American Realty Capital

The Advisor is affiliated with the Sponsor (American Realty Capital II, LLC and Northcliffe Asset Management U.S., LLC), and the Advisor's initial investment in the Company cannot be sold while these entities remain Sponsors, creating a structural conflict of interest. All advisory, acquisition, management, and disposition fees flow to this affiliated entity.

“The Advisor or its Affiliates have made an initial investment of $200,000 in the Company. The Advisor or any such Affiliate may not sell the Initial Investment while American Realty Capital II, LLC or Northcliffe Asset Management U.S., LLC remain a Sponsor but may transfer the Initial Investment to American Realty Capital II, LLC or Northcliffe Asset Management U.S., LLC or any Affiliate of American Realty Capital II, LLC or Northcliffe Asset Management U.S., LLC or the Advisor.”

The charter notes that an Independent Director may not serve as a director or trustee of more than three REITs organized by the Sponsor or advised by the Advisor, indicating the Sponsor (AR Capital Global Holdings, LLC / Nicholas S. Schorsch) organizes and advises multiple REITs simultaneously, creating potential conflicts of interest in allocation of investment opportunities, management time, and resources.

“service as a director or trustee of more than three REITs organized by the Sponsor or advised by the Advisor”

The Company is expressly permitted to invest in joint ventures with the Sponsor, Advisor, Directors, or their Affiliates, subject to majority Independent Director approval. This creates a structural related-party conflict as affiliated parties may be on both sides of transactions.

“The Company may invest in Joint Ventures with the Sponsor, the Advisor, one (1) or more Directors or any of their Affiliates only if a majority of Directors (including a majority of Independent Directors) not otherwise interested in the transaction, approve such investment as being fair and reasonable to the Company and on substantially the same terms and conditions as those received by the other joint venturers.”

The charter expressly permits the Company to purchase or lease assets from, and enter into joint ventures and other transactions with, the Sponsor, Advisor, Directors, and their Affiliates, subject only to majority Independent Director approval — a structural related-party conflict.

“The Company may purchase or lease an Asset or Assets from the Sponsor, the Advisor, a Director, an officer or any Affiliate thereof upon a finding by a majority of Directors (including a majority of Independent Directors) not otherwise interested in the transaction (i) that such transaction is fair and reasonable to the Company and (ii) that such transaction is at a price to the Company no greater than the cost of the Asset to such Sponsor, Advisor, Director, officer, Affiliate or, if the price to the Company is in excess of such cost, substantial justification exists for the excess and the excess is reasonable.”

The Dealer Manager for the Offering is Realty Capital Securities, LLC, which is explicitly identified as an Affiliate of the Company. This creates a conflict of interest as the entity distributing shares is affiliated with the issuer.

“'DEALER MANAGER' means Realty Capital Securities, LLC, an Affiliate of the Company, or such other Person selected by the Board to act as the dealer manager for an Offering.”

The Dealer Manager for the offering, Realty Capital Securities, LLC, is explicitly defined as an Affiliate of the Company, creating a related-party conflict in the distribution of offering proceeds and selling commissions.

“'DEALER MANAGER' means Realty Capital Securities, LLC, an Affiliate of the Company, or such other Person selected by the Board to act as the dealer manager for an Offering.”

Realty Capital Securities, LLC, the Dealer Manager responsible for selling shares in offerings, is an Affiliate of the Company, creating a direct related-party conflict in the distribution of securities.

“'DEALER MANAGER' means Realty Capital Securities, LLC, an Affiliate of the Company, or such other Person selected by the Board to act as the dealer manager for an Offering.”

The Dealer Manager for public offerings — Realty Capital Securities, LLC — is explicitly identified as an Affiliate of the Company, creating a direct related-party conflict in the distribution of selling commissions and dealer-manager fees.

“'DEALER MANAGER' means Realty Capital Securities, LLC, an Affiliate of the Company, or such other Person selected by the Board to act as the dealer manager for an Offering.”

When investment opportunities are suitable for both the Company and other public or private entities managed by the Advisor or its Affiliates, the allocation is governed by a 'longest period without an opportunity' rule, which may disadvantage the Company relative to other affiliated programs.

“In the event that an investment opportunity becomes available that is suitable for both the Company and a public or private entity with which the Advisor or its Affiliates are affiliated for which both entities have sufficient uninvested funds, and the requirements of Section 10.4(i) above have been satisfied, then the entity that has had the longest period of time elapse since it was offered an investment opportunity will first be offered the investment opportunity.”

The Advisor may divert investment opportunities from the Company to affiliated programs when a subsequent development makes an investment 'more appropriate' for another affiliated entity, with the Board obligated only to ensure the method is applied 'fairly' -- not that the Company receives priority.

“If a subsequent development, such as a delay in the closing of a property or a delay in the construction of a property, causes any such investment, in the opinion of the Advisor, to be more appropriate for a program other than the program that committed to make the investment, the Advisor may determine that another program affiliated with the Advisor will make the investment.”

The charter permits the Company to invest in Joint Ventures with the Sponsor, Advisor, Directors and their Affiliates, subject only to majority Independent Director approval and substantially similar terms — creating ongoing related-party conflict risk in co-investment structures.

“The Company may invest in Joint Ventures with the Sponsor, the Advisor, one (1) or more Directors or any of their Affiliates only if a majority of Directors (including a majority of Independent Directors) not otherwise interested in the transaction, approve such investment as being fair and reasonable to the Company and on substantially the same terms and conditions as those received by the other joint venturers.”

The Advisor and its affiliates manage multiple competing investment programs with similar investment objectives, creating potential conflicts in the allocation of investment opportunities. The Advisor is required to disclose and report its allocation method to the Board quarterly.

“If the Advisor, Director or Affiliates thereof have sponsored other investment programs with similar investment objectives which have investment funds available at the same time as the Company, the Advisor shall inform the Board of the method to be applied by the Advisor in allocating investment opportunities among the Company and competing investment entities and shall provide regular updates to the Board of the investment opportunities provided by the Advisor to competing programs in order for the Board (including the Independent Directors) to fulfill its duty to ensure that the Advisor and its Affiliates use their reasonable best efforts to apply such method fairly to the Company.”

The charter expressly permits the Company to purchase or lease assets from, and sell or lease assets to, the Sponsor, Advisor, Directors, Officers, and their Affiliates, subject only to majority Independent Director approval and fair price requirements.

“The Company may purchase or lease an Asset or Assets from the Sponsor, the Advisor, a Director, an Officer or any Affiliate thereof or certain of our Stockholders upon a finding by a majority of Directors (including a majority of Independent Directors) not otherwise interested in the transaction (i) that such transaction is fair and reasonable to the Company and (ii) that such transaction is at a price to the Company no greater than the cost of the Asset to such Sponsor, Advisor, Director, Officer, Stockholder or Affiliate”

The Dealer Manager for the Company's Offerings is Realty Capital Securities, LLC, which is an Affiliate of the Company, creating a related-party conflict in the distribution of selling commissions.

“'DEALER MANAGER' means Realty Capital Securities, LLC, an Affiliate of the Company, or such other Person selected by the Board to act as the dealer manager for an Offering.”

The charter explicitly permits the Company to purchase or lease Assets from the Sponsor, Advisor, Directors, officers, or Affiliates, subject to majority Independent Director approval and appraisal requirements, acknowledging a structural conflict of interest between the Company and its insiders in asset transactions.

“The Company may purchase or lease an Asset or Assets from the Sponsor, the Advisor, a Director, an officer or any Affiliate thereof upon a finding by a majority of Directors (including a majority of Independent Directors) not otherwise interested in the transaction (i) that such transaction is fair and reasonable to the Company and (ii) that such transaction is at a price to the Company no greater than the cost of the Asset to such Sponsor, Advisor, Director, officer, Affiliate”

The charter expressly permits the Company to buy Assets from, and sell Assets to, the Sponsor, Advisor, Directors, officers, and their Affiliates, subject to Independent Director approval and fair-value requirements. This creates ongoing related-party transaction risk.

“The Company may purchase or lease an Asset or Assets from the Sponsor, the Advisor, a Director, an officer or any Affiliate thereof upon a finding by a majority of Directors (including a majority of Independent Directors) not otherwise interested in the transaction (i) that such transaction is fair and reasonable to the Company and (ii) that such transaction is at a price to the Company no greater than the cost of the Asset to such Sponsor, Advisor, Director, officer or Affiliate”

The charter contains extensive conflict-of-interest provisions governing all transactions between the Company and related parties (Sponsor, Advisor, Directors, Officers, and their Affiliates). Sales, leases, and other transactions with affiliates are permitted only upon approval by a majority of disinterested Independent Directors confirming fairness; the Company may not make loans to the Sponsor, Advisor, Directors, or their Affiliates except in limited circumstances. The Advisor (an affiliate) receives multiple fees and may receive incentive compensation from asset sales.

“The Company shall not engage in any other transaction with the Sponsor, a Director, the Advisor or any Affiliates thereof unless a majority of the Directors (including a majority of the Independent Directors) not otherwise interested in such transaction approve such transaction as fair and reasonable to the Company and on terms and conditions not less favorable to the Company than those available from unaffiliated third parties.”