As of December 31, 2018, our accumulated deficit was approximately $5.9 million, and we anticipate that our operations will not be profitable in 2019.
We have paid distributions from sources other than our cash flows from operations, including from the net proceeds of this offering and the private offering transaction. 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. From commencement of paying cash distributions in February 2017, the payment of distributions has been funded from the private offering transaction and this offering. Until we generate cash flows sufficient to pay distributions to you, we may pay distributions from the net proceeds of this offering or from borrowings in anticipation of future cash flows.
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 this offering (which may constitute a return of capital). It is likely that we will be required to use return of capital to fund distributions (if any) in at least 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. From the commencement of paying cash distributions in February 2017, all distributions have been paid from the net proceeds of our public offering and private offering transaction.
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.
This is an initial public offering; we have limited operating history, and the prior performance of real estate programs sponsored by affiliates of our sponsor 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.” 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 (i) we pay upfront fees in connection with the sale of our shares that reduce the proceeds to us, (ii) on January 25, 2017 we sold approximately 360,577 shares of our Class A common stock at a purchase price of approximately $20.80 per share in a private offering transaction as described above, and (iii) we paid offering expenses in connection with our private offering transaction.
There are substantial conflicts of interest among us, our sponsor, advisor, property manager, transfer agent and dealer manager.
Our advisor will face conflicts of interest relating to the purchase of properties, including conflicts with Strategic Storage Trust II, Inc. and Strategic Storage Growth Trust II, Inc., 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.