities of the ROX LP, a Series or any Series’ subsidiaries;

 

   

any state franchise or income tax or any tax based upon the revenues or gross margin of ROX LP, a Series or any Series’ subsidiaries;

 

   

expenses related to any claim, order, litigation or similar action by or against ROX LP, a Series or any Series’ subsidiaries, including any deductible under any applicable insurance policy;

 

   

expenses of ROX LP, a Series or any Series’ subsidiaries with respect to indemnification pursuant to our partnership agreement;

 

   

expenses incurred by a conflicts committee pursuant to our partnership agreement acting on behalf of any Series, including any expenses related to third-party service providers engaged by a conflicts committee; and

 

   

all compensation and benefit costs of any member of the Board who could be a member of the conflicts committee to enable such members to retain their independence for the benefit of any Series.

In consideration of the payment by ROX GP and its affiliates of the expenses not listed above, ROX LP shall pay to RPS Securities advisory fees in accordance with the terms of a services agreement. Please see “Services Agreement with RPS Securities.”

Books and Reports

ROX GP is required to keep appropriate books of the business of ROX LP and each Series. These books will be maintained for both tax and financial reporting purposes on an accrual basis. For tax and fiscal reporting purposes, the fiscal year of ROX LP and each Series is the calendar year.

ROX LP will furnish or make available to record shareholders, within 105 days after the close of each fiscal year, an annual report containing audited financial statements and a report on those financial statements by our

 

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independent public accountants. Except for our fourth quarter, we will also furnish or make available summary financial information within 50 days after the close of each quarter. We will be deemed to have made any such report available if we file such report with the SEC on EDGAR or make the report available on a publicly available website that we maintain.

Information Rights

Our partnership agreement provides that a shareholder can, for a purpose reasonably related to its interest a shareholder, upon reasonable written demand stating the purpose of such demand and at its own expense, have furnished to that holder (but only to the extent necessary and essential for such purpose):

 

   

information regarding the status of our business and our financial condition of the Series of which the shareholder is a holder (provided that this obligation shall be satisfied if the shareholder is furnished our most recent annual report and any subsequent quarterly or periodic reports required to be filed, or which would be required to be filed, with the SEC pursuant to Section 13 of the Exchange Act);

 

   

a current list of the name and last known address of each Series record holder of the Series of which the shareholder is a holder if the purpose related to a specific Series or each Series record holder of ROX LP if the purpose related to ROX LP as a whole;

 

   

copies of our partnership agreement, the certificate of limited partnership of ROX LP, any certificate of registered series if the Series of which the shareholder is a holder of that Series, related amendments and powers of attorney under which they have been executed;

 

   

information regarding the amount of cash and a description and statement of the agreed value of any other property of a Series or services contributed by each Series Record Holder in the applicable Series of which the shareholder is a holder and which each Series record holder in the applicable Series has agreed to contribute in the future, and the date on which each became a Series record holder; and

 

   

other information regarding the affairs of ROX LP or the relevant Series as is just and reasonable.

ROX GP may, and intends to, keep confidential from the shareholders trade secrets or other information the disclosure of which ROX GP determines is not in the best interests of ROX LP or a Series or that we are required by law or by agreements with third parties to keep confidential.

The rights listed above are meant to clarify, by taking into account the specifics of ROX LP, the rights to information provided for under Delaware law. To avoid confusion with the Delaware statutory law, our partnership agreement limits the rights to information that a limited partner would otherwise have under Delaware law to those rights listed above.

Agreement to be Bound by Our Partnership Agreement

By purchasing shares or by acquiring shares in a transfer in accordance with our partnership agreement:

 

   

you will be admitted as a limited partner of ROX LP associated with the applicable Series of shares that are purchased or transferred;

 

   

you will be bound by the provisions of, and deemed to be a party to, our partnership agreement;

 

   

you represent that you have the capacity, power and authority to enter into our partnership agreement; and

 

   

you make the consents, acknowledgements and waivers contained in our partnership agreement.

 

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SERVICES AGREEMENT WITH RPS SECURITIES

The following is a summary of the material provisions of the Services and Investment Management Agreement among RPS Securities, ROX GP, in its capacity as the general partner of ROX LP and Series AMZL and all other Series, and ROX LP on behalf of Series AMZL and all other Series, which is qualified in its entirety by reference to the copy thereof that is filed as an exhibit to the registration statement of which this prospectus is a part. Please see “Where You Can Find Additional Information.”

ROX GP, ROX LP and RPS Securities have entered into a services and investment management agreement (which we refer to as the services agreement) pursuant to which RPS Securities has agreed to provide advice to ROX LP and Series AMZL regarding, and assist ROX LP and Series AMZL in connection with negotiations related to, its business and that of Series AMZL, including as follows:

 

   

the acquisition, management or disposition of interests in commercial real estate or, as the case may be, equity interests in any subsidiary;

 

   

related third-party equity or debt financing;

 

   

any public offering or private placement of Series AMZL shares; and

 

   

any other transaction, structuring or financing activities that may be requested by ROX LP or Series AMZL and agreed to by RPS Securities or suggested by RPS Securities and accepted by ROX LP or Series AMZL.

In consideration of RPS Securities’ provision of the above services, ROX GP shall cause Series AMZL to pay to RPS Securities:

 

   

a management fee set by RPS Securities on an on-going calendar month basis beginning September 1, 2021, of one twelfth of 65 basis points of the monthly average equity value of Series AMZL as observed on NYSE Arca, where:

 

   

the monthly average equity value of Series AMZL shall be calculated by dividing the sum of the daily equity values of Series AMZL shares as observed on NYSE Arca for that month by the number of trading days in that month;

 

   

the daily equity value of Series AMZL shall be calculated for each trading day by multiplying the closing price of a Series AMZL share as observed on NYSE Arca on that trading day by the number of outstanding Series AMZL shares at the time of such close; and

 

   

a trading day shall mean any day on which NYSE Arca is open for trading;

 

   

with respect to this offering of Series AMZL shares, the reimbursement of transaction expenses set by RPS Securities of a cap of 1.75% of the net proceeds, with net proceeds meaning the gross proceeds received by Series AMZL from this offering, after deduction of the underwriters’ discounts and commissions, and the concurrent private placements (which equates to approximately 1.65% based on the gross proceeds of this offering);

 

   

with respect to any future public offering or private placement of shares of a Series, the payment of transaction expenses as set by RPS Securities of a percentage of the net proceeds received by that Series from the completion of such public offering or private placement, with net proceeds meaning the gross proceeds after deduction of the underwriters’ or placement agents’ discounts and commissions; payment, in each case, to be made simultaneously with any such completion; and

 

   

with respect to any sale or other disposition to a third party, who is not an affiliate of ROX LP or ROX GP, of any property or asset of Series AMZL, including but not limited to an equity interest owned by Series AMZL in a subsidiary, an asset sale fee to be set by RPS Securities of up to 1.0% of the net proceeds received by that Series from the closing of such sale or other disposition, with net proceeds

 

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meaning the gross proceeds after deduction of any applicable broker’s fee); payment, in each case, to be made simultaneously with any such closing; note that although Series AMZL shares are intended to be permanent capital vehicles, circumstances may arise that may make selling an asset in the best interests of the shareholders.

The management fee can be reduced at any time by RPS Securities in its sole discretion by notice to ROX LP and, after the third anniversary of the completion of this offering, can be increased by RPS Securities in its sole discretion at any time with at least 90 days prior notice to ROX LP. The management fee is intended to reimburse RPS Securities for certain expenses incurred in connection with providing management services to Series AMZL and, over time, include a profit component. Any future adjustment to the management fee by RPS Securities may be made for any reason, including actual or anticipated changes to expenses or profits. ROX LP will promptly disclose any change to the management fee in a current or periodic report and will give any other applicable notice thereof.

In connection with the payment of the fees set forth above to RPS Securities by Series AMZL, RPS Securities on behalf of itself and its affiliates agrees to pay and not be reimbursed for all direct and indirect expenses in connection with its performance of its services, the performance by ROX GP or an affiliate of ROX GP of its duties on behalf of ROX LP or Series AMZL and the existence, management and operations of ROX LP, Series AMZL or ROX GP other than expenses to be paid by ROX LP or Series AMZL as set forth in our partnership agreement. In that regard, the payment of the transaction expenses is intended to allow RPS Securities, at its discretion, to make distributions to ROX Parent that ROX Parent intends to use to offset transaction expenses and general and administrative expenses related to the offering of Series AMZL shares and ongoing public existence costs related to ROX LP, specifically for Series AMZL and potentially in part to offset personnel costs related to the officers and employees of ROX Parent and its other affiliates. Please see “ROX LP Partnership Agreement—Reimbursement of Expenses.”

Such direct and indirect expenses to be paid by RPS Securities and its affiliates include:

 

   

accounting, legal, cash management, public relations, listing and registration fees payable to a national securities exchange or the SEC, investor relations, preparation of registration statements and periodic reporting and information technology expenses;

 

   

any fixed fee franchise tax for ROX LP;

 

   

except for the Board, all compensation and benefit costs paid to any person to perform services under the services agreement or any services or duties of ROX GP or its affiliate for ROX LP, Series AMZL or any of Series AMZL’s subsidiaries;

 

   

filing or other fees payable in connection with the offering, sale, registration or listing of any Series AMZL shares, including fees payable to the SEC, any state securities regulatory agency, any national securities exchange and any rating agency; and

 

   

transfer agent fees related to Series AMZL shares and record maintenance expenses.

All the services to be performed by RPS Securities for or on behalf of ROX LP or Series AMZL are advisory in nature and only ROX GP, in its capacity as the general partner of ROX LP on behalf of ROX LP, Series AMZL or any of Series AMZL’s subsidiaries, has the power to bind ROX LP, Series AMZL or any of Series AMZL’s subsidiaries or waive any rights of ROX LP, Series AMZL or any of Series AMZL’s subsidiaries.

RPS Securities has agreed to provide the services in a competent, professional and good faith manner using, at a minimum, the ordinary degree of skill and care required for the applicable business, craft, industry, profession, or trade. In addition, RPS Securities shall provide the services in compliance with any agreements binding on ROX LP, Series AMZL and any of Series AMZL’s subsidiaries, applicable laws and governmental requirements and the other terms and restrictions of the services agreement.

 

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The parties to the services agreement acknowledge that our partnership agreement governs the potential indemnification by ROX LP and Series AMZL of RPS Securities, as applicable, and their respective equity owners, employees and officers in connection with the provision of the services. Please see “Our Partnership Agreement—Indemnification.”

For Series AMZL, the services agreement has an initial term of three years from the date of the closing of this offering, with automatic renewals for successive one-year periods thereafter unless notice of non-renewal is given at least 90 days prior to the end of the initial or any renewal term. The services agreement may be terminated at any time upon the consent of ROX GP and RPS Securities or upon a material breach that is not cured 30 days after notice thereof and upon bankruptcy related filings or occurrences. If requested by ROX GP, RPS Securities will continue to provide assistance to ROX LP, Series AMZL and Series AMZL’s subsidiaries for up to 90 days after termination. If ROX GP terminates upon non-renewal, Series AMZL is required to pay to RPS Securities a termination fee equal to the prior month’s management fee multiplied by twenty-four. In addition, upon any termination, Series AMZL shall be required to pay any fees to RPS Securities for a period of one year after termination that relates to any activities for which services were provided prior to termination.

ROX GP agrees that any decision or action it takes in accordance with the services agreement will be approved by a majority of the independent members of the Board.

RPS Securities, which is a wholly owned subsidiary of ROX Parent, is a FINRA member and an investment adviser registered with the SEC pursuant to the Advisers Act, has applied for registration as an investment adviser with the State of Texas and will withdraw its registration with the SEC once its registration with the state of Texas becomes effective. ROX LP operates its business in a manner that permits it to maintain its exclusion from registration under the Investment Company Act.

 

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LICENSE AGREEMENT WITH ROX PARENT

The following is a summary of the material provisions of the License Agreement dated November 19, 2020, between ROX Parent and ROX LP, which is qualified in its entirety by reference to the copy thereof that is filed as an exhibit to the registration statement of which this prospectus is a part. Please see “Where You Can Find Additional Information.”

ROX LP and ROX Parent have entered into a license agreement pursuant to which ROX Parent has granted to ROX LP a nontransferable, nonexclusive and worldwide license, on a royalty-free and as-is basis, to use certain intellectual property, as follows:

 

   

the ROX logo;

 

   

the following applications, technology and the work product thereof:

 

   

an investor application that provides disclosure and investment data, including financial, market, trading data and stacking plans for current and prospective investors;

 

   

a property owners’ application that provides a platform for asset owners to communicate property-level information including for management of the due diligence process, to add files, and for periodic information for investors and for governance purposes; and