As filed with the Securities and Exchange Commission on February 21, 2018

PART II – INFORMATION REQUIRED IN OFFERING CIRCULAR

An offering statement pursuant to Regulation A relating to these securities has been filed with the Securities and Exchange Commission. Information contained in this Preliminary Offering Circular is subject to completion or amendment. These securities may not be sold nor may offers to buy be accepted before the offering statement filed with the Commission is qualified. This Preliminary Offering Circular shall not constitute an offer to sell or the solicitation of an offer to buy nor may there be any sales of these securities in any state in which such offer, solicitation or sale would be unlawful before registration or qualification under the laws of any such state. We may elect to satisfy our obligation to deliver a Final Offering Circular by sending you a notice within two business days after the completion of our sale to you that contains the URL where the Final Offering Circular or the offering statement in which such Final Offering Circular was filed may be obtained.

Subject to Completion, Preliminary Offering Circular Dated February 21, 2018

OFFERING CIRCULAR

2,500,000 Common Shares

Reliance Real Estate Trust, LLC

Up to $25,000,000 of Common Shares

Reliance Real Estate Trust, LLC, a Delaware limited liability company, has been formed to acquire, invest, and operate a diversified mix of multi-family residential properties throughout the United States. We are externally managed by Reliance Real Estate Advisors, LLC, or our Manager. We intend to elect and qualify to be taxed as a real estate investment trust, or REIT, for U.S. federal income tax purposes, commencing with its taxable year ending December 31, 2018.

We are offering up to 2,500,000 common shares (the “maximum offering”) at an offering price of $10.00 per common share. The minimum investment in our common shares for initial purchases is 500 shares, or $5,000. Our common shares are being offered by our executive officers on a best-efforts basis, which means there is no commitment on the part of anyone to purchase any of the common shares. No sales commissions will be paid to our executive officers in connection with this offering.

There is currently no trading market for our common stock. Prior to the completion of the offering, we intend to apply either (a) to list our common shares on the NASDAQ Capital Market, or the NASDAQ, or the NYSE MKT, or the NYSE, or (b) for the quotation of our common shares with OTC Markets Group, or the OTC, on one of the OTCQX, OTCQB or OTC Pink. If we apply to list our common shares on the NASDAQ or the NYSE, there is no guarantee that we will meet the listing standards of either organization. If we choose to apply for quotation of our common shares with the OTC, our common shares may be quoted only to the extent that there is interest by broker-dealers in acting as a market maker.

Investing in our common shares is speculative and involves substantial risks. You should purchase these securities only if you can afford a complete loss of your investment. See “Risk Factors” beginning on page 15 to read about the more significant risks you should consider before buying our common shares. These risks include the following:

The United States Securities and Exchange Commission does not pass upon the merits of or give its approval to any securities offered or the terms of the offering, nor does it pass upon the accuracy or completeness of any offering circular or other solicitation materials. These securities are offered pursuant to an exemption from registration with the Commission; however, the Commission has not made an independent determination that the securities offered are exempt from registration.

Generally, no sale may be made to you in this offering if the aggregate purchase price you pay is more than 10% of the greater of your annual income or net worth. Different rules apply to accredited investors and non-natural persons. Before making any representation that your investment does not exceed applicable thresholds, we encourage you to review Rule 251(d)(2)(i)(C) of Regulation A. For general information on investing, we encourage you to refer to www.investor.gov.

This Offering Circular follows the Form S-11 disclosure format.

The date of this offering circular is                , 2018

IMPORTANT INFORMATION ABOUT THIS OFFERING CIRCULAR

Please carefully read the information in this offering circular and any accompanying offering circular supplements, which we refer to collectively as the offering circular. You should rely only on the information contained in this offering circular. We have not authorized anyone to provide you with different information. This offering circular may only be used where it is legal to sell these securities. You should not assume that the information contained in this offering circular is accurate as of any date later than the date hereof or such other dates as are stated herein or as of the respective dates of any documents or other information incorporated herein by reference.

This offering circular is part of an offering statement that we filed with the Securities and Exchange Commission, or the SEC, using a continuous offering process. Periodically, as we make material investments or have other material developments, we will provide an offering circular supplement that may add, update or change information contained in this offering circular. Any statement that we make in this offering circular will be modified or superseded by any inconsistent statement made by us in a subsequent offering circular supplement. The offering statement we filed with the SEC includes exhibits that provide more detailed descriptions of the matters discussed in this offering circular. You should read this offering circular and the related exhibits filed with the SEC and any offering circular supplement, together with additional information contained in our annual reports, semi-annual reports and other reports and information statements that we will file periodically with the SEC. See the section entitled “Additional Information” below for more details.

The offering statement and all supplements and reports that we have filed or will file in the future can be read at the SEC website, www.sec.gov, or on our website at www.reliancerealestatetrust.com. The contents of our website (other than the offering statement, this offering circular and the appendices and exhibits thereto) are not incorporated by reference in or otherwise a part of this offering circular.

Our Manager and those selling shares on our behalf in this offering will be permitted to make a determination that the purchasers of shares in this offering are “qualified purchasers” in reliance on the information and representations provided by the shareholder regarding the shareholder’s financial situation. Before making any representation that your investment does not exceed applicable thresholds, we encourage you to review Rule 251(d)(2)(i)(C) of Regulation A. For general information on investing, we encourage you to refer to www.investor.gov.

TABLE OF CONTENTS

STATE LAW EXEMPTION AND PURCHASE RESTRICTIONS

Our common shares are being offered and sold only to “qualified purchasers” (as defined in Regulation A under the Securities Act). As a Tier 2 offering pursuant to Regulation A under the Securities Act, this offering will be exempt from state law “Blue Sky” review, subject to meeting certain state filing requirements and complying with certain anti-fraud provisions, to the extent that our common shares offered hereby are offered and sold only to “qualified purchasers” or at a time when our common shares are listed on a national securities exchange. “Qualified purchasers” include: (i) “accredited investors” under Rule 501(a) of Regulation D and (ii) all other investors so long as their investment in our common shares does not represent more than 10% of the greater of their annual income or net worth (for natural persons), or 10% of the greater of annual revenue or net assets at fiscal year-end (for non natural persons). However, our common shares are being offered and sold only to those investors that are within the latter category (i.e., investors whose investment in our common shares does not represent more than 10% of the applicable amount), regardless of an investor’s status as an “accredited investor.” Accordingly, we reserve the right to reject any investor’s subscription in whole or in part for any reason, including if we determine in our sole and absolute discretion that such investor is not a “qualified purchaser” for purposes of Regulation A.

For purposes of determining whether a potential investor is a “qualified purchaser,” annual income and net worth should be calculated as provided in the “accredited investor” definition under Rule 501 of Regulation D. In particular, net worth in all cases should be calculated excluding the value of an investor’s home, home furnishings and automobiles.

RISK FACTORS

An investment in our common shares involves risks. In addition to other information contained elsewhere in this offering circular, you should carefully consider the following risks before acquiring our common shares offered by this offering circular. The occurrence of any of the following risks could materially and adversely affect the business, prospects, financial condition or results of operations, the ability to make cash distributions to the holders of common shares and the market price of our common shares, which could cause you to lose all or some of your investment in our common shares. Some statements in this offering circular, including statements in the following risk factors, constitute forward-looking statements. See “Forward-Looking Statements.”

Risks Related to an Investment in Reliance Real Estate Trust, LLC

Both we and our Manager are newly-formed entities with limited operating history.

Both we and our Manager are newly formed entities, with limited operating history. You should consider an investment in our common shares in light of the risks, uncertainties and difficulties frequently encountered by other newly formed companies with similar objectives. To be successful in this market, we and our Manager must, among other things:

There can be no assurance that we will achieve our investment objectives.

We cannot assure you that a public market for our common shares will develop and your ability to sell our common shares may be limited.

Prior to this offering, there has not been a public market for our common shares. Prior to the completion of the offering, we intend to apply to have our common shares listed on the Nasdaq or NYSE. However, we cannot assure you that a regular trading market for our common shares will develop or, if one does develop, that any such market will be sustained. In the absence of a public trading market, an investor may be unable to liquidate an investment in our common shares. The initial public offering price will be determined by us and the representative of the underwriters. We cannot assure you that the price at which our common shares will sell in the public market after the closing of this offering will not be lower than the price at which they are sold in this offering.

If our common shares are listed, they are likely to be subject to significant price fluctuations.

Until an orderly market develops in our common shares, if ever, the price at which it trades is likely to fluctuate significantly. Prices for our common shares will be determined in the marketplace and may be influenced by many factors, including the depth and liquidity of the market for our common shares, developments affecting our business, including the impact of the factors referred to elsewhere in these Risk Factors, investor perception of our company and general economic and market conditions. No assurances can be given that an orderly or liquid market will ever develop for our common shares.

If we are unable to find suitable investments, we may not be able to achieve our investment objectives or pay distributions.

Our ability to achieve our investment objectives and to pay distributions depends upon the performance of our Manager in the acquisition of investments and the ability of our Manager to source investment opportunities for us. The more money we raise in this offering, the greater our challenge will be to invest all of the net offering proceeds on attractive terms. We cannot assure you that we will be successful in obtaining suitable investments on financially attractive terms or that, if we makes investments on our behalf, our objectives will be achieved. If we are unable to find suitable investments promptly, we will hold the proceeds from this offering in an interest-bearing account or invest the proceeds in short-term assets in a manner that is consistent with our qualification as a REIT. If we would continue to be unsuccessful in locating suitable investments, we may ultimately decide to liquidate. In the event we are unable to timely locate suitable investments, we may be unable or limited in our ability to pay distributions and we may not be able to meet our investment objectives.

The offering price of our shares was not established on an independent basis; the actual value of your investment may be substantially less than what you pay.

We established the offering price of our shares on an arbitrary basis. The selling price of our shares bears no relationship to our book or asset values or to any other established criteria for valuing shares. Because the offering price is not based upon any independent valuation, the offering price may not be indicative of the proceeds that you would receive upon liquidation. Further, the offering price may be significantly more than the price at which the shares will trade if we succeed in becoming actively traded by broker-dealers.

Disruptions in the financial markets or deteriorating economic conditions could adversely impact the residential real estate market as well as the market for equity-related investments generally, which could hinder our ability to implement our business strategy and generate returns to you.

We intend to invest in and acquire a portfolio of multi-family properties throughout the United States. We may make our investments through majority-owned subsidiaries, some of which may have rights to receive preferred economic returns. Economic conditions greatly increase the risks of these investments (see “— Risks Related to Our Investments”). The success of our business is significantly related to general economic conditions and, accordingly, our business has been and could continue to be harmed by the economic slowdown and downturn in real estate asset values, property sales and leasing activities. Periods of economic slowdown or recession, significantly rising interest rates, declining employment levels, decreasing demand for real estate, declining real estate values, or the public perception that any of these events may occur, can reduce volumes for many of our business lines. These economic conditions have resulted in and could continue to result in a general decline in acquisition, disposition and leasing activity, as well as a general decline in the value of real estate and in rents, which in turn would reduce revenue from property management fees and brokerage commissions derived from property sales, leases and mortgage brokerage as well as revenues associated with investment management and/or development activities. In addition, these conditions have led and could continue to lead to a decline in property sales prices as well as a decline in funds invested in existing real estate assets and properties planned for development.

During an economic downturn, it may also take longer for us to dispose of real estate investments or the selling prices may be lower than originally anticipated. As a result, the carrying value of our real estate investments may become impaired and we could record losses as a result of such impairment or we could experience reduced profitability related to declines in real estate values.

All of the conditions described above could adversely impact our business performance and profitability, which could result in our failure to make distributions to our investors and could decrease the value of an investment in us. In addition, in an extreme deterioration of our business, we could have insufficient liquidity to meet our debt service obligations when they come due in future years.

Because we are limited in the amount of funds we can raise, we will be limited in the number and type of investments we make and the value of your investment in us will fluctuate with the performance of the specific assets we acquire.

Under Regulation A, we are only allowed to raise up to $50,000,000 in any 12 month period (although we may raise capital in other ways). We currently expect the size of the investments that we will make will average about $5.0 million to $20.0 million per asset. As a result, the amount of proceeds we raise in this offering may be substantially less than the amount we would need to achieve a diversified portfolio of investments, even if we are successful in raising the maximum offering amount. If we are unable to raise substantial funds, we will make fewer investments resulting in less diversification in terms of the type, number and size of investments that we make. In that case, the likelihood that any single asset’s performance would adversely affect our profitability will increase. Your investment in our common shares will be subject to greater risk to the extent that we lack a diversified portfolio of investments. Further, we will have certain fixed operating expenses, including certain expenses as a public reporting company, regardless of whether we are able to raise substantial funds in this offering. Our inability to raise substantial funds would increase our fixed operating expenses as a percentage of gross income, reducing our net income and limiting our ability to make distributions.

We have no investment criteria limiting the size of each investment we make. Any individual real estate investment could represent a material percentage of our assets, and if that investment experiences a loss, the value of your investment in us could be significantly diminished.

Due to what we currently anticipate will be a relatively small asset base and an anticipated high concentration of our total assets in relatively large individual real estate assets, the value of your investment could vary more widely with the performance of specific assets than if the offering amount were greater or if we invested in a more diverse portfolio of properties. Because of this potential asset concentration, even modest changes in the value of our real estate assets could have a significant impact on the value of your investment.

Our ability to make distributions to the holders of common shares is subject to fluctuations in our financial performance, operating results and unanticipated capital improvements requirements.

In order for the Company to qualify for taxation as a REIT, it will be required to distribute at least 90% of its REIT taxable income (determined before the deduction for dividends paid and excluding any net capital gains) each year to the holders of common shares. To the extent the Company satisfies the 90% distribution requirement but distributes less than 100% of its taxable income, it will be subject to federal income tax on the retained taxable income. In the event of downturns in its operating results, unanticipated capital improvements to the Property or other factors, the Company may be unable to declare or pay distributions to the holders of common shares. The timing and amount of distributions are in the sole discretion of our board of directors, which will consider, among other factors, our financial performance, any debt service obligations, any debt covenants, capital expenditure requirements and REIT distribution requirements. We cannot assure you that we will generate sufficient cash from our property portfolio in order to fund distributions to holders of common shares.

If we pay distributions from sources other than our cash flow from operations, we will have less funds available for investments and your overall return will be reduced.

Our organization documents do not prohibit us from paying distributions from any source, including, borrowings, or sales of assets. If we pay distributions from financings, the net proceeds from this or future offerings or other sources other than our cash flow from operations, we will have less funds available for investments in real estate properties and other real estate-related assets and the number of real estate properties that we invest in and the overall return to our shareholders may be reduced. If we fund distributions from borrowings, our interest expense and other financing costs, as well as the repayment of such borrowings, will reduce our earnings and cash flow from operations available for distribution in future periods, and accordingly your overall return may be reduced. If we fund distributions from the sale of assets or the maturity, payoff or settlement of debt investments, this will affect our ability to generate cash flows from operations in future periods.

Our debt service obligations could adversely affect our overall operating results, may jeopardize our qualification as a REIT, and could adversely affect our ability to make distributions to the holders of our common shares and the market price of our common shares.

Although our governing documents contain limitations related to certain types of debt financing and cross-subsidiary guarantees, in general, these limitations do not restrict the amount of debt that we can incur, directly or through the Property Subsidiaries and their respective subsidiaries, and our board of directors may approve increases in our leverage at any time without the approval of the holders of our common shares. As a result, we may be able to incur substantial additional debt, including secured debt, in the future. The Initial Portfolio’s existing debt and the incurrence of any new debt could subject us to many risks, including the risk that:

The aspects of the Initial Portfolio’s existing debt under the Loans that could subject us to such risks, include, but are not limited to: (i) the Property Subsidiaries' indemnification obligations in respect thereof, (ii) the cross-collateralization granted under the loan provided by Cantor that not only encumbers, and can be triggered by the debt allocated to, two properties within the Initial Portfolio, but also two other properties owned entirely by Alfons Melohn, and (iii) the cross-collateralization granted under the loan provided by Benefit that not only encumbers, and can be triggered by the debt allocated to, thirteen properties within the Initial Portfolio, but also two other properties owned entirely by Alfons Melohn.

Any adverse changes in our Manager’s financial health or our relationship with our Manager or its affiliates could hinder our operating performance and the return on your investment.

We utilize our Manager’s personnel to perform services on its behalf for us. Our ability to achieve our investment objectives and to pay distributions is dependent upon the performance of our Manager in the identification and acquisition or origination of investments, the management of our assets and operation of our day-to-day activities. Any adverse changes in our Manager’s financial condition or our relationship with our Manager could hinder our Manager’s ability to successfully manage our operations and our portfolio of investments.

FINRA sales practice requirements may also limit your ability to buy and sell our common shares, which could depress the price of our shares.

We intend to apply for either (a) to list our common shares on the NASDAQ or NYSE or (b) for quotation of our common shares with the OTC, at which time, if successful, we will be subject to FINRA rules which require broker-dealers to have reasonable grounds for believing that an investment is suitable for a customer before recommending that investment to the customer. Prior to recommending speculative low-priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status and investment objectives, among other things. Under interpretations of these rules, FINRA believes that there is a high probability such speculative low-priced securities will not be suitable for at least some customers. Thus, even if our common shares become listed or quoted, FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common shares, which may limit your ability to buy and sell our shares, have an adverse effect on the market for our shares, and thereby depress our share price.

If we are unable to repay our debt obligations in the future, we may be forced to refinance debt or dispose of or further encumber our properties, which could adversely affect distributions to the holders of our common shares.

If we or its subsidiaries do not have sufficient funds to repay any of our or their current or future debt (including the debt incurred in connection with the Initial Portfolio) at maturity, or before maturity in the event of a breach of our or their debt agreements and our or their lenders exercise their right to accelerate repayment, it may be necessary to refinance our debt through additional debt or equity financings. If we or our subsidiaries are unable to refinance our or their debt on acceptable terms, we may be forced to dispose of its interest in the properties, or our subsidiaries may be forced to dispose of the properties, on disadvantageous terms, potentially resulting in losses. To the extent we or our subsidiaries cannot meet any current or future debt service obligations, we will risk losing the properties or any interest therein. Adverse economic conditions could also cause the terms on which we or our subsidiaries borrow in the future to be unfavorable. We could be required to liquidate our interest in our properties or our subsidiaries could be required to liquidate the properties in order to meet their respective debt service obligations at times which may not permit us to receive an attractive return on our investment.

Interest expense on any debt incurred may limit cash available for distribution to the holders of our common shares.

We may incur, directly or through our Property Subsidiaries or through other subsidiaries, indebtedness that bears interest at variable rates. Higher interest rates could increase debt service requirements on any variable rate debt incurred and could reduce the amounts available for distribution to the holders of our common shares, as well as reduce funds available for operations, capital expenditure or other purposes.

Failure to hedge effectively against interest rate changes in the future may adversely affect our results of operations and our ability to make distributions to the holders of our common shares.

To the extent consistent with our intention to qualify us as a REIT for federal income tax purposes, we may obtain in the future one or more forms of interest rate protection for the Company – in the form of swap agreements, interest rate cap contracts or similar agreements – to “hedge” against the possible negative effects of interest rate fluctuations. However, we cannot assure you that any hedging will relieve the adverse effects of interest rate increases or that counterparties under these agreement will honor their obligations thereunder.

Risks Related to Compliance and Regulation

We are offering our common shares pursuant to recent amendments to Regulation A promulgated pursuant to the Jumpstart Our Business Startups Act of 2012, or the JOBS Act, and we cannot be certain if the reduced disclosure requirements applicable to Tier 2 issuers will make our common shares less attractive to investors as compared to a traditional initial public offering.

As a Tier 2 issuer, we will be subject to scaled disclosure and reporting requirements, which may make our common shares less attractive to investors who are accustomed to the enhanced disclosure and more frequent financial reporting of a traditional initial public offering. In addition, given the relative lack of regulatory guidance regarding the recent amendments to Regulation A, there is a significant amount of regulatory uncertainty in regards to how the SEC or the individual state securities regulators will regulate both the offer and sale of our securities, as well as any ongoing compliance that we may be subject to. If our scaled disclosure and reporting requirements, regulatory uncertainty regarding Regulation A, a perception that the prohibition on raising more than $50,000,000 in any 12-month period is too constraining, or a perception that our financial accounting is not as transparent as that of other REITs, reduces the attractiveness of our common shares, we may be unable to raise the necessary funds necessary to develop a diversified portfolio of residential real estate investments, which could severely affect the value of our common shares.

Our use of Form 1-A and our reliance on Regulation A for this offering may make it more difficult to raise capital as and when we need it, as compared to if we were conducting a traditional initial public offering on Form S-11.

Because of the exemptions from various reporting requirements provided to us under Regulation A and because we are only permitted to raise up to $50,000,000 in any 12 month period under Regulation A (although we may raise capital in other ways), we may be less attractive to investors and it may be difficult for us to raise additional capital as and when we need it. Investors may be unable to compare our business with other companies in our industry if they believe that our financial accounting is not as transparent as other companies in our industry. If we are unable to raise additional capital as and when we need it, our financial condition and results of operations may be materially and adversely affected.

There may be deficiencies with our internal controls that require improvements, and if we are unable to adequately evaluate internal controls, we may be subject to sanctions.

As a Tier 2 issuer, we will not need to provide a report on the effectiveness of our internal controls over financial reporting, and we will be exempt from the auditor attestation requirements concerning any such report so long as we are a Tier 2 issuer. We are in the process of evaluating whether our internal control procedures are effective and therefore there is a greater likelihood of undiscovered errors in our internal controls or reported financial statements as compared to issuers that have conducted such evaluations.

Maintenance of our Investment Company Act exemption imposes limits on our operations, which may adversely affect our operations.

We intend to continue to conduct our operations so that neither we nor any of our subsidiaries is required to register as an investment Company under the Investment Company Act. We anticipate that we will hold real estate and real estate-related assets described below (i) directly, (ii) through wholly-owned subsidiaries, (iii) through majority-owned joint venture subsidiaries, and, (iv) through minority-owned joint venture subsidiaries.

We intend, directly or through our subsidiaries, invest in and manage a diversified portfolio of residential real estate investments. We expect to use substantially all of the net proceeds from this offering to acquire a diversified portfolio of residential real estate properties.

In connection with the Section 3(a)(1)(C) of the Investment Company Act analysis, the determination of whether an entity is a majority-owned subsidiary of our Company is made by us. The Investment Company Act defines a majority-owned subsidiary of a person as a Company 50% or more of the outstanding voting securities of which are owned by such person, or by another Company which is a majority-owned subsidiary of such person. The Investment Company Act further defines voting security as any security presently entitling the owner or holder thereof to vote for the election of directors of a Company. We treat companies in which we own at least a majority of the outstanding voting securities as majority-owned subsidiaries. We also treat subsidiaries of which we or our wholly-owned or majority-owned subsidiary is the manager (in a manager-managed entity) or managing member (in a member-managed entity) or in which our agreement or the agreement of our wholly-owned or majority-owned subsidiary is required for all major decisions affecting the subsidiaries (referred to herein as “Controlled Subsidiaries”), as majority-owned subsidiaries even though none of the interests issued by such Controlled Subsidiaries meets the definition of voting securities under the Investment Company Act. We reached our conclusion on the basis that the interests issued by the Controlled Subsidiaries are the functional equivalent of voting securities. We have not asked the SEC staff for concurrence of our analysis, our treatment of such interests as voting securities, or whether the Controlled Subsidiaries, or any other of our subsidiaries, may be treated in the manner in which we intend, and it is possible that the SEC staff could disagree with any of our determinations. If the SEC staff were to disagree with our treatment of one or more companies as majority-owned subsidiaries, we would need to adjust our strategy and our assets. Any such adjustment in our strategy could have a material adverse effect on us.

Certain of our subsidiaries may rely on the exclusion provided by Section 3(c)(5)(C) under the Investment Company Act. Section 3(c)(5)(C) of the Investment Company Act is designed for entities “primarily engaged in the business of purchasing or otherwise acquiring mortgages and other liens on and interests in real estate.” This exclusion generally requires that at least 55% of the entity’s assets on an unconsolidated basis consist of qualifying real estate assets and at least 80% of the entity’s assets consist of qualifying real estate assets or real estate-related assets. These requirements limit the assets those subsidiaries can own and the timing of sales and purchases of those assets.

To classify the assets held by our subsidiaries as qualifying real estate assets or real estate-related assets, we will rely on no-action letters and other guidance published by the SEC staff regarding those kinds of assets, as well as upon our analyses (in consultation with outside counsel) of guidance published with respect to other types of assets. There can be no assurance that the laws and regulations governing the Investment Company Act status of companies similar to ours, or the guidance from the SEC or its staff regarding the treatment of assets as qualifying real estate assets or real estate-related assets, will not change in a manner that adversely affects our operations. In fact, in August 2011, the SEC published a concept release in which it asked for comments on this exclusion from regulation. To the extent that the SEC staff provides more specific guidance regarding any of the matters bearing upon our exemption from the need to register or exclusion under the Investment Company Act, we may be required to adjust our strategy accordingly. Any additional guidance from the SEC staff could further inhibit our ability to pursue the strategies that we have chosen.

Furthermore, although we intend to monitor the assets of our subsidiaries regularly, there can be no assurance that our subsidiaries will be able to maintain their exclusion from registration. Any of the foregoing could require us to adjust our strategy, which could limit our ability to make certain investments or require us to sell assets in a manner, at a price or at a time that we otherwise would not have chosen. This could negatively affect the value of our common shares, the sustainability of our business model and our ability to make distributions.

Registration under the Investment Company Act would require us to comply with a variety of substantive requirements that impose, among other things:

If we were required to register as an investment Company but failed to do so, we could be prohibited from engaging in our business, and criminal and civil actions could be brought against us.

Registration with the SEC as an investment company would be costly, would subject us to a host of complex regulations and would divert attention from the conduct of our business, which could materially and adversely affect us. In addition, if we purchase or sell any real estate assets to avoid becoming an investment Company under the Investment Company Act, our net asset value, the amount of funds available for investment and our ability to pay distributions to our shareholders could be materially adversely affected.

Risks Related to our Manager and Conflicts of Interest

We depend on our Manager for the success of the Company and upon access to our Manager’s investment professionals and contractors. We may not find a suitable replacement for our Manager if our Manager is terminated, or if key personnel leave the employment of our Manager or otherwise become unavailable to us.

We do not expect to have any employees and we rely completely on our Manager to provide us with administrative and certain advisory services. We are completely reliant on our Manager, which has significant discretion as to the implementation of the operating policies and strategies of our Company. We depend on the diligence, skill and network of business contacts of our Manager. We hope to benefit from the personnel, relationships and experience of the executive team and other personnel of our Manager. Our Manager’s executive officers and key personnel will monitor and manage the properties of the Company; therefore, our success will depend on their continued service.

The departure of any, or a significant number, of the Manager’s, personnel could have a material adverse effect on our ability to achieve its investment objectives. In addition, we offer no assurance that our Manager will remain our Manager, or that we will continue to have access to its personnel. Our operating agreement provides that our Manager will serve as our manager for an indefinite term, but that our Manager may be removed by us, or may choose to withdraw as manager, under certain circumstances. If our Manager is removed and no suitable replacement is found to manage the Company, we may not be able to execute our business plan.

The ability of our Manager and its officers and other personnel to engage in other business activities, including managing other similar companies, may reduce the time our Manager spends managing the business of the Company and may result in certain conflicts of interest.

Certain of our Manager’s officers and directors and of our own officers and directors also serve or may serve as officers, directors or employees of our other companies unaffiliated with our Company. These other business activities may reduce the time these persons spend managing our business. In addition, these persons may have obligations to those entities, the fulfillment of which might not be in the best interests of us, or any of our shareholders. Our board of directors, our officers and our Manager and its officer and directors may face conflicts of interest in allocating sale, financing, leasing and other business opportunities among the real properties owned by the companies. As a result, there may be times when our Manager and its affiliates have interests that differ from those of our Company and our shareholders, which may affect shareholders’ investment returns.

Our operating agreement was prepared by related parties and its terms, including fees payable to our Manager, may not be as favorable to the Company as if they had been negotiated with an unaffiliated third party.

Our operating agreement was prepared by related parties and its terms, including fees payable by the Company to our Manager, may not be as favorable to the Company as if they had been negotiated with an unaffiliated third party.

The removal of our Manager is generally limited to cause, and certain disposition events related to the Company, which may make it difficult or costly to end our relationship with our Manager.

Termination of our Manager is generally limited to cause and certain disposition events related to the Company. The Manager may be terminated for “cause” by our Board of Directors after a 2/3 affirmative vote of our members. “Cause” as defined in our operating agreement includes certain material breaches, certain acts constituting fraud, misappropriation of funds, embezzlement and gross negligence, certain bankruptcy matters and felony convictions involving our Manager and the dissolution of our Manager. Unsatisfactory financial performance does not constitute “cause” under the operating agreement. These provisions make it difficult to end the Company’s relationship with our Manager, even if we believe our Manager’s performance is not satisfactory. Other than accrued fees payable to our Manager, no additional compensation will be paid to our Manager in the event of the removal of our Manager.

Our Manager’s liability to the Company is limited under our operating agreement, and the Company has agreed to indemnify our Manager against certain liabilities. As a result, the Company could experience poor performance or losses for which our Manager would not be liable.

Pursuant to our operating agreement, our Manager, its officers, shareholders, members, managers, directors, personnel, any person or entity controlling or controlled by our Manager and any of their officers, shareholders, members, managers, directors, employees, consultants and personnel, and any person providing advisory services to our Manager are not liable to us, our directors, our shareholders or any subsidiary’s shareholders or partners for acts or omissions performed in accordance with and pursuant to the operating agreement, except because of acts constituting bad faith, willful misconduct, gross negligence, or reckless disregard of their duties under the operating agreement, as determined by a final non-appealable order of a court of competent jurisdiction. The Company will indemnify our Manager, its officers, shareholders, members, managers, directors, personnel, any person or entity controlling or controlled by our Manager and any of their officers, shareholders, members, managers, directors, employees, consultants and personnel, and any person providing advisory services to our Manager with respect to all expenses, losses, damages, liabilities, demands, charges and claims arising from acts of our Manager not constituting bad faith, willful misconduct, gross negligence, or reckless disregard of duties, performed in good faith in accordance with and pursuant to the operating agreement. These provisions could result in (a) the Company experiencing poor performance or other losses caused in whole or in part by our Manager (or any other of above-mentioned related parties) for which we would not have any recourse against our Manager (or these related parties), or (b) the Company incurring substantial expenses in fulfilling its indemnification obligation to the Manager (or these related parties).

Our operating agreement contains provisions that reduce or eliminate duties (including fiduciary duties) of our Manager.

Our operating agreement provides that our Manager, in exercising its rights in its capacity as the Manager will be entitled to consider only such interests and factors as it desires, including its own interests, and will have no duty or obligation (fiduciary or otherwise) to give any consideration to any interest of or factors affecting us, or any of our shareholders and will not be subject to any different standards imposed by our operating agreement, the Delaware LLC Act or under any other law, rule or regulation or in equity. These modifications of fiduciary duties are expressly permitted by Delaware law.

We have agreed to limit remedies available to us and our shareholders for actions by our Manager that might otherwise constitute a breach of duty.

We have agreed to limit the obligations our Manager to us under our operating agreement. In addition, our Manager maintains a contractual, as opposed to a fiduciary relationship, with us and our shareholders. Accordingly, we and our shareholders will only have recourse and be able to seek remedies against our Manager to the extent they breach their obligations pursuant to our operating agreement, as applicable. Furthermore, we have agreed to limit the liability of our Manager and to indemnify our Manager against certain liabilities. These provisions are detrimental to shareholders because they restrict the remedies available to them for actions that without those limitations might constitute breaches of duty, including fiduciary duties. By purchasing common shares, you will be treated as having consented to the provisions set forth in the operating agreement. In addition, we may choose not to enforce, or to enforce less vigorously, our rights under the operating agreement because of our desire to maintain our ongoing relationship with our Manager.

The incentive fee we pay our Manager may induce it to make riskier investments, which could adversely affect our financial condition, results of operations and the value of our common shares.

The incentive fee payable by us to our Manager is determined based on AFFO, which may create an incentive for our Manager to make investments that are risky or more speculative than would otherwise be in our best interests. In evaluating investments and other management strategies, the incentive fee structure may lead our Manager to place undue emphasis on the maximization of AFFO at the expense of other criteria, such as preservation of capital, in order to increase its incentive fee. Investments with higher yields generally have higher risk of loss than investments with lower yields, and could result in higher investment losses, particularly during cyclical economic downturns, which could adversely affect the value of our common shares.

Risks Related to Our Investments

Residential real estate assets that we currently own and may acquire in the future will be subject to the risks typically associated with real estate.

Residential real estate assets that we currently own and may acquire in the future will be subject to the risks typically associated with real estate. The value of real estate may be adversely affected by a number of risks, including:

•              natural disasters such as hurricanes, earthquakes and floods;

•              acts of war or terrorism, including the consequences of terrorist attacks, such as those that occurred on September 11, 2001;

•              adverse changes in national and local economic and real estate conditions;

•              an oversupply of (or a reduction in demand for) residential common shares in the areas where particular properties are located and the attractiveness of particular properties to prospective tenants;

•              changes in governmental laws and regulations, fiscal policies and zoning ordinances and the related costs of compliance therewith and the potential for liability under applicable laws;

•              costs of remediation and liabilities associated with environmental conditions affecting properties; and

•              the potential for uninsured or underinsured property losses.

The value of each property that we may acquire will be affected significantly by its ability to generate cash flow and net income, which in turn depends on the amount of rental or other income that can be generated net of expenses required to be incurred with respect to the property. Many expenditures associated with properties (such as operating expenses and capital expenditures) cannot be reduced when there is a reduction in income from the properties. These factors may have a material adverse effect on the value that we can realize from our assets.

The actual rents we receive for the properties we currently own and that we may acquire in the future may be less than estimated market rents, and we may experience a decline in realized rental rates from time to time, which could adversely affect our financial condition, results of operations and cash flow.

As a result of potential factors, including competitive pricing pressure in our markets, a general economic downturn and the desirability of properties we currently own and that we may acquire in the future compared to other properties in our markets, we may be unable to realize our estimated market rents across the properties in our portfolio. In addition, depending on market rental rates at any given time as compared to expiring leases in our portfolio, from time to time rental rates for expiring leases may be higher than starting rental rates for new leases. If we are unable to obtain sufficient rental rates across our portfolio, then our ability to generate cash flow growth will be negatively impacted.

Properties that have significant vacancies could be difficult to sell, which could diminish the return on these properties.

A property may incur vacancies either by the expiration of tenant leases or the continued default of tenants under their leases. If vacancies continue for a long period of time, we may suffer reduced revenues resulting in less cash available for distribution to our shareholders. In addition, the resale value of the property could be diminished because the market value of our properties will depend principally upon the value of the cash flow generated by the leases associated with that property. Such a reduction in the resale value of a property could also reduce the value of our shareholders’ investment.

Further, a decline in general economic conditions in the U.S. generally could lead to an increase in tenant defaults, lower rental rates and less demand for residential common shares in those markets. As a result of these trends, we may be more inclined to provide leasing incentives to our tenants in order to compete in a more competitive leasing environment. Such trends may result in reduced revenue and lower resale value of properties, which may reduce your return.

We may enter into long-term leases with tenants in certain properties, which may not result in fair market rental rates over time.

We may enter into long-term leases with tenants of certain of our properties, or include renewal options that specify a maximum rate increase. These leases would provide for rent to increase over time; however, if we do not accurately judge the potential for increases in market rental rates, we may set the terms of these long-term leases at levels such that, even after contractual rent increases, the rent under our long-term leases is less than then-current market rates. Further, we may have no ability to terminate those leases or to adjust the rent to then-prevailing market rates. As a result, our cash available for distribution could be lower than if we did not enter into long-term leases.

We will depend on tenants for our revenue, and lease defaults or terminations could reduce our net income and limit our ability to make distributions to our shareholders.

The success of our investments materially depends on the financial stability of tenants. A default or termination by a tenant on its lease payments to us would cause us to lose the revenue associated with such lease and require us to find an alternative source of revenue to meet mortgage payments and prevent a foreclosure, if the property is subject to a mortgage. In the event of a tenant default or bankruptcy, we may experience delays in enforcing our rights as landlord and may incur substantial costs in protecting our investment and re-leasing our property. If a tenant defaults on or terminates a lease, we may be unable to lease the property for the rent previously received or sell the property without incurring a loss. These events could cause us to reduce the amount of distributions to you.

Short-term leases expose us to the effects of declining market rents, which could materially and adversely affect our results of operations and cash flow.

Substantially all of the apartment leases in the Initial Portfolio are for a term of one year or less, and the leases we may enter into with tenants of any properties that we may add in the future to our portfolio may be for similar terms. Because these leases generally permit the residents to leave at the end of the lease term without penalty, our rental revenues will be impacted by declines in market rents more quickly than if leases were for longer terms. These circumstances could materially and adversely affect our results of operations and cash flow, market price of our common shares or tour ability to service debt and to pay distributions to the holders of our common shares.

We may be required to make rent or other concessions and/or we may be required to incur significant capital expenditures to improve properties in order to retain the tenants or attract new tenants, which could materially and adversely affect our financial condition, results of operations and cash flow.

To the extent there are adverse economic conditions in the markets in which we currently own, and in which we may own, properties and the demand for apartment units diminish, we will be required to make rent or other concessions to tenants, accommodate increased requests for renovations, or provide additional services to the tenants. As a result, we may have to make significant capital or other expenditures in order to retain tenants or to attract new tenants in sufficient numbers. Additionally, we may need to raise capital to make such expenditures. If we are unable to do so or capital is otherwise unavailable, we may be unable to make the required expenditures. This could result in non-renewals by tenants upon expiration of the leases, which could materially and adversely affect our financial condition, results of operations, cash flow and per share trading price of our common shares.

We and the Property Manager may not be able to control operating costs, or our expenses may remain constant or increase, even if income from properties decreases, causing our results of operations to be adversely affected.

Our financial results depend substantially on leasing units in properties to tenants on terms favorable to us. Costs associated with real estate investment, such as real estate taxes, insurance and maintenance costs, generally are not reduced even when a property is not fully occupied, rental rates decrease or other circumstances cause a reduction in income from the property. As a result, cash flow from the operations may be reduced if tenants do not pay their rents or we are unable to rent the units on favorable terms. Under those circumstances, we might not be able to enforce our’ rights as landlord without delays and we may incur substantial legal costs.

Increases in property taxes would increase operating costs, reduce its income and adversely affect our ability to make distributions to the holders of common shares.

Properties we currently own are, and properties that we may acquire in the future will be, subject to real and personal property taxes. These taxes may increase as tax rates change and as the properties are assessed or reassessed by taxing authorities. If property taxes increase, our financial condition, results of operations and our ability to make distributions to the holders of our common shares could be materially and adversely affected and the market price of our common shares could decline.

Competition could limit our ability to lease apartments or increase or maintain rents, which could materially and adversely affect our results of operations and cash flow.

Properties we currently own and that we may acquire in the future may compete with other housing alternatives to attract residents, including other rental apartments, condominiums and single-family homes that are available for rent, as well as new and existing condominiums and single-family homes for sale. Competitive residential housing in the areas we currently own properties and where we may acquire properties in the future could adversely affect our ability to lease apartment s and to increase or maintain rental rates.

Potential development and construction delays and resultant increased costs and risks may hinder our operating results and decrease our net income.

From time to time we may acquire properties that are under development or construction. Investments in such properties will be subject to the uncertainties associated with the development and construction of real property, including those related to re-zoning land for development, environmental concerns of governmental entities and/or community groups and our builders’ ability to build in conformity with plans, specifications, budgeted costs and timetables. If a builder fails to perform, we may resort to legal action to rescind the purchase or the construction contract or to compel performance. A builder’s performance may also be affected or delayed by conditions beyond the builder’s control. Delays in completing construction could also give tenants the right to terminate preconstruction leases. We may incur additional risks when we make periodic progress payments or other advances to builders before they complete construction. These and other factors can result in increased costs of a project or loss of our investment. In addition, we will be subject to normal lease-up risks relating to newly constructed projects. We also must rely on rental income and expense projections and estimates of the fair market value of property upon completion of construction when agreeing upon a purchase price at the time we acquire the property. If our projections are inaccurate, we may pay too much for a property, and the return on our investment could suffer.

Actions of any joint venture partners that we may have in the future could reduce the returns on joint venture investments and decrease our shareholders’ overall return.

We may enter into joint ventures to acquire properties and other assets. The Initial Portfolio that we own is currently owned together with a joint venture partner. We may also purchase and develop properties in joint ventures or in partnerships, co-tenancies or other co-ownership arrangements. Such investments may involve risks not otherwise present with other methods of investment, including, for example, the following risks:

•              that our co-venturer, co-tenant or partner in an investment could become insolvent or bankrupt;

•              that such co-venturer, co-tenant or partner may at any time have economic or business interests or goals that are or that become inconsistent with our business interests or goals;

•              that such co-venturer, co-tenant or partner may be in a position to take action contrary to our instructions or requests or contrary to our policies or objectives; or

•              that disputes between us and our co-venturer, co-tenant or partner may result in litigation or arbitration that would increase our expenses and prevent our officers and directors from focusing their time and effort on our operations.

Any of the above might subject a property to liabilities in excess of those contemplated and thus reduce our returns on that investment and the value of your investment.

Costs imposed pursuant to governmental laws and regulations may reduce our net income and the cash available for distributions to our shareholders.

Real property and the operations conducted on real property are subject to federal, state and local laws and regulations relating to protection of the environment and human health. We could be subject to liability in the form of fines, penalties or damages for noncompliance with these laws and regulations. These laws and regulations generally govern wastewater discharges, air emissions, the operation and removal of underground and above-ground storage tanks, the use, storage, treatment, transportation and disposal of solid and hazardous materials, the remediation of contamination associated with the release or disposal of solid and hazardous materials, the presence of toxic building materials and other health and safety-related concerns.

Some of these laws and regulations may impose joint and several liability on the tenants, owners or operators of real property for the costs to investigate or remediate contaminated properties, regardless of fault, whether the contamination occurred prior to purchase, or whether the acts causing the contamination were legal. Activities of our tenants, the condition of properties at the time we buy them, operations in the vicinity of our properties, such as the presence of underground storage tanks, or activities of unrelated third parties may affect our properties.

The presence of hazardous substances, or the failure to properly manage or remediate these substances, may hinder our ability to sell, rent or pledge such property as collateral for future borrowings. Any material expenditures, fines, penalties or damages we must pay will reduce our ability to make distributions and may reduce the value of your investment.

The costs of defending against claims of environmental liability, of complying with environmental regulatory requirements, of remediating any contaminated property or of paying personal injury or other damage claims could reduce the amounts available for distribution to our shareholders.

Under various federal, state and local environmental laws, ordinances and regulations, a current or previous real property owner or operator may be liable for the cost of removing or remediating hazardous or toxic substances on, under or in such property. These costs could be substantial. Such laws often impose liability whether or not the owner or operator knew of, or was responsible for, the presence of such hazardous or toxic substances. Environmental laws also may impose liens on property or restrictions on the manner in which property may be used or businesses may be operated, and these restrictions may require substantial expenditures or prevent us from entering into leases with prospective tenants that may be impacted by such laws. Environmental laws provide for sanctions for noncompliance and may be enforced by governmental agencies or, in certain circumstances, by private parties. Certain environmental laws and common law principles could be used to impose liability for the release of and exposure to hazardous substances, including asbestos-containing materials and lead-based paint. Third parties may seek recovery from real property owners or operators for personal injury or property damage associated with exposure to released hazardous substances and governments may seek recovery for natural resource damage. The costs of defending against claims of environmental liability, of complying with environmental regulatory requirements, of remediating any contaminated property, or of paying personal injury, property damage or natural resource damage claims could reduce the amounts available for distribution to you.

We currently expect that all of the properties we may acquire will be subject to Phase I environmental assessments at the time they are acquired ; however, such assessments may not provide complete environmental histories due, for example, to limited available information about prior operations at the properties or other gaps in information at the time we acquire the property. A Phase I environmental assessment is an initial environmental investigation to identify potential environmental liabilities associated with the current and past uses of a given property. If any of our properties were found to contain hazardous or toxic substances after our acquisition, the value of our investment could decrease below the amount paid for such investment. In addition, real estate-related investments in which we invest may be secured by properties with recognized environmental conditions. Where we are secured creditors, we will attempt to acquire contractual agreements, including environmental indemnities, that protect us from losses arising out of environmental problems in the event the property is transferred by foreclosure or bankruptcy; however, no assurances can be given that such indemnities would fully protect us from responsibility for costs associated with addressing any environmental problems related to such properties.

Costs associated with complying with the Americans with Disabilities Act may decrease cash available for distributions.

Properties which we have acquired and which we may acquire in the future may be subject to the Americans with Disabilities Act of 1990, as amended, or the ADA. Under the ADA, all places of public accommodation are required to comply with federal requirements related to access and use by disabled persons. The ADA has separate compliance requirements for “public accommodations” and “commercial facilities” that generally require that buildings and services be made accessible and available to people with disabilities. The ADA’s requirements could require removal of access barriers and could result in the imposition of injunctive relief, monetary penalties or, in some cases, an award of damages. Any funds used for ADA compliance will reduce our net income and the amount of cash available for distributions to you.

Uninsured losses relating to real property or excessively expensive premiums for insurance coverage could reduce our cash flows and the return on our shareholders’ investment.

There are types of losses, generally catastrophic in nature, such as losses due to wars, acts of terrorism, earthquakes, floods, hurricanes, pollution or environmental matters that are uninsurable or not economically insurable, or may be insured subject to limitations, such as large deductibles or co-payments. Insurance risks associated with potential acts of terrorism could sharply increase the premiums we pay for coverage against property and casualty claims. Additionally, mortgage lenders in some cases insist that property owners purchase coverage against terrorism as a condition for providing mortgage loans. Such insurance policies may not be available at reasonable costs, if at all, which could inhibit our ability to finance or refinance our properties. In such instances, we may be required to provide other financial support, either through financial assurances or self-insurance, to cover potential losses. We may not have adequate coverage for such losses. If any properties incur a casualty loss that is not fully insured, the value of our assets will be reduced by any such uninsured loss, which may reduce the value of your investment. In addition, other than any working capital reserve or other reserves we may establish, we have no source of funding to repair or reconstruct any uninsured property. Also, to the extent we must pay unexpectedly large amounts for insurance, we could suffer reduced earnings that would result in lower distributions to you.

Majority-owned subsidiaries we may invest in will be subject to specific risks relating to the particular subsidiary.

We may also invest in majority-owned subsidiaries owning real estate where we are entitled to receive a preferred economic return. Such investments may be subordinate to debt financing. These investments will involve special risks relating to the particular subsidiary, including the financial condition and business outlook of the subsidiary. These investments are subordinate to debt financing and will be subject to risks of (i) limited liquidity in the secondary trading market, (ii) substantial market price volatility resulting from changes in prevailing interest rates, (iii) subordination to the prior claims of banks and other senior lenders to the issuer, (iv) the operation of mandatory sinking fund or call or redemption provisions during periods of declining interest rates that could cause the subsidiary to reinvest any redemption proceeds in lower yielding assets, (v) the possibility that earnings of the subsidiary may be insufficient to meet any distribution obligations and (vi) the declining creditworthiness and potential for insolvency of the subsidiary during periods of rising interest rates and economic downturn. As a result, we may not recover some or all of our capital, which could result in losses.

Investments in real estate are relatively illiquid and we may not be able to vary our portfolio in response to changes in economic and other conditions.

Many factors that are beyond our control affect the real estate market and could affect our ability to sell properties and other investments for the price, on the terms or within the time frame that we desire. These factors include general economic conditions, the availability of financing, interest rates and other factors, including supply and demand. Because real estate investments are relatively illiquid, we may have a limited ability to vary our portfolio in response to changes in economic or other conditions. Further, before we can sell a property on the terms we want, it may be necessary to expend funds to correct defects or to make improvements. However, we can give no assurance that we will have the funds available to correct such defects or to make such improvements. As a result, we expect many of our investments will be illiquid, and if we are required to liquidate all or a portion of our portfolio quickly, we may realize significantly less than the value at which we have previously recorded our investments and our ability to vary our portfolio in response to changes in economic and other conditions may be relatively limited, which could adversely affect our results of operations and financial condition.

Declines in the market values of investments we may make may adversely affect periodic reported results of operations and credit availability, which may reduce earnings and, in turn, cash available for distribution to our shareholders.

In the future, some of our assets may be classified for accounting purposes as “available-for-sale.” These investments are carried at estimated fair value and temporary changes in the market values of those assets will be directly charged or credited to shareholders’ equity without impacting net income on the income statement. Moreover, if we determine that a decline in the estimated fair value of an available-for-sale security falls below its amortized value and is not temporary, we will recognize a loss on that security on the income statement, which will reduce our earnings in the period recognized.

A decline in the market value of our assets may adversely affect us particularly in instances where we have borrowed money based on the market value of those assets. If the market value of those assets declines, the lender may require us to post additional collateral to support the loan. If we were unable to post the additional collateral, we may have to sell assets at a time when we might not otherwise choose to do so. A reduction in credit available may reduce our earnings and, in turn, cash available for distribution to shareholders.

Further, credit facility providers may require us to maintain a certain amount of cash reserves or to set aside unlevered assets sufficient to maintain a specified liquidity position, which would allow us to satisfy our collateral obligations. As a result, we may not be able to leverage our assets as fully as we would choose, which could reduce our return on equity. In the event that we are unable to meet these contractual obligations, our financial condition could deteriorate rapidly.

Market values of investments we make may decline for a number of reasons, such as changes in prevailing market rates, increases in defaults, increases in voluntary prepayments for those investments that we have that are subject to prepayment risk, widening of credit spreads and downgrades of ratings of the securities by ratings agencies.

Competition with third parties in acquiring properties and other investments may reduce our profitability and the return on your investment.

We anticipate significant competition with respect to the acquisition of properties and other investments with many other companies, including other REITs, insurance companies, commercial banks, private investment funds, hedge funds, specialty finance companies, online investment platforms and other investors, many of which have greater resources than us. We may not be able to compete successfully for investments. In addition, the number of entities and the amount of funds competing for suitable investments may increase. If we acquire properties and other investments at higher prices than our competitors and/or by using less-than-ideal capital structures, our returns will be lower and the value of our assets may not increase or may decrease significantly below the amount we paid for such assets. If such events occur, you may experience a lower return on your investment.

A prolonged economic slowdown, a lengthy or severe recession or declining real estate values could harm our operations.

Any investments we make may be susceptible to economic slowdowns or recessions, which could lead to financial losses in our investments and a decrease in revenues, net income and assets. An economic slowdown or recession, in addition to other non-economic factors such as an excess supply of properties, could have a material negative impact on the values of both commercial real estate and residential real estate properties.

If we sell a property by providing financing to the purchaser, we will bear the risk of default by the purchaser, which could delay or reduce the distributions available to our shareholders.

If we decide to sell any properties, we currently intend to use our best efforts to sell them for cash; however, in some instances, we may sell our properties by providing financing to purchasers. When we provide financing to a purchaser, we will bear the risk that the purchaser may default, which could reduce our cash distributions to shareholders. Even in the absence of a purchaser default, the distribution of the proceeds of the sale to our shareholders, or the reinvestment of the proceeds in other assets, will be delayed until the promissory note or other property we may accept upon a sale are actually paid, sold, refinanced or otherwise disposed.

Our Manager and its affiliates have not sponsored prior real estate investment programs that otherwise would be required to be disclosed under applicable rules and regulations of the SEC, which means that you will be unable to assess their prior performance with other investment programs.

Our Manager and its affiliates have not sponsored prior real estate investment programs that otherwise would be required to be disclosed under applicable rules and regulations of the SEC. Accordingly, this offering statement does not contain any information concerning prior performance of our Manager and its affiliates, which means that you will be unable to assess any results from their prior activities before deciding whether to purchase our common shares.

Risks Related to Our Organization and Structure

Our common shareholders will have limited voting rights and may be bound by either a majority or supermajority vote.

Our common shareholders will have voting rights only with respect to certain matters, primarily relating to amendments to our operating agreement that would adversely change the rights of the common shares, the liquidation of the issuer, and the sale of the Company or all of its assets. Each outstanding common share entitles the holder to one vote on all matters submitted to a vote of common shareholders. Generally, matters to be voted on by our shareholders must be approved by a majority of the votes cast by all shares present in person or represented by proxy, although the vote to remove our Manager for “cause” requires a two-thirds vote. If any vote occurs, you will be bound by the majority or supermajority vote, as applicable, even if you did not vote with the majority or supermajority.

Certain provisions of our operating agreement and Delaware law could hinder, delay or prevent a change of control of our Company.

Certain provisions of our operating agreement and Delaware law could have the effect of discouraging, delaying or preventing transactions that involve an actual or threatened change of control of our Company. These provisions include the following:

•              Authorization of additional shares, issuances of authorized shares and classification of shares without shareholder approval. Our operating agreement authorizes us to issue additional shares or other securities of our Company for the consideration and on the terms and conditions established by our board of directors without the approval of our shareholders. In particular, our board of directors is authorized to provide for the issuance of an unlimited amount of one or more classes or series of our shares, including preferred shares, and to fix the number of shares, the relative powers, preferences and rights, and the qualifications, limitations or restrictions applicable to each class or series thereof by resolution authorizing the issuance of such class or series. Our ability to issue additional shares and other securities could render more difficult or discourage an attempt to obtain control over our Company by means of a tender offer, merger or otherwise.

•              Delaware Business Combination Statute—Section 203. Section 203 of the DGCL, which restricts certain business combinations with interested shareholders in certain situations, does not apply to limited liability companies unless they elect to utilize it. Our operating agreement does not currently elect to have Section 203 of the DGCL apply to us. In general, this statute prohibits a publicly held Delaware corporation from engaging in a business combination with an interested shareholder for a period of three years after the date of the transaction by which that person became an interested shareholder, unless the business combination is approved in a prescribed manner. For purposes of Section 203, a business combination includes a merger, asset sale or other transaction resulting in a financial benefit to the interested shareholder, and an interested shareholder is a person who, together with affiliates and associates, owns, or within three years prior did own, 15% or more of voting common shares. Our board of directors may elect to amend our operating agreement at any time to have Section 203 apply to us.

•              Ownership limitations. To assist us in qualifying as a REIT, our operating agreement, subject to certain exceptions, provides that generally no person may own, or be deemed to own by virtue of the attribution provisions of the Code, either more than 9.8% in value or in number of our common shares, whichever is more restrictive, or more than 9.8% in value or in number of our shares, whichever is more restrictive. Accordingly, no person may own, or be deemed to own, more than 9.8% in value or in number of our shares, whichever is more restrictive. The ownership limits could have the effect of discouraging a takeover or other transaction in which shareholders might receive a premium for their common shares over the then prevailing market price or which holders might believe to be otherwise in their best interests. Furthermore, we will reject any investor’s subscription in whole or in part if we determine that such subscription would violate such ownership limits.

•              Exclusive authority of our board of directors to amend our operating agreement. Our operating agreement provides that our board of directors has the exclusive power to adopt, alter or repeal any provision of the operating agreement, unless such amendment would adversely change the rights of the shareholders. Thus, our shareholders generally may not effect changes to our operating agreement.

Your interest in us will be diluted if we issue additional common shares, which could reduce the overall value of your investment.

Potential investors in this offering do not have preemptive rights to any common shares or common shares we issue in the future. Under our operating agreement, we have authority to issue an unlimited number of additional common shares, common shares, or other securities, although, under Regulation A, we are only allowed to sell up to $50,000,000 of our common shares in any 12 month period (although we may raise capital in other ways). In particular, we are authorized, subject to the restrictions of Regulation A and other applicable securities laws, to provide for the issuance of an unlimited amount of one or more classes or series of shares in our Company, including preferred shares, and to fix the number of shares, the relative powers, preferences and rights, and the qualifications, limitations or restrictions applicable to each class or series thereof by resolution authorizing the issuance of such class or series, without shareholder approval. After your purchase in this offering, we may elect to (i) sell additional shares in this or future public offerings, or (ii) issue equity interests in private offerings. To the extent we issue additional equity interests after your purchase in this offering, your percentage ownership interest in us will be diluted. In addition, depending upon the terms and pricing of any additional offerings and the value of our investments, you may also experience dilution in the book value and fair value of your shares.

Risks Related to Our Status as a REIT

Failure to qualify as a REIT would cause us to be taxed as a regular corporation, which would substantially reduce funds available for distributions to our shareholders.

We believe that our organization and proposed ownership and method of operation will enable us to meet the requirements for qualification and taxation as a REIT. However, we cannot assure you that we will qualify as such. This is because qualification as a REIT involves the application of highly technical and complex provisions of the Code as to which there are only limited judicial and administrative interpretations and involves the determination of facts and circumstances not entirely within our control. Future legislation, new regulations, administrative interpretations or court decisions may significantly change the tax laws or the application of the tax laws with respect to qualification as a REIT or the U.S. federal income tax consequences of such qualification.

If we fail to qualify as a REIT in any taxable year, we will face serious tax consequences that will substantially reduce the funds available for distributions to our shareholders because:

•              we would not be allowed a deduction for dividends paid to shareholders in computing our taxable income and would be subject to U.S. federal income tax at regular corporate rates;

•              we could be subject to the U.S. federal alternative minimum tax and possibly increased state and local taxes; and

•             unless we are entitled to relief under certain U.S. federal income tax laws, we could not re-elect REIT status until the fifth calendar year after the year in which we failed to qualify as a REIT.

In addition, if we fail to qualify as a REIT, we will no longer be required to make distributions. As a result of all these factors, our failure to qualify as a REIT could impair our ability to expand our business and raise capital, and it would adversely affect the value of our common shares. See “U.S. Federal Income Tax Considerations” for a discussion of certain U.S. federal income tax considerations relating to us and our common shares.

Even if we qualify as a REIT, we may owe other taxes that will reduce our cash flows.

Even if we qualify for taxation as a REIT, we may be subject to certain U.S. federal, state and local taxes on our income and assets, on taxable income that we do not distribute to our shareholders, on net income from certain “prohibited transactions,” and on income from some activities conducted as a result of a foreclosure, and state or local income, property and transfer taxes. For example, to the extent we satisfy the 90% distribution requirement but distribute less than 100% of our REIT taxable income, we will be subject to U.S. federal corporate income tax on our undistributed taxable income. We also will be subject to a 4% nondeductible excise tax if the actual amount that we distribute to our shareholders in a calendar year is less than a minimum amount specified under the Code. As another example, we are subject to a 100% “prohibited transaction” tax on any gain from a sale of property that is characterized as held for sale, rather than investment, for U.S. federal income tax purposes, unless we comply with a statutory safe harbor or earn the gain through a taxable REIT subsidiary (“TRS”). Further, any TRS that we establish will be subject to regular corporate U.S. federal, state and local taxes. Any of these taxes would decrease cash available for distribution to shareholders.

REIT distribution requirements could adversely affect our liquidity and may force us to borrow funds during unfavorable market conditions.

In order to maintain our REIT status and to meet the REIT distribution requirements, we may need to borrow funds on a short-term basis or sell assets, even if the then-prevailing market conditions are not favorable for these borrowings or sales. In addition, we may need to reserve cash (including proceeds from this offering) to satisfy our REIT distribution requirements, even though there are attractive investment opportunities that may be available. To qualify as a REIT, we generally must distribute to our shareholders at least 90% of our net taxable income each year, excluding capital gains. In addition, we will be subject to corporate income tax to the extent we distribute less than 100% of our taxable income including any net capital gain. We intend to make distributions to our shareholders to comply with the requirements of the Code for REITs and to minimize or eliminate our corporate income tax obligation to the extent consistent with our business objectives. Our cash flows from operations may be insufficient to fund required distributions, for example as a result of differences in timing between the actual receipt of income and the recognition of income for U.S. federal income tax purposes, the effect of non-deductible capital expenditures, the creation of reserves or required debt service or amortization payments. The insufficiency of our cash flows to cover our distribution requirements could have an adverse impact on our ability to raise short- and long-term debt or sell equity securities in order to fund distributions required to maintain our REIT status. In addition, we will be subject to a 4% nondeductible excise tax on the amount, if any, by which distributions paid by us in any calendar year are less than the sum of 85% of our ordinary income, 95% of our capital gain net income and 100% of our undistributed income from prior years. To address and/or mitigate some of these issues, we may make taxable distributions that are in part paid in cash and in part paid in our common shares. In such cases our shareholders may have tax liabilities from such distributions in excess of the cash they receive. The treatment of such taxable Share distributions is not clear, and it is possible the taxable Share distribution will not count towards our distribution requirement, in which case adverse consequences could apply.

If we fail to invest a sufficient amount of the net proceeds from selling our common shares in real estate assets within one year from the receipt of the proceeds, we could fail to qualify as a REIT.

Temporary investment of the net proceeds from sales of our common shares in short-term securities and income from such investment generally will allow us to satisfy various REIT income and asset requirements, but only during the one-year period beginning on the date we receive the net proceeds. If we are unable to invest a sufficient amount of the net proceeds from sales of our common shares in qualifying real estate assets within such one-year period, we could fail to satisfy one or more of the gross income or asset tests and/or we could be limited to investing all or a portion of any remaining funds in cash or cash equivalents. If we fail to satisfy any such income or asset test, unless we are entitled to relief under certain provisions of the Code, we could fail to qualify as a REIT. See “U.S. Federal Income Tax Considerations.”

If we form a taxable REIT subsidiary (TRS), our overall tax liability could increase.

Any TRS we form will be subject to U.S. federal, state and local income tax on its taxable income. Accordingly, although our ownership of any TRSs may allow us to participate in the operating income from certain activities that we could not participate in without violating the REIT income tests requirements of the Code or incurring the 100% tax on gains from prohibited transactions, the TRS through which we earn such operating income or gain will be fully subject to corporate income tax. The after-tax net income of any TRS would be available for distribution to us; however, any dividends received by us from our domestic TRSs will only be qualifying income for the 95% REIT income test, not the 75% REIT income test. If we have any non-U.S. TRSs, then they may be subject to tax in jurisdictions where they operate and under special rules dealing with foreign subsidiaries, and they may generate income that is nonqualifying for either of the REIT income tests.

Although our use of TRSs may partially mitigate the impact of meeting certain requirements necessary to maintain our qualification as a REIT, there are limits on our ability to own and engage in transactions with TRSs, and a failure to comply with the limits would jeopardize our REIT qualification and may result in the application of a 100% excise tax.

A REIT may own up to 100% of the stock or securities of one or more TRSs. A TRS may hold assets and earn income that would not be qualifying assets or income if held or earned directly by a REIT. A TRS also may sell assets without incurring the 100% the tax on prohibited transactions. Both the subsidiary and the REIT must jointly elect to treat the subsidiary as a TRS. A corporation of which a TRS directly or indirectly owns more than 35% of the voting power or value of the stock will automatically be treated as a TRS. Overall, no more than 25% (for taxable years beginning before January 1, 2018) or 20% (for taxable years beginning after December 31, 2017) of the value of a REIT’s assets may consist of stock or securities of one or more TRSs. In addition, the rules limit the deductibility of interest paid or accrued by a TRS to its parent REIT to assure that the TRS is subject to an appropriate level of corporate taxation. The rules also impose a 100% excise tax on certain transactions between a TRS and its parent REIT that are not conducted on an arm’s-length basis (for example if we charged our TRS interest in excess of an arm’s length rate). We may jointly elect with one or more subsidiaries for those subsidiaries to be treated as TRSs for U.S. federal income tax purposes. These TRSs will pay U.S. federal, state and local income tax on their taxable income, and their after-tax net income will be available for distribution to us but is not required to be distributed to us. We will monitor the value of our respective investments in any TRSs we may form for the purpose of ensuring compliance with TRS ownership limitations and intend to structure our transactions with any such TRSs on terms that we believe are arm’s-length to avoid incurring the 100% excise tax described above. There can be no assurance, however, that we will be able to comply with the 25% (for taxable years beginning before January 1, 2018) or 20% (for taxable years beginning after December 31, 2017) TRS limitation or to avoid application of the 100% excise tax.

Dividends payable by REITs generally do not qualify for reduced tax rates under current law.

The maximum U.S. federal income tax rate for certain qualified dividends payable to U.S. shareholders that are individuals, trusts and estates generally is 20%. Dividends payable by REITs, however, are generally not eligible for the reduced rates and therefore may be subject to a 39.6% maximum U.S. federal income tax rate on ordinary income when paid to such shareholders. The more favorable rates applicable to regular corporate dividends under current law could cause investors who are individuals, trusts and estates or are otherwise sensitive to these lower rates to perceive investments in REITs to be relatively less attractive than investments in the stocks of non-REIT corporations that pay dividends, which could adversely affect the value of the stock of REITs, including our common shares.

Complying with REIT requirements may cause us to forego otherwise attractive opportunities or to liquidate otherwise attractive investments.

To qualify as a REIT, we must continually satisfy tests concerning, among other things, the sources of our income, the nature and diversification of our assets, the amounts we distribute to our shareholders and the ownership of our common shares. We may be required to make distributions to our shareholders at disadvantageous times or when we do not have funds readily available for distribution. Thus, compliance with the REIT requirements may, for instance, hinder our ability to make certain otherwise attractive investments or undertake other activities that might otherwise be beneficial to us and our shareholders, or may require us to borrow or liquidate investments in unfavorable market conditions and, therefore, may hinder our investment performance. As a REIT, at the end of each calendar quarter, at least 75% of the value of our assets must consist of cash, cash items, U.S. Government securities and qualified “real estate assets.” The remainder of our investments in securities (other than cash, cash items, U.S. Government securities, securities issued by a TRS and qualified real estate assets) generally cannot include more than 10% of the outstanding voting securities of any one issuer or more than 10% of the total value of the outstanding securities of any one issuer. In addition, in general, no more than 5% of the value of our total assets (other than cash, cash items, U.S. Government securities, securities issued by a TRS and qualified real estate assets) can consist of the securities of any one issuer, no more than 25% (for taxable years beginning before January 1, 2018) or 20% (for taxable years beginning after December 31, 2017) of the value of our total securities can be represented by securities of one or more TRSs, and no more than 25% of the value of our total assets may be represented by “nonqualified publicly offered REIT debt instruments” (within the meaning of Section 856(c)(5)(L)(ii) of the Code). After meeting these requirements at the close of a calendar quarter, if we fail to comply with these requirements at the end of any subsequent calendar quarter, we must correct the failure within 30 days after the end of the calendar quarter or qualify for certain statutory relief provisions to avoid losing our REIT qualification. As a result, we may be required to liquidate from our portfolio or forego otherwise attractive investments. These actions could have the effect of reducing our income and amounts available for distribution to our shareholders.

You may be restricted from acquiring, or transferring certain amounts of our shares.

In order to maintain our REIT qualification, among other requirements, no more than 50% in value of our outstanding common shares may be owned, directly or indirectly, by five or fewer individuals, as defined in the Code to include certain kinds of entities, during the last half of any taxable year, other than the first year for which a REIT election is made. To assist us in qualifying as a REIT, our operating agreement contains an aggregate share ownership limit and a common shares ownership limit. Generally, any of our common shares owned by affiliated owners will be added together for purposes of the aggregate share ownership limit, and any common shares owned by affiliated owners will be added together for purposes of the common shares ownership limit.

If anyone attempts to transfer or own common shares in a way that would violate the aggregate share ownership limit or the common shares ownership limit (or would prevent us from continuing to qualify as a REIT), unless such ownership limits have been waived by our Manager, those common shares instead will be deemed transferred to a trust for the benefit of a charitable beneficiary and will be either redeemed by us or sold to a person whose ownership of the common shares will not violate the aggregate Share ownership limit or the common shares ownership limit and will not prevent us from qualifying as a REIT. If this transfer to a trust fails to prevent such a violation or our disqualification as a REIT, then the initial intended transfer or ownership will be null and void from the outset. Anyone who acquires or owns common shares in violation of the aggregate share ownership limit or the common shares ownership limit, unless such ownership limit or limits have been waived by our Manager, or the other restrictions on transfer or ownership in our operating agreement, bears the risk of a financial loss when the shares are sold, if the price of our shares falls between the date of purchase and the date of sale. Additionally, anyone that owns our common shares during any such period bears the risk of a decline in the market value of our common shares due to any such disqualifying acquisition or ownership.

Complying with REIT requirements may limit our ability to hedge effectively and may cause us to incur tax liabilities.

The REIT provisions of the Code substantially limit our ability to hedge our liabilities. Generally, income from a hedging transaction we enter into to manage risk of interest rate changes with respect to borrowings made or to be made to acquire or carry real estate assets or to offset certain other positions does not constitute “gross income” for purposes of the 75% or 95% gross income tests, provided certain circumstances are satisfied. To the extent that we enter into other types of hedging transactions, the income from those transactions is likely to be treated as non-qualifying income for purposes of both of the gross income tests. As a result of these rules, we may need to limit our use of advantageous hedging techniques or implement those hedges through a TRS. This could increase the cost of our hedging activities because our TRS would be subject to tax on income or gains resulting from hedges entered into by it or expose us to greater risks associated with changes in interest rates than we would otherwise want to bear. In addition, losses in our TRSs will generally not provide any tax benefit, except for being carried forward for use against future taxable income in the TRSs.

Our ability to revoke our REIT qualification without shareholder approval may cause adverse consequences to our shareholders.

Our board of directors may revoke or otherwise terminate our REIT election, without the approval of our shareholders, if it determines that it is no longer in our best interest to continue to qualify as a REIT. If we cease to be a REIT, we will not be allowed a deduction for dividends paid to shareholders in computing our taxable income and will be subject to U.S. federal income tax at regular corporate rates, as well as state and local taxes, which may have adverse consequences on our total return to our shareholders.

Investments outside the U.S. could present additional complications to our ability to satisfy the REIT qualification requirements and may subject us to additional taxes.

Although we do not expect to invest in non-U.S. real estate assets, if we were to make such investments, operating in functional currencies other than the U.S. dollar and in environments in which real estate transactions are customarily structured differently than they are in the U.S. or are subject to different legal rules may complicate our ability to structure non-U.S. investments in a manner that enables us to satisfy the REIT qualification requirements. In addition, non-U.S. investments may subject us to various non-U.S. tax liabilities, including withholding taxes.

We may be subject to a 100% penalty tax on any prohibited transactions that we enter into, or may be required to forego certain otherwise beneficial opportunities in order to avoid the penalty tax on prohibited transactions.

If we are found to have held, acquired or developed property primarily for sale to customers in the ordinary course of business, we may be subject to a 100% “prohibited transactions” tax under U.S. federal tax laws on the gain from disposition of the property unless (i) the disposition qualifies for a safe harbor exception for properties that have been held by us for at least two years (generally for the production of rental income) and that satisfy certain additional requirements or (ii) the disposition is made through a TRS and, therefore, is subject to corporate U.S. federal income tax.

Under existing law, whether property is held primarily for sale to customers in the ordinary course of a trade or business is a question of fact that depends on all the facts and circumstances. Our opportunistic business strategy may include investments that risk being characterized as investments in properties held primarily for sale to customers in the ordinary course of a trade or business. We intend to comply with the statutory safe harbor when selling properties (or when our joint ventures sell properties) outside of our TRSs that we believe might reasonably be characterized as held for sale, but compliance with the safe harbor may not always be practical. Moreover, because the determination of whether property is held primarily for sale to customers in the ordinary course of a trade or business is a question of fact that depends on all the facts and circumstances, the IRS might disagree with our characterization of sales outside the safe harbor. Thus, we may be subject to the 100% penalty tax on the gain from dispositions of property.

The potential application of the prohibited transactions tax could cause us to forego potential dispositions of other property or to forego other opportunities that might otherwise be attractive to us, or to hold investments or undertake such dispositions or other opportunities through a TRS, which would generally result in corporate income taxes being incurred.

Possible legislative, regulatory or other actions affecting REITs could adversely affect our shareholders and us.

The rules dealing with U.S. federal, state and local income taxation are constantly under review by persons involved in the legislative process and by the IRS and the U.S. Treasury Department. Changes to tax laws (which changes may have retroactive application) could adversely affect our shareholders or us. We cannot predict whether, when, in what forms, or with what effective dates, tax laws, regulations and rulings may be enacted, promulgated or decided, which could result in an increase in our, or our shareholders’, tax liability or require changes in the manner in which we operate in order to minimize increases in our tax liability. A shortfall in tax revenues for states and municipalities in which we operate may lead to an increase in the frequency and size of such changes. If such changes occur, we may be required to pay additional taxes on our assets or income or be subject to additional restrictions. These increased tax costs could, among other things, adversely affect our financial condition, the results of operations and the amount of cash available for the payment of dividends.

Shareholders are urged to consult with their own tax advisors with respect to the impact that legislation may have on their investment and the status of legislative, regulatory or administrative developments and proposals and their potential effect on their investment in our common shares.

A portion of our distributions may be treated as a return of capital for U.S. federal income tax purposes, which could reduce the basis of a shareholder’s investment in our common shares and may trigger taxable gain.

A portion of our distributions may be treated as a return of capital for U.S. federal income tax purposes. As a general matter, a portion of our distributions will be treated as a return of capital for U.S. federal income tax purposes if the aggregate amount of our distributions for a year exceeds our current and accumulated earnings and profits for that year. To the extent that a distribution is treated as a return of capital for U.S. federal income tax purposes, it will reduce a holder’s adjusted tax basis in the holder’s common shares, and to the extent that it exceeds the holder’s adjusted tax basis will be treated as gain resulting from a sale or exchange of such common shares. See “U.S. Federal Income Tax Considerations.”

Our ability to provide certain services to our tenants may be limited by the REIT rules, or may have to be provided through a TRS.

As a REIT, we generally cannot hold interests in rental property where tenants receive services other than services that are customarily provided by landlords, nor can we derive income from a third party that provides such services. If services to tenants at properties in which we hold an interest are limited to customary services, those properties may be disadvantaged as compared to other properties that can be operated without the same restrictions. However, we can provide such non-customary services to tenants or share in the revenue from such services if we do so through a TRS, though income earned through the TRS will be subject to corporate income taxes.

Our management team and its affiliates have limited experience managing a portfolio of assets owned by a REIT.

REITs are subject to numerous complex requirements in order to maintain their REIT status, including income and asset composition tests. Our management team and its affiliates have limited experience managing a portfolio in the manner intended to comply with such requirements. To the extent our Manager and its affiliates manage us in a manner that causes us to fail to be a REIT, it could adversely affect the value of our common shares.

Property taxes could increase due to property tax rate changes or reassessment, which could impact our cash flow.

Even if we qualify as a REIT for U.S. federal income tax purposes, we generally will be required to pay state and local taxes on our properties. The real property taxes on properties may increase as property tax rates change or as properties are assessed or reassessed by taxing authorities. If the property taxes we pay increase, our financial condition, results of operations, cash flow, per share trading price of our common shares and our ability to satisfy our principal and interest obligations and to make distributions to our shareholders could be adversely affected.

We may be subject to adverse tax consequences if certain sale-leaseback transactions are not characterized by the IRS as “true leases.”

We may purchase investments in real estate properties and lease them back to the sellers of such properties. In the event the IRS does not characterize such leases as “true leases,” we could be subject to certain adverse tax consequences, including an inability to deduct depreciation expense and cost recovery relating to such property, and under certain circumstances, we could fail to qualify as a REIT as a result.

Risks Related to Employee Benefit Plans and Individual Retirement Accounts

In some cases, if you fail to meet the fiduciary and other standards under ERISA, the Code or common law as a result of an investment in our common shares, you could be subject to liability for losses as well as civil penalties.

There are special considerations that apply to investing in our common shares on behalf of pension, profit sharing or 401(k) plans, health or welfare plans, individual retirement accounts or Keogh plans. If you are investing the assets of any of the entities identified in the prior sentence in our common shares, you should satisfy yourself that:

•              your investment is consistent with your fiduciary obligations under applicable law, including common law, ERISA and the Code;

•              your investment is made in accordance with the documents and instruments governing the trust, plan or IRA, including a plan’s investment policy;

•              your investment satisfies the prudence and diversification requirements of Sections 404(a)(1)(B) and 404(a)(1)(C) of ERISA, if applicable, and other applicable provisions of ERISA and the Code;

•              your investment will not impair the liquidity of the trust, plan or IRA;

•              your investment will not produce “unrelated business taxable income” for the plan or IRA;

•              you will be able to value the assets of the plan annually in accordance with ERISA requirements and applicable provisions of the applicable trust, plan or IRA document; and

•              your investment will not constitute a prohibited transaction under Section 406 of ERISA or Section 4975 of the Code.

FORWARD-LOOKING STATEMENTS

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

Our beliefs, assumptions and expectations can change as a result of many possible events or factors, not all of which are known to us or are within our control. If any such change occurs, the business, financial condition, liquidity and results of operations of the Company may vary materially from those expressed in, or implied by, our forward-looking statements. You should carefully consider these risks before you make an investment decision with respect to our common shares, along with, among others, the following factors that could cause actual results to vary from our forward-looking statements:

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. You should not rely on these forward-looking statements, which apply only as of the date of this offering circular. We are not obligated, and do not intend, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

USE OF PROCEEDS

The table below sets forth our estimated use of proceeds from this offering, assuming we sell $25,000,000 in shares, the maximum offering amount. Our common shares will be offered at $10.00 per share until , 2018.

We intend to use $6,000,000 of net proceeds to acquire the additional 51.01% interest in the Initial Portfolio. We expect to use substantially all of the remaining net proceeds from this offering to make additional property acquisitions and investments. We may not be able to promptly invest the net proceeds of this offering in real estate. In the interim, we may invest in short-term, highly liquid or other authorized investments. Such short-term investments will not earn as high a return as we expect to earn on our real estate-related investments.

We expect that any expenses or fees payable to our Manager for its services in connection with managing our daily affairs, including but not limited to, the selection and acquisition of our investments, will be paid from cash flow from operations. If such fees and expenses are not paid from cash flow (or waived) they will reduce the cash available for investment and will directly impact the market value of our common shares. See “Management Compensation” for more details regarding the fees that will be paid to our Manager and its affiliates.

(1) We will reimburse our Manager for organization and offering costs. See “Management Compensation” for a description of additional fees and expenses that we will pay our Manager.

(2) Amount reflected are estimates and include expenses to be paid by us in connection with the formation of the company and the qualification of the offering, and the marketing and distribution of common shares, including, without limitation, expenses for printing, engraving and amending offering statements or supplementing offering circulars, mailing and distributing costs, telephones, internet and other telecommunications costs, all advertising and marketing expenses, all fees we will pay Crowdstreet, charges of experts and fees, expenses and taxes related to the filing, registration and qualification of the sale of common shares under federal and state laws, including taxes and fees and accountants’ and attorneys’ fees. See “Plan of Distribution.”

BUSINESS

Overview

We intend to focus on the sector that complements our management team’s expertise in the acquisition and management of residential real estate, and to capitalize on the ability of our management team to source, evaluate, negotiate, structure, close and manage acquisitions of multi-family properties throughout the United States. We expect to use substantially all of the net proceeds from this offering to acquire properties that are appropriate for our investment strategy and our investment objectives. We intend to focus on acquiring properties with significant possibilities for capital appreciation, such as those requiring renovations or repositioning, those located in neighborhoods with high growth potential and those available from sellers who are distressed or face time-sensitive deadlines. Our primary investment objectives are to:

Our Properties

The Initial Portfolio consists of fifteen multi-family properties in five states totaling 1,143 apartment units. The following table sets forth a summary schedule of the Initial Portfolio’s apartment units for leases in place as of September 30, 2017:

Percent Leased and Rental Revenue

The following table sets forth the percentage leased and average monthly rent per leased apartment unit for each of the properties in the Initial Portfolio as of the dates indicated below:

Our Strengths

• Experienced Management Team — Our Manager has a highly experienced management team of real estate professionals, led by David Teiler, its President and Chief Executive Officer. We believe our management team will allow us to benefit from the knowledge and industry contacts they have gained through numerous real estate cycles. Please see “Management —Executive Officers of our Manager” for biographical information regarding these individuals.

• Market Knowledge and Industry Relationships — Through its active and broad participation in real estate capital markets, our Manager benefits from market information that helps enable it to identify attractive commercial real estate investment opportunities and to make informed decisions with regard to the relative valuation of financial assets and capital allocation. We believe that our Manager’s extensive industry relationships with a wide variety of commercial real estate owners and operators, brokers and other intermediaries and third party commercial real estate debt originators will provide us with a competitive advantage in sourcing attractive investment opportunities to meet our investment objectives.

• Management’s Fee Structure — Our fee structure is designed to compensate our Manager primarily through performance based fees, see “Management Compensation” on page 10. We do not pay our Manager any base asset management fees.

• Board of Directors — We hope to appoint an independent board of directors with extensive experience in the real estate, equity and debt markets, which we believe will benefit our shareholders.

• Stable Income Producing Properties — The Initial Portfolio had an average weighted occupancy of greater than 95.0% for the 12 months ending on December 31, 2015, the twelve months ending on December 31, 2016, and the six month period ending September 30, 2017.

Our Investment Strategy

We intend to target strategically located multi-family properties throughout the United States that offer the potential to achieve attractive risk-adjusted returns. The properties that we seek to acquire are generally located near major transportation hubs and corridors and employment centers that derive their value from unique attributes such as access to transportation corridors, and specific local industry.

Our Investment Process

Sourcing and Initial Screening

Through its industry experience, our Manager has built a network of relationships from which to source investment opportunities. These relationships include owners, property managers, developers, leasing and investment sales brokers, financiers, lenders, institutional investors, lawyers and accountants. We believe these broad connections will help source not only marketed transactions, but also potential transactions outside of a competitive bid environment. If an asset meets our criteria, including our current risk adjusted return hurdle, we intend to proceed further into our investment process.

Underwriting and Analysis

Once identified as having potential, an opportunity will undergo both a bottom up and top down analysis. We intend to first focus on the property level, the submarket and finally the target market overall. The officer running the process will tour the asset, and meet with local market resources. The team will create a preliminary underwriting that analyzes the asset’s price per square foot and price per unit, replacement cost, actual cap rate, market cap rate, stabilized cap rate and internal rate of return. In particular, we intend to focus on market rents, expenses and taxes. The team will review the expected capital expenditures and their impact on cash flows. If we expect to use non-recourse secured debt, we will analyze the appropriate loan to value, debt service coverage ratio and current market terms to determine the optimal capital structure, both for the asset itself and the Company’s balance sheet.

On the submarket and target market levels, we will focus on current vacancy rates, rental growth, tenant demand and recent market sale and lease comparables. We also expect to review submarket and market employment drivers and demographic drivers and intend to closely monitor other local economic drivers including trade flows. We will also determine the local property management and leasing teams that will be engaged to represent the property in the market.

Due Diligence and Closing

We believe that we undertake a detailed approach to due diligence. We intend to engage legal counsel to review title, insurance and local regulatory compliance. As necessary, we will engage outside counsel to review complex leases. Third party consultants may be retained to provide a Phase I environmental report, physical/structural report, updated ALTA survey and any other applicable inspections as needed. As part of the physical report, our investment team will review its capital cost estimates versus the engineer’s projected capital needs. In addition, we intend to typically perform additional property inspections and tenant interviews. Once due diligence is complete, our investment team again presents the findings and final underwriting to our investment committee or our board of directors, as applicable.

Asset & Property Management

In general, our Property Manager will make all operating and leasing decisions on properties, however if we make an investment as part of a joint-venture with another asset manager or property manager, certain duties and responsibilities would be shared. We intend to review our property performance quarterly and make changes as conditions warrant. This review will generally include operational statistics, collections, market trends, significant lease rollovers, marketing strategy and capital improvements. In particular, the asset’s capital expenditures and insurance will be closely monitored in order to mitigate large risks across the portfolio. In rapidly changing leasing markets, these reviews may be more frequent. Property tours and walk-throughs will be regularly scheduled by our Manager, including meetings with the local leasing team and other market resources.

Following the completion of the acquisitions, the objective of the Company will be to maximize total returns to holders of our shares through the payment of consistent cash distributions and the achievement of long-term capital appreciation of properties.

Property Management Agreement

Efficient Property Management, Inc., a Delaware corporation, will provide property management and leasing services for the Initial Portfolio and we intend to engage our Property Manager to provide similar services for properties that we acquire in the future. Our Property Manager will be responsible for overseeing real property operations, including tenant leasing, budgeting, cash management and insurance, and for other functions and powers that we delegate to it. Our Joint Venture will pay our Property Manager a monthly management fee equal to 3% of the gross revenues collected for each of the properties we may acquire.

The property management agreement is for a term of one year and shall automatically renew from year-to-year unless terminated prior. The property management agreement may be terminated by either party with or without cause upon 30 days’ prior written notice.

Our Financing Strategy

We may use leverage if we believe it may enhance total cash flow and capital appreciation to our shareholders. We will target an appropriate loan-to-value ratio for our properties based on; (i) the purchase price of the property or the fair market value of the property at the time that the financing is obtained and (ii) the cash flow that the property is generating and the resulting debt service coverage ratio.

We may obtain a line of credit or other financing that will be secured by one or more of our assets. We expect to maintain a flexible capital structure and intend to target a ratio of outstanding indebtedness to the Company’s total assets of between 50% and 80%. Our board of directors will periodically review this target and may modify or eliminate it without the approval of holders of our common shares. We will consider a number of factors when evaluating the Company’s aggregate level of indebtedness and making financial decisions, including, among others, the following:

Critical Accounting Policies

Below is a discussion of the accounting policies that management believes will be critical once we commence operations. The Company’s accounting policies have been established to conform with GAAP. We consider these policies critical because they involve significant management judgments and assumptions, require estimates about matters that are inherently uncertain and are important for understanding and evaluating the Company’s reported financial results. These judgments affect the reported amounts of assets and liabilities and the Company’s disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. With different estimates or assumptions, materially different amounts could be reported in the Company’s financial statements. Additionally, other companies may utilize different estimates that may impact the comparability of the Company’s results of operations to those of companies in similar businesses.

Investment in the Initial Portfolio (Partially Owned Entity)

We account for our investment in partially owned entities under the equity method of accounting in accordance with Accounting Standard Codification (ASC) 323, Investments-Equity Method and Joint Ventures, in cases where we exercise significant influence over, but do not control the entity and are not considered to be the primary beneficiary.

As indicated herein, we have significant influence over the operations of the Initial Portfolio; however, the terms of the operating agreement of our Joint Venture will limit our ability to take actions in respect of the Initial Portfolio’s operations that are opposed by Reliance Joint Venture, LLC. Accordingly, the requirements for consolidation are not met and we will account for our investment in the Initial Portfolio under the equity method.

Equity method investments are initially recorded at cost, including transaction costs, and subsequently adjusted for our share of net income or loss and cash contributions and distributions each period. To the extent our investment cost exceeds its share of the Initial Portfolio’s book value (“excess outside basis”), the excess outside basis portion of our investment is amortized over the anticipated useful lives of the Initial Portfolio’s underlying  tangible and intangible assets acquired and liabilities assumed (based on an allocation of cost to the underlying tangible assets, identifiable intangibles and assumed liabilities based on their estimated fair values at the date of our investment).

Share Based Compensation

We will account for share-based compensation in accordance with the provisions of ASC 718, Share-based Payment. ASC 718 requires that compensation cost for share-based compensation be recognized ratably over the service period of the award. Because all of our share-based compensation will be issued to non-employees , the amount of compensation is to be adjusted, in each reporting period, based on the fair value of the award at the end of the reporting period. The award is re-marked until such time as the award has vested, the service being provided is substantially completed or, under certain circumstances, likely to be completed, whichever occurs first.

Income Taxes

We will operate in a manner intended to enable us to qualify as a REIT under Sections 856-859 of the Internal Revenue Code. Under those sections, a REIT which distributes at least 90% of its REIT taxable income, excluding net capital gains and determined without regard to the dividends paid deduction, as a dividend to its shareholders each year and which meets certain other conditions will not be taxed on that portion of its taxable income which is distributed to its shareholders. Compliance with the REIT Regulations can be complex and requires our management to exercise judgment.

Recently Issued Accounting Pronouncements

In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers”. This new standard will replace all current U.S. GAAP guidance related to revenue recognition and eliminate all industry-specific guidance. The new revenue recognition standard provides a unified model to determine when and how revenue is recognized. The core principle is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This guidance will be effective beginning in 2018 and can be applied either retrospectively to each period presented or as a cumulative-effect adjustment as of the date of adoption. Management is evaluating how the adoption of this new accounting will affect its future financial reporting.

Our Policies for Revenue Recognition

Rental revenue for commercial leases is recognized on a straight-line basis over the terms of the respective leases. Rental income attributable to residential leases and parking is recognized as earned, which is not materially different from the straight-line basis. Leases entered into by residents for an apartment unit are generally for a one-year term, renewable upon consent of both parties on an annual or monthly basis. Deferred rents receivable represents the amount by which straight-line rental revenue exceeds rents currently billed in accordance with lease agreements.  

Related Party Fees

Our Manager will provide certain services to the Company. The Manager may be entitled to a 1.0% acquisition fee on any acquisition or investment that we make and a Subordinated Performance Fee in an amount to be determined based on the performance of the investments we make (see page 12 above). In addition, our Joint Venture will pay our Property Manager, an affiliate of Reliance Global, a property management fee equal to 3% of gross revenues received at our properties.

Off-Balance Sheet Arrangements

As of the date of this offering circular, the Company had no off-balance sheet transactions.

Results of Operations

As of the date of this offering circular, our Company had no operations and is in its organizational stage.

Non-GAAP Financial Measures

Funds from Operations

Funds from operations, or FFO, is a non-GAAP financial measure that is widely recognized as a measure of REIT operating performance. We consider FFO to be an appropriate supplemental measure of our operating performance as it is based on a net income analysis of property portfolio performance that excludes non-cash items such as depreciation. The historical accounting convention used for real estate assets requires straight-line depreciation of buildings and improvements, which implies that the value of real estate assets diminishes predictably over time. Since real estate values historically rise and fall with market conditions, presentations of operating results for a REIT, using historical accounting for depreciation, could be less informative. We define FFO, consistent with the National Association of Real Estate Investment Trusts’, or NAREIT’s, definition, as net income, computed in accordance with GAAP, excluding gains (or losses) from sales of property, plus depreciation and amortization of real estate assets, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures will be calculated to reflect FFO on the same basis.

Adjusted Funds from Operations

Adjusted FFO, or AFFO, is a computation made by analysts and investors to measure a real estate company’s operating performance by removing the effect of items that do not reflect ongoing property operations.

We further adjust FFO for certain items that are not added to net income in NAREIT’s definition of FFO, such as acquisition expenses, equity based compensation expenses, and any other non-recurring or non-cash expenses, which are costs that do not relate to the operating performance of our properties, and subtract recurring capital expenditures (and, when calculating the incentive fee only, we further adjust FFO to include any realized gains or losses on our real estate investments).

Our calculation of AFFO differs from the methodology used for calculating AFFO by certain other REITs and, accordingly, our AFFO may not be comparable to AFFO reported by other REITs. Our management utilizes FFO and AFFO as measures of our operating performance, and believes they are also useful to investors, because they facilitate an understanding of our operating performance after adjustment for certain non-cash items, such as depreciation and amortization expenses, and acquisition expenses and pursuit costs that are required by GAAP to be expensed but may not necessarily be indicative of current operating performance and that may not accurately compare our operating performance between periods. Furthermore, although FFO, AFFO and other supplemental performance measures are defined in various ways throughout the REIT industry, we also believe that FFO and AFFO may provide us and our stockholders with an additional useful measure to compare our financial performance to certain other REITs. We also use AFFO for purposes of determining the quarterly incentive fee, if any, payable to our Manager.

Neither FFO nor AFFO is equivalent to net income or cash generated from operating activities determined in accordance with GAAP. Furthermore, FFO and AFFO do not represent amounts available for management’s discretionary use because of needed capital replacement or expansion, debt service obligations or other commitments or uncertainties. Neither FFO nor AFFO should be considered as an alternative to net income as an indicator of our operating performance or as an alternative to cash flow from operating activities as a measure of our liquidity.

Net Operating Income

We believe that net operating income, or NOI, is a useful measure of our operating performance. We define NOI as total property revenues less total property operating expenses, excluding depreciation and amortization and interest. Other REITs may use different methodologies for calculating NOI, and accordingly, our NOI may not be comparable to other REITs.

We believe that this measure provides an operating perspective not immediately apparent from GAAP operating income or net income. We use NOI to evaluate our performance on a same store and non-same store basis, because NOI allows us to evaluate the operating performance of our properties because it measures the core operations of property performance by excluding corporate level expenses and other items not related to property operating performance and captures trends in rental housing and property operating expenses.

The following table provides historical financial results for the Initial Portfolio for the 12 month periods ending December 31, 2015 and December 31, 2016, and the nine month period ending September 30, 2017.

(1) As owners of a 48.99% interest in a limited liability company, Reliance Property Group, LLC, we have no legal claim to the title of the assets or to revenue of Reliance Property Group, LLC, nor do we have a legal obligation to cover any liability or expense of Reliance Property Group, LLC. 

Our Policies with Respect to Certain Other Activities

If our board of directors determines that additional funding is required, we may raise such funds through additional offerings of equity or debt securities of the Company or by the retention of cash flow (subject to provisions in the Internal Revenue Code concerning distribution requirements and the taxability of undistributed REIT taxable income) or a combination of these methods. In the event that our board of directors determines to raise additional equity capital in respect of the Company, it has the authority, without shareholder approval, to authorize us to issue additional common shares or other classes of shares of the Company, including preferred shares, in any manner (including in exchange for cash or property) and on such terms and for such consideration as it deems appropriate, at any time.

We may repurchase or otherwise reacquire our common shares and may engage in such activities in the future. The Company does not intend to engage in trading, underwriting or agency distribution or sale of securities of other issuers. The Company has not in the past, and is not expected in the future, to invest in the securities of other issuers for the purpose of exercising control over such issuers. The Company has not made any loans to third parties, although the Company may in the future make loans to third parties. The Company intends to make investments in such a way that we will not be treated as an investment Company under the Investment Company Act of the 1940, or the 1940 Act.

Our board of directors may change any of these policies at any time without prior notice to, or a vote of, our shareholders.

Distribution Reinvestment Plan

In the future, we may adopt a distribution reinvestment plan that will permit holders of common shares who elect to participate in the plan to have their cash distributions reinvested in additional common shares. As a result, if our board of directors authorizes, and we declare, a cash distribution, then such shareholders who have elected to participate in our distribution reinvestment plan will have their cash distribution reinvested in additional common shares, rather than receiving the cash distribution.

Staffing

The Company is managed by our Manager pursuant to our operating agreement. All of our officers are employees of our Manager. We will have no employees upon completion of this offering.

Operating and Regulatory Structure

General

Our properties may be subject to various laws, ordinances and regulations, including regulations relating to common areas.

Americans with Disabilities Act

The properties we have acquired or invested in, and the properties we hope to acquire or invest in, must comply with Title III of the Americans with Disabilities Act, or ADA, to the extent that any such property is a “public accommodation” as defined by the ADA. The ADA may require removal of structural barriers to access by persons with disabilities in certain public areas of any such property where such removal is readily achievable. We believe the properties we acquire or invest in will be in substantial compliance with the ADA and that neither the Company nor its subsidiaries will be required to make substantial capital expenditures to address the requirements of the ADA. However, noncompliance with the ADA could result in imposition of fines or an award of damages to private litigants. The obligation to make readily achievable accommodations is an ongoing one, and we will continue to assess the properties we acquire or invest in and to make alterations as appropriate in this respect.

Legal Proceedings

We are not currently subject to any legal proceedings.

MANAGEMENT

Our Manager

We operate under the direction of our board of directors and our Manager. Our Manager is responsible for directing the management of our business and affairs, managing our day-to-day affairs, and implementing our investment strategy. The Manager and its officers and directors are not required to devote all of their time to our business and are only required to devote such time to our affairs as their duties require.

We will follow investment guidelines of our Manager and the investment and borrowing policies set forth in this offering circular unless they are modified by our Manager. Our Manager may establish further written policies on investments and borrowings and will monitor our administrative procedures, investment operations and performance to ensure that the policies are fulfilled. Our Manager may change our investment objectives at any time without approval of our shareholders.

Our Manager performs its duties and responsibilities pursuant to our operating agreement. Our Manager maintains a contractual, as opposed to a fiduciary relationship, with us and our shareholders. Furthermore, we have agreed to limit the liability of our Manager and to indemnify our Manager against certain liabilities.

Responsibilities of our Manager

The responsibilities of our Manager include:

Investment Advisory and Acquisition Services

Offering Services

Asset Management Services

Accounting and Other Administrative Services

Shareholder Services

Financing Services

Disposition Services

Term and Removal of our Manager

Our operating agreement provides that our Manager will serve as our manager for an indefinite term, but that our Manager may be removed by our board of directors for “cause” following an affirmative vote of two-thirds of the Company’s members, or may choose to withdraw as manager, under certain circumstances.

“Cause” is defined as:

Unsatisfactory financial performance does not constitute “cause” under the operating agreement.

Our Manager may assign its rights under our operating agreement in its entirety or delegate certain of its duties under the operating agreement to any of its affiliates without the approval of our shareholders so long as our Manager remains liable for any such affiliate’s performance.

Our Manager may withdraw as our Manager if we become required to register as an investment company under the Investment Company Act, with such withdrawal deemed to occur immediately before such event.

In the event of the removal of our Manager, our Manager will cooperate with us and take all reasonable steps to assist in making an orderly transition of the management function. Our Manager will determine whether any succeeding manager possesses sufficient qualifications to perform the management function.

Other than accrued fees payable to our Manager, no additional compensation will be paid to our Manager in the event of the removal of our Manager.

General

The executive offices of our Manager are located at 40 Wall Street, 60^th Floor, New York, NY 10005, and the telephone number of our Manager’s executive offices is 212-293-8500.

Executive Officers

As of the date of this offering circular, our executive officers, and their positions and offices are as follows:

David Teiler has served as our Chief Executive Officer, Chief Accounting Officer and Director since September 2016, and has served as the Chief Financial Officer of Reliance Global Holdings since August 2012. Mr. Teiler was the Director of Finance at Reliance Global Holdings beginning September 2005. Mr. Teiler’s key competencies include developing internal controls, budgets, forecasts and overall compliance enforcement. Prior to joining Reliance Global Holdings, Mr. Teiler was employed by the Orthodox Union, an educational, outreach and social service organization from December 1989 to April 2001 where he rose through the ranks, advancing to assistant Controller. From April 2001 until June 2005, Mr. Teiler held the position of Controller at Cambridge Pharma Consultancy, a division of IMS health, a management consulting company in the pharmaceutical industry. While at Cambridge Pharma Consultancy, Mr. Teiler’s key responsibilities included financial reporting, annual budget preparations, Sarbanes-Oxley compliance, cost accounting and insurance. He also maintained a strategic role as a planning member of the management board. Mr. Teiler’s experience with financial operations and management and his position as Chief Executive Officer, led to the decision to appoint him to the board of directors.

David Silber has served as our Chief Financial Officer since December 2017 and previously as our Controller since September 2017. Mr. Silber has also served as the Controller of Efficient Property Management since January 2013. Mr. Silber is involved in all financial facets of property operations, capital allocations and development of the properties held by Reliance Global Holdings. He oversees all of the accounting operations of Efficient Property Management, including the production of periodic financial reports, the maintenance of the accounting records, and setting up controls and budgets. Mr. Silber previously served as a staff accountant at Elon Property Management from September of 2011 until August of 2013. Mr. Silber is a Certified Public Accountant and received his Master’s degree from Farleigh Dickinson University and a Bachelor’s degree from Beth Medrash Gavoha.

Shimon Ehrman has served as our Director of Asset Management since September 2016 and has served as the Director of Operations at Efficient Property Management since August 2013, overseeing the property management and operation of all Reliance Global Holdings’ properties. Mr. Ehrman manages approximately 2,500 units throughout the United States. Mr. Ehrman analyzes overall financial performance of the physical properties to ensure productivity and organization. All regional property managers report directly to him. Prior to joining Efficient Property Management, Mr. Ehman served as a Loan Consultant at Eastern Union a commercial mortgage broker from April to August of 2013. Mr. Ehrman’s experience with financial operations and properties, led to the decision to appoint him to the board of directors

Our Directors and Director Nominees

Our Manager will have the sole power to nominate and elect our initial directors to our board of directors. No vacancy caused by the resignation, death or removal of a director may be filled without the written consent of the Manager. Newly created director positions resulting from an increase in the number of directors on the Board of Directors for any reason may be filled by the Manager.

Our Board is currently comprised of two members, David Teiler and Shimon Ehrman. Our Manager currently intends to appoint three additional independent directors to the board. The first annual meeting of our shareholders after this offering will be held in 2017, at which time, each of our directors will stand for election by our shareholders to serve until the next annual meeting of our shareholders and until his or her successor is duly elected and qualifies. Of the five directors, we expect that our board of directors will determine that at least three of our directors are independent for purposes of the NASDAQ corporate governance listing standards.

In addition, effective upon completion of this offering, our board of directors may establish an audit committee, compensation committee and nominating and corporate governance committee that have the responsibilities described below under “—Corporate Governance—Board of Directors and Committees.”

Executive and Director Compensation

Executive Compensation

Each of the executive officers of our Company also serves as an executive officer of our Manager. Each of these individuals receives compensation for his or her services, including services performed for us on behalf of our Manager, by our Manager. Although we will indirectly bear some of the costs of the compensation paid to these individuals, through fees we pay to our Manager, we do not intend to pay any compensation directly to these individuals or reimburse our Manager for the salaries and benefits it may pay these individuals, nor are we under any contractual obligation to do so.

Family Relationships

There are no family relationships among our directors and officers.

 PRINCIPAL SHAREHOLDERS

The following table sets forth the beneficial ownership of our common shares as of the date of this offering circular for each person or group that holds more than 5% of our common shares, for each executive officer and director of our Company and for the executive officers of our Company as a group.

Unless otherwise indicated below, each person or entity has an address in care of our principal executive offices at 40 Wall Street, 60^th Floor, New York, NY.

Unless otherwise indicated below each shareholder listed in the table below has sole voting and dispositive power with regard to such shares. Each such shareholder has an address of Reliance Real Estate Trust, LLC, 40 Wall Street, 60^th Floor, New York, NY.

Shares to be Issued for the Acquisition of the Initial Portfolio

We intend to acquire a 48.99% interest in the Initial Portfolio in exchange for 700,000 shares of our common stock. As of the date of this offering circular these shares have not been issued. We expect to issue these shares upon the closing of our acquisition, which we expect to occur on or around March 15, 2018.

CONFLICTS OF INTEREST; CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

We are subject to various conflicts of interest arising out of our relationship with our Manager and its affiliates.

Our Affiliates’ Interests in Other Reliance Global Entities

General

The officers of our Manager and the key real estate professionals of our Manager who perform services for us on behalf of our Manager are not only officers, managers, and/or key professionals of our Manager, but also other Reliance Global entities. These persons have legal obligations with respect to those entities that are similar to their obligations to us. In the future, these persons and other affiliates of our Manager may organize other real estate-related or debt-related programs and acquire for their own account real estate-related investments that may be suitable for us.

Conflicts of Interest

Conflicts of interest exist and may arise in the future as a result of the relationships between our Manager and its affiliates, on the one hand, and us, and our shareholders, on the other hand.

Our operating agreement provides that the real property, affairs and business will be managed under the direction of our board of directors. Reliance Real Estate Advisors, as the Manager of our Company, will have the sole right to nominate and elect the initial members of our board of directors. Accordingly, shareholders will have no right to nominate, or elect the initial members of our board of directors and the Manager will have complete discretion in nominating and electing the initial members of our board of directors.

All of our officers are officers of our Manager. Certain officers or directors may also serve or may serve as officers, directors or employees of our Manager and their affiliates and other unaffiliated companies. Accordingly, the ability of these persons to engage in other business activities may reduce the time they spend managing our business, including the business. In addition, these persons may have obligations to those entities, the fulfillment of which might not be in the best interests of us, or any of our shareholders.

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

Allocation of Investment Opportunities

Our Manager may in the future establish and manage additional offerings, including offerings that pursue investment strategies similar to ours. If a sale, financing, investment or other business opportunity would be suitable for more than one of its managed programs, our Manager will allocate it according to the policies and procedures adopted by our Manager.

Consistent with its fiduciary duties, our Manager’s policy generally is to allocate investment opportunities to its managed programs on an equitable and fair basis, based on a variety of criteria, including, among other things, size of account and consistency with a program’s investment guidelines and strategies. However, conflicts of interests could arise in connection with transactions our Manager effects on behalf of our company, transactions our Manager effects for other programs, and transactions that our executive officers engage in for his their own accounts. Transactions entered into on behalf of these various parties may differ in substance, timing, and amount, due to, among other things, differences in investment objectives, abilities to take advantage of particular investment opportunities, or other factors affecting the appropriateness or suitability of particular investment activities. Differences could also be due to limitations on the size or availability of particular opportunities.

The Manager will allocate investments among the various programs in a manner it believes to be as fair and equitable as possible, considering each program’s objectives, limitations and capital available for investment, but programs may not all invest in the same financial instruments or in the same proportionate amounts. Although in any particular allocation of a transaction or series of transactions, we may be treated more or less favorably than other programs, we believe that our Manager seeks to treat our company and its other managed programs equitably on an overall basis. However, although the goal of our Manager is to be fundamentally fair on an overall basis with respect to all programs, there can be no assurance that on an overall investment-by-investment basis that a particular program will not be treated more favorably than another.

Initial Capitalization

In connection with the formation and initial capitalization of the Company, our Manager purchased 100 common shares for a purchase price of $1,000.

Indemnification and Limitation of the Manager’s, Directors’ and Officers’ Liability

Pursuant to our operating agreement, we have agreed to indemnify the Manager and each of our directors and officers, to the fullest extent permitted by law, for any claim arising out of such entity’s or person’s relationship to the Company.

Prior to completion of this offering, we intend to enter into separate indemnification agreements with our directors and officers. Each indemnification agreement will provide, among other things, for indemnification to the fullest extent permitted by law and our operating agreement against any and all expenses, judgments, fines, penalties and amounts paid in settlement of any claim. The indemnification agreements will provide for the advancement or payment of all expenses to the indemnitee and for reimbursement to us if it is found that such indemnitee is not entitled to such indemnification under applicable law and our operating agreement.

Insofar as the foregoing provisions permit indemnification of directors, officers or persons controlling us for liability arising under the Securities Act, we have been informed that, in the opinion of the SEC, this indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

JOINT VENTURE

The following is a summary of material provisions in the limited liability company operating agreement of Reliance Property Group, LLC, copies of which are filed as exhibits to the offering statement of which this offering circular is a part. See “Where You Can Find More Information.”

Purchase and Sale Agreement

The Initial Portfolio is currently 100% owned by Reliance Property Group, LLC, or our Joint Venture. On January 30, 2018, we entered into a purchase and sale agreement to acquire a 48.99% interest in our Joint Venture in exchange for 700,000 shares of our common stock. The 48.99% interest we are acquiring in our Joint Venture is currently owned 48.00% by Alfons Melohn, Principal of The Melohn Group and .99% by Ezra Beyman, Chairman of Reliance Global Holdings, LLC. We expect that the acquisition of the 48.99% interest in the Initial Portfolio to occur on or around March 15, 2018.

We have also been granted the option to acquire the remaining 51.01% interest in the Initial Portfolio in exchange for $6.0 million of consideration using proceeds from this offering. The remaining 51.01% interest in the Joint Venture will be owned 42.64% by Alfons Melohn and 8.37% by Ezra Beyman, and we expect they retain their interest until we have acquired those interests using proceeds from this offering. There is no guarantee that we will be successful in completing the acquisition of the remaining interests of the Initial Portfolio.

In the event that this offering results in net proceeds of less than $6.0 million, we will acquire additional interests in our Joint Venture under the same terms in proportion to the amount of capital at our disposal. Any interests that we acquire beyond our initial acquisition of the 48.99% interest will be contingent on either (a) an assumption of the Initial Portfolio’s mortgage loans by us as described below, or (b) approval by the lender of the mortgage loans.

Any acquisition of interest in the Initial Portfolio above 48.99% is subject to us receiving approval from the lender of the current mortgage loans for the Initial Portfolio. If we acquire all of the remaining interest of the Initial Portfolio, we intend to assume the mortgage loans that encumber the properties within the Initial Portfolio in an amount totaling approximately $54.4 million. This assumption is subject to the approval of the lender of the existing mortgage loans. There is no guarantee that we will be successful in obtaining the necessary approvals to acquire additional interests in the Initial Portfolio or in assuming the existing mortgage loans.

General Terms of our Joint Venture

Following our acquisition of the 48.99% interest in our Joint Venture, the membership interests in the Joint Venture owned by us (in our capacity as a managing member, the “REIT Member”) and the interests owned by Reliance Joint Venture (in its capacity as a managing member, the “Reliance Member”) will together represent all of the outstanding economic interests in the Joint Venture.

As owners of a 48.99% interest in a limited liability company, Reliance Property Group, LLC, we have no legal claim to the title of the assets or to revenue of Reliance Property Group, LLC, nor do we have a legal obligation to cover any liability or expense of Reliance Property Group, LLC.

As described below, the REIT Member will have the right to approve certain major decisions made by the Reliance Member with respect to the Property Subsidiaries and the Initial Portfolio. These major decisions relate to, among other things, indebtedness (including the refinancing of the existing loan that encumbers the Initial Portfolio, subject to certain exceptions), expenditures, legal proceedings, tenant bankruptcies, leases, zoning matters, easements, environmental matters and insurance. We have structured the terms of the joint venture agreement in this manner in order to provide both our Company and Reliance Joint Venture with a voice in the management of the Initial Portfolio’s operations.

Membership interests in Reliance Property Group, LLC will not carry a right to vote on any matter voted on by our common shareholders, although membership interests may, under certain circumstances, be redeemed for our common shares.

Rights and Powers of the Members

Under the terms of the joint venture agreement, the Reliance Member and the REIT Member will control all of the business, affairs and operations of the Property Subsidiaries, other than day-to-day management of the properties, which will be performed by our Property Manager, pursuant to the property management agreement. The Reliance Member will have the authority to manage the general affairs of the Property Subsidiaries, though the Reliance Member will not cause the Joint venture or the Property Subsidiaries to take, or omit to take, any of the following actions (“Approval Matters”) without the joint written consent of the REIT Member:

• incur indebtedness (other than trade payables incurred in the ordinary course operation of the business and affairs of the Property Subsidiaries and its subsidiaries); provided that the Reliance Member will be authorized to unilaterally cause the Property Subsidiaries and its subsidiaries to enter into a refinancing transaction for the loan that currently encumbers the Initial Portfolio in the event that a material claim or liability has arisen for either of the existing guarantors of such loan under their guarantees and the Property Subsidiary has not reserved an amount to fully reimburse such claim or liability;

• enter into, amend, modify, extend or terminate any agreement, or otherwise engage in any transaction between the Property Subsidiaries or its subsidiaries, on the one hand, and any affiliate or controlling person of either of the Members, on the other hand;

• amend the operating agreement of Reliance Property Group, LLC

• commit the Joint Venture, or the Property Subsidiaries, as lender, to make or accept, or the making or acceptance by the Joint Venture or Property Subsidiaries as lender of, any loan, and any material modification or amendment thereof or material waiver of any rights thereunder;

• issue guaranties on behalf of the Joint Venture or its subsidiaries of obligations of any other person or entity;

• approve the annual operating budget and any material changes thereto (including the amount of available cash for distribution by the Joint Venture or Property Subsidiaries and any reserves contemplated thereby); provided that in the event that the Members do not jointly approve, then the most recently approved annual operating budget will apply with certain deemed increases or decreases;

• incur or permit or cause the Joint Venture or its subsidiaries to incur any expenditure or take or permit or cause the Joint Venture or its subsidiaries to take any action which is inconsistent with the then approved annual operating budget, subject to certain limited exceptions;

• institute, prosecute, defend or settle any legal, arbitration or administrative actions or proceedings on behalf of the Joint Venture or its subsidiaries with an amount at issue or risk in excess of $250,000 in the aggregate (excluding certain claims arising in the ordinary course of business);

• take or cause the Joint Venture or its subsidiaries to take any action in order to enforce the rights of the Joint Venture or its subsidiaries as (a) landlord under any lease, or (b) seller under any binding agreement of sale for all or any portion of the Initial Portfolio or any direct or indirect interest therein;

• settle any lawsuit or proceeding if the settlement requires a payment in excess of $250,000 or requires an admission of liability on the part of the Joint Venture or its subsidiaries;

• approve or disapprove or cause or permit its subsidiaries to approve or disapprove a creditors’ plan or any bankruptcy or similar proceeding involving any tenant under a lease or any guarantor of a tenant’s obligations under a lease;

• initiate, join in, acquiesce in, or consent to any change in any material private restrictive covenant, zoning law or other public or private restriction, relating to the Initial Portfolio or cause or permit its subsidiaries to do any of the foregoing;

• approve any easement agreements, restrictive covenants or any encumbrances or servitudes to be put on record or affecting the title of the Initial Portfolio’s properties;

• approve of any material or non-ordinary course matters relating to compliance with environmental laws, or regarding any environmental or ecological matter relating to the Initial Portfolio, including selection of consultants in regard thereto and adoption of and implementation of any operation and maintenance program or any other program to remove or otherwise remediate hazardous materials;

• merge or consolidate the Joint Venture with or into any other entity or person;

• file any insurance claim or any insurance settlement involving a claim which could reasonably be expected to exceed $250,000;

• cause the formation of any corporation or other subsidiary entity owned or controlled by the Joint Venture;

• make any significant accounting decision for the Joint Venture which adversely affects a partner;

• designate banks or trust companies (other than those expressly required by the documents relating to the loan that currently encumbers the Initial Portfolio) for the deposit and disbursement of all funds related to the Property Subsidiaries and make any decisions with respect to the maintenance of such funds;

• refrain from making distributions of all then available cash on a monthly basis, or create reserves in excess of the amounts set forth in the then approved annual operating budget;

• change the name of the Joint Venture;

• make material tax elections or decisions on behalf of the Joint Venture or Property Subsidiaries; and

• take any action on behalf of any subsidiary of the Joint Venture, or approve or consent to any action or decision of any subsidiary, which in either case would be an item listed in these bullet points above if such action or decision were made or taken by, or with respect to, the Property Subsidiaries.

Distributions

Under the joint venture agreement, distributions from cash flow from operations will be made to the REIT Member and the Reliance Member on a pari-passu basis.

The operating agreement of the Joint Venture provides that the Joint Venture will distribute cash available for distribution to the members of the Joint Venture at such times and in such amounts as determined by the Managing Members, but in no event less than monthly. Cash available for distribution is calculated as income from the portfolio less operating expenses, with provisions for reasonable and customary reserves as determined by the Managing Members in their discretion, but subject in all cases to the REIT requirements pertaining to the Property Subsidiaries’ assets, income and operations, as described in the joint venture agreement.

To satisfy the requirements to qualify as a REIT and generally not be subject to U.S. federal income and excise tax, it is our intention that the Joint Venture will distribute all cash available for distribution other than reserves on a monthly basis. Any distributions we make will be at the discretion of our board of directors and will depend upon our earnings and financial condition, maintenance of our REIT qualification, restrictions on making distributions under Delaware law and such other factors as our board of directors deems relevant. Our earnings and financial condition will be affected by various factors, including rental income from our properties, the property’s operating expenses and any other expenditures. For more information, see “Distribution Policy.”

Transferability of Interests

Member Interests

Without the consent of the REIT Member, the Reliance Member is not able to transfer its membership interest in the Joint Venture. In addition, the Reliance Member will not be able to withdraw as a member of the Joint Venture if, in the judgment of the REIT Member, the withdrawal would cause a default under the loan(s) that currently encumbers the Initial Portfolio

The REIT Member is not able to transfer its membership interest in the Joint Venture except in connection with the following:

• any merger or sale of all or substantially all of the assets or shares of the REIT Partner, or any third-party purchase offer, tender offer or exchange offer in respect of the common shares that has been accepted by the holders of more than 50% of the aggregate outstanding common shares.

• any merger (including a triangular merger), consolidation or other combination with or into another person following the consummation of which the equity holders of the surviving entity are substantially identical to the members of the REIT Partner immediately prior to the consummation;

• a transfer to any person that is a successor to the REIT Member;

• a transfer to any subsidiary of the REIT Member;

• any transaction or series of related or similar transactions in which the membership interests of the REIT Member or its subsidiaries are transferred to one or more subsidiaries of the REIT Member with a view to the distribution of the ownership interests of the transferee subsidiary or subsidiaries to the holders of limited liability company interests associated with the Company; or

• as otherwise expressly permitted under operating agreement of the Joint Venture.

In addition, the REIT Member is not able to withdraw as a Member of the Property Subsidiaries except in connection with the transactions set forth in the first and second bullets points in the paragraph above.

General Provisions Regarding Transfers

In addition, transfers and assignments of membership interests are subject to certain additional restrictions that are designed to prevent certain adverse legal consequences for the Joint Venture and Property Subsidiaries, including if a transfer could cause a default under the loan that currently encumbers the Initial Portfolio.

Indemnification

The Joint Venture will indemnify its partners, as well as its partners’ respective partners, members, shareholders, officers, directors, trust managers, representatives, advisors and agents (each an “indemnitee”) from and against any and all losses, claims, expenses and other amounts arising from any and all legal proceedings instituted by any persons other than the indemnitee seeking indemnification under the operating agreement and that relate to the operations of the Property Subsidiaries (other than those instituted by a lender pursuant to a recourse guaranty), unless it is established that the act or omission of such indemnitee caused the matter giving rise to the proceeding and was the result of gross negligence, willful misconduct, fraud, or a material breach of the joint venture agreement (including without limitation a material breach of the implied contractual covenant of good faith and fair dealing).

DESCRIPTION OF OUR COMMON SHARES

The following descriptions of our common shares, certain provisions of Delaware law and certain provisions of our certificate of formation and operating agreement, which will be in effect upon consummation of this offering, are summaries and are qualified by reference to Delaware law, our certificate of formation and our operating agreement, copies of which are filed as exhibits to the offering statement of which this offering circular is a part. See “Where You Can Find More Information.”

General

We are a Delaware limited liability company organized on September 13, 2017 under the Delaware Limited Liability Company Act, or the Delaware LLC Act, issuing limited liability company interests. The limited liability company interests in our company will be denominated in common shares of limited liability company interests, or common shares, and, if created in the future, preferred shares of limited liability company interests, or preferred shares. Our operating agreement provides that we may issue an unlimited number of common shares with the approval of our Manager and without shareholder approval.

All of the common shares offered by this offering circular will be duly authorized and validly issued. Upon payment in full of the consideration payable with respect to the common shares, as determined by our Manager, the holders of such shares will not be liable to us to make any additional capital contributions with respect to such shares (except for the return of distributions under certain circumstances as required by Sections 18-215, 18-607 and 18-804 of the Delaware LLC Act). Holders of common shares have no conversion, exchange, sinking fund or appraisal rights, no pre-emptive rights to subscribe for any securities of our company and no preferential rights to distributions.

We intend to have a December 31^st fiscal and tax year end for financial reporting and federal income tax purposes.

Distributions

We expect to declare dividends beginning in the second quarter of 2018. Once we begin to make distributions, we expect that our Board will declare and make them on a quarterly basis, or less frequently as determined by our Board. Any distributions we make will be at the discretion of our Board, and will be based on, among other factors, our present and reasonably projected future cash flow. We expect that our Board will set the rate of distributions at a level that will be reasonably consistent and sustainable over time. Shareholders will be entitled to declared distributions on each of their shares from the time the shares are issued to the shareholder.

Although our goal is to fund the payment of distributions solely from cash flow from operations, we may pay distributions from other sources, including the net proceeds of this offering, if any, cash advances by our Manager, cash resulting from a waiver of fees or reimbursements due to our Manager, borrowings in anticipation of future operating cash flow and the issuance of additional securities. However, we currently have no agreements regarding cash advances, waivers, borrowings or the sale or issuance of additional securities and there can be no assurance that we will be able to raise additional funds for distributions. If we fund distributions from financings or the net proceeds from this offering, we will have less funds available for investment in real estate properties and other investments. Further, because we may receive income at various times during our fiscal year and because we may need cash flow from operations during a particular period to fund expenses, we expect that during the early stages of our operations and from time to time thereafter, we may declare distributions in anticipation of cash flow that we expect to receive during a later period and these distributions would be paid in advance of our actual receipt of these funds. In these instances, we expect to look to third party borrowings, our offering proceeds or other sources to fund our distributions. We currently do not have agreements for any such third party borrowings or from other sources. Additionally, we will make certain payments to our Manager for services provided to us. See “Management Compensation.” Such payments will reduce the amount of cash available for distributions.

We are not prohibited from distributing our own securities in lieu of making cash distributions to shareholders. The receipt of our securities or assets in lieu of cash distributions may cause shareholders to incur transaction expenses in liquidating the securities or assets.

Our distributions will constitute a return of capital to the extent that they exceed our current and accumulated earnings and profits as determined for U.S. federal income tax purposes. To the extent that a distribution is treated as a return of capital for U.S. federal income tax purposes, it will reduce a holder’s adjusted tax basis in the holder’s shares, and to the extent that it exceeds the holder’s adjusted tax basis will be treated as gain resulting from a sale or exchange of such shares.

Voting Rights

Our common shareholders will have voting rights only with respect to certain matters, as described below. Each outstanding common share entitles the holder to one vote on all matters submitted to a vote of common shareholders. Generally, matters to be voted on by our shareholders must be approved by a majority of the votes cast by all common shares present in person or represented by proxy. Our operating agreement provides that special meetings of shareholders may be called by our board of directors, Chairman, chief executive officer or President.

The affirmative vote of the holders of not less than a majority of the common shares then issued and outstanding shall be required for: (i) any amendment to our operating agreement that would adversely change the rights of the common shares; (ii) a disposition by the Company of all or substantially all the Company’ interests by merger, consolidation, sale of assets or membership interests, liquidation, dissolution, winding up or otherwise); (iii) except as provided in the operating agreement, mergers, consolidations or conversions of the Company; (iv) the termination and winding up of the Company, following an election by the Board of Directors to terminate the Company; (v) the election of a director nominee; and (vi) all such other matters as the Board of Directors, in its sole discretion, determines shall require the approval of the holders of the then outstanding common shares voting as a separate class. Removal of our Manager for “cause” as defined in the operating agreement with require board approval and approval of the holders representing two-thirds of the then outstanding common shares.

General Procedures

Public Announcements; Notices. In the case of specified dispositions, we will publicly announce or otherwise provide specified information to holders of common shares.

Fractional Shares. Our Manager will not have to issue or deliver any fractional shares to any holder of common shares upon any distribution in common shares. Instead of issuing fractional shares, we will pay cash for the fractional share in an amount equal to the fair market value of the fractional share, without interest.

Payment of Taxes. If any person exchanging a certificate representing common shares wants us to issue a certificate in a different name than the registered name on the old certificate, that person must pay any transfer or other taxes required by reason of the issuance of the certificate in another name or establish, to the satisfaction of us or our agent, that the tax has been paid or is not applicable.

Preferred Shares

Section 215(e) of the Delaware LLC Act also specifically authorizes the creation of ownership interests of different classes of limited liability company interests, having such relative rights, powers and duties as the limited liability company agreement may provide, and may make provision for the future creation in the manner provided in the limited liability company agreement of additional classes of membership interests. Our board of directors may provide for the issuance from time to time of an unlimited amount of one or more classes or series of preferred shares of limited liability company interests, which we refer to as preferred shares. As of the date of this offering circular, no preferred shares are outstanding and we have no current plans to issue any preferred shares.

Transfer Agent and Registrar

As of the date of this offering circular, we have not engaged a transfer agent, and do not intend to engage a transfer agent until such time as we are required to do so in order to satisfy the conditional exemption contained in Rule 12g5-1(a)(7) of the Securities Exchange Act of 1934, as amended, or the Exchange Act.

Operating Agreement

Organization and Duration

We were formed on September 13, 2017 as Reliance Real Estate Trust, LLC, a Delaware limited liability company, and will remain in existence until dissolved in accordance with our operating agreement.

Purpose

Under our operating agreement, we are permitted to engage in any business activity that lawfully may be conducted by a limited liability company organized under Delaware law and, in connection therewith, to exercise all of the rights and powers conferred upon us pursuant to the agreement relating to such business activity.

Manager

No Fiduciary Relationship with our Manager

Our Manager will perform its duties and responsibilities pursuant to our operating agreement, which will include investment, advisory, origination, acquisition, offering, asset management, accounting and administrative, shareholder, financing and disposition services. Our Manager maintains a contractual, as opposed to a fiduciary, relationship, with us and our shareholders. Furthermore, we have agreed to limit the liability of our Manager and to indemnify our Manager against certain liabilities.

Board of Directors

The business and affairs of the Company and shall be managed by a Board of Directors which shall have full, complete and exclusive authority, power and discretion to manage and control the business, affairs and/or properties of the Company, to make all decisions regarding those matters and to perform any and all other acts or activities customary or incident to the management of the business of the Company. The number of directors shall be not less than one nor more than thirteen, as shall be determined by the Board of Directors from time to time. No vacancy caused by the resignation, death or removal of a director may be filled without the written consent of the Manager. Newly created director positions resulting from an increase in the number of directors on the Board of Directors for any reason may be filled by the Manager.

Members

Except as otherwise provided by applicable law, the debts, obligations and liabilities of the Company, whether arising in contract, tort or otherwise, shall be solely the debts, obligations and liabilities of the Company, and the members shall not be obligated personally for any such debt, obligation or liability of the Company solely by reason of being a member. Members may not be expelled from or removed as members of the Company. Members shall not have any right to resign from the Company; provided, that when a transferee of a member’s shares becomes a record holder of such shares, such transferring member shall cease to be a member of the Company with respect to the shares so transferred. No Member shall be entitled to the withdrawal or return of its capital contribution, except to the extent, if any,that distributions made pursuant to the operating agreement or upon dissolution or termination of the Company may be considered as such by law. Any member may have business interests and engage in business activities in addition to those relating to the Company, including business interests and activities in direct competition with the Company.

Indemnification of our Manager and Others

The Company shall indemnify and hold harmless directors, officers, the manager, employees or other persons for any claim arising out of such entity’s or person’s relationship to the Company, as applicable, to the fullest extent permitted by applicable law. .

Amendments

Our operating agreement may be amended by our board of directors without approval of the members as to the following: a change in the name of the Company, the location of the principal place of business of the Company, the registered agent of the Company or the registered office of the Company; the admission, substitution, withdrawal or removal of members; a change that the Board of Directors determines to be necessary to qualify as a limited liability company and as a REIT; a change that, in the sole discretion of the Board of Directors, it determines (i) does not adversely affect the members in any material respect, (ii) to be necessary or appropriate to satisfy any requirements, conditions or guidelines contained in any opinion, directive, order, ruling or regulation of any federal or state agency or judicial authority or contained in any federal or state statute, to facilitate the trading of the shares or comply with any rule, regulation, guideline or requirement of any National Securities Exchange; in connection with action taken by the Board of Directors pursuant to the operating agreement, (v) are necessary to preserve the Manager’s right to appoint, remove or nominate directors, set the number of directors or fill vacancies on the Board of Directors; a change in the fiscal year or taxable year; an amendment, based on the advice of counsel, to be necessary or appropriate to prevent the Company or its directors and officers from being subjected to the provisions of the Investment Company Act of 1940, as amended, the Investment Advisers Act of 1940, as amended, or “plan asset” regulations adopted under the Employee Retirement Income Security Act of 1974, as amended; an amendment that the Board of Directors determines to be necessary or appropriate in connection with the issuance of any additional common shares, the establishment or creation or issuance of any class or series of shares pursuant to this Agreement and the admission of additional members; an amendment effected, necessitated or contemplated by a merger agreement approved in accordance with this Agreement; an amendment necessary or appropriate for the formation by the Company of, or investment by the Company in, any corporation, partnership, joint venture, limited liability company or other entity; a merger, conversion or conveyance; or any other amendments substantially similar to the foregoing.

No provision of the operating agreement that establishes a percentage of outstanding shares required to take any action shall be amended, altered, changed, repealed or rescinded in any respect that would have the effect of reducing such voting percentage unless such amendment is approved by the affirmative vote of holders of the outstanding shares whose aggregate outstanding shares constitute not less than the voting requirement sought to be reduced.

No amendment to the operating agreement may (i) enlarge the obligations of any member without its consent, unless such shall be deemed to have occurred as a result of an amendment approved pursuant to Section 15(c), (ii) change dissolution provisions, or (iii) change the term of the Company.

Any amendment that would have a material adverse effect on the rights or preferences of any class or series of shares in relation to other classes or series of shares must be approved by the holders of a majority of the outstanding shares of the class or series affected.

Termination

We will continue as a limited liability company until terminated under our operating agreement. We will dissolve upon: (1) the election of our Board of Directors that is separately approved by the affirmative vote of the holders of not less than a majority of the common shares then outstanding to dissolve us; (2) the sale, exchange or other disposition of all or substantially all of our assets; (3) the entry of a decree of judicial dissolution of our company; or (4) at any time that we no longer have any shareholders, unless our business is continued in accordance with Delaware law.

Restrictions on Ownership and Transfer

Our operating agreement, subject to certain exceptions, contains restrictions on the number and value of our common shares and the number and value of shares of our company that a person may own. Our operating agreement provides that generally no person may own, or be deemed to own by virtue of certain attribution provisions of the Code, either more than 9.8% in value or in number of our common shares, whichever is more restrictive, or more than 9.8% in value or in number of our shares, whichever is more restrictive. Accordingly, no person may own, or be deemed to own, more than 9.8% in value or in number of our shares, whichever is more restrictive.

Our Board of Directors may, in its sole discretion, subject to such conditions as it may determine and the receipt of certain representations and undertakings, prospectively or retroactively, waive the ownership limit or establish a different limit on ownership, or excepted holder limit, for a particular shareholder if the shareholder’s ownership in excess of the ownership limit would not result in our company being “closely held” within the meaning of Section 856(h) of the Code.

Redemption

At any time following the initial closing of an initial public offering, the Board of Directors, in its sole discretion, may, subject to the availability of assets legally available therefor and the preferential rights, if any, of holders of any other class of shares of the Company, redeem, on a pro rata basis, all of the outstanding common shares in exchange for all of the shares of common stock of, or partnership, limited liability company or other equity interests that together hold all of the assets and liabilities of the Company.

Distribution or Redemption in Connection with Certain Significant Transactions.

In the event of a disposition by the Company of all or substantially all the Company’ interests, whether held directly or through subsidiaries of the Company, of which the Company is not a majority owner (whether by merger, consolidation, sale of assets or stock, liquidation, dissolution, winding up or otherwise) (a “Significant Transaction”), the Company shall, no later than the first business day following the end of the 10 trading day period beginning on the 15th trading day following the consummation of such disposition, declare and pay a distribution and/or effect a redemption, as the Board of Directors, in its sole discretion, shall elect. Notwithstanding the preceding sentence, the Company shall be under no obligation to declare and pay and/or effect a distribution or redemption (i) in connection with a spin off or similar disposition of the Company’ entire interests to the holders of common shares, including any such disposition that is made in connection with a Board redemption, or (ii) in connection with the termination of the Company.

Authorized but Unissued Shares

Our operating agreement authorizes us to issue additional common shares or other securities of our company for the consideration and on the terms and conditions established by our Board of Directors without the approval of our shareholders. Our Board is authorized to provide for the issuance of an unlimited amount of one or more classes or series of shares of our company, including preferred shares, and to fix the number of shares, the relative powers, preferences and rights, and the qualifications, limitations or restrictions applicable to each class or series thereof by resolution authorizing the issuance of such class or series. Our ability to issue additional shares and other securities could render more difficult or discourage an attempt to obtain control over us by means of a tender offer, merger or otherwise.

Delaware Business Combination Statute—Section 203

We are a limited liability company organized under Delaware law. Some provisions of Delaware law may delay or prevent a transaction that would cause a change in our control. Section 203 of the DGCL, which restricts certain business combinations with interested shareholders in certain situations, does not apply to limited liability companies unless they elect to utilize it. Our operating agreement does not currently elect to have Section 203 of the DGCL apply to us. In general, this statute prohibits a publicly held Delaware corporation from engaging in a business combination with an interested shareholder for a period of three years after the date of the transaction by which that person became an interested shareholder, unless the business combination is approved in a prescribed manner. For purposes of Section 203, a business combination includes a merger, asset sale or other transaction resulting in a financial benefit to the interested shareholder, and an interested shareholder is a person who, together with affiliates and associates, owns, or within three years prior did own, 15% or more of voting shares. Our Board of Directors may elect to amend our operating agreement at any time to have Section 203 apply to us.

Reports to Shareholders

Our operating agreement requires that we prepare an annual report and deliver it to our common shareholders within 120 days after the end of each fiscal year.

U.S. FEDERAL INCOME TAX CONSIDERATIONS

The following summary discusses the U.S. Federal income tax considerations associated with our qualification and taxation as a REIT and the acquisition, ownership and disposition of our common shares. This summary is based upon the Code, Treasury regulations promulgated under the Code, which we refer to as the Treasury Regulations, and reported judicial and administrative rulings and decisions in effect as of the date of this offering circular, all of which are subject to change, retroactively or prospectively, and to possibly differing interpretations. Any such change could affect the validity of this discussion.

This discussion applies only to prospective investors that are “U.S. holders”. For purposes of this discussion, a “U.S. holder” is a beneficial owner of our common shares that is, for United States federal income tax purposes: (i) an individual who is a citizen or resident of the United States; (ii) a corporation created in, or organized under the law of, the United States any state thereof or the District of Columbia; (iii) an estate the income of which is subject to United States federal income taxation regardless of its source; or (iv) a trust if it (1) is subject to the primary supervision of a court within the United States and one or more United States persons have the authority to control all substantial decisions of the trust or (2) has a valid election in effect under applicable United States Treasury regulations to be treated as a United States person. This discussion does not address (i) U.S. federal taxes other than income taxes or (ii) state, local or non-U.S. taxes. In addition, this discussion does not purport to address the U.S. federal income or other tax considerations applicable to holders of our common shares that are subject to special treatment under U.S. federal income tax law, including, for example:

No ruling on the U.S. federal, state, or local tax considerations relevant to our operation or to the purchase, ownership or disposition of our shares, has been requested from the IRS or other tax authority. No assurance can be given that the IRS would not assert, or that a court would not sustain, a position contrary to any of the tax consequences described below.

This summary is also based upon the assumption that the operation of the company, and of its subsidiaries and other lower-tier and affiliated entities, will in each case be in accordance with its applicable organizational documents or partnership agreements. This summary does not discuss the impact that U.S. state and local taxes and taxes imposed by non-U.S. jurisdictions could have on the matters discussed in this summary. In addition, this summary assumes that security holders hold our common shares as a capital asset, which generally means as property held for investment.

Prospective investors are urged to consult their tax advisors in order to determine the U.S. federal, state, local and other tax consequences to them of the purchase, ownership and disposition of our shares, the tax treatment of a REIT and the effect of potential changes in the applicable tax laws.

Taxation as a REIT

We intend to elect and qualify to be taxed as a REIT under the applicable provisions of the Code and the Treasury Regulations promulgated thereunder commencing with our taxable year ending December 31, 2018. Furthermore, we intend to continue operating as a REIT so long as our Manager determines that REIT qualification remains in our best interest. However, we cannot assure you that we will meet the applicable requirements under U.S. federal income tax laws, which are highly technical and complex.

In brief, a corporation that complies with the provisions in Code Sections 856 through 860, and qualifies as a REIT generally is not taxed on its net taxable income to the extent such income is currently distributed to shareholders, thereby completely or substantially eliminating the “double taxation” that a corporation and its shareholders generally bear together. However, as discussed in greater detail below, a corporation could be subject to U.S. federal income tax in some circumstances even if it qualifies as a REIT and would likely suffer adverse consequences, including reduced cash available for distribution to its shareholders, if it failed to qualify as a REIT.

Therefore, we cannot assure you that our actual operating results allow us to satisfy the applicable requirements to qualify as a REIT under U.S. federal income tax laws in any taxable year.

Taxation of REITs in General

As discussed below, REITs are generally subject to federal income tax to the extent of any undistributed “REIT taxable income”. The term “REIT taxable income” means the taxable income as computed for a corporation which is not a REIT:

In any year in which we qualify as a REIT and have a valid election in place, we will claim deductions for the dividends we pay to the shareholders, and therefore will not be subject to U.S. federal income tax on that portion of our taxable income or capital gain which is distributed to our shareholders.

Although we can eliminate or substantially reduce our U.S. federal income tax liability by maintaining our REIT qualification and paying sufficient dividends, we will be subject to U.S. federal tax in the following circumstances: