SEC Company Response from MODIV INDUSTRIAL, INC. (MDV, MDV-PA) (CIK 0001645873) (MDV) — Jan 11, 2016
MODIV INDUSTRIAL, INC. (MDV, MDV-PA) (CIK 0001645873)
Date: Jan. 11, 2016 · CIK: 0001645873 · Accession: 0001162677-16-000127
AI Filing Summary & Sentiment
Reasoning
File numbers found in text: 333-205684
Referenced dates: August 11, 2015, December 15, 2015, January 4, 2013, June 4, 2001, September 7, 2006
Letter
VIA EDGAR Division of Corporation Finance Securities and Exchange Commission Rich Uncles REIT, Inc. Amendment No. 4 to Registration Statement on Form S-11 Filed January 8, 2016 File No. 333-205684
Dear Ms. Gowetski:
On behalf of our client, Rich Uncles NNN REIT, Inc. (formerly known as Rich Uncles REIT, Inc.), we are responding to your letter dated December 15, 2015, regarding the referenced Amendment No. 2 to Registration Statement on Form S-11. On December 11, 2015, the Company filed Pre-Effective Amendment No. 3 to its Registration Statement on Form S-1. Amendment No. 3 was not filed in response to any specific comments from the Commission and instead contained changes based on some adjustments to the Company’s plans and contained other revisions to correct some typographical errors and inconsistencies and generally clarify some of the disclosure in the Form S-11. On January 8, 2016, the Company filed Pre-Effective Amendment No.4 to its Registration Statement on Form S-11. Responses in this letter refer to Amendment No. 4. We enclose five paper copies of Amendment No. 4, marked to show changes from the Amendment No. 2 to Registration Statement on Form S-11 filing made on November 23, 2015 and keyed to comments.
General
1.
Please revise your filing to include financial statements for the fiscal quarter ended September 30, 2015.
RESPONSE: See Index to Financial Statements. Audited Financial statements for the fiscal quarter ended September 30, 2015 have been included in the prospectus.
Jennifer Gowetski
January 11, 2016
Page 2
2.
We note your response to comment 1 of our letter dated August 11, 2015. We will continue to monitor your filing for disclosure required by Industry Guide 5.
RESPONSE: The prior performance table is included as Appendix C to the prospectus.
3.
We note your response to comment 1 of our letter, and your revised disclosure on the cover page under the heading “Suitability Standards.” We further note that your risk factor disclosures state that you are not required to pursue a liquidity event “by a specified date.” Please revise your risk factor disclosures throughout to state that you are not ever required to provide a liquidity event. In addition, please clarify, if true, that there is no public market for your shares.
RESPONSE: See prospectus cover page and pages i, 2 and 10. We revised our risk factor disclosures to explicitly state that we are not ever required to provide a liquidity event. We also clarified that there is no public market for our shares.
4.
We note your response to comment 6 of our letter dated August 11, 2015, and your statement that you believe the Repurchase Program is consistent with the relief granted by the Division of Corporate Finance in prior no-action letters. Please advise us supplementally of the specific letter(s) that you believe support your conclusion. We may have further comment.
RESPONSE: The specific no-action letters that support our conclusion that the Repurchase Program is consistent with the relief granted by the Division of Corporate Finance in prior no-action letters are T REIT Inc. (Letter dated June 4, 2001), Hines Real Estate Investment Trust, Inc. (Letter dated September 7, 2006) and RREEF Property Trust, Inc. (Letter dated January 4, 2013). We believe that the Repurchase Program is consistent with the relief granted by the Division of Corporate Finance in prior no-action letters because of the following facts:
●
Repurchases under the Repurchase Program are limited to the number of shares that may be purchased using the Company’s cash reserves, with funds available under the Company’s lines of credit if any and if any availability, from shares sold during the month shares are submitted for repurchase, and with the amount of net proceeds from the sale of shares under the Company’s dividend reinvestment plan. At the Company’s option, any amount of such funds that are not used to repurchase shares in any given month may be carried over and made available for repurchases in a later month.
●
The terms of the Repurchase Program are disclosed the Prospectus included in the Registration Statement and will be disclosed in any prospectus used for subsequent offerings so long as the Repurchase Program is in existence and will be fully disclosed on the Company’s website.
Jennifer Gowetski
January 11, 2016
Page 3
●
The Company will report the NAV per share of common stock, which will allow a stockholder to determine the repurchase price per share, in a Current Report on Form 8-K or in its annual or quarterly reports, all publicly filed with the SEC. The Company will also provide information about the NAV per share on the Company’s website (such information may be provided by means of a link to the Company’s public filings on the SEC’s website, www.sec.gov).
●
Shares held less than three years will be repurchased at a discount to the most-recently published NAV or, if none,, then $10.00 per share, and may not be repurchased at a price greater than the then-current public offering price of the shares.
●
Purchases will be made on a monthly basis and will be paid in cash on the fifth business day of each month.
●
The Company will not engage in active or widespread solicitation for its shares under the Repurchase Program.
●
Stockholders can tender shares at any time and can withdraw tendered shares at any time prior to the date that is five business day before the repurchase date.
●
The Company will repurchase shares on a pro rata basis each month if the amount of funds available for repurchases is insufficient to satisfy all of the current repurchase requests.
●
The Company does not expect that there will be a trading market for the Company’s common stock, and the Repurchase Program will be terminated if a trading market for the common stock develops.
●
The Company will operate as an open-end investment entity with no pre-established liquidation date, no other established liquidity event and no set timeframe for the listing of its shares on a national securities exchange or for including its shares for quotation in a national securities market.
5.
We note your response to comment 7 of our letter. We further note that your disclosure, including on the cover page and pages 35 and 99, indicates that there is no minimum offering size applicable to this offering. Please revise your disclosure to remove references to a minimum offering size, including on pages 12, 35, 62, and A-10, and in the fee tables starting on pages 3 and 44, or advise us why you believe such disclosure is appropriate.
RESPONSE: See prospectus pages 12, 35, 63, 99 and F-10. We revised our disclosures to remove references to a minimum offering size. The reference to the sale of 5 million shares being sold in the fee tables is not in reference to a minimum offering, but was drafted in response to a prior comment number 15 in a letter dated from you dated August 11, 2015, requesting that the fee table be revised to provide an estimate on the fees expected to be paid in the first year based on our targeted leverage. The current tables reflect our estimate of the fees expected to be paid in the first year based on our targeted leverage.
Jennifer Gowetski
January 11, 2016
Page 4
Prospectus Summary
Sponsor and Advisor Compensation, page 3
6.
We note your response to comment 5 of our letter. Please revise your disclosure in the fee tables starting on pages 3 and 44 to clarify, if true, that you are presenting the estimated acquisition fees assuming use of your target leverage, or revise your disclosure in these sections to present the estimated acquisition fees assuming you utilize your target leverage.
RESPONSE: See prospectus pages 3 and 44. The tables on pages 3 and 44 for the heading “Acquisition Fee” have been revised to clarify that the estimated acquisition fees are presented assuming use of our target leverage of 50%.
7.
We note your response to comment 6 of our letter. We continue to believe that you should revise to clarify how distributions to the shareholders may impact the calculation of the subordinated participation interests as it appears fees and reimbursements could be deferred to increase cash flow from operations. Please consider providing an example detailing how this fee will be calculated.
RESPONSE: See prospectus pages 4 and 45. Based on a conversation with the Staff, we have revised the prospectus to clarify that the Company will not use the proceeds from sales of the Company’s common stock or borrowed money to pay distributions to its stockholders, including any payment of the 6.5% cumulative, non-compounded return to stockholders (the “Stockholders’ Preferred Return”).
Because Comment 7 addresses the impact that distributions to the stockholders may have on the calculation of the subordinated participation in distributions that may become due to the Advisor (the “Subordinated Participation”), and how fees and reimbursements could be deferred to increase cash flow from operations, we have set forth below a supplemental explanation of the interplay between the Stockholders’ Preferred Return, the Subordinated Participation and any deferral of cash fees owed to the Advisor and Sponsor. We have also included a sample calculation of the Subordinated Participation that would be due to the Advisor if there is an annual increase in NAV per share and the Company makes distributions to its stockholders equal to the Stockholders’ Preferred Return.
As described in the prospectus, the Subordinated Participation is equal to 40% of the annual increase in the Company’s net asset value, or “NAV”, per share calculated annually, each December 31, starting with December 31, 2016, plus 40% of the amount by which distributions to stockholders for the calendar year ending on the calculation date exceed the Stockholders’ Preferred Return (“Excess Distributions”). The Advisor will not be entitled to receive the Subordinated Participation unless there is an increase in NAV per share or Excess Distributions, or both.
Jennifer Gowetski
January 11, 2016
Page 5
Even if there is an increase in the NAV per share, the Advisor will not be entitled to receive the Subordinated Participation unless the Stockholders’ Preferred Return has been paid. The Stockholders’ Preferred Return will be paid in cash and will be paid only from income from operations (including proceeds of sales of properties).
There may be times when there has been an annual increase in NAV per share and the Company has income from operations that exceeds the Stockholders’ Preferred Return, but, if the Company used its cash to pay fees due to the Advisor and/or Sponsor1, the Company would not have sufficient cash left to make distribution to Stockholders in an amount that equals or exceeds the Stockholders’ Preferred Return.
The Company’s Advisor and Sponsor, at their sole election, may defer reimbursements and fees otherwise due to them. A deferral of any fees or reimbursements owed to the Advisor or Sponsor will have the effect of increasing cash flow from operations for the relevant period and increase the cash available to make distributions to the Company’s stockholders.
As a result of any such deferral, the Company may be able to make distributions to its stockholders in an amount that would equal or exceed the Stockholders’ Preferred Return at a time when, absent such deferral, the Company would not have enough cash available to pay the full amount of the Stockholders’ Preferred Return.
Because payment of the Stockholders’ Preferred Return is a condition that must be satisfied before the Advisor can receive the Subordinated Participation, deferral by the Advisor or Sponsor of any fees or reimbursements owed to them may result in the Subordinated Participation being paid to the Advisor at a time when the Subordinated Participation would otherwise not be paid, if the deferral results in the Company having enough cash available to pay the full amount of the Stockholders’ Preferred Return.
If, based on a December 31 calculation of an increase in annual NAV per share and the making of distributions to stockholders in an amount equal to or in excess of the Stockholders’ Preferred Return, the Advisor would be entitled to receive the Subordinated Participation, then the Subordinated Participation will be paid by January 31 of the subsequent year, and will be paid in the form of the Company’s common stock at the price then being paid by the public to purchase the Company’s common stock (the most recent calculated NAV).
_______________________
1 References to using cash to pay fees due the Advisor and/or Sponsor and deferral of fees by the Advisor and/or Sponsor refer to fees other than the Subordinated Participation, which will be paid, if due, in shares of the Company’s common stock.
Jennifer Gowetski
January 11, 2016
Page 6
Set forth below is an example hypothetical calculation of the Subordinated Participation as of December 31, 2016. The example is solely for purposes of illustrating the mechanics of how NAV per share will be calculated, the impact of a fee deferral by the Advisor on the NAV per share calculation and, consequently, the ability of the Company to make distributions in an amount necessary to satisfy the Stockholders’ Preferred Return, and the calculation of the Subordinated Participation. The example is not based on the Company’s expectations or projections of actual expected results and is based on implicit assumptions that are not detailed in full in the example.
For the purpose of calculating the Subordinated Participation, the initial NAV per share will be the offering price of $10.00 in the prospectus. Further, for the purpose of calculating any increase in NAV per share used in determining the amount of the Subordinated Participation, only the highest previous price per share at which shares are offered for sale to the public will be used.
Per Share
Initial NAV
$10.00
Stockholders’ Preferred Return
$0.65
(6.5% of $10.00 Offering Price)
Assume that there is an increase in 2016 of the Company’s NAV, such that the NAV per share as of December 31, 2016 is $10.25, before taking into account any fees that may have been deferred by the Advisor and any payment of the Subordinated Participation, and that fees due to the Advisor as of December 31, 2016 are equal to $0.05 per share. The Company would deduct as a liability against NAV the fees due to the Advisor (but not any Subordinated Participation that may become payable) to get a preliminary NAV per share, which would be used to calculate the amount of the Subordinated Participation.
Per Share
NAV as of December 31, 2016
$10.25
(disregarding any deferred fees due the Advisor)
Minus: Deferred Fees due Advisor
($0.05)
Subtotal (Preliminary NAV per Share)
$10.20
Minus: Subordinated Participation (40% of $0.20)
($0.08)
NAV as of December 31, 2016
$10.12
Next, assume that the Company has previously distributed to its stockholders during the course of the year $0.60 per share, such that, if the Company distributes an additional $0.05 per share to its stockholders, it will have distributed to the stockholders an amount equal to the Stockholders’ Preferred Return.
Jennifer Gowetski
January 11, 2016
Page 7
Assume that the Advisor determines to defer payment of the fees due to the Advisor. By deferring the Company’s need to use its cash to pay the fees due to the Advisor, the Company would have more cash available to distribute to its stockholders, as follows:
Per Share
Cash Previously Distributed to Stockholders
$0.60
(before taking into account the fee deferral)
Cash Ava
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CORRESP
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ru11116corr.htm
STRASBURGER & PRICE, LLP
720 Congress Avenue, Suite 700
Austin, Texas 78701
512-499-3600
Lee.Polson@strasburger.com
January 11, 2016
VIA EDGAR
and FEDERAL EXPRESS
Jennifer Gowetski
Special Counsel
Division of Corporation Finance
Securities and Exchange Commission
Washington, D.C. 20549
Re:
Rich Uncles REIT, Inc.
Amendment No. 4 to Registration Statement on Form S-11
Filed January 8, 2016
File No. 333-205684
Dear Ms. Gowetski:
On behalf of our client, Rich Uncles NNN REIT, Inc. (formerly known as Rich Uncles REIT, Inc.), we are responding to your letter dated December 15, 2015, regarding the referenced Amendment No. 2 to Registration Statement on Form S-11. On December 11, 2015, the Company filed Pre-Effective Amendment No. 3 to its Registration Statement on Form S-1. Amendment No. 3 was not filed in response to any specific comments from the Commission and instead contained changes based on some adjustments to the Company’s plans and contained other revisions to correct some typographical errors and inconsistencies and generally clarify some of the disclosure in the Form S-11. On January 8, 2016, the Company filed Pre-Effective Amendment No.4 to its Registration Statement on Form S-11. Responses in this letter refer to Amendment No. 4. We enclose five paper copies of Amendment No. 4, marked to show changes from the Amendment No. 2 to Registration Statement on Form S-11 filing made on November 23, 2015 and keyed to comments.
General
1.
Please revise your filing to include financial statements for the fiscal quarter ended September 30, 2015.
RESPONSE: See Index to Financial Statements. Audited Financial statements for the fiscal quarter ended September 30, 2015 have been included in the prospectus.
Jennifer Gowetski
January 11, 2016
Page 2
2.
We note your response to comment 1 of our letter dated August 11, 2015. We will continue to monitor your filing for disclosure required by Industry Guide 5.
RESPONSE: The prior performance table is included as Appendix C to the prospectus.
3.
We note your response to comment 1 of our letter, and your revised disclosure on the cover page under the heading “Suitability Standards.” We further note that your risk factor disclosures state that you are not required to pursue a liquidity event “by a specified date.” Please revise your risk factor disclosures throughout to state that you are not ever required to provide a liquidity event. In addition, please clarify, if true, that there is no public market for your shares.
RESPONSE: See prospectus cover page and pages i, 2 and 10. We revised our risk factor disclosures to explicitly state that we are not ever required to provide a liquidity event. We also clarified that there is no public market for our shares.
4.
We note your response to comment 6 of our letter dated August 11, 2015, and your statement that you believe the Repurchase Program is consistent with the relief granted by the Division of Corporate Finance in prior no-action letters. Please advise us supplementally of the specific letter(s) that you believe support your conclusion. We may have further comment.
RESPONSE: The specific no-action letters that support our conclusion that the Repurchase Program is consistent with the relief granted by the Division of Corporate Finance in prior no-action letters are T REIT Inc. (Letter dated June 4, 2001), Hines Real Estate Investment Trust, Inc. (Letter dated September 7, 2006) and RREEF Property Trust, Inc. (Letter dated January 4, 2013). We believe that the Repurchase Program is consistent with the relief granted by the Division of Corporate Finance in prior no-action letters because of the following facts:
●
Repurchases under the Repurchase Program are limited to the number of shares that may be purchased using the Company’s cash reserves, with funds available under the Company’s lines of credit if any and if any availability, from shares sold during the month shares are submitted for repurchase, and with the amount of net proceeds from the sale of shares under the Company’s dividend reinvestment plan. At the Company’s option, any amount of such funds that are not used to repurchase shares in any given month may be carried over and made available for repurchases in a later month.
●
The terms of the Repurchase Program are disclosed the Prospectus included in the Registration Statement and will be disclosed in any prospectus used for subsequent offerings so long as the Repurchase Program is in existence and will be fully disclosed on the Company’s website.
Jennifer Gowetski
January 11, 2016
Page 3
●
The Company will report the NAV per share of common stock, which will allow a stockholder to determine the repurchase price per share, in a Current Report on Form 8-K or in its annual or quarterly reports, all publicly filed with the SEC. The Company will also provide information about the NAV per share on the Company’s website (such information may be provided by means of a link to the Company’s public filings on the SEC’s website, www.sec.gov).
●
Shares held less than three years will be repurchased at a discount to the most-recently published NAV or, if none,, then $10.00 per share, and may not be repurchased at a price greater than the then-current public offering price of the shares.
●
Purchases will be made on a monthly basis and will be paid in cash on the fifth business day of each month.
●
The Company will not engage in active or widespread solicitation for its shares under the Repurchase Program.
●
Stockholders can tender shares at any time and can withdraw tendered shares at any time prior to the date that is five business day before the repurchase date.
●
The Company will repurchase shares on a pro rata basis each month if the amount of funds available for repurchases is insufficient to satisfy all of the current repurchase requests.
●
The Company does not expect that there will be a trading market for the Company’s common stock, and the Repurchase Program will be terminated if a trading market for the common stock develops.
●
The Company will operate as an open-end investment entity with no pre-established liquidation date, no other established liquidity event and no set timeframe for the listing of its shares on a national securities exchange or for including its shares for quotation in a national securities market.
5.
We note your response to comment 7 of our letter. We further note that your disclosure, including on the cover page and pages 35 and 99, indicates that there is no minimum offering size applicable to this offering. Please revise your disclosure to remove references to a minimum offering size, including on pages 12, 35, 62, and A-10, and in the fee tables starting on pages 3 and 44, or advise us why you believe such disclosure is appropriate.
RESPONSE: See prospectus pages 12, 35, 63, 99 and F-10. We revised our disclosures to remove references to a minimum offering size. The reference to the sale of 5 million shares being sold in the fee tables is not in reference to a minimum offering, but was drafted in response to a prior comment number 15 in a letter dated from you dated August 11, 2015, requesting that the fee table be revised to provide an estimate on the fees expected to be paid in the first year based on our targeted leverage. The current tables reflect our estimate of the fees expected to be paid in the first year based on our targeted leverage.
Jennifer Gowetski
January 11, 2016
Page 4
Prospectus Summary
Sponsor and Advisor Compensation, page 3
6.
We note your response to comment 5 of our letter. Please revise your disclosure in the fee tables starting on pages 3 and 44 to clarify, if true, that you are presenting the estimated acquisition fees assuming use of your target leverage, or revise your disclosure in these sections to present the estimated acquisition fees assuming you utilize your target leverage.
RESPONSE: See prospectus pages 3 and 44. The tables on pages 3 and 44 for the heading “Acquisition Fee” have been revised to clarify that the estimated acquisition fees are presented assuming use of our target leverage of 50%.
7.
We note your response to comment 6 of our letter. We continue to believe that you should revise to clarify how distributions to the shareholders may impact the calculation of the subordinated participation interests as it appears fees and reimbursements could be deferred to increase cash flow from operations. Please consider providing an example detailing how this fee will be calculated.
RESPONSE: See prospectus pages 4 and 45. Based on a conversation with the Staff, we have revised the prospectus to clarify that the Company will not use the proceeds from sales of the Company’s common stock or borrowed money to pay distributions to its stockholders, including any payment of the 6.5% cumulative, non-compounded return to stockholders (the “Stockholders’ Preferred Return”).
Because Comment 7 addresses the impact that distributions to the stockholders may have on the calculation of the subordinated participation in distributions that may become due to the Advisor (the “Subordinated Participation”), and how fees and reimbursements could be deferred to increase cash flow from operations, we have set forth below a supplemental explanation of the interplay between the Stockholders’ Preferred Return, the Subordinated Participation and any deferral of cash fees owed to the Advisor and Sponsor. We have also included a sample calculation of the Subordinated Participation that would be due to the Advisor if there is an annual increase in NAV per share and the Company makes distributions to its stockholders equal to the Stockholders’ Preferred Return.
As described in the prospectus, the Subordinated Participation is equal to 40% of the annual increase in the Company’s net asset value, or “NAV”, per share calculated annually, each December 31, starting with December 31, 2016, plus 40% of the amount by which distributions to stockholders for the calendar year ending on the calculation date exceed the Stockholders’ Preferred Return (“Excess Distributions”). The Advisor will not be entitled to receive the Subordinated Participation unless there is an increase in NAV per share or Excess Distributions, or both.
Jennifer Gowetski
January 11, 2016
Page 5
Even if there is an increase in the NAV per share, the Advisor will not be entitled to receive the Subordinated Participation unless the Stockholders’ Preferred Return has been paid. The Stockholders’ Preferred Return will be paid in cash and will be paid only from income from operations (including proceeds of sales of properties).
There may be times when there has been an annual increase in NAV per share and the Company has income from operations that exceeds the Stockholders’ Preferred Return, but, if the Company used its cash to pay fees due to the Advisor and/or Sponsor1, the Company would not have sufficient cash left to make distribution to Stockholders in an amount that equals or exceeds the Stockholders’ Preferred Return.
The Company’s Advisor and Sponsor, at their sole election, may defer reimbursements and fees otherwise due to them. A deferral of any fees or reimbursements owed to the Advisor or Sponsor will have the effect of increasing cash flow from operations for the relevant period and increase the cash available to make distributions to the Company’s stockholders.
As a result of any such deferral, the Company may be able to make distributions to its stockholders in an amount that would equal or exceed the Stockholders’ Preferred Return at a time when, absent such deferral, the Company would not have enough cash available to pay the full amount of the Stockholders’ Preferred Return.
Because payment of the Stockholders’ Preferred Return is a condition that must be satisfied before the Advisor can receive the Subordinated Participation, deferral by the Advisor or Sponsor of any fees or reimbursements owed to them may result in the Subordinated Participation being paid to the Advisor at a time when the Subordinated Participation would otherwise not be paid, if the deferral results in the Company having enough cash available to pay the full amount of the Stockholders’ Preferred Return.
If, based on a December 31 calculation of an increase in annual NAV per share and the making of distributions to stockholders in an amount equal to or in excess of the Stockholders’ Preferred Return, the Advisor would be entitled to receive the Subordinated Participation, then the Subordinated Participation will be paid by January 31 of the subsequent year, and will be paid in the form of the Company’s common stock at the price then being paid by the public to purchase the Company’s common stock (the most recent calculated NAV).
_______________________
1 References to using cash to pay fees due the Advisor and/or Sponsor and deferral of fees by the Advisor and/or Sponsor refer to fees other than the Subordinated Participation, which will be paid, if due, in shares of the Company’s common stock.
Jennifer Gowetski
January 11, 2016
Page 6
Set forth below is an example hypothetical calculation of the Subordinated Participation as of December 31, 2016. The example is solely for purposes of illustrating the mechanics of how NAV per share will be calculated, the impact of a fee deferral by the Advisor on the NAV per share calculation and, consequently, the ability of the Company to make distributions in an amount necessary to satisfy the Stockholders’ Preferred Return, and the calculation of the Subordinated Participation. The example is not based on the Company’s expectations or projections of actual expected results and is based on implicit assumptions that are not detailed in full in the example.
For the purpose of calculating the Subordinated Participation, the initial NAV per share will be the offering price of $10.00 in the prospectus. Further, for the purpose of calculating any increase in NAV per share used in determining the amount of the Subordinated Participation, only the highest previous price per share at which shares are offered for sale to the public will be used.
Per Share
Initial NAV
$10.00
Stockholders’ Preferred Return
$0.65
(6.5% of $10.00 Offering Price)
Assume that there is an increase in 2016 of the Company’s NAV, such that the NAV per share as of December 31, 2016 is $10.25, before taking into account any fees that may have been deferred by the Advisor and any payment of the Subordinated Participation, and that fees due to the Advisor as of December 31, 2016 are equal to $0.05 per share. The Company would deduct as a liability against NAV the fees due to the Advisor (but not any Subordinated Participation that may become payable) to get a preliminary NAV per share, which would be used to calculate the amount of the Subordinated Participation.
Per Share
NAV as of December 31, 2016
$10.25
(disregarding any deferred fees due the Advisor)
Minus: Deferred Fees due Advisor
($0.05)
Subtotal (Preliminary NAV per Share)
$10.20
Minus: Subordinated Participation (40% of $0.20)
($0.08)
NAV as of December 31, 2016
$10.12
Next, assume that the Company has previously distributed to its stockholders during the course of the year $0.60 per share, such that, if the Company distributes an additional $0.05 per share to its stockholders, it will have distributed to the stockholders an amount equal to the Stockholders’ Preferred Return.
Jennifer Gowetski
January 11, 2016
Page 7
Assume that the Advisor determines to defer payment of the fees due to the Advisor. By deferring the Company’s need to use its cash to pay the fees due to the Advisor, the Company would have more cash available to distribute to its stockholders, as follows:
Per Share
Cash Previously Distributed to Stockholders
$0.60
(before taking into account the fee deferral)
Cash Ava