AMENDED AND RESTATED CONFIDENTIAL PRIVATE PLACEMENT MEMORANDUM COPY NO. _____________

TREYNET REALTY CAPITAL REIT, INC.

Common Stock (Non-Voting), $0.01 par value per share 20,000,000 Shares at $10.00 Per Share

Minimum Purchase: 5,000 Shares ($50,000)Minimum Offering Amount: $2,000,000

Maximum Offering Amount: $200,000,000

TreyNet Realty Capital REIT, Inc., is a newly-formed Maryland corporation (the “Company”) which was formed on January 6, 2017 that intends to qualify as a real estate investment trust, or REIT, beginning with the taxable year ending December 31, 2017, which may be extended to the taxable year ending December 31, 2018, in the sole discretion of the board of directors of the Company (the “Board”). The Company expects to use substantially all of the net proceeds from this offering to invest primarily in single-tenant, net leased properties through TreyNet REIT OP, LP, a Delaware limited partnership (the “Operating Partnership”). The Company is the sole general partner (the “General Partner”) of the Operating Partnership which has been formed primarily for the principal purpose of acquiring, through purchase or contribution, direct or indirect ownership interests in a diverse portfolio of single-tenant, net leased retail and education-related properties (the “Projects”) located throughout the United States. The Operating Partnership and the Company are advised by TreyNet Partners, LLC, a Delaware limited liability company (the “Advisor”). Where applicable in this Memorandum, the term “Company” includes TreyNet Realty Capital REIT, Inc., the Operating Partnership and their subsidiaries.

The Company is offering for sale up to 20,000,000 shares (the “Shares”) of non-voting common stock, $0.01 par value per share (“Non-Voting Common Stock”), in the Company at a purchase price of $10.00 (the “Purchase Price”) per Share (the “Offering”) upon the terms and conditions set forth in this Amended and Restated Confidential Private Placement Memorandum (the “Memorandum”) as supplemented. Purchasers of the Shares will become common stockholders of the Company. You should read this Memorandum and any supplements or amendments thereto in their entirety before making an investment decision.

The proceeds of the Offering (the “Offering Proceeds”) are intended to capitalize the Company with funds, when coupled with proceeds from anticipated loans, to acquire the Projects and provide for general corporate purposes, including making distributions on Company securities. The Shares are being offered until the earlier of (i) the Maximum Offering Amount is sold, (ii) December 31, 2017, which date may be extended until December 31, 2018 in the sole discretion of the Company or (iii) a decision by the Company to terminate the Offering (the “Offering Termination Date”). The purchase price for the Shares is payable in full with the delivery of the investor’s Instructions to Investors and Subscription Agreement, a form of which is attached as Exhibit A (the “Subscription Agreement”). All subscription payments received for Shares prior to receipt and acceptance by the Company of subscription payments for the Minimum Offering Amount ($2,000,000) will be held in an escrow account at Branch Banking and Trust Company (the “Depository Account”). If the Minimum Offering Amount has not been sold on or before August 31, 2017, which date may be extended, in the sole discretion of the Company, until December 31, 2017 (the “Minimum Offering Termination Date”), the Offering will be terminated and all amounts held in the Depository Account will be returned to the subscribers.

Shares offered hereby are speculative and an investment in Shares involves substantial risks including, but not limited to, the Company is newly formed with no operating history; the Advisor is newly formed and has no experience managing a REIT; lack of liquidity; restrictions on transferability; lack of a fixed liquidation date for the Shares; lack of voting rights; voting control is held by stockholders who are controlled by officers and directors of the Company; the power of the Company to make distributions to its stockholders from any source, including Offering Proceeds; uncertainty as to the Projects to be acquired; general economic risks in the United States and in the real estate industry; limited capital of Company; the use of leverage to acquire the Projects; lack of any binding financing commitments; uncertainty as to the amount and type of leverage used to acquire the Projects; potential recourse liability on financings; reliance on the Advisor to manage the Company and the Projects; fees and distributions payable to the Advisor and its Affiliates (as defined below); and the existence of various conflicts of interest between the Operating Partnership, the Advisor and its Affiliates and the Company and tax risks. See “Risk Factors” and “Conflicts of Interest.”

The mailing address of the Company is 3600 N. Duke Street, Suite 109, Durham, NC 27704. The telephone number is (919) 391-3735 and the fax number is (919) 391-3750. The Company’s website address is www.treynetreit.com.

Neither the Securities and Exchange Commission (the “SEC”) nor any state securities commission has approved or disapproved these securities or passed upon the accuracy or adequacy of this Memorandum. Any representation to the contrary is a criminal offense. These securities are subject to restrictions on transferability and resale and may not be transferred or resold except as permitted under the Securities Act of 1933, as amended (the “Securities Act”), applicable state securities laws, pursuant to registration or exemption therefrom, and the Company’s charter. Investors should be aware that they will be required to bear the financial risks of this investment for an indefinite period of time.

Price to Investors Proceeds to Company(1)

Per Share(2) $10.00 $10.00 Minimum Offering Amount(3) $2,000,000 $2,000,000 Maximum Offering Amount $200,000,000 $200,000,000

This Memorandum is dated March 10, 2017

(1) Amounts shown are proceeds before deducting other expenses incurred in connection with the Offering (the “Organization and Offering Expenses”), including legal, accounting, printing and other costs and expenses directly related to the Offering. The Company anticipates that the Organization and Offering Expenses will be approximately $2,000,000 if the Maximum Offering Amount is sold (approximately 1% of the Maximum Offering Amount), and approximately $100,000 if the Minimum Offering Amount is sold (approximately 5% of the Minimum Offering Amount). In addition, certain Shares may be sold through persons or entities that are registered broker-dealers and commissions and/or fees may be due to such broker-dealers. Investors in Shares purchased through broker-dealers will be required to pay applicable commissions and fees in addition to the purchase price of the Shares.

(2) The minimum subscription amount is $50,000 (5,000 Shares at $10.00 per Share), except that the Company, in its sole discretion, may permit certain investors to purchase fewer Shares.

(3) In the event the Offering price per Share is increased or decreased, the number of shares subject to the Offering will be adjusted to reflect such change and the Maximum Offering Amount will remain unchanged.

The purchase of Shares is a speculative investment involving substantial risks and uncertainties. Investors should read and carefully consider the discussion set forth under “Risk Factors.” This Memorandum contains forward-looking statements about the Company’s business, including, in particular, statements about its plans, strategies and objectives. These statements can generally be identified by the use of forward-looking terminology such as “may,” “will,” “expect,” “intend,” “anticipate,” “estimate,” “believe,” “continue” or other similar words. Prospective investors should not rely on these forward-looking statements because the matters they describe are subject to known and unknown risks, uncertainties and other unpredictable factors, many of which are beyond the Company’s control. The actual results, performance and achievements may be materially different from that expressed or implied by these forward-looking statements. Factors that might cause such differences include, but are not limited to, those discussed under “Risk Factors.” Risks of an investment in Shares include, among others, the following:

1. There is no assurance that investors will realize any return on their purchase of the Shares or that investors will not lose their investment completely. See “Risk Factors – Risks Relating to the Offering and Lack of Liquidity – Speculative Investment.”

2. No public market exists for the Shares and it is uncertain whether a market will develop. See “Risk Factors – Risks Relating to the Offering and Lack of Liquidity – No Public Market for the Shares.”

3. There are substantial restrictions upon the transfer of the Shares under federal and state securities laws. In addition, there is no specified or guaranteed liquidity event or liquidation date for the Shares. Accordingly, Shares must be considered as long-term investments. See “Risk Factors – Risks Relating to the Offering and Lack of Liquidity – Limited Transferability of Shares” and “Risk Factors – Risks Relating to the Offering and Lack of Liquidity – No Guaranteed Liquidity Event.”

4. The Shares have no voting rights. The Shares will only have voting rights upon a Qualified IPO (as defined below). All outstanding shares of the Company’s voting common stock (the “Voting Common Stock”) is currently owned by TreyNet Partners, LLC, a Delaware limited liability company, which is the Advisor to the Company. See “Risk Factors – Risks Related to the Company’s Organizational Structure – No Voting Rights for Shares.”

5. Control of the Company’s Voting Common Stock is held by the Advisor, an entity that is owned and controlled by the officers and directors of the Company. Thus, the holder of all of the Company’s Voting Common Stock is not independent from the Advisor or the Board. See “Risk Factors – Risks Related to the Company’s Organization Structure – Controlling Interests” and “Conflicts of Interest.”

(Cover Page – (ii))

6. The Company has the power to issue additional securities having rights, preferences and privileges that are superior to and dilutive of the Shares offered in the Offering, including additional shares of Voting Common Stock, preferred stock, warrants and options. This could reduce the amount of cash available for distribution to the Company’s stockholders and increases the risk that investors will not profit from their acquisition of Shares or will lose their investment in the Company. Investors will not have any preemptive rights with respect to any equity which the Company may issue in the future. See “Risk Factors – Risks Related to the Company’s Organizational Structure – Senior Securities.”

7. The Company, the Projects and the Company’s assets will be managed by the Advisor. The Advisor may, in its sole discretion, perform its property management duties through one or more Affiliates or may engage a sub property manager to manage the day-to-day operations of the Projects. The success of the Company and the Projects will depend in large part on the Advisor’s ability to effectively manage the Company, the Projects and the Company’s assets. See “Risk Factors – Risks Relating to the Internal Operation of the Company – Reliance on Management” and Risk Factors – Risks Relating to the Internal Operation of the Company – Property Management.”

8. The Company intends to qualify as a REIT beginning with the taxable year ending December 31, 2017, which may be extended to the taxable year ending December 31, 2018, in the sole discretion of the Board. REIT qualification is complex and requires that the Company meet requirements regarding its organization and ownership, distributions of its income, the nature and diversification of its income and assets, and other tests imposed by the Internal Revenue Code of 1986, as amended (the “Code”). If the Company fails to maintain its qualification as a REIT, the value of the Shares will likely be diminished because the qualification of the Company as a REIT is a major component of the tax and liquidity strategy for the stockholders. See “Risk Factors – Risks Relating to the Internal Operation of the Company – Failure of the Company to Maintain REIT Status.”

9. The Company may make distributions from any source, including working capital, Offering Proceeds and/or refinancing proceeds. Distributions paid from sources other than current or accumulated earnings and profits may constitute a return of capital. See “Risk Factors – Risks Relating to the Internal Operation of the Company – Sources of Cash Distributions.”

10. The Company is not limiting the number of investors that may participate in the Offering. Upon the closing of the Offering, the Company may have more than 2,000 holders of such class of shares. If the Company has greater than 2,000 holders of such class of shares or more than 500 “non-accredited” investors of such class of shares, or registers a class of its securities, it will become a “reporting company” under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). In the event that the Company becomes a “reporting company,” it will be required to file the reports required thereunder with the SEC, including annual, quarterly and current reports regarding the financial condition of the Company. The expense of reporting under the Exchange Act is significant, and includes costs relating to an independent auditor, accounting, legal and other expenses. See “Risk Factors – Risks Relating to the Internal Operation of the Company – Costs of Reporting Under the Exchange Act.”

11. The Company intends to acquire Projects that have not yet been identified, which means potential investors will not have the opportunity to evaluate such Projects and must rely solely upon the Company to select such Projects. See “Risk Factors – Real Estate Risks – Unspecified Investments.”

12. The United States economy experienced a significant downturn from which it is still recovering. It is unclear how the downturn will affect the long-term health of the real estate sector. While there has been a partial recovery in the real estate sector, it is still unclear how stable the real estate markets currently are or will be now that the government is pulling back from its unprecedented participation in the bond market to keep interest rates low. There can be no assurance that the Company will achieve its economic projections. See “Risk Factors – Real Estate Risks – Uncertain Economic Conditions.”

13. There are risks associated with the operation of single-tenant, net leased properties including but not limited to vacillations in the demand for net leased space, competition from other competing properties in the market area where the Projects are located, risk of loss or damage to the improvements, environmental risks, the inability of the Company to maintain or increase lease rates at the Projects and other risks associated with ownership of real estate. See “Risk Factors – Real Estate Risks.”

(Cover Page – (iii))

14. The Company may not obtain Project-level audited historical results of operation prior to the acquisition of a Project and may rely on unaudited financial information provided by the sellers of the Projects. Consequently, there may be less certainty regarding the prior economic operating history of the Projects at the time that the Company acquires such Project. See “Risk Factors – Real Estate Risks – No Audited Results of Operations of Individual Projects.”

15. The Company has limited capital. It is likely that the acquisition of the Projects will require the Operating Partnership to obtain loans. Therefore, it is anticipated that the Projects will be leveraged. The Company anticipates that the aggregate loan-to-value ratio for the Company will be between 50% and 65%. The loan-to-value ratio at the time of acquisition for the Projects acquired is anticipated to be between 50% and 65% based on the purchase price of the Projects. Notwithstanding the above, the Company may refinance some of the Projects and, in such case, the loan-to-value ratio may be higher or lower than the percentages described above. See “Risk Factors – Financing Risks – Leverage.”

16. The Company has not obtained any financing commitments for the acquisition of any Projects. In the event that the Company is unable to obtain financing for the acquisition of the Projects, the Company may not be able to acquire any future Projects. In such case, any return to stockholders would be materially reduced. See “Risk Factors – Financing Risks – Availability of Financing and Market Conditions.”

17. Some of the loans obtained by the Company may have variable interest rates. As a result, the debt service payments on any such loan may increase and the Project secured by such loan may not generate sufficient cash flow to pay the increasing debt service payments. In such event, the Company may not be able to pay debt service under such loan which would lead to a default under the loan or the Company will have lower income from such Project. See “Risk Factors – Financing Risks – Variable Interest Rates and Interest Only Loans.”

18. The loans obtained to acquire the Projects may have short terms and may require the Company to make large balloon payments on the maturity date of the loans. If the Company is unable to make the balloon payment by selling the related Project or refinancing the applicable loan for any reason, the ownership of the applicable Project could be jeopardized. See “Risk Factors – Financing Risks – Variable Interest Rates and Interest Only Loans.”

19. Some of the loans obtained by the Company may be recourse loans to the Company. In the event that any Project that is subject to a recourse loan fails to perform as expected, the Company may not have adequate cash to make payments due on the loan. If the Company defaults on a recourse loan, in addition to foreclosing on the applicable Project, the lender may seek repayment of all or a portion of the loan amount from other assets of the Company, which would adversely affect the performance of the Company. See “Risk Factors – Financing Risks – Recourse Liability.”

20. The senior officers of the Company and their Affiliates are engaged in other activities and intend to continue to engage in such activities in the future, including other real estate ventures and such persons could face conflicts of interest in allocating management time, services and functions between various existing enterprises and future enterprises they may organize, as well as other business ventures in which they and their Affiliates may be or may become involved. See “Risk Factors – Risks Relating to the Internal Operation of the Company – Conflicts of Interest.”

21. The Advisor and its Affiliates will be subject to certain conflicts of interest. The principals of the Advisor are also members of the Board and officers of the Company, resulting in a conflict of interest in the Company’s supervision of the Advisor. See “Risk Factors – Risks Relating to the Formation and Internal Operation of the Company – Conflicts of Interest” and “Conflicts of Interest.”

22. The Advisor and its Affiliates have acquired all of the Voting Common Stock in the Company. The Advisor and its Affiliates will not acquire Shares with a view to resell or distribute such Shares. The purchase of Shares by the Advisor or its Affiliates could create certain risks, including, but not limited to, the following: (i) the Advisor or its Affiliates may have an interest in disposing of Company assets at an earlier date than the other stockholders so as to recover its investment in the Shares, (ii) substantial purchases of Shares may limit the Advisor’s ability to fulfill any financial obligations that it may have to or on behalf of the Company and (iii)

(Cover Page – (iv))

acquisition of Shares by the Advisor and/or its Affiliates will mean that the total Shares acquired will not have been provided by disinterested investors after an assessment of the merits and risks of the Offering. In the event that the Advisory Agreement is terminated for any reason, the Advisor and/or its Affiliates will continue to own the Voting Common Stock. See “Conflicts of Interest” and Risk Factors – Risks Relating to Private Offering and Lack of Liquidity – Purchase of Shares by Advisor or its Affiliates.”

The purchase of Shares is suitable only for persons of substantial means who have no need for liquidity in their investment in the Company. See “Who May Invest.” You should carefully consider the following:

1. You are not to construe the contents of this Memorandum as legal or tax advice. You should consult your own counsel, accountant, financial advisor or business advisor as to legal, tax and related matters concerning an investment.

2. The Shares may only be offered to and acquired by investors who meet the Investor Suitability Requirements set forth under “Who May Invest” in this Memorandum.

3. No person has been authorized by the Company to make any representations or furnish any information with respect to the Company, its Affiliates, or the Shares, other than the representations and information set forth in this Memorandum or other documents or information furnished by the Company upon request as described in this Memorandum. However, authorized representatives of the Company will, if such information is reasonably available, provide additional information which you or your representative requests for the purpose of evaluating the merits and risks of the Offering.

4. Any predictions and representations, written or oral, which do not conform to those contained in this Memorandum should be disregarded, and their use is a violation of the law. No representation or warranty can be given that the estimates, opinions or assumptions made herein will prove to be accurate.

5. Trustees, custodians and fiduciaries of retirement and other plans subject to the Employee Retirement Income Security Act of 1974 (“ERISA”) or Code Section 4975 (all references to “Code Section” are references to Sections of the Code, unless otherwise indicated) (including individual retirement accounts) should consider, among other things: whether (i) an investment in the Company is advisable given the definition of plan assets under ERISA and the status of Department of Labor regulations regarding the definition of plan assets, (ii) the investment is in accordance with plan documents and satisfies the diversification requirements of Section 404(a) of ERISA, (iii) the investment is prudent under Section 404(a) of ERISA, considering the nature of an investment in, and the compensation structure of, the Company and the potential lack of liquidity of the Shares and (iv) the Company or any Affiliate is a fiduciary or party in interest to the plan. The prudence of a particular investment must be determined by the responsible fiduciary taking into account all the facts and circumstances of the Qualified Plan (i.e., any pension, profit sharing or stock bonus plan that is qualified under Code Section 401(a), but excluding individual retirement accounts) and of the investment. See “ERISA Considerations.”

6. The Shares are being offered until the Offering Termination Date. The Company may reject a subscription for any reason in its sole discretion. See “Plan of Distribution.”

7. This Memorandum does not constitute an offer or solicitation to anyone in any jurisdiction in which such an offer or solicitation is not authorized. In addition, this Memorandum constitutes an offer only if the name of an offeree in the Company’s records matches the copy number that appears in the appropriate space on the first page of this cover page and is an offer only to such offeree.

8. This Memorandum has been prepared solely for the benefit of persons interested in the proposed private placement of the Shares offered hereby, and any reproduction or distribution of this Memorandum, in whole or in part, or the disclosure of any of its contents, without the prior written consent of the Company, is prohibited. The recipient, by accepting delivery of this Memorandum, agrees to return this Memorandum and all documents furnished herewith to the Company or its representatives upon request if the recipient does not purchase any of the Shares offered hereby or if the Offering is withdrawn or terminated.

(Cover Page – (v))

9. The Company may reject a prospective investor’s Subscription Agreement for any reason. Subscription Agreements will be rejected for failure to conform to the requirements of the Offering or such other reasons as the Company may determine in its sole discretion to be in the best interests of the Company. Subscription Agreements may not be revoked, canceled or terminated by the subscriber, except as therein provided.

10. The Offering is made exclusively by this Memorandum, together with the Exhibits and supplements attached hereto. This Memorandum contains a summary of certain provisions of the charter and the Bylaws of the Company (the “Bylaws”) and the Limited Partnership Agreement of the Operating Partnership (as may be amended, the “Operating Partnership Agreement”). However, only the charter, Bylaws and Operating Partnership Agreement contain complete information concerning the rights and obligations of the parties thereto. This Memorandum contains summaries of certain other documents, which summaries are believed to be accurate, but reference is hereby made to the actual documents for complete information concerning the rights and obligations of the parties thereto. Such information necessarily incorporates significant assumptions, as well as factual matters. All documents relating to this investment and related documents and agreements will be made available to you or your advisors upon request to the Company.

11. During the course of the Offering and prior to sale, investors are invited to ask questions of and obtain additional information from the Company concerning the terms and conditions of the Offering, the Company, the Advisor and their Affiliates, the Shares and any other relevant matters, including, but not limited to, additional information to verify the accuracy of the information set forth in this Memorandum. The Company will provide such information to the extent it possesses it or can acquire it without unreasonable effort or expense.

12. The Shares are offered by the Company subject to the receipt and acceptance by the Company of the relevant Subscription Agreement, the right of the Company to reject any Subscription Agreement for Shares in whole or in part, the withdrawal, cancellation or modification of the Offering without notice to investors, and to certain other conditions.

13. Because the Shares are not registered under the Securities Act and have not been qualified under an exemption to applicable securities laws of any state, investors must hold them indefinitely unless they are registered under the Securities Act and qualified under an exemption to applicable state securities laws, which registration may not occur, or the Company is satisfied, with the advice of counsel, that registration is not required under the Securities Act and applicable state laws. It is unlikely that a public market will ever exist for the Shares.

14. The Company will maintain a list of states where the Shares may be offered and sold.

(Cover Page – (vi))

The securities offered hereby have not been registered under the Securities Act or the securities laws of any state and are being offered and sold in reliance on exemptions from the registration requirements of said act and such laws. The Shares are subject to restrictions on transferability and resale and may not be transferred or resold except as permitted under said act and such laws pursuant to registration or exemption therefrom.

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In making an investment decision, prospective investors must rely on their own examination of the person or entity creating the securities and the terms of the Offering, including the merits and risks involved. These securities have not been recommended by any federal or state securities commission or regulatory authority.

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The Securities Act and the securities laws of certain jurisdictions grant investors of securities sold in violation of the registration or qualification provisions of such laws the right to rescind their purchase of such securities and to receive back their consideration paid. The Company believes that the Offering described in this Memorandum is not required to be registered or qualified. Many of these laws granting the right of rescission also provide that suits for such violations must be brought within a specified time, usually one year from discovery of facts constituting such violation. Should any investor institute such an action on the theory that the Offering conducted as described herein was required to be registered or qualified, the Company will contend that the contents of this Memorandum constituted notice of the facts constituting such violation.

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No person has been authorized to give any information or make any representations other than those set forth in this Memorandum, and, if given or made, such information or representations must not be relied upon as having been given by the Company or its Affiliates.

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This Memorandum does not constitute an offer or solicitation by anyone in any jurisdiction in which such an offer or solicitation is not authorized, or in which the person making such an offer is not qualified to do so, or to any person to whom it is unlawful to make an offer or solicitation.

______________________

Neither the information contained herein nor any prior, contemporaneous or subsequent communication should be construed by you as legal or tax advice. You should consult your own legal and tax advisors to ascertain the merits and risks of an investment in Shares before investing.

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This Offering is being made in reliance on Rule 506(c) of Regulation D promulgated under the Securities Act. The Company intends to utilize general solicitation for the sale of the Shares. As a result, all investors of Shares must be Accredited Investors, as defined in Regulation D. Prospective investors will be required to provide sufficient financial information to the Company so that the Company will have a reasonable basis to believe that the potential investor is an Accredited Investor.

(Cover Page – (vii))

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NOTICE TO FLORIDA RESIDENTS

THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE FLORIDA SECURITIES AND INVESTOR PROTECTION ACT AND ARE BEING OFFERED AND SOLD IN RELIANCE UPON AN EXEMPTION CONTAINED THEREIN. UNDER FLORIDA LAW, IF SECURITIES ARE SOLD TO FIVE OR MORE FLORIDA RESIDENTS, SUCH INVESTORS WILL HAVE A THREE DAY RIGHT OF RESCISSION. INVESTORS WHO HAVE EXECUTED A SUBSCRIPTION AGREEMENT MAY ELECT, WITHIN THREE BUSINESS DAYS AFTER THE FIRST TENDER OF CONSIDERATION THEREFORE, TO WITHDRAW THEIR SUBSCRIPTION AND RECEIVE A FULL REFUND OF ANY MONEY PAID BY THEM. SUCH WITHDRAWAL WILL BE WITHOUT ANY LIABILITY TO ANY PERSON. TO ACCOMPLISH SUCH WITHDRAWAL, THE WITHDRAWING INVESTOR MUST (i) PROVIDE WRITTEN NOTICE TO THE COMPANY INDICATING THE INVESTOR’S DESIRE TO WITHDRAW AND (ii) NOT BE A BANK, A TRUST COMPANY, A SAVINGS INSTITUTION, AN INSURANCE COMPANY, A DEALER, AN INVESTMENT COMPANY, A PENSION OR PROFIT-SHARING TRUST, OR A QUALIFIED INSTITUTIONAL BUYER. THE WRITTEN NOTICE MUST BE SENT AND POSTMARKED PRIOR TO THE END OF THE THIRD BUSINESS DAY AFTER THE FIRST TENDER OF CONSIDERATION FOR THE SECURITIES PURCHASED. NOTICE LETTERS SHOULD BE SENT BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO ENSURE THAT IT IS RECEIVED AND TO EVIDENCE THE TIME WHEN IT IS MAILED. ANY ORAL REQUESTS FOR RESCISSION SHOULD BE ACCOMPANIED BY A REQUEST FOR WRITTEN CONFIRMATION FROM THE COMPANY THAT THE ORAL REQUEST WAS RECEIVED ON A TIMELY BASIS.

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NOTICE TO PENNSYLVANIA RESIDENTS

EACH SUBSCRIBER WHO IS A PENNSYLVANIA RESIDENT HAS THE RIGHT TO CANCEL AND WITHDRAW HIS OR HER SUBSCRIPTION AND HIS OR HER PURCHASE OF SECURITIES THEREUNDER, UPON WRITTEN NOTICE TO THE COMPANY GIVEN WITHIN TWO BUSINESS DAYS FOLLOWING THE RECEIPT BY THE COMPANY OF HIS OR HER EXECUTED SUBSCRIPTION AGREEMENT. ANY LETTER OR TELEGRAM NOTICE SHOULD BE SENT AND POSTMARKED PRIOR TO THE END OF THE AFOREMENTIONED SECOND BUSINESS DAY. IF YOU ARE SENDING A LETTER, IT IS PRUDENT TO SEND IT BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO ENSURE THAT IT IS RECEIVED AND ALSO TO EVIDENCE THE TIME WHEN IT WAS MAILED. IF YOU MAKE THE REQUEST ORALLY, YOU SHOULD ASK FOR WRITTEN CONFIRMATION FROM THE COMPANY THAT YOUR REQUEST HAS BEEN RECEIVED. UPON SUCH CANCELLATION OR WITHDRAWAL, THE SUBSCRIBER WILL HAVE NO OBLIGATION OR DUTY UNDER THE SUBSCRIPTION AGREEMENT TO THE COMPANY OR ANY OTHER PERSON AND WILL BE ENTITLED TO THE FULL RETURN OF ANY AMOUNT PAID BY HIM OR HER, WITHOUT INTEREST. NEITHER THE PENNSYLVANIA SECURITIES COMMISSION NOR ANY OTHER AGENCY PASSED ON OR ENDORSED THE MERITS OF THE OFFERING, AND ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL. YOUR WITHDRAWAL WILL BE WITHOUT ANY FURTHER LIABILITY TO ANY PERSON.

TABLE OF CONTENTS

Page

(i)

WHO MAY INVEST .................................................................................................................................................. 1

Investor Suitability Requirements ................................................................................................................. 1

SUMMARY OF THE OFFERING ............................................................................................................................. 3

ORGANIZATIONAL CHART ................................................................................................................................. 10

RISK FACTORS ....................................................................................................................................................... 11

Risks Related to the Company’s Organizational Structure ......................................................................... 11 Risks Associated with Maryland Corporate Law ........................................................................................ 12 Risks Relating to the Internal Operation of the Company ........................................................................... 13 Real Estate Risks ......................................................................................................................................... 15 Financing Risks ........................................................................................................................................... 20 Risks Relating to the Offering and Lack of Liquidity ................................................................................. 22 Federal Income Tax Risks ........................................................................................................................... 25

ESTIMATED USE OF PROCEEDS ......................................................................................................................... 28

DESCRIPTION OF THE COMPANY...................................................................................................................... 29

Company Structure and Operating Partnership ........................................................................................... 29 Purpose ...................................................................................................................................................... 29 Voting Common Stock ................................................................................................................................ 29 Board of Directors ....................................................................................................................................... 29 Property and Asset Management ................................................................................................................. 29

DESCRIPTION OF THE SHARES .......................................................................................................................... 30

COMPANY BUSINESS PLAN ................................................................................................................................ 32

Investment Objectives ................................................................................................................................. 32 Investment Strategy ..................................................................................................................................... 32 Investment Guidelines and Criteria ............................................................................................................. 34 Portfolio Diversification .............................................................................................................................. 34 Leverage Strategy ........................................................................................................................................ 34 Exit Strategy & Liquidity Mechanism ........................................................................................................ 35 Advisor’s Investment Team ........................................................................................................................ 35 Investment Process ...................................................................................................................................... 36

PLAN OF DISTRIBUTION ...................................................................................................................................... 38

Rule 506(c) .................................................................................................................................................. 38 General Description ..................................................................................................................................... 38 Commissions and Fees of Broker-Dealers .................................................................................................. 38 Determination of Offering Price .................................................................................................................. 38 Qualifications of Investors .......................................................................................................................... 38 Sales of Shares ............................................................................................................................................ 38 Inquiries ...................................................................................................................................................... 38 Sales Materials ............................................................................................................................................ 39 Subscription Procedures .............................................................................................................................. 39 Depository Account ..................................................................................................................................... 39 Acceptance of Subscriptions ....................................................................................................................... 39 Limitation of Offering ................................................................................................................................. 39

CAPITALIZATION OF THE COMPANY .............................................................................................................. 40

MANAGEMENT ...................................................................................................................................................... 41

Board of Directors ....................................................................................................................................... 41

TABLE OF CONTENTS(continued)

Page

(ii)

Directors and Executive Officers ................................................................................................................ 41 Principal Offices .......................................................................................................................................... 43

PRIOR PERFORMANCE OF THE ADVISOR........................................................................................................ 44

CONFLICTS OF INTEREST.................................................................................................................................... 44

Interests in Other Activities ......................................................................................................................... 44 Ownership of Voting Common Stock ......................................................................................................... 44 Receipt of Compensation by the Advisor, the Property Manager and their Affiliates ................................ 44 Purchase of Shares by the Advisor and its Affiliates .................................................................................. 44 Resolution of Conflicts of Interest .............................................................................................................. 44

COMPENSATION OF THE ADVISOR AND ITS AFFILIATES ........................................................................... 45

VALUATION PROCEDURES ................................................................................................................................. 47

SUMMARY OF THE CHARTER AND THE BYLAWS ........................................................................................ 48

General ...................................................................................................................................................... 48 Authorized Shares ....................................................................................................................................... 48 Common Stock of the Company ................................................................................................................. 48 Preferred Stock ............................................................................................................................................ 49 Restriction on Transfer and Ownership of Shares ....................................................................................... 49 Distributions ................................................................................................................................................ 51 Board of Directors ....................................................................................................................................... 51 Indemnification and Limited Liability of Directors and Officers ................................................................ 52 Amendments................................................................................................................................................ 52

MARYLAND GENERAL CORPORATION LAW ................................................................................................. 53

Business Combinations ............................................................................................................................... 53 Control Share Acquisitions ......................................................................................................................... 53 Subtitle 8 ..................................................................................................................................................... 54

SUMMARY OF THE OPERATING PARTNERSHIP AGREEMENT ................................................................... 55

General ...................................................................................................................................................... 55 General Partner and Limited Partners ......................................................................................................... 55 Distributions of Cash From Operations ....................................................................................................... 55 Distributions of Cash From Sale or Refinancing ......................................................................................... 55 Allocation of Net Income ............................................................................................................................ 56 Allocation of Net Loss ................................................................................................................................ 56 Removal of the Limited Partner .................................................................................................................. 56 Authority of the General Partner ................................................................................................................. 56 Liabilities of the General Partner ................................................................................................................ 56 Amendment of Operating Partnership Agreement ...................................................................................... 56

SUMMARY OF THE ADVISORY AGREEMENT ................................................................................................. 57

General ...................................................................................................................................................... 57 Duties of the Advisor .................................................................................................................................. 57 Limitations on Activities of the Advisor ..................................................................................................... 58 Access to Books and Records of the Company ........................................................................................... 58 Fees to the Advisor ...................................................................................................................................... 58 Payment of the Advisor’s Expenses ............................................................................................................ 58 Other Activities of the Advisor ................................................................................................................... 58 Term and Termination of the Advisory Agreement .................................................................................... 59 Indemnification ........................................................................................................................................... 59

TABLE OF CONTENTS(continued)

Page

(iii)

FEDERAL INCOME TAX CONSIDERATIONS .................................................................................................... 60

General ...................................................................................................................................................... 60 REIT Qualification ...................................................................................................................................... 60 Taxation of REITs ....................................................................................................................................... 61 Taxable REIT Subsidiaries – Third-Party Management Contracts ............................................................. 62 Requirements for Qualification as a REIT .................................................................................................. 62 Failure to Qualify as a REIT ....................................................................................................................... 70 Prohibited Transactions ............................................................................................................................... 70 Investments in Taxable REIT Subsidiaries ................................................................................................. 71 Taxation of Taxable United States Stockholders ........................................................................................ 71 Special Tax Considerations for Non-United States Stockholders ............................................................... 73 Information Reporting Requirements and Backup Withholding for Non-United States

Stockholders .................................................................................................................................. 76 Treatment of Tax-Exempt Stockholders...................................................................................................... 77 Backup Withholding and Information Reporting ........................................................................................ 77 Statement of Share Ownership .................................................................................................................... 78 Federal Income Tax Aspects of the Operating Partnership ......................................................................... 78 Income Taxation of the Operating Partnership and its Partners .................................................................. 79 Other Federal Tax Considerations ............................................................................................................... 81 State and Local Tax Considerations ............................................................................................................ 81

ERISA CONSIDERATIONS .................................................................................................................................... 82

Prohibited Transactions ............................................................................................................................... 82 Plan Asset Considerations ........................................................................................................................... 83 Other Prohibited Transactions ..................................................................................................................... 84 Annual Valuation ........................................................................................................................................ 84 Revised Definition of Fiduciary .................................................................................................................. 84 Conclusion ................................................................................................................................................... 84

REPORTS.................................................................................................................................................................. 85

LITIGATION ............................................................................................................................................................ 85

ACCOUNTING MATTERS ..................................................................................................................................... 85

Method of Accounting................................................................................................................................. 85 Fiscal Year .................................................................................................................................................. 85 Distributions ................................................................................................................................................ 85

LEGAL OPINION OF DLA PIPER LLP (US) ......................................................................................................... 85

ADDITIONAL INFORMATION.............................................................................................................................. 85

EXHIBITS:

A Instructions to Investors and Subscription Agreement B Advisory Agreement C Legal Opinion of DLA Piper LLP (US)

1

WHO MAY INVEST

The offer and sale of the Shares is being made in reliance on an exemption from the registration requirements of the Securities Act. Accordingly, distribution of this Memorandum has been strictly limited to prospective investors who meet the requirements and make the representations set forth below. The Company reserves the right to declare any prospective investor ineligible to purchase Shares based on any information that may become known or available to the Company concerning the suitability of such prospective investor or for any other reason.

Investor Suitability Requirements

Investment in the Shares involves a high degree of risk and is suitable only for persons of substantial financial means who have no need for liquidity in this investment. Investors should be able to afford the loss of their entire investment. This investment will be sold only to investors who (i) purchase a minimum of 5,000 Shares for a purchase price of $50,000 (in the event of an adjustment to the purchase price, the minimum number of Shares required for purchase will be adjusted), except that the Company may permit certain investors to purchase fewer Shares, in its sole discretion and (ii) represent in writing that they meet the Investor Suitability Requirements established by the Company and as may be required under federal law.

As a proposed investor in Shares, you must represent in writing that you meet, among others, all of the following requirements (the “Investor Suitability Requirements”):

1. You have received, read and fully understand this Memorandum together with all Exhibits and attachments hereto. You are basing your decision to invest on this Memorandum together with all Exhibits and attachments hereto. You have relied on information contained in these materials and have not relied upon any representations made by any other person;

2. You understand that an investment in the Shares is speculative and involves substantial risks and you are fully cognizant of and understand the risks relating to a purchase of the Shares, including, but not limited to, those risks set forth in the section entitled “Risk Factors” in this Memorandum;

3. Your overall commitment to investments that are not readily marketable is not disproportionate to your individual net worth, and your investment in the Shares will not cause such overall commitment to become excessive;

4. You have adequate means of providing for your financial requirements, both current and anticipated, and have no need for liquidity in this investment;

5. You can bear and are willing to accept the economic risk of losing your entire investment in the Shares;

6. You are acquiring the Shares for your own account and for investment purposes only and have no present intention, agreement or arrangement for the distribution, transfer, assignment, resale or subdivision of the Shares;

7. You have such knowledge and experience in financial and business matters that you are capable of evaluating the merits and risks of investing in the Shares and have the ability to protect your own interests in connection with such investment; and

8. You are an Accredited Investor. An “Accredited Investor” is: If a natural person, a person that has (i) an individual net worth, or joint net worth with his or her spouse, that exceeds $1,000,000, excluding the value of the primary residence of such natural person (as described below); or (ii) individual income in excess of $200,000, or joint income with his or her spouse in excess of $300,000, in each of the 2 most recent years and has a reasonable expectation of reaching the same income level in the current year. If not a natural person, one of the following: (i) a corporation, an organization described in Code Section 501(c)(3), a Massachusetts or similar business trust, or a partnership, not formed for the specific purpose of acquiring Shares, with total assets in excess of $5,000,000; (ii) a trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring

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Shares and whose purchase is directed by a person who has such knowledge and experience in financial and business matters that he or she is capable of evaluating the merits and risks of an investment in a Share; (iii) a broker-dealer registered pursuant to Section 15 of the Exchange Act; (iv) an investment company registered under the Investment Company Act of 1940, as amended (the “Investment Company Act”); (v) a business development company (as defined in Section 2(a)(48) of the Investment Company Act); (vi) a Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958; (vii) an employee benefit plan within the meaning of ERISA, if the investment decision is made by a plan fiduciary (as defined in Section 3(21) of ERISA), which is either a bank, savings and loan association, insurance company, or registered investment adviser, or if the employee benefit plan has total assets in excess of $5,000,000, or, if a self-directed plan, with investment decisions made solely by persons who are Accredited Investors; (viii) a private business development company (as defined in Section 202(a)(22) of the Investment Advisers Act of 1940, as amended); (ix) a bank as defined in Section 3(a)(2) of the Securities Act, or any savings and loan association or other institution as defined in Section 3(a)(5)(A) of the Securities Act whether acting in its individual or fiduciary capacity; or (x) an entity in which all of the equity owners are Accredited Investors. In addition, the SEC has issued certain no-action letters and interpretations in which it deemed certain trusts to be accredited investors, such as trusts where the trustee is a bank as defined in Section 3(a)(2) of the Securities Act and revocable grantor trusts established by individuals who meet the requirements of clause (i) or (ii) of the first sentence of this paragraph. However, these no-action letters and interpretations are very fact specific and should not be relied upon without close consideration of your unique facts.

For purposes of this definition, “net worth” means the excess of total assets at fair market value over total liabilities, except that the value of the principal residence owned by a natural person will be excluded for purposes of determining such natural person’s net worth. In addition, for purposes of this definition, the related amount of indebtedness secured by the primary residence up to the primary residence’s fair market value may also be excluded, except in the event such indebtedness increased in the 60 days preceding the purchase of Shares and was unrelated to the acquisition of the primary residence, then the amount of the increase must be included as a liability in the net worth calculation. Moreover, indebtedness secured by the primary residence in excess of the fair market value of such residence should be considered a liability and deducted from the natural person’s net worth.

Discretion of the Company. The Investor Suitability Requirements stated above represent minimum suitability requirements, as established by the Company, for investors. Accordingly, the satisfaction of the Investor Suitability Requirements or applicable state requirements by an investor will not necessarily mean that the Shares are a suitable investment for such investor, or that the Company will accept the investor as a subscriber. Furthermore, the Company may modify such requirements in its sole discretion for all or certain investors, and any such modification may raise the suitability requirements for investors.

The written representations made by investors will be reviewed to determine your suitability. The Company may, in its sole discretion, refuse a subscription for Shares if it believes that an investor does not meet the applicable Investor Suitability Requirements, the Shares otherwise constitute an unsuitable investment for the investor, or for any other reason.

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SUMMARY OF THE OFFERING

The following material is intended to provide selected limited information regarding TreyNet Realty Capital REIT, Inc. (the “Company”) and the Offering and should be read in conjunction with, and is qualified in its entirety by, the detailed information appearing elsewhere in this Memorandum and the Exhibits attached hereto.

Prospective investors are urged to read this entire Memorandum, including the Exhibits, before investing in Shares. This Memorandum contains forward-looking statements that involve risks and uncertainties. The Company’s actual results may differ significantly from the results discussed in the forward-looking statements. Factors that might cause such differences include, but are not limited to, those discussed under “Risk Factors.”

Securities Offered: The securities being offered hereby are investments in a corporation that intends to qualify as a real estate investment trust, or REIT, beginning with the taxable year ending December 31, 2017, which may be extended to the taxable year ending December 31, 2018, in the sole discretion of the board of directors of the Company (the “Board”). The Company intends to invest in the Projects (as defined below) and conduct its operations through TreyNet REIT OP, LP, a Delaware limited partnership (the “Operating Partnership”). The Company is offering up to 20,000,000 shares (the “Shares”) of non-voting common stock, $0.01 par value per share (“Non-Voting Common Stock”), in the Company at a purchase price of $10.00 (the “Purchase Price”) per Share. See “Description of the Shares.”

Minimum Purchase: The minimum subscription amount is $50,000 (5,000 Shares at $10.00 per Share), regardless of any adjustments to the Offering price, except that the Company, in its sole discretion, may permit certain investors to purchase fewer Shares. The Company intends revalue the Shares as set forth below. In the event the Offering price per Share is increased or decreased, the number of Shares subject to the Offering will be adjusted to reflect such change and the Maximum Offering Amount will remain unchanged. See “Plan of Distribution.”

Potential Re-Valuation of the Shares:

The Shares will initially be offered at a price of $10.00 per Share. The Company may, but will have no obligation to, determine the net asset value (the “Company NAV”) of the Company’s assets prior to the Offering Termination Date. After the Company NAV has been determined, the Company intends to adjust the Offering price of the Shares in an amount equal to the Company NAV divided by the number of outstanding Shares (the “Share NAV”). See “Valuation Procedures.”

Repurchase of Shares: Under certain circumstances, the Company may, in the sole discretion of the Board and upon the request of a stockholder, repurchase the Shares held by such stockholder as follows:

(1) Beginning after a stockholder has owned its Shares for a period of not less than 2 years after the date such stockholder acquired its Shares (the “Share Acquisition Date”) and continuing until the stockholder has held its Shares for no more than 3 years, the purchase price for the repurchased Shares will be equal to 90% of the Share NAV;

(2) For the period beginning 3 years after the Share Acquisition Date and continuing until such stockholder has owned its Shares for not more than 4 years, the purchase price for the repurchased Shares will be equal to 92% of the Share NAV;

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(3) For the period beginning 4 years after the Share Acquisition Date and continuing until such stockholder has owned its Shares for not more than 5 years, the purchase price for the repurchased Shares will be equal to 94% of the Share NAV; and

(4) For the period beginning 5 years after the Share Acquisition Date and thereafter, the purchase price for the repurchased Shares will be equal to 96% of the Share NAV.

The Share NAV initially will be $10 per Share until the Board determines a new Share NAV as described in “Valuation Procedures.” The Company will limit the total Shares repurchased in a calendar year to no more than 2% of the total number of Shares outstanding as of December 31 of the previous calendar year. Notwithstanding the above and subject to the sole discretion of the Board, in the case of the death of a stockholder, the redemption of the Shares may occur at any time after the Share Acquisition Date and, if accepted by the Board, the purchase price for the repurchased Shares will be equal to 100% of the Share NAV. The Board may, in its sole discretion, reject any request for repurchase and may, upon notice to the stockholders, amend, suspend or terminate the repurchase of Shares at any time.

Organization: The Company was incorporated on January 6, 2017. The Board currently has 5 members. The current Board members are the following: Donald R. Draughon, Jr., Chairman of the Board; J.D. Dykstra, Vice Chairman of the Board; Mark A. MacDonald; Mack D. Pridgen, III; and Nick C. Fugh.

The current officers of the Company are the following: Donald R. Draughon, Jr., Chief Executive Officer and Treasurer; J.D. Dykstra, President, Chief Investment Officer and Secretary; and Craig A. Coss, Controller.

Advisor: The Company will engage TreyNet Partners, LLC, a Delaware limited liability company (the “Advisor”), to provide advisory and asset and property management services pursuant to an advisory agreement among the Company, the Operating Partnership and the Advisor (the “Advisory Agreement”). See “Summary of the Advisory Agreement.” The Advisor is newly formed and has no experience advising real estate funds, however, the principals of the Advisor have experience, owning, developing, managing, leasing and operating real estate.

Structure: The Company will utilize an “umbrella partnership real estate investment trust” or “UPREIT” structure in which substantially all of the real estate investments are owned through the Operating Partnership. The Company is the sole general partner of the Operating Partnership (the “General Partner”). For each Share purchased pursuant to the Offering, the Company will acquire one General Partner Unit (as defined in the Operating Partnership Agreement) of the Operating Partnership. The Company uses an UPREIT structure because an UPREIT gives the Company an opportunity to accept contributions of properties from persons who may not otherwise sell their property interest because of unfavorable tax results and in order to provide the Advisor with a share of income and distributions generated by the Projects.

The Operating Partnership and the Company are managed by the Advisor. Pursuant to the Advisory Agreement, the Advisor will identify Projects to

5

be acquired by the Company and provide the Board with recommendations regarding the management and investment of the Company’s assets. In addition, the Advisor will provide asset management services to include property valuation, oversight of property managers, financial and market analyses, analysis regarding whether and when to hold or sell an asset, property portfolio analysis, and advice on debt restructuring. In the event of the Advisor’s fraud, gross negligence or willful misconduct (as determined by a final, non-appealable judgment of a court of competent jurisdiction), the Company will have the right, but not the obligation, to terminate the Advisory Agreement. See “Summary of the Advisory Agreement.”

REIT Status: The Company intends to qualify as a REIT beginning with the taxable year ending December 31, 2017, which may be extended to the taxable year ending December 31, 2018, in the sole discretion of the Board. To qualify for REIT status, the Company must meet a number of organizational and operational requirements, including a requirement that it annually distribute at least 90% of its REIT taxable income, determined without regard for any deduction for distributions paid and excluding any net capital gain to Company stockholders. As a REIT, the Company generally is not subject to federal income tax on the REIT taxable income it distributes to its stockholders. If the Company fails to qualify as a REIT in any taxable year, including the current year, it will be subject to federal income tax at regular corporate rates. Even though the Company qualifies as a REIT, it may still be subject to some federal, state and local taxes on certain of its income or property. In order for the Company to maintain its qualification as a REIT, it may be necessary for certain services to be provided by a taxable REIT subsidiary (a “TRS”).

Use of Proceeds: The Offering of $200,000,000 of Shares as set forth in this Memorandum is being made in order to capitalize the Company with funds, when coupled with proceeds from anticipated loans to acquire Projects, make ancillary investments and provide for general corporate purposes, including making distributions on Company securities. See “Estimated Use of Proceeds.”

Project Description & Investment Objectives:

The Company intends to invest in and operate Projects through the Operating Partnership. The Operating Partnership plans to acquire a diverse portfolio of single-tenant, net leased retail and education-related properties (the “Projects”) located throughout the United States. The Company seeks to opportunistically acquire and sell quality Projects that will provide prospective purchasers of the Shares with (i) the preservation and return of their capital contributions, (ii) stable cash flow (including monthly distributions), (iii) potential capital appreciation, (iv) the realization of growth in the value of the Projects and (v) potential liquidity through a possible future listing of the Company’s common stock on a national stock exchange. However, there can be no assurance that any of these objectives will be achieved.

Projects – Acquisition: It is anticipated that the Company will acquire Projects pursuant to purchase and sale agreements or contribution agreements with unaffiliated sellers. The acquisition structure for such Projects is currently unknown, but it is anticipated that the Company will acquire some Projects in fee simple, directly or through a special purpose entity, while other Projects may be purchased via joint ventures.

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Projects – Financing: The Company intends to finance the purchase of the Projects with proceeds of the Offering and loans obtained from third-party lenders. The Company anticipates that the aggregate loan-to-value ratio for the Company will be between 50% and 65%. The loan-to-value ratio at the time of acquisition for the Projects acquired is anticipated to be between 50% and 65% based on the purchase price of the Projects and will never be more than 65%. Notwithstanding the above, the Company may refinance some of the Projects and, in such case, the loan-to-value ratio may be higher or lower than the percentages described above. The Company has not obtained any financing commitments for any future Projects.

In order to facilitate the acquisition of the Projects during the Offering period, the Operating Partnership may obtain mezzanine loans from unaffiliated third parties, which may give the mezzanine lender the right to convert the mezzanine loan into Shares upon the occurrence of certain events and/or at a discount. If required by a senior lender of any Project, the mezzanine financing may be structured as a joint venture between the Operating Partnership, as holder of the common interests, and the mezzanine lender as the holder of the preferred equity interests, with the preferred return and return of capital paid to the mezzanine lender from the net proceeds of the sale of the Shares pursuant to the Offering.

Projects – Operation: The Advisor is responsible for managing, operating, leasing and maintaining the Projects under the terms of the Advisory Agreement. The Advisor may, in its sole discretion, perform its property management duties through one or more Affiliates or may engage a sub property manager to manage the day-to-day operations of the Projects. The Advisor will be responsible for paying all fees to any Affiliates or sub property managers. The Advisor may also engage local third-party leasing service providers to perform the leasing functions for the Projects. Any fees paid to third-party leasing service providers will be paid by the Company.

Term of Investment: The Shares will not be listed for trading on any securities exchange or over-the-counter market at the time you purchase the Shares. Since it is uncertain as to whether any public market for the Shares will ever develop, you should expect to hold your shares for an extended period of time. The Company anticipates commencing an orderly wind-down of the Company and the sale of its assets if the shares of common stock of the Company have not been listed on a national stock exchange on or prior to the end of the 7th calendar year after the acquisition of the first Project. However, this date may be accelerated in the sole discretion of the Company or extended for up to an additional 2 years with a majority vote of the holders of the Voting Common Stock. The Company will have up to 24 months to complete an orderly disposition of its assets.

Non-Voting Shares; Conversion to Voting Shares

The Shares will be Non-Voting Common Stock. The Shares will only convert to voting shares of common stock after a Qualified IPO. A “Qualified IPO” means the date on which the Company’s common stock is listed on a national securities exchange.

Compensation to the Advisor and its Affiliates

The Advisor and its Affiliates are entitled to receive substantial fees, compensation and distributions as follows:

(1) Asset Management Fee: The Advisor will receive an annual asset management fee (the “Asset Management Fee”), paid on a monthly basis, equal to 1% of the gross asset value of the

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Company as determined by the Board in accordance with the Advisory Agreement (the “Company Asset Value”). If the Advisor delegates its property management duties to one or more Affiliates or engages a sub property manager to manage the day-to-day operations of the Projects, the Advisor will be responsible for paying all fees to any such Affiliates or sub property managers. If the Advisor engages any local third-party leasing service providers to perform the leasing functions for the Projects, the Company will pay for any fees to such third-party leasing service providers in addition to the Asset Management Fee.

(2) Acquisition Fee: The Advisor will receive an acquisition fee (the “Acquisition Fee”) for each Project acquired by the Company equal to 1% of the gross purchase price of the Project, which will be paid at the closing of the acquisition.

(3) Financing Fee: The Advisor will receive a financing fee (the “Financing Fee”) equal to 0.5% of the principal amount of any financing or refinancing, which will be paid at the closing of any such financing or refinancing. The Financing Fee will be in addition to any loan fee paid to a third-party in connection with such financing or refinancing.

(4) Disposition Fee: The Advisor will receive a disposition fee (the “Disposition Fee”) equal to 1.5% of the contract sales price of the Project in connection with a sale, exchange or other disposition of a Project, which will be paid at the closing of such disposition. The Disposition Fee will be in addition to any third-party brokerage, legal and accounting fees incurred in connection with such disposition.

(5) Distributions from the Operating Partnership. The Advisor will receive (i) 20% of Cash From Operations (as defined in the Operating Partnership Agreement) from the Operating Partnership after the Company receives a 6% cumulative but not compounded annual return and (ii) 20% of Cash From Sale or Refinancing (as defined in the Operating Partnership Agreement) from the Operating Partnership after the Company receives a 6% cumulative but not compounded annual return plus a return of capital.

Unless noted above, any third parties engaged by the Advisor to provide the services described above will be paid by the Advisor. See “Compensation of the Advisor and Its Affiliates.”

Organization and Offering Expenses

The Advisor will be reimbursed by the Company for all Organization and Offering Expenses (including legal, accounting, printing, marketing and other miscellaneous costs and expenses) as well as costs and expenses relating to the organization of the Company. The Company anticipates that the Organization and Offering Expenses will be approximately $2,000,000 if the Maximum Offering Amount is sold (approximately 1% of the Maximum Offering Amount), and approximately $100,000 if the Minimum Offering Amount is sold (approximately 5% of the Minimum Offering Amount).

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Distributions of Cash From Operations from the Operating Partnership:

Distributions of Cash From Operations from the Operating Partnership will be payable monthly as follows:

(1) First, 100% to the Company until the Company has been distributed an amount equal to a 6% cumulative but not compounded annual return; and

(2) Thereafter, 80% to the Company and 20% to the Advisor.

Notwithstanding the above, the Operating Partnership may, at the option of the Company (as General Partner), make distributions to the Advisor prior to making the distributions set forth in (1) above (unless needed to maintain REIT status of the Company), to the extent such distributions are needed to pay any income taxes associated with allocations of Net Income (as defined in the Operating Partnership Agreement) to the Advisor. Any such distribution will reduce subsequent distributions to be made to the Advisor.

Distributions of Cash From Sale or Refinancing from the Operating Partnership:

Distributions of Cash From Sale or Refinancing from the Operating Partnership will be as follows:

(1) First, 100% to the Company until the Company has been distributed an amount equal to a 6% cumulative but not compounded annual return and a return of the Company’s capital contributions to the Operating Partnership; and

(2) Thereafter, 80% to the Company and 20% to the Advisor.

Notwithstanding the above, the Operating Partnership may, at the option of the Company (as General Partner), make distributions to the Advisor prior to making the distributions set forth in (1) above (unless needed to maintain REIT status of the Company), to the extent such distributions are needed to pay any income taxes associated with allocations of Net Income to the Advisor. Any such distribution will reduce subsequent distributions to be made to the Advisor.

Investor Suitability Requirements: The Offering of the Shares by the Company is strictly limited to persons who meet certain minimum financial and other requirements. See “Who May Invest.”

Depository Account: All subscription payments will be held in the Depository Account at Branch Banking and Trust Company, pending receipt and acceptance by the Company of the Minimum Offering Amount ($2,000,000). If the Minimum Offering Amount has not been sold on or before the Minimum Offering Termination Date, the Offering will be terminated and all amounts held in the Depository Account will be returned to the subscribers. See “Plan of Distribution – Subscription Procedures” and “Plan of Distribution – Depository Account.”

Monthly Distributions: The principal objective of the Company includes the intent to make monthly distributions to the stockholders. However, there can be no assurance that future cash distributions will actually be made or, if made, whether those distributions will be made when or in the amount anticipated.

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How to Subscribe: If you choose to purchase Shares in the Offering, you will need to complete an Instructions to Investors and Subscription Agreement, which accompanies this Memorandum, and pay for the Shares at the time you subscribe. If you are purchasing with an investor representative, you will also need to complete an investor representative questionnaire, which is available upon request from the Company at 3600 N. Duke Street, Suite 109, Durham, NC 27704, Attn: Donald R. Draughon, Jr.

Definition of Affiliate The term “Affiliate” means (i) any Person directly or indirectly controlling, controlled by or under common control with another Person, (ii) a Person owning or controlling 10% or more of the outstanding voting securities of such other-Person, (iii) any officer, director or partner of such other Person and (iv) if such other Person is an officer, director or partner, any company for which such Person acts in any capacity. The term “Person” means a natural person, corporation, limited partnership, general partnership, joint stock company, joint venture, association, company, trust, bank trust company, land trust, business trust, statutory trust or other organization, whether or not a legal entity, and a government or agency or political subdivision thereof.

ORGANIZATIONAL CHART

N

TreyNet Properties, LLC, (Delaware limited liability company)

Board of Directors

Donald R. Draughon, Jr. J.D. Dykstra

Mark A. MacDonald Mack D. Pridgen, III

Nick C. Fugh

Investors

Stockholder – Voting Common

Stock

TreyNet Partners, LLC (Delaware limited liability company)

Sole Member

Sole S

T(D

TreyNet Management, LLC, (Delaware limited liability company)

Manager

Stockholders – onvoting Common

Stock

10

TreyNet REIT OP, L(Delaware limited partners

General Partner

Advisor

Property SPEs, LL

Properties

Owners

Sole Mem

TreyNet Realty Capital REIT, Inc. (Maryland corporation)

hareholder

reyNet TRS, Inc. elaware corporation)

Limited Partner

P, hip)

C

ber

11

RISK FACTORS

The purchase of Shares is speculative and involves substantial risk. It is impossible to predict accurately the results to an investor of an investment in the Company because of the recent formation of the Company and the general uncertainties in the real estate and financing markets and the retail rental industry.

This Memorandum contains forward-looking statements that involve risks and uncertainties. These statements are only predictions and are not guarantees. Actual events and results of operations could differ materially from those expressed or implied in the forward-looking statements. Forward-looking statements are typically identified by the use of terms such as “may,” “will,” “should,” “expect,” “could,” “intend,” “anticipate,” “plan,” “estimate,” “believe,” “potential,” or the negative of such terms or other comparable terminology. The forward-looking statements included herein are based upon the Company’s current expectations, plans, estimates, assumptions and beliefs that involve numerous risks and uncertainties. Although the Company believes that the expectations reflected in such forward-looking statements are based on reasonable assumptions, the Company’s actual results may differ significantly from the results discussed in the forward-looking statements. Factors that might cause such differences include, but are not limited to, the risk factors discussed below. Any assumptions underlying forward-looking statements could be inaccurate. Purchasers of Shares are cautioned not to place undue reliance on any forward-looking statements contained herein.

You should consider carefully the following risks, and should consult with your own legal, tax and financial advisors with respect thereto. You are urged to read this entire Memorandum before investing in the Company.

Risks Related to the Company’s Organizational Structure

No Voting Rights for Shares. The Shares have no voting rights. The Shares will only have voting rights after a Qualified IPO. Thus, it is uncertain when, if ever, the Shares will have voting rights. Accordingly, so long as the Shares do not have voting rights, holders of the Shares will have no right to vote for the members of the Board or the management of the Company. Holders of Shares must rely entirely on the holders of the Voting Common Stock and the Board to make decisions regarding the management and operation of the Company.

Controlling Interests. Control of the Company’s Voting Common Stock is held by the Advisor, an entity that is owned and controlled by the officers and directors of the Company. Thus, the holder of all of the Company’s Voting Common Stock is not independent from the Advisor or the Board. In the event that the Advisory Agreement is terminated for any reason, the Advisor and/or its Affiliates will continue to own the Voting Common Stock.

Ownership Limit. Subject to certain exceptions set forth therein, the Company’s charter restricts the direct or indirect ownership by one person or entity to no more than 9.8% of the value of the Company’s then outstanding capital stock (which includes all common stock and preferred stock of the Company) and no more than 9.8% of the value or number of the aggregate, whichever is more restrictive, of the Company’s then outstanding common stock. This restriction may discourage a change of control of the Company and may deter individuals or entities from making tender offers for shares of the Company’s common stock on terms that might be financially attractive to stockholders or which may cause a change in the Company’s management. This ownership restriction may also prohibit business combinations that would have otherwise been approved by the Board and stockholders. In addition to deterring potential transactions that may be favorable to the Company’s stockholders, these provisions may also decrease your ability to sell your Shares.

Senior Securities. The Company has the power to issue additional securities having rights, preferences and privileges that are superior to and dilutive of the Shares offered in the Offering, including additional shares of Voting Common Stock, preferred stock, warrants and options. This could reduce the amount of cash available for distribution from operations and liquidation of the Company to the holders of Shares in the Offering and increases the risk that holders of Shares will not profit from their acquisition of Shares or that such holders will lose their investment entirely. Investors in the Offering do not have any preemptive rights with respect to any equity which the Company may issue in the future. Such preferred stock could also have the effect of delaying, deferring or preventing a change in control of the Company, including an extraordinary transaction (such as a merger, tender

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offer or sale of all or substantially all of the Company’s assets) that might provide a premium price to holders of the Shares.

Risks Related to the Operating Partnership. The Company intends to own all of its assets through the Operating Partnership. The Operating Partnership may accept contributions of property from certain persons in exchange for limited partnership interests in the Operating Partnership. The acceptance of persons as limited partners in the Operating Partnership involves certain risks including (i) entering into certain indemnification agreements with the contributing limited partners that would cause the Company to indemnify such persons for tax liability that may be incurred by the contributing limited partners related to the sale of the contributed property, (ii) the fact that the contributing limited partners will have certain voting rights with respect to the Operating Partnership and (iii) the need for the Operating Partnership to allocate debt to contributing partners.

Mezzanine Financing. The Company may obtain mezzanine loans from unaffiliated third parties in order to facilitate the acquisition of the Projects during the Offering Period. The mezzanine loans may give the mezzanine lenders the right to convert their loan into Shares upon the occurrence of certain events and/or at a discount. The issuance of Shares upon conversion of any mezzanine loans will result in dilution of the Shares acquired by investors pursuant to the Offering. In addition, payment of any interest, fees and other costs under the mezzanine loans will reduce the Company’s cash flow from operations available for distribution to the stockholders.

Risks Associated with Maryland Corporate Law

Duties of Directors and Exculpation and Indemnification of Directors and Officers. Maryland law provides that a director will not have any liability in that capacity so long as he or she performs his or her duties in good faith, in a manner he or she reasonably believes to be in the Company’s best interests, and with the care that an ordinarily prudent person in a like position would use under similar circumstances. The Company’s charter provides that to the maximum extent permitted by Maryland law, no present or former officer or director of the Company will be liable to the Company or its stockholders for money damages. In addition, the Company’s charter and Bylaws require the Company to indemnify (including advancement of expenses) the Company’s directors and officers for actions taken by them in those capacities to the maximum extent permitted by Maryland law. As a result, the Company and its stockholders may have more limited rights against these persons than might otherwise exist under common law.

Maryland Takeover Provisions. Certain provisions of the Maryland General Corporation Law applicable to the Company prohibit business combinations with (i) any person who beneficially owns, directly or indirectly, 10% or more of the voting power of the Company’s outstanding voting stock, which is referred to as an “interested stockholder,” (ii) an Affiliate or associate of the Company who, at any time within the 2-year period prior to the date in question, beneficially owned, directly or indirectly, 10% or more of the voting power of the Company’s then outstanding stock, which is also referred to as an interested stockholder or (iii) an Affiliate of an interested stockholder.

These prohibitions last for 5 years after the most recent date on which the interested stockholder became an interested stockholder. Thereafter, any business combination with the interested stockholder must be recommended by the Board and approved by the affirmative vote of at least 80% of the votes entitled to be cast by holders of outstanding voting stock of the Company and two-thirds of the votes entitled to be cast by holders of shares of the Company’s voting stock other than shares held by the interested stockholder with whom or with whose Affiliate the business combination is to be effected or held by an Affiliate or associate of the interested stockholder. These requirements could have the effect of inhibiting a change in control even if a change in control were in the stockholders’ interest. These provisions of Maryland law do not apply, however, to business combinations that are approved or exempted by the Board prior to the time that someone becomes an interested stockholder.

The Company has opted out of these provisions by resolution of the Board with respect to any business combination that is first approved by the Board. However, the Board may, by resolution, opt into the business combination statute in the future.

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Risks Relating to the Internal Operation of the Company

Failure of the Company to Maintain REIT Status. REIT qualification is complex and would generally require that the Company have at least 100 stockholders and that 5 or fewer individuals (as defined under the Code to include certain entities) not collectively own more than 50% of the Company at certain times. In addition, to maintain REIT status, the Company must satisfy certain other tests on an ongoing basis concerning, among other things, the sources of its income and the nature of its assets. REIT qualification requires that specified percentages of the Company’s income be attributable to certain real estate sources and would require the Company to distribute at least 90% of its taxable income to its stockholders each taxable year. If the Company fails to qualify as a REIT, the value of the Shares will likely be diminished because the qualification of the Company as a REIT is a major component of the liquidity strategy for the stockholders.

Sources of Cash Distributions. The Company is not limited in the sources of cash that may be available for distributions. The Company may make distributions from any source, including working capital, Offering Proceeds and/or refinancing proceeds. Distributions paid from sources other than current or accumulated earnings and profits may constitute a return of capital. Offering Proceeds may be used to make distributions on Company securities. If the Company funds distributions from financings, the net proceeds from this or future offerings or other sources, the Company will have less funds available for investment in the Projects and the number of real estate properties that the Company invests in, and the overall return to the Company stockholders may be reduced. If the Company funds distributions from borrowings, the Company’s interest expense and other financing costs, as well as the repayment of such borrowings, will reduce the Company’s earnings and cash flow from operations available for distribution in future periods. If the Company funds distributions from the sale of assets, this will affect the Company’s ability to generate cash flows from operations in future periods.

Potential Adverse Effects of Delays in Investments. Delays which may take place in the selection and acquisition of the Projects could adversely affect the return to an investor as a result of corresponding delays in the commencement of distributions to stockholders and the reduced amount of such distributions.

Use of Proceeds to Pay Organization and Offering Expenses. A portion of the Offering Proceeds will be used to pay the Organization and Offering Expenses. Thus, the gross amount of the Offering Proceeds will not be available for investment and operations. See “Estimated Use of Proceeds.”

No Guaranteed Cash Distributions. There can be no assurance that cash distributions will, in fact, be made or, if made, whether those distributions will be made when or in the amount anticipated. Delays in making cash distributions could result from the inability of the Company to purchase, develop or operate its assets profitably. In the event that the Company is unable to distribute sufficient cash to the stockholders in order to enable the stockholders to pay taxes imposed on taxable income generated by the Company, the Company may be required to issue dividends of common stock in order to satisfy such obligations.

Use of Proceeds Not Limited. Although the Company intends to only invest in Projects that meet the investment criteria described in this Memorandum, the Company has broad authority to invest the Offering Proceeds in various types of assets, including assets that do not meet the investment criteria described in this Memorandum. In addition, the Company has the authority to use Offering Proceeds to make distributions to its investors, including the holders of the Company’s common stock and other securities issued by the Company. Thus, the use of Offering Proceeds is not limited and potential investors must entrust all investment decisions to the Company.

Costs of Reporting Under the Exchange Act. The Company is not limiting the number of investors that may participate in the Offering. Upon the closing of the Offering, the Company may have more than 2,000 holders of such class of shares. If the Company has greater than 2,000 holders of such class of shares or more than 500 “non-accredited” investors of such class of shares, it will be required to become a reporting company under the Exchange Act. In the event that the Company becomes a reporting company for purposes of the Exchange Act, it will be required to file reports with the SEC on a quarterly and annual basis and will be required to comply with certain audit requirements imposed by the Exchange Act. The expense of being a reporting company under the Exchange Act is significant and includes costs related to an independent auditor, accounting, legal and other expenses.

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Conflicts of Interest. The senior officers of the Company are engaged in other activities and intend to continue to engage in such activities in the future, including other real estate ventures and such persons will, therefore, have conflicts of interest in allocating management time, services and functions between various existing enterprises and future enterprises they may organize, as well as other business ventures in which they and their Affiliates may be or may become involved. In addition, all of the shares of Voting Common Stock are owned, indirectly, by members of the Board. See “Conflicts of Interest.”

Loss of Uninsured Bank Deposits. The Company’s cash, including subscription payments held in the Depository Account, will likely be held in bank depository accounts. While the FDIC insures deposits up to $250,000 per depositor per insured institution in most cases, the Company may have deposits at financial institutions in excess of the FDIC limits. The failure of any financial institution in which the Company has funds on deposit in excess of the applicable FDIC limits may result in the Company’s loss of such excess amounts, which would adversely impact the Company’s performance.

Additional Working Capital Requirements. To the extent such funds are not available from operations, the Projects may require additional loans for capital expenditures or operations. The Company has not received a commitment from any third party to make such future loans, if needed, and there can be no assurance that such loans can be arranged or what the terms of any such borrowings would be.

Reliance on Management. All decisions regarding management of the Company’s affairs will be made exclusively by the Board and the Advisor. Decisions of the Company will not be made by the stockholders. Accordingly, investors should not purchase Shares unless they are willing to entrust all aspects of management to the Company, its Board and the Advisor, including, but not limited to, the selection of Projects to be acquired by the Company or the Operating Partnership. Potential investors must carefully evaluate the personal experience and business performance of the principals, the Board and the Advisor. The Company may retain independent contractors, such as the Advisor, to provide services to the Company relating to the Projects. Such contractors have no fiduciary duty to the stockholders, and may not perform as expected. See “Management.”

No Approval Rights Regarding Operation of the Projects. The holders of Shares will have no approval rights regarding the operation of the Projects. The decisions regarding the Projects will be made by the Company and the Advisor without input from the holders of Shares.

Potential Risks Regarding Return of Capital. A portion of the Cash from Operations from the Operating Partnership will be distributed to the Advisor (as the limited partner) prior to the Company receiving a return of its capital. If the Operating Partnership suffers a subsequent loss as a result of the sale or disposition of any Projects, the Advisor will not be required to return any of the distributions it received from the Operating Partnership, which could reduce returns to investors.

Loss on Dissolution and Termination. In the event of a dissolution or termination of the Company, the proceeds realized from the liquidation of the assets of the Company will be distributed among the stockholders, but only after payment of all loans and other obligations of the Company. The ability of a holder of a Share to recover all or any portion of such holder’s investment under such circumstances will, accordingly, depend on the amount of net proceeds realized from such liquidation, the priority of the Shares and the amount of claims to be satisfied therefrom. There can be no assurance that the Company will recognize gains on such liquidation.

Property Management. The Advisor is responsible for managing, operating, leasing and maintaining the Projects. The Advisor may, in its sole discretion, perform its property management duties through one or more Affiliates or may engage a sub property manager to manage the day-to-day operations of the Projects. The success of the Company will depend in large part on the Advisor’s ability to effectively manage the Projects. There can be no assurance that the Advisor or any Affiliate or sub property manager will be able to successfully manage the Projects.

Changes in Market Value or Income Potential of Assets. If the market value or income potential of the Company’s qualifying real estate assets changes as compared to the market value or income potential of the Company’s non-qualifying assets, or if the market value or income potential of the Company’s assets that are considered “real estate-related assets” under the Investment Company Act or REIT qualification tests changes as compared to the market value or income potential of the Company’s assets that are not considered “real estate-

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related assets” under the Investment Company Act or REIT qualification tests, whether as a result of increased interest rates, prepayment rates or other factors, the Company may need to modify its investment portfolio in order to qualify as a REIT or maintain its exception from the definition of an investment company. If the decline in asset values or income occurs quickly, this may be especially difficult, if not impossible, to accomplish. This difficulty may be exacerbated by the illiquid nature of many of the assets that the Company intends to own. The Company may have to make investment decisions that it otherwise would not make absent REIT and Investment Company Act considerations.

Potential Data Security Breaches. The Company collects and retains certain personal information provided by its tenants, employees and investors. The Company has implemented certain protocols designed to protect the confidentiality of this information and periodically review and improve its security measures; however, these protocols may not prevent unauthorized access to this information. Technology and safeguards in this area are consistently changing and there is no assurance that the Company will be able to maintain sufficient protocols to protect confidential information. Any breach of the Company’s data security measures and loss of this information may result in legal liability and costs (including damages and penalties), as well as damage to the Company’s reputation, that could materially and adversely affect the Company, including its business and financial performance.

Real Estate Risks

General Risks of Investment in the Projects. The economic success of an investment in the Company will depend upon the results of the operations of the Projects, which will be subject to those risks typically associated with an investment in real estate. Fluctuations in land values, occupancy rates, rent schedules and operating expenses can adversely affect operating results or render the sale or refinancing of the Projects difficult or unattractive. No assurance can be given that certain assumptions as to the future levels of occupancy at the Projects or future costs of operating the Projects will be accurate because such matters will depend on events and factors beyond the control of the Company. Such factors include, among others, the continued enforceability of tenant leases, vacancy rates for rental real property, financial resources of the tenants, rent levels and sales levels in the local areas where the Projects are located, adverse changes in local population trends, market conditions, neighborhood values, local economic and social conditions, supply and demand for property such as the Projects, competition from similar properties, interest rates, real estate tax rates, governmental rules, regulations and fiscal policies, including the effects of inflation and enactment of unfavorable real estate, rent control, environmental or zoning laws, hazardous material laws, uninsured losses and other risks.

Unspecified Investments. The Company intends to acquire Projects which are not currently identified. Thus, investors will not have an opportunity to evaluate for themselves information about the Projects, such as operating history, terms of financing and other relevant economic and financial information before deciding to participate in the Offering. The Company has broad authority and discretion in making investment decisions. Consequently, investors must exclusively rely on the Company to make investment decisions. No assurance can be given that the Company will be able to acquire suitable Projects or that the Company’s objectives will be achieved.

Uncertainty as to Extent of Diversification. The Company intends to invest in a diverse portfolio of Projects consisting of net leased retail and education-related properties located throughout the United States. The total amount of funds raised in the Offering and the number of Projects acquired by the Company is uncertain. It is possible that the Company will only acquire a few Projects, limiting the diversification of the investments and increasing the risk of loss to investors. A limited number of Projects may place a substantial portion of the funds invested in the same geographical location or retail industry with the same property-related or industry-related risks. In that case, the decline in a particular real estate market could substantially and adversely impact the Company. Further, the Company has no plans to acquire any assets other than single-tenant net leased properties. Thus, the Company will only have limited diversification as to the type of property it owns. In the event of an economic recession affecting the economies of the areas in which the Projects are located, a decline in real estate values in general or a change in economic conditions which affects real property investment and rental markets, or the occurrence of any one of many other adverse circumstances, the financial performance of the Company could be materially and adversely affected. A more diversified investment portfolio would not be impacted to the same extent upon such an occurrence.

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Uncertain Economic Conditions. The United States economy experienced a significant downturn from which it is still recovering. While there has been a partial recovery in the real estate sector, it is still unclear how stable the real estate markets currently are or will be now that the government has begun pulling back from its unprecedented participation in the bond market to keep interest rates low. In addition, economic uncertainty in China and falling oil prices have created global economic uncertainty. As a result, there can be no assurance that the Projects will achieve anticipated cash flow levels. Further, recent world events evolving out of increased terrorist activities and the political and military responses of the targeted countries have created an air of uncertainty concerning security and the stability of world and United States economies. Historically, successful terrorist attacks have resulted in decreased travel and tourism to the affected areas, increased security measures and disturbances in financial markets. It is impossible to determine the likelihood of any future terrorist attacks on United States targets, the nature of any United States response to such attacks or the social and economic results of such events. However, any negative change in the general economic conditions in the United States could adversely affect the financial condition and operating results of the Projects.

Illiquidity of Real Estate Investments. The ownership of the Projects will be relatively illiquid. Such illiquidity will limit the ability of the Company to vary its portfolio in response to changes in economic or other conditions.

No Guaranteed Cash Flow. There can be no assurance that cash flow or profits will be generated by the Projects.

No Audited Results of Operation of Individual Projects. In most cases, the Company will not obtain audited operating statements regarding the prior operations of a Project. The Company will rely on unaudited financial information provided by the sellers of the Projects. Thus, it is possible that information relied upon by the Company with respect to the acquisition of a Project may not be accurate at the time that the Company acquires such Project.

No Purchase Agreements for the Projects. The Company is currently in the process of identifying Projects to be purchased by the Company, but has not identified any Projects to be acquired by the Company. As a result, the terms of the purchase agreements, including the specific Projects to be acquired and the purchase prices of the Projects are unknown at this time. There can be no assurance that the Company will be able to enter into purchase contracts for a sufficient number of Projects.

Affiliated Sellers. The Company may acquire Projects from Affiliates of the Advisor. Accordingly, notwithstanding the fact that the purchase price will be based on a third-party appraisal, the purchase agreements for such Projects will not be negotiated on a third-party, arm’s length basis. Some of the terms of the purchase agreements with Affiliates of the Advisor may not be on market terms.

Environmental Liability. Federal, state and local laws impose liability on a landowner for the release or the otherwise improper presence on the premises of hazardous materials or hazardous substances. This liability is without regard to fault for, or knowledge of, the presence of such substances. A landowner may be held liable for hazardous materials or hazardous substances brought onto the property before it acquired title and for hazardous materials or hazardous substances that are not discovered until after it sells the property. Similar liability may occur under applicable state law. However, an innocent landowner defense to environmental liability under the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”) may be available where a landowner has conducted an appropriate inquiry with respect to potential hazardous substances at and around the subject property in accordance with good commercial and customary practices. Such a defense is generally predicated on obtaining an environmental site assessment that has been prepared in substantial compliance with the “All Appropriate Inquiry Practices” identified by CERCLA and the ASTM Standard E1527-13: Standard Practice for Phase I Environmental Site Assessments. Among other things, the overall site assessment must occur no more than one year prior to the date the property is acquired, and certain components of the site assessment must be performed within 180 days of the property acquisition. Although the Company will attempt to obtain current environmental site assessments for the Projects prior to acquisition, the Company may not obtain such information. Consequently, the innocent landowner defense may not be available to the Company if hazardous substances are found within the Projects. Further, similar defenses to environmental liability may not be available under state or local law. If any hazardous materials or hazardous substances are found within the real property underlying any of the Projects at any time, the Company could be held liable for cleanup costs, fines, penalties and other costs,

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particularly if the Company owns the real property directly rather than through a special purpose entity. If losses arise from hazardous substance contamination which cannot be recovered from other responsible parties, the financial viability of the Projects may be materially and adversely affected.

Single-Tenant Leases. The Company expects to acquire a portfolio of single-tenant, net leased properties. Thus, the financial success of a Project, and the ability of a Project to produce rental income, is dependent upon the performance of a single tenant. The Company will make a determination regarding the Projects it intends to acquire based on, among other things, the Project’s projected rent levels. There can be no assurance that the Projects will continue to be occupied at the projected rents. In the event that a tenant defaults on its lease payments, the Company will need to use other sources of revenue to make debt service payments on any Project loans in order to avoid foreclosure on the Project. Further, the Company may experience delays in enforcing its rights as landlord and may incur substantial costs in protecting and re-letting the Project. Any lease payment defaults by tenants could result in reduced distributions to the Company’s stockholders. If a lease is terminated prematurely or not renewed upon expiration, there is no guarantee that the Company would be able to secure a new tenant for the affected Project in a timely manner or upon similar or more favorable lease terms. In addition, the Project may be difficult to re-lease due to its location and/or special use design. If the Company renews a lease on less favorable terms (including tenant concessions), is unable to re-lease a Project on favorable terms or at all, or is required to sell the Project at a loss, the Company’s financial performance could be adversely affected which could materially reduce the cash available for distributions to the stockholders.

Special Use Single-Tenant Properties. Some of the Projects the Company acquires could be designed to meet particular specifications of the tenants, which may not be practical for other types of tenants. If a lease is prematurely terminated or is not renewed upon expiration, the Company may be unable to secure a new tenant for the Project or to sell the Project unless substantial renovations are made or significant rent concessions are permitted. The Company may incur substantial costs to renovate these Projects or receive significantly less rent from new tenants, either of which could materially affect the financial performance of the Company.

Competition From Similar Businesses. Tenants may face competition from similar businesses located in the vicinity of the Projects. The proximity of other competing businesses in the area surrounding the Projects could negatively impact a tenant’s revenue which could increase the potential for a default under its lease.

Joint Ventures. The Company may make some of its investments through joint ventures between the Company and both affiliated and non-affiliated parties. It is anticipated that, with respect to any such investment, the Company and the joint venture partner will have joint control over the management and operation of the investment. Thus, the Company will be dependent on the decisions made by its joint venture partner. Such joint venture partner may have objectives which are different than those of the Company.

Earthquakes, Hurricanes, Wildfires, Tornadoes and Floods. The Projects may be located in areas in the United States that have increased risk of earthquakes, hurricanes or high winds, tornadoes, wildfires and floods. An earthquake, hurricane, tornado, wildfire or flood could cause structural damage to or destroy a Project. The Company does not intend to obtain earthquake, wind or flood insurance for the Projects unless required by a lender. It is possible that any such insurance, if obtained, will not be sufficient to pay for damage to any Project.

Uninsured Losses. It is possible that under the leases both the Company and the tenants will be required to maintain insurance coverage against liability for personal injury and property damage. The Company will try to maintain adequate insurance coverage against liability for personal injury and property damage, although it does not intend to obtain earthquake, wind or flood insurance unless otherwise required by a lender. There can be no assurance that insurance obtained by the Company or the tenants will be sufficient to cover any such liabilities. Furthermore, insurance against certain risks, such as earthquakes, floods and/or terrorism, may be unavailable or available at commercially unreasonable rates or in amounts that are less than the full market value or replacement cost of a Project. In addition, there can be no assurance that particular risks that are currently insurable will continue to be insurable on an economical basis or that current levels of coverage will continue to be available. If a loss occurs that is partially or completely uninsured, the Company may lose all or part of its investment. The Company may be liable for any uninsured or underinsured personal injury, death or property damage claims. Liability in such cases may be unlimited but stockholders will not be personally liable.

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Regulatory Matters. Future changes in land use and environmental laws and regulations, whether federal, state or local, may impose new restrictions on the development or use, and therefore the value, of real estate. The resale of real estate by the Company may be adversely affected by such regulations. In addition, cities and other municipalities may have different rules and regulations which may change from time to time, including retrofit ordinances, which may affect the capital needs of the Projects. Any such changes would need to be addressed by the Company, which would reduce the Company’s net income and the amount of cash available for distributions to the stockholders.

Toxic Mold. Litigation and concern about indoor exposure to certain types of toxic molds has been increasing as the public becomes aware that exposure to mold can cause a variety of health effects and symptoms, including allergic reactions. Toxic molds can be found almost anywhere; they can grow on virtually any organic substance, as long as moisture and oxygen are present. There are molds that can grow on wood, paper, carpet, foods and insulation. When excessive moisture accumulates in buildings or on building materials, mold growth will often occur, particularly if the moisture problem remains undiscovered or unaddressed. It is impossible to eliminate all molds and mold spores in the indoor environment. In warm or humid climates, the likelihood of toxic mold can be exacerbated by the necessity of indoor air-conditioning year-round. The difficulty in discovering indoor toxic-mold growth could lead to an increased risk of lawsuits by affected persons, and the risk that the cost to remediate toxic mold will exceed the value of the property. Because of attempts to exclude damage caused by toxic mold growth from certain liability provisions in insurance policies, there is no guarantee that insurance coverage for toxic mold will be available now or in the future.

Compliance with the Americans with Disabilities Act. Under the Americans with Disabilities Act of 1990 (the “ADA”), public accommodations must meet certain federal requirements related to access and use by disabled persons. Facilities initially occupied after January 26, 1992 must comply with the ADA. When a building is being renovated, the area renovated, and the path of travel accessing the renovated area, must comply with the ADA. Further, owners of buildings occupied prior to January 26, 1992 must expend reasonable sums, and must make reasonable efforts, to make practicable or readily achievable modifications to remove barriers, unless the modification would create an undue burden. This means that so long as owners are financially able, they have an ongoing duty to make their property accessible. The definitions of “reasonable,” “reasonable efforts,” “practicable” or “readily achievable” are site-dependent and vary based on the owner’s financial status. The ADA requirements could require removal of access barriers at significant cost, and could result in the imposition of fines by the federal government or an award of damages to private litigants. Attorneys’ fees may be awarded to a plaintiff claiming ADA violations. State and federal laws in this area are constantly evolving, and could evolve to place a greater cost or burden on the Company. While the Company will attempt to obtain information with respect to compliance with the ADA prior to investing in a Project, there can be no assurance that ADA violations do not or will not exist at a specific Project. If violations do exist, there can be no assurance that there will be funds to pay for any necessary repairs. Any funds used for ADA compliance will reduce the Company’s net income and the amount of cash available for distributions to stockholders.

Lack of Representations and Warranties. The Company may acquire real estate from sellers who make only limited or no representations and warranties regarding the condition of such real estate, the status of leases, the presence of hazardous materials or hazardous substances within such real estate, the status of governmental approvals and entitlements for such real estate or other matters adversely affecting such real estate. The Company may not be able to pursue a claim for damages against such sellers except in limited circumstances. The extent of damages that the Company may incur as a result of such matters cannot be predicted but potentially could result in a significant adverse effect on the value of such real estate.

Competition For Investments. The real estate industry is highly competitive and fragmented. The Company will compete with other real estate companies, many of which have greater financial resources than the Company. Also, competing properties may be located within the vicinity of the Projects. The Projects will likely experience competition for real property investments from such other properties, as well as other individuals, corporations and other entities engaged in real estate investment activities. Competition for investments may increase costs and reduce returns on the Projects. It is also possible that tenants from the Projects will move to existing or any new properties in the surrounding area and that the financial performance of the Projects would be adversely affected. Competition may also make it difficult to attract new tenants to the Projects. Such competition may result in decreased profits or in losses for the Company.

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No Appraisals or Reports. The Company may not obtain independent third-party appraisals or valuations of a Project, or other reports with respect to a Project, before the Company invests in such Project. If the Company does not obtain such third-party appraisals or valuations, there can be no assurance that the Company’s valuation of a Project will be correct or that a Project’s value will exceed its cost to the Company or that any sale or other disposition of such Project will result in a profit for the Company. Third-party appraisals and other reports may be prepared for lenders, in which case the Company typically will try to obtain a copy of such appraisals and reports for review, as well as reliance letters from the third-party preparers to allow the Company to rely on such appraisals and reports. To the extent the Company does not obtain such other reports or reliance letters before investing in a Project, the risk of investing in such Project may be increased.

Increases in Capitalization Rates. The value of real estate is generally based on capitalization rates. Capitalization rates generally trend with interest rates. Consequently, if interest rates go up, so do capitalization rates. Based on historical interest rates, current interest rates are low, as are current capitalization rates. However, if interest rates rise in the future, it is likely that capitalization rates will also rise, and as a result, the value of real estate will decrease as a market adjustment for such increase. All of the leases for the Projects are expected to be net leases with fixed rental amounts and fixed periodic rent increases. As a result, the net income of the Projects will not be able to adjust with an increase in capitalization rates. If capitalization rates increase, the Projects will likely achieve a lower sales price than anticipated, resulting in reduced returns to the stockholders. There is no assurance that the Company will achieve expected returns from the Projects.

Sale of Projects. Many factors that are beyond the Company’s control affect the real estate market and could affect the Company’s ability to sell Projects for the price, on the terms or within the time frame it desires. These factors include general economic conditions, the availability of financing, interest rates, capitalization rates and other factors, including supply and demand. Because real estate investments are relatively illiquid, the Company has a limited ability to vary its portfolio in response to changes in economic or other conditions. Further, before the Company can sell a Project on the terms it wants, it may be necessary to expend funds to correct defects or to make improvements. However, the Company can give no assurance that it will have the funds available to correct such defects or to make such improvements. The Company may be unable to sell its Projects at a profit. The Company’s inability to sell Projects at the time and on the terms it wants could reduce its cash flow and limit its ability to make distributions to its stockholders and could reduce the value of your investment.

Possible Delays in the Sale or Refinancing of Projects. The Company anticipates that each Project will be sold approximately 7 to 10 years from the time such Project is acquired. It may not be possible to sell a Project at such time. Further, it is anticipated that the loan documents may not allow for prepayment except shortly before the maturity date and may require the payment of a yield maintenance penalty or defeasance and the lender’s approval of the buyer in order to have a loan assumed. If a Project is not sold, the Company may have to refinance the loan. Based on historical interest rates, current interest rates are low and, as a result, it is likely that the interest rate that may be obtained upon refinancing will be higher than that of the loans. Fluctuations in the supply of money for such loans affect the availability and cost of loans, and the Company is unable to predict the effects of such fluctuations on the Company. Prevailing market conditions at the time the Company seeks to refinance a loan may make such loans difficult or costly to obtain. Such conditions may also adversely affect cash flow and/or profitability of the Company.

Future Capital Improvements. When tenants do not renew their leases or otherwise vacate a Project, in order to attract replacement tenants, the Company may be required to expend funds for capital improvements. In addition, the Company may require substantial funds to renovate a Project in order to sell it, upgrade it or reposition it in the market. If the Company has insufficient capital reserves, it will have to obtain financing from other sources. The Company intends to establish capital reserves in an amount it, in its discretion, believes is necessary. A lender also may require escrow of capital reserves in excess of any established reserves. If these reserves or any reserves otherwise established are designated for other uses or are insufficient to meet the Company’s cash needs, the Company may have to obtain financing from either affiliated or unaffiliated sources to fund its cash requirements. The Company cannot assure its stockholders that sufficient financing will be available or, if available, will be available on economically feasible terms or on terms acceptable to the Company. Moreover, certain reserves required by lenders may be designated for specific uses and may not be available for capital purposes such as future capital improvements. Additional borrowing for capital needs and capital improvements will increase the Company’s interest expense, and therefore its financial condition. As a consequence, the Company’s ability to make cash distributions to its stockholders may be adversely affected.

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Construction Risks. The Company may be required to make building and tenant improvements at the Projects. Construction entails risks that are beyond the control of the Company, the Advisor or any general contractor. Completion of renovations may be delayed or prevented by factors such as adverse weather, strikes or energy shortages, shortages of material for construction, inflation, environmental, zoning, title or other legal matters and unknown contingencies. Changes in construction plans and specifications, delays due to compliance with governmental requirements or imposition of fees not yet levied, or other delays could cause construction costs to exceed the amounts projected by the Company and any financing obtained by the Company. The Company will need to provide funds to pay any construction costs in excess of amounts borrowed. In the event that construction costs exceed funds available, the ability of the Company to complete the work to be done on a Project will depend upon the ability of the Company to supply additional funds. There can be no assurance that the Company will have adequate funds available for that purpose. Any delays in construction may have an adverse impact on the cash flow and long-term success of the Company.

Construction Defects. Some of the Projects may be newly or recently constructed. Newly constructed projects are sometimes subject to construction defects that only reveal themselves over time. If any of the Projects should become subject to any construction defect issues, the Company may have remedies under state law as well as under any warranties from the contractors for the construction work, provided that the warranties were assigned to the Company or the Operating Partnership. To the extent that warranties from contractors do not cover any such defects and the Company is not successful recovering damages from the contractor, it is possible that the Company would be responsible to repair any such defects. If the Company is required to pay for the repair of any construction defects, the projected return to the investors may be reduced.

Condemnation of Land. The Projects or a portion of the Projects could become subject to an eminent domain or inverse condemnation action. Any such action could have a material adverse effect on the marketability of a Project or the amount of return on investment for the stockholders.

Potential Liabilities from Operations. The Company anticipates that litigation will occur in the ordinary course of business. The Company intends to maintain adequate general liability insurance to cover such potential litigation which stems from the ordinary course of owning and operating the Projects; however, there can be no assurance that all losses will be covered. If a loss occurs that is partially or completely uninsured, the Company may lose all or part of its investment.

Increases in Property Taxes. The Projects will be subject to real and personal property taxes that may increase as tax rates change and as the Projects are assessed or reassessed by taxing authorities. As the owner of the Projects, the Company will ultimately be responsible for payment of the taxes to the applicable government authorities although the tenants may be responsible for payment of property taxes under the leases. If the Company or the tenants fail to pay any such taxes, the applicable taxing authority may place a lien on the real property and the real property may be subject to a tax sale.

Financing Risks

Leverage. It is likely that acquisition of the Projects will require the Company to obtain loans. Thus, the Projects will be leveraged. The Company may also incur mortgage debt on Projects that it already owns in order to obtain funds to acquire additional Projects, to fund property improvements and other capital expenditures, to make distributions and for other purposes. In addition, the Company may borrow as necessary or advisable to ensure that it maintains its qualification as a REIT for federal income tax purposes, including borrowings to satisfy the REIT requirement that the Company distribute at least 90% of its annual REIT taxable income to its stockholders (computed without regard to the dividends paid deduction and excluding net capital gain). The Company anticipates that the aggregate loan-to-value ratio for the Company will be between 50% and 65%. The loan-to-value ratio at the time of acquisition for the Projects acquired is anticipated to be between 50% and 65% based on the purchase price of the Projects. Notwithstanding the above, the Company may refinance some of the Projects and, in such case, the loan-to-value ratio may be higher or lower than the percentages described above. The Company has not obtained a commitment for any loans for the Projects. Therefore, the amount and terms of any future loans are uncertain and will be negotiated by the Company. No assurance can be given that future cash flow will be sufficient to make the debt service payments on any loans and to cover all operating expenses. If the Projects’ revenues are insufficient to pay debt service and operating costs, the Company may be required to seek additional working capital. There can be no assurance that such additional funds will be available. In the event additional funds are not available, the lenders

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may foreclose on the Projects and the stockholders could lose their investment. In addition, the degree to which the Company is leveraged could have an adverse impact on the Company, including (i) increased vulnerability to adverse general economic and market conditions, (ii) impaired ability to expand and to respond to increased competition, (iii) impaired ability to obtain additional financing for future working capital, capital expenditures, general corporate or other purposes and (iv) requiring that a significant portion of cash provided by operating activities be used for the payment of debt obligations, thereby reducing funds available for distributions, operations and future business opportunities.

Availability of Financing and Market Conditions. Market fluctuations in real estate loans may affect the availability and cost of loans needed to acquire the Projects or refinance any Projects. There is no assurance that the Company will be able to obtain the required financing to acquire or refinance the Projects. Restrictions upon the availability of real estate financing or high interest rates on real estate loans may also adversely affect the ability of the Company to sell the Projects. Based on historical interest rates, current interest rates are low and, as a result, it is likely that the interest rates available for future real estate loans and refinancings will be higher than the current interest rates for such loans, which may have a material and adverse impact on the Projects and the Company.

Unknown Loan Terms. The terms of the loans to be obtained or assumed by the Company to acquire or refinance the Projects will vary and the exact terms are currently unknown. It is anticipated that the loans may not allow for prepayment until shortly before maturity and that any prepayment may require the payment of a yield maintenance penalty. Consequently, the Company may not be able to take advantage of favorable changes in interest rates.

Variable Interest Rates and Interest Only Loans. It is anticipated that loans obtained by the Company may have variable interest rates. In the event that the interest rate on any loan increases significantly, the Company may not have sufficient funds to pay the required interest payments. In such event, the continued ownership of the applicable Project may be threatened. In addition, it is anticipated that some of the loans will only require interest payments. Thus, balloon payments of principal will be due upon maturity. If the Company is unable to make a balloon payment or to refinance a loan for any reason or at reasonable cost, or if the applicable Project has not been sold before such balloon payment is due, the continued ownership of the Project could be jeopardized.

Recourse Liability. Although the Company anticipates that any loan it obtains to acquire or refinance a Project will be nonrecourse, the Company has the discretion to obtain recourse loans. In the event the Company obtains a recourse loan and the related Project fails to perform as expected, the Company may not have adequate cash to make payments due on the loan. If the Company defaults on a recourse loan, in addition to foreclosing on the related Project, the lender may seek repayment from other assets of the Company, which would adversely affect the performance of the Company.

Carve-Outs to Nonrecourse Liability. Although the Company anticipates obtaining loans for the Projects that will be nonrecourse as to principal and interest, it is possible that lenders may require the Company to be personally liable for certain carve-outs. It is also anticipated that the Company will be liable for certain springing recourse events. In circumstances where personal liability attaches, the lender could proceed against the Company’s assets. It is possible that the Company could be responsible for all of the nonrecourse carve-outs or springing recourse events. Stockholders, however, will not be personally liable for any nonrecourse carve-outs or springing recourse events.

Restrictions on Transfers. It is anticipated that the loans for the Projects will restrict the ability of the Company to sell its interest(s) in the Projects. The lenders may also impose restrictions on the transferability of Shares. Upon violation of the restrictions on transfer or encumbrance, a lender will have the right to declare the entire amount of the loan, including principal, interest, prepayment premiums and other charges, to be immediately due and payable. If the lender declares the loan to be immediately due and payable, the Company will have the obligation to immediately pay the loan in full, including applicable prepayment charges. If replacement financing is not found or the loan is not immediately paid in full, the lender may invoke its other remedies under the loan, which may include proceeding with a foreclosure that would cause the Company to lose its entire interest in the applicable Project.

Events of Default. It is anticipated that certain actions by the Company could cause an event of default under the loans encumbering the Projects, including the failure to pay required payments under the loan, the failure

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to pay taxes, the failure to maintain insurance, the assignment by a partial owner of a Project of an interest in such Project to a creditor, the bankruptcy of a partial owner of a Project, the filing of an action for partition or the transfer of an interest in a Project without lender’s consent. Additional events of default may be applicable to some or all of the loans. Should any of the partial owners of Projects which the Company does not completely own default under a loan for any reason, the lender may declare a default under the applicable loan, which could result in foreclosure by the lender on the applicable Project and the loss of all or a substantial portion of the investment made by the Company.

Derivative Financial Instruments to Hedge Against Interest Rate Fluctuations. The Company may use derivative financial instruments, such as interest rate cap or collar agreements and interest rate swap agreements, to hedge exposures to changes in interest rates on loans secured by its assets, but no hedging strategy can protect the Company completely. These agreements involve risks, such as the risk that counterparties may fail to honor their obligations under these arrangements and that these arrangements may not be effective in reducing the Company’s exposure to interest rate changes. The Company cannot assure you that its hedging strategy and the derivatives that it uses will adequately offset the risk of interest rate volatility or that its hedging transactions will not result in losses. In addition, the use of such instruments may reduce the overall return on the Company’s investments. These instruments may also generate income that may not be treated as qualifying REIT income for purposes of the 75% or 95% REIT gross income tests.

Risks Relating to the Offering and Lack of Liquidity

Determination of Share Price. The Purchase Price of the Shares has been determined primarily by the Board and bears no relationship to any established criteria of value such as book value or earnings per Share, or any combination thereof. Further, the price of the Shares is not based on past earnings of the Company, nor does that price necessarily reflect current market value for the assets of the Company. The Company may, but will have no obligation to, determine the Share NAV of the Company’s assets prior to the Offering Termination Date. See “Valuation Procedures” for a description of how the Share NAV determination will be made. The ordinary course of the Company’s business does not entail the valuation of businesses or securities, and therefore cannot guarantee that its estimation of the Share NAV will be an accurate estimation of the Company’s enterprise value.

Limited Redemption Rights. The ability of stockholders to redeem their Shares for cash from the Company is limited as to timing, amount and the discretion of the Company. See “Description of the Shares – Repurchase Plan.”

Speculative Investment. The Company’s business objectives must be considered highly speculative, and there is no assurance that the Company will satisfy those objectives. No assurance can be given that the stockholders will realize a substantial return, if any, on their purchase of Shares or that the holders of the Shares will not lose their entire investment in the Company. Prospective investors should read this Memorandum together with all Exhibits attached hereto, carefully and in their entirety, and should consult with their attorneys or business advisors.

No Public Market for the Shares. There currently is no public trading market for the Company’s securities. The Company may never list the Shares for trading on a securities exchange. The absence of a public market for the Shares could impair an investor’s ability to sell its Shares at a fair price or at all. In addition, the transfer of Shares will be subject to additional limitations. If an investor is able to sell its Shares, it may only be able to sell them at a substantial discount from the price paid. Thus, prospective investors should consider the purchase of Shares as illiquid and a long-term investment, and investors must be prepared to hold their Shares for an indefinite period of time.

Limited Transferability of Shares. Each investor who becomes a holder of Shares will be required to represent that such investor is acquiring the Shares for investment and not with a view to distribution or resale, that such investor understands the Shares are not freely transferable and, in any event, that such investor must bear the economic risk of investment in the Company indefinitely because the Shares have not been registered under the Securities Act or qualified for an exemption under certain applicable state securities laws, and that the Shares cannot be sold unless they are subsequently registered or an exemption from such registration is available. There can be no assurance that there will ever be a market for the Shares and a stockholder cannot expect to be able to liquidate his or her investment in case of an emergency. Further, the sale of Shares may result in taxable income.

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No Guaranteed Liquidity Event. There is no specified or guaranteed liquidity event or liquidation date for the Shares. Accordingly, Shares must be considered solely as long-term investments.

Offering Not Registered With the SEC or State Securities Authorities. The Offering will not be registered with the SEC under the Securities Act or the securities commission of any state, and is being offered in reliance upon an exemption from the registration provisions of the Securities Act and state securities laws applicable only to offers and sales to investors meeting the suitability requirements set forth herein.

Private Offering Exemption – Compliance with Requirements. The Shares are being offered and will be sold to investors in reliance upon a private offering exemption from registration provided in the Securities Act. If the Company should fail to comply with the requirements of such exemption, the stockholders would have the right to rescind their purchase of their Shares if they so desired. It is possible that one or more stockholders seeking rescission would succeed. This might also occur under applicable state securities or “blue sky” laws and regulations in states where the Shares will be offered without registration or qualification pursuant to a private offering or other exemption. If a number of stockholders were successful in seeking rescission, the Company and the Operating Partnership would face severe financial demands that would adversely affect the Company as a whole and, consequently, the investment in the Shares by the remaining stockholders.

Private Offering – Lack of Agency Review. Because the Offering is a nonpublic offering and, as such, is not registered under federal or state securities laws, investors will not have the benefit of a review of the Offering or this Memorandum by the SEC or any state securities commission. The terms and conditions of the Offering may not comply with the guidelines and regulations established for real estate programs that are required to be registered and qualified with the SEC or any state securities commission.

Private Offering Exemption – Limited Information. Because the Offering of the Shares is a nonpublic offering and the Shares are only to be sold to Accredited Investors, certain information that would be required if the Offering were not so limited has not been included in this Memorandum, including, but not limited to, financial statements and prior performance tables. Thus, investors will not have this information available to review when deciding whether to invest in Shares.

No Opportunity to Evaluate Projects. Investors in Shares will not have the opportunity to evaluate the transaction terms or other financial or operational data concerning the Company’s and the Operating Partnership’s investments in Projects. Purchasers must rely on the Company to evaluate investment opportunities, and the Company may not be able to achieve its investment objectives, may make unwise decisions or may make decisions that are not in an investor’s best interests because of conflicts of interest. Investors who invest in the later stages of the Offering may have the opportunity to evaluate some of the Company’s holdings.

Projected Aggregate Cash Flow. Any projected cash flow or forward-looking statements included in this Memorandum and all other materials or documents supplied in connection with the Offering should be considered speculative and are qualified in their entirety by the assumptions, information and risks disclosed in this Memorandum. The assumptions and facts upon which such projections are based are subject to variations that may arise as future events actually occur. The anticipated cash flows and returns described herein are based upon assumptions made by the Company regarding future events. There is no assurance that actual events will correspond with these assumptions. This Memorandum contains forward-looking statements that involve risks and uncertainties. The Company’s actual results may differ significantly from the results anticipated or discussed in the forward-looking statements. Prospective investors are advised to consult with their tax, financial and business advisors concerning the validity and reasonableness of the factual, accounting and tax assumptions. Neither the Company nor any other person or entity makes any representation or warranty as to the future profitability of the Company or an investment in the Shares.

Estimates, Opinions and Assumptions. No representation or warranty can be given that the estimates, opinions or assumptions made herein will prove to be accurate. Any such estimates, opinions or assumptions should be considered speculative and are qualified in their entirety by the information and risks disclosed in this Memorandum. The assumptions and facts upon which any estimates or opinions herein are based are subject to variations that may arise as future events actually occur. There is no assurance that actual events will correspond with the assumptions. Potential investors are advised to consult with their tax and business advisors concerning the

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validity and reasonableness of the factual, accounting and tax assumptions. Neither the Company nor any other person or entity makes any representation or warranty as to the future profitability of the Company.

No Representation of Stockholders. Counsel representing the Company and its Affiliates does not represent and will not be deemed under the applicable codes of professional responsibility to have represented or to be representing any or all of the stockholders in any respect.

Investment by Tax-Exempt Purchasers. In considering an investment in Shares of a portion of the assets of a trust of a pension or profit-sharing plan qualified under Code Section 401(a) (all references to “Code Section” are references to Sections of the Code, unless otherwise indicated) and exempt from tax under Code Section 501(a), a fiduciary should consider whether (i) an investment in the Company is advisable given the definition of plan assets under ERISA and the status of Department of Labor regulations regarding the definition of plan assets, (ii) the investment is in accordance with plan documents and satisfies the diversification requirements of Section 404(a) of ERISA, (iii) the investment is prudent under Section 404(a) of ERISA, considering the nature of an investment in, and the compensation structure of, the Company and the potential lack of liquidity of the Shares, (iv) the Company has a history of operations and (v) the Company or any Affiliate is a fiduciary or party in interest to the plan. See “ERISA Considerations.”

Exemption from Investment Company Act of 1940. The Company will likely have more than 100 stockholders. The Investment Company Act requires that any issuer that is beneficially owned by 100 or more persons and that owns certain securities be registered as required under the Investment Company Act. The Company’s only asset is its general partnership interest in the Operating Partnership. Pursuant to the Operating Partnership Agreement the Company is solely responsible for the management and operation of the Operating Partnership and, as a result, its interest in the Operating Partnership has significant incidents of a true general partnership interest and does not fall within the definition of a “security” for purposes of the Investment Company Act. Further, the Operating Partnership intends to qualify for an exemption from the Investment Company Act based on the type of assets it owns. The Company, as the General Partner of the Operating Partnership, anticipates that at least 55% of the Operating Partnership’s assets will consist of direct interests in real estate and at least 25% of the Operating Partnership’s assets (reduced to the extent the Operating Partnership’s investment in direct interests in real estate exceed 55%) will consist of real estate-related assets. Therefore, the Company will not be required to register under the Investment Company Act. If the Company’s interest in the Operating Partnership is deemed to be a security or if the Operating Partnership fails to qualify for an exemption or exclusions from the Investment Company Act, the Company will be required to register under the Investment Company Act. In the event the Company is required to register under the Investment Company Act, the returns to the stockholders will likely be significantly reduced.

Lack of Firm Commitment Underwriting. The Company is offering the Shares on a best efforts basis. The fact that this is not a firm commitment offering may increase the time necessary to sell the Minimum Offering Amount. If the Company does not raise substantial funds, it will be limited in the number and type of investments it and the Operating Partnership may make, which will result in a less diversified portfolio in terms of the number of investments acquired, the geographic regions in which such acquired investments are located and the types of investments that it may make. An investment in the Company’s Shares will be subject to greater risk to the extent that the Company lacks a diversified portfolio of investments. In such event, the likelihood of the Company’s profitability being affected by the poor performance of any single investment will increase.

Finding Suitable Investments. The more money the Company raises in the Offering, the greater the Company’s challenge will be to invest all of the net Offering Proceeds on attractive terms. The Company could also suffer from delays in locating suitable investments. Delays the Company encounters in the selection and acquisition of income-producing Projects would likely limit the Company’s ability to make distributions to investors and reduce investors’ overall returns.

General Solicitation. The Company intends to utilize general solicitation in connection with the sale of the Shares in reliance on the exemption from registration provided in Rule 506(c) of Regulation D promulgated under the Securities Act. In order to qualify for the exemption provided by Rule 506(c), all purchasers of Shares must be Accredited Investors as defined in Regulation D. The Company is required to have a reasonable basis to believe that the purchasers of Shares are Accredited Investors. In the event that a person who is not an Accredited

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Investor acquires Shares and the Company is deemed not to have complied with the reasonable basis requirement set forth in Rule 506(c), the Company could lose its exemption from registration of the Offering

No Broker-Dealers. Unless an individual investor utilizes a broker-dealer in connection with their acquisition of Shares, the Shares will be sold by the Company without the participation of any broker-dealers. Thus, the independent review of the Offering that would have occurred had broker-dealers been involved will not occur. As a result, the terms of the Offering were not subject to independent review.

Purchase of Shares by Advisor and its Affiliates. The Advisor and its Affiliates have acquired all of the Voting Common Stock in the Company. The Advisor and its Affiliates will not acquire Shares with a view to resell or distribute such Shares. The purchase of Shares by the Advisor or its Affiliates could create certain risks, including, but not limited to, the following: (i) the Advisor or its Affiliates may have an interest in disposing of Company assets at an earlier date than the other stockholders so as to recover its investment in the Shares, (ii) substantial purchases of Shares may limit the Advisor’s ability to fulfill any financial obligations that it may have to or on behalf of the Company and (iii) acquisition of Shares by the Advisor and/or its Affiliates will mean that the total Shares acquired will not have been provided by disinterested investors after an assessment of the merits and risks of the Offering. In the event that the Advisory Agreement is terminated for any reason, the Advisor and/or its Affiliates will continue to own the Voting Common Stock.

Federal Income Tax Risks

Built-In Gain Assets. The Company currently owns an interest in the Operating Partnership and therefore will be deemed to own a corresponding interest in the assets acquired by the Operating Partnership. Upon conversion to a REIT, each such asset that has a fair market value in excess of its adjusted basis generally will be considered a “built-in gain asset.” This built-in gain component will be fixed as of the date of conversion to REIT status. If the Company sells a built-in gain asset within 5 years of the effective date of its REIT election, the Company will (subject to certain exceptions) be subject to a corporate-level tax on the built-in gain component. To the extent that the Company is required to pay federal, state and local taxes, it will have less cash available for distributions.

Company Earnings and Profits. To qualify and maintain its status as a REIT, the Company must distribute any earnings and profits attributable to its existence as a subchapter C corporation. This must occur by the end of the year after the taxable year the Company earned the profits. The Company intends to timely make such distributions.

Failure to Maintain REIT Qualification. DLA Piper LLP (US) (“DLA”) rendered an opinion to the Company in connection with the Offering that the Company’s organization and proposed method of operation should enable it to meet the requirements for qualification and taxation as a REIT, based on a certification of certain facts provided by the Company to DLA and assuming that the Company continues to meets the ownership requirements of a REIT. This opinion is based upon, among other things, the Company’s representations as to the manner in which it is and will be owned and the manner in which it will invest in and operate assets. However, the Company’s REIT status depends upon its ability to meet requirements regarding its organization and ownership, distributions of its income, the nature and diversification of its income and assets and other tests imposed by the Code. DLA does not review the Company’s compliance with the REIT qualification standards on an ongoing basis, and the Company may fail to satisfy the REIT requirements in the future. In particular, the Company may engage in transactions in connection with which DLA has not provided legal advice, and has not reviewed, and which DLA may be unaware. Also, this opinion represents DLA’s legal judgment based on the law in effect as of the date of the opinion and upon a certification of certain facts provided by the Company to DLA in connection with rendering its opinion. DLA’s opinion is not binding on the Internal Revenue Service (the “IRS”) or the courts. Future legislative, judicial or administrative changes to the federal income tax laws could be applied retroactively, which could result in the Company’s disqualification as a REIT. See “Federal Income Tax Considerations.”

If the Company fails to qualify as a REIT for any taxable year, it will be subject to federal income tax on its taxable income at corporate rates. In addition, the Company would generally be disqualified from treatment as a REIT for the 4 taxable years following the year of losing its REIT status. Losing its REIT status would reduce its net earnings available for investment or distributions to stockholders because of the additional tax liability. In addition, distributions to stockholders would no longer qualify for the dividends paid deduction and the Company

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would no longer be required to make distributions. If this occurs, the Company might be required to borrow funds or liquidate some investments in order to pay the applicable tax. For a discussion of the REIT qualification tests and other considerations relating to the Company’s anticipated election to be taxed as a REIT, see “Federal Income Tax Considerations.”

Other Potential Tax Liabilities. Even though the Company intends to qualify as a REIT for federal income tax purposes, it may still be subject to some federal, state and local taxes on its income or property. For example:

• In order to maintain REIT status, the Company must distribute annually at least 90% of the Company’s REIT taxable income to its stockholders (which is determined without regard to the dividends paid deduction or net capital gain). To the extent that the Company satisfies the distribution requirement but distributes less than 100% of its REIT taxable income, it will be subject to federal corporate income tax on the undistributed income.

• The Company will be subject to a 4% nondeductible excise tax on the amount, if any, by which distributions it makes 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.

• If the Company has net income from the sale of foreclosure property that it holds primarily for sale to customers in the ordinary course of business or other non-qualifying income from foreclosure property, it must pay a tax on that income at the highest corporate income tax rate.

• If the Company sells an asset, other than foreclosure property, that it holds primarily for sale to customers in the ordinary course of business, the Company’s gain would be subject to the 100% “prohibited transaction” tax unless such sale were made by a taxable REIT subsidiary.

Risks Relating to Maintenance of REIT Status. To qualify and maintain REIT status, the Company must distribute to its stockholders each year 90% of its REIT taxable income (which is determined without regard to the dividends paid deduction or net capital gain). At times, the Company may not have sufficient funds to satisfy these distribution requirements and may need to borrow funds to qualify and maintain its REIT status and avoid the payment of income and excise taxes. These borrowing needs could result from (i) differences in timing between the actual receipt of cash and inclusion of income for federal income tax purposes, (ii) the effect of non-deductible capital expenditures, (iii) the creation of reserves or (iv) required debt or amortization payments. The Company may need to borrow funds at times when the market conditions are unfavorable. Such borrowings could increase the Company’s costs and reduce the value of an investor’s investment.

In addition, to qualify and maintain REIT status, the Company must satisfy certain tests on an ongoing basis concerning, among other things, the sources of its income, nature of its assets and the amounts the Company distributes to its stockholders. The Company may be required to make distributions to stockholders at times when it would be more advantageous to reinvest cash in the Company’s business or when the Company does not have funds readily available to make distributions. Compliance with the REIT requirements may hinder the Company’s ability to operate solely on the basis of maximizing profits and the value of an investor’s investment.

FIRPTA. A non-United States person disposing of a United States real property interest, including shares of a United States corporation whose assets consist principally of United States real property interests, is generally subject to a tax, known as FIRPTA, on the gain recognized on the disposition of such interest. Under the Protecting Americans from Tax Hikes Act of 2015 (the “PATH Act”), “qualified foreign pension funds” and certain other qualified foreign shareholders may be generally exempt from FIRPTA. In addition, FIRPTA does not apply, however, to the disposition of shares in a REIT if the REIT is a “domestically controlled qualified investment entity.” A REIT is a domestically controlled qualified investment entity if, at all times during a specified testing period (the continuous 5-year period ending on the date of disposition or, if shorter, the entire period of the REIT’s existence), less than 50% in value of its shares is held directly or indirectly by non-United States holders. The Company cannot assure you that it will qualify as a domestically controlled qualified investment entity. If the Company were to fail to so qualify, gain realized by a non-United States investor on a sale of its Shares would be subject to FIRPTA unless the Shares were traded on an established securities market and the non-United States

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investor did not at any time during a specified testing period directly or indirectly own more than 5% of the value of the Company’s outstanding common stock.

Potential Limits on Hedging. The REIT provisions of the Code may limit the Company’s ability to hedge its assets and operations. Under these provisions, any income that the Company generates from transactions intended to hedge its interest rate, inflation and/or currency risks will be excluded from gross income for purposes of the REIT 75% and 95% gross income tests if the instrument hedges (i) interest rate risk on liabilities incurred to carry or acquire real estate, (ii) risk of currency fluctuations with respect to any item of income or gain that would be qualifying income under the REIT 75% or 95% gross income tests or (iii) risk with respect to certain prior hedging transactions described in (i) and/or (ii) above, and each such instrument is properly identified under applicable Treasury Regulations. Income from hedging transactions that do not meet these requirements will generally constitute nonqualifying income for purposes of both the REIT 75% and 95% gross income tests. As a result of these rules, the Company may have to limit its use of hedging techniques that might otherwise be advantageous, which could result in greater risks associated with interest rate or other changes than the Company would otherwise incur.

Preferential Dividends. In order to qualify as a REIT, the Company must distribute annually to its stockholders at least 90% of the Company’s REIT taxable income, determined without regard to the deduction for dividends paid and excluding net capital gain. In order for distributions to be counted as satisfying the annual distribution requirements for REITs, and to provide the Company with a REIT-level tax deduction, the distributions must not be “preferential dividends” as determined on a class by class basis. A dividend is generally not a preferential dividend if the distribution is pro rata among all outstanding shares of stock within a particular class (i.e. all holders of the Non-Voting Common Stock), and in accordance with the preferences among different classes of stock as set forth in the REIT’s organizational documents. A REIT may issue separate classes of shares that have preferences between the classes of shares. There is no de minimis exception with respect to preferential dividends. Therefore, if the IRS were to take the position that the Company inadvertently paid a preferential dividend, the Company may be deemed either to (a) have distributed less than 100% of its REIT taxable income and be subject to tax on the undistributed portion or (b) have distributed less than 90% of its REIT taxable income and its status as a REIT could be terminated for the year in which such determination is made if the Company was unable to cure such failure. The Company can provide no assurance that it will not be treated as inadvertently paying preferential dividends.

Retirement Plan Risks

Failure to Meet Fiduciary Requirements under ERISA and the Code. There are special considerations that apply to employee benefit plans subject to ERISA (such as profit sharing, Section 401(k) or pension plans) and other retirement plans or accounts subject to Code Section 4975 (such as an individual retirement account (“IRA”)) that are investing in the Company’s Shares. If an investor is investing the assets of such a plan or account in Shares, please see “ERISA Considerations” in this Memorandum for a discussion of some of these considerations. Failure to satisfy the fiduciary standards of conduct and other applicable requirements of ERISA and the Code may result in the imposition of civil and criminal penalties and could subject the fiduciary to equitable remedies. In addition, if an investment in Shares constitutes a prohibited transaction under ERISA or the Code, the fiduciary that authorized or directed the investment may be subject to the imposition of excise taxes with respect to the amount invested. In the case of a prohibited transaction involving an IRA owner, the IRA may be disqualified and all of the assets of the IRA may be deemed distributed and subjected to tax. ERISA plan fiduciaries and IRA custodians should consult with counsel before making an investment in the Shares. See “Federal Income Tax Considerations – Treatment of Tax-Exempt Stockholders” and “ERISA Considerations.”

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ESTIMATED USE OF PROCEEDS

The following table sets forth certain information concerning the estimated use of the Offering Proceeds:

Minimum Offering Maximum Offering

Amount Percentage of

Gross Proceeds Amount Percentage of

Gross Proceeds

Gross Offering Proceeds $ 2,000,000 100.00% $ 200,000,000 100.00%

Organization and Offering Expenses(1) $ 100,000 5.00% $ 2,000,000 1.00%

Available for Investment(2) $ 1,900,000 95.00% $ 198,000,000 99.00%

Total Application $ 2,000,000 100.00% $ 200,000,000 100.00%

_________________

(1) The Company anticipates that the expenses incurred in connection with the Offering of the Company, assuming the Minimum Offering Amount is achieved will be $100,000 (approximately 5% of the Minimum Offering Amount) and, assuming the Maximum Offering Amount is achieved, will be approximately $2,000,000 (approximately 1% of the Maximum Offering Amount). In addition, certain Shares may be sold through persons or entities that are registered broker-dealers and commissions and/or fees may be due to such broker-dealers. Investor in Shares purchased through broker-dealers will be required to pay applicable commissions and fees in addition to the purchase price of the Shares.

(2) Amounts available for investment will be used to acquire the Projects, pay Project expenses, make ancillary investments and provide for general corporate purposes, including making distributions with respect to the Shares. The Projects may be acquired with a cash down payment and acquisition debt which has not yet been identified.

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DESCRIPTION OF THE COMPANY

Company Structure and Operating Partnership

The Company is a newly formed Maryland corporation. It intends to primarily own a diverse portfolio of single-tenant, net leased retail and education-related properties located throughout the United States. The Company will conduct its operations through the Operating Partnership, of which it is the sole General Partner.

The Company will utilize an “umbrella partnership real estate investment trust” or “UPREIT” structure in which substantially all of the real estate investments are owned through the Operating Partnership. The Company is the sole General Partner of the Operating Partnership. For each Share purchased pursuant to the Offering, the Company will acquire one General Partner Unit of the Operating Partnership. The Company uses an UPREIT structure in order to provide the Advisor with a share of income and distributions generated by the Projects and because an UPREIT gives the Company an opportunity to accept contributions of properties from persons who may not otherwise sell their property interest because of unfavorable tax results.

The Operating Partnership and the Company are externally managed by the Advisor under the supervision of the Board. The Advisor will identify Projects to be acquired by the Company and provide the Board with recommendations regarding the management and investment of the Company’s assets. In the event of the Advisor’s fraud, gross negligence or willful misconduct (as determined by a final, non-appealable judgment of a court of competent jurisdiction), the Company will have the right, but not the obligation, to terminate the Advisory Agreement. See “Summary of the Advisory Agreement.”

Purpose

The Company’s primary purpose is the acquire, own, operate, manage and sell the Projects.

Voting Common Stock

TreyNet Partners, LLC, which is the Advisor, has contributed $400,000 and has acquired all of the Company’s Voting Common Stock.

Board of Directors

The current Board members are the following: Donald R. Draughon, Jr., Chairman of the Board; J.D. Dykstra, Vice Chairman of the Board; Mark A. MacDonald; Mack D. Pridgen, III; and Nick C. Fugh.

The current officers of the Company are the following: Donald R. Draughon, Jr., Chief Executive Officer and Treasurer; J.D. Dykstra, President, Chief Investment Officer and Secretary; and Craig A. Coss, Controller.

Property and Asset Management

The Advisor is responsible for managing the assets of the Company and managing, operating, leasing and maintaining the Projects under the terms of the Advisory Agreement. The Advisor may, in its sole discretion, perform its property management duties through one or more Affiliates or may engage a sub property manager to manage the day-to-day operations of the Projects. The Advisor may also engage third-party service providers, at market rates, to provide leasing and construction services for the Projects. Though the Advisor is newly formed, its management team has significant experience in managing real estate properties.

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DESCRIPTION OF THE SHARES

Persons who purchase Shares from the Company will become stockholders in the Company. The Shares presently have no voting rights and will only have voting rights after a Qualified IPO. So long as the Shares do not have voting rights, holders of the Shares will have no say in the election of the Board, in the management of the Company or with respect to fundamental changes that may be proposed with respect to the Company.

In General. The securities being offered hereby are investments in a corporation that intends to qualify as a real estate investment trust, or REIT, beginning with the taxable year ending December 31, 2017, which may be extended to the taxable year ending December 31, 2018, in the sole discretion of the Board. The Company intends to invest in the Projects and conduct its operations through the Operating Partnership. Shares of Non-Voting Common Stock are being offered by the Company at $10.00 per Share. The minimum subscription amount is $50,000 (5,000 Shares at $10.00 per Share), except that the Company, in its sole discretion, may permit certain investors to purchase fewer Shares.

Potential Revaluation of Shares. The Shares will initially be offered at a price of $10.00 per Share, which will be the initial Share NAV. The Company may, but has no obligation to, determine the Company NAV prior to the Offering Termination Date. See “Valuation Procedures.” If the Company NAV has been determined during the Offering period, the Company intends to adjust the Offering price of the Shares to reflect the new Share NAV.

Repurchase Plan. Under certain circumstances, the Company may, in the sole discretion of the Board and upon the request of a stockholder, repurchase the Shares held by such stockholder as follows:

(1) Beginning after a stockholder has owned its Shares for a period of not less than 2 years after the Share Acquisition Date and continuing until such stockholder has held its Shares for no more than 3 years, the purchase price for the repurchased Shares will be equal to 90% of the Share NAV;

(2) For the period beginning 3 years after the Share Acquisition Date and continuing until such stockholder has owned its Shares for not more than 4 years, the purchase price for the repurchased Shares will be equal to 92% of the Share NAV;

(3) For the period beginning 4 years after the Share Acquisition Date and continuing until such stockholder has owned its Shares for not more than 5 years, the purchase price for the repurchased Shares will be equal to 94% of the Share NAV; and

(4) For the period beginning 5 years after the Share Acquisition Date and thereafter, the purchase price for the repurchased Shares will be equal to 96% of the Share NAV.

The Company will limit the total Shares repurchased in a calendar year to no more than 2% of the total number of Shares outstanding as of December 31 of the previous calendar year. Notwithstanding the above and subject to the sole discretion of the Board, in the case of the death of a stockholder, the redemption of the Shares may occur at any time after the Share Acquisition Date and, if accepted by the Board, the purchase price for the repurchased Shares will be equal to 100% of the Share NAV. The Board may, in its sole discretion, reject any request for repurchase and may, upon notice to the stockholders, amend, suspend or terminate the repurchase of Shares at any time.

Non-Voting Shares. The Shares will be Non-Voting Common Stock. The Shares will only convert to voting shares of common stock after a Qualified IPO. The term “Qualified IPO” means the date on which the Company’s common stock is listed on a national securities exchange.

Non-Certificated Interests. Unless otherwise provided by the Board, the Company will not issue shares in certificated form. Information regarding restrictions on the transferability of the Company’s shares that, under Maryland law, would otherwise have been required to appear on the Company’s share certificates will instead be furnished to stockholders upon request and without charge. These requests should be delivered or mailed to: TreyNet Realty Capital REIT, Inc., 3600 N. Duke Street, Suite 109, Durham, NC 27704, Attn: Donald R. Draughon, Jr.

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The Company will maintain a stock ledger that contains the name and address of each stockholder and the number of shares that the stockholder holds. With respect to uncertificated stock, the Company will continue to treat the stockholder registered on the Company’s stock ledger as the owner of the shares until the new owner delivers a properly executed form to the Company, which form the Company will provide to any registered holder upon request.

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COMPANY BUSINESS PLAN

The Company was formed with the intent to qualify as a REIT and to invest primarily in single-tenant, net leased properties through the Operating Partnership. The Operating Partnership expects to acquire, through purchase or contribution, direct or indirect ownership interests in a diverse portfolio of single-tenant, net leased retail and education-related properties located throughout the United States primarily in the retail energy, automotive aftercare, general merchandise and quick service restaurant industries. These properties generally will be freestanding, single-purpose buildings in prime locations with good access and visibility. The majority of the tenants will operate convenience stores (with or without gas stations), gas stations, truck stops, quick lube centers, automotive parts stores, automotive body shops, tunnel car washes, dollar stores, drug stores, fast food restaurants, fast casual restaurants, donut shops and coffee shops.

The leases for the Projects will be triple-net or double net leases with medium-terms of 5 to 10 years or long-terms of 10 to 20 years. The Company expects that most of the leases will be structured as triple-net leases whereby the tenants will be responsible for all property taxes, insurance and maintenance at the Projects. This structure will reduce the Company’s exposure to rising operating expenses as well as generate a predictable cash flow stream. Leases may also be structured as double-net leases whereby the Company will be responsible for some or all of the capital expenditures at the Projects including roof replacement, building structure, parking lot and HVAC systems. The Company expects that it will acquire a Project subject to a double-net lease only when the lease terms and rent payable thereunder justify the additional operating expenses. Under a net lease, the tenant typically has limited or no ability to terminate the lease or abate the rent prior to expiration of the lease term.

Overall, the Company expects to invest in a diverse portfolio of Projects across a variety of retail industries, tenants and geographical locations. In the early stages, the Company’s portfolio may include only a few Projects which may be concentrated in the same geographical location or retail industry thus limiting diversification. With time and strategic focus, the Company expects to balance its portfolio to achieve its desired objectives of risk mitigation by allocating investments across target retail industries, tenants and locations.

Investment Objectives

The Company’s key investment objectives are to (i) preserve investor capital, (ii) make regular cash distributions from available net cash flow from operations and capital transactions, (iii) realize moderate capital appreciation and (iv) achieve liquidity through an initial public offering, merger or sale. To accomplish these objectives, the Company intends to target properties that it estimates generate a 6% or greater current cash flow with a goal of generating a net Company-level internal rate of return (“IRR”) of 14% to 17%. The Company’s investment strategy will emphasize total return by focusing on operational and financial management. Fundamental, bottom-up analysis, with a particular emphasis on risk mitigation, will provide the basis for the Company’s approach and process with respect to its investments. Leverage may be used to enhance returns and to diversify equity.

The Company plans to make distributions to its stockholders from available cash flow from operations. The amount and timing of distributions will be determined by the Board based on the Company’s financial condition and other factors it deems relevant. To maintain its qualification as a REIT, the Company must make aggregate annual distributions to its stockholders of at least 90% of its REIT taxable income (which is computed without regard to the dividends paid deduction or net capital gain and which does not necessarily equal net income as calculated in accordance with generally accepted accounting principles).

Investment Strategy

The Company’s principal business strategy is to generate attractive risk-adjusted investment returns by assembling a high-quality portfolio of net leased properties diversified by industry, tenant and geographical location. To that end, the Company will focus on high-quality tenants, critical-use properties, smaller size properties, medium-term and long-term leases, primary, secondary and tertiary markets, leases with market rents and favorable rent escalation provisions, and active asset management of the Projects.

High-Quality Tenants. The Company’s goal is to acquire net leased properties with tenants that are capable of providing consistent, long-term rental income. The Company will seek to invest in properties leased to high-quality, “credit tenants.” Credit tenants generally are large public companies with investment grade credit ratings of Baa3/BBB- or higher from one of the 3 major rating agencies (Moody’s, S&P, Fitch). The Company may,

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however, determine a tenant to be creditworthy, and thus a “credit tenant” even though it may be unrated or below investment grade. The Advisor will conduct a thorough cash flow and credit rating analysis of all prospective tenants as part of its due diligence review. The Company will rely on the Advisor’s broad experience evaluating tenant financial statements and operating data to determine the credit worthiness of prospective tenants.

Critical-Use Properties. The Company will seek to invest in properties that are of “critical-use” operationally to the tenants. Critical-use properties have unique physical attributes or usage characteristics (e.g. high traffic counts, easy ingress/egress, strong visibility and optimal hub/spoke distance to customers). Additionally, a property may be considered critical-use as a result of the extraordinary level of capital investment completed by the tenant to customize the property such as the installation of specialized equipment, loading docks or security systems.

Smaller Size Properties. The Company will seek to invest primarily in smaller size properties that are approximately 2,500 to 15,000 square feet in size. The Company believes that this size of property is less sought after by institutions. With less competition, the Company believes it may be able to acquire these properties at more favorable pricing. Additionally, smaller size properties may have less re-tenanting risk should a tenant choose not to renew its lease because the Company believes there is more demand for smaller size properties.

Medium-Term and Long-Term Leases. The Company will seek to acquire properties that are subject to both: (i) medium-term leases with 5 to 10 years remaining on the lease term and (ii) long-term leases with 10 to 20 years remaining on the lease term. The Company believes that the acquisition of net leased properties with a mix of medium-term and long-term leases will provide the best opportunity for the Company to achieve its objectives of generating predictable and consistent recurring income as well as growing asset residual values. For medium-term leases, the Company will seek to acquire properties that either: (i) possess “below market” rental rates in a submarket with stable or improving fundamentals or (ii) deliver an indispensable location that is vital to the operations of the tenant, which the Company believes will motivate the tenant to release the property at a higher rental rate upon the expiration of the existing lease. The Company believes the greatest competition in the net lease market is for long-term leases located inside of major metropolitan areas and that there is an opportunity to reduce competition and thus achieve better pricing by acquiring medium-term net leased assets. The Company views this strategy as unique and advantageous to its investors. Ultimately, the Company will seek to acquire a varied mix of properties which produce superior, risk-adjusted returns.

Primary, Secondary and Tertiary Markets. The Company will seek to acquire a mix of properties in primary, secondary and tertiary markets throughout the United States. The Company believes that competition for net leased properties is greater in the primary markets. Primary markets are major metropolitan statistical areas (“MSAs”) with large populations and well-established economies such as New York City, San Francisco, Chicago, Boston and Washington D.C. Secondary markets are fast-growing metropolitan cities with emerging economies such as Atlanta, Austin, Charlotte, Nashville and Raleigh. Tertiary markets are smaller cities with less diverse, local economies.

Market Rents With Favorable Rent Escalations. The Company will seek net leased properties with in-place rents “on par” with current market rents. Additionally, the leases should include periodic rental rate increases from 1% to 3% each year of the lease term. In select cases, the Company may acquire a property with in-place rents “below par” with market rents. These acquisitions typically will be short-term leases (1 to 3 years remaining) or medium-term leases. The Company will only acquire these “below par” leases if underwriting supports the probability of retaining the tenant and increasing the rental rate to “on par” or “above par” with market rents.

Active Asset Management. The Company will seek to employ an aggressive, hands-on asset management approach with the Projects. The Company believes that most net leased property owners are passive and do not actively engage with the management of their properties. The Company believes that active asset management is required to properly maintain and protect the properties as well as to ensure tenants renew upon lease expiration. Active asset management requires an ongoing dialogue with tenants to understand (i) how their industry and parent company is performing, (ii) how the tenant is performing and (iii) whether the property is meeting its business requirements. If a tenant chooses not to renew its lease, the Company will be required re-tenant the property.

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Investment Guidelines and Criteria

The Company’s investment goals are to acquire an investment portfolio that will generate a net Company-level IRR of 14% to 17%. To achieve this goal, the Company has established the following investment criteria for the Projects:

• Must be located in the United States.

• Must be an existing property or to be constructed property with a gross acquisition cost of between $1 million to $10 million.

• Must have a projected cash flow of 6% or greater when underwritten on the basis of (i) at least a 5-year hold period and (ii) employing maximum loan-to-value leverage of 65% based on purchase price of the Project.

• Must have a minimum lease term of 5 years.

• Must have a minimum equity commitment of $0.35 million.

• Must qualify as real estate under the REIT rules.

Portfolio Diversification

The Company will seek to acquire a portfolio of properties that will maximize diversification across 3 areas utilizing the following criteria as a target at the time the Company is fully invested:

• Tenants: Target approximately 25% to 30% of annualized rental revenue to be generated from properties leased to investment grade tenants and/or “implied” investment grade tenants.

• Industry: Invest in target retail industries that represent a variety of service-oriented, non-discretionary and low-price point businesses such as retail energy, automotive aftercare, general merchandise and quick service restaurants. Allocate investments across all identified target retail industries. Depending on market conditions, investments may also include education-related properties such as charter schools as well as properties in other retail industries which meet the Company’s investment strategy.

• Geographical Location: Allocate investments across targeted MSAs with strong growth characteristics in primary, secondary and tertiary markets that offer favorable growth and stability.

Leverage Strategy

The Company will take a practical approach to the use of leverage and believes that each Project, based on its characteristics, should have an appropriate capital structure. In developing the capital structure for a particular Project, the Company will stress-test the underwriting to ascertain the potential cash flows in relation to the debt service coverage under a variety of scenarios.

The Company intends to finance the purchase of the Projects with proceeds of the Offering and loans obtained from third-party lenders. The Company anticipates that the aggregate loan-to-value ratio for the Company will be between 50% and 65%. The loan-to-value ratio at the time of acquisition for the Projects acquired is anticipated to be between 50% and 65% based on the purchase price of the Projects. Notwithstanding the above, the Company may refinance some of the Projects and, in such case, the loan-to-value ratio may be higher or lower than the percentages described above. The Company will work diligently to obtain loans with terms of 8 to 12 years which are secured by the applicable Project. Each Project will be financed separately based upon the projected asset management plan and identified risks associated with the Project. The Company may hedge the risks of interest rate increases on floating rate debt by the use of interest rate derivatives, such as swaps or caps/collars. The Company may, in its sole discretion, employ portfolio-level leverage instead of Project-level leverage.

In order to facilitate the acquisition of the Projects during the Offering period, the Operating Partnership may obtain mezzanine loans from unaffiliated third parties, which may give the mezzanine lender the right to convert the mezzanine loan into Shares upon the occurrence of certain events and/or at a discount. If required by a

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senior lender of any Project, the mezzanine financing may be structured as a joint venture between the Operating Partnership, as holder of the common interests, and the mezzanine lender as the holder of the preferred equity interests, with the preferred return and return of capital paid to the mezzanine lender from the net proceeds of the sale of the Shares pursuant to the Offering.

Exit Strategy & Liquidity Mechanism

The Company will employ a disciplined approach to continually evaluate disposition opportunities for the Projects. The Company will develop performance expectations for each Project as part of the Project-specific monitoring plan which will form the basis for subsequent disposition considerations. Once a Project is acquired or developed, actual property-level performance as well as macro-level and micro-level market trends will be reviewed on a regular basis. The Company’s ultimate decision to implement an exit strategy will be driven by its primary goal of maximizing investor returns.

The Company believes that holding periods of 7 to 10 years for the Projects will maximize investor returns as well as maintain consistent and stable cash flow. The Company anticipates that the most likely exit scenario will be a sale of the Projects. Generally, the Company expects to broadly market the Projects through third-parties to a wide range of qualified buyers. In certain situations, the Company may use recapitalizations, as an interim step, to capture value and to reduce risk.

Advisor’s Investment Team

In executing its investment strategy, the Company intends to take advantage of the Advisor’s experienced team of real estate professionals for research, sourcing transactions, conducting due diligence, performing financial analysis, structuring and closing transactions and managing the disposition of the Projects. The Advisor believes that its senior management team has broad real estate experience and industry level experience in convenience stores, quick lube centers, dollar stores, banking and educational facilities. With an average of over 30 years of investment experience, the Advisor’s senior management team is expected to bring to the Company a diverse and extensive combination of skills in real estate investing, banking, retail operations and financial analysis. See “Management” for the biographies of the Advisor’s senior management team.

The Advisor believes it will provide the Company with comprehensive investment and operational capabilities through its in-house real estate professionals who have broad experience in acquisitions, asset management, capital markets, investor relations, human resources, administrative, tax and accounting. The Company may, however, utilize third-party service providers to support certain day-to-day operational and administrative functions. The Company believes it may realize considerable cost savings and improved operational flexibility by outsourcing certain of its functions.

The Advisor’s senior management team has significant experience in the net leased property market across a multitude of industry sectors. Their extensive experience in acquiring, owning and operating net leased properties will be utilized to attempt to successfully source, screen, underwrite, acquire and manage a stable performing portfolio of net leased properties for the Company. In addition, the Advisor believes its senior management team possesses competitive strengths that will enable them to generate attractive risk-adjusted returns for the Company’s stockholders. These strengths include:

Domain Expertise. The Advisor believes its senior management team has deep experience sourcing, structuring, and acquiring net leased properties.

Operating Experience. The senior management team has hands-on operating experience within the convenience store, gas station, banking and charter school industries.

Expertise in Capital Markets. The senior management team has deep experience in real estate capital markets and investment banking.

Broad and Deep Sourcing Network. The senior management team has developed a broad network from which to source investment opportunities. They have cultivated strong relationships with real estate owners, industry operators, banks, brokers, developers and other intermediaries. The Company will source its investments

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primarily through direct origination, capitalizing on the relationships which the senior management team has established with owners and operators throughout the United States. These relationships have been built and sustained over time as a result of the senior management team’s reliability and efficiency executing acquisitions.

Proactive, Hands-on Investment Approach. The senior management team has operated through various economic conditions and real estate cycles. By being proactive and hands-on with their investment tactics, they have responded to the market’s demands and fluctuations. The Advisor will continue this adaptive investment approach to effectively manage risk and to capitalize on opportunities arising from economic uncertainty.

Focus on Risk-Reward Analysis. The senior management team understands the importance of protecting and preserving investors’ capital. The goal is always to provide superior risk-adjusted returns. To that end, the Advisor will perform rigorous analysis across industries, geographical locations, tenants and product types to select appropriate net leased properties for the Company’s portfolio of Projects. Furthermore, the Company will utilize appropriate leverage to augment equity returns, while avoiding unnecessary exposure to excessive interest rate or refinancing risks.

Disciplined Underwriting. The Advisor will perform disciplined underwriting and due diligence before presenting the property to the Company. The process focuses on the following critical areas of assessment: (i) industry segment and the tenant’s competitive positioning, (ii) tenant’s credit and financial strength, (iii) lease quality/terms and landlord obligations and (iv) pricing and corresponding risk adjusted returns on the investment.

Corporate Acquisitions. The senior management team has experience executing large corporate and portfolio acquisitions.

Emphasis on Asset Management. The Advisor’s organizational emphasis is on strong asset management. The Company will place its resources behind building the best possible asset management team responsible for sourcing, screening, buying, monitoring and managing the Projects. Where appropriate, the Company will outsource certain services.

Investment Process

The Advisor has developed a disciplined approach to evaluate and execute real estate investment opportunities. The investment process can be broken down into 5 phases: (i) sourcing and screening; (ii) analyzing and underwriting; (iii) structuring and negotiating; (iv) monitoring and managing; and (v) reporting. The investment process requires coordination of many internal, as well as external, resources.

Market Research. The Advisor performs regular on-going demographic and market analysis through the use of a variety of research tools to evaluate investment strategies and target markets. The research process starts at the macro-level by targeting markets that exhibit attractive economic growth fundamentals. The Advisor’s preliminary analysis may include a review of population growth, job growth and GDP trends. Once an investment strategy and target market is identified, the Advisor begins to drill down into the submarkets. The submarket analysis includes vacancy trends, rent growth, absorption, new construction and excess inventory supply. CoStar and REIS provide market and asset-level occupancy, rents and concessions for retail properties. CoStar also provides econometric market data sourced at the property level utilized for forecasting rent, occupancy and supply trends in the Company’s target markets. The Advisor also uses Real Capital Analytics to gather detailed information on particular transactions, including cap rate, buyer, seller, lender and broker. All of these research tools are crucial in formulating projections and an investment thesis for potential acquisitions.

Sourcing Investments. Investments for the Company will be originated through the extensive network of relationships developed by the Advisor’s senior management team over the course of decades in the real estate industry including (i) direct contact with targeted tenants, (ii) trade shows and industry publications, (iii) property owners, (iv) real estate brokerage community, (v) national, regional and community banks and (vi) servicers. These relationships have been cultivated over combined decades of experience and are expected to provide the Company with a solid and high-quality pipeline of deal flow. The Advisor believes that the Company’s focus on net leased properties with medium-term and long-term leases provides a competitive advantage to the Company. This focus is expected to increase the likelihood that the Company can access the best risk/return opportunities in the targeted MSAs and submarkets.

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Screening Investments. The first step in screening investments is a market/region analysis focused on high-level macroeconomic trends. The Advisor will utilize third-party research companies, such as PPR, REIS, Brookings Institute and Milken Institute, to monitor these trends. Properties must be located in a strong market/region with: (i) positive population and job growth, (ii) strong industry diversity and (iii) a burgeoning transportation infrastructure. The Advisor will then conduct a submarket analysis utilizing secondary as well as primary research to scrutinize submarket conditions such as those listed above under “Market Research.” The Advisor will also leverage its relationships with brokers, tenants and owners to collect first-hand market information. Properties must be located in a strong submarket with favorable movement in vacancy rates, rental rates and market absorption.

Analyzing and Underwriting. The analyzing and underwriting process involves a preliminary underwriting assessment, a feasibility analysis and senior management approval. The purpose of the preliminary underwriting assessment is to determine if the investment opportunity warrants dedicated resources to complete a comprehensive feasibility analysis. With a continuous pipeline of prospective investments, the senior management team must be able to quickly assess the risks/rewards of a particular property by evaluating pricing, investment structure, terms and management strategy. The key elements assessed during preliminary underwriting include whether the property is (i) priced near replacement cost, (ii) leased at current market rents, (iii) situated in a strategic location, (iv) part of an industry favored by macro trends and (v) subject to a lease with a credit-worthy and reliable tenant. The initial cash yield and IRR over the lease terms are also evaluated. For the feasibility analysis, the Advisor will conduct a more comprehensive and thorough investigation of the property including (i) the prevailing market conditions and trends, (ii) relevant industry conditions and risks, (iii) parent company financial analysis, (iv) unit-level financial performance and cash flows and (v) tenant credit underwriting. The results of the preliminary underwriting and feasibility analysis are then presented to the Advisor’s senior management team for their review and consideration.

Structuring and Negotiating. If the senior management team determines that the property meets the Company’s investment guidelines and criteria, the Company will enter into a non-binding letter of intent with the seller and commence negotiations of the structure and terms of the purchase and sale agreement. During this time, the Advisor will conduct a complete due diligence review of the property which may include (i) a physical condition assessment, (ii) an environmental assessment, (iii) a demographic review, (iv) a market review, (v) a tenant review and credit analysis, (vi) an industry review, (vii) a lease and abstract review and (viii) a title and survey review. Once complete, the due diligence results will be presented to the Advisor’s senior management team for their approval. If the senior management team determines that the property is suitable for the Company, the results of the preliminary underwriting, feasibility analysis and due diligence review will be presented to the Company for its approval.

Monitoring and Managing. The Advisor will seek to maximize the value of the Project through active, hands-on asset management. The Advisor’s asset management team will directly interface with the senior management team, property managers, leasing representatives and any joint venturer or development partner, to manage, approve and monitor the operations and strategic plans for each Project. Primary responsibilities will include (i) industry monitoring, (ii) tenant credit and unit-level performance monitoring, (iii) tenant and lease covenant compliance, (iv) annual physical condition assessments, (v) double-net lease expense obligations, (vi) tenant default recoveries and asset repositionings, and (vii) property resale transactions. The Advisor may, in its sole discretion, perform its property management duties through one or more Affiliates or may engage a sub property manager to manage the day-to-day operations of the Projects. The Advisor may also engage local third-party leasing service providers to perform the leasing functions for the Projects. Throughout the life of each Project, the Advisor will actively monitor and assess individual Project performance against the established investment objectives of the Company.

Reporting. The Company will strive for absolute transparency with its stockholders and deliver timely reports that contain industry standard performance metrics and clearly explain any methods for valuation or other calculations (matching requirements as outlined in the Advisory Agreement). The Advisor will provide quarterly performance reports at the property and portfolio level, annual audited financial statements, annual asset valuations, and property and portfolio-level debt disclosure.

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PLAN OF DISTRIBUTION

Rule 506(c)

This Offering is being made in reliance on Rule 506(c) of Regulation D promulgated under the Securities Act. The Company intends to engage in general advertisement for the sale of the Shares. As a result, all purchasers of Shares must be Accredited Investors, as defined in Regulation D. Prospective investors will be required to provide sufficient financial information to the Company so that the Company will have a reasonable basis to believe that the potential investor is an Accredited Investor.

General Description

The Offering is for a maximum of $200,000,000 of Shares. The minimum subscription amount will be $50,000 (5,000 Shares at $10.00 per Share), except that the Company, in its sole discretion, may permit certain investors to purchase fewer Shares. After funding the Company with the Minimum Offering Amount, the net proceeds from the sale of each Share will be added to the Company’s capital and utilized for the purposes set forth in this Memorandum. The Company intends to continue the Offering until the Offering Termination Date.

Commissions and Fees of Broker-Dealers

Certain Shares may be sold through persons or entities that are registered broker-dealers. In such case, an investor will be responsible for paying any commissions and/or fees due to such broker-dealer in addition to the purchase price of the Shares.

Determination of Offering Price

The Purchase Price of the Shares has been determined primarily by the capital needs of the Company and bears no relationship to any established criteria of value such as book value or earnings per Share, or any combination thereof. Further, the price of the Shares is not based on past earnings of the Company, nor does that price necessarily reflect current market value for the assets of the Company. The Company may, but will have no obligation to, determine the Company NAV prior to the Offering Termination Date, at which point the Offering price per Share will be adjusted to reflect the new Share NAV.

Qualifications of Investors

The Shares are being offered only to persons who can represent that they meet the Investor Suitability Requirements described under “Who May Invest” and may be purchased only by investors who satisfy such suitability requirements.

Sales of Shares

The Purchase Price for each Share will be payable in full in cash upon subscription. The minimum subscription amount will be $50,000, except that the Company, in its sole discretion, may permit certain investors to purchase fewer Shares. Until the Minimum Offering Amount has been raised, all subscription proceeds will be promptly deposited in the Depository Account. If the Minimum Offering Amount has not been sold and paid for by the Minimum Offering Termination Date, all funds on deposit will be promptly returned to subscribers in full, without deduction or charges. After the Minimum Offering Amount has been raised, the Company may, upon a supplement to this Memorandum, instruct subscribers to deposit subscription payments with the Company. There is no assurance that all Shares will be sold prior to the Offering Termination Date. The Company reserves the right to refuse to sell Shares to any person, in its sole discretion, and may terminate the Offering at any time.

Inquiries

Inquiries about subscriptions should be directed to the Company whose mailing address is 3600 N. Duke Street, Suite 109, Durham, NC 27704 and the telephone number is (919) 391-3735, Attn: Donald R. Draughon, Jr.

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Sales Materials

Other than this Memorandum, the Exhibits hereto and any supplements or amendments thereto, and factual summaries and sales brochures of the Offering prepared by the Company, no other literature will be used in the Offering.

The Company and the Advisor may respond to specific questions from prospective investors. Business reply cards, introductory letters or similar materials may be sent to prospective investors. However, the Offering is made only by means of this Memorandum. Except as described herein, neither the Company nor the Advisor has authorized the use of other sales materials in connection with the Offering. The information in such material does not purport to be complete and should not be considered as a part of this Memorandum, or as incorporated in this Memorandum by reference or as forming the basis of the Offering.

No broker-dealer, salesperson or other person has been authorized to give any information or to make any representations other than those contained in this Memorandum or in any sales brochure literature issued by the Company and, if given or made, such information or representations must not be relied upon.

Subscription Procedures

To subscribe for Shares, an investor must complete and sign the Subscription Agreement attached hereto as Exhibit A. The investor must deliver to the Company the fully executed Subscription Agreement and pay the full subscription price for the Shares to be purchased by either (i) wire transfer in immediately available funds to Branch Banking and Trust Company, as Escrow Bank, or as otherwise directed by the Company or (ii) mailing to the Company a check made payable to “Branch Banking and Trust Company, as Escrow Bank for TreyNet Realty Capital REIT, Inc.” During the escrow period, the Company will process the proposed subscription and forward any checks for subscription payments to the Escrow Bank for deposit. The Company’s mailing address is as follows: TreyNet Realty Capital REIT, Inc., 3600 N. Duke Street, Suite 109, Durham, NC 27704.

Once the Minimum Offering Amount has been raised, and pursuant to a supplement to the Offering the Company may redirect the investors to make their checks payable directly to the Company. After the Minimum Offering Amount has been reached, the Company may use alternative banks or financial institutions to hold funds tendered for the purchase of Shares.

Depository Account

All subscription payments received for Shares prior to receipt and acceptance by the Company of subscription payments for the Minimum Offering Amount ($2,000,000) will be held in the Depository Account. If the Minimum Offering Amount has not been sold on or before the Minimum Offering Termination Date, the Offering will be terminated and all amounts held in the Depository Account will be returned to the subscribers.

Acceptance of Subscriptions

The Company has the right, to be exercised in its sole discretion, to accept or reject any subscription for Shares in whole or in part for a period of 30 days after receipt of the subscription. Any subscription not accepted within 30 days of receipt will be deemed rejected.

Limitation of Offering

The Shares are being offered and sold in reliance upon exemptions from the Securities Act and state securities laws. Accordingly, distribution of this Memorandum has been strictly limited to persons satisfying the Investor Suitability Requirements described herein, and this Memorandum does not constitute an offer to sell or a solicitation of an offer to buy with respect to any person not satisfying those requirements.

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CAPITALIZATION OF THE COMPANY

The following table sets forth the anticipated capitalization of the Company reflecting the issuance and sale of the Shares offered hereby.

Minimum Offering Amount(1)

Maximum Offering Amount(2)

Voting Common Stock(3) ....................... $ 400,000 $ 400,000

Shares .................................................... $ 2,000,000 $ 200,000,000

Total(4) ................................................... $ 2,400,000 $ 200,400,000

(1) Until the Minimum Offering Amount of Shares is sold, no subscription payments will be released to the Company from the Depository Account.

(2) The Shares are being offered until the Offering Termination Date. As of the date hereof, no Shares have been sold.

(3) TreyNet Partners, LLC has contributed $400,000 and has acquired all of the Company’s Voting Common Stock.

(4) Amounts shown are the anticipated gross proceeds of the Offering before deducting any fees or Offering and Organizational Expenses. See “Estimated Use of Proceeds.”

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MANAGEMENT

Board of Directors

The Company’s business and affairs are managed under direction of its Board. The Board is responsible for the management and control of the Company’s business. The Company’s charter and Bylaws provide that the number of directors of the Company will be 5. TreyNet Partners, LLC, currently the sole holder of Voting Common Stock, designated 5 members of the Board: Donald R. Draughon, Jr., Chairman of the Board; J.D. Dykstra, Vice Chairman of the Board; Mark A. MacDonald; Mack D. Pridgen, III; and Nick C. Fugh.

Each director designated, nominated and elected will hold his or her office as a director until the next annual meeting of stockholders and until his successor is duly elected and qualified. There is no limit on the number of times a director may be elected to office.

Any director may resign at any time and subject to the rights of the holders of one or more classes or series of preferred stock to elect or remove one or more directors, any director, or the entire Board may be removed from office at any time by the affirmative vote of at least a majority of the votes entitled to be cast generally in the election of directors in the event of the director’s or Board’s fraud, willful misconduct or gross negligence, as determined by a non-appealable final judgement of a court of competent jurisdiction.

The directors are not required to devote all of their time to the Company’s business and are only required to devote their time to the Company’s affairs as their duties require. The directors intend to meet quarterly or more frequently if necessary. The Company does not expect that the directors will be required to devote a substantial portion of their time to discharge their duties as the Company’s directors.

The Company’s general investment and borrowing policies are set forth in this Memorandum. The directors may establish further written policies on investments and borrowings and will monitor the Company’s administrative procedures, investment operations and performance to ensure that the policies are fulfilled and are in the Company’s best interests. The Company will follow the policies on investments and borrowings set forth in this Memorandum unless and until they are modified by the directors.

Directors and Executive Officers

The Company’s day-to-day operations are managed by its executive officers under the direction and supervision of the Board. The following table sets forth certain information regarding the directors and executive officers of the Company, the Advisor and TreyNet Properties, LLC (“TreyNet”):

Name Title

Donald R. Draughon, Jr. Chief Executive Officer and Treasurer; Chairman of the Board of the Company

J.D. Dykstra President, Chief Investment Officer and Secretary; Vice Chairman of the Board of the Company

Craig A. Coss Controller of the Company and the Advisor

Mark A. MacDonald Director of the Company

Mack D. Pridgen, III Director of the Company

Nick C. Fugh Director of the Company

Donald R. Draughon, Jr. serves as Chief Executive Officer and Treasurer of the Company, the Advisor and TreyNet. He also serves as Chairman of the Board of the Company. Prior to TreyNet, Mr. Draughon was the founder and CEO of Fuel USA, LLC, an operator of 65 gas and convenience stores in Virginia and Kentucky. This chain was sold to GPM Investments, Inc. in March 2016. Prior to Fuel USA, Mr. Draughon was the founder and CEO of Keysource Commercial Bank, a company he started in June 2006. He sold Keysource to Bank of North Carolina in September 2012 and continued with Bank of North Carolina until January 2015. For a significant part of Mr. Draughon’s career he has been an investment banker with Wachovia Bank, Baxter Fentriss, Anderson &

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Strudwick and Bank of North Carolina. As such, he has sold many different types of businesses with a specialty in convenience stores and other multi-unit retail properties, including banks and quick-lube service stations. From 1998 to 2001, Mr. Draughon was the Chairman and CEO of Convenience USA, LLC, an operator of 250 convenience stores. He was the founder of Voyager Academy Charter School, a K-12 Charter School with 1,300 students in Durham, North Carolina. Currently, Mr. Draughon serves as Chairman of the Voyager Foundation, Inc. and as a member of the Board of Kidznotes, a local non-profit. He also serves on the Board of Directors of Blue Ridge Towers Fund I, LLC and Try-Mac Towers Fund I, LLC, cell tower development companies Mr. Draughon received a Master of Business Administration degree from Wake Forest University in 1984 and a Bachelor of Arts degree from Brigham Young University in 1982.

J.D. Dykstra serves as President, Chief Investment Officer and Secretary of the Company, the Advisor and TreyNet. He also serves as Vice Chairman of the Board of the Company. Mr. Dykstra has over 25 years of experience in the real estate and convenience store industry with direct involvement in over $3 billion of transactions as investor, lender and/or advisor. These transactions include $150 million of successful convenience store debt and equity investments originated in partnership with Silver Point Capital, $293 million of first mortgages, mezzanine financings and sale-leasebacks originated at Lehman Brothers, and $665 million of debt and equity investments originated at Credit Suisse First Boston. While at Lennar Partners, Mr. Dykstra coordinated the new business efforts for the Los Angeles office with responsibility for financial structuring, underwriting and due diligence as the firm acquired billions of dollars of nonperforming real estate loans. Mr. Dykstra was also directly involved in creating equity and mezzanine debt financing programs for multi-family and single-family residential developers at Lennar. Additionally, Mr. Dykstra had key involvement in the $1.6 billion recapitalization of Maguire Thomas Partners. Mr. Dykstra has founded several companies to make investments in the convenience store industry, including Fuel USA, LLC (as co-founder, formed in 2015), CNG Capital, LLC (formed in 2011) and StarNet Capital, LLC (formed in 2005 with $5 billion hedge fund). In 1996, Mr. Dykstra co-founded Convenience Store Finance Company, LLC, a company formed to make loans to mid-sized convenience store and franchise restaurant operators 2000, which he sold to Credit Suisse First Boston Specialty Finance LLC in 2000. Additional real estate experience includes from 2000 – 2001, Vice President at Lehman Brothers investing through securitized lending and sale-leaseback vehicles, from 1995 – 1996, Vice President of acquisitions at Lennar Partners, a partnership with Morgan Stanley RE Fund, and from 1990 – 1994, Associate at Maguire Thomas Partners, a real estate development company. Mr. Dykstra received a Master of Business Administration degree with a concentration in Real Estate from the University of Denver’s Daniels School of Business in 1990 and a Bachelor of Arts degree with a major in History and a minor in Political Science from Western Illinois University in 1985.

Craig A. Coss serves as Controller of the Company and the Advisor. Prior to joining the Company, from 2013 to 2016, Mr. Coss was Plant Controller of Medtroncis, Inc., a global healthcare solutions company. From 2007 to 2011, Mr. Coss was the Chief Financial Officer and Controller of TradeMark Properties, a full service commercial brokerage firm located in Raleigh, North Carolina, where he managed all aspects of the finance functions. Prior to TradeMark, from 1996 to 2007, Mr. Coss was Director of Accounting of Highwoods Properties, Inc., a publicly-traded REIT and member of the S&P MidCap 400 Index. Prior to Highwoods, from 1993 to 1996, Mr. Coss was Property Controller of Prime Outlets of Baltimore, Maryland, a developer, manager and owner of factory outlet malls, where he assisted in taking the company public and was an essential member of its IPO team. From 1984 to 1993, Mr. Coss was Corporate Controller of BTR Realty located in Baltimore, Maryland, a publicly traded developer, manager and owner of retail shopping centers and office buildings, where he was responsible for all SEC reporting and filings for the company. Mr. Coss began his accounting career as an accountant for Mall Management Associates, a manager of retail malls, from 1981 to 1984. Mr. Coss received a Bachelor of Science degree in Business Administration Accounting in1980 from Towson University.

Mark A. MacDonald serves as a director of the Company. He has focused on real estate during his entire 25 year career. In 2012, Mr. MacDonald founded and is the CEO of Arcadia Real Estate Advisors, a firm that advises investors in analyzing and managing real estate investments with a specific expertise in land development. As a member of Arcadia’s executive team, he oversees all aspects of Arcadia’s daily operations, which positions investments to their highest and best use through proper foresight, planning, entitlement, engineering, and construction management services. Since 1990, Mr. MacDonald has advised institutional owners in the investment of over $5 billion of real estate transactions in the southeastern United States. Prior to founding Arcadia, Mr. MacDonald served as Managing Director of Investments for Stratford Land Fund where he was responsible for identifying, acquiring and asset managing strategic land investments located in North and South Carolina, Virginia and the District of Columbia. In this capacity, he invested over $175 million of new equity for Stratford Land

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Funds. Prior to joining Stratford, Mr. MacDonald served as Managing Director of Investments of Highwood’s Properties, a Raleigh based REIT focused on owning and managing properties in business districts, where he was responsible for the development and execution of the firm’s investment strategy. While at Highwood’s, Mr. MacDonald managed over $4 billion of office, industrial, retail, multifamily and land investment transactions, including $1 billion of joint venture investments with institutional partners. Prior to Highwood’s, he was a real estate broker with Robinson Wetmore (now CBRE) in the Virginia market representing institutional owners of office, retail and industrial buildings in lease and investment sales transactions. Mr. MacDonald received a Master of Business Administration degree in 1997 from Duke University’s Fuqua School of Business with a concentration in Finance and a Bachelor of Business Administration degree in 1991 with a major in Marketing and a minor in Economics from James Madison University.

Mack D. Pridgen, III serves as a Director of the Company. Mr. Pridgen has been active in the REIT industry since 1990. He currently serves on the board of directors of Independence Realty Trust, Inc., an apartment REIT listed on the New York Stock Exchange (“NYSE”), and has served on IRT’s board since 2015 when Trade Street Residential, Inc., a NYSE-listed apartment REIT, was merged into IRT. Prior to the merger, from 2012 to 2015, Mr. Pridgen was a member of the board of directors of Trade Street and at the time of the merger was chairman of the board and chairman of its audit committee. From 2007 to 2010, Mr. Pridgen was a member of the board of directors and chairman of the audit committee of REIT Plus, Inc., an affiliate of AmREIT, Inc., a NYSE-listed shopping center REIT headquartered in Houston, Texas, and served in such capacities with AmREIT from 2010 until it was acquired in 2015. Prior to AmREIT, from 1997 to 2007, Mr. Pridgen was General Counsel, Vice President and Secretary of Highwoods Properties, Inc., a $4.5 billion NYSE REIT which primarily owned suburban office properties, where he was responsible for transactional planning, tax planning, corporate governance and SOX compliance, risk management, securities matters, executive compensation and litigation management. Before joining Highwoods, Mr. Pridgen was a partner with the law firm of Smith, Helms, Mulliss and Moore, LLP where he practiced tax and corporate law primarily relating to REIT formation and REIT transactions. Prior to Smith, Helms, he was a tax partner with Arthur Andersen and Co. Mr. Pridgen received a Juris Doctorate degree in 1974 from the University of California at Los Angeles School of Law and a Bachelor of Science degree in Business Administration in 1971 from the University of North Carolina-Chapel Hill. He is a licensed certified public accountant.

Nick C. Fugh serves as Director of the Company. Mr. Fugh has worked in the real estate and private equity industry for the past 9 years. In 2014, Mr. Fugh founded and is the president of Silver Harbor Group, LLC, a firm that invests and manages real estate development projects in North Carolina. He oversees all aspects of Silver Harbor’s daily operations, including investment analysis, financing, design, planning, entitlement, engineering and construction management services. Prior to founding Silver Harbor, Mr. Fugh served as Vice General Manager of Liying Capital, a real estate private equity management firm based in China, where he oversaw investment analysis and capital raising of ¥300 million of private equity for 2 urban mixed-use development projects. While at Liying, Mr. Fugh also originated and facilitated efforts on international acquisitions of several Hong Kong listed companies. Prior to Liying, he was Assistant to Chairman and General Manager of Design Center for Yuzhou Properties, a Hong Kong listed multibillion real estate development company based in China, where he had key involvement in the company’s successful IPO on Hong Kong Stock Exchange in 2009 and corporate bond offering in 2010. He oversaw investor relations for the company while at the same time directing planning and design of 5.16 million square meters of residential, commercial and mixed-use real estate development projects in China. Mr. Fugh received a Master of Business Administration degree from Duke University’s Fuqua School of Business in 2007, a Master of Science with a major in Computer Engineering in 2001 and a Master of Architecture in 1997 from North Carolina State University, and a Bachelor of Engineering with a major in Urban Planning from Tongji University in 1989.

Principal Offices

The Company’s principal executive offices are located at 3600 N. Duke Street, Suite 109, Durham, NC 27704 and the telephone number is (919) 391-3735.

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PRIOR PERFORMANCE OF THE ADVISOR

Although the principals of the Advisor have relevant experience as described above, the Advisor is newly formed and has no experience owning, developing, managing and operating real estate nor managing a fund and therefore, has no prior performance.

CONFLICTS OF INTEREST

Interests in Other Activities

The senior officers of the Company who are also members of the Board, are engaged in other activities and intend to continue to engage in such activities in the future, including other real estate ventures and such persons will, therefore, have conflicts of interest in allocating management time, services and functions between various existing enterprises and future enterprises they may organize, as well as other business ventures in which they and their Affiliates may be or may become involved.

Ownership of Voting Common Stock

Currently, the holder of all of the Voting Common Stock is the Advisor. Thus, the Advisor has the exclusive right to designate the members of the Board.

Receipt of Compensation by the Advisor, the Property Manager and their Affiliates

The payments to the Advisor, the Property Manager and their Affiliates as set forth under “Compensation of the Advisor and Its Affiliates” have not been determined by arm’s-length negotiations.

Purchase of Shares by the Advisor and its Affiliates

The Advisor and its Affiliates have acquired all of the Voting Common Stock in the Company. The Advisor and its Affiliates will not acquire Shares with a view to resell or distribute such Shares. The purchase of Shares by the Advisor or its Affiliates could create certain risks, including, but not limited to, the following: (i) the Advisor or its Affiliates may have an interest in disposing of Company assets at an earlier date than the other stockholders so as to recover its investment in the Shares, (ii) substantial purchases of Shares may limit the Advisor’s ability to fulfill any financial obligations that it may have to or on behalf of the Company and (iii) acquisition of Shares by the Advisor and/or its Affiliates will mean that the total Shares acquired will not have been provided by disinterested investors after an assessment of the merits and risks of the Offering. In the event that the Advisory Agreement is terminated for any reason, the Advisor and/or its Affiliates will continue to own the Voting Common Stock.

Resolution of Conflicts of Interest

The Company will have the right to make any such investment if the Company has sufficient capital to make the investment. The Company’s directors are subject to a duty to act in good faith, with a reasonable belief that their actions are in the Company’s best interests and with the care of an ordinarily prudent person in a like position under similar circumstances, which duty will govern their actions in all such matters. While the foregoing conflicts could materially and adversely affect the stockholders, the Company’s directors, in their sole judgment and discretion, will attempt to mitigate such potential adversity by the exercise of their business judgment in an attempt to fulfill their duties. There can be no assurance that such an attempt will prevent adverse consequences resulting from the potential conflicts of interest.

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COMPENSATION OF THE ADVISOR AND ITS AFFILIATES

The following is a brief description of the compensation that may be received by the Advisor and its Affiliates from the Company in connection with advisory services and administration and operation of the Projects. Other than as specified herein, no additional compensation will be paid to the Advisor or its Affiliates for their services as set forth in this Memorandum. The compensation arrangements have been established by the Company and are not the result of arm’s-length negotiations.

Form of Compensation Description Estimated Amount of

Compensation/Increase

Organization and Offering Stage:

Reimbursement of Organization and Offering Expenses:

The Advisor will be reimbursed by the Company for all Organization and Offering Expenses (including legal, accounting, printing, marketing and other miscellaneous costs and expenses), as well as costs and expenses relating to the organization of the Company.

The actual amount will depend, in part, upon the size of the Offering. These costs and expenses are estimated to be approximately $2,000,000 if the Maximum Offering Amount is sold (approximately 1% of the Maximum Offering Amount), and approximately $100,000 if the Minimum Offering Amount is sold (approximately 5% of the Minimum Offering Amount).

Operating Stage:

Asset Management Fee: The Advisor will receive an annual Asset Management Fee, paid on a monthly basis, equal to 1% of the Company Asset Value. If the Advisor delegates its property management duties to one or more Affiliates or engages a sub property manager to manage the day-to-day operations of the Projects, the Advisor will be responsible for paying all fees to any such Affiliates or sub property managers. If the Advisor engages any local third-party leasing service providers to perform the leasing functions for the Projects, the Company will pay for any fees to such third-party leasing service providers in addition to the Asset Management Fee.

Impracticable to determine at this time.

Acquisition Fee: The Advisor will receive an Acquisition Fee for each Project acquired by the Company equal to 1% of the gross purchase price of the Project, which will be paid at the closing of the acquisition.

Impracticable to determine at this time.

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Financing Fee: The Advisor will receive a Financing Fee equal to 0.5% of the principal amount of any financing or refinancing, which will be paid at the closing of any such financing or refinancing. The Financing Fee will be in addition to any loan fee paid to a third-party in connection with such financing or refinancing.

Impracticable to determine at this time.

Interest in the Operating Partnership:

The Advisor will receive (i) 20% of all Cash From Operations from the Operating Partnership after the Company has received a 6% cumulative but not compounded annual return and (ii) 20% of all Cash From Sale or Refinancing from the Operating Partnership after the Company has received a 6% cumulative but not compounded annual return and a return of capital.

Impracticable to determine at this time.

Liquidation Stage:

Disposition Fee: The Advisor will receive a Disposition Fee equal to 1.5% of the contract sales price of the Project in connection with a sale, exchange or other disposition of a Project, which will be paid at the closing of such disposition. The Disposition Fee will be in addition to any third-party brokerage, legal and accounting fees incurred in connection with such disposition.

Impracticable to determine at this time.

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VALUATION PROCEDURES

The following are the procedures that the Company will follow with respect to the determination of the Company NAV. The Advisor will administer the Company’s valuation guidelines and processes.

Determination of Company Net Asset Value. The Company will determine the Company NAV by (i) taking into consideration the cost value of the Projects and other assets owned by the Company (if such Projects or other assets were acquired within 12 months of the applicable valuation) or (ii) third-party appraisal or broker opinion of value (if such Projects or other assets have been owned by the Company for more than 12 months). The Company expects to determine the initial Company NAV within 150 days following the second anniversary of breaking escrow (the “Initial Valuation Date”). After the Initial Valuation Date, the Company NAV will be made on an annual basis. The Company may determine the Company NAV on a more frequent basis if the Advisor determines, in its sole discretion, that a more frequent valuation is warranted.

Reported Investment Value; Determination of Share NAV. Until the Initial Valuation Date, the value of the Shares may be reported (on customer account statements and other periodic reports) at the Purchase Price (also known as par value). After the Company NAV is calculated as provided above, the Company intends to adjust the Offering price of the Shares in an amount equal to the Company NAV divided by the number of outstanding Shares and will report the new Share NAV to the stockholders. The Board will determine a new Share NAV at such times and in conjunction with the Company’s determination of the Company NAV.

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SUMMARY OF THE CHARTER AND THE BYLAWS

General

The Company was formed as a corporation under the laws of the State of Maryland on January 6, 2017. The place of business of the Company is 3600 N. Duke Street, Suite 109, Durham, NC 27704 and the telephone number is (919) 391-3735. The following is merely a summary of some of the significant provisions of the charter and the Bylaws of the Company and is qualified in its entirety by reference thereto.

Authorized Shares

The Company’s charter authorizes the issuance of 1,000,000,000 shares of common stock with a par value of $0.01 per share, consisting of 850,000,000 shares of Voting Common Stock and 50,000,000 shares of Non-Voting Common Stock, and 100,000,000 shares of preferred stock with a par value of $0.01 per share. The Board may amend the Company’s charter from time to time in order to increase or decrease the aggregate number of the Company’s authorized shares or the number of shares of any class or series that the Company has authority to issue.

Common Stock of the Company

Holders of the Company’s common stock will be entitled to receive such distributions as authorized from time to time by the Board and declared by the Company out of legally available funds, subject to any preferential rights of any preferred stock that the Company issues in the future. In any liquidation, each outstanding share of common stock entitles its holder to share (based on the percentage of shares held) in the assets that remain after the Company pays its liabilities and any preferential distributions owed to its preferred stockholders. Holders of shares of the Company’s common stock will not have preemptive rights, which means that stockholders will not have an automatic option to purchase any new shares that the Company issues, nor will holders of the Company’s Non-Voting Common Stock have any preference, conversion, exchange, sinking fund or redemption rights. Holders of shares of the common stock will not have appraisal rights unless the Board determines that appraisal rights apply, with respect to all or any classes or series of stock, to one or more transactions occurring after the date of such determination in connection with which such stockholders would otherwise be entitled to exercise appraisal rights.

Voting Common Stock

Subject to the restrictions in the Company’s charter on transfer and ownership of shares of the Company’s stock and except as may otherwise be specified in the charter, the holders of the Company’s Voting Common Stock are entitled to one vote per share on all matters submitted to a stockholder vote, including the election of the Company’s directors. Except as provided in the Company’s charter, including any Articles Supplementary with respect to any series of preferred stock that the Company may issue in the future, the holders of the Company’s Voting Common Stock will possess exclusive voting power. The Company’s charter does not provide for cumulative voting in the election of its directors. Therefore, the holders of a majority of the Company’s outstanding shares of Voting Common Stock can elect the Company’s entire Board. Currently, all of the Company’s Voting Common Stock is owned by the Advisor.

Non-Voting Common Stock

The holders of the Shares, which are shares of the Company’s Non-Voting Common Stock, are not entitled to vote on any matters. The holders of Non-Voting Common Stock will have voting rights after a Qualified IPO.

Except as set forth in the preceding sentences, the Non-Voting Common Stock and the Voting Common Stock will have identical preferences, conversion and other rights, restrictions, limitations as to dividends and other distributions, qualifications, and terms and conditions of redemption and the Non-Voting Common Stock will be treated as common stock under all provisions of the Company’s charter.

See “Description of the Shares” for a summary of the Non-Voting Common Stock.

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Preferred Stock

The Company’s charter authorizes the Board to classify any unissued shares of preferred stock and reclassify any previously classified but unissued shares of preferred stock from time to time into one or more classes or series of stock and thereafter to issue such classified or reclassified shares of stock without stockholder approval. The Board may determine the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications or terms or conditions of redemption of each class or series of preferred stock so issued, which may be more beneficial than the rights, preferences and privileges attributable to the Company’s common stock. The issuance of preferred stock could have the effect of delaying or preventing a change in control.

Restriction on Transfer and Ownership of Shares

Ownership Limit

To maintain the Company’s REIT qualification, not more than 50% in value of the Company’s outstanding shares may be owned, directly or indirectly, by 5 or fewer individuals (including certain entities treated as individuals under the Code) during the last half of each taxable year. In addition, at least 100 persons who are independent of the Company and each other must beneficially own the Company’s outstanding shares for at least 335 days per 12-month taxable year or during a proportionate part of a shorter taxable year. Each of the requirements specified in the 2 preceding sentences will not apply in the first taxable year for which the Company makes an election to be taxed as a REIT. The Company may prohibit certain acquisitions and transfers of shares so as to ensure the Company’s continued qualification as a REIT under the Code. However, the Company cannot assure you that this prohibition will be effective.

To help ensure that the Company meets these tests, among other purposes, the Company’s charter prohibits any person or group of persons from acquiring, directly or indirectly, beneficial ownership of more than 9.8% in value of the Company’s aggregate outstanding shares of capital stock or 9.8% in value or number of shares, whichever is more restrictive, of the Company’s outstanding shares of common stock unless exempted by the Board.

The Board may waive (prospectively or retroactively) this ownership limit with respect to a particular person if the ownership in excess of the limit will not result in the Company’s being “closely held” within the meaning of Section 856(h) of the Code or otherwise would result in the Company’s failing to qualify as a REIT. In order to be considered by the Board for exemption, a person also must not own, directly or indirectly, an interest in a tenant of the Company (or a tenant of any entity which the Company owns or controls) that would cause the Company to own, directly or indirectly, more than a 9.9% interest in the tenant. The person seeking an exemption must represent to the satisfaction of the Board that it will not violate these 2 restrictions. The person also must agree that any violation or attempted violation of these restrictions will result in the automatic transfer of the shares of stock causing the violation to a trust as described below. For purposes of this provision, the Company treats corporations, partnerships and other entities as one person. The Company’s charter also prohibits any person from beneficially or constructively owning shares that would result in the Company’s being “closely held” within the meaning of Section 856(h) of the Code or otherwise would result in the Company’s failing to qualify as a REIT and any transfer of the Company’s shares that, if effective, would result in the Company’s shares being beneficially owned by fewer than 100 persons.

Transfer of Capital Stock in Trust

Any attempted transfer of the Company’s shares that, if effective, would result in a violation of the Company’s ownership limit or would result in a violation of any of the other restrictions on transfer and ownership described above will be null and void or will cause the number of shares causing the violation to be automatically transferred to a trust for the exclusive benefit of one or more charitable beneficiaries. The prohibited transferee will not acquire any rights in the shares. The automatic transfer will be deemed to be effective as of the close of business on the business day prior to the date of the attempted transfer. The Company will designate a trustee of the trust that will not be affiliated with the Company or the prohibited transferee. The Company will also name one or more charitable organizations as a beneficiary of the trust.

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Shares held in trust will remain issued and outstanding shares and will be entitled to the same rights and privileges as all other shares of the same class or series. The prohibited transferee will not benefit economically from any of the shares held in trust, will not have any rights to distributions and will not have the right to vote or any other rights attributable to the shares held in the trust. The trustee will receive all distributions on the shares held in trust and will hold such distributions in trust for the benefit of the charitable beneficiary. The trustee may vote any shares held in trust. Subject to Maryland law, the trustee will also have the authority (i) to rescind as void any vote cast by the prohibited transferee prior to the Company’s discovery that the shares have been transferred to the trust and (ii) to recast the vote in accordance with the desires of the trustee acting for the benefit of the charitable beneficiary. However, if the Company has already taken irreversible corporate action, then the trustee will not have the authority to rescind and recast the vote.

Within 20 days of receiving notice from the Company that any of the Company’s shares have been transferred to the trust for the charitable beneficiary, the trustee will sell those shares to a person designated by the trustee whose ownership of the shares will not violate the above restrictions. Upon the sale, the interest of the charitable beneficiary in the shares sold will terminate and the trustee will distribute the net proceeds of the sale to the prohibited transferee and to the charitable beneficiary as follows. The prohibited transferee will receive the lesser of (i) the price paid by the prohibited transferee for the shares or, if the prohibited transferee did not give value for the shares in connection with the event causing the shares to be held in the trust (e.g., a gift, devise or other similar transaction), the Market Price (as defined in the Company’s charter) of the shares on the day of the event causing the shares to be held in the trust and (ii) the price per share received by the trustee from the sale or other disposition of the shares held in trust. The trustee may reduce the amount payable to the prohibited transferee by the amount of distributions which have been paid to the prohibited transferee and are owed by the prohibited transferee to the trustee and by the amount of any costs incurred by the Company in connection with the transfer. Any net sales proceeds in excess of the amount payable to the prohibited transferee will be paid immediately to the charitable beneficiary. If, prior to the Company’s discovery that shares have been transferred to the trustee, the shares are sold by the prohibited transferee, then (i) the shares will be deemed to have been sold on behalf of the trust and (ii) to the extent that the prohibited transferee received an amount for the shares that exceeds the amount such prohibited transferee was entitled to receive, the excess will be paid to the trustee upon demand.

In addition, shares held in the trust for the charitable beneficiary will be deemed to have been offered for sale to the Company, or its designee, at a price per share equal to the lesser of (i) the price per share in the transaction that resulted in the transfer to the trust (or, in the case of a devise or gift, the market price at the time of the devise or gift) or (ii) the market price on the date the Company, or its designee, accepts the offer, both as reduced by the amount of any costs incurred by the Company in connection with the transfer. The Company will have the right to accept the offer until the trustee has sold the shares held in trust. Upon a sale to the Company, the interest of the charitable beneficiary in the shares sold will terminate and the trustee will distribute the net proceeds of the sale to the prohibited transferee. The Company may reduce the amount payable to the prohibited transferee by the amount of distributions which have been paid to the prohibited transferee and are owed by the prohibited transferee to the trustee. The Company may pay the amount of such reduction to the trustee for the benefit of the charitable beneficiary.

Any person who acquires or attempts to acquire shares in violation of the foregoing restrictions or who would have owned the shares that were transferred to any such trust must immediately notify the Company of such event, and any person who proposes or attempts to acquire or receive shares in violation of the foregoing restrictions must give the Company at least 15 days’ written notice prior to such transaction. In both cases, such persons will provide to the Company such other information as the Company may request in order to determine the effect, if any, of such transfer on the Company’s status as a REIT.

The foregoing restrictions will continue to apply until the Board determines it is no longer in the Company’s best interests to continue to qualify as a REIT or that compliance is no longer required for REIT qualification. The ownership limit does not apply to any underwriter in an offering of the Company’s shares or to a person or persons exempted from the ownership limit by the Board as described above.

Within 30 days after the end of each taxable year, every owner of 5% or more of the Company’s outstanding stock will be asked to deliver to the Company a statement setting forth the number of shares owned directly or indirectly by such person and a description of how such person holds the shares. Each such owner will also provide the Company with such additional information as the Company may request in order to determine the

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effect, if any, of his or her beneficial ownership on the Company’s status as a REIT and to ensure compliance with the Company’s ownership limit.

These restrictions could delay, defer or prevent a transaction or change in control of the Company that might involve a premium price for the Company’s shares of common stock or otherwise be in the best interests of the Company’s stockholders.

Distributions

The Company prefers to make distributions from cash flow from operations and does not intend to use the proceeds from the Offering to make distributions. However, the Board has the authority under the Company’s charter and the Bylaws, to the extent permitted by Maryland law, to make distributions from any source, including the sale of assets, proceeds from the Offering or proceeds from the issuance of securities in the future. Because the Company may receive income from interest or rents at various times during its fiscal year and because the Company may need cash flow from operations during a particular period to fund capital expenditures and other expenses, the Company expects that from time to time during its operational stage, it will declare and make distributions in anticipation of cash flow that it expects to receive at a later period and the Company will make these distributions in advance of its actual receipt of these funds, subject to applicable law. In these instances, the Company may borrow funds or, to the extent necessary, utilize Offering Proceeds, or other sources of available capital in order to make distributions. The Company has not established any limits related to funding distributions to its stockholders from borrowings, sale of assets or proceeds of the Offering or any other offerings the Company may undertake.

The amount and timing of distributions to the Company’s stockholders will be determined by the Board based on the Company’s financial condition and other factors it deems relevant.

To maintain its qualification as a REIT after electing REIT status, the Company must make aggregate annual distributions to its stockholders of at least 90% of its REIT taxable income (which is computed without regard to the dividends paid deduction or net capital gain and which does not necessarily equal net income as calculated in accordance with generally accepted accounting principles). If the Company meets the REIT qualification requirements, it generally will not be subject to federal income tax on the income that it distributes to its stockholders each year. See “Federal Income Tax Considerations – Taxation of REITs.” The Board may authorize distributions in excess of those required for the Company to maintain REIT status depending on the Company’s financial condition and such other factors as the Board deems relevant.

The Company is not prohibited from distributing its own securities in lieu of making cash distributions to its stockholders. The receipt of securities in lieu of cash distributions may cause stockholders to incur transaction expenses in liquidating the securities.

The Company has not established a minimum distribution level, and the Company’s charter does not require that the Company make distributions to its stockholders.

Board of Directors

Number

The number of directors of the Company is set at 6. In addition, at any time prior to or at a Qualified IPO, the number of directors may be increased to meet any required minimum number of “independent” directors pursuant to the rules and regulations of the SEC, any state, the North American Securities Administrators Association or any national or regional securities exchange on which the common stock of the Company is then listed.

Vacancies

Any vacancy on the Board for any reason, other than an increase in the number of directors, may be filled by a majority of the remaining directors, even if such majority is less than a quorum. Any vacancy in the number of directors created by an increase in the number of directors may be filled by a majority vote of the entire Board. Any

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individual so elected as director will serve until the next annual meeting of the stockholders and until his or her successor is elected and qualifies.

Determinations by the Board of Directors

The Board may make, in good faith and consistent with the Company’s charter, final and conclusive determinations binding upon the Company and the stockholders with respect to: (i) the amount of the net income of the Company for any period and the amount of assets at any time legally available for the payment of dividends, redemption of stock or the payment of other distributions on stock; (ii) the amount of paid-in surplus, net assets, other surplus, annual or other cash flow, funds from operations, net profit, net assets in excess of capital, undivided profits or excess of profits over losses on sales of assets; (iii) the amount, purpose, time of creation, increase or decrease, alteration or cancellation of any reserves or charges and the propriety thereof (whether or not any obligation or liability for which such reserves or charges have been created has been paid or discharged); (iv) any interpretation of the terms, preferences, conversion or other rights, voting powers or rights, restrictions, limitations as to dividends or other distributions, qualifications or terms or conditions of redemption of any class or series of stock of the Company; (v) the fair value, or any sale, bid or asked price to be applied in determining the fair value, of any asset owned or held by the Company or any shares of stock of the Company; (vi) the number of shares of stock of any class of the Company; (vii) any matter relating to the acquisition, holding and disposition of any assets by the Company; and (viii) any other matter relating to the business and affairs of the Company or required or permitted by applicable law, the charter or Bylaws or otherwise to be determined by the Board.

Removal

Subject to the rights of holders of one or more classes or series of preferred stock to elect or remove one or more directors, any director or the entire Board may be removed from office at any time at an annual or special meeting of stockholders, by the affirmative vote of at least a majority of the votes entitled to be cast generally in the election of directors in the event of the director’s or Board’s fraud, willful misconduct or gross negligence, as determined by a non-appealable final judgement of a court of competent jurisdiction. The Shares offered in the Offering are Non-Voting Common Stock and are not entitled to vote until after a Qualified IPO.

Indemnification and Limited Liability of Directors and Officers

The Company’s charter and Bylaws require, to the maximum extent permitted by Maryland law, the Company to indemnify and to pay or reimburse reasonable expenses in advance of final disposition of a proceeding, to, (i) any individual who is a present or former director or officer of the Company or (ii) any individual who, while a director or officer of the Company and at the request of the Company, serves or has served as a director, officer, partner, member, manager or trustee of another enterprise, from or against any claim or liability to which such person may become subject or which such person may incur by reason of his or her service in such capacity. Furthermore, to the maximum extent permitted by Maryland law, no present or former director or officer of the Company will be liable to the Company or its stockholders for money damages.

Amendments

The Company may from time to time to make any amendment to its charter, now or hereafter authorized by law, including any amendment altering the terms or contract rights, as expressly set forth in the charter, of any shares of outstanding stock. Except for those amendments permitted to be made without stockholder approval under Maryland law or by specific provision in the charter, any amendment to the charter will be valid only if declared advisable by the Board and approved by the affirmative vote of holders of shares entitled to cast a majority of all the votes entitled to be cast on the matter. The Shares offered in the Offering are Non-Voting Common Stock and are not entitled to vote until after a Qualified IPO.

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MARYLAND GENERAL CORPORATION LAW

Business Combinations

Under the Maryland General Corporation Law, business combinations between a Maryland corporation and an interested stockholder or the interested stockholder’s affiliate are prohibited for 5 years after the most recent date on which the stockholder becomes an interested stockholder. For this purpose, the term “business combination” includes mergers, consolidations, share exchanges, or, in circumstances specified in the statute, asset transfers and issuances or reclassifications of equity securities. An “interested stockholder” is defined for this purpose as: (i) any person who beneficially owns 10% or more of the voting power of the corporation’s outstanding voting stock; or (ii) an affiliate or associate of the corporation who, at any time within the 2-year period prior to the date in question, was the beneficial owner of 10% or more of the voting power of the then outstanding stock of the corporation. A person is not an interested stockholder under the statute if the board of directors approved in advance the transaction by which he otherwise would have become an interested stockholder. However, in approving a transaction, the board of directors may provide that its approval is subject to compliance, at or after the time of approval, with any terms and conditions determined by the board.

After the 5-year prohibition, any business combination between the corporation and an interested stockholder generally must be recommended by the board of directors of the corporation and approved by the affirmative vote of at least (i) 80% of the votes entitled to be cast by holders of outstanding voting stock of the corporation and (ii) two-thirds of the votes entitled to be cast by holders of voting stock of the corporation other than shares held by the interested stockholder with whom or with whose affiliate the business combination is to be effected, or held by an affiliate or associate of the interested stockholder.

These supermajority vote requirements do not apply if the corporation’s common stockholders receive a minimum price, as defined under the Maryland General Corporation Law, for their shares in the form of cash or other consideration in the same form as previously paid by the interested stockholder for its shares.

None of these provisions of the Maryland General Corporation Law will apply, however, to business combinations that are approved or exempted by the board of directors of the corporation prior to the time that the interested stockholder becomes an interested stockholder. The Company has, by resolution, opted out of the business combination statute.

Control Share Acquisitions

The Maryland General Corporation Law provides that control shares of a Maryland corporation acquired in a control share acquisition have no voting rights except to the extent approved by a vote of two-thirds of the votes entitled to be cast on the matter. Shares owned by the acquirer, an officer of the corporation or an employee of the corporation who is also a director of the corporation are excluded from the vote on whether to accord voting rights to the control shares. “Control shares” are voting shares that, if aggregated with all other shares owned by the acquirer or with respect to which the acquirer has the right to vote or to direct the voting of, other than solely by virtue of revocable proxy, would entitle the acquirer to exercise voting power in electing directors within one of the following ranges of voting powers:

• one-tenth or more but less than one-third;

• one-third or more but less than a majority; or

• a majority or more of all voting power.

Control shares do not include shares the acquiring person is then entitled to vote as a result of having previously obtained stockholder approval. Except as otherwise specified in the statute, a “control share acquisition” means the acquisition of issued and outstanding control shares.

Once a person who has made or proposes to make a control share acquisition has undertaken to pay expenses and has satisfied other required conditions, the person may compel the board of directors to call a special

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meeting of stockholders to be held within 50 days of the demand to consider the voting rights of the shares. If no request for a meeting is made, the corporation may itself present the question at any stockholders meeting.

If voting rights are not approved for the control shares at the meeting or if the acquiring person does not deliver an “acquiring person statement” for the control shares as required by the statute, the corporation may redeem any or all of the control shares for their fair value, except for control shares for which voting rights have previously been approved. Fair value is to be determined for this purpose without regard to the absence of voting rights for the control shares, and is to be determined as of the date of the last control share acquisition or of any meeting of stockholders at which the voting rights for control shares are considered and not approved.

If voting rights for control shares are approved at a stockholders meeting and the acquirer becomes entitled to vote a majority of the shares entitled to vote, all other stockholders may exercise appraisal rights. The fair value of the shares as determined for purposes of these appraisal rights may not be less than the highest price per share paid in the control share acquisition. Some of the limitations and restrictions otherwise applicable to the exercise of dissenters’ rights do not apply in the context of a control share acquisition.

The control share acquisition statute does not apply to shares acquired in a merger, consolidation or share exchange if the corporation is a party to the transaction or to acquisitions approved or exempted by the charter or bylaws of the corporation.

The Company’s Bylaws contain a provision exempting from the control share acquisition statute any and all acquisitions by any person of the Company’s stock. There can be no assurance that this provision will not be amended or eliminated at any time in the future.

Subtitle 8

Subtitle 8 of Title 3 of the Maryland General Corporation Law permits a Maryland corporation with a class of equity securities registered under the Exchange Act and at least 3 independent directors to elect to be subject, by provision in its charter or bylaws or a resolution of its board of directors and notwithstanding any contrary provision in the charter or bylaws, to any or all of the following provisions:

• a classified board;

• a two-thirds vote requirement for removing a director;

• a requirement that the number of directors be fixed only by vote of the directors;

• a requirement that a vacancy on the board be filled only by the remaining directors and for the remainder of the full term of the class in which the vacancy occurred; and

• a majority requirement for the calling of a stockholder-requested special meeting of stockholders.

Through provisions in the Company’s charter and Bylaws unrelated to Subtitle 8, the Company already (i) vests in the Board the exclusive power to fix the number of directorships and (ii) requires, unless called by the Company’s chairman of the board, chief executive officer or president or any director, the written request of stockholders entitled to cast not less than a majority of the votes entitled to be cast on any matter that may properly be considered at a meeting of stockholders to call a special meeting to act on such matter. The Company has elected, at such time as it becomes eligible to make such election under Subtitle 8, to provide that vacancies on the Board may be filled only by the affirmative vote of a majority of the remaining directors and for the remainder of the full term of the directorship in which the vacancy occurred.

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SUMMARY OF THE OPERATING PARTNERSHIP AGREEMENT

General

The Operating Partnership has been formed under the Delaware Revised Uniform Limited Partnership Act and is governed by the Operating Partnership Agreement. The following is merely a summary of some of the significant provisions of the Operating Partnership Agreement and is qualified in its entirety by reference thereto. Capitalized terms used in this section and not previously defined in this Memorandum will have the meanings set forth in the Operating Partnership Agreement.

The character and general nature of the business to be conducted by the Operating Partnership is the acquisition, operation and disposition of the Projects. The principal place of business of the Operating Partnership (and the mailing address of the Operating Partnership) will be 3600 N. Duke Street, Suite 109, Durham, NC 27704 and the telephone number is (919) 391-3735.

General Partner and Limited Partners

The Company is the General Partner of the Operating Partnership. For each Share issued pursuant to the Offering, the Company will acquire one General Partner Unit of the Operating Partnership.

As of the date of the Offering, TreyNet Partners, LLC (which is the Advisor) is the sole limited partner of the Operating Partnership. The Advisor contributed $10,000 in exchange for all of the Limited Partner Units.

The Operating Partnership will issue the General Partner Units at the time the Company contributes the Offering Proceeds to the Operating Partnership.

Distributions of Cash From Operations

The Operating Partnership distributes Cash From Operations as follows:

(i) First, 100% to the Company until the Company has been distributed an amount equal to a 6% cumulative but not compounded annual return; and

(ii) Thereafter, 80% to the Company and 20% to the Advisor.

Because the Company intends to elect REIT status, the Company, and consequently, the Operating Partnership, are required to distribute at least 90% of their taxable income.

Distributions of Cash From Sale or Refinancing

The Operating Partnership distributes Cash From Sale or Refinancing as follows:

(i) First, 100% to the Company until the Company has been distributed an amount equal to a 6% cumulative but not compounded annual return;

(ii) Second, to the Company until the Company’s Net Capital Contribution is reduced to zero; and

(iii) Thereafter, 80% to the Company and 20% to the Advisor.

Because the Company intends to elect REIT status, the Company, and consequently, the Operating Partnership, are required to distribute at least 90% of their taxable income.

Notwithstanding the above, the Operating Partnership may, at the option of the Company, make distributions to the Advisor prior to making the distributions set forth in (ii) above, to the extent such distributions are needed to pay any income taxes associated with allocations of net income to the Advisor, provided that the Operating Partnership will not make any such tax distributions to the Advisor if such distributions are necessary for the Company to meet its distribution requirements for qualification as a REIT. Any such distribution will reduce subsequent distributions to be made to the Advisor.

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Allocation of Net Income

After giving effect to certain special allocations, the Net Income of the Operating Partnership is allocated as follows:

(i) First, to the Advisor and the Company in proportion to and to the extent of the Net Loss previously allocated to the Advisor and the Company for all previous years;

(ii) Second, to the Company until the Company has been allocated an amount equal to a 6% cumulative but not compounded annual return on its Net Capital Contributions; and

(iii) Thereafter, 80% to the Company and 20% to the Advisor.

Allocation of Net Loss

After giving effect to certain special allocations, Net Loss is allocated as follows:

(i) First, to the Advisor and the Company in proportion to and to the extent of Net Income previously allocated to the Advisor and the Company for all previous fiscal years in reverse order of priority; and

(ii) Thereafter, to the Company.

Removal of the Limited Partner

If the Advisor or an Affiliate is also a Limited Partner, in the event that the Advisor is terminated for fraud or gross negligence under the terms of the Advisory Agreement, the Operating Partnership will have the right, at its option exercised within 120 days following such termination, to repurchase the Advisor’s or its Affiliate’s Limited Partner Interest, for a purchase price equal to the Fair Market Value of such Limited Partner Interest reduced by any damages caused to the Operating Partnership and the Company as a result of the Advisor’s fraud or gross negligence. The purchase price for such Limited Partner Interest will be paid by the Company in cash within 60 days of the determination of the Fair Market Value.

Authority of the General Partner

The Company has the exclusive authority to manage and control all aspects of the business of the Operating Partnership. In the course of its management, the Company may, in its sole discretion, employ such persons, including, under certain circumstances, Affiliates of the Company, as it deems necessary for the operation and management of the Operating Partnership.

Liabilities of the General Partner

The Company is not liable for the nonrecourse debts and obligations of the Operating Partnership beyond the exhaustion of the Operating Partnership assets and the Company does not have an obligation to restore any deficit in its Capital Account upon liquidation of the Operating Partnership.

Amendment of Operating Partnership Agreement

The Company has broad authority to amend the Operating Partnership Agreement without the consent of the Advisor including, among other things, to (i) reflect the addition or substitution of a limited partner, (ii) make any changes necessary or advisable to enable the Company to qualify or maintain its status as a REIT, (iii) minimize the adverse impact of or comply with any “plan assets” for ERISA purposes and (iv) make any changes necessary or advisable to satisfy concerns of the SEC or any state securities authority in connection with a securities offering by the Company or otherwise. In the event that the Operating Partnership accepts the contribution of property from certain persons, the Operating Partnership Agreement will be amended and restated to allow for such contributions and provide for the rights and obligations of such limited partners.

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SUMMARY OF THE ADVISORY AGREEMENT

General

The Advisor will provide, among other functions, investment advice to the Company as well as daily management of the Operating Partnership and the General Partner pursuant to the terms of the Advisory Agreement. The following is merely a summary of some of the significant provisions of the Advisory Agreement, attached hereto as Exhibit B, and is qualified in its entirety by reference thereto. The term “Company” as used in this section collectively refers to the Company, the Operating Partnership and their subsidiaries.

Duties of the Advisor

The Advisor is responsible for managing, operating, directing and supervising the operations and administration of the Company and its assets, including the Projects. The Advisor will use commercially reasonable efforts to present to the Company potential investment opportunities and provide a continuing and suitable investment program consistent with the investment objectives and policies of the Company as determined and adopted from time to time by the Board. The Advisor may engage Affiliates or third parties to perform its duties, some of which include the following:

(i) assisting in the performance of all services related to the organization of the Company or any offering of the Company’s securities, other than services that (a) are to be performed by a broker-dealer, (b) the Company elects to perform directly or (c) would require the Advisor to register as a broker-dealer with the SEC or any state;

(ii) serving as the Company’s investment and financial advisor and, when reasonably requested, providing the Board with reports in connection with the assets and investment policies of the Company;

(iii) providing for the daily management of the Company and performing and supervising the various administrative functions reasonably necessary for the management of the Company;

(iv) engaging such persons as the Advisor deems necessary to perform its duties under the Advisory Agreement;

(v) consulting with and assisting the Board in the formulation and implementation of the Company’s financial policies and furnishing the Board with advice regarding investments and borrowings;

(vi) locating, analyzing, selecting and structuring investments, arranging for financing and refinancing and making other changes in the asset or capital structure of the investments, including debt restructuring, and disposing of investments;

(vii) providing reports to the Board regarding prospective investments;

(viii) obtaining the approval of the Board prior to the Company making any investments;

(ix) monitoring and evaluating the performance of the Company’s assets and overseeing the performance of any property and asset managers;

(x) negotiating with lenders for loans to be made to the Company;

(xi) managing, operating, leasing and maintaining the Projects;

(xii) making reports to the Board of the Advisor’s performance of services to the Company;

(xiii) providing cash management services;

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(xiv) doing all things necessary to assure the Advisor’s ability to render the services described in the Advisory Agreement; and

(xv) notifying the Board of all proposed material transactions before they are completed.

Limitations on Activities of the Advisor

The Advisor is not permitted to take any action which, in its sole judgment made in good faith, would (i) adversely affect the status of the Company as a REIT, (ii) subject the Company to regulation under the Investment Company Act, (iii) violate any applicable law or (iv) not be permitted by the governing organizational documents of the Company and the Operating Partnership.

Access to Books and Records of the Company

The Advisor must maintain appropriate records of all of its activities and make such records available for inspection by the Board and the authorized agents of the Company. The Advisor will have access to the books and records of the Company at all reasonable times.

Fees to the Advisor

Asset Management Fee. The Advisor will receive an annual Asset Management Fee, paid on a monthly basis, equal to 1% of the Company Asset Value. If the Advisor delegates its property management duties to one or more Affiliates or engages a sub property manager to manage the day-to-day operations of the Projects, the Advisor will be responsible for paying all fees to any such Affiliates or sub property managers. If the Advisor engages any local third-party leasing service providers to perform the leasing functions for the Projects, the Company will pay for any fees to such third-party leasing service providers in addition to the Asset Management Fee.

Acquisition Fee. The Advisor will receive an Acquisition Fee for each Project acquired by the Company equal to 1% of the gross purchase price of the Project, which will be paid at the closing of the acquisition.

Financing Fee. The Advisor will receive a Financing Fee equal to 0.5% of the principal amount of any financing or refinancing, which will be paid at the closing of any such financing or refinancing. The Financing Fee will be in addition to any loan fee paid to a third-party in connection with such financing or refinancing.

Disposition Fee. The Advisor will receive a Disposition Fee equal to 1.5% of the contract sales price of the Project in connection with a sale, exchange or other disposition of a Project, which will be paid at the closing of such disposition. The Disposition Fee will be in addition to any third-party brokerage, legal and accounting fees incurred in connection with such disposition.

Payment of the Advisor’s Expenses

The Company will pay directly or reimburse the Advisor for all direct or indirect expenses paid or incurred by the Advisor in connection with the services the Advisor provides to the Company pursuant to the Advisory Agreement. In addition, the Company will pay its pro rata share of the Advisor’s overhead expenses attributable to providing services under the Advisory Agreement. Expenses incurred by the Advisor on behalf of the Company will be reimbursed no less than 15 days after a request for reimbursement by the Advisor. The Advisor will prepare a statement documenting the expenses of the Company during each month, and will deliver such statement to the Company with the request for reimbursement.

Other Activities of the Advisor

The Advisor may engage in other activities, including without limitation, the rendering of advice to other persons (including other REITs) and the management of other programs advised, sponsored or organized by the Advisor or its Affiliates. With respect to any investment in which the Company is a participant, the Advisor may also render advice and service to each and every other participant therein. The Advisor must report to the Board the

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existence of any condition or circumstance known by the Advisor which may create a conflict of interest between the Advisor’s obligations to the Company and its obligations to or its interest in any other person.

Term and Termination of the Advisory Agreement

The Advisory Agreement will be effective until the date that the Company completes an orderly wind-down and sale of all of its assets unless sooner terminated in accordance with the terms thereof. If the Company completes a Qualified IPO prior to the sale of all of its assets, the term of the Advisory Agreement will continue until December 31 of the year the Company completes the Qualified IPO and will automatically renew for successive 1-year terms unless any party thereto gives written notice of termination at least 30 days prior to the expiration of the current term.

The Company may terminate the Advisory Agreement for cause in the event (i) of fraud or gross negligence by the Advisor as determined by a final, non-appealable judgment of a court of competent jurisdiction, (ii) the Advisor commits a material breach of the Advisory Agreement and such breach is not cured within 90 days after receipt of written notice by the Company of such breach or (iii) the Advisor has been adjudged bankrupt or insolvent by a court of competent jurisdiction, and the adjudication or order remains in force or unstayed for a period of 30 days. The Advisor may terminate the Advisory Agreement upon 90 days written notice to the Company.

Upon termination, the Advisor must (i) pay over to the Company all money collected and held for the account of the Company after deducting any accrued compensation and reimbursement for the Advisor’s expenses, (ii) deliver to the Board a full accounting covering the period following the date of the last accounting, (iii) deliver to the Board all assets, books, records and documents of the Company then in the custody of the Advisor and (iv) cooperate with the Company to provide an orderly management transition.

Indemnification

Subject to any limitations imposed by applicable law, the Company generally will indemnify the Advisor and its Affiliates and their respective officers, directors, partners, members, managers and employees, from any losses and related expenses (including reasonable attorneys’ fees) arising in the performance of their duties under the Advisory Agreement, to the extent such losses and expenses are not fully reimbursed by insurance, other than by reason of the Advisor’s fraud or gross negligence. Any indemnification of the Advisor may be made only out of the net assets of the Company.

The Advisor generally will indemnify the Company from any losses and related expenses (including attorneys’ fees), to the extent that such losses and expenses are not fully reimbursed by insurance and incurred by reason of the Advisor’s fraud or gross negligence, but the Advisor will not be held responsible for any action of the Board in following or declining to follow any advice or recommendation given by the Advisor.

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FEDERAL INCOME TAX CONSIDERATIONS

General

The following is a summary of the material United States federal income tax considerations associated with an investment in the Company’s common stock that may be relevant to you. The statements made in this section are based upon current provisions of the Code and Treasury Regulations promulgated thereunder, as currently applicable, currently published administrative positions of the IRS and judicial decisions, all of which are subject to change, either prospectively or retroactively. The Company cannot assure you that any changes will not modify the conclusions expressed in counsel’s opinion described herein. This summary does not constitute legal or tax advice. Moreover, this summary does not deal with all tax aspects that might be relevant to you, as a prospective stockholder, in light of your personal circumstances, nor does it deal with particular types of stockholders that are subject to special treatment under the federal income tax laws, such as insurance companies, tax-exempt organizations, financial institutions or broker-dealers, or foreign corporations or persons who are not citizens or residents of the United States. The Code provisions governing the federal income tax treatment of REITs and their stockholders are highly technical and complex, and this summary is qualified in its entirety by the express language of applicable Code provisions, Treasury Regulations promulgated thereunder and administrative and judicial interpretations thereof. This summary deals only with the Company’s stockholders that hold common stock as “capital assets” within the meaning of Section 1221 of the Code. This summary does not address state, local or non-United States tax considerations.

DLA has acted as the Company’s United States federal income tax counsel in connection with the Offering, has reviewed this summary and has opined that, to the extent that it constitutes matters of federal income tax law or legal conclusions relating thereto, this summary is accurate in all material respects. The opinion of DLA is based on various assumptions, is subject to limitations and is not binding on the IRS or any court.

The Company urges you, as a prospective stockholder, to consult your tax advisor regarding the specific tax consequences to you of a purchase of shares of Non-Voting Common Stock, ownership and sale of shares of Non-Voting Common Stock and of the Company’s election to be taxed as a REIT, including the federal, state, local, foreign and other tax consequences of such purchase, ownership, sale and election and of potential changes in applicable tax laws. The opinion being issued by counsel in connection with the Offering have been rendered for the Company’s information and assistance with respect to the sale of the Company’s Non-Voting Common Stock. The opinion is not intended to be used by any taxpayer to avoid penalties, and may not be relied upon to avoid tax penalties. Each taxpayer should consult with his or her own independent tax advisor with respect to the consequences of a purchase of Non-Voting Common Stock.

REIT Qualification

The Company intends to qualify as a REIT beginning with the taxable year ending December 31, 2017, which may be extended to the taxable year ending December 31, 2018. This section discusses the laws governing the tax treatment of a REIT and its stockholders. These laws are highly technical and complex.

Prior to the commencement of the Offering, DLA will render an opinion that the Company’s proposed method of operation should enable the Company to be taxed as a REIT pursuant to Sections 856 through 860 of the Code, commencing with the taxable year ending December 31, 2017, which may be delayed by the Company’s Board until the taxable year ending December 31, 2018.

It must be emphasized that the opinion of DLA is based on various assumptions relating to the Company’s organization and operation and is conditioned upon representations and covenants made by the Company regarding the Company’s organization and the future conduct of the Company’s business operations.

While the Company intends to qualify as a REIT, given the highly complex nature of the rules governing REITs, the ongoing importance of factual determinations and the possibility of future changes in the Company’s circumstances, no assurance can be given by DLA or by the Company that the Company will qualify and continue to qualify as a REIT for any particular year. The opinion is expressed as of the date issued and does not cover subsequent periods. DLA has no obligation to advise the Company or the holders of the Company’s common stock of any subsequent change in the matters stated, represented or assumed in the opinion, or of any subsequent change

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in the applicable law. You should be aware that opinions of counsel are not binding on the IRS or any court, and no assurance can be given that the IRS will not challenge the conclusions set forth in such opinions.

Qualification and taxation as a REIT depends on the Company’s ability to meet on a continuing basis, through actual operating results, distribution levels and diversity of share ownership, and various qualification requirements imposed upon REITs by the Code, the compliance with which will not be reviewed by DLA. The Company’s ability to qualify as a REIT also requires that the Company satisfy certain asset tests, some of which depend upon the fair market values of assets directly or indirectly owned by the Company. Such values may not be susceptible to a precise determination. While the Company intends to operate in a manner that qualifies the Company as a REIT, no assurance can be given that the actual results of the Company’s operations for any taxable year will satisfy the requirements for qualification and taxation as a REIT.

Taxation of REITs

As a REIT, the Company generally is entitled to a deduction for dividends that it pays and therefore is not subject to federal corporate income tax on the Company’s taxable income that is currently distributed to the Company’s stockholders. This treatment substantially eliminates the “double taxation” at the corporate and stockholder levels that generally results from an investment in a corporation. In general, the income that the Company generates is taxed only at the stockholder level upon distribution to the Company’s stockholders. Even though the Company will elect to qualify for taxation as a REIT, it will still be subject to federal income taxation as follows:

• The Company will be taxed at regular corporate rates on its undistributed REIT taxable income, including undistributed net capital gains;

• The Company may be subject to the “alternative minimum tax” on its items of tax preference, including any deductions of net operating losses;

• If the Company has net income from prohibited transactions, which are, in general, sales or other dispositions of inventory or property held primarily for sale to customers in the ordinary course of a trade or business, other than foreclosure property, such income will be subject to a 100% tax;

• If the Company elects to treat property that it acquires in connection with a foreclosure of a mortgage loan or certain leasehold terminations as “foreclosure property,” the Company may avoid the 100% tax on gain from a resale of that property (if the sale would otherwise constitute a prohibited transaction), but the income from the sale or operation of the property may be subject to corporate income tax at the highest applicable rate (currently 35%);

• If the Company should fail to satisfy the asset or other requirements applicable to REITs, as described below, yet maintains its qualification as a REIT because there is reasonable cause for the failure and other applicable requirements are met, the Company may be subject to an excise tax. In that case, the amount of the tax will be at least $50,000 per failure, and, in the case of certain asset test failures, will be determined as the amount of net income generated by the assets in question multiplied by the highest corporate tax rate (currently 35%) if that amount exceeds $50,000 per failure;

• If the Company fails to satisfy either the 75% or 95% Income Tests (defined below) but has nonetheless maintained its qualification as a REIT because certain conditions have been met, the Company will be subject to a penalty tax based on the magnitude of the failure adjusted to reflect the profit margin associated with the Company’s gross income;

• If the Company fails to distribute during each year at least the sum of (i) 85% of its REIT ordinary income for the year, (ii) 95% of its REIT capital gain net income for such year and (iii) any undistributed taxable income from prior periods, the Company will be subject to a nondeductible 4% excise tax on the excess of the required distribution over the sum of (a) the amounts actually distributed plus (b) retained amounts on which corporate level tax is paid by the Company;

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• The Company may elect to retain and pay tax on its net long-term capital gain. In that case, a United States stockholder would be taxed on its proportionate share of the Company’s undistributed long-term capital gain and would receive a credit or refund for its proportionate share of the tax which the Company paid;

• If the Company fails certain of the REIT asset tests and does not qualify for “de minimis” relief, the Company may be required to pay a corporate level tax on the income generated by the assets that caused the Company to violate the asset test;

• If the Company acquires (or is deemed to acquire) appreciated assets from a C corporation (such as a corporation generally subject to corporate level tax) in a transaction in which the C corporation would not normally be required to recognize any gain or loss on disposition of the asset and the Company subsequently recognizes gain on the disposition of the asset during the 5-year period beginning on the date on which the Company acquired the asset, then a portion of the gain may be subject to tax at the highest regular corporate rate, unless the C corporation made an election to treat the asset as if it were sold for its fair market value at the time of the Company’s acquisition; and

• Income earned by any of the Company’s taxable REIT subsidiaries lessees will be subject to tax at regular corporate rates.

Taxable REIT Subsidiaries – Third-Party Management Contracts

The Operating Partnership may derive income from third-party management agreements. For purposes of the Company’s gross income tests (see “Federal Income Tax Considerations – Requirements for Qualification as a REIT – Operational Requirements – Income Tests”), the Company will be treated as earning its proportional share (generally determined by its capital commitment) of Operating Partnership income directly. In order for the Company to continue to qualify as a REIT, the Company will require that certain third-party management be provided by a taxable REIT subsidiary.

Requirements for Qualification as a REIT

In order for the Company to maintain qualification as a REIT, the Company must meet and continue to meet the requirements discussed below relating to its organization, sources of income, nature of assets and distributions of income to its stockholders.

Organizational Requirements – General Requirements

In order to maintain qualification as a REIT under the Code, the Company must meet tests regarding its income and assets described below and:

(i) be a corporation, trust or association that would be taxable as a domestic corporation but for the REIT provisions of the Code;

(ii) elect to be taxed as a REIT and satisfy relevant filing and other administrative requirements for REITs;

(iii) be managed by one or more trustees or directors;

(iv) have the Company’s beneficial ownership evidenced by transferable shares;

(v) not be a financial institution or an insurance company subject to special provisions of the federal income tax laws;

(vi) use a calendar year for federal income tax purposes;

(vii) have at least 100 stockholders for at least 335 days of each taxable year of 12 months or during a proportionate part of a taxable year of less than 12 months; and

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(viii) not be closely held as defined for purposes of the REIT provisions of the Code.

The Company would be treated as closely held if, during the last half of any taxable year, more than 50% in value of the Company’s outstanding stock is owned, directly or indirectly through the application of certain attribution rules, by 5 or fewer individuals, as defined in the Code to include certain entities. Items (vii) and (viii) above will not apply until after the first taxable year for which the Company elects to be taxed as a REIT. If the Company complies with the Treasury Regulations that provide procedures for ascertaining the actual ownership of the Company’s common stock for each taxable year and the Company did not know, and with the exercise of reasonable diligence could not have known, that the Company failed to meet item (viii) above for a taxable year, the Company will be treated as having met item (viii) for that year.

The Company intends to qualify as a REIT beginning with the taxable year ending December 31, 2017, which may be extended to the taxable year ending December 31, 2018. The Company’s charter contains restrictions regarding ownership and transfer of shares of the Company’s common stock that are intended to assist the Company in continuing to satisfy the share ownership requirements in items (vii) and (viii) above (but which should not prevent the Company from qualifying under item (iv) above).

The Code provides relief from violations of the REIT gross income requirements, as described below under “Operational Requirements – Income Tests,” in cases where a violation is due to reasonable cause and not willful neglect, and other requirements are met, including the payment of a penalty tax that is based upon the magnitude of the violation. In addition, the Code includes provisions that extend similar relief in the case of certain violations of the REIT asset requirements and other REIT requirements, again provided that the violation is due to reasonable cause and not willful neglect, and other conditions are met, including the payment of a penalty tax. If the Company fails to satisfy any of the various REIT requirements, there can be no assurance that these relief provisions would be available to enable the Company to maintain the Company’s qualification as a REIT, and, if available, the amount of any resultant penalty tax could be substantial.

Effect of Subsidiary Entities

Ownership of Partnership Interests. If the Company is a partner in an entity that is treated as a partnership for federal income tax purposes, the Treasury Regulations provide that the Company is deemed to own the Company’s proportionate share of the partnership’s assets, and to earn the Company’s proportionate share of the partnership’s income, for purposes of the asset and income tests applicable to REITs. The Company’s proportionate share of a partnership’s assets and income is based on its capital interest in the partnership (except that for purposes of the 10% value test, the Company’s proportionate share of the partnership’s assets is based on the Company’s proportionate interest in the equity and certain debt securities issued by the partnership). In addition, the assets and gross income of the partnership are deemed to retain the same character in the Company’s hands. Thus, the Company’s proportionate share of the assets and items of income of any of its subsidiary partnerships will be treated as the Company’s assets and items of income for purposes of applying the REIT requirements. For any period of time that the Company owns 100% of the Operating Partnership, all of the Operating Partnership’s assets and income will be deemed to be the Company’s for federal income tax purposes.

Disregarded Subsidiaries. If the Company owns a corporate subsidiary that is a “qualified REIT subsidiary,” that subsidiary is generally disregarded for federal income tax purposes, and all of the subsidiary’s assets, liabilities and items of income, deduction and credit are treated as the Company’s assets, liabilities and items of income, deduction and credit, including for purposes of the gross income and asset tests applicable to REITs. A qualified REIT subsidiary is any corporation, other than a TRS, that is directly or indirectly wholly owned by a REIT. Other entities that are wholly owned by the Company, including single member limited liability companies that have not elected to be taxed as corporations for federal income tax purposes, are also generally disregarded as separate entities for federal income tax purposes, including for purposes of the REIT income and asset tests. Disregarded subsidiaries, along with any partnerships in which the Company holds an equity interest, are sometimes referred to herein as “pass-through subsidiaries.”

In the event that a disregarded subsidiary of the Company ceases to be wholly owned, for example, if any equity interest in the subsidiary is acquired by a person other than the Company or another disregarded subsidiary of the Company, the subsidiary’s separate existence would no longer be disregarded for federal income tax purposes. Instead, the subsidiary would have multiple owners and would be treated as either a partnership or a taxable

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corporation. Such an event could, depending on the circumstances, adversely affect the Company’s ability to satisfy the various asset and gross income requirements applicable to REITs, including the requirement that REITs generally may not own, directly or indirectly, more than 10% of the securities of another corporation. See “Federal Income Tax Considerations – Requirements for Qualification as a REIT – Operational Requirements – Asset Tests” and “Operational Requirements – Income Tests” below.

Taxable REIT Subsidiaries. The Company may jointly elect with any of the Company’s subsidiary corporations, whether or not wholly owned, to treat such subsidiary corporations as taxable REIT subsidiaries, or “TRSs.” The Company generally may not own more than 10% of the securities of a taxable corporation, as measured by voting power or value, unless the Company and such corporation elect to treat such corporation as a TRS. The separate existence of a TRS or other taxable corporation is not ignored for federal income tax purposes. Accordingly, a TRS or other taxable corporation generally would be subject to corporate income tax on its earnings, which may reduce the cash flow that the Company and the Company’s subsidiaries generate in the aggregate, and may reduce the Company’s ability to pay dividends to the Company’s stockholders.

The Company is not treated as holding the assets of a TRS or other taxable subsidiary corporation or as receiving any income that the subsidiary earns. Rather, the stock issued by a taxable subsidiary to the Company is an asset in the Company’s hands, and the Company treats the distributions paid to the Company from such taxable subsidiary, if any, as either income or return of capital. This treatment can affect the Company’s income and asset test calculations, as described below. Because the Company does not include the assets and income of TRSs or other taxable subsidiary corporations in determining the Company’s compliance with the REIT requirements, the Company may use such entities to undertake indirectly activities that the REIT rules might otherwise preclude the Company from doing directly or through pass-through subsidiaries. For example, the Company may use TRSs or other taxable subsidiary corporations to conduct activities that give rise to certain categories of income such as management fees or activities that would be treated in the Company’s hands as prohibited transactions.

Operational Requirements – Income Tests

To maintain qualification as a REIT, the Company must satisfy annually 2 gross income requirements.

• At least 75% of the Company’s gross income for each taxable year, excluding gross income from “prohibited transactions,” generally must be derived from investments relating to real property or mortgages on real property, including interest income derived from mortgage loans secured by real property (including certain types of mortgage-backed securities), “rents from real property,” distributions received from other REITs, and gains from the sale of real estate assets (other than a non-qualified publicly offered REIT debt instrument), as well as specified income from temporary investments. This test is the 75% Income Test.

• At least 95% of the Company’s gross income for each taxable year, excluding gross income from “prohibited transactions” and certain hedging transactions, generally must be derived from some combination of such income from investments in real property (i.e., income that qualifies under the 75% Income Test described above), as well as other distributions, interest, and gain from the sale or disposition of stock or securities, which need not have any relation to real property. This test is the 95% Income Test.

Interest income constitutes qualifying mortgage interest for purposes of the 75% Income Test (as described above) to the extent that the obligation upon which such interest is paid is secured by a mortgage on real property. If the Company receives interest income with respect to a mortgage loan that is secured by both real property and personal property, and the highest principal amount of the loan outstanding during a taxable year exceeds the fair market value of the real property on the date that the Company acquired or originated the mortgage loan, the interest income will be apportioned between the real property and the personal property, and the Company’s income from the arrangement will qualify for purposes of the 75% Income Test only to the extent that the interest is allocable to the real property. However, for purposes of the 75% Income Test, if the fair market value of such personal property does not exceed 15% of the total fair market value of all such property, such personal property is treated as real property. Even if a loan is not secured by real property, or is under-secured, the income that it generates may nonetheless qualify for purposes of the 95% Income Test.

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The rents the Company will receive or be deemed to receive will qualify as “rents from real property” for purposes of satisfying the gross income requirements for a REIT only if the following conditions are met:

• the amount of rent received from a tenant must not be based in whole or in part on the income or profits of any person; however, an amount received or accrued generally will not be excluded from the term “rents from real property” solely by reason of being based on a fixed percentage or percentages of gross receipts or sales;

• in general, neither the Company nor an owner of 10% or more of the shares of the Company’s common stock may directly or constructively own 10% or more of a tenant or a subtenant of the tenant (in which case only rent attributable to the subtenant is disqualified);

• rent attributable to personal property leased in connection with a lease of real property cannot be greater than 15% of the total rent received under the lease, as determined based on the average of the fair market values as of the beginning and end of the taxable year; and

• the Company normally must not operate or manage the property or furnish or render services to tenant, other than through an “independent contractor” who is adequately compensated and from whom the Company does not derive any income or through a “taxable REIT subsidiary.” However, a REIT may provide services with respect to its properties, and the income derived therefrom will qualify as “rents from real property,” if the services are “usually or customarily rendered” in connection with the rental of space only and are not otherwise considered “rendered to the occupant” primarily for its convenience. Even if the services provided by the Company with respect to a property are impermissible tenant services, the income derived therefrom will qualify as “rents from real property” if such income does not exceed 1% of all amounts received or accrued with respect to that property.

The Company may establish taxable REIT subsidiaries to hold assets generating non-qualifying income. The Company may directly or indirectly receive distributions from TRSs or other corporations that are not REITs or qualified REIT subsidiaries. These distributions generally are treated as dividend income to the extent of the earnings and profits of the distributing corporation. Such distributions will generally constitute qualifying income for purposes of the 95% Income Test, but not for purposes of the 75% Income Test. Any distributions that the Company receives from a REIT, however, will be qualifying income for purposes of both the 95% Income Test and the 75% Income Test.

The Company may receive various fees in connection with the Company’s operations relating to the origination of mezzanine and other similar loans secured by an interest in real property. The fees will generally be qualifying income for purposes of both the 75% Income Test and the 95% Income Test if they are received in consideration for entering into an agreement to make a loan secured by real property and the fees are not determined by income and profits. Other fees generally are not qualifying income for purposes of either income test and will not be favorably counted for purposes of either the 75% Income Test or the 95% Income Test. Any fees earned by any TRS will not be included for purposes of the income tests.

Prior to the making of investments in real properties, the Company may invest the net Offering Proceeds in liquid assets such as government securities or certificates of deposit. For purposes of the 75% Income Test, income attributable to a stock or debt instrument purchased with the proceeds received by a REIT in exchange for stock in the REIT (other than amounts received pursuant to a distribution reinvestment plan) constitutes qualified temporary investment income if such income is received or accrued during the one-year period beginning on the date the REIT receives such new capital. To the extent that the Company holds any proceeds of the Offering for longer than one year, it may invest those amounts in less liquid investments such as mortgage backed securities, maturing mortgage loans purchased from mortgage lenders or shares of common stock in other REITs to satisfy the 75% Income Test and the 95% Income Test and the Asset Tests described below. The Company expects the bulk of the remainder of its income to qualify under the 75% Income Test and the 95% Income Test as gains from the sale of real property interests, interest on mortgages on real property and rents from real property in accordance with the requirements described above. With regard to rental income, the Company anticipates that most of its leases will be for fixed rentals and that none of the rentals under the Company’s leases will be based on the income or profits of any person. In addition, none of the Company’s customers are expected to be related to the Company, and the portion of the rent attributable to personal property is not expected to exceed 15% of the total rent to be received under any lease. The

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Company anticipates that all or most of the services to be performed with respect to its real properties will be performed by the Company or its subsidiaries and such services are expected to be those usually or customarily rendered in connection with the rental of real property and not rendered to the occupant of such real property primarily for its convenience. Finally, the Company anticipates that any non-customary services will be provided by a taxable REIT subsidiary or, alternatively, by an independent contractor that is adequately compensated and from whom the Company derives no income. However, the Company can give no assurance that the actual sources of its gross income will allow it to satisfy the 75% Income Test and the 95% Income Test.

Notwithstanding the Company’s failure to satisfy one or both of the 75% Income Test and the 95% Income Test for any taxable year, the Company may still qualify as a REIT for that year if it is eligible for relief under specific provisions of the Code. These relief provisions generally will be available if:

• the Company’s failure to meet these tests was due to reasonable cause and not due to willful neglect; and

• the Company attaches a schedule of its income sources to its federal income tax return.

It is not possible, however, to state whether, in all circumstances, the Company would be entitled to the benefit of these relief provisions. If these relief provisions are inapplicable to a particular set of circumstances, the Company will not qualify as a REIT. As discussed above under “Taxation of REITs,” even where these relief provisions apply, the Code imposes a penalty tax based on the magnitude of the failure adjusted to reflect the profit margin associated with the Company’s gross income tax.

Operational Requirements – Asset Tests

At the close of each quarter of the Company’s taxable year starting with the taxable year with respect to which it elected to be taxed as a REIT, the Company must satisfy 4 tests, which the Company refers to as “Asset Tests,” relating to the nature and diversification of its assets.

• First, at least 75% of the value of the Company’s total assets must be represented by real estate assets, cash, cash items and government securities. The term “real estate assets” includes real property, mortgages on real property or on interests in real property, shares of common stock in other qualified REITs, debt instruments issued by publicly offered REITs, any stock and debt instrument (not otherwise a real estate asset) attributable to the temporary investment of new capital as described above and a proportionate share of any real estate assets owned by a partnership in which the Company is a partner or of any qualified REIT subsidiary of the Company. Under the PATH Act, to the extent that rent attributable to personal property is treated as rents from real property under the Code, such personal property will be treated as a “real estate asset” for purposes of the 75% Asset Test. Further, a debt obligation secured by a mortgage on both real and personal property will be treated as a real estate asset for purposes of the 75% Asset Test, if the fair market value of the personal property does not exceed 15% of the fair market value of all property securing the debt.

• Second, no more than 25% of the Company’s total assets may be represented by securities other than those in the 75% asset class; provided that not more than 25% of the value of the Company’s assets may consist of debt instruments issued by publicly offered REITs.

• Third, of the investments included in the 25% asset class, the value of any one issuer’s securities that the Company owns may not exceed 5% of the value of the Company’s total assets. Additionally, the Company may not own more than 10% of the voting power or value of any one issuer’s outstanding securities, which the Company refers to as the “10% Asset Test.” The 10% Asset Test does not apply to securities of a TRS, nor does it apply to certain “straight debt” instruments possessing certain characteristics. The term “securities” also does not include the equity or debt securities of a qualified REIT subsidiary of the Company or an equity interest in any entity treated as a partnership for federal tax purposes.

• Fourth, no more than 25% (20% for taxable years beginning after December 31, 2017) of the value of the Company’s total assets may consist of the securities of one or more TRS.

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Any interest that the Company holds in a real estate mortgage investment conduit, or REMIC, will generally qualify as real estate assets and income derived from REMIC interests will generally be treated as qualifying income for purposes of the 75% Income Test and the 95% Income Test described above. If less than 95% of the assets of a REMIC are real estate assets, however, then only a proportionate part of the Company’s interest in the REMIC and income derived from the interest will qualify for purposes of the REIT Asset Tests and the 75% Income Test and the 95% Income Test. If the Company holds a “residual interest” in a REMIC from which it derives “excess inclusion income,” the Company will be required either to distribute the excess inclusion income or to pay tax on it (or a combination of the 2), even though the Company may not receive the income in cash. To the extent that distributed excess inclusion income is allocable to a particular stockholder, the income (i) would not be allowed to be offset by any net operating losses otherwise available to the stockholder, (ii) would be subject to tax as unrelated business taxable income in the hands of most types of stockholders that are otherwise generally exempt from federal income tax and (iii) would result in the application of United States federal income tax withholding at the maximum rate (30%), without reduction pursuant to any otherwise applicable income tax treaty, to the extent allocable to most types of foreign stockholders. Moreover, any excess inclusion income that the Company receives that is allocable to specified categories of tax-exempt investors which are not subject to unrelated business income tax, such as government entities, may be subject to corporate-level income tax in the Company’s hands, regardless of whether it is distributed.

If the Company meets the Asset Tests at the close of any quarter, it will not lose its REIT status for a failure to satisfy the Asset Tests at the end of a later quarter in which the Company has not acquired any securities or other property if such failure occurs solely because of changes in asset values. If the Company’s failure to satisfy the Asset Tests results from an acquisition of securities or other property during a quarter, it can cure the failure by disposing of a sufficient amount of non-qualifying assets within 30 days after the close of that quarter. The Company intends to maintain adequate records of the value of its assets to ensure compliance with the Asset Tests and to take other action within 30 days after the close of any quarter as may be required to cure any noncompliance. If that does not occur, the Company may nonetheless qualify for one of the relief provisions described below.

The Code contains a number of provisions applicable to REITs, including relief provisions that make it easier for REITs to satisfy the asset requirements or to maintain REIT qualification notwithstanding certain violations of the asset and other requirements.

One such provision allows a REIT which fails one or more of the asset requirements to nevertheless maintain its REIT qualification if (i) it provides the IRS with a description of each asset causing the failure, (ii) the failure is due to reasonable cause and not willful neglect, (iii) the REIT pays a tax equal to the greater of (a) $50,000 per failure and (b) the product of the net income generated by the assets that caused the failure multiplied by the highest applicable corporate tax rate (currently 35%) and (iv) the REIT either disposes of the assets causing the failure within 6 months after the last day of the quarter in which it identifies the failure or otherwise satisfies the relevant asset tests within that time frame.

A second relief provision applies to de minimis violations of the 10% and 5% asset tests. A REIT may maintain its qualification despite a violation of such requirements if (i) the value of the assets causing the violation do not exceed the lesser of 1% of the REIT’s total assets and $10,000,000, or (ii) the REIT either disposes of the assets causing the failure within 6 months after the last day of the quarter in which it identifies the failure, or the relevant tests are otherwise satisfied within that time frame.

The Code also provides that certain securities will not cause a violation of the 10% Asset Test described above. Such securities include instruments that constitute “straight debt,” which includes securities having certain contingency features. A security cannot qualify as “straight debt” where a REIT (or a controlled taxable REIT subsidiary of the REIT) owns other securities of the issuer of that security which do not qualify as straight debt, unless the value of those other securities constitute, in the aggregate, 1% or less of the total value of that issuer’s outstanding securities. In addition to straight debt, the Code provides that certain other securities will not violate the 10% Asset Test. Such securities include (i) any loan made to an individual or an estate, (ii) certain rental agreements in which one or more payments are to be made in subsequent years (other than agreements between a REIT and certain persons related to the REIT), (iii) any obligation to pay rents from real property, (iv) securities issued by governmental entities that are not dependent in whole or in part on the profits of (or payments made by) a non-governmental entity, (v) any security issued by another REIT and (vi) any debt instrument issued by a partnership if the partnership’s income is of a nature that it would satisfy the 75% Income Test described above

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under “Federal Income Tax Considerations – Requirements for Qualification as a REIT – Operational Requirements – Income Tests.” In addition, when applying the 10% Asset Test, a debt security issued by a partnership is not taken into account to the extent, if any, of the REIT’s proportionate equity interest in that partnership.

The Company believes that its holdings will comply with the foregoing REIT asset requirements beginning in 2017, which may be extended to 2018, and it intends to monitor compliance on an ongoing basis. Certain mezzanine loans the Company makes or acquires may qualify for the safe harbor in Revenue Procedure 2003-65 pursuant to which certain loans secured by a first priority security interest in ownership interests in a partnership or limited liability company will be treated as qualifying assets for purposes of the 75% real estate asset test and the 10% vote or value test. See “Federal Income Tax Considerations – Requirements for Qualification as a REIT – Operational Requirements – Income Tests.” The Company intends to make such investments in such a manner as not to fail the asset tests described above.

No independent appraisals will be obtained to support the Company’s conclusions as to the value of its total assets or the value of any particular security or securities. Moreover, values of some assets, including instruments issued in securitization transactions, may not be susceptible to a precise determination, and values are subject to change in the future. Furthermore, the proper classification of an instrument as debt or equity for federal income tax purposes may be uncertain in some circumstances, which could affect the application of the REIT asset requirements. Accordingly, there can be no assurance that the IRS will not contend that the Company’s interests in the Company’s subsidiaries or in the securities of other issuers will not cause a violation of the REIT asset tests.

If the Company should fail to satisfy the asset tests at the end of a calendar quarter, such a failure would not cause the Company to lose its REIT qualification if it (i) satisfied the asset tests at the close of the preceding calendar quarter and (ii) the discrepancy between the value of the Company’s assets and the asset requirements was not wholly or partly caused by an acquisition of non-qualifying assets, but instead arose from changes in the market value of the Company’s assets. If the condition described in (ii) were not satisfied, the Company still could avoid disqualification by eliminating any discrepancy within 30 days after the close of the calendar quarter in which it arose or by making use of relief provisions.

Operational Requirements – Annual Distribution Requirement

To be taxed as a REIT, the Company is required to make distributions, other than capital gain dividends and deemed distributions of retained capital gain, to the Company’s stockholders each year in an amount equal to:

(i) the sum of:

(a) 90% of the Company’s “REIT taxable income,” computed without regard to the Company’s net capital gains and the dividends paid deduction, and

(b) 90% of the Company’s net income, if any (after tax) from foreclosure property (as described below), minus

(ii) the sum of certain specified items of non-cash income.

While the Company must generally make distributions in the taxable year to which they relate, it may also make distributions in the following taxable year if (i) they are declared before it timely files its federal income tax return for the taxable year in question and (ii) they are paid on or before the first regular distribution payment date after the declaration.

Even if the Company satisfies the foregoing distribution requirement and, accordingly, continues to qualify as a REIT for tax purposes, it will still be subject to federal income tax on the excess of its net capital gain and its REIT taxable income, as adjusted, over the amount of distributions to stockholders.

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In addition, if the Company fails to distribute during each calendar year at least the sum of:

• 85% of the Company’s ordinary income for that year;

• 95% of the Company’s capital gain net income other than the capital gain net income which it elects to retain and pay tax on for that year; and

• any undistributed taxable income from prior periods;

the Company will be subject to a 4% nondeductible excise tax on the excess of the amount of the required distributions over the sum of (i) the amounts actually distributed plus (ii) retained amounts on which corporate level tax is paid by the Company.

The Company intends to make timely distributions sufficient to satisfy this requirement; however, it is possible that the Company may experience timing differences between (i) the actual receipt of income and payment of deductible expenses and (ii) the inclusion of that income and deduction of those expenses for purposes of computing the Company’s taxable income. It is also possible that the Company may be allocated a share of net capital gain attributable to the sale of depreciated property by the Operating Partnership that exceeds the Company’s allocable share of cash attributable to that sale. In those circumstances, the Company may have less cash than is necessary to meet the Company’s annual distribution requirement or to avoid income or excise taxation on undistributed income. The Company may find it necessary in those circumstances to arrange for financing or raise funds through the issuance of additional shares of common or preferred stock to meet its distribution requirements. If the Company fails to satisfy the distribution requirement for any taxable year by reason of a later adjustment to its taxable income made by the IRS, the Company may be able to pay “deficiency distributions” in a later year and include such distributions in the Company’s deductions for distributions paid for the earlier year. In that event, the Company may be able to avoid losing its REIT status or being taxed on amounts distributed as deficiency distributions, but it would be required to pay interest and a penalty to the IRS based upon the amount of any deduction taken for deficiency distributions for the earlier year.

As noted above, the Company may also elect to retain, rather than distribute, the Company’s net long-term capital gains. The effect of such an election would be as follows:

• the Company would be required to pay the federal income tax on these gains;

• taxable United States stockholders, while required to include their proportionate share of the undistributed long-term capital gains in income, would receive a credit or refund for their share of the tax paid by the REIT; and

• the basis of the stockholder’s shares of common stock would be increased by the difference between the designated amount included in the stockholder’s long-term capital gains and the tax deemed paid with respect to such shares of common stock.

In computing the Company’s REIT taxable income, it will use the accrual method of accounting and intends to depreciate depreciable property under the alternative depreciation system. The Company is required to file an annual federal income tax return, which, like other corporate returns, is subject to examination by the IRS. Because the tax law requires the Company to make many judgments regarding the proper treatment of a transaction or an item of income or deduction, it is possible that the IRS will challenge positions the Company takes in computing its REIT taxable income and its distributions.

Issues could arise, for example, with respect to the allocation of the purchase price of real properties between depreciable or amortizable assets and non-depreciable or non-amortizable assets such as land. Were the IRS to successfully challenge the Company’s characterization of a transaction or determination of the Company’s REIT taxable income, the Company could be found to have failed to satisfy a requirement for qualification as a REIT. If, as a result of a challenge, the Company is determined to have failed to satisfy the distribution requirements for a taxable year, it would be disqualified as a REIT, unless it was permitted to pay a deficiency distribution to its stockholders and pay interest thereon to the IRS, as provided by the Code. A deficiency

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distribution cannot be used to satisfy the distribution requirement, however, if the failure to meet the requirement is not due to a later adjustment to the Company’s income by the IRS.

Operational Requirements – Recordkeeping

The Company must maintain certain records as set forth in the Treasury Regulations to avoid the payment of monetary penalties to the IRS. Such Treasury Regulations require that the Company requests, on an annual basis, certain information designed to disclose the ownership of shares of its outstanding common stock. The Company intends to comply with these requirements.

Failure to Qualify as a REIT

If the Company fails to qualify as a REIT for any reason in a taxable year and applicable relief provisions do not apply, it will be subject to tax (including any applicable alternative minimum tax) on its taxable income at regular corporate rates. The Company will not be able to deduct distributions paid to its stockholders in any year in which the Company fails to qualify as a REIT. In this situation, to the extent of current and accumulated earnings and profits, all distributions to the Company’s stockholders that are individuals will generally be taxable as dividends, and, subject to limitations of the Code, corporate distributees may be eligible for the distributions received deduction. The Company also will be disqualified for the 4 taxable years following the year during which qualification was lost unless it is entitled to relief under specific statutory provisions.

Prohibited Transactions

Net income that the Company derives from a prohibited transaction is subject to a 100% tax. The term “prohibited transaction” generally includes a sale or other disposition of property (other than foreclosure property, as discussed below) that is held primarily for sale to customers in the ordinary course of a trade or business. The Company intends to conduct its operations so that no asset that it owns (or is treated as owning) will be treated as, or as having been, held for sale to customers, and that a sale of any such asset will not be treated as having been in the ordinary course of the Company’s business. Whether property is held “primarily for sale to customers in the ordinary course of a trade or business” depends on the particular facts and circumstances. No assurance can be given that any property that the Company sells will not be treated as property held for sale to customers, or that the Company can comply with certain safe-harbor provisions of the Code that would prevent such treatment. The 100% tax does not apply to gains from the sale of property that is held through a TRS or other taxable corporation, although such income will potentially be subject to tax in the hands of such corporation at regular corporate rates.

Foreclosure Property

Foreclosure property is real property and any personal property incident to such real property (i) that the Company acquires as the result of having bid on the property at foreclosure, or having otherwise reduced the property to ownership or possession by agreement or process of law, after a default (or upon imminent default) on a lease of the property or a mortgage loan held by the Company and secured by the property, (ii) for which the Company acquired the related loan or lease at a time when default was not imminent or anticipated and (iii) with respect to which it made a proper election to treat the property as foreclosure property. The Company generally will be subject to tax at the maximum corporate rate (currently 35%) on any net income from foreclosure property, including any gain from the disposition of the foreclosure property, other than income that would otherwise be qualifying income for purposes of the 75% Income Test. Any gain from the sale of property for which a foreclosure property election has been made will not be subject to the 100% tax on gains from prohibited transactions described above, even if the property would otherwise constitute inventory or dealer property. To the extent that the Company receives any income from foreclosure property that does not qualify for purposes of the 75% Income Test, it intends to make an election to treat the related property as foreclosure property.

Derivatives and Hedging Transactions

The Company and its subsidiaries may enter into hedging transactions with respect to interest rate exposure on one or more assets or liabilities. Any such hedging transactions could take a variety of forms, including the use of derivative instruments such as interest rate swap contracts, interest rate cap or floor contracts, futures or forward contracts, and options. To the extent that the Company or a pass-through subsidiary enters into a hedging

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transaction to reduce interest rate risk on indebtedness incurred to acquire or carry real estate assets or risks associated with certain currency fluctuations and the instrument is properly identified as a hedge along with the risk it hedges within prescribed time periods, any periodic income from the instrument, or gain from the disposition of such instrument, would not be treated as gross income for purposes of the REIT 75% and 95% gross income tests. To the extent that the Company hedges in certain other situations, the resultant income may be treated as income that does not qualify under the 75% or 95% gross income tests. The Company intends to structure any hedging transactions in a manner that does not jeopardize its status as a REIT. The Company may conduct some or all of its hedging activities through a TRS or other corporate entity, the income from which may be subject to federal income tax, rather than by participating in the arrangements directly or through pass-through subsidiaries. No assurance can be given, however, that the Company’s hedging activities will not give rise to income that does not qualify for purposes of the REIT gross income tests, or that the Company’s hedging activities will not adversely affect its ability to satisfy the REIT qualification requirements.

Investments in Taxable REIT Subsidiaries

The Company and each subsidiary that will qualify as a TRS will make a joint election for the TRS to be treated as a taxable REIT subsidiary of the Company. A domestic TRS (or a foreign TRS with income from a United States business) pays federal state and local income taxes at the full applicable corporate rates on its taxable income prior to payment of any dividends. A TRS operating outside of the United States may pay foreign taxes. The taxes owed by the Company’s TRSs could be substantial. To the extent that the Company’s TRSs are required to pay federal, state, local or foreign taxes, the cash available for distribution by the Company will be reduced accordingly.

A TRS is permitted to engage in certain kinds of activities that cannot be performed directly by the Company without jeopardizing the Company’s REIT status. However, several provisions regarding the arrangements between a REIT and its TRS ensure that a TRS will be subject to an appropriate level of federal income taxation. For example, the Code limits the ability of the Company’s TRS to deduct interest payments in excess of a certain amount made to the Company. In addition, the Company must pay a 100% tax on some payments that it receives from, or on certain expenses deducted by, the TRS if the economic arrangements between the Company, its tenants and the TRS are not comparable to similar arrangements among unrelated parties. In particular, this 100% tax would apply to the Company’s share of any rent paid by a TRS lessee that was determined to be in excess of a market rate rent. Under the PATH Act, the 100% tax will also apply to “redetermined services income,” i.e. non-arm’s-length income of a REIT’s TRS attributable to services provided to, or on behalf of, the REIT (other than services provided to REIT tenants, which are potentially taxed as redetermined rents). The Company intends that all transactions between it and its TRS lessees will be conducted on an arm’s length basis and, therefore, that the rent paid by the Company’s TRS lessees to the Company will not be subject to the excise tax.

Taxation of Taxable United States Stockholders

Definition

In this section, the phrase “United States stockholder” means a holder of the Company’s common stock that for federal income tax purposes is:

• a citizen or resident of the United States;

• a corporation or other entity treated as a corporation for United States federal income tax purposes created or organized in or under the laws of the United States or of any political subdivision thereof;

• an estate, the income of which is subject to United States federal income taxation regardless of its source; or

• a trust, if a United States court is able to exercise primary supervision over the administration of the trust and one or more United States persons have the authority to control all substantial decisions of the trust.

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If a partnership, including for this purpose any entity that is treated as a partnership for United States federal income tax purposes, holds the Company’s common stock, the tax treatment of a partner in the partnership will generally depend upon the status of the partner and the activities of the partnership. An investor that is a partnership and the partners in such partnership should consult their tax advisors about the United States federal income tax consequences of the acquisition, ownership and disposition of the Company’s common stock.

For any taxable year for which the Company qualifies for taxation as a REIT, amounts distributed to, and gains realized by, taxable United States stockholders with respect to the Company’s common stock generally will be taxed as described below.

Distributions Generally

Distributions to United States stockholders, other than capital gain distributions discussed below, will constitute distributions up to the amount of the Company’s current or accumulated earnings and profits and will be taxable to the stockholders as dividends. These distributions are not eligible for the dividends received deduction generally available to corporations. In addition, with limited exceptions, these distributions are not eligible for taxation at the preferential income tax rates for qualified distributions received by individuals, trusts or estates from taxable C corporations. Stockholders that are individuals, trusts or estates, however, are taxed at the preferential rates on distributions designated by and received from the Company to the extent that the distributions are attributable to (i) income retained by the Company in the prior taxable year on which the Company was subject to corporate level income tax (less the amount of tax), (ii) distributions received by the Company from taxable C corporations, or (iii) income in the prior taxable year from the sales of “built-in gain” property acquired by the Company from C corporations in carryover basis transactions (less the amount of corporate tax on such income).

For purposes of determining the portion of distributions on separate classes of securities that will be treated as dividends for United States federal income tax purposes, current and accumulated earnings and profits will be allocated to distributions resulting from priority rights of preferred stock before being allocated to other distributions.

To the extent that the Company makes a distribution in excess of its current and accumulated earnings and profits, the distribution will be treated first as a tax-free return of capital, reducing the tax basis in the United States stockholder’s shares of common stock, and the amount of each distribution in excess of a United States stockholder’s tax basis in its shares of common stock will be taxable as gain realized from the sale of its shares of common stock. Distributions that the Company declares in October, November or December of any year payable to a stockholder of record on a specified date in any of these months will be treated as both paid by the Company and received by the stockholder on December 31 of the year, provided that the Company actually pays the distribution during January of the following calendar year. United States stockholders may not include any of the Company’s losses on their own federal income tax returns.

The Company will be treated as having sufficient earnings and profits to treat as a dividend any distribution by the Company up to the amount required to be distributed to avoid imposition of the 4% excise tax discussed above. Moreover, any “deficiency distribution” will be treated as an ordinary or capital gain distribution, as the case may be, regardless of the Company’s earnings and profits. As a result, stockholders may be required to treat as taxable some distributions that would otherwise result in a tax-free return of capital.

To the extent that the Company has available net operating losses and capital losses carried forward from prior tax years, such losses may reduce the amount of distributions that it must make in order to comply with the REIT distribution requirements. Such losses, however, are not passed through to stockholders and do not offset income of stockholders from other sources, nor would such losses affect the character of any distributions that the Company makes, which are generally subject to tax in the hands of stockholders to the extent that it has current or accumulated earnings and profits.

Capital Gain Distributions

Distributions to United States stockholders that the Company properly designates as capital gain distributions normally will be treated as long-term capital gains to the extent they do not exceed the Company’s actual net capital gain for the taxable year without regard to the period for which the United States stockholder has

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held his shares of common stock. A corporate United States stockholder might be required to treat up to 20% of some capital gain distributions as ordinary income. Long-term capital gains are generally taxable at maximum federal rates of 20% in the case of stockholders who are individuals and 35% in the case of stockholders that are corporations. Capital gains attributable to the sale of depreciable real property held for more than 12 months are subject to a 25% maximum federal income tax rate for taxpayers who are individuals, to the extent of previously claimed depreciation deductions.

Certain Dispositions of the Company’s Common Stock

In general, capital gains recognized by individuals upon the sale or disposition of shares of common stock will be subject to a maximum federal income tax rate of 20% if such shares of common stock are held for more than 12 months and will be taxed at ordinary income rates (of up to 39.6%) if such shares of common stock are held for 12 months or less. Gains recognized by stockholders that are corporations are subject to federal income tax at a maximum rate of 35%, whether or not classified as long-term capital gains. Capital losses recognized by a stockholder upon the disposition of a share of the Company’s common stock held for more than one year at the time of disposition will be considered long-term capital losses and are generally available only to offset capital gain income of the stockholder but not ordinary income (except in the case of individuals, who may offset up to $3,000 of ordinary income each year with such capital losses). In addition, any loss upon a sale or exchange of shares of common stock by a stockholder who has held such shares of common stock for 6 months or less, after applying holding period rules, will be treated as a long-term capital loss to the extent of distributions received from the Company that are required to be treated by the stockholder as long-term capital gain.

Information Reporting Requirements and Backup Withholding for United States Stockholders

The Company will report to United States stockholders of the Company’s common stock and to the IRS the amount of distributions made or deemed made during each calendar year and the amount of tax withheld, if any. Under some circumstances, United States stockholders may be subject to backup withholding on payments made with respect to, or cash proceeds of a sale or exchange of, the Company’s common stock. Backup withholding will apply only if the stockholder:

• fails to furnish its taxpayer identification number (which, for an individual, would be his Social Security number);

• furnishes an incorrect taxpayer identification number;

• is notified by the IRS that the stockholder has failed properly to report payments of interest or distributions and is subject to backup withholding; or

• under some circumstances, fails to certify, under penalties of perjury, that it has furnished a correct taxpayer identification number and has not been notified by the IRS that the stockholder is subject to backup withholding for failure to report interest and distribution payments or has been notified by the IRS that the stockholder is no longer subject to backup withholding for failure to report those payments.

Backup withholding will not apply with respect to payments made to some stockholders, such as corporations in certain circumstances and tax-exempt organizations. Backup withholding is not an additional tax. Rather, the amount of any backup withholding with respect to a payment to a United States stockholder will be allowed as a credit against the United States stockholder’s United States federal income tax liability and may entitle the United States stockholder to a refund, provided that the required information is furnished to the IRS. United States stockholders should consult their tax advisors regarding their qualification for exemption from backup withholding and the procedure for obtaining an exemption.

Special Tax Considerations for Non-United States Stockholders

The rules governing United States federal income taxation of non-resident alien individuals, foreign corporations, foreign partnerships and other foreign stockholders, which the Company refers to collectively as “Non-United States holders,” are complex. The following discussion is intended only as a summary of these rules.

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Non-United States holders should consult with their own tax advisors to determine the impact of United States federal, state and local income tax laws, including but not limited to the PATH Act, on an investment in the Company’s common stock, including any reporting requirements as well as the tax treatment of the investment under the tax laws of their home country.

Ordinary Distributions

The portion of distributions received by Non-United States holders payable out of the Company’s earnings and profits that are not attributable to the Company’s capital gains and that are not effectively connected with a United States trade or business of the Non-United States holder will be subject to United States withholding tax at the rate of 30%, unless reduced by treaty. In general, Non-United States holders will not be considered to be engaged in a United States trade or business solely as a result of their ownership of the Company’s common stock. In cases where the distribution income from a Non-United States holder’s investment in the Company’s common stock is, or is treated as, effectively connected with the Non-United States holder’s conduct of a United States trade or business, the Non-United States holder generally will be subject to United States tax at graduated rates, in the same manner as domestic stockholders are taxed with respect to such distributions, such income must generally be reported on a United States income tax return filed by or on behalf of the Non-United States holder and the income may also be subject to the 30% branch profits tax in the case of a Non-United States holder that is a corporation.

For any year in which the Company qualifies as a REIT, a non-United States stockholder may incur tax on distributions that are attributable to gain from the Company’s sale or exchange of a United States real property interest, which the Company refers to as a “USRPI,”, under the Foreign Investment in Real Property Tax Act of 1980, or FIRPTA. A USRPI includes certain interests in real property and stock in corporations at least 50% of whose assets consist of interests in real property. Under FIRPTA, a non-United States stockholder is taxed on distributions attributable to gain from sales of USRPIs as if such gain were effectively connected with a United States business of the non-United States stockholder. A non-United States stockholder thus would be taxed on such a distribution at the normal capital gains rates applicable to United States stockholders, subject to applicable alternative minimum tax and a special alternative minimum tax in the case of a nonresident alien individual. A non-United States corporate stockholder not entitled to treaty relief or exemption also may be subject to the 30% branch profits tax on such a distribution. Subject to the discussion below regarding distributions to “qualified shareholders” and “qualified foreign pension funds,” capital gain distributions that are attributable to the Company’s sale of USRPIs will be subject to tax under FIRPTA, as described above. In such case, we must withhold 35% of any distribution that we could designate as a capital gain dividend. A non-U.S. stockholder may receive a credit against its tax liability for the amount we withhold. Moreover, if a non-U.S. stockholder disposes of the Company’s stock during the 30-day period preceding a dividend payment, and such non-U.S. stockholder (or a person related to such non-U.S. stockholder) acquires or enters into a contract or option to acquire the Company’s common stock within 61 days of the first day of the 30-day period described above, and any portion of such dividend payment would, but for the disposition, be treated as a USRPI capital gain to such non-U.S. stockholder, then such non-U.S. stockholder will be treated as having USRPI capital gain in an amount that, but for the disposition, would have been treated as USRPI capital gain.

A U.S. withholding tax at a 30% rate applies to dividends paid to certain non-U.S. stockholders if certain disclosure requirements related to U.S. accounts or ownership are not satisfied. If payment of withholding taxes is required, non-U.S. stockholders that are otherwise eligible for an exemption from, or reduction of, U.S. withholding taxes with respect of such dividends will be required to seek a refund from the IRS to obtain the benefit or such exemption or reduction. We will not pay any additional amounts in respect of any amounts withheld.

Qualified Shareholders. Subject to the exception discussed below, any distribution by us attributable to gain from the sale or exchange of a USRPI to a "qualified shareholder" who holds our stock directly or indirectly (through one or more partnerships) will not be subject to U.S. tax as income effectively connected with a U.S. trade or business under FIRPTA and thus will not be subject to special withholding rules under FIRPTA. In addition, a sale of our stock by a "qualified shareholder" who holds such stock directly or indirectly (through one or more partnerships) will not be subject to U.S. federal income taxation under FIRPTA even if our stock were otherwise treated as a USRPI. However, if our stock were treated as a USRPI and a non-U.S. person who holds an interest in the "qualified shareholder" (other than interests solely as a creditor) also holds more than 10% of our stock (whether or not by reason of the investor's ownership in the "qualified shareholder"), then such non-U.S. person's pro rata

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share of our stock held by the qualified shareholder will generally be treated as a USRPI and therefore may be subject to FIRPTA withholding and taxation.

Qualified Foreign Pension Funds. Any distribution by us attributable to gain from the sale or exchange of a USRPI to a "qualified foreign pension fund" (or an entity all of the interests of which are held by a "qualified foreign pension fund") who holds our stock directly or indirectly (through one or more partnerships) will not be subject to U.S. tax as income effectively connected with a U.S. trade or business under FIRPTA and thus will not be subject to special withholding rules under FIRPTA. In addition, a sale of our stock by a "qualified foreign pension fund" that holds such stock directly or indirectly (through one or more partnerships) will not be subject to U.S. federal income taxation under FIRPTA even if our stock otherwise constitutes a USRPI.

Non-Dividend Distributions

Unless the Company’s common stock constitutes a USRPI, distributions by the Company that are not distributions out of the Company’s earnings and profits will generally not be subject to United States income tax. If it cannot be determined at the time at which a distribution is made whether the distribution will exceed current and accumulated earnings and profits, the distribution will be subject to withholding at the rate applicable to distributions. However, the Non-United States holder may seek a refund from the IRS of any amounts withheld if it is subsequently determined that the distribution was, in fact, in excess of the Company’s current and accumulated earnings and profits. If the Company’s common stock constitutes a USRPI, as described below, distributions by the Company in excess of the sum of the Company’s earnings and profits plus the stockholder’s basis in shares of the Company’s common stock will be taxed under the FIRPTA, at the rate of tax, including any applicable capital gains rates, that would apply to a domestic stockholder of the same type (e.g., an individual or a corporation, as the case may be), and the collection of the tax will be enforced by a refundable withholding at a rate of 15% of the amount by which the distribution exceeds the stockholder’s share of the Company’s earnings and profits.

Dispositions of the Company’s Non-Voting Common Stock

Unless the Company’s common stock constitutes a USRPI, distributions by the Company that are not distributions out of the Company’s earnings and profits will generally not be subject to United States income tax. If it cannot be determined at the time at which a distribution is made whether the distribution will exceed current and accumulated earnings and profits, the distribution will be subject to withholding at the rate applicable to distributions. However, the Non-United States holder may seek a refund from the IRS of any amounts withheld if it is subsequently determined that the distribution was, in fact, in excess of the Company’s current and accumulated earnings and profits. If the Company’s common stock constitutes a USRPI, as described below, distributions by the Company in excess of the sum of the Company’s earnings and profits plus the stockholder’s basis in shares of the Company’s common stock will be taxed under FIRPTA, at the rate of tax, including any applicable capital gains rates, that would apply to a domestic stockholder of the same type (e.g., an individual or a corporation, as the case may be), and the collection of the tax will be enforced by a refundable withholding at a rate of 15% of the amount by which the distribution exceeds the stockholder’s share of the Company’s earnings and profits.

Dispositions of the Company’s Non-Voting Common Stock

Non-United States stockholders could incur tax under FIRPTA with respect to gain realized upon a disposition of the Company’s common stock (including gain realized on a redemption treated as a sale or exchange) if the Company is a United States real property holding corporation during a specified testing period, subject to the discussion below regarding distributions to “qualified shareholders” and “qualified foreign pension funds.” If at least 50% of a REIT’s assets are USRPIs during the testing period, then the REIT will be a United States real property holding corporation. The Company believes that it will be a United States real property holding corporation based on its investment strategy. However, even if the Company is a United States real property holding corporation, a non-United States stockholder generally would not incur tax under FIRPTA on gain from the sale of the Company’s common stock if the Company is a “domestically controlled qualified investment entity.” However, even if the Company is a domestically controlled qualified investment entity, upon disposition of its stock, a non-United States stockholder may be treated as having gain from the sale or exchange of a USRPI if the non-United States holder (i) disposes of the Company’s common stock within a 30-day period preceding the ex-dividend date of a distribution, any portion of which distribution would, but for the disposition, have been treated as gain from the sale or exchange

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of a USRPI and (ii) acquires, or enters into a contract or option to acquire, other shares of the Company’s common stock within 30 days after such ex-dividend date.

A “domestically controlled qualified investment entity” includes a REIT in which, at all times during a specified testing period, less than 50% in value of its shares are held directly or indirectly by non-United States stockholders. We cannot assure you that this test will be met.

If the applicable class of the Company’s stock is regularly traded on an established securities market, an additional exception to the tax under FIRPTA will be available with respect to such stock, even if the Company does not qualify as a domestically controlled qualified investment entity at the time the non-United States stockholder sells such stock. Under that exception, the gain from such a sale by such a non-United States stockholder will not be subject to tax under FIRPTA if (i) the applicable class of our stock is treated as being regularly traded under applicable Treasury Regulations on an established securities market and (ii) the non-United States stockholder owned, actually or constructively, 10% or less of that class of stock at all times during a specified testing period. The Company believes that its common stock to be issued in the Offering will not be regularly traded on an established securities market.

On or after December 18, 2015, a sale of the Company’s common stock by:

• a “qualified shareholder” or

• a “qualified foreign pension fund”

that holds such stock directly or indirectly (through one or more partnerships) will not be subject to U.S. federal income taxation under FIRPTA. While a “qualified shareholder” will not be subject to FIRPTA withholding upon sale of our shares, certain investors of a “qualified shareholder” (i.e., non-United States persons who hold interests in the “qualified shareholder” (other than interests solely as a creditor), and hold, directly or indirectly, more than 10% of the Company’s stock (whether or not by reason of the investor’s ownership in the “qualified shareholder”)) may be subject to FIRPTA withholding.

If the gain on the sale of shares of the Company’s common stock were taxed under FIRPTA, a non-United States stockholder would be taxed on that gain in the same manner as U.S. stockholders, subject to applicable alternative minimum tax and a special alternative minimum tax in the case of nonresident alien individuals. If the Company is not a domestically controlled qualified investment entity at the time its common stock is sold and the non-United States stockholder does not qualify for the exemptions described in the preceding paragraph, under FIRPTA the purchaser of shares of common stock also may be required to withhold 15% of the purchase price and remit this amount to the IRS on behalf of the selling non-United States stockholder.

Gain from the sale of the Company’s stock that would not otherwise be subject to FIRPTA will nonetheless be taxable in the United States to a non-United States holder in 2 cases: (i) if the non-United States holder’s investment in the Company’s stock is effectively connected with a United States trade or business conducted by such non-United States holder, the non-United States holder will be subject to the same treatment as a United States stockholder with respect to such gain, or (ii) if the non-United States holder is a nonresident alien individual who was present in the United States for 183 days or more during the taxable year and certain other conditions are satisfied, the nonresident alien individual will be subject to a 30% tax on the individual’s capital gain.

A U.S. withholding tax at a 30% rate will be imposed on proceeds from the sale of the Company’s common stock received after December 31, 2018 by certain non-United States stockholders if certain disclosure requirements related to U.S. accounts or ownership are not satisfied. If payment of withholding taxes is required, non-United States stockholders that are otherwise eligible for an exemption from, or reduction of, U.S. withholding taxes with respect of such proceeds will be required to seek a refund from the IRS to obtain the benefit or such exemption or reduction. The Company will not pay any additional amounts in respect of any amounts withheld.

Information Reporting Requirements and Backup Withholding for Non-United States Stockholders

Non-United States stockholders should consult their tax advisors with regard to United States information reporting and backup withholding requirements under the Code.

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Treatment of Tax-Exempt Stockholders

Tax-exempt entities, including employee pension benefit trusts and IRAs, generally are exempt from United States federal income taxation. These entities are subject to taxation, however, on any “unrelated business taxable income,” which the Company refers to as “UBTI,” as defined in the Code. The IRS has issued a published ruling that distributions from a REIT to a tax-exempt pension trust did not constitute UBTI. Although rulings are merely interpretations of law by the IRS and may be revoked or modified, based on this analysis, indebtedness incurred by the Company or by the Operating Partnership in connection with the acquisition of a property should not cause any income derived from the property to be treated as UBTI upon the distribution of those amounts as distributions to a tax-exempt United States stockholder of the Company’s common stock. A tax-exempt entity that incurs indebtedness to finance its purchase of the Company’s common stock, however, will be subject to UBTI under the debt-financed income rules.

However, social clubs, voluntary employee benefit associations, supplemental unemployment benefit trusts and qualified group legal services plans that are exempt from taxation under specified provisions of the Code are subject to different UBTI rules, which generally will require them to treat distributions from the Company as UBTI unless the organization properly sets aside or reserves such amounts for purposes specified in the Code. These organizations are urged to consult their own tax advisor with respect to the treatment of the Company’s distributions to them.

In addition, tax-exempt pension and specified other tax-exempt trusts that hold more than 10% by value of the shares of a REIT may be required to treat a specified percentage of REIT distributions as UBTI. This requirement applies only if the Company’s qualification as a REIT depends upon the application of a look-through exception to the closely-held restriction and the Company is considered to be predominantly held by those tax-exempt trusts. It is not anticipated that the Company’s qualification as a REIT will depend upon application of the look-through exception or that it will be predominantly held by these types of trusts; however, the Company does not guarantee that this will be the case in the future.

Backup Withholding and Information Reporting

The Company will report to its domestic stockholders and the IRS the amount of dividends paid during each calendar year and the amount of any tax withheld. Under the backup withholding rules, a domestic stockholder may be subject to backup withholding with respect to dividends paid unless the holder is a corporation or comes within other exempt categories and, when required, demonstrates this fact or provides a taxpayer identification number or social security number, certifies as to no loss of exemption from backup withholding and otherwise complies with applicable requirements of the backup withholding rules. A domestic stockholder that does not provide his or her correct taxpayer identification number or social security number may also be subject to penalties imposed by the IRS. Backup withholding is not an additional tax. In addition, the Company may be required to withhold a portion of a capital gain distribution to any domestic stockholder who fails to certify its non-foreign status.

The Company must report annually to the IRS and to each non-United States stockholder the amount of dividends paid to such holder and the tax withheld with respect to such dividends, regardless of whether withholding was required. Copies of the information returns reporting such dividends and withholding may also be made available to the tax authorities in the country in which the non-United States stockholder resides under the provisions of an applicable income tax treaty. A non-United States stockholder may be subject to backup withholding unless applicable certification requirements are met.

Payment of the proceeds of a sale of the Company’s common stock within the United States is subject to both backup withholding and information reporting unless the beneficial owner certifies under penalties of perjury that it is a non-United States stockholder (and the payor does not have actual knowledge or reason to know that the beneficial owner is a United States person) or the holder otherwise establishes an exemption. Payment of the proceeds of a sale of the Company’s common stock conducted through certain United States related financial intermediaries is subject to information reporting (but not backup withholding) unless the financial intermediary has documentary evidence in its records that the beneficial owner is a non-United States stockholder and specified conditions are met or an exemption is otherwise established. Any amounts withheld under the backup withholding

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rules may be allowed as a refund or a credit against such holder’s United States federal income tax liability provided the required information is furnished to the IRS.

Statement of Share Ownership

The Company is required to demand annual written statements from the record holders of designated percentages of the Company’s common stock disclosing the actual owners of the shares of common stock. Any record stockholder who, upon the Company’s request, does not provide the Company with required information concerning actual ownership of the shares of common stock is required to include specified information relating to his shares of common stock in his federal income tax return. The Company also must maintain, within the Internal Revenue District in which it is required to file its federal income tax return, permanent records showing the information the Company has received about the actual ownership of the Company’s common stock and a list of those persons failing or refusing to comply with the Company’s demand.

Federal Income Tax Aspects of the Operating Partnership

The following discussion summarizes certain federal income tax considerations applicable to the Company’s investment in the Operating Partnership. The discussion does not cover state or local tax laws or any federal tax laws other than income tax laws. DLA has delivered an opinion to the Company in connection with the Offering that the Operating Partnership may be treated as a partnership for federal income tax purposes. See “Exhibit C – Legal Opinion of DLA Piper LLP (US).”

Classification as a Partnership

The Company will be entitled to include in its income a distributive share of the Operating Partnership’s income and to deduct the Company’s distributive share of the Operating Partnership’s losses only if the Operating Partnership is classified for federal income tax purposes as a partnership, rather than as a corporation or an association taxable as a corporation. Under applicable Treasury Regulations, referred to as the “Check-the-Box-Regulations,” an unincorporated domestic entity with at least 2 members may elect to be classified either as an association taxable as a corporation or as a partnership. If the entity fails to make an election, it generally will be treated as a partnership for federal income tax purposes. The Operating Partnership intends to be classified as a partnership for federal income tax purposes and will not elect to be treated as an association taxable as a corporation under the Check-the-Box-Regulations.

Even though the Operating Partnership will not elect to be treated as an association for federal income tax purposes, it may be taxed as a corporation if it is deemed to be a “publicly traded partnership.” A publicly traded partnership is a partnership whose interests are traded on an established securities market or are readily tradable on a secondary market or the substantial equivalent thereof. Under applicable Treasury Regulations, which the Company refers to as the “PTP Regulations,” limited safe harbors from the definition of a publicly traded partnership are provided. Pursuant to one of those safe harbors, which the Company refers to as the “Private Placement Exclusion,” interests in a partnership will not be treated as readily tradable on a secondary market or the substantial equivalent thereof if (i) the Operating Partnership attempts to comply with one of the safe harbors in the Treasury Regulations by limiting the transfer of units per year to transfers of not more than 2% of the total units other than transfers for the following: (a) transfer as a result of death or incompetency, (b) transfer between family members, (c) transfer pursuant to any qualifying repurchase plan (which may permit repurchases of up to 10% of the units per year other than private transfers under Treasury Regulations § 1.7704-1(e)), (d) other transfers that qualify as “private transfers” as set forth in Treasury Regulations § 1.7704-1(e), or (e) other transfers that will not result in the Operating Partnership being treated as a publicly traded partnership as set forth in the Treasury Regulations and (ii) the Operating Partnership Agreement provides that any transfer of units will not be effective unless and until the Company, as General Partner, determines that such transfer will not cause the Operating Partnership to be considered a publicly traded partnership. The Company and the Operating Partnership believe and currently intend to take the position that the Operating Partnership should not be classified as a publicly traded partnership because (1) partnership units are not traded on an established securities market and (2) partnership units should not be considered readily tradable on a secondary market or the substantial equivalent thereof.

Even if the Operating Partnership were considered a publicly traded partnership under the PTP Regulations, the Operating Partnership should not be treated as a corporation for federal income tax purposes as long as 90% or

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more of its gross income consists of “qualifying income” under Code Section 7704(d). In general, qualifying income includes interest, distributions, real property rents (as defined by Code Section 856) and gain from the sale or disposition of real property. If the Operating Partnership were characterized as a publicly traded partnership even if it were not taxable as a corporation because of the qualifying income exception, holders of partnership units would be subject to special rules under Code Section 469. Under such rules, each holder of partnership units would be required to treat any loss derived from the Operating Partnership separately from any income or loss derived from any other publicly traded partnership, as well as from income or loss derived from other passive activities. In such case, any net losses or credits attributable to the Operating Partnership that are carried forward may only be offset against future income of the Operating Partnership. Moreover, unlike other passive activity losses, suspended losses attributable to the Operating Partnership would only be allowed upon the complete disposition of the partnership unit holder’s “entire interest” in the Operating Partnership.

The Company has not requested, and does not intend to request, a ruling from the IRS that the Operating Partnership will be classified as a partnership for federal income tax purposes.

If for any reason the Operating Partnership were taxable as a corporation, rather than a partnership, for federal income tax purposes, the Company would not be able to qualify as a REIT, unless the Company is eligible for relief from the violation pursuant to relief provisions described above. In addition, any change in the Operating Partnership’s status for tax purposes might be treated as a taxable event, in which case the Company might incur a tax liability without any related cash distribution. Further, items of income and deduction of the Operating Partnership would not pass through to its partners, and its partners would be treated as stockholders for tax purposes. The Operating Partnership would be required to pay income tax at corporate tax rates on its net income, and distributions to its partners would constitute distributions that would not be deductible in computing the Operating Partnership’s taxable income.

Income Taxation of the Operating Partnership and its Partners

Partners, Not Operating Partnership, Subject to Tax. A partnership is not a taxable entity for federal income tax purposes. As a partner in the Operating Partnership, the Company will be required to take into account the Company’s allocable share of the Operating Partnership’s income, gains, losses, deductions and credits for any taxable year of the Operating Partnership ending within or with the Company’s taxable year, without regard to whether the Company has received or will receive any distributions from the Operating Partnership.

Operating Partnership Allocations. Although a partnership agreement generally determines the allocation of income and losses among partners, such allocations will be disregarded for tax purposes under section 704(b) of the Code if they do not comply with the provisions of Code Section 704(b) and the Treasury Regulations promulgated thereunder. If an allocation is not recognized for federal income tax purposes, the item subject to the allocation will be reallocated in accordance with the partner’s interests in the partnership, which will be determined by taking into account all of the facts and circumstances relating to the economic arrangement of the partners with respect to such item. The Operating Partnership’s allocations of taxable income and loss are intended to comply with the requirements of section 704(b) of the Code and the Treasury Regulations promulgated thereunder.

Tax Allocations With Respect to Contributed Properties. Pursuant to Code Section 704(c), income, gain, loss and deduction attributable to appreciated or depreciated property that is contributed to a partnership in exchange for an interest in the partnership must be allocated for federal income tax purposes in a manner such that the contributor is charged with, or benefits from, the unrealized gain or unrealized loss associated with the property at the time of the contribution. The amount of unrealized gain or unrealized loss is generally equal to the difference between the fair market value of the contributed property at the time of contribution and the adjusted tax basis of such property at the time of contribution. Under applicable Treasury Regulations, partnerships are required to use a “reasonable method” for allocating items subject to Code Section 704(c), and several reasonable allocation methods are described therein.

Under the Operating Partnership Agreement, subject to exceptions applicable to the special partnership interests, depreciation or amortization deductions of the Operating Partnership generally will be allocated among the partners in accordance with their respective interests in the Operating Partnership, except to the extent that the Operating Partnership is required under section 704(c) to use a different method for allocating depreciation

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deductions attributable to its properties. In addition, gain or loss on the sale of a property that has been contributed to the Operating Partnership will be specially allocated to the contributing partner to the extent of any built-in gain or loss with respect to the property for federal income tax purposes. It is possible that the Company may (i) be allocated lower amounts of depreciation deductions for tax purposes with respect to contributed properties than would be allocated to the Company if each such property were to have a tax basis equal to its fair market value at the time of contribution and (ii) be allocated taxable gain in the event of a sale of such contributed properties in excess of the economic profit allocated to the Company as a result of such sale. These allocations may cause the Company to recognize taxable income in excess of cash proceeds received by it, which might adversely affect its ability to comply with the REIT distribution requirements, although the Company does not anticipate that this event will occur. The foregoing principles also will affect the calculation of the Company’s earnings and profits for purposes of determining the portion of its distributions that are taxable as a dividend distribution. The allocations described in this paragraph may result in a higher portion of its distributions being taxed as a dividend distribution than would have occurred had it purchased such properties for cash.

Basis in Operating Partnership Interest. The adjusted tax basis of the Company’s partnership interest in the Operating Partnership generally will be equal to (i) the amount of cash and the basis of any other property contributed to the Operating Partnership by the Company, (ii) increased by (a) the Company’s allocable share of the Operating Partnership’s income and (b) the Company’s allocable share of indebtedness of the Operating Partnership (which may be less than typical because of allocations to property contributions and payment of distributions) and (iii) reduced, but not below zero, by (a) the Company’s allocable share of the Operating Partnership’s loss and (b) the amount of cash distributed to the Company, including constructive cash distributions resulting from a reduction in the Company’s share of indebtedness of the Operating Partnership. If the allocation of the Company’s distributive share of the Operating Partnership’s loss would reduce the adjusted tax basis of the Company’s partnership interest in the Operating Partnership below zero, the recognition of the loss will be deferred until such time as the recognition of the loss would not reduce the Company’s adjusted tax basis below zero. If a distribution from the Operating Partnership or a reduction in the Company’s share of the Operating Partnership’s liabilities would reduce the Company’s adjusted tax basis below zero, that distribution, including a constructive distribution, will constitute taxable income to the Company. The gain realized by the Company upon the receipt of any such distribution or constructive distribution would normally be characterized as capital gain, and if the Company’s partnership interest in the Operating Partnership has been held for longer than the long-term capital gain holding period (currently one year), the distribution would constitute long-term capital gain.

Depreciation Deductions Available to the Operating Partnership. The Operating Partnership will use a portion of contributions the Company makes from Offering Proceeds to acquire interests in properties and securities. To the extent that the Operating Partnership acquires properties or securities for cash, the Operating Partnership’s initial basis in such properties for federal income tax purposes generally will be equal to the purchase price paid by the Operating Partnership. To the extent that the Operating Partnership acquires properties in exchange for units of the Operating Partnership, the Operating Partnership’s initial basis in each such property for federal income tax purposes should be the same as the transferor’s basis in that property on the date of acquisition by the Operating Partnership.

Sale of the Operating Partnership’s Property. Generally, any gain realized by the Operating Partnership on the sale of property held for more than one year will be long-term capital gain, except for any portion of such gain that is treated as depreciation or cost recovery recapture. The Company’s share of any gain realized by the Operating Partnership on the sale of any property held by the Operating Partnership as inventory or other property held primarily for sale to customers in the ordinary course of the Operating Partnership’s trade or business will be treated as income from a prohibited transaction that is subject to a 100% tax. Whether property is held primarily for sale to customers in the ordinary course of a trade or business depends on the facts and circumstances surrounding each property. The Company intends to avoid the 100% prohibited transaction tax by (i) conducting activities that may otherwise be considered prohibited transactions through a taxable REIT subsidiary, (ii) conducting the Company’s operations in such a manner so that no sale or other disposition of an asset it owns, directly or through any subsidiary other than a taxable REIT subsidiary, will be treated as a prohibited transaction or (iii) structuring certain dispositions of its properties to comply with certain safe harbors available under the Code for properties held at least 2 years. Despite the Company’s present intention, no assurance can be given that any particular property it owns, directly or through any subsidiary entity, including the Operating Partnership, but excluding taxable REIT subsidiaries, will not be treated as property held primarily for sale to customers in the ordinary course of trade or business.

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Other Federal Tax Considerations

The rules dealing with United States federal income taxation are constantly under review. No assurance can be given as to whether, when, or in what form, the United States federal income tax laws applicable to the Company and the Company’s stockholders may be changed. Changes to the federal tax laws and interpretations of federal tax laws could adversely affect an investment in shares of the Company’s common stock.

Tax Rates. The maximum tax rate of non-corporate taxpayers for (i) capital gains, including “capital gain dividends” is generally 20% (although depending on the characteristics of the assets which produced these gains and on designations which Company may make, certain capital gain dividends may be taxed at a 25% rate if such gains are attributable to depreciation recapture on the sale of depreciable property by the Operating Partnership) and (ii) dividends is generally 39.6%. In general, dividends payable by REITs are not eligible for the reduced tax rate on dividends, except to the extent the REIT’s dividends are attributable to dividends received from taxable corporations (such as the Company’s taxable REIT subsidiaries), to income that was subject to tax at the corporate/REIT level (for example, if the Company distributes taxable income that it retained and paid tax on in the prior taxable year) or to dividends properly designated by the Company as “capital gain dividends.”

Foreign Accounts. Withholding taxes may apply to certain types of payments made to “foreign financial institutions” and certain other non-U.S. entities. Specifically, a 30% withholding tax will be imposed on dividends on, and gross proceeds from, the sale or other disposition of the Company’s stock paid to a foreign financial institution or to a foreign nonfinancial entity, unless (i) the foreign financial institution undertakes certain diligence and reporting obligations or (ii) the foreign non-financial entity either certifies it does not have any substantial U.S. owners or furnishes identifying information regarding each substantial U.S. owner. In addition, if the payee is a foreign financial institution, it generally must enter into an agreement with the U.S. Treasury that requires, among other things, that it undertake to identify accounts held by certain U.S. persons or U.S.-owned foreign entities, annually report certain information about such accounts, and withhold 30% on payments to certain other account holders. Withholding under the Foreign Account Tax Compliance Act, or FATCA, provisions of the Code will apply after December 31, 2018 with respect to the gross proceeds from a disposition of property that can produce United States source interest or dividends and began after June 30, 2014 with respect to the other withholdable payments (including dividends on the Company’s stock). Prospective investors should consult their tax advisors regarding this legislation.

Unearned Income Medicare Tax. Under the Health Care and Education Reconciliation Act of 2010, amending the Patient Protection and Affordable Care Act, high-income U.S. individuals, estates, and trusts are subject to an additional 3.8% tax on net investment income. For these purposes, net investment income includes dividends and gains from sales of stock. In the case of an individual, the tax is 3.8% of the lesser of the individuals' net investment income or the excess of the individuals' modified adjusted gross income over $250,000 in the case of a married individual filing a joint return or a surviving spouse, $125,000 in the case of a married individual filing a separate return, or $200,000 in the case of a single individual. U.S. stockholders that are individuals, estates or trusts should consult their tax advisors regarding the effect, if any, of this tax on their ownership and disposition of the common shares.

State and Local Tax Considerations

The Company and any operating subsidiaries it may form may be subject to state and local tax in states and localities in which the Company or they do business or own property. The Company’s tax treatment, the tax treatment of the Operating Partnership, any operating subsidiaries, joint ventures or other arrangements the Company or the Operating Partnership may form or enter into and the tax treatment of the holders of the Company’s common stock in local jurisdictions may differ from the federal income tax treatment described above. Consequently, prospective stockholders should consult their own tax advisors regarding the effect of state and local tax laws on their investment in the Company’s common stock.

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ERISA CONSIDERATIONS

The following is a summary of some considerations associated with an investment in the Company’s shares by a qualified employee pension benefit plan or an IRA. This summary is based on provisions of ERISA and the Code, each as amended through the date of this Memorandum, and the relevant regulations, opinions and other authority issued by the Department of Labor and the IRS. The Company cannot assure you that there will not be adverse tax or labor decisions or legislative, regulatory or administrative changes that would significantly modify the statements expressed herein. Any such changes may apply to transactions entered into prior to the date of their enactment.

Each fiduciary of an employee pension benefit plan subject to ERISA (such as a profit sharing, Section 401(k) or pension plan) or any other retirement plan or account subject to Code Section 4975, such as an IRA, seeking to invest plan assets in the Company’s shares must, taking into account the facts and circumstances of each such plan or IRA (“Benefit Plan”), consider, among other matters:

• whether the investment is consistent with the applicable provisions of ERISA and the Code;

• whether, under the facts and circumstances pertaining to the Benefit Plan in question, the fiduciary’s responsibility to the Benefit Plan has been satisfied;

• whether the investment will produce an unacceptable amount of UBTI to the Benefit Plan (see “Federal Income Tax Considerations – Treatment of Tax-Exempt Stockholders”); and

• the need to value the assets of the Benefit Plan annually.

Under ERISA, a plan fiduciary’s responsibilities include the following: (i) to act solely in the interest of plan participants and beneficiaries and for the exclusive purpose of providing benefits to them, as well as defraying reasonable expenses of plan administration; (ii) to invest plan assets prudently; (iii) to diversify the investments of the plan, unless it is clearly prudent not to do so; (iv) to ensure sufficient liquidity for the plan; (v) to ensure that plan investments are made in accordance with plan documents; and (vi) to consider whether an investment would constitute or give rise to a prohibited transaction under ERISA or the Code.

ERISA also requires that, with certain exceptions, the assets of an employee benefit plan are held in trust and that the trustee, or a duly authorized named fiduciary or investment manager, have exclusive authority and discretion to manage and control the assets of the plan.

Prohibited Transactions

Generally, both ERISA and the Code prohibit Benefit Plans from engaging in certain transactions involving plan assets with specified parties, such as sales or exchanges or leasing of property, loans or other extensions of credit, furnishing goods or services, or transfers to, or use of, plan assets. The specified parties are referred to as “parties-in-interest” under ERISA and as “disqualified persons” under the Code. These definitions generally include both parties owning threshold percentage interests in an investment entity and “persons providing services” to the Benefit Plan, as well as employer sponsors of the Benefit Plan, fiduciaries and other individuals or entities affiliated with the foregoing. For this purpose, a person generally is a fiduciary with respect to a Benefit Plan if, among other things, the person has discretionary authority or control with respect to plan assets or provides investment advice for a fee with respect to plan assets. Under Department of Labor regulations, a person will be deemed to be providing investment advice if that person renders advice as to the advisability of investing in the Company’s shares, and that person regularly provides investment advice to the Benefit Plan pursuant to a mutual agreement or understanding that such advice will serve as the primary basis for investment decisions, and that the advice will be individualized for the Benefit Plan based on its particular needs. Thus, if the Company is deemed to hold plan assets, its management could be characterized as fiduciaries with respect to such assets, and each would be deemed to be a party-in-interest under ERISA and a disqualified person under the Code with respect to investing Benefit Plans. Whether or not the Company is deemed to hold plan assets, if the Company or its Affiliates are affiliated with a Benefit Plan Investor, the Company might be a disqualified person or party-in-interest with respect to such Benefit Plan Investor, resulting in a prohibited transaction merely upon investment by such Benefit Plan in the Company’s shares.

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Plan Asset Considerations

In order to determine whether an investment in the Company’s shares by a Benefit Plan creates or gives rise to the potential for either prohibited transactions or a commingling of assets as referred to above, a fiduciary must consider whether an investment in the Company’s shares will cause the Company’s assets to be treated as assets of the investing Benefit Plan. Neither ERISA nor the Code defines the term “plan assets;” however, regulations promulgated by the Department of Labor (29 C.F.R. Section 2510.3-101) (“Plan Assets Regulations”) provide guidelines as to whether, and under what circumstances, the underlying assets of an entity will be deemed to constitute assets of a Benefit Plan when the plan invests in that entity. Under the Plan Assets Regulations, the assets of an entity in which a Benefit Plan makes an equity investment will generally be deemed to be assets of the Benefit Plan, unless one of the exceptions to this general rule applies.

In the event that the Company’s underlying assets were treated as the assets of investing Benefit Plans, the Company’s management would be treated as fiduciaries with respect to each Benefit Plan stockholder. Further, if the Company’s assets are deemed to be “plan assets,” an investment by an IRA in the Company’s shares might be deemed to result in an impermissible commingling of IRA assets with other property.

If the Company’s management or its Affiliates were treated as fiduciaries with respect to Benefit Plan stockholders, the prohibited transaction restrictions of ERISA and the Code would apply to any transaction involving the Company’s assets. These restrictions could, for example, require that the Company avoid transactions with persons that are affiliated with or related to the Company or its Affiliates or require that the Company restructure its activities in order to obtain an administrative exemption from the prohibited transaction restrictions. Alternatively, the Company might have to provide Benefit Plan stockholders with the opportunity to sell their shares to the Company, or the Company might dissolve.

If a prohibited transaction were to occur, the Code imposes an excise tax equal to 15% of the amount involved and authorizes the IRS to impose an additional 100% excise tax if the prohibited transaction is not “corrected” in a timely manner. These taxes would be imposed on any disqualified person who participates in the prohibited transaction. In addition, the Company’s Board, and possibly other fiduciaries of Benefit Plan stockholders subject to ERISA who permitted the prohibited transaction to occur or who otherwise breached their fiduciary responsibilities (or a non-fiduciary participating in a prohibited transaction), could be required to restore to the Benefit Plan any profits they realized as a result of the transaction or breach and make good to the Benefit Plan any losses incurred by the Benefit Plan as a result of the transaction or breach. With respect to an IRA that invests in the Company’s shares, the occurrence of a prohibited transaction involving the individual who established the IRA, or his or her beneficiary, would cause the IRA to lose its tax-exempt status under Section 408(e)(2) of the Code.

The Plan Assets Regulations provide that the underlying assets of an entity such as a REIT will be treated as assets of a Benefit Plan Investing therein unless the entity satisfies one of the exceptions to the general rule. The Company believes that it will satisfy one or more of the exceptions described below.

Exception for Insignificant Participation by Benefit Plan Investors. The Plan Assets Regulations provide that the assets of an entity will not be deemed to be the assets of a Benefit Plan if equity participation in the entity by employee benefit plans, including Benefit Plans, is not significant. The Plan Assets Regulations provide that equity participation in an entity by Benefit Plan Investors is “significant” if at any time 25% or more of the value of any class of equity interest is held by Benefit Plan Investors. The term “Benefit Plan Investor” is defined for this purpose under ERISA Section 3(42) and includes any employee benefit plan subject to Part 4 of Subtitle B of Title I of ERISA, any plan subject to Code Section 4975 (including IRAs), and any entity whose underlying assets include plan assets by reasons of a plan’s investment in such entity. In calculating the value of a class of equity interests, the value of any equity interests held by the Company or any of its Affiliates must be excluded. It is not clear whether the Company will qualify for this exception.

Exception for Operating Companies. The Plan Assets Regulations provide an exception with respect to securities issued by an operating company, which includes a “real estate operating company” or a “venture capital operating company.” Generally, the Company will be deemed to be a real estate operating company if during the relevant valuation periods at least 50% of its assets are invested in real estate that is managed or developed and with respect to which it has the right to substantially participate directly in management or development activities. To

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constitute a venture capital operating company, 50% or more of the Company’s assets must be invested in “venture capital investments” during the relevant valuation periods. A venture capital investment is an investment in an operating company, including a “real estate operating company,” as to which the investing entity has or obtains direct management rights. If an entity satisfies this 50% assets requirement on the date it first makes a long-term investment (the “initial valuation date”), it will be considered a real estate operating company or a venture capital operating company, as the case may be, for the entire period beginning on the initial valuation date and ending on the last day of the first annual valuation period, provided that it actually exercises its management rights during such entire period. An “annual valuation period” is a pre-established annual period of not more than 90 days, and the first annual valuation period must begin no later than the anniversary of the initial valuation date. For subsequent periods, the entity must satisfy the 50% of assets test at some time during each annual valuation period and must exercise its management rights during the following 12 months. The Company intends to qualify for the real estate operating company exception or the venture capital operating company exception; however, it has not obtained an opinion of counsel regarding such qualification.

Other Prohibited Transactions

Regardless of whether the shares qualify for an exception under the Plan Assets Regulations, a prohibited transaction could occur if the Company, any selected broker-dealer or any of their affiliates is a fiduciary (within the meaning of Section 3(21) of ERISA) with respect to any Benefit Plan purchasing the Company’s shares. Accordingly, unless an administrative or statutory exemption applies, shares should not be purchased by a Benefit Plan with respect to which any of the above persons is a fiduciary. A person is a fiduciary with respect to a Benefit Plan under Section 3(21) of ERISA if, among other things, the person has discretionary authority or control with respect to the Benefit Plan or “plan assets” or provides investment advice for a fee with respect to “plan assets.”

Annual Valuation

Typically, a fiduciary of an employee benefit plan subject to ERISA is required to determine annually the fair market value of each asset of the plan as of the end of the plan’s fiscal year and to file a report with the IRS reflecting such value. When no fair market value of a particular asset is available, the fiduciary is generally required to make a good faith determination of that asset’s “fair market value” assuming an orderly liquidation at the time the determination is made. In addition, a trustee or custodian of an IRA typically must provide the IRS with a statement of the value of the IRA each year. In discharging its obligation to value assets of a plan, a fiduciary subject to ERISA must act consistently with the relevant provisions of the plan and the general fiduciary standards of ERISA.

Unless and until the Company’s shares are listed on a national securities exchange, the Company does not expect that a public market for its shares will develop, and there may not be an independent basis to determine the fair market value of its shares. To date, neither the IRS nor the Department of Labor has promulgated regulations specifying how a plan fiduciary should determine the fair market value of shares when the fair market value of such shares is not determined in the marketplace.

Revised Definition of Fiduciary

In April 2016, the Department of Labor issued a final regulation that revises the definition of “fiduciary” under ERISA and the Code. Under the revised definition, an investment recommendation to an ERISA plan (including an IRA) may constitute conflicted fiduciary advice that, in the absence of an exemption, would constitute a prohibited transaction under ERISA or the Code. The effective date and implementation of the final regulation has been delayed. The application of the final regulation to the marketing of interests in investment funds like the Company is uncertain at this point, and prospective investors that are ERISA plans should consult with their own advisors regarding this development.

Conclusion

EACH PLAN FIDUCIARY SHOULD CONSULT ITS LEGAL ADVISOR AS TO THE PROPRIETY OF AN INVESTMENT IN THE COMPANY IN LIGHT OF THE CIRCUMSTANCES APPLICABLE TO THAT PLAN. ACCEPTANCE OF SUBSCRIPTIONS OF ANY BENEFIT PLAN IS IN NO RESPECT A REPRESENTATION THAT SUCH INVESTMENT MEETS THE RELEVANT LEGAL REQUIREMENTS WITH RESPECT TO THAT PLAN OR THAT THE INVESTMENT IS APPROPRIATE FOR SUCH PLAN.

85

REPORTS

The Company will keep proper and complete records and books of account for the Company. These books and records will be kept at the Company’s principal place of business and each stockholder (or a duly authorized representative) will at all times, during normal business hours, have the right to inspect, examine and copy from them.

Within 120 days after the end of each fiscal year of the Company, the Company will also have prepared and transmitted to the stockholders an annual report containing a year-end balance sheet, income statement and a statement of changes in financial position, all of which except the cash flow statement will be prepared in accordance with generally accepted accounting principles.

LITIGATION

As of the date of this Memorandum, there are no legal actions pending against the Company nor, to the knowledge of management, is any litigation threatened against any of them, any of their management, or any Affiliate, which may materially affect operations or projected goals.

ACCOUNTING MATTERS

Method of Accounting

The Company will maintain its books and records and report its income tax results according to a generally accepted method of accounting.

Fiscal Year

Unless changed by the Company as permitted under the Code, the fiscal year of the Company will be the calendar year.

Distributions

Distributions of the Company may be a return of capital and not investment income and the Company may show a net loss from operations.

LEGAL OPINION OF DLA PIPER LLP (US)

DLA Piper LLP (US) rendered an opinion in connection with the Offering with respect to certain tax issues as set forth in this Memorandum, which is included in Exhibit C attached hereto. Except as to matters stated therein, which are based upon the law in effect as of the date of the opinion and a certificate of certain facts provided by the Company to DLA in connection with rendering its opinion, the issuance of the opinion should not in any way be construed as implying that counsel has approved or passed upon any other matter for the Company. One or more attorneys from DLA may make an investment to acquire Shares pursuant to the terms of the Offering; provided, however, such investment in Shares should not be taken as a representation or opinion concerning the operation of the Company’s business, its future success or any other matter related to the investment by any stockholder in the Company.

ADDITIONAL INFORMATION

The Company will answer inquiries from subscribers concerning the Company and other matters relating to the offer and sale of the Shares, and the Company will afford subscribers the opportunity to obtain any additional information to the extent the Company possesses such information or can acquire such information without unreasonable effort or expense.

EXHIBIT A

INSTRUCTIONS TO INVESTORS AND SUBSCRIPTION AGREEMENT

1

TREYNET REALTY CAPITAL REIT, INC.

INSTRUCTIONS TO INVESTORS AND

SUBSCRIPTION AGREEMENT

Please read carefully the Amended and Restated Confidential Private Placement Memorandum of Common Stock (Non-Voting) in TreyNet Realty Capital REIT, Inc. (the “Company”) dated March 10, 2017, and all Exhibits and supplements thereto (the “Memorandum”) before deciding to subscribe.

You should examine the suitability of this type of investment in the context of your own needs, investment objectives and financial capabilities and should make your own independent investigation and decision as to suitability and as to the risk and potential gain involved. Also, you are encouraged to consult with your own attorney, accountant, financial consultant or other business or tax advisor regarding the risks and merits of the proposed investment.

This Offering is limited to investors who certify that they meet all of the qualifications set forth in the Memorandum. This Offering is being conducted in reliance on Rule 506(c) of Regulation D promulgated under the Securities Act of 1933, as amended, which permits certain general solicitation and requires that each investor provide information verifying their “accredited investors” status.

If you meet these qualifications and desire to purchase Shares, then please (a) complete, execute and deliver the Subscription Agreement to the Company, and (b) pay the full amount of the purchase price for the Shares to be purchased by either (i) wire transfer in immediately available funds to Branch Banking and Trust Company, as Escrow Bank, or as otherwise directed by the Company or (ii) sending a check made payable to “Branch Banking and Trust Company, as Escrow Bank for TreyNet Realty Capital REIT, Inc.” to the Company along with your completed Subscription Agreement, to the following address:

TreyNet Realty Capital REIT, Inc. 3600 N. Duke Street, Suite 109 Durham, North Carolina 27704

Upon receipt of the signed Subscription Agreement, verification of your investment qualifications, and acceptance of your subscription by the Company (which reserves the right to accept or reject a subscription for any reason whatsoever), the Company will execute the Subscription Agreement and notify you of the receipt and acceptance of your subscription. The Company may accept or reject any subscription in whole or in part for a period of 30 days after receipt of the Subscription Agreement, payment in full and any other subscription documents requested by the Company. Any subscription not accepted within 30 days of receipt will be deemed rejected.

Important Note: In all cases, the person or entity actually making the investment decision to purchase Shares should complete and sign the Subscription Agreement. For example, if the investor purchasing Shares is a retirement plan for which investments are directed or made by a third party trustee, then that third party trustee must complete the Subscription Agreement rather than the beneficiaries under the retirement plan. This also applies to trusts, custodial accounts and similar arrangements. You must list your principal place of residence rather than your office or other address on the signature page to the Subscription Agreement so that the Company can confirm compliance with appropriate securities laws. If you wish correspondence sent to an address other than your principal residence, please provide a mailing address where indicated in “Item C. - Investor Information” on the signature page to the Subscription Agreement.

2

TREYNET REALTY CAPITAL REIT, INC. SUBSCRIPTION AGREEMENT

This is the offer and agreement (the “Subscription Agreement”) of the undersigned to purchase ______________ shares of common stock, $0.01 par value per share (the “Shares”), to be issued by TreyNet Realty Capital REIT, Inc., a Maryland corporation (the “Company”), for a purchase price of $10.00 per Share (5,000 Shares or $50,000 minimum) for a total purchase price of $_________________ (the “Subscription Price”), subject to the terms, conditions, acknowledgments, covenants, representations and warranties stated herein and in the Memorandum. Simultaneously with the execution and delivery hereof, I am transmitting a wire transfer or a check payable to the order of “Branch Banking and Trust Company, as Escrow Bank for TreyNet Realty Capital REIT, Inc.” in the amount of the Subscription Price. All terms utilized herein shall have the meanings set forth in the Memorandum.

In order to induce the Company to accept this Subscription Agreement and as further consideration for such acceptance, I hereby make the following acknowledgments, representations and warranties with the full knowledge that the Company will expressly rely on the following acknowledgments, representations and warranties in making a decision to accept or reject this Subscription Agreement:

1. I hereby adopt, confirm and agree to all of the covenants, representations and warranties set forth in this Subscription Agreement, including all applicable attachments.

2. My primary state of residence is:

3. My date of birth is:

4. If a natural person, I hereby represent and warrant (check as appropriate):

______ (i) that I have an individual net worth, or joint net worth with my spouse, of more than $1,000,000 (exclusive of the value of my primary residence). “Net worth” means the excess of total assets at fair market value over the total liabilities, but excluding the value of your primary residence as well as the amount of indebtedness secured by your primary residence, up to its fair market value. Any amount in excess of the fair market value of your primary residence must be included as a liability. If the indebtedness on your primary residence was increased in the 60 days preceding the completion of this Subscription Agreement, the amount of the increase must be included as a liability; or

______ (ii) that I have individual income in excess of $200,000, or joint income with my spouse in excess of $300,000, in each of the two most recent years and I have a reasonable expectation of reaching the same income level in the current year.

5. If other than a natural person, such entity represents and warrants (check if appropriate):

That it is an “accredited investor” as defined in Regulation D promulgated under the Securities Act of 1933, as amended (the “Securities Act”).

An “Accredited Investor” who is not a natural person is: (i) a corporation, an organization described in section 501(c)(3) of the Internal Revenue Code (the “Code”), a Massachusetts or similar business trust, or a partnership, not formed for the specific purpose of acquiring Shares, with total assets in excess of $5,000,000; (ii) a trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring Shares and whose purchase is directed by a person who has such knowledge and experience in financial and business matters that he or she is capable of evaluating the merits and risks of an investment in Shares; (iii) a broker-dealer registered pursuant to section 15 of the Securities Exchange Act of 1934, as amended; (iv) an investment company registered under the Investment Company Act of 1940, as amended (the “Investment Company Act”); (v) a business development company (as defined in section 2(a)(48) of the Investment Company Act); (vi) a Small Business Investment Company licensed by the U.S. Small Business Administration under section 301(c) or (d) of the Small Business Investment Act of 1958; (vii) an employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974 (“ERISA”), if the investment decision is made by a plan fiduciary (as defined in section 3(21) of ERISA), which is either a bank, savings and loan association, insurance company, or registered investment adviser, or if the employee benefit plan has total assets in excess of $5,000,000 or, if a self-directed plan, with investment decisions made solely by persons who are Accredited Investors; (viii) a private business development company (as defined in section 202(a)(22) of the Investment Advisers Act of 1940, as amended (the “Investment Advisers Act”)); (ix) a bank as defined in section 3(a)(2) of the Securities Act, or any savings and loan association or other institution as defined in section 3(a)(5)(A) of the Securities Act whether acting in its individual or fiduciary capacity; or (x) an entity in which all of the equity owners are Accredited Investors. In addition, the SEC has issued certain no-action letters and interpretations in which it deemed certain trusts to be Accredited Investors, such as trusts where the trustee is a bank as defined in Section 3(a)(2) of the Securities Act and revocable grantor trusts established by individuals who meet the requirements of clauses (i) or (ii) of paragraph 4 above. However, these no-action letters and interpretations are very fact specific and should not be relied upon without close consideration of your unique facts.

6. I represent and warrant, in addition to the other representations and warranties contained herein, that I qualify under the following categories (check all applicable categories).

(a) By reason of my business or financial experience, I have the capacity to protect my own interests in connection with the purchase of the Shares.

(b) I have a preexisting personal or business relationship with the Company, or any of their officers or directors, of a nature and duration as would allow me to be aware of the character, business acumen, general business and financial circumstances of the Company or person with whom such relationship exists.

7. I certify that I have such knowledge and experience in financial and business matters that I am capable of evaluating the merits and risks of an investment in the Shares. The following is a description of my experience in financial and business matters:

8. I (we) wish to own my (our) Shares as follows (check one):

(a) Separate or individual property. (In community property states, if the purchaser is married, then his (her) spouse must sign and submit the Consent of Spouse form attached hereto as Attachment A.)

(b) Husband and wife as community property. (Community property states only. Husband and wife should sign all required documents.)

(c) Joint Tenants with right of survivorship. (Both parties must sign all required documents.)

(d) Tenants in common. (Both parties must sign all required documents.)

(e) Trust. (Include name of trust, name of trustee and date trust was formed.)

(f) Partnership. (Include evidence of partnership authority for person who executes required documents.)

(g) Limited Liability Company. (Include evidence of limited liability company authority for person who executes required documents.)

(h) Corporation. (Include evidence of corporate authority for person who executes required documents.)

(i) Other, including IRA, 401(k), profit sharing plan, etc. (indicate)

Subscriber’s Signature: X Date:

Subscriber’s Signature: X Date:

3

REPRESENTATIONS, WARRANTIES AND COVENANTS OF INVESTOR

1. I understand that in the event this Subscription Agreement is not accepted or, if accepted, the Company does not receive and accept Subscriptions for at least 200,000 Shares ($2,000,000) on or before the Minimum Offering Termination Date, then the funds transmitted herewith shall be returned to the undersigned and this Subscription Agreement shall be terminated and of no further effect.

2. I acknowledge that I have received, read and fully understand the Memorandum and all Exhibits, supplements and attachments thereto. I acknowledge that I am basing my decision to invest in the Shares on the Memorandum and all Exhibits and attachments thereto and I have relied only on the information contained in said materials and have not relied upon any representations made by any other person. I understand that an investment in the Shares is speculative and involves substantial risks and I am fully cognizant of and understand all of the risk factors relating to a purchase of the Shares, including, but not limited to, those risks set forth under “Risk Factors” in the Memorandum.

3. My overall commitment to investments that are not readily marketable is not disproportionate to my individual net worth, and my investment in the Shares will not cause such overall commitment to become excessive. I have adequate means of providing for my financial requirements, both current and anticipated, and have no need for liquidity in this investment. I can bear and am willing to accept the economic risk of losing my entire investment in the Shares.

4. All information that I have provided to the Company herein concerning my suitability to invest in the Shares is complete, accurate and correct as of the date of my signature on the last page of this Subscription Agreement. I hereby agree to notify the Company immediately of any material change in any such information occurring prior to the acceptance of this Subscription Agreement, including any information about changes concerning my net worth and financial position.

5. I have had the opportunity to ask questions of, and receive answers from, the Company and its officers and employees concerning the Company, the creation or operation of the Company, or the terms and conditions of the offering of the Shares, and to obtain any additional information deemed necessary. I have been provided with all materials and information requested by either me or others representing me, including any information requested to verify any information furnished to me.

6. I am purchasing the Shares for my own account and for investment purposes only and have no present intention, agreement or arrangement for the distribution, transfer, assignment, resale or subdivision of the Shares. I understand that, due to the restrictions referred to in Section 8 below, and the lack of any market existing or to exist for the Shares, my investment in the Company will be highly illiquid and may have to be held indefinitely.

7. I understand that (i) legends will be placed on any certificates evidencing the Shares with respect to restrictions on distribution, transfer, resale, assignment or subdivision of the Shares imposed by the Company’s charter and federal and state securities laws, (ii) the Shares have not been registered with the Securities and Exchange Commission and are being offered and sold in reliance on an exemption from registration, which reliance is based in part upon my representations set forth herein and (iii) the Shares have not been registered under state securities laws and are being offered and sold pursuant to exemptions specified in said laws, and unless registered, the Shares may not be re-offered for sale or resold except in a transaction or as a security exempt under those laws.

8. I acknowledge that Branch Banking and Trust Company is acting solely as Escrow Bank in connection with the Offering of the Shares, and makes no recommendations with respect thereto. I understand that Branch Banking and Trust Company has made no investigation regarding the Offering, the Company, the officers of the Company, or any other person or entity involved in the Offering.

9. This Subscription Agreement shall be construed in accordance with and governed by the laws of the State of North Carolina, except as to the type of registration of ownership of Shares, which shall be construed in accordance with the state of principal residence of the subscribing investor.

10. Notice to Residents of All States: The Shares offered hereby have not been registered under the Securities Act, or the securities laws of any state and are being offered and sold in reliance on exemptions from the registration requirements of said act and such laws. The Shares are subject to restrictions on transferability and resale and may not be transferred or resold except as permitted under said act and such laws pursuant to registration or exemption therefrom. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved the Shares or passed upon the accuracy or adequacy of the Memorandum. Any representation to the contrary is a criminal offense.

11. Pennsylvania Residents: By signing this Subscription Agreement, I acknowledge and understand (i) that I am prohibited from selling the Shares for a period of 12 months after the date of purchase, except in accordance with waivers established by rule or order of the Pennsylvania Securities Commission, (ii) that the Shares have not been registered under the Pennsylvania Securities Act of 1972 in reliance upon an exemption therefrom, and (iii) that no subsequent resale or other disposition of the Shares may be made within 12 months following their initial sale in the absence of an effective registration, except in accordance with waivers established by rule or order of the Pennsylvania Securities Commission, and thereafter only pursuant to an effective registration or exemption.

12. I hereby covenant and agree that any dispute, controversy or other claim arising under, out of or relating to this Subscription Agreement or any of the transactions contemplated hereby, or any amendment thereof, or the breach or interpretation hereof or thereof, shall be determined and settled in binding arbitration in the County of Wake, State of North Carolina, in accordance with the rules and procedures of the American Arbitration Association. The prevailing party shall be entitled to an award of its reasonable costs and expenses including, but not limited to, attorneys’ fees, in addition to any other available remedies. Any award rendered therein shall be final and binding on each and all of the parties thereto and their personal representatives, and judgment may be entered thereon in any court of competent jurisdiction.

13. I hereby agree to indemnify, defend and hold harmless the Company, the Advisor and all of their shareholders, members, partners, managers, officers, directors, affiliates and advisors from any and all damages, losses, liabilities, costs and expenses (including reasonable attorneys’ fees) that they may incur by reason of my failure to fulfill all of the terms and conditions of this Subscription Agreement or by reason of the untruth or inaccuracy of any of the representations, warranties or agreements contained herein or in any other documents I have furnished to any of the foregoing in connection with this transaction. This indemnification includes, but is not limited to, any damages, losses, liabilities, costs and expenses (including reasonable attorneys’ fees) incurred by the Company, the Advisor or any of their shareholders, members, partners, managers, officers, directors, affiliates or advisors defending against any alleged violation of federal or state securities laws that is based upon or related to any untruth or inaccuracy of any of the representations, warranties or agreements contained herein or in any other documents I have furnished to any of the foregoing in connection with this transaction.

14. Miscellaneous: (a) I may not transfer or assign this Subscription Agreement, or any interest herein, and any purported transfer shall be void; (b) I hereby acknowledge and agree that I am not entitled to cancel, terminate or revoke this Subscription Agreement and that this Subscription Agreement will be binding on my heirs, successors and personal representatives; provided, however, that if the Company rejects this Subscription Agreement, this Subscription Agreement shall be automatically canceled, terminated and revoked; (c) This Subscription Agreement constitutes the entire agreement among the parties hereto with respect to the sale of the Shares and may be amended, modified or terminated only by a writing executed by all parties (except as provided herein with respect to rejection of this Subscription Agreement by the Company); (d) Within five days after receipt of a written request from the Company, the undersigned agrees to provide such information and to execute and deliver such documents as may be reasonably necessary to comply with any and all laws and regulations to which the Company is subject; and (e) The representations and warranties of the undersigned set forth herein shall survive the sale of the Shares pursuant to this Subscription Agreement.

4

A. REGISTRATION INFORMATION

Please print the exact name (registration) you desire on the account. (Note: If the registration name you list is inconsistent with the legal title requested in Section 8 on page 2 and as reflected in any accompanying documents, the Company may require clarification):

(If a trust, please forward a copy of the relevant provisions of the trust documents regarding revocability.)

Address of Principal Place of Residence:

B. DISTRIBUTIONS

Please indicate to whom distributions should be sent, if not to the address set forth in Item A above.

Name:

Address:

Account Number:

C. INVESTOR INFORMATION

Please send all investor correspondence to the following:

Name:

Address:

Investor Phone: Business ( ) Home ( )

Primary State of Residence: Investor E-mail Address:

Social Security or Federal Tax ID Number (“TIN”):

*Prospective Investors must fill out the Form W-9 attached hereto as Attachment B.

D. SIGNATURES

THE UNDERSIGNED HAS THE AUTHORITY TO ENTER INTO THIS SUBSCRIPTION AGREEMENT ON BEHALF OF THE PERSON(S) OR ENTITY REGISTERED IN ITEM A ABOVE.

Executed this _______ day of _____________________, 20____

X Signature (Investor, or authorized signatory)

X Signature (Investor, or authorized signatory)

E. SUBMIT SUBSCRIPTION

To subscribe for Shares, please (a) complete, execute and deliver your Subscription Agreement to the Company and (b) pay the full amount of the purchase price for the Shares to be purchased by either (i) wire transfer in immediately available funds to Branch Banking and Trust Company, as Escrow Bank, or as otherwise directed by the Company or (ii) sending a check made payable to “Branch Banking and Trust Company, as Escrow Bank for TreyNet Realty Capital REIT, Inc.” to the Company along with your completed Subscription Agreement to the address set forth on page 1 of this Subscription Agreement.

F. COMPANY ACCEPTANCE

To be completed by the Company upon acceptance of this Subscription Agreement.

The Company hereby accepts this Subscription Agreement.

Dated: ________________, 20___

TreyNet Realty Capital REIT, Inc., a Maryland corporation

By: Name: Title:

5

ATTACHMENT A

CONSENT OF SPOUSE

(For purchasers in community property states, which are currently Alaska, Arizona, California, Idaho, Louisiana, Nevada,

New Mexico, Texas, Washington and Wisconsin)

I, , spouse of [print name] [print name]

have read and hereby approve of the Instructions to Investors and Subscription Agreement of TreyNet Realty Capital REIT, Inc. for Shares in the

Company (the “Subscription Agreement”), which my spouse has signed. I hereby appoint my spouse as my attorney-in-fact with respect to the

exercise of any rights related to a purchase of any such Shares and agree to be bound by the provisions of the Subscription Agreement, the

Amended and Restated Confidential Private Placement Memorandum of Common Stock (Non-Voting) in TreyNet Realty Capital REIT, Inc. dated

March 10, 2017, and all Exhibits thereto, and any other documents related to the purchase of any such Shares (collectively, the “Purchase

Documents”) insofar as I may have any rights in said Purchase Documents or any property or interest subject thereto under the community

property laws of the State of _____________________ or similar laws relating to marital property in effect in the state of our residence as of the

date of signing of the Subscription Agreement and/or the Purchase Documents.

Dated: __ , 20_____ [signature]

6

ATTACHMENT B

EAST\139699552.3

EXHIBIT B

ADVISORY AGREEMENT

EAST\139070577.5

ADVISORY AGREEMENT

This Advisory Agreement (this “Agreement”) dated as of February 1, 2017 (the “Effective Date”) is entered into by and among TreyNet REIT OP, LP, a Delaware limited partnership (the “Partnership”), TreyNet Realty Capital REIT, Inc., a Maryland corporation (the “General Partner”), TreyNet Partners, LLC, a Delaware limited liability company (the “Advisor”), and any entity formed by the Partnership for the purpose of acquiring Real Estate Assets (as defined below). The Partnership, the General Partner and their subsidiaries are collectively referred to herein as the “Company.”

W I T N E S S E T H

WHEREAS, the Company desires to avail itself of the experience, sources of information, advice, assistance and certain facilities available to the Advisor and to have the Advisor undertake the duties and responsibilities hereinafter set forth, on behalf of, and subject to the supervision of the Board; and

WHEREAS, the Advisor is willing to provide such services, subject to the supervision of the Board, on the terms and conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements contained herein, the parties hereto agree as follows:

1. Definitions. Defined terms shall have the meanings set forth below.

“Acquisition Expenses” shall mean any and all expenses incurred by the Company, the Advisor or their Affiliates in connection with the selection, acquisition, origination or development of any Investment, whether or not acquired or originated, including, without limitation, (i) due diligence expenses, (ii) legal fees and expenses, (iii) travel and communications expenses, (iv) costs of appraisals, environmental reports and other third-party reports, (v) nonrefundable earnest money deposits and option payments on property not acquired, (vi) accounting fees and expenses, (vii) title insurance, (viii) transfer taxes, transfer fees and recording fees and (ix) other customary acquisition closing costs.

“Acquisition Fee” shall have the meaning set forth in Section 8.1.

“Advisor” shall mean TreyNet Partners, LLC, a Delaware limited liability company or any successor advisor to the Company.

“Affiliate” or “Affiliated” shall mean as to any individual, corporation, partnership, trust or other association (i) any person or entity, directly or indirectly, through 1 or more intermediaries, controlling, controlled by or under common control with another person or entity; (ii) any person or entity, directly or indirectly, owning or controlling 10% or more of the outstanding voting securities of another person or entity; (iii) any officer, director, partner, member or trustee of such person or entity; (iv) any person 10% or more of whose outstanding voting securities are directly or indirectly owned, controlled or held, with power to vote, by such other person; and (v) if such other person or entity is an officer, director, partner, member or trustee of a person or entity, the person or entity for which such person or entity acts in any such capacity. For purpose of this Agreement, the term “person” shall include any natural person, partnership, corporation, trust, limited liability company, association or other entity.

“Agreement” shall mean this Advisory Agreement between the Company and the Advisor, as amended from time to time.

“Articles of Incorporation” shall mean the charter of the General Partner, as amended or restated from time to time.

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“Asset Management Fee” shall have the meaning set forth in Section 8.3.

“Board” shall mean the Board of Directors of the General Partner.

“Bylaws” shall mean the bylaws of the General Partner, as amended or restated from time to time.

“Company” shall mean the Partnership, the General Partner and their subsidiaries.

“Company Asset Value” shall mean the gross asset value of the General Partner’s assets as determined by the Board. For purposes of determining the Company Asset Value, if any of the General Partner’s assets are owned in the form of a joint venture, partnership or similar structure, the gross asset value attributable to such assets shall be equal to the General Partner’s prorata share of the gross asset value of the assets of such joint venture, partnership or similar structure.

“Conversion Date” shall mean the beginning of the General Partner’s tax year in which the General Partner has elected REIT status.

“Disposition Expenses” shall mean any and all expenses incurred by the Company, the Advisor or their Affiliates in connection with the sale, exchange or other disposition of the Investments, whether or not sold or disposed of, including, without limitation, legal fees and expenses, travel and communications expenses, costs of appraisals and environmental reports, accounting fees and expenses, title insurance, transfer taxes, transfer fees, recording fees and other customary closing costs.

“Disposition Fee” shall have the meaning set forth in Section 8.4.

“Distributions” shall mean any distributions of money or other property by the Company to owners of Units or Ownership Interests, including distributions that may constitute a return of capital for Federal income tax purposes.

“Effective Date” shall have the meaning in the introductory paragraph.

“Financing Expenses” shall mean any and all expenses incurred by the Company, the Advisor or their Affiliates in connection with any loan, financing or other debt secured by the Investments or otherwise obtained in connection with the Investments, whether or not actually obtained, including without limitation, (i) loan origination and assumption fees and lender expenses, (ii) legal fees and expenses, (iii) travel and communications expenses, (iv) costs of appraisals and environmental reports, (v) accounting fees and expenses, (vi) title insurance, (vii) recording fees and (viii) other customary financing closing costs.

“Financing Fee” shall have the meaning set forth in Section 8.2.

“General Partner” shall mean TreyNet Realty Capital REIT, Inc., a Maryland corporation.

“Investment” shall mean any investment by the Company in Real Estate Assets.

“Investment Company Act” shall have the meaning set forth in Section 7.

“Joint Venture” shall mean any joint venture, limited liability company, partnership arrangement or similar structure in which the Company or any of its subsidiaries is a co-venturer or partner, which are established to acquire Real Estate Assets.

EAST\139070577. 5 3

“Listing” shall mean the listing of the shares of the General Partner on a securities exchange or over-the-counter market.

“Offering” shall mean the offering of non-voting common stock in the General Partner pursuant to that certain Confidential Private Placement Memorandum for Non-Voting Common Stock in TreyNet Realty Capital REIT, Inc., dated February 1, 2017, as may be supplemented and amended.

“Organization and Offering Expenses” shall mean any and all costs and expenses incurred by the Company, the Advisor or their Affiliates in connection with the formation, qualification and registration of the Company, the preparation of Offering materials and the marketing and distribution of Units, Ownership Interests or any other securities of the Company, including, without limitation, (i) underwriting and brokerage discounts and commissions (including fees of the underwriter’s attorneys) and placement fees, (ii) legal, accounting, tax planning and escrow fees and expenses, (iii) printing, amending, supplementing, mailing and distribution costs, (iv) filing, registration and qualification fees, costs and expenses, (v) salaries of employees while engaged in sales activities, (vi) transfer agent fees and expenses, (vii) costs and expenses associated with a Listing, (viii) travel and communication expenses and (ix) advertising and marketing expenses, including costs related to investor and broker-dealer sales meetings.

“Owners” shall mean the holders of the shares of the General Partner.

“Ownership Interests” shall mean the shares of the General Partner.

“Partnership” shall mean TreyNet REIT OP, LP, a Delaware limited partnership.

“Qualified IPO” shall mean the date on which the Company’s common stock is listed on a national securities exchange.

“Real Estate Assets” shall mean investments by the Company in direct or indirect ownership interests in single-tenant, net leased properties.

“REIT” shall mean a “real estate investment trust” under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended, or corresponding provisions of subsequently enacted Federal revenue laws.

“Sale” shall mean any transaction or series of transactions whereby (i) the Company sells, exchanges, grants, transfers, conveys or relinquishes its ownership of any Investment or portion thereof, including the transfer of any Real Estate Asset that is the subject of a ground lease, and including any event with respect to any Investment that gives rise to a significant amount of insurance proceeds or condemnation awards, (ii) the Company sells, exchanges, grants, transfers, conveys or relinquishes its ownership of all or substantially all of the interest of the Company in any Joint Venture or any partnership in which it is a partner or (iii) any Joint Venture or any partnership in which the Company is a partner, sells, exchanges, grants, transfers, conveys or relinquishes its ownership of any Investment or portion thereof, including any event with respect to any Investment that gives rise to insurance claims or condemnation awards.

“Termination Date” shall mean the date of termination of this Agreement.

“Unit” shall mean limited partnership units in the Partnership.

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2. Appointment. The Company hereby appoints the Advisor to serve as its advisor on the terms and conditions set forth in this Agreement, and the Advisor hereby accepts such appointment.

3. Duties of the Advisor. The Advisor is responsible for managing, operating, directing and supervising the operations and administration of the Company and its assets. The Advisor undertakes to use commercially reasonable efforts to present to the Company potential investment opportunities and to provide the Company with a continuing and suitable investment program consistent with the investment objectives and policies of the Company as determined and adopted from time to time by the Board. The Advisor shall have no obligation to take any action that would require the Advisor to register as an investment advisor pursuant to the Investment Advisers Act of 1940, as amended. Subject to the limitations set forth in this Agreement, including Section 4, and the continuing and exclusive authority of the Board over the management of the Company, the Advisor shall, either directly or by engaging an Affiliate or third party, perform the following duties:

3.1 assist in the performance of all services related to the organization of the Company or any offering of the Company’s securities other than services that (i) are to be performed by a broker-dealer, (ii) the Company elects to perform directly or (iii) would require the Advisor to register as a broker-dealer with the Securities and Exchange Commission or any state;

3.2 serve as the Company’s investment and financial advisor and, when reasonably requested, provide the Board with reports in connection with the Company’s assets and investment policies;

3.3 provide the daily management of the Company and perform and supervise the various administrative functions reasonably necessary for the management of the Company;

3.4 select, and, on behalf of the Company, engage and conduct business with such persons as the Advisor deems necessary to the proper performance of its obligations as set forth in this Agreement, including, but not limited to, consultants, accountants, lenders, technical advisors, attorneys, brokers, underwriters, corporate fiduciaries, escrow agents, depositaries, custodians, agents for collection, insurers, insurance agents, banks, developers, construction companies, property owners, property managers, mortgagors and any and all agents for any of the foregoing, including Affiliates of the Advisor, and persons acting in any other capacity deemed by the Advisor necessary or desirable for the performance of any of the foregoing services, including, but not limited to, entering into contracts in the name of the Company with any of the foregoing;

3.5 consult with the Board and assist the Board in the formulation and implementation of the Company’s financial policies, and, as necessary, furnish the Board with advice and recommendations with respect to the making of investments consistent with the investment objectives and policies of the Company and in connection with any borrowings proposed to be undertaken by the Company;

3.6 subject to the provisions of Section 3.8 and Section 4, (i) locate, analyze and select potential Investments, (ii) structure and negotiate the terms and conditions of Investments, (iii) cause the Company to acquire Investments in compliance with the investment objectives and policies of the Company, (iv) cause the Company to acquire Investments in exchange for Ownership Interests or Units (v) arrange for financing and refinancing and make changes in the asset or capital structure of the Investments and (vi) dispose of, reinvest the proceeds from the sale of, or otherwise deal with, the Investments;

3.7 as reasonably requested by the Board, provide reports regarding prospective Investments;

3.8 obtain the prior approval of the Board for any and all Investments;

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3.9 monitor and evaluate the performance of the Company’s Investments, oversee the performance of the property and asset managers for the Investments and coordinate and manage relationships between the Company and any Joint Venture partners;

3.10 negotiate, on behalf of the Company, with banks or lenders for loans to be made to the Company, or obtain loans for the Company provided that any fees and costs payable to third parties incurred by the Advisor in connection with the foregoing shall be the responsibility of the Company;

3.11 manage, operate, lease and maintain the properties underlying the Real Estate Assets, provided that the Advisor may perform these duties through one or more of its Affiliates and may, in its sole discretion, engage one or more sub property managers to manage the day-to-day operations of the Investments so long as the Advisor continues to oversee the performance of the sub property managers;

3.12 from time to time, or at any time reasonably requested by the Board, make reports to the Board of its performance of services to the Company under this Agreement;

3.13 provide the Company with all necessary cash management services;

3.14 do all things necessary to assure its ability to render the services described in this Agreement; and

3.15 notify the Board of all proposed material transactions before they are completed.

4. Authority of Advisor.

4.1 Pursuant to the terms of this Agreement (including the restrictions set forth in this Section 4 and in Section 7), and subject to the continuing and exclusive authority of the Board, the Board hereby delegates to the Advisor the authority to perform the services described in Section 3. The Advisor shall have the power to delegate all or any part of its rights and powers to manage and control the business and affairs of the Company to such officers, employees, Affiliates, agents and representatives of the Advisor or the Company as it may deem appropriate. Any authority delegated by the Advisor to any other person shall be subject to the limitations on the rights and powers of the Advisor specifically set forth in this Agreement.

4.2 Notwithstanding the foregoing, the Advisor may not take any action on behalf of the Company without the prior approval of the Board or duly authorized committees thereof if the Articles of Incorporation, Bylaws or Maryland General Corporation Law require the prior approval of the Board. The Advisor acknowledges and agrees that the acquisition, financing, refinancing and disposition of any Investment shall require the prior approval of the Board.

5. Bank Accounts. The Advisor may establish and maintain 1 or more bank accounts in its own name for the account of the Company, or in the name of the Company, and may collect and deposit into any such account or accounts, and disburse from any such account or accounts, any money on behalf of the Company, under such terms and conditions as the Board may approve; provided, however, that no funds shall be commingled with the funds of the Advisor, and the Advisor shall from time to time render appropriate accountings of such bank accounts to the Board and the auditors of the Company.

6. Records; Access. The Advisor shall maintain appropriate records of all its activities hereunder and make such records available for inspection by the Board and by counsel, auditors and authorized agents of the Company, at any time during normal business hours. The Advisor shall at all reasonable times have access to the books and records of the Company.

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7. Limitations on Activities. Notwithstanding any other provision in this Agreement, the Advisor shall refrain from taking any action which, in its sole judgment made in good faith, would (i) after the Conversion Date, adversely affect the status of the General Partner as a REIT after the General Partner qualifies for and has elected REIT status, (ii) subject the Company to regulation under the Investment Company Act of 1940, as amended (the “Investment Company Act”), (iii) violate any law, rule, regulation or statement of policy of any governmental body or agency having jurisdiction over the Company, the Units, the Ownership Interests or other securities of the Company or (iv) otherwise not be permitted by the Certificate of Limited Partnership and Limited Partnership Agreement of the Partnership or the Articles of Incorporation and Bylaws of the General Partner. In the event that an action would violate (i) through (iv) of the preceding sentence but such action has been ordered by the Board, the Advisor shall notify the Board of the Advisor’s judgment of the potential impact of such action and shall refrain from taking such action until it receives further clarification or instructions from the Board. In such event, the Advisor shall have no liability for acting in accordance with the specific instructions of the Board so given. Notwithstanding the foregoing, the Advisor, its members, managers, officers, employees and stockholders, and officers of the Advisor’s Affiliates shall not be liable to the Company, partners of the Partnership, the Board or Owners of the General Partner for any act or omission by the Advisor, its officers or employees, or stockholders, managers or officers of the Advisor’s Affiliates except as provided in Section 17 and Section 18 of this Agreement. The provisions in this Agreement relating to REIT status or qualification shall not apply until the first day of the year in which the General Partner qualifies for and elects REIT status under the Code.

8. Compensation. As consideration for its services to the Company hereunder, the Advisor shall be entitled to receive from the Company the following:

8.1 Acquisition Fee. The Advisor shall receive from the Company an acquisition fee (the “Acquisition Fee”) as compensation for services rendered in connection with the investigation, selection and acquisition or origination (by purchase, origination, investment or exchange) of the Investments equal to 1% of the gross purchase price of the Investments acquired. The Advisor shall submit an invoice to the Company at the closing of each acquisition, accompanied by a computation of the Acquisition Fee. The Acquisition Fee shall be paid to the Advisor at the closing of the acquisition.

8.2 Financing Fee. The Advisor shall receive from the Company a financing fee (the “Financing Fee”) as compensation for obtaining, negotiating and closing any loan or line of credit obtained by the Company, including loans obtained in connection with the financing or refinancing of an Investment, equal to 0.5% of the principal amount of such financing or refinancing. The Financing Fee shall be in addition to any loan fee paid to a third party in connection with such financing or refinancing. The Advisor shall submit an invoice to the Company at the closing of each financing or refinancing, accompanied by a computation of the Financing Fee. The Financing Fee shall be paid to the Advisor at the closing of the financing or refinancing.

8.3 Asset Management Fee. The Advisor shall receive an annual asset management fee (the “Asset Management Fee”), paid on a monthly basis, equal to 1% of the Company Asset Value. If the Advisor delegates its property management duties to one or more Affiliates or engages one or more sub property managers to manage the day-to-day operations of the Investments, the Advisor shall pay all fees to any such Affiliates or sub property managers. If the Advisor engages any local third-party leasing service providers to perform the leasing functions for the Investments, the Company shall pay for any fees to such third-party leasing service providers in addition to the Asset Management Fee. The Advisor shall submit a monthly invoice to the Company, accompanied by a computation of the Asset Management Fee for the applicable period. The Asset Management Fee shall be payable on the first business day following the last day of each month. The Asset Management Fee may or may not be taken, in whole or in part, as to any month in the sole discretion of the Advisor. All or any portion of the Asset Management Fee not

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taken as to any month shall be deferred and may be paid in such other month as the Advisor shall determine.

8.4 Disposition Fee. The Advisor shall receive a disposition fee (the “Disposition Fee”) as compensation for services rendered in connection with the Sale of an Investment, equal to 1.5% of the contract sales price of such Investment. Any third-party brokerage, legal and accounting fees incurred in connection with such Sale shall be paid by the Company in addition to the Disposition Fee paid to the Advisor. The Advisor shall submit an invoice to the Company at the closing of each Sale, accompanied by a computation of the Disposition Fee. The Disposition Fee shall be paid to the Advisor at the closing of the Sale.

9. Expenses.

9.1 In addition to the compensation paid to the Advisor pursuant to Section 8, the Company shall pay directly or reimburse the Advisor for all of the expenses paid or incurred by the Advisor in connection with the services it provides to the Company pursuant to this Agreement, including, but not limited to:

9.1.1 all Organization and Offering Expenses;

9.1.2 Acquisition Expenses incurred in connection with the selection, acquisition or origination of Investments;

9.1.3 the actual out-of-pocket cost of goods and services used by the Company;

9.1.4 interest and other costs for borrowed money, including discounts, points and other similar fees;

9.1.5 taxes and assessments on income or property, and taxes as an expense of doing business;

9.1.6 costs associated with insurance required in connection with the business of the Company, or by its officers or the Board;

9.1.7 the management fees and other expenses of managing, operating and servicing the Investments owned by the Company, including, but not limited to, travel expenses to the Investments, whether payable to an Affiliate of the Company or a non-affiliated person;

9.1.8 all expenses in connection with payments to the Board and meetings of partners of the Partnership, the Board and Owners;

9.1.9 expenses connected with payments of Distributions in cash or otherwise made or caused to be made by the Company;

9.1.10 expenses of organizing, revising, amending, converting, modifying or terminating the General Partner, its Articles of Incorporation or Bylaws, and the Partnership, its Limited Partnership Agreement or its Certificate of Limited Partnership;

9.1.11 expenses of maintaining communications with Owners, including the cost of preparation, printing and mailing annual reports and other Owners and partner reports, proxy statements and other reports required by governmental entities;

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9.1.12 administrative service expenses including personnel costs; provided, however, that no reimbursement shall be made for costs of personnel to the extent that such personnel perform services in transactions for which the Advisor receives a separate fee;

9.1.13 expenses associated with raising capital through a public offering or otherwise, including any investment banking, broker-dealer or registered representative fee;

9.1.14 audit, accounting, legal and other professional fees;

9.1.15 Disposition Expenses incurred in connection with the Sale of the Investments;

9.1.16 Financing Expenses incurred in connection with any loan, financing or other debt secured by the Investments or otherwise obtained in connection with the Investments;

9.1.17 fees, costs and expenses related to the merger or other capital transaction of the Company;

9.1.18 an appropriate portion of the Advisor’s overhead attributable to providing services pursuant to this Agreement; and

9.1.19 personnel and related employment costs incurred by the Advisor or its Affiliates in performing the services described in Section 3 including, but not limited to, reasonable salaries and wages, benefits and overhead of all employees directly involved in the performance of such services, provided that no reimbursement shall be made for the costs of such employees of the Advisor or its Affiliates to the extent that such employees perform services for which the Advisor receives a separate fee or for the wages and benefits of the Company’s executive officers.

9.2 Expenses incurred by the Advisor on behalf of the Company and payable pursuant to this Section 9 shall be reimbursed no less than 15 days after a request for reimbursement by the Advisor. The Advisor shall prepare a statement documenting the expenses of the Company during each month, and shall deliver such statement to the Company with the reimbursement request. All reimbursement requests shall be made within 150 days of the incurrence of the expense unless otherwise agreed to by the Board.

10. Other Services. Should the Board request that the Advisor or any member, manager, officer or employee thereof render services for the Company other than as set forth in Section 3, such services shall be separately compensated at such rates and in such amounts as are agreed by the Advisor and the Board, and shall not be deemed to be services pursuant to the terms of this Agreement.

11. Other Activities of the Advisor. Nothing herein contained shall prevent the Advisor from engaging in other activities, including, without limitation, the rendering of advice to other persons (including other REITs) and the management of other programs advised, sponsored or organized by the Advisor or its Affiliates, nor shall this Agreement limit or restrict the right of any member, manager, officer or employee of the Advisor or its Affiliates to engage in any other business or to render services of any kind to any other person. The Advisor may, with respect to any investment in which the Company is a participant, also render advice and service to each and every other participant therein. The Advisor shall report to the Board the existence of any condition or circumstance, existing or anticipated, of which it has knowledge, which creates or could create a conflict of interest between the Advisor’s obligations to the Company and its obligations to or its interest in any other person. The Advisor or its Affiliates shall promptly disclose to the Board knowledge of such condition or circumstance.

12. Relationship of Advisor and Company. The Company and the Advisor do not intend to form a joint venture, partnership or similar relationship. Instead, the parties intend that Advisor shall act solely

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in the capacity of an independent contractor for the Company. Nothing in this Agreement shall cause the Advisor and the Company to be joint venturers or partners of each other, and neither shall have the power to bind or obligate the other party by virtue of this Agreement, except as expressly provided in this Agreement.

13. Term. This Agreement shall commence on the Effective Date and continue until the date that the Company completes an orderly wind-down and sale of all of its assets unless sooner terminated in accordance with Section 14. If the Company completes a Qualified IPO prior to the sale of all of its assets, the term of this Agreement shall continue until December 31 of the year the Company completes the Qualified IPO and shall be automatically renewed for successive 1-year terms unless any party gives written notice of termination at least 30 days prior to the expiration of the current term.

14. Termination. The Company may terminate this Agreement for cause in the event (i) of fraud or gross negligence by the Advisor as determined by a final, non-appealable judgment of a court of competent jurisdiction, (ii) the Advisor commits a material breach of this Agreement and such breach is not cured within 90 days after receipt of written notice by the Company of such breach or (iii) the Advisor has been adjudicated bankrupt or insolvent by a court of competent jurisdiction and the adjudication or order shall remain in force or unstayed for a period of 30 days. The Advisor may terminate this Agreement upon 90 days written notice to the Company.

15. Assignment. This Agreement may be assigned by the Advisor to an Affiliate with the approval of the Board. The Advisor may assign any rights to receive fees or other payments under this Agreement without obtaining the approval of the Board. This Agreement shall not be assigned by the Company without the consent of the Advisor, except in the case of an assignment by the Company to a corporation or other organization which is a successor to all of the assets, rights and obligations of the Company, in which case such successor organization shall be bound hereunder and by the terms of said assignment in the same manner as the Company are bound by this Agreement.

16. Payments to and Duties of Advisor upon Termination.

16.1 After the Termination Date, the Advisor shall not be entitled to compensation for further services hereunder except it shall be entitled to receive from the Company within 30 days after the effective date of such termination all unpaid reimbursements of expenses and all earned but unpaid fees payable to the Advisor prior to termination of this Agreement.

16.2 The Advisor shall promptly upon termination:

16.2.1 pay over to the Company all money collected and held for the account of the Company pursuant to this Agreement, after deducting any accrued compensation and reimbursement for its expenses to which the Advisor is then entitled;

16.2.2 deliver to the Board a full accounting, including a statement showing all payments collected by the Advisor and a statement of all money held by the Advisor, covering the period following the date of the last accounting furnished to the Board;

16.2.3 deliver to the Board all assets, including Investments, books, records and documents of the Company in the custody of the Advisor; and

16.2.4 cooperate with the Company to provide an orderly management transition.

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17. Indemnification by the Company. The Company shall indemnify and hold harmless the Advisor and its Affiliates, including their respective officers, directors, partners, members, managers and employees, from all liability, claims, damages or losses arising in the performance of their duties hereunder, and related expenses, including reasonable attorneys’ fees, to the extent such liability, claims, damages or losses and related expenses are not fully reimbursed by insurance, subject to any limitations imposed by any law. Notwithstanding the foregoing, the Advisor shall not be entitled to indemnification or be held harmless pursuant to this Section 17 for any activity which the Advisor shall be required to indemnify or hold harmless the Company pursuant to Section 18. Any indemnification of the Advisor may be made only out of the net assets of the Company.

18. Indemnification by Advisor. The Advisor shall indemnify and hold harmless the Company from contract or other liability, claims, damages, taxes or losses and related expenses including attorneys’ fees, to the extent that such liability, claims, damages, taxes or losses and related expenses are not fully reimbursed by insurance and are incurred by reason of the Advisor’s fraud or gross negligence, but the Advisor shall not be held responsible for any action of the Board in following or declining to follow any advice or recommendation given by the Advisor.

19. Miscellaneous.

19.1 Notices. Any notice, report or other communication required or permitted to be given hereunder shall be in writing unless some other method of giving such notice is accepted by the party to whom it is given, and shall be given by being delivered by hand or by overnight mail or other overnight delivery service to the addresses set forth herein:

To the Company:

TreyNet Realty Capital REIT, Inc. Attn: Donald R. Draughon, Jr. 3600 N. Duke Street, Suite 109 Durham, North Carolina 27704

To the Advisor:

TreyNet Partners, LLC Attn: Donald R. Draughon, Jr. 3600 N. Duke Street, Suite 109 Durham, North Carolina 27704

Either party may at any time give notice in writing to the other party of a change in its address for the purposes of this Section 19.1.

19.2 Modification. This Agreement shall not be changed, modified, terminated or discharged, in whole or in part, except by an instrument in writing signed by the parties hereto, or their respective successors or assignees.

19.3 Severability. The provisions of this Agreement are independent of and severable from each other, and no provision shall be affected or rendered invalid or unenforceable by virtue of the fact that for any reason any other or others of them may be invalid or unenforceable in whole or in part.

19.4 Construction. The provisions of this Agreement shall be construed and interpreted in accordance with the laws of the State of Delaware.

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19.5 Entire Agreement. This Agreement contains the entire agreement and understanding among the parties hereto with respect to the subject matter hereof, and supersedes all prior and contemporaneous agreements, understandings, inducements and conditions, express or implied, oral or written, of any nature whatsoever with respect to the subject matter hereof. The express terms hereof control and supersede any course of performance and/or usage of the trade inconsistent with any of the terms hereof. This Agreement may not be modified or amended other than by an agreement in writing.

19.6 Indulgences, Not Waivers. Neither the failure nor any delay on the part of a party to exercise any right, remedy, power or privilege under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power or privilege preclude any other or further exercise of the same or of any other right, remedy, power or privilege, nor shall any waiver of any right, remedy, power or privilege with respect to any occurrence be construed as a waiver of such right, remedy, power or privilege with respect to any other occurrence. No waiver shall be effective unless it is in writing and is signed by the party asserted to have granted such waiver.

19.7 Gender. Words used herein regardless of the number and gender specifically used, shall be deemed and construed to include any other number, singular or plural, and any other gender, masculine, feminine or neuter, as the context requires.

19.8 Titles Not to Affect Interpretation. The titles of paragraphs and subparagraphs contained in this Agreement are for convenience only, and they neither form a part of this Agreement nor are they to be used in the construction or interpretation hereof.

19.9 Execution in Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original as against any party whose signature appears thereon, and all of which shall together constitute one and the same instrument. This Agreement shall become binding when 1 or more counterparts hereof, individually or taken together, shall bear the signatures of all of the parties reflected hereon as the signatories.

[Signature Page Follows]

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and year first above written.

GENERAL PARTNER:

TreyNet Realty Capital REIT, Inc., a Maryland corporation

By: Donald R. Draughon, Jr. Chief Executive Officer and Treasurer

ADVISOR:

TreyNet Partners, LLC, a Delaware limited liability company

By: Donald R. Draughon, Jr. Chief Executive Officer and Treasurer

PARTNERSHIP:

TreyNet REIT OP, LP, a Delaware limited partnership

By: TreyNet Realty Capital REIT, Inc., a Maryland corporation, its general partner

By: Donald R. Draughon, Jr. Chief Executive Officer and Treasurer

EXHIBIT C

LEGAL OPINION OF DLA PIPER LLP (US)

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