Net Asset Value (NAV)

NAV Calculation Methodology*

Our advisor will calculate our daily NAV by (a) determining the net value of our operating partnership’s assets, based in part on the quarterly estimate provided by the independent valuer, by subtracting the liabilities of the operating partnership and multiplying the resulting amount by our percentage ownership interest in the operating partnership, (b) adding any assets held by the REIT and (c) subtracting any estimated accrued REIT liabilities.

Any change in our NAV will be allocated among the retail shares and the institutional shares based on each class’s percentage of the previous aggregate NAV. Following this allocation between the classes, NAV for each class is adjusted for contributions, redemptions, reinvestment of distributions and accrual of class specific expenses.

The advisor will not verify the quarterly valuations provided by the independent valuer and the methodologies used to calculate our NAV will be based on a number of judgments, assumptions and opinions about future events and may not reflect the amount that could be received in a market transaction. Therefore, the appraised value may not capture the potential realizable value which would potentially cause a discrepancy between the estimated NAV and the potential realizable NAV. All methodologies used by the independent valuer will be consistent with our valuation guidelines established by our board of directors.

Our NAV may not reflect the economic impact of certain extraordinary events on our portfolio that may have occurred since the prior quarterly valuation. If it is determined that such an event has occurred, we will make an announcement regarding such extraordinary event and our advisor will determine the appropriate adjustment to be made to our NAV. We will not however retroactively adjust NAV.


The below tables are a hypothetical calculation illustrating the factors that are likely to impact our NAV calculation for institutional shares and retail shares. This illustration assumes that the calculation occurs on a day which is not a distribution adjustment date and on which there are no reinvestments of distributions. If such hypothetical day were a distribution adjustment date, the adjustment to reflect the accrued distributions would reduce our NAV. As described above, retail shares and institutional shares will have a different NAV because of the different fees and expenses paid by each class of shares. The below tables assume that we have 66,666,666 shares issued and outstanding, comprised of 22,222,222 institutional shares and 44,444,444 retail shares, with assets of $600.0 million. The amounts shown in the table below are for illustrative purposes only and are not indicative of our current or projected financial condition or performance:

Institutional Shares

NAV
Beginning NAV for institutional shares on Hypothetical Trading Day (per
institutional share) $ 200,000,000 ($9.00)
Daily Activity:
Accrual of Portfolio Revenue1 35,616
Accrual of Asset Management Fee and Platform Fee2 (9,315)
Accrual of Other Expenses3 (2,466)
Accrual of Organizational and Offering Expenses4 (21,918)
Unrealized/Realized Gains (Losses) on Assets and Liabilities5 180,000
NAV Before Share Purchases and Redemptions (per institutional share) 200,181,917 ($9.01)
Share Purchases 9,999,999
Share Redemptions (5,000,004)
Ending NAV on Hypothetical Trading Day (per institutional share) 205,181,912 ($9.01)


Retail Shares

NAV
Beginning NAV on Hypothetical Trading Day (per retail share) $ 400,000,000 ($9.00)
Daily Activity:
Accrual of Portfolio Revenue1 71,233
Accrual of Asset Management Fee6 (10,959)
Accrual of Other Expenses3 (4,932)
Accrual of Organizational and Offering Expenses4 (43,836)
Unrealized/Realized Gains (Losses) on Assets and Liabilities5 360,000
NAV Before Share Purchases and Redemptions (per retail share) 400,371,506 ($9.01)
Share Purchases 19,999,998
Share Redemptions (10,000,008)
Ending NAV on Hypothetical Trading Day (per retail share) 410,371,496 ($9.01)
* The board of directors has established valuation guidelines and will oversee our advisor’s NAV calculation and will review and approve the quarterly valuations. Notwithstanding this, the asset management fee paid to our advisor will be based on NAV, which the advisor is responsible for calculating. Therefore, the advisor will be subject to conflicts of interest in making its calculation. In addition, the advisor will not verify the quarterly valuations of the independent valuer and, because such fair value calculations involve significant subjective judgments, valuations will be only estimates, and ultimate realization depends on conditions beyond our, the advisor’s, or the valuer’s control. Therefore, the appraised value may not capture the potential realizable value which would potentially cause a discrepancy between the estimated NAV and the potential realizable NAV.
1 Assumes accrual of portfolio revenue of $106,849 (with $35,616 allocated to institutional shares and $71,233 allocated to retail shares).
2 Asset Management Fee per year of $6,000,000 calculated based on 1% of $600,000,000; $5,479 allocated on a daily basis to institutional shares. Platform fee of $3,836 calculated based on 1/365th of 0.70% of beginning NAV for institutional shares.
3 Assumes accrual of other expenses of $7,398 (with $2,466 allocated to institutional shares and $4,932 allocated to retail shares).
4 Assumes accrual of organizational and offering expenses of $65,754 (with $21,918 allocated to institutional shares and $43,836 allocated to retail shares).
5 Assumes unrealized/realized gains of $540,000 (with $180,000 allocated to institutional shares and $360,000 allocated to retail shares)
6 Accrued Asset Management Fee of $10,959 allocated on a daily basis to retail shares. Selling commissions and dealer manager fees do not accrue because they are paid for by the purchaser at the time of sale.