Risk Factors
An investment in our shares is subject to significant risks. You should carefully consider the information set forth under “Risk Factors” beginning on page 24 of the prospectus for a discussion of the material risk factors relevant to an investment in our shares. Some of the more significant risks include the following:
We have incurred a net loss to date, have an accumulated deficit and our operations may not be profitable in 2019.
No public market currently exists for shares of our common stock and we may not list our shares on a national securities exchange before three to five years after completion of this offering, if at all; therefore, it may be difficult to sell your shares. If you sell your shares, it will likely be at a substantial discount. Our charter does not require us to pursue a liquidity transaction at any time.
Until we generate operating cash flows sufficient to pay distributions to you, we may pay distributions from financing activities, which may include borrowings in anticipation of future cash flows or the net proceeds of our offerings (which may constitute a return of capital). Therefore, it is likely that some or all of the distributions that we make will represent a return of capital to you, at least in the first few years of operation. We are not prohibited from undertaking such activities by our charter, bylaws or investment policies, and we may use an unlimited amount from any source to pay our distributions, and it is likely that we will use offering proceeds to fund a majority of our initial distributions. For the year ended December 31, 2017, we funded 73.8% of our distributions using proceeds from our private offering and 26.2% using proceeds from our distribution reinvestment plan. For the year ended December 31, 2018, we funded 12.9% of our distributions from cash flows from operations, 50.6% using proceeds from public and private offerings and 36.5% using proceeds from our distribution reinvestment plan. For the three months ended March 31, 2019, we funded 47.1% of our distributions using cash flows from operations, 20.0% using proceeds from our public and private offerings and 32.9% using proceeds from our distribution reinvestment plan.
This is an initial public offering and we have limited operating history.
The prior performance of real estate programs sponsored by our sponsor or its affiliates may not be indicative of our future results.
This is a “best efforts” offering. If we are unable to raise substantial funds in this offering, we may not be able to invest in a diverse portfolio of real estate and real estate-related investments, and the value of your investment may fluctuate more widely with the performance of specific investments.
We are a “blind pool” because we have not identified any properties to acquire with the net proceeds from this offering. As a result, you will not be able to evaluate the economic merits of our future investments prior to their purchase. We may be unable to invest the net proceeds from this offering on acceptable terms to investors, or at all.
Investors in this offering will experience immediate dilution in their investment primarily because pursuant to our private offering, we sold approximately 10.7 million shares of our common stock at a weighted average purchase price of approximately $8.55 per share and received weighted average net proceeds of approximately $7.93 per share in our private offering.
A portion of the proceeds received in this offering may be used to honor share redemption requests from our stockholders which will reduce the net proceeds available to acquire additional properties.
There are substantial conflicts of interest among us and our sponsor, advisor, affiliated property manager, transfer agent and dealer manager.
Our advisor may face conflicts of interest relating to the purchase of properties and such conflicts may not be resolved in our favor, which could adversely affect our investment opportunities.
We have no employees and must depend on our advisor to select investments and conduct our operations, and there is no guarantee that our advisor will devote adequate time or resources to us.
We will pay substantial fees and expenses to our advisor, its affiliates and participating broker-dealers, which will reduce cash available for investment and distribution.
We may incur substantial debt, which could hinder our ability to pay distributions to our stockholders or could decrease the value of your investment.
We may fail to qualify as a REIT, which could adversely affect our operations and our ability to make distributions.
Our board of directors may change any of our investment objectives without your consent.
