Risks

There are limitations on the actions that the manager and trustee of the DST can take relative to the real estate. Revenue Ruling 2004-86 sets forth the Internal Revenue Service’s (“IRS”) standards for DST interests acquired in a Code Section 1031 exchange. In order for investors in the DST to be treated as acquiring a direct interest in real estate for federal income tax purposes, the DST imposes prohibitions on the powers of the DST’s manager and trustee. These prohibitions are explained in more detail in the Memorandum and the Property Supplement.

If the manager and trustee of the DST are required to take actions to conserve and protect the property held by the DST but are unable to do so due to the prohibitions imposed on their powers under Revenue Ruling 2004-86, they may determine to terminate (or be required to terminate) the DST and transfer the property to a limited liability company (a “Transfer Distribution”). An interest in a limited liability company, unlike a DST interest, is not treated as a direct interest in the underlying real estate for tax purposes.

You must seek the advice of your own independent tax advisor as to state and local tax issues.

Holders of OP Units receive distributions (not dividends) from the Operating Partnership.

Holders of OP Units receive allocations of the Operating Partnership income of loss that may not be accompanied by cash distributions of the same amount.

If the FMV Option is exercised, the determination of the fair market value of the Property will reflect the fact that the Property is encumbered by the Master Lease, which could cause the fair market value of the Property to vary materially from the value it would have if it were not encumbered by the Master Lease.

If the FMV option is exercised, the Operating Partnership could, among other things, sell or distribute the property which may trigger deferred gain to the holder of the OP Units.

While there is daily or frequent valuing of the REIT, there is no public trading for OP units or shares of common stock thus redeeming units will likely be the only way to dispose of OP Units and participation in the sponsor’s share redemption program for common stock will likely be the only way to dispose of common stock.

Properties with leverage have more debt risk than properties with no leverage.

If the Master Lease is terminated or expires, the economic success of an investment in the Property will depend upon the results of operations of the Property, which will be subject to those risks typically associated with investments in real estate. Fluctuations in vacancy rates rent schedules and operating expenses can adversely affect operating results or render the sale (or financing, where a Transfer Distribution has occurred) of the Property difficult or unattractive. In such case, the poor performance of such Property may adversely affect the overall returns to the investors in the DST.

There is a potential risk that the Master Tenant could default on its obligations under the Master lease and that the Operating Partnership could default on its obligations under the Master Lease and that the Operating Partnership could default on its obligations under the Guaranty.

Prospective purchases must bear the economic risks of an investment in Interests, OP units or common stock in the sponsor’s REIT for an indefinite period of time and must be prepared to sustain a total loss of such investment.

Conflicts of interest may exist in allocating management time, services, and functions between their current and future activities including the trus. In addition, the manager of the Trust may have conflicts allocating leasing opportunities among competing properties.

The Property may incur a vacancy either by the continued default of a tenant under its lease or the expiration of the lease.

The Interests will be subject to an annual Investor Servicing Fee equal to approximately 0.30% of the Total Equity Amount (as defined in the Property Supplement). In the event the FMV Options is exercised, Beneficial Owners may receive Class A OP Units subject to an annual Investor Servicing Fee as described in the Property Supplement.

An economic downturn could adversely affect rental income generated from end tenants. From time to time, an economic downturn could occur that would result in slowed economic activity.

Real properties are illiquid investments, and we may be unable to sell, refinance or reposition a property or properties in response to changes in economic or other conditions.

For Information about THE SPONSOR’S REIT, the Operating Partnership, and the OP Units please refer to the Memorandum.